Who is living in my house?
Section 26 of the Constitution confers the right of access to adequate housing. This section has been interpreted by our courts to require judicial oversight in the process of attaching and selling in execution immovable property of a debtor. The scope of that oversight has recently received some useful judicial attention.
In a recent unreported judgment in the Kwa-Zulu Natal High Court, Pietermaritzburg, Neveling vs Reichmans and Another (14070/2013) [20141 ZAKZPHC (5 August 2014), an execution debtor sought to set aside a writ of execution issued in terms of Uniform Rule 46(1)(a)(i) against immovable property she alleged was her family's primary residence.
Briefly the facts, mostly being common cause, were:
During February 2014, the execution creditor obtained judgment against the execution debtor for an amount of ZAR4m. This debt was never in dispute. Subsequent to this, the execution creditor obtained a writ of execution against the movable property of the execution debtor at what was believed to be her home in Durban. An attachment of the movable assets was effected but a third party, the tenant at the property, lodged an interpleader affidavit claiming that he owned all the movable assets. A nulla bona return was issued by the sheriff.
In terms of Rule 46(1)(a)(i), the execution creditor then issued a writ of execution against the immovable property of the execution debtor; and arranged for it to be sold by the sheriff. The creditor relied on the interpleader affidavit as evidence that the immovable property was not the primary residence of the debtor.
To counter the sale, the execution debtor launched an application requesting the court to set aside the writ, since a court had not ordered execution against the immovable property subject to the writ and the attachment had proceeded without judicial oversight.
The execution debtor averred that although she and her family were living in an outhouse situated on the property, the attached immovable property was in fact her primary residence. This was contested since the crux of the execution debtor's case was that the proviso contained in Rule 46(l)(a)(ii) of the Uniform Rules of Court (which deal with the power of a registrar to declare immovable property specially executable when granting default judgment) must be read as applying to Rule 46(1)(a)(i) (dealing with writs of execution issued after a nulla bona return is received).
The execution creditor adduced facts showing that the attached immovable property was only one of four immovable properties in Durban that the execution debtor either owned or had an indirect interest in. Furthermore, the execution creditor submitted that the debtor's contentions were not supported by a plain reading of the text of Rule 46(l)(a)(i) and no constitutional challenge had ever been made against the rule. The execution creditor believed that the execution debtor had failed to discharge the onus of proving that a court with full knowledge of all the existing facts at the time when the writ was issued would have refused leave to execute against the property that is the debtor's home. The execution creditor lodged a conditional counter-application, in case the writ was set aside, that the court grant an order authorising and directing the Registrar to issue a writ of execution to attach both the immovable property in question and another owned by the execution debtor.
Following debate over whether or not the immovable property in question was the primary residence of the execution debtor, the execution creditor allowed the court to assume that die immovable property was, for purposes of argument, the primary residence. On this assumption Koen J settled that the central legal issue to be determined was whether a writ of execution in the high court, issued after a nulla bona return had been made against immovable property, which was the primary residence of the execution debtor, is valid unless a court, having considered all the relevant circumstances, has ordered such execution. It also had to be determined whether the proviso under Rule 46(1)(a)(i) was applicable to Rule 46(1)(a)(ii), thereby requiring an execution creditor, even after excusing the movables, to take the extra step of applying to court for an order granting leave to attach and execute on the immovable property and primary residence of the execution debtor.
Koen J applied the case authority laid down by the Constitutional Court in Jaftha v Schoeman: Van Rooyen v Scholtz, which dealt with the constitutional validity of Magistrate's Court Rule 66(1) and found the rule to be unconstitutional to the extent that it permitted sales in execution in unjustifiable circumstances without judicial intervention. He held that on application of this case and using the "fact bound enquiry" referred to in ]aftha, the real question was whether it was likely that the debtor would be deprived of access to adequate housing and left homeless as a result of the execution. Furthermore Koen J applied the case of Gundwana v Steko Development, which concerned a writ against immovable property issued at the instance of a mortgagee execution creditor against the primary residence of the execution debtor pursuant to an order declaring the immovable property specially executable granted in default by the registrar of the high court. The court in Gundwana held that it was unconstitutional for a registrar to declare immovable property, being the home of a debtor, specially executable pursuant to an order granted under Rule 31(5) to the extent that it permits the sale in execution of a person's home.
Koen J compared the cases mentioned to the present and found that while the present matter was distinguishable from Gundwana in that it was not a case of declaring immovable property specially executable, and distinguishable from Jaftha in that the writ issued was not in terms of the Magistrates Court rules, this did not mean that the validity of the rule, namely that where an execution debtor's right to housing might be compromised by a writ of attachment against immovable property following upon insufficient movables being found to satisfy the claim, should not also apply to die position in the high court. Koen J held that the same mischief (a debtor losing their home for insufficient reasons or a trifling amount) could also happen in the High Court.
In the present case the execution debtor had not challenged the constitutionality of Rule 46(1)(a)(i) nor had she joined the Rules Board or the Minister of Justice as required by Rule 10A of the Uniform Rules of Court, which requires a litigant to join the provincial or national executive authorities responsible for the administration of the law where the constitutional validity of a law is challenged and therefore, Koen J settled that the rule was constitutionally valid. This, he found, meant that the execution debtor could only attack the validity of the writ if she could persuade the court that Rule 46(1)(a) must be interpreted in such a way that the proviso requiring judicial oversight applies not only to Rule 46(1)(a)(ii) but also to Rule 46(1)(a)(i). This enquiry, the court concluded, was one of interpretation.
The execution creditor argued that the spatial layout of Rule 46(1) made it clear that the proviso requiring judicial oversight only applied to subparagraph (ii) of Rule 46(1)(a) and not (i). Koen J otherwise held that a proper construction of Rule 46, read with the provisions of the Constitution, required that in all instances where execution is sought against a debtor's primary residence that a writ of execution against such a residence should only follow after a court, having considered all the relevant circumstances, ordered execution against such property.
Koen J went on to find that the two sub-rules "simply provided for the two instances in which a writ of execution may come to be issued. Irrespective of which of the two instances results in the writ being issued, where the unit seeks to attach the primary residence of the judgment debtor, the intention ...is that it shall not issue unless the court, having considered all the relevant circumstances, orders execution ...". On this reasoning Koen J found that while in his opinion the writ against the execution debtor in the particular case should have been authorised by a court, this did not mean that the subsequent attachment should be set aside.
He reiterated that it was for the execution debtor to prove to the court that a court with full knowledge of the relevant facts at hand when the writ was issued would not have ordered execution against the property that is the debtor's home. Accordingly, he held the evidentiary onus rested on the execution debtor to show why the execution against the immovable property would infringe her right to adequate housing.
Koen J held that a two-part approach is involved in such an analysis where the first threshold is determining whether the immovable property in question is indeed the primary residence of the debtor and then secondly whether execution against the property would be in breach of the execution debtor's rights in terms of section 26 of the Constitution. Since it had already been assumed that the immovable property in question was the primary residence of the execution debtor, the first threshold had been satisfied. What the execution debtor had to show further was that the execution would inter alia lead to a disproportionality of rights, was unjustifiable or an abuse of the execution process.
For purposes of satisfying the second leg of the enquiry, the execution debtor provided the following considerations:
(a) That the immovable property was her primary residence.
(b) That the execution creditor's claim was not based on a mortgage bond and therefore extraneous to the property.
(c) That she and her family did not have alternative accommodation because the other properties she either owned or had an indirect interest in were either leased or fully occupied.
(d) That because the execution debtor is unable to pay the judgment debt of ZAR4m, she ought to be considered indigent.
Koen J found reason (a) was already presumed and therefore an irrelevant consideration, reason (b) as an unexceptional consideration and (c) and (d) as irrelevant since the former reason was never considered a factor in the case law and the mere inability to pay of the execution debtor did not qualify her as an indigent person.
Concluding, Koen J held that the execution debtor had failed to discharge the onus and show circumstances that would justify the refusal of execution against the immovable property. He found rather that there were convincing reasons that execution against the property be granted such as the fact that the debt outstanding was not trifling, the execution debtor owned two other properties and had indirect interests in another two in the same area, some of which she had leased, she was not indigent, she had not made any payments towards the judgment debt and had chosen not to disclose her income or general financial standing to the court.
Accordingly, the execution debtor's application was dismissed with costs and an order granted in terms of the execution creditor's counter-application that the Registrar issue a writ of execution to attach the immovable property in question.
A reading of the judgment discloses that a creditor, whether or not also a mortgagee, must take the extra step of applying for a court order to execute against the immovable property of the debtor even after excussing the movables. This interpretation seems to be favoured by the court otherwise, "unscrupulous mortgagees who cannot obtain a court order authorising the issue of a unit against the debtor's immovable property, could nevertheless execute against the debtor's residence ... upon receipt of a nulla bona return with a writ against immovable property without judicial scrutiny." Following the impression made by the court in this case, it would behove a creditor to include a prayer (in its action or application against a debtor) that the court order the debtor's primary residence executable under the circumstances.
From a debtor's perspective, the judgment establishes the principle that the mere allegation by a debtor that his or her right of access to adequate housing will be infringed by execution, is insufficient, and that the debtor must adduce objective evidence that this is the case.