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IN THE HIGH COURT OF SOUTH AFRICA

DURBAN AND COAST LOCAL DIVISION

CASE NO. 15510/07

In the matter between:

XOLANI SIBUSISO MKHWANAZI FIRST APPLICANT

NOMSA ELSIE MKHWANAZI SECOND APPLICANT

and

NEDBANK LIMITED FIRST RESPONDENT

MARK GAUDIA SECOND RESPONDENT

THE REGISTRAR OF DEEDS

PIETERMARITZBURG THIRD RESPONDENT

THE SHERIFF OF THE HIGH COURT

LOWER UMFOLOZI FOURTH RESPONDENT

JUDGMENT

LUTHULI AJ

[1] This is the return day of a rule nisi which was granted in an application for an order interdicting the transfer of certain immovable property situated at 16 Kelly Road, Empangeni, KwaZulu-Natal (the immovable property) and an order cancelling the sale agreement between the second and fourth respondents in respect of the immovable property.

[2] On 18 May 2007 default judgment was granted against the applicants in favour of the first respondent in the Natal Provincial Division under case number 3751/07, for payment of the sum of R500 926.31, interest thereon and costs and the immovable property was declared to be executable. A warrant of execution was subsequently issued by the registrar of the abovementioned court, dated 24 May 2007.

[3] A sale in execution of the immovable property which was to take place on 20 September 2007 was advertised in the Government Gazette of
7 September 2007. This sale in execution did not take place because the applicants and the first respondent concluded an oral agreement (settlement agreement) in terms of which the applicants were to make six payments of R11 000.00 per month on the first day of each month. It was agreed that the first respondent would not execute on the default judgment provided that payments were made by the applicant in accordance with the settlement agreement. On 1 August 2007, the applicants made a payment by cheque in the sum of R15 000.00. That payment was reversed because of insufficient funds and the cheque was referred to drawer. On 20 September 2007 a payment in the sum of
R11 000.00 was made. No payment was made during October 2007. On 2 November 2007 a payment of R11 000.00 was made. On 4 December 2007 a payment of R7 000.00 was made. On 11 December 2007 a payment in the sum of R4 000.00 was made.

[4] On 30 November 2007 a sale in execution of the immovable property was advertised in the Government Gazette. The said sale in execution was to take place on 13 December 2007. On 13 December 2007 the immovable property was sold by the fourth respondent to the second respondent in a sale in execution. On 21 December 2007 a rule nisi was issued by this court as described in paragraph [1].

[5] The first respondent took a point that this court has no jurisdiction over this matter. In support of this point, Mr Bezuidenhout for the first respondent submitted that the sale in execution took place after judgment was granted in the Natal Provincial Division against the applicants and in terms of which the sale was approved. It was accordingly submitted that the sale to the second respondent flowed from the judgment granted in the Natal Provincial Division and that the cancelling of the sale agreement between the fourth and second respondent is cancelling of an agreement which flows from the aforementioned judgment. It was further submitted that the sale in execution was in terms of an order granted in the Natal Provincial Division and that this court does not have jurisdiction to cancel an agreement which flowed from that judgment. Mr Pistorius, for the appellants, submitted that this court has jurisdiction on the basis of situs of the immovable property.

[6] In Geyser v Nedbank Ltd and others: In re Nedbank v Geyser 2006(5) SA 355 (WLD) the applicant sought a stay of transfer of an immovable property sold in execution pending the outcome of an application for rescission of a default judgment. In that case the hypothecated immovable property was situated in Johannesburg. The court (Van Oosten J) dealt with the issue of jurisdiction of the Witwatersrand Local Division in that case. The court held that a declaration as to the executability of the hypothecated property is not an order but is merely part of the procedure by which the execution of a judgment debt is obtained and does not constitute an exercise of jurisdiction over such property by the court from which it issues. In this connection, the court referred with approval to the case of Ivoral Properties (Pty) Ltd v Sheriff, Cape Town and others 2005(6) SA 96 (C) para [50] at 114. The Court found that the situs of the hypothecated property constitutes a jurisdictorial connecting factor giving rise to the jurisdiction of the court (para [11] at 362 A – B). I respectfully agree with the reasoning and finding of Van Oosten J in the Geyser v Nedbank case.

[7] In the present case the hypothecated property is situated within the jurisdiction of this court and this court has jurisdiction over this matter. There is no merit in the point taken up by the first respondent on the issue of jurisdiction.

[8] Mr Pistorius submitted that the first respondent was obliged to give notice to the applicant that it had cancelled the settlement agreement and that the first respondent was obliged to convey its intention to terminate the settlement agreement. Mr Pistorius further submitted that in the absence of such notice the sale in execution falls to be set aside because the fourth respondent held no valid right to sell the immovable property.

[9] It is common cause that no notice of cancellation of the settlement agreement was given. It is also common cause that the first respondent agreed to pend proceeding with the warrant of execution, provided that payment was made by the applicants in accordance with the settlement agreement. It is further common cause that payment for August 2007 was reversed because the cheque for R15 000.00 was referred to drawer, there being no sufficient funds, the payment for September 2007 was made 20 days late, there was no payment made for October 2007 and the payment in December 2007 was late. Mr. Bezuidenhout submitted that the applicant failed to comply with the terms of the settlement agreement and that the first respondent was not obliged to give any notice to the applicants. He submitted that there was total inability on the part of the applicants to perform in terms of the settlement agreement.

[10] In Ponisamy and Another v Versailles Estates (Pty) Ltd 1973 (1) SA 372 (AD) the court stated (at 390 B-D)

“It is clear, however, from the aforementioned decisions (both of which are referred to with approval in Universal Cargo Carriers Corporation v. Citati, supra at p. 448) that where a party to a contract cancels without giving notice of rescission, and relies on an alleged “total inability” on the part of the other contracting party to perform, he must at the trial establish such inability. Thus in Thorpe v. Fasey, supra, WYNN-PARRY, J., said (at p 398)

“it is true that in the present case the plaintiff did not, as he could have done, make time of the essence of the contract. That is not fatal to his case, if he can demonstrate that the evidence discloses that the defendant is unable or unwilling, whatever time is given, to perform his contract, or, adopting the words of ROCHE, L.J., (in Harold Wood Brock Co. Ltd v. Ferris, (1935) 2 K.B 198) that he is unable or unwilling to do so at all”

In the present case the appellants were unable to pay the instalments of R11 000.00 per month as agreed upon in the settlement agreement. The first payment for August 2007 was reversed, the cheque having been referred to drawer because of insufficient funds. Payment for September 2007 was made 20 days later. There was no payment for October 2007. In December payments of R7 000.00 and R4 000.00 were made late. By all accounts the applicants were clearly unable to perform according to the settlement agreement. The reversed payment for August 2007 and the non payment for October 2007 were not rectified. The applicants were totally unable to pay their monthly instalments of R11 000.00. This is also confirmed by their allegation that, if notice was given to first applicant, he would have made a desperate plan to secure moneys from another source in order to pay the first respondent and prevent the sale in execution. It is therefore clear that the applicants were not possessed of any assets or money which would have enabled them to perform in terms of the settlement agreement even if notice was given to them.

[11] I accordingly find that the first respondent has established that the applicants were totally unable to perform according to the settlement agreement and that the first respondent was not obliged to give notice of rescission. There is also another ground on which such notice was not to be given to the applicants. The settlement agreement flows from the Covering Mortgage Bond. Clause 9.1 thereof provides that in case of breach, the capital or balance thereof, and all other moneys which may then be claimable or secured under the bond shall become due and payable forthwith and without the mortgagor having been specially placed in default, whether the due date thereof shall have arrived or not. In terms of Clause 9.1 the first respondent was not obliged to give notice.

[12] Mr Pistorius also submitted that the first respondent accepted late and defective performances in respect of the settlement agreement. He went on to submit that continued acceptance of defective payments without objection may be taken as acceptance of such payments and that the first respondent should have given notice of cancellation of the settlement agreement. Mr Pistorius also submitted that if the first respondent objected to the defective performance, it should have done so when the payment of R15 000.00 was reversed during August 2007 and that the first respondent continued to accept defective performances thereafter. In the answering affidavit the first respondent avers that as soon as it became known that the payment of R15 000.00 was dishonoured and that the September payment was late and that no payment was made on
1 October 2007, it gave instructions for the sale in execution to proceed. It would appear that the first respondent became aware of this fact during October 2007. There is therefore no merit in the contention that the first respondent did not object to defective performances in the form of late payments. There is also nothing to show that the first respondent accepted non payment of the instalment for October 2007. This is not a case where the defective performances were defective in the same respect, for instance, late payments. Defective performances in the present case are not of the kind mentioned in Williston’s book on Contracts which was quoted with approval by Watermeyer C.J. in Garlick Ltd v. Phillips 1949 (1) SA 121 (AD) at 131. The first respondent has not acquiesced, expressly or by implication and without objection in a long series of similar defective performances in this matter. There is no merit in the submission that the first respondent accepted late and defective performances in respect of the settlement agreement.

[13] The order that I make is that the rule nisi is discharged with costs.

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SS LUTHULI AJ

Counsel for the Applicants: Adv LD Pistorius

Instructed by: Ndwandwe & Associates

Counsel for the First Respondent: Adv P Bezuidenhout

Instructed by: Meumann White

Judgment handed down on: ________________________

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