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[2016] ZAGPPHC 221
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Kratshi v Absa Bank Limited and Others (39859/2015) [2016] ZAGPPHC 221 (15 April 2016)
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REPUBLIC
OF SOUTH AFRICA
IN
THE HIGH COURT OF SOUTH AFRICA (GAUTENG DIVISION, PRETORIA)
CASE
NO: 39859/2015
15/4/16
Reportable
Of
interest to other judges
Revised.
In
the matter between:
XOLISWA
MARTHA KRATSHI
(ID
NR:
[…])
Applicant
And
ABSA
BANK
LIMITED
First
Respondent
REGISTRAR
OF DEEDS,
PRETORIA
Second
Respondent
SHERIFF
OF THE HIGH COURT, PRETORIA WEST
Third
Respondent
DELPORT
M.D.
Fourth
Respondent
JUDGMENT
MAJIKI
J
[1]
The applicant described herself as a retired (declared medically
unfit) 55 year old single mother of four children, two at university,
one at high school and another at primary school. She approached this
court in terms of Common Law, and/or Rule 31(2) (b) and/or
Rule 42(1)
(a) of the Uniform Rules of Court ("the Rules") for the
rescission of the default judgment granted against
her in favour of
the first respondent on 12 August 2013. She also seeks orders for the
condonation of the late filing of her application
for rescission, the
setting aside of the warrant of execution and the subsequent sale in
execution of the immovable described as
portion 4, Erf 176 Claremont
(PTA) Township ("the property"), which is the subject
matter herein. Furthermore, she seeks
an order in terms of which the
further execution of the above default judgment and all other further
processes emanating therefrom
are stayed. The application is opposed
by the first respondent.
[2]
It is common cause that in November 2007 she obtained a loan of a sum
of R700 000.00 and an additional amount of R140 000.00
secured with a
mortgage bond registered over the property, which is her primary
residence, in favour of the first respondent. She
was obliged to pay
an amount of R6 236.18 monthly over a period of 250 months towards
repayment of the said loan. In 2013 she fell
into arrears with her
monthly payments. She would contact the bank through the manager of
her account, one Ms Kgopotso and make
arrangements regarding the
management of her account. She however made monthly payments,
albeit
short payments of about R3000.00 towards the settlement of her
account. Her financial situation worsened mainly due to illness that
was diagnosed in 2004. Eventually she was declared unfit for work in
January 2015 and has duly received her ill-health retirement
benefits. Her medical condition put a heavy strain on her finances
and it became difficult to balance the medical bills, educational
costs of the children and other household obligations.
[3]
It is also common cause that a notice in terms of
Section 129
of the
National Credit Act 34 of 2005
was sent to her and summons was issued
against her on 30 April and 16 May 2013 respectively. These processes
led to the granting
of default judgment on 12 August 2013, which is
the subject matter of these proceedings.
[4]
In a letter dated 19 June 2013 to the first respondent, the applicant
acknowledged that she had knowledge of the summons issued
against
her. She sought an indulgence from the first respondent. She
attempted to make an offer to make substantial payment on
the account
with the proceeds of the sale of her other immovable property and or
pay-out of her ill health retirement benefits.
The said letter is
annexed to the first respondent's answering affidavit.
[5]
On 15 August 2013, she had an opportunity to review her monthly
payments with the first respondent. From that date she paid
a sum of
R8000.00 per month, whilst awaiting her payment, even though this was
not so regular. In November 2014 she received some
communication from
the office of the sheriff indicating that the property would be sold
on 4 December 2014. All her attempts not
to have her property sold in
execution thereafter came to a naught.
[6]
According to the applicant, she at all material times, before the
judgment was taken, had a standing arrangement with the first
respondent to pay into the account, as much as she could, to cater
for monthly interest. That arrangement would be reviewed on
15 August
2013. This is denied by the first respondent. She goes on to submit
that had the court been appraised of this arrangement,
it would not
have granted the default judgment. Essentially, the judgment was
granted in error.
[7]
The issue in this application is whether the court would have decided
differently, had all relevant facts been placed before
it.
Furthermore, whether the applicant has satisfied the requirements for
the granting of rescission judgment.
[8]
The first respondent raised points of law, which go to the core of
the very issues that are relevant for the determination of
the whole
application. I will deal with such issues as part of the
determination of the application in its entirety.
[9]
Judgment obtained by default under common law can be rescinded by
court if the applicant has shown, sufficient cause for rescission.
Where a judgment is to be set aside on the basis of
Justus error
under common law in
De Wet v Western Bank Ltd
1979 (2) SA
1031(A)
it was held that the discretion of the courts in
setting aside a default judgment under common law extend beyond, and
is not limited
to, the grounds provided for in
rules 31
and
42
(1) of
the Rules.
Rule 31
2
(b) provides;
"a
defendant may within twenty days after she has knowledge of such
judgment apply to court upon notice to the plaintiff to
set aside
such judgment and the court may, upon good cause shown, set aside
such judgment and the court may, upon good cause shown,
set aside the
default judgment on such terms as to it seems meet."
[10]
Rule 42(1)
(a) of the rules provide;
"the
court may, in addition to any other powers it may have, mero motu or
upon the application of any part y affected, rescind
or vary"
(a)
An order or judgment erroneously sought or erroneously granted in the
absence of any party affected thereby.
[11]
Ms Lottering, counsel for the respondents, submitted that
Rule
31(2)(b)
is not available to the applicant. She argued furthermore
that if the applicant wanted to rely on that rule, she is required to
file her application within twenty days after she had knowledge of
the judgment. She also had to show good cause to the court to
set
aside the default judgment. This requires that she gives a reasonable
explanation for the delay. The application must not merely
be made in
order to delay the plaintiff's claim and she must show that she has a
bona fide
defence. Furthermore, the applicant had been to the
respondent on 15 August 2013, three days after judgment was granted;
in November
2013 the applicant heard from the office of the sheriff
that the property will be sold in execution and therefore she ought
to
have known at these instances about the judgment.
[12]
I agree with the submission that the applicant's submission cannot be
acceptable. The submission that she only had requisite
knowledge that
the judgment was erroneous in March 2015 at the time she was able to
fully instruct her attorney. The section refers
to knowledge of
judgment and nothing more. She had been to consult the applicant in
November 2014 and sent the email confirming
her retirement benefits
on 21 November 2014. On 05 December 2014 she consulted with an
attorney about available options regarding
the rescission of
judgment. Even if I am to accept in the applicant's favour that
during the discussions between the parties three
days after the
judgment, both she and Ms Kgopotso possibly were not aware of the
judgment, the applicant cannot succeeded in her
application, if she
seeks to rely on
Rule 31(2)
(b). She was aware of the summons when
she addressed a letter to the first respondent on 19 June 2013. She
was aware of the judgment
at least in November 2014. She has not
fully explained the reason for the delay in approaching court for
rescission of judgment.
[13]
If the applicant relies on common law in her application, she has to
show sufficient cause for rescission of the judgment.
This legal
dispensation too, requires that she presents reasonable and
acceptable explanation for the default and that on the merits
she has
a
bona fide
defence which
prima facie,
carries some
prospect or probability of success. The enquiry as to sufficient
cause both under
Rule 31(2)
(b) or common law has been held to be
linked to whether the applicant acted in wilful disregard of the
court rules, processes and
time limits.
[14]
This leaves the applicant with the determination of whether she has
satisfied the requirements of
Rule 42(1)
(a). The consideration of
the issue of the existence of an error in the sense referred to in
Rule 42(1)
(a) has been a subject of interrogation in the past by the
courts. According to the decision in
Topal v L S Group
Management Services (Pty) Ltd
1988 (1) SA 639
(W)
at
650
D-J
no good cause need be established for rescission
application brought in terms of
Rule 42(1)
(a).
[15]
Similarly I do not deem it necessary to deal with the aspect of
existence of
bona fide
defence. In
Lodhi 2 Properties
Investment CC v Border Developments
2007 (6) SA 87
at
95F
it was held that the existence or non-existence of a defence
on the merits is an irrelevant consideration and, if subsequently
disclosed,
cannot transform a validly obtained judgment into an
erroneous judgment.
[16]
In
Firstrand Bank Limited v Folscher and Another and similar
matters
2011 (4) SA 314
GNP,
the full court had an occasion
to list factors to be considered when the court is called upon to
exercise judicial oversight in
matters dealing with sale of
residential property for recovery of outstanding bond repayments. In
paragraph 19 the court held that
a creditor, applying for default
judgment in those circumstances must simultaneously with the
application file an affidavit setting
out:
(i)
The amount of the arrears outstanding on the date of application for
default judgment;
(ii)
Whether the hypothecated property was acquired with a State subsidy
or not;
(iii)
whether, as far as the debtor is aware, the property is occupied or
not;
(iv)
whether the property is utilised for commercial or for residential
purposes;
(v)
whether the debt sought to be enforced was incurred to acquire the
property or not;
(vi)
in addition, any matter in which the amount claimed falls within the
jurisdiction of the magistrates' court must be referred
to the court
if the hypothecated property is to be declared especially executable;
(vii)
the debtor's attention must be specifically drawn, in the warrant
issued for the purposes of execution of the registrar's
order, to the
fact that he may apply for rescission of the judgment enforced
against the hypothecated immovable property.
[17]
At paragraphs 37, 38, 39 the court cautioned that, instances where a
judgment debtor, facing execution and subsequent eviction,
would be a
victim of an abuse of process would be rare, in matters in which a
specially hypothecated immovable property is the
object of the
execution process. The context in which the creditor entered into the
agreement in those circumstances had to be
taken into account; that
both parties concluded voluntarily, to enable the debtor to acquire
immovable property, or capital as
the case may be, against the
security of the bond registered over the property. Absent any
extra-ordinary circumstances, the judgment
creditor will normally be
entitled to enforce his judgment by executing against the immovable
property that is bonded as security.
The special hypothec registered
in favour of the creditor, as security for the moneys advanced for
the purchase of the home and
capital loans, is entered into between
the parties consciously, deliberately and for mutual benefit.
[18]
At paragraphs 40 and 41 the court stated that it was not possible to
anticipate every potential circumstance that may be regarded
as
extraordinary, which would persuade the court to decline a writ of
execution. The court referred to
Hudson v Hudson and Another
1927
AD 259
; Beinash v Wigley
[1997] ZASCA 32
;
1997 (3) SA 721
SCA
at
734 F Jaftha v Schoeman and Others; Van Rooyen v Stoltz and
Others
[2004] ZACC 25
;
2005 (2) SA 140
CC
and
Absa Bank ltd v Ntsane
and Another
[2006] ZAGPHC 115
;
2007
(3) SA 554
T.
From the
examples in those cases they concluded that
the "Creditors'
conduct need not be wilfully dishonest or vexatious to constitute an
abuse. The consequences of intended writs
against hypothecated
properties, although bona fide, may be iniquitous because the debtor
will lose his home,
while alternative modes of satisfying
the creditor's demands might exist
(my emphasis ) that
would not cause any significant prejudice to the creditor."
The
court then listed the following factors as some that might need to be
taken into consideration:-
•
Whether
the mortgaged property is the debtor's primary residence;
•
the
circumstances under which the debt was incurred;
•
the
arrears outstanding under the bond when the latter was called up;
•
the
arrears on the date default judgment is sought;
•
the
total amount owing in respect of which execution is sought;
•
the
debtor's payment history;
•
the
relative financial strengths of the creditor and the debtor;
•
whether
any possibilities exist, that the debtor's liabilities to the
creditor may be liquidated within a reasonable period, without
having
to execute against the debtor's residence;
•
the
proportionality of prejudice the creditor might suffer if execution
were to be refused, compared to the prejudice the debtor
would suffer
if execution went ahead and he lost his home;
•
whether
any notice in terms of
s 129
of the
National Credit Act 34 of 2005
was sent to the debtor prior to the institution of action;
•
the
debtor's reaction to such notice, if any;
•
the
period of time that elapsed between delivery of such notice and the
institution of action;
•
whether
the property sought to be declared executable was acquired by means
of, or with the aid of, a State subsidy;
•
whether
the property is occupied or not;
•
whether
the property is in fact occupied by the debtor;
•
whether
the immovable property was acquired with moneys advanced by the
creditor or not;
•
whether the debtor will
lose access to housing as a result of Execution being levied against
his home;
•
whether there is any
indication that the creditor has instituted action with an ulterior
motive or not;
•
the position of the
debtor's dependants and other occupants of the house, although in
each case these facts will have to be established
as being legally
relevant.
Not
all of those will be relevant in every matter. The facts in each case
will dictate what would be relevant in that particular
case.
[19]
At paragraph 43, the court recorded that there will always be
problems when the debtor remains in default. Taking into
consideration
everything else, for example, that court should
ordinarily not be expected to take proactive step to establish
whether the debtor
is the victim of abuse litigation, in ordinary
course of events the creditor will be able to fully inform the court
of the history
of the creation of the debt, the repayment thereof,
the debtor's ability to
effect payment on any arrears other than
allowing execution against her home
. (My emphasis) In default
proceedings the creditor, like applicant in unopposed motion
proceedings, as any litigant in that role,
is in duty bound to make
full disclosure to the court of all known relevant facts that might
influence the court in coming to a
conclusion.
[20]
The facts that were placed before the court appear in paragraph 8 of
the affidavit filed in support of the application for
default
judgment. The paragraphs that set out the relevant aspects I will
deal with in this judgment are:-
"8.1
The courts attention is drawn to the fact that the plaintiff
implements various steps to rehabilitate an arrear account,
which
steps are taken prior to an account to be handed over for legal
action. Several telephone calls are made to the defendant
to all
available telephone numbers from the plaintiffs Call-Centre before
the matter is handed over to the Pre-Legal department
of the
plaintiff, where again, attempts are made telephonically to make an
arrangement with the defendant. The account stays in
PreLegal
for six months during which a field-agent is also required to visit
the property in question with the purpose of
negotiating with the
defendant a repayment plan to rehabilitate the account.
8.2
The courts' attention is further drawn to the fact that, during the
procedures referred to in paragraph 8.1 above, the defendant
has been
repeatedly informed that their failure to rehabilitate the account
will result in judgment against them, attachment of
their immovable
property, a sale in execution and ultimate eviction from the
property. It is therefore my submission that the defendant
is aware
of the consequences of his/her failure to make arrangements and that
further notice of this application would be redundant
and will only
result in unnecessary cost for the defendant's account.
8.3
The defendant has made sporadic payments, towards his mortgage bond
over the immovable property.
8.4
The defendant having failed to make payments of the monthly
instalments payable under the mortgage bond, has resulting in the
full amount owing under the mortgage bond becoming due, owing and
payable, and no possibility exist that the defendant's liabilities
will be liquidated within a reasonable period of time and execution
against the primary residence to be the only option left to
the
plaintiff.
8.15
In the light of the breaches by the defendant of his/her obligations
to make payment of the monthly instalments under the mortgage
bond,
there are not alternative methods for the plaintiff to recover the
debt in respect of the monies loaned and advanced by the
plaintiff to
the defendant."
[21]
From the facts apparent in the present application it appears to be
common cause :
that
the agreement was entered into in 2007, it was around August 2012
that the applicant started to make payments that are short
of her
monthly instalment, but on regular basis;
that
her circumstances and financial position changed;
that
she was in contact with the respondent and those culminated to a
meeting for a further review of the account on 15 August 2013;
that
on 19 June 2013 she reduced her request to be afforded time to settle
her arrears into writing. She proposed alternative means
for payment
with the proceeds of the sale of a property in Sunnyside and she was
also making an application for ill-health retirement.
[22]
The first respondent disputes that the applicant had an arrangement
with her account handler, Ms Kgopotso and state that she
did not
attach a confirmatory affidavit from Ms Kgopotso. The applicant
details her arrangement to have been that of paying reduced
monthly
instalments to cater for the interest, subject to a further review of
the account.
[23]
The first respondent has attached the copy of the letter dated 19
June 2013 from the applicant suggesting alternative means
of paying
the debt. It has neither stated what its response was to it nor did
it deny that Ms Kgopotso was its employee who at
all material times
was managing and monitoring the applicant's account. In my view, the
first respondent would have been in a better
position than the
applicant to get a supporting affidavit from Ms Kgopotso in which she
would have confirmed their assertion that
there was no arrangement
with the applicant.
[24]
In paragraph 8.1 extracted from the first respondent's affidavit in
support of the default judgment, the first respondent stated
routine
steps they take to rehabilitate an arrear account. In paragraph 8.7
the respondent referred to sporadic payments that were
made by the
applicant. The respondent did not attach the actual record of
payments made by the applicant. The applicant attached
same in this
application. This would have shown, what in my view, are more of
regular payments than sporadic ones. It is however,
clear that they
were short of monthly instalments. The first respondent made no
mention of the fact that the applicant had communicated
about her
health problems that put a strain to her finances, leading to her
applying for ill-health retirement.
[25]
In paragraph 8.16, the first respondent states as a fact that "there
are no alternative methods for the plaintiff to recover
the debt."
This is in direct contrast of the letter attached by the first
respondent in this application dated 19 June 2013,
making suggestions
of alternate methods to pay the debt.
[26]
The court concluded on the basis of the facts placed before him and
those contained in the first respondent's affidavit that
default
judgment ought to be granted, in the absence of the applicant. I am
of the view that had the judge been aware of the facts
appearing from
paragraph 22 above, he would not have exercised his judicial
oversight in a manner that leads to the conclusion
that it is just
and equitable to order the execution of the property.
[27]
Nepgen J in
Stander
(supra} at
page 884 C-D
after
a considered reference to a number of decisions before coming to his
conclusion, concluded that he was entitled to have regard
to facts,
which do not appear in the record. Facts of which the judge who
granted judgment in the absence of the applicant was
unaware, in
considering whether the order that was made was erroneously granted
in the sense referred to in
Rule 42(a
}. The learned judge in the
final analysis concluded that the order was erroneously granted.
[28]
Accordingly, after consideration of the facts that were within the
knowledge of the respondent, which were not placed before
Sithole AJ,
I have already concluded that, had they been placed, he would have
decided differently. I therefore find that the judgment
was
erroneously granted in the sense referred to in
Rule 42
( l)(a).
[29]
I do not wish to address the contents that relate to the facts after
the time judgment was granted. They would not have served
before
Sithole AJ.
[30]
With regard to the warrant of execution it follows that it ought to
be set aside.
[31]
During the argument of the application, it transpired that the
purchaser, even though cited as a party in the proceedings was
not
properly served. He did not oppose the application. Regardless of
whatever consideration the court would give to his circumstances,
the
sale would not be able to stand when the judgment and the warrant of
execution have been set aside. The sale is accordingly
also set
aside.
[32]
The applicant asked for costs against the respondents, only in the
event of the respondents opposing the application. Usually,
the costs
follow the result, but costs remain within the discretion of the
court. I am not of the view that the opposition herein
was
unreasonable. Therefore, I am not inclined to make an order of costs
against the first respondent that opposed the application,
even
though the opposition was unsuccessful.
In
the result,
1.
It is hereby ordered that the judgment granted by this court on 12
August 2013 be and is hereby rescinded and set aside.
2.
The warrant of execution and the sale in execution held on 4 December
2014 of portion 4, erf 176 Claremont (PTA) Township, held
by Deed of
Transfer T147/2003 be and are hereby set aside.
3.
The costs are hereby reserved for the main action.
_______________________
MAJIKI
J
JUDGE
OF THE HIGH COURT
ACTING
IN GAUTENG DIVISION, PRETORIA
Appearances
Counsel
for the applicant :
Mr Msiza
Instructed
by
:
Messrs Msiza & Associates
793 Merton Avenue
Eastwood, Arcadia
PRETORIA
Tel. 082 737 2010
Counsel
for the 1st respondent: Ms Lottering
Instructed
by:
Messrs Hack, Stupel & Ross
2nd Floor, Standard Bank
Chambers
Church Square
PRETORIA
Ref. C. Van
Wyk/M-L/DA2292
Tel. No. 012 - 325 4185
Date
of hearing:
01 March 2016
Date
of Judgment:
15 April 2016