Nedbank Ltd v Hynek; In re: Standard Bank of South Africa Ltd v Molefe and Another (66547/2015, 66856/2015) [2015] ZAGPPHC 1066 (22 October 2015)

IN THE HIGH COURT OF SOUTH AFRICA

GAUTENG DIVISION, PRETORIA

CASE NO: 66547/2015

DATE: 22 OCTOBER 2015

In the matter between:

NEDBANK LTD

And

FRANK ROBERT HYNEK

CASE NO: 66856/2015

In the matter between:

STANDARD BANK OF SOUTH AFRICA LTD.......................................................................Plaintiff

SILAS MOLEFE.............................................................................................................First Defendant

RAMADUMETJA PEGGY MOAGI........................................................................Second Defendant

JUDGMENT

DAVIS, AJ

THE PARTIES AND THE NATURE OF THE APPLICATIONS:

[1] The Plaintiffs are financial institutions and credit providers. The Defendants are defaulting debtors in respect of loan agreements secured by mortgage bonds over their immovable properties.

[2] The Plaintiffs are the Applicants in applications for default judgment and they claim declarations of executability of the immovable properties in question.

[3] These applications are two of many which regularly feature on the daily unopposed motion court rolls in this division. In fact similar applications take up a substantial portion of the unopposed motion court rolls as well as the judicial time spent in the preparation thereof.

[4] Many of the applications of this nature on these rolls have various defects which occur with unsatisfactory regularity and the two applications under consideration in this judgment are merely illustrative of the manner in which applications of this nature are approached by both the credit providers and their legal representatives.

LEGAL PRINCIPLES:

[5] Security of tenure is guaranteed as follows in Section 26 of the Constitution of the Republic of South Africa, Act 108 of 1996 (“the Constitution"):

“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 may be 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."

[6] The Constitutional Court has, in Jaftha v Schoeman and Others: Van Rooven v Stoltz and Others 2005(2) SA 140 (CC) in dealing with legislation which unduly infringed on these rights (such as Section 66(1)(a) of the Magistrate’s Courts Act, 32 of 1944 (as it then read)) found (at [34]):

"... at the very least, any measure which permits a person to be deprived of existing access to adequate housing limits the rights protected in Section 26(1)"

[7] Subsequently, the Supreme Court of Appeal has also confirmed the requirement for judicial oversight of execution of judgments sounding in money against immovable property in Standard Bank of South Africa Ltd v Saunderson and Others 2006(2) SA 264 (SCA).

[8] The Constitutional Court has further found that the High Court Rules and Practices which allowed Registrars to grant orders of executability against immovable property were unconstitutional. See Gundwana v Steko Development and Others 2011(3) SA 608 (CC) (“the Gundwana judgment). Consequently, the proviso in Rule 46 of the High Court Rules (which was introduced by way of an amendment dated 24 December 2010 (which incidentally predated the Gundwana judgment)) currently provides as follows:

“Rule 46(1 )(a) -

No writ of execution against the immovable property of any judgment debtor shall issue until...

(ii) such immovable property shall have been declared to be specially executable by the court... provided that, where the property sought to be attached is the primary residence of the judgment debtor, no writ shall issue unless the court, having considered all the relevant circumstances, orders execution against such property."

[9] The position has accordingly been summarised as follows by the learned author Harms in Civil Procedure in the Supreme Court at B46.2A:

“Section 26(1) of the Constitution is NOT compromised in every case where execution is levied against residential property. it is only when a writ of execution would deprive a person of adequate housing which would compromise his or her Section 26(1) rights that it would therefore need to be justified as contemplated by Section 36(1) of the Constitution

[10] Subsequently, a “Full Bench” of this Division in Firstrand Bank Ltd v Folscher and Another and similar matters 2011(4) SA 314 (GNP) after an evaluation of the abovementioned cases and consideration of the manner in which the relevant information to be considered by a court should be placed before it issued guidelines (in addition to the contents of the writ including a notice to the debtor that he may apply for rescission of the judgment enforced against the hypothecated immovable property). These guidelines are to the effect that:

10.1 If the debtor does not enter appearance to defend after the service of summons on him and the creditor applies for judgment by default, the creditor must file an affidavit in which he sets out all of the following circumstances:

10.1.1 The amount of arrears outstanding on the date of application for default judgment;

10.1.2 Whether the hypothecated property was acquired with a State subsidy or not;

10.1.3 Whether, as far as the debtor is aware, the property is occupied or not;

10.1.4 Whether the property is utilised for commercial or residential purposes;

10.1.5 Whether the debt sought to be enforced was incurred to acquire the property or not;

10.1.6 In addition, in a matter in which the amount claimed falls within the jurisdiction of the Magistrate’s Court, it must be referred to the court if the hypothecated property is to be declared especially executable.

10.2 A creditor applying to court for the granting of a writ of execution, after obtaining judgment by default, must file an affidavit setting out all the applicable circumstances enumerated in paragraph 41 of the judgment of which the creditor is aware of or is able to reasonably establish from the information at its disposal.

10.3 A creditor instituting action may include a prayer for a writ of execution in the summons, provided that the relevant circumstances identified above are recorded therein. This information is to be verified by an affidavit when an application is made for judgment by default which must be made to the High Court of a granting of a writ is sought at the same time.

[11] Appendix IV of the Practice Directives of the North Gauteng High Court (as it then was)provides for certain notifications to be included in the notice in terms of Section 129 of the National Credit Act and thereafter also provides as follows:

"15. In addition to the aforegoing, the guidelines laid down in the judgment in Firstrand Bank Ltd v Folscher and Another and similar matters 2011(4)

SA 314 (GNP) and the judgments referred to therein must be followed."

[12] I interpose that different practice considerations apply in different divisions. So for example, has it been found by a “Full Bench” in the Western Cape in Standard Bank of South Africa v Bekker and four similar cases 2011 (6) SA 111 (WCC) at [27] that:

12.1 It is desirable that a 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 or special executability is sought ancillary to judgment on the money claim.

12.2 It was found to be “in general undesirable" that the issues regarding executability be dealt with by the introduction of affidavits in the manner required by the practice note issued in the North Gauteng Court (Practice Note 33 of the Western Cape directs the attention of practitioners to Rossouw and Another v Firstrand Bank Ltd 2010(6) SA 439 (SCA) and in particular paragraphs 33 to 37 thereof which primarily deal with the contents of notices in terms of Section 129 of the National Credit Act, No. 34 of 2005).

12.3 Rule 46(1 )(a) does not give rise to a new substantive obligation on mortgagees seeking orders for execution against hypothecated property and that the procedural obligations of such a mortgagee claiming an order that a writ of execution issue against hypothecated property are limited "in the ordinary case” to compliance with the so-called Saunderson practice note (the uSaunderson practice note” contains the requirement that summonses initiating action in which a plaintiff claims a relief that embraces an order declaring immovable property executable include a statement whereby the defendant’s attention is drawn to Section 26(1) of the Constitution and that it is incumbent on the defendant to place information supporting a claim for access to adequate housing before the court).

APPLICATION OF THE GUIDELINES:

[13] Despite all of the above judicial pronouncements and the guidelines contained in the two “Full Bench” decisions, credit providers and

legal practitioners still invariably “get it wrong” more often than not. Whilst applications for orders of executability readily comply with the “Saunderson practice note” and with the practice directives regarding the content of a notice in terms of Section 129 of the National Credit Act, No. 34 of 2005, applicants, to a varying degree, fail to properly apply the remainder of the guidelines for placing relevant information before a court.

[14] Even if one were to appreciate and take into consideration (as one must) the shear volume of defaulting debtors with which large financial institutions and similar credit providers must cope, including the vast number of actions consequently instituted and in respect of which default judgments are sought, including orders for executability of immovable property, the often glaringly apparent so-called "cut- and-paste” manner of preparing documents to be presented to a court is both to be deplored and results in numerous inaccuracies and deficiencies.

[15] One of the most prevalent consequences of these deficiencies refers to the issue of service on a chosen domicile. An example is to be found in the second of the abovementioned matters (case no. 66856/2015). Herein the practitioner had deposed on oath on behalf of the plaintiff that "... the process was served upon the defendant

by handing a copy thereof to a person apparently employed at the defendant’s chosen domicilium citandi et executandi The

chosen domicile in terms of the relevant clause in the bond (which choice was absent from the preceding home loan agreement) was “75 Kopauong Section Service took place at “7 Kopauong SectionThe return reads that it was served on a person who was a llmember of the congregation". The sheriff further pointed out that the incorrect address where he was required to effect service was in fact a church. The incorrect address was the address indicated in the particulars of claim and in the summons and which was expressly “verified’ by yet a further separate affidavit delivered in support of the warrant of execution in terms of Rule 46(1)(a)(ii). Despite all of this, the papers (including the return) were properly and neatly indexed, paginated, presented to the Registrar and the matter was enrolled for hearing. I refer to this aspect because it is one which repetitively occurs in the unopposed motion court where a presiding judge has to meticulously trawl through the papers in order to determine the correctness of the allegations “verified" therein. If practitioners are so lax in verifying easily ascertainable facts, it raises a question regarding the weight to be attached to the other documents presented by them for purposes of a court exercising the

judicial oversight function prescribed in the Constitutional Court judgments referred to above.

[16] Apart from the issues of service, the manner in which the guidelines in the Firstrand Bank Ltd v Folscher case, incorporated in the Practice Manual are to be dealt with also deserve attention. The placing of the relevant information before a court for purposes of judicial oversight can be done in one of two ways: Either the basis for the claim for executability could be set out in the particulars of claim or they could be set out in a separate affidavit in support of a claim for a writ of execution in terms of Rule 46(1)(a)(ii). Both alternatives are permissible on condition that if the facts have been set out in the particulars of claim, they must in any event be verified and confirmed on oath. Simple as the above may sound, these guidelines are apparently in practice applied with little thought and even less precision.

[17] In instances where applicants and practitioners choose to utilise the first of the two aforementioned alternatives, namely the inclusion of the grounds on which they would wish to rely for a claim for executability in the particulars of claim, virtually all rules applicable to pleadings appear to be ignored and/or abandoned. For illustrative purposes I refer again to the particulars of claim in the second of the

abovementioned matters (case no. 66856/2015) which is but one of many repetitive examples in the unopposed motion court. In this instance in the particulars of claim, the “accuracy’ of which has been confirmed in a separate affidavit, the following have inter aiia been stated (I specifically refrain from using the term “pleaded’)'.

"15. In light of the decision of the North Gauteng High Court, Pretoria, in the matter of Firstrand Bank Ltd v Folsher. Bismarck and Another in the event that the plaintiff seeks an order declaring the property executable, it is required to provide the Honourable Court with certain facts and circumstances surrounding the defendant’s indebtedness to the plaintiff.

16. Accordingly the necessary information required for the Honourable Court is now dealt with to exercise its discretion in granting an order declaring the property executable.

17. ... Attached hereto as Annexure “E” is a copy of the defendant’s loan history being a printed screen shot from the plaintiffs online system and a payment profile as received from the plaintiff...

19. ... Attached hereto as Annexure “F” is a property valuation which was conducted on or about 19

October 2009. The valuation has been printed in screen shots from the plaintiff’s online system which printout evidences the current value of the property.

20. The plaintiff submits that the court upon hearing this application for declaring the property executable and authorising the Registrar to issue a warrant of execution against the property may call for further information to enable the court to exercise its discretion ...

24. It is respectfully submitted that the defendant consciously and with the intention of securing the loan amount which has been advanced by the plaintiff to the defendants mortgaged the property to the plaintiff in full knowledge that in the event that the defendants breach the agreement and bond the plaintiff would rely on such security and seek an order declaring the property executable.”

I have quoted the paragraphs in full as a reading thereof will best illustrate the deficiencies.

[18] Apart from the fact that facta probantia and not only facta probanda are pleaded, the allegations are not made in the fashion required of pleadings. High Court Rule 18(4) lays down that “every pleading shall contain a clear and concise statement of the material facts upon which the pleader relies for his claim ... with sufficient particularity to enable the opposite party to reply thereto” (my emphasis). Pleadings should not contain references to case law or statements that a court may claim or require further particulars. Furthermore expressions of opinion or submissions are not statements of fact even where there is a failure to dispute the conclusion. (See Buchner and Another v Johannesburg Consolidated Investment Company Ltd 1995(1) SA 215 (TPD) at 217D-G.)

[19] The following is also stated in the seminal work Erasmus - Superior Court Practice at B1-130A:

“The necessity to plead material facts does not have its origin in the Rules of Court. It is fundamental to the judicial process that the facts have to be established. The court, on the established facts, applies the rules of law and draws conclusions as regards the rights and obligations of the parties. A summons which propounds the plaintiffs own conclusions and opinions instead of the material facts is defective. Facts and not evidence must be pleaded ... The distinction between facta probanda (the facts that had to be proved) and facta probantia (the facts that would prove those facts) should be kept in mind”

[20] Although the considerations of the facts and circumstances required to make a determination in terms of Rule 46(1 )(ii) and the factors listed in Firstrand Bank v Folscher at paragraphs [41] thereof are varied and in certain instances nuanced and although the exercise of a judicial discretion is involved, it does not give licence to resort to shoddy pleadings. As stated in Firstrand Bank v Folscher (at 333E) the inquiry "... must always be fact-bound to identify the criteria that are relevant for the particular case”. Imprecise or vague pleadings do not assist a court in conducting this exercise.

[21] To plead that a “screen shot received from the plaintiff’ is attached, to quote case law, to make “submissions” and not pleading claims, restating a court’s authority to ucall for further information" and the like would ordinarily render a pleading excipiable. It also detracts from the evidentiary weight of the accompanying verifying affidavit.

[22] In instances where plaintiffs choose the other alternative, namely to set out the facts and factors to be considered in a separate affidavit, it is often found that such an affidavit is treated with apparent disdain by practitioners. It appears as if the list of factors mentioned in Firstrand Bank v Folscher are merely repeated by rote or as a formality. An example is that found in case no. 66547/2015 where, in an attempt at compliance with the guidelines, the following is stated:

“9. The arrear amount owing by the defendant on the mortgage bond currently amounts to R6 006,74.

10. The defendant is in occupation of the property.

11. The defendant does not make use of any state housing subsidy.

12. The property is utilised for residential purposes.

13. The debt involved is for a substantial amount and cannot be regarded as trivial.

14. No satisfactory alternative remains which might allow for the recovery of the debt by the plaintiff.

15. To the best of my knowledge no notice of intention to defend was issued, served and filed by the defendant.

16. I accordingly request the following ..

[23] The above examples, which are representative of a substantial portion of similar applications, indicate that when plaintiffs and practitioners elect to set out the relevant factors in pleadings, they do so in an improper and elaborate fashion as if evidence was led. Conversely, when they elect to set out the factors in affidavits, they do so with the paucity generally required of pleadings.

[24] Neither manner in which the two alternatives are utilised amount in assisting the proper administration of justice and not only result in a waste of judicial time but hamper the exercise of a judicial discretion in circumstances which might prejudice constitutional rights.

[25] The reality is that it must be accepted that execution in itseif 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 on the judgment debt, compared to other available means to attain the same purpose, that alarm bells should start ringing". (Gundwana v Steko Development and Others supra at par. [52]).

[26] The further contentions on behalf of plaintiffs that when a debtor has been called up to furnish his version regarding his default or to take remedial steps in respect thereof and furthermore has been called upon to place evidence before a court in response to the required notices in terms of the National Credit Act and now required to be contained in the summons and particulars of claim where his attention is drawn to the provisions of Section 26 of the Constitution and Rule 46 of the High Court Rules, such a defaulting debtor should not complain if his silence or default leaves the court with only the facts placed before it by the plaintiff are correct. Both the reality mentioned in paragraph [25] and these latter contentions will however only hold water and pass constitutional muster if the facts or factors have been properly placed before a court. Haphazard or deficient pleadings or affidavits do not, in my view, constitute compliance with the decisions I have referred to.

[27] It is not apposite to formulate more precise guidelines than those set out in Firstrand Bank Ltd v Folscher (supra) and Standard Bank of South Africa v Bekker (supra) other than the deficiencies pointed out herein regarding the manner in which those guidelines are by and large applied. The reason for this is twofold: Firstly there is the risk that if the format of pleadings or affidavits is more specifically defined the temptation would arise that it would again merely be used as a template without individualisation thereof or without the minds of plaintiffs and their practitioners being properly applied thereto. Any attempt at what may be perceived to be a template would also provide fertile ground for the invasive “cut-and-paste” virus to flourish. The second reason is, as stated in the

“Prolegomenon” to the sixth edition of Harms. Amler’s Precedents of Pleadings (quoting from the foreword to the first edition of the said work by the late Harry Snitcher QC):

“The drawing of pleadings is an important part of the art of the advocate and the attorney and is an ability which is acquired and perfected only after years of experience. To set down in clear concise and lucid form the distilled essence of a plaintiffs cause of action or of a defendant’s defence is of the essence of that art. It requires a clear conception not only of the client’s case but also constitutes a searching test of the pleader's knowledge of the law involved. It has been said that the test of a client’s case is very often whether it can be reduced in the form of a pleading to which no exception can be

taken”

[28] In summary, what needs to be stated (and followed) is the following:

28.1 Every attempt should be made by Plaintiffs and their practitioners to establish the correct set of facts and factors applicable to every instance where executability of a primary residence is sought and which may impact on a debtor’s constitutional rights in terms of Section 26 of the Constitution.

28.2 This attempt should not be limited to the factors set out in Firstrand Bank v Folscher but should at the least include the presentation to a court of such of those factors as may be applicable to a specific case.

28.3 If the facts and factors are included in particulars of claim, they should be pleaded in proper fashion and properly and accurately verified in a separate affidavit.

28.4 If the facts and factors are set out in a separate affidavit, they should be properly, fully and in an individualised manner be dealt with and slavish repetition should be avoided.

ORDER:

[29] Not surprisingly, in both the applications in which this judgment is rendered, the applicants at the hearing of the matter requested that the matters be removed from the roll. That is a request readily acceded to, particularly where in the one matter the indication was given that an “arrangement’ has been reached between the Plaintiff and the Defendant.

[30] The order that I make is the following:

1. Both the matters of Nedbank Ltd v F A Hynek case no. 66547/2015 and Standard Bank of South Africa v S Molefe & R P Moagi case no. 66856/2015 are removed from the roll on which they had been set down, being that of 8 October 2015.

2. The Applicants in both matters are not entitled to recover the costs of the applications set down on the aforesaid date ftom the respective Defendants.

DAVIS

ACTING JUDGE OF THE HIGH COURT

GAUTENG DIVISION

PRETORIA