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2024
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[2024] ZAFSHC 249
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Standard Bank of South Africa Ltd v Choene and Another (4460/2022) [2024] ZAFSHC 249 (22 August 2024)
IN
THE HIGH COURT OF SOUTH AFRICA
FREE
STATE DIVISION, BLOEMFONTEIN
Reportable
/ Not reportable
Case
no:
4460/2022
In
the matter between
THE
STANDARD BANK OF SOUTH AFRICA LTD
Applicant
And
ITUMELENG
WILL CHOENE
First
Respondent
TSHOLOFELO
CHOENE
Second
Respondent
Coram:
Ramdeyal AJ
Heard:
15 August 2024
Delivered:
22
August 2024
JUDGMENT
Ramdeyal
AJ
[1]
The Applicant seeks an order in the
following terms:
That the reserve price as
set in the amount of R790, 000.00 as per the Court Order, dated 20
April 2023 be set aside.
(a) That the
sale of the immovable property known and described as:
A unit consisting of-
Section Number 194 on
Sectional Plan Number SS 182/2011 in the scheme known as Park Avenue,
Bloemfontein, Extension 181 Mangaung
Metropolitan Municipality, held
by deed of transfer ST 5800/2012 proceed without reserve.
(b) That the
Defendant/s pay the costs of this application
[2]
The applicant obtained default judgment
against the respondents on 9 February 2023 for the amount of
R1 165 167.37 whereafter
the property in question was
declared specially executable on 20 April 2023 and a reserve price
for its sale set at R790 000.00
[3]
The applicant proceeded with a sale in
execution of the property and apparently no persons showed interest
at the sale in execution.
As such, the sale in execution did not
realize. Annexure C is the return of service from the sheriff for the
sale in execution
scheduled for the 2
nd
of August 2023.
It reads as follows:
‘
This
is to certify that a SALE IN EXECUTION was scheduled to take place on
2 August 2023.
A representative of the
PLAINTIFF was present at the sale, but the auction did not take place
because there were not interested
buyers not any bid on the
property.’
It is signed by the
Deputy Sheriff and incorporated in it is the Sheriff’s Cost
Account.
The Applicant now
approaches this court seeking a reconsideration of the reserve price,
that it be removed for the property to be
sold and to realise its
security.
[4]
The application is opposed by the
respondents. They contend that the applicants did not follow the
provisions of Rule 46(9)
(c)
,
(d)
, and
(e)
of the
Uniform Rules of Court and, hence, a court does not have sufficient
information at its disposal for a reconsideration of
setting aside
the reserve price.
[5]
Rule 46A(9)
(c)
,
(d)
, and
(e)
reads
as follows:
‘
(c)
If the reserve price is not achieved by a sale in execution, the
court must, on a reconsideration of the factors in paragraph
(b)
and its powers under this rule, order how execution is to proceed.
(d)
Where the reserve price is not achieved at a sale
in execution, the sheriff must submit a report to the court, within 5
days of
the date of the auction,
which
report shall contain
(i) the date, time and
place at which the auction sale was conducted;
(ii) the names, identity
numbers and contact details of the persons who participated in the
auction;
(iii)the highest bid or
offer made; and
(iv) any other relevant
factor which may assist the court in performing its function in
paragraph
(c)
.
(e)
The court may, after reconsidering the factors in
paragraph
(d)
,
and any other relevant factor, order that the property be sold to the
person who made the highest offer or bid.’
[6]
Rule
46(A) has been created to allow Judges to impose a reserve price on
houses, in order to prevent the sale of such property at
ridiculously
low amounts. Rule 46A is designed to protect home owners from their
homes being sold for far less than it is worth.
The purpose of rule
46A is to avoid a homeowners investment in his property from
being encroached upon, and to protect impoverished
debtors who are in
danger of losing their homes. This is one of the mechanisms in play
that gives effect to s 26(1) of the Constitution
of South Africa
which guarantees that everyone has the right of access to adequate
housing. It was also meant to protect indigent
debtors who were in
danger of losing their homes. The sole purpose of judicial oversight
in all cases of execution against immovable
property is to ensure
that the orders being granted did not violate section 26(1) of the
Constitution where the judgment debtor
is likely to be left homeless
as a result of the execution. In
Petrus
Johannes Bestbier and Others v Nedbank Ltd
[1]
the
Supreme Court of Appeal held that: ‘Rule 46A must be
interpreted in view of the historical and legislative context, and
taking into account the purpose and objectives of the Rule.’
[2]
The
Court continued at para 20, by holding that:
‘
the
aim of Rule 46A is to assist the Court in considering whether the s
26 rights of the judgment debtor would be violated if his/her
house
is sold in execution. Rule 46 A contains procedural prescripts, not
substantive law. The requirement of judicial oversight
in s 26 of the
Constitution must be viewed in light of South Africa’s history
of forced removals and racist evictions during
apartheid and the need
to protect security of tenure of all South Africans.’
[3]
[7]
In
Nxazonke
and Another v Absa Bank Ltd and Others
,
[4]
an
unreported case from the Western Cape Division of the High Court, a
sale in execution resulted in a home being sold at a
disproportionately
low price, being R10. The property was valued at
R81 000. This was prior to the enactment of Rule 46A. That being
said, in
this matter before me the property has already been declared
specially executable on the 20
th
of April 2023 with a reserve price for a sale in Execution of
R790 000. The application now brought is to set aside the
reserve
price which could not realise on 2 August 2023 and a
considerable period has lapsed since then. The application is heard a
year
later.
[8]
Therefore when an application is brought
for reconsideration of the sale of a property by way of a sale in
execution without a reserve
price, a court, in considering such
application, must tread carefully and by way of applicable procedure
as set out in Rule 46A,
more especially 46A(9)
(c)
,
(d)
and
(e)
. Rule
46A(9)
(c)
states that: ‘If the reserve price is not achieved at a sale in
execution, the court must, on a reconsideration of the factors
in
paragraph
(b)
and its powers under this rule, order how execution is to proceed.’
Rule 46A(9)
(b)
reads as follows:
‘
(b)
In deciding whether to set a reserve price and the amount at which
the reserve is to be set, the court shall take into account-
(i) the market value of
the immovable property;
(ii) the amounts owing as
rates or levies;
(iii) the amounts owing
on registered mortgage bonds;
(iv) any equity which
maybe realized between the reserve price and the market value of the
property;
(v) reduction of the
judgment debtor’s indebtedness on the judgment debt and as
contemplated in subrule (5)
(a)
to
(e)
, whether or not
equity may be found in the immovable property, as referred to in
subparagraph (iv);
(vi) whether the
immovable property is occupied, the persons occupying the property
and the circumstances of such occupation;
(vii) the likelihood of
the reserve price not being realized and the likelihood of the
immovable property not being sold;
(viii) any prejudice
which any party may suffer if the reserve price is not achieved;
And
(ix) any other factor
which in the opinion of the court is necessary for the protection of
the interests of the execution creditor
and the judgment debtor.’
According to the
Applicant, the founding affidavit of Camilia Nair refers, judgment
was granted against the respondents for payment
of the amount of R1
165 167.37. The respondent’s account in terms of the mortgage
loan was in arrears in the amount of R173
811.74 which escalated from
the amount of R73,890.11, from the time the property was declared
special executable and the full outstanding
balance currently amounts
to R1 311 163.86. The market value of the property is R1 100
000.00 and the forced sale value is
R920 000.00 whilst the municipal
valuation amount to R1 160 00.00 The outstanding
balance to the municipality
is R127,023.43. Hence, she submits that
the Applicant’s security in the immovable property has been
compromised and that
the property be sold at the highest possible
price.
[9]
The first respondent, Ithumeleng Choene on
the other hand in his answering affidavit, confirmed by the second
respondent, submits
that the sheriff has failed to submit its report
as per the requirements in rule 46A(9)
(d)
.
The respondent declares that the immovable property in question is
their primary residence, and he has now made payments in the
amount
of R23 000. He and his wife could not meet their financial
obligations previously in respect of the immovable property
due to
the aftermath of covid which affected their business. They, however,
appear to be in a better financial situation currently,
having also
secured certain work contracts and the respondent feels assured that
he can settle the outstanding arrears. His greatest
concern is that
if the property is sold in execution without a reserve price at the
highest possible price, they will be left homeless
and yet be
responsible for any shortfall on the mortgage bond.
[10]
Reverting to rule 46A(9)
(b)
,
it is incumbent upon a court to examine these factors carefully
before making a determination in respect of the reserve price
or
setting aside of same. The founding affidavit of the Applicant
explains the amounts owing and the procedure requested. However,
the
likelihood of the immovable property not being realized, and the
likelihood of the immovable property not being sold will find
merit
in the sheriff’s report which is essential for a determination
of same, for reconsideration of an amount, or setting
aside the
reserve price. That is not forthcoming.
[11]
In this case the report or rather return of
service from the sheriff is not comprehensive and does not set out
the full details
as required by the Rules. To say it is not necessary
for finer details as submitted by the Applicant’s counsel and
for a
court to grant the application brought could revert to a
position of Nxazonke and Another, supra which the court must guard
against
and reiterate the reasoning behind Rule 46A. Setting aside
the reserve price could only result in a situation where the
Respondent
will be left homeless and still be liable for the
shortfall on the mortgage debt if sold at a very low price. Therefore
this could
result in an abuse of process.
[12]
In
Changing
Tides 17 (Proprietary) limited N.O Kubheka and Another
[5]
it
was said:
‘
If
a property is sold at a price which is significantly below the true
market value, the homeowner is liable to lose the investment
made in
the property and still be left indebted to the bank for more than is
fair. For most homeowners the investment in the mortgaged
property is
the largest and most important of their lives. The very purpose of
Rule 46A is to avoid a homeowner’s investment
in his or her
property from being unjustifiably impinged upon. It seeks to
ameliorate the devastating effects of a debtor’s
inability to
meet the payments of a mortgage loan and the inevitability of
execution against his or her home. One of its aims is
to protect
debtors by ensuring that homes are not sold in execution for prices
which are not market related, as was a prevalent
iniquity in the
recent past. This protection to the homeowner touches directly on the
constitutional imperatives to be found, inter
alia, in section 26 of
the Constitution (the right to housing) and s 1 of the Constitution
which places an obligation on all to
promote the value of human
dignity, the achievement of equality and the advancement of human
rights and freedoms.’
[6]
[13]
In the circumstances, the following order
is made:
The application is
dismissed with costs.
RAMDEYAL,
AJ
Appearances
For
the Appellant:
Advocate
Z Nyezi
Instructed
by:
McIntyre
Van Der Post Attorneys
For
the Respondents
:
Advocate
N M Phakama
Instructed
by:
Motaung
Attorneys
[1]
Petrus
Johannes Bestbier and Others v Nedbank Ltd
[2022]
ZASCA 88; 2023 (4) SA 25 (SCA).
[2]
Ibid para 10.
[3]
See
also
Petrus
Johannes Bestbier and others v Nedbank Ltd
[2024] ZACC 2
;
2024 (6) BCLR 741
(CC) in this regard.
[4]
Nxazonke
and Another v ABSA Bank Ltd and Others
[2012] ZAWCHC 184.
[5]
Changing
Tides 17 (Proprietary) Limited N.O. v Kubheka and Another; Changing
Tides 17 (Proprietary) Limited N.O. v Mowasa and
Another; Changing
Tides 17 (Proprietary) Limited N.O. v Bucktwar; Changing Tides 17
(Proprietary) Limited N.O. v Horsley
(13719/2016; 14932/2016; 14488/2017; 11647/2019) [2022] ZAGPJHC 59;
2022 (5) SA 168 (GJ).
[6]
Ibid para 10.