Investec Bank Ltd v Fraser NO and Others

• Jurisdiction: http://justis.com/jurisdiction/166,South Africa
• Judge: Lapan AJ
• Judgment Date: 06 May 2020
• Court: Gauteng Local Division, Johannesburg
• Hearing Date: 06 May 2020
• Citation: 2020 (6) SA 211 (GJ)
• Counsel: JE Smit (with PG Louw) for the applicant. JS Marks (attorney) for the first and second respondents.
• Docket Number: 33437/2019

Lapan AJ:

Introduction

[1] The applicant seeks an order declaring certain immovable property owned by the Tricour Property Trust (Trust) to be specially executable as a precursor to satisfying a money judgment granted against the Trust, as surety, on 9 February 2015, in the amount of R13 242 075,26 plus interest and costs (judgment debt).

[2] The first respondent opposes this application on the following main grounds:

Lapan AJ

[2.1]

The first respondent resides on the property with her two adult children, alleging that it is her primary residence and, since the applicant failed to comply with rule 46A of the Uniform Rules, this application is fatally defective.

[2.2]

The applicant failed to take account of certain proceeds received by it from the sale of a property belonging to the principal debtor which would have resulted in the judgment debt being fully discharged.

[2.3]

The applicant's calculation of the outstanding balance of the judgment debt is incorrect and not supported by a certificate of balance.

[3] The applicant contends that rule 46A is not applicable as the provisions thereof apply to individual consumers and natural persons, not to trusts.

[4] In its replying affidavit the applicant revised its calculation of the amount owing on the judgment debt by correcting certain errors made and by including amounts previously omitted, such as the proceeds from the sale of the principal debtor's property. The interest calculation on the balance was revised accordingly. The first respondent contends that this is an impermissible revision of the debt as the applicant is seeking to make out a new case in reply.

[5] Before considering these issues, the facts are set out below.

The facts

[6] On 5 January 2011 the Trust executed a suretyship in favour of the applicant in terms of which it bound itself as surety and co-principal debtor, in solidum, jointly and severally, with Bridgeland Development SA (Pty) Ltd (Bridgeland) for any amounts owing, or which may become owing, by Bridgeland to the applicant, subject to a maximum amount of R17 400 000.

[7] Suretyships were also executed by the following sureties in favour of the applicant in respect of Bridgeland's indebtedness to the applicant:

[7.1]

Mr James Fraser, a director of Bridgeland.

[7.2]

Aeterno Investments 115 (Pty) Ltd (Aeterno).

[7.3]

The Tricour Share 3 Trust, of which Mr Fraser and the second respondent were the trustees.

[8] On 31 March 2011 the applicant concluded a loan agreement with Bridgeland in terms of which it lent and advanced an amount of R17 400 000 to Bridgeland (first loan agreement). Several months later Bridgeland defaulted on its repayment obligations in terms of the first loan agreement and, as a result thereof, the outstanding balance became due and payable immediately.

[9] On 21 January 2013 the applicant concluded a second loan agreement with Bridgeland in terms of which it lent and advanced an amount of R15 400 000 to Bridgeland in order to, in effect, restructure the amount outstanding in terms of the first loan agreement (second loan agreement).

Lapan AJ

[10] On 29 July 2013 the Trust acquired certain immovable property described as Holding No 103, Glenferness Agricultural Holdings, Registration Division JR, Province of Gauteng, measuring 2,5563 hectares, held by title deed No T82703/2013, situated at 103 MacGillivray Road, Glenferness Agricultural Holdings (the property).

[11] The property was acquired for an amount of R4 700 000 and extensively renovated at a cost of over R4 000 000. On 1 August 2016 Mr Fraser, his wife, who is the first respondent, and their two adult children moved onto the property.

[12] Bridgeland defaulted on its repayment obligations in terms of the second loan agreement and, as a result thereof, the full amount outstanding became due and payable immediately.

[13] On 12 December 2014 the applicant instituted an action against all the sureties, claiming payment of Bridgeland's outstanding indebtedness.

[14] On 9 February 2015 default judgment was granted against the sureties in the amount of R13 242 075,26 (the judgment).

[15] In March 2015 a writ of execution was issued against the movable assets of the Trust, in execution of the judgment debt but a nulla bona return was made.

[16] In April 2015 the sureties, including the Trust, brought an application to rescind and set aside the judgment. On 22 March 2016 the rescission application was dismissed as the applicants had failed to prosecute the application.

[17] On 29 July 2015 the applicant received the net proceeds, in the amount of R3 182 000, from the sale of immovable property owned by Bridgeland, being Unit 501, Sectional Title No 1410 Eglin, Sunninghill, Pretoria (the Eglin property).

[18] On 7 October 2015 Bridgeland was placed under voluntary liquidation and the applicant proved a claim in the estate of Bridgeland in the amount of R10 106 741,02 plus interest thereon.

[19] Between May 2016 and August 2017 the applicant received dividends from the estate of Bridgeland in the aggregate amount of R8 811 929,65.

[20] In July 2019 a second attempt was made at executing against the movable assets of the Trust but a nulla bona return was made.

[21] As at October 2019 the judgment debt of R13 242 075,26 had been reduced to an amount of R4 937 856,72 calculated as follows:

[21.1]

By deducting an amount of R3 182 000 in respect of the net proceeds from the sale of the Eglin property.

[21.2]

by deducting an amount of R8 811 929,65 being the dividends received from the estate of Bridgeland.

[21.3]

by adding interest in the amount of R3 689 711,11, calculated in accordance with the judgment.

Lapan AJ

[22] The sureties were unable to make payment of the judgment debt. The following events had occurred:

[22.1]

Aeterno was finally liquidated by an order of court granted on 24 October 2014 pursuant to an application brought by Absa Bank Ltd.

[22.2]

Tricour Share 3 Trust could not be located at its domicilium address for purposes of executing a writ against its movable assets and a nulla bona return was made on 27 March 2015. No immovable property was found to be registered in the name of this trust.

[22.3]

Mr Fraser was provisionally sequestrated on 14 May 2019 and finally sequestrated on 27 May 2019 pursuant to an application brought by the applicant for payment of the judgment debt.

[22.4]

Shortly after being sequestrated Mr Fraser emigrated to the United Kingdom, leaving the first respondent and their two adult children to continue residing on the property.

[22.5]

In respect of the Trust, two nulla bona returns had been made, one in March 2015 and one in July 2019, in respect of the movable assets of the Trust as explained above.

[23] In October 2019 the applicant brought this application for an order declaring the Trust's property to be specially executable.

The issues

[24] The following issues arise for consideration:

[24.1]

Whether the provisions of rule 46A are applicable.

[24.2]

Whether the revised calculation of the outstanding balance of the judgment debt is correct and whether the debt has been fully discharged.

[24.3]

Whether the applicant has impermissibly sought to make out a new case in its replying affidavit by revising the calculation of the balance due in respect of the judgment debt.

Analysis

Is rule 46A applicable?

[25] The applicant, relying on the dictum in Mokebe, contends that the Trust is not 'an individual consumer and a natural person', hence the provisions of rule 46A are not applicable. The applicant relies on the provisions of rule 46 for this application. [1]

[26] The first respondent, relying on the decision in Nedbank, contends that rule 46A is applicable and should have been complied with by the applicant. [2]

[27] Rule 46 deals with execution against immovable property and the relevant provisions are quoted in full below. Rule 46(1) provides as follows:

Lapan AJ

'(1)(a) Subject to the provisions of rule 46A, no writ of execution against the immovable property of any judgment debtor shall be issued unless —

(i)

a return has been made of any process issued against the movable property of the judgment debtor from which it appears that the said person has insufficient movable property to satisfy the writ; or

(ii)

such immovable property has been declared to be specially executable by the court or where judgment is granted by the registrar under rule 31(5).'

[28] Rule 46A, which came into operation on 22 December 2017, deals with execution against residential property which is the judgment debtor's primary residence. Rules 46A(1) and (2) are relevant and quoted in full below.

[29] Rule 46A(1) and (2) provide as follows:

'(1) This rule applies whenever an execution creditor seeks to execute against the residential immovable property of a judgment debtor.

(2)(a) A court considering an application under this rule must —

(i)

establish whether the immovable property which the execution creditor intends to execute against is the primary residence of the judgment debtor; and

(ii)

consider alternative means by the judgment debtor of satisfying the judgment debt, other than execution against the judgment debtor's primary residence.

(b) A court shall not authorise execution against immovable property which is the primary residence of a judgment debtor unless the court, having considered all relevant factors, considers that execution against such property is warranted.

(c) The registrar shall not issue a writ of execution against the residential immovable property of any judgment debtor unless a court has ordered execution against such property.'

[30] In Mokebe the full bench was tasked with determining three issues, including the circumstances in which a court should set a reserve price for the sale of property in execution of a...