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[2023] ZAFSHC 162
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Dapaah v Dumansi Trading CC (4205/2017) [2023] ZAFSHC 162 (26 April 2023)
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IN
THE HIGH COURT OF SOUTH AFRICA
FREE
STATE DIVISION, BLOEMFONTEIN
Case
no.: 4205/2017
Reportable: YES/NO
Of interest to other
Judges: YES/NO
Circulate to Magistrates:
YES/NO
In
the matter between
:
AMBROSE
DAPAAH
Applicant
and
DUMANSI
TRADING
CC
Respondent
CORAM:
VANZYL, J
HEARD
ON:
27 OCTOBER 2022
DELIVERED
ON:
26 APRIL 2023
[1]
This is an
opposed application for rescission of the judgment which was granted
in favour of the respondent against the applicant
on 2 November 2017
.
[2]
The action was
instituted by the respondent, as plaintiff, against Tebcon Developers
(Pty) Ltd ("Tebcon") as the first
defendant and the
applicant as the second defendant.
The applicant
was cited
in
his capacity as surety for the obligations of Tebcon towards the
respodent.
[3]
The default
judgment was granted against the defendants, jointly and severally,
the one paying the other to be absolved, for payment
in the amount of
R559 131.93, with interest and costs.
[4]
I will refer
to the parties as cited in the present application.
[5]
The applicant
is seeking an order in the following terms:
1.
Rescission
of
the
default
judgment
granted
against
the applicant
on 2 November 2017.
2.
Leave to
defend the action
.
3.
Costs
of
the
application
in
the
event
that
the
respondent
opposes same.
[6]
The
application
is
being brought in terms of Rule 32(1)(b).
Reasons
advanced by the applicant for his default:
[7]
According to
the applicant he became aware of the default judgment ("the
judgment") on 15 June 2022 when a warrant of
execution was
served upon him.
A copy of the
warrant of execution is attached to the founding affidavit as
annexure "A".
[8]
The
applicant's attorney on 22 June 2022 addressed a letter to the
respondent's attorney requesting a copy of the summons, the return
of
service, the application for default judgment and the default
judgment order as such.
[9]
From the
return of service it is evident that the summons had been served by
leaving it at the principal door at "Building
number […],
C[...] on Main, 3[...] C[...] Road, Bryanston, being the chosen
domicilium
citandi et executandi"
of
the applicant.
[10]
According to the applicant the aforesaid address was that of Tebcon
and that he was no longer in the employment of Tebcon at
the time
when the summons was served. The summons had consequently not come to
his knowledge.
[11]
The applicant
states that had he received the summons, he would have defended the
matter since he has a
bona
fide
defence
against the respondent's claim.
The
applicant’s case on the merits of the application:
[12]
According to
the applicant the Free State Department of Human Settlement awarded
tenders to three companies, one of which was Tebcon,
to build RDP
houses in a section of Thabong, Welkom. Tebcon appointed the
applicant as Senior Project Manager. In his capacity
as such the
applicant was responsible for sourcing of sub-contractors and
material to build the houses.
[13]
The applicant
approached the respondent to open an account for Tebcon to buy the
required material. One Lizelle of Tebcon provided
the applicant with
an application for a credit facility ("the credit application").
The applicant
and one Abednego Molosun completed the credit application form and
returned same to Lizelle during or about 30 March
2015.
[14]
About a week
later when the applicant and Abednego followed up on the said
application, Lizelle informed them verbally that Tebcon
was not
credit worthy and therefore, the application could not be approved.
They did not request written proof of the rejection
of the credit
application.
[15]
The applicant
and Abednego thereafter approached a bridging finance company called
National Urban Reconstruction & Housing Agency
("NURCHA")
to assist Tebcon with financing. According to the applicant NURCHA is
a company that deals with financing
the construction
of houses.
[16]
The director
of Tebcon subsequently signed a tripartite agreement with NURCHA and
the respondent, a copy of which agreement is attached
to the founding
affidavit as annexure "G". As a result, an account was
opened by the respondent on 11 November 2015,
under account number
T[...], in favour of Tebcon.
Thereafter
Tebcon was able to purchase material on credit from the respondent as
late November 2015.
[17]
According to
the applicant the respondent's claim against the applicant is based
on the credit application, in terms of which the
applicant
and
Abednego
also
bound
themselves
jointly
and
severally
as sureties and co-principal debtors
in
solidum
in
favour of the defendant in respect of Tebcon's indebtedness to the
respondent, but which credit application is the one which
was
rejected by the respondent.
[18]
The
applicant's first defence is based on misjoinder in that, according
to the applicant, Abednego should also have been cited as
a party by
the respondent,
since they
both signed as sureties.
[19]
The
applicant's second defence is that the respondent's cause of action
is based on the credit application which had been rejected
by the
respondent. The amount allegedly outstanding is not based on the
credit application in respect of which the applicant signed
as
surety. It is based on the tripartite agreement which the respondent
concluded with NURCHA and Tebcon, to which agreement the
applicant
was not a party.
[20]
According to
the applicant he has reasonable prospects of succeeding
with his
defences should the matter go to trial.
The
answering affidavit:
[21]
In the
answering affidavit it is pointed out that on 8 November 2021, the
sheriff attempted to serve the warrant of execution on
the applicant
at a certain address in Germiston.
The return of
service, dated 9 November 2021, which is attached to the answering
affidavit as annexure "OA2", indicates
that the applicant
informed the sheriff telephonically that he had left the given
address.
[22]
According to
the respondent the applicant would have been made aware of the
judgment which was granted against him since the sheriff
would have
informed the applicant of the reason for the warrant of execution
and/or the parties involved therein.
[23]
The respondent
points out that the address at which the summons was served was
indeed the applicant's chosen domicilium. The applicant,
however,
fails to explain his failure to have informed the respondent of any
change of his address, the responsibility of which
rested upon the
applicant.
[24]
Tebcon applied
for a credit limit of R3 000 000.00, which application was signed by
the applicant. Tebcon was then advised that
it would have to apply
for bridging finance, which it did. After the necessary documents had
been signed, the account was opened
with a credit limit of R3 000
000.00. According to the respondent it never waved the credit
application or the suretyships, without
which the account would not
have been opened, since it is a requirement of the respondent.
[25]
According to
the respondent it was not necessary for it to have joined Abednego as
a party, since it is entitled to proceed against
the applicant for
payment of the whole of the outstanding amount.
[26]
In response to
the applicant's second defence, the respondent states that it is
clear that Tebcon applied for the credit facility
from the
respondent, where after it also applied for financing from NURCHA to
fund the housing project. NURCHA granted Tebcon the
financial
assistance and allocated certain amounts to Tebcon
which
were due to the respondent. Despite having received the funds from
NURCHA Tebcon failed and /or refused to pay the respondent.
[27]
Clause 4 of
the Supplier Payment Undertaking, which is the agreement which the
applicant refers to as the tripartite agreement,
determines as
follows:
"In
the event of payment not being effected as envisaged in clause 3
above and on the proviso that the supplier has not, in
any manner
whatsoever, breached the terms of the Agreement, then and in such
event the contractor will be held responsible by the
supplier "
The
respondent avers that it properly complied with its obligations in
terms of the agreement and points out that it is, in any
event, not
the applicant's case that the respondent breached any of the
agreements.
[28]
The applicant
does also not dispute the amount claimed by the respondent.
[29]
The respondent
consequently contends that the applicant failed
to make out a
proper case for purposes of rescission of the judgment.
The
replying affidavit:
[30]
In response to
the allegation that the sheriff previously attempted to serve the
warrant of execution upon the applicant, the applicant
explains as
follows at paragraph 11 of his replying affidavit:
"11
.
1
I was
contacted by a gentleman in October 2021 or November 2021 who wanted
to know if I am still residing at number [...] C[...]
Place,
Hazeldene,
Lambton,
Germiston.
Since I did
not know the gentleman who was phoning me and for the sake of my
safety and that of my family, I told the gentleman
that I am out of
the country.
I
then proceeded
to ask the
gentleman who is he and he told me that he is from the sheriff of the
court.
The
sheriff informed me that he would like to serve me with court papers,
and I asked him in relation to what matter and his response
was he
would like to see me personally.
I did not
inform the sheriff that I have left the given address.
11.2
The sheriff did not disclose the details of the case to me and
therefore, there was no way I could have known that it
was the matter
of the respondent."
[31]
The applicant
confirms that he did not advise the respondent of his change of
address, but states that it does not change the fact
that he was not
aware of the summons which had been served.
[32]
The applicant
further explains that the reason why he did not inform the respondent
about his change of address is because the credit
application had
been rejected by the respondent and after that the applicant did not
follow up on the application.
[33]
The applicant
confirms that he is not disputing the amount claimed. However, the
amount in the statement is for good sold and delivered
by the
respondent to Tebcon in terms of the tripartite agreement which the
applicant was not a party to.
Legal
principles:
[34]
Since the
application is to be adjudicated on the basis of Rule 31(2)(b), the
rescission is to be granted
"upon
good cause shown",
as
provided in the said rule:
"A
defendant may within 20 days after acquiring knowledge of such
judgment apply to court upon notice to the plaintiff to set
aside
such judgment and the court may, upon good cause shown, set aside the
default judgment on such terms as it deems fit."
[35]
The
requirements for
"good
cause"
are
trite. In
Grant
v Plumbers
(Pty)
Ltd
1949 (2)
SA 470
(0)
at
476 - 477 they are set out as follows:
"(a)
He (the applicant) 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."
See
also
Silber
v Ozen Wholesalers
(Pty)
LTD
1954 (2) SA 345
(A)
at 352G & 353A.
Consideration
of the merits of the application:
[36]
Mr Nyabane
appeared on behalf of the applicant and Mr Van der Merwe appeared on
behalf of the respondent. Both counsel addressed
me fully on the
merits of the application. Mr Nyabane submitted that the applicant
made out a proper case for the judgment to be
rescinded. Mr Van der
Merwe, on the other hand, submitted that the applicant failed to make
out a proper case on both the requirements
for good cause. He
submitted that the explanation advanced by the applicant for his
default, does not constitute a reasonable explanation
and that the
applicant has only himself to blame for the said default. Mr Van der
Merwe further submitted that should I find that
the applicant has, by
the skin of his teeth, met the threshold for purposes of explaining
his default, I should still find that
the applicant's alleged
defences do not constitute legally sustainable defences which carry
prima facie
prospects
of success.
Explanation
for the applicant's default:
[37]
In my view it
has to be accepted that the summons did not come to the applicant's
attention at the time of service thereof. I do
not understand the
respondent to allege the contrary, in my view correctly so. Not only
is it not being disputed by the respondent
that at the time of
service of the summons the applicant was no longer in the employment
of Tebcon, but from the return of service,
dated 8 August 2017, it is
evident that the sheriff remarked that
"Kerrige
Pty Ltd'
is
the occupier of the relevant premises and that the applicant is not
known at the said address.
[38]
With regard to
the attempted service of the writ of execution on the
applicant
on
8
November
2021,
the
applicant
gave
an explanation
as to the contents of the telephonic conversation he had with the
sheriff on the said date. I cannot find that the
applicant's version
regarding their conversation is untenable to the extent that I can
summarily reject it. I therefore have to
accept that the sheriff did
not provide him with the detail of the proceedings from which the
writ of execution emanated.
[39]
The result of
the aforesaid findings is that I have to accept for purposes of this
application that the existence of the summons
and the default
judgment only came to the applicant's attention on 15 June 2022, when
the writ of execution was indeed served upon
him.
[40]
The present
application was issued on 13 July 2022 and therefore within the
stipulated time period of 20 days.
[41]
It is common
cause that the summons was served upon the chosen
domilium
citandi et executandi
of
the applicant. The explanation by the applicant as to why he never
informed the respondent about any change of his address, is
closely
linked to the applicant's defence of the credit application having
been rejected by the respondent. I will therefore return
to this
aspect.
Alle
g
ed
bona fide defences:
[42]
The gist of
the applicant's main defence is that the respondent's cause of action
against the applicant is based on the credit applicatio,
which
application had been rejected, with the result that the concomitant
deed of suretyship also fell to the wayside. The subsequent
selling
and delivery of
the goods to
Tebcon were
done in terms of the tripartite agreement, to which the applicant was
not a party and for purposes of which he did not
bound himself as
surety.
[43]
Mr Van der
Merwe submitted that the tripartite agreement did not replace the
credit application and its related agreements, including
the
suretyship. He further submitted that in view of clause 4 of the
tripartite agreement which determines that should NURCHA fail
to make
payment to the respondent, the ultimate responsibility for payment
remains with Nebcon, it does not make sense that the
respondent would
not have required the security in the form of the previously agreed
suretyships.
Mr Van der
Merwe also pointed out that in terms of the deed of suretyship the
suretyship constitutes a so-called open surety and
is therefore also
for this reason applicable to the indebtedness of Nebcon to the
respondent pursuant to goods sold and delivered
in terms of the
tripartite agreement. Since the fact that it is not in dispute that
the goods had indeed been sold and delivered
by the respondent to
Nebcon in the amount claimed, it matters not pursuant to which
agreement it occurred, the applicant remains
liable.
[44]
I cannot agree
with the last mentioned contention. From a perusal of the particulars
of claim, it is evident that the cause of action
is not merely goods
sold and delivered, but specifically goods sold and delivered in
terms of the credit application and the concomitant
deed of
suretyship. It will therefore be necessary for the defendant to prove
same for purposes of its claim.
[45]
From a perusal
of the documents, it is evident that the credit application
and the deed
of suretyship
were
signed on 10
March
2015. It
is common cause that no goods were sold and delivered pursuant
thereto. It was only after the conclusion of the tripartite
agreement
on 29 October 2015 that goods were indeed sold and delivered by the
respondent to Nebcon, as from 12 November 2015 to
13 June 2017.
[46]
Furthermore,
at the top of the first page of the credit application at p. 49 of
the
paginated
papers, the following handwritten inscription appears:
"T[...]
Limit
R200 000.00
Rep
9-Japie
Open
11/11/2015
Tyd
8:31"
The
same "T[...]" appears as an account number on the Debtors
Report of the respondent in respect of Tebcon attached to
the summons
as annexure "D".
[47]
It
consequently appears that the account which was opened by the
respondent in favour of Tebcon, was only opened 11 November 2015,
subsequent to the conclusion of the tripartite agreement and a day
before the first goods were sold and delivered.
[48]
A document
titled "Supplier Agreement" forms part of the tripartite
agreement, which document was signed on behalf of
the respondent on
30 September 2015. It determines
as follows:
"1.
We hereby
accept the Request for Supplies submitted by the contractor and the
conditions for payment as confirmed herein by National
Urban
Reconstruction and Housing Agency (NPC)
.
2.
We hereby
further agree to deliver the complete order as per attached
construction
programme, a
copy of which is attached to this
Undertaking
as
Annexure
"C",
as
per
the
Request
for
Supplies
within
...
working days
from date hereof
"
[49]
When the
totality of the aforesaid facts and circumstances are considered, I
am of the view that the applicant's defence that the
cause of action
of the respondent is based on the credit application which had been
rejected (during March 2015), whilst the goods
were sold and
delivered pursuant to and in terms of the tripartite agreement,
pertaining to which the applicant did not bound himself
as surety, is
not untenable. Should the applicant be able to prove at the trial
that the credit application had been rejected and
that the goods were
sold and delivered in terms of the tripartite agreement, the
respondent's claim will probably have to be dismissed,
since ifs
cause of
action (the credit application and the concomitant deed of
suretyship) will then be unsubstantiated and the issue of the
suretyship will probably become irrelevant;
alternatively,
the trial court will have to make a determination, based on the
evidence, whether the deed of suretyship is still
enforceable against
the applicant in those circumstances.
[50]
In my view the
applicant consequently has a
bona
fide
and
prima facie
defence
which, if established at the trial, would entitle him to the relief
he will be seeking,
being the
dismissal of the action.
[51]
Having made
the aforesaid findings, I return to the applicant's explanation for
his default like I earlier indicated I would. In
the circumstances
I
find
that
the
applicant's
explanation
why
he did
not
inform the respondent of his change of address, constitutes a
reasonable explanation.
[52]
Considering my
aforesaid conclusions, I do not deem it necessary to deal with the
defence of misjoinder which the applicant also
raised.
Conclusion:
[53]
Considering
the totality of the facts and circumstances of this matter, I am
satisfied that the applicant's application for rescission
of the
default judgment is
bona
fide
and
not made with the intention of merely delaying the respondent's
claim.
[54]
The applicant
is consequently entitled to rescission of the default judgment in
terms of Rule 31(2)(b).
Costs:
[55]
Since an
applicant in an application for rescission of a default judgment is,
depending on the circumstances, often considered to
be seeking an
indulgence from court, such an applicant is generally ordered to pay
the costs of the application, especially in
the absence of opposition
thereto by the particular respondent.
[56]
In
circumstances where a respondent does oppose an application for
rescission of a judgment, the court usually determines whether
the
opposition is reasonable or not in the particular circumstances and
depending
on
such
finding,
decides
whether
an
applicant
should also be ordered to pay the opposition of the application, or
not.
[57]
A further
possibility which is also quite frequently ordered in an opposed
application for rescission of a default judgment, is
where the court
hearing the application is of the view that the court who will
eventually deal with the trial, will be in a better
position to
determine an appropriate order as to costs after having determined
the merits of the action. In such an instance the
costs of the
application for rescission will stand over for later adjudication.
[58]
In exercising
my discretion
in this
particular instance,
I am of the
view
that the
last mentioned order will be appropriate.
Order:
[59]
The following
order is made:
1.
The default
judgment granted in favour of the respondent against the applicant,
dated 2 November 2017, is hereby rescinded.
2.
Leave is
granted to the applicant to defend the main action, for purposes of
which the applicant is to file his Notice of Opposition
within 10
days from date of this order, where after the Rules of court will
apply.
3.
The costs of
the application
stand over for
later adjudication.
C.
VAN ZYL, J
On
behalf of the applicant:
Adv.
V. Nyabane
Instructed
by
:
Maduba Attorneys
BLOEMFONTEIN
On
behalf of the respondent:
Adv.
H.J. van der Merwe
Instructed
by
:
EG
Cooper Majiedt Inc BLOEMFONTEIN