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SAFLII Note: Certain personal/private details of parties or witnesses have been redacted from this document in compliance with the law and SAFLII Policy

                    NOT REPORTABLE

IN THE HIGH COURT OF SOUTH AFRICA

EAST LONDON CIRCUIT LOCAL DIVISION

CASE NO: EL 894/15

ECD 1794/15

In the matter between

CLAUDINE JONAS                                                                            First Applicant

RODWELL DARION JONAS                                                       Second Applicant

and

NEDBANK LIMITED                                                                     First Respondent

SHERIFF OF THE HIGH COURT

EAST LONDON                                                                           Second Respondent

JUDGMENT

HARTLE J

1. On the eve of a sale in execution of their family home (“the property”) the applicants urgently sought a rule nisi against the respondents on very short notice to them , returnable on 2 February 2017, in the following terms:

“1.       Directing that the matter be heard as one of urgency and to dispense with the forms and services provided for the Uniform Rules of Court and allowing the matter to proceed as an urgent application as is provided for in Rule 6(12) of the Uniform Rules of Court as per the directions of the Honourable Court;

2.       That a rule nisi be issued calling upon the respondents to show cause, if any, on the 2^nd day of February 2017 at 10.00 or so soon thereafter as the matter may be heard, why an order in the following terms should not be granted:

a.       Interdicting and restraining the sheriff of the High Court from disposing of the property identified as “[...] S. A., Beacon Bay, East London” in terms of the writ of execution issued under case number EL 894/2015.

b.      That the writ of attachment or order issued in respect of the immovable property identified in paragraph (a) above, by the High Court in case number El 894/2015 be rescinded and or set aside.

3.       An order interdicting and restraining the 1^st and 2^nd respondents from disposing of the immovable property identified as “[...] S. A., Beacon Bay, East London” scheduled to take place on the 20^th of January 2017 at 10.00;[1]

4.       That the orders granted in terms of prayers 2(a) and 3 operate as an interim interdict pending the confirmation or setting aside of the rule nisi;

5.       That the late filing of this application and non-compliance with the Court rules be condoned by the Court.

6.       Costs are reserved.”

2. The first respondent, against whom a costs order was also sought evidently on the basis that it was not justified in springing the surprise sale in execution on them, opposes the application.  The second respondent has filed a notice to abide.

3. The applicants are married in community of property to one other.  They own the property which was mortgaged in favour of the first respondent for several loans advanced to them which were ultimately consolidated in a final “Distressed Restructure Agreement”.  They fell into arrears with their monthly instalments under the bond account, which culminated in default judgment being granted against them on 18 August 2015 for payment of the accelerated bond debt of R1 558 719.00, together with interest and costs.  The property hypothecated for their debt was also declared executable.

4. It is evident from the action file that, at the point default judgment was entered against the applicants, their instalments were then in arrears in an amount of R75 430.70.  By the time of the hearing of this application on the return date, the arrears had escalated to an amount of R241 446.70 according to an updated certificate of balance furnished by the first respondent.   

5. The first respondent issued out a writ of execution pursuant to the judgment and scheduled a sale in execution for 20 January 2017 at 10h00.  Despite their professed surprise about the sale, formal notice thereof was served on the applicants on 23 November 2016.  This is substantiated by the sheriff’s return which reflects that service was accepted at the property on their behalf by their son, Josh Jonas.

6. The notice was also advertised in the Daily Dispatch and the Government Gazette.  Copies of these advertisements were also furnished in support of the first respondent’s claim that the applicants were or should have been aware in appropriate time of the scheduled sale.  The first respondent also avers that the applicants were personally informed by the foreclosure secretary in the employ of their attorneys of record, Ms. Akhona Mazwi, on 18 November 2016 already, that a sale in execution was evitable and would be scheduled, this despite payments made by them in reduction of the arrears after the default judgment was granted against them.  (The last payment made by them up until that point had been on 18 April 2016, in the sum of R15 000.00.)

7. It is this sale which the applicants managed to avert on 19 January 2017 on an urgent basis after giving the first respondent only three hours’ notice of the application.

8. The grounds upon which they persuaded the court to cancel the sale, are summarized below:

8.1.    The first applicant had been “alerted” to the sale when she was called by “Akhona”, in the employ of the first respondent’s attorneys, to advise her thereof.  She says that this was in the first week of January 2017.

8.2     “Akhona” informed her that she and the second applicant were in arrears in the sum of R220 000.00, but that the first respondent was prepared to cancel the sale if they paid in a sum of R130 000.00.

8.3     She negotiated with the bank’s attorneys (she does not specify with whom, or when or provide any records thereof), pursuant to which the minimum payment to avert the sale was lowered to R50 000.00.

8.4     She claims that “in the intervening time” (It is not clear when this was) she advertised her Mitsubishi Outlander motor vehicle for sale for 92 000.00, the proceeds from which she had hoped to make up the required R50 000.00.  (The anticipated advertisement purportedly attached as annexure “D” to her founding affidavit was not furnished to the court.)

8.5     She also sold Sanlam shares due to her to the value of R45 000.00 for which she was expecting to be paid, but realistically only one day after the sale in execution.

9. The urgency was premised on the fact that the sale would proceed the next day whereas the applicants were able, in terms of the “negotiated agreement” with the first respondent, to come up with the required payment to cancel the sale, albeit only a day or so later.  They, and their children, who needed the home, would suffer irreparable harm and prejudice should the sale proceed which was in addition to the prejudice and embarrassment already occasioned to them by the attachment of their home.

10. The prima facie right claimed to have been infringed was their “right to housing and the right to be given an opportunity to exercise that right by being afforded a few days in which to perform in terms of the negotiated agreement”.  Indeed, the first applicant averred that the bank was “not entitled to dispose of (their) property in the face of the negotiated agreement, and the payment (she had) made in respect of the bond in December 2016”.  It is common cause that the applicants had made a further payment of R15 000.00 on 29 December 2015 after the sale in execution was scheduled, which was only receipted by the first respondent on 3 January 2017.

11. The first applicant further alleged that the untimely sale would also do irreparable harm to her current and future business dealings and opportunities in that those would likely be negatively affected by the sale.  In this regard, the first applicant attached a “letter of intent” from Bunono Engineers Africa dated 30 September 2016 in which they indicate that they are willing to partner with Ikamva Fleet Management (Pty) Ltd as a main stream supplier, and that the potential value of the contract for steelworks is R750 000.00.  The relevance, or opportunity for her in her personal capacity in this regard, was not clarified although I assume from the context that the income derived from these potential dealings would constitute a financial resource from which she and the second respondent could afford to pay the debt due to the first respondent.

12. The first applicant purported in her founding affidavit to persuade the court that she has a “proper defence” to the first respondent’s “claim” or “action” entitling her and the second applicant to an order rescinding or setting aside the writ.    On the one hand, she claimed that it was because she has made a genuine attempt to pay the bank (by the recent payment of R15 000.00 and a few other payments made since the judgment was granted) and would continue to do so (upon receipt of the anticipated proceeds) and, on the other hand, on the strength of the “new agreement” with the first respondent that if she paid the agreed sum the disposal of the property would be cancelled.  Even assuming a new agreement (which is denied by the first respondent), it is not clear on what basis the applicants would have been entitled to hold the first respondent to such cancellation because, on her own version, they had not strictly complied with the terms of the purported new agreement.

13. This is the backdrop against which the applicants secured the rule nisi in the format indicated above.

14. Although framed as interim relief, the prayer which put paid to the sale in execution scheduled to take place the following morning was in effect final relief in form. The objective the first respondent patently set about to achieve was to forestall that sale.  No purpose is served in confirming such a rule after the fact, because the sale has come and gone.  The question which I need to determine however, with the benefit now of the first respondent having filed an affidavit in opposition to the relief after the rule nisi was granted, is whether the applicants properly made out a case on the papers for the cancellation of the sale in execution. 

15. In opposing the application, the first respondent, in short, firmly denied that any negotiated agreement was concluded between the parties or that it had waived its rights to proceed with the sale in execution.  The applicants claim to have reached this agreement with the attorneys representing the first respondent, but they do not state who they spoke to, or when, and have provided no record of any such discussions.  Based on the accepted Plascon-Evans Rule[2] in motion proceedings, the first respondent’s denial of any “negotiated agreement” stands.  Mr. Tarr, who appeared on behalf of the applicants, sought to suggest in argument that in the intervening period, between the granting of the default judgment and the issue of the present application the couple signed a “Nedbank – Assisted Sales” agreement, dated 25 May 2016, which was not available at the time because of the “extreme urgency” of the matter, but it is trite that heads of argument cannot be regarded as evidence by a party.[3]  In any event it is not clear if it is that written agreement, or a later one (which they criticize for not being reduced to writing), which forms the premise for the proposed vindication of their rights.  The applicants incidentally failed to file a replying affidavit, neither was leave sought to introduce the signed agreement if it has any bearing on the issues at all.

16. It is in any event improbable, in the light of the applicants’ account history and the extent of the arrears owed by them, that the attorneys would compromise the first respondent’s position by negotiating the agreement which the applicants contend for when it has a judgment for the full amount outstanding on the bond and is under no obligation to accept what appears to be a very non-committal proposal to settle just a small portion of the arrears. 

17. Absent a finding of any agreement constituting a waiver or a novation or a change of terms bearing on the first respondent’s entitlement to proceed with the sale in execution, there appears to me therefore to have been no infringement of the applicants’ rights which they sought to assert warranting a cancellation of the sale.

18. As for the applicants’ submission that payments were being made, it is trite that after judgment an execution creditor is entitled to immediate and unconditional payment of the full judgment debt and costs.  An incomplete payment or partial tender of performance will not put a creditor refusing such performance in mora creditoris, or provide a legal basis to set aside the writ of execution.[4]

19. Apart from not challenging the form of the writ, the applicants also do not and have not purported to seek a rescission of the judgment itself which is the foundation upon which the writ of execution was issued. For as long as that judgment and the declarator of executability stand, a causa exists which justifies the issue of the writ.  The applicants have not in my view established any factual basis for that writ to be rescinded or set aside.

20. It remains to determine whether the court can or should have exercise(d) a discretion to grant the applicant a stay of execution for their convenience essentially to collect the monies that are overdue on the bond, in other words, on residual equitable grounds.   

21. Davis J was vexed with the question in Firm Mortgage Solutions v Absa Bank[5] whether a stay of a warrant of execution could issue where the applicant in that matter had made certain proposals to settle the judgment debt at some time in the future and hoped to avoid a forced sale which would for obvious reasons be to his detriment. He observed that the answer whether he could come to the assistance of that applicant under the relevant circumstances was to be found in rule 45A of the Uniform Rules of Court.

22. In this regard, the basic principles applicable in terms of this rule for the grant of a stay of execution, as set out in Gois t/a Shakespeare’s Pub v Van Zyl and Others,[6] are as follows:

“(a)       A court will grant a stay of execution where real and substantial justice requires it or where injustice would otherwise result.

(b)       The court will be guided by considering the factors usually applicable to interim interdicts, except where the applicant is not asserting a right, but attempting to avert injustice.

(c)       The court must be satisfied that:

(i)       the applicant has a well-grounded apprehension that the execution is taking place at the instance of the respondent(s); and

(ii)      irreparable harm will result if execution is not stayed and the applicant ultimately succeeds in establishing a clear right.

(d)        Irreparable harm will invariably result if there is a possibility that the underlying causa may ultimately be removed, ie where the underlying causa is the subject-matter of an ongoing dispute between the parties.

(e)        The court is not concerned with the merits of the underlying dispute — the sole enquiry is simply whether the causa is in dispute.”

23. Concerning paragraph (d) above Mr. Tarr sought to persuade me based on the authority in De Waal and Another v Absa Bank and Others[7] that the underlying causa in this matter is the subject of an ongoing dispute or negotiation and that I ought for this reason to grant a stay of the writ of execution whilst this situation prevails.  Not only have I made short shrift of the applicants’ allegation that there was indeed a negotiated agreement in place between the parties which raised an expectation that the sale would not proceed based on them raising the R50 000.00, but the De Waal[8] judgment, as was correctly pointed out by Mr. Van Zyl who appeared for the first respondent, is entirely distinguishable on its facts.  In De Waal[9] the applicants approached the court for an interim interdict - a temporary stay of a transfer pursuant to a sale in execution, pending the institution and finalization of separate action proceedings aimed at setting aside the sale in execution.  The full outstanding sum of the judgment was also paid before the sale in execution took place.

24. The De Waal[10] factual scenario is a clear example of the underlying causa being the subject matter of an ongoing dispute, but in the present matter there is no matter aside that is being resolved or is under consideration that would be legally definitive of the applicants’ position.  They have moreover failed to establish any legal basis for the writ itself to be aside, and are not challenging its form. There is therefore simply no causa in dispute, neither any possibility that the underlying causa may ultimately be removed.

25. In the Gois judgment, the causa for the execution was a judgment which had been placed in dispute because a rescission application had been brought, which factor posited the exercise of a favourable discretion by a court.

26. In the Firm Mortgage Solutions judgment no such application for rescission was in the offing, as is the case in the present application, the reasons offered as justification for an exercise of the court’s discretion in its favour being limited to a request which is really of a strictly personal nature and where the complaint of injustice relates to the perceived iniquity that the first respondent can proceed with a sale in execution despite the fact that the applicants are doing their damnedest to make up the arrears, but need an extension  of time within which to do so

27. Mr. Tarr also referred the court to Whitfield v Van Aarde[11], a judgment of this division, as an example in which the court exercised its inherent discretion to order a stay of execution, but it is not hard to imagine that there were exceptional grounds in that matter once the court realized that the motive, by the sale in execution sought to be averted, was not to recover the costs (of litigation in a medical negligence action), but to thwart the further litigation thereby.  There will be those matters in which real and substantial justice would require the court’s intervention for the grant of a stay, but this is certainly not one of those cases.

28. Davis J in the Firm Mortgage Solution judgment answered the question whether the applicant’s pressing personal circumstances and the unfortunate result of a forced sale might justify the exercise of the court’s discretion to stay a warrant of execution by referring to an example which is co-incidentally concerned with a credit agreement under the provisions of the National Credit Act, No. 34 of 2005, as follows:

“[10] Can this, on its own, justify the exercise of a discretion within the scope of rule 45A? The difficulty confronting the court in this case may be illustrated by way of an example which is not directly applicable to this case but illuminates the problem.

[11] In the ordinary course of a dispute between a bank on the one hand and an owner of property on the other, where there is a mortgage on the property which secures the debt, the provisions of the National Credit Act 34 of 2005 (NCA) would be applicable. En passant, I accept that in this case these provisions are not applicable due to first applicant being a juristic person as defined in s 1 thereof read together with s 4(1)(a)(i) and because of the nature of the transaction. (See s 4(1)(b) together with s 9(4) of the Act.) In this hypothetical case the NCA is applicable. Does this mean that, where the procedures of the NCA are followed, for example, where a debtor is invited to utilise the debt review mechanisms of the NCA, but fails to so act, or, before judgment is granted, does not seek to persuade a court to exercise its discretion to invoke the safeguards of debt review and subsequently judgment is granted, the debtor may come and raise similar arguments? In other words, after the judgment has been granted, but before the sale in execution of the property, a court can again intervene by virtue of recourse to rule 45A.

[12] If the answer is a positive one, then would a court have to consider the very same arguments on two separate and discrete occasions? Could it possibly be that rule 45A envisaged the exercise of an equitable jurisdiction unhinged from any legal causa, but simply predicated on the equities of a case?

[13] If this were the case, almost every default judgment, which provides for a sale in execution of a property, at some point is likely to require a second hearing, pursuant to stay in terms of rule 45A. If this were what was intended, rule 45A should so provide expressly or by clear, necessary implication. In my view it does not so provide, for the very reason which is highlighted in my example.”

29. In this instance, the applicants were afforded the opportunity as provided for in the summons commencing action to place before the court any legally relevant circumstances that would have been essential for the court to take into consideration in the peremptory enquiry which would have been undertaken before declaring their property executable, in accordance with the proviso to rule 46(1)(ii) of the Uniform Rules of Court. I expect that the necessary judicial oversight was maintained and certainly no suggestion has been proffered by the applicants to the effect that execution against their home entails an infringement of their section 26 rights under the Constitution or constitutes an abuse. Whilst it is painfully evident that the applicants have been in financial distress and that they have tried hard to address the arrears, the expectation that the first respondent is entitled to execute its judgment against their home is not an injustice. The consequences which ensue because of a forced sale may well be perceived by them to be unfair in the context of their striving to maintain the debt (and in their opinion coming so close to meeting a target), but it does not constitute a real or substantial injustice that the inevitable sale could not be avoided. At least the remedy under section 129 (3) of the National Credit Act (read together with section 129 (4)) avails the applicants, up to the moment still when the proceeds from the sale in execution have been realized.[12] 

30. In the context of safeguarding against abuse, the court observed in Nedbank Ltd v Fraser & Another & four other cases[13] that it can hardly be said, in the ordinary course, that there is an abuse of process where a judgment creditor seeks to execute against a person’s home where the debt arose from providing the funds to purchase the property; the property was specifically hypothecated as security for such credit; and there has been a default on the debt.

31. Davis J’s approach that it would be inappropriate to exercise an equitable discretion unhinged from any legal causa, which is not envisaged by the provisions of Rule 45A in the absence of any real challenge to the underlying causa, commends itself to me.     

32. Mr. Van Zyl urged upon the court to issue a punitive costs award on the scale of attorney and own client costs (which is a step further than the usual order of costs as between attorney and client) on the grounds that the applicants are already in it for the attorney and clients which they “agreed” to pay.  It does not follow in my view however that the costs of this application are costs which have a natural connection with or arise out of or in connection with the bond on the basis envisaged in the underlying instrument(s) of debt.  It is only the wasted costs of the aborted sale in execution that in my view naturally fall into that category. 

33. I agree with Mr. Van Zyl that the application was opportunistic and entirely without merit.  I am also inclined of the view that the applicants gilded the lily to a considerable extent to work the court over in their favour, but still I am not inclined to grant costs on a punitive scale.  The failed application, which adds yet further costs to an already woeful financial position, must surely be perceived by the applicants as a penalty on its own.  The expectation is that these costs will be reckoned as “costs of enforcing the agreement” on the basis envisaged in section 129 (3) of the National Credit Act which will have to be paid together with the full arrear amount should they hope to reinstate the credit agreement still and redeem the property from the execution process.

34. I issue the following order:

1.     The rule nisi granted on 19 January 2017, and extended until today, is discharged;

2.     The applicants are to pay the costs of the failed application including the reserved costs of 19 January 2017 on the party and party scale; and

3.     The applicants are further directed to pay the wasted costs of the cancelled sale in execution, on the scale of attorney and client. 

_________________

B   HARTLE

JUDGE OF THE HIGH COURT

 

DATE OF HEARING   :        2 February 2017

DATE OF JUDGMENT:       11 May 2017

 

Appearances:

                                   

For the applicants:  Mr. Tarr instructed by Deon Stander Attorney, 40 Oakhill Road, Berea, East London, ref. Mr Stander.

 

For the first respondent: Mr. Van Zyl of Bate Chubb & Dickson Inc., Suite 3, Norvia House, 34 Western Avenue, Vincent, East London, ref. Mr J Chambers.

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