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2012
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[2012] ZAGPPHC 6
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Akd Communications (Pty) Ltd and Others v Business Partners (Pty) Ltd (5659/2011) [2012] ZAGPPHC 6 (10 January 2012)
NOT
REPORTABLE
IN
THE HIGH COURT OF SOUTH AFRICA
(NORTH
GAUTENG, PRETORIA)
CASE
NO: 5659/2011
DATE:10/01/2012
In
the matter between:
AKD
COMMUNICATIONS (PTY)
LTD
..........................................................
FIRST
APPLICANT
CRAIG
CHARLES
DAWSON
..................................................................
SECOND
APPLICANT
STANTON
RHETT HALL
BAINES
...............................................................
THIRD
APPLICANT
MUCH-ADO
INVESTMETNS
CC
.............................................................
FOURTH
APPLICANT
ANDREW
KEITH
DAWSON
........................................................................
FIFTH APPLICANT
and
BUSINESS
PARTNERS (PTY)
LTD
...................................................................
RESPONDENT
JUDGMENT
HIEMSTRA
AJ
[1]
The applicants apply for condonation for the late filing of their
opposing affidavit in a summary judgment application brought
by the
respondent under the same case number. The respondent opposes the
application and seeks to have the summary judgment application
be
heard at the same time. This is sensible and cost effective. The
papers in the summary judgment application are before me.
APPLICATION
TO STIKE OUT
[2]
The respondent filed an answering affidavit in the condonation
application. The applicants claim that this answering affidavit
deals
with the merits of the respondent's (plaintiff's in the summary
judgment application) case in the summary judgment application.
It is
argued that this circumvents the provisions of Rule 32(4) of the
Uniform Rules of Court, which provides that a plaintiff
in summary
judgment proceedings may adduce no evidence otherwise than by the
affidavit referred to in subrule (2). The affidavit
in terms of
subrule (2) is limited to a statement that in the opinion of the
deponent, the defendant does not have a bona fide
defence and that
the notice of intention defend had been delivered solely for the
purpose of delay. The plaintiff must also confirm
the cause of action
and the amount claimed. The applicants apply for the offending
paragraphs of the answering affidavit to be
struck out.
[3]
I can only deal with the condonation application after I have dealt
with the striking-out application. In a condonation application
an
applicant must show, inter alia that it has prospects of success. In
summary judgment proceedings the defendant only has to
show that he
has a bona fide defence. Van Reenen J held in Stocks & Stocks
Properties (Pty) Ltd v City of Cape Town
1
that the prospects of success in a condonation application in summary
judgment proceedings had to determined with reference to
what was
sufficient to ward off the granting of summary judgment. The decision
whether or not a prospect of success exists, should
be based on
exactly the same evidential material as that upon which an
application summary judgment had to based, namely the affidavit
in
support of the application for summary judgment and the opposing
affidavit. Accordingly, the introduction of additional evidential
material in a condonation application in summary judgment proceedings
by the plaintiff is inadmissible on the ground that it is
irrelevant.
In Klipton Industries Ltd v Kersen & Another
2
Flemming DJP said that this general principle is subject to the
requirement that a party who is not bona fide should not be assisted.
[4]
Mr J.S. Stone, appearing on behalf of the respondent (plaintiff in
the summary judgment proceedings), argued that the offending
paragraphs in the answering affidavit to the condonation application
are intended to show that the applicants are not bona fide,
and are
not aimed at introducing evidentiary material that would show that
the applicants do not have a bona fide defence.
[5]
The relevant paragraphs of the answering affidavit are 8.4, 8.5, 8.6
and 8.7. 1 have perused these paragraphs. Although they
dispute on
persuasive grounds the truthfulness of the allegations of the
applicants in their affidavit resisting summary judgment,
a plaintiff
in summary judgment proceedings is precluded from adducing evidence
contradicting the defendant's affidavit resisting
summary judgment.
The affidavit also puts the applicant to the proof of certain
allegations. It is not necessary for a defendant
to prove any of its
allegations in such proceedings. These allegations are irrelevant and
therefore inadmissible.
[6]
Paragraphs .4, 8.5, 8.6 and 8.7 of the respondent's answering
affidavit in the condonation application are therefore struck
out.
LOCUS
STANDI OF FIRST TO FOURTH APPLICANTS
[7]
The founding affidavit in the condonation application was deposed to
by the fifth applicant. There are no confirmatory affidavits
by or on
behalf of the other applicants, nor any proof of authority to the
fifth applicant to depose on their behalf. The fifth
respondent
simply said: '7 am duly authorised to depose to this affidavit on
behalf of the Defendants."
[8]
The respondent has challenged the fifth applicant's authority to
represent the other applicants. In the replying affidavit the
fifth
applicant merely reiterated that he represents the other applicants.
There is no explanation for the lack of affidavits confirming
that
the fifth applicant represents them. The fifth applicant contends
that the respondent should comply with the Rules if it wishes
to
challenge his authority. There is no Rule that prescribes any such
procedure. If the fifth applicant purports to rely on Rule
7(1), it
is misplaced. That Rule deals with the special type of power of
attorney which is given by a client to his or her attorney
to
authorise him or her to institute or defend legal proceedings on the
client's behalf.
3
[9]
I therefore find that only the fifth applicant is properly before the
court. The first to fourth applicants have not made out
a case for
condonation and it is accordingly refused. They have also failed to
show prospects of success, in the summary judgment
application.
EXPLANATION
FOR LATE FILING OF AFFIDAVIT OPPOSING SUMMARY JUDGMENT
[10]
The opposing affidavit had to be filed by 14 April 2011 and was filed
on 15 April 2011. Normally such a short delay would be
condoned.
However, the reasons for this delay bear scrutiny.
[11]
The fifth applicant's main alleged defence is that the summons of the
respondent is excipiable. He blames the delay in filing
the opposing
affidavit on the erroneous advice of his attorney that the exception
must be heard before the exception. For that
reason, the attorney did
not regard it as necessary to file an opposing affidavit.
[12]
On 9 March 2011, the applicants' attorney wrote to the respondent's
attorney and said inter alia:
"As
I understand the position, the exception must always be heard before
the application for summary judgment."
[13]
The respondent's attorney replied as follows on 16 March 2011:
"We
refer to the above matter and advise that we are proceeding with our
application
for
summary judgment."
Therefore,
the applicants' attorney already knew on 16 March 2011 that the
respondent intended to proceed with the summary judgment
application.
[14]
On 13 April 2011 the respondent's attorney wrote to the applicants'
attorney that his understanding of the legal position concerning
exceptions and the raising of other legal contentions in summary
judgment proceedings is incorrect. On 18 April 2011, the day of
the
set down of the summary judgment application, the applicant's
attorney wrote inter alia:
"
There is ample authority that the Exception must be heard before the
application for summary judgment."
[15]
Two points can be made regarding the view of the applicants'
attorney: The first is that he is completely wrong. A defendant
may
raise as a defence in a summary judgment application that the summons
is excipiable. If that is found to be the case, summary
judgment will
be refused. The exception need not be heard first or separately. The
second is that, even if he is correct, which
he is not, there was
still no reason not to file the opposing affidavit within the
prescribed time period. The sequence in which
the exception and the
summary judgment had to be heard is irrelevant.
[16]
The applicants' attorney already knew on 16 March 2011, nearly a
month before the expiry of the time period, that the respondent
did
not agree with his contention and that the respondent would proceed
with the summary judgment application. Knowing that the
applicant was
proceeding with the summary judgment application, the least that
could be expected of prudent attorney is be ready
to meet the
application. Every attorney should know that he cannot simply ignore
a summary judgment application because he believes
that it had been
set down prematurely. He should at least raise that point on
affidavit.
[17]
I therefore find that the explanation for the late filing of the
opposing affidavit is inadequate. However, the scales may
be tipped
in favour of an application for condonation if the applicant can show
good prospects of success. I shall therefore examine
the applicant's
alleged defences.
PROSPECTS
OF SUCCES
[18]
The fifth applicant did not deal with the applicants' prospects of
success in the application for condonation. For this reason
alone,
condonation should be refused. However, the affidavit refers to the
applicants' exception and a Notice to Remove Cause of
Complaint is
attached, which sets out the grounds of exception. I shall consider
whether there are any prospects of the exception
being upheld.
[19]
The applicants' main defence is that the summons is excipiable. They
raise four grounds for exception in their belated affidavit
resisting
summary judgment:
First
Ground: No acceleration clause
[20]
The summons is based on a loan agreement entered into between the
first applicant and the respondent. The other applicants
have bound
themselves as sureties and co-principal debtors for the due and
proper repayment by the first applicant of the debt
for an unlimited
amount. The respondent stated in paragraph 3.7 of its particulars of
claim that in terms of the loan agreement,
in the event of any one
instalment not being paid on due date, the full balance then
outstanding in terms of the agreement would
immediately become due,
owing and payable.
[21]
The applicants contend that the loan agreement does not contain such
an acceleration clause. This is baffling. Clause 27 of
the loan
agreement provides as follows: "BREACH
Without
prejudice to any of its rights in taw of in terms of this Agreement,
Business Partners shall be entitled to withhold any
potion of the
loan not paid out and claim immediate payment of the outstanding
balance due by the Borrower to Business Partners
in terms of this
Agreement (whether or not the due date for payment has arrived), as
welt as, .............. "
[22]
This ground of exception therefore holds no water. However, in
argument, Mr van der Merwe, for the applicants, put a different
gloss
to this submission. As I understand him, he contends that clause 27
provides that Business Partners may in the event of breach
claim
immediate payment of the outstanding balance. He contrasted clause 25
which provides as follows:
'PROOF
OF AMOUNT OWING
A
statement purporting to be signed by manager or accountant of
Business Partners (whose appointment or authority need not be proved)
shall, for all purposes (including provisional and summary judgment)
be deemed to be prima facie proof of aj amounts owing by the
Borrower
to Business Partners, and of the interest rate applicable to the loan
from time to time."
He
argued that the amount of the "outstanding balance due" as
per clause 27, and the amount of "all amounts owing"
as per
clause 25 are not the same. Therefore, as 1 understand Mr Van der
Merwe, the two clauses are inconsistent with each other
and therefore
a certificate of indebtedness as provided for in clause 25 is no
proof of the outstanding balance.
[23]
This is a highly ingenious submission. It is correct that the amount
owing may differ from the outstanding balance due while
the borrower
continues to pay regularly in terms of the agreement, because the
full outstanding balance is not yet due. However,
the amounts
converge when cfause 27 kicks in. Then the amount owing becomes the
outstanding balance.
[24]
This ground of exception is misconceived and does not constitute a
bona fide defence.
Second
Ground: No allegation that moneys had been advanced
[25]
Rule 18(4) the Uniform Rules provides that every pleading shall
contain a clear and concise statement of the material facts
upon
which the pleader relies for his claim, defence or answer to any
pleading, as the case may be, with sufficient particularity
to enable
the opposite party to reply thereto.
[26]
The respondent set out clearly and concisely in the particulars of
claim that it had lent and advanced the sum of R2 049 974.00
to the
applicants. The applicants contend that the respondent did not plead
if, or when, it advanced the monies in terms of the
agreement. It is
contended that it is therefore not possible to calculate the interest
payable on the loan if the plaintiff does
not plead the date of the
advance.
[27]
The applicants know whether the applicant has actually advanced the
loan and when. If the respondent had not actually advanced
the loan,
the applicants would know it, and can easily deny it in their plea.
[28]
I find this ground utterly spurious and it does not constitute a
defence.
Third
Ground: No allegation as to when the breach occurred and what
payments were not made
[29]
I reject this ground for the same reasons that I rejected the second
ground.
Fourth
Ground: No allegations that conditions precedent had been fulfilled
[30]
The applicants refer to the conditions precedent contained in clause
8.4 of the loan agreement and contend that the respondent
had failed
to plead whether they had been complied with.
[31]
These conditions precedent are all obligations that the applicants
had to comply with before the money would be advanced. It
is
peculiarly within the knowledge of the applicants whether they have
fulfilled the conditions precedent. If they have not, and
the money
had nevertheless been advanced, then they are in any event liable to
repay it.
[32]
This ground is therefore also not a defence.
[33]
I therefore find that the alleged grounds of exception do not
constitute a bona fide defence. In fact they are so spurious
that is
apparent that the applicants will raise any manner of technical
argument solely for the purpose of delay.
OTHER
DEFENCES RAISED
[34]
The applicants contend that the fourth applicant had been released
from his suretyship. Even if that is so, the fourth applicant
is not
properly before court and I will have no regard to this submission.
In any event, clause 34.2 of the loan agreement provides
that "No
representation, variation, modification, consensual cancellation,
waiver of or consent to depart from any provision
of this Agreement
shall be of any force or effect unless confirmed in writing and
signed by the parties."
[35]
In respect of the other applicants, the applicants contend that they
were granted certain indulgences in terms of which they
would not be
called upon to pay the amount outstanding. This is also covered by
clause 34.2.
CONCLUSION
[36]
The applicants have failed to make out a case for condonation. The
summary judgment application is therefore unopposed. I have
found
that the particulars of claim are not excipiable. Even if the other
defences were before court, they do not constitute a
bona fide
defence.
I
therefore make the following order:
1.
Condonation for the late filing of the applicants' affidavit
resisting summary judgment is refused;
2.
Summary judgment is granted in the following terms:
2.1
Payment of the sum of R1 688 052.82
2.2
Interest on the sum of R1 688 052.82 at the rate of 9% per annum
calculated from 26 December 2010 to date of payment;
2.3
Costs of suit as between an attorney and client, together with value
added tax thereon.
J.
HIEMSTRA
ACTING
JUDGE OF THE HIGH COURT
Date
of hearing: 1 December 2011
Date
of judgment:19 December 2011
Counsel
for the applicant:Adv. J.S. Stone
Attorney
for the applicant: Morris Pokroy Attorney
Counsel
for the respondent:Adv. Van der Merwe
Attorney
for the respondent:T.G. Fine Attorney, c/o Friedland Hart Solomon &
Nicolson
1
2003
(5) SA 140
(CPD)
2
1995
(1) SA 185
(TPD) at184D
3
Erasmus,
Superior Court Practice
B1-59
and
the cases referred to by the learned authors.