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[2016] ZAGPPHC 960
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Gonclaves and Another v Franchising to Africa (Pty) Ltd t/a Gold Brands (72639/16) [2016] ZAGPPHC 960 (2 November 2016)
IN
THE HIGH COURT OF SOUTH AFRICA
GAUTENG
DIVISION,
PRETORIA
2/11/2016
CASE
NO:72639/16
Date
of hearing: 28 October 2016
In
the matter between:
EVY
GONCLAVES
1
st
Applicant/Plaintiff
PEDRO
MIGUEL
DUNCAN
GONCLAVES
2
nd
Applicant/Plaintiff
and
FRANCHISING
TO AFRICA
(PTY)
LTD
Respondent/Defendant
T/A
GOLD
BRANDS
JUDGMENT
BRENNER
AJ
1.
The first and second plaintiffs, Evy Goncalves ("Evy") and
Pedro Miguel Duncan Goncalves ("Pedro"), applied
for
summary judgment against the defendant, Franchising to Africa (Pty)
Ltd t/a Gold Brands ("FTA"), for payment of R560
000,00
plus interest and costs.
2.
The cause of action was based on claims arising from a written
cancellation agreement executed by the above parties on an unknown
date in 2016 ("the cancellation agreement").
3.
The agreement cancelled a franchise agreement previously concluded
between them in terms of which a ChesaNyama franchise store
in
Presidia Building, Pretoria, was acquired by Evy & Pedro from FTA
for a price of R700 000,00 ("the franchise agreement").
The
purchase price was duly paid by Evy and Pedro on or about 3 February
2016.
4.
When the hand-over of the store was imminent, Evy and Pedro
discovered that, contrary to alleged representations made to them
by
FTA:
4.1
the store was not trading;
4.2
the store was in a dilapidated state for various
reasons;
4.3
there was no valid operational liquor licence for
the store
5.
They accordingly refused to take possession of the store. However,
when given FTA's assurance that repairs and upgrades would
occur,
they took possession of same. But the repairs and upgrades were not
effected.
6.
In May 2016, the parties agreed to cancel the franchise agreement,
and executed the cancellation agreement. The precise date
of the
cancellation agreement is not apparent ex facie the document but
nothing turns on this. They agreed that FTA would retake
possession
of the store from 8 June 2016.
7.
Three clauses of the cancellation agreement are germane to the
issues.
8.
FTA chose as its
domicilium citandi et
executandi
for service of all legal processes at 195 Witch Hazel Avenue,
Highveld, Centurion, Pretoria. Vide clause 11.2.2.
9.
In terms of clause 12, if a breach of the agreement occurred and the
breaching party failed to remedy same within 7 days of receipt
of
written notice from the other party to rectify the breach, the
aggrieved party was entitled without prejudice to any other rights
it
may have in law, to take such legal action as may be necessary in the
circumstances.
10.
The most material clause, from which the focal issues arose, is the
clause pertaining to the refund amount and payment thereof,
namely,
clause 3. It is quoted verbatim below, (the Franchisor being FTA and
the Franchisee being Evy and Pedro Goncalves).
"3
REFUND
AMOUNT
AND
PAYMENT
3.
1
The
Franchisor shall refund to the Franchisee an amount
of R700 000-00 (One
Hundred Thousand Rand) subject to
terms and conditions contained in clause 3.3
3.2
The
capital amount of R700 000-00 (Seven Hundred
Thousand Rand) shall be repaid to the Franchisee by the Franchisor in
of
5
(Five) equal monthly instalments of
R140
000-00 (One Hundred and Forty Thousand Rand)
per month
with the first instalment being payable on or before the 7
th
July 2016 and thereafter on or before the
7
th
of each and every following month until such
a
time
the amount is
paid in full.
3.3
The
above amount shall be
paid by
the Franchisor subject to the following conditions:
3.3.1
the deduction of the sum
as
per signed schedule being
the current indebted amount;
3.3.2
the deduction of any amounts that may be owed and outstanding
in terms of Clause
4
hereunder;
3.3.3
the deduction
of any amounts that may be due and
owing in respect to any employee prior to the Take-Over Date in terms
of Clause
7
below;
3.3.4
the Parties agree that upon entering into this Agreement
in any way affects, detracts from, limits, and/or operates
as
a
waiver or
as a
novation of the obligations of the
Franchisees or the rights of the Franchisor in terms of the Franchise
Agreement including that
of
the
Franchisor;
3.3.5
In order
to facilitate
the
provisions
of clauses
3.1, 3.2 and 4 an
adjustment account shall be prepared by the Franchisor setting forth
amounts to be paid against such amounts
as
to
be
subtracted
as
contemplated by the Parties."
11.
Regarding clause 3.3.1, there was no signed schedule providing for
the "current indebted amount".
12.
In part-performance of its obligations, FTA paid the first
instalment of R140 000 to Evy and Pedro on 7 July 2016.
In breach of the cancellation agreement, however, it
failed to pay any further instalments, with
effect
from 7 August 2016, or thereafter.
13.
It merits mention that the cancellation agreement did not contain an
acceleration clause regarding payment of the instalments.
14.
On 10 August 2016, the attorneys for Messrs Goncalves addressed a
letter of demand to FTA, to two email addresses not mentioned
in the
domicilium clause, to demand payment of the August 2016 instalment,
by the following day. A further demand on 22 August
2016, for payment
of the August 2016 instalment, met with no response.
15.
On 20 September 2016, Evy and Pedro Goncalves served summons in which
they claimed payment of the full balance of R560 000,00.
The full
balance was prematurely claimed. This because of the absence of an
acceleration clause. By 20 September 2016, only two
further
instalments of R140 000 each, for August and September 2016, were
due, owing and payable.
16.
The summons was served on the chosen domicilium of FTA
17.
Following an appearance to defend on 3 October 2016, a Summary
Judgment Application was launched and served on 11 October 2016.
The
main deponent was Evy. The oath section of his affidavit dated 4
October 2016 refers to "he/she" throughout. Pedro
signed a
confirmatory affidavit on 7 October 2016 in which it is acknowledged
that "she" knows and understands the contents
of the
affidavit. Both affidavits were signed at police stations.
18.
The affidavit opposing summary judgment was signed on 25 October 2016
by Efpraxia Nathanael on behalf of FTA The copy in the
court file
appears to have omitted one page of this affidavit. I was informed
that the attorneys for the Goncalves also received
an incomplete
affidavit. Nevertheless, what is gleaned from the affidavit is the
following.
19.
It is contended for FTA that Evy's affidavit is invalid in that the
oath section refers to the deponent as "he/she"
and the
oath section of Pedro's affidavit refers to the deponent as "she".
Although Pedro had confirmed Evy's affidavit,
FTA contended, without
justification, that Pedro had not given Evy authority to depose to an
affidavit on his behalf.
20.
At paragraphs 6.4 and 6.5 of the opposing affidavit, the following is
stated:
"6.4
The applicants
are,
however,
not
entitled
to claim
the
full
balance
of
the purchase price as
no
provision is made in the agreement for accelerated
payment of the purchase price.
6.5
The
summons, as issued by the applicants, has therefore
been issued prematurely as the balance of the
purchase
price has not yet become due and payable and the applicants are
therefore not entitled to judgment
for the amount
claimed or at all."
21.
This, then, was the gravamen of the defences raised by FTA.
22.
In argument before me, counsel for FTA raised what he termed legal
points, which were to be considered in addition to the contents
of
the opposing affidavit. He did so without prior notice. He mentioned
that the refundable amount was subject to the deductions
stated in
clauses 3.3.1 to 3.3.3 of the cancellation agreement. There was no
allegation in the summons that the deductions had
taken place. He
pointed out that there was no schedule attached to the document, as
contemplated by clause 3.3.1. He argued that
Messrs Goncalves had
failed to send a prior demand to FTA's domicilium affording FTA seven
days within which to remedy the breach.
In the result, he contended
that the summons was excipiable, and lacked averments necessary to
complete a cause of action, and
therefore, for this reason
simpliciter, summary judgment could not be granted
23.
In addressing legal issues, Counsel for FTA relied on the case of
Arend
and
Another
v Astra
Furnishers
(Pty)
Ltd
1974
(1)
SA 298
C
,
at p314, where Corbett, J, held:
"Accordingly,
I hold that defendant in summary judgment proceedings is not
precluded from raising issues relating to the validity
of the
plaintiff's application merely because he has not referred to these
matters in his opposing affidavit."
24.
To support his contention that Evy and Pedro had not adhered to the
domicile clause regarding prior demand, counsel for FTA
referred to
Shepard
v Emmerich
2015
(3)
SA
309
(GJ)
.
In
Shepard
,
an agreement provided for the chosen domicilium of the
defendant at his attorney's address, "Routledge Madise Moss
Morris,
2 Pybus Road, Sandton (Marked for D Janks 2"d Floor).
The sheriff had served the summons by affixing same to the principal
door of this address, but not on the second floor of the building,
and not on Mr Janks. By the date service took place, the attorneys
had relocated offices. At par 4 of
Shepard
,
the Court approved of the principle that
"where
a
specific
method
of
effecting
service is contractually agreed, that
method should be strictly
complied
with".
The rescission of the default judgment granted
in favour of the plaintiff was held to have been rightly ordered,
owing to improper
service.
25.
The Shepard ratio is distinguishable from the facts in casu because
the summons in casu was served on FTA's chosen domicile
and was
indeed received, since FTA entered an appearance to defend. There was
no suggestion of improper service in the opposing
affidavit.
26.
Regarding the need to address a prior seven day demand as a precursor
to the summons, I do not consider the terms of clause
12 peremptory.
Service of such notice is stated as being "without prejudice to
any other rights ... in law". Arguably,
the summons in casu
served as the demand, and more than seven days have elapsed since
service.
27.
I will proceed to address ad seriatim the technical point on the
validity of the affidavits supporting summary judgment, and
the legal
point that the deductions in clause 3.3.1 to 3.3.3 were not
fulfilled.
28.
I respectfully disagree with the judgment in
Absa
Bank
Ltd
v
Botha
NO
&
Others
2013 (5) SA 563
(GNP)
.
In
practice, the "he/she" reference in the oath section of
affidavits is a frequent occurrence, as is an incorrect reference
to gender. These are innocuous and inadvertent errors in the main. I
am of the respectful view that judicial notice may be
taken of this
established fact, and that one should subordinate form to
substance. It is plain from the body of Evy's
affidavit that
she is female and from the body of Pedro's affidavit that he is
male. The affidavits in casu substantially
complied with the formalities prescribed by the Justice of the
Peace and Commissioner of Oaths Act 16 of
1963.
29.
Concerning the purported non-fulfilment of clauses 3.3.1 to
3.3.3, the following is pertinent. If clause
3.3.1 is
void owing to the omission of the schedule, then it is severable from
the rest of the agreement and clause 14 provides
for such
divisibility. Moreover, no mention is made in FTA's opposing
affidavit about the deductions. The issue is not only one
of law but
of fact. Factually, FTA should have stated whether the deductions had
been made and how they had been calculated. It
was obliged to do so
in terms of clause 3.3.5, 4, and 6, so as to prepare an adjustment
account. It inexplicably failed to do so.
Significantly, the only
comment FTA has to make on the claim is that payment of the full
balance is premature. This is the sum
total of its defence on the
subject.
30.
Rule 32(3)(b) of the Uniform Rules obliges a respondent in summary
judgment proceedings to adduce a bona fide defence to the
action by
way of an affidavit which discloses "fully the nature and
grounds of the defence and the material facts relied upon
therefor".
At
page 81-223 of Erasmus, Superior Court Practice, the author states:
"If,
however,
the defence
is
averred
in
a
manner
which appears
in
all
the circumstances
to
be
needlessly bald, vague
or
sketchy, that
will
constitude
material for
the
court
to
consider in relation
to the requirement
of bona
fides."
This
much was stated in the case of
Breitenbach
v
Fiat
SA
(Edms) Bpk
1976 (2) SA 226
(T)
.
At p228 the Court held as follows:
"It
must be accepted that the subrule was not intended to demand the
impossible. It cannot, therefore, be given its literal
meaning when
it requires the defendant to satisfy the Court of the
bona
fides
of his
defence.
It
will
suffice
......if
the
defendant
swears
to
a
defence,
valid
in law, in
a
manner
which is not inherently
and
seriously
unconvincing."
31.
I fully subscribe to the sentiments expressed in the case of
Majola
v
Nitro
Securitisation
2012 (1) SA 226
SCA
.
I quote from paragraph 25F et sequitur, at p232:
"The
purpose of
summary judgment
is
to
"enable
a
plaintiff with
a
clear
case
to
obtain
swift
enforcement of
a
claim
against
a
defendant who
has
no
real
defence
to
that
claim.
It
is
a
procedure that
is
intended "to prevent
sham
defences
from
defeating
the
rights
of parties
by delay,
and
at the same
time causing
great
loss
to plaintiffs
who were endeavouring
to enforce their rights."
If
a
court hearing
an application
for
summary judgment is satisfied
that
a
defendant
has
no
bona
fide
defence
to
a
plaintiff's
claim
and
grants
summary judgment
as
a
consequence,
it
should
be
slow
thereafter
to grant
leave
to appeal,
lest
it
undermine
the
very
purpose of
the procedure."
32.
I am satisfied on a conspectus of the relevant facts, and the law,
that FTA failed to prove a convincing bona fide, genuine
defence to a
portion of the claim against it. The summons for the full balance of
R560 000,00 was plainly precipitate. What was
owing at the date of
service of same was R280 000,00. Based on the aforegoing grounds, the
plaintiffs are justified in securing
summary judgment for this
amount, plus
mora
interest, and costs, owing to
substantial success. Leave to defend regarding the balance of the
claim is required to be granted.
33.
The following order is made:
33.1
summary judgment is granted in favour of the plaintiffs against the
defendant
for:
(i)
payment of the sum of R280 000,00;
(ii)
interest thereon at the rate of 9% per annum from date of service of
summons to date of payment;
(iii)
costs of the application for summary judgment;
33.2
leave to defend is granted to the defendant in respect of the balance
of the claim raised in the plaintiff's particulars of claim.
T
BREMNER
ACTING
JUDGE OF THE HIGH COURT
Counsel
for Applicants: Adv.
K. Fitzroy
Instructed
by :
Muthray and Associates Inc.
Counsel
Respondent:
Adv L Kellermann
Instructed
by:
Hattingh & Ndzabandzaba Attorneys
Date
of Judgment:
2 November 2016