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[2024] ZAFSHC 86
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Standard Bank of South Africa Limited v Mellet N.O. and Others (68/2023) [2024] ZAFSHC 86 (18 March 2024)
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Certain
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IN THE HIGH COURT
OF SOUTH AFRICA
FREE
STATE DIVISION, BLOEMFONTEIN
Reportable:
YES/NO
Of Interest to other
Judges: YES/NO
Circulate to
Magistrates: YES/NO
Case No.
68/2023
In
the matter between:
STANDARD
BANK OF SOUTH AFRICA LIMITED
Plaintiff
and
BLUCHER
HAUMAN MELLET N.O.
First
Defendant
HENDRIK
FRANCOIS MELLET N.O.
Second
Defendant
JANA
PRINSLOO N.O.
Third
Defendant
FIND
A LOAD CC
Fourth
Defendant
DEMICENTO
(PTY) LTD
Fifth
Defendant
CAROLINA
JOHANNA PIENAAR
Sixth
Defendant
BLUCHER
HAUMAN MELLET
Seventh
Defendant
BLUCHER
HAUMAN MELLET N.O.
Eight
Defendant
EUGENE
HOLTZHAUSEN N.O.
Ninth
Defendant
In
Re:
BLUCHER
HAUMAN MELLET N.O
First
Applicant
HENDRIK
FRANCOIS MELLET N.O.
Second
Applicant
JANA
PRINSLOO N.O.
Third
Applicant
And
STANDARD
BANK OF SOUTH AFRICA LIMITED
Respondent
JUDGMENT
BY
:
VAN RHYN, J
HEARD
ON:
25 JANUARY 2024
DELIVERED:
18 MARCH 2024
[1]
This is an application for an
order
to declare certain immovable property, being Remaining Extent of the
Farm Ospoort A 446, district Philippolis, Free State
Province and the
Farm Ospoort Dam 473, district Philippolis Free State Province (“the
property”) specifically executable,
together with ancillary
relief. The main application is opposed by the first to third and the
sixth to eight respondents. The first
to third and the seventh
respondents launched a counter application in terms of which
cancellation figures are sought from the
bond holder for the
cancellation of the mortgage bond over thse property. The counter
application is opposed by the applicant.
I refer to the parties
as in the main application for ease of reference.
[2]
The plaintiff is Standard Bank of South Africa Limited
(Registration number: 1962/000738/06) (“Standard Bank”)
which
conducts business as a retail bank, an authorised financial
services provider and registered credit provider with its registered
address at 15 Simmonds street Johannesburg, Gauteng Province.
Standard Bank instituted action on 9 January 2023 against the
nine respondents (cited as defendants) due the failure to effect the
monthly instalments due in term of a business term loan.
[3]
The first to third respondents are cited in their
capacities as the duly authorized trustees of the Blucher Mellet
Family Trust,
IT7[…] (“the Blucher Mellet Trust”).
The fourth respondent, Find a Load CC and the fifth respondent,
Dimicento
(Pty) Ltd, have their chosen
domicillium citandi et
executandi
at the farm Overeenkomst, Bainsvlei, Bloemfontein. The
sixth respondent is Carolina Johanna Pienaar of Bloemfontein. The
seventh
respondent is Blucher Hauman Mellet, cited in his personal
capacity. The eight respondent is Blucher Hauman Mellet N.O. cited
with
the ninth respondent Eugene Holtzhausen NO, both in their
capacities as the duly authorised trustees of the Overeenkomst Trust
IT70[…].
[4]
On 20 April 2023 Standard Bank obtained default
judgment against the nine respondents in the main action under Case
No 68/2023 for
payment of the amount of R2 428 149.55
together with interest thereon and costs of suit on an attorney and
client scale.
The judgment is for the debt under a business term loan
on account number 0[…]. On 5 July 2023 a payment of
R1 000.000.00
(One Million Rand) was made on the business term
loan account, reducing the outstanding amount to R1 512 532.96.
[5]
Standard Bank furthermore issued summons out of this
court against the Blucher Mellet Trust and the other respondents,
cited as
defendants, on 28 September 2022 under Case No 4736/2022.
The claim under Case No 4736/2022 is defended and a trial date has
not
yet been set.
[6]
The Blucher Mellet Trust is the registered owner of the
property. A continuing covering mortgage bond with number B58[…]
(the “mortgage bond”) is registered over the property as
surety for the business term loan in favour of Standard Bank.
On 10
March 2023 the Blucher Mellet Trust sold the property to Trevi Import
and Export (“the purchaser”). The
purchaser
obtained a loan from First National Bank. The purchaser of the
property has made a payment of R1 000 000.00
as deposit on
the purchase price on 5 July 2023 which amount has been deposited
into the business term loan account.
[7]
The attorney acting on behalf of the Blucher Mellet
Trust, who received instructions in relation to the cancellation of
the mortgage
bond and the transfer of the property to the purchaser,
has confirmed that the purchaser has obtained the necessary
guarantees
from First National Bank to settle the business term loan.
Once the cancellation figures are made available by Standard Bank,
such
guarantees to the value of R2 000 000.00 will be
submitted.
[8]
Standard Bank’s attorney refuses to provide the
Blucher Mellet Trust with the cancellation figures without which the
cancellation
of the mortgage bond and the transfer of the property to
the purchaser cannot proceed. Standard Bank demand guarantees and
undertakings
for the disputed claim under Case No 4736/2022 as well
as the legal costs that may arise under the said case number in
addition
to guarantees and undertakings for the claim in the matter
at hand (Case No 68/2023) as a pre-requisite for cancellation of the
mortgage bond.
[9]
On 8 November 2023
the Blucher Mellet Trust and Mr. Blucher Hauman Mellet (cited as the
4
th
applicant) launched a counter application in terms of which they seek
an order compelling Standard Bank to provide the cancellation
figures
to facilitate the cancelation of the mortgage bond and to take all
the necessary steps and sign all documents that may
be required to
enable the Blucher Mellet Trust to proceed with the cancellation of
the mortgage bond over the property and the
registration of the
transfer of the property to the purchaser.
[10]
The counter
application is opposed by Standard Bank on the basis that the
mortgage bond is a continuing covering mortgage bond which
secures
the indebtedness of the Blucher
Mellet
Trust to Standard Bank arising from any cause of debt whatsoever for
the sum of R5 4000 000.00 and the additional sum of
R1 350 000.00.
The mortgage bond furthermore provides that the property (both farms)
is bound specifically as a first
mortgage as continuing covering
security for the maximum sum in respect of existing, future and
contingent indebtedness of the
Blucher Mellet Trust to Standard Bank
arising from any cause whatsoever. Standard Bank therefore seeks an
order dismissing the
counter-application and an order in terms of the
notice of motion with costs on an attorney and client scale.
[11]
A
mortgage is a real right in respect of immovable property of another
securing a principal obligation between a creditor and a
debtor. This
real right is created by registration in the Deeds Registry pursuant
to an agreement between the parties. Section
50(2) of the Deeds
Registries Act
[1]
permits
the registration of a mortgage bond to secure both existing and
future debts. A covering bond seeks to secure a future
debt or
existing debt increased by future advances.
[2]
[12]
A
covering bond is a popular instrument of real security in practice,
since it is capable of facilitating an ongoing commercial
relationship between the debtor and creditor. In
Forfif
(Pty) Ltd v Macbain
[3]
it was held that, in the absence of an express or tacit provision in
the bond sanctioning the acceptance of substituted security,
the
mortgagor was not obliged to consent to cancellation of the bond
until the remaining indebtedness had been discharged in full.
[13]
Mr Berry, counsel on behalf of the
Blucher Mellet Trust, argued that even though the sales agreement in
respect of the property
had been provided to Standard Bank and a
payment of R1 000 000.00 was made in respect of the
outstanding amount on the
business terms loan on 5 July 2023, all
these relevant facts were not disclosed in the application for
declaring the property specially
executable. The outstanding amount
on the business term loan amounts to R 1 512 532.96 and the
guarantee to the amount
of R2 000 000.00 is sufficient in
order to settle the amount owing in respect of the business term
loan.
[14]
It is therefore contended that the
conduct of Standard Bank through its attorney of record, by refusing
to provide the cancellation
figures and demanding, as a pre-condition
for providing the cancellation figures, that guarantees and
undertakings be provided
in the amount of R3 197 209.57 as
well as the legal costs that may arise in case no 4736/2022, are
malicious and constitutes
self-help. It is argued that Standard Bank
holds the Blucher Mellet Trust ransom to provide surety and
guarantees for Case no 4736/2022
which is still to be adjudicated
upon by this court.
[15]
On behalf of the respondents it is
contended that Standard Bank’s conduct infringes upon the
Blucher Mellet Trust’s
right to have the matter under case No
4736/2022, where the claim is met with a special plea of
prescription, adjudicated in court.
[16]
The
mortgage bond was not only registered as security for the term loan
but offer security for the amount claimed under case number
4736/2022. The trustees of the Blucher Mellet Trust signed
suretyships in favour of Standard Bank for the debts of Find a
Load
CC and the mortgage bond accordingly provides security for such debt.
Standard Bank is therefore not obliged to consent to
the cancellation
of the mortgage bond over the property until all the amounts secured
under the covering mortgage bond have been
paid in full. In
Standard
Bank of South Africa Ltd v Saunderson and Others
[4]
it was held that: “The mortgage bond curtails the right of
property at its root and penetrates the rights of ownership, for
the
bondholder’s rights are fused into the title itself”
[17]
The argument on behalf of the Blucher
Mellet Trust is therefore flawed in that the contention that the
covering mortgage bond only
covers the business term loan and not all
the other debts of the said trust, is wrong. The guarantees which the
Blucher Mellet
Trust is willing to provide is not sufficient to cover
the indebtedness of the respondents under both case numbers, being
the matter
at hand and case number 4736/2022. The sale of the
property in execution can be avoided if the Blucher Mellet Trust
provides the
guarantee as requested by Standard Bank in the amounts
as set out in the certificate of balance pertaining to the account
held
in the name of Find a Load CC and the certificate of balance in
the account held in the name of the Blucher Mellet Trust. The total
amount due and payable is R3 197 209.57.
[18]
Standard Bank is accordingly not obliged
to consent to the cancellation of the mortgage bond until all amounts
due under the said
bond has been paid in full. The rights of the
Blucher Mellet Trust to deal with the property are curtailed and
affords Standard
Bank a hold on the properties for as long as the
secured debt remains unpaid. I therefore agree with the contention by
Mr Els,
counsel for Standard Bank, that the counter application is
bad in law and cannot succeed.
[19]
The debt and the breach of repayment of
the mortgage bond is not disputed. The question which remains is
whether Standard Bank has
made out a proper case for the relief
sought in the notice of motion in terms whereof the property is to be
declared specially
executable. During argument it was conceded that
the property is not the primary residence of any of the said
respondents. The
debt was incurred as a business term loan and not to
purchase the property. Mr Berry argued that this matter should be
postponed
pending the finalization of the Case number 4736/2022 on
the basis that the relief sought by Standard Bank is not only
premature,
but will impact extremely negatively upon the Blucher
Mellet Trust. I agree with the contention on behalf of the Blucher
Mellet
Trust that the court has a wide discretion to grant the relief
sought or not.
[20]
In Standard Bank’s opposing and replying affidavit a concession
is made
that the intended sale in execution of the property will only
take place after judgment has been granted under case number
4736/2022,
alternatively, before finalisation of the matter under the
said case number in which event Standard Bank will take steps to
secure
any surplus derived from the sale until finalisation of such
action. During argument I was informed that the pleadings in case
number 4736/2022 are closed and it is anticipated that a trial date
will most probably be available during the second or third term
of
2024.
[21]
I agree that a proper case has been made out
for an order declaring the immovable property, as described in the
notice of motion,
specially executable and an order in terms whereof
the Registrar is authorised and directed to issue a writ of execution
against
such property. However, no reserve price has been suggested
in the prayers and, at present, not enough updated information is
available
to accurately determine a reasonable reserve price to be
set by this court.
[22]
Mr Berry furthermore argued that the
court has, apart from the provisions of Rule 45A to suspend the
operation and execution of
any order for such period as it may deem
fit, an inherent discretion to order a stay of a sale in execution
and to suspend the
operation of an ejectment order granted by it. I
am of the view that, in light of Standard Bank’s concession
that the intended
sale, if so granted, will in any event only occur
after the finalisation of case number 4736/2022, the determination of
a reserve
price should be postponed to a later stage when an updated
payment history, proper updated valuation of the property and updated
amounts owed to the Mangaung Metro Municipality are available. The
operation and execution of the order in favour of Standard Bank
should be suspended pending the finalisation of Case number 4736/2022
and the determination of a reasonable reserve price.
[23]
There is no reason why costs should not
follow the event.
[24]
ORDER:
1.
The property described as:
(a)
Remaining Extent of the Farm Ospoort A
446, district Philippolis, Province Free State in extent 1535,7161
(one thousand five hundred
and thirty five comma seven one six one)
hectares held by Deed of Transfer number T10[…];
(b)
The Farm
Ospoort Dam 473, district Philippolis, Province Free State in extent
19,9529 (nineteen comma nine
five two nine) hectares held by Deed of
Transport number T10[…] is declared specially executable.
2.
The Registrar of this court is
authorised and directed to issue a writ of execution against the
immovable properties as described
in paragraph 1 above as to enable
the sheriff to attach and execute upon the properties mentioned in
paragraph 1 above in satisfaction
of the judgment debt, costs and
interest thereon.
3.
The execution in terms of the writ of
execution is stayed pending the finalisation of Case Number 4736/2022
and the setting of a
reasonable reserve price by the court.
4.
The applicant (The Standard Bank of
South Africa) is granted leave to supplement the papers and to
re-enrol the application to enable
the court to set a reasonable
reserve price of the properties in paragraph 1 above at which the
properties may be sold at a sale
in execution.
5.
The First, Second and Third Respondents
are granted leave to file a supplementary affidavit in response to
the applicant’s
supplementary affidavit, if they wish to make
submissions which are relevant to the making of an appropriate order
in the determination
of a reasonable reserve price for the properties
described in paragraph 1 above.
6.
The respondents, jointly and severally, the one to pay the others to
be absolved, are ordered to pay the costs
of the application to date
of this order, on an attorney and client scale.
I
VAN RHYN
JUDGE
OF THE HIGH COURT,
FREE
STATE DIVISION, BLOEMFONTEIN
On
behalf of the Applicant:
ADV.
J ELS
Instructed
by:
PHATSHONAE
HENNEY ATTORNEYS
BLOEMFONTEIN
On
behalf of the Respondents:
ADV.
A BERRY
Instructed
by:
MARIUS
VAN ZYL ATTORNEYS
BLOEMFONTEIN
[1]
Act 47 of 1937.
[2]
Shaw
N.O. v Burger
1994 (1) SA 529
(C) at 531.
[3]
1984
(3) SA 611 (W).
[4]
2006 (2) SA 264
(SCA) at [2].