BACKGROUND AND SUMMARY
The Supreme Court of Appeal (“the SCA”) recently dismissed an appeal brought by NPGS Protection and Security Services CC (“the First Appellant”) and Mr. Llwellyn Rwaxa (“the Second Appellant”), herein after collectively referred to as “the Appellants” against a judgment of the High Court of South Africa, Gauteng Local Division, Johannesburg (“the court a quo”). The question in law before the SCA was whether summary judgment was correctly granted against the Appellants by the court a quo, and if so, whether it was acceptable for the court a quo to declare the immovable property registered in the Second Appellant’s name (“the Immoveable Property”) specifically executable.
On 06 May 2009, FirstRand Bank Ltd (“the Respondent”) entered into a written credit facility agreement (“the Agreement”) with the First Appellant. In terms of the Agreement, the Respondent advanced a loan in the amount of R250 000.00 to the First Appellant. Additionally, the Second Appellant signed as surety and co-principal debtor on behalf of the First Appellant in favour of the Respondent for payment of all amounts due by the First Appellant in terms of the Agreement. The loan in terms of the Agreement was secured by a mortgage bond, which was registered by the Second Appellant, over the Immovable Property, in favour of the Respondent. However, at the time the loan was advanced to the First Appellant, the Second Appellant had already, in or during January 2007, registered a mortgage bond over the Immovable Property, in favour of the Respondent, amounting to R2 000 000.00.
The First Appellant failed to pay the Respondent, in terms of its obligations as contained in the Agreement and had further been in default thereof for more than 20 days. As such, on 04 May 2017, the Respondent issued a Combined Summons in the court a quo wherein it raised the suretyship as signed by the Second Appellant, as well as the mortgage bond registered in the Respondent’s favour over the Immovable Property. The Respondent sought judgment against the Appellants, jointly and severally, for payment in the amount of R649 197.39, interest thereon, costs, as well as an order declaring the Immovable Property to be specially executable.
The Appellants entered an appearance to the defend the action, which resulted in the Respondent making application for summary judgment. The Appellants delivered an opposing affidavit, raising defences in relation to the loan, namely prescription, which was not persevered, that the Respondent failed to attach a certificate of balance to its particulars of claim, and that the Respondent allegedly failed to reveal how its claim was constituted. The Appellants however failed to account for the prayer pertaining to the execution against the Immovable Property. Only during the hearing, did counsel for the Appellants, submit that the Immovable Property, subject to execution, was the primary residence of the Second Appellant.
On 12 September 2017, due to the Appellants failure to disclose a bona fide defence to the action, the court a quo granted the Respondent’s application for summary judgment, for the amount claimed, interest thereon as well as costs. The court a quo further declared the Immovable Property to be specially executable, on the basis that the Second Appellant was not entitled to the judicial oversight of the court a quo, on the basis that the First Appellant was a juristic person. On appeal, the Appellants made the same arguments, in respect of the loan, as advanced in the court a quo.
|The SCA held that the Appellants failed to advance a bona fide defence, and as such dismissed the appeal against the granting of the summary judgment by the court a quo.
The SCA further held that with regard to the order of execution against the Immovable Property, the court a quo erred with the regard to the basis upon which it refused to apply judicial oversight upon the said execution.
The majority of the SCA held that the Second Appellant was not entitled to the court’s oversight for two reasons, namely, the Second Appellant had been legally represented in the court a quo, and in light of the fact that the provisions of S26(3) of the Constitution of the Republic of South Africa, 1996 and Rule 46(1)(a) of the Uniform Rules of Court were brought to his attention as contained in the Combined Summons, the Second Appellant had failed to utilise the various opportunities given to him to place before the court the relevant circumstances pertaining to the execution against the Immovable Property.
The SCA further held that the Second Appellant was not permitted to utilise the oversight of the court a quo on the basis that the loan, which formed the cause of action, was not acquired to purchase the Immovable Property, but rather to finance the business of the Appellants.
A Respondent must put forth all pertinent facts in an affidavit when opposing an application for summary judgment. The liability placed on the Respondent for same, becomes more burdensome in an action or application to have residential immovable property declared specially executable. This is due to Rules 46 and 46A of the Uniform Rules of Court require the Respondent to place specific facts before the court.
Written by Courtney Altmuner and Jeannique Booysen