The right of a creditor to realise the property of its debtor without first obtaining the sanction of the court is called parate executie in our law.

This right has now been challenged by the Constitutional provisions of Section 34 of the Constitution, which provides that:

‘Everyone has the right to have any dispute that can be resolved by the application of law decided in a fair public hearing before a court or, where appropriate, another independent and impartial tribunal or forum.’

Initially the case law on the subject seemed to suggest that a creditor’s right of parate executie had been taken away but the matter has now been resolved in the Supreme Court of Appeal’s decision in the judgment of SA Bank of Athens Ltd v Van Zyl 2005 (5) 93 (SCA).

In this case the court ultimately held that:

1. parate execution is not per se unconstitutional or offensive to public policy;
2. but however the sanction of the court should be sort before enforcing these right (which begs the questions as whether it is in fact parate execution any more).

What this means is that in the event of you as a creditor having taken security such as cession of book-debts, cession of insurance policies, pledges, notarial bonds and any other form of security. Then you are required to first seek the courts sanction before you can enforce your rights in terms of the security. In addition the court will ensure that it does not deem the security to be contrary to public policy before allowing you to take action on the security.