IN THE HIGH COURT OF SOUTH AFRICA
GAUTENG DIVISION, JOHANNESBURG

(1)	REPORTABLE: NO
(2)	OF INTEREST TO OTHER JUDGES: NO
(3)	REVISED:  ✔️

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 SIGNATURE			DATE

CASE NO: 12598/2017

In the matter between:

STANDARD BANK OF SOUTH AFRICA LIMITED                      APPLICANT

and

BARRY HYLTON SNEECH                                           FIRST RESPONDENT
ROCHELLE JULIENNE SNEECH                           SECOND RESPONDENT
 
_____________________________________________________________
JUDGMENT
_____________________________________________________________

THOBANE AJ,
Introduction
[1]	There are two applications before this court. In the first application the applicant seeks foreclosure of certain immovable property registered in the names of the respondents, on the one hand. The second application, a counter-application, on the other hand, is launched by the respondents seeking monetary payment and in the alternative a stay of the foreclosure proceedings pending the outcome of the counter-application.

[2]	The applicant was represented by counsel whereas the first respondent appeared in person.

Applicant’s case
[3]	The applicant seeks the following relief;
(a)	payment of the sum of R4 573 515-21;
(b)	interest on that amount at the rate of 8.3% from 31 March 2017 to date of final payment;
(c)	an order declaring immovable property known as Portion 1 of Erf 28 Senderwood Township, Registration Division I.R., the Province of Gauteng, in extent 2000 square meters, held by Deed of Transfer No. T25935/1990;
(d)	attorney and client costs as per the mortgage bond.

[4]	The applicant alleges in its application that on or about 17 November 2006 a “Liberator” loan agreement was concluded between itself and the respondents. In terms of that agreement the respondents were loaned the sum of R R3.6 million payable in monthly instalments of R33 087-96 plus a homeowners insurance. The applicant further alleges that the agreement was subject to certain suspensive conditions which are, in my view, not unusual in transactions of this nature. The main of such conditions was registration of a mortgage bond over the immovable property of the respondents in the amount of R3.6 million plus an additional sum of R900 000-00.

[5]	In terms of the agreement, the mortgage bond would provide cover as security for the total amount owing from time to time. Should the respondents breach the terms of the agreement and fail to remedy the breach after receiving notice calling on them to do so or should there be a deterioration in their financial position, the applicant would be entitled to terminate the facility and immediately claim payment of the balance owing. Further, that there would be interest at the rate of 8.3% per annum or any rate as may be determined by the applicant from time to time. Another term of the agreement was that the respondents would be liable for payment of costs on a scale as between attorney and client. 

[6]	When the respondents failed to make payment as stipulated in the agreement, owing to seemingly the respondents’ deteriorating financial position, which resulted in an inability to pay,  the applicant as they were entitled to do, interpreted this to mean that there was a breach then sought relief plus interest and costs, hence this application. This application therefore is based among others on a certificate of balance which in terms of the parties’ agreement would be sufficient proof of the amount owing, in the absence of anything to the contrary.

[7]	It is further the applicant’s case that the applicant chose to convert the facility to one payable on demand. This the applicant was entitled to do in terms of the agreement between the parties. 

[8]	A notice in terms of section 129 of the National Credit Act was dispatched to the respondents’ chosen domicilium citandi et executandi on 27 February 2017. The respondents failed to respond thereto and the time periods referred to in section 130 lapsed.

[9]	The applicant seeks an order to have the immovable property declared specially executable. Reliance is placed in this regard on among others the following submissions;
9.1. the fact that the debt was incurred in the purchase of the immovable property and secured by registration of a mortgage bond over it, to which the respondents consented;
9.2. the terms of the mortgage which were voluntarily accepted by the respondents;
9.3. the fact that the respondents willingly borrowed money from the applicant and thereafter put up their property as security;
9.4. that the respondents consented to an order of executability;
9.5. that the respondents have been in arrears for a period in excess of three years and that they therefore can not afford the property;
9.6. that it is improbable for the applicant to recover the outstanding debt by way of attachment of movables including investments;
9.7. that given the fact that the property is an expensive one and the respondents can not afford it, it would be easy for them to obtain more affordable housing if relieved of the burden of paying the bond in respect of the mortgaged property. 

[10]	The applicant further made the respondents aware of the provisions of section 26 of the Constitution of the Republic of South Africa, 1996 in so far as it relates to rights to and attachment of immovable property which is a primary residence as well as the role to be played by the court. The respondents were also called upon to place facts before court to equip the court in the exercise of its discretion in terms of Rule 46(1)(a)(ii).

Respondents’ case
[11]	In defending the application the respondents in a very short affidavit raised the following defences;
11.1. that the first respondent had by way of email requested a Mr Riley Moodey, the deponent to the applicant’s founding affidavit, to on affidavit confirm that the mortgage bond has not been subject to any securitisation transaction by the applicant. In addition that he also requested a bundle of documents that were in Mr Moodey’s possession which he had in the past refused to release. Based on the refusal to release these documents coupled with turning down of a request for a meeting, the respondents then allege that there is a possibility that the mortgage/title has been sold or ceded, in which event, it is submitted, the applicant must disclose the details of the third party to whom it was sold or ceded. The respondents go further to submit that the speculated or suspected sale or cession of the loan agreement to a third party without their consent is null and void. In addition it is submitted that the applicant was selling an asset that had been ceded or sold and was no longer part of their asset. 
11.2. that there are too many points in limine which necessitate for the matter to be referred to oral evidence.
11.3. that the bank has through fraud, incompetence and/or negligence caused the respondents to be unable to pay the monthly instalments;
11.4. that in 2007 the respondents approached the applicant to fund a a development in Mauritius that would have generated R70 million and thus entitling him, the first respondent, a profit in the sum of R35 million plus a development fee of R100 000-00 per month over several months. The respondents contend that the deal went south as a result of actions of the applicant. As a consequence, an application was launched in this court and it served before Tsoka J under case number 34151/2012, who dismissed both the application and the counter-application. The respondents submit that the matter should be heard again despite the res judicata principle.
11.5. the respondents further dispute the amount owing on account of the fact that a detailed statement has not been provided and that the certificate of balance has not been attached to the application, lastly;
11.6. the respondents contend that in light of the fact that the property sought to be executed is their primary residence which the respondents have owned for 27 years, the applicant has failed to set out in the founding papers relevant circumstances entitling it to the order of executability. They further assert that there is a likelihood that money owed to it by the applicant would cover the entire claim by the applicant, that the applicant will not be prejudiced in that should monetary judgment be granted in the applicant’s favour interest would accrue, that the immovable property was not acquired with money advanced by the applicant to the respondents, that the respondents have no access to housing and that the first respondent’s credit record is so bad that he will suffer prejudice should an order be granted against them, as he would not have access to funding.

The counter-application
[12]	The respondents in a very lengthy affidavit set out the basis of their counter-application. In essence it is for payment of 2 968 832-00 (two million, nine hundred and sixty eight thousand, eight hundred and thirty two) Euros, plus interest and cost. In the alternative, that the applicant’s application (this application), be stayed pending final determination of the counter-application. In the counter-application the respondents seek joinder of Standard Bank (Mauritius) Ltd. which they describe as agents of the applicant and its subsidiary. I pause to state that it is not clear from the reading of the papers if the counter application was served on Standard Bank Mauritius. The quintessence of the counter-application is a property development deal that took place in Mauritius. The first respondent states that he approached the applicant for project finance. The applicant agreed to fund the project but appointed Standard Bank Mauritius to act as its representative. Payment in the amount of 35 million Mauritian Rupees was made, it is alleged, by the applicant to an entity in Mauritius. The first respondent states that he was a shadow director of an entity at the time. What followed were alleged fraudulent activities. There was fraudulent invoicing as well as fraudulent valuation by a Quantity Surveyor. The first respondent alleges that notwithstanding the fact that certain suspensive conditions were not fulfilled, Standard Bank Mauritius fraudulently or negligently or recklessly paid 15 (fifteen) million Mauritian Rupees to another entity around July 2008. Construction of houses proceeded without the first respondent’s knowledge but soon hit a snag when money ran out and the development was stopped by the Mauritian authorities.

[13]	The first respondent alleges further that the applicant is withholding documents which are necessary for him to litigate against the applicant. Some of the documents he eventually got hold of and it became apparent to him, so he submits, that he was swindled out of approximately R44 (fourty four) million. It is this claim that the respondents contend should be referred to oral evidence. It is further their contention that they intend to set off the applicant’s claim against the losses in profit that they suffered at the hands of Standard Bank Mauritius.

The Applicant’s reply
[14]	In the replying papers the applicant stated as follows;
14.1. that the alleged securitisation of the loan agreement is denied. The applicant relies on inter alia a certificate by a conveyancer confirming that the mortgage bond remains with the applicant and that the Tittle Deed does not reflect any endorsements. 
14.2. that it is denied that the information in the applicant’s affidavit is incorrect or that the respondent’s bad credit record makes it impossible to secure alternative accommodation. In the contrary, it is submitted that as a property developer the first respondent has wide knowledge of residential properties available which makes him sufficiently empowered to deal with the question of alternative accommodation. 
14.3. that the 2007 deal involve different parties than those before this court. In particular, that the Standard Bank with which the respondents contracted was their Mauritian counterpart. 
14.4. that the respondents’ counter-claim has prescribed.
14.5. that on the respondents’ own version the application was previously dismissed.
14.6. that referral of the issues in this application to oral evidence is ill-founded.
14.7. that there is no basis for alleging that there is a calculation error in respect of the amount owing in that a statement as well as a certificate of balance was attached to the founding papers. 

The Issue
[15]	The issues therefore as I understand them are as follows;
15.1. Whether a case has been made for foreclosure;
15.2. Whether there is in fact a case made for the counter-application;
15.3. Whether these proceedings should be stayed pending the counter-claim.

The Law
[16] The law relating to foreclosures has in my view become settled. In instances where the applicant seeks an order to have the immovable property specially executable, the following is referred to in relevant case law;

16.1. In First Rand Bank Limited v Folscher 2011 (4) SA 314 (GNP), in dealing with the amendment to Rule 46(1)(a)(ii) requiring judicial oversight the Full Bench suggested a comprehensive list of issues be considered by the court when deciding whether a writ should be issued or not. These include:
‘whether the mortgaged property is the debtor's primary residence; the circumstances under which the debt was incurred; the arrears outstanding under the bond when the latter was called up; the arrears on the date default judgment is sought; the total amount owing in respect of which execution is sought; the debtor's payment history; the relative financial strengths of the creditor and the debtor; whether any possibilities exist, that the debtor's liabilities to the creditor may be liquidated within a reasonable period, without having to execute against the debtor's residence; the proportionality of prejudice the creditor might suffer if  execution were to be refused, compared to the prejudice the debtor would suffer if execution went ahead and he lost his home; whether any notice in terms of s 129 of the National Credit Act 34 of 2005 was sent to the debtor prior to the institution of action; the debtor's reaction to such notice, if any; the period of time that elapsed between delivery of such notice and the institution of action;  whether the property sought to be declared executable was acquired by means of, or with the aid of, a State subsidy; whether the property is occupied or not; whether the property is in fact occupied by the debtor; whether the immovable property was acquired with moneys advanced by the creditor or not; whether the debtor will lose access to housing as a result of execution being levied against his home; whether there is any indication that the creditor has instituted action with an ulterior motive or not; the position of the debtor's dependants and other occupants of the house, although in each case these facts will have to be established as being legally relevant of the execution process against property especially hypothecated, which is the 'primary residence' of the judgment debtor and whether the protection of s 26(1) of the Constitution is extended to the debtor who may lose what is usually his only home.’

16.2. In K v Minister of Safety and Security 2005 (6) SA 419 (CC) O'Regan J in para 15 and 16 stated:
‘Our Constitution requires a Court, when developing the common law, to promote the spirit, purport and objects of the Constitution. The pervasive normative effect of our Constitution was acknowledged by this Court in Carmichele v Minister of Safety and Security and Another (Centre for Applied Legal Studies Intervening) where it held that: “Our Constitution is not merely a formal document regulating public power. It also embodies, like the German Constitution, an objective, normative value system.. .The influence of the fundamental constitutional values on the common law is mandated by s 39(2) of the Constitution. It is within the matrix of this objective normative value system that the common law must be developed.” In addition to s 39(2) of the Constitution, s 8 of the Bill of Rights makes it plain that the judiciary is bound, by the provisions of the Bill of Rights in the performance of its functions. The cumulative effect of these constitutional provisions is to create an expressly normative legal system founded on the norms articulated in our Constitution. [16].. In S v Thebus and Another, Moseneke J noted that there were at least two instances in which the need to develop the common law under s 39(2) of the Constitution could arise. “The first would be when a rule of the common law is inconsistent with a constitutional provision. Repugnancy of this kind would compel an adaptation of the common law to resolve the inconsistency. The second possibility arises even when a rule of the common law is not inconsistent with a specific constitutional provision but may fall short of its spirit, purport and objects. Then, the common law must be adapted so that it grows in harmony with the "objective normative value system" found in the Constitution.” ’

Application of the law
[17]	It is convenient that the court deal with what is referred to as points in limine that have been raised by the respondents. At the core of the respondents’ first point in limine, that of securitisation, is the contention that the applicant lacks locus standi. The point in limine is premised on speculation. The respondent suspects that the mortgage bond held by the the respondent is subject to securitisation and has been sold to a third party. The suspicion does not seem to be based on any ground other than the fact that the respondent sought to inspect the original Title Deed but was denied access thereto. In fact the respondents undertook a fishing expedition. They caused a letter to be sent to the applicant, specifically the deponent to the applicant’s founding affidavit Mr Riley Barry Moodey, together with a draft affidavit seeking the applicant to confirm under oath that the bond had not been securitised. In the covering email the respondents stated that the information sought was for the preparation of his defence and counterclaim.

[18]	A conveyancer’s certificate attached by the applicant to the papers shows that there has not been any endorsement on the Title Deed. The point in limine to the effect that the bond has been securitised and loaned is speculative and has no merit. It must accordingly fail.

[19]	What the respondents refer to as the second point in limine is the fact that there are numerous disputes of fact which can only be resolved through oral evidence at a trial. These disputes of fact are to be found, the respondents submit, in the counterclaim. Self evidently, a counterclaim which is loaded with disputes of fact has no place in the motion court. A litigant that foresee the existence of disputes of fact, but nevertheless proceeds by way of motion proceedings, will suffer the consequences of such a decision. In Room Hire Co (Pty) Ltd v Jeppe Street Mansions Ltd 1949 (3) SA 1155 (T), it was decided, as a general rule, that the choice between the procedures depends on whether a bona fide material dispute of fact should have been anticipated by the party launching the proceedings. When such a dispute is anticipated, a trial action should be instituted. At page 1161 Murray AJP stated;

“..…There are certain types of proceeding (e.g., in connection with insolvency) in which by Statute motion proceedings are specially authorised or directed... There are on the other hand certain classes of case (the instances given…are matrimonial causes and illiquid claims for damages) in which motion proceedings are not permissible at all. But between these two extremes there is an area in which…according to recognised practice a choice between motion proceedings and trial action is given according to whether there is or is not an absence of a real dispute between the parties on any material question of fact….”

[20] The court continued at page 1162;
“…application may be dismissed with costs, particularly when the applicant should have realised when launching his application that a serious dispute of fact was bound to develop. It is certainly not proper that an applicant should commence proceedings by motion with knowledge of the probability of a protracted enquiry into the disputed facts not capable of easy ascertainment…what is essentially the subject of an ordinary trial action.”.

[21]	Lastly, in Lombaard v Droprop CC and Others 2010 (5) SA 1 (SCA) at page 11 Heher JA et Shongwe JA stated;

“…Therefore, if a party has knowledge of a material and bona fide dispute, or should reasonably foresee its occurrence and nevertheless proceeds on motion, that party will usually find the application dismissed.”

[22]	In light of the above authorities the second point in limine must suffer the same fate as the first one. The counterclaim which on the respondents’ version is riddled with disputes of fact, falls to be dismissed on this basis alone. There are however many other equally compelling reasons that have been canvassed by both the applicant as well as the respondents. One of those is the fact that the claim which the respondents say they have against the applicant was argued and an order granted. The first respondent argued before me that the order of Tsoka J was res judicata but that he nevertheless believed that the matter should be heard again in that the order was obtained in circumstances where documents were fraudulently withheld from the court by the applicant. I debated with him the trite principle that the order stands until set aside even when wrong. In Erasmus, Superior Court Practice, Vol.2, D1-562 it is stated:

“An order of a court of law stands until set aside by a court of competent jurisdiction.  Until that is done, the court order must be obeyed even if it may be wrong; there is a presumption that the judgment is correct.  A person may even be barred from approaching the court until he or she has obeyed an order of court that has not been properly set aside.  An order could only be set aside under rule 42, rule 31(2)(b), on appeal or on common-law grounds. The general well-established rule is that once a court has duly pronounced a final judgment or order, it has itself no authority to correct, alter or supplement it—it becomes functus officio. The inherent jurisdiction of the High Courts does not include the right to interfere with the principle of finality of judgments, other than in the circumstances specifically provided for in the rules or the common law.”
I further debated with him why if he was of the view that the order was obtained in the circumstances he sketched, he had not brought an application to have it set aside. No satisfactory responses were forthcoming. 
(See Bezuidenhout v Patensie Sitrus Beherend Bpk 2001 (2) SA 224 (E) at 229B–C; Oudekraal Estates (Pty) Ltd v City of Cape Town 2004 (6) SA 222 (SCA) at 242C–244A; MEC for Economic Affairs, Environment and Tourism v Kruisenga 2008 (6) SA 264 (CkHC) at 277C; Jacobs v Baumann NO 2009 (5) SA 432 (SCA).)

[23]	The respondents’ counterclaim, concerns a failed development in Mauritius. The documents which the respondents rely upon show that the contracting parties were Standard Bank Mauritius and an entity called Rex Prop One Ltd. The first respondent was at pains to explain that Standard Bank Mauritius was an agent of the applicant. I could find no such nexus or relationship in the documents the respondents rely upon. I could further not discern why the first respondent would be in the forefront of litigation for a foreign entity of which he was neither a director nor a shareholder. The fact that as he put it he was a ‘shadow director’ makes him devoid of locus standi.

[24]	The respondents contend that the counterclaim they have against the applicant should be set off against moneys owed in these foreclosure proceedings. The counterclaim is in my view stillborn for various reasons. It has already been dismissed in court and it pertains to different parties than those before this court. It is not necessary therefore to canvass in detail the requirements as well as the legal position with regards to set off. Precisely because the counterclaim is stillborn, a case has not been made for the stay of these proceedings.

[25]	What remains is to examine if a case has been made for the relief sought by the applicant. In doing so the court is enjoined to exercise judicial oversight. I note the following from what the parties have advanced in favour  of and against foreclosure;
25.1. that the respondents do not dispute their indebtedness to the applicant;
25.2. that the respondents have been in arrears for a period in total in excess of four years;
25.3. that the arrears are in excess of R 1.4 million. Both the arrears as well as the period of time they have been due and owing is excessive. The claim of R 4 947 978-22, in my view, can not reasonably be raised from movable property;
25.4. I note that on 22 February 2016, which according to the statement was the last time the account was serviced, the respondents deposited a sum of R 1 000 000-00 into the bond account. Due to the high arrears however, this amount did not make a serious dent on the amount owing. If anything since injection of that money the debt has escalated by a further R1.9 million;
25.5. I note that the immovable property is the parties’ primary residence. The respondents contend that for that reason and the fact that they have owned the property for a considerable period of time,  27 years, this court should not order executability thereof. The fact that the property is the primary residence on its own is no bar to the court directing its executability. See Standard Bank of South Africa Ltd v Saunderson & Others 2006 (2) SA 264 (SCA).
25.6. The respondents are called upon to place place facts before court to show why an order of executability was unjustified. It bears noting that the Constitutional Court in Jaftha v Schoeman; Van Rooyen v Stolz 2005 (2) SA 140 (CC) noted the following with regard to the resort to selling a primary residence in execution;

“[56]…. If there are other reasonable ways in which the debt can be paid an order permitting a sale in execution will ordinarily be undesirable. If the requirements of the Rules have been complied with and if there is no other reasonable way by which the debt may be satisfied, an order authorizing the sale in execution may ordinarily be appropriate unless the ordering of that sale in the circumstances of the case would be grossly disproportionate.”
In view of the huge arrears and the period of time the respondents have been in arrears, I do not believe executability is disproportionate.
25.7. The respondents make bald statement that there is no access to any housing and that there will be prejudice should executability be directed. The respondents do not state what the prejudice they stand to suffer is, except the fact that they will be deprived of their primary residence. This is insufficient for parties who have to discharge an onus.
25.8. I do not believe that the application for foreclosure was instituted for ulterior motives. In the contrary, I am of the view that the respondents were cavalier in their opposition of the application. 
25.9. The first respondent states that he resides with the second respondent on the property. He has not disclosed if there are other persons that may be affected by an order of executability. It is startling that the first respondent states under oath that should his defence of the application not succeed, the liability he owes to the applicants may be liquidated within a reasonable time from proceeds of projects the first respondent is busy with. Even more startling is the submission that there is no prejudice on the part of the applicant because the amount due to the applicant will attract interest. 
25.10. The fact that the respondents were able to pay a sum of R 1 000 000-00 shows that they have access to resources which can be utilised to secure alternative accommodation. So is the fact that the first respondent is involved in projects which may “liquidate any liability that is found to be owing to the applicant”. I am therefore not persuaded by the submission that the first respondent who by the way is a properly developer, would not be able to secure alternative accommodation on the basis of a poor credit record.
25.11. The applicant has placed the following information before court in respect of the immovable property;
25.11.1. Amount owing R 4 947 978-22,
25.11.2. Municipal Valuation R 4 572 000-00,
25.11.3. Market Value R 3 800 000-00,
25.11.4. Forced sale value R R 2 750 000-00,
25.11.5. Obligations towards Local Authority R 163 709-30.
25.12. The applicant opines that should a reserve price be set it should be the average between the market value R 3 800 000-00 and the Municipal Valuation of R 4 572 000-00 less the Local Authority liability of R 163 709-30. The figure arrived at is the sum of R 4 022 290-70. The applicant asks in the alternative that the court order in the event the reserve price is not achieved, that the bidder who made an offer of not less than 70% of the reserve be offered the property. The argument being that if the alternative is not considered the applicant may have to approach the court again thus incurring further costs. I decline to consider the alternative order. The court must continue to exercise judicial oversight and in my view it can best be exercised when an approach to court is made, should the reserve price not be achieved. 

[26]	Finally, I am of the view that the respondents have failed to place sufficient relevant circumstances before this court warranting the exercise of my discretion in their favour.  Taking into account the history of this matter, the substantial amount of the arrears and the respondents’ inability to pay the instalments and the arrears, the only realistic manner in which the applicant can protect its interests is by means of the relief sought herein. In my view there are no other proportionate means to attain the same result and therefore execution cannot be avoided. I further do not see why costs should not follow the event, which costs in terms of the mortgage bond are to be on a scale as between attorney and client.

[27]	I therefore make the following order;
1.	The points in limine are dismissed;
2.	The counter-application is dismissed with costs;
3.	Judgment is granted against the respondents jointly and severally the one paying the other to be absolved in the amount of R 4 947 978-22;
4.	Interest thereon at the rate of 8.3% per annum from date of the order to the date of final payment, both days inclusive;
5.	The property described as Portion 1 of Erf 28 Senderwood Township, Registration Division I.R., The Province of Gauteng, in Extent 2000 Square Metres, held by Deed of Transfer No.: T 25935/1990, is declared specially executable, with the reserve price determined as R 4 022 290-70.
6.	The Registrar of this court is authorised to issue a writ against the immovable property described in 5 above;
7.	The respondents are to pay the costs of the application on the scale as between attorney and client.

____________________
SA THOBANE
ACTING JUDGE OF THE HIGH COURT
GAUTENG DIVISION, JOHANNESBURG