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[2017] ZAGPPHC 836
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Poncana v 36 Windsor Road CC and Others (A400/2016) [2017] ZAGPPHC 836 (1 March 2017)
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REPUBLIC
OF SOUTH AFRICA
IN
THE HIGH COURT OF SOUTH AFRICA
GAUTENG
DIVISION, PRETORIA
APPEAL
CASE NO: A400/2016
NOT
REPORTABLE
NOT
OF INTEREST TO OTHER JUDGES
In
the matter between:
THELMA
THANDISWA
PONCANA
Appellant
and
36
WINDSOR ROAD
CC
1
st
Respondent
SUMAIYA
ABDOOL GAFAAR KHAMMISSA
N.O.
2
nd
Respondent
YASHICA
CHETTY
N.O.
3
rd
Respondent
NARAN
MAHARAJH
N.O.
4
th
Respondent
JUDGMENT
NOCHUMSOHN
(AJ)
1.
A judgement sounding in money was granted against the Appellant, by
default, on 24 December 2009, in the Klerksdorp Magistrate's
Court.
2.
An application for the rescission thereof was dismissed on 30 May
2013, by the Magistrate in Klerksdorp ("the 30 May 2013
dismissal order'').
3.
The Appellant then brought an application for the setting aside of
the 30 May 2013 dismissal order. Such application was likewise
dismissed upon 29 April 2016.
4.
This is an appeal against the dismissal order granted upon 29 April
2016.
5.
In the notice of motion, for the setting aside of the 30 May 2013
dismissal order, the Appellant sought the following relief,
inter
alia:
5.1
. An order setting aside the dismissal of her
first rescission application on 30 May 2013; and
5.2
. An order setting aside the judgement sounding
in money, which had been granted on 24 December 2009.
6.
The Appellant failed to file the record in relation to her initial
application for the rescission of the default judgement granted
on 24
December 2009. As a result of this failure, it would not be competent
for us to grant an order setting aside the said judgement.
Mr
Hollander, who appeared for the Appellant, abandoned such relief. In
the result, the Appellant merely sought an order setting
aside the
dismissal of her first rescission application on 30 May 2013.
7.
In argument, counsel for both the Appellant and the First Respondent
were in agreement that in the event of the appeal being
upheld for
the limited relief now sought, the effect thereof would be the mere
setting aside of the dismissal of the First Rescission
Application,
which would serve to resuscitate such rescission application, so as
to enable the parties to set same down for argument
in the court
below.
8.
In order to gain a full understanding of the subject matter of this
appeal, regard must be had to the following background:
8.1
. On 24 December 2009, judgment for a claim sounding in money was
granted by the court below, by default against the Appellant
(whose
attorneys had failed to file an appearance to defend). Such default
judgement was granted in favour of the First Respondent,
a close
corporation which was subsequently placed under provisional
liquidation. Subsequently, the Second to Fourth Respondents
were
appointed in their respective capacities as the joint liquidators of
the First Respondent, and effectively replaced the First
Respondent,
by way of substitution orders. On 17 September 2015, the
provisional winding up order in respect of the First
Respondent was
discharged, which served to resuscitate the First Respondent and the
Second to Fourth Respondents were discharged
as the provisional
liquidators of the First. As such, the Second to Fourth Respondents
no longer have any interest in this appeal;
8.2
. The First Respondent, had sold an immovable property to the
Appellant for the purchase consideration of R2 000 000.00, in
terms
of an agreement of sale signed between the parties;
8.3
. In terms of paragraph 18 of the agreement of sale, the purchaser
was to
"take registration of the
property within six months of acceptance of this offer to purchase
and
a
deposit
to be paid within six months of acceptance of offer..."
Such
clause amplified clause 2(a) of the agreement, which provided for a
deposit of R800 000.00. The said clause 18 also set out
a list of
items in relation to the property, which were to be provided by, or
attended to by the seller, being the First Respondent;
8.4
. Transfer was passed into the name of the Appellant and a first
mortgage bond was registered by her over the property in. favour
of
ABSA Bank;
8.5
. Subsequent to the signature of the agreement of sale, an
Acknowledgement of Debt was signed by the Appellant, in favour of
the
First Respondent, the material terms of which were:
8.5.1.
The Appellant acknowledged herself to be truly and lawfully indebted
to the First Respondent in the amount of R830 645.86,
being in
respect of the balance of the purchase price and transfer and bond
registration costs for the property known and described
as Erf [...]
Wilkoppies Extension 49 Township, which the Appellant had purchased
from the First Respondent in the amount of R2
000 000.00;
8.5.2.
The Appellant undertook and promised to pay the aforesaid amount in
consecutive monthly instalments of R100 000.00 each,
commencing upon
01 November 2009, for eight successive months, with a final
instalment of R30 645.89 on 01 July 2010;
8.5.3.
The Appellant undertook to pay Jassett Mitchell Inc Attorneys the
costs for the drawing of the acknowledgement of debt;
8.5.4.
In the event of legal action being instituted for the recovery of
any monies payable in terms of the acknowledgement
of debt, the
Appellant consented to pay costs on an attorney / client scale;
8.5.5.
The acknowledgement constituted the whole agreement between the
parties and no representations or warranties not contained
therein
would be of any force or effect, unless in writing and signed by both
parties;
8.6.
The Appellant failed to effect any payments under the acknowledgement
of debt;
8.7.
On the Appellant's version, its failure to effect payment was
occasioned by the First Respondent's failure to undertake the
repairs
to the property per clause 18 of the agreement of sale;
8.8.
Arising out of the failure to pay, the Appellant was sued and
judgment was granted by default, as aforesaid, in respect of
such
claim on 24 December 2009;
8.9.
On or about 14 April 2010, the Appellant launched her first
application in the court below, for the rescission of the said
judgment, which application could not be enrolled immediately, as
soon after the launching thereof, the First Respondent was placed
under provisional liquidation;
8.10.
At a time after the Second to Fourth Respondents were substituted for
the First, in their respective capacities as the joint
liquidators of
the First Respondent, they enrolled the Appellant's first rescission
application for hearing upon 26 April 2013,
upon which date such
application was postponed until 30 May 2013;
8.11.
Whilst the Appellant had not received notification of the enrolment
for 26 April 2013, a Notice of Set Down for the hearing
on 30 May
2013 was delivered to the Appellant's then Attorneys of Record, being
her correspondent attorney in Klerksdorp, Kennedy
Kgomongwe;
8.12.
Such attorneys failed to communicate the enrolment of the application
for 30 May 2013 to the Appellant's Johannesburg attorneys,
in
consequence of which the Appellant had no knowledge of the hearing on
30 May 2013 and there was no appearance on her behalf.
On that day -
30 May 2013, the Appellant's first Application for Rescission of the
24 December 2009 judgement was dismissed with
costs, in the absence
of the Appellant;
8.13.
The Appellant first became aware of the dismissal of her first
application for the rescission of the default judgment, when
the
sheriff attended at her home on 22 September 2015, to attach her
assets;
8.14.
Within the twenty day time period provided for in Rule 49(1) of the
Magistrate's Court rules, the Appellant launched her second
rescission application in which she sought:
8.14.1.
the setting aside of the dismissal of her first rescission
application; and
8.14.2.
an order for the rescission of the default judgement granted in
favour of the First Respondent on 24 December 2009;
8.15.
In the second rescission application, both parties were represented
and such application was dismissed by the Magistrate upon
29 April
2016. It is the dismissal of the latter application which now
forms the subject matter of this Appeal, but as set
out above, only
in relation to relief sought for the setting aside of the dismissal
of her first rescission application and not
for the relief sought for
the granting of the rescission of the default judgement granted in
favour of the First Respondent on
24 December 2009, which Mr
Hollander correctly abandoned;
8.16.
In the result, the sole issue forming the subject matter of this
appeal is whether or not the second application for rescission
was
correctly dismissed by the Magistrate in the court below, on 26 April
2016.
9.
The First Respondent filed a notice of objection to this appeal being
heard, together with an application which it enrolled to
be heard at
the commencement of this appeal, in which it sought an order for:
9.1
. The striking of this appeal from the roll;
9.2
. The upholding of its objection to this appeal being heard; for want
of filing of security for the due performance of the judgement,
as
ordered by the court below, on 05 July 2016. The latter order was
granted by the court below, pursuant to an application launched
by
the First Respondent, in terms of Section 78 of the Magistrate's
Court Act 32 of 1944, as amended ("the Act"), and
notwithstanding the order, security for the satisfaction of the 24
December 2009 judgement had not been filed by the Appellant.
10.
In response to the First Respondent's said application, Mr Hollander
correctly argued that the effect of the order of 05 July
2016, was
such that the execution of the judgement granted by default on 24
December 2009 would be suspended, pending the filing
of security
within the time period provided for in such order. Mr Hollander's
submission to the effect that such order did not
serve to suspend the
appeal is correct. Thus we can find no basis for the First
Respondent's objection to the appeal proceeding,
or for the appeal to
have been struck from the roll.
11.
The Appellant's heads of argument were filed a day or two before the
hearing of this appeal, and were accompanied by a formal
application,
on notice of motion, for the condonation of the late filing of such
heads. Such application was predicated upon attorney
error on the
part of the attorneys representing the Appellant. In the interests of
justice, we condoned the late filing of such
heads and conversely
condoned the handing up of the First Respondent's supplementary heads
of argument.
12.
Mr Pretorius, who appeared for the First Respondent, contended that
the Magistrate was correct in dismissing the second rescission
and
argued that the court below was
functus officio
upon the
dismissal of the first rescission application and that the correct
remedy would have been the noting of an appeal or review
against such
order, as opposed to the launching of the second rescission
application.
13.
In response to such submission, and placing reliance upon the
judgement of Jafta J (as he then was), in
Mutebwa v Mutebwa
2001 (2)
SA
193
(TkH),
Mr Hollander
correctly contended that rescission of judgements in the Magistrate's
Court could be brought either under common law,
alternatively in
terms of Section 36 of the Act, as read with Rule 49 and did not need
to specify the section of the Act or rule
number under which the
rescission was brought. In accordance with Section 36(1)(a) of the
Act, the Magistrate's Court may
suo moto,
rescind or vary any
judgement granted by it, in the absence of the person against whom
that judgement was granted.
14.
Given that the first rescission application had been dismissed by the
court below, in the absence of the Appellant, who had
not been
advised of the set down by her own local correspondent attorney, we
find that the second application for rescission of
such order was
competently brought in accordance with Section 36(1)(a) of the Act,
inasmuch as the first order had been granted
by default, without the
Appellant having had knowledge of such rescission application
proceedings.
15.
Mr Pretorius raised in his heads of argument, that the dismissal of
both the first and second rescission applications, were
sterile
inasmuch as the Appellant's right to pursue the first rescission
application had lapsed by operation of Section 75 (1)
of the
Insolvency Act 24 of 1976, which reads:
75
Legal proceedings against estate
(1)
Any civil legal proceedings instituted against a debtor before the
sequestration of this estate, shall lapse upon the expiration
of a
period of three weeks,
as
from
the date of the first meeting of the creditors of that estate, unless
the person who instituted those proceedings gave notice,
within that
period, to the trustee of that estate, or if no trustee
has
been appointed, to the Master, that
he intends to continue those proceedings, and after the expiration of
a period of three weeks
as
from
the date of such notice, prosecutes those proceedings with reasonable
expedition: Provided that the court in which the proceedings
are
pending, may permit the said person (on such conditions
as
it may think fit to impose) to
continue those proceedings, even though he failed to give such notice
within the said period, if
it finds that there
was
a
reasonable excuse for such failure.
16.
Mr Hollander correctly raised in response that Section 75 of the
Insolvency Act was of no application to the First Respondent,
being a
close corporation. Such argument was predicated upon the definition
of "debtor" in section 2 of the insolvency
act, which
means:
'a
person or a partnership or the estate of a person or partnership
which is a debtor in the usual sense of the word, except a body
corporate or a company or other association of persons which may be
placed in liquidation under the Jaw relating to companies'.
17.
Moreover, the First Respondent was never the debtor of the Appellant
as envisaged in terms of section 75(1) of the Insolvency
Act, with
the result that this point falls by the wayside.
18.
The usual principles applicable to the granting of a rescission of
judgement application are twofold. Firstly, the Appellant
must prove
that she was not in wilful default and secondly that she is vested
with a valid and
bona fide
defence.
19.
In dismissing the Appellant's second rescission application, the
learned Magistrate correctly noted that the Appellant's
non-appearance
on 30 May 2013 was attributable to fault on the part
of her local correspondent attorneys, who had received a Notice of
Set Down,
but had failed to communicate such set down to the
Appellant or to their instructing attorneys.
20.
It must thus be accepted, as a
fait accompli,
that the
Appellant was not aware of the set down in respect of the first
rescission application, which had been enrolled by the
First
Respondent. As a result, there was no appearance for the Appellant at
the first rescission application, which was dismissed
at the instance
of the First Respondent, absent the Appellant.
21.
The question which begs to be asked is: was such non-appearance on
the part of the Appellant, in circumstances where she had
no
knowledge of the hearing, tantamount to wilful default on her part?
More aptly, can the First Respondent be visited with the
prejudice
occasioned by the failure on the part of the Appellant's local
correspondent to have communicated the set down to the
Appellant or
her instructing attorney?
22.
I agree with the learned Magistrate that even if the Appellant had
not been notified of the set down by her attorneys, there
ought to
have been some duty which rested upon her shoulders, to follow up on
the process given and instructions conveyed to her
attorneys, over a
period of several years.
23.
The Appellant sat back in blissful ignorance, having taken transfer
of the property (with knowledge of the non-payment by her
of the R830
000.00), without offering any explanation as to what steps were taken
by her in following up the process with her attorneys
of record, over
a very lengthy period of time. Against this, it is clear that the
entire process had been derailed by the provisional
liquidation of
the First Respondent, the appointment of the Second to Fourth
Respondents as liquidators of the First, their substitution
of the
First Respondent by way of several court applications and the setting
aside of such provisional order. It is thus
not correct to lay
too much blame upon the
Appellant,
given that these were circumstances which were not of her making.
24.
In the judgement of Trengrove AJA, with Wessels JA, Rabie JA, Muller
JA and Corbett JA concurring in the case of
De Wet and Others v
Western Bank Ltd
1979 (2)
SA
1031
(A)
,
similar circumstances arose. In summary, in that matter, the
attorney for three of the plaintiffs withdrew shortly before the
trial,
but in contravention of Rule 16(4) of the High Court Rules,
failed to notify his erstwhile clients of his withdrawal as their
attorney
of record. The notice of withdrawal had been served upon the
opponent and filed, without coming to the attention of the
plaintiffs.
In the result, the plaintiffs were unrepresented at the
trial before Van Reenen J, on 16 August 1976, who at the request of
the
defendant's counsel dismissed their claims by virtue of such
non-appearance and granted judgement against them for the
counterclaims.
25.
In the judgement Trengrove AJA recorded:
"Having regard to
all of the relevant facts and circumstances, I
am
of the view
that, on common law principles, this court would not be justified in
exercising its discretion in favour of granting
the appellants the
relief sought. They are, as Melamet J correctly remarked at 780G:
'the authors of their own problems and it would be inequitable to
visit the other party to the action with the prejudice and
inconvenience
flowing from such conduct'."
26.
Whilst following the rationale of Trengrove AJA in
De Wet supra,
it does not seem appropriate for the First Respondent in the case
in casu
to be visited with the prejudice occasioned by the
negligence of the Appellant's local attorney in failing to have
communicated
the set down or appear at the first rescission hearing,
one must be mindful of the approach of Moseneke J (as he then was) in
Harris v ABSA Bank Limited trading as Volkskas 2006 (4) SA
527 (T), paragraphs 8 and 9
,
where the
learned judge said:
"Before an applicant in a rescission of
judgement application can be said to be in wilful default, he or she
must bear knowledge
of the action brought against him or her and of
the steps required to avoid the default. Such an applicant must
deliberately, being
free to do so, fail or omit to take the step
which would avoid the default and must appreciate the legal
consequences of his or
her actions. A decision freely taken to
refrain from filing a notice to defend or a plea, or from appearing,
ordinarily will weigh
heavily against an applicant required to
establish sufficient cause. However, I do not agree that once wilful
default is shown,
the applicant is barred; that he or she is then
never entitled to relief byway of rescission as he or she has
acquiesced. The court's
discretion in deciding whether sufficient
cause has been established must not be unduly restricted."
27.
Similarly, in
Maujean
trading as Audio Video Agencies v Standard Bank of SA Ltd
1994 (3) SA
801
{C), at 803 H to I,
King J
described the act of wilfulness as follows:
"More
specifically in the context of default judgement, wilful connotes
deliberateness in the sense of knowledge of the action
and its
consequences, i.e. its legal consequences and a conscious and
freely taken decision to refrain from giving notice
of intention to
defend, whatever the motivation for this conduct might be."
28.
Viewed in the context of both
Harris
and
Maujean
supra,
we find that the Appellant
was not in wilful default, in circumstances where the non-appearance
at the first rescission hearing
was solely attributable to the
failure of her attorney to have communicated the set down to her. She
had no knowledge of the hearing
on that day and was not in wilful
default of appearing.
29.
Having overcome the hurdle of wilful default the question begs to be
asked whether it is necessary to engage the second leg
of the enquiry
as to whether or not the Appellant is vested with a valid and
bona
fide
defence. Given that the effect of this appeal, if upheld,
would merely serve to set aside the dismissal of the first rescission
application, which in turn would resuscitate such application for
enrolment and hearing in the court below, it would be incumbent
upon
the Appellant to argue that application in the court below and as
part of such process, to prove that she is vested with a
valid and
bona fide
defence. It is thus not strictly necessary for us to
determine whether or not a valid and
bona fide
defence exists,
and we are not able to make such determination, absent the record in
relation to the first application for rescission.
We do not have the
benefit of the summons, the particulars of claim, or the papers for
the first rescission application before
us, rendering the task of
determining the presence of a valid and
bona fide
defence,
impossible.
30.
It would be the function of the court below to determine at the
hearing of the first rescission application, whether or not
the
Appellant has made out a valid and
bona fide
defence, on those
papers, which we have not had sight of, and if so, to grant the
rescission of the default judgement order of 24
December 2009, which
we are no longer required to do, in the light of Mr Hollander's
abandonment of such relief.
31.
Mr Hollander argued that the acknowledgement of debt constitutes a
credit agreement in terms of Section 8(4)(f) of the NCA and
that the
First Respondent had not complied with the provisions of Sections 129
and 130 of the NCA, which omission would give rise
to a valid and
bona fide
defence.
32.
The First Respondent denied the applicability of the NCA, and it
appears to be common cause that notices under Sections 129
and 130
were not dispatched.
33.
On the face of it, and in isolation, the acknowledgement of debt
meets with the criteria set out in-Section 8(4)(f) of the NCA,
the
effect of which section would render the acknowledgement of debt to
be an agreement as contemplated in the NCA, as the document
serves to
defer payment and embodies a provision for payment of fees.
34.
Mr Hollander based his argument upon the judgement of Van Der Byl AJ,
in the case of
Carter Trading (Pty) Ltd v Blignaut
2010 (2) SA
46
(ECP)
.
In the latter case, summary judgement was
sought under Rule 32, where the plaintiff contended that the
defendant had signed an acknowledgment
of debt on 23 December 2008,
for payment to the plaintiff in an amount of R107 082.30, to be paid
in full by 16h00 on 24 December
2008, being the date immediately
after the date on which the acknowledgement was signed. In
opposition to the summary judgement,
the defendant raised that the
acknowledgement was a credit agreement in terms of Section 8(4)(f) of
the NCA and that there had
been non-compliance with Sections 129 and
130 of the NCA. Van Der Byl AJ ruled that the acknowledgement did
constitute a credit
agreement within the meaning of Section 8(4)(f)
of the NCA, inasmuch as payment was deferred, and the document
rendered the defendant
liable for the cost of negotiating and
preparing the acknowledgement.
35.
Against Mr Hollander's aforementioned submissions, Mr Pretorius
placed reliance upon
Ribeiro and another v Slipknot Investments
77
{Pty) Ltd
2011 (1)
SA 575
{SCA)
and
Grainco {Pty) Ltd v Broodryk
2012 (4)
SA
517
(FB)
in arguing that an acknowledgment of debt would not fall
under the NCA, if the underlying cause of action giving rise to the
subsequent
acknowledgement of debt was not subject··to·
the NCA. In further support of such submission, Mr Pretorius referred
us to the article by Hess entitled
"Acknowledgement of Debt
and the NGA",
published in
De Rebus Volume 3. August
2012
,
in which the view was expressed that in the
event of a debtor already being liable in terms of a cause of action,
which is not subject
to the NGA, in respect of an acknowledgement of
debt, merely confirming such existing obligation, such debtor is not
a
'consumer'
as defined in the NCA.
36.
These are considerations which must ultimately be weighed up, with
the benefit of the record in relation to the first rescission
application and will fall to be determined by the presiding
magistrate when the first rescission application is ultimately
argued.
It would be wrongful for us to make findings and thereby
circumscribe the issues, absent the full record of all the
proceedings.
37.
Whilst we do not find that the Appellant has established a valid and
bona fide
defence, she may be able to establish such defence,
in the presentation of her argument for her first rescission
application. To
deny her an opportunity to advance a case, would be
to bring about an injustice, particularly given that the initial
judgement
was granted by default, without the Appellant's evidence
having been raised or heard.
38.
Accordingly, we make the following order:
38.1.
The First Respondent's application for the striking of the appeal
from the roll, is dismissed.
38.2.
The late filing of the Appellants heads of argument is condoned.
38.3.
The Appeal is upheld and the order of the magistrate is replaced with
the following:
"The
default order granted in favour of the First Respondent on 30 May
2013, in terms of which the Appellant's application
for rescission
launched on 14 April 2010
was
dismissed with
costs,
is
hereby
set
aside."
38.4.
The costs of the appeal are to be costs in the First Rescission
Application.
________________________
NOCHUMSOHN,
G
ACTING
JUDGE OF THE HIGH COURT
I AGREE
________________________
MOLOPA-SETHOSA, LM
JUDGE OF THE
HIGH COURT
On
behalf of Applicant: Advocate L Hollander
Instructed
by: Mathopo Attorneys
On
behalf of the First Respondent: Advocate JJ Pretorius
Instructed
by: Theron Jordaan and Smit Inc
Date
of Hearing: 01 December 2016
Date
of Judgment: