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
KWAZULU-NATAL DIVISION, PIETERMARITZBURG
CASE NO: AR230/2024
In the matter between:
NEW TURN INVESTMENTS (PTY) LTD Appellant
(Respondent in the Court a quo)
and
ALBARAKA BANK LIMITED Respondent
(Applicant in the Court a quo)
ORDER
On appeal from: the High Court of South Africa, Kwa Zulu-Natal Local Division, Durban
(Mossop J sitting as a court of first instance), it is ordered that:
1. The appeal is upheld with costs on scale B.
2. The order of the court a quo is set aside and is replaced with the following order:
‘The application is dismissed with costs.’
JUDGMENT
Seegobin J
Introduction
[1] This is an appeal against a judgment and order, granted ex tempore, by the High
Court of South Africa, KwaZulu -Natal Local Division, Durban (Mossop J) on 18 July
2023. The order made was for the dissolution of a property partnership agreement and
for the appointment of a liquidator, together with certain ancillary relief.
[2] An application by the appellant for leave to appeal was refused by Mossop J on
13 November 2023. The present appe al comes before this court pursuant to a
successful application by the appellant to the Supreme Court of Appeal that was
granted on 21 February 2024.
The parties
[3] The appellant is New Turn Investments (Pty) Ltd, a company duly registered and
incorporated in terms of the company laws of the Republic of South Africa . The
appellant has, throughout these proceedings, been represented by Ms Fahima Khan
(Ms Khan), a director of the appellant. Ms Khan is an adherent of the Muslim faith.
[4] The respondent is A lbaraka Bank Limited, a company duly registered and
incorporated in terms of the company laws of the Republic of South Africa , and which
carries on business as an authorised financial service’s provider in terms of the banking
laws of th e Republic of South Africa. In conducting its business, the appellant has
regard to and applies Shariah Law.1
[5] The residential immovable property that forms the subject matter of the
agreements, referred to here in below, is more fully described as Por tion 1 of Erf 1 […],
Chiltern Hills situate at 3 […] C[...] Road, Chiltern Hills, Dawncrest, Westville, KwaZulu-
Natal (‘the property’).
[6] On 29 May 2018, the appellant and the respondent concluded three allied
agreements to effect a property partnership in accordance with the principles of Shariah
Law. The agreements in question were a diminishing Musharaka finance agreement
(‘the Musha raka agreement’), a unilateral promise agreement and an overriding
agreement for the purchase of the respondent’s share in the Musharaka agreement.2
[7] The Musharaka agreement is described as an agreement to purchase equity,
and served as a vehicle for the respondent to benefit commercially in accordance with
the principles of Shariah Law which, as mentioned, prohibits the charging of interest,
from a loan it advanced to the appellant to enable it to purchase a residential property,
being the property referred to above.
[8] The effect of the Musharaka agreement was that the property would become a
partnership asset made up of undivided shares owned by the appellant and the
respondent. The agreement provided for the property to be registered in the appellant’s
name and for a mortgage bond to be registered in favour of the respondent. In the event
of the appellant breaching the Musharaka agreement, the respondent would be entitled
to terminate the agreement by giving the appellant one calendar month’s written notice
of its intention to terminate.
1 Shariah Law, derived from Islamic scriptures, is a religious law system that guides Muslims in all aspects
of life, including moral, spiritual and practical matters. Amongst others, Sha riah Law prohibits the charging
of interest in commercial transactions.
of interest in commercial transactions.
2 Musharaka, in the context of Islamic finance, refers to a partnership or joint venture where two or more
parties contribute capital or effort to a business and share in the profits and losses according to pre -
agreed ratios.
[9] The mechanism to transfer equity from the respondent to the appellant was
contained in the unilateral enforceable promise agreement, concluded by the parties,
also on 29 May 2018. Under this agreement, the appellant undertook to purchase the
respondent’s undivided share in the immovable residenti al property , which would be
acquired over a period of 240 months in successive annual acquisitions. In the event of
the appellant breaching the promise agreement, the respondent would be entitled to
terminate the agreement and recover its damages from the appellant.
[10] The third agreement, being the overriding agreement, recorded that the parties
had entered into the Musharaka agreement in respect of the residential property and
that the appellant had promised to purchase the bank’s undivided share in th e property
in accordance with the unilateral promise. The agreement also provided for a mortgage
bond to be registered over the entire property to secure the respondent’s partnership
share and interest. In the event of a breach of the overriding agreement by the
appellant, the respondent was required to give it seven (7) days’ written notice to
remedy the breach, failing which the respondent would be entitled to cancel the
agreement.
[11] It is common cause that the property served as the primary residen ce of Ms
Khan and her family.
[12] By July 2020, the appellant fell into arrears. On 7 July 2021, the respondent’s
legal representatives addressed a letter of demand to the appellant. This was
succeeded by a further letter dated 18 November 2021 giving th e appellant 30 days’
notice of termination of the Musharaka agreement with immediate effect.
[13] The appellant’s failure to remedy its breach of the agreement by settling all
arrears, resulted in the respondent electing to cancel the agreement on 18 November
2021. The appellant, however, made part payments in respect of the arrear amounts
owed. By 18 January 2022, the outstanding arrears amounted to R99 041.05.
[14] Despite the cancellation of the agreement on 18 November 2021, the respondent
took no further steps against the appellant until 21 April 2022 when it launched
application proceedings in the court a quo (the court). Amongst others, the order sought
by the r espondent was to have the agreement declared to be terminated and for the
appointment of a liquidator in respect of the partnership property. The relief sought was
in terms of the actio communi dividundo . The powers sought to be exercised by the
liquidator were extensive and wide-ranging.
[15] The application was initially set down for hearing on 20 July 2022. On 24 June
2022, a few weeks before the date of hearing, the respondent’s legal representatives
emailed correspondence in the form of a letter t o the appellant’s attorneys in paragraph
5 of which they stated:
‘We request that your client attends to payment of the arrears in the amount of R 99 041.05,
failing which, our instructions are to proceed with the application which is set down for hearing
on 20 July 2022.’
[16] On 11 July 2022, the respondent’s attorneys emailed further correspondence to
the appellant’s attorney with an updated statement of account which indicated the
arrears as being the amount of R142 651.49 as at 8 July 2022. It is common cause that
the appellant made good these arrears on 19 July 2022.
[17] Notwithstanding the full settlement of the arrears by the appellant, the
respondent persisted with the application and insisted that the appellant deliver its
answering affidavit. The answering affidavit was duly delivered on 12 August 2022 and
a replying affidavit by the respondent followed on 5 September 2022. The opposed
application was eventually set down for hearing on 18 July 2023.
Respondent’s main submissions before the court a quo
[18] The respondent’s case was that the application sought to dissolve a partnership
and that this should not be conflated with foreclosure proceedings. According to the
and that this should not be conflated with foreclosure proceedings. According to the
respondent, the appellant had breached the Musharaka agreement during July 2020
and had not made good its arrears by 18 November 2021 when the respondent elected
to terminate the property partnership agreement. Moreover, there was no obligation on
a co -owner to continue in a property partnership against their will, which in hoc casu
was reflected by the respondent’s election to proceed with the application.
Appellant’s main submissions before the court a quo
[19] The appellant’s argument was two -fold: first, the relief sought by the respondent
would deprive the appellant’s director, Ms Khan, who together with her family lived in
the residential property, of her right to housing under s 26 of the Constitution . Second,
there was a compromise of the action as, on the common cause facts, the respondent
had concluded an agreement in terms of which it had agreed to suspend legal action ,
on condition that the full arrears were paid. Fu rthermore, that it was common cause
that the arrears were in fact paid in full before the application could be argued.
Court a quo’s order
[20] The outcome of the opposed hearing on 18 July 2023 was a court order of the
same day which, inter alia, terminated the property partnership agreement, appointed a
liquidator who was imbued with wide powers to deal with the partnership assets, and
declared the partnership properties executable in the hands of the liquidator. The relief
granted paralleled conventiona l foreclosure proceedings, but with a requisite
modification to the actio communi dividu ndo owing to the underlying credit agreement
conforming to the tenets of Sha riah Law. The court further found that despite the
appellant’s denial on the papers, due and proper notice had been given of the
cancellation of the Musharaka agreement.
Issues on appeal
[21] The appeal raises two primary issues for consideration. These are:
(a) Whether a compromise , or pactum de non p etendo, was concluded through the
demand for payment by the respondent of the arrears, which it later breached by
proceeding with the application; and
(b) Whether the respondent, in effecting foreclosure on a residential immovable
property pursuant to finance being granted, is not obliged to place sufficient evidence
before the court in order for the court to exercise its oversight function in terms of
rule 46A of the Uniform Rules , read with s 26 of the Constitution, merely because the
nature of the partnership agreement (necessitated by Sharia h Law prohibiting the
levying of interest) lends itself to foreclosure occurring through the actio communi
dividundo.
First issue
[22] The court found as untenable the applicant’s argument that there was a
compromise of action arising from the respondent having concluded an agreement
under which it had undertaken to suspend legal action on condition that the arrears
were paid. In the cou rt’s view, because the payment of the arrears of R142 651.49 on
19 July 2022 was more than a year after the Musharaka and linked agreements had
been cancelled, rather than resurrect the now -cancelled agreements, the payment
merely served to reduce the appellant’s overall indebtedness to the respondent.
[23] The court further rejected the appellant’s contention that what had in fact been
compromised was the respondent’s ability to bring the liquidation application. The basis
of the cour t’s rejection was th at while the letter of 24 June 2022 stated that the
application would not proceed if payment of the arrears was made before 20 July 2022,
the letter also made reference to the Musharaka agreement. The court reasoned that
since no payment had been immediat ely forthcoming from the appellant from 24 June
2022 until 19 July 2022, the day before the matter was scheduled to be heard, the
invitation to pay the arrears had lapsed. This lapsing of the invitation, according to the
court, meant that the respondent h ad not compromised its prerogative to proceed with
the liquidation application. As set out here in below, I have several fundamental
the liquidation application. As set out here in below, I have several fundamental
difficulties with the cour t’s reasoning in dismissing the compromise of the action out of
hand.
[24] In Mafisa v Road Acci dent Fund,3 the Constitutional Court, when referring to the
legal principles of a compromise, said the following:
‘A compromise is an agreement between the parties to prevent or terminate a dispute by
adjusting their differences by mutual consent. It is trite that a compromise gives rise to new
contractual rights and obligations which exist independently of the original cause of action. Once
a compromise is reached, the parties are precluded from proceeding on the original cause of
action (unless, of course, the compromise provides otherwise).’ (Footnote omitted.)
[25] Given this basic premise, a compromise of action d oes not necessarily resurr ect
terminated contractual rights and duties. Instead, it creates new contractual rights and
obligations, which may or may not be linked to the original cause of action. Therefore,
in my view, there was no legitimate basis for t he court to have rejected, without due
consideration, the appellant’s contention that the compromise related to the
respondent’s ability to proceed with the liquidation application. The contention did not
seek to resurrect the terminated agreement. Instea d, it was limited to what had been
reflected in the letter of 24 June 2022, namely, that the application proceedings would
not continue if the arrears were paid before 20 July 2022.
[26] Moreover, it is difficult to fathom the basis for the court concluding that the
respondent’s invitation to the appellant to pay the arrears had lapsed before the
stipulated deadline of 20 July 2022. The letter to the appellant unambiguously stated
that the arrears had to be paid before 20 July 2022. The appellant paid the arrears in
full on 19 July 2022, a day before the deadline. Therefore, the court’s finding that the
invitation had lapsed is, in my view, plainly incorrect.
[27] It would seem that th e only possible reason for the court to conclude as it did,
would be if it regarded the invitation to pay the arrears as having lapsed on 18
would be if it regarded the invitation to pay the arrears as having lapsed on 18
November 2021, the date on which the respondent had ostensibly terminated the
Musharaka agreement. However, in my view, this scenario would be impossible and
3 Mafisa v Road Accident Fund [2024] ZACC 4; 2024 (4) SA 426 (CC) para 33. See also Slabbert v MEC
for Health and Social Development of Gauteng Provincial Government [2016] ZASCA 157 para 7 where
the SCA held that a compromise serves a dual purpose, to end existing litigation and to prevent or avoid
litigation; Tsholo v Road Accident Fund [2025] ZASCA 21 paras 10-11.
would raise the following inexorable question: If the invitation to pay the arrears had
lapsed on 18 November 2021, when the respondent had supposedly terminated the
Musharaka agreement, why did it invite the app ellant only on 24 June 2022 to make
good the arrears that had been accumulating up to and well beyond the termination
date? If the respondent had in fact regarded the agreement as terminated on 18
November 2021, then the entire amount of the debt would ha ve been due, owing and
payable. Consequently, any request to the appellant for payment would have been for
the whole amount of its indebtedness, not merely for the instalment arrears up to the
deadline of 20 July 2022. It follows that if the court had co ncluded that the invitation
had lapsed when the agreement had ostensibly terminated on 18 November 2021, such
a conclusion would be unwarranted on the facts.
[28] Apart from the above considerations, the cou rt’s conclusion that the arrears of
R142 651.49, paid in full on 19 July 2022, had merely served to reduce the overall
indebtedness is, in my view, untenable. The use of the term ‘arrears’ in the
respondent’s attorney’s communication of 24 June 2022 is unequivocal. It refers
specifically to the unp aid instalments that were due by the appellant up to the date of
the communication. If the r equest for the payment of the arrears amount was meant to
reduce the appellant’s overall indebtedness to the respondent, this should have been
communicated in the letter. This was not the case. Instead, the letter of 24 June 2022
referred specifically to the arrears of R99 041.05. In an updated statement of balance
sent to the appellant on 11 July 2022, the arrears were reflected to be R142 651.49 as
of 8 July 20 22. That the court chose to interpret this payment as being towards the
appellant’s overall indebtedness, amounts to the court reading into the letter of 24 June
2022, something that the respondent neither intended nor specified in its invitation to
2022, something that the respondent neither intended nor specified in its invitation to
the appellant. This reading in was, in my view, impermissible.
[29] In the circumstances and on this issue, I conclude that the respondent had, by
accepting the arrear payments as it did on 19 July 2022, compromised its claim and
precluded itself from continuing with the application thereafter.
Second issue
[30] The Musharaka agreement, which , as I pointed out already, is really a property
partnership agreement, that allowed the respondent to seek a dissolution of the
partnership in terms of the actio communi dividundo . The question that arises is
whether, in such circumstances, it w as unnecessary for the court to exercise its judicial
oversight function in terms of rule 46 and rule 46A of the Uniform Rules , read with s 26
of the Constitution.
[31] Rule 46 deals with execution against immovable property other than the
residential immovable property of a judgment debtor, the underlying principle being that,
save where immovable property has been specially declared executable, execution
shall not issue against immovable property until movable property has been excus sed
and it appears that the movable property is insufficient to satisfy the writ. Rule 46A, on
the other ha nd, applies whenever an execution creditor seeks to execute against the
residential immovable property of a judgment debtor. Rule 46A was added to the
Uniform Rules with effect from 22 December 2017. It was promulgated against the
backdrop of the Constitutional Court’s decisions in Jaftha v Schoeman and Others; Van
Rooyen v Stoltz and Others 4 and Gundwana v Steko Development and Others .5 Those
two cases emphasised that judicial oversight is a tool to preserve the right to adequate
housing and security of tenure. Rule 46A(2) (b) is peremptory. It specifically prohibits a
court from authorising execution against immovable property that is the primary
residence of the judgment debtor, unless it has considered all relevant factors. The
purpose of the rule is to entrench the s 26 rights to adequate housing.
[32] Before the court a quo the appellant contended that no order can be granted to
dissolve a property partnership , such as the one under consideration, without having
regard to the minimum protections afforded by rules 46 and 46A. This was because the
regard to the minimum protections afforded by rules 46 and 46A. This was because the
liquidator’s powers would be substituted for the mandate of the sheriff to sell the
property in execution.
4 Jaftha v Schoeman and Others; Van Rooyen v Stoltz and Others [2004] ZACC 25 ; 2005 (2) SA 140
(CC).
5 Gundwana v Steko Development and Others [2011] ZACC 14; 2011 (3) SA 608 (CC).
[33] The appellant’s argument did not find favour with the court mainly for two
reasons. First, it found that the appellant’s director, Ms Khan, a natural person, was not
to be equated with the respondent, a juristic entity. Therefore, the issue of whether Ms
Khan enjoyed certain rights was not up for consideration as she was not a party to the
agreements with the respondent. In the cou rt’s view, Ms Khan had agreed to the
manner in which the agreements had been structured, and this precluded her from now
asserting that she was prejudiced because of this structure. The court concluded that
the appellant was a juristic entity, and therefore it was unconvinced that a juristic entity
has a right to housing.
[34] The court’s finding on this issue is in conflict with the position articulated by the
Supreme Court of Appeal (SCA) in Bestbier and Others NNO v Nedbank Ltd6 where the
court stated tha t the protections afforded by rule 46A were not limited to natural
persons. The following was said:
‘As I see it, a creditor seeking to execute against immovable property owned by a trust would
have to establish whether beneficiaries of that trust occupy the immovable property in question.
Where that has been established, rule 46A would have to be follow ed . . . I therefore disagree
with the submission made by the respondent's counsel that the person to be protected by rule
46A is, in the tradition of Jaftha and Gundwana, a natural person and not a legal persona such
as a company or a close corporation, n or an institution such as a trust, “even if the immovable
property is the shareholder's, member's or beneficiary's only residence ”. Clearly, a blanket
approach that considers all immovable property held in the name of a juristic person to fall
outside the protection of rule 46A is too narrow.’ (Footnotes omitted.)
[35] The second reason advanced by the court was that the respondent was not
seeking an order of executability against the immovable property. Instead, the relief i t
seeking an order of executability against the immovable property. Instead, the relief i t
sought was for the termination of a partnership relationship relating to the immovable
property. In support of this view, the court referred to sub-paragraphs 3.6 and 3.7 of the
notice of motion, which provided as follows:
6 Bestbier and Others NNO v Nedbank Ltd [2022] ZASCA 88; 2023 (4) SA 25 (SCA).
‘3.6 save to the extent necessary to discharge any liabiliti es of the partnership to third
parties, and all the liquidator’s fees and disbursements, and to ensure an equitable
distribution in accordance with any agreement relating to the partnership, the liquidator
shall not realize any assets of the partnership;
3.7 to the extent that it is necessary for the assets of the partnerships to be realized, to invite
the parties to offer to purchase the partnerships property and/or other partnership assets
that may come to light, which offer must be made to the liquidator within five (5)
business days of the liquidation calling for such offer, and at a price in excess of the
appraised value of such property.’
[36] On the strength of these two paragraphs, the court concluded that there was a
possibility that the immovable property may in the future be acquired by the appellant,
‘in which event no discernible prejudice will accrue to the persons residing within the
immovable property.’7
[37] This depiction by the court of how persons living in the residential property in
question will have their right to housing safeguarded, falls short of the thresholds of
protection provided by s 26 of the Constitution and the oversight obligations provided to
the courts under rule 46A. The fact that the appellant would have the opportunity to buy
the residential property serves as no guarantee of its ability to do so. Therefore, this
cannot be a reason to ignore the provisions of rule 46A. Instead, it would be one of the
factors the court will have to consider when perform ing its judicial oversight function
under rule 46A.
[38] Additionally, the court’s statement that the respondent was not seeking an order
of executability against the immovable property is indeed strange. The statement is
contradicted by paragraph 4 of th e notice of motion and the order that was finally
granted. Paragraph 4 provides as follows:
granted. Paragraph 4 provides as follows:
‘That the partnership properties be and (sic) hereby declared executable in the hands of the
liquidator.’
7 Albaraka Bank v New Turn Investments (Pty) Ltd [2023] ZAKZDHC 43 para 22.
[39] Clearly, an order for execution against the property formed part and parcel of the
overall relief granted by the court. Therefore, the conclusion in paragraph 22 of the
judgment (as quoted above) that the consequences of the relief sought by the applicant
(respondent current matter) are matters for another day, is incorrect. It would seem to
me that the court, by restricting itself to the partnership brought about by the Musharaka
agreement, and b y determining the relief sought solely in terms of the actio communi
dividundo, failed to have regard to its judicial oversight function in terms of rule 46A and
s 26 of the Constitution.
[40] More recently in Bestbier and others v Nedbank Ltd 8 the Constitutional Court
comprehensively discussed the effect of rule 46A of the Uniform Rules and s 26 of the
Constitution. The brief facts in Bestbier are that a trust owned a wine farm from which it
conducted its various business activities, but it als o owned the residences, ie a main
house and several cottages, wherein the workers and their families lived. Bestbier sets
out the core issue, which is similar to the one in this matter, as follows:9
‘Furthermore, the operation of rule 46A has been unclear from its inception. It has attracted
attention in journals, highlighting the lack of clarity in the provision. As stated in Gundwana, the
reach of this Court’s decision in Jaftha has been interpreted in various courts (including in this
matter before the High Court and the Supreme Court of Appeal), and the outcomes have not
been consistent. Moreover, before this case, the courts have not yet grappled with the true
meaning of “any other party who may be affected by the sale in execution” outside the ambit of
judgment debtors and those listed in rule 46(5)(a). Neither the Constitution nor the Uniform
Rules define what meaning should be ascribed to the phrase “any other party who may be
affected by the sale in execution”. Eliminating uncertainty in this area is plainly a matter of
considerable public importance. It is thus in the interests of justice for this Court to consider the
application.’
[41] The Constitutional Court summarise d the past cases, and also set out various
aspects of the rule in some detail.10 In what follows I will only highlight some of the se
8 Bestbier and others v Nedbank Ltd [2024] ZACC 2; 2024 (4) SA 331 (CC) (Bestbier) para 54 onwards.
9 Bestbier para 36.
10 Bestbier para 64 onwards.
aspects, including the findings of that c ourt, that were made in terms of these
discussions.
[42] Perhaps a point to note at this juncture is the following: The applicability of
rule 46A to contracts wherein a juristic entity owns the primary residence is not merely
inferred, as was dealt with and answered in Bestbier. Islamic or Sharia h Law contracts
are a species of contract, 11 meaning that the normal contractual principles for the
conclusion of a contract would apply.12 Hence, it may be argued, in light of Bestbier, that
rule 46A is applicable to Islamic or Sharia h Law contracts where the purchase was
made through the juristic entity, and not the director/individual, who uses the residential
property as their primary residence. It seems to me that in the circumstances, and in
view of the fact that the respondent is subject to the company and banking law s of the
Republic of South Africa, it would be incumbent upon it to also adhere to the rules and
practices of our courts and the constitutional precepts, particularly , as in this case, t he
implementation of s 26 rights, as well as the provisions of rule 46A of the Uniform Rules.
[43] Bestbier, in discussing what may be referred to as a primary residence, with
specific reference to ‘residential immovable property’, states:
‘[74] From the above analysis, the following is clear; there are three categories of immovable
property with which the Uniform Rules 46 and 46A deal with in relation to execution. There is
“immovable property” in general, which is dealt with in rule 46. This includes, but is not limited
to residential immovable property. Then there is “residential immovable property”, to which rule
46A applies. This is a subcategory of “immovable property”. Rule 46A adds additional provisions
which apply when one is dealing with residential immovable property. Finally, there is immovable
property which is the “primary resid ence of the judgment debtor”. This is a sub -subcategory of
11 See generally, J Chuah ‘Impact of Islamic Law on commercial sale contracts - A private international
law dimension in Europe’ (2010) 2 European Journal of Commercial Contract Law 191-204, NM Sapuan
‘An evolut ion of Mudarabah contract: A viewpoint from classical and contemporary Islamic scholars’
(2016) 35 Procedia Economics and Finance 349-358. The various forms of Islamic Law loan contracts
that are available in South Africa are succinctly discussed in F Kholvadia ‘Islamic banking in South Africa
– Form over substance?’ (2017) 25(1) Meditari Accountancy Research 65-81.
12 Ismail v Jantjies and others [2025] ZAWCHC 128 paras 38 -39. See also MD Tuba ‘Lodhi 5 Properties
Investments CC v FirstRand Bank Limited [2015] 3 All SA 32 (SCA) and the enforcement of Islamic
banking law in South Africa’ (2017) 20 PER / PELJ 1 at 19-20.
the subcategory “residential immovable property”. Only some parts of rule 46A apply to this sub-
subcategory of “primary residence” property.
. . .
[81] It must be borne in mind that rule 46A appli es not only to executions against “primary
residential immovable property” but also to residential immovable property of a judgment
debtor. The factor pertaining to primary residence is just one of the factors a court must
consider. The text is clear that the rule applies whenever an execution creditor seeks to execute
against the residential immovable property of a judgment debtor. When applying rule
46A(2)(a)(i), one of the factors that the court must consider is whether the residential immovable
property is used as the primary residence of the judgment debtor.’
[44] Whether a property is a ‘residential immovable property’ is determined by
reference to its characteristics and actual use. Bestbier explains:
‘[75] As stated above, whether property can be classified as “residential immovable property” is
determined by the characteristics and actual use of the property. It does not matter that the
judgment debtor is not herself occupying the property. It also does not matter that the judgment
debtor is a trust. If a trust owns a residential house, it is “residential immovable property”, if the
beneficiaries reside in it, even though the trust itself as a legal entity cannot reside in the
property. Among the provisions which apply to all “residential immov able property” is rule
46A(3)(b), which requires notice to be given to persons who may be “affected” by the sale and
execution. And that is the provision which is the focus of the present case. The importance of
judicial oversight over all residential im movable property, and not only primary residential
immovable property is that it would be risky to leave it to the judgment creditor to determine
whether the property is used as primary residence without this question being ventilated or
determined by a court.
. . .
determined by a court.
. . .
[77] What then is the situation if the immovable property is registered in the name of a juristic
entity but is occupied by natural persons? Can it be ignored that natural persons reside there
and utilise the property as their primary residence ? As stated, when dealing with rule 46A(1),
whether property is residential immovable property depends on the physical characteristics of
the property coupled with its actual use. Residential immovable property may be registered in
the name of a juristic entity. While a juristic entity such as a trust cannot reside in a property, it is
not uncommon for such property to be used as residential immovable property, that is, for it to
be occupied by natural persons. It seems to me that in such instances one has to have regard
to the phrase “any other party that may be affected by the sale in execution” that is used in
rule 46A(3)(b). What has to be determined is whether such natural persons can be categorised
as persons that may be affected by the sale in execution.’
[45] In other words, there are certain parts of rule 46A that are not applicable in
certain instances, as is the case in the present matter. The company (judgment debtor
ie the appellant herein) cannot live in the residential immovable property, however it is
the primary residence of its director. Bestbier provides guidance on the application of
rule 46A in relation to property owned by a juristic entity:13
‘The fact that the residential immovab le property is not the “primary residence” of the judgment
debtor only excludes the operation of those special provisions of rule 46A that apply only to
“primary residence” property. The rest of rule 46A will still apply, even though the property is
owned by a trust. This includes the right of affected persons to receive notice in terms of rule
46A(3)(b) and the various powers of the court in terms of rule 46A(8) (excluding only rule
46A(8)(d)). This includes the power to take into account conditions in the sale of the property or
postponing the application in terms the court considers appropriate or “any other appropriate
order”.’
[46] It should be noted that the property in Bestbier was a mix-use property, whereby
the farming activities, and all other activities connected thereto, were for commercial
purposes. However, the trustees, the beneficiaries and the farm workers lived in the
residential accommodation, or what the court termed ‘ residential immovable property’,
that was provided on the prop erty. The court emphasised that the fact that there was
residential immovable property, meant that rule 46A was applicable.14
13 Bestbier para 78.
14 Bestbier para 80. The farmworkers were protected under s 24 of Extension of Security of Tenure Act 62
of 1997 (ESTA), and the headnote of Bestbier summarises their position, which is not directly on point in
this matter, as follows:
‘The focus of the court's attention was the position of the farmworkers of the trust residing on the farm.
The court noted that the farmworkers were occupiers for purposes of ESTA. By virtue of s 24 of ESTA,
any new owner consequent to a sale in execution would be bound to respect any existing rights of the
farmworkers residing on the property at the time of the sale in execution. As such, it could not be said that
farmworkers' rights to adequate housing in terms of s 26(1) would be impaired by a sale in execution,
their rights being adequately protected by s 24 of ESTA. (See [83] – [86].) The court concluded that the
farm workers were not persons “who may be affected by the sale in execution” requiring notice of the
application (see [87]).’
[47] In light of the legal principles set out above, it must be concluded that the court
was wrong in finding that the provisions of rule 46A did not apply to the appellant’s
director who was occupying the property as her primary residence and as s uch, the
court was required to exercise its judicial oversight function in terms of rule 46 A when
ordering execution against the said property.
[48] Order
In the result, I make the following order:
1. The appeal is upheld with costs on scale B.
2. The order of the court a quo is set aside and is replaced with the following order:
‘The application is dismissed with costs.’
________________________
Seegobin, J
I agree.
________________________
Reddi, AJ
I agree.
________________________
Sibisi, AJ
Date of hearing: 06 June 2025
Date of judgment: 05 September 2025
APPEARANCES
For the Appellant: Mr M.C. Tucker
Instructed by: Abdool, Gafoor, Parasram and Associates
13 Bishop Road
Windermere
Durban
Tel: 031 301 7502
Email: mariam@agpattorneys.co.za
Ref: MSAG/MB/NEW TURN
c/o Stowell & Co Inc
295 Pietermaritz Street
Pietermaritzburg
Tel: 033 845 0541
Email: sumayan@stowell.co.za
Ref: Ms S. Norgot/ ABD63/0043
For Respondent: Mr P. J. Combrinck SC
Ms J.L. Miranda
Instructed by: Eversheds Sutherland (KZN) Incorporated
1st Floor, 29 Richefond Circle
Ridgeside Office Park
Umhlanga
Tel: 031 940 0501
Email: nirashninaidoo@eversheds-sutherland.co.za
Ref: D Avenant/N Naidoo/ MAT6834
c/o Austen Smith Attorneys
1Highgate Drive
1 George MacFarlane Lane
Wembley
Pietermaritzburg
Tel: 033 392 0500
Email: ranitha@austensmith.co.za
Ref: Cullum Smythe