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[2013] ZANCHC 49
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Firstrand Bank Limited v Ortell and Another (332 /2012) [2013] ZANCHC 49 (28 June 2013)
SAFLII
Note:
Certain
personal/private details of parties or witnesses have been
redacted from this document in compliance with the law
and
SAFLII
Policy
IN
THE HIGH COURT OF SOUTH AFRICA
[NORTHERN
CAPE HIGH COURT, KIMBERLEY]
CASE NR:332 /2012
FIRSTRAND
BANK
LIMITED
APPLICANT
AND
LEONARD PETER
ORTELL
1
ST
RESPONDENT
REBEKKA
ORTELL
2
ND
RESPONDENT
DATE HEARD: 03 May 2013
JUDGMENT DATE: 28 June
2013
JUDGMENT
PHATSHOANE J.
1.
FirstRand
Bank Limited, the applicant, approached this Court for an order to
declare the property known as [….], situated
in the Sol
Plaatje Municipality, District Kimberley, in extent 317 square metres
([….]) held by Deed of Transfer T 1250/2008
executable. The
Property is registered in the names of Mr Leornard Peter Ortell and
Ms Rabekka Ortell, the first and second respondents.
2.
FirstRand
Bank lent to the respondents an amount of R378 000.00 against
security of a first mortgage bond which was registered
over the
property on 02 June 2008. On 20 July 2012 the Bank obtained summary
Judgment against the respondents for the payment of
an amount of
R432 180.55 together with interest on the amount mentioned at
the rate of 8.35% calculated daily and compounded
monthly from 08
February 2012 to date of final payment and costs. At the time of
granting the summary judgment against the respondents
my sister
Huges-Madondo AJ was not inclined to declare the respondents’
property specially executable because no representations
or relevant
circumstances were placed before her as envisaged in s 26(1) of the
Constitution of the Republic of South Africa Act,
108 of 1996. My
sister was further of the view that the Bank had not established, in
terms of Rule 46(1), that the respondents
had sufficient movable
property to satisfy the judgment debt.
3.
Rule
46(1) provides:
“
(1) (a)
No writ of execution against the immovable property of any judgment
debtor shall issue until—
(i)
a
return shall have been made of any process which may have been issued
against the movable property of the judgment debtor from
which it
appears that the said person has not sufficient movable property to
satisfy the writ; or
(ii) such
immovable property shall have been declared to be specially
executable by the court
or, in the case of a judgment granted in
terms of rule 31(5), by the registrar: Provided that, where the
property sought to be
attached is the primary residence of the
judgment debtor, no writ shall issue unless the court, having
considered all the relevant
circumstances, orders execution against
such property.”
4.
In
terms of the Home Loan Agreement entered into between the parties the
respondents’ monthly repayment amount to the Bank
was R4 708.57
at a variable interest rate linked to the Bank’s prime
overdraft rate which was to be adjusted with each
change in the
Bank’s prime overdraft rate. At date of filing of this
application, on 11 December 2012, the respondents were
in arrears in
the sum of R90 941.04. The certificate of balance dated 27
November 2012 reflects the amount due and payable
by the respondents
to the Bank as R474 946.12. In the last statement of account
received from the Bank the outstanding balance
was R481 280.55.
The respondents deny that they are in arrears in the last amount.
They also dispute the correctness of the
calculation of the total
amount due and payable to the Bank.
5.
The
respondents underwent a debt restructuring process and were declared
over indebted in terms of the Magistrates’ Court
order dated 22
June 2011. Following this order their proposed fixed payment
obligation, for the debt review period, toward the
Bank was R685.44
per month. They effected payment on 18 July 2011, 04 August 2011 and
08 September 2011 in the amounts of R699.16;
R1685.36 and R377.42
respectively. For the months of October 2011 until February 2012 (5
months) up to the time when the Bank issued
summons against them no
further payments had been made to the Bank. The Bank states that
anent the requirements of
s 88(3)
of the
National Credit Act, 34 of
2005
, it was entitled to issue summons against the respondents
consequent on the default.
Section 88
(3) provides:
“
(3) Subject
to
section 86
(9) and (10), a credit provider who receives notice of
court proceedings contemplated in
section 83
or
85
, or notice in
terms of
section 86
(4) (b) (i), may not exercise or enforce by
litigation or other judicial process any right or security under that
credit agreement
until-
(a)
the consumer is in default under the credit agreement; and
(b)
one of the following has occurred:
(i)
An event contemplated in subsection (1) (a) through (c); or
(ii)
The consumer defaults on any obligation in terms of a
re-arrangement agreed between the consumer and credit providers, or
ordered
by a court or the Tribunal
.”
6.
What
should be determined is whether the relevant circumstances and facts
were placed before the Court which renders execution against
the
respondents’ property undesirable. The circumstances which the
Court should consider in its judicial oversight over the
sale in
execution against the immovable properties of judgment debtors are
countless and diverse. In
Jaftha
v Schoeman and Others; Van Rooyen v Stoltz and Others
[2004] ZACC 25
;
2005 (2) SA 140
(CC)
at
161-162 para 56-59 the Court held:
“
[56]
It would be unwise to set out all the facts that would be relevant to
the exercise of judicial oversight. However, some guidance
must be
provided. If the procedure prescribed by the Rules is not complied
with, a sale in execution cannot be authorised. 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
authorising the sale in execution may ordinarily be appropriate
unless the ordering of that sale in the circumstances
of the case
would be grossly disproportionate. 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.
[58]
Another factor of great importance will be the circumstances in which
the debt arose. If the judgment debtor willingly put
his or her house
up in some or other manner as security for the debt, a sale in
execution should ordinarily be permitted where
there has not been an
abuse of court procedure. The need to ensure that homes may be used
by people to raise capital is an important
aspect of the value of a
home which courts must be careful to acknowledge.
[59]
A final consideration will be the availability of alternatives which
might allow for the recovery of debt but do not require
the sale in
execution of the debtor's home. At present, s 73 of the Act provides
for a judgment debtor to approach a court with
an offer to pay off a
debt in instalments. As pointed out above, this section does not
constitute sufficient protection for indigent
debtors because they
are generally unaware of its potential to protect them and their
inability to invoke it..”
7.
Mr
Buys, for the respondents, submitted that the Court should take into
account that the respondents are under debt review and that
since
this process was set in motion regular payments in terms of the
rearrangement proposal were made.
8.
Following
the issuing of the summons, as adumbrated hereinbefore, the Bank made
an application for summary Judgment which the respondents
opposed.
The basis of the opposition essentially was that they had been in
financial difficulties which resulted in an order declaring
them over
indebted. As a result their obligations were restructured. They made
regular payments to the National Payment Distribution
Agency as was
required in terms of the debt restructuring order. Due to the
Agency’s administrative “system error”
which they
were unaware of, not all the payments made by them to the Agency were
distributed to the Bank. They were also unaware
that the Bank did not
receive payment. Therefore, they cannot be blamed for the default in
payments. It was only upon receipt of
the summons that they became
aware that the Agency had not played its part.
9.
The
issues referred to in the preceding paragraph are being raised once
more in the papers before me. I do not intent to dwell on
them simply
because they were ventilated in the summary judgment of my sister,
Huges-Madondo J, who found that the respondents
had defaulted on the
re-arrangement order and that the Bank was entitled to enforce the
credit agreement. It suffices to mention
that the whole amount
claimed is now due and immediately payable. Since the summary
judgment was granted against the respondents
no serious attempts have
been made by them to show what measures they have put in place to
ensure that the judgment debt was satisfied.
In addition, nothing was
placed before the Court to demonstrate what efforts the respondents
took to correct the situation with
regard to the non-distribution of
the funds by the Agency to the Bank.
Seyffert
And Another v FirstRand Bank Ltd t/a First National Bank
2012 (6) SA
581
(SCA)
at
587para 15 the Court remarked:
“
15…It may well be
pointless in most cases where the matter has already been referred to
a debt counsellor to do so again.
Indeed, a court should be
slow to exercise its discretion to make either of the orders
envisaged in s 85 where the matter has been
dealt with by a debt
counsellor, or a debt review has justifiably been terminated, and
where no material change in circumstances
has been demonstrated.”
10.
The
Bank says that from what it could ascertain the property in issue is
not the primary residence of the respondents. It attached
the XDS
search results showing that the respondents own another property
known as 17 Frere Place in addition to the property sought
to be
declared executable. In their answering affidavit the respondents
intimated that the property susceptible to execution is
their primary
residence and they have no alternative accommodation. They sold 17
Frere Place during 2007.
11.
It
does not end here because the XDS search results also reflects that
the respondents own a further property situated at [….]
Kimberley, purchased on 03 December 1996. This latter property is
registered in the second respondent’s name and is held
under
Title Deed No T3785/1999. The respondents have not placed any facts
before Court on the situation relevant to this property.
They seek
leave, belatedly, in their heads of argument to file a further
affidavit to address this omitted aspect.
12.
The
first respondent explained that he is the breadwinner who has to
support his unemployed wife, the second respondent, and their
five
children aged 6, 10, 15, 20 and 22 years. The respondents’ 22
year old child, Mast Ortell, is disabled and suffers from
Muscular
dystrophy. The respondents intimate that Mast’s medical
condition places a huge financial burden on them.
13.
In
a quest to accommodate the respondents’ dire situation, at
least on two occasions, the Bank has unsuccessfully attempted
to levy
execution against their movable assets at their chosen
domicilium
(Erf
[….])
.
The returns of
non-service record that the property is kept locked. The sheriff also
tried to execute at 17 Frere Place but was
informed by the occupier
that the respondents had left the address. The respondents intimated
that they are unable to comment on
the Banks’ endeavour to
execute against their movable assets because the second respondent is
a ‘stay-at-home mom’
who looks after the parties’
disabled child for 24 hours. They bear no knowledge of the sheriff’s
visit and they did
not receive any warning messages from him. What
the respondents are not saying is that they indeed have sufficient
movable assets
to satisfy the debt.
14.
It
is not in dispute that the property in issue served as security for
the home loan advanced to the respondents. The home loan
was granted
subject to a covering mortgage bond being registered in favour of the
Bank over the property securing the capital amount.
In
ABSA
Bank Ltd v Petersen
2013 (1) SA 481
(WCC)
at
495 para 34 the Court pronounced:
[34]
…The right to housing is not an absolute right; and it is a
right to adequate housing, not to housing that a mortgagor
is unable
to afford. In the context of hypothecation, the
defendant-mortgagor's right to ownership of his or her home must,
in
general, yield to the mortgagee's right to realise its security.
The Court proceeds at 479
para 37:
“
[37]
The fact that the mortgaged property is the defendant's family home
is, in itself, not a reason to deny the mortgagee's contractual
right
to realise its security. Indeed, by giving the property in security
the defendant voluntarily derogated from the extent of
his full
dominium over the property in favour of the bank. He did so for his
own benefit and upon an undertaking in favour of the
bank that, if he
defaulted in his payment obligations to the bank, the full amount
owed by him would become immediately due and
payable, and the
property given as security could be sold to realise the funds to
settle the debt.”
15.
The
Full Bench held in
Standard
Bank of South Africa Ltd v Bekker and Another and Four Similar Cases
2011 (6) SA 111
(WCC)
at
125 para 20:
“
[20]
Having regard to the importance of the concept of the hypothecation
of immovable property in the economic context and the crucial
part it
plays in facilitating private means of access to housing, thereby
affording some collateral assistance to the State in
the discharge of
its obligation to achieve the progressive realisation of the right by
the entire population, it would be counter-productive
to impede the
efficient functioning of the concept by introducing, without cogent
reasons, novel and onerous procedural impositions
on mortgagees
seeking to exercise their contractual rights of security.
Unnecessarily imposing constraints that would make obtaining
orders
for execution, that the Constitutional Court has confirmed should
ordinarily follow in foreclosure cases, significantly
more costly or
cumbersome would, in the end, only be to make access to mortgage
finance more difficult, and redound against the
wider realisation of
rights under s 26(1) of the Constitution.”
16.
The
amount the respondents owe to the Bank is relatively significant. I
am not swayed that there are alternative means to secure
the payment
of the judgment debt other than the odious execution against their
immovable property. The application by the Bank
should succeed.
17.
Clause
2.14 of the loan agreement sanctions the recovery of costs against
the respondents in the event the Bank approaches the Court
to enforce
the agreement. Therefore, there is no reason why the costs should not
follow the success.
Order:
18.
In the result I make the
following order:
1.
In
terms of Rule 46(1)(a)(ii) of the Rules of Court, the property known
as [….], situated in the Sol Plaatje Municipality,
District
Kimberely, Northern Cape Province, in extent 317 Square Metres, held
by Mr Leonard Peter Ortell and Ms Rebekka Ortell,
the first and
second respondents, in terms of Deed of Transfer No 1250/2008,
is declared executable.
2.
The
respondents are to pay the costs of the application.
MV PHATSHOANE
JUDGE
NORTHERN CAPE HIGH
COURT
FOR
THE APPLICANT:
ADV H J BENADE INSTRUCTED BY VAN DE WALL & PARTNERS
FOR
THE RESPONDENTS:
ADV K BUYS INSTRUCTED OERTELL ATTORNEYS