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[2021] ZAGPJHC 863
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Micheal and Another v First Rand Bank Limited (2010/2498) [2021] ZAGPJHC 863 (14 July 2021)
IN
THE HIGH COURT OF SOUTH AFRICA
GAUTENG
DIVISION, JOHANNESBURG
Case
number: 2010/2498
REPORTABLE:
NO
OF
INTEREST TO OTHER JUDGES: NO
REVISED
IN
THE MATTER BETWEEN:
MICHAEL
G
First Applicant
MICHAEL
L.C
Second Applicant
and
FIRST RAND BANK
LIMITED
Respondent
Judgment
BHOOLA
AJ:
Introduction
[1]
This is an application for leave to appeal against the whole of my
judgment and order
handed down on 28 January 2019. The applicants are
the defendants in the main action and the appellants in the
application for
leave to appeal. They are referred to herein as “the
applicants”
.
The respondent is the plaintiff in the main
action.
[2]
The cause of action arose in 2010. Default judgment was entered
against the applicants
on 21 June 2017. They launched an application
for rescission on 22 August 2017. They now seek leave to appeal
against my order
and judgment of 28 January 2019 refusing to grant
the rescission application. The applicants also seek condonation for
the late
filing of their notice of application for leave to appeal.
Application
for condonation
[3]
The application for leave to appeal is dated 18 February 2019 and was
served on the
respondent’s attorneys on 25 February 2019.
However, it appears to have only been filed with the Registrar of
civil appeals
almost a year later, on 18 February 2020, in
contravention of the
requirements of paragraph 1 of Chapter 11
of this Court’s Practice Manual which states that:
“
An
application for leave to appeal must be filed with the registrar in
charge of civil appeals. A copy of the application must also
be filed
with the Judge’s Secretary.”
[4]
The dates of filing appear on Caselines from the pleadings filed by
the respondent
from their files. The applicants denied that the
notice of application for leave to appeal was filed more than a year
late and
contend that the application was served and filed a mere
four days late. They were not able to prove that the application was
filed
timeously, and Mr Marks, applicants’ counsel, submitted
that they were not able to respond timeously as this point had
belatedly
been taken in the respondent’s heads of argument in
the application for leave to appeal. He submitted that the applicants
do not have access to their files and were unable to produce evidence
in substantiation of the submission that the application
was only
four days not more than a year late. Mr Marks sought a postponement
proposing that the respondent should file an explanatory
affidavit
setting out the facts on which they rely for this contention. This
was not a formal application for a postponement and
I refused
counsel’s request for a postponement. In any event it is the
applicants as
dominus litis
who bear the duty to prove that
they filed the application for leave to appeal timeously.
[5]
The application for leave to appeal would thus appear to be out of
time by more than
a year, not only by four days as the applicants
contend. The applicants allege that reason for the lateness of the
application
is due to the fact that they were “stretched in
terms of funding”. They were only able to place their attorneys
in
funds on or about 23 February 2019. However, they provide no
explanation why, although the application for leave to appeal was
served on 25 February 2019, it was only filed a year later on 18
February 2020; why they took no further steps to prosecute the
appeal; and why the application for condonation was only served on 22
June 2021, a week before the application for leave to appeal
was set
down for hearing. All steps to prosecute the appeal, including
enrolment of the appeal for hearing, were in fact taken
by the
respondent’s attorneys. This is an indication of the dilatory
manner with which the applicants have treated this matter,
and it is
of some concern that the cause of action arose in 2010. The
Applicants’ main submission was that that it would
be a
travesty of justice to refuse the condonation application and thus
the appeal itself when the application was only a few short
days late
and to shut the door to the applicants in these circumstances.
[6]
In the matter of
S
v Yusuf
[1]
the Appellate Division had
regard to the requirement of good cause in relation to a request to
be excused from non-compliance with
the Rules of Court. It held as
follows:
“
Thus
the Court has had regard to factors such as the efforts made towards
compliance with the Rules, the degree of non-compliance
(in this case
the length of the delay), the explanation therefor, the prospects of
success, and the importance of the case. Such
factors are not
individually decisive, but must be weighed one against another, for
example a short delay and good prospects of
success might compensate
for a weak explanation. In each case the question is whether
sufficient cause has been shown for the relief
sought.”
[7]
In order to succeed with an application for condonation, the
applicants must therefore
show good cause. This entails three
elements. Firstly, they must give a reasonable explanation for their
default. Secondly, they
must show that the application is made
bona
fide
. The third element is that the defendants must show that
they have a
bona fide
defence, which
prima facie
carries some prospect of success.
[8]
In assessing the reasonableness of the explanation for the default,
this Court has
to consider not only the lateness of the application
for leave to appeal but also the delay in seeking condonation for
such lateness.
I agree with the submission by respondent’s
counsel, Ms Denichaud, that there is no satisfactory explanation for
either of
the delays caused by the applicants. Indeed, there are no
facts and/or reasons provided for the delay at all, and that the
conduct
of the applicants in the matter reflects their lack of
bona
fides.
[9]
It is trite that when a litigant realizes that he has not complied
with a Rule of
Court, he should apply, without delay, for
condonation. It was held as follows in the matter of
De
Beer en
‘n Ander v Western Bank Ltd
[2]
:
“
Dit
is reeds by herhaling in uitsprake van hierdie Hof gestel dat 'n
aansoek om kondonasie gedoen moet word so gou doenlik na 'n
betrokke
party tot die besef kom dat hy nagelaat het om aan voorskrifte van
die Appèlhofreëls te voldoen.”
[10]
In relation to the third element, which is that the defendants must
show that they have a
bona fide
defence, which
prima facie
carries some prospect of success, Ms Denichaud submitted that the
application for condonation is not made
bona fide,
nor is
there a
bona fide
defence. An application for condonation is
not a mere formality. Counsel submitted that applicants also had an
obligation, yet failed,
to show that the grant of the indulgence
sought will not prejudice the respondent in any way. She submitted
that it is clear from
the manner in which the applicants are
litigating, and with specific reference to the background facts, that
their conduct is prejudicial
to the respondent in that unnecessary
legal costs are being incurred as result of time and legal resources
being wasted; and that
the respondent is required to address bogus
defences which are clearly untenable.
[11]
Ms Denichaud submitted that the applicants have also failed to
satisfy the elements required
to prove good cause. Accordingly, she
submitted that the application for condonation is lacking in material
respects, is fatally
defective and ought to be dismissed with costs
on the attorney and client scale. In my view, if regard is had to the
grounds of
appeal, as embellished in the applicants’ heads of
argument, there is indeed no
bona fide
defence and hence no
prospects of success in the appeal. I deal with this below.
Leave to appeal
[12]
The following grounds of appeal,
inter alia,
were raised in
the notice of application for leave to appeal :
12.1
The learned Judge erred in not finding that the applicants’
claim has prescribed in terms of
section 11
of the
Prescription Act
68 of 1969
. The respondent’s amendment to the Declaration was
only granted on 5 October 2016 and served on the first and second
defendants
on or about 18 November 2016.
The pleadings did not
prior to that make out a sustainable action sufficient to found a
proper action in law.
The cause of action as
pleaded, is based on a transaction and facility agreement (loan
agreement),and letters of demand, placing
the debtor (Applicants) in
mora, ostensibly sent on or about 19 or 23 March 2010 and or 16 June
2010 and a proper action was only
before the court (after the
amendment) being on the 14 October 2016. Prior to that an expiable
action had been instructed and no
proper action was before the court
and prescription was accordingly not interrupted by the issue of
summons in 2011.
Accordingly,
the respondent’s claim has prescribed in terms of
section 11
of
the
Prescription Act 68 of 1969
.
12.2
The Court erred further in that it failed to consider the merits of
the rescission application on affidavit:
12.3.1
The Court erred in upholding that the deponent to the application
for
summary judgement had authority to depose to the affidavit in support
of the application for default judgement and that she
had sufficient
knowledge of the facts she verified on affidavit as no proof of
authority (sic).
12.3
The learned Judge erred in finding categorically that there had been
compliance with
section 129
in the face of a material and substantial
factual dispute and should have rescinded the judgment and order in
compliance with
section 129
by Plaintiff prior to the matter
proceeding.
12.4
The Honourable Judge erred in finding that the institution of court
process was not premature, and in breach
of the provisions of section
129 of The National Credit Act.
12.5
The Honourable Judge erred in finding that the applicant had failed
to discharge the onus of proving that
it was entitled to an order
granting the application for rescission of judgment, on a balance of
probabilities.
12.6
Another court could have and should have come to a different
conclusion and on a conspectus of the above
grounds the application
for leave to appeal should have been granted.
[
13]
In considering the prospects of success in the application for leave
the following submissions
are relevant :
Prescription
13.1
Ms Denichaud submitted that this point had been abandoned by the
applicants during the rescission application
and it cannot be revived
now. In any event, the point is legally and procedurally unsound in
that even if the applicants submit,
as they appear to do now, that
the cause of action arose on 16 June 2010 but that a “proper
action” was only proceeded
with on 18 November 2016, when the
respondent/plaintiff’s amendment was effected, the claim would
not have prescribed. In
this regard
section 11(a)(i)
of the
Prescription Act provides
that:
“
The
periods of prescription of debts shall be the following:
(a)
thirty years in respect of-
(i)
any debt secured by mortgage bond;”
13.2
The debt incurred by the applicants under the facility agreement was
secured by two covering mortgage bonds,
the first mortgage bond being
registered on 22 October 2007 and the second mortgage bond being
registered on 23 October 2007 (see
annexures “B” and “C”
to the declaration). Thus the applicable period of prescription is 30
years. I agree
with Ms Denichaud that there is in the circumstances
no merit to this ground of appeal.
Authority
and
section 129
0cm;
line-height: 200%">
13.3
These grounds of appeal are nonsensical. In his heads of argument, Mr
Marks conceded that there is no issue
of authority nor was there an
application for summary judgment. Furthermore,
section 129
is not at
issue in this matter.
Calculation
of the interest rate
13.4
Mr Marks submitted that the Court erred in that it failed to consider
the merits of the rescission application
in regard to the
contradiction between the allegation on the interest rate and the
contents of annexure CS11 as read with CS7.
The Court failed to find
that the allegations contained in the particulars of claim as well as
the agreement attached thereto contradicted
the allegations as more
fully detailed in annexure CS11 which states specifically “
[a]s
a token of goodwill we have reduced your interest rate by a further
50%”
to the Application for Rescission of Judgement, which
annexure is a letter dated 11 April 2008, from the Plaintiff to
Defendants.
13.5
Mr Marks submitted, relying on
ABSA
Bank Ltd v Havenga,
[3]
that this is a clear
variation of the agreement, which it is trite was never applied by
the respondent in calculating the debt
and accordingly is not even
alleged in the particulars of claim. Thus, the certificate of balance
is incorrect and rescission should
have been granted on this ground
alone. Accordingly, the Court erred in finding that the terms as
appearing on annexures CS7 (Case
lines 01-22), i.e. the agreement
relied upon by the respondent, were in fact terms agreed upon by the
parties, which finding was
material to the court granting the order
against the applicants, as it is submitted that annexure CS11 was an
agreed variation
of the terms in regard to the interest rate. The
Court erred further in finding that the interest rate claimed by the
respondent
was correct insofar as it is trite that the 50% reduction
was not in fact applied. Accordingly, the applicants have alleged
facts
which would clearly constitute a reviewable irregularity,
entitling them to an order setting aside the Default Judgement and
having
the matter referred to evidence, even if only on this narrow
issue.
13.6
Ms Denichaud submitted in regard to the interest rate point that it
was clear from the respondent’s
answering affidavit that the
interest rate was reduced by 0,5% or 50 basis points and that the
reference to 50% in the letter (annexure
CS11) was a typographical
error. The applicants were aware of this and refer in their founding
affidavit (Caselines 01-3-11) to
a total -2% reduction that they are
entitled to on the interest rate applicable. Annexure AA16 to the
replying affidavit makes
it clear that the respondent applied a rate
of 14% less 2% and then a 0,5% further reduction. It had never been
the applicants’
understanding that they would receive a 50%
reduction and the respondent’s evidence clearly establishes
this. In any event,
counsel submitted, this point obscures the fact
that the respondent is seeking a money judgment on the capital plus
interest but
the applicants have not made payment even of the capital
amount in over ten years while they continue to occupy the property.
I
agree with Ms Denichaud that in addition that there would have been
no basis for referral of this point to oral evidence as was
submitted
by Mr Marks, and that it this ground of appeal has no prospects of
success.
Notice
in terms of
Section 86(10)
0cm;
line-height: 200%">
13.7
Mr Marks submitted that the Court erred in not finding that the
Respondent had failed to comply with the
provisions of
Section 86
of
the
National Credit Act 34 of 2005
and that as a result the judgment
had been granted in error. The Court erred in not finding that no
proper notification was sent
to each of the applicants in respect of
the
section 86
notice. The respondent relied upon annexure D1, D2 and
D3 as evidence of compliance. (Caselines 09-85 to 09-86). D1 is
addressed
to both applicants, in a single document. D2 is a
registered slip also addressed to both applicants. There is no
evidence as to
whether each applicant or either of them received
notice, no printout from the post office, and even if there was
compliance in
that the post office sent a notification, at least one
of the applicants would not have received notice as required by
section 86.
Thus, the submission is that there was no compliance with
Section 86
ab initio.
13.8
On this basis alone the Court should have found on considering the
papers in the rescission that an order
rescinding the judgement
should have been granted as there was no evidence before the Court
when the order was granted of compliance
with
section 86
and the
Default order had been improperly granted based on the error that
there had been proper compliance with
section 86.
The non-compliance
was a statutory breach, and no proper action was before the Court,
which should have rescinded the judgment
on this ground alone. By
analogy, the Rules of Court and common law require that in any legal
action each defendant is to be served
with any court papers where
they are cited as a defendant, separately, even if they happen to be
spouses and even if they happen
to use the same
domicilium
or
residential address, why then should a mandatory statutory notice be
subject to a lesser requirement when same is mandatory under
legislation.
13.9
Mr Marks submitted that the Court erred in not finding that there had
been noncompliance with
section 86
in the face of a material and
substantial factual dispute and should have rescinded the judgment
and either dismissed the action
in toto or alternatively exercised
its discretion and ordered compliance with
section 86
by the
respondent prior to the matter proceeding. He submitted that although
Sebola
[4]
deals with Notices under
Section 129
, the principles of service and
delivery are directly analogous and on point as regard
section 86
Notices.
13.10
Mr Marks submitted that in
Standard
Bank of South Africa Ltd v Visagie and Another
[5]
Kruger
J refused summary judgment as there was no proof that the 86(10)
notice had in fact been delivered to the post office where
the
defendant resided. The pleadings that are before this Court likewise
have no proof of delivery to the post office where it
was ostensibly
sent. By extension of this principle, the failure to send a notice to
each defendant and the lack of proof of actual
delivery to the post
office where the defendant(s) reside is irregular and is grounds to
set aside the default order and the Court
should have granted the
order for rescission on this ground alone and accordingly the
applicants submitted that the appeal should
be granted on this
ground.
13.11
Accordingly, the Court erred in finding that the institution of court
process was not premature, and in breach of the
provisions of
section
86
of the
National Credit Act in
that factually one of the defendants
had never been served with a notice, nor was one despatched to at
least one of or perhaps
even both defendants. The consequence of not
having been provided with a
section 86(10)
notice is that no proper
action commenced or served before the Court when the order was
granted.
13.12
In regard to the
section 86(10)
notice, Ms Denichaud submitted,
correctly in my view, that the applicants are amplifying their
grounds of appeal in their heads
of argument by raising for the first
time that although the reference to
section 129
in their application
for leave to appeal was an error, that the law relating to
section
129
notices is nevertheless applicable. The applicants at no stage
disputed receipt of the
section 86(10)
notices, and it cannot behove
them to raise this on appeal, and in their heads of argument, for the
first time. Moreover, at the
time default judgment was granted,
Sebola
was not applicable. I agree with Ms Denichaud that this
ground of appeal is similarly without merit.
The
Default Judgment (Second Application)
13.13
This ground of appeal is that the respondent ostensibly served a
second application for Default Judgement, simultaneously
with a
notice that purported to withdraw the first application. The
purported notice of withdrawal is irregular, alternatively
defective
as same clearly fails to make any tender of costs, as required by the
Practice Directive and the Rules of this court.
This ground of appeal
is raised for the first time in heads of argument and can in my view
be disposed of on this basis alone.
[14]
On the above grounds, Mr Marks submitted that another court could
have and would have come to
a different conclusion and on a
conspectus of the above grounds the application for leave to appeal
should succeed. Ms Denichaud
submitted that the application for
rescission was correctly dismissed and there is no prospect that
another court would come to
a different conclusion on appeal. I
agree. Hence, in my view the application for leave to appeal lacks a
bona fide
defence and has no prospects of success.
[15]
In conclusion, the application for condonation falls short of the
legal requirements pertaining
to Uniform
Rule 27
applications. The
applicants clearly dragged their feet in their compliance with the
Rules of this Court and have not provided
good cause for the delays
occasioned by their failure to prosecute this appeal. They have in my
view failed to show good and sufficient
cause to entitle them to
condonation in this instance. They have furthermore failed to show
that there are any prospects of success
in the appeal.
Order
[16]
In the result, I make the following order:
1.
The condonation application is dismissed.
2.
The First and Second Applicants shall pay the costs of the
condonation application on the scale as between attorney and client.
3.
The application for leave to appeal is dismissed.
4.
The First and Second Applicants shall pay the costs of the
application for leave to appeal on the scale as between attorney and
client.
_______________________________
U.
BHOOLA
Acting
Judge of the High Court of South Africa
Gauteng
Local Division, Johannesburg
Date
of hearing: 2 July 2021. Heard by videoconference as per the
Consolidated Directive of the Judge President of 11 May 2020 as
extended.
Date
of judgment: 14 July 2021.
Appearance:
Counsel
for the Applicants: L. Marks
Instructed
by: Larry Marks Attorneys
37
Fricker Road
Illovo
Ref:
Mr L Marks/OLM/M653
Tel
: (011) 024 6174
Fax
(086) 612 6004
Email:
info@lam.co.za
Counsel
for the Respondent: C. Denichaud
Instructed
by: Glover Kannipan Inc
18
Jan Smuts Ave
Parktown
Ref
: K. Benatar/15312
Tel
: (011) 482 5652
Fax:
(011) 482 5653
Email
:
dr2@gkinc.co.za
;
lue@gkinc.co.za
[1]
1968
(2) SA 52 (A).
[2]
1981
(4) SA 255 (A).
[3]
(21558-10) [2010] ZAGPPH 147
2010 (5) SA 533
(GNP) (10 August 2010).
[4]
Sebola
and Another v Standard Bank of South Africa Ltd and Another
(CCT 98/11)
[2012] ZACC 11
;
2012 (5) SA 142
(CC);
2012 (8) BCLR 785
(CC) (7 June 2012).
[5]
[2015]
ZAFSHC 117
(25 June 2015).