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[2016] ZAKZDHC 4
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Nedbank Limited v Blue Sands Trading 537 CC and Others (9840/2014) [2016] ZAKZDHC 4 (15 February 2016)
IN
THE HIGH COURT OF SOUTH AFRICA
KWAZULU-NATAL
LOCAL DIVISION, DURBAN
CASE
NO. 9840/2014
NEDBANK
LIMITED
Applicant
and
BLUE
SANDS TRADING 537 CC
First Respondent
SAINT
MICHAEL
SCHUTTE
Second Respondent
RIANA
SCHUTTE
Third Respondent
JUDGMENT
Delivered
on January 2016
CHETTY
J
1.
The applicant brought an
application in terms of Rule 46(1)(a)(ii) of the Uniform Rules for an
order declaring that the immovable
property of the first respondent
being the Farm, K 96, number 15488 and held under deed of transfer
number: T 33 4664/07, be declared
specially executable, and that the
Registrar of this Court be
authorised
to issue a writ of execution to attach
the said property.
2.
The application brought against
the respondent’s stems from the hypothecation of the immovable
property in terms of a mortgage
bond on 15 November 2011, in favour
of the applicant, as security for the first respondent’s
obligations as surety for money
is lent and advanced to DDK Systems.
In addition, the applicant lent and advanced certain monies to the
first respondent, for which
second and third respondents stood
surety. The summons issued against the respondents sets out the
detail of an overdraft facility
advanced by the applicant to DDK
Systems Services CC. At the time when the overdraft was granted, the
second and third provided
unlimited suretyship for the due fulfilment
of the first defendant’s (DDK) obligations in respect of the
overdraft facility.
The initial amount of the overdraft was for R270
000.00. This amount then grew exponentially, and as at August
2013 the first
defendant was indebted to the plaintiff in the amount
of R935 162.24 plus interest at the rate of 20.50% per annum.
Despite
demand, the first defendant failed to pay the amount due in
respect of its overdraft.
3.
The second claim, as set out in
the summons, relates to an amount due in terms of a loan agreement in
terms of which the plaintiff
loaned an initial amount of
R1,755 700.00 to Blue Sands Trading CC (cited as the second
defendant). This amount was
used by the first respondent (Blue
Sands Trading) to effect improvements to the immovable property. The
terms of the agreement
was that Blue Sands Trading would repay the
loan in installments of R15 182, 43 and would further register a
covering mortgage
bond in favour of the plaintiff in the sum of
R3 505 700.00 in respect of the property at Erf K96
Kwambonambi (the immovable
property being the subject of the Rule
46(1)(a) application).
4.
In terms of a further agreement
between the applicant and the first respondent, the applicant
advanced a further amount of R 1 290,000.00
in order to carry
out further improvements to the property. The second respondent
(S M Schutte) being the third defendant
in the action, resides on the
immovable property in question. He is also the sole member of
Blue Sands Trading as well as
DDK Systems and Aludair 94 CC, the
latter two entities being close corporates which are cited as first
and fifth defendants in
the summons. The second respondent (SM
Schutte) is married to the third respondent (R Schutte), she being
cited as the fourth
defendant in the action. The third respondent
resides on the immovable property together with the second respondent
and their son,
who accordingly to the papers before me, would be
completing high school in 2016.
5.
The second and third
respondents concluded a deed of suretyship with the applicant in
terms of which they bound themselves for the
payment of all amounts
owed by the first respondent to the applicant. The first
respondent failed to honour the terms of
the loan agreement, in
failing to pay the installments of R26 127.80. As at
February 2014 the arrears on the loan account
stood at R79 766.37.
6.
Following on from the default
by the first respondent to honour its repayment of the loan agreement
and the overdraft facility,
the applicant’s representatives met
with the third respondent in enduring April 2014, in an attempt to
conclude an arrangement
to enable the first and second respondents to
settle the overdraft facility as well as the arrears accumulated on
the loan agreement.
7.
At the meeting in April 2014,
at which the third respondent represented her husband as well as the
first respondent, the third respondent
informed the representative of
the applicant that the first respondent would be disposing of two
immovable properties and would
utilize the surplus funds from the
sale, projected at R300,000.00 to settle the overdraft. The applicant
was assured that this
would take place before 31 July 2014. In
respect of the overdraft, the third respondent indicated that as from
30 April 2014, payments
would be made in the amount of R30 000.00 per
month until the liquidation of the debt in January 2015. In respect
of the loan account,
the respondent’s undertook to liquidate
this at the rate of R35 000.00 per month, and that all of the arrears
would be eliminated
by 31 October 2014.
8.
The agreement was reduced to
writing in terms of an email addressed by the applicant’s
representative to the third respondent,
on 15 April 2014. The
third respondent was furthermore notified that in the event of a
failure to perform in terms of the
agreement reached with the
applicant, the applicant would, without prior notification, institute
legal action against all parties
concerned. In addition, the
applicant’s representative confirmed that the agreement to
liquidate the second and third respondent’s
obligations did not
constitute a novation of the original undertaking in terms of the
loan agreement and the overdraft facility.
9.
At the time of the institution
of the action in August 2014, DDK Systems Services, the first
defendant in the action, was overdrawn
in respect of the overdraft
facility to the amount of R 935,162.24, with the arrears in respect
of the loan account standing at
R124,247. 70. The outstanding balance
on the loan agreement was R2 985,996.04.
10.
Following the institution of
the action against the defendants, with the summons being served at
the address provided by the defendants
in the agreements concluded
with the applicant, and in light of no appearance to defend, the
applicant proceeded to apply for default
judgement before the
Registrar in respect of claims 1 and 2 as set out in the summons,
being the monetary claims in respect of
the overdraft facility and
the loan agreement.
11.
In addition, the applicant
further sought an order that the property registered in the name of
the first respondent be declared
executable, but adjourned this part
of the relief to open Court, clearly mindful of the Constitutional
Court’s ruling in
Gundwana
v Steko Development & Others
2011 (3) SA 608
(CC) that the registrar was precluded from granting
an order to declare the immovable property specially executable.
12.
On 19 November 2014 the
registrar granted default judgement against the first to the fifth
defendants, jointly and severally, the
one paying the others to be
absolved. Pursuant thereto, the applicant issued writs of
execution against each of the defendants
in an attempt to attach
immovable property in satisfaction of the claims against the
defendants. These attempts were unsuccessful
as the address for
service, given by the defendants, were locked and unattended. Having
been unsuccessful in attempting to pursue
the judgement against
the first second and fourth defendants, the applicant subsequently
ascertained that the first respondent,
Blue Sands Trading, had two
immovable properties registered in its name, comprising two sectional
title units in a scheme known
as SS Rock of Ages, and the second
being a vacant piece of land in Kwambonambi.
13.
Efforts by the applicant to
first proceed with a writ against movables resulted in the Sherriff
producing an inventory of goods
totaling approximately R80,000,
excluding a 2010 Toyota Fortuner, for which no value was recorded.
Even if one included the
full market value of the motor vehicle, the
total value of goods attached was significantly less than the amount
for which the
applicant had secured judgement.
14.
In light of the lack of options
available to it, the applicant was left with no alternative but to
proceed against the second and
third respondents in their capacity as
suretys is for the obligations of the first respondent. The
immovable property in
question is the family residence of the second
and third respondents and according to the valuation conducted by a
professional
valuer of, the total value of the property together with
improvements, based on a sale in the open market, is R8m. The
applicant
submits that if the immovable property in question is
declared specially executable in terms of Rule 46 and disposed of in
satisfaction
of the judgment debt, the first and second respondent’s
constitutional right to housing would not be adversely affected.
15.
The sale of the immovable
property would be sufficient to satisfy the judgment as well as leave
the with second and third respondents
with a surplus of approximately
R3m, enabling them and their family to acquire another home, albeit
smaller and not as expensive
as the property sold in execution.
Alternatively, in light of the first respondent being the owner
of the sectional
title units in the Scheme known as Rock of Ages, the
second and third respondents could conveniently relocate into one of
these
units in the event that their primary residence is declared
executable and sold. To that extent, any a decision declaring the
immovable
property of the second and third respondent would have no
prejudice or potential to render them homeless.
16.
Despite default judgement
having been granted against the first second and third defendants in
respect of claim one, and against
the second, third, fourth and fifth
defendants, jointly and severally, in respect of the second claim, no
steps had been taken
by the defendants to liquidate their
indebtedness to the applicant. On 6 February 2015, the applicant’s
attorney telephoned
the second and third respondents to discuss
payment of the judgement debt. According to the applicant, the third
respondent indicated
that they were not in a position to settle the
debt, and did not respond to an invitation from the applicant’s
attorney to
provide details regarding their own financial status as
well as that of the other three execution debtors, namely DDK Systems
Services,
Blue Sands Trading and Aludair 94 CC.
17.
The application to declare the
immovable property executable was brought after repeated attempts to
get the respondents to comply
with their obligations in respect of
the judgement. I have no doubt that the application was brought after
all else had failed.
On 13 March 2015, after repeated attempts to
serve a writ of execution in respect of movables, a writ was finally
served on the
respondent’s.
18.
On 8 May 2015 the applicant
filed its application in terms of rule 46(1)(a)(ii) to have the
second and third respondent’s
immovable property declared
executable. On 20 May 2015 the defendants gave notice of their
intention to oppose the application
to have the immovable property
declared executable. On 10 June 2015, almost 9 months after judgement
was obtained, the respondents
gave notice of their intention to
defend the relief sought in the summons to have the property of the
second and third respondents
executable. It is prudent to note that
the notice of intention to defend specifically records that the
defendant intends to defend
only the relief sought in prayer 3 of the
plaintiff’s particulars of claim. At the same time, the
respondent’s attorney
wrote to the applicant’s attorneys
on 8 June 2015 contending that notwithstanding the monetary judgement
having been granted
against the respondents, in terms of rule 19 (5)
it was entitled to deliver a notice of intention to defend. The
respondents’
attorneys further tended to pay the applicant’s
costs in respect of the default judgement.
19.
The position of the
respondents, consistent with the argument advanced by Mr. Ramdhani,
who appeared on their behalf, was that notwithstanding
the granting
of a monetary judgement against the first second and third
respondents, the issue of the decision to declare the respondent’s
property executable was still before the Court, and therefore a live
issue. He submitted that the application for default judgement
should
have been withdrawn, alternatively the present application by the
applicant should be referred to trial and that the respondent’s
be granted the opportunity, in terms of a counter application brought
by them to file a plea in relation to the relief sought in
prayer 3
of the summons.
20.
During the course of argument I
pointed out to Mr Ramdhani that I considered this to be a novel
approach to an application under
Rule 46(11). My reasoning for
this observation is that the respondents have put up no proof that
they are not liable for
the amounts in terms of the default
judgement. Their opposition is restricted to the contention that it
is not just and equitable
for this Court to grant the order declaring
the immovable property executable.
21.
Ms. Thobela-Mkhulisi, who
appeared for the applicant, correctly submitted that the respondents
are hamstrung by the default judgment
granted against them. In
light of the default judgment, the applicant is entitled to pursue
various means in order to satisfy
the debt. It had already
ascertained that the respondents possess no movables of any value
that would be capable of satisfying
the debt. Accordingly, the
only option at its disposal was to pursue an order declaring the
immovable property executable,
the property being valued well in
excess of the amount of the judgment.
22.
Counsel for the applicant
further pointed out that the respondent chose not to bring an
application for rescission. Their
approach to the Rule 46(11)
application is to contend that while the default judgment was granted
by the Registrar, this was only
in respect of prayers 1 and 2. The
relief sought in prayer 3 was referred, in accordance with the
Gundwana
decision, to open Court. Accordingly, the respondents contend,
that it is still open to them to defend the action in respect
of the
relief in prayer 3. The respondents placed reliance on the
wording of Rule 19(5) which reads as follows :
(5) Notwithstanding the
provisions of subrules (1) and (2) a notice of intention to defend
may be delivered even after expiration
of the period specified in the
summons or the period specified in subrule (2), before default
judgment has been granted: Provided
that the plaintiff shall be
entitled to costs if the notice of intention to defend was delivered
after the plaintiff had lodged
the application for judgment by
default.
23.
The argument advanced by the
respondents is that even though the notice to defend has been filed
outside of the time periods prescribed
by the Rules, the Rules permit
late filing. In my view, the respondents’ reliance on
Rule 19(5) is misplaced.
The rule permits a defendant to file a
notice to defend even outside of the period prescribed.
However, this may be allowed
any time
before
default judgment has been granted. In the present default
judgment
has already been
granted
, rendering any
other Court unable to deal with the merits of the monetary claim.
In this regard,
Erasmus,
Superior Court Practice
,
Vol.2, D1-562 states :
“
An
order of a court of law stands until set aside by a court of
competent jurisdiction. Until that is done, the court order
must be obeyed even if it may be wrong; there is a presumption that
the judgment is correct. A person may even be barred
from
approaching the court until he or she has obeyed an order of court
that has not been properly set aside. An order could
only be
set aside under rule 42, rule 31(2)
(b)
,
on appeal or on common-law grounds.
The general
well-established rule is that once a court has duly pronounced a
final judgment or order, it has itself no authority
to correct, alter
or supplement it—it becomes
functus officio
. The
inherent jurisdiction of the High Courts does not include the right
to interfere with the principle of finality of judgments,
other than
in the circumstances specifically provided for in the rules or the
common law.”
See
Bezuidenhout
v Patensie Sitrus Beherend Bpk
2001
(2) SA 224
(E)
at
229B–C;
Oudekraal
Estates (Pty) Ltd v City of Cape Town
2004
(6) SA 222
(SCA)
at
242C–244A;
MEC
for Economic Affairs, Environment and Tourism v Kruisenga
2008
(6) SA 264
(CkHC)
at
277C;
Jacobs
v Baumann NO
2009
(5) SA 432
(SCA).
24.
Counsel for the applicant
submitted that the issue of the notice to defend is a red herring as
there is simply nothing left for
the respondent to defend. I am
in agreement that in respect of claim 1 and 2 of the summons, and in
the absence of an application
for rescission, this Court is obliged
to treat the default judgment granted by the Registrar as final.
That then leaves the
relief sought in respect of declaring the
immovable property executable. Mr Ramdhani referred me to a
decision of Ploos van
Amstel J in
Bettercredit
(Pty) Ltd v Johannes Zinsiwa Mbokazi
(case 8347/2011, KZP) as authority for the proposition that where a
notice of intention to defend had been delivered in an action,
it was
not permissible to proceed with an application for default judgment
to declare a property executable. Counsel did
not furnish me
with a copy of the judgment (or the transcript thereof, as I was
informed that an
ex tempore
judgment was handed down). I am therefor unable to make any
observation regarding the judgment, save to point out that this
matter appears to be distinguishable from that in
Bettercredit
as default judgment has already been granted, albeit not in relation
to the prayer declaring the property executable.
25.
The respondents further
complained of a procedural irregularity in that summons was served at
an address which the applicant and
its representatives were aware,
was no longer occupied by the first and second respondents.
Notwithstanding, the respondents
concede in their opposing affidavit
that the loan agreements concluded with the applicant required that
they inform the applicant
in writing if they had changed their
domicilium
from that recorded in the loan agreements. While the opposing
affidavit refers to an application for a rescission of the judgement
granted against the respondents, no such application was filed at the
time of the hearing of this matter. As such issued,
the default
judgment by the Registrar must stand. I failed to find any basis for
the procedural irregularity alleged.
26.
I am also not persuaded by the
argument that the filing of a notice of intention to defend the
action, after judgement has been
given in respect of claims 1 and 2,
justifies that the relief sought in prayer 3 (to declare the
immovable property executable)
should proceed by way of action, with
the respondents being Permitted to file their plea.
27.
In any event, the present
application required the respondents to place facts before Court as
to why it would not be just and equitable
to grant an order declaring
the immovable property specially executable. The second and third
respondents have, in their opposing
affidavit have placed facts
constituting “relevant circumstances” before this court.
It would appear that the property
was purchased in 2007 for an amount
of R360 000.00. The respondents thereafter carried out
improvements to the property,
utilising their own funds. In February
2011, they secured a loan from the applicant in the amount of R1,75m,
and thereafter took
another loan for a further amount of R1,29m in
December 2011. According to the respondents, they paid an amount of
R981,257.00
to date towards their bond and have effected substantial
improvements to the property on which they reside with their teenage
child
as well as certain other employees.
28.
The movables attached by the
Sherriff on 13 March 2015 pursuant to a writ issued by the
applicant’s attorney, were due to
be sold by way of public
auction on 21 August 2015. On 17 August 2015 the respondents
launched an urgent application in this
Court for as
rule
nisi
for the sale in
execution to be stayed. They sought, and were granted, an order
in terms of which they committed themselves
to pay the applicant
R100 000.00 monthly, as from 15 September 2015 and to continue
for each and every successive month until
the judgment debt of
R2 985 996,04 plus costs was fully extinguished. The
order, granted by Mokgohloa J on 19 August
2015 further provided that
in the event of the applicants (the Schutte’s) failing to
comply with their obligation, the stay
of the writ of execution would
fall away. That order was taken by consent.
29.
Prior to the hearing of this
application, the Recoveries Manager employed by the applicant, Ms.
Ntshangase, deposed to an affidavit
detailing the undertaking to pay
off the debt as set out in the Order above, as well as the steps
taken by the respondents to settle
their debts. In summary, the
affidavit of Ntshangase reflects that the respondents breached their
undertaking and terms of
the Order granted on 19 August 2015 in that
they failed to adhere to the timetable by when they had to pay the
installments, and
furthermore paid amounts less than what they had
undertaken to pay. The affidavit states that after default
judgment was
granted, and almost coinciding with the issuing of the
Rule 46 application, from 7 May 2015 to 12 August 2015, the
respondents
paid a total of R392 000,00 towards the liquidation
of their outstanding debt.
30.
Following upon the Order of 19
August 2015, Ms. Ntshangase recorded that the first and second
respondents paid two installments
on 11 September 2015 and 12 October
2015 in the amounts of R30 000.00 and R21 000.00
respectively. In a replying
affidavit to that of Ms.
Ntshangase, the third respondent pointed out that in addition to the
amounts alluded to by Ms. Ntshangase,
the respondents paid an amount
of R108 000.00 on 10 September 2015; R21 000.00 on 19
October 2015 and R79 000.00
on 30 October 2015. The
respondent acknowledge that they have been in breach of the Order of
19 August 2015, but point out
that they have made payments totaling
R208 000.00 since the Order. In total, since May 2015,
they contend that they
have paid approximately R600 000.00
towards liquidating their debt to the applicant. These payments
are not disputed
by the applicant.
31.
Mr Ramdhani submitted that the
payments made by the respondents is evidence that they are not
recalcitrant in terms of their undertaking
to liquidate their
indebtedness. On the other hand, counsel for the applicant submitted
that the history of the matter reflects
a tale of broken promises by
the respondents to liquidate a substantial debt. In this regard, it
was pointed out that the applicant
had bent over backwards to
accommodate the respondents, and twice before the respondents have
made undertakings to pay, only for
these undertakings to be breached.
32.
What is particularly relevant
is that in respect of the urgent application which the respondent’s
launched in order to prevent
the sale and execution of the movable
property, they voluntarily place themselves under an obligation to
pay the amount of R 100,000
per month in order to extinguish their
debt. The affidavit of the third respondent, in response to that
filed by Ms. Ntshangase,
reflects that while payment has been made
since the order of 19 August 2015, these payments have not been for
the full amount in
terms of the order, nor have they been made
timeously. It bears noting that the Constitutional Court
in
Jaftha v Schoeman; Van
Rooyen v Stolz
[2004] ZACC 25
;
2005 (2) SA
140
(CC) noted the following with regard to the resort to selling a
primary residence in execution :
[56]….
If there are other reasonable ways in which the debt can be paid an
order permitting a sale in execution will ordinarily
be undesirable.
If the requirements of the Rules have been complied with and if there
is no other reasonable way by which the debt
may be satisfied, an
order authorizing the sale in execution may ordinarily be appropriate
unless the ordering of that sale in
the circumstances of the case
would be grossly disproportionate.”
33.
Measured against this
background, the primary issue before this Court is whether the
respondents have discharged the evidentiary
burden on them to show
why execution against immovable property would infringe his or her
right to adequate housing. Similarly
to the evidentiary burden
borne by tenants or unlawful occupiers in eviction applications under
the Prevention of Illegal Eviction
Act, where an application is
brought to declare immovable property executable, the judgment debtor
is ordinarily in the “best
position to advance contentions as
to the unjustifiability such execution”. See
Neveling
v Reichmans (Pty) Ltd & another
(
14070/2013)
[2014] ZAKZPHC 46 (5 August 2014)
para 36;
First Rand Bank
Limited v Folscher and Another, and similar matters
2011
(4) SA 314
(GNP) para 42.
34.
The respondents were no doubt
aware of this evidentiary burden and placed facts before the Court as
to the amounts borrowed from
the applicant, the nature of the
improvements made to the property and the current value of the
property. The factors fall
within the ambit of the factors
elucidated in
Folscher
(para 40-41). The respondents however have been unable to
displace the weight of the contention advanced by the applicant
that
they (the respondents) own other immovable property which they can
dispose of in the event of their primary residence being
declared
specially executable and sold. The undisputed fact is that the
second and third respondents own 2 sectional title
units. No
argument has been advanced either on affidavit or in argument before
me as to why the second and third respondents
would not be able to
occupy one of those units in the event of relief being granted in
favour of the applicant. It should
be borne in mind that the
respondent had prior to the launching of the Rule 46 application
undertook to sell one of these properties
to settle their debts.
They failed to pursue those options.
35.
An even stronger argument
advanced by the applicant is that the value of the property in
question far outstrips the amount of the
judgement debt. Even if the
second and third respondents were unwilling or unable to take
occupation of one of their sectional
title units if their primary
residence were to be sold in execution, they would still be left with
a surplus of approximately R4,5m
which they could use towards the
purchase of alternative accommodation. While the respondent’s
oppose the application in
terms of Rule 46, and have advanced
arguments relating to the improvements which they have effected to
the immovable property,
it is equally apparent that their movable
property will not attract a value capable of being realised in full
and final satisfaction
of the judgement debt. Accordingly,
in light of the amount of the judgement debt at just over R3m, the
non-availability
of sufficient movables that can be sold in
satisfaction of the debt, the application to declare the immovable
property specially
executable cannot be construed as An abuse of
process by the bank, not a disproportionate remedy. In this
regard, the Court
in
Jaftha
v Schoeman
noted the
following at para 56-57
“
This
would be so if the interests of the judgment creditor in obtaining
payment are significantly less than the interests of the
judgment
debtor in security of tenure in his or her home, particularly if the
sale of the home is likely to render the judgment
debtor and his or
her family completely homeless.
[57]
It is for this reason that the size of the debt will be a relevant
factor for the court to consider. It might be quite unjustifiable
for
a person to lose his or her access to housing where the debt involved
is trifling in amount and significance to the judgment
creditor.
However, this will depend on the circumstances of the case. As has
been pointed out above it may often be difficult
to conclude
that a debt is insignificant. In this regard, it is important too to
bear in mind that there is a widely recognised
legal and social value
that must be acknowledged in debtors meeting the debts that they
incur.”
36.
Moreover, it is equally
pertinent to point out that nowhere in their opposing affidavit do
the respondents provide any indication
of the period which they would
require to satisfy the amount of the judgement debt, or what property
if any they intend disposing
of or of other ways in which the debt
could be settled, thereby avoiding a sale in execution. While it is
correct to note that
the respondents have carried out significant
improvements to the property over the years, and at substantial
costs, the applicant
is a financial institution, which has advanced
significant amounts to the respondents on the basis that their
immovable property
constituted the security for the indebtedness. As
the Constitutional Court pointed out in
Gundwana
v Steko
at para 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 that
execution in 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. If
there are no other proportionate means to attain the same
end, execution may not be avoided.
37.
In
dealing with the judicial oversight required before immovable
property is declared executable, in
Nedbank
v Fraser
2011
(4) SA 363
GSJ the Court held that :
“
[23]
The context of the judicial oversight provided in section 26(3) of
the Constitution is a matrix of factors. There are: the
existence of
the social need for housing, the constitutional right to access to
adequate housing embodied in section 26(1), the
need for people to
honour their debts, the need for debts to be enforced by a court
process and the need for execution, all of
which serve the housing
need, as well as the drastic nature and far reaching consequences of
executing against a person's home
and the scope for the abuse of the
process of execution.
[24]
Seen in this context, the purpose of the judicial function required
in section 26(3) is to act as a filter or check on execution
that
does not serve the social interests and which is an abuse. Expressed
simply, the function of the court is to safeguard against
abuse of
the execution process. It is with the consideration of this context
and purpose that a determination is made whether or
not to declare a
person's home executable
.”
38.
The amended Rule 46(1) was
described in
Mkhize v Mvoti
Municipality
2012 (1) SA 1
(SCA) as a “legislative interpretation of
Jaftha
demonstrating
the policy of the legislature”. What it does require the
court to do is to consider “
all
relevant circumstances
”
before an order may be made declaring a primary residence of a debtor
to be specially executable. As set out above, the
respondents have
placed various factors before the court as to why their property
should not be declared executable. Various courts
have expressed the
view that it is not possible to set out every potential circumstance
that may be considered in deciding whether
or not to issue a writ.
The court in
FirstRand
Bank v Folscher
(supra) set
out a detailed list of factors to be considered.
39.
For the purpose of the present
application apart from the factors already considered, the issue of
the debtors’ payment history,
particularly after default
judgement had been granted, was a factor that weighed heavily with
me. It was for this reason that I
requested counsel at the hearing of
the application to file further submissions dealing with the issue of
whether this court should
suspend the execution of an order, if I
were inclined to declare the property specially executable. I raised
the issue as I considered
it to be part of the matrix of factors that
a court should take cognizance of to determine whether or not to
issue a writ.
40.
It is clear that in terms of
Rule 45A, a court may suspend the execution of any order for such
period as it may deem fit. The discretion
is wide however it must be
exercised judicially. It was submitted on behalf of the applicant
that the power to suspend an order
ought to be exercised exceptional
cases only and not on the basis of abstract ideas such as justice and
equity. I am not persuaded
by the last mentioned submission, as I am
of the view that notions of justice and equity permeate an
application to declare a primary
residence specially executable, as
one of the inevitable consequences (in the ordinary course) is that
the debtor would lose their
home. I am mindful however that
Koen J in
Neveling v
Reichmans (Pty) Ltd & another
held
at para [42]
“
The
availability or otherwise of alternative accommodation is not a
factor to be considered. It has not been referred to as such
a factor
in either
Jaftha
or
Gundwana
.
The debate at this stage is ownership and whether a writ should be
issued which could result in the termination of an ownership.
Continued occupation and available alternative accommodation might
only become relevant thereafter and could form the basis of
a PIE
application….., indigency is not the test. More correctly it
is disproportionality. “
This view was perhaps informed by the
dictum in
Standard Bank of
South Africa Ltd v Saunderson and Others
2006
(2) SA 264
(SCA)
where
Cameron JA and Nugent JA stated at para 15 that
“
[15]………What
was in issue in
Jaftha
was not s 26(3) of the Constitution but rather s 26(1) - which
enshrines a right of access to adequate housing - and the impact
of that right on execution against residential property. (Section
26(3), as elaborated by the Legislature in the Prevention of
Illegal
Eviction from and Unlawful Occupation of Land Act 19 of 1998, becomes
relevant in the event of eviction consequent upon
a sale in
execution, and was not in issue in
Jaftha
.)
Nor did the Constitutional Court decide that s 26(1) is
compromised in every case where execution is levied against
residential
property. It decided only that a writ of execution that
would deprive a person of 'adequate housing' would compromise his or
her
s 26(1) rights and would therefore need to be justified as
contemplated by s 36(1). The premise on which the Court below
proceeded
was thus incorrect.
[16]
It must be borne in mind that s 26(1) does not confer a right of
access to housing
per
se
but only a right of access to 'adequate' housing; and this concept of
necessity is relative.”
41.
The applicant has not contended
in its opposing papers or in argument before me that a decision to
declare their primary residence
executable will lead to
homelessness. On the contrary, as set out above, they have
other immovable property they can occupy
should I grant the order
prayed. In considering whether to stay an order for execution,
I would have to be satisfied that
an injustice would otherwise be
done. What is undisputed in this case is that the respondents
are not indigent. They
have other immovable property that they
can move into if an order to declare their property was issued.
The applicants have
sought the order because all other options to get
the respondents to settle their arrears, have failed. While the
amount
paid by the respondent since the default judgment is not
insubstantial, one must not lose sight that the amount of the
judgment
debt is in excess of R3m. As the Court in Gundwana at
para 7 pointed out
“
It
must be accepted that execution in F 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. If there are no other proportionate
means to attain
the same end, execution may not be avoided.”
42.
After careful consideration of
all the facts of the matter and the written submissions of counsel, I
find no basis for the exercise
of my discretion for the suspension of
the order I issue below. The fact that the respondents have
paid certain amounts towards
their debt since default judgment is
not, in and of itself, a basis for suspension of an order for
execution. Moreover, the
respondents have breached their own
undertaking to this Court to pay off their arrears, on terms which
they imposed on themselves.
The granting of the order sought
will not affect their right of access to housing. The applicant
has not acted in any manner
that could be described as an abuse of
process and on the contrary has given the respondents every
opportunity to settle their
debt.
43.
I accordingly make the
following order :
a.
The immovable property of the
first respondent being the Farm K96, Number :15488, Registration
Division GV, Province of KwaZulu-Natal,
2 8037 hectares in extent and
held under deed of transfer : t33464/07 be and is hereby declared
executable;
b.
The Registrar of this Court is
authorized to issue a writ of execution for the attachment of the
immovable property referred to
in (a)
c.
The counter application of the
respondents dated 3 July 2015 is dismissed;
d.
The Rule Nisi issued on 19
August 2015 for the stay of execution of the writ, is discharged;
e.
The respondents are directed to
pay the costs of this application, including those costs in relation
to the urgent application dated
17 August 2015, jointly and
severally, the one paying the others to be absolved, such costs to be
on an attorney client scale.
_______________________
M R CHETTY
Appearances:
For the
Applicant
: Adv. Jabu
Thobela-Mkhulisi
Instructed
by
: Legator
Mckenna Incorporated,
Durban, 031 305
1571
For the Respondent
:
Adv. D Ramdhani
Instructed
by
: Du Toit
Incorporated c/o
Booysen & Company Inc
Durban
Date of
Hearing
: 10 November
2015
Date of
Judgment
: 15
February 2015