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[2022] ZAFSHC 199
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Greenway Burial Society CC and Another v Seartec Trading (Pty) Ltd (2541/2019) [2022] ZAFSHC 199 (25 August 2022)
IN
THE HIGH COURT OF SOUTH AFRICA
FREE
STATE DIVISION, BLOEMFONTEIN
Case
no:
2541/2019
Reportable:
YES/NO
Of
Interest to other Judges: YES/NO
Circulate
to Magistrates: YES/NO
In
the matter between:
GREENWAY
BURIAL SOCIETY CC FIRST
APPLICANT
ELIZABETH
MAGDALENA KOEN SECOND
APPLICANT
and
SEARTEC
TRADING (PTY) LTD RESPONDENT
BEFORE
:
CHESIWE, J
HEARD
ON:
17 JUNE 2022
DELIVERED
ON:
25 AUGUST 2022
[1]
This is an application for a rescission of a default judgment granted
by this court against
the Applicant (Defendant in the main action) on
28 June 2018 under case number
2023/2018
on the grounds that
the Respondent (Plaintiff in the main action) issued summons claiming
for rental arrears amounting to R443
329.27. The Applicants seeks an
order that the default judgment granted against it be rescinded and
that the non-compliance with
the rules be condoned.
[2]
The
Applicants
did not file a notice of
intention to defend the action. As a consequence, thereof, the
Respondent
proceeded to obtain default
judgment against the Applicants for the amount claimed.
[3]
The application is opposed by the Respondent. Prior to hearing the
application, the Applicants
proceeded with an application for
condonation for the late filing of the rescission application, which
the Respondent opposed.
[4]
It is well
settled that in considering condonation applications, the Court has a
discretion to be exercised judicially upon a consideration
of all the
facts and in essence it is a question of fairness for both sides.
Condonation is not a mere formality and it is not
to be had “merely
for the asking”
[1]
. The
Court has to take into consideration the degree of lateness, the
reasons for lateness, prospects of success and prejudice
to the
respondents
[2]
. The Applicant
must show that it did not wilfully disregard the time frames provided
for in the Rules of Court.
[5]
The First
Applicant as indicated in the founding affidavit on page 8, has shown
that she did not wilfully disregard the time frames
provided for in
the Rules of Court. The First Applicant is obliged to satisfy the
Court that there is sufficient good cause for
non–compliance of
the rules. In
Ferreira
v
Ntshingila
,
[3]
the
court said:
“
Where
non-observance of the Rules in a matter have been as flagrant and as
gross, and application for condonation should not be
granted,
whatever the prospects of success might be.”
[4]
[6]
It is my overall impression, based on the facts and circumstances of
the application, I
should exercise my discretion in favour of the
Applicants. I have no reason to doubt that good cause exists. It
would therefore
be in the interests of justice that the Applicants be
granted the relief sought.
[7]
The background on this matter briefly is as follows: The Second
Applicant is a 71 years
old female and is the sole director of the
First Applicant. The First Applicant entered into two separate
contracts with the Respondent.
The Second Applicant signed as surety
on behalf of the First Applicant. The contract entailed the rental of
copier machines
(MX5110N and MX3114N)
and a cabinet
(AX0301)
with a monthly rental of R4 778,00 and R3 521,29 respectively.
On or about December 2017, the First Applicant breached the
contract.
On 10 June 2019, the Respondent’s legal representative
proceeded to issue summons against the Applicants.
[8]
The Applicants filed a notice to defend, but did not file their plea,
seemingly on advice
of their legal representative. Consequently, a
default judgment was granted by this court, followed by a warrant of
execution,
whereupon several goods were attached. On 2 September
2021, a further warrant of execution was issued to attached the bank
account
of the First Applicant.
[9]
The Applicants approached this court with an application to rescind
and set aside the default
judgment.
[10]
It is
common cause between the parties that the
National
Credit Act
[5]
(NCA), is not applicable in
their matter.
[11]
Counsel on behalf of the Applicants in oral argument and written
Heads of Argument submitted that the application
is of great
importance for the Applicants and not merely an attempt to delay the
matter or to frustrate the Respondent. Counsel
submitted that the
Applicants have a complete defence and that there are prospects of
success. Counsel submitted that the default
and warrant were issued
by the Registrar, as currently these are now issued and granted in
open court. Counsel further submitted
that the goods were not
returned to the Applicants, nor was there a cancellation of the
agreement. The Second Applicant is therefore
not delaying the matter
and only needs to present her case.
[12]
Counsel on
behalf of the Respondent submitted in oral argument that the
Applicants knew that they were in arrears and owed the Respondent
and
that the Applicant’s application is not
bona
fide
as
a Notice of Bar was served on the Applicants on the 25 July 2019.
Counsel further submitted that the issue of judicial oversight
was
not pleaded in the papers and that the Applicants did not make out a
case of a
bona
fide
defence. Counsel further submitted that the
Conventional
Penalties
[6]
(CPA), in this instance is discretionary and therefore not
applicable.
[13]
It is trite
that an application for rescission of judgment in terms of Rule 31
(2) (b) of the Uniform Rules of Court requirements
are well
established as stated in
Colyn
v Tiger Food Industries Ltd t/a Meadow Feed Mills (Cape),
[7]
that:
“
The applicant must
show cause why the remedy should not be granted. That entails (a)
giving a reasonable explanation of the default;
(b) showing that the
application is made
bona fide
; (c) showing that there is a
bona fide
defence to the plaintiff’s claim which
prima
facie
has some prospect of success.”
In addition, the
application must be brought within 20 days after the defendant has
obtained knowledge of the judgment.
[14]
The
law governing an application for rescission under Uniform Rule 42(1)
(a) is trite.
The
applicant must show that the default judgment or order had been
erroneously sought or erroneously granted.
If
the default judgment was erroneously sought or granted, a court
should, without more, grant the order for rescission.
[8]
It
is not necessary for a party to show good cause under the subrule.
[9]
Generally a judgment is erroneously granted if there existed at the
time of its issue a fact which the Court was unaware of, which
would
have precluded the granting of the judgment and which would have
induced the Court, if aware of it, not to grant the judgment.
[15]
In order
for an application of rescission order to succeed in terms of common
law, the Applicants must give a reasonable (and obviously
acceptable)
explanation for the default; show that the application is made
bona
fide
and show that she has a
bona
fide
defence which
prima
facie
carries some prospect of success.
[10]
[16]
It is
appropriate to approach the application having regard to the
requirements of Rule 27 and Rule 31 (2) (b) in an integrated
manner.
This entails the exercise by the Court of a wide discretion upon
consideration of all the relevant circumstances.
[11]
[17]
The first requirement to be met by the Applicants claiming rescission
of judgment is the demonstration of
good cause and that a notice to
defend was not served. However, in this instance the Applicants
served a notice to defend, but
did not file their plea. The Second
Applicant explained in the Founding Affidavit on page 10, paragraph
9.1 as follows:
“
When a notice of
bar was received. I was advised by my erstwhile attorney of record
that filing a Plea would attract summary judgment
proceedings and
that I do not have reasonable prospects of success in opposing such
an application and raising a defence and further,
that litigation in
the high Court would lead to additional costly expenses being
incurred by myself and the CC for no good reason.”
[18]
The Second Applicant goes further at paragraph 9.3 of the Founding
Affidavit as follows:
“
Notwithstanding my
intention to defend the action, as a lay person, I accepted the legal
advice of my erstwhile attorney of record
and a plea was therefore
never filed on behalf of myself and the CC.”
[19]
Furthermore, the Second Applicant explained that when the financial
situation of the First Applicant was
affected by the signing of a new
lease agreement which added on more equipment, as a result, it
affected the finances of the First
Applicant. The Second Applicant
then attempted to negotiate with the Respondent but was unsuccessful.
[20]
The
Applicants’ disputed the amount owed, but conceded that they do
owe the Respondent. However, the amount owed constituted
a penalty as
defined in the CPA and that the amount is unreasonable and excessive
under the circumstances.
[12]
I
am inclined to agree with the Applicants, as the Respondent does not
indicate if the goods were sold and if that amount was deducted
from
the amount claimed.
[13]
[21]
This Court has no option, other than to be sympathetic towards the
Second Applicant. Being a 71-year-old
and obviously depended on the
advice of her legal representative, she was bound to accept the
advice that was given to her. She
however later terminated the
mandate of the said attorney. Even though, the Second Applicant was
aware of the warrant of execution
when she bought certain items at
the auction, she explained that these items had sentimental value as
it is items she inherited
from her late brother. It is understandable
that such items will have sentimental value and are not easy to let
go off. The court
will not fault her for having known about the
warrant of execution nor filing the application to rescind at that
stage. The Second
Applicant obviously had the urgency at that stage
to save her inheritance from being sold.
[22]
Even if, the Second Applicant’s explanation was poor for her
default, which in my view is not, she
may still show that she has a
bona fide
defence. The Applicants raised a defence based on
the CPA, Section 3(1) thereof as well as that there was no judicial
oversight
by this court. It is only recently that all defaults
judgments and warrants of execution have to be done in open court.
The Applicants
in this case raised the issue of judicial oversight,
in my view the Courts are there to assist a litigant who makes the
Court aware
of any prejudice he or she will suffer if there was no
judicial oversight in any matter that was before it.
[23]
The Court
is given a wide discretion in terms of Rule 31 (2) (b) when dealing
with words such as good cause. The Court’s discretion
must be
exercised after proper consideration of all the relevant
circumstances. The Court may not come to the assistance
of an
Applicant/Defendant whose default was wilful or due to gross
negligence.
[14]
The Second
Applicant clearly explained that she as a lay person relied on the
advice of her legal representative. Indeed, the conduct
of the Second
Applicant’s erstwhile representative clearly prejudiced the
Applicants.
[24]
The
general approach of the Courts to an application for rescission was
stated by Smalberger J, (as he then was) in the matter of
HDS
Construction (Pty) Ltd v Wait,
[15]
the
court made a determination in so far as that,
“
the
judgment is not merely there for the taking. The applicant must prove
that good cause exists to rescind the judgment before the
court will
grant a rescission order. The applicant must satisfy the principle of
‘good cause’. In determining
whether or not good
cause has been shown, and whether the applicant has given reasonable
explanation as to the reasons for his
default in defending the
matter, the Court is given a wide discretion.”
[25]
I am satisfied that the Applicants’ defences are sufficient to
establish a
bona fide
defence that
prima facie
carries
some prospect of success and that the Applicants’ reasons for
defending the default judgment deserves an opportunity
to be
ventilated before Court.
COSTS
[26]
It is trite that the general rule in respect of costs is that costs
order usually follows the successful
party. The Respondent prayed for
costs on an attorney client scale as provided for in the lease
agreement.
[27]
The basic rule is that costs are in the discretion of the court. This
discretion is wide, though unfettered
and must be exercised
judicially upon a consideration of the facts of each case. I am of
the view that the costs of the application
shall be costs in the main
action.
[28]
I accordingly make the following order;
1.
The default judgment granted by the Registrar
of this court on
19 December 2019
is rescinded and set aside;
2.
The writ of execution issued in pursuance of
the said default judgment, granted by the Registrar of this Court on
6 February 2020
is rescinded and set aside;
3.
The further writ of execution issued under Rule
45(8) and Rule 45(12) by the Registrar of this Court on
2
September 2021
is rescinded and set
aside;
4.
The Applicants are afforded leave to file their
plea in the main action within ten (10) days from the date of this
order;
5.
The costs of this application shall be costs in the main action.
Chesiwe,
J
On
behalf of the Applicants: Adv
R Bester
Instructed
by: Horn
& Van Rensburg Attorneys
BLOEMFONTEIN
On
behalf of the Respondent: Adv TS
Miller
Instructed
by: C/o
Maree & Partners
BLOEMFONTEIN
[1]
Uitenhage Transitional Local Council v South African Revenue
Service,
2004 (1) SA 292
(SCA) at para (6).
[2]
Melanie v Santam Insurance Ltd
1962 (4) SA 531
(A) at 532 c-f;
Dengentenge Holdings (Pty) Ltd v Southern Sphere Mining and
Development Company Ltd
[2013] 2 ALL SA 251
(SCA) at para [11].
[3]
1990
(4) SA 271
(A) at 282 J – A.
[4]
See
also Blumenthal and Another v Thomson NO and Another
[1993] ZASCA
190
;
1994 (2) SA 118
(A) at 121I-122B.
[5]
Act 34 of 2005
[6]
Act 15 of 1962
[7]
2003 (6) SA 1
(SCA),
at para 11
[8]
National
Pride Traiding 452 v Media 24,
2010 (6) SA 587
(ECP) para 31.
[9]
Bakoven
Ltd v GJ Howes (Pty) Ltd
1992 (2) SA 466
(E) at 471G.
[10]
Chetty
v Law Society, Transvaal 1985 (2) SA 756 (A)
[11]
Silber v Wholesalers (Pty) Ltd
1954 (2) SA 354
(A) at 352
[12]
Section 3 (1) prohibits the recovery of a penalty which is out of
proportion to the prejudice suffered by the creditor
and the
court may in such instances, if the penalty is excessive, reduce it
to such as extent as may be equitable in the circumstances.
[13]
Plumbago Financial Services (Pty) Ltd t/a Toshiba Rentals v Janap
Joseph t/a Project Finance 2008 (3) SA 47 (C)
[14]
Grant
v Plumbers (Pty) Ltd 1949 (2) SA 470 (O)
[15]
1979
(2) SA 298
(E) at 300 F – 301 C.