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[2020] ZAGPJHC 232
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Selota Attorneys and Another v ONR and Others (2018/11026) [2020] ZAGPJHC 232; [2020] 4 All SA 569 (GJ) (21 August 2020)
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REPUBLIC
OF SOUTH AFRICA
IN THE HIGH COURT OF
SOUTH AFRICA
GAUTENG
LOCAL DIVISION, JOHANNESBURG
Case
No.: 2018/11026
In the matter between:
M A
SELOTA ATTORNEYS
First Applicant / First Defendant
M ALFRED SELOTA
Second Applicant / Second Defendant
and
O[…]
N[…] R[….]
First Respondent / First Plaintiff
THE SHERIFF OF THE HIGH
COURT,
KEMPTON
PARK
Second Respondent
THE SHERIFF OF THE HIGH
COURT,
JOHANNESBURG
CENTRAL
Third Respondent
JUDGMENT
Gilbert AJ
1.
The
first respondent, a minor, was injured in a motor vehicle collision.
The first respondent’s mother, now deceased, approached
the
applicants in 2009 to represent her in instituting a claim on behalf
of her son against the Road Accident Fund. The second
applicant
practices as a sole proprietor under the name and style of the first
applicant.
[1]
2.
Action proceedings were initiated against
the Road Accident Fund in January 2013 and culminated in an order in
favour of the first
respondent during February 2017 for
inter
alia
a capital amount of R963,309.00.
The capital amount was paid into the trust account of the applicants.
3.
For the first respondent his journey for
compensation did not end there. The applicants as his then attorneys
did not make those
monies available for his benefit. After deducting
a contingency fee, the applicant transferred the balance of R722,
482.00 to a
financial institution, ABSA.
4.
The first respondent, assisted by his
father as his mother had since passed away, was dissatisfied with the
manner in which the
applicants were handling his enquiries as to the
fate of the funds and approached the first respondent’s present
attorneys
for assistance. They were similarly unsuccessful in their
engagements with the applicants.
5.
During March 2018, some six months after
receiving the funds from the Road Accident Fund, the applicants
initiated a process to
form a trust, ostensibly for the benefit of
the first respondent, and, once the trust been registered on 31 May
2018, to arrange
for the monies to be paid into the trust’s
bank account.
6.
The first respondent contends that the
applicants had no mandate to form the trust or to otherwise deal with
the monies in the manner
that they did.
7.
Whilst the applicants were taking steps to
register the trust, the first respondent, assisted by his father, on
5 April 2018 instituted
action against the applicants under the
present case number seeking payment from the applicants as his
erstwhile attorneys. The
first respondent was successful on 27 August
2019 in obtaining an order against the applicants in their absence
when the applicants
failed to appear on the day the action was set
down for trial.
8.
The present proceedings are by the
applicants as the defendants in the action seeking the rescission of
the judgment that had been
granted against them in their absence.
9.
During argument the applicants confined
their application for rescission to Uniform Rule 42(1)(a), which
provides that a court may
rescind or vary an order or judgment
erroneously sought or erroneously granted in the absence of any party
affected thereby.
10.
Much
of the applicants’ papers is directed at demonstrating that the
applicants have good cause for the rescission, asserting
that they
had given a reasonable explanation for their default in failing to
appear at the trial, that their rescission application
is
bona
fide
and that they have a
bona
fide
defence
to the first respondent’s claim.
[2]
But the applicant’s counsel focussed on persuading the court to
rescind the judgment under rule 42(1)(a). This approach by
the
applicants’ counsel is understandable given the lack of merit
in what the applicants put forward as a
bona
fide
defence.
An
applicant for rescission in terms of rule 42(1)(a) is not required to
show that there is good cause for the rescission.
11.
An examination of the common cause facts,
or those that cannot be seriously disputed, demonstrates that the
applicants have not
advanced a bona fide defence to the first
respondent’s action and that there is substance to the first
respondent’s
contentions that there was something amiss with
the manner in which the applicants went about dealing with the funds
that had been
received from the Road Accident Fund.
12.
This raises the question whether a court
retains a discretion to refuse a rescission of judgment under rule
42(1)(a), notwithstanding
that the requirements thereof have been
satisfied, where it appears from the papers before the court that
there is no bona fide
defence. I will return to this issue later in
the judgment, as it is first necessary to answer the antecedent
question, namely
whether the applicants have satisfied the
requirements for rescission under rule 42(1)(a).
The requirements for
rescission under rule 42(1)(a)
13.
Dodson
J in
Kgomo
and another v Standard Bank of South Africa and others
2016 (2) SA 184 (GP)
[3]
usefully
extracted the following principles governing rescission in terms of
Rule 42(1)(a), principally from the now oft-cited
decisions of the
Supreme Court of Appeal in
Colyn
v Tiger Food Industries Ltd t/a Meadow Feed Mills (Cape)
2003
6 SA 1
(SCA)
and
Lodhi
2 Properties Investments CC and Another v Bondev Developments (Pty)
Ltd
2007
(6) SA 87
(SCA)
:
13.1.
the rule must
be understood against its common-law background;
13.2.
the basic
principle at common law is that once a judgment has been
granted, the judge becomes
functus
officio
,
but subject to certain exceptions of which rule 42(1)
(a)
is
one;
13.3.
the rule
caters for a mistake in the proceedings;
13.4.
the mistake
may either be one which appears on the record of proceedings
or one which subsequently becomes apparent from
the information made
available in an application for rescission of judgment;
13.5.
a judgment
cannot be said to have been granted erroneously in the light of a
subsequently disclosed defence which was not known
or
raised at the time of default judgment;
13.6.
the
error may arise either in the process of seeking the judgment on the
part of the applicant for default judgment or in the process
of
granting default judgment on the part of the court; and
13.7.
the applicant
for rescission is not required to show, over and above the
error, that there is good cause for the rescission.
14.
Applicant’s counsel sought to
emphasise the last principle, to which I will return later in this
judgment.
15.
It
is not any error that would found a rescission in terms of
rule 42(1)(a). As stated by Jones AJA in
Colyn
,
[4]
the real issue to be determined is the nature of the error in
question.
16.
An
order is not erroneously granted or sought where the plaintiff was
procedurally entitled to the order.
[5]
There must be a mistake in the proceedings.
[6]
17.
Most of the reported decisions engage with
the requirement whether the plaintiff was procedurally entitled to
the order, or whether
the facts of which the court was unaware relate
to whether the plaintiff was procedurally entitled to the order.
18.
In
some instances, the procedural irregularity or error is clear, such
as where the court grants an order notwithstanding that there
was no
service of summons or the plaintiff had failed to give notice of set
down of the matter.
[7]
In other
instances, it is far less clear whether there was a procedural error
as compared to an error made by the court that relates
to the
substance of the dispute. An example is where the court grants an
order in circumstances where no cause of action is made
out in the
particulars of claim.
19.
The
difficulty in the hard cases is deciding whether the error remains a
procedural error for purposes of a rescission under rule 42(1)(a)
or has become an substantive error, which is the domain of an appeal.
In
Silver
Falcon Trading 335 (Pty) Limited v Nedbank Limited
2012
(3) SA 371
(KZP) the court was alive to the distinction and that a
rescission court cannot sit as a court of appeal on its own judgment
and
cannot review it.
[8]
The
court nonetheless found that an order granted on a simple summons
which lacked averments to sustain a cause of action in the
context of
the
National Credit Act, 2005
was not procedurally sustainable and so
capable of being rescinded under
rule 42(1)(a).
[9]
The court opined
[10]
that an
order may be both appealable and subject to rescission, which was a
position adopted by the applicants’ counsel in
the present
matter.
20.
But what is also apparent from the reported
decisions, although it does not feature prominently, is that the
applicant for rescission
must demonstrate that if the court that had
granted the order in the absence of the applicant had been aware of
the facts that
the applicant contends it was not aware of, the court
would
not
have granted the order. This requirement presupposes that the
applicant for rescission can demonstrate that the court was unaware
of those facts.
21.
In
Nyingwa
v Moolman
1993
(2) SA 508 (Tk) the court held that “
a
judgment has been 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 he had been aware of it, not to grant the
judgment
”.
[11]
22.
To
similar effect, in
Stander
and another v ABSA Bank
1997
(4) 873 (E) the court accepted
[12]
that an order would be erroneously granted where there existed at the
time the order was made facts of which the court was unaware
and
which, if the court had been aware thereof, would have induced the
court not to grant the order sought.
23.
Subsequently
the Supreme Court of Appeal in
Lodhi
,
after referring to both
Nyingwa
and
Stander
,
qualified the type of facts of which the court was unaware that would
be relevant to a rescission under
rule 42(1)(a)
, namely facts that
would demonstrate whether the plaintiff was procedurally entitled to
the order. An order to which a party was
procedurally entitled cannot
be considered to have been granted erroneously by reason of facts of
which the court was unaware at
the time.
[13]
24.
None of the decisions that I have
considered suggest that an order can be rescinded under
rule 42(1)(a)
where the court that granted the order if apprised of the facts would
nonetheless still have granted the order. This would be contrary
to
the test as formulated in
Nyingwa
and
Stander
.
Rule 42(1)(a)
operates where the court was unaware of the facts
relating to the procedural error and so granted an order or judgment
to which
the plaintiffs were not procedurally entitled and that the
court would not have granted had it known of those facts.
25.
For example, in
Silver
Falcon
, a judgment heavily relied upon
by the present applicants, there is no suggestion that should the
court’s attention have
been drawn to the excipiable summons,
and that it nonetheless persisted in granting the order, that that
would remain an order
erroneously granted within the ambit of
rule 42(1)(a).
The election suggested in
Silver
Falcon
between a defendant appealing an
order or seeking a rescission under
rule 42(1)(a)
does not extend to
where the court would have granted the order anyway if it had been
apprised of the plaintiff’s contention
that the simple summons
was excipiable.
26.
In
Van der
Merwe v FirstRand Bank Limited t/a WesBank and Barloworld Equipment
Finance
2001 (1) SA 480
(ECG) the court
rescinded an order that had been granted under
rule 42(1)(a)
in the
absence of the defendant on the basis that the offer of settlement by
the defendant upon which the order was granted
had been signed
by the defendant’s attorney who was not authorised in writing
to do so, contrary to
rule 34(1).
27.
The
court had not been aware at the time of granting the order that there
had been non-compliance with
rule 34(1)
and had it known, it would
not have granted the order.
[14]
It was the court not having awareness of the fact that the
defendant’s attorney was not authorised in writing to sign the
offer of settlement and that had the court known of that fact, that
enabled the court to grant rescission under
rule 42(1)(a).
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28.
National
Pride Trading 452 v Media 24
2010
(6) SA 587 (ECP) is to similar effect. An order was granted
against a respondent in motion proceedings when the respondent
did
not appear in court. The notice of set down had not been served on
the respondent, and the respondent was unaware the matter
was in
court. The court found
[15]
that as the court that granted the order was unaware that the notice
of set down had not been served on the respondent and that
as the
court would not have granted the order had it known of that fact, the
order was to be rescinded in terms of
rule 42(1)(a).
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29.
The
Supreme Court of Appeal in
Rossiter
& Others v Nedbank Ltd
[2015] SCA 196 (1 December 2015),
[16]
after affirming that
“
[g]enerally
a judgment is erroneously granted if there existed at the time of its
issue a fact which the court was unaware of, which
would have
precluded the granting of the judgment and which would have induced
the court, if aware of it, not to grant the judgment
”
,
found that had the Registrar, which granted the default judgment,
been aware of the procedural defect in the
rule 31(5)(a)
notice,
there was “
no
doubt”
that default judgment would not have been granted. The unawareness of
the Registrar of the defect and that had the Registrar known
of the
defect he or she would not have granted the default judgment is what
rendered the default judgment capable of rescission
under
rule
42(1)(a).
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30.
I accordingly would add to the principles
applicable to
rule 42(1)(a)
extracted by Dodson J in
Kgomo
,
as listed earlier:
30.1.
the procedural error or irregularity must
have arisen because of facts of which the court that granted the
judgment or order was
unaware; and
30.2.
had the court been aware of those facts, it
would not have granted the judgment or order.
31.
It is probably because these two
principles, especially the latter, are largely self-evident that they
do not feature prominently
in the reported decisions, and are usually
taken as a given. If the court would have granted the order even if
it had knowledge
of the facts that the applicant contends
demonstrates that the plaintiff was not procedurally entitled to the
order, then to rescind
that order would transgress on what is the
domain of an appeal and not of a rescission. If the court that
granted the order would
have granted the order notwithstanding
knowledge of the contended for facts, it follows that the court
disagreed that the plaintiff
was not procedurally entitled to the
order, and so the subsequent court hearing the rescission application
cannot sit on appeal
of its own judgment and find that the court that
granted the judgment erred.
32.
Accordingly, the applicants must satisfy
the court that there are facts that (i) were unknown to the court at
the time order was
made, (ii) by reason of which the first respondent
as plaintiff was not procedurally entitled to the order, (iii) and if
known
to the court at the time the order was made would have resulted
in the court not granting the order.
A consideration of the
common cause facts
33.
A more detailed consideration can now be
given to the common cause facts or at least such facts as cannot be
seriously disputed
on the affidavits.
34.
The applicants as defendants filed three
affidavits in these rescission proceedings and so had multiple
opportunities to explain
their position. The importance of
considering the applicants’ asserted
bona
fide
defence, notwithstanding that
rescission is sought under
rule 42(1)(a)
, impacts upon whether in the
present instance the applicants can demonstrate the requirements for
rescission under
rule 42(1)(a)
, particularly as to the court’s
knowledge, or lack thereof, of the contended for facts relating to
whether the first respondent
was procedurally entitled to the order
and whether those facts if known to the court would have resulted in
the court not granting
the judgment.
35.
The action instituted by the first
respondent’s mother on his behalf, in January 2013 culminated
in an order by agreement
in favour of the first respondent during
February 2017 for
inter alia
a capital amount of R963,309.00. The applicants were the first
respondent’s attorneys of record. The order provided that
the
Road Accident Fund was to pay the capital amount into the applicants’
trust account held at First National Bank.
36.
During September 2017 the Road Accident
Fund paid the capital amount of R963,309.00 into the applicants’
trust account.
37.
The order also recorded that “
the
Plaintiff and the instructing attorney confirmed that there is no
contingency fee agreement, and any costs to be recovered between
them
will be in terms of an attorney / client agreement
”.
Nonetheless the applicants relied upon a contingency fee agreement,
and deducted R240,827.00, leaving the balance of R722
482.00, which
is the subject matter of the present action proceedings.
38.
After being challenged by the first
respondent in the answering affidavit in the present proceedings on
the deduction of the contingency
fee, the applicants in their
replying affidavit conceded that the recordal in the court order was
incorrect, as there is an contingency
fee agreement in place. The
applicants’ attempt to distance themselves from this incorrect
recordal, explaining that the
Road Accident Fund’s attorney’
had prepared the draft order that would be made an order of court.
But no explanation
is given why the applicants as the then attorneys
for the first respondent as plaintiff agreed to a draft order that
contained
a material error. I am not required to make any finding in
this regard.
39.
According to the applicants, on 27 October
2017 and at their offices the first respondent, represented by both
his father and
mother, orally agreed that the funds which had been
received from the Road Accident Fund “
ought
to be paid into a trust account for the benefit of the first
respondent until the first respondent attains the age of majority
”.
40.
The applicants contend that pursuant to
this oral agreement and acting in the best interests of the first
respondent as a minor,
they on 27 October 2017 paid the balance of
R722,842.00 “
into the bank account
of Absa segregated client’s’ monies trust account
”.
There is a dispute as to whether this was agreed, but I proceed on
the applicants’ version.
41.
It is unclear as to what the applicants
contend is their version of how they handled these monies, and on
what was purportedly orally
agreed. In terms of the order, the monies
were to be paid by the Road Accident Fund into the applicant’s
trust account held
at FirstRand Bank. At best for the applicants, as
can be gleaned from their affidavits, the “
Absa
segregated client’s’ monies trust account
”
may be a separate trust savings or other interest-bearing account
opened by the applicants in terms of section 78(2)(a)
of the
Attorneys Act, 1979, which Act at that stage was still in force. But
as interest earned on that account would be for the
benefit of the
Attorneys Fidelity Fund, and not for the benefit of the first
respondent, that would not be an account to which
the applicants
refer in their averred oral agreement with the first respondent’s
parents. The applicants also expressly disavow
that the trust account
was a trust account as provided for in section 78(2A) of the
Attorneys Act, where the interest earned would
be for the benefit of
the first respondent. But then what do the applicants intend to
convey, on their version, is
a “trust
account for the benefit of the minor”
or a “
segregated client’s’
monies trust account”
? The
applicants cannot expect the court to afford them an opportunity to
proceed to trial to explain what is clearly within their
personal
knowledge. The applicants have had three opportunities to explain
their version of what had been agreed in relation to
the monies
received from the Road Accident Fund.
42.
But what is clear is that the monies could
not have been paid into the bank account of the trust that was
subsequently registered
by the applicants, ostensibly on behalf of
the first respondent, as that trust would only be formed and
registered many months
later on 31 May 2018.
43.
The first respondent’s biological
mother passed away on 26 November 2017. Although there is some
dispute as to when the
applicants became aware of this, I accept for
present purposes the applicants’ version, in their favour, that
they only came
to learn of this in January 2018.
44.
The
first respondent’s mother had during October 2009 given the
applicants a special power of attorney authorising the applicants
as
attorneys of record in the claim for compensation against the Road
Accident Fund. The applicants rely on this power of attorney
as
justifying their handling of the funds.
The
special power of attorney is poorly drafted. It makes no reference to
the first respondent and
ex
facie
the document appears to relate to a claim by the first respondent’s
mother, rather than on behalf of the first respondent.
But whatever
is to be made of these deficiencies, with the death of the first
respondent’s mother, the applicants could no
longer rely on
that power of attorney to justify their handling of the funds.
[17]
45.
On the applicants’ own version that
they became aware of the first respondent’s mother’s
death in January 2018.
They could not thereafter continue to
act as if they had a mandate from the first respondent’s
mother.
46.
It appears that the first respondent’s
father approached the applicants enquiring what had become of the
monies. The first
respondent’s version is that his father was
fobbed off by the applicants. The applicants dispute this, contending
that they
were acting upon instructions of the first respondent’s
parents, including the first respondent’s father, and in the
best interests of the first respondent as a minor. The applicants do
not explain how they could have been acting on behalf of the
first
respondent’s mother in the first respondent’s best
interests once they discovered in January 2018 that the first
respondent had passed away. Nor do the applicants explain how they
could have been acting on the instructions of the first respondent’s
father given the father’s contention that he was being kept in
the dark in relation to the monies.
47.
Nonetheless, this issue need not be
resolved because on the common cause facts the applicants’
mandate was subsequently terminated
by the first respondent and his
father on 26 February 2018.
48.
What transpired is that on 9 February
2018, the first respondent’s present attorneys, who had been
approached by the
first respondent’s father given that he had
become dissatisfied with his interactions with the applicants,
addressed a letter
to the applicants in which demand was made for
payment of the balance of R722,482.00 into their trust account,
failing which summons
would be issued and the matter reported to the
then Law Society.
49.
The applicants’ written response on
15 February 2018 is that to the knowledge of the first respondent’s
father, they
had already paid over the monies to “ABSA Trust”
and so the monies were no longer in their “possession”,
that the first respondent was to address all issues to ABSA Trust and
that they as the first respondent’s attorneys had closed
their
file.
50.
But no trust had yet been formed at this
stage by the applicants. And the basis upon which the applicants had
paid the monies to
“
Absa
segregated client’s monies trust account
”
remained (and still remains) unclear. But whatever the position,
absent the monies having been placed under the control
of trustees of
a duly registered trust (leaving aside whether such a trust had been
formed within the ambit of the applicants’
mandate), the
applicants were duty-bound to have remained in control of the funds,
and have been able to obtain the return of those
monies if required.
51.
On 26 February 2018 the first
respondent’s attorneys addressed a further letter to the
applicants unequivocally
recording that the applicant’s mandate
was terminated, that the first respondent did not wish the applicants
to form any
trust for the benefit of the first respondent and that
the first respondent’s attorneys would attend to do so, and
that any
further action taken by the applicants would be without any
mandate and be unlawful. The first respondent’s attorneys again
demanded payment of the balance.
52.
It does not appear that the applicants
responded to the demand.
53.
Notwithstanding the termination by the
first respondent of the applicant’s mandate, the applicants did
not arrange for the
balance to be paid to the first respondent’s
attorneys. Upon the termination of the mandate, the alleged oral
agreement of
27 October 2017 that the monies were to be paid into a
“trust account” for the benefit of the first respondent
was
no longer of consequence. As the applicants could not have
divested themselves of control of the monies to the trust as the
trust
had not yet been formed, the applicants were duty-bound to
recall the monies from wherever they had transferred the monies and
to pay the monies to the first respondent’s attorneys. The
applicants could not rely on a terminated mandate to retain control
of those monies, or to excuse their failure to recall the monies and
the pay the monies to the first respondent’s attorneys.
54.
Instead the applicants only then, after
their mandate has been terminated, commenced steps to form and
register what they contend
is a trust formed in favour of the first
respondent as beneficiary.
55.
More particularly, the applicants recorded
as follows in their founding affidavit:
“
Pursuant
to the First Respondent’s biological mother’s
instructions I proceeded to register a trust to be known as the
Ramolotja N O Trust. A copy of the deed of trust is annexed
hereto as annexure “MAS7”. I did this because I thought
that this was in the first respondent’s best interests and
because the experts had advised that this should be done. I also
gained the impression that Mr Buthelezi [the first respondent’s
father] wanted to have access to the first respondent’s
funds.
I was fully aware that Mr Buthelezi and the mother did not live
together as husband and wife.
”
56.
The trust deed in relation to this trust
was only signed on 12 March 2018. ABSA Trust would only consent
to administering the
trust on 25 April 2018 And the trust would only
be registered by the Master and letters of authority issued on 31 May
2018.
57.
All this is
after
the applicants had recorded on 15 February 2018 that they had
closed their file and after the first respondent’s attorneys
on
26 February 2018 had unequivocally recorded that the applicants had
no mandate to deal any further with the first respondent’s
affairs, including in relation to the funds. The applicants
disregarded this, taking proactive steps to form and register the
trust. The trust deed prepared by the applicants and signed on 12
March 2018 describe the applicants, as founders of the trust,
as
acting in their capacity as “legal advisor” of the first
respondent. This is incorrect as the applicants’
mandate had to
their knowledge already been terminated on 26 February 2018. Yet the
applicants relied on this document to obtain
registration of the
trust by the Master on 31 May 2018.
58.
There accordingly is considerable merit in
the contentions by the first respondent that the trust was
deliberately formed by the
applicants so as to constitute some or
other basis for justifying the applicants’ continued failure to
make available the
funds for the benefit of the first respondent.
But this need not be decided. What is clear from the common
cause facts is
that the applicants proceeded to form and register a
trust knowing that their mandate had been terminated. No
sustainable
explanation is advanced by the applicants why they did
not recall the funds from whomever they had transferred the monies in
October
2017 once their mandate was terminated in February 2018, and
then pay those monies to the first respondent’s new attorneys.
Had they done so, that probably would have been the end of the
matter, especially as the applicants had already recorded on 15
February 2018 that they had “closed their file”.
59.
The applicants’ explanation that they
thought they were acting in the best interests of the first
respondent or that experts
had advised them to act as they did or
that they wanted to avoid the first respondent’s father laying
his hands on the money
does not pass muster. Nothing of the kind is
said by the applicants of this in their response on 15 February 2019
to the first
respondent’s attorneys demand of 9 February 2019,
or in any other correspondence. And with the termination of their
mandate
on 26 February 2019, it was no longer open for the applicants
to continue to administer the funds, whatever the experts had advised
them. The first respondent’s attorneys letter of 26 February
2019 also makes it clear that the monies would not be handed
over to
the first respondent’s father but would be administered in a
trust to be formed by the first respondent’s attorneys,
acting
within their mandate. It appears from the applicant’
explanation that the applicants simply took it upon themselves,
without any mandate, to decide what was best for the first respondent
and what to do with the funds, namely to form and register
a trust
and arrange for the funds to be paid to that trust.
60.
The first respondent as plaintiff attended
to serve summons upon the applicants as defendants on 5 April
2018, seeking payment
of the monies. That this summons was already
served upon the applicants on 5 April 2018 further seriously calls
into question the
applicants’ conduct in persisting with
attending to the registration of the trust, bearing in mind that ABSA
Trust only consented
on 25 April 2018 to administer the trust
still to be formed and that the trust was only registered on 31 May
2018.
61.
The applicants in a supplementary affidavit
in the rescission proceedings attached a letter from ABSA Trust
confirming that on 19 June
2018 ABSA Trust received an amount of
R739,435.73 into the trust’s bank account. The applicants in
their supplementary affidavit
assert that the date of receipt must be
wrong, presumably as they contend that they had already paid the
monies over to ABSA in
October 2017. But as the trust was only formed
on 31 May 2018, it makes sense that ABSA Trust would only have
received payment
on behalf of the Trust after that. This further
calls into question the applicants’ version that it had already
paid the
monies across to ABSA Trust in October 2017 and that it no
longer had control thereof.
62.
Against these common cause facts, the
defence advanced by the applicants in their rescission papers has no
prospects of success.
That defence is that that the monies were paid
by the applicants to ABSA Trust during October 2017 with the consent
of the first
respondent’s parents, and that the applicants no
longer were in possession of the funds. Even if the consent of the
first
respondent’s parents as at October 2017 is assumed in
favour of the applicants, the trust was only formed on 31 May 2018
and the monies only paid to ABSA Trust to held by that trust on 19
June 2018. By then, the applicant’s mandate has been
terminated.
Upon termination of their mandate in February 2018, the
applicants were duty-bound to obtain the return of the funds and
transfer
same to the first respondent’s new attorneys. But the
applicants did not do so, and even after service of summons they
persisted
in forming and registering the trust and refusing to pay
the funds.
63.
From at least 26 February 2018 the
applicants had no mandate to attend to the affairs of the first
respondent, including in the
formation of any trust. As the trust had
been formed and had received the monies when the applicants had no
longer had a mandate
to either form the trust or arrange for
the monies to be paid to the trust, it was of no concern to the first
respondent
what the applicants may have done with the funds. The
applicants remained obligated to pay to the first respondent’s
attorneys
the balance, regardless of where the applicants may have
transferred those monies after receiving the funds from the Road
Accident
Fund. It would be for the applicants to seek to recover
those monies from wherever they may have paid those monies, and that
the
applicants were no longer “in possession” of the
funds cannot constitute a defence.
64.
It is therefore not surprising that the
applicants’ counsel in argument did not rely on the applicants’
having made
out a
bona fide
defence
that would have been necessary for the applicants to have
demonstrated good cause for rescission and instead focussed only
on a
rescission in terms of the rule 42(1)(a). But in doing so the
applicants cannot not insulate themselves from the common cause
facts
on the affidavits and which, as will appear below, remain relevant in
determining whether the applicants had established
grounds for
rescission within the ambit of rule 42(1)(a).
Application of the
requirements of rule 42(1)(a) to the common cause facts
65.
Pleadings having closed and a pre-trial
conference having been held on 18 March 2019, on 3 July 2019 the
first respondent’s
attorneys served a bundle of documents in
the action proceedings, which included a notice of set down of the
trial for 14 August
2019. As the notice of set down was part of
the bundle of documents consisting of some 130 pages, the
applicants explain that
although they acknowledged receipt of the
bundle, they did not realise that the notice of set down was included
amongst those documents.
Consequently, the applicants did not appear
at trial on 14 August 2019.
66.
On 27 August 2019, Siwendu J granted
the following order:
“
1.
That the Defendants in their capacity as founders of the Trust
terminate the Trust referred to as O.N.
RAMOLOTJA TRUST that was
opened with no mandate and justification.
2.
The payment within 7 (seven) days from the date of judgment the
capital amount of R722 482.00
(Seven hundred and twenty two
thousand and four hundred and eighty two rand rand) plus interest @
10% per annum with effect from
September 2017 from the First and
Second Defendants who are jointly and severally liable.
3.
To pay an amount of R722 482.00 (Seven hundred and twenty two
thousand and four hundred and
eighty two rand rand) at a rate of 10%
per annum with effect from September 2017 to date of final payment be
made into the Plaintiff’s
Attorneys Trust Account with the
following details:
ACCOUNT
NAME: MUKWANI T ATTORNEYS TRUST ACCOUNT
BANK
NAME: STANDARD BANK OF SOUTH AFRICA
BRANCH
CODE: 002305
TYPE
OF ACCOUNT: BUSINESS CURRENT ACCOUNT
BANK
ACCOUNT NUMBER: 001[…]
BRANCH
NAME: CARLTON CENTER
3.1
The monies shall be kept in an interest bearing account in terms of
Section 86
of the
Legal Practice Act of 2014
pending a creation of a
Trust.
3.2
The reasonable costs of the creation of the said Trust referred to
paragraph 3.1 shall be deducted from the
capital amount of
R722 482.00 (Seven hundred and twenty two thousand and four
hundred and eighty two rand rand).
4.
A Trust shall be established (which Trust Deed is attached hereto as
“Annexure C” to
this court order) in terms of the Trust
Property Control Act 57 of 1988 (within 3 months of this order) and
be administered on
behalf of the Plaintiff O[…] N[…]
R[…] to administer the nett proceeds received from the
Defendants which
shall be paid over to a special Trust to be created
with the following provisions:
4.1
The plaintiff shall be the sole beneficiary thereof.
4.2
The Trustees shall include the biological father of the Plaintiff
S[…] N[…] B[…] who
shall recommend one
professional Trustee to act as a co-Trustee together with him.
4.3
The Trust will administer the funds in a manner which will best taken
into account the interests of the Plaintiff.
4.4. The
Trust deed may not be altered without the consent of the Court.
4.5
Upon the death of the beneficiary, the Trust shall be devolve upon
the Plaintiff’s legal heirs.
5.
The Defendants conduct to be referred to the Gauteng Legal Practice
Council for investigation and
possible disciplinary action to be
taken against them.
6.
Costs of suit at attorney and client scale.
7.
Further and / or alternative relief.
”
67.
For reasons that do not appear from the
papers, the order granted by the court in the absence of the
applicants is dated 27 August
2019 although the trial was
enrolled for 14 August 2019. Neither of the parties raise any issue
in relation thereto. In any event,
it is common cause that the
applicants did not appear on the trial date on 14 August 2019 and
were not before Siwendu J when
the order was made. Although the
first respondent contests the applicants’ explanation as to why
they were not in wilful
default in failing to appear at trial, as the
applicants are not persisting in seeking a rescission for good cause
but are confining
themselves to a rescission in terms of
rule 42(1)(a), no finding need be made as to whether the
applicants were in wilful
default. The order was made in their
absence.
68.
It emerged during argument that the order
was not made in open court but in chambers. The first respondent
asserts on various occasions
in his answering affidavit that
Siwendu J “
judicially
scrutinised
” the matter and that
they received the order on 27 August 2019. The first
respondent’s attorneys filed a
confirmatory affidavit, stating
that the matter was decided on the pleadings before the Judge.
69.
It is not clear from the papers as to
precisely what Siwendu J took into account before granting the
order on 27 August
2019 but it does not appear that any evidence
was formally led.
70.
As the matter had progressed to trial
stage, it must be accepted that at the very least the pleadings were
before the court, as
stated by first respondent’s attorneys,
which would include the particulars of claim and the applicants’
plea. The
applicants assert that the plea was not before Siwendu J
because it was not included in the trial bundle that was served upon
them in July 2019. But that the plea does not appear in the trial
bundle does not mean that it was not part of the court file.
The
applicants, or their present attorneys, do not assert personal
knowledge that this was so. As the plea was theirs, they would
have
ensured that it had been filed. The likelihood that Siwendu J, having
had time to consider the matter from 14 August 2019
to 27 August
2019, would have overlooked the plea is remote and there is nothing
on the papers to suggest that that had occurred.
71.
The applicants also complain that their
affidavit resisting summary judgment also was not placed before the
court. Again, they could
not have personal knowledge thereof. The
applicants say that their affidavit resisting summary judgment was
not before the court
because it was not part of the trial bundle that
had been served upon them during July 2019. But this is incorrect as
the bundle
does contain the affidavit resisting summary judgment, as
appears from the index to that bundle.
72.
Notwithstanding the importance of these
documents according to the applicants, they were not included as part
of the rescission
papers or in the court file that was made available
to me in these rescission proceedings.
73.
But, as will appear below, even if the
applicants are correct and those documents were not before
Siwendu J, given the nature
of the procedural errors relied upon by
the applicants those documents would not have made a difference.
74.
The reasons advanced by the applicants why
the first respondent was not procedurally entitled to the order on 27
August 2019 are
twofold.
75.
The first reason is that Siwendu J granted
relief that went beyond that which is provided for in the particulars
of claim.
76.
The second reason is that the court granted
judgment that directly affected ABSA Trust without ABSA Trust
having been joined
as a party to the action.
77.
The first respondent as plaintiff in the
action in his particulars of claim claimed payment of the sum of
R722,482.00, interest,
costs of suit and further and/or alternative
relief.
78.
The relief granted by the court does go
beyond that which was claimed in the particulars of claim. In
particular, the applicants
contend that paragraphs 1, 4 and 6 of
the order of 27 August 2017 go beyond that which was claimed. This is
clearly so when
the relief granted is compared with that which was
sought in the particulars of claim.
79.
The court is not confined in granting
relief to the four corners of what is claimed. But at the same time
the court is not free
to grant whatever relief it sees fit,
particularly in the absence of a party.
80.
Recently the Supreme Court of Appeal in
Freedom Stationery (Pty) Limited v
Hassam
2019 (4) SA 459
(SCA) considered
in the context of a rescission in terms of rule 42(1)(a) whether a
party had obtained an order that it was procedurally
entitled to in
the absence of an affected party where the relief that was granted
had gone beyond that which was sought in the
papers. The court
accepted that the relief granted that went beyond that which was
sought in the papers may, but not necessarily
would, constitute an
error falling within the ambit of rule 42(1)(a). What the court had
to deal with was whether on the facts
of that matter the particular
relief that had been granted, although beyond that which was sought
in the papers, was nonetheless
relief that the court was competent to
grant and therefore could not constitute an error for purposes of
rule 42(1)(a).
81.
Van der Merwe JA found as follows in
paragraph 25:
“
As
I have said, when an affected party invokes rule 42(1)(a), the
question is whether the party that obtained the order was
procedurally
entitled thereto. If so, the order cannot be said to
have been erroneously granted in the absence of the affected party.
An applicant
or plaintiff would be procedurally entitled to an order
where all affected parties were adequately notified of the relief
that
may be granted in their absence. The relief need not necessarily
be expressly stated. In my view, it suffices that the relief granted
can be anticipated in the light of the nature of the proceedings, the
relevant disputed issues and the facts of the matter. In
this regard
it would be useful to enquire whether the relief could have been
granted without amendment of the process in question.
”
82.
In my view the relief in paragraphs 4
and 6 is relief that may be reasonably anticipated in light of the
nature of the proceedings,
the relevant disputed issues and the facts
of the present matter.
83.
In
this Division at least, since the decision of Fisher AJ, as she then
was, in
Dube N.O.
v Road Accident Fund
2014
(1) SA 577
(GSJ), it should be reasonably anticipated that a court
may grant relief requiring such funds to be paid as compensation for
the
benefit of an minor child to be administered by a trust, and
stipulating for the basis upon which that trust is to be established.
The approach in
Dube N.O.
is sensible. Litigants in the position of the parties in a
matter such as this should reasonably anticipate that a court
would
be reticent to grant an order where the monies that are to be for the
benefit of a minor are not safeguarded in some fashion,
and that the
court would take steps in framing its order to safeguard the
interests of the minor child. As Fisher AJ said in
Dube
N.O
,
[18]
it is common for courts, on application and
mero
motu
,
to order that moneys payable to minor children be administered by
persons other than their guardians.
84.
A further reason why such relief is not
objectionable at the instance of the applicants is that they have no
concern in such relief
requiring the establishment of a trust which
would ultimately administer the funds on behalf of the minor child.
The operative
portion of the order insofar as it affects the
applicants is paragraphs 2 and 3, which require the applicants to
make payment of
the capital sum plus interest into the trust account
of the first respondent’s attorneys. Once the applicants have
done so,
they have discharged their payment obligation. It is for the
first respondent’s attorneys to then comply with the court
order
in relation to the establishment of the trust and the payment
of the monies into that trust once established.
85.
This relief granted by Siwendu J also puts
paid to the applicants’ assertions that they are concerned that
the first respondent’s
father was attempting to lay his hands
on the funds. The applicants assert as the concluding
motivation for the rescission
that “
[i]t
is important that this Honourable Court investigate the whole matter
and determine exactly what [the first respondent’s
father]
wishes to do with the First Respondent’s money”
.
But the applicants not only ignore that paragraph 4 of the order of
Siwendu J specifically addresses this concern by requiring
the monies
be administered by a court-approved trust, but challenge that very
relief as being granted procedurally in error.
86.
As the issue of costs is in the discretion
of a court, a litigant should reasonably anticipate that the court
may grant those costs
on a scale other than as sought in the
initiating court process, as Siwendu J did in paragraph 6 of the
order.
87.
On the other hand, in my view, paragraph 1
of the order does not constitute relief that the applicants could
reasonably have anticipated
or which the court could have granted
without an amendment of the application. I therefore accept, in the
applicants’ favour,
that the first respondent was not
procedurally entitled to that relief. But that is not the end of the
matter. In addition,
the applicants must establish that had
Siwendu J been aware of certain facts relevant to that procedural
error, she would not have
granted such relief. If Siwendu J
would have granted the order notwithstanding knowledge of the
relevant facts, then such
error as may have been made would not be
capable of rescission but should be the subject of an appeal.
88.
The applicants are not clear in their
affidavits in particularising precisely what facts Siwendu J should
have been aware of that
if she had been aware thereof she would not
have made the order that she did. As already stated, the applicants
complain that their
plea and affidavit resisting summary judgment was
not before Siwendu J and had those documents been before her, she
would have
acted differently. But even accepting this to be correct,
in respect of which there is doubt, what is contained in those
documents
would not be relevant to the applicants’ complaint
that the court went beyond the relief that was claimed in the
particulars
of claim. Whilst what may be contained in the plea and
affidavit resisting summary judgment may be relevant to what
substantive
defence the applicants may have been contending for, the
issue is not whether the applicants had a substantive defence but
whether
the court went beyond the particulars of claim in granting
the order. The applicant’s complaints originate from the
order, and the applicants could hardly have foreshadowed in their
affidavit resisting summary judgment and their plea that the
court
would go beyond what was claimed in the particulars of claim. If the
applicants had so foreshadowed, then they could not
in the same
breath contend that such relief as was granted was not anticipated,
which, as appears above from
Freedom
Stationery
, was a necessary requirement
for there to be a procedural error in the first place.
89.
In my view, apart from the applicants
failing to establish as a fact that Siwendu J was unaware of their
plea and affidavit resisting
summary judgment or its contents, that
fact is not relevant to whether the first respondent was procedurally
entitled to the relief
in paragraph 1 of the order.
90.
In the absence of the applicants otherwise
identifying the facts that they contend that Siwendu J was unaware
of, but which if known
to her would have resulted in her not granting
the relief, I am left to assume that what the applicants are
contending for is that
Siwendu J was unaware as a fact that she was
going beyond what was claimed in the particulars of claim when
granting the order.
91.
It was for the applicants to adduce facts
from which this court is to be satisfied that the requirements for
rescission under rule
42(1)(a) can be granted. The applicants were
content that these rescission proceedings be decided on the
affidavits before the
court, and did not seek any referral to oral
evidence. And from the facts that have been placed before this court,
in my view,
Siwendu J could not have been unaware that the relief she
was about to and did grant on 27 August 2019 went beyond the
particulars
of claim:
91.1.
Siwendu J had before her the
particulars of claim, which set out the relief that the first
respondent as plaintiff was claiming;
91.2.
the matter had been allocated to Siwendu J
for trial on 14 August 2019. It was not the situation of a busy
court perhaps
not having had the opportunity to closely consider the
particulars of claim and other papers before it, such as might have
been
the case in a busy unopposed motion court in this Division;
91.3.
the first respondent assert, with a
confirmatory affidavit from his attorneys, that the court did
scrutinise the documents, consequent
upon the first respondent’s
legal representatives attending upon Siwendu J in chambers on
14 August 2019;
91.4.
Siwendu J did not immediately grant
the order on 14 August 2019 but only on 27 August 2019,
indicative of a consideration
of and reflection upon the documents;
91.5.
Siwendu J did not only grant the relief in
paragraph 1, but also the punitive costs order in paragraph 6
and the direction
in paragraph 5 that the matter be
investigated by the Gauteng Legal Practice Council. This too is
indicative of consideration of
the papers. Siwendu J would hardly
have made such orders without considering the papers before her, and
realising that the relief
granted went beyond the particulars of
claim.
92.
In
the unreported decision of this division in
FirstRand
Bank v Winter
,
[19]
the court had issued a rule
nisi
and an order directing the manner in which personal service of
summons in foreclosure proceedings was to be effected upon the
defendant. The plaintiff bank did not comply with the directed form
of service and did not attend to effect personal service. On
the
return date in the ordinary motion court, the court nonetheless
granted a foreclosure order in the absence of the defendant.
The
defendant sought rescission of the order in terms of rule
42(1)(a) on the basis that the order had been granted in
circumstances
where the court was unaware that personal service of
the rule
nisi
had
not been effected as had been ordered by the court previously. Lamont
J, who heard the rescission application, found that the
court that
granted the judgment had before it the documents, including the order
directing the form of service and the documents
evidencing that
personal service had not taken place. Lamont J therefore held that as
the court had granted judgment, the court
must have been aware that
personal service had not been effected and nonetheless in its
discretion condoned that deficient service.
Although there was no
direct evidence of what the court had before it and what its state of
knowledge was, Lamont J held that “
t]hese
facts must have been known and present to the mind of the judge at
the time the judge made the order she did”
.
[20]
93.
A fortiori
in
the present instance, where Siwendu J having been allocated the
matter on trial on 14 August 2019 and handing down the order
some two
weeks later on 27 August 2019 had sufficient time to consider the
papers before her.
94.
Based upon the material placed by the
applicants before the court and after considering all the affidavits
delivered in these rescission
proceedings, I am unable to find that
the applicants have demonstrated that (i) Siwendu J was unaware of
the fact that she was
granting relief beyond that claimed in the
particulars of claim; and (ii) that if she had been so aware, that
she would have not
granted the relief. Rather I find, as Lamont J did
in
Winter
,
that Siwendu J must have known and had present in her mind at the
time she made the order she did that the relief that she granted
went
beyond that claimed in the particulars of claim.
95.
As the argument for the applicants
progressed, the applicants’ complaint became directed at the
court not being competent
as a matter of law to have granted the
relief that went beyond that sought in the particulars of claim,
whatever the state of knowledge
of the court of the facts at the
time. It may be that in relation to paragraph 1 of the order, the
relief went beyond that which
a court was competent to grant based
upon the particulars of claim. But on the facts in the present matter
that is not the sort
of error or mistake that would sustain a
rescission under rule 42(1)(a) but would rather be the domain of
an appeal. For this
court to find that such error as may have been
made by Siwendu J in granting that relief on 27 August 2019 is
the sort of
error envisaged by rule 42(1)(a) is to transgress
upon the distinction between a rescission and an appeal, and would
effectively
result in this court sitting on appeal in relation to its
own decision.
96.
A similar analysis is applicable in
relation to the applicants’ second reason why Siwendu J
procedurally erred, namely that
the court could not have granted the
judgment without ABSA Trust having been joined as a party. From the
facts as they appear in
the affidavits, the applicants have not
established that Siwendu J would have acted any differently had this
ground of complaint
been drawn to her attention before she granted
the relief in paragraph 1 of the order. This is reinforced by the
fact that prayer 1
is not directed at ABSA Trust, who would
not be bound by the order. ABSA Trust have not entered the fray,
although it could
have done so had it believed that it was a party
affected by the order. Rule 42(1)(a) expressly permits “
any
party affected”
to apply for the
rescission or variation of the order.
97.
The obligation in paragraph 1 is imposed
upon the applicants as the founders of the trust created at their
instance, who are parties
to the action. As to whether it was
competent of the court to require of the applicants to do that which
is provided for in paragraph 1
of the order is a different issue
and forms the basis of the applicants’ first complaint, which I
have already addressed.
98.
In the circumstances, I find that the
applicants have not established that the order of 27 August 2019 is
to be rescinded under
rule 42(1)(a).
The nature of and the
exercise of the court’s discretion under rule 42(1)(a)
99.
To the extent that I am wrong in finding
that the applicants have not established the requirements for
rescission under rule 42(1)(a),
I in any event in the exercise of my
discretion would refuse the rescission, at least insofar as
paragraphs other than paragraph
1 of the order are concerned.
100.
The
applicant for rescission is not required to show, over and above
the error, that there is good cause for the rescission.
Typically,
the Supreme Court of Appeal in
Lodhi
,
[21]
is cited as authority for this principle, along with the decisions of
the High Courts in
Topol
and others v LS Group Management Services (Pty) Limited
1988 (1) SA 639 (W),
[22]
Bakoven
Ltd v G J Howes (Pty) Ltd
1992 (2) SA 466 (E)
[23]
and
Mutebwa
v Mutebwa
2001
(2) SA 293 (TkH).
[24]
101.
In
Mutebwa
the court went so far as to find
[25]
that notwithstanding the use of “may” in rule 42(1), the
court’s discretion to grant a rescission in terms of
the
subrule is narrowly circumscribed, meaning that “
[t]he
Rule should, therefore, be construed to mean that once it is
established that the judgment was erroneously granted in the
absence
of a party affected thereby, a rescission of the judgment should be
granted”
.
102.
The applicants relied heavily upon
Bakoven
and
Mutebwa
to argue that once it is established that the judgment was
erroneously sought or erroneously granted, that the court must then
rescind and that the court has no discretion to find otherwise.
103.
Rule 42(1) by its express wording confers a
discretion on the court. I do not read these decisions as going so
far to hold that
the absence of a
bona
fide
defence on the merits is
irrelevant to the exercise of the court’s discretion under rule
42(1)(a). Rather I read these decisions
as authority for the
proposition that a rescission can be granted in terms of rule
42(1)(a) if the requirements of the subrule
have been satisfied and
that it is not required of the applicant for rescission
in
addition
to demonstrate good cause,
which includes a bona fide defence. In none of the decisions that I
have considered did the court find
that it was obliged to grant a
rescission under rule 42(1)(a) where the requirements of the subrule
had been satisfied yet it was
plain there was no
bona
fide
defence.
104.
In my view the court retains a discretion
to refuse a rescission in terms of rule 42(1)(a) where although there
is a cognisable
error for purposes of the subrule, it is clear on the
papers before the court that on the merits the defendant has no
defence.
105.
Ordinarily, the rescission court may not be
in a position to assess whether the defendant had a defence and
therefore would not
take the defence into account in the exercise of
its discretion under rule 42(1)(a). For example, as is often the
case where
orders have been granted in the absence of the defendant,
the defendant has failed to deliver a notice of intention to defend
or
a plea and so the court is unaware of the defence on the merits.
106.
But in the present instance the applicants
in their three affidavits filed during the course of these rescission
proceedings advanced
what they contended is their defence on the
merits. This court cannot disregard what is set out in those
affidavits where it is
plain from the common cause facts that emerge
from those affidavits that the applicants have no
bona
fide
defence to the first respondent’s
claim for payment. The present instance is distinguishable from the
judgments relied upon
by the applicants that hold that once an error
is established, the court without more should proceed to grant the
rescission. In
none of those matters, insofar as I can ascertain, did
the court have before it multiple affidavits in which the applicant
unsuccessfully
sought to advance his or her defence on the merits.
The applicants have engaged the court and the first respondent in
their affidavits,
and in their heads of argument, in asserting a bona
fide defence and cannot complain that the court takes that into
account in
the exercise of its discretion under rule 42(1)(a). It was
only during argument that the applicants retracted from asserting
good
cause as a basis for seeking rescission.
107.
The statement by the Supreme Court of
Appeal in
Lodhi
at the end of paragraph 27 – “
The
existence or non-existence of a defence on the merits is an
irrelevant consideration and, if subsequently disclosed, cannot
transform a validly obtained judgment into an erroneous judgment”
– must be seen in the context of the rest of that paragraph,
and the judgment as a whole. In that matter the defendants sought
to
rescind a judgment on the basis that they had a defence on the merits
and that if the court that granted the judgment in their
absence had
been aware of that defence, it would not have granted the judgment,
and so the judgment was erroneously granted. The
court refused the
rescission.
108.
Paragraph 27 in its entirety reads:
“
[27]
Similarly, in a case where a plaintiff is procedurally entitled to
judgment in the absence of the defendant the judgment if
granted
cannot be said to have been granted erroneously in the light of a
subsequently disclosed defence. A Court which grants
a judgment by
default like the judgments we are presently concerned with, does not
grant the judgment on the basis that the defendant
does not have a
defence: it grants the judgment on the basis that the defendant has
been notified of the plaintiff's claim as required
by the Rules, that
the defendant, not having given notice of an intention to defend, is
not defending the matter and that the plaintiff
is in terms of the
Rules entitled to the order sought. The existence or non-existence of
a defence on the merits is an irrelevant
consideration and, if
subsequently disclosed, cannot transform a validly obtained judgment
into an erroneous judgment.”
109.
The existence of non-existence of a defence
on the merits is irrelevant to a consideration of whether the
plaintiff was procedurally
entitled to the judgment. The paragraph is
not authority for the proposition that the existence or non-existence
of a defence on
the merits is irrelevant in all respects for purposes
of rule 42(1)(a). To the contrary, the paragraph itself limits the
extent
of the proposition to
default
judgments where a defendant with knowledge of the proceedings, fails
to oppose the matter and to advance a defence. Such
a defendant
cannot subsequently seek rescission of the judgment as being
erroneously granted because it then wishes to advance
a defence. This
differs from the present instance where the applicants did defend the
matter, did file a plea and did take the
opportunity in three sets of
affidavits to assert a bona fide defence. Having done so, as stated
above, the court cannot ignore
the failure of the applicants to have
made out a defence in those papers.
110.
It is apparent from the then Appellate
Division in
De Wet and others v
Western Bank Limited
1979 (2) SA 1031
(A) that ultimately a rescission of a default judgment is something
that is within the ambit of the court’s discretionary
power.
Whilst rules have been developed to enable the court to judicially
exercise that discretion, such as the requirements for
good cause in
seeking a rescission of a default judgment under common law or those
provided for in the Uniform Rules in rule 31(2)(b)
or rule 42, the
relief remains discretionary in nature. In my view, a court’s
discretion is not so fettered that it is bound
to grant a rescission
in terms of rule 42(1)(a) even where it is clear that there is no
defence on the merits.
111.
I have already found that there is no
bona
fide
defence to that portion of the
order that requires the applicants to make payment, namely paragraphs
2 and 3. Had I found that
the first respondent as plaintiff had
obtained an order to which he was not procedurally entitled and that
had Siwendu J been aware
of facts that would have resulted in her
deciding differently, in the exercise of my discretion the rescission
would be limited
to paragraph 1 of the order and not in relation
to the remaining relief in the order.
112.
This
exercise of a discretion also manifests itself in the court’s
power to grant partial rescissions. Although there were
conflicting
decisions as to whether a court may grant a partial rescission
where the applicants sought rescission in terms
of rule 31,
Fisher AJ, as she then was, in
Conekt
Business Group (Pty) Limited v Navigator Computer Consultancy CC
2015 (4) SA 103
(GJ) found
[26]
that a court acting under rule 31(2)(b) of the Uniform Rules may
rescind part of a default judgment in order to allow that
part to be
defended provided that the judgment is divisible into discreet
defensible and non-defensible parts.
[27]
113.
Illuminating
is what was stated by Levy J in
SOS
Kinderdorf International v Effie Lentin Architects
1993 (2) SA 481
(Nm) at 491 D I and as cited with approval
by Fischer AJ in
Conekt:
[28]
“
The
rules of court constitute the procedural machinery of the court and
they are intended to expedite the business of the courts.
Consequently they will be interpreted and applied in a spirit which
will facilitate the work of the courts and enables litigants
to
resolve their differences in as speedy and inexpensive a manner as
possible.
…
There
is no reason why this pattern should be deviated from where a
plaintiff has already obtain a default judgment in respect of
more
than one but separate claims, and the defendant shows a defence to
some of plaintiff’s claims, or to a part of the claim,
which is
divisible from the whole. For example, where a plaintiff is granted
default judgment in respect of a payment of a sum
of money as well as
delivery of certain goods, and a defendant can show a bona fide
defence to one or the other, there is no reason
why the plaintiff
should not be entitled to judgment in respect of the claim which the
defendant cannot defend. The essential question
is whether the claim
or claims in respect whereof default judgment has been given is
divisible.
”
114.
There is no reason why the same will not
apply in relation to a rescission in terms of rule 42(1)(a). In my
view, for the court
to exercise its discretion in granting rescission
to parts of an order where there is no defence on the merits would
not facilitate
the work of the courts and would not enable the
litigants to resolve their differences in a speedy and inexpensive
manner. To the
contrary, to rescind parts of an order which are
indefensible would undermine the court process.
115.
In the present instance, the relief granted
by the court in paragraph 1, and for that matter the costs order
in paragraph 6,
is divisible. Should I have found that the
applicants had made out a case for rescission in terms of
rule 42(1)(a), the rescission
would have been limited to the
order in paragraph 1. The balance of the relief would stand,
including that which requires
of the applicants to make payment of
the balance of R722, 482.00 with interest into the first respondent’s
attorneys trust
account.
116.
The application for rescission in Part B of
the notice of motion is accordingly refused, with the applicants to
pay the costs.
______________________
Gilbert
AJ
Date of hearing:
4 August 2020
Date of judgment:
21 August 2020
For the
Applicants:
Advocate C A Da Silva SC
Instructed
by:
Gildenhuys Malatji Inc.
For the First
Respondent:
T Mukwani (Attorney)
Instructed
by:
T Mukwani Attorneys
[1]
Although
there is in law and in fact only one applicant, for purposes of
continuity I will refer to the “applicants”.
[2]
The
applicants erroneously refer in their papers to rule 31(2)(b) as the
alternative basis for their rescission, and so seek to
demonstrate
good cause in the context of that sub-rule.
When
it was pointed out during argument that such rule could not apply as
the applicants as defendants had not been in default
of delivery of
a notice of intention to defend or a plea but had rather failed to
appear on the trial date, the applicants abandoned
reliance on rule
31(2)(b). But a court may nonetheless consider the correct form of
rescission if a proper case has been made
out on the facts and the
other parties are not prejudiced, although specific reference is not
made to that form of rescission
(see
Mutebwa
below, para 12).
[3]
Para
11.
[4]
At
9 A/B
.
[5]
See,
for example,
Lodhi
,
para 17 and 25. See also
Freedom
Stationery (Pty) Limited v Hassam
2019
(4) SA 459
(SCA)
at
para 25.
[6]
Colyn
para
9.
[7]
Lodhi
para
24, referring by way of example to
Fraind
v Nothmann
1991 (3) SA 837 (W).
[8]
Para
4.
[9]
At
para 5, applying
Marais
v Standard Credit Corporation Ltd
2002
(4) SA 892
(W), where this Division found that a summons lacking the
necessary averments to sustain a cause of action under the then
Credit
Agreements Act, 1980 resulted in an order that was capable of
being rescinded under rule 42(1)(a).
[10]
At
para 4.
[11]
At
510G.
[12]
At
880H.
[13]
At
para 25.
[14]
Paragraph
26.
[15]
Paragraph
14.
[16]
Paragraph
16.
[17]
Incorporated
Law Society, Transvaal v Meyer and another
1981
(3) SA 962
(T) at 974D.
[18]
At
para 13.
[19]
Case
number 6150/2011, 24 May 2012, per Lamont J.
[20]
In
that matter, the court also found that there had been no procedural
error as it was within the discretion of the court granting
judgment
to condone deficient service.
[21]
At
para 27.
[22]
At
650I-J.
[23]
At
471G : “
Once
the applicant can point to an error in the proceedings, he is
without further ado entitled to rescission. It is only when
he
cannot rely on an 'error' that he has to fall back on Rule
31(2)(b) (where he was in default of delivery of a notice
of
intention to defend or of a plea) or on the common law (in all other
cases). In both latter instances he must show 'good cause'.
[24]
At
para 16.
[25]
In
para 17, citing
Tshabalala
and Another v Peer
1979
(4) SA 27
(T) where Eloff J said at 30D:
'The
Rule accordingly means - so it was contended - that, if the Court
holds that an order or judgment was erroneously granted
in the
absence of any party affected thereby, it should without further
enquiry rescind or vary the order. I agree that is so,
and I think
that
B
strength
is lent to this view if one considers the Afrikaans text which
simply says that: ''Die Hof het benewens ander magte wat
hy mag hê,
die reg om . . .''.'
[26]
In
para 32 and 33.
[27]
Following
what had been held the Flemming DJP in the decisions of
Silky
Touch International (Pty) Ltd v Small Business Development
Corporation Ltd
[1997] 3 All SA 439
(W) and
Revelas
and another v Tobias
1999 (2) SA 440 (W).
[28]
In
para 28.