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[2014] ZAFSHC 184
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Schoonwyk and Another v Standard Bank of South Africa (1292/2014) [2014] ZAFSHC 184 (9 October 2014)
IN THE HIGH
COURT OF SOUTH AFRICA
FREE STATE
DIVISION, BLOEMFONTEIN
Case
No: 1292/2014
In
the matter between:-
PHILLIP
ABRAHM SCHOONWYK
…............................................................................
1
st
Applicant
PHILANDA
MARTINA SCHOONWYK
….....................................................................
2
nd
Applicant
and
THE
STANDARD BANK OF SOUTH AFRICA
…............................................................
Respondent
JUDGMENT
BY:
TSATSI,
AJ
HEARD
ON:
7
AUGUST 2014
DELIVERED
ON:
9
OCTOBER 2014
INTRODUCTION
[1]
This is an opposed application by the first and second applicants
(“the applicants”), for the rescission of a judgment
granted on 14 May 2014 in favour of the respondent for payment in the
sum of R159 973, 19 and interest on the aforesaid amount
at the
rate of 9% per annum, calculated daily and compounded monthly in
arrears from the 4
th
day of March 2014 until date of final
payment.
[2]
The applicants asked the court to grant them the order in the
following terms:
2.1
That condonation be granted for the bringing of this application
after the prescribed time limit;
2.2
That the judgment as given by the Honourable court on 14 May 2014 in
favour of the respondent and against first and second applicants
for
payment in the sum of R159 973, 19 and interest on the aforesaid
amount at the rate of 9% per annum, calculated daily
and compounded
monthly, in arrears from the 4
th
day of March 2014 until date of final payment be rescinded;
2.3
That leave be granted to the first and second applicants to defend
the main action;
2.4
That the matter be referred back to the Magistrate’s court to
make a finding in terms of
section 86(11)
of the
National Credit Act
34 of 2005
;
2.5
Costs of the application; and
2.6
Further and/or alternate relief.
FACTS
[3]
The applicants purchased residential property, Erf 3539 Ashbury (Ext
6) district Bloemfontein, (“the property”).
A
mortgage agreement was entered into between Standard Bank of South
Africa Limited and the applicants, the total cost of which
was
R360 249,60. They have been paying for the mortgage since 1991.
In terms of the mortgage bond the property served
as security for the
loan. During March 2014 the applicants fell in arrears with
their monthly repayments. On March
2014 a summons was served on
the applicants. The respondent applied for default judgment in
terms of Rule 31(5) of the Uniform
Rules of Court on the basis that
the applicants failed to enter an appearance to defend on or before 9
April 2014. On 14
May 2014, the Registrar granted default
judgment against the applicants at the respondent’s instance
for payment of R159 973,
19. In addition interest on the
aforesaid amount of R159 973, 19 at the rate of 9.00% per annum
calculated daily and
compounded monthly in arrears from 4 March 2014
until date of payment.
[4]
The Registrar referred the following prayers to open court:
Leave to be granted in open court for an order declaring the
under
mentioned property, Erf 3539 Ashburn, Extension 6, district
Bloemfontein, Free State Province in extent 350 square metres
held by
deed of transfer no. T1065/1991 subject to the conditions therein
contained and further subject to a reversionary right
executable (ii)
authorizing the Registrar to issue a writ of execution against the
property in question (iii) costs as between
attorney and own client
to be taxed.
[5]
The respondent subsequently brought an application under case number
1292/2014 in this court for an order declaring the property,
subject
to the conditions therein contained and further subject to a
reversionary right executable. In addition the application
was
brought for an order authorizing the Registrar to issue a warrant of
execution in respect of the property and also for an order
of
attorney and own client costs against the applicants.
[6]
The application was set down for 19 June 2014 but postponed
sine
die
as per the agreement between the
parties.
[7]
Before the summons was issued against the applicants, the latter
applied for a debt review on 3 September 2013 with Zuné
Coetzer. Zune’ Coetzer is a debt counsellor, duly
registered with the National Credit Regulator in terms of
section 44
of the
National Credit Act, Act
34 of 2005 (“the Act”).
On 4 September 2013 notice of the applicants’ application to be
placed under debt review
was sent to all of the applicants’
credit providers including the respondent. On 27 November 2013 an
application was issued
in the Magistrate’s court of the
district Bloemfontein, under case number 28553/2013 where an order
was sought to declare
the applicants over-indebted as contemplated in
section 79
of the Act. The said order was to re-arrange the
applicants’ debts in accordance with a debt repayment scheme
proposed
as drafted by the debt counsellor as contemplated in
Section
86(7)(c)(11)
of the Act. The respondent gave its intention to
oppose the application for debt review. The matter was
postponed several
times, subsequently
sine die
by agreement
between the parties in this court.
ISSUES
[8]
The main issue in this application is whether or not the applicants’
default is a wilful one and whether the applicants
have a
bona
fide
defence.
SUBMISSIONS
[9]
Counsel for the applicants argued that condonation be granted to the
applicants for bringing this application after the prescribed
time.
It was submitted on behalf of the applicants that they were not in
wilful default. The reasons given were that when
the summons
was served on the applicants, the latter were under the false
impression that the summons formed part of the review
application.
This was because the applicants, were informed by the debt-counsellor
that the debt review application would
be heard in the Magistrate
court on 28 March 2014, which was two days after the summons was
served. Counsel for the applicants
submitted that the
applicants entrusted their debt review application in the hands of
the debt counsellor and their legal representatives.
[10]
The only time when the applicants realised that something was amiss,
was when the notice of the default judgment application
brought by
the respondent under case number 1292/2014 was served on them.
Subsequently the respondent obtained a default judgment
against the
applicants on 15 May 2014. The property in question is a primary
residence for the applicants and their minor child.
The minor
child was born on 26 January 2001. The applicants did not have
any alternative accommodation available.
[11]
Even though this was not an application before me, counsel for the
applicants argued that Section 26 of the Constitution of
1996
provides that everyone has the “right to have access to
adequate housing”. Subsection (3) provides that: “no
one
may be evicted from their home … without an order of court
made after considering all the relevant circumstances.”
It was
argued on behalf of the applicants that the respondent cancelled the
debt review. Further submission by the applicants’
counsel was that the applicants never received the termination
notices despite the fact that the respondent alleged that
they sent
same to the applicants by registered mail.
[12]
Counsel for the respondent made the following submissions: that the
applicants were in wilful default, therefore there was
no
bona
fide
defence. The applicants should have shown good cause
that they had a reasonable explanation for the default. Wilful
default
was normally fatal but gross negligence may be condoned.
Wilful in this context connoted knowledge of the action and its legal
consequences and a conscious decision, freely taken to refrain from
entering an appearance to defend, irrespective of the motivation.
The applicants should have shown that they had a bona
fide
defence against the plaintiff’s claim. Counsel for the
respondent referred me to this authority. (Harms: “Civil
Procedure
in the Superior Court”, B-2014:
Grant v
Plumbers (Pty) Ltd
1949 (2) SA 476
(O)).
[13]
A further submission by the respondent’s counsel was that
summons was issued through the Registrar of the High
Court on 18
March 2014 and the summons was served personally on the first
applicant on 26 March 2014. The summons referred
the applicants
to the fact that the debt review process had been terminated by the
respondent in terms of
Section 86
(10) of the
National Credit Act,
Act
34 of 2005. Attached to the summons were notices of
termination sent to the applicants, the debt counsellor and the
National
Credit Regulator. Counsel for the respondent made the court
aware of the “Track and trace” registered slip from the
Post Office. The dates when and where the notices were delivered
appeared on the said slip. Counsel for the respondent further
submitted that the respondent was entitled to cancel the debt review
because the 60 business days elapsed since the applicants
applied for
the debt review. Based on the “track and trace”
registered slip from the post office it was evident that
the
applicants received the termination notices.
[14]
Even though this was not an application before me, the respondent’s
Counsel argued that Section 26(3) of the Constitution
did not apply
in this case. The Supreme Court of Appeal found that the effect
of the registration of a mortgage bond was
that the borrower, by his
or her own volition compromised his or her right of ownership until
the debt was repaid. The right
to continued ownership and
occupation depended on repayment. Counsel for the respondent referred
me to this authority. (
Standard Bank
of South Africa Ltd v Saunderson and Others
2006 (2) SA 264
(SCA)).
THE
LAW
[15]
Rule 31(2) (b) of the Uniform Rules of High Court provides that “
A
defendant may within 20 days after he has knowledge of such judgment
apply to court upon notice to the plaintiff to set aside
the default
judgment on such terms such judgment and the court may, upon good
cause shown, set aside the default judgment on such
terms as to it
seems meet.”
[16]
The requirements for the rescission of judgment are similar to the
ones of removal of bar, in that the applicant must give:
(1)
a satisfactory explanation for the delay;
(2)
the application must be
bona fide
and not simply to delay;
(3)
a
bona fide
defence must be established which is not patently unfounded and is
based on facts, if proved, constitute a valid defence.
Nathan
(Pty) Ltd v All Metals (Pty) Ltd
1961 (1) SA 297
at 300.
[17]
In
Chetty v Law Society, Transvaal
1985 (2) SA 756
AD Miller JA, on behalf of unanimous court, dealt
with the term “sufficient cause” or “good cause”
when
used in the context of an application for rescission of a
judgment. At 765D-E he said:
“
For
the obvious reasons a party showing no prospect of success on the
merits will fail in an application for rescission of a default
judgment against him, no matter how reasonable and convincing the
explanation of his default. An ordered judicial process
would
be negated if, on the other hand, a party who could offer no
explanations of his default other than his disclaims of rules
was
nevertheless permitted to have a judgment against him rescinded on
the grounds that he had reasonable prospects of success
on merits.”
[18]
The
onus
was upon the applicants for rescission to establish
that “good cause” existed. Good cause cannot be
satisfied
unless there was evidence that a substantial defence
existed and that the applicants had a
bona fide
desire to
raise the defence if the application was granted (
Brangus
Ranching (Pty) Ltd v Plaaskem (Pty) Ltd
2011 (3) SA 477
(KZN).
[19]
Section 86(11) provides that: “If a credit provider who has
given notice to terminate a review as contemplated in subsection
(10)
proceeds to enforce the agreement in terms of part C of Chapter 6,
the Magistrate Court hearing the matter may order that
the debt
review resume on any conditions the court considers to be just in the
circumstances.”
APPLICATION
OF THE LAW
[20]
The applicants gave an explanation for noncompliance with the uniform
rules of Court. Counsel for the respondent did not oppose
condonation. I am inclined to grant condonation as I am of the view
that the respondent will not suffer any prejudice.
[21]
I am of the view that the explanation that the applicants gave as to
why they are in default was not satisfactory. Such
explanation
was not adequate and complete. It is highly improbable that the debt
counsellor, the legal representatives of the applicants
and the
applicants themselves would not have known the significance of
summons served on the applicants. It also highly improbable
that none
of the parties would not have known that such summons initiated a
legal process against the applicants that had a potential
of getting
them evicted from their home. I am inclined to think that it was
because of an error of judgement on the part of the
applicants’
failure to attend to the summons at the material time. I am mindful
of the fact that although the applicants
did not have legal
background, they are not illiterate people. One of the applicants is
a lecturer at one of the academic institutions.
I am not
convinced that the applicants had reasonable prospect of success on
the merits, therefore leave to defend will not
take the matter any
further. I am therefore not inclined to grant leave to defend.
[22]
The respondent complied with the practice note issued by the Supreme
Court of Appeal in
Standard Bank of
SA Ltd v Saunderson and Others
2006 (2) SA 264
(SCA) at 277D-E which
provides as follows: “
the
Defendants’ attention is drawn to Section 26 (1) of the
Constitution of the Republic of South Africa which accords everyone
the right to have access to adequate housing. Should the Defendants
claim that the order to execution will infringe that right
it is
incumbent on the Defendants to place information supporting that
claim before the Court”.
The
respondent inserted the preceding clause in the summons served on the
applicants. I am not inclined to believe that
the debt
counsellor and legal representatives of the applicants ignored a
legal action instituted by the respondent against the
applicants.
The problem did not end there, as the applicants also alleged that
they did not receive the termination notices.
This was despite the
fact that the respondent registered the termination notices. The
registered post slip and “parcel tracking
results” were
attached to the court papers. There was no allegation that the
respondent sent the termination notices to the
wrong address. I fail
to understand why the applicants did not receive the termination
notices if same were sent to the correct
address and registered.
[23]
The registered termination notices were sent to the applicants on 21
February 2014. The summons was served on the applicants
on 26 March
2014. Issue and service of summons occurred after the expiry of the
prescribed ten day notice in terms of section 86
(10) and
section 130
(1)(a) of the
National Credit Act. The
purpose of the minimum
ten day period that must elapse after the delivery of the notice in
terms of
section 86
(10) and the commencement of enforcement
proceedings appears to enable the consumer to urgently bring an
application to the
Magistrate in terms of
section 86
(7) ( c) or 86
(8) (b) if that has not already been done. If such an application is
already pending to give the consumer an opportunity
to approach
the magistrate for an order in terms of
section 86
(11) of the
National Credit Act
) that the debt review should be resumed
(
Changing Tides 17 (Pty) Ltd v
Erasmus
2010
JOL 25358
WLC). In this matter the respondent complied with the
requirements of
section 129
(1) and
130
(1) of the Act. I am
therefore not required to deal with the application for default
judgment in terms of
section 130
(4) (b) of the Act. I am satisfied
that I did not have to adjourn the matter to set out steps that the
credit provider must follow
before the matter could be resumed. I am
of the view that by failing to attend to the termination notices, the
applicants missed
the ten day period opportunity to urgently bring
the matter to the magistrate in terms of section 86 of the Act that
the debt review
be resumed. In light of the preceding I am of
the view it will not be necessary to revert the matter to the
magistrate to
enable the magistrate to make a finding in terms of
section 86
(11).
[24]
The applicants’ purported reliance on
Section 3(g)
, (h), (i);
86
(1) and
11
of the Act, in my view was ill conceived. The said
sections were not relevant in determining whether or not the
applicants
were in wilful default and whether or not they had a
bona
fide
defence.
[25]
As regards section 26 of the Constitution, I am accordingly in
agreement with counsel for the respondent that “the effect
of
the registration of a mortgage bond was that the borrower, by his or
her volition compromised his/her rights of ownership until
the debt
was repaid. The right to continued ownership, and hence
occupation, depended on repayment.” The mere fact
that the
property was the home of the applicants did not by itself justify an
inference that section 26 rights are implicated.
I echo the words of
Rogers AJ in
Standard Bank of South
Africa v Hunkydony Investments 1B8 (Pty) Ltd and Others
(NO.2)
2010 (1) SA 634
(WCC) at para
30, that “
section 26 of the
Constitution enshrines the right of access to “adequate”
housing, not a right to continue living in
a house of one’s
choice even though one cannot afford it.”
[26]
Summons was served on the applicants personally nothing was done by
the applicants. The respondent sent registered termination
notices,
still the applicants allege that they did not receive the said
notices. The applicants only acted when a default judgment
was served
on them. I am of the view that the applicants did not put up
sufficient facts which convinced me that, a court
having been aware
of all the facts at the time of the granting of the default judgment,
would have ordered otherwise.
[27]
In light of the preceding I am not convinced that the explanation
given by the applicants for their default was satisfactory
and
bona
fide.
Neither am I convinced that
the applicants’ default was
bona
fide.
[28]
In the result I make the following order:
28.1
Condonation for the late filing of the applicants’ papers is
granted.
28.2
Application for the rescission of judgment in favour of the
respondent and against the applicants for payment in the sum of
R159,
973.19 and interest on the aforesaid amount at the rate of 9% per
annum, calculated daily and compounded monthly, in arrears
from 4
March until date of final payment, is dismissed with costs.
________________
E.
K. TSATSI, AJ
On
behalf of the applicants: Adv. R van der Merwe
Instructed
by:
Neuhoff
Attorneys
BLOEMFONTEIN
On
behalf of the respondent:
Adv.
P.
Zietsman SC
Instructed
by:
Matsepes
Inc.
BLOEMFONTEIN