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[2023] ZAECMKHC 65
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Velocity Finance (RF) Limited v Desert Fox Investments (Pty) Ltd t/a Desert Fox Investments (1206/2022; 1511/2022) [2023] ZAECMKHC 65 (23 May 2023)
IN
THE HIGH COURT OF SOUTH AFRICA
(EASTERN
CAPE DIVISION, MAKHANDA)
CASE
NO. 1206/2022
and
1511/2022
In
the matter between:
VELOCITY
FINANCE (RF)
LIMITED Plaintiff
and
DESERT
FOX INVESTMENTS (PTY) LTD
t/a
DESERT FOX
INVESTMENTS Defendant
JUDGMENT
LAING J
[1]
This is a
matter that involves two summary judgment applications, involving the
same parties and the same issues. The parties agreed
that the matters
could be dealt with under a single judgment.
[1]
Background
[2]
The
plaintiff alleges that, on 23 December 2020, the defendant concluded
an instalment sale agreement (‘ISA’) with Volkswagen
Financial Services SA (Pty) Ltd (‘VFS’) for the purchase
of a motor vehicle.
[2]
The
material terms thereof are not immediately relevant, save to say that
they were typical of an agreement of such nature.
[3]
The
defendant, it is alleged, took delivery of the vehicle but
subsequently failed to keep up with the payment of instalments. At
some stage, VFS transferred its rights and duties to the plaintiff,
who in turn cancelled the instalment sale agreement and instituted
action against the defendant. The plaintiff claims the return of the
vehicle and damages.
[3]
[4]
In its plea, the defendant contends,
inter alia
, that the
plaintiff lacks
locus standi
because it failed to properly
plead the transfer of rights and duties from VFS. It also alleges
that the plaintiff made a contractual
undertaking not to proceed
against the defendant, pending approval of the proposed restructuring
of the defendant’s payment
of arrears. The remainder of its
plea is a bare denial of the plaintiff’s claim.
[5]
The plaintiff then made application for summary judgment, which will
be discussed
in the paragraphs that follow.
Plaintiff’s
case
[6]
The plaintiff ‘s application for summary judgment was supported
by the
affidavit of a manager in the plaintiff’s Specialised
Collections Department, Ms Aphiwe Mayola.
[7]
She asserted, in relation to the defendant’s plea, that the ISA
expressly
permitted VFS to transfer its rights and obligations to the
plaintiff without notification to the defendant. She attached a copy
of the cession agreement to which VFS and the plaintiff were parties.
[8]
Furthermore, Ms Mayola indicated that the defendant had been obliged
to make
an initial payment by 25 March 2022 in accordance with the
proposed restructuring. It had, however, failed to make such payment
or any other.
[9]
Ms Mayola contended that the defendant’s defence did not raise
any issue
for trial.
Defendant’s
case
[10]
The defendant advanced several arguments, as apparent from the
opposing affidavit of its sole director,
Mr Mohammed Mayat. Only the
arguments relevant to the matter are mentioned below.
[11]
Mr Mayat stated that Ms Mayola was not competent to depose to the
plaintiff’s supporting affidavit.
This was because she was not
a party to the ISA, played no role in its implementation, and had
nothing to do with the proposed
restructuring. She lacked personal
knowledge of the matter and was not able to swear positively to the
facts thereof.
[12]
Furthermore, the cession agreement attached to Ms Mayola’s
affidavit was dated 18 July 2017.
It contemplated VFS’s sale of
‘participating assets’, which included ISAs of the type
that forms the subject
of the present matter. The cession also
contemplated the sale of ‘subsequent participating assets’,
which pertained
directly to the later ISA concluded by the plaintiff
and defendant on 23 December 2020. Any such sale had to comply with
the stipulated
preconditions. The plaintiff, argued the defendant,
had failed to indicate whether it had indeed done so.
Issues
to be decided
[13]
The present matter is characterised by a swirl of defences raised by
the respondent, mostly technical
in nature. There appear to have been
subtle changes in the colour and intensity of the defences over time.
[14]
When the matter was argued, however, the parties had crystallised the
issues to the following: (a)
whether Ms Mayola could swear positively
to the facts, as envisaged under rule 32(2) of the Uniform Rules of
Court (‘URC’);
and (b) the effect of the plaintiff’s
alleged non-compliance with rule 18(6).
[15]
A brief consideration of the applicable legal framework follows.
Legal
framework
[16]
The summary
judgment procedure contained in rule 32 was designed to prevent a
plaintiff’s claim from being delayed by an abuse
of court
process.
[4]
It permits the
plaintiff to approach the court, in certain circumstances, for the
granting of judgment in his or her favour without
need for the delay
and expense of proceeding to trial. Nevertheless, the procedure was
not intended to deny the defendant the opportunity
to present his or
her defence to the court when there is indeed a triable issue.
[5]
[17]
The relevant portion of rule 32 is set out below:
‘
(1)
The plaintiff may, after the defendant has delivered a plea, apply to
court for summary judgment on each of such
claims in the summons as
is only–
(a)
…
(b)
on a liquidated amount in money;
(c) …
(d)
…
together with any claim
for interest and costs.
(2) (a)
Within 15 days after the date of delivery of the plea, the plaintiff
shall deliver a notice
of application for summary judgment, together
with an affidavit made by the plaintiff or by any other person who
can swear positively
to the facts.
(b) The plaintiff shall,
in the affidavit referred to in sub-rule (2)(a), verify the cause of
action and the amount, if any, claimed,
and identify any point of law
relied upon and the facts upon which the plaintiff’s claim is
based, and explain briefly why
the defence as pleaded does not raise
any issue for trial.
(c) If the claim is
founded on a liquid document a copy of the document shall be annexed
to such affidavit…
(3) The defendant may–
(a) …
(b) satisfy the court by
affidavit… that the defendant has a bona fide defence to the
action; such affidavit or evidence
shall disclose fully the nature
and grounds of the defence and the material facts relied upon
therefor…
(4) No evidence may be
adduced by the plaintiff otherwise than by the affidavit referred to
in sub-rule (2)…’
[18]
The case
law indicates that, in general, the courts have required strict
compliance with the provisions of rule 32 but are, nevertheless,
prepared to condone technical defects in the adoption of the
procedure. Van Loggerenberg comments as follows:
[6]
‘
It has been
pointed out by Van den Heever J in
Edwards
v Menezes
[7]
that the courts have approached rule 32 from diametrically opposite
points of view. On the one hand it has been stressed that the
defendant must show, not that he is
bona
fide
,
but that he has a good defence: that the defendant must show a
defence which, assuming the alleged facts to be true, is good in
law;
thus the defendant’s duty under rule 32(3)(b) has been
emphasized. On the other hand it has been stressed that it is
only
where the court has no reasonable doubt that the plaintiff is
entitled to judgment as prayed, that the plaintiff has an
unanswerable
case, that summary judgment will be granted. Van den
Heever J has expressed, with good reasons therefor, a preference for
the latter
approach.
[8]
The
author is in respectful agreement with this view.’
[9]
[19]
From the
above, it could well be said that wherever a court focuses its
enquiry, be it on either the plaintiff’s case or the
defendant’s defence, there is no reason to exclude the basic
principle that the plaintiff’s case must properly disclose
a
cause of action. His or her pleadings cannot be excipiable.
[10]
This assumes even more importance within the context of a procedure
that does not allow the benefit of a reply or the advantages
of
cross-examination.
[20]
The above principles constitute the framework for the assessment of
the facts and argument that inform
the matter.
Application
to the facts
[21]
The issues, as identified earlier, will be addressed in sequence.
Competency
of Ms Mayola to swear positively to the facts
[22]
The respondent contends that Ms Mayola has no direct knowledge of the
matter. She states that she has
relied on the records of the
plaintiff, but has not specified these, making it impossible for the
court to ascertain whether she
can indeed swear positively to the
facts.
[23]
Furthermore,
asserts the respondent, to the extent that Ms Mayola has relied on
electronic records, these are inadmissible by nature,
constituting
hearsay evidence. The respondent asserts that she has failed to meet
the requirements of section 15(3) of the Electronic
Communications
and Transactions Act 25 of 2002 (‘ECTA’), which would
otherwise enable the court to attach the appropriate
evidential
weight to the records in question. She has also failed to supply,
properly, the certification envisaged under section
15(4), necessary
to render the records admissible on the mere production thereof.
Insofar as the respondent has purported to have
done so, the
certification is not that of Ms Mayola but someone else,
[11]
and pertains only to the ISA and not to the cession agreement or
anything else.
[24]
The respondent argues that, by reason of the above, Ms Mayola cannot
be said to have been able to have
sworn positively to the facts or to
have been able to have verified the applicant’s cause of
action.
[25]
The
applicant has referred to three authorities in this regard. In the
matter of
Stamford
Sales & Distribution v Metraclark
,
[12]
Swain AJA observed that:
‘…
This
court in
Dean Gillian Rees v Investec Bank Limited
(330/13)
[2014] ZASCA 38
(28 March 2014), in dealing with the issue of whether
personal knowledge of all of the facts forming the basis for the
cause of
action, had to be possessed by the deponent to the verifying
affidavit, said the following in para 15:
“
As stated in
Maharaj
,
[13]
‘undue formalism in procedural matters is always to be
eschewed’ and must give way to commercial pragmatism. At the
end of the day, whether or not to grant summary judgment is a
fact-based
enquiry
.
Many summary judgment applications are brought by financial
institutions and large corporations. First-hand knowledge of every
fact cannot and should not be required of the official who deposes to
the affidavit on behalf of such financial institutions and
large
corporations. To insist on first-hand knowledge is not consistent
with the principles espoused in
Maharaj
.”
(My emphasis.)
In my view, as long as
there is direct knowledge of the material facts underlying the cause
of action, which may be gained by a
person who has possession of all
of the documentation, that is sufficient.
…
The enquiry,
which is fact-based, considers the contents of the verifying
affidavit together with the other documents properly before
the
court. The object is to decide whether the positive affirmation of
the facts forming the basis for the cause of action, by
the deponent
to the verifying affidavit, is sufficiently reliable to justify the
grant of summary judgment. Those high court decisions
which have
required personal knowledge of all of the material facts on the part
of the deponent to the verifying affidavit are
accordingly not in
accordance with the principles laid down by this court in
Maharaj
.
…
An insistence
upon personal knowledge by a deponent to a verifying affidavit of all
the material facts forming the basis for the
cause of action, where
the cessionary of a claim seeks summary judgment against the debtor,
in most cases would effectively preclude
the grant of summary
judgment. The consequences of this narrow approach is illustrated by
the decision in
Trekker
Investments (Pty) Ltd v Wimpy Bar
1977 (3) SA 447
(W). It was held that it had to appear from the
verifying affidavit that the facts relating to the claim of the
cedent against
the debtor were within the knowledge of the deponent
who was able to swear positively thereto. The deponent in such a case
was
prima
facie
making the affidavit on behalf of a cessionary and there was nothing
in the affidavit to indicate that the deponent had any connection
with the cedent, which presumably would have enabled him to acquire
this knowledge. To insist on personal knowledge by the deponent
to
the verifying affidavit on behalf of the cessionary of all the
material facts of the claim of the cedent against the debtor,
emphasises formalism in procedural matters at the expense of
commercial pragmatism.’
[14]
[26]
The above
passage was quoted in
South
African Securitisation Programme (RF) Ltd v Fullimput 11 (Pty) Ltd
and another
,
[15]
where Binns-Ward J remarked that an apparent lack of first-hand
knowledge of the facts could, depending on the circumstances, be
remedied by reference to the papers. The court ‘looks at the
matter “at the end of the day” on the basis of all
the
material that is properly before it’.
[16]
[27]
The
additional case to which the applicant referred was
Firstrand
Bank Ltd v Desert Fox Investments (Pty) Ltd
,
[17]
where Collett AJ affirmed the principles espoused in
Stamford
Sales & Distribution
,
saying that ‘[d]irect knowledge of the material facts
underlying the cause of action gleaned by a person who may be in
possession of the documentation has been regarded as sufficient’.
[18]
The court also cited
Maharaj
as the basis for the principle that ‘[e]ven if an affidavit
fails to measure up to all the requirements, at the end of the
day,
reference may be had to other documents properly before the court in
the proceedings’.
[19]
[28]
Mindful of the above authorities, this court is satisfied that an
overly formalistic approach to the
requirements of rule 32(2) would
not advance the respondent’s opposition. The deponent to the
affidavit in support of the
application, Ms Mayola, may not have been
a party to the ISA or played any role in its implementation and may
not have had anything
to do with the proposed restructuring of the
respondent’s arrears, yet her statement that she has control
and access to all
of the records that pertain to this matter and her
assertion that she has acquainted herself therewith may well be
sufficient when
considered with the documents properly presented.
[29]
The court, however, remains to be persuaded that the applicant has
made out a case for summary judgment.
This will be explained further,
below, in relation to the other issue raised by the respondent.
Compliance
with rule 18(6)
[30]
The respondent argues that the applicant has relied on the cession
agreement but has not complied with
the provisions of rule 18(6). To
that effect, the applicant has failed to plead whether the cession
agreement was written or oral
and when, where and by whom it was
concluded. It has also failed to attach a copy or part thereof to its
particulars of claim.
[31]
The
starting point is the date of the cession agreement, viz. 18 July
2017. At that time, the ISA between the applicant and the
respondent
had not yet been concluded.
[20]
It was not a ‘participating asset’ that formed the
subject of the cession agreement, argues the respondent. The parties
thereto had, however, made provision for the sale of ‘subsequent
participating assets’ at a future date, such as the
ISA in
question. To that effect, the relevant portions of clause 5.3 of the
cession agreement state as follows:
‘
5.3.1 The
Seller [VFS] shall be entitled… in relation to a pool of
proposed Subsequent Participating Assets…
to deliver to the
Issuer [the applicant], a list containing, inter alia:
(a)
details of all proposed Subsequent Participating Assets… that
the Seller wishes to sell, cede, delegate
and assign to the Issuer in
accordance with the provisions of this Agreement;
(b) the
book value of such Subsequent Participating Assets…
(c)
the Relevant Transfer Date with effect from which the Seller wishes
to sell, cede, delegate and assign
such proposed Subsequent
Participating Assets…
5.3.2 The Issuer
shall be obliged to purchase all proposed Subsequent Participating
Assets… provided that, as at the
Relevant Transfer Date:
(a)
a Sale Supplement… in respect of those Subsequent
Participating Assets… has been completed
and signed by the
Seller and the Issuer… The Seller shall deliver a copy of the
signed Sale Supplement to the Administrator,
for delivery to WesBank,
a division of FirstRand;
[etc]’
[32]
The completion of a ‘sale supplement’ was just one of 11
conditions that had to be fulfilled
before the applicant could
purchase the ‘subsequent participating assets’. The
applicant, argues the respondent, has
failed to plead the fulfilment
of the above conditions, and has failed to attach the ‘sale
supplement’ to its papers,
which would have indicated whether
VFS’s rights and duties were indeed transferred to the
applicant in relation to the ISA
that forms the basis of this
application. Consequently, contends the respondent, the applicant has
failed to demonstrate that it
has the necessary
locus standi
in the action proceedings.
[33]
To this, the applicant merely asserted in argument that it had indeed
pleaded that VFS had transferred
its rights and duties. This had been
done in accordance with the cession agreement.
[34]
The
provisions of rule 32(2)(b) require a plaintiff to verify the cause
of action and the amount claimed, and to identify any point
of law
relied upon and the facts upon which the claim is based. The classic
definition of a cause of action, made by Lord Esher
MR in
Read
v Brown
,
[21]
is the following:
‘
every fact which
it would be necessary for the plaintiff to prove if traversed, in
order to support his right to the judgment of
the court. It does not
comprise every piece of evidence which is necessary to prove each
fact, but every fact which is necessary
to be proved.’
[22]
[35]
In the present matter, the applicant relies on VFS’s transfer
of its rights and duties under
the ISA. The applicant was not an
original party thereto. Whereas the applicant attached a copy of the
ISA, in compliance with
rule 18(6) of the URC, it failed to attach a
copy of the cession agreement. This only emerged when the applicant
brought its application
for summary judgment. From the cession
agreement itself, it is apparent, on the face of it, that the ISA is
a ‘subsequent
participating asset’ and that certain
conditions had to be fulfilled before the applicant could purchase
and accept transfer
of the VFS’s rights and duties.
[36]
The
provisions of rule 32(4) make it clear that the only evidence that
the applicant may present for purposes of its application
for summary
judgment is its supporting affidavit. A court is required to ignore
any additional evidence, such as the cession agreement.
[23]
Here, not only has the applicant failed to attach the cession
agreement to its particulars of claim and to plead the details
thereof,
as required by rule 18(6), but it has also failed to plead
fulfilment of the conditions. Such averments constitute the facts
necessary
for the applicant to prove before judgment can be granted
in its favour. They constitute an integral component of the
applicant’s
cause of action.
[37]
The courts
have previously held that where a plaintiff fails to verify his or
her cause of action with clarity and exactitude, it
is defective and
his or her claim must fail.
[24]
In the present matter, the respondent has argued that the applicant’s
particulars of claim are excipiable. The court is inclined
to agree.
The shortcomings in the applicant’s claim, as identified by the
respondent, give rise to the question of whether
the applicant has
the necessary
locus
standi
to pursue the claim set out in its particulars. This is a triable
issue.
Relief
and order
[38]
The court is satisfied that the applicant’s failure to have
attached the cession agreement to
its particulars of claim and its
failure to have pleaded the details thereof, as well the fulfilment
of the relevant conditions,
amounts to fatal non-compliance with the
provisions of rule 18(6) and renders its particulars excipiable. It
cannot be said that
the applicant has an unanswerable case.
[39]
Consequently, the court is satisfied that the respondent has a
bona
fide
defence. The court cannot grant judgment in favour of the
applicant when there is doubt about its
locus standi
. The
application must be refused.
[40]
The costs must still be decided. If the court was not prepared to
grant the application, then the applicant
argued that costs should be
made in the cause. This was especially so where the procedure did not
allow for a reply. The respondent,
in contrast, argued that it was
entitled to its costs by reason of the applicant’s disregard
for the provisions of rule 18(6)
and the irregular nature of the
application.
[41]
The court is of the view that there is merit in the respondent’s
argument. Considering the shortcomings
in the applicant’s
pleadings, such that it failed to properly disclose a cause of
action, there was simply no basis upon
which it could have launched
the present application.
[42]
Consequently, the following order is made:
(a) the
applications for summary judgment, brought in terms of case number
1206/2022 and case number 1511/2022,
respectively, are dismissed; and
(b) the
applicant is directed to pay the respondent’s costs in relation
thereto.
JGA
LAING
JUDGE
OF THE HIGH COURT
APPEARANCE
For
the plaintiff: Adv
Sephton, instructed
by Huxtable Attorneys, Makhanda.
For
the defendant: Adv
Knott, instructed by Cloete & Co., Makhanda.
Date
of hearing: 02
March 2023.
Date
of delivery of judgment: 23 May 2023.
[1]
The
material facts for purposes of the judgment are essentially the
same. Insofar as there may be minor differences, these will
be
indicated.
[2]
The
subject of the sale was a 2020 Volkswagen Amarok 2.0 BITDI Highline
under case number 1206 / 2022, and a 2017 BMW X5 XDrive30D
M-Sport
under case number 1511 / 2022.
[3]
The
plaintiff claimed an amount of R 927,056 and R 785,102 under the
respective case numbers,
supra
n
2.
[4]
See
Meek
v Kruger
1958
(3) SA 154
(T), at 159-60; and, more recently,
Joob
Joob Investments (Pty) Ltd v Stocks Mavundla Zek Joint Venture
2009 (5) SA 1
(SCA), at 11C-G.
[5]
See
the English authority of
Jacobs
v Booth’s Distillery Co
85 LT 262
(HL); and, most recently in South African case law,
FirstRand
Bank Ltd t/a Wesbank v Maenetja Attorneys
(unreported, GP case no 8557/2021, dated 17 September 2021), at
paragraph [2].
[6]
DE
van Loggerenberg,
Erasmus:
Superior Court Practice
(Jutastat e-publications, RS 17, 2021).
[7]
1973
(1) SA 299
(NC), at 304-5.
[8]
Ibid.
[9]
DE
van Loggerenberg,
op
cit
,
D1-383 to D1-384.
[10]
See
Dowson
& Dobson Industrial Ltd v Van der Werf and others
1981
(4) SA 417 (C).
[11]
The certification was provided
by
a Ms Leanne Jaliel under case number 1206 / 2022, and by a Ms
Melinda Heneke under case number 1511 / 2022.
[12]
(676/2013)
[2014] ZASCA 79
(29 May 2014).
[13]
Maharaj
v Barclays National Bank Ltd
1976
(1) SA 418 (A).
[14]
Stamford
Sales & Distribution
,
n 10,
supra
,
at paragraphs [10] to [12].
[15]
2021 JDR 1571 (WCC).
[16]
At
paragraph [15].
[17]
(Unreported,
ECD case no 2214/2022, dated 30 November 2022.)
[18]
At
paragraph [13].
[19]
At
paragraph [14].
[20]
The
applicant pleaded that it was only concluded on 23 December 2020.
[21]
22
QBD 131.
[22]
Cited
in RC Claassen,
Claassen’s
Dictionary of Legal Words and Phrases
(LexisNexis, July
2022, SI 25).
[23]
Venter
v Kruger
1971 (3) SA 848
(N);
AE
Motors (Pty) Ltd v Levitt
1972 (3) SA 658
(T);
Rossouw
v FirstRand Bank Ltd
2010 (6) SA 439
(SCA), at 453 I-J. See, too, the discussion in
DE
van Loggerenberg,
op
cit
,
at D1-406.
[24]
Visser
v De la Ray
1980
(3) SA 147
(T), at 150.