APPLICATIONS TO DECLARE IMMOVABLE  PROPERTY SPECIALLY EXECUTABLE 

Nedbank Namibia Limited v Eva Fifteen CC (HC-MD-CIV-ACT-CON-201903814) [2023] NAHCMD 14 (27 January 2023) – right to seek recourse against bonded property – judicial oversight in such cases 

Whereas the respondents were indebted to the applicant and a judgement was granted on 17 November 2020, and whereas the judgement debt could not be satisfied, the applicant brought an application in terms of rule 108(1)(b) to declare a certain property chosen by the second respondent as her domicilum citandi et executandi, specially executable. The application was initially opposed, but the legal representative for the respondent did not appear in court to argue the matter. The court, therefore, proceeded and listened to the arguments of the legal practitioner on behalf of the applicant.

The second respondent filed a statement on behalf of the first respondent, indicating that she was the owner of 100% of the membership interest of the first respondent.  She indicated that the main source of income of the first respondent was the income generated from leasing out the property. She further indicated that her health declined during February 2019, which then had a negative impact on her business.  She could not attend to her own affairs or that of the first respondent until the end of 2021 when her health had improved again. During this time, a tenant of hers did not pay his rental fees, and she could not institute legal action against him due to her ill-health. The said tenant owed a substantial amount of rent. The Covid 19 pandemic further impacted on the business.

The property is being leased as from 1 February 2022 until 31 January 2024 for N$15 000 per month.  She made a settlement proposal to the legal practitioners of the plaintiff/applicant to make certain payments to them in an attempt to settle the arrears, as well as undertook to pay the rental amount she receives for the property to them.  She further made various payments between November 2021 to September 2022.

She further explained that she owns various shares in companies that also struggled during the Covid 19 pandemic, but their financial position is expected to improve. She received these court documents only on 14 September 2022.  She is willing to make a payment of N$25 000 a month, with further lump sum payments from time to time until the debt is fully paid.  She further argued that no proper service was effected on the lessee of the property as the documents were just affixed to the main gate of the premises, and thus no personal service took place.

The High Court considered the facts and the provisions of rule 108(1), and stated that:

‘[8] In Namib Building Society v Du Plessis 1990 NR (HC) 161, it was found that a mortgagee as a right can seek recourse against a bonded property.  This judgement said the following:

‘There appears to be considerable authority to support the contention that a mortgagee can as of right look to the mortgaged property to satisfy his claim... See G B van Zyl The Theory of the Judicial Practice of South Africa vol 1 3rd ed at 294-5. He writes that in Roman law, movables first had to be exhausted before recourse could be had to land. He continues:

“It is the same with us when the plaintiff has no hypothec or pledge. But when property has been specially mortgaged, that property must first be sold in execution before any other can be taken, and only for the deficiency can other property be taken.”

[9] The locus classicus (leading case) in these matters is the case of Standard Bank Namibia Limited v Shipila and Others 2018 (3) NR 849 (SC), which specifically deals with the owner’s right to protect his or her primary home against execution.  The argument put forward in the current matter is that the owner of the property is a closed corporation, and it is common cause that it is not the primary home of the second respondent, but that the first respondent is leasing out the property to a third party, who received notification of these proceedings.  The Supreme Court concluded:

‘In the present instance, the appellant (and commercial banks) accepts that there must be judicial oversight where a claim is in respect of the foreclosure of a bond in terms of the provisions of rule 15(3). The first respondent in this matter had been informed personally of the intention of the appellant to apply to court for an order to declare the relevant immovable property specially executable, and had been given the opportunity to make submissions in the court a quo (which she did); the deputy sheriff made a nulla bona return (which was not strictly necessary in respect of a claim for the foreclosure of a registered mortgage bond); the first respondent never settled the debt as promised; the first respondent never made an allegation that the appellant by instituting an action for the recovery of the outstanding amount, abused the court’s process, and neither is there a suggestion that the appellant acted in bad faith.

[70]      The court a quo should in these circumstances have declared the said immovable property specially executable in view of the fact that there is no viable alternative, or no less drastic measure other than a sale in execution.’

In conclusion, the court found that there was no indication as to how the first respondent intended to settle the outstanding amount, except for utilising the rental amount being received every month.  Because of the default on the side of the first defendant to repay its debt as agreed in the initial agreement, the plaintiff obtained a default judgement, and as such, is entitled to call up the bond and sell the property on execution.

As a result, the property was declared specially executable. 

Fruit Veg City (Pty) Ltd t/a Fresh PM v Rudolph Izaaks t/a Namsea SS (I 3776-2013) [2023] NAHCMD 3 (20 January 2023) – considerations where property sought to be declared is a primary home 

Whereas the applicant obtained a default judgement in its favour on 17 June 2015, and whereas the judgement debt could not be satisfied, the applicant brought an application in terms of rule 108 of the Rules of the High Court to declare a certain property specially executable to satisfy the debt stated in that judgement. The respondent was served personally in terms of rule 8(2)(a) with the application on 26 July 2021, but failed to oppose the matter and/or offer to settle the amount owed to the applicant. The matter was thus heard unopposed and determined on the papers as follows: 

In terms of rule 108(2), where an order declaring property executable is sought to be made in respect of a primary home, the court is obliged to ensure that personal service of the relevant papers on the execution debtor or his or her lessee is effected. Furthermore, the court is enjoined, having regard to all the circumstances, to consider whether there exist ‘less drastic measures than a sale in execution’ (Futeni Collections (Pty) Ltd v De Duine (I 3044/2014) [2015] NAHCMD 119 (27 May 2015). In this connection, the execution debtor must place before the court relevant circumstances regarding the existence of less drastic measures to possibly prevent a sale in execution.

In this matter, it appeared that the property in question was a primary home. The respondent did not, despite the necessary personal notice, file any papers or place any relevant information regarding his ability to settle the amount in question before court. The application thus stood uncontested. In the case of Kisilipile v First National Bank of Namibia Limited (SA 65 of 2019) [2021] NASC 52 (25 August 2021), the Supreme Court held that:

‘[18] In Namibia, judicial oversight takes the following form when it comes to declaring a primary home specially executable. If a property is a primary home, the court must be satisfied that there are no less drastic alternatives to a sale in execution. The judgement debtor bears the evidential burden. He or she should preferably lay the relevant information before court on affidavit, especially if assisted by a legal practitioner, either in resisting default judgement or summary judgement. The failure to do so, however, does not relieve the court of its obligation to inquire into the availability of less drastic alternatives….’

In light of the Kisilipile case, the judgement debtor bears the evidential burden to lay relevant information before court in resisting the application. Generally, it would be improper to declare a property specially executable without the applicant first exploring the possibility of the options given by the respondent as alternatives, or rather less drastic measures than a sale in execution of the respondents’ primary home. The respondent did nothing to satisfy the court that there were less drastic alternatives to be followed to avoid declaring the property specially executable, despite being served with the rule 108 application personally. Consequently, there was nothing before the court to be taken into consideration and in the respondent’s favour. The only information before the court was that which was provided by the applicant.

The court was mindful of the relatively negligible amount of the debt in this matter, but where the respondent has been served personally with the papers but does not place any material before court pointing to the less drastic measures open, the court is placed in a straight-jacket, and has no material facts at hand to avoid granting the relief sought. In exercising judicial oversight, and notwithstanding provisions of rule 108(2), the court ordered the applicant, before deciding on the matter, to once again cause a writ to be issued in relation to movable property, before the ultimate sanction could be issued. In this regard, the deputy sheriff issued a nulla bona return, which indicated that the respondent was personally served with the writ, and upon enquiry, the respondent could not afford to pay the amount of the debt, and he also failed to point out any movable property that could be attached and sold in execution.

The court did everything within its power to attempt to avoid the sale of the respondent’s primary home. Sadly, the respondent did not co-operate in this process, which culminated in the respondent not complying with the demands of the rule to avoid the sale of the primary home, and left the court with no other option at its disposal but to grant the relief sought.      

In conclusion, the court was of the considered view that the provisions of rule 108 are clear in that where less drastic measures are available, they should be considered, as opposed to declaring the property specially executable. On the other hand, where there are no less drastic measures available or placed before the court for consideration, the court cannot lightly refuse an application to declare the property specially executable. In light of the fact that no less drastic alternatives to a sale in execution were placed before court, the application had to be granted as prayed. The court cannot, in the circumstances, mero motu (on its own) invent less drastic measures when the respondent does not assist the court in establishing the same.

As a result, the property was declared specially executable. 

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