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[2012] ZAKZPHC 80
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Forrest Crest Properties CC v Matthee and Others (AR 194/11) [2012] ZAKZPHC 80 (30 July 2012)
1
REPORTABLE
IN THE KWAZULU-NATAL HIGH COURT,
PIETERMARITZBURG
REPUBLIC OF SOUTH AFRICA
APPEAL AR 194/11
FORREST CREST PROPERTIES CC
............................................................
APPELLANT
and
JOHANNES VENTER MATTHEE
....................................................
FIRST
RESPONDENT
LESTER HALL, SWAN & FLETCHER
INC
................................
SECOND
RESPONDENT
MINISTER OF JUSTICE &
CONSTITUTIONAL
DEVELOPMENT
..............................................................................
THIRD
RESPONDENT
JUDGMENT
Delivered
on30 July 2012
______________________________________________________________________
MURUGASEN, J
Introduction
[1] The parties herein are referred to
as they were in the court a quo.
[2] This an appeal against the
dismissal with costs by the learned Magistrate, Pinetown of an
application for rescission of judgment
by default granted in favour
of the plaintiff against the defendant on 19 April 2010 for payment
of the sum of R400 000 together
with costs and interest.
Proceedings in the Court
a
quo
[3] On 9 March 2010, the plaintiff,
Johannes Venter Matthee (first respondent herein), instituted an
action under Case Number 3481/10
in the Pinetown Magistrate’s
Court against the defendant, Forrest Crest Properties CC,
Registration Number 1995/018175/23
(appellant herein), for payment of
the sum of R400 000 being the purchase price of an immovable property
sold by the plaintiff
to the defendant in terms of a written
agreement of sale dated 9 March 2006 (‘the agreement’).
[4] It was a material term of the
agreement that the purchase price would be paid to the plaintiff by
the conveyancers on behalf
of the defendant on registration of
transfer of the property to a third party.
[5] The registration of the transfer
of property to the third party was effected on or about 5 February
2010. The defendant however
failed to pay the purchase price in terms
of his obligation under the terms of the agreement to the plaintiff.
The plaintiff consequently
instituted an action against the defendant
arising from the defendant’s breach of his obligation to pay
the purchase price
on the registration of transfer of the property.
[6] The summons was served on the
defendant by a copy thereof being affixed to the principal door of
the registered office at his
domiciliumcitandi et executandi,
being 22 Underwood Road Pinetown on 23 March 2010. The defendant
did not enter an appearance to defend the action.
[7] On 15 April 2010 the plaintiff
applied for default judgment against the defendant for payment of the
sum of R400 000 plus costs
in the sum of R896.32, and interest on the
capital sum. Default judgment was granted on 19 April 2010.
The Application for Rescission
[8] By way of an application dated 26
April 2010, the defendant applied for rescission of the aforesaid
judgment and other relief,
inter alia,
that the second
respondent, Lester Hall Swan & Fletcher Incorporated, be directed
to retain the funds held by it in trust in
terms of its undertaking
dated 1 February 2010 until the final determination of the rescission
application and of the action in
the Pinetown Magistrate’s
Court under Case 3481/10, should the judgment be rescinded.
[9] Matthee, in his capacity as sole
member of the defendant, deposed to the affidavit in support of the
application for rescission.
He alleged that the defendant did not
defend the action because it did not receive the summons which was
served at the offices
of its accounting officer and Matthee himself
was not in South Africa when the summons was served. Matthee
furnished proof thereof
by way of copies of his airline ticket and
passport. No confirmatory affidavit in respect of the service on the
domicilium
was furnished by the accounting officer.
[10] Matthee contended further that
the purchase price became due and payable only when the immovable
property was transferred ‘during
or about March 2010’. He
alleged however, that he, in his personal capacity, had a claim
against the plaintiff for repayment
of the balance of R442 347 and
interest which was due and payable by the plaintiff in respect of a
loan made to the plaintiff by
Matthee in terms of a contract
concluded during 1997.
[11] It had therefore been agreed that
the purchase price would be held in trust by the second respondent,
which consequently issued
an irrevocable undertaking dated 1 February
2010, to retain the sum of R400 000 from the proceeds of the sale of
the property and
to invest the funds in an interest bearing account
until presented either with a written agreement between the
plaintiff, defendant
and Matthee, authorizing the release of such
funds and interest or a final court order.
[12] Matthee then instituted an action
for repayment of the balance of the loan against the plaintiff in the
Durban High Court on
22 February 2010 under Case No 2201/2010, which
has been defended by the plaintiff.
[13] Matthee alleged that he was
uncertain whether the plaintiff would await the final outcome of that
action before reaching an
agreement about the disposal of the funds
held by the second respondent. But if the plaintiff instituted an
action against the
defendant, he had intended to cede his claim for
repayment of the loan to the defendant so that it could set up a
counterclaim
for the aforesaid amount.
[14] Therefore when Matthee learned of
the action instituted by the plaintiff against the defendant in the
Pinetown Magistrate’s
Court (and the judgment against the
defendant), on 26 April 2010 he ceded to the defendant his right,
title and interest in and
to his claim against plaintiff for the
repayment of the balance of the aforesaid loan. A condition of the
cession was that the
defendant as cessionary could pursue the action
commenced in the Durban High Court in the name of the cedent or in
its own name.
[15] The defendant relied further on
the provisions of Section 47 of the Magistrate’s Court Act No
32 of 1944 to request a
stay of the plaintiff’s action in the
Pinetown Magistrate’s court until the proceedings in the High
Court instituted
by Matthee against the plaintiff, which he had
subsequently ceded to the defendant, was resolved either by judgment
or agreement.
[16] The plaintiff resisted the
application for rescission on the grounds that the defendant did not
set out a valid and
bona fide
defence to the plaintiff’s
claim in compliance with Rule 49 (3) of the Magistrate’s Court
Rules. He did not oppose
the application on the grounds that the
defendant had failed to defend the action and was in wilful default,
as he appears to have
been satisfied with the proof furnished by the
defendant that he was out of the country at the relevant time and did
not receive
the summons served at his
domicilium,
although no
confirmatory affidavit was filed by Hain or any member of his firm of
accountants about the non-receipt of the summons.
[17] On 6 December 2010 the
application for rescission was dismissed with costs by the court
a
quo.
The judgment of the Court a quo
[18] The learned magistrate dismissed
the application for rescission on the following grounds :-
The defendant admitted that the
purchase price was due and payable and failed to set out grounds of
defence which enabled the
court
a quo
to find that the
defendant has a
bona fide
defence to the plaintiff’s
claim and that the application for rescission was not intended
merely to harass the plaintiff.
The defendant’s defence to the
plaintiff’s claim was therefore not a defence on the merits as
it did not establish
a
prima facie
case which, if
established, would entitle the defendant to the relief sought. There
was therefore no triable issue or real dispute
between the parties.
The defendant’s reliance on the
provisions of Section 47 of the Magistrate’s Court Act for a
stay of the proceedings
pending the outcome of the action in the
High Court was ‘misguided’ as a summons issued in the
High Court does not
amount to a claim in reconvention in the
Magistrate’s Court. Therefore, where a defendant does not file
a claim in reconvention
in an action against him in the Magistrate’s
Court but issues summons in the High Court, the magistrate is not
empowered
to stay the action in the Magistrate’s Court.
Further Section 47 applies when the
defendant files a plea and alludes to a counterclaim exceeding the
jurisdiction of the Magistrate’s
court, which is yet to be
filed in a competent court and not when, as in this case,
proceedings had already commenced in the
High Court on 22 February
2010 before the action was instituted in the Magistrate’s
Court on 9 March 2010.
The action in the High Court was
instituted by Matthee in his personal capacity, who, when he became
aware of the plaintiff’s
action ‘to which he had no
defence’, for no apparent reason, ceded his right, title and
interest in and to his claim
against the plaintiff in the High Court
to the defendant. The court a quo was of the view that the
application for rescission
was therefore a strategy to stall the
release of the R400 000 held by the second respondent and
constituted an abuse of
the process of court.
Consequently the defendant had failed
to show good cause or reason why the default judgment fell to be
rescinded, and the application
fell to be dismissed.
Grounds of Appeal
[19] The defendant now appeals against
the dismissal of the application on the grounds that the magistrate
in the court
a quo
failed to appreciate that Rule 49 (3) only
sets out the requirements when a defendant seeks to defend the action
on the merits.
It contends that a defendant’s procedural rights
are not curtailed after the rescission of a judgment against him as
Rules
19 (4) and 20 (3) provide for the circumstance when the
defendant intends to admit the plaintiff’s claim in a dilatory
plea,
but also intends to file a claim in reconvention so that when
judgment is eventually passed on the defendant’s claim in
reconvention,
the claim in reconvention may be set off against the
plaintiff’s claim.
[20] Subsequent to the filing of the
appeal, the defendant launched an application placing in issue the
constitutionality of the
provisions of Section 47 of the Magistrate’s
Court Act, contending that Section 47ought to be declared
unconstitutional as
it violates the provisions of Section 9 (1) and 9
(3) of the Constitution of South Africa, as Section 47(1)
differentiates between
litigants who have commenced proceedings in
another court and those who have not. At the hearing of the appeal,
the defendant’s
application to join the Minister of Justice and
Constitutional Development as Third Respondent in the appeal in
compliance with
Rule 10A of the Uniform Rules, was granted.
Plaintiff’s Grounds of
Opposition to the Appeal
[21] The appeal is opposed by the
plaintiff on the grounds that the defendant does not have a
bona
fide
defence to the plaintiff’s action as the cause of
action arose when on registration of transfer of the property, the
purchase
price became payable to the plaintiff. The defendant has
admitted that the purchase price was payable on registration of
transfer
and Matthee does not deny the defendant’s indebtedness
to the plaintiff. The defendant relies on the cession by Matthee
which
was effected on 26 April 2010, and is
ex post facto
the
commencement of the action in the Magistrate’s Courton 23 March
2010 and also the default judgment granted on 19 April
2010. The
cession and thus the cause of action in respect of the defendant’s
counterclaim did not exist at the time the action
was instituted by
the plaintiff. The plaintiff therefore submits that the reliance on
the cession was therefore without merit as
the defendant had no valid
and
bona fide
defence to the action in compliance with the
provisions of Rule 49(3).
[22] The plaintiff is also defending
the action in the High Court and has lodged a counterclaim for R1 975
000 plus interest, and
costs which was in excess of its claim in the
Magistrate’s Court and the ceded claim in respect of the loan.
[23] The defendant disputes the
correctness of the plaintiff’s contention that because the
cession was effected after the
commencement of his action and the
grant of default judgment, it did not have a
bona fide
defence
to the action at its commencement. It has submitted in response that
the ‘proper’ legal issue was whether the
cession of the
action conferred on the defendant a valid and
bona fide
defence
to theplaintiff’s claim as the validity of the defence is not
dependant on the moment in time when the defence arises.
[24] Matthee avers that had he known
that the plaintiff had served summons on the defendant claiming
payment for the R400 000 he
would have ceded his right, title and
interest in the High Court action to the defendant, which would have
then pleaded that it
had taken cession of the claim against the
plaintiff, which claim exceeded the jurisdiction of the Magistrate’s
Court.
[25] This would have constituted a
valid and triable defence. On this basis he submitted that the
defendant had a
bona fide
and valid defence to the plaintiff’s
action and was entitled to rescission.
Third Respondent’s Grounds
of Opposition
[26] The third respondent agrees with
the plaintiff that the interpretation of the provisions
of Section 47(1) by the court
a quo
is correct and that consequently its dismissal of the
application for rescission and the
reasons therefor are correct.
[27] He contends that as there was no
cession in place when the plaintiff instituted his action against the
defendant, the plaintiff’s
claim is unassailable as the
defendant had no defence. The cession was intended merely to ensure
compliance with Rule 49(3); there
can be no valid cession where the
purpose of the cession is immoral or against policy and such cession
will be ineffectual even
if the intention to cede is genuine.The
defendant’s application is therefore intended to delay the
payment due to the plaintiff.
[28] The third respondent contends
further that the appeal can be determined without
venturing into the constitutionality
of the provisions of Section 47(1). However, should
the appeal court find it necessary to
consider the constitutionality of the provisions of
Section 47(1), the third respondent
submits that while Section 47(1) differentiates
between a litigant who has already
commenced proceedings in another court and a
litigant who has not and who is about
to institute proceedings in another court following
upon the stay of the action in the
Magistrate’s Court, the pertinent question is whether
the differentiation bears a rational
connection to a legitimate government purpose and
whether it amounts to unfair
discrimination under Section 9(3) of the Constitution.
[29] The third respondent submits that
the legitimate government purpose of Section
47(1) is to afford the protection of
the law and to ensure equal treatment to litigants who
are sued in the Magistrate’s
Court but have counterclaims in excess of the Magistrate’s
Court jurisdiction by enabling those
litigants to apply for a stay of action in the
Magistrate’s Court. The
legitimate government purpose is therefore in accordance with
the Constitution in that it promotes
and upholds the right to equality enshrined in Section
9 of the Constitution.
[30] A litigant who has already issued
summons in another court cannot subsequently
avail himself of the procedural right
to counterclaim as contemplated in terms of Section
47(1) read with Rules 20 (3), (4) and
(5) as he has already exercised his right to
access the court and to protection of
the law. There is therefore no violation of
Section 9 or any of his other rights
under the Constitution.
[31] In conclusion the third
respondent contends that the defendant has failed to
demonstrate that it has suffered
unfair discrimination or prejudice or has been
disadvantaged as a result of the
provisions of Section 47(1), as it may still pursue its
claim in the High Court, and the
appeal therefore falls to be dismissed.
Issues for determination on
Appeal
[32] The issues that arise for
determination on appeal are :
1 whether the court
a quo
erred
in finding that the defendant had failed to satisfy the requirements
of Rule 49 (3) in that it has not set out a
bona fide
defence
to the plaintiff’s claim.
2 whether the court
a quo
erred
in finding that the defendant is not entitled to an order staying the
plaintiff’s action in the magistrate’s
court in terms of
Section 47 (1) as :
2.1 the action in the High Court had
been instituted by Matthee prior to the plaintiff’s action in
the Magistrate’s
Court against the defendant;
2.2 a stay of proceedings in terms of
Section 47(1) was available to a defendant who had a counterclaim
exceeding the jurisdiction
of the Magistrate’s Court;
2.3 the defendant did not have such a
counterclaim. At the time when the action was instituted by the
plaintiff and judgment granted,
the defendant did not have a defence
or counterclaim to the plaintiff’s claim. The defendant had
failed to comply with the
requirements of Rule 49 (3).
2.4 The cession was executed on the
day on which the application for rescission was launched and was
therefore not a valid and legal
ground on which the defendant was
entitled to rescission or a stay of proceedings.
3 whether the provisions of Section
47(1) of the Magistrate’s Court Act, No 32 of 1944, are
inconsistent with the Constitution
and lie to be amended.
The law
[33] The Magistrate’s Court Act
No 32 of 1944 provides as follows :
Rule 49 :
Rescission and variation of judgments
(1) A party to
proceedings in which a default judgment has been given, or any person
affected by such judgment, may within 20 days
after obtaining
knowledge of the judgment serve and file an application to court, on
notice to all parties to the proceedings,
for a rescission or
variation of the judgment and the court may, upon good cause shown,
or if it is satisfied that there is good
reason to do so, rescind or
vary the default judgment on such terms as it deems fit:………
(2)………………….
(3) Where an application
for rescission of a default judgment is made by a defendant against
whom the judgment was granted, who
wishes to defend the proceedings,
the application must be supported by an affidavit setting out the
reasons for the defendant's
absence or default and the grounds of the
defendant's defence to the claim.
Section 47: Counterclaim
exceeding jusrisdiction
(1) When in answer to a claim within
the jurisdiction the defendant sets up a counterclaim exceeding the
jurisdiction, the claim
shall not on that account be dismissed; but
the court may, if satisfiedthat the defendant has prima facie a
reasonable prospect
on his counterclaim of obtaining a judgment in
excess of its jurisdiction, stay the action for a reasonable period
in order to
enable him to institute an action in a competent court.
The plaintiff in the magistrate’s court may (not withstanding
his
action therein) counterclaim in such competent court and in that
event all questions as to costs incurred in the magistrate’s
court shall be decided by that competent court.
Rule 20 Claims in reconvention
(3) A defendant may set up by a claim
in reconvention any right or claim which he may allege against the
plaintiff, whether liquid
or illiquid, whether liquidated or
unliquidated, whether or not it arises out of or is connected with
the subject-matter of the
claim in convention and such claim (if
within the jurisdiction of the court) shall have the same effect as a
cross-action, so as
to enable the court to pronounce a final judgment
in the same action both on the claim in convention and on the claim
in reconvention.
(4) A defendant delivering a claim in
reconvention may by notice delivered therewith or within 5 days
thereafter apply to the court
to pronounce that the claim in
reconvention exceeds its jurisdiction and to stay the action under
section 47 of the Act.
(5) Where the court finds that the
claim in reconvention exceeds its jurisdiction, the defendant may
forthwith or by notice delivered
within 5 days after such finding
apply for stay of the action.
An application for rescission
[34] The relevant portion of the
provision reads :
‘
the
court
may
,
upon good cause shown, or if it is satisfied that there is good
reason to do so, rescind or vary the default judgment on such
terms
as it deems fit:…..’ (my emphasis)
[35] It is immediately apparent that :
1
a court
is not entitled to rescind a judgment if the applicant fails to show
‘
good cause’
or does not satisfy the court that there is good reason for the
rescission of the judgement.
even if the applicant succeeds in
showing good cause, it is still within the discretion of the court
whether or not to grant the
relief sought.
This discretion must be exercised
judicially in light of all the facts and circumstances of a case.
[36] The approach to be adopted by the
court is described in
Jones & Buckle
as follows :
‘
An
application for rescission is never simply an enquiry whether or not
to penalise a party for his failure to follow the rules
and
procedures laid down for civil proceedings in our courts. The
question is, rather, whether or not the explanation for the default
and any accompanying conduct by the defaulter, be it wilful or
negligent or otherwise, gives rise to the probable inference that
there is no
bona
fide
defence, and that the application for rescission is not
bona
fide.
The magistrate’s discretion to rescind the judgments of his
court is therefore primarily designed to enable him to do justice
between the parties. He should exercise that discretion by balancing
the interests of the parties, bearing in mind the considerations
referred to in
Grant
v Plumbers (Pty) Ltd
1949 (2) SA 470
(O)
and
HDS
Construction (Pty) Ltd v Wait
1979 (2) SA 298
(T)
,
and also any prejudice that might be occasioned by the outcome of the
application.’
(see
Jones & Buckle The Civil
Practice of the Magistrates’ Court in South Africa , 9
th
ed
Volume II 49 – 4 - 49 – 5)
[37] The defendant has conceded that
it does not seek to oppose the plaintiff’s claim on the merits.
The defendant wishes
to enter what is in effect a dilatory plea –
in thathe alleges that the claim should not be paid as the plaintiff
owes him
more than is due by him to the plaintiff.
[38] Therefore although generally in
an application for rescission the defence to the claim must be a
defence on the merits and
a
prima facie
case should be
established setting out the averments in sufficient detail, which if
established at the trial would entitle the defendant
to relief, the
relief sought by the defendant in this case was not premised on the
merits as the defendant admitted that the plaintiff’s
claim was
due and payable.
[39] The court
a quo
therefore,
in my view, misdirected itself when it found that the defendant’s
founding affidavit failed to comply with the
requirements in Rule 49
(3) because the defendant ‘admitted that the plaintiff’s
claim was due and payable’ but
‘purports to raise it as a
defence that it seeks to rely on the provisions of Section 47 of the
Magistrate’s Court
Act and apply for a stay of the proceedings
pending the outcome of the action in the High Court.’
[40] The defendant nevertheless had to
persuade the court
a quo
that there was good reason to grant
the rescission viz that the defendant could rely on Section 47(1) as
it had reasonable prospects
of success in respect of a counterclaim
that exceeded the jurisdiction of the Magistrate’s Court. The
defendant sought the
rescission relying on the cession of the action
instituted by Matthee in the High Court to stay the proceedings,
alleging that
he had intended to effect the cession of his claim to
the defendant to enable it to file a claim in reconvention, should
the plaintiff
institute an action against the defendant.
[41] There were in my view two
problems that the defendant had to overcome in the application for
rescission before the court
a quo
.
[42] The first arises from the
discretion the provisions of Section 47(1) confer on a court which is
requested to stay proceedings
as the court
may
only order the
stay
if satisfied
that the defendant has
prima facie
a
reasonable prospect of obtaining judgment in excess of its
jurisdiction on his counterclaim (my emphasis). It is therefore
incumbent
upon the court to consider the defendant’s
counterclaim, in order to exercise its discretion judicially. The
fact that the
defendant has already instituted an action for a claim
in excess of the jurisdiction of the Magistrates’ Court does
not preclude
its filing of a counterclaim to the plaintiff’s
action.
[43] I am fortified in this regard by
the judgment in
Esterhuizen v Holmes 1947(2) SA789 (T).
In
that case, while the action in the Magistrate’s Court was
pending, the defendant instituted an action in the then Supreme
Court
and requested that the matter be stayed pending the result of his
action against the plaintiff in the Supreme Court. The
court held per
Neser J
that a claim in reconvention had to be filed before an
application in terms of Section 47(1) was competent and that as no
claim
in reconvention had been filed before the court
a quo,
it
had correctly refused an application to stay the proceedings before
it although the defendant had instituted an action in the
Supreme
Court for a claim in excess of the jurisdiction of the Magistrates’
Court. The learned judge held further at page
797 :
‘
I know of no
provision in the Magistrates' Courts Act whereby a magistrate would
be empowered to stay an action instituted by a
plaintiff against a
defendant in the magistrate's court merely because the defendant had,
either previously to or after issue of
summons by the plaintiff in
the magistrate's court, issued a summons in the Supreme Court against
the plaintiff.’
[44] Therefore the only basis upon
which an action can be stayed in terms of Section 47 is if a
counterclaim has been filed. In
my view, the rationale for this
decision clearly lies in the aforementioned obligation imposed on the
magistrate in the exercise
of his discretion by the provisions of
Section 47(1).
[45] My view is
also not inconsistent with
the commentary in
Jones and
Buckle
on which the court
a quo
relied :
a summons issued in the High Court
does not amount to a claim in reconvention in the Magistrates’
Court;
where a defendant who is sued in the
Magistrates’ Court does not file a claim in reconvention but
merely issues summons
in the High Court, the magistrate is not
empowered to stay the action in his court;
a plea alleging facts which would
justify a claim in reconvention being made or alleging facts which
are used to found a counterclaim
in some other Court does not amount
to the setting up of a counter claim within the meaning of the
section.
[46] Without a counterclaim before it,
the court
a quo
herein could not decide on the
prima facie
prospects of the defendant and consequently whether there was good
cause or reason to grant the rescission, thereby enabling the
defendant to file a counterclaim and stay the proceedings.
[47] However, in my view the court
a
quo
erred when it held that the defendant’s reliance on
Section 47 of the Magistrate’s Court Act was ‘misguided’
because the section only applies whenthe defendant files a plea and
alludes to a counterclaim exceeding jurisdiction, which isyet
to be
filed in a competent court.’ It also erred when it held further
that as the defendant referred to ‘aclaim which
was commenced
in the High court before the respondent’s (plaintiff’s)
summons wasissued, the claim in the High Court
was ‘totally
separate’ and could not ‘be connected tothese proceedings
by employing Rule 49 of the rules of this
Court’.
[48] The proper reason is that a claim
in reconvention must be filed,
whether before or after
the
institution of the claim in another competent court, before a stay
may be ordered, as a defendant is not precluded from filing
a
counterclaim and applying for a stay of prosecution although he has
already instituted an action in the High Court.
[49] The issue raised by the defendant
in respect of the constitutionality of Section 47 is also resolved.
Despite the portentous
arguments on this issue, Section 47(1) does
not in fact differentiate between litigants who have commenced
proceedings in another
court and those who have not. There is
therefore no merit in the defendant’s application to declare
Section 47 unconstitutional
and for amendments thereto.
[50] The second problem which faced
the defendant in the application for rescission, is that when the
judgment was granted against
the defendant, the cession had not been
effected. An intention to cede expressed
ex post facto
did not
satisfy the court
a quo
. It noted that although Matthee had
commenced the action in the High Court on 22 February 2010 in his
personal capacity, once he
became aware of the plaintiff’s
action to which the defendant had no defence, he ‘for no
apparent reason’ effected
the cession to the defendant. It
consequently held that the cession was ‘a strategy designed to
stall the release of the
R400 000’ to the plaintiff
pursuant to the judgment in his favour, as Matthee wanted to use the
Magistrates’ Court
to protect his claim in the High Court by
ensuring that the plaintiff had the funds to satisfy any judgment
Matthee may obtain
in the High Court.
[51] While Section 47(1) does provide
a legitimate procedure to protect a counterclaim exceeding the
jurisdiction of the Magistrates’
Court, it is common cause that
the counterclaim in favour of the defendant did not exist when the
action was instituted and judgment
granted, as the cession was
effected simultaneously with the application for rescission.
[52] I am consequently in agreement
with the court
a quo
that the cession was an abuse of the
court process, the dilatory objective of which is consistent with the
acrimonious relationship
between the parties.
[53] It is also noted that the
plaintiff has filed a counterclaim in the High Court in excess of the
defendant’s claim.
[54] Further the object of rescinding
a judgment is to restore the opportunity for a real dispute to be
ventilated. But as the court
a quo
was unable to make an
informed decision on the prospects of success of any counterclaim,
the defendant failed to furnish a good
reason for the exercise of the
court’s discretion in its favour in granting the rescission
sought.
[55] Nevertheless there is no undue
prejudice to the defendant (or Matthee) by the refusal of the
application for rescission as
the defendant may pursue the ceded
claim, which it intended to set up as a claim in reconvention, in the
High Court.
[56] Consequently while the court
a
quo
may have erred and misdirected itself in its interpretation
and application of the relevant legal principles in its judgment, the
refusal of the application for rescission itself is the proper
outcome and the appeal therefore falls to be dismissed.
Costs
[57] There is no reason why costs
should not follow the result. The plaintiff is therefore
entitled to its costs in opposing the
appeal.
[58] Insofar as costs of the third
respondent is concerned, the defendant chose to raise
a constitutional issue, the motivation
for which was Matthee’s personal and selfish
interests. In my view, this was just
another attempt to utilise legal proceedings to delay
satisfaction of the plaintiff’s
claim, as Matthee could have simply pursued the High Court
action without resorting to conduct
which served only to prolong the proceedings in the
Magistrates’ Court with a
concomitant escalation of costs. I am therefore of the
considered view that defendant should
not be permitted to escape full responsibility for
the costs of the third respondent.
Order
I accordingly propose the following
order :
The appeal is dismissed and the
refusal of the application for rescission with costs by the court
a
quo
is confirmed.
The application dated 31 August 2011
for an order in terms of paragraphs 2 & 3 thereof is dismissed.
The appellant (defendant in the court
a quo
) is ordered to pay the costs of the first respondent
(plaintiff in the court
a quo
).
The appellant is ordered to pay the
third respondent’s costs of the opposed hearing on 7 May 2012.
SEEGOBIN, J. I Agree
______________________
MURUGASEN, J. It is so ordered.
______________________
Counsel
for the Plaintiff: Adv E Lingerfelder
Instructed
by: Lingerfelder Attorneys
Gillitts
Park
2
Roger Place
Gillitts
Counsel
for the First Respondent: Adv S Hoar
Instructed
by: Ewing McKeownInc
Mafavuke
House
28
Old Main Road
Hillcres
t
Counsel
for the Third Respondent: AdvTS Mthembu
Instructed
by: The State Attorney
8
Floor
Metropolitan
Life Building
391
Smith Street
Durban