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[2023] ZAECMKHC 128
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Ricksaw Trade Investments 49 (Pty) Ltd t/a FMMC v Member of the Executive Council Responsible for Education in the Eastern Cape (2370/2022) [2023] ZAECMKHC 128 (21 November 2023)
IN
THE HIGH COURT OF SOUTH AFRICA
(EASTERN
CAPE DIVISION, MAKHANDA)
Case
No: 2370/2022
In
the matter between:
RICKSHAW
TRADE INVESTMENTS 49 (PTY) LTD
t/a
FMMC
APPLICANT
/ DEFENDANT
and
MEMBER
OF THE EXECUTIVE COUNCIL
RESPONSIBLE
FOR EDUCATION IN THE
EASTERN
CAPE
Respondent
/ PLAINTIFF
JUDGMENT
Bloem
J
[1]
The issue is whether the order granted by default on 22 November 2022
against
the applicant, a company, in favour of the respondent, the
Member of the Executive Council responsible for education in the
Eastern
Cape, for payment of R1 531 660, interest thereon
and costs (the order) should be rescinded. Although this is an
application,
I shall refer to the parties as they have been cited in
the summons commencing action, namely as plaintiff and defendant
respectively.
The application for the rescission of the order (the
rescission application) was heard on 5 October 2023. After the
hearing of
submissions, the parties were informed that judgment would
be delivered on 17 October 2023.
[2]
On 12 October 2023 the defendant instituted an interlocutory
application for
an order that it be granted leave to file a further
affidavit. That application, which was opposed by the plaintiff,
caused the
judgment not to be delivered on 17 October 2023. Instead,
submissions were made on 15 November 2023 on whether leave should be
granted to the defendant to file a further affidavit. In the first
part of this judgment I shall deal with the facts contained in
the
affidavits before the interlocutory application was instituted
whereafter I shall deal with the additional facts that the defendant
sought to introduce through the filing of a further affidavit.
[3]
On 27 July 2022 the plaintiff issued summons against the defendant
for payment
of the above amount, interest thereon and costs, being in
respect of a payment allegedly wrongly made by the Eastern Cape
Department
of Education (the department) to the defendant. On 11
August 2022 the sheriff served the summons upon Ms Thiyena Nkola at
the defendant's
principal place of business. It is common cause that
Ms Nkola is the daughter of Bongile Nkola, who deposed to the
founding
and replying affidavits in the rescission application in his
capacity as the defendant’s managing director. The defendant
did not give notice of its intention to defend the action. The
application for default judgment was set down for hearing on
22 November
2022, on which date the order was granted.
[4]
On 14 April 2023 the defendant instituted the rescission application.
Mr Nkola
said in the founding affidavit that the rescission
application was made in terms of rule 31(2)(b) of the Uniform Rules
of Court.
That rule provides that:
“
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.”
[5]
A defendant who seeks the rescission of an order under rule 31(2)(b)
must satisfy
at least two requirements. The first is that the
application must be made within 20 days after the defendant has
acquired knowledge
of the order or judgment against it. Secondly, the
defendant must show good cause for the setting aside of the order. I
now deal
with the first requirement. In the founding affidavit in
support of the rescission application, Mr Nkola said that the
sheriff
served a copy of the order on him on 25 February 2023.
He claimed that was the first time that he became aware of the order
against the defendant. The answering affidavit in the rescission
application was deposed to by the then head of the department,
Mahlubandile Qwase. In his answering affidavit Mr Qwase said
that the sheriff served a copy of the order on Mr Nkola on 18
February 2023. In support of that statement, he annexed a copy of the
return of service, which reflected that the sheriff served
the order
on Mr Nkola on 18 February 2023. In his affidavit in support of the
application for condonation for the late institution
of the
rescission application, which was instituted after Mr Qwase’s
affidavit had been delivered, Mr Nkola said that his
“
memory
says that I became aware of this matter on 25 February 2023
but the return of the sheriff said that the summons
was actually
served on me on 18 February 2023. I know that, when I became
aware of this matter, I immediately contacted my
attorney on behalf
of the applicant and informed him about the matter
.” In the
circumstances, I accept that the sheriff served the order on Mr
Nkola, and therefore on the defendant, on 18 February 2023.
The twenty-day period referred to in rule 31(2)(b) would have
expired on 20 March 2023. The defendant should accordingly have
instituted the rescission application on or before 20 March 2023. As
pointed out above, the rescission application was instituted
only on
14 April 2023, some 17 days after the expiry date. The next
question is why the application was, on the defendant’s
own
version, not instituted within 20 days after the defendant had
acquired knowledge of the order, but 17 days after the
expiry of
the 20-day period.
[6]
In the above quotation, Mr Nkola said that he, on behalf of the
defendant, contacted
his attorney immediately after the order had
been served on him. He said that, although he had made great progress
in his battle
with severe depression, he had memory loss, hence his
belief that he became aware of the order only on 25 February
2023. His
attorney had to consult with him “
more than four
times in order to help [him] recollect events properly
” in
this matter.
[7]
In his answering affidavit, Mr Qwase said that the defendant was
aware of the
action against it before the order was granted. In
support of that statement, he referred to a telephone call that
Amanda Madlanga,
the plaintiff’s attorney, said that she
received from the defendant’s attorney, Sipho Klaas, on 26
October 2022. During
that telephone discussion, Mr Klaas requested
certain documents relating to the plaintiff’s claim against the
defendant.
Ms Madlanga requested Mr Klaas to place the request in
writing, because he had by then not placed himself on record in the
plaintiff’s
action against the defendant. That same
evening, she received an email from Mr Klaas wherein he requested her
to furnish
him with all the documents relevant to the plaintiff's
claim against the defendant, inclusive of the summons. Ms Madlanga
deposed
to an affidavit wherein she confirmed that on 26 October 2022
she had the telephone conversation with Mr Klaas and that, later
that evening, she received the email from him.
[8]
Mr Nkola said that the email was not sent to Ms Madlanga on 26
October 2022,
but on 27 February 2023. The explanation for the date
of 26 October 2022 on the email was that the laptop, from which Mr
Klaas
had sent the email, was malfunctioning. In his confirmatory
affidavit Mr Klaas confirmed that he sent the email to Ms Madlanga on
27 February 2023 and that the laptop that was used “
for
office work was malfunctioning causing a lot of confusion with
dates
”.
[9]
Whether the email was sent and received on 26 October 2022 or
27 February 2023
is immaterial for purposes of establishing
what occurred after the sheriff had served the order on Mr Nkola on
18 February 2023.
All that Mr Nkola said in that regard was that he
contacted his attorney immediately after the service of the order on
him. Mr Klaas
did not say when he consulted with Mr Nkola and
what the aspects were in respect whereof there allegedly was a need
to have more
than four consultations with Mr Nkola. The defence
raised by the defendant to the plaintiff’s claim requires proof
that
the department had requested the defendant to manufacture and
deliver furniture to it or to schools and that the defendant had
delivered the manufactured furniture. Those documents would in all
probability have established the date when the request was made
and
when the furniture was delivered. As it turned out, nothing was said
in Mr Nkola’s affidavit about a request by the department
to
the defendant to manufacture furniture. The only document that was
annexed to his affidavit in that regard was a quotation from
the
defendant to the department for the manufacture of school furniture
amounting to R1 531 660.
[10]
In my view, it would not have taken long to prepare the founding
application papers in the rescission
application had Mr Nkola been
requested to provide Mr Klaas with the request by the plaintiff for
the defendant to manufacture
the furniture.
[11]
Furthermore, on the assumption, without deciding, that the
conversation between Ms Madlanga and Mr
Klaas occurred and the email
was sent and delivered on 27 February 2023, neither Mr Nkola
nor Mr Klaas explained why
Ms Madlanga was not informed of the
alleged difficulties that they experienced with the preparation of
the rescission application
or why an agreement was not sought from
the plaintiff for the application to be instituted after the expiry
of the 20-day period.
[12]
It was
unclear from the affidavits whether Ms Madlanga sent the requested
documents to Mr Klaas after he had sent the above email.
That email
established that, at least as at 27 February 2023, Mr Klaas knew that
Ms Madlanga acted for the plaintiff in the action
against the
defendant. He could have alerted her of the alleged difficulties that
he experienced with Mr Nkola’s alleged
loss of memory and
sought agreement from the plaintiff for an extension of the time
within which to institute the rescission application.
The
defendant failed to do so. Regard being had to all the evidence, I am
of the view that the defendant has not given a satisfactory
explanation for the late institution of the rescission application.
The application for condonation for the late institution of
the
rescission application should be refused. That refusal would mean
that the first requirement of rule 31(2)(b) has not been
satisfied.
For that reason alone, the rescission application under that subrule
should be dismissed.
[1]
[13]
However, if
the finding, that the defendant failed to satisfactorily explain its
failure to institute the rescission application
within 20 days of
acquiring knowledge thereof, is incorrect, the rescission application
should nevertheless be dismissed for want
of good cause. The courts
have deliberately refrained from giving a precise or comprehensive
meaning to the phrase ‘good
cause’. That is so because
any definition of that phrase is likely to interfere with the court’s
wide discretion to
determine whether a defendant has established good
cause. Each case must be determined on its own peculiar facts. The
essential
elements of good cause for the rescission of an order
granted in default are that the applicant must give a reasonable and
acceptable
explanation as to the reasons for its failure to defend
the action; and it must show that it has a bona fide defence to the
plaintiff’s
claim, which defence prima facie carries some
prospect of success.
[2]
[14]
Mr Nkola did not deny that the summons was served by the sheriff on
his daughter on 11 August 2022.
What he denied was that he was aware
of the summons before the order was granted. He stated that even if
his daughter had drawn
his attention to the summons, it would not
have made any difference because his health was fast deteriorating.
His daughter said
that after the sheriff had served the summons on
her, she kept it “
amongst [her father’s] personal
documents hoping
that he would be able to see it and attend to
it after he recovered from his sickness.
” She said that she
did so because she was aware that her father’s depression
emanated from his work problems and that
members of the family had
been given strict instructions by his medical practitioner not to
bother him about anything until he
recovered. Ms Nkola described
herself as an adult. According to the return of service, the
sheriff explained the nature of
the summons to her. She must
have understood that the plaintiff claimed an amount of more than one
million rand from the
defendant. That should have raised an alarm
bell because the defendant was faced with a big claim and something
had to be done
to protect the defendant’s interest. I have
difficulty understanding Ms Nkola’s conduct under those
circumstances.
She did not say that she hid the summons from
her father or that, during that period, he did not have access to his
personal documents.
Nothing prevented him from discovering the
summons amongst his personal documents while he was still depressed.
It boggles the
mind that an adult would adopt such a nonchalant
attitude towards the summons wherein such a big amount of money was
claimed from
the defendant. Her conduct in that regard boarded on
being reckless. In my view, what Ms Nkola did with the summons does
not provide
a reasonable and acceptable explanation for the
defendant’s failure to defend the action.
[15]
The plaintiff’s claim against the defendant was that on 15
December 2022 and in the bona fide
and reasonable belief that the
department owed R1 531 660 to the defendant, paid that
amount to the defendant when it
was not owing to it and that the
defendant nevertheless appropriated that amount. That amount
was based on an invoice dated
7 December 2020, which the defendant
sent to the department. It is common cause that during May 2018 the
department and the defendant
concluded a service level agreement in
terms whereof the defendant was required, on request, to manufacture
and deliver furniture
to the department or schools for payment. The
plaintiff’s claim was that the defendant had neither
manufactured nor delivered
any school furniture to the department or
to a public school in terms of the service level agreement and that
the R1 531 660
that was paid to the defendant was neither
due nor owing by the department to the defendant. It is common cause
that the defendant
has, to date, not delivered furniture to the
department or any school, despite the fact that the above invoice,
upon which the
erroneous payment was based, reflected that the
furniture had been delivered at various inland and coastal schools in
the Eastern
Cape.
[16]
Mr Nkola admitted that the defendant received the R1 531 660
from the plaintiff. I set
out hereunder what Mr Nkola claimed to
have been the defendant’s bona fide defence, under the heading
of bona fide defence:
“
28. I
was not afforded an opportunity to defend the action, the alleged
Summons was never served to me by the Respondent
and that I have not
met them until such time they sent to my attorney after the request
was made to the Respondent’s Attorneys.
29.
I further submit that at the time of the issuing of Summons I was in
a sick bed and that there was application
to compel the Respondent
which is still running before the Bhisho High Court under case number
229/2022 as per attached Notice
of Motion in this application.
30.
It is the above reasons which I believe that I do not owe the
Respondent any monies, I am not denying
the payment paid to me in
December 2020 nor am I denying the fact that I had contractual
obligations with the Respondent but the
Respondent have to comply
with my constant request from him to furnish the Applicant with the
delivery instructions. Remember it
was and it is not easy for me to
just deliver to any school as I was dealing with furniture of various
school in the Eastern Cape,
it is for this reason why I consistently
nagged the Respondent to issue the delivery instruction on which he
failed dismally to
issue same to the Applicant until this date. I am
still looking forward to receive same from the Respondent.
31.
I have complied with my contractual obligations but the Respondent
failed to submit to the Applicant
the delivery instructions until to
date.
32.
I submit that I have a bona fide defence to defend any action against
my company including the main
action.
33.
It is against this background and reasoning that the default judgment
entered against should be rescinded.”
(sic)
[17]
In my view, the defendant has failed to show that it has a bona fide
defence which prima facie carries
some prospect of success to the
plaintiff’s claim. One would have expected the defendant to
have shown that the plaintiff
requested it to manufacture furniture,
that the furniture was delivered to the department or to a particular
school or schools
and that the defendant invoiced the department for
the delivered furniture. Clause 10.3 of the service level
agreement provides
that payment to the defendant shall take place
after the furniture had been delivered. What happened in this case
was, on the defendant’s
own version, that payment was made
before the furniture could be delivered. In his founding
affidavit in the rescission application,
Mr Nkola said that he
“
consistently nagged
” the department to issue
delivery instructions, but that it failed to issue such
instructions. The defendant’s
explanation was that it
retained the amount that the plaintiff paid to it because the
plaintiff did not issue a delivery instruction
to it. That version is
irreconcilable with the invoice on which the payment was based which
reflected that the furniture had been
delivered; and with what Mr
Nkola said in his replying affidavit, namely that the defendant
issued that invoice “
for the manufacturing, storage and
delivery, even though same had not taken place
”. The
defendant’s explanation is unsatisfactory and so improbable
that it must be rejected.
[18]
What was annexed to Mr Nkola’s founding affidavit was a
quotation dated 27 October 2020
by the defendant for 200
teachers’ tables, 200 teachers’ chairs, 1 000 single
tables and 1 000 learner chairs
totalling R1 531 660.
Mr Qwase explained that, when there was a need for school furniture,
the department would
request the defendant to provide it with a
quotation in respect of a certain number of identified pieces of
furniture. On
receipt of the defendant’s quotation, the
department would establish whether it had sufficient funds to
instruct the defendant
to manufacture the furniture according to the
quotation. If the budget allowed it, the department would place an
order. Mr Qwase’s
explanation found support from paragraph 3 of
the letter of award dated 15 June 2017 that the previous head of the
department sent
to the defendant. In that paragraph the defendant was
informed that the service level agreement depended on “
budget
availability and the need
”. The original set of affidavits
showed that there was a quotation but no order from the defendant.
[19]
What was also annexed to Mr Nkola’s affidavit was a letter
dated 29 May 2021 from the defendant
to the head of the department
wherein a complaint was made about a certain Mr Harmse who allegedly
did not place orders for school
furniture with the defendant. In
paragraph 3 of that letter Mr Nkola placed it on record that “
to
date the department has not furnished [the defendant] nor given
delivery instructions, yet Mr Harmse has the guts to withhold
[the defendant’s] school furniture orders which is totally
unfair to say the least
”. In that letter Mr Nkola
complained that the department withheld school furniture orders from
the defendant. Despite the
overwhelming evidence against the
defendant and the absence of proof of an order for furniture, Mr
Madukuda, counsel for the defendant,
nevertheless submitted at the
hearing on 5 October 2023 that the defendant placed an order for the
manufacture of furniture. On
the evidence contained in the original
set of affidavits, that submission was unsustainable for lack of a
factual basis.
[20]
In my view, on the original application papers, the defendant failed
to demonstrate a bona fide defence,
which prima facie has some
prospect of success to the plaintiff’s claim. There was no
evidence to indicate that the department
placed an order for school
furniture to the value of R1 531 660 to be manufactured and
delivered. The application for
the rescission of the order should, in
the circumstances, be dismissed. I will now consider whether the
defendant has made out
a case for the filing of a further affidavit
and, if such affidavit is admitted, whether it changed the position.
[21]
In motion
proceedings three sets of affidavits are ordinarily filed, namely
founding, answering and replying affidavits. Rule 6(5)(e)
provides
that the court may in its discretion permit the filing of further
affidavits. A court is unlikely to grant leave to a
party to file a
further affidavit to set out facts that should have been in the
earlier affidavit, in the absence of a satisfactory
explanation as to
why those facts were not in the earlier affidavit in the first
place.
[3]
[22]
It is very difficult to appreciate whether the defendant has an
explanation why the facts that it sought
to introduce by way of the
filing of a further affidavit were not set out in its founding or
replying affidavits. Mr Klaas said
that, after the hearing on
5 October 2023, he “
took time to reason with [Mr
Nkola] at his house in order to help him remember the whereabouts of
this important information whereafter
I took it upon myself to travel
to the applicant’s offices at Mthatha in order to look for
these documents and I was able
to find them from the applicant's
offices …
”.
[23]
As pointed out above, the defendant’s defence required proof
that the plaintiff requested it
to manufacture furniture and that the
furniture had been delivered. Mr Klaas, as an attorney, must have
realised when he prepared
the rescission application what the
defendant was required to do to demonstrate that it had a bona fide
defence to the plaintiff’s
claim. Before the institution of the
rescission application, Mr Klaas could have searched for the
documentation to demonstrate
that the plaintiff had ordered furniture
from the defendant and that the defendant had delivered the
manufactured furniture, if
that was the case. He failed to do so. In
the absence of a reasonable explanation why those facts were not
placed before the court
in the affidavits prior to the hearing on
5 October 2023, the application for the filing of a further
affidavit should be
refused.
[24]
However, even if regard is had to the contents of the defendant’s
further affidavit, which, coincidentally
was deposed to by Mr Klaas,
who obviously had no knowledge of the facts relating to the
plaintiff’s claim and the defendant’s
defence, the
application for the filing of the further affidavit must be dismissed
because, despite the fact that new documents
came to light regarding
the payment of the R1 531 660, the defendant did not
produced any proof that the department placed
an order with the
defendant to manufacture the furniture. Without such an order, the
defendant had no mandate from the department
to manufacture furniture
to the value of R1 531 660.
[25]
The defendant reiterated in the further affidavit that it received
the amount of R1 531 660.
The plaintiff’s case was
that the defendant “
was paid without any purchase order
having been issued, without any delivery instruction and without any
of the items that the department
invoice for having been delivered
”.
The reason for that payment, said the head of department, was because
departmental officials misled the department into
believing that the
school furniture had been delivered, when that was not the case.
[26]
The defendant has admitted in the further affidavit that it had not
delivered the furniture, claiming
that the “
only reason the
furniture has not been delivered to this day is that the applicant
insists on the delivery instructions, the importance
of which the
respondent had not denied
”. The plaintiff contended that an
instruction to deliver furniture is given before the department
issues a purchase order
and before payment is made. That makes sense.
It means that after the department had ascertained that it had
sufficient funds to
pay the defendant for the furniture, as quoted,
it will place an order for the manufacturing of the furniture. Once
payment has
been requested and processed, an instruction to deliver
the furniture will be issued. After the delivery of the furniture,
the
defendant would be paid. The defendant's version was that the
delivery instruction “
was to follow immediately after the
payment but the respondent failed to issue the instruction
”.
That version is inconsistent with the clear provisions of clause 10.3
of the service level agreement and is so improbable
that it must be
rejected.
[27]
In all the circumstances, the further affidavit was of no assistance
to the defendant, as it did not
remedy the shortcomings in the
defendant's earlier affidavits.
[28]
The plaintiff has successfully opposed the rescission application.
There is no reason why the defendant
should not be ordered to pay the
costs of the rescission application as well as the application for
the filing of a further affidavit.
[29]
In the result, it is ordered that:
1.
The application for
the rescission of the order that was granted on
22 November 2022 against the applicant in favour of the
respondent be
and is hereby dismissed.
2.
The applicant shall
pay the respondent’s costs of the
application, such costs to include the costs of the application for
the filing of a further
affidavit and the hearing on 5 October 2023
and 15 November 2023.
GH
BLOEM
Judge
of the High Court
APPEARANCES
For
the applicant / defendant:
Mr Z
Madukuda, instructed by Sipho Klaas Attorneys Inc, East London and
Mgangatho Attorneys, Makhanda.
For
the respondent / plaintiff:
Mr TL
Luzipho of TL Luzipho Attorneys, Mthatha and Yokwana Attorneys,
Makhanda.
Date
of hearings:
5
October 2023 and 15 November 2023
Date
of delivery of the judgment:
21
November 2023
[1]
Colyn v
Tiger Food Industries Ltd t/a Meadow Feed Mills (Cape)
;
[2003] ZASCA 36
;
2003 (6) SA 1
(SCA;
(2003) 2 ALL SA 113
(SCA) para
12.
[2]
Chetty
v Law Society, Transvaal
1985 (2) SA 756
(A) at 765A-C;
[1985] 2 All SA 76
(A) at 79. See
also
Melane
v Santam Insurance Co Ltd
1962 (4) SA 531
(A) at 532C-E.
[3]
Rhoode
v De Kock
[2012] ZASCA 179
;
2013 (3) SA 123
(SCA);
[2013] 2 All SA 389
(SCA)
par 19.