THE South Gauteng High Court has rescinded a 1999 Nedbank default judgment after discovering the bank had served summons on a man who had been dead for nearly two years.
The ruling invalidates multiple property transfers spanning two decades and returns ownership to the deceased's estate, despite objections from the current titleholder
The court ruled that the default judgment granted in March 1999 against the late Lefu Stephen Moisi was erroneously sought and granted, as he had died nearly two years before the summons was purportedly served on him.
The matter arose from a loan agreement concluded in July 1989 between Nedbank, then known as Nedcor Bank Limited, and the late Moisi.
The bank advanced R37 196, secured by a mortgage bond over his property. After a breach of the loan agreement, the bank instituted foreclosure proceedings and obtained a default judgment declaring the property executable, after which it was subsequently sold.
The property was later transferred through several entities and eventually ended up registered in the name of the second respondent, Final Housing Solution (Pty) Ltd, in or around 2004.
What was alarming was that the sheriff’s return of service indicated that the summons had been personally served on Moisi in February 1999.
However, Moisi’s death certificate showed that he had died in December 1997, making personal service impossible.
At the time the summons was issued, Moisi’s estate had already been placed under administration. Mamokele Maria Moisi, the deceased’s sole heir, had been appointed executrix in March 1998. The court found that there had been no proper service on her in her capacity as executrix, and the default judgment was granted in her absence.
Nedbank brought an application to rescind the 1999 judgment on the basis that it had been granted against a person who had already passed away. It also sought to have all subsequent transfers declared invalid.
The bank conceded that the summons could not have been properly served and that the default judgment was void from the outset.
As the current owner, Final Housing Solution opposed the application arguing that the rescission application was frivolous, unreasonable, and constituted an abuse of the court process. It contended that the parties had been engaging for some time regarding compensation for the property and that Nedbank proceeded with the application despite knowing that the issue of compensation remained unresolved.
Moreover, the company maintained that it was an innocent purchaser of the property and would suffer significant financial prejudice if the rescission was granted without compensation. It argued that it was entitled to compensation at market value and claimed that it stood to lose the full market value of the property.
The company stated that it had sought R500,000 to resolve the matter, while Nedbank had offered to repay R10,430, being the original purchase price plus associated transfer costs and interest.
Final Housing Solution further argued that Nedbank knew or ought to have known that the deceased had passed away before obtaining default judgment, particularly because an insurance policy covering the mortgage had allegedly been paid out.
The court, however, held that the central issue before it was whether the 1999 judgment had been erroneously granted. Acting Judge N Mzuzu presided over the matter and found that, had the court in 1999 been aware that Moisi had already died, the default judgment would not have been granted.
The judge ruled that the concerns raised by Final Housing Solution regarding compensation and alleged prejudice were not relevant to the rescission application itself and could be pursued separately if necessary.
In addition, the court noted that Final Housing Solution had not taken possession of the house for approximately 19 years. Yet it claimed that it stood to lose the full market value of the property if the rescission was granted, as well as rental income it alleged it would have earned had it taken possession in 2005. In reality, it never occupied the property or derived any rental income from it.
The court dismissed all preliminary points raised by Final Housing Solution, granted condonation for the late filing of Nedbank’s replying affidavit, and rescinded the March 1999 judgment.
The court declared invalid and set aside all subsequent transfers of the property and directed the Registrar of Deeds to cancel the current title deed held by Final Housing Solution and to take the necessary steps to register the property in the name of Mamokele Maria Moisi as executrix of the deceased estate.
Nedbank was ordered to pay the transfer costs associated with restoring the property to the estate.
Each party was ordered to pay its own legal costs.