Rejanala Farms and Projects (Pty) Ltd (5243/2019) [2021] ZAFSHC 131 (29 April 2021)

FREE STATE HIGH COURT, BLOEMFONTEIN

REPUBLIC OF SOUTH

AFRICA

Case No: 5243/2019

In the matter between:

REJANALA FARMS AND PROJECTS (PTY) LTD

[Reg No: 2014/109822/07]

FIRST

APPLICANT

KELEBOGILE

LINDA SAMBO

SECOND

APPLICANT

NTOKO

SOPILE MOELETSI

THIRD

APPLICANT

FRANCIS

MANDE FOURTH

APPLICANT

and

MASISIZANE FUND (NPC)

[Reg No: 2007/009983/08]

RESPONDENT

JUDGEMENT BY: MOLITSOANE, J

HEARD:

4 MARCH 2021

DELIVERED: 29 APRIL 2021

[1] The Applicants seek the rescission of a judgment granted by this court on 12 March 2020 in favour of the Respondent. They further seek condonation for the late filing of the application for rescission of judgment.

[2] The First Applicant, Rejanala Farms and Projects (Pty) Ltd. (Rejanala) conducts business in the agricultural sector. The rest of the Applicants are its directors. The Respondent is a non-profit company duly incorporated in terms of the company laws of the Republic of South Africa under registration no. 2007/009883/08.

[3] Rejanala produced grains and legumes and sold such grains and legumes to hawkers and at fresh produce market in Bloemfontein. It is the case for the Applicants that during June and July 2017 the Fourth Applicant, acting on behalf of Rejanala approached the Respondent for both a loan and a grant. It is the case for the Applicants that the Fourth Applicant engaged with Mr Robert Matsila, Head of Agribusiness at Masisizane.

[4] On 26 August 2017 the Fourth Applicant submitted the application for funding to the respondent. The Fourth Applicant submits that at all material times an impression was created by the respondent that the loan and the grant were part and parcel of the application process and that the application process submitted by Rejanala pertained to both. Rejanala applied for a loan of R2 661 446.00 and expected to be given a grant of R1 000 000.00. It is the case for the Applicants that their intention was to utilise the grant partially to repay the loan amount and from the proceeds of the crops to be planted, to repay the balance.

[5] On 24 November 2017 the respondent approved the “business loan application to the value of R2 661 446(Two million six hundred and sixty-one thousand four hundred and forty six rand) which is inclusive of loan and notarial bond fees” in favour of Rejanala[1].

[6] It is the case for the applicants that following the approval of the loan, they were made to sign certain documents by one Ms Nandipha Gaqa without being afforded the opportunity to read them. These documents were signed in haste in a coffee shop at the airport in Bloemfontein, as according to the Fourth Applicant, the said Ms Gaqa had to fly back within 10 minutes of her arrival.

[7] The Applicants further submit that the planting season for the sugar bean was from October to April and the time frame for growing the sugar bean was about three months from planting to harvesting. It was a condition precedent for the loan that Rejanala must cede its crops to the Respondent. The respondent also required Rejanala to take crop insurance but prescribed the insurer to be used to provide such insurance. The preferred insurer provided crop insurance until end of March. The payments to the suppliers was only made on 22 December 2017. The respondents contend that by the time payment was done to the suppliers most of them had already closed for the December holiday. The end result was that deliveries of the products required in respect of the farming activities of Rejanala commenced only after 21 January 2021. This, argues the Rejanala, only gave it two months to plant the sugar beans before the onset of winter, while the respondent was aware that its preferred insurer would only cover any losses up to the end of March 2018. Rejanala thus contend that failure to pay the suppliers in time was the sole cause of the alleged damages by the respondent.

[8] The applicants case is founded on Uniform Rule 31(2)(b). This Rule provides that a defendant may within 20 days after acquiring knowledge of a judgment against him, 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 it deems fit.

[9] The applicant in an application for rescission of judgment in terms of Rule 31(2)(b) must show good cause. This entails that that:

a) The applicant must give a reasonable explanation for his default;

b) The applicant must show that the application is bona fide and not made the intention to delay the Plaintiff’s claim;

c) The applicant has a bona fide defence to the Plaintiff’s claim.

See Colyn v Tiger Food Industries Ltd t/a Meadow Feed Mills (Cape) 2003(6) SA 1 (SCA) at par [11].

[10] In Du Plooy v Anwes Motors (Edms) Bpk 1983(4) SA 212(0) the court said:

“Applications for rescission of default judgment, removal of bar, leave to defend and applications for extensions of time for the late filing of pleadings must be seen as species of the same genes. In all these cases there is a failure by a litigant to act timeously in terms of the rules and who seeks the indulgence of the court so as to allow him to proceed with his action or defence. According to Rule 27(1) of the Uniform Rules of Court, ‘good cause’ must be shown and this gives the Court a wide discretion which must, in principle, also be exercised with regards to the merits of the matter seen as a whole.

[11] It is trite that a party may approach the court for condonation for its non-compliance with the court rules in terms of Rule 27(3). It is common cause that this application was not brought within 20 days as envisaged in Rule 31(2) (b). It is for this reason that, as a starting point the Applicants seek condonation for the late bringing of this application.

[12] In explaining the delay, it is confirmed that on 10 June 2020 the Sheriff of this Court served a writ of execution at the residential address of the Third Applicant. On 18 June 2020 the legal representatives of the Applicants obtained copies of the court file in this matter. A consultation was secured with Counsel on 29 June 2020. This consultations was with the Third Applicant. On this first consultation further documentation was required and consultation with the Fourth Applicant was specifically sought as it appeared that certain documentation pertaining to this dispute was in his possession.

[13] According to the Fourth Applicant he fell ill during the month of June 2020 which illness led to his self-isolation from 28 June 2020 to 13 July 2020. He could thus only secure an appointment with Counsel on 4 August 2020. By then the 20 day period envisaged in rule 31(2) (b) had already elapsed. Following a consultation on 4 August 2020 a further consultation was scheduled for 25 August 2020. It appears from evidence that the latter consultation was to deal with the process pertaining to a grant and a loan. On 9 September 2020 the Applicants attorney was furnished with a draft application which required further documentation to complete. Such further documentation was only given on 21 September 2020.

[14] It is indeed so that an Applicant seeking condonation must explain satisfactorily and fully the delay which covers the entire period to enable the court to understand how it really came about. It is indeed so that the applicant had three consultations with Counsel. While the second consultation was understandable in view of the assertion that the Fourth Applicant was the only one who was in possession of the documents required to complete the consultation, no further explanation was given for the third consultations. This I say on the basis that it has not been explained why the relationship between the application for a loan and for a grant could not have been explained or discussed in the first or the second consultation. This, notwithstanding, I am prepared to accept that such consultation was necessary. The same also hold true with the documentation which had to be procured on three different occasions.

[15] Given the circumstances relating to the illness of the Fourth Respondent, coupled with various consultations with Counsel and the concomitant request for further documentation I am of the view that the Applicants have fully explained the delay and how it came about.

[16] It is common cause that the summons was served on all four Applicants by delivery of the said documents at their chosen domicilium citandi et executandi. The said summons were served on a lady employed by the Third Applicant. The said lady deposed to an affidavit that she received the summons and placed them amongst other documents. She further asserts that she had intended to give same to the wife of the Third Applicant but forgot. There is no explanation as to what happened to the documents but the bottom line is that the summons and consequently the action was never brought to the attention of the Applicants. The Third Respondent and his wife only became aware of the judgment when the sheriff came with the writ of execution on 10 June 2020.

[17] The Applicants in the main pleads iustus error as their line of defence. They assert that when they approached the Respondent, as a strategic partner, to assist Rejanala, Respondent promised to grant them a loan and a grant. It would seem that the question of the loan was dealt with by the respondent while the grant application was dealt with by Old Mutual Trust. It is the contention of the respondent that Rejanala was not misled by them and further that the Respondent and Old Mutual Trust were two separate entities.

[18] The Respondent attempted to distinguish between its entity and Old Mutual Trust and contended thus that the Applicants were never misled and the error on the part of the applicants was not iustus.

[19] The case for the Applicants is that Fourth Respondent approached the Respondent for a loan and a grant. Mr Robert Matsila confirmed that the Respondent would be able to assist the Applicants with a loan and a grant in order for Rejanala to achieve its objectives.

[20] The evidence reveal that the loan application was approved on 24 November 2017 subject to certain conditions. The said approval makes no mention of a grant. The loan agreements were signed on 22 December 2017. These agreements also make no reference to a grant. Between 9 and 11 January 2018 Rejanala and Old Mutual Trust exchanged correspondence regarding the grant.

[21] What remains unexplained on the part of the Respondent is what prompted the exchange of the correspondence between Rejanala and the Trust, regarding the grant after the approval of the loan. In my view, the Respondent has failed to dispel the notion that it (Masisizane) and the Trust were separate entities and consequently that the Applicants were not misled into believing that the granting of the loan and the acquisition of a grant were part and parcel of the same transaction.

[22] By way of an illustration, Mr Matsila is the Investment Head Agribiz of Masisizane Fund. On 19 July 2017 he sent an electronic mail to Rejanala from the email address: NMatsila@oldnutual.com. Ms Nandipha Gaga is the Provincial Manager, Gauteng, Free State and North West of the Respondent but the email address she used to correspond with the Applicants is nggaqa@oldmutual.com. There is no proper explanation why they used the domain of Old Mutual if they are separate from it. What is more puzzling is the documents attached to the summons in support of the claim. The loan statement on which the Respondent relies for proof of its quantum, was generated under the name ‘Old Mutual Finance.’ The Certificate of Balance indicating the amount recoverable is also generated under the name of Old Mutual Finance. This balance statement was signed by one Siegfried Creagh Schuttler, in his capacity as Senior Legal Recoveries Manager, not of Masisizane, but of Old Mutual Finance (RF) (Pty) Ltd. I am satisfied that owing to the apparent inter-relationship between the Respondent and Masissizane as indicated above the Applicants may have been misled into believing that the granting of the loan and of the grant were part and parcel of the same process, and in that regard their error may be found at the trial to be iustus. Should the applicants succeed on relying on iustus error, they would be justified on being released from the contractual relationship which was concluded when the parties signed the loan agreement and the suretyships and this would constitute a bona fide defence.

[23] It is contended on behalf of the Respondent in the Heads of Argument that there is no indication as to when the Applicants became aware of the alleged misrepresentation or when they became aware that no grant would be afforded to them, and without that indication the court could not find that the alleged misrepresentation constituted a bona fide defence. I disagree.

[24] In the evaluation of whether the Applicant has shown good cause as envisaged in Rule 31(2)(b), this court has a wide discretion. Good cause is not limited to the existence of a substantial defence. (See Silber v Ozen Wholesalers (Pty) Ltd 1954(2) SA 345(A) at 352). The Applicant needs only to establish a prima facie defence and need not deal exhaustively with the merits of the defence as the Applicant has done in this case. In my view the applicants have shown good cause to purge their default. There is no need to deal further with other defences raised. The application ought to succeed. I accordingly make the following order.

ORDER

1. The application for rescission of judgment is granted with costs.

2. The order granted by default on 12 March 2020 in favour of the Respondent is hereby rescinded.

P.E. MOLITSOANE,J

On behalf of the Applicant:

Adv R Van der Merwe

Instructed by: Phatshoane Henney Attorneys

BLOEMFONTEIN

On behalf of the Respondent: Adv C Pretorious, SC

Instructed by: Blair Attorneys

[1] See paginated record, Annexure FA7, page 105.