Brief Summary

Rescission of Judgment — Application for rescission — Applicants seeking rescission of default judgment granted in favor of Respondents — Applicants contending lack of knowledge of judgment until 23 November 2021 — Respondents arguing that Applicants had prior knowledge — Court finding that actual knowledge of the judgment was obtained on 23 November 2021 — Condonation required for delay in filing application — Applicants failing to provide satisfactory explanation for delay — Application for rescission dismissed.

Comprehensive Summary

Summary of Judgment

Introduction

This was an application for the rescission of a default judgment granted by the High Court (Free State Division, Bloemfontein) on 15 July 2021 in favour of the respondents (as plaintiffs in the action). The applicants also sought condonation to the extent that the rescission application might have been instituted outside the time period contemplated in Uniform Rule 31(2)(b).

The applicants were Johannes Jacobus Erasmus N.O. and Gerhard Albertus van Rhyn N.O. (in their capacities as trustees of the Whitelinen Laundry Trust), together with Johannes Jacobus Erasmus and Gerhard Albertus van Rhyn in their personal capacities. The respondents were Stefanus Johannes Nell van Rensburg N.O., Margaretha Aletta Notley N.O., and Zania Hartman N.O. (in their capacities as trustees of the Louriella Trust).

The rescission application was served on 20 December 2021, was heard on 21 April 2022, and judgment was delivered on 28 April 2022 by De Kock AJ.

The general subject-matter of the dispute concerned whether the applicants had made out a proper case to rescind a default judgment, with a preliminary focus on timeous institution and condonation, and (if necessary) whether the applicants had established a bona fide defence to the respondents’ claim, which arose from a landlord-tenant relationship relating to charges connected to the leased premises (including water and electricity), and issues arising from the sale/transfer of the property to the respondents.

Material Facts

A default judgment was granted against the applicants on 15 July 2021. The applicants’ rescission application was served on the respondents’ attorney on 20 December 2021.

Service of the combined summons and particulars of claim (with annexures) had been effected at a chosen domicilium citandi et executandi, being an address in Bloemfontein. The sheriff’s returns reflected service by affixing a copy to the main entrance of the domicilium address. The papers also reflected that a business, Bond Inx-Hair Salon, was at the domicilium address. It was common cause on the papers that the applicants had vacated the leased premises during or about June 2019, and the applicants contended that no summons had been received by them.

On the applicants’ version, actual awareness of the default judgment arose only on 23 November 2021, when Mr Erasmus (first applicant in a representative capacity and third applicant in a personal capacity) was shown a copy of the judgment by the applicants’ current attorney, Mrs S van Biljon, during a visit to Bloemfontein for another court matter.

There was, however, a prior sequence of events. The applicants alleged that on or about 14 November 2021 Mr Erasmus received a telephone call from Mr Hennie Bergh, who mentioned a “possible judgment” against the applicants. The applicants stated they believed judgment was impossible because no summons had been received. An email from the respondents’ attorneys dated 17 November 2021 was attached, in which the respondents’ attorneys provided, as attachments, copies of the summons, returns of service, and the judgment, and referred to the time period being relevant to condonation in a contemplated rescission application.

The respondents disputed the applicants’ approach to the “knowledge” issue, contending that the applicants did not adequately address when their attorney became aware of the judgment, why the attorney waited until 23 November 2021 to inform them, and why the applicants had not taken steps to verify the information mentioned by Mr Bergh.

On the merits relevant to rescission, the applicants advanced certain defences (while conceding in argument that “numerous” purported defences initially raised were not bona fide). Two defences were persisted with. The first relied on clause 7.9 of the lease agreement, contending that proof of payment was required to support any claim for water and electricity. The second concerned the sale and transfer of the property to the respondents, contending that the lease was not ceded to the respondents, and that the sale agreement did not create a valid cession.

Legal Issues

The central issues before the court were whether the rescission application complied with Uniform Rule 31(2)(b) and, if not, whether condonation should be granted for non-compliance. This required determination of when the applicants acquired knowledge of the default judgment for purposes of the Rule and whether any delay was adequately explained.

If condonation was required, the court had to assess whether the applicants had established, for rescission purposes, a bona fide defence to the respondents’ claim, in the sense of setting out averments which, if established at trial, would entitle them to relief. This entailed the application of established rescission and condonation principles to the facts alleged.

The dispute therefore involved a combination of factual questions (especially regarding the timing and nature of knowledge of the judgment and the explanation for delay), the application of legal standards to those facts (condonation and rescission requirements), and an ultimately evaluative judgment as to whether condonation should be granted in the interests of justice, having regard to explanation, prospects (via the existence of a bona fide defence), and prejudice.

Court’s Reasoning

The court first addressed whether the rescission application was brought timeously under Uniform Rule 31(2)(b), which required identifying the date on which the applicants obtained “knowledge” of the default judgment. The applicants contended that actual knowledge arose only on 23 November 2021, when a copy of the judgment was shown to Mr Erasmus. The respondents argued that knowledge existed earlier (including through Mr Bergh’s communication and documentation indicating judgment had been obtained), and further contended that possession of a copy of the judgment was not required, only knowledge of its existence.

The court accepted from the papers that the summons was not served on the applicants or their attorney in a manner that resulted in their receipt of it, and that the applicants’ belief (upon hearing informal information) that judgment was unlikely because no summons had been received was, in the circumstances, reasonable. While the court recorded that actual possession of a copy of the judgment is not a requirement of Rule 31, it nevertheless found, on the particular facts, that actual knowledge of the judgment was obtained when Mr Erasmus was shown a copy by the applicants’ attorney. The court was not persuaded that there was evidence that the applicants’ attorney had actual knowledge prior to 17 November 2021, and it accepted that the applicants obtained actual knowledge on 23 November 2021.

On that footing, the court held that condonation was required, but limited the condonation enquiry to the period between 17 November 2021 and 23 November 2021. The court regarded the explanation for that interval as poor, noting that the applicants’ attorney chose to inform the applicants when Mr Erasmus visited Bloemfontein for another case, and that no explanation was given why the applicants were not contacted telephonically or why the judgment was not sent by email.

The court then applied the established approach to condonation and rescission, referring to the interests-of-justice framework and the relevance of prospects of success (via the existence of a bona fide defence). It cited authority to the effect that prospects are an important factor, that an excessive delay without explanation may render prospects irrelevant, and that the correct inquiry includes whether the party seeking condonation would succeed in the main action if the facts alleged were established at trial. It also applied the rescission requirement that an applicant must show a bona fide defence, and that it suffices to set out averments constituting a prima facie defence if established at trial.

Turning to the alleged defences, the court held that the first defence (based on clause 7.9 of the lease) was not bona fide. On the court’s reading of the clause, the lessee was responsible to pay water and electricity directly to the relevant authority and to provide proof of payment to the lessor monthly; the clause did not support the proposition that the lessor was required “from the outset” to pay, nor did it impose the proof-of-payment obligation contended for by the applicants in the manner advanced.

As to the second defence (that the lease was not ceded to the respondents upon sale), the court accepted the respondents’ position that the property was sold as a going concern, that the applicants were tenants on transfer, and that the respondents became the landlord by substitution of the previous owner. The court found that the applicants’ contention that the absence of an express cession clause meant the respondents were not the landlord did not constitute a bona fide defence on the papers before it. The court also rejected the applicants’ related contention regarding outstanding municipal amounts and clearance requirements, noting the respondents’ statement that the amounts claimed related to usage after transfer, and finding that this too did not constitute a bona fide defence.

Weighing the factors together, the court considered the weak explanation for the relevant period of delay, the absence of a bona fide defence, and the prejudice that the respondents would suffer if condonation were granted despite the lack of a bona fide defence. On that basis, the court refused condonation. It followed that the rescission application also had to fail.

Finally, on costs, the court held that considerations of law and fairness required the unsuccessful applicants to pay the costs of the application.

Outcome and Relief

The court dismissed the applicants’ application for condonation and, consequentially, dismissed the application for rescission of the default judgment granted on 15 July 2021.

The court ordered the first and second applicants (in their capacities as trustees of the Whitelinen Laundry Trust) and the third and fourth applicants (in their personal capacities) to pay the respondents’ costs jointly and severally.

Cases Cited

Basson v Bester 1952 (3) SA 578 (C).

Grootboom v National Prosecuting Authority and Another (2014) 35 ILJ 121 (CC).

Seatlolo and Others v Entertainment Logistics Service (A Division of Gallo Africa Ltd) (2011) 32 ILJ 2206 (LC).

Grant v Plumbers (Pty) Ltd 1949 (2) SA (O).

Legislation Cited

No legislation was cited in the judgment.

Rules of Court Cited

Uniform Rule 31(2)(b).

Held

The court held that, on the facts, the applicants obtained actual knowledge of the default judgment when Mr Erasmus was shown a copy of the judgment on 23 November 2021, and that condonation was required in relation to the period between 17 November 2021 and 23 November 2021.

The court held further that the applicants’ explanation for the relevant delay was inadequate, and that the applicants failed to establish a bona fide defence to the respondents’ claim. In particular, the court held that the lease clause relied upon did not support the applicants’ proof-of-payment defence, and that the contention that the lease had not been ceded (in the context of a sale as a going concern and substitution of landlord) did not constitute a bona fide defence.

Condonation was refused, the rescission application was dismissed, and costs were awarded against the applicants jointly and severally.

LEGAL PRINCIPLES

Uniform Rule 31(2)(b) requires an assessment of whether an application for rescission has been brought within the stipulated time after the applicant acquires knowledge of the default judgment, and whether condonation is necessary where there is non-compliance.

In determining condonation, the court applied an interests of justice evaluation in which the presence of reasonable prospects of success (in rescission matters commonly reflected by the existence of a bona fide defence) is an important factor, though not decisive, and must be considered together with the extent of the delay, the adequacy of the explanation, and potential prejudice.

For rescission, the applicant is required to demonstrate a bona fide defence to the claim. It is sufficient to set out averments that disclose a prima facie defence, meaning allegations which, if established at trial, would entitle the applicant to the relief sought, without requiring full ventilation of the merits or proof that the probabilities are in the applicant’s favour at the rescission stage.

Erasmus N.O and Others v Van Rensburg N.O and Others (3692/2020) [2022] ZAFSHC 369 (28 April 2022)