Rossitter & others v Nedbank Ltd

The Rossitter Family Trust, represented by the first appellant as trustee, concluded loan agreements with BOE Private Bank (respondent's predecessor) for R13.5 million and R9.77 million. The agreements were varied several times, with the final variation providing for "bullet repayments" due on 1 June 2010. The loans were secured by mortgage bonds over three properties and suretyships by the first appellant. The trust defaulted and summons was issued on 14 October 2010. A notice of intention to defend was served on 5 November 2010. After further defaults, a notice of bar was served on 29 March 2012. No plea was delivered within five days. On 17 May 2012, the respondent served notice of intention to apply for default judgment, which was granted by the registrar on 30 May 2012. The appellants became aware of the judgment on 9 July 2012 and applied for rescission on 14 August 2012 under Uniform Rule 42(1)(a), arguing the judgment was erroneously sought and granted due to non-compliance with Rule 31(5)(a) and the KZN Practice Manual.

• Whether the default judgment was erroneously sought and granted within the meaning of Uniform Rule 42(1)(a)
• Whether the respondent complied with Uniform Rule 31(5)(a) read with paragraph 2.3 of the KZN Practice Manual when applying for default judgment
• Whether the appeal had become perempted due to the appellants' alleged acquiescence in the judgment
• Whether a practice manual has the same force and effect as the Uniform Rules

1. The appeal is upheld with costs. 2. The order of the court a quo is set aside and substituted with: (a) The application for rescission of the default judgment granted by the Registrar on 30 May 2014 is granted and the default judgment is set aside. (b) The respondent is ordered to pay the costs of the application.

A default judgment is erroneously granted within the meaning of Uniform Rule 42(1)(a) where the notice of intention to apply for default judgment fails to comply with the mandatory requirements of Rule 31(5)(a) read with the applicable practice manual directives. Where summons has been served more than six months before an application for default judgment, and the practice manual requires notice specifying the date and time when judgment will be sought with at least five days' notice, failure to provide such particulars renders the notice defective and the resulting judgment erroneously granted. A practice manual or directive duly promulgated by the Judge President of a High Court division has the same force and effect as the Uniform Rules. Where a judgment is erroneously sought or granted under Rule 42(1)(a), rescission must be granted without requiring the applicant to demonstrate good cause. A judgment is erroneously granted if there existed at the time of its issue a fact of which the court was unaware that would have precluded the granting of judgment.

The court expressed its disapproval of the respondent's conduct in proceeding to transfer properties in execution of judgment after the appellants had lodged their appeal record, demonstrating clear intention to prosecute the appeal. The court noted it was disturbing that the respondent transferred the Winston Park property on 19 February 2014 and had the Umhlanga property declared specially executable on 13 August 2014 in the face of a pending appeal. The court observed that the process of transferring properties could be easily undone since the respondent transferred them into its own name. The court found the appellants' attorney's explanation for not timeously delivering a plea (being too busy with other matters, being indisposed, and blaming support staff) to be far from satisfactory, though this was not determinative of the appeal. The court noted it was not necessary to consider various defences raised by the appellants on the merits, including that the third trustee was not cited, that no valid loan agreements existed, and that the mortgage bonds were invalid.

This case reinforces the proper application of Uniform Rule 42(1)(a) and the procedural requirements for obtaining default judgment under Rule 31(5)(a). It confirms that practice manuals and directives duly promulgated by a Judge President have the same force and effect as the Uniform Rules and must be complied with. The judgment provides important guidance on when a judgment is 'erroneously granted' - namely when there existed at the time of its issue a fact which the court was unaware of that would have precluded the granting of judgment. The case emphasizes that where a judgment is erroneously sought or granted under Rule 42(1)(a), rescission must be granted without requiring the applicant to show good cause. It also clarifies that procedural defects in notices required by the rules constitute grounds for finding a judgment was erroneously granted, even if such defects do not appear on the face of the court record. The judgment serves as a warning against executing judgments when an appeal is pending.