SB Guarantee Company (RF) (Pty) Ltd v Key and Another (71519/2019) [2020] ZAGPPHC 469 (20 August 2020)

IN THE HIGH COURT OF SOUTH AFRICA

(GAUTENG DIVISION, PRETORIA)

(1) REPORTABLE: YES/NO

(2) OF INTEREST TO OTHERS JUDGES: YES/NO

(3) REVISED

Case No: 71519/2019

In the matter between:

SB GUARANTEE COMPANY (RF) (PTY) LTD

Applicant

and

ZOLA ALLEN MONTOR KEY

First Respondent

PORTIA MAMMIDI KEY

Second Respondent

JUDGMENT

BAQWA J

INTRODUCTION

1 This is an application for foreclosure arising out of a loan facility by the Standard Bank to the respondents in terms of which the respondents indemnified the applicant against any obligation it had to the Standard Bank under a guarantee and registered mortgage bond in favour of the applicant.

BACKGROUND

2 On 1 March 2015 the Applicant and the Standard Bank concluded an agreement in terms of which the applicant would as the need arose guarantee the obligations of the Standard Bank debtors under individual home loan agreement.

3 On 29 May 2017 the Standard Bank and the respondents concluded a home loan agreement in terms of which the respondents were loaned an amount of R3.7 million repayable over 240 months in instalments of R48 448.05. The loan would be secured by the mortgage bond over Holding 157 Bashewa Agricultural Holdings (“the property”).

4 A continuing covering bond was registered over the property in favour of the applicant.

5 The applicant alleges that the respondents breached the home loan agreement by failing to pay the instalments, alternatively by making sporadic payments from November 2017 after the registration of the mortgage bond.

6 The applicant demanded payment but despite such demand respondent failed or refused to pay the arrears. Consequently, the applicant cancelled the agreement on 2 August 2019.

7 In this application the applicant seeks an order against the respondents for payment of R3 986 841.12 together with interest and costs consequent to such cancellation. The applicant also seeks an order declaring the property specially executable.

DEFENCES RAISED

8 The respondents have raised a number of defences to the applicant’s

claim, namely:

8.1 The property is their primary residence;

8.2 They will be in a position to settle the arrears in full within a few months from the date of hearing;

8.3 The applicants have not taken into account the improvements made on the property in the evaluations thereof;

8.4 The Section 129 (1) notice has not come to their notice inasmuch as they no longer reside at the domicilium address to which the notice was posted.

8.5 The applicant has not complied with the guarantee agreement in that they were not notified to make payments to Standard Bank.

8.6 The property should not be declared specially executable as a matter of course in terms of the Constitution.

DISCUSSION

9 Regarding the Section 129 (1) notice, an applicant is required to prove that the notice was sent by prepaid registered post to the correct branch of the post office and that the Post Office sent the relevant notification to the respondents. An inference can then be drawn that the respondents received the registered item. See Kubyana v Standard Bank of South Africa Ltd 2014 (3) SA 56 CC at para 54.

10 From the evidence tendered by the applicant, it would appear that the above requirements were complied with. Moreover, despite the respondents alleging that they have since moved from the domicilium address, they do not allege that the notice was sent to the wrong address.

11 What puts the Section 129 (1) issue to rest however is the undisputed evidence that on 9 July 2019 the first respondent acknowledged by email that he received the notice and that on 2 August 2019 he received the cancellation letter.

12 It is trite that the primary residence consideration only kicks in once an infringement has occurred. See Standard Bank of South Africa v Saunderson and Others 2006 (2) SA 264 (SCA) at para 20. The respondents have not proved that such are infringement has occurred.

13 In order to prove such an infringement, they would have to discharge an onus as follows:

“..There is an onus on the debtor, at the very least, to provide the Court with information concerning whether the property is his or her personal residence, whether it is a primary residence, whether there are other means available to discharge the debt and whether there is a disproportionality between the execution and other possible means to exact payment of the judgment debt.” See NPGS Protection and Security Services CC and Another v Firstrand Bank Ltd 2020 (1) SA 494 (SCA) at para 55.

It does not seem that the respondents have discharged this onus as will become clearer below.

14 Section 123 of the NCA provides:

“(1) A credit provider may terminate a credit agreement before the time provided in that agreement only in accordance with this section;

(2) If a consumer is in default, under a credit agreement, the credit provider may take the steps set out in Part C of Chapter 6 to enforce and terminate that agreement.”

15 Section 129 (3) of the NCA provides:

“(3) Subject to subsection (4), a consumer may (a) at any time before the credit provider has cancelled the agreement re-instate a credit agreement that is in default by paying to the credit provider all amounts that are overdue, together with the credit provider’s prescribed default administration charges and reasonable costs of enforcing the agreement up to the time of the default was remedied.”

16 On the other hand, Section 129 (4) (c) provides as follows:

“A credit provider may not reinstate or revive a credit agreement after-

(c) The termination thereof in accordance with Section 123.”

17 As stated above, having complied with the relevant requirements the applicant was able to terminate the agreement in terms of Section 129 (3). This was done by giving a notice in writing on 2 August 2019.

18 In the circumstances, the submission by the respondents that they may still be able to settle the arrears is not possible in light of the legal prescripts referred to above. Cancellation prevents the possibility of a reinstatement.

19 The respondents are also not assisted by the accreditation and management agreement which they submit as proof of a potential source of income. The agreements are incomplete in that they have not be signed by some of the parties. They would therefore appear to be draft agreements which cannot provide any potential relief to the applicant even if there were no legal obstacles to reinstatement.

20 The respondents also seek to challenge the authority of the deponents to both the founding affidavit and the replying affidavits. This challenge is made in the face of their statements under oath that they are duly authorised to represent the applicant. There is no basis for the challenge and it would seem to be part of the technical defences that the respondents seek to raise.

21 Another technical defence raised is the reference to applicant’s evaluation as inaccurate and outdated. It is true that applicant’s evaluation is R3 435 000.00 and that it was obtained on 20 February 2018. The respondent’s evaluation was obtained on 15 October 2019 and it reflects a market value of R4 840 000.00. Market value is just one of the factors taken into account in terms of Rule 46 A (9) in order to determine whether a reserve price ought

to be fixed or not with a view to protecting the interests of respondents in the event the property being declared executable.

The other factors are: the amounts owing as rates or levies; the amounts owing on mortgage bonds; any equity which may be realised between the reserve price and the market value of the property; reduction of the judgment debtor’s indebtedness on the judgment debt and as contemplated in sub-rule 5 (a) to (e) whether or not equity may be found in the property, the likelihood of the reserve not being realised and the property not being sold.

The respondent’s evaluation is not a factor that ought to be elevated to a point where the matter is referred for oral evidence as submitted by respondents. The Court is at large to take cognisance of the later evaluation in settling the reserve price. Evaluation of the property in question cannot be utilised to offer respondents who have acted in breach of an agreement a defence where they have none.

It so happens that in the present case the respondents do not seem to dispute that they are in arrears and in breach of the agreement. They are instead pleading for time to raise funds in order to settle arrears. The time for doing so was the time when they were served with a Rule 129 (1) notice. They did not utilise that opportunity to engage the applicant and make alternative arrangements to settle the arrears. As matters stand, the applicant, acting in terms of the Act, has already cancelled the agreement. The respondents have only themselves to blame for the situation they find themselves in.

22 As matters stand, the current debt owing by the respondents is about R4.4 million whilst the arrears stand at R734 000.00. Taking the applicant’s valuation into account, that results in negative equity of about R1 million rands. Even if I were to utilise the respondents’ evaluation that would not result in equity to protect in terms of Rule 46A. In the circumstances the result is that the property ought to be declared executable without reserve. See

ABSA Bank Ltd v Mokebe and Related Cases 2018 (6) SA 492 (GJ).

23 Respondent’s Counsel, relying on the matter of Japhta v Schoeman and Others [2004] ZACC 25; 2005 (2) SA 140 (CC) submits that there will be instances when executions will be unjustifiable because the advantage that attaches to a creditor who

seeks execution will be far outweighed by the immense prejudice and hardships caused to the debtor. (Japhta paras 43 – 43).

24 The fact of the matter is, whilst such considerations are indeed factors to be weighed by a Court, the order to be granted remains in the discretion of the Court seized with the matter.

CONCLUSION

25 In the present case, having weighed all the factors, I am not persuaded that this is a case where I ought to exercise such a discretion in favour of the respondents.

THE ORDER

26 In the circumstances, having read the documents filed, having listened to Counsel and having considered the matter, I am satisfied that a proper case has been made out and make the following order:

26.1 Payment of the sum of R4 444 900.28;

26.2 Payment of interest on the aforesaid sum at the rate of prime plus 4.4% per annum, which interest is calculated daily and compounded monthly in arrears from 12 June 2020 to date of payment, together with monthly insurance premiums of R1 499.87;

26.3 the following immovable property is declared specially executable:

26.3.1 Holding 157 Bashewa Agricultural Holdings, Registration Division J.R, the Province of Gauteng, measuring 4,4326 (Four Comma Four Three Two Six) Hectares, Held by Deed of Transfer No. T85492/2017;

26.3.2 The Registrar of the above Honourable Court is authorised to issue a Warrant of Execution against the aforesaid immovable property.

26.4 Costs of the application on the attorney and own client scale.

JUDGE SELBY BAQWA

JUDGE OF THE HIGH COURT OF SOUTH AFRICA

GAUTENG DIVISION, PRETORIA

Heard on

: 18 August 2020

Judgment delivered

: 20 August 2020

Appearances:

For the Applicant

: Adv. M De Oliveira

Instructed by

: Jason Michael Smith Inc Attorneys

For the 1st – 2nd Respondent : Adv. A Billings

Instructed by

: Soomar Marlik Attorneys