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[2013] ZANCHC 50
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Van Wyk and Another v Absa Bank Limited (1439/12) [2013] ZANCHC 50 (25 October 2013)
IN
THE HIGH COURT OF SOUTH AFRICA
[NORTHERN CAPE HIGH
COURT, KIMBERLEY]
CASE NO: 1439/12
In
the matter between:
WILLEM
ALEXANDRA VAN WYK
FIRST APPLICANT
CHARLOTTE
LEVINA VAN WYK
SECOND APPLICANT
And
ABSA
BANK
LIMITED
RESPONDENT
Date of hearing: 23
August 2013
Date of judgment: 25
October 2013
JUDGMENT
PHATSHOANE J
1.
Mr
Willem Alexandra Van Wyk and Ms Charlotte Levina Van Wyk, the first
and second applicants, seek condonation for the late filing
of their
application to rescind and set aside the default judgment entered
against them in favour of ABSA Bank Limited, the respondent,
by the
registrar of this Court and the attendant costs.
2.
The
applicants are married to each other in community of property. They
are sureties and co-principal debtors with Red Coral Investment
61
(Pty) Ltd (in deregistration), the principal debtor. During August
2012 when summons were issued against them Red Coral Investment
had
ceased to exist through deregistration. They did not enter
appearance to defend. On 06 November 2012 judgment by default
was
obtained against them in favour of the Bank for the payment of an
amount of R717 586.70; payment of interest thereon at
the rate
of 10% per annum with effect from 23 April 2010 capitalized monthly
to date of payment; and costs on an attorney and client
scale.
3.
In
the applicants’ explanation of the delay in bringing the
application they acknowledge that the summons was served on them
by
affixing same to the outer principal door of their chosen
domicilium
address. However, they
never had sight of the summons. Mr Van Wyk states that he became
aware of the action on 22 November 2012
when the sheriff served on
him a warrant of execution. He immediately contacted his attorneys.
On 26 November 2012 an agreement
was reached that the sheriff would
withhold execution of the warrant.
4.
The
applicants state that their attorneys obtained copies of the Court
file on 13 December 2012 from the Bank’s attorneys.
On the date
in question their attorneys sought an indulgence from the Bank’s
attorneys to file the application for the rescission
of the judgment
on 07 January 2013 because Mr Van Wyk says he had to obtain the
Bank’s statements and his attorneys offices
were to close on 14
December 2012. Mr Van Wyk explained that he was only able to obtain
copies of the Bank’s statements on
10 January 2013. The
application for rescission of the judgment was filed on 01 February
2013. Ms Stanton, for the applicants,
argued that, regard being had
to the explanation offered for the delay, the applicants were not in
wanton and wilful default.
5.
The
Bank opposes the application for condonation on the ground that the
applicants have no bona fide defence to its claim and that
they have
resorted to technical defences which cannot avail them. In their
attorneys’ correspondence to the Bank’s
attorneys seeking
an indulgence to file papers at the later date the applicants’
attorneys informed the Bank’s attorneys
that if they were not
amenable to their proposal their papers would be served and filed by
19 December 2013. There was no response
from the Bank’s
attorneys. Save that they received the Bank’s statements around
10 January 2013 the applicants do not
explain why the papers were not
filed on the suggested date. There is also no explanation of what the
applicants did from 10 January
2013 to 01 February 2013 to file their
application.
6.
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
[1]
.
The application is approximately 26 days late. However, I am of the
view that the delay in bringing the application for rescission
of the
judgment is not inordinate. I would therefore determine if the
application is made bona fide or that the applicants have
a bona fide
defence to the Bank’s claim which
prima
facie
has some prospects of
success.
7.
In
Colyn v Tiger Food
Industries Ltd t/a Meadow Feed Mills (Cape)
2003 (6) SA 1
(SCA) at 9 para 11 the following dictum appears:
“
[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)]).”
8.
In
demonstrating that they do have a bona fide defence to the Bank’s
claim, the applicants attacked the procedure followed
by the Bank in
obtaining judgment against them on a number of grounds. Firstly, they
claim not to have received the s 129 Notices
in terms of the
National
Credit Act, 34 of 2005
.
Section 129
deals with the procedures that
should be followed before debt enforcement could commence. Ms Stanton
argued that the returns of
service in respect of the
s 129
Notices
are defective in multiple respects.
Inter
alia
, no case numbers
appears to have been allocated to the matter because it does not
appear
ex facie
the
returns of service; both returns refer to the action instituted in
the Magistrates’ Court and not in this Court; the returns
are
silent on the nature of the letter served on the applicants; and that
it was strange that the
s 129
Notices were served by two different
sheriffs on the same date and at almost the same time.
9.
The
defects on the returns of service do not advance the applicants’
case in anyway. There can be no doubt on what the contents
was of
what was served by the sheriff on 23 July 2012. This is borne out by
the Bank’s attorneys’ reference number
on the
s 129
Notice Letters which is reflected on both returns. Ordinarily when
the
s 129
Notice is issued there can be no case number because no
Court process has been issued at this stage, neither can it be known,
at
least to the Sheriff, whether the action would be instituted in
the Magistrates’ Court or the High Court. The signature part
which seems to display the names of two different sheriffs albeit
served at almost the same time would not avail the applicants
either
because what counts is whether they were served or not. A perusal of
both returns of service shows that the applicants were
personally
served with the
s 129
Notices but they simply displayed indifference.
10.
The
summons was subsequently served by affixing copies thereof to the
outer principal door of the applicants’ chosen
domicilium
.
While this method of service is proper in terms of the Rules the
applicants should be given the benefit of the doubt that
they might
not have received the summons as they claim. In these circumstances
it cannot be said that they were in wilful default.
But this is not
the only yardstick in the determination of the application for a
rescission of a default judgment because the applicants
should still
establish good cause.
11.
In
Silber v Ozen Wholesalers
(Pty) Ltd
1954 (2) SA 345
(A) at 352E-H the Court remarked:
“
In
Brown v Chapman,
1938 T.P.D. 320
, MILLIN, J., expressed the view at
p. 328 that the introduction of the words, 'and if good cause is
shown' had made no difference
to the effect of the Rule; he was of
opinion that the showing of good cause amounted to no more than the
disclosing of a substantial
defence which had, according to earlier
decisions, been required under the unamended Rule. But the language
of the amendment does
not support the suggested limitation. The
applicant had always been obliged to set out the reasons why he did
not appear, as well
as the grounds of his defence, but it was only in
1936 by another amendment that the application was required to be on
affidavit.
It seems clear that by introducing the words 'and if good
cause be shown' the regulating authority was imposing upon the
applicant
for rescission the burden of actually proving, as opposed
to merely alleging, good cause for rescission, such good cause
including
but not being limited to the existence of a substantial
defence (cf. du Plessis v Tager,
1953 (2) SA 275
at p. 278 (O)). The
position under the sub-rule is thus that if the defendant fails to
show good cause for relief or if the plaintiff
shows that the
defendant was in wilful default the magistrate is not entitled to
rescind the judgment; if good cause has, and wilful
default has not,
been shown the magistrate apparently has a discretion, but it is
unnecessary to examine this aspect of the matter.”
12.
The
following passage appears in Erasmus Superior Court Practice, Farlam
et al
at B1-204, Service 38/2012.
“
The
requirement that the applicant for rescission must show the existence
of a substantial defence does, however, not mean that
he or she must
show the probability of success: It suffices if he or she shows a
prima
facie
case, or the existence of an issue which is fit for trial. The
applicant need not deal fully with the merits of the case but the
grounds of defence must be set forth with sufficient detail to enable
the Court to conclude that there is a
bona
fide
defence, and that the application is not made merely for the purpose
of harassing the respondent.”
13.
The
second procedural attack advanced by the applicants is the alleged
failure by the Bank to comply with
Rule 18(6).
They contend that in
terms of this Rule a party that relies on a written contract should
annex a true copy thereof or the portion
relied upon to the pleading.
They argued also that the Bank did not attach to the summons the
credit agreement it concluded with
Red Coral Investment. It also
failed to set forth the necessary averments pertaining to this claim
in its particulars of claim.
The applicants further intimated that
should they succeed with their application, they will serve on the
Bank a
Rule 30(1)
Notice to cure the defect.
14.
The
Bank instituted action against the applicants in their capacity as
sureties and co-principal debtors with Red Coral Investment
61 (Pty)
Ltd. The following averments are made in the summons:
“
1.1
By
virtue of the provisions of the suretyships annexed hereto and marked
A1-A2 the first and second defendant bound themselves as
sureties and
co-principal debtors with Red Coral Investment (Pty) Ltd (“the
principal debtor”) in the amount of R717 586.70
plus
10.00% interest calculated and capitalized monthly in arrears the
entire debt now being owing, due and payable.
1.2
As will more fully appear from the suretyship, the first and second
defendant have agreed
that their liability in accordance with the
suretyship are individually and jointly with the principal debtor; in
respect of all
its liabilities inclusive of interest and costs and
that a certificate, signed by a manager of the plaintiff, shall be
prima facie
proof of the amount owing to the plaintiff; the interest rate payable
and any other fact relating to the claim. A manager of the
plaintiff
has certified that the defendants are indebted in the amount claimed
as evident from the annexed certificates, marked
B1-B2.”
15.
As
it can be gleaned from the preceding paragraph the cause of action
was based on the written deeds of suretyship. Both the applicants’
deeds of suretyship are attached to the summons. I am not persuaded
that the Bank did not comply with
Rule 18(6).
From what appears
on the certificate of balance the principal debtor’s
indebtedness arose from a cheque account evidently
arising from an
overdraft facility. The deeds of suretyship are, in terms of clause
11 thereof, a continuing covering security
which would remain in
force notwithstanding any interim settlement of the debt until the
Bank receives written notice from the
surety or his/her executors,
curators or legal representative to terminate the deeds provided that
the amount outstanding together
with interest and costs would have
been settled. The applicants do not dispute the amount owing to the
Bank save that on 19 January
2010 the balance due to the Bank was
R685 385.69. A certificate of balance is designed to facilitate
proof of the amount of
liability in these situations.
[2]
16.
The
third attack is on the non-joinder of the principal debtor. The
applicants further contended that as sureties their liability
arises
from the time the principal debtor is in default and therefore their
obligation towards the Bank is of an accessory nature.
They further
contended that the Bank did not present proof that it has acted
against the principal debtor nor did it produce proof
of its
indebtedness to the Bank and by extension that the certificate of
balance cannot assist the Bank.
17.
In
Millman and Another NNO v
Masterbond Participation Bond Trust Managers (Pty) Ltd (Under
Curatorship) and Others
1997 (1) SA 113
(C) at 122J-123A the Court held:
“
In our view, the legal position
was correctly stated by Professor J G Lotz in Joubert
(ed) The Law of South Africa vol
26 para 161, where the following
statement appears:
'Unless the parties have agreed
otherwise, a surety's debt normally becomes enforceable as soon as
the principal debtor is in default
subject, however, to the surety's
right to claim that the principal debtor first be excussed. If a
surety has bound himself also
as co-principal debtor, his debt
becomes enforceable at the same time as the principal debt.”
18.
The
creditor may join the principal debtor and sureties in one action but
it is not a prerequisite
[3]
.
The creditor is not obliged to proceed first against the principal
debtor unless the surety avails himself of the benefit of
excussion
[4]
.
In the applicants’ own words the principal debtor was
deregistered and therefore non-existent. It would be pointless
therefore
to join the principal debtor nor can the applicants raise
this defence at any hearing in due course. The summons issued against
a deregistered company is a nullity (see
Village
Freezer t/a Ashmel Spar v CA Focus CC
2012
(6) SA 80
(ECG) at 87 para 26;
Pieterse
v Kramer NO
1977 (1) SA
589
(A) at 601F-G). The applicants were personally served with the
s 129
Notices which showed that the principal debtor was in default of
payment and chose not to act as advised in the notices.
19.
The
fourth attack against the Bank’s claim is that the principal
debt cannot be enforced against the applicants because the
principal
debtor had already ceased to exist when summons were issued against
the applicants and therefore they should be released.
This cannot be.
For all we know, they may have been responsible for the downfall of
the principal debtor. In
Traub
v Barclays National Bank Ltd; Kalk v Barclays National Bank Ltd
1983 (3) SA 619
(A) amongst the issues which the Court had to deal
with was the question whether the companies’ deregistration
extinguishes
the liability of a surety. In that case the D company
had been deregistered in terms of s 73 of the Companies Act, 61 of
1973,
on 21 December 1979. The appellants submitted that as a result
of the company's deregistration, there was no longer a principal
debtor and, therefore, their liability to the respondent had been
extinguished. The Court held that there was no foundation in
law for
the argument that a surety was released from liability to the
creditor when the principal debtor ceased to exist.
20.
Fifthly,
the applicants contended that the debt was extinguished by
prescription in that the Bank failed to issue summons against
Red
Coral Investment within the prescribed period. They intimate that the
debt was similarly extinguished by prescription as against
them
because they signed the deeds of suretyship on 05 April 2006 and no
steps were taken against them until August 2012 when the
Bank
instituted action against them.
21.
To
succeed with their application for rescission of the judgment on the
basis of the defence of prescription the applicants had
to show, at
least
prima facie
,
that the principal debt had prescribed at the time of the institution
of the action on 22 August 2012. The suretyship is indeed
accessory
to the principal debt. Prescription of the principal debt will
extinguish that debt and thereby release the surety.
[5]
22.
It
is for a party invoking prescription to allege and prove the date of
the inception of the period of prescription (see
Santam
Ltd v Ethwar
[1998] ZASCA 102
;
1999 (2) SA
244
(SCA) at 256G;
Absa Bank
Bpk v De Villiers
2001(1)
SA 481 (SCA) at 486G. No mention is made of the date of inception of
the period of prescription in the applicants’
papers. What the
applicants are saying is that the balance due and payable by Red
Coral Investment as at 21 September 2009 was
R22.39. From the final
statement, Mr Van Wyk says he could obtain from the Bank dated 25
January 2010, the amount due and payable
to the Bank by Red Coral
Investment as at 19 January 2010 was R685 385.69.
Section 11(d)
of the
Prescription Act, 68 of 1969
, provides that a debt shall
prescribe after three years unless an Act of Parliament provides
otherwise.
The claim cannot be
said to have prescribed regard being had to the dates the applicants
aver that the debt became due and payable.
23.
On
the sixth ground the applicants argue that should the Court find
against them in all the five defences/grounds aforegoing, they
plead
that the second applicant’s liability towards the Bank in terms
of her deed of suretyship be limited to the maximum
amount of
R300 000.00. Her limited liability is apparent from the summons
and the certificate of balance. On the latter ground
the Bank
conceded that its claim against Ms Van Wyk should be limited to an
amount of R300 000.00 and consented to the variation
of the
default judgment to reflect the correct position.
24.
Save
for raising the technical defences there is no explanation given by
the applicants why the amount owed to the Bank has not
been paid. I
am of the view that the applicants failed to establish good cause or
a
prima facie
case fit for trial and must therefore fail. There can be no logic in
rescinding a judgment which would be revived or yield the
same result
at a later stage. To the extent that the liability of the second
applicant towards the Bank is limited to an amount
of R300 000.00
the judgment should be varied accordingly. There can be no prejudice.
The costs will follow the success.
Order:
25.
In the result:
1.
The
application for the rescission of judgment entered against Mr Willem
Alexandra Van Wyk and Ms Charlotte Levina Van Wyk, the
first and
second applicants, is dismissed with costs.
2.
Para 1 of the Judgment by
default dated 06 November 2012 entered against the first and second
applicants is varied to the following
extent:
“
Having read the summons and
other documents filed of record, judgment by default is granted in
favour of the plaintiff:
1. (a) As against
the first defendant, Mr W A Van Wyk, for the payment of the sum of
R717 586.70.
(b)
As
against the second defendant, Ms CL Van Wyk, for the payment of
the sum of R300 000.00.”
MV
PHATSHOANE
JUDGE
NORTHERN
CAPE HIGH COURT
Appearance
for the applicants : Adv A Stanton
Instructed
by Mjila & Partners
Appearance
for the respondent: Adv. A.S Sieberhagen
Instructed
by Duncan & Rothman
[1]
See Rule 31(2)(b) of the Uniform Rules.
[2]
See at Thrupp Investment Holdings (Pty) Ltd v Goldrick
[2007] ZAGPHC 23
;
2008 (2) SA
253
(W)256 A and authorities cited therein.
[3]
CF Forsyth & JT Pretorious Caney’s The Law of Suretyship,
sixth edition at 134-135 para 10.
[4]
CF Forsyth & JT Pretorious Caney’s The law of Suretyship,
sixth edition at 126 para 3.
[5]
CF Forsyth & JT Pretorious Caney’s The law of Suretyship,
sixth edition at 200.