REPORTABLE

Republic of South Africa

IN THE HIGH COURT OF SOUTH AFRICA 
(WESTERN CAPE HIGH COURT, CAPE TOWN)

Case No: 934/2011

Before: The Hon. Mr Justice Binns-Ward
In the matter between:

and

JUDGMENT DELIVERED: 20 SEPTEMBER 2012 
BINNS-WARD J:

[1] Two applications arising out of an action in which the plaintiff bank obtained default judgment against the defendant mortgagor as long ago as 6 May 2011 were heard together. One of them was an application by the bank for an order directing that the judgment could be executed against the hypothecated immovable property. The other was brought by the defendant, in terms of uniform rule 31(2)(b), for the rescission of the judgment.. Both applications were opposed. It is appropriate to determine the defendant's application first because if it is successful the bank's application will be rendered redundant.

[3] In the current case the application for rescission was made by the defendant outside the 20 day period prescribed in terms of the sub-rule. He became aware of the judgment on 8 February 2012. The application was instituted several months later on 29 June 2012, and quite some time after he had already delivered his opposing papers in the bank's application for an order of executability. (The defendant gave notice of his intention to oppose the application for an order of executability on 30 April 2012 and deposed to his opposing affidavit on 30 May 2012.) Consequently, he was also required to show good cause why the period within he could bring the rescission application should be extended; see uniform rule 27(1) and (2).

[5] The reason for a limited period being afforded to a person who becomes aware of a default judgment to make application to have it set aside is manifest. It is in the public interest that there be finality in litigation. Any approach that would tolerate tardy challenges to judgments of the courts determining litigation in too accommodating a manner would thus be inimical to the public interest. The effect of the time limitation is that a judgment debtor who fails to take steps timeously to have a default judgment set aside may be required to suffer the consequences of the judgment notwithstanding that he or she might have had a defence to the claim on which it is premised.

[12] The Constitutional Court was divided on the answer. The majority held (at para.s 74-76) that upon a proper construction of s 129 read with s 130 of the NCA it is not required of a credit provider seeking judicial enforcement of a credit agreement to prove that the s 129 notice had actually come to the attention of the consumer, nor is it required of the credit provider to prove delivery to an actual address. What is required is -

[13] Cameron J, writing for the majority, summed up this part of the judgment as follows (at para. 77):

The credit provider's summons or particulars of claim should allege that the notice was delivered to the relevant post office and that the post office would, in the normal course, have secured delivery of a registered item notification slip, informing the consumer that a registered article was available for collection. Coupled with proof that the notice was delivered to the correct post office, it may reasonably be assumed in the absence of contrary indication, and the credit provider may credibly aver, that notification of its arrival reached the consumer and that a reasonable consumer would have ensured retrieval of the item from the post office.

[26] The history of the matter shows that the defendant had been in breach of his contractual obligations for some considerable time and that the bank had been accommodating of his requests for time to get his affairs in order and bring his payments up to date. On his own version of the facts the defendant had not complied with his undertakings in respect of reduced periodic payments. It is evident that he was in no position to bring his arrears up to date. The deponent to the bank's opposing affidavit averred that the defendant had contacted the bank's attorneys on 8 February 2012 to indicate that he wished to make a payment arrangement. In response, and on the same day, the attorneys had emailed a request to the defendant to furnish them with an income and expenditure statement, together with a written payment proposal. The defendant replied immediately, undertaking to comply with

the request by 9 February. He failed to do so. More than two months later, on 18 April 2012 (approximately two weeks after service of the execution application on him), the defendant emailed the bank's attorneys admitting his failure to keep to his undertaking and advising that he would "endeavour' to make monthly payments of R14 500 with effect from 27 April.
[27] Previous arrangements made in this regard had not been kept by the defendant. Payment records attached to the bank's opposing affidavit show that the defendant's payments had been erratic. Thus, during the six months between July and December 2011, when the defendant should have paid the sum of R87000 to the bank in terms of the reduced monthly payments arrangement, payments actually made totalled only R49 393,79.
[28] It is also relevant that in the execution application the defendant had sought an order postponing the matter for three to four months, subject to an undertaking by him to pay the bank R14 500 per month (that is in instalments less than his contractual obligation) so that he could arrange the transfer of his accounts to another bank against settlement by that bank of his indebtedness to the plaintiff. It was common cause at the hearing that notwithstanding the passage of more than three months he had not succeeded in transferring the accounts. He also had not succeeded in borrowing funds from his 'business entities' to settle his indebtedness, a prospect which had been offered in the alternative to transferring his accounts. This tends to indicate that the defendant's ability to purge his arrears and maintain future payments has not been demonstrated to be sufficient to persuade alternative funders to step into the shoes of the plaintiff as his creditor.

[31] In the circumstances the defendant has failed to show good cause why the period within he could bring an application in terms of rule 31(2)(b) should be extended, and, even were an extension to have been given, why his application for rescission of the judgment should be granted. I shall reflect these conclusions in an order simply dismissing the application for rescission with costs.

SA 111 (WCC) at para.s 16-26. The recognition of the important role played by the provision of mortgage finance in assisting towards the realisation of the right of adequate housing that is evident in all of these judgments is significant. It confirms that public policy supports the enforcement of home-related mortgage contracts, except where it is apparent that their enforcement is sought in bad faith.

costs (for the account of the defendant), and an unnecessary additional imposition on

[36] The defendant has raised a number of points in answer to the bank's application for leave to execute against the hypothecated property. These are (1) the property is his family home; (2) a sale in execution will realise far less than the property is worth and he will prejudiced in consequence; (3) the consolidation of the building unit on the mortgaged section with that on the adjoining section owned by his wife will make the property difficult to sell practically; (4) he was in the process of raising funds to pay off his indebtedness to the bank in full 'in a few weeks'; and (5) the bank had been unreasonable in seeking leave to execute against the property 'when alternative means exist to obtain payment of the amount owing to [it]'. I shall consider each of these points in turn.

[38] The defendant's second point also hangs in the air. I think it can be accepted that forced sales frequently realise prices lower than those achieved in sales by private treaty. But if that consideration were sufficient to defeat a mortgagee's right to realise its security, the security would be illusory for all practical purposes. The position might have been different if the defendant had averred that he had put his property on the market and had been able to give an indication of a reasonably short time period within which it might be expected to be sold to common advantage in the prevailing market conditions. There has been no such averment or indication by the defendant; on the contrary, it is evident that his desire is to continue in ownership and occupation of the property, notwithstanding the bank's rights as mortgagee.

[39] The fact that the property might be difficult to sell because of building alterations effected by the mortgagor is a wholly irrelevant consideration when the enforcement of the mortgage contract is sought. There is no merit in the defendant's third point.

[40] As described earlier, the history of the matter shows that the bank has been reasonably accommodating of the defendant's financial problems. Arrangements previously entered into in this regard have not been adhered to by the defendant. Furthermore, despite the passage of more than three months between the deposition of the defendant's opposing affidavit and the hearing, the defendant has not made good on his promise to settle the debt. His fourth point is thus also demonstrably without substance.

[41] There is nothing in the defendant's fifth point. It is a weak attempt to suggest that the bank is acting in bad faith in seeking to exercise its right as mortgagee. It will be apparent from what has been described earlier in this judgment that all the indications are to the contrary effect. The defendant has provided no evidence of alternative reasonable or effective means of obtaining settlement of the debt.

[42] In the result the bank's application for leave to execute against the hypothecated property must be upheld, as indeed it should have been when default judgment was granted on the money claim.

[43]    The following orders are made:
1. The defendant's application for rescission of the judgment granted against him by default on 6 May 2011 is dismissed with costs.
2. Sections 240 and 229 (Sectional Plan SS.206/1988) in the scheme known as WOODBRIDGE ISLAND at MILNERTON are declared executable in satisfaction of the judgment granted against the defendant on 6 May 2011.
3. The defendant is ordered to pay the plaintiffs costs of suit in the application for the order granted in terms of paragraph 2, above.
4. The costs awarded in terms of paragraphs 1 and 3, above, shall be taxable on the scale as between attorney and client (as agreed in terms of clause 12 of the mortgage bond).

A.G. BINNS-WARD
Judge of the High Court

JUDGMENT:	Binns-Ward J

FOR THE PLAINTIFF: Adv. D. Van Reenen

INSTRUCTED BY: Sandenbergh Nel Haggard 
Bellville

FOR THE DEFENDANT: Adv. D. Rabie

INSTRUCTED BY: Abrahams & Gross Inc. 
Cape Town

DATE OF HEARING: 13 SEPTEMBER 2012