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[2021] ZAGPJHC 89
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Leopard Line Haul (Pty) Ltd t/a Elite Line v New Clicks South Africa (Pty) Ltd (39276/2019) [2021] ZAGPJHC 89 (16 July 2021)
HIGH
COURT OF SOUTH AFRICA
GAUTENG
DIVISION, JOHANNESBURG
Case
No: 39276/2019
In
the matter between:
LEOPARD
LINE HAUL (PTY) LTD t/a ELITE LINE
Applicant
and
NEW
CLICKS SOUTH AFRICA (PTY) LTD
Respondent
In
Re
:
NEW
CLICKS SOUTH AFRICA (PTY)
LTD
Plaintiff
and
LEOPARD
LINE HAUL (PTY) LTD t/a ELITE LINE
Defendant
Case
Summary
: Judgment – by default of entering a
notice of intention to defend – Rescission - either in terms of
r 42(1)
(a)
or r 31(2)
(b)
of
the Uniform Rules of Court or in terms of the common law
–
whether the judgment was ‘erroneously granted’ as
contemplated in r 42(1)(a) because it was not legally competent for
the court to have made such order – whether ‘good cause’
has been shown as required in terms of r 31(2)(
b)
and the common law.
JUDGMENT
MEYER
J
[1]
The applicant, Leopard Line Haul (Pty) Ltd t/a Elite Line (Elite
Line), seeks an order
rescinding a default judgment granted against
it by this court (Moultrie AJ) on 4 May 2020, when it was ordered to
pay to the respondent,
New Clicks South Africa (Pty) Ltd t/a New
Clicks (New Clicks), contractual or delictual damages in the amount
of R1 711 650.00
plus interest and costs of suit.
[2]
The background facts relevant to the determination of this
application are broadly
uncontroversial. Insofar as New Clicks
disputed certain factual matter raised in Elite Line’s founding
and supporting
affidavits by way of ‘bold and hollow denials of
[such] factual matter’ without countervailing evidence in
circumstances
where such evidence was required, I take the required
‘robust common-sense approach’ to the matter. (See
Wightman t/a JW Construction v Headfour (Pty) Ltd and another
2008
(3) 371 (SCA) para 13;
Buffalo Freight Systems (Pty) Ltd v
Crestleigh Trading (Pty) Ltd and another
2011 (1) 8 (SCA) at
14A-D.) Instead of presenting such countervailing evidence, New
Clicks’ answering affidavit, which
is deposed to by its
in-house legal advisor, is made up ‘with a pound of legal
argument’. (See
Braz v Afonso & another
[1997] ZASCA 81
;
1998
(1) SA 573
(SCA) at 577F.)
[3]
Elite Line conducts the business of haulage or the conveying of
goods. During September
2017, the parties entered into an
agreement in terms of which it was agreed that Elite Line would
convey goods or stock for New
Clicks by road between its storage
facilities or warehouses in Centurion and Germiston, for
remuneration. It was agreed that
Elite Line would carry out its
mandate in a proper and professional manner, exercising due care and
skill, and that it would take
adequate steps to avoid loss of stock
being transported (the agreement).
[4]
After some months during which Eline Line had conveyed New Clicks’
stock, New
Clicks, through a stock taking exercise, ascertained stock
shortages in its warehouses. It caused an investigation to be
conducted, which revealed to New Clicks that its employees had stolen
stock from its warehouses and had caused such stock to be
conveyed on
Elite Line’s trucks while Elite Line was fulfilling its
obligations in terms of the agreement.
En route
between
its warehouses in Germiston and Centurion, the stolen stock had been
offloaded from Elite Line’s trucks. New
Clicks, early in
2018, adopted the stance that Elite Line was liable to compensate it
in respect of the alleged stolen stock.
[5]
Elite Line referred the matter to its insurer. By letter dated
11 September
2018, its insurer advised it as follows:
‘
This
policy covers the insured’s legal liabilities that arise whilst
the insured is operating as a transporter.
In
this instance however, as the actual time of the theft of the goods
must be at the time they were illegally loaded out of the
Clicks
warehouse, clearly the loss did not occur whilst the goods were in
the insured’s custody and control, but rather while
still under
the custody and control of Clicks.’
Elite
Line adopted a similar stance that it was not liable for the thefts,
if such thefts had indeed occurred.
[6]
New Clicks, despite demand from New Clicks’ attorneys, refused
to pay to Elite
Line the balance outstanding in an amount of R785
893.20 in respect of the transport services rendered to it during the
period
November 2017 to January 2018. Elite Line threatened to
institute legal proceedings to obtain payment of such amount.
Subsequently, by 19 November 2018, New Clicks paid all the monies due
to Elite Line in respect of the transport services which
Elite Line
had rendered to it. New Clicks remained of the view that Elite
Line was liable to it for payment of an amount
of R1 711 650, because
of the involvement of its employee, Mr Mpofu, who was the driver of
the trucks on which the stolen stock
had been conveyed. The
amount of R1 711 650 represents the cost price of the stock shortages
in New Clicks’ warehouses,
which stock shortages its stock
taking exercise had revealed. Elite Line, in turn, remained
adamant that it was not liable
to New Clicks for its alleged loss,
and it did not comply with the formal demand for payment of such
amount from New Clicks’
attorneys. By letter dated 18
October 2019, Elite Line’s erstwhile attorneys responded to the
demand,
inter alia
by stating:
‘
We
confirm that our client has handed the matter over to its insurers,
who have indicated that they will defend any legal proceedings
launched by your client against our client as threatened in your
letter of demand.’
[7]
On 31 October 2019, New Clicks’ attorneys of record asked Elite
Line’s
erstwhile attorneys whether they would consent to
service of the summons at their offices or whether they should serve
it on Elite
Line. On the same day, Elite Line’s erstwhile
attorneys addressed an email
inter alia
to Elite Line’s
managing director, Mr Henk Adendorff, stating:
‘
In
light of the fact that your insurers are going to handle any
litigation launched by New Clicks, please confirm that I can respond
to Fairbridges and advise them that we are not authorized to accept
service of any summons issued, on your behalf, and that they
should
proceed to have any summons issued formally served on your offices?’
[8]
On 8 November 2019, New Clicks issued summons against Elite Line for
payment of contractual
or delictual damages in the amount of R1 711
650 plus interest and costs. In its claim
ex contractu
it avers:
‘
5.
In breach of the Agreement, in the period between 1 December 2017 and
31 January 2018 (the precise dates
being unknown to the Plaintiff),
the Defendant failed to take adequate steps to prevent the loss of
the Plaintiff’s stock,
and/or failed to perform the Services in
a proper and professional manner, exercising due care and skill.
The stock that
was lost and/or stolen is set out in annexure “A”
hereto, which is a schedule showing the shortages of stock, together
with the cost price and selling price thereof.
6.
In consequence of the Defendant’s breach of the Agreement, the
Plaintiff has suffered damages
in the amount of R1 711 650.00, being
the cost price of the stock that was lost and/or stolen.’
[9]
And these are the averments in relation to its alternative claim for
delictual damages:
‘
8.
At all times material to this claim, the Defendant employed Siboniso
Mpofu (“Mpofu”), as
a truck driver.
9.
In the period between 1 December 2017 and 31 January 2018, Mpofu
unlawfully and intentionally misappropriated
stock belonging to the
Plaintiff, which was being transported between the Plaintiff’s
distribution centres in Centurion and
Germiston, alternatively
allowed such stock to be misappropriated by third parties, the
identities of whom are unknown to the Plaintiff.
A schedule of
the stock that was misappropriated is annexed, marked “A”.
10.
At all material times Mpofu was acting within the course and scope of
his employment with the Defendant, and
the Defendant is vicariously
liable for the damages sustained by the Plaintiff in consequences of
Mpofu’s conduct aforesaid.’
[10]
The summons was served on Elite Line on 11 November 2019. At
12h26 that morning, an employee
of Elite Line forwarded a copy of the
summons
inter alia
to its managing director, Mr Adendorff, who
in turn sent the summons
inter alia
to its insurance broker,
Mr Greg Anderson t/a RMS Brokers, and to its erstwhile attorneys, who
at 12h37 enquired from Mr Adendorff
whether they should enter an
appearance to defend. At 12h54 Elite Line’s insurance
broker sent the summons to Elite
Line’s insurer.
[11]
Elite Line’s insurer addressed an email to its insurance broker
on 13 November 2019, advising
it as follows:
‘
We
have instructed Savage Jooste & Adams to act on our behalf.
They will be in contact with the insured’s Attorney
to discuss
the matter seeing that we have not the
(sic)
added to the
summons. We did however request that they take the matter over
if that status changes.’
Mr
Anderson, who deposed to a confirmatory affidavit, states that he
understood the correspondence to mean that Elite Line’s
insurer
confirmed that it was attending to the summons and had appointed
attorneys. Mr Adendorff states that he, ‘as
controlling
mind of the Applicant, accepted that the Respondent’s action
was going to be defended by the Applicant’s
insurers’.
[12]
During January 2020, Mr Adendorff enquired from Elite Line’s
insurance broker about New
Clicks’ action, which led to a
string of emails. At 11h19, Elite Line’s insurance broker
requested its insurer
for confirmation that its attorneys were still
attending to defending New Clicks’ action. At 14h02 Elite
Line’s
insurer replied that ‘[o]our attorneys are
handling the matter on our behalf’. At 16h08 Elite Line’s
insurance
broker informed Mr Adendorff that Elite Line’s
insurer had acknowledged that its attorneys were handling the matter
on the
insurer’s behalf. At 16h16 Mr Adendorff thanked
Elite Line
’
s
insurance broker for the information. Mr Adendorff states that
he ‘was by virtue of the aforegoing confirmation satisfied
that
the defence of the Respondent’s action was in good hands’.
[13]
On 28 July 2020, the sheriff served a warrant of execution upon Elite
Line pursuant to a default
judgment that had been granted against it
in the action. Mr Adendorff states that he was surprised and
immediately commenced
making enquiries as to how it had occurred
despite his
bona fide
belief that Elite Line’s defence
to New Clicks’ action was being attended to. It turned
out that no notice of
intention to defend the action had been filed
on behalf of Elite Line, that an application for default judgment on
behalf of New
Clicks had been issued on 29 November 2019, it had been
set down for hearing on 4 May 2020, and that this court had granted
the
default judgment on 4 May 2020 without evidence, either
viva
voce
or by way of affidavit, on the question of damages.
[14]
Mr Adendorff states that his investigations revealed that there had
been a misunderstanding between
Elite Line’s insurer on the one
hand, and its insurance broker and himself on the other. Its
insurer explained to its
insurance broker that the exchange of
correspondence to which I have referred ‘actually meant that
Savage Jooste & Adams
Inc had been appointed to act on behalf of
the insurer should the insurer become involved in the litigation
between the respondent
and the applicant in view of the insurer
having declined liability’. Elite Line, represented by Mr
Adendorff, and its
insurance broker, represented by Mr Anderson,
‘however, interpreted the responses by the applicant’s
insurer to the
effect that the insurer was in fact dealing with the
respondent’s action as an insurer of an insured normally does
when an
insured is sued’. It is as a result of this
misunderstanding that no notice of intention to defend the action was
filed
on Elite Line’s behalf.
[15]
Mr Adendorff states that it has always been the stance of Elite Line
that it is not liable to
New Clicks and that it would defend its
claim. Mr Anderson also states that he, as the insurance broker
of Elite Line and
who has exclusively been dealing with its insurer
on its behalf, held the
bona fide
belief ‘that as a
matter of fact the Applicant’s insurers were attending to
defending the Respondent’s action
against the Applicant’.
He further states ‘that the Applicant’s brokers would not
have sent the Respondent’s
summons and the subsequent
correspondence to the Applicant’s insurer for any other reason
than to ensure that the Respondent’s
claim would be defended as
is normally the case when an insured is sued’. He,
‘acting as the individual representing
the Applicant’s
brokers, [has] always been aware that the Applicant denies liability
vis-à-vis the Respondent and
would defend the Respondent’s
claim to the hilt. In these circumstances [he] would have
ensured that the Respondent’s
claim be defended had [he] had
any clear indication that the Applicant’s insurers were in fact
not going to do so.
There is simply no reason why [he] would
not have ensured that other Attorneys entered an appearance to defend
on behalf of the
Applicant had [he] been aware that the Applicant’s
insurers were not going to do so’.
[16]
Elite Line acted promptly after it became aware of the default
judgment on 28 July 2020 when
the sheriff served the warrant of
execution upon it. The present application for the rescission
of the default judgment pursuant
to which the warrant of execution
was issued and served on Elite Line, was served on New Clicks on 25
August 2020, which is within
20 court days after the default judgment
had come to Elite Line’s knowledge.
[17]
As far as New Clicks’ contractual claim is concerned, it relied
on the term of the agreement
that Elite Line ‘would take
adequate steps to avoid the loss of stock being transported’,
which term it avers Elite
Line breached by allegedly failing
‘to take adequate steps to prevent the loss of the Plaintiff’s
stock’.
Elite Line, on the other hand, avers that the
term was not breached. It contends that it was only
contractually obliged to
take adequate steps to prevent the loss of
New Clicks’ stock that it conveyed or transported in terms of
the agreement (‘authorised
stock’) and not stock that was
stolen by New Clicks’ employees from its warehouses and
uploaded onto its trucks when
the authorised stock was uploaded. As
far as New Clicks’ delictual claim is concerned, Elite Line
contends that it
is likewise based on the averment that Elite Line’s
truck driver intentionally misappropriated or allowed
misappropriation
of New Clicks’ stock ‘which was being
transported between the Plaintiff’s distribution centres in
Centurion and
Germiston’. Elite Line contends that none
of the stock entrusted to it in terms of the agreement for conveyance
between
New Clicks’ warehouses was ever lost or stolen.
New Clicks, on the other hand, contends that once the ‘unauthorised
stock’ was loaded onto Elite Line’s truck, it had the
responsibility to take adequate steps to avoid the loss of
‘authorised’
and ‘unauthorised’ stock being
transported by it.
[18]
Elite Line denies that its truck driver was involved in the theft and
contends he could at most
have been regarded as an accessory after
the fact. New Clicks, on the other hand, contends that theft is
a continuing crime
and that ‘theft continues as long as the
stolen property is in possession of the thief or of some other person
who was a
party to the theft, or even some person acting on behalf of
or even, possibly in the interest of the thief’ and that ‘[a]ny
person who assists the original thief, or his or her
socius
whilst
the theft continues, is a thief’. (
Per
Dolamo J in
Ssengendo v S
[2014] ZAWCHC 147
para 27.)
[19]
Elite Line disputes that it is vicariously liable for the alleged
wrongs committed by its truck
driver. Any such wrongful acts
were committed solely for its employee’s own interests and
purposes. New Clicks,
on the other hand, argues that
there
was nevertheless a
sufficiently close link between the employee’s wrongful acts
and the business of New Clicks for it to be
held vicariously liable.
Elite Line, in turn, denies that there was such ‘sufficiently
close link’.
[20]
In
Democratic Alliance v President of the Republic of South Africa
and Others; Economic Freedom Fighters v State Attorney and Others
[2019] 1 All SA 681
(GP) para 65, the full court said this:
‘
The
general principle of vicarious liability holds an employer liable for
the wrongs committed by an employee during the course
of employment.
Where an act is done by an employee solely for his own interests and
purposes, although occasioned by his
employment, a subjective and an
objective test are applied for determining vicarious liability.
This approach for determining
vicarious liability was thus formulated
by O-Regan J in
K v Minister of
Safety and Security
[2005] ZACC 8
;
2005 (6) SA
419
(CC) (CC) para 32:
“
The
approach makes it clear that there are two questions to be asked.
The first is whether the wrongful acts were done solely
for the
purposes of the employee. This question requires a subjective
consideration of the employee’s state of mind
and is a purely
factual question. Even if it is answered in the affirmative,
however, the employer may nevertheless be liable
vicariously if the
second question, an objective one, is answered affirmatively.
That question is whether, even though the
acts done have been done
solely for the purpose of the employee, there is nevertheless a
sufficiently close link between the employee’s
acts for his own
interests and the purposes and the business of the employer.
This question does not raise purely factual
questions, but mixed
questions of fact and law. The questions of law it raises
relate to what is ‘sufficiently close’
to give rise to
vicarious liability. It is in answering this question that a court
should consider the need to give effect to the
spirit, purport and
objects of the Bill of Rights.”’
[21]
Elite Line also disputes a causal link between its alleged breach of
the agreement and the contractual
damages claimed by New Clicks as
well as the quantum of delictual damages claimed from it as a result
of the alleged wrongful acts
for which it is allegedly vicariously
liable. The contractual or delictual loss claimed from it was
ascertained by means
of a stocktaking exercise, which revealed a
general shortage. Elite Line contends that New Clicks cannot
prove that every
cent of the general shortage established through its
stocktaking exercise was caused by the stock losses that occurred as
a result
of stolen stock allegedly conveyed on its trucks. New
Clicks has merely raised a bare denial and did not present
countervailing
evidence of how the amount of damages claimed from
Elite Line as a result of its alleged breach of the agreement or the
alleged
wrongful acts of its truck driver was established; in other
words on what basis all the stock losses revealed by means of its
stock
taking exercise is ascribed to the stolen stock conveyed on
Elite Line’s trucks.
[22]
Elite Line contends that it is entitled to the rescission of the
default judgment, either in
terms of r 42(1)
(a)
or of r
31(2)
(b)
of the Uniform Rules of Court, or in terms of the
common law.
[23]
Rule 42(1)
(a)
provides that ‘[t]he court may, in
addition to any other powers it may have,
mero motu
or upon
the application of any party affected, rescind or vary . . . [a]n
order or judgment erroneously sought or erroneously granted
in the
absence of any party affected thereby’. An order or
judgment is ‘erroneously granted’,
inter alia
, if
it was not legally competent for the court to have made such an
order. (See
Athmaram v Singh
1989 (3) SA 953
(D) at 956
in fine
-957A;
Promedia Drukkers & Utgewers (Edms) Bpk v
Kaimowitz
1996 (4) SA 411
(C) at 417G-H.) New Line argues
that it was legally incompetent for the court to have granted
contractual or delictual damages
by way of a default judgment without
receiving evidence, either
viva voce
or by way of affidavit,
in order to determine the
quantum
thereof. The cost
price of the stock shortages in New Clicks’ Centurion and
Germiston warehouses determined by way of
a stock taking exercise, it
argues, does not
per se
establish liability on the part of New
Clicks for damages in the amount of the cost price of such stock
shortages.
[24]
I agree that the cost price of the stock shortages in New Clicks’
warehouses determined
by way of a stock taking exercise does not
per
se
establish liability on the part of New Clicks for damages,
either as a result of breach of contract or in delict, in the amount
of the cost price of such stock shortages. However, such are
not the averments made in the particulars of claim, either in
pleading the claim
ex contractu
or in delict. In
claiming contractual damages, New Clicks avers that stock that was
lost or stolen as a result of Elite Line’s
breach of contract
is set out in annexure ‘A’ to the pleading, which is a
schedule showing the shortages of stock,
together with the cost and
selling prices thereof. Similarly, in claiming delictual
damages, New Clicks avers that Elite
Line’s employee unlawfully
and intentionally misappropriated its stock set out in the schedule
to the pleading or allowed
such stock to be misappropriated by third
parties. Furthermore, the damages claimed by New Clicks in
contract or in delict
are merely the cost price of the goods as
reflected in annexure ‘A’ to the particulars of claim and
could thus easily
be determined by the court in granting default
without any reference to evidence. (See
Economic Freedom
Fighters and others v Manuel
2021 (3) SA 425
(SCA) paras 91-104,
and the authorities therein quoted.) On the pleading, it was
thus legally competent for the court to
have granted default
judgment. The requirements of r 42(1)
(a)
, therefore,
have not been met to rescind the order granted in the absence of
Elite Line.
[25]
Rule 31(2)
(a)
provides that ‘[w]henever in an action the
claim or, if there is more than one claim, any of the claims is not
for a debt
or liquidated demand and a defendant is in default of
delivery of a notice of intention to defend or of a plea, the
plaintiff may
set the action down as provided in subrule (4) for
default judgment and the court may, after hearing evidence, grant
judgment against
the defendant or make such order as to it seems
meet’. And r 31(2)
(b)
provides that ‘[a]
defendant may within twenty days after he or she has knowledge of
such judgment apply to court upon notice
to the plaintiff to set
aside such judgment and the court may, upon good cause shown, set
aside the default judgment on such terms
as to it seems meet’.
It is trite that the common law also requires good cause to be shown
for the setting aside of
a default judgment. (
Colyn v Tyger
Foods Industries Ltd t/a Meadow Feed Mills (Cape)
2003 (6) SA 1
(SCA at 9A.)
[26]
The principles relating to ‘good cause’
are well-established: An applicant is expected to (a) give
a
reasonable explanation of its default; (b) show that its application
is made
bona fide
; and show that it has a
bona fide
defence
to the plaintiff’s claim which
prima facie
has some
prospect of success. (
Colyn
at 9E-F). The
defendant must at least furnish an explanation of his default
sufficiently full to enable the court to understand
how it really
came about, and to assess his conduct and motives: Schreiner JA
in
Silber v Ozen Wholesalers (Pty) Ltd
1954
(2) SA 345
(A) at 353A.
The court should
not come to the assistance if it appears that the default was wilful
or that it was due to gross negligence:
Brink J in
Grant
v Plumbers (Pty) Ltd
1949 (2) SA 470
(O) at 476A. Whilst the respondent has to prove
wilfulness of the default, the applicant bears the overall burden of
proving good cause for the rescission of a default judgment.
(
Silber
at 352G-H.)
In
Valor
IT v Premier, North West Province and Others
2021 (1) SA 42
(SCA)
para 38, Plasket JA said that ‘very weak prospects of success
may not offset a full, complete and satisfactory explanation
for a
delay; while strong merits of success may excuse an inadequate
explanation for the delay (to a point)’.
[27]
New Clicks argues that the explanation proffered by Elite Line for
its default, being that it
believed that its insurer was entering an
appearance to defend on its behalf, is ‘extremely unacceptable
and highly unreasonable’,
and depicts Elite Line’s
conduct ‘as being wilful alternatively negligent in the
circumstances’. It argues
that it is glaringly apparent
from the email chain (to which I have referred earlier in this
judgment) that there is no possible
way in which those emails could
have been interpreted in the way Mr Adendorff on behalf of Elite Line
and its insurance broker
interpreted them. I disagree.
[28]
First, the facts presented in this application demonstrate that Elite
Line always disputed liability
for the losses which New Clicks
allegedly incurred as a result of loss, theft or misappropriation of
its stock. When New
Clicks, as a consequence of its alleged
losses, refused to pay
to Elite Line the balance outstanding
in an amount of R785 893.20 in respect of the transport services
rendered to it during the
period November 2017 to January 2018, Elite
Line denied liability and threatened to institute legal proceedings
to obtain payment
for its services, which was then subsequently
paid. Elite Line did not comply with the demand for payment of
New Clicks’
alleged loss, but responded that its insurer will
defend any legal proceedings instituted by New Clicks. Mr
Adendorff’s
evidence is that Elite Line has always adopted the
stance that it is not liable to New Clicks and that it would defend
its claim.
Mr Anderson also states that he, as the insurance
broker of Elite Line and who has exclusively been dealing with its
insurer on
its behalf, [has] always been aware that the Elite Line
denies liability vis-à-vis New Clicks and would defend its
claim
to the hilt.
[29]
Second, Mr Adendorff on behalf of Elite Line dealt expeditiously with
New Clicks’ summons
when it was received by Elite Line by
immediately referring it to its insurance broker, who in turn, on the
same day, sent it to
Elite Line’s insurer. Two days later
Elite Line’s insurance broker was informed that its insurer had
appointed
Savage Jooste & Adams to act on the insurer’s
behalf. Elite Line, as I have mentioned, acted promptly after
it
had become aware of the default judgment on 28 July 2020, when the
sheriff served the warrant of execution upon it. It instituted
the present application for rescission of the default judgment on 25
August 2020.
[30]
Third, during January 2020, Mr Adendorff enquired from Elite Line’s
insurance broker about
New Clicks’ action, which led to a
string of emails that resulted in Elite Line’s insurance broker
informing Mr Adendorff
that Elite Line’s insurer had
acknowledged that its attorneys were handling the matter on the
insurer’s behalf, which
confirmation satisfied Mr Adendorff
that Elite Line’s defence to New Clicks’ summons ‘was
in good hands’.
Elite Line’s insurance broker
explains that he sent New Clicks’ summons to its insurer and
exchanged correspondence
with it for no other reason than to ensure
that New Clicks’ claim would be defended as is normally the
case when an insured
is sued. If he had had any clear
indication that its insurer in fact was not going to do so, he would
have ensured that other
attorneys entered an appearance to defend the
action on behalf Elite Line.
[31]
Fourth, if the evidence of Elite Line’s insurance broker and
that of Mr Adendorff is not
to be believed, then there seems to be no
conceivable reason why the summons was referred to Elite Line’s
insurer, why Elite
Line was prepared to permit New Clicks to take a
judgment by default against it since this is what would occur if the
insurer did
not enter an appearance to defend, and why Elite Line,
who had steadfastly refused to pay New Clicks’ claim, for no
conceivable
reason changed its mind and decided not to defend the
action. Furthermore, I do not need to determine whether the
interpretation
which Messrs Adendorff and Anderson placed on the
communications from Elite Line’s insurer was right, or whether
it was wrong
as argued by New Clicks. Their interpretation
explains why no notice of intention to defend the action on behalf of
Elite
Line was filed. It furthermore shows that Elite Line’s
application for rescission of the default judgment is
bona fide
.
In all the circumstances it has also not been established that Elite
Line’s default
was wilful or that it was
due to gross negligence.
[32]
New Clicks further argues that Elite Line’s insurance broker
did not follow up with its
insurer since 24 July 2020 until the
warrant of execution was served upon Elite Line on 28 July 2020.
This criticism, in
my view, has merit and renders New Clicks’
opposition to the rescission application reasonable. This will
be reflected
in the costs order I propose to make. Its failure
to further follow up with its insurer during this period, however, is
in
all the circumstances of this case not dispositive of Elite Line’s
application for rescission of the default judgment granted
against
it. Elite Line’s default is the failure to have filed a
notice of intention to defend.
It furnished an
explanation of its default sufficiently full to enable this court to
understand how it really came about, and to
assess its conduct and
motives. Mr Adendorff on behalf of Elite Line instructed its
insurance broker to follow up on the
progress in defending New
Clicks’ action. Once Mr Anderson reverted to Mr Adendorff
and confirmed that Elite Line’s
insurer had acknowledged that
its attorneys were handling the matter, Mr Adendorff was satisfied
that Elite Line’s defence
to the action ‘was in good
hands’.
[33]
I now turn to the question whether Elite Line has established a
bona
fide
defence to New Clicks’ alternative claims, which
prima
facie
has some prospects of success. Elite Line has put
forward evidence of the existence of a substantial defence relating
to its
non-breach of the common cause terms of the agreement, the
question of its vicarious liability, and the lack of a causal link
between
its alleged breach of the agreement and the contractual
damages claimed by New Clicks as well as the quantum of delictual
damages
claimed from it as a result of the alleged wrongful acts for
which it is allegedly vicariously liable. These are all triable
issues. In addition, Elite Line has put forward evidence of its
bona fide
past and presently desire actually to raise the
defence concerned in the event of the default judgment being
rescinded. (
Galp v Tansley NO
1966 (4) SA 555
(C) at
560B-C;
Kritzinger v Northern Natal Implement Co (Pty) Ltd
1973 (4) SA 542
(N) at 546B-C.)
[34]
In all the circumstances, in my view, this is a case in which
rescission of the default judgment
ought to be granted; good cause
has been shown.
[35]
In the result the following order is made:
(a)
The default judgment granted against the applicant by this court
(Moultrie AJ) on 4 May 2020 is
hereby rescinded.
(b)
The date of the granting of this order shall be deemed to be the date
upon which the applicant
has entered notice of its intention to
defend the action instituted against it by the respondent.
(c)
The normal time periods provided for in the Uniform Rules of Court
shall further govern the action
proceedings.
(d)
The applicant shall pay the respondent’s costs of opposing this
application.
P.A.
MEYER
JUDGE
OF THE HIGH COURT
Judgment:
16 July 2021
Heard:
29 April 2021
Applicant’s
Counsel:
Adv T.A.L.L. Potgieter
SC
Instructed
by:
Savage Jooste & Adams, Menlo Park, Pretoria
C/o Dentons South Africa,
Sandton, Johannesburg
Respondent’s
Counsel:
Adv N. Cheethai
Instructed
by:
Fairbridges Wertheim Becker, Cape Town/Johannesburg