Nedbank Ltd v Jessa and Another, ABSA Bank Ltd v Morulane, Firstrand Bank Ltd v Hendricks and Another (6656/2011, 15274/11, 15388/2011) [2011] ZAWCHC 495; 2012 (6) SA 166 (WCC) (20 December 2011)

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

CASE NO: 6656/2011

NEDBANK LIMITED ….........................................................................Plaintiff

and

ASHWIN JESSA …...................................................................First defendant

VIMALA JESSA …...............................................................Second defendant

AND CASE NO: 15274/11 ABSA BANK LIMITED …............................................................................Plaintiff and ABIGAIL ELIZABETH MORULANE …................................................Defendant AND CASE NO: 15388/2011 FIRSTRAND BANK LIMITED …................................................................Plaintiff and EUGENE AUGUST HENDRICKS and ….....................................First defendant RAMONDE HENDRICKS ….....................................................Second defendant JUDGMENT DELIVERED ON 20 DECEMBER 2011 BLIGNAULT J: [1] These three applications, Nedbank Limited v A and V Jessa, Absa Bank Limited v A E Morulana and Firstrand Bank Limited v E and R Hendricks, have certain features in common. They are representative of a number of applications that were recently heard by me in motion court. [2] The plaintiff in each case is a registered bank. It applies for default judgment against the defendant. The summons in each case follows a standard pattern. The bank claims a capital amount from the defendant in respect of monies lent and advanced to him and interest thereon. The relief sought by the bank contains an order declaring certain immovable property of the defendant executable. In each case the property in question is used for residential purposes and it is encumbered by a mortgage bond in favour of the bank. The mortgage bond contains a clause which entitles the bank to have the mortgaged property declared executable. [3] The summons, I may add, also contains allegations regarding compliance by the bank of certain provisions of the National Credit

Act 34 of 2005 ("the NCA"). This judgment, however, is not concerned with the provisions of the NCA or the application thereof. [4] This judgment deals with two issues that frequently arise in this kind of cases: The first issue concerns the content of the clause which is intended to inform the defendant of his rights under section 26 of the Constitution of the Republic of South Africa Act 108 of 1996 ("the Constitution").

The second issue is the practice of the banks to place an affidavit with relevant information before the court at the hearing of the matter. The section 26 rule of practice [5] The summons in each case contains a paragraph with the following wording: "The defendant's attention is drawn to s26(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." [6] This paragraph has its origin in the judgment of the Supreme Court of Appeal in Standard Bank of SA Ltd v Saunderson and Another 2006 (2) SA 264 (SCA). The reasoning behind it is set out in para [25] of the judgment: " it seems to us desirable that the defaulting debtor should be informed, in the process of initiating action, that s 26(1) may affect the bond-holder's claim to execution it is in our view desirable to lay down a rule of practice requiring a summons in which an order for execution against immovable property is sought to inform the defendant that his or her right of access to adequate housing might be implicated by such an order. It is plainly desirable that this development should be prospective only, and it is as well to make clear that existing summonses are not invalid for want of reference to s 26(1). 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 Saunderson judgment then proceeded to formulate the rule of practice in the terms set out above. [7] It is noteworthy that the reasoning and the rule of practice in Saunderson referred to sub-section 26(1) of the Constitution only and not to sub-section 26(3). For ease of reference I quote these two sub­sections: "26 (1) Everyone has the right to have access to adequate housing. (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." [8] In the judgment of the Constitutional Court in Gundwana v Steko Development and Others 2011 (3) SA 608 (CC) the Saunderson judgment was in some respects overruled. It was made clear, amongst others, that it is not only the defendant's right to adequate housing in terms of sub-section 26(1) of the Constitution that must be considered before a residential property is declared executable but all relevant circumstances within the meaning of sub-section 26(3) of the Constitution. This is recognised in the recent judgment of a Full Bench of this court in Standard Bank of South Africa Ltd v Bekker and Another and Four Similar Cases 2011 (6) SA 111 (WCC) para [13]. [9] Meanwhile Uniform Rule of Court 46(1) was amended with effect from 19 November 2010 to read as follows: "46 Execution - Immovables (1) (a) No writ of execution against the immovable property of any judgment debtor shall issue until - (i) A return shall have been made of any processwhich may have been issued against themovable property of the judgment debtor fromwhich it appears that the said person has notsufficient movable property to satisfy the writ; or (ii) Such immovable property shall have beendeclared to be specially executable by the courtor, in the case of a judgment granted in terms ofrule 31 (5), by the registrar: Provided that, wherethe property sought to be attached is the primaryresidence of the judgment debtor, no writ shallissue unless the court, having considered all therelevant circumstances. Orders execution againstsuch property." [10] It is obvious that the amended rule 46(1) introduced the same requirement for an order declaring residential property executable

as sub-section 26(3) of the Constitution, namely consideration of relevant circumstances. [11] I may point out that although the Full Bench of this court in the Be/c/cer judgmen t quoted the Saunderson ml e of practice, it did not purport to approve of the precise content thereof. This is made clear, amongst others, from the passage which follows, in para [19], immediately after the quotation: "[19] The object of the [Saunderson] 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." [12] I am therefore of the view that the Saunderson rule of practice should be amplified to include an appropriate notification to the defendant that he is entitled to place information regarding relevant circumstances within the meaning of section 26 (3) of the Constitution and Uniform Rule of Court 46(1), before the court hearing the matter. [13] I must make it clear, finally, that my proposed amendment of the Saunderson rule of practice does not purport to have any retrospective effect. Plaintiff's Supplementary Affidavit [14] The second issue to be dealt with in this judgment is the practice on the part of plaintiffs to submit information regarding relevant circumstances to the court by way of an affidavit which is frequently not served on the defendant. [15] In my view this practice should not be followed. It is in direct conflict with the right to a fair hearing which is embodied in section 34 of the Constitution. This provision reads as follows: "34. Access to courts.—Everyone has the right to have any dispute that can be resolved by the application of law decided in a fair public hearing before a court or, where appropriate, another independent and impartial tribunal or forum." [16] In National Director of Public Prosecutions and Another v Mohamed NO and Others 2003 (4) SA 1 (CC) para [36] Ackermann J described the audi alteram partem rule is one of the main pillars of the section 34 fair hearing right. [17] If it is intended to place additional facts regarding relevant circumstances before the court, they should be alleged in

plaintiff's summons and served on the defendant. This is the procedure envisaged in para [29] of the Bekker judgment. [18] In all three these cases orders are granted as prayed for. A.P. BLIGNAULT

AND

CASE NO: 15274/11

ABSA BANK LIMITED …............................................................................Plaintiff

ABIGAIL ELIZABETH MORULANE …................................................Defendant

CASE NO: 15388/2011

FIRSTRAND BANK LIMITED …................................................................Plaintiff

EUGENE AUGUST HENDRICKS and ….....................................First defendant

RAMONDE HENDRICKS ….....................................................Second defendant

JUDGMENT DELIVERED ON 20 DECEMBER 2011

BLIGNAULT J:

[1] These three applications, Nedbank Limited v A and V Jessa, Absa Bank Limited v A E Morulana and Firstrand Bank Limited v E and R Hendricks, have certain features in common. They are representative of a number of applications that were recently heard by me in motion court.

[2] The plaintiff in each case is a registered bank. It applies for default judgment against the defendant. The summons in each case follows a standard pattern. The bank claims a capital amount from the defendant in respect of monies lent and advanced to him and interest thereon. The relief sought by the bank contains an order declaring certain immovable property of the defendant executable. In each case the property in question is used for residential purposes and it is encumbered by a mortgage bond in favour of the bank. The mortgage bond contains a clause which entitles the bank to have the mortgaged property declared executable.

[3] The summons, I may add, also contains allegations regarding compliance by the bank of certain provisions of the National Credit

Act 34 of 2005 ("the NCA"). This judgment, however, is not concerned with the provisions of the NCA or the application thereof.

[4] This judgment deals with two issues that frequently arise in this kind of cases:

The first issue concerns the content of the clause which is intended to inform the defendant of his rights under section 26 of the Constitution of the Republic of South Africa Act 108 of 1996 ("the Constitution").

The second issue is the practice of the banks to place an affidavit with relevant information before the court at the hearing of the matter.

The section 26 rule of practice

[5] The summons in each case contains a paragraph with the following wording:

"The defendant's attention is drawn to s26(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."

[6] This paragraph has its origin in the judgment of the Supreme Court of Appeal in Standard Bank of SA Ltd v Saunderson and Another 2006 (2) SA 264 (SCA). The reasoning behind it is set out in para [25] of the judgment:

" it seems to us desirable that the defaulting debtor should be

informed, in the process of initiating action, that s 26(1) may affect

the bond-holder's claim to execution it is in our view

desirable to lay down a rule of practice requiring a summons in which an order for execution against immovable property is sought to inform the defendant that his or her right of access to adequate housing might be implicated by such an order. It is plainly desirable that this development should be prospective only, and it is as well to make clear that existing summonses are not invalid for want of reference to s 26(1).

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 Saunderson judgment then proceeded to formulate the rule of practice in the terms set out above.

[7] It is noteworthy that the reasoning and the rule of practice in Saunderson referred to sub-section 26(1) of the Constitution only and not to sub-section 26(3). For ease of reference I quote these two sub­sections:

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

(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."

[8] In the judgment of the Constitutional Court in Gundwana v Steko Development and Others 2011 (3) SA 608 (CC) the Saunderson judgment was in some respects overruled. It was made clear, amongst others, that it is not only the defendant's right to adequate housing in terms of sub-section 26(1) of the Constitution that must be considered before a residential property is declared executable but all relevant circumstances within the meaning of sub-section 26(3) of the Constitution. This is recognised in the recent judgment of a Full Bench of this court in Standard Bank of South Africa Ltd v Bekker and Another and Four Similar Cases 2011 (6) SA 111 (WCC) para [13].

[9] Meanwhile Uniform Rule of Court 46(1) was amended with effect from 19 November 2010 to read as follows:

"46 Execution - Immovables

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

(i) A return shall have been made of any processwhich may have been issued against themovable property of the judgment debtor fromwhich it appears that the said person has notsufficient movable property to satisfy the writ; or

(ii) Such immovable property shall have beendeclared to be specially executable by the courtor, in the case of a judgment granted in terms ofrule 31 (5), by the registrar: Provided that, wherethe property sought to be attached is the primaryresidence of the judgment debtor, no writ shallissue unless the court, having considered all therelevant circumstances. Orders execution againstsuch property."

[10] It is obvious that the amended rule 46(1) introduced the same requirement for an order declaring residential property executable

as sub-section 26(3) of the Constitution, namely consideration of relevant circumstances.

[11] I may point out that although the Full Bench of this court in the Be/c/cer judgmen t quoted the Saunderson ml e of practice, it did not purport to approve of the precise content thereof. This is made clear, amongst others, from the passage which follows, in para [19], immediately after the quotation:

"[19] The object of the [Saunderson] 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."

[12] I am therefore of the view that the Saunderson rule of practice should be amplified to include an appropriate notification to the defendant that he is entitled to place information regarding relevant circumstances within the meaning of section 26 (3) of the Constitution and Uniform Rule of Court 46(1), before the court hearing the matter.

[13] I must make it clear, finally, that my proposed amendment of the Saunderson rule of practice does not purport to have any retrospective effect.

Plaintiff's Supplementary Affidavit

[14] The second issue to be dealt with in this judgment is the practice on the part of plaintiffs to submit information regarding relevant circumstances to the court by way of an affidavit which is frequently not served on the defendant.

[15] In my view this practice should not be followed. It is in direct conflict with the right to a fair hearing which is embodied in section 34 of the Constitution. This provision reads as follows:

"34. Access to courts.—Everyone has the right to have any dispute that can be resolved by the application of law decided in a fair public hearing before a court or, where appropriate, another independent and impartial tribunal or forum."

[16] In National Director of Public Prosecutions and Another v Mohamed NO and Others 2003 (4) SA 1 (CC) para [36] Ackermann J described the audi alteram partem rule is one of the main pillars of the section 34 fair hearing right.

[17] If it is intended to place additional facts regarding relevant circumstances before the court, they should be alleged in

plaintiff's summons and served on the defendant. This is the procedure envisaged in para [29] of the Bekker judgment.

[18] In all three these cases orders are granted as prayed for.

A.P. BLIGNAULT