Court name
High Court Main Division
Case name
Standard Bank Namibia Ltd v Shipila
Media neutral citation
[2015] NAHCMD 281
Judge
Miller AJ


















SAFLII
Note:
Certain
personal/private details of parties or witnesses have been
redacted from this document in compliance with the law and
SAFLII
Policy







REPUBLIC
OF NAMIBIA


HIGH
COURT OF NAMIBIA MAIN DIVISION, WINDHOEK


JUDGMENT


Case
no: I 1791/2014


DATE:
19 NOVEMBER 2015


REPORTABLE


In
the matter between:


STANDARD
BANK NAMIBIA
LIMITED........................................................................PLAINTIFF


And


MAGDALENA
SHIPILA.................................................................................................DEFENDANT


THE
OMBUDSMAN................................................................................................AMICUS
CURIAE


NEDBANK
NAMIBIA
LIMITED............................................................1ST
COMMERCIAL BANK


FIRST
NATIONAL BANK NAMIBIA LIMITED.................................2ND
COMMERCIAL BANK


BANK
WINDHOEK
LIMITED..............................................................3RD
COMMERCIAL BANK


Neutral
citation: Standard Bank Namibia Ltd v Shipila (I
1791-2014)[2015] NAHCMD 281 (19 November 2015)


Coram:
MILLER AJ


Heard:
22 May 2015


Delivered:
19 November 2015


Flynote:
Practice – High Court Rule 108(1) and (2) –
Interpretation thereof – Application by Mortgagee to declare an
immovable property, placed under a mortgage bond specially
executable, as of right together with the default judgment –
Principles in Futeni Judgment restated – Rule 108 not
changing the common law right of mortgagee to declared bonded
property executable but merely stating the procedures to be followed
– Rule 108 (1) and (2) in line with the common law position
that execution must first be laid against movables and thereafter
immovable -  Such Mortgagee not in a better position than any
other judgment creditor  - Application struck from the roll.





ORDER


1.
The application to declare the immovable property, to write: Erf.
no [6…..], [R…..] [C…..], [Extension no…..],
Windhoek, Republic of Namibia, Registration Division K, Khomas
Region, measuring 360 square metres and held by Deed of Transfer
No.[T2………],
specially executable is struck
from the roll.


2.
The plaintiff must bear the defendant’s costs limited to actual
disbursements reasonably incurred.


JUDGMENT


MILLER
AJ:


[1]
This is an application in terms of which the Commercial Banks
(Standard Bank, FNB, NEDBANK and Bank Windhoek) seek guidance from
the court as to the correct procedure to be followed in cases where
foreclosure of a bond is sought in terms of an existing mortgage bond
agreement. The guidelines and reasons follows.


Factual
background: The claim


[2]       
The plaintiff approved a home loan application of the defendant on 20
May 2008 and to which the defendant bound herself in favour of the
plaintiff in the amounts of N$ 300 275.00 and N$ 75 069.00. As
security for the monies advanced, a continuing covering mortgage bond
was registered over the immovable property belonging to the
defendant, to writ: Erf. no [6……], [R……]
[C……], [Extension no……], Windhoek,
Republic of Namibia, Registration Division K, Khomas Region,
measuring 360 square metres and held by Deed of Transfer No.[T2……..]
.


[3]       
The defendant defaulted in her monthly instalments to the plaintiff
and was, according to the certificate of Indebtedness, as at 26 June
2014 indebted to the plaintiff in the amount of N$ 299 862.47. After
several demands, the plaintiff instituted legal action for the
recovery of the debt, and rightly so in terms of the bond agreement,
on 10 July 2014. The relevant portion of the agreement reads as
follows:


           
21. Default
by Mortgagor


21.1    
The mortgagor shall be deemed to be in breach of the Mortgagor’s
obligation in respect of the loan, if:


21.1.1 
the Mortgagor fails to pay any amount due in terms of the loan or any
other amount due to the Bank in respect of any other liability of
whatsoever nature to the Bank on due date or commits a breach of any
other provision of the loan or the Bond (whatever such breach is
material or not) or;


21.2    
If the Mortgagor is deemed, in terms of clause 21.1 to be in breach,
then at the option of the Bank, all amounts whatsoever owing to the
Bank by the Mortgagor shall forthwith be payable in full,
notwithstanding the exercise by the Bank of any other rights and the
Bank may institute proceedings for the recovery thereof and for an
order declaring the mortgaged property executable. The Bank shall
further be entitled, and is hereby authorised by the Mortgagor, to
surrender or otherwise realise any policy of insurance or any other
security which is ceded or made payable to the Bank as collateral
security, and to appropriate the surrender value or amount otherwise
realised in reduction of the amount outstanding.’


[4]       
As part of the summons, the plaintiff makes the allegation that leave
would be sought to declare the property executable and that any
submissions from the defendant should be placed before court for
consideration at the hearing of the matter. No allegation was ever
made that the property is not the primary home of the defendant. It
can however be assumed that it is the primary home of the defendant,
hence the notice served in terms of rule 108(2)(a). The summons and
the annexures (the bond agreement, the certificate of Indebtedness
and the Notice in terms of rule 108(2)(a) and (b) ) where served on
the defendant on 22 July 2014 by attachment to the principal door of
the subject property as no other manner of service was possible.


Defence
to the claim


[5]       
The action was defended and the application for default judgment was
opposed on 31 July 2014 and in summary, the defendant states that
liability towards the plaintiff is not denied and that arrangements
would be made to repay the amounts owed to the plaintiff. The
defendant is currently unemployed but has identified a unit which is
nearing completion in order to generate funds to pay off the loan or
alternatively, offers her retirement fund annuities available in the
Old Mutual Retirement Fund Investment, meanwhile waiving any
protection that may be attached to these for purposes of fulfilling a
debt, in order to pay the debt owing to the plaintiff. Alternatively,
that such annuities will be made available only in February 2016. The
defendant further states that she will be left homeless with her
children if the house, which is her primary home, is sold in
execution.


[6]       
The court on 14 August 2014 granted judgment for the payment of N$
299 862.46 with compound interest at the rate of 8.75% per annum to
be calculated on a daily basis and capitalized monthly as from 27th
of June 2014 to date of payment as agreed to between the parties, as
well as costs of suit. The court refused the prayer to declare the
subject property executable. A writ of execution against movable
goods of the defendant was issued out of the office of the Registrar
of the High Court on 23 September 2014, personally served on the
defendant and a nulla bona return was filed with the court on
30 September 2014. The applicant then brought an application to
declare the subject property executable. The procedural question in
terms of rule 108 was then set down for determination.


The
application


[7]       
The court on 21 January 2015 joined the Ombudsman as amicus curiae
and further granted leave to Old mutual Max Investment Pension Fund,
First National Bank and Bank Windhoek to intervene as parties with a
potential interest in the outcome of the matter and to present
arguments on the issue at hand. Only the Ombudsman and the commercial
banks presented arguments on the matter.


[8]       
The application before court is to the effect that the defendant
seeks the release of the house from an interim attachment in exchange
of an amount equivalent to the debt which is to be released from the
retirement fund. The plaintiff’s takes the stance that there is
no guarantee that the debt will be paid in full if a grace period of
two years as requested by the plaintiff, is granted, more so because
the defendant is unemployed and is not in any position to afford the
instalments. In respect of the flat, the plaintiff states that it is
not clear as to the source of the funds used to build the flat, how
far the completion is and what amounts are expected to be generated
from the Unit and that such uncertainty does not count for the
defendant. As regards the retirement annuities, the plaintiff states
that such request is unenforceable in terms of the Pension Fund Act,
1956 and as such, the rights cannot be ceded; the amounts are only
paid out in portions and would in any event not be sufficient enough
to cover the debt. The plaintiff rejects any assurances offered by
the plaintiff as they are unreasonable and unenforceable.


The
legal issue that needs to be determined


[9]       
In addition to the guidance sought by the Commercial Banks, the
remaining prayer by the plaintiff is to declare the immovable
property belonging to the defendant executable. The bone of
contention between the parties is whether rule 108 would in this
instance be strictly applied.


The
parties’ submissions


On
behalf of the commercial Banks


[10]     
The commercial banks jointly made submissions on the subject and take
the stance that rule 108 should not apply in cases where the creditor
(Bank) has a mortgage registered in its favour over an immovable
property. Adv. Heathcote represented the Commercial banks and submits
that the judgment creditor, may seek an order for the foreclosure of
a bond together with an order for default judgment in terms of rule
15(3).  Counsel submits that rule 108 does not apply in cases
where the immovable property is bonded in favour of the judgment
creditor; or where the property belongs to a corporation; where the
property is not a primary home of the defendant and not leased to a
third party.


[11]     
As regards procedure, the Commercial banks position is that judgment
creditor has a substantive right in the property which it is entitled
to enforce by having the property sold in execution, and this right
stems from the common law. Mr Heathcote relied on authorities
sustaining the position that a judgment creditor has, as of right and
at its choice, an inherent right to have the property executed
whether the agreement contains such a clause or not and in the
absence of an execution against the movables, especially in cases
where the property has been specifically mortgaged. Such relief would
be granted if prayed for in the summons at the same time that default
judgment is sought. Counsel submits that rule 15(3) is in line with
common law and that the conflict is created by rule 108 which, in
such instances and bearing in mind the presumption of legality, rule
108 should not be made to apply to claims involving mortgage bonds.


[12]     
As a result, the guidelines suggested by the commercial banks
includes that judgment creditors be granted an executable order when
applying for default judgment in terms of rule 15 on condition that
the judgment debtor is notified, such service to be in compliance
with rule 8, of the intention of seek such an order and be given an
opportunity to be heard before the order can be made. These
suggestions are based on the interpretation of rule 108(1) and (2) by
the Commercial banks that form 24 may be served simultaneously with
the summons on the defendant; that the court does not have to look at
extraordinary circumstances before being satisfied and that a mere
indication that the judgment debtor has been informed of his/her
rights before issuing the order and where there is no indication of
any abuse of court process. Accordingly, the court should not
exercise its discretion unless in circumstances where there are other
ways to satisfy the judgment debt.


[13]     
Counsel submits that since a nulla bona was obtained against
the movables of the defendant on 30 September 2015, the order prayed
for must be granted as this would not amount to an abuse of court
process. With regard to the defendant’s offer that judgment be
satisfy by means of the pension annuities being paid out on February
2016, the plaintiff states that s 37A of the Pension Fund, 1956
states that, unless for tax purposes or maintenance claims, no right
in the fund benefit may be reduced, transferred or ceded or
hypothecated or be liable to be attached or be subjected to any form
of execution. Any such attachment would be in violation of statutory
law.


On
behalf of the Ombudsman: Amicus Curiae


[14]     
Adv. Frank appeared on behalf of the Ombudsman and submitted that the
practice has been that a court could declare a property executable if
the plaintiff asked for that relief whether there is a foreclosure
clause in the agreement of not. Accordingly, rule 108 reaffirms
common law but extends judicial oversight even after a writ on
movables has failed to satisfy the judgment debt. In answering the
questions posed by the Commercial banks, the Ombudsman takes the
stance that Form 24 should only be served after default judgment has
been granted and not annexed to the summons and that the conditions
precedent to the execution against the immovables must be fulfilled.
Accordingly, an application must be brought before court for the
property in question to be declared executable, which such
application must comply with rule 65 and rule 32. The reasoning
behind the support of the procedures as set out in rule 108 is that
the court at the default judgment stage cannot overlook the fact that
there may be movable properties that may satisfy the debt and the
process used by the plaintiff to have the property declared
executable on the basis of the summons is an abuse of court’s
process.


[15]     
The Ombudsman denied that there is conflict between common law and
rules 15 and 108. Accordingly, rule 108 does not affect the
Commercial Banks rights to the foreclosure of a bond and that it
simply affords the court judicial oversight before immovable
properties are executed.


The
defendant


[16]     
The defendant’s position is that the property in question is
her primary home and the only home where she lives with her two
dependent children. It is clear from her submissions that there are
no movable properties that could satisfy the debt, which by now has
inflated with interest. The acknowledgment of her indebtedness is
obvious from the record but she submits that she will be left in
destitute if the home is to be sold. She is more than willing to
waive the protection placed on retirement annuities and even proposes
that such an arrangement be made an order of court.


[17]     
No submissions where made from the Retirement Fund.


The
law


[18]     
The effect of the arguments advanced on behalf of the Commercial
banks is that Rule 108 procedure would not apply in cases where the
property is bonded in their favour. Let us do a close read-up and
interpretation of this rule:


Conditions
precedent to execution against immovable property and transfer of
judgments


108.    
(1)       The registrar may not issue a
writ of execution against the immovable property of an execution
debtor or of any other person unless -


(a)       
a return has been made of any process which may have been issued
against the movable property of the execution debtor from which it
appears that that execution debtor or person has insufficient movable
property to satisfy the writ; and


(b)       
the immovable property has, on application made to the court by the
execution creditor, been, subject to subrule (2), declared to be
specially executable.


[19]     
It is trite law that the rules of the high court has done away with
default judgments been granted by the registrar and that the
rationale behind this rule is to give more judicial oversight on the
question of declaring primary homes executable. From the reading of
subrule (1), it is clear that the only instances under which a writ
against any immovable will be issued is if there is a nulla
bona
return and if there is a court order. No distinction was
made here between immovable belonging to a corporate or to an
individual and whether it’s a primary home or not. This section
thus subjects all properties sought to be declared executable. The
section does further not make any distinction as to whether the
property was bonded or not. I do not think that was the intention of
the drafters  either.


[20]     
Note that subrule 1(b) is subjected to subrule (2). This means that
the court order is further subjected to an enquiry in terms of
subrule (2), which comes into play if the immovable property is the
primary home of the judgment debtor. If the immovable property is not
the primary home of the judgment debtor, then the enquiry in terms of
subrule (2) does not come into play. This means that the court would
be exercise its judicial oversight before granting the order in order
to ensure that all cases of execution against immovable property
conducted in terms of the rules did not serve to breach the
constitutional right to housing.[1]


[21]     
The word
and
between
the subrules is an indication that the
nulla
bona

return and the court order must be obtained before any writ may be
issued. The position is different in South Africa, as correctly
pointed out by the Commercial banks, in terms of which rule 46
alternate between the
nulla
bona

and the court order. This means that a property may be declared
executable even if no
nulla
bona

has been obtained. This is not the position in Namibia and the
position as stated in
Namib
Building Society v Du Plessis
[2]
has been changed.[3]


[22]     
Rule 108(1)(b) deals specifically with the courts’ order
declaring an immovable property executable. The rules create an even
further enquiry to be carried out before the order may be granted.
Rule 108(2) reads:


(2)      
If the immovable property sought to be attached is the primary home
of the execution debtor or is leased to a third party as home the
court may not declare that property to be specially executable unless
-


(a)       
the execution creditor has by means of personal service
effected by the deputy-sheriff given notice on Form 24 to the
execution debtor that application will be made to the court for an
order declaring the property executable and calling on the execution
debtor to provide reasons to the court why such an order should not
be granted;


(b)       
the execution creditor has caused the notice referred to in paragraph
(a) to be served personally on any lessee of the property so sought
to be declared executable; and


(c)       
the court so orders, having considered all the relevant circumstances
with specific reference to less drastic measures than sale in
execution of the primary home under attachment, which measures may
include attachment of an alternative immovable property to the
immovable property serving as the primary home of the execution
debtor or any third party making claim thereto.’ (Underlining
for emphasis)


[23]     
This subrule applies in cases where the immovable property is the
primary home of the judgment debtor and it places a duty on the court
to ensure that subrule (2)(a)-(c) is complied with before any order
is made. This means that on the day that the application is to be
made, the following should be before court:


a)           
A return of service showing that notice has been given on
form 24 and
has been personally served on the judgment
debtor
and any third party leasing the property.


[24]     
This is to inform the judgment debtor that the judgment creditor
intends to apply to the court to have the property declared
executable, after the receiving a nulla bona return, and to
afford the judgment debtor an opportunity to provide reasons why such
an order may not be granted. The wording of form 24 reads:


TAKE
NOTICE THAT ..................................................
(plaintiff/defendant)(hereinafter called the judgment creditor) has
obtained judgment against
........... (plaintiff/defendant)
(hereinafter called the judgment debtor) on
.............................................. (date) in this court.


TAKE FURTHER
NOTICE THAT the judgment creditor has applied in terms of rule
108(1)(b) for an order declaring the property executable and the
judgment creditor is hereby called to provide reasons to this
honourable court within 10 days why such an order may not be
granted.’


[25]     
There is no doubt from the wording of Form 24 that what is intended
is for a default judgment to be granted first before an application
is made for the property to be declared executable. It has become
practice that Form 24 being attached to the summons differ from the
provided Form in terms of the rules. Attention is brought to the
wording of subrule 108(2)(a) that notice should be ‘on Form
24’
as opposed to ‘as near as it may be to Form
24’
. This implies that the Form must be precisely as
required by the rules without any additions or subtractions. The
court in the Futeni Judgment at para [29] elaborated more on
this point and stated that ‘at the summons stage, the parties
to the lis are referred to as the plaintiff and the defendant.
At the stage of the issuance of the notice in terms of rule 108 (2)
(a), however, the appellations change and the parties are referred to
as the ‘execution creditor’ and ‘execution debtor’,
respectively. This indicates that the notice is issued after judgment
in favour of the plaintiff has already been granted and the parties
are, at the stage of execution of the judgment hence the use of the
word, execution creditor and debtor, respectively’.


b)           
having considered all the ‘relevant circumstances’
with specific reference to less drastic measures than sale in
execution of the primary home under attachment,


[26]     
This sub-rule is primarily made to protect home owners or third
parties residing in homes from unbridled loss of homes by
declarations of executability of landed property by court orders and
over which the courts simply had no control and considerations over
other remedies less drastic than the sale of a home.[4]
Relevant circumstances and less drastic measures would in this case
be an execution against the movables that may be able to satisfy the
judgment. Although,
these
considerations do not change the common law principle that a judgment
creditor is entitled to execute upon the assets of a judgment debtor
in satisfaction of a judgment debt sounding in money, this is a
caution to the courts that, in allowing execution against immovable
property, due regard should be taken of the impact that this may have
on judgment debtors who are poor and at the risk of losing their
homes. If the judgment debt can be satisfied in a reasonable manner,
without involving those drastic consequences, alternative course
should be judicially considered before granting execution orders
.[5]


[27]     
This is the mechanism adopted by the courts to protect homes of
judgment debtors. At common law, as in the words of my brother
Masuku, AJ, a mortgagee plaintiff has a substantive right to realize
the immovable property of the judgment debtor in cases where the said
judgment creditor duly registered the mortgage bond for the very
purpose of securing the debt which is the subject matter of the
claim.[6] It is now common cause
that the terrain has changed somewhat since the amendment of the
rules[7] of court by the Judge
President when he introduced the provisions of rule 108.[8]
The rule was promulgated to balance two interests. The first was to
regulate the sale of homes in execution when the property in question
was a home. The second, was to ensure that the giving of credit by
financial institutions remained effectual and was not rendered
unserviceable.  Rule 108 does therefore, as conceded to by the
Ombudsman, not take away the creditors right to execute against the
properties of the debtor but merely sets down procedures as to how
that should be done. The Banks do not therefore find themselves in a
better and more advantageous position than any other judgment
creditor.


[28]     
The courts are very slow in setting general guidelines that will
apply across the board since each case should be decided on its own
facts. The guidelines in one case might not necessarily apply in the
next case. In this matter, the plaintiff has not complied with the
procedural requirements of rule 108(1) and (2) in that default
judgment was not first sought before the application was brought.
Furthermore, the application before court does not comply with rule
65. I find that mortgage holders are obliged to comply with rule 108.
Since, in the instance case, there has been no compliance with that
rule, it must follow that the application must be struck from the
roll and it is so ordered.


[29]     
Costs would in this instance also follow the event. The defendant’s
cost is however only limited to actual disbursements reasonably
incurred.[9]


[30]     
In the result, I make the following order,


3.
The application to declare the immovable property, to writ: Erf.
No [6.........], [R.......] [C.......], Extension no.1, Windhoek,
Republic of Namibia, Registration Division K, Khomas Region,
measuring 360 square metres and held by Deed of Transfer
No.T2..........,
specially executable is struck from the roll.


4.
The plaintiff must bear the defendant’s costs limited to actual
disbursements reasonably incurred.


Miller,
AJ


Acting


Appearance:



On behalf of the
Commercial Banks: R Heathcote, SC (Assisted by Y Campbell)



On instructions
of Behrens & Pfeiffer, Windhoek



On behalf of
Interested party: Ombundsman T Frank, SC (Assisted by g Dicks)



On instructions
of Fisher, Quarmby & Pfeiffer, Windhoek



Defendant In
person



[1]
Principle set out in the case of Mkize v Umvoti Municipality and
Others 2012 (1) SA 1 (SCA).




[2]
1990 NR 161(HC)161.




[3]
See
Futeni
collections (Pty) Ltd v De Duine (I 3044
/2014)
[2015] NAHCMD 119 (27 May 2015), at para [




[4]
Futeni
Judgment, para [34]; see further
Jaftha
v Schoeman and Others; Van Rooyen v Stoltz and Others

[2004]
ZACC 25
;
2005
(2) SA 140

(CC).




[5]
Gundwana
v Steko Development and Others

2011
(3) SA 608

(CC),
at para [53].




[6]
Ibid
at page 163J – 164A.




[7]
High Court Amendment Act 12 of 2013.




[8]
Futeni
Judgment, para [25].




[9]
See Nationwide Detectives & Professional Practitioners CC v
Standard Bank of Namibia Ltd 2007 (2) NR 592 (HC).