Reasons for order:
DE JAGER J:
After having failed to comply with an undisputed deed of settlement that was made a court order on 10 March 2021, the applicant (Bank Windhoek Limited) instituted motion proceedings against the respondents (Robertson Building Construction CC, Robertson Kapuuo and Veyaruka Kapuuo, respectively) for payment of moneys due under a commercial and mortgage loan and for orders declaring three immovable properties specially executable (the Rocky Crest property, the farm, and the Hentiesbaai property). After the matter was argued on 8 October 2024, but before judgment was reserved, the respondents made a settlement offer whereon the applicant’s legal practitioners had to obtain instructions. The matter was postponed to 6 November 2024 for a status hearing and for judgment to be reserved if the matter is not settled.
On 6 November 2024, the court ordered, by agreement between the parties, payment of N$1 702 955,67 (under account ML000388982) and N$3 302 550,86 (under account CL4000072185) together with interest on those amounts as set out in the 6 November 2024 court order, the Hentiesbaai property and the farm specially executable while staying execution of the farm for six months from 6 November 2024, the respondents must sign a power of attorney in the applicant’s favour to enable it to assist in marketing the Hentiesbaai property and the farm to the satisfaction of the monetary orders, and costs of suit on a scale as between attorney and client. Judgment was reserved for the prayer that the Rocky Crest property be declared specially executable and the case was postponed for delivery of judgment.
The second and third respondents are married to each other. Neither the Hentiesbaai property nor the farm is their primary home. There is no evidence that the Hentiesbaai property or the farm is leased to third parties as home. Rule 108(2) did therefore not apply to the Hentiesbaai property and the farm. Both those properties are subject to registered mortgage bonds in the applicant’s favour for the indebtedness concerned. Nulla bona returns of service were not strictly necessary for foreclosure of those registered mortgage bonds. In those circumstances, the court endorsed the settlement reached on 6 November 2024.
It is undisputed that the Rocky Crest property is the second and third respondents’ primary home since 2005. In the deed of settlement endorsed by the court on 10 March 2021, it was agreed that the applicant is entitled to an order declaring the property specially executable. Whereas a mortgage bond was registered in favour of the applicant over the Rocky Crest property for the indebtedness concerned, the applicant has a substantive right to execute against it and the applicant need not execute against movable property before turning to the bonded immovable property. A nulla bona return of service is also not strictly necessary for foreclosure of that bond. Whereas that property is the second and third respondent’s primary home, rule 108(2) nevertheless applies to that property and the court may not declare it specially executable unless rules 108(2)(a) and (b) were complied with and the court so orders it after having considered all relevant circumstances with specific reference to less drastic measures than a sale in execution which measures may include attachment of alternative immovable property. The court is satisfied that rules 108(2)(a) and (b) were complied with in respect of the Rocky Crest property. The court must consider whether there are less drastic measures than a sale in execution of that property. The circumstances relevant to that enquiry are as follows.
Another immovable property situated in Grootfontein was already sold and the proceeds applied to the respondents’ indebtedness. By agreement between the parties, the court declared the Hentiesbaai property and the farm specially executable. Alternative properties were thus provided to be sold in execution, but they may be insufficient to cover the judgment debt.
The respondents were able to service the bond registered over the Rocky Crest property since 2005 to about 2019. They allege that the ‘recession’ and Covid-19 led to the proceedings against them. The respondents acknowledge they failed to comply with the deed of settlement concluded in September 2020 and endorsed by the court on 10 March 2021. The farm, where they breed and sell cattle and small livestock and produce charcoal, is their primary and most consistent form of income. They say, if given time to pay off the debt, they will be able to resume charcoal production to pay the applicant. On 15 December 2021 the first and second respondents gave the applicant an unreserved power of attorney to sell the Hentiesbaai property valued at N$1 600 000 in January 2022 and to keep the sale proceeds to cover the indebtedness. They complain that the Hentiesbaai property was sought to be declared specially executable and that it was not already sold under a power of attorney signed some time ago. In June 2024 the first respondent concluded a deed of sale with a third party whereby the first respondent agreed to purchase an immovable property situated at Finkenstein to enable it to construct, develop and sell 28 town houses at a value of about N$45 240 000 with a projected profit of N$10 940 000. The expected completion date is October 2025 while the units will be sold during their development stage. The first respondent is prepared to cede a portion of the proceeds of that project to the applicant. The respondents are willing to make monthly payments of N$10 000 from September 2024 and N$50 000 from January 2024 (they must have meant January 2025) pending proceeds from other projects.
In reply the applicant provided the following information. The commercial loan forming part of the judgment debt is in arrears with N$2 540 292,72 and the accrued interest is N$1 744 019,14. The bi-annual instalment is N$182 030,44, the capital outstanding is N$3 559 616,18 and the total amount outstanding is N$5 303 635,32. The mortgage loan forming part of the judgment debt is in arrears with N$536 931,17 and the accrued interest is N$581 409,02. The monthly instalment is N$10 438,74, the capital outstanding is N$1 286 694,86 and the total amount outstanding is N$1, 870 281,58. The second respondent’s mortgage loan is in arrears with N$1 906 766,38 and the accrued interest is N$810 562,58. The annual instalment is N$444 848,99 and the total amount outstanding is N$2 717 328,96. As at 12 July 2024, the entire indebtedness is N$9 891 245,86. The tendered amounts are untenable as they are unrealistic. The payments proposed in the deed of settlement were not paid in the last four years and there is no guarantee or payment history to support any averment that payments can be made. It has been four years since Covid-19 and no payments were received. The respondents do not tender their livestock to the alleged value of N$550 000 for their indebtedness towards the applicant. The answering affidavit is silent on the second respondent’s financial capacity and ability as party and co-debtor. The power of attorney signed for the Hentiesbaai property did not restrict the respondents’ compliance with their obligations towards the applicant. The Hentiesbaai property is incomplete, and the tendered valuation suggests its uncompleted market value to be N$1 200 000 and its forced sale value to be N$1 000 000. The outstanding amount exceeds the potential sale proceeds. Its incomplete state presented difficulty selling that property. The respondents do not state they cannot afford to rent other premises as home or that the Rocky Crest property is their only viable home.
The second respondent’s mortgage loan referred to in the preceding paragraph does not form part of the judgment debt and is not considered for the application at hand. The total indebtedness as at 12 July 2024 for the judgment debt is N$7 173 916,90 (N$5 303 635,32 + N$1, 870 281,58).
In Court-Managed Civil Procedure of the High Court of Namibia the following is stated on rule 108:
‘The rule must not become the means by which to frustrate the legitimate commercial interests of a creditor to seek satisfaction of a judgment debt. It should be borne in mind that the judgment creditor is limited to only two opportunities to have a primary home declared specially executable. On the other hand, an execution debtor who offers a viable alternative that would reasonably satisfy the debt of the execution creditor must not be left homeless where doing so does not meet the legitimate interest of modern-day commerce and the country’s overall financial system, which rely on credit extension to the majority of the population.’
The two competing interests are the regulation of selling a home in execution and that the provision of credit by financial institutions remain effectual and serviceable.
The respondents bear the evidential burden for existent reasons why the Rocky Crest property should not be declared specially executable. That would entail satisfying the court that there are less drastic measures than a sale in execution to satisfy the judgment debt. The forced sale value for the Hentiesbaai property is N$1 000 000. The respondents did not provide any valuation for the farm. The respondents counsel merely submitted from the bar that it can fetch N$5 000 000 to N$6 000 000. The respondents did not provide evidence satisfying the court of less drastic measures than a sale in execution. A proposal to pay the judgment debt over a prolonged period does not satisfy the judgment debt, which is due, owing and payable.
Even if the Hentiesbaai property and the farm are sold for N$7 000 000 (N$1 000 000 + N$6 000 000), the judgment debt would remain unsatisfied. Notwithstanding the shortcomings in the respondents’ opposition, the court is alive to the fact that the proceeds from the sale of the Hentiesbaai property and the farm may be substantial, and the respondents’ financial position may change to such extent that they would, at the time that those properties are sold, be able to pay the shortfall of the judgment debt.
In those circumstances, the Rocky Crest property is declared specially executable but only after both the Hentiesbaai property and the farm are sold and the respondents thereafter fail to satisfy the shortfall of the judgment debt, if any, within three months after the sale of both the Hentiesbaai property and the farm. The 6 November 2024 court order already includes a cost order by agreement between the parties.
In conclusion, the order is as set out above. |
