Absa Bank Limited v Lekuku (32700/2013) [2014] ZAGPJHC 274 (14 October 2014)

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[2014] ZAGPJHC 274
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Absa Bank Limited v Lekuku (32700/2013) [2014] ZAGPJHC 274 (14 October 2014)

REPUBLIC
OF SOUTH AFRICA
IN
THE HIGH COURT OF SOUTH AFRICA
GAUTENG
LOCAL DIVISION, JOHANNESBURG
CASE
NO: 32700/2013
DATE:
14 OCTOBER 2014
In
the matter between:
ABSA
BANK LIMITED
.............................................
Applicant
And
LEKUKU,
DANIEL
................................................
Respondent
JUDGMENT
MAKGOBA
J and VICTOR J
:
[1]
Judge President Mlambo constituted this Full Bench to deal with the
concerns by Banks and in particular Absa Bank Ltd (the
Bank) about
the variable approaches adopted by Judges in this Division when
adjudicating unopposed applications to declare a primary
residence
specially executable. The Bank has also challenged the legality of
the practice directives in particular within the context
of
foreclosures.  Banks other than the applicant did not wish to
join in these proceedings but wished to await the outcome
of this
application. Adv S Wilson of the Socio-Economic Rights Institute of
South Africa (SERI) has assisted the court in these
proceedings as
amicus curiae.
Issues
for determination by the Full Bench as raised by the Bank
[2]
There is a challenge to the legality of three provisions of chapter
10.17 of the Practice Manual of the Gauteng Local Division
of the
High Court. In particular the challenge is to the requirement that
service of the summons in seeking foreclosure is to be
personal where
possible thus elevating the foreclosure process to a status matter.
Secondly the Practice Directive provides
that in the absence of
personal service the Bank has to return to court to obtain a further
direction on service such as service
on a Saturday or service at the
debtor’s place of employment thus escalating costs.
[3]
Thirdly, the Bank submits that in the face of a
domicilium citandi
clause in the agreement, the service requirement in the Practice
Directive conflicts with the substantive law and the principle
of
stare decisis
. Historically the Supreme Court of Appeal has
accepted that service on a
domicilium citandi
without service
on a person is sufficient service. In the light of this approach the
Banks are of the view that the principle of
stare decisis
is
being disregarded under the guise of the discretion afforded in Rule
4(10) of the Uniform Rules of Court and Chapter 10.17 of
the Practice
Manual. The argument is that the High Court is creating substantive
law and this can only be done by the Legislature,
the Supreme Court
of Appeal or the Constitutional Court.
[4]
An ancillary issue raised by the Bank is that the service as set out
in chapter 10.17 of the Practice Directive offended the
principle of
pacta sunt servanda
. Where the parties had agreed to the
method of service in respect of the
domicilium citandi,
the
Bank had difficulty with the requirement of personal service or
service on a Saturday or at the debtor’s place of employment
as
required by Meyer J in
First Rand Bank Ltd v Powell
[2012]
ZAGPJHC 20 (6 March 2012).
[5]
A further difficulty raised by the Bank was the perception that in
primary residential foreclosure matters,  the courts
have become
courts of equity in that they have interfered with an individual’s
right to contract under the guise of applying
principles of fairness
which were indefinable and applied differently by different judges.
The concern by the Bank is that the
High Court in these foreclosure
matters, on the basis of principles of equity, is utilising the
Practice Directive to change the
substantive law to the extent that
it amounts to an interference with the very Rule of Law itself. The
Bank is concerned that importing
this concept of equity introduces a
tension between Equity versus the Law versus Constitutionalism.
Stare
Decisis
[6]
The Bank’s contention that the practice directive in the
context of foreclosure is a breach of the doctrine of
stare
decisis
and an interference with the
Rule of Law must be assessed in the light of evolving constitutional
principles. In
Camps Bay Ratepayers’
and Residents’ Association v Harrison
2011
(4) SA 42
(CC) para 28, Brand AJ stated:
‘
certainty,
predictability, reliability, equality, uniformity, convenience: these
are the principal advantages to be gained by a
legal system from the
principle of stare decisis. It is a manifestation of the rule of law
itself, which in turn is a founding
value of our Constitution. To
deviate from this rule is to invite legal chaos.’
[7]
The Practice Directive on foreclosures in this division was developed
to give substance to its judicial oversight role in foreclosure

matters as intended by the Constitutional Court.  It follows
inevitably therefore that the development of the Practice Directive

should be congruent with the evolving constitutional jurisprudence.
The Bank has been unable to submit any persuasive argument
to
demonstrate that this particular Practice Directive in foreclosure
matters is not in accordance with the principles referred
to in
Camps
Bay
supra. Therefore the Practice Directive on foreclosure
matters is not in breach of the
stare decisis
doctrine.
[8]
The higher courts have always recognised the principle of discretion
in matters of service. In
Arendsnes Sweefspoor CC v Botha
2013
(5) SA 399
(SCA), Shongwe JA in dealing with service on a close
corporation reiterated that the court has a discretion to determine,
on the
facts, whether service was good. He stated at para 13:
‘
it
is trite that each case must be dealt with on its own particular
facts and merits. There is no differentiation or exception.
The
court, if service is contested, must determine whether service was
good and legally recognised or substantially compliant with
the rules
of service.’
It
follows therefore that when the High Court scrutinises and considers
the question of service in foreclosure matters by introducing
the
guidance of a Practice Directive in order to give meaning to its
judicial oversight role, the principle of
stare decisis
is not
breached. It is clear that the High Court has to deal with each case
on its facts and does have a discretion guided by constitutional

principles.
Background
[9]
This Local Division of the High Court is situated in down town
Johannesburg and is in the heart of one of the biggest banking
and
commercial hubs in South Africa. Not unsurprisingly it has had to
adjudicate the substantial rise in foreclosure applications.
These
applications have at times exceeded hundreds per week.
[10]
In the main the judgements are taken by default as debtors fail to
defend the claims in the summonses or negotiate forbearance
with the
banks.  In this era of high unemployment, consumer
over-indebtedness and acute housing shortages together with the

incremental constitutional jurisprudence in relation to the housing
rights contained in s26 of the Constitution, different approaches
by
the Bench on the question of executability of a primary residence
emerged. There was a discernible reluctance by some members
of the
Bench to order the executability of a primary residence where the
arrears were low or just a few months in arrears and where
there was
no overt indication of debtor delinquency. This led to a closer
scrutiny of the pleadings, the paper work, a focus on
hearsay
averments in the pleadings and the inadequate nature of the
foreclosure information resulting in postponements and refusal
of the
foreclosure applications.
[11]
It was inevitable that differing approaches would result when
implementing the evolving constitutional jurisprudence. Closer

scrutiny of procedures would follow and differing views on issues
such as the proportionality between low arrears and the final
effect
of foreclosure within the context of the relevant socio-economic
factors and rights emerged.
[12]
The relevant paragraphs of Chapter 10.17 of the
Practice Directive read:
‘
10.17
Foreclosure (And Execution when property is, or appears to be the
defendant’s primary home)
1
Without derogating from the requirements regarding applications
contained in the Rules Regulating the Conduct of the Proceedings
of
the Several Provisional and Local Divisions of the High Court of
South Africa (‘Rule’ or ‘the Rules’)
or
Chapter 9 of the Practice Manual of the South Gauteng High Court
(‘Practice Manual’), in every matter where a judgment
is
sought for execution against immovable property, which might be the
defendant’s primary residence or home, an affidavit
is required
in which the matters set out below on this para 1, are stated. The
affidavit must contain the following:
……
1.6
That there is compliance with Folscher
Note:
When amounts are low, the court may, in its discretion, postpone the
matter with an order that it may not be set down before
the expiry of
x months and that notice of set down should again be served.
1.7.1
That there was personal service of the process upon the consumer.
1.7.2
If personal service is not possible, that there was such service as
was authorised by the Court. (Powell para 7.9). (See para
5 below.)
……
5
Order if para 1.7.1 is not complied with:
5.1
The application herein may be served at the respondent’s place
of employment, and only if a return of non-service is rendered
in
respect of such service, upon the respondent’s residential
address on a Saturday upon a person not less than 16 years
of age.’
[13]
The practical effect of paragraph 10.17.1.7.1 read with paragraph
10.17.1.5 is that if the process cannot be served personally
on the
consumer, the applicant has to approach the court for an order that
the process may be served on the consumer’s place
of work, or
upon their place of residence on a Saturday. This means a further
court application with further affidavits and the
consequent costs.
This is a cause of concern to both the Bank and the
amicus curiae
.
The
Evolving Constitutional Jurisprudence on Residential Foreclosures
[14]
The development of the common law that resulted in the justiciability
of the traditional relationship between debtor and creditor
based on
socio- economic rights had its genesis in
Jaftha v Schoeman and
Others, Van Rooyen v Stoltz and Others
[2004] ZACC 25
;
2005 (2) SA 140
(CC) at
para 40 where Mogoro J stated:
‘
It
is difficult to see how the collection of trifling debts in this case
can be sufficiently compelling to allow existing access
to adequate
housing to be totally eradicated, possibly permanently, especially
where other methods exist to enable recovery of
the debt. This is not
to say that every sale in execution to satisfy a trifling debt will
be unreasonable and unjustifiable. There
are a number of difficulties
with such a conclusion. In the first place, it is not easy to adopt a
uniform definition of the concept
of a 'trifling debt'. What might
seem trifling to an affluent observer might not be trifling to a poor
creditor reliant on his
or her ability to recover debts. Indeed, not
all creditors are affluent and to many who use the execution process,
it constitutes
the only mechanism to recover outstanding debts.’
[15]
In
Standard Bank v Saunderson
2006 (2) SA 264
(SCA) it was
held that it is
‘desirable to lay down a
rule of practice requiring a summons in which an order for execution
against immovable property is
sought to inform the defendant that his
or her right of access to adequate housing might be implicated by
such an order.
’ In
Gundwana v Steko Development
2011 (3) SA 608
(CC), it was held that judicial oversight in the
executability of a residence was required thus changing the
requirement that the
Registrar issue the writ.
[16]
In
First Rand Bank Limited v Folscher
2011 (4) SA 314
(GNP),
in dealing with the amendment to Rule 46(1)(a)(ii) requiring judicial
oversight the Full Bench suggested a comprehensive
list of issues be
considered by the court when deciding whether a writ should be issued
or not. These include:
‘
whether
the mortgaged property is the debtor's primary residence; the
circumstances under which the debt was incurred; the arrears

outstanding under the bond when the latter was called up; the arrears
on the date default judgment is sought;the total amount owing
in
respect of which execution is sought; the debtor's payment history;
the relative financial strengths of the creditor and the

debtor;whether any possibilities exist, that the debtor's liabilities
to the creditor may be liquidated within a reasonable period,
without
having to execute against the debtor's residence; the proportionality
of prejudice the creditor might suffer if  execution
were to be
refused, compared to the prejudice the debtor would suffer if
execution went ahead and he lost his home; whether any
notice in
terms of
s 129
of the
National Credit Act 34 of 2005
was sent to the
debtor prior to the institution of action; the debtor's reaction to
such notice, if any; the period of time that
elapsed between delivery
of such notice and the institution of action;  whether the
property sought to be declared executable
was acquired by means of,
or with the aid of, a State subsidy; whether the property is occupied
or not; whether the property is
in fact occupied by the debtor;
whether the immovable property was acquired with moneys advanced by
the creditor or not; whether
the debtor will lose access to housing
as a result of execution being levied against his home; whether there
is any indication
that the creditor has instituted action with an
ulterior motive or not; the position of the debtor's dependants and
other occupants
of the house, although in each case these facts will
have to be established as being legally relevant of the execution
process
against property especially hypothecated, which is the
'primary residence' of the judgment debtor and whether the protection
of
s 26(1) of the Constitution is extended to the debtor who may lose
what is usually his only home.’
Foreclosure
Practice Directives and the Substantive law of Service
[17]
In order to determine whether the effect of the form of service as
contained in the new Practice Directive impinges on the
substantive
law, it is necessary to consider whether a High Court in introducing
the Practice Directive is embarking upon a process
which seeks to
expand the substantive law or whether it is dealing with procedure
only, or whether it has become necessary to develop
the common law in
relation to the service of process at the address in the
domicilium
clause.
[18]
The distinction between substantive law and procedural law has been
analysed in detail in a number of cases. In
Universal City Studios
Inc and Others v Network Video (Pty) Ltd
[1986] ZASCA 3
;
1986 (2) SA 734
(A)
Corbett JA in dealing with a High Court’s power to regulate its
own process stated:
‘
There
is no doubt that the Supreme Court possesses an inherent reservoir of
power to regulate its procedures in the interests of
the proper
administration of justice (see Stuart v Ismail
1942 AD 327
;
Republikeinse Publikasies (Edms) Bpk v Afrikaanse Pers Publikasies
(Edms) Bpk 1972 (1) SA 773 (A) at 783A - G; also Ex parte Millsite

Investment Co (Pty) Ltd
1965 (2) SA 582
(T)   H  at
585 - 6; Moulded Components and Rotomoulding South Africa (Pty) Ltd v
Coucourakis and Another
1979 (2) SA 457
(W) at 461F - 462H). It is
probably true that, as remarked in the Cerebos Food case (at 173E),
the Court does not have an inherent
power to create substantive law,
but the dividing line between substantive and adjectival law is not
always an easy one to draw
(cf Minister of the Interior and Another v
Harris and Others
1952 (4) SA 769
(A) at 781C - H; Botes v Van
Deventer
1966 (3) SA 182
(A) at 198H; Yew Bon Tew v Kenderaan Bas
Mara
[1982] 3 All ER 833
(PC) at 836B; Salmond Jurisprudence 11th ed
at 503 - 4; Paton Jurisprudence 4th ed para 127). Salmond (op cit at
504) states that:
"Substantive law is concerned with the ends
which the administration of justice seeks; procedural law deals with
the means
and instruments by which those ends are to be attained.”
’
[19]
In
Mukaddam v Pioneer Foods (Pty) Ltd and Others
2013 (5) SA
89
(CC) Jafta J at para 42 in dealing with s173 of the Constitution
stated:
‘
Section
173 makes plain that each of the superior courts has an inherent
power to protect and regulate its own process and to develop
the
common law on matters of procedure, consistently with the interests
of justice. The language of the section suggests that each
court is
responsible and controls the process through which cases are
presented to it for adjudication. The reason for this is
that a court
before which a case is brought is better placed to regulate and
manage the procedure to be followed in each case so
as to achieve a
just outcome. For a proper adjudication to take place, it is not
unusual for the facts of a particular case to
require a procedure
different from the one normally followed. When this happens it is the
court in which the case is instituted
that decides whether a specific
procedure should be permitted.’
[20]
Cadac (Pty) Ltd v Weber-Stephen Products Co and Others
2011
(3) SA 570
(SCA) Harms DP stated:
‘
in
the light of a court's inherent jurisdiction to regulate its own
process in the interests of  justice — a power derived

from common law and now entrenched in the Constitution (s 173)—
I can see no justification for refusing to extend the practice
to
other cases’.
[21]
In
Oosthuizen v Road Accident Fund
2011 (6) SA 31
(SCA) in
para 13 Bosielo JA stated:
‘
Our
courts derive their power from the Constitution and the statutes that
regulate them. Historically the Supreme Court (now the
High Court),
in addition to the powers it enjoyed in terms of statute, has always
had additional powers to regulate its own process
in the interests of
justice. This was described as an exercise of its inherent
jurisdiction. That power is now enshrined in s173
of the
Constitution. Citing Jacob Current Legal Problems, Freedman CJM
adopted the following definition of 'inherent jurisdiction':
“.
. . the reserve or fund of powers, a residual source of powers, which
the court may draw upon as necessary whenever it
is just or equitable
to do so, and in particular to ensure the observance of the due
process of the law, to prevent improper vexation
or oppression, to do
justice between the parties and to secure a fair trial between them.”
[14]
Jerold Taitz succinctly describes the inherent jurisdiction of the
High Court as follows in his book The Inherent Jurisdiction
of the
Supreme Court (1985) at 8 – 9: “This latter jurisdiction
should be seen as those (unwritten) powers, ancillary
to its
common-law and statutory powers, without which the court would be
unable to act in accordance with justice and good reason.
The
inherent powers of the court are quite separate and distinct from its
common-law and its statutory powers, eg in the exercise
of its
inherent jurisdiction the Court may regulate its own procedure
independently of the Rules of Court.” ’
[22]
In the light of the above cases the High Court in issuing the
Practice Directive is clearly entitled to regulate its own intimate

process and does so not only based on the existing common law but is
also entitled to do so by virtue of s173 of the Constitution.
The
Practice Directive is aimed at ensuring the proper administration of
justice. The impact of the evolving constitutional jurisprudence

makes it imperative that foreclosure orders are not issued based on a
positivistic jurisprudential model without regard to a critical

realist enquiry into the effect and fairness of the foreclosure
order.
[23]
Accordingly, the Bank’s reliance on
Greenberg
v Khumalo and Another; Greenberg v Du Preez and Another
2012 JOL 29170
(GSJ) as authority or justification
for the exclusion of practice directives since it may deny a litigant
a procedural right is
misplaced in the light of the authorities on
judicial oversight and is certainly not authority in matters of
foreclosure. This
court based on constitutional principles and the
inherent common law right principles referred to above clearly
entitles the Judge
President and the Deputy Judge President to issue
Practice Directives where appropriate.
[24]
Distinguishing a primary residence foreclosure from ordinary motion
proceedings is not novel. There are several jurisdictions

particularly in the United States of America where a foreclosure
conference or foreclosure mediation is held before filing for
default
judgment. The intervention by the courts prior to foreclosure is
really a procedural intervention into the sphere of socio-economic

rights. It is also a procedural intervention into the contractual
debtor and creditor relationship. In our view the procedural

intervention does not change the contractual debtor creditor
relationship; it merely guides its own procedure in relation to the
domicilium
clause when a debtor or creditor wishes to exercise
the right.
[25]
The introduction of a procedural step in the service of process in
our constitutional milieu serves as a safeguard that primary

residences are not lost through inadequate service. It does not
undermine the
domicilium
clause as that address remains the
central point where the creditor and the Deputy Sheriff must find the
debtor. The question to
be answered is whether the introduction of a
procedural requirement running parallel with the
domicilium
clause is permissible. This issue should be analysed using the
paradigm referred to in
Brisley v Drotsky
2002 (4) SA 1
(SCA).
The starting point is not whether the court has a discretion to
refuse to enforce the
domicilium
clause but whether the
introduction of such a procedural step concerning the
domicilium
clause offends the commercial transaction in an unduly trammelled
manner. No case has been made out that defining the service of

process in foreclosure matters by way of Practice Directive restricts
commercialism or results in a court assisting a party to
go back on
the express provisions of the contract.
[26]
Accordingly to the extent that it is necessary this court is required
to develop the common law around the implementation of
the
domicilium
citandi
clause. Such a development must commence at the High
Court level.
[27]
In
K v Minister of Safety and Security
[2005] ZACC 8
;
2005 (6) SA 419
(CC)
O'Regan J in para 15 and 16 stated:
‘
Our
Constitution requires a Court, when developing the common law, to
promote the spirit, purport and objects of the Constitution.

The pervasive normative effect of our Constitution was acknowledged
by this Court in
Carmichele v Minister
of Safety and Security and Another
(Centre
for Applied Legal Studies Intervening) where it held that: “Our
Constitution is not merely a formal document regulating
public power.
It also embodies, like the German Constitution, an objective,
normative value system.. ..The influence of the fundamental

constitutional values on the common law is mandated by  s 39(2)
of the Constitution. It is within the matrix of this objective

normative value system that the common law must be developed.”
In addition to s 39(2) of the Constitution, s 8 of the Bill
of Rights
makes it plain that the judiciary is bound by the provisions of the
Bill of Rights in the performance of its functions.
The
cumulative effect of these constitutional provisions is to create an
expressly normative legal system founded on the norms
articulated in
our Constitution.
[16]..
In
S v Thebus and Another
, Moseneke J noted that there were at
least two instances in which the need to develop the common law under
s 39(2) of the Constitution
could arise. “The first would
be when a rule of the common law is inconsistent with a
constitutional provision. Repugnancy
of this kind would compel an
adaptation of the common law to resolve the inconsistency. The second
possibility arises even when
a rule of the common law is not
inconsistent with a specific constitutional provision but may fall
short of its spirit, purport
and objects. Then, the common law must
be adapted so that it grows in harmony with the ''objective normative
value system'' found
in the Constitution.” ’
[28]
In promoting the spirit, purport and object of the Bill of Rights its
application in the common law of contract is necessary.
A procedural
requirement extending the application of the
domicilium
clause
must of necessity be introduced where appropriate. Cameron JA as he
then was in
Brisley vs Drotsky
(supra) stated:
'The
Constitution requires that its values be employed to achieve
a  careful balance between the unacceptable excesses
of
contractual freedom, and securing a framework within which the
ability to contract enhances rather than diminishes our self-respect

and dignity.’
[29]
The balance between contractual freedom and the framework of the
debtor creditor relationship and the foreclosure process is
not
imperilled by the development of the common law in respect of the
common law principles of a
domicilium citandi
clause.
This extension of the common law in relation to the proper
application of the
domicilium
clause in a foreclosure matter
is a highly desirable and a necessary infusion in the common law. The
introduction of the Practice
Directive in relation to foreclosure
matters involving a primary residence the common law is to be
developed. There is a constitutional
imperative that the creditor and
debtor relationship within this context of foreclosure be subjected
to greater scrutiny when service
of process is at issue.  Courts
are faced with hundreds of foreclosure applications per month where
people lose their homes.
It is no longer appropriate that this
happens without a further requirement of heightened focus on whether
the debtor received
the summons.
[30]
The
amicus curiae
submitted that contractual agreements which cater for future legal
proceedings do not oust a court’s jurisdiction to determine
how
those proceedings are to be conducted. In choosing a
domicilium
the debtor is faced with
fait accompli
.
It does not mean that when a debtor selects a
domicilium
he or she knowingly waives the right to personal service where
possible.  Accordingly, additional service requirements around

the
domicilium
clause in foreclosure matters do not undermine the
pacta
sunt servanda
principle. The additional
service requirement does not violate a public policy principle.
[31]The
effect of additional service does not mean that either party is going
back on their word. In
African Dawn Property Finance 2 (Pty) Ltd v
Dreams Travel and Tours CC and others
2011 (3) SA 511
(SCA)
Ponnan JA at para 15 and 16 stated:
‘
Contracts
valid in form are
prima facie
enforceable in South African law and effect will be given to them
unless grounds for their avoidance are proved (per Didcott J
in
Roffey v Catterall, Edwards & Goudré (Pty) Ltd).
But, as Cameron JA correctly observed, our Constitution “requires

us to employ its values to achieve a balance that strikes down the
unacceptable excesses of freedom of contract, while seeking
to permit
individuals the dignity and autonomy of regulating their own lives”.
Indeed, on appeal to it (Barkhuizen
v Napier) the majority of the
Constitutional Court (per Ngcobo J) made that much clear in these
terms (para 57): “On the
one hand public policy, as informed by
the Constitution, requires in general that parties should comply with
contractual obligations
that have been freely and voluntarily
undertaken. This consideration is expressed in the maxim
pacta
sunt servanda
, which, as the Supreme
Court of Appeal has repeatedly noted, gives effect to the central
constitutional values of freedom and dignity.
Self-autonomy, or the
ability to regulate one's own affairs, even to one's own detriment,
is the very essence of freedom and a
vital part of dignity. The
extent to which the contract was freely and voluntarily concluded is
clearly a vital factor as it will
determine the weight that should be
afforded to the values of freedom and dignity.”
[16]
Our courts have, however, recognised that pactum sunt servanda is not
a holy cow (Bredenkamp and Others v Standard Bank).    As

Ngcobo J observed in Barkhuizen (para 87): “
Pacta sunt
servanda
is a profoundly moral principle, on which the coherence
of any society relies. It is also a universally recognised legal
principle.
But the general rule that agreements must be honoured
cannot apply to immoral agreements which violate public policy. As
indicated
above, courts have recognised this and our Constitution
re-enforces it.” ’
[32]
It was submitted by the
amicus
curiae
that the existence of a
domicilium
clause in a contract is
prima facie
indicative that
domicilium
service would ordinarily suffice, but it does not bind a court’s
discretion to require more, in particular such procedural

intervention by the courts.  In cases where a person faces the
loss of a home this pre-eminently entitles a court where there
may be
an infringement of his or her rights under s26 (1) of the
Constitution, to decide, as in the Practice Directive that personal

service should be attempted if possible.  Although the
Constitutional Court has not dealt with the constitutionality of a
domicilium
clause in bonded property, sufficient jurisprudence has evolved to
justify a High Court  engaging strategically with the Banks
on
issues of foreclosure, whether it be the question of service or a
proportionality assessment of the amount owing to justify
the
foreclosure.
[33]
The
amicus curiae
submits that this discretion exists
separately and independently from the
domicilium
clause of a
contract. The existence of such a clause may be taken into account,
but it is not determinative. Reliance is placed
on
First Rand Bank
Limited v Gazu
2011 (1) SA 45
KZP, where Lopes J commented that:
‘
It
is notorious that, in dealing with the banks, mortgage bonds and
other formal documents are presented to their clients on a “take

it or leave it” basis, and the ability of the other contracting
party to balance out the unequal bargaining power on the
mortgage
bond is extremely limited, if not entirely excluded.’
Low Arrears,
Proportionality and Foreclosure
[34]
An important difficulty raised by the Bank was the issue of low
arrears and the varying approaches by different judges as to
what the
benchmark is for arrears being too low to justify foreclosure. The
difficulty with the differing approaches by the Bench
results in the
banks not knowing in advance whether foreclosure will be granted. A
court will always have a discretion based on
the facts before it as
to what amount is proportional to the final effect and consequence of
foreclosure. In carrying out this
assessment, the court in each and
every case carries out a unique enquiry in exercising its judicial
oversight. To lay down a standard
approach will be contrary to the
constitutional imperative of judicial oversight in foreclosure
matters.
[35]
In
ABSA Bank v Ntsane
[2006] ZAGPHC 115
;
2007 (3) SA 554
(T) at para 38,
Bertlesman J declined to authorise execution against a debtor when
the arrears at the time the matter came before
him were a mere
R18.46. Similarly in
Firstrand Bank Ltd v Maleka and three similar
cases
2010 (1) SA 143
GSJ, CJ Claassen also refused foreclosure
where the arrears were low.
[36]
It would be inappropriate to define when arrears are low for the
purposes of Practice Directive 10.17.1.6 as this would unduly

restrict a discretion which a judge must exercise in the particular
circumstances of each case. This Full Bench cannot give guidance
in
this regard as the very purpose of the judicial oversight requires an
enquiry and a strategic engagement with the parties. The
amicus
curiae
submitted that the overriding question is whether
execution is proportionate, having regard to all the relevant
circumstances.
The
amicus curiae
submitted that there is
no definitive number or easy calculation. If there were, claims for
execution against residential property
would be liquidated claims.
The underlying basis of the
Jaftha
and
Gundwana
decisions is that they are not.
[37] In seeking
foreclosure in respect of low arrears the Banks must examine each
case and advise the court what they have done
to avoid foreclosure of
a primary residence in particular with reference to engagement with
the debtor at a ‘with prejudice’
level to avoid
foreclosure. This needs to be no more than a paragraph or two in the
affidavit seeking foreclosure. To use computer
software jargon, it
should not be a ‘cut and paste’ exercise. This court need
give no further guidance as to what should
be in the affidavit
justifying foreclosure. Ample guidance has been given in
Folscher
supra and the principles emerging from all the case referred to, as
well as Chapter 10 of the Practice Directive. Banks having
considered
all the facts should only bring a foreclosure application if the
execution would not be disproportionate.
Conclusion
[
38
]
In conclusion there will always be a
variance in whether a foreclosure order is granted or not. The nature
of foreclosure applications
and the constitutional imperative of
judicial oversight inevitably leads to these differences.
[39]
In the light of the request from the Bank during oral argument that
if the Practice Directive is to remain in place it be simplified
to
avoid returning to court for direction on service thus necessitating
the amendment of the Practice Directive number 10.17.1.7.
In addition
on the question of the triggering point on low arrears and the number
of months in arrears, this court adds to the
long line of cases that
suggest points for consideration before granting foreclosure. This
court adds the principle of proportionality.
In dealing with
proportionality the affidavit in support of foreclosure must still
deal with the aspects referred to in
Folscher,
Saunderson, Mortinson,
[1]
Dawood
[2]
Jessa
[3]
and
in addition deal with the principle of proportionality. On the
question of proportionality the affidavit accompanying
the
foreclosure application must deal with the contacts with the debtor
and attempts made to avoid foreclosure. This court also
directs that
in matters of low arrears a postponement of the matter for a period
of 6 months be made in order for the mortgagors
to report back on
steps taken by them to avoid foreclosure.
The order that we
make is:
Prayer 1
Chapter
10.17.1.7 of the Practice Directive is amended to read:
10.17.1.7
In matters where leave to execute against property which might be a
person’s home is sought, the affidavit shall
reflect that
every
reasonable effort
has been made to draw that person’s
attention to the proceedings, including, where possible, serving the
foreclosure application
on him or her personally or at the place of
employment or on a Saturday on a person over the age of 16 at the
domicilium citandi.
Prayer
2
10.17.5
This paragraph is deleted in its entirety.
Prayer
3
Chapter
10.17.1.6 of the Practice Directive is amended to read:
10.17.1.6.1
In respect of low arrears and period of arrears sufficient
particularity must be included in the affidavit seeking foreclosure

justifying the proportionality of foreclosure.
10.17.1.6.2
In the event that the applicant has not
demonstrated the requisite proportionality the application may
be postponed for a period
of not less than 6 months and the
application shall be duly amplified reporting back what further steps
the applicant has taken
to avoid foreclosure.
10.17.1.6.3
The order and the new notice of set down
shall be served on the debtor.
Prayer 4
There
shall be no order for costs
VICTOR
J
Vally
J
[40]
I have read the judgment of my colleagues. I support most of its
conclusions but respectfully disagree with some. I write separately

in order to explain my reasoning.
[41]
For a considerable time this Court has been inundated on a weekly
basis with hundreds of applications for default judgments
involving
the foreclosure of a property which is the primary residence of the
debtor and the debtor’s family. The applicant
in all cases is
a bank which had advanced a loan to the debtor. The advancing of the
loan is crucial for the debtor/homeowner,
for without it she would be
unable to purchase the property. In most cases the loan advancement
takes the form of a bilateral contract
between the debtor/homeowner
and the creditor/bank. The contract is in all cases a standard one
utilised by the particular bank
for the loans it advances towards the
purchase of the property. To protect its interests the bank requires
that the property be
hypothecated. Absent this, the loan would, in
all probability, not be granted. The debtor agrees to the condition.
The agreement
caters for a monthly repayment of the loan. Failure by
the debtor to meet a monthly repayment on the due date triggers an
acceleration
clause in terms of which the full outstanding amount
becomes due. Sometimes the bank waits for a few months, during which
period
it tries to take steps to avert approaching the Court for
relief. However, this does not halt the operation of the acceleration

clause. When the bank decides that its only option is to approach the
Court it does so on the basis of the full outstanding amount,
and not
just on the amount of arrears, being due.
[42]
In all these applications the banks tend to be represented by the
same small set of attorneys and counsel. The applications
from each
bank are so frequent that they have become standardised. The same
averments are found in most of the affidavits deposed
to in support
of the applications. In addition, the affidavits from each of the
banks tend to be deposed to by the same employee
of the particular
bank seeking the order. The order that is sought is for money
judgment against the debtor - the full outstanding
amount on the loan
and not just the arrears – as well as an order declaring the
property executable. Once the order is granted
the process spelt out
in Rule 46 of the Uniform Rules of Court (the Rules) is set in
motion.
[43]
As stated above the applications are for default judgment. The banks
deliver their summonses at the
domicilium
chosen by the debtor
in the loan agreement. Often the debtor is not available to receive
it. The sheriff renders a return which
states:
“
This
is to certify that on (date) at (time) at (address) being the chosen
domicilium citandi executandi of the defendant, (name
of defendant),
a copy of the Combined Summons, Particulars of Claim and Annexures A
to Z was served by affixing a copy to the outer
door as the premises
was found locked. After a diligent search and enquiry, no other
manner of service was possible at the given
address. Rule
4(1)(a)(iv)
”
[44]
Often the debtor fails to deliver a Notice of Intention to defend, as
is required by the Rules, if she intends to oppose the
relief claimed
in the summons. The applicant bank then waits the necessary ten days,
whereafter its attorneys seek a date from
the registrar to set down
the application for default judgment. As mentioned earlier, there are
hundreds of such applications each
week. The Judge presiding in the
unopposed motion court has to deal with all of them in that week. At
times the counsel moving
the applications does so in batches. If the
orders are granted the debtors’ primary residence is eventually
sold in execution.
The process continues unabated each week.
[45]
Unsurprisingly, some of the matters re-appear on the Court roll
either as applications for rescission of the judgment granted
by
default, or as applications to stay the sale in execution. As a
result, Judges of this Division became concerned about the manner
in
which these applications found themselves on the roll, about the
control they were having over the process and about whether
justice
was being served by the Court giving judgment in default in these
circumstances, and ordering that the property be sold
in execution.
[46]
Eventually, the Court, per Meyer J, handed down judgment in
First
Rand Bank Ltd v Powell
[4]
,
which dealt with this issue. The Court, in
Powell
,
highlighted the fact that every week this Court deals with hundreds
of applications where a bank seeks an order allowing it to
sell a
person’s home, but where the summons had not reached the
defendant, as service had taken place in a manner similar
to that
referred to in paragraph 43 above. The Court found that such service
was inadequate as the order had a direct impact on
the debtor’s
constitutionally entrenched right to housing. The Court relied on the
findings of the Constitutional Court (CC)
in
Jaftha
v Schoeman and Others; Van Rooyen v Stoltz
and
Others
[5]
and
Gundwana
v Steko Development and Others.
[6]
The Court concluded that the constitutional right of the debtor
called for caution to be exercised when considering whether the

service of the process had been effective, even where there had been
compliance with the provisions of Rule 4.
[7]
It further found that such service was inadequate. In arriving at
this conclusion the Court took particular note of the fact that

service upon a person has the benefit of the sheriff explaining the
nature and contents of the summons to the person upon whom
service is
being effected. The caution exercised is warranted as the
debtor/defendant and her family, which may include the elderly,
the
infirm and the very young, may well be rendered homeless should the
order be granted. The exercise of caution resulted in the
Court
issuing a rule
nisi
calling upon the defendant to furnish reasons as to why her property
should not be declared executable, and ordering that the rule
nisi
be served upon the defendant’s place of employment, and “
only
if a return of non service is rendered in respect of such service,
upon the defendant’s domicilium or residential address
on a
Saturday.
”
[8]
[47]
Powell
failed to stem the huge number of applications for
default judgment where it is sought,
inter alia
, that the
primary residence of the defendant and her family be declared
executable and where the summons was only served by “
affixing
it to the outer door
”. It was not uncommon for the Court to
refuse to grant the order sought as there was no indication that the
summons was brought
to the attention of the defendant. Invariably,
the matter would be postponed
sine die
or removed from the
roll in order to allow the plaintiff/bank to attempt to serve the
summons on the defendant at her place of
employment, and if that
failed, on a person at the chosen
domiciluim.
This would be
done. However, the consequence of this was that valuable judicial
resources were expended in attending to the matter
without any
progress being made towards its finalisation, as the plaintiff was in
no better position after the matter was postponed
sine die
or
removed from the roll than it would have been had it just taken a
further step towards effecting personal service or service
in terms
of
Powell
. As a result, the Deputy Judge-President, after
consulting with the Judges of this Division, decided to add Chapter
10.17 to the
Practice Manual applicable to the Division in the hope
that it would resolve this problem. Chapter 10.17 of the Practice
Manual
was issued in early 2013. It came into effect on 22 April
2013.
[48]
Chapter 10.17 aims to give effect to the numerous decisions that
arose in the Courts, and which in one form or another touched
on the
many issues involved in the execution of the primary residence of the
debtor and her family. These are:
Standard
Bank of South Africa Ltd v Gordon and Others
[9]
;
Standard
Bank of South Africa Ltd v Saunderson and Others
[10]
;
Nedbank
Ltd v Jessa and Another
[11]
;
Standard
Bank v Dawood
[12]
;
Nedbank
Ltd v Mortinson
[13]
;
First
Rand Bank Ltd v Folscher and Another, and similar matters
[14]
and, of course,
Powell
[15]
[49]
The relevant paragraphs of Chapter 10.17 read:
“
10.17
Foreclosure (And Execution when property is, or appears to be the
defendant’s primary home)
1
Without derogating from the requirements regarding applications
contained in the Rules Regulating the Conduct of the Proceedings
of
the Several Provisional and Local Divisions of the High Court of
South Africa (‘Rule’ or ‘the Rules’)
or
Chapter 9 of the Practice Manual of the South Gauteng High Court
(‘Practice Manual’), in every matter where
a judgment is
sought for execution against immovable property, which might be the
defendant’s primary residence or home,
an affidavit is required
in which the matters set out below on this para 1, are stated. The
affidavit must contain the following:
...
1.6
That there is compliance with
Folscher
[16]
Note:
When amounts are low, the court may, in its discretion, postpone the
matter with an order that it may not be set down before
the expiry of
x months and that notice of set down should again be served. (There
is reference to various judgments in this regard)
1.7.1
That there was personal service of the process upon the consumer.
1.7.2
If personal service is not possible, that there was such service as
was authorised by the Court. (
Powell
para 7.9). (See para 5
below.)
...
5
Order if para 1.7.1 is not complied with:
5.1
The application herein may be served at the respondent’s place
of employment, and only if a return of non-service is rendered
in
respect of such service, upon the respondent’s residential
address on a Saturday upon a person not less than 16 years
of age.
”
[50]
The banks have often taken issue with some of the provisions of this
chapter. The provisions that they are aggrieved about
are
sub-paragraph 1.6 and sub-paragraphs 1.7.1 and 1.7.2. Sub-paragraphs
1.7.1 and 1.7.2 deal with the issue regarding the service
of the
summons. Often this issue became the main focus of the Court hearing
the application.
[51]
Notwithstanding the findings in
Powell,
the banks turned their attention to these sub-paragraphs and pointed
out that, as the Practice Manual is merely a guideline for
Courts, it
does not have the force of law. They asked that service by affixing
to the outer or principal door of the chosen
domicilium
of the debtor be accepted, as it complied with the provisions of Rule
4(1)(a)(iv). This is the view adopted by the applicant, Absa
Bank
(Absa), in this matter. Absa claims that sub-paragraphs 1.7.1 and
1.7.2 of Chapter 10.17 is legally incompetent and, therefore,
not
binding upon it. As a result, the failure on its part to comply
therewith should not prejudice its claim to have the primary

residence of the debtor declared executable. This Court was
constituted to consider the claim of Absa.  In this case, Absa

did not serve the summons personally on the debtor, Mr Lekuku. It
served it on a person at his chosen
domicilium.
Mr Lekuku failed to deliver a Notice of Intention to Defend, which
resulted in Absa seeking default judgment against him.
When the
matter was called, the Court, per Sutherland J, referred it to the
Judge-President for him to consider establishing a
full-bench to hear
it. This was so that the issue of the service could be examined in
thorough detail in the hope that the problem
of this Court being
inundated with these applications, where there is uncertainty as to
whether the summons came to the attention
of the debtor, can be
resolved. The Judge-President decided to constitute this Bench to
deal with the application. By the time
the matter was called, Mr
Lekuku had come to learn of the application and had attended Court.
He had not appointed any legal representative(s)
to assist him.
However, as the Court was constituted to consider in particular the
issues regarding the validity of sub-paragraphs
1.6 and 1.7.1 and
1.7.2 of Chapter 10.17, and as Absa believed that these issues should
be resolved since they affect so many matters
it brings to this
Court, it asked that they be decided. Mr Lekuku, being unrepresented,
elected not to participate in the hearing
on these issues. However,
when the matter was postponed by Sutherland J, it came to the
attention of the Socio-Economic Rights
Institute (Seri) which,
thereafter, sought and was granted the right to act as
amicus
curiae
. It is a non-governmental
organisation. Its interest lies in the fact that it is often
approached by persons who seek assistance
because their primary
residences are either on the verge of being sold in execution, or
have already been sold in execution, pursuant
to a Court Order
granted in default. I am indebted to Seri and its counsel for the
well balanced written submissions provided and
for their general
assistance in this matter.
[52]
In support of its claims Absa relied,
inter
alia
,
upon certain
dicta
in a  judgment of Potgieter AJ in the matter of
Greenberg
v Khumalo and Another; Greenberg v Du Preez and Another
[17]
.
In that matter the applicants failed to comply with the terms of
paragraph 5 of Chapter 9.22 of the Practice Manual in that they
had
failed to appear in Court when the matter was first called, resulting
in it being struck from the roll in the Unopposed Court.
The
provisions of paragraph 5 of Chapter 9.22 precluded them from
re-enrolling the matter without filing an affidavit explaining
why
they failed to make an appearance. When the applicant, Mr Greenberg,
failed to comply with paragraph 5 of Chapter 9.22 the
respondent, Mr
Khumalo, asked for the matter to be struck from the roll, and that
Mr. Greenberg be ordered to pay the wasted costs
as well as to file
the necessary affidavit before enrolling the matter again. Potgieter
AJ held that paragraph 5 of Chapter 9.22
was inconsistent with Rule
6(5)(f) which only required a party to apply to the registrar to
allocate a date for hearing. The requirement
that Mr. Greenberg, who
defaulted by failing to appear on a previous occasion, should file an
affidavit explaining the default
before being allowed to re-enrol the
matter is an imposition of an additional burden upon him which,
according to Potgieter AJ,
is not warranted. He questioned the
legality of the Deputy Judge-President’s decision to issue
paragraph 5 of Chapter 9.22
and in this regard said:
“
I
do not see where the power to impose a requirement in addition to and
inconsistent with that contained in Rule 6(5)(f) of the
Rules of
Court derives from, unless it has to do with the prevention of the
abuse of this rule. However, non-appearance when a
matter allocated
for hearing is called does not to my mind without more constitute an
abuse of process which requires or justifies
the inherent power of
the High Court to be harnessed to supplement the requirements of Rule
6(5)(f) on a blanket basis.
On
my analysis the practice directive under discussion is procedurally
incompetent, has no legal force or effect and should not
be applied
by either the registrar or a Court to constitute a bar to (or
additional requirement for) the allocation of a date (enrolment)
for
the hearing of an application.
”
[18]
[53]
He further found that “
neither
a party nor a Court nor any ‘practice’ can simply avoid
the application of the Rules of Court.
”
[19]
As a result he concluded that Mr. Greenberg need not comply with
paragraph 5 of Chapter 9.22, though he did not set aside
paragraph 5
of Chapter 9.22.
[54]
Absa submits that Potgieter AJ’s finding supports its
contention that it need not comply with the provisons of
sub-paragraphs
1.7.1 and 1.7.2.
[55]
It is trite that the provisions of the Practice Manual do not bind
the Court. A litigant and the registrar, however, are bound
to comply
with their terms.
[20]
The
Court has a discretion to condone non-compliance therewith. The Court
is also not bound by the Rules. These are there for the
convenience
of the Court. It is now well established that “
rules
are for the Court, and not the Court for the rules.
”
[21]
Potgieter AJ is, therefore, incorrect to say that “
neither
a party, nor a Court nor any ‘practice’ can simply avoid
the application of the Rules of Court.
”
[56]
The matter before Potgieter AJ dealt with a general disregard for
Court proceedings by litigants who, after setting the matter
down for
hearing in the Unopposed Court, do not bother to make an appearance
when the matter is called. This is not the same as
the matter before
us. However, given that both cases focus on the validity of a
Practice Directive, and on the need for litigants
to adhere to the
relevant Practice Directive, I believe it is necessary to voice my
concern at the fact that Potgieter AJ’s
judgment gives licence
to litigants to ignore paragraph 5 of Chapter 9.22 of the Practice
Manual.
[57]
The conduct of litigants who set a matter down for hearing but who
fail to make an appearance in the Unopposed Court when the
matter is
called causes wasteful expenditure of judicial and other resources.
It results in judges being required to unnecessarily
read the papers
in preparation for the hearing, only to find that there is no
appearance by the party. The roll gets unnecessarily
clogged up
preventing other matters ripe for hearing from being enrolled for
that day. This practice makes for inefficient use
of the Court’s
resources. Paragraph 5 of Chapter 9.22 is directed at ending such
wasteful expenditure and is designed to
ensure that the judicial
system runs smoothly and efficiently.
[58]
For over a century now the common law has recognised that the Court
has an inherent power to control and regulate its own processes.
[22]
The inherent powers are there to avert an injustice, or to facilitate
the achievement of justice: “(T)
he
Court will exercise an inherent jurisdiction whenever justice
requires that it should do so.
“
[23]
.
The inherent power is used to create procedural rules where such
rules are necessary in order to apply (and develop) the substantive

law.  The procedural (adjectival) law is, no doubt, bound to
interfere with the substantive law. As Corbett CJ observed:
“
There
is no doubt that the Supreme Court possesses an inherent reservoir of
power to regulate its procedures in the interests of
the proper
administration of justice. … It is probably true that, …
the Court does not have an inherent power to
create substantive law,
but the dividing line between substantive and adjectival law is not
always an easy one to draw”
[24]
[59]
This has been recognised by the Courts over the years. Didcott J
surveyed the common law on the issue and held that:
“
I
am far from sure that the order which the applicant wants can be
rated as simply procedural. It goes a good deal further, I am

inclined to think. That, however, is by the way. I say this because
the Supreme Court's inherent power is not confined, as I see
it, to
procedure in the strict sense. VIEYRA J refused in
Ex
parte Millsite Investment Co (Pty) Ltd
1965 (2) SA 582
(T) to accept the limitation. He declared (at 585H):
"The
inherent power claimed is not merely one derived from the need to
make the Court's order effective, and to control its
own procedure,
but also to hold the scales of justice where no specific law provides
directly for a given situation."
The
outer reaches of the power do not have to be explored now. All that
matters at present is this. The power is wide enough, it
seems, to
encompass directions concerning the search for and collection of
evidence that is needed in litigation. Two of the cases
to which
BOTHA J referred illustrate that. I have in mind
Mackenzie v
Furman
and Pratt
1918 WLD 62
and
Cohen and Tyfield v Hull
Chemical Works
1929 CPD 9.
The same broader view happens to have
been taken in England. Lord MACDERMOTT has spoken in the House of
Lords of the High Court's
"...
inherent jurisdiction to make interlocutory orders for the purpose of
promoting a fair and satisfactory trial."
The
occasion was
S v S; W v Official Solicitor
1972 AC 24
(at 46E)
(see also
[1970] 3 All ER 107).
The speech continued thus (at 46E -
F):
"I
do not think there is now any question about the existence of this
jurisdiction... It may be procedural in character, but
it is much
more than that. It is a jurisdiction which confers power, in the
exercise of a judicial discretion, to prepare the way
by suitable
orders or directions for a just and proper trial of the issues joined
between the parties."
This
is not to say, however, that an order providing for evidence to be
investigated and gathered is obtainable here whenever the
evidence is
or may well be material to the case of the party who asks for the
order and he has no other means of assembling the
information. The
Court will come to his assistance in that situation, one may safely
assume, once it has nothing else that matters
to take into account,
once it has no real reason to withhold help. It will no doubt feel
satisfied then, to quote BOTHA J, that:
"...
justice cannot properly be done unless relief is granted to the
applicant."
[25]
[60]
This common law principle has now been recognised and endorsed in,
the Constitution of the Republic of South Africa Act 108
of 1996 (the
Constitution).  Section 173 of the Constitution provides that:
“
The
Constitutional Court, Supreme Court of Appeal and High Courts have
the inherent power to protect and regulate their own process,
and to
develop the common law, taking into account the interests of
justice.
”
[61]
In
Williamson v Schoon
,
Navsa J (as
he then was) held that with the advent of the new Constitution,
Courts now are enjoined to have regard to principles
of equity when
exercising their inherent jurisdiction to regulate their own process.
He reasoned it thus:
“
Whereas
our Courts are now, because of the new Constitutional order, obliged
to have regard to notions of basic fairness and justice,
the point
that emerges from the examination of the authorities examined above
is that the Supreme Court is empowered to regulate
its own procedure
within the system where it adjudicates cases. In doing so, our Courts
will have regard to equitable principles
as established over time and
as now informed by the Constitution”
[26]
[62]
The CC has called on Courts to take care when exercising inherent
jurisdiction so that the rights in the Bill of Rights are
given
effect: This is manifest in the following
dicta
from the CC:
“
The
power recognised in s 173 is a key tool for Courts to ensure their
own independence and impartiality. It recognises that Courts
have the
inherent power to regulate and protect their own process.  A
primary purpose for the exercise of that power must
be to ensure that
proceedings before Courts are fair. It is therefore fitting that the
only qualification on the exercise of that
power contained in s 173
is that Courts in exercising this power must take into account the
interests of justice.”
“
When
Courts exercise the power to regulate their own process it is
inevitable that that power will affect rights entrenched in ch
2 of
the Constitution. A Court must regulate the way proceedings are
conducted and this will inevitably affect both the right to
a fair
trial (s 35 of the Constitution) and the right to have disputes
resolved by Courts (s 34). Courts are bound by the provisions
of the
Bill of Rights and therefore bear a duty to respect those rights. In
exercising the power, therefore, they must take care
to ensure that
those rights are not unjustifiably attenuated.
”
[27]
[63]
These authorities demonstrate that the Court is enjoined to exercise
its inherent jurisdiction to ensure that Courts are accessible,
fair,
efficient and that the rights enshrined in the Bill of Rights are
given full effect.
[64]
It is the duty of this Court to oversee the execution process of the
primary residence.
[28]
Failure
to do so would “
render
the procedure unconstitutional.
”
[29]
In performing this role the Court has to have regard to the fact that
the execution process eventually culminates in the debtor
and her
family vacating their home, either voluntarily or by force. In both
cases the experience involves a painful inroad into
their right to
dignity,
[30]
thus making it
necessary for the Court to carefully examine the facts and
circumstances before granting the order allowing the
property to be
sold in execution. It can only perform this function if, at the very
least, all the necessary steps have been taken
to ensure that it can
be apprised of the facts and circumstances surrounding the debt and
the debtor’s situation.
[65]
The Court has over the years exercised its inherent power to issue
Anton Pillar orders
[31]
; to
compel further and better discovery in circumstances where the rules
proved to be inadequate;
[32]
to stay proceedings in order to prevent an abuse of its processes and
to protect a party from possible prejudice
[33]
;
to grant condonation for non-compliance with its rules in
circumstances where strict compliance with the rules may defeat the

cause of justice.
[34]
Some of
these, no doubt, are much more invasive interventions than merely
asking a plainiff seeking forclosure of a primary residence
to ensure
that personal service is effected, or a serious attempt at personal
service is made. Further, if an individual who is
in danger of losing
her spouse through divorce proceedings, or of losing her estate
through sequestration proceedings, is entitled
to personal service,
we see no reason why a person who is in danger of losing her primary
residence through foreclosure should
not be entitled to personal
service, or at least an attempt at personal service. In a case which
involves the constitutional rights
of persons, and where there is a
real prospect of those rights being trampled upon, it is imperative
that the Court examines very
carefully the circumstances under which
this occurs, failing which there is real danger of an injustice
prevailing. There are therefore
good grounds to deploy the inherent
jurisdiction of the Court to avert such injustice.
[66]
Further, there is no doubt in my mind that to the extent that rule
4(1)(a)(iv) allows for service on the “
outer
” or
“
principal door
” or “
under a stone
”
of a chosen
domicilium
it fails to be of any assistance to the
Court when performing its inquisitorial role of ensuring that all the
circumstances are
taken into account before a primary residence of
the debtor and her family is taken away. Courts must exercise caution
when making
a decision of such magnitude. Requiring that personal
service upon the debtor be at least attempted is certainly part of
exercising
such caution and is part of the Court performing its
constitutionally imposed duty to ensure the foreclosure process and
outcome
involving a primary residence is fair and just. In this case
the process followed can have a direct impact on the outcome.
[67]
To conclude on this aspect the Court, in my view, is not, and can
never be, deterred by the Rules from calling for personal
service or
for an attempt at personal service, if justice so requires. The
authorities demonstrate, without doubt, that the Rules
do not, and
cannot, impede a Court from doing justice:
“
I
can entertain no doubt whatever that the Court possesses this
inherent power to grant relief where an insistence upon exact
compliance
with a Rule of Court would result in substantial injustice
to one of the parties.””.
[35]
[68]
Absa also contended that sub-paragraphs 1.7.1 and 1.7.2 are legally
incompetent as they interfere with the substantive common
law
regarding service on a chosen
domicilum
. Absa placed
particular reliance on a
dicta
in
Loryan (Pty) Ltd v
Solarsh Tea and Coffee (Pty) Ltd
where the Court reasoned:
“
The
choice of a
domicilium citandi et
executandi
is primarily related to the
service of process in judicial proceedings. As appears from Rule 4
(1) (a) (iv), which reflects our
common law  practice,
service of any process may be effected by delivering or leaving a
copy thereof at the
domicilium
chosen by the party concerned. Such service is then good, even if the
process may not be received, for the very purpose of requiring
the
choice of a
domicilium
is to relieve the party causing service of the process from the
burden of proving actual receipt. Hence the decisions in which

service at a
domicilium
has been held to be good, even though the address chosen was vacant
ground, or the party was known to be resident abroad, or had

abandoned the property, or could not be found.
Where
a contract provides for a
domicilium
for notices under the contract, as well as for the service of
process, there is a so-called double provision. The purpose of
choosing
a
domicilium
for the giving of a prescribed notice under a contract is the same as
it is for the service of process,… namely to relieve
the party
giving the notice from the burden of proving receipt thereof.
... Obviously the service of process or the giving
of notice at a
domicilium
,
to be valid, must be effected as required by the Rules of Court or by
the contract, as the case may be. Thus, for instance, where
delivery
of a notice under a contract is to be effected at a residence chosen
as a
domicilium
,
it would not be enough merely to drop the notice over the garden
fence or to put it into the hedge. Delivery would have to be
made in
the manner required by the contract.
”
[36]
[69]
Absa overstates the importance of
Loryan
to our case. It is not support for the proposition that the choice of
a
domicilium
in a contract, regardless of the nature of the contract, renders the
service upon that
domicilium
adequate, even if the papers were not brought to the attention of the
party whose
domicilium
it is. The Court in
Loryan
was dealing with a commercial lease. It did not concern itself with
problems associated with service on a chosen
domicilum
in a matter involving the foreclosure of a primary residence. Loryan
was a pre-Constitutional decision and did not have to pay
any
attention to the fact that the Court has a particular duty to oversee
the foreclosure process to ensure that it is just and
fair.
[70]It
is Absa’s contention that service of the summons on the chosen
domicilium
is part and parcel of the contract, and that the
defendant has agreed to allow Absa to serve at the
domicilium
,
and by so doing has assumed the risk of the summons not coming to her
attention. It had exercised its contractual right and was
entitled to
do so. If the debtor was concerned that service effected on the
chosen
domicilium
might not come to her attention she should
have objected to the
domicilium
clause when concluding the
contract.  Parties must abide by their contracts, and in
accordance thereto this stipulation in
the contract must be observed,
according to Absa. This is a well-established principle of contract
law, commonly known as “
pacta sunt servanda.
”
Absa’s contention must be assessed in the light of two CC
judgments.
[71]
In
Gundwana
it
was pointed out that the fact that the debtor may agree to place her
primary residence at risk does not mean that the stipulation
to this
effect in the contract escapes constitutional scrutiny. It was
further noted that the fact that a debtor agreed to give
up her
primary residence should she default on the loan repayments does not
mean that the Court has to automatically grant a claim
asserted soley
on the terms of the agreement. The Court has a constitutional duty to
look at all the facts before ordering that
the primary residence be
sold in execution. The stipulation in the contract, should there be
one, may (depending on the circumstances)
have to yield to the
constitutional right of the debtor to adequate housing.
[37]
Pacta
sunt servanda
is a crucial aspect of our law and is based on at least two
constitutional values, namely, freedom and dignity, but it is not
sacrosanct. It can be departed from if, without compromising these
values, there are other constitutional values that require prominence

for justice to prevail.
[72]
More recently, the CC had occasion to consider the right of a party
to a bilateral contract to cancel the contract if there
was a
material breach by the counterparty. The CC highlighted the fact that
enforcement of stipulations in bilateral contracts
require good faith
from both parties. Though this was part of our common law, it has now
received constitutional approval. Considering
the principal of
reciprocity in bilateral contracts, the CC iterated the following:
“
To
the extent that the rigid application of the principle of reciprocity
may in particular circumstances lead to injustice, our
law of
contract, based as it is on the principle of good faith, contains the
necessary flexibility to ensure fairness. In
Tuckers
Land and Development Cooperation v Hovis
(1980 (1) SA 645
(A)) it was pointed out that the concepts of
justice, reasonableness and fairness historically constituted good
faith in contract.
The principle of reciprocity originated in these
notions. This accords with the requirements of good faith.
“
...
Bilateral contracts are almost invariably cooperative ventures where
two parties have reached a deal involving performances
by each other
to benefit both. Honouring that contract cannot therefore be a matter
of each side pursuing his or her own self-interest
without regard to
the other party’s interests. Good faith is the lens through
which we come to understand contracts in that
way.
”
[38]
[73]
The CC had recourse to this principle in dealing with the question of
whether a party’s (in that case, Botha’s)
breach allowed
the counterparty (in that case, the Trustees) to cancel the contract
without more. The CC came to the following
conclusion:
“
For
the same reasons mentioned above, granting cancellation – and
therefore, in this case forfeiture – in circumstances
where
three quarters of the purchase price has already been paid would be
disproportionate penalty for the breach. In their application
for
cancellation the Trustees did not properly address the
disproportionate burden their claim for relief would have on Ms
Botha,
They took the view that the question of forfeiture and
restitution was independent of, and logically anterior to, the
question
of cancellation. That was a fundamental error. The fairness
of awarding cancellation is self-evidently linked to the consequences

of doing so. The Trustees’ stance therefore meant that they
could not justify this Court’s awarding the relief they
sought.
In view of the above the cancellation application must fail.
”
[39]
[74]
Despite the fact that the Trustees were entitled, on the basis of a
stipulation in the contract, to cancel the contract because
of the
breach by Botha, the CC refused to enforce this stipulation because
of its disproportionate effect. This is consistent with
its earlier
finding that
pacta sunt servanda
cannot be applied mechanistically. Its application must take into
account other constitutional imperatives, and where these direct

towards a refusal to apply it strictly in order to do justice by the
parties, then the Court must do so.
[75]
To return to the facts of our case. To allow Absa and the banks that
rely on the
domicilium
clause, read with rule 4(1)(a)(iv), to serve on the outer or
principal door could result in an injustice prevailing. For that
reason I hold that Absa’s reliance on the doctrine of
pacta
sunt servanda
is misplaced. It is no
bar to this Court refusing to accept such service.
[76]
In my view, in all matters where the plaintiff seeks to execute
against the primary residence of a debtor and her family, there

should be personal service, or at least an attempt at personal
service, on the defendent. The process should begin with an attempt

at personal service at the chosen
domicilium
of the defendent and where that fails, personal service at her place
of employment. If this were to fail then service should be
on any
person on a Saturday at the chosen
domicilium
of the defendant. If that fails, then the plaintiff can approach the
Court either for further direction or for an order declaring
the
primary residence of the defendent and her family to be executable.
The Court hearing the application can, in the exercise
of its
discretion, make whatever decision it holds to be just and fair. The
process I advocate is slightly different from that
in
Powell
and in the process required by sub-paragraph 1.7.2 of Chapter 10.17.
Sub-parargraph 1.7.2 read with sub-paragraph 5.1 of Chapter
10.17
does do not require personal service at the place of employment of
the defendent. In my view, two attempts at personal service
are
required, once at the chosen domicilium and, if that fails, once at
the place of employment. The defendent should be found
at either of
the two locations. However, if the plaintiff fails on both counts it
is not without a remedy. It can then serve on
a person entitled to
accept service at the
domicilium
on a Saturday. Should this process be followed it would, in my view,
indicate that the plaintiff has taken reasonable steps towards

ensuring that the summons was brought to the attention of the
defendent. Finally, it needs to be said that, when the plaintiff

fails to secure personal service at the first attempt at the chosen
domicilium
,
it need not approach the Court for an order to serve at the place of
employment and, if necessary, thereafter at the
domicilium
on a Saturday on any person. It may just proceed to the next stage.
[77]
The view I adopt is different from that of my colleagues in the
majority judgment. They do not require personal service at
the place
of employment of the defendent. The reason I emphasise personal
service is because this minimises, if not altogether
eliminates, any
future controversy that may arise if the defendent is no longer
employed there.
[78]
Absa also complains about the provisions of sub-paragraph 1.6 as it
allows the Court to refuse to grant the foreclosure application
if it
is of the view that the amount outstanding is low. Sub-paragraph 1.6
draws attention to various judgments where it was held
that the
outstanding amounts were relatively low and did not justify an order
that the primary residence may be sold in execution.
Absa complains
that since sub-paragraph 1.6 has generalised the position it is now
impossible for it to know in advance whether
its application to
foreclose on the primary residence of its debtor will be granted, as
there is no indication as to what constitutes
a low outstanding
amount.  I find this concern of Absa to be unfounded. The power
of the Court to refuse to grant the foreclosure
application on the
basis that the outstanding debt is low is integral to the enquiry as
to whether it is in the interest of justice
to allow foreclosure. The
Court acting in its supervisory capacity is required to undertake
this enquiry. Sub-paragraph 1.6 does
not give the Court any power it
did not already have.
[79]
That an outstanding amount may be too low to justify the taking of
the person’s primary residence cannot be disputed:
it is
possible that the harm suffered by the debtor and her family far
outweighs the benefit to be gained by the creditor should
the order
allowing a sale in execution be granted.
[40]
What constitutes a low amount is something that must be determined by
the Court dealing with the application. The determination
can only be
case-specific. It will, undoubtedly, be determined in relation to
other factors, such as for how long the mortgage
bond has been in
existence, what arrangements can be made to reduce, and ultimately
eliminate, the outstanding amount and the circumstances
under which
the debtor has fallen behind with her payments. This, obviously, is
not an exhaustive list of factors that the Court
could take into
account. Furthermore, a low outstanding amount may yet result in the
primary residence being sold in execution.
[41]
It is a matter best left to the discretion of the Court receiving the
application. This is precisely what sub-paragraph 1.6 does.
I,
therefore, find nothing offensive about it.
[80]
Accordingly, for the reasons set out above, I hold that
sub-paragraphs 1.6, 1.7.1 and 1.7.2 of Chapter 10.17 of the Practice

Manual are valid and should be adhered to by parties affected
thereby.
[81]
My colleagues take the view that it is necessary to amend the
sub-paragraphs in order to further streamline the process. In

contrast, I hold that that is a matter best left in the hands of the
Deputy-Judge President or the Judge-President, who after consulting

the Judges of this Division can advise the Chief Justice to amend the
relevant sub-paragraphs. This has the benefit of ensuring
that the
actual wording of the amendment would, in all likelihood, be
expressive of the collective experience of the Judges rather
than the
outcome of an objection by a single party, like Absa, in a single
case. Earlier in this judgment I spelt out the history
of Chapter
10.17. Chapter 10.17 was a product of a collective discussion of the
Judges of this Division who had approved it. In
this sense it
resulted from a process not dissimilar to the one that was followed
in
Cele
v South African Social Security Agency and 22 Related Cases
[42]
where
before a practice directive was issued, Judges in that Division gave
input as to its terms. The benefit gained from such a
process is not
to be underestimated. In conclusion, I believe that this Court should
not tamper with the provisions of sub-paragraphs
1.6, 1.7. 1 and
1.7.2 of Chapter 10.17 of the Practice Manual.
COUNSEL FOR
APPLICANT J A SWANEPOEL
INSTRUCTED BY
SMIT SEWGOOLAM INC
COUNSEL FOR
AMICUS CURIAE ADV S WILSON
INSTRUCTED BY
SOCIO-ECONOMIC RIGHTS INSTITUTE OF SOUTH AFRICA
DATE
OF HEARING 29 AUGUST 2014
DATE
OF JUDGMENT 14 OCTOBER 2014
[1]
Nedbank Ltd v Mortinson 2005(6) SA 462 (W) para 33.1
[2]
Standard Bank v Dawood 2012(6) SA151 (WCC) para 37
[3]
Nedbank Ltd v Jessa and Another
2012 (6) SA 166
CC para 12
[4]
[2012] ZAGPJHC 20 (6 March 2012)
[5]
2005 (2) SA 140 (CC)
[6]
2011 (3) SA 608 (CC)
[7]
Powell
,
fn 4, at [10]
[8]
Id at [12]
[9]
[2011] JOL 27838 (GSJ)
[10]
2006 (2) SA 264 (SCA)
[11]
2012 (6) SA 166 (CC)
[12]
2012 (6) SA 151 (WCC)
[13]
2005 (6) SA 462 (W)
[14]
2011 (4) SA 314
(GNP)
[15]
Above, fn. 4
[16]
Folscher
,
fn 14
[17]
2012 JOL 29170 (GSJ)
[18]
Id
.
at [23]-[24]
[19]
Id
.
at [20)
[20]
See:
Camps
Bay Ratepayers' and Residents' Association and Another v Harrison
and Another
2011 (4) SA 42
(CC) at [62];
Oudekraal
Estates (Pty) Ltd v City of Cape Town and Others,
2004 (6) SA 222
(SCA) at [31];
Judicial
Service Commission and Another v Cape Bar Council and Another
2013 (1) SA 170
(SCA) at [13]
[21]
Anglo
Operations Ltd v Sandhurst Estates (Pty) Ltd
2007
(2) SA 363
(SCA) at [32]; See also
Republikeinse
Publikasies (Edms) Bpk v Afrikaanse Pers Publikasies (Edms) Bpk
1972 (1) SA 773
(A) at 783
[22]
Ritchie
v Andrews
(1881
–
1882) 2 EDL 254
;
Connolly
v Ferguson
1909 TS 195
;
Oosthuizen
v Road Accident Fund
2011 (6) SA 31
(SCA) at [15]
[23]
Moulded
Components and Rotomoulding South Africa (Pty) Ltd v Coucourakis and
Another
1979 (2) SA 457
(W) at 463A
[24]
Universal
City Studios Inc and Others v Network Video(Pty) Ltd
[1986] ZASCA 3
;
1986 (2) SA 734
(A) at 754G-755A, (references omitted)
[25]
Seetal
v Pravitha and Another NO
1983
(3) SA 827
(D) at 832B-832G
[26]
1997
(3) SA 1053
(T)
at
1068 H-I; See also
Ncoweni
v Bezuidenhout
1927 CPD 130
at 130
[27]
SABC
Ltd v National Director of Public Prosecutions
[2006] ZACC 15
;
2007 (1) SA 523
(CC) at
[36]
-
[37]
[28]
Jaftha,
fn
5, at [55];
Gundwana
,
fn 6, at [45]; Rule 46(1)(ii)
[29]
Mkhize
v Umvoti Municipality and Others
2012 (1) SA 1
(SCA) at [26], per Navsa and Snyders JJA
[30]
Jaftha
,
fn 5 at [21] and [29]
[31]
Universal
City Studios Inc,
fn
24, at 754G-755A, (references omitted)
[32]
Moulded
Components and Rotomoulding South Africa (Pty) Ltd,
fn
23 at 463A
[33]
Williamson,
fn
26, at
1066G
[34]
Moluele
and Others v Deschatelets
N.O
1950  (2) SA 670 (T) at 676-677
[35]
Moluele
and Others v Deschatelets,
N.O.
1950 (2) SA 670
(T) at 676. See also
Leibowitz
and Others v Schwartz and Others
1974 (2) SA 661
(T) at 662A-B.
[36]
1984 (3) SA 834
(W) at 847C - I
[37]
Gundwana
,
fn 6, at [46]-[48]
[38]
Lorraine
Sophie Botha and Another v Henry Robins Rich N O and Others
[2014] ZACC 11
at
[45]
-
[46]
[39]
I
d.
at [50]
[40]
This has been amply demonstrated in the cases referred to in the
footnote to sub-paragraph 1.6
[41]
Jaftha
,
fn 5 at [42]
[42]
2009
(5) SA 105
(D) at [38]