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[2016] ZAGPPHC 336
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Gani and Another v Autumn Leaf Trading CC and Another (24270/2014) [2016] ZAGPPHC 336 (3 May 2016)
IN
THE HIGH COURT OF SOUTH AFRICA
(GAUTENG
DIVISION, PRETORIA)
REPUBLIC
OF SOUTH AFRICA
CASE
NUMBER: 24270/2014
DATE:
3 MAY 2016
In
the matter between:
MOHAMED
JAVED
GANI
............................................................................................
First
Applicant
KWIK
PROPERTY HOLDINGS (PTY)
LTD
..........................................................
Second
Applicant
And
AUTUMN
LEAF TRADING
CC
................................................................................
First
Respondent
THE
SHERIFF: CENTURION
WEST
..................................................................
Second
Respondent
JUDGMENT
BRENNER
AJ
1.
This is an application for the
rescission of an order, granted by consent on 20 June 2014, in terms
of which a written settlement
agreement was made an order of Court.
Leave is sought to rescind the settlement agreement, and the warrant
of execution issued
against the applicant in consequence of the
order.
2.
The applicants appear to rely on the
common law and/or the provisions of Rule 42 (1) (a) of the Uniform
Rules of Court in their
application. Under this Rule, an affected
party may apply to rescind a judgment which was erroneously granted.
Their case is based
on the principle of iustus error.
3.
At common law, a judgment may be set
aside on the ground of iustus error, albeit on rare occasions. See De
Wet v Western Bank Limited
1979 (2) SA 1031
(A) at 1039H to 1043A.
4.
A judgment given by consent may be set
aside on “good and sufficient cause”, in accordance with
the same principles
as those which apply to rescissions under Rule
31(2). In such application, the applicant must provide a reasonable
explanation
for the circumstances in which the consent judgment was
entered, and is required to demonstrate the bona fides of the
application,
and the bona fides of the defence on the merits of the
case, which defence prima facie carries with it a good prospect of
success.
5.
The judgment of Colyn v Tiger Food Industries Limited
t/a Meadow Feed Mills (Cape)
2003 (6) SA 1
(SCA) involved a case in
which summary judgment was granted by default. The Court noted:
Even
if one takes a benign view, the inadequacy of this explanation may
well justify a refusal of rescission on that account unless,
perhaps,
the weak explanation is cancelled out by the defendant being able to
put up a bona fide defence which has not merely some
prospect, but a
good prospect of success (Melane v Santam Insurance Co Ltd
1962 (4)
SA 531
(A)”).
6.
A prima facie defence suffices. It is
not necessary for the applicant to traverse the merits in detail or
to produce evidence that
the probabilities are in its favour.
7.
The pivotal issue in casu is whether the
applicants have been able to discharge the burden of proving, prima
facie, whether the
documents which culminated in the execution of the
settlement agreement were forged by an employee of the second
applicant, so
as to vitiate the validity of the agreement.
8.
For ease of reference, the first
applicant will be referred to below as “Gani", the second
applicant as “Kwik Property”,
and the first respondent as
“Autumn Leaf. The second respondent, being the sheriff of
Centurion West, has not opposed the
proceedings. Another company,
Build Kwik Trading (Pty) Ltd, (“Build Kwik”), an
associate company of Kwik Property,
forms part of the dramatis
personae.
9.
At all material times, Autumn Leaf
traded as “Timber Junction” and was the supplier of
timber products, while Kwik Property
and Build Kwik were wholesalers.
10.
A conspectus of the papers in the
application reveals that the alleged forgery of the three documents
which gave rise to Autumn
Leafs cause of action was raised for the
first time on 7 August 2014, in a detailed letter from Gani’s
attorneys to Autumn
Leafs attorneys. This was one week after service
on Gani of a warrant of execution for the attachment of movable
property to satisfy
the debt, which remained unpaid.
11.
The following chronology of events
merits mention.
12.
In 2011, Build Kwik wished to acquire
timber from Autumn Leaf on credit. An application for credit
facilities was ostensibly signed
by Gani as director of Build Kwik on
27 June 2011, in which a credit facility of R1,5m was sought (“the
credit application").
The credit application appears to have
been signed by Gani on behalf of Build Kwik, and, beneath his
signature, at clause 13 of
the document, he stood surety for the
liability in his personal capacity. There are two unidentified
witnesses to the credit application.
13.
Some four months later, on 10 October
2011, at the behest of Autumn Leaf, two other documents were
ostensibly executed by Gani.
A cross company guarantee was signed by
Kwik Property in favour of Autumn Leaf, (its trade name is
mentioned), for the liability
to Autumn Leaf of Build Kwik (“the
cross company guarantee”). There are two identified witnesses
to this document,
namely, Brigesh Patel ("Patel”) and Neel
Soni. On the same date, a resolution was ostensibly signed by Gani on
behalf
of Kwik Property, to authorise the cross company guarantee.
14.
Where deemed appropriate, the credit
application, cross company guarantee and resolution will be referred
to below collectively
as “the 2011 documents”.
15.
In his opposing affidavit in this
application, Alistair Gilson (“Gilson”), a member of
Autumn Leaf, asserts: “I
personally saw Mr Gani sign....(the
credit application, the cross company guarantee and the resolution)”.
16.
Between July 2013 and August 2013,
Autumn Leaf supplied goods to Build Kwik on credit, resulting in the
amount of R828 318,48 being
owed to it. Payment was not made.
17.
On 13 February 2014, following a phone
conversation between Gilson and Gani, Autumn Leafs attorneys wrote a
letter to Gani enclosing
an acknowledgment of debt for signature by
him, personally, for payment of the above liability in four
instalments (“the
AOD”). Included with this document was
a resolution to be signed by Kwik Property to authorise the execution
of the AOD.
Clause 6.1 of the AOD confirms the existence of the cross
company guarantee by Kwik property. Clause 6.4 contains a suretyship
by Kwik Property as co-surety with Gani for the debt owed to Autumn
Leaf. The AOD was never signed. On 19 February 2014, written
demand
was made by Autumn Leafs attorneys to Gani’s attorneys. In a
reply of the same date, a bare denial was made while
at the same
time, copies of “all agreements, invoices and other documents"
were called for. Autumn Leafs attorneys replied
that they would
furnish the documents on instructions from their client. It would
appear that the documents were not provided at
this time but instead
a decision was made to issue Summons.
18.
On 24 March 2014, Autumn Leaf issued
Summons out of this Court, against Build Kwik, Gani and Kwik
Property, jointly and severally,
for payment of the sum of R828
318,48. Reliance was placed on the credit application, cross company
guarantee and resolution, all
of which were attached to the
particulars of claim.
19.
The Summons was served on 31 March 2014
on Kwik Property, on “Javid - director of Kwik Property
Holdings (Pty) Ltd”.
“Javed” is Gani’s middle
name. The Summons was served on 2 April 2014 on Build Kwik at its
registered address,
with a sheriffs note that Build Kwik no longer
traded from the premises at 20 Schubart Street Eldoglen. Service was
effected on
2 April 2014 on Gani at corner Lanham and Engelbrecht
Street East Lynne, Pretoria, on one Mrs Thompson, who accepted
service in
the temporary absence of Gani.
20.
Prima facie, therefore, it would appear
that Gani received copies of the credit application containing his
surety, the cross company
guarantee, and resolution, on 31 March 2014
by the latest. Gani has this to say about the Summons: “The
relevant documentation
that were later attached to the combined
summons were then delivered to my attorney on approximately 25
February 2014.” Gani
is obviously mistaken about the date, but
confirms receipt and later delivery of the Summons to his attorney.
21.
Gani says that his attorney was “bona
fide and prima facie” under the impression that Gani had signed
the documents.
Gani then says “The documents were forwarded to
me and I initially also prima facie thought that I signed the
documents but
have bona fide forget (sic) about it.” He then
proceeded to instruct his attorney to “settle the matter on the
most
favourable terms possible.”
22.
The settlement negotiations purportedly
occurred while Gani was in the UK, and took place, as alleged by him,
“under extreme
pressure”, being finalised on the day of
the summary judgment application, which was 20 June 2014. On this
date, a written
agreement was signed by one P Dewes for Autumn Leaf,
and by AJ Henn for Gani and Kwik Property, both indicating on the
document
that they were duly authorised. The terms of this agreement
were made an order of Court on 20 June 2014. Gani and Kwik Property
agreed, jointly and severally, to pay the sum of R900 000,00 to
Autumn Leaf in three equal instalments of R300 000,00 on 7 July
2014,
7 August 2014 and 7 September 2014.
23.
In the meantime, on 6 May 2014, Build
Kwik was liquidated.
24.
Gani’s statements about the
revelation that his signatures were forged on the credit application,
cross company guarantee
and resolution, are not entirely
illuminating. He omits to mention precisely when it was that he
noticed that his signatures had
been allegedly forged. This is a
material issue which he simply avoids addressing.
25.
He asserts that, “after
investigation and proper perusal of the documents”, he
established that one of his employees,
Brijesh Patel (“Patel”)
had forged his signature on the 2011 documents. An affidavit from
Patel is attached to his
affidavit. Gani states in his affidavit
dated 8 August 2014: “I am considering disciplinary steps
against Patel in my capacity
as his employer.” He goes on: “I
would never have consented to personal liability towards (Autumn
Leaf) and/or to bind
(Kwik Property) in favour of (Autumn Leaf), for
(Build Kwik’s)... liability.”
26.
After the execution of the settlement
agreement, post 20 June 2014, he says: “I then got involved in
investigating the matter
and to decide together with my attorney
regarding the correct strategy after the real facts came to my
knowledge..........
Unfortunately (Autumn Leaf) then proceeded with the writ and I
immediately
had detailed consultations with my attorney as a result of which a
letter
was sent to (Autumn Leafs) attorney dated 7 August
2014..................... 1 deny
that
Patel had any authority to sign the suretyship, resolution and
guarantee
attached
to (Autumn Leafs) combined summons............. I inter alia intend
to obtain
the
services of a handwriting expert in order to prove the defences of
myself and (Kwik Property).”
27.
Much is made by Gani and Kwik Property
of the request for signature of the AOD, in addition to the 2011
documents. They contend
that this request was made because Autumn
Leaf was aware that the 2011 documents were invalid, and had been
forged. This is denied
by Autumn Leaf. I find no sinister
connotations in this conduct. It would appear that Autumn Leaf simply
wished to reiterate the
existence of the pre-existing securities and
make an accommodation to the applicants for payment of the debt in
instalments.
28.
Service of the warrant of execution took
place on 30 July 2014. In Gani’s attorney’s letter to
Autumn Leafs attorneys,
dated 4 August 2014, still no mention is made
of the purported forgery. Instead, Gani’s mother, Rashida Gani,
lays claim
to all movable property under attachment by way of
interpleader. The first time the alleged forgery is mentioned is in a
subsequent
letter dated 7 August 2014.
29.
Patel’s affidavit dated 8 August
2014 mentions that he and not Gani signed the 2011 documents. The
credit application was
signed because Build Kwik needed wood-building
material “urgently” and Autumn Leaf would not supply same
without a
signed application. He says: “Mr ABD Gilson was
personally present at the premises of (Build Kwik) at the time of
signing
by myself of the credit application. He goes on: “Although
(Autumn Leaf) then delivered the relevant goods Mr ABD Gilson again
approached (Build Kwik) to get further security and under the exact
same circumstances I signed (the cross company guarantee and
resolution)", (my emphasis). Patel states: ”l am presently
unemployed”.
30.
The gist of the case for Gani and Kwik
Property is summarised by Gani as follows: “I now respectfully
wish to resile from
the settlement agreement entered into with
(Autumn Leaf) mainly on the ground that when the agreement was
entered into it was done
because of a genuine iustus error on my side
and the bona fide but mistaken belief that (Kwik Property) and myself
are liable towards
(Autumn Leaf) on the grounds as set out in (Autumn
Leafs) combined summons.”
31.
The rescission application was served on
11 August 2014. Notice to oppose was served on 20 August 2014. The
opposing affidavit was
served a year later, on 14 August 2015.
Condonation was sought and there was no opposition by the applicants
to the late service
of same. No replying affidavit was forthcoming
from the applicants. The application was enrolled for hearing on 25
April 2016.
32.
The opposing affidavit of Autumn Leaf
denies the alleged forgery and the basis for the iustus error relied
upon by the applicants.
It sets out to prove that Kwik Property and
Gani had, since the launch of the rescission application, admitted
their liability
to Autumn Leaf on several occasions. A litany of
emails and letters from 11 September 2014 until 17 June 2015
evidences averments
as to admissions of liability by Kwik Property
and Gani, protracted negotiations concerning repayment of the debt,
and a series
of broken promises.
33.
On 1 July 2015, a written agreement was
even signed by Gani and Gilson in which it is confirmed that Autumn
Leaf is owed a higher
sum of R1 350 000,00, but that such agreement
does not supercede prior agreements.
34.
Gilson has this to say about the alleged
forgery: ”ln particular, I wish to take issue with the
suggestion in Patel’s
affidavit that I saw him sign (the credit
application). I personally saw Mr Gani sign (the credit application)
as well as (the
cross company guarantee) and (the resolution).
Concerning Patel, Gilson says: ”l mention that notwithstanding
what Patel
says about being unemployed, he still works for the
applicants or at least for Gani. I saw him at Gani’s premises
on 1 July
2015, the day on which I signed the agreement....”
(the 1 July 2015 agreement mentioned above).
35.
As stated above, no replying affidavit
was forthcoming from Kwik Property and Gani, even though various
allegations of a material
nature in the opposing affidavit called for
an answer. Certain of these allegations therefore remain uncontested
by the applicants.
36.
On
the subject of iustus error, the Court in National and Overseas
Distributors Corporation (Ptv) Ltd v Potato Board
1958 (2) SA 473
(A)
at 479G-H said:
“
Our
law allows a party to set up his own mistake in certain circumstances
in order to escape liability under a contract into which
he has
entered. But where the other party has not made any misrepresentation
and has not appreciated at the time of acceptance
that his offer was
being accepted under a misapprehension, the scope for the defence of
unilateral mistake is very narrow, if it
exists at all. At least the
mistake (error) would have to be reasonable(justus) and it would have
to be pleaded."
37.
The
decisive question to be asked was formulated in Sonap Petroleum (SA)
(Ptv) Ltd v Pappadogianis
[1992] ZASCA 56
;
1992 (3) SA 234
(A) at 239I to 240B:
“
Did
the party whose actual intention did not conform to the common
intention expressed, lead the other party, as a reasonable man,
to
believe that his declared intention represented his actual intention?
To answer this
question,
a three-fold enquiry is usually necessary, namely, firstly, was there
a misrepresentation as to one party’s intention;
secondly, who
made that misrepresentation; and thirdly, was the other party misled
thereby?... The last question postulates two
possibilities: Was he
actually misled and would a reasonable man have been misled?”
38.
In addressing the issue of iustus error,
Autumn Leaf’s Counsel drew my attention to the case of Absa
Bank Limited v Jansen
van Rensburq
2015 (5) SA 521
GJ. In this case,
an attorney for Absa Bank arranged for a bidder to attend an auction
of property in a sale in execution. The
bidder was authorised to bid
for the property up to R35 615. The bidder exceeded her limit and bid
at R125 000,00 and this was
accepted. The Court found that the
mistake was due to the fault of the mistaken party, and that Absa
Bank could not escape from
the sale which came into place on
acceptance of the bid. By appointing its attorneys to bid on its
behalf at the auction, Absa
Bank had represented to third parties and
to the sheriff that its agent had unlimited authority to bid.
39.
In its judgment, the Court referred with
approval to the case of Monzali v Smith
1929 AD 382
at 385:
“
Where
any person by words or conduct, represents or permits it to be
represented that another person has authority to act on his
behalf,
he is bound by the acts of such other person with respect to any one
dealing with him as an agent on the faith of any such
representation,
to the same extent as if such other person had the authohty which he
was so represented to have. ”
40.
Gani and Kwik Property have failed to
advance a defence which has good prospects of success. There was no
iustus error on the part
of the applicants on the facts before me.
There was no mistake and, even assuming there was one, it was in any
event not reasonable.
41.
On his own version, Gani is a
businessman and is the sole director of various companies which he
manages. It is stretching credulity
for him to imply that he did not
peruse the Summons served on 31 March 2014, with its annexures, being
the 2011 documents, and
appreciated then that he was being sued
personally, with Kwik Property, for the liability of Build Kwik.
42.
It beggars belief that he would have
failed to observe that he was sued in his personal capacity qua
surety and that Kwik Property
was sued qua guarantor for the debt of
Build Kwik. It is highly improbable that, over the period from 31
March 2014 until about
7 August 2014, he would not have observed that
his signature on the 2011 documents was “forged”. Gani's
assertion that
he would never have stood personal surety or have
bound another company to stand surety is inconsistent with his
version that he
did not initially appreciate that this was the case,
when he received the Summons and before he mandated his attorney to
settle
the matter in June 2014.
43.
Gani is also not candid about a fact of
paramount importance, namely, when he first observed the alleged
forgery.
44.
He says in August 2014 that he intends
to take disciplinary steps against Patel, and this assumes that Patel
is still employed by
him. Yet Patel, in his own affidavit in August
2014, mentions that he is unemployed. Gilson states that he saw Patel
on 1 July
2015 at Gani’s premises, when Gani and Gilson signed
an agreement. This is not contested by the applicants because they
failed
to reply. Patel corroborates Gilson’s version that
Gilson was present at the applicants’ premises in June 2011 and
October 2011 when the documents were signed.
45.
No mention is made whether any effort
was made to procure a supporting affidavit from Neel Soni, a witness
to the cross company
guarantee. No effort has been made to introduce
the expert evidence of a handwriting expert concerning the purported
forgery.
46.
Little probative value can be attached
to Patel’s averment that he perpetrated the forgeries under the
given circumstances,
a fortiori considering the relationship between
him and the applicants.
47.
The allegation that the case was settled
“under severe pressure” is belied by the fact that the
matter ran its course
for over two months before settlement.
48.1
remain unconvinced, on the prima facie evidence before me, that there
was indeed a “forgery” of the 2011 documents.
Gani’s
version on this issue is inherently improbable, and little weight, if
any, can be attached to the
corroborating
evidence of his employee, Patel. Even assuming there was, Gani’s
error in settling the matter on the strength
of what he considered to
be valid documents was not reasonable.
49.
On a totality of the evidence, Gani and
Kwik Property have failed to prove good cause for the setting aside
of the order against
them. Costs should follow the result, with
cognisance being taken of the cavalier manner in which the applicants
have conducted
themselves in this application.
50.
The applicants failed, even prima facie,
to establish the requirements for a iustus error, as adumbrated in
the Sonap case. On the
facts, neither was Gani actually misled about
the true factual position, nor would a reasonable man in his position
have been misled.
The applicants were not able to prove a bona fide,
prima facie defence with a good prospect of success, and have
therefore failed
to prove good cause for the relief sought.
51.
In the result, the following order is
made:
a.
The application is dismissed;
b.
The first and second applicants are
directed to pay the costs of the application, jointly and severally,
on the attorney and client
scale.
BRENNER AJ
ACTING
Judge of the high court of south africa
GAUTENG
DIVISION, PRETORIA
3 May 2016
Appearances
Counsel
for the First and Second
Applicants:
Advocate KT Jordt
Instructed
by:
Attorneys Lacante Henn Inc
Counsel
for the First
Respondent:
Advocate D
Schaup
Instructed
by:
Venn’s Attorneys