- The High Court set aside a R97,509.69 default judgment after finding that Koka James Rametse established good cause for rescission and raised a bona fide defence.
- The central dispute is whether Rametse lawfully returned the BMW X6 under the agreement, and whether the residual payment was only due if he elected to keep the vehicle.
- The court found substantial issues regarding compliance with Section 127 of the National Credit Act, holding that these are triable issues to be determined at trial.
BMW Financial Services South Africa (Pty) Limited will not be able to enforce a R97,509.69 shortfall judgment against Koka James Rametse without first proving its case at trial, after the High Court in Johannesburg rescinded a default judgment.
Judge LR Adams found that Rametse had provided a reasonable explanation for his default and demonstrated a bona fide defence with reasonable prospects of success. The court set aside the judgment granted in November 2023 for payment of R97,509.69, together with interest and attorney-and-client costs.
The core dispute over the agreement
At the heart of the matter is a written agreement concluded in January 2016 for a 2016 BMW X6 Xdrive 4.0d M Sport. BMW Financial Services contends that the agreement was an instalment sale with a buy-back arrangement, and that Rametse was obliged to pay a residual amount of more than R635,000 on 1 March 2020. When that amount was not paid, and the vehicle was returned and later sold, the company claimed there was a shortfall.
Rametse disputes that characterisation. He maintains that the agreement, described as an “Instalment Sale / Lease Agreement”, offered him four options before the residual value fell due—including the option to return the vehicle. According to him, he chose in March 2020 to return the vehicle and communicated that decision in writing. He says that at the time of the return, he was up to date with his instalments and that the balloon payment was only applicable if he chose to keep the vehicle.
Judge Adams accepted that this version, if ultimately proved, could constitute a complete defence. "The defendant has, in my view, done what the aforesaid case authority requires him to do," the judge said. He described Rametse’s account as "a coherent version that he leased the vehicle, elected to return it under the buy-back option, informed the plaintiff timeously, returned the vehicle in good condition, and was not in arrears."
The court emphasised that, at the rescission stage, the defendant is not required to prove his defence. It is sufficient to set out facts which, if established at trial, would entitle him to succeed.
National Credit Act compliance in issue
Beyond the contractual dispute, Rametse also raised non-compliance with Section 127 of the National Credit Act 34 of 2005, which regulates the surrender and resale of goods under credit agreements. He argued that BMW Financial Services failed to provide written notice of the estimated value of the vehicle within ten days after receiving it, and that notices were sent to an address he had long since left.
Judge Adams found that these allegations were not peripheral. "He has raised substantial issues regarding compliance with the NCA. These are triable issues. A court hearing evidence may find in his favour," the judgment states.
The court also indicated there may have been irregular service of the summons and application for default judgment. Referring to the possibility that the documents were served at an address where Rametse no longer resided, Judge Adams said this "may very well be the position," potentially rendering the judgment erroneously granted.
Good cause for rescission established
In considering whether good cause had been shown, the court addressed BMW Financial Services’ argument that the rescission application was out of time. Rametse said he only became fully aware of the judgment in June 2024, when a sheriff attended his residence in connection with a warrant of execution.
"I have no reason not to accept the defendant’s ipse dixit in that regard," Judge Adams held. Even if the application were technically late, the explanation was reasonable. The judge noted that after the sheriff’s visit, Rametse "immediately consulted his legal representatives, who did the necessary investigations with a view to establishing what the warrant of execution was about."
The court concluded that Rametse had provided a reasonable explanation for his default, acted promptly once aware of the judgment, and demonstrated a bona fide defence with reasonable prospects of success. "The defendant has complied with all of the requirements for the granting of an order for the rescission of the default judgment," Judge Adams said. "The application for rescission should therefore succeed."
The default judgment granted in November 2023 was rescinded and set aside. Rametse has been directed to deliver a notice of appearance to defend within ten days, and the dispute over the alleged shortfall and compliance with credit law will now proceed to trial.
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