Cultural wisdom posits that he who pleads guilty is treated leniently (gunsinze aliwa bitono). This wisdom appears to have been at play in Macdowel Food & Beverages -v-
The facts
Macdowel borrowed from
The fly in the ointment was that the Myriad shareholders and directors were all employees of
Macdowel was not notified of the sale of the property to Myriad until several months later when after repaying the debt, it sought to redeem the mortgaged property. Macdowel sued
What remained for the court was the question of damages. Macdowel sought not only compensation for the inconvenience it had suffered but it also wanted
The Mortgage Act 2009
Allegations of banks impropriety in sales of mortgaged property has long done rounds in the borrower community. This was one of the issues addressed in the Mortgage Act 2009.
The Act codified a duty of care on a bank selling mortgaged property to ensure the highest price is obtained, going so far as to specify that the property must be advertised with colour pictures. The Act expressly prohibits the sale of mortgaged property to employees of the mortgagee or to persons who can influence the decisions of the mortgagee unless the transaction is sanctioned by court. The Act makes such transactions voidable at the instance of the borrower and further criminalises a violation of the bank's duty of care.
The decision
Hon.
What Macdowel means to the market
The decision is commendable for the speed with which it was made, fully vindicating the specialist commercial court. The conduct of counsel in entering a part settlement also served to expedite the resolution of the case. The courts are littered with cases in which an errant defendant lamely still insists that the plaintiff must prove its case.
The market whispers on insider property sales should also be silenced by this decision. Borrowers should be comforted that their right to redeem mortgaged property is protected. The long arm of the law has reach. The Mortgage Act has bite.
The content of this article is intended to provide a general guide to the subject matter. Specialist advice should be sought about your specific circumstances.
Mr Phillip Karugaba
ENSafrica
Sandton
Tel: 11269 7600
Fax: 10596 6176
E-mail: atim@ensafrica.com
URL: www.ENSafrica.com
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