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“IN THE HIGH COURT OF SOUTH AFRICA”

NORTH WEST DIVISION, MAHIKENG

                                                  CASE NUMBER: 699/16

In the matter between:-

SIMMY MOROANE LABOUR LAW CONSULTANT   CC                  1^ST Applicant

SIMON SIMI MORWANE                                                                   2^ND Applicant

And

THE RUSTENBURG MUSLIM JAMAAT (PTY) LTD                           Respondent

JUDGMENT

GUTTA J.

[1]        This is an application for rescission of a judgment granted by default on the 21 July 2016 in terms of which the court granted the following order:

1.1         Against first applicant (first defendant):

a)    Evicting the first applicant from the premises;

b)    Directing the first applicant to pay all costs pertaining to the eviction on an attorney and own client scale.

1.2         Against first and second applicants(first and second defendant):

a)    Payment of the amount of R167 804.35;

b)    Interest thereon at 9% per annum from 4 February 2016 to date of final payment;

c)    Costs of suit on an attorney and own client scale.

[2]        Applicants allege that they were not in wilful default and they have a bona fide defence which is set out in their founding affidavit and in their plea as follows:

2.1       On or about August 2016, the second applicant found documents on the floor in the office while cleaning which appeared to be a summons. A notice of intention to defend was served on the respondents’ attorney who within two days of service raised an irregular step. The respondents’ attorney did not mention that default judgment was granted. The irregular step was ‘cured’ and the plea was served on the respondents’ attorney within 20 days. The respondents’ attorney still did not mention that default judgment was granted when served with the plea. Early in October 2016, the respondents’ attorney wrote an email to applicant’s attorneys informing him that default judgment had been granted ‘a long time ago’. A request was made to respondents’ attorneys for a copy of the return of service and default judgment. No reply was forthcoming and on the 21 October 2016 second applicant ‘got hold’ of the default judgment. Applicant promptly defended the matter after finding it and filed his plea and still has the intention to defend the matter.

2.2       This court lack jurisdiction in that:

“Jurisdiction

1.1         The plaintiff cause of action appears to be flowing from the same matter that was before magistrate court of Rustenburg District under case number 5646/2015

1.2         The above matter was settled on or about 21 October 2015 and the provisions of paragraph 7(a), (b) and (c) of the same were not complied with and alternatively paragraph 23 of Lease Agreement.

1.3         The concealment of this material fact by the plaintiff to the Honourable Court is tantamount to abuse of the justice system.

1.4       This claim clearly resides with the magistrate court more over the plaintiff approached the same initially”.

2.3       The respondent did not disclose that approximately R100 000.00 was paid and the respondent will be unjustly enriched. What is due is less than 3 months rental, approximately R35 000.00 of which some payments were made directly to respondent by first applicant’s agent, Mr Tau.

2.4    The provisions of Section 129 of Act 34 of 2005 were not complied with.

2.5      The dispute resolution mechanism in the lease agreement was not complied with inter alia clause 15 and the first applicant is yet to receive any termination notice.

2.6       The second applicant should not be a party to the proceedings

2.7       There is no need for an eviction order as applicants moved out of the premises.

2.8       Applicants suffers prejudice by the judgment and the respondent will not suffer any prejudice if rescission is granted.

2.9       The action was malicious, unwarranted and premature.

[3]        The respondent in opposing the application for rescission alleged that the applicants failed to show a bona fide defence and failed to properly explain their default in that:

3.1       The cause of action in the magistrates’ court was in respect of three dishonoured cheques and settlement was reached in respect of that claim amount.

3.2       A detailed statement setting out calculations of the amount owing negates the applicants’ defence regarding the amount. Payments made by “Mr Tau” were taken into account and explained.

3.3       Second applicant is held liable on a deed of suretyship.

3.4       The National Credit Act does not apply to a lease agreement in respect of immovable property.

3.5       The agreement does not provide for the implementation of dispute resolution mechanisms.

3.6       The summons was served on the 22 June 2016 and the applicant did nothing until the 27 July 2016 when a notice of intention to defend was served and filed. No information was provided what happened to the summons that was served on the second applicant’s receptionist. Further second applicant alleges that the summons was ‘found’ during August 2015 when their attorney had already served the notice of intention to defend on the 27 July 2016.

            The Law

[4]        In terms of Rule 31(b) of the Uniform Rules of Court “a defendant may within twenty days after he or she 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”.

[5]        The requirements for rescission of a judgment are the following:

5.1       The applicant must give a reasonable explanation for his default. If it is appears that his default was wilful or that it was due to gross negligence the court should not come to his assistance.

5.2       The application must be bona fide and not made with the intention of merely delaying plaintiffs’ claim.

5.3       The applicant must show that he has a bona fide defence to respondent’s claim. It is sufficient if he makes out a prima facie defence in the sense of setting out averments which, if established at a trial, would entitled him to the relief asked for[1].

[6]        The elements of wilfulness is one of the factors to be considered in deciding whether or not an applicant has shown good cause. Although wilful default is not a substantial or compulsory ground for refusal of an application for rescission, the reasons for applicants default remains an essential ingredient of the good cause to be shown[2]. Absence of gross negligence is but a factor to be considered in the overall determination of whether or not good cause has been shown[3].

[7]        The explanation for the default must be sufficiently full to enable the court to understand how it really came about, and to assess the applicant’s conduct and motives[4].

[8]        Before a person can be said to be in wilful default, the following elements must be shown:

a)    knowledge that the action is being brought against him;

b)    a deliberate refraining from entering appearance, though free to do so; and

c)    a certain mental attitude towards the consequence of the default. The test for this requirement is when a defendant with full knowledge of the circumstances and of the risks attendant on his default freely takes a decision to refrain from taking action[5].

[9]        The requirement of ‘good cause’ is satisfied if there is a substantial defence and a bona fide desire on the part of the applicant to raise the defence if the judgment is rescinded[6].

[10]      It suffices if the applicant shows a prima facie case on the existence of an issue fit for trial[7]. The applicant need not deal fully with the merits of the case but the grounds of the defence must be set forth with sufficient detail to enable the court to conclude that there is a bona fide defence and that the application is not made merely for the purpose of harassing the respondent[8].

[11]      In Standard Bank of SA Ltd v El-Naddaf[9], Marais J declined to follow Grant v Plumbers supra at 786 B – D as the case suggests that a mere bald averment which appears in all the circumstances to be needlessly bald, vague or sketchy is sufficient to demonstrate bona fide. The court held that the degree of detail must depend on the circumstances.

[12]      The court exercises a wide discretion in evaluating ‘good cause’ and a court should be mindful, on the one hand of a party’s right to have his or her bona fide dispute resolved in a court of law and on the other hand to avoid a party abusing the legal processes and manipulating it in circumstances where the party has failed to show good cause why his or her matter should be entertained by a court of law. Rule 31 seeks to ensure that justice is done.

[13]      It is common cause that:

13.1    Summon was served on the first applicant on the 22 June 2016 at the first applicant’s chosen domicilium citandi et executand by handing the summons to an employee of the new owner at the address.

13.2    Summons was served on the second applicant on 22 June 2016 at the chosen domicilium citandi by handing the summons to second applicant’s receptionist.

13.3    Judgment was granted by default against the first and second applicants on the 21 July 2016.

13.4    The applicants served their first notice of intention to defend on the 27 July 2016.

13.5    The applicants served the second notice of intention to defend on the 5 August 2016.

13.6    The applicants served their plea on the 12 September 2016.

13.7    The application for rescission was filed on the 27 October 2016.

EVALUATION

[14]      The second applicant alleged that on or about August 2016 “he found documents on the floor in the office whilst cleaning, which appeared to be summons as I do not know how they got there”. He said a notice of intention to defend was “duly and personally served on the respondents’ attorney”. The applicants do not state that they served two notices of intention to defend on different dates. The second applicant is also silent about the fact that the summons was served on his receptionist. He failed to furnish any explanation as to what happened to the summons after it was served on his receptionist on the 22 June 2016 and to explain why he failed to take any steps from the date of service of the summons in June 2016. No affidavit was attached from second applicant’s receptionist explaining what she did with the summons after it was served on her in June 2016. Furthermore it is improbable that second applicant only became aware of the summons on or about August 2016 as the first notice of intention to defend was served on the 27 July 2016.

[15]      In the applicants’ founding affidavit, it is alleged that after the appearance to defend was served, two days later the respondent served them with an irregular step. There is no evidence of an irregular step and the applicants fail to take the court into its confidence to explain what the alleged irregular step was.

[16]      Applicants allege that ‘early in October 2016’ the respondent’s attorney sent an email to their attorney informing them that default judgment was granted. The 20 day period in which to launch the application for rescission runs from the date the applicants became aware of the judgment. It is unfortunate that the applicants did not disclose the exact date on which they received the email. It is however noted that the respondent’s attorney’s letter is dated 15 September 2016. Further the second applicant alleges that he “got hold” of the default judgment on the 21 October 2016, but does not explain how he obtained the said judgment. It is clear that the applicants from early October 2016, took no positive steps, save for writing to respondent’s attorney, to peruse the court file and uplift a copy of the judgment.

[17]      The applicants lay blame on the respondents’ attorney for not informing them that judgment had been granted against them when the notice to defend was served. Although the respondents’ attorney should have informed the applicant’s attorney immediately upon receipt of the applicants notice of intention to defend that judgment was granted, this does not absolve the applicants from providing a reasonable explanation for their default. Applicant’s explanation in my view is not sufficiently full to enable this court to understand how it really came about and to assess applicants’ conduct and motive.

[18]      Having said that I cannot find the third element to prove wilful default, namely that the applicants with full knowledge of the risks attendant on default freely took a decision to refrain from taking action especially when considering that two notices of intention to defend and a plea was filed, albeit late. Furthermore although the explanation for the default is insufficient as stated supra, I cannot find that the applicants were grossly negligent.

[19]      The next requirements for good cause is whether the application is bona fide and whether applicants have a bona fide defence, and have made out a prima facie case.

[20]      Applicants’ defence is contained in their opposing affidavit and in their plea. As stated supra the plea was filed on the 12 September 2016 after default judgment was granted. Applicants attached a copy of their plea to their opposing affidavit. The plea is confusing as it has a separate heading ‘Exception’, but no exception was raised in accordance with the rules of court. The applicants in their founding affidavit and plea, raised the following defences which are dealt with seriatim herein below.

            Lack of Jurisdiction (res judicata)

[21]      Applicants allege that the matter was instituted in the magistrate court and settled. The respondent attached the summons and settlement agreement reached in the magistrate court to its opposing affidavit. This court accepts the respondent’s explanation as set out in paragraph 3.1 supra, that the cause of action in the magistrate court related to three dishonoured  cheques and did not relate to the cause of action in casu which is the breach of the lease agreements in that the applicant is in arreas with payment of the rental. Hence the matter is not res judicata.

[22]      Although the claim amount falls within the magistrate courts’ jurisdiction, this does not exclude this court’s jurisdiction and the court exercises its discretion regarding costs.

            The amount claimed is disputed

[23]      In applicants’ affidavit filed in support of the application for rescission, it is alleged that “Respondent deliberately misled the Honourable court by not disclosing that almost ±R100 000.00 (Hundred Thousand rands) was paid in the said period evidenced by GUP 3, 4 and 5”. GUP 3, 4 and 5 are receipts made out by the respondent for the following periods:

8 July 2015               – R20 000.00

13 August 2015        – R 5000.00

06 October 2015      – R 5000.00

30 January 2016      – R 10 000.00

11 March 2016         – R 10 000.00

21 July 2016             – R 10 000.00

05 August 2016        - R 10 000.00

27 August 2016        – R20 000.00

                                __________________

                                    R 90 000.00

[24]      Second applicant in his plea avers that there might be a shortfall but the amount claimed is incorrect. He alleges that at the end of February 2016 the arreas was approximately R35 000.00 of which some payment were made directly to respondent by the first applicant’s agent, one Mr Tau. He further alleges that they have “consistently had problems with proper accounting”. Applicants counsel submitted that the amount was not ascertainable.

[25]      Respondent in their affidavit attached a detailed statement of account commencing from December 2014 until November 2016. Respondent in its particulars of claim alleged that as at 3 February 2016, first applicant was in arrears with the rental payment in the amount of R167 804.35. The amount claimed is consistent with the statement of account. Furthermore the statement reflects all payments made by applicant including payment made by Mr Tau. The amount reflected in GUP 3, 4 and 5 were accordingly credited by respondent.

[26]      Applicant’s affidavit is a bare denial of the amount claimed and a bald allegation that an amount of approximately R 100 000.00 was not disclosed as per annexures GUP 3, 4 and 5. This has proven to be a false statement as stated supra that respondents’ detailed statement clearly reflects the amounts paid. Applicants allege that the respondent has problems with accounting but fails to substantiate and to take the court into its confidence to show what payments were made and what on their version is the amount that is due and payable to the respondent. Applicants allege that there is a shortfall. The applicants also elected not to file a replying affidavit.

[27]      Where the strength of the defence on the merits becomes crucial, the applicant must furnish sufficient information to satisfy the court that he or she has a good defence[10]. Although the applicants were not expected to deal fully with the merits of the matter, they should have set forth their defence with sufficient detail to enable the court to conclude that there is a bona fide defence. The degree of detail required is in the circumstances insufficient for this court to conclude that applicants have a bona fide defence regarding the amount claimed.

            Second applicant should not be a party to the proceedings

[28]      There is no merit on this ground as second applicant is cited in the particulars of claim as a party which is based on a surelyship agreement concluded in terms of which second applicant bound himself as surety and co-principal debtor with the first applicant for the liability of the first applicant.

            The provision of section 129 of Act 34 of 2005 were not complied with

[29]      The National Credit Act is not applicable as it does not apply to lease agreements of immovable property.

            The dispute mechanism in the lease was not complied with

[30]      On perusal of the lease agreement it is apparent that the agreement does not provide for an alternate dispute resolution mechanism. Furthermore the applicant relied on clause 15 of the lease agreement, which clause reads inter alia that if the lessee fails to remedy the breach within 7 days after dispatch by the lessor of a written notice requiring it to remedy the breach or consistently breaches the condition of the lease, then the lessor shall have the right to cancel the lease. The respondent attached a letter dated 11 March 2016 which was delivered by registered post advising the applicants that they have failed to comply with their obligations notwithstanding demands on numerous occasions and that they forthwith in terms of clause 15.1 cancel the lease (own emphasis). The respondent accordingly acted in accordance with clause 15.1 of the lease agreement.

[31]      It is unfortunate that some of defences raised by the applicants supra are frivolous defences which creates the impression that it was raised solely for purposes of delaying respondents’ claim. Having considered all the defences raised supra, I am of the view that the applicants failed to show that they have a bona fide defence. Accordingly the applicants failed to show good cause to rescind the judgment.

            ORDER

[32]      In the result:

32.1    The application for rescission is dismissed.

32.2    The first and second applicants are liable jointly and severally the one paying the other, for the costs of the application.

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N. GUTTA

JUDGE OF THE HIGH COURT

APPEARANCES

DATE OF HEARING                                  :  01 JUNE 2017

DATE OF JUDGMENT                              :  15 JUNE 2017

ADVOCATE FOR APPLICANT                 : MR MORWANE

ADVOCATE FOR RESPONDENT           : ADV TRUSLER

ATTORNEYS FOR APPLICANT              :  SMIT STANTON INC.

                                                                   (Instructed by: Zietsman-Horn)

ATTORNEYS FOR RESPONDENT         :  NTSAMAI ATTORNEYS

                                                                  (Instructed by: Matlhase Attorneys)

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