According to the IOL website, “46,5 percent of credit-active consumers – 8,61 million people – have apparently not been making their payments as they should.” This often results in judgements granted by a court and in many cases debtors neglect to defend the actions instituted against them (i.e. a summons).
This results in the court granting a default judgement in their absence and ultimately, that he or she is then blacklisted. Blacklisting adversely affects the debtor’s ability to have business dealings, but specifically, his or her ability to obtain credit (creditworthiness).
In order to remove his or her name from the so-called blacklist, the judgement in question, must be rescinded by an order of court. The court however, will only grant an order rescinding judgement, if the debtor has complied with prevailing laws and relevant court rules.
On the flip side of the coin, any creditor may list adverse information on a debtor’s credit record for a period of two years. This too, although not a judgment, may preclude a debtor from obtaining credit.
The general rule that applies in the High Court and Magistrate’s Courts is that an order of court will stand, until being set aside by a competent court. Thus, the court order must be obeyed, as there is a presumption that the judgment is correct.
In De Wet and Others v Western Bank Ltd, the court held:
‘A Court obviously has inherent power to control the procedure and proceedings in its Court. This is done to facilitate the work of the Courts and enable litigants to resolve their differences in as speedy and inexpensive a manner as possible. This, in my view, does not include the right to interfere with the principle of the finality of judgments other than in circumstances specifically provided for in the Rules or at common law.’
For a judgement to be rescinded in the High Court, the following needs to be established:
1. Good cause:
In order for an application for rescission of judgement to succeed, good cause must be proven. This is substantiated by the fact that in recent cases such as Swart v ABSA Bank Ltd the court dismissed this (unopposed) application for the rescission of judgment, as the debtor had failed to show good cause.
Good cause has never been defined and each case is measured individually against the facts contained in that specific case. The individual measurement of good cause further implies that the court can exercise its discretion in determining whether or not it is just and equitable to rescind any judgment previously made by it.
2. The rules of court:
In De Wet and others v Western Bank Ltd it was declared that the court has complete power to control the procedures and proceedings of the court. This is done to facilitate the work of the court and to enable litigants to resolve their differences as quickly as possible. Therefore, a rescission of judgement application must also comply with the rules of court.
Rule 42 sets out the grounds for the variation and rescission of an order. The grounds on which the court may rescind a matter due to of an error are:
- Where an order or judgment was wrongly sought or granted in the absence of any affected party;
- Where there is an ambiguity, a patent error or omission to the extent of such ambiguity,
- An order or judgment granted as a result of a mistake common to the parties.
Moreover, in the case where the rescission of judgement application is unopposed and brought by consent the court will regard the following:
- Reasonableness in the behaviour of the applicant,
- That the application is made in good faith,
- That the applicant has a bona fide substantial legal defence (based on the merits of the case).
3. Common law:
In Swadif (Pty) Ltd v Dyke No the common law requirements set for rescissions of judgement applications were examined by court. Thus, in terms of common law, the following grounds can be used to set aside a judgement:
- On rare occasions an error in law (justus error),
- New documents have been discovered,
- Judgement was granted be default in the absence of parties,
- On grounds of just cause (justus causa).
In addition to the above grounds, there must be a causal connection between the circumstances that gave rise to the rescission of judgement and the original judgement.
For the High Court even to consider a rescission of judgement, common law provisions, compliance with court rules and good cause must be established. This however, does not guarantee that a rescission will be granted, as the outcome is still at the discretion of the court.
The High Court is superior to the Magistrates Court and therefore has a bearing on the Magistrates Court and its decisions. High Court decisions also bind the Magistrates Courts in that province.
The Magistrates Court is a creature of statute and therefore can only perform what law allows it to in terms of the court rules. In terms of Rule 49 the following statutory requirements are set for rescissions of judgement in the magistrates courts:
- The application must be done within 20 days of obtaining knowledge of such a judgement.
- On application for rescission of judgement, an applicant must prove that there is good cause for the court to rescind the judgement. Nevertheless, the court may also rescind any judgement where it has good reason to do so. Thus, the court can use its discretion as to whether or not to rescind judgement.
As with the High Court, the magistrates court has never defined good cause.
For example, in the case of Silber v Ozen Wholesalers (Pty) Ltd good cause included the applicant’s defence, the circumstances surrounding and leading to judgement being taken and his conduct thereafter. In summary, the defendant (applicant) must have a bona fide legal defence, but is not limited thereto.
In addition, it is preferable that the applicant proves that there was no wilful non-compliance/default in terms of the court rules.
Therefore, the court rules must be complied with in the Magistrate’s Court in order to rescind judgement and as with the High Court, the judgement remains at the discretion of the court.
In the case of defaults, make sure you can afford the credit you have been given from the outset or make arrangements with creditors before falling into arrears so that a listing is avoided.
It is very important to note that under no circumstances will an attorney be able to predict or guarantee the outcome of an application for rescission of judgement, as it is solely the court’s discretion to grant or deny these.
Therefore, in order to avoid being blacklisted, it is advisable to approach an attorney for assistance when action is instituted against you. An attorney can also save you money by informing you whether the judgement cannot be rescinded due to non-compliance with the relevant legal provisions.