MEC of the Department of Agriculture, Conservation and Environment, North-West Province (DACE) v Ivolve Procurement and Rental Partner (Pty) Ltd (1791/2008) [2009] ZANWHC 24 (25 September 2009)

IN THE NORTH WEST HIGH COURT, MAFIKENG

CASE NO: 1791/2008

In the matter between:

THE MEMBER OF THE EXECUTIVE COUNCIL OF Applicant/Defendant

THE DEPARTMENT AGRICULTURE, CONSERVATION

AND ENVIRONMENT, NORTH WEST PROVINCE

(DACE)

and

IVOLVE PROCUREMENT AND RENTAL PARTNER Respondent/Plaintiff

(PTY) LTD

CIVIL MATTER

DATE OF HEARING : 17 SEPTEMBER 2009

DATE OF JUDGMENT : 25 SEPTEMBER 2009

COUNSEL FOR THE APPLICANT : ADV MOLOISANE

COUNSEL FOR THE RESPONDENT : ADV GRüNDLING

JUDGMENT

HENDRICKS J

[A] Introduction:-

[1] On the 25th July 2008 Plaintiff (Respondent) issued summons out of this court for payment in respect of two claims totaling R1 501 483.03. On 30 September 2008 the Registrar granted default judgment for the aforementioned two claims in favour of the Plaintiff (Respondent).

[2] It subsequently came to the attention of the office of the State Attorney, (Ms Annelize Lee) who is the attorney of record on behalf of the Defendant (Applicant), that the aforementioned default judgment was granted by the Registrar. Acting on the instructions of the Defendant (Applicant), application is now made for an order in the following terms:-

“[1] An order in terms of Rule 31(5)(d) of the Rules of court for the reconsideration of the judgment granted by the Registrar of the above Honourable Court on 25 September 2008;

[2] Rescinding and setting aside the judgment granted by the Registrar of the above Honourable Court in case number 1791/08 on 25 September 2008 in respect of Claim 1 thereof;

[iii] Rescinding and setting aside the judgment granted by the Registrar of the above Honourable Court on 25 September 2008 under case number 1791/08, in respect of Claim 2 thereof;

[iv] Condoning the Applicant’s late filing of the Notice of Intention to Defend in the main action;

[v] Directing the Applicant (Defendant in the main action), to file a Notice of Intention to Defend within 5 (five) days of the granting of this order;

[vi] Directing the Respondent to pay the costs of this application on an attorney and client scale; and

[vii] Further and / or alternative relief.”

[B] Background:-

[3] The background to this matter can be succinctly set out as follows:-

The Defendant (Applicant) entered into a Master Rental Agreement (contract) with the Plaintiff (Respondent) for the renting and installation of PABX telephone systems. These telephone systems were installed by a company called Molopo Telecoms at the instance of the Plaintiff, to whom another company namely Kitso Technologies had ceded their rights in terms of the contract.

[4] Both the last two mentioned entities did not contract with the Defendant. The installed telephone systems are dysfunctional and defective and could therefore not serve the purpose for which they had been installed.

[5] Meetings were held with all the relevant stakeholders to resolve the impasse, but to no avail. The Plaintiff issued a letter of demand due to breach of the rental agreements (contracts) and thereafter issued summons on 25 July 2008, which was served on the office of the State Attorney on 05 August 2008. The office of the State Attorney did not file a notice of intention to defend as none was found in the court file. The Registrar granted default judgment in terms of Rule 31(5)(a) of the Uniform Rules of Court.

[6] When it subsequently came to the attention of the Defendant that default judgment had been granted by the Registrar, the matter was investigated. Based upon the revelations of the investigations, the Defendant decided to bring an application in terms of Rule 31(5)(d) of the Uniform Rules of Court for rescission of the judgment and order so granted. Hence, the present application for an order in terms of the aforementioned prayers.

[C] The Application:-

[7] It is trite law that it is incumbent upon the Applicant in an application for rescission of a default judgment to:-

[i] give a reasonable explanation of his default. The reasons for his absence or default must be set out in order to determine whether or not the default was willful and whether the prospect of success favours the Applicant;

[ii] that the application is bona fide and is not made with the intention merely to delay payment of the Plaintiff’s claim;

[iii] that he has a bona fide defence to the Plaintiff’s claim.

[8] It is contended by the Defendant that there have been a filing error on the part of either the messenger from the office of the state attorney or the filing clerks at the Registrar’s office, thus resulting in the notice of intention to defend went missing or not appearing in the court file, seeing that it was in fact complied and send for issuing and filing in the court file. The following appears in the affidavit of Motsile Shadrack More:-

“On or about the 8th of August 2008, I addressed a letter to Miss A.C. Lee, of the State Attorney’s office in Mafikeng, and instructed her to represent the DACE in the legal proceedings which had been instituted by the Plaintiff. I respectfully instructed the State Attorney to enter an Appearance to Defend. I refer the Honourable Court to a copy of the aforesaid letter, attached hereto and marked Annexure “MSM6”.

On or about the 8th October 2008, I received a telephone call from Ms Lee, informing me that she had perused the file of this matter with an intention of verifying the date on which she had to file a plea so as to arrange for a consultation with officials of the DACE and counsel. When she could not find a copy thereof in her file she telephoned the records office of the High Court so as to ask for a copy of the notice of intention to defend. To her surprise, she was informed that here was no notice filed in the file, and further, that the Registrar had granted judgment by default in terms of Rule 31(5) on the two claims on or about 25th September 2008. When she requested further details, the clerk promised to fax the copies of the judgment and the index. The faxed

documents were accompanied by a fax cover sheet on the letterheads of the High Court. I refer the Honourable Court to copies of the fax cover sheet, the Index and the default judgment, marked Annexures “MSM7(a)”, “MSM7(b)” and “MSM7(c)”

respectively. I further refer the Honourable Court to the Confirmatory Affidavit of Annelize Lee, the attorney of record of the Applicants, marked Annexure “MSM8”.

According to Ms Lee, there was a filing error by either the messengers from the office of the State Attorney, or on the side of the filing clerks either in her office or in the Registrar’s office, as she had prepared that document, more particularly as she had been requested to file the notice to defend. She further informed me that it was also a standard practice in the office to file a notice of intention to defend in respect of all actions, or a notice of intention to oppose in respect of all applications, and to withdraw same only in the event of the client’s instructions being to the contrary.

Ms Lee further advised me that she had already briefed counsel to draw a plea in accordance with my instructions to the State Attorney. She was, however, unable to establish what had actually happened to the notice of intention to defend which was supposed to have been filed with the Registrar’s office. I again refer the Honourable Court to the Confirmatory Affidavit of Annelize Lee.”

[9] There is no explanation by Ms Lee as to what the practice is in the office of the State Attorney when documents are send with their messenger to file with the office of the Registrar. She only deposed to a confirmatory affidavit confirming the contents of the affidavit of More and nothing else. There is no record book carried by the messenger that is signed whenever documents are delivered to a person or institution. There is also no copy of the notice of intention to defend attached to the papers which indicates that such a notice was indeed drawn up and send for issuing and filing. It is quite easy to hide behind the fact that the document could easily have been either misfiled or lost by the messenger or the clerks.

[10] It is expected of an attorney to conduct the case of his/her client to the best of his/her ability. It would have been very easy to proof to the court that there was indeed such a notice drawn up and send for issuing and filing with the Registrar if such proof was indeed provided. However, the possibility that it was indeed send as alluded to by More and Lee is not disputed.

[D] Bona fide defence:-

[11] In the affidavit deposed to by Motsile Shadrack More the following appears to be the Defendant’s defence:-

“4.1 The basis of the Applicant’s (Defendant’s) defence is set out as follows:

5.7 … A dispute arose between the DACE and the Plaintiff and the Plaintiff as the DACE was unhappy with the service received from the telephone system installed by Molopo Telecoms at the instance of the Plaintiff, i.e. Ivolve, to whom Kitso Technologies had cede their rights in terms of the contract, as a result of which the DACE could not effect payment. The installed telephones were dysfunctional and ineffective, and could therefore not serve the purpose for which they were installed.

See: Record page 11, paragraph 5.7.

4.2 It is further stated that:

5.10 The dispute however resulted in an impasse which culminated in the Plaintiff (Respondent herein) serving a Letter of Demand on the DACE on 13 June 2008. In the said Letter of demand, the Plaintiff demanded payment of an amount of R1 501 483.03 due to an alleged breach of the rental agreements …

See: Record page 13, paragraph 5.10 (answering affidavit).

4.3 Mr More further sets out that ‘there was a material breach of agreement on the Plaintiff’s (Respondent’s) side’, having in mind the undertaking to get the telephones to be functional.

See: Record page 17, paragraph 11 (answering affidavit).”

[12] In answer to this, the Plaintiff states the following in the opposing affidavit deposed to by Almero Ockert Jacobs:-

“14.1 I admit that a dispute arose between the Applicant and the Respondent, but deny that the telephones were dysfunctional and defective. The Applicant fails to state exactly what was wrong with the goods. I deny that this is sufficient reason not to effect payment.

Paragraph 6 of the terms and conditions of the Master Rental agreement specifically states that the maintenance of the goods is a separate and distinct agreement from the Master Rental agreement. Paragraph 6 further states that the Applicant may not withhold its compliance under the Rental agreement due to any dispute in relation to maintenance or non-performance by the supplier.

Paragraph 5.4 of the terms and conditions of the Master Rental agreement specifically states that the Applicant may not cancel the rental agreement if it has received the equipment, and thereafter it has signed the certificate of acceptance, and subsequently it transpires that the equipment is not, for any reason, acceptable to the Applicant.

I attach hereto a copy of the letter received from the Applicant, as undersigned by the Head of the Department Mr MP Mogotlhe, (who also signed the rental agreement) confirming that all the equipment was installed as per the tender. (See annexure AOJ1).

In amplification hereof, it is important to note that the Applicant is actually using the equipment, (and has been using the equipment since the installation thereof), and it is submitted that they simply keep changing the goalposts in order not to pay the Respondent what is contractually and legally due to them.

It is important to note that the Applicant initially required only 300 (Three hundred) analogue phones to be installed with the PABX system. These have been delivered and installed. Currently the Applicant has over 580 (Five hundred and eighty) phones installed and being used on the system. It is clear that the Respondent and its suppliers, have actually done more than what is expected from them, but still the Applicant persists in its non-payment.”

[13] The Plaintiff does not deny that a dispute arose between him and the Defendant, but denies that the telephones were dysfunctional and according to the Plaintiff, it is not stated in what manner they were dysfunctional or defective. In the light of the aforementioned, it is apparent that there was a dispute pertaining to the contract.

[14] Furthermore, the Plaintiff fails to acknowledge that Samsung was represented at the meeting to address the dispute of dysfunctional telephones on its behalf, being a party to the contract with the Defendant, and not on its own accord, and that failure to perform in terms of the undertaking actually puts the Plaintiff in breach of the contract as the DACE contracted with the Plaintiff (Ivolve) and not with other parties who were brought in by the Plaintiff. The Defendant was not party to the subcontracts which were at the instance of the Plaintiff.

[15] It is clear from the aforementioned that an admission was made that there was something wrong with the telephones and the dispute is in that regard. In the Respondent’s (Plaintiff’s) opposing affidavit, the existence of a dispute is acknowledged.

[16] The Plaintiff was, or should have been aware that because of the existence of a dispute, the matter should not have been referred to the Registrar for default judgment to be granted.

[E] Conclusion:-

[17] I am satisfied that the Defendant (Applicant) does have a bona fide defence and was all along desirous to defend the action. I am furthermore satisfied that the Defendant (Applicant) does not merely

want to enter notice to defend only to delay payment of Plaintiff’s (Respondent’s) claim. The explanation by Lee, though not without criticism, cannot be said to be so preposterous that it should be outrightly dismissed or ignored. For the

aforementioned reasons, I am inclined to grant an order in the terms of the notice of motion as prayed.

[F] Costs:-

[18] The Defendant (Applicant) prays for a punitive cost order against the Plaintiff (Respondent) based on the fact that the Plaintiff (Respondent) was aware that there was a dispute over the dysfunctional and defective telephone systems but nevertheless proceeded to obtain default judgment against Defendant (Applicant).

[19] Plaintiff’s (Respondent’s) contention is to the effect that as far as they are concerned the telephone systems were installed and that they are therefore entitled to payment. The maintenance of the installed systems are the responsibility of the company Samsung and are distinctly different from the installation of the systems.

[20] Though the conduct of the Plaintiff (Respondent) cannot be said to be without criticism, it is in my view not such that a punitive cost order is called for. Usually the Defendant (Applicant) pays the costs for the indulgence sought in an application of this nature. However, there is no reason why costs should not follow the result in this case seeing that the Plaintiff should not have approached the Registrar for an order in the first place.

[G] Order:-

[21] Consequently, the following order is made:-

[i] An order is granted in terms of paragraphs 1, 2, 3, 4 and 5 of the notice of motion.

[ii] The Plaintiff (Respondent) is ordered to pay the costs of this application.

R D HENDRICKS

JUDGE OF THE HIGH COURT

ATTORNEYS FOR THE APPLICANT/DEFENDANT: THE STATE ATTORNEY – A C LEE