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[2013] ZAKZPHC 26
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Marwick and Others v ABSA Bank Ltd and Others (3351/12) [2013] ZAKZPHC 26 (31 May 2013)
IN THE KWAZULU-NATAL
HIGH COURT, PIETERMARITZBURG
REPUBLIC OF SOUTH
AFRICA
CASE NO. 3351/12
In the matter between:
CHERYL DOROTHY MARWICK
...................................
1
ST
APPLICANT
MICHAEL CONNAIRE
MARWICK
................................
2
ND
APPLICANT
CHARLES HORNER
.....................................................
3
RD
APPLICANT
and
ABSA BANK LIMITED
..............................................
1
ST
RESPONDENT
THE
SHERIFF OF THE KWAZULU-NATAL
HIGH COURT –
PIETERMARITZBURG
...................
2
ND
RESPONDENT
THE REGISTRAR OF DEEDS
..................................
3
RD
RESPONDENT
JUDGMENT
Delivered
on 31 May 2013
STRETCH AJ:
[1] During October 2006
the first and second applicant (“Ms and Mr Marwick”)
purchased immovable residential property
situated at 35 Oakleigh
Avenue, Pietermaritzburg (“the property”) for R2 250
000,00 after Ms Marwick (with Mr Marwick
as surety) had obtained a
loan from the first respondent bank (“ABSA”) against the
registration of a mortgage bond
for R1 750 000,00 over the property
in ABSA’S favour.
[2] The Marwicks fell
into arrears with their bond repayments and ABSA issued summons. On 7
May 2008 the Marwicks independently
signed confessions to judgment
(in terms of rule 31(1) of the uniform rules of this court) in favour
of ABSA for payment of R1
891 637,00 together with interest and
costs. Ms Marwick’s confession included consent to an order
declaring the property
executable.
[3] On 19 and 20 November
2008 this court granted judgment against the Marwicks (jointly and
severally) in terms of these confessions,
the order on the 19
th
being for payment of the aforesaid debt, and that on the 20
th
declaring the property executable.
[4] On 30 April 2012 this
court issued a
rule nisi
, calling on ABSA and the second and
third respondents (the sheriff of this court and the registrar of
deeds) to show cause why
the following orders should not be made:
[a] that the judgments
granted by this court on 19 and 20 November 2008 are rescinded;
[b] that ABSA and the
second respondent are interdicted from proceeding with the sale in
execution of the property;
[c] that a writ of
execution which had been issued by the registrar of this court is
stayed;
[d] that ABSA is directed
to comply with an order granted in the magistrates’ court on 11
April 2012, which order declared
the Marwicks to be over-indebted,
and re-arranged payment to five creditors (including ABSA) such
re-arrangement to be reviewed
by the magistrates’ court at its
discretion.
[5] It was further
directed that the orders sought setting aside the writ and staying
the sale in execution would operate as interim
orders with immediate
effect, pending the finalisation of this application. The Marwicks
were further directed to ‘continue’
paying ABSA the
amount R10 019,60 per month, pending the finalisation of the
application.
[6] The Marwicks and the
third applicant (Charles Horner, who had been their debt counsellor),
also in their notice of motion sought
an order directing Horner in
terms of the provisions of section 85(a) of the National Credit Act
34 of 2005 (“the Act”),
to make a recommendation to this
court in terms of section 86(7) of the Act.
[7] The applicants
contend for rescission of this court’s judgments granted on 19
and 20 November 2008, on the following grounds:
[a] that the Marwicks
were not apprised of their rights in
terms of section 129 of
the Act, and that this renders the enforcement of the debt premature
and the provisions of section 86(2)
of the Act as not applicable;
[b] that when the
Marwicks signed the confessions to judgment incorporating
acknowledgments of debt, they were not legally represented
and were
unaware of the possible consequences of signing these documents, and
that if this court had been alive to this it would
not have granted
the relief it did on 19 and 20 November 2008. In short, the
applicants contend that this relief was erroneously
granted;
[c] that the relief was
also erroneously sought, in that when these orders were made (and
unbeknown to the Marwicks), debit orders
had not been processed in
favour of ABSA for the months of August, September October, November
and December 2008;
[d] that, in any event,
this court ought not to have declared the property (being a primary
residence) executable as the Marwicks
were not afforded an
opportunity to make representations to this court in terms of section
26 of the Constitution, and that ABSA
had failed to comply with this
court’s practice directive dealing with applications to declare
immovable property executable.
[8] The applicants
further contend that this court should also make a declaratory order,
directing ABSA to abide by the magistrates’
court order
restructuring the Marwicks’ debt to it; alternatively, that
this court should, in terms of section 85 of the
Act, refer the
matter to debt counsellor Horner with a request that he evaluates the
Marwicks’ circumstances and makes recommendations
to this
court, or that this court should declare the Marwicks to be
over-indebted and make an order to relieve their position.
[9] It is only necessary
for me to consider the bouquet of proposals which I have referred to,
if I find that the Marwicks have
made out a case for rescission. If
not, that is the end of the matter.
[10] The Marwicks admit
that ABSA issued summons in 2008 because they had fallen into arrears
with their bond repayments. What is
disputed, is whether ABSA had
complied with section 129 of the Act before it issued summons. The
Marwicks say that it did not,
and if it did, they would have
exercised their rights there and then to be placed under debt review
and to have their indebtedness
to ABSA restructured and rearranged.
[11] Section 129(1) of
the Act provides that if a consumer is in default, the credit
provider may, before enforcing the debt, draw
the default to the
notice of the consumer in writing and propose that the consumer
refers the credit agreement to a debt counsellor,
an alternative
dispute resolution agent, a consumer court or an ombud (with the
intent that the parties resolve any dispute under
the agreement or
develop and agree on a plan to bring the payments under the agreement
up to date), and that the credit provider
may not commence legal
proceedings to enforce the agreement before first delivering the
aforesaid notice to the consumer in compliance
with section 130 of
the Act.
[12] It is contended that
the Marwicks did not receive the notice; alternatively, that if they
did, the notice is defective in that
it does not specifically advise
the Marwicks that they can approach a debt counsellor … ‘with
the intent that the
parties develop and agree on a plan to bring the
payment under the agreement up to date’.
[13] I am not persuaded
that the Marwicks did not receive the notices, which appear to have
been sent to a post office box address
at the Liberty Midlands Mall.
Both notices were dated during January 2008, and had been addressed
to Mr and Ms Marwick respectively.
Both notices reflect that the
parties may approach an alternative dispute resolution agent, the
consumer court or an ‘ombud’
with jurisdiction to assist
them. During February 2008 ABSA’s attorney received a letter
sent from Mr Marwick’s email
address but addressed by Cheryl
Marwick (Ms Marwick), apologising for not replying to the attorney’s
‘letters’
a
nd continuing as follows:
‘
It was only
when I
brought
the letters home and opened them
all
that the error was revealed My husband had been faxing the legal dept
of Absa ( … his last fax was on
30/01/08
- the date of your letter
)
and we naively thought that they were withholding legal action. Thank
you for suggesting the
ombudsman
and/or a.n.other.
My husband will be following this up’
(emphasis
added).
[14] The following is
apparent from a reading of this letter:
that the letters
referred to were not sent to the Marwicks’ home but had to be
collected from somewhere;
that if this letter had
been typed by Mr Marwick unbeknown to Ms Marwick (as has been
suggested in argument), he would not have
referred to ‘my
husband’;
that the reference to
‘
the date of your letter’
happens to coincide
with the actual date of the notices sent by ABSA’s attorney,
namely 30/01/2008. Neither of the Marwicks
would have known when the
attorney’s letter was dated, if they had not perused it;
that it is highly
probable that Ms Marwick’s referral to the ombudsman and/or
others had its origin in the same references
used by the attorney in
the section 129 notice.
[15] In the premises I am
satisfied that the Marwicks were advised of their rights in terms of
section 129 prior to the enforcement
of the debt.
[16] As for the
contention that the section 129 notice is defective in that it does
not specifically advise the Marwicks that they
may refer the credit
agreement to a third party ‘with the intent that the parties
resolve any dispute under the agreement
or develop and agree on a
plan to bring the payments under the agreement up to date…’
,
the Act does not require the credit provider to advise
the consumer of the intention behind drawing the default to the
defaulter’s
attention nor does the Act require that a list of
options which the consumer may choose to exercise when referring the
credit agreement
should be made available to the consumer in the
section 129 notice as a type of checklist. To do so in any event
would simply be
absurd and achieve nothing whatsoever.
[17] I now turn to the
contention that the judgment on confession granted on 19 November
2008 (for payment of the debt) was granted
in error as the court
would not have done so had it been made aware of the circumstances
under which the confessions to judgment
had been obtained (in a
nutshell being that the Marwicks were not advised at the time as to
what exactly they were signing as they
were dealing with ABSA’s
attorney and did not have their own independent legal
representation).
[18] There exists a
factual dispute as to whether the Marwicks knew what they were
signing. ABSA’s attorney avers that he
explained to them what
they were signing and what they were committing to, despite the fact
that there was no legal duty upon him
to do so. I have taken the
liberty of perusing the original documents under case number 4285/08
when judgment was granted against
the Marwicks. I digress to mention
that this file was reported to have gone astray and has taken some
time to trace.
[19] From the time that
the Marwicks delivered their notice of
intention to defend, they
made it quite clear that they were acting in person. The notice of
intention to defend for example, has
the words FIRST DEFENDANT IN
PERSON and SECOND DEFENDANT IN PERSON in clear bold capitals below
the signatures of the Marwicks
on two different pages.
[20] The service
affidavit of Mr Louw (the respondent’s attorney) confirms that
he delivered two copies of the application
for summary judgment to
the Marwicks’ home address (as opposed to notifiying an
attorney).
[21] More particularly
each of the two originally signed consents to judgment comprises two
pages. The first page, setting forth
the judgment, runs onto the
second page and is then signed by each of the Marwicks, whereafter
they each again signed on the second
page of their verification
affidavits.
[22] Rule 31(1)(b) of the
High Court rules specifically caters for the unrepresented debtor. It
reads as follows:
“
Such
confession shall be signed by the defendant personally and his
signature shall either be witnessed by an attorney acting for
him,
not being the attorney acting for the plaintiff, or be verified by
affidavit.”
[23]
The
requirements of the rule as regards this mode of
execution are peremptory
and rightly so, particularly in that the rule not only provides for
the giving of judgment against a defendant
on a confession, but it
furthermore provides that such judgment may be applied for and given
without any notice to the defendant.
See:
Sunset Investments
(Pty) Ltd v Bramdaw and Others
1973 (2) D&CLD
415 at 418B – G)
[24] It has not been
argued that the provisions of the rule have not been complied with.
What has been contended is that the Court
granting judgment was not
aware of the fact that the Marwicks did not have legal
representation.
[25] These papers were
perused by two judges, firstly by the judge who granted the judgment
on confession and again the following
day by another judge who
declared the mortgaged property executable. That is clear
ex facie
the court orders themselves. It is trite that one of the
prerequisites for the granting of a judgment on confession is either
a properly executed verification affidavit, verifying the signature
to the consent itself, or the consent must be witnessed by the
debtor’s own attorney. It is clear in this matter from the two
verification affidavits that the Marwicks did not have an
attorney.
This would also have been seen by the judge granting the judgment.
[26] Accordingly the
contention that the judgment was granted in
error because the judge
did not know that the parties were not legally represented must fail.
In any event, even if the judge was
unaware of this fact, proper
compliance with rule 31 is all that is required for judgment to
follow. I say so particularly because
strict compliance with the rule
elevates a judgment on confession to the level of one which cannot be
rescinded.
[27] This is so for the
following reasons:
Rule 31(2) which
traverses default judgment, reads as follows:
“
(2)(a)
Whenever in an action the claim … is not for a debt or
liquidated demand and a defendant is in default of delivery
of notice
of intention to defend or of a plea, the plaintiff may set the action
down … for default judgment and the court
may, after hearing
evidence, grant judgment against the defendant or make such order as
to it seems meet.
(2)(b) A defendant may within twenty
days after he or she has knowledge of such judgment apply to court
upon notice to the plaintiff
to set aside such judgment and the court
may, upon good cause shown, set aside the default judgment on such
terms as to it seems
meet.”
There is no similar
provision in rule 31(1) for the setting aside of a judgment on
confession. Naturally, as I have mentioned
herein- before, if there
is any irregularity in the consent to judgment itself, it may be set
aside, for example where it is
drawn up for the defendant by or in
the offices of the plaintiff’s attorney (as in this case)
unless verified by affidavit
(as also in this case). See:
Mostert v SA
Association 1868 Buch 286
However, a consent to
judgment duly executed cannot be arbitrarily revoked or withdrawn,
nor can a defendant against whom judgment
has been granted in term
of a duly executed consent be entitled to apply for the rescission
of such a judgment. See:
Moshal Gevisser
(Trade Market) Ltd v Midlands Paraffin Co
1977 (1) SA 64
(N)
Morkel v Absa Bank
Bpk
1996
(1) SA 899
(C) at
902F
Standard Bank of SA
Ltd v Essop
1997 (4) SA 569
(D)
at 576D
[28] The applicants have
made their best endeavours to raise a bouquet of issues in an attempt
make out a case for a rescission
of the judgment sounding in money.
However, none of these issues come even close to suggesting that the
consent was not duly executed
in the manner prescribed by rule 31 or
that it is tainted by fraud. This being the case, I am of the view
that the other issues
raised are irrelevant to a determination of
whether the judgment on confession ought to be set aside. By the same
token I do not
deem it necessary to address the various further
proposals raised by the applicants which proposals ought only to be
given serious
consideration in the event of the judgment on
confession having been set aside.
[29] I now turn to the
contention that the order, declaring the mortgaged property
executable, ought to be set aside because, so
it is contended, the
Marwicks, when the order was made, had not been afforded the
opportunity to address the Court on their right
to housing and as
such, the practice directives of this Court had not been complied
with.
[30] Item 26 (issued on
10 January 2006) of this court’s practice manual states that as
from 15 December 2005 any summons
initiating action in which a
plaintiff claims relief declaring immovable property executable shall
draw the defendant’s attention
to section 26(1) of the
Constitution which accords to everyone the right to have access to
adequate housing, and that should the
defendant be of the view that
the order for execution was infringing that right, that it was
incumbent on the defendant to place
information supporting that claim
before the court.
[31] It is not disputed
that the Marwicks were informed of this right
ex facie
the
summons issued on 7 March 2008. In
Gundwana v
Steko
Development and Others
2011 (3) SA 608
(CC)
it was
declared unconstitutional
for the registrar to declare immovable property specially executable
when ordering default judgment under
rule 31(5)(b) to the extent that
this permits the sale in execution of the home of a person. The
effect of this decision, read
with subrule 5(b) and rule
46(1)(a)(ii), is that the registrar has to refer all applications for
default judgment in which an order
declaring specially executable a
judgment debtor’s usual or ordinary residence (such as the
property in question), for hearing
in open court; alternatively, that
such applications should have been enrolled for hearing in open court
in the first place.
[32] It has been argued
on ABSA’s behalf that the provision of judicial oversight
provided for in
Gundwana
only came into effect when the judgment was delivered on
11 April 2011 (resulting in a practice directive being issued in this
province
to give effect to the decision), and as such did not apply
when Madondo J made the order declaring the Marwicks’s property
executable on 20 November 2008.
[33] This is not
necessarily the position. Froneman J in traversing the question of
retrospectivity in
Gundwana
said
the following (at paras 57 to 60):
‘
[57] But
what about retrospectivity? In
Jaftha
,
this court placed no limit on the retrospectivity of its order. The
declaration of invalidity of the legislative provisions in
that
matter did not entail, however, that all transfers made subsequent to
invalid execution sales were automatically invalid.
Individual
persons affected by the ruling still needed to approach the court to
have the sales and transfers set aside if granted
by default. This
was made clear in
Menqa
and Another v Markom and others
2008 (2) SA 120
(SCA)
.
A similar approach should be followed here.
[58] There may be a fear that the
decision in this matter will lead to large-scale uncertainty about
its effects on past matters,
where homes were declared specially
executable by the registrar, and sales in execution and transfers
followed. The experience
following
Jaftha
may be an indication
that this fear is overstated. It must be remembered that these orders
were issued only where default judgments
were granted by the
registrar. In order to turn the clock back in these cases, aggrieved
debtors will first have to apply for the
original default judgment to
be set aside. In other words, the mere constitutional invalidity of
the rule under which the property
was declared executable, is not
sufficient to undo everything that followed. In order to do so the
debtors will have to explain
the reason for not bringing a rescission
application earlier, and they will have to set out a defence to the
claim for judgment
against them. It may be that in many cases those
aggrieved may find these requirements difficult to fulfill.
[59] From what has been stated above,
in relation to the legitimacy of resorting to execution in order to
obtain satisfaction of
judgment debts sounding in money, and that
only deserving cases would justify other means to satisfy the
judgment debt, it follows
that a just and equitable remedy, following
upon the declaration of unconstitutionality, should seek to ensure
that only deserving
past cases benefit from the declaration. I
consider that this balance may best be achieved by requiring that the
aggrieved debtors,
who seek to set aside past default judgments and
execution orders granted against them by the registrar, must also
show in addition
to the normal requirements for rescission, that a
court, with full knowledge of all the relevant facts existing at the
time of
granting default judgment, would nevertheless have refused
leave to execute against specially hypothecated property that is the
debtor’s home.
[60] Once these hurdles have been
cleared, and it is determined that special execution should not have
been allowed, the question
of the effect of invalid execution sales
and subsequent transfers will have to be considered as the next step.
It is not possible
to lay down inflexible rules to deal with all the
permutations that may arise in these cases. Existing legal principles
and rules
will be sufficient to deal with most cases in a just and
equitable manner.’
[34]
Gundwana
clearly makes provision for retrospective application in
deserving cases and seems to somewhat shift the duty from the
execution
debtor in terms of practice directive 26 (to show cause why
an order for execution should not be made), to the bondholder who, if
it wishes to execute on a mortgage bond, should first approach a
court of law for it to make a proper determination as to whether
the
sale in execution of the judgment debtor’s home is justifiable
in the circumstances of the case.
[35] Having said this, it
is still incumbent on this court - not only because of what I have
already stated, but also because
Gundwana
makes it
abundantly clear that an aggrieved debtor must not only first show
(as in the case of the judgment sounding in money) that
the normal
requirements for rescission have been met but also thereafter, that a
court, with full knowledge of all the relevant
facts existing at the
time of the granting of the default judgment, would nevertheless have
refused leave to execute against the
debtor’s home - to decide
whether the requirements for rescission have been met with respect to
the second judgment declaring
the property executable. In the event
of this question being answered in the affirmative, I do not deem it
necessary to decide
whether a court with full knowledge at the time
would have refused leave to execute. I say this because the second
leg of this
test is clearly (in terms of
Gundwana
)
only of application in those special instances where persons whose
homes were sold before
Gundwana
are seeking to have
affected sales and transfers set aside.
[36] In the matter before
me the sale has been interdicted pending the further determination of
this court. It is accordingly only
necessary for me to determine, on
this leg, whether there are grounds for setting aside the judgment on
confession, declaring the
immovable property executable. In my view
the same test applies as that which applied to the money judgment,
and the facts of this
case must also be distinguished from the
typical default judgment situation catered for in the practice
directives which follow
the
Gundwana
decision. To
emphasise, and stated differently, since there is in subrule (1) of
rule 31 no provision similar to that in subrule
(2)(b), a defendant
against whom judgment has been granted in terms of this subrule is
simply not entitled to apply for rescission
of the judgment (unless
of course there are persuasive allegations that the judgment was
fraudulently obtained, which is not the
case here).
[37] It has been argued
on behalf of the Marwicks that they were invited in the summons to
make representations in terms of section
26 of the Constitution “at
the hearing of the matter” and that because Ms Marwick
confessed to judgment declaring her
property executable, and because
the matter was thereafter never “heard” as the Marwicks
were not invited (after confessing
to judgment) to attend court when
“default” judgment was granted, that the judgment ought
to be rescinded.
[38] This argument is
unsustainable and in any event based on misconceptions. All that is
required of the bondholder is to inform
the judgment debtor of
his/her constitutional right to have access to adequate housing and
to invite him/her to place information
before the court should the
belief exist that such a right will be unduly infringed in the event
of an execution order being granted.
The practice directive does not
refer to the “hearing” of the matter, nor does the
summons in this case. What the summons
does do is to advise Ms
Marwick that if she objects to an order declaring her property
executable, that she is “obliged”
to place facts and
submissions before the court, failing which she runs the risk of such
an order being made. Against this backdrop
Ms Marwick nevertheless
signed a confession agreeing to this order being granted without any
further ado. Furthermore, the judgment
which was granted by Madondo J
in terms of this confession is not a “default” judgment
as urged for by the Marwicks
and as envisaged in
Gundwana
and which led to the introduction of the practice directive. It is a
judgment granted in terms of an unequivocal admission of the
claim
contained in the summons, which admission
ex facie
the formal
document, has complied with all the peremptory requirements set forth
in rule 31. In the premises, no grounds for rescission
exist on a
proper application of the legal principles pertaining to a consent to
judgment.
[39] According to the
summons, the property in Pietermaritzburg was mortgaged for R2 250
000,00 in 2006. It is averred that when
summons was issued in March
2008, Ms Marwick was in arrears with her repayments of this loan to
the tune of R125 626,88. The certificate
of balance reflects the
total amount due and payable to ABSA as at 17 January 2008 as being
R1 891 637,00. On 3 April 2012 this
court ordered the Marwicks to
“continue” paying ABSA the amount of R10 019,60 per month
pending the finalisation of
this application. This is clearly a
somewhat affluent estate and significantly distinguishable from the
typical situation envisaged
in
Gundwana
where an
indigent debtor had already been evicted.
[40] In the premises I am
in any event of the view that the relevant circumstances of this
case, had they been fully considered
by the court which made the
order for execution based on the confession, are unlikely to have
persuaded the court to act any differently.
[41] Insofar as it may be
necessary to mention, the inclusion of Mr Marwick as a defendant in
the order declaring the property executable
is clearly an error not
only because he is liable for payment of the money debt only by
virtue of his position as a surety, but
more significantly because
the confession to judgment which forms the basis of this order states
that only Ms Marwick consents
to this judgment, duly verified by only
her signature and only her verification affidavit.
[42] This is also clear
not only
ex facie
the summons, but also from the original
application for judgment declaring the property executable (case no.
4285/08), where relief
is clearly sought against Ms Marwick as the
mortgagor only. Accordingly, the amendment to that order which
follows, must not be
construed as a finding that the Marwicks have
been partially successful in their rescission application. It is
merely the correction
of an obvious mistake which if undetected,
would in any event have had no effect on Mr Marwick.
In the premises I make
the following order:
ORDER:
The order granted by
Justice Madondo on 20 November 2008 under case no. 4285/08 is
amended by the deletion of the words “second
defendant”
wherever they may appear.
With respect to the
order made by Justice Koen
on 30 April 2012 under
case no. 3351/12:
The
rule nisi
is
discharged.
The interim relief
granted in terms of paras 1.3
and 1.4 of the
rule
nisi
is set aside.
The first and the second
applicants are directed (jointly and severally, the one paying the
other to be absolved) to pay the first
respondent’s costs of
the rescission application (including the costs of the application
for urgent interim relief heard
on 30 April 2012) on the scale as
between attorney and client.
________________
STRETCH AJ
Appearances /
Appearances
For the Applicants
: Mr. A.R. Khan
Instructed by
:
Swaleh Mahomed Attorneys Pietermaritzburg
For the 1
st
Respondent
: Mr. R. van Rooyen
Instructed
by
: Geyser Du Toit Louw & Kitching Inc.
Pietermaritzburg
Date
of Hearing
: 21 September 2012
Date of Filing of
Judgment
: 31 May 2013