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[2020] ZASCA 127
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Huysamen and Another v Absa Bank Limited and Others (660/2019) [2020] ZASCA 127 (12 October 2020)
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THE
SUPREME COURT OF APPEAL OF SOUTH AFRICA
JUDGMENT
Not Reportable
Case
no: 660/2019
In
the matter between:
WILHELM
GEORGE
HUYSAMEN FIRST
APPELLANT
CONSTANTIA
TONIA HUYSAMEN SECOND
APPELLANT
and
ABSA
BANK
LTD FIRST
RESPONDENT
KOLMAN,
JAROD SECOND
RESPONDENT
DU
PLESSIS,
PHILIP THIRD
RESPONDENT
REGISTRAR
OF DEEDS, PRETORIA FOURTH
RESPONDENT
THE
SHERIFF, SANDTON
SOUTH FIFTH
RESPONDENT
INVESTEC
BANK
LIMITED SIXTH
RESPONDENT
Neutral
citation:
Huysamen
& another v Absa Bank Limited & others
(660/2019)
[2020] ZASCA 127
(12 October 2020)
Coram:
CACHALIA, DAMBUZA,
DLODLO NICHOLLS JJA and MATOJANE AJA
Heard
:
25 August 2020
Delivered
:
This judgment was handed down electronically by circulation to the
parties’ legal representatives by email, publication
on the
Supreme Court of Appeal website and release to SAFLII. The date and
time for hand-down is deemed to be at 10h00 on 12 October
2020.
Summary:
Application
for condonation – adequacy of explanation for delay –
attorney remiss –
section 5
(1) of the
Insolvency Act 24 of
1936
considered.
ORDER
On
appeal from:
Gauteng
Division of the High Court, Pretoria (Manamela AJ sitting as court of
first instance):
1.
The application for
condonation of the late filing of the notice of appeal and
reinstatement of the appeal is dismissed with costs
on an attorney
and client scale including costs-consequent upon the employment of
two counsel.
2 The costs in (1) above are to be
paid by the applicants and their attorney
de bonis propriis,
jointly and severally, the one paying the other to be absolved.
JUDGMENT
Dlodlo
JA (Cachalia, Dambuza, Nicholls JJA and Matojane AJA concurring):
[1] This is an application for
condonation for the late filing of a notice of appeal and the
reinstatement of a lapsed appeal. The
appeal is against a judgment of
the Gauteng Division of the High Court, Pretoria (the high court)
dismissing an application by
the applicants to set aside a sale
in execution of immovable property for being offensive to the
provisions of
s 5(
1) of the Insolvency Act 24 of 1936
(the Act). The applicants’ complaint was that the sale was
unlawful because
they had already published notices surrendering
their estates in terms of s 4(1) of the Act at the time of the sale,
which had
the effect of prohibiting the sale from proceeding. The
applicants currently reside on the property known as Erf […]
Parkmore,
Johannesburg (the property). After dismissing the
application the high court granted leave to appeal to this court.
Facts
[2]
The applicants, who jointly owned the property, defaulted on their
bond repayment obligations. This prompted Absa to proceed
with legal
action against them by way of summons. On 16 April 2012, judgment was
granted against the applicants for payment of
R1 691 958
together with interest at a rate of 15.5% per annum compounded
monthly, calculated from 7 November 2008 to
date of payment and costs
on an attorney and client scale. On 28 February 2013, the property
was declared executable.
[3]
The applicants’ indebtedness to Absa was secured by three
mortgage bonds registered against the property, securing the
capital
and additional sums mentioned therein and interest. The mortgage
bonds served as continuing covering security for ‘each
and
every sum in which the mortgagor may now or hereafter become indebted
to (Absa)’. A writ of attachment of the property
was served on
the first appellant personally on 3 May 2013. On 31 May 2013, Absa
caused advertisements of the sale in execution,
scheduled for 18 June
2013, to be published.
[4]
On 13 June 2013, the notice was served on the first applicant
personally. On the same date, the applicants applied for the
voluntary surrender of their estates. They also lodged a statement of
their affairs as contemplated in s 4(3) of the Act
with
the Master of the High Court. On 14 June 2013, the applicants caused
a notice of their intention to apply for the surrender
of their
estates to be published in the Government Gazette.
[5]
The applicants did not, at the time, inform the Sheriff or Absa of
the aforementioned publications or their intended surrender
applications. According to Absa, by June 2013, they were indebted to
it in the sum of R3 292 106. Absa obtained a judgment
debt
against them, and the property, which Absa held as collateral, was
declared executable. In their statement of affairs, the
applicants
did not disclose the existence of the judgment debt against them.
Neither did they disclose the full extent of their
indebtedness to
Absa. They declared the sum total of their joint indebtedness to Absa
to be only R1 741 310 (R870 655
each). They valued the
property at R2 400 000. According to their statement of
affairs, the first applicant’s security
was limited to
R869 400. This was not true because Absa’s security was
unlimited.
[6]
On 18 June 2013 (as scheduled), the property was sold in execution.
It was bought by the second and third respondents (the purchasers).
The applicants’ attorneys posted a notice of the surrender
application to all creditors, including Absa. This was a day after
the purchase of the property. The notice was received by Absa’s
insolvency department on 5 July 2013. Absa’s attorneys
involved
in the foreclosure action against the applicants first acquired
knowledge of publication of the surrender notices and
the intended
applications when they were informed telephonically by the
applicants’ attorney on 5 August 2013. On 18 November
2014, the
transfer of the property to the purchasers was registered.
[7] In April 2015, the applicants
unsuccessfully brought an application in the high court to set aside
of the sale in execution.
In their application, they contended that
the sale was unlawful because the notice of the surrender had the
effect of suspending
any sale in execution in accordance with the
provisions of s 5(1) of the Act. In the alternative, the applicants
contended that
they had entered into a settlement agreement with
Absa. The high court dismissed their application on 14 August 2017.
Leave to
appeal to this court was granted by the high court on 21
September 2018. The notice of appeal should have been lodged with the
Registrar of this Court by 22 October 2018, but was not and the
appeal lapsed. The applicants have thus brought an application for
condonation for the late filing of the notice of appeal and
reinstatement of the appeal. Absa and the purchasers resist the
condonation
application on various grounds.
Condonation
[8]
The notice of appeal to this court (as mentioned above) was due on or
before 22 October 2018. It was not filed until 13 June
2019. On 23
October 2018, the applicants’ attorney was advised by counsel
that the appeal would lapse on 23 October 2018
if the notice of
appeal was not served on the Registrar of this Court by then. Counsel
was then requested to attend to the preparation
of the notice of
appeal. The notice was only forwarded to the correspondent attorneys
in Bloemfontein (Honey Attorneys) on 23 October
2018 with
instructions to file it with the Registrar of this Court. On the same
date, the Registrar declined to accept the notice
because it was
late. Honey Attorneys informed the instructing attorneys promptly by
email. The email was received by one of the
firms’ secretaries
(Ms Olivier) who did not alert the applicants’ attorney of its
contents. She, instead, discussed
this with a candidate attorney, who
undertook to draft a condonation application. But he never did. The
applicants’ attorney
only became aware of this months later.
[9]
The applicants’ attorney does not explain why the appeal was
dealt with by a candidate attorney or why he made no enquiries
from
the candidate attorney or Honey Attorneys regarding the status of the
appeal.
On
his calculation of the relevant time periods, the appeal would have
lapsed on 24 February 2019 in terms of Rule 8(3) for failure
to file
the record. According to him, efforts were made from 11 January
2019 to 13 May 2019 to obtain a transcript of the
argument in the
high court. But the delay amounting to 104 days is not explained. It
was only on 21 May 2018 that he discovered
that the notice of appeal
had never been filed. He was apparently advised on 22 May 2019 that
it was not necessary to include the
transcript of the argument in the
appeal record. Lastly, although the founding affidavit in the
condonation application was deposed
to on 6 June 2019, it was only on
10 June 2019 that the notice of motion was signed. The condonation
application was filed in this
Court only on 13 June 2019.
[10]
The approach this Court adopts in determining whether to grant
condonation is well-known. In
Dengetenge
Holdings
[1]
Ponnan JA held that factors relevant to the discretion to grant or
refuse condonation include ‘the degree of non-compliance,
the
explanation therefor, the importance of the case, a respondent’s
interest in the finality of the judgment of the court
below, the
convenience of this court and the avoidance of unnecessary delay in
the administration of justice.’
Fleshing
out the aforementioned general considerations, Plewman JA in the
Darries
[2]
stated the following:
‘
Condonation
of the non-observance of the rules of this court is not a mere
formality. In all cases, some acceptable explanation,
not only of,
for example, the delay in noting the appeal, but also, where this is
the case, any delay in seeking condonation, must
be given. An
appellant should whenever he realises that he has not complied with a
rule of court apply for condonation as soon
as possible. Nor should
it simply be assumed that, where non-compliance was due entirely to
the neglect of the appellants’
attorney that condonation will
be granted. In applications of this sort the applicants’
prospects of success are in general
an important though not decisive
consideration. When application is made for condonation it is
advisable that the petition should
set forth briefly and succinctly
such essential information as may enable the Court to assess the
appellant’s prospects of
success. But appellant’s
prospect of success is but one of the factors relevant to the
exercise of the court’s discretion,
unless the cumulative
effect of the other relevant factors in the case is such as to render
the application for condonation obviously
unworthy of consideration.
Where non-observance of the Rules has been flagrant and gross an
application for condonation should
not be granted, whatever the
prospects of success might be.’
[3]
It does not follow that if the cause
of delay in complying with the rules is the conduct of the
applicants’ attorney, condonation
will be granted. Thus in
Saloojee
, Steyn CJ held:
‘
I
should point out, however, that it has not at any time been held that
condonation will not in any circumstances be withheld if
the blame
lies with the attorney. There is a limit beyond which a litigant
cannot escape the results of his attorney’s lack
of diligence
or the insufficiency of the explanation tendered. To hold otherwise
might have disastrous effect upon the observance
of the Rules of this
Court. Considerations
ad
misericordiam
should not be allowed to become an invitation to laxity. In fact,
this Court has lately been burdened with an undue and increasing
number of applications for condonation in which the failure to comply
with the Rules of this Court was due to neglect on the part
of the
attorney. The attorney, after all, is the representative whom the
litigant has chosen for himself, and there is little reason
why, in
regard to condonation of a failure to comply with a Rule of Court,
the litigant should be absolved from the normal consequences
of such
relationship, no matter what the circumstances of the failure are.’
Similarly,
in
Tshivhase
Royal Council and another,
Nestadt
JA stated that this Court ‘has often said that in cases of
flagrant breaches of the Rules, especially where there
is no
acceptable explanation therefor, the indulgence of condonation may be
refused whatever the merits of the appeal are; this
applies even
where the blame lies solely with the attorney.’
[4]
[11]
An applicant for condonation must give a reasonable and full
explanation covering the entire period of the delay.
[5]
The applicants and their attorney have failed in this regard. It is
totally unhelpful for the applicants’ attorney to tell
this
court that he was waiting for funds to brief counsel to draft the
notice of the appeal. This Court has long held that the
drafting of a
notice of appeal is ordinarily an attorney’s work.
[6]
There is no reason why an attorney has to brief counsel to draft a
notice of appeal. It is also no excuse for him to attribute
the delay
to the applicants’ impecuniosity because, as we gather, he is
acting on a contingency basis.
[12]
It is not acceptable for an attorney to place reliance on his
inexperience in conducting appeals in this Court. In terms of
Rule
8(b)(j)(i) the record shall not contain argument. In any event, an
attorney who is instructed to note an appeal is duty bound
to
acquaint him or herself with the rules of the court in which the
appeal is to be prosecuted.
[7]
One searches in vain for an explanation of his failure to comply with
this basic duty. The delay in the preparation of the record
during
the period covered by the months November and December 2018 has not
been explained. The attorney merely says that he attempted
to obtain
the transcript of the argument in the court a quo. Of course this was
a misguided endeavour. But at the very least one
would have expected
that the nature, extent and timing of those attempts would be set
out. There are some explanations of what
transpired during January to
13 May 2019. The applicants’ attorney informs this court that
Honey Attorneys told him on 22
May that it was not necessary to have
the argument transcribed for appeal purposes. But he then waited
until 27 May 2019 to obtain
a quotation from Pro Recordings,
a professional
recording and transcription service, to prepare the record. The
record had still not been lodged at the time of deposing
to his
affidavit, despite the inordinate delay and patent urgency of the
matter. The respondents’ interest in the finality
of the
judgment of the court a quo remains a factor which will always weigh
with this court.
[8]
[13]
The applicants wrongly contend that the respondents would suffer no
prejudice if the condonation application is granted. One
gathers from
the record in this matter that the applicants have made no payments
to Absa in respect of the property since 2011.
They have also made no
payments to the purchasers of the property after the sale and
transfer thereof. In essence, they have been
living on the property
for 8 years rent free while the purchasers remain liable for
insurance of the property, municipal charges
in relation thereto and
their mortgage bond instalments to Investec Bank. This is prejudice
enough. The explanation the applicants
have given in the present case
is neither full nor satisfactory. There was, I must add, gross
negligence on the part of the applicants’
attorney in leaving
the matter in the hands of an unsupervised candidate attorney.
[14]
The question is whether the applicants’ condonation application
should be granted despite their attorney having been
remiss in
fulfilling his duty to them. Courts, in general, are ordinarily
loath to penalise a litigant on account of his
attorneys’
negligence. But in
Reinecke
,
[9]
this Court warned litigants that the time had come that it should be
no excuse. Attorneys are members of the Court. The Court expects
them
to know and uphold the Rules of the court in which they practise. A
litigant can derive no benefit from the ineptitude
of his attorney.
After all the attorney is the litigant’s chosen legal
representative. If one’s legal representative
has poorly
executed the mandate, one must suffer the consequences. In any event,
the applicants themselves are not without blame.
It would be
unreasonable to accept that once a client has given instruction to an
attorney, he or she can sit back and do nothing.
The applicants
herein, it would seem, hardly enquired from their attorney as to the
progress with the appeal. They sprang
into action only upon
receipt of an eviction application served on them on 13 May 2019 at
the instance of the purchasers. This,
seemingly, prompted the
applicants and their attorney to launch this condonation application
on 10 June 2019. The purchasers thus
contend that this condonation
application is not bona fide and is merely designed to delay the
ultimate eviction of the applicants
from the property. One cannot
take issue with the purchasers’ contention in this regard.
Accordingly, the applicants have
not satisfied the onus on them to
show that condonation should be granted.
[15]
The application for condonation must also fail because the prospects
of success are weak. Absa, in its answering affidavit,
contended that
the publication of the notices to surrender the applicants’
respective estates on 14 June 2013 was with the
ulterior motive of
frustrating Absa’s endeavours to execute upon its judgment.
There was no bona fide intention to benefit
the body of creditors as
a whole. This was not refuted in reply by the applicants. It
constitutes a formidable obstacle for the
applicants. There is no
explanation why they resorted to abuse of s 5(1) of the Act. In
Firstrand
Bank Limited
,
[10]
Binns-ward J stated the following in paragraph 7 of the judgment:
‘
Nothing
in the relevant provisions of the Act supports the notion that a
notice of surrender may, or can, legitimately be given
with the
primary object of frustrating sales in execution, or to provide a
debtor with a moratorium against the sale in execution
of his
property while he considers his position and decides whether or not
he should proceed with the presentation of an application
for the
acceptance of his surrender. Compare
Ex
parte Stepney
,
in which even the postponement of an application for voluntary
surrender brought bona fide was refused because such a course would
in substance “
sanction
the device of putting a notice in the Gazette without a real
intention to surrender, and thus locking up the assets, while
the
estate is left in the hands of the insolvent”
-
something which a court could not be seen to countenance.’
Binns-ward J made it clear in
paragraph 8 that:
‘
The
notice of surrender tells the world, the debtor’s creditors and
his employees that he will be applying for acceptance
of surrender of
his estate. “It does not inform them he is taking time to
consider his options.” To use the notice
procedure for a
purpose for which it is not intended is to misrepresent the debtor’s
position to the legally interested third
parties and, when there are
pending sales in execution involved, to cause s 5(1) of the Act to
operate in circumstances in which
it clearly was not intended to
apply; in other words, to act not only contra legem, but also in
fraudem legis. The misrepresentation
is plainly mala fide when it
occurs in the context of deliberate misuse of the statutory
provisions.’
[16]
Applicants in voluntary sequestrations have a duty to make full and
honest disclosure of the material facts.
[11]
And it is the duty of the court to consider carefully a friendly
sequestration application to determine whether the process will
be of
advantage to the creditors. It is in this sense that an applicant’s
good faith is an important consideration in a sequestration
application. The remarks in
Edkins
,
[12]
which
the applicants rely upon, that the mala fides of the insolvent debtor
is irrelevant when considering the lawfulness of a sale
in execution,
is not a general principle. It must be understood in the light of the
context that in that case the judgement debtor
was in fact
sequestrated and a trustee took control of the estate. It is against
this background that the debtor’s lack of
good faith there
became irrelevant.
[17]
The reliance by the applicants on the judgment of this court in
Edkins
is therefore misplaced. In
Edkins
this
court found that the provisions of s 5 did not apply as the sale in
execution preceded the publication of the notice to surrender.
It was
found that s 4 was the applicable section, and the court then held
that ‘upon publication of a notice in terms of
s 4(1) of the
Act, the provisions of section 20(1)(c) and (2)(a) immediately come
into operation. The effect thereof is that control
of the insolvent
estate vests in the Master until a trustee has been appointed and
thereafter the estate will vest in the trustee.’
In
Edkins
,
this court also found that the Sheriff could not have lawfully
proceeded to transfer the property to the purchaser upon becoming
aware of the sequestration of the insolvent. Instead the purchaser
should have approached the court in terms of s 20(1)(c) read
with
subsection (2)(a) to pass transfer.
[18]
Of course s 20 (1)(a) of the Act provides for a stay in execution as
soon as the Sheriff becomes aware of the sequestration
of an
insolvents’ estate. However where, as in this case, the sheriff
could not have been aware of the publication of a notice
of surrender
a sale in execution is not unlawful under s 5. In terms of s 5 a sale
in execution becomes unlawful if it occurs after
the publication of
the notice of surrender. In principle where a sale is not unlawful
under s 5(1) of the Act, transfer of the
immovable property is not
prohibited by the publication of a surrender notice where there has
been no supervening sequestration.
Edkins
is therefore distinguishable from this case in that it concerned a
supervening sequestration (between the sale in execution and
the
transfer of immovable property under attachment).
[13]
In this case it is common cause that the applicants’ estate was
never sequestrated until the property was transferred to
the
purchasers.
[19]
In this case it is further discomforting that on 6 November 2013 the
surrender applications were postponed indefinitely and
nothing was
done until a year later, when the property was transferred to the
purchasers.
[20]
The applicants’ misleading statement of affairs lodged with the
Master of the high court on 13 June 2013 in which they
understated
their indebtedness to Absa by 50 percent runs contrary to the duty of
full and honest disclosure. So is their misrepresentation
to an
unsuspecting employee of Absa to the effect that the bank (Absa) held
only two mortgage bonds, when in fact there were three.
It is not
surprising that when Absa discovered the extent of deliberate
misrepresentation of facts by the applicants it withdrew
from
settlement negotiations.
[21] For these reasons, the following
order is made.
1.
The application for
condonation of the late filing of the notice of appeal and
reinstatement of the appeal is dismissed with costs
on an attorney
and client scale including costs-consequent upon the employment of
two counsel.
2 The costs in (1) above are to be
paid by the applicants and their attorney
de bonis propriis
,
jointly and severally, the one paying the other to be absolved
_____________________
DLODLO JA
JUDGE
OF APPEAL
Appearances
For
First and Second appellant: M H Van Twisk
Instructed
by: DLBM Attorneys Inc, Pretoria
Honey
Attorneys, Bloemfontein
For
First respondent: P Stais SC
Instructed
by: Smit Sewgoolam Inc, Durban
Peyper
Attoorneys, Bloemfontein.
For
Second and Third respondents: M Oppenheimer
Instructed
by: Schilndlers Attorneys, Johannesburg
Webbers,
Bloemfontein.
[1]
Dengetenge
Holdings (Pty) Ltd v Southern Sphere Mining and Development Company
Ltd and Others
(619/12)
[2013] ZASCA 5
;
[2013] 2 All SA 251
(SCA) para 11.
[2]
Darries
v Sheriff Magistrate’s Court, Wynberg and Another
[1998]
ZASCA 18
; 1998(3) SA 34 (SCA) at 40H-41E.
[3]
Saloojee
and Another NNO v Minister of Community Development
1965 (2) SA 135 (A).
[4]
Tshivhase
Royal Council and Another v Tshivhase and Another
[1992]
ZASCA 185
;
1992 (4) SA 852
(AD) at 859E-F.
[5]
Van
Wyk v Unitas Hospital and Another
[2007] ZACC 24
;
2008 (2) SA 472
(CC) para 22.
[6]
Darries
fn
2 above at 42A-B.
[7]
Ferreira
v Ntshingila
[1989] ZASCA 149
;
1990 (4) SA 271
(A) at 281G-E.
[8]
Ferreira
supra, see also
Federated
Employers Fire General Insurance Co Ltd and Another v McKenzie
1969
(3) SA 360 (A).
[9]
Reinecke
v Incorporated General Insurances
Ltd
1974 (2) SA 84
(A) at 92F.
[10]
Firstrand
Bank Limited v Consumer Guardian Services (Pty) Limited and others
[2014] ZAWCHC 27.
[11]
Arentzen
v Nedbank
Ltd
2013 (1) SA 49
(KZP paras [5], [6] and [7].
[12]
Fourie
and Another NNO v Edkins
[2013] ZASCA 117
;
2013 (6) SA 576
(SCA).
[13]
For that reason it is unnecessary for us to discuss the academic
debate on the dichotomy between
Edkins
and
De
Villiers v Delta Cables(Pty) Ltd
1992
(1) SA 9
(SCA).