REPUBLIC OF SOUTH AFRICA
IN THE HIGH COURT OF SOUTH AFRICA
(GAUTENG LOCAL DIVISION , JOHANNESBURG )
CASE NO : 20789/2019

In the matter between:

THE STANDARD BANK OF SOUTH AFRICA LIMITED                             Applicant

and

CHESTER STORMER BOAST                                                           Respondent

JUDGMENT

UYS AJ:

[1] In its notice of motion dated 12 June 2019, Applicant essentially seeks the following relief against Respondent :

[1.1] Payment of the amount of R4 939 376,45 ;

[1.2] Payment of interest on the above amount at 10.741% per annum calculated daily and compounded monthly in arrears from 30 April 2019 to date of payment, together with monthly insurance premiums of R2 634,64;

[1.3] Declaring Portion 305 (a portion of Portion 1) of the Farm Vlakfontein No. 30, Registration Division IR, the Province of Gauteng, Measuring 3,2105 hectares and held by Deed of Transfer T22559/2003 ("the property' ), executable;

[1.4] Authorising the Registrar of this court to issue a warrant of execution against the property; and

[1.5] Costs of the application on the attorney and own client scale.

[2] When argument commenced, Mr D'Oliveira (who appeared on behalf of the Applicant) handed up an updated certificate of balance to which Ms Joubert (who appeared on behalf of the Respondent) did not object and the handing up of which accords with an accepted practice in this division.

[3] Given the absence of any objection thereto (correctly so) by Respondent's counsel, the judgment now sought by Applicant reflects the amount, interest rate and the date from when interest is sought as specified in the certificate of balance dated 28 January 2020 so handed up.

[3.1] In accordance with the 28 January 2020 certificate of balance, Respondent's arrears as at 31 December 2019 was stated as R 1 087 784,55, with the indebtedness of Respondent as mortgagor at that date stated as R5 358 978,55 together with interest on such latter amount at a rate of 10.241% per annum from 31 December 2019 to date of payment, together with monthly insurance premiums of R2 804,66.

[3.2] In the certificate so handed up, the amount claimed is certified as representing the principal debt (stated to be as defined in Section 102 of Act 34 of 2005) that is owed by the mortgagor (Respondent) to Applicant and finance charges as permitted by Section 101(d) of the NCA and which is stated not to include any elements not falling within the aforesaid.

[4] The essential facts of this matter are in the most part uncomplicated and common cause.

[4.1] Respondent operated a  home  loan  facility  with  the Applicant which was increased on  16 July 2014 when Applicant and Respondent concluded a written home loan agreement ("the agreement") in terms of which Applicant loaned and advanced to the Respondent a further sum of R1 393 084,00 in addition to an amount of R3.2 million previously advanced to Respondent by Applicant under the said facility.

[4.2] The combined loan was repayable over a period of 240 months in terms of the agreement so concluded on or about 16 July 2014 (the stated period of repayment an aspect of some conflict between the parties to which further reference will be made below), with an initial monthly instalment of R42 811,97.

[4.3] The home loan was secured through three continuing covering mortgage bonds registered over the property, to wit:

[4.3.1] a first mortgage bond (814935/03) for the sum of R 1 000 000,00 and an additional sum of R250 000,00;

[4.3.2] a second mortgage bond (8067916/05) for the sum of R2 800 000,00 and an additional sum of R700 000,00; and

[4.3.3] a third mortgage bond (835194/14) for the sum of R800 000,00 and an additional sum of R200 000,00.

[4.4] Applicant complied with all its obligations under the agreement and any and all suspensive conditions were duly fulfilled.

[4.5] From August 2017 onwards, Respondent  breached  the agreement by failing to make timeous payment of his monthly obligations under the agreement, despite making sporadic payments in smaller amounts, with the full outstanding balance under and in terms of the agreement as at 29 May 2019 together with interest thereon (then calculated at a rate of 10,741% per annum) having amounted  to R4 939 376,45 and with arrears in respect of monthly premiums having totalled R629 962,06 at that time.

[4.6] It is common cause that on or about 15 April 2019, Applicant addressed a letter of demand to Respondent which constituted a notice in terms of Sections 129 and 130 of the NCA.

[4.7] Respondent in his answering affidavit stated that despite not having received such aforesaid letter by normal post, he in fact received same by e-mail. The content of the letter so addressed by Applicant to Respondent on or about 15 April 2019 in terms of Section 129(1) of the NCA  is  of  importance  pertaining  to  one  of  the  defences  raised  by Respondent, with the relevant portions thereof having stated that:

"2. You are  indebted to our client in the sum of R4 865 964, 13 together with interest thereon at the rate of 10.741% per annum, calculated daily and compounded monthly in arrears from 30 March 2019 to date of payment ("the indebtedness") arising from the home loan agreement conducted on account number 218380097 ("the agreement').

3. As at 10 April 2019 the arrears portion of the indebtedness in terms of the agreement amounted to  R573 263, 51  ("the Arrears' ).

4. You have breached the Agreement in that, inter alia:

4.1 You have failed to make payment of the amountls due in terms thereof as and when same fell due;

4.2 There is, in the opinion of our client, a material deterioration in your financial position.

5. Our client hereby  demands  that you pay  the Arrears  into our trust account within 10 (ten} business days from date of delivery hereof, the details whereof appear below, failing  which  the  full outstanding amount  in  respect  of  the  aforesaid  agreement. together with  the  interest  thereon  will become  due,  owing and p a y able and the agreement will be cancelled."
(The underlining and bold emphasis being my own)

[4.8] Respondent admits that the payments so demanded in the notice in terms of Section 129 of the NCA have not been made by him and he does not dispute that as a result, the full amount under the agreement became due, owing and payable. As for the alleged deterioration in his financial position, Respondent admits that he is experiencing cash flow problems seemingly relevant to a new investment which he had made, but stated that he does have a plan to turn that around, with him alleged to be in the process of selling a commercial property to alleviate his financial pressure.

[5] The necessary averments as required specifically in this division, but further also under Uniform Rule of Court 46A are addressed in Applicant's founding affidavit, with the property also alleged by Applicant to be "a luxury home" that "constitutes the Respondent's primary residence". The nature of the property is detailed in a valuation report that was attached to Applicant's affidavit.

[6] Respondent took issue with the fact that when the application was issued, no confirmatory affidavit by the valuer was included. A confirmatory affidavit by the valuer, Mr Peter Donald Havenga was subsequently filed, in which he confirmed having furnished the said valuation report and also confirmed the content of the founding affidavit where it related to or concerned him.

[7] In the valuation report of the property by Mr Havenga, he concluded that the market value of the property was R6 300 000,00, with the forced sale value thereof (defined by him in his report as being the value "where either the buyer or seller is under pressure to offload the property and could not be regarded willing to transact'') as R5 000 000,00. It is further common cause that the current municipal valuation of the property is R3 220 000,00.

[8] The defences raised by the Respondent were essentially all of a technical nature, being:

[8.1] a point in limine that the Applicant's deponent failed to show that such deponent was duly authorised to represent the Applicant in the proceedings and that such deponent was authorised to institute the proceedings on behalf of the Applicant ("the authority defence'');

[8.2] a second  point in  limine  (not stated  as such  in  Respondent's answering affidavit, but contained in Ms Joubert's heads of argument) that the confirmatory affidavit of the valuator of the property had been filed on 18 September 2019 after the index to the papers had been filed with same stated to thus have constituted a failure by Applicant to prove its case in its founding affidavit. This, so it was submitted, had the effect that the valuation could not to be taken into consideration and that the application must fail ("the absence of a sworn valuation report'};

[8.3] the extension by a further 240 month term of the pre-existing loan - agreement through conclusion of the subsequent agreement of- which Respondent alleges not to have been informed ("the contract period defence'};

[8.4] Applicant's non-entitlement and/or non-effective cancellation of the agreement ("the cancellation defence'}; and

[8.5] Respondent's willingness to pay the arrears and having alternative means to do so ("ability to effect payment defence').

[9] At the hearing, Respondent sought and was granted leave to hand up a supplementary affidavit, the essence of the content thereof being that:

[9.1] Respondent has attempted to "start making payments again" in respect of his "mortgage bond account" and notwithstanding the full outstanding amount not being paid, was making payment of any amounts available to him; and

[9.2] a new offer of purchase dated 31 October 2019 in respect of a commercial property stated to be his commercial property has been obtained. Upon perusal of the attachments to the supplementary affidavit, the property appears to be owned by Upmarket Trading CC, this assumption made by me based upon the contents of a letter by Attorneys Tuckers Incorporated addressed to what appears to be the possible potential purchaser, despite that not appearing from the agreement (as attached).

[10] From the content of Respondent's supplementary affidavit, it follows that during the period 4 December 2019 to 10 January 2020 a total amount of R15 000,00 has been paid by Respondent towards the loan, whilst debit order reversals (which appears to be in respect of debit orders relevant to the monthly payments on the loan in the amount of R61 472,85) occurred on 4 December 2019 and again on 4 January 2020. According to the annexures attached to such supplementary affidavit, monthly interest is raised in an amount of R47 715,80 on that account and the payments thus made were inadequate to even service the interest so levied.

[11] As for the contract of sale attached to Respondent's supplementary affidavit, the purchaser is described as the person having made the successful bid to buy, with full details of such purchaser stated to be set forth in Annexure "B", but with the agreement as attached to the supplementary affidavit not containing any Annexure "B". Ms Joubert conceded in argument that the identity of the purchaser, as is even also the case with the seller, does not appear from the agreement or at the very least from those portions of the agreement attached to the supplementary affidavit.

[12] It further follows from perusal of the supplementary affidavit that the guarantees to have been rendered within 21 days after acceptance by the seller of the agreement (as attached to Respondent's supplementary affidavit), had not been forthcoming and that the potential purchaser was granted an extension to deliver such payment guarantee up until 31 January 2020.

[13] As for Respondent's authority defence, it is unfortunate that this "defence" often still finds its way into a Respondent's answering papers and the statement by Flemming DJP (as he then was) in Eskom v Soweto City Council still rings true:

"I find the regularity of arguments about the authority of a deponent unnecessary and wasteful."

[14] It has long been accepted that where the authority of a party is questioned, such authority has to be challenged on the level of questioning whether the attorney was duly empowered and which is done by means of utilisation of the provisions contained under Rule 7(1) of the Uniform Rules of
Court.

[15] Where authority is challenged in an answering affidavit and which challenge in any event in my view requires more specificity than what Respondent has stated in his answering affidavit, it is also permissible to make out a case for such authority in·reply.

[16] Respondent has failed to utilise the provisions of Rule 7  and  in addition, I am satisfied that following from the content and annexure to Applicant's  replying affidavit, this defence is without  merit and this point in limine is accordingly dismissed.

[17] Respondent's second point in limine (the absence of a sworn valuation report defence) is similarly without merit and is dismissed.

[17.1] Not only was a confirmatory affidavit by the valuator filed prior to the hearing of the application, but in addition, the content of the report and the amounts stated therein is in fact common cause between the parties on the papers.

[17.2] The essential purpose of such valuation report is to assist the Court in deciding whether to set a reserve price and if so, what amount ought so be set as reserve price. This, given the undisputed content of the report, the Court is as a result able to do, essentially to the benefit of the Respondent himself. 

[18] In respect of Respondent's contract period defence,  Respondent admits that it was a term of the agreement that the loan would be for a period of 240 months during which time the Respondent would be obliged to repay the loan in initial monthly instalments of R42 811,97, but states that it was never explained to him nor would he have agreed that the term of the original loans advanced to him and for which he had already been paying for approximately 11 years and approximately 9 years respectively, would be extended for another 20 years, together with the additional interest for the extended period of the loan.

[18.1] This term of the agreement was agreed upon by the Respondent which is evidenced by the relevant page of the further advance agreement (Annexure "FA 1") containing clauses 5 and 6, as initialled by the Respondent.

[18.2] The stated duration of the agreement was specified and stated therein in no uncertain terms. As correctly argued by Mr D'Oliveira on behalf of Applicant, this, to the extent that Respondent wishes to rely upon it constituting a mistake, had been due to his own fault.

[18.3] No mention is also made of Respondent having raised this issue at any time prior to the launching of the current application.

[18.4] The raising of this issue in my view constitutes no true defence and is of no consequence as Respondent does not seek to or allege an entitlement to resile from the agreement as a result thereof. To the contrary, through its cancellation defence, Respondent essentially seeks the agreement to be kept alive and/or to be capable of reinstatement by operation of law upon payment of all arrears. 

[19] Respondent's  third  defence  is  thus  without  merit  and  cannot  be upheld.

[20] Respondent's fourth defence is the cancellation defence (as detailed in paragraph [8.4] above).

[20.1] Respondent firstly disputes the validity of the cancellation by Applicant in that it is argued that Applicant has not only failed to validly cancel the agreement, but secondly and in addition thereto, alleges that Applicant had no entitlement to cancel and/or to rely upon cancellation of the agreement.

[20.2] As already stated above, Applicant in its Section 129 (of the NCA) letter advised Respondent that should the payment of the arrears not be effected, Applicant would cancel the agreement.

[20.3]     In its founding affidavit  Applicant inter alia stated:

"The Applicant herewith gives the Respondent notice of cancellation of the agreement in terms of Section 123(2) of the NGA."

[20.4] The aforesaid statement contained in Applicant's founding affidavit constitutes a valid cancellation of the agreement. It is a well­ established principle at common law that notice of cancellation may be communicated in a pleading or an application. 

[20.5] Applicant's available remedies, in the event of default by the Respondent on effecting its monthly payments and same not being remedied when demanded (it being common cause that Respondent had so defaulted and had failed to remedy such default, with it further also being  common  cause  that  there  had  been  a  material  deterioration  in
)

 Respondent's financial position , included that the Applicant could at its election and without affecting any other rights which it may have in terms of the agreement or otherwise, recover payment from the Respondent of all amounts owing under the agreement, inclusive of legal costs and charges as well as the right to cancel the agreement.

[20.6] Respondent explicitly agreed that should he be in default of his repayment obligations under this agreement, he could "at any time before cancellation of the loan by us ..." pay all amounts overdue and certain further costs, upon which Applicant may then continue to make the loan available to the Respondent. 

[20.7] Respondent, through reliance upon Section 129(3) of the NCA read with the decision in Nkata v FirstRand Bank Limited sought to argue that Applicant did not have the authority to cancel the agreement.

[20.8] Section 129(3) of the NCA provides that:

"(3)  Subject to subsection  (4),  a consumer may at any  time before   the credit p rovider has cancelled the agreement, remedy a default in such credit agreement by paying to the credit provider all amounts  that are overdue, ..." (own underlining added)

[20.9] Section 129(4) of the NCA in turn provides that a credit provider may not reinstate or revive a credit agreement after certain eventualities, one of it being the termination thereof in accordance with Section 123 of the NCA.

[20.10] The aforesaid sections of the NCA are to be read with Section 123(1) and (2) of the NCA where a credit provider is authorised to terminate a credit agreement prior to the time provided for in the agreement, but only in accordance with that particular section, with sub­ section 123(2) of the NCA providing:

"If a consumer is in default under a credit agreement, the credit provider may take the steps set out in Part C of Chapter 6 to enforce and terminate that agreement." (own underlining added)

[20.11] Sections 129 and 130 of the NCA as referred to above are contained in Part C of Chapter 6 and thus provide the necessary guidelines.  This Applicant has complied with.

[20.12] It was held in Nkata v FirstRand Bank that:

"110. Reinstatement may occur only  before   the   credit   provider   has cancelled  the  agreement.  The question arises whether, when the bank invokes the acceleration clauses, it has, for that reason only, cancelled the agreement. This is a mixed question of fact and law. If the acceleration clause is resorted to while the contract subsists and the bank demands full payment, it is not the same thing as cancellation of the agreement for breach. This is so if we keep in mind that s 129(3)(a) applies to agreements in default. Here, the bank could only have lawfully terminated the credit agreements in terms of s 130 read with s 129. At a factual level, the bank did not comply with s 129. This meant that the credit agreements were not cancelled." (own underlining added)

[20.13] The facts in casu differ from those in Nkata in that in casu the Applicant did comply with Section 129 of the NCA and gave due, effective and proper notice of the amounts due in terms of that notification and advised that unless the default was remedied as stated therein, the full outstanding amount would become due, owing and payable and the agreement would be cancelled. The cancellation occurred only after the full outstanding amount became due, owing and payable in terms of the agreement following Respondent's failure to have remedied his default.

[20.14] During argument, Ms Joubert on behalf of the Respondent and after I had canvassed the question with Mr D'Oliveira, endeavoured to argue that the claim by Applicants ought to have been a claim for damages, mindful of cancellation of the agreement. This was indeed not a point raised by Respondent on its papers and can be dismissed on that basis alone. The point is in my view in any event without merit in that albeit not a claim for specific performance (mindful of the cancellation), it is still a distinct contractual remedy because Applicant's entitlement to claim the full outstanding amount accrued before cancellation. In  Nash  v Golden  Dumps (Pty) Limited  the court aptly explained the rationale behind this principle as follows:

"Where that happens, the other party to the contract may elect to accept the repudiation and rescind the contract. If he does so, the contract comes to an end upon communication of his acceptance of repudiation and rescission to the party who has repudiated (see Joubert Law of South Africa vol 5 para 226).  The consequence of this is that the rights and obligations of the parties in regard to the further performance of the contract come to an end and the only forms of relief available to the party aggrieved are, in appropriate cases, claims for restitution and for damages. Where, however, a right to performance under the contract has accrued to one party prior to rescission, this right is not affected by the rescission and   may be enforced despite rescission. This rule was enunciated by GREENBERG J (with SOLOMON J concurring) in Walker's Fruit Farms Ltd v Sumner 1930 TPD 394. In the Crest Enterprises case supra it was held (at 870G) that:

"... the rule in the Walker case supra is confined to cases where, prior to the rescission of a contract by one party's acceptance of the other's repudiation, there exists a right which is accrued, due, and enforceable as a cause of action independent of any executory part of the contract"."

[20.15] Where the right to claim the full amount outstanding accrued prior to cancellation, as in the current matter, the full amount outstanding is claimable under the agreement (notwithstanding cancellation) and such claim does then not constitute a damages claim, but remains a distinct contractual remedy.

[20.16] As for Section 129(3) of the NCA, it only entitles consumers to maintain, reinstate or revive the requisite agreement prior to cancellation thereof by the credit provider.

[20.17] From the above it follows that where effective cancellation has occurred, reinstatement of the loan agreement through payment of the arrears is no longer possible, even under the NCA. In absence of cancellation, the contractual right to claim acceleration has been rendered subsidiary to the debtor's fundamental right under Section 26 of the Constitution read with the relevant provision in the NCA.

[21] Even if I am wrong pertaining to Respondent's entitlement to have the loan agreement reinstated and/or revived upon payment of all of the arrears, Applicant's stance adopted of expressing a view that Respondent is not entitled to such reinstatement, does not constitute a defence to Respondent against the relief currently sought by Applicant.

[21.1] The reinstatement and/or revival of the agreement is at this juncture essentially of academic interest only in  light of Respondent's failure to have even to date of argument (29 January 2020) effected payment of all arrears to the Applicant.

[21.2] Any possible entitlement which Respondent might wish to claim to reinstatement which, for reasons aforesaid, I am not in agreement with as a result of the effective prior cancellation of the agreement, only becomes of any possible relevance, upon payment so having been effected.

[22] In the result, Respondent's fourth defence is without merit and cannot be upheld.

[23] Pertaining to the question of executability of the property and being in essence also what Respondent wishes to prevent through his fifth defence, what was stated in Gundwana v Steko Developments CC and Others remains appropriate:

"It must be accepted that execution in itself is not an odious thing. It is part and parcel of normal economic life. It is only when there is disproportionality between 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."

[24] Foreclosure of immovable property where same constitutes the primary residence of a consumer indeed may have an impact on the right to have access to adequate housing as provided for in Section 26(1) of the Constitution.

[25] It is for this very reason that Respondent had been given proper notice and ample opportunity to place sufficient information before court as to why he is of the view that his right to adequate housing will be unjustifiably infringed as well as any further relevant factors which he wished to bring to the court's attention.

[26] Respondent's contribution in this regard was limited to two allegations, the first being that the property is his primary residence where he resides with his wife who is unemployed as well as his two children aged 5 and 8 and the second being that "my housing rights as well as those of my wife and children will be affected".

[27] The above bald allegations simply do not suffice to make a case why Respondent's (and his wife and children's) constitutional right to adequate housing would be infringed.

[28] The market value of the property of R6.3 million has not been disputed by Respondent nor has the fact that it is a "luxury home", with Respondent failing to provide any information why upon a sale in execution of the property, he would not be in a position to provide alternative adequate housing for himself and his family.

[29] As for alternative means available to satisfy the judgment debt sought to be granted herein, all previous possible opportunities over a period of more than a year (even preceding the launching of the application) came to nought. It appears that there is no realistic prospect (given the difficulties with the sale of a property belonging to an entity other than the Respondent referred to above which, even if successful, will render an insufficient amount to satisfy the full judgment debt sought) of Respondent effecting payment by means of utilisation of alternative resources .

[30] As for the determination of a reserve price, I deem a realistic and effective reserve price to be the average between the undisputed market value of the property and the undisputed municipal value thereof, less the amounts due, owing and payable to the applicable local authority in respect of service fees relevant to municipal services and property rates, stated in Applicant's founding papers to be RB 745,76. As a result, I determine the reserve price of the property at R4 760 000,00 less RB 745,76 in respect of outstanding service fees and property rates.

[31] Given the particular facts of this matter and the prior cancellation of the agreement by Applicant, no order as referred to under Chapter 10.17 of this division's Practice Manual, relevant to reinstatement and/or an entitlement thereto, is granted.

[32] Pertaining to costs, Applicant is in terms of the agreement entitled to costs on a scale as between attorney and client and there is no reason not to so award such costs.

[33] In the result, I make the following order :

(a) Judgment  is  granted  against  the  Respondent  in favour  of  the Applicant for:

(i) Payment of the amount of R5 358 978,55;

(ii) Payment of interest on the amount of R5 358 978,55 at the rate of 10.241% per annum, which interest is calculated daily and compounded monthly in arrears from 31 December 2019 to date of payment, together with monthly insurance premiums in the amount of R2 084,66;

(b) Portion 305 (a portion of Portion 1) of the Farm Vlakfontein No. 30, Registration Division IR, the Province of Gauteng, measuring 3,2105 hectares in extent and held by deed of transfer number T22559/2003 ("the property'') is declared specially executable;

(c) The registrar is authorised and directed to issue a warrant of execution in order to give effect to the order in paragraph (b) above;

(d) The sale in execution of the property shall be subject to a reserve price of R4 760 000,00 less R8 745,76, the later amount being in respect of municipal service fees and property rates in respect of the property;

(e) Respondent is ordered to pay the Applicant’s costs of the application on the attorney and client scale.

JC UYS 
Acting Judge of the High Court
Gauteng Local Division, Johannesburg

Appearances:

Counsel for the Applicant:   M D'Oliveira
                                            Instructed by Jason Michael Smith 
                                              Incorporated Attorneys

Counsel for Respondent:    M Joubert (Ms)
                                            Instructed by Rogers Devachander Attorneys

Date matter heard :             29 January 2020 
Judgment date:                 17/02/2020