Balkind v ABSA Bank, In re ABSA Bank Ltd v Ilifu Trading 172 CC and Others (29/2012) [2012] ZAECGHC 102; 2013 (2) SA 486 (ECG); [2013] 3 All SA 66 (ECG) (12 December 2012)

IN THE HIGH COURT OF SOUTH AFRICA

EASTERN CAPE, GRAHAMSTOWN

CASE NO. 29/2012

In the matter between:

BARRY BALKIND .................................................................................Applicant

and

ABSA BANK ...................................................................................1st Respondent

IN RE:

ABSA BANK LIMITED ...........................................................................Plaintiff

ILIFU TRADING 172 CC ................................................................1st Defendant

BARRY BALKIND .........................................................................2nd Defendant

GEOFFREY GEORGE LUNDERSTED ......................................3rd Defendant

JUDGMENT

ALKEMA J

[1] This is an application by the Applicant (the Applicant) to rescind a judgment granted against him in this Court on 22 February 2012 in favour of Absa Bank, the Respondent and Plaintiff in the action, and to which I shall hereinafter refer to as the Bank.

[2] The main issue in this application concerns the interpretation of the judgment of the Constitutional Court in Sebola and Another v Standard Bank of South Africa Ltd and Another 2012 (5) SA 142 (CC) (Sebola). The Sebola judgment, in turn, concerned the issue whether the provisions of the National Credit Act 34 of 2005 (the Act), which entitle a debtor to written notice under section 129 (1) of the Act before a credit provider may institute action, require that the debtor actually receive that notice.

[3] Before embarking on a more detailed discussion of the law on the subject, it is necessary to set out the facts of this case.

[4] During the period 2004 and 2009 the Applicant (as the Second Defendant in the action) and the Third Defendant each held a 50% member’s interest in First Defendant Close Corporation, which conducted business in Port Elizabeth and East London as a supplier of engineering equipment. On 30 August 2004 the Applicant and Third Defendant concluded suretyship agreements with the Bank in terms of which they bound themselves as sureties and co-principal debtors jointly and severally with First Defendant in favour of the Bank in respect of all liabilities, past and future, which First Defendant may owe to the Bank. The Applicant chose his (then)

residential address, 92 Basroyd Drive, Bassonia, East London as his domicilium citandi et executandi for purposes of all notices and correspondence relating to the Bank.

[5] During 2009 the Applicant sold his 50% member’s interest in First Defendant to Third Defendant. In terms of the sale agreement the Third Defendant undertook to take all steps which may be necessary to release Applicant from his suretyship with the Bank. On 8 July 2009 the Applicant resigned as a member of First Defendant and relocated to Johannesburg where he is still residing. It appears to be common cause that Third Defendant did not secure, or was unable to secure, the release of Applicant as surety under the Deed of Suretyship, and he remained a surety at all relevant times. The Applicant states that when he sold his member’s interest to the Third Defendant, the First Defendant was not indebted in any amount to the Bank.

[6] As at 24 September 2011 the First Defendant was indebted to the Bank in the sum of R103,173. 76 which it was unable to pay. During January 2012 the Bank instituted action against the Applicant (as Second Defendant) and Third Respondents as sureties and

co-principal debtors with First Defendant under the Deeds of Suretyship for the recovery of the outstanding amount. Prior to doing

so, the Bank caused a s.129 (1) notice dated 3 November 2011 to be addressed to Applicant by registered post to his chosen domicilium, 92 Basroyd Drive, Bassonia. The summons was also served on that address on 18 January 2012.

[7] Because the Applicant never advised the Bank of his change of address (which he was obliged to do under the Deed of Suretyship), his chosen domicilium was the only address which the Bank had for service of the summons and the s.129 notice. When he decided to sell his share of the business and relocate to Johannesburg, the Applicant sold the 92 Basroyd Drive property which was transferred into the name of the new owner on 2 July 2008. Accordingly, the summons and s. 129 notice never came to his attention. During 2012 the Applicant was telephoned by a Bank official who enquired about his new address. The Applicant furnished the official with his address in Johannesburg. He only became aware of the summons and s. 129 notice when the writ of execution was served on him at his present address in Johannesburg. This application for rescission followed shortly thereafter.

[8] The above facts are common cause. It was not seriously contended in argument before me that the Applicant is not bound by the Deed of Suretyship. Also, his bona fides in not defending the action cannot be disputed, and notwithstanding his failure to observe his contractual obligation to advise the bank of his change of address, it cannot be disputed that neither the summons nor the s.129 notice was brought to his attention. He took timeous steps to remedy the situation once he became aware of the summons. It is also common cause that the notice was sent by registered post to the chosen domicilium and that the “track and trace” report show that it reached the correct post office. The question is whether these facts constitute compliance with the requirements

set out in Sebola.

[9] It is necessary to refer briefly to the chronology of the various judgments which shaped the development of our law on this subject. In doing so I do not propose to yet again report in detail what was said in each judgment. That much is clear from a reading of the judgments. Also, the provisions of s.s.129 and 130 are well-known and recorded in virtually all the judgments I intend to

refer to. It is unnecessary to repeat them, and I intend to refer only to the particular wording in the sections which I consider

relevant for purposes of this judgment without quoting the entire section. Finally, I intend to refer to the ratio in the respective judgments in summary only, and then only in respect of those aspects I consider relevant for present purposes.

[10] Prior to 2010 there were conflicting judgments from the High Courts of South Africa in regard to the manner of delivery of a section 129 notice. The issue was whether the section requires actual receipt of the notice, and if not, the degree of proof necessary to establish that the notice was brought to the attention of the consumer. The judgment from the Supreme Court of Appeal in Rossouw and Another v FirstRand Bank Ltd 2010 (6) SA 439 (SCA) (Rossouw) finally settled the controversy.

[11] Rossouw held that the legislature’s grant to the consumer of a right to choose the manner of delivery under s.65 read with s.96 of the Act, “… inexorably points to an intention to place the risk of non-receipt on the consumer’s shoulders ….” (at para 32). Therefore, if the consumer had chosen postage under s.65 as his/hers preferred manner of communication, then dispatch by registered post to the address chosen by the consumer is sufficient for purposes of s.129. In these circumstances actual receipt is the responsibility of the consumer and proof of receipt by the credit provider is unnecessary and irrelevant. Rossouw held, however, that dispatch of the notice by registered post was essential. The jurisdictional requirements of s. 129 were therefore satisfied only once the credit provider proved dispatch of the notice to the consumer at his chosen domicilium by registered post.

[12] The above remained the state of our law for 2 years until 2012 when the Constitutional Court delivered the Sebola judgment. Effectively, Sebola held that dispatch of the notice by registered post is not enough; more is required. It concluded that proof by means of the post office “track and trace” report that the registered post reached the correct post office, would constitute proper delivery of the notice to the consumer as contemplated by s.129.

[13]The problem giving rise to the different interpretations of the Sebola judgment seems to arise in those cases where the requirements of Sebola are met (namely, dispatch by registered post coupled with proof that the registered item was delivered to the correct post office), but, for whatever reason, the notification to the consumer by the post office to collect the registered item either did not come to the notice of the consumer, resulting in the notice to be returned to the Bank by the post office without actual receipt by the consumer. The question arose whether, on a reading of Sebola, the jurisdictional requirements of s. 129 are met on proof of registered post and delivery to the correct post office, or only on proof that the notice came to the attention of the consumer.

[14] The answer to the correct interpretation of Sebola lies, I believe, in the determination of the ratio for the requirements of the degree of proof. It is therefore necessary to return in more detail to the reasoning in Sebola.

[15] The essence of the argument advanced before me did not necessarily concentrate on what the judgment says, but rather on why it was wrong in saying what it did, and therefore concluding that it could not have intended what it said. For instance, Mr Louw on behalf of the Bank submitted with some force that no Court can tolerate an “opportunistic debtor” who intentionally evades service of the s.129 notice in order to frustrate enforcement of an otherwise valid claim against him. I will later in this judgment return to this issue, but for present purposes it suffice to say that I do not agree with this approach. In determining the intention in Sebola, I am not at all concerned with whether it was right or wrong, and my own views are irrelevant on this issue. This Court and all other High Courts in the country are bound by the Sebola judgment. The basic principles applicable to construing documents also apply to the construction of a court’s judgment or order: the court’s intention is to be ascertained primarily from the language of the judgment as construed accordingly to the usual well-known rules. See: Firestone South Africa (Pty) Ltd v Genticuro AG 1977 (4) SA 298 at 304 D-E.

[16] The Sebola judgment gave rise to conflicting decisions between the High Courts in the Western Cape and those in KwaZulu-Natal. In the Western Cape, Griesel J held in Nedbank Ltd v Binneman and 13 similar cases 2012 (5) SA 569 (WCC) that Sebola did not overrule Rossouw; and in the KwaZulu-Natal High Court, Olsen AJ held in Absa Bank Ltd v B.E. Mkhize and Another and 2 similar cases 2012 (4) All SA 161 (KZD) that in effect, Sebola did overrule Rossouw.

[17] In Binneman, Griesel J held that in accordance with Rossouw the risk of non-receipt of the s129 notice rests squarely with the consumer and once delivery by registered post to the chosen domicilium citandi et executandi is shown, coupled with proof that the notice reached the appropriate post office as required by Sebola, such evidence will ordinarily constitute sufficient proof of delivery. This will be the case even if it is shown, as was the case on the facts in Binneman, that as a matter of fact the notice was returned to the Bank due to the consumer not responding to the notification to collect a registered item, and therefore did not come to the notice of the consumer. He held that these principles were not overruled in

Sebola (Para 3-8).

[18] The judgment of Griesel J in Binneman effectively held that the jurisdictional requirements of s. 129 are satisfied on proof of the requirements of registered post coupled

with delivery to the correct post office. The jurisdictional requirements of s.129 are therefore met, on those judgments following

Binneman, even where the notice was returned to the Bank and the Court knows, as a fact, that its content was never brought to the attention of the consumer. Other judgments follow the interpretation favoured by Olsen AJ in Mkhize; namely that non-receipt of the notice cannot be ignored and is not irrelevant; that judgment should be refused and that the matter should be adjourned with directions under s.130 (4) (b) of the Act as to the steps the Bank must take before the litigation may be resumed.

[19] In Mkhize, Olsen AJ held that conclusive evidence that the s129 notice did not reach either the consumer or the consumer’s address, cannot be ignored and is not irrelevant as held in Rossouw and Binneman (Paras 51, 53, 55, 58). The learned Acting Judge found that, for inter alia the reasons mentioned by him in para 52, the Sebola judgment held that actual notice to the consumer is indeed the standard set by s129 (1), and proof positive of the fact that the

notice did not reach the consumer trumps any conclusion which may be drawn from facts which suggest that the notice ought to have reached the consumer (para 53). The Court accordingly concluded that there has not been compliance with s.129 as required by Sebola, as a result of which the cases had to be adjourned as contemplated by s.130 (4) (b).

[20] The judgments in this Division are split. Some judgments follow Binneman in regard to the interpretation of Sebola, whilst others favour the interpretation in Mkhize. The issue will undoubtedly be settled shortly by either the Supreme Court of Appeal or the Constitutional Court (or both), but in the meantime there is an urgent need for uniformity in this Division.

[21] It becomes necessary to refer to the facts in Sebola. The Sebola judgment was concerned with an opposed application for the rescission of a default judgment granted in favour of the Bank. The Applicants, as the mortgagers under a home loan agreement, chose the mortgaged property as their domicilium, and registered post addressed to their domicilium as their

preferred method of communication. The s. 129 notice was accordingly dispatched by the bank by registered post addressed to the mortgaged property.

[22] In their rescission application before the Court a quo, the Applicants attached to their papers the “track and trace” report of the post office which conclusively showed that the notice was erroneously delivered to the wrong post office. The notification to collect the registered item was therefore never delivered to the Applicants and the notice never came to their attention. The notice was returned to the Bank.

[23] Relying on Rossouw the Court a quo and the Full Court on appeal held in the case of Sebola that the cause of action was complete once it was established by the Bank that the notice was dispatched by registered post to the chosen domicilium. Rescission was accordingly refused.

[24] The issue before the Constitutional Court, as is in this case, was effectively whether the facts of that case constituted compliance with s. 129 by the Bank before instituting action. For the sake of completion, I should add that in terms of s.129 (1) (b) a credit provider may not commence any legal proceedings to enforce the agreement before first providing the s. 129 (1) notice to the consumer. The issue was accordingly whether those facts constitute “… notice to the consumer …” as contemplated by section 129.

[25] The majority judgment in Sebola found that those facts did not constitute notice and therefore compliance with s. 129, and that the Applicants showed conclusively with reference to the post office “track and trace” report that the notice was sent to the wrong post office and was therefore never brought to their attention through no fault on their part. The Court found that in addition to sending the notice by registered post to the chosen domicilium as required by Rossouw, the credit provider must also show that the registered item was sent to the correct post office. This it could establish by attaching the “track and trace” report to its summons.

[26] The answer to the question whether the Sebola judgment requires that the content of the s. 129 must be brought to the attention of the consumer, must therefore be sought in determining the ratio for holding that, in addition to the requirement of the registered post, there should also be proof that the notice was sent to the correct post office. Such ratio will also determine the further question; namely whether the Sebola judgment means that conclusive proof that the notice was not received by the consumer notwithstanding compliance with the requirements of registered post and receipt by the correct post office does not constitute proper notice as required by s. 129. With this in mind, I turn to the reasoning of the Court in Sebola.

[27] The Court adopted a purposive and contextual approach to a constitutional interpretation of s.129. It acknowledged that whilst the main object of the Act is to protect consumers, it must do so by balancing the respective rights and responsibilities of (both) credit providers and consumers (Para 40). One of the means by which the Act provides for protecting consumers, is through “consensual resolution of disputes arising from credit agreements.” Section 129 (1) is pivotal to this. It precludes legal enforcement of a debt before the credit provider has suggested to the consumer that he or she explore non-litigious ways to purge the default. S. 129 is therefore a vital safety valve designed to prevent unnecessary and costly litigation and premature (and often unnecessary) foreclosure on consumers’ assets (Paras 46 and 47).

[28] The judgment held that section 129 cannot be understood in isolation. The requirements of a “… notice of the consumer …” in 129 (1) (a) and a “… notice to the consumer …” in 129 (1) (b) must be understood and read together with s.s. 130, 65 (1) and (2), 96 and 168. Because s. 129 is pivotal to the statute’s innovative entrenchment of court avoidant and settlement-friendly processes, the requirements in the s.s. 130 (1) (to “deliver a notice to the consumer …”); 129 (1) (a) (to draw the default “… to the notice of the consumer …”); and 129 (1) (b) (the prohibition to commence legal proceedings to enforce the agreement before “… first providing notice to the consumer ) must all therefore be read in the light of the high importance of the s, 129 notice (Paras 51-72).

[29] Para 74 of the judgment is important. The learned Judge acknowledged that the statute does not demand that the credit provider prove that the notice has actually come to the attention of the consumer, since that could ordinarily be impossible. Nor does it

demand proof of delivery to an actual address. But given the high significance of the section 129 notice, “… it seems to me that the credit provider must make averments that will satisfy the court from which enforcement is sought that the notice, on balance of probabilities, reached the consumer.” (My emphasis).

[30] The above quoted words are a repetition of the opening words of the paragraph:

“These considerations (the meaning of notice of (to) a consumer … in the light of the importance of s.129) drive me to conclude that the meaning of “deliver” in section 130 cannot be extracted by parsing the words of the statute. It must be found in a broader approach – by determining what a credit provider should be required to establish, on seeking enforcement of a credit agreement, by way of proof that the section 129 notice in fact reached the consumer.” (My emphasis).

[31] The requirement that proof on a balance of probability to show that the notice in fact reached the consumer – notwithstanding that proof of actual receipt is not required – is repeated in paragraphs 83, 85 and 87. In para 83 the learned Judge says:

“More importantly, we must stay true to the statutory scheme, Section 129 requires that notice be provided to the consumer.”

[32] In para 85, he remarks:

“To require mere dispatch of the section 129 notice, as the Bank and BASA sought, under-appreciates its importance in the statutory scheme. It gives too little force to the plain wording of that provision, which requires that the notice come to the attention of the consumer.” (My emphasis).

[33] In paragraph 87 the learned Judge summarizes his findings as follows:

“The requirement that a credit provider provide notice in terms of section 129 (1) (a) to the consumer must be understood in conjunction with section 130, which requires delivery of the notice. The statute, though giving no clear meaning to ‘deliver’, requires that the credit provider seeking to enforce a credit

agreement aver and prove that the notice was delivered to the consumer.” (My emphasis.”

[34] Effectively, on my understanding of Sebola, it ruled that the s129 notice must either be brought to the attention of the consumer or reached the consumer (paras 74, 75, 76, 77, 83, 85, 86, 87). Since the Act does not require proof of actual receipt or proof of actual delivery to the address, averments must be made in the combined summons “… that will satisfy the Court from which enforcement is sought that notice, on balance of probabilities, reached the consumer” (Para 74). Hence, mere dispatch is not enough. Not only is registered mail essential, but averments must be made “… that will satisfy a court that the notice probably reached the consumer, as required by s.129 (1).” (Para 75). (See also: paras 77, 78, 86, 87).

[35] It must be borne in mind that the Constitutional Court in Sebola was engaged in the process of constitutional interpretation. It was not so much concerned with the jurisdictional requirements of s.129 to ensure compliance (as was the Supreme Court of Appeal in Rossouw), but rather with what was meant on a purposive and contractual reading of s.129 by “… notice to (of) a consumer …” For the reasons mentioned, it concluded that it meant that the notice must come to the attention of the consumer or that it reached the consumer. The problem it faced was how this requirement was to be proved in the absence of any specific section providing for such proof. Put differently, it “read in” section 129 a requirement that the notice must reach the consumer without interpreting the words or phrases in any particular section which specifically require actual proof that the notice reached the consumer or came to his or her attention. (In the same manner words may be “read out” in constitutional interpretation).

[36] The essence is therefore that the court must be satisfied on averments made by the credit provider that the notice in fact reached the consumer (Para 74). The proof is secondary. Proof is established, on balance of probability, on averments in the papers,

and those averments will depend on the facts of each case. (Except, of course, where delivery by mail is the chosen manner of communication, in which case proof of dispatch by registered mail and receipt by the correct post office are essential averments – I shall shortly return to this issue).

[37] The finding that s.129 requires that the notice reached the consumer, is expressed in various terms in the judgment. In paras 72 and 83 the judgment states that the section requires that the notice must be “provided” to the consumer; in paras 75 and 85 it states the notice must “come to the attention” of the consumer; in paras 86 and 87 it suggests that the notice must be “delivered” to the consumer; and in paras 74 and 77 it requires that the notice “reached” the consumer. The various expressions, coupled with the absence of any requirement in the Act of proof of actual receipt of the notice by the consumer, is in my respectful view indicative of a broad requirement that the consumer must be made aware of the notice, or that it came to his or her attention. (See para 77).

[38] Returning to the issue of the required proof to establish that the notice reached the consumer or came to his or her attention, I believe Sebola ruled that in every case where the consumer had chosen mail as his/her method of communication, and had appointed an address for service, then registered mail delivered to the correct post office is in the absence of any stronger proof essential. However, except where the chosen method of communication is by mail, these requirements are not cast in stone. I do not believe the judgment intended to convey that in a case, for instance, of personal delivery of the notice on the customer by a bank official or by the Sheriff, section 129 nevertheless requires registered mail delivered to the correct post office. And nor are these requirements

essential in cases where, for instance, the customer chose delivery by way of fax or electronic mail, and the evidence establish that on balance of probability the notice reached the customer by fax or electronic mail. The emphasis is on the requirement that the notice on balance of probability came to the consumer’s attention, and not on the method employed to bring it to his or her attention. (Except, as I said, where mail is the chosen method of communication).

[39] I find support for the above interpretation of Sebola by the use of the various expressions in the judgment such as: That such evidence will “ordinarily” (but not always) constitute adequate proof of delivery (Paras 75, 78, 86); that receipt of the notice by the consumer “… may reasonably be assumed in the absence of contrary indication …” to constitute compliance with the requirement (Paras 77 and 87); that such evidence (registered post addressed to the correct post

office) will “… in the normal course ...” establish that it came to the attention of the consumer …” (Para 77); that the truth of allegations by consumers in contested applications to the effect that the notice did not come to his or her attention (notwithstanding registered post and delivery to the correct post office), must be established on the facts of each case. (Paras 79 and 87).

[40] The caveat to the requirement of allegations to establish registered post and delivery to the correct post office, is therefore that if, notwithstanding these allegations, the notice did not come to the attention of the consumer, then the credit agreement may not be enforced due to non-compliance with s. 129. The ratio for establishing these requirements (registered post and delivery to the correct post office) is therefore in my view, to ensure the notice comes to the attention of the consumer. But conclusive evidence that the notice did not come to the attention of the consumer, may trump these requirements. If this is not so, it simply makes no sense to emphasise the high importance of the s.129

notice in the scheme of the Act, but nevertheless to simultaneously allow a credit agreement to be enforced in circumstances where the notice never came to the attention of the consumer through no fault of his own.

[41] In this respect Sebola in my view overrules Rossouw. Rossouw held that receipt of the notice is the responsibility of the consumer, and once the notice is dispatched by registered mail then the requirement of section 129 had been satisfied. On my interpretation of the Sebola judgment, it established the principle that the notice must reach the consumer or be brought to his or her attention. The jurisdictional requirements of s. 129 are therefore only satisfied once this principle is proved. And this principle is “ordinarily” established by registered mail coupled with proof that the notice was delivered to the correct post office. However, if there are indications to the contrary, the court must make a factual finding and if not satisfied that the notice came to the attention of the consumer, the claim cannot be enforced.

[42] This may be the case where, notwithstanding registered mail delivered to the correct post office, the notification to collect the mail never came to the attention of the consumer through no fault of his own. The consumer may have left the address, he may have been hospitalised, he may have been away on extended leave or away for business purposes. In these circumstances, on my reading of Sebola, the notice did not come to the consumer’s attention and the credit agreement cannot be enforced.

[43] The difference between Rossouw and Sebola is this: Rossouw established that the jurisdictional requirements of s. 129 are satisfied on proof that the notice was dispatched to the consumer by registered post. Sebola established that the jurisdictional requirements of s.129 are satisfied only on proof on a balance of probability that the notice either reached the consumer or came to the attention of the consumer. So, on the test on Rossouw, the credit provider was required to allege in the summons and prove dispatch of the notice by registered post. On the test in Sebola, the credit provider is required to allege and prove on balance of probability that the notice reached the consumer or at least came to the attention of the consumer.

[44] The supporters of the Binneman judgment, which held that Sebola did not overrule Rossouw, argue, not without force, that the test in Sebola is met once it is established by the “track and trace” report that the notice reached the correct post office. That is the time for determining whether or not the jurisdictional requirement (that the notice came to the consumer’s attention), is satisfied. What happens subsequently is irrelevant. Since both Rossouw and Sebola agree that there is no requirement in the Act that the credit provider must prove actual receipt of the notice by the consumer, they argue that in this sense Sebola left the finding in Rossouw, namely that receipt of the notice remains the responsibility of the consumer because he had the right to chose the method of communication, intact and unaffected. The argument concludes that if this was not so, unscrupulous debtors will leave the Banks in an invidious position by simply evading service and denying receipt of the notice. This offends section 3 of the Act which requires a “fair” and “effective” credit market which promotes “equity … by balancing the respective rights and responsibilities of credit providers and consumers.”

[45] The test in Rossouw is undoubtedly easier to apply and less costly to credit providers. However, the stare decisis rule binds High Courts to the Sebola judgment and it must be followed. On my reading of the judgment in Sebola, the time for determining compliance with the jurisdictional requirement that it came to the attention of the consumer, is at the

time enforcement is sought in a court, and not at the time the notice reached the correct post office. It is when “…the guillotine falls” (para 60 of Sebola) and judgment is sought when the jurisdictional requirements of s. 129 are determined – not at an arbitrary time when the notice is dispatched. (See also para.74). It is at that stage when proof of delivery at the correct post office by registered post will “ordinarily” and “in the absence of indications to the contrary” constitute compliance or otherwise. If there are indications that the notice did not come to the attention of the consumer, then the court must make a factual finding on the totality of all the evidence before it and determine, as a fact, whether or not on a balance of probability the notice came to the consumer’s attention. If not, the credit agreement may not be enforced.

[46] I am therefore in respectful disagreement with Griesel J in Binneman where he held in paras 6-8 that Sebola did not overrule Rossouw in this respect. It follows that I believe the decision in Mkhize was correctly decided by Olsen AJ.

[47] It also follows that on my interpretation of Sebola, and particularly in view of the absence of any section in the Act which requires proof of receipt by the consumer, or proof of delivery at the correct address, or more importantly proof that the notice actually came to the attention of the consumer, the degree

of proof required by the judgment leaves room for a finding of fictional fulfilment of the principle that the s.129 notice had come to the attention of the consumer. For instance, a recalcitrant debtor who deliberately avoids the notification to collect a registered item, or having received the notification, deliberately avoids to collect it, cannot hide behind non-receipt of the notice or be heard to say it did not come to his/her attention.

[48] If the facts show the consumer was residing at the chosen domicilium and he was in residence at the time the notification to collect the registered item was posted to that address from the correct post office, or that he was telephonically informed by a Bank official to collect the item and was supplied with a correct tracking number, then in the absence of a satisfactory explanation why he did not collect same, the Sebola judgment in my view permits a finding of fictional fulfilment of the principle notwithstanding that the notice may have been returned to the Bank without being collected by the consumer.

[49] I come to this conclusion because Sebola recognises that there is no jurisdictional requirement in the Act for proof of actual receipt of the notice on the consumer, or actual

delivery of the notice at the correct address. Given the “… especial statutory significance of the notice requirement …” (para 66) the judgment “read in” the requirement under s. 129 that the notice must come to the attention of the consumer or must have reached him or her. And that requirement can be established in a vast number of different ways, depending on the facts of each case, including in my respectful view by invoking the principle of fictional fulfilment.

[50] If my interpretation of Sebola is correct, then actual receipt of the notice, or proof that the notice actually came to his or her attention, is not required. What is required, is that reasonable steps were taken by the credit provider to ensure that the notice probably reached the consumer who would have reasonably collected the notice from the post office. I find support for this view in para 77 of Sebola where the Court held – albeit in somewhat different context: “… it may reasonably be assumed … that notification of its arrival reached the consumer and that a reasonable consumer would have ensured retrieval of the item from the post office.”

[51] It does not lie within the ambit of this judgment to discuss what allegations should be made by the Bank in its combined summons – other than those required by Sebola – in order to overcome the difficulty of dealing with the recalcitrant debtor who evades the notice to frustrate enforcement of a legitimate debt. It suffice to say that experience shows that Banks have contact numbers of their clients and are normally in telephonic

contact with them when the “guillotine is about to fall.” There is no reason why averments cannot be made in the summons to the effect that enquiries have established that the consumer was in residence at the required address at the time of notification to collect the registered item, or was telephonically requested to collect the registered item during a given period and was provided with the requisite tracking number, and notwithstanding the aforesaid he/she failed to collect it resulting in the item being returned to the sender.

[52] One of the practical problems faced by courts in this Division on the law as it presently stands, is that in most cases the “track and trace” report which is annexed to the summons was printed out after the notice reached the correct post office, but before the consumer responded to the notification to collect the notice. In these cases there is compliance with the requirements set out in Sebola and judgment is granted (para 77 of Sebola) without the court knowing whether the notice reached the consumer or was returned to the sender.

[53] However, the facts placed before Olsen AJ in Mkhize show that more than 50% of all registered items are not collected by consumers from the post office. It follows that if the time afforded to the addressee to collect the registered item lapses, then the notice is returned to the Bank. On my interpretation of

Sebola, if the court knows from the “track and trace” report that the notice was returned to the Bank through no willful fault on the part of the consumer, then it cannot find that the notice came to the attention of the consumer and the claim cannot be enforced.

[54] The (illogical) consequence of the above is that the enforcement of the credit agreement will depend on the happenstance of the time when the “track and trace” report was printed. If it was printed before the notice was returned to the Bank but after dispatch by registered post and delivery to the correct post office, then judgment may be granted; if it was printed two weeks later after showing non-receipt by the consumer and that it was returned to the Bank, judgment may not be granted because then the evidence shows the notice as a fact did not come to the attention of the consumer (para77). Bearing in mind that more than 50% of notices are returned to the Bank, it is safe to assume that in more than 50% of the case where the court granted judgment, judgment would otherwise not have been granted if the “track and trace” report was printed two weeks later showing the notice was returned to the Bank.

[55] To overcome this illogical consequence in this Division, I would suggest that credit providers consider making the averments in the summons as suggested above from which it can reasonably be inferred that the consumer was in residence at the time when the notification was sent to him and he was made aware of the necessity to collect the notice. This may not only overcome the difficulty of notices being returned to the Bank, but may also be a means to overcome the difficulty posed by recalcitrant debtors. There are further reasons I consider it advisable to make the averments in the summons suggested above.

[56] Sebola acknowledge that in contested proceedings such as opposed summary judgment or rescission applications, proof that the notice came to the attention of the consumer may not always be established notwithstanding registered mail delivered to the correct post office (paras 79 and 87). Olsen AJ in Mkhize also advances a convincing argument that, on the facts of that case, ordinary mail is more likely to come to the attention of the consumer than mail by registered post. In this regard I point out that the notification sent by the post office to the consumer to collect a registered item, is either placed in the P.O. Box number of the consumer (if he has one), or sent by ordinary mail to the chosen domicilium address (The facts in Mkhize before Olsen A J). If the strength of a chain is only as strong as its weakest link, coupled with knowledge that postal services are not available in all areas of South Africa – particularly in rural areas and townships, the effectiveness of registered post as means to ensure that the notice come to the attention of the consumer becomes questionable. The minority judgment in Sebola equally refers to convincing examples where the notice will more readily come to the attention of the consumer than by registered mail and delivery to the correct post office (Para 96 of Sebola).

[57] Because an adjournment under s.130 (4) only serves to delay enforcement and increase the costs thereof, it makes sense to employ any or all of these suggestions at an early stage before commencing legal proceedings This may very well constitute sufficient proof that the notice came to the attention of the consumer as required by Sebola, notwithstanding evidence from the “track and trace” report that the notice was returned to the sender, or even notwithstanding patently false denials by consumers that they did not receive the notice.

[58] With these considerations in mind, I return to the facts of this case.

[59] It is not disputed that the debtor left his domicilium address on 3 October 2009 when he moved to his current address in Melville, Johannesburg. He sold his domicilium property during 2008 which was transferred into the name of the new owner on 2 July 2008. The summons was served on his domicilium property on 18 January 2012 and he only became aware of the default judgment granted against him when the warrant of execution was served on him in Johannesburg on 29 May 2012.

[60] The s.129 notice was dispatched to his domicilium address by registered post during November 2011 and it is not disputed that the notice never reached him and nor did it come to his attention.

[61] I pause to remark that the debtor was telephoned by the Bank during January 2012 to ascertain his present address for purposes of serving the writ. If this telephonic enquiry was made during October 2011, before s.129 notice was sent, coupled with the necessary allegations in the summons as suggested earlier in this judgment, then the proceedings would in all probability have been finalised by now.

[62] Be that as it may, the fact remains that the s.129 notice was not brought to the consumer’s attention as required by Sebola, and the jurisdictional requirements of section 129 are thus not met. The legal proceedings instituted by the Bank are thus premature in terms of s.129 (1) (b).

[63] It was submitted by Mr Louw on behalf of the Bank that the notice was addressed to the chosen domicilium of the debtor who failed to inform the Bank of his change of address as he was required to do in terms of the credit agreement. Accordingly, he argued that the requirement to give notice under s.129 was met when the notice was dispatched by registered post to the chosen domicilium. This argument is based on the reasoning adopted in Binneman, and it fails to take into account that the jurisdictional requirements of s.129 are only determined on the evidence before court when judgment is sought. If there are indications that notwithstanding dispatch by registered post to the chosen domicilium and proof that the notice reached the correct post office, the notice did not come to the consumer’s attention as required by Sebola, then in the absence of any indication that the debtor deliberately avoided receipt of the notice, application for judgment must fail.

[64] Of course, for the reasons mentioned, if there is room for a finding that the consumer deliberately evaded service of the notice or failed without good reason to respond to the notification to collect a registered item, then in my view Sebola permits the principle of fictional fulfillment to be invoked. However, on the facts of this case, there is no room for a finding

that the debtor deliberately evaded service of the notification to collect either the registered item or the notice. It may be argued that a contractual failure to notify the Bank of his change of domicilium address, operate as a form of estoppel which prevents the consumer from raising a defence based on non-receipt, but I do not read the judgment in Sebola as going to such lengths. It is a bridge too far.

[65] Since all the requirements under Rule 31 (2) (b) for the rescission of a default judgment are met, it follows that the judgment must be rescinded. For the reasons mentioned by me in my (unreported) judgment of Allan Michael Pottas and 2 Others v First Rand Bank Ltd and 5 Others (Case No. 613/09 delivered in the High Court, Port Elizabeth, in November 2011), s.130 (4) does not apply. And neither was s.130 (4) applied in Sebola by the Constitutional Court, which was also a rescission application.

[66] I make the following order:

1. The default judgment granted against the applicant on 22 February 2012 under the above case number, be and is hereby rescinded.

The defendant is granted leave to defend the action and to file and serve a notice of intention to defend in terms of the provisions of the Rules of this court.

The Respondent (the plaintiff in the main action) is ordered to pay the costs of this application.

__________________

Heard on : 20 September 2012

Delivered on : 12 December 2012

Counsel for Applicant : Mr D H De La Harpe

Instructed by : Nettelton

Counsel for Respondent : Mr S S W Louw

Instructed by : Wheeldon Rushmere & Cole