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[2017] ZAFSHC 85
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Pretorius and Others v Iliad Africa Trading (Pty) Ltd (5348/2016) [2017] ZAFSHC 85 (25 May 2017)
IN
THE HIGH COURT OF SOUTH AFRICA,
FREE
STATE DIVISION, BLOEMFONTEIN
Case
number: 5348/2016
In
the matter between:
BAREND
MATTHEUS
PRETORIUS
First
Applicant
LISA
NICOLE
DAMON
Second
Applicant
JOHAN
LOUIS DU
PLESSIS
Third
Applicant
and
ILIAD
AFRICA TRADING (PTY)
LTD
Respondent
JUDGMENT
BY:
SNELLENBURG, AJ
HEARD
ON:
18 MAY 2017
DELIVERED
ON:
25 MAY 2017
[1]
This
matter concerns the
rescission of a default judgment granted by the registrar against the
applicants in favour of the respondent in terms of the provisions
of
Uniform rule 31(5)(b)(i) on 5 January 2017 in terms whereof the
applicants were ordered, jointly and severally, the one paying
the
others to be absolved, to pay the respondent the amount of
R2 640 584.39, interest and costs on the scale as between
attorney and client. The applicants also seek a stay of the
attachment of their property, if any, and the sale in execution
thereof
pending the finalisation of the rescission application
[1]
as well as a punitive cost order on the scale as between attorney and
client, alternatively
de
bonis propriis
.
[2]
The respondent opposes the application on the basis that the
applicants have failed to show good cause for the rescission.
Requirements
for rescission of a default judgment granted in terms of rule
31(5)(b)
.
[3]
A default judgment in terms of rule 31(5)(b) can be set aside by a
defendant in terms of the common law
[2]
or in terms of rule 31(5)(d)
[3]
.
To successfully apply for the rescission of a default judgment in
terms of the common law the applicant must show good cause by
(a)
giving a reasonable explanation of the default; (b) showing that the
application is made bona fide; and (c) showing the existence
of a
bona fide defence to plaintiff's claim which prima facie has some
prospect of success.
[4]
[4]
In
Pansolutions
Holdings Ltd v P & G General Dealers and Repairers CC
[5]
[Pansolutions]
it was
held that the court was accorded the power in terms of rule 35(d) to
substitute its discretion for the registrar’s
and that that the good cause criteria applicable in terms of rule
31(2)(b) is also applicable when the court, in terms of rule
31(5)(d), reconsidered a default judgment granted by the registrar.
In reality, save for the requirement in rule 31(5)(d) that
the
application be made within 20 days after the party acquired knowledge
of the judgment, the requirement that needs to be satisfied
for
rescission in terms of rule 31(5)(d) and at common law is the same,
namely good cause.
[5]
The applicants apply in terms of the common law insofar as it may
have any real effect on the adjudication of the matter.
[6]
The evaluation of the ‘good cause’ criteria that has been
applied consistently in relation to rescission applications,
whether
in terms of the common law or rule 31(2)(b), by Swain, J in
Pansolutions
supra
reveals the following
relevant considerations:
(a)
A court, in evaluating 'good cause', has a wide discretion in order
to ensure that justice is done.
[6]
(b)
The courts have declined to frame 'an exhaustive definition of what
would constitute sufficient cause to justify the grant of
an
indulgence'.
[7]
(c)
The enquiry is directed at establishing the reasons for the aggrieved
parties' absence. It is incumbent upon the applicant to
show that the
default was not wilful.
(d)
That an applicant is bona fide in bringing the application, and has a
bona fide defence to the claim, as required as part of
the obligation
to show 'good cause' is equally embraced by the concept of
determining whether an imbalance, oppression or injustice
has
resulted from the judgment granted by the registrar in terms of rule
31(5)(d).
(e)
As regards the establishment of a bona fide defence, what the
applicant has to do is set out a prima facie defence, by setting
out
averments which, if established at the trial, will entitle the
applicant to the relief asked for. The applicant is not obliged
to
deal fully with the merits of the case, and produce evidence that the
probabilities are actually in his favour.
[8]
[7]
The overarching obligation to ensure that justice is done applies
equally to the applicant and the respondent in a rescission
application. It is also well established that the requirements for
good cause should not be considered in isolation but rather
in
conjunction with one another.
[8]
In light of the various issues that needs to be adjudicated it is
necessary to deal with the common cause facts which inform
the
history of the matter as well as the salient matters that appear from
the parties’ affidavits in this matter.
The
common cause facts
[9]
During July 2016 the respondent instituted an action under civil case
cover number: 3449/2016 [case 3449/2016] against the applicants.
The
respondent claimed payment of the amount of R2 640 584.39
from the applicants jointly and severally, the one to pay
the other
to be absolved, together with interest and costs on the scale as
between attorney and client. The applicants were sued
on deeds of
suretyship in terms whereof they bound themselves as sureties and
co-principal debtors with ZPC Hospitality Renovation
Specialists
(Pty) Ltd, registration number: 2003/021432/07 (the principal debtor)
in favour of the respondent for the due and punctual
payment of all
amounts which may become owing, due and payable by the principal
debtor to the respondent from whatsoever cause
and howsoever arising.
[10]
The summons was served on the respective applicants during July 2016
at 5 Milner Road, Bloemfontein by affixing a copy to the
main
entrance as the addressees were found to be absent. The said address
was alleged in the summons to be the applicants’
chosen
domicilium
address and is also indicated in the principal
debtor’s application for credit as being its business and
registered address.
On 18 August 2016 the respondent applied to the
registrar for a default judgment. The registrar however gave notice
on 23 August
2016 that the matter needed to be referred to open court
for confirmation of the terms of the suretyship and
domicilium
.
[11]
The applicants defended the aforesaid action on 12 September 2016.
The respondent thereafter applied for summary judgment.
In resisting
the application for summary judgment the second applicant deposed to
an answering affidavit which was accompanied
by affidavits by the
first and third applicant confirming the contents of the answering
affidavit and associating themselves with
the content thereof. The
answering affidavit was duly filed on 7 October 2016.
[12]
For reasons that appear later the applicants also rely on the entire
content of their aforementioned answering affidavit in
the summary
judgment application in these rescission proceedings, hence it is
necessary to deal with the content thereof. I refrain
from quoting
the affidavit in its entirety, it is not necessary. I have, as far as
practical, used the same choice of words as
the applicants used, to
give a fair and accurate reflection of the content of the answering
affidavit, notwithstanding the fact
that I summarise the points
raised. The main contentions are:
12.1 The
application for summary judgment amounts to an abuse of process as
the affidavit in support thereof contains inadmissible
evidence in
the form of allegations as well as annexures;
12.2 The deponent
to the aforesaid affidavit, in support of the summary judgment
application, does not possess personal knowledge
of the facts he
purports to verify;
12.3 The
particulars of claim constitutes a nullity and, as result thereof,
also the summary judgment proceedings due to the
fact that the
particulars of claim was signed only by an attorney who does not have
the right of appearance in this Division;
12.4 The respondent
relies on a written agreement allegedly concluded between it and the
principal debtor. It purports to
append a copy thereof to the
particulars of claim as annexure A. Annexure A is, on the face of it,
merely an application for credit
facilities signed only on behalf of
the principal debtor. It is not a written agreement between the
respondent and the applicant
as alleged. As result there is an
inconsistency between the allegations in the particulars of claim and
the document relied upon
for the cause of action which renders the
pleading vague and embarrassing. The respondent also fails to specify
who represented
the parties during conclusion of the agreement and
merely refers to duly authorised representatives. It is also alleged
that the
claim premised on the alleged written agreement lacks
allegations necessary to sustain a cause of action against the
principal
debtor. As direct consequence the particulars of claim also
lacks allegations necessary to establish liability of the applicants
as sureties for the principal debtor’s obligations pursuant to
the alleged agreement between the respondent and the principal
debtor. The applicants’ record that they will, in due course,
file the necessary notice [in terms of Uniform rule 23];
12.5 The respondent
failed to append any written document purporting to be a suretyship
by any of the applicants in favour
of the respondent. The General Law
Amendment Act 50 of 1956 provides that no contract of suretyship
entered into after the commencement
of the Act, shall be valid,
unless the terms thereof are embodied in a written document signed by
or on behalf of the surety. The
plaintiff has thus failed to disclose
a cause of action against the sureties. If written deeds of
suretyship do exist the same
have not been appended and the necessary
allegations required in terms of rule 18(6) are not contained in the
particulars of claim.
12.6 No proper
demand in terms of
section 129(1)
of the
National Credit Act 34 of
2005
was dispatched to any of the applicants or the principal debtor.
The provisions of the said section, read with
sections 86(9)
and
130
are mandatory before any action can be instituted against “any
defendant as an alleged debtor”. The claim, if there
exists a
claim against the applicants, is premature. Because the applicants
are allegedly also co-principal debtors, their position
is markedly
different from that of a mere surety and compliance with the
provisions of the
National Credit Act is
therefore mandatory;
12.7 I quote the
next point verbatim. The relevance will appear later. “.. as is
evident from Plaintiff’s very
own Particulars of claim, the
alleged amount claimed by the Plaintiff is disputed, but
notwithstanding this, the Plaintiff persists
and moves for summary
judgment for the disputed amount,..”;
12.8 The principal
debtor has been placed under business rescue in terms of
section 129
of the
Companies Act 71 of 2008
with effect from 30 May 2016. This is
the reason why the plaintiff has not instituted action against the
principal debtor. The
Business Rescue Plan was adopted on 18 July
2016 of which a copy is appended as annexure to the answering
affidavit. The implementation
in terms of
section 150(2)(
b
)(
ii
)
constitutes a compromise and discharge of the principal debt and thus
the applicants have been released as sureties to the principal
debtor.
[13]
The summary judgment application as issued notified the applicants
that it will be heard (is set down) on 13 October 2016.
It appears
from the court order of 13 October 2016 that Rampai, J, after hearing
counsel for the plaintiff, postponed the summary
judgment application
sine die
and ordered that costs be costs in the cause.
[14]
On 4 November 2016 the respondent issued a second combined summons
against the applicants under civil case cover number: 5348/2016
(the
matter which ultimately gave rise to this rescission application).
[15]
Neither the respondent nor its attorney of record or its attorney at
the seat of the court informed the applicants of the fact
that,
whilst the first action was still extant and the summary judgment
proceedings were postponed
sine die
, it had instituted a
second action against them.
[16]
As far as case 5348/2016 is concerned the summons is, save for the
differences which is mentioned below, an identical copy
in every
respect to the summons issued in case 3449/2016. The result is that
that the same plaintiff has instituted action against
the same
defendants for the same thing arising out of the same cause. The
summons even bears the same reference number as the summons
in case
3449/2016. The only difference between the two summonses are that (i)
the particulars of claim is properly signed by an
attorney with right
of admission in this Division; (ii) the particulars of claim in the
second summons contains an additional paragraph
numbered 7.3.5,
wherein reference is made to the written deeds of suretyship granted
in favour of the respondent by each of the
applicants and (iii)
copies of the said deeds of suretyship are appended to the pleading
as annexures F1, F2 and F3.
[17]
The summons in case 5348/2016 was served on the same
domicilium
address (5 Milner Road) where the summons in case 3449/2016 was
served on the same day that the second action was issued. The returns
of service in respect of all three applicants record that the sheriff
was informed by a receptionist of Fresh Harvest, another
business,
that the defendant is no longer at the aforementioned address.
[18]
On 21 November 2016 the respondent applied for a default judgment in
case 5348/2016.
[19]
On 14 December 2016 the respondent’s attorney at the seat of
the court deposed to a so-called ‘lost document affidavit’.
The attorney states that she took the matter over as correspondent
from another local attorneys firm and that the original certificate
of balance, agreement and suretyship agreements were filed in case
3449/2016 but were amiss when she uplifted the court file for
purposes of appending the same as annexures to case 5348/2016. This
is of course not correct insofar as the deeds of suretyship
were
never appended to the summons in case 3449/2016.
[20]
On 5 January 2017 the registrar granted the default judgment.
[21]
On 19 January 2017 a writ of execution was issued to take into
execution the third Applicant’s movable property and to
realise
the same at a public auction to satisfy the judgment debt, costs and
charges.
[22]
On 20 February 2017 the applicants issued the application for
rescission under consideration. After receipt of the applicants’
heads of argument in this application the respondent filed a notice
of withdrawal of case 3449/2016 wherein costs of the action
is
tendered. The respondent did not seek the applicants consent nor did
it, prior to argument, seek leave from the court.
Relevant
evidence contained in the applicants and respondent’s
affidavits in the rescission application.
[23]
The first applicant deposed to the founding affidavit in support of
the rescission application. The first applicant avers that
he and the
other applicants were contacted by the sheriff on 1 February 2017.
The sheriff informed them that he had received instructions
to
proceed with the attachment of their property. Before continuing with
the applicants’ version two aspects pertaining to
the
applicants’ aforementioned averments need to be addressed.
Although there are no documents in the court file pertaining
to the
execution process against the second and third applicants, these
facts are not denied by the respondent, thus confirming
that the
execution process is pursued against all three the applicants. It
should be pointed out however that the applicants’
attorney
addressed a letter to the respondent’s attorney at the seat of
the court on 1 February 2017. In this letter the
author states that
the sheriff contacted the applicants on 31 January 2017. The purpose
of the letter was to record that the applicants
had only become aware
of the default judgment when the sheriff informed the applicants of
his instructions; to inform the respondent
that “daar geen
bates op die Verweerder se naam is nie” and to enquire whether
the respondent intended to persist with
the execution in which event
the applicants would seek a rescission of the judgment on urgent
basis. It does not appear that any
reply to the letter was
forthcoming. The discrepancy regarding the date that the sheriff
contacted the applicants is not material
to the adjudication of the
matter.
[24]
The applicants explain the reasons for the default as follows:
“
The Applicants no
longer conducts business at its
domicilium
address in
accordance with the written Agreement annexed to the Particulars of
Claim, being 5 Milner Road to both Particulars of
Claim. The
Principal Debtor, ZPC Hospitality Renovation Specialists (Pty) Ltd
has since moved to a new location.”
The
first applicant continues to aver that none of the applicants had
knowledge of the proceedings and if they had they would have
defended
the same. The applicants state that their failure to defend was
not wilful.
[25]
Regarding the bona fide defence the applicants refer to the defences
set out in their answering affidavit to the summary judgment
application in case 3449/2016. They also appended a copy of the
answering affidavit.
[26]
The applicant deals with the background regarding the first action
(case 3449/2016) and appends the majority of documents that
form part
of the court file in case 3449/2016 to the founding affidavit.
[27]
Lastly the applicants moves for a punitive cost order, alternatively
costs de
bonis propriis
. This order is sought on the basis
that the applicants contend that the respondent acted
mala fide
and the attorneys ‘unethically’ based on the history of
the matter.
[28]
The respondent denies that the applicants are bona fide with the
application and avers that the applicants default is wilful.
Suffice
it to say that the respondent takes issue with the fact that the
applicants did not give a detailed account of when the
premises was
vacated (or the business was relocated) and they state that service
of case 3449/2016 was effected on the same address.
They also rely on
the fact that the applicants chose the address as
domicilium
address and also that it is not the applicants’ case that the
principal debtor changed its registered address.
[29]
The respondents deny that the application is bona fide and state that
the applicants are merely employing delaying tactics
as they have no
bona fide defence to the respondent’s claim. To this end they
deal with each defence in the answering affidavit
in case 3449/2016
and conclude that the defences dealt with in the answering affidavit
to the summary judgment application do not
constitute a bona fide
defence for purposes of the rescission application. The defences are
evaluated later in the judgment.
[30]
The respondent’s request that the application be dismissed with
costs on the scale as between attorney and client is
premised on the
provisions of the deeds of suretyship which provides that the
respondent is entitled to costs incurred in enforcing
any of the
provisions of the suretyship on this scale.
[31]
In the replying affidavit the applicants aver that the respondent
misunderstood the primary grounds upon which the application
for
rescission has been brought and then proceeds to deal with the fact
that when the second action (5348/2016) was issued the
respondent
knew that the applicants had defended the first case and intended to
defend the matter and that the cause of action
was clearly
lis
pendens
when the second action was issued. This was also the
thrust of the argument on the applicants’ behalf.
Explanation
for default
[32]
I am satisfied that the applicants have given a satisfactory
explanation for their failure to defend the action.
[33]
Although it is correct that:
33.1 service of the
summons in case 3449/2016 was effected on the
domicilium
address and notwithstanding the fact that it was affixed to the main
entrance it did come to the applicants’ knowledge;
[9]
33.2 the applicants did
not take steps to change the
domicilium
address when the
business was relocated;
33.3 the applicants fail
to supply any information regarding when exactly the business would
have relocated, the aforementioned
must be considered in light of the
history of the matter. What must be determined is whether the
applicants were in wilful default
to defend case 5348/2016.
[34]
The respondent had already issued summons against the applicants in
case 3449/2016 as sureties. The action was still extant
and the
applicants could not reasonably be expected to anticipate another
action on the same cause of action claiming the same
relief being
served on them by the respondent. In fact, case 3449/2016 was
defended, the summary judgment application had not been
finalised and
the applicants were represented by attorneys. It can hardly be argued
that in those circumstances it should be held
against the applicants
that they did not think to inform the respondent that the
domicilium
address was vacated or of a new
domicilium
address. The
default can never be found to be wilful in the circumstances of this
case.
[35]
The facts in the matter of
Hardroad
(Pty) Ltd v Oribi Motors (Pty) Ltd
[10]
are distinguishable from the facts in this matter. In that matter the
respondent attempted to serve at the same address where the
first
provisional sentence summons was served. The sheriff was informed
that the address was vacated and the respondent then served
on the
applicant company’s registered address. The provisional
sentence summons had been withdrawn prior to the issuing and
service
of the fresh provisional sentence summons. Even in those
circumstances the court remarked that the respondent’s
attorney’s failure to inform the applicant’s attorneys
that they were issuing a new summons “showed a grave lack
of
courtesy”. The Judge remarked that it seemed to be in keeping
with the war of technicalities that characterised that case
and
opined however that he doubts that, that fact is likely to move the
trial court to special sympathy for the applicant.
[36]
The facts of this matter does not warrant a finding of wilful
default.
The
bona fide defence
[37]
The applicants indicated in their replying affidavit and in argument
that the principal or main bona fide defence proffered
in this
rescission application is the fact that when the second action was
instituted the matter became
lis alibi pendens
.
[38]
It is correct that the moment the second action, case 5348/2016, was
issued the plea of
lis
alibi pendens
became
available to the applicants. This is admittedly so because the all
the requirements for
lis
alibi pendens
were satisfied at that stage, namely an action against the same
defendants for the same thing arising out of the same cause.
[11]
[39]
As referred to in the background the respondent served a notice of
withdrawal of the action under civil case cover number 3449/2016
on
12 May 2017. The costs were tendered on party and party scale. The
first question presenting itself for consideration is whether
the
first action has indeed been properly withdrawn. Uniform
rule 41(1)
provides that:
“
(1)(a) A person
instituting any proceedings may at any time before the matter has
been set down and thereafter by consent of the
parties or leave of
the court withdraw such proceedings, in any of which events he shall
deliver a notice of withdrawal and may
embody in such notice a
consent to pay costs; and the taxing master shall tax such costs on
the request of the other party.
(b) A consent to pay
costs referred to in paragraph (a), shall have the effect of an order
of court for such costs.
(c) If no such consent to
pay costs is embodied in the notice of withdrawal, the other party
may apply to court on notice for an
order for costs.”
The
‘withdrawal’ was motivated by the specific reference in
the replying affidavit to the defence
lis alibi pendens
. The
respondent did not obtain the applicants consent nor did it request
leave from the court prior to the filing of the notice.
[40]
Counsel for the respondent contends firstly that the first action was
withdrawn by virtue of the notice of withdrawal and that
consent was
not required. As result it is contended that there can no longer be
any
lis pendens
. The applicants joined issue with the
proposition that the action had been withdrawn. They contend that the
proceedings had been
set down with the result that the respondent
required either their consent or leave of court. As the respondent
had neither when
it filed the notice, the action had not been
withdrawn.
[41]
The “proceedings” referred to in
Rule 41(1)(a)
are those
envisaged by the Rules in which there is a
lis
between parties, one of whom seeks redress or the enforcement of
rights against the other.
[12]
To my mind the respondent required the applicants’ consent or
leave of the court to withdraw case 3449/2016 in the circumstances.
Counsel for the respondent urged me to grant leave for the withdrawal
in the event that I found the same to have been a requirement.
It
would not be proper to entertain such request. I accept that the fate
of this application may be material to those proceedings.
Whilst it
is not ordinarily the function of the Court to force a person to
institute or proceed with an action against his or her
will or to
investigate the reasons for abandoning or wishing to abandon one
[13]
,
the applicants may very well wish to put further facts before the
Court pertaining to the order ultimately sought in that case.
As
far as the evaluation of this application is concerned I therefore
proceed on the basis that case 3449/2016 has not been
withdrawn.
[42]
It appears that the applicants’ case is based, on the one hand,
on the following: the respondent ‘snatched’
a judgment in
the second action whilst knowing the first action was extant; was
actively being defended and that the applicants
always intended to
defend the action against them as sureties. For these reasons the
judgment should according to the applicants
be rescinded.
[43]
In
Hudson v Hudson and Another
1927 AD 259
at
268
De Villiers held as follows regarding attempts to abuse court
process:
“
Where... the Court
finds an attempt made to use for ulterior purposes machinery devised
for the better administration of justice
it is the duty of the Court
to prevent such abuse. But it is a power to be exercised with great
caution, and only in a clear case.”
[14]
[44]
Whilst the respondent’s attorneys’ lack of courtesy in
this matter is to be remarked upon as having “showed
a grave
lack of courtesy” (to borrow from
Hardroad
supra
),
this does not justify a finding that the Court’s process was
abused on the facts of this matter, or put differently, that
this is
a clear case as envisaged in
Hudson v Hudson and Another
supra
. My findings regarding the outstanding issues
are therefore premised on the fact that I have found that there was
not an abuse
of process.
[45]
The applicants, after being confronted in the answering affidavit
with the respondent’s challenge that the ‘defences’
raised in the answering affidavit in the first action are either no
longer applicable (because the deficiencies were amended) or
no
longer constitutes a
bona fide
defence for purposes of
rescission to the claim in the second action where default judgment
was granted, replied that the respondent
misunderstood their defence.
The applicants state, as pointed out in the background, that they
rely on
lis alibi pendens
. It is also of consequence that the
applicants did not challenge the respondent’s attack on the
defence in any manner other
than by reliance on the defence of
lis
alibi pendens
. The applicants also elected to persist with the
defences as formulated to the summary judgment application in the
first action.
[46]
As point of departure the mere reference to
lis
alibi pendens
can never on its own constitute a bona fide defence to case
5348/2016, because in absence of a bona fide defence to the action
for the same thing arising from the same cause, there is little
reason to allow a plea of
lis
alibi pendens
to succeed.
[15]
In
absence of a bona fide defence it is indeed difficult to envisage
grounds that will convince a court that it is not just
and equitable
to allow the second action to continue, notwithstanding the fact that
the same case was instituted earlier.
[47]
Insofar as the applicants’ reliance on the defence of
lis
alibi pendens
is aimed at contending that the judgment in the
second case is invalidated merely by reason of the fact that when it
was granted
the same case which was instituted earlier still existed,
I can do no better than to associate myself fully with the following
dicta in
Starita v Absa Bank Ltd and Another
2010
(3) SA 443
(GSJ) para 7
which is dispositive of that argument:
“
The applicant's
first contention is that it is impermissible to have two extant
summonses for the same debt, and that that position
invalidates the
default judgment granted on the second summons. It is true that such
a position would afford a defendant the right
to raise the defence of
lis alibi pendens
, which is invariably done by way of a
special plea. But the defence is merely a dilatory one, since if it
is upheld the usual practice
is to stay the proceedings in the one
matter. The court has a discretion whether to uphold the defence, and
could refuse to do
so in a proper case. Ordinarily the plaintiff
would simply withdraw one of the actions. The mere fact that there is
at any point
in time two extant summonses does not render one or both
of them invalid or inoperative. If it did, the special plea of
lis
pendens
would not be merely dilatory and the court would not have
a discretion in the matter; it would be dispositive of the case. If
the
special plea of
lis pendens
is never raised there would be
no adverse consequences to the plaintiff other than the fact that it
would not be entitled to obtain
judgment in both actions, but only in
one. Accordingly, in my view, the fact that two summonses had been
issued, and that both
actions were pending at the time when default
judgment was granted on the second, does not invalidate the default
judgment granted.”
[48]
I would also add that insofar as the applicants rely on the fact that
when the judgment in the second case was given, the existence
of the
same case which was instituted earlier was not disclosed, there are
two answers. Firstly, the registrar’s attention
was in fact
drawn to the first case in the ‘lost documents affidavit’.
Secondly it was held in the matter of
Yekelo v Bodlani
1990 (3) SA 970
(TK)
where the court sitting as court of appeal
was called upon to decide what the consequence should be of a
plaintiff’s failure
to disclose to the court of first instance
that a rescission application for the same relief was pending in the
magistrate’s
court, that the fact that the application for
rescission was pending in the magistrate's court was not an absolute
bar to the High
Court entertaining an application for the same
relief. Whilst the institution of two actions is
prima facie
vexatious, it is within the court's discretion to allow an action to
continue should that be considered just and equitable
despite the
earlier institution of the same action. The court held that the Judge
would probably still have granted the relief
sought had he known of
the first action.
[49]
This judgment must not be seen as approval to parties who are engaged
in litigation to approach another court (or the same
court
differently constituted) with a second case whilst the same action
which was instituted earlier is still extant without disclosing
the
existence thereof to the court. This matter is decided on its own
facts and, as will appear below, there are circumstances
flowing from
the applicants defence to case 3449/2016 which contributed to the
result.
[50]
As stated above, an important factor is whether a party raising
lis
alibi pendens
has a proper defence to the action or application.
In this matter it appears that the ‘invalidity’ defence
motivated
the issue of the fresh summons, obviously rectified in some
respects. To this end I point out the obvious: the applicants raised
the point that the first summons was invalid. The gist of the defence
was therefore that there was no valid process in existence.
It would
not assist them to cry foul because the respondent decided to issue a
valid process.
[51]
The question that begs an answer is therefore whether the applicants
have shown that any bona fide defence exists to the same
thing being
claimed arising out of the same cause. The applicants limit their
defence to the defences contained in answering affidavit
to the
summary judgment application. If those defences do not satisfy the
requirements of a bona fide defence for purposes of rescission
the
application is foredoomed to failure. The defences have been set out
in paragraph [12] above. For the following reasons they
do not
constitute bona fide defence to the present action.
[52]
The defences referred to in paragraph 12.1, 12.2 and 12.3 above do
not constitute a bona fide defence to this action wherein
default
judgment was granted.
[53]
The defence referred to in paragraph 12.4 falls well short in the
present proceedings to constitute a bona fide defence. The
respondent
appended letters (as annexures D1 and D2) to its particulars of claim
addressed to it on behalf of the principal debtor
by its attorneys.
The same attorneys also represent the applicants in these
proceedings. The respondent used to trade under the
names Buco
Rustenburg, Buco Bloemfontein and SAFLOK SA. The letters are
addressed to Buco Bloemfontein and SAFLOK. The letters
state in the
introduction that the author thereof holds instructions to address
the letter to the principal debtor’s possible
creditors. In
annexure D1 the amount of R10 540 797.54 is recorded to be
owing to Buco Bloemfontein and in annexure D2
the amount of
R4 648 433.44 is recorded to be owing to SAFLOK. The
applicants, save for the objection raised in the summary
judgment
application would, to my mind, in these proceedings have had to
seriously grapple with the alleged indebtedness and the
relationship
between the respondent and the principal debtor, more so when the
applicants themselves rely on the fact that the
respondent is
acknowledged to be a creditor in the business rescue. It is clear
that the respondent is indeed a creditor of the
principal debtor and
that an amount of money is owed to it. If the applicants were to deny
that the principal debtor was indeed
a creditor of the respondent or,
for that matter contended that the principal debtor does not owe the
respondent any money, then
they bore the onus to make
averments
to substantiate the defence which, if established at the trial, would
entitle them judgment in their favour. They failed
to do so.
[54]
The defence referred to in paragraph 12.5 is not relevant to the
present proceedings as the written deeds of suretyship were
appended
to the particulars of claim in case 5348/2016. The applicants
significantly did not deny the deeds.
[55]
The defence referred to in paragraph 12.6 does not constitute a bona
fide defence. The respondent specifically relies on the
provisions of
section 4(1)(a)(i)
of the NCA to the effect that the agreement would
be excluded from the provisions of the aforesaid Act. The applicants
have not
advanced any primary facts to refute the reliance on the
provisions of section 4(1)(a)(i) or to establish a bona fide defence
to
the extent that the principal agreement between the respondent and
the principal debtor was not excluded from the NCA. The applicants
are sued as guarantors to the obligations of the principal debtor in
terms of a credit transaction to which the NCA does not apply.
The
contractual relationship with the applicants remains ancillary to the
main agreement between the respondent and the principal
debtor. The
applicants cannot claim that the NCA applies to them on the basis
that their obligations arise in terms of a credit
guarantee as set
out in section 8(5) of the NCA as that section requires the credit
guarantee to apply to the obligations of another
consumer in terms of
a credit transaction to which the NCA applies.
[16]
The applicants contend that their position differs from that of a
mere surety because they are sued as surety and co-principal
debtor.
Signing as surety and co-principal debtor does not render a surety
liable in any capacity other than a surety who has renounced
the
benefits of excussion and division.
[17]
The use of the words ‘co-principal debtor’ does not
transform the contract into any other than suretyship.
[18]
[56]
The defence referred to in paragraph 12.7 reads “as is evident
from Plaintiff’s very own Particulars of claim,
the alleged
amount claimed by the Plaintiff is disputed, but notwithstanding
this, the Plaintiff persists and moves for summary
judgment for the
disputed amount,..”. What the deponent was referring to is not
clear. There are no allegations in the particulars
of claim that
justifies this conclusion. The applicants have not elaborated upon
this allegation at all. If the allegation
refers to the
difference between the letters addressed on behalf of the principal
debtor and the claim amount, the applicants should
say so. The claim
amount is substantially less than the amounts that the principal
debtor acknowledged in its letters. The applicants
are however in a
better position than sureties are normally. They have intimate
knowledge of the business rescue proceedings. In
such event they
should deal with the amount which they say was owed by the principal
debtor.
[57]
Lastly the defence referred to in paragraph 12.8 above, namely that
the principal debtor is under business rescue; that the
implementation of the business rescue constitutes a full and final
settlement of the respondent’s claim against the principal
debtor and therefore any possible indebtedness by the applicants as
sureties have been discharged. Firstly, the respondent stated
in its
answering affidavit that the business rescue had been converted into
provisional liquidation proceedings. The applicants
failed to deal
with this allegation in their replying affidavit. This is an
important issue which at the very least called for
an explanation.
There are no rational grounds to ignore this statement. Any statutory
moratorium as result of the business rescue
proceedings that could
conceivably assist the applicants, without finding that there would
be any, would in any event have lapsed
if the business rescue
proceedings were terminated.
[19]
Secondly, for the same reasons there cannot be any suggestion of the
discharge of the sureties’ obligations where the business
rescue proceedings were terminated. Thirdly, I have considered the
proposed business rescue plan as appended to the answering affidavit.
There does not appear to be any indication that the respondent could
not pursue its remedies against the sureties.
[58]
When
lis alibi pendens
is raised the Court has a discretion. As stated earlier, i
f
the applicants do not have a bona fide defence, there would be very
little reason to allow the plea of
lis alibi pendens
to
succeed.
[59]
As matters stand the Court would not accede to the request to uphold
the defence of
lis alibi pendens
in light of the absence of
even a semblance of a bona fide defence to the merits of case
5348/2016.
Bona
fide
in making the application
[60]
This aspect can only bear on the costs in light of my conclusion that
the application stands to be dismissed. I have no doubt
that the
applicants were bona fide with the application.
Costs
[57]
The applicants were not successful and no reason exists why costs
should not follow the result. To my mind however it is appropriate
to
order that the costs be paid on party and party scale.
[58]
Accordingly,
IT IS ORDERED THAT
:
The
application is dismissed with costs.
___________________
N.
SNELLENBURG, AJ
Appearances
:
On
behalf of the applicants: Adv PC
Ploos van Amstel
Instructed
by:
D Muller
Kramer Weihmann &Joubert
Inc
Bloemfontein
On
behalf of the respondent: Adv BC Stoop SC
Instructed
by:
E De Jager
Botha De Jager Attorneys
Bloemfontein
[1]
This order would not have any practical effect at this stage.
[2]
See
Chetty
v Law Society, Transvaal
1985 (2) SA 756
(AD) at 764J.
[3]
See
Lazarus
v Nedcor Bank Ltd
;
Lazarus
v Absa Bank Ltd
1999
(2) SA 782
(W) at 78;
Pansolutions
Holdings Ltd v P & G General Dealers and Repairers CC
.2011
(5) SA 608 (KZD) paras [13] – [15].
[4]
Colyn v
Tiger Food Industries Ltd t/a Meadow Feed Mills (Cape)
2003 (6) SA 1
(SCA) also applied in
Pansolutions
supra.
[5]
See
fn
3 supra
.
[6]
Wahl
v Prinswil Beleggings (Edms) Bpk
1984
(1) SA 457 (T).
[7]
Innes
J in
Cairns'
Executors v Gaarn
1912 AD 181
at 186.
[8]
Colyn
v Tiger Food Industries Ltd t/a Meadow Feed Mills (Cape)
2003
(6) SA 1
(SCA) at 9E – F.
[9]
In
Loryan
(Pty) Ltd v Solarsh Tea And Coffee (Pty) Ltd
1984 (3) SA 834
(W)
the
court gave a pointed summary of the position relating to
service on a
domicilium
address, namely that ‘the choice of a
domicilium
citandi et executandi
is primarily related to the service of process in judicial
proceedings. As appears from Rule 4 (1) (a) (iv), which reflects our
common law practice (see Muller v Mulbarton Gardens (Pty) Ltd
1972
(1) SA 328
(W) at 331 in fine to 333H and the authorities there
cited), service of any process may be effected by delivering or
leaving
a copy thereof at the
domicilium
chosen by the party concerned. Such service is then good, even if
the process may not be received, for the very purpose of requiring
the choice of a
domicilium
is to relieve the party causing service of the process from the
burden of proving actual receipt. Hence the decisions in which
service at a
domicilium
has been held to be good, even though the address chosen was vacant
ground, or the party was known to be resident abroad, or
had
abandoned the property, or could not be found.’
[10]
1977
(2) SA 576 (W).
[11]
Caesarstone
Sdot-Yam Ltd v World of Marble and Granite 2000 CC and Others
2013 (6) SA 499
(SCA);
Nestlé
(South Africa) (Pty) Ltd v Mars Inc
2001
(4) SA 542
(SCA).
[12]
De
Lange v Provincial Commissioner of Correctional Services, Eastern
Cape
2002 (3) SA 683 (SE).
[13]
Levy
v Levy
1991 (3) SA 614 (A).
[14]
Also see
Levy
v Levy
[1991] ZASCA 81
;
1991 (3) SA 614
(A).
[15]
Nordbak
(Pty) Ltd v Wearcon (Pty) Ltd and Others
2009 (6) SA 106 (W).
[16]
See
Firstrand
Bank Ltd v Carl Beck Estates (Pty) Ltd and Another
2009 (3) SA 384 (T).
[17]
Firstrand
Bank Ltd v Carl Beck Estates (Pty) Ltd and Another
,
supra
par 22;
Maasdorp
v Graaff-Reinet Board of Executors
(1906 -
1909) 3 Buch AC 482
at 490;
Du
Plessis v Estate Teich Brothers
1914 CPD 48
at 50; Neon supra at 471.
[18]
Per De Villiers, CJ in
Maasdorp
v Graaf-Reinet Board of Executors
,
supra
at 490.
[19]
New
Port Finance Company (Pty) Ltd and Another v Nedbank Ltd
[2015]
2 All SA 1
(SCA)