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[2021] ZAGPJHC 32
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Kgasoane and Another v Nedbank and Another (13040/2019) [2021] ZAGPJHC 32 (23 March 2021)
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IN
THE HIGH COURT OF SOUTH AFRICA
GAUTENG
LOCAL DIVISION, JOHANNESBURG
(1)
REPORTABLE:
YES
/ NO
(2)
OF INTEREST TO OTHER JUDGES:
YES
/NO
(3)
REVISED.
23
March 2021
CASE
NUMBER:
13040/2019
In
the matter between:
JOHN
KARABO KGASOANE
First Applicant
LERATO
GIFT KGASOANE
Second
Applicant
and
NEDBANK
LIMITED
First
Respondent
THE
SHERIFF OF THE HIGH COURT
JOHANNESBURG
SOUTH
Second Respondent
Delivered:
This judgment was handed down electronically by
circulation to the parties’ representatives by email.
Summary:
Variation of a court order in terms of Rule 42(1) – Necessity
to include reserve price — Judicial
oversight imperatives under
Rule 46A – Sale of primary residential property for
recovery of outstanding bond repayments
— Constitution, section
26.
JUDGMENT
ROME
AJ:
INTRODUCTION
AND ISSUES
[1]
This is an application by the first and second applicants, Mr and Mrs
Kgasoane
(collectively,
“the Kgasoanes”) for the rescission alternatively
variation of a final order granted in default of their
appearance. By
the time the matter was argued before me the Kgasoanes’
confined the relief sought to that of variation of
the default order.
[2]
Whilst the facts are relatively straight forward, the adjudication of
the application
for variation gave rise to the
following somewhat complex legal issue.
[3]
Where a judgment
creditor
[i]
seeks execution in respect of immovable property
which is also the primary
residence of an individual debtor –
(a) Do the Rules of
Court and in particular the provisions of Rule 46A now prescribe
that, barring exceptional circumstances,
an order of special
executability must invariably provide for a reserve price below which
the property cannot be sold in auction?
(b) Can a party
against whose home an order of special executability was granted by
default, obtain a variation of that
default order if the order does
not provide for a reserve price?
[4]
The first question has been comprehensively answered by a Full Bench
of
this Division. The second question is addressed in this judgment.
THE
FACTS
The main application
and the default order
[5]
In 2019 the first respondent, Nedbank, as creditor and mortgagee of
the
Kgasoanes,
brought a consolidated application (“the main application”)
for a monetary judgment and a special order of
executability. In the
main application, Nedbank sought payment of a first amount of
R3,966,454.08
and a second amount of
R1,445,977.43
from the Kgasoanes (the first
and second respondents in the main application) and from a third
respondent,
Nhlamulo-Hosi Investment
CC.
This entity’s liability to Nedbank was as surety for the
indebtedness of the Kgasoanes. Since this entity has not sought
to
rescind or vary the default order I need mention it no further.
[6]
The Kgasoanes above indebtedness to Nedbank arose from their
conclusion
of
two written loan agreements with Nedbank. Neither the conclusion of
the
loan
agreements, nor the amounts of the capital advanced thereunder are in
dispute.
[7]
The larger amount of the Kgasoanes’ above debt (
R3,966,454.08
)
arose from
a
loan agreement dated 22 September 2015. In terms of this agreement,
Nedbank had lent and advanced the amount of R3,925,700.00
(“the
first capital amount”) to the Kgasoanes. The Kgasoanes’
obligations to repay the first capital amount,
and interest accrued
thereon was secured by a mortgage bond which the Kgasoanes registered
on 17 December 2015 in favour of Nedbank.
This mortgage bond is
registered over immovable property described as
[….]
(“the [….] property”).
[8]
The second amount owed by the Kgasoanes (
R1,445,977.43
)
pertains to a loan
agreement
also dated 22 September 2015. In terms of this agreement, Nedbank had
lent and advanced the amount of R1,4 million (“the
second
capital amount) to the Kgasoanes. The Kgasoanes’ obligations to
repay the second capital amount and interest accrued
thereon was also
secured by a mortgage bond which they registered on 31 July 2015 in
favour of Nedbank. This mortgage bond
is registered over
another immovable property described as
[….]
(“the [….] property”).
[9]
Subsequent to Nedbank’s advance of the first and second capital
amounts, and
as
set out it the main application, the Kgasoanes breached their
obligations to pay the monthly instalments due under the loan
agreements. As a result, Nedbank as it was entitled to do, elected to
recover the full amount owed in respect of its loans (and
interest
thereon) and simultaneously sought a special order of execution as
against both the [....] property and the [....] property.
[10]
In its founding affidavit, Nedbank set out the attempts it had made
prior to
issuing
the main application, to reach a repayment plan with the Kgasoanes
and that these attempts had come to naught. Nedbank further
drew the
Kgasoanes’ attention to the applicable provisions of the
National Credit Act (section 129(3)) and their rights thereunder.
[11]
In respect of the [....] property, Nedbank stated that to the best of
its
knowledge
this property is owned by the Kgasoanes and is used by them as their
primary residence. Nedbank, per the contents
of its founding
affidavit, advised the Kgasoanes of their constitutional right to
housing and of the procedural provisions available
to protect such
right. Specifically, Nedbank informed the Kgasoanes that if they
believed that the execution process would infringe
on their right to
housing, it was incumbent on them to place information before the
Court supporting such claim and to place information
and submissions
before the Court in relation to Rule 46(1)(a)(ii) of the Uniform
Rules of Court.
[12]
Nedbank in its founding affidavit further stated that if the Court
would deem it
necessary
to set a reserve price. It would suggest that an appropriate reserve
price would be for an amount of R2.8 million being
50% of the market
value of the [....] property, which amount took into account the
average selling price in the area and the various
expenses which a
prospective buyer would have to pay at a public sale in execution
including such factors as the Sheriff’s
commission, transfer
costs, outstanding rates and taxes, outstanding levies, the eviction
and escalation costs.
[13]
In regard to the [....] Property, Nedbank in its founding affidavit,
stated that the
Kgasoanes
acquired this property as an investment property and that as such
this property was not occupied by them as their home.
Nonetheless, as
with the [....] property, Nedbank drew the Kgasoanes’ attention
to their constitutional right to housing
and to their rights to place
information supporting any claim by them that the order for execution
would infringe it. Given
the stated nature of the Kgasoanes’
use of the [....] property, Nedbank’s founding affidavit
unsurprisingly makes no
mention of any reserve price being
appropriate in regard to a sale in execution of this property.
[14]
The Kgasoanes did not enter an appearance to oppose the main
application.
Nedbank
then obtained default judgment against the Kgasoanes per an order of
this court dated 8 August 2019 (“the default
order”).
[15]
In terms of the default order, the Kgasoanes jointly and severally,
the one
paying
the other to be absolved, were directed to pay Nedbank the
abovementioned amounts of R3,966,454.08 and R1,445,977.00. The
default order further declared both the [....] and [....] properties
to be specially executable and it did not provide for the
inclusion
of a reserve price in respect of the sale of either property.
The application for
rescission, alternatively variation
[16]
On 25 February 2020, the Kgasoanes issued the present application. In
this
application, the
Kgasoanes sought the rescission of the entirety of the default
order. In the alternative, they sought an
order that this court
mero moto
consider the inclusion in the conditions of sale of
the properties of a reserve price of R6 million for the [....]
property and
a reserve price of R1,850,000.00 for the [....]
property.
[17]
The Kgasoanes’ supporting founding affidavit, deposed to by Mr
Kgasoane, can
at
best be described as underwhelming. It contains numerous legal
submissions dealing with the right to housing and the need for
the
procedural protection of that right when a judgment creditor seeks
execution as against the debtor’s home or primary
residential
property. The Kgasoanes’ affidavit is further replete with
paragraphs that do no more than paraphrase at length
the contents of
the Kgasoanes’ n
otice of motion. Rather than setting out
detailed facts, the Kgasoanes’ affidavit contains lengthy
quotations from certain
judgments dealing with the right to housing.
The affidavit also, and at some length, needlessly restates trite
legal principles
pertaining to rescission under Rule 31(2)(b), the
common law and Rule 42(1).
[18]
By contrast in proffering a reason for their default, Mr
Kgasoane in one short
paragraph states that –
“
The
Applicant's [sic] reasons for not opposing the application
comprehensively at the first instance and the Applicant's [sic]
reasons for not applying for relief at an earlier stage; were also
because of financial constraints that resulted in the Applicant
[sic]
unable to properly instruct legal representation timeously and/or
further at the given period. Hence the Applicant as an
individual
consumer that he is, only recently after securing the necessary legal
resources (fees); has launched this application.
This is in order for
her [sic] place relevant and concrete facts before the Honourable
Court.”
[19]
Despite the use of the word “also” in the above extract
from his founding
affidavit,
Mr Kgasoane failed to furnish any other facts in regard to the
alleged impediment of not being able to obtain legal assistance.
Mr
Kgasoane further proffered no facts to support the Kgasoanes’
submission that they lacked funds to brief a lawyer timeously
and
that this alleged impecuniosity caused their default. Further Mr
Kgasoane’s affidavit contains no details of any efforts
the
Kgasoanes might have made to “timeously” obtain legal
representation. Their affidavit moreover does not provide
any
explanation as to when and how the Kgasoanes’ circumstances
altered so as to allow them to have now obtained obtain legal
representation. Finally, the affidavit is entirely silent as to why
the Kgasoanes themselves could not have, despite the real
disadvantage of lacking legal representation, taken any steps
personally to oppose Nedbank's application.
[20]
In her heads of argument, counsel for Nedbank, Ms Kabelo, correctly
pointed
out
that the Kgasoanes had failed to provide an explanation for their
default. Ms Kabelo submitted that on this basis alone the
Kgasoanes’
application fell to be dismissed. In response to these contentions
and prior to my hearing the rescission application,
the Kgasoanes
then made an oral application to this Court from the bar for a
postponement to introduce evidence/further evidence
explaining their
default. After hearing argument, I dismissed the Kgasoanes’
postponement application. When the rescission
application was
thereafter heard, the Kgasoanes indicated that they were no longer
persisting with an application for rescission
but that they in
effect sought a variation of the default order so as to provide
for a reserve price of some R5,2 million
[ii]
in respect of the [....] property and some R1,7 million in respect of
the [....] property.
[21]
The Kgasoanes submissions were that this Court has the necessary
jurisdictional
facts before it
mero motu
to enquire into the issue of the
reserve price and to decide whether the default order requires
variation so as to include the
reserve prices suggested by them. They
contended that their affidavit contains sufficient evidence to
sustain the submissions advanced
by them as to the appropriate amount
of the reserve price being set for each property.
Rule
42
[22]
As the application before me thus evolved into one for variation of
the default
order
so as to provide for a reserve price, a brief review of the
requirements for a variation of an order under Rule 42 is required.
It is also necessary to consider whether Rule 42’s strictures
can be softened in circumstances where an application for variation
pertains to the imperative requirements of Rule 46A.
[23]
Rule 42(1) deals with both the recission and variation of an order of
court. It
provides
that:
“
The court may, in addition
to any other powers it may have, mero motu or upon the application of
any party affected, rescind or
vary:
(a) An order or judgment
erroneously sought or erroneously granted in the absence of any party
affected thereby;
(b) an order or judgment in which
there is an ambiguity, or a patent error or omission, but only to the
extent of such ambiguity,
error or omission; …”
[24]
The Kgasoanes contended that the Court’s failure to set a
reserve price when
granting
the default order resulted in the order being erroneously sought or
granted and also constituted an omission within the
purview of Rule
42. These contentions however ignored the narrow ambit of the Rule
and what in the context of the Rule, is meant
by an “omission”.
[25]
The cases of
First National Bank of SA Ltd v
Jurgens and Others
1993 (1) SA
245
(W) and
Bakoven Ltd v G J Howes (Pty) Ltd
1992 (2) SA 466
(E)
illustrate how the courts have understood and applied the ambit
interpreted the purpose of Rule 42 and the nature of the error
that
may found an application under this Rule.
[26]
In
Bakoven
,
the Court succinctly explained that (at 471F):
“
An
order or judgment is ‘erroneously granted' when the
Court commits an ‘error’ in the sense of ‘a mistake
in a matter of law (or fact) appearing on the
proceedings of a Court of record’ (The
Shorter Oxford
Dictionary). It follows that a Court in deciding
whether a judgment was ‘erroneously granted’
is, like a Court of Appeal, confined to the record of
proceedings.”
[27]
In
First
National Bank of SA Ltd v Jurgens
,
Leveson J explained the meaning
of the word “omission” in Rule 42 as follows (at
247D-E):
“
I am unable to perceive
how an omission can be categorised as something erroneously sought or
erroneously granted.
I consider that the Rule only has
operation where the applicant has sought an order different from that
to which it was entitled
under the cause of action as pleaded.”
[28]
In the present matter there is nothing in the record of the
proceedings to even
remotely
suggest that Nedbank had sought or obtained an order to which it was
not entitled under the “cause of action as pleaded”.
The
absence of any manifest error in the record of proceedings combined
with the Kgasoanes’ failure to provide an adequate
explanation
for their default would, but for the considerations pertaining to
immovable home properties, have led me to dismiss
the application.
However, there are countervailing considerations. A dismissal of the
variation sought on the somewhat perfunctory
basis that it does not
fall within the strictures of Rule 42 may be inconsistent with the
values and purports underpinning the
provisions of Rule 46A.
Rule 46A
[29]
Nedbank both in the main application and in its answering affidavit
in the
present
application, has informed the Court that it was (and is) not averse
to a reasonable reserve price being set for the sale
of the [....]
property. Nedbank’s concession that a reasonable reserve could
be set for the [....] property did not however
find its way into
default order. There is also nothing in the record to indicate why in
granting the default order the Court omitted
to provide for a reserve
price for the [....] property.
[30]
Rule 46A mandates increased judicial oversight in the execution
process where
that
process may effect and even negate the relevant judgment debtor’s
right to housing. Accordingly, to assess whether notwithstanding
the
shortcomings of the Kgasoanes’ application, the default order
may still be varied to take into account Nedbank’s
acceptance
that a reserve price could have been provided for, it is necessary to
refer to the context in which Rule 46A was introduced
into the
Uniform Rules.
[31]
The introduction of specific Rules of Court to enhance judicial
oversight in the
execution process
gained momentum as a result of several appeal judgments commencing
with
Chief
Lesapo v North West Agricult
ural
Bank and Another
[1999] ZACC 16
;
2000
(1) SA 409
(CC) and
Jaftha v Schoeman and Others;
Van Rooyen v Stoltz and Others
[2004] ZACC 25
;
2005 (2) SA 140
CC.
[32]
In
Jaftha
, the unanimous Constitutional Court (per Mokgoro J)
stated
(para 28):
“
Section 26(3) [of the
Constitution]
is
the provision which speaks directly to the practice of forced
removals and summary eviction from land and which guarantees that
a
person will not be evicted from his or her home or have his or her
home demolished without an order of court considering all
of the
circumstances relevant to the particular case. The whole section,
however, is aimed at creating a new dispensation in which
every
person has adequate housing and in which the State may not interfere
with such access unless it would be justifiable to do
so.”
[33]
In
Gundwana v Steko Development and Others
2011 (3) SA 608
(CC), the
Constitutional
Court, again unanimously (per Froneman J) summarised the effect of
Jaftha
and
Chief
Lesapo v North West Agricultural Bank
thus
(para 41):
“
The
combined effect of these two cases is that execution may only follow
upon judgment in a court of law. And where execution against
the
homes of indigent debtors who run the risk of losing their security
of tenure is sought after judgment on a money debt, further
judicial
oversight by a court of law of the execution process is a must.
”
(Footnote omitted.)
[34]
The consti
tutional imperative for further and
improved judicial oversight in the execution process then led to the
promulgation of Uniform
Rule 46A which came into effect on 22
December 2018.
The principle
underlying Rule 46A is that, when adjudicating on an application for
an execution order against a debtor’s primary
residence, a
court must consider whether the debtor can satisfy the debt in an
alternative way so as to avoid a sale of the debtor’s
home. In
furtherance of this precept, Rule 46A specifically provides that an
execution order will only be justified as against
the debtor’s
home if, a Court upon considering all relevant factors, has
determined that such execution is “warranted”.
[35]
Rule
46A therefore contains detailed provisions regarding the form and
content of the notice of application, the content of the
supporting
affidavit, information to be evidenced by supporting documents,
service of the notice of application and supporting
affidavit on the
debtor and other affected persons, and the manner in which the debtor
should respond to the application. Most
pertinently, the Rule
provides for the Court’s exercise of, what has described as, a
“novel power”
[iii]
to set a reserve price.
[36]
A
reserve price is something peculiar to a sale by public auction. The
“reserve”
or the “reserve price”
is
the minimum price that a seller is willing to accept for goods/assets
to be sold at auction. Typically, the seller is the owner
of the
auctioned item or at least is acting at the owners’ behest. At
an auction sale, the seller would ordinarily have the
power to choose
whether the auction of the relevant item is to be subject to a
reserve price.
In
contrast
the
judgment debtor, having already largely lost control over the fate of
his/her attached property, has no power to require the
application of
a reserve price. The absence of the owner’s input on whether a
reserve price should to be stipulated for clearly
led to inequity and
abuse.
[37]
In
Nxazonke
and Another v Absa Bank Ltd and Others
[2012]
ZAWCHC 184
(WCC), Davis J deal with a notorious instance where in an
action sale in execution, the debtor’s home was sold for a
pittance
of its apparent value. In
that
case
the debtor’s home had a municipally assessed value of
R81,000.00, yet it was sold for the derisory sum of R10.00. There was
thus a manifest need to provide a framework for the judicial
oversight necessary to avoid potential abuses that could occur (and
had occurred) where the price of a home sold by dint of an order of
special executability is ultimately set by an unfettered auction
sale
process.
[38]
Rule
46A therefore contains specific provisions that both enable and
mandate the Court to consider whether a reserve price is to
be set.
[39]
Rule
46A(8) provides that:
“
A court
considering an application under this Rule may –
(a) of its own
accord or on the application of any effected party order the
inclusion in the conditions of sale of any condition
of which may
consider appropriate;
(e) set a reserve
price”.
[40]
Rule 46A(9)(a) provides that:
“
In
an application under this rule, or upon submissions made by a
respondent, the court
must consider
whether a reserve price is
to be set.” (My emphasis.)
[41]
Whilst the above sub-rules enable and oblige the Court to
enquire into the
appropriateness
of a reserve price, they do not of themselves prescribe that upon
enquiry and consideration a reserve price
ought
to be set
.
The question of when a reserve price ought to be set was thus one
of the issues considered by a Full Bench of this Division in
Absa
Bank Limited v Mokebe and Related Cases
2018 (6) SA 492
(GJ).
[42]
In
Mokebe
, under
section 14(1)(a)
of
the
Superior Courts Act 10 of 2013
, the
Full
Bench was directed to make a ruling on the procedures that financial
institutions must adhere to when foreclosing on a mortgaged
property
that is the debtor’s primary residence. The issuing of the
directive has been described as a salutary attempt to
bring sanity to
a procedural muddle.
[iv]
[43]
One of the questions put to the Full Bench was, under what
circumstances
should
a Court set a reserve price and how is this to be determined in terms
of Uniform
Rule 46A?
The Full Bench’s definitive answer to this
question was the following (para 66):
“
We
are aware that
Rule 46A(8)
provides that a court ‘may’
set a reserve price. In order to comply with the constitutional
requirement of just and
equitability, it would be an exception rather
than a rule where a reserve price is not set by a court. In our
view question
7 [of the Judge President’s directive in terms of
section 14(1)(a)
of the
Superior Courts Act] should
be answered as
follows:
‘
Save
in exceptional circumstances a reserve price should be set by a
court, in all matters where is execution is granted against
immovable
property which is the primary residence of the debtor, where the
facts disclosed justify such an order.’”
[44]
In the course of answering the directive
the Full Bench further stated that:
“
[57]
The courts’ power and duty to impose a reserve price is
founded, inter alia, in s 26(3) of the Constitution …
[59]
… It is therefore necessary for a court to determine whether a
reserve price should be set based on all the factors
placed before it
by both the creditor and the debtor when granting an order declaring
the property especially executable. If a
debtor fails to place facts
before the court despite the opportunity to do so, the court is bound
to determine the matter without
the benefit of debtor’s input.”
[45]
I note that in another Division there has been some reservations
expressed
about some aspects
of the Full Bench’s judgment in
Mokebe
.
[v]
Those reservations do not have any application to the issue of when a
reserve price must be set. I am thus bound by
the consideration
that where the facts disclosed to the Court justify that a reserve
price be set, the Full Bench has given its
definitive imprimatur to
the setting of a reserve price in all but exceptional cases.
[vi]
[46]
I am accordingly required to consider whether the facts disclosed in
the main
application
justified the inclusion of a reserve price and, if so, whether there
are any exceptional circumstances justifying a
departure from the
default position of including a reserve price.
[47]
The record in the main application and in particular the facts
disclosed in
Nedbank’s
founding affidavit, plainly justified the setting of a reserve price
in respect of the [....] property. In respect
of this property
Nedbank in the main application had quite properly disclosed that to
its knowledge it is the Kgasoanes’
primary residence. Nedbank
advised that it was not averse to a reserve price being set for this
property. Nedbank also alleged
several facts to support its
submission that if a reserve were to be set, the appropriate minimum
sale price to be achieved should
be set at R2,8 million being half of
its estimated market value and taking into account matters such as
unpaid rates, transfer
fees and sheriffs’ fees.
[48]
Ultimately the main application was not opposed and the default order
did not
provide for a
reserve price. As the order herein was granted by default, there is
no judgment setting out the court’s reasons.
It is therefore
not possible to discern from the record why the Court, in granting
the default order, chose not to provide for
a reserve price.
Nevertheless, there clearly were
no
exceptional circumstances
which required the Court to depart form the default position of
providing for a reserve price for the
[....] property.
[49]
I am mindful that Rule 42 would not ordinarily permit a variation of
a default
order in
circumstances where an applicant for rescission has failed to
demonstrate an omission of the nature described in
Jurgens
and
where the alleged error does not appear from the record of the
proceedings. However, in the context of considering the variation
of
a default order of special executability granted against the debtors’
home and the meaning of the word “omission”
as used in
Rule 42, I must interpret the wording and apply the Rule in a manner
that advances the constitutional imperative to
develop the common law
so as to promote the rights vouchsafed by the Bill of Rights.
[50]
In this context it seems to me that in a variation application, once
it becomes
manifest
that the relevant order ought to have provided for the inclusion of a
reserve price but did not do so, that there exists
a judicial
omission that can be remedied by variation.
[51]
Apart from the imperative to develop the common law under the aegis
of section
39(2) of the
Constitution, a narrower construction of Rule 42 and the term
“omission” in the present matter would, in
any event be,
dissonant with the Full Bench’s
Mokebe
decision as to
when a reserve price must be set.
[52]
Rule 46A provides that when considering an application under the Rule
the
Court
“
may of its own accord order the inclusion in the conditions
sale, of any condition which it deems appropriate
”. The
present application has not strictly speaking been brought under Rule
46A. Yet, it is so closely intertwined with the
requirements of Rule
46A that it would amount to a hidebound approach for me to have
declined to consider whether the default order
ought to have included
a reserve price.
[53]
I am accordingly of the view, notwithstanding that the present
application is
brought
under Rule 42, that I am required to address the issue of whether the
default order ought to have included a reserve price
and, if so,
whether and in what manner the default order falls to be varied.
The [....] property
[54]
The record in the main application does not indicate the existence of
any
exceptional
circumstances allowing for the omission of the reserve price. To the
contrary, in its founding affidavit Nedbank, having
identified the
[....] property as the Kgasoanes’ primary residence, stated
that it was not averse to the inclusion of a reserve
price being set
for this property. As such, in terms of Rule 46A and in accordance
with the judgment in
Mokebe
, in granting the default order the
Court herein ought to have provided for the inclusion of a reserve
price.
[55]
As to the amount of the reserve price in respect of the [....]
property, I
consider it
appropriate that Nedbank’s submissions as set out in the
founding affidavit should prevail. These after all were
the only
submissions that the Court granting the default order could have
taken into account when hearing the main application.
[56]
Whilst the Kgasoanes urged for a higher price to be set for the
[....]
property and their
affidavit contains some averments in support of this submission,
these submissions were not before the Court
when the main application
was heard.
[57]
It is necessary therefore to have regard to the record that was
before the Court
when the main
application was heard. I emphasise that Nedbank’s submissions
on the quantum of the reserve price at that time
went unchallenged.
Nedbank’s submissions also dealt properly with the factors
stipulated in Rule 46A(9)(b). Nedbank repeated
these submissions in
its answering affidavit in the present application. The Kgasoanes did
not then reply to Nedbank’s answering
affidavit. Nedbank’s
allegations in support of their submissions on the amount of the
reserve price thus once again effectively
stand uncontested.
[58]
To the extent necessary, I nevertheless further enumerate the reasons
why
Nedbank’s
submissions are preferred over those of the Kgasoanes. Firstly, at
the time when the main application was heard
the record did not
include the Kgasoanes’ submission on the reserve price.
Secondly, in the present application they failed
to reply to
Nedbank’s answering affidavit and thus failed properly to
challenge Nedbank’s averments on what a reasonable
reserve
should be. Thirdly, the Kgasoanes, in support of their submission of
what would constitute a reasonable reserve price,
annexed a valuation
they obtained from
professional valuator trading
under the name and style of Infoprops. Infoprops valued the [....]
property at a market value of R6,000,000.00
and at a forced sale
value of R4,400,000.00. This valuation is dated 1 October 2019 and is
therefore, particularly in view of the
hobbling impact of the
Covid-19 pandemic on all aspects of the economy, including the
housing market, clearly outdated. Fourthly,
the Kgasoanes did not
challenge Nedbank’s allegations to the effect that at the time
when the main application was heard
the municipal arrears on the
[....] property were more than R192,000.00. Nor did they contest
Nedbank’s assertion that these
arrears have likely increased
every month and that the unpaid arrears would significantly reduce
the price a buyer (who would on
assuming ownership bear
responsibility for these charges) might be willing to pay for the
[....] property.
The [....] property
[59]
Mr Kgasoane alleged that
this property is now
primarily used for residential
purposes by “the
Applicant”. The use of the word “now” appears to be
aimed at Nedbank’s allegations
(in the main application) that
the Kgasoanes had purchased this property for investment purposes and
as such it is not their home.
The potential elasticity of the time
period encompassed by the Kgasoanes’ use of the word “now”
does not assist
them. Their application, despite it involving Rule
46A consideration
s, is nonetheless still an application for
variation. There is thus no proper basis for the Kgasoanes to have
sought to vary the
default order on the basis that the [....]
property is now occupied by “the Applicant”.
[60]
In respe
ct
of the [....] property the Court hearing the main application could
not
conceivably have
considered the applicable provisions of Rule 46A. At that time the
record clearly indicated that the [....] property,
not the [....]
property, was the Kgasoanes’ residential property.
[61]
In summary, I consider that a reserve price of
R2,8 million is appropriate for the
[....] property and
no case has been made out for the variation of the default order so
as to set a reserve price for the [....]
property.
COSTS
[62]
That leaves the question of costs. Whilst the Kgasoanes have succeed,
albeit
to a limited extent,
in obtaining a variation of the default order, their conduct in these
proceedings leaves much to be desired.
As noted above, they
were clearly in default of their obligation to place facts before the
Court in support of their reserve price
submissions. They failed to
provide a proper or adequate explanation for their default, this
despite their initially having applied
for a rescission of default
order in its entirety. Their founding affidavit, was long in
argumentative matter but largely bereft
of relevant fact. It was only
after receipt of Nedbank’s heads of argument and immediately
prior to the hearing of their
rescission application that the
Kgasoanes then unsuccessfully sought to take steps remedy the
manifestly inadequate nature of their
founding affidavit by applying
for a postponement to introduce a further affidavit. Thereafter
they filed supplementary heads
of argument in which they confined
their application to one of variation for the inclusion of a reserve
price. These supplementary
heads of argument whilst being of
assistance to the Court contained intemperate and speculative
submissions that Nedbank intentionally
failed to disclose relevant
facts in the main application and procured the default order through
improper means.
[63]
Nedbank’s opposition to the rescission application,
particularly given that the
main relief sought
was the rescission of the default order in its entirety, can hardly
be considered unreasonable. Moreover, had
the Kgasoanes accepted
Nedbank’s submissions regarding the appropriate reserve price
for the [....] property, it is likely
that the matter would not have
been opposed and the parties would have instead submitted an agreed
variation order for this Court’s
consideration.
[64]
In the circumstances I cons
ider it fair
that the Kgasoanes pay the costs
occasioned
by this application.
Order
[65]
I accordingly make the following order:
1.
Paragraph 2 of the default order of this Court under case number
13040/2019 dated
8 August 2019 is varied to include the following
paragraphs 2A:
“
2A(a)
The
sale in execution of the property described as
Erf
2505 [....] Extension 5 Township, Registration Division I.R., the
Province of Gauteng
is subject to a reserve
price of R2.8 million (Two Million Eight Hundred Thousand Rand).
2A(b)
If
the reserve price of R2.8 million (
Two
Million Eight Hundred Thousand Rand)
million
is not achieved at the sale in execution:
2A(b)(i)
The sheriff must submit a report to this
Court, within 5 days of the date of the auction, which report shall
contain the matters
mentioned in Rule 46(A); and
2A(b)(ii)
This Court must, on a reconsideration of the factors in Rule
46A(9)(b) and in the exercise of its powers under this Rule, order
how execution is to proceed.”
2.
Mr John Karabo Kgasoane and Mrs Lerato Gift Kgasoane (the First and
Second Respondents
in the main application under case number
13040/2019 and the First and Second Applicants in the application for
rescission, alternatively
variation of the above default order) are
ordered to pay, jointly and severally the one paying the other to be
absolved, Nedbank’s
costs of the application for rescission,
alternatively variation.
G
B ROME
ACTING
JUDGE OF THE HIGH COURT
GAUTENG
LOCAL DIVISION
Date
of hearing: 26 January 2021
Date
of judgment: 23 March 2021
APPEARANCES
Counsel
for the Applicants for rescission:
EC
Chabalala
Instructed
by:
CSM
ATTORNEYS
Counsel
for the First Respondent:
S
Kabelo
Instructed
by: KWA Attorneys
[i]
Strictly
speaking until the default order herein had been granted Nedbank was
a creditor not a judgment creditor. It is
now at least in this
Division clear law that where an order of special executability over
a home is sought the creditor must
apply for both monetary judgment
and the order of executability at the same time. In this
context it may be appropriate
to refer to the debtor in such an
application as “
the
judgment debtor
”.
[ii]
In the
Kgasoanes’ supplementary heads of argument the amount of
the suggested reserve price as contained in their
notice of motion
(R6 million) was then reduced in submissions to an amount of some
R5,2 million. In view of the findings contained
in this judgment, it
is not necessary to deal with the difference between the amount of
the reserve price initially contended
by for the Kgasoanes and their
lesser amount of some R5,2 million
[iii]
Rule
46A(8)(e); Brits “Executing a debt against Residential
Property: The Potential Application Of Rule 46A
of the Uniform
Rules of Court Beyond A Literal Reading Of ‘Property Of
A Judgment Debtor’” (2020)
Journal
for Juridical Science
45(2) 74 at 76. Both this article and the article at endnote 4
provide summaries of the provisions of Rule 46A and of the context
in which the Rule was introduced and which summaries I found of
great assistance in preparing this judgment.
[iv]
Kawadza
“Taming the mechanics of mortgage foreclosures: The case of
ABSA
Bank Ltd v Mokebe
and
Related Cases
2018 (6) SA 492
(GJ)”
2019
De Jure Law Journal
102-109.
[v]
See
in this regard the judgment of Rogers J in
Changing
Tides 17 (Pty) Ltd No V Frasenburg
[2020]
4 All SA 87 (WCC),
where
the learned Judge declined to follow that part of the
Mokebe
decision which requires that
an
application for a monetary judgment and an order of execution
against immovable property must always be brought simultaneously.
[vi]
I am of course bound by the
Mokebe
decision as it is judgment of the Full Bench of this Division. See
in this regard the discussion on the application of the doctrine
of
stare decisis
cross different provincial Divisions sitting in varying numbers in
Hahlo and Kahn
The
South African Legal System and its Background
(1968) at 250-256.