Urgent
Chamber Application
MUREMBA
J:
On
21 January 2015 the respondent obtained judgment in its favour
against the applicant under case number HC1548/13. The judgment is
for the payment of $35,873-00 with interest at the rate of 5% per
annum from 1 January 2013, and legal costs in the sum of $2,500-00.
The
judgment debt led to the attachment of the applicant's dwelling
namely, Stand 907 Mt Pleasant Heights, Mt Pleasant Harare.
The
applicant received the notice of attachment on 18 January 2016 and
filed this application on 29 January 2016.
The
applicant wants the sale of the dwelling suspended because, firstly,
if the sale is allowed to proceed her family will suffer great
hardship. Secondly, the applicant says she is making a reasonable
offer to settle the debt at the rate of $1,000-00 per month.
The
following is the relief that she is asking for:
“Terms
of final order sought
That
you show cause to this Honourable court why a final order should not
be made in the following terms:
1.
The sale in execution of the said dwelling is suspended on condition
that the applicant carries out fully the terms of the offer of
settlement made above and if applicant defaults on any one
instalment, execution shall proceed.
2.
No order as to costs.
Interim
relief granted:
Pending
determination of this matter, the Applicant is granted the following
relief:
1.
The Deputy Sheriff shall suspend the action towards the sale in
execution of the said dwelling.
2.
A copy of this order shall be served on the respondent's legal
practitioners.”
The
history of the case is as follows.
The
applicant was in the employment of the respondent as Human Resources
Director for 12 years before 2010. In 2010 she sought to leave the
respondent's employment due to harsh economic conditions that were
prevailing at the time.
On
10 September 2010 she made an application to the respondent for a
voluntary retrenchment package which was being offered by the
respondent which she found attractive. In response, the respondent
persuaded her to stay with a staff retention proposal of a housing
loan of $120,000-00.
The
same offer was extended to the Chief Executive Officer and the
Finance Director.
According
to the housing loan offer, the title deeds of the house that she
would purchase would be surrendered to the respondent as security.
The
repayment of the loan was going to be upon separation, in other
words, upon the applicant's termination of employment.
During
her tenure she was only supposed to pay interest of $600-00 per
month.
Upon
termination of employment the applicant was supposed to repay the
loan using her terminal benefits.
The
applicant was persuaded to stay by the housing loan offer and took
the loan on 23 October 2010.
This
staff retention proposal was signed by the Chief Executive Officer, C
Mutasa and the Board Chairman, P.F Timba.
The
applicant stated that in 2012, there was a change of management at
chairman and CEO levels of the respondent.
She
said that relations were not good between herself and them. She
further stated that it became clear to her that the employment
relationship could not continue.
On
17 December 2012 she tendered her resignation from employment in
acknowledgement of the breakdown of the relationship.
She
said that upon her resignation her terminal benefits went towards
settling the loan, but it was not extinguished.
It
was only reduced from $67,124-00 to $ 35,172-00.
She
said that she failed to agree with the respondent's new managers as
to how the balance was to be settled.
As
a result, litigation ensued resulting in the parties signing a deed
of settlement in December 2014, and the respondent obtaining judgment
which gave rise to the attachment of her dwelling.
The
applicant stated that if the house is sold her family will likely
suffer great hardship.
She
said that she has always acknowledged her indebtedness to the
respondent and has always intended to pay the debt, but because she
was not employed from January 2013 to June 2015 she was unable to pay
anything.
She
said that now that she is in employment she is making an offer to pay
off the debt at the rate of $1,000.00 per month which offer she says
is reasonable.
The
applicant attached proof to show that from July 2015 when she took up
employment with Pan African Mining (Pvt) Ltd she had only managed to
pay $4,000-00 to the respondent.
The
amount was not disputed by the respondent.
PROCEDURE
Although
the applicant does not state in her application that she is making
this application in terms of Order 40 Rule 348A(5a), I do agree with
the respondent that looking at the nature of the application it is
indeed being made in terms of Order 40 Rule 348A(5a) which deals with
applications for the postponement or suspension of the sale of a
dwelling where that dwelling has been attached and is occupied by the
execution debtor or members of his family.
The
execution debtor is empowered to make a chamber application for the
postponement or suspension of the sale of the dwelling or eviction of
its occupants. The application should be made within 10 days of
notice of attachment of the dwelling.
Once
such an application is made the Registrar of this court shall submit
the chamber application to a judge who shall consider the papers
forthwith.
In
terms of Rule 348A(6), an application made under Rule 348(A)(5a)
shall be treated as urgent and set down urgently, without delay.
However,
even if the application is treated urgently, the order that is
granted by the court is a final one.
This
is supported by Rule 348A(5e) which states that if the judge is
satisfied that there is good ground for postponing or suspending the
sale of the dwelling concerned or postponing or suspending the
eviction of the occupants, he may order the postponement or
suspension of the sale or eviction subject to terms and conditions he
may specify.
The
Rule does not say that the order that is granted is a provisional
one.
Even
the Form 45 upon which this chamber application is made shows that
the order which is sought by the applicant is final in nature.
The
relevant portion of the form reads as follows:
“The
applicant seeks an order in the following terms:
The
sale in execution of the said dwelling is postponed
until………………………………. (date)
OR
ALTERNATIVELY:
The
sale in execution of the said dwelling shall proceed subject to the
condition that the above mentioned occupants are permitted to remain
in occupation until…………….…………….(date)
OR
ALTERNATIVELY:
The
sale in execution of the said dwelling is suspended on condition that
the applicant carries out fully the terms of the offer of settlement
made above.”
It
is apparent therefore that in this matter the applicant ought to have
made a chamber application and not an urgent chamber application as
she did.
It
will be futile to grant a provisional order suspending or postponing
the sale.
Once
this is done there will not be anything to confirm on the return day
as the provisional order that she is seeking is final in nature and
has the effect of a final order. In fact, there will not be any need
for confirmation of the provisional order on the return day.
Considering
that the applicant is a self-actor who is not well versed with the
rules of this court, I will condone her adoption of the wrong
procedure.
This
is in light of the fact that the respondent did not make it an issue.
It
is just an observation that I made as the court.
In
any case the applicant made her application within 10 days of having
been served with the notice of attachment of the dwelling.
The
respondent has not suffered any prejudice because before the hearing,
it was served with the application and got the chance to file its
notice of opposition and opposing affidavit.
The
requirement of Rule 348A(5C)(b) which says that upon the filing of
the chamber application the Registrar shall without delay serve a
copy of the application on the judgement creditor was therefore
complied with.
So
in the event that I am satisfied that the applicant has made a good
case for herself I will award an order in terms of Rule 348A(5e)
which order will be final.
MERITS
OF THE CASE
The
meaning of Order 40 Rule 348A(5e)
Where
a judgment debtor applies under Order 40 Rule 348A(5a) for the
postponement or suspension of the sale in execution or eviction the
judge may grant the application in terms of Rule 348A(5e) which
reads:
“If,
on the hearing of an application in terms of subrule (5a), the judge
is satisfied —
(a)
that the dwelling concerned is occupied by the execution debtor or
his family and it is likely that he or they will suffer great
hardship if the dwelling is sold or they are evicted from it, as the
case may be; and
(b)
that —
(i)
the execution debtor has made a reasonable offer to settle the
judgment debt; or
(ii)
the occupants of the dwelling concerned require a reasonable period
in which to find other accommodation;
or
(iii)
there is some other good ground for postponing or suspending the sale
of the dwelling concerned or the eviction of its occupants, as the
case may be; the judge may order the postponement or suspension of
the sale of the dwelling concerned or the eviction of its occupants,
subject to such terms and conditions as he may specify.”
What
it means is that the judge may postpone or suspend the sale of the
dwelling if he is satisfied that the execution debtor or his family
are in occupation of the house and will likely suffer great hardship
if the dwelling is sold.
In
addition to showing that great hardship is likely to be suffered, the
execution debtor should make a reasonable offer to settle the debt.
If
a reasonable offer is made the judge will postpone or suspend the
sale to enable the execution debtor to pay off the debt.
If
the execution debtor cannot make a reasonable offer to settle the
debt, he should, in addition to showing that he or his family will
likely suffer great hardship, show that he or his family needs a
reasonable period to secure alternative accommodation.
In
that case the judge will postpone or suspend eviction for a
reasonable period to enable him or his family to find alternative
accommodation before they can vacate the dwelling.
If
the execution debtor, after showing that he or his family will likely
suffer great hardship, neither offers a reasonable offer to settle
the debt nor shows that he or his family needs a reasonable period to
acquire alternative accommodation, but advances some other good
ground which persuades the judge, the judge may postpone or suspend
the sale or the eviction on conditions he thinks fit.
Put
differently, for a judgment executor to succeed in his application it
is imperative in every case that he shows;
(i)
firstly, that there is occupation of the dwelling by him or his
family; and
(ii)
secondly, that he or his family will likely suffer great hardship.
This
is the first requirement the execution debtor has to satisfy or meet
in terms of Rule 348A(5e)(a).
After
satisfying the first requirement, the second requirement that he
ought to satisfy is in terms of Rule 348A(5e)(b) under subparagraph
(i) by making a reasonable offer to pay the debt or under
subparagraph (ii) by showing that he or his family needs a reasonable
period to find alternative accommodation or under subparagraph (iii)
by advancing some other good ground which persuades the judge to find
in his favour.
It
is my understanding that Rule 348A(5e)(a) and Rule 348A(5e)(b) should
be read conjunctively because of the use of the word 'and'
instead of 'or' between them.
In
casu,
is not disputed that it is the applicant who is the execution debtor
who is in occupation of the dwelling together with her family.
She
has averred in her application that the family will likely suffer
great hardship if the sale is allowed to proceed and she has made an
offer to settle the debt which she says is reasonable.
I
have to make a determination on whether she has shown that the family
will likely suffer great hardship and whether her offer is indeed
reasonable.
GREAT
HARDSHIP
On
great hardship which will be suffered by her family if the house is
sold and they are evicted, the applicant made the following
submissions.
They
will be rendered homeless and end up on the streets as she will not
be able to spare any money for rentals since the family is operating
on a very tight budget. The children, especially the two who are in
school, will be affected in their studies. The trauma of losing a
home and friends will leave or cause permanent psychological scars
that may affect their mental health and development.
She
said that the one in Form 4 will be affected the most since he will
be sitting for his examinations this year.
She
also said that since the house was constructed by her husband the
sale will put a strain on their relationship as he is already blaming
her for the loss that they are about to suffer.
The
applicant said that the house's estimated open market value is
$300,000-00, but a forced sale will cause it to fetch much less.
She
said that this will be worsened by the harsh economic conditions
prevailing in the country which make potential buyers unable to offer
fair value.
The
applicant said that the family will therefore suffer a huge financial
loss.
The
husband attached a supporting affidavit stating that he is the one
who borrowed money from Time Bank to finance the construction of the
dwelling and subsequently caused the title deeds to be issued in both
his names and the applicant's.
He
said that they never use this house as security in borrowing money
because it is their only dwelling house.
He
said that he is currently unemployed and has been trying to establish
a farming business for the past few years, but unfortunately the
business has not performed well and he has lost money.
He
attached proof to show that he indeed took a loan from Time Bank in
respect of the property. By 6 November 2003, the loan was paid up.
In
response, the respondent citing the case of Masendeke
v CABS
2003 (1) ZLR 65 (HC), submitted that great hardship is hardship which
is more than the ordinary hardship faced by individuals who have been
deprived of their dwelling.
The
respondent said that an inconvenience in finding and paying for
alternative accommodation or the need to relocate to another
residential place is just ordinary hardship which cannot be
categorised as great hardship.
The
respondent further stated that if the open market value is around
$300,000-00, a forced sale value may be slightly less.
It
further said that the proceeds thereof are likely to far exceed the
judgment debt and the surplus from the sale will be available to the
applicant to seek alternative accommodation.
It
said that the fact that the applicant is now employed means that she
can afford to seek alternative rented accommodation whilst she
secures an alternative property to buy with the net proceeds.
The
respondent further stated that in any case the applicant ought to
have used the loan to purchase a house and secured the loan with the
title deeds of the purchased house.
It
said that it is now suffering because the applicant did not use the
loan for its intended purpose.
In
Masendeke
v CABS
2003 (1) ZLR 65 (HC) at 69 A-B Chinhengo J said:
“In
my view the hardship must be more than ordinary hardships which
persons deprived of their place of residence ordinarily suffer such
as the attendant inconveniences in finding and paying for alternative
accommodation or the need to relocate to another residential place
such as a rural home or a rented accommodation. The hardship must be
great in that it results in the execution debtor being rendered
homeless.”
The
same sentiments were echoed by Makoni J in Zwidza
& Anor v Mudoti & Anor
HH349/15.
In
the circumstances of this case I make a finding that if the sale is
allowed to proceed the applicant and her family will suffer great
hardship. This is in view of the following reasons.
The
applicant is the sole breadwinner.
Although
she has secured another job and is earning a salary of $5,000.00 per
month the letter of confirmation of employment from her new employer
states that it (the new employer) is experiencing cash flow problems.
As a result, it cannot pay its employees their full salaries at once
at the end of the month. It has resorted to paying them in cycles.
The
applicant gets her salary every 3 weeks and even then, she does not
get her full salary, but $1,800-00 per cycle.
The
letter further states that, as it is, the employer already owes the
applicant salary arrears of 2 months salary.
The
applicant produced a breakdown of her family expenses which shows
that they use $1,800-00 per month.
This
is clear evidence that indeed the applicant and her family are
operating on a very tight budget as she said. As things stand, the
applicant cannot afford rented accommodation.
I
do not find the respondent's argument that the applicant can afford
to buy another house using the surplus from the sale of the house
appealing for the following reasons.
To
begin with, this is a house which is registered in the names of both
the applicant and her husband. The husband therefore has his half
share.
The
sale of the house basically means that the husband is forced to sell
his share, even if he will recover his share from the net proceeds of
the sale.
The
bottom line however, is that he would have lost his house.
When
the applicant obtained the loan she did not register a mortgage bond
over this house in favour of the respondent. In other words, she did
not use this house as collateral security.
When
the applicant took the loan she never anticipated that she was
putting her family house at the risk of being sold for she was
supposed to use her salary and terminal benefits to repay it.
If
the respondent's managers had not forced the applicant out of
employment, the applicant would have continued servicing the debt
using her salary.
Now,
if the house is going to be sold in a forced sale, it is going to
fetch much less especially in view of the prevailing harsh economic
conditions. Chances of getting fair value for the house are very
slim.
The
family is therefore likely to suffer a huge financial loss even if it
will remain with a surplus after the debt has been paid.
Finding
alternative accommodation with the surplus will present its own
challenges.
Whilst
this might be viewed as ordinary hardship consequent to losing a
house, it ought to be weighed against the fact that the applicant
estimates the open market value of the house to be $300,000-00.
The
question is: is it fair to dispose of a house worth this much just to
recover a debt of $36,000-00 in a situation where the execution
debtor has since secured employment and is willing to pay the debt?
The
other question is: will this not cause unnecessary great hardship to
the family?
In
my considered view, in a situation such as the current one, where the
execution debtor has since secured employment and is willing to pay
off the debt, a debt of $36,000-00 does not warrant the disposal of a
house worth $300,000-00.
The
inconveniences that the applicant's family will suffer, taken
cumulatively, will in my view constitute great hardship.
The
inconveniences include looking for rented accommodation, which from
the look of things, the family cannot afford; relocating; suffering a
huge financial loss from the forced sale of the house in the current
harsh economic conditions and trying to purchase another house.
REASONABLE
OFFER
Having
been satisfied that the family will suffer great hardship, I have to
consider if the offer to settle the debt is reasonable.
The
applicant said that she only took up employment with Pan African
Mining (Pvt) Ltd in July 2015, and is earning a monthly salary of
$5,000-00. She attached a letter of confirmation of employment and
salary.
She
said that having taken up employment she is now in a position to
service the judgment debt. The letter of confirmation of employment
and salary from Pan African Mining (Pvt) Ltd which was signed by the
Chief Executive Officer states that due to inadequate cash flows, the
company is currently owing the applicant almost 2 months salary
arrears.
The
letter further states that the company is currently paying 50% of
salaries in cycles of 3 weeks, and that salary transfers to the
applicant's bank are at a rate of approximately $1,300-00 per
payment cycle.
The
applicant also attached a breakdown of her monthly expenses which
stands at $1,800-00.
It
is in light of the foregoing that the applicant is offering to
extinguish the debt at the rate of $1,000-00 per month.
During
the hearing she said that if she is stretched to the limit in order
to save her dwelling she can offer to pay a maximum of $1,300-00 per
month to the respondent.
She
said that she is unable to pay anything beyond that amount as she is
the sole breadwinner of the family. She said that she has 3 children
aged 20, 16 and 8 years old, 2 of whom are still in school.
She
attached their birth certificates.
She
said that she also stays with her mother in law and attached her
national identification document.
She
said that she also stays with her husband who is unemployed at the
moment.
In
response, the respondent said that the total debt inclusive of
interest and costs of suit now stands at $36,166. 65.
It
said that if the applicant is going to be paying $1,000-00 per month
it will take her 36 months, which is 3 years, to pay the debt in
full.
It
argued that, that cannot be said to be a reasonable offer considering
that this debt has already been outstanding for the past 3 years.
It
argued that if the applicant is allowed to settle the debt at the
rate of $1,000-00 per month it means that all in all it would have
taken the respondent a total of 6 years to get its money back, which
is too long a period.
The
respondent even refused to accept the increase of the offer from
$1,000.00 to $1,300-00 which the applicant made during the hearing.
It
stated that it can only accept an offer to settle the debt at the
rate of $3,000-00 per month.
The
respondent said that the balance of convenience favours it since the
debt has been outstanding since February 2013.
What
is pertinent about the present matter is that the applicant did not
borrow money from a bank, but from her then employer.
To
begin with, she is not the one who took the initiative to ask for the
money. She had decided to resign and get a retrenchment package at a
time when the respondent, her then employer, was offering
retrenchment packages to those who wanted to take the offer.
In
a bid to keep her for her services, the respondent offered her a loan
as an incentive to retain her.
She
was not the only one, the Chief Executive Officer and the Finance
Director were offered the same incentive.
Shortly
after the applicant had taken the loan there was new management staff
for the respondent who made working conditions for the applicant
unbearable to the extent that she opted to resign. Although the
respondent says that she resigned mero
motu,
I buy the applicant's story that the working conditions had become
very difficult for her and this forced her to tender her resignation.
This
is evidenced by the fact that having taken the loan on 23 November
2010, on 7 December 2012 she tendered her resignation, just 2 years
later.
When
she did so, she had not found alternative employment.
From
January 2013 to June 2015 she was not employed.
I
do not believe that if all was well at the respondent's, the
applicant would have resigned without having obtained alternative
employment especially when she knew that she had not yet paid up the
loan.
The
loan agreement that she had signed in 2010 stipulated that in the
event of termination of her employment with the company, for whatever
reason, the company would withhold any monies due to her from her
terminal benefits and pension fund.
At
the time of termination, her terminal benefits were indeed withheld
and her balance on the loan came down to $35,172-00 from $67,124-00.
Therefore,
when she left employment she knew that she still owed the respondent
that much.
She
also knew that she had no job from which she could get a salary and
pay off the balance of the debt with.
With
this, I do not believe that she is a person who can be said to have
left employment on her own volition, freely and voluntarily.
Circumstances
at work forced her to leave.
It
is clear that with no job for two and a half years the applicant
found it difficult to service the debt.
Her
failure to pay it off even though she had signed a deed of settlement
in 2014 promising to have paid it off by May 2015 is understandable.
It
cannot be said that she willfully chose not to pay.
Her
unemployment explains why 3 years went by with her having failed to
pay it off.
Now
that the applicant is employed, she is asking to be given a chance to
pay the debt using her salary to save her house which was attached by
the Sheriff.
Whilst
I agree that a total period of 6 years is indeed too long, what are
worth considering are the circumstances which caused the applicant to
fail to service the debt in the first place.
If
the respondent's new management had not made the working conditions
difficult for the applicant, this matter would not have come to where
it is today.
The
applicant would have continued in employment and serviced her debt
using her salary.
With
the offer the applicant has made, yes it might take her another 3
years to pay off the debt, but these 3 years are going to be
different in the sense that this time around it will be 3 years
towards the liquidation of the debt.
Monthly,
the applicant will be paying some money towards extinguishing the
debt.
3
years to repay a debt of $36,000-00 is in my view not unreasonable.
Generally, for this amount of money that is the repayment period the
banks normally give.
In
any case the respondent is not a bank whose business depends on
lending money to clients and getting profits therefrom. The
respondent is into tourism and survives on tourism, so the delay in
getting its money back from the applicant does not in any way affect
its operations or business. Moreover if the applicant had continued
in employment she would have been repaying the debt at the rate of
$600-00 per month which is much less than what she is offering now.
The
respondent cannot really cry foul for the other 3 years that the
applicant spent without paying the debt because it was due to its
managers that the applicant had to quit employment when the debt
still owed and when she did not have an alternative source of income
with which she could service the debt.
In
her application the applicant said that she wants the sale suspended
on condition that she carries out fully the terms of the offer of
settlement and that if she defaults on any
instalment
execution should proceed.
Here
she is showing total commitment to paying the debt. She is putting
her head on the block.
I
am persuaded by her attitude that she needs to be given a chance to
save her family home. Once she loses it, the family will not be able
to purchase a similar house. My sense of justice disallows me from
sanctioning the sale of this house at this moment in time when things
have just turned for the better for the applicant who happens to be
the sole breadwinner of her family.
During
the hearing the applicant increased her offer to $1,300-00. I will
hold her to that amount.
The
applicant did not ask for costs. This is a case where I believe that
each party should bear its own costs.
In
the result, it is ordered that:
1.
The sale in execution of Stand 907 Mt Pleasant Heights. Mt Pleasant,
Harare be and is hereby suspended on condition the applicant pays to
the respondent monthly instalments of US$1,300-00 with effect from 31
March 2016 until the outstanding debt is extinguished.
2.
If the applicant defaults on any one instalment the respondent shall
be entitled to proceed with the sale in execution of the property
mentioned in paragraph 1 above.
3.
Each party is to pay its own costs.
Kantor
& Immerman,
respondent's legal practitioners
1.
Rule 244 of the High Court Rules, 1971
