REPUBLIC OF SOUTH AFRICA

SOUTH GAUTENG HIGH COURT
JOHANNESBURG

CASE NO:  2008/020459  

(1)	REPORTABLE: YES / NO
(2)	OF INTEREST TO OTHER JUDGES: YES/NO
(3)	REVISED. 

         ……………………..		………………………...
                   DATE			        SIGNATURE

In the matter between:

ROSTAMI BELEGGINGS CC					            Applicant

and

NEDBANK LIMITED					          First Respondent

BLOEMHOF DIAMOND EXCHANGE (PTY) LTD             Second Respondent

SHERIFF, PRETORIA NORTH-EAST                                   Third Respondent
______________________________________________________________ 

J U D G M E N T
______________________________________________________________ 

KGOMO, J:

INTRODUCTION

[1] 	This is an application for rescission of a default judgment granted against the applicant herein and the second respondent at a trial hearing that took place on 10 May 2011. In the alternative, the applicant is asking this Court for an order declaring executable the property described therein as The Remaining Extent of Portion 1 of Erf 53, Waverley (Pretoria), Registration Division J.R. Transvaal, situated at 913 Slagtersnek Street, Waverley Waverley, Pretoria, void for lack of compliance with the provisions of Rules 46(1)(a)(ii) and 46(3)(a) of the Uniform Rules of Court.

[2] 	The relief sought in the Notice of Motion was in two parts.  In Part A thereof, an urgent order for stay of execution of the default judgment granted by this Court on 10 May 2011 was sought, pending the finalisation of the relief sought in Part B, which is an application for the rescission of the default judgment.

[3] 	The first respondent did not oppose the relief sought by way of urgency in Part A of the Notice of Motion.  As such this application is presently only in respect of the rescission of the default judgment.  In fact, the applicant obtained an order, unopposed, in which Sutherland J ordered that:

“… 1.  Execution of the judgment of this Honourable Court dated 10 May 2011 against the Applicant is stayed pending the finalisation of Part B.	
	
2.	Costs in the cause.”

[4] 	The circumstances under which the default judgment was granted will be set out in the chronology of events that will be set out herein below.

[5] 	For completeness sake the default judgment was sought by and granted to the first respondent, Nedbank Limited who was the plaintiff in that matter, against Bloemhof Diamond Exchange (Pty) Ltd, the second respondent in our present matter and the first defendant in the court a quo and Rostami Beleggings CC, the applicant herein who was the second defendant in the court a quo.

[6]	The details of the default judgment were as follows:

6.1	That default judgment is granted against the first and second defendants jointly and severally, the one paying, the other being absolved for:

6.1.1	Payment of the amount of R2 006 624,27;

6.1.2	Interest on the amount of R2 006 624,27 at the rate of 15,5% per annum calculated from 9 July 2008 to date of final payment, both days inclusive;

6.1.3	Costs of suit on the scale as between attorney and client;

6.2	That as against the first defendant, the following property is declared specially executable:

Remaining Extent of Erf 465 Bloemhof Township; Registration Division H.O., the Province of North West; Measuring : 3617 square metres; Held under Deed of Transfer T.144616/2006;

6.3	That as against the second defendant, the following property is declared specially executable:

Remaining Extent of Portion 1 of Erf 53, Waverley, (PTA) Township; Registration Division JR, the Province of Gauteng; Measuring : 1552 square metres; Held under Deed of Transfer T78772/1994.

[7] 	The first respondent is opposing this application.

CITATION OF THE PARTIES AND CHARACTERS

[8] 	In addition to those entities and people that would be mentioned by name and for the sake of ease of reference due to the somewhat convoluted or confusing nature of the manner in which the parties have been cited in this and the previous action the parties herein will henceforth be referred to as follows:

8.1	To the applicant herein as “Rostami”;

8.2	To the first respondent as “Nedbank”;

8.3	To the second respondent as “Bloemhof”’;

8.4	To Josewes Nicolaas Meyer as “Meyer”;

8.5	To Peter Lombard as “Lombard”;

8.6	To Craig Pattison as “Pattison”;

8.7	To Allan Martin Raphael Bermel as “Bermel”;

8.8	To the court granting default judgment as “the court a quo”;

8.9	National Credit Act as “NCA”.

DEFENCES RAISED BY ROSTAMI AGAINST NEDBANK’S CLAIM IN COURT A QUO

[9] 	The defences raised by Rostami against Nedbank’s claim in the court a quo were the following:

9.1	Lack of jurisdiction;

9.2	Non-compliance with sections 129 and 130 of the National Credit Act, 34 of 2005 (“the NCA”);

9.3	An oral agreement during September 2006 where Lombard allegedly agreed with Meyer that Rostami’s suretyship and the mortgage bond registered over its (Rostami’s) property would be cancelled with immediate effect upon the registration of a second mortgage bond over Bloemhof’s property (presumably referring to Erf 465);

9.4	An oral agreement during October 2006 where Lombard allegedly agreed with Meyer to convert an overdraft facility to a mortgage bond facility, repayable over 20 years;

9.5	Absence of agreement regarding the interest rate charged by Nedbank in respect of the overdrawn or overdraft account;

9.6	A dispute as to the balance claimed to be owing to Nedbank and whether that balance was due, owing and payable;

9.7	An undertaking by Pattison during November 2007 to Meyer that should Rostami pay certain amounts, then Nedbank would not take legal action against it (Rostami), which undertaking according to Meyer was breached when Nedbank issued summons against Rostami and Bloemhof; and
9.8	Some or other fraudulent conspiracy and improper collusion between Bermel, Lombard, Pattison and various other unidentified persons who, like them, were in Nedbank’s employ.

[10] 	Nedbank’s opposition to the rescission application is predicated by or based among others on the following grounds:

10.1	That Rostami has no defence of any nature against Nedbank’s claim and that this application for rescission of judgment is simply an abuse of process; and

10.2	That Rostami stood in wilful default at the time when the default judgment was granted and that it (Rostami) failed to provide an acceptable or adequate explanation for not appearing at court on the date of trial, i.e. 10 May 2011.

CHRONOLOGY OF RELEVANT EVENTS

[11] 	On 6 September 2006 Bloemhof requested Nedbank to open a business account with overdraft facilities for it, which was done. Lombard acted as the relationship manager on behalf of Nedbank in the above process.  Relationship managers at Nedbank do not have authority to authorise the opening of a current account and related facilities.  Their duty is to motivate and/or recommend in that regard to at least one credit manager at the bank and an area manager.
[12] 	Meyer, who claimed to be a shareholder of Bloemhof, provided Nedbank with his identity document (“ID-book”) in support of the above process in compliance with FICA.

[13] 	On 7 September 2006 Lombard prepared an abbreviated credit minute to motivate his recommendation that banking facilities be afforded to Bloemhof.  Salient features thereof were that:

13.1	Bloemhof was a new client of Nedbank who was applying for a fluctuating overdraft facility of R1 million. Rostami was reflected in the minute as an existing client of Nedbank with an existing home loan facility at the bank, and Nedbank held a first covering mortgage bond registered over Rostami’s property.  The securities proposed by Lombard in respect of the overdraft facility would be an unlimited suretyship, cession of loan funds by Rostami and the registration of a second covering bond over Rostami’s property;

13.2	Bloemhof was a new tender house business which would only start trading in the few weeks following the opening of the account and granting of the facilities, it allowed or approved;

13.3	Lombard motivated the approval of the applied for overdraft facility because:

13.3.1 	it was or likely to be a security-based lending, with reference to the proposed suretyship and second covering bond in respect of Rostami;

13.3.2	Bloemhof would generate large turnovers in a short period of time; and

13.3.3	the facility would be fully covered with reference to the Rostani suretyship and second bond.

[14] 	On 9 September 2006 Nedbank’s Area Manager, Credit approved Lombard’s credit minute after it was also recommended and approved by two other credit managers.

[15] 	On 22 September 2006, Meyer’s wife, Martha Johanna Meyer, who is the sole member of Rostami, passed a resolution consenting to Rostami providing security in connection with any loans and/or facilities granted or to be granted by Nedbank to Bloemhof.  On the same date, Meyer’s wife signed an Extract from Minutes of Meetings of the members of Rostami wherein and whereby she was authorised to sign an unlimited suretyship incorporating a cession of loan funds for facilities granted or to be granted by Nedbank to Bloemhof.  The same date further, Rostami, represented by Meyer’s wife, signed an unlimited suretyship in favour of Nedbank in respect of Bloemhof’s current and future indebtedness to it.

[16] 	This was conceded or admitted by Rostami in the pleadings filed in the court a quo.

[17] 	On 14 February 2007, Erf 465 Bloemhof (“Erf 465”) was valuated by Du Plessis-Viviers Incorporated.

[18] 	On 21 February 2007 Lombard again prepared an abbreviated credit minute to promote an increase in the overdraft facility from R1 million to R1,8 million because Bloemhof did not receive the funds it had anticipated and consequently required access to more funds.  The contents of the recommendation were that:

18.1	Lombard requested an increase in the overdraft facility by R800 000,00 to the overdraft;

18.2	He (Lombard) proposed that as additional security for this increased facility, a first covering mortgage bond be registered over Bloemhof’s immovable property, being Erf 465;

18.3	Referring to the minute he earlier filed in the above respect Lombard added that the reasons for this new recommendation was that various promises of outside funding injection into Bloemhof had yet to come to fruition and that this has had the effect that Bloemhof’s business had not yet commenced trading and that they had not as yet paid for their trading licence.  He mentioned that Bloemhof was approaching Nedbank to authorise the additional R800 000,00 to enable it to acquire or pay for the business licence in order to commence trading;

18.4	Bloemhof undertook to repay the full outstanding overdraft upon receipt of the outside funding.  He also mentioned the aspect of the valuation of Erf 465.

[19] 	On 23 February 2007 Nedbank’s Area Manager, Credit and a credit manager approved the additional R800 000,00 additional facility.

[20] 	On 28 February 2007 Bermel, duly representing Bloemhof, signed an Offer of Banking Facilities (which had been prepared by 26 October 2006), which records the terms and conditions attached to the operation of the current account, which were:

20.1	That the overdraft facility would be linked to Nedbank’s prime rate.  Provision was also made for penalty interest as well as default interest; and

20.2	That the security for the facilities granted to Bloemhof would comprise of the Rostami suretyship and second covering mortgage bond referred to above.

[21] 	On 18 May 2007 a covering mortgage bond in the amount of R1 million was registered over Erf 465 in favour of Nedbank to secure the additional R800 000,00 facility referred to above.

[22] 	Lombard took early retirement from Nedbank at the end of September 2007.  Pattison took over Lombard’s portfolio, which included that of Bloemhof.

[23] 	On 30 November 2007 Bloemhof addressed a letter to Pattison in which he referred to a meeting on 29 November 2007 which was attended by Pattison, Meyer, Meyer’s brother and Bermel.  This letter also acknowledged the bond registered over Erf 465 which was discussed at this meeting as well as the fact that Bloemhof had acquired a large parcel of rough diamonds which it (Bloemhof) expected to sell “within the next few days” and the proceeds of that sale deposited into its current account to reduce the overdraft.  Meyer is identified on that Bloemhof’s letter’s letterhead as an alternate director.

[24] 	On 6 December 2007 Bloemhof again directed a letter to Pattison which made mention of some meeting as well as payments that had been made into the current account. Bloemhof also suggested in this letter that the overdraft facility could be reduced if:

“… we change the covering bond on the Bloemhof property to a normal bond.”

Pattison was requested to consider such conversion as an option.

[25] 	On 12 December 2007 Bermel signed an Extract from the Minutes of a Meeting of the directors of Bloemhof where it was resolved that Bloemhof would provide all such security as may be required by Nedbank in an Offer of Banking Facilities.  Pattison considered the conversion proposal from Bloemhof on that same day and turned it down.  He instead prepared an Offer of Banking Facilities with terms the bank would live with.  Bloemhof accepted the terms and signed. The signed “Offer” was geared or meant to regulate the future conduct of the overdrawn current account by Bloemhof.  Salient features thereof were among others that:

25.1	A facility of R2,8 million was extended to Bloemhof on a fluctuating basis linked to Nedbank’s prime rate;

25.2	The following securities for the facility remained in place:

25.2.1 	Rostami’s unlimited suretyship;

25.2.2	the second covering mortgage bond registered over Rostami’s property;

25.2.3	the first covering mortgage bond registered over Erf 465; and

25.2.4	cession of insurance policies.

25.3	A Deed of Pledge and Cession over an investment account in the name of Bloemhof was further required as security.

[26] 	On 14 December 2007 Bermel signed a Deed of Pledge and Cession as was required by the relevant Offer of Banking Facilities.  On 30 January 2008 Nedbank addressed letters to the directors of Bloemhof and the members of Rostami, calling up the overdraft facility, which at the time had an outstanding balance of R3 110 656,68.  On 7 March 2008 Nedbank addressed a further letter to the directors of Bloemhof, referring to the previous correspondence and demand, notifying Bloemhof that the matter would be handed over to their (Nedbank’s) legal department for recovery proceedings to be instituted.

[27] 	On 26 March 2008 Bloemhof addressed a letter to Nedbank in response to the abovementioned letter to them from Nedbank, in which they (Bloemhof) recorded the following:

27.1	Reference to a meeting that was held at Bloemhof’s offices on 14 March 2008;

27.2	That Bloemhof’s exposure of over R3 million would be settled by an overseas company interested in acquiring the shareholding in Bloemhof;

27.3	That the Bloemhof property be moved or transferred to a bond account as previously requested; 

27.4	That if the Bloemhof property was transferred to a bond account, the overdraft facility would have an outstanding balance of R2 050 603,10;

27.5	That Nedbank consider the above as proposals for acceptance.

[28] 	On 4 April 2008 Nedbank delivered a letter to Meyer’s brother and Bermel in which the following was confirmed:

28.1	That the facilities had been called up;

28.2	That Nedbank would enforce the cession of the pledged investment account;

28.3	That Bloemhof’s current account still exceeded the overdraft limit of R1,8 million by some R250 000,00.

[29] 	On 4 July 2008 Nedbank issued summons in the action.
[30] 	On the date allocated as the date of trial, which was 26 April 2010, Bloemhof and Rostami brought an application for postponement, relying on several technical grounds to justify their contention that the matter was not ripe for trial.  After argument my brother Boruchowitz J postponed the trial sine die and reserved costs.

[31] 	On 17 May 2010 Nedbank’s attorneys served and filed a Rule 37(1) Notice calling for a pre-trial conference. This was at some time that was considerably in advance of the projected date of re-instatement of the matter for trial since Meyer had among others relied on the closeness to the trial date when applying for postponement on 26 April 2010. 

[32] 	On 8 June 2010 Nedbank’s attorneys served and filed a Rule 37 pre-trial Agenda.  Therein Bloemhof and Rostami were reminded of the new trial date of 10 May 2011.  According to Nedbank, Bloemhof and Rostami failed to address any of the issues raised in the agenda.  On the same date, i.e. 8 June 2010 Nedbank served and filed a request for trial particulars. According to Nedbank further, Bloemhof and Rostami did not to date, furnish those requested particulars.

[33] 	On 10 May 2011, being the second trial date, the matter was called at the roll call and there were no appearances on behalf of the defendants, i.e. Bloemhof and Rostami.  It was then referred to Acting Judge Van Eeden for default judgment.  Nedbank presented its case there fully and in open court.  After being persuaded that the plaintiff (Nedbank) had made out a case for the orders sought, the Learned Acting Justice granted default judgment against the defendants.

[34] 	I reiterate; there were no appearances, either by counsel or an attorney, on behalf of either Bloemhof and Rostami.  Equally, there were no witnesses present on behalf of Bloemhof and/or Rostami.

[35] 	In short, the default judgment granted herein against which a rescission is sought was granted on a date well known to all the parties herein as the date of set down or a day when the matter was to go on trial.  Such a date had been known to Bloemhof and Rostami at the latest by 8 June 2010, i.e. some 11 months earlier.

JURISDICTION

[36] 	The applicant contended that the South Gauteng High Court did not have jurisdiction to grant the default judgment which it now seek to have rescinded.  The grounds for the above defence were:

36.1	That in the mortgage agreement between Nedbank and Rostami, Rostami chose the address at the mortgaged property as its domicilium citandi et executandi, and that that address is in Pretoria; and

36.2	That the defendants never submitted to the jurisdiction of South Gauteng High Court.

[37] 	The bank (Nedbank) insisted that South Gauteng High Court had jurisdiction, among others because:

37.1	The application for banking facilities was signed at Johannesburg and the Offers of Banking Facilities were also concluded and signed at Johannesburg;

37.2	Bloemhof’s current account was held at Johannesburg;

37.3	The issue of jurisdiction had never been pleaded or raised by either Rostami or Bloemhof:

37.3.1 	in the affidavit resisting summary judgment deposed to by Meyer on behalf of Rostami and Bloemhof;

37.3.2 	in the plea filed by Rostami and Bloemhof, they raised two (2) special pleas, which were only related to or confined to alleged non-compliance with the NCA;

37.3.3	before litis contestatio; and
37.3.4	prior to it being mentioned, for the first time, in Meyer’s founding affidavit in this application.

[38] 	It is on the above grounds among others that Nedbank submitted that Rostami had, by direct implication, submitted to the jurisdiction of the South Gauteng High Court in Johannesburg; and that in any event, an objection to jurisdiction ought to have been taken before litis contestatio.

See:	Van der Walt Business Brokers (Pty) Ltd v Budget Kilometres CC and Another 1999 (3) SA 1149 (WLD).

Commercial Union Assurance Co Ltd v Waymark NO 1995 (2) SA 73 (TkGD).

[39] 	Clause 13 of the mortgage bond which deals with jurisdiction reads as follows:

	“13. 	JURISDICTION

The Mortgagor consents in terms of Section 45 of Act 32 of 1944 to the bank taking any legal proceedings for enforcing any of its rights under this bond for recovery of moneys secured under this bond, in the Magistrates Court for any district having jurisdiction in respect of the Mortgagor by virtue of Section 28(1) of the aforesaid Act. The bank is nevertheless, at its option, entitled to institute proceedings in any division of the High Court of South Africa which has jurisdiction.”

[40] 	It is so that the applicant or Bloemhof has never objected to the jurisdiction of the South Gauteng High Court at any material stage save when raising same in this present application for rescission.

[41] 	The applicant herein singled out the mortgaged property as the red- herring to alleged lack of jurisdiction.  It has conveniently disregarded the other jurisdictional facts like where banking and overdraft facilities were applied for or where their banking accounts were held; that being in Johannesburg.

[42] 	The applicant in my view also conveniently ignored the fact that in terms of the mortgage bond, the bank, i.e. Nedbank, was:

“…, at its option, entitled to institute proceedings in any division of the High Court of South Africa which has jurisdiction.”

[43] 	The question that may also be asked is why the jurisdictional facts relating to the bank and other facilities cannot found or confirm jurisdiction.  Furthermore, why is it only at this stage, long after litis contestatio, that the applicant comes up with the issue of jurisdiction.

[44] 	For a court to find that a litigant has not submitted to the jurisdiction of a court, the conduct of such a litigant has to be such that the court had to be able to say that such conduct was consistent only with acquiescence.  Where the litigant raised objection to jurisdiction at the earliest possible opportunity, the conclusion or inference that can be drawn would be that that litigant has not submitted to jurisdiction.  The above, in my view, presupposes that if the litigant did not object to jurisdiction at the very first opportunity to do so, as was the case in this application, the conclusion that may be reached or inference that can be drawn would be that he submitted to jurisdiction.

See:	Van der Walt Business Brokers (Pty) Ltd v Budget Kilometres CC (supra).

[45] 	In Hlatshwayo v Mare and Deas 1912 AD Solomon J put it as follows at 256:

“Now it is clear that the onus of proving of acquiescence lies upon him who alleges it, and inasmuch as the effect of such proof is to deprive a person of a right conferred upon him by law, the evidence in support of it must be clear and irresistible.  If the facts proved are of such a nature that more than one inference may fairly be drawn from them, then in my opinion the party who sets up the case that there has been acquiescence must be held to have failed to discharge the onus.”

[46] 	De Villiers JP held as follows in the same judgment at 259:

“Whether then we base the doctrine of acquiescence on the consent which is implied or the choice which is exercised, or call it waiver makes no difference.  At bottom the doctrine is based upon the application of the principle that no person can be allowed to take up two positions inconsistent with one another, or as is commonly expressed to blow hot and cold, to approbate and or to reprobate. This being so there is no doubt of the actual minimum which is required by our law in order to constitute acquiescence.  And that is:  before a person can be said to have acquiesced in a judgment, and thereby to have lost the right of re-opening a case or of appeal, a right which he clearly has or at all events had, the court must be satisfied upon the evidence that he has done an act which is necessarily inconsistent with his continued intention to have the case re-opened or to appeal.”

[47] 	Unfortunately, in argument in this Court, not very much was said about this particular aspect on behalf of the applicant. It is so that the Heads of Argument does refer to quite a number of decided cases on the aspect, however, it is my considered view and finding that the peculiar facts and circumstances in any particular case should dictate whether or not there was such a submission to jurisdiction.

[48] 	In Estate Agents Board v Lek 1973 (3) SA 1048 (A), Trollip JA enumerated the general principles of our law in determining whether or not a particular Division of the High Court has jurisdiction as follows at 1063F-H:

“That depends on (a) the nature of the proceedings, (b) the nature of the relief claimed therein, or (c) in some cases, both (a) and (b) … Approach (a) was adopted by Innes J in Steytler’s case 1911 AD at 315-16.  The enquiry was, he said, whether by its nature, the action was personal, real or misled.  De Villiers JP adopted approach (b) at 346/7; and (c) was applied in the Gulf Oil case.  Approach (b) is based on the principles of effectiveness – the power of the Court, not only to grant the relief claimed but also to effectively enforce it directly within its area of jurisdiction, i.e. without any resort to the procedural provisions in the Supreme Court Act 59 of 1959 canvassed above.”

[49] 	Effectiveness does not per se confer jurisdiction on a court.  It, however, remains a factor to be taken into account, in conjunction with other factors, in considering whether some common law ratio jurisdictiones exists conferring jurisdiction on the Division of the Court in respect of the particular proceedings.

See:	Veneta Mineraria Spa v Carolina Collieries (Pty) Ltd (in liquidation) 1987 (4) SA 883 (A) at 891 (C).

[50] 	Other factors to be considered may include considerations of convenience and common sense.

	See:	Sonia (Pty) Ltd v Wheeler 1958 (1) SA 555 (A) at 562F.

[51] 	Litis contestatio is said to be synonymous with the close of pleadings when issues are crystallised and joined.

See:	Milne NO v Shield Insurance Co Ltd 1969 (3) SA 352 (A) at 358C.

	Government of the Republic of South Africa v Ngubane 1972 (2) SA 601 (A) at 608D.

[52] 	In Commercial Union Assurance Co Ltd v Waymark NO 1995 (2) SA 73 (TkGD), White J put it among others as follows at 80D-E:

“… Mr Locke has submitted further that an objection to the jurisdiction of the Court must be taken in limine, and if, this is not done before litis contestatio has been reached, even through inadvertence, that party will be assumed to have submitted to the Court’s jurisdiction …”
[53] 	It is common cause, as already stated above, that the applicant did not object to jurisdiction before litis contestatio.

[54] 	Voet puts the law relating to submission to jurisdiction as follows:

“2.1.18 	It is surely undoubted that once litis contestatio has taken place the jurisdiction of him before whom the proceedings was in this way started can no longer be declined by one of the litigants. Where a suit had its beginning, there also it must receive its end.  The authority of laws has decreed that without any distinction being drawn between those with knowledge and those in error, even dilatory exceptions, including the very exception to jurisdiction, must be put forward before litis contestatio at the origin and among the very preliminaries of the suit.

2.1.19 	Of the former class of cases we declare that litis contestatio taking place in error has the same result as in other cases the mere consent before litis contestatio of litigants not in error, express or evinced by the fact of approach, would have had.  The Judge cannot be said to be incompetent, unless he was one who was not competent even with the extension.”

	(Gane’s translation)

[55] 	Theron J convincingly also in my view, put it as follows in William Spilhaus & Co (MB) (Pty) Ltd v Marx 1963 (4) SA 994 (C) at 1001G-1002 (top) and 1002B-C:

“I can see no reason for thinking that our Courts in general would fail to give effect to the rule of common law, as it is to be gathered from Voet 2.1.20, as read with 2.1.18, 26 and 27, that a defendant who has pleaded to the plaintiff’s main claim without objection to the jurisdiction must at any rate after the stage of litis contestatio has been reached, be considered to have bound himself irrevocably to accept the jurisdiction of the Court – and this even in a case where his failure to raise the question of the jurisdiction might have been due to some mistake on his part … Bearing in mind the manifest inconvenience and wastage of costs which must inevitably result if a defendant were to be allowed to advance a defence so fundamental in nature as a plea declinatory of the jurisdiction for the first time after litis contestatio (and a fortiori after commencement of the very trial itself as in the present cases), it would therefore be surprising if the Courts were to fail to give full effect – wherever possible – to the rule propounded in Voet.”

[56] 	The above dictum in my view directly talk to the facts and circumstances of our present application.  The question that needs to be answered is whether or not the applicant did or failed to do, or did what he did or ought to have done due to lack of knowledge or ignorance.

[57] 	On the issue of knowledge Murray J put it as follows in Ex Parte Sussens 1941 TPD 15 at 20:

“The necessity for a full knowledge of the law in the case of waiver follows from the principle that waiver is a form of contract, in which one party is taken deliberately to have surrendered his rights : there must therefore be proof of an intention so to surrender, which can only exist where there is knowledge both of the fact and the legal consequences thereof.”

See also:	Borslap v Spangenberg en Ander 1974 (3) SA 695 (A) at 704F-H.

[58] 	In the Commercial Union Assurance case (supra) the court found that the defendant was manifestly not aware of all the facts relating to jurisdiction, and if it had known that no attachment had been made to confirm jurisdiction, it would have timeously filed a special plea against jurisdiction. The court found as much because the defendant objected to jurisdiction at the very beginning of litigation, well before litis contestatio.

[59] 	The applicant in our present case was represented throughout the proceedings by qualified attorneys and counsel. Consequently, the issue or aspect of lack of knowledge on its part cannot arise or be countenanced. As a consequence, it is my finding that the applicant consciously and knowingly elected or chose not to object to jurisdiction before litis contestatio.  As a further consequence it cannot succeed in its application on this ground. There were other aspects relating to jurisdiction that were raised and argued. However, in the light of the above view that I have formed, it is not necessary at this stage to decide them.

[60] 	It is my considered view and finding that the South Gauteng High Court has concurrent jurisdiction with the North Gauteng High Court over the parties in this application by virtue of the jurisdiction clause in the mortgage bond and the other jurisdictional facts that occurred in Johannesburg.

[61] 	A similar point was in issue in Hugo v Wessels 1987 (3) SA 837 (AA). In this case, in terms of a consent paper incorporated in an order of divorce granted by the Orange Free State Provincial Division, it was agreed that the respondent would pay R25 000,00 to the appellant for the purchase of a house to be occupied by her and the parties’ children.  It was specifically agreed that it will be registered in the names of their three sons subject to the appellant’s (applicant’s) life-long usufruct.  When there was delay, the wife respondent sought an order in the Orange Free State Provincial Division of the High Court enjoining the husband to take the necessary steps to effect registration of the property as agreed, however, in the Deeds Office in Pretoria.  A special plea of jurisdiction was dismissed.  The husband appealed.  It was contended on his behalf in the appeal that the Transvaal Provincial Division of the High Court (“TPD”) did not have exclusive jurisdiction in the matter by virtue of the locus rei sitae principle (as the property was situated in Ermelo) but that the claim was equally justifiable in the Orange Free State Division.

[62] 	The court observed that the enquiry as regards a court’s jurisdiction in a particular matter was a dual one. It firstly had to be determined whether the court was entitled to take any cognisance of the matter whatsoever. The answer to this depended on the existence of one or more of the recognised grounds of jurisdiction. The second part of the enquiry concerned the question of whether the defendant was subject to the jurisdiction of the court. The answer to this had to be sought with reference to the doctrine of effectiveness, i.e. the court’s power to give effect to its order should it grant the relief claimed.

[63] 	The court held that:

63.1	In respect of the first question, that the fact that the respondent’s action was based on undertakings made by the appellant, which undertakings were contained in a consent paper incorporated in an order made by the Orange Free State Provincial Division, constituted a valid ground of jurisdiction;

63.2	As regards the second part of the enquiry, that it needed to be emphasised that, if the Orange Free State Provincial Division should uphold the respondent’s claim (which ultimately happened), it would not lead to any order whatsoever being made against the Registrar of Deeds, Pretoria – the order claimed by the respondent merely amounted to the appellant being ordered to sign and submit certain documents; and, should she fail to do so, the Registrar of the Orange Free State Provincial Division was authorised to act on her behalf in this respect.

[64] 	The court further held that as regards the court a quo’s reliance on s 97(2) of the Deeds Registry Act 47 of 1937 as well as s 26(1) of the Supreme Court Act 59 of 1959 for its finding that it would be able to give effect to the relief granted, that it was entirely unnecessary for the respondent to rely on the provisions of s 26(1) in this regard : should his claim succeed and the appellant comply with the order herself and perform the acts requested or, if she should fail to do so, if the Registrar performs these acts on her behalf, the finalisation of passing of ownership in the Deeds Office in Pretoria would in neither situation depend upon the execution of the court order within the area of jurisdiction of the Transvaal Provincial Division.

[65] 	The court held further that when judging the effectiveness of an order ad factum praesdandum, the possibility of imprisonment for contempt of court due to non-compliance with the court order was a factor which had to be considered.  Such imprisonment however does not necessarily ensure that the judgment debtor would comply with the court order. It could hardly be seen as anything other than a drastic and effective means of enforcement.

[66] 	With the exception of the judgment in Vorster v Keyser and Keyser 1943 WLD 150, there was no direct authority which could be referred to on the applicant’s behalf for the conclusion that an action for the transfer of land situated within the Republic, the forum rei sitae had exclusive jurisdiction.

[67] 	On the basis of the principles embodied in the above judgments it is also my view and finding that even in our present application, the North Gauteng High Court as the forum rei sitae does not possess exclusive jurisdiction. The South Gauteng High Court, by reason of its apparent concurrent jurisdiction as a consequence of the other jurisdictional grounds set out above is also an appropriate forum for processes relating to the issues raised herein to be instituted.

NON-COMPLIANCE WITH THE NCA

[68] 	The applicant also submitted or contended that the respondent, i.e. Nedbank did not comply with the National Credit Act (“NCA”).

[69] 	There cannot be merit in this contention.

[70] 	The agreements concluded between Nedbank and Bloemhof in respect of the current account would constitute pre-existing and large agreements as envisaged by s 9(4)(a) and (b) of the NCA because they were concluded with a juristic person and their value(s) at the time of conclusion exceeded R250 000,00.

[71] 	In terms of s 4(1)(a) and (b) of the NCA, the NCA would not have been applicable to Nedbank’s claims against Bloemhof and Rostami when the above is taken as a basis.

[72] 	Consequently, as the NCA did not apply to the agreements concluded between Nedbank and Bloemhof, it cannot apply between Nedbank and Rostami who is a surety and co-principal debtor.

See:	Firstrand Bank Ltd v Carl Beck Estates (Pty) Ltd 2009 (3) SA 384 (TPD).

	Nedbank Limited v Wizard Holdings (Pty) Ltd & Others 2010 (5) SA 523 (GSJ).

THE SEPTEMBER 2006 ORAL AGREEMENT TO CANCEL

[73] 	It is the applicant’s further defence and contention that during September 2006 its Meyer concluded an unconditional agreement with Nedbank’s Lombard that Rostami’s suretyship and the bond registered over Rostami’s property would be a temporary arrangement or measure pending the satisfactory valuation and registration of a second mortgage bond over Bloemhof’s property whereafter the said suretyship and bond over Erf 465 (Rostami’s property) would be cancelled immediately such second covering bond over Bloemhof’s property was registered.  That this never took place is not in dispute.

[74] 	The second respondent (Nedbank) hotly disputes this.

[75] 	As stated in the chronology of events herein, the valuation of Erf 465 occurred in February 2007 which was a time when Bloemhof on its own required an increase in the overdraft facility. Bloemhof was not yet a trading entity at the time the initial facility was granted to it. Therefore the only security it had to secure the overdraft facility was the suretyship and covering bond over Rostami’s property, i.e. Erf 465.  Meyer was a manager of Bloemhof at the time and took a leading role in the negotiations.  Meyer’s wife, who was Rostami’s sole member unconditionally resolved on 22 September 2006 that Rostami would provide the suretyship and mortgage bond cover for Bloemhof and signed the suretyship the same day.

[76] 	The terms of the suretyship reveal the reasons underlying it.  They provided that:

76.1	No variation of this suretyship shall be of any force or effect unless reduced to writing and signed by Rostami and confirmed by Nedbank in writing (clause 7);

76.2	The suretyship constitutes the whole agreement between the parties and there are no conditions precedent suspending its operation and that no warranties, promises or representations whatsoever have been made or given by Nedbank or any other person, to Rostami, to sign the suretyship and any such warranties, promises or representations are excluded (clause 8);

76.3	Rostami would only be released from its obligations in terms of the suretyship by a written notice from it to Nedbank requesting Nedbank to so release it (Rostami); which shall only be terminated on written notice from Nedbank acknowledging that the suretyship has been terminated.  Even then, such termination would only become effective when the sum or sums of money at that time due, i.e. at date of receipt of that notice, had been paid (clause 12); and

76.4	The suretyship is unconditional (clause 13).

[77] 	This Rostami covering bond also provided that it would constitute a continuing covering security which would remain in force and effect in full until cancelled at the Deeds Office.

[78] 	The above terms are at variance in my view with what the applicant is alleging.  It deserves mention that at the time when Lombard prepared his credit minute on 7 September 2006, the valuation of Erf 465 was not even contemplated.  The valuation occurred at a time when Bloemhof experienced financial or cash flow difficulties and had to ask for the extension and increase of its overdraft.

[79] 	Which brings up Meyer’s contention that he was at that stage not aware that the mortgage bond over Erf 465 had been registered.

[80] 	This cannot be correct.

[81] 	At a meeting that was held on 29 November 2007 which Meyer attended, the issue of the registration of the bond over Erf 465 was discussed.  The resolutions of that meeting were confirmed by Bloemhof in a letter dated 30 November 2007.  Meyer himself alleged in the papers that he is or was a manager of Bloemhof.  Consequently, his denial cannot stand.  Furthermore, this denial is only brought up now for the first time : it was never at any stage in the affidavits and the pleadings filed in the action.  Consequently the second respondent’s (Nedbank’s) charge that this is an after-thought and/or recent fabrication is hard to refute or refuse.
[82] 	Rostami’s woes do not end there.  It is common practice that one may not rely on the provisions of an extraneous undertaking, if any, in the face of a “non-variation” clause. Evidence therefore, of a prior oral agreement which is at variance with the terms of the Rostami suretyship and mortgage bond is inadmissible.

	See:	De Villiers v Mc Kay NO and Another 2008 (4) SA 161 (SCA).

[83] 	A series of decisions of the Supreme Court of Appeal over this aspect illustrate the point.

83.1	In HNR Properties CC v Standard Bank of SA 2004 (4) SA 471 (SCA), the court ruled that:

“The effect of a non-variation clause was that the agreed upon procedure to vary the agreement should be followed. In the absence thereof, not even waiver or estoppel could be raised by a party relying on terms not contained in the agreement.”

83.2	In Brisley v Drotsky 2002 (4) SA 1 (SCA) the court said the following:

“A non-variation clause is binding on parties and a term that all amendments to the contract must comply with specified formalities is not contra bonos mores.”

83.3	In Affirmative Portfolios CC v Transnet Limited t/a Metrorail 2009 (1) SA 196 (SCA) it was held that:
“If the evidence establishes that a written document was intended to be the exclusive memorial of the parties’ agreement, evidence of a prior agreement varying the terms of the written agreement is inadmissible.”

83.4	The court in Yarram Trading CC t/a Tijuana Spur v Absa Bank Ltd 2007 (2) SA 570 (SCA) put it as follows:

“The effect of a non-variation clause is that the applicant may rely thereon to avoid disputes of fact regarding terms of an oral agreement extraneous to the written document.”

83.5	Cloete JA summed it up in De Villiers v Mc Kay (supra) as follows:

“The effect of an ‘entire agreement’ clause was that for purposes of the contract, the provisions of any extraneous undertaking had to be left out of account. Extraneous undertakings are irrelevant in proceeding to enforce the terms of a contract.”

[84] 	This nett effect of the above is that this defence cannot avail the applicant.

THE OCTOBER 2006 ORAL AGREEMENT TO CONVERT

[85] 	The applicant also contended that during October 2006, Nedbank, represented by Peter Lombard, agreed that the overdraft facility extended to Bloemhof (by Nedbank), which was secured by the covering bond over Rostami’s property, would be converted to a mortgage bond facility in the names of Bloemhof, which would be payable over a period of 20 years. It further contended that the valuation of Bloemhof’s property (Erf 465) in February 2007 was part of that process.

[86] 	The above contentions are challenged and/or denied by the second respondent.

[87] 	The applicant and Bloemhof did raise this defence in the action proceedings. Importantly, the plea avers that Meyer represented Bloemhof at that time and Nedbank was represented by Lombard.

[88] 	That cannot be correct.

[89] 	It has been alleged by Nedbank and such allegations were not gainsaid or contradicted by the applicant among others, that Lombard took up early retirement and left Nedbank’s employ at the end of September 2007.  He was replaced by Mr Pattison (“Pattison”) in November 2007.  The chronology points out that Bloemhof proposed the conversion to Pattison on 6 December 2007 and the latter refused to accept the offer or proposal, which refusal or state of affairs forced Bloemhof to sign an Offer of Banking Facilities which has terms totally contradictory to any agreement to convert as alleged by the applicant through Meyer.

[90] 	There is evidence further, that at the time Nedbank called up the overdraft on 26 May 2008 Bloemhof again suggested or proposed the conversion but Nedbank declined to take up the offer or suggestion.

[91] 	As a result, the applicant’s contention on this defence is not borne out by the facts and consequently cannot be of assistance to the applicant.

NO AGREEMENT ON INTEREST

[92] 	Although this aspect was not dealt with by the applicant in its heads of argument, counsel made submissions on it during argument.  The reasons for the above is, in my view clear : The two Offers of Banking Facilities accepted and signed for by Bloemhof contain terms and conditions relating among others to the overdraft and also specifically make reference to interest.  It is my view and finding that the reference to interest as mentioned above is such that any reasonably competent business person would know what the rate of interest is or how it will or can be computed. Consequently this defence has no merit.

BALANCE OUTSTANDING BUT NOT DUE AND PAYABLE

[93] 	In the application by the applicant (and/or Bloemhof) to open a current account as well as in the Rostami suretyship, the terms thereof include among others that a written certificate of balance would be prima facie proof of what stands therein as well as being proof that such amount(s) reflected therein are due and payable.  Those certificates were annexed to the summons in respect of both Rostami and Bloemhof.  When preparing for trial thereat, Nedbank obtained a certificate in terms of s 15(4) of the Electronic Communications and Transactions Act, 2002, which was amongst the documents discovered by Nedbank as well as being part of the trial bundles.

[94] 	Those s 15 certificates sets out all the transactions on the account(s) before and after it was handed over.  The correctness thereof has not been challenged or if there was some challenge, it was half-hearted and not convincing. This, in my view, constitutes prima facie evidence of Bloemhof and Rostami’s (the applicant herein) indebtedness.

[95] 	Furthermore, in the Rule 37 pre-trial agenda served by Nedbank on both the applicant and Bloemhof they were required to admit the entries contained in those statements as well as stating, in the event of them intending to deny same, to state the nature and grounds of their denial thereof. Up to and including the date of argument of this application neither the applicant or Bloemhof has answered the agenda or put forward the nature and/or grounds why they did or would dispute Nedbank’s claims. Consequently, this defence also cannot avail the applicant.

UNDERTAKING NOT TO LITIGATE

[96] 	Nedbank refuted this defence.  By calling up the account(s) Nedbank unequivocally, in my view, signified a clear intention to litigate. Consequently, it would be illogical or inconsistent with reality or probabilities for Pattison to have engaged in any conversation that promised the applicant that there would be no litigation.  What is also disturbing is that this defence is raised for the first time in Meyer’s founding affidavit in this application.  It was not raised in any previous affidavit(s) or pleading filed in the action.  It was not mentioned during the summary judgment stage. Neither was it raised in a special plea or as a point in limine.  The first respondent’s charge that it is also a recent fabrication is thus hard to dismiss.

FRAUDULENT CONSPIRACY

[97] 	The second respondent contends that this defence raised by the applicant is both malicious, unfounded as well as being an unsubstantiable red-herring solely raised to avoid the repercussions of this application being way out of time.

[98] 	Meyer contended that it is clear that there was an improper collusion between Nedbank and Bermel whereby Bermel would secure or secured certain benefits.  This contention is not substantiated in any manner.  He further went on to state that:

“I have good reason to believe that there was fraudulent collusion between Bermel, Lombard, Pattison and various other persons …”
                        
           In Nedbank’s employ.                    
[99] Once more, these very serious and basically potentially defamatory allegations are not backed up by any fact or basis.

[100] Again, as with the alleged oral agreement alluded to above, Rostami made no mention at all of the alleged fraud or collusion in affidavits previously as well as in the pleadings for the action.  It is coincidentally Meyer who deposed to affidavits, not only in respect of the application for summary judgment but also when the applicant (and Bloemhof) applied for a postponement as set out hereinbefore. Why it was not raised at any of those occasions leaves this Court with serious question marks. Furthermore, the applicant has not shown the existence of any triable issue in respect of the alleged fraud and/or collusion.  All Meyer came up with on this aspect in my view and finding remains speculation that should be left as such.

[101] 	Consequently, in the absence of factual basis for the allegations of fraudulent conspiracy, this Court has no basis upon which it can consider them as valid defences.

COMPLAINT RE LACK OF JUDICIAL OVERSIGHT (RULE 46(1)(a)(ii)

[102] 	The applicant complains that the second respondent did not place all relevant circumstances before the judge who heard the unopposed application for summary judgment like, whether there were other reasonable ways in which the debt could be paid, whether ordering the sale of a primary residence would not be grossly inappropriate, whether the interest of the judgment creditor in obtaining payment were not significantly less than the interests of the judgment debtor in security of tenure in his or her home, particularly if the sale of the home is likely to render the judgment debtor and his or her family completely homeless or whether or not the amount of debt in particular, whether or not it is trifling in amount and significant to the judgment creditor, among others.

[103] 	The problem with the above submissions is that it is made ex post facto, i.e. after the event.  The applicant has not attached to the papers herein a transcript of the recording in court on the day to substantiate its contentions.  As such, they are in my view, merely a regurgitation of the “ideal situation” as set out in Jaftha v Schoeman & Others, Van Rooyen v Stoltz & Others 2005 (2) SA 140 (CC) and many other decided cases.

[104] 	Certainly the amounts involved herein were not trifling.

[105] 	In Nedbank Ltd v Mortinson 2005 (6) SA 462 (W) the court held among others at 473D-G that a creditor seeking an order declaring specially executable immovable property,  must aver in an affidavit among others the amount of the arrears outstanding as at the date of the application for default judgment; whether the property was acquired by means of or with the assistance of a state subsidy; whether, to the knowledge of the creditor, the immovable property is occupied or not; whether the property is utilised for residential purposes or commercial purposes; and whether the debt sought to be enforced was incurred in order to acquire that immovable property or not.
[106] 	All the above factors are factors that are or ought to be within the peculiar knowledge of the applicant, who was the judgment debtor.  As such, it is my view that it was incumbent on the applicant to have alluded to them in the affidavits.  This Court, as stated above, does not have the benefit of the transcript of the proceedings in court on the date of argument for the granting of the application for summary judgment. However, we have the first respondent’s contention that it put all that was to be put before that court and satisfied all requirements, resulting in the default judgment being granted and the immovable property being declared specially executable.  There is no way this Court can say it was not done.  Consequently, this ground cannot avail the applicant.

[107] 	The applicant visited any possible legal point it could think of to try to bolster its case. However, at the end of the day, what it submitted could not in my view defeat or diminish the strength of the first respondent’s case.

WILFUL DEFAULT

[108] 	Rostami is putting the blame for its non-appearance at court on its legal representatives.  If it is to be believed, it would mean that both its attorneys as well as its counsel, Venter SC, simply did not do their work or execute their mandate.  However, it does not explain why it did not heed or follow the prompts coming from the pre-trial conferences or Notices to produce documents for purposes of trial.  The question would be, which trial was being contemplated throughout, if not this very one. There is no explanation why its (Rostami’s) witnesses were not at the trial also.  Even if its briefed counsel fell it, a stand-in could have been arranged or proper notification made in relation to preparedness for trial.  Nothing was done. There was nobody representing Rostami at the roll call for the day – not even a candidate attorney with right of appearance at court or Rostami’s representatives themselves.

[109] 	All the above lead to one inference capable of being drawn from the available facts, being that Rostami was in wilful default of attendance on the trial date.

CONCLUSION

[110] 	From the papers filed of record as well as from the submissions made during argument, it is my considered view and finding that Rostami does not have a bona fide defence to the first respondent’s (Nedbank’s) claims. It is not in dispute that it (Rostami) owes Nedbank and that the defences it offered were not directly related to its indebtedness to Nedbank. The Notice of Motion itself constituted a proper notice of the ending of amicable creditor-debtor relationship and the advent of adversarial relations.

[111] 	In the circumstances, the applicant’s (Rostamis’) application stands to be dismissed with costs. The only question to be answered at this stage is on what the scale of costs should be.

COSTS

[112] 	The duty or discretion in respect of costs lies with the court dealing with the matter.  The facts and circumstances in the matter should dictate what the scale of costs should be.

[113] 	The contracts in issue in this application specified orders on an attorney and client scale in the event of litigation.

[114] 	I have perused the papers and considered the arguments advanced to determine whether there was justification for this Court to depart from granting costs on attorney and client scale as per the agreements. I could not find any. As such the costs order accompanying the ruling in this application should be on a scale as between attorney and client.

ORDER

[115] 	The following order is made:

“The applicant’s (Rostami’s) application for rescission of the default judgment granted against it on 10 May 2011 which judgment also ordered specified immovable properties specially executable, is dismissed with costs on a scale as between attorney and client.”

						_____________________________
							        N F KGOMO
						JUDGE OF THE SOUTH GAUTENG
						  HIGH COURT, JOHANNESBURG
FOR THE APPLICANT			MR MERVYN DENDY
						TEL NO:  011 – 880 4048

INSTRUCTED BY				0’DONOVAN ATTORNEY
						PARKTOWN NORTH
						JOHANNESBURG
						TEL NO:  011 – 880 3514

FOR THE FIRST RESPONDENT		ADV J M KILLIAN
						TEL NO:  011 – 223 8000

INSTRUCTED BY				BALOYI SWART & ASSOCIATES INC
						TEL NO:  0861 298 007

DATE OF HEARING				26 JULY 2012 

DATE OF JUDGMENT			19  OCTOBER 2012 

IN THE MATTER BETWEEN:

ROSTAMI BELEGGINGS CC                                                            Applicant

AND  

NEDBANK LIMITED                                                                           1st Respondent
BLOEMHOF DIAMOND EXCHANGE (PTY)LTD                               2nd Respondent
SHERIFF, PRETORIA NORTH-EAST                                               3rd Respondent

                                        HEAD NOTE

1. JURISDICTION- a plea for lack of jurisdiction ought to be raised preferably by special plea in the ordinary course and in any event, before litis contestation.

-	Applicant herein failed to object to this court’s jurisdiction in its application resisting summary judgment, in its plea or before litis contestation.

-	The above plus other jurisdictional facts present points to Applicant’s having submitted to the jurisdiction of this court

-	Clause 13 of mortgage bond applicable herein among others proclaim that the bank (Nedbank ) may, at its option, be entitled to institute  proceeding in any division of the High court of South Africa having jurisdiction. The South Gauteng High Court indeed did have jurisdiction to hear the matter.

2. Litigants not to single out jurisdictional facts contained in mortgage bond and conveniently disregard other factors granting jurisdiction.

3. Failure to attend court on trial date without valid reason – Amounts to wilful default.

4. In case, applicant have not shown any bona fide defence or prospects of success in event of rescission being granted.

5. Application for rescission of judgment dismissed with costs on a scale as between attorney and client.