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[2013] ZAGPPHC 72
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Smilin' Thru Chalets (Pty) Ltd v Brakfonteing Game Farm (Pty) Ltd and Others (19597/2011) [2013] ZAGPPHC 72 (1 March 2013)
IN
THE NORTH GAUTENG HIGH COURT, PRETORIA
[REPUBLIC
OF SOUTH AFRICA]
CASE
NUMBER: 19597/2011
DATE:01/03/2013
In
the matter between:
SMILIN’
THRU CHALETS (PTY)
LTD
...................................................................
APPLICANT
And
BRAKFONTEING
GAME FARM (PTY) LTD
.......................................................
1ST
RESPONDENT
THE
SHERIFF FOR THE DISTRICT OF
POTCHEFSTROOM
...............................................................................................
2nd
RESPONDENT
THE
REGISTRAR OF
DEEDS
..............................................................................
3rd
RESPONDENT
HIRCHIWOTZ
FLIOIS
ATTORNEYS
......................................................................
4
th
RESPONDENT
In
re:
BRAKFONTEIN
GAME FARM (PTY)
LTD
..............................................................
PLAINTIFF
And
SMILIN’
THRU CHALETS (PTY)
LTD
......................................................................
DEFENDANT
JUDGMENT
MAVUNDLA
J
[1]
The applicant (defendant in the main action) brings an application
for rescission of judgment granted against it by default
on 29
November 2011 for payment of an amount of R8 756 814. 10 together
with interest at the rate of 15.5% on the aforesaid amount
a tempore
morae to date of final payment in full with taxed costs of suit.
[2]
The application is also for a declaratory order setting aside the
sale in execution of the immovable property known as FARM
476 PORTION
10, situated at Portion 10 of the Farm Brakfontein, Foschivllle,
Registration Division I.Q. North- West Province, measuring
228, 0858
hectares, held under Title Deed T. 17353/ 1996, sold by the second
respondent to the first respondent.
[3]
The application is only opposed by the first respondent.
[4]
The applicant in its affidavit contended that the application is
being brought in terms of Rule 31(2)(b) alternatively in terms
of
Rule 42. Indeed an application for rescission for a judgment granted
in the absence of the other party may be brought in terms
of either
of the aforesaid rules and also under common law.
[5]
Under Rule 31(2)(b) the applicant must
1
:
(a)
give reasonable explanation of his default. If it appears that his
default was wilful or that it was due to gross negligence
the Court
should not come to his assistance.
(b)
show that his application is bona fide and not made with the
intention of merely delaying plaintiff’s claim.
(c)
show that he has a bona fide defence to the plaintiffs claim. It
suffices if he can make a prima facie defence by setting out
facts,
if established during the trial, would entitle him to his relief he
seeks.
[6]
Rule 42(1) provides that:
2
“
1
The court may, in addition to any other powers it may have, mero motu
or upon 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 an ambiguity, or a patent
error or omission, but only to the extent of such ambiguity,
error or
omission.”
[7]
The application for rescission can also be brought under common law.
The fact that the application for rescission is brought
under any of
the aforesaid mechanisms does not preclude the Court granting
rescission under either of the other mechanisms provided
the
requirements of the relevant channel under which the relief is sought
are met; vide Mutebwa v Mutebwa and Another 2001(2) SA
193 (Tk) at
198C-E.
[8]
It is trite that the grant or refusal of an application for
rescission is a matter within the Court’s discretion, with
the
proviso that the applicant, who bears the onus, must satisfy the
Court that:
(i)
“There was reasonably satisfactory explanation why the
judgment
was allowed to go by default” (good cause);
(ii)
"On the merits there is a bona fide defence, which, prima focie,
carries some issue which is triable and has some prospects
of
success".
[9]
It is common cause that the summons in casu was first served on 31
March 2011. The applicant being a company, the service was
defective
in that it merely provided that the summons was served personally,
without providing the names of the person upon whom
the service was
effected, as required in terms of Rule 4 (1)(a)((v). Whereas the
applicant in its papers had initially contended
that, due to the
defective service, the entire process flowing from such defective
service was null and void ab initio and for
that reason only the
default judgment and the subsequent writ of execution should be set
aside. This contention would have been
correct
3
but for the very fact that the summons was subsequently properly
served upon a Mr. Johnny Breedt, who is a local co-director of
the
applicant on 19 May 2011.
4
A notice of intention to amend was served on Mrs Cyoloa Makume at the
applicant’s address on 24 October 2011
5
.
A warrant of execution was served upon Mrs Kauffelo at the
applicant’s address on 1 March 2012
6
.
The applicant’s counsel, wisely so in my view, did not rely on
the argument of defective service of the summons, as was
contended in
the papers.
[10]
The deponent, Mr. Edmund Marc De Run, to the affidavit of the
applicant is one of the other two Malaysians directors of the
applicant. He stated that the summons was neither brought to his nor
the other Malaysian director’s attention by Mr. Breedt.
They
only became aware of the sale in execution on or about 17 May 2012 as
per email in annexure “SMR08” originating
from Jonny
Breedt, wherein the latter states that he heard a rumour of a sale
(in execution I suppose) at the applicant’s
place and that he
would not be in a position to attend because he was far away. It begs
the question why Mr. Breedt would be talking
about a rumour of a sale
in execution and not mention the service of the summons upon him.
7
[11]
In my view, there was a duty on Mr. Breedt, as one of the applicant’s
directors, to avert any potential economic loss
to the applicant, as
such he ought to have informed the
Malaysian
directors of the service of the summons, which it seems he failed to
do.
8
[12]
I take note of the fact that the amounts claimed in casu run into
several millions of rand. In casu, a local director Mr. Breedt
did
not, it would seem, lift a finger to avert a colossus claim being
obtained by default against the company is, in my view, a
circumstance which qualifies itself to be regarded as a good cause,
for the Court to accept, when it being raised as such by the
company
to bring an application for rescission of the default of judgment. I
am disinclined to be persuaded by the submission made
on behalf of
the first respondent that it should not be prejudiced by any
remissness overtly or otherwise, if any, on the part
of a director,
as in casu and that the applicant must bring a damages claim against
such a director. That route, in my view, would
be too laborious and
tortuous. Allowing the rescission, would serve a better purpose
because all the relevant issues, including
the conduct of Mr. Breedt,
can be speedily interrogated during the trial in casu. I am therefore
satisfied that the applicant has
discharged the onus resting on it to
show that there was good cause why the judgment was obtained against
it by default.
[13]
When the relief is sought under Rule 31(2)(b), the application must
be brought within 20 days from the date the applicant became
aware of
the default judgment. According to Mr. De Run it was only on the 17
May 2012 that the warrant of execution was brought
to his attention.
His founding affidavit was deposed to on 26 June 2012. The respondent
did not raise the issue of non-condonation.
The application was
brought just few days out of time, a delay which is very negligible
and can be mero motu condoned by the Court,
as I do. I am satisfied
that the applicant has demonstrated that he has a bona fide defence,
which, prima facie, carries some issue
which is triable and has some
prospects of success.
[14]
The first respondent's claim arises from alleged undue enrichment of
the applicant's immovable property as the result of amounts
expended
by the first respondent, as the successor bona fide possessor
alternatively bona fide occupier of the resort situated
on the
property described as portion 10 of the farm Brakfontein as from 4
December 2009, and by the predecessor in the amount of
R599,843. 57
(annexure "BF2" and by Marley, Marley Investments 7 (Pty)
Ltd, (Marley) the predecessor bona fide possessor
alternatively bona
fide occupier of the resort situated on the property described as
portion 10 of the farm Brakfontein until before
4 December 2009 in
the amount of R8, 156, 970. 53 (annexure "BF1"), both
amounts totalling r8, 756,814.10.
[15]
The applicant contended in its affidavit that ex facie the judgment
of Goody AJ, the default judgment was granted without any
evidence,
and that regard being had to the cause of action evidence ought to
have been heard, which was not and therefore it was
erroneously
granted.
[16]
The applicant further disputes the amounts allegedly expended by the
first respondent and Marley. With regard to the merits
the applicant
contended that there was a joint venture between itself and Marley
that they would contribute towards development
of the game farm and
share in the profits of the development. In terms of the joint
venture agreement, whatever Marley expended
towards the development
would be repaid from the proceeds of the development. The amounts
claimed by or on behalf Marley were not
due and payable. Further, the
amounts claimed are disputed, for various reasons, inter alia, were
not incurred; Marley repudiated
the joint venture by not performing.
[17]
At this stage of the proceedings, this Court need not decide the
veracity or otherwise of the defence raised. In my view, the
applicant has disclosed defence which prima facie, carries some issue
which is triable and has some prospects of success on trial.
[18]
There mere fact that I have not specifically referred to the
counterargument raised on behalf of the first respondent should
not
be construed to mean that I have not considered same. The point is
that I have not been persuaded otherwise to the views I
have
expressed herein above.
[19]
I am of the view that rescission of the default judgment should be
granted. There is however a further relief sought, and that
is the
cancellation of the sale in execution. The first respondent is the
purchaser of the relevant property involved in casu,
measuring
228.0859 hectares for an amount of R3. 5 million. The applicant
contended that the fair market value for the said property
was an
amount of R5.5 million. It would seem that the property was
undersold. There is a serious allegation of collusion made against
and concerning Mr. Breedt, the local director, regarding none full
disclosure to the other external directors and not acting in
the best
interest of the applicant. If these allegations are correct, and seen
from the very fact that the first defendant is the
very purchaser of
vast tract of land at an undervalued price, it would be fair that
these allegations be investigated during the
trial in this matter.
Granting the relief sought that the sale in execution be cancelled,
would, in my view, not prejudice the
first respondent because the
property would simply revert to the applicant. Should on trial the
applicant fail in its defence and
the first respondent be successful
with its claim, it would be at liberty to attach the relevant
property and liquidate it. I am
therefore of the view that the
further relief of cancellation of sale should be granted.
[20]
With regard to costs, it is trite that the cost follow the event. The
first respondent in the circumstances must bear the costs
of this
application as prayed for.
[21]
In the result it is hereby ordered:
1.
That the judgment granted in case number 19597/2011 on 29 November
2011 is hereby rescinded;
2.
That the sale in execution by the second respondent, where the
property known as FARM 476 PORTION 10, situated at Portion 10
of the
Farm Brakfontein, Foschville, Registration Division I.Q. North West
Province, measuring 228, 0858 hectares, held under Title
Deed
T.17353/ 1996, was sold to the First Respondent is hereby set aside;
3.
That the First Respondent pays the party and party costs of this
application under Part B.
N.M.
MAVUNPLA
JUDGE
OF THE HIGH COURT
DATE
OF HEARING : 28 FEBRUARY 2013
DATE
OF JUDGMENT : 01 MARCH 2013
APPLICANT'S
ATT : EY STUART INC.
APPLICANT
S ADV : ADV. T.A.L.L. POTGIETER
1ST
RESPONDENTS' ATT : HIRSCHOWITZ FLIONIS ATTORNEYS
1st
RESPONDENTS' ADV : ADV. R. MICHAU SC
with
ADV. S MENTZ (Ms.)
1
Superior
Court Practice at Bl-202
2
Superior
Court Practice at B1-306.
3
Vide
Friand v Nothmann
1991 (3) SA 837
(W) at 839H;
Topol v LS Group Management
Services (Pty) Ltd
1988 (1) SA
639
(W) at 648-649F.
4
Annexure
“PJV1” paginated page
5
Annexure
“PJV2” paginated page 142.
6
Annexure
“PJV6" paginated page 146.
7
Vide
annexure SMR11 at paginated 86, which is the Minutes of the
Director’s meeting of the applicant held on 21 MY 2012.
8
Vide
annexure SMR 11 supra.