1.1. Judicial Supervision: Each Case on Its Merits?
The second principle, to which we will return, is that perhaps in our case, as in this one, the bank should require judicial consideration of the matter if it wishes to sell the property below an amount substantially below its market value. This is in fact the practice in most of the United States. In the other parts of the United States, it is not possible to pursue for debts when the property is sold below the value of the debt.[1]
This argument for judicial supervision was considered favourably in Jaftha where the Prevention of Illegal Evictions Act is seen as an example of where judicial supervision was an innovation that went beyond the common law. In both cases, judicial supervision, that was absent historically was deemed necessary in the modern world. [2]
Mortinson[3] took place shortly after Jaftha and in it , the ruling in Jaftha was applied to default judgment in that they could not be issued by the Registrar.
Saunderson[4] concerned mortgage bonds and not simply debts. The argument from the bank was that Jaftha would not apply because people had voluntarily bonded themselves. However it was found that it did apply, the court still had a supervisory role.
Often, what is needed is to give the courts greater discretion to look at the circumstances of the case. In Twee Gezellen[5] which concerned provisional sentence, in was held that there was discretion to refuse the creditor judgment even when the probabilities were in the creditors favour. There was also discretion not to require the defendant to pay the judgment debt before going to trial. In Sale and Execution, greater discretion over the means of sale, the initial sale price and the mechanism by which that price drops from the market price, are required. This is currently not possible under the Uniform Rules.
The Constitutional Court in Jaftha was not prepared to make a blanket rule that no situations would justify sales in execution of this nature. They wished instead for judicial oversight.
It would be possible also to require judicial oversight of cases where it was proposed to sell property below, say 95% of its market value or some similar rule. Alternatively, it would require a court to confirm such a sale. A list of factors could be compiled, similar to the list in Jaftha.[6]
The list in Jaftha was as follows[7]:
“The court listed factors that should be taken into account when balancing the interest of the parties. These factors are; the size of the debt; the circumstances in which the debt arose; the financial situation of the parties; whether the debtor is employed or has another source of income to pay the debt; and the availability of alternative methods of debt recovery”
Similarly, in Port Elizabeth[8] the court emphasised the need to take into account all relevant factors. It noted that even where there was often a common combination of frustrated landlords and destitute people the circumstances were capable of ‘infinite variation’.
[1] See Section on Foreign Law.
[3] Nedbank v Mortinson par 24.
[4] Standard Bank of South Africa Ltd v Saunderson and Others 2006 (9) BCLR 1022 (SCA)
[5] At Paragraphs 30 and 31
ha v Schoeman and others; Van Rooyen v Stoltz and others [2003] 3 all SA 690 (C).
[6]
Du Plessis para 4.1 from paragraphs 56-60 in Jaftha
[7] Port Elizabeth