Simultaneous or separate: A relook at Absa v Mokebe and the provision for hearing monetary judgment and executability applications simultaneously or separately

September 1st, 2020
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The execution process in South Africa (SA) has always followed five simple steps, namely –

  • sending a letter of demand;
  • serving a summons;
  • granting a monetary court order;
  • obtaining a warrant of execution; and
  • proceeding to a sale in execution.

Rule 46 of the Uniform Rules of Court added a new sub-step during the execution of immovable property, as it requires a plaintiff to seek a court order declaring immovable property specifically executable. In addition to adding a new sub-step, r 46 also added an extra level on judicial oversight into the execution process (for a review on r 46 see Ciresh Singh ‘To foreclose or not to foreclose: Revealing the “cracks” within the residential foreclosure process in South Africa’ (2019) 31.1 SA Merc LJ 145 and Ciresh Singh ‘A critical analysis of home mortgage foreclosure requirements and procedure in South Africa and proposals for legislative reform’ (unpublished PhD thesis, University of KwaZulu-Natal, 2018). The decision in Absa Bank Limited v Mokebe and Related Cases 2018 (6) SA 492 (GJ) further changed the process for executing against immovable property. In this case, the Full Bench of the Gauteng Local Division of the High Court, Johannesburg held that an application for monetary judgment and an order of execution against immovable property must be brought simultaneously before the court. The judgment was followed by the Western Cape Division of the High Court in Standard Bank of South Africa Ltd v Hendricks and Another and Related Cases 2019 (2) SA 620 (WCC) and was further supported thereafter by several Practice Notes and Directives by various divisions of the High Court. The recent decision of Changing Tides 17 (Pty) Ltd NO v Frasenburg (unreported case no 19353/2019, 2-7-2020) (Rogers J) the WCC has questioned this new process. These three decisions will be considered below.

The Mokebe case

In the Mokebe case, the Full Bench sought to resolve the issue of whether an application for a monetary judgment and an order of execution against immovable property must be brought simultaneously or separately before a court. The court considered the history of the foreclosure process and expressed concern over the lack of consistency and clarity. This lack of clarity resulted in different approaches by creditors for the enforcement of their claims. In particular, while some creditors initially proceeded to obtain a monetary judgment against their debtors, and after some months proceeded to obtain an order of execution (ie, separately); other creditors proceeded to obtain monetary judgment and execution in a single application (ie, simultaneously). The court held that there was a need for certainty and consistency in practice and stated that an application for a monetary judgment and an order of execution must be brought simultaneously. The court confirmed that the monetary judgment is an intrinsic part of the cause of action in foreclosure cases and it is inextricably linked to the claim for an order of execution. It was thus both necessary and desirable for these issues to be heard simultaneously and not piecemeal. The court further confirmed that it was the duty of the creditor to bring its entire case, including monetary and execution claims, before the court in a single proceeding.

The Hendricks case

A few months after the Mokebe decision, the Full Bench of the Western Cape Division delivered judgment on its interpretation of r 46A in the Hendricks case. The court followed the Mokebe judgment and held that monetary orders and orders of execution against immovable property must be brought simultaneously, and not on a piecemeal basis. The court found that while the Constitution and r 46A require judicial oversight during the foreclosure process, the manner and extent of such oversight is treated differently by different courts. Such divergence in views (opinions and practices by legal practitioners, creditors, academia and the court) and lack of consistency between judges has the potential to harm the dignity and integrity of the courts. The Western Cape Division found that there was a great need for clarity to be established in foreclosure, and directed that the Practice Manual for the Division be amended to establish a uniform approach. The court further held that there was a need for national uniformity among the provincial divisions.

The Fransenburg case

On 2 July, the Western Cape Division once again considered the issue of whether an application for monetary judgment and executability must be brought simultaneously before the court. Rogers J criticised the finding in Mokebe in that the judgment failed to allow the court the discretion to grant a monetary order and postpone the order for executability against the immovable property. In the Fransenburg case, the homeowner was due to receive a pay-out on an investment in May 2021, the proceeds of which would easily settle the outstanding mortgage balance. Rogers J found that under such circumstances it would be just to grant the plaintiff a monetary order, but postpone the order of executability until May 2021.

Rogers J held there was nothing in the court rules that compelled a mortgagee to seek an order of executability and its failure to do so did not amount to it losing its security against the mortgage property. Referring to Gundwana v Steko Development CC and Others 2011 (3) SA 608 (CC) and FirstRand Bank Ltd v Folscher and Another, and Similar Matters 2011 (4) SA 314 (GNP), the court found that it was competent for the court to grant monetary judgment in favour of a creditor without ordering an order of special executability (see Fransenburg at para 35). This would naturally be the case where the r 46 assessment reveals that there are other assets or alternatives that can be exercised to satisfy the plaintiff’s claim.

Conclusion

The Mokebe, Hendricks and Fransenburg judgments expose a severe lack of consistency in the foreclosure process and in particular the application of r 46. It has been a long established practice that a creditor must first seek monetary judgment against a debtor, and only thereafter, seek execution against the debtor’s immovable property. The Mokebe and Hendricks judgments appear to have changed this practice, as they require both monetary and execution applications to be brought simultaneously.

I am not in favour of the approach that monetary and execution applications must be brought together. While it is accepted that this may reduce the litigation costs attached to foreclosure applications, it places the debtor at a disadvantage, as the court will only hear their matter once. In other words, if monetary and execution applications are brought separately, judicial oversight takes place twice, providing more judicial protection to the debtor and further reduces the chances of abuse of process. The Mokebe and Hendricks approach appears to be contrary to the objective and spirit of the Constitutional Court decisions in Jaftha v Schoeman and Others; Van Rooyen v Stoltz and Others 2005 (2) SA 140 (CC) and Gundwana and ss 26 and 34 of the Constitution. The decision in Fransenburg is thus much welcomed as it directs the court to actively consider whether there are alternatives to execution and to order the execution against immovable property as an absolute last resort.

Dr Ciresh Singh LLB LLM PhD (UKZN) is a litigation supervisor in Durban.

This article was first published in De Rebus in 2020 (Sept) DR 12.