The Western Cape High Court turned down an application by Standard Bank for an execution order against the home of a couple who are merely 2.8 months in arrears on their mortgage bond.
“An execution order against the primary residence of the debtor should be the last resort and only when all other avenues to satisfy the arrears have been meaningfully exhausted,” Acting Judge Tanya Golden said.
She noted that there were no significant arrears in the present matter.
“The facts show that the respondents (the couple) did not significantly fall into arrears and have no history of arrears other than the immediate 2.8 months arrears upon which the application is predicated.”
Judge Golden said in this case, in ordering that the family should lose their home would lead to an iniquitous result, given the negligible arrears of 2.8 months and where the facts suggested that the respondents may have been in a position to settle the arrears.
The respondents fell into arrears under the loan agreement and owed about R16 000. The full balance outstanding in terms of the mortgage loan agreement was R432 931.04.
After alerting the couple that they were in arrears and not hearing from them, and although the arrears were hardly three months old, the bank issued summons to execute against the property on a default basis.
Judge Golden noted that there were common features in these types of applications. The respondents are mostly working class and/or indigent debtors, and where the mortgaged property is almost always in the poorer areas of the Western Cape.
“It does not mean that because the respondents did not oppose the application, that the application was there for the taking. I am required to approach these applications cautiously, given the potential far-reaching consequences that will inevitably arise when a family loses their home.”
The judge added that the respondents and their children may be deprived of their Constitutional rights to a home. “A court shall not authorise execution against immovable property which is the primary residence unless the court, having considered all the factors, considers that such an order is warranted,” she said.
The bank claims that the total amount owed by the respondents is substantial and that it will be prejudiced if it cannot recover a portion of the amount due to it by executing against the property. It was argued on behalf of the bank that there was no reasonable possibility that the respondents would be able to pay the arrears and that the bank therefore had no alternative but to execute against the immovable property.
According to the bank, it allowed the respondents an indulgence of being in arrears with monthly instalments for a period of three months before commencing legal proceedings.
But the judge said this was not entirely consistent with the facts which showed that the arrears amounted to 2.8 months.
The couple, meanwhile, did manage to make a payment of R6 000, but this was not mentioned by the bank.
“This is an important factor which the court must consider in the respondents’ ability to settle the arrears in the form of a reasonable payment plan, given that the arrears amounted to a default period of only 2.8 months.”
Judge Golden added that it was not unreasonable to infer that they may conclude a reasonable payment plan with the bank.
She questioned how the bank could want the property to be auctioned, to satisfy a debt arising from arrears of approximately 2.8 months. She said this was “wholly disproportionate” to the arrears.
“It will lead to an iniquitous result should I have granted the application given the negligible arrears of 2.8 months,” she said.
Pretoria News