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[2010] ZAWCHC 606
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Assafan Trust and Others v ABSA Bank Limited (A104/2010) [2010] ZAWCHC 606 (6 December 2010)
Republic
of South Africa
IN THE HIGH COURT OF
SOUTH AFRICA
(WESTERN CAPE HIGH
COURT, CAPE TOWN)
Case No:A104/2010
Wynberg Magt Ct Case
No: 4193/2009
In
the matter between:
THE
ASSAFAN TRUST (IT384/1989)
…...................................................................
1
st
Appellant
SHEIK
DAWOOD HOOSAIN N.O.
….......................................................................
2
nd
Appellant
NAZREEN
HOOSAIN N.O.
…...................................................................................
3
rd
Appellant
SHEIK
DAWOOD HOOSAIN
…................................................................................
.4
th
Appellant
NAZREEN
HOOSAIN
…............................................................................................
5
th
Appellant
And
ABSA BANK LIMITED
…...........................................................................................
Respondent
JUDGMENT
DELIVERED:
6
Dec 2010
BINNS-WARD, J:
[1]
The appellants have come before this court on appeal against the
dismissal by the magistrate's court of their application
for the
rescission of the judgment entered against them in that court by
default. The judgment was for payment of the sum of
R1 132 722,66,
plus interest thereon as provided in terms of an applicable mortgage
contract. In terms of an ancillary order,
the hypothecated immovable
property was also declared directly executable.
[2]
It is appropriate to describe the circumstances in which the default
judgment came to be granted in the court below. The appellants,
having delivered notice of their intention to defend the action
instituted against them by the respondent bank, were given notice
of
bar in the context of their having failed to timeously deliver a
plea. Within the period afforded to them in terms of the
notice of
bar, the appellants delivered not a plea, but a notice of exception
to the summons. The exception was delivered outside
the period
provided in terms of rule 17(1)(a) of the magistrates' court rules.
But notwithstanding the provisions of rule 17(1)(b),
read with rule
60(5) - which requires leave of the court to be obtained for the
late delivery of an exception - the respondent
noted no objection to
the late exception. The exception was thereafter set down for
argument.
[3]
A few days before the date on which the exception was due to be
argued the appellants gave notice of the withdrawal of their
notice
of exception and, simultaneously therewith, delivered what purported
to be their plea in the action. The appellants' attorney
did not
attend at court on the date set down for the hearing of the
exception, believing that the appellants' position had been
adequately addressed by the prior withdrawal of the exception and
the delivery of a plea.
[4]
The respondent's attorney attended court on the date on which the
exception had been due to be argued and moved for judgment
by
default against the appellants. She did so on the basis that the
exception had been out of time and that the appellants had
not
delivered their plea within the period afforded in terms of the
aforementioned notice of bar. The respondent's attorney alleged
that
the magistrate had required that the appellants' attorney be
informed of the application for default judgment. The respondent's
attorney claims that she telephoned the appellants' attorney to
inform him of the application for default judgment, but the
appellants' attorney disputes having been so informed.
[5]
The magistrate, apparertly persuaded by the respondent's attorney's
interpretation of the magistrates' court rules, granted
judgment by
default against the appellants accepting that they had been barred
from pleading to the action by the time they purported
to plead
after the withdrawal of the notice of exception. The subsequently
brought application for rescission of the judgment
appears to have
been dismissed because the magistrate was of the view that in the
applicable circumstances the effect of the
magistrates' court rules
was to exclude any discretionary basis to deny the respondent's
application for default judgment. He
considered the effect of the
rules to have been 'the alpha and the omega' and seems to have
considered it unnecessary to consider
whether the appellants might
have had a
bona
fide
defence
to the action, or that they might have wished to request an
extension of time v/ithin which to validly deliver their plea.
[6]
The magistrate's approach was clearly misdirected. Although the
lower courts are indeed creatures of statute and lacking in
the
inherent jurisdiction that vests in the High Court, it is
nevertheless well-established by authority that the rules of the
magistrates' courts, properly construed, clearly vest magistrates
with a judicial discretion when it comes to deciding applications
for default judgment. In the circumstances in which it was evident
that they had wished to defend the action, default judgment
should
not have been granted against the appellants without adequate and
formal notice of the application for such judgment having
been given
to them. Authority for that conclusion is afforded in the reasoning
in judgments such as
Modesi
v Mosiga
1927
TPD 150
,
Olivier
v Fourie
1966
(3) SA 401
(C),
Mthanthi
v Pepler
1993
(4) SA 368
(D) and
Santam
Ltd and Others v Bamber
2005
(5) SA 209
(W). It was always open to the appellants to have applied
for an extension of the period within which to validly deliver their
plea. For the same reasons, it was, to say the least, misdirected of
the respondent's attorney to have pressed the application
for
default in the manner in which she did. The principles articulated
in the authorities, just cited, are underscored by the
provisions of
s 34 of the Constitution. The disregard for them by the judicial
officer and legal practitioner concerned is therefore
all the more
regrettable.
[7]
The respondent opposed the appeal principally on the basis that the
appellants' application for the rescission of the default
had been
fatally deficient by reason of its failure to set out the grounds of
their defence, as required by the provisions of
rule 49(3) of the
rules of the magistrates' court. Rule 49 is applicable to all
applications for the rescission or variation
of judgments in the
magistrates' courts. Insofar as currently relevant, it provides as
follows:
(1)
A party to proceedings in which a default judgment has been given,
or any person affected by such judgment, may within 20
days after
obtaining knowledge of the judgment serve and file an application to
court, on notice to all parties to the proceedings,
for a rescission
or variation of the judgment and the court may, upon good cause
shown, or if it is satisfied that there is good
reason to do so,
rescind or vary the default judgment on such terms as it deems fit.
(2)
It will be presumed that the applicant had knowledge of the default
judgment 10 days after the date on which it was granted,
unless the
applicant proves otherwise.
(3)
Where an application for rescission of a default judgment is made by
a defendant against whom the judgment was granted, who
wishes to
defend the proceedings, the application must be supported by an
affidavit setting out the reasons for the defendant's
absence or
default and the grounds of the defendant's defence to the claim.
(4)
Where an application for rescission of a default judgment is made by
a defendant against whom the judgment was granted, who
does not wish
to defend the proceedings, the applicant must satisfy the court that
he or she was not in wilful default and that
the judgment was
satisfied, or arrangements were made to satisfy the judgment, within
a reasonable time after it came to his
or her knowledge.
(5)
…..
(6)
….
(7)
….
(8)
Where the rescission or variation of a judgment is sought on the
ground that it is void
ab
origine
or
was. obtained by fraud or mistake, the application must be served
and filed within one year after the applicant first had knowledge
of
such voidness, fraud or mistake.
(9)
…...
[8]
The appellant's counsel argued that the judgment was void
ab
origine,
having
been granted in violation of the appellants' constitutional right to
a fair hearing, and that the provisions of rule 49(3)
were therefore
not applicable. In the alternative, he submitted that the content of
the appellants' plea, a copy of which was
annexed to in the
affidavit in support of the application for the rescission of the
default judgment, was sufficient to satisfy
the grounds of defence'
requirement in the sub-rule.
[9]
The first of the aforementioned arguments goes against the weight of
authority that is binding on this court. In
Leo
Manufacturing CC v Robor Industrial (Pty) Ltd t/a Robor Stewarts &
Lloyds
2007
(2) SA 1
(SCA), the Supreme Court of Appeal held that rule 49(3)
precluded the rescission of default judgment where the applicant had
failed to set out grounds of a defence to the respondent's claim.
Approving the approach adopted in
Cooper
& Ferreira v Magistrate for the District of Humansdorp and
Another
[1997]
1 All SA 420
(E) and
F
& J Car Sales v Damane
2003
(3) SA 262
(W), Zulman JA held (at para. [6]), 'the provisions of
Rule 49(3) are peremptory when a court considers an application to
rescind
a default judgment. More particularly, the wording of the
subrule makes it clear that the grounds of the defendant's defence
to the claim must be set out. Where the objection is that the
judgment was void
ab
origine,
compliance
with Rule 49(3) nevertheless involves further proof of the existence
of a valid and bona fide defence to the claim.'
[10]
There had been no attack in
Leo
Manufactuhng
on
the constitutionality of rule 49(3) (or of its predecessor rule
49(2) - which, differently to the current requirement, required
the
grounds of defence to be only 'briefly' set forth) insofar as it
bore on applications to rescind default judgments that were
void
ab
origine.
No
reference was made in the SCA judgment to s 34 of the Constitution.
There was also no attack on the constitutionality of the
sub-rule in
the current appeal. It is therefore unnecessary to express a view,
but it seems to me
phma
facie
that
even if there had been such an attack, a rational basis might be
found in the public policy in favour of the desirability
of finality
in litigation to support any
limitation
of the s 34 right arguably brought about by the sub-rule. After all,
there seems no practicable reason to set aside
an invalid, but
nevertheless effective, default judgment if the applicant for
rescission has no defence to the claim; to do so
would be to
encourage further litigation for no practical purpose and to
contribute to unnecessarily clogging the court rolls.
[11]
Turning to the alternative argument advanced by the appellants'
counsel, the principal affidavit made ir support of the application
for rescission of judgment, which was deposed to by the appellants'
attorney, does not, in terms, set out the grounds of any
defence, as
required by rule 49(3). The affidavit does refer to the plea that
was delivered, but not to incorporate its content;
rather, merely to
narrate the date on which it was delivered and the circumstances of
such delivery. I do not think that this
constituted compliance with
the rule; cf.
Taylor
v Additional Magistrate, Vereeniging, and Others
1984
(4) SA 1
(T) and
Kruger
v Standard Krediet Korporasie Bpk
1988
(1) SA 570
(T).
[12]
But even if I were to be incorrect in such conclusion, the
allegations in the plea are so baldly and opaquely formulated
as to
be insufficient to set out the grounds of the appellants' defence in
the manner contemplated by rule 49(3). It will be
recalled that the
claim is for payment of an amount due in terms of a mortgage loan.
It is admitted in the plea that the contract
provided for the
prima
facie
proof
of the amount due by a certificate from the mortgagee. A certificate
as contemplated in the contract was attached to the
summons in
support of the claim. It follows that at any trial of the action
there would have been an evidential onus on the defendants
to rebut
the effect of the certificate of balance (cf. e.g.
Bank
of Lisbon International Ltd v Venter and Another
1990
(4) SA 463
(A) at 481H - 482C, read with
Senekal
v Trust Bank of Africa Ltd
1978
(3) SA 375
(A) at 382
in
fine
-
383). They would be obliged to adduce evidence to demonstrate the
incorrectness of the certificate. Their mere statement, without
substantiation, that the amount was incorrect would be insufficient
for this purpose. All the plea alleges in the relevant respect
is
that the amount claimed is not accurate. The grounds on which this
conclusion is premised are not set out in the plea. There
is
therefore no indication in the plea of the evidential basis on which
the defendants might seek to rebut the presumptive effect
of the
certificate of balance. It is not sufficient to satisfy the
requirement of rule 49(3) for the deponent to merely identify
the
nature of a defence, but fail to set forth the grounds upon which it
will be advanced (compare the provisions of rule 14(3)(c)
which
requires of a defendant opposing an application for summary judgment
to disclose the 'nature
and
grounds'
of
its defence; and consider the discussion of the meaning of the
expression grounds of the defence' in that connection by Erasmus
et
al in
Jones
& Buckle, The Civil Practice of the Magistrates Courts in South
Africa
9ed
(Juta) Vol. II at 14-26 [Service 25, 2009]).
[13]
The fourth and fifth appellants were sued in their capacity as
sureties for the principal debt. The plea annexed to the supporting
affidavit filed in support of the application for the rescission of
default judgment admits the execution of the deeds of suretyship
and
the alleged effects of the provisions thereof. The relevant
paragraph of the plea reads as follows:
'Save
for pleading that the fourth and fifth defendants did not fully
understand the implications and obligations imposed by a
surety
agreement, and that such implications were not explained to them by
the plaintiff, the contents [of paras 16 and 17 of
the particulars
of claim] are admitted.'
[14]
I agree with the submission by the respondent's counsel that the
plea does not make out a defence by the sureties. No basis
for the
existence of any duty on the respondent to explain the implications
and obligations is alleged; and insofar as it might
be inferred that
the fourth and fifth appellants were seeking to rely on the defence
of
Justus
error
(which
is far from clear), the allegations necessary to support such a
defence with reference to the principles set forth in decisions
such
as those in
George
v Fairmead (Pty) Ltd
1958
(2) SA 465
(A) and
Spindrifter
(Pty) Ltd v Lester Donovan (Pty) Ltd
1986
(1) SA 303
(A) are notably absent.
[15]
The failure by the appellants to comply with rule 49(3) is therefore
an insuperable obstacle to the success of their appeal.
[16]
It remains, however, to deal with the order made by the magistrate
declaring the property hypothecated by the mortgage bond
directly
executable. This order was sought by the respondent and granted by
the magistrate simultaneously with the order granting
default
judgment. The appellants had alleged in their plea, which, as
mentioned was before the magistrate when he made the orders,
that an
order for execution against the property would lead to an
infringement of their constitutional right to adequate housing.
The
plea indicated their intention to adduce evidence and/or submit
argument in support of that contention. The issue of the
order in
those circumstances without an enquiry into the facts sufficient to
establish a basis for a consideration by the court
of all relevant
circumstances, as contemplated by s 26(3) of the Constitution, was
unlawful; cf.
Jaftha
v Schoeman; Van Rooyen v Stoltz
[2004] ZACC 25
;
2005
(2) SA 140
(CC) (2005 (1)BCLR78).
[17]
In a note submitted after the hearing at the court's invitation, the
respondent's counsel submitted that the appellants should
have dealt
with their contentions on the constitutional rights aspect as part
of their setting out of grounds of defence in terms
of rule 49(3).
He submitted that as a consequence of their failure to do so, the
order for execution should stand. I do not agree.
[18]
The order for direct execution against the property was not integral
to the default judgment; it was an order that followed
consequentially on the default judgment. It was an order of the
nature contemplated by s66(1)(a) of the Magistrates' Court Act
32 of
1944, as that provision falls to be read in the context of the
Constitutional Court's judgment in
Jaftha.
The
enquiry enjoined by s 26(3) of the Constitution is an aspect to be
addressed irrespective of the merits of the rescission
of default
judgment application; cf.
Standard
Bank of SA Ltd v Adams
2007
(1) SA 598
(C). While the question of quite how the application of s
26(1) of the Constitution should operate in the context of the
execution
by mortgagees against hypothecated property has not, as
far as I am aware, been determined (cf.
Standard
Bank of SA Ltd v Saunderson
2006
(2) SA 264
(SCA)
(2006 (9) BCLR 1022
;
[2006] 2 All SA 382))
, the
summons in this case drew the defendants' attention to s 26 of the
Constitution and invited them to place information that
might
support any claim by them that an order for execution would infringe
their constitutional right to access to adequate housing
before the
court. As to what circumstances might possibly be relevant in the
circumstances, see
Campus
Law Clinic, University of KwaZulu-Natal v Standard Bank of South
Africa Ltd and Another
[2006] ZACC 5
;
2006
(6) SA 103
(CC)
(2006 (6) BCLR 669)
at para.
[8]
. The manner in
which the order for direct execution was obtained in this matter
deprived the appellants of the opportunity of
which they apparently
wished to avail to take up that invitation.
[19]
Ordinarily, the issue would have been canvassed during the trial of
the action or, if no defence on the merits of the claim
were
advanced, at a specially set-down hearing. The consideration
enjoined by s 26(3) of the Constitution is one for which there
is no
special procedural provision in the rules of court. The respondent
cannot deprive the appellants of the opportunity to
put their
circumstances up for consideration by the court in terms of s 26(3)
by purporting to bring the enquiry under the rules
pertaining to the
granting and rescinding of default judgment.
[20]
Although the order for direct execution made in the magistrates'
court will be set aside, the respondent has nevertheless
been wholly
successful in opposing the appeal against tne refusal of the
appellants' application for rescission of the default
judgment. A
setting aside of the execution order does not, for the reasons
already discussed, amount to a partial rescission
of the default
judgment (assuming such an order were competent). The respondent is
therefore entitled to the costs of the appeal.
[21]
I propose that the following orders should issue:
1.
The appeal is dismissed with costs.
2.
The
order made by the magistrate declaring the hypothecated property
directly executable is set aside. In the event that the respondent
wishes to apply afresh for such an order in terms of s66(1)(a) of
the Magistrates' Court Act, it shall make such application
on notice
to the appellants, as provided in terms of rule 55 of the
Magistrates' Court Rules of Court.
A. G. BINNS-WARD
Judge
of the High Court
ERASMUS
J:
I
agree and it is so ordered.
N.C.
ERASMUS
Judge
of the High Court