Section 26 of the Constitution provides that “Everyone has a right to have access to adequate housing”. However, does the protection envisaged in Rule 46A of the Uniform Rules of Court apply if your home is owned by a Trust?
Following two seminal cases in which the Constitutional Court held that failure to ensure judicial oversight of sales in execution of immovable property of debtors was unconstitutional and invalid, Rule 46A was inserted into the Rules in November 2017.
In terms of this Rule, the Court cannot authorise a creditor to execute against the immovable property of a debtor which is the primary residence of the debtor unless the Court, having considered all the relevant factors, determines that the execution is warranted.
The Court must first establish whether the property in question is the primary residence of the debtor and, once it has considered any alternative means by which the debtor could satisfy the debt, only then allow execution against the property. This Rule is one of the ways that the State has taken reasonable legislative measures to achieve the realisation of section 26. The Constitutional considerations of Rule 46A, however, cannot challenge the principle that a creditor is entitled to execute against the assets of a debtor in order to satisfy a judgment debt.
Rule 46A also places an additional burden on the creditor, requiring that the debtor must be given notice of the creditor’s intention to execute against the property and ensuring that the debtor is given notice of their right to oppose the application.
Furthermore, the Rule requires that the creditor must provide the Court with all relevant information, such as the market and municipal value of the property, the amounts owing on any mortgage bonds registered over the property and the amounts owing to the municipality. The Court also has the power to set a reserve price for the property and to grant any other appropriate order.
Despite the finding of the Constitutional Court, the South Gauteng High Court held, in Investec Bank Limited v Fraser NO and Others, that Rule 46A is not applicable where the immovable property is owned by a Trust as it could not qualify as being the primary residence of a person.
The Court considered the fact that a “judgment debtor” in the context of Rule 46A refers to an individual person and it is the primary residence owned by a person that falls within the ambit of the Rule. The Court held that if the judgment debtor is not a natural person, the Constitutional considerations and protections in section 26, including the right of access to adequate housing, are not available to it. Thus, if immovable property is owned by a company, a close corporation or a trust, any member, shareholder or beneficiary, who is the beneficial owner of the property, is not protected by Rule 46A.
The High Court in KwaZulu-Natal, however, still expects a creditor to apply Rule 46A and provide the Court with all the necessary information before an order declaring the immovable property executable is granted, even when the debtor is a Trust. But how would this Court deal with a creditor not applying Rule 46A and following the judgment of the South Gauteng High Court?
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