1
THE
HIGH COURT OF SWAZILAND
MELUSI
QWABE
Applicant
And
BUILD
PLUMB AFRICA (Pty) Ltd
1st
Respondent
CHARLES
THWALA N.O.
2nd
Respondent
In
Re:
BUILD
PLUMB AFRICA (Pty) Ltd
Plaintiff
And
MELUSI
QWABE
Defendant
Civil
Case No. 1490/2003
Coram S.B.
MAPHALALA - J
For
the Applicant MR. M. MABILA
For
the Respondent MR. K. MOTSA
2
JUDGEMENT
(05/03/2004)
The
applicant before court seeks to have a default judgement entered by
this court on the 25th July 2003, against him rescinded on the basis
that the same was erroneously sought and erroneously granted.
The
Applicant in his founding affidavit avers further that he seeks to
have the judgment rescinded on the basis that he was never served
with the summons when the same was granted and also states that he
has a good defence to the action instituted by the 1st Respondent
against him
more
particularly because he has a counter claim against it.
The
founding affidavit further reveals that the present application for
rescission is being done in terms of Rule 42 (1) (a), Rule 31 (3) (b)
and also in terms of the common law.
The
founding affidavit outlines in great detail the substantial facts in
support of this application. At paragraphs 7 to 10 the background of
the matter is related. At paragraphs 12 to 14 averments are made in
support of an application for rescission in terms of Rule 42 (1) (a).
At paragraphs 15 to 17 averments are made under Rule 31 (3) (b) of
the Rules. At paragraph 18 to 19 facts are advanced under the common
law.
Pertinent
annexures are filed in support of the founding affidavit, viz
annexure "MQ1" being a certificate of incorporation of a
company called "J.
F.
L.
Construction (Propriety) Limited", annexure "MQ2" (a)
and "MQ2 (b)", being a Memorandum of Association of the
said company, annexure "MQ2 (c)" being Articles of
Association of the said company.
The
Respondent opposes the application and the answering affidavit of its
Director one Edwin Mvubu is filed in opposition thereto. The
affidavit attempts to answer all the issues raised by the Applicant
in his founding affidavit. A number of points in limine are raised as
follows:
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"3.1. The
remedies in terms of Rule 31 (3) (b), Rule 42 (1) (a) and in terms of
the common law, are mutually exclusive and can therefore not be
brought simultaneously in the same application on the same set of
facts;
3.2. The
Applicant has not disclosed the basis of the application to the
Honourable Court and is clearly on a fishing expedition, which with
all due respect cannot be countenanced;
3.3. As
the Applicant has not disclosed the nature of the alleged
authorisation to enter into any agreement on behalf of JFL
Construction (Pty) Ltd, has not shown that he is a Director of the
company, as claimed by him, and by virtue of the office held by him,
that he had the right to bind the company in terms of its articles of
association, he is therefore in terms of the turquant rule, estopped
from denying that he acted in his personal capacity and alleging that
he had in fact entered into a credit agreement with the Respondent on
behalf of JFL Construction (Pty) Ltd; and
3.4. The
Respondent is unsure of what the case is. He has to answer to and
humbly pray that the Applicant's application therefore be dismissed
with costs".
When
the matter came for arguments it was argued as a whole. There are a
number of issues for determination in this case viz, 1) whether the
Applicant has
made
a case under Rule 31 (3) (b) of the Rules; 2) under Rule 42 (1) (a);
3) common law rescission; 4) estoppel and 5) whether the Turquant
rule applies in casu.
Before
addressing the issues I shall proceed to sketch a brief history of
the matter. The Applicant purchased certain building materials from
the Respondent over a period of time. The Applicant however did not
make payment of the accounts and summons was issued against him.
According to the Applicant the summons was served on one Mr. Themba
Kunene and not him personally, however Respondent allege that summons
were served on the Applicant personally, in this regard the Deputy
Sheriff for the High Court has deposed to an affidavit.
Subsequently
to judgment having been taken the Applicant attended to the offices
of the Respondent's attorneys of record and paid an amount pf E5,
000-00 being a first instalment to avoid his assets being executed
upon. The Applicant, however did not pay any further amounts as
agreed upon with the attorney, who has also deposed to an affidavit
in this regard. The defence advanced by the Applicant in casu is that
he does not owe the money personally, but that he entered into the
agreement for credit on
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behalf
of a "clearly identifiable principal". On the other hand
the Respondent avers that
the
fact that the Applicant is a subscriber to the Memorandum does not
make him a Director as he describes himself. At no stage did the
Applicant intimate to the Respondent or to his attorney that he was
only acting on behalf of the company of which he is a Director. The
accounts were not opened in the name of the company nor is there any
indication that he acted in a representative capacity.
I
now revert to the points for determination and I shall address them
ad seriatum, thus:
1.
Rule 31 (3) (b).
In
terms of Rule 31 (3) (b) application for a rescission can be made
under the following circumstances:
"A
defendant may, within twenty-one days after he has had knowledge of
such judgment, apply to court upon notice to the Plaintiff to set
aside such judgment and the court may upon good cause shown and upon
the defendant furnishing to the Plaintiff security for the payment of
the costs of the default judgment and of such application to a
maximum of E200, set aside the default judgement on such terms as to
it seems fit.
The
Applicant has to show that there is "good cause" to have
the judgment rescinded. In the case of Buckle v Kotze 2000 (1) S.A.
453 (W) the following pertinent remarks were made:
"The
question rather being whether or not explanation for default and
accompanying conduct of the defaulter, whether wilful, negligent or
otherwise, giving rise to probable inference of no bona
fide
defence, and thus that application for rescission not bona
fide"
In
casu the Applicant avers at paragraph 17 of his founding affidavit as
follows:
"Furthermore,
it is my humble submission that I have shown sufficient cause as it
is quite apparent that I was never served with the summons at any
stage herein and I am not liable to the 1st Respondent for the
amounts owed by the company in which I am a Director".
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However,
in my assessment of the affidavits I come to the conclusion that the
Applicant
was clearly in wilful default as the summons were served on him
personally
by
the Deputy Sheriff of the court who has declared under oath that the
summons was so served. He chose to ignore them. "Wilful default"
in this context connotes deliberateness in the sense of knowledge of
the action and its legal consequences and a conscious decision,
freely taken, to refrain from entering an appearance, irrespective of
the motivation (see Mavjean t/a Audio Video Agencies vs Standard Bank
of
S.A.
Ltd 1994 (3) S.A. 801).
In
this regard, I agree with the submissions made on behalf of the
Respondent that the Applicant has further not shown that there is any
bona fide defence to the claim for which judgment was given. The
Applicant's defence is that he did not act in his personal capacity
but on behalf of a separate legal entity. It is trite law that to
represent another legal entity proper authorisation must be given. In
casu there is no resolution from the company confirming the
Applicant's authority or confirming the defence as alleged by the
Applicant. The invoices attached to the answering affidavit clearly
are in the name of the Applicant personally. There is no indication
that he is acting on behalf of another legal entity.
Furthermore,
under this head the Applicant must, at least furnish an explanation
of his default sufficiently full to enable the court to understand
how it came about and to assess his conduct and motives. Prejudice
and convenience are not factors to be considered (see Silber v Ozen
Wholesalers (Pty) Ltd 1954 (2) S.A. 345 (A) at 353 (A); Evander
Caterers (Pty) Ltd vs Potgieter 1970 (3) S.A. 313 (T) at 315;
Cavalinia's vs Claude Neon Lights S.A. Ltd 1965 (2) S.A. 649 (T) at
651, Metje & Ziegler BPK vs Gresse 1959 (3) S.A. 698 (SWA) at
702; and Weare vs Absa Bank Ltd 1997 (2) S.A. 212 (A)).
For
the above reasons Applicant cannot succeed under Rule 31 (3) (a). 2.
Under Rule 42 (1) (a).
The
case for the Applicant in this regard is found in paragraphs 12, 13
and 14 of the founding affidavit. Essentially, the contention in this
regard is, had the court been
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aware
that he was acting for and on behalf of the company when he dealt
with the 1st Respondent, it would not have entered the default
judgement as ft is clear that he was acting for a "clearly
identifiable principal" which has legal capacity. Secondly, that
he was not served with the summons personally.
In
terms of Rule 42 (1) (a) application for a rescission can be made
under the following circumstances;
"42
(1) the court may, in addition to any other powers it may have, mero
motu or upon the application of any party affected, rescind on vary:
a)
An order or judgment erroneously granted in the absence of any party
affected
thereby..."
According
to the dicta in the case of Deary vs Deary 1971 (1) S.A. 227(C) and
at 230 H an Applicant must satisfy the court that the judgment was
granted, not only in his absence, but erroneously.
Although
it is common cause that the judgment was indeed granted in his
absence there is no indication of same having been granted
erroneously.
Further,
in the present case, the Applicant has not set out sufficient facts
which, if established at the trial would constitute a good defence,
which must have existed at the time of the judgment. (see Sanderson
Technitool (Pty) vs Intermenua (Pty) Ltd 1980 (4) S.A. 573 (W)).
Therefore,
Applicant cannot succeed under Rule 42 (1) (a). 3. Common law
rescission.
Under
the common law as well, the Applicant for rescission must show good
cause before a judgment can be rescinded. In Nyingwa vs Moolman No.
1993 (2) S.A. 508 (TK) at 509
1
- 510D White J, after reviewing the authorities, came to the
following conclusion at 511 J- 512:
7
"It
follows that any judgement, including a summary judgment, can be
rescinded under the
common
law. If the merits of the dispute were considered before summary
judgement
was
granted,
rescission can follow only on the grounds set out in the Childerley
case; if the merits were considered and the judgement was granted by
default, the grounds for rescission are virtually unlimited, and the
only prerequisite is that "sufficient cause" therefore must
be shown.
In
the instant case the Applicant has not furnished the court with an
adequate reason for not opposing the matter and has not shown that he
has a bona fide defence to the matter. The Applicant's defence is
that he acted on behalf of a separate legal entity, but provides no
proof that he was in fact authorised to do so and is estopped from
denying that he acted in his personal capacity.
The
Applicant therefore cannot succeed under the common law. 4. Estoppel.
In
the case Northside Development (Pty) Ltd vs Registrar General (1990)
170 CLR
146
the following was said:
"If
the company has not held the agent out, the agent has no authority
from the company to misrepresent his own authority; he cannot bind
the company by his own statements of his authority and any loss
suffered by the other party cannot be sheeted home to the company".
In
the present case the Applicant has not shown that he derives his
authority to bind the company from the articles, nor has he shown
that he has been authorised to bind his principal nor has the
principal ex post facto ratified the actions of the Applicant. It is
trite law that a Director cannot bind a company/principal of which he
is a Director without either deriving the authority from the articles
or having express authority to do so.
The
Applicant had at no stage indicated that he was acting as a
representative of his principal. He has not attached a resolution to
the effect that he is to enter into a credit agreement on behalf of
his principal, notwithstanding being called upon to do so by the
Respondent. The account with the Respondent is clearly in the
personal name of
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the
Applicant. There is no indication on the documentation that it is on
behalf of any other party but himself.
All
in all, in this regard, I am in total agreement with the Respondent
that the Applicant must be estopped from denying that he acted in his
personal capacity.
5. Whether
the Turquant rule applies in casu.
The
Applicant is relying on the Turquant rule in that he intends to prove
in a trial that he, as a Director could bind the company, and the
fact that he did in fact not have such authorisation would,
nevertheless bind the company in this regard.
The
principle known as "the rule in Royal British Bank vs Turquand
(1856) 6E & B 327" provides inter alia that if directors in
terms of the Articles have power to bind the company, but the
articles require that certain preliminaries should be gone through
before that power can be duly exercised, then a person contracting
with the Directors is not bound to investigate in order to discover
whether such preliminaries have been observed (see also Mahomed vs
Ravant Bombay House (Pty) Ltd 1958 (4) S.A. 704 (T); Gibson, South
African Merchantile & Company Law (6th ED) at page 346; and L.
C.
B.
Gower, Gower's Principles of Modern Company Law (5th ED) page 179.
In
casu, clearly the above does not apply. The Applicant has not shown
that he has any bona fide defence in the matter. There is no reason
for this court to draw the inference that he was in fact acting as a
representative of a "clearly identifiable principal" when
the only thing that is clear is that he acted in his personal
capacity. The Turquant rule does not apply in the circumstances of
the present case. The Applicant is estopped from denying that he
acted in his personal capacity.
In
the result, the application is dismissed with costs.
S.B.
MAPHALALA
JUDGE
