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[2020] ZAGPJHC 230
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C B v Absa Bank Limited and Others (25718/2018) [2020] ZAGPJHC 230 (11 September 2020)
SAFLII
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Certain
personal/private details of parties or witnesses have been
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IN
THE HIGH COURT OF SOUTH AFRICA
GAUTENG
DIVISION, JOHANNESBURG
Case
number: 25718/2018
IN THE MATTER
BETWEEN:
C
B
Applicant
and
ABSA
BANK
LIMITED
First Respondent
FIRST
NATIONAL
BANK
Second
Respondent
THE
SHERIFF, CENTRAL
JOHANNESBURG
Third
Respondent
JUDGMENT
BHOOLA AJ:
Introduction
[1] This is an
application for rescission of a default judgment granted by the
Registrar of this Court ("the default order"),
consequent
upon which the applicant's bank accounts with the Second Respondent
(“FNB”) were attached without any notice
or warning to
her. Despite her attempts to establish why her bank accounts had been
attached and what steps she could take to have
her access restored,
it was only when she approached this court for urgent interim relief
that the party responsible for this conduct,
the First Respondent
(“ABSA”), explained why it had caused her accounts to be
attached in the first place.
[2] As a result, the
applicant seeks relief on two grounds. Firstly, that this court
should reconsider or rescind the default order
granted against her
and set it aside. Secondly, that this court should declare that
ABSA’s attachment of her bank accounts
was wrongful and that
ABSA should be ordered to pay general damages to her as
solatium
for the harm caused by its conduct, or, alternatively, that the
quantification of damages should be referred to trial for
determination.
[3] Although these
two claims are distinct, it was alleged in the applicant's founding
affidavit they have a similar factual foundation
and it is in the
interests of the administration of justice that they are brought on
the same papers and are heard concurrently.
The applicant seeks no
relief against FNB and the Third Respondent and neither of them
opposes this application.
Factual
background
[4] On or about 8
April 2005, Thuthuka Telecom CC (“the close corporation”),
opened a cheque account with ABSA ("the
cheque account")
and it was afforded an overdraft facility on the cheque account.
[5] On or about 9
May 2005, the applicant's husband, A B, to whom she was at the time
married in community of property, signed an
unlimited deed of
suretyship in terms of which he bound himself as surety and
co-principal debtor jointly and severally in favour
of ABSA, for
repayment on demand of any sum or sums owed by the principal debtor
in terms of the overdraft on the cheque account.
[6] On the same day
the applicant signed a form in terms of which she consented to the
joint estate being bound by her husband's
suretyship. Her consent,
which was a legal requirement under the
Matrimonial Property Act,
1984
, translated by the applicant, reads as follows:
“
My consent under the provisions of the
Matrimonial Property
Act, 1984
, is necessary to incur the attached unlimited surety
(inclusion of loan account cession) in favour of Thuthuka Telecom CC
(2001/007296/23)
on ABSA Bank Limited's normal terms and conditions
by my spouse A with whom I am married in community of property. I
hereby grant
such consent and I acknowledge the liability of our
joint estate in this regard.”
[7] On 8 February
2013, the applicant and her husband divorced and the joint estate was
dissolved by way of a settlement agreement
made an order of court in
terms of
section 7(1)
of the
Divorce Act 70 of 1979
.
Inter alia,
the settlement agreement stipulated that Mr B would attain full
ownership and interests in the close corporation and that the
applicant
would be released from any liability in connection thereto.
After the divorce was finalised, the close corporation became
insolvent
and entered into liquidation on 21 January 2014.
[8] As at 10
December 2015, the outstanding balance on the close corporation’s
overdrawn cheque account was R430 197.05 plus
interest at 11, 75%
linked, per annum, capitalised monthly from 11 December to date of
payment ("the outstanding amount").
On 10 February 2016
ABSA delivered, through its attorneys of record, a notice in terms of
section 129(1)
of the
National Credit Act 34 of 2005
, by registered
mail to the applicant and Mr B at their residential address and
chosen
domicilium citandi et executandi,
being 1120 Lepton
Turn, Wilgeheuwel, 1736.
[9] On 29 March
2016, ABSA caused summons to be issued under case number 10434/16
against Mr B, his other business partners who
had stood surety for
the business account of the close corporation and the applicant, in
which it sought payment of the outstanding
amount. In the summons the
applicant was cited as the eighth defendant. She did not receive the
summons or the
section 129(1)
notice, as she had not resided at the
domicilium
address since her divorce from Mr B in 2013.
[10] On 7 March
2017, the Registrar granted the default order against the applicant
and Mr B, jointly and severally, the one paying
the other to be
absolved, for payment of the outstanding amount plus costs and
Sheriff's fees ("the judgment debt").
On 12 April 2017 the
Sheriff attempted to serve the default order on the applicant and Mr
B but since they did not reside there
and were not known by the
current owner, a return of non-service was issued. On 23 June 2017
the Sheriff served the writ of execution
personally on the applicant
at her residential address. On 22 July 2017 the writ of execution was
served on Mr B at his residential
address.
[11] On 1 June 2018
ABSA's attorneys obtained a writ of execution (movables) from the
Registrar directing the Sheriff to attach
all the applicant's funds
held in her bank accounts with FNB. On 13 June 2018 the Sheriff
served the writ of execution (movables)
on FNB as well as a notice of
attachment under
Rule 45(8)
and
45
(12) attaching her right, title
and interest in and to any or all her bank accounts held with FNB.
The applicant's
founding affidavit
[12] The applicant
states in her founding affidavit that she is a single mother of an
eight-year-old child, and is employed by Mercedes
Benz as a personal
assistant. In and around 2013 she had heard that the close
corporation had gone insolvent and would possibly
enter voluntary
liquidation proceedings. She had no legal or financial interest in
the close corporation and as she was not on
amicable terms with her
husband she was not aware of the final liquidation of the close
corporation. She was not aware that it
had defaulted on the overdraft
facility owing to ABSA and she did not anticipate any claim against
her. Since she had not received
the notices or summons, she had not
entered appearance to defend nor had she engaged with ABSA in regard
to its claim.
[13] On 21 June 2017
she received a notice from the Sheriff attached to the gate of her
residence asking her to contact him urgently.
She telephoned the
Sheriff and was informed that he would return the next day to attach
her movable assets. At the time, she did
not know what this meant or
what this was in regard to. The Sheriff visited her home the
following day and took an inventory of
her movable assets.
[14] On 23 June
2017, the day after the Sheriff visited her home, the applicant was
contacted by a representative from ABSA's attorneys.
She was told
that a default order had been granted against her and was supplied
with the combined summons. She was further informed
that ABSA's
attorneys had been unable to contact her ex-husband and that they had
turned to hold her and the other defendants liable
for the judgment
debt. In an email, she provided ABSA's attorneys with her
ex-husband's contact details. She alleges that she understood
at that
time that they would thereafter pursue him for the judgment debt and
would no longer seek to hold her liable given that
the joint estate
had been dissolved.
[15] Despite her
request for ABSA's attorney's to contact her to resolve the Sheriff's
attachment thereafter, the applicant did
not hear back from them or
ABSA, nor was she contacted by the Sheriff again. She assumed that
ABSA's attorneys had successfully
claimed the judgment debt from her
ex-husband and the other defendants.
[16] In April 2018
the applicant approached SA Home Loans to apply for a small home loan
to do renovations on her home. She was
informed by a representative
of SA Home Loans that her application was declined on account of a
court order being granted against
her. The applicant states that she
did not understand what this meant at the time and assumed that it
was a vestigial record of
the fact that an order had been granted
against her. She alleges that had she been contacted or approached by
ABSA's attorneys,
ABSA or any other party during this period to
discuss making payment of the judgment debt, she would have thought
differently about
the refusal of the loan.
[17] On 22 June
2018, when the applicant was trying to transfer funds within her FNB
bank accounts to pay for petrol on her credit
card, the transaction
was declined. She had to arrange for a friend to come and pay for her
petrol. She immediately contacted FNB
and was advised that a
garnishee order had been placed on her bank accounts by ABSA's
attorneys, the effect of which was to freeze
her out of all of her
accounts. The fact that she was unable to access any of her funds in
order to provide for herself and her
minor child came as a complete
shock to her. She had received no notice that on 13 June 2018 the
Sheriff had served the writ of
execution granted against her on her
bank, FNB, as well as the attachment order issued under
Rule 45(8)
and
45
(12) attaching her bank accounts. Prior to her accounts being
attached, neither ABSA nor FNB had warned her about this.
[18] The applicant
instructed attorneys who on 28 June 2018 sent a letter of demand to
ABSA's attorneys requesting access to her
bank accounts to be
restored and requesting a copy of the notice of attachment. No
response was forthcoming from them. On 11 July
2018 her attorneys
brought an urgent application for interim relief seeking that the
attachment of her bank accounts should be
uplifted pending an
application for reconsideration or rescission of the default judgment
or order and/or the writ of execution.
FNB filed an answering
affidavit in which they stated that the hold on her account could not
be uplifted in the absence of a court
order to this effect. Despite
the urgency of the matter, ABSA's attorneys filed their answering
affidavit only two weeks later,
on 23 July 2018, the day before the
matter was to be heard. When the matter was heard on 24 July 2018, an
order by way of consent
was granted to the applicant temporarily
lifting the hold on her account until an application to resolve the
dispute between the
parties had been finally determined.
ABSA's answering
affidavit
[19] ABSA alleges
that on 27 June 2018 a notice of upliftment was served on FNB in
terms of which the attachment of applicant's
right, title and
interest in her bank accounts was uplifted. The Sheriff's return of
service is attached to the answering affidavit.
The notice of
attachment is not attached.
[20] ABSA notes that
the applicant consented to her husband signing a deed of suretyship
and acknowledged the liability of their
joint estate. Notwithstanding
this it denies that the applicant was or could be released from any
liability towards it in connection
with the close corporation. It
still considered the joint estate to be liable.
[21] In regard to
the urgent application ABSA alleges that the Sheriff's return in
respect of the notice of upliftment was only
received on 23 July 2018
and hence they were only able to file their answering affidavits in
the urgent application on that day.
They allege that by then in any
event the applicant's access to her accounts had already been
restored by virtue of the upliftment
notice. In so far as the return
of service of the notice only mentions Mr Marais, the first defendant
in the default order, ABSA
denies that this means the notice was only
related to his bank account, and alleges that it clearly applied to
the applicant as
well.
Rescission of the
default order
[22] Applicant's
counsel, Mr Gotz SC, submitted that the default order was granted by
the Registrar against the applicant on the
basis of flawed pleadings.
There were at least two material averments in ABSA’s
particulars of claim that were entirely incorrect.
These are that the
applicant and her husband were still married in community of property
despite the fact that that they had long
been divorced and the joint
estate had been dissolved; and that the applicant had personally
stood surety for the debt of the close
corporation when in fact she
had simply consented to her husband binding the joint estate when he
registered his suretyship for
the close corporation’s debts.
[23] ABSA's attitude
was (despite the above material flaws having been brought to their
attention) that the default order was correctly
granted against the
applicant and that she was liable for the debts of the close
corporation in terms of his suretyship, which
bound the joint estate.
It appears to now concede in its answering affidavit that the joint
estate was liable in terms of the deed
of suretyship, and the
applicant was not personally liable. In these circumstances, counsel
for ABSA, Mr Reyneke, correctly conceded
that the rescission
application should be granted. It cannot thus be disputed that the
material averments on which the default
order was obtained were
factually incorrect and did not sustain a cause of action. In these
circumstances, it is appropriate that
the default order is set aside
in terms of
Rule 42(1)(a)
as having been erroneously granted.
Condonation
[24] An application
in terms of
Rule 42(1)(a)
has to be brought within a reasonable
time.
[1]
The applicant seeks condonation for the late filing of this
application and ABSA persists in its opposition in this regard. Mr
Reyneke submitted that the applicant had been aware of the default
judgment for about a year when she was informed by SA Home loans
in
2018 that there was a judgment debt against her. Despite this, she
took no action, and she furthermore terminated the settlement
negotiations with ABSA following the interim interdict. Hence her
delay in instituting these proceedings should not be condoned.
[25] In
Melane v
Santam Insurance Co. Ltd,
[2]
the Court held that the following should be considered in determining
whether condonation for lateness should be granted:
“
[T]he basic principle is that the Court has a discretion,
to be exercised judicially upon a consideration of all the facts, and
in essence it is a matter of fairness to both sides. Among the facts
usually relevant are the degree of lateness, the explanation
therefor, the prospects of success and the importance of the case.
Ordinarily these facts are interrelated, they are not individually
decisive, save of course that if there are no prospects of success
there would be no point in granting condonation. Any attempt
to
formulate a rule of thumb would only serve to harden the arteries of
what should be a flexible discretion. What is needed is
an objective
conspectus of all the facts. Thus a slight delay and a good
explanation may help to compensate prospects which are
not strong. Or
the importance of the issue and strong prospects may tend to
compensate for a long delay. And the Respondent’s
interests in
finality must not be overlooked.”
[26] It is clear
from the pleadings that the applicant first became aware of the
default order on 23 June 2017 after the Sheriff
had contacted her,
and she then liaised with ABSA's attorneys and provided them with the
contact details for her ex-husband. Despite
her request for ABSA’s
attorney’s to contact her to resolve the Sheriff’s
attachment of her movable property,
they did not revert to her, and
she, as layperson, justifiably assumed that the matter had been
resolved with her ex-husband and
the other defendants. Other than the
time when SA Home Loans declined her loan on the basis of a court
order recorded against her
(which she understood to be a vestigial
record of the default order), the first time she came to learn that
ABSA still intended
to pursue, and was pursuing, a claim against her
was a year later when her bank accounts were suddenly frozen on 22
June 2018.
[27] Mr Gotz
submitted that from this point on she took legal steps timeously to
seek the rescission of the default order. This
is clear from the
factual background. On 24 July 2018, interim relief was ordered which
inter alia
made provision for a period in which the parties
would negotiate and try to reach settlement before an application for
rescission
would need to be launched. On 10 September 2018, the
applicant and ABSA’s attorneys met for a roundtable settlement
discussion
where
inter alia
it was agreed that:
27.1 The negotiation period would be extended;
27.2 ABSA would supply a recalculation of the debt based on certain
issues raised in the discussion;
27.3 Either party could unilaterally declare that the matter had
become incapable of being settled thus ending the negotiation
period
and triggering the need to institute the rescission application as
contemplated in the interim order.
[28] As of early
December 2018 however, ABSA had still not reverted with a
recalculation of the debt that the applicant would have
owed until
the divorce. As such, given this further delay and the applicant's
desire to bring the matter to resolution given her
vulnerability as a
single mother of a minor child, she terminated the negotiation period
and brought this rescission application.
[29] I agree with Mr
Gotz that the applicant should be excused for initially trying to
resolve the matter with ABSA without resorting
to litigation unless
it became absolutely necessary. In any event, it was ABSA’s own
prolonged delays in finalising the settlement
negotiations process
that led to her terminating the discussions in order to seek
finality. Accordingly, I find on the
Melane
(
supra
)
test that the lateness should be condoned and the applicant has
provided a good explanation for the delay.
Was ABSA's
conduct wrongful?
[30] Mr Gotz
submitted that ABSA’s attachment of the applicant's bank
accounts without notice to her, without the requisite
evidence to
sustain a writ of execution, and without judicial authorisation, was
unlawful. As a result, in the one month during
which her bank
accounts were attached and she was entirely unable to access her
savings or monthly income, she needlessly suffered
distress, anxiety
and embarrassment and is entitled to general damages.
[31] In assessing
this ground for relief it is trite that a party who wishes to claim
general damages for wrongful attachment must
demonstrate that there
was an attachment of property; and that this was done without lawful
justification or judicial authority.
[3]
The harm which the law seeks to relieve in a claim for wrongful
attachment is the anguish, embarrassment and indignity of the
unlawful deprivation of one’s property and rights. To this end,
a claim for general damages as
solatium
for the anguish
suffered may be provided as a remedy.
[32] On this basis,
Mr Gotz submitted that a declaration of unlawfulness in the present
matter is justified by the following:
32.1 Firstly, the facts and circumstances relating to ABSA’s
attachment of the applicant's bank accounts;
32.2 Secondly, that such attachment was without judicial authority
and therefore wrongful;
32.3 Thirdly, ABSA's strict liability for the wrongful attachment
regardless of fault;
32.4 Fourthly, the harm the applicant suffered during her one month
ordeal of being denied access to her bank account, and the
justification for an award of general damages, alternatively that the
quantification of damages be referred to trial.
The
facts and circumstances relating to the attachment of applicant's
bank
accounts
[33] The facts
establish that the applicant was not given notice of the attachment
order obtained by ABSA. She only learnt of it
from FNB on 12 July
2018 when it filed its answering affidavit to the urgent application.
ABSA and its attorneys had, up until
the day before the hearing of
the urgent application, not served the attachment order on her nor
had it responded to her requests
for access to her accounts and
information about how her accounts had come to be attached.
[34] ABSA's
answering affidavit in the urgent application for the first time
provided an explanation. It averred that :
"[a]ll the judgment
debtors opposed the attachments and commenced with negotiations to
make arrangements for repayment of their
debt towards ABSA Bank''.
The applicant denies that this applies to her. She alleges that:
"[w]hile I cannot speak for the other defendants, this was
completely untrue in my own case. At no stage had I entered into
such
negotiations with ABSA Bank and this was clearly a misstatement.
"
[35] Further, ABSA
averred that,
"[a]ll the Defendants against whom attachment
[sic] were made, however insisted that the funds were needed for
their businesses
and that the attachments should be uplifted."
Again the applicant states that while this may have been true for
the other defendants, it was manifestly untrue in her own case.
Not
only had did she have no such interaction with ABSA, but it was her
personal bank accounts that were frozen.
[36] In regard to
the upliftment ABSA alleges that:
"[a]fter negotiations . .
ABSA Bank Limited instructed on the 21st June 2018 that the
attachments be uplifted against all Judgment
Debtors ... In that
regard, a copy of the email sent to the Sheriff of Johannesburg South
who effected this specific attachment
dated 27 of June 2018 is
attached hereto... it is a specific instruction to the Sheriff to
uplift all the attachments."
It attached to its answering
affidavit a return of service from the Sheriff indicating that the
attachment had already been uplifted
on the 27 June 2018. It alleged
that as of that date the attachment of the applicant's “
right,
title and interest in and to any or all accounts”
held with
FNB had been uplifted.
[37] However, as is
set out in the applicant's founding affidavit, the annexures ABSA
attached do not support these averments at
all. Firstly, the alleged
email sent to the Sheriff to "uplift all attachments" is in
fact an email sent to Nedbank,
with the Sheriff on carbon copy,
directing Nedbank to release the attached funds. As the applicant was
not a customer of Nedbank,
she states that it was entirely unclear
why ABSA believed this email was relevant to her or supported its
averments. Secondly,
the Sheriff's return of service for the notice
of upliftment does not mention the applicant at all. The only party
it mentions
is "Marais Roelof Jacobus Petrus", the first
defendant and FNB as the garnishee bank.
[38] The applicant
avers that when these inconsistencies were pointed out to ABSA's
legal representatives at the hearing of the
urgent application, they
were insistent that in fact such notice was sufficient. In particular
they submitted that in practice,
upliftment notices need simply name
the first defendant and the case number and then the bank which
received such notice would
know that it applied to all defendants in
that matter. As a result, ABSA's representatives claimed that it was
FNB's fault that
the attachment of her bank accounts was not lifted.
[39] Mr Gotz
submitted that given that ABSA has failed to attach a copy of the
notice of upliftment to its papers and that FNB confirmed
that after
a diligent search it was unable to locate a notice of upliftment from
ABSA, the only reasonable inference to draw in
the circumstances is
that ABSA failed to adequately instruct FNB or the Sheriff to uplift
the attachment of the applicant's bank
accounts. As such, given that
no documentary or confirmatory evidence is provided by ABSA to
substantiate its version in the face
of clear evidence that the hold
on the accounts remained, its allegations can justifiably, on the
authority of
Plascon Evans
Ltd v Van Riebeeck Paints (Pty) Ltd
and
Wrightman t/a JW Construction v Headfour (Pty) Ltd &
Another,
[4]
be rejected on the papers.
[40] Mr Reyneke
submitted that that although the heading of the return of service
only makes reference to Mr Marais, the actual
notice of upliftment
did in fact contain a reference to the applicant. In any event, he
submitted that the Sheriff's return confirms
that the notice of
upliftment was served on FNB on 13 June 2018, which ABSA had done in
respect of her on humanitarian grounds,
and which meant that she was
only deprived of her bank accounts for five days. ABSA could
therefore not be blamed for the conduct
of FNB in failing to uplift
her accounts. Furthermore, ABSA's conduct was not without lawful
justification, since it had on 7 March
2017 obtained a valid default
judgment against four defendants, including the applicant, and it was
entitled to proceed against
them. In these circumstances, Mr Reyneke
submitted that ABSA's conduct was not wrongful, and it accordingly
could not be held liable
for any damages the applicant may have
suffered.
[41] Mr Reyneke
submitted further that the consent order granted in the application
before Van der Linde J referred to the attachment
order to the
"
extent that it is still in place
". This reflected
ABSA's view that the attachment had already been uplifted when the
notice of upliftment was served on FNB.
Mr Reyneke submitted further
that because ABSA acted on the default order, the attachment was not
unlawful and it was entitled
to proceed to attach the accounts in
terms of
Rule 45(8)
and (12). However, this submission, as Mr Gotz
pointed out, does not take into account the fact that ABSA's failure
to serve the
attachment order on the applicant rendered the
subsequent attachment of her bank accounts legally invalid.
[42] Mr Gotz relied
on the authority of
Schmidt v Weaving,
[5]
where although the Supreme Court of Appeal dealt with an attachment
of a member’s interest in a close corporation it referred
with
approval to the judgment of Innes CJ in
Reinhardt v Ricker and
David
:
[6]
"[T]he essential to be observed in all cases of the
attachment of debts is that the debtor should receive due notice, so
that
he may be warned not to discharge his obligation to his original
creditor, and so that he may have an opportunity of coming to the
Court for relief in case he wishes to raise the question of the
validity of the debt, or any lien, discharge or other matter which
would operate in his favour.”
[7]
Furthermore, in
South Africa Congo Oil Company (Pty) Limited v
Identiguard International (Pty) Limited
the Supreme Court of
Appeal held that
Rule 45(12)(a)
envisaged “two separate jural
acts": an attachment of the debt and service upon the garnishee
of the prescribed notice.”
[8]
[43] On the first
ground I am in agreement with Mr Gotz that, while the return of
service from the Sheriff is not disputed by the
applicant, there is
no evidence that the notice of upliftment served on FNB in fact
contained a reference to the applicant. No
reason is provided why the
notice of upliftment could have been obtained from the Sheriff if
ABSA was unable to locate it. The
applicant was, on the facts, as Mr
Gotz put it, summarily "unbanked" without notice by ABSA
since it is not disputed
that the writ of execution and attachment
order were not served on the applicant. The authorities cited make it
clear that a garnishee
order without proper notice is invalid. In my
view this renders ABSA's conduct wrongful and the writ of execution
(movables) a
nullity.
[44] Having
determined the first ground relied upon to establish ABSA's
wrongfulness, I am not required to determine the additional
self
standing basis for unlawfulness on the grounds that the writ of
execution (movables) and subsequent attachment order that
led to the
freezing of the applicant's bank accounts was unlawful as it was
obtained without judicial oversight. However in these
circumstances I
consider it necessary to do so.
The
attachment was without judicial authority and therefore unlawful
[45] In regard to
legal justification for the execution order, Mr Reyneke submitted
that it was issued in terms of rule 45(8) and
45(12) of the Uniform
Rules and was validly issued. Judicial oversight, he submitted was
not required to justify the attachment
of the applicant's account.
Furthermore, unlike the execution of immovable property, Rule 45(8)
makes it clear that attachment
of incorporeal property does not
require judicial oversight. The Registrar issued the order and no
further application was necessary
before ABSA could attach the
applicant's bank accounts. Mr Gotz correctly conceded that insofar as
ABSA relies on just cause, this
cannot disputed since ABSA had
obtained the default order.
[46] Mr Gotz
however, in relying on the lack of judicial authorisation as self-
standing basis for unlawfulness, submitted that
ABSA should have
approached a court for the attachment order on the basis of the
ratio
decidendi
in
University of Stellenbosch Legal Aid Clinic and
Others v Minister of Justice and Correctional Services and Others
[9]
("
Stellenbosch
"), where the Constitutional Court
held that emoluments attachment orders issued without court
authorisation are inconsistent
with the Constitution. Thus, in the
absence of judicial authority the attachment, he submitted, of the
applicant's bank accounts
was wrongful, and it caused injustice,
iniuria
and harm to the applicant.
[47] The
Stellenbosch
decision, Mr Gotz submitted, followed preceding
similar decisions including
Jaftha v Schoeman and Others, Van
Rooyen v Stoltz and Others,
[10]
where at paragraph [55] the Constitutional Court defined the phrase
“
judicial oversight
” as denoting a decision by a
court, following a consideration of relevant facts. It held
unambiguously that “
[e]ven if the process of execution
results from a default judgment the court will need to oversee
execution against immovables.”
The
Stellenbosch
ratio
was moreover confirmed by the Constitutional Court in
Members of
the Executive Council for Health and Social Development v DZ
.
[11]
There the Constitutional Court held that “
judicial oversight
is constitutionally necessary whenever execution against property of
the judgment debtor is contemplated. This
would apply even where what
falls to be the subject of execution is a sum of money.”
[12]
[48] It is useful to
quote the entire rationale of the
Stellenbosch
judgment,
written by Cameron J for the majority: (footnotes omitted):
"[129] There are two major differences with the first
judgment. First, we differ on an issue of principle. The first
judgment
assumes, without affirming definitively, that the
Constitution requires judicial supervision when orders issued from a
court are
executed and finds that this is how the contested provision
ought to be properly interpreted. The High Court in striking down the
contested provision went further. It pointed out that this Court’s
judgments have repeatedly found that where an applicant
seeks an
order to execute against or seize control of the property of another
person, there must be judicial oversight. To my mind,
the High Court
was right. This is not a principle that should merely be assumed in
deciding this case.
It has been
established in the
jurisprudence of this Court that execution of court orders is
part of the judicial process. It requires judicial oversight.
Though previous cases dealt with debtors’ homes, the principle
underlying them was that judicial oversight of the execution
process
against all forms of property is constitutionally indispensable.
Clearly then, the fundamental principles relating to the
proscription
against self-help flowing from the section 34 right of access to
courts apply, with equal force, to the execution
process. I would
therefore affirm the breadth of the High Court’s approach.
[130] Indeed
, this case is a prime example of why judicial
oversight over the execution process is required. An emoluments
attachment order
may deal with the enforcement of a judgment debt,
but it is a substantive decision in itself.
By granting an order
that a debtor will pay the debt through her wages, the court is
deciding how the debt will be paid. A decision
on the means of paying
a debt can often be as important as the debt itself – and
parties may contest the means of payment,
even when they do not
dispute that the debt itself must be paid. A large debt payable
through lenient means may be less burdensome
than a small debt
payable in one go.
[131]
An emoluments attachment order is clearly
burdensome
. It severely constricts the autonomy of the debtor to
decide how she will pay off the debt. It is also inflexible as it
does not
adapt to the debtor’s changing circumstances from week
to week. It goes directly off a debtor’s wages – and
these
wages will often form the means for the debtor’s
day-to-day survival. These are all important considerations to be
borne
in mind when deciding whether an emoluments attachment order
should be granted. What is more, a debtor’s personal
circumstances
may well have changed in the interim between when a
judgment debt is entered and ordered to be paid in instalments and
when an
emoluments attachment order is sought. It is, therefore,
crucial that these considerations are taken into account at the time
the
emoluments attachment order is sought.
[132] All this accentuates the importance of the High Court’s
encompassing approach to execution against property and the
constitutional necessity for judicial supervision
over it. The broader approach takes fuller account of the harsh
effects in the absence of judicial oversight, acknowledging that
they
threaten the livelihood and dignity of low-income earners, a
distinctly vulnerable group in our society. Even though Jaftha
and
Gundwana dealt with the section 26 right of access to housing, they
find analogous application here, where indigent debtors
run the risk
of losing a part of their only property – their monthly
income".(
Own emphasis)
[49] What is of
further relevance in regard to the applicant however, is the
ratio
in
Stellenbosch
that the lack of judicial oversight
results in the denial of rights entrenched in the Constitution:
[133]
Primarily, the debtor’s section 34 right of access to court is
breached by an execution process not sanctioned by a
court. Moreover,
taking away the basic income that indigent debtors rely on for
subsistence, without court supervision, rubs right
up against the
right to dignity (which underlies all the socio-economic rights of
housing, food and health care). It may also implicate
the protection
against arbitrary deprivation of property afforded under section 25."
[50] Mr Gotz
correctly conceded that there are two distinctions between the
Stellenbosch
approach, its predecessor decisions,
[13]
Member of the Executive Council for Health and Social Development,
Gauteng v DZ
, and the present matter. Neither distinction however
interferes with the applicability of the principles entrenched in
these cases
to the applicant's situation. Firstly, the
causa
in
Stellenbosch
arose under Section 65J of the Magistrates’
Court Act (Act 32 of 1944), whereas ABSA’s case against the
applicant is
in terms of Rule 45(12) of the High Court. The second
difference is that
Stellenbosch
deals with garnishee orders
and in the applicant's case the attachment of her bank accounts.
[51] As regards the
first distinction Mr Gotz submitted that the two provisions are
analogous and the
Stellenbosch
principle applies equally to
emoluments attachment orders under both the jurisdictions. If this
was not the case it would lead to
the anomalous position that there
would be greater protection for an individual whose debt is sought to
be recovered in the Magistrate’s
court than a judgment debtor
whose debt arises from High Court proceedings.
[52] As regards the
second distinction Mr Gotz submitted that a garnishee order attaching
a portion of a debtor’s salary is
fundamentally the same as
execution through the freezing of a bank account. Both orders address
a third party to ensure that it
transmits funds due to the debtor, to
the creditor; It would clearly be inimical to the principles of
Stellenbosch
to suggest that the two orders do not require the
same judicial oversight. The
ratio
therefore equally applies
to the attachment of emoluments and/or bank accounts in the High
Court as a matter of principle.
[53] In addition,
the Supreme Court of Appeal has applied the requirement of judicial
oversight to garnishee orders:
South Africa Congo Oil Company
(Pty) Limited v Identiguard International (Pty) Limited
.
[14]
The SCA held that an attachment in the form of a garnishee order
“
only followed upon an application to court on notice to the
debtor and the creditor in respect of the debt and upon the court
sanctioning
the issue and service of the garnishee order.”
The
SCA clearly linked this rule to the common law:
“
Rule 45(12) must be viewed against the backdrop of the
common law and the procedural position that obtained immediately
before its
introduction. Under the common law a special application
to court was always required in order to attach the debt owing by a
third
person to the judgment debtor.”
[15]
[54] The
Constitutional Court’s reasoning is clear: in order to pass
constitutional muster and have legal force, a writ of
attachment
requires judicial oversight. But for such oversight, the writ of
attachment is a nullity. Moreover, the failure to provide
an
opportunity to the applicant to make representations as to how any
amount she might have been liable for could have been paid,
stripped
the attachment order of a key jurisdictional requirement. This
further rendered the attachment order wrongful and a nullity,
as Mr
Gotz submitted. I agree.
Strict
liability applies to wrongful attachment
[55] Liability for
the wrongful attachment of property is strict. A claimant need not
prove fault on the behalf of the respondent.
[16]
Both counsel were
ad idem
on this point. Mr Gotz referred in
this regard to
Meevis v Coetzee
[17]
were De Villiers J held after a review of the authorities that a
claimant need not establish fault in a claim for wrongful attachment.
In reference to this principle the court referred to and approved of
the statement of law by the learned author Neethling who stated:
“
In the case of wrongful attachment of property the conduct
concerned takes place without any justification or judicial authority
whatsoever. Such wrongful conduct makes the defendant liable without
further ado. Fault (intent or negligence) is unnecessary to
found
liability. Accordingly the defendant cannot raise mistake or absence
of consciousness of wrongfulness as a defence –
he is liable
without fault.”
[56] ABSA must
therefore be held strictly liable for its wrongful attachment of the
applicant's bank accounts.
The
applicant's entitlement to general damages
[57] In my view,
given ABSA's wrongful and unlawful conduct in the circumstances it
should have offered a
solatium
to the applicant and was in
fact given a further opportunity at the commencement of this hearing
to so. In the absence of such an
offer, it would be appropriate to
refer the quantification of the applicant's general damages claim to
a trial court for determination.
In making this submission Mr Gotz
relied on
Cadac (Pty) Ltd v Weber-Stephen Products Co And
Others
[18]
where the SCA confirmed that in appropriate cases a court might make
a determination on the merits of the dispute and postpone
the quantum
of the amount of the claim for later adjudication by way of a
referral to trial.
[19]
[58] This approach
is equally applicable to declaratory relief such as is sought
in
casu.
The court held in this regard:
[13]
I
cannot see any objection why, as a matter of principle and in a
particular case, a plaintiff who wishes to have the issue of
liability decided before embarking on quantification, may not claim a
declaratory order to the effect that the defendant is liable,
and
pray for an order that the quantification stand over for later
adjudication. It works in intellectual property cases albeit
because
of specific legislation but in the light of a court’s inherent
jurisdiction to regulate its own process in the interests
of justice
– a power derived from common law and now entrenched in the
Constitution (s 173) – I can see no justification
for refusing
to extend the practice to other cases. The plaintiff may run a risk
if it decides to follow this route because of
the court’s
discretion in relation to interest orders. It might find that
interest is only to run from the date when the
debtor was able to
assess the quantum of the claim. Another risk is that a court may
conclude that the issues of liability and
quantum are so interlinked
that it is unable to decide the one without the other.
[14]
Once the principle is accepted for trial actions there
is no reason why it cannot apply to application proceeding. In
Modderklip,
which was brought on notice of motion, this court issued
an order for the determination of the quantum of damages based on the
formulation used in Harvey Tiling. The order of the Constitutional
Court was in this regard identical The fact that the order related
to
‘constitutional’ damages does not affect the procedural
principle.
[59] It was
submitted by Mr Gotz that this is such an appropriate case in that,
but for ABSA’s improbable version that it
served the notice of
upliftment on FNB 27 June 2018, the essential facts of the attachment
are common cause. Furthermore, given
the costs which the applicant
would incur, as a layperson with limited means, in pursuing action
proceedings to try the merits
(which are essentially legal in
nature), it was submitted that it is in the interests of the
administration of justice that such
a referral should be made.
Costs
[60] Applicant prays
for costs for this application as well as the costs incurred in the
urgent interim application be awarded to
the applicant on the
attorney-client scale given ABSA's obstructionist conduct in
resolving this matter. Mr Reyneke however submitted
that the costs
reserved at the urgent application should not be for ABSA's account.
[61] Mr Gotz
submitted that the following considerations should be taken into
account:
61.1 ABSA’s failure to notify the applicant that the dispute
was still unresolved after she had given ABSA’s attorney’s
her ex-husband’s details and requested that they revert to her;
61.2 ABSA attached the applicant's bank account without warning after
almost a year had passed without any contact;
61.3 ABSA failed to reply to the letter of demand sent on behalf of
the applicant during her ordeal and made no effort at all to
contact
her to explain or discuss the attachment of her bank accounts;
61.4 Despite having given ABSA just under two weeks’ notice to
prepare for the interim application, it filed its answering
affidavit
the afternoon before the hearing. This unjustifiably prejudiced the
applicant's in their preparation for the hearing;
61.5 ABSA included a number of problematic claims in its answering
affidavit in the urgent application, which were false. These
include
allegations to the effect that the bank accounts were in fact already
unfrozen when the applicant approached the Court
for urgent relief (a
claim Mr Gotz submitted was so manifestly absurd as to be insulting)
and misstatements about having negotiated
with her;
61.6 ABSA failed to provide a recalculation statement in a reasonable
time period, an exercise central to the negotiation process.
The
evidence it attached as proof that it was at the “final stages”
of recalculating the applicant's alleged indebtedness
towards ABSA at
the time the negotiation period was terminated is practically no more
than a bank statement of the close corporation’s
debts.
Further, the statement is dated is dated 20 September 2018, which is
almost three months before the roundtable settlement
negotiations
were terminated.
[62] I am of the
view that punitive costs are justified given the conduct of ABSA
and/or its attorneys in the unfortunate situation
to which the
applicant was subjected. What is in my view eminently clear from the
factual background is that this conduct was characterised
by a
complete disregard of and indifference to the human dignity and
socio-economic rights of the applicant. The fundamental indignity
to
which she was subjected could have ceased at the stage when she was
forced to bring the urgent application, or even prior thereto,
but
ABSA instead delayed the period for negotiations of a settlement
agreed in the interim order, causing further uncertainty to
the
applicant. There can be no doubt that the
ratio
of the
Constitutional Court in
Stellenbosch
that constitutional
rights of dignity and access to justice are infringed by obtaining an
attachment order without judicial authorisation
is applicable to the
applicant, and that as a single mother with a minor child court she
was placed at extreme risk in being denied
access to her finances in
the circumstances which prevailed in this matter. The conduct of ABSA
was indeed unfortunate in relation
to her, and in my view warrants
the highest sanction of this court.
Order
[63] In the
premises, I make the following order:
1 The Applicant's non-compliance with the time periods stipulated in
the Uniform Rules is condoned in terms of Rule 27(3).
2 The default judgment and order of 7 March 2017 under case number
10434/2016, issued against the Applicant, is hereby set aside,
and
the applicant is granted leave to oppose the action within 30 days of
the date of this order;
3 The writ of execution (movables) of 1 June 2018, issued in case
number 10434/2016, against the Applicant is declared a nullity
and
set aside.
4 The attachment of the Applicant's bank accounts on 22 June 2018 is
declared to be wrongful and unlawful.
5 The First Respondent is liable for the wrongful and negligent
attachment of the Applicant's bank accounts.
6 The quantification of the Applicant's claim is referred for trial
in respect of which:
6.1
The notice of motion in this application is to stand as simple
summons and the First Respondent's notice of opposition as notice
of
intention to defend.
6.2
The Applicant/Plaintiff is to file a declaration within 30 days of
the date of this order.
6.3
Thereafter the normal rules relating to the filing of pleadings and
preparation for trial will apply.
8 The First Respondent is ordered to pay the costs of both this
application and the costs of the urgent application of 24 July
2018
for interim relief under case number 2018/25718 on the
attorney-client scale.
___________________________
U.
BHOOLA
Acting
Judge of the High Court of South Africa
Gauteng
Local Division, Johannesburg
Date
of hearing: 24 August 2020. Heard by videoconference as per the
Consolidated Directive of the Judge President of 11 May extended
to
15 September 2020.
Date
of judgment: This judgment was handed down electronically by
circulation to the parties’ legal representatives by email,
by
being uploaded onto the CaseLines digital system of the GLD and by
release to SAFLII. The date and time for hand-down is deemed
to be
10:00 on 11 September 2020.
Appearances:
Counsel for the
Applicant: A. Gotz SC with M. Laws
Instructed by:
Africa & Associates, Roodepoort
Counsel for the
First Respondent: A. Reyneke
Instructed by: Tim
du Toit & Co. Inc, Pretoria
[1]
See inter alia: First National Bank of South Africa v Van Rensburg
N.O 1994 (1) 667 (T).
[2]
1962 (4) SA 531
(A) at 532B-E.
[3]
Neethling, Potgieter and Visser, “Law of Delict”, 6th ed
at 345.
[4]
Plascon-Evans Paints Ltd v Van Riebeeck Paints (Pty) Ltd
[1984]
ZASCA 51
;
1984 (3) SA 623
(A) at 634E-635C.
Wrightman t/a JW
Construction v Headfour (Pty) Ltd & Another
[2008] ZASCA 6
;
2008
(3) SA 371
(SCA) para 12.
[5]
2009 (1) SA 170 (SCA).
[6]
1905 TS 179.
[7]
[2008] ZASCA 123
;
2009 (1) SA 170
(SCA) at para 15.
[8]
[2012] ZASCA 91
at para 22.
[9]
University of Stellenbosch Legal Aid Clinic and Others v Minister of
Justice and Correctional Services and Others; Association
of Debt
Recovery Agents NPC v University of Stellenbosch Legal Aid Clinic
and Others; Mavava Trading 279 (Pty) Ltd and Others
v University of
Stellenbosch Legal Aid Clinic and Others (CCT127/15)
[2016] ZACC 32
;
2016 (6) SA 596
(CC); (2016) 37 ILJ 2730 (CC);
2016 (12) BCLR 1535
(CC) (13 September 2016).
[10]
CCT74/03)
[2004] ZACC 25
;
2005 (2) SA 140
(CC);
2005 (1) BCLR 78
(CC) (8 October 2004).
[11]
Member of the Executive Council for Health and Social Development,
Gauteng v DZ obo WZ (CCT20/17)
[2017] ZACC 37
;
2017 (12) BCLR 1528
(CC);
2018 (1) SA 335
(CC) (31 October 2017).
[12]
Ibid at para 86.
[13]
Jaftha v Schoeman and Others, Van Rooyen v Stoltz and Others
(CCT74/03)
[2004] ZACC 25
;
2005 (2) SA 140
(CC);
2005 (1) BCLR 78
(CC) (8 October 2004). At [55] the Constitutional Court defined the
phrase “judicial oversight” as denoting a decision
by a
court, following a consideration of relevant facts. It held
unambiguously that “[E]ven if the process of execution
results
from a default judgment the court will need to oversee execution
against immovables.”
[14]
South Africa Congo Oil Company (Pty) Ltd v Identiguard International
(Pty) Ltd (710/11)
[2012] ZASCA 91
;
2012 (5) SA 125
(SCA) (31 May
2012).
[15]
Ibid at [16].
[16]
Neethling, Potgieter and Visser “Law of Delict”, 6th ed
at 345.
[17]
[1998] 2 All SA 602
(T). The correctness of the judgment was upheld
on appeal to the SCA in Coetzee (Sheriff, Pretoria East) v Meevis
[2001] 1 All
SA 10 (A).
[18]
Cadac v Weber-Stephen (530/09) [2010] ZASCA (16 September 2010);
2011 (3) SA 570 (SCA).
[19]
Endorsed in this division in Levenson v Fluxmans Incorporated
2015
(3) SA 361
(GJ) at para 8.