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[2013] ZAWCHC 42
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ABSA Bank Ltd v Zimele Plant Hire CC and Others (17539/2011) [2013] ZAWCHC 42 (27 February 2013)
Republic
of South Africa
IN
THE HIGH COURT OF SOUTH AFRICA
(WESTERN
CAPE HIGH COURT, CAPE TOWN)
Case
Number: 17539/2011
in
the matter between:
ABSA
BANK LTD
...............................................................................................................
Applicant
and
ZIMELE
PLANT HIRE CC
.....................................................................................
First
Respondent
Registration
no.: 2003/0254/18/24
PHAZAMILE
EDWARD
TOM
..........................................................................
.
Second
Respondent
ID
No.:
MODI
ELSIE TOM
................................................................................................
Third
Respondent
ID
No.:
JUDGMENT
DELIVERED ON WEDNESDAY 27 FEBRUARY 2013 DOLAMO, J:
[1]
Two applications served before this Court. In the one application the
applicants sought an order in terms of which an immovable
property
being erf no. 2574 Eerste River situated in the City of Cape Town,
Stellenbosch Division (“the property”)
and registered in
the names of the second and third Respondents be declared executable.
The Respondents in turn launched, on an
urgent basis, an application
for the stay of the sale in execution of their movables, which were
attached pursuant to a writ of
execution.
[2]
I shall, for purposes of convenience, refer to the first application
as the
declaratory
application
and the second
application to suspend the sale in execution as the
suspension
application.
I shall
furthermore refer to the applicant in the declaratory application, in
both applications, as ABSA while the respondents
in the first
application, though applicants in the suspension application, simply
as respondents or as first, second and third
respondents
respectively.
[3]
It is common cause between the parties that on 8 March 2012 ABSA
obtained default judgment against the Respondents for payment
of the
sum of R94 819.85, interest thereon at the rate of 9% per annum,
capitalised monthly, from 2 June 2011 to date of final
payment and
costs on an attorney and client scale which costs shall be taxed. At
the time when default judgment was granted the
plaintiff did not
apply for an order declaring the immovable property executable.
[4]
Prior to obtaining the default judgment and the launch of the
declaratory application against the respondents and on 8 July
2011,
ABSA through its attorneys directed a letter of demand to the second
respondent wherein payment of the some of R94 819.85
was demanded.
Paragraph 3 of this letter reads as follows: “
if
you are unable to effect payment of aforesaid amounts you are invited
to contact our offices or alternatively our client to make
acceptable
arrangements for the payment of the amount due to our client in
instalments or otherwise.”
It will appear that the first respondent, encouraged by this overture
responded in a letter dated 10 August 2011 wherein he stated
in
paragraph 4 thereof that the first respondent propose to settle the
amount owing and payable to ABSA in reasonable monthly instalments
of
R4500.00 commencing on 7 September 2011 and thereafter on 7 of every
month. They gave as a reason for its inability to pay the
present
economic climate and its deteriorated financial position. According
to Respondents, they sincerely believed and were confident
that they
will turn around its financial fortunes in the not so distant future
but submitted that, in order to do so, will have
to restructure their
payment obligation to their creditors.
[5]
On receipt of the respondents offer, ABSA came with conditions for
the acceptance thereof, these conditions are contained in
a letter
the contents of which reads as follows:
“
We
record that we act on instructions received from ABSA Bank Ltd. We
have considered it prudent to inform you at this stage of
the
following general requirements set out by our client with regard to
the debt due by you to our client and to which you must
please
adhere;
1.
If you are unable to effect immediate payment of the debt and want to
submit any proposal to our client that will entail a delay
in making
payment you will be required to sign an unconditional consent to
judgment. Signing such unconditional consent to judgment
will
however, not be an indication of our client’s willingness to
accept any offer made to our client now or in the future,
our clients
rights are fully reserved and particular its right to recover the
amount due to it by whatever means the law provide.
2.
No request for delayed payment of your obligations, whether as
principle debtor or surety will be considered before we have been
provided with the information stipulated below in respect of you
personally where applicable also in respect of the principle debtor,
namely;
2.1.
Full and comprehensive financial statements were available;
2.2.
All information pertaining to all immovable properties, the amounts
outstanding in respect of mortgages thereon and the value
you place
on each such property. The value that you place on such property
substantiated by an evaluation if available;
2.3.
An comprehensive list of your assets and liabilities substantiated
with documentary proof insofar as is possible;
2.4.
Copies of all vehicle registration documents;
2.5.
Copies of your television licence and details of your DSTV
subscription including subscription number;
2.6.
Copies of instalment agreements;
2.7.
Copies of all loan agreements
2.8.
Full and precise details of ail short-term insurance policies
including the replacement value place on movable assets;
2.9.
Full and precise details
of
all
life insurance policies with
documentation indicating the loan value in respect thereof;
2.10.
Full and precise details of all income derived from whatever source
properly vouched by documentation;
2.11.
Full and precise details of all expenditure properly vouched by
documentation.
3.
Full and precise details as to further securities that you are
prepared
to
offer to our client in respect of the debt, inclusive of;
3.1.
immovable property free of any present mortgage;
3.2.
session of claims not already ceded,
3.3.
insurance policies with value capable of being ceded;
3.4.
movable property identified by serial number, capable of
hypothecation by notarial bond;
4.
If it is your contention that your estate has been sequestrated or
placed under administration or that you labour under a like
legal
disability you are to provide us with full details as to the trustee
of your estate or other curator that is in control
thereof If it is
claimed that the debt is subject to a debt review you are to provide
us with a debt councillors details as well
as a copy of the Court
order pertaining to this particular debt.
5.
on receipt of an adequate response to this letter we shall consider
your submissions in collaboration with our client. We however
;
stress that the action
embarked upon will not be stayed as a result of any response hereto
or any offer that may be made.
6.
you are liable for any legal costs incurred herein. To keep costs to
a minimum we suggest that you full comply with this letter.
Incomplete or insufficient information will negatively impact on any
submission received.
We
shall only revert to you once we have received our client
instructions. ”
[6]
Notwithstanding these onerous requirements the respondents
instructed their attorney to put further settlement proposals to
ABSA. in a letter dated 21 September
respondents’
iegal representative stated that they confirm their instructions to
facilitate
negotiations in respect of the repayment of the debt owing to ABSA.
In the same letter they confirmed that the respondents’
instructions were to have no objection to signing an unconditional
consent to judgment and to pay the necessary legal fees incurred.
The respondent’s attorneys further stated that respondents,
however, believed that delving into the financials of the close
corporation (first respondent) and that of the sureties (second and
third respondents) will prove to be a worthless exercise
and a waste
of time. This according to the respondents, was because the
respondents had suffered grave financial difficulties
over the past
3 years and as such found themselves in a position where they were
unable to meet their financial obligations timeously
or in full. The
offer to pay the sum of R4500.00 per month was to commence on 7
October 2011 and thereafter on or before the
7th day of each
subsequent month was again repeated.
[7]
The respondents also alleged that the problems of the first
respondent with its various clients has been sorted at and that
the
cash flow of the first respondent has stabilized and as a result it
had, since March 2012, been paying a sum of R4500.00
to the
applicant. Respondents also alleged that during this period they
were not aware that ABSA went ahead and obtained default
judgment
against them. They submitted that they only became aware of this
development on 11 April 2012 when the Sheriff of the
Court came to
the first respondent’s offices. Second respondent further
submitted that he immediately thereafter made a
payment on 12 of
April 2012 and sent an email on 12 April 2012 to ABSA’s legal
representatives to enquire as to what was
the current state of
affairs. On 13 April 2012 he received an answer through email
wherein he was told that the monthly payments
were accepted on
condition that he signs a consent to default judgment and that this
was never done. Notwithstanding these developments
the respondents
continued to pay the sum of R4500.00 per month.
[8]
During October 2012 second respondent allege that, to his surprise,
he received the declaratory application. As a result he
sent an
emaii to ABSA’s legal representative in which he indicated
that he did in fact sign the consent to default judgment
and which
was delivered at the legal representative’s office on 15 March
2012. The respondents also requested ABSA to withdraw
the
declaratory application or postpone it
sine
die
pending the fulfilment
of their obligation to pay. In the same email ABSA’s wasted
costs in respect of the application
were tendered.
[9]
In response thereto ABSA’s legal representatives replied via
email on 30 October 2012 in which they stated that they
will proceed
with the application and were not interested in debating the matter
any further. This did not dissuade the respondents
who, on 2
November 2012, made further settlement proposals in terms of which
they undertook to pay R20 000.00 on or before 17
November 2012 and
to continue with the payments of R4500.00 per month. ABSA was
further requested to indicate whether this offer
was acceptable and
if so to postpone the declaratory application in order to enable a
monitoring of the payment progress. On
17 November
the
respondent paid a further sum of R10 000.00.
[10]
In the action proceedings and in the declaratory application itself,
the attention of the respondents was drawn to section
26 (1) and (3)
of the Constitution of the Republic of South Africa which accords
everyone the right of access to adequate housing.
ABSA also alleged
that if it was the contention of the second and third respondents
that the claim declaring their property executable
and that the sale
of the property in execution will infringe that right it will be
incumbent on them to place before Court information
supporting that
contention. Furthermore ABSA made reference to the provisions of
rule 46 (1) (a) of the rules of this Court which
provides for the
requirements which are to be met if an immovable property which is a
primary
residence
was to be declared executable.
[11]
Pursuant to the default judgment obtained against the respondents,
ABSA proceeded with a warrant of execution against their
property
and on 19 April 2012, the Sheriff served on the respondents the said
warrant and attached goods which, according to
ABSA, were not enough
assets to satisfy the debt due and owing. Consequently it sought an
order declaring the property specially
executable.
[12]
ABSA submitted that it would be proper for this court to declare the
second and third respondents’ immovable property
executable
and for the following reasons:
1.
Second and third respondents consented to the property being
declared executable in paragraph 8 of the mortgage bond.
2.
Respondents received the summons at their chosen
domicilium
addresses but did not respond thereto and did not place any relevant
facts before this court as to why the property should not
be
declared executable or why a right to housing will be infringed by
such an order.
3.
The amount owing by the respondents is substantial and there appears
to be no other manner in which it can be collected from
the
respondents and attached a certificate which indicated that the
outstanding amount on 7 June 2011, to which interest and
costs were
still to be added was R94 819.85. It appears that the respondents
main ground for opposing the application is that
ABSA obtained a
judgment which made provision for the costs to be taxed by the
taxing master of this court and to date that had
not been done.
[13]
ABSA conceded that the property sought to be declared executable is
the primary residence of the second and third respondents.
ABSA
however, pointed out their registered a mortgage bond over the
property of second and third respondents as security, in
favour of
ABSA for the due fulfilment of their obligations as sureties for the
first respondent.
[14]
The respondents’ main ground for opposing the application
appears to be that there has been payment which amounted
to R45
000.00 which came subsequent to the default judgment being obtained
and which had substantially reduced the amount owed
to ABSA. This
payment has since increased to R65 000.00, as on 19 January
2013.
[15]
The second and third respondents also submitted that they have been
living in the property for the past sixteen years with
their three
minor children and that this is their primary place of residence.
For this and the other reason the respondents submit
that ABSA was
not entitled to an order declaring the property executable.
[16]
The chronology of events as set out by the respondent was vehemently
disputed by ABSA. It set out its own version in its
reply which also
served as an opposing affidavit to the suspension application.
[17]
The respondents submitted that ABSA proceeded with the application
to have the property declared executable for a relatively
small
amount. They also submitted that ABSA instituted the proceedings in
the High Court which could have been brought in the
Magistrates
Court. Furthermore, because the applicant adopted this route, the
respondents allege that they were deprived of their
right in terms
of section 73 of the Magistrates Court Act 32 of 1944 to apply for
payment of the judgment debt in instalments.
[18]
Lastly, the respondent indicated that there are other reasonable
methods in terms of which ABSA’s judgment debt can
be
collected other than to declare their primary place of residence
executable. The respondents also allege that ABSA was not
playing
open cards with the Court in that they failed to supply information
that the judgment debt has since been reduce by the
payments
referred to supra. ABSA is also accused of failing to place
information before the court relating to the settlement
proposals
that were made by the respondents as well as the negotiations that
preceded the application,
[19]
The questions for determination are whether ABSA was, in the
circumstances, entitled to apply for an order declaring the
respondents’ property specially executable and, if not,
whether it can proceed to sell the movables attached in execution
even where the respondents have been paying the judgment debt in
instalments.
[20]
Mr Cooper, argued that ABSA was entitled to an order declaring the
respondents’ property executable. In support of
this argument
he referred to the decision of my brother Binns-Ward J in
ABSA
Bank Ltd
v
Petersen
(934/2011) [2012] ZA WCHC 18 wherein he stated that a right to
housing was not an absolute right: “
and
it is right to adequate housing, not to housing that a mortgagor is
unable to afford'.
He also
referred to the decisions in
Gundwana
v Steko Development
2011 (3)
SA 608
(CC) (that it must be accepted that execution in itself is
not an odious thing);
Mkize
v Lemvoti Municipality and Others
2012 (1) SA 1
(SCA) (that the order made in Japhta is aimed at
preventing the infringement of the right to adequate housing hence
the requirement
for judicial oversight in all cases of execution
against immovable property),
Japhta
v Schoeman and Others, Van Rooyen v Schotz and Others
[2004] ZACC 25
;
2005 (2) SA 140
CC (that it would be unjustifiable for a person to
lose his or her access to housing for a trifling amount which is
owed); Standard
Bank
South Africa Ltd v Sounderson and Others
2006 (2) SA 264
(SCA) (cases where execution against property could
conflict with section 26 (1) of the Constitution are likely to be
rare and
that it is unimaginable that a mortgagee’s right to
claim the debt from the property will be denied altogether) and
Nedbank
Ltd v Jessa
2012 (6) SA 166
(WCC) (notification to defendants of the right in terms of section
26 (1) to place information before Court to demonstrate that
there
would be a violation of the right of access to adequate housing if
execution against immovable property were to be allowed).
[21]
The crux of Mr Cooper’s submission is that execution against a
judgment debtor’s property in itself is not odious.
It is a
part and parcel of normal economic life. Only when an execution
would amount to an infringement of the right to adequate
housing
would the Court refuse the judgment creditor to execute against the
immovable property of the judgment debtor. Otherwise
the defendant
mortgagor’s right to ownership of his or her home must, in
general, yield to the mortgagee’s right
to realise its
security. That in the circumstances of this case second and third
respondents’ rights to access to adequate
housing will not be
infringed by declaring the property executable.
[22]
I agree with Mr Cooper’s submissions in this regard. I need
however to point out
what
was said by Binns-Ward J in the
Petersen
matter
supra
at
paragraph 33, namely that
“
it
is only when the exercise of the mortgagee's right [to realise the
security] is in
bad faith
that
effect should not
be
given
to
the right An
indication
of bad faith would
be
provided if the mortgagee
seeks to proceed with execution against the defendant's
home
when it is evident that the judgment debt can probably satisfied in
a reasonable manner, without involving the drastic consequences
of
the loss of the mortgaged
home
”
[23]
Mr Smit on behalf of the respondent argued that ABSA’s
insistence on executing against the immovable property was in
bad
faith. Counsel’s argument was that the respondents have
significantly reduced the debt and all indication were that
they
will continue to meet the monthly instalments of R4500.00. In the
circumstances an insistence on execution against the immovable
property of the respondents is nothing but an indication of bad
faith. According to Mr Smit ABSA refused reasonable proposals
for
the settlement of the debt which were made even before summons were
issued. It persisted with this attitude by issuing summons
in this
Court in the circumstances where the claim falls under the
jurisdiction of the Magistrates Court, and further proceeded
with
default judgment against the respondents and refusing reasonable
requests for postponement of the declaratory application.
[24]
While I do not endorse Mr Smit’s submissions regarding ABSA’s
intention I am, nevertheless satisfied that this
is a case where
execution against the respondents’ property should not be
ordered. There are several factors in this case
which militates
against such an order. In the first place I am of the view that the
respondents have shown an ability to pay
the judgment debt in
reasonable instalments. It is correct as Mr Cooper pointed out that
we do not have the respondents’
financial statement which
would have enabled the court to determine whether the respondents
have made a full disclosure of their
financial position. I agree
that this would have been an ideal way of determining the
respondents5 financial position. I am satisfied,
however, that
factors such as the regularity with which the payments were made
point to an ability to pay. The alternative will
be to execute
against their movables if they should fail to pay.
[25]
Secondly to order execution against the respondent’s property
will be disproportionate to the outstanding amount of
the debt. The
severe impact that the execution process will have on the second and
third respondents, together with their dependants,
of losing their
primary residence, far outweighs any prejudice which ABSA may suffer
if an order of execution against the property
is not granted.
[26]
Lastly there was a proposal that the declaratory application be
postponed
sine
die
for ABSA to monitor
payment of the balance outstanding. This proposal was rejected
without considering its merits. There were
accusations and
counteraccusations made in argument regarding the
bona
fides
of each side regarding
the postponement of this application. My view is that ABSA
unreasonably refused to seriously consider
respondents’
proposals. Mr Cooper argued that the Court must guard against
crafting an agreement for the parties which
an order for payment of
the debt in instalments will have. I do not purpose going done this
route. I have no doubt that ABSA
would be anxious to collect what is
due and payable to it in the shortest possible period. The
circumstances of this case, in
particular the progress the
respondents have already made in liquidating the debt, do not
justify an order declaring their property
executable.
[27]
After obtaining default judgment against the respondents ABSA
proceeded with a writ of execution against their movables.
On 11
April 2012 the Sheriff of this Court, authorized and directed by the
said writ, attached respondents’ movables,
[28]
The respondents are now applying in terms of Rule 45A of the rules
of this Court, on an urgent basis, for a stay of the sale
of these
movables in execution pending compliance with their undertaking to
pay the judgment debt in instalments of R4500.00
per month, and, I
add, until the capital interest and legal costs are paid in full.
[29]
The respondents advanced a number of reasons for the application. In
the first place the respondents complain about ABSA’s
conduct.
They allege that in paragraph 12.3 of the founding affidavit in the
declaratory application it alleged that the amount
owing by the
respondents was substantial and there appeared to be no manner in
which it can be collected from the respondents
as a reason for
seeking an order declaring their property specially executable, but
failed to give a full history of the matter.
In particular they
complain that ABSA failed to disclose the fact that respondents
engaged it in settlement negotiations and
that the judgment debt has
been partly paid.
[30]
Secondly they allege that on 21 January 2013 ABSA’s legal
representatives gave instructions to the Sheriff of this
Court to
remove and sell in execution the movables which were attached
despite the fact that the declaratory application was
pending. As a
result of this development respondents sought an undertaking that
ABSA will not proceed with the sale in execution
which ABSA refused
to give.
[31]
As a result of these development the respondents were apprehensive
that the sale in execution was eminent.
[32]
The respondents submit that it will be in the interest of justice to
stay the sale in execution of their movables. The respondents
submit
that they have paid the sum of R65 000.00 to date, in reduction of
their indebtedness to ABSA and that the sale of these
movables,
which are necessary for the first respondent to generate income,
will deprive them of an important source of income.
The respondents
argued that should this happen, they will not be in a position to
meet their contractual obligations which will
spell the end of the
first respondent. This they allege was for an outstanding balance of
a mere R40 000.00.
[33]
As a further reason justifying the grant of the relief prayed for
the respondents submitted that ABSA brought the action,
which was
within the monetary jurisdiction of the Magistrate Court in this
Court and consequently deprived them of the right
to apply in terms
of section 73 of the Magistrates’ Court Act 32 of 1944 to pay
it in reasonable periodical instalments.
[34]
The respondents further allege that ABSA is an exceptionally strong
and big financial institution with unlimited financial
resources and
that the payment of the judgment debt in instalments will not affect
its financial status.
[35]
Responding to this allegation ABSA pointed out that this was not a
mortgage loan agreement secured by a mortgage bond over
immovable
property but a commercial loan on an overdraft account which it
granted to the first respondent subject to second and
third
respondent’s unbounded property being pledged and bonded to
ABSA for the payment of the commercial debt. This accordingly,
ABSA
submitted, was not a relatively small home loan as the respondents
seemed to imply.
[36]
ABSA also disputed the respondents’ allegation that they were
making regular payments. According to ABSA the “
regular
payments were made after the respondents became aware that the
Sheriff had a warrant to execute against their movables. The history
that preceded the granting of the default judgment, as set out by
the respondents, was also disputed, i deem it unnecessary to
set out
in details ABSA’s version of the events save to point out that
these paints a picture of the respondents having
negotiated in bad
faith for example, the statement in the letter of 21 September 2011
by respondents attorneys that “
delving
into the financials of the CC and that of the sureties will prove to
be a worthless exercise and a waste of time”
was
intended to create the impression that the respondents had no
movable assets. This allegation was refuted by the return of
service
which showed that the Sheriff attached assets valued to the sum of
R60 000.00. Had these facts been known, according
to ABSA, would
have resulted in any offer for payment of a minimal monthly
instalment being refused.
[37]
Second respondent’s version regarding the consent to judgment
was also disputed. In this respect it was pointed out
that he was
still offering to sign and sent the consent to judgment on 16 April
2012, which was in contrast to his assertion
that he had signed and
hand delivered the consent to judgment on 15 March 2012.
[38]
The offer to increase the monthly instalments in 2012 was also
characterised as a misrepresentation. The dispute which arose
regarding untaxed legal costs which allegedly were added to his
account also enjoyed attention in the answering affidavit. I
shall
however, not deal any further with it as the respondents’ did
not persist with it.
[39]
It was also alleged that the value of the respondents’
property was far in excess of the requirements of adequate housing
which they no longer afforded.
[40]
ABSA also pointed out that it was the respondents who, in opposing
the declaratory application, alleged that they had sufficient
movables against which execution of the judgment debt can be levied.
They could therefore not oppose the sale in execution of
the same
assets which they said were available for execution to be levied
against them.
[41]
I find no merit in the argument by the respondents that the sale in
execution of their movables would result in the total
collapse of
their means of generating income. The assets attached are not
essentia! to the nature of business conducted by the
first
respondent. Secondly it was they who proposed execution against
their movables when opposing the declaratory application.
I am
mindful that the original debt has been drastically reduced but find
no tangible reason to delay satisfaction of the judgment
in
immediately given that the respondents have executable movable
assets.
[42]
The general principles which a Court may take into consideration
when adjudicating an application in terms of rule 45A, set
out by
Waglay J, in Go/s
t/a
Shakespeare’s
Pub
v Van Zyl and Others
2011
(1) SA 148
(CC) at para [37], do not apply in this matter. It would
not be an injustice to execute against the movables of the
respondents
to satisfy the judgment debt or the outstanding balance
thereof.
[43]
Regarding costs each party has been partly successful. In the
circumstances I deem it fair and just that each party pay
his/her/its own costs occasioned by the two applications.
[44]
The order I make therefore is the following:
44.1.
The application to declare the second and third respondent’s
immovable property being erf no. 5274 Eerste River, situated
at 32
Ariene Street, Eerste Rivier and Erf 5275 situated at 34 Arlene
Street, Eerste River is hereby dismissed.
44.2.
This application in terms of rule 45A of the rules of this Court to
postpone execution against the movable properties attached
in
execution pursuant a default judgment obtained by ABSA on 8 March
2012 is hereby dismissed.
44.3.
Each party is to pay its his/or her own costs occasioned by the two
applications.
M J DOLAMO
HIGH
COURT JUDGE