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[2012] ZAECPEHC 75
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Mbane v Eastern Cape Development Corporation (3452/2010) [2012] ZAECPEHC 75 (26 April 2012)
7
IN THE HIGH COURT OF
SOUTH AFRICA
EASTERN CAPE, PORT
ELIZABETH
Case no: 3452/2010
Date heard: 26.4.2012
Order given: 26.4.2012
In the matter between:
KOLEKA NOMSA MBANE
..............................................................................
Applicant
vs
EASTERN CAPE
DEVELOPMENT
CORPORATION
...........................................................................................
Respondent
REASONS FOR JUDGMENT
TSHIKI J:
A) INTRODUCTION
[1] On 4
th
August 2006 in Port Elizabeth, applicant (third defendant in the main
action) herein bound herself as surety in favour of the respondent
for a sum of R350 000.00 which the first defendant (Anix Trading
481 CC) in the main action, owed to the respondent. As surety
applicant renounced all benefits from legal exceptions,
inter
alia
, the following ‘
non-numeratae pecuniae, non causa
debiti
, revision of accounts, no value received, errore calculi
and
de duobus vel pluribus reis debendi
’.
[2] Applicant and one
Dumalisile Vukile Mbane, the second defendant in the main action,
were members of the first defendant close
corporation being the main
juristic person to which the respondent (plaintiff in the main
action) lent and advanced the sum of
R350 000.00 of which
applicant stood surety for the debt. Applicant bound herself as
surety and co-principal debtor in solidum
with the principal debtor
Anix Trading 481 CC for the due performance by the principal debtor
of its obligations in favour of the
respondent. When the first
defendant failed to pay the respondent’s debt, respondent sued
the close corporation and its members
for payment of the amount due
and payable and subsequently obtained judgment against them on 14
th
January 2011.
[3] When applicant became
aware of the judgment she applied for its rescission which
application I dismissed with costs on the 26
th
April 2012
with reasons for my decision to follow at a later stage. When I was
preparing my judgment thieves opened my vehicle
and stole my
briefcase which contained,
inter alia
, the file in these
proceedings. There was, therefore, a further delay in my preparation
for my reasons. Fortunately, the file in
this case was found and was
brought to the office of the registrar who brought it to me. I was,
therefore, able to finally prepare
my reasons for judgment which now
follow hereunder.
[4] When the application
for judgment was argued before me Mr. Dyer appeared for the applicant
and Mr Moorhouse represented the
defendant.
B) ISSUES
[5] Applicant’s
contention herein is based on a number of points which are:
[5.1] That she only
became aware of the judgment sought to be rescinded on 18
th
March 2011.
[5.2] that the action
against her had been prematurely instituted and that respondent
(plaintiff) should have first invoked the
provisions of section 129
(1) of the National Credit Act 34 of 2005 (the Act) before
instituting the action proceedings against
her.
[5.3] Secondly, as
applicant was a surety who had not excluded the legal exception known
as
beneficium excussionis
therefore respondent had not yet
excussed
the first defendant in the main action.
[5.4] Thirdly, applicant
contends that respondent had sought and obtained judgment for the
incorrect amount in the main action.
This is so, as she contends,
because only the sum of R200 000.00 had been received by the
first defendant.
[6] In its opposition of
the application for rescission of judgment, respondent contends as
follows:
[6.1] That applicant has
failed to show good cause for the rescission of the judgment as she
has not presented a reasonable and
acceptable explanation for her
default and that she has also failed to show that she has a
bona
fide
defence to the main action a defence which should carry some
prospect of success on the merits.
[6.2] That the
applicant’s reliance on section 129 (1) the provisions of the
National Credit Act 34 of 2005
is of no application in the present
proceedings because the principal debt herein was higher than the
threshold prescribed by
section 7
(1)(b) and
section 4
(1)(b) read
with sections 9 (4) of the Act.
C) REASONS FOR JUDGMENT
[7] I would have had no
reason to refuse respondent condonation for having filed its
answering papers out of time that is outside
the 15 days period
provided in Rule 6 (5)(d)(ii). This is so also in view of the fact
that applicants do not appear to be seriously
opposing the
application for condonation sought by respondents. The rule gives the
Court a wide discretion to either grant or refuse
the application.
Having heard the proffered reason for the late filing of the relevant
papers I have no reason to refuse the application
(see
Nedcor
Investment Bank Ltd v Visser NO and Others
2002 (4) SA 588
(T). The explanation given by the respondent for the late filing of
the papers appears to be
bona fide
and not patently unfounded
and has not caused any prejudice to applicant.
[8] In terms of common
law a Court can only rescind a judgment obtained on default of
appearance if the applicant shows sufficient
cause for his or her
default. This entails two requirements which are:
[8.1] that the party
seeking relief must present a reasonable and acceptable explanation
for his or her default; and
[8.2] that on the merits
such a party has a
bona fide
defence which,
prima facie
,
carries some prospect of success (see
Chetty v Law Society
Transvaal
1985 (2) SA 756
at 765 A-C).
[9] It follows that the
applicant has to prove both requirements and not only one of them. In
the present case applicant’s
explanation in her founding
affidavit has to be evaluated to establish whether she has in fact
complied with the common law requirement
aforesaid.
[10] Applicant’s
contention that the respondent should have to first proceed in terms
of section 129 (1) of the Act has to
be evaluated. Firstly in view of
the provisions of section 7 (1)(b) read with sections 4 (1)(b) and 9
(4) of the Act the debt in
issue is excluded. The amount in issue is
higher than the limit provided for by the Act which is more than the
R250 000.00
provided for in the Act. In this case the principal
debtor is a juristic person and that the provisions of the Act do not
apply
to a credit agreement in terms of which the consumer is a
juristic person whose asset value or annual turnover at the time of
the
agreement was made equals or exceeds the threshold value
(currently R1 000 000.00) determined by the Minister
responsible
for consumer credit matters in terms of section 7 (1) of
the Act. Secondly,
section 4
(1)(b) of the
National Credit Act does
not apply to a credit agreement:
[10.1] which is a large
agreement as envisaged in
section 9
(4)(b) read with
section 7
(1)(b)
of the
National Credit Act, if
the “principal debt” under
the transaction equals or exceeds the amount of R250 000.00 as
determined in the Government
Notice 713 of 1 June 2000; and
[10.2] in terms of which
the consumer is a juristic person, whose asset value or annual
turnover, is at the time the agreement was
made was below the
threshold value of (currently R1million) determined by the Minister.
[11] The above facts
which are relied upon by respondent have not been refuted by the
applicant and the debt in issue is R350 000.00.
It, therefore,
follows that the principal debt exceeds the threshold of R250 000.00
thus rendering the aforementioned provisions
of section 129 (1) of
the Act not applicable.
[12] In the suretyship
agreement applicant herein bound herself as surety and co-principal
debtor in solidum, jointly and severally,
with the first defendant
(principal debtor) in the main action for the amount owed by it to
respondent. The effect of this is that
“generally the only
consequence ... that flows from the surety who is also undertaking
liability as a co-principal debtor
is that
vis-a-vis
the
creditor he thereby tacitly renounces the ordinary benefits available
to a surety, such as those of excussion and division,
and he becomes
liable jointly and severally with the co-principal debtor”.
(See
Neon and Cold Cathode Illumination (Pty) Ltd v Ephron
1978 (1) SA 463
(A) at 472 B-C,
Canex’s the Law of
Suretyship
6
th
ed p 57.)
[13] Applicant herein has
specifically renounced the benefits of excussion and division and
bound herself as surety and co-principal
debtor. It, follows,
therefore that the debt becomes enforceable against her at the same
time as the principal debtor. Applicant
therefore cannot rely on the
mentioned benefits in order to escape liability.
[14] It has also been
contended by applicant that respondent had sought judgment for an
incorrect amount of money as only the sum
of R200 000.00 had
been received by the first defendant. This contention, in my view,
has been adequately addressed by the
respondent in its answering
affidavit and I have no reasons to prefer the version of the
applicant especially in view of the decision
in
Plascon-Evans
Paints Ltd v Van Riebeeck Paints (Pty) Ltd
[1984] ZASCA 51
;
1984 (3) SA 623
(A). The applicant’s contention in this regard is hereby
rejected as having no substance at all.
[15] On the above
analysis of the facts and law I am of the view that the applicant
herein has no
bona fide
defence to the respondent’s main
action and therefore her application for rescission of judgment has
no merit. She, therefore,
has not proffered a
bona fide
defence on the merits of the respondent’s claim.
[16] It is, therefore,
for the above reasons that I dismissed with costs the applicant’s
application for rescission of judgment.
_________________________
P.W. TSHIKI
JUDGE OF THE HIGH COURT
Counsel for the applicant
: Adv Dyer
Instructed by : Laubscher
Attorneys
PORT ELIZABETH
Counsel for the
respondent : Adv Moorhouse
Instructed by : Boqwana
Loon & Connellan Inc
PORT ELIZABETH