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[2017] ZAGPPHC 99
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Barns and Another v Absa Bank Limited (2014/3027) [2017] ZAGPPHC 99 (14 February 2017)
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Certain
personal/private details of parties or witnesses have been
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IN
THE GAUTENG DIVISION OF THE HIGH COURT OF SOUTH AFRICA, PRETORIA
14
February 2017
CASE
NO: 2014/3072
REPORTABLE
OF
INTEREST TO OTHER JUDGES
NOT
REVISED
In
the matter between:
GLADWIN
LIDDENE BARNS
FIRST APPLICANT
YVETTE
ROSILINE BARNS
SECOND
APPLICANT
And
ABSA
BANK LIMITED
RESPONDENT
JUDGEMENT
TSATSAWANE
AJ
Introduction
1
The applicants seek an order in terms of which the default judgement
granted
against them on 11 March 2014 is rescinded and set aside. In
addition, the applicants seek an order in terms of which the writ of
execution issued pursuant to the default judgment is set aside. Both
parties applied for condonation for the late filing of their
papers.
These applications were correctly not opposed and I condoned the
non-compliance for which both parties sought condonation.
2
The rescission application is opposed by the respondent on
various grounds set out in its answering affidavit.
The default judgement
3
On 17 January 2014, the respondent issued a notice of motion
against the applicants seeking an order in the following terms -
"1.
Payment in the sum of R1 076 775,27;
2.
Payment of interest on the amount of Rl 076 775,27 at the rate of
7.20% per annum...
3.
An order in terms whereof the movable property described below is
declared specially
executable ...
PORTION 227 OF ERF
1[...] C[...] TOWNSHIP ..."
4
The respondent's claim was based on a mortgage loan agreement
in terms of which it lent and advanced monies to the applicants for
purposes of purchasing immovable property, i.e. Portion 227 of Erf
1[...] C[...] Township
("
the
property
").
The loan amount
was advanced to the applicants against registration of a mortgage
bond over the property in favour of the respondent.
5
There is no serious dispute between the parties that the
respondent advanced a loan to the applicants and that a mortgage bond
was
indeed registered over the property in favour of the respondent.
6
In its founding affidavit in the main application, the
respondent alleged that the amount claimed in the notice of motion
was due
and payable and that it had complied with the requirements to
enforce the mortgage loan agreement in the manner sought in the
application.
7
In two returns of service attached to the papers filed of
record in the main application, the relevant sheriff reported that he
served the application upon the second applicant at the chosen
domicilium
on 4 February 2014. In terms of
section 43(2)
of
the
Superior Courts Act 10 of 2013
these returns of service
constitute
prima facie
proof that the application was properly
served upon the applicants. The fact that a return of service only
constitutes
prima facie
proof of the contents thereof means
that a return of service could be impeached, amongst others, on the
basis that the contents
thereof are not true.
8
In
Deputy-Sheriff for Witwatersrand District
v
Harry
Goldberg And Others
1905 TS 680
,
it was held that -
"It is, I think,
clear, in the first place, that if the return can be impeached it can
only be impeached on the
clearest and most satisfactory
evidence
."
(my
emphasis).
9
It therefore follows that a return of service cannot be
impeached by a simple, bare and unsubstantiated denial of receipt of
process
- the
"clearest and most satisfactory evidence"
is required to disturb the
prima facie
status of a return
of service.
10
The applicants did not deliver a notice of intention to oppose
the application nor did they deliver opposing papers. The
respondent's
notice of motion notified the applicants, amongst
others, that
"the application will be heard on 11 March 2014
at 10:00 ..."
if no notice of intention to oppose is given.
Assuming that the returns of service in this case are not
impeachable, it must necessarily
follow that the applicants knew the
consequences of not delivering a notice of intention to oppose.
11
The respondent's application was called before Kollapen J on
11 March 2014 who granted default judgement on the terms set out in
the notice of motion on an unopposed basis. It is this default
judgment which the applicants seek to rescind and set aside.
The application for
rescission
12
In their founding affidavit, the applicants rely on
Rule
42(l)(a)
, the common law, and further alternatively,
Rule 31
for the
relief which they seek. In addition to this, the applicants also
raised a point
in limine
which was correctly abandoned at the
hearing of the matter. It is for this reason not necessary to deal
with that point
in limine.
13
The applicants contend that the default judgment was
erroneously sought and erroneously granted in that -
13.1
there was no proper service of the application upon the applicants -
in fact, the applicants say that
despite what is stated in the
returns of service, the application was not served upon them; and
13.2
the respondent did not deliver to each of the applicants the notice
contemplated in section 129 of
the National Credit Act 34 of 2005
("
the NCA
").
14
If the applicants are correct, it follows that the proceedings
in terms of which the default judgment was granted and the default
judgment itself are a nullity.
15
In view of the fact that the applicants say that they were not
served with the respondent's notice of application, they contend that
they were not in wilful default. In this regard, in paragraph 5 of
their founding affidavit, the applicants say that-
"5.The above
order was taken in default on 11 March 2014, as stated above, at the
outset, I refer to the two returns of service,
in respect of myself
and the second applicant, annexed hereto marked AA3, the contents of
which are self-explanatory. I dispute
in the strongest possible terms
the contents of the respective return of service. The second
applicant categorically denies that
copies of the application on this
matter were served personally on her. The court entered default
judgment under the incorrect
notion that the application had been
properly served and that I had wilfully not entered notice to oppose,
and that a copy of the
application was served properly on me and came
to my attention, this is not the case. I categorically deny that I
received the
summons or that it came to my attention until recently
....and the judgment was wrongfully sought, alternatively wrongfully
granted
as stated above and accordingly the judgment falls to be set
aside."
16
In relation to non-compliance with the provisions of the NCA,
the applicants say the following in their founding affidavit-
"22.The
respondent asserts that it gave notice in terms of section 86(10) of
the Act and refers to annexure F to the founding
affidavit, being a
letter dated 4 October 2013. We never received the notice in terms of
section 129. The purported notice in terms
of section 86(10) that the
respondent avers it had sent to us was not dealt with as required by
law and I deny categorically that
we received same or that same came
to our attention, the first time I saw it was as an annexure to the
application. The honourable
court will notice that the respondent on
its version, which version I deny in any event, sent only one letter
to us (both defendants)
being the letter of the 04 October 2013, as
opposed to sending two separate letters as required by the National
Credit Act.
23. I also
categorically deny it was posted to either my residential, business,
domicilium or actual property address. Accordingly,
there is no
compliance with section 86(10) of the Act and false allegation were
put before the Court in both the summons and in
the affidavit by
Sabashnee Naidoo of compliance which directly lead the court to
entering the judgement under the false and erroneous
misconceptions
that there had not only been compliance with section 86(10), but that
the application and even been served.
"
Service of the
application
17
In paragraph 6 of their founding affidavit, the applicants
correctly accept that
"the return of service itself
constitutes only prima facie proof that service was effected as set
out therein."
The applicants, however, challenge the truth
of the contents of the returns of service.
18
If the challenge to the returns of service is good, it would
necessarily follow that the default judgement was erroneously sought
and erroneously granted as contemplated in Rule 42(1)(a) and the
default judgment must then be rescinded and set aside without
any
further enquiry. In this regard, in
Lodhi 2 Properties Investments
CC v
Bondev Developments (Pty) Ltd 2007(6) SA 87 (SCA)
the
Supreme Court of Appeal stated the legal position to be as follows -
"[24]
...
Where notice of proceedings to a party is required and judgment is
granted against such party in his absence without notice of the
proceedings having been given to him such judgment is granted
erroneously. That is so not only if the absence of proper notice
appears from the record of the proceedings as it exists when judgment
is granted but also if, contrary to what appears from such
record,
proper notice of the proceedings has in fact not been given. That
would be the case if the sheriff's return of service
wrongly
indicates that the relevant document has been served as required by
the Rules whereas there has for some or other reason
not been service
of the document. In such a case, the party in whose favour the
judgment is given is not entitled to judgment because
of an error in
the proceedings. If, in these circumstances, judgment is granted in
the absence of the party concerned the judgment
is granted
erroneously ....
"
19
There is no dispute that the applicants were entitled to
receive notice of the respondent's application and that the default
judgment
was granted in their absence. At issue in this application
as far as notice of the application is concerned is whether the
applicants
have adduced the clearest evidence to challenge the truth
of the contents of the returns of service to entitle them to impeach
the two returns of service.
20
Whilst it is correct that the contents of a return of service
may be challenged and the return set aside, such a challenge is not
one which a Court should easily and lightly uphold. This is due to,
amongst others, the very status and purpose of the return of
service
and what would be required to meet such a challenge to impeach a
return of service. For example, the litigant who instructed
the
sheriff to serve the process would not know how and if the process
was served and only the sheriff would know and it would
be
impractical to require the sheriff to give evidence each time that
there is a challenge to a return of service, even a in respect
of
slight challenge based on a simple, bare and unsubstantiated denial
of receipt of process.
21
What then constitutes a good challenge to impeach a return of
service? The answer to this question must necessarily depend on the
circumstances of each case and what is contained in the return of
service, in particular, the manner in which service is reported
to
have been effected. In my view, and with specific reference to the
circumstances of this case, where the Sheriff says that the
process
was served upon the
"second respondent personally"
and
in respect of the first respondent (the first applicant herein) upon
his wife, who is the second respondent (and the second
applicant
herein)
"at the chosen domicilium citandi et executandi"
of the applicants, it would be necessary for the applicants to
allege and prove at least the following -
21.1
the reasons why it could not have been possible for the sheriff to
effect service in the manner reported
in the return of service;
21.2
that service could not possibly have been effected upon the person
whom service is said to have been
effected on the date and at the
time stated in the return of service and the reasons for such
impossibility;
21.3
the whereabouts of the person upon whom service is said to have been
effected on the date and at the
time stated in the return of service
if it is reported that personal service was effected and this is
denied;
21.4
if service is said to have been effected at a place of residence or
domicilium citandi et executandi,
whether the intended
recipients were still residents thereat or whether they had changed
their
domicilium citandi et executandi;
and
21.5
if the process is said to have been served upon a person other than
the intended recipients, whether
such a person could not possibly
have been at the address of service and if such a person is known to
the intended recipients of
the process and that person, if known,
must have deposed to an affidavit to deny that the process was served
upon him or her and
to state why it is not possible that the service
could have been effected upon him or her at the time, date and manner
stated in
the return.
22
The above is obviously not an exhaustive list nor would it be
desirable to formulate a list cast in stone. The above list, in my
view, contains what would strengthen a challenge to the
prima fade
status of a return of service as opposed to a simple, bare and
unsubstantiated denial of service even though the return of service
states that service was effected upon one of the applicants at the
chosen
domicilium citandi et executandi
without it being
alleged as to why it could not have been possible to effect service
in the manner stated in the return of service.
23
In my view, alleging some of the issues in the aforesaid list
would enable the litigant on whose behalf process was served to
meaningfully
deal therewith and to obtain the sheriffs comments
thereon. Without such allegations, the respondent (and possibly the
sheriff)
would be confined to what is stated in the return of service
(which the intended recipients would be disputing) and the Court
would
not be in any better position to resolve the matter. In
Greeff
v First Rand Bank
2012 (3) SA 157
(NCK),
the applicant for the
rescission of judgment contended that the summons
"never came
to her attention"
and on the facts of the case, the Court
accepted her version and stated that -
"[10]
The provisions of s 36(2) of the Supreme Court Act are to the effect
that a return of service
will constitute prima facie proof of the
contents thereof It follows that such evidence may be challenged.
[11]
This is exactly what the applicant did in her founding affidavit. The
applicant pointed out that
accordingly to the sheriff's return the
summons had been served by attaching it to the main door of her house
in her absence, and
she stated
-
•
that
the house had been fenced in, that the gate had at all times been
locked and the sheriff would not in the circumstances have
had access
to the main door of the house; and
•
that
she never received or became aware of the summons before
7
March
2011.
[12]
The only comment to this by Mr. Robert Freeborough
...
was to
repeat the statement in the return that the summons had been attached
to the main door of the house
... "
24
In
Greeff,
the court was clearly influenced by the fact
that the applicant had stated the reason why
"the sheriff
would not in the circumstances have had access to the main door of
the house."
25
The applicants before me simply deny service even though the
return states that service was effected upon the second applicant and
at the
domicilium.
There is no suggestion made as to why it
could not have been possible for the sheriff to do that which the
sheriff says he did in
the return of service. In the result, I am not
persuaded that the applicants have presented a proper challenge to
the returns of
service supported by the clearest evidence to justify
an impeachment of the returns of service. In the circumstances, the
challenge
must fail.
26
The applicants referred me to the judgment of Wepener J in
Absa Bank Ltd v Wu and Another [2014] ZAGPJHC 46 (14 March 2014)
in support of their contention that the notice of the
respondent's application ought to have been served personally upon
each of
them. That case dealt with the practice directive of the
Gauteng Local Division of the High Court which requires personal
service
to be effected - this Court does not have a similar practice
directive. Therefore, that case does not assist the applicants.
Non-compliance with
the
National Credit Act
27
The
applicant disputes that the respondent complied with the
provisions of the NCA before bringing its application. They say that
they
"never received the notice in terms of
section 129
"
and the notice in terms of
section 86(10)
of the NCA.
28
The applicants also point out that the notice in terms of
section 86(10)
of the NCA upon which the respondent relied in its
founding affidavit
"was not dealt with as required by law"
presumably due to the fact that the respondent
"sent only
one letter to us (both defendants)
...
as opposed to sending
two separate letters as required by the
National Credit Act."
29
In
its founding affidavit in the main application, the
respondent alleged that it terminated the debt review process
initiated by the applicants in
relation to the credit
agreement. The respondent terminated the debt review process
"in
accordance with the provisions of
Section 86(1O)
"
and then
sent notice of the
termination to the
applicants. In this regard, the respondent relied upon its letter of
termination dated 25 November 2013.
30
In terms of the aforesaid letter, the respondent invited the
applicants
"to raise a dispute regarding the termination of
your debt review"
should they wished to. The same notice was
also sent to the applicant's debt counsellor.
31
It would appear from the termination letter that the
respondent terminated the debt review process due to the fact that
the applicants
were
"in default of your obligations"
in
terms of their home loan agreement.
32
In paragraph 22 of their founding affidavit, the applicants
refer to a letter dated 4 October 2013 as the letter in terms of
which
the respondent terminated the debt review process. In addition,
the applicants further refer to a
"track and trace"
document which, on their version, shows that the letter dated 4
October 2013 and the
"track and trace"
document are
not attached to the applicant's founding papers. Assuming in favour
of the applicants that these two documents say
what, the applicants
allege in paragraphs 24 and 25 of their founding affidavit, the
applicants' allegations must be wrong in that
the respondent's
termination letter attached to its founding affidavit is dated 25
November 2013 and could not possibly have been
in Cape Town on 17
March 2013. Furthermore, the respondent has attached to its founding
affidavit proof of sending the termination
letter by registered post
which is dated 29 November 2013.
33
At the hearing of this matter, I stood the matter down to
enable counsel for the applicants to obtain a full set of the
applicants'
papers, in particular, those referred to in the founding
affidavit but are not attached thereto. This did not improve the
applicants'
papers and the matter was then fully argued on the basis
of the rescission application papers consisting of 127 pages and the
main
application papers consisting of 73 pages. In the premises, the
matter was argued and it is decided on the basis that -
33.1
there is no evidence to show that the respondent's termination letter
referred to above was in fact
sent to Cape Town;
33.2
there is no evidence to contradict the respondent's version in
paragraph 10.2 of its answering affidavit
that the
"relevant
Section 86(10)
notices were however sent to all relevant and
applicable addresses of the Applicants"
and in paragraph
10.3 that the notices
"reached the relevant Post Offices and
that notifications were sent out".
The applicants did not
make out a case to suggest that this did not constitute compliance
when regard is had to the decisions of
the Constitutional Court in
Sebola
v
Standard Bank And Others 2012(5) SA 142 (CC)
and
Kubyana
v
Standard Banko/SA 2014(3) SA 56 (CC).
34
The applicants' further point is that they did not receive a
notice in terms of
section 129
of the NCA. The respondent is silent
on this point, presumably due to the fact that it acted in terms of
section 86(10)
of the NCA. This raises the
question whether the respondent was obliged to deliver a
notice in terms of
section 129
of the NCA after terminating the debt
review process.
35
The purpose of
section 129
of the NCA is to inform a consumer,
who is in default under a credit agreement, of the possible remedies
available to remedy the
default so as to invoke such remedies before
legal proceedings are instituted. The possible remedies available to
a consumer who
is in default include, amongst others, referring the
credit agreement to a debt counsellor
"with the intent that
the parties resolve any dispute under the agreement or develop and
agree on a plan to bring the payments
under the agreement up to
date."
36
When the applicants realised that they were in default under
the credit agreement concerned, they invoked one of the remedies
provided
for in
section 129
of the NCA. In this regard, they applied
for debt review in terms of section 86 of the Act.
The application
for debt review was informed by the applicants' knowledge of the fact
that they were in default under the credit
agreement and their
knowledge of the remedies available to them to bring the payments
under the credit agreement up to date
. In my view, this means
that there was no longer a need to
"draw the default to the
notice of the consumer"
and to draw the remedies available
to the consumer's attention as contemplated in section 129 of the
NCA. The applicants were already
aware of these and they had already
taken the necessary steps to invoke the remedies available to them.
37
In
FirstRand Bank Limited t/a Honda Finance
v
Owens
2013 (2) SA 325
(SCA)
the Supreme Court of Appeal considered the
question whether it was necessary to deliver a notice in terms of
section 129 of the
NCA in circumstances where the consumer had
already invoked the provisions of section 86 of the NCA and the debt
review process
had been terminated by the credit provider in terms of
section 86(10). This is exactly what happened in this case. The
Supreme
Court of Appeal answered the question as follows -
"[10]
A reading ofss (1) of each of ss 129 and 130 shows that where it is
the credit provider that
wishes to enforce the debt, a notice must be
given by it to the consumer in terms of s 129(l)(a). That subsection
also makes it
clear that the credit provider must draw to the
consumer 's attention the possible methods of resolving the debt
default. Section
86(10), on the other hand, assumes knowledge on the
part of the consumer of these methods: it applies only where the
consumer has
already applied for debt review. A notice under s
129(J)(a) is thus redundant where the consumer has already taken
steps to rearrange
her debts. That is whys 129(l)(b)(i) states that
in order to commence legal proceedings, a credit provider must give
notice either
under s 129(1)(a) of s 86(10). The former applies where
there has been no debt review. The latter applies where there has
been.
The requirement of two notices to the consumer where these are
meant to serve different purposes, and in different contexts, is
absurd
[11]
I accordingly agree with the decision of Murphy Jin Changing Tides
that a notice in terms of
s l 29(l)(a) is not required where a notice
under s 86(10) has been given
..."
38
This Court is bound by the above quoted decision of the
Supreme Court of Appeal. For this reason, the applicants' point that
they
were not served with a notice in tenns of section 129 of the NCA
must fail.
39
In the circumstances, the application is dismissed with costs.
Kennedy Tsatsawane
Acting Judge of the
Gauteng Division of the High Court of South Africa, Pretoria.