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[2016] ZAKZPHC 1
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Microzone Trading 474 CC v Govender and Others (AR34/15) [2016] ZAKZPHC 1 (5 January 2016)
IN THE HIGH COURT OF
SOUTH AFRICA
KwaZulu-Natal Division,
Pietermaritzburg
Case No AR34/15
DATE: 5 JANUARY 2016
In the matter between :
Microzone Trading 474
CC
......................................................................................................
Appellant
And
Rathnavelu
Govender
...................................................................................................
First
Respondent
Dolly
Govender
..........................................................................................................
Second
Respondent
Registrar of Deeds KwaZulu-Natal
N.O
...................................................................
Third
Respondent
Judgment
Lopes J
[1] This is an appeal against the whole
of the judgment and order of the additional magistrate Ms Khuzwayo,
which was handed down
on the 31st October 2014 in the Chatsworth
Magistrates’ Court.
[2] The history of the matter may be
summarised as follows :
(a) on the 23rd February 2011, the
appellant, a money-lender, obtained a judgment against Rathnavelu
Govender, the first respondent
herein, for payment of the sum of R6
465,73 together with interest thereon calculated at the rate of 42%
per annum from the 25th
July 2008 to date of payment and costs in the
sum of R264.
(b) A warrant of execution was issued
against the property of the first respondent on the 23rd February
2011, and the Sheriff attached
movable property to the value of R1
650.
(c) On the 26th June 2012 an
interpleader affidavit was received from the son of the respondents
claiming ownership of the property
which had been attached. On the
instruction of the appellant’s attorney the Sheriff released
the attachment on the 25th
October 2012.
(d) On the 24th August 2011 the
appellant obtained judgment against Dolly Govender, the second
respondent herein, for payment of
the sum of R6 213,98 together with
interest calculated at the rate of 42% per annum from the 1st
February 2009 to date of payment
and costs in sum of R646. The
Govenders are married to each other in community of property
(e) On the 11th December 2012 a Notice
to Appear in terms of
s 65A
(1)(a) of the
Magistrates’ Courts
Act, 1944
was served on the first respondent. The matter was
apparently heard on the 19th February 2013, when the first respondent
informed
the appellant’s attorney that he was still unemployed
and the matter was struck off the roll.
(f) The Notice to Appear was re-issued,
and the
s 65A
enquiry was heard on the 29th October 2013. It is
clear from the record of those proceedings that Mr Govender remained
unemployed,
and had little income, doing odd jobs like painting and
cutting grass. He confirmed that he had no movable assets which he
could
sell to satisfy the judgment debt. In the circumstances the
appellant’s attorney requested that the matter be adjourned
sine die.
(g) Mrs Govender also appeared at the
s
65A
enquiry on the 29th October 2013. Mrs Govender confirmed that
she had no movable assets which could be sold to satisfy the judgment
debt and at the request of the appellant’s attorney the matter
was also adjourned sine die. At the end of that enquiry the
first
respondent indicated to the learned magistrate that his son could
repay the debt in instalments, but nothing was finalised
in that
regard and no such payments have been made.
(h) On the 14th January 2014 the
appellant caused an application to be brought in the Chatsworth
Magistrates’ Court seeking
authority to attach and sell in
execution the immovable property which is the home of the Govenders,
in order to obtain monies
with which to satisfy the indebtedness of
them, to the appellant. From the founding affidavit, the amount owed
by the Govenders
was by then R28 868,39. The municipal valuation of
Mr and Mrs Govender’s home was R350 000.
(i) On the 27th May 2014 one Ruphus
Wiseman Makhanya, an attorney practising as a professional assistant
with Legal Aid South Africa,
delivered an opposing affidavit on
behalf of Mr and Mrs Govender, taking the point in limine that the
appellant had previously
brought two cases which had been
consolidated seeking the same relief. He submitted that in the
circumstances the application
to declare the immovable property
executable was res judicata.
(j) The previous cases relied upon by
Mr Makhanya were the same cases in which judgment was obtained on the
23rd February 2011 and
the 24th August 2011 respectively.
(k) Mr Makhanya also raised the fact
that Mrs Govender had made a payment of R5 000 towards her debt.
That amount was paid on the
10th March 2014.
(l) In the appellant’s replying
affidavit the appellant’s attorney denied that the appellant
had used the same facts
in the previous actions. The payment of R5
000 by Mrs Govender was admitted. The appellant’s
representative pointed out
that the previous application had been
dismissed because the founding affidavit of the appellant had been
inadequate to support
the request for execution. In addition, the
appellant had not, at the default judgment stage, instituted
s 65A
enquiries and not done everything in its power to make out a case
which would justify the declaring executable of the immovable
property owned by Mr and Mrs Govender.
(m) The replying affidavit also drew to
the court’s attention that the
s 65A
enquiries had subsequently
been held and were unsuccessful in establishing any financial ability
on the part of the Govenders to
repay their indebtedness. Although
Mrs Govender had handed in a payslip and a schedule of expenses, that
had demonstrated a complete
inability to meet the debt.
[3] The matter came before the learned
magistrate, Ms Khuzwayo, on the 31st October 2014. She dismissed
the point in limine of
res judicata, and found that the appellant
had failed to satisfy the court that it had exhausted all the other
avenues to have
the payment of the debts owed by Mr and Mrs Govender
satisfied. The application was dismissed with costs and the matter
referred
back to the
s 65
enquiry for review on the financial
standing of Mr and Mrs Govender.
[4] The appellant now appeals against
that judgment alleging that the magistrate had placed an onus on the
appellant to establish
that the Govender’s right to access to
adequate housing had not been infringed, and that the appellant had
not exhausted
all other avenues to obtain payment of the debt. The
learned magistrate should have held, as a matter of law, that the
onus was
on Mr and Mrs Govender to satisfy her that their right of
access to adequate housing would be infringed if the order sought was
granted. The appellant further submitted that the learned magistrate
erred in finding that the appellant had not exhausted all
its avenues
to have the debt satisfied, particularly with regard to the two
s 65A
enquiries which had been held, and that those enquiries had yielded
no source of funds.
[5] The matter came before us on appeal
on the 9th November 2015. Two days prior to the hearing the attorney
from the Pinetown
Justice Centre acting on behalf of Mr and Mrs
Govender withdrew as their attorney of record. The appellant’s
attorney addressed
a lengthy letter to the attorney, Mr Anith Luckan,
complaining that, inter alia, the notice of withdrawal did not comply
with the
provision of
Rule 16(4)
of this court. Mr Luckan responded
to the appellant’s attorney’s letter pointing out that
Legal Aid had withdrawn
as attorneys of record because they had been
unable telephonically to contact Mr and Mrs Govender with regard to
the appeal. They
simply advised that the respondents had been
notified by the previous representative, Mr Makhanya, that the appeal
was set down
for the 9th November 2015. Ms Y Ramchander is recorded
on the letterhead of Mr Luckan as, what appears to be, his partner.
[6] It is indeed necessary that any
attorney withdrawing shall do so timeously. This is a duty which he
owes not only to his clients
in order to enable the clients to make
other arrangements, but also to the court. The withdrawal in this
case was so late as to
place Mr and Mrs Govender in great difficulty
because they did not have time to locate and appoint another attorney
in Mr Luckan’s
stead.
[7] In all the circumstances of the
matter we made an order on the 9th November 2015 :
(a) adjourning the matter to the 1st
December 2015;
(b) issuing a rule nisi calling upon Mr
Luckan and/or Ms Ramchander and/or Mr Makhanya and/or the Legal Aid
South Africa to show
cause to this court why an order should not be
made directing them to pay the wasted costs de bonis propriis, which
costs were
occasioned by the adjournment of the appeal hearing
because of the irregular withdrawal of Legal Aid South Africa as
attorney of
record for Mr and Mrs Govender.
(c) Costs were reserved.
(d) Legal Aid South Africa was directed
to deliver heads of argument by the 23rd November 2015.
[8] When the matter came before us on
the 1st December 2015, Mr Luckan, a contract employee and attorney at
the Pinetown Justice
Centre of Legal Aid South Africa appeared. He
accepted that the instructions given to him by superiors to withdraw
from the appeal
were incorrect.
[9] Mr de Beer informed the court that
a further payment of R5 000 was made by the second respondent. He
submitted that this should
not affect any decision by this court as
to whether the learned magistrate erred in refusing the application
made by the appellants.
It does, however, indicate some willingness
on the part of the Govenders to discharge their indebtedness.
[10] The matter of judicial oversight
in order to alleviate the injustices which may result where a
debtor’s home is sold
for an insignificant amount of money was
considered in Jafta v Schoeman and Others; van Rooyen v Stoltz and
Others
[2004] ZACC 25
;
2005 (2) SA 140
(CC). In summarising factors which a court
would consider in deciding whether to grant an order that immovable
property be declared
executable, Mokgoro J stated at paragraph 60 :
‘In summing up, factors that a
court might consider, but to which a court is not limited, are : the
circumstances in which
the debt was incurred; any attempts made by
the debtor to pay off the debt; the financial situation of the
parties; the amount
of the debt; whether the debtor is employed or
has a source of income to pay off the debt and any other factors
relevant to the
particular facts of the case before the court.’
[11] In this matter nothing is revealed
about the circumstances in which the debt was incurred. Mr de Beer,
who appeared for the
appellant, informed the court that the appellant
was what may be described as a ‘micro-lender’. Nothing
in the application
before the Magistrates’ Court indicates how
it came about that Mr and Mrs Govender were loaned this money.
Relevant factors
in this regard are whether the Govenders themselves
approached the micro-lender, or whether they were the subject of a
marketing
campaign generally or even specifically directed to Mr and
Mrs Govender themselves. Given the parlous state of the Govenders’
finances, it seems probable that a prima facie case of reckless
lending is suggested by the circumstances. What is of grave concern
in this regard is that there was obviously an agreement by the
Govenders to pay interest at 42% per annum. Given the current
overdraft rate of some 8.5% and the prescribed legal rate of 9.5% per
annum, a rate of 42% may be viewed as excessive in the sense
of being
unconscienable or exorbitant. Whether or not it is illegal in the
context of the relevant regulations governing lending
rates, we have
not been informed.
[12] With regard to the attempts made
by Mr and Mrs Govender to pay off the debt, it is true that they have
not exactly been forthcoming
in this regard. An amount of R5 000,
however, was paid off by Mrs Govender on the 10th March 2014. Their
failure to make payments
is no doubt exacerbated by their financial
situation.
[13] The financial situation of the
Govenders is clearly dire. In the
s 65A
enquiry, it appeared that
Mrs Govender earned a weekly salary of approximately R633. This has
to be viewed against the family’s
expenses of several thousand
rand per month. It also seems clear that Mr and Mrs Govender are
entirely reliant upon their son
in order to be able to survive
financially.
[14] The amount of the debt is in my
view very small considering the indebtedness of the Govenders. Their
outstanding indebtedness
when the application was instituted, and
taking into account the payment of R5 000 by Mrs Govender, would
have been R23 868,39.
Thus the debt owed at the stage of the learned
magistrate’s decision was approximately three and a half per
cent of the
value of the immovable property.
[15] It appears that Mr Govender is
unemployed, obtaining occasional income doing painting and cutting
grass. Mrs Govender’s
income appears, at least, to be
irregular. It is clear from their evidence at the
s 65
enquiry that
neither of the Govenders have any resources which would enable them
promptly to pay off the debt.
[16] Notwithstanding their impoverished
position, Mr and Mrs Govender, at the application to declare the
immovable property executable,
made an offer of R300 per month each
towards settlement of the debt. This was rejected by the appellant.
[17] A relevant fact with regard to the
exercise of judicial oversight in this case, is that the debt was not
owed because of the
Govenders’ default on a mortgage bond,
given for the purpose of purchasing the Govenders’ home. This
debt was provided
in circumstances of which we have not been
apprised, and to recover it, the appellant seeks to prejudice the
rights of the Govenders
to access to adequate housing in terms of s
26 of the Constitution.
[18] I refer to the statement of
Froneman J in Gundwana v Steko Development and Others
2011 (3) SA
608
(CC) at paragraph 54 :
‘In Jaftha, Mokgoro J, before
listing some relevant factors that needed to be considered in
judicial oversight of the execution
process, warned that “ it
would be unwise to set out all the facts that would be relevant to
the exercise of judicial oversight.”
Mindful of that warning,
I would merely add the following. It must be accepted in life that
execution in itself is not an odious
thing. It is part and parcel of
normal economic life. It is only where there is a 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. If there are no
other proportionate means to attain the same end, execution may not
be avoided.’
[19] Taking into consideration all the
factors of the matter, in my view the learned magistrate would have
failed in her duty of
judicial oversight had she declared the
immovable property belonging to the Govenders to be executable. In
my view there is no
reason why the matter cannot revert to the s 65A
court and the agreement by the Govenders to repay R300 per month each
revisited.
The offer of R600 per month by the Govenders was one in
line with their financial circumstances, a factor which should have
been
known to the appellant prior to loaning them the money.
[20] In all the circumstances I make
the following order :
(a) the appeal is dismissed;
(b) the appellant is directed to pay
the respondents’ costs, save for the wasted costs of the
appellant and the respondents,
occasioned by the adjournment on the
9th November 2015. Those costs shall be borne by Legal Aid South
Africa (Pinetown Justice
Centre) and shall not be recoverable from
the respondents.
Marks AJ
I agree
Lopes J
It is so ordered.
Date of hearing 1st December 2015:
Date of judgment : 5th January 2016
Counsel for the Appellant : A de
Beer SC (instructed by Louis M Podbielski)
For the Respondents :A Luckan
(instructed by Legal Aid South Africa (Pinetown Justice Centre)