Nedbank Limited v Mbuduma's Jazz Club CC and Others (3486/2020) [2023] ZAMPMHC 40 (8 November 2023)

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

IN THE HIGH COURT OF SOUTH AFRICA

MPUMALANGA DIVISION: MIDDELBURG LOCAL SEAT

CASE NO: 3486/2020

(1) REPORTABLE: NO

(2) OF INTEREST TO OTHER JUDGES: NO

(3) REVISED

DATE: 13/06/2023

SIGNATURE

In the matter between:

NEDBANK LIMITED

PLAINTIFF/APPLICANT

AND

MBUDUMA’S JAZZ CLUB CC

1ST DEFENDANT/1ST RESPONDENT

JACOB ZABO MABENA

2ND DEFENDANT/2ND RESPONDENT

MARTHA MABENA

3RD DEFENDANT/3RD RESPONDENT

JUDGMENT: APPLICATION FOR SUMMARY JUDGMENT AND RULE 46 (1) (a) APPLICATION

Vukeya J

[1] This is an application for summary judgment in terms of Rule 32 of the Uniform Rules of Court. The plaintiff seeks relief against the three defendants as follows:

1.1. Payment of the amount of R 475 485, 26.

1.2. Payment of interest on the amount of R 475,485.26 calculated at the rate of 5,75 % per annum compounded monthly in arrear from 1 July 2020 to date of final payment, both days inclusive, (being the base rate of 7.25% as at 01 July 2020 less 1.50%) which indebtedness is currently owing, due and payable.

[2] The plaintiff also seeks an order in terms of Rule 46 (1) (a) (ii) of the Uniform Rules of Court, declaring the property of the defendants to be executable for the amounts and interest set out above and directing the Registrar of this court to issue a Warrant of execution against the property. It further prays for an order in terms of Rule 46A determining whether or not the property of the defendants shall be sold in execution with or without a reserve price. The property in question is described as follows:

ERF 1[...] W[...] EXT 8 TOWNSHIP, REGISTRATION DIVISION JS, MPUMALANGA PROVINCE, EMALAHLENI LOCAL MUNICIPALITY.

[3] At the beginning of the hearing, Counsel for the defendants raised an issue regarding the manner in which the plaintiff intended to proceed with the applications before court. She contended that the application for Summary judgment and the application in terms of Rule 46 are not suited to be heard in one application for Summary Judgment. The basis for her contention was that the plaintiff had already proceeded against the defendants by way of action in which it prays for a monetary judgment against the defendants and the executability of the defendants’ property.

[4] Counsel for the defendant further argued that because the matter is already ceased by way of action, and because the plaintiff could not ask for these prayers together then Summary Judgment is not suited for these proceedings. Her view was that, if the plaintiff asks for relief by way of action then it conceded that that kind of dispute, namely, whether the property is executable or not, must be tried by way of action. Counsel for the plaintiff persisted and argued that these applications are to be heard simultaneously depending on whether the plaintiff is successful in its application for summary judgment where after the court can proceed with the Rule 46A application.

[5] I could not find merit in the defendants’ contentions. The nature of a summary judgment application is such that a summons must be issued and after the defendant has filed its plea, then summary judgment may be obtained. The defendants’ argument that if the plaintiff asks for relief by way of action then this means it concedes that the dispute whether the property is executable or not must be tried by way of action cannot be sustained. As soon as summary judgment is obtained over the monetary part of the claim, nothing stops the plaintiff from applying for the executabilty of the subject property as long as the application has merit. Based on these grounds I ruled that the two applications could proceed simultaneously.

The Summary Judgment Application

[6] The plaintiff issued summons against the first, second and third defendants in which it alleged that the plaintiff and the defendants entered into a written loan agreement secured by a mortgage bond for the purchase of the above mentioned property. The debt was also secured by a suretyship agreement signed by the second and third defendants on 21 July 2008 in which they bound themselves jointly and severally as surety and co-principal debtors for the payment, when due, of all present and future debts of any kind of the first defendant to the plaintiff. It alleges that the parties further entered into a Distressed Restructure Agreement on or about 25 September 2015 and the loan was altered in terms of section 117 of the National Credit Act, 2005.

[7] The defendants admitted to having borrowed an amount of money from the plaintiff and having agreed to register a bond over the abovementioned property. They aver that they have been paying the plaintiff between R6 000, 00 and R7 000, 00 on a monthly basis and dispute that the amounts owing to the plaintiff is R475 485, 26. In their affidavit opposing summary judgment, deposed to by their attorney, Ms Yasmin Omar, the defendants raised the following defences to the plaintiff’s claim:

7.1. The plaintiff has lodged no declaration in terms of Rule 20 of the Uniform Rules of Court despite the fact that they issued a simple summons;

7.2. In terms of the plaintiff’s simple summons, the plaintiff contends that the defendants entered into a restructuring agreement with the plaintiff in 2018 and failed to effect payment timeously. According to the defendants the summons do not make out the necessary allegation for when the cause of action arose. The defendants contend that the plaintiff’s debt has prescribed as the summons was issued during 2000 for a debt which arose in 2018 and it was served on the defendants in 2022.

7.3. The defendants further contend that on 17 October 2022 they tendered to the plaintiff payment of the full arrears as set out in the summons, in the sum of R 32 973, 62 as well as administrative and legal costs, with a view of reinstating the credit agreement and the plaintiff rejected the proposal for reinstatement and insisted on arrears as per the summary judgment application which amount is in excess of R 150 000, 00.

[8] It is common cause that the defendants borrowed money from the plaintiff and agreed to register a mortgage bond over it; a distressed structure agreement was entered into by the parties which resulted in the variation of the terms of the agreement and that the defendants made payments to the plaintiff in the amount between R 6 000, 00 and R7 000, 00.

[9] The crisp issues for determination in this application are, whether the defendants have a bona fide defence against the plaintiff’s claim and whether their defences raise triable and mitigating issues. The onus rests with the plaintiff to show that the defendant does not have a defence on the merits of the case.

[10] In the case of Firstrand Bank Limited t/a Wesbank v Maenet JA Attorneys Inc. (8557/2021) [2021] ZAGPPHC 612 (17 September 2021) it was held that: “The Summary Judgment application calls for strict circumspection and judicial oversight in balancing the rights of both the applicant and the defendant. The Summary Judgment proceedings have been described as drastic and robust proceedings. In Joob Joob Investments v Stocks Mavundla Zek JV [2009] All SA 407 (SCA) it was held that summary judgment proceedings are no longer extraordinary and the Rule must be applied properly. Naturally, summary judgment cannot be granted where it is clear that some ventilation of evidence is required in order for the court to come to a decision”.

[11] Rule 32 of the Uniform Rule of Court provides that:

(1) The plaintiff may, after the defendant has delivered a plea, apply to court for summary judgment on each of such claims in the summons as is only—

(a) on a liquid document;

(b) for a liquidated amount in money;

(c)… and

(d)…

(2) (a) Within 15 days after the date of delivery of the plea, the plaintiff shall deliver a notice of

application for summary judgment, together with an affidavit made by the plaintiff or by any other person who can swear positively to the facts

(b) The plaintiff shall, in the affidavit referred to in sub-rule (2)(a), verify the cause of action and the amount, if any, claimed, and identify any point of law relied upon and the facts upon which the plaintiff’s claim is based, and explain briefly why the defence as pleaded does not raise any issue for trial.

(3) The defendant may—

(a) give security to the plaintiff to the satisfaction of the court for any judgment including costs which may be given; or

(b) satisfy the court by affidavit (which shall be delivered five days before the day on which the application is to be heard), or with the leave of the court by oral evidence of such defendant or of any other person who can 12 swear positively to the fact that the defendant has a bona fide defence to the action; such affidavit or evidence shall disclose fully the nature and grounds of the defence and the material facts relied upon therefor.

[12] In casu, it was submitted on behalf of the defendant that the plaintiff has lodged no declaration in terms of Rule 20 of the Uniform Rules of Court despite the fact that they issued a simple summons. Rule 20 (1) provides that “in all actions in which the plaintiff’s claim is for a debt or liquidated demand and the defendant has delivered notice of intention to defend, the plaintiff shall, except in the case of a combined summons, within fifteen days after his receipt thereof, deliver a declaration.” [my emphasis]. A plaintiff who fails to deliver a declaration within the prescribed time may be barred under the provisions of rule 26. But that is not the only position. In terms of Rule 32 (2) (a) “within 15 days after the date of delivery of the plea, the plaintiff shall deliver a notice of application for summary judgment, together with an affidavit made by the plaintiff or by any other person who can swear positively to the facts.”

[13] In both instances, where a short summons has been issued and where a party wishes to apply for summary judgment, the plaintiff has less than 15 days to either deliver a declaration or to apply for summary judgment. In terms of the new Rule 32, the delivery of a plea is now a prerequisite to an application for summary judgment, unless the plaintiff takes a further procedural step after the delivery of the plea, in which case it will waive its right to apply for summary judgment. (See B W Kuttle & Association Inc v O’Connell Manthe and Partners Inc 1984 (2) SA 665 (C). I mention this to indicate that it is not necessary for the plaintiff to file a declaration after the defendant has filed its plea against a simple summons, more especially where the simple summons contains sufficient allegations concerning the cause of action. In the plaintiff’s summons, paragraph (a) contains all the allegations made against the plaintiff with sufficient details to allow the defendant to have sufficient knowledge of what the claim is based on. The defendants have even been able to plead and to raise specific defences to the allegations.

[14] My view is that the contention of the defendant would have had merit if they were alleging that they have been unable to ascertain from the simple summons what the cause of action was without the assistance of a declaration and that they have been unable to plead. The defendants cannot mention bluntly that the plaintiff has failed to file a declaration without stating how this has prejudiced them in the filing of a plea. It must be borne in mind that the summary judgment is accompanied by an affidavit which verifies the cause of action and the amount, it identifies any point of law relied upon and the facts upon which the plaintiff’s claim is based.

[15] In simple terms, the affidavit in support of the application for summary judgment amplifies the claim to enable the defendant to understand clearly the cause of action. Having been able to file their plea to the allegations made in the simple summons and the affidavit in support of the application for summary judgment, I find that the filing of a declaration was not necessary. It is therefore my respectful view that the defendant’s defence herein has no merit.

[16] The defendants contend further that the plaintiff’s debt has prescribed as the summons was issued during 2020 for a debt which arose in 2018 and it (the summons) was served on the defendants only in 2022, and therefore the plaintiff’s claim has prescribed. This contention is without merit. Section 11 (a) (i) of the Prescription Act 68 of 1969 provides that the periods of prescription of debts shall be 30 years in respect of any debt secured by mortgage bond. The parties are at ad idem that the debt was acquired by way of a mortgage bond registered against the property. They are also at ad idem that they entered into a distressed restructure agreement in which they novated the previous agreement and entered into a new home loan agreement dated 25 September 2015.

[17] This Distressed Structure Agreement actually renewed the first loan agreement during September 2015, incorporating

the mortgage bond against the first defendant’s property. The defendant’s argument that the plaintiff’s claim

prescribed during 2018 is without merit because the claim is clearly based on a debt which was secured by mortgage bond. My view is therefore that the plaintiff has succeeded to prove that the defence as pleaded by the defendants does not raise any issue for trial and that the application for summary judgment stands to succeed.

APPLICATION IN TERMS OF RULE 46 (1) (a) (ii)

[18] Simultaneously with the application for Summary Judgment, the applicant also brings an application for an order declaring the property of the first respondent specially executable for the amounts and interest in terms of the summary judgment application. It prays that if the court orders the executability of the property then it must not set a reserve price, alternatively, that the reserve price be set at an amount equals to 50% of the market value of the property.

[19] Although the applicant applies for the executability of an immovable property, it contends that Rule 46A is not applicable because the first respondent is a juristic person namely, a close corporation, and the second and third respondents are not the owners of the subject property. According to the applicant the rule only applies to individual judgment debtors and not to corporate entities. This explains why the application is brought in terms of Rule 46 (1) (a) (ii) of the Uniform Rules of Court.

[20] Rule 46 (1) (a) (i) (ii) provides that:

“Subject to the provisions of rule 46A, no writ of execution against the immovable property of any judgment debtor shall be issued unless — (i) a return has been made of any process issued against the movable property of the judgment debtor from which it appears that the said person has insufficient movable property to satisfy the writ; or (ii) such immovable property has been declared to be specially executable by the court or where judgment is granted by the registrar under rule 31(5).”

[21] It is clear from the above, more particularly Rule 46 (1) (a) (ii) that the requirement is that the property must be declared to be specially executable by the court before any writ of execution against the property can be issued and this is subject to the provisions of Rule 46A. Rule 46A provides that:

(1) This rule applies whenever an execution creditor seeks to execute against the residential immovable property of a judgment debtor.

(2) (a) A court considering an application under this rule must —

(i) Establish whether the immovable property which the execution creditor intends to execute against is the primary residence of the

judgment debtor; and

(ii) Consider alternative means by the judgment debtor of satisfying the judgment debt, other than execution against the judgment debtor’s primary residence.

(b) A court shall not authorise execution against immovable property which is the primary residence of a judgment debtor unless the court, having considered all relevant factors, considers that execution against such property is warranted.

[22] According to Rule 46A, whenever an execution creditor seeks to execute against the residential immovable property of a judgment debtor this rule must be applied. Both rule 46(1) (a) (ii) and Rule 46A refer to a “judgment debtor”. If the applicant’s argument is that the first respondent is the only owner of the property and not the second and the third, the question should therefore be, who is the judgment debtor? And not, who is the owner of the property?

[23] Before 22 December 2017, the position was that there was no procedural protection afforded under Rule 46A. Property owned by a company, close corporation, trust, even if such property was occupied for residential purposes by a natural person who happened to be a shareholder, member of beneficiary of the respective company, close corporation or trust, was not protected under rule 46 until the inclusion of rule 46A. A sale in execution of a residential immovable property is subject to the judgment debtor’s Constitutional right to have adequate housing in terms of section 26 of our Constitution.

[24] The Constitutional Court in Japhta v Schoeman and Others; Van Rooyen v Stoltz and Others [2004] ZACC 25; 2005 (1) BCLR 78 (CC) provided for the judicial oversight of the process and held that the main reason for judicial oversight is to prevent execution against homes of indigent debtors, where they stand to lose their security of tenure and risk of being rendered homeless and give effect to section 26 of the Constitution. In Bestbier and Others v Nedbank Limited 2023 (4) SA 25 (SCA) (13 June 2022) the court held as follows in paragraph 25 and 26:

“[25] The text of rule 46A (1) reveals that the rule applies whenever an execution creditor seeks to execute against residential immovable property of a judgment debtor. Notably, rule 46A (2) provides that a court considering an application in which a creditor seeks to execute against the judgment debtor’s immovable property must consider various matters. Given that rule 46A (2) provides that a court ‘shall not’ authorise execution unless ‘all relevant factors’ have been considered, I can see no reason why the fact that the relevant immovable property is owned by a trust and occupied as a place of residence by the beneficiaries of that Trust should not be one of the factors to be taken into account. It is also noteworthy that rule 46A (3) requires that ‘every notice of application to declare residential immovable property executable shall be . . . on notice to the judgment debtor and to any other party who may be affected by the sale in execution . . .’.

(Own emphasis).

[26] It is clear from a plain reading of the entire text of rule 46A that it is important to have a preceding enquiry in all cases where the immovable property of the judgment debtor is used as residential immovable property. This preceding enquiry should be directed at establishing whether the persons occupying the immovable property in question are of the Jaftha kind. As I see it, a creditor seeking to execute against immovable property owned by a trust would have to establish whether beneficiaries of that trust occupy the immovable property in question. Where that has been established, rule

46A would have to be followed and, consequently, rule 33 of the Practice Directive would have to be complied with. I therefore

disagree with the submission made by the respondent’s counsel that the person to be protected by rule 46A is, in the tradition

of Jaftha and Gundwana, a natural person and not a legal persona such as a company or a close corporation, nor an

institution such as a trust, ‘. . . even if the immovable property is the shareholder’s, member’s or beneficiary’s

only residence’ Clearly, a blanket approach that considers all immovable property held in the name of a juristic person to fall outside the protection of rule 46A is too narrow.”

[25] It is common cause that the property is the primary residence of the second and the third respondents, however, what is in dispute is that because it is not their property therefore rule 46A does not find application. What Bestbier (supra) means to the facts that are before me is that, if rule 46A (2) (a) is correctly applied, I have to consider that despite the fact that the property is owned by the first respondent, it is used as a primary residence of the second and third respondents. This factor I must consider amongst all factors relevant to conclude whether execution against the property is warranted. I could find no reason why the fact that the subject property owned by the close corporation and occupied by the second and third respondents should not be taken into consideration in casu because the two are members of the first respondent. This is evident from the Company Search Report filed by the plaintiff in the

affidavit supporting the application for Summary Judgment.

[26] I therefore find that the applicant’s submission that Rule 46A does not find application in the facts before me is without merit and I reject it.

[27] Having established that the immovable property which the applicant intends to execute against is the primary residence of the second and third respondents I proceed to determine if there are alternative means by the judgment debtor of satisfying the debt other than execution against the subject property alternatively, whether the plaintiff has adopted creative means to allow the defendant to satisfy the debt. This are some of the factors the court should consider to be able to conclude that the execution of the property is warranted.

[28] In its founding affidavit, the plaintiff states that any client is entitled to make personal representations to it, the client may be granted indulgence or extension upon proper application in respect of payment obligations or restructuring. It also states that it has made unsuccessful attempts on many occasions to get into accepted payment arrangements with the defendants. The plaintiff has just paid lip service to the question whether creative means were adopted to allow the defendants to meet their payment obligations or to satisfy the debt.

[29] It would be expected for the plaintiff to state what processes they went through with the defendants and how they offered to assist the defendant and if the defendants were made aware of their rights in respect of the possible granting of an order for executability of the property they occupy. In Absa Bank Ltd v Njolomba and Other Cases 2018 (5) SA 548 (GJ) at 550E–551C Fisher J stated that:

“These laws and rules emanate from an accepted need to promote the objects of our Bill of Rights and especially the requirement that all relevant circumstances be considered before depriving a person of his or her home. They include the requirement that immovable property not be executed against without judicial oversight being brought to bear thereon and the recent introduction of rule 46A into the Uniform Rules which requires that the court “consider alternative means of satisfying the judgment debt, other than execution against the judgment debtor’s primary residence.” The cases have required stringent adherence to notice and service requirements and the furnishing of details in relation to the steps taken to manage the indebtedness of the debtor. Recent amendments to rule 46 [sic] of the Uniform Rules require the consideration by the court of alternative means of satisfying the judgment debt. These changes impose an even more rigorous investigative function on a court faced with an application for a declaration of executability and require still more information to be forthcoming in relation to the debtor’s circumstances and the value of the property.”

[30] The defendants alleged, in the summary judgment application that on 17 October 2022 they tendered to the plaintiff payment of the full arrears as set out in the summons, in the sum of R 32 973, 62 as well as administrative and legal costs, with a view of reinstating the credit agreement and the plaintiff rejected the proposal for reinstatement and insisted on arrears as per the summary judgment application which amount is in excess of R 150 000, 00. This, though it is evidence obtained in relation to the summary judgment application and not in the application in terms of rule 46 (1) (a) (ii) alternatively Rule 46A, is relevant to the consideration to be made whether the executability is warranted. It is clear from the above that the plaintiff is not interested in assisting the defendants to find alternative means to satisfy the debt.

[31] Furthermore, the plaintiff, as aforementioned, has failed to furnish the court with details in relation to the steps taken to manage the indebtedness of the debtor, in its affidavit. This simply means that the plaintiff has not proven that it has sufficiently explored alternative means on which the defendant can satisfy the debt. It is therefore my considered view that the plaintiff has failed to place before the court sufficient factors to consider find that the execution against the immovable property which is the primary residence of the second and third respondents, is warranted.

[32] In the result I make the following orders:

32.1. Summary Judgment is granted against the first, second and third defendants, jointly and severally, the one paying the other to be absolved for

32.1.1. Payment of the amount of R 475 485, 26.

32.1.2. Payment of interest on the amount of R 475,485.26 calculated at the rate of 5,75 % per annum compounded monthly in arrear from 1 July 2020 to date of final payment, both days inclusive, (being the base rate of 7.25% as at 01 July 2020 less 1.50%) which indebtedness is currently owing, due and payable.

32.1.4. Costs of the Summary Judgment application to be paid by the

defendants on a party to party scale, jointly and severally, the one paying the other to be absolved;

32.2. The application in terms of Rule 46 (1) (a) (ii), for the executability of the defendants’ property described as: ERF 1[...] W[...] Ext 8 Township, Registration Division JS., Mpumalanga Province, Emalahleni Local Municipality, is dismissed, with costs.

VUKEYA LD

JUDGE OF THE HIGH COURT

For the Applicant: Adv. J van der Berg Plaintiff/Applicant’s Attorneys: Stegmanns Incorporated Pretoria Ref: T E DUGGAN / MAT61911 C/O Bertus Venter Attorneys. Middelburg Tel: 013 282 6583 Email: tracy@stegmanns.co.za For the defendant/respondents: Ms Zahir Omar Defendants/Respondents’ Attorneys: Zehir Omar Attorneys Springs C/O GFT Pistorius INC Middelburg Tel: 013 282 7304; 011 815 1720 Ref: ZP45i Email: legal@tplaw.co.za; admin@zahiromarlaw.co.za Heard: 13 June 2023 Delivered: 08 November 2023