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IN THE HIGH COURT OF SOUTH AFRICA

GAUTENG LOCAL DIVISION, JOHANNESBURG

CASE NUMBER: 45240/16

Not reportable

Not of interest to other judges

Revised.

24 Nov 2017

In the matter between:

RIAN FERREIRA                                                                                1^st APPLICANT

HELEN HEATHER FERREIRA                                                             2^nd APPLICANT

and

NEDBANK LIMITED                                                                     1^st RESPONDENT

SHERIFF OF THE HIGH COURT: HEIDELBERG               2^nd RESPONDENT

 

JUDGMENT

AJ PATHER:

 

Introduction

[1] The first applicant is Rian Ferreira.

[2] The second applicant is Helen Heather Ferreira.

[3] The applicants are married to each other in community of property. The first applicant represents them in these proceedings.

[4] The first respondent is NEDBANK LIMITED, cited as being a general bank and credit provider, carrying on business as such at 135 Rivonia Campus, 135 Rivonia Road, Sandown, Sandton.

[5] The second respondent is the Sheriff, Heidelberg, GAUTENG.

[6] This is an application for rescission of the judgment granted against the applicants on 19 August 2016. The applicants submit that the application is brought either under Rule 31 (2)(b), Rule 42 (1)(a) or the common law, as all three have application in so far as they allege that the judgment was granted in their absence as a result of defective service.

[7] Broadly the applicants seek an order:

1.  condoning the late filing of this application;

2.  rescinding the default judgment granted by Yacoob AJ on 19 August 2016 for payment of the sum of One Million Four Hundred and Fifty Five Thousand Four Hundred and Forty Two Rands and Fifty Three Cents (R1 455 442,53) together with interest;

3.  interdicting the respondents from proceeding with the sale in execution pending the final determination of the matter;

4.  staying the writ of execution pending the final determination of the matter; and

5.  that they be allowed to submit such further evidence and documents as referred to in the founding affidavit.

[8] The first respondent opposes the application and seeks that the rescission application be dismissed with a punitive costs order.

 

Background

[9] During 2008 the applicant and the first respondent entered into a home loan agreement secured by a mortgage bond (the bond) registered over the applicants’ property (the subject property) in favour of the first respondent. It is common cause that the applicants fell into arrears with their monthly instalments under the bond and in June 2010 the parties entered into a debt restructuring agreement. Between then and May 2016, there were various interactions between the parties, which included the first respondent’s providing the applicants with Nedbank Assisted Sale (NAS) mandates. In terms of the NAS mandates, the first respondent would assist the applicants in marketing the subject property through estate agents in an attempt to sell it. During this period too, and on 29 August 2014, the first respondent had already instructed its attorney to commence legal action against the applicants, as the last payment made by the applicants towards the bond was on 14 March 2014.

[10] As the property had not been sold, a further extended NAS mandate was offered to the applicants on 25 April 2016, which was only signed on 23 May 2016. The first respondent accepted this on the basis that legal action against the applicants would continue as their account was by then twenty-three months in arrears.

[11] Summons was served on 14 June 2016 by affixing it to a gate on the subject property. The action was however not immediately pursued due to the extended NAS mandate that the applicants had signed. On 27 July 2016, the first respondent sent an email communication to the applicants advising that as an offer which had been received on the subject property had fallen through and further that the extended NAS mandate had expired, legal action would be continued. This was followed by a detailed message left for the applicants on a cell phone number when the cell phone went into voicemail service.

[12] On 28 September 2016, the first applicant was telephoned on another cell phone number and informed of the judgment by default and that the property had been attached. During the conversation, he informed the first respondent’s representative that the tenants who were occupying the property were interested in purchasing it.

 

The issues

[13] The applicants base their application for rescission on the following grounds:

13.1 they did not have knowledge of the judgment as it had been granted by default in their absence;

13.2 the legal action previously instituted by the first Respondent during 2014 and which they, the applicants had opposed was pending;

13.3 the Application for Default Judgment was fatally defective in that the Commissioner of Oaths was employed by a firm of attorneys who are on the first respondent’s panel of attorneys. The Commissioner of Oaths, so it was contended, was, under the provisions of regulation 7(1) of the Regulations Governing the Administering of an Oath or Affirmation, prohibited from commissioning affidavits by employees of the first respondent relating to disputes in which the first respondent was a party;

13.4 the judgment amount includes amounts which the first respondent is not entitled to claim, such as legal fees, interest and amounts for the periods during which the applicants were participating in the NAS. It was contended that the first respondent’s representatives had at the time they had originally offered the NAS programme to the applicants, indicated to them that they, the applicants were not required to make payments towards the bond during the period of participation in the NAS programme;

13.5 in granting the credit agreement, the first respondent had granted the applicants a loan amount secured by the bond, “at what appears” to have been in excess of the value of the subject property. In other words, the first respondent in doing so, had participated in a Reckless Credit Agreement. It was also contended that the subject property would not fetch the amount of the bond and that generally properties in that area sold for below their values; and

13.6 the judgment against the applicants and the attachment and proposed sale in execution of the property were unconstitutional. In this regard, and as stated by the first respondent, whole sections of the Constitution of the Republic of South Africa, 1996, have been quoted.

[14] In regard to the application to stay the writ of execution, the applicants state that in addition to the grounds listed for the rescission application, they would suffer irreparable harm if the property is sold on auction. They would not be able to let the property at a market-related value, would be deprived of the opportunity at market value, would be prevented to return to the property as they had intended and be able to resume full payments of the bond if they reside in the property. Furthermore, they contend that if the stay of the writ is not granted they would be forced to bring additional applications to prevent the property from being transferred, presumably to a buyer, while court applications are being fought.

[15] The applicants repeat most of the above grounds in their submission that they would be prejudiced if the application for rescission and other relief is not granted. They claim further that they would eventually be liable for a debt that is in contravention of the National Credit Act, 2005.

[16] The first respondent referred to a previous urgent application on the same set of facts as in this matter, brought by the applicants, which application was struck from the roll by Molahlehi J on 15 November 2016 for lack of urgency. The applicants were ordered to pay the costs. Instead of enrolling that application for adjudication on the merits, the applicants proceeded to issue the application which is the subject of this judgment. Despite the first respondent’s request that they should either withdraw this application or the urgent one because of the irregularity, the applicants failed to do so.

[17] The first respondent chose not to pursue its own plea of lis pendens against the applicants. However, in answer to that of the applicants’, the first respondent stated that it did not pursue the earlier action, but had issued summons in June 2016 as mentioned earlier in this judgment. The first respondent undertook to file a Notice of Withdrawal at the hearing of this matter. This issue is now academic.

[18] In dealing with the merits of the application, the first respondent has provided a comprehensive answer, detailing the interventions made when the applicants fell behind with their bond repayments, and the several attempts made to contact the applicants in an effort to resolve the matter of non-payment. Much of the first respondent’s answer to the issues raised by applicants have not disputed.

[19] The first respondent has further submitted that in terms of the Debt Restructuring Agreement, the applicants had chosen as their domicilium citandi et executandi the address of the subject property. Summons was served by affixing to the gate at this address. The section 129-Notice was also sent to this address and emailed to addresses which the applicants had provided. The applicants had in the meantime moved to Durban, having rented out the subject property. However, as they had not changed their address as required by the Debt Restructuring Agreement, the first Respondent was unaware of their move.

[20] Objecting to the style of pleading and the inclusion of legal argument in the founding affidavit, the first respondent seeks an order that the sections of the Constitution quoted by the applicants should be struck from the affidavit, with costs. However, as will become evident, the sections of the Constitution quoted have no bearing on the issue of whether the applicants have properly made out a case for a rescission of the judgment. Therefore it is not necessary for any striking out to occur.

[21] The applicants’ seeking of an order to be allowed at a later stage to submit further evidence and documents cannot be sustained. I agree with the submission on behalf of the first respondent in its heads, that the applicants should have disclosed in the founding affidavit all facts upon which they based their application. They cannot be allowed time to gather further information which in any event has not been conclusively shown to exist.

 

The law

[22] Rule 42(1) provides that a court may rescind or vary:

(a) an order or judgment wrongly sought in the absence of an affected party;

(b) an order or judgment where there is an ambiguity, patent error or omission but only to the extent of the ambiguity, error or omission;

(c) an order or judgment granted as a result of a mistake common to the parties.

[23] It is clear that Rule 42(1) does not apply as, just as in the case of Swart v ABSA Bank 2009 [1](5) SA 219 (C), “there is no ambiguity, error or mistake in the judgment and it was also not erroneously granted”. 

[24] The common law grounds for a rescission application are:

(a) fraud;

(b) an error in law;

(c) judgment granted by default in the absence of the parties; or

(d) upon good cause shown.

[25] On the other hand, Rule 31(2)(b) provides that:

“A defendant may within 20 days after he has knowledge of such judgment apply to court upon notice to the plaintiff to set aside such judgment and the court may, upon good cause shown, set aside the default judgment on such terms as to it seems meet.”

[26] Both the common law and Rule 31(2)(b) find application to the facts of this matter in that both apply to cases where the applicants were unaware of the judgment and require good cause to be proved before rescission of the judgment will be ordered.

 

Has good cause been proven?

[27] The applicants were well aware of the increasing arrears owed in terms of the bond, having participated in debt restructuring and the NAS programme. By the time summons was issued, the bond account was 23, 31 months in arrears and the amount outstanding was R245 592,01. While they could be commended for seeking better opportunities elsewhere, given that they were sinking further into debt by then, it does not assist their case to have simply ignored the first respondent, a major creditor. When confronted with the respondent’s evidence of constant attempts at contacting them, the first applicant attempted to introduce new evidence in the replying affidavit – he blamed the tenant for not informing him of the warrant of execution against the property, technology in that signals were poor at his Durban residence, his wife’s poor health and the first respondent’s attorneys for giving him incorrect advice.  If anyone was reckless, it is the first applicant for avoiding the first respondent’s telephone calls and not responding to its messages.

[28] While the summons was served by affixing, the warrant of execution for the attachment of the subject property was served on the tenant on 31 August 2016. I agree with the first respondent’s contention that it is improbable that she, Ms Valashig would not have reported this to the applicants. It was surely in her interests that the applicants acted with sufficient alacrity so as to halt whatever action was pending, and to attempt to resolve the matter, otherwise she might well have had to find alternate accommodation quite soon.

[29] Turning to the defences raised in the founding affidavit, these can only be described as bald and fictitious. Regulation 7(1) in respect of commissioners of oaths provides that a commissioner of oaths “shall not administer an oath or affirmation relating to a matter in which he/she has an interest”. To suggest that the attorney who commissioned the first respondent’s affidavit and who is employed by the firm of attorneys who are part of the first respondent’s panel of attorneys/conveyancers, has an interest in the matter against the applicants, is far-fetched. In the course of their legal work for the first respondent, the firm probably deals with many such matters in a day. And it is not known whether the commissioner of oaths is one of the conveyancers who works in that department. This is similar to the first applicant’s spurious attack on the attorney acting on behalf of the first respondent’s, blaming her for his poor handling of his “urgent” application.

[30] Furthermore, I have no hesitation in rejecting the applicants’ other challenge on the grounds of legal fees, insurance and securitisation. On the papers and in presenting his argument the first applicant demonstrated an above-average understanding of law, to the extent that he is able to use it to his advantage. The bond was registered based on his authority in terms of a Power of Attorney. He also clearly understood the terms and conditions contained in the draft bond, otherwise he could have objected before the registration was effected. The applicant clearly cannot afford to bond repayments, and the first respondent is entitled to take steps to recover its losses.

[31] I accept the argument advanced on behalf of the first respondent that the applicants deliberately failed to defend the matter. The court finds that they were therefore in wilful default. The applicants have failed to meet the requirements for rescission of the default judgment in that no good cause has been proven. I do not however deem it necessary to grant an order for punitive costs against the applicants, who already are in debt.

[32] In the circumstances, the application is dismissed with costs.

 

_______________________

S PATHER AJ

 JUDGE OF THE HIGH COURT

 

APPEARANCES

For the applicants: In Person

For the first respondent: Advocate Jacques Minaar

Instructed by: Hammond Pole Majola Incorporated

Date of hearing: 6 September 2017

Date of judgment : 23 November 2017

 

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