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[2021] ZAWCHC 202
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Juma v Mercedes Benz Financial Services South Africa (Pty) Ltd (18412/2019) [2021] ZAWCHC 202; 2022 (3) SA 506 (WCC) (15 October 2021)
IN
THE HIGH COURT OF SOUTH AFRICA
(WESTERN
CAPE DIVISION, CAPE TOWN)
CASE
NO : 18412/2019
In
the matter between
JANET
ALUOCH
JUMA
APPLICANT
AND
MERCEDES
BENZ FINANCIAL SERVICES SOUTH AFRICA
RESPONDENT
(PTY)
LTD
Heard:
23 August 2021
JUDGMENT
DELIVERED ON 15 OCTOBER 2021
THULARE,
AJ
[1]
This is an application for rescission of a default judgment in favour
of the respondent on 12 November 2019. The terms of the
order were
confirmation of termination of the agreement, the return of 2013 Used
Mercedes Benz C180 1.6 BE (W204) with engine number
27491030069352
and chassis number WDD2040312R302437 (the vehicle). The damages claim
was postponed
sine die
and the applicant had been ordered to
pay the costs on attorney and client scale to be taxed.
[2]
The applicant and respondent concluded a written instalment agreement
in terms whereof the respondent sold the vehicle to the
applicant.
The respondent delivered the vehicle to the applicant as agreed.
Ownership remained vested in the respondent until the
applicant had
fulfilled all her obligations. The applicant paid an initial payment
of R21 990-00 and was to pay R4820-49 monthly
for 58 months
until 30 September 2023. In the event of failure to pay as agreed,
the full balance owing became immediately due
and payable. The
respondent would be entitled to cancel the agreement, repossess the
vehicle and proceed with the enforcement or
termination of the
agreement.
[3]
In its summons the respondent alleged that the applicant failed to
pay the instalments in terms of the agreement and as at 17
September
2019 was in arrears in the amount of R15 276-86 and the full
outstanding balance was R197 953-32. The
respondent issued
the notice as envisaged in section 129 of the National Credit Act,
2005 (Act No. 34 of 2005) (the NCA) which
was served on 29 Gordon
Road, Heathfield, 7945. The notice was sent by pre-paid registered
mail on 26 September 2019. Thereafter
the respondent issued summons
on 18 October 2019 and then requested default judgment which was
granted.
[4]
The section 129 notice and the summons were served on the
chosen
domicilium citandi executandi.
It is not in dispute that the
applicant did not have knowledge of both the notice and the summons.
She had left the address on 15
September 2019 and had moved to Erf
1432 Wetton where she had brought property. The transfer of the
Wetton property from MR and
R Taliep to her name and that of Patrick
Tshibambe was registered at the deeds office on 8 October 2019.
[5]
Reliance on her service was based on the formal compliance with due
process in respect of both the notice and the summons. It
was in fact
argued that she had herself to blame for not receiving the notice and
summons, as she did not inform the respondent
in writing or even
orally that she had changed her address. She attributes the failure
to notify the respondent, in writing, of
the change of address
amongst others on the urgency with which she had to move houses. The
other reason was that she did not yet
have the supporting documents
on the change, like the municipal utility account or store accounts,
as envisaged in the agreement,
contemporaneous with and immediately
after her change of address. The agreement provided:
“
4.3
If you wish to change the address or any other details you must
inform us thereof by written notice delivered either by hand,
or
registered mail or electronic format with the applicable supporting
documents required by law.”
[6]
The applicant had paid the initial amount and all other monthly
instalments since concluding the agreement, except for the months
of
June, July and September 2019. Even after September 2019 she had
continued to pay and but for the arrears as explained, was
up to
date. When she deposed to her affidavit on the 4
th
of
December 2019, she had just paid the instalment on 1 December 2019.
She had skipped the months referred to above because of
a temporary
financial slump but knew that she was going to catch up with settling
the instalments not paid and continue to pay
the monthly instalment
in terms of the agreement.
[7]
The applicant only came to know about the processes already
undertaken when she was called by the sheriff on 29 November 2019.
That is when she came to know that the sheriff was in possession of a
warrant of execution to remove the vehicle from her and to
take
possession thereof. The applicant called the respondent’s
attorneys and offered to pay the arrears in full. The applicant
was
informed by the attorneys that the arrears were then about R30
000-00. She was further informed that it did not matter whether
she
paid the arrears or not because judgment had already been obtained
and that the attorneys would only accept any payment if
the vehicle
was returned to the respondent and that the only way to keep the
vehicle was to pay the entire agreement sum of R200
000-00.
[8]
The applicant alleges that it was once she became aware of the
judgment, and the attitude of the respondent to her offer, that
she
instructed her attorneys to bring a rescission application and an
urgent application to stop the removal and sale of the vehicle.
The
urgent court authorized the urgent removal and storage, but not the
sale of the vehicle pending this rescission application.
She further
stated that had she been aware of the notice she would have acted
upon her rights and defences conferred upon her in
terms of the NCA,
which included negotiating a payment plan to deal with the unpaid
arrears and other alternative mechanisms provided
if needed.
[9]
Section 31(2)(b) of the Uniform Rules of court provides:
“
31
Judgment on confession and by default and rescission of judgment
(2)(b)
A defendant may within 20 days after acquiring knowledge of such
judgment apply to court upon notice to the plaintiff to
set aside
such judgment and the court may, upon good cause shown, set aside the
default judgment on such terms as it deems fit.”
In
Chetty v Law Society, Transvaal
1985 (2) SA 756
(AD) at 765A-C
it was said:
“
The
term “sufficient cause” (or “good cause”)
defies precise or comprehensive definition, for many and various
factors require to be considered. (See
Cairn’s
Executors v Gaarn
1912 AD 181
at 186
per
Innes
JA.) But it is clear that in principle and in the long-standing
practice of our Courts two essential elements of “sufficient
cause” for rescission of a judgment by default are:
(i)
That the party seeking relief must present
a reasonable and acceptable explanation for his default; and
(ii)
That on the merits such party has a
bona
fide
defence which,
prima
facie,
carries some prospect of
success. (
De Wet’s
case
supra
at
1042;
PE Bosman Transport (Pty) Ltd
1980
(4) SA 794
(A);
Smith NO v Brummer NO
and Another; Smith NO v Brummer
1954
(3) SA 352
(O) at 357-8.)
[10]
Criticism may be levelled against the applicant as being the author
of her own misfortune by not providing the respondent with
her new
address, once she had moved from her
domicilium citandi
executandi.
The criticism notwithstanding, I am unable to
conclude that her default was explained by disdain for the Uniform
Rules of Court.
Such a conclusion would be possible if she had
knowledge of the notice or the summons or was someone who one would
conclude was
a person familiar with the procedure of the courts. It
cannot be said that her default was informed by a sense that the
notice
or summons was unworthy of her consideration or respect. The
explanation for her default was not general, but in specific terms.
[11]
The notice is part of the required procedure before debt enforcement
[section 129 of the NCA]. The applicable provisions of
the notice
sent to the applicant read as follows:
“
In
terms of section 129 read with
section 89
and
130
of the
National
Credit Act 34 of 2005
you are at liberty to refer the credit
agreement to a debt counsellor, alternative dispute resolution agent,
consumer court or
ombud with jurisdiction with the intent to resolve
any dispute under the agreement or develop and agree on a plan to
bring the
payment under the agreement up to date.
Should
you fail to exercise your rights as aforesaid within 10 (ten)
business days from date hereof, legal action will be instituted
against you without further notice for: …”
[12]
The applicant missed two instalments in succession, that of June and
July 2019. She paid the instalment of August 2019. She
missed the
instalment of September 2019. She paid the instalments of October and
November. By the time the respondent obtained
the judgment by default
on 12 November 2019, the applicant alleged that respondent had
received the payment of October 2019 and
was aware of the applicant’s
offer to settle the outstanding arrears, which equaled three months
of instalments, in full
and had rejected the offer.
[13]
In my view, having regard to the period for which the agreement had
already run, the history of the monthly payments, the amount
payable
per month, the period in which the applicant failed to pay, the total
amount outstanding in arrears and the conduct of
the applicant from
the time that the notice was issued to the date that the default
judgment was determined, this is a matter where
I find a rational
connection between the arrears and the payment of arrears only as a
just and fair response. If the applicant
proves the facts and factors
set out, they may stand as a valid answer to the claim.
[14]
It will be a response proportional to the implications of the
default, non- payment and breach as envisaged in the agreement
between the parties. This is provided in clause 7 at 7.4 of the
agreement which reads:
“
You
may at any time prior to cancellation of this Agreement, remedy your
default by paying us all amounts that are overdue, together
with our
prescribed administration charges and collection costs (set out in
clause 26) incurred to enforce this Agreement against
you up to the
date on which your default is remedied.”
[15]
It does not seem to me that the applicant was generally unable to
meet the monthly payments. She was not unsuccessful in her
undertaking in terms of the agreement for the reason that she could
not meet the monthly financial watermark. The facts set out,
if
proved, would negate a conclusion that she was unable or unwilling to
meet the standard of servicing the monthly instalments
as agreed
until settlement of the total outstanding amount. The facts suggested
that she failed to pay in terms of the agreement
punctually in a
specified financial season. It was not a failure which was high
enough, in terms of the amount and period, to warrant
the respondent
to terminate the agreement and obtain return of the vehicle without
allowing the applicant an opportunity to remedy
the default despite
her offer. It may be found that the dispossession and sale of the
vehicle was harsh and disproportionate under
the circumstances.
[16]
In
Absa Bank v Petersen
2013 (1) SA 481
(WCC) at paragraph 11
it was said:
“
[11]
The object of the prescribed statutory notice is to afford the credit
consumer the opportunity of taking advice and seeking
to make
arrangements to bring the arrears up to date, or failing that, to
purge the default. …
A
credit provider is required to react in a constructive and bona fide
manner to any approach made to it by a consumer who has received
a
notice in terms of
s 129.
The notice has been described as a pivotal
characteristic of the NCA’s ‘cost-avoidant and settlement
friendly processes’.
It is directed at alerting debtors to
‘restructure their debts, or find other relief, before the
guillotine of cancellation
or judicial enforcement falls’: see
Sebola and Another v Standard Bank of South Africa Ltd and Another
2012 (5) SA 142
(CC) ([2012] ZACC 11), in paras 72 and 59
respectively.”
[17]
The divisions of the past, which the preamble to the Constitution of
the Republic of South Africa, 1996, (Act No. 108 of 1996)
(the
Constitution) instruct and urge us to heal, includes the great divide
between credit providers and credit consumers. Section
129 of the NCA
is one provision in the greater scheme of the legislation through
which the nation should navigate the deep, narrow
gorge with steep
sides to make it through the kloof of bargaining power in credit
agreements. Unless courts are deliberate in their
judicial output, a
contest between chronically unequal financial beings will always
result in the authority of the powerful, irrespective
of the quality
and state of their case.
[18]
The Constitutional values of human dignity, the achievement of
equality and the advancement of human rights would remain impossible
to realise if credit providers continue to disregard the voice of the
consumer, but not their payment, once the section 129 notice
is
issued until they secure a court order. This matter, in my view,
demonstrates that judicial oversight of this period, especially
when
orders by default are considered, has become a pre-requisite for
justice to prevail. Credit provider domination in this period,
which
domination appear selfish and maybe greedy in securing its interests
whilst it is cold and aloof to that of the consumer,
should be soaked
in the conscience and consciousness of our constitutional values.
[19]
The time has arrived where credit providers who request judgment by
default should also indicate what response, if any, the
section 129
notice or the summons elicited or what payments, if any, were made
from the moment the section 129 was issued to the
date that default
judgment is requested. In circumstances like the present, where the
credit provider alleged that the agreement
was cancelled at the issue
of the section 129 notice, but continued to receive payments, more is
expected in that report to the
court considering judgment by default.
Consumers cannot continue to pay monthly instalments where the light
of judicial oversight
did not streak, for want of disclosure in the
request for default judgment, with the belief that the payment is in
fulfilment of
the terms of an agreement, when the credit provider
knew that the agreement was cancelled, and the consumer still
suffered the
indignity of dispossession of the assets purchased.
[20]
Where the consumer made payments, believing it was payments in
fulfilment of the agreement, when the agreement was cancelled
and
such cancellation was only known to the creditor, such receipt seems
to me to be a receipt under false pretences. Mitigation
of damages
and transparency, especially a frank and candid disclosure to a court
called upon to determine the request for default
judgment, are not
mutually exclusive. The vision envisaged in the NCA postured towards
the protection of the consumer must translate
into the lived
experiences of consumers. Courts should ensure that the bad
tendencies, practices and cultures in debt recovery,
especially hasty
and unnecessary dispossession of properties which are subjects of
credit agreements, do not remain a living stubborn
heritage in the
history of consumer credit, when considering especially judgment by
default.
[21]
For these reasons I make the following order:
(a)
Judgment granted against the applicant in favour of the respondent on
12 November 2019 is rescinded.
(b)
The applicant is granted leave to defend the action.
(c)
No cost order is made.
THULARE, AJ