R60 billion class action case soon in court

ZELDA VENTER

WHILE hundreds of people who had their homes repossessed — primarily due to missed bond payments — and then sold for a fraction of their true value, may be a step closer to justice as the long-awaited R60 billion class action against banks is expected to soon get off the ground.

Advocate Douglas Shaw, who has dedicated years in building this and other related cases, said the Gauteng High Court in Johannesburg is about to issue a date for the hearing.

The case was lodged in 2020 and there were many delays, but it is now hoped that the court will within the next few months decide on whether or not to certify this as a class action. Shaw said he honestly believed that unreasonable damage had been done by the banks to these people.

Many of these people had their homes auctioned off for as little as 10% of their market value, and have been homeless and destitute for over a decade while the banks recovered their debts.

Most of these people are poor and not able to recover their losses after losing their homes to the banks, such as Absa, Standard Bank, FirstRand Bank and Nedbank.

Some of those pinning their hopes on the court said they have been waiting since 2016 for some kind of judicial intervention. “Some of us are living below the poverty line due to the banks, who sold the houses for a pittance. We just want to ensure our case is heard and that we receive justice,” one of the applicants said.

In their application, they are asking the court to represent various different classes. These include those whose properties were sold for more than 10% below market value.

Up to 2017, the banks were selling houses at sheriff auctions, without a reserve price, thus leading to substantial losses and the owners still owing large sums to the bank after the auction. In 2018, the court altered the rules to include reserve prices for properties to be sold by auction by a bank.

They said that in the event that the banks are held liable for past sales in executions that were unjustly obtained, they should be suitably compensated.

Each of the class members has, at various times and at various locations, entered into mortgage bond agreements with the defendant banks, who have obtained court orders for them to sell the properties by way of sale in execution when the people fall in arrears with their bond payments.

It is said that the banks sold the properties for substantially less than the properties are worth and or not as a last resort.

The applicants do not dispute that in certain instances, the banks are entitled to sell properties on sale in execution using their security.

They, however, dispute the constitutionality of selling properties in execution when it is not necessary, or when the sale price accepted is far lower than the market value of the property.

It is claimed by them that the average price properties have sold for in execution has been around 50% of the market value. In many cases, properties have sold for discounted prices of around 10% of the market value.

In fact, it was stated in court papers, in some instances, properties were even sold for prices as low as R100.

The banks are meanwhile opposing the application and they deny any wrongdoing. FirstRand Bank, in a sentiment shared by the other banks, said in its opposing papers that there is a notion that the banks sell properties on auctions recklessly and without regard to the property owners, which is “simply not true”.

FNB said it takes “every reasonable measure to avoid selling properties in execution”. The bank stated that consumers are told about their rights, such as that they may take a “payment holiday” if they fall in arrears and that they only revert to selling a property in execution as a last resort.

People who think they may qualify to join the class action can meanwhile send an email to bankssoldmyhouse@bankinglawadvisor.co.za (if their homes have already been sold) or email now@bankinglawadvisor.co.za if their homes are in the process of being sold.

• ‘Long overdue’: EFF throws weight behind homeowners pursuing R60 billion class action against big banks