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[2019] ZAGPPHC 382
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Nhlengethwa and Another v Agattu Trading 191 (Pty) Ltd and Others (64120/2015) [2019] ZAGPPHC 382 (8 August 2019)
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REPUBLIC
OF SOUTH AFRICA
IN
THE HIGH COURT OF SOUTH AFRICA
GAUTENG
DIVISION, PRETORIA
(1)
REPORTABLE:
NO
(2)
OF
INTEREST TO OTHER JUDGES: NO
(3)
REVISED.
CASE NO: 64120/2015
8/8/2019
In
the matter between:
SIPHO
SLSON NHLENGETHWA
FIRST APPLICANT
(ID
No. [….])
JOYCE
MARIA NHLENGETHWA
SECOND APPLICANT
(ID
No. [….]
and
AGATTU
TRADING 191 (PTY) LTD having
substituted
BONDPRO FINANCE (PTY) LTD
FIRST RESPONDENT
KOEGELENBERG
ATTORNEYS
SECOND RESPONDENT
SEKWATI
GABRIEL MOTSEPE
THIRD RESPONDENT
JUDGMENT
KUBUSHI
J
INTRODUCTION
[1]
This matter concerns an application for
rescission of judgment obtained against the applicants by the first
respondent when the
applicants failed to enter appearance to defend
the first respondent's summons served upon them.
[2]
The application was initially instituted
in the urgent court where it was postponed
sine
die
with costs against the
applicants. However. when the parties appeared before me the issue of
urgency no longer pertained and only
the first respondent was
opposing the application.
[3]
The actual relief sought by the
applicants is set down in the notice of motion as follows:
3.1
That
the judgment granted by the Honourable Court on 18 March 2014, be set
aside.
3.2
Ordering
the first respondent to refund the third respondent the purchase
price paid to the first respondent in respect of the property
known
as Erf [….], pending the rescission application.
3.3
Restraining
and interdicting the second respondent from transferring the property
situated at [….]. to any purchaser pending
the rescission
application.
3.4
Costs of this application.
FACTUAL
MATRIX
[4]
I pause to set out the salient facts and
circumstanc.es Which led to the applicants bringing the application
for rescission of the
judgment against the respondents. The
applicants are the owners of a certain immovable property described
in the papers as Erf
[….] ("the property"). When It
became difficult for the applicants to comply with their financial
obligations,
having incurred several debts, they approached a certain
company called Bondpro Finance (Pty) Ltd ("Bondpro") for
assistance.
If is common cause that Bondpro undertook to assist the
applicants with a loan which would be used to consolidate the
applicants'
debts. Before the loan was granted, Bohdpro conduct d an
assessment of the applicants’ financial status in order to
ascertain
their indebtedness and ability to pay back its loan. After
the assessment, Bondpro offered to lend the applicants an amount of
R280 450 (two hundred and eighty thousand, four hundred and fifty
rand), which was to be paid back over a period of twelve months.
The
applicants accepted Bondpro's offer and entered into a bond loan
agreement ("the loan agreement") with Bondpro. In
terms of
the said agreement the applicants were to pay back the loan amount in
monthly instalments of R4106, 24 (four thousand,
one hundred and six
rand and twenty four cents). As security for the loan a covering
mortgage bond was registered in favour of
Bondpro against the
property.
[5]
The applicants defaulted with their
obligations in terms of the loan agreement by failing to make
payment, as obligated. By the
time the period of twelve months,
agreed to in the loan agreement, lapsed Bondpro's loan had not been
paid off. This resulted in
Bondpro instituting action against the
applicants in July 2013, for the recovery of the outstanding amount.
The summons was duly
served upon the applicants on 1 August 201·3.
The applicants did hot defend the matter and on 9 September 2013 and
30 January
2014, respectively , Bondpro caused a notice of
application and set down of default judgment to be served on the
applicants. A
judgment in default was consequently granted against
the applicants in favour of Bondpro on 8 March 2015 for the amount of
R278
045, 10 (two hundred and eighty seven thousand and forty five
rand and ten cents), plus costs of suit oh an attorney and client
scale as well as ah order declaring the mortgaged property
executable.
[6]
Pursuant to the default judgment, the
property was attached by the sheriff to be sold in execution. On or
about 8 July 2015, the
applicant; received a letter from the first
respondents attorneys informing them that the property w s to be sold
in execution
on 31 July 2015 The applicants consulted with their
attorney of record on 29 July 2015. An attempt to enter into
settlement arrangements
with the first respondents• attorneys
before the property was sold fell through and on 31 July 2015, the
property was sold
in execution to the third respondent.
[7]
On 12 August 2015 the applicants
launched, on an urgent basis, their application f6r rescission of the
default judgment, inclusive
of the ancillary relief as stated in
paragraph [3] of this judgment. The application Was s t down for
hearing on 14 August 2015.
As already stated the application was
postponed
sine die
on
that date.
[8]
In the meanwhile, Bondpro was placed under business rescue. On 6 May
2016, Bondpro,
represented by its busitit3ss rescue practitioner
entered into and concluded agreements in terms of which Bondpro ceded
all its
rights, title and interest in the bond loan agreements and
the covering mortgage bond agreements, which it concluded with
various
borrowers, including the applicants, to the first respondent.
The agreements concluded between Bondpro and the applicants (as
pleaded
in Bondpro's particulars of claim In respect of the loan
agreement and the covering mortgage bond agreement) constitute
agreements
that were ceded by Bondpro to the first respondent.
[9]
On the basis of the ceded agreements, the first respondent launched
an application
to be substituted as the plaintiff in the action
between Bondpro and the applicants and on 6 November 2017 the
application for
substitution was granted. It was only on 15 May 2018,
that the first respondent filed its answering affidavit to the
applicants'
claim in the application for rescission of judgment.
PRELIMINARY
ISSUE
[10]
The applicants did not file their replying affidavit to the first
respondent's answering affidavit.
In their heads of argument and In
oral argument in court the applicants applied that the first
respondent’s answering affidavit
be disregarded by this court
because it was filed out of time without a substantive application
for condonation .
[11]
It is common cause that the first respondent's answering affidavit
was filed out of time and
without a substantive application for
condonation. It is, also, not in dispute that the first respo11dent's
substitution was granted
on 6 November 2017. The first respondent,
having been substituted, was expected to file its answering affidavit
within fifteen
days after such substitution but the first respondent
filed the answering affidavit on or about 23 May 2018 ·- mare
than
five months after the application for substitution was granted.
[12]
The first respondent in its argurt1ent
urged the court to exercise its discretion in favour of condoning the
first respondent's
non compliance with the rules of court. Relying on
the judgment in
De Lange and Another
\I Eskom Holdings Ltd and Others
[1]
the first respondent contended that
condonation can be granted even where a formal application has not
been made, if it is in the
interest of justice. Arguing from the bar,
and without any reasons proffered for such argument, the first
respondent suggested
that it was in the interest of justice, in this
instance, that condonation be granted.
[13]
It is, however, my view that the case on
which the first respondent relies is not authority for the general
proposition that condonation
should be granted where no formal
application has been made. On the contrary, the case establishes the
proposition that condonation
may be granted where no formal
application has been made if it is in the public interest to grant
such condonation. The invocation
of this principle finds no
application on the circumstances of the matter before me as there are
no public interest considerations
at play.
[14]
The general principle is that the court
has a Wide discretion to grant condonation on good cause shown. Two
requirements in this
regard have crystallised, namely, firstly the
requirement that the applicant should furnish a sufficient
explanation for tier or
his default to enable the court to understand
how it really came about and to assess her or his conduct and
motives. Secondly,
the requirement that the applicant should satisfy
the court that she or he has a
bona
fide
defence.
[2]
Such requirements can only be satisfied through a substantive
application before court. Without such a substantive application
I am
unable to consider whether or not the first respondent has satisfied
the requirements for the granting of condonation, as
such, the
answering affidavit is
non pro
scripto.
What, therefore,
constitutes evidence in this matter, is only the founding affidavit
of the applicants.
THE ISSUE
[15]
The central issue for determination, in
this application is whether or not the applicants have satisfied the
requirements for the
granting of the rescission of judgment.
THE LAW
[16]
The requirements for granting rescission
of judgment are provided for in Uniform Rule 31 (2)
(b).
In terms of Uniform Rule 31 (2)
(b),
a party against whom default
judgment has been granted may, within 20 days after she or he has
knowledge of that default judgment,
apply to court to set that
judgment aside. The court may on good cause shown set that judgment
aside,
[17]
The issue ie, therefore, two pronged.
The first part of the issue is whether the application was launched
within 20 days after the
applicants had knowledge of the default
judgment. the second part is whether the applicants have shown good
cause hi their application.
DISCUSSION
[18]
In regard to the first part of the
issue, it is my view that the application was instituted within the
prescribed period of 20 days,
stipulated in Uniform Rule 31 (2)
(b).
[19]
It appears from the papers that the
applicants became aware of the default judgment when they consulted
with their attorney of record
on 29 July 2015. On 8 July 2015, the
applicants received a letter from the first respondent's attorneys
Which Informed them that
the property is to 6e sold in execution on
31 July 2015. According to the applicants, they consulted with their
attorney of record
on 29 July 2015 and launched the application on 14
August 20·15. I would. therefore, infer from these facts that
the applicants
only became aw re of the default Judgment when they
consulted with their attorney. The application was thus, in my view.
Filed
within the prescribed period of 20 days. There was. as such, no
heed for the applicants
to
apply
for condonation, as suggested oy the first respondent, In argument.
[20]
In respect of the second part of the
issue it established law that courts generally require an application
for rescission of judgment
to show good cause by (a) giving a
reasonable explanation for the default; (b) showing that her/his/its
application for rescission
is made
bona
fide
and not merely with the
Intention to delay the plaintiffs claim; (c) showing that she/he/it
has a
bona fide
defence
to the plaintiffs claim which
prima
facie
has some prospects of success.
Regarding the last-mentioned requirement, it is trite that an
application for rescission of judgment
is not required to illustrate
a probability of success, but rather an existence of an issue fit for
trial.
[3]
[21]
Equally trite is the principle that even
when all the requirements set out above have been met, it is still
within the discretion
of the court whether or not to rescind the
judgment. That discretion must be exercised judicially in light of
all the facts and
circumstances of the case.
[4]
[22]
I shall, hereunder, deal with the requirements of 'good cause' in
relation to the applicants'
application for rescission of judgment,
in turn.
Reasonable explanation for the
default
[23]
As already explained earlier in this judgment, the applicants
approached their attorney after
they were informed of the pending
sale in execution of the property. Their attorney was instructed to
negotiate Settlement arrangements
with the first respondent which
negotiations fell through. It is the applicants' contention that the
first respondent's attorney
gave them the Impression that the first
respondent will accept the settlement proposal and that they were not
informed that the
settlement proposal had been rejected by the first
respondent. They, as a result, laboured under the impression that the
settlement
proposal had been accepted. They only became aware on 31
July 2015 that the first respondent was proceeding with the sale in
execution
and had in fact proceeded with same.
[24]
It is, thus, my view, that based on the aforestated facts the
applicants were not in wilful default
since they harboured under the
impression that the matter would be settled.
Bona fide Defence
[25]
It Is common cause that the applicants do riot deny their
indebtedness to the
first respondent. They have
instead raised a number of technical defences.
[26]
The first defence raised Is that the first respondent loaned the
money to the applicants recklessly
without considering the first
applicant's source of income and affordability as
per
the requirements
of the Consumer Protection Act
[5]
,
given that the first applicant was the only one employed. According
to the applicants, the first respondent called them the money
well
aware of the fact that they would not be able to repay the loan, and
overlooked this Important aspect to their prejudice.
[27]
It Is the applicants’ submission that when they approached
Bondpro for assistance, they
were already in debt. The first
applicant entered into the loan agreement for the purpose of debt
consolidation.
[28]
The second defence raised by the applicants is that Bondpro, as a
credit provider, was not conducting
its business according to the law
and that there was an investigation that revealed that there were
fraud and theft cases opened
against Bondpro.
[29]
The third defence is that the first respondent failed to adhere to
the settlement agreement entered
into by the parties on 30 March 2017
which led to the property being sold in execution without the
applicants being able to stop
the sale.
[30]
The last defence is that as
per
paragraph ·11 of the
first respondent's particulars of claim the applicants are entitled
to raise a plea of prescription
.
[31]
In an application for rescission of judgment, it is expected of the
applicant to set out averments
which, if established at the trial,
would entitle her/him/it to the relief asked for. The applicant need
hot deal fully with the
merits of the case nor produce evidence that
shows that the probabilities are c:1ctually in her/his/its favour.
[6]
[32]
In following the decision In
Hassim
on this issue, I cannot at
this stage of the proceedings determine whether the third respondent
loaned the money to the applicants
recklessly or not. All that Is
expected is to determine whether the averments of the applicants, if
established at the trial, would
entitle them to the relief asked for.
It is not expected, as suggested by the first respondent in its oral
argument, for the applicants
to deal fully with the merits of the
case and produce evidence that shows that the probabilities are
actually In their favour.
[33]
Th first respondent concedes in its heads of argument that the loan
granted
to
the applicants was indeed for the consolidation of their debts. The
first respondent submits further in Its supplementary submissions
that "consolidation loans", like the one granted to the
applicants, in terms whereof an over indebted consumer is assisted
by
a credit provider that loans an amount to that consumer in order to
assist the consumer in consolidating and paying off its
existing
credit agreement debts, with the result that the consumer is no
longer over Indebted after settling his consolidated credit
agreements and is able to pay off the consolidation loan over an
agreed period of time, should not constitute reckless credit as
these
type of loans can be viewed as debt relief measures In themselves in
those instances where they cure the consumers over indebtedness.
[34]
Prima facie,
it is evident that there was no way that the
applicants would have paid off the loan within a period of twelve
months stipulated
in the loan agreement with the monthly instalment
agreed to oy the parties. Without attempting to go Into the merits of
the main
case, it is also evident that the applicants were still over
indebted after settling the consolidated debts.
[35]
On this defence alone, It is my view
that the applicants have raised a
bona
fide
defence. The applicants'
averments’ In this regard, if established at the trial would
entitle them to the relief asked for
the issue is triable.
[36]
On the basis of my aforementioned
·findings, i find it not necessary to deal with the other
defences.
Bona fide Application
[37]
A very important consideration is said
to be that an application for rescission of judgment must be
bona
fide
and not be made simply to delay
the plaintiff's action.
[7]
[38] It is
evident from the facts provided by the applicants that they had all
the Intention to proceed
with the application to rescind the judgment
granted against them in default, even though it took this long to
reach finality.
[39]
The applicants instituted the
application immediately after they became aware of the default
judgment granted against them, Sight
should not be lost of the fact
that during 2016, Bondpro was placed under business rescue which
meant that no legal action against
it could be proceeded with. The
first respondent's substitution application was granted on 6 November
2017 and its answering affidavit
filed on 15 May 2018.
[40]
I am, as a result satisfied that the
applicants' application for rescission of judgment ls
bona
fide
and not intended as a delaying
tactic. In the circumstances, I opt to exercise my discretion in
favour
of
granting
the application.
CONCLUSION
[41]
It is, therefore, my conclusion that the
applicants have satisfied the requirements for the granting of the
rescission of judgment
and are, therefore, entitled to the relief
they seek. The application for the rescission of judgment and the
ancillary relief sought
ought to be granted.
[42]
Even though the applicants are the
successful parties, they approached this court seeking and
indulgence, as such, they are not
entitled to the costs of suit.
Costs should, as such, be costs in the cause.
ORDER
[43]
In the circumstances, I make the
following order
1.
The
application for rescission of judgment is granted.
2.
The
default judgment granted on 8 March 2015 is rescinded and set aside.
3.
The
first and the second applicants are granted leave to defend the
matter.
4.
The
first respondent is ordered to refund the third respondent the
purchase price paid to the first respondent in respect of the
property Erf [….].
5.
The second respondent is interdicted
from transferring the property situated at [….] to any
purchaser.
6.
Costs
are costs in the cause
E.M.
KUBUSHI
JUDGE
OF THE HIGH COURT
APPEARANCES:
Counsel
for Applicant:
Adv. D.Z. Kela
Instructed
by:
Mogwerane & Letsoalo Attorneys
c/o Thikhathali Attorneys
Counsel
for First Respondent:
Adv. J. J. Rysbergen
Instructed
by:
Koegelenberg Attorneys
c/o Hack Stupel & Ross Attorneys
Date
heard:
14 May 2019
Date
of Judgment:
8 August 2019
[1]
(2012) 1 All SA 543
(GSJ) at para 27.
[2]
Mynhardt v Mynhardt
1986 (1) SA 456
(T) at 4611- J and Kritzinger v
Northern Natal Implement Co (Pty) ltd
1973 (4) SA 542
(N) at 546.
[3]
See Hassim Hardware v Fab Tanks (1129/2016) (2017] 7.ASCA 14 (13
bt:tob8r 2017) para 12
[4]
See Hassim
supra
at para 13.
[5]
Act 68of 2008.
[6]
See Hassim
supra
at para 17
-
18.
[7]
See Grant v Plumbers (Pty) Ltd
1949 (2) SA 470
(O) at 476 to A77 .