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[2023] ZAECMKHC 36
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Sikhosonke Trading and Investments (Pty) Ltd v ABSA Bank Limited and Another (2338/2020) [2023] ZAECMKHC 36 (17 March 2023)
IN
THE HIGH COURT OF SOUTH AFRICA
(EASTERN
CAPE DIVISION, MAKHANDA)
Case No: 2338/2020
In
the matter between:
SIKHOSONKE
TRADING AND
INVESTMENTS
(PTY) LTD
APPLICANT
and
ABSA
BANK LIMITED
FIRST
RESPONDENT
SHERIFF
OF THE HIGH COURT,
LUSIKISIKI
SECOND RESPONDENT
In
re:
ABSA
BANK LIMITED
PLAINTIFF
and
SIKHOSONKE
TRADING AND
INVESTMENTS
(PTY) LTD
DEFENDANT
JUDGMENT
Rugunanan
J
[1]
The applicant seeks a
rescission of an order of this Court granted by default on 9 March
2021 per Lowe J. On 30 October 2020, the
first respondent (as
plaintiff) instituted action against the applicant (as defendant).
The claim arose from the applicant’s
breach of a written
agreement for the lease of an excavator from the first respondent for
a five year term at a monthly rental
of R30 196.15. As at
9 March 2021, the date on which the order was granted, the
applicant’s arrears amounted to
R165 045.29.
[2]
The sheriff for
Lusikisiki has been cited as second respondent in these proceedings
but has not participated therein. In what follows
hereafter I shall
refer to the first respondent as ‘the respondent’.
[3]
The
applicant’s notice of motion does not identify the specific
rule of court in terms of which the application was instituted,
though the founding affidavit indistinctly indicates that reliance is
sought on Uniform rule 42(1)
(a)
,
alternatively rule 31(2)
(b)
or the common law. It is trite that an application for rescission can
be entertained on any of these bases if the requirements
are met.
[1]
Uniform rule 42(1)
(a)
[4]
The
prerequisite jurisdictional factors for granting rescission in terms
of this rule are firstly, that the judgment or order must
have been
erroneously sought or erroneously granted; and secondly, that it must
have been granted in the absence of the applicant.
Once these
requirements are established, the applicant would ordinarily be
entitled to relief,
caedit
quaestio
.
[2]
[5]
A
rescission on grounds of error requires an applicant to show that
there existed at the time of the judgment or order a fact which
the
court was unaware of and which would have induced the court, if aware
of it, not to grant the judgment.
[3]
[6]
The
rule has also been held to cater for a mistake in the proceedings –
the mistake may either appear on the record of proceedings
or it may
subsequently become apparent from the information made available in
the application for rescission.
[4]
[7]
The
interaction between Lowe J and the legal representative for the
respondent who moved for the order by default is unknown as
the
record of those proceedings is not before this Court. The applicant
posits its case on mistake or error subsequently becoming
apparent
from information extrapolated from the court file. The error
suggested is that service of the summons was defective.
[5]
[8]
It matters not in my view whether the error
(if indeed it were) becomes apparent from the information presently
made available,
or whether it existed at the time of the judgment or
order. In either instance it makes no difference to the order
intended to
be made at the conclusion of this judgment.
[9]
Beginning with the question of absence it
is not disputed that the order was granted in circumstances where no
notice to defend
was delivered. Mr Xolani Daniso, the applicant’s
sole director who is also the deponent to the founding affidavit,
avers
that the applicant had no knowledge of the action instituted by
the respondent nor did the applicant have knowledge of the order
granted by default. He attributes the applicant’s lack of
knowledge to defective service of the summons and for that reason,
he
maintains that the applicant did not wilfully fail to enter an
appearance to defend. He goes on to state that it was only upon
gaining access to the court file after the sheriff attempted to
execute a warrant for the delivery of goods during June 2021 that
the
applicant became aware for the first time that the sheriff’s
return indicating that service of the summons was effected
on
‘10-11-12’ was a ‘doctored’ or fraudulent
document, and that the order it now seeks to set aside was
erroneously granted.
[10]
In
considering the rescission sought under the rule aforementioned the
scenario commences with three purported returns of service,
each
bearing the name of the sheriff, ‘L Tonjeni’.
[6]
10.1
The first return indicates that a ‘Notice of Agreement Form 27’
was served on the applicant on
‘10-11-20’ at 09h00 (I add
that Form 27 is the notice under Uniform rule 41A dealing with the
referral of a dispute
to mediation before proceeding with
litigation).
10.2
The second return indicates that ‘Summons’ was served on
the applicant on ‘10-11-12’
at 09h00. The document
however bears a date stamp for 10 November 2020.
10.3
Both returns show that service was effected at ‘Dubana A/A
Lusikisiki 4820’ on V Tshezi (Secretary).
10.4
The third return indicates that ‘Summons & Form 27 Notice
of Agreement’ was served on ‘10-11-20’
at 12h00 at
‘Dubana A/A Lusikisiki 4820’ on V Cacadu
(Secretary).
[11]
Relevant to the second return of service
the error relied on in the founding affidavit differs from the
contention/s raised in the
applicant’s heads of argument.
Adverting to the second return, Mr Daniso impugns the service of
summons effected on 10-11-12.
He denies that the applicant has a
registered office at Dubana Administrative Area and maintains that it
is his residential address
at which there is no other person, whether
male or female, by the name of V Tshezi designated as the applicant’s
secretary.
[12]
Parenthetically, the answering affidavit
points out that there is no denial attributed to V Cacadu who
features as secretary in
the third return of service, nor is it
denied that the applicant had been served with the Form 27 which is
the notice under Uniform
rule 41A.
[13]
In the founding affidavit, it is apparent
that the applicant engenders the belief that the order was
erroneously granted with reference
to the sheriff’s return
indicating service of the summons on 10-11-12. To augment this belief
and indeed the basis for asserting
that it is a fraudulent document
the applicant also places reliance on an affidavit by the sheriff Mr
Luyanda Tonjeni in which
the latter denies having served any process
on 10 November 2012 ‘or on any other day in connection with
this matter’.
The contents of this affidavit will be dealt with
later in this judgment.
[14]
In heads of argument, applicant’s
counsel assailed the first and third returns of service. The
proposition is that they are
three hours apart on the same date and
they identify two different people who are said to be secretaries
whom Mr Daniso maintains
are fictitious individuals. This
discrepancy, so the argument went, undermines the reliability of the
returns; hence the failure
to have brought it to the attention of the
presiding judge occasioned the erroneous granting of the order.
[15]
The
argument appears to be made without reference to the record and is
misconceived. It overlooks a telling deficiency in the founding
affidavit. While Mr Daniso, in the vaguest of terms, seeks to
distance himself or the applicant from V Tshezi, he does not
categorically
state that no person by the name of V Cacadu is
employed by the applicant or that the said person is unknown to the
applicant
or to himself. Mr Daniso has indisputably and
opportunistically failed to disclose material information to this
Court to deflect
attention from the third return of service which
quite remarkably is attached to the founding affidavit.
[7]
[16]
Although the argument by counsel does not
accord with the case presented in the founding affidavit, his
arguments in either instance
are untenable. Focus ought to have been
directed more specifically at the third return of service and the
lease agreement attached
to the summons. The return indicates that:
‘Summons & Form 27 Notice of Agreement’ was served on
‘10-11-20’
at 12h00 at ‘Dubana A/A Lusikisiki 4820’
on V Cacadu (Secretary).
[17]
In
my view this return of service is manifest of effective service under
Uniform rule 4(1)
(a)
(v).
[8]
[18]
What follows are my reasons.
[19]
In
the lease agreement, the applicant’s registered address and its
physical address is indicated as ‘Dubana A/A Lusikisiki
4820’.
The address falls within the jurisdiction of this Court, which
exercises its jurisdiction over the entire province
of the Eastern
Cape.
[9]
Service at the
registered address within the Court’s jurisdiction is good
service
[10]
even if the
registered address is not the place of business of the applicant.
[11]
Hence, the denial by Mr Daniso that the applicant has a registered
office at Dubana Administrative Area is at odds with the address
indicated in the lease which he signed on behalf of the applicant as
its director when the agreement was entered into in June 2019.
[20]
Moreover,
nothing turns on the contentions raised by applicant’s counsel
about discrepant returns as indicated in the applicant’s
heads
of argument. Counsel’s approach overlooks the fact that the
third instrument is a self-standing return of service which,
for
reasons aforementioned,
prima
facie
constitutes evidence of the matters stated therein
[12]
and has been shown to be reliable and effective.
[21]
In the light of the finding that there was
effective service of the summons, the applicant’s explanation
that it did not wilfully
fail to enter an appearance to defend
because it had no knowledge of the pending action recedes into
insignificance. Where there
had been proper service of the summons
and a failure to enter appearance to defend, the respondent was
procedurally entitled to
obtain its order in the absence of the
applicant. Expressed differently, a court which grants a judgment or
order by default does
so on the basis that the defendant has been
notified of the plaintiff’s claim as required by the Uniform
rules, that the
defendant, not having given notice of an intention to
defend, is not defending the matter and that the plaintiff is in
terms of
the rules entitled to the order sought.
[22]
In the premises, I am not persuaded that
the order against the applicant was erroneously granted and that is
liable to be set aside.
Good cause as a
requirement under Uniform rule 31(2)
(b)
or the common law
[23]
Under
Uniform rule 31(2)
(b)
the court may set aside a default judgment upon ‘good cause’
shown. The relief under the common law is available on
the basis of
‘sufficient cause’ being shown.
[13]
Whereas ‘good cause’ identifies a rescission under rule
31(2)
(b)
,
‘sufficient cause’ is associated with the common law.
The distinction is semantic; the terms mean the same thing
[14]
and their requirements are identical namely, an applicant must
satisfy the court: (a) that there is a reasonable explanation
for its default; (b) that the application for rescission is
bona
fide
in the sense that it is not made with the intention of merely
delaying the plaintiff’s claim;
[15]
and (c) that it has a
bona
fide
defence which
prima facie
carries some prospect of success.
[16]
[24]
As
to the meaning of requirement (c) it is considered apposite to quote
from
Sanderson
Technitool (Pty) Ltd v Intermenua (Pty) Ltd
[17]
in which it is stated:
‘
It
is sufficient if [the applicant] makes out a
prima
facie
defence in the sense of setting
out averments which if established at 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.’
[25]
The
requirements in (b) and (c) are interconnected in that proof of a
bona fide
defence may indicate that the application is not made merely for
delaying the plaintiff’s claim but that the applicant does
have
a valid defence in law. On the other hand, the absence of a
bona
fide
defence would generally lead to the conclusion that the applicant is
engaged in delaying tactics where there is no valid defence
to the
plaintiff’s claim.
[18]
[26]
I turn to consider whether the applicant
has established a
bona fide
defence.
[27]
The essence of the applicant’s
alleged defence is that there was a verbal agreement between Mr
Daniso and the respondent’s
branch manager at Lusikisiki to
settle the applicant’s arrears by the end of March 2021, the
arrears having been occasioned
by the Covid-19 pandemic in 2020.
[28]
The averment by Mr Daniso that the
applicant was given until the end of March 2021 is denied by the
respondent on the basis that
clause 24 of the lease agreement
precludes any amendment or variation thereof unless reduced to
writing. The applicant filed a
replying affidavit which was struck
out in terms of an order granted by Bloem J on 29 March 2022.
Technically there is no reply
to the respondent’s denial.
[29]
For
that reason the respondent’s denial stands to be accepted as
uncontested.
[19]
[30]
It is obvious from the lease agreement that
its terms are binding. As at 9 March 2021 when the court order
was granted against
the applicant its account was in arrears. Payment
bringing the arrears up to date was made on 15 March 2021.
This occurred
a few days after the lease agreement was cancelled and
judgment by default was obtained.
[31]
At the time the order was granted there
existed a
lis
between the parties. The applicant mistakenly presumes that the
agreement between Mr Daniso and the respondent’s branch manager
discharged that
lis
.
In the absence of clear proof of the reduction to writing of the
alleged payment arrangement, the arrangement is ineffective and
lends
no credence to what is stated in the founding affidavit.
[32]
In the applicant’s heads of argument
an attempt is made to raise as a defence the provisions of
section
129(3)
of the
National Credit Act 34 of 2005
. The section permits a
consumer who is in default, at any time before a credit provider has
cancelled a credit agreement, to re-instate
the agreement by paying
all overdue amounts and default charges up to the time of
re-instatement. The Act does not apply to a juristic
person. To this
end the provisions of section 4(1)
(a)
read with section 4(1)
(b)
of the Act have been pleaded in the summons. It is also noted that
the applicant’s founding affidavit says nothing about
seeking
reliance on the section and indeed no case is made out for relying
thereon as a defence. Heads of argument do not constitute
evidence
given under oath. They are merely persuasive comment by the parties
or their legal representatives with regard to questions
of fact or
law and offer no substitute for sworn evidence.
[33]
I am of the opinion that the circumstances
are such that this Court is unable to come to the assistance of the
applicant neither
under Uniform rule 31(2)
(b)
nor the common law. The absence of a
bona
fide
defence is indicative of the
applicant employing delaying tactics.
[34]
The
order complained of was correctly granted but to set it aside in
circumstances where, absent a
lis
between the parties and no
bona
fide
defence is shown, would be an exercise in futility and would be
tantamount to granting the applicant an order that has final effect.
From that perspective the factual disputes raised by the respondent
become an obstacle to the applicant.
[20]
[35]
Because the application has no merit, the
norm is that costs must follow the result. There is another dimension
to the question
of costs. This application was initially brought in
two parts, the first of which was for an order sought on urgency for
the stay
of the warrant of delivery issued on 6 April 2021 at the
instance of the respondent – and the second part of the
application
was in respect of the present rescission application. On
25 June 2021, this Court per Beshe J granted an order staying the
warrant
pending the outcome of the application for rescission. In
addition, the order directed that the costs of the application
relevant
to the first part of the proceedings are to stand over for
determination in the rescission application. For the respondent it
was
submitted that the costs of the first part be costs in the cause
in the determination of the outcome of the rescission application.
[36]
I have no inclination to disagree with this
approach.
[37]
Before
concluding, a matter that needs to be mentioned concerns the
affidavit by the sheriff, Mr Tonjeni.
[21]
[38]
My own emphasis in italics, he states the
following:
‘
I
wish to clarify that I personally never went to serve any papers at
Lusikisiki on 10 November 2012
or on any
other day in connection with this matter
.
I never authorised any person to draft the return of service in this
matter. I did not sign the return either. Someone may have
forged my
signature. I do not even know where Dubana Administrative Area is.’
[39]
It
appears that the sheriff distances himself from the second return
indicating service on 10 November 2012. Whether he does so
in
relation to the first and third returns of service requires
clarification taking into consideration the italicised portion of
his
affidavit. On the version of the respondent,
[22]
supported by confirmatory affidavits by its legal
representatives,
[23]
the
sheriff emailed a statement of account to its attorneys on 10
November 2020 for the amount of R988. This amount was paid on
16
November 2020.
[40]
What followed in February 2021 was a
further statement of account from the sheriff for the amount of R709.
The respondent’s
attorneys requested the sheriff to reverse
this amount which had not been done as at 12 July 2021 being the date
of signature of
the respondent’s answering affidavit. By
maintaining that he did not serve papers on any other day in
connection with the
matter, it begs of the sheriff to address the
following questions: (a) for which return of service is the statement
of account
of 10 November 2020 applicable? And (b) for which return
of service is the statement of account forwarded in February 2021 for
the amount of R709 applicable?
[41]
The other issues arising from the sheriff’s
affidavit are identified in the respondent’s answering
affidavit.
[42]
I quote directly from the applicable
paragraphs:
‘
15.
The supporting affidavit from the sheriff … is vague in that:
15.1
there are two returns of service in this matter, one for the summons
and one for the Rule 41A notice.
The Sheriff does not indicate
in respect of which return of service, or both, he is referring to;
15.2
the sheriff states that he did not personally serve the papers,
however [he] does not state that nobody from
his offices such as a
deputy sheriff served the summons and/or [the] Rule 41A notice;
15.3
whilst he states that he “did not sign the return”, he
also states that “Someone may have
forged my signature”.
If he did not sign the return of service, it must consequently follow
that his signature was forged
as he does not state that his signature
is different to that of his own … nor does he state what
steps, if any, he is taking
to resolve the issue which relates to
himself directly.’
[43]
In short, and arising from what is put out
hereinabove read in conjunction with the respondent’s
answering affidavit
and supporting annexures, are issues: (a)
relating to the unidentified returns of service for which statements
of account were
rendered in November 2020 and in February 2021; and
(b) in relation to the alleged forging of the sheriff’s
signature.
[44]
It is not intended to cast disrespectable
reflections upon the sheriff but the material before this Court does
raise concerns about
his conduct and motives if left unexplained to
date. For this reason, the registrar of this Court will be directed
to forward a
copy of this judgment to the Board for Sheriffs for its
consideration and possible further investigation of the matter.
Order
[45]
The following order will issue:
1.
The application for rescission of the order
granted by this Court per Lowe J on 9 March 2021 is dismissed.
2.
The applicant shall pay the costs of the
application, such costs shall include those in respect of Part 1
thereof.
3.
The registrar is directed to send a copy of
this judgment to the Board for Sheriffs.
M.
S. RUGUNANAN
JUDGE
OF THE HIGH COURT
Appearances:
For
the Applicant:
J.
Knott
Instructed
by Mduma Mjobo Attorneys
c/o
Yokwana Attorneys
Makhanda
Tel:
046-622 9928
(Ref:
N. Yokwana)
For
the First Respondent:
M.
Somandi
Instructed
by Huxtable Attorneys
Makhanda
Tel:
044-622 2692
(Ref:
O. Huxtable)
Date
heard:
17
November 2022
Date
delivered:
17
March 2023
[1]
Mutebwa
v Mutebwa
2001
(2) SA 193
(TkHC) paras 11-12 (‘
Mutebwa
’).
[2]
Mutebwa
supra
at 199G.
[3]
Zuma v
Secretary of the Judicial Commission of Inquiry into Allegations of
State Capture, Corruption and Fraud in the Public Sector
Including
Organs of State and Others
[2021] ZACC 28
;
2021 (11) BCLR 1263
(CC); para 62;
Rossitter
& Others v Nedbank Ltd
[2015] ZASCA 196
para 16.
[4]
Kgomo v
Standard Bank of South Africa and Others
2016 (2) SA 184
(GP) at 187I-188A.
[5]
See
Topol
and Others v Group Management Services
(Pty)
Ltd
1988
(1) SA 639
(WLD) at 648D-649F for a discussion on as to what
constitutes an error for purposes of Uniform rule 42(1)
(a)
.
[6]
For completeness, the returns are attached to the respondent’s
answering affidavit as annexures at pages 66, 67 and 71.
[7]
Annexure SIKHO2.
[8]
To the extent considered relevant for present purposes the rule
essentially provides that service of process directed to the
sheriff
shall be effected ‘in the case of a corporation or company, by
delivering a copy to a responsible employee thereof
at its
registered office or its principal place of business within the
court’s jurisdiction…’
[9]
Thembani
Wholesalers (Pty) Ltd v September and Another
2014 (5) SA 51
(ECG).
[10]
Erasmus
Superior
Court Practice
[Service 2, 2016] at D1-35.
[11]
Federated
Insurance Co Ltd v Malawana
1986 (1) SA 751
(AD) at 759E.
[12]
Section 43(2)
of the
Superior Courts Act 10 of 2013
; see also
Van
Vuuren v Jansen
1977 (3) SA 1062 (T).
[13]
De Wet
and Others v Western Bank Ltd
1979 (2) SA 1031
(A) at 1042F-1043A; see also
Athmaram
v Singh
1989 (3) SA 953
(D&CLD) at 954E.
[14]
Athmaram
v Singh supra
at 957C;
Chetty
v Law Society, Transvaal
1985
(2) SA 756
(A); also
Mosenogi
NO and Another v 22 Webster
[2020] ZAGPPHC 127 para 9; and
Mutebwa
supra
at
198I
.
[15]
Mutebwa
supra
at
197E-F.
[16]
De
Witts Auto Body Repairs (Pty) Ltd v Fedgen Insurance Co Ltd
1994 (4) SA 705
(ECD) at 708H-J;
Athmaram
v Singh supra
at 957C. As to what is meant by the words ‘a prima facie
defence’, the court in
Sanderson
Technitool (Pty) Ltd v Intermenua (Pty) Ltd
1980 (4) SA 573
(WLD) at 575H-576A, stated: ‘It is sufficient
if he sets out a prima facie defence in the sense of setting out
averments,
which
if established at 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.’
[17]
Sanderson
Technitool (Pty) Ltd v Intermenua (Pty) Ltd
1980 (4) SA 573
(WLD) at 575H-576A.
[18]
Mutebwa
supra
at 197G.
[19]
Nedbank
Limited v Dinah Rampersad and Another
,
unreported judgment of the Pretoria High Court, Case No 58806/2018
(3 November 2021) para 4.
[20]
JAN v
NCN
[2022] ZAECMKHC 47 paras 13-14.
[21]
The affidavit is dated 14 June 2021 and is attached to the
applicant’s founding affidavit at pages 32-34.
[22]
See answering affidavit Basetsana Matolong, dated 12 July 2021
paragraphs 5 to 15.
[23]
Marileze Marais at 72 and Jason Myles De Klerk at 74.