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[2016] ZAWCHC 107
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Van As v Nedbank Limited (10589/16) [2016] ZAWCHC 107 (26 August 2016)
IN THE HIGH COURT
OF SOUTH AFRICA
(WESTERN
CAPE DIVISION, CAPE TOWN)
CASE
NO: 10589/16
DATE:
26 AUGUST 2016
In
the matter between:
MICHAEL
ANDREW VAN
AS
................................................................................................
Applicant
And
NEDBANK
LIMITED
...........................................................................................................
Respondent
JUDGMENT
DELIVERED ON 26 AUGUST 2016
VAN
ROOYEN AJ
[1]
On 11 March 2010 the applicant purchased a
motor vehicle (“
the vehicle”)
which was financed by the respondent in terms of a written credit
agreement (“
the credit
agreement”)
. On 18 July 2012 the
respondent issued summons against the applicant, claiming that the
applicant was in breach of the credit agreement
because the applicant
was in arrears with the instalments payable in terms thereof. The
respondent applied for default judgment
which was granted by the
Registrar of this court on 24 October 2012. In terms of the judgment
the credit agreement was cancelled
and the Sheriff was authorised to
attach and hand over to the respondent the vehicle. Consequently, the
vehicle was repossessed
on 6 December 2012. However, on 10 December
2012 it was agreed orally that the vehicle be released. On 21 October
2013 the respondent
repossessed the vehicle again, claiming that the
applicant was in arrears and the vehicle was sold by the respondent.
[2]
During February 2014 the applicant launched
this application, seeking rescission of the default judgment and a
declaratory order
that:
2.1
a settlement agreement was concluded
between the applicant and the respondent on 10 December 2012,
alternatively 11 December 2012;
2.2
the credit agreement was reinstated by the
settlement agreement (if it had been cancelled at all);
2.3
the respondent was not entitled to rely on
the default judgment for the purposes of moving the vehicle from the
applicant’s
possession and/or selling the vehicle;
2.4
the respondent acted in unlawful breach of
the terms of the credit agreement when it took the steps referred to
in sub-paragraph
3 above
2.5
the credit agreement has been cancelled;
2.6
the applicant is entitled to restitution of
all of the performance which he has made in terms of the credit
agreement.
[3]
The applicant further seeks leave to sue
the respondent for such damages, if any, as he may have suffered
arising out of the alleged
breach of the credit agreement by the
respondent.
Rescission
[4]
The applicant seeks rescission of the
default judgment in terms of Uniform Rule 42, alternatively Rule 31,
further alternatively
the common law.
[5]
In
terms of Rule 42(1)(a) a court may rescind an order erroneously
sought or erroneously granted in the absence of any party affected
thereby. Once a court holds that an order or judgment was erroneously
sought or granted, it should without further enquiry rescind
or vary
the order
[1]
and it is not
necessary for a party to show good cause for the sub-rule to apply.
In general terms a judgment is erroneously granted
if there existed
at the time of its issue a fact of which the court was unaware, which
would have precluded the granting of a judgment
and which would have
induced a court, if aware of it, not to grant the judgment
[2]
.
If material facts are not disclosed in an
ex
parte
application or the facts are deliberately misrepresented to the
court, the order will be erroneously granted.
[3]
Agreement
to hold over legal proceedings:
[6]
According
to the applicant he was not in arrears and as he did not have the
means or knowledge to defend the action he approached
his neighbour,
Mr Stowe (“Stowe”), an advocate, for assistance and Stowe
agreed to assist him on a
pro
amico
basis. Stowe communicated with the respondent’s then attorneys.
In the founding affidavit, a detailed account was given of
telephonic
conversations between Stowe and identified representatives of the
respondent’s attorneys and letters emanating
from Stowe to the
respondent’s attorneys were attached to the founding affidavit.
Stowe deposed to a confirmatory affidavit.
The respondent denied such
communication but failed to file affidavits deposed to by any of the
identified representatives of the
respondent. Consequently, these are
unsubstantiated denials which fail to create a “
real,
genuine and bona fide dispute of fact
”
[4]
and the applicant’s
version in this regard must be accepted.
[7]
On 13 August 2012, Stowe telephoned the
respondent’s then attorneys and spoke to the attorney attending
to the matter, one
Candice. Stowe advised her that the applicant was
not in arrears, that he had made several payments since 1 March 2012
and requested
that she obtain from the respondent an updated account
of the amounts allegedly due. It was agreed between Stowe and Candice
that
she would hold the matter in abeyance and that the applicant did
not have to enter appearance to defend the action. Stowe confirmed
the agreement by way of a letter dated 13 August 2012. In that letter
it was expressly recorded that, according to the applicant,
his
payments were up to date. It was also recorded that the respondent’s
attorneys would check this with their client so
that the matter can
be resolved. The respondent’s legal representatives never
addressed a letter to either Stowe or the applicant
in which they
took issue with the contents of Stowe’s letter.
[8]
On 23 August 2012, Stowe addressed a
further letter to the respondent’s attorneys, once again
requesting a statement of account
as same had not yet been furnished.
[9]
On 14 September 2012 the respondent’s
attorneys provided Stowe with an account reflecting an amount of
R19,226.66 to be due
and owing as at 1 January 2012. The applicant
was unable to understand the lengthy account and maintained that he
was not in arrears.
He communicated it to Stowe who, in turn,
telephoned the respondent’s attorneys and spoke to one Tasneem
Ebrahim (“
Ebrahim”)
who was dealing with the matter at the time. Stowe informed Ebrahim
that the applicant was endeavouring to ascertain the exact
amount
which was due but that he was having difficulty procuring an
up-to-date and accurate account from the respondent. Ebrahim
undertook on behalf of the respondent that she would continue to hold
over legal proceedings until such time as certainty regarding
the
outstanding amount was obtained.
[10]
The applicant’s spouse thereafter
telephoned the respondent on “
innumerable
”
occasions but was unable to determine how much was owing and why. On
occasion she was informed that the account was in arrears
in an
amount of R8,000.00 but the official concerned could not explain why.
The official undertook to revert to the applicant’s
spouse
[11]
On 20 September 2012, the respondent
provided Stowe with a further shortened statement indicating that an
amount of R14,327.51 was
due. Stowe telephoned the respondent’s
attorneys and spoke to Ebrahim who advised that she did not have
knowledge as to the
arrears due, that she would contact the
respondent and would revert to Stowe.
[12]
On 27 September 2012, without any further
communication from the respondent or its attorneys to the applicant
or Stowe, the respondent
applied to the Registrar for default
judgment which was granted on 24 October 2012.
[13]
An
attorney employed by the respondent’s then attorneys of record
(who were not the attorneys representing the respondent
at the time
of the hearing of this application) deposed to an affidavit
“
Confirming
Compliance in terms of s129(1) of the NCA
[5]
,
No 34 of 2005
”
in support of the application for default judgment. In paragraph 2 of
that affidavit he stated that the facts contained
in the affidavit
“
are
within my personal knowledge and belief and to the best of my
knowledge both true and correct”
.
He continued to state in paragraph 11 that:
“
No
dispute exists in respect of entries made as contemplated in Section
111 of the Act, alternatively, if a dispute existed the
Bank complied
with Section 111(2)(b)(i) of the Act. The Bank explained and/reversed
(sic) the entry. No dispute is under alternative
dispute resolution
procedures before the tribunal.
”
[14]
The general tenor of the aforequoted
paragraph 11 leaves the impression that it was taken from a template
without considering the
facts relevant to this matter. The deponent,
an attorney employed by the respondent’s then attorneys of
record, stated that
the facts contained in his affidavit were within
his personal knowledge and it must therefore be assumed that he had
access to
the file relating to the respondent’s claim against
the applicant. He would therefore have had access to not only Stowe’s
correspondence but also to notes that probably would have been made
of telephonic conversations between Stowe and representatives
of the
respondent’s attorneys.
[15]
Quite apart from the provisions of the Act
(which will be considered later herein), the communication between
Stowe and representatives
of the respondent’s attorneys was
material information that should have been divulged to the Registrar
when application was
made for the default judgment. It is alarming
that the respondent’s then attorneys failed to do so. At best,
the attorney
who deposed to the affidavit for purposes of default
judgment, failed in his duty to establish the relevant facts (which
he would
have found in the records of the respondent’s
attorneys of record).
[16]
The Registrar would not have granted the
default judgment if he were alerted to the dispute concerning the
alleged arrears, the
confirmation in Stowe’s letter of 13
August 2012 that “
(a)s agreed, an
Appearance to Defend will not be entered pending your reply”
and the telephonic undertaking by Ebrahim on 14 September 2012 that
she would continue to hold over legal proceedings until such
time as
certainty regarding the outstanding amount was obtained.
Sections
129 and 130 of the Act:
[17]
The
duty to divulge facts such as those referred to above, is
particularly required in the context of the Act. It must always (also
when application for default judgment is made) be borne in mind that
“
one
of the statute’s core innovations is significantly
consumer-friendly and court-avoidant procedures
”
and that “
(t)hese
procedures are designed to help debtors to restructure their debts,
or find other relief, before the guillotine of cancellation
or
judicial enforcement falls
”.
[6]
[18]
In terms of s 129(3) “
a
consumer may at any time before the credit provider has cancelled the
agreement, remedy a default in such credit agreement by
paying to the
credit provider all amounts that are overdue …
”.
It stands to reason that, in order to give effect to s 129(3), read
in the context of the aforequoted passage from
Sebola
,
a consumer must know what the overdue amount is. If all the relevant
facts were divulged by the respondent, the Registrar would
have
realised that effect was not given to s129(3) because it was disputed
that the applicant was in arrears. In any event, it
was impossible
for the applicant to determine what, according to the respondent, the
overdue amount was because the respondent
gave conflicting accounts
of the outstanding amount.
[19]
In terms of s 130(1) a credit provider may
approach the court for an order to enforce a credit agreement only
if, at that time,
the consumer is in default. In terms of s
130(3)(c), the court may determine the matter only if the court “
is
satisfied
” that the credit
provider has not approached the court despite the consumer having
brought the payments under the credit
agreement up to date. The court
can only be “
satisfied
”
that those jurisdictional requirements exist if it applies its mind
to the relevant facts and to that end all such facts
must be
divulged. If all the relevant facts were divulged in this matter, the
Registrar probably would not have been satisfied
that the applicant
was in default.
[20]
In this legislative context, it is
incumbent on a credit provider, when application is made for default
judgment, to divulge all
facts that may be relevant in the process of
establishing whether the requirements of s129 and 130 have been met.
The respondent
fell far short of fulfilling this duty by mechanically
contenting itself with general statements in its motivation for
default
judgment instead of divulging all material facts.
Section
111:
[21]
By
virtue of the facts dealt with above, it was argued on behalf of the
applicant that s 111 of the Act prohibited the respondent
from
obtaining default judgment because there was a dispute and in terms
of s 111(2) the respondent was not entitled to commence
with
enforcement proceedings
[7]
.
According to the respondent, s 111 does not apply as the applicant
never challenged a particular debit or credit entry and the
applicant
simply denied being in arrears.
[22]
The applicant, represented by Stowe,
notified the respondent in writing that, according to the applicant,
he was not in arrears
and he specifically pointed out that he had
“
proof of all his payments
”.
The applicant was unable to “
make
head or tail
” of an account
received from the respondent and to compound matters, the respondent
furnished the applicant with conflicting
versions of the amount that,
according to the respondent, was overdue. The respondent undertook to
revert to the applicant but
failed to do so before obtaining default
judgment.
[23]
Section
111 must be interpreted purposively
[8]
and bearing in mind that the main object of the Act is to protect
consumers whilst safeguarding the interests of creditors
[9]
.
It may be argued that those principles dictate that s111 should be
interpreted broadly to cover facts such as those set out above,
otherwise it will undermine the purpose of the Act
[10]
.
However, in view of my findings under the previous headings, it is
not necessary to decide this issue.
Section
129(1)(a):
[24]
It is necessary to deal with a further
ground on which the default judgment was granted erroneously, as it
reflects unacceptable
conduct on the part of the attorneys who
represented the respondent at the time of the default judgment being
granted and it may
have a bearing on the costs order that will be
made in this matter.
[25]
In the particulars of claim attached to the
summons and signed during June 2012 by the same attorney who deposed
to the affidavit
confirming compliance with the Act, it was stated
that:
“
10
On the 20/06/2012 the Plaintiff delivered a Notice in terms of Sect
129(1)(a), read with Sect 123
to the Defendant.
11
In terms of the aforesaid notice, the Plaintiff has drawn the default
to the notice
of the Defendant and proposed that the Defendant refer
the agreement to a debt counsellor, alternatively a dispute
resolution agent,
consumer court or ombud with jurisdiction with the
intent that the parties resolve any dispute under the agreement or
develop and
agree a plan to bring the payments under the agreement up
to date.
12
A copy of said letter and proof of posting are annexed hereto marked
as Annexure “B”.
13
A period in excess of ten business days has lapsed since the delivery
of the notice
and notwithstanding the aforesaid notice, the Defendant
has not responded to the notice.
”
[26]
At the time when the particulars of claim
were signed, not a word of the aforequoted passages from the
particulars of claim was
true. It was made worse by the attorney’s
failure in his affidavit, confirming compliance with the Act, to
explain this falsehood.
[27]
It
does not assist the respondent to argue that, courtesy of
Sebola
[11]
,
the action is not void because a notice in terms of s 129(1)(a) was
sent by registered mail on 10 July 2012. Whilst instituting
action
without prior notice does not mean that the action is void, it is
inexcusable to mislead the court by stating in particulars
of claim
that a notice was delivered whilst, at the time of the particulars of
claim being signed, it is not true. If, what is
referred to as
annexure “B” in the particulars of claim, was the letter
dated 3 July 2012 sent by registered mail on
10 July 2012, it makes
matters worse because it is not the notice relied on in the
particulars of claim.
[28]
In the absence of an amendment of the
particulars of claim, the respondent therefore sought, and was
granted, default judgment based
on particulars of claim referring to
a notice delivered on 20 June 2012 whilst such a notice did not exist
and no delivery was
effected prior to 10 July 2012. Consequently, the
Registrar could not have satisfied himself that there was compliance
with the
provisions of s 129 as alleged in the particulars of claim
(with reference to a notice delivered on 20 June 2012). The Registrar
therefore did not comply with the requirements of s 130 (3)(a) and
erred in granting default judgment.
Conclusion
iro rescission:
[29]
In these circumstances, the default
judgment was granted erroneously because there existed at the time of
its issue facts of which
the Registrar was unaware, which would have
precluded the granting of the judgment and which would have induced
the Registrar,
if aware of it, not to grant the default judgment.
Moreover, it was an error to grant the default judgment whilst there
was an
evident discrepancy between the notice relied on in the
particulars of claim and the notice before the Registrar when the
default
judgment was granted.
[30]
The
respondent argued that an unreasonable time had lapsed before the
applicant applied for rescission. What is a reasonable time
depends
upon the facts of each case
[12]
.
The applicant explained in detail how he attempted to resolve the
matter in communication with the respondent. It
inter
alia
led to the release of the vehicle. It was only repossessed again in
October 2013 and then further communication between the parties
followed. This application was launched in February 2014. Considering
the facts of this matter, the application for rescission
was brought
within a reasonable time.
[31]
The respondent’s counsel further
argued that the question of rescission is academic as the vehicle was
sold in execution.
However, I agree with the submission of counsel
for the applicant that the issue is not academic because the judgment
will reflect
negatively on the applicant’s credit record.
[32]
The default judgment should therefore be
rescinded.
Declaratory
relief
[33]
The declaratory relief sought by the
applicant depends on the applicant’s contention that a
settlement agreement was concluded
between the applicant and the
respondent on 10 December 2012, alternatively 11 December 2012.
[34]
For his reliance on a settlement agreement
concluded on 10 December 2012, the applicant contends that Stowe
telephoned the respondent’s
chief executive officer, Mr Brown,
on that date and explained the full history of the matter to him.
Brown indicated that there
had been a mistake on the part of the
respondent and he undertook to release the vehicle. According to the
applicant the intention
was to bring an end to the litigation and to
secure the release of the vehicle. The effect was to settle the
action. Shortly thereafter,
the respondent sent the applicant an
e-mail authorising him to collect the vehicle, which he did.
[35]
The applicant relies on a letter dated 11
December 2012 from the respondent’s attorneys to the applicant,
for the alternative
contention that an agreement was concluded on
that date. The applicant contends that it was indicated in the letter
that the respondent
was willing to settle the matter in an endeavour
to amicably resolve the matter and proposed that a payment of alleged
arrears
in an amount of R5,778.60 be made by the applicant. The
applicant accepted the settlement offer which had the effect to
finally
settle the dispute between the parties. The applicant made
payments accordingly.
[36]
According to the respondent, the
conversation between Stowe and Brown on 10 December 2012 and the
return of the vehicle were nothing
more than an indulgence. The
judgment remained.
[37]
As far as the letter of 11 December 2012 is
concerned, the respondent pointed out that it was stated in the
letter that “
the above in no way
cancels or deviates from the original agreement but is merely an
attempt to settle the current dispute in an
amicable manner
”.
The letter also records that “
we
reiterate that the above proposal is made on a without prejudice
basis and without any admission of liability on the part of
our
client or our offices. We further advise that all our client’s
rights remain strictly reserved
”.
[38]
If a settlement agreement were concluded
orally on 10 December 2012, one would have expected reference thereto
in the letter of
11 December 2012. Whilst that letter refers to a
letter from the applicant to the respondent dated 10 December 2012
and a telephone
conversation between the applicant and Mr Mohamed, a
representative of the respondent’s attorneys, on that date,
there is
no reference to a telephone conversation between Stowe and
Brown, let alone an oral agreement concluded between them.
[39]
The aforequoted passages from the letter
dated 11 December 2012 dictate against an intention on the part of
the respondent to settle
the entire matter.
[40]
Even if there were an intention to settle
the matter, the terms of such a settlement are not at all clear from
the papers. For example,
there is no reference to the status of the
default judgment or any undertaking that no execution steps will be
taken in future
in terms of that judgment.
[41]
In
the circumstances, a material dispute exists as to the existence or
not of the alleged settlement agreements. The respondent
raised a
real, genuine and
bona
fide
dispute of fact and its version is not so far-fetched or clearly
untenable that it will be justified to dismiss it merely on the
papers.
[13]
[42]
The applicant, therefore, has not made out
a case for the declaratory relief sought in the notice of motion.
Leave
to sue
[43]
The applicant seeks leave to sue the
respondent for such damages, if any, as he may have suffered arising
out of the breach of the
credit agreement by the respondent. This
relief too is dependent on the existence of the settlement agreement
alleged by the respondent.
In view of my findings above, the
applicant is not entitled to this relief.
[44]
Moreover, after the application had been
launched, the applicant instituted an action contemplated in this
part of the relief sought.
Consequently, the leave sought in this
application became academic and for this reason too the applicant is
not entitled to such
an order.
Costs
[45]
In the process of considering an
appropriate costs order, regard must be had to the following. The
applicant is successful with
his application for rescission but
unsuccessful with his application for declaratory relief and leave to
sue the respondent. The
respondent’s conduct when it sought
default judgment, left a lot to be desired and a costs order ought to
reflect disapproval.
The fact that the respondent tendered to agree
to the rescission on condition that the declaratory relief be sought
in an action,
does not assist the respondent. It could have made an
unconditional offer. In any event, whilst the respondent stated that
it was
left to the court’s discretion, vigorous oral argument
was presented on behalf of the respondent to motivate why this
court’s
discretion should be exercised against rescission.
[46]
In these circumstances considered as a
whole, it will be just to order that the costs of this application be
paid by the respondent
on a scale as between party and party and not
on attorney and client scale as sought by the applicant in the notice
of motion.
In coming to this conclusion, I consider the applicant’s
failure to make out a case for a part of the relief sought, to be
balanced out by the conduct of the respondent dealt with earlier
herein. If it were not for the applicant’s failure to make
out
a case for a part of the relief sought, I would have granted an order
as to costs on a punitive scale without any hesitation.
Order
[47]
It is ordered that:
47.1
the default judgment which was granted in
favour of the respondent (as the plaintiff) against the applicant (as
the defendant) on
24 October 2012 be rescinded;
47.2
the applicant’s application for the
relief sought in paragraphs 2 and 3 of the notice of motion be
dismissed;
47.3
the costs of this application be paid by
the respondent.
VAN
ROOYEN, AJ
[1]
Rossitter
and Others v Nedbank Ltd
(96/2014) ZASCA 196 (1 December 2015) at para [16]
[2]
Rossiter
,
supra
[3]
Naidoo
and Another v Matlala NO and Others
2012 (1) SA 143
(GNP) at 153 C-E
[4]
Wightman
t/a JW Construction v Headfour (Pty) Ltd & Another
[2008] ZASCA 6
;
2008 (3) SA 371
(SCA) at para
[13]
[5]
National
Credit Act, 34 of 2005
(“
the
Act”)
[6]
Sebola
& Another v Standard Bank of South Africa Ltd & Another
2012
(5) SA 142
(CC)
at para [59]
[7]
Section
111
provides as follows:
“
Disputed
entries in accounts –
(1)
A consumer may dispute all or part of any particular credit or debit
entered under a credit agreement, by
delivering a written notice to
the credit provider.
(2)
A credit provider who receives a notice of dispute in terms of
subsection (1)-
(a)
must give the consumer a written notice either:
(i)
explaining the entry in reasonable detail; or
(ii)
confirming that the statement was in error
either in whole or in part, and setting out the revised entry; and
(b)
must
not begin enforcement
proceedings on the basis of a default arising from the disputed
entry-
(i)
until the credit provider has complied with
paragraph (a); or
(ii)
at any time that the matter is under
alternative dispute resolution procedures, or before the Tribunal in
terms of
section 115.
”
[8]
ABSA
Bank v de Villiers
2009 (5) SA 40
(C) at para [27]
[9]
Sebola
at para [40]
[10]
Natal
Joint Municipal Pension Fund v Endumeni Municipality
2012 (4) SA 593
(SCA) at para [18]
[11]
at
para [53]
[12]
Promedia
Drukkers & Uitgewers (Edms) Bpk v Kaimowitz
1996 (4) SA 411
(C) at 421 G
[13]
Plascon-Evans
Paints Ltd v Van Riebeeck Paints (Pty) Ltd
[1984] ZASCA 51
;
1984 (3) SA 623
(A) at 634 H – 635 C