[20]
Arising out of the above legal exposition, the
Court eventually came to the conclusion arrived at
Ndzamela’s case. The Court essentially considered the statutory control of the development corporation by the provincial government and its funding
and transfers of monies from provincial revenue fund, that on the strength thereof the corporation assets were essentially purchased
by provincial government for the corporation. It concluded that such properties were to be accorded protection against attachment
or execution as though they are the state assets as envisaged in terms of section 3 of the State Liability Act. >
[21]
Ndzamela’s case is distinguishable from the case under consideration in that:
“(a)
Municipalities are subject to very much limited ministerial directions and control and they operate
as a form of local sphere of government and yet a development corporation is heavily funded by the provincial government.
(b)
Municipalities have wide executive and legislative powers vested in their municipal councils and
they have a right to govern, on their own initiative, their local government affairs subject, of course, to national and provincial
legislations as provided for in the Constitution and yet the development corporation is substantially dependent upon provincial government
for the proper exercise of its mandate and for its continued existence.
(c)
Municipality may make and administer by-laws for the effective administration of the matters which
it has a right to administer and to also administer the local government matters listed under Part B of Schedule 4 and Part B of
Schedule 5. These are indeed extensive powers to administer without intervention of the provincial sphere of government of the province
of the Eastern Cape yet, such is wanting with regard to Development Corporations.
(d)
In terms of Section 4(2)(c) of the Eastern Cape Development Corporation Act 2 of 1997, the Corporation
is bound to open a banking account as may be approved by the Auditor-General and the operations of corporations are managed and controlled
by the Board of Directors and the above do not apply to municipalities such as the Applicant.
[22]
It is upon the heavy reliance by corporation upon provincial treasury for its continued existence and
upon transfer payments to it by the provincial government as well as the effective control exercised upon it in terms of the Public
Finance Management Act No.1 of 1994 that the Court concluded that the corporation, which is another hand of the government of the
province of the Eastern Cape, should be accorded indemnity against the attachment or execution as if its assets are those of the
state as envisaged in terms of Section 3 of the State Liability Act.
[23]
In
casu the Sate does not exercise such powers and control over the Applicant, as a municipality as to, for instance, when and in what manner
it should carry out its businesses, nor does the state maintain control of when and how its powers are to be exercised. A municipality,
such as Applicant, conducts largely its affairs through municipal councils over which the state has no control. Applicant is not
the nominal defendant nor respondent cited as envisaged in terms of Section 2 of the State Liability Act, further, nor is Applicant the political head of a department sued in a representative capacity. (Jayiya v MEC for Welfare EC supra at 612B).
[24]
It is trite law that the onus of establishing the actual applicability of Section 3 of the State Liability rests upon the party relying upon it (Shoba v OC Temporary Police Camp, Wagendrift Dam 1995(4)SA 1 AD at 20D). In casu I am not persuaded that Applicant has succeeded in discharging the onus upon it on a balance of probabilities that, indeed, the provisions
of Section 3 of the said Act are of application in this matter. In any event I am bound by judgment of the Supreme Court of Appeal in this regard
which has not been demonstrated to me to be distinguishable from the facts of this case. (Mateis v Ngwathe Plaeslike Municipaliteit en andere supra). In conclusion I find that Applicant is excluded from protection accorded by Section 3 of the Act.
[25]
I now proceed to consider whether the mere launching of an application for rescission of a judgment by
default automatically suspends the said judgment or not.
[26]
In the case of Nel v Le Roux NO & Others 2006(30 SA 56 (SE)the court held that an application for rescission, correction or variation the judgment does not have the effect of automatically
suspending the judgment and, in order to have such an effect, Applicant for rescission of judgment requires an application to court
in order for it to be suspended. The court went further to state that, where a warrant of execution has already been issued, the
Applicant ought, simultaneously with his or her application to suspend the judgment, to apply for an order staying the warrant of
execution. In the absence of an order staying the warrant, any subsequent sale in execution remains valid and cannot be set aside
(at 95FG and 59J-60A).
[27]
I am in full agreement with the above legal exposition. When Applicant lodged the application for rescission
on 22 November 2007, it knew already that a Warrant of Execution was issued and was brought to its attention with a view to executing
it on 20 November 2007 and should have, simultaneously with its application for rescission of judgment, apply for an order staying
the Warrant of Execution and not to wait until 4 December 2007 when the current application was actually instituted.
[28]
Applicant should have known, when application for rescission of judgment was launched on 22 November
2007, that there is no substantive rule of law that the mere filing of an application to rescind a judgment automatically suspends
execution of that judgment. It is only a substantive rule of law that the noting of an appeal automatically suspends the operation
of the order in question.
[29]
In the case of United Reflective Converters (Pty) Ltd v Levine 1988(4) SA 460 (WLD) the court stated that “there is no substantive rule of law that an application to vary or rescind an order or judgment automatically
suspends its operation (463J-464B). However, it was also said, a Court is empowered to assist a litigant by ordering the suspension
of an order or judgment pending finalization of an application to vary or rescind it to avoid apparent injustice. The court further
explained provisions of Rule 49(11) to mean, save where it deals with appeals, that it is a substantive rule of law that the words
“or to rescind, correct, review or vary” as they appear in the Rule, are of no force or effect (at p.464B). I am in full
agreement with the above legal exposition.
[30]
On whether to grant relief sought in the Notice of Motion or not, I am of the view that the dismissal
of this application will lead to the revival of the warrant of execution which may be executed against Applicant’s assets and
thereby render the pending application for rescission of judgment to be of no force or effect. In my view that would be too harsh
and would effectively deprive Applicant of its opportunity to proceed with the Application for rescission and, if successful, of
defending the main case. That would clearly not be in accordance with a right or access to justice or court. It is only in most deserving
cases where such drastic steps may be taken. In my view, therefore, this is a proper case where such consequences should be averted
at all costs.
[31]
I feel I would also be usurping the court, of its powers, that may be seized with the application for
rescission of judgment if I were to exercise my discretion against the Applicant in that, by discharging the rule, I would directly
or indirectly be rendering the application for rescission worthless, which I am not empowered to do in these proceedings. Further
more there would be no practical effect, result or advantage in pursuit by Applicant of the application for rescission. The court
dealing with the application for rescission would be merely called upon to pronounce upon abstract or academic issues as there will
no longer be any issues between the parties (Coin Security Group (Pty) Ltd v SA National Union for Security Officers 2001(2) SA 872 (SCA) at 875A-D; Port Elizabeth Municipality
v Smith 2002 (4) SA 241 (SCA) at 246I-247A).
[32]
Considering whether to stay the warrant of execution or not, in Van Dyk v Du Toit en andere 1993(2) SA 781(O), the court held that a warrant of execution can be set aside if it is no longer supported by its causa. A judgment which is dependant, for its enforceability and further existence, on a decision of a further legal issue, whether to
rescind it or not, was held to be uncertain to such an extent that it cannot serve as a basis for a warrant of execution. Whether
the warrant of execution is still supported by its causa, can only be answered after the decision of a legal issue, of whether the judgment sought to be rescinded is in fact actually rescinded
when the application for rescission is finally dealt with.
[33]
The issuance of the warrant of execution on 20 November 2007 was clearly dependant upon the judgment
by default granted against Applicant on 8 November 2007. Without existence of the judgment by default sought to be rescinded on the
application launched on 22 November 2007 upon whose causa the warrant of execution is clearly based, the warrant of execution under consideration will no longer be supported by its causa, judgment by default.
[34]
If the causa for the warrant of execution has fallen away or is likely bound to fall away, simultaneously with the setting aside of judgment upon
which it is based, I feel that the power to execute the warrant should be temporarily stayed pending finality in the application
for rescission of judgment granted 8 November 2007(Ras an andere v Sand River Cytrust Estates (Pty) Ltd 1972(4) SA 404 (TPD).
[35]
In the case of Le Roux v Yskor Landgoed 1984(4) SA 252(T) at 257B-C, the court held that stay of execution could be granted where the underlying cause of the judgment debt is being disputed or no longer
exists. In the pending application of rescission of judgment, the claim against Applicant is being disputed which, in my view, indicates
that the causa of the judgment in question is being assailed and in casu the execution of the judgment is now being sought to be stayed.
[36]
In Road Accident Fund v Straydom 2001(1) SA 705 (CPD), it was held that the court will, generally speaking, grant the stay of the execution where justice requires such a stay wherein
injustice would otherwise be done. In casu I am satisfied that Applicant has shown a well grounded apprehension of the order being executed to finality long before the application
for rescission is brought to an end if the execution of the warrant is not stayed. Applicant has further sufficiently demonstrated
that the stay of execution is justified as the foundation upon which its apprehensions are based will affect or assail the very causa which is the basis of the warrant of execution. I therefore conclude that substantial injustice on the part of the Applicant will
be enormous if the execution and sale of Applicant’s assets were to be allowed before finality of the application for rescission
of judgment which, is still pending before this court, is reached.
[37]
Should the Application for rescission of judgment be successful, I am satisfied that the underlying causa upon which the warrant of execution was issued will also fall away and there would accordingly be no basis for the warrant of execution
being executed. The judgment sought to be rescinded is clearly dependent, for its enforcement, on the outcome of the pending application
for rescission of judgment where the execution will be dependant upon legal issues to be raised therein. As the judgment under consideration
cannot, in view of the above approach, serve as a basis for the warrant of execution, I am of the view that it is proper and more
appropriate for this court to grant a stay of execution pending finalization of the application for rescission of judgment granted
against Applicant on 8 November 2007.
[37]
However, though I am inclined to confirm the Rule subject to the extent of amendment I intend effecting, I
nonetheless feel that, had Applicant conducted itself in accordance with the law as expounded above, there would have been no need
for it to now launch this application, separately from one of rescission of judgment. Because of Applicant’s conduct as a afore-stated, costs of this application were unnecessarily
incurred by the Respondent who acted lawfully when proceeding with a Warrant of Execution as nothing in law that disapproves of its
conduct in the circumstances. This therefore bears relevance with regard to the issue of costs order which I intend giving hereunder.
[39]
In the result I make the following order:-
1.
Pending finalisation of the application for rescission of judgment by default granted against Applicant on 8 November 2007, it is
hereby order that:-
1.1
the execution of the judgment by default referred to under paragraph 1 above be and is hereby suspended.
1.2
the Warrant of Execution against property of Applicant issued on 20 November 2007 be and is hereby stayed.
1.3
Applicant to pay 50% of Respondent’s costs occasioned by this application
_____________________________________
ACTING JUDGE OF THE HIGH COURT
COUNSEL FOR THE APPLICANT
:
P.V. MSIWA
Instructed by
:
X.M. Petse Inc.
ATTORNEY FOR THE RESPONDENT:
K.T. MQUQU
Instructed by
:
S.V. Magazi Attorneys
Heard on 7 August 2008.
Delivered on 21 August 2008.
PDF format
RTF format