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[2017] ZAKZPHC 56
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Griffiths v MMI Group Limited (13869/2015) [2017] ZAKZPHC 56 (4 December 2017)
IN
THE HIGH COURT OF SOUTH AFRICA
KWAZULU-NATAL
DIVISION, PIETERMARITZBURG
Case Number: 13869/2015
In
the matter between:
BRUCE
EARL
GRIFFITHS
Applicant
and
MMI
GROUP
LIMITED
Respondent
JUDGMENT
Delivered
on: 04 December 2017
MAHBEER
AJ
[1]
The applicant applies for the rescission of a default judgment
granted against him on 20 December 2015, condonation under rule
27
and ancillary relief.
[2]
The applicant’s heads of argument were served a day late and
his application for condonation was unopposed. I need not
address
this aspect.
The
law
[3]
The following is necessary under Uniform Rule 31(2)(b), which it
seems is common cause founds the present application:-
3.1
the
applicant is to make an application within twenty (20) days of
knowledge of the default judgment; and
3.2
the
court may upon good cause shown set aside the default
judgment
on terms it deems meet.
[4]
It is trite that in order to establish good cause an applicant must
set forth a reasonable explanation for the default and a
bona
fide
defence/s. Our courts routinely shy away from defining ‘good
cause’ as “doing so would hamper the exercise of
a
discretion which the rules have purposely made very extensive”
(see
Brangus
Ranching (Pty) Ltd v Plaaskem (Pty) Ltd
2011 (3) SA 477
(KZP))
[5]
Silber v
Ozen Wholesalers
1954 (2) SA 345
(A) at 353A remains authority for the proposition
that an applicant’s explanation must be sufficiently full to
enable the
court to understand how the default came about and assess
the applicant’s conduct.
[6]
An element of the explanation for the default is that the applicant
must show that he was not in wilful default. If the case
the
applicant makes out on wilful default is not persuasive, that is not
the end of the enquiry - the applicant’s case may
be rescued if
a
bona
fide
defence is demonstrated.
Harris
v ABSA Bank Ltd t/a Volkskas
2006
(4) SA 527
(T) at [8] – [10]
Melane
v Santam Insurance Co Ltd
1962
(4) SA 531
(A) at 532C-F
The
facts
[7]
The material facts which are common cause or undisputed are:-
7.1
in 2010,
the applicant and respondent concluded a Financial Planner Agreement.
The applicant was employed as an independent contractor
(a broker)
who would sell the respondent’s products;
7.2 the applicant would
earn commission, in advance, on the products so sold;
7.3 in the event of
policies lapsing or being cancelled, the commission would be derived
from the respondent’s recalculations
and adjustments (the
so-called “clawback” clause);
7.4 between July 2010 and
July 2013, the respondent advanced commissions to the applicant;
7.5 between July 2010 and
September 2015, certain products or policies lapsed or were
cancelled;
7.6 the respondent
recalculated commission and claimed adjustments from the applicant;
7.7 the respondent
provided the applicant with monthly ledgers setting out the
commission calculations and adjustments;
7.8 in about November
2012, the applicant began to suffer from severe depression and
related ailments. By December 2013, his
condition had
progressed such that he was prevented from continuing his work for
the respondent this according to a neuro-psychological
assessment
report dated 10 December 2013;
7.9 in the meantime, in
April 2013, one Ryan Roberts (“Roberts”) was appointed as
the ‘caretaker’ of the
applicant’s portfolio;
7.10 on 20 June 2013, the
respondent terminated its contract with the applicant;
7.11 on 28 July 2013, the
applicant sold his business (also referred to as his “book”)
to Roberts;
7.12 the respondent
invoked the “clawback” and in October 2015, it instituted
the action for R340,453.47 plus interest;
7.13 summons was served
by affixing at the applicant’s
domicilium
address when the respondent knew that the applicant had moved to an
alternate address;
7.14 on 10 December 2015,
default judgment was granted against the applicant;
7.15 the applicant
learned of the judgment on 23 July 2016;
7.16 the applicant
entered into correspondence with the respondent’s
representatives and, when that failed to resolve the
dispute, he
instructed his attorneys of record. This was in October 2016;
7.17 the applicant’s
attorneys then attempted to settle the matter with the respondent’s
representatives but they too
failed; and
7.18 the present
application for rescission was brought on the 20
th
December 2016.
[8]
I note that there is no suggestion that the applicant is non
compos
mentos
. No medical evidence was submitted to indicate that
at the time of the application he was emotionally incapable of
appreciating
or acting in appreciation of the implications of the
legal proceedings. Indeed, the applicant was capable of making
enquiries and
communicating with the respondent’s
representatives, instructing his attorneys and counsel and he
deposing to the founding
and replying affidavits. I record this
because it is relevant to the emotional content of his affidavit, by
which I am unmoved.
Condonation
[9]
Regarding service of the summons, it is undisputed that this occurred
at the applicant’s
domicilium
address, notwithstanding the respondent’s knowledge that he had
vacated that property. I am prepared to give the applicant
the
benefit of the doubt and accept that this effectively means that
between December 2013 and 23 July 2016, the applicant was
not in
wilful default of the judgment. (See
Wishart
NO v First Rand Bank Ltd
(3459/2013)
[2014] ZAKZDHC 58 (28 November 2014) What is of concern, however, is
that as soon as the applicant instructed his attorneys,
steps should
immediately have been taken to avoid wilful default from that point
on. Why an application was not so made,
even if to run parallel
with the attorneys’ attempts to negotiate with the respondent
in order to protect the applicant’s
interests and comply with
Uniform Rule 31(2)(b), is unexplained. Instead, the application
was launched two months after the
applicant instructed his
attorneys’. The applicant’s and his attorneys’
silence on this material point feature
in my assessment of wilful
default.
[10]
The respondent’s opposition to the application for condonation
for the late institution of the rescission application
thus has merit
in the context of the five month delay between July 2015 (when the
applicant first learned of the default judgment)
and December 2015
(when the application was finally brought). And whilst the two month
delay following the applicant’s first
consultation with
attorneys may seem minor, it is not the period that perturbs me but
the active disregard of the Uniform rules
of this court. The delay is
unacceptable and it constitutes wilful default.
The
Defences
[11]
As I pointed out at the outset, wilful default is not the only factor
in the exercise of my discretion. I must still analyse
if the
applicant has demonstrated a
bona
fide
defence. I take guidance in doing so from the reasoning in
Harris
v ABSA Bank Ltd supra
at paragraph [16] and examine if the applicant’s defence “shows
the existence of an issue which is fit for trial”.
If so
demonstrated then this may overcome my finding about the wilfulness
of the applicant’s default.
[12]
The applicant raised a number of issues. Not all of these were
tendered as defences but it is necessary, for reasons
I advance
later, to highlight some of the matter contained in his affidavits:-
12.1 the applicant’s
emotional state rendered him incapable of acting
proactively;
12.2 the applicant’s
personal claim against the respondent under an income protector
policy had resulted in a dispute which
preoccupied him;
12.3 the respondent had
coerced the applicant to settle on a purchase price for his “book”
which was far less than its
true value. This, so the applicant
averred, constituted grounds for a claim-in-reconvention;
12.4 part of the
respondent’s claim in the action has prescribed;
12.5 the purchaser of the
respondent’s books, Roberts, ought to have been joined as a
party to the action because it was he
against whom the “clawback”
ought properly to have applied.
[13]
Counsel for the applicant prudently confined his argument to two
defences: prescription and misjoinder of Roberts.
[14]
On the defence of prescription, it is trite that the party who raises
prescription must allege and prove the date of inception
of the
period of prescription. (See
Gerrick
v Sack
1978 (1) SA 821
(A)). In my view, it does not suffice that the
applicant adopted prescription somewhat speculatively as a defence
and blamed the
lack of particularity on the respondent’s
particulars of claim.
[15]
Nevertheless and notwithstanding the flawed manner in which the
defence was invoked, the respondent countered it by pointing
out that
in fact the applicant was provided with commission ledgers on a
regular basis and this would have adequately enabled him
to formulate
the prescription defence properly.
[16]
Thus for the applicant to claim that he was so emotionally
overwrought as to not understand the ledgers is simply not good
enough. Even if he did lack the necessary grasp of the law and
process, nothing prevented the applicant’s legal
representatives
from formulating a
bona
fide
prescription defence by applying their collective minds to the
commission ledgers. The Financial Planner Agreement contemplates
that
the lapsing or cancellation of policies may occur at any time, so the
date upon which prescription arises would have been
determinable
through or by the date of lapsing or cancellation of the policies.
All that the applicant and or his legal representatives
were required
to do to set out prescription properly was to analyse the ledgers and
identify what amounts and dates were subject
to prescription.
This exercise was not undertaken.
[17]
In the circumstances, the defence on prescription is unsustainable
and not
bona
fide
.
[18]
The defence based on misjoinder similarly does not resonate. A
connection between the respondents’ claim and a third
party
claim against Roberts for possible future lapses and current debit
balances was not demonstrated. What is more, the issue
of “current
debt balances” is a red herring upon a plain reading of the
affidavits, as is the insinuation that the
respondent and Roberts
conspired to undervalue the applicant’s “book”.
[19]
Mr Shapiro for the applicant pointed out, in the interest of full
disclosure, that the respondent acquired certain rights under
clause
2.4.1 of a Conditional Consent to Cession and Delegation of Broker
Entity Rights and Obligations. Clause 2.4.1 states:-
“
All
rights and obligations in respect of the policies will be transferred
from the transferring broker [in this case, the applicant]
to the
accepting broker [Roberts], however, any debit will revert to the
broker that was credited with the initial credit movement.”
[20]
This confirms that there is no
nexus
between Roberts and the
respondent. Clause 2.4.1 comprises a cession to secure the
respondents’ rights relating
inter alia
to the
calculation, advancement and recovery of commission and is
unequivocal in its effect. The clause does not indemnify the
applicant from the claim - quite the contrary.
[21]
The defence of misjoinder accordingly would have little prospects of
success in an action.
[22]
Mr Shapiro referred me to regulations pertaining to the formulation
of what commission would be payable upon
inter
alia
a
health event of a life insured. This is of no assistance to the
applicant.
[23]
Generally, I am left with the impression that this application was
calculated to unnecessarily frustrate the respondents’
judgment. If I am wrong on this, the point of relying on
irrelevant and obfuscatory matter nevertheless escapes me. For
instance, the applicant misrepresented the negotiations for the sale
of his “book”. The respondent’s intervention
in the negotiations between Roberts and the applicant for the sale of
the applicant’s “book” was supportive and
facilitative, not coercive as alleged, and this is borne out by the
correspondence comprising annexures “AA2” –
“AA17”
to the answering affidavit. The applicant introduced matter
regarding his disputed claim under the income
protection policy
seemingly to paint the respondent in a poor light when actually the
complaint is irrelevant to the present dispute.
I need not say more
on all this other than it is contrary to the spirit in which an
applicant should approach the court for relief
under rule 31(2)(b).
[24]
Ultimately, the applicant has failed to show a
bona
fide
or
arguable defence against the respondent’s claim. Add to
this the wilfulness of his default and I arrive at the conclusion
that the application cannot succeed.
[25]
The order I make in the circumstances is that the application is
dismissed with costs.
_____________
MAHABEER
AJ
Date
of hearing
: 28 November 2017
Date
delivered
: 04 December
2017
Appearances
:
For
the Applicant
:
Adv WN Shapiro
Instructed
by
: Browne Brodie
Ground Floor, 5 Sinembe
Crescent
La Lucia Office Estate
Durban
Tel:
031 310 4100
Email:
indra@brownebrodie.co.za
Ref:
ACM/ik/GR122/0002
c/o Browne Brodie
321 Pietermaritz Street
Pietermaritzburg
Tel: 033 342 8386
For
the Respondents
: Adv
JF Steyn
Instructed
by
: Gerings Attorneys
79 Hamilton Street
Johannesburg
Tel:
Ref: L McColl/MO1069
c/o Talbot Attorneys
2 Schackleford Road,
Pelham
Pietermaritzburg
Tel: 033 386 5499
Email:
martie@talbotlaw.co.za
Ref: T
Talbot/mo/GER1/0013