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[2021] ZAGPJHC 870
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LLR Properties (Pty) Ltd and Another v Sasfin Bank Ltd and Another (2020/10763) [2021] ZAGPJHC 870 (24 May 2021)
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Certain
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REPUBLIC
OF SOUTH AFRICA
IN
THE HIGH COURT OF SOUTH AFRICA
GAUTENG
DIVISION
LOCAL
SEAT, JOHANNESBURG
CASE
NO: 2020/10763
DATE:
24 May 2021
Reportable:
No
Of
Interest To Other Judges: No
Revised
In
the matter between:
LLR
PROPERTIES (PTY)
LTD
First Applicant
RAMATSHILA-MUGERI:LUFUNO,
LESLIE
Second Applicant
and
SASFIN
BANK
LTD
First Respondent
SUNLIN
(PTY)
LTD
Second Respondent
JUDGMENT
Johann
Gautschi AJ
1.
This is an application for rescission of the judgment which
was
granted by default on 19 August 2020 against the first and second
applicants jointly and severally in favour of the first respondent
(the judgment). Rescission is sought in terms of Uniform Rule 31 (2)
(b), alternatively Rule 42 (1) (a), further alternatively
in terms of
the common law.
2.
It is common cause that the judgment was granted by default
in the
absence of the applicants.
3.
The case for the applicants is that the summons was served at
the
wrong addresses and consequently they only became aware of the order
that had been granted when the sheriff telephonically
contacted the
second applicant to advise him that he had to serve a warrant of
execution and needed an address to do so.
4.
The causes of action upon which the judgment was granted were
three
rental agreements concluded between Thusano Group (PTY) Ltd (Thusano)
and the first applicant, which were ceded to the second
respondent
and thereupon ceded by the second respondent to the first respondent.
5.
The joint and several liability of the second applicant arises
from
three signed guarantees in which he bound himself jointly and
severally as co-principal debtor in respect of each of the three
rental agreements to Thusano and its cessionaries.
Default
judgment void
ab origine
due to defective service of summons
6.
The applicants also submit that the Court was not in law entitled
to
grant the default judgment and that it was void
ab origine
by
reason of defective service of the summons.
7.
The applicants submitted in their founding affidavit that service
of
the summons was “
improper and ineffective
” as it
took place in contravention of the Regulations 20 and 21 issued in
terms of the
Disaster Management Act, 2002
at Cedar Lodge which
provides luxury and leisure accommodation services to the public and
was closed during the national Lockdown.
8.
The respondents’ answering affidavit made it clear why
this
submission was misconceived and without merit. The relevant portion
of
regulation 20
reads: “
Service of process and execution of
writs and warrants by sheriffs must be limited to cases which are
urgent or permitted services
– – –“.
The
applicants failed to have regard to the definition of “
permitted
services
”. In terms of item 8 of section B (Civil Law
Proceedings) of Annexure 1 to the regulations, “
Permitted
services in terms of Alert level 4” include: “Issue of
all court processes and proceedings and filing of papers
relevant to
pending proceedings
”.
9.
Not surprisingly, therefore this submission was not pursued
in the
applicants’ heads of argument.
10.
Instead, the applicants pursued their contention that the summons was
not served
on any valid address for the applicants. In the case of
the first applicant, it was contended in the replying affidavit that
service
should have taken place at its registered office. In the case
of the second applicant, it was contended in the founding affidavit
that the Combined Summons was served at an address in Louis
Trichardt, whereas the second applicant says that does not reside
there, but resides in Midrand.
11.
The respondent contends that service was valid as it took place at
the
domicilia citandi et executandi
as selected in the rental
agreements and the guarantees. Consequently, in the case of the first
applicant there was no need to
serve it at the registered office.
12.
In the applicants’ replying affidavit the second applicants
stated that
the respondents were not entitled to rely on chosen
domicilia citandi et executandi
as the applicants had not
entered into any of the agreements.
13.
The validity of service issue is impacted on by the issue of whether
the agreements
and guarantees were signed by the second applicant.
That involves the main dispute between the parties, namely, whether
the applicants
have shown that they have a bona fide defence. I shall
revert to the significance of service validity after I have dealt
with the
issue of whether the applicants have shown that they have a
bona fide defence.
14.
I should add that it is, in any event, not clear to me that
domicilia
citandi et executandi
had been inserted in each of the
guarantees. The manuscript details of the address on the first
guarantee annexed to the combined
summons as annexure
SAS1c
are illegible. In the case of the second guarantee dated 30 July 2018
(annexure
SAS3c
) the manuscript details are so illegible that
it is not clear whether any address has been inserted. In the case of
the third guarantee
(annexure
SAS5c
) dated 29 August 2018, as
far as I can see, no address has been inserted.
Bona fide defence
15.
In the applicants’ founding affidavit deposed to by the second
applicant,
he states that he is the sole director of the first
applicant and contends that he has shown sufficient cause and that
the applicants
have a bona fide defence to the respondent’s
claims,
inter alia
, because the three rental agreements are
fraudulent based on the following averments (the fraud point):
“
23.
Secondly, the Applicants have no knowledge of the rental agreement
said to be concluded with the Respondents. A
close inspection of such
rental agreements attached in the Particulars of Claim, reveals that
such a contract was entered into
between us, the Applicants and an
entity known as Thusano Group (PTY) Ltd.
24. The
rental agreement was allegedly concluded with a certain Mr Jade
Christopher on behalf of the Respondents.
This person is unknown to
the Applicants. Furthermore, Thusano Group (PTY) Ltd is also unknown
to the Applicants. The Applicants
are therefore not party to the said
contractual agreement with the Respondent.
25. The
Respondents in their defective summons and particulars of claim
again, describe the Second Defendant in
the main action as “the
duly authorised representative of the First Defendant” and
further as “an adult female”.
Again, I am not female, and
most importantly, I have never entered into any agreement with the
Respondent.
26. I
am the sole director of the First Applicant. I would be the only one
to act as representation of the First
Applicant. I did not act in
such capacity, and I certainly did not authorise anyone to enter into
any agreements with the Respondent.
27. The
agreements relied upon by the Respondents for their cause of action
are fraudulent. They were not concluded
by me or any representative
of the First Applicant. As I keep reiterating this point, I did not
authorise the conclusion thereof.
28.
Moreover, the only explanation I can offer the court with regards to
what appears to be my signature on the
alleged agreements is that it
is an obvious and pure falsification of my signature and subsequently
rendering all three alleged
agreements fraudulent. I submit that the
Respondents have a pure and clear intention to mislead the court.”
16.
The first respondent’s answering affidavit disputed the fraud
point and,
in support of its contentions, provided considerable
detail surrounding the signing of the rental agreements. The heads of
argument
of respondent’s counsel, adv JG Botha criticised the
inadequate manner in which the applicants responded in reply which
compounded
the skimpy detail in its founding affidavit. The
respondent contends that the applicants’ version is so
deficient that the
applicants had not shown the requisite
bona
fide
defence.
17.
For a proper understanding of the validity of those contentions I
shall quote
extensively from those portions of the answering
affidavit dealing with the fraud point before setting out the
respondent’s
criticism thereof.
18.
In relation to the circumstances leading up to and surrounding
signing of the
rental agreements and guarantees, the first respondent
stated the following which was confirmed in a confirmatory affidavit
by
Mr Bunting who is said to have represented to Thusano in
concluding the rental agreements:
14.
Bunting is startled by the allegations of fraud, and that the
deponent allegedly “has no knowledge”
of the agreements,
and that his “signature” is an “obvious
falsification”.
15.
Apart from the fact that three (3) separate rental agreements were
concluded with Thusano, one of which was
concluded a month after the
first two, each agreement requires multiple signatures by the first
Applicant’s representative,
not one.
16. The
deponent was required to sign each agreement on at least seven (7)
places, apart from signing the Guarantee.
(On each agreement the
first pages signed twice by the signatory, at the “Agreed Costs
and Rental Period” In three
(3) places, and the acknowledgement
of receipt once, and finally at the debit order authorisation once.)
17.
Moreover, the signing of the agreements occurred within the context
of the following events:
17.1 during or
about June 2018, Thusano was referred by the previous owner of Cedar
Lodge to the 1st Applicant. Thusano subsequently
furnished a
quotation to the first Applicant on a new PABX system (essentially a
switchboard);
17.2 Bunting
attended at Cedar Lodge to furnish a quote and ascertain the
particular needs of Cedar Lodge, and for purposes
of establishing the
technical specifications that would be required of the PABX;
17.3 upon arrival
at Cedar Lodge, Bunting was met by, and he dealt with the manager in
charge, Mrs Moloko Ramathella-Mugeri
(“Moloko”);
17.4 during the
course of Bunting’s dealings with Moloko it emerged that she
was married to a “lawyer” (the
deponent) and that:
17.4.1
Moloko’s husband (the deponent) was at the time the director
of
Cedar Lodge, and consequently he would have to sign the relevant
documents. This is confirmed by an extract of the records of
the
CIPC, annexed hereto as “AA1”. “AA1” confirms
that the deponent only resigned as a sole director of
Cedar Lodge on
22 October 2018 and that Moloko was then appointed as sole director
on the same day;
17.4.2
upon acceptance of the Thusano’s quote, which Moloko asked
to
include the Toshiba multi-functional printer, Bunting was informed
that the rental agreement would be concluded with LLR Propertys
(Pty)
Ltd (the 1st Applicant), whose sole director was also the deponent.
This is confirmed by an extract of the records of the
CIPC, a true
copy of which is enclosed as “AA 2”. As a consequence,
the deponent would also have to sign the relevant
agreements;
17.5 Bunting
explained to Moloko that the installation of the PABX would
necessitate that “Cedar Lodge” also conclude
a separate
services agreement in respect of telephony services and the porting
of Cedar Lodge’s telephone numbers, without
which the PABX
would not be operational. Telephony services were required to enable
“Cedar Lodge” to use the PABX.
Bunting suggested that
Huge Telecom (Pty) Ltd (a company related to Thusano) concludes a
telephony services agreement with the
first Applicant. Arrangements
could then be made for the installation of the PABX and the porting
of Cedar Lodge’s phone
number;
17.6 the first
Applicant subsequently concluded a services agreement with Huge
Telecom, on 17 July 2018. A true copy of the
services agreement is
annexed hereto as “AA 3” (“the services
agreement”);
17.7 the services
agreement included a debit order authorisation in respect of the
payment of the amounts due under the services
agreement, by the first
Applicant;
17.8 the deponent,
in his capacity as the 1st Applicant’s sole director, signed
the services agreement and authorised
the debiting of Huge Telecom of
the first Applicant’s account at FNB, cheque account number
[....], held at Randburg branch
(“the Randburg FNB account”);
17.9 Bunting made
arrangements with Moloko for the installation of the PABX. The
installation commenced on 19 July 2018. Thusano’s
job card in
respect thereof is annexed hereto as “AA4.1”. Thusano’s
technicians attended at Cedar Lodge on numerous
subsequent occasions,
thereafter, as is evidenced by its job cards, annexed hereto as “AA
4.2” to “AA 4.8”;
17.10
during the installation of the PABX, and when Bunting attended
at
Cedar Lodge to obtain the signed agreements for the PABX and the
multi-functional printer from Moloko, the deponent was present.
He
remarked to Bunting that he was impressed with the work being
performed by Thusano’s technicians who, as Bunting, were
wearing corporate branded “Thusano” shirts;
17.11 a month later, the
third rental agreement, in respect of the Wi-Fi equipment, was
concluded on 29 August 2018. As before,
it was signed by first
Applicant, represented by the deponent;
17.12
as part of Thusano’s business arrangement with the
Sunlyn, to
which all rental agreements concluded by Thusano was
(sic)
ceded on 16 March 2017, Thusano required written and signed
confirmation from its customers that the equipment forming the
subject
matter of the agreements were properly installed. Such
confirmation was obtained from the first Applicant, represented by
the deponent.
Such notifications are annexed to the Respondent’s
particulars of claim as “SAS1d”; “SAS 3d” and
“SAS 5d”. Internally, the Respondents referred to the
latter documents as “ATP’s” (Authority to pay)
as
Sunlyn would not pay Thusano without the existence of an ATP in
respect of particular agreement ceded to it;
17.13
Bunting consequently disputes the deponent’s allegations
that
the Applicants have “no knowledge” of the agreements and
that the deponent’s signatures thereon are fabrications.
Apart
from meeting Bunting, wearing a corporate branded “Thusano”
shirt, at Cedar Lodge the deponent:
17.13.1
was required to and in fact concluded the required services agreement
with
the Huge Telecom, in terms of which payment was made against the
1st Applicant’s Randburg FNB account;
17.13.2
signed the agreements, in multiple places, which similarly included
debit
order authorisations against the 1st Applicant’s Randburg
FNB account;
17.13.3
witnessed installation of at least the PABX, with which he was
“impressed”;
17.13.4
signed the “ATP’s” in respect of the PABX, the
Toshiba
and the Wi-Fi equipment.”
19.
In the light of the aforegoing details provided in the respondent’s
answering
affidavit and the manner in which they were responded to by
the applicants in their replying affidavit, respondent’s
counsel
made the following submissions in his heads of argument:
“
16.
The Respondent disputes that allegation of fraud:-
16.1 three (3)
separate rental agreements were concluded. Each agreement requires at
least seven (7) signatures on behalf
of the 1st Applicant, apart from
the 2nd Applicant's signature as guarantor;
16.2 the Applicants
terse denial of signing "the rental agreement plainly glosses
over this abovementioned material feature
of the agreements. The
denial also fails to address the conclusion of the agreements (and
the guarantees) on three (3) separate
days;
16.3 Thusano's
representative, Mr. Grant Bunting, furnishes as
(sic)
affidavit regarding
the circumstances surrounding the
conclusion
of the agreements:-
16.3.1
the previous owner of Cedar Lodge referred Thusano to the 1st
Applicant in June 2018;
16.3.2
Thusano attended at Cedar Lodge to furnish a quote;
16.3.3
Bunting was met by and dealt with the 2nd Applicant's wife, "Moloko";
16.3.4
the 1st Applicant also concluded a separate telephony services
agreement with Huge Telecom to port the lodge's phone numbers failing
which the PABX would not be operational;
16.3.5
the payments under the latter agreement were made via direct debit
against the Randburg FNB cheque account;
16.3.6
the rental is due under the three (3) rental agreements were also
paid by direct debit against the same Randburg FNB cheque account;
16.3.7
Bunting (who wore a corporate branded "Thusano" shirt)
was
present at the installation of the PABX. The 2nd Applicant spoke to
him remarking how "impressed" he was with Thusano's
work;
16.3.8
Thusano's technicians attended Cedar Lodge on numerous occasions
to
perform the installation and delivery as evidenced by Thusano's job
cards;
16.3.9
apart from the three (3) rental agreements, . the Applicants signed
three (3) "ATP's" (authority to pay) failing which Thusano
would not receive payment;
16.4 the rentals
payable under the three (3) agreements were subsequently paid by way
of direct debit against the 1st Applicant's
Randburg FNB account for
approximately nine (9) months;
16.5 Significantly,
Cedar Lodge's manager sent an email (copying the2nd Applicant's wife)
on 13 May 2020, wishing to cancel
the agreements "because of the
current excruciating pressure our industry is having with the current
Covid-19 pandemic".
17. In
summary, the fraud-point is contradicted:
17.1 by the number
of the agreements and their form, requiring multiple signatures on
three separate occasions, apart from
the three (3) guarantees;
17.2 the separate
signing by the 1st Applicant of three (3) ATP's on finalisation
and delivery of the equipment;
17.3 the
circumstances surrounding the signing of the agreements, and the
separate agreement concluded with Huge Telecom;
17.4 the subsequent
payment, for approximately nine (9) months, by way of direct debit
against the 1st Applicant's Randburg
FNB account, of the rentals and
the services payments;
17.5 the written
request to cancel the agreements on 13 May 2020 due to the pandemic.
20.
In reinforcement of the submission contained in paragraph 17.1 of the
respondent’s
heads quoted above, the following point was made
in a footnote:
The 2nd Applicant did not
deny signing the guarantees in the Founding Affidavit, when this is
pointed out in the Answering Affidavit
(paragraph 27 at [012-15], the
2nd Applicant in the Replying Affidavit states "I deny having
signed
the Guarantee
to each agreement and I deny that
I have bound myself jointly and severally as co-principal debtor to
Thusano, or its cessionaries."
21.
In further support of his aforementioned submissions, respondent’s
counsel
also referred to the following extracts from judgments in
point:
“
18.1
I
n
Kassim
Brothers
(Pvt)
Ltd
v
Kassim
and
Another
[1]
by Hathorn
ACJ:
"As in so many
instances in the affidavits filed by' or on behalf of the defendants,
it is not so much
what is
said in
them: it is
what is not said in t
hem."
(Emphasis added);
18.2 in
Standard
Bank
of
SA
Ltd
v
El-Naddaf
and
Another
[2]
by Marais
J:
" The authority of
the judgment of Colman J (and common sense) indicate that bona tides
cannot be demonstrated
by
merely making
a
bald
averment
lacking
in
any
detail
. To hold that such
bald
averment is
sufficient
to
demonstrate
bona tides is a classic
oxymoron.
It
effectively negates the requirement
that
the
Court be satisfied
that
the
applicant
has
a bona fide defence.
It
could
with equal validit
y
be
held
that a
mere
statement
by
an
applicant
that his
defence
is
bona
fide
would
be
sufficient which
is
manifestly absurd
.
The
requirement
that detail
ade
quate in the
circumstances
be provided
applies
with
particular
force
in
a
case
like
the present one
where a clear
and
unambiguous
document
has
been signed by
a
literate
p
erson
who
relies
(app
arently) on
having
been
in some
wa
y
misled
b
y
the
plaintiff
.
Without
requiring
the
defendant to
prove
her
case
or
to
show
a
balance
of
probabilities in
her favour or to
provide
copious evidence, I would nevertheless firmly say that
it
must be
inadequate
for a defendant, required to
demonstrate
a
bona fide
defence, to make bald averments
without
givin
g
them
some
of
the
flesh
and
colour
provided bv
a
degree of
detail. The degree of detail
must depend
on
the circumstances, but I
reiterate that in
circumstances like the
p
resent for a defendant
merel
y to make the averment 'I was
misled by the plaintiff' is inadequate
to
demonstrate
bona fides
and
insofar
as the
Grant case
may suggest
otherwise
I
am
in respectful disagreement."
(Emphasis added)
22.
Adv Botha’s heads of argument then concluded with the following
submissions:
19. The
following aspects of the Applicants' application expose the absence
of a bona fide defence:
19.1 both the
founding and replying affidavits are silent about the delivery and
installation of the rented equipment. The
Applicants respond with a
bald denial that installation and delivery was accompanied by three
(3) signed "ATP"s from
the 1st Applicant;
19.2 the
Applicants merely "note":-
19.2.1
the allegations and references to numerous job cards in relation
to
the installation and delivery of the equipment, on numerous
consecutive days;
19.2.2
similarly, Mr. Grant Bunting's affidavit, confirming that he
in
fact met
the 2nd
Applicant whilst
wearing
a
"Thusano"
branded shirt, is
"noted'
;
[3]
19.2.3
the dispatch of the letter requesting cancellation of the agreements
during May 2020.
20.
These latter aspects plainly negate the notion that the Applicants
"had no knowledge" of the agreements.
21.
Tellingly, it is stated in the replying affidavit that the cedent had
dealt with Moloko "...from the
get-go and
it ought not be
presumed
that I automatically am priv
y
of
all her arran
gements
with other people
...".
22.
Curiously, no affidavit is tendered by Moloko, to provide "...some
of the flesh and colour provided by
a degree of detail....",
apart from the vague and ambiguous manner in which the Applicants'
defence is presented.
23. The
continued payment of the rentals until the breach, and the subsequent
request for cancellation in May
2020, contradicts the notion that the
Applicants had "no knowledge" of the agreements.
24.
Moreover, the monthly rentals were not insignificant. The rental in
respect of the PABX was R5,520 per month.
The monthly rental in
respect of the Toshiba E-studio was R2,185.00. The monthly rental in
respect of the Ubiquity wi-fi equipment
was R3,450.00.
25. The
2nd Applicant's response to the aforementioned debits (totalling
R11,155.00 per month) is:-
'[57] I have a lot of
debit orders which run against LLR's bank account as it is a
busines.s account. [58] I was unaware of this
debit order running
against LLR for quite some time. As soon as it came to my attention
that this specific debit order, (which
I learn now that the
respondents are the creditors under this action), I cancelled and
reversed the debit orders."
26. It
has a hollow ring to it.”
23.
Applicants’
counsel, adv Peter, emphasised in his heads of argument the
applicable principles as they appear from the following
dictum in
Sanderson
Techitool v Intermenua:
[4]
“
In Grant v
Plumbers (Pty) Ltd
1949 (2) SA 470
(O) at 476 BRINK J summarised
the effect of South African decisions. An applicant who claims relief
under this Rule, should comply
with, inter alia, the following
requirements. His application must be bona fide and not made with the
intention of merely delaying
plaintiff's claim and he must show that
he has a bona fide defence to plaintiff's claim. It is sufficient if
he makes out a prima
facie defence in the sense of setting out
averments, which if established at the trial, would entitle him to
the relief asked for.
He need not deal fully with the merits of the
case or produce evidence that the probabilities are actually in his
favour.”
24.
He also
drew attention to the following passage from the judgment in
RGS
Properties (Pty) Ltd v eThekwini Municipality
[5]
relevant
to whether a
bona
fide
defence has been shown by an applicant for rescission of a default
judgment:
“
[12] I may add to
this principle that judgment by default is inherently contrary to the
provisions of s 34 of the Constitution.
The section provides that
everyone has a right to have any dispute that can be resolved by the
application of law decided in a
fair public hearing before a court,
or, where appropriate, another independent and impartial tribunal or
forum. Therefore, in my
view, in weighing up facts for rescission,
the court must on the one hand balance the need of an individual who
is entitled to
have access to court, and to have his or her dispute
resolved in a fair public hearing, against those facts which led to
the default
judgment being granted in the first instance. In its
deliberation the court will no doubt be mindful, especially when
assessing
the requirement of reasonable cause being shown, that while
among others this requirement incorporates showing the existence of
a
bona fide defence, the court is not seized with the duty to evaluate
the merits of such defence. The fact that the court may
be in doubt
about the prospects of the defence to be advanced, is not a good
reason why the application should not be granted.
That said however,
the nature of the defence advanced must not be such that it prima
facie amounts to nothing more than a delaying
tactic on the part of
the applicant.”
25.
During the hearing, having considered the affidavits and heads of
argument,
I raised with Adv Peter my
prima facie
concerns
about the absence of detail and explanations in the applicant’s
affidavits.
26.
At the outset Adv Peter in oral argument drew attention to
contradictions between
the particulars of claim and the respondents’
answering affidavit. In the particulars of claim the person
representing Thusano
is alleged to be Jade Christopher, whereas in
the respondents’ answering affidavit it is alleged that “
In
concluding the agreements, Thusano was represented by Mr Grant
Bunting
“.
27.
Adv Peter then emphasised that what is required at the rescission
stage is to
set out a prima facie case which, if proved at the trial,
would be a defence. He submitted that in evaluating what the claimant
says I should not place myself in the position of the trial court
hearing the case. The court considering rescission, he submitted,
merely has to consider whether fraud would constitute a defence to
the claim, that fraud is a defence; whether or not the applicant
could prove and succeed on it at the trial, is a different
consideration. He stressed that the only prejudice to the respondent
would be a delay of some months in the execution of its order,
whereas it would be final for the applicants. Consequently, the
court
should not shut the door to the applicants so that they are given an
opportunity of proving the defence in a trial. He submitted
that in
considering an application for rescission, I should apply the same
standard as would be applicable in considering an exception,
namely,
that where a pleading can be substantiated by the leading of evidence
it would not be excipiable and that, similarly, in
the case of
rescission, the difficulties which I had raised should be fully
ventilated at trial where evidence would be led.
28.
In the light thereof and being conscious of the implications for the
second
applicant as an attorney, I carefully re-assessed the
respective cases of the parties to ensure that in evaluating the
respective
cases and in exercising my discretion, I would correctly
apply the applicable legal principles.
29.
The exception approach contended for is not apposite. In the present
case the
issue is not merely whether the applicants have shown that
they have a defence. If the second applicant did not sign the rental
agreements and the guarantees, that would be a defence. The issue
here is separate from the requirement to show a defence. The
applicants must satisfy the Court that the defence raised is
bona
fide
.
30.
The distinction between merely showing a defence and what is
additionally required
in order to satisfy the Court that the defence
raised is bona fide, was well articulated by Colman J in
Breytenbach
v Fiat SA (Edm) Bpk
as explained by Marais J in
Standard
Bank
of
SA
Ltd
v
El-Naddaf
and
Another
(supra) at pages 784-785 in the passages preceding those quoted
in the respondent’s heads.
“
I wish to add
something in regard to the sketchiness of the second defendant's
affidavit. It is true that in Grant v Plumbers (Pty)
Ltd
1949
(2) SA 470
(O) Brink J at 476-7 said that:
'He must show that he has
a bona fide defence to the plaintiff's claim. It is sufficient if he
makes out a prima facie defence in
the sense of setting out averments
which, if established at the trial, would entitle him to the relief
asked for. He need not deal
fully with the merits of the case and
produce evidence that the probabilities are actually in his favour.'
I am aware that this was
approved by Zulman AJ (as he then was) in Federated Timbers Ltd v
Bosman NO and Others
1990 (3) SA 149
(W) at 155 et seq. I also
accept the statement by Zulman AJ that it is not necessary for the
defendant to actually prove his case.
Clearly not.
But I find a degree of
contradiction in the statement by Brink J that on the one hand the
applicant must show that he has a bona
fide defence and his statement
that it is sufficient if the applicant sets out 'averments which, if
established at the trial, would
entitle him to the relief asked for'.
It seems to me that the question of whether the applicant has shown
that he has a bona fide
defence must be decided against the
background of the full context of the case. In a case such as this,
where the applicant for
rescission admits having signed a clear
suretyship, I feel that it cannot be sufficient to establish bona
fides if she baldly states
'the plaintiff misled me as to the
contents of the document I was signing' without saying how the
plaintiff misled her. I am at
a loss to understand how, if so bald
and sketchy an averment is made, a court can be satisfied as to the
bona fides of an applicant
who is in a position to set out much more
clearly (without requiring massive detail) how she was misled and by
whom on behalf of
the plaintiff.
It seems to me that the
situation is analogous to that under Rule 32(3)(b) of the Uniform
Rules of Court, which requires that the
Court must be satisfied that
the defendant has a bona fide defence. This subrule was considered in
Breitenbach v Fiat SA (Edms)
Bpk
1976 (2) SA 226
(T). The
relevant portion of the subrule requires the defendant to 'satisfy
the Court by affidavit . . . that he has a bona fide
defence to the
action; such affidavit . . . shall disclose fully the nature and
ground of the defence and the material facts relied
upon therefor'.
It will immediately be seen that the second portion of the sentence
contains requirements different to those specifically
required in an
application for rescission. However, Colman J deals with the
requirement that the defendant must satisfy that his
defence is bona
fide as
(a)
separate from the requirement that he must satisfy the Court that he
has a defence and
(b)
separate from the requirement that he 'shall I disclose fully the
nature and grounds of the defence
and the material facts relied upon
therefor.
At 227 in fine - 228A
Colman J says:
'If, therefore, the
averments in a defendant's affidavit disclose a defence, the question
whether the defence is bona fide or not,
in the ordinary sense of
that expression, will depend upon his belief as the truth or falsity
of his factual statements. . . .'
That paragraph is
preceded at 227G-H by the statement that the rule requires that the
defendant
'set out in his affidavit
facts which, if proved at the trial, will constitute an answer to the
plaintiff's claim. If he does not
do that, he can hardly satisfy the
Court that he has a defence. . . . On the face of it, bona fides is a
separate element relating
to the state of defendant's mind.'
This makes it quite clear
that Colman J regarded the requirement that bona fides be
demonstrated as separate and distinct from the
requirement that the
affidavit 'shall disclose fully the nature and grounds of the
defence' etc, even though there would appear
to be some inevitable
overlapping between the two requirements. That Colman J regarded bona
fides as a separate requirement, and
was dealing with that only in
the last sentence of the following passage, appears from the full
passage itself. At 228B-E the relevant
passage occurs and it reads:
'Another provision of the
subrule which causes difficulty, is the requirement that in the
defendant's affidavit the nature and the
grounds of his defence, and
the material facts relied upon therefor, are to be disclosed
''fully''. A literal reading of that requirement
would impose upon a
defendant the duty of setting out in his affidavit the full details
of all the evidence which he proposes to
rely upon in resisting the
plaintiff's claim at the trial. It is inconceivable, however, that
the draftsman of the Rule intended
to place that burden upon a
defendant. I respectfully agree, subject to one addition, with the
suggestion by Miller J in Shepstone
v Shepstone
1974 (2) SA 462
(N) at 366-467, that the word ''fully'' should not be given its
literal meaning in Rule 32(3), and that no more is called for than
this: that the statement of material facts be sufficiently full to
persuade the Court that what the defendant has alleged, if it
is
proved at the trial, will constitute a defence to the plaintiff's
claim. What I should add, however, is that if the defence
is averred
in a manner which appears in all the circumstances to be needlessly
bald, vague or sketchy, that will constitute material
for the Court
to consider in relation to the requirement of bona fides.'
The last two sentences
make it clear that Colman J separates the requirement to show bona
fides and the requirement to 'disclose
fully the nature and grounds
of the defence and the material facts relied upon therefor'.
I stress the distinction
drawn by Colman J because, since he does not rely upon the other
arguments of the Rule when he lays down
what is required to
demonstrate bona fides, I am satisfied that his remarks regarding
what is required to demonstrate that a defence
is bona fide are of
equal application to applications for rescission where the applicant
is also required to demonstrate that he
has a defence which is bona
fide.
In my view the concluding
sentence in the passage that I have quoted is of full application to
applications for rescission. In my
view, where it is required that
bona fides be demonstrated, this cannot be done by making a bald
averment lacking in any detail.
Insofar as Grant's case
may suggest that a mere bald averment 'which appears in all the
circumstances to be needlessly bald, vague
or sketchy' is sufficient
to demonstrate bona fides, I am of the view that it is clearly wrong
and I decline to follow it.”
31.
In the present case the denials and averments in the applicant’s
founding
affidavit are unacceptably bald seen in the light of the
undisputed facts as they emerged from the applicants’ replying
affidavit.
32.
The founding affidavit deposed to by the second applicant contains no
more than
a general denial of knowledge “
of the rental
agreement said to be concluded with the Respondents
”, a
general averment that the “
agreements relied upon by the
Respondents for their cause of action are fraudulent
”, a
denial that those agreements were “
concluded by me or any
representative of the First Applicant
” and a general denial
of knowledge of Thusano. In effect this also amounts to an implicit
denial of any awareness that a
PABX and Wi-Fi system had been
installed in Cedar Lodge. He concludes by stating “
Moreover,
the only explanation I can offer the court with regards to what
appears to be my signature on the alleged agreements is
that it is an
obvious and pure falsification my signature and subsequently
rendering all three alleged agreements fraudulent. I
submit that the
Respondent have a pure and clear intention to mislead the court
”.
33.
In considering what one would expect the applicants to have set out
in the founding
affidavit it is necessary to bear in mind the second
applicant’s state of knowledge at that time based on what
turned out
to be not disputed by the applicants in their replying
affidavit.
34.
It is not in dispute that the second applicant was the sole director
of Cedar
Lodge until 22 October 2018 and that from 22 October 2018
his wife became a director of Cedar Lodge.
35.
It is also not denied, but merely noted, that at the relevant times
the second
applicant’s wife was the manager of Cedar Lodge.
36.
It is not disputed that every month for some 9 months three debit
orders totalling
R11,155 were debited to the second applicant’s
FNB account as well as the debit orders for Huge Telecom and that the
last
payments on the three rental agreements were made, respectively,
on three consecutive months in January, February and March 2019
and
that, according to the second claimant, as soon as these debit orders
came to his attention, he “
cancelled and reversed
”
them.
37.
Also not denied by the second applicant, but merely noted, is that on
13 May
2020 an email was sent to Thusano by Deon Langa as “
Management
Cedar Country Lodge
” and which email was CCed to Moloko,
the second applicant’s wife who is described as “owner”
and who was
at that time the sole director of Cedar Lodge according
to the CIPC record. The relevant portion of the letter attached to
the
email reads as follows:
“
Effective (15 May
2020), I would like to cancel my contract for all Thudsano
telecommunication services which include Wi-Fi and
telephony. I am
cancelling the service because of the current excruciating pressure
our industry is having with the current Covid-19
pandemic. It is with
great regret that as Fidelity industry is only deemed to resume
operation at Level 1 as per the Government
laws and regulations.
It is impossible for us
to keep up with the previously arranged monthly instalment as we are
currently not making any revenue whatsoever.
For your reference, my
contract number is [....]/[....]
Owner: Moloko
Ramatshila-Mugeri-0817197137”
38.
In the circumstances, and where each of the three rental agreements
attached
to the particulars of claim included the signed debit order
authorisations to debit the first applicant’s FNB account, I
would have expected at least some explanations in the founding
affidavit to flesh out the general denials in order to demonstrate
the bona fides of the baldly alleged defence that the second
applicant’s signature had been falsified and the baldly alleged
lack of knowledge and awareness of the debit orders paid from first
applicant’s FNB account and of the installation of a
new PABX
and Wi-Fi system in Cedar Lodge of which he was then the sole
director.
39.
Even more problematic for the applicants is that, once the
circumstances surrounding
signing of the documents by the second
applicant and the installation of the PABX and Wi-Fi systems were set
out in detail in the
respondents’ answering affidavit, I would
most certainly have expected proper explanations in the replying
affidavit. However,
there were none.
40.
It beggars belief in such circumstances that the second applicant,
being the
sole director of Cedar Lodge and his wife being the
manager, would not have been aware of the installation of the new
PABX and
Wi-Fi system and that he was not aware of the debit orders
coming off his FNB account.
41.
The undisputed statement “
It is impossible for us to keep up
with the previously arranged monthly instalment
– –“does
not sit comfortably with the second applicant’s exculpatory
explanation of lack of awareness of
the debit orders when he states:
'[
57] I have a lot of debit orders which run against LLR's bank
account as it is
a
busines
.
s
account.
[58]
I
was
unaware
of
this
debit
order
running against
LLR
for quite
some
time. As
soon as it came to my
attention
that
this
specific
debit order, (which
I learn
now
that
the
respondents
are
the
creditors
under this action), I cancelled and reversed the debit orders."
Yet, no explanations were volunteered in the founding affidavit.
42.
It is to be expected that there must have been some discussions
between the
second applicant and his wife about what had been debited
to the first applicant’s FNB account to have caused him to stop
payment on each of the three debit orders after the last payments
were made, respectively, in January, February and March 2019
followed
about a year later by Cedar Lodge’s “management”
emailing Thusano on 13 May 2020 (about a week after
summons was
issued on 8 May 2020) stating that “
It is impossible for us
to keep up with the previously arranged monthly instalment
–
–“, an email which was copied to the second applicant’s
wife who was then sole director of Cedar Lodge.
Yet, the second
applicant provides no explanation whatsoever about any discussions or
to explain the circumstances surrounding
the cancellation of the
debit orders.
43.
I also would have expected him to have filed a supporting affidavit
from his
wife to explain what had happened and to explain how it
could possibly have happened that the second applicant had no
knowledge
or awareness of the installation or of the amounts being
debited from first applicant’s FNB account, contrary to the 13
May
2020 email complaining that “
It is impossible for us to
keep up with the previously arranged monthly instalment
–
–“.
44.
I would add that, given the large amount which had been incorrectly
(on the
second applicant’s version) debited to the first
applicant’s account, I would have expected steps to have been
taken
to reclaim the amount. However, the applicants’ founding
and replying affidavits are silent thereon from which I infer that
no
such steps were taken.
45.
Moreover, the views expressed by Marais J in the above quoted extract
from the
judgment in
El-Naddaf
(supra) in respect of a
“literate person”, must apply with even greater force
where, as in the present case, the second
applicant is an attorney.
Adv Peter submitted that all legal practitioners should not be judged
by the same standard as this would
be applying too strict an
approach. He submitted that the applicants should be given an
indulgence to have a further opportunity
of proving their defence in
a trial court.
46.
No doubt there would be instances where different standards might be
applicable
in judging the conduct of an attorney depending on his or
her particular experience or diligence. However, in the present case
a reading the answering affidavit where the detailed circumstances
were so clearly and glaringly spelt out, it would, in my view,
have
been plainly obvious to any legal practitioner that proper
explanations should be provided. Moreover, in the present case
there
is no evidence to suggest that the second applicant should be judged
by some lesser standard. On the contrary, his ID number
on the CIPC
search document shows that he is in his mid-40s as he was born in
1975. I would also have thought that he has some
business experience
given the sole directorship which he had in Cedar Lodge.
47.
In the absence of proper explanations, the second applicant’s
bald denials
and averments in the founding and replying affidavits
are not plausible.
48.
As against the aforegoing, I considered the significance and import
of the contradictions
which were highlighted in argument by adv
Peter, between the particulars of claim and the answering affidavit
as to the identity
of the person who represented Thusano in
concluding the rental agreements. In my view nothing turns on this
terminology. It seems
to me to be apparent from the context in which
the answering affidavit referred to Mr Bunting as representing
Thusano in “
concluding
” the agreements, that it
must be read in the context of the further details provided. Those
details show that he was the
person who came to the premises and had
all the agreements signed by the second applicant, clearly for
purposes of concluding the
rental agreements. Confirmation of this
can be seen in the documents themselves where his name appears as the
witness to the second
applicant signatures. In addition it can be
seen that the name of Jade Christopher appears as the director who
signed acceptance
of the rental agreements, thereby formally
concluding those agreements.
49.
In conclusion therefore, the unacceptably bald denials and averments
in the
applicants’ founding affidavit, particularly when
combined with the total absence of proper explanations in the
replying
affidavit, fall so far short of what is required to show a
bona fide
defence, that, in my view, the applicants had not
shown that the defence raised is
bona fide
.
50.
In so far as I have a discretion nevertheless to grant rescission
notwithstanding
my conclusion that the applicants had not shown that
their defence is bona fide, I decline to exercise that discretion in
favour
of the applicants. The second applicant, an attorney, had the
opportunity to provide the necessary fleshed out explanations in
reply and to submit a supporting affidavit from his wife. The fact
that he provided neither and persisted with no more than generalised
denials and averments, in my view, do not justify the exercise of a
discretion in favour of the applicants.
51.
During the hearing I invited submissions from adv Peter about my
prima facie
view that, if I were to refuse rescission on the grounds
that no bona fide defence had been proved, this would in effect mean
a
finding that the second applicant, an attorney and an officer of
the Court, has given false evidence in legal proceedings and that
in
such circumstances I should refer this judgment to the Legal Practice
Council to consider disciplinary proceedings against the
second
applicant.
52.
Adv Peter again emphasised his concern about the drastic and dire
consequences
for the second applicant, given that such a finding
would have been made on paper without his defence of fraud having
been fully
ventilated.
53.
However, I pointed out that the findings in this judgment would be
res inter alios acta
in any disciplinary proceedings where
findings would have to be made on the evidence before the
disciplinary tribunal.
Default
judgment void
ab origine
54.
I revert now to the issue of whether the default judgment is void
aborigine
by reason of the applicants’ claim in the replying
affidavit that the respondents were not entitled to rely on chosen
domicilia citandi et executandi
as the applicants had not
entered into any of the agreements.
55.
Given that I have found that the applicants have not shown that the
defence
raised is bona fide, it follows that respondents were
entitled to serve the combined summons on the first applicant at the
chosen
domicilia citandi et executandi.
Consequently, the
default judgment granted is not void ab origine as contended by the
applicants.
56.
Furthermore, with regard to service of the summons on the second
applicant,
insofar as there may have been service at an incorrect
address, this is, in my view, no reason for me to exercise any
discretion
in favour of the applicants given my finding that a bona
fide defence has not been shown.
ORDER:
1.
The application is dismissed.
2.
The Applicants are ordered jointly and severally to pay the
costs of
this application including the costs of counsel.
3.
This judgment is to be referred to the Legal Practice Council
to
consider disciplinary proceedings against the second applicant.
Johann
Gautschi AJ
24
May 2021
Date
of judgment: 24 May 2021
Date
of hearing: 3 May 2021
Counsel
for applicants: Adv L Peter
Attorneys
for applicants: Ramatshila-Mugeri Attorneys Inc
Counsel
for respondents: Adv JG Botha
Attorneys
for respondents: ODBB Attorneys
[1]
1964
(1) SA 651 (SR)
[2]
1999
(4) SA 779
(W) at 785J to 786E
[3]
This
submission is not correct. Paragraph 62 which is referenced in the
heads of argument contains a denial. It is in response
to paragraph
18 of the answering affidavit referring to buntings confirmatory
affidavit being annexed that the replying affidavit
stated "noted".
[4]
1980 (4) SA
573 (W)
[5]
2010 (6) SA
572
(KZD) at 57H-576D