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[2019] ZASCA 73
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Bayport Securitisation RF Ltd v Sakata (1320/17) [2019] ZASCA 73 (30 May 2019)
THE
SUPREME COURT OF APPEAL OF SOUTH AFRICA
JUDGMENT
Not
reportable
Case
No: 1320/17
In
the matter between:
BAYPORT
SECURITISATION RF
LTD
APPLICANT
and
NOLUVUYO
SAKATA
RESPONDENT
Neutral
Citation:
Bayport Securitisation v
Sakata
(1320/17) [2019] ZASCA 73
(30 May 2019)
Coram:
Cachalia, Swain, Zondi, Mathopo and Makgoka JJA
Heard:
7 May 2019
Delivered:
30 May 2019
Summary:
Magistrates’ Court Act 32 of 1944
– s 58 – default judgment – Magistrates’
Court Rules –
Rules 49(1), (3) and (8) – rescission of
judgment – failure to set out bona fide defence –
liability acknowledged
– procedural error in proceedings –
rescission refused.
ORDER
On
appeal from
: The Eastern Cape Division
of the High Court, Bhisho (Hartle J and Rugunanan AJ sitting as court
of appeal):
1 The applicant is
granted special leave to appeal.
2 The appeal is upheld
with costs
3 The order of the full
court is set aside and replaced with the following:
‘
The
appeal is dismissed with costs.’
JUDGMENT
Mathopo
JA (Cachalia, Swain, Zondi and Makgoka JJA concurring):
[1]
This application for leave to appeal concerns two judgments granted
by the clerk of the court, Zwelitsha Magistrates’
Court, acting
in terms of s 58(1) of the Magistrate Court Act 32 of 1944 (the
Act) as amended.
[1]
It
arises from a consent to a judgment signed by the respondent on 14
July 2013 wherein she acknowledged her indebtedness to the
applicant
in the sum of R13 793.18. On 14 December 2015 the
respondent launched an application in the Zwelitsha Magistrates’
Court for the rescission of the two judgments in terms of the
provisions of rule 49(1), (3) and (8) of the Act.
[2]
The
basis of the application was that the judgments were void
ab
origine
.
Despite the lateness of the application, the respondent did not seek
condonation for the late delivery of the application.
[2] The Magistrate
dismissed the application on the basis that no proper application for
condonation had been made in terms of the
rules and that the
respondent had failed to set out a valid and bona fide defence to the
applicant’s claim in terms of rule
49(3). Dissatisfied with
that decision, the respondent appealed to the Eastern Cape Division
of the High Court, Bhisho (the high
court) (Hartle J and Rugunanan
AJ). The high court rejected the submissions on behalf of the
applicant which were in line with
the provisions of rule 49(3) and
(8). It granted rescission of the judgments on the basis that the
judgments by the clerk of the
court, acting in terms of s 58, of
the Act, were void
ab origine
and had been granted in error,
expressing itself in the following terms:
‘
In
summary, there is substance in the contention by Mr Du Plessis that
the respondent did not consider the rights of the appellant
as is
manifest by the manner and circumstances in which the consent to
judgment was procured, the manner in which the request for
judgment
and supporting documentation was lodged and the failure by the
respondent to notify the appellant of the judgment by registered
mail
as is required by section 58(2) of the Act. In opposing the
application the respondent did not in its opposing affidavit
deal
with its failure to ensure that the credit agreement or a copy
thereof was placed before the clerk of the court neither did
it deal
with its failure to have provided proof of postage in respect of the
letter of demand purportedly sent by registered mail
nor, without
intending to attribute criticism, were these aspects dealt with by Mr
Mundell during argument.’
[3] The high court then
concluded that good cause existed for the rescission of the judgment
and that this was justified in order
to do justice between the
parties stating the following:
‘
It
follows that the judgment was granted in error and that its
rescission must ensue, this on the premise of the court’s
inherent jurisdiction to grant relief where the rules of court make
no express provision therefor.’
[4] The effect of the
judgment is that once there is a procedural error in the grant of the
judgment, it is unnecessary for an applicant
to set out a valid and
bona fide defence and a court must invoke its inherent jurisdiction
and rescind a judgment. In so doing
it ignored the provisions of
rules 49(3) and (8).
The application for
leave to appeal
[5] An application for
leave to appeal to this court was referred for oral argument in terms
of s 17(2)(d) of the Superior
Court Act 10 of 2013. This court
ordered that the parties be prepared, if called upon to do so, to
argue the merits in terms of
s 17(2)(b) of the Act. In
Cook v
Morrison
[2019] ZASCA 08 with reference to the requirements
of special leave, this court held that:
‘
The
existence of reasonable prospects of success is a necessary but
insufficient precondition for the granting of special leave.
Something more, by way of special circumstances, is needed. These may
include that the appeal raises a substantial point of law;
or that
the prospects of success are so strong that a refusal of leave would
result in a manifest denial of justice; or that the
matter is of very
great importance to the parties or general public. This is not a
closed list (
Westinghouse Brake &
Equipment (Pty) Ltd v Bilger Engineering (Pty) Ltd
1986 (2) SA 555
(A) at 564H-565E;
Director
of Public Prosecutions: Gauteng Division, Pretoria v Moabi
[2017] ZASCA 85
;
2017 (2) SACR 384
(SCA) para 21).’
[6] This matter is of
great importance to the parties and the general public because the
judgment of the high court introduced a
new ground for rescission
which is clearly at odds with the judgment of this court in
Leo
Manufacturing CC v Robor Industrial (Pty) Ltd
2007 (2) SA 1
(SCA)
(
Leo Manufacturing CC
) and two judgments of its own division
namely
Diniso v African Bank Ltd
[2017] ZAECGHC 3 and
Smith v Finbond Mutual Bank
[2017] ZAECGHC 4. These
judgments held that where rescission is sought in terms of rule 49(8)
on the basis that the judgment
was void
ab origine
, the
applicant must still set out a valid and bona fide defence to the
claim. In view of the conflicting decisions, it is in the
interest of
justice that leave to appeal should be granted. As to the merits we
are of the view that there are reasonable prospects
of success for
the applicant’s appeal.
Factual background
[7] The background to the
application for the rescission of judgment can be summarised as
follows: The debt, which gave rise to
the judgment, arose from a
credit agreement concluded between the respondent and the applicant.
The agreement was subject to the
provisions of the National Credit
Act 34 of 2005 (the NCA). The respondent did not dispute that the
provisions of ss 129 and
130 of the NCA were complied with. In
the consent papers the respondent agreed to the quantum of the
applicant’s claim as
well as the manner of payments. She did
not deny that she was indebted to the applicant nor that the amount
of the judgment debt
was owing and payable when the judgment was
granted by the clerk of the court. In her founding affidavit in
support of the application
for rescission of the judgment she
acknowledged being indebted to the applicant arising from the credit
agreement and did not dispute
receipt of the letter of demand sent to
her in terms of s 58(1) of the Act. Annexed to the applicant’s
application for
a request for judgment before the clerk of the court
were the following documents:
(a) An affidavit in terms
of rules 4(2) and 12(6) supporting the request for judgment, dated
2 July 2013.
(b) The consent to
judgment by the respondent, dated 14 May 2013.
(c) The pre-agreement
statement, and quotation and credit agreement in respect of which
judgment was sought.
(d) The notice as
contemplated under s 129 of the NCA.
(e) Proof of postage of
the s 129 notice.
(f) The track and trace
report showing delivery of the s 129 notice to the respondent.
(g) The letter of demand
addressed to the respondent.
(h) A letter certifying
that the s 129 notice was sent to the respondent, signed by the
applicant.
(i) Proof of registration
of the applicant as a credit provider.
(j) A
statement of the respondent’s loan account dated 20 April 2016.
[8]
Except for the argument that certain documents were not annexed to
the request for judgment, the respondent did not set out
any defence
to the applicant’s claim as required by rule 49(3). No
explanation was advanced why the application was
launched late and
again the respondent did not explain how and when she obtained
knowledge of the judgment. The high court rightly
criticised her
papers as ‘somewhat discrepant of the factual detail’,
but then went on to conclude that the magistrate
should have
concluded that the respondent had brought the application for
rescission within a period of one year, after the respondent
had
gained knowledge of the voidness
ab
origine,
of the judgments as provided
for in rule 49(8). The high court stated that ‘the
application was sufficiently widely
presented to have enabled the
court a quo to have properly directed itself to all the relevant
facts.’
[9]
Before us the principal issue was whether it was competent for the
high court to invoke what it described as its ‘inherent
jurisdiction to grant relief where the rules of court make no express
provision therefore’ and rescind a judgment on the
basis of a
procedural error, in the absence of any valid and bona fide defence.
No heads of argument were filed on behalf of the
respondent. Upon an
enquiry by the Registrar of this Court the attorney for the
respondent, Mr Du Plessis, indicated that her whereabouts
were
unknown. A day before the hearing of this appeal Mr Du Plessis
withdrew as attorney of record for the respondent.
[10] In her application
for rescission of judgment, the respondent relied solely on the
alleged procedural irregularities to impugn
the judgment of the clerk
of the court. In the result a substantial portion of the high court’s
judgment was dedicated to
the resolution of these procedural
defences, which culminated in the high court reaching the following
conclusion:
‘
In
the circumstances it must necessarily be concluded that the
appellant’s denial of receipt of a letter of demand not only
meant that she had no knowledge of the respondent’s cause of
action but that her written consent to judgment was not the
product
of informed consent. It follows therefore that the judgment granted
by the clerk of the court was void ab origine.’
As
pointed out above the high court then concluded that the judgment was
also granted by the clerk of the court in error and then
proceeded to
rescind the judgments.
[11] The high court in
rescinding the judgments sought to distinguish the decision of this
court in
Leo Manufacturing CC,
on the following basis:
‘
Relying
on the
Leo Manufacturing
case, Mr Mundell argued that the requirements of rule 49(3) find
equal application where rescission is sought in terms of rule
49(8)
on the basis that the judgment was void ab initio and absent the
appellant having disclosed a valid and bona fide defence
(an element
of good cause), rescission cannot be granted. Although the soundness
of the legal authority relied on by Mr Mundell
is not
questioned, the earlier finding that the judgment by the clerk of the
court was void
ab origine
stems from the particular facts of this matter. The absence of proof
that a letter of demand was posted by registered mail to the
applicant and the appellant’s denial that she received such
letter carries the consequence that the respondent’s cause
of
action was not pertinently communicated to her. The further
consequence is that, her written consent to judgment could not have
amounted to informed consent (more about this below). In the
particular circumstances of the matter it is doubtful if it was
incumbent
of the appellant to have pleaded a defence as an element of
good cause. In my view this scenario also makes a case for rescission
for “good reason”, since the papers before this court and
the material contained therein are sufficiently wide enough
to
incorporate this ground.’
[12] In
Leo
Manufacturing CC
this court stated the following:
‘
[6]
Put differently, the provisions of rule 49(3) are peremptory when a
court considers an application to rescind a default judgment.
More
particularly the wording of the sub-rule makes it clear that the
grounds of the defendant’s defence to the claim must
be set
out. Where the objection is that the judgment was void
ab
origine
, compliance with rule 49(3)
nevertheless involves further proof of the existence of a valid and
bona fide defence to the claim.
[7]
Insofar as subrule 49(8) may be relevant to the matter, in that it
specifically refers to the rescission or variation of a judgment
which is sought,
inter alia
,
on the ground that it is void
ab origine
and requires the application to be served and filed within one year
after the applicant first had knowledge of such voidness, this,
in no
way, overrides the provisions of rule 49(3). Rule 49(8) simply
provides a different time period for the filing and service
of an
application for rescission of a judgment (not only a
default
judgment) on certain specified grounds. In their comment upon rule
49(8), the learned authors Erasmus and Van Loggerenberg make
the
point that an applicant seeking rescission of a
default
judgment on the grounds that the judgment in question is void
ab
origine
must (in terms of rule 49(3))
set out a defence “with sufficient particularity” so as
to enable the court to decide
whether or not there is a valid and
bona fide
defence.’
[13]
It is accordingly clear that the high court erred in seeking to
distinguish the decision in
Leo
Manufacturing CC,
on the facts of the
present appeal. Absence of proof that a letter of demand was posted
by registered mail to the respondent and
her denial that she received
such a letter, did not absolve her from the obligation of setting out
with sufficient particularity,
a valid and bona fide defence to the
claim of the applicant.
[14]
For the reasons stated above, reliance by the high court on its
‘inherent jurisdiction to grant relief where the rules
of court
make no express provision therefore’ was misplaced. A proper
reading of the rules makes it plain that where the
objection is that
the judgment is void
ab origine
compliance with rule 49(3) is peremptory. The defence to the claim
must be set out with sufficient particularity to enable the
court to
decide whether there is a valid and
bona
fide
defence. It follows that the
judgment of the high court must be set aside.
[15] In the circumstances
the following order is made:
1 The applicant is
granted special leave to appeal.
2 The appeal is upheld
with costs.
3 The order of the full
court is set aside and replaced with the following:
‘
The
appeal is dismissed with costs.’
________________________
R S Mathopo
Judge
of Appeal
APPEARANCES:
For
applicant: A R G Mundell SC
Instructed
by:
Marie-Lou
Bester, Johannesburg
Bokwa
Attorneys, Bloemfontein
For
respondent: No appearance
[1]
‘
(1)
If any person (in this section called the defendant), upon receipt of
a letter of demand or service upon him or her of a summons
demanding
payment of debt, consents in writing to judgment in favour of the
creditor (in this section called the plaintiff) for
the amount of the
debt and the costs claimed in the letter of demand or summons, or for
any other amount, the court may, on the
written request of the
plaintiff or his or her attorney and subject to subsection (1B) –
(a) enter judgment in
favour of the plaintiff for the amount of the debt and the costs for
which the defendant has consented to
judgment; and
(b) if it appears from
the defendant’s written consent to judgment that he or she has
also consented to an order of court
for payment in specified
instalments or otherwise of the amount of the debt and costs in
respect of which he or she has consented
to judgment, order the
defendant to pay the judgment debt and costs in specified
instalments or otherwise in accordance with
this consent, and such
order shall be deemed to be an order of the court mentioned in
section 65A(1).
. . . .’
[2]
‘
(1)
A party to proceedings in which a default judgment has been given,
or any person affected by such judgment, may within 20
days after
obtaining knowledge of the judgment serve and file an application to
court, on notice to all parties to the proceedings,
for a rescission
or variation of the judgment and the court may, upon good cause
shown, or if it is satisfied that there is good
reason to do so,
rescind or vary the default judgment on such terms as it deems fit:
Provided that the 20 days’ period
shall not be applicable to a
request for rescission or variation of judgment brought in terms of
subrule (4) or (5A).
. . .
(3) Where an application
for rescission of a default judgment is made by a defendant against
whom the judgment was granted, who
wishes to defend the proceedings,
the application must be supported by an affidavit setting out the
reasons for the defendant’s
absence or default and the grounds
of the defendant’s defence to the claim.
. . .
(8) Where the rescission
or variation of a judgment is sought on the ground that it is void
from the beginning, or was obtained
by fraud or mistake, the
application must be served and filed within one year after the
applicant first had knowledge of such
voidness, fraud or mistake.
.
. . .’