FORM A FILING SHEET FOR EASTERN CAPE JUDGMENT

Transcription

1 1 FORM A FILING SHEET FOR EASTERN CAPE JUDGMENT 025/2005 ECJ NO : PARTIES: Body Corporate of Sunninghill Park And Nobumba and Others REFERENCE NUMBERS - Registrar: 2019/04 DATE HEARD: 17 February 2005 DATE DELIVERED: 3 March 2005 JUDGE(S): Leach and Plasket JJ LEGAL REPRESENTATIVES - Appearances: for the State/Applicant(s)/Appellant(s): RWN Brooks for the accused/respondent(s): No appearance Instructing attorneys: Applicant(s)/Appellant(s): Netteltons Respondent(s): 1 st respondent: State Attorney 2 nd respondent: VG Toto 3 rd respondent: NF Mlumbi

2 2 CASE NO: 2019/04 IN THE HIGH COURT OF SOUTH AFRICA (EASTERN CAPE DIVISION) DATE DELIVERED: 3 MARCH 2005 REPORTABLE In the matter between: BODY CORPORATE OF SUNNINGHILL PARK APPLICANT and SAMUEL SIVIWE NOBUMBA (CIVIL MAGISTRATE FOR THE DISTRICT OF PORT ELIZABETH) 1 ST RESPONDENT VUYO GIDEON TOTO 2 ND RESPONDENT NOMARAHIYA FELICIA MLUMBI 3 RD RESPONDENT JUDGMENT

3 3 Review of decision by a magistrate to refuse to authorise a warrant of execution against immovable property, in terms of section 66(1)(a) of the Magistrates Courts Act 32 of 1944 Decision set aside on account of its irrationality and the warrant of execution duly authorised. PLASKET J [A] INTRODUCTION [1] This is an application to review and set aside a decision of the first respondent (a magistrate for the district of Port Elizabeth) dismissing an application for the authorisation of a warrant of execution against immovable property of the second and third respondents known as section 26, Sunninghill Park, situate at 29 Sunninghill Park, Moregrove Street, Westering, Port Elizabeth (the property). The application for the authorisation of the warrant was brought in terms of s 66(1)(a) of the Magistrates Courts Act 32 of 1944 and in accordance with the provisions of rule 55 of the Magistrates Courts Rules, pursuant to a judgment being taken against the second and third respondents in an amount of R , together with costs on an attorney and client scale and interest on the capital sum at the rate of 24 percent per annum calculated from 1 April 2004 to date of payment. [2] In addition, the applicant also applies for an order authorising the issue of the warrant of execution as well as an order for costs. In other words, the applicant wants this court to grant the substantive relief it sought before the first respondent, rather than an order remitting the matter to the first respondent or to another magistrate in Port Elizabeth. [B] THE FACTS [3] The facts giving rise to the application brought before the first respondent

4 4 are relatively simple. The second and third respondents were the owners of the property and were obliged to pay to the applicant levies calculated in accordance with the provisions of the Sectional Titles Act 95 of They fell into arrears and, as stated above, judgment was duly taken against them, jointly and severally, in the amount of R , together with interest at the rate of 24 percent per annum, calculated with effect from 1 April 2004 to date of payment, as well as costs on an attorney and client scale. [4] A warrant of execution was duly issued but the sheriff was unable to attach any moveable assets. He duly rendered a nulla bona return of service. It would appear that the respondents have no movable assets to attach: those assets which they did own had already been attached and sold in execution by the sheriff. The respondents not having made any attempt to negotiate the settlement of their debt with either the applicant or its attorneys, the applicant took the next step: it brought an application for an order authorising the issue of a warrant of execution against the immovable property of the respondents. [5] In support of this application, Ms PJ Kennedy, the person entrusted with the no doubt unenviable task of recovering and collecting arrear levies on behalf of the applicant, set out a number of factors indicative of the grant of such an order being just and equitable. These included that a failure on the part of a person to pay levies impacts adversely on the capacity of a body corporate to perform its functions properly, for the benefit of all, as well as on the rights of all other owners in the scheme in question who would then have to contribute more for the payment of such expenses as rates and taxes, insurance, electricity and water consumption (in respect of common facilities), bank service charges, maintenance, auditing and managing agents fees and cleaning and gardening services. [6] She stated further that the obligation to pay levies is an on going monthly obligation that arises from being an owner in a sectional title scheme; that a failure by an owner to pay on due date would hamper a body corporate in

5 5 meeting its monthly commitments; that if a body corporate is unable to enforce judgments against people who do not pay their levies, it may well lead to persons in similar positions as the respondents simply failing to make payment and in this way evading their responsibilities to the detriment of all the owners in the scheme concerned ; that it is iniquitous, untenable and cannot be condoned that by simply failing to pay their levies the respondents have, in effect, forced their neighbours to foot their bills so to speak ; that by the attachment of the respondents immovable property and its sale in execution, a new owner can be found who would pay his or her monthly levies as and when they are due. [C] SECTION 66(1)(A) OF THE MAGISTRATES COURT ACT [7] The application before the first respondent was brought, as stated above, in terms of the provisions of s 66(1)(a) of the Magistrates Court Act. The need to apply to a court for the authorisation of a warrant of execution against immovable property arose as a result of the judgment of the Constitutional Court in the matter of Jaftha v Schoeman and other; Van Rooyen v Stoltz and others. 1 Prior to this judgment, s 66(1)(a) of the Act provided that when a nulla bona return had been issued to reflect insufficient movable property to settle a judgment debt, the clerk of the court could issue a warrant of execution against the immovable property of the debtor. In her judgment, however, Mokgoro J (writing for a unanimous court) held that this section constituted an unreasonable and unjustifiable limitation of the fundamental right of access to adequate housing entrenched in s26 of the Constitution, to the extent that it allows for sales in execution in unjustifiable circumstances and without judicial intervention. 2 [8] In order to remedy this conflict with the Constitution, Mokgoro J read into s 66(1)(a) certain words to create judicial oversight of sales in execution against (1) BCLR 78 (CC). 2 Para 61.

6 6 immovable property. As a result the section now reads: Whenever a court gives judgment for the payment of money or makes an order for the payment of money in instalments, such judgment, in case of failure to pay such money forthwith, or such order in case of failure to pay any instalment at the time and in the manner ordered by the court, shall be enforceable by execution against the movable property and, if there is not found sufficient movable property to satisfy the judgment or order, or the court on good cause shown, so orders, then a court, after consideration of all relevant circumstances, may order execution against the immovable property of the party against whom such judgment has been given or such order has been make. 3 [9] Mokgoro J set out the more important of the factors that a court called upon to authorise execution against immovable property should consider. She held: 4 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 a case before the court. [D] THE FIRST RESPONDENT S REASONS [10] I turn now to the reasons furnished by the first respondent for the dismissal of the application, which reasons were furnished in terms of rule 53 of the High Court Rules. [11] Prior to turning to his reasons, the first respondent saw fit to engage in a 3 The words in italics are the words read into the section. 4 Para 60. See too paras

7 7 gratuitous attack on the applicant s attorney who had, in the founding affidavit, stated that the issue involved was not only of importance to the present applicant in these proceedings, but to all creditors seeking to execute against immovable property and more in particular bond holders. The first respondent stated that the deponent to the Notice of Motion is trying to sow some confusion here by referring to bond holders, that the matter at hand has got nothing to do with bond holders, this is a pure case where the debtor has failed to pay levies simple and that therefore it is my considered opinion that he is not in any way entitled to speak on behalf of bond holders because that issue can be dealt with when it comes and must not be used covered by the issue of levies which are exorbitant high in interest and lacking control. [12] This is perhaps indicative of what is to come. It manifests a clear lack of understanding of the issues involved, and ignores the context in which the applicant s attorney referred to the rights of bond holders he was obviously making the legitimate point that the issue involved in this case has a public interest element to it as the implications of the first respondent s dismissal of the application go beyond the immediate interests of the applicant and the second and third respondent. There is nothing confusing in this and there was no basis upon which the applicant s attorney could be accused of sowing confusion. The first respondent s comments also disclose a worrying hostility to the applicant and to the scheme involved. This hostility, apart from being inappropriate in judicial pronouncements, such as the first respondent s statement of reasons, has no rational and justifiable basis on the record before him. [13] The first respondent held that there was something wrong with the nulla bona return, but precisely what was wrong is difficult to fathom. He said the following: 5 Thereafter a warrant of execution against properly was issued and 5 In this and the following quotes from the first respondent s reasons, I have quoted him verbatim. The grammatical and other errors are his, not mine.

8 8 nulla bona return was made by the Sheriff. This nulla bona return has left much to be desired. It was done in the absence of both the execution debtors. Secondly on remark, I quote: This return is not meant to set a return in terms of section 8(b) of the Insolvency Act 24 of In case defendant possesses executable fixed property and further execution is intended, please supply complete alternative addresses of the latter. This is needed for services purposes to effect a technical correct attachment. I am unable to understand this remark if the nulla bona return is the usual one for what is expected in the normal cause of event. To me it seems the return was just a mere formality and specifically to pave way for execution of the immovable property(ies), which not what the law or justice demand. Then the first step of the application has to fail the question of good cause cannot be in any way sustain. [14] It is clear that the first respondent has taken no care at all in formulating his reasons. He has simply thrown together an unintelligible jumble of words without a jot of the intellectual rigour, attention to detail or care that can legitimately be expected of a public official exercising judicial power. [15] The first respondent s apparent conclusion that there is something amiss with the sheriff s nulla bona return discloses a fundamental lack of understanding of the issues involved, the processes, and the content of the return itself. He appears to have been influenced by the fact that the sheriff stated that he searched for property at the premises during the absence of the defendant. If he had considered the warrant of execution in its entirety, he would have noted that it was served initially by affixing it to the door of the residence of the second and third respondents, that subsequently, and during their absence, the writ was executed by searching the property at the

9 9 premises. The sheriff stated further on the return that [n]either the defendant nor any sufficient attachable moveable property to satisfy the warrant could be found. Consequently a return of nulla bona is rendered. Below the standard form reference to the Insolvency Act which has no relevance for purposes of this case the sheriff has recorded: HOUSE EMPTY GOODS SOLD BY SHERIFF IMMOVABLE PROPERTY HAS BEEN ATTACHED BY VAN VOLLENHOVEN ATTORNEYS [16] The reason for the dismissal of the application on this first ground is, indeed, as the applicant has argued, arbitrary and capricious. Because it is objectively irrational, it falls foul of s1(c) of the Constitution, the founding value of the rule of law and constitutional supremacy. 6 It consequently constitutes a gross irregularity in the proceedings. [17] The first respondent then turned his attention to s 66(1)(a) of the Magistrates Courts Act. The first point that he made in this regard was that the section commences with the words: Whenever a court gives judgment for the payment of money. He interpreted this as follows: It is so present tense has been used by the legislature in that the Court must be presently giving judgment not a judgment which has been given. [18] He proceeded to state: Having a closer look on section 66 it is my considered opinion that al the provisions will only be of effect and force after the court not the clerk of the court has made a determination to pay in money or instalment. Thus the court will only be able to make after it has a knowledge that the person or debtor is having money and able to make a payment. 6 Pharmaceutical Manufacturers Association of South Africa and another: In Re Ex Parte President of the Republic of South Africa and others 2000 (2) SA 674 (CC); 2000 (3) BCLR 241 (CC), paras 89 and 90.

10 10 The only mechanism we have in our legislation is the section 65(A)(1) Act 32 /1944 upon which the court will be in position to either make an order for payment in money or instalment or issue warrant of execution against movable or immovable (65 E). Therefore it is my considered opinion that section 65(A) Act 32/1944 is the only correct procedural step for the applicant. This would have been so even before the Constitutional Court judgment CCT 74/03 decided on the 08/10/2004 in Maggie Jaftha v Stephanus Schoeman and 9 others. The application which was brought in court in the 09/12/2004 has got no legal basis. This is an equivalent of the abuse of Court process which has caused the constitutional court to make a ruling in an endeavour to put a stop on this conduct. [19] The first point made about s 66(1)(a) that the Court must be presently giving judgment not a judgment which has been given only has to be stated for it to be rejected. It is a patently incorrect interpretation of the section. It ignores the very structure of the Act and particularly the procedure for execution created by it. [20] As to the first respondent s second difficulty, it is apparent that he has misdirected himself fundamentally in interpreting the Act to mean that s 65 must be utilised in preference to and before resort is had to s 66(1)(a). A predominant purpose of s 65 is to make provision for a procedure whereby the judgment debtor s financial position can be determined in order to enable the judgment creditor to obtain from his debtor as much as the latter can really afford to pay, avoiding as far as possible the expense of issuing a warrant of execution against movable property which may prove abortive. 7 7 Jones and Buckle The Civil Practice of the Magistrates Courts in South Africa Vol 1 (9 ed) Cape Town, Juta and Co: 1997, Act 268.

11 11 [21] In this instance, the applicant chose not to follow this route, opting instead to risk the expense of issuing a warrant of execution against movable property which did indeed prove to be abortive, and then utilising s 66(1)(a) once the sheriff filed a nulla bona return. The first respondent was therefore wrong in law when he stated that the only mechanism we have in our legislation is the section 65A(1) Act 32/1944 upon which the court will be in position to either make an order for payment in money or instalment or issue warrant of execution against movable or immovable. What is more, he displayed a fundamental lack of understanding of what was decided in Jaftha s case, when he said that s 65A of the Magistrates Courts Act is the only correct procedural step for the applicant and that this would also have been so before the judgment in Jaftha. His conclusion that the application has got no legal basis is simply incorrect in law, constitutes a material error of law, is an irrational conclusion to draw from the facts before him and the applicable law, and constitutes an irregularity liable to be set aside on review. [22] To accuse the applicant of an abuse of Court process and to equate its conduct with that of some of the respondents in Jaftha whose conduct attracted the criticism of the Constitutional Court (and that of the Cape Provincial Division before that 8 ) is as misguided as it is unfair. [23] The first respondent then refers to the idea, expressed in the Jaftha matter, that s 66(1)(a) potentially allows for a person s house to be attached and sold in execution for his or her failure to pay a trifling debt. He stated: For example how one, will be able to explain to authorise warrant against a flat which is + R for a debt which is + R having not known whether the debtors are working or having money to pay the debts. The whole system of Body Corporate is not in harmony with our Constitutional setup because, it is a business and a genuine one, but it is a systematically way of dispossessing people housing 8 See Jaftha v Schoeman and others; Van Rooyen v Stoltz and others [2003] 3 All SA 690 (C).

12 12 whilst it is known that it is constitutional correct to have every citizen in South Africa a house to stay in. Nobody can explain why there is 24 percent interest charge by this Body Corporate what criteria is used for that. Secondly the ruling was given and all aspects were considered and to dismiss the application was the only option, because by the look of the things this application is an attempt to overrule the Constitutional Court decision because our local practitioners are not prepared to adhere to the prescribed procedure. For reasons unknown because when the legislation was passed they were either there personally or in their representative capacity. [24] The passage I have quoted illustrates a lack of understanding on the part of the first respondent of the issues before him, the import of the Jaftha decision and the applicable constitutional provisions. Once again, this passage is so sloppily drafted that, in places it is impossible to fathom what the first respondent is trying to convey. [25] The first respondent blames the applicant for the lack of information about the means of the second and third respondents. The precise reason why judicial supervision of the execution process was read into s 66(1)(a) in Jaftha was to ensure that fair procedures are followed in terms of which such information may be placed before the court. This information is, however, information that lies within the exclusive knowledge of the second and third respondents. They were given notice of the application and chose not to oppose it or furnish the type of information that may have had a bearing on how the court exercised its discretion. Their failure to provide the court with information that may have been to their advantage cannot be held against the applicant. [26] The principle involved is the same principle that was involved in Ellis v

13 13 Viljoen. 9 In that matter an eviction case in which the applicant had simply alleged that he was the owner of the property concerned and that the respondent was in unlawful possession Thring J held that if there were relevant circumstances upon which the respondent wished to rely to justify further occupation of the property concerned, the onus must, on all the recognised principles of pleading and evidence, rest on him to allege and prove them, whatever they may be. 10 Similarly, in this matter, if there were factors that may have impacted on the discretion that the first respondent was required to exercise in respect of the authorisation of the warrant of execution, it was incumbent on the second and third respondents to place them before the court. It could not be expected of the applicant to place before the court facts that were within the exclusive knowledge of the second and third respondents. [27] There is simply no possible basis upon which the first respondent could conclude that the whole system of Body Corporate is constitutionally objectionable and that it is a systematically way of dispossessing people [of] housing. The hostility towards the applicant, evident from these assertions, appears to be based to put it bluntly on uninformed conjecture. [28] Quite what the first respondent meant when he accused the applicant of seeking to overrule the Constitutional Court is beyond me, but if he concluded from the conduct of the applicant s attorney in the matter before him that our local practitioners are not prepared to adhere to the prescribed procedure he has been grossly unfair to him as there is no basis for such criticism: indeed, it is evident that the applicant s attorney went to great lengths to follow the Jaftha decision. [29] I am at a loss to understand what the first respondent meant by the last sentence of the passage of his reasons that I have quoted above, namely: (5) BCLR 487 (C). 10 At 497D E.

14 14 For reasons unknown because the legislation was passed they were either there personally or in their representative capacity. I am also at a loss to understand what the relevance of this statement may be. As with the other aspects of the first respondent s reasons, the passage that I have quoted above is illustrative of the objective irrationality of the first respondent s conclusion. [30] The patent errors of the first respondent are compounded even further when he turned his attention to the issue of costs. After observing that the applicant did not seek a costs order, he stated that a cost order which is punitive against the applicant s attorney(s) in their professional capacity will be appropriate. As with everything else in the first respondent s reasons, this statement too is misguided. [E] RELIEF [31] On account of the irregularities outlined above, the first respondent s decision to dismiss the application cannot be allowed to stand. His decision must accordingly be set aside. The applicant also applies for an order in terms of which this court will substitute its decision for that of the first respondent and authorise the issue of the warrant of execution. [32] Even though it would be usual to remit a matter such as this, I take the view that there are sufficient grounds to justify this court taking the decision. In the first place, the facts are before us and we are in as good a position as the first respondent, or another magistrate, to evaluate them and exercise a discretion. Secondly, in these circumstances, it would be a waste of time for the matter to be remitted for a decision that would inevitably be in favour of the applicant, there being no factors of note to counter balance the factors put up by the applicant to motivate the grant of the relief it sought. Thirdly, to subject the applicant to the standard of decision making that it was forced to endure at the hands of the first respondent would be unfair.

15 15 [33] The second and third respondents withheld or failed to pay their monthly levies, with the result that not only the applicant but their neighbours too were prejudiced and would have to pay more to make up for their failure. The second and third respondents were in a very different position to the appellants in the Jaftha matter, who stood to lose, not only their homes, but also State housing subsidies in the future. They had fallen into debt because they were poor, having borrowed small amounts of money R and R to buy necessities, such as food. Although the personal details of the second and third respondents are not before us because they have chosen not to respond in any way, it can safely be assumed that they are not similarly poor: they purchased a property that is part of what I assume to be a townhouse development and, although the value of the property is not stated, it can safely be assumed that it is worth a considerable amount. (This may well provide the first and second respondents with something of a safety net, in the sense that there may well be a surplus due to them after their judgment debts have been paid, with which they may be able to purchase or rent more affordable accommodation.) The second and third respondents do not appear to have made any attempt, whether before or after judgment was taken against them, to settle the debt. Nor do they appear to have given any undertaking to pay what is due, whether in instalments or otherwise. It seems to me that, in these circumstances, the applicant s interests (and that of the neighbours of the second and third respondents) in the due enforcement and payment of the debt, outweighs the interests of the second and third respondents even if, on the face of it, the debt is a relatively small one. A case has accordingly been made out by the applicant for the authorisation of a warrant of execution. [34] In the result, the following order is made: (a) The decision taken by the first respondent, in case number 16230/04, in the Magistrate s Court for the district of Port Elizabeth, dismissing the applicant s application for the authorisation of a warrant

16 16 of execution against the second and third respondent s immovable property situate at 29 Sunninghill Park, Moregrove Street, Westering, Port Elizabeth, is reviewed and set aside. (b) The order issued by the first respondent s is substituted with the following order: (i) A warrant of execution against the second and third respondent s immovable property situate at 29 Sunninghill Park, Moregrove Street, Westering, Port Elizabeth is authorised. (ii) The second and third respondents are directed to pay the applicant s costs of the application in case number 16230/04. C. PLASKET JUDGE OF THE HIGH COURT I agree. L.E. LEACH JUDGE OF THE HIGH COURT