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[2020] ZAGPJHC 303
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CB v ABSA Bank Limited and Others (25718/2018) [2020] ZAGPJHC 303 (11 September 2020)
SAFLII
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Certain
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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 Andre 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 L[…]
T[…], W[…], 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.
15
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,
16
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.
17
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.