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Civil Procedure: Common law grounds for a rescission application: Moshoeshoe and Another v Firstrand Bank Ltd and Others

Facts

The applicants (Mr and Mrs Moshoeshoe) concluded a loan agreement with the first respondent (Firstrand Bank hereafter “the bank”) to purchase their home.  The property was pledged as security and the applicants elected the property address as their domicilium citandi et executandi. However, this address was incorrectly recorded. The applicants drew the error to the conveyancing attorney’s attention, who assured them that it wasn’t important, as well as the bank. It was the failure to correct this error which led to the unfortunate trail of events resulting in the current application.

The applicants later fell into arears and the bank issued a notice to them, in terms of s129 of the National Credit Act[1] (hereafter “the Act”) and were informed that the applicants had been placed under debt review. Ignoring this, the bank proceeded to issue summons, however, both the summons as well the notice prescribed in terms of s86(10) of the Act, identified and was served on the incorrectly recorded address. The resident of that address also informed the bank of the error. Therefore, the applicants had no knowledge of the pending court action against them and the bank knew this. Despite this knowledge the bank proceeded to obtain default judgement against the applicants due to their failure to oppose the action.

The applicants became aware of the judgement when they were served with two copies of the ensuing writ of execution. One of these copies as well as the subsequent notice advertising the sale in execution continued to reflect the incorrect address.

On the 11 November 2010 the applicants sought to have the order issued by the Registrar rescinded. They appointed an attorney who informed them that an application had been launched and that it would automatically stay the execution process. Despite the supposedly pending application, the bank proceeded, and the property was ultimately sold to the second, third and fourth respondents and it was registered in the fourth’s name. During this process the applicants had contacted the bank informing the bank they had not been served with a summons. An employee of the bank told them that the manager of the department had set aside the sale, however, they later received an email noting the banks refusal to cancel same.

 The second to fourth respondents then brought an application for the eviction of the applicants and their children in the Magistrates Court which was subsequently granted. The applicants brought another application both to rescind the eviction order and have the sale set aside (this was made with an application for condonation).

The above factual averments were unopposed by all respondents. Furthermore, all the answering affidavits of the respondents were late with no application made for condonation.    Additionally, the fourth respondent made a counter application enforcing the eviction order. Under the impression that the attorney was handling the matter, the applicants failed to make an appearance when the matter was called in the Opposed Motion Court before Dodson AJ. Accordingly, he dismissed the application with costs and postponed the counter application and reserved its costs. The applicants were subsequently evicted in September 2014 at the instance of the fourth respondent.  The matter before the court relates to an application for rescission (with condonation) of such default judgement and order.

Parties’ arguments

No opposing affidavit was filed to the application. Instead, the bank filed a notice in terms of rule 6(5)(d)(iii) wherein it raised two mutually exclusive points of law which were argued in the alternative. The first argued that the matter was already finalized in a court of law (res judicatia) and the other that it was still pending (lis pendens).

Issue in dispute

The issue before the court was whether the matter had been finalized or was still pending and, if neither, whether there was good cause shown on which to rescind the order of the Registrar based on common law grounds.

Reasons for judgement

Res Judicatia: The court noted that the order resulting from the default judgement was made without going into the merits of the dispute and without making any findings on these merits. The absence of reasons would also make it impossible for an appellate court to properly consider the matter. Therefore, the court held that the matter was susceptible to being revisited.

Lis pendens: The application before the court only concerned the order resulting from the default judgement refusing an application for rescission and thus the court found that it was incorrect to suggest that such a case was still pending.

Common law: The court accordingly proceeded to examine the common law grounds of a rescission application per Colyn v Tiger Food Industries Ltd t/a Meadow Feed Mills[2]. To succeed the applicants must have (a) provided a reasonable explanation of their default, (b) shown that the application was made bona fide, and (c) shown that they have a bona fide case which prima facie would succeed in setting aside the order of the Registrar.

The court found that the applicants provided a detailed account of the facts leading to the order, which was largely caused by their unfortunate experience with attorneys and an advocate.  Furthermore, it was clear that the application was made bona fide considering the harm suffered by the applicants and their numerous attempts to seek the protection of the law. It was emphasized that the applicants had never been given an opportunity to present their case having never been served with a summons. Additionally, the execution process proceeded without judicial oversight as the Constitutional Court had pronounced that a Registrar does not have the power to issue an order declaring a person’s home to be executable per Gundwana v Steko Development and others.[3] Lastly, the court noted that the applicants had lost their primary residence due to unjust circumstances or unlawful means and thus had a prima facie case which had significant prospect of succeeding in rescinding the order made by the Registrar.

Judgement

The court accordingly granted condonation for the late application, set aside and rescinded the judgement and order in question, and ordered the bank to pay costs.

In my opinion the case was a series of unfortunate events stemming from two causes acting in conjunction. The courts approach was correct and gave effect to the principle of audi alteram partem.

[1] National Credit Act 34 of 2005.

[2] Colyn v Tiger Food Industries Ltd t/a Meadow Feed Mills (Cape) 2003 (6) SA 1 (SCA) at [11].

[3] Gundwana v Steko Development aSsnd others 2011 (3) SA 608 (CC) at [49].

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