Small Enterprise Finance Agency SOC Ltd v Max Munchies Dog Food CC and Others (6469/2017) [2020] ZAFSHC 150 (3 September 2020)

SAFLII Note: Certain personal/private details of parties or witnesses have been redacted from this document in compliance with the law and SAFLII Policy

IN THE HIGH COURT OF SOUTH AFRICA,

FREE STATE DIVISION, BLOEMFONTEIN

Case number: 6469/2017

In the matter between:

SMALL ENTERPRISE FINANCE AGENCY SOC LTD Applicant and MAX MUNCHIES DOG FOOD CC (Registration number: 2008/161344/23) 1st Respondent DEWALD ROUX (Identity number: […]) 2nd Respondent EBELEEN FOUR CC t/a VENT QUIP (Registration number: 1988/06137/23) 3rd Respondent ELWALD PROPERTIES CC (Registration number: 2003/04579/23) 4th Respondent

CORAM: DAFFUE, J

HEARD ON: 27 AUGUST 2020

JUDGMENT BY: DAFFUE J

DELIVERED ON: 3 SEPTEMBER 2020

[1] On 8 December 2017 the applicant as plaintiff issued a combined summons against the four respondents as defendants. The document and its annexures consist of 107 pages. Judgment was sought against the four defendants, who will herein later be referred to as respondents, for payment in the amount of R780 575.90, interest, the delivery of certain stock and equipment to be sold by the sheriff of the court in accordance with the provisions of a notarial bond, together with costs of suit on an attorney and client scale.

[2] In its particulars of claim plaintiff, herein later referred to as applicant, relies on a written loan agreement attached thereto. The loan amount agreed upon was R1 330 060.00 as pleaded in paragraph 10.1, read with the applicable annexure. This is much more than eventually paid out as is apparent from paragraph 12 of the particulars of claim.

[3] Upon delivery of a notice of intention to defend applicant brought an application for summary judgment in terms of rule 32 of the Uniform Rules of Court which was set down for hearing on 15 March 2018, nearly two and a half years prior to today.

[4] Summary judgment procedure is a speedy and extra-ordinary remedy to be utilised by a party who believes that it is not necessary for the matter to be adjudicated at a full-blown trial. The object of rule 32 is to prevent a plaintiff’s claim, based upon certain causes of action, from being delayed by a defendant without a proper defence and who merely intends to abuse the court process. The procedure allows a plaintiff to apply to court for judgment to be entered summarily against the defendant and thereby saving time and the expense of a trial.

[5] Mr Dewald Roux, cited as the second respondent, deposed to an answering affidavit on behalf of the four respondents. Roux admitted the written loan agreement relied upon by applicant in terms whereof a loan in the amount of R1 330 060.00 had been granted

by applicant to first respondent. However, he pointed out that applicant had failed to pay out the full amount of the loan. This averment is in line with the applicant’s own case as pleaded although the parties differed on the exact amount paid out. According to Roux an amount of R611 000.00 only was paid out on 18 December 2015. Therefore, it was respondents’ case that applicant had breached the loan agreement in that it failed to pay out the full amount of the loan as agreed upon. Roux also attached documentary proof of payments made to applicant in the total amount of R265 774.24 in partial settlement of the loan. Furthermore, Roux stated that first respondent had suffered damages as a result of applicant’s breach of contract and intended to file a counterclaim. It is not deemed necessary to deal with the further allegations relied upon. In conclusion it was denied that the amount claimed was due and payable and that applicant was entitled to claim interest at the rate levied.

[6] Rule 32 requires the defendant to set out facts which, if proved at the trial, will constitute an answer to the plaintiff’s claim. The court does not attempt to decide the dispute or to determine whether the balance of probabilities favours one of the parties. Summary judgment procedure is not intended to shut out a defendant who raises a triable issue. If the matter had to be considered based on the version relied upon by respondents in the aforesaid affidavit, chances were good that summary judgment would have been refused. However, much more has taken place since then.

[7] The matter was postponed a few times and eventually set down for hearing by Edeling AJ on 21 June 2018. The learned acting judge granted the following orders by agreement:

“1. The application is removed from the roll.

2. First defendant to pay the agreed instalment amount of R20 000.00 per month in down payment of the outstanding loan amount, taking into account any amounts paid by the first defendant up until the date of this order.

3. The above instalment amount is to be reviewed after 6 (six) months of date of this order, subject to first defendant furnishing its management accounts.

4. In the event of the first defendant failing to make monthly instalments in the above amount the plaintiff will be entitled to approach court for judgment for the full outstanding amount, to which judgment the first defendant consents.

5. The defendants to pay the cost of the application.”

[8] It is not clear whether all respondents were parties to the agreement entered into which was made an order of court. Paragraphs 2, 3 and 4 merely refer to the first respondent and there is no indication that second, third and fourth respondents accepted the terms of the agreement. However, I take cognisance of the fact that paragraph 5 of the order indicates that all respondents shall pay the costs of the application. My uncertainty in this regard does not present any difficulties as I am prepared to accept for purposes of adjudication of this matter that all respondents entered into the settlement agreement with applicant.

[9] On 21 November 2019, a year and a half later, applicant brought an application against all four respondents, jointly and severally, the one paying the other to be absolved, for judgment by consent in terms of the prayers set out in the combined summons, save insofar as the amount claimed increased to R848 476.64 and interest was claimed from 28 February 2019. This application was served on the respondents, but eventually removed from the roll. It has not been withdrawn or adjudicated upon. One of the issues raised by respondents’ counsel why the summary judgment application should be dismissed is this pending application. The defence of lis alibi pendens was raised in the heads of argument.

[10] On 4 March 2020 applicant’s Johannesburg attorney filed a supplementary affidavit, claiming that applicant was entitled to summary judgment. It was the intention to have the summary judgment application heard on 12 March 2020, but it came before me five months later on 27 August 2020. It appears from paragraph 2.11 of the supplementary affidavit that the amount outstanding as at 30 September 2019 increased to R971 833.98. Interest is claimed from that date. Reliance is placed on a certificate of indebtedness attached to the supplementary affidavit.

[11] Contrary to the conclusion arrived at in paragraph 2.11 of the supplementary affidavit, the deponent asks for the following relief:

“Wherefore it is prayed that summary judgment be granted against the first, second, third and fourth respondents as prayed for in the application for summary judgment.”

In the particulars of claim and subsequent application for summary judgment the amount of R780 575.90 plus interest is claimed.

Clearly, the allegation in the new affidavit is in conflict with the relief claimed in the summary judgment application.

[12] Ex facie rule 32 an applicant is not entitled to file a further affidavit, whether in the form of a replying affidavit or a so-called supplementary affidavit in summary judgment proceedings. This was the case prior to as well as after the amendment of the rule taking effect on 1 July 2019.

[13] I mentioned earlier that it is apparent from the papers serving before Edeling AJ that first respondent deposed to facts probably sufficient to be regarded as a proper defence preventing the presiding judge to grant summary judgment. The court might well have been convinced that a triable issue had been raised for the application to be refused instead of shutting the court’s doors for the respondents. However, it is not necessary to deal with the merits of the defence any further as the parties settled the matter. Consequently, the summary judgment application was removed from the roll and paragraphs 2 to 5 were granted.

[14] The application for summary judgment was set down for hearing on 12 March 2020, postponed several times and eventually heard by me on 27 August 2020 as alluded to. Counsel for the parties filed supplementary heads of argument. In his second set of supplementary heads of argument received by email the evening before the hearing, Mr Thompson for the first time relied on the judgment of the Constitutional Court in Eke v Parsons[1]. The court dealt with three issues relevant to the adjudication of the present dispute, to wit (1) the interpretation of settlement

agreements which have been made orders of court, (2) the validity of an agreement allowing a plaintiff in summary judgment proceedings to enrol the matter again once the defendant has failed to comply with his undertakings in the settlement agreement and (3) the validity of an undertaking by the defendant that he would not oppose such relief to be applied for.

[15] I quote extensively from Eke v Parsons as follows:

“[29] Once a settlement agreement has been made an order of court, it is an order like any other. It will be interpreted like all court orders…..

[31] The effect of a settlement order is to change the status of the rights and obligations between the parties. Save for litigation that

may be consequent upon the nature of the particular order, the order brings finality to the lis between the parties; the lis becomes res judicata (literally, 'a matter judged'). It changes the terms of a settlement agreement to an enforceable court order. The type of enforcement may be execution or contempt proceedings. Or it may take any other form permitted by the nature of the order……

[38] Accordingly, I can find no basis to disagree with the High Court's finding that the settlement agreement is final in its terms and that Mr Parsons is entitled to approach a court for enforcement of that order in accordance with the procedure set out in it.

Rule 32 of the Uniform Rules

[39] This issue concerns Mr Eke's complaint that the re-enrolled summary judgment application was legally incompetent; this because rule 32 of the Uniform Rules allows the filing of only one summary judgment application. Mr Eke argues that the causa for the re-enrolled summary judgment application was not the same as that of the earlier summary judgment application. As a result, he continues, the re-enrolled application was essentially a second summary judgment application. Without doubt, rules governing

the court process cannot be disregarded. They serve an undeniably important purpose. That, however, does not mean that courts should be detained by the rules to a point where they are hamstrung in the performance of the core function of dispensing justice. Put differently, rules should not be observed for their own sake. Where the interests of justice so dictate, courts may depart from a strict observance of the rules. That, even where one of the litigants is insistent that there be adherence to the rules. Not

surprisingly, courts have often said '(i)t is trite that the rules exist for the courts, and not the courts for the rules'.

[40] Under our constitutional dispensation the object of court rules is twofold. The first is to ensure a fair trial or hearing. The second is to 'secure the inexpensive and expeditious completion of litigation and . . . to further the administration of justice'.

I have already touched on the inherent jurisdiction vested in the superior courts in South Africa. In terms of this power the High

Court has always been able to regulate its own proceedings for a number of reasons, including catering for circumstances not

adequately covered by the Uniform Rules, and generally ensuring the efficient administration of the courts' judicial functions.

[41] Where the parties themselves, through a settlement agreement reached with legal representatives present on each side, prefer to dispense with the strictures of a rule and request that the court recognise this preference by means of a consent order, for one party suddenly to perform a volte-face and demand strict adherence with that selfsame rule borders on the ludicrous. Justice between the two litigants demands that their settlement agreement, which was made an order of court, must be given effect. After all, a court's duty is to do justice between litigants. In this instance justice demands that Mr Eke be held to his bargain.

[42] In the circumstances of this case, it matters not that rule 32 does not provide for the enrolment of a second summary judgment application. Mr Eke's contentions in this regard cannot succeed. Substance must be put ahead of form.

Undertaking not to oppose

[43] This last issue relates to paragraph 18 of the settlement agreement where Mr Eke 'agrees . . . not to oppose the . . .

application for summary judgment'. The complaint is that — in the face of s 34 of the Constitution — this is unenforceable.

Section 34, entitled 'Access to courts', provides:

[16] 'Everyone has the right to have any dispute that can be resolved by the application of law decided in a fair public hearing before a court or, where appropriate, another independent and impartial tribunal or forum.'

[44] Our courts have long recognised the detrimental effect of parties, by way of agreement, preventing each other from having a dispute heard by a court of law. The common law rightfully recognises that agreements of that nature may offend public policy. This was expressed thus by the Appellate Division in Schierhout:…….

[46] …… Although, on their face, the terms of the settlement agreement prevented Mr Eke from raising even bona fide defences to the re-enrolled summary judgment application, the factual reality is that he did raise defences. Mr Parsons, in turn, has not attempted to enforce para 18 of the settlement order. It is manifest from the High Court judgment that Mr Eke was afforded the full opportunity to ventilate his disgruntlement before that court. He raised the full gamut of defences. The High Court considered and dismissed them all.

[47] While it may be said that some of the defences were not dealt with in any detail, there is no basis to say the High Court did not apply its mind to Mr Eke's contentions. What disagreement Mr Eke has amounts to no more than a complaint against what he perceives to be an unsatisfactory assessment of his defences. That is a far cry from being denied access to court.

[48] After all, the right of access to court is about being afforded an opportunity for a legal dispute to be determined fairly and

in accordance with the court process. Although a party exercising this right may be hoping for what she or he believes to be the

correct outcome, the right is not about, nor does it guarantee, a correct outcome.

[49] In the circumstances, the complaint that the settlement agreement denied Mr Eke access to court has no merit.” (emphasis added)

[16] The question to be considered is whether the facts in casu are in line with those in Eke v Parsons. Ex facie the court order of 21 June 2018 the parties did not expressly agree what amount was due and payable and no provision was made for the filing of a supplementary affidavit.

[17] The respondents request dismissal of the summary judgment application with costs. Mr Jacobs submitted that the agreement

in casu is not as lucid as the one in Eke v Parsons in that the agreed outstanding amount was not stated, there was no agreement as to how the outstanding amount would be quantified in the event of respondents’ failure to comply with the agreement and no provision was made for the filing of a supplementary affidavit by applicant.

[18] I am satisfied that applicant could have approached the court to claim summary judgment. Although rule 32 does not provide for the procedure followed, the Constitutional Court provided authority in this regard. It is correct that, unlike in Eke v Parsons, the parties did not stipulate the amount outstanding at the stage they requested the court to grant an order by agreement, but it is apparent that they considered the outstanding loan amount, having regard to instalments made by first respondent on the account. Although there was no express agreement that applicant would be entitled to file a supplementary affidavit in the event of first respondent’s breach, this was clearly anticipated and must follow by necessary implication if paragraph 4 of the order is read in context. Respondents also undertook, as in Eke v Parsons, to consent to judgment.

[19] In order to grant a court order sounding in money a court should be satisfied as to the amount due and payable, especially in summary judgment applications. In terms of the application for summary judgment, as it still reads, the amount of R780 575.90 plus interest from 1 November 2017 is claimed. As mentioned in the supplementary affidavit, supported by a new certificate of balance, a totally different figure is claimed, to wit R971 833.98 plus interest from 30 September 2019. Contrary thereto, applicant’s statement of account dated 28 February 2019, also attached to the supplementary affidavit, indicates a total amount of R491 124.71 due and R357 351.93 not due. Mr Thompson was as confused as I when he asked for summary judgment in yet another amount in his latest heads of argument, to wit R981 193.36. He changed his mind during oral argument, insisting that the correct amount should be R1 056 210.96 plus interest from 1 August 2020. The last two figures are derived from applicant’s statement of account dated 31 July 2020. Again, this document, sent per email with the latest heads of argument the night before the hearing, to which Mr Jacobs vehemently objected, refers to an amount of R981 193.36 due and an amount of R75 017.60 not due. This document, which was informally presented to the court, without being explained and confirmed under oath, cannot be accepted in light of the objection.

[20] I have reason to believe that a significant amount is still due and payable to applicant. I am also prima facie satisfied that respondents cannot now, or in future, be heard to rely on any of the defences contained in the answering affidavit filed previously. The parties have settled the lis as stated in Eke v Parsons quoted above. However, I am not convinced exactly which amount is due and payable to applicant.

[21] When an application for summary judgment is dismissed and leave granted to defend, costs are often reserved for adjudication by the trial court. This is what I intend to do.

[22] The following orders are made:

1. The application for summary judgment is dismissed.

2. Leave is granted to respondents to defend the main action.

3. Costs of the summary judgment application are reserved for adjudication at the trial.

_______________

J P DAFFUE J

On behalf of Applicant: Adv DR Thompson

Instructed by: Symington & De Kok

BLOEMFONTEIN

On behalf of Respondents: Adv FF Jacobs

Instructed by: Peyper Attorneys

[1] 2016 (3) SA 37 (CC)