Republic of South Africa

IN THE HIGH COURT OF SOUTH AFRICA 
(WESTERN CAPE HIGH COURT, CAPE TOWN)

Before:
The Hon Mr Justice DH Zondi 
The Hon Mr Justice VC Saldanha 
The Hon Mr Justice AG Binns-Ward

In the matter between:

and

AND FOUR SIMILAR CASES

JUDGMENT DELIVERED ON: 25 AUGUST 2011
THE FULL BENCH:

'(a) No writ of execution against the immovable property of any judgment debtor shall issue until—

[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.

'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.

'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.

[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.

[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

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

[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-

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-

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).

Orders.

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

(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