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[2024] ZAECMKHC 51
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EFB Farm (Pty) Ltd v RV Smith CC (170/2023) [2024] ZAECMKHC 51 (24 May 2024)
SAFLII
Note:
Certain
personal/private details of parties or witnesses have been
redacted from this document in compliance with the law
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SAFLII
Policy
IN
THE HIGH COURT OF SOUTH AFRICA
(EASTERN
CAPE DIVISION, MAKHANDA)
Case
no. 170/2023
In
the matter between:
EFB
FARM (PTY)
LTD
Appellant
and
RV
SMITH
CC
Respondent
EX
TEMPORE JUDGMENT
LAING
J
[1]
This is an appeal against a judgment delivered in the Gqeberha
District Court, dismissing the appellant’s application
for
rescission.
[2]
The parties previously concluded a contract for the provision of,
inter alia
, roofing repairs and related services at Glen Boyd
Farm Dam, situated in Makhanda. A dispute arose between the parties
and the
respondent instituted action for payment of R 211,558.
[3]
The sheriff attended to service of the combined summons and
particulars of claim on 13 April 2021. More will be said about
this
later. The appellant failed to deliver a notice of intention to
defend, and the respondent obtained judgment by default on
24 May
2021.
[4]
The first time that the appellant became aware of the matter, alleges
its financial manager, Ms Michelle van Jaarsveld,
was on 6 May 2022,
when the sheriff contacted her about the appellant’s address
for purposes of serving a warrant of execution.
This prompted Ms van
Jaarsveld to instruct the appellant’s attorneys to launch a
rescission application, which the respondent
opposed.
[5]
The district court dismissed the application. In his judgment, the
magistrate held that the respondent was within its
right to direct
service of the summons at the appellant’s registered address,
viz. 1[…] C[…] Road, M[…]
C[…], Gqeberha,
notwithstanding that the appellant no longer operated therefrom. The
magistrate pointed out that the appellant
never explained why it
failed to comply with
section 23
of the
Companies Act 71 of 2008
,
requiring notification of any change in address to be given to the
Companies and Intellectual Property Commission (‘CIPC’).
Consequently, there had been proper service of the summons. The
magistrate also held that the appellant failed to make out a
bona
fide
defence, as required by the Magistrates’ Court rules.
It was unclear from Ms van Jaarsveld’s affidavit what such
defence
comprised.
[6]
The grounds of the appeal are based primarily on those two findings.
The appeal is not opposed.
[7]
In terms of section 36(1)(a) of the Magistrates’ Court Act 32
of 1944, a court may rescind or vary any judgment
granted in the
absence of a person. The procedure in that regard is contained in
rule 49 of the Magistrates’ Court rules.
To that effect,
sub-rule (1) permits a court to rescind a default judgment upon good
cause shown or if there is good reason to
do so, while sub-rule (3)
stipulates that an applicant who wishes to defend the proceedings
must set out the reasons for his or
her absence or default, as well
as the grounds of his or her defence.
[8]
In the present matter, the appellant explained that it was simply
unaware of the summons, notwithstanding service at its registered
address. The company no longer operated from 1[…] C[…]
Road; it traded as Glen Boyd Farm Dam and was based in Makhanda.
Importantly, averred the appellant, the respondent was aware of this
because it carried out work at the Makhanda address and later
instructed the sheriff to serve the warrant of execution thereat. The
respondent did not dispute this.
[9]
The district court agreed with the respondent, however, that
notwithstanding the appellant’s lack of knowledge of
the
proceedings, there was indeed proper service of the summons. In this
regard, rule 9(3)(e) stipulates that process shall be
served on a
corporation or a company as follows:
‘
by delivering a
copy to a responsible employee thereof at its registered office or
its principal place of business within the court’s
jurisdiction, or if there is no such employee willing to accept
service, by affixing a copy to the main door of such office or
place
of business, or in any manner provided by law.’
[10]
An elementary principle of South African law is that a litigant has a
right to be informed of any proceedings
instituted against him or
her. In the case where a litigant is a company, then rule 9(3)(e)
allows service on a responsible employee
thereof, failing which the
sheriff may attach a copy of the process to the main door of the
registered office or principal place
of business. In
Magricor
(Pty) Ltd v Border Seed Distributors CC
2021 JDR 0104 (ECG), to
which the appellant referred, the court observed that the purpose of
the corresponding rule in the High
Court is to ensure that the
process comes to the attention of the juristic entity. The court went
on to hold that proper service
occurs when: (a) the process is served
on a company’s employee; or (b), when the employee is unwilling
to accept service,
by affixing a copy of the process to the main door
of the registered office.
[11]
The facts in this matter are somewhat distinguishable from those in
Magricor
and the decisions to which the court referred, i.e.
Arendsnes Sweefspoor CC v Botha
2013 (5) SA 399
(SCA) and
earlier cases. This is because there was no evidence of an employee
or anyone else having been available to accept service.
The contents
of the sheriff’s return of service stated as follows:
‘
On
this 13
th
day of
April 2021 at 14h07, I served this combined summons with particulars
of claim upon EFB Farm (Pty) Ltd at the registered
address at 1[…]
C[…] Road, M[…] C[…], Port Elizabeth, by
affixing a copy to the principal door as I
found the premises locked.
No other service was possible after performing a diligent search.’
[12]
In the circumstances, the sheriff was unable to serve the summons
upon any employee of the appellant and attached it
to the ‘principal
door’, as permitted under rule 9(3)(e). What is concerning,
however, is what followed in the rest
of the return of service. The
relevant portion read, in capitalised text:
‘
THERE
IS [a] BANK, CLINIC & DEVELOPMENT HUB AT THE GIVEN ADDRESS.’
[13]
There is no mention of the appellant. There is no indication, at all,
that the sheriff attached the summons to the main
door of the
appellant’s registered office or place of business. This stands
to reason considering Ms van Jaarsveld’s
assertion that the
appellant no longer operates from 1[…] C[…] Road. In
the absence of any evidence to the contrary,
such as an affidavit
from the sheriff, the return of service must be understood as
indicating service by attaching the summons
to the ‘principal
door’ of the bank, the clinic, or the development hub. It
cannot in any way be contended that the
requirements of rule 9(3)(e)
were met. The service of the summons was bad, the appellant was never
informed of the proceedings.
[14]
That the respondent was aware of the appellant’s current
address aggravates the irregularity. No explanation is
apparent from
the record why the respondent did not or could not instruct the
sheriff to serve the summons at Glen Boyd Farm Dam,
in Makhanda,
where Ms van Jaarsveld resided and at which the respondent carried
out the work that gave rise to the dispute. The
use of a disused
registered address suggests, at the least, a measure of cynicism on
the respondent’s part.
[15]
Turning to the grounds of the appellant’s defence, Ms van
Jaarsveld alleged in her founding affidavit to the rescission
application that the respondent breached the contract through
defective workmanship or malperformance, as she called it. She
amplified
her allegation by referring to correspondence between the
parties, from which it is evident that there were problems with the
supply
of wooden fascia boards, the installation of aluminium
gutters, the construction of dry-walling, and the repair of the
pressed
ceilings. The most recent correspondence indicated that that
the roof was still leaking. Ms van Jaarsveld also referred to a
report
prepared by an independent roofing and waterproofing business,
Imcor CC, in terms of which it was averred that the gables had not
been properly repaired, and that the verandah sheeting, aluminium
gutters, and downpipes had not been properly installed.
[16]
Although the appellant did not set out the precise details of its
defence, it did so with sufficient detail and clarity
to make it
obvious that it was relying on an alleged breach of contract. The
decision of the full court in
Hlophe v Freedom Under Law
2022
(2) SA 523
(GJ) is authority to the effect that the rules relating to
pleadings, as contained in rule 18 of the Uniform Rules of Court and
rule 6 of the Magistrates’ Court rules, do not apply to
affidavits.
[17]
It cannot be said, in the present matter, that the appellant failed
to comply substantially with the provisions of rule
49(3). The
appellant satisfactorily set out the reasons for its absence or
default, as well as the grounds of its defence. Consequently,
I am
persuaded that there was indeed good cause for the default judgment
to have been rescinded and that the district court misdirected
itself
in not doing so. It would also follow that there was no basis for the
respondent’s warrant of execution.
[18]
Regarding costs, the appellant has been put to the unnecessary
expense of having to pursue an appeal. There is no reason
why it
should not be entitled to recover the costs thereof. It never sought
the costs of its rescission application, however, as
counsel
conceded.
[19]
Consequently, the following order is made.
(a)
The appeal succeeds and the judgment of the
district court, dated 15 August 2023, is set aside, and replaced with
the following:
‘
1. The
default judgment granted against the applicant on 24 May 2021, under
case number 2544/2021, in the Magistrates’
Court for the
District of Gqeberha (Port Elizabeth), is rescinded.
2.
The applicant is granted leave to deliver its
plea within 15 court days of the date of this order.’
(b)
The respondent shall pay the costs of the appeal.
JGA
LAING
JUDGE
OF THE HIGH COURT
I
concur.
GH
BLOEM
JUDGE
OF THE HIGH COURT
Date
heard:
24 May 2024
Date
delivered
: 24 May 2024
Appearances:
Counsel
for the Appellant: Adv L Ntlokwana
Chambers, Makhanda
Instructed
by:
Kawondera Alex Attorneys Inc.
Appellant’s
Attorneys
1 Glanville Street
Makhanda
Tel: 046 307 0046
Email:
alex@kaattorneys.co.za
Counsel
for the Respondent: None Appearance