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Moshoeshoe and Another v Firstrand Bank Ltd and Others (40290/12) [2018] ZAGPJHC 8; [2018] 2 All SA 236 (GJ) (25 January 2018)

85 Reportability
Land and Property Law
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Brief Summary

Execution — Rescission of judgment — Late application for rescission — Applicants sought condonation for late filing of rescission application following default judgment leading to loss of primary residence — Applicants claimed ignorance of proceedings due to incorrect address on summons — Court held that the failure to serve the summons correctly constituted a valid ground for rescission, emphasizing the duty of the bank's attorneys to ensure proper notification of the applicants.

Comprehensive Summary

Summary of Judgment


Introduction


The proceedings concerned an application for condonation and rescission of a prior High Court order granted by default when the applicants failed to appear in the Opposed Motion Court. The applicants sought to set aside an order dismissing an earlier rescission application, which earlier rescission application had in turn aimed to undo a Registrar’s default judgment and the execution against the applicants’ primary residence.


The parties were Moshoeshoe GT and Moshoeshoe EM (the applicants, a married couple) against Firstrand Bank Ltd (the first respondent) and three private respondents associated with the purchase of the property at the sale in execution (Seponono AM, Mathapelo JS, and Ngcobo J, cited as the second to fourth respondents), together with the Sheriff of the High Court, Benoni (fifth respondent).


Procedurally, the dispute had a prolonged history. A Registrar’s order was granted against the applicants on 27 September 2010, including a money judgment and a declaration that their home was executable. The applicants attempted rescission of that Registrar’s order (initially under a different case number), and later re-launched or replicated rescission proceedings under the present case number. Those rescission proceedings were opposed, but on 27 January 2014 they were dismissed with costs by Dodson AJ due to the applicants’ non-appearance when the matter was called. The applicants later brought the present application (filed in or about 20 November 2016) seeking rescission of Dodson AJ’s dismissal order and condonation for non-compliance with the rules. Only the bank opposed this application, and it did so by taking preliminary legal points rather than by filing an opposing affidavit on the merits.


The subject-matter was the procedural validity and fairness of default orders in motion proceedings, and whether the applicants should be permitted—through rescission—to re-open litigation that materially affected their primary residence, in circumstances where the underlying foreclosure and execution process was alleged to have proceeded without the applicants having had proper notice and without judicial oversight.


Material Facts


An undisputed background fact was that the applicants concluded a loan agreement with the bank in 2006 to purchase the property, and the property was mortgaged as security. The applicants selected their home address as their domicilium citandi et executandi, but the contract incorrectly recorded the street number as 36 rather than 26. The applicants alerted the conveyancing attorney and also wrote to the bank to correct the address, and the bank’s records reflected the correct address for purposes such as sending statements.


It was also treated as undisputed on the papers that when the bank’s attorneys issued and served the summons (issued 1 July 2010), it cited the incorrect address (36 R Street) and was served at that incorrect address. The sheriff’s return recorded that service was effected by affixing the summons to the gate at that address, with no person found at home. The summons did not come to the applicants’ attention, and they did not defend the action. In consequence, the bank obtained a default judgment from the Registrar on 27 September 2010, including a declaration that the applicants’ home was executable.


Further undisputed facts included that statutory notices relevant to debt review processes under the National Credit Act 34 of 2005 were also directed to the incorrect address and did not come to the applicants’ attention. The writ of execution was later served at the correct address (26 R Street) on 18 November 2010, though at least one copy reflected continuing confusion about the street number.


The applicants contended—and the court recorded that the bank and the other respondents did not meaningfully dispute the factual narrative—that the owners of 36 R Street had alerted the bank’s attorneys that the summons had been affixed at the wrong property, and were told to ignore it. The court treated it as a significant part of the factual matrix that the summons was not brought to the applicants’ attention, yet default judgment was nevertheless taken.


The property was sold in execution. After an initial sale fell through, a further sale occurred on 15 February 2011, and registration later took place in the name of the fourth respondent on 18 August 2011. Eviction proceedings then followed, culminating in the applicants’ eviction in September 2014 and associated conflict described in the judgment as part of the broader chronology.


As to the history of the litigation steps, the applicants attempted rescission processes through various legal representatives. A rescission application aimed at the Registrar’s order was said to have been initiated in 2010/2011, but was not effectively prosecuted. On 24 October 2012, almost two years after the Registrar’s foreclosure order, the applicants brought a further rescission application (under the present case number), including a request for condonation due to lateness. That application was opposed. On 27 January 2014, Dodson AJ dismissed it with costs due to the applicants’ failure to appear. The present application sought condonation and rescission of Dodson AJ’s dismissal order, and it was common cause for purposes of the present hearing that the bank did not place a competing factual version before the court in an opposing affidavit to the rescission application.


Legal Issues


The central legal questions the court was required to determine were whether the bank’s preliminary defences—res judicata and lis pendens—barred the present rescission application, and, if not, whether the applicants had established good cause under the common law to justify rescission of Dodson AJ’s order dismissing the earlier rescission application.


The dispute primarily concerned the application of legal principles to procedural facts, rather than the resolution of factual disputes on the merits, because the bank did not file an answering affidavit disputing the applicants’ version and instead sought dismissal on legal grounds. The court nevertheless had to make an evaluative assessment, within the common-law rescission framework, of whether the applicants’ explanation for default was reasonable, whether the application was bona fide, and whether there were prima facie prospects that the underlying Registrar’s order could be set aside.


A further embedded question was the proper characterisation of a dismissal order granted by default in an opposed motion court: whether such an order should be treated as a final determination “on the merits” for purposes of res judicata, or as a procedural disposition susceptible to rescission.


Court’s Reasoning


The court addressed the bank’s res judicata argument by analysing the nature of the order granted by Dodson AJ. The bank’s contention depended on the proposition that, because the motion papers were before Dodson AJ when the matter was called, the dismissal should be treated as a substantive adjudication equivalent to a decision on the merits. On that approach, the applicants’ only remedy would be to pursue leave to appeal.


The court rejected that characterisation. It reasoned that, in the ordinary practice of the court, when a matter in the opposed motion court is called and a party fails to appear, the matter is treated as unopposed for purposes of disposing of it procedurally once the court is satisfied that the matter is properly enrolled. The court stated that it does not, in that setting, scrutinise the merits in a way that produces determinate findings on disputed issues; the absence of reasons for the order was treated as consistent with a customary default order rather than a merits judgment. The court considered that it could not be correct to treat such an order as a merits adjudication with the finality required for res judicata.


The court also considered the practical implications of the bank’s res judicata stance. It held that, if the applicants were forced into an appeal, the appellate court would face an insurmountable difficulty because there were no reasons to evaluate, and the procedural nature of the order meant that there was no merits determination to appeal against in the usual sense. The court’s analysis thus treated rescission as the appropriate mechanism to enable the dispute to be properly considered after the order granted in the applicants’ absence was revisited.


Turning to lis pendens, the court held that the bank’s argument misconceived the object of the present application. While there had been multiple attempts to rescind the Registrar’s foreclosure order, the present proceedings were directed at rescinding Dodson AJ’s order dismissing the earlier rescission application. Because the present cause was not duplicative of pending litigation under another case number, and because no other pending matter was shown to bear on the outcome of the present application, the lis pendens defence could not succeed.


After dismissing both preliminary points, the court considered whether the applicants had made out a case for rescission under the common law, which required at least a reasonable explanation for default, bona fides in bringing the application, and a bona fide defence carrying prima facie prospects of success if the underlying matter were re-opened. The court recorded that the bank conceded in argument that, if its legal points failed, rescission should follow.


On the explanation for default, the court accepted the applicants’ detailed account of their difficulties in obtaining effective legal representation and the succession of attorney-related failures described in the papers. The explanation was treated as contextualising why the applicants did not appear when the matter was called and why the litigation had not been prosecuted to finality earlier.


On bona fides, the court found there was no real dispute: the applicants were attempting to vindicate their rights in relation to the loss of their home and had persisted in seeking legal protection.


On prospects of success, the court considered it important that the underlying Registrar’s order had been granted in circumstances where, on the applicants’ undisputed version, the summons did not come to their attention, and the subsequent execution occurred without judicial oversight. The court also relied on Constitutional Court authority that a Registrar lacks power to grant an order declaring a person’s home executable. This, combined with the asserted lack of proper notice, led the court to conclude that the applicants had, prima facie, significant prospects of success in overturning the Registrar’s order if the rescission application were properly ventilated.


The court therefore exercised its discretion to grant condonation for non-compliance with the rules and to rescind and set aside the default order of Dodson AJ, together with a costs order against the bank.


Outcome and Relief


The court granted condonation for the applicants’ non-compliance with the rules.


The court ordered that the judgment and order of Dodson AJ dated 27 January 2014 be rescinded and set aside.


The court ordered that the first respondent (Firstrand Bank Ltd) pay the costs of the present application.


Cases Cited


Gundwana v Steko Development and others 2011 (3) SA 608 (CC)


Absa Bank Ltd v Lekuku [2014] ZAGPJHC 274


Pitelli v Everton Gardens Projects CC 2010 (5) SA 171 (SCA)


Colyn v Tiger Food Industries Ltd t/a Meadow Feed Mills (Cape) 2003 (6) SA 1 (SCA)


Legislation Cited


National Credit Act 34 of 2005


Rules of Court Cited


Uniform Rule of Court 42(1)(a)


Uniform Rule of Court 31(2)(b)


Uniform Rule of Court 6(5)(d)(iii)


Held


The court held that the dismissal order granted by Dodson AJ due to the applicants’ non-appearance was not a determination on the merits with the finality required for res judicata, and that the present proceedings were not barred by lis pendens because they concerned rescission of Dodson AJ’s procedural dismissal order rather than duplicative pending litigation.


The court further held that the applicants established good cause under the common law for rescission, including a reasonable explanation for their default, bona fides in seeking relief, and prima facie prospects of success in challenging the underlying Registrar’s foreclosure order, particularly in light of the applicants’ contention that they were not served with the summons and the principle that a Registrar lacks authority to declare a primary residence executable.


LEGAL PRINCIPLES


A default dismissal in the opposed motion court, granted because a party failed to appear when the matter was called, is not necessarily equivalent to a merits adjudication for purposes of res judicata, particularly where the order is granted without reasons and without findings on the substantive dispute.


A plea of lis pendens requires the existence of pending litigation involving the same dispute; an application directed at rescinding a later procedural dismissal order is not rendered lis pendens merely because other proceedings (past or attempted) concerned the underlying substantive order.


Under the common law, rescission requires good cause, which includes a reasonable explanation for the default, bona fides, and a bona fide defence with prima facie prospects of success.


In foreclosure contexts affecting a primary residence, the absence of proper notice and the absence of judicial oversight are material to the assessment of whether there are prima facie prospects of success in rescission-related relief, and the Registrar’s lack of power to declare a home executable (as recognised in Constitutional Court authority) is relevant to assessing those prospects.

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[2018] ZAGPJHC 8
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Moshoeshoe and Another v Firstrand Bank Ltd and Others (40290/12) [2018] ZAGPJHC 8; [2018] 2 All SA 236 (GJ) (25 January 2018)

SAFLII
Note:
Certain
personal/private details of parties or witnesses have been
redacted from this document in compliance with the law
and
SAFLII
Policy
REPUBLIC
OF SOUTH AFRICA
IN
THE HIGH COURT OF SOUTH AFRICA
GAUTENG
LOCAL DIVISION, JOHANNESBURG
Case
number: 40290/12
REPORTABLE
OF
INTEREST TO OTHER JUDGES
In
the matter between:
Moshoeshoe
GT
First
Applicant
Moshoeshoe
E
M
Second
Applicant
and
Firstrand
Bank
Ltd
First
Respondent
Seponono
A
M
Second
Respondent
Mathapelo
J
S
Third
Respondent
Ngcobo
J
Fourth
Respondent
The
Sheriff of the High Court,
Benoni
Fifth
Respondent
JUDGMENT
Introduction
[1]
The
applicants, a married couple, seek condonation for the late filing of
their application for rescission of an order of this Court
obtained
against them by default of their appearance in Court when their case
was called. In addition, they seek to have the order
rescinded.  The
order concerns a loss of their primary residence. This Court
entertains numerous rescission applications in
any one court term.
Almost all of them arise from a failure of the applicant to comply
with the time periods prescribed in the
Uniform Rules of Court
concerning pleadings, or a failure on their part to attend Court on
the date of the hearing to present their
cases. Invariably the
explanation given for their failure is that they were ignorant of the
fact that a case was launched against
them by the party that
succeeded in obtaining a judgment by default, or they were ignorant
of the date of the hearing. This case,
however, is unusual. Here the
applicants want to rescind an order dismissing their application for
rescission of a previous order.
The basic facts are these: an order
was granted against them by the Registrar of this Court as a result
of their failure to answer
to a summons issued against them; they
brought an application for rescission of the order issued by the
Registrar; their application
was opposed by the first to fourth
respondents; they failed to make an appearance when the matter was
called in the Opposed Motion
Court and so it was dismissed; they now
bring an application to rescind that order. The case has a long and
tortuous history, which
has to be reflected upon if any sense is to
be made of the applicants’ claim to relief.
History
[2]
Some
seven years ago, on 27 September 2010, the Registrar issued an order
requiring the applicants to jointly and severally pay
the first
respondent (the bank) the sum of R482 145.90 as well as interest
on this amount at the rate of 9.2% p.a. from 1
June 2010, plus costs
in the amount of R650.00. The Registrar went a step further and
declared the home of the applicants, which
is described in the order
as Erf 81, D. H. Township (the property), and which was mortgaged to
the bank, executable.  The
more commonly used address of the
property is 26 R. Street, D. Park, Benoni.  The order, no doubt,
caused significant harm
to the applicants. Two years and one month
later, the applicants approached this Court to have the order of the
Registrar rescinded.
The application was founded on the provisions of
rule 42(1)(a), alternatively rule 31(2)(b), alternatively on the
principles of
the common law. In explaining why they allowed a
default judgment to be obtained from the Registrar, they claimed that
the summons
commencing action against them was never served upon
them, as a result of which they were at all material times ignorant
of the
fact that they had a case to answer to.
[3]
The
issue originates with the fact that in 2006 they concluded a contract
of loan with the bank in order to purchase the property.
They agreed
to pledge the property as security for the loan. They elected to use
the address of the property – 26 R. Street,
D. Park, Benoni –
as their
domicilium
citandi et executandi
,
but unfortunately this got incorrectly recorded in the contract as 36
R. Street, D. Park, Benoni. They alerted the conveyancing
attorney
from Austin Jordon Attorneys, who was appointed by the bank, of this
error, but he advised them that the error should
cause them no
anxiety. He noted that it was of no consequence since the property
was correctly described on the register of deeds
at the office of the
Registrar of Deeds and on the title deed issued by the Registrar, and
it is those descriptions that were important.
The description on the
register and on the title deed was Erf 81, D. Township. Being
uneducated in these matters, they accepted
the advice. In the
meantime, they wrote to the bank directly and informed it that the
address on the contract was incorrectly reflected
as 36 R. St instead
of 26 R. St. The bank made sure that its records had the correct
address, thus ensuring that all statements
reflecting the payments by
the applicants towards liquidating the debt were sent to 26 R. St and
not 36 R. St.
[4]
Despite
the conveyancing attorney’s assurance that the error was of no
material importance, it actually had a serious practical
consequence
for the applicants – one that was the source of immense
heartache for them and which turned out to be financially
ruinous for
them. The consequence took effect when the applicants failed to
honour all their obligations in terms of the loan agreement.
Aware of
the problems they faced, the applicants drew on the offer contained
in s 86(1) of the National Credit Act, 34 of 2005
(the NCA) to apply
to a debt counsellor to have themselves declared over indebted. Their
application met with success. On 1 June
2010 the bank’s
attorney, Lowndes Dlamini Attorneys (Lowndes Dlamini), issued notice
in terms of s 129 of the NCA, which
notice came to the attention of
the first applicant. He contacted an employee of this firm of
attorneys and told her that he was
under Debt Review and supplied her
with the details of the appointed Debt Counsellor. This did not deter
the bank from issuing
a summons against the applicants. The summons,
issued on 1 July 2010, identified 36 R. Street and not 26 R. Street
as their place
of residence and was accordingly served at 36 R.
Street. Crucially, (the importance of which will be clear in a
moment) the summons
was issued by Lowndes Dlamini. According to the
return filed by the Sheriff he went to 36 R. Street on 8 July 2010
and found the
property fenced, the gates locked and “
nobody
at home
”,
thus leaving him with an option to either “
fix
a copy
(of the summons)
to
the entrance
”,
or to leave without serving the documents. He chose the former
option. As to what occurred with the summons is explained
below in
[8]. For the moment the important undisputed fact is that the summons
did not come to the attention of the applicants.
In consequence, they
failed to note their opposition to the action and the bank drew the
advantage of securing an order by default
from the Registrar and, as
we know, it did not let the advantage slip away. It took the order on
27 September 2010.
[5]
It is
not to be forgotten that the notice prescribed by s 86(10) of the NCA
(the s 86(10) notice) was, too, sent per registered
post to 36 R. St.
It, too, did not come to the attention of the applicants.
[6]
On or
about 22 October 2010 the first applicant was informed, per telephone
call, by an employee of the bank that the order was
secured from the
Registrar and that the bank would soon be issuing a writ of
execution. While the Debt Counsellor appointed to
attend to their
over indebtedness was trying to resolve the matter with Lowndes
Dlamini, the bank nevertheless instructed Lowndes
Dlamini to issue
and serve the writ of execution. The writ of execution, unlike the
summons and the s 86(10) notice, was correctly
served on the
applicants at 26 R. Street. This was on 18 November 2010. By the
terms of the writ they were informed that a sale
of execution of
their property situated at 26 R. Street would be held. The applicants
were served with two copies of the writ.
Both copies reflected, per
typeset, the address of the property as 36 R. Street. But, one of the
copies had a line drawn in manuscript
over the typeset number 36 and
the number 26 written, again in manuscript, above it. In essence, the
mis-description of the address
continued, at least on one copy of the
writs. The notice advertising the sale in execution was placed in The
Times newspaper of
19 November 2010. It described the property as
being situated at 36 R. Street, but it clearly identified the two
applicants as
the debtors against whom judgment was secured. Thus,
according to the advert the property that was to be sold was not the
one that
was mortgaged to the bank.
[7]
On 11
November 2010 the applicants sought to have the order issued by the
Registrar rescinded. They appointed a Mr Gideon Desemond
Phalatse (Mr
Phalatse) of Phalatse Attorneys to attend to the rescission
application. On 16 January 2011 he informed the first
applicant that
the said application was launched and that it would automatically
stay the execution process. Mr Phalatse operates
from Pretoria and
had told the first applicant that he had appointed Manungeni
Attorneys as his correspondent attorneys. The last
time the first
applicant saw or heard from Mr Phalatse was on 16 January 2011. The
applicants were never furnished with a full
copy of the application
for rescission by Mr Phalatse. However, the first page of the notice
of motion was annexed to his present
papers and it indicates that a
rescission application was filed on 11 January 2011 (but according to
the first applicant it was
served on the bank on 15 December 2010).
The case number is 25265/10. Nevertheless, the bank continued with
the process of executing
on the order of the Registrar, which means
that if this application was actually brought it failed to deter the
bank from proceeding.
If this is true then the bank cannot be said to
have acted
bona
fide
.
In this regard, it is important to bear in mind the dictum of the
Constitutional Court that:
“
An
agreement to put one’s property at risk as security in a
mortgage bond does not equate to a licence for the mortgagee to

enforce execution in bad faith.
”
[1]
[8]
The
applicants as we know were served with two copies of the writ. Upon
being served with these copies the first applicant investigated
the
issue of the service of the summons. He made contact with a Ms Gangat
who owns the property situated at 36 R. Street. She informed
him that
in July of that year she found the summons affixed to her gate. She
noticed that it was not addressed to her even though
the address
contained therein reflected her address. She immediately made contact
with Lowndes Dlamini and informed them of this
fact. She was told
that she should ignore the summons. Lowndes Dlamini was, therefore,
made aware of the fact that the summons
did not come to the attention
of the applicants. By virtue of this knowledge, they also must have
known that they sent the s 86
notice to the incorrect address. Yet
they persisted with securing a default judgment against the
applicants. This particular conduct
of the attorneys, I must say, is
disconcerting. At the very least they were under a legal duty to
bring to the attention of the
Registrar that neither the summons nor
the s 86 notice were brought to the attention of the applicants.
[2]
Instead they remained silent and took the order from the Registrar.
[9]
The
sale in execution took place. This occurred despite the fact that a
rescission application was supposedly pending. The property
was sold
to the fourth respondent, but he was unable to secure a loan from any
financial institution as he was declared to be an
unworthy credit
risk. The sale was cancelled. A new sale was held. The property was
then sold to the second, third and fourth respondents
on 15 February
2011. The second and third respondents are related to the fourth
respondent. On 18 August 2011 the property was
registered in the name
of the fourth respondent.
[10]
In
the meantime, the first applicant contacted a Mr Malatjie of the bank
and informed him that while judgment was taken against
him and the
second applicant no summons was ever served upon them. On 7 March
2011 the first applicant received a call from an
employee of the
bank, a Ms Jacqueline Jacobs (Ms Jacobs). She said that she was
informed by the manager of her department, a Mr
Desmond Scheepers (Mr
Scheepers), that the sale in execution was set aside. He asked her to
confirm this in writing. On 23 March
2011 he received an email from
Ms Jacobs containing an attachment which was a letter from Mr
Scheepers addressed to him. She indicated
to him that the letter
constituted the bank’s formal response to his complaint
(presumably this refers to his contention
that the summons was never
served upon him or the second applicant). Contrary to what Ms Jacobs
said orally, the letter of Mr Scheepers
essentially iterated that the
bank had no intention of cancelling the sale of their property as it
was of the view that it was
within its rights to sell the property in
order to recover the monies lent to the applicants.
[11]
The
applicants applied to the Legal Aid Board for assistance with legal
representation. They were refused legal aid. They appealed
against
the decision. On 30 June 2011 they were informed by the Regional
Operations Executive of the Legal Aid Board that their
appeal was
unsuccessful because “
there
are no prospects of success (merits) in proceeding with the matter.
”
[12]
On or
about 14 September 2011 the first applicant approached a Mrs
Selamolela of T S Selamolela Attorneys to assist him in bringing
the
rescission application. Mrs Selamolela passed his case on to
Manungeni Attorneys, which informed him that they would only be
able
to assist if he were to pay part of their fees upfront. He was unable
to do so. Manungeni Attorneys were the same attorneys
that were
appointed by Mr Phalatse to act as correspondent attorneys on his
behalf. The first applicant asked them about the application
that Mr
Phalatse was supposed to have launched in November 2010, and was
informed that as their fees for acting as correspondent
attorneys
were not paid by Mr Phalatse they did not do anything with the
application. He was now alerted to the fact that Mr Phalatse
was no
longer practising as an attorney. He contacted the Law Society of the
Northern Provinces who informed him that it had suspended
Mr Phalatse
from practice on 20 July 2010, and that the Court had struck him from
the roll of attorneys on 8 November 2011. It
is crucial to note that
while the applicants only learnt of this on 30 June 2011 they had
actually engaged Mr Phalatse on or about
11 November 2010, and at
that time he was legally unable to proffer any services to them, but
did not tell them so.
[13]
Thereafter
the second, third and fourth respondents brought an application in
the Magistrates Court for the District of Benoni for
the eviction of
the applicants from the property. The applicants were represented by
a Mr Sefatsa, of Sefatsa Attorneys.
[14]
During
the proceedings for the eviction order the presiding magistrate
advised them that the way to halt the eviction was to have
the
foreclosure order of the Registrar rescinded in this Court. It seems
the learned magistrate was not informed that the rescission

application had already been launched.  The application for
their eviction was granted on 2 February 2012. In early May 2012
the
fourth respondent sent the Sheriff to evict the applicants from the
property. The applicants immediately approached this Court
on an
urgent basis seeking an interdict halting the eviction process. On 9
May 2012 they secured an interim interdict from this
Court, per Spilg
J. The order of Spilg J reads:
“…
2.
That pending the final determination of Appeal and Recession.
Applications pending before the above Honourable Court under case

number 438/2011 and 25265/2010 respectively [It is not clear on the
papers which Court is being referred to here].
2.1
That the Respondents to be interdicted an restrained from evicting
the Applicants at the property situated at Stand No. 26 R.
Street, D.
H. Park, Benoni
2.2
That the 1
st
Respondent [fourth respondent in our case] be
interdicted and restrained from intimidating the Applicants directly
and indirectly.
3.
That the Applicants will continue in paying the Municipality services
upon the receipt of the Rates and Taxes, Water and Lights
and Refuse
account as applicable and that the Municipality cannot be instructed
by the 1
st
Respondent [fourth respondent in our case] to terminate the services
to the Applicants. While the Applicant so pays those account
directly
to the 4
th
Respondents [the Municipality]. The Applicants obligation to so pay
as a condition not to have services terminated depending on
receipt
by them of account for such payment whether directly from the
[Municipality] or via the [present fourth respondent], if
the
Applicant are no longer identified by the [Municipality] as the
relevant party to be billed.
”
(The
quotation is verbatim.)
[15]
Then,
on 24 October 2012, almost two years after the foreclosure order was
granted by the Registrar, the applicants brought another
application
to have the order rescinded, as well as to have the order of the sale
of their home in execution set aside. The applicants
are aware that
their application was outside the time periods allowed for the
launching of a rescission application and therefore
asked that its
late-filing be condoned. Important to note though is that this time
the applicants were represented by attorneys
from J Galananzhele Inc.
Mr Galananzhele, the attorney dealing with them merely re-filed the
same rescission application that was
filed by Mr Phalatse, except he
obtained a different case number. That is the present case number:
2010/40290. The application
was served on all the present
respondents. The application was resisted by the first to fourth
respondents presently cited here.
All these respondents filed
opposing papers.
[16]
The
answering affidavit of the bank was filed by a Ms Amelia Buisson who
is the bank’s foreclosure manager. Her affidavit
was filed on
or about 8 March 2013, some five months after the application was
served on the bank. There is no application by the
bank for
condonation for the late filing of its answering affidavit.
[17]
Ms
Amelia Buisson does not challenge any of the factual averments, which
are relayed above in [2] – [14]. This is worrying
given that
the first applicant has averred that the bank proceeded to issue the
writ fully cognisant of the fact that by that stage
the rescission
application was brought, and that it was based on a common cause fact
that the order was obtained without the summons
being served on the
applicants. Instead of placing its factual version before Court the
bank elected to rely solely on a number
of legal contentions, which
according to it should be determined on the basis of the facts
averred to by the applicants. These
contentions are:
a.
The
application for rescission was well out of time, thus making it
incompetent;
b.
The
applicants were personally present during the sale in execution and
had therefore “
acquiesced
to the validity of the sale in execution
”;
c.
According
to the abstract system of transfer of immovable property the property
had been transferred to the fourth respondent;
d.
Even
if the order of the Registrar was rescinded, the property cannot be
vindicated from the second to fourth respondents because
“
the
sale in execution cannot be set aside
”.
[18]
The
answering affidavit of the second to fourth respondents was deposed
to by the fourth respondent. It was filed on 14 February
2013 four
months after they received the application. The fourth respondent
does apologise for the late filing of the answering
affidavit, but
does not apply for it to be condoned. These respondents, too, do not
challenge any of the factual averments of the
applicants relayed
above in [2] – [14]. Their main ground of challenge is that
they had legitimately purchased the property
during the sale in
execution and that the applicants had had numerous opportunities to
bring their application for rescission of
the order of the Registrar
but failed to do so. Simultaneously with their opposition they
brought a counter-application wherein
they sought,
inter
alia
,
an order “
enforcing
the eviction order granted on 7 December 2011 in the Magistrates
Court for the District of Benoni.
”
[19]
The
applicants did not file a replying affidavit, nor did they answer to
the counter application of the second to fourth respondents.
[3]
[20]
On 27
January 2014 the matter was called in the Opposed Motion Court before
Dodson AJ. The applicants failed to make an appearance.
Dodson AJ
issued a default judgment which dismissed the rescission application
of the applicants with costs, postponed the counter-application
of
the second to fourth respondent and reserved the costs of the
counter-application.
[21]
In
early September 2014 the Sheriff of the Benoni District evicted the
applicants and their family at the instance of the fourth
respondent.
The Sheriff removed the possessions of the applicants, placed them on
the street and locked the applicants and their
children out of the
property. The applicants with the assistance of members of the
community removed the locks and re-took possession
of the property.
On 11 September 2014 the first applicant was arrested. On 13
September 2014 the fourth respondent and his friends
evicted the
applicants and their family and locked the property. The applicants
unlocked it and re-took possession. On 19 September
2014 while the
first applicant was at work the second applicant was arrested. On the
same day the fourth respondent came to the
property with some friends
and demanded that the children vacate the property. The first
applicant was called. He arrived. Upon
seeing him the fourth
respondent and his friends fled. A few minutes later the first
applicant was arrested. He was released on
bail. The second
applicant, too, was released on bail. They were both charged and a
criminal case against them is now pending.
They are being represented
by Mrs Selamolela. On their return to the property they found the
fourth respondent and his friends
removing their furniture. The
applicants sought the assistance of the police, but to no avail. They
have since vacated the property.
[22]
The
first applicant has since attended this Court to enquire about the
default judgment and order of Dodson AJ. He found the case
file to be
empty. He was informed by the office that types and records the Court
Orders of the order of Dodson AJ. He was furnished
with a copy of the
order. He claims that he was surprised to learn that the judgment and
order were taken in their absence. He
claims that he was always under
the impression that Mr Galanzhele was attending to the opposed
application to rescind the order
of the Registrar.  He took the
copy of the Dodson AJ order to Mrs Selamolela and asked her to launch
an application for its
rescission.  She failed to do so. When it
became clear to him that she was not pursuing the matter on their
behalf they dispensed
with her services. This was in April 2015. They
appointed the attorneys Luis Teixeira Inc to represent them. In
August 2015 these
attorneys informed them that they were not able to
assist them. They sent the applicants an email, the contents of which
read:
“
We
regret to inform you that we are no longer able to continue as your
attorneys in your matter.
In
the interim, we have furnished your details to Richard of RMB Wands
Attorneys who are highly recommended by Advocate Shaw and
who will be
in contact with you shortly.
If
you have any queries, you are welcome to contact Advocate Shaw or
Lesley.
Thank
you for your instructions to date.
”
[23]
The
first applicant claims that he only received the email on 22 March
2016. However, in the meantime on 11 December 2015 he engaged
the
services of Advocate Viquelin Kim Johnson, who informed the
applicants that she would bring an urgent application in the Gauteng

High Court, Provincial Division to rescind the order of Dodson AJ. It
bears mentioning that Dodson AJ sat in the Gauteng High Court,
Local
Division. She charged him a fee of R54 000.00, of which he paid
R23 000.00. As he was not able to pay the rest
she was not able
to continue servicing him. He terminated her services in August 2016,
when he appointed his present attorney Mr
Hadebe of T Hadebe
Attorneys. Mr Hadebe had great difficulty in locating all the papers
in the matter, which he required in order
to launch a properly
considered application for rescission. The application was brought on
or about 20 November 2016. While identifying
Rule 42(1)(a) as a
ground for the rescission, it is really brought in terms of the
common law. It was served on all the respondents.
Only the bank
opposed it.
[24]
The
bank did not file an opposing affidavit. Instead it filed a notice in
terms of rule 6(5)(d)(iii) wherein it stated that it intended
to
raise two mutually exclusive points of law, which were argued in the
alternative. They were:
a.
The
matter has been finalised in this Court, i.e.
res
judicata
;
b.
The
matter is still pending i.e. a plea of
lis
pendens
Res
Judicata
[25]
The
argument that the matter had been finalised in this Court goes like
this: The order of Dodson AJ may have been given because
the
applicants were in default, but it has to borne in mind that when the
matter was called in Court all the papers of the applicants,
as well
as those of the bank, were placed before Dodson AJ; therefore, Dodson
AJ was fully apprised of the case made out by the
applicants as well
as the basis of the bank’s opposition; in these circumstances,
the order is equivalent to a judgment as
it is a decision on the
merits of the application for rescission. Taken to its logical
conclusion this contention leaves the applicants
with one option
only, to apply for leave to appeal the order of Dodson AJ to a higher
court. The application would have to be brought
before Dodson AJ and
if unsuccessful it would have to be on petition to the Supreme Court
of Appeal.
[26]
It
bears reminding that my colleague Dodson AJ did not give any reasons
for his decision. He merely issued an order, which is customary
in
this Court when a default judgment is given. In these circumstances,
it cannot be correct to say that Dodson AJ had taken all
the facts
into account and heard full argument, even if only from one side,
before granting the order. Default judgment in this
Court is not only
obtained when the Court is entertaining unopposed applications, it is
also granted when the Court is entertaining
opposed applications, but
where one of the parties is in default of its duty to appear at the
hearing. When this occurs the Court
deals with the matter as if it is
unopposed and, after being satisfied that all procedural requirements
for the matter to have
been properly placed on the roll are complied
with, grants the order. The Court does not scrutinise the
application. If it were
to do that and found that the party that is
in default has a good case, it would postpone the matter, but never
grant an order
in favour of that party. It would do so simply because
that party has failed in its duty to make an appearance when the
matter
was called. When the matter is next called, that party would
have to explain its default and could find itself mulcted with costs

of its opponent at the previous hearing.
[27]
In my
view, the order of Dodson AJ is not equivalent to a judgment where
the main issue in dispute between the applicants and the
bank (which
secured the order from the Registrar) was solemnly and with certainty
determined in favour of the bank. Dodson AJ has
certainly issued an
order which dismissed the application of the applicants but the
learned Acting-Judge did so without going into
the merits of the
dispute and without making any findings on these merits. Hence, the
absence of reasons for the order granted
by him on 27 January 2014.
[28]
Another
factor that demonstrates the folly of the view that the matter is
res
judicata
leaving open an appeal as the only avenue forward (assuming that the
application for leave to appeal succeeded), is the impossible

position the appellate court would find itself in given the absence
of any reasons from Dodson AJ. Dodson AJ cannot be asked to
furnish
any reasons for he merely granted the order as per the usual practice
in this Court. There was no misdirection on the part
of Dodson AJ.
Hence, the appeal would have to fail even though the applicants’
case would not have been heard (in both the
court
a
quo
and the appellate court). All the facts referred to above, which
incidentally are not disputed, would remain ignored
in
toto
,
although they are of crucial importance for a fair and just
determination of the dispute between the applicants and the
respondents.
[29]
It is
clear then that the order of Dodson AJ was granted without the merits
of the dispute between the applicants and the respondents
being
considered and without the applicants being heard. Accordingly, in my
view, it is not complete and is susceptible to being
revisited by
this Court. In fact, the only available remedy to the applicants, who
remain aggrieved by an order which has far reaching
implications for
them, is to ask this Court to revisit the order. Once that process is
complete they would then be able to approach
the appellate court. In
other words, the only avenue open to them is to have the order of
Dodson AJ rescinded. Should they fail
either because they have failed
to make out a case for rescission or for whatever other reason, they
would be entitled to approach
an appellate court for further relief.
Until then the only avenue open to them is to call on this
Court to exercise its powers
to rescind the order of Dodson AJ,
[4]
which is exactly what they have done.
[30]
For
the reasons stated above, it is my judgment that the
res
judicata
point taken by the bank has no merit and stands to be dismissed.
Lis
Pendens
[31]
The
bank contended that since the applicants have brought more than one
rescission application this particular one is
lis
pendens
.
The three applications referred to concern the rescission of the
order of 27 September 2010 issued by the Registrar. But none
of those
applications prevail here. The case here is that the order of Dodson
AJ is susceptible to being rescinded as it was,
inter
alia
,
erroneously granted in the absence of the applicants. It is therefore
incorrect to suggest that the case that presently prevails
here is
pending in this Court under a different case number. There is no
pending litigation that bears on the outcome of this case.
[32]
Accordingly,
the
lis
pendens
contention, too, must fail.
Should
Dodson AJ’s order be rescinded?
[33]
The bank
failed to challenge any of the factual material that forms the basis
of this application. In fact, it was conceded during
argument that if
the two legal points it raised failed, the rescission application
should succeed. However, as the applicants rely
on the common law, it
is necessary to examine whether they have shown good cause for the
rescission.
[34]
To
succeed on this basis, the applicants must at least (a) provide a
reasonable explanation of their default, (b) show that the

application is made
bona
fide
,
and (c) show that they have a
bona
fide
case which
prima
facie
would succeed in setting aside the order of the Registrar.
[5]
[35]
The
applicants have provided a detailed account of facts that led to
their default. The default is really caused by the fact that
they, no
doubt, have not had a pleasant experience with attorneys and in one
case an advocate. In their short experience they have
encountered:
a.
A
conveyancing attorney, Austin Jordan Attorneys, who refused to
correct the error on the contract of loan agreement;
b.
The
present attorneys of the bank, Lowndes Dlamini, who when alerted by
the recipient that the summons was sent to the incorrect
address,
informed the recipient to ignore it. It bears mentioning in this
regard that Lowndes Dlamini was also made aware of the
fact that the
s 86(10) notice was sent to the incorrect address and did nothing to
remedy the problem. Instead it proceeded to
secure a default judgment
from the Registrar;
c.
The
Legal Aid Board who refused to take their case because “
there
was no merit
”
in it;
d.
Mr
Phalatse of Phalatse Attorneys who while not being allowed to
practice as an attorney promised to launch the rescission application

and see it through to finality but then failed to honour his promise;
e.
Mr
Galananzhele of Galananzhele Attorneys who failed to prosecute their
rescission application to finality;
f.
Ms
Selamolela of T S Selamolela Attorneys whose only way of assisting
them was to pass the case on to Manungeni Attorneys;
g.
Manungeni
Attorneys who were firstly appointed as correspondent attorneys by
Phalatse Attorneys but who, without the knowledge of
the applicants,
failed to perform because of non-payment b
y
Phalatse Attorneys.
They were later asked by Ms Selamolela to take on the case, but
refused to do so without receiving payment upfront;
and,
h.
Advocate
Viquelin Kim Johnson who charged the first applicant R54 000.00,
was paid R23 000.00 but did not see the matter
through.
[36]
There
is no debate that the application is made
bona
fide
.
The applicants have suffered greatly as a result of the order of the
Registrar and they have done everything that could be expected
of
anyone caught in their position to seek the protection of the law.
Unfortunately, it has not been an easy road for them, but
they have
persisted nevertheless.
[37]
The
order granted by the Registrar had been issued without them ever
being given an opportunity to present their case as they were
never
served with the summons. Moreover, the execution process took place
without any judicial oversight. The Constitutional Court
has
pronounced that the Registrar does not have to power to issue an
order declaring a person’s home to be executable.
[6]
[38]
The
applicants have lost their primary residence, which
prima
facie
appears to have occurred through unlawful means or to have occurred
in unfair and unjust circumstances.  There is no doubt
that
prima
facie
they enjoy a significant prospect of succeeding in overturning the
order of the Registrar.
[39]
For
these reasons the order below is made.
Order
[40]
The
following order is made:
1.
The
non-compliance with rules of this Court is condoned.
2.
The
judgment and order of Dodson AJ issued on 27 January 2014 is
rescinded and set aside.
3.
The
first respondent is to pay the costs of this application.
_____________________
VALLY
J
Representatives
for the applicant: Thamsanqa Hadebe from T Hadebe Attorneys
Representative
for the first respondent: Leander VR Van Tonder
Instructed
by: Lowndes Dlamini Attorneys
Date
of hearing: 25 October 2017
Date
of judgment: 25 January 2018
[1]
Gundwana v
Steko Development and others
2011 (3) SA 608
(CC) at [48]
[2]
I must mention
that until recently the banks which granted loans to persons for
them to purchase residential properties had brought
a phenomenally
large amount of foreclosure applications on an unopposed basis in
this Court. Lowndes Dlamini has acted for the
banks in a
substantially large number of these applications. The applications
only subsided when the Deputy Judge President issued
specific
practice directives that were addressed to stem the tide of abuse
that had developed in this area of law. These directives
have
received full judicial approval, in one case by a full court, see
Absa
Bank Ltd v Lekuku
[2014]
ZAGPJHC 274.
[3]
In its heads of
argument, the bank claims that the applicants had filed a replying
affidavit in June 2014. No page reference was
supplied in the heads
of argument filed on its behalf, and I searched for this replying
affidavit in the papers but could not
find it. In any event, if the
bank is correct then the replying affidavit was filed after the
order of Dodson AJ was obtained.
The order of Dodson AJ was obtained
on 27 January 2014.
[4]
See:
Pitelli
v Everton Gardens Projects CC
2010 (5) SA 171
(SCA) at [31]
[5]
See:
Colyn
v Tiger Food Industries Ltd t/a Meadow Feed Mills (Cape)
2003 (6) SA 1
(SCA) at [11]
[6]
Gundwana,
n1, at [49]

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