Cloete and Another v Standard Bank of SA Ltd (1049/2017) [2020] ZANCHC 38 (22 May 2020)

SAFLII Note: Certain personal/private details of parties or witnesses have been redacted from this document in compliance with the law and SAFLII Policy

IN

THE HIGH COURT OF SOUTH AFRICA

(NORTHERN CAPE DIVISION, KIMBERLY)

Case No: 1049/2017

Matter Heard: 28/02/2020

Judgment delivered: 22/05/2020

In the matter between:

ANDREW

PIETER CLOETE First

Applicant

JANDRE CLOETE Second

Applicant

and

STANDARD

BANK OF SA

LTD

Respondent

JUDGMENT

MAKOTI AJ

[1] This is an opposed application in terms of Rule 42(1) of the Rules applicable in this Court has long been pending. In it the applicants seek the rescission of the default judgement that was granted against them on 28 September 2015. They further prayed for the court to condone their delayed filing of the rescission application. In addition, the applicants prayed that any warrant of execution issued in pursuance to the default judgement, be set aside.

[2] The default judgement sought to be rescinded was granted approximately two and half years before this application was instituted. This necessitated, in so far as the application is predicated on the provisions of Rule 31(2)(b), an application to condone the late delivery of this rescission application. In their Notice of Motion, the applicants do ask the court to condone the late delivery of this application. I will deal with the propriety of the application for condonation at a later stage.

[3] The applicants are the consumer under a consumer credit agreement, being a home loan agreement secured by a mortgage bond in favour of Respondent, Standard Bank. It is common cause that the applicants fell into arrears[1] in the payment of instalments of the home loan. The respondent then instituted action against the applicants, and obtained a default judgement against them for the repayment of the entire loan amount[2] and declaring the immovable properties of the applicants specifically executable,[3] and had a writ issued in such respect.[4]

[4] Despite the legal steps that were taken by the respondent, the parties maintained communication which was intended to afford the applicants an opportunity to rectify the default. When all efforts failed to yield desired results, the respondent began processes to execute on the orders that it had previously obtained. In reaction to the execution, the applicants lodged this application on 08 March 2018.

[5] Having read the papers, it is palpable that the applicants located the application within the ambit of both Rules 31(2)(b)[5] and 42(1)(a),[6] which empowers the court to rescind its order or judgement. The differences of the requirements for reliance on these two rules have now become well-known. Where necessary, however, I may canvass some of the known requirements.

[6] Apart from the fact that the Notice of Motion mentions both rules, the applicants seem to only rely on the provisions of Rule 42(1) in their founding affidavit. Thus, I first consider the applicability of the provisions of Rule 42(1) to this application. Then, in so far as it may be required, I will deal with the requirements under Rule 31(2)(b).

[7] Rule 42(1) is available to an applicant if the order or judgement sought to be rescinded was erroneously sought or erroneously granted in the absence of such party. The applicant seeking to rely on this sub-rule should first show to the court that he or she is affected by the decision that was granted in his or her absence. Secondly, to rely on this sub-rule, an applicant seeking rescission has to satisfy the court that the order that was granted was erroneously sought or erroneously granted.

[8] The authorities make it clear that an order or judgement is said to have been erroneously sought or erroneously granted if, at the time when it was granted, there existed facts that would have precluded the court from granting the judgement or order, had it been aware of the existence of such facts.[7] In the case of Promedia Drukkers & Uitgewers (Edms) Bpk v Kaimowitz & Others the court held that:[8]

“Relief will be granted under this Rule (Rule 42(1)) if there is an irregularity in the proceedings; if the Court lacked legal competence to have made the order; and if the Court, at the time the order was made, was unaware of facts which, if known to it, would have precluded the granting of the order. …” (Emphasis added)

[9] There are no facts in the applicants’ founding papers, nor have I been informed of the existence of any facts, which would have prevented the court from granting default judgement against the applicants. This is so because the orders that were granted against them were based on the proven facts that they had fallen into arrears on the repayment of the mortgage loan that they were advanced by the respondent. In fact, that they were in arrears was confirmed by the first applicant when making submissions in court, confirming that the last time that he repaid the loan was in December 2015.

[10] The applicants did not address their indebtedness to the respondent and why it was not entitled to seek judgement against them. The error that they complained about was in relation to the service of NCA section 129 notice at their chosen address of service, being No. [...], Khathu. Their gripe was that they were not aware that the notice was served through registered mail. Also, they complained that they did not receive service of the summons.

[11] In the judgement of the majority in Sebola v Standard Bank,[9] which was delivered on 7 June 2012, the Constitutional Court decided that in order to satisfy a court that there has been compliance with s 129(1), the credit provider must go further and establish that the registered item reached the addressee’s post office. At par 87 of the judgement it is stated:

(W)here the credit provider posts the notice, proof of registered despatch to the address of the consumer, together with proof that the notice reached the appropriate post office for delivery of the consumer, will in the absence of contrary indication constitute sufficient proof of delivery. If in contested proceedings the consumer avers that the notice did not reach him or her, the court must establish the truth of the clam. If it finds that the credit provider has not complied with section 129 (1), it must in terms of section 130 (4) (b) adjourn the matter and set out the steps the credit provider must take before the matter may be resumed.”

[12] Pursuant to the Sebola judgement, supra, the Western Cape High Court in Nedbank LTD v Binneman[10] concluded that where there was proof that the notice reached the post office, the risk of non-compliance rested with the defaulting

consumer. In other words, it is not enough for one to simply argue that he or she was not aware of the s 129 notice which had been shown to have reached the post office. The address, No. [...], was the applicants’ chosen address of service.[11]

[13] Somehow the applicants have adopted an approach of blaming everyone but themselves. They went as far as calling the Registrar

dishonourable but without producing any facts or evidence to support their regretful attack of this official of the court. Ultimately,

what they did not show is how the default judgement or the orders that were granted against them were ‘erroneously sought or erroneously granted’. On that basis, reliance on Rule 42(1) in order to sustain the application is not helpful to the applicants.

[14] The next question for consideration is whether the application satisfies the requirements of Rule 31(2)(b). The legal principles in relation to an application for rescission of a default judgment in terms of this Rule are well-known. An applicant in a rescission application must demonstrate a reasonable explanation for the default[12] and in relation to the merits of the dispute, a bona fide defence which, prima facie, carries some prospect of success.[13] An explanation that was proffered by the applicants was that they were not aware of the service of the summons, which they concede were served at their chosen address of domicile.

[15] In their own version, the applicants became aware of the default judgement against them on 27 September 2017. This happened when the Sheriff visited them at No [...], Kathu to execute the warrant against their movable properties. This application was then lodged on 08 March 2018, after the lapse of more than three months. The applicants had to explain their failure to defend the action against them and, furthermore, as part of the application for condonation of the late filing of the rescission application, their failure to institute that application within twenty (20) days of becoming aware of the default judgement.

[16] As I have indicated above, the only reason advanced by the applicants for their failure to defend the action was that they were not aware that summons were issued against them. This is easily explainable because the address at which the applicants were staying happened to be a different one to their chosen address of service. I do not believe that the applicants can blame anyone for this as they could have informed the respondent that their domicilium citandi et executandi had changed. They did not do so and to apportion blame on others is not only unfair but also disingenuous.

[17] Rule 31(2)(b) requires an applicant to show the existence of a bona fide defence.[14] Apart from stating that they were in discussion with representatives of the respondent, Raymond Dicks and Joop Dekker, the applicants have not stated their defence against the respondent’s claim. On the contrary, they conceded before me to be in arrears with their mortgage loan repayments. In the absence of a bona fide defence the application stands no chance of succeeding. It is not required of the applicants to set out the full details of their

defence, save that they should present a defence that prima facie carries some prospects of success.

[18] When affirming the established requirements that an application for rescission in terms of rule 31 (2) (b) must satisfy, the Supreme Court of Appeal held in the case of Colyn v Tiger Food Industries Ltd t/a Meadow Feed Mills (Cape) that:

“The applicant must show cause why the remedy should be granted. That entails (a) giving a reasonable explanation of the default; (b) showing that the application is made bona fide; and (c) showing that there is a bona fide defence to the plaintiff’s claim which prima facie has some prospects of success. In addition, the application must be brought within 20 days after the defendant has obtained knowledge of the judgement”. (Emphasis added)

[19] That the application was issued outside of the time period of twenty days is common cause. This requires the applicants to further show good cause why the period within which they could bring the rescission application should be extended. The applicants have, simultaneously with the application for rescission of the default judgement, asked the court to condone their non-compliance with the rules This brings me to the final issue for consideration in the matter, being the application for condonation of the filing of the rescission

outside to the stipulated 20 day period.

[20] The standard for considering an application for condonation is the interests of justice.[15] However, the concept “interests of justice” is so elastic that it is not capable of precise definition.[16] This concept inextricably includes a consideration of (a) the nature of the relief sought; (b) the extent and cause of the delay; (c) the effect of the delay on the administration of justice and other litigants; (d) the reasonableness of the explanation for the delay; (e) the importance of the issue to be raised in the intended appeal; and (f) the prospects of success.

[21] The main ground that has been repetitively advanced by the applicants for seeking condonation is ignorance of the rule in that, as lay-people, they did not know that they had to lodge the application for rescission within a period of 20 days. They blame the respondent for not serving the default judgement prior to the date when the Sheriff visited them on 27 September 2017. There was no proper explanation of what had transpired in the period between 27 September 2017 and 08 March 2018 when the rescission application was lodged.

[22] On the other hand, the respondent explained that the reason why the various court processes could not be served was due to the fact that the applicants were not present at their domicilium address. As I have indicated earlier, the applicants cannot blame anyone for their failure to notify the respondent of their new physical address. The respondent had to employ the services of tracers in order to obtain the applicants’ address of [...], Khathu. Only then was the Sheriff enabled to serve the warrant to execute the applicants’ movable property.

[23] What stands in the way of success for the applicants is the lack of prospects of success in the application. In their admission, they have not made any payments towards the mortgage loan since December 2015, but without offering any justification for the failure.

[24] I accordingly make the following order:

“The application is dismissed with costs.”

__________

MAKOTI,

MZ

ACTING

JUDGE

NORTHERN

CAPE HIGH COURT

KIMBERLEY

Representation:

For Applicants: In person (both present)

For Respondent: Adv Fourie

[1] By 01 November 2017, in the amount of R616,850.98.

[2] Being R1,659,912.76.

[3] Par 3 of the Order dated 28 September 2015.

[4] On 20 October 2015.

[5] Rule 31(2)(b). Defendant may apply within 20 days of becoming aware of judgement against him or her. For rescission to be granted, good cause must be shown.

[6] Rule 42(1)(b). Good cause is not a requirement.

[7] Bakoven Ltd v G J. Howes (Pty) Ltd, 1992 (2) SA 466: at 471 E-I.

[8] 1996 (4) SA 411 at 417 G to 418 B.

[9] 2012 (5) SA 145 (CC).

[10] 2012 (5) SA 569 (WCC).

[11] See, par 14.2 of mortgage loan agreement.

[12] Chetty v Law Society, Transvaal 1985 (2) SA 756 (A).

[13] P E Bosman Transport Works Committee and Others v Piet Bosman Transport (Pty) Ltd 1980 (4) SA 794 (A): Smith N.O. v Brummer and Another: Smith N.O. v Brummer 1945 (3) SA 352 (O) at 357-8.

[14] Silber v Ozen Wholesalers (Pty) Ltd 1954 (2) SA 354 (A) at 352 -3.

[15] Grootboom v National Prosecuting Authority and Another 2014 (2) SA 68 (CC); 2014 (1) BCLR 65 (CC); [2014] 1 BLLR 1 (CC); (2014) 35 ILJ 121 (CC) (21 October 2013).

[16] Brummer v Gorfil Brothers Investments (Pty) Ltd and Others [2000] ZACC 3[2000] ZACC 3; ; 2000 (2) SA 837 (CC)[2000] ZACC 3; ; 2000 (5) BCLR 465 (CC) at para 3; Van Wyk v Unitas Hospital and Another (Open Democratic Advice Centre as Amicus Curiae) 2008 (2) SA 472 (CC)[2007] ZACC 24; ; 2008 (4) BCLR 442 (CC) at para 20.