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[2011] ZAGPJHC 114
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Standard Bank of South Africa Ltd v Gordon and Others [2011] ZAGPJHC 114; 2011/6477 (21 September 2011)
SOUTH GAUTENG HIGH COURT, JOHANNESBURG
CASE NO: 2011/6477
DATE:21/09/2011
In the matter between:
STANDARD
BANK OF SOUTH AFRICA LIMITED
............................
Applicant
and
GORDON,
RIAAN
EDWARD
..........................................................
Respondent
FELDMAN, NATALIE
VERONICA
....................................
Second
Respondent
FELDMAN, RUVIAN
RONALD
..............................................
Third
Respondent
J U D G M E N T
Summary:
Execution of immovable property –
the directives given in
Saunderson
1
and
Mortinson
2
are equally applicable to matters brought by way of application
proceedings – consequences of failure to make necessary
allegations in founding affidavit – failure to adhere to the
Saunderson
and
Mortinson
directives.
WEPENER, J
:
[1] The applicant brought an
application against the respondents for payment of the sum of R635
000, interest, costs and an order
declaring certain immovable
property executable, such property having been mortgaged by the
respondents in favour of the applicant.
In the founding affidavit the
applicant alleges that the respondents entered into the mortgage bond
which was duly registered and
a copy of the bond is attached. It is
then alleged that the respondents acknowledged their indebtedness to
the applicant in the
sum of R150 000 plus an additional amount of R37
500. It is stated thus:
“
7. As
appears more fully from the said agreements, the Respondent
acknowledge their indebtedness to the Applicant in the sum of
R150
000.00
plus an additional sum of
R37
500.00
which the Respondents were to repay to the Applicant by way of
monthly instalments commencing on the first day of the month within
thirty days after the day of the month in which the monies were
advanced, namely the first day of the month commencing within thirty
days of
18
May 2007.
”
8. It
was a term of the said agreements that:
8.1 The Respondents were to pay monthly instalments to the
Applicant on or before the first day of each month;
8.2 The Respondents were to pay interest as determined from time
to time by the Applicant calculated and capitalised monthly in
arrears;
8.3 Monthly instalments were to be paid regularly month by month
without deduction on demand;
8.4 The full balance outstanding at any particular time would
forthwith become due, owing and payable in the event of the
Respondents
failing to make any payment on due date;
8.5 The Respondents would be obliged to pay costs on the scale as
between Attorney and client;
8.6 the
Applicant would be entitled to increase or decrease the rate of
interest on all amounts in terms of the bond to the rate
determined
by the Applicant as being payable for the class of bonds into which
the bond falls and would be entitled to commensurately
increase the
monthly instalment from time to time;”.
The
reference to “
agreements
”
is significant.
The
sub-clauses referred to above do not appear in the mortgage bond
document. They are clauses that are typically found in an agreement
of loan.
[2] The
applicant further alleges that:
“
9. Pursuant to the said agreements the Applicant;
Duly advanced the said monies to the Respondents during 18 May
2007;
…”
The
allegations
in paragraph 9 read with its admission in the replying affidavit that
there was indeed such an agreement of loan albeit
that the applicant
annexed an irrelevant document (explained below), leaves no doubt
that the cause of action is not based on the
mortgage bond but on a
loan agreement still to be disclosed.
[3] The mortgage bond being
security for a loan, does not set out the terms of a loan nor does it
set out the monthly instalments
or the dates for repayment of a loan.
It only sets out the amount of the security. The document is a second
mortgage bond. A proper
reference to a loan agreement is absent from
the founding affidavit.
[4] In this regard Mr Grove, who
appeared for the respondents, argued that there was a failure by the
applicant to attach the loan
agreement as well as the first mortgage
bond and thus the complete agreement between the parties was absent.
The respondents in
an affidavit stated that:
“
the
applicant has therefore failed to annex the complete contract between
the parties as is prescribed by the Rules relating to
pleadings and
thus the respondents are unable to respond fully to the application
”.
[5] The applicant, having elected
to institute proceedings by way of application proceedings has to
comply with the provisions of
Rule 6 regarding the contents of
affidavits.
I am of the view that in the
event of a party utilising application procedure rather than the
usual action procedure in matters
such as this, it is required of the
applicant to comply fully with the requirements of the Rules, which
have been framed to ensure
that issues between the parties are
clearly defined and that sufficient particularity is supplied in
order to enable the opposite
party to respond thereto. There can be
no justification for a party to utilise application proceedings and
thereby depriving an
opposing party access to the full ambit of the
case it has to meet. It has long been the general requirement that an
applicant
is required to set out a case fully in the founding
affidavit:
“Courts
do not normally countenance a mere skeleton of a case in the founding
affidavit, which skeleton is then sought to
be covered in flesh in
the replying affidavit
”,
per
Viljoen J
in
Titty’s Bar &
Bottle Store v ABC Garage & Others
1974 (4) SA 362
T at 369 A-B
[6] Rule 6(1) reads:
“
Save
where proceedings by way of petition are prescribed by law, every
application shall be brought on notice of motion supported
by an
affidavit as to the facts upon which the applicant relies for
relief.
“
The facts upon which the
applicant relies include the loan agreement, the first mortgage bond
and the second mortgage bond. In the
replying affidavit the applicant
purports to attach the loan agreement as well as the first mortgage
bond. The applicant states
in reply:
“
24. The
second respondent avers that she is unable to answer to the
allegations contained within the founding affidavit, due to
the loan
agreement and first mortgage bond not being attached.
25. I apologise for not attaching the required documentation and
attach the loan agreement as annexure “I” and the first
mortgage bond as annexure “J”.
26. It is to be noted that the allegations contained within the
founding affidavit reflect the terms and conditions contained within
the loan agreement.
27. Furthermore, I deny that the respondents could not answer the
allegations contained in the founding affidavit. The respondents
all
have true copies of the loan agreement and relevant mortgage bonds in
their possession.
28. The respondents accordingly have knowledge of the content of
the loan agreement and mortgage bonds.
29. The respondents could therefore not have been prejudiced by
the failure of the applicant to attach this documentation.
30. Full legal argument will
be addressed on this point at the hearing of this application.”
[7] These allegations by the
applicant miss important aspects of litigation. They miss the
requirement that an applicant is obliged
to make its case in the
founding affidavit and not in the replying affidavit. It misses the
fact that the respondent is entitled
to have a case properly pleaded
in order to answer it, which includes having sight of the documents
relied on by the applicant
and it is no answer to allege that the
respondents have copies of the documents in their possession.
[8] In addition, and despite to
the deponent to the replying affidavit stating that the loan
agreement and first mortgage bond being
attached to it, that
statement is untrue. The document attached is a loan agreement
between the applicant and two different parties
to the three
respondents in this matter. It is a document of some 24 pages. If the
loan agreement between the applicant and the
respondents is in any
way similar to the one attached to the replying affidavit, it is a
substantial document that is missing.
Indeed, it is a vital document
to support the applicant’s cause of action. The mortgage bond
alleged to be attached to the
replying affidavit as the first
mortgage bond is the selfsame second mortgage bond which is attached
to the founding affidavit.
The applicant has consequently failed to
make a proper case in the founding affidavit and failed to disclose a
cause of action
based on the alleged loan. The applicant’s
failure is compounded by its reliance on a wholly irrelevant document
as well
as the selfsame second mortgage bond in reply whilst it
admitted its case is based on the loan agreement and that there also
exists
a first mortgage bond.
[9] It was said in
Klerck
N.O. v van Zyl and Maritz
1989 (4) SA 263
at 275:
“
A
convenient starting point for the consideration of this issue is an
analysis of the nature of the real right which is constituted
by a
mortgage bond. A mortgage bond may be defined as an instrument
hypothecating landed property to secure a debt, existing or
future.
Lief
NO v Dettmann
1964
(2) SA 252 (A)
at 259B;
Thienhaus
NO v Metje &
Ziegler
Ltd and Another
1965
(3) SA 25 (A)
at 31F. At 259E of the former case the following appears:
'The only real rights in
favour of the mortgagee created by the registration of a bond are
rights in respect of the mortgaged property,
eg the right to restrain
its alienation and a right to claim a preference in respect of its
proceeds on insolvency of the mortgagor.
The real rights, however,
can only exist in respect of a debt, existing or future, and it
follows that they cannot be divorced
from the debt secured by them.'
At
264 and 265 it was said that a mortgage bond is an
acknowledgment
of debt and at the same time an instrument hypothecating landed
property and that the object of a mortgage bond is
not merely
hypothecation, but the settlement of the terms of the obligation it
secures. See, too,
Thienhaus
'
case
supra
at 38. It follows therefore that the real right created by a mortgage
bond is accessory in nature and is dependent for its existence
on the
existence of the obligation which it secures.
If
there is no valid principal obligation for the mortgage bond to
secure, there can be no valid mortgage bond and no real right
of
security in the hands of the mortgagee. See, too,
Kilburn
v Estate Kilburn
1931 AD 501
where the following was said at 505 - 6:
'... (Y)ou cannot have a
settlement of a security apart from the thing which is secured, be it
a money debt or the performance of
an act. The settlement of a
security divorced from an obligation which it secures seems to me
meaningless....
It
is therefore clear that by our law there must be a legal or natural
obligation to which the hypothecation is accessory. If there
is no
obligation whatever there can be no hypothecation giving rise to a
substantive
claim. Now the Court below has found as a fact that there was no
serious promise of £500 and no intention to pay
the wife that
sum, but that the whole intention of the spouses was that the wife
should claim £500 if and when the husband
became insolvent.
There was therefore no obligation secured by this bond, and therefore
in a
concursus
creditorum
the appellant cannot claim on the bond.'
Reference
may further be had to
Thienhaus'
case
supra
at 32 where,
a
fter
stating, with reference to
Kilburn's
case
supra
,
that it is clear that a mortgage bond as a deed of hypothecation must
relate to some obligation, Williamson JA added:
'If
on a
concursus
creditorum
a mortgagee, or a pledgee fails to establish an enforceable claim
which it was intended should be secured by the hypothecation,
the
bond, or the pledge, as the case may be, falls away.'
At
43 and 44, in the minority judgment of
Wessels
JA
,
the following passages appear:
'When the mortgagor causes a
mortgage bond to be registered in favour of the mortgagee he does so
to give effect to an antecedent
agreement between them - which may be
either in writing or verbal - in terms of which the former bound
himself to grant to the
latter, as security for a debt, a real right
in the immovable property concerned....
It is of the
essence of the real right which is constituted by the registration of
a mortgage bond that it should be related to
a debt, and the
substantial reason why the antecedent agreement must of necessity
refer to the debt which it is intended to secure
is so that the
nature and extent (ie the content) of the real right, which it is
intended to constitute by the registration of
a mortgage bond, may be
exactly determined. It follows from this that the obligation resting
upon the debtor is to effect the constitution
of a real right in the
immovable property concerned in favour of the creditor in accordance
with the definition thereof in the
agreement in question.'
Although
these last two passages appear in the minority judgment and in a
context different from that which obtains
in
casu
,
reference to the principles set out therein is apposite in this
judgment. Reference may finally be had to
Wille
Mortgage
and Pledge
3rd
ed
at 4 and
Lubbe
on 'Mortgage'
in
Joubert
(ed)
Law
of South Africa
vol 17 para 398, and the authorities there cited.”
[10
] Applying
these principles to the matter under consideration I am of the view
that the terms of the second mortgage bond make it
clear that it is
not the instrument creating the debt of the respondents. It is a
mortgage bond to cover the indebtedness of the
respondents arising
from money lent or advanced pursuant to an agreement of loan, which
is not set out in the mortgage bond. The
second mortgage bond is
consequently a portion of the security which the applicant holds for
some indebtedness of the respondents
extraneous the mortgage bond.
[11] Since
v
Mortinson
the
following rules of practice have been applied in this Court:
“
[33.1] In
all applications for default judgment where the creditor seeks an
order declaring specially hypothecated immovable
property executable,
the creditor shall aver in an affidavit filed simultaneously with the
application for default judgment:
[33.1.1] The amount of the
arrears outstanding as at the date of the application for default
judgment.
[33.1.2] Whether the
immovable property which it is sought to have declared executable was
acquired by means of or with the assistance
of a State subsidy.
[33.1.3] Whether, to the
knowledge of the creditor, the immovable property is occupied or not.
[33.1.4] Whether the
immovable property is utilised for residential purposes or commercial
purposes.
[33.1.5] Whether
the debt which is sought to be enforced was incurred in order to
acquire the immovable property sought to be
declared
executable or not.”
See
Mortinson
at 473 para 33.1.
In
Saunderson
the
following order was made in paragraph 27, paragraph 2 of the order:
”
The
summons initiating action in which a plaintiff claims relief that
embraces an order declaring immovable property executable
shall, from
the
date of this judgment, inform the defendant as follows: ''The
defendant's attention is drawn to s 26(1) of the Constitution
of the
Republic of South Africa which accords to everyone the right to have
access to adequate housing. Should the defendant claim
that the order
for execution will infringe that right it is incumbent on the
defendant to place information supporting that claim
before the
Court.''
The requirements set out in
Mortison
and
Saunderson
have
been approved in
Gundwana
v Steko Development CC & Others
[2011] JOL 26971
(CC). The reasons for requiring adherence to the
Mortinson
and
Saunderson
directives are equally applicable to matters which are brought by way
of application proceedings.
[12] Save for the directive
referred to in
Saunderson,
there was no attempt by the applicant to comply with the rules of
practice. Having regard to the applicant’s failure to plead
a
proper case in the founding affidavit and its failure to attach and
rely on the documents which it should have attached to the
founding
affidavit to support a cause of action and its failure to comply with
the rules of Court and the rules of practice, the
application falls
to be dismissed with costs.
___________________
The Honourable Judge W L Wepener
Judge of the High Court
Counsel for
Applicant:
...................
S
Aucamp
Attorneys for
Applicant:
.................
Hammond
Pole & Majola
Attorney for
Respondents:
............
C
G Grove
Attorneys for
Respondents
….....
Smit
& Grove Attorneys
Date of
hearing:
............................
15
September 2011
Date of
Judgment:
.........................
21
September 2011
1
Standard Bank of South Africa
Ltd v Saunderson & Others
2006 (2) 264 (SCA)
2
Nedbank Limited v Mortinson
[2005] ZAGPHC 85
;
2005 (6) SA 462