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[2021] ZAGPPHC 375
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Van Heerden and Another v Hambsch (7408/2017) [2021] ZAGPPHC 375 (18 June 2021)
REPUBLIC OF SOUTH
AFRICA
IN THE HIGH COURT OF
SOUTH AFRICA
GAUTENG
DIVISION, PRETORIA
Case
No.: 7408/2017
NOT
REPORTABLE
NOT
OF INTEREST TO OTHER JUDGES
REVISED
In
the matter between:
FRED
VAN
HEERDEN
1
st
Applicant
IMPORT
EXPORT 2020 (PTY) LTD
2
nd
Applicant
and
BERNIE
HAMBSCH
Respondent
In re:
BERNIE HAMBSCH t/a
RHODES & HAMBSCH
CIVILS
AND PLANT HIRE
Plaintiff
and
FRED
VAN HEERDEN
1
st
Defendant
WARMBAD
WATERFRONT (PTY) LTD
2
nd
Defendant
IMPORT
EXPORT 2020 (PTY) LTD
3
rd
Defendant
JUDGMENT
MNGQIBISA-THUSI
J
[1]
The applicants seek on the basis of Uniform
Rule 42(1)(a), alternatively, Uniform Rule 31(2)(b), alternatively,
the common law,
the setting aside of an order granted on 18 September
2018. The order sought to be rescinded was granted by agreement
between
the parties. The applicants further seek condonation
for the late filing of this application.
[2]
Rule 42(1)(a) provides that:
“
A
court may, in addition to any other powers it may have,
mero
motu
or upon 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”.
[3]
This
means that the applicant has to show that the court in granting the
default judgment had committed an error “in the sense
of a
mistake in a matter of law appearing on the proceedings of a Court of
record
[1]
. If
the applicant can prove the error committed by the court, it is not
necessary for him to explain his default.
[4]
Rule
31(2)(b) provides that a defendant may within 20 days after he has
knowledge of a judgment against him by default 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 to it seems meet. In terms of Rule 31(2) (b) an
applicant for rescission of a judgment must show
good cause.
This means that the applicant has to give a reasonable explanation
for the default, must show that his application
is bona fide, and be
able to show that he has a bona fide defence to the respondent’s
claim which
prima
facie
has some prospect of success
[2]
.
[5]
Under
the common law, in order for the court to grant an order rescinding a
previous order or judgment the applicant has to show
sufficient
cause. In
Chetty
v Law Society, Transvaal
[3]
the court held that:
“
But
it is clear that in principle and in the long standing practice of
our Courts two essential elements of “sufficient cause”
for rescission of a judgment by default are:
(i)
That the party seeking relief must present
a reasonable and acceptable explanation for his default; and
(ii)
That on the merits such party has a bona
fide defence, which
prima facie
carries some prospect of success.”
[6]
It is common cause that during August 2007
the first applicant and the respondent concluded an agreement in
terms of which the respondent
would provide civil and engineering
services for the construction of roads and storm-water sewerage
infrastructure in respect to
a project known as Warmbad Waterfront at
Belabela. The first applicant defaulted by failing to pay
certified amounts in terms
of certificates of payments issued by a
certain Mr De Kock, a civil engineer. As a result, on 8
December 2008 the respondent
issued provisional sentence proceedings
under case number 57647/08 against the first applicant for payment of
outstanding amounts.
However, the provisional sentence
proceedings were withdrawn and on 18 December 2008 the parties
concluded a settlement agreement
in terms of which the first
applicant undertook to pay to the respondent the sum of R1,
491,016.93 by 31 January 2009, subject
to the registration of a
mortgage bond by Investec over property owned by the first applicant.
[7]
Subsequent
to the settlement agreement of 18 December 2008 and due to the first
applicant defaulting on payments due to the respondent,
several
subsequent settlement agreements
[4]
were concluded between the parties in order to re-arrange the payment
schedule of the applicant, culminating in the conclusion
of the
settlement agreement concluded on 4 December 2015. In terms of
the settlement agreement of 4 December 2015, the first
applicant
undertook to make full payment of amounts still outstanding by 15
December 2016 to the respondent. Further the
first applicant
undertook to pay certain instalment amounts and the second applicant
and Warmbad Waterfront (Pty) Ltd bound themselves
as sureties and
principal co-debtors for the debt owed by the first applicant to the
respondent. However, the first applicant
again defaulted on its
payments to the respondent which led the respondent instituting an
action against the applicants.
By the time the action was
instituted, Warmbad Waterfront (Pty) Ltd was already placed under
provisional liquidation.
[8]
Even though the applicants had filed their
plea to the respondent’s action, the parties engaged in
settlement negotiations
which resulted in the 4 December 2015
settlement agreement being amended in order to extend the due date
for final payment to the
respondent. The amended settlement
agreement culminated in its being made, by agreement between the
parties, an order of
court, which is the subject-matter in these
proceedings.
[9]
Subsequent to the order of 18 September
2018, the first applicant duly paid the required instalments until
March 2019. In
his founding affidavit the first applicant
alleges that after March 2019 he was unable to make any payments.
As a result,
he consulted with his current attorneys, and on advice,
launched this rescission application.
[10]
The applicants seek the rescission of the
order of 18 September 2018 on the following grounds:
10.1
that the settlement agreement which was made an order of court is a
credit agreement
as
envisaged in s 8(4)(f) of the NCA
[5]
falling
under the ambit of the National Credit Act 34 of 2005 (“the
NCA”). It is the applicants’ contention
that, as
the settlement agreement provides for the deferment of payment of the
capital amount subject to interests being payable,
the settlement
agreement qualifies as a credit transaction;
10.2
that the respondent, as a credit provider was obliged, in terms of s
40(1)
[6]
of the NCA to register
as a credit provider;
10.3
that since the respondent was not so registered at the time the
settlement agreement was concluded in 2015,
the settlement agreement
is in terms of s 89(2)
[7]
of the
NCA unlawful and the respondent is precluded, from enforcing any
rights emanating from such settlement agreement; and
10.4
that since the settlement agreement is a credit agreement, the
respondent was obliged to comply with the
requirements of s 129
[8]
and s 130 of the NCA
[9]
.
[11]
In
support of their grounds for seeking the rescission of the order, the
following submissions were made on behalf of the applicants.
It
is the applicants’ contention that when the May and December
2015 settlement agreements were concluded, the agreements
provided
for the novation of previous agreements. It is the applicants’
further contention that the 2007 agreement
was no longer extant and
since the settlement agreements, as conceded by the respondent, were
credit agreements as contemplated
in the NCA, in that payment was
deferred and interest was payable. In this regard the
applicants rely on the decision in
Du
Bruyn and Others v Karsten
[10]
that the respondent was obliged to register as a credit provider
under the NCA and to comply with the provisions of s 129 and s
130 of
the NCA.
[12]
On behalf of the respondent it was
contended that the underlying cause to the settlement agreement
concluded on 4 December 2015
was not a credit agreement as
contemplated under the NCA but a non-credit provider-non-consumer
agreement between a civil contactor
and an employer and thus does not
fall within the ambit of the NCA as a credit agreement and that the
respondent was not a credit
provider and was not obliged to register
as a credit provider. It was contended on behalf of the
respondent that the underlying
causa, being the 2007 agreement,
remained extant even though subsequently several settlement
agreements were concluded.
[13]
It
is the respondent’s contention that the NCA was not intended to
apply to settlement agreements. In this regard the respondent
rely on
the decision of
P
S Ratlou v MAN Financial Services (Pty) Ltd
[11]
where a settlement agreement was concluded after negotiations took
place with regard to default rentals which ended up with MAN
confiscating some of the trucks it had leased to Ratlou’s
company, PTN. With regard to the interpretation of s 8(4)(f) of
the
NCA the court stated that:
“
A
purposive interpretation and not a literal interpretation of section
*(4)(f) of the Act is required because it is clear that the
Act was
not aimed at settlement agreements. Its application to them
will have devastating effect on the efficacy and the
willingness of
parties to conclude settlement agreements and thereby curtail
litigation.”
[14]
The court held that in the case where the
underlying agreement to a settlement agreement is not covered by the
provisions of the
NCA, such settlement agreement cannot be regarded
as a credit agreement. The court went further to hold that:
“
[27]
Having found that the legislature never had the intention that the
NCA be applicable to all settlement agreements
in terms which accord
with the determination of credit transactions, in particular to the
agreement concluded by the parties in
this case, it is not necessary
to deal with the alternatives to MAN’s main argument. I
may, however indicate, in respect
thereof as well, that the effect of
the sudden unintended conversion of a non-consumer/non-credit
provider relationship into one
governed by the NCA and the chill
effect that would have on settlement of disputes would still hold
considerable weight.
As was submitted on behalf of MAN, parties
who were never credit providers, such as a once off lessor, would
suddenly find themselves
unable to enforce the terms of their
settlement agreement, for want of registration or due assessment or a
lessee for creditworthiness.”
[15]
Even though the applicants seek to argue
that because some of the settlement had provisions which indicated
that the agreement was
a novation of the original agreement (2007
agreement), this is not convincing in that without the initial
underlying agreement
there would have been no need for the settlement
agreements to have been concluded. The settlement agreements
were concluded
as a result of the first applicant’s default in
paying for the civil contracting work the respondent did in the Warm
Waterfront
project. The applicants cannot deny that the civil
contractor agreement is not a credit agreement and would not have
fallen
within the ambit of the NCA. Therefore, in light of the
decision in the
Ratlou
matter (
supra
),
and in view of the fact that the initial agreement was not a credit
agreement and the subsequent settlement agreements and such
initial
agreement were interdependent, such settlement agreements cannot be
credit agreements. I am therefore of the view
that the
applicants, even taking into account the decision in the
Du
Bruyn
matter, has no bona fide defence
to the respondent’s claim. Further, I am also of the view
that the respondent was
not obliged to comply with the requirements
of s 129 and 130 of the NCA.
[16]
The applicants have relied on uniform rule
42(1) and 31(2) and the common law for the rescission of the order.
The applicants’
claim that the order was granted in their
absence is disingenuous when one has regard to the letter from their
erstwhile attorneys
dated and sent to the respondent’s legal
representatives which reads in part that:
“
2.
The First and Third Respondents agree to an order in accordance with
the draft order
attached hereto”.
[17]
There is no doubt that the applicants
consented to the settlement agreement being made an order of court.
The fact that they
were not represented in court on the day the order
was granted is of no consequence as a Notice of set-down was sent to
the applicants’
attorneys on 24 August 2018. The
applicants cannot therefore claim that the order was granted in their
absence.
[18]
The applicants do not allege that their
erstwhile attorneys of record had no instructions to consent to the
settlement agreement
being made an order of court. In fact, the
applicants acquiesced to the order made on 18 September 2018 by
making payments
to the respondent in accordance with the terms of the
order. This is indicative of the fact that the applicants were
aware
of the circumstances leading to the order being made as they do
not even dispute that a notice of set-down was delivered to their
attorneys of record. I cannot therefore find any default on
their part.
[19]
Distilling
the principles set out in
Colyn
v Tiger Foods Industries Ltd t/a Meadow Feed Mills (Cape)
[12]
and
Lodhi
2 Properties Investments CC and another v Bonde Developments (Pty)
Ltd
[13]
,
in
Kgomo
and another v Standard Bank of South Africa and others
[14]
the court held in relation to the application of rule 42(1)(a) that:
“
[11.1]
the rule must
be
understood
against its
common law
background;
[15]
[11.2]
the basic principle at common law is
that once a
judgment
has been
granted,
the judge
becomes
functus
officio,
but
subject
to
certain
exceptions of which rule
42(1)(a) is
one;
[16]
[11.3]
the rule caters for a mistake in
the
proceedings;
[17]
[11.4]
the
mistake
may
either
be
one
which
appears
on
the
record
of
proceedings or one
which
subsequently becomes apparent from the information
made
available
in an
application
for
rescission
of judgment;
[18]
[11.5]
a
judgment
cannot be
said to have been granted erroneously in
the light
of a subsequently
disclosed
defence
which was
not known
or raised at the time of default
judgment;
[19]
[11.6]
the error may arise either in the process of seeking the judgment
on the
part
of
the
applicant
for
default
judgment
or
in the
process
of granting
default judgment on
the part of
the court;
[20]
and
[11.7]
the applicant for rescission is not required to show, over and above
the
error, that
there is
good cause
for the
rescission as contemplated in rule
31(2)(b).
[21]
[21]
In terms of Uniform Rules 42(1)(a) and
31(2)(B) I am satisfied that the order was not granted erroneously or
was granted in the
absence of the applicants.
[22]
Further
in
Chetty
[22]
(supra), the court stated that:
“
As
I have pointed out, however, the circumstances that there may be
reasonable or even good prospects of success on the merits would
satisfy only one of the essential requirements for rescission of a
default judgment. It may be that in certain circumstances,
when
the question of the sufficiency or otherwise of a Defendant’s
explanation for his being in default is finely balanced,
the
circumstances that his proposed defence carries reasonable or good
prospects of success on the merits might tip the scale in
his favour
in the application for rescission…”
[23]
Taking into account my finding that because
the underlying causa did not fall within the ambit of the NCA and
that the settlement
agreement which was made a court order does not
qualify as a credit agreement under s 8(4)(f) of the NCA, I am of the
view that
the applicants have not shown that they have not shown that
their defence has reasonable prospects of success and I find that
they
have not shown sufficient cause for the order to be rescinded.
[24]
In view of my conclusion that the
applicants have not shown sufficient cause for the rescission of the
order of 18 September 2018,
I am of the view that it is not necessary
to deal with the issue of condonation for the late filing of this
application.
[25]
With regard to costs, I am of the view that
the circumstances of this case do not justify the imposition of
punitive costs.
[26]
In the result the following order is made:
‘
The
application is dismissed with costs.’
NP MNGQIBISA-THUSI
Judge
of the High Court
Date of hearing: 20
August 2020
Date
of Judgment: 18 June 2021
For applicants: Adv
JS Stone (instructed by Hattingh & Ndzabandzaba Attorneys)
For
respondent: Adv DK Nigrini (instructed by Hartman &
Associates Attorneys)
[1]
Bakoven
Ltd v GJ Howes (Pty) Ltd
1992 (2) SA 466 (ECD).
[2]
Grant
v Plumbers (Pty) Ltd
1949 (2) SA 470
(O) and
Colyn
v Tiger Food Industries Ltd t/a Meadow Feed Mills (Cape)
2003 (6) SA 1
(SCA)
(2003) 2 ALL SA 113
, at para 11.
[3]
1985
(2) SA 756(A)
at 765 B-C.
[4]
Settlement
agreements were concluded on 13 November 2013; 15 May 2015; 4
December 2015.
[5]
Section
8(4)(f) of the NCA which provides that:
“
An
agreement, irrespective of its form but not including an agreement
contemplated in subsection (2), constitutes a credit transaction
if
it is –
(f)
any
other agreement, other than a credit facility or credit guarantee,
in terms of which payment of an amount owed by one person
to another
is deferred, and any charge, fee or interest is payable to the
credit provider in respect of-
(i)
the
agreement; or
(ii)
the
amount that has been deferred.”
[6]
“
(1)
A person must apply to be registered as a credit provider if- (a)
the total principal debt owed to that credit provider under
all
outstanding credit agreements, other than incidental credit
agreements, exceeds the threshold prescribed in terms of section
42(1)”.
[7]
Section
89(2)(d) of the NCA reads as follows: “…a credit
agreement is unlawful if at the time the agreement was made,
the
credit provider was unregistered and this Act requires that credit
provider to be registered.”
[8]
Section
129 reads as follows: “
If
the
consumer
is
in
default
under
a
credit
agreement,
the
credit
provider- (a) may draw
the
default
to
the notice
of
the consumer in
writing
and
propose
that
the
consumer
refer
the
credit
agreement
to
a
debt
counsellor,
alternative
dispute
resolution
agent,
consumer
court
or
ombud
with
jurisdiction,
with
the
intent
that
the
parties
resolve any dispute under the agreement or develop and agree on
a
plan
to bring the
payments
under the agreement up to date; and (b) subject to section 130(2),
may not commence
any
legal
proceedings
to
enforce
the
agreement
before-
(i) first
providing
notice
to
the
consumer,
as
contemplated
in
paragraph
(a),
or
in
section
86
(10),
as
the
case
may
be;
and (ii) meeting
any
further requirements
set
out in section
130."
[9]
Section
130 provides in relevant part as follows: (1)
Subject
to
subsection
(2)
a
credit
provider
may
approach
the
court for
an
order
to
enforce
a
credit
agreement
only
if,
at
that
time,
the
consumer
is
in
default
and
has
been
in
default
under
that
credit
agreement
for
at least
20
business
days
and- (a) at
least
10
business
days have elapsed since the
credit
provider
delivered
a
notice
to
the consumer
as
contemplated
in
section
86
(10),
or
section
129 (1), as the case may be; (b) in
the
case of a
notice
contemplated
in
section
129(
1
),
the
consumer
has-
(i) not responded
to
that notice;
or
(ii) responded
to
the
notice
by
rejecting
the
credit
provider's
proposal;
and
(a) in
the
case
of
an
instalment
agreement, secured loan
or
lease,
the
consumer
has
not
surrendered
the
relevant
property
to
the credit provider
in
terms of section
127…
(3) Despite any
provision
of
law
or
contract
to
the
contrary,
in
any
proceedings
commenced
in
a
court
in respect of a credit agreement
to
which
this
Act
applies,
the
court
may
determine
the
matter only if the court is
satisfied
that-
(a) in case
of
proceedings
to
which
sections 127,
129
and
131
apply,
the
procedures
required
by
those
sections
have
been
complied
with;
…(3) In
any
proceedings
contemplated
in
this
section
if
the
court
determines
that-
…(b) the
credit
provider
has
not
complied
with
the
relevant
provisions
of
this Act,
as
contemplated
in
subsection
(3)(a),
…
(a)
the
court must- (i) adjourn
the
matter before
it;
and
(ii) make
an
appropriate
order
setting
out
the
steps
the
credit
provider
must
complete
before
the
matter
may
be
resumed."
[10]
(929/2017)
(2018) ZASCA 143
(28 September 2018).
[11]
(1309/2019)
(2019) ZASCA 49
(1 April 2019).
[12]
[2003]
2 All SA 113 (SCA).
[13]
2007
(6) SA 87 (SCA).
[14]
2016
(2) SA 184 (GP).
[15]
Colyn
above
at paras 1-5.
[16]
Colyn
above
at para 4.
[17]
Colyn
above
at paras 5 and 9.
[18]
Lodhi
above
at paras 24 and 26.
[19]
Lodhi
above
at paras 17 and 27.
[20]
See the wording of the rule. See also
De
Wet
&
Others
v Western Bank Ltd
1979
(2) SA
1031
(A)
at 1038 E-H.
[21]
See para 47 below.
[22]
At
767J-768 A-B.