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IN THE HIGH COURT OF SOUTH AFRICA
(EASTERN CAPE DIVISION, MAKHANDA)
CASE NO.: 1798/2020
Reportable: Yes/No
In the matter between:
SITHEMBISO BOKLENI Applicant
and
FIRST RAND BANK LIMITED Respondent
t/a WESBANK
JUDGMENT
Cengani-Mbakaza AJ
Introduction
[1] On 11 April 2023, the applicant approached this court to rescind the judgment
granted in favour of the respondent on 17 November 2020. The impugned judgment
reads as follows:
“1. The Agreement in respect of the vehicle stated below be and is hereby
cancelled;
2. Return of the 2012 VOLKSWAGEN POLO 1.4 COMFORTLINE 5DR motor
vehicle with engine number L[...], chassis number A[...] and registration
number H[...].
3. Costs of suit on the Magistrate’s Court Tariff.”
[2] The notice of motion stipulates that the application is made in terms of Rule
42 of the Uniform Rules of Court. Furthermore, the applicant applies for condonation
for the late filing of the rescission application. The applicant seeks further relief in the
form of an order setting aside the warrant of delivery that was issued on 25
November 2020.
The background facts
[3] On or about 9 June 2014, the applicant entered into the credit agreement (the
Agreement) with the respondent for the financing and purchasing of a Volkswagen
Polo 1.4 Comfortline SDR (the motor vehicle). As per the terms of the Agreement,
the respondent retained the ownership of the motor vehicle until the applicant fulfilled
all payment obligations. The applicant was required to make 59 monthly instalments
of R2,637.61 over 60 months.
[4] In addition to these monthly instalments, the Agreement also included a
balloon payment of R52,148 which was due on the sixtieth month of the Agreement
term. Following the completion of the 59 monthly repayments, the debit authorization
order lapsed, and the respondent ceased to debit further amounts.
[5] Prior to the payment of the outstanding balloon payment, the applicant
received a letter reflecting a settlement amount of R62,646.04 as per his request.
Notwithstanding this settlement proposal, the applicant remained obligated to settle
the outstanding balloon payment in accordance with the terms of the original
Agreement.
The applicant’s case
[6] In his founding affidavit, the applicant alleges that in 2020, without prior notice
or warning, individuals arrived at his workplace intending to repossess the motor
vehicle. He claims that he never received a summons or any notification in terms of
section 1291 (section 129 notice) of the National Credit Act, 34 of 2005 (the NCA)
and as a result, he was unaware of the outstanding debt. Furthermore, the applicant
states that since the respondent ceased debiting the monthly instalments, he
assumed that there were no outstanding amounts due and payable. This
assumption, so he claims, led him to believe that his obligation under the Agreement
had been fulfilled. The balloon payment was never explained to him. Following this
explanation, the repossession of the motor vehicle was halted.
[7] The applicant consulted with his attorneys, P.N Zide and Partners.
Subsequently, a series of correspondence was exchanged between the applicant’s
and the respondent’s attorneys. During this exchange, the applicant’s attorneys
discovered that a summons had been issued against the applicant. In February
2021, the applicant’s attorney requested a copy of the statements of account, which
they received on 10 July 2021. The applicant alleges that these statements lacked
detail and only covered the period from September 2014 to December 2019.
[8] The applicant’s attorneys then proposed a payment arrangement with the
respondent’s attorneys. Unfortunately, they were unable to reach an agreement. The
respondent’s proposed amount of R5 269.92 each month, exceeded the applicant’s
offered amount of R2,500.
1 Section 129 of the NCA deals with the required procedures before debt enforcement . This section
provides.
“(1) If the consumer is in default under a credit agreement, the credit provider-
(a) may draw the default to the notice of the consumer in writing and propose that the consumer
refer the credit agreement to a debt counsellor, alternative dispute resolution agent , consumer court
or ombud with jurisdiction, with the intent that the parties resolve any dispute under the agreement or
develop and agree on a plan to bring the payments up to date;
(b) subject to section 130 (2), may not commence any legal proceedings to enforce the
agreement before-
(i) first providing notice to the consumer, as contemplated in paragraph 9a) or in section 86(10),
as the case maybe; and
(ii) meeting any further requirements set out in section 130………….”
[9] The applicant acknowledges that there was an inordinate delay of two years
and four months between the events in question and the filing of his application for
the rescission of the judgment. He attributes this delay to his genuine belief that he
would be able to negotiate a mutually acceptable agreement with the respondents,
wherein he would be permitted to settle the outstanding amounts through a payment
arrangement. The negotiations commenced on 15 February 2021 to 29 March 2023.
[10] Despite his efforts to negotiate a payment arrangement, the respondent
repossessed the motor vehicle on 01 March 2023. At that time, the applicant lacked
the necessary funds to seek legal advice and was only able to consult with his
attorney after receiving his salary on 15 March 2023.
The respondent’s case
[11] In its answering affidavit, the respondent vehemently denies the applicant's
claims of not receiving the summons and section 129 notice. Furthermore, the
respondent claims that despite the applicant’s allegations that the terms and
conditions of the balloon payment were not adequately explained to him, he failed to
provide a satisfactory explanation for his own failure to carefully read and understand
the Instalment Sale Agreement before signing it. The respondent emphasizes that
the conditions of the balloon payment are explicitly and unambiguously set out in the
Agreement, leaving no room for misunderstanding. By not taking time to familiarize
himself with the Agreement’s terms, the applicant cannot now claim that he was not
aware of the balloon payment conditions.
[12] Following his failure to fulfil the terms and conditions of the balloon payment,
the respondent asserts that on multiple occasions, it informed him via SMS and
telephone calls that the payment was outstanding and required settlement in full.
Furthermore, on 14 August 2019, the respondent sent an automated letter of
demand to the applicant, formally demanding full settlement of the outstanding
balloon payment.
[13] The respondent further asserts that the applicant was fully aware that, in
accordance with the terms of the Agreement, the debit order authorisation he
electronically signed only facilitated the payment of the monthly instalments due
under the Agreement. It did not provide for the repayment of the balloon payment,
which was a separate and distinct obligation under the Agreement.
[14] The respondent further avers that the applicant had breached the terms and
conditions of the Agreement, specifically by failing to make the required balloon
payment. As a direct result of this breach, the respondent took action to enforce its
rights under the Agreement and applied for a court order directing the return of the
motor vehicle.
[15] Prior to the serving of the summons, the respondent’s attorneys sent a letter,
via SMS, to the applicant, informing him that his account had been handed over to
Cally Gentle and Manila Brewis Attorneys for further action. The letter advised the
applicant to contact the attorneys to discuss the matter and prevent further legal
action from being taken against him.
[16] Regarding the inordinate delay, the respondent indicates that, in fact, efforts
were made to resolve the matter amicably. Specifically on 24 March 2022, an
employee of the respondent approached the applicant and requested that he
voluntarily surrender the motor vehicle, thereby avoiding the need for the sheriff to
deliver a warrant of delivery. Unfortunately, this attempt at a peaceful resolution was
unsuccessful, as the applicant failed to surrender the motor vehicle. Instead of
cooperating with the respondent’s employee, the applicant simply drove away with
the motor vehicle, refusing to surrender it voluntarily forcing the respondent to
pursue legal action to recover the motor vehicle.
The legal framework
[17] The rescission of the judgment under common law is a remedy that allows a
party to have a judgment set aside, however, this remedy is not automatic, and the
applicant must demonstrate sufficient reasons to warrant such a rescission. To
succeed in his application, the applicant must fulfil two essential requirements.
Firstly, he must provide a reasonable and acceptable explanation for his default.
Secondly, the applicant must demonstrate that he has bona fide, which prima facie
has merit and carries substance. In other words, he must demonstrate that he has a
good chance of succeeding if the matter were to be brought on trial.
[18] In De Wet and Others v Western Bank Ltd2 Trengove AJA, deliberated on the
common law principles governing the rescission of the judgments, carefully
examining the applicable provisions and precedents. Under common law, the courts
of Holland had the authority to rescind judgments obtained due to the defendant’s
default appearance, provided that sufficient grounds were present. The court
exercised its discretion which went beyond the specific grounds outlined in Rules 31
and 42(1), as well as those mentioned in the case of Chirderley Estate Stores v.
Standard Bank of SA Ltd 1924 OPD 163.
[19] In a recent decision, the Constitutional Court3 reaffirmed and clarified the
requirements for rescinding a judgment under common law, reiterating the essential
principles that govern this remedy. At paragraph 71, the Court held:
“The requirements for rescission of a default judgment are two-fold. First, the
applicant must furnish a reasonable and satisfactory explanation for its
default. Second, it must show that on the merits it has a bona fide defence
which prima facie carries some prospect of success. Proof of these
requirements is taken as showing that there is sufficient cause for an order to
be rescinded. A failure to meet one of them may result in refusal of the
request to rescind.
Thus, the existing common law test is simple: both requirements must be
met.”
[20] Pursuant to Rule 31(1)(b) of the Uniform Rules of the Court, the defendant
who has acquired knowledge of the judgment against him may, within 20 days, apply
to the court on notice to the plaintiff to have the judgment set aside. Upon such
application, the court may, if good cause is shown, set aside the default judgment on
such terms as the court deems just and equitable.
2 1979 (2) SA 1031 at para-F.
3 Zuma v the Secretary of the Judicial Service Commission of Inquiry into Allegations of State
Capture, Corruption and Fraud in the Public Sector including Organs of the State and Others [2021]
ZACC 28.
The court’s analysis of the case
[21] The applicant expressly acknowledges that the application for rescission of
the judgment was submitted substantially outside the prescribed timeframe,
attributing the delay to ongoing negotiations between his legal representatives and
those of the respondent. These negotiations, he asserts, were a necessary precursor
to the filing of the rescission application and their protracted nature inevitably
resulted in the delayed submission of the application.
[22] A thorough examination of the papers filed, reveals that the respondent does
not seriously oppose the application for condonation. Considering this, it is prudent
to pronounce at this juncture, that the interests of justice necessitate a full and
proper ventilation of the issues between the parties. Given that no prejudice or unfair
advantage will accrue to either party as a result, the court is empowered to consider
the matter in its entirety, thereby allowing for a just and comprehensive resolution of
the issues.
[23] Ms Nyobole, counsel for the applicant levelled several points of criticism
regarding the respondent’s handling of the debt, highlighting specific concerns and
irregularities in the respondent’s approach to debt collection. In addition to all other
specific concerns she raised regarding the debt collection, she contended that the
failure to bring the section 129 notice to the applicant’s attention provides a
compelling basis for rescinding the judgment. Furthermore, so she argued, the
additional failure to serve summons to the applicant, serves to bolster the applicant’s
prospects of success and that these factors will be pivotal in determining the
outcome of the matter when it is ultimately argued at trial.
[24] Ms Sephton, counsel for the respondent, responded robustly to the criticisms
directed at the respondent, presenting a formidable counterargument that effectively
addressed each of the concerns raised.
[25] It is undisputed that the judgment was obtained in the absence of the
applicant. However, the applicant’s omission to specify the precise subsection upon
which his application is predicated is a notable oversight, as there is a dearth of
evidence suggesting that the judgment was granted because of errors, mistakes or it
contains patent errors, ambiguities or omissions as it would be required under the
relevant Rule 42 of the Uniform Rules of Court. With the legal framework now clearly
established, the crucial issue that arises is whether the applicant has successfully
made out a case for rescission of the judgment, either under the provisions of Rule
31 or in terms of the common law.
[26] The applicant candidly acknowledges his indebtedness to the respondent,
specifically regarding the outstanding balloon payment as stipulated in the
Agreement. He further admits that after the judgment was granted, he engaged in
negotiations with the respondent to secure a reduced instalment payment. However,
he concedes that he was unable to afford the amount offered by the respondent.
[27] The pivotal issue on this point is whether rescinding the judgment would be a
practicable solution to the applicant’s financial difficulties and effectively break the
deadlock that has arisen from the unsuccessful negotiations between the parties.
Can the applicant’s assertion be legitimately regarded as a good cause for default
and genuine and substantial defence to the applicant’s claim, or does it merely serve
as an unsubstantiated obstacle to his relief?
[28] To provide a comprehensive response to this question, it is essential to revisit
the purpose of the NCA. As succinctly articulated in the landmark rulings of Sebola
and Another v Standard Bank of South Africa and Another4 and reaffirmed in
Kubyana v Standard Bank of South Africa Ltd5, the NCA is directed at consumer
protection. It represents a deliberate legislative endeavour aimed at regulating and
enhancing the dynamics between the consumers and credit providers thereby
promoting a more equitable and sustainable credit marketplace.
[29] A meticulous examination of the seminal judgments6 in this area, reveals an
unblemished understanding that the NCA seeks to strike a balance between the
4 (CCT)98/11 [2021] ZACC 11;2012 (5) SA 142 (CC) (07 June 2012) at para 41
5 (CCT 65/13) [2014] ZACC 1; 2014 (3) SA 56 (CC);2014 (4) BCLR 400 (CC)[ 20 February 2014) at
para 20.
6 See Sebola and Kubyana at footnote 3 and 4 supra.
competing interests of consumers and creditors. Specifically, it underscores that
while the protection of consumer interests is paramount, the NCA also recognises
that the legitimate interests of creditors warrant equal consideration and
safeguarding and cannot be overlooked. Thus, the NCA effectively discourages
contractual defaults by consumers, promoting a culture of responsible borrowing and
adherence to credit agreements.
[30] In my considered opinion, the argument that the applicant was unaware of the
balloon payment is without merit. The agreement he signed is unequivocal, and its
contents are not in dispute. As a responsible consumer, it was incumbent upon him
to ensure that arrangements were made to settle the remaining debt after the debit
order collection had lapsed. Regrettably, he failed to take the necessary steps,
thereby neglecting his obligation under the Agreement. Furthermore, in a notable
development, the respondent subsequently tendered an additional proposal for
settling the outstanding ballon payment, even after the judgment had been obtained
by the applicant. Regrettably, this overture was not reciprocated by the applicant.
[31] Prior to the issuance of section 129 notice, the respondent had sent SMS
reminders to the applicant alerting him to the fact that his account was in arrears.
These reminders were sent to the cellular phone number provided by the applicant
when he signed the Agreement. Despite these efforts to remind him of the
outstanding balloon payment, the applicant failed to take the necessary steps or
make arrangements to settle the debt. Furthermore, the track and trace report
confirms that the notice was brought to the applicant’s attention. Notwithstanding this
conclusive evidence, his founding affidavit does not deny receipt of the section 129
notice but merely asserts a lack of recollection regarding receipt of the notification
without providing any substantive evidence to counter the proposition that it was
brought to his attention.
[32] Moreover, the applicant’s alternative argument that the Section 129 notice
was sent to an incorrect post office is entirely without merit. The inconsistency is
readily apparent from a striking discrepancy between the applicant’s current
argument and the assertions made on page 14 of the founding affidavit, specifically
regarding his claimed lack of recollection concerning whether the section 129 notice
was brought to his attention or not. It is well established in our law that non-
compliance with section 129 notice does not have the effect of invalidating the
proceedings entirely. Rather, it merely serves to delay the finalisation of the process,
thereby ensuring that due process is accurately followed and affording the consumer
a meaningful opportunity to exercise his rights. In the case under consideration, the
applicant fails to provide even a hint of prejudice or suggest what an alternative
course of action he would have pursued had he received the section 129 notice,
thereby rendering his contention highly speculative and unsubstantiated.
[33] In conclusion, the applicant concedes that the sheriff’s return indeed indicates
that the summons was served on him, yet he vehemently denies the receipt of the
summons. He justifies this denial by asserting that he was not present at home when
the summons was allegedly served. However, our courts have consistently held that
in the absence of clearest evidence to rebut the sheriff’s return, the return of service
constitutes conclusive proof that the papers were indeed served on the litigant,
thereby establishing prima facie evidence of the service.7
[34] Considering the arguments presented in their entirety, it is evident that the
applicant has failed to establish the crucial requirements distilled by the
Constitutional Court in the matter of Zuma v the Secretary of the Judicial Service
Commission of Inquiry into Allegations of State Capture, Corruption and Fraud in the
Public Sector including Organs of the State and Others.8 In the result, the
application for the rescission of default judgment must fail.
Order
[35] The following order is issued:
7 In Absa Bank v Mare and Others, a case that I was referred to by Ms Sephton on behalf of the
respondent, the court held at para 19, a return of service, it is trite, is regarded as prima facie
evidence of its content. Indeed, s 43(2) of the Superior Courts Act 10 0f 2013 expressly provides that
“[t] he return of the sheriff of what has been done upon any process of the court, shall be prima facie
evidence of the matters therein stated. ” It follows that such evidence may be challenged by adducing
the clearest evidence. (see, for example, Greeff v FirstRand Bank Ltd 2012 (3) SA 157 (NCK), at para
10; Deputy Sheriff, Witwatersrand v Goldberg 1905 TS 680).
8 See footnote 2 above.
1. The application for rescission of default judgment is dismissed with
cost on scale “A” as contemplated under Rule 67A read with Rule 69 of
the Uniform Rules of Court.
N CENGANI-MBAKAZA
ACTING JUDGE OF THE HIGH COURT
APPEARANCES:
Counsel for the Applicant : Adv EN Nyobole
Instructed by : P.N Zide & PARTNERS INC
Mthatha
c/o Yokwana Attorneys
Makhanda
Counsel for the Respondent : Adv S Sephton
Instructed by : Messrs. Huxtable Attorneys
Makhanda
Heard on : 17 October 2024
Judgment Delivered on : 17 December 2024