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THE HIGH COURT OF SOUTH AFRICA

(WESTERN CAPE HIGH COURT

Case No: 14272/2010

DATE: 16 JANUARY 2014

In the matter between:

NOMSA NKATA……………………………………………………………………………………………APPLICANT
And
FIRSTRAND BANK LIMITED……………………………………………………..FIRST RESPONDENT

SHERIFF IN THE DISTRICT OF DURBANVILLE…………………SECOND RESPONDENT

KRAAIFONTEIN PROPERTIES / EIENDOMME………………………..THIRD RESPONDENT

WESTERN CAPE DEEDS OFFICE……………………………………….FOURTH RESPONDENT

Coram: ROGERS J

Heard: 21 October 2013

Delivered: 16 JANUARY 2014

JUDGMENT

ROGERS J:

Introduction

[1] This is an application for the rescission of a default judgment granted against the applicant (‘Nkata’) by the registrar of this court on 28 September 2010. Judgment was thereby granted against Nkata in favour of the respondent in the present proceedings (‘FRB’) for payment of R1 472 506,89 together with interest from 1 June 2010 to date of payment, allegedly owing to FRB in terms of a mortgage loan agreement secured by a mortgage bond over Erf 8832 Durbanville situated at 3[…] V[…] D[…] Street in Durbanville (‘the property’). An order was also granted declaring the property to be executable for the amount of the judgment.

[2] Nkata seeks not only the rescission of the default judgment but also the setting aside of the writ of attachment issued by the registrar on 28 September 2010 and an order declaring the sale of the property in execution on 24 April 2013 to the third respondent (‘Kraaifontein Properties’) to be invalid. An interdict to restrain transfer of the property by the sheriff to Kraaifontein Properties was resolved by an undertaking pending judgment.

[3] The factual background to the matter is as follows. Nkata purchased the property in March 2005. The property was at that time undeveloped. Nkata obtained mortgage finance from FRB which resulted in the registration of a first bond in June 2005 and a second bond in May 2006. Nkata built a home on the property and took up occupation there with her two daughters during 2007. In the first bond Nkata chose the mortgaged property as her domicilium citandi et executandi. In the second bond she chose as her domicilium C/04 D[…] H[…], Rondebosch. This was the flat at which she was residing prior to the completion of the house she was building at the Durbanville property.

[4] During 2010 Nkata fell into arrears with her mortgage bond repayments. There were numerous telephone calls to her about this from the bank over the period March to November 2010. On 1 June 2010 FRB’s attorneys, Cohen Shevel Fourie (‘CSF’), in the person of Mr TO Price (‘Price’), addressed a letter to Nkata in terms of s 129(1) of the National Credit Act 34 of 2005 (‘the Act’). This letter was addressed to 2[…] V[…] D[…] Street (not 35 V[…] Doux Street, the address selected in the first mortgage bond). On 4 June 2010 a further s 129(1) was addressed to Nkata at ‘c/o 4 D[…] H[…]’ in Rondebosch (not C/04 D[…] H[…], the address selected in the second mortgage bond). Neither of these letters reached Nkata. The second was retrieved CSF on 14 June 2010 as an uncollected item.

[5] FRB issued summons on 5 July 2010. The summons alleged that her chosen domicilium was 35 V[…] D[…] Street in Durbanville. The summons alleged compliance with s 129(1)(a), annexing in purported proof of that allegation a copy of the notice sent to the Rondebosch address. On 9 July 2010 the sheriff attempted service at ‘4 D[…] H[…]’ in Rondebosch. His return indicated that service at that address was unsuccessful because there was a block of flats there called Exmoore Court. FRB’s attorneys were requested to supply the unit number. On 27 July 2010 the sheriff effected service at the Durbanville address by affixing a copy of the summons to the outer or main door.
[6] Nkata did not enter appearance to defend. On 4 August 2010 she approached a debt counsellor, and on 20 August 2010 she made an application for debt review. FRB alleges that she probably took these steps because she had received the summons. Nkata denied having received the summons.

[7] As already mentioned, default judgment was granted by the registrar on 28 September 2010. A writ authorising the sheriff to attach and take the property into execution was issued on the same day. (The judgment of the Constitutional Court in Gundwana v Steko Development & Others 2011 (3) SA 608 (CC), in which it was held that rule 31(5)(b) was invalid to the extent that it permitted the registrar (rather than a court) to declare a person’s home executable, was only delivered on 11 April 2011.)

[8] According to Nkata, she only learnt of the judgment when she received a telephone call from an FRB employee in the first half of October 2010 informing her that the property was to be sold in execution. The sale was scheduled for 10 December 2010. On 13 October 2010 her then attorneys, Ahmen & Hamman Attorneys (‘AHA’), emailed FRB urgently requesting a copy of the summons and judgment. On 19 November 2010 Nkata, through the offices of AHA, issued a rescission application (‘the first application’). FRB delivered a notice of opposition, and answering and replying affidavits were filed. The matter was to have served before the duty judge on 10 December 2010. The application was postponed because the parties were discussing settlement. On the same day the first application was settled in terms contained in a draft order. The agreement was that the sale in execution of the property (scheduled for that very day) was cancelled. Nkata undertook to sign FRB’s standard Quicksell mandate. She agreed that while the mandate was in place she would pay monthly instalments of R10 000. If the property was not successfully sold pursuant to the Quicksell mandate, Nkata was to pay the full arrears to FRB within 14 days of such expiry. If she failed to do so, FRB would be entitled to proceed to sell the property in execution forthwith. If she did pay the full arrears, FRB agreed not to sell the property but Nkata was obliged to resume payment of the full monthly instalment. Nkata was to pay the wasted costs of the cancelled sale and was also to pay the costs of the rescission application ‘as taxed or agreed’.

[9] It was envisaged that this settlement agreement would be made an order of court. Nkata during March 2011 applied through the chamber book to have the settlement made an order of court but the duty judge declined to make an order, observing that the papers were incomplete and confusing and that there would need to be notice to FRB. Neither Nkata nor FRB took further steps to have the settlement made an order. Be that as it may, the property was not sold pursuant to the Quicksell mandate. Instead, and during March 2011, Nkata paid a lump sum of R87 500 which extinguished her arrears, and she resumed monthly payments. It appears that over the next 12 months she again fell into arrears but brought the account up to date in March 2012.

[10] In April 2012, shortly after extinguishing the arrears for the second time, Nkata asked FRB to agree to the rescission of the default judgment because the judgment was negatively affecting her credit record. FRB refused to agree. In May 2012 Nkata told FRB that she was battling to meet her monthly instalments. After visiting the Durbanville branch of the bank, she submitted a distressed debt application but the bank rejected the application, stating that the matter was under litigation. (The bank’s internal records note, against the date 5 June 2012, that although Nkata’s account was up to date, this was ‘after years in arrears’, that the bank had a judgment and that there was no justification for acceding to the distressed debt application ‘with this lack of financial behaviour’.)

[11] Nkata then approached another debt counsellor, Johan Wepener. The latter was informed by FRB on 19 October 2012 that the mortgage loan was excluded from any debt review because it was ‘under litigation’. On Wepener’s advice, Nkata in December 2012 submitted a fresh distressed debt application but this was again rejected by the bank.

[12] Despite her financial difficulty, Nkata continue to pay the contractual instalments until February 2013, when she again fell into arrears. FRB then caused the property to be sold in execution, which sale was scheduled for 24 April 2013. According to the bank, its staff contacted Nkata on numerous occasions over the period February to April 2013 in an attempt to arrange for payment by her of the arrears. The bank alleges that she made promises which she did not keep.

[13] The sale in execution took place on 24 April 2013. The property was sold to Kraaifontein Properties for R1,086 million. According to the bank’s records, her full debt as at 5 April 2013 was about R1 392 028, with the arrears being R33 716 (approximately three months’ instalments). Kraaifontein Properties purchased the property with a view to renovating and re-selling it. They immediately erected a for-sale sign at the property. On the day following the sale in execution (25 April 2013) Nkata signed a monthly lease with Kraaifontein Properties to allow her to remain in occupation pending the re-sale. According to Kraaifontein Properties, Nkata agreed that they could arrange show houses. They started renovations immediately, which were completed in May 2013. According to them, Nkata did not say that she intended to seek rescission. On 2 May 2013 Kraaifontein Properties on-sold the property but registration has by agreement been suspended pending the outcome of the present application.

[14] On 3 May 2013 Nkata paid her first month’s rent to Kraaifontein Properties. She failed to pay rent in June and July 2013.

[15] The present rescission application (the second such application) was issued on 13 May 2013. FRB and Kraaifontein Properties oppose the application. They were both represented at the hearing by Mr D van Reenen. Ms Dzai appeared for Nkata.