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2024
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[2024] ZAFSHC 264
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Hlano Financial Services (Pty) Ltd v Member of the Executive Council for Human Settlements, Free State (1150/2024) [2024] ZAFSHC 264 (26 August 2024)
IN
THE HIGH COURT OF SOUTH AFRICA
FREE
STATE DIVISION, BLOEMFONTEIN
Reportable
/ Not reportable
Case
no:
1150/2024
In
the matter between
HLANO
FINANCIAL SERVICES (PTY) LTD
Applicant
and
THE
MEMBER OF THE EXECUTIVE COUNCIL
FOR
HUMAN SETTLEMENTS, FREE STATE
Respondent
Coram:
Cronje AJ
Heard:
8 August 2024
Delivered:
26 August 2024
Summary:
Application for condonation – Explanation for delay weak –
Good cause shown – Condonation granted – Prospects
of
success – Costs.
ORDER
1.
The application for condonation is granted.
2.
The Applicant pays the costs of the application, including the costs
of senior counsel, to
be taxed on scale C.
JUDGMENT
Cronjé,
AJ
Introduction
[1]
The Applicant brought an application against the Respondent
claiming R429 226 178.74 (four hundred and twenty-nine
million,
two hundred and twenty-six thousand, one hundred and
seventy-eight rand and seventy-four cents) according to an
undertaking given
by the Respondent in favour of the Applicant for
2 602 contractual borrowers. The merits of the main application
do not serve
before me. I am only called upon to determine whether
condonation should be granted to the Respondent for the late filing
of its
answering affidavit.
Condonation
and explanation for the delay
[2]
The Registrar issued the application on 27 February 2024. It
was served on the Respondent on 29 February 2024 and the State
Attorney
on 28 February 2024. The Respondent had to file its notice
of opposition on or before 22 March 2024. It was, however, only
delivered
on 25 March 2024.
[3]
On the day the answering affidavit was due, 17 April 2024, the
Respondent requested an extension until 10 May 2024. The reason
proffered
was that the attorney in the offices of the State Attorney
dealing with the matter was hospitalised. Subsequently, further
extensions
were granted to the Respondent, and an indulgence was
granted to file the answering affidavit by no later than 10 May 2024.
This
did not materialise, and the Respondent requested an extension
until 24 May 2024. At that stage, the reason for the request was
that
senior counsel had to be appointed, but was not yet secured.
[4]
The Respondent was advised that the application would be
enrolled on the unopposed roll for 6 June 2024 if the answering
affidavit
and an application for condonation for late delivery of the
answering affidavit were not received by 23 May 2024. This did not
happen, and on 4 June 2024, two days before the application would
serve on the unopposed roll, the State Attorney advised that it
received urgent instructions to request that the matter be removed
from the roll of 6 June 2024 or be postponed by agreement to
a later
date. The reason for the request was that the Respondent desired to
review the Applicant’s claims. The Applicant
was prepared to
have the matter postponed by agreement until 27 June 2024, and an
order was granted. All the postponements were
made by agreement
between the parties.
[5]
On 6 June 2024, the State Attorney requested a postponement
until 19 June 2024, which provided for the answering affidavit and
application
for condonation to be filed by 20 June 2024. The
Applicant informed the State Attorney that settlement negotiations
would not impact
the suspended litigation process, and should the
Respondent fail to comply with the Court order of 6 June 2024, the
Applicant would
proceed with the application on 27 June 2024. The
Respondent served an answering affidavit electronically on 26 June
2024. There
was no self-standing substantive application for
condonation.
[6]
The answering affidavit commences with delineating issues
raised as a defense to the application. They relate to non-joinder,
prescription,
a history and factual background to the matter, a
record of understanding (ROU), a revised record of understanding
(‘the
New Deal’), termination of the New Deal, status of
the ROU, the National Housing Code 2000, the National Housing Code
2009,
a comparison between the ROU and the New Deal, the 2014
undertaking, the merits of the application, and condonation. A notice
of
motion did not accompany the condonation application.
[7]
The Respondent affirms the chronology as set out by the
Applicant. It refers to a meeting that was scheduled in an attempt to
reach
an amicable solution to resolving the matter. According to it,
the first meeting occurred on 14 June 2024, where the Respondent
tabled a proposal to settle the dispute. An agreement was reached
that the parties would reconvene on 19 June 2024. The Respondent
states that it became aware of the rejection of its proposal on the
morning of 19 June 2024, and it did not comply with the order
granting it an opportunity to file the answering affidavit and
condonation application by 20 June 2024.
[8]
The Respondent states that whilst the requirements for
condonation demand a more comprehensive explanation, it can only say
that
there was a delay. It states that Senior Counsel was briefed on
6 May 2024. As consultations had to be scheduled for drafting the
answering affidavit, it became impossible to file the affidavit by 10
May 2024 without having consulted thoroughly. Consultations
took
place on 20 May 2024, and it was already known that the matter was
set down for 6 June 2024.
[9]
The main argument for the Respondent’s non-compliance is
that the matter involves an exorbitant amount of public funds and
that it would unduly prejudice the Respondent. It relies on public
interest, and the issues should be addressed in court. It states
that
the Applicant would not be unduly prejudiced, and the facts set out
by the Applicant are seriously disputed. That is all that
the
Respondent says.
[10]
The Applicant, in reply, states that the meagre allegations
regarding condonation do not establish good cause. The requirements
for condonation were not satisfied, and it did not disclose that it
has a
bona fide
defence or prospects for success. It refers to
a letter dated 2 July 2024 wherein the Respondent was advised that
the Applicant
intends to oppose the condonation application.
[11]
The
Applicant relies on the 2014 undertaking as an offer to make payment
of the Applicant’s ROU and non-ROU claims. It states
that it
was implemented, and payments were made over the period. It states
that the judgment in
Hlano
Financial Services (PTY) Ltd v Member of the Executive Council for
Human Settlements and Another
[1]
is relevant to the merits of the present matter as it relates to a
claim between the MEC in Gauteng and Applicant in 2017, in which
there was a similar undertaking. According to the Applicant, the
payment obligations of the contractual borrowers were delegated
to
the Respondent.
[12]
The Applicant states that the Housing Code 2000 provides
statutory rights which has a 30-year prescription period, and the
2014
undertaking removes any doubt about prescription. It is
prejudiced as it legitimately relied on the implementation of the
2014
undertaking and cannot execute its security to realise the value
of the underlying assets.
[13]
In
reply to the condonation application, it states that the Respondent
requested the meeting for settlement purposes before the
postponement
of 6 June 2014. It made various attempts between 8 June 2014 and 12
June 2024 to enquire from the Respondent about
the meeting that the
Respondent requested. The Respondent only responded on 12 June 2024
and agreed to a meeting for 14 June 2024.
This is not denied in the
replying affidavit.
[2]
Arguments
[14]
Mr
Mene SC, who appears for the Respondent, relies on
Grootboom
v National Prosecuting Authority and Another
[3]
where the Constitutional Court held:
‘
I
have read the judgment by my colleague Zondo J. I agree with him
that, based on
Brummer
and
Van Wyk
, the
standard for considering an application for condonation is the
interests of justice. However, the concept of “interests
of
justice” is so elastic that it is not capable of precise
definition. As the two cases demonstrate, it includes the nature
of
the relief sought, the extent and cause of the delay, the effect of
the delay on the administration of justice and other litigants,
the
reasonableness of the explanation for the delay, the importance of
the issue to be raised in the intended appeal; and the prospects
of
success. It is crucial to reiterate that both Brummer and Van
Wyk emphasise that the ultimate determination
of what is in the
interests of justice must reflect due regard to all the relevant
factors, but it is not necessarily limited to
those mentioned above.
The particular circumstances of each case will determine which of
these factors are relevant.
It
is now trite that condonation cannot be had for the mere asking. A
party seeking condonation must make out a case entitling it
to the
court’s indulgence. It must show sufficient cause. This
requires a party to give a full explanation for the non-compliance
with the rules or court’s directions. Of great significance,
the explanation must be reasonable enough to excuse the default.’
[4]
(Footnotes
omitted.)
[15]
He argues that the Respondent approached the settlement
negotiations in good faith, but the Applicant had no intention to
settle
the matter amicably. The lateness of the answering affidavit
was communicated to the Applicant.
[16]
He
submits that the interest of justice demands that condonation be
granted as the Respondent disputes that it owes the Applicant
monies
and that the Applicant has not demonstrated any real prejudice. The
amount claimed is, and the Applicant was unreasonable
in opposing the
application, causing unnecessary delay in disposing of the matter. I
understood Mr Mene not to take issue with
any of the case law that
the Applicant relies on except a passage from
MEC
for Health, Eastern Cape and Another v Kirkland Investments (Pty)
Ltd.
[5]
on
which the Applicant relies.
[17]
Mr
Snellenburg SC, appearing for the Applicant, submits that there can
be no doubt that the Respondent was ordered to file a proper
condonation application. Until condonation is granted, the answering
affidavit is
pro
non scripto
.
He argues that the Constitutional Court made it clear in
Mohamed
and Another v President of the Republic of South Africa and Others
[6]
that
the
state
must lead by example.
[18]
He argues that the procedure of dealing with grounds for
condonation at the end of the answering affidavit effectively means
that
there is no condonation application. The Applicant made it clear
that it would entertain settlement proposals in the meantime.
However, the onus would be on the Respondent to proceed with such
negotiations before its opposing papers became due on 20 June
2024,
and should the matter not be settled, its opposing papers, together
with its application for condonation (if so advised),
should be filed
before or on the 20
th
June 2024. He argues that the
defences raised in the Respondent’s answering affidavit have
been disposed of in
Hlano Financial Services
supra
as
issue estoppel.
Discussion
[19]
The requirements for condonation are trite and need no
repetition.
[20]
It has to be accepted that the whole period of delay can be
attributed to the Respondent. Although the averments regarding every
day of delay are meagre, those that were presented do carry some
weight.
[21]
An insufficient explanation for the time that passed may be
compensated for by good cause. The settlement negotiations did not
absolve
the Respondent from filing its answering affidavit and
condonation application, but there is some explanation for this, too.
[22]
The Respondent has, in my view, placed defences on the table.
Whether they will eventually carry weight is up to the Court, which
hears that application, to decide. It can, however, not be said that
they are fictitious, flimsy or without any prospect for success.
[23]
When the answering affidavit incorporating the
“
condonation application
” was eventually filed, it
was not far beyond the time agreed to.
[24]
I conclude that condonation should be granted.
Costs
[25]
A party seeking condonation is asking for an indulgence. Such
a party should ordinarily pay the costs for the indulgence.
[26]
In my view, the Respondent prejudged the settlement
negotiations' possible outcome. It should have made sure that it
would comply
with the order. There were, then, many orders that were
made. It kept the door open to file papers. It should, on the
established
principles and the specific facts of this case, pay the
Applicant’s costs of senior counsel on scale C.
ORDER:
[27]
Wherefore the following order is made:
1.
The application for condonation is granted.
2. The
Respondent pays the costs of the application, including the costs of
senior counsel, to be taxed on scale C
.
CRONJÉ,
AJ
Appearances
For
the Applicant:
Adv.
B.S. Mene SC
Adv.
N.M. Phakama
Instructed
by: State Attorney,
Bloemfontein
For
the Respondent:
Adv.
N. Snellenburg SC
Instructed
by:
MAP
Attorneys
C/o
Van der Merwe & Sorour
[1]
Hlano
Financial Services (PTY) Ltd v Member of the Executive Council for
Human Settlements and Another
[2022]
ZAGPJHC 645.
[2]
Replying affidavit, para 13.
[3]
Grootboom
v National Prosecuting Authority and Another
[2013]
ZACC 37
;
2014 (2) SA 68
(CC);
2014 (1) BCLR 65
(CC).
[4]
Ibid paras 22-23; See also:
Van
Wyk v Unitas Hospital and Another
[2007]
ZACC 24; 2008 (2) SA 472 (CC).
[5]
MEC
for Health, Eastern Cape and Another v Kirkland Investments (Pty)
Ltd
[2014]
ZACC 6; 2014 (5) BCLR 547 (CC).
[6]
Mohamed
and Another v President of the Republic of South Africa and Others
[2001]
ZACC 18
;
2001 (3) SA 893
(CC) para [69].