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[2021] ZAGPJHC 25
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Morula Resources cc and Another vs Natioal Urban Reconstruction and Housing Agency NPC (21247/2018) [2021] ZAGPJHC 25 (10 February 2021)
IN THE HIGH COURT OF
SOUTH AFRICA
GAUTENG
DIVISION, JOHANNESBURG
CASE
NO:
21247/2018
NOT REPORTABLE
NOT OF INTEREST TO OTHER
JUDGES
REVISED
In
the matter between:
MORULA
RESOURCES CC
First
Applicant/First Respondent
a quo
TSHIRELETSO
HAROLD DIRA
Second Applicant/Second Respondent
a
quo
and
NATIONAL URBAN
RECONSTRUCTION &
HOUSING
AGENCY NPC
Respondent/ Applicant
a
quo
J U D G M E N T
(Application for Leave to
Appeal)
MAIER-FRAWLEY
J
:
1.
The applicants (first and second respondents’
respectively
a quo
)
seek leave to appeal the judgment and order granted by me on 16
November 2020 (‘the judgment’) in terms of which,
amongst
others: (i) two immovable properties owned by Morula Resources CC
(judgment debtor) were declared to be specially executable;
(ii) the
issuing of a writ of execution in respect of the properties was
authorized; and (iii) the sale in execution of each of
the properties
was made subject to a reserve price, in the respective amounts
stipulated in paragraph 4 of the order.
2.
For convenience, the parties
will be referred to as they were
referred to in the main application: Morula Resources CC was the
first respondent, whilst Mr Harold
Dira Tshireletso was the second
respondent. Although they are the applicants in the application for
leave to appeal, they will
be referred to collectively as ‘the
respondents’ or individually as first and second respondents in
this judgment as
dictated by the context. National Urban
Reconstruction & Housing Agency NPC will, for convenience, be
referred to as ‘the
execution creditor’ herein.
3.
The
judgment found that the provisions of Rule 46A of the Uniform Rules
of Court were not applicable to the matter in circumstances
where
execution was sought only as against the immovable properties owned
by a juristic person such as the first respondent-judgment
debtor,
based on the authority of
Folscher,
[1]
as
further discussed and applied in the unreported decision of
Investec.
[2]
As was
reaffirmed by the Constitutional Court in
Garvas,
[3]
‘
Following
previous decisions constitutes not only compliance with the doctrine
of judicial precedent but also accords with the principles
of
judicial discipline and accountability.’
4.
The
judgment was challenged on two grounds, namely, that the court erred
in:
(1)
Not ordering
that a sworn valuation in support of the market value of the
Immovable Properties must be placed before the Honourable
Court under
oath, as provided for by Rule 46A(5)(a) of the Uniform Rules of
Court, in order to enable the Honourable Court to determine
a reserve
price for the sale in execution of the immovable properties; and
(2)
Not ordering that
certain parties with a vested interest in the proceedings be joined
to the proceedings and/or notified thereof.
To this end, the Court
did not order that the Registrar of Deeds and the bondholder that
registered a mortgage bond over the immovable
properties, namely the
Standard Bank of South Africa Limited, be joined to and/or notified
of the proceedings.
5.
At
the hearing of the application for leave to appeal and in heads of
argument filed on their behalf, reliance on the second ground
of
appeal was expressly abandoned by the respondents.
6.
As indicated in the judgment, one of the
two properties owned by Morula Resources CC (the Sagewood property)
was occupied by the
second applicant (Mr Harold Dira Tshireletso) and
his family at the time the main application was heard. Such
occupation however
only commenced sometime after service of the main
application upon the respondents
a
quo.
7.
I was informed at the hearing of the
present application that the respondents do not take issue with the
fact that the Kingfisher
property, being the other property owned by
the close corporation, was declared specially executable and is
therefore subject to
a sale in execution in satisfaction of the first
respondent’s existing indebtedness to the execution creditor.
Respondents’
contentions
8.
Leave
is sought to appeal the order of executability granted only in
respect of the Sagewood property on the basis that, so it was
contended, Rule 45A was applicable, given that Mr Tshireletso, who
was occupying that property as his primary residence, remained
a
judgment debtor, albeit that execution was not sought against any
immovable property owned by him and that the close corporations,
as
principal debtor, was first being excussed by the execution creditor.
Therefore, so the argument developed, on the authority
of
Mokebe
,
[4]
the court ought to have insisted on a sworn valuation being placed
before it of the market value of the Sagewood property in order
to
arrive at a forced sale value for purposes of determining a reserve
price at a future sale in execution.
9.
Reliance
was placed on the case of
Nedbank
,
[5]
where
Ramapuputla
AJ
placed
emphasis on the fact that the property sought to be declared
executable was used as a dwelling or shelter for humans, rather
than
on the identity of the judgment debtor, in circumstances where one of
the trustees of a property owning Trust was occupying
the Trust’s
property.
Ramapuputla
AJ concluded that ‘
it
is immaterial whether the judgment debtor is a juristic person or a
natural person. The trustees in their official capacity do
not have
to be the judgment debtors for Rule 46A to be applicable
…’
10.
Counsel
for the respondents submitted that there are conflicting judgments on
the applicability of Rule 46A (given the differing
views expressed in
the
Nedbank
and
Investec
cases) so that it is necessary for higher courts to pronounce on the
issue. The peculiar facts of the present matter, so it was
submitted,
also offer a compelling reason why the appeal should be heard. Leave
to appeal is accordingly sought in terms of ‘s17(1)(a)(ii)
of
the Supreme Court Act, 10 of 2013’
[6]
.
Discussion
11.
Counsel for the execution creditor argued
that in terms of
s 17
of the
Superior Courts Act, 10 of 2013
, an
application for leave to appeal can only be granted where the
presiding judge is of the opinion that either the appeal would
have
reasonable prospects of success or there is some other compelling
reason why the appeal should be heard, including whether
or not there
are conflicting judgments on the matter under consideration. In
neither instance, have the respondents met the threshold
standard
entitling them to be granted leave to appeal.
12.
Section 17 of the Superior Courts Act, 10
of 2013, (‘the Act’) provides for the following test to
be applied in applications
for leave to appeal:
“
(1)
Leave to appeal may only be given where the judge or judges concerned
are of the opinion that -
(a)
(i) the appeal would have a reasonable
prospect of success; or
(ii) there is some other
compelling reason why the appeal should be heard, including
conflicting judgments on the matter under consideration;
(b)
…”
13.
The
use of the word ‘would’ in section 17 (1)(a)(i) of the
Superior Courts has been held to denote ‘
a
measure of certainty that another court will differ from the court
whose judgment is sought to be appealed against.’
[7]
Such
approach has been held to
be
correct in this division in
Acting
National Director of Public Prosecutions and Others v Democratic
Alliance, In Re: Democratic Alliance v Acting National Director
of
Public Prosecutions and Others.
[8]
To
this may be added, further cautionary notes sounded by the Supreme
Court of Appeal in dealing with appeals: In
S
v Smith
,
[9]
it was stated that in deciding whether there is a reasonable prospect
of success on appeal, there must be ‘a sound, rational
basis
for the conclusion that there are prospects of success on appeal.’
In
Dexgroup
(Pty) Ltd v Trustco Group International (Pty) Ltd and Others,
[10]
the
SCA cautioned that the ‘need to obtain leave to appeal is a
valuable tool in ensuring that scarce judicial resources are
not
spent on appeals that lack merit. …’
14.
The respondents argue that a sworn
valuation ought to have been required by the court before it could
determine a reserve price
apropos the future sale in execution of the
Sagewood property.
15.
The respondents rely on the fact that the
Sagewood property is occupied by Mr. Tshireletso as his primary
residence for their submission
that Rule 46A was applicable to the
enquiry pertaining to the executability of the Sagewood property. The
court considered the
contention out of an abundance of caution based,
however, on the cursory argument proffered at the hearing of the main
application
that the ambit of Rule 46A ought to be extended to cater
for an occupant such as Mr Tshireletso. I did so, notwithstanding
that
no case in support of such an argument had in fact been made out
in the answering affidavit and no reasons had been advanced in
oral
argument for why the facts of the matter warranted a departure from
established case law on the subject.
16.
The
respondents appear to accept that Rule 46A does not apply to juristic
persons, given the authoritative pronouncements by superior
courts on
the inapplicability of the provisions of Rule 46A to properties
against which execution is sought, which are owned by
judgment
debtors comprising juristic persons.
[11]
17.
The
plain meaning of the express provisions R
ules
46A(1) and (2) clearly underscores that which was stated in
Folscher.
[12]
The sub-rules provide for the establishment of two jurisdictional
facts, first, that the executor creditor seeks execution against
the
residential immovable property of a judgment debtor and, second, that
the property sought to be executed against is the primary
residence
of that judgment debtor. The Sagewood property is not the immovable
property of Mr.
Tshireletso,
regardless of whether or not he is a notional judgment debtor.
Execution is not sought to be levied against his immovable
property
in satisfaction of the judgment debt. This should be considered in
conjunction with what was stated in paragraph 4 of
my judgment.
.
18.
In
the present application, the applicants rely on pronouncements made
in the
Nedbank
case
for their submission that a higher court needs to consider an
extension of the ambit of Rule 46A. The court in
Investec
[13]
concluded
that the
Nedbank
decision
was ‘clearly wrong’ for
inter
alia,
reasons
outlined in paras 63 to 71 of that judgment and which reasons I
cannot respectfully fault.
19.
The respondents have not sought to
appeal the following findings or conclusions in the judgment:
19.1.
That there
were no other proportionate means to exact payment of the judgment
debt, other than through execution levied against
the immovable
properties of the close corporation (first respondent);
19.2.
That on the
facts, the second respondent (Mr.
Tshireletso)
did not fit the demographic of an indigent, vulnerable or poor
debtor;
19.3.
That it had not been established by
the respondents that an infringement of Mr Tshireletso’s
constitutionally protected right
to
adequate
housing had been infringed or would be infringed by execution against
the immovable property of the close corporation; and
19.4.
The finding that execution was
justifiable in the circumstances alluded to in the judgment.
20.
In
my view, the respondents have failed to persuade me that there is a
measure of certainty that another court will come to a different
conclusion and find that the application should have been accompanied
by a sworn valuation despite the fact that the judgment debtor
whose
property was sought to be declared executable is a juristic entity
which does not enjoy the protection or application of
Rule 46A. Nor
am I persuaded that there are compelling reasons, based on the facts
of the matter at hand or on pronouncements
made in the
Nedbank
case
that are in any event in conflict with binding pronouncements made by
higher courts in
Foscher
and
Mokebe
[14]
that the appeal be heard. In the result, the application for leave to
appeal must fail.
21.
As the successful party, the
applicant is entitled to the costs of the application. I have not
been alerted to any facts or circumstances
that would justify a
departure from the general rule that costs follow the result.
22.
Accordingly, the following order is
granted:
ORDER
1.
The application for leave to appeal is
dismissed with costs.
A
MAIER-FRAWLEY
JUDGE
OF THE HIGH COURT,
GAUTENG
DIVISION, JOHANNESBURG.
Delivered:
This judgement is handed down electronically by circulation to the
Parties/their legal representatives by email
and by uploading it to
the electronic file of this matter on CaseLines. The date for
hand-down is deemed to be 10 February
2021.
Date of virtual hearing:
5 February 2021
Judgment
delivered:
10 February 2021
APPEARANCES:
Counsel for
Applicant:
Ms KA Wilson
Attorneys
for Applicant:
DMO Attorneys
Counsel for
Respondent:
Mr
C. Rip
Attorneys for
Respondent:
Morne
Coetzee Attorneys
[1]
Firstrand
Bank ltd v Folscher and another, and Similar Matters
2011
(4) SA 314
(GNP), para 32, a decision of the Full Court of this
division to which I am bound.
[2]
Investec
Bank Limited v Fraser N.O. and Another
(33437/2019)
[2020] ZAGPJHC 107 (6 May 2020), an unreported decision of Lapan AJ
in this division, with whose reasoning I respectfully
agreed in the
judgment or at least could not conclude was wrong.
[3]
SATAWU
v Garvas
[2012]
ZACC 13
;
2013 (1) SA 83
(CC);
2012 (8) BCLR 840
(CC) at para 114,
where the court reaffirmed what had earlier been said in
Ex
parte Minister of Safety and Security: In re S v Walters
[2002]
ZACC 6
;
2002
(4) SA 613
(CC)
[2002] ZACC 6
; ;
2002
(7) BCLR 663
(CC)
at para 57
concerning
the application of the
doctrine
of
stare
decisis
(Doctrine
of Judicial precedent).
[4]
Absa
Bank Ltd v Mokebe and Related Cases
2018
(6) SA 492
(GJ), a Full Court decision in this division, sitting in
Pretoria.
[5]
Nedbank
v Trustees for the time being of the Mthunzi Mdwaba Family Trust and
Others
(7901/2017)
ZAGPPHC 336 (9 July 2019). An unreported decision of Ramapuputla AJ
given in the Gauteng Division, Pretoria.
[6]
The reference to ‘Supreme Court Act’ was probably an
error.
[7]
The
Mont Chevaux Trust (IT 2012/28) and Tina Goosen and 18 Others
Case No. LCC 14R/2004, at para [6].
[8]
(19577/09)
[2016) ZAGPPHC
489
(24 June 2016) para [25], a decision of the Full Court, which
subsequently been approved by the Supreme court of Appeal in
Notshokovu
v S
(157/15)
[2016]
ZASCA 112
(7 September 2016),
at
para 2, where the following was said: “
An
appellant, on the other hand, faces a higher and stringent
threshold, in terms of the Act compared to the provisions of the
repealed Supreme Court Act 59 of 1959. (See Van Wyk v S, Galela v S
[2014]
ZASCA 152
;
2015
(1) SACR 584
(SCA)
para [14].
)”
[9]
2012
(1) SACR 567
(SCA) para 7.
[10]
2013
(6) SA 520
SCA
at
para [24].
[11]
See:
Folscher,
cited
in fn 1 above, where the Full Court held that the term ‘judgment
debtor’ refers to an individual person and
not a juristic
person. At par 31 of that judgment, it was held that ‘
It
is therefore the primary residence
owned
by a person
[judgment
debtor]
that
falls within the purview of the rule.’
(own
emphasis). See too:
Investec
(cited
in fn 2 above).
[12]
Id
Folscher,
par 31.
[13]
Investec,
(cited
in fn 2 above). At paras 69 to 71 of
Investec
,
the following was said:
“
The Nedbank judgment
is in conflict with the judgments in
Jaftha
,
Gundwana
,
Mokebe
and
Folscher
,
all of which considered that the constitutional protections are
afforded to judgment debtors who are individuals and natural
persons
in danger of losing their homes and where it was held, specifically
by the Full Bench constituted in
Mokebe
and
Folscher
,
that these protections are not available to legal entities or
trusts
.
Where
the shareholder or trustee is not the beneficial owner of the
property, no enquiry can be made into his/her personal circumstances
when considering execution of a judgment debt obtained against a
company or a trust of which they are a shareholder or trustee,
respectively. In those circumstances, insisting on compliance
with the provisions of rule 46A will be wholly misplaced
as it would
be aimed at protecting a right which the occupant of the property
does not have as he/she is not the judgment debtor.
Such
an interpretation could have the unintended consequence of a company
or a trust allowing any individual to occupy its property
with a
view to avoiding or delaying execution against its property.
The execution creditor will then be required to take
the steps set
out in rule 46A to safeguard the interests of the occupant who is
not the judgment debtor and whose rights in terms
of section 26 of
the Constitution are not implicated. These are the
implications of the decision in
Nedbank
and it is
in conflict with the earlier judgments of higher authority which
considered the
persona
of the judgment debtor to be
an essential component in matters involving execution against the
judgment debtor’s property.”
[14]
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)