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[2018] ZAGPJHC 605
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Changing Tides 17 (Pty) Ltd NO v Mabiletsa and Others; Absa Bank v Montwetsana (30443/2017; 30147/2018) [2018] ZAGPJHC 605; [2019] 1 All SA 619 (GJ) (14 November 2018)
Links to summary
GAUTENG
LOCAL DIVISION, JOHANNESBURG
CASE
NOS: 30443/2017
30147/2018
REPORTABLE
OF
INTEREST TO OTHER JUDGES
REVISED
14
November 2018
In the matters between:
CASE
NO 30443/2017
CHANGING
TIDES 17 (PTY) LTD
N.O Plaintiff
and
MABILETSA, BOKANG
SOLOMON
First
Defendant
MABILETSA,
LERATO Second
Defendant
THE
CITY OF
JOHANNESBURG Third
Defendant
CASE
NO 30147/2018
ABSA
BANK Plaintiff
and
BELEBESI,
NTHABALENG
MONTWETSANA Defendant
JUDGMENT
SPILG,
J:
INTRODUCTION
1.
There were two cases on my unopposed roll dealing
with payment of the outstanding balance on a home loan and
foreclosing on the
property bonded as security.
The
first is
Changing Tides 17 (Pty) Ltd NO v B
Mabiletsa, L Mabiletsa and the City of Johannesburg
under case no 30443/2017. The other is
Absa
Bank Ltd v Belebesi
under case no 30147/2018.
2.
Although the first case is for default judgment
and the other for summary judgment in each case the considerations I
am required
to take into account are similar; namely whether the
defendant’s personal circumstances should preclude the creditor
from
taking a monetary judgment and foreclose on the mortgaged
property. None of the defendants has a substantial defence to the
merits,
save for possibly a recalculation of the actual amount of
indebtedness and in the case of
Changing Tides
the original cause of action appears incomplete but this has not been
raised by the defendant.
Each
defendant however contends that there are circumstances that should
be taken into account to prevent foreclosure. It is now
accepted that
a court cannot grant a judgment for repayment of the loan prior to
ordering a foreclosure of the property. See
Absa Bank Ltd v Mokebe
and related cases
[2018] ZAGPJHC 487 (delivered on 12 September
2018) which is a binding full court decision.
GUIDING
PRINCIPLES IN ADJUDICATING FORECLOSURE ISSUES
3.
The general
common law principle that a party is bound by the terms of his or her
contract, including those terms dealing with the
consequences of a
breach, has been obliged to yield to remedial socio-economic
legislation which finds its origins in ss 9, 25
and 26 of the
Constitution and the overarching right to dignity under s10.
[1]
4.
Leaving aside the Consumer Protection Act and
certain dedicated legislation, these statutes include the
National
Credit Act 34 of 2005
(“
the NCA”
)
and The Prevention of Illegal Eviction from and Unlawful Occupation
of Land Act 19 of 1998 (“
PIE
”
).
This
is apparent from the objects provisions of s3 of the NCA which
includes promoting the development of a credit market that is
accessible to all and in particular those who historically were
unable to access credit under sustainable market conditions.
[2]
Pillay J in
Standard
Bank of South Africa Ltd v Dlamini 2
013
(1) SA 219
(KZD) at para 32 described the NCA as part of a “
raft
of national legislation aimed specifically at consumers, to reverse
historic socio-economic inequalities and adjust the imbalance”
.
In
turn PIE is the national legislation enacted to give effect to s26
(3) of the Constitution. The section reads:
“
.No one may be
evicted from their home, or have their home demolished, without an
order of court made after
considering
all the relevant circumstances
. No
legislation may permit arbitrary evictions.”
(emphasis
added)
5.
Both the NCA and PIE have received considerable
judicial attention since they became law. They remain an evolving
part of our jurisprudence.
Nonetheless a number of clear principles
have emerged which are relevant to the present enquiry which concerns
residential property
subject to a bond held as security for a home
loan:
a.
A
home loan creditor cannot separate the monetary judgment from the
order for foreclosure. Accordingly if the executability of the
bond
is postponed for any reason then the order for payment must also be
postponed. The effect of this requirement was succinctly
stated
in
Mokebe
at para 29 :
“
Should
the matter require postponement for whatever reason, the entire
matter falls to be postponed and piecemeal adjudication is
not
competent”;
[3]
b.
Judicial
oversight is required in all cases of execution against immovable
property. See the application of
Jaftha
[4]
and
Gundwana
[5]
in
Mkhize
v Umvoti Municipality and Others
2012
(1) SA 1
(SCA) at para 26.
In
Mkhize
at para 25 the court explained:
“
It is clear
from Gundwana that insisting on judicial scrutiny in every case
should hold no terrors. The level of enquiry will vary
from case to
case and will always be dependent on the circumstances. As was
pointed out in Gundwana the rule established in Jaftha
'caution[s]
courts that in allowing execution against immovable property due
regard should be taken of the impact that this may
have on judgment
debtors who are poor and at risk of losing their homes'.
Regard must now be had
also to the comprehensive provisions introduced into Rule 46 and by
Rule 46A which .deal with the court’s
oversight functions in
respect of levying execution on immovable property
c.
The sale of a property for a nominal amount
results in the home-owner not only losing the house but also
remaining indebted to the
mortgagee for the outstanding sum of the
indebtedness “
even in cases where the
on-sale of the property occurs to buyers at substantially higher
prices than the price realised during the
sale in execution”
.
See
Mokebe
at para 53;
d.
Rules 46 and 46A “
require
the consideration by the court of alternative means of satisfying the
judgment debt”
The changes to these
rules “
impose an even more vigorous
investigative function on a court faced with an application for a
declaration of executability and
require still more information to be
forthcoming in relation to the debtor’s circumstances and the
value of the property.”
These passages are from
the judgment of Fisher J in
Absa Bank v
Njolomba and another
[2018] ZAGPJHC 94 and
were endorsed by the full court in
Mokebe
at
para 58;
e.
Ultimately
a court is obliged to “
consider
all the relevant factors when declaring a property specially
executable at the behest of a bondholder. It is thus incumbent
upon
the bank or bondholder to place ‘all relevant circumstances’
before the court when it seeks an order for execution.
This, in our
view, includes a proper valuation of the property (under oath), the
outstanding arrears, municipal accounts and the
like information.
This is not to thwart the mortgagee’s right to execution, to
which it may be entitled, but to secure a
just and equitable outcome.
It is not a prohibition to realise a bank’s security as is
suggested in the affidavit filed by
Investec. The oversight duty is a
far cry from such perceived prohibition. This is based on s 1 of the
Constitution which places
an obligation on all to promote the value
of human dignity, the achievement of equality and the advancement of
human rights and
freedoms which would include the application of s 26
of the Constitution by a court, having regard to all the relevant
circumstances,
before sanctioning the process that may lead to the
ultimate eviction from a home. This is not to hamper the ability of
the mortgagee
to execute but that very process requires
oversight.”
[6]
6.
The courts have reiterated that one cannot be
prescriptive as to how the oversight function is to be applied in any
particular case.
In
Absa Bank Limited v Lekuku
[2014] ZAGPJHC 274 at para 34 Victor J clarified that:
“
A court will
always have a discretion based on the facts before it as to what
amount is proportional to the final effect and consequence
of
foreclosure. In carrying out this assessment, the court in each and
every case carries out a unique enquiry in exercising its
judicial
oversight. To lay down a standard approach will be contrary to the
constitutional imperative of judicial oversight in
foreclosure
matters.”
7.
It may well
be that the overriding consideration in practical terms come down to
what
Adv.
Wilson
submitted behalf of the
amicus
in
Lekuku
,
namely; “
whether
execution is proportionate, having regard to all the relevant
circumstances”
[7]
8.
One is
driven to the conclusion that the application of the various
decisions and considerations I have mentioned, in practice will
require a court to effectively engage in what used to be a rule
45(12)(i) (or Section 65 enquiry in the Magistrates’ Court)
financial enquiry albeit now at a pre-judgment stage because of the
ratio
in
Mokebe
that
one cannot grant a monetary judgment if the order for foreclosure is
to be stayed
[8]
. This is
justified on an application of the equitable considerations which are
expressly provided for in the NCA and s 26 (3) of
the Constitution
and which, in my respectful view, cannot be given effect to in any
other rational manner.
9.
I would add that relevant circumstances would not
be based solely on quantitative criteria but also involve qualitative
considerations.
Regard may have to be given to the vicissitudes of
life; for instance where the borrower has maintained the bond
repayments for
a considerable period but due to the prolonged
economic recession and rising costs of basic commodities and services
that has engulfed
the country the debtor has been retrenched or has
now to support others or the like. This was considered to be a
relevant factor
in
Nkata v FirstRand Bank
Limited and Others
2016 (4) SA 257
(CC) where
Moseneke DCJ said at para 94
“
Yes, debtors
must diligently and honestly meet their undertakings towards their
creditors. If they do not, the credit market
will not be
sustainable. But the human condition suggests that it is not
always possible – particularly in credit arrangements
that run
over many years or decades, as mortgage bonds over homes do.
Credit givers serve a beneficial and indispensable
role in advancing
the economy and sometimes social good. They too have not only
rights but also responsibilities. They
must act within the
constraints of the statutory arrangements. That is particularly
so when a credit consumer honestly runs
into financial distress that
precipitates repayment defaults. The resolution of the
resultant dispute must bear the hallmarks
of equity, good faith,
reasonableness and equality. No doubt, credit givers ought to
be astute to recognise the imbalance
in negotiating power between
themselves and consumers. They ought to realise that at play in
the dispute is not only the
profit motive, but also the civilised
values of our Constitution.
10.
It is also necessary to revert to the enabling
legislation which must be given effect to and which is remedial by
nature. In particular,
when considering relevant circumstances and
weighing the competing interests involved in any enquiry where a
proportionality test
is invoked.one is driven back .to the objects
and interpretation provisions of the NCA and purpose of the NCA set
out in s 3 as
read with s 2 as well as s 26(3) of the Constitution.
Section
2(1) requires that the NCA must be interpreted in a manner that gives
effect to s 3. Section 3 contains a number of important
objectives.
They include:
a.
Ensuring consistent treatment of different credit
products and different credit providers (s3(a));
b.
Promoting responsibility in the credit market by
inter alia
encouraging
the fulfilment of financial obligations by consumers (s 3( c)(i));
c.
Addressing over-indebtedness of consumers and
providing mechanisms for resolving over-indebtedness based on
principles of satisfaction
by the consumer of all responsible
financial obligations (s 3(g)); and
d.
Providing for a consistent and harmonised system
of debt restructuring, enforcement and judgment, which prioritises
the eventual
satisfaction of all responsible consumer obligations
under credit agreement (s 3(i)).
11.
Put
broadly, one of the aims of the NCA is to enable a credit receiver to
retain and ultimately own the property purchased while
fulfilling his
contractual obligations under the agreement or if he falls into
arrears to have determined in a fair manner whether
he will be able
to pay the debt by a reasonable restructuring of his payment
obligations in a manner that bears “
the
hallmarks of equity, good faith, reasonableness and equality
”
[9]
.
This is sought to be achieved by being fair in the circumstances to
the consumer and the credit provider while bearing in mind
that
depriving a person of property in respect of which significant
payments have already been made may impact on the rights of
access to
housing and the other pro-active property right provisions of ss 25
and 26 of the Constitution.
It
is therefore axiomatic that the court does not sit on review of the
decision not to enter into any further settlement proposals
with the
defendant nor is debt review the only means of restructuring debt; a
court is not precluding from effectively doing the
same in respect of
a single creditor even if there are others.
CHANGING
TIDES v MABILETSA
12.
Changing Tides applied for default judgment for
R1 612 068.66 together with interest and sought an order to
declare the
mortgaged property specially executable.
13.
The plaintiff had instituted action after the
defendants had fallen into arrears. The defendants entered an
appearance to defend
and the plaintiff then applied for summary
judgment. The defendants then signed a document entitled “
Confession
to Claim and Consent to Judgment
“ and
made arrangements to pay the plaintiff a once off amount of R50 000
by the end of October 2017 and to then pay
from 1 December 2017
monthly amounts of R28 000. The defendants also acknowledged
that the amount of the indebtedness was
as stated in the previous
paragraph.
14.
The defendants paid the R50 000 on 7
November which was a week late and subsequently made only one further
payment of R19 000
on 10 February 2018.
15.
The plaintiff makes the standard allegation that
there is no reasonable prospect of the defendants liability being
liquidated within
a reasonable period without having to execute
against the property and that a delay in execution would be
prejudicial bearing in
mind that there are arrear municipal rates and
other charges.
16.
The arrears at the time the summons was issued
was R138 392, 32. In other words the R50 000 payment
shortly after the
summons was issued would immediately have satisfied
just over a third of the arrears which then totalled R115 020. By the
time
judgment was sought the arrears had risen to R212 453 which
equated to just over 11 months of arrear instalments. The total
monthly instalments were R19 381.79 with the last payment being
made some 8 months ago.
17.
The home loan was obtained in May 2013 and aside
from the default to which the summons relates the defendants had also
defaulted
in October 2014. The defendants made another settlement
proposal in October 2018. The plaintiff rejected the offer because it
also
assumed a growth in the defendant’s business which did not
materialise. The bank statements provided by the defendants for
July
to September 2018 of the business’ turnover did not satisfy the
plaintiff that there will be a sufficient cash flow
to settle the
arrears. The plaintiff was unconvinced that the settlement proposal
was substantially different to the previous one.
18.
The defendants however contend that the previous
proposal was made in relation to an enterprise that did not produce
the anticipated
returns. They have however remodelled the nature of
the business and the turnover is far better. They accept that the
December
2018 income will be negligible but are confident that on the
current turnover and profit margins they can successfully restructure
their debt.
19.
A valuation of the property estimates the market
value at R1.9 million with a forced sale value of R1.35 million.
The local
authority valued the property at R1.38 million.
20.
The effect of foreclosure from the plaintiff’s
perspective is that on a sale in execution it may obtain on the
formula adopted
by it about R1.1 million while the total debt is now
R1.6 million. Accordingly the plaintiff will have to look to the
defendants
to pay the shortfall of R500 000.
The
obvious question that comes to mind is why the plaintiff is
effectively prepared to forfeit R500 000 when the defendants
seeks a period of time to prove that their turnover will cover
current bond repayments and part of the arrears. They also clam
that
they need to continue occupying the property as they have converted
the garage into an office from where four staff members
work. If they
are forced to leave the premises their business will of necessity
decline.
21.
Ordinarily the borrower is an existing customer
of the bank with whom a personal relationship has developed at branch
level. The
relationship between Changing Tides and its customers is
far more impersonal. In Changing
Tides 17
(Pty) Ltd NO v Congwane
[2016] ZAGPHC 128
it
was necessary to investigate the basis of the relationship between
the parties. The structuring of the transaction in that case
is
similar to the present one. .
22.
In
Congwane
I
analysed the transactions and found at paras 2 to 5 that:
“
2. As with
most, if not all Changing Tides applications of this nature, it is
not based on a standard home loan agreement concluded
by a financial
institution as plaintiff directly with a defendant credit receiver.
3. To simplify the
nature of the transactions involved I will refer to the credit
provider as the lender and the credit receiver
as the borrower.
4. Changing Tides is
not the lender. The lender is Blue Banner Securitisation Vehicle RC1
Proprietary Ltd, its successors in title
and assigns (“Blue
Banner). The South African Home Loans Guarantee Trust (formerly known
as the Guarantee Trust) and which
will be referred to as “The
Trust” stands as guarantor to Blue Banner for the liability of
the borrower, i.e. the defendant,
under the loan. In turn the
defendant indemnifies the Trust and provides his or her immovable
property as security for due performance
of its indemnity.
The defendant
accordingly continues to repay the monthly instalment under the loan
to Blue Banner. Changing Tides features as the
plaintiff because it
is the trustee “for the time being” of the Trust.
The suite of
agreements required to implement the immediate transaction for the
loan comprise the loan agreement between Blue Banner
and the
defendant, a guarantee given to Blue Banner by the Trust in respect
of the specific loan to the debtor on terms which are
contained in a
main or umbrella agreement, an indemnity given by the defendant to
the Trust and an indemnity bond provided by the
defendant over her
residential property. In all the agreements Changing Tides acts as
trustee for the Trust. It is evident therefore
that each agreement is
dependent on the other and forms an integral part of a larger
transaction.
5. The particulars of
claim allege that both the Trust and Blue Banner are credit providers
under sections 40 and 45 of the National
Credit Act 34 of 2005 (“the
NCA”). Changing Tides is not alleged to be a credit provider. I
leave open whether Changing
Tides is a credit provider or whether it
is necessary for Changing Tides to allege sufficient facts to show
that it is not. I did
not raise the issue and will assume that it is
not obliged to register as a credit provider.”
23.
I also found in
Congwane
(at paras 28 to 31) that:
28. The transaction is
one where Blue Banner appears to have either factored its debtors’
book to the Trust and the Trust
holds the bond, or the Trust is used
as a special purpose vehicle (SPV) to pool together or bundle the
value of the loans into
tradable securities which are then on-sold to
institutional investors in the capital markets.
29. In consequence the
amount that the Trust will be obliged to pay Blue Banner under the
guarantee will either be less than the
amount under the loan
agreement or the Trust will be procuring a profit in trading the loan
as part of a package, thereby reducing
its own liability under the
guarantee, which may or may not be taken into account in the overall
set-offs between Blue Banner and
the Trust under the main or umbrella
guarantee agreement.
30. In short the court
is left in the dark in a case where at face value the original loan
may have been traded and therefore cannot
be produced. The court is
also asked to be satisfied with a deeming provision and a certificate
relating to the actual liability
owed by the Trust to the lender in
circumstances where there remains a full right of recourse by the
original lender against the
borrower (even after the bonded property
is sold) for any difference between the amount that the Trust is
obliged to pay under
its guarantee to the lender on the one hand and
the borrower’s liability to the lender on the other.
Nowhere do any of the
agreements provided to the court indicate that a payment by the Trust
under the guarantee will discharge the
separate debt owed by the
borrower to the lender. This also appears unlikely if regard is had
to the way the transactions would
have to be structured in order to
facilitate securitisation.
31. The indemnity
agreement attempts to shore up the discrepancy by reference to a
deeming provision. I accept that this position
tries to distil the
commercial rational for the elaborate loan structure and number of
parties. Nonetheless a court would be ignoring
the purpose of section
3 of the NCA if it turned a blind eye to the risks inherent to the
consumer where the actual terms of the
guarantee and the actual
liability of the Trust to the lender are not disclosed, but where the
borrower remains potentially exposed
to the lender directly.”
24.
There are also significant difficulties in
accepting the certificate since it does not emanate from the
principal creditor but from
its managing agent. In
Congwane
I said at para 43 :
“
It is difficult
to appreciate how anyone could have a record of the conduct of the
defendant’s account with Changing Tides,
since the defendant
conducted its account with Blue Banner. Moreover the defendant’s
liability to Changing Tides is dependent
on the amount which the
Trust reflects as owed by the defendant to it under the guarantee.”
And
later at para 50:
“
In my view the
defendant when contracting could not have envisaged anyone employed
by the managing company (whatever that might
mean in the present
context) or firm of accountants being able to sign the certificate.
If that were so then a typist who might
have access to the account on
her screen or even an office cleaner can sign the certificate if
employed at the time by the management
company or firm of
accountants.
It could never have
been the common intention of the parties that in cases such as this,
where the loan has obviously been securitised,
a person can sign a
certificate when he or she does not have a sufficient understanding
of the transaction to know which files
or transactional records are
relevant. The reliability of the person scrutinising the records in
order to sign a certificate is
the underlying consideration for the
clause, and the only qualifier found in the clause is that the
individual signing is someone
who holds the position of manager,
trustee or accountant. At the least, the clause is ambiguous
and the contra proferentem
rule supported by an interpretation that
gives effect to the underlying protection that the NCA is intended to
afford consumers
ought to prevail.
25.
Two issues arise. The first is that the plaintiff
appears to have acquired the “debtors’ book” of
Blue Banner
and that there has been securitisation. This impacts on
the relationship between the plaintiff and defendant. The plaintiff’s
interest lies in collecting sufficient of its book in any one month.
The individual borrower is simply part of a statistic. Hence
I would
suggest the lack of concern about the shortfall between the price the
property is expected to fetch and the outstanding
debt. It also
impacts on the considerations to be taken into account when applying
the provisions of s 3 of the NCA.
The
other concern is that not much store can be placed on the certificate
of indebtedness.
26.
In this regard in
Congwane
I expressed a number of concerns which were
set out in paras 35-39:
“
35. The facts
of Vitex also suggest the potentially opaque nature of the
transactions since only the loan agreement and the indemnity
are
provided although, on the allegations made, the Trust itself appeared
to be the borrower’s first point of contact before
the suite of
agreements were structured to facilitate both the loan and its
securitisation.
Vitex also brings into
focus whether Changing Tides is an associated company for the
purposes of sections 40(1) to (3) of the NCA.
36. Another potential
disadvantage is that the borrower remains exposed to the
lender
since the indemnity agreement is a “separate and independent
primary obligation” (see earlier) with no
comfort being
given to the borrower that payment to Changing Tides under the
indemnity agreement will extinguish the borrowers
debt to the lender
.
37. This puts the
borrower in jeopardy should Changing Tides or the Trust be placed
under winding up or business rescue. Moreover
the Trust may replace
Changing Tides as the trustee if regard is had to the wording of the
Guarantee.
38. Accordingly while
there may be sound commercial advantages to securitise and its
features may promote the broader availability
of loans, which is one
of the objectives of the NCA, it raises concerns in respect of the
deeming provision contained in the Indemnity.
In particular it
appears to manifest an imbalance in negotiating power (see section
3(e) of the NCA), it may adversely impact
on one of the other
objects of the NCA (see section 90(2)(a)(i)), it may have the effect
of waiving or defeating the borrower’s
rights under the NCA or
the common law (under sections 90(2)(b) and (c)) and, in light of the
facts in Vitex, the deeming provision
may have the effect of limiting
the liability of both credit providers’ for any representation
made on their behalf under
section 90(2)(g).
39. In the present
case it would be remiss of the court to ignore these issues,
especially if regard is had to the duty imposed
on it under section
90(4) of the NCA.
27.
In that case I concluded at paras 40-41 that
40. It is therefore
necessary that the relevant terms of the Common Terms Agreement and
its variations are pleaded and attached.
The deeming provision cannot
act as the palliative. Aside from appearing to run counter to the
basic tenets of the NCA it may also
offend
sections 48(1)
(c) (i),
(2) (a) (b) and (d) of the
Consumer Protection Act 68 of 2008
41. For the same
reason it is necessary that the actual liability incurred by the
Trust to Blue Banner is suitably alleged and demonstrated.”
27.
In the present case the parties subsequently
concluded a consent to judgment. It would therefore be inappropriate
for the court
to consider re-adjusting rights: it should be left to
the defendants to take these issues further in a properly motivated
manner
if so advised.
28.
The defendants have set out the amounts they
claim they are able to pay and by when. They rely on a projected
income stream based
on significantly improved and objectively
demonstrable turnover figures which the defendants explain are
attributable to a revised
business model that is proving to be
successful.
29.
Weighing all the relevant circumstances as I am
obliged to, I am satisfied that;
a.
an
order foreclosing on the security of the bond should not be granted
at this stage with the consequence that, in terms of
Mokebe
,
the monetary judgment sought must be stayed at this stage; and
b.
the defendants must demonstrate their ability to
meet their financial obligations going forward by being afforded some
degree of
debt relief at this through a three month partial
moratorium. This period of time will also allow them to initiate any
competent
challenge to the certificate or the consent agreement if so
advised. The order I made appears at the end of this judgment.
ABSA
v BELEBESI
30.
In this case there is a more traditional
banker-client relationship between the parties.
31.
The defendant took out a home loan of R1million
in April 2012. The monthly instalments at the time of issue of
summons were R11 591.60.
At that time the arrears were
R98 722.91. Due to her default the full amount outstanding is
R1 231 678.26. At face
value it is difficult to see how
that amount is arrived at, but I have not done any calculations which
might indicate that it is
incorrect.
32.
The plaintiff alleges that the market value of
the property is R1.86 million. The most recent municipal valuation,
which was in
July 2018, is for R1.7 million. There is a substantial
amount owing to the local authorities of R90 205.55.
33.
The plaintiff has not committed itself to
indicate what the property is likely to fetch on a forced sale nor
has it supplied objective
evidence that is readily available from a
Windeed Property Report or a
LightStone
Erf Valuation
Report. I am reluctant to
accept the latest municipal valuation roll figures, even in cases
where there is no objection, due to
glaring anomalies in the
valuations of properties that appear to exist, in other cases I have
dealt with, between market prices
fetched in certain areas which are
considerably below the municipal.
34.
I will however assume that if the property is
sold at a reserve price of even 30% below the claimed market value
that the shortfall
is relatively small.
35.
The issue is therefore somewhat different to the
previous case. Here it is really about the proportionality of
execution where the
personal circumstances of the defendant and the
interests involved take centre stage and how one is supposed to
balance them against
the plaintiff’s right to execute and the
broader issue of the overall impact on the cost of credit to others.
36.
Ms Belebesi had been paying regularly until her
husband left the matrimonial home.
This was in
2015 and she was obliged to carry all the household costs including
paying for her 6 year old son’s schooling.
She bore the entire
cost of his maintenance.
The
divorce was acrimonious as her husband claimed that he had effected
major improvements to the home and had paid for household
necessities
while she was paying off the bond. The divorce became a fight over
property and child maintenance which went as far
as a contested court
hearing. After about a year the parties eventually resolved the
divorce on the basis that the defendanat would
retain the property in
return for which her husband would be absolved from any maintenance
obligations towards their child including
his schooling.
The
defendant has placed her son in a nearby school and it is evident
that if the property is sold she will have to find a new school.
The
difficulties of finding suitable schooling at a late stage in the
year, particularly when this will be the child’s first
year at
a primary school are self-evident. There is therefore potential
prejudice to the child’s nurturing at a critical
stage of his
development. This is a qualitative issue which, involving children’s
rights as it does, is to be put on the
scale.
37.
The facts reveal that the defendant has had to
bear the costs of an acrimonious divorce which could not have ben
foreshadowed when
she purchased the house. She also had to bear all
the household costs and those of her child.
38.
Much of this may be the plight of many others and
one cannot expect a mortgagee to extend a credit moratorium to all.
In my view
the tipping point in the present case is that, not only
did she forfeit maintenance in order to retain a house that would
preserve
some stability for her child in a familiar environment
conducive to his growth at a time when the child would already be
affected
by the separation from his father, but throughout the period
she maintained a consistent level of payment to the bank albeit that
it was only a quarter of the monthly bond instalments.
39.
Her payments throughout very trying times both
emotionally and financially demonstrate a commitment to persevere and
not give up
on the house she had fought for in the divorce
settlement. This also takes her out of the usual profile of a
defaulting debtor.
If regard is had to her surplus income there is
very little she can obtain by way of reasonable accommodation for
herself and the
child. She certainly would struggle to again become a
homeowner. Yet her prospects are good for recovery from the impact of
the
divorce and its aftermath.
40.
In my view the defendant comfortably fits the
profile mentioned by Moseneke DCJ in
Nkata
of
a person who, as I have quoted earlier, “
honestly
runs into financial distress that precipitates repayment defaults.”
The Constitutional Court impressed that in
such cases:
“
The
resolution of the resultant dispute must bear the hallmarks of
equity, good faith, reasonableness and equality.”
41.
In this case I believe that it is appropriate
when considering the respective interests involved to place greater
weight on the
provisions of ss 25 and 26 of the Constitution and its
impact on a single mother and her child. This does not mean that
there is
any permanent relief. I am only considering a short
moratorium which, having regard to the lengthy period of the bond,
should be
reasonably insignificant to the bank provided the arrears
can be built into future instalments.
Although
not argued by the bank, I considered the possibility of the defendant
paying interest only while the capital portion was
deferred by
extending the existing period of the bond. This may be an appropriate
consideration in cases where the bond has been
in existence for a
considerable time. However in the present case, it is evident that
the defendant at this stage does not have
the surplus income to meet
the interest portion which, considering the relatively short period
the bond has already run, is still
likely to comprise the most
significant part of the monthly instalments.
I
believe that where a plaintiff contends in an affidavit that it has
explored all reasonable avenues short of foreclosure, as it
is
obliged to, instead of reciting the standard mantra, it should
indicate why the payment of only the interest portion of the
current
instalment for a short period (while possibly extending the bond
period) is not a consideration that the court should take
into
account, particularly if the bond has been in existence for a
significant time and the interest portion no longer accounts
for the
major part of the monthly repayment.
42.
The defendant seeks effectively another year to
rehabilitate herself. I am also aware that there is a large debt owed
to the municipality.
However they too are not averse to arrangements.
43.
I intend holding the defendant to her undertaking
which is recorded in the order I make.
VAULATION
OF PROERTY
44.
Recently in
Nedbank
Ltd v Moeketsi and another
(GLD) (unrep: case
no 16720/2018 of 31 October 2018) I suggested a more objective method
of valuation which is readily available
and which is based on actual
market sales in the area where the property in issue is located. In
the present cases, save for the
municipality’s valuation the
mortgagee relies exclusively on its own internal valuation. I would
be reluctant to base a reserve
price on these figures alone when much
better evidence is readily available in the form of the Windeed or
LightStone reports mentioned
earlier.
ORDER
IN CHANGING TIDES v MABILETSA:
45.
On 7 November I made the following order:
1.
The defendants shall pay to the applicant
the following amounts::
a.
R26 000 on or before 1 December 2018;
b.
R13 000 on or before 1 January 2019;
c.
R26 000 on or before 1 February 2019;
2.
The application for judgment is postponed
to be heard before Spilg J on Friday 15 February 2019 in court 6D
unless the defendants
fail to pay any of the above amounts on due
date, in which event the plaintiff may apply before Spilg J on ten
days’ notice
to the defendant for judgment as claimed in its
application in terms of rule 31(1) dated 15 April 2018.
3.
In the event that the defendants contest
the amount of the debt they shall present a schedule of all amounts
allegedly paid which
were not taken into account by the plaintiff or
any other error in the account and furnish proof that the alleged
amount was in
fact paid.
This shall be done by
no later than 15 December 2018 by delivery to the plaintiff and to
the court of such schedule with the copies
of the necessary proof
attached. A failure to do so shall debar the defendant
from contending for any error in the
amount claimed by the plaintiff.
4.
The defendant shall pay the costs of the
application incurred to date on the attorney and client scale, such
costs not to be executed
upon pending the finalisation of the
application
ORDER
IN ABSA BANK LTD v BELEBESI
46.
I accordingly order that:
1.
The defendant shall pay to the plaintiff
the following amounts::
a.
R3 000 per month as from 1 December
2018 to 1 March 2019 inclusive;
b.
R6 000 per month as from 1 April 2019
to 1 June 2019 inclusive;
c.
R8 000 per month as from 1 July 2019
to 1 September 2019 inclusive;
d.
R11 591.60 per month as from 1
October 2019 to 1 December 2019;
2.
The application for judgment is postponed
to be heard before Spilg J on Friday 6 December 2019 in court 6D
unless the defendant
fails to pay any of the above amounts on due
date, in which event the plaintiff may apply before Spilg J on ten
days’ notice
to the defendant for judgment as claimed in its
application in summary
judgment.
3.
The respondents shall pay the costs of the
application incurred to date on the attorney and client scale, such
costs not to be executed
upon pending the finalisation of the
application.
4.
_______________
SPILG
J
DATE
OF JUDGMENT: 14 November 2018
DATE
OF REVISION: 19 November 2018
CHANGING
TIDES v MABILETSA:
FOR
PLAINTIFF: Adv V Fine
Moodie
and Robertson
FOR
DEFENDANTS: In person
ABSA
BANK v BELEBESI
FOR
PLAINTIFF: Adv M Msomi
(Heads
drawn by Adv L Morland)
Lowndes
Dlamini Attorneys: FOR DEFENDANT: In person
[1]
Section 9 is the equality provision.
The
s 10 right to dignity is a foundational constitutional right. In the
context of the present issues see
Jaftha v Schoeman and
Others; Van Rooyen v Stoltz and Others
[2004] ZACC 25
;
2005 (2) SA 140
(CC)
at para 21 per Mokgoro J
Section
25 is the property provision which aside from protecting ownership
rights also envisages proactive steps being taken to
bring about
equitable access to land and, in subsection (5) requires the State
to “
take reasonable legislative and other measu
res
within its available resources, to foster conditions which
enable citizens to gain access to land on an equitable basis
”.
Section
26 provides for the right of access to adequate housing.
[2]
Section 3(a)
[3]
See also paras 11, 14, 15, 21 to 23 and the conclusion reached at
para 31 of the judgment
[4]
Jaftha v Schoeman and
Others; Van Rooyen v Stoltz and Others
2005 (2) SA 140 (CC
[5]
Gundwana
v Steko Development CC and Others
2011 (3) SA 608 (CC)
[6]
Uniform
Rule 46(1)(a)(ii).
[7]
Leluku at para 36
[8]
Rule 45(12)(i) was deleted by GN R608 of 31 March 1989.
[9]
Nkata
at para 94