SOUTH AFRICA: Court Overturns 1999 Nedbank Foreclosure After Summons Were Served on Dead Homeowner

The South Gauteng High Court in Johannesburg has rescinded a 1999 default judgment obtained by Nedbank Ltd after finding that the summons in the foreclosure proceedings had been served on a man who was already deceased.

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.

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. READ MORE