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[2014] ZAGPPHC 159
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Muntu Industries CC v KSO Financial Services (Pty) Ltd, In Re; KSO Financial Services (Pty) Ltd v Sfilile and Others (49255/08) [2014] ZAGPPHC 159 (7 April 2014)
IN
THE NORTH GAUTENG HIGH COURT, PRETORIA
(REPUBLIC
OF SOUTH AFRICA)
CASE
NO: 49255/08
DATE:
7 APRIL 2014
In
the matter between:
MUNTU
INDUSTRIES CC
…………………………………………..…….
Applicant
AND
KSO
FINANCIAL SERVICES (PTY) LTD
……………………………..
Respondent
IN
RE
KSO
FINANCIAL SERVICES (PTY) LTD
…………………………
..……
Plaintiff
AND
SFILILE,
KHAN VUYOLWETHU
…………………………………
First
Defendant
MABELANf,
LEBOGANG ANTHONY
…………………………
.
Second
Defendant
MUNTU
INDUSTRIES CC
…………………………………………
Third
Defendant
JUDGMENT
TEFFO.
J :
[1]
On or about 1 September 2006 and at
Dunkeld West Sandton the plaintiff (respondent) and the defendants
concluded a loan agreement
in terms of which the plaintiff loaned to
the defendants a capital amount of R450 000,00. Interest was to be
charged on the capital
amount at a rate of 5% per month alternatively
the maximum interest rate legally allowable, whichever is the lower
from 30 September
2006. The first payment was to be effected on 30
September 2006. The defendants agreed to pay the total outstanding
amount owed
to the plaintiff by 28 February 2007. In the event of the
defendants failing to perform in terms of the agreement, the
plaintiff
would have the right to claim immediate payment of all
amounts due to it.
[2]
The plaintiff duly performed in terms of
the agreement. The defendants failed to make payments in terms of the
agreement. Despite
demand the defendants failed to pay the
outstanding amount of R484 353,75 to the plaintiff.
[3]
A mortgage bond was registered as
security for all amounts owed to the plaintiff in respect of Portion
36 of Erf 934 Sunninghill
Extension 26 Township Registration Division
I.R Registration The province of Gauteng, measuring 321 square
metres, held under deed
of transfer T 122994/2001 herein after
referred to as the property.
[4]
As a
result
of the defendants’ failure
to pay the outstanding amount, the plaintiff then issued summons on
22 October 2008 which were
served at the defendants’ domicilium
citandi on 24 October 2008.
[5]
No appearance to defend was entered by
the defendants and the dies induciae expired on 7 November 2008.
[6]
On 25 November 2008 the plaintiff
obtained default judgment against the defendants for payment of the
sum of R484 353,75 plus interest
on the aforesaid amount at the rate
of 24% per annum from 27 August 2008 to date of final payment, costs
and an order declaring
the property specially executable.
[7]
The applicant, Muntu Industries CC, now
seeks an order rescinding and setting aside the above order granted
against it and the first
and second defendants.
[8]
The application is opposed.
[9]
The applicant alleges that since the
commencement of the agreement between the parties it paid an amount
of R22 500,00 in 20 (twenty)
instalments in the total amount of R450
000,00 for the capital debt. The only amount that was due and payable
to the respondent
was R34 353,75 which comprised the interest
portion.
[10]
According to it when the summons was
issued, the respondent claimed an amount of R484 353,75 which was not
correct because at that
time it already paid an amount of R450
000,00.
[11]
After obtaining default judgment the
respondent attempted to sell the property in order to recover the
aforesaid amount of R484
353,75 claimed in the summons.
[12]
The applicant and its members appointed
an attorney to stop the sale in execution. Its attorney engaged with
the respondent’s
attorney and it was agreed that the applicant
should pay an amount of R200 000,00 for the outstanding interest and
legal costs.
The applicant as a result thereof paid an amount of R200
000,00 to the respondent and the threatened sale in execution was
abandoned.
[13]
It further avers that as at July 2009 it
had paid the respondent a total amount of R650 000,00 comprising of
an amount of R450 000,00
for the capital amount plus R200 000,00
which was for interest and legal fees.
[14]
According to the applicant it innocently
believed after the above payment of
R200
000,00 that the matter had been laid to rest as it no longer owed the
respondent any amount of money. It therefore did not
rescind the
order in issue.
[15]
It was advised on or about 25 February
2012 when it consulted with its current legal representatives that
there was a second threat
by the respondent to auction the property
on 13 March 2012 and that its innocent belief that the matter was
resolved
was wrong in law as the order
ought to have been rescinded.
[16]
It alleged that it and its members were
not aware of this fact and took it for granted, erroneously so, that
since there was no
litigation with anyone anymore all the disputes
had been resolved.
[17]
It was shocked to learn around February
2012 (two years after the fact) that it still owed the respondent an
amount of R616 816,22
arising from the 2006 loan agreement concluded
with the respondent.
[18]
It contends that in terms of the spread
sheet, the respondent appears to have disregarded the amount of R450
000,00 which it had
paid from November 2006 when it determined the
amount owed to it.
[19]
The respondent insists that it owes it
an amount of R616 816, 22. It had instructed its recovery agents and
the sheriff to proceed
with an auction of the applicant and its
members’ properties. It does not know what the amount of R616
816,22 is for. According
to it the respondent cannot justify and
explain the aforesaid amount. It has fully complied with its
obligations in terms of the
loan agreement. It does not owe the
respondent anything.
[20]
It has been advised that the respondent
seeks to violate the in duplum rule which provides that no person
could, in a loan agreement,
charge interest that is more than the
capital amount.
[21]
It contends that it had paid an amount
of R650 000,00. It cannot therefore be forced to make a further
payment of R616 816,22 for
the same old loan agreement where it
loaned a capital amount of R450 000,00.
[22]
It had not received a full history of
reconciliation of the payment it had made from the respondent.
[23]
It was submitted that the applicant and
its members were not aware of the action that led to the default
judgment that it seeks
to rescind as it never received the summons.
[24]
The first time it became aware of the
summons, the default judgment and the
warrant
of execution was in 2009/2010 when it received them from the
respondent with the notice of sale in execution of the property
through the post.
[25]
Had
the
respondent insisted in 2009/2010
that it was owed any other amount than
the
R450 000,00 and the R200 000,00, it would have then had a reason to
promptly
apply for rescission. It
thought that there was no need to apply for rescission as the order
granted did not affect the way it conducted
its business.
[26]
It was submitted on behalf of the
applicant that the order sought to be rescinded pursuant to the
default judgment was erroneously
granted as at the time the summons
was issued, the amount owing by the applicant was different from the
one claimed by the respondent.
It owed the amount of R34 353,75 which
was for the interest portion and the respondent claimed an amount of
R484 353,75 being the
capita amount and interest.
[27]
The respondent did not disclose to the
court that it had paid it an amount of R450 000,00 in terms of the
loan agreement. Had the
respondent disclosed its payment of R450
000,00 at the time judgment was obtained, the court would not have
granted the default
judgment.
[28]
It has reasonable prospects of success
against the respondent in the main action as it has a bona fide
defence.
[29]
Although the respondent concedes that
the applicant paid an amount of R450 000,00 to it since the
commencement of the agreement
between the parties which consisted of
20 (twenty) monthly instalments of R22 5000,00, it denies that the
applicant had repaid
the capital amount in full. It contends that in
terms of the acknowledgement of debt signed by the applicant, it was
agreed that
all payments received should first be apportioned against
interest due and thereafter capital.
[30]
The respondent also disputes that the
amount R34 353,75 was the only amount outstanding at the time when
the summons was issued.
[31]
The respondent maintains that despite
payment by the applicant, an amount of R484 353,75 was still
outstanding, due and payable
to it.
[32]
The respondent further contends that it
is negligent to contend that a facility of R450 000,00 would attract
interest of only R34
353,75 over a period of two years.
[33]
It referred the court to annexure “RA2”
which is a settlement agreement signed by the parties on 6 April
2009. This
agreement was signed at the time when the applicant was
threatened with a sale in execution of the property.
[34]
It
was
submitted that in terms of the
settlement agreement an amount of R250 000,00 was to be paid in order
to stay the execution but only
an amount of R200 000,00 was received
and despite this the sale was cancelled. The respondent reiterates
that in the light of the
settlement agreement the applicant had full
knowledge of the outstanding amount it owed to the respondent and
after paying the
amount of R 200 000,00 it cannot be said that its
indebtedness towards the plaintiff was settled in full.
[35]
The respondent disputes that in terms of
the spread sheet “SV26” it has failed to include the
amount of R450 000,00
the applicant had paid when it determined the
amount the applicant owed to it. It explained that the spread sheet
“SV26”
merely indicated the calculation of interest after
judgment was granted and it also incorporated the payment of R200
000,00 that
it received from the applicant.
[36]
It also contends that it is entitled to
auction its security to satisfy a judgment given in its favour.
[37]
The respondent submitted that the
applicant has full knowledge of how the amount of R616 812,22 was
calculated because the spread
sheet “SV26” detailing the
amount was sent to it. It further submitted that the fact that
judgment was obtained resets
the interest calculation. Therefore the
interest portion in no way exceeds the capital portion due and
payable.
[38]
It denies that the applicant and its
members were not aware of the action that led to the default judgment
it seeks to rescind.
[39]
It maintains that it never provided the
applicant with a letter indicating that its indebtedness has been
extinguished, nor did
the applicant seek it.
[40]
In the applicant's heads of argument an
issue was raised that the respondent filed its opposing affidavit
outside the 10 (ten) day
period and that it failed to apply for
condonation of the late filing of its opposing affidavit. When the
matter was argued the
issue was not raised. I have considered the
matter and in the interests of justice I condoned the late filing of
the respondents
opposing affidavit to allow the parties to ventilate
all the issues so that the court could arrive at a proper decision on
what
is before it.
[41]
The
issue
for determination is whether the
applicant is entitled to rescission in terms of Rules 42 (1) of the
Uniform Rules of court.
[42]
Rule 42(1) of the Uniform Rules of court
provides as follows:
“
(1)
The court may in addition to any other powers it may have, mero motu
or
upon the application of any party
affected, rescind or vary:
(a)
An order or judgment erroneously sought
or erroneously granted in the absence of any party affected thereby;
(b)
An order or judgment in which there is
ambiguity or a patent error or omission but only to the extent of
such ambiguity, error or
omission;
(c)
An order or judgment granted as the
result of a mistake common to the parties.
[43]
In
order
to obtain a rescission under this
subrule the applicant must show that the prior order was “erroneously
sought or erroneously
granted.” Once the court holds that an
order or judgment was erroneously sought or granted, it should
without further enquiry
rescind or vary the order and it is not
necessary for the party to show good cause for the subrule to apply (
Tshabalala v Peer
1979 (4) SA 27
(T) at 30D; Topol v LS Group
Management Services (Pty) (Ltd
1988 (1) SA 639
W at 650 D-J, Promedia
Drukkers & Uitgewers (Edms) Bpk v Kaimowitz
1996 (4) SA 411
(C)].
[44]
A judgment is erroneously granted if
there existed at the time of its issue a fact which the judge was
unaware of, which would have
precluded the granting of the judgment
and which would have induced the judge, if aware of it, not to grant
the judgment (Naidoo
v Matlala NO
2012 (1) SA 143
(GNP) at 153C.
[45]
In Mutebwa v Mutebwa and Another
2001
(2) SA 193
(Tk) the court held that there are three ways in which a
judgment taken in the absence of one of the parties may be set aside,
viz, in terms of Rule 31 (2) (b) or Rule 42 (1) of the Uniform Rules
of court, or at the common law. It was also held that the fact
that
an application is brought in terms of one rule does not mean that it
cannot be entertained in terms of
another
or under common law provided the requirements therefore are met.
[46]
In Promedia Drukkers & Uitgewers
(Edms) Bpk v Kaimowitz and Others referred to supra the court held
that it had a discretion
to grant rescission of judgment where
sufficient or good cause is shown. It then pointed out two essential
elements of sufficient
cause, viz;
46.1
A party seeking relief to present
reasonable and acceptable explanation for his default; and
46.2
On merits such party having a bona fide
defence or claim which prima facie carries some prospects of success
(Colyn v Tiger Food
Industries Ltd t/a Meadow Feed Mills (Cape)
2003
(6) SA 1
(SCA).
[47]
In Harris V Absa Bank Ltd t/a Volkskas
2006 (4) SA 527
the following was said:
“
A
steady body of judicial authorities has held that a court seized with
an application for rescission of judgment should not, in
determining
whether good or sufficient cause has been proven, look at the
adequacy or otherwise of the explanation of the default
or failure in
isolation. Instead, the explanation, be it good, bad, or indifferent,
must be considered in the light of the nature
of the defence, which
is an important consideration, and in the light of all the facts and
circumstances of the case as a whole.
The presence of wilful default
does not necessarily negative the establishment of a just or
sufficient cause. Even in the fact
of finding a wilful default,
the court is enjoined to exercise whether the
defence raised by the person who seek§ the relief shows the
existence of an issue
which is fit for trial”.
[48]
In Dalhouzie v Bruwer
1970 (4) SA 566
(c
) at
571 F, 572
C the court pointed out two principal requirements
for the favourable exercise of the court’s discretion in
considering what
is “good cause”, namely:
48.1
The applicant should file an affidavit
satisfactorily explaining the delay. In this regard it had been held
that the defendant must
at least furnish an explanation of his or her
default sufficiently full to enable the court to understand how it
really came about,
and to assess his or her conduct and motives.
48.2
The applicant should satisfy the court
on oath that he or she has a bona fide defence.
[49]
According to the applicant when the
respondent obtained default judgment against it, it did not disclose
to the court that it had
already paid an amount of R450 000,00 which
amount it paid in 20 (twenty) monthly instalments of R22 500,00. It
disputes that at
that time it owed the respondent an amount of R484
353,75. According to it it has already settled the capital amount of
R450 000,00
and the only amount that was due and payable was an
amount of R34 353,75. The applicant further submitted that the
alleged failure
by the respondent to disclose to the court the amount
it had already paid before judgment was taken renders the granting of
that
judgment erroneous in that had the court been placed with the
correct facts before it, it would not have granted that judgment
which it seeks to rescind. The applicant also alleges that it |did
not receive the summons.
[50]
In terms of the loan agreement concluded
by the parties (see para 1 supra) interest was to be charged on the
capital amount of R450
000,00 at a rate of 5% per month.
A
calculation of 5% of the capital amount of R450 000,00 is R22 500,00.
20 (twenty)
paid instalments of R22
500,00 equals to R450 000,00.
[51]
In terms of clause 5.2 of the loan
agreement all payments made by the defendants
would
first be apportioned against any outstanding interest and thereafter
in the
reduction of the capital
outstanding amount.
[52]
It is common cause between the parties
that after the commencement of the agreement, the only amount that
the applicants paid to
the respondent was an amount of R450 000,00 as
explained supra. The applicant then defaulted with its payments in
terms of the
agreement
[53]
It is clear from the breakdown of the
amounts paid by the applicant that when it defaulted with its
payments as required of it in
terms of the agreement, it had not at
all stated paying any amount which resulted in the reduction of the
capital amount of R450
000,00. The reason being that all payments as
per the agreement were first apportioned against any outstanding
interest and thereafter
in the reduction of the capital outstanding
amount. The amount of R22 500,00 paid by the applicant equals to 5%
interest per month
of the capital amount of R450 000,00.
[54]
According to the respondent when summons
was issued the applicant owed it an amount of R484 353,75 which
comprised R450 000,00 capital
and R34 353,75 interest.
[55]
Summons was issued in October 2008 and
the contract between the parties was concluded on 1 September 2006.
It makes sense that from
the time of the commencement of the
agreement to the time of issuing summons a period of 20 (twenty)
months has passed and if the
applicant only paid R22 500,00 as
alleged, that amount only went to the interest portion and could not
have reduced the capital
amount. From what I have highlighted supra I
find that in the calculation of the amount claimed in the summons,
viz, R484 353,
75 the amount of R450 000-00 paid by the applicant was
taken into account. The submission that when judgment was taken the
respondent
did not disclose payment of the amount of R450 000,00 by
the applicant is therefore rejected as it is without merit.
[56]
I therefore find that the judgment
granted was not erroneously obtained.
[57]
In terms of the returns of service
attached to the papers, summons were served upon the applicant and
its members on 24 October
2008 at their domicilium addresses by
affixing them to the principal door.
[58]
According to the applicant it only
became aware of the judgment after the summons, the judgment, the
warrant of execution and the
notice of sale of the property was sent
to it by the respondent by post. It did nothing until on the date of
sale when it paid
an amount of R200 000,00, which according to it was
for interest and the respondent’s legal fees, and which
resulted in the
abandonment of the sale in execution. The founding
affidavit in support of this application was signed on 7 March 2012
after the
applicant became aware of the judgment it sought to rescind
in March/April 2009. The applicant contends that because it had paid
the capital amount of R450 000,00 in full, it believed and maintains
that the amount of R200 000,00 that it paid on 6 April 2009
discharged its debt in favour of the plaintiff. It is adamant that it
had complied with its obligations in terms of the agreement
with the
respondent. It argues that it cannot be expected to pay more than the
R650 000,00 that it had paid for a debt of R450
000,00. According to
it the respondent had breached the in duplum rule. The applicant
submitted that because after paying the R200
000,00 it took it that
it had discharged its obligations towards the respondent, it did not
find it necessary to apply for rescission
of judgment as the judgment
did not affect the way it conducted its business. It was only alerted
and advised by the respondent’s
agents and its current
attorneys of record when it was threat9ned with a second sale in
execution of the property on 25 February
2012 of the alleged
outstanding amount of R616 816,22 and the fact that it should have
applied for rescission of judgment.
[59]
It appears from the papers filed by the
respondent in this application that the applicant’s members
through its attorneys
signed a settlement agreement with it on 6
April 2009 stating the following:
“
Whereas
KSO Financial Sen/ices (Pty) (Ltd) has instituted proceedings in the
High Court of South Africa, North Gauteng High Court
under case
number 49255/2008 and whereas the said plaintiff has obtained
judgment against the defendants, jointly and severally,
for:
a)
Payment in the amount of R484 353,75,
b)
Interest
on
the amount of R484 353,75 at the rate of 24% per annum from 27 August
2008 to date of payment; and whereas the defendants are
desirous to
settle the above matter, now therefore the parties agree as follows:
1.
The defendants acknowledge that they are
jointly and severally indebted to the plaintiff in the amount of R560
069,65 (five hundred
and sixty thousand and sixty nine rand sixty
five cents) as at 6 April 2009 in respect of monies lent and advanced
by the plaintiff,
interest thereon at a rate of 24% per annum and
legal costs, taxed on 6 March 2009 in the amount of R4 865,44 (four
thousand eight
hundred and sixty five rand forty four cents).
2.
The aforesaid amount of R560 069,65
(five hundred and sixty thousand and sixty nine rand sixty five
cents) interest thereon at 24%
per annum and legal costs will be
payable by the defendants to the plaintiff as follows:
2.1
The amount of R250 000,00 payable on or
before close of business on Wednesday, 8 April 2009;
2.2
An amount
of R100 000,00 every month thereafter, payable on the 1st day of
every subsequent month, until the full capital amount,
interest and
legal fees have been paid by the debtors;
2.3
Interest shall be charged monthly in
arrears on the outstanding balance at 24% per annum;
3.
If any of the aforesaid payments are not
made on due date, the full amount of R560 069,65 (five hundred and
sixty thousand and sixty
nine rand sixty five cents) alternatively
the balance of the outstanding amount will become immediately due and
payable.
4.
The plaintiff hereby undertakes not to
proceed with the execution of the
judgment
against the defendants for so long as the said defendants duly comply
with
the above payment undertakings.
5.
In the event of default by the
defendants with any of their obligations in terms
of
this
agreement the plaintiff will be entitled to:
5.1
proceed with the execution of the
judgment against the defendants for the full balance of the amounts
owing at that time to the
plaintiff by the defendants; and more
specifically;
5.2
cause to sell on public auction the
immovable property more fully described as Portion 36 of Erf 934
Sunninghill Extension 26 Township
Registration Division I.R. The
Province of Gauteng, measuring 321 square metres held under deed of
transfer T122994/2001”.
[60]
On 6 April 2009 the applicant through
its attorneys managed to stop the sale.
I
find it difficult to accept that if indeed the applicant had an issue
with the judgment why did it not apply for rescission at
that time
when the sale was stopped. The reasons given by the applicant for its
failure to challenge the judgment granted against
it when it stopped
the sale in execution and to wait for more than two years before it
could do so, are not convincing at all.
If one looks at the contents
of the settlement agreement signed by the parties on 6 April 2009 it
cannot be correct to say that
after the payment of R200 000,00 by the
applicant the debt had been fully paid. In terms of clause
2.2
of the settlement agreement the applicant
agreed to pay an amount of R100 000,00 per month on the 1
st
day of every subsequent month after the payment of R250 000,00 until
the full capital amount, interest and legal fees have been
paid. The
applicant was legally represented at the time of concluding and
signing the settlement agreement. It never at that time
had an issue
with the judgment granted against it which it seeks to rescind.
Further to this it acknowledged its indebtedness to
the plaintiff in
the amount of R560 069,65 together with interest and costs. Now the
applicant comes to court and contends that
the settlement agreement
which it failed to mention in its application for rescission, which
came to the court’s attention
through the respondent, should be
disregarded for the purposes of this application.
That
contention is without merit. There is no way in which the court can
disregard the settlement agreement as it is part and parcel
of the
judgment that it seeks to rescind. When it was concluded the
applicant was trying to stop the sale which the respondent
was
entitled to proceed with, in execution of the judgment it obtained
against the applicant. It cannot therefore be said that
the
settlement agreement constitutes a new cause of action.
[61]
I am of the view that the applicant's
explanation for the delay in bringing the application is not
reasonable, adequate and convincing.
I find the applicant to have
been in wilful default of not defending the action against it by the
respondent. There was just no
reason for the applicant not to
challenge or rescind the judgment if there was something wrong with
it. Strange enough the applicant
continued to sign the settlement
agreement where it acknowledged its indebtedness to the plaintiff in
respect of the judgment debt
plus interest. Despite the fact that the
applicant through its members signed a settlement agreement as a
result of which the sale
was abandoned, the applicant did not fulfil
its obligations in terms of the settlement agreement. It paid R200
000,00 instead of
the agreed R 250 000,00. From that payment of R200
000,00 it was clear from the applicant that the full amount of the
judgment
debt was not paid. Instead the applicant fully aware that it
had not fully paid the amount agreed upon when the settlement
agreement
was concluded decided to sit back and not pay its debt. A
period of more than two years lapsed and only in 2012 when it was
threatened
with the second sale, it decided to challenge the
judgment, part of which it had already complied with. To now argue
that the respondent
has breached the in duplum rule is senseless. I
am not persuaded that the applicant has a defence in law which is
sufficient or
carries with it the prospects of success in the action
by the respondent against it.
[62]
Borrowing from the words used by the
court in Harris v Absa Bank Ltd t/a Volkskas referred to supra the
defence raised by the applicant
does not show the existence of an
issue which is fit for trial.
[63]
It is my view that the applicant has not
shown good cause for bringing this application.
[64]
In the result I make the following
order:
The
application is therefore dismissed with costs.
M
J TEFFO
JUDGE
OF THE HIGH COURT NORTH GAUTENG PRETORIA
On
behalf
óf
the
APPLICANT : T J MACHABA
Instructed
by NTANGA NKUHLU
C/O
MABUELA INC
On
behalf the RESPONDENT
:
S McTURK
INSTRUCTED
: KISSONDUTH ATTORNEYS
DATE
OF [HEARING: 11 APRIL 2013
DATE
OF JUDGMENT : 7 APRIL 2014