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[2012] ZAFSHC 141
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UMSO Construction (Pty) Ltd v BK Investments Holdings (Pty) Ltd (5541/2011) [2012] ZAFSHC 141 (10 August 2012)
FREE STATE HIGH
COURT, BLOEMFONTEIN
REPUBLIC OF SOUTH
AFRICA
Case No. : 5541/2011
In the matter between:-
UMSO CONSTRUCTION
(PTY) LTD
…..................
Respondent/Plaintiff
(Registration number:
1996/015450/07)
and
BK INVESTMENTS
HOLDINGS (PTY) LTD
….......
Applicant/Defendant
(Registration number:
2007/013557/07
_____________________________________________________
HEARD ON:
2
AUGUST 2012
_____________________________________________________
JUDGMENT BY:
KRUGER, J
_____________________________________________________
DELIVERED ON:
10 AUGUST 2012
_____________________________________________________
[1] This is an
application for rescission of a default judgment granted by the
registrar on 9 February 2012 for R7 436 507,79. In
the founding
affidavit the deponent states that the application is brought in
terms of Rule 31(2)(b) alternatively the common law
on good cause
shown. In the answering affidavit the deponent points out that the
application was not timeously launched within
the time limits
prescribed by Rule 31(2)(b), and there is no application for
condonation of the late filing of the application.
The deponent to
the answering affidavit says that even if it is accepted that the
applicant only got knowledge of the default judgment
on 28 March
2012, the 20 day period allowed by Rule 31(2)(b) expired on 30 April
2012. The application was only served on the respondent
on 11 May
2012. In the replying affidavit the applicant admits that the
application was issued more than 20 days after the default
judgment
came to applicant’s attention and the deponent continues:
“…
but
deny that, for that reason alone, the applicant is disentitled to
relief or that a condonation application is required.”
He goes on to say that
the default judgment also falls to be set aside in terms of Rule
42(1)(a) as having been erroneously granted,
because it was granted
on particulars of claim which are excipiable.
[2] As to the legal
provision on which applicant relies, it is common cause that
applicant delayed more than 20 days after gaining
knowledge of the
default judgment before approaching court for relief. Thus Rule
31(2)(a) could not be used. Mr De Wet contends
that the remedy which
the applicant should have applied is Rule 31(5)(d), which gives a
disgruntled defendant the right to set
the matter down for
reconsideration by the court after a default judgment granted by the
registrar has come to his attention. In
my view the reconsideration
procedure is to be distinguished from rescission applications. An
application for reconsideration is
not the same as a rescission
application. Be that as it may, the common law has not been excluded
and applicant retains the right
to apply for rescission of the
default judgment under the common law, as it has done here.
[3] At the hearing Mr
Pienaar, who appeared for the applicant, relied mainly on Rule
42(1)(a) but also on the common law in his
request for rescission.
[4] Mr De wet, for the
respondent, contends that in seeking rescission, the common law can
only be reverted to where it is necessary
to do so in order to make a
court order effective and to grant relief where the Rules of Court
are silent and the proper administration
of justice demands such
intervention, with reference to
ATHMARAM v SINGH
1989
(3) SA 953
(D+CLD) at 956 B. However, this reference is to the order
granted by that court dismissing the defence and granting judgment by
default, not to the situations where the common law can be invoked.
The applicant is entitled to rely on the common law in this
application and must explain its default and show that it has a
bona
fide
defence –
CHETTY v LAW SOCIETY, TRANSVAAL
1985 (2) SA 756
(A) at 765A - F.
[5] The summons was
served at applicant’s registered address on 29 December 2011 by
affixing a copy to the main door of the
premises. The premises were
locked at the time, for the end of year vacation. Applicant’s
employees only became aware of
the existence of the default judgment
on 28 March 2012 after a writ of execution had been served. Applicant
is not in wilful default,
and has explained its default sufficiently.
[6] Applicant raises
defences against the judgment. The first defence is that the court
does not have jurisdiction, firstly, because
applicant’s
registered address is in the Western Cape and the contract was
concluded either in Gauteng or the Eastern Cape.
The fact that the
subcontract dealt with bridges in the Free State is not, in the view
of the deponent to the founding affidavit,
sufficient to confer
jurisdiction in this court. Mr Pienaar, for applicant, submits that
in order for this court to have jurisdiction,
the applicant should
have been bound to perform that portion of the contract in respect of
which applicant is being sued, within
the area of jurisdiction of
this court, with reference to
VENETA MINERARIA SPA v CAROLINE
COLLIERIES (PTY) LTD
1985 (3) SA 633
(D) at 643 B – D
(upheld on appeal),
1987 (4) SA 883
(A));
FRANK WRIGHT (PTY)
LTD v CORTICAS ‘BCM’ LTD
1948 (4) SA 456
(C) at
463 – 464. The
VENETA
-case concerned anticipatory
breach which occurred outside the country. The
FRANK
WRIGHT
-case dealt with CIF contracts.
I disagree with Mr
Pienaar. The right infringed is here anchored in a contract that has
a direct connection with the area of jurisdiction
of this statement
(
VENETA
at p 643D).
[7] A
more fundamental point which the applicant raises is that the
contract contains a comprehensive dispute resolution mechanism.
That
dispute resolution mechanism requires the decision by the appointed
engineer and if that fails, mediation. Applicant intends
to invoke
section 6
of the
Arbitration Act 1965
to obtain a stay of
respondent’s action pending the institution of arbitration
proceedings. Mr Pienaar says courts generally
respect arbitration
agreements.
The onus is
on the respondent to satisfy the court that it should not in its
discretion refer the matter to arbitration –
UNIVERSITEIT
VAN STELLENBOSCH v J A LOUW (EDMS) BPK
1983
(4) SA 321
(A)
at 333 H. A
court will only refuse to refer the matter to arbitration where a
very strong case has been made out –
G
K BREED (BETHLEHEM) (EDMS) BPK v MARTIN HARRIS & SEUNS (OVS)
(EDMS) BPK
1984 (2) SA 66
(O)
at
70 A and 70 D.
[8] Mr De Wet, for
respondent, contends that in spite of the dispute resolution
mechanism in the contract, the respondent had the
option to decide to
approach this court for relief. That may be so, but courts try to
honour the intention of parties. If the parties
have inserted a
dispute resolution mechanism in a contract, courts will generally
allow the parties to follow that procedure. Especially
in building
contracts, which are technical in nature, it is sensible to have an
engineer consider the facts. That is what the parties
intended to do
here. Arbitration should take its course, all things being equal.
According to the Answering Affidavit p. 60 §
24 this dispute is
not about contract, but the merits of the claim for payment. The
engineer would be well-placed to adjudicate
such dispute.
[9] Mr De Wet refers to
annexure “F” to the particulars of claim which, in his
view, contains an acknowledgement of
liability to which the applicant
in the founding affidavit does not refer. Annexure “F” is
addressed to Messrs Price
Waterhouse Coopers dated 13 September 2010.
It reads as follows:
“
13 September
2010
PRICEWATERHOUSE COOPERS INC
PO BOX 13069
VINCENT
5217
OUR ACCOUNT WITH UMSO CONSTRUCTION
REFERS
On behalf of BK Investments (Pty) Ltd,
I hereby confirm that at the end of June 2010 an amount of R 2 100
754.46 was due for work
done on various bridge projects with them.
Due to financial constraints we were
not able to pay our accounts with Umso Construction as well as for
all work done after June
2010.
In due course we will be in a
financial position to pay Umso Construction and it is therefore not
necessary for them to provide
for bad debts for the amounts owed to
them by us.”
[10] In the answering
affidavit respondent refers to annexure “F” in para 26.
In the replying affidavit applicant’s
deponent deals with this
aspect at p 92 § 11.3 and makes it clear that annexure “F”
is not an acknowledgement
of debt; it was written for a different
purpose, namely for bookkeeping.
[11] In the answering
affidavit the respondent states that the contract price was defined
and reduced to writing. In the replying
affidavit (p 93 § 12)
the applicant’s deponent quotes a letter which states that the
final contract value is subject
to remeasurement:
“
12.2 I quote
the relevant extract from that letter which was dated 3 September
2009:
‘
The
contract sum is the amount of R2,670,301.80 (Two Million, Six Hundred
And Seventy Thousand, Three Hundred And One Rands And
Eighty Cents)
and is inclusive of V.A.T..
The
final contract value is subject to remeasurement of quantities
against the tendered rates contained in the sub-contract agreement
.
(emphasis added)
12.3 The contents of my letter
(annexure ‘D’ to Mr Moodley’s affidavit) do no more
than affirm the terms of the
sub-contract agreement on which the
respondent relies – there would have to be a valuation of the
work performed by the respondent!
12.4 The paragraph I have quoted above
does not constitute either an agreement or an admission that the
respondent, upon completion
of the works, was entitled to be paid R2
670 301.80.”
[12] The papers indicate
the there is a dispute between the parties on several aspects. It is
desirable that those disputes be fully
ventilated, either in further
court proceedings or at an arbitration or both. I am satisfied that
the applicant has a
bona fide
defence.
[13] In the replying
affidavit applicant’s deponent points out that the respondent’s
claim was incorrectly computed
and to that extent the judgment was
erroneously granted as contemplated in
Rule 42.
In my view applicant
made out a proper case for rescission under the common law.
[14] As to costs,
applicant’s attention was drawn to the fact that the
application was out of time in the answering affidavit
and that
applicant had to apply for condonation. Yet applicant failed to do
that. The applicant is seeking an indulgence from the
court and
should be ordered to pay the costs of this application.
ORDER:
1. The default judgment
granted by the registrar of this court on 9 February 2012 is
rescinded.
2. The costs of this
application are to be paid by applicant.
____________
A. KRUGER, J
On
behalf of respondent/plaintiff: Adv C D Pienaar
Instructed
by:
Wessels
& Smith
BLOEMFONTEIN
On
behalf of applicant/defendant: Adv P J T de Wet
Instructed
by:
Symington
& De Kok
BLOEMFONTEIN
/sp