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[2015] ZAFSHC 190
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Free State Agriculture v President of the Republic of South Africa and Others (170/2012) [2015] ZAFSHC 190 (8 October 2015)
IN THE HIGH COURT
OF SOUTH AFRICA
FREE STATE DIVISION
BLOEMFONTEIN
Case
no.1750/2013
In the matter between:
SETSOTO
BRICKS AND MANUFACTURING
Applicant
(Registration
number: B2001/037176/23)
and
DUMANSI
TRADING
Respondent
(Registration
number: 2007/109532/23)
IN
RE:
DUMANSI
TRADING
Plaintiff
(Registration
number: 2007/109532/23)
and
SETSOTO
BRICKS AND MANUFACTURING
(Registration
number: B2001/037176/23)
Defendant
JUDGMENT
BY
:
RAMPAI,
J
HEARD
ON:
17
SEPTEMBER 2015
DELIVERED
ON:
1
OCTOBER 2015
[1]
These were motion proceedings. The applicant was the defendant
and the respondent
the plaintiff in the action proceedings.
Brevitas
causa
I
shall refer to the parties as in the action proceedings. The
defendant applies to have the judgment granted against it by
default
rescinded and leave to defend granted. The plaintiff opposes
the rescission application.
[2]
The rescission application was filed out of time. The defendant
also applied to have
its lateness condoned. The plaintiff did
not oppose the condonation application. I condoned the late
filing and directed
the defendant to pay the costs.
[3]
The plaintiff also brought an application just before the proceedings
commenced. It
applied for the special leave to duplicate.
The defendant did not oppose the duplication application. I
then granted
special leave to the plaintiff to duplicate in response
to the new matters the defendant raised in its replying affidavit.
I directed that the costs thereof would be costs in cause.
[4]
It appeared necessary to give an outline of the historical background
prior to the launch
of the current application. The plaintiff
issued summons against the defendant on 5 May 2013 – (vide “anx
jk4”).
On 7 June 2013 the sheriff served the summons on a
certain Mr Sim, an accountant of Deane & Threshner, 27 Steyn
Street, Kroonstad.
There was no notice of intention to defend
filed. The plaintiff then applied and obtained default judgment
against the defendant
on 2
nd
July
2013. On 27 August 2013 the sheriff served the writ on someone
who called himself Mr J Setsoto at 7910 Constantia Park
Kroonstad
(vide “anx jk8” and “anx ld7”). The
sheriff attached certain immovable property (vide “anx
jk9”).
[5]
The defendant’s director subsequently consulted his lawyer at
Grimbeek, Van Rooyen
& Partners, a lawfirm of Kroonstad in
connection with the summons. At the request of the defendant’s
lawyers, the
plaintiff’s lawyers Messrs E P du Preez of Welkom
furnished the defendant’s lawyers with a copy of the summons on
27
July 2013. The defendant’s attorney acknowledged
receipt thereof on 1 October 2013 (vide “anx jk2”).
They then requested for further documents in order to prepare a
rescission application. They were furnished with copies of
the
agreements or to be specific cessions labelled as “anx jk5”
and “anx jk6” on 8 October 2014 (vide “anx
ld9”).
[6]
The parties and their legal representatives then held a meeting in
Welkom on 21 October
2013. The defendant was furnished with
copies of the required delivery notes and invoices. The purpose
was to enable
the defendant to check its records, to verify the
correctness of the plaintiff’s claim and to advise the
plaintiff of its
attitude toward the claim within 30 days, in other
word before 22 November 2013.
[7]
The defendant did not revert to the plaintiff. On 2 December
2013 the plaintiff’s
legal representative called upon the
defendant to advise the plaintiff of its attitude towards the claim
within 5 days. Again
the defendant failed to respond.
[8]
On 14 January 2014 the case was transferred in terms of section 65M
of the Magistrate’s
Court Act 32 of 1944 from the Free State
High Court to the Kroonstad District Court. On 29 March 2014
notice in terms of
section 65A(1) Act 32 of 1944 was served on the
defendant’s deponent and sole member, Mr Kheleli (vide “anx
jk7”).
He was called upon to appear on 27 March 2014 so
that an enquiry into the defendant’s financial position could
be held.
The enquiry was postponed six times to 8 April 2014,
13 May 2014, 20 May 2014, 17 June 2014, 24 June 2014 and 8 July
2014.
On that last day the defendant changed attorneys.
Messrs L M Mokhele Attorneys took over from Messrs Grimbeek Van
Rooyen
& Partners. Once again the financial enquiry was
postponed, on that occasion, to 29 July 2014. This was done in
order to enable the defendant to prepare its application for
rescission of judgment.
[9]
On 28 July 2014 the defendant served and filed its rescission
application. I suppose
that on 29 July 2014 the financial
enquiry was postponed
sine
die
or
removed from the roll pending the anticipated outcome of the
rescission application. I might be wrong because it does not
appear on the papers as to what really happened at Kroonstad District
Court on the day in question. On 15 October 2014 the
defendant
withdrew its rescission application.
[10]
On 24 June 2015, almost nine months later, the current rescission
application was served on the plaintiff’s
attorneys and filed
on 29 June 2015. On 21 Augustus 2015 the defendant filed notice
of setdown whereby the current
rescission application was
enrolled for argument on Thursday 17 September 2015. By the
time I heard this application for
rescission of default judgment 28
months had lapsed since default judgment was granted against the
defendant in favour of the plaintiff.
[11]
The broad question in the application was whether the defendant had
shown good cause as to why the
default judgment should be rescinded.
[12]
On behalf of the defendant Mr Mokhele submitted that the answer to
the crucial question must be affirmative.
Therefore, he urged
me to set aside the default judgment and to grant the defendant leave
to defend the plaintiff’s action.
[13]
On behalf of the plaintiff Mr Groenewald submitted that the answer to
the crucial question must be
negative. Therefore, counsel urged
me to dismiss the application and to let the default judgment stand.
[14]
The requisites for an application for the rescission of judgment
granted by default in favour of the
one party against the other were
set out in
Grant
v Plumbers (Pty) Ltd
1949
(2) SA 470
(O). It is incumbent upon an applicant who seeks
recessionary relief to establish through a reasonable explanation
firstly,
that he was not in wilful default; secondly, that he was not
actuated by any ulterior dishonest or dilatory intentions in applying
for the relief; thirdly that he has a
bona
fide
defence
to the action instituted against him. It is incumbent upon him
to show that he has given a reasonably sufficient and
honest
explanation to demonstrate the overall
bona
fides
of
his default, intention and defence.
[15]
What a
bona
fide
defence
entails was elucidated by Brink J in
Grant
supra
,
on 476 – 477 as follows:
“
It
is sufficient if he makes out a prima facie defence in the sense of
setting out averments which, if established at the trial,
would
entitle him to the relief asked for. He need not deal fully with the
merits of the case and produce evidence that the probabilities
are
actually in his favour. (Brown v Chapman
(1938 TPD 320
at p. 325).)”
[16]
The “good cause concept” and its twin the “sufficient
cause concept” have no
precise meaning(s). It has been
stressed that it is unwise to give them precise meaning(s). In
HDS
Construction (Pty) Ltd v Wait
1979
(2) SA 298
(E) at 300 Smallburger J, as he then was, said the
following about the concepts and the discretion of the court
implicitly embodied
in them:
“
When
dealing with words such as "good cause" and "sufficient
cause" in other Rules and enactments the Appellate
Division has
refrained from attempting an exhaustive definition of their meaning
in order not to abridge or fetter in any way the
wide discretion
implied by these words (Cairn's Executors v Gaarn
1912 AD 181
at 186;
Silber v Ozen Wholesalers (Pty) Ltd1954 (2) SA 345 (A) at 352 - 3).
The Court's discretion must be exercised after a proper
consideration
of all the relevant circumstances.”
[17]
In order to succeed a litigant who applies for the relief of
rescission of judgment taken against him
by default is expected to
show good cause as to why such default judgment should not be allowed
to stand. In
Conlyn
v Tiger Food Industries Ltd t/a Meadew Feed Mills (Pty) Ltd (Cape)
2003
(6) SA 1
(SCA) at 9e – f para [12] Jones AJA, as he then was,
said the following:
“
With
that as the underlying approach the Courts generally expect an
applicant to show good cause (a) by giving a reasonable explanation
of his default; (b) by showing that his application is made bona
fide; and (c) by showing that he has a bona fide defence to the
plaintiff's claim which prima facie has some prospect of success
(Grant v Plumbers (Pty) Ltd, 20 HDS Construction (Pty) Ltd v Wait
supra, 21Chetty v Law Society, Transvaal).”
[18]
I now turn to the papers. As regards the element of the relief
which requires an applicant to
show that he has a
bona
fide
defence,
the defendant’s factual allegations must be closely examined.
In his founding affidavit the defendant stated
the following:
“
18.1
It was again during the said consultation that I was advised that
after the auditor completes the audit’s
report, we will file an
Application for Liquidation so that we do not pay the Respondent any
monies as per the quotation attached
on their summons;
18.2 I did inform my
previous attorney of record about these agreements and have
maintained with him that I do
not owe and I did not enter any
agreement with the Respondent for the supply of the building
materials other than the agreements
referred to in
supra
;
18.3 It further
bears to be brought to the attention of the Honourable Court that all
agreements entered into
between the Applicant, The Respondent and the
Department served as a security that they will be receiving their
payments for the
building materials supplied herein directly from the
Department and not from the service providers appointed by the
Department;
18.4
Regard being had to that which has already being stated herein, I
submit that it would be in the best interest
of justice that the
legal relief sought in this application be granted as I do have a
bona
fide
defense
to the (sic) in the main action instituted by the Respondent herein
and as same will become more apparent of that which
follows
immediately herein below and the fact that I have shown good cause
for my default.”
[19]
The plaintiff denied the defendant’s factual allegations that
it has a
bona
fide
defence.
The plaintiff’s factual allegations, which I have randomly
selected in this regard, must be singled out.
In its answering
affidavit the plaintiff answered:
“
19.1
Op 22 September 2011 het Applicant en respondent a resolusie
onderteken in terme waarvan Respondent aan Applikant
boumateriaal sou
verskaf om ‘n bouprojek te Hoopstad te voltooi. Applikant
het toegestem dat “Department of Human
Settlements Free State”
(hierna die “Departement Behuising” genoem) die
Respondent
mag
betaal op fakture
ingedien. ‘n Afskirf word hierby aangeheg as Aanhangsel
“LDI”.
19.2
Op dieselfde datum van 22 September 2011 het Applikant a sessie
geteken van enige betalings wat deur die
Department Behuising aan
hulle verskuldig
mag
wees. Dit het
bloot as sekuriteit vir Respondent gedien en was die Departement
Behuising nie ‘n party tot die ooreenkoms
nie. Dit is
opvallend dat beide voormelde dokumente deur dieselfde deponent as in
hierdie aansoek onderteken was. ‘n
Afskrif van die sessie
word hierby aangeheg as Aanhangsel “LD2”.”
[20]
In its replying affidavit the defendant persisted that it has a
bona
fide
defence
in that it was not personally liable to the plaintiff as alleged or
in any other manner whatsoever. The defendant
replied as
follows:
“
20.1
It is also submitted with great respect that the building materials
allegedly submitted to the Applicant herein, same were
delivered
after the resolution as well as the Cession Agreement were concluded
between the Applicant; Respondent as well as the
Department of Human
Settlement, Free State who accepted the responsibility of settling
the Respondent’s invoices upon same
been produced by the
Respondent herein;
20.2 Furthermore, I
further confirm that we have also entered into a material supply
cession agreement with the Respondent
as well as the Department of
Human Settlement, Free State and same was entered into on the 1
st
December 2010 and as such for the convenience of the Honourable
Court, the said material cession agreement has been attached to
the
Applicant’s Founding Affidavit as Annexure “
J.K6”
and same is attached herein as Annexure “
J.K6”
;
20.3 In terms of
the said agreement, the Department still bound itself to pay directly
to the Respondent for the materials
supplied to the Applicant and
such agreement served as a security to the Respondent for any an all
claims for building material
that it has supplied and delivered to
the Applicant;
20.4 I have further
been advised that in the event that the Department and/or refused to
pay the Respondent any invoices,
the Respondent must have issued
summons against the Department herein and not the Applicant herein;
20.5
Furthermore, the resolution stipulates that payment
“
may”
only
be made to the Respondent on submission of invoices and nowhere in
their papers is mentioned that the Department has refused
and/or
denied to pay their invoices;”
[21]
The defendant heavily relied on the two cessions for its contention
that the Department Human Settlement,
and not the defendant itself,
was liable towards the plaintiff. The first cession, “anx
jk6”, concerned an amount
of R3,6 million which the defendant
ceded to the plaintiff in Bloemfontein on 1 December 2010. The
Department of Human Settlement
as the defendant’s debtor,
acknowledged the cession by the defendant in favour of the plaintiff
and undertook to abide by
the terms thereof – (vide p 30 of the
record).
The second cession,
labelled “anx jk5”, concerned an amount of R524 274,92
which the defendant “purported”
to cede to the plaintiff
in Welkom on 22 September 2011.
[22]
There was a remarkably significant distinction between the first and
second cession. The
second cession, unlike the first
cession, was not suffixed by any written undertaking by a lawfully
authorised and designated functionary
of the Department of Human
Settlement whereby the Department acknowledged itself to be indebted
to the defendant and agreed to
honour the terms of the cession signed
by the defendant in favour of the plaintiff. Consequently it
was fallacious, in my
view, for the defendant to claim on the
strength of “anx jk5” that the Department bound itself to
settle all the claims
of the plaintiff for the building materials the
plaintiff supplied to the defendant.
[23]
The whole history of the second cession was comprehensively address
in the plaintiff’s duplicating
affidavit. However, I
consider it prudent to fleetingly point out that on 20 November 2012
the plaintiff presented the second
cession to the Department in an
endeavour to claim payment – (vide anx “a”).
On 6 December 2012 the Department
repudiated the plaintiff’s
claim – (vide anx “b”). It follows,
therefore, that the defendant’s
averments that the department
did not refuse to pay the plaintiff’s claim of R524 274,92
was also incorrect. So
too were the defendant’s averments
that the plaintiff should have sued the department; that the
department was liable towards
the plaintiff and that the department
was bound to pay.
[24]
The plaintiff’s claim was for the payment of the price of the
building material sold and supplied
to the defendant to complete a
public tender project awarded to him by the department. The
defence of the defendant is that
the department and not the defendant
is, on the strength of the debt which the department never
acknowledged, indebted to the plaintiff.
The tenuous
allegations made by the defendant in its founding affidavit as well
as in its replying affidavit, disturbingly revealed
lack of basic
understanding of the import of a cession as a commercial instrument.
[25]
I have earlier outlined some of the allegations the defendant made in
the founding affidavit and the
replying affidavit. Those
passages as quoted were representative of the high watermark of the
defendant’s defence.
But none of them would entitle him
to succeed with the defence that the defendant is not personally
liable for the amount claimed
in the summons or substantial part
thereof.
[26]
The defendant’s prospects of success are so remote that it
cannot, in my view, be seriously said
that the defendant has a
bona
fide
defence.
On the facts, I have come to the conclusion that the defendant has
not been able to show that its alleged defence
has good prospects of
success –
Colyn
supra
at
para [13].
[27]
Seeing that the defendant has dismally failed to put up a
prima
facie
defence
by setting out averments which, if established at the trial of the
pending action, would entitle him to the relief of dismissal
of the
action, the current application falls to be dismissed –
Grant
supra
at
476.
[28]
At the heart of the rescission application is the requisite of a
bona
fide
defence
which has good prospects of success. Where, as in this
instance, such core requisite is not established, it cannot
be said
that sufficient cause has been shown to warrant rescission of default
judgment.
HDS
Construction
supra
at
300f – c. However reasonable the explanation may be shown
to be and however honest the intention may be shown to
be –
none of these requisite can, singularly or collectively, constitute
sufficient cause in this matter. The application
is
substantially deficient. The substantive deficiency is so
material that nothing else can compensate its demerits as regards
defence. In my view the application cannot be redeemed by
showing that it has two other very favourable virtues.
[29]
In all the circumstances of this matter, I have come to the
conclusion that the defendant, as the applicant,
has established no
sufficient cause to justify the rescission of the default judgment
granted in favour of the plaintiff, as the
respondent, on 2 July
2013. Given the considerable delay occasioned by the
defendant’s apparent lack of interest of
serious intention to
prosecute its application or to challenge the default judgment it
would be a travesty of justice to exercise
any discretion in favour
of the defendant.
[30]
The defendant was entirely responsible for the inordinate delays and
the initiation of the present
proceedings. The plaintiff was
fully justified to oppose the grant of the relief sought and did so
successfully. That
being the case, the plaintiff is entitled to
the fruit of its success.
[31]
Accordingly I make the follow order:
30.1 The
applicant’s rescission application is dismissed.
30.2 The applicant
is directed to pay the respondent’s costs on the scale as
between party and party.
______________
M.
H. RAMPAI, J
On
behalf of the applicant: Mr L. M. Mokhele
Instructed by:
L M Mokhele Attorneys
BLOEMFONTEIN
On
behalf of the respondent: Adv. W. J. Groenewald
Instructed
by:
E G
Cooper Majiedt Inc.
BLOEMFONTEIN
/eb