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Standard Bank of South Africa Ltd v Bekker and Another (6628/2011, 6635/2011, 6644/2011, 7032/2011, 7047/2011) [2011] ZAWCHC 330; 2011 (6) SA 111 (WCC) (25 August 2011)

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[5] Except for the indications in the plaintiffs heads of argument and the information we obtained from counsel in chambers shortly after we received the court files, it was not evident on the papers themselves, however, why the matters had been referred to a full bench. We therefore invited counsel who at that stage represented the plaintiffs to formulate the questions which the full bench was requested to address. The invitation elicited the following questions for determination:

1. What are the 'relevant circumstances' to which a court should have regard before ordering execution against mortgaged property specially hypothecated to satisfy the debt secured by such mortgage?

2. By whom must such circumstances be placed [? pleaded] before the court?

3. Does the new rule 46(1) have the effect of setting up any substantive requirement on the part of the plaintiff in order to obtain the relief sought, namely the enforcement of contractual rights and obligations?

It was evident that all three of these questions bore on the issue of the meaning and effect of rule 46(1)(a) of the Uniform Rules of Court, as currently worded, and, in particular, went to how the provisions should be implemented in practice with regard to applications for orders for writs of execution to issue against hypothecated immovable property.

[6] Upon receipt of these questions we requested the president of the Cape Bar to nominate counsel to act as amicus curiae in the matters. Ms Daws accepted appointment as such. We are indebted to her for the able and thoughtfully formulated written and oral arguments which she submitted. They were most helpful indeed. We are also appreciative of the assistance which we derived from the arguments eloquently advanced on behalf of the plaintiffs by Mr Gauntlett SC and Mr Sievers.

[7] Commencing then with a consideration of the Constitutional Court's judgment in Gundwana: The case concerned a matter in which default judgment on a mortgage debt had been granted by a High Court registrar, together with the usual ancillary order authorising execution directly against the hypothecated immovable property. The material events had occurred many years before the amendment of rules 46(1) and 45(1) of the Uniform Rules to read as they currently do. The registrar had acted in terms of rule 31(5) read with rule 45(1), as they then read. The issue before the Constitutional Court in Gundwana was whether the provisions in the Uniform Rules which permitted such orders to be made by registrars in cases in which the affected property was the judgment debtor's home were constitutionally compliant. The contention that the practice permitted in terms of the rules was unconstitutional was advanced and considered in the context of what was referred to as 'the reach of Jaftha'.¹⁴ In its earlier judgment in Jaftha,¹⁵ the Constitutional Court had held, in considering the provisions of s 66(1 )(a) of the Magistrates' Court Act,¹⁶ that any measure which permits a person to be deprived of existing access to adequate housing limits the rights protected in s26(1) of the Constitution, and unless justifiable under s36, could entail a violation of the negative obligation on everyone not to prevent or impair existing access to adequate housing. Execution upon a judgment sounding in money against immovable property that was the home of the judgment debtor potentially constituted such a measure and thus, so it was held, with regard to s 26 of the Constitution read as a whole, an order declaring such immovable property executable could lawfully be made only by a court after an evaluation of the relevant circumstances of each case. The provisions in the Magistrates' Court Act which authorised a clerk of court to issue a writ of execution against immovable property without judicial oversight were held to be constitutionally incompatible.¹⁷

[8] Jaftha's case involved the legality of the attachment and sale in execution by a judgment creditor of the home of an indigent person in satisfaction of a judgment obtained in respect of a trifling debt. The applicants in Jaftha had, amongst other relief, sought an order 'Declaring section 66(1)(a) of the Magistrates' Courts Act 32 of 1944 inconsistent with the Constitution to the extent that it authorises and obliges the clerk of the court, insufficient movable property has been found to satisfy the judgment debt, to issue a warrant of execution against immovable property constituting the home of the judgment debtor, where the debt is trifling or there are other and less invasive means of satisfying the judgment debt. Jaftha had not entailed any issue of execution by a mortgagee against property that had been hypothecated by the owner in its favour. As already mentioned, in Gundwana, by contrast, the judgment debt had arisen from a claim by a mortgagee. It will be recalled that the mortgagee had obtained default judgment from a High Court registrar in terms of rule 31(5) of the Uniform Rules, together with an ancillary order for special execution against the hypothecated property. On grounds that need not now detain us, it was argued by the judgment creditor in Gundwana that the rationale of the judgment in Jaftha did not extend to claims by mortgagees for orders of special executability against hypothecated property. The argument was rejected. The Constitutional Court declared that, to the extent that it would purport to permit the sale in execution of the home of a person, it is unconstitutional for a registrar of a High Court to declare immovable property specially executable when granting default judgment under rule 31(5) of the Uniform Rules.¹⁸ The Court reasoned that the sale in execution of immovable property that is the defendant's home potentially implicates the defendant's right to access to adequate housing in terms of s 26(1) of the Constitution and that a writ for the attachment in execution of such property may lawfully be ordered only by a court after consideration of all the relevant circumstances. In context it is clear that the phrase 'all therelevant circumstances' used by the Court in both Jaftha and Gundwana drew on the language of s 26(3) of the Constitution.

[9] In respect of the constitutional matter centrally before it, the Constitutional Court's judgment in Gundwana disapproved and overruled the finding some years earlier by the SCA in Saunderson¹⁹ that it was unexceptionable for a registrar to grant an order in terms of rule 31(5), read with rule 45(1), authorising execution against immovable property, including property that is the home of the judgment debtor. It is important to remember, however, that the Constitutional Court did not make any determination whatsoever in Gundwana as to whether or not the authorisation by a court of a writ of execution agafnst the property hypothecated by Mrs Gundwana would have been exceptionable in the circumstances. That question was left to be determined in Mrs Gundwana's application for rescission of judgment, which was referred back to the High Court.

[10] In both Jaftha and Gundwana, the Constitutional Court declined to offer a definitive indication of what the relevant facts or circumstances might be in any such evaluation. It would also be undesirable, indeed futile, for this court to essay such an indication. This is because the possible permutations are innumerable; and in some matters the relevant circumstances will become evident only on peculiar facts that it is impracticable to try to conceive in the abstract. Other than to affirm that the circumstances must be legally relevant,²⁰ and to hold that any facts that would tend to demonstrate either an infringement of basic rights, or a justification for any such infringement, would be so relevant; as would any facts that would be relevant to the exercise by a court of its discretion to refuse enforcement of contractual rights,²¹ we are thus unable to answer the first of the aforementioned questions put to us any better than the Constitutional Court has been. It needs to be stated, however, that in both Jaftha and Gundwana, the evidence of the facts which supported the allegation that the judgment debtor's section 26 rights would be implicated if their homes were sold in execution was adduced by the judgment debtors, and not by the judgment creditor - albeit, in the peculiar circumstances of both those cases, not before the courts of first instance from which writs of execution had issued.

[11] Our inability to answer the first question particularly helpfully brought us to the realisation that it would in fact be more constructive to address the three questions put to us on a globular rather than an individual approach. This, because on analysis of the arguments advanced at the hearing by counsel forthe plaintiffs and by the amicus curiae, with reference primarily to judgments in Saunderson, ²² Fraser²³ and Folscher²⁴ it is evident that the essential problem that falls to be addressed in this judgment is the lack of consistency between individual judges of this court in respect of what is required of plaintiff mortgagees procedurally, rather than evidentially, to obtain orders authorising execution against property that has been hypothecated to them in security for the debts on which they seek, or have obtained, judgment when that property is, or appears to be, the defendant's home. Any consideration of the relevant circumstances required in such a case by the proviso to rule 46(1 )(a) is obviously circumscribed by the ambit of the material that is placed before the court for such consideration; in other words, the circumstances known to the court when it determines whether to authorise the issue of the writ of execution. The question that appears to have been causing difficulty is an inconsistent approach by judges of this court as to which of the parties should be responsible for ascertaining and placing evidence as to the relevant circumstances before the court, and the manner in which this should be done.

[12] In reaching its decision in Gundwana, the Constitutional Court found it unnecessary to enquire* into whether the SCA had been correct in its understanding of the import and effect of Jaftha as having gone only to s 26(1) of the Constitution, and not also to s 26(3).²⁵ In our view, however, the distinction was fundamental to the SCA's decision in Saunderson because, if s 26(3) were involved, the argument that the registrar should have the power to authorise execution against immovable property that was the judgment debtor's home would have been unsustainable. Section 26(3) of the Constitution expressly requires judicial oversight in respect of evictions from, or demolitions of homes. We have no difficulty in accepting that execution against immovable property that is the judgment debtor's home is conceptually distinct from any possible subsequent proceedings for the eviction of the judgment debtor from the property. Accepting the distinction still leaves unanswered the determination of the character of 'the relevant circumstances' referred to in rule 46(1 )(a) to which a court must have regard before ordering a writ of execution to issue. That was a question that the SCA did not answer in Saunderson: not only because of its conclusions on the limits of the reach of Jaftha, but also, of course, because rule 46(1 )(a) in its current form had at that stage not yet been introduced.

[13] It seems to us, now that the judgment in Gundwana has confirmed that the reach of Jaftha is longer than the SCA had determined, that the judicial oversight required consequent upon the Constitutional Court's consideration of s 26 in Jaftha is predicated on an acceptance of the reality that in the overwhelming majority of matters execution against immovable property that is the home of the judgment debtor will inexorably entail the subsequent forfeiture by the judgment debtor of his or her right of occupation, whether voluntarily or by eviction, thereby negating any security of tenure bound up in the substance of the right to access to adequate housing in terms of s 26(1). That much seems to be underscored by Mokgoro J's observation in Jaftha that s 26 of the Constitution falls to be read and applied as a whole; therebyimplying an inextricable interrelationship between the provisions of s26(1) and s 26(3). We are thus in general agreement with the conclusion by the full bench of the North Gauteng High Court in Folscher²⁶ that the circumstances which fall to be taken into account include those that would be relevant in matters arising for consideration under s 26(3). We, however, have reached that result by giving effect to the reasoning in Jaftha and Gundwana, and not with reference to the proviso to rule 46(1)(a). In our view, the amendment to rule 46(1 )(a) merely gives effect to the constitutional principles enunciated in the two judgments of the Constitutional Court.

[14] The Constitutional Court has not prescribed what the content of the evaluation required in terms of rule 46(1) should be, nor has it advised how, or by whom, the relevant evidence for the required evaluation should be placed before the court in a default judgment situation, save by suggesting that the practical directions given in Saunderson²⁷ and Mortinson²⁸ to ensure that defendants are alerted to .the possibility of the impact that judgment may have on their fundamental rights might be of assistance.²⁹ The Court did, however, make a number of pertinent observations which provide important guidance.

[15] Thus, in Gundwana, the Court emphasised that the constitutional requirement of judicial oversight did not challenge the principle that a judgment creditor is entitled to execute upon the assets of a judgment debtorin satisfaction of a judgment debt sounding in money.³⁰ Froneman J. writing for the Court, proceeded in this connection '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.³¹

[16] Further, while holding that the mere fact that a property owner had agreed to hypothecate immovable property did not put any determination of a prayer for execution against the property beyond the reach of the decision in Jaftha (that is an order for execution should even in such a case not occur without judicial oversight in a case in which the property was the mortgagor's home), the Court in Gundwana³² appears to have endorsed the observation in Jaftha (at para 58) that if the judgment debtor had willingly put his or her home up in some manner as security for the debt, a sale in execution should ordinarily be permitted unless the application for the issue of a writ in such a case amounted to an abuse of court procedure.³³ In Jaftha, the Court had explained in this regard that 'The need to ensure that homes may be used by people to raise capital is an important aspect of the value of a home which courts must be careful to acknowledged.'³⁴ Also see Saunderson, in which the SCA noted that '(t)he mortgage bond is an indispensible tool for spreading home ownership'³⁵ and '(t)he value of a mortgage bond as an instrument of security lies in confidence that the law will give effect to its terms'.³⁶ Nothing in the Gundwana judgment derogates from the materiality and cogency of these observations in Saunderson.

[17] The endorsement in Gundwana of the remarks in Jaftha, at para 58, confirms that in the absence of unusual circumstances, or an abuse of process, execution against hypothecated property which is the home of the mortgagor is prima facie constitutionally justifiable, even if its effect would be to infringe the judgment debtor's section 26 rights. This appears to leave unaffected the force of the following observations by Cameron and Nugent JJA at para 19-20 of Saunderson:

'[19]...even accepting for present purposes that execution against mortgaged property could conflict with s 26(1) such cases are likely to be rare. It is particularly hard to conceive of instances wtiere a mortgagee's right to reclaim the debt from the property will be denied altogether: and it is therefore not surprising that the Constitutional Court noted in Jaftha that in the absence of abuse of court procedure -and none is alleged here - a sale in execution should ordinarily be permitted against even a home bonded for the debt sought to be reclaimed. Nor can the approach differ depending on the reasons the property owner might have had for bonding the property, or the objects on which the loan was expended. Mr Marcus for the amici, pointing out that the instruments before us are covering bonds (as mongage bonds usually are), which observe no such distinctions, suggested in effect that execution should ordinarily' follow only where the bond was taken out to fund inessential lifestyle choices: but this gives no weight to the fact that in all cases the bond-holder's claim in its essence is against the property, and that its entitlement springs from a limitation in title the owner chose to accept in obtaining the loan.

[20] Though it is more easily possible to contemplate a court delaying execution where there is a real prospect that the debt might yet be paid, even in such cases the approach to pleading does not change. A plaintiff is called to justify an infringement of a constitutionally protected right only once it has been established that infringement has in fact occurred. As pointed out by Stuart Woolman in M. Chaskalson et al Constitutional Law of South Africa 12-2:

'Constitutional analysis under the Bill of Rights takes place in two stages. First, the applicant is required to demonstrate that her ability to exercise a fundamental right has been infringed ... If the court finds that the law [or measure] in question infringes the exercise of the fundamental right, the analysis may move to its second stage. In this second stage ... the party looking to uphold the restriction ... wilt be required to demonstrate that the infringement is justifiable.'

Until the defendants in the cases before us could show that orders for execution would infringe s 26(1) the bank was not called on to justify the grant of the orders. The sole fact that the property is residential in character is not enough to found the conclusion that an infringement of s 26(1) will necessarily occur.

[18] Indeed, in Snyders,³⁷ Blignault J in this court - in a judgment which, in its appreciation of the reach of Jaftha, appears to have anticipated that of the Constitutional Court in Gundwana - held that the appropriate means of equipping the court to effectively discharge the function of judicial oversight in matters in which an order permitting execution against property, which the court had inferred constituted the homes of the defendants, was by requiring the mortgagee plaintiff to include in its summons a suitable allegation to convey to the defendant that the latter's section 26 rights could be relevant matter in the determination of the relief sought. The practice note issued by the SCA in Saunderson gave embodiment to this consideration; and, as already noted,³⁸ that 'practical direction' enjoyed commendation in Gundwana.

[19] The 'practical direction' given in Saunderson was framed as a practice note providing as follows:

'The summons initiating action in which a plaintiff claims relief that embraces an order declaring immovable property executable shall, from the date of this judgment, inform the defendant as follows: "The defendant's attention is drawn to s 26(1) of the Constitution of the Republic of South Africa which accords to everyone the right to have access to adequate housing. Should the defendant claim that the order for execution will infringe that right it is incumbent on the defendant to place information supporting that claim before the Court.'"

The object of the practice note is to alert defendants whose rights in terms of s 26 of the Constitution could be infringed by execution against the mortgaged property to bring the relevant facts to the court's attention. There can be no doubt that any court would have regard to such facts in whatever context the defendant might bring them forward, whether in a plea, a letter to the court, or by personal appearance at the application for judgment. In either of the latter instances the court would give procedural directions to facilitate the proper ventilation and consideration of the issues raised by the information placed before it by a defendant.

[20] Having regard to the importance of the concept of the hypothecation of immovable property in the economic context and the crucial part it plays in facilitating private means of access to housing, thereby affording some collateral assistance to the state in the discharge of its obligation to achieve the progressive realisation of the right by the entire population, it would be counter-productive to impede the efficient functioning of the concept by introducing, without cogent reasons, novel and onerous procedural impositions on mortgagees seeking to exercise their contractual rights ofsecurity. Unnecessarily imposing constraints that would make obtaining orders for execution that Constitutional Court has confirmed should ordinarily follow in foreclosure cases significantly more costly or cumbersome would, in the end, only be to make access to mortgage finance more difficult, and redound against the wider realisation of rights under section 26(1) of the Constitution.³⁹

[21] It is also relevant to have in mind that the NCA affords a measure of protection to mortgagees who are natural persons. The provisions of chap 6 of the NCA are applicable even to mortgage agreements concluded before the commencement of the Act; and the provisions of Part D of chap 4 of the Act, which heavily penalise credit providers who extend credit recklessly - that is without a prior financial assessment and verification of the consumer's ability to viably make repayment - are applicable to all mortgage agreements concluded with natural persons after 1 June 2007.

[22] These are considerations which, in our view, should also be weighed in determining the extent to which the courts should incline to be creatively proactive in seeking out ways to give effect to rule 46(1 )(a) by imposition on the mortgagee plaintiff, as a matter of course, of an obligation to obtain and place before the court information which, in the overwhelming majority of cases, will not affect the mortgagee's prima facie entitlement to realise its security.⁴⁰ In our view an appropriate measure of circumspection is called for.

[23] For the reasons given in the passage from Saunderson quoted in para [17], above, we do not consider that the circumstances in which the secured loan was incurred are relevant, in general, to a determination of whether an order for execution against hypothecated property should be granted or not. So, for example, if the acquisition of property with state assistance afforded in terms of the state's obligation in terms of s 26(1) does not fetter the property owners right to use it subsequently to raise credit, there is no reason to afford such property, if it so used by the owner, special protection against the consequences of the contract of hypothecation. If the courts were to adopt a different approach it would be liable to result in the economic stigmatisation of property acquired with state assistance with attendant adverse effect on the dignity and economic freedom of the owners of such property. The advancement of human freedoms is one of the founding values of the constitutional order⁴¹ The exercise of such freedom by choosing to use one's property in a certain way, such as to raise credit, unavoidably bears with it the assumption of a corresponding responsibility. The statement in para 58 of Jaftha quoted in para [16], above, was a pragmatic affirmation of this axiom.

[24] Furthermore, we are, with respect, unable to reconcile the suggestion by Peter AJ in Fraser⁴² that a court should be more inclined to order execution in a matter in which the secured debt was incurred for the purpose of the acquisition of the property than in a matter in which the debt was incurred for purposes unrelated to the acquisition or improvement of the property eitherwith the passage from Saunderson quoted above, or the approach indicated at Jaftha at para 58, and reiterated in Gundwana at para 47. There is, in our view, no foundation in legal principle for such an approach.

[25] All the aforegoing observations do not, however, detract from the authority, indeed, the duty of the court to act proactively to obtain whatever additional information might appear relevant for the purpose of consideration in terms of rule 46(1) if, in a peculiar case, some or other feature of the matter flashes warning signals. The manner in which the court proceeded in Ntsane⁴³ exemplifies such an instance.

[26] It is axiomatic that" the defendants are the persons best informed and able to apprise the court of any circumstances attending execution against the property that is their home that might result in an unjustifiable infringement of their section 26 rights. The mere fact that the property concerned is the home of the defendant does not by itself justify an inference that section 26 rights are implicated; for, as Rogers AJ observed in Hunkydory Investments (2),⁴⁴ 's 26 of the Constitution enshrines a right of access to "adequate" housing, not a right to continue living in the house of one's choice even though one cannot afford if. It is ordinarily for the defendant to alert the court to any facts or circumstances that implicate his or her section 26 rights. In our view the determination by the SCA in Ndlovu v Ngcobo; Bekker and Another v Jika⁴⁵ of the incidence of the evidentiary onus in eviction applications under s 4 of the PIE Act⁴⁶ applies mutatis mutandis with equal force in the context of the duty on a mortgagor to allege an abuse of process, or a relevant constitutional rights infringement for consideration under rule 46(1) when the mortgagee seeks an order authorising execution against the hypothecated property and the mortgagor wishes to avoid the mortgage being enforced in the usual course, as contemplated in Jaftha at para 58. In Ndlovu⁴⁷ the SCA held, insofar as currently relevant, that provided the owner had made out a prima facie case for eviction and complied with the peculiar procedural formalities prescribed in terms of PIE, '[U]r?/ess the occupier opposes and discloses circumstances relevant to the eviction order, the owner, in principle, will be entitled to an order for eviction. Relevant circumstances are nearly without fail facts within the exclusive knowledge of the occupier and it cannot be expected of an owner to negative in advance facts not known to him and not in issue between the parties.'

[27] It is desirable that the court should be able to know from the summons whether or not the application for an order authorising execution against immovable property concerns property that is the defendant / judgment debtor's primary residence. An appropriate allegation should therefore henceforth be included in the summons in matters in which a declaration of special executability in sought ancillary to judgment on the money claim. In matters in which the plaintiff is unable to make such an allegation positively because of a lack of knowledge of the relevant facts that much should be stated in the summons. In cases in which the summons does not contain an

allegation that the affected property is not the primary residence of the defendant the court will scrutinise the matter assuming that the property may be the defendant's primary residence unless it is clear from other indications in the papers that this is not so. We agree with the contention advanced both by counsel for the plaintiff and by the amicus that it is in general undesirable that these issues be dealt with by the introduction of affidavits in the manner required by the practice note issued in the North Gauteng High Court in terms of para 54 of the judgment in Folscher. (The position is of course different in matters in which an application for leave to execute is made discretely subsequent to a judgment granted earlier sounding in money; as will occur ordinarily when excussion has first been attempted against the judgment debtor's movable property - an unlikely scenario in cases involving hypothecated property, in which orders authorising special execution against the property are ordinarily sought contemporaneously with judgment for payment of the secured debt.)

[28] Matters in which the plaintiff is able to make the allegation that the property is not the primary residence of the defendant can still be disposed of by the registrar. Mortgagee plaintiffs in such cases are encouraged to avail of that procedure because of the burden placed on the court's limited judicial resources by the number of default applications with attendant prayers for orders of special executability that do require judicial oversight in terms of the proviso to rule 46(1)(a).⁴⁸ The registrar of this court has been advised that in all applications for the issue of writs of execution not directed to the court because the property sought to be attached is alleged not to be the defendant or judgment debtor's primary residence, an affidavit should be required from the plaintiff or judgment creditor, deposed to by a person appearing to have the relevant knowledge, confirming that the property is not the primary residence of the judgment debtor. The requirement by the registrar of such an affidavit in the circumstances arises out of the exigencies of the proviso to rule 46(1)(a) and is consistent with the registrar's duty in terms of rule 31(5)(vi) to consider whether an application under the subrule should rather be set down for hearing in open court.

[29] We also consider that it would assist the court in the discharge of its duty to examine applications for execution against immovable property that might be the defendant's home cautiously, astute to the fact that the exercise entails more than just seeking to be satisfied that a cause of action has been made out, if, in a case in which execution is sought against hypothecated property, the mortgagee plaintiff would, in cases in which the secured debt was repayable in periodic instalments, include in the summons allegations setting out the amount of such instalments and the amount in which payment in terms of such instalments was in arrears at the time of foreclosure or the issue of summons. In matters in which the amount in arrears was relatively low at the time of foreclosure the plaintiff would be advised to set out in its summons allegations which might support the resort to direct realisation of the security as reasonable and appropriate in the circumstances. While we do not wish to be understood to suggest that such allegations should be mandatory, they would, we venture, assist in allaying concerns that could otherwise arise in such cases as to whether the prayer for an order of special executability might be an abuse of process. If such concerns are not allayed in advance they may occasion delay if it becomes necessary to address requests by judges for further information when the matter comes before the court. In considering any allegations made in this respect the court will have due regard in the ordinary course to all the features of the case including the principle of pacta sunt servanda and the considerations acknowledged by the Constitutional Court in Jaftha at para 58, which we have discussed at length above.

[30] To sum up with reference to the three questions set out in para [5]: (1)A definitive answer cannot be given to the first question. Relevant circumstances qualify as such only if they are legally relevant. Evidence to show an infringement of constitutional rights or an abuse of process is obviously relevant, as is evidence offered to support any contention by the mortgagee that an alleged or demonstrated infringement is justifiable. (2) Allegations that execution against the hypothecated property wouldinfringe the defendant / judgment debtor's constitutional rights or that the application for a writ of execution to issue is an abuse should, in principle, be pleaded by the defendant / judgment debtor, and any rebutting allegations by the plaintiff / judgment creditor. (3) Rule 46(1 )(a), in its current form, does not give rise to any new substantive obligation on mortgagees seeking orders for execution against the hypothecated property. The proviso to the subrule gives procedural effect to the constitutional requirement that execution against immovable property that is a judgment debtor's home may potentially entail an infringement of section 26 rights and must therefore occur only under judicial oversight. Apart from the compliance required with PN 33 of this Court in applicable cases,⁴⁹ the procedural obligations which a mortgagee claiming an order that a writ of execution issue against the hypothecated property must satisfy are limited in the ordinary case to compliance with the Saunderson practice note. In addition, any applicant for an order for execution against immovable property should comply, as far as it is practicable in the circumstances of the case, with the guidelines set out in para [27]-[29] of this judgment.

[31] We turn now to deal with the individual matters on their merits.

Standard Bank of SA Ltd v Bekker and another (Case no. 6628/2011)

[32] The agreement on which the plaintiff's action is founded is a credit agreement within the meaning of the NCA, Section 129(1) of the NCA provides:

(1) If the consumer is in default under a credit agreement, the credit provider-

(a) may draw the default to the notice of the consumer in writing and propose that the consumer refer the credit agreement to a debt counsellor, alternative dispute resolution agent, consumer court or ombud with jurisdiction, with the intent that the parties resolve any dispute under the agreement or develop and agree on a plan to bring the payments under the agreement up to date; and

(b) subject to section 130 (2), may not commence any legal proceedings to enforce the agreement before-

(i) first providing notice to the consumer, as contemplated in paragraph
(a), or in section 86 (10), as the case may be; and

(ii) meeting any further requirements set out in section 130.

Section 130(1) of the NCA provides insofar as currently relevant:

Subject to .... a credit provider may approach the court for an order to enforce a credit agreement only if, at that time, the consumer is in default and has been in default under that credit agreement for at least 20 business days and-

a) at least 10 business days have elapsed since the credit provider delivered a
notice to the consumer as contemplated in section 86(9),⁵⁰ or section 129(1),
as the case may be;

b) in the case of a notice contemplated in section 129(1), the consumer has-

i) not responded to that notice; or

ii) responded to the notice by rejecting the credit provider's proposals; and

c)

Section 130(3)(a) of the NCA provides:

Despite any provision of law or contract to the contrary, in any proceedings commenced in a court in respect of a credit agreement to which this Act applies, the court may determine the matter only if the court is satisfied that-

(a) in the case of proceedings to which sections 127, 129 or 131 apply, the procedures required by those sections have been complied with.

[33] The required notice was sent to the defendant on 28 February 2011. Clause 14.3 of the mortgage agreement provides (for convenience I quote from the English version of the standard form contract document used by the bank in all five cases):

The Mortgagor chooses the postal address set out below as the address to which letters, statements and notices may be delivered, and the Mortgagor accepts that any letters and notices posted to this address by registered post will be regarded as having been received within 14 (fourteen) days after posting.

[34] It follows that the defendant is to be regarded as having received the notice which the plaintiff was required to give on 14 March 2011. Summons was issued in the action on 23 March 2011 and served on the defendants on 31 March 2011. The period of a minimum of 10 business days required in terms of ss 129(1 )(b) and 130(1)(a) of the NCA to have elapsed before the commencement of legal proceedings were completed only on 29 March 2011 (21 March 2011 having been a public holiday).

[35] In Standard Bank of South Africa Limited v Rockhill and Another,⁵¹ in the context of an application of clause 14.3 of the standard form mortgage contract quoted above, it was held, without discussion, that the full period of 10 business days referred to in s 130(1)(a) of the NCA had to have elapsed after the deemed receipt of the s 129 notice by the defendant 14 days after its dispatch to the defendant had to have elapsed before the credit provider was entitled to issue summons.⁵² We consider that the construction of the pertinent provisions of the NCA in Rockhill was correct. That the commencement of proceedings within the meaning of s 129(1)(b) denoted the issue of summons, and not the service thereof on the defendant, follows on the requirements of s 130(1) of the NCA. Those provisions require that at the commencement of proceedings the plaintiff must be in a position to allege, not only that the defendant has been given the requisite notice in terms of s 129(1), but also that the defendant has either failed to respond to the notice during the 10 business days notice period, or has rejected the invitation extended in terms of the notice given in terms of s 129. This obviously cannot be done before the expiry of the notice period.

[36] It follows that the plaintiff commenced proceedings in case no. 6628/2011 prematurely. In the circumstances the court is prohibited by the provisions of s 130(3)(a) of the NCA from determining the matter. Section 130(4)(b) of the NCA requires the court to adjourn the matter and make an appropriate order setting- out the steps the credit provider must complete before the matter may be resumed. It seems to us that it would be appropriate to adjourn the application for default judgment sine die and to direct the plaintiff, if it wishes to proceed with the application, first to provide notice afresh to the defendants in terms of s 129(1) of the NCA, and thereafter to serve an amended summons on the defendants including the allegation that the defendants have either failed to respond to the notice or have rejected the proposals set out therein. There is no reason why the defendants should be visited with the wasted costs occasioned by the postponement consequent upon the plaintiff's non-compliance with the NCA.

SB Guarantee Company (Pty) Ltd v Harris and another (Case no. 6635/2011)

[37] In this matter the mortgage bond debt in issue had been the subject of debt review under the NCA. On 21 February 2011 the plaintiff gave notice to the defendants in terms of s 86(10) of the NCA of the termination of the debt review proceedings. Summons in the action was issued on 23 March 2011 more than 10 business days after the deemed receipt by the defendants of the termination notice on 7 March 2011. Summons was served on the defendants on 2 April 2011 by being fixed by the sheriff to the outer or principal door of the premises at the defendants' domicilium citandi. The defendants did not enter an appearance to defend within the period provided. They also did not place any information before the court in response to the notice incorporated in the summons in compliance with the Saunderson practice note, or make any allegations that the application for an order that the hypothecated immovable property be declared specially executable constituted an abuse of process. In all the circumstances, the plaintiff is entitled to default judgment as prayed, together with an order authorising execution against the hypothecated immovable property.

The Standard Bank of South Africa Limited v Murtz and another (Case no. 6644/2011)

[38] In this matter the service of the summons was premature for reasons similar to those discussed above in respect of the matter of Bekker and another. An order in the same terms as that to be made in BeWcerwill also be made in this matter.

SB Guarantee Company (Pty) Ltd v Roos (7032/2011)

[39] In this matter too, the issue of summons occurred before the expiry of the prescribed notice period in terms of s 86(10) and 130(1)(a) of the NCA. The purpose of the minimum 10 day period that must elapse after the delivery of a notice in terms of s 86(10) and the commencement of enforcement proceedings appears to be to enable the consumer and/or the debt counsellor to urgently bring an application to a magistrate in terms of s 86(7)(c), or 86(8)(b) if that has not by then already been done, alternatively, if such an application is already pending, to approach the magistrate for an order in terms of s 86(11) of the NCA that the debt review should be resumed; cf. Changing Tides 17 (Pty) Ltd v Erasmus 2010 JOL 25358 WCC.⁵³ Non compliance by the plaintiff with the requirements of s 129(1) and s 130(1) of the NCA means that we are required to deal with the application for default judgment in terms of s 130(4)(b) of the Act. It seems to us that it would be appropriate in the circumstances to adjourn the application and require the plaintiff to effect an amendment to its summons alleging that the defendant had failed to take any steps under the Act consequent upon the deemed receipt of its notice in terms of s 86(10) on 17 March 2011 and the service of summons on her more than 10 business days later, on 7 April 2011. In the event of the defendant failing to dispute such allegation, the court could then dispose of the matter being satisfied that the opportunity to the defendant which the relevant provisions of the NCA had been intended to afford had been adequately extended.

The Standard Bank of South Africa Limited v Jordaan (7047/2011)

[40] For the reasons .given in respect of the matter of Bekker, the commencement of legal proceedings was premature in this matter. An order in the same terms as that to be made in Bekker will also be made in this matter.

Orders.

[41] In case no.s 6628/2011; 6644/2011 and 7047/2011 the following orders shall issue in each case:

1. The application for default judgment is postponed sine die, with no order as to costs;

2. the plaintiff is cfirected, if it wishes to proceed with the application, first to provide notice afresh to the defendant(s) in terms of s 129(1) of the NCA, and thereafter to serve an amended summons on the defendants including the allegation that the defendants have either failed to respond to the notice or have rejected the proposals set out therein;

(c) the plaintiff is given leave to re-enrol the application ten (10) days after service of an amended summons on the defendant(s) in compliance with the directions set out in para (b).

[42] In case no. 7032/2011 the following orders are made:

(a) The application for default judgment is postponed sine die, with no order as to costs;

(b) the plaintiff is directed, if it wishes to proceed with the application, first to effect an amendment to its summons to include an allegation that the defendant had failed to take any steps under the Act in the period between the deemed receipt by the defendant, on 17 March 2011, of the notice given by the plaintiff in terms of s 86(10) of the National Credit Act 34 of 2005, and the service of summons on the defendant, more than 10 business days later, on 7 April 2011.

(c) the plaintiff is given leave to re-enrol the application ten (10) days after service of an amended summons on the defendant(s) in compliance with the directions set out in para (b).

[43] In case no. 6635/2011 the following orders are made:

(a) Judgment is granted against the first and second defendants jointly and severally, the one paying the other being absolved, in the sum of R1 222 740,08, together with interest thereon at 7,55% per annum from 9 March 2011 to date of payment, such interest to be capitalised monthly in arrear;

(b) The issue of a writ of execution against the hypothecated immovable property, viz. Erf 830 Grassy Park, in the City of Cape Town, Cape Division, Province of Western Cape to enforce payment of the judgment debt under para (a) is hereby authorised.

(c) The plaintiff is awarded costs of suit in the action on the scale as between attorney and client.

D.H. ZONDI

Judge of the High Court

V.C. SALDANHA

Judge of the High Court

A.G. BINNS-WARD

Judge of the High Court

1Cf. First National Bank of SA Ltd v Ngcobo 1993 (3) SA 490 (D) at 492D; Entabeni Hospital Ltd v Van der Linde; First National Bank of SA v Puckriah 1994 (2) SA 422 (N) at 424G-H.

2For a description of the relevant law see Gerber v Stolze and Others 1951 (2) SA 166 (T); Nedbank Ltd v Mortinson [2005] ZAGPHC 85; 2005 (6) SA 462 (W) and Gundwana v Steko Development CC and Others 2011 (3) SA 608 (CC); 2011 (8} BCLR 792 at para 37. In Colonial Mutual Life Assurance Society Ltd v Tilsim Investments (Pty) Ltd 1952 (4) SA 134 (C) at 135C, it was held 'It has been the general practice of our Courts, unless some sound reason is advanced. to declare property which is specially mortgaged to be executable for the mortgage debt' (Emphasis supplied.) See also Ledlie v Erf 2235 Somerset West (Pty) Ltd 1992 (4) SA 600 (C) at 601F-G to the same effect.

3Section 26 of the Constiution provides:

Housing

(1) Everyone has the right to have access to adequate housing.

(2) The state must take reasonable legislative and other measures, within its available resources, to achieve the progressive realisation of this right

(3) No one maybe evicted from their home, or have their home demolished, without an order of court made after considering all the relevant circumstances. No legislation may permit arbitrary evictions.

4See Gundwana (note 2) at para 53.

5Above n 2.

6First Rand Bank Ltd v Folscher and Another [2011] ZAGPPHC 79 (24 May 2011)

7Nedbank Ltd v Fraser and Another and Four Other Cases 2011 (4) SA 363 (GSJ).

8Standard Bank of South Africa Ltd v Saunderson and Others [2006] 2 All SA 382 (SCA); 2006 (2) SA 264; 2006 (9) BCLR 1022. Saunderson was decided on appeal against the decision of a single judge of this court (Blignault J) in Standard Bank of SA Ltd v Snyders and Eight Similar Cases 2005 (5) SA 610 (C); [2006] 2 All SA 537.

9The limit of the extent to which Gundwana overruled Saunderson is succinctly stated in para 52 of the judgment in Gundwana.

10In terms of GN R981 of 19 November 2010.

11Above n 7. at para 12.

12At para 56.

13Quite what the import of the qualification denoted by the words 'to an extent' was intended
to be is not apparent; because the effect of the rules amendment puts it beyond doubt that the rules in current form do not permit a writ of execution to issue against immovable property
that is the home of the judgment debtor unless the court - as distinct from the registrar - has
ordered execution of such property. The contextual history of the amendment to rule 46(1 )(a)
provides a clear indication that it was inspired by the provisions of s 26 of the Constitution and
the treatment thereof in a relevant sense in Jaftha. The term 'primary residence' in rule

46( 1 ){a) thus falls to be construed with regard to property which, if the judgment debtor were deprived of it. would require him or her to seek alternative accommodation if his or her right to adequate housing were not potentially to be implicated; in other words the property that would ordinarily be regarded as the judgment debtor's home. Cf Folscher supra at para 12 and 28-29. Whether or not the sale in execution of a primary residence would in fact adversely affect the judgment debtor's right to adequate housing, and if so, whether the infringement would be justifiable, would, of course, depend on the peculiar circumstances. The qualification may have been attached because the amended rule does not address the position of persons other than the judgment debtor, whose s 26(1) rights might be implicated by execution against the property. An appropriate case would have to present for proper consideration to be given to that possibility.

14Gundwana (above n 2) at para 28, 42 and 49.

15Jaftha v Schoeman and Others, Van Rooyen v Stoltz and Others [2004] ZACC 25; 2005 (2) SA 140 (CC): 2005 (1) BCLR 78, at para 31-34.

16Act 32 of 1944.

17Consequent upon the judgment in Jaftha, s 66(1)(a) of the Magistrates' Court Act now falls to be read as follows:' Whenever a court gives judgment for the payment of money or makes an order for the payment of money in instalments, such judgment, in case of failure to pay such money forthwith, or such order in case of failure to pay any instalment at the time and in the manner ordered by the court, shall be enforceable by execution against the movable property and, if there is not found sufficient movable property to satisfy the judgment or order, or the court, on good cause shown, so orders, then a court, after consideration of all relevant circumstances, mav order execution against the immovable property of the party against whom such judgment has been given or such order has been made.' The underlined words were read into the provision by the Constitutional Court.

18In this respect, the Constitutional Court judgment essentially vindicated the reasoning of Blignault J in Snyders (above n 8).

19Above n 8

20Cf. Brisiey v Drotsky 2002 (4) SA 1 (SCA); [2002] 3 All SA 363:2002 (12) BCLR 1229. at para 42.

21Execution by a mortgagee against hypothecated immovable property after foreclosure, even though the right thereto accrues by operation of law and is not dependent on an inclusion in the mortgage bond of a clause to that effect, amounts, in essence, to availment by the mortgagee of its contractual rights. Cf. The Law of South Africa Second Edition (ed Joubert et al) vol 17 part 2, sv Mortgage and Pledge para 368. Obtaining an order that a writ for execution issue against the hypothecated property is thus closely analogous to obtaining an order for specific performance. There is nothing novel in the exercise by a court of the discretionary power to refuse to give an order enforcing a contractual right in circumstances where the result of granting the order would bear unreasonably harshly, or produce injustice (see e.g. Haynes v Kingwilliamstown Municipality 1951 (2) SA 371 (A); Barclays National Bank Ltd and Another v Natal Fire Extinguishers Manufacturing Co (Pty) Ltd and Others 1982 (4) SA 650(D) and Benson v SA Mutual Life Assurance Society 1986 (1) SA 776 (A) at 782-783). Any such refusal compels the claimant to find redress in alternative remedies. The court exercises the power judicially upon a consideration of all the known facts. The judicial character of the discretion means that while it is not is not susceptible to circumscription or regulation by rules, it is nevertheless not unfettered.

22Above n 8.

23Above n 7.

24Above n 6.

25Gundwana (above n 2) at para 42

26Above n 6, at para 34.

27Above n 8, at para 27.2.

28Above n 2, at para 33.

29Gundwana (above n 2) at para 52

30Gundwana para 53

31Ibid para 54.

32Ibid para 47

33Cf. Mortinson (above n 2) para 25 and 28.

34Ibid para 58.

35At para 1.

36At para 3.

37Above n 8.

38Above para 12

39Cf Fraser (above n 7) at para 45; Folscher (above n 6) at para 39.

40Cf. Fraser (above n 7) at para 20-21.

41Section 1(a) of the Constitution.

42Above n 7, at para 26-27.

43Absa Bank Ltd v Ntsane & another [2006] ZAGPHC 115; 2007 (3) SA 554 (T).

44Standard Bank of South Africa Ltd v Hunkydory Investments 1B8 (Pty) Ltd and Others (No 2) 2010 (1) SA 634 (WCC) at para 30.

45 2003 (1) SA 113 (SCA); [2002] 4 All SA 384 at para 19.

46The Prevention of Illegal Eviction from and Unlawful Occupation of Land Act 19 of 1998

47At para 19.

48The current cases do not require us to decide the constitutionality of the registrar's power in terms of s 27A of the Supreme Court Act 59 of 1959 read with rule 31 (5) and rule 46(1 )(a)(ii). Nevertheless, because of the reference at para 41 of Gundwana to the 'combined effect' of the judgments in Chief Lesapo v North West Agricultural Bank and Another [1999] ZACC 16; 2000 (1) SA 409 (CC); 1999 (12} BCLR 1420 and Jaftha. and the statement in general terms at para 38 of Gundwana that the judgment in Lesapo had 'challenged the notion that the execution process needs no judicial content', and lest it be thought that we have not considered Lesapo, it might be indicated to point out that we do not consider that the judgment in Lesapo would support any impugnment of the constitutionality of the registrar's power under those provisions in cases falling outside the reach of Jaftha, and therefore outside the proviso to rule 46. As emphasised by Kriegler J in Metcash Trading Ltd v Commissioner South African Revenue Service, and another 2001 (1) SA 1109 (CC), at para 50, the statutory provision (38(2) of the North West Agricultural Bank Act 14 of 1981) condemned in Lesapo expressly empowered the agricultural bank, without recourse to a court of law', to attach and sell up the assets of its defaulting debtors through its own agents and on such conditions as its directors might determine. The thrust of the complaint which founded the invalidation of the provision in Lesapo was that it infringed s 34 of the Constitution and breached the rule of law by sanctioning self-help, the bank being permitted thereby to be the judge in its own cause. That is not the effect of s 27A of the Supreme Court Act read with rule 31 (5).

49PN 33 expressly directs the attention of practitioners to Rossouw and Another v Firstrand Bank Ltd 2010 (6) SA 439 (SCA), in particular at paras 33-37.

50The reference to s 86(9) is erroneous and falls to be read as a reference to s 86(10).

512010(5) SA252 (GSJ)

52Rockhill at para 15

53At para 32