Silver Falcon Trading 333 (Pty) Ltd and Others v Nedbank Ltd, Nedbank Ltd v Silver Falcon Trading 333 (Pty) Ltd and Others (2928/2010) [2011] ZAWCHC 568 (2 December 2011)

About SAFLII
Databases
Search
Terms of Use
RSS Feeds
South Africa: Western Cape High Court, Cape Town
SAFLII
>>
Databases
>>
South Africa: Western Cape High Court, Cape Town
>>
2011
>>
[2011] ZAWCHC 568
|

|

Silver Falcon Trading 333 (Pty) Ltd and Others v Nedbank Ltd, Nedbank Ltd v Silver Falcon Trading 333 (Pty) Ltd and Others (2928/2010) [2011] ZAWCHC 568 (2 December 2011)

1
REPORTABLE
IN THE KWAZULU-NATAL HIGH COURT, PIETERMARITZBURG
REPUBLIC OF SOUTH AFRICA
CASE NO: 2928/2010
In the matter between:
SILVER FALCON TRADING 333 (PTY) LTD
........................
First Applicant
DANIEL GABRIEL WANNENBURG
..................................
Second Applicant
ELMARIE WANNENBURG
....................................................
Third
Applicant
DANIEL GABRIEL WANNENBURG NO
............................
Fourth Applicant
(in his official capacity as one of the trustees
for the time being of the
FG VAN NIEKERK EIENDOMS TRUST)
ELMARIE WANNENBURG NO
...............................................
Fifth
Applicant
(in her official capacity as one of the trustees
for the time being of the
FG VAN NIEKERK EIENDOMS TRUST)
ELIZABETH VAN NIEKERK NO
............................................
Sixth
Applicant
(in her official capacity as one of the trustees
for the time being of the
FG VAN NIEKERK EIENDOMS TRUST)
and
NEDBANK LIMITED
......................................................................
Respondent
In re:
NEDBANK LIMITED
............................................................................
Plaintiff
and
SILVER FALCON TRADING 333 (PTY) LTD
........................
First Defendant
DANIEL GABRIEL WANNENBURG
.................................
Second
Defendant
ELMARIE WANNENBURG
....................................................
Third
Defendant
FG VAN NIEKERK EIENDOMS TRUST
.............................
Fourth Defendant
___________________________________________________________
JUDGMENT
___________________________________________________________
GORVEN J
On 2 June 2010 default judgment was granted against the
applicants in this matter. This arose from the foreclosure of a
mortgage
bond executed by the first applicant in favour of the
respondent and deeds of suretyship executed by the second and third
applicants
and the trustees of the FG van Niekerk Eiendoms Trust
(who I will refer to as the other applicants) in which they each
bound
themselves as sureties for and co-principal debtors with the
first applicant for its indebtedness to the respondent arising from

the mortgage bond.
The applicants apply, in the present application, for
the rescission of that default judgment. The application is brought
solely
in terms of Uniform rule 42(1)(a). No reliance is placed on
rule 31(2)(b) or the common law. The applicants allege that the

judgment against them was erroneously granted. A number of
alternative bases are mentioned in the papers but Mrs Hunt, who

appeared for the applicants, limited her heads of argument to one
basis only and, at the hearing, specifically abandoned the others.
The remaining basis on which the applicants rely is
that the judgment was without legal foundation because the simple
summons
did not contain sufficient averments to sustain a cause of
action.
1
The summons pleads that the provisions of the National
Credit Act 34 of 2005 (the NCA) do not apply to the mortgage bond.
Counsel
for the applicants submitted that the summons is, in this
respect, demonstrably incorrect. She submitted that the provisions

of the NCA do apply to the mortgage bond. As a result of the summons
relying on the averment that the mortgage bond is excluded
from the
operation of the NCA, no averment alleging compliance with s 129(1)
and s 130 of the NCA appears in the summons.
If the provisions
of the NCA do apply to the agreement, she submitted, the absence of
such an averment is fatal, the summons
is excipiable and it was not
legally competent for the court to grant the default judgment.
2
If counsel for the applicants is correct in her
submission that the summons is excipiable for want of essential
averments, the
first issue is whether rule 42(1)(a) applies. A court
cannot sit as a court of appeal on its own judgment and cannot
review it.
3
The learned author Harms is correct when he says that
the rule is a procedural one and does not affect the substantive
law.
4
Certain cases seem to suggest that the applicants may
be limited to an appeal on the basis that the judgment is wrong in
law.
In
Seale v Van Rooyen NO & others;
Provincial Government, North West Province v Van Rooyen NO &
others
5
Cloete JA said, in relation to an argument that
recourse should have been had to the rule and that an appeal was not
competent:
‘
The submission by counsel representing the
TYC that the rule should be interpreted, “because of is plain
and grammatical meaning”,
as covering orders wrongly granted,
is inconsistent with the interpretation given to the rule in numerous
cases, has not a shred
of authority to support it and requires no
further consideration.’
However, the converse may not hold true. It has been
held, in relation to rule 42(1)(c), that an appeal is no bar to an
application
for rescission under that rule
6
and I can see no basis why this should not apply equally
to rule 42(1)(a). It may be, therefore, that a judgment is both
appealable
and subject to rescission under this rule. After all,
except in situations which I will deal with later, both an appeal and
a rescission
application under rule 42(1)(a) confine a court to
consider only the four corners of the record without recourse to
material which
was not before the judge who granted the judgment.
This was the
approach adopted by
Coetzee J in Marais v Standard Credit Corporation Ltd.
7
In that matter he rescinded a default judgment granted
on a claim subject to the Credit Agreements Act
8
where the summons failed to aver that s 6(5) of
that Act had been complied with. He held that this was an essential
averment
absent which the summons was excipiable as not disclosing a
cause of action. This was because, he held, s 6(5) of that Act

imposed by law a suspensive condition in respect of contracts
subject to that Act and that a suspensive condition and its
fulfilment
must be pleaded.
9
Dealing with the application of rule 42(1)(a) he
said:
‘
In terms of Rule 42(1)(a) I can
rescind the judgment on application by the party affected. In my view
the word “erroneously”
covers a matter such as the
present one, where the allegation is that for want of an averment
there is no cause of action , ie
nothing to sustain a judgment, and
that the order was without legal foundation and as such was
erroneously granted for the purposes
of Rule 42(1)(a).’
10
I respectfully agree that this approach accords with
principle. If there are insufficient averments to sustain a cause of
action,
it follows that the judgment must have been erroneously
granted within the meaning of those words in the rule because there
can
have been no legal basis for granting it. I am accordingly
entitled to deal with this application.
Counsel for the applicants is correct that, if the NCA
does apply to the mortgage bond, the averments in the summons must
include
facts showing that the respondent has complied with the
provisions of s 129(1) and s 130 of the NCA. The failure
to
plead such facts would render the summons excipiable for want of
necessary averments on which to found a cause of action.
11
It is clear that facts proving either compliance with s
129(1) or a basis for the exclusion of the mortgage bond from the
operation
of the NCA must be pleaded. In
Rossouw
the court held that a case for summary judgment was not
made out where the plaintiff failed to plead (and prove by way of
the
affidavit in support of the application for summary judgment)
that the notice in terms of s 129(1) had been sent by one of

the methods envisaged in the NCA. The bare averment that the
provisions of s 129(1) and s 130 had been complied with

was not sufficient.
12
Similarly, counsel for the applicants submitted, if I
find that the averments in the summons do not show that the mortgage
bond
was excluded from the operation of the NCA, rescission must be
granted due to the absence of factual averments showing compliance

with s 129(1).
13
This approach was correctly not contested by Mr
Combrink who appeared for the respondent.
The application of the first applicant, therefore,
stands or falls by whether or not the averment that the mortgage
bond is excluded
from the provisions of the NCA is demonstrably
incorrect. The averment in the summons which relates to this aspect
is set out
in paragraph 9. This reads as follows:
‘
The provisions of the Act do not apply to
the agreement in that First Defendant is a juristic person which
entered into a large
agreement and had assets and a turnover in
excess of the threshold of R1 000 000.00 as stipulated in
the aforesaid Act
and regulations thereto.’
The point of departure of the NCA is that s 4(1)
makes the NCA applicable to every credit agreement except for those
excluded
by the various subsections of s 4(1). The first
applicant is a juristic person. The relevance of this becomes clear
when
regard is had to those agreements excluded from the operation
of the NCA. Section 4(1)(a) and (b) bear on the application
of
the first applicant. The relevant parts read as follows:
‘
(1) … this Act applies to every
credit agreement between parties dealing at arm's length and made
within, or having an effect
within, the Republic, except-
(a) a credit agreement in terms of which the consumer is-
(i) a juristic person whose asset value or annual turnover, together
with the combined asset value or annual turnover of all related

juristic persons, at the time the agreement is made, equals or
exceeds the threshold value determined by the Minister in terms
of
section 7 (1); …
(b) a large agreement, as described in section 9 (4), in terms of
which the consumer is a juristic person whose asset value or
annual
turnover is, at the time the agreement is made, below the threshold
value determined by the Minister in terms of section
7 (1)’
Counsel for the applicants submitted that, because the
summons avers that the mortgage bond is a large agreement, the
respondent
squarely bases its case for an exclusion from the
provisions of the NCA on s 4(1)(b). She submitted that large
agreements
are excluded from the operation of the NCA only if
s 4(1)(b) applies and that s 4(1)(a) does not apply to
large agreements
and therefore to the mortgage bond. Because the
first applicant is alleged in the summons to have had a turnover and
asset value
of more than R1m, she submitted that s 4(1)(b)
cannot apply. Accordingly, she submitted, on a construction of the
summons,
the agreement is not excluded from the operation of the
NCA.
The flaw in the reasoning of counsel for the applicants
becomes apparent on an analysis of the relevant sections of the NCA.
It
is common cause that, at the relevant time, the threshold value
determined by the Minister in terms of s 7(1) was R1m. The

agreement in question is, as already mentioned, a mortgage bond.
Section 9 of the NCA provides that every credit agreement is

characterised either as a small agreement, an intermediate agreement
or a large agreement. Section 9(4) provides that a ‘…

credit agreement is a large agreement if it is…a mortgage
agreement’. All large agreements are therefore, first
and
foremost, credit agreements. The NCA does not envisage any large
agreements which are not credit agreements. Put differently,
s 9(4)
makes it clear that a mortgage agreement, although it is a large
agreement, is one only as a category of credit agreement.
If this is
not sufficiently clear from a reading of s 9, s 1 of the
NCA defines a credit agreement as being one which
meets all the
criteria set out in s 8. Section 8(1) provides that an
agreement constitutes a credit agreement for the
purposes of the NCA
if it is a credit transaction as described in s 8(4).
Section 8(4)(d) is to the effect that an
agreement constitutes
a credit transaction if it is a mortgage agreement. Any way one
looks at it, therefore, the mortgage bond
sued upon is, as well as
being a large agreement, a credit agreement.
There is no warrant, in light of the use of the
inclusive term ‘credit agreement’ in s 4(1)(a), for
excluding
any category of credit agreement from the operation of
that section. If the legislature had intended to limit the operation
of
s 4(1)(a) to only certain categories of credit agreements,
it would have made this clear by either specifying those to which
it
applies or those to which it does not. This it has done in s 4(1)(b)
which is made to apply only to large agreements
in the circumstances
set out there. Far from limiting the credit agreements to which
s 4(1)(a) applies, it mentions ‘a
credit agreement’
simpliciter
. This section therefore clearly applies to all
credit agreements, whether characterised as small agreements,
intermediate agreements
or large agreements. This means that
s 4(1)(a) applies to large agreements where the annual turnover
or asset value of the
juristic person exceeds the threshold.
Section 4(1)(b) applies to large agreements where the annual
turnover or asset value
does not exceed the threshold. A
construction of the section shows, therefore, that large agreements
with juristic persons are
excluded from the operation of the NCA,
regardless of the annual turnover and or asset value of the juristic
person. Depending
on whether, at the relevant time, one of these
exceeds the threshold or not, they fall under either s 4(1)(a)
or s 4(1)(b).
This was elegantly summarised by Satchwell J in
the following terms:
‘
It is common cause that the first
respondent is a juristic person. A mortgage agreement is both a
credit transaction and a large
agreement. Accordingly the agreement
entered into by the first respondent with the applicant falls under
both ss 4(1)(a) and
ss 4(1)(b). As to which is of
application is dependent upon the asset value or annual turnover of
the first respondent.’
14
Adopting a purposive approach, as I am obliged by the
NCA to do,
15
it is immediately clear that there is a rational basis
for excluding from the operation of the NCA all credit agreements
where
the threshold is exceeded and for excluding all large
agreements, regardless of the annual turnover or asset value of the
juristic
person. The legislature has made it clear that the NCA does
not apply to large entities in the role of consumers, whether they

are juristic persons or organs of state. It also clearly intended to
exclude all large agreements.
16
These exclusions meet the purposes set out in s 3; they
certainly do not offend against them. Conversely, I can conceive of
no
rational basis for excluding all other credit agreements but
making large agreements subject to the NCA purely because the
juristic
person had an annual turnover or asset value exceeding the
threshold sum at the relevant time. In all the circumstances, the

first applicant’s interpretation and consequent submission
that s 4(1)(a) cannot apply because the agreement sued on
was a
large agreement cannot be sustained.
Whether s 4(1)(a) or (b) applies depends on the
annual turnover or asset value of the first applicant at the date of
the
conclusion of the agreement. The respondent, in the summons,
avers that both the annual turnover and the asset value of the first

applicant exceeded the R1m threshold. The summons does not specify
the date to which this averment applies. Because a large agreement

is relied on and large agreements are excluded under both
subsections, it is not necessary to plead the date or even the asset

value or annual turnover. It is sufficient to plead that a juristic
person entered into a large agreement. The summons accordingly

contains sufficient averments to exclude the mortgage bond from the
operation of the NCA. Therefore the respondent was not obliged
to
plead compliance with the provisions of s 129(1). The summons
is accordingly not excipiable as lacking necessary averments.
If
recourse is had to only those papers which were in the court file on
the date default judgment was granted, it cannot accordingly
be said
that the judgment was erroneously granted against the first
applicant.
The only part of the applicants’ founding papers
in the rescission application which touches on this aspect is
paragraph
40. There it is stated that the first applicant ‘does
not have a turnover in excess of R1 million’. The question is

whether, in the light of this being a rescission application based
on rule 42(1)(a) in which it is contended that the judgment
was
erroneously granted, this evidence can be taken into account. No
submissions were made on this point by either counsel. It
has been
authoritatively held, in circumstances where it appears from the
court file at the time of judgment that the procedural
requirements
have been complied with when they were not in fact complied with,
that the party in whose favour judgment was granted
is not entitled
to judgment due to an error in proceedings.
17
In such an instance, evidence to this effect may be
taken into account and the judgment can be held to have been
erroneously granted
within the meaning of that phrase in
rule 42(1)(a). It is clear, however, that a defence which did
not appear on the papers
at the time default judgment was granted
may not be taken into account in a rescission application brought
under this Rule. In
Lodhi
Streicher JA said the following in this regard:
‘
Similarly, in a case where a plaintiff is
procedurally entitled to judgment in the absence of the defendant the
judgment if granted
cannot be said to have been granted erroneously
in the light of a subsequently disclosed defence.’
18
The averments cannot, therefore, be taken into account
in this application.
Even if a defence raised in the papers can be taken
into account, the averments in the applicants’ papers fall
short of
establishing such a defence. Counsel for the applicants
quite properly conceded that the statement in paragraph 40 of the
affidavit
is framed in the present tense and, accordingly, deals
with the situation as at the date on which the affidavit was
attested.
In order to address s 4(1)(a), the operative date is
that on which the mortgage bond was concluded. The statement also
does
not dispute that the assets of the first applicant exceeded
R1m. The manner in which s 4(1)(a) is framed makes it clear

that if, at the relevant date, either the annual turnover or the
asset value exceeded R1m, the provisions of the NCA do not apply
to
the mortgage bond. Quite apart from these considerations, as stated
above, all large agreements concluded with juristic persons
are
excluded, regardless of annual turnover or asset value. Even if the
averments in the applicants’ papers dealing with
a defence to
the claim can be considered in the application, therefore, the
provisions of the NCA cannot be said to apply to
the mortgage bond.
On any approach, therefore, the application for rescission of the
default judgment granted against the first
applicant in favour of
the respondent must fail.
Counsel for the applicants did not contend that, if it
was held that the mortgage bond is excluded from the operation of
the NCA,
the provisions of the NCA nevertheless apply to the other
applicants arising from their deeds of suretyship. They do not
apply.
Section 1 of the NCA provides that an agreement constitutes a
credit guarantee if it satisfies all the criteria set out in s 8(5)

of the NCA. The relevant part of s 8(5) reads as follows:
‘
An agreement, irrespective of its form…,
constitutes a credit guarantee if, in terms of that agreement, a
person undertakes
or promises to satisfy upon demand any obligation
of another consumer in terms of a credit facility or a credit
transaction to
which this Act applies’.
A deed of suretyship clearly falls within the ambit of
this section and is, accordingly, not a credit guarantee as defined
in the
NCA because the mortgage bond is excluded. The NCA therefore
does not apply to the various deeds of suretyship executed by the
other applicants.
19
[17] In the result, it is clear that no case for
rescission of the default judgment was made out by any of the
applicants.
[18] Counsel for the applicants correctly conceded that,
because the mortgage bond makes provision for the payment of costs on
the
scale as between attorney and client, the respondent is entitled
to costs on that scale if the application is dismissed.
[19] In his heads of argument, counsel for the
respondent drew attention to the fact that the name of the trust in
the typed court
order was incorrectly rendered. This was clearly a
patent error and one which would fall under the provisions of rule
42(1)(a).
An amendment to the order to correctly reflect the name of
the trust was accordingly not opposed by the applicants. Since this
point was neither raised nor relied upon by the applicants, the fact
that this results in an amendment to the order does not constitute

success on the part of the applicants warranting any change in the
usual approach relating to costs.
[20] In the result the following orders are granted:
The application is dismissed with costs on the scale
as between attorney and client. Such costs are to be paid jointly
and severally
by the applicants, the one paying the others to be
absolved.
The order granted on 2 June 2010 is amended to reflect
the name of the fourth defendant, wherever it appears, as follows:
‘F
G van Niekerk Eiendoms Trust duly represented by its
trustees being: Daniel Gabriel Wannenburg, Elmarie Wannenburg and
Elizabeth
van Niekerk.’
DATE OF HEARING: 24 November 2011
DATE OF JUDGMENT: 2 December 2011
FOR THE APPLICANTS: P HUNT, instructed by SPRUYT,
LAMPRECHT & DU PREEZ, locally represented by NICHOLSON &
HAINSWORTH ATTORNEYS.
FOR THE RESPONDENT: LE COMBRINK, instructed by MASON
INCORPORATED.
1
See,
for instance,
Athmaram v Singh
1989 (3) SA 953
(D) at 957A.
2
Section
129(1)(b) provides that a credit provider may not commence any legal
proceedings to enforce a credit agreement before
first providing
notice to the consumer as contemplated in s 129(1)(a). Section
130 provides that a credit provider may approach
the court only
where a consumer has been in default under a credit agreement for at
least 20 business days and at least 10 business
days have elapsed
since the credit provider delivered a notice to the consumer as
contemplated in s 129(1)(a). Section 129(1)(a)
sets out
what must be contained in the notice to the consumer.
3
D
Harms:
Civil Procedure in the Supreme Court
para B42.4 where
the learned author bewails the number of
dicta
which give the
impression that this basic principle does not apply.
4
Ibid.
5
2008
(4) SA 43
(SCA) para 18. See also
Frenkel, Wise & Co (Africa)
(Pty) Ltd v Consolidated Press of SA (Pty) Ltd
1947 (4) SA 234
(C);
Holmes Motor Co v SWA Mineral & Exploration Co
1949 (1) SA
155
(C). In the latter two cases, the judgments were rescinded on
the basis that, unbeknown to the court at the time the provisional

sentence was granted,
payment
of the amount claimed had been
made in full.
6
Tshivhase
Royal Council & another v Tshivhase & another; Tshivhas &
another v Tshivhase & another
[1992] ZASCA 185
;
1992 (4) SA 852
(A) at 865A-B.
7
2002
(4) SA 892
(W).
8
75
of 1980.
9
At
897E-F.
10
At
897A-B.
11
Rossouw
& another v Firstrand Bank Ltd
2010 (6) SA 439
(SCA).
12
Rossouw
para 38.
13
The
test is therefore whether an exception to the summons would succeed.
It is settled law that, where the claim relies on a statute,

specific mention of the section is not necessary; all that is needed
is that sufficient facts are pleaded from which the conclusion
can
be drawn that the provisions of the statute apply. See
Ketteringham
v City of Cape Town
1934 AD 80
at 90.
14
Firstrand
Bank Ltd v Carl Beck Estates (Pty) Ltd & another
2009 (3) SA
384
(T) para 11 (references omitted).
15
Nedbank
Ltd & others v National Credit Regulator & another
2011
(3) SA 581
(SCA) para 2. Section 2(1) of the NCA provides: ‘This
Act must be interpreted in a manner that gives effect to the
purposes
set out in section 3.’ The preamble to s 3 is to
the following effect: ‘The purposes of this Act are to promote

and advance the social and economic welfare of South Africans,
promote a fair, transparent, competitive, sustainable, responsible,

efficient, effective and accessible credit market and industry, and
to protect consumers…’ and goes on to list nine
means
by which this is to be achieved.
16
Regarding
government, Plasket J said the following in Nelson Mandela Bay
Metropolitan
Municipality v Nobumba NO & others
2010 (1)
SA 579
(ECG) para 22: ‘Although the purposes of the NCA appear
to be focused on the regulation of what I would term commercial
credit, its application is wider than that: while the State and
organs of State, when they are consumers, are expressly excluded

from its protection, s 4(3)(b)(i) states that the application of the
NCA extends to credit agreements entered into by organs
of State as
credit providers.’
17
Lodhi
2 Properties Investments CC & another v Bondev Developments
(Pty) Ltd
2007 (6) SA 87
(SCA) para 24. In
Brangus Ranching
(Pty) Ltd v Plaaskem (Pty) Ltd
2011 (3) SA 477
(KZP) the court
appeared to accept the converse;
viz
that where evidence in
the rescission application showed that the summons was in fact
served on a person prepared to accept service
at the registered
office of a company but where the person in question was not a
responsible employee of the applicant, this
could be taken into
account in assessing whether or not there were in fact procedural
irregularities.
18
Para
27. See also
Colyn v Tiger Food Industries Ltd t/a Meadow Feed
Mills (Cape)
2003 (6) SA 1
(SCA) paras 9-10.
19
See
also
Nedbank Ltd v Wizard Holdings (Pty) Ltd & others
2010
(5) SA 523
(GSJ) paras 9&10.