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B.V v Standard Bank of South Africa and Another (44749/2020) [2023] ZAGPPHC 40 (23 January 2023)

78 Reportability
Banking and Finance
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Brief Summary

Execution — Rescission of judgment — Applicant sought rescission of default judgment granted in favor of the bank for outstanding loan amount — Applicant claimed lack of knowledge of proceedings and disputed the amount owed — Court found that there were unresolved issues regarding the quantum of the bank's claim and the correctness of the certificate of balance relied upon by the bank — Rescission granted as applicant demonstrated good cause and existence of triable issues.

Comprehensive Summary

Summary of Judgment


1. Introduction


The proceedings were an application for rescission of a default judgment granted in favour of a commercial bank in mortgage-loan enforcement litigation. The applicant (a private individual, cited as B.V) sought to set aside a default judgment obtained by the first respondent, Standard Bank of South Africa. The second respondent was the Sheriff of the High Court for the District of Carltonville, cited because execution steps had been taken pursuant to the judgment.


The procedural history was that the bank instituted action against the applicant for payment of R1 160 888.66, interest, and costs arising from a home loan agreement secured by a continuing covering mortgage bond registered over a sectional title property. Summons was issued in September 2020 and, after the applicant did not defend the action, the bank launched an application for default judgment which was granted on 26 November 2020. A writ of execution was later issued on 15 March 2021, and the applicant alleged that she only became aware of the judgment when the sheriff arrived with the writ. The applicant brought the rescission application in May 2021, which the bank opposed.


The general subject-matter of the dispute concerned whether the default judgment should be rescinded on the basis that the applicant had shown good cause, including a bona fide defence (in particular, issues relating to the quantum of the bank’s claim and the reliance on a certificate of balance following the sale of the bonded property during sequestration-related processes involving the applicant’s former husband’s estate).


2. Material Facts


The court accepted as common cause that the underlying debt arose from a home loan agreement concluded between the bank, the applicant, and the applicant’s former husband, and that the loan was secured by a mortgage bond over immovable property described in the papers as a sectional title unit in Celtisdal Extension 20, Centurion, within the City of Tshwane. The loan was repayable over 240 months, and the bank alleged that the borrowers fell into arrears, entitling the bank to accelerate the debt and claim the full outstanding balance.


It was also not in dispute, on the court’s assessment, that the applicant consented to the sale of the property for purposes of settling the debt owed to the bank. The papers reflected that the property was sold (at least initially) for R640 000.00 to Sancrontron Close Corporation, and that it was thereafter sold for R950 000.00. The court treated the existence of these sales and the applicant’s consent to the sale as established on the papers.


The bank’s action was instituted by summons issued on 8 September 2020. According to the sheriff’s return of service, the summons was served on 16 September 2020 at the applicant’s chosen domicilium address by affixing a copy to the principal door after a diligent search, purportedly in terms of Uniform Rule 4(1)(a)(iv). The bank proceeded to seek default judgment on 23 October 2020, which was granted on 26 November 2020.


A significant aspect of the factual matrix relied upon by the court related to uncertainty emerging from the papers regarding the financial accounting after the sale of the property. The court identified that it was unclear from the papers what the outstanding balance was at the time the trustees (in the insolvent estate of the applicant’s former husband) sold the property, how the sale proceeds were appropriated, and how the mortgage bond was cancelled notwithstanding an alleged shortfall. These uncertainties were central to the court’s conclusion that the certificate of balance relied upon by the bank was open to doubt on the available evidence.


There was a dispute on the papers regarding the applicant’s understanding of the debt and its evolution. The applicant alleged that the original loan applied for was R689 900.00, that she did not understand how the bank arrived at a claim of R1 160 888.66, and that there was inadequate transparency about the sale of the property and the reduction (or otherwise) of the indebtedness. The bank, for its part, maintained that the sale proceeds did not extinguish the debt and relied on the loan terms providing that a manager’s certificate of balance constituted prima facie proof of indebtedness.


3. Legal Issues


The central legal questions the court was required to determine were whether the applicant had established a basis for rescission of the default judgment, and specifically whether she had shown “sufficient cause” or “good cause” under the applicable rescission framework relied upon in the matter. Although the judgment canvassed the three main procedural routes for rescission—Uniform Rule 31(2)(a), Uniform Rule 42(1), and the common law—the matter was treated as turning on the common-law standard of good cause rather than on an allegation that the judgment was erroneously granted in terms of Rule 42(1).


The dispute concerned the application of legal standards to facts and involved an evaluative, discretionary judgment. The court had to evaluate whether the applicant had provided a satisfactory basis for rescission, including whether there existed a bona fide defence with at least prima facie prospects of success, and whether the material placed before court raised issues warranting ventilation at trial, particularly on the quantum of the claim and the reliability of the certificate of balance in the circumstances.


4. Court’s Reasoning


The court approached the matter by first identifying the relevant rescission frameworks. It recorded that rescission may be sought under Uniform Rule 31(2)(a) in certain default situations, under Uniform Rule 42(1) where a judgment was erroneously granted (or contains a patent error/ambiguity, or was granted due to a common mistake), or under the common law, which requires a showing of good cause. In describing the common-law requirements, the court referred to authority indicating that two essential elements are generally required: a reasonable and acceptable explanation for the default, and a bona fide defence that prima facie carries some prospect of success.


In evaluating the merits, the court did not decide the application by weighing competing probabilities in detail about the certificate of balance, even though counsel had advanced extensive arguments on probabilities and the contractual status of the certificate. Instead, the court resolved the matter by focusing on identified uncertainties arising from the papers concerning the sale of the property and the computation of the outstanding indebtedness.


The court regarded it as significant that the papers did not clearly disclose the relevant accounting: it was not clear what the outstanding debt was at the time of sale by the trustees, how the sale proceeds were appropriated, and how the mortgage bond was cancelled despite the alleged shortfall. Those factors, in the court’s view, raised questions about the correctness of the amount claimed and therefore about the reliability of the bank’s certificate of balance as determinative proof in the circumstances.


In that context, the court relied on the principle that reliance on a certificate of balance may become problematic where other evidence emerges casting doubt on its correctness. The court referred to Bank of Lisbon International Limited v Venter en ’n Ander 1990 (4) SA 463 (A) for this proposition, and it also referred to authority indicating that a certificate of balance is not absolute proof of indebtedness in every circumstance. The court further noted that, given the substantial amount claimed and the history of the sale transactions reflected in the papers (including that the property was sold for amounts that related in a complicated way to the original loan amount), questions might arise concerning how interest was calculated, mentioning the duplum rule as a consideration that might prompt further interrogation of the interest calculation. The court did not make a definitive finding on the duplum rule; it treated it as part of the broader set of uncertainties that required clarity.


The court concluded that these unresolved questions constituted good cause because they raised triable issues about quantum and undermined the conclusiveness of the bank’s reliance on the certificate of balance at the rescission stage. It stressed that the applicant’s burden in rescission was not to demonstrate a defence with a probability of success on the merits, but rather to show the existence of an issue appropriate for trial. On that basis, the court found it unnecessary to consider other possible defences in further detail once it was satisfied that the quantum issues warranted rescission and a trial process.


5. Outcome and Relief


The court granted the application for rescission of the default judgment. It ordered that the applicant be granted leave to defend the action. The court further ordered that costs be costs in the cause of the action (meaning the costs of the rescission application would be determined in the main action).


Cases Cited


Bank of Lisbon International Limited v Venter en ’n Ander 1990 (4) SA 463 (A). Promedia Drukkers & Uitgewers (Edms) Bpk v Kaimowitz and Others 1996 (4) SA 411 (C). Chetty v The Law Society of Transvaal 1985 (2) SA 756 (A). Trupp Investments Holdings (Pty) Ltd v Goldrick [2007] ZAGPHC 23; 2008 (2) SA 253 (W).


Legislation Cited


No legislation was cited in the judgment.


Rules of Court Cited


Uniform Rule of Court 31(2)(a). Uniform Rule of Court 42(1). Uniform Rule of Court 4(1)(a)(iv).


Held


The court held that the applicant established good cause for rescission under the common law because the papers revealed unresolved and material issues concerning the quantum of the bank’s claim, including uncertainty as to the outstanding balance at the time of the property’s sale, the appropriation of sale proceeds, and the cancellation of the mortgage bond despite an alleged shortfall. These issues cast doubt on the correctness and reliability of the bank’s certificate of balance for purposes of opposing rescission. The default judgment was accordingly rescinded, the applicant was granted leave to defend, and costs were ordered to be costs in the cause.


LEGAL PRINCIPLES


A party seeking rescission at common law must generally show good cause, which entails a reasonable and acceptable explanation for the default and a bona fide defence that prima facie carries some prospect of success, as reflected in the authorities cited by the court.


A contractual certificate of balance clause renders the certificate prima facie proof of indebtedness, but it is not necessarily conclusive in every circumstance. Where other evidence emerges that casts doubt on the correctness of the certificate, a court may treat the certificate as insufficient to foreclose a bona fide dispute requiring ventilation at trial.


In assessing rescission, the applicant’s burden is not to prove a defence that will probably succeed at trial, but to demonstrate the existence of triable issues that warrant rescission and an opportunity to defend, particularly where the accuracy of the claim’s quantum is legitimately placed in issue on the papers.

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[2023] ZAGPPHC 40
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B.V v Standard Bank of South Africa and Another (44749/2020) [2023] ZAGPPHC 40 (23 January 2023)

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
THE
GAUTENG DIVISION, PRETORIA
Case
no:
44
7
49/2020
REPORTABLE:
NO
OF
INTEREST TO OTHER JUDGES: NO
REVISED:
NO
23
January 2023
In
the matter between:
B
[....] V
[....]

APPLICANT
and
STANDARD
BANK
OF SOUTH AFRICA

1st RESPONDENT
SHERIFF
OF
THE HIGH COURT FOR THE
DISTRICT
OF
CARLTONVILLE

2nd
RESPONDENT
JUDGMENT
MALUNGANA
AJ
Introduction
1.
On
26
November 2020, the
first
respondent
('hereinafter
referred
to
as
'
the
bank'), successfully launched an application for default judgment
against the applicant for payment of the sum of R1 160
888.66
,i
nterest
thereon plus costs.
2.
The
action
which
resulted
in
the
aforesaid default judgment was predicated upon a home
l
oan
agreement
which the applicant and her former husband (
'
C
[....]
'
)
concluded with the bank. The
sa
id
loan
was
secured
by
means of a
continuing
covering
mortgage
bond
[1]
which
was registered over the parties
'
immovable
property
situated
at
Celtisdal
Extens
i
on
20
,
Section
No.23 of Sectional Title Scheme
known
as
Robinson within
the
City
of Tshwane
('the
property').
3.
In
terms
of the loan
agreement,
the
principal
debt
together
with
intere
st
at
an applicable rate was payable by the applicant and her former
husband over a per
i
od
of
240 months
.
In
breach of the terms of the loan agreement
the
applicant
and
C
[....]
fell
into arrear with their loan repayment to the bank, prompting the
latter
to
institute
lega
l
proceedings
for the
recovery
of
the outstanding debt.
4.
It
appears
from
the
papers
that
the applicant was alerted to the existence of the default judgment
when
the
sheriff
of
the
court
turned
up
at her doo
r
steps
,
armed
with the writ of execution issued by the registrar
on
15 March 2021
.
[2]
5.
The
applicant
n
ow
seeks to
have
the
default
ju
dgment
obtained
against
her
rescinded
,
and
in
this
regard has brought
this
application
before
me which
is
being
opposed by
the
bank.
Immediately
I
turn
to
th
e
legal
principles
governing
applications
for rescission or judg
me
nts
.
6.
There
are
three
di
spensations
under
which
an
application
for
r
escission
of
judgment can be brought, namely
:
(a)
Rule
31(2)(a) -
where
there is no appearance to defend or where the defendant
has
filed
an appearance
to
defend but failed to
file
a
plea and was barred
from
doing
so
;
(b)
Rule
42.1
-where
(i)
the
judgment
sought
to be rescinded was erroneously
granted
in
the absence
of
the
affected
party;(ii)
there
is
a patent error or omission or ambiguity
in
such
judgment
,
but
only to the extent
of
such error or omission
or
ambiguity
;
or
(iii) was granted
as
a
result
of
mistake common
to
the
parties
.
This
application
does not pivot on
this
rule
as it would become clear herein below.
(c)
Common
law
-
where
the
applicant
has
to
demonstrate
suffic
i
ent
or
good cause for the court
to
exercise
discretion
in his/he
r/
its
favour.
That
would
entail
a
situation
where
the
party
presents
reasonable
and
acceptable
explanation
for
her/his
or
its
default;
and
that
party
also has to show
on
merits
that
it/she/he
has
a
bona
fide
defence
,
which
prima
facie
carries
some prospect of
success.
[3]
7.
At
this
stage
it
is
necessary
to
set out
the
relevant
background
facts.
Factual Background
8.
On
08 September 2020
the
bank issued summons against the
applicant
out of this division
for
the
outstand
ing
amount
o
f
R1
160
888.66
and
ancillary relief
.
9.
According
to
the
sheriff's
return
of
service
,
the
summons
was
served
upon
the
applicant
on
16
September
2020
,
at
her
chosen
domicilium
et
executandi
being
10
Fish Eagle Charles De Gaulle Crescent, Centurion
by
affixing
a
copy
thereof
to
the
principal
door
after a diligent
search,
in
terms
of
Rule
4(1)(a)(iv)
of
the Uniform Rules.
[4]
10.
The
application
for
default
judgment was launched by
the
bank
on 23 October 2020, and was granted
on
26
November
2020.
11.
The
application before me was instituted
by
the
applicant during the month of May 2021, and served upon the first
respondent
on
12
May
2021.
[5]
12.
It
is
alleged
in
the
particulars
of claim
that
in
terms
of
the
loan
agreement,
if
one
instalment
is
not
paid on the due date the whole
outstanding
balance
would
become due
and
payable.
[6]
In
that
event
the
first
respondent
would
be entitled to
institute
proceedings
for
the recovery
of
all such
amounts
and
for
a court
order
declaring
the
hypothecated
property executable.
The
certificate
signed by a manager of
the
first
respondent
would
become
a
prima
facie
proof
of
the
amount
owed
by
the
applicant
and
her
former husband.
[7]
13.
It
is
alleged
in
paragraph
8.1 of the particulars of claim
that
the applicant's
former
husband,
C [....] B [....],
was
placed
under
final
sequestration
on
14
September
2009,
and
Trustees
were
appointed
in his
estate.
The
bank contends that
the
trustees were
unable
to
settle
the
first
respondent's
claim.
As
a
result the property in question was
realized
and
the
proceeds
were utilized to partially settle
the
first respondent's claim
against
the
estate
.
[8]
The
current
balance
owing
by
the
app
l
icant
is
shown
in
the
certificate
of balance attached
to
the
particulars
of
claim
marked
Annexure
"C
"
[9]
.
Merits of the Application
14.
The
applicant
states
in
her
founding
affidavit
that during her marriage
to
her former husband
they
had
two
immovable
properties including the
property
in Celtisdal
Centurion.
After
her
divorce
the
former
husband took
responsibility
of
both
properties
,
whi
l
e
she moved out in 2006
.
At
all relevant times she was under the
i
mpression
that he would
be
able
to
take
care
of
the
financial
obligations
in
terms
of the loan agreements.
[10]
15.
Dur
ing
the
sequestration of her erstwhile husband's estate
in
September
2009,
she
was requested by his attorneys to give
consent
fo
r
the
sale of the immovable properties which were under his custody
.
The
applicant states under paragraph
13
of
the
founding affidavit that she has no details of how the
said
properties
were
disposed of by
the
liquidators
of her
husband
'
s
es
t
a
t
e
.
She
was
taken
by
surprise
when the sheriff of the
court
served
her with
the
writ
of execution. She
laboured
under
the impression
that
the
issue
of
the
properties
had been
resolved
.
16.
The
applicant
f
urther
alleges
in
paragraphs
17
to
22
of the found
i
ng
affidavit,
that
they
only applied for a loan amount of R689 900.00 from the bank
,
and
she does not
know
how
the first respondent arrived at
t
he
amount
R1
160
888.66,
given
the
fact
that
the
immovable
property was sold for
R950
000.00
.
[11]
17.
In
answer
to the application, the bank has filed its opposing affidavit
resisting the relief sought by
the
applicant.
According to the bank,
th
e
trustees
in
the insolvent estate of
C
[....]
were
unable to settle the bank
'
s
claim against the estate. As a result they resolved to realize the
property
in
collaboration
with
the
applicant
for
the sum of R640 000
.
00
[12]
The
proceeds of
t
he
sale were util
iz
ed
t
o
partially satisfy
the
bank's
claim aga
i
nst
C [....]
'
s
estate.
18.
The
bank further
contends
that
the proceeds of the sale of the property could not ext
i
ngu
i
sh
the
deb
t
owed
by
the
applicant.
and
in
light
thereof
it
seeks
t
o
recover
the
amoun
t
reflected
in
th
e
certificate
of
bala
nce
marked
"H",
attached
to
its
answering affidavit. Furthermore,
the
applicant
and
C
[....]
have
consented
under
the
loan
agreement
that
the
certificate of balance s
i
gned
by the manager of the bank
will
constitute
a
prima
facie
proof
that the duo
are
indebted
to
the
bank.
[13]
Assessment
19.
Counsel
on both
s
ide
s
dealt
extensive
ly
with
what was contended to be, on
the
one
hand,
probabilities
favouring
the contentions of the appl
i
cant,
and conversely,
probabilities
favouring
the bank, that the certificate of balance serves as
prima
facie
evidence.
For purposes of my
judgment
I
do not have to embark on the details of the argument.
The
matter can be resolved on the paragraphs
that
follow
.
20.
The
starting point
is
that
,
it
is
not
in dispute that the applicant consented to the sale of the property
in
order
to
settle
the
debt
owed
to
the
bank.
The
property
was
first
sold
to
Sancrontron
Close
Corporation
for
the
amount
of
R640
000
.
00,
and
thereafter
sold for the amount of R950 000
.
00.
Three
issues
ar
i
ses
from the sale of the applicant
'
s
property
.
Firstly,
it
is not clear
from
the
papers
as to how much was the outstanding debt when the property was sold by
the trustees.
Secondly,
I
could could not discern from the papers as to how
the
proceeds
of the sale were appropriated
by
the trustees, and
.
Thirdly,
how
the
mortgage
bond
was
cancelled
notwithstanding
the
shortfall
in
respect
of
the
principal
debt. This,
i
n
my view
,
raises
some questions around the amount reflected in the certificate of
balance relied upon by the bank.
21.
In
the
Bank
of Lisbon
International
Limited
v
Ven
ter
en
'n
Ander
1990
(4)
SA 463
(A),
the
court held that the reliance on a certificate of balance becomes
problematic
when
other
evidence
emerges
which
cas
t
s
doubt
on
the correctness
of
the
ce
rtificate.
Ev
i
dently
the property in question was purchased
for
R689 900.00, and so
ld
for
R640 000
.
00
less
than
the
value
of
the
loan. and
subsequently
sold
by another en
t
ity
for
R950
000
.
00.
Having
regard
to
the
duplum
rule
th
ere
might be questions
to
be
answered
regarding
the
manner
in
which
interest
on
the
debt
were
calculated
in
view
of
the
substantial
amount
cla
i
med
by
the
bank
.
I
n
any
event
the
certificate
of
balance
relied
on
by
the
bank
is
not
an
absolute
proof
of
indebtedness
in
every
circumstance.
[14]
Conclusion
22.
As
in
Bank
of Lisbon,
supra
I
weighed all the aspects
I
have
referred to in the
sca
l
e
against
the
all
other
evidence.
It is my view
that
there
are
outstanding
issues
which
constitute
good
cause
raised
by
the
applicant
against
the
bank
'
s
claim.
These
issues,
in
my view,
casts
into doubt
into
the
correctness
of
the certificate
relied
upon by the bank
.
A
clarity
has
to
provided as how the quantum of its claim has
been
calculated
taking into account the proceeds of the sale of the property. The
burden
on
the
applicant for purposes of obtaining rescission was not to show
substantial defence with probability
of
success
.
It
is
enough
to
show
the
existence of an issue which is for trial.
23.
Given
my view
that
there
are
i
ssues
pertaining
to
the
quantum
of
the
bank
'
s
claim which needs to be answered at
the
trial, it
is
not
necessary
for me to
consider
whether
the other probable defences are bona fide and have reasonable
prospects of
success
.
I
am
satisfied that
the
applicant
has made out
a
proper case, and rescission ought
to
be
granted.
24.
In
the
premises,
therefore,
the
rescission
is granted.
The
following
order
is
made:
1.
Th
applicant
is
granted
leave
to
defend
the
action;
2.
Costs
will be costs in
the
cause
of the action.
P
H MALUNGANA
ACTING
JUDGE
OF
THE
HIGH
COURT
APPEARANCES:
For
the
Applicant
:
Adv
BL
Pilusa
Instructed
by
:
Sukwa
na
Motshabi
Inc
For
the
Respondent
:
Adv
B Kubeka-Manyelo
Instructed
by

: Findlay & Niemeyer Inc
.
[1]
Sectional
Continuing Covering Mortgage Bond, Case-lines 004-14
[2]
Warrant of
Execution. Case lines 006-77
[3]
Promedia
Drukkers & Uitgewers (EDMS) BPK v
Kaimowitz
and Others
1996
(4) SA 411
al page 417;
Chetty:v
The Law Society of Transvaal
1985
(2) SA 756
at 765B-C. Millar JA said:
"But
it is clear that in principle and in the long-standing practice of
our courts two essential elements of 'sufficient
cause ·'for
rescission of judgment by default are (i) that the party seeking
relief must present aa reasonable and acceptable
explanation for his
default and (ii) that on the merits such party has a bone fide
defence which, prima facie, carries some prospect
of success."
[4]
Return of
Service by Deputy Sheriff Dhlamini. Case lines 005-1
[5]
Notice of
Motion dated 11 May 2021. Case lines 006-53
[6]
Para.7.1 of
the Particulars of Claim. Case lines 004-7
[7]
Paras
7.2-7.4. of the Particulars of Claim. Case lines004-7
[8]
Para 8.2 of
the Particulars of Claim. Case lines 004-8
[9]
"Para
9.2 of the Particulars of Claim. Case lines 004-9.
"The
current balance due and payable to the Plaintiff in terms of the
loan agreement is R1 160 888.66 (One Million One Hundred
Sixty
Thousand Eight Eight Rand and Sixty Six Cents) together with
interest on. the said sum
at
the
rate of 17% per annum·from 14
th
of OCTOBER 2020, to date of payment (see certificate of balance
attached hereto marked as Annexure “C
”·.
[10]
Paras 8-9
of the Founding Affidavit. Case lines 006-9
[11]
Para 22 of
the Founding Affidavit.
·'The
respondent seems to be in pursuit of me as the only debtor in the
circumstances. There is no transparency regarding
!he sale of the
properly."
[12]
Para 6.1 of
the Answering Affidavit. Case- lines 008--7
[13]
Para 23.2
of the Answering Affidavit. Case lines 008--15
[14]
Trupp
Investments Holdings (Pty) v Goldrick
[2007] ZAGPHC 23
;
2008
(2)
SA 253
(W) at
[6]

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