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[2010] ZAWCHC 486
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Industrial Development Corporation of South Africa and Another v Tsung and Another (5932/2006) [2010] ZAWCHC 486 (13 October 2010)
IN
THE HIGH COURT OF SOUTH AFRICA
(WESTERN
CAPE HIGH COURT, CAPE TOWN)
CASE
NUMBER
:
5932/2006
DATE
:
13
OCTOBER 2010
In
the matter between:
INDUSTRIAL
DEVELOPMENT CORPORATION
OF
SOUTH AFRICA
…..............................................................................
1
st
Plaintiff
FINDEVCO
(PTY) LIMITED
….............................................................
2
nd
Plaintiff
and
ROBERT
HSU-NAN TSUNG
…...........................................................
1
st
Defendant
ROBERT
CHENG-LI TSUNG
….....................................................
2
nd
Defendant
JUDGMENT
DAVIS,
J
:
I
shall provide more comprehensive reasons if required. But as I have
already indicated in debate with counsel, the application
for the
stay of the trial, based on the application for rescission of a
default judgment, which was granted against the company
(Dynasty
Textiles (Pty) Limited) raises the question whether the defendants in
the present application will be prejudiced if the
default judgment
which was granted, is not rescinded. The basis for this approach, as
I understand it, is firstly that the continued
existence of the
default judgment against Dynasty Textiles (Pty) Limited would
preclude the defendants in the present application
from raising
defences of prescription and other defences of which content at this
stage I am not entirely clear.
The
debate between counsel resulted in a concession being made by the
plaintiffs in this particular case, Mr
Fitzgerald
,
who appears together with Ms
Buikman
,
namely that the plaintiff would not raise the fact that the default
judgment is an answer to any defence that might be pleaded.
This
particular concession was reduced to writing and it is from that
written document that I now read it into the record. The
route that
Mr
Fitzgerald
urged
upon me was that I should not decide the rescission application, but
that this issue should be postponed, pending a hearing
of the
evidence in the present case, namely the case based on section 424 of
the Companies Act of 1973.
Mr
Brusser
,
who appears with Mr
Crowe
,
on behalf of the defendants has urged that if the default judgment
continues to be in existence, his client would be prejudiced
insofar
as the formulation of some defences may be concerned, to which I have
already made reference. An application for stay compels
the Court to
weigh up the possible prejudices to the two parties. This case has
been long in the making. It has taken six years
since the launching
of the present action to come to this point. Understandably,
plaintiffs are anxious to proceed and have already
incurred costs
with regard to witnesses that they wish to have testify in court.
Of
course, plaintiffs are entitled to an expeditious hearing and should
not be subjected to delays which have little or any basis
in law.
That is not to say that the defendants are not without rights in this
case. Indeed, the issues raised by Mr
Brusser
require
careful consideration. If the existence of a default judgment
constitutes an obstacle to a fair defence, then this would
contribute
to clear prejudice which needs to be considered. Given the approach
which I have adopted, it appears to be necessary
to deal with the
unexplained or seemingly unexplained delay (Mr
Brusser
submitted
in argument that the delay was neither unexplained nor unreasonable
and I shall make no decision in relation to that question),
which was
caused by the application for rescission.
That
is better dealt with at a later date, because as Mr
Brusser
correctly
submits, if the defendant proceeds on the basis of the common law
insofar as the rescission is concerned, the requirements,
as set out
by
Miller
,
JA in
Chettv
v Law Society Transvaal
1985(2)
SA 756 at 764, would require a reasonable and acceptable explanation
as to the default and furthermore that applicant, on
the merits, has
a bona
fide
defence,
at best
prima
facie,
but
which carries some prospect of success.
In
my view, whilst the issue of the explanation can be examined and
debated, it would be preferable to have some evidence which
would
allow a Court to assess whether there is some prospect of success
insofar as a
bona
fide
defence
is concerned. For this reason, Mr
Fitzgerald
's
suggestion carries considerable weight. It means that the rescission
application will be postponed, presumably at least until
the end of
the evidence which is to be heard in the main application. That
evidence may well compel a finding in favour of the
defendant; that
is for a later date.
At
this point I should say that disturbing features of the present
justice system in South Africa, are incessant delays. Of course,
parties have rights to bring interlocutory applications and to pursue
their rights, but Courts have to be careful to balance those
rights
against the rights of the other side to have access to justice in
terms of section 34 of the Constitution of the Republic
of South
Africa Act 108 of 1996.
In
this case, the correct balance will be struck as follows. Plaintiffs
will not be allowed, in terms of their concession, to raise
the fact
that default judgment is an answer to any defence that may be
pleaded. To the extent that the defendants wish to reconsider
what
further defences they may wish to plead, since I propose to commence
the trial on Monday, there is ample time for this to
be done. The
rescission application can then be heard at a time which would be
convenient for the parties. In this way, I seek
to protect the
defendants' rights, so that they will be able to ensure that any
defence which can be raised, which would justify
a dismissal of the
action brought against them, could be properly aired and considered.
On the other hand, plaintiffs' desire,
after six years, to have its
case brought before the Court and heard will also be guaranteed.
For
these reasons (which I am prepared to amplify, if necessary), the
application for a stay is refused. The application for rescission
of
the default judgment is postponed to a date to be determined and the
costs in relation to the latter are to stand over. Accordingly
the
costs in relation to the stay application will also stand over for
later are to stand over. Accordingly the costs in relation
to the
stay application will also stand over for later.
DAVIS,
J