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[2015] ZAGPPHC 780
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Lategan v Als Rental (North West) (Pty) Ltd (29688/14) [2015] ZAGPPHC 780 (19 August 2015)
IN
THE HIGH COURT OF SOUTH AFRICA
GAUTENG
DIVISION, PRETORIA
Case
Number: 29686/14
Date:
19/8/15
Not
Reportable
Not
Of Interest To Other Judges
In
the matter between:
GERTRUIDA
MAGRIETA LATEGAN
APPLICANT/DEFENDANT
and
ALS
RENTALS (NORTHWEST)(PTY)
LTD RESPONDENT/PLAINTIFF
Coram:
HUGHES J
JUDGMENT
Heard
on: 22 April 2015
Delivered
on: 19 August 2015
HUGHES
J
[1]
The applicant, who was the defendant in the main application, seeks
rescission in term of Rule 42(1)(a) or Rule 31(2)(b)
read with
Rule 27(1) or the common law, of the main application in total of the
judgment granted in favour of the respondent, plaintiff
in the main
application. At the outset I must state that even though the
applicant stated in its founding affidavit that rescission
was sought
under Rule 42(1)(a) it transpired that in its heads of argument and
argument in court that in fact it sought rescission
under Rule
42(1)(c) instead.
[2]
Filapro (Pty) Ltd ("Filapro") was a business entity of
which the applicant was the sole director. Filapro owed the
respondent an amount of R3 514 949.39 for good sold and delivered.
The applicant had signed as surety in respect of the aforesaid
debt.
Filapro fell upon hard times and entered into business rescue on 12
March 2014. On 17 April 2014 the respondent issued the
main
application against the applicant as surety.
[3]
Proceedings in respect of setting aside the business
rescue and a final winding up of Filapro
were
instituted by W. Ferguson Investments CC and Capital Acceptance (Pty)
Ltd on 25 April 2014. The rescue practitioner of Filapro
brought a
counter application for an extension of time to lodge his report
which was refused by the court and a final winding up
order was
granted on 29 May 20014.
[4]
The service of the main application was at the
domicilium
address
of the applicant by affixing the summons to the outer
door on 14 May 2014. The applicant alleges that she did
not receive
same. Judgment by default was granted on 3 July 2014.
[5]
On the 4 July 2014 the applicant became aware that summons was
supposed to have been served upon her. After some enquiries were
made
by her erstwhile attorneys correspondence was sent to the
respondent's erstwhile attorneys on 4 July 2014 expressing the
applicants position that she had not yet received the summons she had
heard had been served and they requested that service of the
said
summons be made upon them. The respondent attorney's replied on 16
July 2014, advising that summons had been served on the
applicant's
domicilium
address and they granted the applicant an
extension of three day from the date of the letter to file her
intention to defend, failing
which default judgment would be sought.
[6]
It would seem that unbeknown to both attorneys the correspondent
attorney of the respondent had already attained default judgment
in
the matter. The applicant seeks rescission on the
grounds that both were under the common
mistake that default judgment had not been sought. In addition
the applicant states that, as surety, she was entitled to
the
protection of the moratorium in term of section 133 of the Companies
Act 71 of 2008 ('the Act") that was operative against
creditors
of Filapro. The respondent had instituted proceedings against her, as
surety, during that moratorium period and this
constitutes an
irregularity which falls to be set aside.
Service
of Summons
[7]
In terms of the suretyship agreement the applicant agreed that legal
processes be served on her
domicilium
address. The respondent
submits that it duly served the summons on this address. The
applicant take issue with the manner of service,
arguing that the
sheriff could not have served on "the outer door" as
indicated on the return of service as there
was no access to the
outer door due to the gates and the sheriff would have required
someone to let him onto the premises to proceed
to the outer door.
See
section 43(2) of the Superior
Courts Act10
of 2013.
[8]
It is trite that the return of service of the sheriff,
prima facie
the return, is sufficient proof of what it purports to state
therein. In this instance the sheriff comments that he attempted to
ring the bell of the address where he was to serve, he noted that
there were vehicles in the driveway but no one opened for him
or
attended to him thus the only manner possible was to affix the
process to the door.
[9]
The applicant argues that as a return of service of the sheriff is
prima
facie
proof it is thus open to be
challenged and I was referred to
Greeff
v
Firstrand
Ltd
2012
(3)
SA
157(NCK)
at
paragraph
[1
OJ.
The applicant argued further that in the circumstances of the
service of this summons it cannot be concluded that the process was
indeed served upon the applicant.
[10]
The respondent on the other hand submits that the applicant has
failed in it challenge in that there is no evidence, but for
mere
speculation on the part of the applicant, that the sheriff did not
serve the summons as per the return, in fact there is evidence
to the
contrary based on the circumstances set out by the sheriff who has
nothing to gain or lose as an office of the court when
he avers that
the summons was served.
[11]
I agree with the submissions of the respondent, there is
evidence that the sheriff was at the premises, that he called
those
instructing him to serve and advised that vehicles were on the
premises but they refused to open or attend to him whilst
he buzzed
at the
domicilium
address provided. The
prima
facie
return together with the confirmatory note
and the two affidavits, of the sheriff and Ms Preez (Ward) of the
respondent's attorney
is in my view sufficient proof that the sheriff
did in fact serve as stated in the return of service.
[12]
Whether it is a gate or door the important factor to me is that he
affixed it at the address. This being a valid means of service
therefore the quest for rescission on this ground must fail.
The
common mistake
[13]
The applicant's argument here is that both parties laboured under
the common mistake that default judgment had
not been granted
when they communicated with each other and the respondent granted the
applicant the three day extension to file
its intention to defend.
The
respondent argued that if one wanted to rely on this defence, in
terms of Rule 42(1)(c) the mistake should have a causal link
to the
judgment or order, refer to
Tshivhase
Royal Council
Tshivhase
[1992] ZASCA 185
;
1992 (4) SA
852
(A) at
863C-E
for easy reference the extract is set out below:
"Secondly,
there must be a causative link between the mistake and the grant of
the order or judgment; the latter must have
been 'as the result of'
the mistake. This requires, in the words of Eloff J in
Seedat v
Arai
and Another1
984
(2) SA 198
(T) at 201 D, that
the mistake relate to and be based on something relevant to the
question to be decided by the Court at the time.
Other cases which
illustrate this are
Ex parte
Barclays Bank
1936 AD 481
and
Van Zyl v
Van
der
Merwe1986 (2) SA 152 (NC) . The principle is that you cannot
subsequently create a retrospective mistake by means of fresh
evidence
which was not relevant to any issue which had to be
determined when the original order was made. The reason is obvious:
the Court
would at that time have had before it no evidence and thus
no wrong evidence on the point; hence there would have been no
mistake.
Contrast this with the case where the subsequent evidence is
aimed at showing that the factual material which led the Court to
make its original order was, contrary to the parties' assumption as
to its correctness, incorrect. Here one would have the type
of
situation envisaged by Rule 42(1
)(c).
One
finds in the reports examples of the successful invocation of Rule
42(1)(c) (see
Ex
parte Jooste en 'n
Ander1968
(4) SA 437 (0),
Ex parte
Kruger1982
(4)
SA 411 (SE) as also, in relation to the corresponding provisions in
the magistrate's court, the cases cited by Jones and Buckle
The
Civil Practice
of
the
Magistrates'
Courts
in
South Africa
8th
ed at 139-40). But there do not appear to be many such cases. The
reason, I would apprehend, is that the circumstances giving
rise to
the operation of the Rule are inevitably somewhat unusual. In my
opinion, however, our matter is such a case. It provides
a textbook
example of a judgment granted as a result of a mistake common to the
parties. Plainly, both Kennedy and John believed
the statement in the
letter dated 11 January 1988 ((ix) above) that the Khoro had 'after
deliberating on this matter . . . resolved
that (John) be (the
chief)' and that the President 'has accepted the advice given to him
by the . . . Khoro'. They, therefore,
assumed a state of affairs
which, as it turned out, was a wrong assumption. In other words, they
laboured under a common mistake."
[14]
The reliance of a mistake common to the parties raised as a ground
for rescission, in my view must also fail, as there was
no mistake
common to the parties. What transpired is that the respondent was not
aware that the default sought from the registrar
had been attended
and was granted by the registrar on the day in question. The
extension of three days together with the threat
of seeking default
was given to the applicant on that very premise. At the time when the
order or judgment was sought there had
been no extension granted or
sought. These factors were after the judgment had been granted this
was not the situation before the
court granted the judgment and as
such does not amount to a mistake common to the parties.
Business
rescue
[15]
The applicant argued that as surety she was entitled to protection of
the moratorium in term of section 133 the Act afforded
to the
principle debtor that was operative against creditors of Filapro.
[16]
This issue was settled by the Supreme Court of Appeal in
New
Port
Finance
Company
(Pty)
Ltd
v Nedbank
Ltd
(3
0
1
2014)[2014]
ZASCA
210
(1 December
2014)
which
dealt with whether the business rescue proceedings affords the
sureties relief of its indebtedness.
[17]
The applicant is sued by the respondent in the main application on
the deed of suretyship. The purpose of the deed is to cater
for
situations where the principle debtor for some reason or the other
defaults and is not able to pay the debt. That being the
case the
deed of suretyship is coached in a specific fashion to ensure that if
this situation arises the creditor can still recover
from the surety.
To this end, in the paragraphs below I set out the relevant
paragraphs of the suretyship agreement that illustrate
that
notwithstanding the position that the principle debtor is in
regarding the moratorium in this case the creditor is still entitled
to pursue the surety.
[18]
The deed of surertyship is clear at paragraph 8 that the surety's
liability is not affected in anyway whatsoever by the estate
of the
principle debtor being liquidated, sequestrated, placed under
judicial management, administration, compromise or arrangement
either
by way of statute or otherwise.
[19]
In addition paragraph 9 of the deed of suretyship provides that no
indulgence, latitude or extension of time to the principle
debtor or
the surety is a waiver of the rights of the principle debtor or
novation of the surety's liabilities.
[20]
As per paragraph 12 (12.2) of the deed of suretyship the benefit of
excussion against another party was excluded.
[21]
The deed of suretyship clearly permits the creditor to pursue the
surety notwithstanding the position that the principle debtor
might
be in. This is the purpose of a deed of suretyship and any default by
the principle debtor permits the creditor to sue the
surety.
[22]
In the circumstances set out above the creditor is entitle to demand
from the surety that which was due by the principle debtor
notwithstanding any indulgence that was granted to the principle
debtor. Thus the fact that section 133 provides the protection
of the
moratorium to the principle debtor does preclude the surety from
being sued. This falls in the realm of paragraph 8, 9 and
12 (12.2)
of the deed of suretyship. See
Cape Produce
Co
(Port
Elizabeth)
(Pty) Ltd v Dal Maso and Another NNO
2002
(3)
SA
752
(SCA)
at
paragraphs
[9]
to [11];
New
Port
Finance
Company (Pty) Ltd
at
paragraphs
[1
OJ, [11] and [12].
Compliance
with Rule 18(6)
[23]
The applicant submits that it is prudent for the plaintiff when
setting out its case to ensure that if written documents form
a link
to the chain of the cause of action; such written
documents referred to in the particulars
of claim must be attached. The applicant
refers
Absa Bank Ltd v Studdard
&
Another
[2012]
ZAGPJHC 26 (13
March 2012) at
[24]
-
[25].
[24]
The plaintiff in this case refers to hire agreements, which were
attached to the particulars of claim. However, within those
agreements mentioned is made of the terms and conditions of the hire
agreement. These terms and conditions were not attached and
as such
the applicant contend that the respondent has failed to comply with
Rule 18 (6) in that these omitted terms and conditions
form an
integral link in the chain of the plaintiffs of the cause action.
This failure results in the plaintiff having not properly
disclosed a
cause of action and judgment cannot be granted on a summons that is
defective.
[25]
The plaintiff concedes that it did not attach the terms and
conditions of the hire agreements. The stance taken by the plaintiff
is that it has complied with Rule 18(6) as it is not necessary to
attach the entire agreement in terms of the said rule, as it
has
attached that which it relies upon in respect of its claim against
the applicant. The plaintiff argues that the
reliance of the
terms and conditions is on the part of the applicant for its
counter-claim against the plaintiff. In any event,
the terms relied
upon are in the documents attached encompassing the parties' details
(item 1 of hire agreement), the equipment
hired (item 2), the rental
rate thereof (item 2), the payment terms (clause 2 of the hire
agreement) and interest (clause 3) applied
thereupon and the
signatory binding himself as surety in terms of the suretyship
agreement (clause 7).
[26]
Rule 18(6) reads as follows:
"A
party
who in his pleadings
relies
upon
a
contract
shall
state
whether
the contract is
in
writing
or
oral
and
when,
where
and
by
whom
it
was
concluded, and
if
the contract is written
a
true
cop
y thereof or of the part
relied on in the pleadings shall be
annexed
to the p
leadings."
[My emphasis]
[27]
The contention of the plaintiff is that, that which it relies upon,
in respect of the annexed documents put up, are the documents
which
set out its cause of action in its case against the applicant.
[28]
To my mind, that which is annexed is what reliance is placed upon by
the plaintiff in respect of its case against the applicant.
Those
documents that were annexed are what the applicant is entitled to
assume the plaintiff would rely on for its case. See
Stem NO v
Standard Trading
Co
(Pty) Ltd
1955
(3)
SA
423
(A)
at 429F-H.
[29]
I have examined the particulars in respect of the cause of action in
the particulars of claim. In my view the reliance by the
plaintiff
lies in the suretyship agreement which emanates from the hire
agreement. The particulars relevant for the plaintiff's
cause of
action, that is from the hire agreement and from the suretyship
agreement are set out in paragraphs 8, paragraph 6 supposed
to be 9,
paragraph 7 which supposed to be 10, paragraph 8 and 9 which supposed
to be 11 and 12 on pages 8 and 9 of the indexed
and paginated
particulars of claim.
[30]
From the particulars of claim and that annexed thereto, I find that
the plaintiff sets out its case with its cause of action
building up
as follows: the parties entered into a hire agreement which made
provision for the suretyship agreement. The hire agreement
set out as
submitted by plaintiff
"the
parties' details
(item 1
of
hire agreement), the
equipment
hired (item
2),
the
rental
rate
thereof
(item
2),
the payment
terms
(clause
2
of
the
hire
agreement)
and
interest
(clause
3)
applied
thereupon
and
the
signatory
binding
himself
as
surety
in
terms
of
the
suretyship agreement (clause 7)".
The link in the
chain with regard to the cause of action is the hire agreement and
the suretyship agreement, those terms necessary
between the two are
as appears in the hire agreement and the terms and conditions
referred to by the applicant which are lacking,
do not render the
cause of action wanting in these circumstances. Rule 18(6) is
formulated on the assumption that the pleader is
able to attach a
copy of the written contract. In those circumstances the copy or the
relevant part thereof must be annexed. See
Superior Courts
Practice Erasmus at
81-1328.
[31]
In dealing with the case referred to by the applicant of
Absa
Bank
Ltd
v Studdard
&
Another
above, I must point out in that instance the
contract that the plaintiff relied upon regarding its cause of action
was not annexed
at all to the simple summons. In this instance the
hire agreement and the suretyship agreement relied upon in respect of
the plaintiff's
cause of action is annexed but for the addendum terms
and conditions.
[32]
In the circumstances I find that there has been compliance with Rule
18(6).
Bona
fide defence and the counterclaim
[33]
In terms of Rule 31(2)(b) the applicant in terms of the common law
must establish that the judgment needs to be rescinded on
good cause
shown, this relies on a bona fide defence being advanced and that the
application was also bona fide. In this case the
court needs to look
at whether the defence raised and counter-claim are bona fide.
[34]
The applicant's defence is that the quantum claimed in the
particulars of claim is not supported by the documents put up by
the
plaintiff. There is a concession that an incorrect certificate was
used in the quantification of at least one piece of equipment's
invoice. The plaintiff replies by saying that at best
"...the
certificate
reflects R3 000.00
more
than the statement,
with the
judgment
merely to
be
corrected
accordingly".
To this end the plaintiff submits that
the challenge to the quantum does not equate to a bona fide dispute.
[35]
The plaintiff makes reference to clause 10 of the hire agreement
where the responsibility lies with the applicant to sign off
weekly
time sheets for the piece of equipment held. Failure to do so
"the
Hirer by his omission agrees to the correctness thereof
and
shall
be
invoiced
accordingly".
In this instance the manager of
Filopro signed off the weekly time sheets and the site manager signed
off on the pro forma invoices
issued by the plaintiff. Thus the site
manager had signed the acceptance of the quotes and orders upon which
the plaintiff claim
relies upon.
[36]
In addition to the above, regard should be had to the fact that the
applicant made large substantial and payments in respect
of the
invoices, accounts and orders. These were made after the hire
agreement had been terminated in addition on 14 March
2014 V. Lategan
of Filopro provided the plaintiff with an undertaking to pay the
liability due to the plaintiff. There has been
no evidence advanced
by the applicant to the contrary and in these circumstances the
disputes raised by the applicant in my view
fall short of being bona
fide disputes and the applicant has failed to raise a bona fide
defence to the plaintiff's claims.
[37]
Turning to deal with the counter-claim the applicant argued that it
had a counter-claim based on loss of profit because of
certain
equipment breaking down. The applicant states that this should be set
off against the amount claimed by the plaintiff.
To this
counter-claim the plaintiff, in its defence, places reliance on
the terms and conditions of the hire agreement. According
to Filopro,
who in this application placed reliance on the terms and
conditions not being annexed to dismiss the plaintiff
claims,
now shuns the same hire agreements term and conditions by stating
that when presented with same they had refused
to sign. The causes
pertinent to the counter-claim of the applicant are clause 6.3.4,
4.13 and 8.5. These clauses as correctly
pointed out by the plaintiff
amount to exclusionary clauses.
[38]
In the circumstances, the applicant being bound by these clauses is
precluded from claiming that which it seeks in the
counter-claim. The
parties also contracted that any legal cost incur as a result of the
agreement between the parties would be
on the scale as between
attorney and client.
Conclusion
[39]
For the reasons I have set out above the rescission is dismissed with
costs on an attorney and client scale.
[40]
In the result the following order is made:
[40.1]
The rescission application is dismissed with costs on an attorney and
client scale.
______________________________
W.
Hughes Judge of the High Court