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[2015] ZAGPJHC 27
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Isserie and Others v South African National Tuberculosis Association (A5059/2013) [2015] ZAGPJHC 27 (18 February 2015)
REPUBLIC OF SOUTH
AFRICA
IN THE HIGH COURT OF
SOUTH AFRICA
(GAUTENG LOCAL
DIVISION, JOHANNESBURG
CASE NO: A5059/2013
DATE: 18 FEBRUARY 2015
In the matter between
SATEESH
ISSERIE
..............................................................................................
FIRST
APPELLANT
DECAWITZ INVESTMENTS (PTY)
LTD
....................................................
SECOND
APPELLANT
SERVIPLEX 24
CC
.............................................................................................
THIRD
APPELLANT
PRIMED-ACUTE MEDICAL
CC
.................................................................
FOURTH
APPELLANT
NAOMI
REDDY
...................................................................................................
FIFTH
APPELLANT
ELIZABETH
CHETTY
.......................................................................................
SIXTH
APEPLLANT
And
SOUTH AFRICAN NATIONAL TUBERCULOSIS
ASSOCIATION
......................
RESPONDENT
J U D G M E N T
VAN OOSTEN J:
[1] This is an appeal by the appellants
against the dismissal with costs by this court (Fischer AJ) of their
application for rescission
of a judgment obtained against them in
favour of the respondent in default of their appearance, as
defendants, on the trial date
of the action. The appeal is with leave
of the court a quo.
[2] In this appeal the same issues
dealt with in the court a quo arise. First, whether the judgment can
be rescinded in terms of
rule 42(1)(a). Second, and in the
alternative, whether the appellants have shown sufficient cause for
rescission under the common
law. On both these issues the learned
judge a quo found against the appellants.
[3] It is at the outset necessary to
summarise the facts which gave rise to the application for
rescission. On 2 November 2011 the
respondent (SANTA), represented by
David C Feldman attorneys (Feldman), instituted action against the
appellants in which it claims
payment of the sum of R13 477 224-01,
interest thereon and costs. The claim arises from alleged fraudulent
transfers by the first
and/or fifth and/or sixth appellants acting
personally and on behalf of the second, third and fourth appellants,
of SANTA’s
funds from its bank account to the fourth appellant,
without SANTA’s consent. The appellants, then represented by
Brider
and Associates attorneys (Brider), filed a notice of intention
to defend and SANTA applied for summary judgment. An affidavit
resisting
summary judgment was filed and leave to defend by agreement
granted. The appellants delivered a plea containing a bare denial. On
10 February 2011, before the close of pleadings, SANTA delivered a
notice of enrolment of the trial and subsequently, on 20 March
2012,
a notice of set down for hearing on 12 November 2012. On 17 April
2012 SANTA and pursuant to SANTA’s application to
compel
discovery, Maluleke J ordered the appellants to respond to SANTA’s
notice in terms of rule 35(1) and (10) within 10
days of the date of
service of the order on them and to pay the costs of the application.
The appellants’ discovery affidavit
was subsequently, on 30 May
2012, filed.
[4] On 24 August 2012 Brider served a
notice of withdrawal as attorneys of record on behalf of the
appellants on Feldman. On 9 November
2012 and thus three days before
the trial was to be heard, Feldman deposed to an affidavit in which
he sets out his unsuccessful
attempts to locate and contact the
appellants (the pre-trial affidavit). On 12 November 2012 the matter
was called in the roll
call court before Boruchowitz J. The
appellants were in default of appearance. Counsel for SANTA applied
for judgment by default.
It is common cause that both the pre-trial
affidavit and a practice note, prepared by counsel for SANTA, served
before Boruchowitz
J. The learned judge thereupon granted judgment by
default for payment of the amount claimed in the summons together
with interests
thereon and costs (the default judgment).
[5] Subsequent to the granting of the
default judgment a warrant of execution against property was
authorised and issued. It is
alleged that it was only upon service
thereof on the first appellant at his residence in Durban that any of
the appellants became
aware that the default judgment had been
obtained. The appellants launched an urgent application for the stay
of the execution
pending the finalisation of an application for
rescission of the default judgment. SANTA opposed the application and
it was heard
by Tshabalala J on 19 January 2013. The learned judge
reserved judgment and on 22 January 2013 granted an order for the
stay of
execution and subsequently delivered written reasons for the
order to which I will revert.
[6] The application for rescission of
the default judgment was launched on 15 February 2013. SANTA
vigorously opposed the application
and filed an answering affidavit.
The appellants responded in a replying affidavit and subsequently
filed a supplementary replying
affidavit to which SANTA replied by
way of an answering affidavit. The paper trail accumulated into a
bundle of documents extending
into nine volumes, consisting of 865
pages. The application came up for hearing before Fisher AJ on 11
June 2013 and the judgment
and order dismissing the application with
costs, was delivered on 19 July 2013.
[7] The learned judge a quo carefully
and meticulously analysed, examined and considered the two issues I
have referred to. In the
course of the judgment the bona fides of the
defence proffered by the appellants came under close scrutiny and a
number of adverse
findings, including credibility findings, were made
against them. In the view I take of this matter I do not consider it
necessary
to engage in these findings. I propose to only deal with
the first issue which is whether the default judgment was erroneously
sought and granted, in accordance with the provisions of rule
42(1)(a). That issue, in my view, is decisive of the appeal and I
turn now to deal with it.
[8] The notice of set down of the trial
was duly served on Brider, almost three months prior to his
withdrawal as attorney of record
on behalf of the appellants. The
appellants maintain that Brider never informed them of the trial
date. I should add that the trial
date was again referred to in the
application to compel discovery but the appellants likewise claim
ignorance thereof.
[9] Brider, as I have mentioned, filed
a notice of withdrawal. The appellants state that they never received
the notice. Their version
in this regard did not find favour with the
judge a quo. Be that as it may, the appellants further place reliance
on a number of
irregularities which they contend render the notice
defective. Counsel for SANTA readily conceded that the notice of
withdrawal
does not comply with the provisions of rule 16(4)(c). The
irregularities relied on are first, that the wrong address was
furnished
in respect of the first appellant, second, that no address
was furnished in regard to the fourth, fifth and sixth appellants,
third,
the absence of any statement as to the date when and the
manner in which the notice was sent to the appellants and, finally,
the
absence of proof, by way of registered post slip or otherwise, of
the sending of the notice to the appellants. Rule 16(4)(c) requires,
notably in peremptory terms, that ‘the notice shall state the
names and addresses of the parties notified and the date on
which and
the manner in which the notice was sent to them’. The
irregularity of the notice of withdrawal accordingly, has
been shown
and the question arising is whether that, without more ado, resulted
in the erroneous granting of the default judgment.
[10] The court a quo and supported by
counsel for SANTA, relied on the judgment of the then Appellate
Division, in De Wet and others
v Western Bank Ltd
1979 (2) SA 1031
(A). There the question whether a defective notice of withdrawal
rendered the subsequent resumed trial proceedings irregular was
answered in the negative. In this regard Trengove AJA (as he then
was), writing for the court, held that the appellants could not
avail
themselves of the fact that their attorney had not complied with the
requirements of rule 16(4). The learned judge of appeal
held that the
enrollment of the matter before the appellants’ attorney had
withdrawn, obviated the need to serve any further
documents or
notices on the appellants concerning the resumed hearing and that
counsel for the respondent, in the absence of an
appearance by or on
behalf of the appellants, was fully entitled to seek and obtain
absolution from the instance with costs. It
was however, further
held, that the fact that the appellants had not been advised
timeously of the withdrawal of their attorney
was a factor to be
taken into account in the consideration of the good cause requirement
in applications for rescission of judgments
under the common law. It
follows that the appellants in the present matter cannot avail
themselves of the defective notice of withdrawal
as a basis for
relying on rule 42(1)(a). But, the enquiry does not end there: regard
must be had to the events occurring after
the filing of the notice of
withdrawal and in particular whether the trial judge was misled or
influenced by incorrect facts placed
before him, to grant the
judgment by default.
[11] This brings me to the hearing
before Boruchowitz J. The appellants contend that the learned judge
was fraudulently misled by
the pre-trial affidavit and the practice
note to grant the default judgment. It is common cause that both
these documents contain
incorrect information. As for the pre-trial
affidavit, Feldman states that he was unable to arrange a pre-trial
conference with
the appellants ‘as despite attempts to locate
them I have been unable to do so’. The statement is factually
incorrect.
The closest one gets to an attempt to locate them is
Feldman’s reference to a charge of theft that was laid by SANTA
against
the appellants, pursuant to which a Col Ueckermann was
appointed to investigate. Col Ueckermann however, according to
Feldman,
had ‘great difficulty in contacting’ the
appellants and Feldman accordingly requested him to be notified
should he
trace them. And there it ends. Terseness and lack of detail
aside the allegations clearly fall short of establishing any attempt
to locate the appellants.
[12] It furthermore has now become
apparent that no attempts at all were made to contact inter alia the
second, third and fourth
appellants in respect of which the commonly
used internet search for their contact details, no doubt, would have
produced results.
[13] Counsel for the appellants was at
pains to submit that Feldman as well as counsel for SANTA
fraudulently misled the trial court
in the hope of securing a
judgment by default in SANTA’s favour. In the absence of a
proper enquiry in regard to this aspect
I do not propose to deal with
it any further.
[14] The practice note likewise,
contained wrong information: it stated that a pre-trial conference
could not be held as ‘1st,
5th, 6th defendants representing
2nd, 3rd, 4th defendants could not be found after the defendants’
attorneys of record withdrew’
and further, with reference to
the notice of withdrawal, that ‘the defendants and
representatives could not thereafter be
contacted at the last known
address provided by their erstwhile attorneys and failed to respond
to the plaintiffs’ notices
thereafter’. The fact of the
matter is that, after the withdrawal of Brider, no notices of any
kind were sent to any of the
appellants.
[15] To sum up: the information before
Boruchowitz J justified the conclusion that despite attempts to
locate and contact the appellants,
they could not be found.
Juxtaposed hereto are the true facts that no attempts at all were
made to either locate or contact them.
The decisive question
accordingly, is whether the true facts, had the trial judge been
apprised thereof, would reasonably have
precluded him from granting
the default judgment or would have induced him not to grant the
default judgment (see Nyingwa v Moolman
NO
1993 (2) SA 508
(Tk) 510G;
Naidoo and another v Matlala and others
2012 (1) SA 143
(GNP) 153C
and Topol and others v LS Group Management Sevices (Pty) Ltd
1988 (1)
SA 639
(W)).
[16] On a conspectus of all the facts I
am satisfied that knowledge of the true facts would have constituted
insuperable difficulties
to the granting of the default judgment.
Furthermore, had counsel for SANTA alerted the learned judge to the
defective notice of
withdrawal it would have constituted a further
stumbling block to the granting of the default judgment. The practice
in this Division
is that, in the event of a withdrawal of the
attorneys of record, proof is required of the sending of the notice
to the parties
concerned, in particular the withdrawing attorney’s
erstwhile client/s. The ratio for the practice is to be found in the
provisions of rule 16 which are clearly aimed at ensuring that at
least the notice of the withdrawal is sent to the parties, including
the parties formerly represented by the attorney. In this matter the
defects I have referred to, in my view, would have created
considerable doubt as to whether the granting of judgment by default
was appropriate.
[17] It follows that the default
judgment was erroneously sought and granted and that in the exercise
of this court’s discretion,
it falls to be rescinded in terms
of rule 42(1)(a) (see, generally, Lodhi 2 Properties Investments CC
and another v Bondev Developments
(Pty) Ltd
2007 (6) SA 87
(SCA) para
[17] – [27]. It is accordingly not necessary to decide the
second issue (see F & J Electrical CC v MEWUSA
obo E Mashatola
and others
[2015] ZACC 3
(CC) para 27).
[18] It remains to deal with the costs
of the appeal. The appellants are the successful parties and in
accordance with the general
rule of costs following the result,
ordinarily would have been entitled to the costs of the appeal. In
the circumstances of this
case however, a deviation from the general
approach, in my view, is justified.
[19] SANTA is a welfare organization.
Its case against the appellants is based on serious allegations of
fraud involving a vast
amount of money. The matter by now has
progressed way beyond mere allegations of fraud in the pleadings. In
the application for
rescission the appellants were acutely alive to
the requirement of having to disclose a bona fide defence. At an
early stage of
the proceedings when a stay of execution was granted,
Tshabalala J remarked that their conduct was ‘with respect very
strange
and suspicious’ but the learned judge cautiously and
fairly left open the possibility that ‘the defendants may
produce
another paper trail (in the application for rescission) from
the fourth defendant to other creditors of the plaintiff’.
[20] And a formidable paper trail
indeed followed: not only from the appellants but also from the
respondent. I have already referred
to the magnitude of the case
before this court. The learned judge a quo, as I have already alluded
to, having carefully analyzed
the defence proffered by the
appellants, made numerous well-grounded adverse findings against the
appellants and readily rejected
their defence, albeit not having had
the benefit of viva voce evidence.
[21] This court, on appeal, in view of
the finding I have made, is not called upon to pronounce on the bona
fides of the defence
raised. That will be determined by the trial
court after having heard all the evidence and argument. The merits
and bona fides
of the appellants’ defence was fully dealt with
in argument and hotly contested before this court. The bulk of the
documents
and the better part of the argument before this court
related to the appellants’ defence. Suffice to say that, for
present
purposes, the appellants’ defence is replete with
improbabilities and seemingly unsatisfactory aspects. This appeal is
decided
on a narrow technical point. In the light hereof, it would be
unjust and unreasonable not only to SANTA but also in general, before
findings are made concerning the appellants’ alleged fraud, to
award the costs of the appeal to the appellants. In my view
those
costs should be costs in the action, which in the final analysis
turns on whether the appellants had acted fraudulently or
not. For
all these reasons the costs of the appeal should be costs in the
action.
[22] In the result the following order
is made:
1. The appeal is upheld.
2. The order of the court a quo is set
aside and in its place is substituted with the following:
i. The judgment by default of this
court granted on 12 November 2012 is rescinded.
ii. The costs of this application shall
be costs in the action.
3. The costs of the appeal shall be
costs in the action.
FHD VAN OOSTEN
JUDGE OF THE HIGH COURT
I agree.
KM SATCHWELL
JUDGE OF THE HIGH COURT
I agree.
V TLHAPI
JUDGE OF THE HIGH COURT
COUNSEL FOR APPELLANTS ADV JF ROOS
SC
ADV JK BERLOWITZ
ATTORNEYS FOR APPELLANT S JM SHOOT
ATTORNEYS
COUNSEL FOR RESPONDENT ADV SS COHEN
ATTORNEYS FOR RESPONDENT DAVID
FELDMAN ATTORNEYS
DATE OF HEARING 11 FEBRUARY 2015
DATE OF JUDGMENT 18 FEBRUARY 2015