The Gauteng Division of the High Court, Pretoria was recently tasked with considering whether circumstances existed to grant the rescission of a default judgment granted to Absa Bank Ltd (Absa).
In the circumstances, Duma alleged that she had been retrenched by her employer and was accordingly not in a position to make payment to Absa in accordance with her mortgage bond. She had engaged them in order to extend the terms of her mortgage bond, however it appeared that these requests had been ignored by Absa. Default judgment was granted in Absa’s favour together with the property being deemed executable and costs being awarded against Duma on an attorney client scale.
In circumstances where a debtor has had default judgment granted against him and where property has been deemed executable, two options remain at the debtor’s disposal. These are to either settle the judgment debt or to bring a rescission application of the judgment that was granted. In this instance, Duma had chosen the latter.
In order for a court to accordingly rescind a judgment that was granted, one of the following instances must be present:
- the judgment was erroneously sought or granted in the absence of the affected party;
- there was the presence of ambiguity in the judgment; or
- the judgment was granted as a result of a mistake which was common between the parties.
The court noted that in the circumstances, there was nothing irregular about the notice of set down nor the enrolling of the application and that the only reason for Duma’s application was because she may be in a position to come to an agreement with Absa in the future.
The court made it clear that its role is not to indicate how a bank should negotiate with debtors regarding the outstanding amounts but that the court’s inquiry into declaring the property executable is to give the home owner the opportunity to engage with the bank to determine if the loss of the home could be prevented. Judicial oversight is required to take place prior to a property being declared executable, with one of the most important factors to consider being the outstanding arrears.
The court referenced the case of First Rand Limited v Folscher and Another, which held that a creditor who applies for a writ of execution after having obtained a default judgment must file an affidavit setting out all the applicable circumstances of which the creditor is aware or is able to reasonably establish. The court in this case held that the affidavit is required to be served on debtors in all instances, but that this was not the practice which was currently being observed and should accordingly be rectified.
In noting its disagreement with the current practice being observed, the court noted that debtors are usually lay persons who find it difficult to represent themselves and that the court accordingly must inform them of their rights which, had they not been informed of, may have a serious impact on them. The court accordingly ruled that Duma would be entitled to have the original agreement effective again should she be able to pay the arrears prior to the sale being realised.
In light of this decision, creditors are to be mindful that all affidavits which are to be served after the granting of a default judgment, in order to have the property deemed executable, are to be served on the debtor. Should this not be the case, creditors may risk having sales in execution delayed by debtors seeking to rescind the judgment to attempt to delay the process of the sale.
Written by Jillian San Pedro on 20 August 2018.
Jillian San Pedro is a Candidate Attorney in the Litigation Department at Alan Levy Attorneys Notaries and Conveyancers in Sandton, Johannesburg. Jillian can be contacted on firstname.lastname@example.org or 011 326 8050.