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[2011] ZAGPJHC 244
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Standard Bank of South Africa Limited v Gordon and Others (2011/6477) [2011] ZAGPJHC 244 (21 September 2011)
REPUBLIC OF SOUTH
AFRICA
SOUTH GAUTENG
HIGH COURT, JOHANNESBURG
CASE
NO: 2011/6477
DATE:
21 SEPTEMBER 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;
9.1 Duly advanced
the said monies to the Respondents during 18 May 2007;
9.2 …”
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, after 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