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[2016] ZAECELLC 10
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Mtshixa v Ukweza Holdings (Pty) Ltd; In re: Ukweza Holdings (Pty) Ltd v Mtshixa (EL495/2016, ECD1195/2016) [2016] ZAECELLC 10 (20 December 2016)
IN
THE HIGH COURT OF SOUTH AFRICA
(EAST
LONDON CIRCUIT LOCAL DIVISION)
CASE
NO: EL 495/2016
ECD
1195/2016
In
the matter between:
MZUVUKILE
SIBONGILE
MTSHIXA
APPLICANT
And
UKWEZA
HOLDINGS (PTY)
LTD
RESPONDENT
IN
RE:
UKWEZA
HOLDINGS (PTY)
LTD
PLAINTIFF
And
MZUVUKILE
SIBONGILE
MTSHIXA
DEFENDANT
JUDGMENT
ON INTERLOCUTORY APPLICATION
MBENENGE
J:
[1]
On 19 April 2016 the respondent instituted action proceedings before
this court seeking payment by the applicant of the sum
of R454 065.
75
“
due, owing
and payable by the Department of Education of the Province of the
Eastern Cape [the [D]epartment] to the [respondent]
in respect of
catering services the (respondent) had rendered to the [D]epartment
at the Mthatha Commercial High School but which
amount was paid by
the [D]epartment to the [applicant] on account thereof that the
[applicant] on account thereof that the
[applicant] had
misrepresented to the [D]epartment that the said amount was due and
payable to him whereas, in truth and in fact
it was, to the
[applicant’s] knowledge, due and payable to the [respondent]”
(the main action)
.
[2]
It was, in the alternative, alleged that R454 065. 75 was, on
the basis set out in paragraph 1 above, the extent to which
the
applicant had been unjustifiably enriched at the expense of the
respondent.
[3]
After the applicant had entered appearance to defend the main
action, the respondent duly notified the applicant of its intention
to apply for summary judgment. Despite such notice, the applicant did
not oppose the application, resulting in summary judgment,
by
default, being granted against the applicant for payment of R454 065.
75, together with interest thereon calculated at
the prescribed
legal-rate
a temporae morae,
on 24 May 2016.
[4]
The grant of summary judgment attracted the launch, by the applicant,
of an application for an order rescinding and setting
aside the
summary judgment and granting the applicant leave to defend the main
action. The essence of the applicant’s alleged
bona fide
defense to the main action is captured in the relevant supporting
affidavit in the following terms:
“
19.
The respondent owes me and [my] corporation [Thathile Trading 110 CC]
the difference between the
said sum of R454 065. 75 and a sum of
R12 042 000. 00 plus interest and penalties due by the
corporation to SARS
as a result of the failure by the respondent to
pay the said income tax and vat for claiming vat and not paying it.
Due to the
fact that the corporation has never been a vat vendor, the
respondent is not entitled to any deductions for vat output. In the
premises I submit that the respondent has failed to join the
corporation in these proceedings to whom the sum claimed was paid.
Therefore, the judgment granted by the above Honourable Court was
granted by error and it is void.”
[5]
The applicant has also proffered a lengthy explanation regarding how
it came about for him to be oblivious to 24 May 2016 as
having been
the summary judgment application hearing date. Nothing, for present
purposes, hinges on that explanation and why the
rescission
application was not launched timeously.
[6]
The respondent is opposing the rescission application principally on
the ground that the applicant has not shown that it has
a
bona
fide
defense which
prima facie
enjoys prospects of
success. The mainstay of the opposition is set out in the relevant
opposing affidavit as follows:
“
4.6
…the suggestion that the applicant, personally, is liable to
SARS is manifestly without
merit. Apparent from the applicant’s
own affidavit is that the transactions which attracted the tax were
conducted by the
respondent on behalf of the CC.
In
the circumstances it is quite inconceivable that the applicant can be
personally held liable for such tax.
4.7
The applicant’s allegations, if proved in due course, will not
constitute a defense
to the respondent’s action. In the
premises, the applicant’s contention that he has a
bona fide
defense to the plaintiff’s action
is
manifestly without any factual or legal basis.”
[7]
Elsewhere in the opposing affidavit, the respondent contends:
“
8.3.
The applicant’s unsubstantiated allegation that the respondent
owes him, personally, significant
amounts in respect of income tax
and value-added tax is, for the reasons set out above, clearly
incorrect. Apparent from the paragraph
under reply is that the
applicant accepts that the transactions which attracted the tax
[
were]
performed
by the respondent on behalf of the CC and not on his behalf.
8.4.
To the extent that it may be relevant, which is not conceded, I
record that the respondent has
paid all taxes it was obliged to pay
arising from the income it earned in respect of the services it
rendered on behalf of the
CC.”
[8]
The applicant’s replying affidavit ought to have been delivered
within 10 days from 1 August 2016. This did not happen,
culminating
in the respondent taking the initiative and setting down the
rescission application for hearing as an opposed application
on 27
October 2016. The relevant notice of set down was delivered on 12
September 2016.
[9]
On 13 September 2016 the applicant delivered a notice in terms of
rule 35(12) of the Uniform Rules of Superior Court Practice
(the
Rules) calling upon the respondent to produce for his inspection-
“
1
All income tax returns for all taxes the respondent was obliged to
pay arising
from the income it earned in respect of the services it
rendered on behalf of the CC for the period from November 2006 to
June
2015, which the respondent [refers] to in paragraph 8.4 of its
answering affidavit.
2.
All fresh invoices issued to the CC by respondent for the period from
November
2006 to June 2015.
3.
Proof of credits passed in favour of the CC in respect of value Added
Tax the
respondent previously charged for the period from November
2006 to June 2015.”
[10]
The respondent replied to the applicant’s rule 35 (12) notice
registering its refusal to produce the income tax returns
referred to
in paragraph 8.4 of its answering affidavit, first, on the ground
that the income tax returns are not relevant to the
triable issues in
the rescission application and, second, because the respondent’s
answering affidavit makes no reference
to income tax returns in
respect of the period from November 2006 to June 2015 (the period
referred to in paragraph 1 of the notice
under reply). The respondent
pledged to avail, on request by the applicant, “
a tax
clearance certificate evidencing that the respondent has complied
with all its income tax obligations”
. Copies of the fresh
invoices are annexed to the respondent’s reply, and so are
copies of the credit notes.
[11]
Thereafter, on 24 October 2016, the applicant resorted to the instant
interlocutory application and is seeking an order making
the
provisions of rule 35 relating to discovery applicable to the
rescission application so as “
to secure the discovery of
outstanding documents [a]pplicant seeks in order to prepare properly
for his case
.”
[12]
The affidavit in opposition to the interlocutory application was
delivered out of time, on 18 November 2016. Condonation for
the late
delivery of the replying affidavit was sought by way of notice
delivered on 24 November 2016, the date set for hearing
of both the
rescission application and the related interlocutory application. The
respondent once again took the initiative to
set these matters down
for hearing. The application for condonation of the late delivery of
the replying affidavit was not opposed.
[1]
[13]
At the hearing before me, I informed the parties that, whilst both
the rescission and interlocutory applications were serving
before me,
it would be prudent and convenient to first hear the interlocutory
application and make a ruling thereon. In that way,
the future
conduct of the rescission application wherein the replying affidavit
has yet to be delivered would be determined.
[2]
[14]
Mr
Poswa
who, at the hearing appeared for the applicant, disavowed reliance on
rule 35 (12) of the Rules
[3]
and
contented himself with seeking a directive in terms of rule 35 (13)
rendering the provisions of rule 35 relating to discovery
applicable
to the rescission application. From a reading of the affidavit in
support of the interlocutory application, it is not
the applicant’s
case that he is unable to deliver his replying affidavit in the
rescission application because, for instance,
there is a document
referred to in the answering affidavit which he seeks to inspect and
copy or transcribe before delivering the
replying affidavit. The
interlocutory application also does not purport to compel the
respondent to reply to the applicant’s
rule 35 (12) notice, as
that notice has attracted a reply.
[15]
As far as I could have ascertained, the applicant’s quest is
for “
[securing] the discovery of outstanding documents [the]
[a]pplicant seeks in order to prepare for his case.”
The
case that the applicant contemplates appears to be “
an
application to compel the [r]espondent to produce the income tax
returns in relation to all income the [r]espondent received
from the
Department…which was due to the [a]pplicant’s
corporation for the period November 2006 to August 2015.
”
[16]
The applicant has, in my view, called in aid rule 35 (13) in a
situation for which it was not designed. The employment of discovery
is generally resorted to where the battle lines between the parties
have been drawn and legal issues established.
[4]
The purported contemplated application to compel production of
certain outstanding documents has yet to be launched. It hardly
lies
with the applicant to contend that battle lines have been drawn and
legal issues established in respect of a “
contemplated
application”.
Even
in the rescission application battle lines will be drawn and legal
issues established once the applicant shall have delivered
his
replying affidavit.
[5]
[17]
Even though rule 35 relating to discovery applies to applications as
far as the court may direct,
[6]
discovery is rare and unusual in application proceedings and should
be ordered by the court only in exceptional circumstances.
[7]
The applicant has not established the existence of exceptional
circumstances.
[18]
It follows that no case for relief has been made out in the notice
commencing the interlocutory application.
[19]
The respondent’s efforts to bring the rescission application
closer to a finish have been thwarted by the applicant’s
tardiness. The main application ought to be brought closer to
finality, sooner than later. This may be achieved once the applicant
is placed on terms to deliver his replying affidavit in the
rescission application.
[20]
I accordingly make the following order:
(a)
The applicant’s interlocutory application for an order in terms
of rule 35 is dismissed
with costs, such costs to include the
reserved costs of 27 October 2016.
(b)
The main application is postponed to a date to be arranged with the
Registrar of this Court.
(c)
The applicant is directed to deliver his replying affidavit in the
rescission application by 20 January
2017.
(d)
Any costs occasioned by the –
(i)
postponement of the main application; and
(ii)
applicant’s application for condonation of the late delivery of
the replying affidavit
in the interlocutory application, shall be
borne by the applicant.
___________________
S
M MBENENGE
JUDGE
OF THE HIGH COURT
Counsel
for the applicant:
S G Poswa
Instructed
by Makhanya Attorneys
East
London
Counsel
for the respondent:
D J Taljaard
Instructed
by Gordon McCune Attorneys
King
William’s Town
C/o
Mark Fredericks & Associates
East
London
Date
heard
24 November
2016
Date
Delivered
20 December 2016
1
The respondent took umbrage to certain allegations made in the
relevant
supporting affidavit which sought to introduce
via
the backdoor fresh causes of action. The impugned allegations were,
however, not persisted in by the applicant.
[2]
On
the authority of
Waltloo
Meat and Chicken SA (Pty) Ltd v Silvy Luis (Pty)Ltd
others
[2008] ZAGPHC 136
;
2008 (5) SA 461
(T) a court is entitled to disregard an
affidavit delivered out of time without condonation for such late
delivery having been
applied for.
[3]
Rule 35 (12)
provides:
“
Any
party to any proceeding may at any time before the hearing hereof
deliver a notice as near as may be in accordance with Form
15 in
Schedule to any other party in whose pleadings or affidavits
reference is made to any document or tape recording to produce
such
document or tape recording for his inspection and to permit him to
make a copy or transcription thereof. Any party failing
to comply
with such notice shall not, save with the leave of the court, use
such document or tape recording in such proceeding
provided that any
other party may use such document or tape recording.”
[4]
SST
Sales (Pty) Ltd v Fourie
2010 (6) SA 272
(GSJ) at 276
[5]
In
the
SST
case (
supra)
it was held that an order in terms of rule 35 (13) will, as a
general rule, only be made after the legal issues have been
established
once all the affidavits have been filed.
[6]
Machingawuta
v Mogale Alloys (Pty) Ltd
2012
(4) SA 113
(GSJ) at 115 f – 116A
[7]
Firstrand
Bank LTD t/a Wesbank v Manhattan Operations (PTY) LTD
2013
(5) SA 238
(GSJ) at 242 F-H