Standard Bank of South Africa Limited v Hales and Another (8278/2008) [2009] ZAKZHC 3; 2009 (3) SA 315 (D) ; [2009] 2 All SA 416 (D) (11 February 2009)

REPORTABLE

IN THE HIGH COURT OF SOUTH AFRICA

DURBAN AND COAST LOCAL DIVISION

CASE NO: 8278/2008

In the matter between:

THE STANDARD BANK

OF SOUTH AFRICA LIMITED PLAINTIFF

and

DENNIS GEORGE HALES FIRST DEFENDANT

RUBY CLARE WIGHT SECOND DEFENDANT

_____________________________________________________________________

JUDGMENT

GORVEN J

[1] The plaintiff seeks to foreclose on a mortgage bond registered on 10 July 2007 in its favour over the immovable property of the defendants as security for a loan by the plaintiff to the defendants.

[2] The parties agreed a stated case in terms of rule 33(1) of the Uniform Rules of Court. The stated case reads as follows:

“1. The defendants applied to the plaintiff for finance in order to purchase an immovable property in Kingsburgh, KwaZulu-Natal. Their application was successful and it was a condition of the loan that a first mortgage bond would be registered against the said immovable property.

2. The defendants accordingly purchased the immovable property and a first covering mortgage bond was registered against the property on 10 July 2007 in the sum of R790 000.00 plus an additional sum of R197 500.00.

The defendants fell in arrears with the payment of their bond instalments which as at 18 April 2008 amounted to R53 611.88.

The defendants have failed to pay any further bond instalments.

On 18 April 2008, the plaintiff gave the defendants notice in terms of section 129 and 130 of the National Credit Act, 2005 (“the

Act”).

The defendants admit receiving such notice.

On 4 July 2008 the plaintiff instituted action against the defendants in which the plaintiff seeks judgment for payment of the

sum of R868 889.31 together with interest thereon at the rate of 13.40% per annum calculated in advance and compounded monthly from 4 July 2008 to date of payment, together with an order declaring the immovable property executable, plus costs on an attorney and client scale.

The summons was served on the defendants on 14 July 2008.

The defendants entered an appearance to defend on 15 September 2008.

The plaintiff applied for summary judgment on 23 September 2008 and the defendants deposed to affidavits in opposition to the

application on 6 November 2008.

In the affidavit deposed to by the second defendant, she alleges that she and the first defendant are over-indebted and that they have engaged the services of a debt counsellor.

On 17 November 2008, the plaintiff filed a declaration.

On 19 November 2008, the defendants filed and served a plea.

In paragraph 1 of the defendants’ plea they admit all of the allegations contained in the plaintiff’s declaration but in

paragraph 2 they allege that they are over-indebted as contemplated in Section 79 of the Act and they apply for relief from over-indebtedness in terms of Section 85 of the Act. This is the only defence raised to the plaintiff’s claims.

The loan agreement between the parties is a credit agreement in terms of Section 1 of the Act.

The plaintiff complied with the provisions of Section 129 and 130 of the Act.

The defendants are over-indebted in terms of Section 79 of the Act.

The defendants’ over-indebtedness is set out in the document contained in the defendants’ discovery documents at pages 5 to 7 thereof.

The defendants did not apply for debt relief in terms of Section 86 of the Act prior to the institution of proceedings by the plaintiff against them.

The defendants ask for relief in terms of Section 85 of the Act.

The plaintiff asks that the court exercises its discretion by not granting the defendants relief in terms of Section 85 but prays that judgment be granted in its favour in terms of prayers (a) to (d) of its declaration.

In the event that this court declines to grant the defendants relief in terms of Section 85, it is admitted that plaintiff is entitled to judgment, as prayed.

It is agreed that both parties and the court may have reference to the pleadings and the discovery documents.”

[3] At the hearing a bundle of documents was handed up, and it was indicated to me that both parties admitted the documents as true. The only relevant document is that mentioned in paragraph 18 of the stated case. It shows that the joint monthly income of the defendants after employer deductions is R21 769.55 and their joint monthly expenses are R33 255.66. There is therefore a monthly shortfall of R11 486.11. As regards their debt commitments, they are obliged to pay a monthly bond instalment to the plaintiff of R10 034.94 and monthly instalments on the other debt commitments of the defendants totalling R2 793.37. There are, in addition, other debt commitments which do not have monthly repayment figures against them and are ignored in the monthly expenses of the defendants. These include an overdraft indebtedness to the plaintiff in the sum of R29 845.22, an amount of R1 857.56 due to the Ethekwini Municipality and indebtedness to Wesbank in the sum of R108 640.15.

[4] The crisp issue in the stated case is whether or not the court should take the step referred to in section 85(a) of the Act.

[5] Section 85(a) reads as follows:

“Despite any provision of law or agreement to the contrary, in any court proceedings in which a credit agreement is being considered, if it is alleged that the consumer under a credit agreement is over-indebted, the court may-

(a) refer the matter directly to a debt counsellor with a request that the debt counsellor evaluate the consumer's circumstances and make a recommendation to the court in terms of section 86(7)”.

The date of commencement of this section was 1 June 2007. It is common cause that it applies to this indebtedness.

[6] There are two factors required by section 85(a) prior to a court being empowered to refer a matter to a debt counsellor, viz:

1. Proceedings in which a credit agreement is being considered: and

2. An allegation that a consumer under the credit agreement is over-indebted.

The parties are ad idem that both factors are present. The parties agree that the agreement on which the plaintiff sues is a credit agreement as envisaged in the Act. The defendants allege that they are over-indebted as envisaged in the Act. This is admitted by the plaintiff in the stated case.

[7] Once the two factors are present, the section provides that “the court may” take the step of referral to a debt counsellor. The word “may” vests the court with a discretion as to whether or not to take that step. It is clear, therefore, that the need to exercise a discretion in this matter has been triggered by the presence of these two factors. The plea delivered by the defendants asks only that the court take the step referred to in section 85(a), viz. to refer the matter directly to a debt counsellor with a request that the debt counsellor evaluate the consumer’s circumstances and make a recommendation to the court in terms of section 86(7). They do not rely on section 85(b).

[8] Section 86(7) of the Act reads as follows:

“(7) If, as a result of an assessment conducted in terms of subsection (6), a debt counsellor reasonably concludes that-

(a) the consumer is not over-indebted, the debt counsellor must reject the application, even if the debt counsellor has concluded that a particular credit agreement was reckless at the time it was entered into;

(b) the consumer is not over-indebted, but is nevertheless experiencing, or likely to experience, difficulty satisfying all the consumer's obligations under credit agreements in a timely manner, the debt counsellor may recommend that the consumer and the respective credit providers voluntarily consider and agree on a plan of debt re-arrangement; or

(c) the consumer is over-indebted, the debt counsellor may issue a proposal recommending that the Magistrate's Court make either or both of the following orders-

(i) that one or more of the consumer's credit agreements be declared to be reckless credit, if the debt counsellor has concluded that those agreements appear to be reckless; and

(ii) that one or more of the consumer's obligations be re-arranged by-

(aa) extending the period of the agreement and reducing the amount of each payment due accordingly;

(bb) postponing during a specified period the dates on which payments are due under the agreement;

(cc) extending the period of the agreement and postponing during a specified period the dates on which payments are due under the agreement; or

(dd) recalculating the consumer's obligations because of contraventions of Part A or B of Chapter 5, or Part A of Chapter 6.”

[9] Since it is common cause that the defendants are over-indebted, subsections (a) and (b) of section 86(7) do not apply. No allegation has been made by the defendants that any of the credit agreements should be declared to be reckless credit, nor have the defendants claimed that there have been contraventions of Part A or B of Chapter 5 or Part A of Chapter 6. This means that the recommendations which could be made by a debt counsellor in terms of section 86(7)(c), in the event of a referral, are limited in the present instance to an extension of the mortgage bond and concomitant reduction in instalments, a suspension of instalments for a period or a combination of these two measures.

[10] The first question to deal with is the basis on which to approach the exercise of the discretion. In the pleadings the defendants have admitted the entire claim and sought to avoid an order at this stage by invoking the provisions of section 85(a). Ordinarily, the party alleging the right to a specific order bears the onus to prove its entitlement to such order. In Pillay v Krishna and another 1946 AD 946 at 952 the following was said:

“Where the person against whom the claim is made is not content with a mere denial of that claim, but sets up a special defence, then he is regarded quoad that defence, as being the claimant: for his defence to be upheld he must satisfy the Court that he is entitled to succeed on it.”

However, the plea does not amount to a defence to the claim. It goes no further than to request the court to refer the matter to a debt counsellor in terms of section 85(a). This is no more than a request that the court exercise a discretion in their favour. Since the debt counsellor is obliged to make a recommendation to the court in terms of section 86(7), this is, at most, a dilatory plea rather than being in the nature of a confession and avoidance which would attract an onus. There is, therefore, no onus to discharge once the two factors are admitted to be present. There are no facts to prove on the part of the defendants which would discharge an onus. Instead, the defendants have only to persuade the court to exercise its discretion in their favour.

[11] The legislature has not seen fit to enumerate specific factors which should weigh with the court. However, in section 3 of the Act the purposes of the Act are set out in the following terms:

“The purposes of this Act are to promote and advance the social and economic welfare of South Africans, promote a fair, transparent, competitive, sustainable, responsible, efficient, effective and accessible credit market and industry, and to protect consumers, by-

(a) promoting the development of a credit market that is accessible to all South Africans, and in particular to those who have historically been unable to access credit under sustainable market conditions;

(b) ensuring consistent treatment of different credit products and different credit providers;

(c) promoting responsibility in the credit market by-

(i) encouraging responsible borrowing, avoidance of over-indebtedness and fulfillment of financial obligations by consumers; and

(ii) discouraging reckless credit granting by credit providers and contractual default by consumers;

(d) promoting equity in the credit market by balancing the respective rights and responsibilities of credit providers and consumers;

(e) addressing and correcting imbalances in negotiating power between consumers and credit providers by-

(i) providing consumers with education about credit and consumer rights;

(ii) providing consumers with adequate disclosure of standardised information in order to make informed choices; and

(iii) providing consumers with protection from deception, and from unfair or fraudulent conduct by credit providers and credit bureaux;

(f) improving consumer credit information and reporting and regulation of credit bureaux;

(g) addressing and preventing over-indebtedness of consumers, and providing mechanisms for resolving over-indebtedness based on the principle of satisfaction by the consumer of all responsible financial obligations;

(h) providing for a consistent and accessible system of consensual resolution of disputes arising from credit agreements; and

(i) providing for a consistent and harmonised system of debt restructuring, enforcement and judgment, which places priority on the eventual satisfaction of all responsible consumer obligations under credit agreements.”

[12] In such circumstances the courts have steadfastly refused to produce a numerus clausus of factors which will apply in every situation. Section 3 and other relevant sections of the Act are intended to provide a backdrop against which the discretion must be exercised. The court, in exercising any discretion, is required to do so judicially. “It is not to be exercised capriciously or upon any wrong principle, but for substantial reasons” (Myburgh Transport v Botha t/a SA Truck Bodies 1991 (3) SA 310 (NmSC) 314G-H). Whilst this dictum has been used primarily of a discretion relating to a postponement, it applies to the exercise of any discretion. Likewise, in First National Bank of SA Ltd v Myburgh and Another 2002 (4) SA 176 (C) 184H - I, the following was said, “The Court's discretion should not be exercised on the basis of conjecture or speculation, but on the basis of the material before it.” This means that the court must have regard to a conspectus of all relevant material. It follows that it is in the interests of both parties, but in particular the party desiring the referral to a debt counsellor, that as much relevant material is placed before the court as possible to assist in this exercise.

[13] Ms Olsen, who appeared for the defendants, urged me to find that the mere fact that the over-indebtedness was admitted was decisive in the exercise of the court’s discretion. She was constrained to do so, I suspect, by the paucity of evidence placed before me by the defendants. Her submission cannot be correct. If it were correct, the legislature would have made it plain that proof of over-indebtedness would oblige the court to take the step set out in section 85(a). The section would have been framed differently and at least eliminated reference in that circumstance to sections 86(7)(a) and (b) since these leave open the possibility that the debt counsellor will conclude that the consumer is not over-indebted. The fact, as opposed to the allegation, of over-indebtedness is, of course, a factor to be taken into account but cannot be decisive. Ms Olsen also submitted that, since the preamble to section 3 refers to the protection of consumers, I should find that the sole, or at least the chief, purpose of the Act is to provide protection for consumers. Since section 3 lists a number of purposes, it cannot be

that the protection of consumers is the sole purpose. Neither can it be said that this is the chief purpose. No prioritisation is provided. A number of the listed means by which the purposes are to be achieved include the protection of consumers but not all do so. Others include a balancing of rights and responsibility of consumers and credit providers as well as enforcement of debt. Whilst consumer protection is a clear object, it is one factor, albeit a very important one, in the purposes of the Act.

[14] The plaintiff, represented by Mr Van Niekerk SC along with Mr Naidu, referred to a judgment in the matter First Rand Bank Ltd v Olivier [2008] JOL 22139 (SE). I was unable to find any other decision dealing with section 85 of the Act, and neither Mr van Niekerk nor Ms Olsen was able to refer me to any other decision on the section.

[15] Mr van Niekerk adopted four of the submissions made on behalf of the plaintiff in Olivier’s case and urged me to exercise my discretion against the defendants along the lines set out in paragraph [15] of that case which reads as follows:

“Counsel submits that it is relevant to the exercise of the court's discretion that the defendant did not prior to the issue of summons apply to a debt counsellor in terms of section 86(1) to have himself declared over-indebted. They refer to the principle that the court generally will not entertain a proceeding where there is another, similar and less expensive, effective procedure available (Troskie v Troskie 1968(3)SA369) Counsel submit that the defendant having failed to avail himself of the opportunity to approach a debt counsellor prior to the institution of action, must explain that failure to the court. They submit that the defendant's action in awaiting legal debt enforcement by the plaintiff rather than voluntarily taking steps to have himself declared over-indebted, amounts to abuse of the court process. They submit that the following factors dictate in favour of this approach:

"(a) The NCA provides a simple, inexpensive and effective procedure for debt restructuring in section 86.

(b) These provisions were obviously designed to expedite and to simplify the procedure relating to debt restructuring.

(c) These procedures are furthermore designed to avoid the necessity of the parties having to resort to the far more costly procedure of applying to the High Court for relief.

(d) It is also undesirable that the High Court has to deal with frequent applications for debt restructuring, very much along the lines of a court sitting in terms of section 65 of the Magistrate's Court Act, Act 32 of 1944."

[16] The court in Olivier’s case dealt with these submissions at paragraph [16] as follows:

“These considerations could well in proper circumstances influence the court in the exercise of its discretion. In the present matter, however, I am not prepared to fault the defendant for not acting timeously in terms of section 86(1). The relevant portions of Part D of Chapter 4 and Part C of Chapter 6 commenced on 1 June 2007. Summons was served on the defendant on 23 October 2007. There is, however, no indication of how long before that date the section 129(1) notice was served on the defendant. Section 86(2) precludes a consumer from applying to a debt counsellor in terms of subsection (1) once the creditor has proceeded to take steps contemplated in section 129 to enforce the agreement. It is not clear whether the defendant had sufficient time before receiving the section 129(1) notice to initiate the process created in Part D of Chapter 4. That procedure was at the time still very new and not I should think generally known.”

[17] Some of these factors are distinguishable from the present matter. Two bear mention. It is known that the section 129(1) notice

was sent on 30 April 2008, well after the section had come into effect and, unlike in Olivier’s case, the Act had come into effect before the bond was registered.

[18] Section 129(1) reads as follows:

“(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-

(i) first providing notice to the consumer, as contemplated in paragraph (a) , or in section 86(10), as the case may be; and

(ii) meeting any further requirements set out in section 130.”

It is clear that the process provided for in section 129(1) is designed to provide both impetus and a window of opportunity for a consumer, in the event of there being a dispute or a desire to bring his or her payments up to date, to make use of that section or take other steps which may redress his or her financial embarrassment.

[19] Section 86(1) and (2) provide as follows:

“(1) A consumer may apply to a debt counsellor in the prescribed manner and form to have the consumer declared over-indebted.

(2) An application in terms of this section may not be made in respect of, and does not apply to, a particular credit agreement if, at the time of that application, the credit provider under that credit agreement has proceeded to take the steps contemplated in section 129 to enforce that agreement.”

Since the defendants purported to apply to a debt counsellor in terms of section 86(1) one month after the delivery of the application for summary judgment, it is conceded by Ms Olsen that the application was a nullity due to the provisions of section 86(2).

[20] Mr van Niekerk, in addition to the four factors dealt with above in Olivier’s case, submitted that the court’s discretion should be exercised against the defendants since:

1. There was no explanation for the delay in their application for debt review in terms of section 86;

2. There was no explanation for the dishonest defence raised in the affidavit opposing summary judgment;

3. The defence raised is clearly designed to frustrate the plaintiff in obtaining judgment and foreclosing on the immovable property;

4. If one deducts from the monthly expenses of the defendants that amount required to service the mortgage bond, the defendants would be living within their means and would not be over-indebted; and

5. The defendants had not paid any instalments for a period of some fourteen months.

[21] He also submitted in argument that, since the defendants did not take the steps set out in section 86(1) after receiving the section 129 notice, the invocation of section 85(a) amounted to an abuse of the process of court against which the court should be astute to protect itself. I cannot agree that this amounts, in and of itself, to an abuse of process. First, on my reading of sections 86 and 129, it was not open to the defendants to apply to a debt counsellor in terms of section 86(1) after receipt of a section 129 notice. This is because section 86(2) bars the defendants from making such application after the section 129 notice has been sent. The referral could only be one in terms of section 129 and could not result in a declaration of over-indebtedness and the other steps set out in section 86. According to the provisions of section 129(1), the debt counsellor would be limited to attempting to resolve a dispute under the agreement or attempting to agree a plan to bring payments up to date. Secondly, if, as Mr van Niekerk suggests, section 86 had been utilised, no resort could now be had to section 85 since the debt counsellor would already have made a recommendation in terms of section 86(7). Thirdly, there may be cogent reasons why the defendants could only raise section 85(a) at this stage. After receiving the section 129 notice the defendants may have referred the matter to a debt counsellor in terms of section 129 despite which no agreement could be reached. In this case, the appeal to section 85(a) would be their only opportunity to show that the debt counsellor should be accorded the machinery of section 86(7). It might be that the failure to agree was as a result of the plaintiff having been unreasonable. Fourthly, there may well be circumstances where, even if no referral was made in terms of section 129, one of the other four steps mentioned in the section was taken which did not satisfy a genuine complaint of the consumer.

[22] This brings squarely into focus, therefore, what took place during the course of the agreement and, in particular, the explanations of the defendants as to the circumstances which bring them to rely on section 85(a) at this point. Unfortunately, as adverted to above, no relevant factors additional to those in the stated case and the document referred to in paragraph 18 of the stated case were forthcoming, either in evidence or by way of agreed information. The defendants gave no indication how it came about that they defaulted under the agreement. They did not say whether, and if so in what respect, their financial circumstances changed or what steps they took to remedy or minimise their default. They did not indicate whether, before receipt of the section 129 notice, they were aware of the provisions of section 86 and, if so, why they did not make application in terms of section 86(1) to a debt counsellor. They did not mention whether they approached the plaintiff at any stage with proposals to reschedule the debt or any other proposals. They did not explain when the other indebtedness reflected in the document referred to in paragraph 18 of the stated case arose. They did not say if it did so after they had defaulted on their obligations to the plaintiff and thus incurred monthly expenses which further reduced their ability to service the mortgage bond. They did not indicate how, when the excess of expenditure over income amounts to just more than the entire instalment due to the plaintiffs, it will be feasible to reschedule the debt, with or without the temporary suspension of instalments. One would have expected the defendants to place at least the information referred to above before the court. In opposing summary judgment, they denied, on oath, having received the section 129 notice. As Mr van Niekerk submitted, the absence of a cogent explanation for this false denial supports an inference that their attempt to rely on section 85(a) is simply an attempt to delay judgment. However, I make no finding to this effect and simply take it into account as one factor among many.

[23] The defendants abruptly stopped paying the instalments due to the plaintiff. There was no initial reduction in the instalment,

giving an indication of an attempt to meet their obligation. It appears from the monthly commitments of the defendants that, even

without the instalment due to the plaintiff, they would be marginally over-indebted. This means that there appears to be little potential to successfully reschedule the indebtedness under the mortgage bond. Even ignoring the other monthly amounts required to service their debt commitments, the defendants would only have an amount of R1 342.20 to pay towards the mortgage bond indebtedness to the plaintiff. This would leave a monthly shortfall to plaintiff of R8 692.74 without taking into account the overdraft indebtedness and those to the Ethekwini Municipality and Wesbank. Whilst I have no evidence of how the term of the mortgage bond would be increased if an instalment of only R1 342.20 was paid, it is clear, taking into account compound interest, that this would not be a feasible way of rescheduling the mortgage bond. The defendants have not paid a single instalment in some 14 months. A further suspension of instalments is only likely to increase their indebtedness in the absence of additional income. Once again, the defendants have not mentioned this as a possibility. If it is not feasible to extend the mortgage bond debt or for the defendants to recover financially after a further suspension of instalments, it is difficult to see how a debt counsellor could make one of the remaining available recommendations in terms of section 86(7).

[24] Mr van Niekerk submitted that, if the order sought by the plaintiff were granted and the property sold in execution, this would leave the defendants with no shortfall on their other monthly debt commitments. Whilst it would improve their situation, this submission ignores the overdraft indebtedness and those to Ethekwini Municipality and Wesbank. It also ignores the need for the defendants to find, and pay for, alternative accommodation. It further assumes that the sale of the property will extinguish the mortgage bond indebtedness of the defendants. I have no evidence of the present market value of the property to support this assumption. However, it is clear that the main source of the defendants’ over-indebtedness is their obligation to maintain the mortgage bond. They would be relieved of a substantial portion of their monthly burden if judgment were given in favour of the plaintiff as prayed. In addition, it is relevant that, as was submitted by Mr van Niekerk, the plaintiff has scrupulously complied with the provisions of the Act. It did not even proceed as soon as it was entitled to do so after delivery of the section 129 notice, waiting some months and affording the defendants far more of a window period than it was obliged to before instituting action against them.

[25] Ms Olsen urged me to find that the grant of the order sought would infringe the defendants’ right to housing afforded them in section 26 of the Constitution of the Republic of South Africa, 1996. This section, in its relevant parts, reads as follows:

“(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.”

Although an order declaring the property executable is sought by the plaintiff, the defendants have not placed any relevant material

before the court as to how this would result in an infringement of their right to adequate housing. Nor can they complain that they did not know that they should do so. The summons pertinently drew their attention to the provisions of section 26 and indicated that, “Should they claim that the order for execution will infringe that right it is incumbent on them to place information supporting that claim before the court. It must be remembered that it is the right to adequate housing, not housing per se, that is protected and the courts therefore require evidence in order to adjudicate a claimed infringement. The use of property as security for a debt was specifically dealt with in Jaftha v Schoeman and Others, van Rooyen v Stoltz and Others [2004] ZACC 25; 2005 (2) SA 140 (CC) para [58] where Mokgoro J said:

“[58] Another factor of great importance will be the circumstances in which the debt arose. If the judgment debtor willingly put his or her house up in some or other manner as security for the debt, a sale in execution should ordinarily be permitted where there has not been an abuse of court procedure. The need to ensure that homes may be used by people to raise capital is an important aspect of the value of a home which courts must be careful to acknowledge.”

At the time of that judgment, section 85(a) had not come into operation. Its potential was foreshadowed in paragraph [59] in the

following terms:

“[59] A final consideration will be the availability of alternatives which might allow for the recovery of debt but do not require the sale in execution of the debtor's home. At present, s 73 of the Act provides for a judgment debtor to approach a court with an offer to pay off a debt in instalments. As pointed out above, this section does not constitute sufficient protection for indigent

debtors because they are generally unaware of its potential to protect them and their inability to invoke it. However, the concept

of paying off the debt in instalments is important and the practicability of making such an order must be ever present in the mind of the judicial officer when determining whether there is good cause to order the execution. The balancing should not be seen as an all or nothing process. It should not be that the execution is either granted or the creditor does not recover the money owed. Every effort should be made to find creative alternatives which allow for debt recovery but which use execution only as a last resort.”

Even though the defendants in the present matter put up the property as security for the indebtedness to the plaintiff under the mortgage bond, the Act has nevertheless given them the opportunity to utilise its provisions to avoid execution in suitable circumstances. They have not even given the minimum information set out in paragraph [60] of Jaftha’s case:

“[60] In summing up, factors that a court might consider, but to which a court is not limited, are: The circumstances in which the debt was incurred; any attempts made by the debtor to pay off the debt; the financial situation of the parties; the amount of the debt; whether the debtor is employed or has a source of income to pay off the debt and any other factor relevant to the particular

facts of the case before the court.”

It is clear, in addition, that the facts in the present matter are distinguishable from those in Jaftha’s case. Even apart from putting up security, the debt is by no means trifling and the mechanisms of the Act have been available to the defendants. I am, therefore, of the view that there is no evidence before me to show that the grant an order declaring the property executable will undermine the rights of the defendants accorded them by section 26 of the Constitution.

[26] In all the circumstances of this matter and on the material before me, I am not disposed to exercise my discretion in favour of the defendants and take the step referred to in section 85(a). That being the position, the stated case requires that I grant judgment for the plaintiff as prayed.

[27] The costs of the application for summary judgment were reserved for the decision of the trial court. Since the defence put up by the defendants to summary judgment, to the effect that they had not received the notice in terms of section 129 of the Act, has now been admitted to be false the provisions of Rule 32(9)(b) apply. This would ordinarily result in a costs order on the attorney and client scale. I would readily make such an order but, since the mortgage bond provides a contractual basis to order such costs, it will not be necessary to invoke the Rule in doing so.

[28] In the result, there will be judgment for the plaintiff against the defendants jointly and severally, the one paying the other to be absolved, for:

Payment of the sum of R868 889.31;

Interest on the sum of R868 889.31 at the rate of 13.40% per annum, calculated in advance and capitalized monthly, from 4 June 2008 to date of payment;

An order declaring specially executable the immovable property described as:

“Portion 6 of Erf 1831 Kingsburgh, registration division ET. Province of KwaZulu-Natal in extent 1973 (one thousand nine hundred

and seventy-three) square meters, held by Deed of Transfer No. T031228/07 subject to the conditions therein contained”;

Costs of suit calculated on the scale as between attorney and client, which costs shall include the costs reserved in the application for summary judgment.

___________________

Date of hearing: 2 February 2009

Date of judgment: 11 February 2009

Counsel for the plaintiff: van Niekerk SC and Naidu

Attorney for the plaintiff: S D Moloi & Ass Inc

Counsel for the defendant: Ms Olsen

Attorney for the defendant: Booysen & Co Inc

17