Mokotoane and Others v Colt Logostics CC and Another (10040/2020) [2022] ZAGPPHC 169 (17 March 2022)

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[2022] ZAGPPHC 169
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Mokotoane and Others v Colt Logostics CC and Another (10040/2020) [2022] ZAGPPHC 169 (17 March 2022)

HIGH
COURT OF SOUTH AFRICA
(GAUTENG
DIVISION, PRETORIA)
(1)
REPORTABLE:  NO.
(2)
OF INTEREST TO OTHER JUDGES:  NO
(3)
REVISED.
DATE:
17 MARCH 2022
CASE
NO: 10040/2020
In
the matter between:
LETHWELE
LISTER MOKOTOANE
First
Applicant
KINDAH
EVENLYN MATABOGE
Second
Applicant
THEKISO
SAMUEL MATABOGE
Third
Applicant
STEPHEN
WHYTE NANO MATABOGE
Fourth
Applicant
and
COLT
LOGISTICS CC
First
Respondent
THE
SHERIFF: TSHWANE (PRETORIA) EAST
Second
Respondent
J
U D G M E N T
This matter has been heard by
way of a virtual hearing and disposed of in the terms of the
Directives of the Judge President of this
Division.  The
judgment and order are accordingly published and distributed
electronically.
DAVIS, J
[1]
Introduction
On 5 December 2021, the plaintiff
in the main action (Colt Logistics) obtained a default judgment
against the first defendant, being
erstwhile director of M2 Precious
and Base Metals (Pty) Ltd (the principal debtor) as well as three
other defendants, representing
the Nano Mataboge Family Trust as
trustees thereof (the trust).  The judgment was obtained after
the trust was unsuccessful
in uplifting the bar imposed on the
delivery of a plea.  The trust now seeks to have the default
judgment rescinded.
[2]
The nature of the
cause of action
2.1
On 23 December 2019
Colt Logistics and the principal debtor entered into an agreement
with each other which agreement was subsequently
amended, the last
addendum being dated 24 April 2020.
2.2
In terms of the
agreement (as amended) Colt Logistics loaned and advanced some R5,2
million to the principal debtor.
2.3
Colt Logistics’
particulars of claim states that a “default event” had occurred
in respect of the principal debtor’s obligations,
entitling Colt
Logistics to seek payment of the outstanding amount from the
erstwhile director and the trust as “guarantors”.
2.4
Both the principal
debtor and the trust’s interests in respect of the agreements and
the ensuring litigations were in the hands
of the erstwhile director,
who had also instructed the trust’s previous attorneys.  It is
these attorneys who had failed to
deliver a plea in this matter.
2.5
In separate litigation
against the principal debtor, the said director had settled with Colt
Logistics on the basis that liquidation
proceedings would not
continue against the principal debtor and, instead of making
repayment, it would transfer thirteen prospecting
rights for chrome
and platinum and other precious metals (estimated to be some R300
million in value) to Colt Logistics.
2.6
The settlement
agreement is now subsequently under attack (to which aspect I shall
refer more fully hereunder), which caused Colt
Logistics to proceed
against the trust as co-principal debtor and “guarantor”.
2.7
Although Colt Logistics
continues to view the trust as a co-principal debtor, the nature of
its liability was at all relevant times
accessory to the debt of the
actual principal debtor.  Had the principal debtor paid off the
loan or, for example, repaid half
of it, the trust could either no
longer be held liable or only liable for the outstanding half of the
debt.  The trust’s accessory
liability, although jointly and
severally, is therefore of the same nature as that of a surety.
2.8
So far, Colt Logistics’
cause of action.
[3]
Was the judgment
erroneously sought or granted?
3.1
Adv Strauss, who
appeared for Colt Logistics in this application, had also represented
it during the default judgment application.
That application
was proceeded with after Moosa AJ declined to uplift the bar and
allow the trust’s plea to be formally delivered.
Pursuant
hereto and, at the instance of Adv Strauss, Moosa AJ was urged to
disregard the contents of the affidavit in support of
the application
for upliftment, and all arguments based thereon, which she did.
(These facts are not in dispute and was confirmed
by a new attorney
for the trust who was present in court at the time).
3.2
At the time when the
default judgment was sought:
-
The principal debt on
which Colt Logistics had relied on initially, was no longer relied on
as a cause of action against the principal
debtor in winding up
proceedings.  The reason was that the debt has been extinguished
by way of a settlement.
-
However, the settlement
agreement whereby the debt was extinguished has since become the
subject of pending litigation in case no
45837/21 in this court.
This was launched by a prospecting company who is also a creditor of
the principal debtor, Geoprospect
Investment Holdings (Pty) Ltd.
Colt Logistics is a party to that litigation.
-
A separate action had
been instituted by the principal debtor, also in this court, in case
no 60127/21 wherein fraud and a contrivance
is alleged between Colt
Logistics and the erstwhile director.  Colt Logistics is also a
party to that action wherein the loan
agreement is sought to be
declared invalid.
-
The erstwhile director
has been removed as a director of the principal debtor and his
attorneys (which were also the principal debtor’s
attorneys and the
ones who caused a bar to have descended on the trust’s plea) have
been reported to the Legal Practice Council.
-
Objections to the
transfers of prospecting rights (perpetuating the stripping of the
principal debtor’s assets) have been lodged
at the Department of
Mineral Resources and Energy.  Colt Logistics was aware of this.
3.3
Noting that none of the
above issues, which all impact on the nature, validity and extent of
the principal debt, featured in Adv Strauss’
Heads of Argument
furnished to Moosa, AJ, at the time the default judgment was applied
for, I enquired whether any of it was disclosed
to the court at the
time.  Adv Strauss responded, after some thought, that to the
best of his knowledge, it had not.
3.4
In my view, Colt
Logistics’ purely procedural view of its cause of action, namely
simply a loan to a principal debtor, a default
and a claim against
the trust as a surety and in respect of which no plea has been
allowed, is manifestly over-simplistic and inappropriate
in these
circumstances.  The pending litigation attacking the whole
validity of the loan agreement and the possible use thereof
as a
front to asset-stripping might result in the principal debt being
unenforceable or, at best, it becoming an enrichment claim.
I
need not express any view on this as it is certainly a matter for the
hearing of oral evidence.
3.5
To amplify further: in
this matter, there is both an action and an application (wherein
facts have been confirmed on oath) pending,
to which Colt Logistics
is a party.  Colt Logistics, as an applicant seeking default
judgment, was aware that this litigation
may impact on or destroy its
cause of action.  For Adv Strauss to hold the unilateral view
that the allegations in the pending
litigation are “nonsense
allegations” do not, in my view, justify it being simply ignored at
the instance of Colt Logistics.
As least, a court should have
been placed in a position to consider whether,
despite
the pending litigation, it would be justified in granting default
judgment.  Alternatively, if Adv Strauss’ contentions of
a
“nonsense” attack on the settlement hold water, then the
principal debt had been extinguished by the settlement and judgment
against parties in the position of sureties should not have been
sought.
3.6
I am therefore
satisfied that the tests for rescission in terms of both Rule 42 and
the common law, which are trite and need not be
restated, have been
met.  In the exercise of this court’s discretion, I am of the
view that this is clearly a matter which
should have gone on trial,
separately or on conjunction with the action in case no 60127/21.
The matter is further to be distinguished
on the facts from
Colyn
v Tiger Food Industries Ltd t/a Meadow Feed Mislls (Cape)
2003 (6) SA 1
(SCA) to which I had been referred where, without
sufficient explanation, consequential damages pursuant to alleged
defects in feed
was tentatively raised as a factor why it should have
been found that default judgment was erroneously sought and should be
rescinded.
That is a far cry from the present matter.
[4]
Procedural aspects
4.1
A point which Adv
Strauss repeatedly and vehemently argued, was that the trust should
be non-suited because the appropriate relief
would be an appeal.
4.2
Adv Strauss is
bolstered in his argument due to the fact that the trust had indeed
delivered an application for leave to appeal the
default judgment.
This was however, done subsequent to the delivery of the rescission
application and because Colt Logistics
refused to hold over execution
pending the hearing of the rescission application.  The
rescission application was, however prior
in time and the trust is
entitled in the exercise of its Constitutional Rights to have the
disputes raised therein considered by
a court, hence this judgment.
4.3
Moreover, our courts
have already previously indicated that there may be instances where
the grounds (or procedure) for a rescission
application and those for
leave to appeal might overlap.  This is one of those cases.
See
Silver Falcon
Trading 333 (Pty) Ltd and others v Nedbank Ltd
2012 (3) SA 371
(KZP) at paragraph [4] “
It
has been held, in relation to Rule 42(1)(c) that an appeal is no bar
to an application for rescission under that rule and I can
see no
basis why this should not apply equally to Rule 42(1)(a).  It
may be, therefore, that a judgment is both appealable and
subject to
rescission under this rule
”.
4.4
The general proposition
advanced by Adv Strauss that, absent an appeal (for which leave is
necessary) a court, once it has delivered
a judgment, is
functus
officio
and that it
cannot revisit its own order is correct, but that proposition does
not preclude a rescission application of an order
granted in the
absence of a party.  Rule 42(1)(a) provides that a court may,
either on the basis of that rule or the common
law, rescind an order
or judgment despite it being
functus
officio
if, at the
time the order was made, the court was unaware of facts which, if
known to it, would have precluded the granting of the
order.
See
Promedia
Drunkkers & Uitgewers (Edms) Bpk v Kaimowitz and others
1996 (4) SA 411
(CPD) at 416J – 417I.  This judgment also
confirms that a court hearing such a rescission application has a
discretion, to
be exercised judicially and dependent on the facts.
Such a discretion would include the consideration of whether a
rescission
should be granted, despite the fact that subsequently an
application for leave to appeal has (also) been delivered.  In
this
instance the delivery of the second application did not have the
effect of negating the first, particularly not on the facts of this
case.
4.5
I am mindful of the
fact that, if the default judgment is rescinded and the trust be
given leave to pursue its defence, the effect
would be as if the bar
had been lifted.  This consequence would “kick in” despite
the application for such upliftment having
been refused but that is
simply the practical and procedural necessity which is to follow (and
which would follow) despite the previous
proceedings.  It is
simply a corollary of the present application which has been
legitimately brought and which has separately
been considered.
The plea has already been delivered and for practicality and case
management’s sake the Rules as for trials
should henceforth apply
and it shall be so ordered.
[5]
Costs
Ordinarily, costs should follow the event but, having
regard to the nature of the allegations and, to be fair to Colt
Logistics who
might disprove the allegations of fraud and collusion,
thereby keeping the principal debt or liability intact, costs should
be costs
in the cause.
[6]
Order
1.
The judgment granted by
default on 2 December 2021 in this matter is rescinded and set aside.
2.
The second to fourth
defendants’ plea uploaded under item 004:2 in the Caselines index
on 26 May 2021 is formally allowed and the
Rules of this court
pertaining to further exchange of pleadings, discovery and trial,
shall henceforth apply from date of this order.
3.
Costs of this
application shall be costs in the cause.
N
DAVIS
Judge
of the High Court
Gauteng Division, Pretoria
Date
of Hearing: 7 March 2022
Judgment
delivered: 17 March 2022
APPEARANCES:
For
the Applicants:

Adv T Scott
Attorney for the
Applicants:
Mncedisi & Sedumedi Attorney Inc, Johannesburg
c/o Sithole &
Mokomane Attorney,
Pretoria
For
the 1
st
Respondent:

Adv H J Strauss
Attorneys for the
1
st
Respondent:
Shandu Attorneys
c/o Gildenhuys
Malatji Attorneys, Pretoria