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[2017] ZAFSHC 46
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Kabelo Investments (Pty) Ltd t/a Central Timber and Truss v Botha t/a Johnny's Construction and Another (5512/2016) [2017] ZAFSHC 46 (23 February 2017)
SAFLII
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Certain personal/private
details of parties or witnesses have been redacted from this
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Policy
IN
THE HIGH COURT OF SOUTH AFRICA,
FREE
STATE DIVISION, BLOEMFONTEIN
Case
No.: 5512/2016
In
the matter between:
KABELO
INVESTMENTS (PTY) LTD t/a
Applicant
CENTRAL
TIMBER AND TRUSS
and
JOHNNY
BOTHA t/a JOHNNY’S CONSTRUCTION
First
Respondent
AC
BOTHA
Second
Respondent
CORAM
:
MENE,
AJ
JUDGMENT
BY
:
MENE,
AJ
HEARD
ON
:
02
FEBRUARY 2017
DELIVERED
ON
:
23
FEBRUARY 2017
[1]
In this matter the applicant seeks an order declaring the immovable
properties of the respondents specially executable in order
to
satisfy the judgment that the applicant had obtained against the
respondents. The applicant obtained a judgment from this court
for an
amount of R1 393 093.57, interests on the said amount and costs of
the suit.
[2]
The properties which are the subject matter of this application are:
(1) portion 1 of Ert [...], Extension [...], Bloemfontein,
held in
terms of deed T20684/2009 and known as 200 Paul Kruger Avenue,
Universitas, Bloemfontein (hereinafter referred to as the
‘first
house’); (2) Unit G1, Sectional Title Scheme known as Cowboy
113, held in terms of SK 459/2006 and known as
204 Paul Kruger
Avenue, Universitas, Bloemfontein (hereinafter referred to as the
‘second house’).
[3]
Subsequent to the judgment there were negotiations that ensued
between the applicant and the respondents on how this judgment
debt
could be settled. When the negotiations yielded to nothing, a writ of
execution was caused to be served by the Sheriff on
the respondents
but the return of service indicated that the respondents told the
Sheriff that it was ‘impossible to pay
the amount claimed or
any sum’. Accordingly the Sheriff attached movable assets of
the respondents to the total value of
R16 100.00 which was not enough
to satisfy the judgment debt hence this application.
[4]
This application is opposed by the respondents. The basis of the
opposition is that the first house is the primary residence
of the
respondents and the second house accommodates the oldest son of the
respondents. The oldest son is staying with his family
in the second
house. If the houses are declared especially executable the
constitutional rights of the respondents to housing will
be
infringed. The respondents further contend that there are alternative
remedies which will infringe less on the constitutional
rights of the
respondents to housing such as postponing the execution of the houses
or waiting until 25 August 2017 to allow the
respondents an
opportunity to pay the debt. The respondents are waiting for payment
of their debt from a company (hereinafter referred
to as ‘third
party’) against whom they had obtained judgment of R2.8 million
and such amount becomes payable on 23
August 2017 as per an already
existing order of this court. In the meantime the respondents are
tendering to pay R20 000.00 per
month until 23 August 2017 when the
whole judgment debt could be fully paid.
LEGAL
POSITION
[5]
In matters of this nature the court should consider certain factors
before deciding whether to issue a writ or not. These factors
are
listed in
Jaftha
v Schoeman
;
Van
Rooyen v Stoltz
[2004] ZACC 25
;
2005 2 SA 140
(CC)
at paras 56-58. The list is however not exhaustive. The court can
consider and pay attention to the most significant factors that
might
have to be taken into account in the weighing-up of the interests of
debtor and creditor.
[6]
In
Gundwana
v Steko Development
2011 3 SA 608
(CC)
at para 54 it was stated that execution itself is not an odious
thing. It is part and parcel of normal economic life. It is only
when
there is disproportionality between the means used in the execution
process to exact payment of the judgment debt, compared
to other
available means to attain the same purpose, that alarm bells should
start ringing.
APPLICATION
OF THE LAW TO THE FACTS OF THE CASE
[7]
I will now proceed to deal with the factors that I consider to be
important in this case.
THE
CIRCUMSTANCES UNDER WHICH THE DEBT WAS INCURRED
[8]
The applicant and the respondents entered into an agreement in terms
of which the applicant would supply building material and
trusses to
the respondents on an open account. In turn the respondents had to
pay an amount of R1 393 093.56 to the applicant.
When the respondents
failed to pay that money, the applicant sued the respondents for the
said amount together with interest thereon.
Respondents filed their
notice of intention to defend but the applicant proceeded to obtain
summary judgment against the
respondents on 8 October 2015.
THE
AMOUNT OF THE JUDGMENT DEBT AND ATTEMPTS MADE BY THE RESPONDENTS TO
PAY OFF THE DEBT
[9]
The judgment debt or any portion thereof has not been paid when this
matter was heard. As a result of this failure to pay interest
has
accrued and accumulated and the total amount owed could therefore be
close to two million rand. Even though there were extensive
negotiations to try to settle the debt, these negotiations yielded to
nothing.
THE
FINANCIAL POSITION OF THE RESPONDENTS AND WAYS IN WHICH THE DEBT CAN
BE PAID
[10]
The financial position of the respondents has not been divulged
before this court except that they cannot pay the debt and
that there
is an amount of R20 000.00 that has been tendered as an instalment
towards the payment of the debt from January 2017
until August 2017.
On how and where this money will come from, the court is left totally
in the dark. The court is also left in
the dark in respect of the
financial position of the oldest son of the respondents who is
staying in the second house with his
family. I must say that I am not
impressed with this lack of disclosure and take a dim view on this
failure by the respondents
to place all the facts before court.
[11]
The respondents, on their own version, are conducting a construction
business. I expected them to disclose the business’
financial
position or the assets it has. However this was not done. The only
evidence before me is that the business is owed money
by a third
party and that such third party is struggling to pay the respondents.
[12]
Even though it is clear that the third party is struggling to pay the
respondents, the respondents contend that the amount
that would be
recovered from the third party would be used to satisfy the judgment
debt owed to the applicant. I must say, and
as correctly argued by
the applicant, that it is doubtful that the money owed by the third
party to the respondents will be recovered.
I say this for the
following reasons: there is a dispute between the third party and its
creditor (Eastern Cape Provincial Department
of Human Settlements).
This dispute has been going on for quite some time now. It is not
certain whether it will be finalized in
August 2017. In fact this
arbitration dates back from 2014 and it was supposed to have been
finalized on 29 February 2016 but it
was not. Even if it could be
finalized in August 2017 there is no guarantee that it will go in
favour of the third party and if
this eventuality arises, there is no
way that the respondents will recover their debt.
[13]
Considering the age of the respondents (59 and 60 years
respectively), the amount owed (close to two million rand) and the
amount tendered as monthly instalment (R20 000.00), it is difficult
to say how long the respondents will be able to pay such amount
if
the eventuality arises that the third party does not pay in August
2017. The cession agreement entered into between the third
party and
the respondents in respect of the debt that is owed by the Eastern
Cape Provincial Department of Human Settlements will
at the end of
the day not be worth the paper it is written on or offer any comfort
to the applicant.
[14]
I must further add that the money owed by the respondents is not a
trifling amount. As argued by the applicant this amount
is very
significant to its survival, otherwise the applicant will face the
same predicament the respondents find themselves in.
WHETHER
THE TWO HOUSES ARE USED AS PRIMARY RESIDENCES OF THE RESPONDENTS
[15]
It is common cause that the two houses are occupied by the
respondents and the respondents’ oldest son respectively and
are used as their primary residences. However it is important to
mention that even though the respondents built these houses, both
houses have bonds registered in favour of Absa and one Mr. Liau
Michael Hlaheng respectively. In respect of the first house the
respondents are still owing Absa Bank an amount of R142 000.00. In
respect of the second house the respondents have a bond with
Absa
Bank for the purchase of the site and also a bond of R1 million
registered in favour of Mr. Hlaheng. The bond was registered
in
favour of Mr. Hlaheng on 18 May 2016 as is evident from
annexure JB3 to the opposing affidavit. The court remarked as
follows
in Jaftha (
supra)
at paragraph 58
:
“
..........
If the judgment debtor willingly put his or her house up in some
manner as security for the debt, a sale in execution
should
ordinarily be permitted where there has not been an abuse of court
procedure
”
.
Even though the respondents argued that the houses are their primary
residences, they willingly put them as security for debt.
The
question that boggles my mind is what would happen if they fail to
fulfil their obligations in respect of the debt owed to
Absa Bank and
Mr. Hlaheng. Logic dictates that they did not mind if they lost their
houses should they fail to fulfil their obligations.
The other
worrying factor is that they put their second house as security for
debt while knowing that they owed money to the applicant.
They
deliberately and consciously hypothecated the second house as
security for a loan obtained from Mr. Hlaheng. This factor militates
against not granting the execution of the houses. Furthermore it has
not been shown that there is an abuse of court procedure on
the part
of the applicant.
RIGHT
TO HOUSING AND ALTERNATIVE REMEDIES
[16]
It was argued on behalf of the respondents that their right to
housing will be infringed should the houses be declared to be
especially executable and that there are less infringing measures
available. These measures are inter alia (i) the applicant should
wait until August 2017 to allow the respondents an opportunity to pay
the debt; (ii) stay of proceedings until August 2017 and
allow the
applicant to supplement its papers and place the matter before court
if the debt is not paid; and (iii) to order that
the properties may
only be executed at the end of August 2017.
[17]
As indicated in paragraph 12 above there is no guarantee or any
certainty that in August 2017 the third party will pay the
respondents. To stay the matter will be detrimental to the applicant.
It will most likely put the applicant into serious financial
trouble.
The applicant indicated that it has a lot of pressure from its
creditors and that drastic action could be taken by its
creditors
should it fail to effect payment any time soon. Should action be
taken against it, it would be put out of business.
[18]
On the right to housing that will be infringed, it was argued on
behalf of the applicant that the respondents could find adequate
housing by renting a place. The respondents have shown that they can
afford to pay an amount of R20 000.00 per month. This money
could be
used to pay rent. It was further argued that should the houses be
declared executable, there would be extra money in the
pockets of the
respondents which was meant for respondents’ creditors. I am
inclined to agree with the applicant. Indeed
the respondents will be
able to afford a decent, adequate and affordable place with the
amount that has been tendered. In respect
of the second house I do
not have facts or evidence that has been placed before me regarding
the financial status of the household
of the respondents’
oldest son. I must say that this is a simple stratagem used by the
respondents to avoid showing that
their oldest son (and his spouse or
partner) can afford a decent and adequate housing. I therefore do not
find that their right
to adequate housing will be infringed if their
properties are declared especially executable.
[19]
Under these circumstances I find that there is no reason why the
properties of the respondents should not be declared specially
executable now.
[20] In the result I make
the following order:
The
properties described hereunder are declared specially executable:
Portion
1 of Ert [...], Extension [...], Bloemfontein, held in terms of deed
T20684/2009 and known as 200 Paul Kruger Avenue, Universitas,
Bloemfontein;
Unit
G1, Sectional Title Scheme known as Cowboy 113, held in terms of SK
459/2006 and known as 204 Paul Kruger Avenue, Universitas,
Bloemfontein.
(1)
The
respondents to pay the costs of this application on a party and party
scale.
_____________
B.
S. MENE, AJ
On
behalf of the applicant: Adv. P.J.J. Zietsman
Instructed
by:
Honey
Attorneys
BLOEMFONTEIN
On
behalf of the respondents: Adv. A.P.
Berry
Instructed
by:
McIntyre
& Van der Post
BLOEMFONTEIN