Puruglia Trading CC v Body Corporate Parkwood and Another (81964/2017) [2020] ZAGPPHC 130 (21 April 2020)

IN THE HIGHCOURT OF SOUTH AFRICA

(GAUTENG DIVISION, PRETORIA)

(1) REPORTABLE: NO

(2) OF INTEREST TO OTHER JUDGES: NO

Case Number:81964/2017

21/4/2020

In the matter between

PURUGLIA TRADING CC

APPLICANT

(Reg. No: 2005/132569/23)

And

THE BODY CORPORATE PARKWOOD

1ST RESPONDENT

KAAP VAAL TRUST(PTY) LTD

2ND RESPONDENT

In re:

THE BODY CORPORATE PARKWOOD

APPLICANT

PURUGLIA TRADING CC

RESPONDENT

JUDGMENT

KUBUSHI J

INTRODUTCION

[1] This is an opposed rescission application in respect of a final winding up order granted against the applicant by default in terms of section 69 (1) read with section 68 (c) of the Close Corporation Act 69 of 1984 ("the Act'').

[2] Only the first respondent is opposing the application. The second respondent is cited herein in it s capacity as the appointed liquidator of the applicant and, thus, no specific relief is sought against it.

FACTUAL MATRIX

[3] The winding up application was instituted against the applicant by the first respondent, a Body Corporate of Parkwood, established in terms of the Sectional Titles Act 95 of 1986 for the scheme known as Parkwood. The applicant is the owner of a property in Parkwood and in terms of the Parkwood Scheme Is liable to pay monthly levies. The allegation by the first respondent is that the applicant fell in arrears with the payment of its levies and failed upon demand by the first respondent to pay same, as a result whereof the first respondent app roached court for an order to wind up the applicant. The applicant denies that it is in arrears with the payment of its levies.

[4] The first respondent' s cause of action in the winding up application, was premised on the applicant' s deemed inability to pay its debts as envisaged in section 69 (1) of the Act.

[5] The applicant was finally wound up by an Order of Court on 20 September 2018. The provisional order was granted on 7 March 2018. Both orders were granted in default. The applicant has as a result approached court to have the final order rescinded.

THE ISSUE

[6] The issue for determination is whether the applicant has satisfied the requirements for the granting of the rescission of judgment.

LEGISLATIVE FRAMEWORK

[7] A judgment granted in default may be rescinded by the court in terms of either Uniform Rules 31 (2) (b) or 42 (1). It was not apparent from the applicant's papers with which rule the applicant sought relief. However, during argument in court, it became clear that the applicant was relying on the provisions of Uniform Rule 31 (2) (b).

[8] Uniform Rule 31 (2) (b) provides that:

“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 ft seems meet.”

[9] Whether an applicant has shown good cause as envisaged In Uniform Rule 31 (2) (b) lies within the discretion of the court. As such, there is no exhaustive definition of what would constitute sufficient cause to justify the granting of an application for the rescission of default judgment. The courts have over the years established the following requirements to satisfy the element of good cause stipulated under sub-rule 31(2) (b):[1]

9.1 The applicant must give a reasonable explanation of his or her default. The default must not be wilful or due to the applicant’s gross negligence;

9.2 The application must be bona fide and not be made with intention to delay the respondent's claim; and

9.3 The applicant must show that he or she has a bona fide defence to the respondent's claim.

[10] The approach adopted by our courts in matters of this kind Is to consider these factors in an interrelated manner and to weigh one against the other; a strong factor to compensate for a weaker one,[2] for example, where the applicant has provided a poor explanation for default, a good defence may compensate.[3]

WILFUL DEFAULT

[11] The reasons for the applicant's default is said to be an essential ingredient of the good cause to be shown. Therefore, the applicant must provide a reasonable explanation of its default. The issue of wilful default though not an essential element of the good cause to be shown, the wilful or negligent nature of the default is one of the considerations which the court takes Into account in the exercise of Its discretion in determining whether or not good cause has been shown. The reasons for the applicant's default must therefore be set out because it is relevant to the question whether its default was wilful.[4]

[12] The applicant's explanation for Its default is that the processes served on it did not come to its knowledge and/or the knowledge of its members. The argument Is that the form of service used by the first respondent to serve the processes on the applicant is not sufficient to constitute knowledge of the proceedings.

[13] It is not disputed that the notice of motion seeking the winding up of the applicant was served at the applicant's registered address by way of affixing on 19 January 2018, which service is confirmed by the sheriff' s re turn of service attached to the papers as annexure "BB1". It is also not in dispute that the notice of set down in respect of the final winding up proceedings was served at the applicant's registered address on 4 July 2018 by way of affixing, which service is confirmed by the sheriff's return of service attached to the papers as annexure ''CC1" . The notice of set down was further served at the residential address of Ms Gloria Mokoena, the former c-o member of the applicant on 26 June 2018 by way of affixing to the principal door, which service is confirmed by the sheriff’s return of service attached to the papers as annexure "CC2".

[14] The interim order (provisional order) was advertised In the Pretoria News newspaper which predominantly circulates within the district of Pretoria whilst the registered address of the applicant is located in Weltevreden Park in the West Rand.

[15] The argument on this aspect, in court as well as in the papers,

revolved around whether or not there was proper service of the processes. This argument in my view misses the point. What is at

issue here is not whether the processes were properly served but whether the said processes came to the knowledge of the applicant

and/or its members.

[16] Before a person can be said to be in wilful default the following elements must be shown:(a) knowledge that the action is brought against him; (b) a deliberate refraining from entering appearance, though free? to do so; and (c) a certain mental attitude towards the consequences of the default . All these elements must be established before a party can be said to be in wilful default. The onus of proof rests with the respondent.[5]

[17] It is, thus, important that the first respondent prove that either the applicant or its members had knowledge or came to know of the proceedings. The applicant's contention is that it did not receive the processes that were served by the sheriff by affixing and that such processes did not com e to either its knowledge or its members' knowledge. But, the first respondent is adamant that since the processes w ere served at the applicant's registered address, even though by affixing, same should have come to the knowledge of the applicant and/or its members.

[18] According to the first respondent probabilities are that the processes having been so served, by affixing, ought to have come to the knowledge of the applicant and/ or its members or inference should be drawn that the processes ought to have come to the knowledge of the applicant and/ or its members.

[19] I am not in agreement with the first respondent's afore stated argument. Firstly, it is trite that the inference sought to be drawn must be consistent with all the proved facts. Even though the first respondent's argument, which I accept, that it has been able to prove that the processes were properly served on the applicant at its registered address, the first respondent has, however not been able to prove all the elements of wilful default. That is, the first respondent was not able to prove that the processes came to the knowledge of the applicant, that the applicant deliberately refrained from opposing the notice of motion or appearing in court on the dates of hearing of the application for winding up, though free to do so; and that the applicant and/or Its members had an indifferent attitude towards the consequences of the default. This, the first respondent

was unable to prove, so an inference cannot, thus be safely drawn.

[20] Secondly, in my view, probabilities, where service was by affixing, should be stacked against the first respondent. There are a number of things that could have happen to a process that was served by affixing to the door. I do not think it is necessary to mention them here, but they speak for themselves.

[21] The same applies also to the advertisement of the newspaper. The applicant says none of its members saw the advertisement. That it was advertised in the Pretoria News, a newspaper not circulating in the

West Rand as alleged by the applicant, is not the issue. The issue is whether the advertisement came to the knowledge of the applicant.

[22] Be as it may, I am of the opinion that the applicant's explanation is reasonable in the circumstances of this case. It Is correct that the manner of service used by the first respondent to serve the processes on the applicant is not sufficient to constitute knowledge of the proceedings. I am, therefore, satisfied that the applicant is not in wilful default and that the explanation he provided is reasonable.

BONA FIDE DEFENCE

[23] Good cause includes, but is not limited to, the existence of a substantial de fence. The defence must not show a probability of success: It suffices if the applicant shows a prima facie case, or the existence of an Issue which is fit for trial. The grounds of defence must be set forth with sufficient detail to enable the court to conclude that there is a bona fide defence.[6]

[24] The applicant raises a number of defences in its papers. The upshot thereof is that the applicant disputes the arrear levies. I am thus satisfied that the defences show a prima facie case or the existence of an issue which is tri able. Thus, the applicant has succeeded in establishing a bona fide defence.

BONA FIDE APPLICATION

[25] ft has been held that good cause includes, but is not limited to, the existence of a substantial defence. The requirement of good cause cannot be held to be satisfied unless there is evidence not only of the existence of a substantial defence but, in addition, the bona fide presently held desire on the part of the applicant for relief actually to raise the defence concerned in the event the judgment is rescinded.[7]

[26] I am satisfied that this application is bona fide and that the applicant has a bona fide held desire to actually raise the defence concerned in the event judgment is rescinded. I say this because of the minuscule amount of money owed by the applicant as compared to the estate that stands to be liquidated should the winding up of the applicant be proceeded with.

CONCLUSION

[27] It is my view that the relief sought by the applicant ought to be granted. I am satisfied that the applicant has succeeded in making out a case for the rescission of the default order granted against it on 20 September 2018. The applicant should be granted leave to oppose the final liquidation. The first respondent and any other creditors of the applicant, stands to suffer no prejudice as the applicant will remain under provisional winding up .

CONDONATION

[28] The applicant Filed it’s application out of time and has consequently applied for condonation for such late filing. The first respondent di d not oppose the condonation application and, as a result, that application ought to be granted.

ORDER

[29] Consequently, I make the following order:-

1. The application for condonation is granted.

2. The application for rescission of the order granted against the applicant on 20 September 2018 is granted.

3. The order granted against the applicant on 20 September 2018 is rescinded.

4. The applicant is granted leave to oppose the final winding up application.

5. Costs are reserved pending the finalisation of the final winding up application.

E.M KUBUSHI

JUDGEOF THE HIGH COURT

Appearance:

Applicant's Counsel

: Adv. F.C. Lamprecht

Applicant's Attorneys : Kirkcaldy Pereira Incorporated.

Respondent's Counsel : Adv. L. Monnakgotla

Respondent's Attorneys : Maponya Attorneys Inc.

Date of hearing

: 04 February 2020

Date of judgment

: 21 April 2020

[1] See Erasmus: Superior Court Practice 2nd Volume 2 at D1-365 - D1- 366 and Colyn v Tiger Food Industries Ltd t/a Meadow Feed Mills (Cape) 2003 (6) SA 1 (SCA) at 9E - F.

[2] Burton v Thomas Barlow & Sons (Natal) 1978 (4) SA at 797H.

[3] See Carolus v Saambou Bank Ltd; Smith v Saambou Ltd 2002 (6) SA 346 (SE) at 349B-C.

[4] See Erasmus: Superior Court Practice 2ed Volume 2 at D1- 366.

[5] See Erasmus: Superior Court Practice 2ed Volume 2 at D1-367.

[6] See Erasmus: Superior, Court Practice 2ed Volume2 D1-368- D1 369

[7] Silber v Ozen Wholesalers (Pty) Ltd 1954 (2) SA 345 (A) at 352