Scholtz v J Frances and Seuns Klerksdorp (Pty) Ltd and Another; In re: J Frances and Seuns Klerksdorp (Pty) Ltd v Scholtz and Another (38685/2010) [2015] ZAGPPHC 1080 (31 August 2015)

IN THE HIGH COURT OF SOUTH AFRICA

[GAUTENG DIVISION, PRETORIA]

CASE NUMBER: 38685/2010

DATE: 31/8/15

In the matter between :

WILHELM PIETER SCHOLTZ

APPLICANT

and

J FRANCES & SEUNS KLERKSDORP (PTY)

LTD

FIRST RESPONDENT

JACQUES HENDRIK JANSEN

SECOND RESPONDENT

In re:

LTD

APPLICANT

WILHELM PIETER SCHOLTZ

FIRST RESPONDENT

JUDGMENT: APPLICATION FOR LEAVE TO APPEAL

A.J. LOUW AJ

[1] The Applicant for rescission of judgment, Wilhelm Pieter Scholtz applies for leave to appeal against my judgment of 16 July 2015 ("my judgment"). I will refer to him as the Applicant or as "Scholtz". To the First Respondent, J Frances & Seuns Klerksdorp (Pty) Ltd I will refer as First Respondent or as "Frances". To the Second Respondent, being Jacques Hendrik Jansen I will refer as Second Respondent or "Jansen". Where necessary I will refer to Jansens lngelyf, being the incorporated attorneys practice whereof the Applicant and the Second Respondent were the directors, as "Jansens lngelyf'.

[2] The application for leave to appeal was filed timeously. This application for leave to appeal must be dealt with under the provisions of the Supreme Court Act 59 of 1959 and not in terms of the provisions of the Superior Courts Act 10 of 2013. This matter was pending long before the Superior Courts Act 10 of 2013 took effect. (See section 52 thereof).

[3] It is common cause or in any event not disputed, that, if leave to appeal should be granted, that the appeal must be heard by the Full Bench of the Gauteng Division, Pretoria of the High Court of South Africa. The matter does not require the attention of the Supreme Court of Appeal.

[4] For the Applicant Mr Scholtz appeared in the application for leave to appeal. As his predecessor, Ms Da Rocha, Mr Scholtz presented an able argument in support of the application for leave to appeal. For the First Respondent, Mr Davis SC, again appeared. Ithank both counsel for the assistive argument that they presented during the application for leave to appeal.

[5] Mr Scholtz correctly in my respectful view, conceded that the matters raised in paragraph 1 of the application for leave to appeal do not constitute grounds upon which the application for leave to appeal must be granted or refused.

[6] During oral argument Mr Scholtz raised a number of points upon which the application, according to the Applicant, must be granted. These specifically argued grounds are:

6.1 There is no proof in the application for contempt of court (in other words the application that served before Goodey, AJ, on 9 December 2011) of the fact that the Applicant (Scholtz) in fact had knowledge of the order of Tolmay, J of the 2nd July 2010.

6.2 Contempt proceedings can only be successful against the directors of a company if it is indeed proved that they had knowledge of the order giving rise to the application for contempt of court. I was referred to the 20th Century Fox Film Corporation and Another v Playboy Films 1978 (3) SA 202 (WLD) matter that I referred to in paragraph 42 of my judgment. In addition I was referred to the matter of Gauteng Province Driving School Association and Two Others v Amaryllis Investments (Pty) Ltd 2011 ZASCA 237 a judgment of the Supreme Court of Appeal dated the 1st December 2011. Mr Scholtz argued that a mandamus must first be applied for and granted against directors if they were not joined from the outset. Therefore, in this matter, so it was argued, an order for contempt of court could not have been made against the Applicant by Goodey, AJ.

6.3 It was argued that I erred in finding that I had a discretion whether to grant the rescission or not. Some of the judgments referred to in my judgment regarding this aspect of the matter (see paragraph 57 of my judgment), are authority that there is no discretion to refuse rescission of judgment in terms of Rule 42 if the order indeed was erroneously sought or erroneously granted. Some of those judgments date after the Tshivhase-matter (see paragraph 57 of my judgment) and therefore there is a reasonable prospect of success on appeal. It was argued that this is so specifically having regard to the fact that the liberty of the Applicant is at stake. Alternatively it was argued that, having

regard to the fact that it is the Applicant's liberty that is at stake, I should have exercised my discretion in favour of the

Applicant.

6.4 The order of Bredenkamp, AJ dated the 2nd September 2011 and as dealt within in paragraph 10 of my judgment is still the subject of a rescission application. The Goodey, AJ order is dependant upon the existence of the Bredenkamp, AJ order and therefore the rescission should have been granted.

6.5 Next it was argued that there is no foundation for the order in prayer 3 as granted by Goodey, AJ. The R400 524.75 constituted trust monies. The interest thereon does not belong to the First Respondent and the Applicant was not joined as a party from the outset.

6.6 The order of Goodey, AJ substitutes the costs order of Bredenkamp, AJ and indeed there is no case made out for attorney and client costs.

6.7 Next it was argued that I erred to find that the First Respondent had locus standi to ask for an order that the R400 524.75 be paid to it as no case was made out that the said funds indeed belonged to the First Respondent. Trust creditors of the First Respondent would first have to abandon their rights to the funds and the said funds had not been identified as funds that belonged to the First Respondent.

6.8 It was further argued that Jansens lngelyf should have been joined as a party in the contempt application resulting in the order of Goodey, AJ as it has a direct and substantial interest in the proceedings.

[7] I dealt with the question of whether the Applicant had knowledge of the order in inter alia paragraph 43 of the judgment. I again considered the contents of the application for rescission of judgment. Nowhere is it in the rescission of judgment application the case of the Applicant, amongst a long list of purported grounds for rescission of judgment, that he did not have knowledge of the order of 2 July 2010 as granted by Tolmay, J.

[8] The Applicant had the onus of proof, on a balance of probabilities, to show that the rescission of judgment must be granted. If non-knowledge of the judgment of Tolmay, J was a reason why the order of Goodey, AJ must be rescinded, then one would have expected it to be raised in the application for rescission of judgment. In fact, it simply cannot be regarded as a ground for rescission of judgment, if it is not raised by the Applicant himself in his founding affidavit. This is not a rehearing of the application that served before Goodey, AJ. The judgment at present under attack is my judgment in the rescission of judgment application. It simply is not his case on the evidence before me, that the Applicant did not have knowledge of the Tolmay, J order of 2 July 2010. Therefore there is no merit in this argument of Mr Scholtz.

[9] On grounds of the Gauteng Province Driving School Association and Others v Amaryllis Investments (Pty) Ltd and Another judgment of the Supreme Court of Appeal (supra) it is argued that a mandamus should first have been granted against the directors of Jansens lngelyf and that the

directors of Jansens lngelyf (i.e. inter alia the Applicant) should have been joined before a contempt order could have been made against the Applicant.

[10] The Supreme Court of Appeal in the Amarylli s-judgment did not make any such finding as that a mandamus must first be issued against directors. It did find in that case that there was no case made out against the directors of the First Appellant for a contempt order and on that ground the appeal against the contempt order against the two directors of the First Appellant, was set aside. However, this was a finding that followed upon the particular facts of the matter. In the affidavit of the Second Appellant as supported by a confirmatory affidavit of the Third Appellant in the Amarylli s-judgment (the Second and Third Appellants being the two directors of the First Appellant) it was denied that the Second and Third Appellants disobeyed or failed to comply with the relevant court order or that there was wilfulness or ma/a tides on their part. Amaryllis did not file a replying affidavit in the proceedings and accordingly the statements of the Second and Third Appellants were undisputed. On that ground it was found that the appeal of the Second and Third Appellants must succeed.

[11] That set of circumstances differ totally from the facts in this matter. In this matter knowledge of the order of Toimay, J of 2 July 2010 is not disputed by the Applicant in the application for rescission of judgment. I dealt with this aspect of the matter in paragraphs 43 to 46 of the judgment. The Applicant was duly and properly cited as a Respondent and served with the application in the contempt application. I am satisfied that no other court could reasonably come to a different conclusion on the issues of knowledge and citation of the Applicant. I therefore cannot find that in this regard there are reasonable prospects of success on appeal for the Applicant.

[12] As to the argument that there is no discretion or that I should have exercised my discretion in favour of granting rescission of judgment, the judgment of the Supreme Court of Appeal in Tshivhase Royal Council v Tshivhase; Tshivhase v Tshivhase [1992] ZASCA 185; 1992 (4) SA 852 (AD) at 8621 - 863A and the provisions of Rule 42(1) are clear. I discussed these aspects also fully in paragraphs 57 and 58 of the judgment. There was also clear contempt of court. There are no reasonable prospects of success on appeal for the Applicant on these grounds.

[13] In any event I found that there is no bona fide defence with prospects of success raised by the Applicant. In those circumstances, in any event, rescission should be refused. See:

Sheriff Pretoria North-East v Flink and Another [2005] (3) All SA 492 (T) that I referred to in paragraph 58 of the judgment. See also the discussion in paragraph 842.9 of Harms, Civil Procedure in the Supreme Court page B-304.

[14] I will deal with the argument that the order of Bredenkamp, AJ of 2 September 2011 is still the subject of a rescission application hereinlater.

[15] It was argued that prayer 3 of the order of Goodey, AJ has no foundation as the R400 524.75 constituted trust money. In addition

the interest thereon does not belong to the First Respondent (but to the Market Agents' Board) and thirdly the Applicant was not joined as a party in the applications leading up to the order of Goodey, AJ.

[16] I dealt with the matter of locus standi in my judgment and I am satisfied that there is no reasonable prospect that another court will find that the First Respondent did not have locus standi to apply for and be granted the orders of 2 July 2010 and 29 July 2010. The fact that prayer 3 of the order of Goodey, AJ makes provision for payment of interest on the R400 524.75 constitutes no ground whereupon another court will come to a different conclusion. Any questions of enrichment, as was argued by Mr Scholtz loses cognisance of the fact that as of the date of the unlawful transfer of the R400 524.75 into the trust account of Jansens lngelyf, there was an obligation to repay, that is in terms of the Prescribed Rate of Interest Act 55 of 1975 subject to payment of interest. See section 2( 1), 2(2) and 2(3). In addition the attached R4 843.00 will not cause unjustified enrichment as the principles of set-off would prevent overpayment.

[17] The Applicant was properly cited as a Respondent in the application that led up to the default judgment that was granted on the gth December 2011. This is also an aspect that was dealt within in my judgment now forming the subject of the application for leave to appeal. I am satisfied there is no reasonable prospect that another court will come to a different finding in that regard.

[18] It was argued that the order of Goodey, AJ substituted the costs order of Bredenkamp, AJ and thus is a "review" of the order of Bredenkamp, AJ in circumstances where no case for attorney and client costs were made out.

[19] The costs order of Goodey, AJ, being prayer 4 of the order of the gth December 2011, is a costs order against the Applicant. It is a separate and distinct order against the Applicant and does not constitute a "review" of the order of Goodey, AJ. In fact prior to the gth December 2011, no costs order of any nature was made against the Applicant personally.

[20] As regards the award of attorney and client costs against the Applicant I am of the respectful view that, in view of the circumstances of the matter, Goodey, AJ was fully entitled to grant such an order. I am satisfied that there is no reasonable prospect that another court will come to a different conclusion in this regard. Accordingly I cannot grant leave to appeal on these grounds.

[21] It was further argued that I erred in finding that the First Respondent had locus standi to ask for the order that the R400 524.75 be paid as no case was made out that these funds indeed belonged to the First Respondent. I have no doubt that the First Respondent, as the entity entitled to manage and conduct its trust account, has locus standi to claim repayment of any amounts unlawfully withdrawn from such trust account. There is no merit in this argument.

[22] It was furthermore argued that Jansens lngelyf should have been joined as a party in the contempt application as it has a direct and substantial interest in the proceedings. I do not agree. The contempt application was specifically directed against (inter alia) the Applicant himself. Perpetrators of contempt of court who committed the contempt in the same circumstances, will be jointly and

severally liable for their contemptuous conduct. There is no basis to say that Jansens lngelyf must be joined in the contempt proceedings.

I dealt with this aspect in my judgment and I am satisfied that there is no reasonable prospect that another court will come to a different conclusion.

[23] One of the grounds for leave to appeal is that I failed to take into account the differences between the contents of the affidavit of Marius Dreyer,

dated the 30th April 2013 when compared to the contents of the letter of Jansens lngelyf dated 2 July 2010. The affidavit of Dreyer is attached to the opposing affidavit of the First Respondent. There is no reply by the Applicant to the opposing affidavit and the affidavit of Dreyer. In the circumstances the evidence, under oath, of Dreyer stands uncontested. There is no merit in this ground for leave to appeal.

[24] I undertook to deal with the ground of appeal argued by Mr Scholtz that the order of Bredenkamp, AJ of 2 September 2011 (and in this regard I see that I incorrectly referred to the date as 2 July 2011 in paragraph 40 of the judgment) is still the subject of a rescission of judgment application. It was argued that the order of Goodey, AJ, is dependant upon the existence of the order of Bredenkamp, AJ and therefore that I should have granted rescission of judgment.

[25] For purposes of the application for leave to appeal I was provided with a set of documents. In the set of documents the alleged

application for rescission of judgment of the 2 September 2011 application is attached as Annexure "VPS16". Only the

Notice of Motion is attached. It purports to be an application by "the Applicant" without specifying whether it is brought by Jansens lngelyf as well as Marius Dreyer or only Jansens lngelyf. The Notice of Motion purports to be supported by an affidavit of Jansen. The date of signature of the Notice of Motion (without any indication as to the date of hearing thereof although a space for the date of hearing is indicated) is the 30th January 2012. Whether the application indeed was issued, is not clear and for purposes of this judgment assume that it indeed at some stage was a pending application.

It is clear that Dreyer is not part of that application any longer, if indeed he ever was. His affidavit in support of the First Respondent in the rescission of judgment application clearly shows that he certainly is not part of the purported application for rescission of judgment of the 2 September 2011 order.

Accordingly that application was brought by Jansens lngelyf. It is to be noted that the Applicant did not join in that application. As we know, he already departed as a director of Jansens lngelyf during 2011.

In paragraph 1.1 of the application for leave to appeal it is the Applicant's own case that the capital amount of R400 542.75 with

interest was paid arising out of the order of 9 December 2011 by Jansens lngelyf to the First Respondent prior to the 4th May 2015. On the facts of the matter it is thus clear that the rescission of judgment application indeed is not proceeding as payment of the R400 542.75 as well as the interest thereon, would not occur if the rescission of judgment application is indeed still pending. If it was pending, the payment shows acquiescence in the orders made against Jansens lngelyf and Jansen personally.

I accordingly conclude that there clearly is no pending rescission of judgment application of the 2 September 2011 order.

[26] There are conflicts in the case law on whether applications for rescission of judgment suspend the operation of an order that was granted by default. The case of United Reflective Converters (Pty) Ltd v Levine 1988 (4) SA 460 (WLD) found that Rule 49(11) purports to set forth a rule of substantive law regarding the suspension of the operation of an order that stands to be rescinded under an application for rescission of judgment and to that extent Rule 49(11) is ultra vires. It was found by Roux, J that a rescission of judgment application does not suspend the operation of the judgment. See the United Reflec t ve-judgment at 462G

- 464C. In Peniel Development v Pieterson 2014 (2) SA 503 (GJ) Vally, J declined to follow the United Reflect ve-judgment and found, as did the same court in the matter of Khoza v Bod y Corporate Ella Court that the common law must be extended in this area and that the operation of a judgment is suspended when an application for rescission of judgment is noted. See the Penie/-judgment at 507A - F. considered it and must say that I am in agreement with the approach followed by Vally, J in Peniel-supra.

[27] If I am wrong with my conclusions in the previous paragraphs, I will now turn to the question of whether it is correct that the order of 9 December 2011 is dependant upon the order of 2 September 2011. The order of 2 September 2011 directly orders Jansens lngelyf to pay R400 524.75 to the First Respondent. In addition it declares that the "authority" that Dreyer gave to Jansens lngelyf to utilise the R400 524.75 as fees, is set aside.

[28] I dealt with this aspect in the judgment and found in paragraph 65 of the judgment that the order that the Applicant must personally pay the R400 524.75 in order to avoid being imprisoned, can stand alone on the facts without the existence of the 2 September 2011 order. The question thus is whether there is a reasonable prospect that another court might find that I am wrong with this finding, for, if I am wrong, then the conflict between the Pen e/-judgment and the United Reflec t ve-judgment will at least constitute reasonable grounds for success on appeal for the Applicant.

[29] In the judgment I dealt with the nature of a contempt of court order. The purpose of contempt proceedings usually are to compel the non-complier to comply with the terms of a previous order. This is not the only purpose and contempt proceedings may be brought for the sole purpose of punishing a non-complying party. See the discussion and authority in paragraph 33 of the judgment.

[30] I pointed out in the judgment that there was indeed non-compliance and indeed contempt of the order of 2 July 2010. I refer in this regard to the judgment. All along since the 2nd July 2010 the unlawfully obtained R400 524.75 were not paid and nor were there any explanation as to what precisely Jansens lngelyf and its directors, that included Scholtz, did with this amount of money. By 9 December 2011 no effective progress was made with the return of the R400 524.75 to the First Respondent.

[31] The 9 December 2011 order of Goodey, AJ firstly finds the Applicant in contempt of the order of 2 July 2010. This order is not dependant on the 2 September 2011 order of Bredenkamp, AJ. Secondly the Applicant is committed to gaol and the committal is suspended on the proviso that the R400 524.75 be paid by the Applicant.

[32] The fact that the R400 524.75 was unlawfully extracted from the trust account of the First Respondent cannot be disputed and is again not dependant upon the order of 2 September 2011.

[33] The order of 9 December 2011 that the Applicant pays the R400 524.75 that was all along unlawfully withdrawn from the trust account of the First Respondent in order to avoid imprisonment, is not dependant on the order of Bredenkamp, AJ of the 2nd September 2011.

[34] In the circumstances it follows that the order of 9 December 2011 can stand without the existence of the order of Bredenkamp, AJ of the 2nd September 2011. I therefore find that also on this ground there is no reasonable prospect of success on appeal for the Applicant.

[35] In the circumstances I find that there 1s no reasonable prospect of success on appeal for the Applicant.

[36] I make the following order:

It is ordered that the application for leave to appeal is dismissed with costs.

________________

AJ LOUW AJ