Mostert v Nedbank Limited

• Jurisdiction: South Africa
• Judge: Gorven J
• Judgment Date: 31 March 2014
• Docket Number: 5709/2011
• Hearing Date: 12 March 2014
• Court: KwaZulu-Natal High Court, Pietermaritzburg

Gorven J:

[1]

This application is for the rescission of a default judgment granted against the applicant (Mr Mostert) on 3 August 2011. It is brought under Rule 41(2)(a), alternatively Rule 32(1)(b) of the Uniform Rules of Court (the Rules). The background to the granting of this judgment is as follows.

[2]

On 20 March 2010 summons was served on Schalk Mostert Motors CC (the CC). Service was effected on one van den Heever, said in the Sheriff's return to be working for the CC, at 166 Piet Retief Street, Pongola (the disputed address). In the action, the respondent (Nedbank) claimed money and the return of goods purchased under instalment sale agreements concluded by the CC with Nedbank. An interim order was granted for return of the goods pursuant to cancellation of the agreements by respondent due to breach by the

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CC. On 3 June 2010 respondent obtained default judgment against the CC for the return of the vehicles and further relief. The matter was set down for the final money judgment against the CC but the attorneys of the CC (who are now Mr Mostert's attorneys) pointed out that the CC had been deregistered. As a result, the action was not persisted in. The official documentation reflects that the final deregistration of the CC took place on 16 July 2010.

[3]

On 3 August 2011, default judgment was taken against Mr Mostert for the money amounts due by the CC to Nedbank. The action was based on Mr Mostert having been the sole member of the CC. The CC had been deregistered under s 26 of the Close Corporations Act 69 of 1984. Mr Mostert thus became personally liable for the debts of the CC. Mr Mostert denied that service of the summons took place. He also denied that he has ever been personally indebted to Nedbank.

[4]

Under Rule 42(1)(a), an application must be brought within a reasonable time without a specific time period being stipulated. In contrast, an application under Rule 31(2)(b) must be brought within 20 days after Mr Mostert became aware that judgment has been granted against him. Mr Mostert requests condonation, insofar as may be necessary, for the late launch of the application for rescission. It is clear that the application is out of time if brought under Rule 31(2)(b). It is therefore appropriate to first consider if the application was brought out of time under Rule 42(1)(a). If it was out of time under this Rule, consideration must then be given to whether Mr Mostert has made out a case for condonation under either of the Rules in question.

[5]

As indicated, judgment was entered against Mr Mostert on 3 August 2011. The case made out in the founding papers is as follows. Mr Mostert stated that he first became aware of this judgment on or around 10

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January 2013 when he received a Notice in terms of Section 65(1)(A) of the Magistrate's Court Act 32 of 1944 (the Act). He requested his attorney to obtain information about the judgment which gave rise to this Notice. Nedbank's attorneys furnished this to his attorney on 28 January 2013. Mr Mostert instructed his attorney to employ counsel to draft the rescission application. The application was launched on 29 April 2013. No further evidence was given bearing on when he became aware of judgment or on condonation.

[6]

Mr Mostert's assertion that he received the notice in question on or around 10 January 2013 was challenged in answer by Nedbank. In reply Mr Mostert conceded that his averment in the founding affidavit had been incorrect. He stated that he became aware of the judgment during November 2012 when a Notice in terms of Section 65(2)(A) of the Act was served on him. His receipt of this Notice tallies with the evidence of Nedbank that a notice in terms of s 65A(2) and s 65J(2) of the Act dated 20 November 2012 was sent by registered post to Mr Mostert. This addressed him as the judgment debtor, referred to the judgment of 3 August 2011 and set out the parties, the case number, the court in which it had been granted and the judgment amount.

[7]

The contention that this when he became aware of the judgment was challenged by Nedbank in argument on the following basis. Mr Mostert himself said that he has never incurred personal liability to Nedbank. The answering affidavit says that, on 22 November 2011, Mr Mostert's attorney directed a letter to Nedbank's attorneys. It was headed 'SWJ Mostert / Nedbank Beperk'. It enquired in what amount Mr Mostert was indebted to Nedbank, mentioning three policies which were said to have been sold and whose value was approximately R200 000.00. The letter said that Mr Mostert had become aware that he had been listed with a credit bureau for an amount

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of approximately R310 000.00. These averments were not denied in the replying affidavit. A response was given to a number of paragraphs together and these averments were not dealt with. Nedbank submitted that this shows that Mr Mostert was aware of the debt at that stage in the light of this action being the only litigation with Mr Mostert personally. The date of the letter is approximately three months after the default judgment was obtained and one year before Mr Mostert says that he became aware of the judgment.

[8]

Mr Mostert knew that he had been listed in respect of a debt to Nedbank. He said that he had incurred no personal liability to Nedbank. In the light of the undenied averment in the answering affidavit that his attorneys enquired about the debt due to Nedbank, and that this is the only matter between the parties, it must be held that he was aware of the judgment by 22 November 2011. At the very least, he had sufficient information to obtain all the details concerning the judgment. Even on his own version, Mr Mostert became aware of the judgment at the very latest during November 2012.

[9]

Mr Mostert gave no evidence why no steps were taken by him between November 2011 and January 2013 concerning an application for rescission of the default judgment. He did not even deal with what was done between November 2012 and January 2013. In addition, apart from saying that he instructed his attorney to brief counsel to bring this application at the end of January 2013, he said nothing about why the application was only launched on 29 April 2013. There is therefore a period of more than three months after he received copies of the summons and the return of service from Nedbank's attorneys which is unaccounted for. The question is whether Mr Mostert has made out a case that the application has been brought within a reasonable time.

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[10]

Because of the finality of court orders, an approach must be made within a reasonable time. [1] The purpose of Rule 42(1)(a) is 'to correct expeditiously an obviously wrong judgment or order'. [2] The courts have refused to fix a specific period which would be reasonable. The difference between this Rule and Rule 31(2)(b) is that, under this Rule, a judgment should not have eventuated. It must either have been erroneously sought or erroneously granted. Under Rule 31(2)(b), the judgment granted is competent and the applicant has to show cause why it should be rescinded. This appears to be the underlying rationale for not fixing a specific time period under Rule 42(1)(a). A reasonable time depends on the circumstances of each matter and must be evaluated in the light of the evidence on a case by case basis. [3] It seems to me that a reasonable time, although also not specified in this Rule, should use as its starting point the 20 day period referred to in Rule 31(2)(b) [4] and evaluate whether any other factors should result in that period being extended.

[11]

Other factors may be relevant because evidence, which may rely on sources other than the applicant, is more likely to be necessary for an application under Rule 42(1)(a). Thus, a party might have given an undertaking not to proceed against an applicant in the light of negotiations. If this undertaking was breached, this would result in the judgment having been erroneously sought. The person who performed negotiations on behalf of such an applicant would need to be traced for an affidavit to be procured. Where a judgment has been erroneously granted, it may be that the court file has been archived and it is not possible to examine a return of service or assess whether the summons discloses a cause of action. In other words, if there is evidence

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which bears on an inability to have brought the application within 20 days, no condonation is needed under this Rule. This evidence is simply weighed in the scale as a whole to determine whether the application was brought within a reasonable time.

[12]

In Roopnarain, it was held that...