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[2019] ZAECMHC 41
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Ponono v Motor Finance Corporation (1366/2016) [2019] ZAECMHC 41 (30 July 2019)
IN
THE HIGH COURT OF SOUTH AFRICA
(EASTERN
CAPE LOCAL DIVISION, MTHATHA)
CASE NO. : 1366/2016
Heard
on: 06 June 2019
Date
delivered: 30 July 2019
In
the matter between:
LULAMILE
LORDVICE PONONO
Applicant/Defendant
And
THE
MOTOR FINANCE CORPORATION
Respondent/Plaintiff
JUDGMENT
MAJIKI
J
[1]
This is an application for rescission of a default judgment.
The respondent
and the applicant had entered in an instalment sale
agreement for the purchase of a motor vehicle. The applicant
failed to
keep up with the monthly repayments in the agreement.
Summary judgment for the return of the motor vehicle and cancellation
of the agreement was obtained by the respondent. The vehicle
was sold in execution by the sheriff. Subsequently, the
respondent issued summons for the difference between the outstanding
amount and the value of the motor vehicle. The applicant
filed
notice to oppose. An application for summary judgment in
relation to the second summary judgment was refused.
The
applicant defended the matter. On the date of trial there was
no appearance on his behalf and judgment was obtained by
default.
He now seeks rescission of the said default judgment. The
application is opposed by the respondent.
[2]
The applicant has applied for condonation of the late filing of the
application for
judgment. Rule 31(2)(b) requires the
application to be made within 20 days of the applicant becoming
aware of the judgment.
My reading of the papers reveals that he
became aware of the judgment on 28 February 2018, his application
papers were served on
28 March 2018. The date of filing is not
apparent. If it follows the date of service, the application
would comply
with the rule.
[3]
It is common cause that on 16 January 2009, the parties entered
into a written
instalment sale agreement. The applicant
purchased a 2008 Toyota Avanza (motor vehicle) from the respondent.
The agreement
is governed by section 8 of the National Credit
Act 34 of 2005 (NCA). Within five (5) days of delivery of the
motor
vehicle, it suffered a mechanical breakdown, its engine
overheat. The applicant took the motor vehicle to the
respondent.
All attempts by the respondent to repair it failed,
until it broke down completely. Eventually the vehicle was
returned to
the respondent permanently. The applicant continued
to pay monthly instalments until he was not able to do so. He
was
then successfully sued for cancellation of the agreement, amongst
others. Later, he was sued for a sum of R124 467.80
being
difference between the amount the motor vehicle was sold for and the
full outstanding balance. The applicant resisted
the second
action and filed a counterclaim. For circumstances alleged by
the applicant, his opposition and counterclaim could
not be pursued
to finality. I will revert to those allegations later herein.
[4]
In the counterclaim, whose averments I have been asked to incorporate
herein, the
applicant alleges that it was a material, express, tacit
or implied term of the contract that the motor vehicle would be
free from defects upon delivery or within a reasonable time
thereafter. Part K of the extract of the written contract,
attached
to the respondent’s answering affidavit at paragraph
3, provides that the applicant must inspect the goods and ensure that
they are free of defects. According to the respondent the
agreement also provided that, no warranties, guarantees or
undertakings of whatever nature as to the quality of goods or their
fitness for the purpose they are intended for had been made
by the
respondent.
[5]
According to the respondent the motor vehicle was still under a
manufacturer’s
guarantee. It was purchased by the
respondent as a demonstration model with about 7000 kilometres
odometer reading. The respondent
sold the motor vehicle to the
applicant with an extended warranty which would become operational on
termination of the original
motor plan.
[6]
The vehicle was duly sent to Buffalo Toyota. Buffalo Toyota
claimed from Toyota
South Africa. Toyota South Africa
repudiated the claim on the basis that the damage was caused by the
person who operated
the motor vehicle. The radiator cap was
opened negligently.
[7]
The respondent informed the applicant that the vehicle could be
repaired for a total
cost of R12 000.00, which would have to be
payable by the applicant. The applicant demanded the return of
the vehicle
in full working condition. Further, he stated that had he
been aware that the vehicle was defective, he would not have entered
into the contract of sale, in the first place.
[8]
The respondent repaired the motor vehicle. The applicant had
already fallen
in arrears in the sum of R24 800.00 by then.
The respondent then demanded payment of arrears and repair costs.
The motor vehicle was handed to the applicant who later returned it
with further complaints.
[9]
According to the applicant, when he returned the vehicle permanently
to the respondent,
and when the respondent accepted the motor
vehicle, the applicant was cancelling the agreement.
[10]
Subsequently, the respondent advised the applicant that the dispute
was between the applicant
and Buffalo Toyota. The respondent
denies that the agreement was cancelled by the applicant and states
that the applicant
was not entitled to do so. Further, the
respondent states that it did not accept the vehicle but it was
surrendered by the
plaintiff, hence it sought confirmation of
termination of the agreement from court.
[11]
Rule 31(2)(b) provides:
“
A defendant may within twenty
(20) 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, upon good cause shown set aside the default judgment on
such terms as it seems
meet”.
Good
cause has been stated to encompass two elements;
1. Reasonable
explanation for the default and
2. That on the
merits the applicant must have a
bona fide
defence, which
prima facie
carries some prospect of success.
In
Silber
v
Osen Wholesalers (Pty) Ltd
1954 (2) SA
345
AD 353A, it was held that the explanation for the default
must be sufficiently full to enable the court to understand how
it
came about, and assess the applicant’s conduct and motives.
The authors of Erasmus Superior Court Practice,
second
edition at D-367 expand on this by referring to the authority in
Benicke
v
Winter
1426 SWA 59, and state that, an
application which fails to set out those reasons is not proper, but
where the reasons appear clearly,
the fact that they are not set out
in so many words will not disentitle the applicant of the relief
sought. The said
authors go on to state that before a
person can be said to have been in wilful default the following
elements must be shown:
1. knowledge that
the action is brought against him;
2. a deliberate
refraining from entering appearance, though free to do so and
3. a certain mental
attitude towards the consequences of the default.
[13]
According to the applicant, his matter could not be pursued
due to
unfortunate circumstances of changing hands at his legal
representatives’ firm of attorneys. He had filed notice
to defend the initial summons but summary judgment was granted.
On the second summons after summary judgment was refused,
he even
filed a counterclaim. In March 2015 Mr Jikwana who he
originally instructed, left practice to become an advocate.
Incidentally, he appears in this matter as an advocate. Shortly
thereafter, Mr Yeko took over the matter.
He also
left in September 2016. Mr Yeko had always assured him that the
matter was being taken care of and that he would
inform him when the
matter was ripe for trial. Again, Mr Qumntu took over the
matter and left as well. It was after
the involvement of Mr
Nohesi in the same firm of attorneys that there was progress in
the matter. In January
2018, Mr Nohesi contacted the
respondent’s attorneys who confirmed that default judgment was
obtained on 21 February 2017.
The notice of set down for 21
February 2017 sent, care of, his Mthatha correspondents could not
reach him. He was not in
wilful default in failing to attend
court.
[14]
He only learnt of the default judgment on 28 February 2018.
The
contents of the applicant’s founding affidavit have been
confirmed by Mr Nohesi in as far as they relate to him.
In the
replying affidavit he states that his original firm of attorneys
(Jikwana Incorporated) ceased to exist, Nohesi attorneys
served
notice of acting on 18 September 2018.
[15]
He, the applicant on his part did not deliberately or unreasonably
cause the delay. He had been following up on the progress of
the matter after he instructed the firm of his legal representatives
to defend the matter. He learnt of judgment on 28 February
2018. The application papers were served on 28 March 2018.
It is not apparent as to when the application was filed in court.
The judgment itself was obtained without hearing evidence
or without
the damages affidavit being filed.
[16]
The applicant further explains the delays caused by the difficulties
in obtaining information due to the closure of his original firm of
attorneys. His reply was filed late, as a result.
The
answering affidavit had also been filed out of time. There was
no explanation by the respondent in this regard.
However, when
the matter was argued these issues were no longer pursued.
[17]
According to the respondent, no confirmatory affidavits have
been
filed to support what the applicant averred about his legal
representatives. As regards damages affidavit or
viva voce
evidence, it submits that the claim was in respect of outstanding
balance in terms of the agreement between the parties.
The agreement and the certificate of balance had been placed before
court.
[18]
As regards
bona fide
defence, the applicant is required to
have a
bona fide
defence which,
prima facie
carries
some prospect of success. The averments he or she sets out
must, if established at trial, enable him to be entitled
to a
relief. The defence has to be good in law.
[19]
The applicant stated that the basis of his defence is as stated
in
his counterclaim. Therein, he stated that it was an express,
tacit or implied term of the agreement that he would have
the right
to cancel the agreement should the goods be defective upon delivery,
if the respondent failed to remedy the defect within
a reasonable
time. The respondent’s delivery of the motor vehicle with
a mechanical defect was a defective malperfomance.
The
respondent breached the agreement. He denies that he had
dealings with the dealer in his transaction. The respondent
had
confirmed that the applicant terminated the contract in terms of
section 127 of the NCA. This the respondent placed
in
dispute. However, according to the applicant the respondent
even gave him the estimated value of the motor vehicle in
terms of
section 127 (2) to be R62 000.00.
[20]
As regards the first order of summary judgment he states that
he
agreed to it because he had already cancelled the agreement. His
defence was never ventilated and determined.
[21]
The respondent avers that the defence pursued herein failed
when it
was raised in the opposing affidavit resisting the first summary
judgment. According to the respondent, after
it was
informed of the problem that the motor vehicle was overheating, it
contacted Buffalo Toyota. The claim by Buffalo
Toyota was
repudiated by Toyota South Africa. The applicant was advised to
take up the matter with the dealer.
[22]
In terms of Section 1 of the Consumer Protection Act 68 of
2008 (CPA)
the respondent is not a Supplier. The supplier therein is
defined as a person who markets (promote or supply)
goods or
services. The respondent merely provided credit for the
financing of the sale transaction. Both the applicant
and the
respondent are consumers in terms of the CPA. In terms of
Section 5(2)(d) of the CPA the transaction that constitute
credit
agreement under the provision of NCA is excluded from the provisions
of CPA. The goods and services that are subject
of the
transaction are however, not excluded. The object of section
5(2)(d) of the CPA is to distinguish the position of
a credit
provider from that of a supplier. Further, it is to protect the
contractual rights of a credit provider.
[23]
Further, it is submitted on behalf of the respondent that
the CPA
however, makes no provision for the reservation of the consumer’s
statutory protection against supplier, where the
credit provider had
financed the supply of goods. The applicant did not request the
respondent to cede its rights as a consumer
in terms of the CPA to
the defendant. The right being to be able to return the vehicle
to the supplier against the refund
of a purchase price.
Alternatively, he did not request the respondent to exercise those
rights against the supplier.
[24]
Finally, the applicant did not return the vehicle within six
(6)
months as provided for in Section 5(b)(2) of the CPA. On 9
October 2009, from the correspondence between the parties,
the
vehicle was still with the respondent and not returned to the
supplier. For these reasons the respondent avers that the
applicant has no
bona fide
defence to the claim.
[25]
In my view, the applicant was clearly not aware of the notice
of set
down which led to the default judgment being granted. I am
unable to faulter the applicant for the circumstances which
led to
the failure of him being advised of the date. On his part he
kept checking progress with an attorney who would be
at the offices
of his legal representatives. He would be assured that all was
in order. I have had regard to the criticism
that he did not
attach confirmatory affidavits of respective attorneys he referred
to. His evidence is that when he attended
the offices he would
find someone else, up to Mr Nohesi who has deposed to a confirmatory
affidavit. I find no reason not
to accept his unchallenged
evidence about what is in his personal knowledge. When he
learnt of the judgment on 28 February
2018, the application for
rescission of the default judgment was served by 22 March 2018.
His intention to defend the matter
is apparent in his plea and
counterclaim. I am therefore satisfied with his explanation for
the default, he did not deliberately
refrain from defending the
matter to finality.
[26]
As regards
bona fide
defence the applicant avers that he
cancelled the contract on the basis that the motor vehicle was
defective. The respondent
avers that he was not entitled to do
so. The respondent is not the supplier of the motor vehicle.
The vehicle was not
timeously returned to the supplier or at all.
In my view the applicant’s defence
prima facie
, carries
some prospects of success. With regard to whether the return of
the vehicle to the respondent, within five (5) days
of purchase and
later returned to the supplier, it cannot be readily concluded that
same fell short of the provisions of the CPA.
[27]
In the matter I was referred to,
MFC and JAJ Botha
Case No.
6981/2013, delivered in the Western Cape High Court on 15 August
2013, the vehicle was returned after a month to the credit
provider.
Unlike the motor vehicle in
casu
, in JAJ Botha’s matter
there is no indication of the involvement of the supplier in the
issue of the return of the defective
motor vehicle. Further, it
is in dispute between the parties as to what warranties were included
in the agreement between
the parties. If evidence at trial
establishes that the warranties existed, the court may well still
find that the applicant
was entitled to and did cancel the agreement.
[28]
As regards costs, I am unable to find that the respondent’s
opposition was not warranted. The issues raised in this
application for rescission are highly contentious and both parties
are justified to have ensured that they are brought before court.
In
the result,
1. Application for
rescission of the judgment of 21 February 2017 is hereby granted.
2. No order as to
costs is made.
___________________________
B Majiki
Judge of the High Court
Counsel
for the applicant :
Mr Jikwana
Instructed
by
: Messrs
Jikwana & Company
c/o
Mgxaji Incorporated
No.
3 Glencombe Flats
MTHATHA
Counsel
for the respondent:
Mr Botma
Instructed
by
: Messrs Strauss Daly
Incorporated
c/o
Messrs K B Mabanga Incorporated
No.
137 York Road
Meeg
Bank Building
MTHATHA