The bank in this instance is owed around R 10 million from a company which has, inter-alia, registered mortgaged bonds over three properties owned by the surety of the company.
The allegation in the founding affidavit is that none of the properties is the surety's primary residence as he does not reside at any of the addresses, but at a fourth address.
The surety concedes that he does not live at the properties, but resists the foreclosure on these properties on the grounds that he has three wives to whom he is married by Muslim rites. He further states that he is required to provide each wife with a house. He has done so, and these properties are the primary residences of each of his wives. He says that an order to foreclose on these properties would infringe on the rights of his wives as enshrined by section 26 of the Constitution.
Muslim marriages are not yet recognised in South African law, notwithstanding the South Africa Revenue Services' (SARS') requirements in this regard and many decided cases relating to the benefits women are entitled to under Muslim marriages.
The fact that polygamy is also illegal in South Africa is also not the focus of this discussion. The question to be addressed is: why does this individual believe that such a defence would outweigh the bank's right to foreclose on its security in circumstances where the arrears are so high.
The South African Constitution guarantees to all citizens the right to adequate housing. This provision has over the years been interpreted by the legislature and the judiciary to mean not necessarily that the government must provide every citizen a house, but that when this asset is acquired as a primary residence, it must be protected.
This protection is afforded through section 26 of the Constitution, Rule 46 (1) (a) of the uniform rules of the high courts and through case law where the judiciary has interpreted these provisions.
When the economic recession started to impact world economies in 2008, many citizens started facing severe pressure on their disposable incomes. At that time, the South African prime rate of interest was 15.5% - a five year high.
This also came soon after the implementation of the National Credit Act, when banks - in a display of synchronised confusion - simply stopped lending credit to people they were previously throwing gold and platinum credit cards at.
These factors lead to an increase in the liquidation of businesses and then to an increase in the foreclosure on mortgaged property. Since 2008 there has been a steady flow of such applications to court. At times, it has been akin to a flood. There were record numbers of primary residences being sold on public and private auctions for fractions of their value. Many people lost their homes because they could no longer afford the monthly repayments. They had either lost their employment or the interest rates had increased to unforeseen levels making the monthly payments unaffordable.
Prior to December 2010, and notwithstanding the provisions of section 26, the rules of court provided for a situation where the registrar of the court (a court appointed official and not a judge) would grant an order declaring a person's property to be executable. There was no requirement for judicial oversight. In many divisions of the high courts in the country, it was not even permitted for one to place such an application on the court roll for determination by a judge. One was obliged to refer the matter to the registrar for a determination on whether a person's home could be attached and sold in execution.
This was despite a decision in the Cape High Court in Standard Bank vs Snyders 2005 (5) SA 610 (C), that such applications required judicial oversight and should rather be decided on application to court. The supreme court of appeal did not agree and in Standard Bank vs Saunderson 2006 (2) SA 264 (SCA), it was decided that such applications must continue to be referred to the registrar. The primary reason was so as not to over burden our precious court rolls with unopposed applications.
As a result of the flood of such applications being referred to the registrar between 2008 and 2010 a huge backlog ensued at registrars across the country. This forced banks to refer matters to the judges in court, simply to avoid the backlogs at the registrars. As this continued to increase, a full bench in the Cape decided in 2010 to relook the issue under Standard Bank vs Steenkamp and Others, where it was decided that banks and other lenders could proceed directly to court and bypass the registrar in order to declare property executable.
More was yet to come, in December 2010 the rules board amended Rule 46 of the uniform rules of court to include the provision that courts must consider all relevant circumstances before granting an order to execute against a property that is a primary residence.
This lead to a plethora of decisions such as Gundwana v Steko Development CC and Others 2011 (3) SA 608 (CC), Nedbank Ltd vs Fraser and 4 Others 2011 (4) SA 363 (GSJ), First Rand Bank Limited vs Folscher and Another 2011 ZAGPPHC 79 (24 May 2011) and Standard Bank v G Bekker and four Others , 24 August 2011, (CPD), where it was, inter-alia, decided that such applications must be brought in open court and required judicial scrutiny.
Now for the first time since the inception of section 26, there is a requirement that a judge must exert judicial oversight and take all relevant factors into account before declaring a primary residence executable.
The effect is that any plaintiff that wishes to, inter-alia, obtain an order declaring property executable, must identify whether it is a primary residence. If it turns out to be so, then the plaintiff must place all the relevant circumstances that may influence such a decision, before the court.
Returning to the man with the three wives who has graciously purchased each one their own residence. He is of course correct that this is each one's primary residence, but the fact is that they are not the owners of the properties but tenants, for want of a better description. But he then goes even further to add that he is obliged to spend at least two nights with each wife and therefore these should really be considered his primary residences as well.
Whether he is successful with this argument remains to be seen, but he deserves an "A" for sheer innovativeness.
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