Court rejects Standard Bank's bid to foreclose on Zwelinzima Vavi's home over loan arrears
The Johannesburg High Court has ruled against Standard Bank in its legal bid to foreclose on the upmarket Sandton home of South African Federation of Trade Unions general secretary Zwelinzima Vavi.
The bank sought a money judgment and permission from the court to execute against Vavi's primary residence, because he and his wife had fallen behind on their home loan repayments.
However, what is curious about Standard Bank's legal bid is that the arrears date back three years, and Vavi and his wife had not only kept up with their bond repayments but had also worked to reduce the arrears from R170,000 to R85,000.
In handing down his judgment on Tuesday, Judge Stuart DJ Wilson rebuked the bank for seeking an execution order when the Vavis' repayment over the last 18 months showed 'an apparently perfect adherence to the Vavis' obligations to pay their monthly instalments'.
'Standard Bank has placed nothing before me that explains why execution against the Vavis' home is a proportionate means of recovering the arrears,' Judge Wilson said.
The court, referencing the Constitutional Court's stance in Gundwana v Steko Development CC, emphasised that the value or location of a property does not diminish the need for proportionality when a bank seeks to take away someone's home. 'Cases in which it would be disproportionate to authorise execution of a proven mortgage debt against such a property are likely to be rare. This is such a case,' the judgment noted.
What raised eyebrows was Standard Bank's demand for more than R160,000 in legal costs – almost double the outstanding arrears. The court found that the bank had effectively tied the settlement of the dispute to the payment of these costs, suggesting that the Vavis may have hesitated to pay legal fees that far exceeded their actual arrears.
The broader problem
Standard Bank's case against Vavi is not unique. Across South Africa, banks have been criticised for using aggressive tactics to address home loan arrears.
These include:
Initiating legal action for repossession even when homeowners are actively reducing their arrears;
Imposing excessive legal costs that quickly outpace the actual debt; and
Failing to engage meaningfully with customers before resorting to court action.
In 2024, Judge Wilson came down on Standard Bank for using 'high-handed' tactics by taking a Meyersdal couple to court over home loan arrears on which they had managed to catch up a few months before the matter was set down to be heard.
Earlier this year, the bank attempted to take the home of a Roodepoort homeowner who was attempting to catch up on arrears, but the case was dismissed with costs.
If the court had granted Standard Bank's order against Vavi, it would have given the bank the power to foreclose on the house and potentially sell it at a fraction of its value to recoup the R85,000 that it is owed. This has happened to countless South Africans over the years.
However, a R60-billion class-action suit against South Africa's leading banks – Standard Bank, Absa, FirstRand and Nedbank – is seeking to address this issue.
Led by Advocate Douglas J Shaw, the lawsuit highlights systemic issues with how banks handle mortgage arrears. Despite a 2017/18 legal victory that forced banks to set reserve prices at sheriff auctions – preventing sales at rock-bottom prices – Shaw reports that many homes continue to be sold for only 50% to 70% of their true value, and in some cases as low as 10%.
Former owners often remain liable for the outstanding bond balance while being left homeless and destitute for years.
Shaw further alleges that banks frequently proceed with sales even when foreclosure is not a last resort, such as when homeowners have regained employment, can rent out their properties or could subdivide them to meet obligations.
'We often see banks act in a manner we consider irresponsible. You cannot trust them to do what most people would see as 'the right thing',' Shaw said.
This ongoing class action underscores the concerns raised by the Vavi case – namely, that banks sometimes resort to heavy-handed enforcement tactics without adequately considering proportionality or alternative solutions. It also highlights the broader call for stricter regulation and more ethical conduct in mortgage enforcement practices across South Africa.
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