Malan v Merchant West (Pty) Ltd
| Jurisdiction | South Africa |
| Judge | NM Mavundla J |
| Judgment Date | 14 May 2020 |
| Docket Number | 19063 / 2017 |
| Court | Gauteng High Court, Pretoria |
| Hearing Date | 14 May 2020 |
| Citation | 2020 JDR 0939 (GP) |
Mavundla J:
The applicant (a businessman) and the second applicant (a female attorney and legal consultant) approach this Court for an order rescinding the default judgment granted against them, on 4 June 2018, and the warrant of execution for the delivery of goods (warrant of execution) granted on 21 June 2018. The application is brought in terms of Uniform Rule 42, alternatively 31(2)(b), and further alternatively, common law.
The second respondent was merely cited as an interested party and has not opposed the relief sought. Accordingly, reference to respondent herein, will only be to the first a respondent.
The applicants were sole directors of Pneumatika (Pty Ltd ("the company"), before it went into business rescue and eventual sale of its business trading as Supa Quick Cresta ("the business" as a going concern.
The company concluded a Master Rental Agreement ("the rental agreement") on 11 May 2015 relating to a Cummings 44Kva Generator and a Stamford Alternator ("the goods") with the first respondent. Simultaneously with the conclusion of the rental agreement, the
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applicants bound themselves as co-sureties and principal co-debtors in favour of the first respondent.
The terms of the Master Rental Agreement, provided, inter alia, that:
the customer is granted the use of the equipment and the customer accepts such grant of use and enjoyment, as customer [1] ;
the equipment shall at all times be and remain the sole and absolute property of Rentor. At no stage during this agreement or thereafter will the customer or any person on its behalf acquire ownership of this equipment [2] .
The customer or any person on its behalf, shall not after termination of this Agreement be entitled to retain the possession, use or enjoyment of the Equipment.
The company subsequently ran into financial distress, as a result:
the company, on 30 June 2015, formally entered into business rescue in terms of chapter 6 of the Companies Act, Act 71 of 2008. On 30 June Mr. Harry Kaplan was appointed as the business rescue practitioner. Various creditors meetings ensued culminating eventually in the creditors of the business voting in favour of accepting the sale of the business to Trump Tyres CC ("the purchaser") for an amount of R2 600. 000. 00;
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On 26 February 2016 the agreement of sale, in terms of the business plan was sold to the purchaser and was forwarded to all creditors, including Merchant West;
On 1 March 2016 an amended and final business rescue plan (dated 26 February 2016), incorporating the sale of the business (and which sale was effective as at 16 March 2016), was forwarded to all creditors; and
On 10 March 2016 in the final meeting of creditors of the business, the creditors voted in favour of the amended and final business rescue plan (which incorporated the sale agreement);
in terms of the sale the sale agreement, it was agreed inter alia, that there is only one rental agreement for the generator which will continue to be paid on due date until the period of the lease expires; [3]
In the minutes of final creditors' meeting it was recorded that the purchaser's representative, Goolam Omar confirmed that he would sign the sale agreement on behalf of the purchaser, and that he would negotiate with the company leasing the generator, being Merchant West. The applicants contended that the negotiations between Omar and Merchant West resulted in a transactio / or compromise.
Subsequent to the sale of the business as a going concern the first respondent instituted action against the applicants for payment under the rental agreement and return of the goods.
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The first respondent (the plaintiff in the main action) obtained default judgment against the applicants on 4 June 2018. It is this judgment the applicants seek to rescind.
As indicated herein above the application for rescission is first and foremost brought in terms of rule 42, and alternatively rule 31(2)(b) and alternatively common law. In the respective orders set out by the applicants herein above, it is trite that a judgment may be set aside through either:
rule 42 (1) under this rule: The court may, in addition to any other powers it may have, mero motu or upon application of any party affected, rescind or vary:
An order or judgment erroneously sought or erroneously granted in the absence of any party affected thereby;
An order or judgment in which there is an ambiguity, or a patent error or omission, but only to the extent of such ambiguity, error or omission;
an order or judgment granted as the result of a mistake common to the parties.
Under rule 42 the court has a discretion to rescind if the jurisdictional requirements are met, as well as an explanation for the grant of the judgment in the absence of the applicant.
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rule 31(2)(b); Under this rule as stated in Ferris v FirstRand Bank [4] the requirements are that the applicant must show good cause for rescission, which means that he must:
give a reasonable explanation for their default;
show that the rescission application is brought bona fide; and
show that they have a bona fide defence, including a prima facie case on the merits.
The application must be brought within 20 days upon becoming aware of the default judgment.
In the matter of Sanderson Techntool (Pty) Ltd v Intermenua (Pty) Ltd [5] the court held that the requirement under this rule are that the application must be bona fide and not made with the intention of merely delaying plaintiff's claim and he must show that he has a bona fide defence to the plaintiff's claim. It is sufficient if he makes out a prima facie defence in the sense of setting out averments, which if established at the trial, would entitle him to the relief asked for. He need not deal fully with the merits of the case or produce evidence that the probabilities are actually in his favour.
At common law the Court has discretion to grant rescission of judgment where sufficient or good cause has been shown. The applicant must, show sufficient cause which means that he must give an acceptable explanation of his default and this must coexist with evidence of reasonable prospects of success on the
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merits. If one of the essentials is lacking, then the court will not come to his assistance; vide Harris v ABSA Bank Ltd t/a Volkskas; [6] Mutebwa v Mutebwa and Another. [7]The application must be brought within reasonable time upon becoming aware thereof.
The summons was issued 16 March 2017. The sheriff's return (annexure FA13 paginated page 134) shows that the summons was served on 10 April 2017 at 21 Northriding Manor, 94 Bellairs Drive, Northriding, being the chosen domiciliun citandi et executandi of both the present applicants, by means of affixing copies to the outer or principal door at the given address.
The first respondent (the plaintiff in the main action) obtained default judgement against the applicants on 4 June 2018. According to the applicants the existence of the summons only came to their attention on 5 December 2018 when same was forwarded to them by one Secchi.
On the same day of receipt of the summons, the second applicant requested Secchi in order to discuss the default judgment. Secchi and advised the second applicant that she was unavailable to attend the meetings for the remainder of the year, having regard to the fact that her offices were closing on 14 December 2018.
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After learning of the default judgment, the applicants' attorneys Wilkens Attorneys attempted to source counsel to assist with the drafting of the for rescission application. However, all attempts were fruitless given that the festive season was looming and most counsel were unavailable or had already taken leave,
Wilken Attorneys also closed its offices during the festive season in December 2018 and opened its offices on 14 January 2019. On 24 January and 7 February 2019 respectively, the applicants, together with Mr Wilken from Wilken Attorneys, attended two roundtable meetings...
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