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[2018] ZAGPJHC 539
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Auralite LED Lamps (Pty) Ltd v Goldenwood Investments (Pty) Ltd (47675/15) [2018] ZAGPJHC 539 (1 October 2018)
IN
THE HIGH COURT OF SOUTH AFRICA
(GAUTENG
DIVISION, PRETORIA)
Case no.: 47675/15
In the matter between:-
AURALITE
LED LAMPS (PTY)
LTD
Applicant
And
GOLDENWOOD
INVESTMENTS (PTY)
LTD
Respondent
JUDGMENT
NKOSI AJ
INTRODUCTION
1.
On the 4
th
September 2017, this Court heard an application for the rescission of
judgment which incorporated an application for condonation.
Both
applications were heard and considered simultaneously. On the 18
th
September 2017, judgment was handed down in terms of which both
applications were dismissed with costs.
2.
This, therefore, is an application for
leave to appeal brought in terms of Section 17(2)(a) of the Superior
Courts Act 10 of 2013
(“the Act”). The application is
opposed.
3.
In considering the application for
rescission of judgment, I had before me a bundle of documents which
contained various material
annexures including annexures “AA1”,
“GW1”, Combined Summons, Founding Affidavit and others.
These documents
were referred to by both counsels during the hearing
of this application. Where applicable, I shall refer to these
documents in
detail later in this judgment.
THE
ACT
4.
Section 17(2)(a) of the Act states that:
“
Leave
to appeal may be granted by the judge or judges against whose
decision an appeal is to be made or if not readily available,
by any
other judge or judges of the same court or Division.”
5.
Section 17(2)(a) has to be read in light of
the provisions of section 17(1) which provide that:
“
(1)
Leave to appeal may only be given where the judge or
judges
concerned are of the opinion that—
(a)
(i) the appeal would
have a reasonable prospect of success; or
(ii)
there is some other compelling reason why the appeal should be heard,
including conflicting judgments on the matter under consideration;
(b)
the decision sought on
appeal does not fall within the ambit of section 16(2)(a); and
(c)
where the decision
sought to be appealed does not dispose of all the issues in the case,
the appeal would lead to a just and prompt
resolution of the real
issues between the parties.”
6.
The Applicant’s submissions centre
around the provisions of Section 17(1)(a) only. There was no argument
raised to suggest
that the other provisions of Section 7(1) namely,
subsection (b) and (c) are relevant to this application for this
Court to consider.
I would deal with Section 17 (1)(a) later in this
judgment when I make my finding whether the appeal would have a
reasonable prospect
of success or whether there is some other
compelling reason why the appeal should be heard.
DISCUSSION
7.
The Applicant brought an application for
rescission of judgment under rule 42(1)(a), alternatively the common
law, and argued that
rescission of judgment ought to have been
granted under both, section 42 (1))a) and common law.
8.
In
terms of rule 42(1)(a), the Court has a discretion whether or not to
grant an application for rescission under this sub rule.
[1]
The purpose of the rule is to correct expeditiously an obviously
wrong judgment or order.
[2]
The Court does not however, have a discretion to set aside an order
in terms of the sub rule where one of the jurisdictional facts
contained in paragraphs (a) – (c) of the sub rule does not
exist.
[3]
9.
The applicant contends that the
jurisdictional fact outlined in rule 42(1)(a) does exist and the
Court has to exercise its discretion
and grant the application. In
support of its contention, the applicant argues that the parties to
the loan agreement are not the
same parties to the main action
instituted by the respondent. It further argues that the Court of
first instance erred in granting
judgment by default because had it
been made aware of this error, it would not have granted judgment. It
alleges that the loan
agreement was between AURALITE (PTY) LTD and
GOLDENWOOD 2 (PTY) LTD.
10.
I do not agree with the applicant’s
contentions. Mr George Geer, the deponent to the founding affidavit
in support of the
application for the rescission of judgment states
on paragraph 1:
“
I
am a major male businessman and the sole director of the applicant
herein”.
The applicant referred to is AURALITE
LED LAMPS (PTY) LTD. In terms of Annexure “AA1” or “GW1”
the same
Mr Geer gave instructions to GOLDENWOOD 2 (PTY) LTD to
deposit R 1,350,000.00 into AURALITE LED LAMPS (PTY) LTD. The loan
agreement
between the parties was later rectified by the court of
first instance to reflect GOLDENWOOD INVESTMENTS (PTY) LTD as the
plaintiff.
Mr Geer, the sole director of the applicant, was the
active party in securing a loan of R1,350,000.00 for his company. He
has failed
to explain his relationship with AURALITE (PTY) LTD, if
indeed he was acting for AURALITE (PTY) LTD when securing the loan.
Just
as he has declared in his founding affidavit, I would have
expected him to state that he is also a director of AURALITE (PTY)
LTD
and that he had the necessary authority to represent it in the
loan negotiations and to direct how the loan amount should be paid.
However, he elected to withhold these material facts which indeed
would have shed light to his contention. As the matter
stands,
I am hardly persuaded that AURALITE (PTY) LTD was a party to the loan
agreement.
I
am consequently not persuaded that the applicant is entitled to
rescission of judgment under rule 42(1)(a). In my view, the procedure
followed when judgment by default was sought and granted cannot be
faulted.
11.
I now turn to deal with the issue regarding
the service of summons commencing action. It was argued by the
applicant that the summons
did not come to its attention before
judgment was granted although it was served at its registered
address. It is not disputed
that the applicant subsequently changed
its registered address at the Companies and Intellectual Property
Commission after the
summons had already been served by the sheriff.
12.
Rule 4(1)(a) of the uniform rules of court
provides:
“
4(1)(a)
Service of any process of the Court directed to the sheriff and
subject to the provisions of paragraph (
aA
)
any document initiating application proceedings shall be affected by
the sheriff in one or other of the following manners:
(I)…
(ii)…
(iii)…
(iv)…
(v)
In the case of a corporation or company, by delivering a copy to a
responsible employee thereof at its registered office or
its
principal place of business within the Court’s jurisdiction, or
if there be no such employee willing to accept service,
by affixing a
copy to the main door of such office or place of business or in any
manner provided by law,”
13.
The sheriff’s return of service of
the summons commencing action reads as follows:
“
On
25
th
day of June 2015 at 15:59 at 323 Lynwood Road, Menlo Park, being the
registered address of AURALITE LED LAMPS (PTY) LTD, defendant,
I duly
served a copy of combined summons with all Annexures upon Mrs. Tumy
Kekana (Receptionist of Shelf Company Warehouse) after
the original
was shown and the nature and contents thereof explained. The said
person who is apparently older than sixteen years
of age and
apparently in charge at the given address accepted copies of the
document on behalf of the defendant (rule 4(1)(a)(v))”
14.
It was correctly conceded by the applicant
that the summons was correctly served at the applicant’s
registered address before
the applicant changed its address. The only
issue raised by the applicant regarding service is that the summons
was not brought
to the attention of the applicant in time to enter an
appearance to defend.
15.
The
service effected by the sheriff accords with rule 4(1) (a) (v).
Otherwise, where else was the sheriff required to serve the
summons
besides at the applicant’s registered address. In
Arendsnes
Sweefspoor CC v Both
[4]
Leach
JA had this to say:
“
[28]
Essentially service at the registered address of a corporation is
sufficient to amount to service on the corporation. As was
correctly
conceded by counsel for the appellant, as a regular practice the
courts accept as effective the service of a summons
upon an employee
of a firm of accountants or auditors whose office is used as a
corporation’s registered address, but sought
to distinguish
those cases from the present basis of a link between the accountants
or auditors and the corporation which is missing
in the present case.
In my view this misses the point. The importance is the fact that
service at the registered address of the
corporation, even if not on
one of its employees, is regarded as substantial compliance with the
rules.”
16.
The Court went on to state that:
“
The
Court a quo expressed the view, with which I agree, that a
corporation –
‘
Which
fails to ensure that there is a responsible person present at the
premises appointed as its registered address, does so at
its peril
and should not be allowed to bemoan its lot should the process not
come to its attention’. Be that as it may, there
was
substantial compliance with the rule relating to service upon a
corporation, and the high court correctly dismissed the special
plea.”
[5]
17.
Having made a finding that the applicant
was a contracting party to the loan agreement, in my view it was
obliged to advise its
creditors known to it in particular the
respondent of the change of its registered address, but it failed to
do so. This failure
has proven to be costly to the applicant. When
the change of address was effected, judgment had not been entered. In
all probabilities
judgment by default would have been prevented had
the respondent been made aware of the change registered address. The
new address
would have assisted the respondent to serve the notice of
set down at the applicants address alerting the applicant to enter an
appearance to defend.
18.
The fact that the summons was properly
served does not auger well for the applicant’s quest for
rescission of judgment under
common law and the condonation
application. The applicant never gave a reasonable explanation why it
failed to enter an appearance
to defend except merely to state that
the summons did not come to its attention. I do not accept this
explanation. It is not reasonable
and it fails to take the Court into
the Applicant’s confidence. The sheriff’s return of
service does indicate the name
of a person who received the summons
at the Shelf Company yet there is no confirmatory affidavit by such
person explaining how
she dealt with the summons. It cannot be
speculated that the summons did not come to the applicant’s
attention. Both parties
are not ad idem in so far as this issue is
concerned. The sworn statement of the person who received the summons
is material and
yet not before the Court.
19.
I am satisfied that there was substantial
compliance with rule 4(1)(a)(v) and that the court of first instance
was entitled to accept
the service when hearing the application for
default judgment. I therefore find that there is no reasonable
explanation why the
applicant failed to enter an appearance to defend
and why it delayed to bring the application for rescission of
judgment.
20.
It is common cause that the respondent paid
an amount of R1,350,000.00, into the applicant’s bank account
as a loan. The court
of first instance ordered the applicant to
refund the said amount with interest. In light of the above, I find
it strange that
the applicant after being made aware of the judgment
decided to negotiate settlement with the respondent rather than
immediately
launching an application for rescission of judgment. If
indeed it was not a party to the loan agreement, surely there would
be
nothing to negotiate but to challenge the judgment. From the
onset, Mr Geer is the one who negotiated for a loan and gave
instructions
that it be paid over to his company, the applicant. That
explains why he was uncomfortable to immediately defend the action or
bring an application for rescission of judgment.
21.
Mr Geer states in paragraph 14 of his
founding affidavit:
“
I
further pointed out to him that at no stage before summarily walking
away from our “conversion to shareholding” arrangement
did he make demand for delivery of the actual share certificate and
as such he was not entitled to cancel the “share conversion”.
This
version is inconsistent with what Mr Geer stated in Annexure “AA1”.
He states clearly that the loan shall bear
interest and at the sole
discretion of the respondent be convertible into shares in AURALITE
(PTY) LTD. The loan was not intended
for AURALITE (PTY) LTD, but for
the applicant to enable it to immediately effect payment to its
subcontractors. There is no clear
indication on record to persuade me
that the loan was intended for and received by AURALITE (PTY) LTD.
22.
I cannot therefore, agree with counsel for
the applicant that the party to be sued is AURALITE (PTY) LTD and
that the respondent’s
course of action against the applicant
should be based on enrichment and not breach of contract for the
reasons I mentioned in
paragraph 19 above. Further, there is no
supporting affidavit by AURALITE (PTY) LTD to corroborate the
Applicant’s version
that the loan was between AURALITE (PTY)
LTD and the respondent or another entity as contended by the
applicant. I am not able
to conclude that the application for
rescission of judgment is bona fide when the applicant has not taken
the Court into its confidence.
The defences raised prima facie do not
bear prospects of success.
23.
In conclusion I find that the Applicant has
failed to prove the jurisdictional facts Prescribed in Section 17 (2)
(a) of The Supreme
Courts Act 10 of 2013. I therefore make the
following order
i.
The application for leave to appeal is
dismissed
ii.
The applicant has to pay the costs.
________________
NKOSI,
AJ
DATE OF HEARING
: 19 JULY 2018
DATE OF JUDGEMENT
: 1OCTOBER 2018
FOR APPLICANT
: ADV U LLOTTER
Instructed By
: Trevor Swartz Attorneys
FOR RESPONDENT
: ADV K TSATSAWANE
Instructed By
: Cliff Dekker Hofmeyer Attorneys
[1]
De Wet v
Western Bank Ltd
1977 (4) SA 770
(T) at 777F–G;
Theron
NO v United Democratic Front (Western Cape Region)
1984 (2) SA 532
(C) at 536G.
[2]
Bakoven
Ltd v G J Howes (Pty) Ltd
1992 (2) SA 466
(E) at 471E–F;
Promedia
Drukkers & Uitgewers (Edms) Bpk v Kaimowitz
1996 (4) SA 411
(C) at 417B–I;
Kili
v Msindwana in Re: Msindwana v Kili
[2001] 1 All SA 339
(Tk) at 345.
[3]
Van der
Merwe v Bonaero Park (Edms) Bpk
1998 (1) SA 697
(T) at 702H; and see
Swart
v Absa Bank Ltd
2009 (5) SA 219
(C) at 222B–C.
[4]
Arendsnes
Sweefpoor CC v Botha
2013 (5) SA 399
per Leach JA
[5]
Arendsnes
Sweefpoor CC v Botha supra at 30