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IN THE HIGH COURT OF SOUTH AFRICA

GAUTENG DIVISION, PRETORIA

CASE NUMBER: 56974/2013

DATE: 28 NOVEMBER 2014

In the matter between

TERESSA ANTONETTE DU PLESSIS....................................................................................APPLICANT

And

ABSA BANK LIMITED..........................................................................................................RESPONDENT

JUDGMENT

LEPHOKO AJ

[1] This is an opposed application for the rescission of a default judgment granted against the applicant on 18 September 2013. The applicant also seeks an order for the return of a certain motor vehicle seized by the sheriff in terms of that judgment.

Judgment was obtained against the applicant after she defaulted on a debt rearrangement agreement in terms of the National Credit Act, Act 34 of 2005 (the NCA).

BACKGROUND

[2] The applicant had entered into a lease agreement with the respondent in terms of which she leased a motor vehicle from the respondent. The applicant failed to make monthly repayments in terms of the lease agreement. The applicant applied for debt counselling and review in terms of the NCA and a debt re-arrangement order was granted by the Brits Magistrate Court on 08 November 2010. The applicant defaulted on the debt re-arrangement order resulting in the respondent cancelling the debt-rearrangement and instituting legal proceedings against the applicant. The applicant now seeks to rescind the judgment resulting from those proceedings. The applicant is alleged to have fallen in arrears of R10 706-69 at the time of summons. The applicant did not defend the action as she believed the respondent would not take judgment pending settlement negotiations that were ongoing between the parties. The application for rescission is brought out of time.

CONDONATION

[3] The applicant applies for condonation of the late institution of this application as the application is brought one day out of time. The applicant alleges that she became aware of the judgment on 31 January 2014 when the sheriff served on her the warrant of execution. She states that due to her being under severe financial pressure she tried to resolve the matter through her attorney and debt counsellor outside the formal court process. Various telephone calls and letters were exchanged between the parties’ representatives in this regard. On 19 February 2014, the respondent’s attorneys advised the applicant of the terms on which the respondent was prepared to settle the matter. The applicant was unable to meet the proposed terms of settlement. She also disputed the amount the respondent alleged was in arrears.

[4] The applicant had to obtain various documents for her legal representatives to enable them to draft the rescission application. The applicant was unable to supply the information timeously as her previous debt counsellor had stopped practicing as such. This resulted in the applicant having to obtain the necessary documents and proof of payment from her various banks and peruse her records for as far back as 2010, which resulted in the delay. The applicant only had a week to obtain the necessary information as from the 19 February 2014 when it became clear that the matter would not be resolved. The applicant submitted that whilst the application was brought out of time, it was brought within a reasonable time. These allegations are not disputed by the respondent.

[5] The court may on good cause shown, condone any non-compliance with the rules. The court exercises its discretion judicially upon consideration of the facts of the case. The court may take into account factors such as such as the efforts made towards complying with the rules, the degree of non-compliance, the explanation therefor, the prospects of success and the importance of the case. See S v Yusuf 1968 (2) SA 52 (A) at 53A-54B, Federated Employers Fire and General Insurance Co Ltd v McKenzie 1969 (3) SA 360 (A) at 262G-365A. I am of the view that there is a reasonable explanation for the delay and that the respondent is not in prejudiced thereby. Accordingly, the applicant’s failure to bring this application on time is condoned.

REQUIREMENTS FOR RESCISSION OF JUDGMENT

[6] In order to succeed with an application for rescission of judgment the applicant must show that she was not in willful default, that the application is bona fide and not made with the intention to delay the claim against her and that she has a bona fide defence, which prima facie has some prospects of success: See Grant v Plumbers (Pty) Ltd 1949 (2) SA 470 (O) at 476 - 477, Morkel v ABSA Bank Bpk 1996 (1) SA 899 (C) at 903D - E, Standard Bank of SA Ltd v EL-Naddaf 1999 (4) SA 779 (W) at 784.

EXPLANATION FOR THE DEFAULT

[7] The applicant admits that she was served with a notice of termination of debt review in terms of the NCA before legal proceedings were instituted against her. The applicant also admits that she was served with the summons. She alleges that because of her dire financial situation, in an effort to avoid incurring unaffordable legal costs, she attempted to resolve the matter amicably with the respondent without formally defending the court action.

[8] The notice in terms of section 86(10) of the NCA terminating the debt review was sent to the applicant on about the 21 August 2013. On 22 August 2013 the debt counsellor responded to the letter of termination and advised that the applicant had not made payment for January and February as per an arrangement made with Portia of the respondent. On receipt of the summons she approached the debt counsellor who in turn approached the respondent’s attorney in an endeavor to resolve the matter. The debt counsellor then sent a letter to the respondent’s attorney requesting them to hold over any legal proceedings due to the fact that the applicant had made arrangements with the respondent in respect of the payments that had to be made during February 2013 and April 2013. These are the non-payments that seem to triggered the termination. On 27 September 2014 the respondent’s attorney respondent and advised that that they were still awaiting instructions from the respondent. It later transpired that the respondent had obtained default judgment against the applicant on 18 September 2014. These allegations are not denied by the respondent.

[9] The applicant alleges that due to the negotiations that were taking place between the parties and the respondent’s attorney indicating that he would revert once he had obtained his client’s instructions, she was under the bona fide belief that all legal action was on hold. She believed that the respondent would not proceed with the action before reverting to her and advising of its intention to do so. Based on the foregoing, the applicant claims that she had no knowledge that the respondent was proceeding with the legal proceedings and as a result did not defend the action.

[10] I am of the view that the respondent’s attorney’s conduct created an impression to the applicant that the matter would not be proceeded with until he had reverted and advised of his client’s instructions. There was a duty on the respondent’s attorney to advise the applicant that the legal action was no longer on hold and the respondent would proceed to obtain judgment if the action remained undefended. This is compounded by the fact that he still advised that he awaiting further instructions although he knew that judgment was granted on 18 September 2013. It is clear that the conduct of the respondent’s attorney contributed in the applicant not defending the action. Under these circumstances the applicant acted reasonably and cannot be said to have been in wilful default.

BONA FIDE DEFENCE

[11] The respondent instituted legal proceedings and obtained judgment after the applicant defaulted on payment of the rearranged debt. The respondent would not have been entitled to institute the legal proceedings that culminated in the judgment had the applicant not defaulted.

[12] The defence raised by the applicant is, inter alia, that she had made an arrangement with respondent through its employee, Portia. The arrangement was that the payment for the months of January and February 2014 would be made in March 2014 and the applicant would make increased payments on the monthly installments from end March. The respondent does not deny that the arrangement was made as alleged by the applicant. The respondent’s response is that Portia is does not deal with debt reviews and was not authorized to make the arrangement.

[13] As the discussion and arrangement between Portia and the applicant is not disputed, it must be taken as admitted by the respondent to have taken place. This being the case, it can be inferred that the applicant was possibly misled by an employee of the respondent to believe that an acceptable arrangement had been agreed upon as to future payments and that based thereon the respondent would not cancel the agreement and proceed with legal action. The applicant honoured the new arrangement as was agreed with Portia and made numerous payments which were accepted by the respondent without any question. These payments are admitted by the respondent.

[14] The applicant disputes the alleged arrears of R10706-69 recorded in the notice in terms of section 86(10) issued on 21 August 2014. The arrears at the time of summons on 12 September 2014 are reflected as R10706-69. This did not take into account the amounts paid by the applicant between 04 March 2014 and 02 August 2014 before the 86(10) notice was issued and the additional amount of R850-00 paid on 26 August 2013.

[15] The other defence raised by the applicant is that the respondent failed to adhere to the debt review order in that it failed to apply the 0.00% interest rate agreed to between the parties and subsequently made a court order. The respondent had throughout the period charged an interest rate of 6.50%. These allegations are not disputed by the respondent. The respondent’s response is that the Magistrate who made the debt rearrangement order did not have the power in terms of section 87(10) of the NCA to make an order that alters the interest rate which is applicable in terms of the credit agreement.

[16] A judgment of a court is presumed to be right, and can be challenge only on appeal or review: see Makings v Makings 1958 (1) SA 338 (A) at 349. The applicant was not entitled to alter the interest merely because he believed the decision to of the court be ultra vires.

[17] The respondent referred the court to the judgment of Firstrand Bank v Evans 2011 (4) SA 597 (KZN) para 35 where the court stated that the effect of debt rearrangement order is not to alter the debtor’s contractual obligations to the creditor, but merely precludes the creditor from pursuing its contractual rights, for so long as the debtor is complying with the provisions of the debt rearrangement order. If the debtor does not comply with the debt rearrangement order, the creditor is not confined to claiming remedies on the basis of an amended contract. Instead, the bar on the enforcement proceedings against the debtor is removed and the creditor is entitled to pursue in full its contractual remedies.

[18] I am in agreement with the decision in Firstrand Bank v Evans (supra), that the creditor is entitled to enforce its full contractual rights after the debtor’s default. However, in this case, default remains in dispute and the respondent cannot be said to have been entitled to enforce its contractual right in full

[19] The respondent also argued that it did not claim a monetary amount together with interest, but claimed confirmation of the cancellation of the agreement and return of the goods. This contention overlooks the point made by the applicant (which is not disputed) that the respondent already charged an interest of 6.50% in respect some of the amounts paid before the debt rearrangement was cancelled and that that interest is included in the default amount of R10706-69. The overcharged interest can therefore not be viewed in isolation of the arrears relied upon to establish the default that formed the basis of the respondent’s claim.

[20] The function of a court hearing an application for rescission is inter alia to determine whether the defence raised by the applicant is bona fide and whether it prima facie has some prospects of success at the trial, and not to try the issues. It would be improper for a court hearing an application for rescission to usurp the role of a trial court.

[21] In RGS Properties (Pty) Ltd v Ethekwini Municipality 2010 (6) SA 572 (KZD) at 575H-576C the court stated that judgment by default is inherently contrary to the provisions of section 34 of the Constitution and that in weighing up facts for rescission, the court must balance the need of an individual who is entitled to have his dispute resolved in a fair manner in a public hearing, against those facts which led to the default judgment being granted. The court observed that whilst there is a need for the existence of a bona fide defence the court is not seized with the duty to evaluate the merits of the defence. The fact that the court may be in doubt about the prospects of the defence to be advanced is not a good reason for refusing the application. In my view the applicant has been able to establish the existence of a bona fide defence.

[22] In the light of some of the defences raise by the applicant, the applicant appears to be bringing the application bona fide and not merely for the purpose of delaying the plaintiff’s claim. The applicant has therefore satisfied all the requirements for rescission and is therefore entitled to have the judgment rescinded.

I make the following order

1. Condonation is granted for the late filing and service of the application for rescission.

2. The default judgment granted against the applicant rescinded.

3. The respondent is ordered to return the following vehicle within five days of the date of this order: 2005 Volswagen Velociti 1.41, Engine Number: AGY 065397, Chassis Number: AAV3317254009276 (the vehicle)

4. The applicant shall deliver her notice of intention to defend within 5 days of the date of this order.

5. The applicant shall file her plea not later than 20 days after delivery of her notice of intention to defend.

6. The costs of this application, including any costs in respect of the removal, storage and return of the vehicle shall be costs in the cause.

A LC M LEPHOKO

(ACTING JUDGE OF THE HIGH COURT)

Heard on: 11 August 2014.

Judgment delivered on: 28 November 2014.

For the Applicant: J Roux.

Instructed by: Lovegrove Mulder Attorneys.

For the Respondent: C Spangenberg.

Instructed by: Delport Van Den Berg Incorporated.

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