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[2020] ZAGPJHC 271
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Standard Bank of South Africa Limited v Ratlou and Another (26005/2019) [2020] ZAGPJHC 271 (18 September 2020)

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IN
THE HIGH COURT OF SOUTH AFRICA
GAUTENG DIVISION, JOHANNESBURG
CASE
NUMBER : 26005/2019
In the matter between:
THE STANDARD BANK
OF
SOUTH AFRICA
LIMITED
Applicant
and
PHASWANA
STEPHEN
RATLOU
First
Respondent
MBALI
RATLOU
Second
Respondent
JUDGMENT
BHOOLA A J:
Introduction
[1]
This is an opposed application to set a reserve price in a sale in
execution. On 6 September 2016 the applicant obtained
default
judgment against the respondents ordering them to make payment of the
amount of R5 009 440.46 to the applicant together
with interest at
the rate of 10,5% p.a. and costs on the attorney and client scale.
The court also
declared
their immovable property ("the property") specially
executable. The court order preceded the promulgation of
Uniform Rule
46A and the judgment in
Absa
Bank Limited v Mokebe
and related cases.
[1]
[2]
Thereafter the parties entered into negotiations and subsequently
concluded a settlement agreement in terms of which the respondents

undertook to settle the judgment debt (and other monies due to the
applicant) by making certain payments, failing which the applicant

could proceed to enforce its rights in terms of the aforesaid court
order. The respondents breached the settlement agreement by
failing
to make payment in terms thereof. Various sales in execution
scheduled in 2018 and 2019 were cancelled based on undertakings
by
the respondents, which they subsequently reneged upon. At the last
sale in execution the respondents threatened to stay the
sale on the
basis that no reserve price had been set by the court. This prompted
the present application.
The
issue
[3]
The issue to be determined is whether a reserve price should be set.
The
applicant's submissions
[4]
The respondents are indebted to the applicant in the aggregate sum of
R million (R4 974 284.91 plus interest at 10.25% p.a).
The sworn
valuation filed in terms of R46A(5) records the market value of the
property as R 4.2 million and the forced sale value
as R2 750 000.00.
As at 5 March 2019 the respondents were in arrears with the City of
Johannesburg in respect of rates, taxes and
utilities in the sum of
R89 426.06. As at 18 March 2019 the respondents were in arrears in
their levies to the relevant homeowners'
association to the extent of
R58 075.17.
[5]
Counsel for the applicant, Mr De Oliveira submitted that, taking into
account the forced sale value of the property and the
indebtedness to
the local authority and the homeowners' association, there is no
equity in the property and no reason to set a
reserve price.
[6]
In this regard the counsel referred in
Mokebe
(supra)
[2]
where
the court held that :
Rule
46A(8)(e), in operation since December 2017, now empowers the court
to set a reserve price for the property at the sale in
execution. It
would, in our view, be expedient and appropriate to generally order a
reserve price in all matters depending
on the facts of each case.
That will serve to curb the inequities of the matters such as those
in Jaftha, Ntsane, Maleka, Gundwana, Nxazonke and Nkwane.

The facts of a particularly case may, however, convince a court to
depart from the general practice of setting reserve prices.
It may
well be that the debtor’s obligations regarding the property
can be so great that the equity in the property is close
to zero or
even has a negative value.
This fact too, should be taken into
account in order to decide whether to impose the reserve price in a
particular matter. It will
always be
‘
.
.
.
in the interests of both the Banks and the judgment debtor to realise
as much value in the property as reasonably possible.’
(Counsel's emphasis)
[7]
Counsel submitted however, that to the extent that the court is
inclined to set a reserve price an amount of R3 327 498.77 would
be
appropriate in the circumstances.
Respondents'
answering affidavit and counter-application
[8]
The respondents filed a counter application and answering affidavit
in which they contend that the credit agreement upon which
the
judgment debt is based was reinstated in terms of section 129(3) of
the National Credit Act 34 of 2005 ("the NCA")
on 1
December 2016. The applicant submitted that such agreement (being a
home loan agreement) cannot be reinstated between the
parties in
terms of section 129(3) of the Act as it was terminated in terms of
section 123 of the Act. The respondents no longer
persist with this
defence.
Evaluation
[9]
On 1 December 2016 when the respondents signed the settlement
agreement they made payment of the sum of R125 449.28 in accordance

with clause 9.1 of the agreement. This was in compliance with the
agreement and they had in addition this amount further agreed
to pay
R49 415.36 per month on or before 1 December 2016 and on or before
the 1st of each successive month.
[10]
Respondents' submit that the property is their primary residence and
agree that a reserve price of R3 327 498.77 should be
set.
Respondents however persist in their submission that they should have
been provided with notice in terms of section 129(1)
and 130(1) of
the NCA prior to the institution of these proceedings. Mr De Oliveira
submitted that there are three defences to
this submission, each of
which are totally unassailable. Firstly, the current proceedings do
not constitute an application to the
court to enforce a credit
agreement as contemplated in section 130(1). A court order enforcing
the judgment debt has already been
granted and the current
proceedings involve the determination of a reserve price. Secondly,
the underlying
causa
is
the settlement agreement in terms of the judgment debt and not a
credit agreement. That the NCA does not regulate settlement

agreements was clearly established in the same matter in which the
respondents were appellants in the Supreme Court of Appeal:
Ratlou
v Man Financial Services.
[3]
However,
counsel submitted that even if this application is considered to
constitute debt enforcement proceedings, then on the authority
of
Ratlou
,
there is no need to comply with the NCA. Thirdly, counsel submitted
that this defence emerges for the first time and was not pleaded
by
the respondents in their answering affidavit. Since it is trite that
in motion proceedings the pleadings constitute the evidence,
the
respondents' contention is bad in law.
[11]
Ms Kriel, appearing for the respondents, submitted that the
contention that the NCA notice requirement was not raised in the

answering affidavit is not correct and referred to 19.2 thereof where
the respondents allege :
Insofar as the innuendo suggests that the
second respondent and I waived our rights, especially as envisaged in
the [National Credit]
Act, same is denied. Despite the settlement
agreement the enforcement of the terms and conditions of the credit
agreement were
at all relevant times subject to the stipulations of
the Act, applicant could not have proceeded with its enforcement in
disregard
thereof.
This is a reply to the founding
affidavit's allegations that the respondents are in breach of the
repayment agreement entered
into between the parties in terms of
which they undertook
inter alia
to settle the judgment debt
and other monies owed to the applicant, failing which the applicant
could proceed to with the recovery
thereof and exercise its rights in
terms of the court order.
[12]
Secondly, in regard to the submission that this application does not
constitute debt enforcement as contemplated by sections
129(1) and
130(1) of the NCA, counsel cited
Absa
v De Villiers
[4]
where
she submitted enforcement was construed in a very wide sense. Counsel
submitted that this application was brought by the applicant
to
enforce its right to proceed with sale in execution and hence it is
not correct to submit that these are not debt enforcement

proceedings. In any event Ms Kriel submitted, common sense determines
that this is a debt enforcement proceeding.
[13]
Ms Kriel submitted further that insofar as the applicant seeks to
attribute malice to the respondents based on their contrary

submissions in the SCA, Ms Kriel submitted that the underlying
causa
in the SCA matter did not fall within
the ambit of the NCA. Where the underlying transaction is a credit
agreement which is contemplated
by the NCA, Ms Kriel submitted that
the settlement agreement similarly constitutes a credit agreement and
hence the provisions
of the NCA are applicable. In this regard
counsel made reference to the matters of
Grainco
(Pty) Ltd v Broodryk NO & Others
2012
(4) SA 517
(FB),
Hattingh
v Hattingh
2014 (3) SA 162
(FB), and
Ribeiro & Another v Slip Knot
Investments
777 (Pty) Ltd
2011 (1) SA
575
SCA. These judgments are distinguishable, counsel submitted, as
the underlying
causa
did not fall within the ambit of the NCA and hence it was correctly
found by the respective courts that the settlement agreements
did not
constitute credit agreements. However, where the underlying
causa
is a credit agreement that is governed
by the NCA the applicable principle is that the settlement agreement
would continue to be
governed by the NCA. Hence, the applicant was
required to give notice in terms of the NCA to the respondents prior
to commencing
with debt enforcement proceedings.
[14]
In referring to the SCA judgment in
Ratlou (supra)
Ms Kriel
submitted that after having discussed the matters of
Grainco,
Hattingh and Ribeiro
the Court found as follows:
“
[26]
….. There can only be one conclusion, that the NCA was not
designed to regulate settlement agreements where the underlying

agreements or cause, would not have been considered by the Act.
[27] Having
found that the legislator never had the intention that the NCA be
applicable to all settlement agreements in terms which
accord with
the termination of credit transactions, in particular to the
agreement concluded by the parties in this case, it is
not necessary
to deal with the alternatives to MAN’s main argument. I may,
however indicate, in respect thereof as well,
that the effect of the
sudden unintended conversion of a non-consumer/noncredit provider
relationship into one governed by the
NCA and the chill effect that
would have on settlement of disputes would still hold considerable
weight. As was submitted on behalf
of MAN, parties who were never
credit providers, such as a once off lesser, would suddenly find
themselves unable to enforce the
terms of their settlement agreement,
for want of registration or due assessment or a lessee for
creditworthiness”.
[15]
It is clear that in
Ratlou
the
SCA was required to determine the question of whether a settlement
agreement is governed by the provisions of the NCA where
the
underlying contracts – the rental of trucks to a corporate
entity – and a suretyship in respect of the leases –
are
not governed by the Act.  In that matter Mr Ratlou ( who is also
the first respondent herein), sought on appeal to set
aside a
declaration by the high court that the settlement agreement between
his company and Man Financial Services is made an order
of the court.
The SCA dealt
(at
para [13])
with
the discrete legal point of whether the settlement agreement is
governed by the NCA. The high court had found that the settlement

agreement was a new credit agreement which fell within the ambit of
the NCA.
It
was a
transactio
or
compromise which created between the parties a new relationship with
consequential rights and obligations.
[16]
In this regard the SCA dealt (at para [18]) with the argument by Mr
Ratlou that the settlement agreement, as a new and independent

contract, extinguished the underlying
causa
and Mr Ratlou’s status in relation to the debt was altered to
that of a co-principal debtor. The provisions of the NCA therefore

applied. The SCA held : "[19]
Mr
Ratlou argued that the underlying causa for the compromise in the
form of the settlement agreement cannot be examined for the
purposes
of determining whether the acknowledgment of debt falls within the
parameters of the NCA. This is simply because the underlying
causa
has been extinguished by the compromise. The argument is artificial.
If the underlying causa did not fall within the parameters
of the
NCA, then its compromise in terms of the settlement agreement, cannot
logically result in the agreement being converted
to one that does."
It was accordingly held
(at
[28]) that the settlement agreement did not fall within the ambit of
the NCA.
[17]
Ms Kriel submitted that in the light of the SCA's decision, in
casu
the settlement agreement is regulated
by the NCA and the applicant cannot seek to create a superficial
distinction between a judgment
debt and a settlement agreement. As
was held by the SCA in
[22])
"it
provided for payment of the amount owed in deferred instalments and
interest was payable in terms thereof."
However, it must be noted that the court proceeded to state that "
on
a literal interpretation the settlement agreement meets the
definition of a credit transaction".
[18]
I am in agreement with the submissions by Mr De Oliveira in reply
that the reliance on sections 129(1) and 130(1) of the NCA
is not
explicitly pleaded in the answering affidavit. The paragraph the
respondents' rely upon relates to their previous reliance
on the
submission that they have a right to reinstatement of the credit
agreement in terms of section 129 (3) of the NCA. This
reliance on
reinstatement has since been abandoned. In regard to the respondents'
reliance on
ABSA v De Villiers
(supra)
counsel
submitted that it deals with an instalment sale agreement and is
distinguishable since the applicant is seeking to exercise
its rights
in terms of the judgment debt. I agree. The terms of the settlement
agreement moreover make it clear that applicant
is entitled to
proceed to enforce its rights under the judgment debt. It is not
therefore required to give notice in terms of the
NCA to the
respondents. The decision in
Ratlou
moreover, as counsel
submitted, makes it clear that the court is dealing with a judgment
debt not a settlement agreement. The respondents'
own reliance on the
SCA authority therefore does not assist it in this instance.
[19]
Ms Kriel submitted that if this court was not inclined to find in the
respondents' favour on the applicability of the NCA,
which would
require a postponement of the matter in terms of section 130(4)(b) to
enable the applicant to give notice to the respondents,
then a
reserve price should be set. In this regard the respondents are in
agreement with the reserve price proposed by the applicant
in the
notice of motion. In regard to costs Ms Kriel submitted that there
was no reason for costs on a punitive scale as the respondents'

opposition is justified and the issues it raised arise squarely from
the SCA judgment in
Ratlou.
The applicant could have sought a
postponement of the matter in order to ensure that the relevant
notices were issued but instead
chose to proceed with this
application.
Order
[20]
In the premises, I grant an order as follows :
20.1 That the respondents' immovable
property described as Erf […], the Province of Gauteng,
Measuring 1330 (One Thousand
Three Hundred and Thirty square metres)
in Extent and held by Deed of Transfer No. T 25957/2006 be sold by
the sheriff of the above
honourable court at a duly constituted sale
in execution subject to a reserve price of R3 327 498.77
20.2 The respondents to pay the costs
of this application on a party and party scale.
___________________________________
U. BHOOLA
ACTING JUDGE OF THE
HIGH
COURT
GAUTENG DIVISION, JOHANNESBURG
Date
of hearing: Heard on 27 August 2020 by videoconference in terms of
the Judge President's extended Consolidated Directive of
11 May 2020
extended to 15 September 2020.
Date
of judgment: Judgment was handed down electronically and emailed to
parties, uploaded onto caselines and made available to
saflii.org on
18 September 2020 and is deemed to have been handed down at 10:00.
Appearances:
Counsel
for the Applicant:  Adv. M. De Oliveira
Instructed
by: Jason Michael Smith Inc. Attorneys
Rosebank,
Johannesburg
Counsel
for the Respondent: Adv. Z. Kriel
Instructed
by: Machobane Kriel Inc.
Brooklyn,
Pretoria
[1]
Absa
Bank Limited v Mokebe; Absa Bank Limited v Kobe; Absa Bank Limited v
Vokwani; Standard Bank of South Africa Limited v Colombick
and
Another (
2018/00612;
2017/48091; 2018/1459; 2017/35579) [2018] ZAGPJHC 485;
2018 (6) SA
492
(GJ) (12 September 2018)
.
Rule 46A came into operation on 22 December 2017.
[2]
Ibid
at para 59
.
[3]
(1309/2017)
[2019] ZASCA 49
(01 April 2019).
[4]
(146/09)
[2009] ZASCA 140
(17 November 2009).