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[2011] ZAKZDHC 84
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Zammit and Another v Standard Bank of South Africa Ltd (7593/10) [2011] ZAKZDHC 84 (2 June 2011)
IN THE KWAZULU-NATAL HIGH COURT,
DURBAN
REPUBLIC OF SOUTH AFRICA
CASE NO: 7593/10
In the matter between:
MARC HENRY ZAMMIT
….......................................................................
First
Applicant
LISA ANN MARIE ZAMMIT
…..............................................................
Second
Applicant
and
THE
STANDARD BANK OF SA LIMITED
…...............................................
Respondent
JUDGMENT
Rall
AJ,
[1] The applicants, who are married to
each other in community of property, seek the rescission of the
summary judgment granted
against them by default on 25 August 2010.
The judgment was for,
inter alia
, payment of the balance
outstanding on a mortgage bond over the applicants’ home and an
order declaring the property executable.
[2] In addition, the applicants have
applied for condonation of their failure to apply for rescission
within the time limit prescribed
by rule 31(2)(b). This was in
response to a point taken by the respondent in its answering
affidavit in the rescission application.
[3] However, the applicants cannot and
need not rely on that rule. Firstly, rule 31(2)(b) does not apply to
the rescission of a
summary judgment by default, but to the
rescission of a default judgment in terms of rule 31(2)(a), that is,
where the defendant
is in default of a notice of intention to defend.
Secondly, the applicants may apply for
rescission
under the common law
and
in terms thereof they must show sufficient cause.
1
This involves firstly, giving a
reasonable and acceptable explanation for the default and secondly,
showing a
bona fide
defence on the merits which,
prima
facie
, carries some
prospects of success.
2
The applicant for rescission may, in
addition, have to explain any delay in bringing the rescission
application.
3
[4] The applicants instructed
attorneys who delivered an appearance to defend the action. However,
no affidavit in opposition to
the application for summary judgment
was delivered and as a result, summary judgment was granted by
default in the absence of the
applicants and their legal
representative. The reason that they give for failing to deliver an
opposing affidavit is that their
Durban attorneys failed to inform
those instructing them of the application for summary judgment. In my
view, this is a satisfactory
explanation. The default was due to
fault on the part of attorneys in circumstances where that fault
cannot be attributed to their
clients.
[5] According to the applicants they
only became aware of the judgment when a writ was served on 7
September 2010. The rescission
application was only delivered on 8
November 2010. This two month delay is explained by the applicants as
follows. They had instructed
their attorneys to handle two matters on
their behalf, this matter and an unrelated matter. They agreed on a
fee of R8500.00 for
each matter. It was also agreed that before the
attorneys would start doing anything in either matter, the agreed fee
had to be
paid. The applicants paid their attorneys R8500.00,
intending it to be for this matter. However, the attorneys mistakenly
allocated
the payment to the other matter and so did not start
working on this matter. The mistake was realised on 4 November 2010
and the
rescission application was launched four days later.
[6] In my view, the delay is not
inexcusably long and in any event has been explained.
[7] The first defence which the
applicants raise is that they did not receive a notice in terms of
s129 or s86(10) of the National
Credit Act, 34 of 2005 (the NCA). In
this case the respondent only had to give notice in terms of the
latter section and proof
of posting would be sufficient. The
respondent has alleged in its summons that the debt review has been
cancelled, and annexed
to the summons is proof of posting of a notice
to the first applicant. However no proof of posting of such a notice
to the second
applicant was annexed to the summons or put before me.
[8] The respondent argues that because
the applicants are married to each other in community of property,
notice to one spouse is
sufficient. However, the bond is registered
in both applicants’ names, the respondent has sued both
applicants and the application
for debt review was made by both
applicants. I am accordingly of the view that it is arguable that for
the notice in terms of s86(10)
to be valid it had to be given to both
applicants.
[9] Secondly, the applicants allege
that the summons does not allege compliance with s86(10) and that it
is therefore defective.
I do not agree. Whilst it is correct that
there is no reference to that subsection in the summons, there is an
allegation in it
that the debt review process had been cancelled, and
the annexed letter of cancellation refers to the subsection.
[10] Thirdly, the applicants raise a
defence based on s86 of the NCA. They allege that the respondent was
not entitled to terminate
the debt review proceedings because an
application had been made in terms of s87 of the NCA to the Pinetown
Magistrates’
Court before the summons was served in this
matter. Relying principally on the full
bench
decision of the Western Cape High Court
in the unreported case
of
Wesbank v Papier and Anor
(Case No 14256/10), Mr Havemann,
who put up a capable and helpful argument on behalf of the
applicants, argued that the application
in terms of s87 precluded the
respondents from proceeding against his clients.
[11] On the other hand, the
respondent’s counsel urged me to follow the decision in
Firstrand Bank v Mvelase
2011(1)SA 470 (KZP). He also
contended that the
Papier
case was in any event
distinguishable from the present one because in the former case no
application to the magistrates’ court
had been brought by the
time action was instituted.
[12] I reserved judgment in order to
give further consideration to the above two cases. However, whatever
my views were on the matter
and whatever the merits of counsel’s
argument became totally irrelevant on 27 May 2011 when the Supreme
Court of Appeal handed
down its judgment in the matter of
Collett
v Firstrand Bank and Anor
(Case No 766/2010 [2011] ZASA 78). In
that case the court came down squarely on the side of the decisions,
including the
Mvelase
case, in which it was held that a credit
provider could cancel a review process notwithstanding the fact that
the matter was pending
before a magistrate in terms of s87 of the
NCA.
[13] In my view that is not the end of
the matter however. Apart from what I have stated in paragraph [8]
above, there are possible
defences open to the applicants arising
from the
Collett
case. Firstly, based on what is stated in
paragraph [28] of the judgment, it is arguable that in order for a
s86(10) notice to
be valid, it has to be filed at court and there is
no evidence in this case of this having taken place. Secondly, it
would still
be open to the applicants to request this court at the
trial to order that the review process be reopened in terms of
s86(11) and
thereby delay judgment being granted (see paragraphs [15]
to [18] of the judgment).
[14] These defences are not all
defences to the respondent’s claim but are ones which, if
valid, would at least be sufficient
to delay judgment and are
sufficient for purposes of an application for the rescission of a
summary judgment.
[15]I am accordingly of the view that
they are defences which have some prospect of success. I am
furthermore of the view that the
applicants are
bona fide
in
bringing this application. They are simply attempting to prevent
their home from being sold. I accordingly find that the applicants
have made out a case for rescission of the judgment. It is therefore
not necessary for me to consider the other points raised on
behalf of
the applicants.
[16] Counsel for the respondent agreed
to my suggestion that in the event of rescission being granted, no
point would be served
in allowing the application for summary
judgment to proceed. Instead he suggested that the matter should
proceed to trial on the
expedited roll. No objection to this was
raised on behalf of the applicants and this seems eminently sensible.
The issues are crisp
and capable of speedy disposal.
[17] Finally, on the merits of the
case I need to deal with the application which the applicants brought
to stay the sale in execution
of their property. In that application
a rule was granted on 10 November 2010 in terms of which firstly
‘That execution be
stayed pending the outcome of the said
application for rescission…’ and secondly that the first
part of the rule ‘be
effected forthwith’(sic). The rule
was ordered to operate as an interim order ‘pending the return
day of the
rule nisi’
. Finally the order contained a
final costs order reading ‘That the applicant (sic) pay the
costs of this application unless
the respondent opposes this
application.’ The rule was ultimately adjourned
sine die
with the costs reserved. What costs these are in the light of the
costs order of 10 November 2010 and of the fact that the respondent
did not oppose the application, is not clear. Presumably they are the
costs occasioned by the adjournment.
[18] The order of 10 November 2010 is
rather confusing but the interim relief will probably lapse once the
judgment is rescinded.
Nevertheless, in order to avoid any confusion
it is probably best that the rule be discharged.
[18] The only fair costs order is for
the costs of both the application for summary judgment and the
application for rescission
(including the application for
condonation) to be reserved for decision by the trial court. That
court will have all the facts
before it and so will be best equipped
to decide the issue of costs. As far as the costs of the application
to stay the sale is
concerned, it would be best to clarify the
situation by ordering the applicants to pay those costs, in line with
the order granted
at their request
[18] I therefore make the following
order:
The judgment granted against the
applicants on 25 August 2010 is rescinded.
The application for summary judgment
is refused.
The applicants are given leave to
defend the action.
It is directed in terms of practice
rule 21.3 that the action be enrolled on the expedited roll and that
the provisions of practice
rule 21.4 shall apply to this matter.
The
rule nisi
granted on 10
November 2010 is discharged.
The applicants are ordered to pay the
costs of the application for the order granted on 10 November 2010.
The costs of the applications for
summary judgment, rescission and condonation are reserved for
decision by the trial court.
RALL AJ
Date argued: 24 May 2011
Date of judgment: 2 June 2011
1
De
Wet v Western Bank 1979(2) SA1031(A) at 1042 F-H
2
Chetty
v Law Society Transvaal 1985(2) SA756 (A) at 765 A-C
3
Athmaram
v Singh 1989(3) SA 953(D) at 958