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[2015] ZAWCHC 165
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Absa Bank Limited v Nongoma Medical Centre CC and Others (25905/2010) [2015] ZAWCHC 165 (25 August 2015)
IN THE HIGH COURT
OF SOUTH AFRICA
(WESTERN CAPE
DIVISION)
Case
No: 25905/2010
DATE:
25 AUGUST 2015
In
the matter between
ABSA
BANK
LIMITED
..............................................................................................................
Plaintiff
And
NONGOMA
MEDICAL CENTRE
CC
........................................................................
First
Defendant
LIONEL
PATRICK
BARNARD
................................................................................
Second
Defendant
ANNA
CHRISTINA
BARNARD
.................................................................................
Third
Defendant
HESTER
ELIZABETH VAN
ROOYEN
...................................................................
Fourth
Defendant
JUDGMENT
DELIVERED ON 25 AUGUST 2015
VAN
ROOYEN,
AJ:
[1]
During November 2010 the plaintiff (“
ABSA
”)
issued summons in this court under the abovementioned case number
against the defendants for payment of an amount.
The claim
against the first defendant (“
Nongoma
”),
a close corporation, was based on a sum owing to ABSA by Nongoma in
terms of a loan agreement. The claims against
the other
defendants were based on suretyships signed by those defendants in
favour of ABSA.
[2]
The summons was served on Nongoma at its
registered address and on the other defendants at their chosen
domicilia citandi et executandi.
[3]
The defendants did not file notices of
intention to defend and on 19 September 2011 ABSA obtained default
judgment (“
the judgment”)
from the Registrar of this court in terms of Uniform Rule 31(5)(b)
against the defendants for payment of the sum claimed in the
summons.
[4]
These are applications for the rescission
of the judgment. I shall refer to the parties as in the action.
THE
APPLICANTS
[5]
On 10 February 2012 the fourth respondent
(“
Van Rooyen”)
launched an application for rescission of the judgment in terms of
Rule 42(1)(a).
[6]
On 25 May 2012 Van Rooyen filed a notice of
intention to amend, seeking to add the other defendants as applicants
in this application
for rescission. In an accompanying
affidavit she stated that “
I have
locus standi
to bring this application on behalf of
second, third and fourth applicants as I will be severely prejudiced
should the default judgment
granted against above applicants remain
in place
”. That does not
support the
locus standi
claimed by her and no affidavits were deposed to by the second and
third defendants, the members of Nongoma.
[7]
On 22 June 2012 an application for
rescission of the judgment in terms of Rule 42(1)(a) was launched,
purportedly on behalf of Nongoma.
One Gysbert Loots (“
Loots
”)
deposed to the founding affidavit and he claimed
locus
standi
to bring the application for the
following reasons: (a) He is a creditor of Nongoma; (b) He is a
lessee of “
the Property
”;
(c) He was duly authorised under a power of attorney granted to him
on 13 January 2011.
[8]
The
mere fact that Loots is a creditor of Nongoma does not bestow him
with
locus
standi
.
In Rule 42(1) it is contemplated that an ”
affected
”
party may bring an application. Such a party must have an
interest in the subject-matter of the judgment “
sufficiently
direct and substantial
”
to entitle him to intervene
[1]
.
The subject-matter of the judgment: (a) as between ABSA and Nongoma,
is Nongoma’s liability in terms of a loan agreement;
and (b) as
between ABSA and the other defendants, relates to suretyship
agreements. Loots was not a party to those agreements,
he is
not a party to the action and the judgment has no bearing on him.
In these circumstances he does not have a “
sufficiently
direct and substantial”
interest in the subject-matter of the judgment to entitle him to
intervene.
[9]
Loots’ reliance on his status as “
a
lessee of the Property”
makes no
sense as “
the Property”
is not identified and the judgment does not relate to a property.
[10]
In any event, Loots did not bring the
application in his own name, and for that reason too the first two
bases offered by him for
his asserted
locus
standi
have no merit.
[11]
Loots
does not annex the power of attorney allegedly granted to him on 13
January 2011. He presumably refers to a power of attorney
attached to
an e-mail dated 14 January 2011 from Van Rooyen, annexed to ABSA’S
application. That power of attorney
provides for “
managing
and transacting our business … with full power and authority
to sell all fixed property and settle all outstanding
bonds
registered in our name
”.
Read contextually, it therefore appears to be for a narrow purpose,
i.e. the selling of fixed property for purposes
of settling
outstanding bond debts. In any event, it does not authorise
Loots to represent Nongoma in litigation. Moreover,
there is no
explanation for the members’ failure to depose to affidavits.
Further, and in any event, Nongoma was deregistered
on 24 February
2011 and with that the power of attorney lapsed. That is so
because deregistration put an end to the existence
of Nongoma
[2]
and with that change of status the power of attorney lapsed
[3]
.
When the registration of Nongoma was subsequently re-instated, it
revested Nongoma with its property and validated its corporate
activities
during
the period of its deregistration
[4]
.
However, it did not revive the power of attorney which was granted
prior
to
deregistration and which lapsed on deregistration.
[12]
In these circumstances the applications,
purportedly brought on behalf of Nongoma and its two members, cannot
succeed and only Van
Rooyen’s application for rescission
remains to be decided.
VAN
ROOYEN’S APPLICATION
[13]
Van
Rooyen brought the application in terms of Rule 42(1)(a).
However, in argument her counsel also relied on Rule 31(2)(b)
and he
referred me to the following passage from Erasmus
[5]
:
“
The
fact that the application for rescission of judgment is brought under
this subrule does not mean that it cannot be entertained
under any
other rule such as rule 31(2)(b) or the common law, provided the
requirements thereof are met.”
[14]
I therefore accept that Van Rooyen is
entitled to rely on the provisions of Rule 31(2)(b) too. She does not
rely on the common law.
RULE
31(2)(b)
[15]
In
terms of Rule 31(2)(b) the judgment may be set aside if good cause
has been shown by Van Rooyen. The requirements for an
application for a rescission under that subrule have been stated as
follows
[6]
: (a) The applicant
must give a reasonable explanation of her default; (b) The
application must be
bona
fide
and not made with the intention of merely delaying the plaintiff’s
claim; (c) The applicant must show that she has a
bona
fide
defence to the plaintiff’s claim.
[16]
A
court has a wide discretion in evaluating good cause in order to
ensure that justice is done.
[7]
Reasonable
explanation:
[17]
Proper service of the summons was effected
at Van Rooyen’s chosen
domicilium
citandi et executandi
and at Nongoma’s
registered address. Van Rooyen asserts that she did not
receive
the summons and it appears from her affidavit that she resides at
another address. It is common cause that a letter in terms
of
s129 of the National Credit Act, 34 of 2005, was delivered at her
chosen
domicilium citandi et executandi
and that she received it. Moreover, it appears from the
affidavit of Loots that his residential address is Van Rooyen’s
chosen
domicilium citandi et
executandi.
Van Rooyen describes
Loots as her “
partner”
in her affidavit. In these circumstances it is improbable that the
summons did not come to the attention of Van Rooyen.
Significantly, she says that she did not receive it but she does not
say that it did not come to her attention. She chose
a
domicilium citandi et executandi
and
if she wanted to change it she should have communicated with ABSA in
this regard. In these circumstances I am not satisfied
that Van
Rooyen gave a reasonable explanation of her default.
Defences:
[18]
As
part of showing good cause, Van Rooyen has to show that she has a
bona fide defence. It is sufficient if she makes out a
prima
facie
defence
in
the sense of setting out averments which, if established at the
trial, would entitle her to the relief asked for.
[8]
Founding
Affidavit
[19]
In her founding affidavit Van Rooyen raised
a single defence, namely that ABSA, by not acting timeously and
reasonably, prejudiced
her. In amplification she asserted that
it was a ten year term loan agreement concluded on 19 August 2002,
but ABSA waited
for seven years before enforcing its rights in terms
of the loan and surety agreements.
[20]
Van
Rooyen never claimed the benefit of excussion and in any event the
general principle is that, after a surety has claimed the
benefit of
excussion, no defence is afforded a surety if the creditor delays in
excussing the principal debtor
[9]
.
[21]
Van Rooyen therefore failed to raise a
bona
fide
defence in her founding affidavit.
Affidavit
in support of “Notice to Amend”
[22]
In her affidavit in support of her “
Notice
to Amend
” Van Rooyen asserted
that the judgment was irregular because ABSA, in conflict with the
provisions of Rule 18(6), failed
to attach a copy of the written
contract that it is relying on.
[23]
The only written agreements referred to by
ABSA in the summons are the suretyship agreements between ABSA, Van
Rooyen and the members
of Nongoma. Copies of those agreements
were attached to the summons.
[24]
Moreover, clause 14 of the suretyship
agreements reads as follows:
“’
n
Sertifikaat onderteken deur enige bestuurder van die Bank sal
voldoende bewys
wees van enige toepaslike rentekoers en van die bedrag hierkragtens
verskuldig of van
enige ander
feit met betrekking tot die borgstelling vir doeleindes van vonnis
,
insluitende voorlopige en summiere vonnis, bewys van eise teen
insolvente en bestorwe boedels of andersins en indien ek/ons
die
korrektheid van sodanige sertifikaat betwis, sal die bewyslas op
my/ons rus om die teendeel te bewys. Dit sal nie nodig
wees om
in sodanige sertifikaat die aanstelling of bevoegdheid van die
ondertekenaar te bewys nie
.”
(emphasis supplied)
[25]
Such a certificate was annexed to the
summons, stating
inter alia
that Nongoma, Van Rooyen and the other sureties “
are
indebted to ABSA Bank Ltd, as follows in respect of
the
abovementioned Term Loan Agreement: 3008719901
”
(emphasis supplied). It therefore constituted sufficient proof of the
loan agreement and shifted the onus to Van Rooyen
to prove the
non-existence of the agreement.
[26]
In any event, it is evident from
correspondence between Van Rooyen and ABSA/ABSA’s attorneys,
including the letter in terms
of s129 of the National Credit Act
referred to earlier, that the term loan account number 3008719901
(relied on in the summons
and referred to in the certificate attached
to the summons) was referred to expressly and was not denied by Van
Rooyen in the correspondence.
On the contrary, she requested time to
sell Nongoma’s assets to pay Nongoma’s debt to ABSA.
[27]
In
these circumstances, the purpose of the rules of court has been
achieved, namely “
to
facilitate the ventilation of disputes arising from substantive law”
and to allow Van Rooyen to hide behind Rule 18(6) will make this
court “
a
slave to the rules of court”
.
[10]
[28]
Van Rooyen’s reliance on Rule 18(6)
is therefore without merit and does not constitute a
bona
fide
defence.
Replying
Affidavit
[29]
In reply Van Rooyen, for the first time,
raised additional defences. Quite apart from the general
principle that an applicant
must make out her case in her founding
affidavit, it will be illustrated that the additional defences raised
in the replying affidavit
are not
bona
fide
.
[30]
Before I deal with those defences, it needs
to be mentioned that the sole defence raised in the founding
affidavit does not even
feature in the replying affidavit.
[31]
Van Rooyen surprisingly asserts in the
replying affidavit that ABSA did not conclude an agreement with
Nongoma but with the two
members of Nongoma in their personal
capacity. That flies in the face of Van Rooyen’s stance
in correspondence referred
to earlier and does not explain why the
members (and Van Rooyen) signed suretyship agreements for Nongoma’s
debt to ABSA.
Finally, counsel for ABSA and Van Rooyen agreed
in oral argument that I may have regard to an application under case
number 12401/2011
brought by Loots in this court for an order placing
Nongoma under business rescue in terms of
s131(4)(a)
of the
Companies
Act, 71 of 2008
. In terms of a court order made by agreement on
30 April 2015 that application was to be heard together with Van
Rooyen’s
application for rescission. Both applications
were therefore before me and it was only after I had heard the
application
for rescission that the parties agreed that the business
rescue application be postponed. In the founding affidavit in
the
business rescue application, Loots states that ABSA and Nongoma
entered into a loan agreement, that the members of Nongoma failed
to
“
adhere to their obligations in
terms of the aforesaid agreement
”
and that ABSA consequently issued summons out of this court on 23
November 2010 under case number 25905/2010. The
business rescue
application is not opposed by Nongoma. This defence raised by
Van Rooyen in the replying affidavit is therefore
opportunistic and
not
bona fide
.
[32]
In her replying affidavit Van Rooyen
further, for the first time, asserts that ABSA’s claim has
prescribed as the summons
was launched seven years after ABSA’s
claim arose. No details are provided as to why the claim arose
more than seven
years ago and on what date exactly the claim arose.
In any event, the correspondence in 2010/2011 emanating from Van
Rooyen
who purported to act on behalf of Nongoma constituted an
acknowledgement of debt. This defence too is not
bona
fide
.
Bona
fides
[33]
Van Rooyen’s failure to give a
reasonable explanation of her default, her failure to raise
substantial defences and the way
in which she changed the single
defence relied on in her founding affidavit to other defences in her
replying affidavit after she
had failed to raise any of those
defences in her correspondence with ABSA, lead me to conclude that
her application for rescission
is not
bona
fide
.
Discretion
[34]
I
am mindful of the “
proper
function”
of a court, namely “
to
try disputes between litigants who have
real
grievances
and so to see to it that justice is done”
[11]
.
(underlining added)
[35]
It
has been illustrated that Van Rooyen does not have “
real
grievances”
[12]
. In the circumstances I
conclude that she has failed to show good cause contemplated in
Rule
31(2)(b)
and that justice will not be done if I exercise my
discretion in her favour.
[13]
RULE
42(1)(a)
[36]
According to Van Rooyen the judgment was
“
erroneously sought or erroneously
granted”
as contemplated in
Rule
42(1).
[37]
The
court has a discretion whether or not to grant an application for
rescission under this subrule. The purpose is “
to
correct expeditiously an
obviously
wrong
judgment or order
”
(emphasis supplied)
[14]
.
The trend by the courts over the years is not to give a more extended
application to the rule to include all kinds of mistakes
or
irregularities.
[15]
[38]
A
judgment to which a party is procedurally entitled cannot be
considered to have been granted erroneously within the meaning of
the
subrule by reason of facts of which the judge who granted the
judgment was unaware
[16]
.
[39]
Van Rooyen’s reliance on
Rule
42(1)(a)
can only conceivably relate to her argument that there was
non-compliance with
Rule 18(6).
[40]
I
have already illustrated, when I dealt with Van Rooyen’s
reliance on
Rule 31(2)(b)
, why there is no merit in her argument
based on
Rule 18(6).
For the same reasons, it cannot be
said that the judgment was “
obviously
wrong”
[17]
and that it was
“
erroneously
sought or erroneously granted”
.
[41]
In
these circumstances ABSA was procedurally entitled to the
judgment.
[18]
[42]
The considerations dealt with earlier when
I considered Van Rooyen’s reliance on
Rule 31(2)(b)
, and that
caused me to exercise my discretion against Van Rooyen, equally apply
in respect of her reliance on
Rule 42(1)(a).
CONCLUSION
[43]
Van Rooyen is therefore not entitled to
rescission of the judgment against her.
[44]
Nongoma and its members cannot be held
liable for the costs of these applications as they did not authorise
Van Rooyen or Loots
to represent them in these applications.
[45]
Consequently, the applications are
dismissed with costs (such costs to be paid by the fourth defendant
only).
R
F VAN ROOYEN, AJ
[1]
Erasmus,
Superior
Court Practice
,
B1-308
[2]
Miller
v Nafcoc Investment Holdings
2010(6) SA 390 (SCA) at para [11]
[3]
Law
of South Africa
,
Vol 1, para 147
[4]
Newlands
Surgical Clinic (Pty) Ltd v Peninsula Eye Clinic (Pty) Ltd
2015
(4) SA 34
(SCA) at para [29]
[5]
At
B1-306G
[6]
Erasmus,
B1-201
[7]
Erasmus,
B1-204
[8]
Erasmus,
B1-201
[9]
Forsyth
and Pretorius,
Caney’s
The Law of Suretyship
,
6
th
ed, at 137
[10]
Absa
Bank Ltd v Zalvest Twenty (Pty) Ltd and Another
2014 (2) SA 119
(WCC) at para [11]
[11]
Khunou
and Others v M Fihrer & Son (Pty) Ltd and Others
1982
(3) SA 353
(W) at 355F-356A, referred to with approval in
Absa
Bank Ltd v Zalvest Twenty, supra.
[12]
Khunou,
supra.
[13]
Erasmus,
B1-204
[14]
Erasmus
B1-306G
[15]
Colyn
v Tiger Food Industries Ltd t/a Meadow Feed Mills (Cape)
2003
(6) SA 1
(SCA) at para [8]
[16]
Lodhi
2 Properties Investments CC v Bondev Developments (Pty) Ltd
2007 (6) SA 87
(SCA) at para[25]
[17]
Erasmus
B1-306G
[18]
Lodhi
2, supra