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[2020] ZAGPJHC 97
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Assetline South Africa (Pty) Ltd v Manhattan Delux Properties (Pty) Ltd and Others (30996/19) [2020] ZAGPJHC 97 (10 May 2020)
REPUBLIC OF SOUTH AFRICA
IN
THE HIGH COURT OF SOUTH AFRICA
GAUTENG
LOCAL DIVISION, JOHANNESBURG
CASE
NUMBER: 30996/19
In
the matter between:
ASSETLINE
SOUTH AFRICA (PTY) LTD
Applicant
and
MANHATTAN
DELUX PROPERTIES (PTY) LTD
First
respondent
MICHAEL
DENENGA
Second
respondent
EDISON
DOKO HATIRARAMI MATIENGA
Third
respondent
J U D G M E N T
KEIGHTLEY,
J
:
1.
This is an application for a money judgment against the respondents,
coupled with an order declaring certain immovable property
(the
property) to be specially executable. The application arises out of a
loan made by the applicant, Assetline South Africa (Pty)
Ltd
(Assetline), to the first respondent, Manhattan Delux Properties
(Pty) Ltd (Manhattan). The second and third respondents, Mr
Denenga
and Mr Matienga, entered into suretyship agreements as security for
the loan. A mortgage bond in favour of Assetline was
also registered
over the property.
2.
The initial amount of the loan was R2,5 million. With interest, the
amount due as at the institution of the application was R5
million,
as evidenced by a certificate of balance attached to the founding
affidavit. The loan agreement provides for a certificate
of balance
to stand as
prima facie
proof of the debtors’
indebtedness. In accordance with the
in duplum
rule, interest
stopped running on the debt when the outstanding amount reached R5
million.
3.
Manhattan does not dispute that it has failed to make the outstanding
repayments to Assetline pursuant to its obligations under
the loan
agreement. The respondents also do not place the amount of the claim
in dispute. Instead, they raise a number of defences
which may best
be described as being highly technical.
4.
The initial line of defences mounted by the respondents was to insist
that the application could not proceed until such time
as a
consolidation application instituted by them on 17 March 2020 had
been finalised. The consolidation application is not before
me and
remains pending. However, before I could hear the main application, I
was required to deal with an application for recusal
by the
respondents and what became a belated application for a postponement
by them. Both of those preliminary applications featured
the
consolidation application as a factor. I dismissed both, and
proceeded to deal with the main application.
5.
The consolidation issue raises its head in the first defence raised
by the respondents, viz. the defence of
lis pendens
. This is
because in a separate application under case number 35073/19, one Ms
Vanmali, sought an order directing the first respondent
to sign the
documents necessary to transfer the property to her. Her case was
that Manhattan had accepted her offer to purchase
the property, but
had subsequently reneged on its undertaking. Ms Vanmali obtained an
order against Manhattan in February 2020.
Manhattan subsequently
obtained an interdict in urgent court essentially putting the
enforcement of Ms Vanmali’s order on
hold until Manhattan had
initiated and finalised an application for recession of Ms Vanmali’s
order. I should add that, as
the bondholder, Assetline was cited as a
respondent in Ms Vanmali’s application, and was hence cited as
a party in the respondent’s
urgent application. However,
Assetline did not play much of an active role in those proceedings,
save, it would seem, to oppose
the granting of the urgent
application.
6.
The respondents contend that the pending litigation arising out of
case number 35073/19 is litigation between the same parties
(they
refine this to state that it is “more or less” the same
parties); based on the same cause of action (they say
the cause of
action in both concerns the property); and the same subject matter.
This, they say, satisfies the requirements for
the defence of
lis
pendens
7.
Lis
pendens
may
be raised where a plaintiff or applicant brings another action
against the same defendant or respondent on the same cause of
action
and in respect of the same subject matter. The question is whether
the one matter is a replication of the other. If so,
the court has a
discretion to decide whether or not it is just and equitable for the
one matter to proceed pending the finalisation
of the matter that was
instituted first.
[1]
8.
The
lis alibi
defence finds no application in the matter
before me. There is quite obviously no overlap in the causes of
action in each matter.
In this matter, Assetline sues as the creditor
under a loan agreement. It wants an order directing the respondents
to pay to it
what they say Manhattan and the sureties owe under that
agreement and the deeds of suretyship. Although the property features
in
both applications, this is not to say that the applications have
the same cause of action. The property features in this application
because Assetline has a mortgage bond over it to secure the loan
advanced to Manhattan. Its cause of action is the loan, secured
by
the mortgage bond. This is worlds apart from Ms Vanmali’s
application, which is based on what she claimed was a binding
agreement of sale in respect of the property between Manhattan and
her. It follows, too, that the two applications do not involve
the
same parties.
9.
For these reasons, I find that there is no merit in the
lis alibi
defence.
10.
The next defence raised by the respondents is that Assetline has
failed to comply with the requirements of Rule 46 and Rule
46A of the
Uniform Rules of Court. The first submission made by the respondents
in this regard is that Assetline did not first
proceed to execute
against movable property, and thus it cannot be permitted to obtain
an order against the immovable property.
They say that this is a
requirement of Rule 46(1)(a)(i). In terms of Rule 46(1)(a)(ii), a
creditor has an alternative route open
to it where it has not
executed against movable property: it is expressly entitled to seek
an order from a court declaring immovable
property to be specially
executable. This is precisely what Assetline has done here. Our
courts deal with applications of this
nature on a weekly basis. It is
surprising that Manhattan persisted in relying on this defence in its
oral submissions to me. It
is patently unmeritorious.
11.
The second
leg of the respondent’s defence in this regard relates to Rule
46A. The Rule lays down a procedure that must be
followed where an
execution creditor seeks to execute “
against
the residential immovable property of a judgment debtor
”.
[2]
Where that is the case, the court is required to establish whether
the property “
which
the execution creditor intends to execute against is the primary
residence of the judgment debtor
”.
In addition, the court must consider alternative means by the
judgment debtor of satisfying the judgment debt.
[3]
12.
Assetline
submits, in the first instance, that Rule 46A has no application in
this matter as the property is owned by Manhattan,
a corporate
entity, and the Rule only applies to natural persons.
[4]
However, out of an abundance of caution, Assetline nonetheless
included in its founding affidavit the necessary averments dealing
with the relevant factors that a court is required to consider in
circumstances where Rule 46A applies. It also complied with Rule
46A
in providing the information relevant for purposes of determining
whether the court should set a reserve price for the sale
of the
property.
13.
In the answering affidavit, Mr Denenga, the deponent on behalf of
Manhattan, states that: “
To my knowledge, the property they
seek to have declared specially executable is the primary home of (Mr
Matienga). The right enshrined
in s26 (of the Constitution) would be
implicated, and that (Mr Matienga) would be rendered homeless by the
order of execution against
his home
”. Mr Matienga, in turn
provides a standard-form confirmatory affidavit to Mr Denenga’s
answering affidavit. The respondents
contend that Mr Denenga’s
general is sufficient for this court to refuse to make an execution
order against the property.
14.
In the first instance, even if the property was Mr Matienga’s
primary residence, it is not his property. It is the property
of
Manhattan, a juristic person. It is thus questionable indeed whether
Rule 46A applies, as Assetline initially submitted. However,
even
assuming that the legal position in this regard is determined by Mr
Matienga’s obligations as a surety against whom
judgment is
sought (and I make no finding in this regard), this does not assist
the respondents in their defence.
15.
If Rule 46A is to be applied, the court must consider whether indeed
the property is Mr Matienga’s primary residence.
All the court
has to go on here is the vague assertion by Mr Denenga that it is,
and Mr Matienga’s standard form confirmatory
affidavit. Nowhere
does Mr Matienga assert that the property is indeed his residence,
let alone his primary residence. Mr Matienga
signed the power of
attorney for the loan in London. He signed his confirmatory affidavit
in London. Various text messages between
Mr Katz, the deponent to the
founding and replying affidavit, and Mr Matienga demonstrate that Mr
Matienga travels what appears
to be frequently between London,
Zimbabwe and South Africa for purposes of doing business in those
jurisdictions. There is no clear
evidence before me to establish that
the property is, indeed, his primary residence. Mr Matienga never
expressly asserts that it
is.
16.
However,
even assuming that it is his primary residence (and I make no finding
in this regard), Mr Matienga has placed nothing before
the court that
would weigh in favour of the court finding that execution against the
property is not warranted.
[5]
An
order refusing execution is obviously warranted when the effect would
be to infringe on Mr Matienga’s constitutional rights
under
section 26(3). All this court has is the bald statement by Mr Denenga
that this would be the case. The statement is completely
unsubstantiated. Mr Matienga himself fails to make any submissions in
this regard. If there are any relevant factors which would
assist the
court in determining whether indeed Mr Matienga might become homeless
as a result of an order of execution, the burden
lies on Mr Matienga
to place the relevant information before the court. He has not done
so.
17.
On the contrary, what the court does know from the papers is that the
loan was advanced to Manhattan for purposes of a business
venture: it
was not to provide funding to purchase the property. From the text
messages exchanged between Mr Matienga and Mr Katz,
Mr Matienga holds
himself out to be an international businessman involved in various
ventures across international jurisdictions.
At one stage, he claimed
that he had access to funding in Dubai (although it has to be said
that this did not result in Manhattan
actually meeting its
obligations under the loan agreement). He also appears (from the text
messages) to be a co-owner of another
property in Johannesburg valued
by him at the time to be worth R9 million. Mr Matienga was also
willing to sell the property to
a private buyer before getting cold
feet and refusing to sign the transfer documents. This fact also
appears from the text messages
exchanged between the parties. In
short, these facts do not describe the profile of a debtor who would
be rendered homeless by
an order of execution against the property.
18.
In addition, the debt has been outstanding for over 18 months. It has
escalated, with interest, to an
in duplum
capped amount of R5
million. Despite numerous promises that arrangements would be made to
repay the debt, and despite Assetline’s
patience in this regard
(as appears from the text exchanges), settlement has not been
forthcoming. In these circumstances, it would
be unwarranted of this
court to deny Assetline its right to enforce its security. It is
highly improbable that Assetline can realistically
expect that the
debt will be repaid by alternative means.
19.
For all of these reasons, I find that the Rule 46A defence is without
any merit.
20.
The remaining defences by the respondents relate to the indebtedness
of the sureties. They made the bald submission that the
suretyship
agreements are invalid because the loan agreement is invalid.
However, the respondents failed to dispute the validity
of the loan
agreement in any substantial sense.
21.
In
addition, the respondents asserted that the sureties should escape
liability because Assetline failed to comply with the requirements
of
the National Credit Act
[6]
(the
NCA). The argument advanced is that while the NCA might not be
applicable to Manhattan, because it is a juristic person, it
is
applicable to the sureties, and they were entitled to the protections
afforded under,
inter
alia
,
section 129 of the Act. They say they were short changed by not being
served with the requisite notices under this section.
22.
Once again,
this defence is easily disposed of. Section 4(2) of the NCA provides
that it “
applies
to a credit guarantee only to the extent that this Act applies to the
credit facility or credit transaction in respect of
which the credit
guarantee is granted.
”
It follows that if the underlying credit facility is not governed by
the NCA, any deed of suretyship, being a form of credit
guarantee,
securing the credit transaction, will likewise not be governed by
it.
[7]
The suretyships entered
into by Mr Denenga and Mr Matienga were thus not governed by the NCA
despite the fact that they are natural
persons. Assetline was under
no obligation to serve section 129 notices on them.
23.
For all of
these reasons, none of the defences raised by the respondents have
merit, and Assetline is entitled to the order for
which it has
prayed. The only issue I should consider (on the assumption, but not
a finding) that Rule 46A may find application,
is whether it is
appropriate to set a reserve price for the property. A Full Court of
this Division has held that a reserve price
should be set “
save
in exceptional circumstances ... in all matters where execution is
granted against immovable property which is the primary
residence of
a debtor, where the facts disclosed justify such an order
”.
[8]
In my view, the disclosed facts do not justify setting a reserve
price in this matter. As I have already indicated, there is little
to
support the case that the property is Mr Matienga’s primary
residence, and no evidence to substantiate that he is impecunious
and
might be rendered homeless if an order is granted without setting a
reserve price. Manhattan made a business decision to take
out a loan
for business purposes and to agree to a bond being registered as
security. It has fallen hopelessly behind on its repayment
obligations. Mr Matienga is a surety, who took the risk of agreeing
to enter into a suretyship agreement. It appears from the texts
attached to the papers that he was the business mind behind the loan
and what subsequently transpired when Manhattan defaulted.
He is not
the proverbial indigent debtor whose constitutional rights might be
impaled in the event that a reserve price is not
set.
24.
Moreover, there appears to be a market for the property, given that
Ms Vanmali made an offer to purchase for it. There does
not appear to
be a threat in this case that the property will be sold for a song on
public auction. These are all exceptional circumstances
that warrant
this court declining to set a reserve price, even on the assumption
that Rule 46A is applicable.
25.
The final issue to deal with concerns a matter that was placed front
and square by the respondents in their answering affidavit,
their
heads of argument and their oral submissions. It concerns the
allegedly egregious conduct of Assetline’s attorney,
Mr
Greenberg, in allowing himself to become involved in a “
deep
seated
”, “
unethical
” and “
highly
reprehensible
” conflict of interest and in so doing, to
have acted “
brazenly in an unethical manner
”. On
this basis, the respondents sought an order of costs
de bonis
propriis
against him.
26.
The respondents went on in their answering affidavit to say that
Assetline’s attorney (who they identify as Mr Greenberg)
was
involved in “
machinations
” involving “
the
illicit manner in which the litigation ... commenced
” for
the propose of “
unconstitutionally gaining access to the ...
property through the Courts
.” Mr Greenberg was accused of
abusing the court process through this conduct. These assertions were
repeated by the respondents
in an affidavit filed the day before the
hearing. In oral submissions to the court, counsel for the
respondents contended that
the accusations against Mr Greenberg were
accurate and true, and showed that he was involved in a scheme to
permit Assetline to
get its hands on the property.
27.
The alleged conflict of interest arises out of the fact that Mr
Greenberg acts for Assetline in this matter, and for Ms Vanmali
in
her application against Manhattan. It is not clear why this should
mean that there is a conflict of interest. Assetline and
Ms Vanmali
are not at loggerheads in her application, and she is not a party to
the present application. Even if there was a conflict
of interest, it
is for Ms Vanmali or Assetline to raise the conflict, not Manhattan
or the other respondents. Ms Vanmali filed
an affidavit to say that
she does not intend to raise an issue of conflict of interest.
28.
It seems that the real complaint of the respondents is that Mr
Greenberg is committing unprofessional, unethical and possibly
even
criminal conduct in using his role as attorney in both matters to
undermine the law in order to deprive Manhattan of its property.
There is not an iota of evidence that the two applications are an
abuse of process and that Mr Greenberg has behaved unlawfully
and
unethically. Ms Vanmali was entitled to pursue her claim against
Manhattan arising out of her offer to purchase the property.
Likewise, Assetline was entitled to pursue a money judgment and
execution order against the respondents and the property. None
of
this is unlawful or unethical. In fact, the court has weighed in on
Ms Vanmali’s application, and will do so again regarding
the
rescission (when it is launched). This court has weighed in on
Assetline’s perfectly legitimate application based on
an
entirely separate cause of action. The rule of law has not been
undermined in any way.
29.
When I asked counsel to clarify how the alleged conflict of interest
and Mr Greenberg’s alleged conduct amounted to a
defence
against Assetline’s application, he conceded that it did not
amount to a defence. This means that the very serious
allegations
against Mr Greenberg were not relevant for purposes of opposing the
application. This obviously compounds the grievous
nature of the
accusations against him. What makes matters worse, is that the
deponent to the answering affidavit, in which the
accusations were
first made, Mr Denenga, is a practising attorney himself. While he
states that the submissions he makes are on
the advice of his legal
representatives, he ought to have known that serious allegations of
this nature should not be made unless
they are relevant and can be
substantiated with proper evidence.
30.
Mr Greenberg was perfectly entitled to retain his own personal
advocate to deal with the
de bonis propriis
costs order sought
against him based on the accusations against him. He is entitled to
his legal costs in this regard on an attorney
and client scale.
31.
I make the following order:
1. The Respondents shall
pay, jointly and severally the one paying the other to be absolved,
to the Applicant: -
1.1 The amount of R5 000
000.00;
1.2 Interest on R5 000
000.00 from date of judgment to date of final payment;
1.3 Costs of the
application on an attorney and client scale;
1.4 The costs incurred by
Attorney Joshua Gedalia Greenberg in briefing counsel to oppose the
de bonis propriis
costs order being sought against him by the
Respondents, which costs shall be taxed on an attorney and client
scale.
2. The following
immovable property is hereby declared specially executable: - A UNIT
CONSISTING OF:— SECTION NO. 3 AS SHOWN
AND
MORE FULLY DESCRIBED ON
SECTIONAL PLAN NO SS 129/1987 IN THE SCHEME KNOWN AS HEAVENS GATE IN
RESPECT OF THE LAND AND BUILDINGS OR
BUILDINGS SITUATE AT NORTHCLIFF
EXTENSION 12 TOWNSHIP, LOCAL AUTHORITY CITY OF JOHANNESBURG, OF WHICH
SECTION THE FLOOR AREA, ACCORDING
TO THE SAID SECTIONAL PLAN, IS 523
(FIVE HUNDRED AND TWENTY THREE) SQUARE METERS IN EXTENT; AND AN
UNDIVIDED SHARE IN THE COMMON
PROPERTY IN THE SCHEME APPORTIONED TO
THE SAID SECTION IN ACCORDANCE WITH THE PARTICIPATION QUOTA AS
ENDORSED ON THE SAID SECTIONAL
PLAN HELD BY DEED OF TRANSFER NUMBER
ST44061/2017
3. The Registrar of the
Gauteng Local Division, Johannesburg is authorised to issue a warrant
of execution against the immovable
property referred to in paragraph
2 above.
-----------------------------------------
R
M KEIGHTLEY
JUDGE
OF THE HIGH COURT
GAUTENG
LOCAL DIVISION
Date
Heard (by videolink): 23 April 2020
Date
of Judgment: 10 May 2020
Counsel
for the applicant: JM Hoffman
Instructed
by : Swartz Weil Van der Merwe Greenberg Inc
Counsel
for respondent: M Kufa; M Moropene
Instructed
by : Machaba Attorneys
Counsel
for Mr Greenberg: L Hollander
[1]
Herbstein & Van Winsen’s The Civil Practice of the High
Court of South Africa, Volume 1, pg 310 (Herbstein & Van
Winsen)
[2]
Rule 46A(1)
[3]
Rule 46A(2)
[4]
FirstRand Bank Ltd Folscher and another
2011 (4) SA 314
(GNP) at
paras 32 and 50
[5]
Rule 46A(2)(b)
[6]
Act 34 of 2005
[7]
Mostert & others v FirstRand Bank Ltd t/a RMB Private Bank
2018
(4) SA 443
(SCA) at para 38
[8]
Absa v Mokebe and Related Cases
2018 (6) SA 492
(GJ) at para 66