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[2019] ZAECPEHC 60
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Mothlabane v ABSA Bank Limited (2318/2017) [2019] ZAECPEHC 60 (25 September 2019)
IN
THE HIGH COURT OF SOUTH AFRICA
(EASTERN
CAPE LOCAL DIVISION, PORT ELIZABETH)
Case
No: 2318/2017
Date
heard: 29 August 2019
Date
delivered: 25 September 2019
In
the matter between:
MATSHEDISO
DAPHNE
MOTHLABANE Applicant
And
ABSA
BANK
LIMITED
Respondent
JUDGMENT
Goosen
J:
[1]
The
applicant seeks rescission of a judgment granted against her by
default on 20 February 2018
[1]
.
She also seeks rescission of an order declaring her hypothecated
property specially executable on 19 June 2018.
[2]
The respondent instituted action for payment of the accelerated
capital
sum due in terms of a loan agreement concluded with the
applicant. The sum claimed was R450 032,48 together with
interest
and costs. The loan agreement, entered into on 14 May 2012,
provided for registration of a first mortgage bond over Erf 3447,
Korsten,
Port Elizabeth (the property) as security for the loan. The
applicant was required to repay the capital and interest on the loan
by way of monthly instalments in the amount of R4 595,00. The
loan agreement provided that in the event of default of payment
of
the monthly instalment the respondent would be entitled,
inter
alia
, to claim payment of the full amount due in terms of the
loan agreement.
[3]
It is not
in dispute that the applicant fell into arrears in the payment of her
monthly instalment. As a consequence the respondent
caused a Notice
and letter of demand in terms of s 129 of the
National
Credit Act
[2]
(hereunder the
NCA
)
to be delivered to the applicant. Delivery of this Notice, dated 20
June 2017, is not in dispute
[3]
.
It is common cause that the applicant did not avail herself of any of
the remedies available to her in terms of s 129 read with
s 130 of
the
NCA
.
[4]
As already indicated the respondent issued summons seeking to enforce
the credit agreement concluded between it and the applicant. Summons
was served on the applicant in person at the
domicilium
address of the property on 11 July 2017. The applicant did not enter
an appearance to defend. It appears that the application for
default
judgment was set down for 3 October 2017. It is not apparent what, if
anything, transpired on that day. There is no note
on the file nor
any court order dated 3 October 2017. Be that as it may, the
application for default judgment was re-enrolled for
20 February
2018. The applicant is noted as being present and appearing in
person. As indicated, judgment was granted by Beshe
J for payment of
the capital, plus interest and costs.
[5]
On 3 May 2018 the respondent issued an application in terms of Rule
46A
to declare Erf 3447 Korsten, Port Elizabeth to be specially
executable. Personal service of the application was effected on the
applicant on 8 May 2018. On 19 June 2018, Chetty J granted the order.
[6]
The application for rescission of the aforementioned judgments is
premised
upon the common law, alternatively upon Rule 42(1)(a).
[7]
The
applicant’s founding affidavit sets out three bases upon which
rescission of the judgments is sought. The first of these
that the
procedure adopted by the respondent, viz. to obtain two separate
judgments i.e. the first for the capital and interest
and the second
for authority to execute against the property is impermissible. In
this regard reference is made (both in the founding
affidavit and the
heads of argument filed on behalf of the applicant) to
Absa
Bank Limited v Mokebe
[4]
.
Mr Lambrecht, who argued the matter on behalf of the applicant,
wisely and properly abandoned the point. The
Mokebe
judgment was delivered on 12 September 2018 after both judgments in
this matter had been handed down. The
Mokebe
judgment (leaving aside for the moment its precedential status) does
not address the practice or procedure of this Division prior
to its
delivery. The applicant’s reliance upon it is accordingly
without merit.
[8]
The primary basis upon which the applicant seeks rescission is the
contention
that the credit agreement was re-instated prior to
judgment by reason of the plaintiff effecting payment of the then
outstanding
arrears. The applicant alleges that shortly after
receiving the summons in the action she visited a branch office of
the respondent.
She does not state when this occurred. However, she
states that she spoke to a bank official who made telephonic contact
with an
official in the Home Loans Department of the respondent at
its head office in Gauteng. She spoke to this official, a Mr
Madlabane.
She states that he informed her that she should make
payment of R45 000,00 in order to bring the account up to date.
Should
she do so no further legal steps would be taken.
[9]
Following this conversation the applicant made payment of the
R45 000,00
in two tranches, R30 000,00 on 2 September 2017
and a further R15 000,00 on 6 September 2017. According to the
applicant
she believed that the payment of the arrears would result
in the legal proceedings being halted.
[10]
The applicant states that she attended court on 20 February 2018 and
explained to the court
that she had made an arrangement with the bank
official. She thereafter assumed that the matter was resolved and
only came to a
different understanding when she received notice of
the application to permit execution against the property.
[11]
The
applicant then sought legal assistance from some unnamed attorneys.
She was advised not to take the matter further. She was
eventually
referred to her present attorney. This was some time after the order
was made by Chetty J. During the course of September
2018 counsel’s
opinion was obtained and on 3 October 2018 the present application
was launched
[5]
.
[12]
In addition to the contention that the credit agreement was
reinstated by payment of the
arrears the applicant also asserts that
she intends to challenge the enforceability of the credit agreement
on the basis that the
extension of credit to her was reckless. As I
understand it this is founded on the allegation that the loan was
approved at a stage
when she was five years from retirement. She
would, for this reason, therefore not have been in a position to
repay the loan over
the period of its terms.
[13]
For reasons which will become apparent hereunder it is not necessary
to canvas this latter
issue to determine whether it constitutes a
bona fide
defence to the respondent’s claim. I have my
doubts but I need say no more.
[14]
A party
seeking rescission of judgment, in accordance with common law
principles, is required to establish sufficient cause. This
involves
two elements viz. a reasonable and acceptable explanation for the
default
and
a
bona
fide
defence which carries some prospects of success
[6]
.
Both elements must be established.
[15]
Mr Van Rooyen, for the respondent, argued that the applicant’s
application must fail
on both accounts. He argued that the applicant
had given no explanation for her default nor for the delay in
bringing this application.
[16]
I am unable to agree with these submissions. The applicant states
that she did react to
the summons. She contacted the bank and was
told that she must pay the outstanding arrears on the account. If she
did so no further
action would be taken. She did, in fact, pay the
amount indicated and therefore assumed that nothing further would
occur. That
was in September 2017 and it appears that nothing further
was in fact done until the application for default judgment was
“re-enrolled”
for 20 February 2018. On that occasion she
attended and, according to her uncontradicted statement, attempted to
explain her position.
[17]
In my view this explanation is reasonable. It adequately explains why
she was in default
of entering an appearance to defend. The
explanation is also closely intertwined with the substantive defence
raised on the papers,
viz. that the credit agreement upon which the
cause of action had been founded had been reinstated.
[18]
In its answering affidavit the respondent suggests that the
applicant’s averments
regarding the arrangement to pay the
outstanding arrears are “
conveniently vague, bald and
sketchy
”. This characterization of the applicant’s
averments is patently wrong. While it is so that the applicant does
not
specify a date when she spoke to the bank official, she names the
official and identifies the department in which he works. She
also
provides specific detail in regard to the amount of the arrears
communicated to her.
[19]
Apart from the inaccurate characterization of the averment there is
no attempt by the respondent
to address these factual averments. The
respondent does not go on oath to state that no such person as a Mr
Lucky Madlabane exists
or then worked in the Home Loans Department or
that such conversation never occurred.
[20]
No reason
is given why these allegations cannot be investigated. Instead, the
averments of the applicant stand unchallenged. What
is more, the
applicant’s version of what occurred is strongly supported by
the evidence adduced by the respondent at the
stage of default
judgment and before this court. At the stage when default judgment
was sought a supplementary affidavit (pursuant
to Rule 14A) was
filed
[7]
. In it the arrears
amount is given as R14 571,50. The account statements annexed
thereto indicate that on 2 September and
6 September 2017 R30 000,00
and R15 000,000 respectively was paid. The arrear balance as at
6 September 2017 is reflected
as R747,40. The arrear balance as at 9
February 2018 accordingly consists of this amount together with
instalments and interest
accrued after 6 September 2017. This state
of the applicant’s account is confirmed in a so-called
“
Re-Calculation
”
statement annexed to the answering affidavit in the present
application.
[21]
It is, in my view, significant that immediately prior to the payment
made by the applicant
the arrear amount reflected on the account
statement was R45 767,40. This accords very closely with what
she says she was
told the arrear amount was.
[22]
Mr Van
Rooyen argued that, as a matter of fact, the applicant had not paid
the arrears in full, nor had she paid the costs incurred
in enforcing
the agreement. As such she could not avail herself of s 129(3) of the
NCA
or the judgment in
Nkata
v Firstrand Bank Ltd
[8]
.
[23]
S 129(3) provides that a consumer may:
“
at any time before
the credit provider has cancelled the agreement, remedy default in
such credit agreement by paying to the credit
provider all amounts
that are overdue, together with the credit provider's prescribed
default administration charges and reasonable
costs of enforcing the
agreement up to the time the default was remedied.”
[24]
In
Nkata
[9]
it was held that “
all
amounts that are overdue
”
refers only to the arrear instalments. Reinstatement occurs by
operation of law
[10]
and
occurs upon payment of the arrears that are due, the permissible
default charges and the legal costs. Importantly, it was held
that
legal costs are only due and payable when they are reasonable, agreed
or taxed and on due notice to the consumer
[11]
.
That did not happen in this instance. Accordingly, it was open to the
applicant to reinstate the agreement
[12]
upon payment of the amount in arrears.
[25]
Does the fact that the full amount that was overdue was not paid
preclude reliance on s
129(3)? It may well be so notwithstanding the
amount of the difference, however, small. I need, however, not decide
the issue.
There are two reasons. Firstly, I need only determine
whether the applicant has raised a
bona fide
defence against
the respondent’s claim which entitled her to rescission of
judgment. She contends that a bank official informed
her of the
amount of the arrears to pay and she paid that amount. She was told
that no further legal steps would be taken. Although
her case for
rescission was argued upon a reinstatement basis, the facts relied
upon also sustain an agreement not to proceed in
the event that
payment of R45 000,00 was made. There is also the argument,
raised in the applicant’s heads of argument,
that in the
circumstances of this matter the respondent was duty-bound to draw to
the applicant’s attention the outstanding
amount of R767,40 so
that she could avail herself of the protection afforded by s 129(3).
[26]
When I take all of these aspects into consideration I am satisfied
that the applicant has
indeed raised a
bona fide
defence which
enjoys some prospect of success. It follows that the applicant is
entitled to rescission of the judgment of 20 February
2018. Mr
Van Rooyen conceded, properly so, that the judgment of 19 June 2018
declaring the property executable would necessarily
also need to be
set aside. In respect of costs there is no reason to depart from the
ordinary rule that costs follow the result.
[27]
I, therefore, make the following orders:
1. The
judgments of 20 February 2018 and 19 June 2018 under case number
2318/2017 are hereby rescinded.
2. The
respondent is ordered to pay the costs of the application to rescind
the judgments.
G.G
GOOSEN
JUDGE
OF THE HIGH COURT
Obo
the Applicant: Adv
Lambrecht
Instructed
by Leon
Keyter Attorneys, 27 Uitenhage Road, North End, Port Elizabeth
Obo
the Respondent: Adv
C van Rooyen
Instructed
by Jacques
Du Preez Attorneys, 96 Mangold Street, Newton Park, Port Elizabeth
[1]
The judgment is erroneously dated 20 February 2017. That this is an
error is apparent from the court file which indicates that
summons
was issued and served on 11 July 2017 (this is also admitted by the
applicant) and was thereafter referred to open court
on 3 August
2017 and ultimately enrolled for hearing on 20 February 2018.
[2]
Act No, 34 of 2005
[3]
The Notice reflects the amount in arrears as at 8 June 2017 as being
R31 650,26.
[4]
2018 (6) SA 492
(GJ)
[5]
It is apparent that the conduct of the application itself was
bedevilled by delays in the filing of papers. These delays do not
bear upon the substantive question as to the applicant’s
explanation for the delay in commencing the application and can
accordingly be ignored for present purposes.
[6]
See
Chetty
v Law Society, Transvaal
1985 (2) SA 756
(A) at 765A-D
[7]
The original Rule 14A affidavit was deposed to on 31 July 2017
reflecting the state of the applicant’s account as at that
date. The supplementary affidavit is dated 9 February 2018.
[8]
2016 (4) SA 226 (CC)
[9]
Supra
at par [108]
[10]
Supra
at par [105]
[11]
Supra at [80]
[12]
It was not in issue that the applicant was time bound in this
instance and therefor precluded from relying on s 129(3) of the
NCA
.