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[2019] ZAGPPHC 14
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Mojaho Trading (Pty) Ltd and Others v National Empowerment Fund (18678/17) [2019] ZAGPPHC 14 (31 January 2019)
IN THE HIGH COURT OF SOUTH
AFRICA
(GAUTENG LOCAL DIVISION,
JOHANNESBURG)
(1)
REPORTABLE
(2)
OF INTEREST TO OTHER
JUDGES
(3)
REVISED.
CASE
NO: 18678/17
In
the matter between:
MOJAHO
TRADING (PTY) LTD
First
Applicant/Defendant
VINCENT
MOKHELE
MOKHOLO
Second Applicant/Defendant
ERIC
5081
MOKHOLO
Third
Applicant/Defendant
MOGMAD
R
NORDIEN
Fourth
Applicant/Defendant
and
NATIONAL
EMPOWERMENT
FUND
First Respondent/Plaintiff
(Registration
No IT10145/00)
JUDGMENT
COLLIS
J
INTRODUCTION
[1]
In
the
present
application,
applicants
seek
an
order
for
the
rescission
of a default judgment taken against them on
11
October
2017.
[1]
The application is
brought in terms of the provisions of Uniform Rule 32. The
application is
opposed
by the respondent.
BACKGROUND
[2]
The
plaintiff
is
the
NATIONAL
EMPOWERMENT FUND
TRUST,
a
trust
established in terms of the
National Empowerment Fund Act 105 of
1998
.
[2]
[3]
On
8 February 2013, the plaintiff issued summons against the defendants
for payment of,
inter alia
,
the
following amount
s
:
3.1
R22 849 606.04, emanating from a loan
facility agreement entered into between the plaintiff and the first
defendant on
or
about 23 December 2005 in
terms
of which the
plaintiff
loaned the first
defendant
an amount of R24 472 800.00;
3.2
R4 030 937.48, emanating from a
preference share subscription agreement entered into between the
plaintiff and the first defendant
on
or
about 23
December
2005;
3.3
the loan facility agreement and the
preference share subscription agreement are collectively referred to
as
"the facility agreements"
;
3.4
the
plaintiffs claim against the second, third and fourth defendants is
by virtue of a deed of suretyship entered into between them
and the
plaintiff in terms of which the second, third and fourth defendants
bound themselves jointly and severally as
sureties
and
co-principal
debtors
together
with
the
first defendant’s obligations arising out of or in connection
with the loan facility agreement;
[3]
3.5
the
first defendant breached the facility agreements in that it failed to
make payment of the requested monthly instalments of the
capital and
interest
timeously;
[4]
3.6
on or about 25 February 2015, the
plaintiff and the first defendant entered into a settlement agreement
in terms of which the first
defendant agreed to pay the plaintiff an
amount of R8 055 431.00 in instalments
as follows:
3.6.1
R400 000.00
on
10
March
2015
or
seven
days
after
the
conclusion
of
the
settlement agreement;
3.6.2
R500 000.00 on or before 31 July 2015;
3.6.3
R500 000.00 on or before 31 December
2015;
3.6.4
R1 000 000.00 on or before 31 July 2016;
3.6.5
R1 000 000.00
on
or before 31 December 2016;
3.6.6
R1 000 000.00 on or before 31 July 2017;
3.6.7
R1 000 000.00 on or before 31 December 2017;
3.6.8
R1 000 000.00 on or before 31 July 2018;
3.6.9
R1 000 000.00
on
or before 31 December 2018;
3.6.10
R655 431.00 on or before 31 July 2019;
[5]
3.7
the first defendant breached the
settlement agreement by failing to make payment of any of the
instalments due from 10 March 2015
to 31 December 2016;
3.8
as
a result thereof, the plaintiff demanded payment of the amount of R7
168 021.00 from the
defendants;
[6]
3.9
notwithstanding
demand,
the
defendants
failed,
refused
and/or
neglected
to
make
payments
to
the
plaintiff;
[7]
3.10
the
plaintiff therefore claimed any amount which was due, owing and
payable by the defendants and any amounts which would in future,
by
way of future instalment(s), become due, owing and payable by the
defendants to the plaintif
.
f;
[8]
[4]
Uniform
Rule 31(2)(b)
provides as
follows:
"A
defendant may within twenty days after he or she has knowledge of
such judgment apply to court upon notice to the plaintiff
to set
aside such judgment and the court may on good cause shown set aside
the default judgment on such terms as it seems meet."
[5]
The
requirement for
an
application under
this
sub
rule
have
been
stated
to be as
follows:
5.1
The applicant must give a reasonable
explanation of his default. If
it
appears that
his default was wilful
or that
it
was
due to gross negligence the court
should not come to his assistance.
5.2
This application must be
bona
fide
and not made with the intention
of
merely
delaying the
plaintiffs
claim.
5.3
He
must show that he has a
bona
fide
defence
to plaintiffs claim. It is sufficient if he makes out a
prima
facie
defence
in the sense of setting out averments which, if
established
at trial would entitle him to the
relief
asked for.
He
need not deal fully with the merits of the case and produce evidence
that the probabilities are actually in his
favour.
[9]
WILFUL
DEFAULT
[6]
In
the
decision
Silber
v Ozen Wholesalers (Pty) Ltd,
[10]
it
has been held that
the
explanation
for
the
default
must
be
sufficiently
full
to
enable
the
court to understand how it really came about, and to assess the
applicants' conduct and motives. The reasons for the applicants'
absence or default must therefore be set out because it is relevant
to the question whether or not their default was wilful.
[11]
[7]
In
relation to the absence of the first applicant to have entered an
appearance to defend, the deponent of the founding affidavit
alleges
that the
first
applicant,
for the first
time
only became aware of
the
default judgment on 4 December 2017 when the remainder of the
applicants were informed by the third applicant that the sheriff
of
the court visited his premises in respect of this matter.
[12]
[8]
The
return of service on first applicant refers to service to have taken
place by way of affixing at the principal place of business
at the
first applicant situated at 318 Rivonia Boulevard, Rivonia, in terms
of
rule 4(1)(a)(v).
[9]
In
respect of the service address, the deponent merely alleges that this
address was the erstwhile address of the then auditors
of the first
applicant, and that the said auditors were no longer conducting their
practice from the said address.
[10]
In opposition, the respondent, in answer to what has been stated
above, sets out that service of the summons on the
auditors as the
principal place of business of the first applicant was valid in law.
Furthermore,
the
respondent contests that the auditors are the erstwhile auditors of
the first applicant, as such a change in auditors has not
been
corrected with the CIPC.
[13]
[11]
In
its replying affidavit, the deponent merely responds that the
issue
of service has become a legal issue and that legal argument will be
advanced
at
the
appropriate
time.
[14]
[12]
In respect of service of the summons on
the first applicant, counsel for the applicant advanced the argument
that the respondent
must have known
that
the
first
applicant
did
not
receive
the
summons
as
attempted execution of the judgment took
place at the respective residential addresses of the applicants.
[13]
Now it is not disputed between the
parties that service on the first applicant was
properly
effected
on
the
principal
place
of
business
of
the first applicant, as reflected in the
CIPC in terms of rule
4(1)(a)(v).
[14]
Furthermore,
if one has
regard to
the
founding affidavit and
the
replying affidavit, these affidavits are
silent as to when the first applicant had vacated its registered
place of business and
effected its change in the CIPC as it was
mandated to do in terms of the enabling legislation.
[15]
Counsel for the respondent correctly, in
my view had submitted that where a company changes its registered
office or its principal
place of business, if it
has more than one office, such company
will have a duty to comply with the provisions of
section
23(2)(b)(ii)
of the
Companies Act
71
of 2008
.
Thus
the first applicant was remiss in having complied with such
requirement and failure to have done so amounted to
the first applicant having been
negligent.
[16]
As there is no explanation given under
oath by the first applicant as to when it vacated its principal place
of business and further
as to when it informed the CIPC as it was
mandated to do, I cannot conclude that this default was not wilful
due to negligence
on its part.
[17]
Consequently, I cannot be persuaded that
the first applicant has satisfied the requirement of not having been
in wilful default.
[18]
In respect of the service address in
respect of the second, third and fourth applicants, the deponent to
the founding affidavit
alleges that service of the summons was
effected on
No.
9
Jaspis
Avenue, Mayfield Park, which address was
the
chosen
domicilium
address
when
the
loan agreement and suretyship agreements were concluded.
[19]
Furthermore,
as no domicilium address was elected when the settlement agreement
was concluded, the respondent was prohibited from
effecting service
on this very same
address.
[15]
[20]
In
addition to this, the deponent further alleges that the third
applicant had occupied No. 9 Jaspis Avenue, Mayfield Park and that
he
had vacated the said address during
2009.
[16]
[21]
If one has regard to the relevant
returns of service, they all reflect service on
a
domicilium
address
,
being
No.
9
Jaspis Avenue,
Mayfield Park.
[22]
In
response to what has been stated above, the respondent contends that
the address of service was the elected address chosen by
the second,
third and fourth applicants when the deed of suretyship was concluded
and
that
the
subsequent
settlement agreement entered into did
not
novate or supersede the
deed
of suretyship.
Furthermore,
that the
deed
of
suretyship
was
a
continuing
surety
as
provided
for
in
clause
21 of the deed of suretyship.
[17]
As a consequence, the deed of suretyship is still valid and
enforceable against the second, third and fourth
applicants,
notwithstanding
a
settlement
agreement
having
been
concluded between
the
first
applicant
and
the
respondent.
[23]
It is not in dispute that the respondent
was permitted to serve the second, third and
fourth applicants on
a chosen
domicilium
in terms of the Rules of Court.
[24]
Rule
4(1)(a)(iv)
provides as
follows:
"If
the person so to be served has chosen
a
domicilium citandi by delivering or
leaving
a
copy
thereof at the domicilium so chosen."
[25]
Where
a person has chosen a
domicilium
citandi et executandi,
the
domicilium
so
chosen
must be taken
to
be
the
person's
place
of
abode within the
meaning
of the Rules of Court, which deals with service of a summons.
[18]
[26]
If
a
domicilium
has
been chosen, service there would be good even though the defendant is
known
not
to
be
living
there.
[19]
[27]
It
is significant to note that the applicants failed to give an
explanation as to whether the respondent was informed that their
chosen
domicilium
address
had
change
during 2009. This
duty
rested
on
them
to inform the other contracting party of their new
domiciliu
m
.
[20]
[28]
In the absence of an explanation
proffered by the second, third and fourth applicants of them having
informed the respondent of
a change of their chosen
domicilium
address, service in terms of the
Rules of Court
was
valid and
proper.
[29]
Consequently,
the
failure
to
have
responded
to service
of
the
summons on
their chosen
domicilium
address is
therefore considered to
be
wilful
in their
default.
[30]
Albeit, that I have found the applicants
to have
been
in wilful default
by failing to defended the summons, I
still consider it prudent to consider whether a bona fide defence has
been disclosed by them.
This is because a good
defence may compensate for
a
poor
explanation for
a
default.
If
it
is
found
that
indeed
a
bona
fide
defence
has
been
disclosed by them, even where the
applicants have been remiss in proving that they had not been in
wilful default, a court must
under those circumstances come
to
their
assistance.
BONA
FIDE
DEFENCE
[31]
The applicants have articulated their
bona fide
defence
to be the following:
31.1
the
settlement
agreement
concluded
on
25
February
2015
only
obliges the first applicant to make certain payments on dates
reflected in
the
settlement agreement;
31.2
in
terms of the said settlement agreement, there was no
basis
of
liability
in
respect
of
the
second,
third
and
fourth
applicants;
[21]
31.3
the
settlement agreement so concluded contains no acceleration clause
which would have entitled the respondent to payment of the
amount of
R7 168 020.00 before 31 July 2019;
[22]
31.4
furthermore, the applicants contend that
the respondent had received a payment of R650 000.00 from the first
applicant in reduction
of
its
indebtedness, but
that
this
amount
had
not
been
taken into account when the default judgment was
granted;
31.5
as
the settlement agreement was not signed by the second,
third
and
fourth
applicant
s
,
they attracted no
obligation
in terms of the settlement
agreement.
[23]
[32]
In
response, the respondent denied that it was only the first applicant
which attracted liability to pay the respondent in terms
of the
settlement agreement. Furthermore, the respondent contends that the
settlement agreement did not release the second, third
and fourth
applicants from their obligations to the respondent in terms of the
deed of suretyship.
[24]
[33]
Furthermore,
the respondent concedes that, as at date of issue of summons during
May 2017, the first applicant had paid an amount
of R650 000.00 in
reduction of its indebtedness and that this amount had not been taken
into account. In addition to this, the
respondent contends that a
further amount of R2 million was payable by end December 2017, which
had not been paid and, as such,
the respondent gave notice that it
will move for a judgment in the amount of R4 750 000.00.
[25]
[34]
In their replying affidavit, the applicants replied that the
concession made by the respondent that
the first applicant had paid
an amount of R650 000.00
which
had not been taken into account is confirmation of the applicants
having a
bona
fide
defence
to the respondent's claim.
[26]
[35]
In the present matter, none of the parties had annexed to their
affidavits the facility loan agreement
or the preference share
subscription agreement. This having been the position, this court was
unable to have regard to the terms
of such agreements and, more
importantly, whether any of such agreements contained in it any
acceleration clause.
[36]
If one further considers the settlement agreement, same does not
contain any acceleration clause, neither
is any acceleration clause
referred to in the correspondence exchanged between the parties which
brought into being the settlement
agreement.
[37]
In addition thereto, the respondent had been remiss to disclose the
basis for claiming the full outstanding
amount in terms of the
settlement agreement in the absence of such an acceleration clause
being contained in the said settlement
agreement.
[38]
The concession made by the respondent that the amount of R650 000.00
had been paid and should have
been taken into account to reduce the
judgment amount, in my opinion, sufficiently discloses a
prima
facie
defence which would entitle the applicants to the relief
claimed, even where they have failed to convince this court that they
were
not in wilful default.
[39]
In the result, the following order is
made:
39.1
the judgment granted by the court on 11
October 2017 is hereby rescinded;
39.2
the first, second, third
and fourth applicants are hereby granted
leave to defend;
39.3
Cost to be in
the
cause.
CJ
COLLIS
JUDGE
OF THE HIGH COURT OF SOUTH AFRICA
Appearances:
Counsel
for the applicant:
Mr T. Seokane
Instructed
by:
Seokane Lesomo Inc
Counsel
for the
respondent:
Adv S Hussein-Yusuf
Instructed
by:
Mothle Jooma Sabadia Inc.
Date of
hearing:
30 August 2018
Date of
judgment:
31 January 2019
[1]
Founding affidavit para 5.2 p 5
[2]
Founding affidavit para 5.1 p 5
[3]
Particulars of claim para 7 pp 29 and 30
[4]
Particulars of claim para 8 p 30
[5]
Particulars of claim para 9 p 30
[6]
Particulars of claim paras 11 and 12 p 31
[7]
Particulars of claim para 13 p 32
[8]
Particulars of claim para 14 p 32
[9]
Colyn v Tiger Food Industries Ltd t/a Meadow Food Meals (Cape)
2003 (6) SA 1
(SCA) at 9F
[10]
1954 (2) SA 354
(A) at 353A
[11]
Brown v Chapman
1928 TPD 320
at 328
[12]
Founding affidavit para 7 pp 9 and 10
[13]
Answering affidavit para 20 p 85
[14]
Replying affidavit para 12 p 106
[15]
Founding affidavit para 7.2 p 11
[16]
Founding affidavit para 7.2.3 p 11
[17]
Answering affidavit para 23 p 86
[18]
Muller v Mulbarton Gardens (pty) Ltd
1972 (1) SA 328
0N) at
332 G
[19]
Pretoria Hypothec Maatskappy v Groenewald
1915 TPD 170
[20]
Mashaba v Absa Bank Ltd
2011 JDR 1321
[21]
Founding affidavit paras 9.2 and 9.3 p 13
[22]
Founding affidavit para 9.9 p 15
[23]
Founding affidavit para 9.15 p 16
[24]
Answering affidavit paras 29 and 30 p 87
[25]
Answering affidavit para 31 p 88
[26]
Replying affidavit para 26 p 108