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[2016] ZAGPPHC 1106
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Cathoros Commodities (Pty) Ltd v Anglo Operations (Pty) Ltd; In re: Anglo Operations (Pty) Ltd v Cathoros Commodities (Pty) Ltd (54095/2013) [2016] ZAGPPHC 1106 (24 November 2016)
REPUBLIC
OF SOUTH AFRICA
I
N
THE
H
I
GH
COURT OF SOUTH AFRICA,
NORTH
GAUTENG
D
I
VISION,
PR
E
TORIA
CASE
NO: 54095/2013
DATE:
24/11/2016
In the
matter between:
CATHOROS
COMMO
D
I
TIES
(PTY)
LTD
Applicant
and
ANGLO
OPERA
T
I
ONS
(PTY)
L
TD
Respondent
In
re:
ANGLO
OPERATIONS
(PTY)
LTD
Plaintiff
and
CATHOROS
COMMODITIES (PTY)
LTD
Defendant
J
U D G M E N T
MSIMEKI
J,
INTRODUCTION
[1] The
applicant, in this application, seeks an order:
1.
Rescinding
the
judgment
granted
by
the
Registrar
against
it
on
24
November
2014;
2.
Costs only in
the event of opposition;
3.
Further
and/or
alternative
relief.
The
application is opposed.
BRIEF
BACKGROUND
FACTS
[2] The
parties concluded two agreements: one written on 15 January 2013 and
the other oral in about April 2013. In terms of the
agreements, as
disclosed by the simple summons, the respondent sold and delivered
coal to the applicant which had to pay to the
respondent an amount of
R10 919 675 68 (ten million nine hundred and nineteen thousand six
hundred and seventy five rand and
sixty-eight cents). The
respondent sued the applicant on 30 August 2013 on two claims arising
from the two agreements that the
parties concluded. Claim 1 is for
payment
of
the amount
of
R8 046 129 00 while claim 2 is for payment of the amount of R2
873 546 68. In respect of claim 1, the applicant contends that the
respondent sold coal to the applicant which included rocks. In
respect of claim 2 the applicant's contention is that it was standard
practice that the respondent would furnish it with
"log
sheets" and
"weight
slips",
which according to the applicant, were not
annexed to the respondent's declaration. The applicant denies that it
collected the tonnages
which the respondent's invoices reflect. The
applicant entered an appearance to defend the respondent's action.
The respondent,
after the applicant entered
its
appearance to defend, brought an application for summary
judgment which was opposed by the applicant. The defence which the
applicant
disclosed in its affidavit resisting summary judgment
convinced the respondent to grant the applicant leave to defend
its
action and the Court, accordingly, made an order in terms
of
the respondent's decision. It is submitted on behalf of the
applicant, that it is strange that the respondent, after finding it
fit to grant the applicant leave to defend the action in
its
summary judgment application, now opposes the rescission
of
judgment application. This, because, the stance that the
respondent took when it granted leave to defend the action ought to
remain
the same in this application.
[3]
Advocate
L.
S De Klerk SC
("Mr De Klerk") and with him Advocate
A.
S. L Van Wyk ("Mr Van Wyk") and Advocate
D. L Uys ("Mr Uys") represented the applicant and the
respondent
when the matter was argued.
[4] It
was submitted, on behalf
of
the respondent, that the application does not refer to any
specific rule. This does not seem correct. Mr Emmanuel Nzuma, the
managing
director of the applicant, in his founding affidavit in
support of the application for rescission of judgment, in paragraph
3.5,
specifically states:
"It
is important
to not
e
that this application for rescission
of
judgment
was
sought
and
grantee!
erroneously by the
registrar. I
will
become clear hereunder that the Judgment could not have been
granted ex facie the application for default
judgment
(and declaration), in fact the Registrar ought
to
have
refused the
default
judgment application alternatively refer the application to
open Court. I will nonetheless hereunder
explain the
delay
in
bringing
of
this
application
to
unequivocally
indicate
to
this Honourable
Court
our
bona
fides
in
launching
this
application."
(my
emphasis).
I
t
i
s
common cause that the Ru
l
e
which deals with this aspect
i
s
Ru
l
e
42(1)(a) of the Uniform Rules of Court.
Rule
42(1)(a)
states:
“
42.
Variation
and
rescission
of
or
d
ers
The
court may. in
addition to
an
y other powers it may
have,
m
ero
motu or
upon
the
application of
any
party affected,
rescind or
vary:
(a)
an
order
o
r
judgment
erroneously
sought
or
erroneously
grantee!
in
the
absence
of
any
party
affected
t
hereby".
(my
emphasis).
[5] The
applicant's heads of argument in paragraph 2 specifically mentions
that the applicant's application is based on
Ru
l
e
42(1).
[6] I
need to set out the chronological sequence of events in this matter.
1.
The
respondent
i
nstituted
the
action
by way
of a
simple summons.
2.
I
t
delivered
i
ts
declaration on
27
August 2014.
3.
The
applicant
entered
i
ts
appearance
to
defend
the
action.
4.
On
1
6
October 2014, the respondent, in
a
l
etter,
called
u
pon
the applicant to deliver
i
ts
p
l
ea
within 5 days from date of receipt
of
the
l
etter
failing which
the appl
i
cant
would be
barred.
A notice of bar
was
served
on
the
applicant
on
27
October
2014.
5.
After
barring
the
applicant,
the
respondent,
on
1
8
November 2014 served an
application for default
judgment
upon
the
applicant.
6.
The
registrar of
the
court granted default
judgment
on
24
November 2014.
7.
On
1
8
December 2014 the respondent's attorneys advised the applicant
that
default
judgment had
been
granted
against
i
t.
8.
On 18 March 2015 the application for rescission of judgment
was issued.
POINTS
IN LIMINE
[7] The
applicant and the respondent raised points
in
limine.
In
addition the respondent, in its opposing affidavit in particular
paragraph
4
thereof,
required the applicant to provide security for costs.
[8] On
behalf of the applicant, it was submitted that the respondent served
the Notice of its intention to apply for default judgments
on 18
November 2014 and that the Notice fell short of the peremptory 5 days
which the Rule makes provision for. It was further
submitted that the
registrar had acted
ultra vires
his powers in terms of
Rule
31(5)(e)
when he awarded
"costs of
suit”
.
[9] The
respondent contends that the applicant's application ought to be
dismissed with costs as the applicant failed to comply
with
Rule
31(2)(b)
which requires the application for rescission of judgment
to be filed within the prescribed time period of 20 days after the
applicant
obtained knowledge of such judgment.
I
SSUES
[10
]
The issues,
inter
alia,
are:
1.
Whether the application should be in terms of
Rule
31(2)(b)
of
the
Un
i
form
Ru
l
es
of Court or Ru
l
e
42(
1
)(a).
2.
Whether a party's failure to
comply with
Rule 31(5)(a)
i
s
of
any consequence.
3.
Whether the applicant needed condonation for bringing the
application outside the time period prescribed by
Rule
31(2)(b)
as the application,
according to the respondent, had to be filed by 20 January 2015.
4.
Whether
the
applicant must furnish security
for costs as
contended
for by
the
respondent.
5.
Finally,
whether
the applicant
has
made
out
a
case
for
the relief
i
t
seeks.
[11]
Before endeavouring to
resolve the
i
ssue,
i
t
i
s
i
mportant
to refer to the relevant Rules.
Rule
31(2)(b)
provides:
"31
Judgment
on
Confession
and by Default
..
.(2)
(b) A
defendant
may
within
20
days
after
he
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."
(my
emphasis).
Rule
31(5)(a)
provides:
"(5)
(a)
Whenever
a
defendant
is
in
default
of
delivery of
notice
of
intention to defend
or of
a
plea.
the plaintiff,
if
he or she wishes to obtain judgment by
default,
shall
where
each
of
the
claims
is
for
a
debt
or liquidated
demand,
file
with the registrar
a
written application
for judgment
against such defendant: Provided that when
a
defendant
is in default
of
delivery
of
a
plea.
the
plaintiff shall give
such
defendant
not
less
than
5
days'
notice
of
his
or
her
intention
to
apply
for default
judgment.
(my
emphasis).
Ru
l
e
31(5)(d)
provides:
"(d)
Any party dissatisfied
with
a
judgment
granted or direction given by the
registrar
may,
within
20 days
after
such
party
has
acquired knowledge of
such
judgment
or
direction,
set
the
matter
down
for
reconsideration by the court".
(my
emphasis).
Rule
31(5)(e)
prov
i
des:
"(e)
The registrar shall grant
judgment
for
costs in an amount of R200 plus the sheriff's fees
if
the value of the claim as stated in the summons, apart
from
any
consent
to
jurisdiction,
is
within
the jurisdiction
of
the
magistrate's
court and, in other cases,
unless the
application for default judgment
requires costs to be
taxed or the registrar requires
a
decision on costs from the Court, R650 plus the sheriff's
fees.
(my emphasis).
[
1
2]
I
t
was
submitted,
on
behalf
of
the
respondent,
that
the
applicant
was
aware
of the application for default judgment.
The applicant, according
to the respondent, if the notice fell short of the required
time period, should have defended same or filed a
Rule
30
Notice to complain about the premature set down. To
this, the applicant's response is that
Rule
31(5)(a)
uses the word
"shall"
and that therefore the Rule is peremptory. The applicant's
submission is, indeed, correct. The effect thereof, according to the
submission, is that the judgment was prematurely and erroneously
sought. Because the registrar had no power to condone this, the
submission proceeds, the judgment was erroneously granted. This seems
correct. The registrar, the submission proceeds, does not
have an
inherent discretion to regulate its proceedings. It must only comply
with the Rules. The registrar, the submission further
proceeds, ought
to have known better that the judgment should not have been granted
as
Rule 31(5)(a)
had,
not been complied with. The short service, according to the
applicant, should not have been condoned as the registrar had no
power to do so. This is correct. Clearly, the judgment was
erroneously sought and granted. On this ground alone, as correctly
submitted by Mr De Klerk, the application for rescission should be
granted.
COSTS
[13]
Rule
31(S)(e)
is clear when it involves costs where the
registrar is called upon to grant judgment by default. The rule, too,
is peremptory. If
the value of the claim in the summons falls within
the jurisdiction of the magistrate's court i.e.: apart from any
consent to jurisdiction,
the registrar "shall" grant
judgment for costs in an amount of R200 plus the Sheriff's fees. In
other cases, the registrar
"shalt'
grant judgment for costs in an amount of R650 plus
Sherriff's fees unless the application for default judgment requires
costs
to be taxed or the registrar requires a decision on costs from
the Court. (See:
Bloemfontein
Board
Nominees
Ltd
v
Benbrook
1996 (1) SA 631
(O); Colyn
v
Tiger
Food Industries
Ltd
t/a Meadow Feed
Mills (Cape)
2003 (6) SA 1
(SCA)).
[14] If
the registrar was entitled to grant default judgment and costs the
need was there for him to comply with
Rule
31(5)(e).
He, clearly, acted ultra vires his powers in terms of the
Rules. The registrar was not empowered to grant
"costs
of suit”
.
[15] The
registrar granted the following order in favour of the
respondent/plaintiff on 24 November 2014, namely, for:
"1.
Payment in the amount of R10 919 675 68;
2.
Interest
on
the aforesaid
amount
at
15.5%
a
temporae
mora calculated
daily compounded
monthly
in arrears from
date of demand
to
date
of
payment;
3.
Costs
of
suit”.
[16] On
behalf of the applicant, it was submitted that the application for
rescission of the default judgment should be granted
with costs as
Rule 31(S)(a)
and
Rule 31(S)(e)
were
not complied with by the respondent, its attorneys and the registrar.
CONDONATION
[17] The
respondent raised the issue that
Rule
31(2)(b)
requires the applicant to bring the
application within the time period stipulated therein and that
condonation was required
as the Rule had not been complied with. The
application, according to the submission, ought to have been filed by
20 January 2015.
This submission, as shown above, loses sight of the
fact that the application is based on
Rule
42(1)(a).
Rule 42(1)(a)
unlike
Rule
31(5)(a)
or
Rule 31(2)(b)
has no provision which specifically stipulates when the
application should be launched.
Rule
42(1)(a)
speaks of
"may"
which, according
to the applicant, means that the application has to
be
brought
"within
a
reasonable
time".
It was submitted on behalf of the
applicant that
"the
time frame within which the
applicant
brought
the
application
was not
unreasonable"
and that
"any
delays
have
been explained”
.
It was
further submitted that a proper explanation regarding the lapsed time
between the granting of the default judgment
and the launching
of the rescission application which explanation was acceptable
was given by the applicant. The point
in limine,
according to
the applicant, should be dismissed with costs.
SECURITY
FOR COSTS
[18] The
respondent's submission is that the applicant has
no immovable property, has no known address
and may "very well
be unable to pay costs should it be required to." The applicant
denies that it is liable to pay costs.
[19]
Rule
47
deals with circumstances under which security for costs may be
requested. Under common law an
incola
plaintiff (company) could not be compelled to give
security for costs. The new
Companies
Act
71
of
2008
makes no provision for
security for costs by companies.
Section 13
of
the
Companies Act
61 of
1973
provided the Court with a discretion to order a plaintiff company
to furnish security for costs where it reasonably believed that
the
company would not be able to pay the defendant's costs. Under common
law, an
incola
plaintiff may not be compelled to give security but the
court still has the discretion to order the furnishing of security
where
it is of the opinion that the proceedings are vexatious. (See:
Siemens
Telecommun
i
cations
(Pty) Ltd
v
Datagencies
(Pty)
Ltd
2013
(1) SA 65
(GNP);
Nielson v
Rautenbach N.O
and
others
2014 (3) SA
17
(GNP) and
Boost Sport South Africa
(Pty) Ltd v South
African
Breweries Ltd
2014 (4) SA 343
(GP)).
[20] It
was submitted, on behalf of the applicant, that there was nothing in
this matter which demonstrates that these proceedings
are vexatious
or without merit. That no security was furnished in this matter,
according to the applicant, should not persuade
the Court to dismiss
the application on that basis alone. There is merit in the
submission.
[21] The
applicant has based the application on the following:
1.
The respondent's failure to comply with
Rule 31(5)(a)
by
failing to give the applicant at least
5
days' notice;
2.
The agreement between the applicant and the respondent
contains a peremptory arbitration and/or dispute clause which impels
them
to first refer the dispute to arbitration before approaching the
Court; and that
3.
The respondent attached wrong invoices in respect of the wrong
sites to its declaration and summons demonstrating that it has failed
to prove its claims and therefore is not entitled to the judgment.
[22]
Rule
31(5)(d)
enables a
dissatisfied party to set the matter down for reconsideration by the
Court, within
20
days
after the party has acquired knowledge of a judgment or discretion
given by the registrar, with which the party is unhappy.
It was
submitted on behalf of the applicant that the Rule speaks of
"any
party
may".
The sub-rule, according to the applicant, is not
peremptory and that the applicant was within its right to exercise
and employ any
remedy it might have had at the time and that
Rule
42(1)(a)
was such a remedy. I agree.
[23] It
has been said that
"sufficient”
or
"good
cause"
must be
shown.
"Sufficient
cause"
in
De Wet and Others
v
Western
Bank Ltd 1979 (2)
SA
1
031
(A) at
1
042 and Childerly
E
state
Stores
v
Standard
Bank of SA Ltd
1924 OPD 163
and Cairns Executors
v
Gaarn
1912 AD
181)
has been said to
defy precise or comprehensive definition as many and various factors
need to be considered.
However,
the
two
essential elements of
"sufficient cause"
are:
1.
That the party seeking relief must present a reasonable and
acceptable explanation for the delay;
2.
That on the merits such party has a
bona
fide
defence which,
prims
facie,
carries some
prospect of success (See:
De
Wat's
case
(supra)
at
1042;
P.
E
Bosman
Transport
Wks
Com
v Plat Bosman Transport (Pty) Ltd
1980 (4) SA 794
(A); Smith
N.O v Brummer N.O and Another
1
954 (3) SA 352
(0)
at
357-8).
[24] It
was submitted that the applicant was in wilful default and that
it
had no
bona fide
defence. The submission was that the
applicant would have filed a plea and counterclaim had it intended to
as, according to the
submission, the applicant had been given enough
time to do so. Further, it was submitted that Mr Khoza, the
applicant's attorney,
in his affidavit, did not explain
''why the
papers and reports were not ready when the
applicant
was
called
upon
to
file
its
paper
s
".
Lastly, it was submitted that it was irrelevant whether the
applicant could get hold of Mr Khoza as the applicant finally got him
when it needed him to depose to the affidavit applicant had to tread
very cautiously. Indeed, the amount involved is huge. According
to
the applicant, it initially appeared that the reports pertaining
to
the calorific value of the coal would easily be obtained. This
was not so because, according to the applicant, the experts who were
to assist it with the reports did not want to assist because the
respondent was doing business with them. This, indeed, the applicant
could not control. This, according to the applicant, delayed the
filing of the plea and the counterclaim.
[26] The
applicant could not easily get its attorney when it needed him
because he had lost his father. The attorney too, according
to the
applicant, was also sick. Indeed, this is not something that the
applicant could have control over. Mr Khoza deposed to
an affidavit
explaining all the factors which gave rise to the situation. The
applicant has also explained that it terminated its
mandate that it
had given its previous attorney adding that its new attorney is now
carrying out its mandate. The applicant, in
my view, appears to have
done everything possible in the circumstances of this case. It
appointed its present attorneys of record
shortly before the annual
Christmas holidays when the legal profession virtually comes to a
standstill as
dies
do not apply during the time. The applicant
contends that it always had the intention to file a plea and
counterclaim and that it,
as a result, was never in default in
failing to file its plea and counterclaim.
[27] The
applicant contends further that it has a bona fide defence against
the respondent's claim as-:
1.
The coal that the respondent provided was unusable and unfit
for the purpose for which it was purchased;
2.
The parties concluded an agreement in terms of which the price
of
the coal would be
reduced in relation
to
the
carolific value of the coal. It is common cause between the parties
that the coal that the applicant received was mixed with
rocks which
had no calorific value at all. The applicant contends that it
tendered return
of
the
unusable material. The Kromdraai agreement was amended to cover the
calorific value.
[28] It
was submitted that the respondent had failed to prove that the
applicant was in wilful default by failing to prove all three
elements necessary to prove it, namely,
1.
Knowledge that the action was being brought against it;
2.
A
deliberate refraining from filing its plea and counterclaim;
and
3.
The necessary mental attitude towards the consequences of the
default.
(See:
Grant v Plumbers
(Pty)
Ltd
1
949
(2) SA 470
(O); Rose and Another v Alpha
and Secretaries
Ltd
1
947
(4) SA 511
(A)
and
Sanderson Technitool
(Pty)
Ltd
v
l
ntermenua
(Pty)
Ltd
1980 (4)
SA
573
(W)).
[29]
I
t
was
submitted as shown
above, that the applicant
had demonstrated
that the judgment
was
erroneously sought
and
granted and that the
applicant was entitled to the rescission of
the
judgment.
I
t
was
further
submitted
that
in
an
application based
on
Rule
42(1)(a)
the
applicant
"need
not
show
good cause".
I
t
was further
submitted
the
"good cause"
was,
i
n
any event,
sufficiently
demonstrated
and that that
entitled the
applicant
to
the
rescission
of
the
judgment.
The
further
submission
was
that
"should
the defences
raised
by
the
applicant
succeed
at
trial
the
applicant
will be
entitled
to
the relief it
sought'.
The
submission is,
in
my
view, correct.
[30] It
was submitted correctly, in my view, that the respondent failed to
properly "deal with the allegations contained in
Annexure "E"
to the applicant's founding affidavit", stating that it will not
deal with each and every allegation
contained therein. Annexure "E"
is the respondent's/defendant's opposing affidavit in the summary
judgment application.
As shown above, the respondent gave the
applicant (defendant) leave to defend the respondent's (Plaintiff's)
action. The respondent's
decision cannot simply be ignored as it is
also key in this matter. It was
[31] It
was submitted that if the applicant was allowed to defend the matter
that would only relate to claim 1 and not claim 2.
I do not agree. It
is my view that judgment should be rescinded in respect of both
claims.
[32] It
was submitted that whatever the decision, the Court ought to award
the costs of the application to the respondent. I again
do not agree.
Having regard to the facts of the case, I am of the view that costs
should be costs in the cause.
ORDER
[33]
The following order, as a result, is made:
1.
The judgment
granted
by the
reg
i
strar
agai
n
st
the
applicant
on
24
November
2014
i
s
h
ereby
rescin
d
ed.
2.
Costs will
be
costs
i
n
the cause.
____________________
M.
W. MSIMEKI
JUDGE
OF THE HIGH COURT OF SOUTH AFRICA
GAUTENG
DIVISION OF THE HIGH COURT,
PRETORIA