29 May 2019 by and Dispute Resolution Alert

Executing against immovable property when movable property can satisfy the judgment debt

The legal principles relating to execution against movable property are more or less settled, less so the law relating to execution against immovable property. This is mainly because the right to housing is enshrined in s26 of the Constitution and the issue of land has become somewhat emotive and politicised in the recent past.

The execution process is governed by rules 45, 46 and 46A of the Uniform Rules of Court. Rule 45(3) requires that whenever a sheriff is commanded by any process of court to raise a sum of money upon the goods of any person, he must proceed to the dwelling or place of employment of such person and demand satisfaction of the writ, and failing satisfaction, he must demand that so much movable and disposable property be pointed out as he may deem sufficient to satisfy the writ and failing such pointing out he shall search for such property. According to Rule 46(1), a writ of execution against the immovable property of any judgment debtor must only be issued if:

  • a return has been made of any process issued against the movable property of the judgment debtor from which it appears that the said person has insufficient movable property to satisfy the writ; or
  • such immovable property has been declared to be specially executable by the court.

The rules, however, do not address the situation where a judgment debtor, who has sufficient moveable property and immovable property, frustrates the process of the sheriff in executing against the said movable property. The court in Nkola v Argent Steel Group (Pty) Ltd t/a Phoenix Steel (2) SA 216 (SCA) had to consider this dilemma. In short, the court had to consider the question of whether a judgment creditor is entitled to have immovable property belonging to the judgment debtor declared specially executable when the movable property of the judgment debtor is alleged to exceed the value of the judgment debt.

The judgment debt arose from a deed of suretyship which the appellant signed in favour of the respondent. The respondent first tried to execute against the appellant’s movable property after the respondent had been granted default judgment against the appellant. The movable property was, however, released from attachment as the appellant’s wife alleged that it belonged to her. Thereafter, the respondent brought an application to declare the appellant’s immovable property specially executable. The appellant had admitted liability to the respondent therefore the court a quo granted the application and declared two of the appellant’s properties, both residential, executable.

The appellant was granted leave to appeal but the full bench dismissed the appeal. The appellant was granted special leave to appeal to the Supreme Court of Appeal (SCA). On appeal, the appellant argued that he had substantial moveable property, largely, of shares in companies he controlled but also motor vehicles. His contention was that the respondent should seek out his movable property and sell it prior to seeking execution in respect of the immovable properties. The appellant further argued that he was under no obligation to make his movable property available for execution.

The SCA held that it is correct that in executing a judgment, a judgment debtor’s movable property must be attached and sold to satisfy the judgment debt before the judgment creditor can proceed to execute against immovable property. Only in the event that they are insufficient to fulfil the debt may a judgment creditor proceed against immovable property.

The SCA held that the common law and the Uniform Rules of Court place no obligation on a judgment creditor to execute against movable property where a judgement debtor has failed to point these out and make them available. The court referred with approval to Silva v Transcape Transport Consultants and Another 1999(4) SA 556 (W) where Wunsh J considered that because the judgment debtor in the matter had not pointed out movable property that was available to satisfy the judgment debt, he had behaved in a tricky manner and had deliberately frustrated the judgment creditor’s efforts to obtain payment. Wunsh J was of the view that this was a case where the interests of justice did not dictate that the execution of the judgment should be stayed and a case where execution should proceed against the judgment debtor’s immovable properties.

The appellant further advanced contentions relying on the right to housing as entrenched in s26 of the Constitution and that subsequent judgments had changed the common law, reflected in the Silva case. The court was at pains to point out that those judgments deal with a completely different factual matrix and those cases follow on the judgments in the Constitutional Court which deal with the right to housing, which might be jeopardised where execution is permitted in respect of a debtor’s primary residence. Those decisions of the Constitutional Court (eg Jaftha v Schoeman, Van Rooyen v Stoltz & others [2004] ZACC 25; 2005 (2) SA 140 (CC) and Gundwana v Steko Development CC & others 2011 (3) SA 608 (CC)) are confined to execution in respect of a debtor’s primary home and bring the law in line with the constitutional right to housing and the objective was to achieve judicial oversight in instances where the right to housing is implicated.

The court held that the court a quo took account of the appellant’s circumstances including the fact that he had considerable means, and that the debt was due since July 2014, despite the fact that he said he had liquidity problems which would be resolved by the end of that year. The full court did not interfere with discretion of the court a quo. The fact that one of the houses was his primary residence and the other that of his elderly father was of no consequence as he had the means to avert the execution of the judgment debt and chose not to pay the admitted liability. In any event, the appellant, on his own account, was not the kind of person who qualifies for the protection required by the Constitutional Court above. The appeal was accordingly dismissed with costs.

The decision of the SCA confirms that a judgment creditor is entitled to have immovable property belonging to a judgment debtor declared specially executable even in circumstance where the judgement debtor has sufficient movable property but is behaving in a tricky manner and deliberately frustrates the judgment creditor’s efforts to obtain payment.

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