High Court sets aside FNB's sale of mortgaged home

On 12 December 2013 the Pretoria High Court set aside the sale-in-execution of a mortgaged home belonging to a Soweto family. While the family had paid the entire amount due to the bank, it sold their home on public auction anyway.

Ten years ago the Thwala's bond account went into arrears after both Mr and Mrs Thwala lost their jobs. First National Bank (FNB) obtained default judgment against them but undertook to stop the sale-in-execution subject to the Thwala's making further payments towards the bond. The Thwalas did this and FNB stopped the sale, continuing to run the bond account and accepting payments from the family.

In 2010, after the Thwalas had effectively repaid the entire amount due in terms of the judgment debt, the bank sold the property on public auction using the writ of execution it had obtained seven years earlier. There was no judicial oversight over the execution process. If a court had considered all the relevant circumstances, it would have in all likelihood refused the sale.

Last year the new owner of the property launched an eviction application against the Thwalas and their five children. The Thwalas then approached SERI, who applied to set aside the sale of their home on the basis that they had satisfied the default judgment by the time execution was levied. By SERI's calculations (which FNB did not dispute) between the date on which summons was issued and the date on which the sale took place the Thwala's paid about R500 more than the total value of the default judgment, plus interest and other payments to FNB. SERI lawyers argued that this rendered the sale void.

The court agreed. Acting Judge Van Niekerk set aside the sale declaring that the default judgment had been satisfied before the sale in execution took place and that there was "no lawful basis for FNB to proceed, as it did, with the sale in execution".

Tashwill Esterhuizen, SERI attorney acting for the Thwala family, said: "We welcome this judgment as it addresses the reality of many South Africans who have lost, and continue to lose, the biggest investments of their lives, their homes, simply because financial institutions can ‘play the game' better. The judgment vindicates not only this family, but other families in a similar position across the country. Sale-in-execution of a home is a harsh way to recover debt, and banks should not be allowed to act in an unreasonable or callous manner when enforcing payment."

Read the judgment (12 December 2013) here: http://bit.ly/18FH9j0

Read more on the case here: http://bit.ly/18FH9j0

Statement issued by Tashwill Esterhuizen, attorney at SERI, December 14 2013

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