REPUBLIC OF SOUTH AFRICA

SOUTH GAUTENG HIGH COURT
JOHANNESBURG

CASE NO:  21621/2012 

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

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                   DATE			        SIGNATURE

In the matter between:

ACS TRADING CC							       First Plaintiff

AGGELIK KAVOURAS						  Second Plaintiff

and

THE STANDARD BANK OF 
SOUTH AFRICA LIMITED						          Defendant
______________________________________________________________ 

J U D G M E N T
______________________________________________________________ 

MAKUME, J:

[1] 	This is an application for default judgment. The plaintiffs instituted action against the defendant on 12 June 2012 seeking payment of the sum of R1,3 million. The cause of action is pleaded as breach of an implied alternatively that duty of good faith. (See paragraph 11 of the particulars of claim.)

[2] 	On the 22 June 2012  summons was served on the defendant at its place of business  5 Simmonds Street, Johannesburg by handing a copy thereof to an employee of the bank in their group legal department.

[3] 	It is common cause that the defendant failed to enter appearance to defend the action within the prescribed period or at all.  This prompted the plaintiffs to apply for entry of judgment by default as prayed for in the summons in terms of Rule 31(5)(a) of the Rules of this Court.  That application is dated 20 July 2012. 

[4] 	Rule 31(5) authorises the Registrar to enter judgment where the claim is for a debt or liquidated demand.  Rule 31(5)(b)(vi) gives the Registrar the authority to refer a matter for hearing in open court.

[5] 	The Registrar raised certain queries on 19 September 2012, namely that he needed proof that the property was sold to another person before considering the application.

[6] 	On 19 October 2012 the Registrar after receiving a response referred this matter to open court in terms of Rule 31(5)(a)(vi).  When this matter was placed before me on 13 November 2012 I called for evidence in the form of an affidavit from the plaintiffs.

[7] 	Counsel for the plaintiffs placed such affidavit before me on Friday 15 November 2012 and addressed the court on the merits and applied for judgment as prayed for in the summons.

[8] 	This matter is accordingly before me in terms of Rule 31(2)(a) read with Rule 31(5)(b)(vi) of the Rules of the Court.

[9] 	The background history leading to this claim is set out in the plaintiffs’ particulars of claim to the summons.

[10] 	It is common cause that during or about March 2008 the plaintiffs and the defendant entered into a home loan agreement in terms whereof the defendant advanced certain monies to plaintiffs and as security for such loan a mortgage bond was registered in favour of the defendant over immovable property namely Erf 97 Melrose Township Registration Division IR Gauteng Province (“the hypothecated property”).

[11] 	The second plaintiff bound herself as surety and co-principal debtor with the first plaintiff in terms of a deed of suretyship dated 7 April 2008 in favour of the defendant.

[12] 	The plaintiffs defaulted in paying in terms of the home loan agreement. This resulted in the defendant obtaining judgment against both plaintiffs on 13 December 2011 in the amount of R4 321 125,71 (Four Million Three Hundred Twenty One Thousand One Hundred and Twenty Five Rand and Seventy One Cents) together with interest and costs.  

[13] 	The hypothecated property was placed under attachment.  The defendant through its attorneys took the necessary steps to sell the property by public auction.

[14] 	The public sale in execution of the property was conducted by the Sheriff Johannesburg North on 29 March 2012 and was sold for an amount of R2 781 146,68 (Two Million Seven Hundred and Eighty One Thousand One Hundred and Forty Six Rand and Sixty Eight Cents).

[15] 	On 23 March 2012  a week before the sale in execution   Mr Andreas Kyprianou plaintiffs’ attorney addressed a letter to Messrs Ramsay Webber Attorneys who were then acting for the defendant.  The contents of the letter are worth quoting in full for reasons that will be evident later:

	“Dear Sir/Madam

1.	Attached find the requested draft of our Pro Forma Statement.

2.	Also find attached the respective Offer to Purchase.

3.	We are currently awaiting the required ‘Bond Grant’ from the Purchaser which we shall have over the next 2 or 3 working days.

4.	The letter attached from estate agents confirm that they are holding R200 000,00 in the form of a deposit.

5.	Kindly allow for a few working days so that we may receive the Bond Approval which should be granted very soon and in due course.  As such kindly do not proceed with the sale in execution of the respective property, as it is in the best interest of all parties that this transfer go through which it is envisaged in high probability that same will take place.

6.	Thanking you. We await your response as soon as may be possible.”

[16] 	Ramsay Webber did not respond to the letter.

[17] 	The offer to purchase referred to in paragraph 2 of the letter was attached to the affidavit of Mr Andreas Kyprianou dated 15 November 2012.  The offer to purchase has no date save to say that in it the first plaintiff agreed to sell the hypothecated property to one Michaela and Guy Andrew Voller for a purchase price of R4 300 000,00 (Four Million Three Hundred Thousand Rand).

[18] 	It was a further term of the offer to purchase that the purchasers Michaela and Guy Voller would pay a deposit of R600 000,00 within seven days of date of acceptance of the offer which amount would be paid to the plaintiff’s estate agent First Realty Company.

[19] 	The balance of the purchase price amounting to R3 700 000,00 (Three Million Seven Hundred Thousand Rand) would be payable to the seller against registration of transfer of the property to the purchaser.

[20] 	The offer to purchase was made subject to the suspensive condition that the purchaser is able to obtain a bond facility of not less than R3 700 000,00 (Three Million Seven Hundred Thousand Rand) by not later than 7 March 2012. 

[21] 	Clause 4.5 of the offer to purchase reads as follows:

“If the bond facility is not approved within the period provided for in this agreement (or such further period as the parties may agree upon) in writing this sale shall lapse and be of no force and effect and the deposit paid by the purchaser shall be refunded to the purchaser together with interest unless the purchaser prevented or frustrated fulfilment of this condition to avoid being bound by the contract in which event this condition precedent shall be deemed to have been fulfilled forthwith.”

[22] 	In paragraphs 11, 12 and 13 of the particulars of claim the plaintiff describe their cause of action against the defendant as follows:

“11. 	Plaintiffs aver that defendant, in breach of its implied alternatively tacit duty of good faith arising from the contractual relationship, more fully dealt with in paragraphs 4 and 5 above, disposed of the property for R3 million whereas there was a willing and able purchaser for R4,3 million.

12.	In the premises, the first and/or second plaintiffs have suffered damages in the sum of R1,3 million.

13. 	The plaintiffs aver that the damages flow naturally from defendant’s breach and/or were, in any event, within the contemplation of the parties that in the event of the defendant disposing of the property for less than what the property could fetch in the open market, that defendant would be liable for such damages arising from such breach.”

[23] 	It is trite that a request for default judgment is in the nature of an ex parte application therefore requiring an applicant to make full disclosure of all relevant factors.

[24] 	What is pleaded in this action is not supported by the evidence placed before me. In paragraph 3 of his affidavit Kyprianou says that he received instructions from the plaintiff during December 2011 to attend to the transfer of the hypothecated property from the plaintiffs to Mr and Mrs G Voller and yet Annexure “A” to the affidavit by Kyprianou is a letter from the estate agents dated 21 February 2012 addressed to Kyprianou wherein was enclosed a signed agreement of sale instructing Kyprianou to attend to transfer of the hypothecated property. It is therefore not correct that plaintiff instructed Kyprianou to attend to transfer in December 2011. 

[25] 	Secondly, the deed of sale between the plaintiffs and Mr and Mrs Voller had a suspensive condition as set out in clause 4.1 which required that the purchaser obtain a bond facility of not less than R3,7 million by not later than 7 March 2012 failing which that offer to purchase lapses.  On 23 March 2012 when Kyprianou addressed a letter to Ramsay Webber requesting more time to enable the purchaser to obtain a bond the offer to purchase had lapsed and was of no further force and effect.  There is nothing in the evidence of Kyprianou to the effect that the defendant had allowed the purchasers an extension of time to secure a bond.

[26] 	Thirdly, the purchaser in that offer to purchase was requested to pay a deposit of R600 000,00 (Six Hundred Thousand Rand) as set out in clause 3.3 of the offer to purchase. In breach of that clause the purchaser paid only R200 000,00 (Two Hundred Thousand Rand).

[27] 	It is possibly these breaches of the offer to purchase that may have persuaded the defendant not to postpone the date of sale of the hypothecated property as there was no guarantee that the purchasers would obtain a bond.  Nowhere in his affidavit does Kyprianou say when did the purchasers obtain a bond if any.  If they did it was well after the date of sale in execution and by that time they no longer had a valid agreement it having lapsed on 7 March 2012. 

[28] 	In the letter of 23 March 2012 Kyprianou says that the purchasers requested 2 to 3 working days to obtain the bond which meant they would have obtained the bond before 29 March 2012 and yet in his affidavit Kyprianou now says at paragraph 4 that he notified Ramsay Webber both telephonically and by e-mail that they should grant his clients a few extra days over and above the deadline set for the auction. This is in direct contradiction and does not support what is pleaded.

[29] 	It is trite that the mortgagee on the default of the mortgagor has a right to have the mortgaged property sold and to receive payment of the amount owed from the proceeds. Applied to the facts of the present matter the defendant after judgment was granted in its favour in December 2011 possessed a real right over the hypothecated property.  The plaintiffs in purporting to sell the hypothecated property to a third party could not transfer rights that they no longer had.

[30] 	When judgment was granted the defendant became owner of the hypothecated property in exchange for the amount of money that the plaintiff at that stage owed to the defendant.  It was only the defendant who could sell that property not the plaintiffs.

[31] 	In paragraph 12 of the particulars of claim the plaintiffs say that they have suffered damages in the sum of R1,3 million. The evidence placed before me by affidavit Kyprianou says that the sale in execution took place and that his client’s property was sold to R2 781 146,88 (Two Million Seven Hundred and Eighty One Thousand One Hundred and Forty Six Rand and Eighty Eight Cents).  This is contrary to what is pleaded namely that the property was sold for R3 million.

[32] 	Attorney Kyprianou says that thereafter the property was transferred to Mr and Mrs Voller for an amount of R4,3 million therefore their client suffered damages in the sum of R1 518 853,32 (One Million Five Hundred and Eighteen Thousand Eight Hundred and Fifty Three Rand and Thirty Two Cents). This is more than what is pleaded.  No amendment was requested.

[33] 	In the matter of Absa Bank Ltd v Bisnathi N.O. and Others 2007 (2) SA 583 the court held that where the mortgagee at a sale in execution purchased the hypothecated property as a result of inadequate bids received and then sold the property to third parties and there is a balance outstanding the mortgagee in that case is obliged to credit the proceeds of the subsequent sale of the property to the mortgagor’s account.

[34] 	In the present matter there is no evidence that the defendant had a “buy in” at the sale in execution. Another person whose details are not disclosed for some unknown reason purchased the property at the execution sale. That person obtained a clean title to ownership of the property free of real security and it was that person not the defendant who then resold the property not to Mr and Mrs Voller as pleaded by the plaintiff but to an entity called “Guka Residence Trust”.

[35] 	In the matter of Abraham v City of Cape Town 1995 (2) SA 319 at page 324C the learned Steyn AJ said the following:

“It was common cause before me that where an application for default judgment serves before a court, it has a clear and unfettered discretion in terms of the relevant rules of court to decide whether or not to hear oral evidence on any of the issues which may require to be decided in order to determine whether or not to grant the relief claimed.”

[36] 	I have received evidence by way of an affidavit from the plaintiff which is unsatisfactory and does not support what is pleaded. I have indicated that what the plaintiffs claim in the summons is different from what is in the affidavit. The plaintiffs’ claim is therefore not a liquidated claim.

[37] 	In applying my unfettered discretion as set out in the matter of Abraham v City of Cape Town (supra) I have come to the conclusion that the plaintiffs have not made out a prima facie case in the sense that there is no evidence relating to all the elements of the claim to survive absolution.

[38] 	Accordingly the order I make is the following:

	Absolution from the instance.

						_____________________________
							    M A MAKUME
						JUDGE OF THE SOUTH GAUTENG
						  HIGH COURT, JOHANNESBURG