At common law, a mortgagee plaintiff has a substantive right to realise the immovable property of the judgment debtor in cases where the judgment creditor duly registered the mortgage bond to secure the debt, which is the subject matter of the claim.
The High Court Amendment Act of 2013 was promulgated to grant authority to the Judge-President to establish rules to regulate the execution of immovable property where such property is the primary home of the judgment debtor. Rule 108 of the Rules of the High Court was introduced thereafter, which requires that a judgment creditor first obtain a nulla bona return for any movable property, and thereafter apply to the court for an order to declare the property specifically executable.
The aforementioned introduced a peremptory exclusion and created a conflict between the common law position wherein mortgagee plaintiffs retain a substantive right to execute against hypothecated immovable properties, and the court rules, which maintain that a nulla bona return must first be obtained against the movable property.
The High Court Amendment Act of 2024 brings substantial changes to the sale of immovable property in satisfaction of a debt, by introduction of a new Section 35A. Firstly, by insertion of a definition of "primary home" as well as the imposition of restrictions on the sale in execution of immovable property.
A primary home is defined as a dwelling which a person uses as their main place of residence irrespective of whether they occasionally reside at any other place of residence or own another place of residence.
Section 35A(1) prohibits the sale of any immovable property in execution of a judgment in court unless the sale in execution is carried out under the authority of, and in accordance with, an order of the court issued after the following requirements have been complied with:
- The court, upon return of service of process by the deputy sheriff, is satisfied that the judgment debtor has insufficient movable property to satisfy the judgment debt; and
- The court, upon application made to it by the judgment creditor, has declared the immovable property to be executable.
Section 35A(2) stipulates that a person need not comply with the requirement to submit a nulla bona return of service if the immovable property to be sold in execution is subject to a mortgage bond registered in favour of the judgment creditor. Failure to satisfy the mortgage bond in full or in part gave rise to the judgment debt which is the subject matter of the sale in execution. This is a major shift from the current practice where banks are required to jump over a number of procedural hurdles before they can execute on the security put in place over the immovable property, as addressed in case law such as Futeni Collection (Pty) Ltd v De Duine (Pty) Ltd and the Standard Bank Namibia Limited v Shipala judgments.
In terms of Section 35A(3), the Court shall not issue an order authorising execution against immovable property where the immovable property is used by the judgment debtor or by any other person as a primary home, unless the Court is satisfied, after holding an inquiry, that the sale of such immovable property is the most appropriate order to satisfy the judgment debt.
The above reads similarly to Rule 108(2)(c), wherein the court may not order a property specially executable unless the court has considered all the relevant circumstances with specific reference to less drastic measures than sale in execution of the primary home under attachment.
Another substantial provision is Section 35A(4), wherein provision is made for a non-exhaustive list of alternative orders the Court may issue if the Court is not satisfied that a sale in execution of the immovable property is appropriate in the circumstances of the case. The Court may, having due regard to the interests of the judgment creditor, the judgment debtor, and any other person using the immovable property as a primary home make an alternative order which may include but is not limited to:
- An order attaching alternative immovable property owned by the judgment debtor;
- An order varying the repayment period of the judgment debt or the instalments which are payable in terms of the agreement between the parties;
- An order that the debt be taken over by another person chosen by the judgment debtor, including a family member or a relative of the judgment debtor who is willing and able to fulfil the obligation to repay the debt;
- An order allowing the judgment debtor to voluntarily dispose of the immovable property within a specified period; or
- Any other order that the court considers proper and just in the circumstances of the case.
In addition to the above, section 39 of the High Court Act, 1990 has been amended to make provision for the Judge-President to make rules regulating the execution against an immovable property of a judgment debtor where the property is the primary home of such judgment debtor, and more specifically, he may prescribe therein that:
- The sale of such property is by reserve price which shall be based on the market value of the property as that prescribed by the Judge-President in the rules of court;
- The property is sold to the highest bidder upon conditions prescribed in the rules of court and further that the bid of such highest bidder may not be less than the prescribed reserve price contemplated in subparagraph (i).
Finally, it is important to note that the High Court Amendment Act, 2024 is not yet in force, and will be brought into force on a date determined by the Minister via Gazette.
The content of this article is intended to provide a general guide to the subject matter. Specialist advice should be sought about your specific circumstances.