REPORTABLE
IN THE HIGH COURT OF SOUTH AFRICA 
Case No: 10519/07 Date heard: 15/05/2007 
Date of judgment: 5/6/07 
In the matter between: 
DEORIST A 144 (PTY) L TO 
APPLICANT 
and 
A. J. JACOBS 
F. D. BRONKHORST 
EKURHULENI LOCAL MUNICIPALITY 
18T RESPONDENT 2ND RESPONDENT 3RD RESPONDENT 
JUDGMENT 
DU PLESSIS J: 
[1] This is an unopposed application for the eviction of the first and second 
respondents from a residential property known as Player street 3, Brakpan North 
extension 1, Brakpan. The applicant alleges that it is the registered owner of the 
property and that the first and second respondents occupied it as lessees in 
terms of a written agreement of lease. According to the applicant, it cancelled the 
lease in January 2007 as a result whereof the two respondents are in unlawful 
occupation of the property. 

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[2] The applicant proceeded, correctly so in my view, on the footing that the first and second respondents (to whom I shall refer as "the respondents") are "unlawful occupiers" as defined in the Prevention of Illegal Eviction from Unlawful Occupation of Land Act, 19 of 1998 (PIE). Accordingly, the applicants on 13 April 2007 obtained an order from this court authorising it to give notice to the respondents in terms of section 4(2) of PI E that it will seek an eviction order on 15 May 2007. On the latter date the matter came before me. was not satisfied that the applicant is entitled to the order it seeks and, after hearing the submissions of the applicant's counsel, I reserved judgment. In the course of preparing the judgment, further difficulties arose. I heard further argument and again reserved judgment. On 24 May 2007 I issued an order dismissing the application and indicated that my reasons will follow. These are my reasons. 
[3] In its founding affidavit the applicant alleges that, during May 2007, it purchased the property from the respondents. It appears further that the respondents remained in occupation of the property as they had leased it back form the applicant. According to the applicant, the respondents fell into arrears with the monthly rental and, despite demand, remained in arrears. The applicant cancelled the lease and hence the application for eviction. 

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[4] In the founding affidavit the applicant also states: 'The property was purchased as part of the business of a company known as Reverse Mortgage Company (Pty) Ltd of which the deponent to the applicant's founding affidavit is a director. The affidavit continues that the "deal was then that the Respondents would lease the property from the Applicant and that they would later also get an opportunity to purchase the property back from the Applicant". 
[5] In other cases that came before me, I have had occasion to deal with the concept of "reverse mortgage", albeit not always in the context of the business of the Reverse Mortgage Company (Pty) Ltd. As I understand it, the term "reverse mortgage" is used to describe a transaction whereby a moneylender lends money to a homeowner. Instead of registering a mortgage over the borrower's property as security for the loan, the lender, or an associated company or person, takes transfer of the borrower's property on the understanding that, once the loan is repaid, the property will be transferred back to the borrower. 
[6] In many instances of "reverse mortgage", the homeowner finds himself in financial difficulties and cannot obtain a loan in the ordinary course. The homeowner then approaches the "reverse mortgagor" for a loan. The lending transaction is then structured as follows. The lender, or an associated person of entity, enters into a contract of purchase and sale with the borrower. The purchase price recorded in the contract often is equal to the amount outstanding on the existing bond over the property plus the amount that the owner borrows. 

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Because the owner did not really wish to alienate his or her property, he or she leases the property back from the purchaser until the loan is repaid and the borrower repurchases the property. 
[7] In some of these instances the "purchase price" is far below the actual market value of the property. The burden on the already over-burdened "seller" to pay both the rental and to repay the loan might sometimes prove impossible to bear, and then the lease is cancelled and the homeowner evicted. Also, some of these transactions are embodied in different written instruments. If regard is had to the entire transaction, one might find that the homeowner is required to pay a usurious interest. One might also find that the transaction is in breach of statutory provisions such as the National Credit Act, 34 of 2005. 
[8] Section 26 of the Constitution of the Republic of South Africa, 1996 forms part of the Bill of Rights and protects every person's right to adequate housing. 
In that context section 26(3) provides: 
"No one may be evicted from their home, or have their home demolished, without an order of court made after considering all the relevant circumstances. No legislation may permit arbitrary evictions." (The underlining is mine.) 
This enshrined right is echoed in section 4(6) and (7) of PIE. 

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[8] As I was not satisfied that all the relevant circumstances of this matter were before me when the applicant applied for the eviction of the respondents, I was not prepared to grant the eviction order. At the time I intended to postpone the application so as to afford the applicant an opportunity to place further facts before the court. In addition, I intended specifically to grant to the respondents an opportunity to place the full facts relating to the sale and lease of their home before the court. To this latter end, I intended to order the applicant to serve on the respondents a further notice in terms of section 4(2) of PIE wherein the respondents are, in addition to the requirements of section 4(5), invited to place an affidavit before the court setting out the full facts and to do so without necessarily entering an appearance to oppose the application. My reason for this is that the respondents might be destitute and not in a position formally to oppose the application. 
[9] In the course of preparing the judgment, I found that the document alleged in the founding affidavit to be a director's resolution authorising this application on the applicants behalf (Annexure HH1) is not such a resolution. Counsel for the applicant contended that the defect could be cured if the matter is postponed and the applicant afforded an opportunity to supplement its papers. I assume in the applicant's favour that the defect can be cured. 
[10] There is another defect that cannot be cured however. Section 4(2) of PIE provides: 

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"At least 14 days before the hearing of the proceedings contemplated in subsection (1), the court must serve written and effective notice of the proceedings on the unlawful occupier and the municipality having jurisdiction" . 
In Cape Killarney Property Investments (Pty) Ltd v Mahamba 2001 (4) SA 1222 (SCA) the Supreme Court of Appeal considered the requirements of section 4(2) and made it clear that service of the section 4(2) notice must be authorised and directed by the court before it is served. In paragraph 12 of the judgment, Brand AJA pointed out that an application for the eviction of an unlawful occupier must be served in the ordinary manner in terms of the rules. Accordingly, it was held, the application papers must be served in addition to the section 4(2) notice. Put differently, the section 4(2) notice is a statutory requirement that must be complied with in addition to serving the application papers in terms of the court rules. I may add that the section requires "effective" notice. That, in my view means that the attention of the occupier must, as far as is possible, be drawn pertinently to the notice that the court authorised and directed. 
[11] In this case the court on 13 April 2007 ordered that a notice in the form of Annexure A to the order, be served on the respondents. The order itself was not served on the respondents, however, and nor was Annexure A thereto served as such. Only the notice of motion, the founding affidavit and the annexures thereto were served on the respondents. Incidentally, Annexure A to the founding 

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affidavit is the same document as what was intended to be Annexure A to the order of 13 April. 

[12] 	In my view the applicant failed to comply, substantially or otherwise, with the order of 13 April or with the provisions of section 4(2) of PI E. First, the section 4(2) notice was not served in addition to the application papers. Although the notice that was to be served in accordance with the order of 13 April was one 
of a number of annexures to the founding affidavit, its incidental service did not constitute a separate and effective notice as is required by section 4(2) of PIE. 
The respondents' attention was not drawn to the notice. Assuming that the respondents read the notice as part of the papers, it is doubtful that they would have realised its importance. 
	[13] 	I conclude therefore that when the application was moved on 15 May 2007, the applicant had not complied with the provisions of section 4(2) of PIE. 

In the result the application was dismissed. 
B. R. DU PLESSIS 
Judge of the High Court

Applicant's Attorney: 
Marais Stuart Inc.