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[2018] ZAGPJHC 556
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Molefe and Another v Firstrand Bank Limited t/a Wesbank (11897/2017) [2018] ZAGPJHC 556 (11 October 2018)
IN
THE HIGH COURT OF SOUTH AFRICA
GAUTENG
LOCAL DIVISION, JOHANNESBURG
CASE
NO: 11897/2017
Date
of Hearing: 04 September 2018
Date
of Judgment: 11 October 2018
In
the matter between:
BUSISIWE
PORTIA
MOLEFE First
Applicant
REUBEN
MOLEFE Second
Applicant
And
FIRSTRAND
BANK LIMITED t/a
WESBANK Respondent
JUDGMENT
MASHILE
J:
INTRODUCTION
[1]
The applicants are husband and wife and are married in community of
property. The First Applicant and the Respondent concluded
an
instalment sale agreement in terms of which the latter financed the
First Applicant to purchase a Mercedes Benz A180 Elegance
A/T motor
vehicle (‘the Motor vehicle’). Following the First
Applicant’s breach of the terms of the instalment
sale
agreement, the Respondent obtained judgment against the Applicants on
27 July 2017 and thereafter a warrant for the delivery
of the
Mercedes Benz motor vehicle on 10 August 2017.
[2]
It is the default judgment that the Applicants now seek to rescind on
the basis that it was granted in error. Had the Respondent
put all
facts at the disposal of the Court, contend the Applicants, at the
time of the hearing of the default judgment application,
it would not
have approved it. The application is thus brought in terms of the
provisions of Rule 42(1)(a) of the Uniform Rules
of Court. With the
exception of the allegation that the Court granted judgment in error,
the facts are largely common cause.
FACTUAL
BACKGROUND
[3]
On 27 April 2013, the First Applicant and the Respondent entered into
the instalment sale agreement in terms of which the Respondent
financed a transaction for the purchase of the motor vehicle by the
First Respondent. The purchase price, monthly instalments and
the
arrears at the time when judgment was obtained by the Respondent are
not in dispute. The Applicants are also not denying that
the First
Applicant completed the different annexures mentioned in the
answering affidavit of the Respondent.
ISSUES
[4]
The issue for determination is whether or not in terms of the
provisions of Rule 42(1)(a) or at common law, the Applicants have
made a case for the rescission of the order.
THE
RESPONDENT’S ASSERTION
[5]
The forms were meant to elicit information from the First Applicant
which, had they been answered correctly and honestly, would
have
assisted the Respondent to decide whether to finance the transaction
or not . The respondent seeks the dismissal of the rescission
application with costs. It asserts that the Applicants have not
furnished satisfactory reasons why they could not enter an appearance
to defend the action promptly.
[6]
F
urthermore, the order for the warrant of
delivery and return of the motor vehicle were not erroneously sought
or erroneously obtained.
In addition, the Applicants have failed to
make out a case for the rescission of the default judgment and the
setting aside of
the warrant for delivery. Moreover, the Applicants
have failed to demonstrate that they have a
defence
to the Respondent’s claims brought about by her
breach of the instalment sale agreement.
[7]
The Respondent believes that the launching of this application to
rescind was enthused by a desire to thwart the execution of
the
relief granted to it by this Court. Prevention of the carrying
out of the relief obtained means that the motor vehicle
would not be
sold and the whole process would, as such, be delayed. That
conclusion is inescapable in view of the fact that the
Respondent
delivered its answering affidavit in February 2018 yet the Applicants
would not set the matter down notwithstanding
that the matter is
before this Court at their instigation, concludes the Respondent.
APPLICANTS’
ASSERTION
[8]
The Applicants on the other hand have raised a few issues in an
endeavour to show that they are entitled to a rescission of
the
judgment. The Applicants argue that the judgment was granted in error
as the Court laboured under the impression that the Applicants
had
been properly notified of the application for judgment before the
matter came to Court. For that reason, they claim that the
judgment
should be rescinded and set aside in terms of Rule 42(1)(a). In an
attempt to show a bona fide defence, the Applicants
contend that the
Respondent advanced reckless credit to the First Applicant. In
consequence, the Applicants should not have been
held liable under
the instalment sale agreement.
LEGAL
POSITION
[9]
Rule 42 provides that:
‘
(1) The court may, in addition
to any other powers it may have, mero motu or upon the application of
any party affected, rescind
or vary:
(a)
an order or judgment erroneously sought or erroneously granted in the
absence of any party affected thereby;.’
[10]
The Applicant’s reliance on Rule 42(1)(a) is premised on
the contention that the order was erroneously sought and
granted
because service of the notice of application for default judgment was
not effected on them. In this regard, this Court
has been referred to
the case of
Lodhi 2 Properties Investments
CC v Bondev Development (Pty) Ltd
2007
(6) SA 87
(SCA), where Streicher JA held that if notice of
proceedings to a party was required but was lacking and judgment was
given against
that party such judgment would have been erroneously
granted.
[11]
Section 81(3)
of the
National Credit Act 34 of 2005
provides that ‘a
credit provider must not enter into a reckless credit agreement with
a prospective consumer.’
[12]
For a litigant to succeed with an application for rescission of
judgment whether or not in terms of
Rule 42(1)(a)
or common law the
following requirements must be satisfied:
12.1 Show good cause why
the order should be rescinded;
12.2 Existence of a bona
fide defence; and
12.3 The application must
be bona fide and brought within a reasonable period.
[13]
The approach that when an application is brought in terms of
Rule 42
an applicant need not show good cause in order to succeed is not
without qualification and this is evident from the attitude that
the
Supreme Court of Appeal adopted in
Colyn v
Tiger Food Industries Ltd T/A Meadow Feed Mills Cape
2003
(6) SA 1
(SCA) at para 5 – 7. To illustrate the point, it could
be instructive to refer to the following passage uplifted from the
case:
‘
[5] It is against this
common-law background, which imparts finality to judgments in the
interests of certainty, that
Rule 42
was introduced. The H
Rule caters for mistake. Rescission or
variation does not follow automatically upon proof of a mistake. The
Rule gives the A
Courts a discretion to order it, which
must be exercised judicially (Theron NO v United Democratic Front
(Western Cape Region)
and Others) and Tshivhase Royal Council and
Another v Tshivhase and Another; Tshivhase and Another v Tshivhase
and Another. B
[6] Not every mistake or irregularity
may be corrected in terms of the Rule. It is, for the most part at
any rate, a restatement
of the common law. It does not purport to
amend or extend the common law. That is why the common law is the
proper context for
its interpretation. Because it is a Rule of Court
its ambit is entirely procedural.’
APPLICATION
[14]
It is clear that the existence of a procedural irregularity does not
robotically relieve an applicant of the duty of furnishing
a
reasonable and acceptable explanation for his default, showing that
he has a bona fide defence with prima facie prospects of
success and
that the application is bona fide. The Applicants have not made any
attempt whatsoever to show good cause. This Court
is in the dark why
the Applicants failed to enter an appearance to defend. In the
absence of that explanation, this Court has no
choice but to accept
that the Applicants deliberately failed to defend the action.
[15]
The Applicants’ reference to the case of
Lodhi
2 Properties Investments CC supra
is
completely misguided.
Rule 31(5)(a)
is clear that where no intention
to defend has been served, the applicant does not need to notify the
respondent that he is applying
for default judgment. This must be
contrasted with a situation where the respondent has served a notice
of intention to defend
in which case the applicant would be obliged.
The case mentioned by the Applicants concerns the latter situation.
The application
should therefore be dismissed on this ground alone.
[16]
That said, there is authority that failure to show good cause can be
excused provided there exist prospects that the applicant’s
defence in the main action will succeed. However, for reasons that
will follow below, I do not believe that this is the case. I
am
therefore compelled to determine whether the defence of the
Applicants is bona fide or not. If this Court was to grant the relief
sought, it seems that the Applicants’ defence will be that the
Respondent advanced reckless credit to the First Applicant
because it
did not conduct due diligence to satisfy itself that the First
Respondent was the right candidate deserving of the credit
that it
advanced to her.
[17]
It is correct that
Section 81(2)(a)
of the National Credit Agreement
34 of 2005 requires the Respondent to conduct an assessment prior to
advancing credit. There is
no express let alone implied suggestion in
the NCA that the Respondent was under obligation to go beyond the
information obtained
at the assessment interview with the First
Applicant to verify its veracity before approving the credit. If the
Respondent took
all reasonable precautions in the process of
eliciting information from the First Applicant, as I believe it did,
the Applicants
cannot later turn around and blame it for advancing
reckless credit.
[18]
It is evident from the forms completed by the First Applicant that
she consciously furnished misleading information with the
objective
of persuading the Respondent to grant credit to her. In this regard,
it could be useful to scrutinise some of the information
that she
confirmed at the end of page 2 of Annexure ‘A’ to the
answering affidavit. Of particular interest to this
Court is her
confirmation in subparagraphs E and F that she
did
not have any current debt re-arrangement in existence and that she
has not previously applied for a debt re-arrangement respectively.
[19]
When completing the customer application details, which is annexed to
the answering affidavit as Annexure ‘F’,
the First
Applicant again confirmed that she was not under a debt rearrangement
and that she had previously not applied for debt
re-arrangement. The
information supplied on Annexures ‘A’ and ‘F’
is manifestly incorrect. The First Applicant
had been placed under
debt review at the time, which had come into operation in 2011. So,
contrary to what she states in subparagraph
F and Annexure ‘F’,
she has previously applied for a debt re-arrangement, hence she was
placed under debt review in
2011.
[20]
For proof of income, the Respondent obtained the First Applicant’s
pay slip. Thereafter, the First Applicant completed
an affordability
assessment form whose information was necessary to conduct an
assessment for purposes of determining her eligibility
to credit. One
of the First Applicant’s pay slips is dated 13 March 2013.
According to that pay slip, the taxable earnings
of the First
Applicant amounted to R18 579.98 and the net pay to R18 899.44.
[21]
The affordability assessment form describes the Respondent’s
calculation. It shows that the total net income as calculated
by the
Respondent amounted to R18 899.44. The calculations demonstrate
that the First Applicant had monthly expenses of R10 718.52
and
that she was then left with a difference of R8 123.92, which
represented her monthly disposable income. On that calculation,
the
First Applicant could comfortably afford a monthly installment of
R4 421.10.
[22]
During argument in court, the Second Applicant argued that in its
assessment of the First Applicant, the Respondent reflected
him as an
income earner when it was aware that the contrary was true. This
contention must be rejected as bereft of any merit whatsoever.
The
name of the Second Applicant is cited merely to show that he is the
First Applicant’s husband and that they are married
in
community of property. There is no item to which financial
responsibility has been assigned to him.
[23]
Based on the above, prospects of success of the defence of the
Applicants is bleak. Accordingly, it will not be sound to grant
them
the relief sought while it is unquestionable that their defence is
untenable. Perhaps I should emphasize that the main hurdle
for the
Applicants was their failure to show good cause. I have stated
earlier that even if this Court was prepared to overlook
that
requirement, it would still not assist them because their defence is
not sustainable.
CONCLUSION
[24]
Judgment was correctly sought and granted because the Applicants had
breached the terms of the instalment sale agreement by
failing to
make monthly instalments. The Applicants have failed to show good
cause why they failed to defend the case. Even
if one were to
excuse that shortcoming, their defence, for reasons stated above, is
untenable. The application to rescind is not
bona fide and has been
launched mainly to delay or avoid the inexorable.
ORDER
[25]
The application fails and I make the following order:
1.
The application is
dismissed with costs.
______________________________________
B
A MASHILE
Judge
of the High Court of South Africa
Gauteng
Local Division, Johannesburg
APPEARANCES:
For
the Applicant: In Person
For the Respondent: Adv K
Meyer
Instructed
by: De Jager Kruger Van Blerk Attorneys