Desai v Inman & Co

• Jurisdiction: South Africa
• Judge: Harcourt J and Van Heerden J
• Judgment Date: 14 September 1970
• Citation: 1971 (1) SA 43 (N)
• Hearing Date: 28 August 1970
• Court: Natal Provincial Division

Harcourt, J.:

This is an appeal from a judgment of a magistrate's court delivered in certain proceedings under and E in terms of sec. 65 of the Magistrates' Courts Act, 32 of 1944. The order made by the magistrate after such hearing was that the debtor should pay the sum of R5 per month to the creditor.

The litigation between the parties commenced by way of a summons dated 1st June, 1967, issued by the respondent (creditor) against the appellant (debtor) for payment of F R1,479.67. This amount was alleged to be due in respect of goods sold and delivered by the creditor to the debtor and for the value of a cheque. On 26th October, 1967 the creditor filed a request for default judgment in an amount of R774.67, acknowledging that an amount of R705 had been paid on account. On 27th October, 1967 default judgment was granted in terms of the said request, with costs in an amount of R15.75. A warrant G of execution was issued but not executed.

On 3rd November, 1967 a firm of attorneys wrote a circular letter to individual creditors of the debtor making certain proposals on behalf of their client, one Ebrahim Mahomed Timol, (hereinafter referred to as Timol), relative to a proposed H purchase of the debtor's business by Timol. The terms of this letter are of considerable importance; they are as follows:

"Dear Sirs,

We have been consulted by Mr. Ebrahim Mahomed Timol of this City. Our client has purchased from Mr. A. K. E. Desai, the business known as Simplex Stores at Mersey in the district of New Hanover of which business we are advised you are a creditor. This sale is now being duly advertised. Our client has also purchased the property on which the business is being conducted, the seller being Mr. G. M. E. Desai.

Harcourt J

The purchase price of the business is the sum of R7,955.74 which has been arrived at as follows:

Stock in trade as at close of business on 7th October, 1967	R5,377.74
Fixtures, fittings, bottle cooler, refrigerator and stove	R685.00
Chevrolet van	R850.00
Book debts	R1,043.00
	R7,955.74

We are advised that the liabilities of the business as at 7th October, 1967, amount to the sum of R7,573.65 and, as part payment of the purchase price, our client has agreed to assume liability for creditors' claims. The purpose of this letter, therefore, is to seek your consent to our client assuming B liability for the amount owing to you which we are informed is the sum of R

Our client is, however, not in a position to pay creditors immediately and wishes to effect payment over a period of 24 months, the first instalment to be paid by the end of this month and thereafter by equal instalments payable by the end of each month. It is proposed that the instalments be paid into our offices and that we make distributions to the creditors. Naturally, should any one instalment not be paid, the full C balance owing to each creditor would become immediately due and payable. Our client's father, Mr. Mahomed Amod Timol, has indicated that he is prepared to guarantee payment of creditors' claims. We are informed that in addition to carrying on business at Uitenhage, Cape Province, Mr. Mahomed Amod Timol also owns an unbonded property in Merchiston Street, Ladysmith, Natal.

We must inform you that certain of the creditors have instituted proceedings against the seller of the business and, D if these proceedings and any others which may be instituted are carried to their final end, it seems likely that creditors generally will suffer a loss. On the other hand, if creditors will accede to the proposal made by our client, it would appear that they will be paid in full.

In so far as concerns the property, the purchase price is the sum of R16,000. Of this amount R12,000 will be covered by bonds. Registration of transfer of the property cannot as yet be proceeded with because the consent of the first bondholder is being sought to the transposition of his bond from the E seller to our client.

The sale of the business is conditional upon all creditors agreeing to accept our client as their debtor and to allow him to liquidate their claims in 24 equal monthly instalments. It would appear to be in the interest of all creditors to agree and thus to cause the sale to become final.

We shall be pleased to hear as soon as possible whether you are prepared to agree to our client's proposal.

F We will inform you whether or not all creditors agree and if they do, we undertake to keep you informed of the position from time to time."

On 13th November, 1967 the creditor's attorneys answered the circular letter in the following terms:

"Dear Sirs,

Inman & Co. v A. K. E. Desai t/a Simplex Stores: Your client: B. M. Timol

G We acknowledge receipt of your circular of 3rd inst., contents of which are noted.

We write to advise that the balance owing is the sum of R888, the additional amount of R50.12 representing judgment, writ and court messenger's charges - R10.75 and interest R39.37.

Our client is prepared to wait for payment over 24 months, and we accordingly expect to receive R37 per month as from the end of this month."

H Subsequent to this exchange of correspondence there were apparently certain distributions of money made by Timol's attorneys which included some payment made, to and accepted by, the creditor's attorneys. The record is silent as to the precise number of such payments. On 28th November, 1968 Timol's attorneys wrote to those of the creditor in the following terms:

"Further to our letter to you of 7th October, 1968 we regret to inform you that contrary to our expectations we have not been placed in funds to enable us to make any further distribution to creditors who are now at liberty to take such further action as they may individually decide."

Harcourt J

Two days before this, however, namely on 26th November, 1968, the creditor's attorneys had re-issued the warrant of execution which was returned by the messenger of the court on 4th December, 1968 with a notation that the judgment debtor had A left the business premises of Simplex Stores.

On 28th January, 1969 the creditor's attorneys issued a notice to the judgment debtor to attend an inquiry in terms of sec. 65 of the Act. This notice was in the form of the printed notice, No. 42, reproduced under the Government printers' authority. On the face of such document there appear the various amounts B claimed from the judgment debtor (R774.67) together with execution costs and fees totalling in all R809.87, against which there is a credit item of R249.27, being presumably the amount of payments received by the creditor in reduction of the judgment debt. On the reverse side there is printed an affidavit containing the matters required to be alleged by a judgment creditor in terms of sec. 65. One paragraph of such C affidavit loomed large in the argument before us and was in the original printing of the document (that is, without any typed additions). It was to the following effect:

"2.

That the judgment has remained unsatisfied for a period of ten days from the date of judgment."

This affidavit was signed by a clerk to the attorneys for the D creditor and was dated 28th January, 1969.

After some unexplained delay, the debtor eventually appeared before the magistrate's court on 13th March, 1969, and the inquiry was thrice adjourned until 6th June, 1969. On that day the attorney for the debtor took a point in limine, arguing E that the debtor had been released from all liability under the judgment debt by virtue of a delegation which he claimed had been effected by the exchange of the letters which are quoted above. The creditor's attorneys opposed the point in limine. In the course of the hearing, copies of relevant correspondence were handed in, including those quoted above. The hearing was F adjourned by agreement for further argument.

On 24th June, 1969 argument was resumed when the debtor was represented by counsel and the creditor by its attorney. By consent counsel called the judgment debtor who gave certain evidence after which argument on the point in limine was then resumed. The details of this argument (which appear in the G magistrate's reasons for a ruling which he gave and which will shortly be quoted) are not now particularly relevant since the matter was fully debated on appeal in arguments which covered the points made before the magistrate.

At the conclusion of argument the matter was adjourned for decision but, on resumption, the court indicated that it wished to hear argument regarding the binding effect of the default H judgment of 27th October, 1967, in the absence of that judgment being set aside. The matter was adjourned for such further argument which was in due course presented.

Finally, on 17th October, 1969, the court made a ruling as follows:

"Point in limine dismissed, Plaintiff (judgment creditor) awarded such costs (if any) as he may be entitled to in accordance with the prescribed tariff for sec. 65 matters."

Thereafter the judgment debtor requested a statement of the magistrate's

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