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[2015] ZAGPPHC 704
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Berg and Others v Absa Bank Limited (20155/2006/; 17103/2008) [2015] ZAGPPHC 704 (7 August 2015)
IN THE HIGH COURT
OF SOUTH AFRICA
(GAUTENG DIVISION,
PRETORIA)
Date: 7/8/15
Case No: 20155/2006 and
Case No: 17103/2008
Not Reportable
Not of interest to other
judges
In
the matter between:
J
J
P BERG &
OTHERS
Applicants
and
ABSA
BANK
LIMITED
Respondent
REASONS
D
S
FOURIE, J:
[1]
On 17 November 2014 I granted an order in both matters (case number
20155/2006 in which J J P Berg was the applicant and in
case number
17103/2008 in which C J H Nel and M D Nel were the applicants) in
terms whereof:
•
the
applicants' failure to bring their application within the time limits
prescribed by the Rules was condoned;
•
the
default judgment granted against the applicant on 14 August 2006 in
case number 20155/2006 and the default judgment granted
against the
applicants on 11 August 2008 in case number 17103/2008 were rescinded
and set aside;
•
the
applicants were granted ten days to enter an appearance to defend;
and
•
costs have been reserved.
[2]
On 9 December 2014 the respondent requested written reasons in both
matters for the orders granted on 17 November 2014. For
some unknown
reason the court files (and both these notices) were never brought to
my attention. On 30 April 2015 a similar notice
was filed again. At
that stage I was already doing criminal trials at Palm Ridge for
almost the entire term. However, on the same
date the respondent's
attorney was informed that I would only be able to attend to this
matter after my return to my chambers in
Pretoria. I have now been
able to do so and these are my reasons for the orders granted.
BACKGROUND:
[3]
During 2003 the respondent and N4 Crossing Hardware (Pty) Ltd (the
principal debtor) entered into a written loan agreement in
terms
whereof the respondent advanced the amount of R1,000,000.00 to the
principal debtor. The applicants in both applications
bound
themselves as sureties and co-principal debtors, jointly and
severally, with the principal debtor in favour of the respondent
for
the repayment on demand of any sum of money which the principal
debtor may owe to the respondent.
[4]
During 2005 the principal debtor was finally liquidated. According to
the applicants the respondent's claim against the principal
debtor at
that stage amounted to R650,518.95. During June 2006 summons was
issued against the applicant Berg. He failed to enter
an appearance
to defend and on 14 August 2006 judgment by default was granted
against him for payment in the amount of R803,880.07
together with
interest thereon at the rate of 11,5% per annum from 10 May 2006.
[5]
During April 2008 another summons was issued against both the Nel
applicants. They also failed to enter an appearance to defend
and on
11 August 2008 judgment by default was granted against them for
payment in the amount of R1,024,546.36 together with interest
thereon
at the rate of 15,5% per annum from 2 February 2008.
CASE
FOR THE APPLICANTS:
[6]
According to the applicant in case number 20155/2006 (Berg) he only
became aware of the judgment against him during January
2010 when he
conducted a credit bureau search. Immediately thereafter he arranged
for a consultation with an attorney who took
the matter up with the
respondent. As no progress had been made, he decided to obtain the
assistance of another attorney. After
further discussions and a
settlement proposal, the respondent refused to settle the matter and
then proceeded to execute on the
default judgment. The reason why he
failed to file a notice of intention to defend is because the summons
was served at his chosen
domicilium
citandi
et
executandi
during 2005. As he had by then already
relocated from this address, he never received the summons.
[7]
As far as his defence is concerned, he gave the following
explanation: During 2003 the respondent and the principal debtor
entered into a written loan agreement in terms whereof the respondent
advanced the amount of R1,000,000.00 to the principal debtor.
The
loan was advanced on two conditions, being an amount equal to 80% of
the outstanding balance would be secured by a policy of
Kula
Insurance and the remaining 20% exposure would be secured by him and
the applicants in case number 17103/ 2008. When the principal
debtor
was liquidated during 2005, the respondent's claim against it
amounted to R650,518.95.
[8]
During June 2006 he surrendered two Sanlam insurance policies for the
total value of R58,529.50 to the respondent. According
to him the
respondent also received dividends from the insolvent estate of the
principal debtor in the total amount of R231,132.34.
In addition
thereto the Kula Insurance Company also paid out an amount of
R471,344.58 to the respondent, but this amount was only
allocated to
the account of the principal debtor on 19 June 2012. It was
therefore submitted, having regard to all these
payments, that the
principal debtor's account should have shown a credit balance or,
alternatively,
a much reduced debit balance as opposed
to the amount for which default judgment was granted.
[9]
According to the explanation given by the applicants in case number
17103/2008 (Nel & Nel) they did not enter an appearance
to defend
because they were under the impression that their estate had already
been sequestrated. They referred in this regard
to a letter by
attorneys Stols Mashiloane Inc dated 23 March 2007 in terms
whereof it is confirmed that
"voorlopige sekwestrasiebevele
is
toegestaan
teen mnr
en
mev
Nel
en op 29 Maart
2006
is
die
finale
bevel
bekragtig".
It was only later discovered that
the application for sequestration was struck from the roll on the
return date resulting in the
provisional sequestration order having
been discharged. Had they been aware of these circumstances, they
would have entered an
appearance to defend.
[10]
As far as their defence is concerned, they rely on the
same allegations which have been explained by the
applicant
(Berg) in case number 20155/2006. They also maintained that if all
the payments mentioned by the other applicant
had been taken
into account, the account of the principal debtor should not have
shown a debit baiance or, in the
alternative,
it should
have shown a much reduced debit balance as opposed to the amount for
which default judgment was granted.
CASE
FOR THE
RESPONDENT:
[11]
The respondent contended that the applicants failed to make out a
proper case for condonation of the late filing of their application
and they also failed to provide a proper explanation for their
failure to enter an appearance to defend. It was also submitted
that
the applicants do not have a
bona
fide
defence
against the respondent's claim and therefore both applications should
be dismissed.
[12]
It was pointed out in this regard that the principal debtor had
several facilities with the respondent and that the claim against
the
applicants as sureties related only to a "term loan". The
respondent did not lodge a claim in the insolvent estate
of the
principal debtor relating to the term loan, as there was a risk of a
contribution. However, certain payments had been received
from the
insolvent estate of the principal debtor, but these payments related
to other facilities which, according to the respondent,
are not
relevant to the present claim.
[13]
The two Sanlam policies which had been ceded to the respondent in the
total amount of R58,529.50 were paid into the principal
debtor's
cheque account during June 2006 and later, also during June 2006,
transferred to the term loan account. The amount of
R471,344.58 (debt
insurance) was paid out by Kula Insurance on 19 June 2012 when
the account of the principal debtor was
also credited with that
amount. It was therefore contended, having regard to all these
payments and the accumulation of interest,
that the applicants have
no
bona fide
defence and that their application for rescission
should be dismissed.
DISCUSSION:
[14]
Rule 31(2)(b) provides that a defendant may within 20 days after he
or she has knowledge of a default judgment apply to Court
to 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. Rule 27
makes provision for extension of time and condonation. Subrule (3)
provides that the Court may, on good cause shown,
condone any
non-compliance with these Rules.
[15]
The requirement of "good cause shown" referred to in Rule
27(3) gives the Court a wide discretion
(Smith N.O. v
Brummer
N
.O.
1954 (3) SA 352
(0) at
358A). Our Courts have refrained from attempting to formulate a
definition of what constitutes "good cause",
because to do
so would hamper unnecessarily the exercise of a discretion
(Silber
v Ozen
Wholesalers
(Pty) Ltd
1954 (2)
SA 345
(A) at 353A). However, I accept that it
should be exercised in a judicial manner.
[16]
The requirements of "good
cause shown"
referred to
in Rule 31(2)(b) have been stated to be as follows:
•
the
applicant must give a reasonable explanation of his default. If it
appears that his default was wilful or that it was due to
gross
negligence the Court should not come to his assistance;
•
the
application must be
bona
fide
and not
made with the intention of merely delaying the plaintiff's claim;
•
the applicant must show
that he has a
bona
fide
defence to the
plaintiff's claim. It is sufficient if he makes out a
prima facie
defence in the sense of setting out averments which, if
established at the trial, would entitle him to the relief
asked
for. He need not deal fully with the merits of the case and
produce evidence that the probabilities are in his favour
(Grant
v
Plumbers
(Pty)
Ltd
1949 (2) SA 470
(0) at 476-477 and also
HDS
Construction
(Pty)
ltd
v
Wait
1979 (2) SA 298
(E) at 300F - 301C).
[17]
Before a person can be said to be in wilful default, it must be
established that he had knowledge about the action, he deliberately
refrained from entering an appearance and that he displayed a certain
mental attitude towards the consequences of his default (Erasmus,
Superior
Court
Practice,
Revision
Service 45, 81-202).
[18]
From the explanation given by
the applicant in case
number 20155/2006 (Berg) it is clear that he failed to file a notice
of intention to defend because the summons was served at his
chosen
domicilium
citandi et
executandi.
By that time he had already departed from this address. After he
had become aware of the judgment against him during January 201O
he
instructed an attorney to take up the matter with the respondent. He
thereafter instructed another attorney and after further
discussions
and a settlement proposal the respondent refused to settle the
matter and proceeded to execute on
the default judgment.
[19]
Notwithstanding a long period of delay, I was unable to find that his
default was wilful or that he acted with the intention
of merely
delaying the plaintiff's claim. He instructed attorneys on two
occasions to act on his behalf in an attempt to come to
a settlement.
Having regard also to his defence (to which I shall refer later), I
was and still am of the view that he gave a reasonable
explanation
for the long delay as well as for his default. In this regard I also
took into account the principal that a good defence
may compensate
for a poor explanation.
[20]
The same applies to the applicants in case number 17103/2008
(Nel & Nel). According to them they failed to
enter an appearance
to defend because they were under the impression that their estate
had already been sequestrated. This has
been confirmed by a letter of
attorneys Stols Mashiloane Inc. It 'vvas only later discovered
that no such order had been granted.
I have no reason to
disbelieve them when they indicated that, had they been aware
of these circumstances, they would
have entered an appearance to
defend. This is also, in my view, a reasonable explanation for the
delay as well as for their default.
[21]
As far as the defence is concerned, I took into
account the following:
•
the
applicants pointed out that the allegations with regard to the loan
agreement differ materially. For instance, in case number
20155/2006
(par 11.2 of the particulars of claim) it has been alleged that
interest was calculated
"daily
and compounded
monthly
at
11.50% per
annum
from
1Qth May 2006",
whereas in
case number 17103/2008 it has been alleged (par 3.3 of the
particulars of claim) that interest was calculated
"at
the rate of
15.50% per
annum
as from
2
February 2008
to
date
of
payment,
the
said
interest to
be calculated
and
capitalised
monthly";
•
the
applicants also pointed out that the respondent had failed to
provide a statement indicating the allocation of the dividends.
According to the applicants the other facilities granted to the
principal debtor were settled by an entity known as Super
Group upon
taking over the business of the principal debtor.
Therefore, according to them, the dividends in the
total
amount of R231,132,34 should not have
been allocated to these other facilities, but to
the term loan
account;
•
according
to the applicants there was an unreasonable delay by the respondent
in calling up the debt insurance payment from Kula
Insurance. The
principal debtor was finally liquidated during 2005 and judgment by
default was entered against Berg during August
2006. The amount of
R471,344.58 was only credited to the principal debtor's account
during June 2012.
[22]
In the result it was contended by the applicants that the amount
owing to the respondent, if any, would still be substantially
less
than what judgment was obtained for. The fact that the debt insurance
of R471,344.58 was only credited at such a late stage
(after several
years) and no dividends were taken into account, might be the reason
why such a vast amount of interest has accumulated
in the meantime
for which the applicants should not be held responsible. On the other
hand, there may also be merit in the answers
given by the respondent,
but that is for the trial court to decide. make no final ruling in
this regard.
[23]
Having regard to the above I was (and still am) of the view that the
applicants demonstrated a
bona fide
defence with regard to the
quantum of the respondent's claim. I also took into account that an
applicant for rescission must show
the existence of a substantial
defence which does not mean that he or she must also show a
probability of success at this stage.
A
prima facie
case is
sufficient in the sense that there should be an issue which is fit
for trial
(PLJ
van Rensburg &
Vennote
v Den Dulk
1971 (1) SA 112
(W)). In my view there is, in both
these matters, an issue with regard to the quantum of the
respondent's claim which is fit for
trial. For these reasons I have
exercised my discretion in favour of the applicants.
D S FOURIE
JUDGE OF THE HIGH COURT
PRETORIA
Date:
7 August 2015.