Court reverses home repo judgment after Nedbank bungled calculations

It seems the banks are finding it tougher going against customers who stand up to them in court. Especially those who stand alone.

Prenash Somlal stood alone in court against the bank and its legal counsel over a case that will no doubt cause Nedbank considerable embarrassment, not least because of the shoddy way in which it presented its evidence.

A recent case in the Pretoria High Court set aside a 2020 judgment in favour of Nedbank, which later admitted to an “unfortunate oversight and typing error” in overstating the amount for municipal services owed by the property owner.

That overstatement had catastrophic consequences for Somlal, the homeowner, a self-employed accountant living in Laudium, Tshwane.

He lived in the property with his elderly mother and faced eviction as a result of an eviction order granted by the same court.

His R1.4 million property ended up being sold at auction for R700 000 after the bank was granted judgment in 2020 for the amount of R124 323.

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Background

Somlal borrowed R220 000 in 2003 and some time later started questioning the amount of interest being charged by the bank. In 2011, the bank began launching applications for default judgment against Somlal, though these appear to have gone nowhere.

In 2018, Somlal raised the defence of in duplum, a common law principle that says the interest on a loan stops running when the unpaid interest equals the amount of the outstanding capital.

The bank was eventually granted judgment against him in January 2020. Somlal did not attend court for the hearing, having informed the bank he intended to refer the matter to the Banking Ombud.

Nedbank employee Robin van Niekerk told him the bank would not proceed with the application for default judgment, so Somlal assumed he had no reason to attend court.

Van Niekerk promised to investigate the matter and revert – which never happened. Instead, Nedbank’s attorneys arrived in court and the matter proceeded, apparently unopposed.

The bank denied Somlal’s claim that Van Niekerk advised it would not proceed with its application for default judgment.

Here’s what Judge Nelissa Mali had to say about this: “The first respondent’s [Nedbank’s] version is unsubstantiated. There is no rebuttal of the version about Ms Robin Van Niekerk. The first respondent would have been in a better position to obtain the affidavit from its employee. The first respondent’s version is a bare denial and cannot be accepted. The presence of the applicant was precluded, his absence was not elected.”

Nedbank’s attorneys in this case were VHI Attorneys, with Advocate WJ Roos arguing in court.

Somlal represented himself.

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Overstatement

To grant Somlal’s request for a rescission of judgment, he had to prove that there were material facts that, had they been previously known to the court, would have resulted in a different decision.

Somlal argued that the reserve price of R700 000 set by the court in 2020 was incorrect because the bank overstated the amount he owed to the municipality.

The bank claimed in its 2020 court papers that Somlal owed R61 076 to the municipality and attached a statement which purported to back up this claim.

The problem with this was that the attachment it referenced was incorrect, and the actual amount owed was just R1 276.

The reserve price is the price set by the court as the minimum at which a repossessed property may be sold, after considering various factors such as outstanding municipal bills. This was introduced to the courts in 2017 after an amendment to Rule 46 of the Uniform Rules of Court to prevent properties being sold at absurdly low prices.

“The explanation proffered on behalf of [Nedbank] is that the above is all an unfortunate oversight and typing error,” reads the judgment.

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Another unfortunate contradiction …

It didn’t get much better for the bank.

After obtaining default judgment for the amount of R124 333, Nedbank issued Somlal with a statement of account for R94 488.

This raised the question: what was the true amount owing? R124 333 or R94 488?

“This happened without the applicant making payment towards reducing the sum of R124 333.80. This glaring contradiction can be nothing more than miscarriage of justice,” the judgment goes on.

“One is left none the wiser as to the amount of debt owed by the applicant to the first respondent when the judgment was granted. These issues should be ventilated in the appropriate forum.”

Somlal will now have to argue his main case before the court, and the bank will no doubt have some explaining to do in respect of the amount owed and the contradictions in its 2020 papers.

Also cited as respondents in the case were the City of Tshwane, the Registrar of Deeds, the Sherriff of North-West Pretoria and Hawa Bibi Osman, who purchased the property at auction for R700 000. Only Nedbank defended the matter.

This article was republished from Moneyweb. Read the original here.