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[2016] ZAGPPHC 1180
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Haribhai v Da Silva N.O. and Another (46585/2014) [2016] ZAGPPHC 1180 (14 September 2016)
IN
THE HIGH COURT OF SOUTH AFRICA
(GAUTENG
DIVISION, PRETORIA)
CASE
NO: 46585/2014
14/9/2016
Not
reportable
Not
of interest to other judges
Revised.
In
the matter between:
JANINE
HARIBHAI
Applicant
and
GEORGE
DA SILVA
N.O.
First Respondent
PULENG
FELICITY
BODIBE
Second Respondent
JUDGMENT
Carrim
AJ
[1]
This is an application for rescission of an order granted by this
court on 12 August 2014. The applicant is the spouse of Mr
Dinesh
Haribhai who was declared insolvent in February 2013.
[2]
The respondents are the trustees of the insolvent estate.
[3]
The order of 12 August 2014 obtained by the respondents in default of
the appearance of the applicant inter alia terminates
the joint
ownership of the applicant and Dinesh Haribhai in five properties
which fell into the insolvent estate.
[4]
The rescission is sought in terms of Rule 42(1)(a) of the Uniform
Rules alternatively under the common law.
Background
Facts
[5]
Dinesh Haribhai
(" Dinesh" )
was declared insolvent
and his estate was placed under final sequestration on 26 February
2013 in the South Gauteng High Court,
Johannesburg. He appealed that
decision to the Supreme Court of Appeal but was unsuccessful.
[6]
The respondents were appointed as trustees of the insolvent estate
and set about their duties under the Insolvency Act 24 of
1936
("
the
Acf'). Five properties namely 20 Leadwood, 21 Mimosa Mews, 16
Mimosa Mews, 23 Bush Willows and 4 La Maison all situated in
sectional
title complexes in the suburb of Weltevredenpark fell into
the insolvent estate and were registered in both the applicant's and
Dinesh's names. The properties were hypothecated to the Standard Bank
of South Africa.
[7]
Unbeknownst to the respondents, the Haribhai's had
changed their matrimonial regime from in community
of
property to ante nuptial without accrual in 2008. In terms of their
notarial contract Dinesh Haribhai kept 100% ownership of
all the
properties save for 21 Mimosa Mews
(" the remaining
property")
which was their matrimonial home at the time.
Dinesh and Janine owned 50% each in the remaining property. Husband
and wife had failed
to make the necessary changes to the titled deeds
of these properties, which still reflected them as co-owners. The
mortgage bonds
on the five properties also reflected them as joint
owners.
[8]
The trustees of the insolvent estate understood all the properties to
be co owned by Dinesh and Janine in undivided 50%
shares.
Accordingly letters were sent to the applicant by the attorneys
acting on behalf of the respondents in which the applicant
was
requested either to purchase the undivided half-shares properties or
to authorize the trustees to sell each of the properties
by way of
public auction or private treaty, she being entitled to one half of
the proceeds of the sale after the indebtedness of
the bank and
administration costs were finalized. The applicant did not accede to
this request.
[9]
The respondents still under the misimpression that all the properties
were co owned by the applicant eventually brought
proceedings in
this court for the extension of their powers under the Act, for the
termination of the joint ownership of the properties,
authorizing
them to sell the properties, requiring the applicant to sign all
necessary documents and failing her authorizing the
Sheriff to sign
on her behalf for the disposal of the properties.
[10]
The respondents obtained default judgement against Dinesh and the
applicant on 12 August 2014 in terms of which –
10.1. The general powers of the
trustees described by the
Insolvency Act were
extended;
10.2. The joint ownership of Dinesh
and Janine in the five properties as described therein was
terminated;
10.3. The respondents were authorized
and allowed to sell the properties as provided in clause 3 thereof;
10.4. That the respondents and Janine
sign all documentation necessary for the disposal of these properties
and failing Janine,
the Sheriff is authorized to sign.
[11]
The respondents only learned of the change of the matrimonial
property regime after this order was granted. They accordingly
instructed their attorneys to abandon that part of the order that
related to the 4 properties owned solely by Dinesh.
[12]
It has subsequently transpired, two years later since the court
order, that four of the five properties have been sold and
the
remaining property, 21 Mimosa Mews, is the one in which the applicant
has a 50% share.
The
Application
[13]
The applicant now seeks an order to rescind the judgement granted in
default on 12 August 2014.
[14]
Her application was first brought in terms of
rule 42(1)(a)
on the
basis that there the order was granted in error due to defective
service. The application in terms of
rule 42(1)(a)
was filed on 17
November 2014.
[15]
The respondents filed an opposing answering affidavit on 13 February
2015 in which they deny that service was defective.
[16]
The applicant did not file a replying affidavit within the time
frames permitted by the rules. However she filed a replying
affidavit
on 10 May 2016 almost a year later to which the respondents objected.
[17]
The applicant filed an application to supplement her papers by the
filing of a supplementary affidavit on 11 March 2016 more
than a year
after her application was filed in November 2014. In this
supplementary affidavit she seeks to place before this Court
the
grounds of her defence to the main matters, which she alleges she
neglected to do in her founding affidavit due to the inexperience
of
her attorneys.
[18]
The respondents filed a supplementary affidavit in which they opposed
the objected to the filing of the applicant's supplementary
affidavit
but pleaded over in the event that the Court permitted it by
answering thereto.
[19]
At the hearing of the matter I had to first decide whether to allow
the applicant's replying affidavit and both parties' supplementary
affidavits. However it also emerged that the respondents wished to
adduce further evidence on the issue of the applicant's place
of
residence which was objected to by the applicant. The respondent's
heads had also been filed late in the day.
[20]
The hearing became marked by preliminary skirmishes. The respondents
opposed the filing of applicant's supplementary affidavit.
The
respondents also opposed the filing of the applicant's replying
application on the basis that it was filed almost a year later
than
required by the rules. The applicant on the other hand objected to
the handing in of the respondent's heads of arguments and
the
application by the respondent to adduce new evidence through the
filing of an affidavit by the instructing attorney and was
of the
view that were it to be admitted they might have to seek a
postponement of the matter. I set these facts out here to convey
the
manner and tone that has dominated these proceedings which I will
refer to later again.
[21]
The matter was stood down to allow the parties some time to consider
their positions. The parties eventually indicated that
they desired
to argue the merits of the application. To this extent the
respondents elected not to press with their application
to adduce
further evidence. In light of the fact that the parties were eager to
get to the merits of the matter and that it has
been dragging on for
a considerable length of time, I allowed the supplementary affidavits
and the respondent's heads of arguments
the consequence of which is
that the applicant's application is also now brought on the basis of
the common law and not only under
rule 42(1)(a).
Application
under
Rule 42(1)(a)
[22]
Rule 42
states -
"42 Variation and
Rescission of Orders
(1)
The court
may, in addition to any other powers it may have, mero motu or upon
the application of any party affected, rescind or
vary:
(a)
An order or judgment erroneously sought or erroneously
granted in the absence of any party affected thereby;
(b)
an order or judgment in which there is an ambiguity, or
a patent error or omission, but only to the extent of such ambiguity,
error or omission;
(c)
an order or judgment granted as the result of a mistake
common to the parties.
(2)
Any party
desiring any relief under this rule shall make application therefor
upon notice to all parties whose interests may be
affected by any
variation sought.
(3)
The court
shall not make any order rescinding or varying any order or judgment
unless satisfied that all parties whose interests
may be affected
have notice of the order proposed."
[23]
The core issue to be decided
under this heading is whether the court order was erroneously
granted. The enquiry under this Rule
is whether order was granted in
error on the part of the court, not on the part of the parties,
having regard to the record of
proceedings before it. Not every
mistake or irregularity may be corrected in terms of the rule. While
the rule caters for mistake,
rescission or variation does not follow
automatically upon proof of a mistake. The courts still have
discretion to order it, which
discretion must be exercised
judicially.
[1]
[24]
The applicant's alleges that the order should be rescinded because
there was defective service. The papers in the application
for
termination of the joint ownership ("termination application")
were served on 23 Bush Willows. She did not reside
at 23 Bush Willows
but lives at 23 Fairviews 14th Avenue, Fairlands and has been living
there for three to four years. In her founding
affidavit she cites
this address as her current residence.
[25]
Her second supplementary ground for defective service is that the
Sheriff's return describes that address as her
"chosen
dbmicilium citandi et executandt .
That was not her chosen
domicilium citandi et executandi
she had changed it sometime
ago.
[26]
She does not state when she first became of the default judgement or
the circumstances in which it was brought to her attention
but merely
states that she took steps to apply for a rescission in November
2013. Her application for rescission was filed November
2014.
[27]
The respondents deny that the order was granted in error on the
following basis: the termination application, when it was first
drafted, reflected the applicant's address as 21 Mimosa Mews. However
additional efforts were made to confirm this. The respondents
confirmed that she resided at 23 Bush Willows and as appears from the
founding affidavit in that application, amended the papers
to reflect
this. The Sheriff's return of service confirms that the papers were
served on 23 Bush Willows.
[28]
The fact that the Sheriff's return describes that address as the
'chosen domicilium citandi et executandl'
is in my view of no
consequence on the facts of this case. In the absence of evidence to
the contrary and in the absence of choices
being made subsequently, a
person's residence is in law the
domicilium citandi et executandi
for the commencement of proceedings. There was substantial
compliance with the requirements of rule 4(1)(a)(v) of the Uniform
Rules.
(See
Brangus Randburg (Pty) Ltd v Plaaskem (Pty) Ltd
2011
(3) SA 477
(KZP) )
[29]
In my view on the basis of the record of proceedings before the court
at that time the plaintiff (respondent) was procedurally
entitled to
the order sought. The respondents had described the residential
address of the applicant in the papers as 23 Bush Willows
and service
had been done at that address. On the papers before the court at the
time there was no suggestion that the applicant's
residential address
was incorrect or that the Sheriff had served on a address different
from that described as hers or that the
wrong documents had been
served on 23 Bush Willows. (See
Lodhi 2 Properties Investments CC
& Another v Bondev Developments (Pty) Ltd
2007 (6) SA 87
(SCA) at para 24).
[30]
There is authority to suggest that in considering an application for
rescission a court may have regard to evidence outside
the record of
proceedings. See
Colyn v Tiger Food Industries Ltd
tla
Meadow Feed Mills Cape
[2003] 2 All SA 113
(SCA) (31
March 2003) at 10 for a summary of the debate as to whether the error
must be patent from the record of proceedings and
that the court is
confined to the four corners of the record or that regard to external
evidence may be had. The applicant has
put up what is alleged to be
contemporaneous facts in support of her grounds which I consider
below.
[31]
The applicant alleges that she changed her
domicilium citandi et
executandi
and the respondents ought to have been aware of this.
However the document she puts up is an email addressed to Alana
Pretorius
of Eksteen Attorneys in which Dinesh advises her that
"our
Domicilium is now changed to the below mentioned for any legal
correspondence. But all levy statements must still come
to me."
The below mentioned address is that of their attorney Tony
Webbstock. The email was sent to Eksteen Attorneys on 10 November
2010
and related to a matter of payment of levies for unit 16 and 21
Mimosa Mews. This notice could hardly apply to the termination
proceedings nor was such an email sent to the respondents, because if
it had undoubtedly, it would have been produced. In any event
there
would be no need for her to change her
domicilium
with the
respondents because until the termination proceedings commenced.
There was no lis between the respondents and her.
[32]
A further ground proffered by the applicant for defective service is
that she had appointed Tony Webbstock as attorney of record
and that
the respondents ought to have served the papers on him. However the
Notice of Appointment attached as Annexure B and as
KK2 is addressed
to a firm of attorneys Velile Tinto Inc and is in relation to a
matter between the Standard Bank of South Africa
as plaintiff and the
Haribhai's as defendants together with Luke Pre-owned CC as third
defendant. This matter does not involve
the respondents but relates
to a totally different case and cannot serve as the address for
service for the termination proceedings.
[33]
The respondents put up the affidavit of Jaco du Toit who attended at
23 Bush Willows on 25 June 2014 in order to value the
property and
serve a notice of vacation. He was employed as a Valuer-General by
Park Village Auctions. Du Toit attests that it
was clear to him that
the Haribhai's resided at 23 Bush Willows. His version of events is
that he used the intercom system to contact
the resident and was
connected to a man who identified himself as Mr Haribhai. He was
refused access to the property by Mr Haribhai
but had a conversation
with him about the purpose of his visit. He gained access to the
complex by one of the other tenants and
left the notice to vacate at
the front gate and slipped another notice under the garage door of
the unit. Du Toit also left his
contact details. Later that evening
Mr Haribhai called him several times and indicated to Du Toit that
his conduct was unlawful
and that he would obtain an interdict
against Du Toit.
[34]
The respondents attest further that when the application for
rescission was filed they took steps to investigate whether the
applicant resided at 23 Bush Willows. To this extent they
appointed a tracing agent whose report (record 184) confirms that
as
at 27 January 2015 the Haribhai's resided at 23 Bush Willows.
[35]
The applicant puts up a weak case in relation to the abovementioned
facts. In her reply she denies Du Tait's version, attacks
his
veracity and states again that at the time the application was served
she and her husband were already residing at 23 Fairviews
14th Avenue
Fairlands. But she puts up no evidence such as utility bills, rental
slips, lease agreements or even title deeds if
she was the owner
thereof to show that she resided or resides at 23 Fairviews
Fairlands. She also does not explain who resided
at 23 Bush Willows,
a fact she would have known given that she was co-owner of the unit
at the time. In relation to the tracing
report which also reflects
Dinesh's contact details she has merely a bald denial.
[36]
On balance of probabilities, even when regard is had to the evidence
outside of the record of proceedings, I find that there
was no error
and the application fails under rule 42(1)(a).
Common
Law
[37]
I turn now to consider the relief under the common law. The
requirements under common law are that there must be sufficient
or
good cause.
(De Wet and Others v Western Bank Ltd
1979 (2) SA
1031
(A)). The Courts generally expect an applicant to show
"good
cause"
by giving a reasonable explanation of the default, by
showing that the application is made
bona fide
and that he has
a bona fide
defence to the plaintiff's case which has good
prospects of success (see Colyn
supra
and
Melane v Santam
Insurance Co Ltd
1962 (4) SA 531
(A),
Chetty v Law Society
Transvaal 1985 (2) SA,
Grant Plumbers (Pty) Ltd
1949 (2)
SA 470
(0).)
[38]
A court may also have regard to other factors such as
prejudice to the respondents if the rescission is granted,
the mental
aspect of the default whether it was wilful, negligent or blameless.
[39]
I have already discussed the applicant's explanation for her default
earlier. In summary she alleges that the papers were served
on the
wrong address because she did not and still does not reside at 23
Bush Willows. I have already found her explanation wanting.
[40]
The applicant has also not provided an explanation as to why she has
enrolled the matter only now, more than two years after
the order was
granted and 22 months since she launched her application for
rescission. There is a duty on an applicant to bring
an application
without undue delay if it is to be brought in good faith. I would
venture to say that that duty extends not only
to the bringing of an
application by filing it but also to the finalization thereof so that
the position can be rectified without
undue delay in the interests of
all concerned and in the interests of justice.
Van Wyk v Unitas
Hospital
[2007] ZACC 24
;
2008 (2) SA 472
(CC) at 477. As
discussed above the applicant also does not explain when and how she
became aware of the order - all that is stated
is that she pursued an
application for rescission in November 2014, which also happens to be
the month in which her spouse's appeal
was dismissed.
[41]
What emerges from the respondents' supplementary answering affidavit
is that the respondents only learned about the change
in marital
regime and the terms of the ante-nuptial contract of the Haribhai's
after the default judgement was obtained on 12 August
2014. As a
consequence they instructed their attorneys to abandon the order in
relation to the four properties, the ownership of
which vested solely
in Dinesh's name. In their view the order of 12 August 2014 only
remains effective in relation to 21 Mimosa
Mews in which Dinesh and
Janine have undivided (50%) half shares.
[42]
More importantly what also emerges is that four of the five
properties have already been sold and the dispute only relates
to the
remaining property being 21 Mimosa Mews. These changed circumstances
were not brought to the attention of the Court by the
applicant. In
fact she persists in creating the impression that the four properties
are still unsold by remaining silent. The sale
of these properties
would be a pertinent factor to consider in the exercise of my
discretion.
[43]
I turn to consider the applicant's defence to the main matter. In her
supplementary affidavit she relies on
sections 82
and
64
and
21
(3) of
the
Insolvency Act (which
I refer to as
"the
Acf')
although the last mentioned is linked to the first ground namely the
lack of due and proper service. In addition she submits
that the
properties could not be sold by the respondents at this stage without
the authority of the Master which has not been obtained.
As the last
ground she alleges that Standard Bank which was the second respondent
in the default judgement could not seek to recover
a debt from her
because it has ceded its rights under the mortgage agreement to SB
Guarantee (Pty) Ltd. Standard Bank is precluded
from recovering debts
on behalf of SBG under section 78(1)(g) of the Bank Act 94 of 1990.
[44]
All of the grounds are opposed by the respondents.
[45]
In relation to the last mentioned ground, it is apparent ex facie the
documents attached as annexures GA7, GA8,GA9 and GA10
to the
respondents' supplementary answering affidavit that the mortgage
bonds in relation to the remaining property have not been
ceded by
Standard Bank and there is no basis for this defence.
[46]
Her reliance on section 21(3) only holds water if the nature of the
application was to execute against her portion of the jointly
owned
property. The application was to seek termination of the joint
ownership between her and Dinesh. It might be that eventually
the
only way she is able to retain the value of her portion of the joint
property is through the proceeds of a disposal thereof.
But this is a
matter she can discuss with and come to some arrangement with the
trustees, which she has already been requested
to do. Or she can
purchase Dinesh's share. Reliance on section 21(3) is not a defence
against the application for a termination
of the joint ownership of
the properties.
[47]
The applicant relies on s 82 to argue that the respondents could not
sell immovable property unless they have held the first
and second
meetings of creditors and that such meetings were not held. She
states that she knows that these meetings were not held
because if
they were held Dinesh as the insolvent would have received a notice.
Such a notice would have been sent to him in terms
of section 64 of
the Act. In reading section 64 together with section 82 she concludes
that the trustees cannot sell the properties
at this stage because
the consent of the Master and creditors has not been obtained.
[48]
While section 64 of the Act places an obligation on the insolvent to
attend the first and second meetings of creditors it does
not require
the trustees to provide him with notice thereof. It further requires
the insolvent to attend subsequent meetings when
required by written
notice thereof. The latter requirement of written notice to attend
subsequent meetings supports the conclusion
that there is no
obligation on the trustees to send a personal notice to the insolvent
in respect of the first and second meetings
of creditors. Section
81(1)(bis(a) requires the trustees to send notices to all the known
creditors in the estate but does not
include the insolvent.
[49]
Mr Da Silva submits, correctly in my view, that the Act does not
place an obligation on the trustees to send notices to the
insolvent
to attend the first and second meetings of creditors. The insolvent
is duty bound to ascertain these dates by inspection
of the
Government Gazette in which the notices of meetings are advertised.
The first meeting of creditors is convened by the Master
at which
trustees are appointed. There after the trustees convene further
meetings.
[50]
These meetings appear to have been held as evidenced by a copy of the
resolution of the second meeting of creditors dated 11
December 2013
(record 297 annexure GA5). At that meeting the trustees were
authorized to dispose of the immovable assets of the
insolvent estate
by public auction, private treaty or public tender. In relation to
the requirement of the Master's consent, one
of the orders sought by
the trustees was an extension of their powers which was granted.
[51]
Significantly the applicant does not put up a single defence as to
why the joint ownership ought not to be terminated. The
termination
application flows from the declared insolvency of her spouse. He was
unsuccessful in setting it aside on appeal. The
applicant has not put
up any evidence to suggest that that he is on his way to solvency and
that termination of the joint ownership
of the properties might
therefore be unnecessary. In fact the evidence seems to go the other
way. The applicant and her spouse,
joint owners of the remaining
property in question being 21 Mimosa Mews are in arrears on their
mortgage repayments and have failed
to make any payments on any of
the bond accounts with Standard Bank over that property since 1
February 2011. In other words even
if the order were to be rescinded
the applicant would not be able to prevent her 50% ownership from
being adversely affected by
the continued insolvency of her spouse.
[52]
In conclusion I find that the applicant does not have good prospects
of success in the main matter.
[53]
As a final factor to consider is the change in circumstances that was
brought about by the unexplained delay in enrolling this
matter
[54]
These events have been significant. Four of the properties have been
sold and already transferred to the buyers. The applicant,
as wife of
the insolvent Dinesh would have been aware of these sales as would
Dinesh. Through these protracted proceedings the
fact of the 12
August 2014 order has become known to the applicant and yet she
chooses to resist it 22 months later, without providing
an
explanation for this delay or bringing the court's attention to the
fact that there is only one remaining property, but also
persists in
seeking a rescission of the entire order.
[55]
Rescinding of the order in relation to all five properties would
result in prejudice not only to the trustees in their function
to
wind up the insolvent estate but also to the new owners of the sold
properties. The reason why there is a duty on the applicant
to bring
a rescission application without undue delay is precisely so as to
avoid these kinds of complexities arising out of changed
circumstances due to the passage of time.
[56]
In light of the above I do not consider the application to be brought
in good faith nor do I consider the applicant to have
a bona fide
defence. Having regard to this and to the fact that there is a
likelihood of prejudice to third parties and the respondents
were the
order be rescinded I make the following order –
56.1. The application for rescission
is dismissed
56.2. The applicant to pay the
respondent's costs occasioned by opposition to this application.
______________________
Y.
CARRIM
ACTING
JUDGE OF THE HIGH COURT OF SOUTH AFRICA
GAUTENG
DIVISION, PRETORIA
Heard
on:
07 September 2016
Delivered
on:
14 September 2016
For
the Applicant:
Mr Z. Omar
Instructed
by:
Zehir Omar Attorneys
For
the First Respondent:
Advocate L. W. de Beer
Instructed
by:
Vezi & De Beer Attorneys
[1]
See Harms
Civil
Procedure in the Superior Courts