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[2021] ZAWCHC 40
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Coosner v Nuttall (16244/2020) [2021] ZAWCHC 40 (8 March 2021)
In
The High Court of South Africa
(WESTERN
CAPE DIVISION, CAPE TOWN)
CASE
NO:
16244/2020
In
the matter between:
ANTON
COOSNER
Applicant
and
PAUL
HERBERT
NUTTALL
Respondent
Date of hearing: 24
February 2021
Date
of Judgment: 08 March 2021(delivered by email to the parties’
legal representatives).
JUDGMENT
PANGARKER,
AJ
INTRODUCTION
[1]
This is an opposed rescission application which was heard as an
urgent application
on 24 February 2021. Ms Morgan appears for the
applicant, instructed by Mr Barnaschone, and Mr Elliott SC,
instructed by Mr Crossley,
appears for the respondent. I refer to the
parties as applicant and respondent. The applicant seeks to rescind
an urgent Order
granted under case number 17279/2020 which placed his
estate under provisional sequestration.
COMMON
CAUSE AND UNDISPUTED FACTS
[2]
The parties in this matter are involved in a sequestration
application under case
number
17279/2020
(the
sequestration application)
.
The respondent in this matter is the applicant in the aforementioned
sequestration application against the applicant in this matter.
[3]
On 18 January 2021, De Villiers AJ granted an Order in the
sequestration application
by agreement as contained in
FA1
,
with the following orders: granting the intervening parties, Charlene
Irma Trust and APE Projects CC, leave to intervene in the
sequestration application; postponing the opposed sequestration
application to the semi-urgent roll of
13
April 2021
;
ordering the respondent in that application (applicant herein) to
deliver his answering affidavit, and simultaneously ordering
the
intervening parties to deliver their founding affidavits, on 12
February 2021. The remaining orders are not essential for purposes
of
this judgement.
[4]
By 12 February 2021, the applicant had not delivered his answering
affidavit in the
sequestration application as per the agreed Order.
Mr Barnaschone had not communicated with Mr Crossley regarding the
delay in
delivery of the answering affidavit.
[5]
FA
4.1 – 4.13
,
attached to the applicant's founding affidavit herein, comprises
email communication between the legal representatives in the
sequestration application. The respondent's claim against the
applicant arises from an award of R5.4 million plus interest granted
in his favour by the arbitration appeal tribunal.
[6]
On 17 February 2021, the respondent deposed to a supplementary
affidavit (commissioned
on 18 February 2021) in support of an urgent
application to be heard under case number
17279/2020
on 19 February 2021 for the provisional sequestration of the
applicant with a return date of 13 April 2021
(the
urgent sequestration application)
.
[7]
At 14h44 on Thursday 18 February 2021, the respondent's attorneys
served the Notice
of Motion in the urgent sequestration application
personally on Barnaschone Attorneys by service of the documents on a
staff member,
Ms Ilhaam Mitchell who placed it in the office of Ms
Kokott, Mr Barnaschone’s PA.
[8]
On Friday 19 February 2021, Gamble J granted an urgent Order for the
provisional sequestration
of the applicant and issued a rule nisi
calling on all persons concerned to show cause on 13 April 2021, why
the applicant’s
estate should not be placed under final
sequestration.
[9]
Neither the applicant nor his legal representative was present at the
unopposed urgent
application hearing on 19 February 2021.
THE
PARTIES’ SUBMISSIONS
[10]
The applicant's submissions in this rescission application are that
the application is brought
in terms of Rule 42(1)(a), alternatively,
the common law. There was no way that Mr Barnaschone could have
expected a new sequestration
application; the respondent's attorney
did not serve the urgent application per email as was the practice in
respect of the sequestration
matter
(see
FA 4.1 – 4.13)
;
there was nothing urgent about the application heard on 19 February
2021 in Third Division after closure of the roll; the parties
had an
agreement and a timetable which was encompassed in an Order granted
on 18 January 2021; the new application ignores the
Order and is an
abuse of process; and, the applicant has a
bona
fide
defence to the sequestration application.
[11]
The respondent's submissions are that, not unexpectedly, no answering
affidavit was filed as
per the Court Order and timetable of 18
January 2021; the respondent has the real fear that the applicant is
placing his assets
beyond the reach of creditors, including the
respondent; the applicant has no defence or opposition to the
sequestration application
and is merely buying time; and, the
application was personally served on Barnaschone Attorneys and there
is no obligation to serve
her email. Mr Elliott SC submits further
that Rule 42(1)(a) does not apply, and that the applicant does not
overcome the hurdle
of setting out a
bona fide
defence in
terms of the common law grounds for rescission of judgement.
LEGAL
PRINCIPLES
[12]
Rule 42 (1)(a) states as follows:
(1)
The court may, in addition to any other powers it may have, mero motu
or upon the application
of any party affected, rescind or vary:
(a)
An order or judgment erroneously sought or erroneously granted in the
absence of any party
affected thereby;
(b)
….
[13]
At common law, a judgment may be rescinded on the following grounds:
fraud,
justus
error, in certain exceptional circumstances where new documents have
been discovered, and where judgment was granted by default
on the
grounds of
justa
causa
(
De
Wet v Western Bank Ltd
1979 (2) SA 1031
(A);
Swadif
v Dyke NO
1978 (1) SA 928
(A).
In terms of the common law requirements, the applicant must show
sufficient cause (which is synonymous with good cause) for the
rescission of judgment
(
Silber
v Ozen Wholesalers (Pty) Ltd
1954 (2) SA 345
(D);
Colyn
v Tiger Food Industries Ltd t/a Meadow Feed Mills (Cape)
2003 (6) SA 1
(SCA) at 5 I – 6 B).
[14]
In terms of
section 149
(2) of the
Insolvency Act 24 of 1936
, the
Court may rescind or vary any Order made by it under the provisions
of the Act. In terms of
section 2
of the abovementioned Act,
‘
sequestration
order’
includes a provisional order.
EVALUATION
[15]
The Order for provisional sequestration granted on 19 February 2021
was pursuant to an urgent
application in the fast lane Court before
Gamble J and not on the Third Division roll as alleged by the
applicant. This is evident
from the respondent’s answering
affidavit, and the averment is not disputed in Mr Barnaschone’s
replying affidavit.
[16]
The submission that the learned Gamble J had questions for Mr Elliot
SC regarding the urgent
application and was satisfied that the matter
was indeed urgent, is not disputed. Similarly, it is not disputed
that the Judge
was satisfied that the provisional liquidation
application could be heard as a matter of urgency. I agree with Mr
Elliott’s
submission that the issue of urgency of the
application of 19 February 2021, is not one which I may revisit or
entertain. In any
event, the applicant has not applied in terms of
rule 6 (12)(c) for a reconsideration of the Order granted in his
absence on 19
February 2021.
[17]
Ms Morgan submits that the Order was erroneously granted (and
erroneously sought) as there were
facts which Gamble J was unaware of
at the time he was seized with the urgent application. I point out,
firstly, that a copy of
De Villiers AJ’s Order of 18 January
2021, postponing the opposed sequestration application, is attached
as
SFA3
to the Notice of Motion and referred to in the founding affidavit.
Thus, the existence of an opposed sequestration application
to be
heard on the semi-urgent roll of 13 April 2021 was disclosed and
placed before the Court on 19 February 2021. Secondly, proof
of
service on Barnaschone Attorneys, is clearly indicated on page 2 of
the Notice. Thus, Gamble J was indeed made aware of service
of the
urgent application. Thirdly, the urgent Notice of Motion indicates
pertinently to the reader that the respondent (the applicant
herein)
was ordered to deliver his answering affidavit on or before 12
February 2021 but failed to do so. In
Naidoo
and Another v Matlala NO and Others
2012 (1) SA 143
(GNP) at par 5,
Southwood J referring to
Nyingwa
v Moolman NO
1993 (2) SA 508
(Tk)
and various authorities, states that:
‘
In
general terms a judgment is erroneously granted if there existed at
the time of its issue a fact of which the judge was unaware,
which
would have precluded the granting of the judgment and which would
have induced the judge, if aware of it, not to grant the
judgment’
[18]
Having regard to the three factors listed above, and the dictum in
Naidoo
,
it cannot be said with any conviction that there were facts, as far
as the urgent application is concerned, which were not placed
before
Gamble J. I am satisfied that the Order granted on 19 February 2021,
placing the applicant under provisional sequestration,
was not one
which was either granted erroneously or erroneously sought in the
applicant’s absence. Thus, the provisions of
Rule 42(1)(a) do
not find application.
[19]
This brings me to rescission in terms of the common law. The
applicant is required to should
show sufficient cause for the Order
to be set aside, which entails providing a reasonable (and thus
acceptable) explanation for
the default, showing that the application
is
bona
fide
and showing on the merits that he has a
bona
fide
defence which
prima
facie
carries the prospect of success. I can dispense easily with the
requirement relating to a
bona
fide
application – there is no indication or evidence that the
rescission application is brought in bad faith.
[20]
On the requirement of a reasonable and acceptable explanation for the
applicant’s default,
the submission is that the applicant did
not receive proper notice as required in urgent applications. The
applicant relies on
the judgment of
South
African Airways SOC v BDFM Publishers (Pty) Ltd and Others
2016 (2) SA 561
(GJ)
wherein
Sutherland J sets out the steps necessary to ensure effective service
in matters which are urgent. The
South
African Airways
matter dealt with an application brought
ex
parte
on an urgent basis against the respondent at 22h00 in the evening.
The application was emailed to the respondent’s legal
representatives on 30 minutes’ notice. The Notice omitted to
state the venue for the hearing and Sutherland J found that
the time
and steps taken by the applicant were unreasonable and in fact not
collegial in the circumstances. The Judge set out amongst
others,
that where an urgent application is brought on less than 24 hours’
notice, then it is mandatory professional responsibility
that an
applicant’s legal representative undertakes various actions to
ensure that effective service of the application has
occurred.
[21]
The
South
African Airways
matter is distinguishable from the urgent Order forming the subject
matter of this rescission application between the parties in
this
matter. The urgent sequestration application was not an
ex
parte
application. Secondly, while the urgent application was on less than
24 hours’ notice, service thereof was effected personally
on
Barnaschone Attorneys. It is correct that the parties had
corresponded by email regarding the opposed sequestration
application,
but there is no evidence to conclude on a balance of
probabilities that the parties had agreed to email service in all
matters
between them. In terms of rule 4 (1) (a A), Mr Crossley was
entitled to effect service of the urgent application on Mr
Barnaschone’s
office personally and did so between the hours of
07h00 to 19h00 as required by sub-rule 4(1)(b). In addition, thereto,
rule 4
(10) allows a Court which is not satisfied as to the
effectiveness of service to order further steps to be taken as it
deems fit.
There is no indication that the urgent duty Judge had
issues or concerns with the service of the urgent application on Mr
Barnaschone’s
office. In the absence of an agreement to serve
per email, my view is that there was no mandatory professional
obligation on Mr
Crossley to serve the urgent application per email.
The submission that service of the urgent application was not
effective or
did not occur properly, is dismissed.
[22]
The next aspect is the applicant’s default or absence on 19
February 2021. Mr Barnaschone’s
PA, received the Notice of
Motion from the person who was served (Ilhaam) on the Thursday and
did not read it properly or paid
very little attention to it. Ms
Morgan’s submission is that the PA could in no way have
anticipated that a new sequestration
application would be brought
when the opposed sequestration application was postponed by agreement
in terms of an Order of Court.
On a cursory reading of the first page
of the Notice of Motion, any reader would see that notice is given of
an application to
be heard on Friday 19 February 2021 at 10h00. The
day, date and time are in capital letters and in bold type font, thus
unmissable.
Paragraph 1 of the Notice of Motion indicates that the
matter is brought “
as
one of urgency in terms of Rule 6(12)
”.
The argument that a new sequestration application was not anticipated
does not excuse the failure to take note of
the details of the Notice
of Motion, at the very least, to note that an urgent application was
to be heard the next morning. Certainly,
the parties’ names,
and the case number should have alerted the PA that something was
afoot in the sequestration matter.
[23]
The negligence cannot, however, all be placed at Ms Kokkot’s
door. Mr Barnaschone arrived
at his office on the 18 February 2021,
after 14h44, thus after service of the urgent application. He admits
being informed by the
PA that documents arrived in the sequestration
application and that it did not look urgent. He then informed her
that he would
look at it the next morning. While it could possibly be
argued that he accepted her advices that the documents were not
urgent
and hence he did not look at it that Thursday afternoon, this
does not explain why, as the attorney seized with the sequestration,
he did not call for the documents on Friday morning at 10h00 when he
arrived at the office. Nothing was done about the Notice of
Motion
until 12pm (noon) on Friday when Ms Kokkot informed Mr Barnaschone
that she had re-looked at the papers and realised that
it was a new
sequestration. By that time, the matter had already been called and
it was too late.
[24]
Is the explanation that the PA overlooked the information on the
urgent Notice of Motion as she
did not expect a new sequestration
application, a reasonable and acceptable explanation in the
circumstances? Given that there
was effective personal service, the
applicant’s legal representatives individually and
cumulatively, paid little or no attention
to the Notice of Motion.
This occurred not once, but at least on three occasions: firstly,
after receipt thereof when the PA read
the first page but paid no
attention to it, when she clearly should have as it was an urgent
application; secondly, when Mr Barnaschone
arrived at his office on
the Thursday afternoon, was informed of documents in the
sequestration but did not request to read them;
and thirdly, on the
Friday morning (19 February 2021) when Mr Barnaschone did not request
the Notice of Motion and the PA only
handed it to him at 12pm. If Mr
Barnaschone, being the person dealing with the sequestration
application, called for the Notice
of Motion on the Friday morning
(at least), the situation might have been salvaged by going to Court
and seeking a postponement
or contacting Mr Crossley. There was a
clear lack of diligence, attention and prudence by the applicant’s
legal representatives
which, with respect, amounts to negligence. In
Saloojee
and Another NNO v Minister of Community Development
1965 (2) SA 135
(A) at page 141,
the
Appellate Division as it then was stated that:
‘
There
is a limit beyond which a litigant can escape the results of his
attorney's lack of diligence or the insufficiency of the
explanation
tendered’.
[25]
There is no supporting affidavit by the applicant as to why the lack
of diligence of his legal
representatives to take note of the urgent
application and attend to it on more than one instance between the
time it was served
and the morning of the hearing, should not be
imputed to him. I agree with Mr Elliott’s submissions and find
that the applicant’s
explanation for the default is neither
reasonable nor acceptable in the circumstances.
[26]
The last common law requirement is whether the applicant has a bona
fide defence which prima
facie carries some prospect of success
(see
Vilvanathan
and Another v Louw NO
[2010] ZAWCHC 49
at page 11;
Chetty
v Law Society, Transvaal
1985 (2) SA 756
(AD) at 764 I – 765 E).
Without revisiting the urgent application, it is evident that
the respondent sets out the basis upon which the applicant
should be
placed under provisional sequestration. Mr Barnaschone has deposed to
the founding affidavit in this rescission application,
and only
paragraph 57 thereof deals with the merits thereof. He makes
averments that the applicant will show that there are
no advantages
to creditors and thus the applicant’s estate cannot be
sequestrated; the assets are secured to creditors with
security (e.g.
mortgage bond, deed of cession, pledge); and the shareholding in APE
Projects CC is worthless (Clicks has cancelled
contracts). There is
no confirmatory affidavit from the applicant and thus the content of
paragraph 57 remains unconfirmed and
unsubstantiated. It cannot thus
be stated, at this stage of proceedings, that the applicant has shown
a
bona
fide
defence which carries some prospect of success. Furthermore, there is
also no answering affidavit filed in terms of the De Villiers
AJ
Order under case number
17279/2020
,
which sets out a defence to the sequestration.
[27]
In terms of Gamble J’s Order
(AA1
attached to the answering affidavit),
the
applicant’s estate was provisionally liquidated and a rule nisi
was issued calling on any parties to show cause why his
estate should
not be finally sequestrated. Ms Morgan submits that the applicant is
entitled to oppose both stages of the sequestration.
The problem,
however, is that the applicant cannot expect a reconsideration of the
urgent Order of 19 February 2021, because he
elected not to proceed
in terms of rule 6 (12) (c) but rather in terms of rule 42(1)(a).
With respect, where the applicant misses
the mark is in the argument
that until he files his answering affidavit in terms of the 18
January Order, there is no need to set
out a defence. This argument
is self - destructive because the applicant elected to apply for
rescission of the provisional sequestration
Order and should have
anticipated that if he fails under rule 42(1)(a), then the common law
requirements for rescission would apply
and would have to be
overcome.
All
the common law requirements must be met before an applicant can be
said to succeed with his application for rescission of a judgment
or
order. Thus, the requirement of setting out a
bona
fide
defence to the respondent’s claim would be necessary for
purposes of the rescission application. The bald, unsubstantiated
averments in paragraph 57 of the founding affidavit do not, in my
view, constitute a
bona
fide
defence which
prima
facie
has prospects of success.
[28]
In conclusion, I find that the applicant has failed to prove all the
requirements necessary in
terms of the common law, and thus has not
shown sufficient cause, for rescission of the Order granted by Gamble
J on 19 February
2021. In these circumstances, there is no need to
make a determination on the argument that the urgent application was
an abuse
of process because of the existence of the Order of 18
January 2021.
ORDER
[29]
In the result I make the following Order:
The
application for rescission of the Order granted on 19 February 2021
under case number 17279/2020 (the provisional sequestration
Order),
is dismissed with costs.
_______________________
M.
PANGARKER
ACTING
JUDGE OF THE HIGH COURT
Appearances:
For Applicant
: Adv. C Morgan
Instructed
by: Barnaschone
Attorneys
For Respondent:
Adv. G Elliot SC
Instructed
by: Crossleys
Inc.