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[2013] ZAGPPHC 136
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Mechanology Properties (Pty) Ltd and Others v State Bank of India Ltd (16376/12) [2013] ZAGPPHC 136 (31 May 2013)
REPORTABLE
IN THE NORTH GAUTENG HIGH COURT,
PRETORIA
(REPUBLIC OF SOUTH AFRICA)
CASE NUMBER: 16376/12
DATE:31/05/2013
In the matter between:
MECHANOLOGY
PROPERTIES
...................................................
1st
Applicant / 2nd Defendant
(PTY) LIMITED
CRAIG ANTHONY
SAVIDES
...........................................................
2nd
Applicant / 3rd Defendant
MICHELINA
SAVIDES
....................................................................
3rd
Applicant / 4th Defendant
CRAIG ANTHONY SAVIDES
N.O.
.................................................
4th
Applicant / 5th Defendant
MICHELINA SAVIDES
N.O.
...........................................................
5th
Applicant / 6th Defendant
and
STATE BANK OF INDIA
LIMITED
.................................................
Respondent/Plaintiff
JUDGMENT
RATSHIBVUMO AJ:
1. Introduction. The five applicants
apply for a rescission of summary judgment that was granted by this
court on 18 June 2012.
In terms of that order, all the applicants,
then defendants (together with the first defendant who is not part of
the current application),
were ordered to, jointly and severally, the
one paying the other to be absolved pay (i) the amount of R10 568
199.64; (ii) interest
on R2 416 732.81 calculated at prime lending
rate (9 %) plus penal interest at the rate of 2 % per annum from the
30th April 2010
to date of payment; (iii) portion 21 of Erf 2 in the
township of Prosequor, Registration Division JR; Province of Gauteng,
measuring
3866 square meters, held by Deed of Transfer No.
T151307/2003 was declared specially executable; and (iv) costs of
suits on the
attorney and client scale.
2. Background. The relevant background
facts are that the respondent had entered into a loan agreement with
the first defendant.
Suretyship agreements were also entered into
between all the applicants and the respondent for the debts of the
first defendant
up to R11 million. The first applicant also agreed to
a hypothecation over the property referred to in the summary
judgment, to
serve as security over the said debt. Breaches of this
agreement led to summons being issued against the applicants and the
process
culminated in the summary judgment being granted against
them. The first applicant in this case was the managing director of
the
first defendant who as indicated above, is not part of the
current application. The first defendant has since been liquidated.
Summary judgment against the current applicants was granted based on
these suretyship agreements.
3. This application is sought on the
basis that the aforesaid summary judgment was erroneously sought and
granted as envisaged by
the provisions of Rule 42 (1) (a),
alternatively under common law. The applicants aver that they have a
bona fide defence and a
reasonable explanation as to their
non-appearance (so they could give the said defence in court) on the
day the judgment was handed
down.
4. The reason advanced for their
default on the date the summary judgment was granted is to the effect
that the applicants were
under the impression or understanding that
there was an agreement between them and the respondent or their legal
representatives
that an application for summary judgment would not be
proceeded with by the respondent. As for the bona fide defence, they
allege
that there was an oral agreement entered into between the
first applicant and the respondent, represented by Mr. Panda that
there
would not be a court action brought against them.
5. Rule 42 (1) provides, “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: An order
or judgment erroneously sought or erroneously granted in the absence
of any party
affected thereby.” The common law position has
always been that the courts may rescind a judgment upon the applicant
showing
a good cause:
by giving a reasonable explanation of
his default,
by showing that his application is
made bona fide,
and by showing that he has a bona
fide defence to the claim which prima facie has reasonable prospects
of success.”
1
6. It is common cause that the
applicants were served with notice of set down for summary judgment
application on 8 June 2012 which
was set for 18 June 2012. It is also
common cause that before the summons were served on the applicants;
the first applicant had
been making attempts to reach a settlement
with the respondent, efforts that did not stop even as the
application for summary judgment
was set down. No agreement reached
(if any) was reduced to writing.
7. The allegation by the first
applicant to the effect that there was an agreement not to proceed
with the application for rescission
is disputed by the respondent. In
fact such an allegation is negated by the respondent’s conduct
who seemed determined to
get a judgment even as the first applicant
attempted to negotiate a settlement. This is evident in hat the
notice for set down
was issued by the respondent at the stage the
first applicant was still trying to negotiate his way out. In fact,
the applicants’
attorney even contacted the respondent’s
attorney upon receipt of the notice of set down wondering why, since
the first applicant
was yet to make submissions. The response by the
respondent’s attorney is again disputed. Irrespective of the
above, the
applicants and/or their legal representative chose not to
be in court on the 18th June 2012 even after being served with the
set
down.
8. Issues. Issues for determination by
the court are whether the explanation by the applicants regarding
their default is reasonable,
and whether they have a bona fide
defence which prima facie, has the reasonable prospects of success.
The test is whether a reasonable
person with the knowledge that the
applicant had would have been of the impression that there was an
agreement not to proceed with
the application for summary judgment.
Before judgment was handed down, the matter went through a number of
stages. After summons
was issued, there was an application for
summary judgment and the same had to be set down before a judgment
was granted by the
court. All these were served on the applicants.
9. There is no document, whether under
oath or otherwise that suggests that there was an agreement between
the applicants and the
respondent to withdraw the application for
summary judgment. All that can be shown is correspondence from the
attorney of the respondent
directed to the applicant’s attorney
wherein he denies there was ever such an arrangement. The e-mail
correspondence from
the applicant’s attorney directed to the
respondent’s attorney reflects that the applicants were under
the “impression”
that the matter would not be proceeded
with. Soon thereafter, in a follow up e-mail “the impression”
is now upgraded
to “an arrangement.”
10. Even if the parties were to agree
and reduce the agreement in writing, such does not absolve one from
being present in court
if they need to make sure that the agreement
would be honoured. One would be willing to accommodate a party who
laboured under
the impression that the matter would be removed from
the roll to the extent that he did not attend to court proceeding, if
he relied
on a written undertaking to that effect. To stay away while
there was no such undertaking in writing is unacceptable in my view.
Even if the version by the applicants was to be accepted as true, the
mere reason that the respondent went on to set the matter
down for
hearing while they were still negotiating; is in my view sufficient
for them to have acted cautiously since the respondent
is painted as
having not negotiated in good faith (setting the matter down while
negotiations were still underway). There cannot
be any reasonable
justification for the default of the applicants when one looks at the
facts as a whole.
11. The bona fide defence. It is
important to note that the applicants do not dispute their
indebtedness to the respondent. They
however allege that the oral
agreements they had with Mr. Panda would be a successful defence
against the respondent’s claim.
The said agreement was the
pactum de non petendo which clearly negated the original agreement.
It is worth noting that Mr. Panda
is not the respondent, but an
employee of the respondent who represented it when the loan and
suretyship agreements were signed
with the applicants. His role is
merely that of being a representative just as the current
representative of the respondent, Mr.
Rajasekharan is doing. There is
no need for the respondent to have personal dealings with the
applicants when the respondent is
a corporate entity.
2
The applicants knew very well that they did not enter into suretyship
agreements with Mr. Panda, but with the respondent, as much
as they
knew that the loan granted to the first defendant came from the same
respondent, not Mr. Panda. The first applicant wants
the court to
believe that the corporate entity in the person of the respondent
entered into an agreement wherein they vary the
written contracts,
but such variance was not reduced in writing. The court is called on
to evaluate if there are reasonable prospects
of success based on
this defence.
12. The applicants did not attach an
affidavit by Mr. Panda to confirm the allegation of an oral agreement
as one would have expected
of them. It is the respondent who secured
the said affidavit (the second one) and served the same on the
applicants’ attorney
some seven months back. This was after the
applicants had raised concerns over the commissioning of the
affidavit by Mr. Panda
which was done outside of the Republic of
South Africa. The applicants oppose the filing of the second
affidavit because it comes
after they had filed their replying
affidavit. While the court takes note of the decision of the Supreme
Court of Appeal in Hano
Trading CC v JR 209 Investments (Pty) Limited
and another,
3
the facts in this case are distinguishable in that the Hano decision
deals with the fresh affidavits which were only collected
after the
replying affidavits had been filed, in an attempt to counter the
contents of the said replying affidavits.
13. The current application relies on
oral agreements with a person who has since emigrated. The respondent
attached his affidavit
so the court would hear his side of story
regarding the alleged agreements he may have entered into with the
applicants, but concerns
are raised regarding the commissioning of
the statement thereof. The only thing that happened after the
replying affidavit was
to have the same statement the applicants had
long before filing their replying affidavits, re-commissioned afresh
and served again
on them. I am persuaded by the reasoning in
Pangbourne Properties Ltd v Pulse Moving CC &
another
4
in the finding that it cannot be concluded that when affidavits are
filed out of time that they are not, without more, before the
court.
I come to this conclusion having evaluated the prejudice that the
applicants could suffer in the acceptance of this affidavit
by the
court. In my view, the only prejudice the applicants can suffer would
be in the court knowing the truth which unfortunately
is not in line
with their version. I am as such prepared to accept the said
affidavit.
14. Even without
the affidavit by Mr. Panda, the suggestion that the applicants have a
bona fide
defence
is a far from convincing and falls short of the requirement that it
should be a defence that carries reasonable prospects
of success. On
this point again, the applicant’s case stands to be dismissed.
15. Application to
be made bona fide.
It appears in my view
that the whole purpose for this application is to delay the execution
of the summary judgment. The summary
judgment was granted in June
2012. The correspondence by the applicant’s attorney by e-mail
contains requests that the execution
of the judgment be stayed. Even
after the notice of motion for this application, the applicant did
not set the matter down for
hearing until the same was done by the
respondent. The applicants’ counsel suggested that the matter
be postponed to a future
date in that there was now an affidavit that
the respondent was to rely on, referring to the affidavit that was
served on them
some seven months back. Another requirement for the
rescission in terms of Rule 42 (1) is that the application should be
made
bona fide
. I
am not convinced that the application as a whole was brought
bona
fide
.
16. The applicants have therefore
failed to show that there is a reasonable explanation for their
default when summary judgment
was handed down. They knew of the date
since it was served on them. They also failed to show that they have
a bona fide defence
that has prospects of success. The application as
a whole also seems to be a delaying tactic not brought bona fide.
17. I therefore make the following
order:
The application is dismissed with
costs.
________________
T.V. RATSHIBVUMO
ACTING JUDGE OF THE HIGH COURT
APPEARANCES:
Date Heard: 08 May 2013
Judgment Delivered: 31 May 2013
For the Applicants: Adv. F Vaccaro
Instructed by: David Bayliss
Attorneys
Pretoria
For the Respondent: Adv. Y Alli
Instructed by: Edward Nathan
Sonnenbergs
c/o Friedland Hart Solomon &
Nicolson
Pretoria
1
See
Chetty v Law
Society Transvaal
1985 (2) SA 756
at
p. 764-765 and
Grant v Plumbers (Pty)
Ltd
1949 (2) SA 470
(O) at p. 476.
2
See
Standard Bank of
South Africa v Secatsa Investments (Pty) Ltd and Others
1999 (4) SA 229
(C) at p. 235.
3
[2012] JOL 29725
(SCA).
4
[2010] JOL 26475
(GSJ)