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[2017] ZAGPJHC 184
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Firstrand Bank Ltd t/a First National Bank v Fondse and Another (A5027/2016) [2017] ZAGPJHC 184 (23 June 2017)
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REPUBLIC
OF SOUTH AFRICA
THE
HIGH COURT OF SOUTH AFRICA
GAUTENG
LOCAL DIVISION, JOHANNESBURG
APPEAL
CASE NO A5027/2016
CASE
NO A QU02014/12979
REPORTABLE:
YES
OF
INTEREST TO OTHER JUDGES: YES
23/6/2017
In
the matter between:
FIRSTRAND
BANK LTD T/A FIRST NATIONAL
BANK
Appellant
and
FONDSE
ADRIAAN RUDOLPH
N.O.
First
Respondent
O'NEIL,
JANE
ELIZABETH
Second
Respondent
JUDGMENT
Sutherland
J:
Introduction
[1]
This is a case about the purpose, scope and reach of the defence of
res judicata
or issue
estoppel in respect of an abandoned judgment. It arises from unusual
circumstances.
[2]
The appellant lent money to Mr and Mrs O'Neil against the security of
a mortgage bond. The O'Neils did not pay up. The appellant
sued. The
O'Neils defended. The appellant sought and got summary judgment. The
O'Neils applied for leave to appeal. At that hearing,
the appellant
abandoned the judgment. Later the appellant withdrew that action, and
instituted fresh proceedings on application
for the identical
indebtedness of the O'Neils to the appellant. At the time of
instituting that application, Mr O'Neil had died;
the first
respondent is the executor of his estate. A defence was put up to the
appellant's application that it was bad because
res judicata applied.
That defence was upheld. The appeal is against the judgment upholding
the defence of res judicata and the
consequent dismissal of the
application.
[3]
Several interrelated arguments have been advanced. They are dealt
with discreetly, but first the exact facts need to be described,
to
which these contentions were addressed.
What
exactly happened?
[4]
The accounts given in the affidavits filed by the appellant and Mrs
O'Neil, and the transcript of the proceedings in the summary
judgment
hearing reveal the unfolding saga.
[5]
The O'Neils obtained two loans from the appellant, on 29 August 2005
and on 18 October 2007. Both were secured by mortgage bonds
over
their home at [...], Kleve Hill, Johannesburg. In April 2010, the
O'Neils fell into arrears and stopped paying altogether
in December
2011. The appellant's first demand to remedy the breach was made in
October 2013.
[6]
The reasons for not paying, although not relevant to their legal
relationship with the appellant
per se,
bears
mention, because these circumstances were ventilated in the dealings
between the parties. The O'Neils were ostensibly hard
up. Mr O'Neil
was terminally ill. Mrs O'Neil was in dispute with a former employer
about money due. Mrs O'Neil who was the principal
spokesperson for
the couple throughout, continually advanced the idea that the debt
was capable of resolution once her dispute
with her former employer
had been resolved. Notably, throughout this entire saga, the
indebtedness of the O'Neils to the appellant
has never been denied.
[7]
The appellant instituted an action to obtain a money judgment against
the O'Neils. The action was defended and Mrs O'Neil deposed
to three
opposing affidavits on 5 and 10 and 27 February 2012. She had not
obtained legal representation. In these affidavits,
she traversed the
woes that befallen her and her husband, alluded to her disputes about
money owed to her, her husband's illness,
and attached material,
chiefly from copies of
Noseweek,
condemning
her former employer and its management as gangsters. The thrust of
the contents was to the effect that money was owed
to her and if
allowed time to obtain satisfaction in that regard, she would have
money to discharge her admitted indebtedness to
the appellant.
[8]
Importantly, in her last affidavit, after having alluded to the fact
that she had consulted an attorney, who was not on record,
she stated
that:
'The Defendants did not
receive the notification in terms of section 129 of the National
Credit Act as it was sent to […]
Crescent and not […]
Crescent. Neither of the defendants received notice. This is
presently (sic) being debated in the Constitutional
Court.'
The
facts so alleged were true. The source of the mischief was an
erroneous recordal in the second loan agreement of the name of
the
street.
[9]
On 28 February 2012, the matter came before Court. A transcript
records the exchanges. Counsel for the appellant/applicant sought
a
money judgment for the debt; no relief was sought in respect of the
executability of the property subject to the mortgage bonds.
Mrs
O'Neil is recorded as being aggrieved that the appellant would not
accept a tender of payments on the arrears. An exchange
between her
and the judge took place, in which he invited her to express her
point of view about why whatever she had put before
the court could
constitute a defence to the claim. In essence, her responses were
allusions to her travails in pursuing a claim
against her former
employer, which was by then in liquidation and being subjected to an
enquiry in terms of section 417 of the
Companies act, in which she
had been called to testify. No mention of the alleged non- compliance
with section 129 of the National
Credit Act 34 of 2005 (NGA) occurred
in the exchanges. Ultimately, summary judgment was granted, in which
no allusion to the wrong
address or the impossibility of a delivery
of the section 129 notice was made.
[10]
On 13 March 2012, an application for leave to appeal was instituted.
On 29 August 2012, the hearing for the application for
leave to
appeal took place. At this moment, the appellant announced that it
abandoned its judgment. No hearing therefore took place.
[11]
Why the appellant did so is explained in paragraph 50 of its founding
affidavit of the subsequent application:
'...in an endeavour to
assist the O' Neils' and to save costs as well as in the light of the
Constitutional Court ruling in the
matter of
Sebola
&
another v
Standard Bank of southern Africa Ltd
&
Another
2012 (5) SA 142
(CC)
the
applicant [ie, appellant] abandoned the judgment that was obtained in
its favour. This was done with a view to amicably settle
the matter
and possibly conclude some form of down payment with the O' Neils and
to allow them to invoke the provisions of section
129 of the
[National Credit] Act.'
[12]
It might fairly be observed that in this passage, the lady 'doth
protest too much', but the averments stand unrebutted. However,
even
if the profuse expostulations of goodwill are discounted, what
remains is the expression of a business- orientated approach
to the
predicament in which the appellant, unquestionably, found itself.
That predicament was non-compliance with section 129 of
the Credit
Agreements Act 34 of 2005 (NCA) as required by the judgment in
Sebola,
which was
delivered by the constitutional Court on 7 June 2012; ie after the
summary judgment hearing and shortly before the set
down date of the
application for leave to appeal.
[13]
A slight digression into the application of the NCA is necessary. The
purpose of the NCA is the protection of consumers of
credit. Several
safeguards have been introduced, among which is section 129. The
relevant portion reads:
'(1) If the consumer is
in default under a credit agreement, the credit provider-
(a)
may draw the default to the notice of the
consumer in writing and propose that the consumer refer the credit
agreement to a debt
counsellor, alternative 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
on a plan to bring the payments under the agreement up to date; and
(b)
subject to section 130 (2), may not commence any
legal proceedings to enforce the agreement before-
(i)
first providing notice to the consumer, as
contemplated in paragraph (a), or in section 86 (10), as the case may
be; and
(ii)
meeting any further requirements set out in
section 130.
(2) …
(4) ....
(5) The notice
contemplated in subsection (1) (a) must be delivered to the consumer
(a)
by registered mail; or
(b)
to an adult person at the location designated by
the consumer.
(6) The consumer must in
writing indicate the preferred manner of delivery contemplated in
subsection (5).
(7) Proof of delivery
contemplated in subsection (5) is satisfied by-
(a)
written confirmation by the postal service or its
authorised agent, of delivery to the relevant post office or postal
agency; or
(b)
the signature or identifying mark of the
recipient contemplated in subsection (5) (b).
[14]
In pursuance of these injunctions, a bank typically would send a
notice. The method of notification would be one chosen by
the debtor.
A typical choice was by registered post to a stipulated address. How
far had a creditor to go in respect of ensuring
receipt? The answer
to that question was given in
Roussouw
&
Another v Firstrand Bank
Ltd
2010 (6) SA 439
(SCA).
The
SCA held that proof of the dispatch was sufficient and the risk of
non-delivery was upon the debtor. That was what the law was
understood to be when the summary judgment hearing took place.
Sebola
changed that understanding. The law according
to
Sebola
is thus:
'[74] .... the meaning of
'deliver' in s 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 s 129
notice in fact reached the consumer. As pointed out earlier, the
statute does not demand that the
credit provider prove that the
notice has actually come to the attention of the consumer, since that
would ordinarily be impossible.
Nor does it demand proof of delivery
to an actual address. But given the high significance of the s 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.
[75] Hence, where the
notice is posted, mere despatch is not enough. This is because the
risk of non-delivery by ordinary mail is
too great. Registered mail
is in my view essential. Even though registered letters may go
astray, at least there is a 'high degree
of probability that most of
them are delivered'. But the mishap that afflicted the Sebolas'
notice shows that proof of registered
despatch by itself is not
enough. The statute requires the credit provider to take reasonable
measures to bring the notice to the
attention of the consumer, and
make averments that will satisfy a court that the notice probably
reached the consumer, as required
by s 129(1). This will ordinarily
mean that the credit provider must provide proof that the notice was
delivered to the correct
post office.
[76] In practical terms
this means the credit provider must obtain a post-despatch 'track and
trace' print-out from the website
of the South African Post Office.
As BASA's submission explained, the 'track and trace' service enables
a despatcher who has sent
a notice by registered mail to identify the
post office at which it arrives from the Post Office website. This
can be done quickly
and easily. The registered item's number is
entered, the location of the item appears, and it can be printed.
…
[79] If, in contested
proceedings, the consumer asserts that the notice went astray after
reaching the post office, or was not collected,
or not attended to
once collected, the court must make a finding whether, despite the
credit provider's proven efforts, the consumer's
allegations are
true, and, if so, adjourn the proceedings in terms of s 130(4)(b).
[15]
The appellant upon reading this judgment appreciated that the appeal
by the O'Neils would result in the overturning of the
summary
judgment. Resisting the application for leave to appeal was
pointless. It might be noted that the consequences of the wrongly
recorded address, in any event, would not have satisfied even the
Roussouw test.
[16]
There followed what might be described as an interregnum. The parties
engaged one another but without the benefit of cordiality.
Mr O'Neil
died. When Fondse was appointed as executor the possibility of
further litigation became a reality.
[17]
The appellant formally withdrew the action. The court a quo remarks
that this act carried no juridical significance. We have
not been
called upon to examine the point and therefore express no view about
it.
[18]
On 8 August 2014, the appellant instituted proceedings afresh against
Fondse and Mrs O'Neil, by way of application. The founding
affidavit
candidly disclosed the history of the dispute; in paragraph 40- 41 it
was stated:
'[40] The [ appellant]
previously instituted action against the O'Neils .... based on the
first and second home loan agreements
and the first and second
mortgage bonds.
[41] the cause of action
as set out in this summons is the same as made out above ....'
[19]
The appellant also, in the founding affidavit, set out all the
necessary material facts to demonstrate that it had complied
with
section 129 of NCA in the manner required by
Sebola.
There was also express acknowledgement of
receipt. Ostensibly, the sole cogent point raised in the initial
proceedings had now been
resolved.
[20]
The answering affidavit raised
Res Judicata
as
a defence to the claim.
[21]
20 October 2015, the matter came before court. The defence of
Res
judicata
was upheld. That is the judgment on appeal to this court
with leave of the Supreme Court of appeal.
The
Nature of
Res Judicata
and
Issue Estoppel
[22]
The arguments advanced to us covered several aspects of the concept
of
res judicata
and
the ambit of its application to these facts. It is useful to briefly
address the juridical character of the defence before marrying
the
law to these facts.
[23]
The requirements of
Res Judicata
are
that the proceedings are in respect of a dispute between the same
parties on the same cause of action for the same relief as
has
previously been dispositively adjudicated. It is hard to think of a
more perfect example than that presented by these facts
to illustrate
that position. Indeed, such is the contention on behalf of the
respondents.
[24]
The label
Issue Estoppel,
derived
from the parlance of English jurisprudence, is given to a relaxed
application of these requirements in the interests of
fairness. What
this means in practice was addressed by Brand JA in
Prinsloo
NO v Goldex 15 (Pty) Ltd
&
Another
2014 (5) SA 297
(SCA):
'[10] The expression 'res
iudicata' literally means that the matter has already been decided.
The gist of the plea is that the matter
or question raised by the
other side had been finally adjudicated upon in proceedings between
the parties and that it therefore
cannot be raised again. According
to Voet 42.1.1, the exceptio was available at common law if it were
shown that the judgment in
the earlier case was given in a dispute
between the same parties, for the same relief on the same ground or
on the same cause (idem
actor, idem res et eadem causa petendi) (see
eg National Sorghum Breweries Ltd (t/a Vivo African Breweries) v
International Liquor
Distributors {Ply) Ltd
[2000] ZASCA 159
;
2001 (2) SA 232
(SCA)
([2001]
1 All SA 417)
at 239F - H and the cases there cited). In time
the requirements were, however, relaxed in situations which gave rise
to what became
known as issue estoppel. This is explained as follows
by Scott JA in Smith v Porritt and Others
2008 (6) SA 303
(SCA) para
10: 'Following the decision in Boshoff v Union Government
1932 TPD
345
the ambit of the exceptio res iudicata has over the years been
extended by the relaxation in appropriate cases of the common-law
requirements that the relief claimed and the cause of action be the
same (eadem res and eadem petendi causa) in both the case in
question
and the earlier judgment. Where the circumstances justify the
relaxation of these requirements those that remain are that
the
parties must be the same (idem actor) and that the same issue (eadem
quaestio) must arise. Broadly stated, the latter involves
an inquiry
whether an issue of fact or law was an essential element of the
judgment on which reliance is placed. Where the plea
of res iudicata
is raised in the absence of a commonality of cause of action and
relief claimed it has become commonplace to adopt
the terminology of
English law and to speak of issue estoppel. But, as was stressed by
Botha JA in Kommissaris van Binnelandse
lnkomste v Absa Bank Bpk
1995
(1) SA 653
(A) at 669D, 667J - 671B, this is not to be construed as
implying an abandonment of the principles of the common-law in favour
of those of English law; the defence remains one of res iudicata. The
recognition of the defence in such cases will however require
careful
scrutiny. Each case will depend on its own facts and any extension of
the defence will be on a case-by case basis
(Kommissaris van
Binnelandse lnkomste v Absa (supra) at 670E - F). Relevant
considerations will include questions of equity and
fairness, not
only to the parties themselves but also to others. . .'
[25]
The critical dimension of
Goldex v Prinsloo
judgment is the caution to a court to apply
the defence with regard to the fact-specific circumstances and to be
wary of applying
it.
[26]
The most recent attention given to the scope and reach of
Res
Judicata
is in
Molaudzi
v The State
2012 (2) SACR 341
(CC).
The
Molaudzi
case was
truly exceptional, principally because it was raised in a criminal
matter and that it was raised on behalf of a convicted
person to
enable a second application for leave to appeal to be made, the first
having been dismissed.
[27]
Mr Molaudzi had been one of several Accused convicted of serious
crimes and sentenced to life imprisonment. He had appealed
to a Full
Court of the North West Division of the High Court without success.
He had thereafter launched applications for leave
to appeal, which
had been repeatedly refused all the way to the Constitutional Court
itself. The grounds advanced related to the
admissibility of the
evidence of Co-Accused. Separately from Mr Molaudzi, other Co-Accused
sought leave to appeal and raised certain
constitutional issues which
they contended should have resulted in the evidence being excluded.
Those Accused were granted leave,
and subsequently their appeal on
those grounds succeeded. Accordingly, that left Mr Molaudzi in jail
for life whilst others in
a similar legal position were freed.
[28]
The Constitutional Court thereupon invited a second application from
Mr Molaudzi to seek leave to appeal. There was consensus
between the
prosecution and Mr Molaudzi that the two applications for leave to
appeal were distinct because the grounds were distinct
and therefore,
Res judicata
could not
apply. (at [12])
[29]
The Constitutional Court addressed the nature and application of Res
Judicata at [14] ff. The Constitutional Court held, at
[16] that the
rationale for the defence was to 'give effect to the finality of
judgments'. Observing the developments, both in
our law and in other
jurisdictions, away from the strict application of
Res
Judicata,
The Constitutional Court held thus:
'[32] Since res judicata
is a common-law principle, it follows that this court may develop or
relax the doctrine if the interests of justice
so demand. Whether
it is in the interests of
justice to develop the common law or the procedural rules of a court
must
be determined on a case-by-case basis
.
Section 173 [of the Constitution] does not limit this power. It does,
however, stipulate that the power must be exercised with
due regard
to the interests of justice.
Courts should not
impose inflexible requirements for the application of this section.
Rigidity has no place in the operation of
court procedures.
[33] This inherent power
to regulate process does not apply to substantive rights but rather
to adjectival or procedural rights.
A court may exercise inherent
jurisdiction to regulate its own process only when faced with
inadequate procedures and rules in
the sense that they do not provide
a mechanism to deal with a particular scenario. A court will, in
appropriate cases, be entitled
to fashion a remedy to enable it to do
justice between the parties. This court held in
South African
Broadcasting Corp Ltd:
'The power in s 173 vests
in the judiciary the authority to uphold, to protect and to fulfil
the judicial function of administering
justice in a regular, orderly
and effective manner. Said otherwise, it is the authority to prevent
any possible abuse of process
and to allow a court to act effectively
within its jurisdiction.'
[34] The power in s 173
must be used sparingly otherwise there would be legal uncertainty and
potential chaos. In addition, a court
cannot use this power to assume
jurisdiction that it does not otherwise have.' (footnotes omitted)
(Emphasis supplied)
[30]
The heart of the
Molaudzi
judgment is that when confronted
with a substantial injustice that would result from the application
of
Res Judicata
and the absence of an 'effective alternative
remedy' [at [39])
res judicata
should be relaxed to prevent
injustice.
The
evaluation of whether Res Judicata should be relaxed in this case
[31]
The prominent issue is whether an abandonment of a judgment
per
se, or if not
per se
under what peculiar circumstances, would be
proper grounds upon which to relax the application of
res
Judicata,
if at all.
[32]
In the court a
quo
the
proposition was advanced that the fact that it was a summary judgment
which was abandoned meant that the consequent legal position
was
tantamount to the granting of leave to defend in the ensuing trial.
Whether that is correct need not be decided in this case
because it
is irrelevant, because owing to the institution of the fresh
proceedings, that scenario never existed. Also, the debate
about the
character and effect of a default judgment, later abandoned need not
be examined because that scenario is not relevant.
The court a quo
was correct to emphasise that:
'The judgment in this
court followed upon a consideration of the evidential material before
it and the judgment is final and binding.'
Accordingly,
the legal position that needs to be examined is that where a decision
on the merits has been given.
[33]
The judgment a
quo
also
referred to earlier decisions which influenced its approach on the
effect of abandonment of a judgment. These decisions are
re-examined
to determine whether they really support the conclusions of the
judgment a
quo.
[34]
The most important decision relied upon, which was that which was
said to be on all fours with the present case, is
Liberty
Group Ltd v Bezuidenhout ZAKPHC 15 (4 March 2012).
The
court a
quo
cited
paragraph [15] of
Liberty Group.
'...in principle, there
is no difference between a judgment granted by default and a judgment
granted after a trial. A successful
plaintiff who abandons a judgment
in the latter situation would undoubtedly be visited by a successful
plea of
res judicata
if
he should thereafter reinstate the claim in the hope of securing a
better judgment on
quantum.'
[35]
The circumstances in
Liberty Group
were
that the plaintiff sought and obtained a money judgment by default.
The cause of action was money due to the plaintiff after
a
reconciliation of account at the termination of an agency agreement.
The plaintiff then abandoned its judgment and served an
amended
summons for a higher sum, about double the initial claim. A res
judicata defence was upheld. The judgment comprises several
responses
to arguments advanced and found each wanting. Ultimately, the
ratio
seems to be that stated in paragraph [17]:
'Whether [res judicata]
should in fact succeed is what I should consider having regard to the
peculiar facts of this particular
case. The Plaintiff abandoned in
terms of the common law and I cannot find any jurisprudence in that
regard. A judgment in my view
can only be abandoned in terms of Rule
41(2) of the Rules of this Court. If there is such an abandonment in
terms of common law,
I fully agree with the submission made by
counsel for the Defendant that it would therefore also have the
effect of there being
a
res judicata
in
respect of the action.'
[36]
The facts were odd indeed. It may be surmised that the explanation
for the plaintiff s conduct was that it had miscalculated
the sum due
and did not want to forfeit the full sum of the indebtedness. It
abandoned the judgment in order to 're-serve' an amended
claim. It
did not issue a fresh summons. These facts seem, to me, to
distinguish
Liberty
Group
[1]
from the present
case. The
once
and for all rule
seems
to be the rationale that best explains the outcome in
Liberty
Group. 1
That
is not the position in the present case, as a comparison with the
description of events plainly shows. If the approach is to
be
fact-specific the importance of this distinction must be weighed. In
my view, the
Liberty
Group
judgment
is not on all fours because of these distinctions.
[37]
In
Jacobson v Havinga 2001(2)
SA
177 (T),
a case
invoked in
Liberty Group,
what
happened was that the plaintiff sued in the Johannesburg Magistrate's
Court and got default judgment. Thereafter it was realised
that the
Johannesburg court lacked territorial jurisdiction. The plaintiff
then withdrew the action and sued in a court of competent
jurisdiction.
Res Judicata
was
raised and upheld. On appeal the decision was confirmed. The appeal
court decided the matter on the basis that the Johannesburg
court
judgment stood, even though incompetent, and would continue to do so
until it was set aside; thus, the plea of
res
judicata
was good. (at s182B) The implication
is that the withdrawal of proceedings after a judgment had been given
is ineffectual. In my
view, this is correct and a rescission seems to
have been the appropriate solution for that debacle as it was plainly
an order
taken in error as contemplated by Rule 42(5) of the Uniform
Rules of the high Court. (at 179C). As to the notion of an
abandonment,
a peripheral argument in this case, the court said:
'The appellant's final
submission that the judgment that was granted in his favour was
abandoned has no substance because the abandonment
of a judgment can
only be effected in terms of Rule 27(4). The subrule requires the
delivery of notice of abandonment. In the absence
of such a notice,
in my view, there was no abandonment of the judgment by the
appellant.'
[38]
Accordingly, this decision having found there was no 'abandonment'
cannot be authority for the effect of an abandonment.
[39]
The decision in
Baloyi NO v Schoeman NO
&
Others
[2003] 4 All
SA
261
(NC)
was cited in
Liberty Group
and in
the judgment a quo, but for different propositions. However, neither
judgment analysed the
Baloyi
case.
The critical facts are related to a sale of shares. The respondent
had sold shares to the applicant, with a reservation of
ownership
pending payment in full, the purchase price to be discharged in
instalments. A provision expressly stipulated that a
failure to keep
up with instalments would result in the respondent either suing for
specific performance or cancelling the agreement
with the payments to
date being forfeited. The applicant failed to pay as agreed and fell
behind. The respondent sued and obtained
default judgment for the
full price, ie a sum inclusive of the sums not yet due,
notwithstanding that the agreement contained no
acceleration
provision. The respondent then abandoned the judgment.
[40]
Thereafter, a demand was made to pay the overdue sums and when that
demand was not met, the respondent cancelled the sale.
Then the
applicant took the initiative by making an application in which,
first, a declarator was sought to declare the cancellation
invalid,
and second, an order of specific performance was sought, to deliver
the shares without having to pay the outstanding balance
on the
grounds that because the default judgment for payment had been
abandoned, a right to payment had been forfeited by the respondent.
[41]
Self-evidently, these are peculiar facts indeed. It was contended
that the abandonment evidenced a waiver but that argument
was not
pressed and this case is no authority on that question, despite the
remarks made by the court that proof of a waiver had
not been
established. (at [15]).
[2]
[42]
The rationale for the dismissal of the application was multiple. One
notable foundation was that the default judgment was a
nullity
because no cause of action existed upon which a claim for the full
price could have been made and thus the judgment was
null and void.
(at [22]-[23])This view contrasts with that expressed in
Jacobson
v Havinga.
In my view, this proposition in
Baloyi
cannot be
correct because the fact that a judgment is wrong on the facts or law
does not render it a nullity; rather it is fatally
susceptible to an
appeal.
Jacobson v Havinga,
which
was not cited, expresses 'the preferable view.
[43]
In respect of the defence of
Res Judicata,
the
mistaken nullity finding loomed large in
Baloyi.
The court held that:
'[22] Not only at the
stage when summons had been issued but also when judgment was granted
in terms thereof, was there therefore
no cause of action to found a
claim for or a judgment in the amount of the whole outstanding
balance. The position where judgment
is granted in the absence of a
cause of action or a legal basis for such a judgment must in my
opinion be distinguished from the
position where a summons does not
disclose a cause of action. Such a summons could normally be amended,
but "If there is no
cause of action then a judgment pronouncing
that a non-existent cause exists is void and of no effect"
(see
Ngani v Mbanje
and another, Mbanje and another v Ngani
1988 (2) SA 649
(ZS) at
6528-C & I).
[23] This means that the
abandoned judgment had actually been a nullity. The question is then
whether the abandonment of such a
judgment could found a defence of
res judicata.
In my opinion it cannot and Ms
Hassim
also
conceded this. Even if the effect of an unqualified abandonment of a
default judgment might otherwise have been a complete
reversal and
might therefore have resulted in a deemed refusal of default judgment
(see
Jones
&
Buckle: The Civil Practice of the
Magistrates' Courts in South Africa,
Volume I, Erasmus & Van
Loggerenberg, 9ed, at 364 and
Ntshiqa v Andreas Supermarket (Ply)
Ltd
1997 (1) SA 184
(Tk) at 1918), the same could certainly not
apply when the abandoned judgment had been a nullity. The reversal of
a nullity could
never result in a judgment in favour of the other
party, as if the judgment initially granted had been competent. Due
to the fact
that the default judgment had been void and a nullity it
did not constitute "a judicial declaration" and because it
was
of no force and effect it did not in actual fact have the effect
of regulating the legal relationship between the parties (compare
Lurlev (Ply) Ltd v Unifreight General
Services (Ply) Ltd and others
1978 (1) SA
74
(D) at 798-C).
[24] There is in my
opinion yet another and even more compelling reason why the
exceptio
rei judicatae
should not be allowed to succeed in circumstances
like these. The void default judgment could never have been regarded
as a judgment
"which necessarily and with complete decision"
decided the issue which would now arise should the first and second
respondents
claim payment of the outstanding balance of the purchase
price at this stage (see
Mvaami (Pvt) Ltd v Standard Finance Ltd
1977 (1) SA 861
(R) at 868C-D and G). The issue at that stage was
whether the whole outstanding balance had become payable in advance
because of
the breach while the issue now would be whether the full
purchase price had been paid by the date agreed upon as the final
date
of payment.
[25] The defence of
res
judicata
or
"issue
estoppef'
is based upon principles of
fairness and equity (see
Kommissaris
van Binnelandse lnkomste v Absa Bank
Bpk
1995 (1) SA 653
(A) at 676C-D) and it
would in my opinion result in extremely unfair and unjustifiable
consequences if the abandonment of a judgment
under these
circumstances were to be allowed to lead to a successful defence of
resjudicata.
It
follows therefore that the applicant would not be entitled to insist
upon transfer of the shares without tendering payment of
the full
outstanding balance and this too was eventually conceded by Ms
Hassim.'
[44]
Although the nullity rationale, cannot be excised from the
ratio
decidendi
of
Baloyi,
paragraph [25] states that gross
inequity trumps the application of
res judicata, which is
undoubtedly the correct fact-specific approach in keeping with
the dicta in
Goldex
and in
Molaudzi.
[45]
The next case to trawl these waters was
Shackleton
Credit Management (Pty) Ltd v Grob/er 2009 JDR 0469 (GNP).
In
this matter,
Jacobson v Havinga
was
cited, but not
Baloyi.
The
controversy arose in the context of an application to substitute a
cessionary for a cedent. Nedcor sought a default judgment
against the
respondent, its debtor. However, before the default judgment was
granted, Nedcor ceded its rights to the applicant.
To compound the
confusion, Nedcor, after the grant of the default judgment, abandoned
the judgment on the premise that it had no
rights as against the
debtor at the critical moment when the default judgment was granted
and was therefore the order was erroneously
sought. The applicant
contended that the abandonment resulted in a reversion of the
status
quo ante
the grant of the default judgment,
and could not be understood to mean the 'entire cause of action' had
been abandoned, a contention
rightly rejected at [12] of the
judgment.
[46]
The respondent then argued that
res judicata
should apply, alternatively, that the
abandonment should result in absolution from the instance. The court
held thus:
'(10). The correct
procedure for the applicant to follow would have been an application
for rescission of the judgment. In
Jacobson v Havinga t/a Havingas
2001(2) SA 177 (T) it was found that default judgment, until
rescinded, was binding and thus competent to sustain a plea of res
judicata. In that matter, a notice of withdrawal of the action was
filed by the plaintiff after default judgment had been granted
and a
new summons was issued from a different court. The court found that
in the new summons the plea of res judicata was competent
because the
court granting the default judgment although not having territorial
jurisdiction did have jurisdiction in the sense
to adjudicate upon,
determine and dispose of the matter. The judgment thus stood and
constituted res judicata until set aside.
(11). In casu, the default
judgment is however void and not effective as res judicata inter
partes. In the alternative, there is
a request that the judgment be
rescinded. As it is common cause that Nedcor had already ceded its
rights they could not proceed
with obtaining default judgment or
abandoning the default judgment. The application for the rescission
of the default judgment
is clearly brought as an alternative to the
void abandonment. The papers before me do not strictly comply with
the requirements
of rule 42. A Court however has a discretion to
correct an obviously wrong judgment and the respondent's
representative did not
in address object to a rescission of the
judgment.
(12). The further
question is whether the abandonment of this default judgment does
give rise to a defence of res judicata. In certain
circumstances the
abandonment of a judgment could arguably give rise to such a defence.
In casu however the void abandonment of
a void judgment cannot be
seen as a matter that has been finally disposed of. There was
accordingly no finality to the issue in
the matter. As stated in the
Jacobson-matter (supra), the correct procedure would be to rescind
the judgment and not abandoning
of the judgment. I cannot find that
the abandonment of a void default judgment constitutes absolution
from the instance. I accordingly
rescind the judgment.'
[47]
It seems to me that the
ratio
of
this judgment is simply that grounds to rescind were shown. The
remarks about
Res Judicata
are
obiter. The several remarks seem to suggest that the default judgment
was found to be void, yet support for the proposition
upheld in
Jacobson v Havinga
is
also expressed: this is inconsistent. The remark that: 'In certain
circumstances the abandonment of a judgment could arguably
give rise
to such a defence', cited in the judgment a
quo,
is a broad observation and is inherently
speculative. Moreover, the remark must be understood within the
context of the equitable
discretion that the courts must apply to the
application of
res judicata,
and
implies that other factors in a fact-specific enquiry would influence
any such possible outcome. Accordingly, in my view,
Shackleton
is not authority that supports the
conclusions in the judgment a
quo.
[48]
In my view, the traverse of these cases illustrates the wisdom of the
fact-specific nature of the assessment. None of these
decisions offer
strong support for the proposition that an abandonment of a judgment
ought
ordinarily
to
result in a successful defence of
Res
Judicata.
[49]
The relevant fact -specific attributes of the present case are these:
49.1
If the act of abandonment can, in an appropriate
case (ie together with other facts), constitute a waiver, it must
also mean that
the intention of the party abandoning the judgment
must be relevant. No question of a waiver of the right to claim the
indebtedness,
which was ongoing, can be contrived from the events
because all the evidence contradicts an intention to release the
O'Neils from
their indebtedness. Moreover, as it is, apparently, not
uncommon for a party to abandon part of a judgment and retain another
part,
the intention of that party to make that distinction has to be
expressed and is thus a legitimate source of information in
determining
the extent of the abandonment, a point well illustrated
in
Feyt v Myers
1919 CPD 122.
In
that case, a ruling was given by a magistrate that the onus lay with
the defendant and the case was subsequently decided against
him. The
plaintiff, thereafter, whilst on appeal, abandoned reliance on the
wrong ruling and tendered to begin the case afresh.
The court held
that the abandonment was limited and did not result in a sacrifice of
his claim.
49.2
The judgment that the appellant had obtained was
guaranteed to be overturned on appeal for want of compliance with a
peremptory
procedural requirement, which if challenged for
non-compliance would result merely in a dilatory defence. To
acquiesce in the grant
of leave to appeal and embark on the long,
ritualistic slouch towards the court of appeal where the point would
be upheld, before
resuming the litigation in earnest, is so obviously
an exercise in costly futility, that any reasonably minded person
would wince
at having to endure such a process. Seeking to obviate it
is not pernicious.
49.3
No
alternative suitable remedy existed. No grounds to invoke Uniform
Rule 42 exist,
[3]
there being no
error committed within the meaning of that rule. The summary judgment
ought not to have been granted because the
section 129 point was
good, but that is not a procedural error as contemplated by Rule 42;
rather, it is a reason to overturn the
judgment on appeal. Inasmuch
as the appellant might be said to have been obliged to allow the
appeal to run its course, and that,
tiresome as it would be, was the
alternative procedural channel, the contention is correct, but ought
not to trump the application
of common sense and fairness to the
exact circumstances shown to exist.
In
Feyt v Myers
the
court remarked that the parties were compelled to exhaust the appeal
procedure to achieve the objective of a fresh beginning,
but the
impact of
res
judicata
was
not considered in that case and therefore that decision cannot be
authority for a proposition adverse to the finding in this
case that
the appellant ought not be unsuited by the defence of
Res
Judicata
under
the particular circumstances.
49.4
The effect of applying res judicata would result
in a gift of involuntarily releasing the debtors from the debt with
no
quid pro quo.
That
outcome would be grossly unfair.
49.5
There is, on the facts, no abuse of the process.
The policy rationale for the existence of the defence of
Res
Judicata
is not at all upset by its
relaxation in this case. It was argued that the appellant's
predicament is the consequence of its own
conduct and it is not the
random victim of an unfair procedure. This is true, but that notion
does not offer a cogent reason not
to relax the application of
Res
Judicata,
upon a holistic appreciation of the
circumstances, amongst which is no shred of unfairness that could be
suffered by the debtor
owing an admitted debt.
49.6
Lastly, section 34 of the constitution is worthy
of being given weight:
'Everyone has the right
to have any dispute that can be resolved by the application of law
decided in a fair public hearing before
a court or, where
appropriate, another independent and impartial tribunal or forum.'
[50]
Lastly, it was argued that an implication of not applying
res
judicata
in this case is that the effect
would be to treat the initial summary judgment as
res
judicata
from the moment the order was
granted until it was abandoned, and then to treat the judgment as not
res judicata
thereafter,
which would be an impermissible anomaly. In my view, this question
does not truly arise.
Res judicata
is
not an indelible attribute which adheres to an initial judgment,
which cannot thereafter be exorcized. The concept of
res
judicata
is that of a defence to be raised at
a given moment when a second case is launched, whereupon, a court
shall then pronounce, at
that moment, whether the mantle of
res
judicata
is to be cast over a second action
or application.
[51]
Accordingly, upon a fact specific appreciation aimed at fairness,
Res
Judicata
ought not to be applied.
Conclusions and costs
[52]
Accordingly, the appeal should be upheld.
[53]
The matter warranted the employment of two counsel and the costs
should follow the result inclusive of such costs.
The
Order
The
appeal is upheld with costs including the costs of two counsel.
_____________________
Sutherland
J
(with whom Matojane and Makume JJ concur)
Judge of the High Court,
Gauteng
Local Division, Johannesburg
______________________
Matojatone
J
Judge
of the High Court,
Gauteng
Local Division, Johannesburg
Makume
J
Judge
of the High Court,
Gauteng
Local Division, Johannesburg
Hearing:
30 May 2017
Judgment:
26 June 2017
Appearances:
For
the Appellant:
Adv
N Konstantinides SC,
With
him, Adv H M Viljoen and Adv M L S Msimang
Instructed
by Chari Cilliers Inc
For
the Respondent:
Adv
J Suttner SC,
Instructed
by Walter Niedinger & Associates
[1]
See: Evins v Shield Insurance Co Ltd
1980 (2) SA 814
(AD) at 835
F-G.
[2]
This conclusion was based on the Zimbabwean authority of Ngani v
Mbanje & Another 1988(2) SA 644 (ZS). In that case, English
authority was the source of that finding; ie the decision in Macfoy
v United Africa Ltd
[1961] 3 ALL ER 1169
(PC). The notion that an
act performed by the exercise of public power is ipso facto void and
does not require any step to set
it aside is a contradiction of the
South African decisions in Oudekraal Estates (Pty) Ltd v City of
Cape Town
2004 (6) SA 222
(SCA) and MEG for Health & Another v
Kirfand Investments (Pty) Ltd
2014 (3) SA 481
(CC). Accordingly,
such notion is not good South African Law.
[3]
See: 'Rule 42 (1) The court may, in addition to any other powers it
may have, mere motu or upon the application of any party
affected,
rescind or vary:
(a) An order or judgment erroneously
sought or erroneously granted in the absence of any party affected
thereby;
(b) an order or judgment in which
there is an ambiguity, or a patent error or omission, but only to
the extent of such ambiguity,
error or omission;
(c) an order or judgment granted as
the result of a mistake common to the parties.
(2) Any party desiring any relief
under this rule shall make application therefor upon notice to all
parties whose interests may
be affected by any variation sought.
(3) The court shall not make any
order rescinding or varying any order or judgment unless satisfied
that all parties whose interests
may be affected have notice of the
order proposed.