Mwila v Seartec Trading (Pty) Ltd (A189/2019) [2020] ZAFSHC 152 (15 July 2020)

IN THE HIGH COURT

OF SOUTH AFRICA

FREE STATE

PROVINCIAL DIVISION

Case No: A189/2019

In the matter between:

DAVID

MATIPA

MWILA

Appellant

and

SEARTEC TRADING (PTY)

LTD

Respondent

Coram: Naidoo, J et Opperman, J

Date of appeal: 18 May 2020. The matter was determined on Heads of Argument as per agreement by counsel and with permission of the court.

Delivered: This judgment was handed down electronically by circulation to the parties’ legal representatives by email on 15 July 2020 at 15h00 and also for release to SAFLII.

Summary: Appeal – Refusal of application for rescission of judgment in Magistrate’s Court.

ORDER

On appeal from the Magistrate’s Court: Bloemfontein (S Ernest, Magistrate sitting as court of first instance), Seartec Trading (Pty) Ltd (Registration number: 2005/017943/07) versus Ditema Architects and Project Managers (Pty) Ltd t/a Letsatsi Family Trust (Registration

number: 2005/011622/07),[1] Case number 7154/2018, Order dated 26 June 2019.

1. Condonation for the late filing of the Heads of Argument of the Appellant is granted.

2. The appeal is upheld with costs.

3. The order of the court a quo dismissing the application for rescission of the Default Judgment is set aside.

4. The Default Judgment granted on 29 June 2018 and resultant Warrant for Execution in case number 7154/2018 are set aside.

5. The Appellant is granted leave to defend the action and ordered to deliver to the Magistrate’s Court a plea within 20 (Twenty) days from date of this judgment.

6. The costs orders already granted in the Default Judgment and the application for rescission are set aside and are to be costs in the cause.

JUDGMENT

Naidoo J et Opperman J

[1] This is an appeal against a judgment of the Magistrate’s Court Bloemfontein, in which an application for rescission of a Default Judgment was refused. According to the Heads of Argument filed, Advocate K Nhlapo is on record for the Appellant and Advocate G.S. Janse Van Rensburg for the Respondent. The order appealed against reads as follows: After hearing arguments on behalf of both parties and considering the documents filed in this matter,

the court is making the following order-

1. Leave to intervene is granted.

2. Application for rescission of Default Judgment is dismissed.

3. Each party to pay their own costs.

[2] The facts of the case are:

2.1 On 11 May 2018 Seartec Trading (Pty) Ltd served a combined summons at the Magistrate’s Court. The cause of action, claimed to be, breach of a contract entered into on 4 October 2013 in Bloemfontein with Ditema Architects.

2.2 Ditema Architects, as allegedly duly represented by Teboho Molaba, entered into a written rental agreement for printing equipment.

2.3 The physical address and supposed domicilium citandi et executandi of Ditema Architects are reflected as Unit 5, Brandwag Park, McHardy Avenue, Brandwag, Bloemfontein.

2.4 The Respondent complied with the rental agreement. The contract authorised a debit order on the account of the Letsatsi Family Trust, ABSA, bank account number: 4062437726.

2.5 During the period December 2013 to March 2018 Ditema Architects failed to make payment of the monthly rental due to the value of R88 244.50.

2.6 The demand for the payment was sent via email to info@humansettlement.co.za. The Respondent was satisfied that Ditema Architects received the message; to such an extent that it proceeded with issue of summons.

2.7 Notwithstanding the fact that they could trace Ditema Architects through the bank account and through the email address, they served at Unit 5, Brandwag Park, McHardy Avenue, Brandwag, Bloemfontein on 25 May 2018. The remark on the return of service is that Namso Construction Company is situated at the address. The service is, of course, in accordance with the law because a copy of the summons was affixed to the entrance.

2.8 In a summons dated 21 October 2015, filed on 22 October 2015 at the Randburg Magistrate’s Court and served on the same Ditema Architects; the address of its main place of business was reflected by the Respondent to be Suite 10, Atrium Terraces, 272 Oak Street, Ferndale, Johannesburg.

2.9 This summons referred to above caused confusion in the Bloemfontein Magistrate’s Court and the court would apparently not proceed on the basis of lis pendens. An indication that the litigation in Randburg was “withdrawn” appeased the concern of the Presiding Officer and the application for rescission proceeded.

2.10 Again, notwithstanding having knowledge of the address of Ditema Architects at its main place of business in Johannesburg, the Respondent applied for Default Judgment. The Default Judgment was granted on 29 June 2018 and soon thereafter in August 2018, a Warrant for Execution was obtained from the clerk of the court in Bloemfontein. The Default Judgment was obtained on the Bloemfontein address and the Warrant for Execution on the Ferndale address.

2.11 David Matipa Mwila, the Appellant and a shareholder and Director of the Defendant, now entered into the litigation. He was, correctly, admitted to intervene by the court a quo. On 12 September 2018 he deposed to a statement wherein he explained that he took cognisance of the Warrant for Execution on 15 August 2018 because it was served at the offices in Ferndale.

2.12 He declared that Ditema Architects has not, since its existence until now, had any offices in Bloemfontein or for that matter in the Free State Province.

2.13 The Teboho Molaba that contracted with the Respondent is recorded to have acted in the name of a trust that neither Ditema Architects nor Mwila himself allegedly ever had an interest in, nor had they had a connection with.

2.14 The said Teboho Molaba also allegedly did not have any authority to represent Ditema Architects in any way.

2.15 The equipment rented in terms of the Rental Agreement has never been utilized by Ditema Architects and had at no stage been located at their offices. Ditema Architects had made no payments towards any rental of the equipment.

2.16 The Respondent knew when the application for Default Judgment was instituted in Bloemfontein that a similar issue lies in the Randburg Court. Notwithstanding they persisted in the application for Default Judgment and opposing the application for rescission.

2.17 There is no word from Teboho Molaba in the record. The dispute eventuates from his conduct and his testimony may well have resolved the whole case.

[3] The Appellant claims that the Respondent obstructed his right to have the issue resolved in a court of law. The Respondent did this

by serving the summons at an address that was not effective. The summons did not come to his notice.

[4] The law lies in Rule 49 of the Magistrate’s Court Rules, the relevant provisions of which are:

(1) A party to proceedings in which a default judgment has been given, or any person affected by such judgment, may within 20 days after obtaining knowledge of the judgment serve and file an application to court, on notice to all parties to the proceedings, for a rescission or variation of the judgment and the court may, upon good cause shown, or if it is satisfied that there is good reason to do so, rescind or vary the default judgment on such terms as it deems fit: Provided that the 20 days’ period shall not be applicable to a request for rescission or variation of judgment brought in terms of sub-rule (5) or (5A).

(2) It will be presumed that the applicant had knowledge of the default judgment 10 days after the date on which it was granted, unless the applicant proves otherwise.

(3) Where an application for rescission of a default judgment is made by a defendant against whom the judgment was granted, who wishes to defend the proceedings, the application must be supported by an affidavit setting out the reasons for the defendant’s absence or default and the grounds of the defendant’s defence to the claim.

[5] The Appellant’s case is that he had satisfied the requirements for a successful rescission application in that the application was brought in time, the application was made in good faith and not to delay the Respondent in their claim and he has shown good cause in presenting prima facie defences with a good potential for success if rescission is granted. He submitted that the Magistrate failed to exercise her discretion judicially.

[6] Counsel for the Appellant pointed out that they cannot be bound by the actions of a single director acting without authority, especially in the circumstances like the present where the Respondents have no valid defence at their disposal. On the Respondent’s own version and the facts admitted on the Appellants’ affidavit, there is no resolution and no ostensible or apparent authority established, the Appellant and Ditema Architects have never conducted their business in Bloemfontein and it is not disputed that Mr Molaba’s whereabouts have been unknown to the Appellant for a period exceeding three (3) years. On the Respondent’s own version, it cannot rely on the Turquand-rule.

[7] Counsel for the Respondent concluded that the appeal should not be entertained and/or granted. The Appellant failed to clear the

various hurdles in its path to be successful on appeal inter alia; no condonation was asked for and received in the Court a quo for the late filing of the rescission application and no bona fide defence was raised. We pause to mention that the respondent did not take issue with the late filing of the rescission application in the court a quo, and this issue was not considered or pronounced upon by that court. It is, therefore, impermissible for the respondent to raise the late filing of the rescission at this stage.

[8] The above said, constitutional principles have come to play a pivotal role in matters of this kind. In RGS Properties (Pty) Ltd v

Ethekwini Municipality 2010 (6) SA 572 (KZD) at 575G-576C it was held that Default Judgements are inherently contrary to the Constitution.

[9] An absolute rejection of Default Judgments will, however, not suffice because there is a persistent tension between commercial certainty and prompt remedies in law for non-compliance with contracts, on the one hand; and the right to access to courts on the other hand.

[10] Commercial certainty is the unfettered right of the Respondent to claim compliance with contracts and be aided with access to swift

justi ce in assertion thereof. The sustenance of a democratic economy is crucial.

[11] In Basson v Chilwan and Others [1993] ZASCA 61; 1993 (3) SA 742 (A) at 762H Eksteen JA referred to: “The paramount importance of upholding the sanctity of contracts, without which all trade would be impossible ...”

[12] Justice Ackermann in Ferreira v L e v i n NO; Vryenhoek v Powell NO 1996 (1) SA 984 (CC) described it as 'a central consideration in a constitutional state'. These statements aim for reasonable certainty, so that parties can go about their business knowing the rules of the game; constitutional economic integrity is vital.

[13] The constitutional right of the Appellant lies in the use of courts to settle disputes; the right to access to courts in terms of

section 34 of the Constitution. Furthermore, to h a v e any dispute that can be resolved by the application of law decided in a fair public hearing before a court.

[14] The above sets the atmosphere in which the norm of 'good cause ' must be applied on the facts of this case. The criteria include at least both a reasonable and acceptable explanation for the default and a bona fide defense on the merits which prima facie carries some prospect of success.

[15] A caveat isthat if the court is in doubt of the prospects of the defense to be advanced, it cannot for that reason refuse an application. Section 34 of the Constitution specifically directs: “ … any dispute that can be resolved by the application of law.”

[16] The application for rescission must not to be a delaying tactic. Each case must be adjudicated on its own merits and there is no numerus clausus of factors.

[17] The summons did not come to the notice of the Appellant and he promptly reacted and enforced h i s right in terms of section 34 of

the Constitution when the Default Judgment came to h is attention. This confirms his bona fides and an absence of intent to delay litigation.

[18] The second leg of the test is, as was mentioned, if there are grounds for adjudication of the facts by a court on the basis of a

bona fide defense and on merits which prima facie carries some prospect of success. The Appellant satisfied this requirement of the test. The Respondent relies on a contract of which the enforceability is disputed. The atmosphere of the defense is that it was entered into fraudulently. The agreement is disputed by the Appellant. The existence of the agreement depends on evidence and adjudication by a court. The issue needs to be unravelled in a court of law.

[19] The undertone of the defense, is credibility. Credibility is problematic to deal with at this stage and has to be dealt with by evidence tendered, tested and evaluated.

[20] The non-compliance with the rules of court that the Respondent strongly relies upon cuts both ways in this case. On pages 136 and

137 of the record the attorney for the Appellant certified the documents in the record to be a true and exact reproduction of the

original. If that is so; the Plaintiff did not sign the particulars of claim at page 13, the notice of application to intervene as a party was not signed at page 34, the affidavit in support of the application for rescission was not signed at page 43, the opposing affidavit was not signed at page 55, the replying affidavit was not signed at page 66, the alleged same cause of action was litigated in the Randburg Magistrate’s Court, the notice of appeal is not signed at page 132, the application for rescission was apparently brought out of time but this never formed part of the original opposition of the application in the court a quo and the lis pendens issue was addressed in the court a quo when there was an indication that the matter in Randburg was “withdrawn”. The Respondent cannot therefore, complain of the appellant’s non-compliance with the Rules, when it also did not comply with the Rules.

[21] Reading of the Heads of Arguments of the Respondent in the appeal from page 8 onward reveals serious disputes of fact and law that must be ventilated in a court. There exists a defense that is legally plausible.

[22] In conclusion, the Appellant has provided a reasonable explanation for the default as well as a bona fide defense on the merits which prima facie carries some prospect of success.

[23] As to costs, as pointed out, the litigation and handling of the matter are questionable and the trial court will best be placed to decide the issue of costs. An equitable order at this stage is that costs be costs in the cause. Since the general rule of costs

dictates that costs follow the result, we are of the opinion that the Respondent be ordered to pay the costs of the appeal.

[24] The application for condonation from the Appellant for the late filling of their Heads of Argument is granted in light of the circumstances that prevailed due to the Covid 19- pandemic.

[25]

ORDER

1. Condonation for the late filing of the Heads of Argument of the Appellant is granted.

2. The appeal is upheld with costs.

3. The order of the court a quo dismissing the application for rescission of the Default Judgment is set aside.

4. The Default Judgment granted on 29 June 2018 and resultant Warrant for Execution in case number 7154/2018 are set aside.

5. The Appellant is granted leave to defend the action and ordered to deliver to the Magistrate’s Court a plea within 20 (Twenty) days from date of this judgment.

6. The costs orders already granted in the Default Judgment and the application for rescission are set aside and are to be costs in

the cause.

______

M OPPERMAN, J[2]

I concur

S NAIDOO, J

APPEARANCES

On behalf of Appellant: Advocate K NHLAPO Chambers, Bloemfontein

Instructed by: Phatshoane Henney Incorporated Bloemfontein japiek@phinc.co.za

Ref: HAL7/0004

On behalf of Respondent: Advocate G.S Janse van Rensburg Chambers, Bloemfontein

Instructed by: Pothecary Attorneys,

c/o McIntyre & Van Der Post Bloemfontein lishe@mcintyre.co.za

Ref: ND1314

[1] Referred to as “Ditema Architects” in this judgment.

[2] *Electronically send and therefor unsigned; signed judgment available in file: Registrar of the Free State High Court, Bloemfontein.