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[2016] ZAFSHC 180
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Fintech Receivables 2 (Rf) Limited and Another v Bongaz Suppliers and Trading CC and Others (3068/2016) [2016] ZAFSHC 180 (13 October 2016)
IN
THE HIGH COURT OF SOUTH AFRICA,
FREE
STATE
DIVISION,
BLOEMFONTEIN
Case
No. 3068/2016
In
the matter between:
FINTECH
RECEIVABLES 2 (RF) LIMITED
1
st
Applicant
FINTECH
UNDERWRITING
(PTY)
LIMITED
2
nd
Applicant
and
BONGAZ
SUPPLIERS AND TRADING CC
1
st
Respondent
SIBONGILEKATRINA
MTHETHWA
2
nd
Respondent
ISRAEL
NGAZANS
MTHETHWA
3
rd
Respondent
JUDGEMENT
BY:
MOLITSOANE, AJ
HEARD
ON:
15 SEPTEMBER 2016
DELIVERED
ON:
13 OCTOBER 2016
[1]
This is an application for summary judgment against the three
respondents. It is opposed by the respondents on various grounds,
raising both points of law and procedural issues.
[2]
This application for summary judgment is opposed by the respondents
on the following grounds:-
2.1
That the first applicant lacks
locus
standi;
2.2
That the respondents are not
indebted to the first
applicant, and even if it could be found that they were indebted to
anyone (which they still
deny), it would be to the second applicant
only;
2.3
That the combined summons with
reference to the particulars of claim
may be expiable in terms of rule 23 of the Uniform Rules of this
court;
2.4
That the amount claimed by the
first applicant is a pre estimate
of the damages which is elevated by the Conventional Penalties Act 15
of 1962;
2.5
That the respondents cancelled
the agreement with the second
applicant during March 2016 and that as a result they deny any
liability.
[3]
Rule 32(3)(b) of the Uniform Rules of court requires the defendant to
set out in an opposing affidavit the nature and grounds
of its
defence and to set out the material facts sufficiently fully to
satisfy the court that the defence is
bona
fide.
[4]
The approach which the court must follow in deciding an
application for summary judgment has been set out
as follows in
Maharaj
v Barclays
National Bank
1976 (1) SA 418
(A) at 426A-D:
"Accordingly,
one of the ways in which a defendant may successfully oppose a claim
for summary judgment is by satisfying the
Court by affidavit that he
has a bona fide defence to the claim. Where the defence is based upon
facts, in the sense that material
facts alleged by the plaintiff in
his summons, or combined summons, are disputed or new facts are
alleged constituting a defence,
the Court does not attempt to decide
these issues or to determine whether or not there is a balance of
probabilities in favour
of the one party or the other. All that the
Court enquires into is: (a) whether the defendant has 'fully'
disclosed the nature
and grounds of his defence and the material
facts upon which it is founded, and (b) whether on the facts so
disclosed the defendant
appears to have, as to either the whole or
part of the claim, a defence which is both bona fide and good in law.
If satisfied on
these matters the Court must refuse summary judgment,
either wholly or in part, as the case may be. The word 'fully', as
used in
the context of the Rule (and its predecessors), has been the
cause of some judicial controversy in the past. It connotes, in my
view, that, while the defendant need not deal exhaustively with the
facts and the evidence relied upon to substantiate them, he
must at
least disclose his defence and the material facts upon which it is
based with sufficient particularity and completeness
to enable the
Court to decide whether the affidavit discloses a bona fide defence."
[5]
I will now deal with the grounds of the opposition as follows:
(1)
Lack of
locus standi
In
order to understand the argument of the respondents, it is necessary
to repeat paragraph 3 of the plaintiff's particulars of
claim.
Plaintiff alleges as follows:-
"3.
The Plaintiffs are cited in the alternative, their respective locus
standi being dependent on the above Honourable Court's
finding:
3.1
that the First Plaintiff has locus standi by virtue of the existence,
operation and compliance
with the Restated and Amended Sale
Agreement, referred to herein below;
3.2
that the Second Plaintiff has locus standi by virtue of the
existence, operation and compliance
with the Rental Agreement,
referred to herein below, and in the event of the First Plaintiff not
having locus standi."
[6]
It is important to note that this application for summary judgment is
brought by the first applicant only. I hasten to add that
in its
heads of argument, it is stated that the
"
first
applicant.
alternatively, the
second
applicant
applies
for
summary
judgment.
.
." (my own emphasis). However,
one can glean from the Notice of Motion as well as on the affidavit
of Kuhgen Govender in support of the application for summary
judgement that only the first applicant applies
for
summary judgement.
[7]
No affidavit in support of the application for summary
judgment was filed by the second applicant. Kuhgen Govender
also does
not purport to depose anything on behalf of the second
defendant.
[8]
I can, therefore, find no merit in the argument that second applicant
also applies for summary judgment against the three respondents.
[9]
My premise, therefore, in dealing with the grounds of opposition will
be on the basis that only first applicant is applying
for summary
judgment against the three respondents.
[10]
First respondent is cited as Fintech Receivables 2 (RF) Ltd, a
company of which the Memorandum of Incorporation
contained certain restrictive conditions applicable to the company.
Prior to its conversion on 15 May 2013 it was cited as Fintech
Receivables 2 (Pty) Ltd.
[11J
Applicant contends that Annexure "X" annexed to the
founding affidavit evidences the the conversion from private
company as stated in paragraph [10] above. On the other hand,
respondents contend that there is no link between the two and
annexure "X" cannot be evidence that Fintech Receivables 2
(Pty) Ltd was converted to Fintech Receivables 2 (RF) Ltd.
[12]
Rule 32(4) of the Uniform rules provides, inter alia, as follows:
"No
evidence
may
be
adduced
by
the
plaintiff
otherwise
than
by
the
affidavit
referred
to
in
subrule
(2)
..
.
"
It
is therefore abundantly clear that the adjudication of the
application has to be done on the documents filed and no evidence
extrinsic the said documents should be allowed.
[13]
No reference whatsoever is made in Annexure "X" of the
company, Fintech Receivables 2 (Pty) Ltd. Counsel for first
applicant
contends that in terms of
section 5
of the
Companies Act 71 of 2008
,
the respondents must be regarded as having knowledge of any provision
of a company's Memorandum of Incorporation contemplated
in
section
15(2)(b)
or (c) [of Act 71 of 2008] if the company includes the
element "RF" .
[14]
This argument, however, loses sight of the fact that according to the
papers filed of record, plaintiff is cited as Fintech
Receivables 2
(RF) Ltd and annexure "X", which purports to evidence proof
of conversion makes no mention whatsoever
of the previous
company, Fintech Receivables 2 (Pty) Ltd. It might be so that later
during the trial the applicants may prove the
conversion but on the
evidence before me, I can find no nexus between the two companies.
[15]
Further, the company Fintech Receivables 2 (RF) Ltd is not a party to
the Amended and restated agreement annexed to the summons.
I
accordingly cannot find that Fintech Receivables 2 (RF) Ltd has
locus
standi
in this lis.
(2)
Fai
l
ure to comply with rule
1
8(6)
[16]
The argument of the respondents in this regard is two fold,
namely:
(1)
In its particulars of claim, it is alleged that first or second
plaintiff was duly represented
by a
"duly
authorised
representative';
and
(2)
That reference is made in paragraph 13 of the particulars of claim to
a written agreement allegedly
entered into in October 2013 and that
such an agreement was not annexed to the summons.
[17]
Rule 18(6) provides as follows:
"A
party who
in h
i
s
pleading
rel
i
es upon a contract
shall state
whether the contract is written or oral and when, where and by
whom
it was
concluded,
and
i
f
the
contract
i
s
written
a
true
copy
thereof
or
of
the
part
relied
on
in
the
pleading shall
be
annexed
to
the pleading."
[18]
It is not in dispute that the applicant's particulars of claim do not
disclose
"when,
where
and
by
whom"
the alleged agreement was
concluded nor does it disclose
"when,
where
and
by
whom"
the
instruction was given and accepted on behalf of the plaintiff and
defendant respectively nor is it in
dispute
that the underlying agreement was not annexed to
the summons.
[19]
It is so that in certain circumstances non-compliance with rule 18(6)
can be condoned in the absence of prejudice to the other
party. In
Charsley
v
Avbob
Begrafnisdienste
Bpk
1975 (1) SA 891
(E) the court had this to say:
"...
if there
is
a
material
defect
in any
of the
formalities
required
by
the
Rules
of
court,
the
court
should
not
readily
grant summary judgment.
On the
other
hand, where
it is clear that the Rules have
substantially been
complied with and
there is
no prejudice to the defendant, I
think that
the court
should
condone
a failure
to
comply
with
a technical
requirement
of the Rules."
[20]
Much as the rules of the court must be observed and complied with,
their non-compliance must not be a bar to matters being
ventilated
before court, and conversely, their non-compliance should not be
raised to frustrate plaintiffs in enforcing their claims.
[21]
I am unable to find that the failure to plead "when, where and
by whom the contract was entered into", will prejudice
the
defendants, at least at this stage of the proceedings.
[22]
I also cannot find that failure to comply with rule 18(6) in this
matter can be defence to the plaintiffs claim as envisaged
by rule
32(2) of the Uniform rules of this court.
(3)
Conventional Penalties Act 15 of 1962
[23]
First applicant's claim is for
payment of the
amount
of R144 891,54, being the outstanding balance payable under a
rental agreement. According to defendant,
this claim is a pre
estimate of damage and therefore not a claim as contemplated in rule
32(1).
[24]
My understanding of the argument of the plaintiff is that it
does not dispute that the amount claimed, being future rental
amounts
to damages, as envisaged by Act 15 of 1962. What they, however,
contend is that in such a case, the court has a discretion
in terms
of section 3 of Act 51 of 1962 to reduce penalties owing to lack of
proportion between the penalty and prejudice suffered
by the
creditor. According to the argument therefore, upon reduction of the
penalties owing, the court may enter summary judgment.
[25]
There are two approaches the courts have followed in matters of
enforcement of a penalty clause by way of summary judgment.
One
approach is that in matters of this nature, summary judgment cannot
be decided. - See
Bester v Smit
1976 (4) SA 751
(C).
[26]
On the other hand, the other school of thought is that summary
judgment can be entered in these type of applications - See
Premier
Finance
Corporation
(Pty)
Ltd v
Rotainers
(Pty)
Ltd
And Another
1975 (1) SA 79
(W).
[27]
I am of the view that this matter can be decided without having
regard to which approach one aligns with.
[28]
In claims of this nature, protection is granted to a debtor against
an excessive penalty. Section 3 of the Conventional Penalties
Act 15
of 1962 provides as follows:-
"If
upon hearing of a claim
for a penalty, it appears to
the court
that such penalty is out of proportion to the
prejudice suffered
by the creditor by reasons of which penalty
was stipulated, the
court
may
reduce
the
penalty
to
such
an
extent
as
i
t
may
consider equitable
in
the
circumstances:
Provided that
in
determining
the
extent
of
such
prejudice the
court
shall take
into
consideration
not
only
the
creditors
proprietary
interest,
but every
other
rightful interest which may be affected
by the
act or omissions in
question."
[29]
It is therefore clear that the court has discretion in terms
of section 3 of Act 15 of 1962 in a claim
for the
enforcement of a penalty clause.
[30]
In terms of this section, the onus lies with the creditor to prove
that the penalty is proportionate to the prejudice suffered
and to
what extent (see
Smit
v
Bester
infra).
In the exercise of its discretion the
court is obliged to take
in
consideration the proprietary interest of the
creditor amongst others and also every other rightful
interest
which may be affected by the act or the
omission in question. Such evidence was not
placed before court and
the court could also not allow
such evidence to
be in
contravention of rule 32(4). Without further evidence in this regard,
the court was not in a position to exercise
its discretion as
envisaged in section 3 of Act 15 of 1962.
[31]
It is furthermore my considered view that invocation of the
applicability of section 3 of the Conventional Penalties Act will
be
a valid defence albeit even if for a reduction or otherwise of the
penalty.
(4)
Cancellation
of Agreement
[32]
Respondents contend that the agreement herein was
cancelled in March 2016 and in support thereof they annexed
a copy of
the bank statement, in which there are clear references to
"settlements". In the absence of any contrary evidence
as
to why the respondents referred to their deposits as such I am
prepared to accept that the payments were prima facie made in
anticipation of cancellation of the agreement between the Second
Applicant and the respondents.
[33]
I accordingly find that save to raise the defence of non
compliance with rule 18(6) the respondents have valid bona fide
defences to the first applicant's claim.
(5)
Costs
[34]
Respondents argue that the first applicant should have foreseen that
the applicability of the Conventional Penalties Act would
be an
issue to be raised but that notwithstanding it persisted with the
application. Because of this respondents are of the view
that I
should make a cost order in favour of the respondents.
[35]
On the other hand, applicants contend that if I were to refuse
summary judgment, I must make an order that costs shall be costs
in
the cause.
[36]
As I alluded earlier, there is no uniformity that where there is a
claim for enforcement of a penalty clause, summary judgment
cannot be
granted. It would in my view be unfair to have expected the
applicants to have anticipated that such a defence will be
raised.
[37]
The plaintiffs are claiming an amount which falls within the
qualitative jurisdiction of the regional court. It will
be as
such prudent that the issue of costs be determined by the court which
will be seized with the final adjudication of this
matter in view of
the fact that this matter should rightly have been brought in the
regional Court.
[38]
I accordingly make the following order:
1.
The
application
by
the
first applicant for summary judgment
against
the
3
respondents
is
hereby dismissed;
2.
The
respondents are
hereby
granted
leave
to
defend
;
3.
Costs shall
be costs
in the cause.
_________________________
P.
E. MOLISOANE, AJ
On
behalf of the applicant:
Adv. J. S. Rautenbach
Instructed by:
Hill McHardy &
Herbst Inc
BLOEMFONTEIN
On
behalf of the Respondents:
Adv. P. du P. Greyling
Instructed by:
Steenkamp De
Villiers & Coetzee Inc.
BLOEMFONTEIN
/EB