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[2016] ZAGPJHC 107
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Firstrand Bank Limited v Moodley (2015/28061) [2016] ZAGPJHC 107 (10 May 2016)
IN
THE HIGH COURT OF SOUTH AFRICA
GAUTENG
LOCAL DIVISION, JOHANNESBURG
CASE
NO: 2015/28061
DATE:
10 MAY 2016
In the matter
between:
FIRSTRAND BANK
LIMITED
..............................................................................................
Applicant
And
MOODLEY,
LOGAVINOTHA
............................................................................................
Respondent
JUDGMENT
ADAMS AJ:
[1]. On the 28th
April 2016, I granted judgment in favour of the applicant against the
respondent for payment of the sum of R1,218,357.29,
together with
interest thereon and cost of suit on the attorney and client scale.
The applicant’s application to have immovable
property of the
respondent declared specially executable and for the issue of a
warrant of execution against the said property,
I postponed sine die.
I undertook to furnish reasons for the order at a later stage. The
following are the reasons.
[2]. The applicant’s
application is founded on written mortgage loan agreements, which
were granted against security of a
first and second mortgage bond
which were registered over the respondent’s property in favour
of the applicant.
[3]. The respondent
opposed the application on a number of grounds, most of which were of
a technical legal nature.
THE RESPONDENT’S
LEGAL DEFENCES
[4]. The respondent
alleges that the person who deposed to the applicant’s founding
affidavit was not authorised to launch
the application. As far as
that defence is concerned, I agree with the submissions on behalf of
the applicant that the principles
enunciated in Eskom v Soweto Town
Council,
1992 (2) SA 703
(W), find application herein. It is trite
that when an attorney who acts on behalf of a party is authorised so
to act, there is
no need for any other person to be additionally
authorised.
[5]. The respondent
also alleges that the provisions of the National Credit Act has not
been complied with in that the section 129
notice was never received
by him.
[6]. Again, I am in
agreement with the submissions made on behalf of the applicant that
this legal point should fail. In the matter
of S A Taxi Development
Finance v Phalafala, (an unreported GSJ Judgment of Van Eeden J, in
which the following principle was laid
down:
‘Non –
receipt of the notice prior to receiving the summons is not a defence
dilatory or otherwise, to the plaintiff’s
claim in this matter.
The subsequent receipt of the notice at the time of the service of
the summons and the defendant’s
reaction thereto, entitle the
plaintiff to approach the court for an order to enforce the credit
agreement. No purpose would be
served to give him the notice for a
second time – it would be placing form above substance to
require a further notice to
be sent to the defendant. It is
accordingly unnecessary to adjourn the matter or to make an order in
terms of s 130(4)(b), since
the defendant actually received the
notice and since the time periods of S 130(1) and (1)(a) have
actually expired. I consequently
find that the fact that the
defendant did not receive the notice prior to the service of the
summons ‘does not render the
notice invalid and the issue of
the summons premature’.
[7] Therefore, the
respondent’s second point in limine I also dismissed.
[8] On the merits
the respondent alleges that the acceleration clauses in the mortgage
loan agreements are unlawful in that there
has not been compliance
with the provisions of section 64 of the National Credit Act, which
requires the applicant to have produced
the credit agreement in plain
and understandable language. The respondent also alleges that the
said agreements fall foul of other
provisions of the said Act.
[9] I reject the
submissions in that regard on behalf of the respondent on the basis
that the procedural requirements of the Act
had been complied with.
As for the substantive requirements, I am of the view that the
respondent has not demonstrated that her
attention was not drawn to
the acceleration clauses in the agreements. In any event, the
respondent ought reasonably to have been
aware of these clauses.
[10] Finally, the
respondent claims that she should not be held liable in terms of the
agreements as the applicant was guilty of
‘reckless lending’.
[11] I am not
persuaded that the respondent has made out a defence based on
‘reckless lending’.
[12] None of the
requirements relative to a defence based on ‘reckless lending’
as set out in S A Securitisation v Mbatha,
2
011 (1) SA 310
(GSJ),
were set out by the respondent. In fact, the respondent failed to
place before me any information which would have enabled
me to find
that there was reckless lending.
[13] In the
premises, I was of the view all of the respondent’s defences on
the merits of the applicant’s claim, should
fail and I ruled
thus on the 28th April 2016.
THE RULE 46(1)(A)
CONSIDERATIONS
[14] Uniform Rule
46(1)(a) provides that no writ of execution against the immovable
property of any judgment debtor shall issue
until —
(i) ‘a return
shall have been made of any process which may have been issued
against the movable property of the judgment
debtor from which it
appears that the said person has not sufficient movable property to
satisfy the writ; or
(ii) such immovable
property shall have been declared to be specially executable by the
court or, in the case of a judgment granted
in terms of rule 31(5),
by the registrar: Provided that, where the property sought to be
attached is the primary residence of the
judgment debtor, no writ
shall issue unless the court, having considered all the relevant
circumstances, orders execution against
such property’.
[15] The effect of
the proviso is that only a court is competent to declare any or all
of a judgment debtor’s residential
immovable property specially
executable under the provisions of rule 46(1)(a)(ii).
[16] If such
residential property consists of the judgment debtor’s primary
residence, the court has, in terms of the proviso
to rule
46(1)(a)(ii), to consider all relevant circumstances before ordering
execution against such property.
[17] In deciding
whether or not to declare the primary residence of a judgment debtor
who is a natural person specially executable,
the court must consider
all relevant circumstances as contemplated in the sub-rule. This
means ‘legally relevant circumstances’.
[18] In Jaftha v
Schoeman; Van Rooyen v Stoltz,
[2004] ZACC 25
;
2005 (2) SA 140
(CC), the
Constitutional Court gave the following examples of such
circumstances:
18.1 Whether the
rules of court have been complied with;
18.2 Whether there
are other reasonable ways in which the judgment debt can be paid;
18.3 Whether there
is any disproportionality between execution and other possible means
to exact payment of the judgment debt;
18.4 The
circumstances in which the judgment debt was incurred;
18.5 Attempts made
by the judgment debtor to pay off the debt;
18.6 The financial
position of the parties;
18.7 The amount of
the judgment debt;
18.8 Whether the
judgment debtor is employed or has a source of income to pay off the
debt;
18.9 Any other
factors relevant to the particular case.
[19] In Nedbank Ltd
v Mortinson,
[2005] ZAGPHC 85
;
2005 (6) SA 462
(W), the full court of this division
laid down the following rules of practice applicable in all
applications for default judgment
where the creditor seeks an order
declaring specially hypothecated immovable property executable. It
was held that 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.
[20] In FirstRand
Bank Ltd v Folscher and Another, and Similar Matters,
2011 (4) SA 314
(GNP), the full court of the North Gauteng High Court, Pretoria,
observed the following:
‘40. It is
obviously impossible to provide a list of circumstances that might be
regarded as extraordinary which would persuade
a court to decline a
writ of execution. They would usually consist of factors that would
render enforcement of the judgment debt
an abuse of the process,
which a court is obliged to prevent, see Hudson v Hudson
1927 AD 259
,
Beinash v Wixley
[1997] ZASCA 32
;
1997 (3) SA 721
(SCA) at 734F: “an abuse of
the process takes place where the procedures permitted by the Rules
of the Court to facilitate
the pursuit of the truth are used for a
purpose extraneous to that objective …” Instances of
this nature would fall
into the category enumerated by Mokgoro J in
Jaftha, supra and encountered in Absa Bank Ltd v Ntsane & another
[2006] ZAGPHC 115
;
2007 (3) SA 554
(T). As is apparent from these examples, the
creditor’s conduct need not be wilfully dishonest or vexatious
to constitute
an abuse. The consequences of intended writs against
hypothecated properties, although bona fide, may be iniquitous
because the
debtor will lose his home while alternative modes of
satisfying the creditor’ s demands might exist that would not
cause
any significant prejudice to the creditor.
41. Mindful of the
impossibility to anticipate every potential circumstance, some of the
following factors that may need to be taken
into consideration by the
court when deciding whether a writ should issue or not, are:
• 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 strength 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
section 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 have 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 monies 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.’
[21] It is obvious
that not each and every one of the above considerations will of
necessity have to be taken into account in every
matter. The enquiry
must always be fact bound to identify the criteria that are relevant
for the particular case.
[22] Applying the
aforegoing principles in casu, I am of the view that before ordering
execution against the immovable property
of the respondent, I should
have regard to the following circumstances:
22.1 By all
accounts, the applicant has complied in all respects with the court
rules applicable to the type of relief sought in
this application.
Additionally, the applicant has complied with the provisions of the
Practice Manual of this division as well
as the guidelines contained
in the relevant case authorities.
22.2 There have
obviously not been any attempts by the applicant to execute against
the movable property of the respondent, as the
monetary judgment was
only granted by me on the 28th April 2016.
22.3 These
proceedings were only commenced during August 2015 and it is not
altogether clear whether there are possibilities that
the respondent
will liquidate her indebtedness within a reasonable period without
the applicant having to resort to executing against
the residence of
the respondent.
22.4 The judgment
debt due by the respondent to the plaintiff is for the sum of
R1,218,357.29, plus interest thereon and costs of
suit. As and at the
date of the filing of the
rule 46(1)
application during August 2015,
the total sum outstanding amounted to R1,218,357.6298. The last
payment received from the respondent
an amount of R13,000.00 received
was on the 27th October 2015, and the amount of the arrears was a sum
equal to approximately 5
months’ worth of instalments.
22.5 It appears that
the respondent lives at the property with other members of her
family. There is however no evidence that any
of the occupants are
what can be described as vulnerable.
22.6 The property in
question has, by all accounts, not been purchased with the assistance
of a Government Housing subsidy.
22.7 The relative
financial strengths of the applicant and the respondent is a
consideration which favours the respondent.
22.8 On the
available evidence, especially the fact that the respondent seems
eager to try and resolve this matter with the applicant,
I am of the
view that not enough has been done by the applicant to attempt in the
spirit of the above cited authorities to find
a solution to the
respondent’s difficulties in this matter.
[23] These factors,
in my view, mitigates in favour of the respondent, who, I believe, if
given a chance, may be able to resolve
the issue of the arrear
instalments.
[24] In the
circumstances of this matter, I was of the view that it will be
unjust and iniquitous to order that the property of
the respondent be
declared to specially executable.
ORDER:
For all the above
considerations, I made the order referred to in para [1] above, which
read as follows:-
Judgment is granted
in favour of the applicant against the respondent for:
1. Payment of the
sum of R1,218,357.29 (one million two hundred and eighteen thousand
three hundred and fifty seven rand and twenty
nine cents).
2. Interest on the
aforementioned amount at 7.50% per annum, calculated daily and
compounded monthly from the 30th June 2015 to
the 23rd July 2015, and
at 7.75% per annum from the 24th July 2015, to date of final payment.
3. Cost on the
attorney and client scale.
The application for
judgment in terms of prayers 3 & 4 of the Notice of Motion was
postponed sine die.
L ADAMS
Acting Judge of
the High Court
Gauteng Local
Division, Johannesburg
HEARD ON: 28th
April 2016
JUDGMENT DATE:
10th May 2016
FOR THE
PLAINTIFF: Adv L Van Rhyn Tonder
INSTRUCTED BY:
Lowndes Dlamini
FOR THE
DEFENDANT: Mr G Moodley
INSTRUCTED BY:
Moodley Attorneys