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2024
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[2024] ZAFSHC 65
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Bloem water v Lesedi Civil Construction CC (5850/2021) [2024] ZAFSHC 65 (5 March 2024)
IN THE HIGH COURT
OF SOUTH AFRICA
FREE
STATE DIVISION, BLOEMFONTEIN
Case No.
5850/2021
Reportable: YES/NO
Of Interest to other
Judges: YES/NO
Circulate to Magistrates:
YES/NO
In
the matter between:
BLOEM
WATER
Applicant
and
LESEDI
CIVIL CONSTRUCTION CC
Respondent
In
re:_
LESEDI
CIVIL CONSTRUCTION CC
Plaintiff
and
BLOEM
WATER
Defendant
JUDGMENT
BY
:
VAN RHYN, J
HEARD
ON:
1 FEBRUARY 2024
DELIVERED:
5 MARCH 2024
[1]
This is an application for rescission of a judgment granted by Daniso
J on 12 May 2022 in favour of
the respondent against the applicant in
default of an appearance by the former to defend the action
instituted by the respondent.
[2]
The applicant is Bloem Water, a water services institution
established in terms of section 28 of the
Water Service Act
[1]
.
The applicant took over Sedibeng Water, a local government and legal
entity as contemplated in terms of the provisions of section
151 of
the Constitution of the Republic of South Africa and section 2 of the
Local Government: Municipal Systems Act
[2]
.
Sedibeng Water has been disestablished by notice in the Government
Gazette, effective from 26 July 2022.
[3]
The respondent is Lesedi Civil Construction CC (Registration Number
2005/103344/23) a close corporation
with its main place of business
situated at Klerksdorp. On 2 March 2020, Sedibeng Water appointed the
respondent to provide water
for a drought relief program to the towns
of Cornelia and Frankfort situated within the Mafube Local
Municipality, Free State Province.
The respondent was required to
deliver the water per water tankers from 5 March 2020. The
appointment was accepted in writing by
a member of the respondent on
16 March 2020.
[4]
The scope of work entailed that the respondent supplied water at a
specified daily rate of R4 680.00
for a period of two months at
a contract sum of R1 313 208.00, including VAT. On 20 April
2020 the applicant, by way
of a written notice of extension of the
agreement to provide water, extended the agreement for a further
period of two (2) months.
The termination date was set on 30
June 2020 in the letter dated 20 April 2020. The extension of the
agreement to provide
water per tanker services was accepted in
writing by a member of the respondent on 11 May 2020.
[5]
The respondent issued an invoice dated 26 June
2020 to the applicant in the amount of R688 890.00, which
amount
was settled by the applicant on 18 November 2020. The respondent
issued two (2) further invoices, dated 27 July 2020 in
the amount of
R 608 166.00 and 28 August 2020 in the amount
of R 80 730,00 which, according to the
respondent, both remained
due and payable. The respondent (as the plaintiff in the main action)
issued summons against to applicant
(the defendant in the main
action) on 15 December 2021 for payment of the sum of R688 896.00
being the amount due and payable
by the applicant in respect of
Invoice 2020/34 dated 27 July 2020 and Invoice 2020/43 dated 28
August 2020 with interest
a tempora morae
from date of
summons.
[6]
The invoices appended to the summons reflect, on an itemised basis,
how the amount claimed had been
made up with a description of the
destination, being either Frankfort of Cornelia, the number of days,
unit price and the total
amount due and payable. The summons
was served on Mrs J E Kriel, the personal assistant to the chief
executive officer of
the respondent by the Sheriff, Bothaville on 14
January 2022. The applicant did not enter an appearance to defend.
The respondent
obtained judgment by default on 12 May 2022 against
the applicant for payment of an amount of R688 896.00, interest
on the
aforesaid amount and a cost order on the scale as between
attorney and client.
[7]
The applicant’s application for rescission is expressly brought
in terms of the provisions of Rule 31(2)(b)
of the Uniform Rules of
Court. The rule require that such applications must be brought within
20 (court) days of the defendant
having knowledge of the judgment.
In the matter at hand the applicant obtained knowledge of the
judgment when the court order
dated 12 May 2022 was served upon the
applicant on 15 June 2022.
[8]
Upon receipt of the order an internal investigation was conducted in
an attempt to ascertain whether
the invoices claimed were submitted
and paid or not. It is contended that the applicant was under the
impression that all the invoices
had been settled. The applicant
endeavoured to set up a meeting with the respondent with no success.
The respondent obtained a
warrant of execution against the applicant
of which the applicant became aware of during June 2023. On 4 July
2023 the Sheriff
proceeded to attach the assets of the applicant for
the intended sale in execution scheduled for 11 August 2023. In the
meantime,
the applicant requested that the matter be kept in abeyance
to finalize their investigation with the view of a possible
settlement.
[9]
The applicant contends that on 26 July 2022 Sedibeng Water was
disestablished under Government Gazette
No 47094 with the applicant
formally taking over which change resulted in some matters not being
resolved “… as quickly
as they may have been should the
water board not have gone through the magnitude of the administrative
changes it went through”.
Upon its internal investigation the
applicant concluded that the matter should have been defended by the
former Sedibeng Water,
however no further facts or information
pertaining to the findings through its internal investigation, nor
the date of the completion
thereof were divulged by the applicant.
[10]
On 17 July 2023 the applicant’s attorneys of record addressed a
letter to the respondent requesting to consent
to rescission of
judgment and an undertaking not to proceed with the process of
execution pending the finalisation of the rescission
application to
be brought by the applicant. The applicant thereafter requested a
further extension to ascertain whether matter
may be settled
amicable. The sale was scheduled to proceed on 11 August 2023.
Eventually the application for rescission was delivered
upon the
respondents on 3 August 2023.
[11]
On behalf of the applicant it was argued that it has paid the amount
due and owing to the respondent and has even
paid an amount in excess
of the amount in terms of the contract. In its founding affidavit it
is averred that an amount of R2 143 650.00
were paid to the
respondent with reference to a schedule of receipts and payments
appended as annexure “BW19”. According
to the applicant
it is “common cause” that the agreement to deliver water
to the drought stricken towns of Frankfort
and Cornelia was extended
until 30 June 2020. The respondent denies that the delivery of
services terminated on 30 June 2020. The
invoices delivered to the
applicant indicates that services were rendered by the respondent up
until 27 July 2020.
[12]
During argument and in its heads of argument the applicant relied
upon the provisions of Rule 42(1) and contended
that judgment was
erroneously sought or erroneously granted in the absence of the
applicant on the basis that the respondent did
not have a valid and
binding contract to enforce and claim payment from the applicant. It
is well established that Rule 42(1) caters
for a mistake in the
proceedings. Because it is a rule of court its ambit is entirely
procedural. The court is furthermore not
inclined to give a more
extended application to the rule.
[13]
The application is opposed by the respondent on the grounds that the
application is brought in terms of Rule 31(2)(b)
and not Rule 42.
Rule 42 is not applicable. In order to succeed it was incumbent on
the applicant in its application for condonation
and the rescission
application to show good or sufficient cause for the relief sought.
What sprung the applicant into action to
apply for the rescission of
the default judgment was the warrant of execution and the threat of
the nearing sale in execution.
The respondent denies that any
overpayment of monies occurred. The agreement was extended verbally
and the services were rendered
to the applicant.
[14]
The claim by the respondent was for payment of services rendered for
a period from March 2020 which period was
extended verbally by the
applicant when the initial period of two (2) months expired. The
summons was served upon the applicant
and no notice to defend was
filed by the applicant. Subsequent to the judgment by default being
obtained the order was also
delivered to the applicant on 15 June
2022. Therefore, the application must have been brought within 20
(court) days from 15 June
2022. The applicant only launched the
application for rescission more than 13 months later on 3 Augustus
2023, well outside the
prescribed time limit.
[15]
It is evident that the respondent delivered three (3) Tax Invoices
for the services rendered to the applicant during
the period when
water was delivered to Cornelia and Frankfort. Tax invoice No 2020/25
dated 26 June 2020 in the amount of R699 660.00
was paid on 18
November 2020. There is no indication that the applicant instructed
the respondent to cease the delivery of water
at any stage. The
applicant does not contend that delivery of water did not take place.
The applicant contends that the period
of service delivery
extended beyond the end of June 2020, which is in conflict with the
termination date of the agreement, being
30 June 2020. However, it is
clear from the correspondence between the parties that the delivery
of water only commenced at a later
stage and not on 2 March 2020. In
this regard it is noteworthy to have regard to the acceptance of the
offer which was on 16 March
2020 and not on 5 March 2020.
[16]
The
applicant, being the party which seeks the rescission order, bears
the
onus
of
establishing ‘good cause’. Rule 31(2)(b) requires ‘good
cause’ to be established before rescission of
default judgement
may be granted. The evaluation of the ‘good cause’
criteria has been applied consistently in relation
to rescission
applications, whether in terms of the common law or Rule 31(2)(b).
The phrases ‘good cause’ and ‘sufficient
cause’
are synonymous and interchangeable.
[3]
Swain J, in
Pansolutions
Holdings Ltd v P&G General Dealers & Repairs CC
[4]
held that a court, in evaluating 'good cause', has a wide discretion
in order to ensure that justice is done.
[17]
The absence of ‘wilful default’ does not appear to be an
express requirement under Rule 31(2)(b)
or under the common law. It
is, however clear law that an enquiry whether sufficient cause has
been shown is inextricable linked
to or dependent upon whether the
applicant acted in wilful disregard of court rules, processes and
time limits. In the case of
Grant
v Plumbers (Pty) Ltd
[5]
Brink J held that an applicant who applies for the setting aside of
default judgment should comply with the following requirements:
“
(a)
He must give a reasonable
explanation of his default. If it appears that his
default was wilful
or that it was due to gross negligence the Court should not come to
his assistance.
(b)
His application must be
bona fide
and not made with the intention of merely delaying
plaintiff’s claim.
(c)
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 and produce evidence that the probabilities are actually in
his favour”
[18]
Courts have held that where non-compliance with the Rules of Court
has been flagrant and gross an application
for condonation should not
be granted, whatever the prospects of success might be
[6]
.
The applicant has not explained Sedibeng Water’s failure to
take steps to defend the matter subsequent to the service
of the
summons on 14 January 2022. The only explanation tendered is that the
former Sedibeng Water received the summons and the
order and no
reason could be provided for Sedibeng Water’s failure to
deliver a notice to defend the action instituted by
the respondent.
Even after the applicant took over from Sedibeng Water on 1 August
2022, apart from requesting meetings with the
respondent to discuss
the matter, nothing was done to apply for the rescission of the
judgment by default.
[19]
In
Silber
v Ozen Wholesalers (Pty) Ltd
[7]
Schreiner, JA
held as follows:
"It is enough for
present purposes to say that the defendant must at least furnish an
explanation of his default sufficiently
to enable the court to
understand how it came about and to assess his conduct and motives."
[20]
The applicant was neglectful in not paying proper attention to the
summons which was served upon Sedibeng
Water and to investigate the
claim by the respondent immediately. It is furthermore evident that
the applicant, who took over from
Sedibeng Water shortly thereafter,
must have been aware of the claim for payment by the respondent. A
demand for payment prior
to the issue of the summons was issued by
the respondent. From the correspondence appended to applicant’s
founding affidavit
it appears as if the applicant investigated the
claim for payment by the respondent since June 2022 and by August
2023 had not
yet consulted with whomever was responsible at Sedibeng
Water for the verbal agreement to deliver water, the commencement
thereof,
the extension of the water delivery project or the payments
made or tax invoices received from the respondent.
[21]
The applicant did not refer to any information obtained to indicate
that the verbal agreement was not extended
past 30 June 2020. Apart
from a schedule of receipts and payments made to the respondent since
29 April 2020 up to 26 October 2020
indicating 4 different payments
and a further document with the heading “FS Drought Relief
Fund” indicating 5 payments
made to the respondent, no
explanation of the contents of these documents were provided by the
applicant. No supporting affidavits
from any of the employees
involved in the project or the investigation that followed were
obtained and appended to the founding
affidavit. I am not satisfied
that the applicant has furnished sufficient information that it has a
good defence to the respondents
claim for payment of the tax invoices
dated 27 July 2020 and 28 August 2020 which included the delivery of
water up until 27 July
2020.
[22]
I am of the view that the requests for further time to investigate
the matter is indicative of the applicant’s
intention to delay
the finalisation of the respondent’s claim. The internal
investigation commenced subsequent to 15 June
2022 and by 17July 2023
the applicant was still seeking consent to rescission of judgment as
it had not yet applied for such rescission.
Thereafter the
application for rescission was only delivered on 3 August 2023. I
agree with the respondent’s contention that
the applicant was
jolted into action
by the
threatened
sale
in execution of the assets of the applicant.
[23]
The applicant was provided with three (3) tax invoices for the
delivery of water to drought stricken areas.
These tax invoices
provided an abundance of information from which the applicant should
have been able to ascertain whether payments
were made in respect of
these tax invoices and when such payments were made. I find the
applicant’s explanations for its
failure to have timeously
entered appearance to defend the action and its omission to apply for
rescission of judgment within the
prescribed time period very weak
and unpersuasive.
ORDER:
[24]
In the result the following order is made:
1.
The application for condonation of the applicant’s
non-compliance with the requirements of Rule
31(2)(b) of the Uniform
Rules of Court and for rescission of the judgment granted against the
applicant in default of an appearance
to defend the action are
dismissed with costs.
I
VAN RHYN
JUDGE
OF THE HIGH COURT,
FREE
STATE DIVISION, BLOEMFONTEIN
On
behalf of the Applicant:
ADV.
P T MASIHLEHO
Instructed
by:
MATLHO
ATTORNEYS
BLOEMFONTEIN
On
behalf of the Respondent:
ADV.
S GROBLER SC
Instructed
by:
CALLIS
ATTORNEYS
BLOEMFONTEIN
[1]
Act 108 of 1997.
[2]
Act 32 of 2000.
[3]
Silber
v Ozen Wholesalers (Pty) Ltd 1954 (2) SA (A) at 352 H-353 A.
[4]
2011
(5) SA 608 (KZD)
[5]
1949
(2) SA 470
(O) at 476-477
[6]
Darries v Sheriff, Magistrate's Court, Wynberg and Another 1998(3)
SA 34 at 41A-D.
[7]
1954 2 SA 345
(A) at 353A.