Nedcor Bank Ltd v Kindo and Another (A566/00) [2002] ZAWCHC 10 (28 February 2002)

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[2002] ZAWCHC 10
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Nedcor Bank Ltd v Kindo and Another (A566/00) [2002] ZAWCHC 10; 2002 (3) SA 185 (C) (28 February 2002)

6
IN THE HIGH COURT
OF SOUTH AFRICA
(CAPE
OF GOOD HOPE PROVINCIAL DIVISION)
REPORTABLE
CASE NO A566/00
In the matter
between:
NEDCOR
BANK Ltd Appellant
And
HJ
KINDO
First
Respondent
DK
KINDO
Second
Respondent
_________________________________________________________
JUDGEMENT
DELIVERED ON 28
th
DAY OF FEBRUARY 2002
__________________________________________________________________
HLOPHE,
JP:
This is an appeal against the
judgement of a magistrate sitting in Simonstown. The magistrate
refused to grant an order declaring
certain immovable property
executable pursuant to the foreclosure of a covering mortgage bond
No. 39734/99 in favour of Nedcor Bank
Ltd in default case number
1414/2000.
The
bank, hereinafter referred to as the appellant, was the mortgagee in
respect
of erf 2044 Ocean View, which mortgaged property was bonded
as
security for monies lent and advanced. Appellant’s claim was for
payment of the sum of R23139, 94 being the balance owing by
the
respondents to the appellant under and by virtue of the mortgage
bond. In terms of the said mortgage bond the whole amount owing
by
the respondents to the appellant would become due in terms of the
said bond. On the due date the respondents failed to pay the
monthly
instalments due by them in terms of the mortgage bond and the whole
balance as aforesaid was due and payable. Accordingly
the Appellant
brought an action against the respondents for payment of the said
amount plus interest as well as seeking a cost order
against the
respondents.
The
court a quo granted relief sought against the respondents. However,
it refused to declare the mortgaged property executable,
hence, the
present appeal.
Mr
Maher appeared for the appellant. No appearance was made for the
respondents. Mr Maher submitted, correctly in my view, that
it is
clear that the mortgage bond is legally valid and enforceable in that
all the necessary statutory formalities in terms of the
Deeds
Registries Act, No. 47 of 1937
were complied with and the further
general contractual requirements and formalities existed at the time
that the agreement was entered
into by the relevant parties.
The
mortgage bond itself contains the usual standard terms. It does not,
however, expressly make provision for the mortgaged property
to be
declared
executable in the event of foreclosure. In the circumstances, Mr
Maher submitted that an express provision to the effect
that the
mortgagee may sell the mortgaged property is unnecessary given the
legal consequences of a mortgage and indeed the very
nature of a
mortgage. Furthermore, he submitted that it was undoubtedly the
intention of the parties that the immovable property
would be
hypothecated and that the mortgagee could avail itself of the real
right afforded it by a mortgage and sell the hypothecated
property,
in the event of default on the part of the mortgagor.
In
my judgement the crisp legal issue to be decided is whether or not
the appellant is entitled to an order declaring the mortgaged
property to be executable, despite the absence of an express
contractual term in the mortgage bond itself. In other words, does
the mortgagee have an inherent or implied right to have the mortgaged
property sold and to receive the amount of its debt from the
proceeds
of the sale in the event of a mortgagor defaulting? This implied
right could, of course, arise either through the operation
of the law
i.e. by the very nature of the mortgage bond, or as a result of the
intention of the contracting parties
There
does not appear to be any recorded judgement dealing specifically
with this crisp legal point. According to the
Digest
(D. 13.7.4) in Roman law the position appears to be that:
“
[i]f there is an agreement for the pignus to be sold,
made either initially or later, not only is the sale valid but also
the buyer
becomes the owner of the thing. However, even if there is
no
agreement
for the pledge to be sold, the rule we apply is that the sale is
still allowed, unless, indeed, there is an agreement that
it shall
not be allowed. Indeed, when there is an agreement forbidding sale,
the creditor, if he sells is liable for theft, except
where the
debtor has been given three warnings to pay and has failed to
respond.”
The
Roman Dutch authorities, following Ulpian, have similarly held that:
“
[i]f the debtor does not pay the creditor what he
owes it is open not only to the first creditor but also to a second
to whom the
pledge has been given in pledge to sell up the pledge.
This is so provided that the original debtor is in default.”
See
also Voet
Commentarius
20.5.1.
According
to Grotius in
Jurisprudence of Holland
(Vol 1) 2.48.41 (Tr. RW Lee). The position in Roman Dutch law was as
follows:
“
The effect of a hypothec is not that the creditor may
appropriate to himself the encumbered property or sell it of his own
motion:
and, what is more, he may not by special conditions in the
contract stipulate that the ownership shall be forfeited to himself
in
the event of non-payment of the debt; but he must, after obtaining
a decree of the Court, allow the property to be sold by legal
process, and so realise his claim.”
Mr
Maher quite rightly submitted that the probable logic behind the
earlier authorities approach, as set out above, is that it is
quite
clear that the payment of the debt is irrevocably bound to the
mortgage bond. The latter effectively serves to secure the
debt and
this has the effect of ensuring that the mortgagee has a real right
in the property so pledged.
Furthermore
it is a generally accepted principle of South African law that ‘where
there is a right there is a remedy’. This principle
is expressed
in the maxim
ubi ius ibi
remedium.
It is clear
that the mortgagee’s right to sell the immovable property in
execution follows automatically from the foreclosure.
The only
qualification in South African law is that a court order authorising
execution is required, on the basis that pledgee or
mortgagee only
has a ius in re aliena and the courts must accordingly take care to
guard the pledgor or mortgagor against any abuse
by the former of
this right. (See
Cape of Good Hope Bank (in
liquidation) v Melle
(1893) SC at 289
.
)
See also
Silberberg
and Schoeman
–
The Law of Property
(3
rd
ed) 1992 at 419 and 429, where the learned authors state:
“
the mortgagor’s first and foremost duty is of
course to pay the debt secured and the mortgagee’s corresponding
right is to ‘call-up’
or ‘foreclose’ the bond and to have the
property sold, if payment is not forthcoming on the due date.”
It
is my judgement that a mortgagee is entitled to a court order
declaring the immovable property to be executable once the bond is
foreclosed. It is inconceivable that a separate application is
required to declare the
property
executable in terms of section 66 of the Magistrates Court
Act
32 of 1944, as it would be contrary to existing authority, thereby
defeating
the entire object of a registered bond.
In
addition, if were it not so, it would lead to absurd consequences
whereby the mortgagee would have a right without a remedy, surely
that cannot be. It is also certainly accepted banking practice that
a deed of hypothecation, that is a mortgage bond over specified
property, provides security which is effective at all times and which
gives the creditor the right, on default of payment by the
debtor, to
have the mortgaged property sold in execution and to receive payment
of the proceeds. (See Silberberg and Schoeman
-
The Law of Property
(3rd ed) supra at 429.)
In
my view the magistrate erred in refusing to declare the hypothecated
immovable property in question executable, on the basis that
there
was no clause in the mortgage bond to that effect. The executability
or otherwise of the property in question clearly arises
by operation
of the law. Thus it is my judgement that even in the absence of a
clause in the mortgage bond to that effect, that,
however cannot lead
to a situation whereby the property cannot be declared executable.
To hold otherwise would defeat the very purpose
of securing a
mortgage bond over immovable property. It would also defeat the very
object of securing a mortgage bond, namely, that
in the event of
non-payment of a debt on the due date, the mortgagee is entitled to
foreclose and to have a hypothecated immovable
property declared
executable. It is only in that way that the mortgagee would have the
right and a remedy, in the event of non-payment
and subsequent
foreclosure of the bond.
In
the light of the conclusion to which I have come, it is unnecessary
to deal with the other arguments advanced by Mr Maher on behalf
of
the appellant. In my view the appellant is entitled to an order
declaring the immovable property to be executable pursuant to
the
judgement debt granted in its favour. There was no suggestion that
the requirements of section 66(1) (a) of the Magistrate Court
Act 32
of 1944, relating to “good cause” shown, were not satisfied
in
casu
.
The
following order is granted:
The
appeal is upheld with costs;
The
mortgaged property being Erf 2044, Ocean View held under Deed of
Transfer No. T75162/1999 is declared executable.
HLOPHE,
JP
I
agree
MOTALA,
J