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[2022] ZAECMKHC 24
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Blue Crane Route Municipality v South African National Parks Board (953/2021) [2022] ZAECMKHC 24 (31 May 2022)
IN
THE HIGH COURT OF SOUTH AFRICA
(EASTERN
CAPE DIVISION, MAKHANDA)
CASE
NO: 953/2021
In
the matter between:
BLUE
CRANE ROUTE MUNICIPALITY
Respondent/Plaintiff
and
SOUTH
AFRICAN NATIONAL PARKS BOARD
Applicant/Defendant
JUDGMENT
BLOEM
J
:
1.
On 5 April 2021 the sheriff served a
summons on the South African National Parks Board, the defendant in
the action and the applicant
herein, wherein the Blue Crane Route
Municipality, the plaintiff in the action and the respondent herein,
claimed an order that
the defendant should pay to it the amount of R4
198 191.09, interest thereon and costs. The defendant did not deliver
a notice
of intention to defend. On 24 August 2021 this court granted
an order by default that the defendant should pay to the plaintiff
the above amount claimed together with interest and costs (the
order). On 27 September 2021 the defendant launched this application
for an order that the default judgment be set aside. Although this is
an application, I shall refer to the parties as they have
been cited
in the action.
2.
In
its particulars of claim the plaintiff alleged that the defendant is
the owner of two farms, farm 410 and farm 244 (the farms
or the
property), which are within its area of jurisdiction. It alleged
that, by virtue of the provisions of the Local Government:
Municipal
Property Rates Act
[1]
(the
Municipal Property Rates Act), it levied rates on the property, that
the defendant failed to pay those rates in the sum of
R3 365 460.59
in respect of farm 410 and R832 730.50 in respect of farm 244, the
total being R4 198 191.09. Since the defendant
did not deliver a
notice of intention to defend, the plaintiff set the matter down for
and obtained default judgment on 24 August
2021.
3.
The defendant seeks to have the default
judgment rescinded on the basis of rule 42(1)(a), alternatively, rule
31(2)(b). Rule 42
provides for the variation and rescission of
orders. Rule 42(1)(a) reads as follows:
“
The
court may, in addition to any other powers it may have, mero motu or
upon the application of any party affected, rescind or
vary—
(a) an
order or judgment erroneously sought or erroneously granted in the
absence of any party affected thereby…”
4.
According to the affidavit which was filed
in support of the application for the rescission of the order, one of
the defendant’s
defences seems to be based on section 17(1)(e)
of the Municipal Property Rates Act. Section 17 makes the levying of
rates on certain
property impermissible. Section 17(1)(e) provides
that a municipality may not levy a rate:
“
(e)
on those parts of a
special nature reserve, national park or nature reserve within the
meaning of the
National Environmental Management: Protected Areas
Act, 2003
or of a national botanical garden within the meaning of the
National Environmental Management: Biodiversity Act, 2004
which are
not developed or used for commercial, business, agricultural or
residential purposes.”
5.
The defendant contends that the plaintiff
does not have the power to levy a rate on the entire property, which
forms part of a national
park, but only those parts which are
developed or used for commercial, business, agricultural or
residential purposes. The defendant
alleged that the property has
housing structures which are being used for storage purposes and
housing of the defendant’s
staff working in the area. Those
structures were not developed by the defendant, but were “
inherited
”
when it acquired the property in 2001 and 2003 respectively. The
defendant alleges that the property is not used for commercial,
business, agricultural or residential purposes “
in
the context of a national park”
or “
in the context of the
Municipal Property Rates Act
”.
Despite the structures being used to house its staff, on the
defendant’s own version, it nevertheless denies that
the
property is used for residential purposes.
6.
It is the defendant’s case that the
plaintiff is not entitled to the judgment because the rates that it
levied on the property
is based not only on those parts of the
property which are found to be used for commercial, business,
agricultural or residential
purposes, but that the rate is levied on
the entire property. By doing so, the plaintiff misconceived its
powers, it was submitted.
It was also submitted that had the court
been aware that the plaintiff misconceived its powers when it granted
the order, it would
not have granted it. It was accordingly submitted
that the order was erroneously granted.
7.
It is apparent from the above, that the
defendant does not attack the procedure that was followed when the
plaintiff obtained the
order. The case that the plaintiff set out in
its particulars of claim is that it levied a rate on the property in
terms of the
Municipal Property Rates Act, that the defendant failed
to pay the levied rate and that it was entitled to judgment in the
amount
claimed. The defence now raised by the defendant (which was
not before the court when the order was granted) is that the
plaintiff
was not entitled to levy the rate in the amount claimed.
8.
A
judgment to which a party is procedurally entitled cannot be
considered to have been granted erroneously by reason of facts of
which the Judge, who granted the default judgment, was unaware.
[2]
That is the case even where a defendant wanted to defend an action
but did not do so because an application for summary judgment
was
brought to the attention of such defendant’s attorney of record
but not the instructing attorney. In
Colyn
v Tiger Food Industries Ltd t/a Meadow Feed Mills (Cape)
[3]
both attorneys formed part of the same firm, but were stationed in
Cape Town and Bellville respectively.
9.
The fact that the present defendant may not
have been in wilful default of the delivery of a notice of intention
to defend cannot
transform an order to which the plaintiff was
procedurally entitled into an erroneous order. In the circumstances,
the defendant
is not entitled to the rescission of the order on the
basis of rule 42(1)(a).
10.
I now consider whether or not the order
should be rescinded on the basis of rule 31(2)(b). That subrule
reads as follows:
“
(a)
Whenever in an action the claim or, if there is more than one claim,
any of the claims is not for a debt or liquidated demand and a
defendant is in default of delivery of notice of intention to defend
or of a plea, the plaintiff may set the action down as provided in
subrule (4) for default judgment and the court may, after hearing
evidence, grant judgment against the defendant or make such order as
it deems fit.
(b) 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.”
11.
Rule
31(2)(b) gives the court a discretion to set aside a default judgment
upon good cause shown. In order to show good cause an
applicant for
rescission of a default judgment should: (i) give a reasonable
explanation for his or her default; (ii) make a
bona
fide
application; and (iii) show that he or she has a
bona
fide
defence to the plaintiff’s claim.
[4]
12.
All
the facts relevant to each of the above factors must be balanced in
the exercise of the court’s discretion. A slight delay
and a
good explanation therefor may help to compensate for prospects of
success which are not strong, or an apparently good defence
may
compensate for a poor explanation.
[5]
On behalf of the plaintiff it was submitted that the defendant has
failed to make out a case for rescission of the order in terms
of
rule 31(2)(b).
13.
Regarding the explanation for the
defendant’s failure to deliver a notice of intention to defend,
the facts are that the defendant’s
legal advisor, Fahlaza
Monaledi, requested the plaintiff’s attorney, Zanele George, to
communicate with the plaintiff to
hold the litigation in abeyance,
the summons having been served on the defendant on 6 April 2021. In a
meeting that was held on
30 April 2021, Ms. George informed
those in attendance on behalf of the defendant, including Ms.
Monaledi, that she will
take instructions from the plaintiff to
proceed with the litigation “
if
they do not get any feedback from SanParks”
.
On 13 May 2021 Ms. George informed Ms. Monaledi that the
plaintiff had agreed not to proceed with the action until 7 June
2021.
14.
On 7 June 2021 Ms. Monaledi informed Ms.
George that the defendant was unable to make a financial offer to the
plaintiff and requested
the plaintiff to hold the litigation in
abeyance “
until Government provide
a solution to the matter
”. In her
email of 8 June 2021 Ms. George informed Ms. Monaledi that
her instructions were to proceed with the litigation,
but that the
plaintiff was prepared to further delay the litigation only upon
receipt of a proposed initial payment. There was
no response to that
email from the defendant or Ms. Monaledi. Although the application
for default judgment was issued on 15 June
2021, it was only on 12
August 2021 that it was set down for hearing on 24 August 2021. Ms.
Monaledi stated that she became aware
on 6 September 2021, when Ms.
George telephoned her, that default judgment had been granted against
the defendant on 24 August
2021. She instructed the defendant’s
attorneys to institute the present application, which was done on 27
September 2021,
three weeks after 6 September 2021.
15.
In her affidavit Ms. Monaledi alleged that
the defendant did not expect the plaintiff to take default judgment
when “
the summons [was the]
subject of discussion and [there was] exchange of correspondence for
more than two months
”. It is
correct that the parties corresponded for about two months until 7
June 2021. After Ms. George’s email
of 8 June 2021 there
could have been no doubt that, insofar as the plaintiff was
concerned, the time for correspondence was over
unless the plaintiff
received the proposed initial payment. There is no basis for the
defendant’s contention that it laboured
under the belief that,
if the plaintiff was going to continue with the litigation, it would
alert the defendant that it would apply
for default judgment. In my
view, in the light of the email of 8 June 2021, there were no grounds
upon which such a belief could
have been based.
16.
The defendant’s explanation for its
inactivity after 8 June 2021 and its failure to deliver a notice of
intention to defend
after it was informed on 8 June 2021 that the
plaintiff would proceed with the litigation is poor, almost
non-existent.
17.
An
application for rescission of a judgment cannot be dismissed merely
because an applicant has failed to give a reasonable or no
explanation for the delay, because the defendant might have put up a
bona
fide
defence with good prospects of success. Such a defence might make up
for the lack of explanation for the delay. The defendant alleges
that
it has two defences. The first is that the plaintiff misconceived its
powers to levy a rate on the entire property, when it
is entitled to
do so only on those parts which are developed or used for commercial,
business, agricultural or residential purposes.
Secondly, it alleges
that, because the plaintiff failed to comply with the provisions of
the Intergovernmental Relations Framework
Act,
[6]
it was prohibited from instituting the present legal proceedings
against it.
18.
It is common cause that the plaintiff has
levied rates in respect of the entire property. The issue to be
determined is whether
the plaintiff was permitted to do so or whether
it could levy rates only on those parts of the property which are
used for commercial,
business or residential purposes. Mr. Buchanan,
counsel for the plaintiff, submitted that the plaintiff was entitled
to levy a
rate in respect of the two farms which form part of the
national park. Because it is common cause that there are houses on
those
farms which are used to accommodate the defendant’s
staff, those farms are used for residential purposes. The
exclusionary
effect of section 17(1)(e) does therefore not apply
to the farms. Mr. Beyleveld submitted that, if it is found that the
houses
on the property are used for residential purposes, the
plaintiff would be entitled to levy a rate only in respect of the
land on
which the houses are built. He also submitted that, insofar
as visitors to the property pay an entrance fee and if it is found
that the property is therefore used for commercial or business
purposes, the plaintiff would be entitled to levy a rate only in
respect of those parts of the property that are being used for such
purposes, for example the land on which restaurants and hotels
are
built or the roads that are used by visitors.
19.
The power of a municipality to levy a rate
on property in its area is derived from section 2 of the Municipal
Property Rates Act.
That section reads as follows:
“
Power
to levy rates
(1)
A
metropolitan or local municipality may levy a rate on property in its
area.
(2) ......
(3) A municipality must
exercise its power to levy a rate on property subject to-
(a)
section 229 and any other applicable provisions of the
Constitution;
(b)
the provisions of this Act; and
(c)
the rates policy it must adopt in terms of section 3.”
20.
As it apparent from section 2(3)(b), the
power of a municipality to levy a rate is subject to the provisions
of the Municipal Property
Rates Act. Section 7(1) provides that the
power of a municipality to levy rates is limited to rateable property
in its area. Rateable
property is defined in section 1 to mean
“
property on which a municipality
may in terms of section 2 levy a rate, excluding property fully
excluded from the levying of rates
in terms of section 17
”.
21.
It appears to me that section 17(1)(e) of
the Municipal Property Rates Act gives the plaintiff the power to
levy rates only on those
parts of the property which are used for
commercial, business or residential purposes. The defendant’s
interpretation of
that subsection seems to me to be reasonable, when
applied to the facts contained in the parties’ affidavits. That
being
the case, it appears that the defendant has a reasonably good
defence to the plaintiff’s claim, because if the plaintiff is
permitted to levy a rate on only those parts which are found to be
used for commercial, business or residential purposes, as submitted
by Mr. Beyleveld, the plaintiff would be entitled to a much
lesser amount than the R4 198 191.09 in respect whereof
it
obtained default judgment on 24 August 2021.
22.
When regard is had to the fact that the
defendant has a very poor explanation for its failure to enter an
appearance to defend,
a reasonably good defence and that it cannot be
said that the application is not
bona
fide
, it would not be in the interest
of justice to deny the defendant the opportunity to place its defence
before the court. I am of
the view that, on the basis of rule
31(2)(b), the defendant has succeeded in making out a case for the
rescission of the default
judgment that was granted against it on
24 August 2021. It is accordingly unnecessary to deal with
the defendant’s
second defence.
23.
Had it not been for the defendant’s
failure to enter an appearance to defend, this application would not
have been necessary.
It cannot be said that the plaintiff’s
opposition to the application was unreasonable. In my view, despite
the fact that
the defendant was successful, the facts of this case
justify an order that it should pay the costs of this application.
24.
Section 17 makes the levying of rates on
certain property impermissible. Section 17(1)(e) provides that a
municipality may not levy
a rate:
“
(e)
on those parts of a
special nature reserve, national park or nature reserve within the
meaning of the
National Environmental Management: Protected Areas
Act, 2003
or of a national botanical garden within the meaning of the
National Environmental Management: Biodiversity Act, 2004
which are
not developed or used for commercial, business, agricultural or
residential purposes.”
25.
In the result, it is ordered that:
1.
The default judgment granted on 24 August
2021 be and is hereby rescinded.
2.
The defendant shall deliver a notice of its
intention to defend within five days from the date of this order.
3.
The defendant shall deliver its plea within
ten days from the date of delivery of the notice referred to in
paragraph 2 above.
4.
The defendant shall pay the costs of the
application for the rescission of the judgment that was granted on 24
August 2021.
G.H.
Bloem
JUDGE
OF THE HIGH COURT
For the
applicant/defendant:
Mr. A. Beyleveld SC, instructed by Jooste and Adams
Inc, Pretoria and
Whitesides Attorneys, Grahamstown.
For the
respondent/plaintiff:
Mr. R.G. Buchanan SC, instructed by Smith Tabata
Attorneys, East
London and Cloete and Co, Grahamstown.
Date
of hearing:
26 May 2022.
Date
of delivery of judgment:
31 May 2022.
[1]
Local
Government: Municipal Property Rates Act, 2004 (Act 6 of 2004).
[2]
Lodhi
2 Properties Investments CC and another v Bondev Development (Pty)
Ltd
2007 (6) SA 87
(SCA) at 94E-F.
[3]
Colyn
v Tiger Food Industries Ltd t/a Meadow Feed Mills (Cape)
2003 (6) SA 1
(SCA) at paras 9 and 10.
[4]
HDS
Construction (Pty) Ltd v Wait
1979 (2) SA 298
(E) at 300E-301C.
[5]
Melane
v Santam Insurance Co Ltd
1962
(4) SA 531
(A) at 532C – F and
Zealand
v Milborough
1991 (4) SA 836
(SECLD) at 837F-838E.
[6]
Intergovernmental
Relations Framework Act, 2005 (Act 13 of 2005).