Intratrek Properties (Pty) Ltd and Another v XTLS Investments 90 (Pty) Ltd and Another (2015/08599) [2017] ZAGPJHC 6 (1 February 2017)

REPUBLIC

OF SOUTH AFRICA

IN THE HIGH COURT OF SOUTH AFRICA,

GAUTENG LOCAL DIVISION, JOHANNESBURG

CASE NO:2015/08599

Reportable: Yes

Of interest to other judges: Yes

Revised.

01/02/2017

In the matter between:-

INTRATREK PROPERTIES (PTY) LTD First

Applicant

IBRAHIM

SILDKY YUSUF Second

Applicant

and

XTLS INVESTMENTS 90 (PTY) LTD First

Respondent

SHERIFF OF THE HIGH COURT, JOHANNESBURG Second

Respondent

FIRST

NATIONAL BANK Garnishee

JUDGMENT

CRUTCHFIELD AJ:

[1] This application for the rescission of a default judgment in terms of Rule 42(1) of the Uniform Rules came before me on the opposed motion roll of 13 September 2016.

[2] The applicants claimed orders:

2.1 Rescinding and setting aside the default judgment granted against the first applicant on 17 August 2015 under case number 2015/08599.

2.2 Setting aside the writ of execution issued on 28 September 2015, uplifting all attachments already effected by the Sheriff and releasing from such attachment all of the applicants’ movables and / or bank account.

2.3 Ordering the respondents to pay the applicants’ costs of the application.

[3] The application was opposed by the first respondent only.

[4] Pursuant to the applicants’ failure to furnish a practice note together with heads of argument in terms of the practice manual, or in accordance with a directive issued by the senior judge at the time of this Division, I required the applicants to submit an affidavit by 10h00 on Friday, 16 September 2016, explaining their lack of compliance as well as the lateness of the applicants’ heads of argument and practice note. The applicants duly furnished the required affidavit.

[5] The issues for determination were the following:

5.1 Whether service of the summons upon the first applicant’s registered address was competent where a postal address was chosen as the domicilium citandi et executandi; and

5.2 Whether the applicants were obliged to disclose a bona fide defence in terms of rule 42, and if so, whether the applicants had demonstrated such a defence.

[6] The common cause facts were the following:

6.1 On 24 October 2013, the first applicant duly represented by the second applicant, entered into a written offer to purchase an immovable property (‘the property’), for an amount of R30 million (‘the agreement’), to be paid as follows:

6.1.1 R10 million in cash within thirty-six (36) days of acceptance of the agreement;

6.1.2 The balance of R20 million in two instalments of R10 million each by 31 December 2013 and 31 January 2014 respectively, to be paid to the seller simultaneously with transfer of the property to the first applicant. Payment of the balance was to be secured by means of a banker’s or other approved guarantee.

6.2 Clause 10 of the agreement provided that:

6.2.1 The seller would pay the first respondent’s commission in an amount equivalent to 4% plus VAT of the purchase price of the property, which commission would be deemed to be earned on signature of the agreement and should the agreement be subject to a suspensive condition, upon fulfilment of such condition, and would be payable upon transfer into the first applicant’s name.

6.2.2 If the agreement was cancelled as a result of the default of either the purchaser or the seller, the first respondent would be entitled to payment of the commission from the party at fault.

6.2.3 It was subject to the proviso that if the agreement was cancelled prior to transfer but after the fulfilment of any applicable

suspensive conditions, the agent would become entitled to payment of the commission immediately upon such cancellation.

6.2.4 It was a stipulation for the benefit of the first respondent, who accepted the benefits thereof, and was enforcable by the first respondent.

6.2.5 In the event that the first respondent instituted legal action to recover the agreed commission plus VAT, the parties agreed that the amount thereof represented a genuine liquidated pre-estimate of damages suffered and the first respondent need not prove the amount thereof.

6.3 In the event that the first applicant was a company, the person representing the first applicant in concluding the agreement interposed and bound himself as surety and co-principal debtor with the first applicant for the due and proper discharge of the first applicant’s obligations in terms of the agreement.

6.4 The agreement constituted the entire agreement between the parties and no warrantees, representations, guarantees or other terms and conditions of whatsoever nature not contained therein would be of any force or effect.

6.5 No variation of the terms and conditions of the agreement or any purported consensual cancellation thereof would be of any force or effect unless reduced to writing and signed by the parties or their duly authorised representatives.

6.6 The parties acknowledged that the agreement and its consequences had been explained to them and that they were fully aware of the implications thereof.

[7] The first respondent was the agent involved in the sale.

[8] Prior to concluding the agreement, the second applicant advised the first respondent that the sale would not be subject to any

conditions.

[9] Attorneys were appointed to effect transfer of the property to the first applicant.

[10] On 27 November 2013, correspondence was transmitted by electronic mail (‘email’), to the applicants reminding them that the first deposit of R10 million was due on 29 November 2013.

[11] A subsequent email was sent to the second applicant on 29 November 2013 requesting confirmation of the previous email and enquiring as to payment of the first deposit.

[12] Notwithstanding, the first applicant did not pay the first deposit or secure the balance of the purchase price.

[13] On 14 January 2014, a letter of demand was emailed to the second applicant requiring payment of the purchase price of R30 million

within seven (7) days of the date of transmission of the demand, failing which the seller reserved its right to cancel the agreement

and institute a claim for whatever damages the seller might suffer pursuant to the breach, and, in which event the applicant ‘might be responsible for payment of the estate agent’s commission in this matter as referred to in the agreement of sale’.

[14] No response was received from the applicants.

[15] A further email was remitted to the first applicant on 21 January 2014, requesting the second applicant to contact the first respondent and stating that the seven-day period for payment in terms of the demand expired on that day.

[16] The applicants remained silent and hence, the agreement was cancelled on 5 February 2014 in writing pursuant to the applicants’

breach.

[17] Pursuant to the cancellation, the first respondent instituted action for payment of the commission payable under the agreement. The summons was served on 16 March 2015 on the registered address of the first applicant.

[18] No appearance to defend was delivered, and the first respondent’s application for default judgment against the first applicant was granted on 17 August 2015, for:

18.1 Payment of the sum of R1 368 000.00;

18.2 Interest thereon at the prescribed rate of 15.5% per annum from date of demand to date of payment; and

18.3 Costs on the attorney and client scale.

[19] On 28 September 2015, a writ of attachment in respect of the first applicant’s bank account with the garnishee was issued by the Registrar.

[20] The applicants argued that they sought to institute the rescission application without delay as soon as they became aware of the judgment and writ of attachment. Thus, the first of three unsuccessful urgent applications to stave off the writ, was issued

during October 2015.

[21] The first respondent contended, however, that the applicants’ objective conduct did not reflect any real intention to defend the action, as the first respondent was responsible for prosecuting the rescission application to finality. Hence, the applicants were merely seeking to delay payment of the amount claimed to the first respondent.

[22] The applicants argued before me that:

22.1 The service of the summons was defective; and

22.2 The applicants were not required to show a bona fide defence in terms of rule 42(1), as such a defence was not a requirement under the rule.

[23] However, in the event that a bona fide defence was required, then the applicants contended they had demonstrated a triable defence.

[24] The applicants raised various defences on the merits including that the agreement was subject to a suspensive condition, that the first respondent was not entitled to the commission absent the actual sale and transfer of the property, that the clause permitting the commission upon cancellation of the sale agreement was contra bonos mores and that the applicants were entitled to rectification of the agreement.

[25] The applicants referred to various cases[1] in support of their contention that once an irregularity as envisaged in rule 42 was shown to exist, they were entitled automatically to rescission without having to demonstrate a bona fide defence.

[26] The first respondent argued that such a defence was required in terms of Rule 42(1). Flink[2] was the governing case, not Van Niekerk[3] as contended by the applicant, as the court in Van Niekerk was referred to the Topol[4] case but not to Flink.

[27] Hence, the first respondent argued that the applicants had failed to show an irregularity as required in terms of rule 42(1), and to demonstrate a bona fide defence and the application should be dismissed with costs on the scale as between attorney and client.

[28] The applicants relied upon an alleged absence of proper service upon them as the irregularity that entitled them to rescission in terms of rule 42(1)(a). Pursuant thereto, the court allegedly lacked legal competence to grant the default judgment, which stood to be rescinded.

[29] The service of the summons on the first applicant’s registered address was allegedly defective as the agreement included a domicilium citandi et executandi, selected by the applicants as the place at which all notices could be served for all purposes under the agreement.

[30] The domicilium address, however, comprised a postal address, namely; ‘P O Box 379 Fontainebleau 2032’.

[31] The first respondent argued that the nomination of a domicilium citandi et executandi did not preclude effective service through one of the other methods[5] prescribed in rule 4, particularly where the domicilium address was a post office box.

[32] Whilst a Full Bench of this Division[6] recently concluded that where a specific method of service was contractually agreed upon, that method should be strictly complied

with, such compliance by the first respondent was not possible as the contractually agreed domicilium address was a post office box.

[33] Given that the sheriff cannot serve a summons on a post office box, the first respondent had to source an alternative effective method of service. Being a company, the first applicant’s registered address was the most appropriate alternative manner of service. Accordingly, the summons was served at 21 Van Rensburg Street, Mbombela, allegedly the first applicant’s registered address.

[34] The applicants contended however, that the first applicant’s registered address was not that at which the sheriff had served the summons. The applicants demonstrated that they had purchased a shelf company with registered address ‘Mbombela, Mpumalanga’. During 2002, the name of the shelf company was changed to that of the first applicant and the registered address to 66 Fourteenth Avenue, Fairlands, Northcliff.

[35] The applicants attached a certificate of change of name of company dated 29 October 2002, reflecting the name change from Argonaut

Holdings 9 (PTY) LTD to Intratrek Properties (Pty) Ltd.

[36] In addition, the applicants furnished a copy of Argonaut Holdings (Pty) Limited’s Notice of Registered Office and Postal address, otherwise known as the CM22, dated 26 September 2002 reflecting the registered address as 66 Fourth Avenue Fairlands Northcliff 2118. The provision in the CM22 for ‘the date of the intended change in the address’ was left blank.

[37] The first respondent argued that the governing legislation during 2002 was the Companies Act 61 of 1973. In terms thereof,[7] two requirements had to be satisfied for the valid amendment of a company’s registered office,[8] namely:

37.1 A valid resolution of the company to that effect; and

37.2 Due notification of the resolution to the Registrar of Companies.

[38] There could not be a valid change in the registered address ‘unless and until’ both conditions[9] were satisfied.

[39] Furthermore, a change in the registered address did not take effect until the Registrar of Companies recorded the particulars thereof, including by way of electronic methods of recordal.[10]

[40] The first respondent argued that the applicants had not furnished a copy of the resolution, nor any explanation as to the absence

thereof. Given that the applicants relied upon the alleged change, and included various averments in their heads of argument as to an error in the Companies and Intellectual Property Commission (‘CIPC’), records, it was not unreasonable to expect that the applicants would make the resolution available, which they did not do. Nor did they provide an explanation for the absence of the resolution.

[41] The first respondent attached a copy of the CIPC disclosure certificate and the printout of the search in respect of Intratrek

Properties (Pty) Ltd, from the CIPC website. The documents reflected the registered address as 21 Van Rensburg Street, Nelspruit, 1200, the address at which the sheriff served the summons.

[42] The applicants argued with reference to the history of the first applicant as recorded on the CIPC and ‘Searchworks’

documents, that the only recorded change to the registered address of the first applicant was to an address ‘4 Lincoln Street,

Woodmead 2148’. Notwithstanding, the CIPC and the ‘Searchworks’ documents both clearly reflected the first applicant’s

registered address as that at which service of the summons was effected.

[43] Moreover, neither the CIPC or the ‘Searchworks’ documents referred to the address relied upon by the applicants as the first applicant’s registered address, being 66 Fourth Avenue Fairlands Northcliff 2118.

[44] ‘It is trite that each case must be dealt with on its own particular facts and merits. There is no differentiation or exception. The Court, if service is contested, must determine whether the service was good and legally recognised or substantially compliant with the rules of service.’[11]

[45] It is a well-established principle that service of process at the registered office of a company is ‘good and legally recognised’[12] service,[13] wherever that registered office may be situated.

[46] In Hard Road[14] rescission was refused in terms of rule 42 in substantially similar circumstances to those at hand. The applicant had failed to notify the Registrar of Companies of the change of address and a summons had been served in accordance with the rules at the office properly notified to the Registrar as the applicant’s registered head office.

[47] Given that service of the summons on the first applicant herein was proper, the first respondent was procedurally entitled to the judgment. Hence, the judgment was not granted erroneously.

[48] Absent a procedural irregularity in the granting of the judgment, this court is not vested with a discretion to set aside the default judgment in terms of rule 42(1).[15]

[49] In the circumstances, I am obliged to refuse the application for rescission and there is no reason for me to deal with the issue of whether or not a bona fide defence is a requirement for success under rule 42.

[50] The parties were agreed that the costs of the application should follow the merits. Whilst the first respondent claimed costs on the scale as between attorney and client, I do not consider such an order to be necessary.

[51] Based upon the aforegoing I grant the following order:

1. The application is dismissed with costs

_____________

A

A CRUTCHFIELD

ACTING

JUDGE OF THE HIGH COURT OF SOUTH AFRICA

COUNSEL

FOR APPLICANTS

T Mathopo.

INSTRUCTED BY

Masondo Attorneys Inc.

COUNSEL FOR FIRST RESPONDENT Mr H P van Nieuwenhuizen.

INSTRUCTED BY

K G Tserkezis.

DATE

OF HEARING

15 September 2016.

DATE OF JUDGMENT 1

February 2017.

[1] Bakoven Ltd v G J Howes (Pty) Ltd 1992 (2) SA 466 (E) at 468H (‘Bakoven’); Promedia Drukkers & Uitgawers (Edms) Bpk v Kaimowitz & others 1996 (4) SA411 at 417G-B.

[2] Sheriff Pretoria North-East v Flink and another [2005] 3 All SA 492 (T) (‘Flink’).

[3] Van Niekerk and others v Absa Bank Limited [2014] ZAGPJHC 408 (15 December 2014) (‘Van Niekerk’).

[4] Topol v L S Group Management Services (Pty) Ltd 1988 (1) SA 639 (W) at 651B-C (‘Topol’).

[5] Sandton Square Finance (Pty) Ltd v Biagi, Bertola and Vasco 1997 (1) SA 258 (W) at 260C-D.

[6] Shepard v Emmerich 2015 (3) SA 309 GJ.

[7] Section 170 (2) of the Companies Act 61 of 1973 (‘the old Companies Act’).

[8] Du Plooy NO v Onus (Edms) Beperk 1979 (2) SA 241 (C) at 242E (‘Du Plooy No’).

[9] Id.

[10] Section 170(2)(d) read together with section 1(1A)(j) of the old Companies Act.

[11] Arendsnes Sweefspoor CC v Botha 2013 (5) SA 399 (SCA) para 13.

[12] Id.

[13] Federated Insurance Co Ltd v Malawana 1986 (1) SA 751 (A) at 759E; Section 170 (1)(b) of the old Companies Act.

[14] Hard Road (Pty) Ltd v Oribi Motors (Pty) Ltd 1977 (2) SA 576 (W) (‘Hard Road’).

[15] Van der Merwe v Bonaero Park (Edms) Bpk 1998 (1) SA 697 (T) (‘Van der Merwe’).