Sebola and Another v Standard Bank of South Africa Ltd and Another

• Jurisdiction: South Africa
• Judge: Mogoeng CJ, Yacoob ADCJ, Cameron J, Froneman J, Jafta J, Khampepe J, Nkabinde J, Skweyiya J, Van der Westhuizen J, Maya AJ and Zondo AJ
• Judgment Date: 07 June 2012
• Citation: 2012 (5) SA 142 (CC)
• Docket Number: CCT 98/11 [2012] ZACC 11
• Hearing Date: 14 February 2012
• Counsel: CDA Loxton SC (with JA Cassette) for the first respondents. S Wilson (with I De Vos) for the first amicus curiae, instructed by the Socio-Economic Rights Institute of South Africa Law Clinic. M Chaskalson SC (with D Smit) for the second amicus curiae. G Marcus SC (with N Ferreira) for the third amicus curiae.
• Court: Constitutional Court

Cameron J (Yacoob ADCJ, Froneman J, Khampepe J, Nkabinde J, Skweyiya J, Van der Westhuizen J and Maya AJ concurring): A

Introduction

[1] This is an application for leave to appeal directly to this court against B a judgment of the full court of the South Gauteng High Court. That court dismissed an appeal against a decision of a single judge of the same court (high court), which refused to rescind a default judgment entered against the applicants, Mr and Mrs Sebola, in September 2009. Standard Bank (Bank) obtained the judgment after it instituted action to C reclaim a home loan Mr and Mrs Sebola owed.

[2] The main issue before both the high hourt and the full court was whether the provisions of the National Credit Act [1] (NCA) that entitle a debtor to written notice before a credit provider may institute action [2] require that the debtor actually receive that notice. It was accepted that D the Sebolas did not receive the notice the Bank sent to them. The high court and the full court, the latter relying on the decision of the Supreme Court of Appeal in Rossouw, [3] held that proof by the Bank that it had despatched the notice was sufficient, even if the notice did not reach the debtor, and therefore that the action against the Sebolas was competent. The effect of these judgments was that the sale in execution of the E Sebolas' property could go ahead.

[3] In their application to this court, Mr and Mrs Sebola put that interpretation in issue. They say it fails to give effect to ss 8(3) [4] and 39(2) [5] of the Constitution. But after they lodged the application, the Bank abandoned the judgment it obtained against them. It now says the F matter has become moot. That question, as well as condonation, must

Cameron J (Yacoob ADCJ, Froneman J, Khampepe J, Nkabinde J, Skweyiya J, Van der Westhuizen J and Maya AJ concurring)

be considered before it is possible to consider whether the substantive A issues of interpretation should be addressed. But first, a fuller background.

Background

[4] Mr and Mrs Sebola, married in community of property, entered into B a home loan agreement with the Bank in November 2007, under which the Bank granted them a loan of R1 312 500 against security of a mortgage bond over their home. Clause 13 of the agreement, 'Jurisdiction and addresses', recorded that the Sebolas chose the mortgaged property as the address where notices and documents 'in any legal C proceedings' should be served. In addition, they specified a post office box in North Riding, Johannesburg, as the postal address to which 'letters, statements and notices may be delivered'. The clause recorded that the Sebolas accepted 'that any letters and notices posted to this address by the Bank by registered post will be regarded as having been received within 14 (fourteen) days after posting'. D

[5] By 2009 the Sebolas had fallen into arrears with their bond repayments. On 16 March 2009 the Bank's then attorneys sent a notice to them, addressed to their North Riding post office box. The notice identified itself in terms of ss 129 and 130 and set out the options E available to the Sebolas under those provisions. It was sent by registered mail. In their rescission application, the applicants testified that they never received it. This was because the postal services diverted the notice to the wrong post office. The Sebolas attached to their papers a post office 'tracking and tracing' record, which appeared to show that the item intended for North Riding had been diverted instead to the Halfway House post office. F

[6] On 25 May 2009 the Bank issued summons against Mr and Mrs Sebola in the South Gauteng High Court in which it sought payment of the full outstanding amount under the mortgage bond, namely R1 156 092,30, together with interest and costs. The Bank also G sought an order declaring the property 'specifically' executable. The return of service indicated that the summons was served on 27 May 2009 by affixing a copy to the principal door of the property at the applicants' chosen domicilium, being the mortgaged property.

[7] On 25 September 2009 the Registrar of the South Gauteng High H Court granted default judgment against the Sebolas, affording the Bank all the relief it sought. On 17 November 2009 the Bank obtained a writ of attachment in respect of the property. It was only after this, the Sebolas testified, that they became aware of the judgment for the first time. They later sought to rescind the judgment, and the writ of execution the Bank obtained against their home pursuant to it. I

[8] In their rescission application the Sebolas stated that they did not receive the summons, and asserted that it was impossible that the summons could have been affixed to their door since their home is in a housing development, and they had ascertained that the sheriff did not gain entry on the day the return of service indicated. J

Cameron J (Yacoob ADCJ, Froneman J, Khampepe J, Nkabinde J, Skweyiya J, Van der Westhuizen J and Maya AJ concurring)

High court decision A

[9] In their application for rescission, the Sebolas conceded that their repayments were in arrears and that they were consequently in breach of the bond agreement. But they stated that they had received neither the summons nor the s 129 notice before the Bank initiated proceedings. B Hence the Bank's action was incompetent.

[10] For the purposes of rescission, the Bank accepted that the Sebolas were unaware of the summons. So the only question was whether, if the judgment were rescinded, the Sebolas would have a defence to the C Bank's action. That depended on whether the Bank had complied with ss 129(1) and 130(1) before instituting action. At the time of the hearing there were conflicting single-judge decisions about the provisions, [6] but no Supreme Court of Appeal decision. Blieden J followed earlier decisions that held that a credit provider's proof of postage to the correct (chosen) address constituted compliance for the purposes of the provisions. D He thus rejected the applicants' argument that non-receipt of the s 129(1) notice constituted a bona fide defence to the Bank's claim. He dismissed the application for rescission with costs.

[11] He immediately granted the Sebolas leave to appeal against his E decision to the full court.

Full court appeal

[12] The Sebolas appealed to the full court. Just over 10 weeks after they filed their notice of appeal, and before the appeal was heard, the F Supreme Court of Appeal handed down its decision in Rossouw.

[13] In Rossouw a bank sought summary judgment against a couple who had defaulted on their mortgage bond repayments. In their bond agreement the couple chose delivery by registered post at the mortgaged property as a means of service of any notice. Their defences to the Bank's summary judgment application included that they had not received the G statutory notice. Resolving the conflict between high court judgments, [7] the Supreme Court of Appeal found that s 129 did not require the credit provider to prove that the consumer had received the notice — proof of despatch to the consumer's chosen address was sufficient:

Cameron J (Yacoob ADCJ, Froneman J, Khampepe J, Nkabinde J, Skweyiya J, Van der Westhuizen J and Maya AJ concurring)

'It appears to me that the legislature's grant to the consumer of a right A to choose the manner of delivery inexorably points to an intention to place the risk of non-receipt on the consumer's shoulders. With every choice lies a responsibility, and it is after all within a consumer's sole knowledge as to which means of communication will reasonably ensure delivery to him. It is entirely fair in the circumstances to conclude from the legislature's express language in s 65(2) that it considered despatch B of a notice in the manner chosen by the appellants in this matter sufficient for purposes of s 129(1)(a), and that actual receipt is the consumer's responsibility.' [8]

[14] Before the full court, the Sebolas sought to undercut Rossouw with constitutional arguments on interpretation. But the court held itself C bound by Rossouw. It found that the decision had authoritatively decided that the credit provider's mere sending of the notice by registered post to the address chosen in the mortgage bond constitutes compliance with the Act. The appeal was dismissed with costs.

Condonation D

[15] The full court dismissed the Sebolas' appeal on 11 August 2011. The rules of this court [9] required them to apply for leave to appeal within 15 court days, by 1 September 2011. Instead, they filed their papers only on 12 October 2011 — about six weeks, or 29 court days, late. They seek condonation because they are representing themselves and needed to E have the record transcribed to get legal advice about appealing. They state that they received the record from the transcribers only on 4 October 2011, hence the delay.

[16] The Bank does not dispute these facts, which favour condonation. F The delay is not excessive, the prejudice and inconvenience minimal, and the Sebolas were at all times intent on pursuing their case. Condonation should therefore be granted.

Submissions in this court

[17] The Sebolas submit that the high court erred by failing to adopt a G purposive and contextual reading of s 129. They submit s 129 should have been interpreted constitutionally in the light of the Act's objectives. The full court's interpretation, they say, renders the protections the statute affords consumers nugatory. They submit the decision in Rossouw adversely affects consumers who are not versed in law. H

[18] The Bank submits that the matter has become moot. About three weeks before the date set for the hearing, it changed attorneys. Shortly before its written argument was due, the Bank informed the Sebolas, through its new attorneys, that its head...