Research Articles (Mercantile Law)

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Browsing Research Articles (Mercantile Law) by Author "Brits, R."

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    Application of the housing clause during mortgage foreclosure : a subsidiarity approach to the role of the National Credit Act (part 1)
    (Juta Law, 2014-04) Brits, R.; Van Der Walt, A. J.
    Direct execution of a judgment debt against immovable property - including those burdened with mortgage bonds - is permissible in the high court on the condition that "where the property sought to be attached is the primary residence of the judgment debtor, no writ [of execution] shall be issued unless the court, having considered all the relevant circumstances, orders execution against such property." The amended rule is a result of section 26 of the Constitution of the Republic of South Africa, 1996 and reflects the principle that was established earlier in Jaftha v Schoeman; Van Rooyen v Stoltz with regard to the magistrates' courts' execution process. The housing clause provides as follows: "(1) Everyone has the right to have access to adequate housing. (2) The state must take reasonable legislative and other measures, within its available resources, to achieve the progressive realisation of this right. (3) No one may be evicted from their home, or have their home demolished, without an order of court made after considering all the relevant circumstances. No legislation may permit arbitrary evictions." To give effect to debtors' rights under section 26(1), the constitutional court held in the Jaftha case that a clerk of the court may no longer grant judgments by default against primary residences. Rather, a magistrate must grant the order and may do so only after all the relevant circumstances have been considered. The case involved insignificant, unsecured debts that were enforced against vulnerable debtors' state-subsidised houses. It was therefore not immediately apparent that section 26 would apply also in the general context of mortgage bonds being enforced in the high courts.
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    Application of the housing clause during mortgage foreclosure : a subsidiarity approach to the role of the National Credit Act (part 2)
    (Juta Law, 2014-01) Brits, R.; Van Der Walt, A. J.
    The proportionality test to determine the justification of execution against a home revolves around various contextual considerations. Yet, it appears that the enquiry will largely centre on the size of the outstanding debt and – significantly – of the actual arrears, as compared to alternative ways that are available to satisfy the claim for either or both of these amounts. For mortgage law to comply with the proportionality standard, the process must include a way to have recourse to reasonable, creative alternatives before a home is sold in execution. In terms of common law doctrine, a mortgage is a limited real right that the creditor holds in the debtor’s hypothecated land. The most prominent element of this property right is the creditor’s entitlement, when the debtor defaults, to call up the bond and insist on the sale of the burdened property to settle the debt. Because the mortgagee has a right to execute against that specific property on the basis of its limited real right in that property, it has no duty to first seek execution against other assets, such as movables or non-primary residences.