Sales in Execution of Immovable Property, The Rules of Court and the Consumer Protection Act Regulations: Back to the Drawing Board?

• Jurisdiction: South Africa
• Pages: 55-71
• Published date: 16 August 2019
• Author: Charl Hugo
• Citation: (2014) 25 Stell LR 55
• Date: 16 August 2019

55

SALES IN EXECUTION OF IMMOVABLE

PROPERTY, THE RULES OF COURT AND THE

CONSUMER PROTECTION ACT REGULATIONS:

BACK TO THE DRAWING BOARD?

Charl Hugo

BA (Law) LLB LLM LLD

Professor of Banking Law, University of Johannesburg

Elmien du Plessis

BA (International Relations) LLB LLD

Senior Lecturer, Faculty of Law, University of Johannesburg

1 Introduction

Banks often lend money to pro spective home owners. Such loans are

typically secure d by means of mortgage bonds (typically a so -called

kustingsbrief ) regist ered against the prop erties by the prospe ctive home

owners. In the case of owners defau lting on their loan repay ments, the banks

foreclose by taking judgment agai nst the owners, and sell ing the propert ies

concerned in execution by public auction. T his has been the practice for many

years. It is a normal par t of economic l ife in ou r society.

These sales in execution have long been regu lated in detail by the r ules

of court. In the High C ourt the relevant provisions are found i n Rule 46 of

the Uniform Rules of Court , and in the Magist rate’s Court in Rule 43 of the

Magistrates’ Cour ts Rules of Court. The process is ver y similar and henceforth

we refer only to the High Court rules. There is a signicant body of case law

interpreti ng Rule 46, and, by 2008, it would be fair to say th at the law and

practice in this r egard wa s reasonably well understood.

The sign icance of 2008 is that the Consumer Protection Act 68 of 20 08

was enacted in th at year. Section 45 deals with auc tions. Subsection 1 reads:

“In this section, ‘auction’ includes a sale in execution of or pursuant to a court order, to the extent that

the order contemplates that the sale is to be conducted by an auction.”

Thereby the foreclosure sales at the i nstance of mortgagee ba nks were

brought r mly within the real m of the Consu mer Protection Act. The

Regulations subseque ntly promu lgated in terms of the Act1 also deal

comprehensively with auctions (including sales in execut ion).

The purpose of th is article is to show that the Consumer Prot ection Act, read

with the Regulations, doe s not make sense in regard to sales in execution, and,

in particula r, that the Regulations (or their applicability) need to be rethought.

The process envisaged in t he Act and its Regulations, f urther more, cannot

be harmonised w ith the practice unde r the court r ules. We approach the

1 The Consume r Protection Act Reg ulations GN R 293 in GG 3418 0 of 01-0 4-2011

(2014) 25 Stell LR 55

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problem speci cally from the perspe ctive of the mortgagee ban k as judgment

creditor.2

Before dealing with the procedu res envisaged in the court rules on the one

hand, and the Consu mer Protection Act Regulat ions on the other, it is useful

to consider the main featu res of the material law relating to sales in execution

of immovable property pur suant to a court order.

2 Material law of sales in execution of immovable pr operty

The material law regard ing sales in execution of immovable proper ty is

not well settled. Although not the mai n focus of this article, it is nevert heless

necessary to ma ke some points in this regard.

In a comparatively recent jour nal article the mater ial law regarding sales

in execution pursuant to a judg ment of a court was investigate d in depth by

Sonnekus.3 He states t hat although such sales are held dai ly, it is not always

done with full appreciat ion or consideration of the material legal p rinciples

concerned. Th is is probably due to the fact that in the se sales the focus is

mostly on procedural rat her than materia l law.4 Against this background,

and with a thorough canvassi ng of Roman-Dutch and ius-commune sources, 5

he makes the following points:

• The ownership acquired by the purch aser at the sale of execution is acqui red

in original (as opposed to der ived) fashion due to the absence of a real

agreement in terms of which ownership is transfer red and acq uired. The

acquisition is e x lege as a consequence of an allocation der ived f rom state

authority (“toew ysing op owerheidsgesag”)6 symbolised in earlier times by

the prominent display of a spear ( hence the terms “sub ha sta sale”, “sale

subhastationis publicae” a nd “veiling onder den stokke”).7 He denes such

a sale as follows:

“’n Sub hasta-veiling is … ‘n geregtelike veiling wat in die openbaar gehou word soos gelas deur

die gereg in die omskrewe omstandighede ten uitvoerlegging van ’n vonnis.”8

• As such the ownership acquired by the purchaser is protected and the

purchaser is not suscept ible to eviction or the rei vindicatio by a third

2 Hence the pers onal pronoun “it” w ill be used as oppos ed to “his” or “her”

3 JC Sonnekus “S ub hasta-veil ings en die Onde rskeid tuss en Oorspon klike en Afgel eide Wyses van

Eiendomsver kryging” (200 8) TSAR 696

4 704-705

5 He refers, amongs t others, to the Cor pus Juris Civili s, Matthaeus, Gr oenewegen, Van Bijnkersho ek, Van

der Keessel, Van Lee uwen, Van der Linden, Voet, D e Groot, and Pecki us See also the ju dgment of Cloete

JA in Menqa v Markom 20 08 2 SA 120 (SCA) 131-143 in which the co mmon-law authorit ies are reviewed

extensively

6 Sonnekus (20 08) TSAR 703

7 702-703

8 702

56 STELL LR 2014 1

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