Nedbank Ltd (formerly known as Nedcor Bank t/a Perm) v Sekoboane and Another (1831/2011) [2013] ZANWHC 24 (7 March 2013)

IN THE NORTH WEST HIGH COURT, MAFIKENG

CASE NO: 1831/2011

In the matter between:

NEDBANK LIMITED

(FORMERLY KNOWN AS NEDCOR

BANK T/A PERM) .....................................................................Plaintiff / Respondent

and

SAMUEL POGISO SEKOBOANE ......................................................First Defendant

VIRGINIA BALESENG SEKOBOANE ..........................................Second Defendant

MOSES SIPHO MZIAKO ,,,,,,,,,,,,,,,,,,,,,,,,,,,,,,,,,,,,,,,,,,,,,,,,,,,,,,,,,,,,,,,,,,Intervening Party

CIVIL MATTER

DATE OF HEARING : 28 FEBRUARY 2013

DATE OF JUDGMENT : 07 MARCH 2013

COUNSEL FOR THE APPLICANT : ADV HITGE

INTERVENING PARTY : IN PERSON

JUDGMENT

HENDRICKS J

[1] On or about 10 February 1995 the Plaintiff and the First and Second Defendants (“the Sekoboane’s”) entered into a written agreement of loan in terms of which Plaintiff lent and advanced an amount of R50 000,00 to the Sekoboane’s in order to purchase the property described as Erf 914, Boitekong Ext 1 held under certificate of registered grant of leasehold TL19885/95. The amount lent and advanced to the Sekoboane’s was secured by the registration of a mortgage bond in favour of Plaintiff, which bond was registered on 10 February 1995 under reference number BL21685/95.

[2] The Sekoboane’s defaulted in respect of their monthly loan repayments to the Plaintiff, An action was instituted against them in the Rustenburg Magistrate’s Court under case number 2025/05. Judgment was granted by default against them by the Clerk of the Rustenburg Magistrate’s Court on 11 April 2005.

[3] The immoveable property was judicially attached and sold at a sale in execution to the Intervening party (“Mziako”) by the Sheriff of the Rustenburg Magistrate’s Court on or about 3 February 2006 in an amount of R67 000,00. The property sold in execution was never registered in the name of Mziako because according to the Plaintiff, Mziako merely paid a 10% deposit of R6 700,00 to the Sheriff and failed thereafter to pay the balance of the purchase price due.

[4] On 7 March 2011 Mziako was given a final opportunity to deliver guarantees for the balance purchase price in the amount of R60 300,00 within 14 days from 7 March 2011 failing which, the Sheriff would regard the sale in execution as cancelled in accordance with Clause 10 of the terms of the sale. Mziako failed to provide the necessary guarantees, and the sale in execution was regarded as cancelled.

[5] The Plaintiff abandoned its earlier default judgment in the Magistrate’s Court. The required notice of default in terms of section 129 read with section 130 of the National Credit Act Number 34 of 2005 was served on 23 September 2011 by registered post on the Defendants. The Defendants failed to either react to the notice of default or to avail themselves of the alternatives set out in the notice of default timeously or at all.

[6] The summons was issued afresh against the Sekoboane’s under the abovementioned case number and was served on 21 November 2011 at their chosen domicilium citandi et executandi.

The order prayed for is:-

“that default judgment be granted against the First and Second Defendants jointly, in the amount of R130 310,58;

interest on the amount of R130 310,58 at the rate of 9% per annum from 1 September 2011 to date of payment;

that the Defendants’ immoveable property better known as:-

ERF 914 SITUATE IN THE TOWNSHIP OF BOITEKONG EXT 1, REGISTRATION DIVISION JQ NORTH WEST PROVINCE MEASURING 273 (TWO HUNDRED AND SEVENTY THREE) SQUARE METERS HELD UNDER CERTIFICATE OF REGISTERED GRANT OF LEASEHOLD TL19885/95

hypothecated in favour of the Plaintiff in terms of the mortgage bond with reference number BL21685/95 and held by the Defendants’ under Deed of Transfer number TL19885/95 is herewith declared specially executable in accordance with the provisions of Rule 46(1)(a)(ii) and the Registrar is authorised to issue a writ in accordance herewith.

that the Defendants shall be jointly liable for the Plaintiff’s costs incurred in the application for default judgment up to and including 9 February 2012 on the scale as between attorney and client.

that the intervening party (Mziako) shall be liable for the costs of the Plaintiff in respect of the application for default judgment after 9 February 2012 to be taxed on the scale as between attorney and client.”

[7] The Sekoboane’s did not enter an appearance to defend the fresh action for judgment in Plaintiff’s favour in the amount of R130 310.58 together with an order declaring the aforementioned immoveable property in respect of which a bond was registered in favour of the Plaintiff, specially executable. Hence, the application for default judgment was applied for on behalf of the Plaintiff, despite the fact that the application for default judgment and the notice of set down for this application was duly served on the Sekoboane’s on 16 January 2012 (the application for default judgment was set down to be heard on 9 February 2012).

[8] The intervening party (“Mziako”) did however on or about 9 February 2012 file an application to be granted leave to intervene in the default judgment application. After the exchange of various sets of affidavits between Plaintiff and Mziako, the application for intervention served before me on 15 November 2012. It was ordered (by agreement between the parties) that Mziako be granted leave to intervene in the application for default judgment between Plaintiff and the Sekoboane’s and that the merits of the application for default judgment and Plaintiff’s counter-application to the intervention application be argued on 28 February 2013. Cost was ordered to be costs in the cause.

[9] In essence, Mziako contends that default judgment and an order declaring the property in question specially executable ought not to be granted, as he is allegedly entitled to transfer of the property in his own name.

[10] The Plaintiff alleged that even if it were to be accepted for the sake of argument that Mziako were entitled to obtain transfer of the immoveable property into his name in future, then not even in such event would the alleged right to transfer constitute a bar in law to the Plaintiff’s claim to have the immoveable property declared executable, for the following reasons:

The alienation of a mortgaged property does not extinguish the rights of the mortgagee (Plaintiff) in the immoveable property.

The effect of a special mortgage of immoveable property duly executed and registered is that it affects the property itself so that it passes to any alienee subject to the mortgage – as long as a duly registered mortgage bond is in existence over

immoveable property, such property is subject to the bond, and no alienation of the property can deprive the mortgagee of his

mortgage.

See: Wille: The Law of Mortgage and Pledge in South Africa, 2nd Edition, page 107

[11] The right of a mortgagee to claim on its duly registered mortgage bond against the debtor and/or against any subsequent registered owner, remains effective irrespective of the subsequent alienation of the immoveable property.

See: Barclays Nasionale Bank (Bpk) v Registrateur van Aktes, Transvaal, en ‘n Ander 1975 (4) SA 936 (T) at 940 to 941

Standard Bank van SA Bpk v Breitenbach en Andere 1977 (1) SA 151 (T)

[12] It accordingly follows that Mziako’s version does not in law constitute a defence to the application for default judgment

against the Sekoboane’s and more specifically the application to declare the immoveable property specially executable.

[13] In terms of Clause 5 of the Conditions of Sale in Execution, Mziako was required to pay a deposit of 10% of the purchase price

immediately upon conclusion of the auction and to furnish acceptable bank guarantees for payment of the balance of the purchase price, to be furnished to the Sheriff within 14 days from date of sale. Should a purchaser fail to carry out any of his obligations under the conditions of sale within 14 days from sale, the judgment creditor may afford the purchaser seven days prior notice to comply with his obligations failing which, the sale is to be regarded as cancelled and the property may be put up for sale again. In the event of the purchaser failing to rectify his breach, any deposit paid shall be forfeited.

[14] It is proven that Mziako only paid the 10% deposit in the amount of R6 700.00 and failed to either deliver the required

guarantees for payment of the balance of the purchase price or to pay the balance of the purchase price personally. Despite the further indulgence granted to Mziako on 7 March 2011 to provide guarantees for payment of the balance of the purchase price, he failed to do so. Mziako’s attitude when he filed the application for intervention was that “Nedbank’s claim for payment of the balance purchase price had prescribed”.

[15] Totally contrary to his extinctive prescription allegation, Mziako states in his Replying Affidavit that he did in fact pay the balance of the purchase price to the transferring attorneys and also claim to have provided bank guarantees for payment to the said transferring attorneys. Mziako fails to attach any proof of payment and simply state that he cannot find a copy of proof of payment of the balance purchase price. It is trite law that a party who alleges payment of a debt, carries the onus to prove such payment.

See: Inter alia Pillay v Krishna and Another 1946 AD 946 at 955;

Van Niekerk and Another v Favel and Another [2006] ZAGPHC 24; 2006 (4) SA 548 (W) at par [11];

Standard Bank of South Africa Limited v Oneanate Investments (Pty) Limited [1997] ZASCA 94; 1998 (1) SA 811 (SCA).

[16] Not only does Mziako fail to discharge the onus resting on him to prove payment, but he clearly mislead this Court in making the allegation that he did in fact pay the balance of the purchase price:

The allegation of payment is directly contradictory to his earlier “defence” of extinctive prescription with which he persists in his Replying Affidavit – if payment of the purchase price had in fact taken place, the issue of extinctive

prescription would never have arisen.

Despite stating under oath that payment of the balance purchase price was effected during 2006, Mziako does likewise under oath as recently as 3 June 2009 allege that he still owes about R50 000,00 to Nedbank.

[17] It is strange, to say the least, for a person who has in fact paid the full purchase price to also allege that he supplied bank guarantees for payment of such purchase price as in such event those guarantees would be unnecessary and the guarantees would in any event be paid by the guarantor and not personally. In the premises it must therefore be accepted that the erstwhile agreement of sale is no longer binding on any of the parties thereto.

[18] Mziako does also, as already mentioned, allege that Nedbank’s claim for payment of the balance purchase price against him has become prescribed. It was contended on behalf of the Plaintiff that Mziako’s “prescription argument” is ill-conceived for the following reasons:

No contract of sale was ever entered into between Mziako and the Plaintiff.

The claim of Nedbank is against the Sekoboane’s for payment of the balance due in terms of the mortgage bond and no lis exists between Plaintiff and Mziako.

[19] Plaintiff’s claim against the Sekoboane’s is still secured by means of the mortgage bond which is attached to the immoveable property and which remains so attached until the outstanding balance of R130 310.58 had been paid. The prescription period in respect of a debt secured by mortgage bond is 30 years. The mortgage bond in question had only been registered in 1995.

[20] The erstwhile terms of the sale in execution constituted reciprocal obligations between the Sheriff and Mziako and therefore

the Sheriff’s claim against Mziako could not become prescribed before Mziako discharged his obligation to pay the balance of the purchase price became prescribed, or put differently, none of the two reciprocal obligations becomes prescribed before the other.

See: Section 13(2) of the Prescription Act No 68 of 1969

[21] In any event, did the Sheriff not seek specific performance against Mziako and the terms of sale were regarded as cancelled due to his non-payment of the balance purchase price. Nedbank did not enter into a contract of sale with Mziako in respect of the

immoveable property, as it was a sale in execution pursuant to a judgment debt and subsequent public auction held in terms of the

Rules of the Magistrate’s Court. Mziako’s reference to the Prescription Act is inappropriate and irrelevant.

[22] Mziako states in paragraph 4.6 of his Founding Affidavit in the intervention application that the Magistrate’s Court granted a judgment against Nedbank “to take the registration of transfer of Erf 914, Boitekong Ext 1 Township Rustenburg”. Although Mziako alleged attaching a copy of the said Magistrate’s Court order, this order was in fact not attached to his affidavit. The fact that the court order was not attached was expressly pointed out in paragraph 6.2 of the Plaintiff’s Answering Affidavit in the intervention application. Despite his failure having been pointed out to him, Mziako neither reacts thereto in his Replying Affidavit filed in his intervention application nor takes the opportunity to attach the alleged court order to his Replying Affidavit or to supply it in any other manner. He also did not present it at the hearing. Mziako’s allegations in this regard must therefore be disregarded.

[23] Even if the unproven allegation of a court order in the Magistrate’s Court were hypothetically to be accepted, then in that event:

Nedbank would in any event not have been able to pass transfer to Mziako, as it was at no stage the seller of the property or in any other manner a party to the terms of the sale in execution.

No possible transfer to Mziako would in any event affect the validity of Nedbank’s mortgage bond against the property,

which right attaches to the property itself, irrespective of registration of ownership.

[24] The alleged judgment, even if it were hypothetically accepted to have been given, is a nullity due to a lack of jurisdiction on the part of the Rustenburg Magistrate’s Court:

No jurisdiction existed in respect of the person of Nedbank as contemplated in section 28 of the Magistrate’s Courts Act 32 of 1944. Nedbank could not have consented to jurisdiction in respect of its person, as it was unaware of the alleged action instituted against it.

The Magistrate’s Court could not have had jurisdiction in terms of section 29(1)(a) either, because the value of the property

to be transferred exceeded the jurisdictional limit of the Magistrate’s Court. (The jurisdictional limit is R100 000.00

whilst the property’s value was R250 000.00 as in 2009.)

A Court order made in the absence of jurisdiction, is a nullity and of no force and effect, without the need to have such order set aside.

See: The Master of the High Court (North Gauteng High Court, Pretoria) v Motala NO and Others 2012 (3) SA 325 (SCA) at 331 to 333;

State v Absalom 1989 (3) SA 154 (A) at 164.

[25] Instead of simply delivering a guarantee for the balance purchase price of the property, Mziako proceeded by way of an ex-parte application to obtain an order attached to his affidavit as “MSM2” in the North Gauteng High Court. The order attached by Mziako does clearly not oblige either the Sheriff or the Registrar of Deeds to pass transfer of the property to him and merely authorises (as opposed to compelling them) to sign the necessary documents to effect transfer. In any event, was the authorisation referred to in paragraphs 1, 2 and 3 of the Court order subject to payment of the outstanding purchase price.

Paragraph 4 of the said court order reads:-

“THAT the Conveyancers attending to the transfer documents; COMBRINK KGATSE ATTORNEYS; be and are hereby directed to verify if there is any outstanding balance at NEDBANK Limited owing by the Applicant after the sale to him of the above immovable property; and to pay and/or guarantees for the outstanding balance; if any; to NEDBANK Limited before lodging the transfer documents.”

As already mentioned, I am unconvinced that Mziako paid the balance of the purchase prize. Accordingly this Court order obtained without any notice to Nedbank does not assist Mziako at all and does not constitute any defence to an order declaring the immoveable property specially executable. It is also questionable why this order was seek on an ex parte basis and why in the North Gauteng High Court rather than this Court that has jurisdiction.

[26] Mziako also states that because the action between Nedbank and the Sekoboane’s had previously been decided by the Magistrate’s

Court, Rustenburg in favour of Nedbank, the Plaintiff was precluded from issuing a fresh summons. It is alleged that the matter is res judicata. A party who raises res judicata is required to allege and prove all of the following elements underlying his defence:

The judgment and order must be final and must be an order based on the merits of the matter.

The earlier judgment must be given in litigation to which the present parties before Court were also then the same parties.

The cause of action in both cases must be the same.

The same relief must be claimed in both cases.

[27] In my view, the requirements of a reliance on the principle of res judicata are not met in the present matter due to the following:

Mziako (who pleads res judicata ) was not a party to the previous action against the Sekoboane’s in the Magistrate’s Court, Rustenburg.

The Sekoboane’s in the present action before this Honourable Court do not raise any defence whatsoever and have elected not to oppose the action.

Mziako having become a party to the present action, is a different (additional) party.

Even if the personal action against the Sekoboane’s had been res judicata (which is certainly not the case) then the hypothecary action of the Plaintiff which accrues in respect of the property (through the bond attached thereto) had not been instituted previously and certainly not against Mziako.

[28] The Plaintiff had in any event withdrawn the previous Magistrate’s Court action and abandoned the default judgment granted in its favour, which judgment had not been decided upon on the merits, being a default judgment. There is accordingly no risk and no possibility that the Sekoboane’s will be ordered twice to pay the same arrears amount and no abuse of process arises, which is the underlying policy of the principle of res judicata.

See: Janse van Rensburg and Others v Steenkamp and Another; Janse van Rensburg and Others v Myburgh and Others 2010 (1) SA 649 (SCA) at paragraphs [29] to [30] of judgment

[29] In terms of the mortgage bond, the Defendants are liable for the legal fees of the Plaintiff in collecting any monies due in terms thereof on the scale as between attorney and client. Since the Sekoboane’s did not oppose the action, it is just and equitable that they be held liable for the costs of the Plaintiff until 9 February 2012 only (the date upon which the default judgment application would have been heard, but for the intervention application of Mziako).

[30] The proceedings became opposed and protracted due to Mziako’s intervention. In my view, as from 10 February 2012, Mziako ought to be held liable for the costs of the further proceedings. Furthermore, am I of the view that a cost order on the scale as between attorney and client is appropriate against Mziako due to the blatant misleading of this Court by providing false evidence on affidavit amounting to perjury in respect of both the belated allegation of payment of the balance purchase price as well as the provision of guarantees in respect of the balance purchase price.

[31] I am satisfied that the requisites for default judgment against the Sekoboane’s clearly exist on the papers before me namely:-

An unpaid loan, secured by a properly registered mortgage bond, which is in arrears.

The amount of arrears was R130 310,58 as on 21 December 2011.

The summons was duly served on 21 November 2011 on the Sekoboane’s.

The dies to enter an appearance to defend expired on 5 December 2011.

The Defendants failed to give notice of an intention to defend the action.

The statutory prerequisites contained in sections 129 and 130 of the National Credit Act No 34 of 2005 had been complied with.

Neither of the Defendants utilised their prerogative in terms of section 129 of the National Credit Act and failed to respond to due demand by the Plaintiff.

Order:-

[32] Consequently, the following order is made:-

[i] Default judgment is granted against the First and Second Defendants jointly, in the amount of R130 310,58.

[ii] First and Second Defendants are ordered to pay interest on the amount of R130 310,58 at the rate of 9% per annum from 1 September

2011 to date of payment.

[iii] The Defendants’ immoveable property better known as:

ERF 914 SITUATE IN THE TOWNSHIP OF BOITEKONG EXT 1, REGISTRATION DIVISION JQ NORTH WEST PROVINCE MEASURING 273 (TWO HUNDRED AND SEVENTY THREE) SQUARE METERS HELD UNDER CERTIFICATE OF REGISTERED GRANT OF LEASEHOLD TL19885/95

hypothecated in favour of the Plaintiff in terms of the mortgage bond with reference number BL21685/95 and held by the Defendants’

under Deed of Transfer

number TL19885/95 is herewith declared specially executable.

[iv] The Defendants shall be jointly liable for the Plaintiff’s costs incurred in the application for default judgment up to and including 9 February 2012 on the scale as between attorney and client.

[v] The intervening party (Mziako) shall be liable for the costs of the Plaintiff in respect of the application for default judgment

after 9 February 2012 to be taxed on the scale as between attorney and client.

R D HENDRICKS

JUDGE OF THE HIGH COURT

ATTORNEYS FOR THE APPLICANT:- ADAMS & ADAMS INC