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[2014] ZANCHC 2
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Mocwane and Another v Standard Bank of South Africa Limited and Another (1993/2011) [2014] ZANCHC 2 (7 February 2014)
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Certain
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IN THE
HIGH COURT OF SOUTH AFRICA
[NORTHERN
CAPE HIGH COURT, KIMBERLEY]
JUDGMENT
CASE NUMBER: 1993/2011
KAGISHO
JOSEPH
MOCWANE
.....................................................................
FIRST
APPLICANT
PATIENCE
MARGARET
MOCWANE
........................................................
SECOND
APPLICANT
AND
STANDARD BANK
OF SOUTH AFRICA LIMITED
................................
FIRST RESPONDENT
ALETTA
ELIZABETH
BOTHA
..............................................................
SECOND
RESPONDENT
Date of
hearing: 08 November 2013
Date of
judgment: 07 February 2014
PHATSHOANE
J.
1.
Mr Kagisho Joseph Mocwane and Ms Patience
Margaret Mocwane, the first and second applicants, brought an
application for condonation
of the late filing of their application
for rescission of the two judgments issued out of this Court; for an
order to rescind the
default judgment dated 07 March 2012 entered by
the Registrar of this Court; for rescission of an order of this Court
dated 08
June 2012 declaring a property known as Erf 1[…],
Kimberley, executable. Ancillary relief is also sought.
2.
The applicants, aged 60 and 57 years are
married to each other. On 12 November 2007 they entered into a home
loan agreement with
Standard Bank of South Africa Limited, the first
respondent, in terms of which the Bank advanced to them a loan in the
amount of
R800 000.00. On 20 December 2007 they caused to be
registered a first continuing covering mortgage bond in favour of the
Bank
over their immovable property, Erf 1[…], Kimberley, as
security for the loan.
3.
The Bank attached to its papers annexure
“DAH1”, a copy of a printout of the applicants’
bond account, reflecting
the amounts paid with effect from January
2008 to 10 March 2013. The applicants met their bond repayments
obligations from January
2008 in the amount of R7 283.42 until
November 2008 when the debit order was reversed. Thereafter, no
payments were made on
the bond account until August 2010, almost a
year and nine months later. The applicants were therefore in default
in terms of Part
B clause 14 of the terms and conditions of home loan
agreement which provides in part:
“
14.1
Default in terms of this agreement will occur if:
14.1.1 You fail to make
repayment, in full, on or before the payment date, of any amount
owing by you”
4.
The applicants intimate that during March
2010, because of financial constraints, they applied for debt review
in terms of s 86
of the National Credit Act, 34 of 2005, (the NCA) at
Credit Matters Debt Counsellors. By way of a letter dated 17 March
2010 the
Bank was notified of this application. The repayments on the
bond account resumed in August 2010 on a restructured basis in terms
of the debt review process and continued for a period of 8 months.
They ceased on 29 April 2011. Since then no payments were received
from the applicants. There is a dearth of information from them why
they failed to effect payment. They also did not produce any
proof of
payment to controvert the Bank’s allegation and essentially
confine themselves to bare denials.
5.
On 25 August 2010 the Bank terminated the
debt review in terms of s 86(10) of the NCA. It contended that it did
so properly because
the applicants were in default under the credit
agreement which was being reviewed. The similarly worded Notices of
termination
read:
“
With
reference to the above we confirm that our client was notified by
your debt counsellor of your application for debt review
in terms of
the provisions of the National Credit Act 34 of 2005 (the Act).
You are in default with your
obligations in terms of the abovementioned credit agreement and since
more that 60(sixty) business
days have lapsed since you applied for
debt review, we hereby give you notice in terms of section 86(10) of
the Act, terminating
the debt review with immediate effect.
Should you wish to raise a
dispute with our client with regard to this termination, kindly
contact our client on [……]
not later than 10 business
days from the date of this letter, failing which our client will
proceed with legal action against you
for the recovery of your
indebtedness towards our client.”
6.
The aforesaid Notices of termination of the
debt review were sent by prepaid registered post to: 7 H[…]
Street R[…],
Kimberley, the applicants’ chosen
domicilium as reflected in the home loan agreement and the mortgage
bond. They have consented
in terms of the home loan agreement to this
method of service.
7.
During December 2011 the Bank issued
summons against the applicants for the payment of an amount of
R885 606.93; payment of
interest at the rate of 7.45% per annum,
calculated daily and compounded monthly in arrears from 15 November
2011 until date of
payment; an order declaring the property
executable; and costs on an attorney and client scale.
8.
The summons was served by affixing same to
the outer principal door of the applicants’ chosen domicilium
address on 14 December
2011. On 07 March 2012 Default Judgment was
entered against the applicants by Registrar for the payment of the
amount claimed in
the summons together with interest and costs. The
prayer to declare the property executable was referred to open Court.
The Notice
of Set Down for the latter proceedings was served on one
Mr Tshepo Mocwane, who the applicants state they do not know. They
claim
not to have received the summons and the Notice of Set Down. On
08 June 2012 the Bank obtained an order declaring their property
executable in the unopposed motion Court. Long after the judgments
were obtained against them, around September 2012 the applicants
state that they completed a fresh application for debt review.
9.
It is common cause that the applicants
became aware of the judgments when the writ of execution was served
on them by the Sheriff
on 03 July 2012. The applicants say that
during July 2012 they approached Oertel Attorneys for assistance.
Their attorney advised
them that they did not have prospects of
success in having the judgments rescinded because the Bank had
terminated the debt review
in terms of s 86(10) of the NCA. They
intimated that they were not satisfied with the advice because they
were not aware of the
termination of the debt review and cannot
afford to lose their primary residence. They nevertheless,
reluctantly, accepted the
advice and did nothing.
10.
Seven months later, the applicants received
a notice which informed them that the property was to be sold by
public auction on 28
February 2013. They intimate that they did not
bring an urgent application to stay the sale for fear of the risk of
an uncertain
outcome. The property was sold to Ms Alletta Elizabeth
Botha, the second respondent, at a public auction. I was informed by
counsel,
from the bar, that both parties agreed that the registration
of the transfer of the property into Ms Botha’s name was to be
withheld pending the determination of this application. Ms Botha
abides the decision of the Court.
11.
The applicants further state that they
contacted their attorney again and instructed her, notwithstanding to
her previous advice,
to apply for the rescission of the judgments.
Those instructions culminated in the launching of the present
application on 18 March
2013, about eight months after they became
aware of the judgments.
12.
The Bank resisted the application on the
basis that the applicants have not shown good cause and that they are
in wilful default.
It contended that, with full knowledge of the
judgments against them, they waited eight months before they brought
the application.
In any event, it was argued, the applicants have no
bona fide
defence
to the Bank’s claim.
13.
In terms of Rule 31(2)(b) of the Uniform
Rules a defendant may within 20 days after he or she has knowledge of
a judgment by default
apply to Court upon notice to the plaintiff to
set aside such judgment and the Court may, upon good cause shown, set
aside the
judgment on such terms as to it seems meet. On the
applicants’ own version their application for rescission is 8
months late.
They had accepted, albeit reluctantly as they put it,
that they had no prospect of success to bring the application for
rescission
of the judgments. In their replying affidavit they tried
to paint a picture that they had been waiting for some documents from
the Bank such as bank statements and were therefore not in a position
to file the application within 20 days.
14.
In
Colyn v
Tiger Food Industries Ltd t/a Meadow Feed Mills (Cape)
2003 (6) SA 1
(SCA) at 9 para 11 the Court made the following
pronouncement:
“
[11]….The
authorities emphasise that it is unwise to give a precise meaning to
the term 'good cause'. As Smalberger J put
it in
HDS
Construction (Pty) Ltd v Wait
[
1979
(2) SA 298
(E)]:
'When dealing
with words such as ''good cause'' and ''sufficient cause'' in other
Rules and enactments the Appellate Division has
refrained from
attempting an exhaustive definition of their meaning in order not to
abridge or fetter in any way the wide discretion
implied by these
words (
Cairns'
Executors v Gaarn
1912 AD 181
at 186;
Silber
v Ozen Wholesalers (Pty) Ltd
1954
(2) SA 345
(A) at 352 - 3). The Court's discretion must be exercised
after a proper consideration of all the relevant circumstances.'
With that as
the underlying approach the Courts generally expect an applicant to
show good cause (a) by giving a reasonable explanation
of his
default; (b) by showing that his application is made bona fide; and
(c) by showing that he has a bona fide defence to the
plaintiff's
claim which
prima
facie
has some prospect of success (
Grant
v Plumbers (Pty) Ltd
[
1949 (2) SA 470
(O)],
HDS
Construction (Pty) Ltd v Wait
supra,
Chetty
v Law Society, Transvaal
[
1985
(2) SA 756
(A)]).”
15.
The eight months delay in bringing the
application is quite inordinate. I am also of the view that the
explanation the applicants
proffered for the delay is manifestly
flimsy and unreasonable. I should mention at this juncture that their
main defence is that
they did not receive the Notices of termination
of the debt review. It strikes me as very odd that they did not file
the application
for rescission when the judgments came to their
attention. It was certainly peculiarly within their knowledge that
they did not
receive the Notices of termination of the debt review.
In their own words, they were shocked and surprised when they
received the
writ of execution because the Bank was barred from
instituting proceedings against them.
16.
I now turn to the question whether the
application is made bona fide or whether the applicants have a bona
fide defence to the Bank’s
claim which
prima
facie
has some prospects of success.
The first issue arising for consideration is whether the Bank
correctly terminated the debt review
process or was entitled to
terminate it in view of the fact that it had already been notified by
the debt counsellor that the applicants
had applied for a debt
review. The second issue primarily hinges on whether there was proper
delivery of the Notice of termination
of the debt review process.
17.
On the first issue the applicants argued
that they were not in default with their monthly repayments
obligations in terms of the
credit agreement when they applied for
debt review and therefore the Bank was barred from terminating the
debt review and initiating
litigation against them. The applicants’
bare denial that they were not in arrears is not supported by any
evidence. From
“DH1” not only were they in default with
their contractual monthly payments but were also in default after
their debt
was ostensibly rearranged.
18.
Section 86 of the NCA provides in part:
“
86
Application for debt review
(1)
A
consumer may apply to a debt counsellor in the prescribed manner and
form to have the consumer declared over-indebted.
(2)
An
application in terms of this section may not be made in respect of,
and does not apply to, a particular credit agreement if,
at the time
of that application, the credit provider under that credit agreement
has proceeded to take the steps contemplated in
section 129 to
enforce that agreement.
(3) A debt counsellor-
(a) may require the consumer to
pay an application fee, not exceeding the prescribed amount, before
accepting an application in
terms of subsection (1); and
(b) may not require or accept a
fee from a credit provider in respect of an application in terms of
this section.
(4) On receipt of an
application in terms of subsection (1), a debt counsellor must-
(a) provide
the consumer with proof of receipt of the application;
(b) notify,
in the prescribed manner and form-
(i) all
credit providers that are listed in the application; and
(ii)
every registered credit bureau.
(5) A consumer who applies to a
debt counsellor, and each credit provider contemplated in subsection
(4) (b), must-
(a) comply with any reasonable
requests by the debt counsellor to facilitate the evaluation of the
consumer's state of indebtedness
and the prospects for responsible
debt re-arrangement; and
(b) participate in good faith in
the review and in any negotiations designed to result in responsible
debt re-arrangement.
(6) A debt counsellor who has
accepted an application in terms of this section must determine, in
the prescribed manner and within
the prescribed time-
(a) whether
the consumer appears to be over-indebted; and
(b) if the
consumer seeks a declaration of reckless credit, whether any of the
consumer's credit agreements appear to be reckless.
“
(7)
If, as a result of an assessment conducted in terms of subsection
(6), a debt counsellor reasonably concludes that-
(c)
the consumer is over-indebted, the debt counsellor may issue a
proposal recommending that the Magistrate's Court make either
or both
of the following orders-
(i)
that one or more of the consumer's credit agreements be declared to
be reckless credit, if the debt counsellor has concluded
that those
agreements appear to be reckless; and
(ii) that
one or more of the consumer's obligations be re-arranged by-
(aa) extending the period of the
agreement and reducing the amount of each payment due accordingly;
(bb) postponing during a
specified period the dates on which payments are due under the
agreement;
(cc) extending the period of the
agreement and postponing during a specified period the dates on which
payments are due under the
agreement; or
(dd) recalculating the
consumer's obligations because of contraventions of Part A or B of
Chapter 5, or Part A of Chapter 6.
(8) If a debt counsellor makes
a recommendation in terms of subsection (7) (b) and-
(a)
the consumer and each credit provider concerned accept that proposal,
the debt counsellor must record the proposal in the form
of an order,
and if it is consented to by the consumer and each credit provider
concerned, file it as a consent order in terms
of section 138; or
(b)
if paragraph (a) does not apply, the debt counsellor must refer the
matter to the Magistrate's Court with the recommendation.”
19.
There is no indication on the papers that
the applicants’ state of indebtedness and their prospects for
responsible debt rearrangement
was evaluated by their appointed debt
counsellor as required in terms of s 86(5). There is equally nothing
pointing to the fact
that the debt counsellor had determined that
they were over-indebted as set out in s 86(6). Nevertheless, I will
assume for their
sake that an evaluation of over-indebtedness was
conducted because payments on the rearranged basis were made for a
period of some
eight months before it stopped. A puzzling aspect of
their case is that, although they applied for debt review in March
2010, there
is no order by a magistrate issued in terms of s 86(7)(c)
or 86(8) of the NCA declaring them to be over-indebted. In the
applicants’
own words, they do not know why their debt
counsellor failed to bring an application to the Magistrates’
Court in terms of
s 86(7) or 87 of the NCA to declare them to be
over-indebted. In
Collett v FirstRand
Bank Ltd
2011 (4) SA 508
(SCA) at 515
para 11 the Court remarked:
“
[11]
The debt counsellor is charged to determine whether the consumer
'appears' to be overindebted, and must issue a proposal recommending
any or all of the orders set out in s 86(7)(c). The debt counsellor's
involvement in the debt review is no end in itself, but part
of an
ongoing process culminating in the order of the magistrates' court
under s 87 (or a voluntary rearrangement under ss 86(7)(b)
and
86(8)(a)). Only then can the debt review be said to be complete. The
role of the debt counsellor does not end with his referral
of the
matter to the magistrates' court. His 'proposal' takes the form of an
application governed by the rules of the magistrates'
court and he is
required to be present in court, participate in the hearing and
assist the court by way of furnishing evidence,
making submissions or
answering questions.”
20.
Section 88 of the NCA deals with the effect
of a debt review or re-arrangement order or agreement. It partly
provides:
“
(3)
Subject to section 86 (9) and (10), a credit provider who receives
notice of court proceedings contemplated in section 83 or
85, or
notice in terms of section 86 (4) (b) (i), may not exercise or
enforce by litigation or other judicial process any right
or security
under that credit agreement until-
(a) the
consumer is in default under the credit agreement; and
(b) one of
the following has occurred:
(i) An event
contemplated in subsection (1) (a) through (c); or
(ii) the
consumer defaults on any obligation in terms of a re-arrangement
agreed between the consumer and credit providers, or
ordered by a
court or the Tribunal.”
21.
In
Collett v
FirstRand Bank Ltd
(supra) at 516 para
12 the Court pronounced:
“
[12]….A
sounder approach is to recognise the express words of s 86(10),
which gives the credit provider a right to
terminate the debt review
in respect of the particular credit transaction under which the
consumer is in default, and only when
he is in default, at least 60
business days after the application for debt review was made. It must
be emphasised that it is only
when the consumer is in default that
the credit provider has this right. If he is not, the debt review
continues without the credit
provider being entitled to terminate it.
It is not that the credit provider is 'derailing' the process when he
terminates the debt
review: it is the consumer that is in breach of
contract, not the credit provider. If the consumer applies for debt
review before
he is in default the credit provider may not terminate
the process. But if the consumer is in default the consumer is
entitled
to a 60 business days' moratorium, during which time the
parties may attempt to resolve their dispute.”
22.
From the analysis set out above the
applicants had been in default and at least 60 business days after
the application for debt
review was made. In these circumstances the
Bank cannot be faulted for having terminated the debt review. What
remains is whether
the applicants were properly notified of the
termination of the debt review. They contended that they did not
receive the Notices
of termination of the debt review from the Bank.
Furthermore, that the Bank failed to proof that the Notices of
termination of
the debt review were delivered to them.
23.
It is common cause that although the
notices were sent to the applicants by prepaid registered post they
were returned to the sender
because they were not collected at the
post office by the addressees. From the Track and Trace report, the
Notices were dispatched
to the applicants on 25 August 2010 from the
Tshwane Post Office. They were received by the Kimberly Post Office
on 27 August 2010
but were returned to the sender on 01 October 2010.
The Bank argued that it needs only to prove that it dispatched the
registered
letters to the correct address and does not have to show
that the Notices were actually received by the addressees.
24.
Section
86(10) of the NCA provides:
“
(10)
If a consumer is in default under a credit agreement that is being
reviewed in terms of this section, the credit provider in
respect of
that credit agreement may give notice to terminate the review in the
prescribed manner to-
(a) the
consumer;
(b) the debt
counsellor; and
(c) the
National Credit Regulator,
at any time
at least 60 business days after the date on which the consumer
applied for the debt review.”
25.
In terms of s 129(1)(b) if the consumer is
in default under a credit agreement, the credit provider, subject to
s 130(2), may not
commence any legal proceedings to enforce the
agreement before (i) first providing notice to the
consumer, as
contemplated in s 129(a) or in s 86(10), as the case may
be; and (ii) meeting any further requirements set out in s 130. No
method
has been prescribed for the delivery of the Notice in terms of
s 86(10) of the NCA to the consumer. In
Sebola
and Another v Standard Bank of South Africa Ltd and Another
2012 (5) SA 142
(CC) the ConCourt dealt extensively with the meaning
of “delivery” of the notice within the context of s 129
read with
s 130 of the NCA and did so against the background of s
65(1) and (2), s 96 and s 168 of the NCA that indicate how delivery
of
notices must be effected. In my view this would also apply to a
delivery of a Notice in terms of s 86(10) of the NCA. The following
dictum appears at para 87 of the
Sebola
judgment:
“
[87]
To sum up: The requirement that a credit provider provide notice in
terms of s 129(1)(a) to the consumer must be understood
in
conjunction with s 130, which requires delivery of the notice. The
statute, though giving no clear meaning to 'deliver', requires
that
the credit provider seeking to enforce a credit agreement aver and
prove that the notice was delivered to the consumer. Where
the credit
provider posts the notice, proof of registered despatch to the
address of the consumer, together with proof that the
notice reached
the appropriate post office for delivery to the consumer, will in the
absence of contrary indication constitute
sufficient proof of
delivery. If, in contested proceedings the consumer avers that the
notice did not reach him or her, the court
must establish the truth
of the claim. If it finds that the credit provider has not complied
with s 129(1), it must in terms of
s 130(4)(b) adjourn the matter and
set out the steps the credit provider must take before the matter may
be resumed.”
26.
It has been held, with reference to the
delivery of a Notice in terms of s 129, in
Nedbank
Ltd v Binneman and Thirteen Similar Cases
2012 (5) SA 569
(WCC) that where the letter in terms of s 129 was
sent by registered post to the mortgaged property (the agreed
domicilium citandi et executandi
)
and that it actually reached the appropriate post office in
accordance with settled authority, the applicant has duly provided
notice to the consumer as required by s 129(1) of the NCA and the
risk of non-receipt therefore rests squarely with the addressee.
In
the unreported decision of the SCA,
ABSA
Bank Limited v Mkhize
(716/12 [2013]
ZASCA139, delivered on 30 September 2013 at page 23 paras 50-51 the
Court made the following remarks:
“
[50]
The conclusion, Absa submitted, would have the result that a consumer
who deliberately avoided collection of the notice, could
frustrate
the credit provider’s right. The answer to that is that where
there is proof of deliberate failure to collect the
notice, after
adjourning the hearing, and prescribing the steps to be taken by the
credit provider, the court may conclude that
the consumer was acting
in bad faith and enter judgment. The Eastern Cape High Court,
Grahamstown (Alkema J)
[Balkind
v Absa Bank
2013 (2) SA 486
(ECG) para 48]
,
faced with the same difficulties as those in this appeal, while
agreeing with the approach of Olsen AJ, suggested that where the
facts show that the consumer was residing at the chosen domicilium,
that the notice was sent to the correct post office, that
notification was sent to the correct address and there is no
‘satisfactory explanation’ why the consumer did not
collect
it, a finding of ‘fictional fulfilment’ would be
appropriate.
[51]
I do not think it necessary to go so far.”
27.
Save to deny receipt of the notices the
applicants do not advance reasons why they had not collected their
mail. They do not say
that the address to which the notices were sent
is not their chosen domicilium nor are they saying that the notices
went astray
or to the wrong post office. The conclusion that can be
reached is that they simply avoided the collection of the notices.
The
Bank, as it is statutorily enjoined, also sent the Notices of
termination of the debt review to their debt counsellor, Ms Jolande
De Beer, and to the National Credit Regulator by telefax and e-mail,
respectively. There is nothing in the papers showing that
the debt
counsellor did not receive the Notice of termination of the debt
review or that the telefax to which the notice was sent
was not
assigned to the debt counsellor concerned. The applicants’
argument that they did not receive the notices cannot
hold
Lastly, the
applicants contended that the property in issue is their primary
residence. Their two grandchildren and a disabled
child reside with
them. They earn an average monthly income of approximately
R14 000.00 from which they are able to meet
their monthly
obligation in terms of the rearranged proposal. They contended that
these were some of the circumstances that they
could have placed
before the Court prior to their property being declared executable.
As already alluded to, this new debt restructuring
proposal came in
very late when the Bank had long terminated their previous debt
review. In
Seyffert And Another v
FirstRand Bank Ltd t/a First National Bank
2012 (6) SA 581
(SCA) at 587 para 15 it was held:
“15…It
may well be pointless in most cases where the matter has already
been referred to a debt counsellor to do
so again. Indeed, a
court should be slow to exercise its discretion to make either of
the orders envisaged in s 85 where
the matter has been dealt with by
a debt counsellor, or a debt review has justifiably been terminated,
and where no material
change in circumstances has been demonstrated”
29.
Emotive as execution against a residence
may be, there are circumstances in which it cannot be avoided. The
fact that the mortgaged
property is the defendant's family home is,
in itself, not a reason to deny the mortgagee's contractual right to
realise its security.
See
ABSA Bank Ltd
v Petersen
2013 (1) SA 481
(WCC) at
497-498 para 37. In
Standard Bank
of South Africa Ltd v Saunderson and Others
2006
(2) SA 264
(SCA) at 269 paras 2-3 the Court held:
“
[2]
A mortgage bond is an agreement between borrower and lender, binding
upon third parties once it is registered against the title
of the
property, that upon default the lender will be entitled to have the
property sold in satisfaction of the outstanding debt.
Its effect is
that the borrower, by his or her own volition, either on acquiring a
house or later, when wishing to raise further
capital, compromises
his or her rights of ownership until the debt is repaid. The right to
continued ownership, and hence occupation,
depends on repayment. The
mortgage bond thus curtails the right of property at its root, and
penetrates the rights of ownership,
for the bond-holder's rights are
fused into the title itself.
[3]
The value of a mortgage bond as an instrument of security lies in
confidence that the law will give effect to its terms.”
30.
The
Standard
Bank of South Africa Ltd v Saunderson and Others
(supra) was overruled by the ConCourt in
Gundwana
v Steko Development and Others
2011 (3)
SA 608
(CC) only to the extent that it held that a registrar is
constitutionally competent to make execution orders when granting
default
judgment in terms of Rule 31(5)(b) in respect of immovable
property. On the whole I am satisfied that the applicants did not
establish
good cause or a
prima facie
case fit for trial. Their application falls to be dismissed.
ORDER
1.
The
application is dismissed with costs.
MV PHATSHOANE
JUDGE
Counsel
for the Applicants: Adv. JJ Buys
Instructed
by Oertel Attorneys, Kimberley
Counsel for the
First Respondent: Adv. P Zietsman SC
Instructed by
Duncan & Rothman, Kimberley
No appearance for
Second Respondent