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[2013] ZAKZPHC 13
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Rossitier and Others v Nedbank Ltd (8244/10) [2013] ZAKZPHC 13 (25 February 2013)
IN THE KWAZULU-NATAL
HIGH COURT, PIETERMARITZBURG
REPUBLIC OF SOUTH
AFRICA
CASE NO: 8244/10
In
the matter of:
TERRANCE
JOHN ROSSITIER
.................................................................................................
APPLICANT
TERRANCE
JOHN ROSSITIER N.O
..........................................................................
SECOND
APPLICANT
GAIL
WINGROVE ROSSITIER
.....................................................................................
THIRD
APPLICANT
AND
NEDBANK LIMITED
................................................................................................................
RESPONDENT
JUDGMENT
Date of hearing:
11 February 2013
Judgement
delivered on: 25 February 2013
D. PILLAY J
[1]
In this application for rescission of default judgment the
respondent, Nedbank Limited, issued summons on 14 October 2010 for
R13 975 793.17 and R10 686 943.68 plus interest on these amounts. The
applicants defended the action. The parties renegotiate the
payment
terms of these loans on 05 November 2010 in a variation agreement.
The applicants defaulted again. More than a year later
Nedbank’s
attorneys issued a notice of bar on 29 March 2012. The applicants’
attorney received the notice of bar. He
was over-committed with other
work. He did not deliver the plea. After the notice expired he asked
Nedbank’s attorneys for
an extension of time to deliver the
plea. They refused. On 17 May 2012 the applicants’ attorney
received an application for
default judgement. Default judgment was
granted on 30 May 2012.
[2]
Relying on Rule 42(1)(a) of the Uniform Rules of Court the applicants
attack the default judgment on the ground that it was
erroneously
sought and granted in their absence. The alleged error arose as a
result of Nedbank’s non-compliance with practice
directive 2.3
which provides:
‘
Where
an application for default judgment is made six months after the date
of service of the summons, it is both a practice of
the registrar’s
office and the court to require that a notice of set down be served
on the defendant informing him/her that
such default judgment will be
sought on a given date and time, such date and time being not less
than five days from the notice.’
[3]
Furthermore, Rule 31(5)(a) prescribes that when a defendant is in
default of delivery of a plea, the plaintiff may obtain judgment
by
default provided it gives the defendant not less than five days’
notice of its intention to apply for default judgment.
Nedbank
followed its notice of bar with a notice dated 10 May 2012 informing
the applicants that it would, after five days, apply
for default
judgment. The application for default judgment should have but did
not set out the date and time when default judgment
would be sought.
Accordingly, it did not comply with the practice directive.
[4]
Rules of procedure exist in order for litigants and the court to
conduct proceedings in a predictable way. So they should be
adhered
to. However, when the parties concluded the variation agreement, the
applicants accepted that Nedbank was entitled:
‘
without
notice to the Trust and without limiting any other remedy which it
may have in law to:
6.1.2.
in the event that such breach occurs subsequent to the withdrawal of
the confession of judgment, prosecute the action to
finality.’
[5]
Notwithstanding the applicants attack on the validity of the
variation agreement, which I reject below, I find that the applicants
waived their right to notice to the further prosecution of the
action. By serving the application for default judgment Nedbank
did
more than it was obliged to in terms of the variation agreement.
[6]
The applicants’ attorney’s explanation for not applying
to lift the bar or react to the application for default
judgment
timeously emerges in the following paragraphs extracted from his
affidavit in this application:
‘
18
I
wrote to the other side after the expiry of the notice of bar
requesting to be allowed to deliver the plea, however they refused
to
grant any extension, advising that a substantial condonation
application would have to be made and that in the interim they
would
be requesting default judgment.
19
The
notice requesting default judgment served on my agents did not give a
date when the default judgment was to be requested and
as such was a
defective, however it was pointless to bring an application to uplift
the bar which would have to be brought in a
normal course and my
contention was that to deal with the application for default judgment
before the Registrar and advise the
Registrar that the defendants had
a substantial defence and wanted to deliver a plea.
20
In
my view, it was impossible to bring a substantial application to
uplift the bar before the plaintiff applied for default judgment
which they could do on 10 days notice.
21
Notice
was received to set the application for default judgment down but no
date was given and I would submit deliberately so to
avoid the
defendants and me from approaching the registrar to prevent judgment
from being given and such application was therefore
defective.
22
After
it came to the first defendant’s attention that judgment was
granted sometime at the end of June 2012, he delivered
the writ of
execution to me where after on the 10
th
July 2012, I wrote to the plaintiff’s attorney advising that a
rescission application would be forthcoming.’
(sic)
[7]
The attorney’s evidence above clearly indicates that he was
aware of Nedbank’s intention to proceed with default
judgment
as soon as the notice of bar expired. He was also aware that Nedbank
wanted a substantial application for condonation
if they were to
grant any extension to the applicants to deliver their plea. The
attorney does not explain why it would be ‘pointless
to bring
an application to lift the bar’. It would have been pointless
to lift the bar if the applicants had no defence.
If the applicants
did have ‘a substantial defence’ the attorney would have
disclosed this at every opportunity and
especially when he received
the notice of bar and the application for default judgment. He says
that it was ‘impossible’
for him to bring the substantive
application to lift the bar because of his personal circumstances. He
should have requested an
extension to deliver the plea as soon as he
received the notice of bar, not after it expired. If he could not
render an efficient
service to the applicants then he should have
informed them. If he did then it was up to them to find another
attorney or live
with the consequences of retaining him.
[8]
The applicants’ attorney opined that Nedbank ‘deliberately’
avoided informing the applicants of the date and
time of the default
judgment application so that he would not approach the registrar to
prevent judgment. If that was indeed his
genuine suspicion at the
time then he had all the more reason to thwart Nedbank’s
strategy by applying to uplift the notice
of bar, intercepting the
application for default judgment, and presenting the registrar with
the applicants’ plea setting
out the promised ‘substantial
defence’.
[9]
The first applicant alleges that he became aware of the default
judgment on 9 July 2012 when he instructed his attorney to apply
for
rescission. The applicants’ attorney signalled that the
rescission application would be delivered by Monday 16
July
2012. He had became aware at the end of June 2012 that default
judgment had been granted. On 10 July 2012 he notified Nedbank’s
attorneys that he would be applying for rescission. As a result of
his personal difficulties this application was eventually launched
only on 14 August 2012.
[10]
From the affidavits for the applicants it appears that after the
parties concluded the variation agreement nothing transpired
until
the notice of bar. However, it emerges from the affidavit for Nedbank
that when the applicants defaulted on the variation
agreement by not
paying the first instalment which fell due on 1 April 2011, their
attorney notified Nedbank’s attorney that
the applicants would
pay by 30 June 2011. Following a meeting at Nedbank’s offices
on 31 May 2011 the applicants undertook
to give Nedbank a further
payment proposal urgently. On 20 June 2011 the applicant’s
attorney again promised that his clients
would be in a position to
pay R1.5m before 30 June 2011.
[11]
Nedbank accepted the applicants’ proposal on condition that, in
addition to that payment, the applicants would pay enough
to Nedbank
to service the monthly instalments under the loan agreement for
twelve months from 1 July 2011. The applicants paid
R2m on 1 July
R458 000 on 12 July 2011. They allege that their accounts were
consequently not in arrears. Assuming that they are
correct, on their
own version they still did comply with Nedbank’s term that they
pay in advance for twelve months from July2011.
[12]
Nine months later on 8 March 2012 Nedbank’s attorneys notified
the applicants of their breach of the variation agreement
and
demanded payment of the full arrears of R625 890.44. They wrote once
again to the applicants’ attorney demanding payment
of the
arrears by 15 March 2012 failing which they would take further
action.
[13]
Also not apparent from the founding affidavits but which emerges from
the affidavit for Nedbank is that on 14 August 2012 the
High Court
dismissed with costs their application to stay the sale in execution
of one of their immovable properties. Whatever
the basis of that
dismissal was, the ensuing order is premised on the underlying
validity of the default judgment. It does not
appear that that
judgment is on appeal; if it is the applicants would have said so in
this application. Instead, other properties
of the applicants have
since also been attached and sold to Nedbank.
[14]
A judgment or order once pronounced is final. This principle of
finality divests
the court of any inherent
jurisdiction to interfere with its judgments or orders.
1
This question arose in
Firestone
South Africa (Pty) Ltd v Genticuro A.G
1977 (4) SA 298
(A). Trollip JA assumed without deciding that a court
retains a general discretion to correct, alter or supplement its
judgment
or order in appropriate cases. But it cautioned that the
assumed discretionary power
‘
should
be very sparingly exercised, for public policy demands that the
principle of finality in litigation should generally be preserved
rather than eroded.
2
In
that case the applicant had ample opportunities over seven years to
clarify or rectify an order. Trollip JA remarked:
‘
In
a case as the present one a court ought to be loath to exercise its
discretion in favour of the party who has not been vigilant,
but
indeed supine or dormant, about protecting its alleged rights or
redressing alleged wrongs.’
3
[15]
Nestadt JA reiterated the principle of finality articulated in
Genticuro
in
Tshivhase Royal Council and
another v Tshivhase and another; Tshivhase and another v Tshivhase
and another
[1992] ZASCA 185
;
1992 (4) SA 852
at 862 G
-J to acknowledge the discretion a court has in an application for
rescission.
4
He accepted that an application for rescission should be brought
within a reasonable time. What is reasonable depends on the facts
of
each case. In that case a lapse of two and a half months was not
inordinate in circumstances where the attorney based in Pretoria
instructed a local correspondent in the Cape.
[16]
In this case the conduct of the applicants is inconsistent with a
genuine intention to apply to lift the notice of bar, oppose
the
application for default judgment or indeed to defend the action on
its merits. An application of rescission of a judgment or
order, even
one erroneously sought or obtained, must be brought within a
reasonable time of the applicant for rescission becoming
aware of the
judgment and error. The headnote of the judgment of James JP in
Roopnarain v Kamalapathy and another
1971 (3) SA 387
(D) reads:
‘
When
innocent parties will suffer substantial loss if an application for a
rescission of an order of court is granted and that loss
is directly
attributable to the applicant’s inordinate delay in making the
application, that is in itself a good reason for
holding that the
applicant should be refused relief.’
Roopnarain
was also brought in terms of Rule 42(1) of the Uniform Rules of
Court. However, the court pointed to Rule 31(2) (b) as an indicator
of what would constitute a reasonable time. Rule 31 (2)(b) gives a
defendant 21 days to apply to set aside a
jr
judgment.
5
[17]
The applicants relied on
Mutebwa v
Mutebwa and another
2001 (2) SA193
(TkH) to reinforce their proposition that it was enough to prove the
errors; they did not need to show good cause.
Proving the error is
not enough if the application is not made within a reasonable time.
What is a reasonable time can be determined
solely on the basis of
the period of the delay. It can also take its meaning from
determining whether there is good cause and what
the explanation is
for the delay. Practically, when a court exercises its discretion in
a rescission application it takes into
account all three factors: the
period of delay, the explanation for the delay and good cause. To do
otherwise could result in injustice.
There are cases such as
Mutebwa
in which one of the factors could be decisive. Thus a return of
service of a summons that was completed fraudulently was sufficient
to result in the rescission of the ensuing judgment.
6
In this case the delay, the absence of a reasonable explanation and
the applicants’ supine attitude to rescinding the judgment
are
sufficient grounds to refuse the application.
[18]
In the confession to judgment incorporated in the variation
agreement, the applicants confessed in terms of Rule 31 of the
Uniform Rules of Court for the amounts Nedbank claimed in the action,
less any payments. The confession to judgment was valid for
twelve
months. The variation related only to the repayment terms of the
original loans as claimed in the action. Accordingly, the
applicants
did not dispute their liability for the principle debt.
[19]
Notwithstanding their confession, the applicants allege that they
have substantive defences to the action. They contest the
validity of
the mortgage bonds on the grounds that the first applicant signed the
loan agreements in his personal capacity; all
three trustees did not
authorise the loans or the bonds. Similarly, they attack the
variation agreement on the basis that the institutional
trustee did
not sign it.
[20]
The applicants looked to
Nieuwoudt
and another NNO v Vrystaat Melies (Edms) Bpk
2004 (3) SA 486
(SCA) paras 2- 4 in which the respondent trustees
sought to terminate a sale agreement on the basis that the trust deed
required
both trustees to authorise the transaction. The second
trustee had not authorised the transaction or mandated the executing
trustee
to act on her behalf.
7
On the facts of that case the trust deed enabled the trustees to
authorise one or more of their number to sign any documentation
‘
for
official purposes for the administration of the trust and for the
execution of any transaction in connection with the business
of the
trust.’
The
Appellate Division interpreted that clause to apply only to the
signing of documents for official, administrative purposes and
not
for contracts such as the sale
Q
of
mealies which founded the dispute.
8
[21]
In this case clause 9 of the Trust Deed expressly provides:
‘
9.
The TRUSTEES may from time to time delegate to any individual TRUSTEE
or TRUSTEES or committee any specific duty or assignment.’
The
mandate to the trustees in this case is therefore wider than in
Nieuwoudt.
[22]
As for impugning the mortgage bonds, if the applicants genuinely
believed that this was a valid defence they would not have
concluded
the variation agreement or indeed be in this predicament. This seems
to be a defence dredged up in desperation after
default judgment was
granted. Assuming this defence is valid, it does not address the
central issue of how the applicants intend
to repay loans they
received without authorisation.
[23]
They complain that Nedbank did not cite all the trustees in the
summons. They rely on
Nieuwoudt
again and clause 8 of the Trust Deed which provides:
‘
8.
A quorum of TRUSTEES shall be two (2) and the TRUSTEES shall not
conduct any business unless there is a quorum present, provided
always that the presence of PETER BRETT FEATONBY-SMITH, or his
nominee in his absence, shall be necessary to constitute a quorum.’
Mr
Featon-Smithby, his nominee or successor are trustees who are not
cited in this application for the obvious reason that they
are
institutional trustees representing BOE, a bank associated with
Nedbank. The applicants do not say what prejudice they suffer
as a
result of the non-joinder. Nor do they say what practical purpose
will be served by joining the institutional trustee. In
any case, the
institutional trustee could have been joined at any stage of the
proceedings, even by the applicants themselves if
they genuinely
believed that would have served any useful purpose.
[24]
Still relying on clause 8 of the Trust Deed, the applicants submit
that the variation agreement is invalid for the further
reason that
the quorum passing the resolution was not properly constituted. The
institutional trustee had to participate to form
a quorum to pass the
trust resolution to conclude the variation agreement and confess to
judgment. The resolution records that
only the first and third
applicants passed the resolution.
[25]
For the same reasons above for the non-joinder of the institutional
trustee to the application, his participation in passing
the
resolution was equally pointless. The applicants signed the variation
agreement and confessed to judgment because they, not
the
institutional trustee, needed help to pay it. They needed the
indulgence. The
quid pro quo
for the indulgence was delaying default judgment by rearranging
payment and waiver by the applicants of notice of further
proceedings.
Signing the resolutions and the variation agreement
signalled their commitment to repaying the debt. That is what
mattered.
[26]
From the inception when Nedbank granted the loans against security of
the loan agreement, covering mortgage bonds which were
registered
pursuant to signed powers of attorney granted on behalf of the Trust,
and two limited suretyships granted by the first
applicant, duly
assisted by his spouse, the third applicant, they always represented
that they were authorised to represent the
Rossitter Family Trust. In
addition, the applicants in all these credit agreements warranted
that all information provided to Nedbank
was true and correct, that
no information affecting Nedbank’s decision to approve the
loans was withheld and that all information
concerning the
applicants’ financial affairs had been disclosed to Nedbank.
9
The applicants also warranted that there were no material facts or
circumstances which had not been fully disclosed in writing
to
Nedbank. These warrants put the onus squarely on the applicants to
disclose fully all information relevant to the credit agreements
to
Nedbank for the entire duration of the agreements.
[27]
When the applicants needed an indulgence they represented in writing
to Nedbank that the first applicant was authorised to
conclude the
variation agreement on behalf of the Trust to stop Nedbank from
proceeding with its action. The first applicant also
represented that
he would sign the confession to judgment on behalf of the Trust. To
renege on these representations is not only
another breach of the
credit agreements but also manifest bad faith.
[28]
Notwithstanding the contention that the variation agreement is
invalid and cannot be relied upon, the applicants persisted
with
their next astonishing defence. Their counsel submitted that
following the variation agreement Nedbank had a new cause of
action.
Therefore, it was precluded from relying on the original cause of
action. The express wording of the variation agreement
quoted above
is clearly to the contrary. Prevaricating on the validity of the
variation agreement is another act of bad faith.
[29]
They further contended that Nedbank should have issued a notice in
terms of s 129 of the NCA before it applied for default
judgment. As
Nedbank delivered such a notice before issuing summons based on the
credit agreements, another notice was not required.
Nedbank was not
suing on the variation agreement. Even if it were I doubt that it
needed to issue a second s 129 notice as suggested
by counsel for the
applicants.
[30]
Equally frivolous is their submission that the Trust was not in
default when judgment was granted. The bank statements attached
to
the application do not bear out this submission. Indeed, if there was
any merit in it the applicants would hastily have applied
to lift the
notice of bar and intercept the application for default judgment.
[31]
The applicants’ last challenge to the standing of Nedbank’s
attorney’s right of appearance in the High Court
is its final
attempt to clutch at elusive straws. A copy of the attorney’s
enrolment unceremoniously puts this issue to bed.
[32]
Taking a bird’s eye view of the applicants’ conduct,
after delivering a notice to defend they delivered no further
pleadings. They remained in default of the credit agreements. They
even failed to pay in terms of the variation agreement which
was
executed to assist them. They failed to respond to demands for
payment preceding the notice for bar. Their inaction continued
after
the notice of bar and notice of the application for default
judgement. Cumulatively, their conduct suggests that they tacitly
acknowledged that they had no defence. Additionally, on the strength
of the default judgment their properties have been sold in
execution.
In this application they now attempt to wriggle out of their
indebtedness by relying on form, process and technicalities.
By
putting form over substance the applicants compound their bad faith.
Even if I am wrong in holding that the applicants validly
waived
their rights to notice in the variation agreement, their conduct is
so dishonourable that I exercise my discretion not to
come to their
assistance. Having regard to the size of the loans these applicants
are not indigent and do not deserve any accommodation
that a
vulnerable person may be entitled to. Whatever their defence, however
meritorious it may be, the applicants cannot escape
their singular
obligation to repay Nedbank.
[33]
This raises the question of costs. In view of the frivolous
allegations, misrepresentations and manifest bad faith the applicants
attract a punitive order for costs. Contractually, the credit
agreements bind the applicants to paying such costs. In so far as
the
applicants’ attorney admits that he was at fault he should bear
the costs of this application personally. However, the
applicants
stand or fall by their choice of legal representative. Besides, they
know best whose fault it actually was that default
judgment was
granted. They may decide amongst themselves who would ultimately bear
the costs.
[34]
The application is dismissed with costs on a scale as between
attorney and client, such costs to be paid jointly and severally
amongst the applicants, the one paying the others to be absolved.
D. Pillay J
Appearances:
//
Appearances
Counsel for the
Appellant: T.N Aboobaker SC
Instructed by:
Theyagaraj Chetty Attorneys
C/O Cajee Setsubi
Chetty Inc.
195 Boshoff Street
Pietermaritzburg
Ref: A Essa/ND/A599
Tel: (033) 345 6719
Fax: (033) 345 5778
Counsel for the
Respondent : P.J Combrinck
Instructed by: Lynn &
Main Attorneys
187 Hoosen Haffejee
(Berg) Street
Pietermartizburg
Tel: (033) 342 3645
Fax: (031) 342 3680
Ref:
N Riekert/itBoe47
1
DE
van Loggerenburg and PJB Farlam
(eds)Erasmus
Superior Court Practice
(2012, Revision Service 39) Rule - B1 - p306G;
2
Firestone
South Africa (Pty) Ltd v Genticuro
supra
309 A-B
3
Firestone
South Africa (Pty) Ltd v Genticuro
supra
309 F
4
Tshivhase
page
863 A see also
Promedia
Drukkers and Uitgewers (EDMS) BPK v Kaimowitz and Others
1996
(4) SA 411
at 421 F-H
5
Roopnarain
v Kamalapathy
391B-C
6
Mutebwa
v Mutebwa and another
supra
para 18
7
Nieuwoudt
and another NNO v Vrystaat Mielies (Edms) Bpk
supra
para 5.
8
Nieuwoudt
and another NNO v Vrystaat Mielies (Edms) Bpk
supra
para 11.
9
Clause
6.1.1 of loan agreement.