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[2016] ZAGPPHC 439
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EH Hassim Hardware (Pty) Ltd v Fab Tanks CC (2733/2015) [2016] ZAGPPHC 439 (27 May 2016)
REPUBLIC
OF SOUTH AFRICA
IN THE
HIGH COURT OF SOUTH AFRICA
GAUTENG
DIVISION, PRETORIA
DATE:
27/5/2016
CASE
NO: 2733/2015
(1)
REPORTABLE: YES
In the matter between:
EH HASSIM HARDWARE
(PTY)
LTD Applicant
and
FAB TANKS
CC Respondent
JUDGEMENT
SIWENDU, AJ:
[1].
The applicant is a supplier of building materials and related
products to various builders in the construction industry. Its
operations are based in Limpompo Province. On 19 May 2015, the
respondent obtained a default judgment against the applicant
following
a failure by the applicant to pay an outstanding balance
due in respect of a Galvanised Pressed Steel Tank (herein in after
referred
to as
"the tank")
supplied and delivered to
the applicant. In terms of this judgement, the applicant was ordered
to pay an amount of R484 585.00 together
with the costs of the suit
to the respondent. As a consequence, the applicant seeks a rescission
thereof in terms of Rule 31(2)(b)
of the Uniform Rules of Court.
[2].
Rule 31(2)(b) provides that:
"A
defendant may within twenty (20) days after he or she has knowledge
of such judgment apply to court upon notice to the plaintiff
to set
aside such judgment and the court may, upon good cause shown, set
aside the default judgment on such terms as to it seems
meet' .
In
order to succeed in terms of this rule, the applicant must show good
cause. The approach is succinctly set out in
Colyn
v
Tiger Food
Industries
Ltd
t/a
Meadow
Feed
Mills
(Cape)
2003 (6) SA 1
(SCA) para 11, that an applicant
shows good cause: (a) by giving a reasonable explanation for the
default; (b) by showing that
the application is made bona fide; and
(c) by showing a bona fide defence to the plaintiffs claim which
prima facie has some prospect
of success.
[3].
The facts leading to the application disclosed in the applicant's
affidavit are that:
[3.1]
The applicant, acting as a subcontractor of Segabokeng Building
Construction, the main contractor with the Department of Public
Works, ordered the tank from the respondent which was to be installed
at Malipsdrift SAPS as part of the Department of Public Works
building project. A quotation which embodies the terms and conditions
for the supply and installation of the tank as well as the
estimated
and/or expected delivery time period of 5 to 7 weeks was provided to
the applicant on or about 25 September 2013. On
acceptance of the
terms, the applicant paid to the respondent a deposit in the amount
of ± R484 585.50 which constituted
50% of the contract price.
The payment terms entailed inter alia that the applicant pay to the
respondent 40% of the price on delivery
of the material, 5% of the
price after the erection of the tank and a further 5% after testing
or three months after the erection
of the tank.
[3.2]
An examination of the quotation in annexure TN5 attached to the
applicant's affidavit reveals that the delivery time period
was
subject to clause 3 of the terms and conditions of contract. The
clause states that the delivery times were to be calculated.
[3.3]
"from the date of the order or on receipt of all technical
confirmation necessary to proceed with the manufacturing whichever
is
received last."
[3.4]
It was common cause between the parties and at the hearing of the
application that delivery was effected in April 2014 outside
of the
estimated 5 to 7 weeks time period. The respondent conceded the late
delivery which it had attributed to a larger than expected
work order
load.
[4].
A review of the correspondence exchanged between the parties annexed
to the applicant's affidavit reflects that the applicant
had
registered its unequivocal dissatisfaction with the delay. Prior to
delivery and installation of the tank, the respondent had
issued the
applicant with an invoice dated 31 March 2014 for the balance of the
price. Further invoices were issued on 9 June 2014
respectively. The
respondent failed to honour the payment. The balance owing became the
subject of the default judgment obtained
and the dispute which ensued
between the parties.
[5].
It is also common cause that prior to the launch of the action
proceedings, the applicant and the respondent were embroiled
in a
dispute about the outstanding balance. The applicant was at first
represented by Bresler Bekker Attorneys. On 24 February
2015, the
legal representation was transferred to De Bruin Oberholzer Attorneys
the current attorneys of record. The applicant
persisted in the
denial of liability on account of the late delivery of the tank and
certain defects subsequently found on the
tank. At the instance of
Oberholzer, summons commencing action were served at his offices on
23 April 2015.
[6].
Undisputed unexpected course of events occurred as Oberholzer took
ill from 25 March 2015 and was hospitalized in intensive
care on 8
April 2015 for a month. He was only able to return to work on 11 May
2015. He has deposed to an affidavit in support
of the application
for rescission of the judgment further confirming the fact of his
hospitalisation. He submits that during his
absence the
administration of the affairs of his office were entrusted to Mrs
Mariaan Bresler, the erstwhile attorneys of the applicant
as well as
a professional assistant in his office and an article clerk. The
erstwhile attorney was to supervise the applicant's
files. It was
only after a call by the applicant on 20 May 2015 informing of the
having been blacklisted that Oberholzer became
aware of the court
process. He nevertheless filed a notice of intention to defend, on
the same day. This was a day after default
judgment was granted. The
respondent's attorneys refused to consent to the rescission of the
judgment.
[7].
The applicant in the first instance relies on the confluence of
events in particular Oberholzer's illness and submits that
it was not
in wilful default or grossly negligent in the handling of the matter.
It was submitted that the respondent was aware
at all times that any
court action instituted against it would be opposed hence why it was
invited to serve summons on the applicant's
attorneys.
[8].
Secondly, it submits that it has bona fide defences to the
applicant's claim. The first defence argued for is based on a
counterclaim.
The applicant submits that it is being held liable for
penalties allegedly raised against the main contractor for the late
completion
due to the late delivery of the tank. It has attached as
proof a progress payment certificate and an unsigned reconciliation
statement
issued to the main contractor. There are no summons issued
against the applicant or direct demands to applicant by the main
contractor
evident. It submits further that this counter-claim will
be instituted simultaneously with the plea in defence of the claim
once
the recession has been granted.
[9].
The second defence raised in the applicant's founding affidavit is
that leaks were found on the tank subsequent to installation.
As a
consequence, the applicant had incurred costs to cure these defects
as the respondent had refused to do so.
[10].
The main issue before me is whether the applicant has shown good
cause to warrant the rescission of the default judgment,
and, in
particular, whether the counter- claim in respect of the penalties
constitutes a bona fide defence to the respondent's
claim. I pause to
mention that the trite principle of whether good cause exists is not
only confined to the determination of whether
the default was wilful
but also whether or not there is evidence of a substantial defence to
the claim. In this regard, Mr Gouws
for the applicant correctly
contended that the two considerations must be counterbalanced in
assessment. The decision in Colyn
supra,
that a weak
explanation for the default may be offset by the defendant being able
to put up a
bona fide
defence which has not merely some
prospect, but a good prospect of success is apposite.
[11].
Prior to determining this, it is necessary to first dispose of the
question of the existence or otherwise of a wilfulness
resulting in
the default on the part of the applicant. This relates to the
unforeseen illness and absence of his attorney which
resulted in the
matter not being defended. The respondent has in resisting the
application dismissed this assertion as a matter
of negligence. The
respondent however did not dispute that but for this, the matter
would have been opposed. In assessing this,
the principle in
Saloojee
and Another NNO
v
Minister of Community Development
1965
(2) SA 135
A which has been restated generally, is that subject to
the facts, the courts are slow to penalize a litigant for his
attorney
inept conduct of a litigant's matter has relevance. This
approach is still relevant given the accepted and constitutionally
protected
right to legal representation. There is however a fetter to
this general view, in that subject to the facts of a particular case,
the court may have no alternative but to require that a litigant
bears the consequences of the negligence of his attorneys
(see
Colyn supra).
In my view the facts of this case do not qualify as
such a case. I have as a consequence accepted that the confluence of
events
emanating from the illness of the attorney of record led to
the failure to enter an appearance to defend the matter.
Notwithstanding
the failure, there were no facts to dispute that he
had not put measures to look after the applicant's matter. Having
regards to
the time period over which his illness and the judgment
occurred, I am constrained to find that the applicant was in wilful
default.
A reasonable explanation for the default has been offered.
Nevertheless, this matter does not stand alone.
[12].
I now turn to the question of whether or not the applicant has a bona
fide defence to the claim. Mr Jacobs on behalf of the
respondent
submitted that the essence of the applicant's counter- claim is that
of damages which are unliquidated and cannot be
set-off against a
liquid claim. In my view, at the heart of the assessment of whether
the applicant has a bona fide defence is
first, a procedural dilemma
confronted by the applicant. Unlike in a case of a defence to a
summary judgment, the procedure envisaged
in Rule 22(4) rule does not
apply to cases where a judgment already exists. Thus, an applicant
faced with a recession of a default
judgment cannot apply for a
recession of a default judgment to enable it to deliver a counter
claim.
[13].
In argument at the hearing, the question posed was whether based on
the facts of this case there is merit in extending the
approach
applied in respect of summary judgments to the current case. In my
view, the answer must be in the negative. The first
reason lies in
the distinct nature and peculiar features of a summary judgment which
is a robust remedy designed to dispose of
a matter expeditiously and
to force a defendant to reveal it defence early. Materially, an
assessment of the bona fides of a defence
in an application for
summary judgement occurs prior to the granting of judgment thereof.
In view of the robust nature of the remedy,
the greater latitude to
the ambit of allowable defence are to be understood in that context.
[14].
The second reason is to be found in the rationale for the Rules of
Court. The framework for the interpretation of the Uniform
Rules of
Court, has been referred to in a number of cases, in particular that,
"the Rules of the court are delegated legislation, having
statutory force, and are binding on the court, subject to the court's
power to prevent abuse of its process".
The Rules are
provided to secure the inexpensive and expeditious completion of
litigation and are devised to further the administration
of justice
(Lawsa, third edition Volume 4 - para 8 -10). Nevertheless, one of
the time honoured principles which applies to the
furtherance of the
administration of justice is that there must be finality to
litigation. Trollip AJ in
Firestone South Africa (Pty) Ltd vs
Gentiruco AG
1977 (4) SA 298
(A)
dealing with the
discretionary power a court may have at common law stressed, that
the:
"...
assumed
discretionary
power
is
obviously
one
that
should
be very sparingly
exercised, for
public
policy demands
that
the principle
of
finality
in
litigation
should generally
be
preserved
rather
than
eroded
...
".(8)
[15].
What remains is the question whether the counter- claim alleged and
as framed in the applicant's papers constitutes a bona
defence to the
respondent's claim. Mr Jacobs placed reliance on the decision in
Lazarus
vs
Nedcore
Bank
limited, Lazarus
vs ABSA
Bank
1999
(2)
SA
782
W
and submitted that the object of rescinding a judgment
is
"to restore
a
chance to air
a
real dispute"
and it was not necessary to rescind the judgment to enable the
applicant to ventilate the issues raised.
[16].
In opposition, Mr Gouws argued that the there was a breach of the
agreed terms of the contract by the respondent. The applicant
accepted the late delivery against its right to claim damages and
this right was never abandoned. He submitted that the late and
defective delivery has resulted in a plethora of triable issues
evidencing the applicant's defence. The penalties for which the
applicant is held liable pertain to the entire contract and the
respondent's entire cause of action. While the submissions may
in
themselves be correct, I part ways with the submission that the
penalties allegedly raised against the applicant pertain to
the
entire cause of action by the respondent. I find favour with Mr
Jacobs's contention. In my view the triable issues relied upon
while
flowing from the alleged breach, are not necessarily germane to claim
the applicant may have against the respondent in respect
of the
counter claim. Stated conversely, the facts giving raise to the
counterclaim which is in its nature contractual damages,
can and does
constitute a separate cause of action. In this sense, it cannot be
construed to constitute a defence that goes to
the heart of the
respondent's claim. In my view, the requirement of a bona fide
defence means a defence that provides the kind
of answer that
addresses the heart and merits of the respondent's claim. This
approach is countenanced in
Dominion Earthworks (Pty) Ltd V MJ
Greef Electrical Contractors (Pty) Ltd 1970(1) SA 228 (A),
namely
that a defendant who wishes to claim damages flowing from a breach
must raise this in a counter-claim and not as a defence
to a plea.
This militates against the applicant and the finding that the default
was not wilful.
[17].
In view of the above, the prospective defence raised is not in the
nature that meets the requirements for the rescission of
the
judgement. The application for the rescission of judgment cannot
succeed.
[18].
In view of this, the costs must follow the result. The gusto with
which the respondent has opposed the application complained
of by Mr
Gouws cannot be the reason to deprive it of its costs. No facts were
presented to indicate that the respondent may have
abused the court
process which would give rise to the exercise of my discretion
against the respondent. In the circumstances,
[19].
it is ordered that:
[19.1]
The application for the rescission of judgment is dismissed; and
[19.2]
The applicant is ordered to pay the costs of the application.
_____________________
SIWENDU,
NT
ACTING
JUDGE OF THE HIGH COURT OF SOUTH AFRICA
GAUTENG
LOCAL DIVISION, JOHANNESBURG
CASE
N
O.:
2733/2015
HEARD
ON:
15 FEBRUARY
2016
FOR THE
APPLICANT:
ADV
SG
GOUWS
ATTORNEYS FOR THE
A
PPLICANT:
DE
BRUIN
OBERHOLZER
ATTORNEYS
C
l
O A L
MAREE INCORPORATED
FOR THE
RESPONDENT:
ADV
JACOBS
ATTORNEYS FOR THE
RESPONDENT
:
HOGAN
LOVELLS
(SOUTH AFRICA)
C/O VAN STADE VAN DER
ENDE INC
DATE OF
JUDGMENT:
27
MAY 2016