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[2018] ZAFSHC 136
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Flacador 109 CC t/a Bell Foods v AFGRI Poultry (Pty) Ltd t/a Day Break Farms (5099/2016) [2018] ZAFSHC 136 (14 September 2018)
IN
THE HIGH COURT OF SOUTH AFRICA,
FREE
STATE DIVISION, BLOEMFONTEIN
Case
number:
5099/2016
In
the matter between:
FLACODOR
109 CC t/a BELL
FOODS
Applicant
(Registration
Number: 2003/078541/23
and
AFGRI
POULTRY (PTY) LTD t/a DAY BREAK
FARMS
Respondent
HEARD
ON:
06 SEPTEMBER 2018
JUDGMENT
BY:
DANISO, AJ
DELIVERED
ON:
14 SEPTEMBER 2018
[1]
This is an application for rescission of a default judgment granted
against the applicant on the 17 May 2017. The application
is opposed.
[2]
The brief background is as follows. The applicant, a close
corporation duly incorporated in accordance with the laws of South
Africa chose Mccabe street, Fiksburg station in Fiksburg as its
domicilium
address. The
causa for the default judgment arises from a written agreement
concluded by the parties on 27 January 2009
[1]
in terms of which the applicant would purchase goods from the
respondent from time to time. On 25 October 2016 the respondent
issued summons against the applicant in the amount of R8 116 567.24
for failing to make payments in respect of goods sold
and delivered
to the applicant. The summons was served at the applicant’s
nominated address on 6 December 2016 by affixing
the copies to the
principal door. The applicant did not enter an appearance to defend
the action and after
expiry
of the
dies
induciae,
the respondent applied and was granted a default judgment in the
amount claimed together with interest and costs.
[3]
The parties are
ad idem
that for the applicant to succeed with
this application it must establish good cause in the sense of
explaining fully the reasons
for its failure to defend the action and
the grounds of its defence. It must show that the application is
bona
fide
and not designed as a dilatory tactic to delay the
inevitable.
[4]
The applicant’s reasons for not defending the action are set
out in the affidavit by Mr. Stefan Engelbrecht the sole member
of the
applicant’s business. He alleges that he was not aware of the
legal action involving the parties until 15 November
2017 when the
applicant’s banker informed him of a judgment on the
applicant’s credit record. He immediately contacted
the
applicant’s attorneys of record who made arrangements to obtain
the court file. The summons initiating the action was
indeed served
at the applicant’s nominated address of service. The summons
did not come to the applicant’s attention
due to the fact that
at the time the summons was served the applicant was no longer
occupying the said address.
[2]
It is in this regard that the applicant contends that it was not in
wilful default.
[5]
W
ith regards to the merits. The applicant avers that it has a
bona fide defense to the respondent’s claim simply on the basis
that the respondent’s particulars of claim are vague and
embarrassing thus excipiable, for the following reasons,-
5.1. The allegations in
the particulars of claim also contradict the essential terms of the
agreement. The respondent alleges that
the applicant was required to
pay for the goods within 7 days of receipt of the invoice whereas the
agreement provides that payments
shall be made within 14 days from
the date of invoice.
5.2. There is a
contradiction between the statements of accounts and invoices relied
upon by the respondent as proof of the applicant’s
indebtedness. The statements include entries for 2013, 2014 and 2015
whereas the plaintiff’s particulars of claim are limited
to 31
March 2016 to 31 July 2016.
5.3. There are also
discrepancies with regard to the computation of the amount claimed by
the respondent. Annexure “2”
refers to unpaid invoices
for the period 24 December 2013 to 19 October 2016 in the sum of
R8 116 567.24. However, goods
to the value of R43 187 167,
87 were purchased by the applicant during that period. The applicant
paid R42 536 605,
01 the outstanding amount is only
R650 562, 86.
5.4. The applicant
continues to state that it also has a valid counterclaim against the
respondent. The counterclaim arises from
an oral agreement concluded
by the parties subsequent to the written agreement. In this agreement
the parties agreed that the applicant
would render transport services
on behalf of the respondent by collecting and delivering goods to the
respondent’s customers.
The applicant would be entitled to a 5%
discount on the goods purchased from the respondent provided the
applicant pays its accounts
in accordance with the agreed terms. In
turn the respondent undertook to pay the applicant’s accounts
within 30 days from
date of statements. Any amounts due by the
applicant to the respondent would be set-off against any monies due
by the respondent
to the applicant.
5.5. The applicant has
duly complied with all the terms of the said agreement whereas the
respondent has failed to credit the applicant’s
account with
the agreed 5% discount reckoned at R2 159 358, 39. The
respondent has also failed to pay the full amounts
owed for the
transport services rendered and is currently indebted to the
applicant in the sum of R1 030 880, 31. The
applicant’s
debt in the sum of R650 562, 86 is accordingly extinguished by
set-off. In the result the respondent is
indebted to the applicant in
the amount of R381 317, 45 which the applicant intends to
recover through a counterclaim.
[6]
The applicant has accordingly raised a bona fide defence and a valid
counterclaim against the respondent’s claim. The
default
judgment should therefore be rescinded and the applicant be granted
an opportunity to defend the action.
[7]
It was argued for the applicant that the costs of this application
should be borne by the respondent as the opposition was unnecessary,
in the alternative, the costs should be costs in the cause or be
reserved for the main action.
[8]
On the other side, the respondent’s answering affidavit as
contemplated in Rule
6(5) (d) (ii)
of the Uniform Rules of Court was delivered out of time. It was due
on 15 January 2018 but delivered on 23 January
2018. The answering
affidavit was accordingly 6 days late. It was the respondent’s
submission that it was during December
2017 when the applicant’s
rescission application was served on the respondent. At that time
most of the respondent’s
staff and also the respondent’s
legal representative were on holidays. The respondent’s legal
representative only resumed
work on 15 January 2018 and it was only
then that consultations were arranged and instructions provided to
oppose the application.
On 26 January 2018 a request for condonation
for the late filing of the answering was forwarded to the applicant’s
legal
representatives by email. The applicant has since not consented
nor opposed the late filing of the respondent’s answering
affidavit. The respondent therefore requests that it’s
non- compliance with the rules of court be condoned.
[9]
It is axiomatic that
condonation
cannot be had for the mere asking, it is an indulgence which a court
has discretion on whether to grant it or not. The
respondent must
show sufficient cause entitling it to the court’s indulgence by
giving a full explanation for the non-compliance
with the court
rules. In my view the fact that the period of delay in delivering the
answering affidavit is not excessive, the
explanation for the delay
has been fully and sufficiently given and that there is no prejudice
to the applicant constitutes sufficient
cause warranting the court
applying its discretion in the respondent’s favour.
It
is in the interests of the administration of justice and the
applicant as well that this matter is finalized.
I am therefore inclined to condone the late filing of the
respondent’s answering affidavit.
[10]
The respondent’s opposition of the application is simply that
the applicant failed to present a reasonable explanation
for its
default and that the application does not set out a bona fide
defence.
[11]
According to the deponent of the applicant’s founding affidavit
he only became aware of the default judgment when he
was informed by
the applicant’s banker Andre Swanepoel but no confirmatory
affidavit in that regard was provided in order
to confirm these
allegations. The applicant’s allegations in this regard should
therefore be rejected as they constitute
hearsay evidence.
[12]
It is not in dispute that the summons was served properly and in
compliance with rules of court.
[3]
The reason the summons did not come to the applicant’s
attention was as a result of the applicant having vacated the address
without informing the respondent and this is despite the fact that in
terms of the agreement between the parties
[4]
the applicant was required to inform the respondent of any change of
address. The applicant’s conduct was reckless as it
should have
reasonably foreseen the danger of legal process being served at its
nominated address that it no longer occupied. The
applicant’s
default was accordingly wilful. The court should not come to its
assistance.
[13]
With regard to the defences to the claim. The respondent concedes
that the respondent’s particulars of claim in respect
of the
amount claimed and how it is arrived at is contradictory to the
statements of account and invoices. It was argued on behalf
of the
respondent that the contradictions do not render the claim excipiable
as they do not strike at the root of the respondent’s
cause of
action. The claim is simply based on the applicant’s failure to
pay invoices in breach of the written agreement.
[14]
The subsequent oral agreement pertaining to the transport services
and its essential terms relating to a set -off and a 5%
discount as
alleged by the applicant is also not in dispute, except that the
respondent was actually represented by one Kabelo
Sekete and not
Naeema Craig. The respondent also admits being indebted to the
applicant for the unpaid transport services however
the amount due by
the respondent is R781 829,10 and not R1 030 880, 31as
claimed by the applicant. The applicant
is not entitled to the 5%
discount as it never paid its account within the specified period.
The application should therefore be
dismissed. With regard to the
costs, it was submitted that the applicant changed the address of
service without informing the respondent
otherwise it would have
received the summons and defended the action. The applicant is
responsible for the costs occasioned by
this application. The
application should be dismissed and the applicant to pay the costs.
[15]
Thus is in short the summary of the facts in this matter. In addition
to the submissions presented by counsel I was also referred
to
various judicial authorities applicable when considering applications
of this nature.
[16]
Rule 31(2)(b) of the Uniform Rules of Court provides that an
applicant against whom default judgment has been granted may, within
20 days after he or she has knowledge of that default judgment, apply
to court to set it aside. The court may, on good cause shown,
set
that judgment aside. The applicant bears the onus of establishing
good cause by;-
(a)
Providing a reasonable explanation for its default;
(b)
Showing that the application is made bona fide and not merely
intended to delay the respondent’s claim; and
(c)
that it has a bona fide defence to the respondent’s claim which
prima facie has some prospect of success or probability
of success.
[17]
I now turn to consider the conduct of the applicant to establish
whether it was in wilful default or not. It was the applicant’s
case that it only became aware of the default judgment when it was
informed by its banker Andre Swanepoel. As the respondent rightly
countered, the applicant relies on hearsay evidence as no
confirmatory affidavit was attached to the applicant’s
affidavit.
Hearsay evidence is indeed inadmissible unless condoned by
the court, to that end, the applicant in an attempt to rectify this
omission, it attached the confirmatory affidavit on the replying
affidavit.
[18]
It is trite that the
applicant's
case must appear in its founding affidavit. It is not
permissible to rectify an omission in a founding affidavit
in a
replying affidavit. See
Bayat
and Others v Hansa and Another
1955
3 SA 547
(A) at 553D E
and
Titty's
Bar and Bottle Store v A B C Garage and Others
1974 4 SA
362
(T)
.
Having said that, the issue of how and when the applicant became
aware of the default judgment would be pertinent in the circumstances
where the applicant is also seeking condonation for the late filing
of the rescission application. In this matter it has not be
alleged
that the applicant’s application has not been delivered within
the 20 days from the date the applicant
acquired knowledge of the judgment.
[19]
The applicant’s reason for not defending the action is merely
that it did not receive the summons and this is despite
the fact that
the summons was served at the applicant’s
domiciliary
address nominated in the written agreement.
[5]
A
summons served in this manner will be good even though the applicant
no longer lived at the address. It was held in
Sheppard
v Emmerich
2015
(3) SA 309
(GJ) at 310 1-J
,
"that where a specific method of effecting service is
contractually agreed, that method should be strictly complied with."
It was similarly held in
Van
der Merwe v Bonaero Park (Edms) Bpk
1998
(1) SA 697
(T)
that "It is the obligation of the Defendant to change the
domicilium
citandi et executandi
address
or to change its registered address and accordingly I find that the
service at the address referred to in the summons and
the return of
service was good service on the Defendant."
[20]
Taking into consideration the above-mentioned factors and the case
law to be applied I find that the applicant’s explanation
with
regard to the reason why it did not defend the action and the
circumstances thereof cast doubt on its submission that it was
not in
wilful default.
[21]
An
application for rescission is never simply an enquiry whether or not
to penalise a party for his failure to follow the rules and
procedures laid down for civil proceedings in our courts. The
question is, rather, whether or not the explanation for the
default
and the accompanying conduct by the defaulters, be it wilful or
negligent or otherwise, gives rise to the probable inference
that
there is no
bona
fide
defence,
and that the application for rescission is not
bona
fide
.
[6]
In other words, w
ilful
default on its own is
not
a ground for refusing the application. The grounds of the applicant’s
defence to the claim are also a factor that the
court must consider.
A
good
defence may compensate for a poor explanation.
[22]
On the facts germane to this matter the applicant’s assertion
that the respondent’s claim has not been properly
set out and
the amount claimed is not properly computed is not disputed.
It
is incumbent on a plaintiff to plead a complete cause of action which
identifies the issues upon which the plaintiff seeks to
rely upon and
on which evidence will be led, in an intelligible and lucid form
which allows the defendant to plead to it.
[7]
Except for disputing the total amount allegedly owed to the applicant
the fact that the respondent is indebted to the applicant
is
admitted. A counterclaim is a valid ground for rescinding a judgment.
[23]
I’m satisfied that the defences raised by the applicant
constitute a
bona fide
defence which prima facie has a
prospect of success. There is accordingly a good reason to rescind
the judgment.
[24]
In the premises, the following order is granted
;
(1)
The late delivery by the respondent of
its answering affidavit is condoned.
(2)
The default judgment which was granted
by this court on 17 May 2017 under case number 5099/2016 is hereby
rescinded.
(3)
The c
osts of this application
will be costs in the cause.
_____________
DANISO,
AJ
APPEARANCES:
Counsel
on behalf of Applicant: Adv. J. Els
Instructed
by: Symington & De Kok
Counsel
on behalf of Respondent: Adv. M. Mgxashe
Instructed
by: Maphoso Mokoena Att.
[1]
Annexure “1” attached to the respondent’s
particulars of claim.
[2]
Paragraph 1-7 of the applicant’s founding affidavit.
[3]
Rule 4(1) (a)(iv) of the Rules of Court.
[4]
Clause 4, section 3A of Annexure “1”.
[5]
Clause 10.2, section 3B of the agreement.
[6]
De Witts Auto Body Repairs (Pty) Ltd v Fedgen Insurance CO Ltd 1994
(4) SA 705 (E) 711 E-G.
[7]
Imprefed (Pty) Ltd v National Transport Commission
[1993] ZASCA 36
;
1993 (3) SA 94
(A) at 107C-H.