Masuku v J.D Group Swaziland (Pty) Ltd (38/11) [2011] SZSC 48 (30 November 2011);

group

Full judgment

IN THE SUPREME COURT OF SWAZILAND

HELD AT MBABANE CIVILAPPEAL CASE NO: 38/11

In the matter between:

KHANYISILE MASUKU APPELLANT

AND

J.D. GROUP SWAZILAND RESPONDENT

(PTY) LTD

t/a Bradlows

CORAM: EBRAHIM, JA

MOORE, JA M.C.B. MAPHALALA, JA

FOR APPELLANT ATTORNEY S.P. MAMBA

FOR RESPONDENT ATTORNEY L. HOWE

HEARD ON 17^thAND 23^rdNOVEMBER 2011

DELIVERED 30^THNOVEMBER 2011

Summary

Civil Procedure – Contract of Sale – breach of contract – ex parte application for cancellation of contract – duty to observe the utmost good faith in ex parte applications – Facts not disclosed not material to influence court’s decision – appeal dismissed with costs on the ordinary scale.

JUDGMENT

M.C.B. MAPHALALA J.A.

[1] This is an appeal against the judgment of the court a quo delivered on the 29^th October 2010; the learned judge upheld an appeal brought by the Respondent from a decision of the Magistrate court with costs on the ordinary scale, and, the Rule nisi issued by the magistrate was confirmed.

[2] It is common cause that on the 1^st February 2010, the respondent brought an urgent application on an ex parte basisthe Manzini Magistrate’s court for a rule nisi in respect of the following orders: firstly, that the court messenger for the Manzini District should be authorised to seize and attach certain goods from the appellant; secondly, that the goods should be kept in respondent’s custody pending finalization of the matter; thirdly; that the police should be ordered to accompany the court messenger in the execution of the Order; fourthly, that the court should authorise the court messenger and the police to break open the gates and doors to gain entry to the appellant’s premises in the event that the appellant locks such gates and doors, in order to execute the court order; fifthly, that the sale agreement between the parties dated 14^th May 2009 should be cancelled; sixthly, that the court declares that the respondent is entitled to retain all amounts already paid by the appellant as part of the purchase price; and, lastly, that the appellant be ordered to pay costs of suit. In the alternative, the respondent sought an order that the appellant be ordered to pay the outstanding balance of E42 682.73 (Forty two thousand six hundred and eighty two emalangeni seventy three cents).

[3] The parties concluded an Instalment Sale Agreement on the 14^th May 2009 in Mbabane in terms of which the respondent sold and delivered to the appellant certain goods at a purchase price of E60 676.40 (Sixty thousand six hundred and seventy six emalangeni forty cents) inclusive of interest and other charges. The appellant paid a deposit of E7 000.00 (Seven thousand emalangeni); and, she was further obliged to pay a monthly instalment of E2 237.00 (two thousand two hundred and thirty seven emalangeni) with effect from the 1^st July 2009 over a period of twenty three months, and, the last instalment was E2 225.40 (two thousand two hundred and twenty five emalangeni forty cents). The respondent alleged that the appellant was in breach of the contract and that she had failed to pay all the instalments due, and that she was in arrears of E4 665.33 (Four thousand six hundred and sixty five emalangeni thirty three cents); the appellant had paid a total of E18 314.00 (eighteen thousand three hundred and fourteen emalangeni) when these proceedings were instituted at the Magistrate court, and, the balance outstanding in terms of the contract was E42 682.73 (Forty two thousand six hundred and eighty two emalangeni seventy three cents). The respondent invoked clause 8 of the Agreement which entitled it to cancel the agreement in the event of a breach of contract; the Agreement further allowed the respondent to take possession of the goods and retain all monies paid. A rule nisi was issued on the 1^st February 2010 returnable on the 15^th February 2010.

[4] The application was opposed by the appellant who subsequently filed a Notice to Oppose as well as an Answering Affidavit. In limine the appellant stated that the Hire Purchase Agreement between the parties was void ab initio because it did not satisfy all the requirements of a valid binding contract; the basis for the submission was that it was not dated, it did not contain the full names of the parties and that it was not initialled.

[5] On the merits the appellant argued that the reason why she was in arrears was because of the termination of her contract of employment. She further argued that she was covered by an Insurance Policy in terms of the Contract and that the said policy should take care of the outstanding balance; she urged the respondent to lodge a claim with its insurers for payment of the amount due. She further disputed the amount claimed and stated that the amount was inflated by the financial charges and insurance which were calculated at twenty four months instead of eight months, which is the period within which the contract was concluded.

[6] The appellant attached to his Answering Affidavit Annexure “A” being the letter of termination of her contract of employment as well as Annexure “B” being the “Buyer’s Protection Insurance Policy”. The letter of termination was addressed to the appellant and dated 30^th September 2009, and, it was signed by the director of the company; however, the name of the said director was withheld. The appellant was insured by Swaziland Royal Insurance in Mbabane and four events were insured: firstly, the accidental loss or damage to or theft of the goods; secondly, the accidental death of the insured; thirdly, the permanent disability of the insured caused by accident; and, fourthly, the temporary disablement of the insured caused by accident.

[7] The respondent filed a Replying Affidavit denying that the contract is void ab initio as alleged; it argued that the contract is paginated, dated, initialled with full names of the parties to the contract. The respondent further denied, as alleged, that the appellant was prevented from fulfilling the Instalment Sale Agreement by circumstances beyond her control; it also denied that the appellant lost her job at all or that she could not procure her benefits to make payment. The respondent also argued that when the parties concluded the contract, the appellant advised the respondent that her company, Dolphin Auto Body (PTY) Ltd, was jointly owned by her husband and herself; and, that she was both a director and an employee of the company in the position of Financial Manager. It was further argued on behalf of the respondent that even if she had lost her job in the company, which was denied, she could still utilise her income as a director to settle her debt with the respondent.

[8] The respondent further argued that the contract allowed it to investigate the circumstances of the insured’s alleged retrenchment; and, that it did conduct investigations in this regard and discovered that the appellant was still working at Dolphin Auto Body (PTY) Ltd. In addition, the respondent argued correctly that the appellant’s retrenchment was not covered by the Insurance Policy.

[9] The Respondent also argued that the finance charges and insurance charges were calculated for a period of twenty four months because the contract stipulated that payment would be made over a period of twenty four months; it argued correctly that the fact that the proceedings commenced on the eighth month of the contract did not imply that the charges should be calculated for a period of eight months.

[10] The court after hearing the parties refused to confirm the rule and ordered that the goods be returned to the appellant. The basis for the Magistrate’s decision was that the respondent had failed to disclose two important facts: firstly, that the appellant had been retrenched at her workplace which made it impossible for her to make payments; secondly, that the appellant had an insurance policy which was meant to cover her in the event of retrenchment. The Magistrate reasoned that the failure by the respondent to disclose these facts militated against the principle of law that litigants must observe the utmost good faith in ex parte applications by placing all material facts before the court which might influence the court in coming to its decision.

[11] The respondent appealed the decision of the magistrate court on three grounds: firstly, that the court erred in law and in fact by finding that the respondent failed to disclose certain facts in its Founding Affidavit and that such failure demonstrates bad faith since the information was crucial for the purpose of arriving at a just decision and that such a failure rendered the court’s decision unbalanced, defective and unfair warranting it to be set aside; secondly, that the court erred in law and in fact by finding that the respondent had acted in bad faith and had adduced hearsay evidence by failing to show in their affidavit the reasons why the appellant failed to pay and further disclosed that she did not qualify for insurance cover; thirdly, that the court erred in law and in fact by refusing to confirm the rule nisi and ordering that the goods confiscated from the appellant be returned to her and that the respondent should bear costs on a punitive scale.

[12] The High Court correctly upheld the appeal on the basis that the facts which were not disclosed by the respondent were not material and relevant to the merits of the application. At page 10 of the judgment, at paragraph 27, the learned judge said the following:

“….An explanation of failure to honour her obligation because she had been retrenched could not have assisted the respondent in her defence. I agree that it is not a defence.”

[13] The learned judge at page 9 of the judgment, paragraph 9 further observed correctly the following:

“The appellant’s application a quo being an application to rescind or cancel a hire-purchase agreement and the return of goods, the appellant to sustain a cause of action ought to plead: firstly, the terms entitling it to cancel or must allege facts which would entitle it to cancel, such as mora where time is of the essence, breach going to the root of the contract or repudiation. Secondly where it claims the return of the goods, it must rely on the provisions or terms of the contract that entitle it to repossess the goods…. It is my considered view that these allegations would be sufficient even in ex parte applications.”

[14] When the appeal came before this court, an application for condonation for the late filing of the appeal was granted by consent; thereafter, the appellant argued that it has a Retrenchment Insurance Policy which could cover her retrenchment, and further pay her debt to the respondent. However, there is no such policy before this court; and, there is no evidence to show that such policy was furnished to the court a quo as well as to the Magistrate Court. The only policy before this court is the one in annexure “B” at page 30 of the Record entitled “Buyer’s Policy”; however, this policy does not cover retrenchment.

[15] It is trite law that “utmost good faith” must be observed by litigants making ex parte applications, and, that all material facts must be placed before the court. If any order has been made upon an ex parte application, and it appears that material facts have been kept back which might have influenced the decision of the court whether or not to make the Order, the court has a discretion to set aside the Order on the ground of non-disclosure; it is not necessary that the suppression of the material facts be wilfully, negligently or mala fide. “Materiality” in this regard means that the facts not disclosed must not only be relevant but should have a bearing on the merits of the ex parte application. In the exercise of its discretion, the court should have regard to the extent to which the rule has been breached, the reasons for non-disclosure, the extent to which the court might have been influenced by full disclosure as well as the consequences of denying relief to the applicant on the ex parte order. The court has a discretion even where the non-disclosure was material to dismiss the application or to set aside the proceedings.