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[2015] ZAFSHC 217
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Diamond Blue Trading 505 BK t/a Just Water Bloemfontein v Cross Point Trading 311 (Pty) Ltd and Another (1601/2015) [2015] ZAFSHC 217 (29 October 2015)
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FREE
STATE HIGH COURT, BLOEMFONTEIN
REPUBLIC
OF SOUTH AFRICA
Case
number: 1601/2015
In
the matter between:-
DIAMOND
BLUE TRADING 505 BK
t/a
JUST
WATER
BLOEMFONTEIN
Applicant
and
CROSS
POINT TRADING
311 (PTY)
LTD
SHERIFF
OF THE
HIGH COURT,
1
st
Respondent
BLOEMFONTEIN
EAST
2
nd
Respondent
CORAM:
OPPERMAN, AJ
HEARD
ON:
08 OCTOBER 2015
DELIVERED
ON:
29 OCTOBER 2015
JUDGMENT
Introduction
[1]
This matter concerns an application for rescission of a default
judgment. The Registrar granted judgment as requested in terms
of
rule 31(5)(b)(i) for payment of the sum of R864 019.55 and ancillary
relief to the 1st respondent.
[2]
The two main issues that came to the fore in the application are;
firstly, that the application for rescission is erroneously
in terms
of rule 31(2)(b) whilst rule 31(5)(d) is applicable. Secondly the
prerequisite of good cause is in dispute.
The
issue of the rules
[3]
The
respective
rules
are
differently
worded.
Whereas
an
applicant
for
the
rescission
of
a judgment
granted
by the
court
is required
to
show
'good cause', an
applicant
is
entitled
to have
a
judgment
granted
by
the Registrar set down for
'reconsiderat
i
on'.
[1]
[4]
The criteria pertaining to the rules in practical application is
crucial in the adjudication of the appropriateness of
the
manner in which this case was brought before court. The use of rule
31(2)(d) is formally wrong. The question is whether the
application
is admissible on the foundation of the error. Similar circumstances
were already pondered in case law and as Van der
Merwe J put it in
Jansen van Vuuren v Reinecke
(703)
[2014] ZAFSHC
109
(24 July 2014) in paragraph 7 with reference to
Pansolutions
Holdings
Ltd
v
P
&
G
General
Dealers
and
Repairers
CC
2011 (5)
SA 608 (KZD): ' ...the conflict might be more apparent than
real.'
[5]
The crux of
the
facts
and
findings in
the
Bloemfontein
Board
Nominees
Limited
v
Benbrook
1996
(1)
SA
633
(0)
case
is
not
applicable to this
matter and
the
1st respondent
cannot
rely on
it.
[2]
[6]
I am in agreement with the finding in both cases
(Jansen
van
Vuuren
and
Pansolutions)
that the well-established
criteria of 'good cause' in terms of rule 31(2)(b) is also applicable
to 'reconsideration' in rule 31(5)(d).
The erroneous rule on which
the application is based is consequently not fatal and is salvaged by
the substantive synonymy of the
criteria. Fairness dictates the
indulgence of the court.
Good
Cause
[3]
[7]
The above said; constitutional principles have come to play a pivotal
role in matters of this kind. In
RGS
Properties
(Ptvl
Ltd v
Ethekweni
Municipality
2010 (6) SA 572
(KZD) at 575G-576C it was held that default judgements are inherently
contrary to the Constitution.
[8]
An absolute rejection of default judgments will not suffice because
there is a persistent tension between commercial certainty
and prompt
remedies in law for non-compliance with contracts, on the one hand;
and the right to access to courts on the other hand.
[9]
Commercial
certainty
is the
unfettered
right of
the
1st
respondent to claim
compliance
with
contracts
and
be aided
with
access
to
swift
just
i
ce
in
assertion
thereof.
The
sustenance
of
a
democratic
economy
is crucial.
In
Sasson
v
Chilwan
and
Others
1993
(3) SA 742 (A)
[4]
at 762H
Eksteen JA
referred
to:
'The
paramount importance of upholding the sanctity of contracts, without
which all trade would be impossible ...'
Justice
Ackermann in
Ferreira
v
Levin
N
O; Vryenhoek
v
Powell
NO
1996 (1) SA 984
(CC)
paragraph 26 described it as 'a central consideration in a
constitutional state'. These statements aim for reasonable
certainty, so that parties can go about their business knowing
the rules of the game; constitutional economic integrity
is
vital.
[10]
The constitutional right of the applicant lies in the use of courts
to settle disputes; the right to access to courts in terms
section 34
of
the
Constitution of the Republic of South
Africa,
1
996.
Furthermore, to have
any dispute
that can be resolved
by
the application
of law
decided in a fair public
hearing before a court.
[11]
The above sets the atmosphere in which the norm of 'good cause' must
be applied on the facts of this case. The criteria includes
at least
both a reasonable and acceptable explanation for the default and a
bona fide defence on the merits which prima facie carries
some
prospect of success.
A
caveat is that if the court is in doubt of the prospects of the
defence to be advanced, it cannot for that reason refuse an
application.
Section 34 of the Constitution specifically directs: '
... any dispute that can be resolved by the application of law.' That
said,
the application for rescission must not to be a delaying
tactic. Each case must be adjudicated on its own merits and there is
no
numerus clausus
of factors.
[12]
It is not in dispute that both parties, officially, complied with the
rules during litigation preceding the application. The
applicant
claims that the 1st respondent obstructed their right to have their
issue resolved in a court of law. The defendant did
this by serving
the summons at an address that was not effective: Suite 5, Victoria
Office Park, [.....], Willows, Bloemfontein.
The summons did not come
to their notice. The service was possibly ma/a
fide.
The
argument of the 1st respondent is simply that they had a right to
serve in terms of rule 4(1)(a)(v) and no mistake or procedural
irregularity in respect of the issuing of the default judgment has
been committed.
[13]
The reality is that the law is not as elementary as the 1st
respondent makes it out to be. Simplistically put; with rights
come
responsibilities and litigants must conduct themselves with veracity
that goes deeper that the words of the rule. The circumstances
surrounding the choice of address by the 1st respondent to start
litigation is doubtful and for the following reasons:
1.
The sole address of business between the applicant and the 1st
respondent was at Bob Morrison Street, Ou Oos-Einde, Bloemfontein.
ii.
Between August 2013 and February 2014 the 1st respondent delivered
goods and issued invoices at the Bob Morrison Street address.
This
was the principle place of business.
iii.
In the meanwhile on 7 October 2014 [.....] endeavoured to cancel the
so-called Golden Licence Agreement and informed
the applicant
of the debt of R864 019.55. It is not in dispute that the
respondent knew about the disagreement between the
applicant and
Water4you@George. It can be comfortably inferred that the 1st
respondent must have realised the mentioned dispute
is going to
prolong and complicate litigation.
iv.
It is not in dispute that the applicant has not appropriated this
address for business since November 2013 but was registered
there.
The neglect to change the address of the company in compliance with
statute is peripheral to the
issue in
hand. Relevant is the return of service dated 8 April 2015 that
reads: 'REMARKS: Given address is Victoria
Office Park and Defendant
does
not exist at address.'
v.
Despite clearly realising that the applicant will not get notice of
the summons and having knowledge of the correct address of
the
applicant, the 1st respondent applied for default judgement.
vi.
Perplexingly they applied for a warrant of execution on the Bob
Morrison Street address.
[14]
The summons did not come to the notice of the applicant and they
immediately reacted and enforced their right in terms of section
34
of the Constitution when the default judgment came to their
attention. This confirms
bona fides
and an absence of intent
to delay litigation.
[15]
The second leg of the test is, as was mentioned, if there are grounds
for adjudication of the facts by a court on the basis
of a bona fide
defence and on merits which prima facie carries some prospect of
success? The applicant satisfied the onus of this
test. The 1st
respondent relies on an oral agreement for their claim. The agreement
is disputed by the applicant. The existence
of the agreement depends
on evidence and adjudication by a court. The issue of the Golden
Licence agreement needs to be unravelled
in a court of law. This
brings a plethora of questions of fact and law to the table. The
undertone of the resistance of the 1s
respondent in assessment of the
defence, is credibility. Credibility is problematic to deal with at
this stage and has to be dealt
with by evidence tendered, tested and
evaluated.
Conclusion
[16]
In conclusion, the applicant has provided a reasonable explanation
for the default as well as a bona fide defence on the merits
which
prima facie carries some prospect of success.
[17]
The 2nd respondent did not join the action. The applicant clarified
that they were sited due to the interest they might have
and relief
was not sought against them.
Order
[18]
In result the following order is issued:
1.
The Default Judgment granted by the Registrar on 28 April 2015 in
case 1601/2015 is set aside;
2.
The Warrant of Execution issued by the Registrar on 15 May 2015
in case 1601/2015 is set aside;
3.
The applicant is granted leave to defend the action and ordered to
deliver a plea within 15 (Fifteen) days
from date of judgment;
4.
The costs already granted in the default judgment to be costs in the
cause;
5.
Costs of this application to be costs in the cause.
______________________
M.
OPPERMAN, AJ
On
behalf of applicant:
Adv. H.J Benade
Instructed by:
Symington & De Kok
Attorneys
BLOEMFONTEIN
On
behalf of respondent: Adv. W.A
van Aswegen
Instructed by:
Lovius Block Attorneys
BLOEMFONTEIN
[1]
Pansolutions
Holdings Ltd v P
&
G
General
Dealers and Repairers
CC
2011 (5)
SA 608 (KZD)
[2]
Jansen
van
Vuuren
v Reinecke
(703)
[2014]
ZAFSHC 109 (24 July
2014) at
paragraph
7.
[3]
Lazarus
v
Nedcor
Bank
Ltd
:
Lazarus
v
ABSA
Bank
Ltd
1
999
(2)
SA782
(W)
at
785,
Pansolutions
Holdings Ltd v P
&
G
General
Dealers
and
Repairers
paragraphs
[13] to [15],
Cairns'
Executors
v
Gaarn
1912
AD
181
at
186
and
189-190,
Silber
v
Ozen
Wholesalers
(Ply)
Ltd
1954
(2)
SA
345
(A)
at 352H-
353A.
[4]
Basson
v
Chilwan
and
Others
(332/1991)
[1993]
ZASCA
61
;
1993 (3)
SA
742
(AD);
[1993]
2
All
SA
373
(A) (17 May 1993)