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IN THE HIGH COURT OF SOUTH AFRICA
(WESTERN CAPE DIVISION, CAPE TOWN)
Case No.: 18696/2023
In the matter between:
THE STANDARD BANK OF SOUTH AFRICA Plaintiff/Applicant
(Registration Number: 1962/000738/06
and
RAY GRAHAM VAN NELSON First Defendant/Respondent
(Identity Number: 8[…])
CHANTEL VAN NELSON Second Defendant/Respondent
(Identity Number: 8[…])
REASONS
GOLDEN AJ:
[1] This application came before me in Third Division on 22 February 2024. I
dismissed the application . The plaintiff, Standard Bank of South Africa
(“Standard Bank ”) has requested reasons for the Order. These are my
reasons.
[2] Standard Bank applied for default judgment and an order in terms of Rule 46A
to declare the respondents’ immovable property described as Erf 1 […], Cape
Town (“the property”) executable, subject to a reserve price and to authorise
the Registrar of the High Court to issue a Writ in Execution against the
immovable property. It also sought costs on an attorney and client scale and
condonation for non -compliance with Rule 46A(3)(d) that the Court accept
service of the application on the respondents as proper service.
[3] As is the practice with Rule 46A applications in Third Division, Standard Bank
sought both the money judgment and an order to execute on the mortgaged
property in one application. The special execution order is ought to satisfy the
debt owed by the respondent debtors.
[4] The facts are the following.
[5] The mortgage bond was registered in favour of Standard Bank on 13 August
2013.
[6] The monthly instalment on the bond was R5 137.68.
[7] The respondents first fell into arrears under the loan agreement on or about
July 2023.
[8] They were three months in arrears as of 29 September 2023 in the amount of
R16 064.32.
[9] The full balance outstanding in terms of the mortgage loan agreement as at
29 September 2023, was R432 931.04.
[10] According to Standard Bank, the respondents were in breach of the mortgage
loan agreement since 29 September 2023.
[11] On 3 October 2023, Standard Bank addressed a letter of default and Notice in
Terms of Section 86(10) of the National Credit Act (“ NCA”), to the
respondents, the debt counsellor and the National Credit Regulator to inform
the respondents inter alia that they were in breach of the loan agreement
when they failed to make payment of the full monthly instalment due.
[12] The arrears were hardly three months old, and the bank proceeded to issue
summons on 18 October 2023 seeking a money judgment and an order in
terms of Rule 46A to execute against the property for satisfaction of the
accelerated debt.
[13] I must determine the application in terms of Rule 31, Rule 46A and the
Western Cape Practice Directive 33A.
[14] Erasmus, in “ Superior Court Practice ”, recognises that Rule 31 makes
provision not only for default judgment on a claim which is for a debt or
liquidated demand where the defe ndant is in default of delivery of a Notice of
Intention to Defend or a Plea, but also an Order by the Court declaring
residential property specially executable where the claim is for a debt or
liquidated demand and the defendant is in default of delivery of a Notice of
Intention to Defend or a Plea.
[15] There are common features in these applications. The respondents are
mostly working class and/or indigent debtors, and where the mortgaged
property is almost always in the poorer areas of the Western Cap e. The
debtors almost always ha ve significant arrears and where they have been in
arrears for some time prior to the application.
[16] It does not mean that because the respondents did not oppose the
application, that the application was there for the taking. I am required to
approach these applications cautiously, given the more so given the potential
far-reaching consequences that will inevitably arise when a family loses their
home and that the respondents and their minor children may be deprived of
their rights in terms of Section 26 of the Constitution. Indeed, the Court’s
rigorous investigative function in Rule 46A applications was c onfirmed in
ABSA Bank Ltd v Njolomba & Another and Other Cases 2018 (5) SA 548
(GJ).
[17] A court shall not authorise execution against immovable property which is the
primary residence unless the Court, having considered all the factors,
considers that such an Order is warranted ( Williams and Another v Standard
Bank of SA Ltd and Another 2022 (6) SA 629 (WCC)).
[18] The Court in Standard Bank v Lamont 2022 (3) SA 537 (GJ), held that a
balance must be struck between the rights of the execution creditor to enforce
its contractual rights and the protection of a debtor’s right to housing.
[19] It is perhaps necessary to state the obvious that the requirements for a default
judgment application must be properly demonstrated.
[20] The founding affidavit in the application alleged that personal service was
effected by the Sheriff on the respondents at the residential address on
23 November 2023. The deponent avers that Standard Bank has instructed
its attorney of record to inform the Court how the application was served on
the respondents and any other party who may be affected by the relief sought
in the application, since this information is not available to him at the time of
commissioning the affidavit. He refers in this regard to the affidavit filed
pursuant to Practice Directive 33A (“the 33A affidavit’).
[21] In the 33A affidavit deposed to by Ms Geesje Maria de Wet dated 14 February
2024, the bank’s attorney of record, Ms de Wet confirms that the application
was personally served by the Sheriff on both respondents on 6 December
2023. This is inconsistent with the returns of servic e attached to the papers
which reflect that the application was served on the respondents on 24
January 2024.
[22] The founding affidavit also avers , as at the date of the application, th at the
bank is not aware of any other affected parties who require service of the
application or other persons occupying the premises. The third return of
service dated 26 January 2024 however records that the r espondents have
two minor children aged 9 and 12 years. No mention of this is made in the
33A affidavit, even if the bank itself did not have knowledge of this information
prior to the service of the application . In fact, the founding affidavit pertinently
alleges that there are no dependents and/or elderly persons and/or disabled
persons occupying the property.
[23] The affidavit also alleges that the bank does not know if the respondents are
employed, has no further information relating to the ir financial position and
that the y have been invited to place any relevant circumstances before the
Court since this information is not available to the bank. The 33A affidavit
however avers that the r espondents had , as at 14 February 2024,
telephonically confirmed that they are employed full-time.
[24] Standard Bank avers that the re spondents were affor ded the opportunity to
remedy the breach in terms of the mortgage loan agreement and despite
being in breach of the agreement since 29 September 2023, have failed to do
so.
[25] Standard Bank avers that the total amount owing by the respondents are
substantial and that it will be prejudiced if it cannot recover a portion of the
amount due to it by executing against the property. It also alleges, given the
amount due to it, that it is unlikely that the respondents will be in a position to
satisfy any judgment granted, either by way of payment by way of attachment
and sale of movable property. It alleges that there is no reasonable possibility
that the respondents’ bre ach of the loan agreement will be cured within a
reasonable period and that the bank therefore has no alternative but to
execute against the immovable property.
[26] It alleges that it took all reasonable steps to conclude a suitable arrangement
with the respondents to settle their outstanding obligations to avoid
foreclosure which included, inter alia , telephone calls to the respondents to
investigate the possibility of entering into a reasonable arrangement to settle
the total arrears on the mortgage loan account in monthly instalments.
[27] The bank alleges that it allowed the respondents an indulgence of being in
arrears with monthly instalments for a total period of three months before
commencing legal proceedings. This is not entirely consistent wi th the facts
which shows that the arrears amounted to 2.8 months.
[28] The allegation is also made that further attempts by the bank’s attorney were
made to contact the respondents to enter into a suitable arrangement to settle
the arrears . (This averment in paragraph 15.5 of the f ounding affidavit is
unclear as it is also alleged that the bank could not confirm whether the
respondents reside at the mortgaged property). However, no mention of this is
made in the 33A affidavit. No information is placed before the Court, as to
what payment arrangements, if any, were proposed to the respondents, and
when. I do not know what steps were taken, when, and what transpired when
a payment arrangement could not be concluded . The bank was a lso
inconsistent as to whether the respondents resided at the property. The 33A
affidavit alleges that the property is assumed to be the primary home of the
respondents. In terms of the Particulars of Claim, it is alleged that to the
bank’s knowledge, the property is currently occupied by the respondents and
is utilised for residential purposes.
[29] The bank alleges that the respondents’ latest arrears as at
19 December 2023, amounted to R14 477.36. Notwithstanding that the
affidavit was deposed to on 16 January 2024, the affidavit does not at all
acknowledge the payment of R6 000.00 which the respondents made on 2
January 2024, although the payment is mentioned in the p ractice note. This is
an important factor which the Court must consider in the respondents’ ability
to settle the arrears in the form of a reasonable payment plan, given that the
arrears amounted to a default period of only 2.8 months. It is not
unreasonable t o infer that the respondents, having made a payment in
January 2024 , may have been able at least at this stage to conclude a
payment arrangement to cure the arrears. Given the paucity of information in
the application surrounding the efforts made and engagements with the
respondents to conclude a reasonable payment plan , it was difficult to discern
whether the engagements occurred before or after the payment was made.
[30] Aside from these deficiencies and discrepancies in the application, the
application to declare the property specially executable in order to satisfy a
debt arising from arrears of approximately 2.8 months, is, in my view, wholly
disproportionate to the arrears. The proportionality of the remedy is an
important factor in the exercise of the Court’s d iscretion of a Rule 46A
application.
[31] In Gundwana v Steko Development CC and Others 2011 (3) SA 608 (CC ),
the Constitutional Court held that the execution against a primary residence
must be a proportionate response to the respondent’s default. It held that
execution itself is not an odious thing and that it is part and parcel of normal
economic life. It is only when there is disproportionality bet ween 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.
[32] The proportionality factor was more recently applied in ABSA v Gontsana
2023 (3) SA 530 (GJ), where the Court held that the execution order must be
evaluated on the facts as they stand. The Court recognised that courts
regularly suspend execution orders to allow a debtor the chance to make
good their arrears and held that a court need only be satisfied that suspension
is in the interests of j ustice. This entails an examination as to whether the
person against whom the order operates will suffer an injustice if the order is
not suspended, and whether a suspension would be duly prejudicial to the
person in whose favour the order was granted (se e also Soja Ltd v Land
Development Corp 1981 (2) SA 407 (W) at 411E-F).
[33] In Gontsana the Court held that what remains of the judgment debt has been
calculated, it may be possible to explore the avenues available to enable
Gontsana to pay it off, and w hether the quantum remaining, and the
Gontsanas’ capacity to repay the amount, it would be proportionate to the
outcome of the execution against them.
[34] At the commencement of legal proceedings (which I assume was 22 October
2023) the respondents’ arrears amounted to R16 064.32.
[35] As at 19 December 2023 the arrears amounted to R14 477.36.
[36] It is fair to assume that if the arrears were less in December 2023, that the
respondents must have made a payment in the period between October and
December 2023.
[37] The arrears were never more than 2.8 months.
[38] Certainly, by the time that the application served before me, the arrears
amounted to 2.8 months.
[39] It is incumbent upon the execution creditor to persuade the court, upon a
consideration of all the facts, that execution against the property is warranted.
(Williams & Another v Standard Bank 2022 (6) SA 629 (WCC) )
[40] Rule 46A confers a discretion on the Court to grant or refuse the application,
which discretion must be judicially exercised . Judicial oversight permits the
court to consider all the relevant factors of a case to determine whether there
is good cause to order execution (Japhta v Schoeman & Others; Van Rooyen
v Stoltz & Others 2005 (2) SA 140 (CC ) at paragraph [55] ).
[41] The Court retains a general discretion in terms of Section 173 of the
Constitution to regulate its own processes and that the exercise of this general
discretion is subject to the interests of justice which entails a careful weighing
up of factors ( United Democratic Movement and Another v Lebashe
Investment Group (Pty)Ltd & Others 2023 (1) SA 353 (CC) ).
[42] In Williams the Court held that Rule 46A confers a discretion on the Court to
determine whether or not it would be appropriate to authorise execution
against a residential property, which discretion is to be exercised judicially,
having regard to the factors set out in the rule. It held that the task of the
Court is to ensure that execution against primary residence of the judgment
debtor would not be disproportionate in all the circumstances of the case,
hence the requirement that execution may only be authorised when there is
no other satisfactory way to satisfy the judgment debt (see also Japhta v
Schoeman; Van Rooyen v Stoltz and Others 2005 (2) SA 140 (CC) ).
[43] The Full Bench of this division in Standard Bank of South Africa Limited v
Hendricks and Another 2019 (2) SA 620 (WCC) took the view that the stated
practice of the bank should be adhered to in providing a number of months to
debtors to settle outstanding arrears, rather than sanctioning an approach to
the Court for a “ trifling debt ” after a very limited period of time and without
appropriate steps being taken to resolve the matter. The Court held:
“We consider it impossible to provide a benchmark for arrears justifying
an approach to court. While we accept that there have been dif fering
approaches by judges to the issue, this remains a unique enquiry
undertaken in the exercise of a court’s judicial oversight. To lay down a
standard approach will be contrary to the constitutional imperative of
judicial oversight in foreclosure matters.”
[44] The Court held that a loan agreement secured by a mortgage bond over the
primary residence of the judgment debtor has the potential to impact the
Section 26 right of access to housing, with the money order causally
connected to and intrinsically linked to the order of special execution given the
existence of the mortgage bond over the primary residence of the debtor. The
Court recognised that in the vast majority of cases the satisfaction of the
money judgment will not be possible other than th rough a sale in execution of
the immovable property, with a clear distinction therefore existing between a
loan agreement secured by a mortgage bond registered over the debtor’s
immovable property and a loan agreement which does not. Where the
immovable property is the primary residence of the debtor, this puts the nature
of the entire transaction into a different category, one which, when the
application for both orders is considered simultaneously in the manner
supported by the banks, engages Section 26 of the Constitution. As a result,
so the Court held, having regard to the debtor’s Section 26 right, the money
judgment may be postponed together with the order for special execution
where a court, on a proper consideration of the facts before it, conside rs this
to be in the interests of justice. In paragraph [49] of the judgment, the Court
held that:
“The practice in this division has developed in which certain banks
proceed to court to seek both the money judgment and an order of
special execution when the debtor is only two months in arrears with
payments on his/her loan account. Granting an order in circumstances
of trifling arrears does not strike the balance between the interests of the
parties in the manner contemplated by the National Credit Act.”
[45] The Court then held that, having regard to the competing interests of the
parties and given the relationship between both the money order and the
order of special execution, Section 26 of the Constitution is engaged e ven in
the application for the money order before the Court given that the application
for such Order is intertwined with the order for special execution. The view
that the Court took on the matter is that the Court holds a discretion to
postpone the appl ication for a money order in appropriate circumstances
having regard to Section 172(1)(b) of the Constitution.
[46] The Concourt in Gundwana held that an evaluation of the facts of each case
is necessary in order to determine whether a declaration that hy pothecated
property constituting a person’s home is declared specially executable .
Mokgoro J in Japhta v Schoeman ; Van Rooyen v Scholtz (2005) 2 SA 141
(CC) warned in relation to judicial oversight, that it would be unwise to set out
all the facts that would be relevant to the exercise of judicial oversight. The
Court in Japhta also held that if there are other reasonable ways in which the
debt can be paid an order permitting as a sale in execution will ordinarily be
undesirable.
[47] The Concourt in Japhta held that “it would be unwise to set out all the relevant
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 i f 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. 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.” (at paragraphs [56] and [57] ).
[48] There were no significant arrears in the present matter.
[49] The facts show that the respondents did not significantly fall into arrears and
have no history of arrears other than the immediate 2.8 months arrears upon
which the application is predicated.
[50] It will lead to an iniquitous result should I have grante d the application given
the negligible arrears of 2.8 months and where t he facts suggest that the
respondents may have been in a position to settle the arrears.
[51] An execution order against the primar y residence of the debtor should be the
last resort and only when all other avenues to satisfy the arrears have been
meaningfully exhausted. This was not the case on the facts before me. This
should not be construed to mean that debtors who have put up the ir
immovable property as security for the mortgaged loan agreement is absolved
from their contractual obligations under the loan agreement . To order
otherwise would be inconsistent with the legal position that contracts
voluntarily concluded should be enfo rced if they and/or their enforcement is
not contrary to public policy. However, this approach, in my view, strikes a
balance between the contractual rights of the bank and the Section 26 rights
of the debtors.
[52] The court has a discretion to postpone the application which is a more
common occurrence in these applications where the debtor is given the
opportunity to settle the arrears , and which often has the effect that the bank
is afforded the opportunity to also augment its application in one way or
another. The execution orders are also often granted but suspended to all the
debtor to make good the arrears.
[53] I elected not to postpone the application . I exercised my discretion and
dismissed the application in terms of Rule 46A(8) which provides that a court
considering an application under the rule may refuse the application if it has
no merit.
[54] Standard Bank’s contractual rights in terms of the mortgage loan agreement
to seek satisfaction of the debt by way of an execution order remain
undisturbed. Although it has not succeeded by way of default judgment, it can
still proceed to achieve the same result by way of the action which it has
instituted (ABSA Bank Ltd v Van Rensburg & another 2014(4) SA 626 (SCA);
ABSA Bank v Mkhize & Two Similar Cases 2014 (5) SA 16 (SCA) ).
[55] I ultimately dismissed the application in the interests of justice.
[56] These are my reasons.
_____________________________
T J GOLDEN
Acting Judge of the High Court
04 November 2024