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[2012] ZAFSHC 186
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Mokharumetso v First Rand Bank Ltd and Others (94/2012) [2012] ZAFSHC 186 (11 October 2012)
FREE STATE HIGH
COURT, BLOEMFONTEIN
REPUBLIC OF SOUTH
AFRICA
Case No: 794/2012
In
the matter between:-
MADISEBO
FRANCINAH MOKHARUMETSO
.............................
Applicant
and
FIRST RAND BANK LTD
.....................................................
1
st
Respondent
(Formerly known as FIRST
NATIONAL BANK
OF SOUTHERN AFRICA LTD)
HASAN ABUARJA
.............................................................
2
nd
Respondent
REGISTRAR OF
DEEDS-FREE STATE
..............................
3
rd
Respondent
THE SHERIFF FOR THE
HIGH COURT WELKOM
............
4
th
Respondent
JUDGMENT BY:
MHLAMBI, AJ
_________________________________________________________
HEARD ON:
25 MAY 2012
_________________________________________________________
DELIVERED ON:
11 OCTOBER 2012
_________________________________________________________
[1] The Applicant
approaches the Court on Motion for an order in the following terms:-
That the
WRIT OF
EXECUTION
against the immovable property issued by the Registrar
of the above Honourable Court under
Case No. 3762/2007
on the
strength whereof that the Sheriff sold
Erf 9 Flamingo Park,
district WELKOM
, also known as
No. 4 Brebner Street, WELKOM,
PROVINCE FREE STATE
be declared null and void and/or unlawful
and set aside;
That the purported Sale
in Execution on
30
th
November 2011
under the same
Case No. 3762/2007
of the aforementioned
property, that was allegedly attached in terms of the abovementioned
Warrant of Execution and Notice of
Attachment, together with all
subsequent sales of such property thereafter be declared null and
void and/or unlawful and set
aside;
Interdicting and
prohibiting the registration by the Third Respondent (REGISTRAR OF
DEEDS) of the pending transfer from the Applicant
to the Second
Respondent and/or to any other person of the property known as
Erf
9 Flamingo Park, district of WELKOM, PROVINCE FREE STATE
.
Alternatively directing the Third Respondent to register the
Applicant as owner of a property known as
Erf 9 Flamingo Park,
district of WELKOM, PROVINCE FREE STATE
, alternatively, granting
Applicant leave to recover ownership of the said property by way of
a restitution intergrum or otherwise,
and thereafter to register
ownership with the Third Respondent;
Interdicting and
prohibiting the First Respondent, (FIRST RAND BANK LTD) from
cancelling
Bond Number 8146/2007
registered over
Erf No. 9
Flamingo Park, district of WELKOM, PROVINCE FREE STATE
in the
name of the Applicant, alternatively, directing the Third Respondent
to re-register a Bond in favour of the Second Respondent
over
Erf
No. 9 Flamingo Park, district of WELKOM, PROVINCE FREE STATE
under the same terms and conditions;
5. Declaring that the
First Respondent and those of the Respondents who oppose this
Application bear the costs of the Application
jointly and severally,
the one paying the others to be absolved;
Further and/or
alternative relief.
The application is
opposed only by the first Respondent.
[2]
FACTUAL
BACKGROUND
2.1 During or about
January 2007
, the applicant was granted a Home Loan by the 1
st
Respondent, which loan was secured by a mortgage bond.
2.2 By
17 April 2007
,
less than 3 months after commencing repayments, the Applicant had
already fallen into arrears in the amount of
R4 593.22
which
had grown to R16 282.16 by 3 July 2007 when the first Respondent
issued a notice in terms of section 129 of the National Credit
Act.
2.3 By
3 July 2007
,
the arrears had grown to
R16 282.16
and the 1
st
Respondent issued a notice in terms of
Section 129 of the National
Credit Act
.
2.4 The applicant failed
to respond to the notice and summons was issued.
2.5 The applicant did not
enter appearance to defend and on
11 September 2007
, default
judgment was granted by the Registrar.
2.6 The default judgment
included an order declaring the property in question executable.
2.7 A warrant of
Execution against immovable property was issued on
18 September
2007
.
2.8 During
September
2007
when the default judgement and Warrant of Execution was
obtained, the applicant would have been about
R18 000.00
in arrears – more than 3 full monthly instalments.
2.9 The first sale in
execution was arranged for
14 November 2007
, but was cancelled
due to payment of
R14 000.00
and
R8 000.00
by
the applicant on
13
and
14 November 2007
.
2.10 Afterwards, the
Applicant repeatedly fell into arrears, resulting in further sales in
execution being arranged and cancelled
due to payments by the
Applicant.
2.11 The property was
eventually sold to the 2
nd
Respondent at a sale in
execution, held on
13 November 2011
.
2.12 On 12 January 2012
Applicant received an application for eviction from the Second
Respondent and such application is a subject
of other court
proceedings.
APPLICABLE LAW
[3]
Rule 46 (1)
of
the Uniform Rules provides as follows:-
“
(1)(a)
No
writ of execution against the immovable property of any judgment
debtor shall issue until
—
a return shall have
been made of any process which may have been issued against the
movable property of the judgement debtor from
which it appears that
the said person has not sufficient movable property to satisfy the
writ; or
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
.”
The amendment became
effective from
24 November 2010
.
This invokes the
provisions of
Section 26 of the Constitution
, which provide
that:
“
(1)
Everyone has the right to have access to adequate housing.
(2) ………………………
(3) 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.”
“
Suffice
it to note that execution upon judgment on a money debt generally
took place against movable property first, and upon immovable
property only if there was insufficient realisable movable property
to satisfy the judgment. Initially the practice was that the
court
had to be approached for an order declaring immovable property
executable when movables were insufficient to satisfy the
debt, but
this practice was soon discontinued. The practice of ordering
immovable property specially executable at the time of
judgment arose
on the basis of practical expediency, namely to circumvent the
necessity of first executing against movables where
immovable
property had been specially hypothecated as security for the debt.
The underlying basis for
the lack of judicial control over the whole process of execution was
that it was an ‘
executive matter which is dealt with by the
Registrar’.
”
GUNDWANA v STEKO
DEVELOPMENT AND OTHER
2011 (3) SA 608
CC.
In this
case, the registrar’s power under the previous Rule 45(1) to
declare mortgaged property which is a debtor’s
primary
residence executable, was declared unconstitutional.
“
The
judicial process, guaranteed by Section 34, also protects the
attachment and sale of a debtor’s property, even where there
is
no dispute concerning the underlying obligation of the debtor on the
strength of which the attachment and execution takes place.
That
protection extends to the circumstances in which property may be
seized and sold in execution
”
CHIEF LESAPO
v NORTH WEST AGRICULTURAL BANK AND ANOTHER
[1999] ZACC 16
;
2000 (1) SA 409
CC.
On the appropriateness of
judicial oversight of the execution process,
Mokgoro J
expressed
herself as follows:
“
Even
if the process of execution results from a default judgment the court
will need to oversee execution against immovable property.
This has
the effect of preventing the potentially unjustifiable sale in
execution of the homes of people who, because of their
lack of
knowledge of the legal process, are ill-equipped to avail themselves
of the remedies currently provided in the Act.”
JAPHTA v SCHOEMAN
AND OTHERS
;
VAN ROOYEN v STOLZ AND OTHERS
[2004] ZACC 25
;
2005 (2) SA 140
(CC).
[4] The learned Judge
goes further and states:
“
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
.
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.”
“
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
factor relevant to the particular
facts of the case before the court.”
“
Bondholders
who wish to execute on a mortgage bond must first approach a court of
law for it to make a proper determination as to
whether the sale in
execution of a person’s home is justifiable in the
circumstances of the case
”
.
GUNDWANA
,
supra
.
“
If
the judgment debt can be satisfied in a reasonable manner, without
involving those drastic consequences, that alternative course
should
be judicially considered before granting execution orders
,
”
Quoting
Mokgoro J
in Japhta
supra
, Froneman J
goes on to say
“
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.”
[5] Having declared the
High Court Rules and practice, allowing the registrar to grant orders
declaring immovable property that
is a person‘s home
executable, constitutionally invalid, the Court (in
GUNDWANA
)
then expressed itself as follows:
“
The
declaration of invalidity of the legislative provisions in that
matter did not entail, however, that all transfers made subsequent
to
invalid execution sales were automatically invalid. Individual
persons affected by the ruling still needed to approach the courts
to
have the sales and transfers set aside if granted by default
.
This was made clear in
Menqa
and
Another
v Markom and Others
2008 (2) SA 120
SCA
.
A similar approach should be followed here.”
“
In
Menqa
it
was held that sales in execution of immovable property (and
subsequent sales) were invalid if the warrant of execution pursuant
to which the sales had taken place had been issued by the clerk of
the magistrate’s court without judicial supervision, and
the
absence of this procedural safeguard imperilled a party’s
Section
26(1) Constitutional Rights
,
even if they occurred prior to the Jaftha case (
supra
),
and could not be saved by an application of
Section
70 of the Magistrate’s Courts Act.”
(Paragraphs [21-22] at
128H – 129D.)
[6] It was held further
in
MENQA
that,
”
If
a sale in execution was null and void because it violated the
principle of legality, the sheriff had no authority to transfer
ownership to the purchaser, who would therefore not acquire ownership
despite registration of the property in his or her name.
On the facts
the first respondent was theoretically entitled to recover the
property in vindicatory proceedings.”
(
Paragraphs [24]-[25]
at 129G-130D.
)
”
It
was held further on the facts, that directing the Registrar of Deeds
to re-register the property in the first respondent’s
name
would not take into account what the first appellant had paid for the
property and the first respondent’s possible unjust
enrichment.”
(
Paragraph
[25] at 130E
.)
[7] Further,
Section
70
should not be interpreted as protecting a sale which is void,
as this conflicts with the basic principle of legality and
Section
25 of the Constitution. (Paragraphs [46] at 141D – E and 142B –
D.)
CONTENTIONS BY THE
PARTIES
[8] Applicant seeks to
overturn the writ of execution on the basis that:-
There was no compliance
with Rule 46.
No warrant against the
Applicant’s movable property was issued or sought.
The property was not
declared executable by a competent Court.
[9] The Respondent on the
other hand argues strongly that the application should fail on the
following grounds:
There was no reviewable
irregularity in the obtaining of the warrant;
The Applicant has failed
to comply with any of Froneman J’s directions in the Gundwana
matter in that :-
There was no application
for rescission;
There was no explanation
for failing to apply for rescission from September 2007 to date;
There was no disclosure
of any bona fide defence to the 1
st
Respondent’s
claim;
The Applicant failed to
allege or show that the court, with full knowledge of all the
relevant facts existing at the time of granting
default judgment
would have refused leave to execute.
The Applicant had not
placed any facts before the court to justify protection under
section 26 (1) of the Constitution.
Had the 1
st
Respondent approached the court under Rule 46 (1) as it stands
today, any court would have been willing to declare the property
executable.
The Applicant had
advanced false and misleading statements in his affidavit.
EVALUATION
[10] It must be stated
from the outset that in the light of the submissions made on behalf
of the Applicant, she:
Seeks no rescission of
judgment.
Consequently she has,
obviously offered neither an explanation for her failure to do so
nor disclosed a bona fide defence to the
Respondent’s claim.
[11] The cardinal
question that arises is: Should the application therefore fail in the
light of Mr Johnson’s argument that
there was no compliance
with the directions of Froneman J in
GUNDWANA
?
In other words, should a debtor in the shoes of the Applicant always
approach Court with an application for the rescission of judgment
as
a first step even where he/or she only feels aggrieved by the sale
and accept the judgment. If the answer is in the affirmative,
then
the application must fail. If not, what next?
[12] In
GUNDWANA
,
supra
, the learned Judge went further to say:
“
In
order to turn back the clock….aggrieved debtors will first
have to apply for the original default to be set aside….it
may
be that in many cases those aggrieved may find these requirements
difficult to fulfil”. In giving direction to individual
persons
who needed to approach the courts to have the sales and transfers set
aside if granted by default, the learned Judge said
that
Menqa,
supra,
served as guidance. I am therefore of the view that Applicants may
approach Court with an application for the stay of the
warrant and
subsequent sale without having to apply for the rescission of
judgment. See also the unreported decision of this Court
as per
Jordaan J in M.G. Keikelame & Others v Wilson Thoabala &
Others case number 1267/2010 dated 17 November 2011; paragraphs
15-22
on page 5.”
[13] It was argued on
behalf of the First Respondent that had he approached the Court under
Rule 46(1) as it stands today, any Court
would have been willing to
declare the property executable.
[14] It is clear from the
papers and Applicant’s uncontested statements that she had
sufficient movable property as at the
time of judicial attachments
whereupon First Respondent could attach for settlement or utilise as
further security for the debt.
In paragraphs 4.12 and 4.16 of the
Founding Affidavit, she mentions amounts of R900 000.00 (nine hundred
thousand rands) and R201
101.81, being progress payments due to her
for services rendered. Such payments had not, as yet, realised. The
first amount was
subject to litigation between her and a
sub-contractor and had been paid into an Attorney’s Trust
account pending finalisation
of the matter. The surplus on payment
would, according to her, be used to settle the debt. I am therefore
of the view that a court,
with full knowledge of all the relevant
facts existing at the time of granting default judgment, would have
refused leave to execute.
[15] Counsel for first
Respondent requests in his heads that, should further proof of the
allegations in paragraph 13 of the opposing
affidavit be required,
leave is sought to file a supplementary affidavit. This affidavit
would address the veracity of the arrangements
entered into between
Applicant and the First Respondent and that indeed such sales in
execution were arranged and cancelled. For
purposes of this
judgement, I do not find this step to be necessary. On perusal of
Amelia du Buisson’s affidavit the following
became apparent:
1 First Respondent was on
or before 25 May 2011 uncertain as to the validity of the warrant of
execution as a consequence of which
it was cancelled shortly before
the sale. First Respondent had then proceeded to enrol an application
for confirmation of the warrant
of execution which was issued against
the property.
Instead of finalising
the confirmation of such warrant, a next sale in execution was
accordingly scheduled for 27 July 2007.
Instead of proceeding with
the sale, an alleged “quick-sell mandate” was signed by
Applicant in terms of which
First Respondent would proceed to
market the property in the open market in an attempt to obtain the
best price therefor. I
should hasten to say that neither in the
Heads of Argument nor in the oral argument did First Respondent
address this point;
despite the Applicant having denied in her
answering affidavit to ever having signed such document. It would
appear that the
sale of the 27
th
of July was therefore
cancelled or not proceeded with as a result of this document.
On the expiry of the
so-called “quick-sell mandate” on October the 20
th
2011, the property not having been sold, a further sale in
execution was arranged and the property was sold on the 13
th
of November 2011.
The Deponent alleges
that the First Respondent duly complied with the remainder of the
provisions of Rule 46, and the property
was sold to the Second
Respondent for the amount of R10 000 (Ten thousand rands). The
reason for the very low purchase
price, is that the arrear rates
and taxes on the property amounted to R173 385.76 (One hundred
and seventy three thousand
three hundred and eighty five rand and
seventy six cents).
I have difficulty with
this attitude. Nowhere in argument or otherwise, was it First
Respondent’s case that there was compliance
with Rule 46. If
indeed there was compliance, this matter would not have served before
court. In fact, according to her, the matter
was enrolled, but
apparently never proceeded with. I find First Respondent’s
change of heart strange in that, approximately
three weeks after the
quick sale document expired. First Respondent, who was in the process
of attempting to obtain the best price
for the Applicant for the
property, suddenly puts it up for sale.
In paragraph 14 of her
affidavit she then states
“
It
is as such evident that the First Respondent went out of his way for
a period of approximately 5 years to accommodate the Applicant
and to
assist her in retaining the immovable property”.
In
GUNDWANA
,
supra
, Froneman J states:
“
The
voluntary placing-at-risk also runs into difficulty. It is true that
a mortgagor willingly provides her immovable property as
security for
the loan she obtains from the mortgagee, and that she thereby accepts
that the property may be executed upon in order
to obtain
satisfaction of the debt. But does that particular willingness imply
that she accepts that –
The mortgage debt may be
enforced without court sanction;
She has waived her right
to have access to adequate housing or eviction only under court
sanction of section 26(1) and (3); and
The mortgagee is
entitled to enforce performance, in the form of execution, even when
that enforcement is done in bad faith?
I think not.
If authority is needed
that self-help is inimical to the rule of law,
LESAPO
is that
authority. It is also authority that execution upon property in
respect of a mortgage debt without court sanction, is not
allowed.”
[16] It is therefore
clear that on this ground too the application must succeed.
In
ABSA v NTSANE
AND ANOTHER
[2006] ZAGPHC 115
;
2007 (3) SA 554
TPD at 563 I-J, the Court says:
“
From
the registration of the bond over the property it is clear that the
Defendants did not receive any state assistance to purchase
their
home.
Given this history and
somewhat erratic pattern of payments made by the Defendants, the
presumption referred to above that the bonded
property is the
Defendants’ first home appears to be reasonable.”
COSTS
[16] In light of the
above I am of the opinion that costs should follow the event.
ORDER
[17] In the result the
following order is made:
Prayers 1 and 2 are
granted.
The first part of prayer
3 is granted insofar as third Respondent is interdicted and
prohibited from registering the property
mentioned in prayer 1 to
the Second Respondent.
First Respondent to pay
costs.
_________________
J. J. MHLAMBI, AJ
On behalf of Applicant:
Adv.
Instructed by:
BLOEMFONTEIN
On behalf of Respondent:
Adv.
Instructed by:
BLOEMFONTEIN