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[2016] ZAGPPHC 604
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Thomani and Another v Seboka N.O and Others (22030/2015) [2016] ZAGPPHC 604; 2017 (1) SA 51 (GP) (12 July 2016)
IN
THE HIGH COURT OF SOUTH AFRICA
GAUTENG
DIVISION, PRETORIA
CASE
NO: 22030/2015
DATE:
12 JULY 2016
In
the matter between:
THOMANI,
RENDANI
...................................................................................................
First
Applicant
THOMANI,
AZWINNDINI
MAVIS
..........................................................................
Second
Applicant
And
MR
T F SEBOKA N.O. IN HIS CAPACITY AS SHERIFF OF THE HIGH COURT,
CENTURION
EAST
.....................................................................................................
First
Respondent
D’AGUAR
CORINE
THERESA
............................................................................
Second
Respondent
SWANEPOEL
THEO
JOHN
.....................................................................................
Third
Respondent
ABSA
BANK
LIMITED
...........................................................................................
Fourth
Respondent
JUDGMENT
JANSEN
J
Background:
[1] This matter
is an application for rescission of a default judgment and the
setting aside of a sale in execution of the immovable
property of the
first and the second applicants who are married in community of
property. It is emphasised that pursuant to the
sale in execution,
the property has not yet been registered in the names of the
purchasers, namely the second and third respondents.
[2] Initially the
sheriff, who had sold the property in execution, and the purchaser of
the property were not joined as parties.
This was formerly done by
way of an application for joinder, which was granted prior to the
hearing of this application, on an
unopposed basis. The application
for joinder, which contains an opposing and replying affidavit, was
also relied upon during argument.
In fact, the opposing affidavit in
the joinder application and the application opposing the rescission
of the default judgment
were deposed to by same deponent Rumark
Creswell Watson. In the joinder application the application for
rescission was fully dealt
with, whereas in the opposing affidavit in
the rescission judgment the version in the joinder application is
proffered in a somewhat
condensed fashion.
Bona
fide
defences
:
[3] In the
joinder application, the fourth respondent goes into greater detail
and it is therefore of greater assistance to the
court. The grounds
relied upon by the fourth respondent remained the same throughout.
[4] In argument
it was pointed out that there had also not been proper sendee of a
notice on the applicants, as owners of the immovable
property,
advising them of the attachment of the property or the date of the
sale in execution. This constitutes a contravention
of rule 46(3)(a).
The registrar of deeds was also not served with the requisite notice.
[5] Rule 46(3)(a)
reads as follows: —
"(3)(a) The
mode of attachment of immovable property shall be by notice in
writing by the sheriff served upon the owner thereof,
and upon the
registrar of deeds or other officer charged with the registration of
such immovable property, and if the property
is in the occupation of
some person other than the owner, also upon such occupier."
[6] The
application for rescission is clothed in such a manner, it is
contended for the applicants, that a case for relief in terms
of rule
42 and the common law has been made out.
[7] The
applicants contend that the summons was furthermore not properly
served on them as it was serv ed on their previous domicile
which
they had changed as early as 2012. and they further contend that the
fourth respondent was aware of this fact. The applicants
also contend
that even had service of the summons at their previous domicile been
proper, it never came to their notice. They allege
that they only
became aware of the default judgment on or about 29 January 2014. The
application for rescission was filed at court
on 28 May 2014.
[8] It is further
submitted that both in terms of rule 42, and at common law
(“sufficient cause” having been demonstrated),
the
applicants' actions were reasonable and that the application for
rescission was launched within a reasonable time.
[9] The
applicants bound themselves as sureties and co-principal debtors in
favour of a company called Abrina 1591 (Pty) Ltd.
[10] The
applicants contend that the fourth respondent's claim against them
has prescribed. The last payment made by the principal
debtor, a
company called Abrina 1591 (Pty) Ltd, was on 5 April 2008. This can
be ascertained from an extract from ABSA Bank statement
of Abrina
1591 (Pty) Ltd. which is attached to the founding affidavit in the
rescission application. On the said date, the applicants
contend, the
entire amount became due and payable, and prescription began to run
from 5 April 2008.
[11] This cannot
be accurate as payment had to be made monthly. Strictly speaking,
prescription would have run from 5 May 2008.
However, the precise
date does not have any impact on the outcome of this judgment. (The
fourth respondent contends that the last
credit granted to the
principal debtor was on 19 August 2008 and refers to a bank statement
allegedly attached to the answering
affidavit. It has not been
attached. However, a bank statement was attached to the application
for joinder. This printout only
refers to the year 2007. What this
bank statement demonstrates is that the principal debtor defaulted in
2007 already.)
[12] It is
unclear from where the date of 19 August 2008 was obtained.
Furthermore, the answering affidavit in the rescission application
contains an allegation to the effect that the last credit which was
granted to the principal debtor was 1 January 2009. Without
any
supporting documentation these conflicting allegations carry no
weight and must be disregarded.
[13] Some five
years later, on 1 8 April 2013, summons was issued and served on the
applicants at their old domicilium citandi et
executandi.
[14] The
"Sectional mortgage bond hypothecating a unit" which was
granted by the fourth respondent to the applicants to
secure their
personal home loan agreement contains a clause 4 which reads as
follow's: —
CONTINUING
COVERING BOND
The
Bond shall remain in force as continuing covering security for
the capital amount
.
the
Interest thereon and the additional amount,
notwithstanding
any intermediate settlement, the Bond shall be and
remain of full
force, virtue and effect as a continuing security and covering bond
for each and every sum in which the Mortgagor
may
now or hereafter become indebted to
the Bank from any cause
whatsoever
to the amount of the capital amount, interest thereon and the
additional amount. "
(Emphasis
added.)
[15] The question
to answer is whether the phrase ...for each and every sum in which
the mortgager may now or hereafter become indebted
to the Bank from
any cause whatsoever ' can be construed to cover the applicants'
liability to the fourth respondent in terms of
the suretyship
agreement. (Such a clause constitutes an indeterminate obligation,
the constitutionality of which can be challenged.
However, for
purposes of this judgment, it is unnecessary to investigate this
issue.)
[16] What was not
emphasised during argument on behalf of all the parties. Under the
following clause in the suretyship agreement,
namely clause 5.
captioned "Additional Security”, the following is stated:
-
"I/We
acknowledge and admit that this suretyship is additional to any
security which the Bank currently holds or may hereafter
hold in
respect of the
oblisations of the
debtor
(Abrina 1591 (Pty) Ltd) and that this suretyship shall
not detract in any way from other security already furnished by me/us
in
favour of the Bank, which security shall remain in force until
terminated in writing by the Bank.
(Emphasis
added.)
[17] Clause 11 of
the suretyship agreement was also not emphasised. This clause reads
as follows: —
CONTINUING
SECURITY
This suretyship
shall be a continuing covering security' notwithstanding any
intermediate settlement
of the
amount owing
and notwithstanding my/our death or legal
incapacity until the Bank has received notice in writing from me/us
or my/our executor,
trustee or other legal representative, as the
case may be, terminating the same,
and
until the amount owins in terms of this suretyship at the
date
of receipt of such notice plus interest and costs until date of
payment, has been paid;
provided that such notice shall have no force or effect and shall not
terminate this suretyship unless it is accompanied by a copy
of a
notice addressed by me/us to the Debtor in terms of which the Debtor
is advised of the termination of this suretyship. ”
(Emphasis
added.)
[18] This clause
most certainly does not assist the fourth respondent.
[19] It was hence
necessary for the fourth respondent to rely on clause 4 of the
initial "Sectional mortgage bond hypothecating
a unit”
which the applicants entered into to secure their home loan. The
question is whether clause 4 can be interpreted
to cover the
indebtedness of the applicants as sureties to Abrina 1591 (Pty) Ltd.
Clause 4 has been quoted earlier in this judgment.
[20]
The
matter of
F.J. Hawkes & Co Ltd
v
Nagel
1957 (3) SA 126
(W)
was
quoted as authority for this submission.
[21] In that
case, however, the continuing indebtedness was for all debts incurred
by the principal debtor. Hence this matter takes
the case no further.
[22]
The
matter of
Netherlands Bank of South Africa v Stern N.O.
and Another
1955 (1) SA 667
(W)
makes
it
clear
that: —
'A pledge,
similar to a mortgage bond, is dependent upon and accessory to a
valid principal obligation. Any lawful obligation, civil
or natural,
absolute or conditional, present or future can be secured by way of a
pledge.
"
[23] In
Netherlands Bank of South Africa v Stern supra it was held that a
pledge given as security for any amount due or which thereafter
may
become due given by a customer of a bank in consideration of banking
facilities having been granted may be enforced by a Bank
in respect
of a promissory note issued by a customer to the creditor and
therefore discounted by the Bank.
[24]
In
Barclays National Bank Ltd v Umbogintwini Land and
Investment Co (Pty) Ltd (in liquidation) and Another
1985
(4) SA 407
(D)
at
pages 410- 451. the following was held: —
"It may be
correct to infer (though this has not been pleaded) that but for the
suretyship and mortgage bond the subsequent
loans would not have been
made. To this extent there is a causal connection but the fact
remains that these dispositions were separate
from, though ancillary
to, the loan agreement and the rights and obligations flowing from
it. This is the position in law notwithstanding
the fact that the
first defendant bound itself as coprincipal debtor as well. (Cf
Wieltan NO
v
Wouda
1957 (4)
SA 724
(W) at 726A.)
[25]
In
Zietsman v Allied Building Society
1989
(3) SA 166
(C) SA
at
page
166
it was
held that the words enige bedrag wat ingevolge die gemelde verband
betaalbaar mag word " referred to an amount included
within the
obligatory part of the bond: this had to be so because what w as
required was that the amount had to be payable under
the bond, not
merely secured by the bond. It was further held that as the
suretyship had been drafted by the respondent, the contra
proferentem
rule had to be applied against the respondent and the key words of
the deed of suretyship, correctly interpreted, did
not render
appellant liable for the amounts advanced to the mortgagor on other
bonds.
[26] It is clear
from the wording of the clause in the mortgage bond in respect of the
applicants' home loan that it related to
the obligatory part of the
bond - namely the capital amount, the interest thereon and the
additional amount payable in respect
of the home loan. The phrase
“any cause whatsoever ” is also limited to the amount of
the capital amount, interest
thereon and the additional amount. It
should also be emphasised that clause 5 of the surety agreement cited
above refers pertinently
to the obligations of the principal debtor.
[27] Furthermore,
one can hardly believe that the bank would rely on one mortgage bond
to secure a home loan in an amount of approximately
R500.000 and, in
addition thereto, to secure an amount of R921.322.00 loaned to Abrina
1591 (Pty) Ltd.
[28]
It
should also be noted that the following is pleaded in the particulars
of claim:
"As backing security for
inter
alia
the aforementioned term loan agreement (i.e. the loan to
Abrina 1591 (Pty) Ltd) the First and Second Defendants
caused
to be registered in favour of the Plaintiff
\
(sic)
a Mortgage Bond NO SB 1/5143/2004...
over
the sectional unit. The pleading was never amended.
[29] This
statement is, on the facts set out above, wholly inaccurate. This
incorrect pleading, no doubt, persuaded the judge hearing
the default
application to grant it.
[30] The
suretyship agreement is annexed to the application for rescission and
reflects that the second applicant signed the suretyship
agreement as
did the first applicant who signed it in terms of the peremptory
provisions of the Matrimonial Property Act 88 of
1984 (as the
applicants were married in community of property). According to the
suretyship agreement it was entered into on 24
May 2007. The
suretyship agreement pertinently states that the loan agreements of
the applicants are also ceded to the fourth respondent.
This
suretyship agreement includes the following important clauses: —
LIMITATION
Notwithstanding
anything to the contrary herein contained, the amount contained, the
amount that the Bank shall be entitled to recover
from under this
suretyship shall be:
All the
liabilities that the Debtor now has or in future may have to the Bank
(the “Debtor’’'' being the principal
debtor)
Limited
to a
maximum
-
of
-
R
-
...
.
...................................................
(..
.......................
.)
a
l
re
a
dy
accrued or which will accrue until the date of payment of the
amount
[31] The deed of
suretyship, dated 24 May 2007, predates the loan agreement between
the fourth respondent and Abrina 1591 (Pty)
Ltd which was allegedly
entered into during or about 7 June 2007. A physical address of 6
Silver Creek. Eco Park Estate. Centurion
0157 was furnished by the
sureties to the fourth respondent. This loan agreement was allegedly
destroyed in a fire and an example
of a standard loan agreement was
attached to the particulars of claim (ex facie the wording of the
particulars of claim). The amount
loaned was allegedly R921.322.00.
It bears mention that the annexes to the particulars of claim have
not been included in the answering
affidavit of the fourth respondent
in the rescission application.
[32] When Abrina
1591 (Pty) Ltd’s liability prescribed, the applicants'
liability would also have prescribed.
[33] The
Sectional mortgage bond hypothecating a unit’’ on which
the respondent relies, does not pertain to the applicants
as sureties
to the principal debtor, but to a mortgage bond in respect of
property purchased by them in their personal capacities.
The unit
loan mortgage bond relates to an amount of R401, 900.00. and an
additional amount of R80 380 was registered on 17 November
2004.
[34] These issues
are traversed in more detail below.
Rescission of the
default judgment:
[35] Sendee, as
stated, was effected on the applicants' erstwhile domicile which they
had already vacated in 2012. The applicants
submitted that the fourth
respondent was aware of this fact as their current residential
address is reflected in the fourth respondent's
records pertaining to
them. The fourth respondent refused to acknowledge this fact,
although it was clear from the documentation
attached that the fourth
respondent was aware of this fact. The "ABSA COMPREHENSIVE
CUSTOMER INFORMATION lists the applicants'
residential address
correctly as 17 Schipol Street Highveld x 8, Centurion. This document
also reflects the husband, namely the
first applicant's, telephone
number. The fourth respondent haiped on the fact that in terms of
clause 12 of the suretyship agreement,
a change of domicilium citcmdi
er executandi had to be in writing. Nonetheless, if the bank knew
that the applicants no longer
resided at this address (which it did,
according to the fourth respondent's records) it would amount to mala
fides to serve the
summons on an erstwhile residential address.
[36] What the
fourth respondent does acknowledge, however, is that the summons
never came to the applicants' attention. When they
became aware
thereof, on 29 January 2014, they immediately contacted their
erstwhile lawyer. Mr Oupa Motaung. who could not assist
them, with
the result that on 12 May 2014, they contacted their current
attorneys of record who launched an application for rescission
on 28
May 2014. The applicants therefore contend that the application was
brought within a reasonable time.
[37] In the
answering affidavit in the rescission application it w'as submitted
that in the absence of an affidavit from attorney
Motaung, the
applicants have not proved that they consulted another attorney. That
it may be difficult to persuade an attorney
to depose to an affidavit
to the effect that he was the cause of a delay and possibly incorrect
legal advice, can readily be understood.
This argument on behalf of
the fourth respondent is therefore of little value.
[38] The question
is w'hether such service, on an "old" domicilium citandi et
execittandi. renders the grant of the default
judgment procedurally
defective.
[39] In Herbstein
and Van Winsen The Civil Practice of the High Courts and the Supreme
Court of Appeal of South Africa Fifth edition
Juta sub. cap. C
Judgments and Orders at page 931 the following is stated: —
"C
Erroneously sought or erroneously granted in the absence of any party
affected thereby
The question of
what constitutes an error for the purposes of rule 42 has been the
subject matter of a number of decided cases.
[1]
It has been stated that it seems that a judgment has been 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. "
[2]
[40] In view of
the aforesaid, it is held that there was no unreasonable delay and
that Rule 42 (and the common law) have been complied
with by the
applicants.
[41] The main
defence is that the applicants stood surety for a company called
Abrina 1591 (Pty) Ltd. whereas the bond on which
the fourth
respondent relies was a normal housing bond over the applicants'
sectional unit and not a surety bond.
[42]
I
pause to point out that the fourth respondent, in its answering
affidavit, in the joinder application, states that:
(i)t
should be kept in mind that, at the state of granting financial
assistance to the principal debtor, the (fourth) respondent
had no
knowledge of the principal debtor, except that the applicants were
involved and that the applicants stood suretyship for
the
indebtedness of that entity. ”
This
allegation is bizarre, to put it mildly. It is not often that one
hears that a bank loans money to an unknown entity.
[43] That this
allegation is inaccurate is bome out by the bank statement attached
to the founding affidavit in the rescission application
which clearly
relates to Abrina 1591 (Pty) Ltd, P.O. Box 114 Newtown 2113 (account
number 40-6805-6685).
[44]
The
fourth respondent further alleges in its affidavits in the rescission
applications:
At the stage of binding themselves as
sureties to the (fourth) respondent, the applicants knew that they
were accepted as sureties
on behalf of the principal debtor on the
basis that they owned immovable property and that, as sureties, their
immovable property
may be executed upon in the event of the principal
debtor failing to pay the amounts owing by it to the respondent. The
respondent
granted financial assistance to the principal debtor on
condition that the principal debtor supply to the respondent valid
and
valuable Deeds of Suretyship signed by the first and second
applicants who are married in community of property. The applicants
complied therewith. "
[45] The
answering affidavits in the rescission and joinder application also
contains the following convoluted reasoning as to why
the applicants'
personal property was allegedly mortgaged in respect of an
unidentified debtor's loan: —
The principal
debtor’s indebtedness to the respondent was, at all material
times, secured by a mortgage bond registered against
a property being
the property that was sold in execution. I say that for the reasons
that follow. The respondent’s claim
for repayment of the
amounts owing by the principal debtor is against the entire financial
scheme designed to support the principal
debtor and to keep it in
business. The scheme was designed by,
inter
alia,
the applicants to operate as follows:
a)
An application to the (fourth) respondent for the lending of
an amount to the principal debtor on condition that the applicants,
who are registered owners of an immovable property, sing Deeds of
Suretyship in favour of the respondent;
b)
the immovable property remains of vital importance in that
the amount advanced to the principal debtor was secured by the
immovable
property which, in turn, was bound and remains bound by
virtue of Deeds of Suretyship entered into by the applicants;
c)
but for the fact that the applicants owned immovable
property, the principal debtor would never have obtained any
financial assistance
from the respondent.
As a result, the
(fourth) respondent’s claim and the principal debtor’s
indebtedness is underwritten by an immovable
property that is subject
to a mortgage bond granted by the respondent in favour of the
applicants. The mortgage bond only prescribes
after a period of 30
years from date upon which the claim, which forms the subject matter
of the plaintiff’s claim against
the applicants, as sureties,
arose. That claim arose on a date other than the date alleged by the
applicants;"
[46] It is
significant that the fourth respondent cannot rely on a written or
oral agreement which supports its convoluted reasoning.
[47] That the
fourth respondent has to resort to such convoluted reasoning is, in
itself, telling.
[48] The fourth
respondent further seeks to tie up loose ends in the rescission
application by stating the following: —
The (fourth)
respondent will not only, during argument, rely upon the financial
design and structure more fully set out above, but
also upon the fact
that:
•
the deeds
of suretyship provides that the applicants bound themselves as
sureties and co-principal debtors in
solidum
with the principal debtor for the repayment on demand of all
amounts owing by the principal debtor to the respondent;
•
the
aforesaid necessarily entails that the amount owing by the sureties
is secured by a mortgage bond and that such amount, secured
as
aforesaid, is subject to the provisions of the
Prescription Act 68 of
1969
. In terms of
section 11
of that Act it is provided that a debt
secured by a mortgage bond only prescribes after a period of 30
years. "
[49] The
allegation that the aforesaid necessarily entails " that the
amount owing to an unknown debtor is secured by a mortgage
bond is
wholly inaccurate. This is pure wishful thinking on the part of the
fourth respondent. When one enters into a suretyship
agreement one
does not necessarily thereby mortgage one's property. It needs only
be stated to be rejected.
[50] From the
date upon which the principal debtor was deregistered until the date
upon w'hich the directors and shareholders, including
the applicants,
applied for the reregistration thereof and the date upon which the
fourth respondent became aw’are of the
fact that the principal
debtor was "in the process of reregistration" the fourth
respondent alleges that it had no knowledge
of the identity of its
debtor and the facts upon wiiich it could rely in order to hold the
principal debtor liable. (There is a
not so subtle difference between
the version proffered in the rescission application and the version
proffered in the joinder application,
which has been quoted above.)
These facts were allegedly withheld from the fourth respondent and
the fourth respondent had to rely
upon searches undertaken by itself,
subsequent to the launch of the rescission application, in order to
ascertain that the principal
debtor was being reregistered.
[51] Of great
significance is that it is pleaded by the fourth respondent that the
loan agreement which it entered into with the
principal debtor was
partly written and partly oral. Furthermore, the particulars of claim
read as follow's: —
“
During or
about
7
June 2007 and at Pretoria, the Plaintiff and ABRINA
1591 (Pty) Ltd (Reg. NO: 2005/025100/07)
deregistered,
hereinafter referred to as ‘The Principal Debtor’, both
parties duly represented, entered into a partly written, partly
oral,
Term Loan Agreement. ”
(Emphasis
added)
[52] On the face
of it, and what was presented to the judge hearing the default
application, the Term Loan Agreement was entered
into with a
deregistered company.
[53] This renders
the particulars of claim vague in the extreme.
[54] It is very
difficult to fathom who signed the written loan agreement on behalf
of an unknown debtor. Conveniently, the said
written part of the loan
agreement was, so it is alleged, destroyed in a fire. Furthermore, as
stated, no particulars are given
regarding the alleged oral part of
the loan agreement. Express terms of the loan agreement are merely
pleaded without a distinction
being draw
r
n between the
terms of the written agreement and the terms of the oral agreement.
Where, when and by whom the oral agreement was
entered into are not
pleaded which, in any event, renders the particular of claim fatally
defective.
[55] The fourth
respondent's deponent then continues to state that, to the best of
his knowledge, the principal debtor has not yet
been reregistered.
This is followed by the statement that, "(i)f not, I believe it
will be registered within the very near
future (In the supplementary
heads of argument filed for the respondent, reference is made to an
extract from the register.) This
extract reflects the following: -
2009/11/13
AR IN DEREGISTRA TION
(ANNUAL
RETURN NON COMPLIANCE - DEREGISTRA TION
REGSITRA
TION DA TE: 14/07/2005AR DUE DA TE: 01/0 7/2006AR LA TE
DATE:
01/09/2006 DEREGISTRATION COMMENCE
DA
TE: 01/03/200 7 DEREGISTRA TION A CTION
DATE:
13/11/2009) 2010/07/16 AR FINAL DEREGISTRATION
(FINAL
DEREGISTRA TION FOR ANNUAL RETURN NON COMPLIANCE)
2012/10/02 AR -
RE-1NS1A TE INTO BUSINESS
(THABO
LESLEYTHA
TANA 74..........)
[56] It is not
for a court to analyse documents annexed to an affidavit but for a
deponent to explain them to a court. According
to the fourth
respondent, it states on oath that it does not know whether the
principal debtor has been reregistered. Hence, the
history reflected
against the date of 2012/10/02 may simply mean that reregistration
proceedings had been commenced.
[57] The
following statement is then made by the deponent for the fourth
respondent: —
"I
respectfully state that, under the aforesaid circumstances, the
applicants cannot rely upon a defence of prescription as
the entity,
being the principal debtor, was deregistered. The respondent was
entitled to look to the sureties for payment, and
knew that the
amount owing by the applicants to the (fourth) respondent was secured
by a mortgage bond. That amount remains so
secured. "
[58] How one
enters into agreements with an unknown entity which no longer exists,
is difficult to fathom.
[59] The fourth
respondent's remedy was to apply for the reregistration of the
company. However, as it did not even know
7
, on its
version, with whom or with entity it had entered into an agreement
(partly written and partly oral) the fourth respondent's
allegations
are nonsensical.
[60] All these
convoluted arguments w
r
ould not have been necessary had
the bank obtained a second bond over the applicants' property to
secure Abrina 1591 (Pty) Ltd's
or the applicants' suretyships.
[61] The fourth
respondent's desperate attempts to tie the applicants' liability (in
terms of their suretyship agreements to an
unknown, non-existing
debtor) to the existing mortgage bond obtained to secure their
personal sectional unit loan, is clearly because
the fourth
respondent believes that in the absence of a mortgage bond, its claim
has prescribed. In any event, on its own version,
it has no claim as
no principal debtor existed.
[62] The summons
was only served upon the applicants, qua sureties, on 18 April 2013.
The principal debtor's name and registration
number appears clearly
on the suretyship agreement, rendering the fourth respondent's
version that it did not know who the principal
debtor was at certain
different points in time (when regard is had to the different
versions in the affidavits in the joinder and
rescission
applications) patently inaccurate. Even if the fourth respondent were
to be believed, then it could have argued the
requisite knowledge by
exercising reasonable care as contemplated in
section 12(3)
of the
Prescription Act 68 of 1969
.
[63] It is stated
by the fourth respondent in its answering affidavit in the rescission
application that the first applicant and
two other people became
directors and shareholders of the principal debtor in approximately
September 2006, and that the principal
debtor was deregistered on 16
July 2010. This is not how the pleadings read which indicates that a
loan agreement was entered into
with a deregistered company.
Allegedly the principal debtor (which the fourth respondent states
"includes” the applicants)
applied for the re-registration
of the principal debtor on 2 October 2012. (A third director, a
certain Malada Awelani's status
is reflected as "resigned”
in the WINDEED CIPC Company Report.)
[64] It is also
not denied in the answering affidavit to the rescission application
that on or about 29 January 2014. the second
applicant became aware
of the attachment of the applicant's property due to a phone call
from the fourth respondent's attorney.
Neither is it denied that the
applicants then contacted their attorney Oupa Motaung of the firm
Malebye Motaung Motembulnc, nor
that the first applicant was
dissatisfied with the advice received as it differed from the
research he had done on the internet.
[65] The fourth
respondent’s deponent states that he has in his possession and
control the account of the principal debtor,
as well as all documents
pertaining to the applicants and a Mr Thabane (sic). He also stresses
that "to the best of his knowledge”,
the applicants never
contacted the fourth respondent regarding the default judgment. The
use of this phrase in quotation marks
and the reference to a Mr
Thabane underscores the applicants' doubt whether the deponent truly
has any knowledge of the loan agreement
and. most importantly, the
oral part thereof
[66] This
sectional mortgage bond over the applicant's sectional unit was
obtained by the applicants in their personal capacity
and it was
registered three years before the loan agreement was entered into by
the fourth respondent with an unknown entity.
[67] The bond is
also referred to as a first mortgage bond over the property.
[68] The
applicants contend that the fourth respondent obtained judgment
against them, based on this bond, which they entered into
in their
personal capacities in order to obtain a loan in respect of the unit
section number 3, known as Crystal Springs situate
at Erf 29338,
Highveld, Extension 50 Township City of Tshwane Metropolitan
Municipality.
[69] As stated,
the fourth respondent relied on a suretyship agreement which the
applicants and a certain Thabo Leslv Thatana had
entered into in
respect of an entity called Abrina 1591 (Pty) Ltd. I have referred to
the wording of clause 21 thereof above.
[70] It is clear
that the applicants stood surety only for the amount loaned to Abrina
1591 (Pty) Ltd. It is also important to note
that it is stated that
“this suretyship shall be a continuing covering security. "
Hence, the security which the Bank
obtained for the payment of Abrina
1591 (Pty) Ltd's debt was the deed of suretyship and not a mortgage
bond.
[71] As set out
above in the particulars of claim, it is pleaded therein that during
or about 7 June 2007. the plaintiff and Abrina
1591 (Pty) Ltd
deregistered (sic) entered into a loan agreement, which was partly
written and partly oral. The standard loan agreement,
referred to as
annex "A" in the particulars of claim is not attached to
the application. The loan which was granted to
Abrina 1591 (Pty) Ltd,
in terms of the particulars of claim, was an amount of R921 322.00
which qualifies as a large agreement
with the result that the
National Credit Act 34 of 2005
does not apply to it.
[72] The standard
mortgage bond and mortgage conditions are, similarly, not attached to
the particulars of claim. All that can be
gleaned from an annex
attached to the application, is that the first applicant was a
director of the said company (in terms of
the WINDEED search)
together with other directors. (The second applicant was never a
director of Abrina 1591 (Pty) Ltd).
[73] It is clear
that the first mortgage bond, dated 17 November 2004, is for a
personal loan and not in the nature of a bond in
respect of a
suretyship.
[74] What the
current status of Abrina 1591 (Pty) Ltd is, is unknown. In any event,
prescription started running against the principal
debtor as soon as
the whole amount was due, owing and payable. This date is stated to
be April 2008 in the application for rescission.
As stated, when a
company is deregistered the relief which a creditor such as the
fourth respondent has is to seek its reregistration
and then to sue
it. This did not happen.
[75] The last
payment made by the principal debtor was the sum of R61 077.23 which
the fourth respondent appropriated from Abrina
1591 (Pty) Ltd's bank
account on 5 April 2008. This was the last amount paid by Abrina 1591
(Pty) Ltd, as set out in the application
for rescission.
[76] From the
transactional history it is clear that during 2007 there were already
unpaid debit orders.
[77]
Miller
JA
held
in
Chetty v Law Society, Transvaal
1985
(2) SA 756
(A)
764I-765F.
that: —
As I have pointed
out, however, the circumstance that there may be reasonable or even
good prospects of success on the merits would
satisfy only one of the
essential requirements for rescission of a default judgment. It may
be that in certain circumstances, when
the question of the
sufficiency or otherwise of a defendant's explanation for his being
in default is finely balanced, the circumstance
that his proposed
defence carries reasonable or good prospects of success on the merits
might tip the scale in his favour in the
application for rescission.
"
[78] Miller JA
then referred to the judgment of Melane v Santam Insurance Co Ltd
1962 (4) SA 531
(A) at page 532 and held: —
But this is not
to say that the stronger the prospects of success the more
indulgently will the Court regard the explanation of
the default.
An unsatisfactory
and unacceptable explanation remains so, whatever the prospects of
success on the merits. In the light of the
finding that appellant's
explanation is unsatisfactory and unacceptable it is therefore,
strictly speaking, unnecessary to make
findings or to consider the
arguments relating to the appellant's prospects of success.
Nevertheless, in the interests of fairness
to the appellant, it is
desirable to refer to certain aspects thereof. ”
[79] It is trite
that a surety's liability is accessory to the principal debtor's
debt.
[80] The further
argument that a pi gnus iudiciale was created between the fourth
respondent and the bona fide purchasers of the
immovable property is
also incorrect in law
7
. This principle is discussed in
depth in the matter of Knox NO v Mafokeng and Others
2013 (4) SA 46
(GSJ) as follows: —
"[17] The
common-law principles are ... reflected in Badenhorst, Pienaar &
Mostert Silberberg and Schoeman's The Law of
Property (5 ed) at 261
in the following terms, with reference to the relevant common-law
authority:
‘
Property
sold at judicial sales cannot, after delivery in the case of movables
or registration in the case of immovables, be vindicated
from a bona
fide purchaser. Even when an article is sold by mistake as belonging
to a judgment debtor, the true owner cannot vindicate
it from a bona
fide purchaser (though Matthaeus states that he or she can do so on
refunding the purchase price to the purchaser).
Thus,
section 70
of
the Magistrates'
Courts Act provides that the sale in execution by the Sheriff of the
court will not, in the case of movable things
after delivery thereof
or in the case of immovable things after registration of transfer, be
liable to be impeached as against
a purchaser in good faith and
without notice of any defect.'
In fn 192 on the
same page, the authors qualify the general statement by stating that:
—
‘
(t)lie
sale, however, has to be a valid sale complying with the applicable
rules of court and statutory measures: see Van der Walt
v Kolektor
(Edms) Bpk
1989 (4) SA 690
(T); Joosub
v
JI Case SA (Pty) Ltd
1992 (2) SA 665
(N)
at
679B’.
[18]
It follows that the first common-law principle to be applied
in the present instance is that, as a general rule, property sold at
a sale in execution in terms of a valid, existing judgment cannot be
vindicated from a bona fide purchaser once the property had
been
transferred to the purchaser, provided the sale in execution was not
a nullity."
[81] Thus, so
long as transfer has not yet been effected, a sale to a bona fide
purchaser is not binding.
[82] The entire
application is rendered troublesome is that no further reference is
made to consequences of the status of Abrina
1591 (Pty) Ltd qua a
deregistered company as at the date when summons was issued. On a
reading of the particulars of claim alone,
default judgment could not
have been granted absent an allegation that the company had been
reregistered.
[83] In this
regard it is important to note that section 73(6) of the 1973
Companies Act was repealed by
s 224
of the
Companies Act 71 of 2008
which came into operation on 1 May 2011. In the matter of Insamcor
(Pty) Ltd v Dorbyl Light & General Engineering
2007 (4) SA 467
(SCA) para 23 Brand JA. in an obiter dichim held that
section 73(6)
"seems to validate, retrospectively, all acts done since
deregistration - including, for example, the institution of legal
proceedings - on behalf of a company which did not exist.”
[84]
It
is useful to begin by considering the general effect of a deeming
provision such as the one in the instant case. The use of the
word
"deemed', Innes J held many years ago, is . . .
“not
a very happy one, because that term may be employed to denote merely
that the persons or things to which it relates are
to be considered
to be what really they are not
....
”
[3]
However, usually it is a species of retrospective legislation
which
“changes the law only for the future, but it looks to the past
and attaches new
prejudicial
consequences
to a completed transaction.
...
A retrospective statute operates as of a past time in a sense that it
opens up a closed transaction and changes its
consequences,
although the change is effective only for the future”.
(Emphasis
added.)
[4]
This means that it will almost always have
the
effect of changing the consequences of the transaction - also for
third parties - unless there is some limitation in the statute
itself.
[85] In Ex parte
Sengol Investments (Pty) Ltd,- Van Dijkhorst J described the general
effect of the deregistration of a company:
-
“
The effect
of restoration to the register is that the company is deemed not to
have been deregistered at all. This entails that
all parties who have
by deregistration of the company or thereafter acquired rights to
assets which the company had upon deregistration
will lose those
rights as the assets will revert to the company. This includes assets
which have become
bona vacantia
and
as such accrued to the State.
Likewise
debtors and creditors of the company at time of deresistration may
upon restoration find their
obligations or rishts resuscitated
. ”
(Emphasis
added.)
[86] However, in
the matter of CA Focus CC v Village Freezer t/a Ashmel Spar
2013 (6)
SA 549
(SCA) it w'as held in paragraph 22 that: -
“
In
conclusion it is interesting to note that ss 26(7) of the Act and
73(6) of the 1973
Companies Act were
repealed by
s
224
of the
Companies Act 71
of2008
, which came into operation on 1 May 2011. Section 82(4)
of the 2008 Act now allows the registration of deregistered company
or
close corporation to be reinstated, but the
provision
permitting the restoration to operate retrospectively
was
omitted, perhaps because the lawmaker is now aware of potential
anomalies. ”
(Emphasis
added)
[87] These
anomalies lie in the fact that "the finger moves on" and
parties may change their positions radically and enter
into new
agreements and the like which may be acutely affected should the
reregistration of a company have retrospective effect.
[88] All the
parties to the rescission application overlooked the problems caused
by the deregistered status of the company and
it was only addressed
when the court requested further heads of argument on this issue.
[89] Given the
fact that the parties were not alive to the problems created by the
deregistered status of the company, this aspect
was only dealt with
tangentiallv in the application for rescission. On the respondents'
version, only when the application for
rescission was brought, Abrina
1591 (Pty) Ltd was in the process of reregistration. The respondents
expressly stated that they
did not know whether the company has been
reregistered.
[90] The question
to be answered then is whether the sureties (the applicants in the
application for rescission) could be sued,
whilst the principal
debtor Abrina 1591 (Pty) Ltd was no longer in existence.
[91] The
appellate division in Traub v Barclays National Bank Ltd 1983(3) SA
619 (A) held that: -
The
final defence relied on by the appellants’ counsel against the
Bank’s claim for the capital amount was based on
the fact that
Dancor was deregistered on 21 December 1979. This came about because
the company had become dormant; it
had lost all its assets and
it was not carrying on any business. It is common cause that the
Registrar of Companies acted in accordance
with the provisions of
s73
of the
Companies Act 61 of1973
when Dancor was deregistered. Taurog
was aware of the developments and so, according to his evidence, was
the Bank. The appellants
pleaded that Dancor’s deregistration
had extinguished its debt to the Bank, with the result that the
appellants’' liability
to the Bank was also extinguished (see
the reported judgment of MYBURGH J at 294D - F). In my opinion this
defence is without merit.
In support of it, counsel said: there
cannot be a debt without a debtor. Whatever validity’ such a
statement may have in
other contexts, it certainly cannot be applied
to the facts of this case. It is not the law that a surety is freed
from liability
>
to the
creditor when the principal debtor ceases to exist. If the principal
debtor is a natural person and he dies, his surety remains
liable to
his creditor; and a surety? for a company remains liable to its
creditor if it is liquidated and dissolved under
s 419
of the
Companies Act. In
short, there is no foundation for the argument that
Dancor’s deregistration released the appellants from liability
to the
Bank. ”
[92] The Supreme
Court of Appeal held in Jans v Nedcor Bank Ltd
[2003] 2 All SA 11
(SCA) (24 March 2003) an analysis was undertaken whether the
principal debtor and suretyship's obligations prescribe at the same
time. It was emphasised that the agreement between a creditor and a
surety is usually that the surety binds him/herself as surety
and
co-principal debtor.
[93]
It
was pointed out by
Trollip JA in Neon and Cold Cathode
Illuminations (Pty) Ltd v Ephron 1978 (1) SA at 471 c - a ... “that
the effect of a surety
binding himself
as a co-principal debtor is not to render him liable to the creditor
in any capacity other than that of a surety
who has renounced the
benefits ordinarily available to a surety against the creditor (e.g.
that payment be sought from the principal
debtor first). But where
the surety is bound as a co-principal debtor he or she will be
jointly and severally liable with the principal
debtor and
prescription will begin to run in favour of both at the same time. ”
[94]
In
the Traub matter it was held as was done in
Kilroe-Daley
v Barclays National Bank Ltd
[1984] ZASCA 90
;
1984 (4) SA 609
(A):-
“
In that
case the surety executed a mortgage bond securing his obligation in
terms of a contract of suretyship. It was held that
when the claim
against the principal debtor became prescribed the claim against the
surety likewise became prescribed and the creditor
was accordingly
precluded from invoking s ll(a)(i) of the
Prescription Act which
provided for a period of prescription of 30 years in respect of a
mortgage bond."
[95] In Jans v
Nedcor Bank supra Scott JA undertook an extensive analysis of the old
authorities and cited the following dictum
from Cronir v Meerholz
1920 TPP403: -
“
By our
common law the surety undertakes to pay the debt of the principal
debtor so long as that debt exists in law and has not in
fact been
paid by the debtor. If, therefore, the debt is extinguished by
prescription or the remedy is barred by a
limitation of
actions the surety is either discharged or the remedy against him is
also barred. But if the debt is kept alive by
judgment, so that
neither prescription nor limitation will run, the surety’s
obligation by the common law continues to exist,
because his
obligation and that of the principal debtor is one and the same. ”
[96] Scott JA
also stated the following in Jans v Nedcor Bank paragraph [21]: -
“
With
regard, in particular, to the reasoning in Cronin
v
Meerholz, supra, De Wet points out that while the
accessory nature of the surety’s obligation has the effect that
prescription
of the claim against the principal debtor results in
prescription of the claim against the surety, it does not necessarily
follow
that interruption of prescription against the principal debtor
interrupts prescription against the surety. He says that to accept
that it does, is to put the cart before the horse. (De Wet and Van
Wyk op cit at 398-399 n 53.) The metaphor is, of course, not
entirely
accurate. If completion of the principal debtor’s period
ofprescription results in completion of the surety’s
period
ofprescription, even ifprescription in favour of the latter began to
run at a later date than in the case of the former,
it is neither a
big nor an illogical step to accept that an interruption of
prescription against the principal debtor has the effect
of
interrupting prescription against the surety. But in any event, in
arriving at the conclusion it did, the Court relied not only
on the
accessory nature of the surety’s obligation but also on its
commonality with the principal debtor’s obligation.”
[97] Scott JA in
paragraph [30] of Jans concludes, however, that when a principal
debtor's claim is interrupted or delayed, so is
the liability of a
surety. He emphasised that sureties assume obligations of others with
their free consent and has a commercial
interest in the principal
debt. In doing so, he accepted Voet's viewpoint on this issue. Scott
JA added that provided that the
surety exercises some vigilance in
relation to the fortunes of the claim against the principal debtor,
there will be no prejudice.
In fact, in order to protect the claim
against a surety to prescribe before the claim against the principal
debtor would subvert
the purpose of a suretyship agreement (Wessels
JP Union Government v Van der Merwe 1921 TPP 318 at p 320).
[98] As a result.
Scott JA held in Jans at par 32 as follows: -
“
In my view
therefore the position in the South African law is that an
interruption or delay in the running of prescription in favour
of the
principal debtor interrupts or delays the running of prescription in
favour of the surety. If, of course, prescription in
respect of the
claim against the surety has not yet commenced to run, any
interruption or delay relating to the claim against the
principal
debtor will not affect the position of the surety, but in the present
case, of course, prescription began to run in respect
of both the
principal debtor and the surety at the same time
.”
[99] Finally, it
should be borne in mind that reregistration does not validate acts
retrospectively but only operates prospectively
due to the wording of
s 224
of the
Companies Act 71 of 2008
.
[100] It should
be recalled that even where it w
r
as deemed under the old
section 76(3)
that a reregistration of a company had retrospective
effect, the court was approached for an order to that effect which
contained
a rule nisi calling upon all interested persons to show
cause why the company's restoration should not be restored. This w
r
as
held in cases such as Ex Parte Sengol Investments (Pty) Ltd
1982 (3)
SA 474
(T) and Ex Parte Jacobson: In Re Alec Jacobson Holdings
1984
(2) SA 372
(W).
[101] The
reasoning behind the practice appears from the following statement by
Van Dijkhorst J in Sengor (at 477 C - F): -
[20]
'The effect of restoration to the register is that the
company is deemed not to have been deregistered at all. This entails
that
all parties who have by deregistration of the company or
thereafter acquired rights to assets which the company had upon
deregistration
will lose those rights as the assets will revert to
the company. This includes assets which have become bona vacantia and
as such
accrued to the State. Likewise debtors and creditors of the
company at time of deregistration may upon restoration find their
obligations
or rights resuscitated.
It follows that
the restoration of the registration of a company in terms of
s 73
(6)
may have wide-ranging effects. Although the applicant alleges that
the company had no other assets than the mineral rights,
and that it
had no liabilities, the possibility does exist of the discovery of
forgotten assets. That this is not illusory is evidenced
by the cases
where this fact necessitated an application like the
present....'
(See also
Goldstone J in Ex Parte Jacobson at 377F-H): -
[21]
The statement by Van Dijkhorst J must, of course, be
understood against the background of
s 73(6).
It provides: '6(a) The
Court may, on application by any interested person or the Registrar,
if it is satisfied that a company was
at the time of its
deregistration carrying on business or was in operation, or otherwise
that it is just that the registration
of the company be restored,
make an order that the said registration be restored accordingly; and
thereupon the company shall be
deemed to have continued in existence
as if it had not been deregistered.
(b)
Any
such order may contain such directions and make such provision as to
the Court seems just for placing the company and all other
persons in
the position, as nearly as may be, as if the company had not been
deregistered. ’
[102]
This
reasoning was followed by Brand JA in
Isamcor (Pty) Ltd
v Dorbyl Light & General Engineering (Pty) Ltd, Dorbyl Light &
General Engineering (Pty) Ltd
v
Insamcor (Pty) Ltd; [2007] SCA 6 (RSA) (12 March 2007)
at
paragraphs [30] and [31],
[103] The
sections of the
Prescription Act 68 of 1969
as amended which find
application in this case are the following: -
3.
Completion of prescription postponed in certain circumstances
(1)
If-
(a)
the person against whom the prescription is running is a
minor or is insane, or is a woman whose separate property is
controlled
by her husband by virtue of his marital power, or is a
person under curatorship,
or is
prevented by superior force from interrupting the runnins of
prescription as contemplated in
section 4
;
or
(b)
the person in favour of whom the prescription is running
outside the Republic, or is married to the person against whom the
prescription
is running, or
is a
member of the sovernins body of a juristic person asainst
whom
the prescription is runnins and;
(Section
3(l)(b)
substituted by
section 10
of Act 139 of 1992)
(c)
the period of prescription would, but for the provisions of
this subsection, be completed before or on, or within three years
after,
the day on which the relevant impediment referred to in
paragraph (a) or (b) has ceased to exist,
the period of
prescription shall not be completed before the expiration of a period
of three years after the day referred to in
paragraph (c).
(Emphasis added)
10 (2) By the
prescription of a principal debt a subsidiary debt which arose from
such principal debt shall also be extinguished
by prescription.
13.
Completion of prescription delayed in certain circumstances (
d)
If-
(a)
the creditor is a minor or is insane or is a person under
curatorship or
is prevented by
superior force
including any law or any order of court from
interrupting the running of prescription as contemplated in section
15(1);
(b)
the debtor is outside the Republic; or (Section 13(l)(b)
substituted by section 11(a) of Act 139 of 1992)
(c)
the creditor and debtor are married to each other; or
(d)
the creditor and debtor are partners and the debt is a debt
which arose out of the partnership relationship; or
(e)
the creditor is a juristic
person and the debtor is a member of the
sovernins
body of such juristic person;
[104] (Whether
the first applicant was still a director of Abrina 1591 (Pty) Ltd is
unclear but clearly he was not whilst the company
was unregistered.)
On what is set out in the answering affidavits, the sureties (the
applicants in this application), before the
company had been
reregistered, brought the application for default judgment
prematurely. This, in itself, is also, as set out above,
a fatal
flaw.
Conclusion
[105] In the
premises, it is held that the mortgage bond which was registered as
security for the applicants' home loan, could not
be used as security
for a loan to Abrina 1591 (Pty) Ltd.
[106]
Furthermore, the sureties were sued prematurely when Abrina 1591
(Pty) Ltd had not yet been reregistered. This, in itself,
renders the
default judgment procedurallv defective.
[107]
Furthermore, the loan agreement had been inaccurately pleaded and
reference was made in the particulars of claim to the wrong
bond
agreement.
[108] In the
premises, the following order is made: —
Order
1. The judgment
granted by default against the applicants on the 27
th
of
September 2013 is rescinded.
2. The sale in
execution which took place on the 19
th
March 2014 pursuant
to the grant of the default judgment is set aside.
3. Costs of the
application is to be paid by the fourth respondent.
4. The applicants
are ordered to pay the costs occasioned by the filing of yet a
further set of heads of argument.
JANSSEN
J
JUDGE
OF THE HIGH COURT
For
the Applicants Advocate AJ Venter (082 551 4108)
Instructed
by Trevor Swartz Attorneys c/o Jacobson & Levy Inc (012-342 3311)
For
the Respondent Advocate GH Meyer (Oil- 535 1800/082 457 0723)
Instructed
by Jay Mothobi Incorporated (011 268 3500) c/o Savage Jooste and
Adams
[1]
Topol
v L S Group Management Services (Pty) Ltd
1988 (1) SA 639
(W) at
648E—650C. See also Rail Commuter Action Group v Transnet Ltd
t/a Metrorail (No 2)
2003 (5) SA 593
(C) at 594.
[2]
Nyiitgwa v Moolman NO
1993 (2) SA 508
(Tk GD) at 510.
[3]
Chotabhai
v
Union
Government & another 1911 AD at p 33.
[4]
Driedger,
Construction of Statutes (1983) at 185-6 referred to in Devenish op
cit at 188.
5
Ex parte Sengol Investments (Pty) Ltd
1982 (3)
SA
474(T)
at 477C-D.