Bad day in home foreclosure court for Nedbank and its lawyers
The bank was attempting to foreclose on 12 homes. In one instance, a valuation was done based on assumptions. Picture: AdobeStock
It was a bad day in court last week for Nedbank, its property valuation experts, and its lawyers.
In a scathing judgment, Acting Judge Fiona Southwood of the Johannesburg High Court halted Nedbank's attempts to foreclose on 12 properties, each with different owners, citing numerous instances of non-compliance with court rules and ethical standards.
The judge raised serious concerns about the conduct of Nedbank's attorneys, counsel and property valuation experts.
Nor did she place much credibility on the arrears amounts claimed by the bank in several cases brought before the court by the bank.
The bank statements in five cases show the respondents were making payments on their mortgage loans.
'This raises a concern that the amount certified as being in arrears is not credible. [Nedbank's] counsel could not address my concern. It is advisable that the applicant lodge an affidavit to explain why the balance does not change,' reads the judgment.
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Falsehoods
Nedbank's attorney and counsel were found to have misled the court in one case by claiming the owner was properly served with legal notices and then – when challenged by the judge – denied any misrepresentation.
'There is no evidence in the record that the address at which personal service occurred is the home of the respondent,' reads the unreported judgment.
'At face value, the submissions in counsel's practice note constitute misrepresentations to the court. Furthermore, the attorney's incorrect allegation as to what appeared in the sheriff's return also constitutes, at face value, a misrepresentation to the court.'
The bank's attorneys were referred to the Legal Practice Council (LPC) for further investigation, while the counsel representing Nedbank will have to answer to the same council as well as the Pretoria Society of Advocates.
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12 cases, 'recurring issues'
The 12 cases – heard during the court's 'Big Bang Week' when 15 courts heard 70 cases a day from 18 to 20 June 2025 – involved unopposed foreclosure applications under Rule 46A, which governs execution (public auction) against residential immovable property.
Rule 46A requires strict judicial oversight to ensure that foreclosure does not violate homeowners' rights, particularly when the property is their primary residence.
Judge Southwood identified several recurring issues that led to the dismissal or postponement of Nedbank's applications, including improper document handling, inadequate valuations, failure to serve notices correctly, and misrepresentations by legal practitioners.
One of the requirements in foreclosure applications is a valuation of the property.
This is to prevent properties being sold at well below market prices, a practice that historically led to homeowners losing equity accumulated in their homes.
'The valuer used in every instance did not give a satisfactory basis for claiming expertise in valuations nor indicate her qualifications and it was uncertain that she was in fact employed by an independent third party as she alleged,' says the judgment.
In one instance, a valuation was done without gaining access to the property. The valuator relied on assumptions about the number and sizes of the rooms, as well as the quality of finishes.
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The valuator was referred to the South African Council for the Property Valuers Profession (SACPVP) for investigation.
In multiple cases, documents were not uploaded correctly to CaseLines, the court's electronic case management system, hindering judicial preparation.
Affidavits meant to verify the authenticity of security documents were either missing, incomplete, or lacked proper references. In one case, the bank submitted copies of original documents, stating that originals were stored in a 'safe storage facility' without further evidence.
Nedbank also failed to comply with the National Credit Act's requirements for serving Section 129 notices, which inform debtors of their rights to resolve arrears before legal action.
One notice was sent to an incorrect email address, with the bank's legal counsel admitting the process was flawed.
ALSO READ: Another slapdown for banks in high court
'Strong message'
This ruling is stunning in its scope, sending a strong message to financial institutions and their legal representatives about the importance of meticulous compliance with court procedures and ethical standards in foreclosure cases.
The judgment emphasises the courts' role in safeguarding the right to housing, particularly for primary residences, as mandated by the Constitutional Court.
The ruling offers a reprieve for the homeowners, ensuring their homes cannot be seized without rigorous judicial scrutiny.
As the LPC and SACPVP investigate the professionals involved, the case also highlights the need for accountability in South Africa's legal and financial sectors, says consumer legal advisor Leonard Benjamin.
'Nedbank now faces the challenge of rectifying its applications to meet the court's stringent requirements, while the ruling sets a precedent for future foreclosure proceedings.
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'We've seen far too many instances of banks selling peoples' homes using judgments that should not have been granted in the first place,' he adds.
'Here's a ruling that I hope draws a line in the sand. Judge Southwood must be commended for rejecting outright sub-standard presentation of cases by Nedbank.
'While it must be appreciated that the volume of matters that must be dealt with places the judiciary under considerable pressure, it is no excuse and of little comfort to consumers because, in many cases, judges are all that stand between judgments that should not have been granted in the first place and possible homelessness.
'Clearly, despite increased judicial oversight, the banks still believe that, as [a] right, they are entitled to foreclose and that legal proceedings are a mere formality. Hopefully, this is coming to an end.'
This article was republished from Moneyweb. Read the original here.
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