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[2011] ZANCHC 8
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Greeff v Firstrand Bank Ltd (744/2010) [2011] ZANCHC 8; 2012 (3) SA 157 (NCK) (20 May 2011)
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IN THE HIGH COURT OF
SOUTH AFRICA
(Northern Cape High
Court, Kimberley)
Case Nr: 744/2010
Case Heard:
06/05/2011
Date delivered:
20/05/2010
In
the matter between:
Elishia
Maria Greeff
…............................
APPLICANT
and
Firstrand
Bank Limited
…......................
RESPONDENT
JUDGMENT
Olivier J:
BACKGROUND
The applicant, mrs
Elishia Maria Greeff, and the respondent, Firstrand Bank Ltd, are
parties to a loan agreement in terms of which
the respondent granted
the applicant a loan for the purchase of an immovable property. As
security a mortgage bond was registered
over the property in favour
of the respondent.
It is not in dispute
that the property is the only immovable property of the applicant
and that the house on the property is the
prime and only place of
residence of the applicant and her children.
The applicant failed
to pay the monthly instalments as agreed. On 4 May 2010 the
respondent caused a summons to be issued for,
inter alia
,
payment of the outstanding balance of R315 615,75, and interest
thereon, as well as for an order declaring the said property
specially executable. No notice of intention to defend was filed and
on 31 August 2010 the registrar granted orders to this effect
in
default judgment in terms of uniform rule 31 (5).
It
is common cause that the registrar at a later stage issued a writ of
execution in respect of the property, on the basis of
the default
judgment. It is not clear exactly when the writ was issued, but it
would appear to have been before the as yet unreported
judgment of
the Constitutional Court in
Gundwana
v Steko Development CC and Others
(the
National
Consumer Forum
as
amicus
curiae
)
1
.
On 25 April 2011 the
applicant delivered the papers in this application (or rather copies
thereof, because the application was
only lodged with the registrar
on 30 March 2011) to the respondent. The relief claimed in the
notice of motion is:
condonation of the
non-compliance with the rules pertaining to form and service;
rescission of the
default judgment and the setting aside of the writ, alternatively
its suspension pending finalisation of the
application;
a
declaration in terms of section 85 (b) of the National Credit Act
2
(“
the
Act
”
)
that the applicant is over-indebted;
the stay of a sale in
execution which was to have taken place on 14 April 2011; and
an order that the
respondent pay the costs of the application.
CONDONATION
The application was
initially set down for 8 April 2011, which would have been the 10
th
day after it had been “
filed
” with the
respondent. There is no indication of the respondent having been
prejudiced by the fact that there had not been
10 clear court days
between these dates, or by the fact that the papers (or copies
thereof) were delivered to the respondent
before the application had
actually been lodged. These points were not raised on behalf of the
respondent and the application
for condonation was never opposed.
Insofar as condonation may be required it will therefore be granted,
especially in view of
what follows.
SALE IN EXECUTION
On 8 April 2011 the
matter was postponed to 6 May 2011 for hearing. The planned sale of
14 April 2011 has become irrelevant and
Ms Jordaan, the attorney who
appeared on behalf of the applicant, indicated that relief in this
regard was no longer required.
EXPLANATION FOR
DEFAULT
The
test applicable where a rescission of a default judgment is claimed
on the basis relied upon here is trite
3
.
As regards the failure
to defend the action and the period between the date of the default
judgment and the date of the application,
it is the applicant’s
case that the summons never came to her attention and that she only
became aware of it, and of the
judgment, when a notice of the
intended sale in execution was served on her 10 year old daughter on
7 March 2011.
The
provisions of section 36 (2) of the
Supreme
Court Act
4
are
to the effect that a return of service will constitute
prima
facie
proof
of the contents thereof. It follows that such evidence may be
challenged
5
.
This
is exactly what the applicant did in her founding affidavit. The
applicant pointed out that, according to the sheriff’s
return,
the summons had been served by attaching it to the main door of her
house
6
in
her absence and stated:
that the house had
been fenced in, that the gate had at all times been locked and the
sheriff would not in the circumstances
have had access to the main
door of the house; and
that she never
received or became aware of the summons before 7 March 2011.
The only comment to
this by Mr Robert Freeborough, the deponent for the respondent, was
to repeat the statement in the return
that the summons had been
attached to the main door of the house.
Mr Freeborough
described himself as “
the Operations Manager: Legal Arrears
of the Respondent
”. He is clearly not the sheriff who
claims to have served the summons and he could not on the face of it
have any first-hand
knowledge of whether and how the summons had
been served. Mr Freeborough’s statement in this regard
therefore cannot be
said to have created a genuine factual dispute.
This Mr Benade, counsel for the respondent, readily conceded.
The
respondent apparently never took the trouble of having the
particular sheriff approached for his comment on what the applicant
stated in her founding affidavit and in the circumstances the
applicant’s version in this regard has to accepted as correct.
Consequently it cannot be found that the summons had indeed been
served in accordance with the provisions applicable to service
at a
domicilium
citandi
7
.
As regards the period
after default judgment had been granted (on 31 August 2010) and
until the notice of the sale was served
on 7 March 2011, the
applicant states that she at no stage became aware (before 7 March
2011) of the judgment. No writ of execution
or notice of attachment
was served on her.
Mr Freeborough’s
only reaction to this was to state that the applicant’s
version in this regard was “
improbable
”. No basis
was laid for this statement and quite clearly, and again readily
conceded by Mr Benade, Mr Freeborough’s
reaction could not be
said to have raised a genuine dispute as far as this is concerned.
It was not disputed that the notice
of sale had indeed been served
on 7 March 2011 (nor, incidentally, that it had been “
served
”
on a 10 year old child).
Mr Freeborough did
refer to telephonic conversations with the applicant on 16 and 22
November 2010. He stated that the applicant
had, during those
conversations, promised to make certain payments in reduction of the
arrears and, more importantly, that the
purpose of those calls to
the applicant had been “
to advise her that the Respondent
were (
sic
) waiting for a sale date of the
property
”.
Mr Freeborough was,
however, not prepared to say who it was that had phoned the
applicant. He merely stated that she had been
phoned.
In reply the applicant
admitted that the telephone conversations had taken place and that
she had made some of the payments referred
to by Mr Freeborough.
However, she categorically denied:
that Mr Freeborough
had been the person involved in those conversations; and
that she had at any
stage during those conversations been made aware of the summons or
of the default judgment.
It consequently has to
be accepted, even on Mr Freeborough’s own version, that his
remarks in this regard constituted hearsay
evidence. No reason was
advanced why it should be admitted as evidence to refute the
applicant’s clear statement on oath
that the existence of the
default judgment had only come to her attention on 7 March 2011.
I
therefore come to the conclusion that the applicant has indeed
furnished a reasonable explanation for the failure to defend
the
action and for the fact that this application was only lodged in
March 2011, some seven months after the default judgment
had been
granted. The application was lodged within the prescribed period of
20 days
8
after
the applicant had become aware of the default judgment.
BONA FIDES
There is no suggestion
that this is not a
bona fide
application.
DEFENCE
The
applicant stated that she is over-indebted. In order to show good
cause for the rescission of the judgment all the applicant
had to do
in this regard was to make out a case that she had a defence which
she could raise at the trial and which could
prima
facie
succeed
9
.
This
differs from the test to be applied in considering whether the
applicant should, at this stage and by this Court, in terms
of
section 85 (b) of the Act be declared to be over-indebted. In such a
scenario the applicant would have been burdened with
an onus to
prove on a balance of probabilities that she is indeed at this stage
over-indebted as envisaged in section 79 (1)
of the Act
10
.
Ms Jordaan, however,
abandoned the relief that had been sought in terms of s 85 (b) of
the Act. It is not therefore necessary
to decide whether the
applicant had shown on a balance of probabilities that she is
over-indebted, or to consider Mr Benade’s
argument that it
would not at this stage be competent for this Court to make an order
in terms of section 85 (b).
What has to be
considered, however, is whether the averments in the founding
affidavit regarding over-indebtedness would satisfy
the standard
required for the purposes of the rescission of a default judgment,
in other words whether they made out a case for
a defence that would
prima facie
have succeeded to defeat the respondent’s
claim at the time when default judgment was granted. I think not.
The applicant, in
dealing with her income and expenditure, and her liabilities, made
it very clear that she was dealing with her
present circumstances,
in other words the circumstances that existed when she deposed to
her founding affidavit on 23 March 2011,
and not with the
circumstances as at the date of her breach of the credit agreement,
or as at the date of the default judgment
some seven months earlier.
The fact that she had only later become aware of the judgment did
not prevent her from dealing with
her earlier circumstances, and she
also never even attempted to raise this as an excuse for not dealing
with her earlier circumstances.
The
applicant did not make any allegations regarding the values of her
assets. We know what the outstanding amount on the house
is, but not
its value. We know that the applicant has only one vehicle, but
again not what its value is
11
.
The
applicant has not even attempted to explain when and how she had
fallen into a state of over-indebtedness, or why she had
never
before March 2011 (when she approached a debt councellor) taken
steps to address the problem
12
.
It is undisputed that she had fallen into arrears with her bond
instalments before March 2010, in other words more than a year
before she eventually approached a debt councellor (and even then
clearly only after having been prompted to do so by a second
notice
in terms of section 129 of the Act
13
).
By then this default judgment had, however, already been granted.
SECTION 129 (1)
NOTICE
There is, however, in
my view another defence to the respondent’s claim. It has not
been raised on behalf of the applicant,
but in my view it appears
clearly from the very papers upon which the respondent had relied
for the purposes of its application
for default judgment.
It concerns the
section 129 notice (the first, and the only one predating the
summons) referred to by the respondent in paragraph
7 of the
summons, in alleging that the applicant had been properly notified
in terms of section 129 (1) of the Act. Although
the applicant
herself also did not pertinently raise non-compliance with sections
129 (1) and 130 (1) of the Act as a defence,
she did deny having
received this notice.
It
is, as already mentioned, this notice upon which the respondent had
relied as “
a
critical cog in
(its)
cause
of action
”
and
without which the institution of the respondent’s action would
not have been possible
14
.
The respondent claimed
to have sent this notice to the applicant by registered post on 2
March 2010, and therefore well before
the institution of the action.
As I have said, the respondent for some unknown reason sent another
section 129 notice to the
applicant at a later stage. It is dated 22
February 2011, well after the issue and alleged service of the
summons, and the fact
that the applicant admits having received this
later notice on 9 March 2011 is therefore irrelevant for the
purposes of section
130 (1) (a) of the Act, which requires a credit
provider to “
deliver
” such a section 129 notice
to the consumer not less than 10 days before approaching a Court to
enforce a credit agreement.
Mr
Benade was constrained to concede that non-delivery of the March
2010 notice would be a conclusive defence to the respondent’s
claim, but he argued, with reference to
inter
alia
Starita
v Absa Bank
15
,
that the posting of that notice constituted proper delivery for the
purposes of the Act.
It is also so that it
was agreed, in clause 4.33.6.2 of the loan agreement, that any
notice posted by registered post would “
be deemed to have
been duly received by the addressee …. on the fifth day
following the date of such posting
”.
That
the mere posting of such a notice could, where the consumer had
chosen posting as a means of the delivery of such a notice,
constitute “
delivery
”
of
the notice, without the credit provider having to prove actual
receipt thereof, was confirmed by the Supreme Court of Appeal
in the
Rossouw
case
referred to above
16
.
It is, however, important to note that this would only be the
position where the credit provider had indeed complied with the
method of delivery chosen by the consumer.
“
It
appears to me that the legislature’s grant to the consumer of a
right to choose the manner of delivery inexorably points
to an
intention to place the risk of non-receipt on the consumer’s
shoulders. With every choice lies a responsibility, and
it is after
all within a consumer’s sole knowledge as to which means of
communication will reasonably ensure delivery to
him. It is entirely
fair in the circumstances to conclude from the legislature’s
express language in s 65(2) that it considered
despatch of a notice
in
the manner chosen
by
the appellants in this matter sufficient for purposes of s 129 (1)
(a), and that actual receipt is the consumer’s
responsibility
.”
17
(My emphasis)
The applicant indeed
exercised her right to choose a method of delivery in terms of
section 65 (2) of the Act. In clause 4.33
of the loan contract the
following was agreed in their regard:
“
4.33
The parties elect the following addresses:-
Postal
addresses
for all forms, communic-tions and
notices
which will be
sent by registered or ordinary post
:-
the Lender
nominates the postal address ….
the Customer
nominates the
postal address
reflected on the first page
of this agreement.
Physical
addresses
for the
service
of all forms,
notices
and documents
in respect of any legal proceedings
which may
be insti-tuted by virtue hereof:-
the Lender
nominates the physical address ….
4.33.2.2 The
Customer nominates the
physical address
reflected
on the first page of this agreement
”
(My emphasis)
The applicant’s
chosen or elected addresses appear as follows on the first page of
the agreement:
“
ELISHIA
MARIA GREEFF
Identity number
780822 0068 08 3
(“the
Customer”)
39-8
TH
STREET, HOMEVALE, KIMBERLEY,8301
Physical address
318 GEMSBOK STREET,
GRIEKWASTAD, 8365
Postal address
”
The respondent’s
section 129 notice of March 2010 was addressed and posted (by
registered mail) to 39 8
th
Street, Homevale, Kimberley,
in other words to the applicant’s chosen physical address, and
not to the address chosen by
the applicant for the receipt of,
inter
alia
, notices sent to her by post.
When
I took this up with Mr Benade he argued, if I understood him
correctly, that a notice in terms of section 129 would constitute
a
notice “
in
respect of legal proceedings
”
18
and
would as such form part of a so-called more serious category of
notices
19
(than
those intended in clause 4.33.1) and that such notices had been
intended to be addressed to the applicant’s physical
address,
rather than to her postal address. According to Mr Benade’s
argument the notices intended in clause 4.33.1 would
then be
so-called less serious notices.
I
cannot agree with mr Benade’s argument in this regard. There
is absolutely no reason at all why the parties would have
intended
to exclude a section 129 notice from those notices which the
respondent could deliver by means of posting it. In fact,
the
delivery of section 129 notices by post has been expressly
sanctioned as a method of delivery which a consumer can elect
and
which would constitute sufficient delivery for the purposes of
sections 129 and 130 of the Act
20
.
After
all, even a document “
potentially
far more detrimental to the consumer
”
like
a summons may, where a
domicilium
address
has been chosen, be served by merely leaving it at such address
21
.
Even if the
interpretation of the agreement proposed by Mr Benade were to be
accepted as correct, the fact then remains that the
March 2010
section 129 notice was not delivered by “
service
”,
as agreed in clause 4.33.2. The sending of the notice by registered
post could never have constituted “
service
”. It
is abundantly clear, to my mind, that the parties had intended to
make it possible to choose different addresses for
the method of
posting, on the one hand, and for the method of service, on the
other hand.
In my view the
inescapable consequence of the respondent’s failure to comply
with the applicant’s chosen method for
the delivery of this
notice was that the respondent bore the risk of non-receipt, and the
burden of proving that it had not only
sent this notice by post, but
that the applicant had indeed received it. The applicant’s
statement that she had never received
the March 2010 notice was not
disputed, or even challenged in any way. There is, for example, no
evidence that a notice to collect
registered post was delivered,
that the registered letter was in fact collected at the Post Office
or that it has not been returned
to the respondent as undelivered.
It follows that I am
of the view that the default judgment should not have been granted,
because the respondent had on its own
allegations (read with the
annexures to the summons) not delivered the section 129 notice as
required by the Act. This would
of course constitute a proper
defence and, in view of the conclusions to which I have already come
as regards the applicant’s
explanations and the
bona fides
of her application, it follows that the default judgment should be
set aside.
WRIT OF EXECUTION
In
his heads of argument mr Benade submitted, with reference to the
Gundwana
case
referred to above
22
,
that the applicant had failed to “
show
… 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
”
23
.
The
Gundwana
case concerned the constitutionality of orders, in default judgment
by the registrar, declaring mortgaged property specially
executable.
The requirement laid down in paragraph [59] of that judgment was
intended to apply to judgment debtors seeking the
rescission of such
orders made by the registrar before the finding of
unconstitutionality.
The
applicant, however, does not have to rely on the unconstitutionality
of the registrar’s order or of the writ. The rescission
of the
default judgment will automatically render the writ useless and of
no force
24
.
COSTS
In
some instances the rescission of a default judgment is regarded as
an indulgence, and the applicant is then ordered to pay
the costs of
such an application
25
.
In
this case there are, however, different considerations. The
respondent has, through its failure to challenge the applicant’s
allegations concerning the alleged attachment of the summons to the
main door of the
domicilium
citandi
,
caused a question mark to hang over whether the summons had indeed
been served. It has also failed to produce proof of a notice
of
attachment by the sheriff
26
,
the service of which may have shown that the applicant had been
aware of the judgment at an earlier stage than alleged by her.
On the other hand the
applicant failed to make out a
prima facie
case for a defence
of over-indebtedness and she also failed to pertinently raise the
defence that the first section 129 notice
had not been sent to her
chosen postal address.
To my mind a fair
result would in the circumstances be that each party pay its own
costs, which would then include the costs of
the postponement of 8
April 2011.
ORDERS
The following orders
are therefore made in this matter:
Condonation of the
non-compliance with the rules regarding form and service is granted.
The default
judgment granted by the registrar on 31 August 2010 under case
number 744/2010 against the applicant in favour of
the respondent is
set aside.
The writ of
execution granted by the registrar in enforcement of the said
default judgment in respect of Erf 16845, Kimberley,
is set aside.
Each party will pay
its own costs, which costs will include those of 8 April 2011.
______________________
C J OLIVIER
JUDGE
NORTHERN CAPE
DIVISION
For the Applicant: Ms S
Jordaan
Instructed by: Jordaan
Attorneys, KIMBERLEY
For the Respondent: Adv H J
Benade
Instructed by: Duncan &
Rothman, KIMBERLEY
1
Case
CCT 44/10,
[2011] ZACC 14
, 11 April 2011
2
34
of 2005
3
Herbstein
& Van Winsen, The Civil Practice of the High Courts of South
Africa
, 5
th
edition, vol 1, Cilliers
et
al
, p715.
4
59
of 1959
5
Erasmus
Superior Court Practice
, Farlam et al,
A1-95
6
The
applicant’s chosen
domicilium
citandi et executandi
7
Uniform
rule 4 (i) (a) (iv)
8
Uniform
rule 31 (2) (b)
9
Grant
v Plumber (Pty) Ltd
1949 (2) SA 470
(O) at 476-477
10
Standard
Bank of South Africa Ltd v Panayiotts
2009
(3) SA 363
(W) para’s [8] – [10], [40], [55] and [56].
11
Standard
Bank of South Africa Ltd v Panayoitts, supra,
para’s
[64.1] and [75]
12
Compare
Firstrand Bank Ltd v Olivier
2009 (3) SA 353
(SECLD) para’s [15] and
[16]
13
To
which I will revert in due course
14
Rossouw
v Firstrand Bank
2010 (6) SA 451
(SCA)
para [38]
15
2010
(3) SA 443
(GSJ) at 453 H
16
Paragraph
32, footnote 14
17
Rossouw
v Firstrand Bank, supra,
para [32]
18
As
envisaged in clause 4.33.2 of the loan agreement.
19
Presumably
because of its essential role in the institution of legal
proceedings.
20
Rossouw
v Firstrand Bank, supra
, para [30]
21
Starita
v ABSA Bank, supra
, para [18.11]
22
Paragraph
[4], footnote 1
23
Gundwana
v Steko Development CC and Others (National Credit Forum as
amicus
curiae
), supra
,
para [59]
24
Le
Roux v Yskor Landgoed (Edms) Bpk en Andere
1984
(4) SA 252
(TPA) at 257 H
25
Phillips
t/a Southern Cross Optical v SA Vision Care (Pty) Ltd
2000 (2) SA 1007
(C) at 1015G-H
26
Uniform
rule 46 (3)