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[2016] ZAKZPHC 61
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Harrison and Another v Absa Bank Limited (7543/2013) [2016] ZAKZPHC 61 (17 June 2016)
IN
THE HIGH COURT OF SOUTH AFRICA
KWAZULU-NATAL
DIVISION, PIETERMARITZBURG
CASE
NO: 7543/2013
DATE:
17 JUNE 2016
In
the matter between:
PHILIP
ROBERT
HARRISON
............................................................................
FIRST
APPLICANT
PAMELA
HARRISON
......................................................................................
SECOND
APPLICANT
And
ABSA BANK
LIMITED
.................................................................................................
RESPONDENT
ORDER
(a)
The application for rescission is dismissed.
(b)
The first and second applicants are ordered to pay the respondent’s
costs of the application including the appearance
on 2 June 2016,
such costs to be paid on an attorney and client scale.
JUDGMENT
SEEGOBIN
J:
INTRODUCTION
[1]
This is an application for rescission of a default judgment granted
against the first and second applicants (‘the applicants’)
by Kruger J on 16 November 2015. The application was opposed by
the respondent herein which is Absa Bank Limited.
[2]
In their founding affidavit the applicants based their application
for rescission purely on common law grounds. This was
the case
which the respondent met in its answering affidavit. However,
in the heads of argument and in oral submissions made
before me on 2
June 2016,
Mr Flemming
who appeared on behalf of the
applicants relied solely on the provisions of Rule 42(1)(a) of the
Uniform Rules of Court.
No other ground was relied upon nor
alluded to in argument.
[3]
Rule 42(1)(a) provides as follows:
“
42(1)
The court may, in addition to any other powers it may have,
mero
motu
or on 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;
(b)
…
(c)
…
(1)
…
(2)
…
(3)
… ”
[4]
In order to succeed under Rule 42(1)(a) an applicant is not required
to show good cause (including a
bona
fide
defence) as under the common law or the provisions of Rule 31
[1]
.
The only requirement for rescission of a default judgment under the
sub-rule is that the judgment must have been ‘erroneously
sought or erroneously granted
[2]
.
Southwood J in
Naidoo
v Matlala NO
[3]
pointed
out that in general terms a judgment is erroneously granted if there
existed at the time of its issue a fact of which the
judge was
unaware, which would have precluded the granting of the judgment and
which would have induced the judge, if aware of
it, not to grant the
judgment
[4]
.
BACKGROUND
AND COMMON CAUSE FACTS
[5]
The following facts which are common cause and/or not seriously
disputed emerge from the applicants founding papers and the
respondents answering affidavit:
[5.1]
At all material times hereto, the applicants were under debt review
and acted on the advice of their duly appointed debt counsellors
known as SS Debt Counsellors. In particular, they acted on the
advice of one
Christiaan Ferdinand Koen
(Koen) who is the
so-called legal advisor of SS Debt Counsellors.
[5.2]
On 9 April 2010 the debt counsellors obtained a consent order in the
Alberton Magistrate’s Court in terms of which the
applicants
were declared to be over-indebted and a re-arrangement of their debts
was made. The full terms of the order read
as follows:
“
1.
It is ordered:-
a.
That the 1
st
and 2
nd
Respondents found to be
over-indebted.
b.
That payments of debt to creditors be rescheduled as per Annexure “A”
– summary of payments to creditors.
c.
That the 1
st
and 2
nd
Respondents are herewith
ordered to pay an amount of R15000 monthly to the National Payment
Distribution Agency registered with
the National Credit Regulator
(DCM) in respect of the debt listed in Annexure “A”.
First payment on or before
30/4/2010 and monthly thereafter on or
before the LAST day of each and every month.
d.
That the amount increases annually in October by R400 pm.
e.
That the debt counsellor ensures that the matter is reviewed
annually.
f.
That none of the existing respective rights and obligations of the
original credit agreement/loan agreement is herewith waived
or
amended.
g.
That the rights and obligations as referred to in (e) above will be
reviewed and be fully enforceable should the 1
st
and 2
nd
Respondents default in terms of this Consent Order.”
[5.3]
By letter dated 14 June 2013 the respondent notified the applicants
that they were in arrears with their home loan account
held with the
respondent in an amount of R57402,71. They were further
notified that since they were in default with their
obligations in
terms of their credit agreement with the respondent and since more
than sixty (60) days had elapsed since the applicants
had applied for
debt review, the respondent was terminating the debt review in terms
of
section 86(10)
of the
National Credit Act 34 of 2005
with
immediate effect.
[5.4]
The applicants having raised no dispute regarding the termination of
the debt review, the respondent instituted an action
under Case
No.7543/2013 for payment of the amount owing and for an order
declaring the immovable property specially executable.
This
action was defended by the applicants through their debt counsellors
in conjunction with attorneys Shepstone and Wylie.
[5.5]
There is no dispute that a notice of set down of the above trial was
served on the applicant’s attorneys on 13 April
2015. In
terms of the notice of set down the applicants were notified that the
trial was set down on 16 November 2015.
[5.6]
On 13 November 2015 (three days before the trial) the applicant’s
attorney sent an email to the respondents’ attorneys
in which
they sought an adjournment of the matter with a tender of costs.
[5.7]
In response to this email, the respondents attorneys informed the
applicant’s attorneys that the bank would not agree
to an
adjournment without the applicants or their debt counsellors
providing a detailed and plausible reason why the matter needs
to be
adjourned.
[5.8]
On the same day Koen sent an email to the applicant’s attorneys
in which he,
inter alia
, stated the following:
“
.
. .
Nevertheless,
please serve and file a notice of withdrawal as attorneys of record,
then we can apply again for the rescission of
the judgment after
16
th
, since I only became aware of the court date
yesterday and the client today, after I got hold of him.”
[5.9]
No appearance having been made either by the applicants attorneys, or
the applicants themselves, or the debt counsellors,
on the 16
November 2015, default judgment was taken against the applicants.
[5.10]
The default judgment granted by Kruger J on 16 November 2015 was in
the following terms:
“
(a)
Payment of R631 617.67;
(b)
Interest thereon at the legal rate of 9% per annum, capitalized
monthly, from 20 June 2013 to date of final payment, both days
inclusive;
(c)
Costs of suite on the scale as between attorney and client;
(d)
The following immovable property:
A
UNIT CONSISTING OF –
(a)
SECTION NO. 37 AS SHOWN AND MORE FULLY DESCRIBED ON SECTIONAL P LAN
NO.
SS311/1995
, IN THE SCHEME KNOWN AS SURREY LANE IN RESPECT OF THE
LAND AND BUILDING OR BUILDINGS SITUATE AT AMANZIMTOTI IN THE
ETHEKWINI MUNICIPALITY
AREA OF WHICH SECTION THE FLOOR AREA,
ACCORDING TO THE SAID SECTIONAL PLAN IS 78 (SEVENTY EIGHT) SQUARE
METRES IN EXTENT; AND
(b)
AN UNDIVIDED SHARE IN THE COMMON PROPERTY IN THE SCHEME APPORTIONED
TO THE SAID SECTION IN ACCORDANCE WITH THE PARTICIPATING
QUOTA AS
ENDORSED ON THE SAID SECTIONAL PLAN.
HELD
BY DEEN OF TRANSFER NO. ST 57518/2003 be and is hereby declared
executable.”
[5.11]
It is this judgment which the applicants seek a rescission of.
The application for rescission was launched on
17 December 2015.
FINDINGS
[6]
The only issue to consider is whether the default judgment granted on
16 November 2015 was done so erroneously. In my
view it was
not. I base this finding on the following facts:
[6.1]
First
, in terms of prayer 1(c) of the debt review order, the
applicants were ordered to pay an amount of R15000,00 monthly to the
National
Payment Distribution Agency registered with the National
Credit Regulator in respect of the debts listed in Annexure to the
Order.
The first payment was to be made on or before 30 April
2010 and monthly thereafter on or before the last day of each and
every
month. In terms of prayer 1(d) the above amount was to
increase annually in October by R400 per month. While the
respondent
admits receiving an amount of R112810,00 over the period
30 April 2010 to 30 June 2013, it avers that if the annual escalation
is taken into account these payments do not exceed the amount due in
terms of the order (as escalated).
[6.2]
Second
, the respondent avers that the applicants have in fact
failed to make any payments in terms of the debt review order for the
months
of June 2011, June 2012 and July 2012. The applicants
admit this.
[6.3]
Third
, the respondent points out that the applicants failed to
make a single payment in terms of the debt review order since
November
2013. The applicants, whilst admitting that they
failed to make certain payments to the respondent since the action
was instituted,
deny that they failed to make a single payment since
2013, as alleged.
[6.4]
Fourth
, as I pointed out already, as at 14 June 2013 the
applicants were in arrears in an amount of R57 402,71.
This, in my
view, is a clear indication that the applicants were
finding it difficult to comply with their obligations both in terms
of the
loan agreement with the respondent and in terms of the
restructuring order made in 2016.
[7]
I agree with
Mr
Hoar
on behalf of the respondent that once the applicants had breached the
restructuring order, the bank was entitled to enforce the
loan
without any further notice. This is apparent from the wording
of the relevant sections of the Act.
Section 88(3)(b)(ii)
[5]
does not require further notice – it merely precludes a credit
provider from enforcing a debt under review unless, among
other
things, the debtor defaults on a debt-restructuring order.
Additionally,
s129(2)
expressly stipulates that the requirement to
send a notice under
s 129(1
) is not applicable to debts subject to
debt-restructuring orders
[6]
.
[8]
Sub-para 1(g) of the debt review order itself provides that the
rights and obligations referred to (e) of the order will be
reviewed
and be fully enforceable should the applicants default in terms of
the order. Sub-para (e) provides that the debt
counselor is to
ensure that the matter is reviewed annually.
[9]
In
Firstrand
Bank v Fillis
[7]
,
Eksteen J held as follows in para [16]:
“
It
follows, in my view, as a matter of interpretation, that once the
jurisdictional requirement set out in
s88(3)(a)
co-exists with any
one of the jurisdictional requirements set out in
s88(3)(b)
, the
credit provider is at liberty to proceed and to exercise and enforce,
by litigation or other judicial process, any right or
security under
his credit agreement, without further notice.”
[10]
Mr Flemming on behalf of the applicants contended that as at the time
when the action was instituted by the bank, the applicants
were not
in default of the debt re-structuring order. In the
alternative, he submitted that even if the applicants were previously
in default of the credit agreement, once all arrears were paid, the
credit agreement is automatically re-instated. In such
circumstances the applicants were not entitled to issue summons.
In support of the latter contention in this regard, Mr Flemming
placed reliance on the judgment of the Constitutional Court is the
matter of
Nkata v Firstrand Bank Limited and Others
(CC)
(Case No. CC73/15) which was handed down on 21 April 2016.
[11]
I find no merit in Mr Flemming’s submission for the simple
reason that on the applicant’s own version they had
failed to
pay at least three instalments to the bank even after the
restructuring order was made. Furthermore, after judgment
was
granted against them in November 2015, no payments were made.
As for Mr Flemming’s reliance on the
Nkata
judgment is
concerned, I consider such reliance to be misplaced. That
matter dealt essentially with the re-instatement of
a credit
agreement once all the debtors obligations which comprise the payment
of all arrears, permissible default charges and
legal costs have been
fulfilled. This does not apply in the present matter where the
applicants have defaulted and continue
to default in the obligations
with their bank.
[12]
I was assured by Mr Hoar that when judgment was sought before Kruger
J, the learned Judge was fully apprised of all the facts
pertaining
to the bank’s claim and the failure on the part of the
applicants to meet their obligations in terms of the re-structuring
order. In these circumstances it can hardly be suggested that
the judgment was ‘erroneously granted’ justifying
a
rescission under the provisions of
rule 42(1)(a).
[13]
In my view, the applicants are the authors of their own misfortune.
They were fully aware of the fact that the trial
was set down for
hearing on 16 November 2015. They did nothing to ensure their
attendance at court even if it was only to
seek a postponement.
Instead they seemed prepared to follow the incorrect advice given by
Koen who instructed their attorneys
to file a notice of withdrawal in
order to provide them with an opportunity to apply for a rescission.
This was a situation
clearly engineered by Koen to the detriment of
the applicants.
[14]
All in all, I am not persuaded that the applicants have made out a
case for rescission under
rule 42(1)(a).
It follows that the
application must be dismissed.
ORDER
[15]
I grant the following order:
(c)
The application for rescission is dismissed.
(d)
The first and second applicants are ordered to pay the respondent’s
costs of the application including the appearance
on 2 June 2016,
such costs to be paid on an attorney and client scale.
Date
of Hearing : 2 June 2016
Date
of Judgment : 17 June 2016
Counsel
for Applicants : G Flemming
Instructed
by : Shepstone & Wylie Attorneys
Counsel
for Respondent : S Hoar
Instructed
by : Geyser Du Toit Louw & Kitching
c/o
Venns Attorneys
[1]
Colyn
v Tiger Food Industries Ltd t/a Meadow Feed Mills (Cape) 2003(6) SA
1 (SCA) ([2003]
2 All SA 113
;
[2003] ZASCA 36)
paras 8-9; Mutebwa v
Mutebwa and Another 2001(2) SA 193 (TkH) ([2001]
1 All SA 83)
para
16; and Topol and Others v LS Group Management Services (Pty) Ltd
1988(1) SA 639 (W) at 650I-J.
[2]
Ferris
and Another v Firstrand Bank Ltd 2014(3) SA 39 (CC) at para [13].
[3]
2012(1)
SA 143 (GNP).
[4]
See
also: Nyingwa v Moolman NO 1993(2) SA 508 (TK) at 510 D-G; Herbstein
& Van Winsen vol 1 at 931.
[5]
The
relevant part of
section 88(3)
provides, in relevant part:
“
(3)
Subject to
section 86(9)
and (10), a credit provider who receive
notice of court proceedings contemplated in
section 83
or
85
, or
notice in terms of
section 86(4)(
b
)(i),
may not exercise or enforce by litigation or other judicial process
any right or security under that credit agreement until
–
(a)
the consumer is in default under the
credit agreement; and
(b)
one of the following has occurred:
(ii)
the consumer defaults on any obligation in
terms of a re-arrangement agreed between the consumer and credit
providers, or ordered
by a court or the Tribunal.”
[6]
Ferris
and Another v Firstrand Bank Ltd, supra, at para [14].
[7]
2010(6)
SA 565 (ECP).