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[2017] ZANCHC 20
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Kruger v Van der Wath and Kie (CA&R123/2016) [2017] ZANCHC 20 (17 March 2017)
IN
THE HIGH COURT OF SOUTH AFRICA
NORTHERN
CAPE DIVISION, KIMBERLEY
Case
No:
CA
&
R 123/2016
Heard
on: 20/02/2017
Delivered
on:
17/03/2017
In
the matter between:
THEUNIS
JOHAN KRUGER
APPELLANT/DEFENDANT
And
VAN
DER WATH
&
KIE
RESPONDENT/PLAINTIFF
Coram:
Pakati J et Mamosebo J
JUDGMENT
ON APPEAL: RESCISSION OF JUDGMENT
MAMOSEBOJ
[1]
This is an appeal noted in terms of Rule 51 of the Magistrates Courts
Rules against the judgment, order and the reasons of the
decision of
acting Magistrate
PP
Tshweu delivered on 08 October 2015 at
Kuruman Magistrate' s Court for her refusal to rescind the default
judgment granted on 24
February 2009.
[2]
The appellant is Theunis Johan Kruger a former sole member of a close
corporation registered as THEUNIS JOHAN KRUGER t/a ALL-IN-ONE
CC with
registration number 2007/021962/23. The respondent is Van der Wath &
Kie, a company registered with the Council for
Debt Collectors with
registration number 0016580/06.
[3]
Before the arguments could commence Adv Olivier, for the appellant,
addressed us on the aspect of security for costs because
it was
raised in the heads of argument by Adv Sieberhagen
appearing for the respondent, relying on Rule 51(4) of the
Magistrates Court Rules. Counsel for the respondent subsequently
abandoned the argument as that would have meant a postponement
to enable the appellant to comply with the requirement. As a result
the non-compliance with the Rule 51(4) was condoned. See
Pilane
v Northern Cape Tractors (Pty) Ltd
[1971] 3 All SA 346
(NC).
[4]
On 06 June 2007 the appellant received and completed an application
for credit facilities from NKB Traders (Pty) Ltd t/a
Lumber
City Kuruman. He also completed and signed a surety form
attached to the application
for the credit facility. The
CC was liquidated and later deregistered. The amount obtained through
the credit facility remained
unpaid.
[5]
On 13 February 2007 the respondent entered into a cession
agreement with Lumber City. The debt by the appellant
was ceded
to the respondent.
[6]
On 03 October 2008 the respondent issued a simple summons against the
appellant for the payment of R99 999.99 for goods sold
and delivered,
interest at 15.5% per annum from the date of the
mora
(when
the summons was served) to date of final payment and costs. The
appellant failed to enter an appearance to defend. At the
expiry of
the
dies
default judgment was granted on 24 February 2009. The
appellant brought an application for rescission of the judgment on 29
October
2014: five years and seven months later which was dismissed
by the Magistrate.
[7]
Rule 49 of the Magistrates Court Rules provides:
"(1)
A party to proceedings in which a default judgment has been
given, or any person affected by such
judgment, may
within 20 days after obtaining knowledge of the judgment serve
and file an application to
court, on notice
to all parties to the proceedings, for a rescission or variation
of the judgment and the court
may,
upon good cause
shown,
or
if
it is satisfied that there is good reason to do so,
rescind
or vary the default judgment on such terms as it deems fit: Provided
that the 20 days' period shall not be applicable to
a request for
rescission or variation of judgment brought in
terms
of
subrule (5).
" (Emphasis
added)
[8]
The prerequisites that the appellant must satisfy under this sub-rule
are the following:
(9.1)
The application must be brought within 20 days of having obtained
knowledge of the judgment;
(9.2)
Good cause must be shown.
(9.3)
If the appellant relies on the ground that rescission must be granted
because the default judgment is void
ab origine
the
application must be filed within one year after the appellant had
knowledge of such voidness, fraud or mistake.
[9]
The essential question to be determined is whether the appellant has
demonstrated whether the default judgment was erroneously
sought or
granted, or whether the judgment is void
ab origine
or was
obtained by fraud or mistake.
[10]
The appellant's contention was that the Magistrate erred:
11.1
In finding that the appellant does not have a
bona
fide
defence to the respondent's claim;
11.2
In finding that the appellant was in wilful default;
11.3
In dismissing the point
in
limine
raised by the
respondent that Rule 49(8) was not applicable to a rescission of
judgment;
11.4
In finding that the default judgment was properly granted whereas the
suretyship agreement
was not attached to the summons;
11.5
In finding that the default judgment was not granted erroneously
and therefore not
void
ab
origine;
11.6
In finding that the judgment granted
against
the appellant in his personal
capacity was correct
whereas it was
the close corporation that bought
and received the goods
sold by the respondent.
[11]
It was argued on behalf of the appellant that the
fact that the summons upon which the default
judgment was
granted was issued in the Magistrate Court in
the District of Kuruman it is excipiable based
on the Court's lack of
jurisdiction which rendered the default judgment
void
ab origine.
This argument lacks
merit. The appellant was served personally at [...] B. S.,
Kuruman. The same address appears on the surety
form signed by the
appellant. There was compliance with the provisions of s
28(1) (a) of the Magistrate's Court Act,
32 of 1944, which stipulates
that:
"28
Jurisdiction in respect of
persons.
-
(1) Saving
any other jurisdiction assigned to a court by this Act or by
any other law, the persons
in respect of whom the court shall,
subject to subsection
(J
A), have jurisdiction shall be
the following and no other:
(a)
Any person who resides, carries on business or is employed within the
district or regional division."
The
appellant was cited in his personal capacity. I
therefore find
that there was no misdirection on the part of the Magistrate to hold
that the Magistrates Court Kuruman had jurisdiction
to hear the
matter.
[12]
The appellant argued further that it was the close corporation and
not him in his personal capacity that was in wilful
default.
This assertion was not supported on paper. It is not in dispute that
the appellant, as the sole member, was the
alter ego of the
close corporation. This is what the appellant deposed to in his
founding affidavit:
"
I wanted [to]
start a
construction business and register
a close corporation as to protect
myself [in} my personal capacity
should my business entity suffer any sort of difficulties or losses.
I therefore decided to register
a close corporation (hereinafter
referred to as the CC) for the benefits this entity offered me
against creditors and because of
the advantages that it is a legal
entity and can trade as such. In particular, I was aware of the
benefit as in terms of s 2(3)
of the Close Corporations Act 69 of
1984 (hereinafter referred to as "the Act'') where a/the
member of the
CC
incur no
personal
liability when the matters for the
CC
is in the normal sense
of business for the
CC
's affairs. In this regard I refer the
Honourable Court to
the relevant
section:
'2
Formation and juristic personality of close corporations.
(3)
Subject to the provisions of this Act, the members of a corporation
shall not merely by reason of their membership be liable
for the
liabilities or
obligations of
the
corporation.
'"
[13]
It is also questionable that the appellant as the sole member of the
CC would not have known about the debts of the CC, particularly
the
credit facility provided by Lumber City Kuruman in respect of which
he had signed as surety. That he had marital problems and
moved several times within the specified period cannot be
described as a
bona fide
defence. In my view the argument
raised by the appellant pertaining to the summons is technical and
not a matter of substance and
is capable of being amended. These
technicalities nevertheless cannot assist him on the question of a
bona fide
defence. When the appellant was personally served
with the summons on 09 October 2008 he could have denied that the
amount of R99
999.99 was due and payable to Lumber City, Kuruman, but
he tacitly accepted his indebtedness.
I therefore find that there
was no misdirection on the part of the
Magistrate to hold
that the appellant was wilful in his
conduct.
[14]
Mr Olivier submitted that Rule 49(8) finds application in that where
a party is seeking rescission of a judgment on the basis
that it was
void ab origine
or was obtained by fraud or mistake, the
application must be served within one year after the applicant first
gained knowledge of
such voidness, fraud or mistake .
[15]
What the appellant omitted to point out is that he had signed as
surety on 06 June 2007 when he applied for a credit facility.
He only
made reference to the credit facility application attached as "K2"
and yet the completed and signed surety form
was attached to "
K2". The form reads:
"
Ek, die ondertekende Johann Kruger, Identity Number provided, verbind
hiermee myself as Borg en Mede Hoofskuldenaar ten behoewe
van NKB
TRADERS (Edms) Bpk, vir die behoorlike en stiptelike nakoming deur
All- in - One Konstruksie van al sy verpligtinge teenoor
die genoemde
NKB TRADERS (Edms) Bpk, hetsy dit tans verskuldig, opeisbaar en
betaalbaar is, of in die toekoms verskuldig, opeisbaar
en betaalbaar
gaan word deur Hoofskuldenaar.
Ek
doen hiermee afstand van die volgende regseksepsies:
I.
Non causa debiti (geen skuld oorsaak nie);
2.
Errore calculi (berekeningsfoute);
3.
De duobus fel pluribus reis debende (indien meer dan een borg, dan
gesamentlik of afsonderlik aanspreeklik);
4.
Beneficium ordinus sei excussiones (barge en mede-hooskuldenaars
gesamentlik en afsonderlik aanspreeklik);
Vir
doeleindes van hierdie borstelling, kies die barge hiermee as
domicilium citandi et executandi (synde adres waarborg geag word
altyd teenwoordig wees) te:
B.
S. [...] , Kuruman."
[16]
The fact that the appellant had bound himself as co-principal debtor
entitled the respondent to elect who it wanted to claim
against to
recover its debt since they were jointly and severally liable. The
appellant cannot be correct in his argument that
he cannot be
held personally responsible for the debt and further that the
close corporation should have been
joined as a party. Mr Olivier
sensibly abandoned this ground. It is clear from the
suretyship agreement
that the appellant
has renounced the benefit of excussion, and can therefore not insist
that the CC be
excussed first.
[17]
Mr Olivier submitted that the summons upon which the default judgment
was granted may be deemed to be an irregular step, alternatively,
excipiable based on the provision of the Magistrates Court Rules
on where a plaintiff sues a cessionary. Rule 5 (9)
of the
Magistrates Courts Rules of Court provides:
"Where
the plaintiff sues as cessionary the plaintiff shall indicate the
name, address and description of the cedent at the
date of cession as
well as the date of the cession.
"
[18]
Counsel also argued on behalf of the appellant that the written
cession agreement was not annexed to the summons as required
by Rule
6(6) and 12(6) and that the agreement was not contained in the
Magistrate's Court file when the judgment was delivered;
an aspect
denied by the respondent and rejected by the Magistrate. Although the
Rule requires the plaintiff to indicate the name,
address and
description in the summons, such omission is not of such nature
that it renders the process
void ab origine.
In its
answering affidavit the respondent explained that the
original cession agreement was filed at Court on 11 February
2009 and
that judgment was delivered on 24 February 2009.
[19]
I
n the address made
before the Magistrate the following is apposite:
"
Respondent:
Yes your worship so that is why my learned colleague
basically states that he never disputed that he has to pay the money,
we dispute
that the defendant should not pay the money, the claim
should have been lodged against the
CC,
the
CC
applied
[for] the credit.
Court:
But you do not dispute that the money is owed.
R
espondent:
Your worship the
CC
t
ook,
received
the
goods yes
,
th
e
CC
received
the goods.
Court:
Yes the
CC
received the goods, you do not dispute that?
Respondent
:
No
Court:
the CC?
You
do not dispute that the respondent has a surety against
Respondent:
No
Court
:
You also do not dispute the cession that it happened?
Respondent:
Your worship we did not, the cession was never basically
discussed as thoroughly in the summons so that is why we never
dwelled
upon that as well as the suretyship agreement.
Court
:
But it is in the bundle.
Respondent
: Yes
Court:
Yes, so all those things you do not dispute but what you are stating
is that the summons [was] erroneously issued against
the defendant
and they did not include it instead of the CC
Respondent
:
Because the
CC
is an entity on its
ow
n.
Court
: So that is
why.
Respondent
:
That is the basis of our defence, your worship; it is that the
CC
received the goods in their capacity as a legal entity, and that
he never received the goods. Therefore he is not liable but the
CC
is for the receiving of the goods."
[20]
Streicher JA's remarks in
Lodhi 2 Properties Investments CC and
Another v Bondev Developments (Pty) Ltd
2007 (6) SA 87
(SCA)
at 95D
-
F (para 27) are instructive:
"
..[I]n a case where a plaintiff is procedurally entitled to
judgment in the absence of the defendant the judgment
if
granted cannot be said to have been granted erroneously in the
light of a subsequently
disclosed defence. A Court
which grants a judgment by default like the judgments we are
presently concerned with, does not grant
the judgment on the basis
that the defendant does not have a defence: it grants the judgment on
the basis
that the defendant has been notified
of the plaintiff's claim as required by the Rules, that the
defendant, not having given notice
of an intention to defend, is not
defending the matter and that the plaintiff is in terms of the Rules
entitled to the order sought.
The existence or non-existence of a
defence on the merits is an irrelevant consideration and, if
subsequently disclosed, cannot
transform a validly obtained judgment
into an erroneous
judgment.
"
[21]
It is clear to me that the appellant failed to enter an appearance to
defend. He then subsequently sought advice from
his attorney
after he was in gainful employment and several years after the
default judgment was granted. It is also clear
from the address made
to the Magistrate that the so-called 'error' was based on the
premise that the judgment
ought to
have been granted against the CC and not the appellant.
This contention has not been substantiated
at all. The conduct of the
appellant in this application was wilful. We cannot come
to his rescue.
[22]
It is necessary for me to end by addressing the inordinate delay in
furnishing reasons for her decision by the Magistrate.
The judgment
was delivered
ex tempore
on 08 October 2015. The appellant's
legal representative requested reasons for judgment on 09 October
2015 which were only furnished
by the Magistrate on 26 May 2016,
about 7 months later. Adjudicating disputes and delivering properly
crafted and well reasoned
judgments promptly is the core
function of a presiding officer. The expression justice delayed is
justice denied still holds absolutely
true. Such prolonged delay may
render the judgment useless and prejudice the judgment creditor
immensely. The supine attitude by
the Magistrate may even
have breached the Magistrates'
Code of Conduct
where she
informed
Mr Nico Van Noordwyk, the attorney representing the appellant at the
Magistrates Court that:
"Ek
het die Landdros versoek vir 'n skriftelike uitspraak en is daar
aan
my vermeld dat sy aan my sal verskaf
sodra sy kans
kry.
"
[23]
Rule 51 (1) stipulates:
"
(1)
Upon a request in writing by any party within 10 days after judgment
and before
noting
an appeal the judicial officer
shall
within
15
days
hand
to the registrar or clerk of the court a judgment in writing which
shall become part of
the
record showing
-
(a)
The facts
he
or she found to be
proved
;
and
(b)
His or her reasons for judgment.
"
[24]
The appellant clearly lacked a
bona fide
defence. His
argument lacked merit and stands to be dismissed. The
Magistrate has applied her mind properly. I cannot therefore
find any
misdirection in her finding that the appellant lacked a
bona fide
defence.
[25]
What remains is the question of costs. There is no reason why
the costs should not follow the result. The calculation of interest
and costs claimed must not offend against the
in duplum principle.
[26]
In the result, the following order is made:
The
appeal is dismissed with costs.
__________________________
MAMOSEBO
J
NORTHERN
CAPE HIGH COURT
I
concur
__________________________
PAKATI
J
NORTHERN
CAPE HIGH COURT
For
the applicant:
Adv AD Olivier
Instructed
by:
Van Noordwyk
Attorneys
Hugo Mathewson &
Oosthuizen Attorneys
For
the respondent: Adv
AS Sieberhagen
Instructed
by:
KBVS
Attorneys
Duncan & Rothman Inc