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[2021] ZAGPPHC 316
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Chrome Crete Readymix (Pty) Ltd and Others v Lafarge Industries South Africa (Pty) Ltd (93304/2019) [2021] ZAGPPHC 316 (17 May 2021)
REPUBLIC
OF SOUTH AFRICA
IN
THE HIGH COURT OF SOUTH AFRICA
GAUTENG DIVISION, PRETORIA
(1)
REPORTABLE: NO
(2)
OF INTEREST TO OTHER JUDGES: NO
(3)
REVISED.
CASE
NUMBER: 93304/2019
In
the matter between:-
CHROME
CRETE READYMIX (PTY) LTD
First Applicant
MARINA
BIANCA HANNA
Second Applicant
DENAVAN
EDWIN
HANNA
Third
Applicant
SILVERSTONE
CRUSHERS (PTY) LTD
Fourth Applicant
and
LAFARGE
INDUSTRIES SOUTH AFRICA (PTY) LTD
Respondent
Delivered.
This
judgment was handed down electronically by circulation to the
parties’ representatives by email. The date and time for
hand
down is deemed to be 10h00 on 17 May 2021.
JUDGMENT
SKOSANA
AJ
[1]
In this matter, the applicants seek a rescission of the default
judgment issued by
the Registrar of this court on 21 February 2020.
The order was for payment by the first to fourth applicants jointly
and severally
to the plaintiff an amount of R3 808 339-46
plus interest as well as costs on an attorney and client scale. No
notice
of intention to defend had been filed by any of the applicants
before the default judgment was issued.
[2]
In brief, the relevant facts are the following:
2.1
The respondent concluded an agreement with the first applicant on 06
June 2012 (“the
principal agreement) in terms of which the
respondent would sell and deliver goods to the first applicant at the
latter’s
special instance and request. The business of the
respondent was to manufacture and sell cement while the first
applicant’s
business was to supply readymixed concrete and
cement.
2.2
The terms of the agreement entitled the first applicant to order and
purchase from time
to time from the respondent and the respondent to
deliver the goods in accordance with the terms of their agreement.
2.3
In the event of the respondent granting credit facilities to the
first applicant, the first
applicant would make payment within 30
days from the date of the respondent’s statement of account,
without deduction or
set-off of any claims of the first applicant. In
the event of default of payment, all other amounts due and payable by
the first
applicant to the respondent would become due and payable
and the first applicant was not entitled to withhold payment for any
reason
including a dispute pending between the parties.
2.4
A certificate signed by a senior manager of the respondent would
constitute
prima facie
proof (sufficient evidence) of the
amount of indebtedness.
2.5
The second and third applicants simultaneously with the principal
agreement signed an agreement
in terms of which they bound themselves
as sureties, guarantors and co-principal debtors with the first
applicant in favour of
the respondent for due performance of the
obligations of the respondent and for the payment of any amount due
in terms of the principal
agreement.
2.6
The fourth applicant bound itself as a guarantor and co-principal
debtor with the first
applicant in favour of the respondent for the
due performance of the obligations of the first applicant and for the
payments of
any amounts due in terms of the principal agreement. The
third applicant concluded this contract on 27 February 2013.
2.7
The first applicant and the respondent have had a long-drawn dispute
between themselves
in regard to payments culminating in the
respondent issuing summons against the applicants in December 2019
and obtaining the default
judgment as aforestated.
2.8
It is not in dispute that the first applicant only became aware of
the default judgment
on 18 March 2020 and that it instituted the
present rescission application on 02 June 2020.
[3]
There are three aspects that require my adjudication in this matter,
namely, the application
for condonation for the late launching of the
rescission application, the application to strike out certain
paragraphs of the applicants’
replying affidavit and the merits
of the rescission application. I deal hereunder with each of these
aspects though the facts and
issues relating thereto overlap to a
great extent.
Condonation
[4]
Although the default judgment was issued on 21 February 2020, it is
common cause that
it came to the attention of the first applicant
about 18 March 2020, i.e. a few days before the commencement of the
lockdown imposed
under the State of
Disaster Management Act 57 of
2002
with effect from 26 March 2020. The rescission application was
instituted on 02 June 2020. It was argued on behalf of the applicants
that the circumstances prevailing at the time caused great
inconvenience and that legal practitioners were only allowed to
travel
in performance of their duties from 01 May 2020. It was
further argued that voluminous documentation and invoices had to be
studied
and considered in consultation with legal practitioners
before the rescission application could be instituted.
[5]
The respondent opposes the application for condonation on the basis
that it took the
applicants about 2 and half months to bring the
rescission application and that legal practitioners were not
prohibited from performing
their duties during the relevant period.
[6]
In my view, although legal practitioners may not have been prohibited
from performing
their duties, they, like most other professions, were
inhibited from doing so. Moreover, their clients were certainly
restricted
in their freedom of movement and therefore in their
consultations and the exchange of documents especially hard copies.
[7]
The advent of COVID-19 almost brought everything to a stand still at
least for a couple
of months and most people were not ready for it.
So too were legal practitioners and their clients.
[8]
Although it was unclear from the applicants’ founding papers,
it was clarified
at least in their heads of argument that they rely
on the common law grounds of rescission. That means rescission had to
be instituted
within reasonable time. Reasonable time could not, in
my view be equated to or necessary measured against the 20 days as
prescribed
by
Rule 31.
Reasonable time as suggested by the phrase
itself should be determined with consideration of the circumstances
prevailing at that
moment and which could reasonably have affected
the applicants. The circumstances which prevailed at the time are
therefore relevant.
[9]
It also appears from correspondence, particularly a letter from the
applicants’
attorneys dated 30 March 2020 that they indicated
at that stage already that they would apply for rescission but still
believed
that by further reconciliation of the invoices and payments,
they could still persuade the respondent to consent to rescission of
the default judgment. They consequently proceeded for some time in
pursuance of that objective.
[10]
In the result, I am persuaded that it is in the interest of justice
to grant condonation in the
circumstances of this case.
Application
to strike out
[11]
The application to strike out is aimed at certain portions of the
applicants’ replying
affidavit, namely paragraphs 5.9, 6.2, 6.3
and 6.4 thereof. The main ground is that these paragraphs introduced
new material which
and ought to have been included in the founding
affidavit and that they are irrelevant and scandalous and therefore
prejudicial
to the respondent.
[12]
The main thrust of these paragraphs is to give details of payments
that were allegedly made by
the first applicant and on the basis of
which it is contended that the respondent’s claim and therefore
the default judgment
is wrong because they did not take such payments
into account. The pargraphs also seek to make assertions that some
wrong invoices
and delivery notes were attached to the application
for default judgment.
[13]
Rule 6
(15) provides:
“
(15)
The court may on application order to be struck out from any
affidavit any matter which is scandalous, vexatious
or irrelevant,
with an appropriate order as to costs, including costs as between
attorney and client. The court
may
not grant
the application
unless
it is satisfied that the applicant will be prejudiced
if the application is not granted
.”
[My emphasis].
[14]
From the accentuated portions of the above-quoted Rule, it is clear
that first there must be
a scandalous, vexatious or irrelevant
material and, second the court must be satisfied that if such
material is not struck out
the respondent will be prejudiced. The
matters raised in the impugned portions of the replying affidavit are
certainly relevant
as they relate to payments with a view to show a
bona fide
defence and that the default judgment may have been
based on incorrect invoices. It can also not be persuasively argued
that they
are vexatious nor was there an attempt to do so.
[15]
As indicated by me during argument only the inclusion of the word
‘
fraudulently
’ in paragraph 6.4 render a portion
of those allegations scandalous. There was no need to allege or imply
that the respondent
acted fraudulently in claiming the money. The
applicants could achieve their purpose by simply alleging that
incorrect information
was supplied to the Registrar. Fraud requires
proof of elements which do not and need not form part of the
applicants’ application.
[16]
This leaves me with the aspect of prejudice. I agree with the
respondent that the applicants
only made vague reference to these
aspects in their founding papers while they could at that time make
elaborate averments as they
did in their reply. Such conduct is
prejudicial to the respondent who had no opportunity to deal
therewith.
[17]
Although prejudice exists, I still hold the view that the impugned
portions do not advance the
applicants’ case, in any event.
Striking them out is therefore a mere academic exercise.
[18]
To conclude under this heading, I am inclined to grant the
application to strike out only in
relation to the inclusion of the
word ‘
fraudulently
’ in paragraph 6.4 of the
replying affidavit. Although the inclusion of the rest of the
impugned portions is prejudicial,
it is in my view unnecessary and
serves no purpose to strike them out.
Merits
of the application
[19]
The applicants relied on the common law grounds of rescission. Such
grounds comprise fraud,
iustus
error, new documents, default
judgment and absence of a valid agreement (
iusta causa
). Only
the ground under the subtitle ‘default judgment’ is
relevant for the purposes of this case.
[20]
In order to rescind a default judgment under common law, the
applicants had to show good/sufficient
cause.
[1]
This entails that the applicants must first give a reasonable
explanation for their default, second, show that the application
is
made
bona
fide
and third, show the existence of a
bona
fide
defence on the merits. The failure to meet one of these requirements
may result in refusal of the rescission.
[2]
[21]
It is common cause in the present case that the summons were properly
served on the applicants
at least in January 2020 and the default
judgment issued on 21 February 2020. There is no irregularity raised
in regard to the
service of the summons as well as the process
towards obtaining the default judgment.
[22]
The explanation proffered by the applicants for their default is that
there was an undertaking
made by the respondent that they will not
proceed with obtaining judgment as reflected in the email dated 20
January 2020 which
in turn refers to an earlier telephonic
discussion. The applicants further add that there were disputes and
negotiations concerning
reconciliation of the accounts pending
between the parties. This appears to be the extent to which the
applicants were able to
provide an explanation for their default.
[23]
Respondent’s counsel pointed me to correspondence which
militate against the averment of
an undertaking not to proceed to
obtain judgment. These include correspondence in September and
October 2019 indicating that the
respondent was determined to proceed
to issue summons, as well as another in November 2019 stating that
the respondent’s
attorney is instructed to proceed with legal
action until or unless settlement is reached.
[24]
It was further pointed out on behalf of the respondent that the
correspondence on 31 March 2020
from the applicants’ attorneys
which was sent after they had obtained knowledge of the default
judgment, did not allege any
undertaking by the respondent or an
agreement between the parties not to proceed to judgment. All that is
stated was that the judgment
was obtained while the negotiations were
still on. There is also an email from the respondent dated 20 January
2020 which states
in relation to one of the sureties (second
applicant) that she should consult with an attorney to ensure that
her rights are protected
and that appearance is timeously entered on
her behalf. This further confirms the respondent’s explicit
resolve to proceed
to judgment and, this email being sent on the same
date as the one relied upon by the applicants to prove an undertaking
not to
proceed, conclusively refutes and cancels the latter email.
[25]
In my view, the applicants have failed to give a reasonable
explanation for their default. The
alleged undertaking by the
respondent not to proceed to judgment has not been proved when regard
is had to the documentation at
hand. It further does not constitute
sufficient reason for the applicants not to have entered appearance
the fact that there were
negotiations carrying on between the
parties. Such negotiations did not stop the respondent from issuing
summons against the applicants
in the first place. Therefore their
existence could reasonably not have created an impression that the
respondent would be dissuaded
or prevented from proceeding to
judgment. In any event, the agreement allowed them to issue the
summons and to obtain judgment
when it states in paragraph 3.9
thereof that “
The customer shall not be entitled to withhold
payment for any reason whatsoever notwithstanding that any dispute
may be pending
between the parties nor shall the Customer be entitled
to make any deduction from the Price or to set off any alleged claim
against
the amounts due by the Customer to the Company.
”
[26]
The applicants having failed to provide a reasonable explanation and
therefore to satisfy one
of the requirements under common law for
rescission of the default judgment, the application must fail. This
also means that it
is unnecessary for me to deal with the issue of
showing a
bona fide
defence on the merits. However, for the
sake of completeness I deal shortly hereunder therewith.
[27]
First, it is trite law that a party who relies on payment and
settlement of a debt bears the
onus to prove it. It is not sufficient
for a defendant either in a rescission application or a summary
judgment application to
merely say that he made some payment which
may constitute a defence or some defence should he be allowed to go
to trial
[3]
.
Although the defendant need not prove his defence, the alleged
defence must be shown to be
bona
fide
and
prima
facie
carrying some prospect of success.
[28]
In this case, the applicants allege that there was some payment made
to the respondent towards
settlement of the debt or a portion
thereof. The applicants neither tender the difference nor do they
clearly allege that the invoices
relied upon by the respondent do not
make out the total claim as contained in the default judgment. There
is also no clear averment
that the belatedly produced proof of
deposits relate to the invoices on the basis of which default
judgment was granted. It is
also greatly concerning that, this being
an obviously important aspect of the applicants’ defence, it is
only raised and
produced at the tail end in their replying affidavit.
[29]
The facts and issues in this case are compatible to those of
Nedperm
Bank Ltd v Lavarack and Others
[4]
,
where the following stamen was made:
“
It
is also trite law that the onus to prove valid payment rests on the
debtor (Pillay v Krishna and Another
1946 AD 946
at B955).
From
these basic principles of law it follows logically, in my view, that
where there are two obligations to be fulfilled by a debtor,
he bears
the onus of proving, not simply that a payment was made, but also of
proving
the necessary consensus regarding which debt was paid
.
I agree, therefore, with the formulation of the relevant principle by
Viljoen AJ in Italtile Products (Pty) Ltd v Touch of Class
1982
(1) SA 288
(O) at 290H, viz:
'Although
I have myself also not found authority dealing with a case such as
the present,
where payment is admitted but there is dispute
regarding the debt for which it was intended, I have no doubt that
the onus of proving,
not only that payment was made, but that the
debt in question was paid, rests upon the debtor
. This is in
accordance with the principle that it is the party making a positive
averment who bears the onus of proof. Moreover,
it seems to me that
the very requirement that a debtor should prove payment of a debt, in
itself necessitates proof that the debt
in question has been paid and
not simply proof that a payment has been made to the creditor.'
As
pointed out above, such onus would require proof of consensus
regarding the identity of the debt being paid.”
[my
own emphasis]
[30]
In the present case, the respondent has among other things also
relied on a certificate of indebtedness
which constitutes
prima
facie
proof (sufficient evidence) of such indebtedness. The
unclear facts alleged by the applicants in relation to payment do not
in
my view displace this
prima facie
proof or sufficient
evidence. The applicants could not even say that such certificate
left their alleged payments out of account.
[31]
Even the issue of deliveries and the delivery notes does not cross
the threshold. Importantly,
the applicants do not allege that the
deliveries for which payment was claimed and judgment given, never
occurred. All that the
applicants do is to raise possible technical
defences based on the delivery documentation to support their
speculative assertions
that the respondent did not prove that such
deliveries had taken place. It seems to me that the applicants were
not confident enough
of their defences hence they elected not to
defend but to continue to persuade the applicants through extracurial
negotiations.
This they did to some extent even after becoming aware
of the default judgment. Clearly this constitutes willful default on
their
part.
[32]
As to costs, the general rule is that they must follow the result. I
could not find a reason
to deviate from this general rule. Further,
the agreement between the respondent and the first applicant
stipulates that, should
the respondent elect to take legal action,
the first applicant shall be liable for such legal costs on an
appropriate scale. The
rest of the applicants guaranteed and bound
themselves liable for all the obligations arising out of the
agreement including costs.
The application for rescission and the
opposition thereof still form part of litigation arising out of the
breach of the agreement.
In the circumstances, I deem a costs order
on an attorney and client scale as appropriate.
[33]
In the result, I make the following order:
1.
Condonation for the late filing of the rescission application is
granted.
2.
The application to strike out is granted only to the extent of
removing the word
‘fraudulently’ from paragraph 6.4 of
the applicants’ replying affidavit.
3.
The application for rescission is dismissed.
4.
The applicants are ordered to pay the costs of this application on a
scale of
attorney and client jointly and severally, the one paying
the other to be absolved.
DT
SKOSANA (AJ)
Acting
Judge of the High Court
Pretoria
Date
of hearing: 13 May 2021
Date
of judgment: 17 May 2021
Appearances:
For
Applicants:
Adv JC Kotze
Instructed by
Kotze and Roux Attorneys
Block B, Unit
B50
Brooklyn
Office Park
105 & 107
Nicolson Street
Brooklyn,
Pretoria
For
Respondent:
Adv R Blumenthal
Instructed by
NVDB Attorneys
c/o VFV
Attorneys
Block A,
Corporate Place
Ashlea
Gardens, Pretoria
[1]
Colyn v Tiger Food
Industries Ltd t/a Meadow Feed Mills (Cape)
2003 (6) SA 1
(SCA)
para [11].
[2]
Government of the
Republic of Zimbabwe v Fick & Others
2013 (5) SA 325
(CC)
para [85].
[3]
Standard
Bankof SA Ltd v El-Naddaf and Another 1999(4)SA779(W0 at 784E-H
[4]
1996
(4) SA 30
(A) at 47A-D