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[2019] ZAGPPHC 241
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Mahomed v Standard Bank of South Africa Ltd and Another (69492/2017) [2019] ZAGPPHC 241 (26 June 2019)
SAFLII Note:
Certain
personal/private details of parties or witnesses have been
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REPUBLIC
OF
IN
THE HIGH COURT OF SOUTH AFRICA
GAUTENG
DIVISION, PRETORIA
(1)
REPORTABLE:
YES
/ NO
(2)
OF
INTEREST TO OTHER JUDGES:
YES
/NO
(3)
REVISED.
Case
No: 69492/2017
20/6/2019
In
the matter between:
SIKANDER
MAHOMED
APPLICANT
(Id.
No.: [….])
and
THE
STANDARD BANK OF SOUTH AFRICA LTD
1
ST
RESPONDENT
(Reg.
No.: 1962/000738/06)
SHERIFF
PRETORIA SOUTH AFRICA
2
ND
RESPONDENT
JUDGMENT
G
JACOBS (AJ)
[1]
Applicant, seeks in its Notice of Motion, a rescission of Judgment
granted against
him in case number 69492/2017, in this
Honourable Court on 14 March 2018.
[2]
The Applicant further seeks condonation for the late filing of the
Application for
Rescission and further seeks that
the Warrant of Execution and the Notice of Attachment,
issued
pursuant to the Judgment be set aside.
[3]
The Applicant did not file Heads of Argument, in terms of the
Practice Directive
and also did not pursue the
Application after it became opposed by the First Respondent
(hereafter “Standard Bank”).
[4]
Standard Bank set the matter down on the opposed roll and the matter
was
allocated
for argument.
[5]
On the date that the matter was set down, the legal representative on
behalf of
the Applicant approached the Court with
a Condonation Application explaining
the failure to file Heads of Argument and requested the Court to
accept the Heads of Argument, at that stage.
[6]
The late Heads were canvassed with the representative on behalf of
Standard
Bank and as no objection was
raised. The Applicant further tendered the wasted
costs for 3
June 2019 and the matter stood down to 4 June 2019 for
argument and in order to give me the opportunity
to consider
the arguments set out in the
Heads.
[7]
At that stage, I indicated that the scale of costs should be reserved
and shall be
dealt with at the argument stage.
[8]
It is not clear, in terms of the Notice of Motion, read with the
Founding Affidavit,
whether the Application is brought
in terms of Rule 31(2)(b), or the common law.
However, in the Heads of Argument, the Applicant insisted that the
Application was brought in terms of Rule 31(2)(b), the
common
law, as well as Rule 42(1)(a).
[9]
On the papers, I am of the view that Rule 42(1)(a) does not apply and
will consider
the rescission on the basis of Rule 31(2)(b) and the
common law.
[10]
In terms of Rule 31(2)(b):
“
A defendant may
within twenty days after he or she has knowledge of such
judgment
apply to court upon notice to the plaintiff to set aside the
judgment and the court may, upon good
cause shown, set aside the default judgment, on such
terms as
it seems meet.”
[11]
In terms of the common law, as set out in
Promedia
Drukkers en Uitgewers (Edms) Bpk) v
Kaimowitz and Others
1996 (4) SA 411
(CPD) at 417
,
the Court has a discretion to grant a rescission of judgment
where sufficient or good cause
has been shown.
[12]
The two essential elements of sufficient cause for rescission of
judgment is set
out in
Chetty v Law Society
of Transvaal
1985 (2) SA 756
(A) at 765 B – C
and are the following:
12.1
The party seeking relief must present a reasonable and acceptable
explanation for his or her default.
12.2 On
the merits, such party shall disclose a bona fide defence, which
prima
facie
carry some prospects of success.
[13]
This is also echoed in
Herbstein
and Van Winsen – The Civil Practice of the High
Courts of South Africa, Fifth Edition at 938 to 939
.
The learned authors,
inter
alia
relying on
Silber
v Ozen Wholesalers (Pty) Ltd 1954 (2) SA
345 (A)
,
state that the phrases “good cause” and “sufficient
cause” are synonymous and interchangeable. The learned
authors
further state that the
Court, when asked to grant an
order for rescission, under Rule
31(2)(b) exercise
a discretion
in doing so and that, that discretion shall be exercised
judicially. See the authorities quoted in footnotes 173 and 174
therein.
[14]
The bank opposed the Application on both the elements (the
explanation for the default
as well as whether the Applicant
disclosed a
bona
fide
defence) in a comprehensive Opposing Affidavit,
the relevant portions thereof will be dealt with
infra
.
[15]
As to whether the Applicant was in default and wilful default, I have
considered all the
allegations made by the Applicant, together
with the referral to correspondence and telephonic
discussions that took
place between Standard Bank and the Applicant,
prior to Summons being issued. I cannot find, on the papers,
that the Applicant
was in wilful default and the enquiry in this case
will then proceed to whether the Applicant disclosed a
bona fide
defence, which
prima facie
, carry some prospects
of success.
[16]
Similarly, if the Application is considered in terms of Rule
31(2)(b), the Application
was brought outside of the
twenty days provided for in the Rule. Again, the explanation
for the delay since the Applicant
became aware of the Judgment
and the issue of the Application is in my view adequately explained
and the Court
condones the late bringing of the
Application in terms of the Rule.
[17]
If the Application is brought in terms of the common law then the
Application, in
my view, was brought within a reasonable
time.
[18]
THE APPLICANT’S DEFENCE:
18.1
The Applicant states in his Founding Affidavit that when he applied
for the loan in 2008, he was 62
years old, employed by Micom
and was due to retire at the age of 65. He further states that
at the time, he did not
contribute to any formal pension fund
and his primary source of income was derived from his employment
(Micom), described above.
18.2 He
further stated that his primary asset was the immovable property (Erf
319 Laudium,
Pretoria). I pause here to
mention that the Respondent showed that this is
the same property for which the loan
was granted and in
essence, the Applicant bought the property from this close
corporation, of which he
was the only member and he held
100% members interest.
18.3
The Applicant alleges that to the best of his knowledge and
recollection, the loan was granted without
a credible
affordability test being conducted. He further states that
Standard Bank failed to take into account that his
income was not reliable, consistent and sustainable, taking into
account that he was only three years away
from retirement and
he had no sizable pension pay-out to speak of.
18.4
Applicant further alleges that Standard Bank failed to take into
account his age and the fact that
he would be 82 years of age
when the last payments that were due, in terms of
the loan, had to be paid.
18.5 He
further alleges that Standard Bank failed to take into account his
past credit history and exposure
to credit.
18.6 As
to the allegation that no credible affordability test has been
conducted, it
is important to note that the
Affordability Assessment Regulations published in
Government Gazette No.: 38557 on 13
March 2015, was not yet
published and is not be applicable to this case.
18.7
The Respondent, in the Opposing Affidavit, fully sets out the
measures it took and the factors it considered,
more
specifically with regards to the affordability of the loan and
I am satisfied that Standard Bank, at the time
that the loan
was granted (2008), properly considered the question whether
the Applicant could afford to repay the loan.
18.8
This is confirmed by the facts of this matter that, on the undisputed
version of the Applicant, he
was able to service the loan and
make repayments up to approximately 2016 (ie. 8 years
after the loan was granted).
18.9 As
to the allegation by the Applicant that Standard Bank failed to take
into account his past credit
history, Standard Bank, in its
opposing papers, annexed the necessary
credit bureau history that
were done in 2008, when the
loan was applied for. Again, this allegation by the Applicant is
not sustainable
and does not, in my view, amount to a bona fide
defence.
18.10 The aspect
that remained and which was extensively argued by both
parties, was the age of the Applicant, at the
time when he applied
for the loan (62 years of age). Further, directly relevant to this,
was the source of income of the
Applicant at that stage and
the allegation that he had no sizable pension of any
nature.
18.11 In this
regard, Standard Bank drew my attention to Section 61 of the
National Credit Act (Act 34 of 2005) (hereafter
“the Credit
Act”) which specifically protects a consumer or
prospective consumer against discrimination,
as set out in
Section 9(3) of the 1996 Constitution. Relevant for
purposes of this Application, Standard Bank should
not
discriminate against a consumer or prospective consumer on the basis
of age.
18.12 In the
National Credit Act (Sections 80 and 81), the legislator deals with
reckless credit and prevention of reckless
credit, the relevant
sections will not be quoted
verbatim
herein.
18.13 On the
papers, and in argument, it was never contended that the Applicant
could not afford to repay the
loan, at the stage when the credit was
granted. The long term sustainability and affordability,
due to his age was
the contentious issue before this Court.
18.14 Standard Bank
also, in its papers, Heads of Argument and argument
before this Court, alluded me to Section
81(4), which reads as
follows:
“
For all
purposes of this Act, it is a complete defence to an allegation that
a credit agreement
is reckless if –
(a)
the credit provider establishes that the consumer failed to fully and
truthfully answer
any requests for information made by the credit
provider as part of the assessment required by this section…”
18.15 In this
regard, my attention was drawn to the two application forms which
formed part of the credit application
that were completed and signed
by the Applicant when he applied for the loan. Standard
Bank argued that the
Applicant did not truthfully disclose his
occupation in that the averment in his Founding Affidavit is
contradicted by the
credit applications, the latter stating
that he was self-employed as a sole proprietor.
18.16 The Applicant
attempted to rectify this in his Replying Affidavit but merely
added to the confusion. In
his Replying Affidavit, he stated that he
was not only self-employed but he was also employed as
alleged in his Founding
Affidavit. Nowhere in the application
for credit and the information supplied by the Applicant, did he
disclose to Standard
Bank that he was indeed due to retire (as he
alleges now in his papers), at the alleged age of 65. In my
view, this non-disclosure,
does have a material effect on the long
term sustainability of the Applicant’s
ability to repay the loan.
To the contrary, the Applicant states in
his credit application that he is self-employed, the
reasonable inference therefrom
is that he is a businessman and that
there is no formal retirement age.
18.17 Another
factor that the Court has to take into account, when exercising is
discretion whether to grant a rescission
or not is the fact that the
Applicant, in essence, by purchasing the property from the
close corporation, of which
he was the sole member, at that
stage raised capital of 1.5 Million Rand, on a property which
he already owned through the
close corporation and occupied,
as set out in his Founding Affidavit. Nowhere is it
explained what happened
to the proceeds received by the close
corporation, of which he as the sole member.
18.18 In the
circumstances, I find that on the Applicant’s papers in this
Application, read
with his application for
credit in 2008 there was a material
non-disclosure of fact, facts that in all
probability would have
influenced Standard Bank’s decision to grant the loan or not.
[19]
In the premises, and in terms of Section 81(4)(a), Standard Bank has
a complete
defence, against the allegation of reckless credit.
[20]
Even if I am wrong in the aforesaid conclusion, on a proper
conspectus of the
information provided
by Standard Bank in its Opposing Affidavit, the original
credit application
and ancillary documents, even if the Applicant was
62 years old, the conduct of Standard Bank cannot be construed as
reckless.
[21]
In my view, a proper consideration of all the facts, including the
fact that he was a
sole proprietor, had business interests and a significant disposable
income, at that stage, was taken into account when
the loan
was granted. If these facts are
to be compared, it
is in stark contrast with the matter of
Absa
Bank Ltd v De Beer and 2 Others
2016 (3) SA 432
GP
,
where money was lent and advanced to pensioners and as the
Court therein found, was actually money thrown into a
bottomless pit.
[22]
In the premises, I am of the view that the Applicant, in this
Application, failed to
establish that he has a bona fide
defence, more specifically a defence that Standard
Bank granted the credit
recklessly and therefore, the Application for
rescission, in my view, should
not succeed.
[23]
In making this finding, I have duly considered all the authorities
referred to in the Applicant’s
list of authorities that were
included in the Heads of Argument.
[24]
This brings me to the counter Application by Standard Bank. In this
counter
Application, Standard Bank seeks that the property described as Erf
319 Laudium Township, held by Deed of Transfer No.: T120724/20078
(hereafter “the property”) to be
declared specifically executable.
[25]
The Applicant answers to this Application in paragraphs 133 and
further of its
Replying Affidavit. The
first point he raises is a point
in
limine
and the allegation that the
Applicants cannot proceed with the relief as a result of the Judge
President’s Practice Directive 2 of 2018, where all foreclosure
matters were
postponed
sine
die
,
pending a decision of the Full Bench.
[26]
This point has become moot when the Full Bench considered the
approach in
foreclosure matters, in
Absa
Bank Ltd v Mokebe and related cases
2018 (6) SA 492
(GJ)
.
Therefore, the point
in
limine
cannot be upheld.
[27]
In considering Standard Bank’s request that the property be
declared specifically
executable, this Court has to consider the approach set out in
Firstrand
Bank Ltd v Folscher and Another, and similar
matters
2011 (4) SA 314
(GNP)
where the Full Bench of
this Division set out the principles that should be applied
in cases like these and further weighing the interests of the debtor
against the
interests of the bank.
[28]
In the present case, the Applicant has a duty to fully disclose, and
is in the best
position to fully inform the Court of any
aspect that should be taken into account.
See: paragraph 42 of the Folscher Judgment at page 333.
[29]
The Applicant merely states:
“
In lieu of the
fact that there is no real proceeds to be realised from the sale, it
will
mean that we cannot buy another home.”
He further states:
“
I also do not
have financial means to pay rentals.”
He further states:
“
As a result, we
will have no residence and proper housing.”
[30]
With the aforesaid in mind, he lists in paragraph 139, a number of
persons
(family) who resides in the property but does not explain how, in
light of his financial position, he is able to provide for them
or
that he indeed does provide
for them. The list of persons also
does not include any explanation
as to their
rights to reside on the property
and stay in his home. The mere fact
that a person or persons reside in the
home of another does
not necessarily give them a right
in law to remain there.
[31]
The fundamental right to housing and its limitations is fully set out
in the Folscher
Judgment at paragraph 11 to 17 and has to be considered by this
Court. The Applicant,
unfortunately,
does not set out any grounds or sufficient information
on which the Court can find that there is
any alternative
to declaring the property executable.
[32]
Standard Bank, on the other side, provided a loan to the Applicant,
in essence
raising further finance on a
property which he already occupied (albeit through a close
corporation) and as security for
that loan, caused a bond to be
registered over the said property. If the said bond was not provided,
the loan would not have
been granted to the
Applicant.
[33]
The Applicant had the benefit of the loan since 2008, fell in
arrears, and on his
own version cannot enter into
any alternative arrangement with the bank to
prevent the property
from being declared executable. The Applicant
further does
not propose
any alternative, save to state that he cannot afford to
obtain alternative
housing,
without taking the Court into his confidence and supplying
any details.
[34]
In the present case, I deem it necessary to hold the Applicant to the
original
terms of
the loan agreement, more specifically that he furnish as security for
the
said loan, the property which he now occupies.
[35]
In the premises, the Court is satisfied that the property should be
declared
executable.
[36]
In terms of the Absa Bank v Mokebe matter
supra
,
the Court has a discretion to determine a reserve price. See:
paragraph 51 of that Judgment at page 515 and
further. The determination of a reserve price is to be considered on
the merits of
each case and I canvased this aspect with both parties in argument.
[37]
Standard Bank, in its opposing papers, annexed a valuation
determining a
market value of between 1.7 Million Rand and 1.95 Million Rand, with
a forced sale value of R1.4
Million
Rand. The municipal value of the property, is allegedly
R870 000.00.
[38]
In the present case, considering all the facts, I am of the view that
to set the
reserve
price at 1.4 Million Rand (being the forced sale value as determined
by Standard Bank, which
is not
disputed by the Applicant), would protect the
interests of all the parties.
[39]
If the reserve price is too high, then Standard Bank might have
difficulty to
dispose of the property and will have to approach the Court at a
later stage, to
reduce the reserve price, only incurring further costs. A forced sale
value is, almost without
exception, used in this Court in sequestration proceedings and in
voluntary surrender of estates and I see no reason why that same
principle should not be
applied when a reserve price, in matters like these, have to
be set.
[40]
Unfortunately, as the enforcement of a reserve price is a relatively
new
development in our Courts, there
is very little direction, if any, in the case law as
to the approach
that should be adopted.
[41]
This brings me to the question of costs. The loan agreement between
the Applicant and Standard
Bank provides for attorney and client
costs and I see no reason why, if Standard Bank is
successful in its opposition
of Applicant’s
Application, and if Standard Bank is successful in its
counter
Application, why I should deviate from that. I only have to include
that the costs of 3 June 2019 that was occasioned
by the late
filing of Heads of Argument, on behalf of the
Applicant, should also be
on an attorney and client scale.
[42]
In the premises, I make the following order:
42.1
The Applicant’s claim is dismissed.
42.2
The Applicant is to pay the costs of the Application, including the
wasted
costs of 3 June 2019, on a scale as between attorney and client.
42.3
The property known as Erf 319 Laudium Township, Registration Division
JR, Province of Gauteng, (“the property”) held by
Deed of
Transfer No.:
T120724/2008, is declared specifically executable.
42.4
The Registrar of the above Honourable Court is authorised to issue a
Writ
of
Execution in respect of the property.
42.5
The property is to be sold in execution, subject to a reserve price
of 1.4
Million Rand.
42.6
The Applicant is to pay the costs of Respondent’s counter
Application, on
a
scale as between attorney and client.
G JACOBS
ACTING JUDGE OF THE HIGH COURT
GAUTENG DIVISION, PRETORIA
APPEARANCES:
For the applicant:
Mr Pillay
From Pillay
Thesigan Inc
PRETORIA
For the respondent:
Adv Reyneke M
Instructed by
Ramsay Webber Attorneys
JOHANNESBURG