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[2012] ZAFSHC 189
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Du Preez and Others v Van der Berg and Others; Van der Berg and Others v Du Preez and Others (794/2012, 2326/2009) [2012] ZAFSHC 189 (11 October 2012)
FREE STATE HIGH
COURT, BLOEMFONTEIN
REPUBLIC OF SOUTH
AFRICA
Case No: 794/2012
In
the matter between:-
PHILLIP
BARTHELOMEUS DU PREEZ
.................................
1st
Applicant
H I DU PREEZ h/a
DUCON
....................................................
2nd
Applicant
PHILLIP
BARTHELOMEUS DU PREEZ N.O.
.........................
3rd
Applicant
(in sy hoedanigheid as
trustee van die
SANDSTONE
TECHNOLOGY TRUST, IT
44/07)
and
P C W VAN DER BERG
......................................................
1st
Respondent
M P TRISOS
.......................................................................
2nd
Respondent
M C VAN DER BURGH
.......................................................
3rd
Respondent
J M HANEKOM
...................................................................
4th
Respondent
B G CANTOR N.O.
..............................................................
5th
Respondent
B G CANTOR N.O.
..............................................................
6th
Respondent
C GERBER N.O.
..................................................................
7th
Respondent
(Fith to seventh
respondents in their capacities as
Trustees of the
BB
FAMILY TRUST, IT 1571/07
)
AD HOC BALJU OF THE
HIGH COURT,
BLOEMFONTEIN-EAST
.....................................................
8th
Respondent
IN RE:
Case Nr: 2326/2009
In the matter between:
P C W VAN DER BERG
......................................................
1st
Respondent
M P TRISOS
.......................................................................
2nd
Respondent
M C VAN DER BURGH
.......................................................
3rd
Respondent
J M HANEKOM
...................................................................
4th
Respondent
B G CANTOR N.O.
..............................................................
5th
Respondent
B G CANTOR N.O.
..............................................................
6th
Respondent
C GERBER N.O.
..................................................................
7th
Respondent
(Fith to Seventh
Respondents in their capacities as
Trustees of the
BB
FAMILY TRUST, IT 1571/07
)
and
PHILLIP
BARTHELOMEUS DUE PREEZ
...............................
1st
Applicant
H I DU PREEZ h/a
DUCON
....................................................
2nd
Applicant
PHILLIP
BARTHELOMEUS DU PREEZ N.O
..........................
3rd
Applicant
(
in his capacity
as trustee of the
SANDSTONE
TECHNOLOGY TRUST, IT
44/07)
GRAHAM CORBETT
COETZEE N.O
......................................
4th
Applicant
(in his capacity as
trustee of the
SANDSTONE
TECHNOLOGY TRUST, IT
44/07)
ELIZABETH SOPHIA
KELLER N.O
........................................
5th
Applicant
(in his capacity as
trustee of the
SANDSTONE
TECHNOLOGY TRUST, IT
44/07
)
_________________________________________________________
JUDGMENT BY:
MHLAMBI, AJ
_________________________________________________________
HEARD ON:
_________________________________________________________
DELIVERED ON:
11 OCTOBER 2012
_________________________________________________________
INTRODUCTION
This is an application
in terms whereof the Applicants seek the following:-
[1] That condonation, if
any, be granted in terms of Uniform
Rule 27(3)
to First,
Second and Third Applicants for their failure to apply timeously and
in terms of the Rules for the rescission of the
Order granted by the
Honourable
Van Zyl J
, under
Case Number 2326/2009
on
9
July 2009
in favour of the First to the Seventh Respondents;
That the said Order
granted under
Case Number 2326/2009
by the Honourable
Van
Zyl J
be set aside;
That no cost order be
granted save as against such Respondents that shall oppose this
application unsuccessfully;
Such further and/or
alternative.
BACKGROUND
[2] Applicants had
approached Court on an urgent basis on
7 May 2012
for an order
suspending the Warrant of Execution against the movable property
issued by First to Seventh Respondents and authorised
by the
Registrar of the Free State High Court, BLOEMFONTEIN, in terms
whereof the Eighth Respondent attached certain property belonging
to
First and/or Second and/or Third Applicants; and which would have
been sold in execution on
7 May 2012
at the premises known as
Plot 17, Dealesgift, BLOEMFONTEIN; pending the determination of the
relief set out in prayers 1,2 and
3 above.
On
7 May 2012
the
said Warrant of Execution against movable property was suspended by
agreement between the parties.
On 13 May 2009, all seven
Respondents filed an application under
Case Number 2326/2009
(for the sake of convenience, the parties will be referred to as in
that application); seeking relief as follows:
1. That Sandstone
Technology Trust (hereinafter styled STT), as represented by Third
Respondent and two other trustees cited as
4
th
and 5
th
Respondents, be declared as the alter ego of First and Second
Respondents (First and Second Applicants herein).
2. Declaring First and
Second Respondents jointly and severally liable for the repayment of
any monies paid by the applicants to
the Second Respondent, for the
benefit of First and Second Respondents.
3. Directing First and
Second Respondents to pay jointly and severally, the one paying, the
other to be absolved, the amount of:
3.1
R1 4000 000.00
in favour of the First Applicant;
3.2
R500 000.00
in favour of the Second Applicant;
3.3
R500 000.00
in favour of the Third Applicant;
3.4
R200 000.00
in favour of the Fourth Applicant;
3.5
R1 400 000.00
in favour of the Fifth Applicant.
Interest on the aforesaid
amount, a tempore morae, at 15,5% p.a to date of payment;
That First and Second
Respondents pay the costs of the application jointly and severally.
[3] Applicants filed a
Notice of Opposition on
28 May 2009
, which was withdrawn on
2
July 2009
. An order as per the prayers above was granted on
9
July 2009
by
Van Zyl J
. This is the order that Applicants
seek to rescind.
[4] Between
12
December 2007
and
30 January 2008
, and in BLOEMFONTEIN,
written Memoranda of Agreement were entered into by and between
Bartherlomeus Du Preez
, in his capacity as the Trustee of
STTR, and all the seven Respondents, in their personal and
representative capacities, called
the “investors”. The
salient points were that STT, the holder of a patent number
2006/02775
and equipment to manufacture sandstone bricks, had
received contracts for the supply of such sandstone bricks. The
investor would
then invest in the project known as Bloemfontein
International Convention Centre (BICC project).
[5] On signature of the
Agreement, the investor would pay the amount agreed upon into the
bank account of STT. STT would then buy
the material and equipment in
order to manufacture the sandstone bricks. 2.5% of the net profit of
the projected figures of the
BICC project would be payable to the
investor on finalisation of the project and not later than May 2009.
[6] However, on
14
December 2007
,
P.B. Du Preez
, as a representative of STT,
nominated under cover of a letter addressed to ‘Geagte
Belegger’ dated
14 December 2007,
an extract of the
contents reading as follows:
”…
die
volgende Bankrekening genomineer vir inbetalings van die onderskeie
beleggings in die sg. Bloemfontein International Convention
Centre &
STT.
Bank: Nedbank Business
Free State
Naam: HI Du Preez t/a
Ducon
Rek no: 1662040822
B/kode: 166234
Tipe: Lopend(Tjek)
Met Dank”
[7] This Bank account
belonged to the Second Applicant and according to the affidavits
filed of record, the monies deposited into
this account were utilised
to purchase material and the VAT recovered was for the business of
Second Applicant.
[8] As authorised
representative of STT and having, as such, agreed to grant security
for his indebtedness arising out of the Investment
Agreement referred
to as the “Main Agreement”, Third Applicant agreed to
pledge to the investors (now termed the pledgees)
his rights to, and
the proceeds of a certain property identified as plot 47, Sand du
Plessis Avenue, Estoire, Bloemfontein; the
property of the pledger,
whether by sale, rental or any other form of proceeds arising
therefrom. The pledge was signed by the
parties on
20 December
2007
.
[9] On 3 and 5 February
2009, Respondents caused a letter to be addressed to the
Trustee
Sandstone Technology Trust c/o Mr PB du Preez
and the Second
Applicant, bringing it to their attention that it had come to the
Respondents’ attention that the Bloemfontein
International
Convention Centre would not be completed by
31 May 2009
;confirming
also the undertaking by the latter to refund the former the amount of
the investment plus interest thereon, provided
such payment would be
effected within fourteen days from the date of the letter.
[10] Third Respondent,
responding through his attorney under cover of a letter dated
12
February 2009
, confirmed that the Respondents’ investments
had indeed been used by the STT for the purchase of material and
equipment in
order to manufacture the sandstone bricks. In terms of
an agreement between the parties, the investments would only become
due
and payable on
31 May 2009
. However, the attorney’s
instructions were that the Trust was in the process of raising funds
to repay the investors their
capital amount together with interest at
prime plus two from date of the investment to date of final payment.
Confirmation of payment
would be made on/or before
20 March 2009
.
[11] Third Applicant’s
attorney failed to address the contents of the correspondence of
3
February 2009
by Respondents’ attorneys that the BICC would
not be completed by
31 May 2009
.
[12] On
6 March 2009
,
Respondents’ attorneys addressed a letter to Applicants’
attorney confirming the following:
“
1.
PB
du Preez
had
sold 17 Vlei Avenue, Dealesgift;
2…..
3. Confirmation that the
matter be held over until
10 March 2009
when a final offer of the settlement would be made.”
[13] As payment was not
forthcoming, Respondents then filed an application to have STT
declared an alter ego of the First and Second
Respondents on
13
May 2009
. Applicants file a Notice of Opposition.
[14] Negotiations once
more ensued between the respective attorneys culminating in a letter
from
Messrs Honey Attorneys
on behalf of the Respondents,
undertaking not to proceed with execution within a period of thirty
days and that a Notice of Withdrawal
of the Opposition should be
filed to facilitate the granting of an Order on an unopposed basis.
Such notice as filed and the Order
was duly granted on
9 May 2009.
[15] Despite the order
and undertakings to pay, no payment was made by the respondents.
Several steps towards execution were taken
for the recovery of the
monies paid over to Applicants culminating in the application by the
Applicants under
Case Number 1811/2011
in which he Applicants
resisted the attachment and sale of property on the basis that the
execution against such property was improper.
The Honourable Wright J
made an order suspending the sale in execution pending the
application for the rescission of the judgment/order
and granted a
punitive costs order against the applicants.
[16] A further sale in
execution was arranged as against the Applicants’ movable
assets, which led to urgent application of
7 May 2012
, being
the date on which the sale of execution would have taken place. In
this application, rescission of judgment is sought.
CONTENTIONS BY THE
PARTIES
[17]
Mr Snyman
advances the following submissions:
1. Good grounds exist for
the Court to grant condonation for the late filing of the application
for the rescission of the order,
in that:
1.1
Mr Cobus le Roux
,
the Applicants’ erstwhile attorney, created the impression to
them that the order granted on
9 July 2009
was decided on the
merits and they had to abide by it.
1.2 After the demise of
Mr le Roux
, the Applicants coincidentally received contrary to
his; and due to financial constraints, they could not pursue the
matter any
further;
1.3 The pursuit of the
present application was made possible by the assistance of third
parties;
2. The Applicants have
presented a reasonable and acceptable explanation for their default
and have a bona fide defence which, prima
facie, carries some
prospect of success, in that:
2.1 Facts were present
but withheld at the time of
Van Zyl J’
s decision, which
would have moved her not to grant the order as she did;
2.2 The order was
erroneously sought or erroneously granted in the absence of the
Applicants who were affected thereby;
2.3 The transactions
forming the basis of the application under
Case Number 2326/2009
were loan agreements rather than investments by unregistered credit
providers;
2.4 Such transactions are
null and void as they were entered into contrary to the provisions of
the
National Credit Act, 34 of 2005
;
2.5 Had the true nature
of the transactions been disclosed, the Court would not have granted
the order as it did;
[18]
Mr Zietsman
,
on behalf of the Respondents, submits as follows:
The condonation
application should not succeed because of the following:
3.1 The effluxion of a
period of three years since the order was granted;
3.2 Despite applications
to the Court by the Applicants, no formal application for the
rescission of the order was made except in
the present application;
3.3 Two years after the
order was granted, Applicants approached Court to suspend a sale in
execution. Applicants only approach
Court when threatened with
execution against their property;
3.4 Applicants put the
blame on the deceased
Mr Le Roux
, whom they allege to have
given them wrong advice and acting contrary to their instructions in
the matter that served before the
Honourable
Van Zyl J
;
3.5 Such allegations
constitute hearsay evidence and should not be entertained. The late
Le Roux
became a trustee of the Third Applicant in
December
2009
; indicative and confirmative of the close ties between him
and the Applicants;
3.6 The declaration by
the Court of Third Applicant as the alter ego of both First and
Second Applicants was to facilitate payment
by the Applicants. Such
declaration has no bearing whatsoever on the
National Credit Act,
34 of 2005
;
3.7 Despite having raised
three defences previously, Applicants were now relying on one defence
only, namely; that the investments
to STT were nothing else but pure
money-lending transactions;
3.8 Applicants cannot
talk of the order having been obtained fraudulently as they were the
ones who drafted documents creating the
impression that the
Respondents were investing in STT;
3.9 The argument that the
transactions were loans is untenable as it is based on the settlement
agreement reached at a later stage
for purposes of securing the
repayment of monies already paid;
3.10
Section 4
of
the
National Credit Act, excludes
the Third Respondent from the
operation of the Act.
THE LEGAL POSITION
[19]
Mr Snyman
submits, correctly so, that an application for the rescission of
judgment can be brought in terms of Uniform
Rules 31(2)(b);
42(1)(a)
and in terms of the common law.
[20] Uniform
Rule
31(2)(b)
reads as follows;
“
A
defendant may within
20
days
after
he has knowledge of such judgment apply to court upon notice to the
plaintiff to set aside such judgment and the court may,
upon
good cause shown,
set
aside the default judgment on such terms as to it seems meet.”
[21] Uniform
Rule
42(1)(a)
reads as follows:
“
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:
(a) An order or judgment
erroneously sought or erroneously granted in the absence of any party
affected thereby;”
[22] The requirements for
an application for the rescission of judgment under
sub rule
31(2)(b)
have been stated as follows in
Grant v Plumber
1949(2) SA 470(O) at 476-477:
“
(a)
He (the Applicant) must give a reasonable explanation for 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) His application must
be bona fide
and not made with the intention of merely delaying
the Plaintiff’s claim.
(c) He must show that he
has a bona fide defence to the Plaintiff’s claim….”
[23] The explanation by
the defendant must be sufficiently full to enable the Court to
understand how it really came about, and
to assess the applicant’
s conduct and motives.
See
Silber v Ozen Wholesalers Ltd
1954 (2) SA 345
(A) at 353.
[24] Before an applicant
in a rescission of judgment application can be said to be in ‘wilful
default’ he or she must
bear knowledge of the action brought
against him or her and of the steps required to avoid the default.
Such an applicant must
deliberately, being free to do so, fail or
omit to take the step which would avoid the default and must
appreciate the legal consequences
of his or her actions.
Harris
v Absa Bank Ltd t/a Volkskas
2006(4) SA 527 (T).
[25] “Good cause”
includes, but is not limited to, the existence of a substantial
defence….cannot be held to
be satisfied unless there is
evidence, not only of the existence of a substantial defence, but in
addition, of the
bona fide presently held desire
on the part
of the applicant for relief actually to
raise the
defence
concerned in the event of the judgment being rescinded.
See
Silber v Ozen Wholesalers
supra
at 352; also
Galp v Jansley NO
1966 (4) SA 555
(C) at 560
.
[26] A judgment is
erroneously granted if there was an irregularity in the proceedings
or if it was not legally competent for the
court to have made such an
order.
[27] A judgment to which
a party is procedurally entitled cannot be considered to have been
granted erroneously within the meaning
of this sub rule by reason of
facts of which the judge who granted the
judgment was unaware
;
so also is the judgment granted in the absence of the defendant in
the light of a subsequently disclosed defence, such a defence
cannot
transform a validly obtained judgment into an erroneous one.
Lodhi
2 Properties Investments CC v Bonder Investments Developments (Pty)
LTD
2007 (6) SA 87
(SCA) 94E
.
FINDINGS
[28] I find it difficult
to believe that applicants firmly believe that their erstwhile
attorney, the late
Mr Le Roux
, acted contrary to their
instructions when the notice of withdrawal of the opposition was
filed. The correspondence between the
attorneys then, which continued
over a prolonged period before and after the granting of the order,
clearly indicates that such
a submission is untenable.
[29] Months before the
granting of the order on
9 July 2009
they had instructed their
attorney to negotiate with the Respondents to gain time for purposes
of raising money in order to compensate
the Applicants for their loss
and were unable to raise the requisite capital.
[30] They regarded the
payments to themselves as investments and the defence that such
payments were loan agreements came later
as an afterthought.
[31] I agree with
Mr
Zietsman
that the thrust of the order under
Case No.2326/2009
was the declaration of STT as the alter ego of 1
st
and
2
nd
Respondents; and consequently that the
1
st
and
2
nd
Respondents
were jointly and
severally, responsible for the payment of monies paid by the
Respondents to the Applicants.
[32] As such, the order
had far-reaching consequences as shown by the various court
applications and steps taken in execution of
the judgment. Therefore
I find it strange that Applicants, having a bona fide defence as they
maintain, never pursued it vigorously
to avert the granting of the
Order by
van Zyl J
, which had visited such hardships to their
lives. It is equally strange that they place the blame for their
non-appearance on the
late Mr Le Roux, whom they welcomed as a
trustee of STT months after the granting of the order.
[33] Applicants have
failed to disclose what the “merits” were that they had
to abide by according to
Le Roux
. At no stage were the actual
circumstances surrounding the “merits” that the court
pronounced on revealed. This presupposes
that the court should have
dealt, and indeed it did, with the matter as set out in the papers
before it. They do not describe what
their defence was then; as the
defence under consideration could not have existed. The Applicants
were satisfied to make bare allegations
of being inappropriately
advised, their attorneys having failed to execute their mandate which
they fail to set out in their papers
and acquiesced therein.
[34] Every time there is
an execution against property or a threat thereof, the Applicants
approach court with defences that are
not consistent. The defences
raised in their papers indicate in my mind their wish to shirk the
responsibility of ultimately owning
up. So also the fact that some of
the properties judicially attached were nowhere to be found for
purposes of completing the execution
process. Despite the various
execution proceedings against them, Applicants failed to approach
Court with an application to rescind
the order. This, in my mind,
clearly indicates that applicants were delaying Respondent’s
claim.
[35] I am convinced that
the Honourable
Van Zyl J,
was neither misled nor gave a wrong
order as she did. Consequently I come to the finding that, as at the
granting of the order,
the Applicants had no bona fide defence which
could later give rise to a successful rescission of judgment. The
application should
therefore fail on this ground.
[36] The defence raised,
having regard to the above, is without merit and irrelevant as at
09
July 2009
when the order was made. I therefore agree with the
submission of
Mr Zietsman
that STT, as a juristic person as
defined in
Section 1
of the
National Credit Act, 34 of 2005
,
is excluded from the operation of such Act.
[37] I can only come but
to one conclusion, namely, that the Applicants’ conduct and
motives were to evade payment; and that
at the time the order was
made they had no bona fide defence and their subsequent applications
were also not
bona fide
.
COSTS
[38]
Mr Zietsman
asked that a special costs order be awarded against the Applicants,
jointly and severally, the one paying the other to be absolved.
[39] In the
circumstances, and in the light of the Applicants’ vexatious
behaviour, a special order of costs is warranted.
[40] I therefore make the
following order:
The application is
dismissed with costs; costs to be paid on an attorney and client
scale.
_________________
J. J. MHLAMBI, AJ
On behalf of
Applicant
: Adv.
Instructed by:
BLOEMFONTEIN
On behalf of
Respondent
: Adv.
Instructed by:
BLOEMFONTEIN