About SAFLII
Databases
Search
Terms of Use
RSS Feeds
South Africa: South Gauteng High Court, Johannesburg
SAFLII
>>
Databases
>>
South Africa: South Gauteng High Court, Johannesburg
>>
2020
>>
[2020] ZAGPJHC 432
|
|
Magengenene v Audi Financial Services (3377/2017) [2020] ZAGPJHC 432 (25 September 2020)
SAFLII
Note:
Certain
personal/private details of parties or witnesses have been
redacted from this document in compliance with the law
and
SAFLII
Policy
REPUBLIC
OF SOUTH AFRICA
IN
THE HIGH COURT OF SOUTH AFRICA
GAUTENG
LOCAL DIVISION, JOHANNESBURG
CASE
NO:
3377/2017
REPORTABLE:
NO
OF
INTEREST TO OTHER JUDGES: NO
REVISED.
29/09/2020
In
the matter between:
ANDILE
ANELE LUVO
MAGENGENENE
Applicant
and
AUDI
FINANCIAL SERVICES, A DIVISION OF WESBANK
(PTY)
LIMITED
Respondent
JUDGMENT
Lapan
AJ:
INTRODUCTION
[1]
This is an application for the rescission of a default judgment
granted against the
applicant by the registrar of this court on 14
December 2017. The judgment was granted in favour of the respondent
for payment
of the sum of R215 017.02 together with interest and
costs.
[2]
The applicant seeks rescission of the default judgment and the
setting aside of a
writ issued on 4 May 2017 for the attachment and
sale of the vehicle more fully described below. The writ was issued
following
upon default judgment granted against the applicant by the
registrar, on 25 April 2017, cancelling the agreement and authorising
the attachment and sale of the vehicle to reduce the applicant’s
outstanding indebtedness to the respondent.
[3]
The applicant states that he did not receive the summons nor the
application for default
judgment and that the default judgment was
erroneously sought and granted in his absence as contemplated in
uniform rule 42(1)(a).
[4]
The respondent states that the summons and the application for
default judgment was
served on the applicant at his residential
address which is his chosen
domicilium citandi et executandi
(domicilium
address
)
.
[5]
Before dealing with the merits of the rescission application and the
prayer for condonation
for the late filing thereof, the factual
background is set out below.
BACKGROUND
[6]
On 23 July 2015, the applicant purchased a new
2015 Audi A4
1.8T SE
vehicle with registration number [....] (vehicle) from the
respondent.
[7]
Imperial Group (Pty) Ltd trading as Audi Centre Fourways (Audi
Fourways) is the dealership
where the applicant had selected the
vehicle and its accessories. Had the applicant paid cash, he would
have acquired the vehicle
directly from Audi Fourways. Since the
applicant required financing, the vehicle was purchased with the
financial assistance of
the respondent. Audi Fourways and the
respondent are two separate legal entities operating under the same
brand name, the former
being a dealer in motor vehicles and the
latter being a financial services provider.
[8]
As explained in the answering affidavit, the process involves the
applicant making
application to the respondent for financial
assistance to acquire the vehicle. If the application is approved,
the respondent purchases
the vehicle from the dealer and, upon paying
the purchase price, becomes the owner of the vehicle. Thereafter, the
respondent concludes
an instalment sale agreement with the applicant
in terms of which it sells the vehicle to the applicant. The dealer
delivers the
vehicle to the applicant on behalf of the respondent as
the owner of the vehicle.
[9]
On 23 July 2015, an instalment sale agreement was concluded
electronically between
the applicant and the respondent in terms of
which the respondent sold the vehicle to the applicant (agreement).
The applicant
took delivery of the vehicle on the same day.
[10]
The salient provisions of the agreement are that the applicant pays
the purchase price of the
vehicle in monthly instalments, the
respondent retains ownership of the vehicle until all instalments are
paid and, in the event
of breach, the respondent is entitled to take
possession of the vehicle, retain all instalments paid and claim any
damages suffered.
[11]
On 5 August 2015, exactly 13 days after taking delivery of the
vehicle, the vehicle broke down
whilst being driven by the applicant.
The vehicle was towed to the nearest Audi dealership which was in
Sandton (Audi Sandton).
Upon inspecting the vehicle, Audi Sandton
determined that the breakdown was caused by a burnt-out clutch which
was in turn caused
by driver abuse. The applicant was informed that
he was liable for the repairs and he was invited to arrange for an
independent
assessment of the vehicle to obtain a second opinion on
the damage to the vehicle.
[12]
The applicant declined to pay for the repairs or to arrange for an
independent assessment of
the vehicle. The vehicle was later towed to
Audi Fourways, never to be collected by the applicant.
[13]
The applicant states that he decided to cancel the agreement for two
reasons, first, he believed
that the vehicle must have been defective
when delivered to him since new vehicles do not fail after 13 days
and, second, Audi
Fourways failed to provide him with a courtesy car
after the breakdown of his vehicle.
[14]
The applicant states that, on 19 August 2015, he notified the
respondent of his intention to
cancel the agreement and, on 26 August
2015, he unequivocally cancelled the agreement and communicated such
cancellation to the
respondent. The applicant also states that, on 5
August 2015, he returned the vehicle to the respondent. The
respondent denies
having received a notice of cancellation from the
applicant and denies that the vehicle was returned to it.
[15]
During August 2015, the applicant lodged a complaint against Audi
Fourways with SA Consumer Complaints.
A copy of the complaint has not
been made available (first complaint).
[16]
The first complaint is summarised in a letter, dated 26 August 2015,
from Mr Odendaal, an arbitrator
and mediator at SA Consumer
Complaints, addressed to Audi Fourways, requesting a response to the
complaint. In this letter, Mr
Odendaal states that the applicant
seeks cancellation of the agreement as prescribed in the Consumer
Protection Act. Audi Fourways
did not respond. In a letter dated 10
September 2015, Mr Odendaal advised the applicant that the dispute
could not be resolved
as Audi Fourways had failed to respond. Mr
Odendaal advised the applicant to refer the dispute to the National
Consumer Commission
in terms of the Consumer Protection Act.
[17]
In an undated report compiled by Mr Odendaal, he summarised the
complaint, the investigation
conducted by him and his findings
(report). In his findings, the report notes that Audi Sandton was
contacted and had advised Mr
Odendaal that the clutch had burnt out
due to the applicant’s driving style. As a goodwill gesture,
Audi Sandton offered
to replace the clutch and pressure plate
provided that the applicant pays the labour costs involved in doing
so, in an amount of
R5 306.70 incl VAT.
[18]
The report notes further that the applicant rejected the aforesaid
offer and advised that he
still wanted to cancel the agreement. The
applicant made the following comments as captured in the report:
“
My
reason for wanting to cancel this contract is because the car is of
no use to me, as I constantly drive in traffic, so I will
probably
have this problem over and over again, and the bad service I have
received from Audi since the car gave me the problem.”
[19]
There is no indication in the report, or in any correspondence, that
SA Consumer Complaints contacted
the respondent for a response even
though the report notes that the respondent financed the acquisition
of the vehicle.
[20]
On 18 September 2015, the applicant lodged a complaint with the Motor
Industry Ombudsman of South
Africa (Ombudsman). In the complaint, the
applicant stated that he wanted the contract cancelled as he had lost
trust in Audi Fourways
due to its failure to provide him with a
courtesy car and because the vehicle broke down after only 13 days
(the second complaint).
In response to the question as to what
outcome the applicant hopes to achieve by lodging the complaint, the
applicant stated that
“
the supplier must cancel the
transaction.
”
[21]
On 5 January 2017, the respondent gave notice to the applicant in
terms of
section 129
of the
National Credit Act 34 of 2005
. This
notice was not responded to.
[22]
On 13 March 2017, the respondent instituted the action against the
applicant claiming cancellation
of the agreement and the return of
the vehicle. The summons was served on the applicant at his
residential address which was his
chosen
domiclium
address.
The return of service indicates that the applicant was temporarily
absent from his residence and that the summons was
served on an
employee at his residence. The applicant failed to enter an
appearance to defend. The applicant now states that he
did not
receive the summons and, since the agreement was cancelled by him on
26 August 2015, he no longer had a chosen
domicilium
address.
[23]
On 25 April 2017, the respondent brought an application for default
judgment in terms of
rule 31(5)(a)
, claiming cancellation of the
agreement and authorising the attachment and sale of the vehicle, the
proceeds to be used to reduce
the applicant’s outstanding
indebtedness to the respondent in the amount of R347 139.84.
[24]
On 25 April 2017, default judgment was granted against the applicant
by the registrar of this
court and the vehicle was attached pursuant
to a writ of attachment issued on 4 May 2017. The vehicle was sold at
an auction for
an amount of R222 000.00. In November 2017, the
respondent brought a second application for default judgment in terms
of
rule 31(5)(a)
, claiming payment of the balance of the outstanding
indebtedness, in an amount of R217 017.20, which was the amount
owing
after applying the proceeds from the sale of the vehicle.
[25]
On 15 November 2017, the second application for default judgment was
served on the applicant
at his residential address. The return of
service indicates that a new owner was at the premises who advised
that the applicant
had relocated.
[26]
On 11 December 2017, the second complaint was finalised when the
Ombudsman advised the applicant
that Audi Fourways had failed to
respond to the complaint and, therefore, that the dispute could not
be resolved. The applicant
was advised to refer the dispute to the
National Consumer Commission in terms of the Consumer Protection Act.
There is no indication
that the Ombudsman contacted the respondent
for a response to the complaint.
[27]
On 14 December 2017, default judgment was granted by the registrar
against the applicant for
payment of an amount of R217 017.20
together with interest and costs.
[28]
On 19 January 2018, the applicant lodged a complaint with the
National Consumer Commission (Commission).
In this complaint, the
relief sought by the applicant was the “
acknowledgment
”
of the cancellation of the agreement and the “
removal of the
judgments
” against his name (third complaint). In the third
complaint, the applicant pertinently stated the following (in
manuscript):
“
I
would like the judgment against my name for the purchase of this
vehicle removed as car broke down within 14 days and we were
poorly
serviced and have every right to cancel this contract.”
[29]
When asked, in the complaint form, what steps were taken to resolve
the complaint, the applicant
wrote: “
I would like the
judgment against my name removed and cancellation of this contract
acknowledged…”.
The applicant fails to mention the
outcome of the third complaint.
[30]
The applicant states that he first became aware of the default
judgment on 28 August 2019 when
he applied for a loan to Absa Bank.
He states that the default judgment is adversely affecting his credit
record making it difficult
to obtain financing. The applicant seeks
rescission of the default judgment on the basis that he had cancelled
the agreement and
returned the vehicle to the respondent in August
2015.
THE RESCISSION
APPLICATION
[31]
The applicant relies on rule 42(1)(a) for his application to rescind
the default judgment granted
on 14 December 2017 and to set aside the
writ issued on 4 May 2017. To succeed, the applicant must establish
that the default judgment
was erroneously sought or erroneously
granted in his absence and that his rights or interests are affected
thereby.
[32]
The applicant also relies on the common law for the granting of the
rescission application. In
this regard, the applicant must show
sufficient cause for setting aside the judgment which requires the
applicant to prove, first,
that he has a reasonable (and thus
acceptable) explanation for his default, second, that the application
is made
bona
fide
and not with the intention of delaying the respondent’s claim
and, third, that the applicant has a
bona
fide
defence to the claim. The last two requirements are interlinked.
[1]
[33]
The applicant also seeks condonation for the late filing of this
application, if the application
is considered to be late since, in
the applicant’s view, the application was brought within a
reasonable time after becoming
aware of the judgment.
RULE 42(1)(a)
Was the default
judgment erroneously sought or erroneously granted?
[34]
The applicant is required to show that, at the time when the default
judgment was granted, the
Court, or the registrar in this case, was
unaware of facts which, if known to it, would have precluded the
granting of the order.
[35]
The applicant contends that the judgment was erroneously granted for
two reasons. First, the
respondent delivered a defective vehicle to
the applicant, in breach of the agreement, which resulted in the
applicant cancelling
the agreement on 19 or 26 August 2015 and
returning the vehicle to the respondent. Second, the applicant
alleges that the summons
and the application for default judgment
were not served on him and that he did not have a
domicilum
address as he had cancelled the agreement.
[36]
The applicant makes the bald assertion that the respondent delivered
a defective vehicle to him
in breach of the agreement. The applicant
had declined to appoint an independent assessor to provide a second
opinion on the damage
to the vehicle. Furthermore, the parties no
longer have access to the vehicle as it was sold at an auction in
2017. Therefore,
there is no evidence to substantiate the applicant’s
claim that the respondent delivered a defective vehicle to him on 23
July 2015.
[37]
The applicant’s contention that he cancelled the agreement is
not borne out by the correspondence
relied on being the two emails
addressed to Audi Fourways on 19 and 25 August 2015. Audi Fourways
was not appointed to act as an
agent of the respondent and the two
emails only go as far as advising Audi Fourways of the applicant’s
intention to cancel
the agreement. There was no notice of
cancellation let alone one that was addressed to the respondent.
[38]
The alleged cancellation is also not borne out by the applicant’s
three complaints. In
the summarised version of the first complaint,
it is specifically recorded that the applicant sought cancellation of
the agreement.
In the second complaint, the applicant stated that he
wanted “
the supplier to cancel the transaction”
.
In the third complaint, the applicant sought the “
acknowledgment
”
of the cancellation of the agreement but without stating when or how
such cancellation had been effected. Therefore, whilst
the applicant
might have wished to cancel the agreement, he did not actually do so
by sending a notice of cancellation to the respondent.
[39]
Furthermore, the vehicle could not have been returned to the
respondent on 5 August 2015, as
the applicant claims, as this was the
day on which the vehicle broke down and was towed to Audi Sandton.
Days later, and after
assessing the damage, the vehicle was towed to
Audi Fourways where it remained until repossessed by the respondent
pursuant to
the writ issued on 4 May 2017.
[40]
For the aforesaid reasons, it is clear that there were no facts that
would have precluded the
granting of the default judgment. In view
thereof, the default judgment was not erroneously sought or
erroneously granted and the
requirements of rule 42(1)(a) have not
been satisfied.
RESCISSION UNDER THE
COMMON LAW
The applicant’s
explanation for the default
[41]
The applicant asserts that, because he cancelled the agreement and
returned the vehicle on 5
August 2015, he had no further obligations
to the respondent. As already mentioned above, the applicant did not
cancel the agreement
nor did he notify the respondent of his
purported cancellation and neither did the applicant return the
vehicle to the respondent
at its chosen
domicilium
address.
[42]
If the agreement was not cancelled then the applicant’s
explanation for the default in
defending the action does not pass
muster as the summons was served at his chosen
domiclium
which
was also his residential address at the time.
Is
the application made bona fide and does it raise a bona fide defence
?
[43]
It appears that the applicant elected to bring the application for
rescission upon realising
that his credit record is adversely
affected by the judgment. This may be considered a
bona fide
reason for bringing the application. However, the applicant’s
proposed defence to the action, namely, that he cancelled the
agreement because the respondent had delivered a defective vehicle to
him, lacks merit.
[44]
The applicant did not conduct an independent assessment of the
vehicle to determine the cause
of the breakdown on 5 August 2015 and,
thus, his assertion that the respondent delivered a defective vehicle
is speculative at
best.
[45]
More than five years have elapsed since the vehicle was delivered to
the applicant on 23 July
2015 and even in the unlikely event that the
vehicle is located, the applicant will be hard-pressed to establish
that the vehicle
was defective when it was delivered to the
applicant, brand new, more than five years ago.
[46]
Since the applicant did not cancel the agreement, he remained liable
to pay the monthly instalments
to the respondent and he breached the
agreement when he fell into arrears with these payments. The
applicant was not entitled to
simply walk away from the transaction,
abandon the vehicle and avoid all contact with the respondent. The
applicant could have
invoked the complaints resolution procedure set
out at the end of the agreement, which involves lodging a complaint
with the respondent’s
compliance officer for resolution of the
complaint within 6 weeks.
[47]
Should the complaint not be resolved within 6 weeks, the applicant
could refer the complaint
to the FAIS Ombud where it would be
resolved within 6 months calculated from the date when the complaint
was lodged with the respondent.
There was no reason to follow other
dispute resolution processes to the exclusion of the process set out
in the agreement which
had the benefit of strict timelines set for
the resolution of disputes.
[48]
The respondent was entitled to pursue its remedies due to the
applicant’s breach of the
agreement and the longer the
respondent delayed in pursuing these remedies, the less valuable its
security became. As it turned
out, the respondent sold the vehicle
almost two years after it had been abandoned by the applicant for
almost half of its original
purchase price.
[49]
In view of the aforesaid, the applicant has failed to prove that it
has a
bona fide
defence which
prima facie
has some
prospect of success and this court finds that the applicant has
failed to establish the requirements for the granting
of the
rescission application under the common law.
CONDONATION
[50]
Condonation is not for the mere asking and sufficient cause must be
shown, having regard to the
various factors to be considered, to
determine whether it would be in the interests of justice to grant
condonation. The applicant
is required to explain the entire period
of the delay.
[2]
[51]
Delaying the finalisation of a matter has a deleterious effect on the
administration of justice
and is prejudicial to other litigants,
particularly in the present matter where the vehicle was sold at an
auction in 2017. Evidence
is lost, memories fade, witnesses become
unavailable and innocent third parties are unduly prejudiced when
matters are not finalised
promptly including applications to rescind
and set aside judgments of this court.
[52]
The applicant states that he learnt about the default judgment on 28
August 2019 when applying
to Absa Bank for a loan. He also states
that, thereafter, he sought legal assistance from his insurer and the
Legal Aid Board but
was refused. Upon obtaining funding from a third
party, the applicant states that he was able to bring this
application but that
further delays were caused by trying to retrieve
the court file which had already been archived.
[53]
The applicant makes these general statements without any supporting
evidence in the form of confirmatory
affidavits nor does he provide
any dates to explain the entire period of the delay of some 3 months
(excluding the December –
January recess), when the applicant,
on his version, first became aware of the default judgment on 28
August 2019.
[54]
As already mentioned, when regard is had to the third complaint, it
is clear that the applicant
knew about the default judgment when he
lodged the third complaint on 19 January 2018, as he sought therein
the “
removal of the judgment against my name for the
purchase of this vehicle
.” This can only be a reference to
the default judgment granted against the applicant on 14 December
2017 and it could also
be (or include) a reference to the first
default judgment granted against the applicant on 25 April 2017 which
led to the issuing
of the writ on 4 May 2017. Either way, the
applicant knew about the default judgment for at least two years
prior to bringing this
application for rescission and he provides no
explanation for this lengthy period of delay.
[55]
Although rule 42(1) does not specify a time limit, rescission in
terms of rule 42(1) is a discretionary
remedy and, like all
discretionary remedies, it must be sought within a reasonable time.
The same applies to rescission applications
brought in terms of the
common law.
[3]
What is
reasonable depends on the circumstances of each case.
[4]
[56]
In the present matter, there is no explanation for the lengthy delay
in bringing the rescission
application and for approaching the
Commission, in terms of his third complaint, to have the judgment of
this court “
removed
”. The applicant appears to
have ignored a judgment of this court in the hope of obtaining a more
favourable outcome in another
forum in the same way that he ignored
the respondent and the agreement which he had concluded with the
respondent.
[57]
The applicant has delayed this application unnecessarily and without
having recourse to the respondent
and the complaint resolution
mechanism set out in the agreement for resolving disputes
expeditiously. He could also have attempted
to re-negotiate the
agreement with the respondent in order to achieve a more favourable
outcome given his dissatisfaction with
the vehicle which was the real
reason for him walking away from the transaction as he so clearly
stated in his first complaint.
[58]
As it turned out, when the applicant was not satisfied with the offer
made by Audi Sandton pursuant
to the first complaint, he took the
matter to the Ombudsman where the matter remained unresolved for two
years. By the time when
he lodged the third complaint with the
Commission, in January 2018, the respondent had by then taken the
necessary steps to recover
its money and make good its security in
the vehicle.
[59]
It will be very difficult, if not impossible, for the applicant to
substantiate its defence that
the respondent caused the breakdown of
the vehicle five years ago, on 5 August 2015, by delivering a
defective vehicle to the applicant.
The availability of the vehicle
to substantiate the applicant’s defence is dubious given the
inordinate lapse of time and
bearing in mind that memories fade,
documents are lost and witnesses become unavailable.
[5]
Furthermore, the respondent will be unduly prejudiced if the default
judgments are now rescinded and the writ of attachment set
aside.
[60]
For the above reasons, the prayer for condonation ought to be
refused, in the exercise of this
court’s discretion, and the
application for rescission ought not be entertained. In any event,
this court finds that the
rescission application lacks merit.
[61]
The following order is made:
The application is
dismissed with costs.
AJ
LAPAN
ACTING
JUDGE OF THE HIGH COURT
GAUTENG
LOCAL DIVISION, JOHANNESBURG
COUNSEL
FOR THE APPLICANT:
Mr M
Manaka
APPLICANT’S
ATTORNEYS:
AG
Mulaudzi Attorneys
COUNSEL
FOR THE RESPONDENT:
Mr P Marx
RESPONDENT’S
ATTORNEYS:
Rossouws, Lesie Incorporated
DATE
OF THE HEARING:
24
August 2020
DATE
OF JUDGMENT:
25
September 2020
[1]
Chetty
v Law Society, Transvaal
1985
(2) SA 756
(A) at 765B-C.
[2]
Grootboom
v National Prosecuting Authority and Another
2014
(2) SA 68
(CC) para [23].
[3]
Roopnarain
v Kamalapathy and Another
1971
(3) SA 387
(D) at 391B-D.
[4]
Promedia
Drukkers & Uitgewers (Edms) Bpk v Kaimowitz and Others
1996
(4) SA 411
(C) at 421F-H.
[5]
Brummeria
Rennaissance (Pty) Ltd and Others v CSARS
2007
(6) SA 601
(SCA) in para [26].