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[2013] ZAFSHC 148
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De Bruyn v St Clair Cooper NO and Others (1651/2013) [2013] ZAFSHC 148 (5 September 2013)
FREE STATE HIGH
COURT, BLOEMFONTEIN
REPUBLIC OF SOUTH
AFRICA
Case No. : 1651/2013
In the appeal between:-
ARTHUR BENJAMIN DE
BRUYN
............................................
Applicant
and
CHAVONNES
BADENHORST ST CLAIR
COOPER N.O.
..............................................................
First
Respondent
STAMATIOS
TSANGARAKIS N.O.
........................
Second
Respondent
SIMON MALEBO
RAMPOPORO N.O.
.......................
Third
Respondent
_____________________________________________________
HEARD ON:
15 AUGUST 2013
_____________________________________________________
JUDGMENT BY:
PHALATSI, AJ
_____________________________________________________
DELIVERED ON:
5 SEPTEMBER 2013
_____________________________________________________
[1] The three respondents
are the liquidators of the Waverley Construction CC (In liquidation)
the close corporation of which the
applicant was one of the three
members. The said Waverley Construction CC was initially a private
company, but it was converted
into a close corporation during
September 2007.
[2] The respondents, in
their said capacities as liquidators of the close corporation, issued
summons against the applicant in which
they claimed an amount of
R507 414.03, being for personal expenses of the applicant, which
were paid for by the close corporation.
This amount appears in the
loan account as set out in the financial statements for the close
corporation for the year ended 2009,
as well as the report of a
certain Sean Bernard Saffy, a chartered accountant who the
respondents had engaged to verify the financial
affairs of the close
corporation. Judgment by default was granted against the applicant on
19 March 2013, the applicant having
failed to file notice of
intention to defend within the prescribed time period. It is this
default judgment that the applicant
has applied to rescind in the
present application. The respondents filed their opposing affidavit
on 31 May 2013 and the applicant
replied thereto on 18 June 2013.
After the applicant filed his replying affidavit, the respondents
made an application that certain
parts of paragraph 12, as well as
paragraphs 13 and 18 of the applicant’s replying affidavit be
struck out from the said
affidavit, in terms of Rule 6(15) of the
Uniform Rules of Court. The basis of the said application is that the
said parts in the
replying affidavit should have been in the founding
affidavit. Both these applications were heard on the same day.
APPLICATION FOR
RESCISSION OF JUDGMENT
[3] In support of his
application for rescission of judgment, the applicant filed an
affidavit, setting out the reasons for his
default in defending the
action, as well as his defence. In short, he alleges that he did not
receive the summons, as, according
to the sheriff’s return of
service, the said summons was served at 130 Eland Street, Martindale,
Bloemfontein, by attaching
a copy thereof at the door. He states that
he had not been residing at the said address for more than 10 years.
In respect of his
defence, he states that he is unable to respond to
the allegation that he owes the close corporation R507 414.03,
as no documentation
as to how the said amount is computed and arrived
at, is attached to the particulars of claim. According to the
particulars of
claim, this amount is the amount which the close
corporation allegedly paid for the personal expenses of the
applicant, in terms
of the oral agreement between the applicant and
the other two members of the close corporation. He, however, denies
that he borrowed
any money from the close corporation, nor that any
of his personal expenses were paid for by the close corporation. He
further
states that he was not involved with the administration of
the close corporation and even brought an application against the
other
members of the close corporation, to enable him to have access
to all the documents and financial records of the close corporation.
This he did because he was not happy with the way in which the other
members were dealing with the affairs of the close corporation.
The
application was never proceeded with because there were too many
factual disputes and the close corporation was liquidated.
The
applicant further alleges that, according to the draft financial
statements attached to his affidavits, it is the close corporation
that owes him money. Counsel for the applicant, however, abandoned
this defence, (correctly in my view), when it was shown by the
respondents that the applicant interpreted the financial statements
incorrectly, as it was in fact the applicant, according to
the said
financial statements, who owed the close corporation and not the
other way round.
[4] The respondents
oppose the application for rescission of judgment on the basis that
the applicant has failed to show a
prima facie
defence to the
respondents’ claim. They claim that the claim is based on the
loan account as reflected in the close corporation’s
approved
financial statements, the amounts of which have been verified by Sean
Bernard Saffy.
[5] The respondents
further state that the applicant proved a claim against the close
corporation, after its liquidation, in the
amount of R2 813 273.66,
in terms of section 44 of the Insolvency Act. This claim was based on
a report of an audit by
a certain G.R. Erasmus, who had been engaged
by the applicant. This claim was later found to be unfounded and
baseless during the
insolvency questioning in which the said G.R.
Erasmus testified. The applicant’s response to this allegation
is one of the
subject matters of the application to strike out, which
I will deal with later. Counsel for the respondents argued that
Erasmus
could not have compiled a report on behalf of the applicant,
if the applicant did not have any documents, as he claimed. This
fact,
so the argument goes, negates the applicant’s averment
that he could not respond to the claim, as no documents in support
thereof had been attached to the particulars of claim and this
indicates that the applicant is not acting
bona fide
.
[6] In the case of
Chetty
v Law Society, Transvaal
1985 (2) SA 756
(A) at 765 the court
stated that an applicant for rescission of judgment must show
“sufficient cause” for rescission
and stated the
essential elements, as follows:
(i) that the party
seeking relief must present a reasonable and acceptable explanation
for his default; and
(ii) that on the merits
such party has a
bona fide
defence which,
prima facie
,
carries some prospect of success.
6.1
Reason for
default.
The applicant has stated
that he did not receive the summons and this fact seems to be
conceded by the respondents and needs no
further attention. I
therefore find that the applicant has given satisfactory reason for
his default.
6.2
Prima facie
defence.
I will deal with this
aspect without referring to the contents of the paragraphs which are
the subject matters of the application
to strike out and my finding
will determine whether it is necessary to deal with the said
application or not.
[7] The applicant denies
that the close corporation paid any of his personal expenses on his
behalf, which at face value appears
to be a bare denial. He, however,
states that he cannot fully respond to the claim as there are no
documents attached to the particulars
of claim in support of same.
The argument that the applicant must have had documents on the basis
of which Erasmus compiled a report,
does not mean that those
documents include or relate to the respondents’ claim against
the applicant. Furthermore, the fact
that the claim is apparent
ex
facie
the close corporation’s approved financial statements
does not preclude the applicant from challenging the veracity
thereof,
on receipt of supporting documents. The fact that applicant
instituted proceedings against the other members of the close
corporation
to have access to the records and financial information
of the close corporation before receipt of summons, clearly shows
that
the applicant was concerned with the way in which the financial
affairs of the close corporation were handled.
[8] It is true that the
applicant does not deny the existence of an oral agreement between
himself and other members that their
personal expenses should be paid
by the close corporation, but that does not mean that he admits that
his own personal disbursements
were incurred and paid for by the
close corporation. In fact, this is what he expressly denies, which
the respondents will have
to prove.
[9] I therefore find that
the applicant has shown that he has a
prima facie
defence
against the respondent’s claim and has therefore made out a
case for the rescission of judgment.
[10] In the light of this
finding, I do no find it necessary to deal with the application for
striking out, as that will in no way
affect the outcome of this
application. I also make no order as to costs in respect of the said
application.
[11] On the question of
costs in respect of the application for rescission, I find that the
applicant was indeed at no fault in
not defending the action in that
he did not receive the summons, but I also find that the respondents
were not unreasonable in
opposing the application. In the premises, I
find that it is appropriate that the costs of this application be
costs in the main
action.
ORDER
[12] I accordingly make
the following order:
Default judgment which
was granted by the Registrar of this court against the applicant on
19 March 2013 under Case Number 4945/2012
is hereby rescinded and
set aside.
The applicant is
granted leave to defend the action under Case Number 4945/2012.
The costs of this
application to be costs in the main action.
_________________
N.W. PHALATSI, AJ
On
behalf of applicant: Adv P.R. Cronjé
Instructed
by:
L
& V Attorneys
BLOEMFONTEIN
On
behalf of respondents: Adv Paul Zietsman SC
Instructed
by:
E
G Cooper Majiedt Inc BLOEMFONTEIN
/spieterse