FirstRand Bank Limited v S.M.B and Others (2022/004866) [2023] ZAGPJHC 904 (14 August 2023)

Key Facts

Transaction Type

Issues

• The court determined that the bank retains the right to execute the property registered in both spouses' names, as no formal transfer or endorsement was completed post-divorce. Legal principles under the Deeds Registries Act and case law (e.g., Fischer v Uhomi Ushishi Trading) were applied to affirm the necessity of registration for derivative ownership.
• The bank argued compliance with s 129 of the National Credit Act by sending the notice via registered mail to the respondents' designated address and the property's address. The court accepted this as sufficient, noting the respondents' admission that the notice was at the post office, aligning with Sebola v Standard Bank case law.
• The court addressed whether a divorce settlement agreement, made an order of court, could absolve Ms M from liability under a joint home loan agreement. It concluded that such an order binds only the divorcing parties and does not affect the bank's rights, citing res inter alios acta and case law (e.g., Nedbank Limited v Finin).

Holdings

• The court grants summary judgment against the first and second respondents, jointly and severally, requiring one to pay the other to be absolved.
• The Registrar is authorized to issue a writ of attachment, and the Sheriff is authorized to execute the warrant of attachment in respect to the immovable property.
• The immovable property (Erf [...] Stretforn Extension 1 Township) is declared specially executable with a reserve price of R290,000.
• Respondents ordered to pay R211,519.75, with interest at 9.55% variable rate from 31 May 2022, calculated daily and compounded monthly.
• The property may be sold by the Sheriff with a reserve price of R290,000, and a copy of the order must be served on respondents prior to sale.
• Respondents advised that they may prevent the sale by paying overdue amounts, default charges, and enforcement costs before execution.
• Respondents directed to pay the costs of this application.

Remedies

• The immovable property may be sold by the Sheriff with a reserve price of R290,000.
• The first and second respondents are directed to pay the costs of this application.
• Interest at 9.55% nominal per annum, calculated daily and compounded monthly from 31 May 2022 to the date of final payment.
• The first and second respondents are advised that the provisions of section 129(3) and (4) of the National Credit Act 34 of 2005 apply to the judgment granted in favour of the applicant. The respondents may prevent the sale of the abovementioned property if they pay the applicant the overdue amounts, default administration charges, and reasonable costs of enforcing the credit agreement up to the time the default was remedied, prior to the property being sold in execution.
• The immovable property known as Erf [...] Stretforn Extension 1 Township, Registration division I.Q., the province of Gauteng, measuring 243 square meters, T74743/2009, subject to the conditions therein contained, be declared specially executable.
• The Sheriff of this court is authorized to execute the warrant(s) of attachment in respect to the immovable property.
• Payment of R211,519.75
• A copy of this order is to be served on the first and second respondents as soon as practically possible after this order is granted but prior to any sale in execution.
• The Registrar of this court is authorized to issue a writ(s) of attachment herein.

Monetary Damages

Legal Principles

Precedent Name

• Corporate Liquidators (Pty) Ltd v Wiggill
• Nedbank Limited v Finin
• Sebola v Standard Bank of South Africa Ltd
• Eke v Parsons
• Jaftha v Schoeman
• Gundwana v Steko Development
• Allen v Allen
• Fischer v Uhomi Ushishi Trading
• Reynders v Rand Bank BPK
• Sivemangal v AM Gas & General Suppliers (Pty) Ltd
• CB v Absa Bank Limited
• Ex Parte Menzies and Uxor

Key Disputed Contract Clauses

• The court addressed the bank's reliance on the loan agreement's joint and several liability clause, which held both Ms M and Mr B accountable for payments until Mr B formally substituted Ms M as a debtor. The clause ensured both parties remained liable despite the divorce order.
• Ms M's defense centered on clause 12 of the divorce settlement agreement, which stipulated Mr B's sole responsibility for mortgage payments. The court ruled this clause did not bind the bank, as it was not a party to the agreement.
• The bank argued that Ms M's release from liability required Mr B to apply for substitution under the loan agreement. Since Mr B did not do so, both remained bound by the original contractual terms.

Cited Statute

• Deeds Registries Act
• Divorce Act
• National Credit Act

Judge Name

Passage Text

• the court found that in terms of s 16 of the Deeds Registry Act, transfer must take place because it serves the important publicity principle... the agreement did not vest ownership.
• The bank is not legally obliged to give effect to the settlement agreement made an order of the court, as it only binds the divorcing parties. Ms M's recourse is against Mr B.
• the bank is following the process set out in the Rules, and both parties are aware of the proceedings, unlike in the CB case. That case is, therefore, not applicable.

Damages / Relief Type

• Declaratory Relief: Immovable property declared specially executable
• Other: Authorization to issue writ of attachment and execute warrant of attachment
• Other: Copy of order to be served on respondents prior to sale in execution
• Other: Respondents directed to pay application costs
• Compensatory Damages: R211,519.75 plus interest at 9.55% nominal per annum from 31 May 2022
• Other: Property may be sold by Sheriff with R290,000 reserve price
• Other: Respondents advised they may prevent sale by paying overdue amounts, charges, and costs