Standard Bank’s attempt to foreclose on Vavi’s house fails in court

STANDARD Bank  was dealt a blow in its court application to authorise the foreclosure of a mortgage bond it granted over the primary residence of South African Federation of Trade Unions General Secretary Zwelinzima Vavi and his wife Norma.

The bank had asked for a money judgment and leave to execute it against the residence of the respondents, the Vavis. Their indebtedness arises from a mortgage bond passed over the property, which is an upmarket residence in the Sandton area.

Gauteng High Court, Johannesburg Judge Stuart Wilson noted that a court asked to authorise the foreclosure against a debtor’s primary residence must be satisfied that to do so would be proportionate.

“Foreclosure is generally proportionate when there is little meaningful prospect of the debt secured against the residence being recovered in some other way, and when the interest of the creditor in obtaining payment outweighs the interest of the debtor in retaining ownership of their home,” he explained.

Judge Wilson stated that the property's status as an expensive dwelling in a well-heeled suburb does not affect the fundamental inquiry. However, cases in which it would be disproportionate to authorise the execution of a proven mortgage debt against such a property are likely to be rare.

This is such a case, the judge said. The Vavis owe around R1.68 million on their bond and are in arrears to the tune of just over R85 000 – or around four months’ worth of instalments.

The arrears were accumulated around three years ago, and since then, the Vavis appear to have serviced their bond punctiliously, while taking steps to reduce their arrears from just under R170,000 when the application was instituted to around R85,000 today.

The latest home loan statement filed shows around 18 months of apparently perfect adherence to the Vavis’ obligations to pay their monthly instalments, the judge noted.

“Standard Bank has placed nothing before me that explains why execution against the Vavis’ home is a proportionate means of recovering the arrears.”

He also commented that Standard Bank claims over R160,000 in legal costs against the Vavis.

“It is apparent from the affidavits that Standard Bank has tied the resolution of this dispute to the settlement of those costs,” the judge said, adding that it is at least possible that the Vavis have balked at paying legal costs of twice the value of their current arrears.

“It seems to me that the Vavis would be entitled to rehabilitate the loan agreement by paying their arrears and then debating the reasonableness of those costs with Standard Bank as a separate issue,” the judge said.

But, he added, in the absence of more information, he cannot presently conclude that foreclosure against the Vavis’ home is a proportionate means of liquidating their arrears.

He postponed the application indefinitely and said that Standard Bank may renew the application if and when it adduces evidence that foreclosure would be proportionate.

The judge also ruled that at this stage, each party will pay its legal costs.

Cape Times