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IN THE HIGH COURT OF SOUTH AFRICA

GAUTENG DIVISION, PRETORIA

Case Number: A657/2013

DATE: 6/10/2014

Not reportable

Not of interest to other judges

In the matter between:

DISCOVERY AUCTIONS...................................................................................................APPELLANT

and

CITY COURIERS..............................................................................................................RESPONDENT

In re:

Case Number: 47177/2010

DISCOVERY AUCTIONS....................................................................................................APPLICANT

and

CITY COURIERS..............................................................................................................RESPONDENT

Coram: MABUSE J et HUGHES J

JUDGMENT

Delivered on: 6 September 2014

Heard on: 2 September 2014

HUGHES J

[1] The appellant seeks condonation for the late filling of a rescission application for an order granted on 14 March 2011. The said order directs the appellant to pay the respondent R100 000 000.

[2] Initially the respondent opposed the rescission application. The respondent filed opposing papers and heads of argument. However, on 29 July 2014 the respondent served a notice of withdrawal of its opposition and heads of argument. The respondent opted to abide by the decision of this court.

[3] The appellant brings this rescission application in terms of section 36(1) (a) of the Magistrate’s Court Act 32 of 1944 read with Rule 49(1) and (3) of the Magistrate’s Court Rules.

[4] For easy reference, the sections mentioned are set

Section 36(1) (a) of the Magistrate’s Court Act 32 of 1944:

“36 What judgments may be rescinded

(1) The court may, upon application by any person affected thereby, or, in cases falling under paragraph (c), suo motu-

(a) rescind or vary any judgment granted by it in the absence of the person against whom that judgment was granted;…”

Rule 49(1) and (3) of the Magistrate’s Court Rules:

“49 Rescission and variation of judgments

(1) A party to proceedings in which a default judgment has been given, or any person affected by such judgment, may within 20 days after obtaining knowledge of the judgment serve and file an application to court, on notice to all parties to the proceedings, for a rescission or variation of the judgment and the court may, upon good cause shown, or if it is satisfied that there is good reason to do so, rescind or vary the default judgment on such terms as it deems fit: Provided that the 20 days' period shall not be applicable to a request for rescission or variation of judgment brought in terms of subrule (5)….

(2) Where an application for rescission of a default judgment is made by a defendant against whom the judgment was granted, who wishes to defend the proceedings, the application must be supported by an affidavit setting out the reasons for the defendant's absence or default and the grounds of the defendant's defence to the claim.”

[5] Initially, this matter was instituted out of the Durban Magistrate’s Court under case number 13985/2009. In the summons an allegation was made that the “Whole cause of action arose within the jurisdiction of the above Honourable Court”, that being Durban. The appellant (defendant) raised a special plea concerning jurisdiction and the respondent (plaintiff) withdrew the matter and tendered the costs.

[6] The issuing of new summons with case number 4177/2010 out of the Pretoria Magistrate’s Court occurs on 31 May 2010. These papers alleged that the whole cause of action took place in the jurisdiction of Pretoria.

[7] The special plea of jurisdiction that was raised as to whether the jurisdiction is Durban or Pretoria, in my view, was rectified when the respondent withdrew the action in the Durban Magistrates court and tendered costs. The Pretoria Magistrates court now being the correct court.

[8] The appellant instructed Cornelius Boshoff Attorneys to file a notice of intention to defend, plea and counter-claim. The appellant terminated Cornelius Boshoff Attorneys mandate in early 2011 with the file transferred to Kralevich and van Vuuren Attorneys. I would like to make mention at this stage that, from the papers, it would seem that Kralevich and van Vuuren Attorneys never formally placed themselves on record.

[9] It is also evident that Jan du Plessis Attorneys represented the appellant and were the attorneys who filed the notice of intention to defend on behalf of the appellant. On 27 October 2010 the respondent served the notice of bar upon them as they were the attorneys of record for the appellant. It is further evident that Jan du Plessis Attorneys as at to date have not withdrawn as attorneys of record.

[10] In the midst of this the appellant states that :

“…the file pertaining to the matter got lost and was ultimately only found during the end of March 2011”.

[11] The appellant contends that its intention from the outset was to defend the matter and when the notice of bar was served between August and January 2011 neither, Kralevich and van Vuuren Attorneys nor Cornelius Boshoff Attorneys advised the appellant of the such notice having been served.

[12] It is clear from the paper before me that both Kealevich and van Vuuren and Cornelius Boshoff Attorneys could not have been aware of the notice of bar served because they were not on record in the proceeding, as the appellant thought, and thus were not in a position to advise him that the notice of bar had been served.

[13] The appellant places reliance on a written contract concluded by the parties. The terms thereof appear on the back of the pro forma invoices. The respondent puts up these invoices as annexures to the particulars of claim in support of the respondents claim against the appellant. The respondent in its plea states that the contract was a verbal contract.

[14] In the respondents particulars of claim the respondent states that on 12 April 2008 it deposited an amount of R100 000.00 with the intention of purchasing machines from the appellant and the respondent attaches the invoices as mentioned above as proof. The respondent alleges that it :

“…did not purchase the machines and was told by the defendant (appellant) that the deposit would be refunded to the plaintiff (respondent).”

[15] Default judgment was granted against the appellant in the sum of R100 000.00 against the following background.

[16] On an inspection of the conditions on the pro forma invoice, the following  introduction appears:

“The invoice constitutes a legal and formal Sales Agreement between Discovery Auctions (Pty) Ltd (the “Seller”) and the recipient who’s(sic whose) particulars are recorded on the other side of this paper, hereinafter referred to as the “Purchaser”. The Seller sells and the Purchaser purchases the Goods recorded herein under the following conditions.”

[17] The crux of the appellant's case is that it was not in wilful default or grossly negligent in not filing its plea. It contends that it tendered an explanation for the failure. In any event, it argues that wilful default is not a requirement for rescission; instead, the important issue is whether it has a bona fide defence, thus indicating that the application is bona fide.

[18] To illustrate the above contention the appellant states that it entered into a written sales agreement where the respondent paid a deposit of R100 000.00 for the machinery. The appellant invoiced in the name of the respondent, which invoice represents the contact, with all the terms and conditions of the sales agreement at the back of said invoice.

[19] I wish to point out those terms and conditions at the back of the invoice that are of relevance in this application. I have already pointed out above that the introduction states that the invoice constitutes a sale agreement between the parties.

[20] Clause 2 thereof states that the parties accept the terms and conditions of sale when the purchaser (respondent) makes payment of or towards the goods purchased with the seller (appellant) accepting such payment.

[21] Clause 8 deals with cancellation. It states that, in the event of same by the purchaser, for any reason whatsoever or non-compliance by the purchaser with terms of the agreement;  the seller shall be liable to cancel immediately, without prior notice, repossess what was sold that was delivered or was to be delivered, claim specific performance and damages from the purchaser. Of importance is the fact that the seller shall retain any amounts received as pre-estimated liquidated damages.

[22] Clause 9, to my mind, sums up the rights and duties concerning this sales agreement. It states that:

“The conditions set out above and on the face of this document are the only conditions which may apply to this Agreement and no other terms, conditions or representations shall have any effect unless in writing and confirmed by both parties.”

[23] In this case the magistrate concluded that the appellant was in wilful default for failure to comply with the rules and that the reasons submitted for failing to abide by the rules was merely “shifting the blame onto the shoulders of the attorneys who were never a party to the suit is mind-boggling. The respondent was never served with any notice of withdrawal by the attorney he has always dealt with…No clear cut defence to the claim is set , out even at this late stage”.

[24] Rule 49(1) provides that rescission of a default judgment is granted upon good cause shown and if a court is satisfied, there is a good reason to do so. According Jones and Buckle The Civil Practise of Magistrates’ Courts in South Africa 2013 volume 2 the words good cause extend the court’s discretion in granting rescission if there is good reason to do so. I agree with the views of the authors of Jones and Buckle that the addition of good reason in rule 49(1) intends to expand the powers of discretion of the magistrate court by the introduction of a less stringent approach.   

[25] Jones J in De Witts Auto Body Repairs (Pty) v Fedgen Insurance Co Ltd 1994 (4)SA 705 (E) at 771E-F sets out an approach to be adopted in rescission matter:

“An application for rescission is never simply an enquiry whether or not to penalise a party for his failure to follow the rules and procedures laid down for civil proceedings in our courts. The question is, rather, whether or not the expectation for the default and any accompanying conduct by the defaulter, be wilful, or negligent or otherwise, gives rise to the probable inference that there is no bono fide defence, and hence that the application for rescission is not bona fide. The magistrate’s discretion to rescind the judgment of his court is therefore primarily designed to enable him to do justice between the parties. He should exercise that discretion by balancing the interest of the parties…”

I align myself with this approach as being the correct approach adopted in rescission matters.

[26] With the facts previously mentioned and on an examination of the case made out in the respondent’s particulars of claim, it is clearly contrary to the terms of the sale agreement, no change to the contact could be made verbally only in writing. In the particulars of claim, the respondent states that after it failed to purchase the machinery, the appellant undertook to refund its deposit. The respondent gives no particularity for the non-purchase.

[27] The variation to the sale agreement had to be in writing. On the respondent’s own version, this was not the case. In my view, in these circumstances, the court below could not have granted default judgment on the paper before it. The particulars needed clarity. This was not forth coming. Further, the variation that had taken place was not explained in the papers. In addition, according to the terms of the sale agreement, the seller (appellant) is permitted to retain the deposit paid by the respondent.

[28] The appellant has furnished an explanation for the failure to file its plea, even though it is open to criticism, it stands uncontested due to the respondent withdrawal of its opposition. As such, it constitutes an explanation and thus demonstrates that there was no wilfulness on the part of the appellant. In my view, the appellant has demonstrated good cause and no wilfulness on its part not file its plea and defend this matter. The magistrate had no evidence to the contrary before him when he refused rescission. Likewise, the appellant demonstrated that it had good reason and a bona fide defence; as such, it was bona fide in defending this matter. To me the magistrate failed to exercise his/her discretion in striking a balance between the interests of the parties and granting the rescission in these circumstances.

[29] The respondent had withdrawn its defence and heads of argument on 29 July 2014. The appellant seeks costs for the appeal. I do not consider it prudent at this stage to deal with the issue of cost of the appeal, especially in light of the withdrawal of the respondent’s opposition and heads of argument.

[30] In the circumstances the magistrates order cannot stand and the appeal must succeed. The following order is made:

[30.1] The appeal succeeds.

[30.2] The costs of the appeal are to be costs in the cause in the magistrate’s court.

[30.3] The order of the magistrate is set aside and the following order is substituted for it:

[a] The default judgment granted against the applicant on 14 March 2011 is rescinded.[b] The applicant is granted 10 days to deliver its plea.

[c] The applicant is ordered to pay the costs of the application for rescission on an unopposed scale.

______________________________

W. Hughes

Judge of the High Court

I Agree

_______________________________

P. M. Mabuse

Judge of the High Court

Delivered on: 6 September 2014

Heard on: 2 September 2014

Attorney for the Appellant:

TIM DU TOIT & CO INCORPORATED

433 Rodericks Road

c/o Rodericks rd and Sussex Ave

Lynnwood

PRETORIA

Tel: 012

Ref: GROVE/PN1808

Attorney for the Respondent:

ARADHANA DHARAMDAW & SALAM GARBARAN ATT

c/o DU PREEZ ATTORNEYS

The Works

258 Brooklyn Road

Menlo Park

PRETORIA

Tel: 012 632 2694

Ref: DU PREEZ

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