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[2019] ZAKZDHC 12
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Renasa Insurance Co Ltd v Ramched (14318/2017) [2019] ZAKZDHC 12 (12 August 2019)
OFFICE
OF THE CHIEF JUSTICE
REPUBLIC
OF SOUTH AFRICA
IN THE HIGH COURT OF SOUTH AFRICA
KWAZULU-NATAL LOCAL DIVISION,
DURBAN
CASE NO: 14318/2017
In
the matter between:
RENASA
INSURANCE CO LTD
Applicant/Defendant
and
VISHAL
RAMCHED
Respondent/Plaintiff
ORDER
(a)
The default judgment granted
against the Defendant on the 25
th
of May 2018, under case No. 14318/2017, is hereby set aside.
(b)
The Defendant is ordered to
file its plea to the Plaintiff’s particulars of claim within 15
days of the grant of this order.
(c)
The Defendant remains liable
for the Plaintiff’s costs of the application for default
judgment.
(d)
The costs of this application
are to be costs in the cause of the action.
JUDGMENT
Delivered on: 12 August
2019
TOPPING
AJ
[1]
The Applicant in these
proceedings is the Defendant in the main action and the Respondent
the Plaintiff therein. I shall accordingly
refer to the
Applicant as the Defendant and the Respondent as the Plaintiff.
[2]
The Defendant seeks an order
setting aside a judgment granted, by default, on the 25
th
of May 2018 and that it be directed to file a plea to the Plaintiff’s
particulars of claim within 15 days of the granting
of such order.
The Defendant also seeks costs against the Plaintiff in the event of
this application being opposed.
[3]
In the founding affidavit,
deposed to by the general manager of the Defendant, it is alleged
that the Plaintiff instituted proceedings
against it out of this
court by the issue of a combined summons on the 1
st
of December 2017. The Plaintiff’s claim was founded upon
a contract of insurance, pursuant to which the Defendant undertook
to
indemnify or compensate him for any loss or damage to his property.
It is alleged in the particulars of claim that the
Plaintiff’s
home had been burgled on two separate occasions, namely on the 20
th
and 22
nd
of November 2016, and that the Defendant was accordingly liable to
indemnify him for the loss which he had sustained. The Defendant
had
however repudiated liability in terms of the policy. The
Plaintiff’s claim was for payment of the sum of R 980,607.50.
[4]
It is then alleged that the
Sheriff’s Return of Service reflects that the summons was
served upon one “Vicky Nene”,
a receptionist at the
Defendant’s offices, on the 4
th
of December 2017. Reference is then made to the supporting
affidavit of Ms Nene, where she states that she cannot recall
having
been served with the documents and cannot recall how she “handled
them” after she had accepted service.
She assumes that
she must have put the documents aside, with the intention of bringing
them to the attention of one of the Defendant’s
managers, but
that she must have misplaced the documents and thereafter forgot all
about them. It is therefore alleged that the
summons did not come to
the attention of the Defendant’s management and an appearance
to defend was not entered timeously.
[5]
The deponent then goes on to
state that the Plaintiff sought default judgment against the
Defendant, despite being aware that the
Defendant had rejected his
claim under the policy. The deponent further states that,
although the Plaintiff’s application
for default judgment was
addressed to the Defendant, the application was not served upon it.
It is contended that, had this
been done, the Defendant would have
sought to oppose same. The Defendant alleges that it first became
aware of the fact that a
default judgment had been entered against it
when the Sherriff arrived at its premises on the 11
th
of June 2018 with a Notice of Attachment in Execution.
[6]
It is alleged by the Defendant
that it has a
bona fide
defence to the Plaintiff’s claim, based on the contention that
the claim was in certain respects fraudulent, that the Plaintiff
had
claimed an indemnity in respect of property which had not been stolen
during the alleged burglaries, that certain documents
which the
Plaintiff had submitted in support of the claim had been altered and
falsified, that the Plaintiff had misrepresented
the values of
certain items of property included in the claim and that the
Plaintiff had been unable to quantify the value of the
clothing which
had allegedly been stolen and included in the claim.
[7]
The Defendant accordingly
contends that it ought to be found that it has established good cause
for the rescission of the default
judgment, given that it was not in
wilful default, that it has furnished the court with an explanation
for its failure to enter
an appearance to defend, that it has a
bona
fide
defence to the
Plaintiff’s claim and that it is
bona
fide
in instituting this
application and is not simply seeking to delay the execution thereof.
[8]
Supporting affidavits have been
put up by the aforementioned Ms Nene and the Defendant’s
portfolio manager, who in essence
confirm the events outlined above.
[9]
In his answering affidavit, the
Plaintiff confirms the service of his summons and the cause of action
as outlined by the Defendant.
The Plaintiff disputes the
contention that Ms Nene simply cannot “recall” the events
and believes that her contention
in this regard is false. In
support of this, the Plaintiff makes reference to the Sheriff’s
Return of Service wherein
it is confirmed that the nature of the
process was explained to Ms Nene. The Plaintiff accordingly
submits that the Defendant
would have had sight of the documents
delivered and that its failure to defend the action only exhibits an
indifference to the
consequences of the processes of this court and
cannot be tolerated.
[10]
It is further alleged by the
Plaintiff that the application for default judgment was in fact
served upon the Defendant and puts
up the Sheriff’s Return of
Service in support thereof. It is evident from the Return of
Service that the application
was indeed served on the Defendant,
again upon Ms Nene, the receptionist, on the 9
th
of May 2018. Again it is apparent from the Return of Service that the
nature of the documents being served upon her were also explained
to
her.
[11]
Insofar as the Defendant’s
contention that it has a
bona
fide
defence to his claim
is concerned, the Plaintiff simply denies same. The Plaintiff
also submits that the Defendant is in
wilful default as it not only
failed to defend the action but also failed to oppose the application
for default judgment.
[12]
I also had before me an
interlocutory application, instituted by the Defendant, seeking to
deliver a supplementary founding affidavit
and further supporting
affidavits of Ms Nene and its portfolio manager. It is stated
in the affidavit in support of the interlocutory
application, deposed
to by the Defendant’s attorney of record, that, subsequent to
the institution of the rescission application,
it had come to his
attention that the Return of Service issued in respect of the
application for default judgment indicated that
the application had
been served upon the Defendant. The Defendant accordingly sought to
supplement its founding papers in order
to deal with such fact.
Although the interlocutory application was initially opposed, counsel
representing the Plaintiff,
rightly in my view, conceded that the
supplementary affidavit ought to be considered in my determination of
this matter.
[13]
If one has reference to the
supplementary affidavit, again deposed to by the Defendant’s
general manager, he concedes that
the Plaintiff’s application
for default judgment was served upon Ms Nene on the 9
th
of May 2018. He states that Ms Nene, again, cannot recall being
served with the application papers and is again forced to
conclude
that she put the documents aside with the intention of bringing them
to the attention of one of the members of the Defendant’s
management, but failed to do so. This is confirmed by Ms Nene
in a further affidavit filed by her.
[14]
This being the case, it is
accepted by the Defendant that the summons was served upon it on the
4
th
of December 2017 and the application for default judgment was served
upon it on the 9
th
of May 2018. In both instances Ms Nene cannot recollect the
documents being served upon her and she assumes that she must
have
misplaced them and thereby failed to bring them to the attention of
the Defendant’s management.
[15]
In order to succeed in this application, as the Defendant would
appear to be well aware of by
virtue of the submissions made in its
founding affidavit, it will have to (a)
give
a reasonable explanation of its default, (b) show that it, at the
very least, has a
bona fide
defence to the Plaintiff's claim which,
prima
facie
, has some prospects of success,
should the judgement be rescinded and the matter proceed to trial,
and (c) show that this application
is made
bona
fide
, in that it is not merely
endeavouring to delay matters.
[1]
[16]
It has been held that, while
wilful default on the part of the applicant is not a substantive or
compulsory ground for the refusal
of an application for rescission,
the reasons for the applicant’s default remain an essential
ingredient of the good cause
to be shown.
[2]
The wilful or negligent nature of the Defendant’s actions is
one of the considerations which the court must take into account
in
exercising its discretion in determining whether good cause has been
shown.
[3]
[17]
If one has reference to the
explanation provided by the Defendant in these proceedings, it is
common cause that the Defendant’s
representative, on two
occasions, simply ignored the processes of this Court being served
upon her. It was however argued
by counsel for the Defendant
that her actions should not be imputed as being the actions of the
Defendant, as the Defendant’s
“controlling mind”
would be its management, who were simply unaware of the fact that an
action had been instituted
against it, or that an application for
default judgment had been launched, until such time as the Plaintiff
sought to execute upon
his judgment already obtained.
[18]
The Plaintiff does not dispute
that the Notice of Attachment in Execution was served upon the
Defendant on the 11
th
of June 2018. It is also evident from these papers that the
founding affidavit was deposed to on the 30
th
of June 2018 and this application itself instituted on the 5
th
of July 2018. It appears therefore that the Defendant’s
management indeed did react upon becoming aware that an action
had
been instituted and a judgment had been obtained against the
Defendant.
[19]
It is also evident, from
the letter put up in these proceedings, that the Defendant informed
the Plaintiff, as far back as the 27
th
of February 2017, that it had repudiated his claim and invited him to
contact the Ombudsman for Short-Term Insurance should he
not be
satisfied with such decision. This, in itself, gives some
credence to the contention that the Defendant intended to
defend any
action instituted by the Plaintiff throughout. This being the
case, it is reasonable to assume that, had the Defendant’s
management been aware of the fact that a summons, or an application
for default judgment, had been served upon them, they would
have
timeously reacted thereto and would not have consciously ignored it.
Save to state that he believes that the Defendant would
have had
sight of the documents delivered by the Sherriff and that its failure
to defend the action only exhibits an indifference
to the
consequences of the process of this Court, the Plaintiff cannot
gainsay the Defendant’s version of events.
[20]
As
far as the Defendant’s defence is concerned, counsel for the
Plaintiff correctly conceded that such would constitute a
defence to
the Plaintiff’s claim, if proved at trial. In
applications of this nature, the minimum that the Defendant
must show
is that its defence is not patently unfounded and that it is based
upon facts which, if proved, would constitute a defence
to the
action. This the Defendant has done by contending that the
Plaintiff’s claim was, in certain respects, fraudulent.
It has put up the letter addressed to the Plaintiff in repudiation of
his claim in support of such contention. It accordingly
appears
that the Defendant has sought to contend this defence throughout.
[21]
Counsel for
the Defendant referred me to the case of Saraiva Construction (Pty)
Ltd v Zululand Electrical and Engineering Wholesalers
(Pty) Ltd
[4]
in support of his submission that, even though Ms Nene’s
actions may be construed as grossly negligent in the manner in which
she dealt with the documents served upon her by the Sherriff, this
would not debar the Defendant from being granted the relief
sought,
having regard to all the circumstances relevant to the current
consideration.
[22]
In that
case, the summons had been served upon the managing director of the
Defendant, who in turn, handed it to his “site
controller”
to convey it to an attorney to act upon. The site controller
conveyed the summons to the attorney, but
found him to be unavailable
and thereafter “forgot about the matter”. The court
found that although they clearly
intended to instruct an attorney to
defend the action, their lack of diligence in carrying out that
intention was “deplorable”.
The court was of the view
that, although the Defendant’s representatives were grossly
negligent in their handling of the
matter, their conduct was neither
wilful nor reckless. Having regard to the fact that it was
accepted as having been established
that the Defendant had a defence
to the action and had seriously intended to defend it, the court did
not consider that the negligence
was so gross as to debar the
Defendant from relief, after having regard to all the circumstances.
[23]
The actions of Ms Nene in the
present instance can also be described as “deplorable”.
Her version however cannot
be gainsaid and the immediate reaction of
the Defendant’s management upon becoming aware that a default
judgment had been
granted against it adds credence to the submission
that the Defendant was not wilful in its failure to timeously enter
an appearance
to defend, or oppose the application for default
judgment. The probabilities favour a conclusion that they would
have acted
upon the service of the court processes upon the Defendant
had they known about them at the time.
[24]
Bearing in mind that it has
been conceded that the Defendant has a valid defence to the
Plaintiff’s claim, and bearing in
mind that the Defendant’s
management immediately sought to rescind the default judgment granted
against it upon becoming
aware of its existence, I do not consider
that the clearly negligent actions of Ms Nene ought to debar the
Defendant from the relief
sought in this application.
Considering all relevant factors, I am of the view that the Defendant
has established that it
is
bona
fide
in instituting these
proceedings and that it has not done so simply to delay matters.
I am therefore of the view that there
is good cause for setting aside
the default judgment forming the subject of this application.
[25]
Having reached this conclusion,
I now need to consider the issue of costs. If one views the
circumstances prevailing at the
time, the Plaintiff was clearly
entitled and justified in seeking a default judgment against the
Defendant. He had served
both the summons and the application
on the Defendant and had received no response thereto. The
Defendant only has the actions,
or more appropriately described
“inaction”, of its receptionist to blame for the
Plaintiff forming the view that he
was justified in seeking a default
judgment against it. I am therefore of the view, despite my
finding that the relief sought
in this application ought to be
granted, that it would be appropriate for the Defendant to remain
liable for the costs incurred
by the Plaintiff in instituting the
application for default judgment.
[26]
I have been urged by the
Defendant’s counsel to hold that the costs of this application
should follow the result. He
submitted that, if I find for the
Defendant, it follows that the Plaintiff was not justified in his
opposition to these proceedings.
Having regard to the initial
confusion in the Defendant’s founding papers regarding the
service of the application for default
judgment upon it, I am of the
view that there was some justification in the Plaintiff opposing this
application. As things
developed however such justification
appeared to wain once the Defendant was allowed to file a
supplementary founding affidavit
and it appeared that the Plaintiff
would not be able to gainsay the fact that the Defendant’s
management simply did not know
about the service of the processes
upon it. This however only came into fruition at the hearing of
the matter and the costs
consequent upon an opposed motion already
having been incurred. At the end of the day, the justification
of either instituting
or opposing this application will be determined
by the result of the trial, and once a finding has been made as to
whether the
Plaintiff has been successful in its claim, or the
Defendant successful in his defence thereof. I am therefore of the
view that
the costs of this application should follow the result of
the trial.
[27]
I therefore make the following
order:
(a)
The default judgment granted
against the Defendant on the 25
th
of May 2018, under case No. 14318/2017, is hereby set aside.
(b)
The Defendant is ordered to
file its plea to the Plaintiff’s particulars of claim within 15
days of the grant of this order.
(c)
The Defendant remains liable
for the Plaintiff’s costs of the application for default
judgment.
(d)
The costs of this application
are to be costs in the cause of the action.
TOPPING
AJ
Appearances:
For the
Applicant/Defendant :
Mr.
M. Swain
Instructed
by
:
Neerajh Ghazi Attorneys,
Durban.
For the
Respondent/Plaintiff
:
Ms A
Moodley
Instructed
by
:
Keowan Y Reddy Inc,
Mount Edgecome.
Date of
hearing :
30 July 2019
Date
Delivered :
12 August
2019
[1]
Colyn v Tiger Food Industries Ltd t/a Meadow Feed
Mills (Cape) 2003(6) SA (SCA) at page 9 paragraph 11.
[2]
Harris v Absa Bank Ltd t/a Volkskas
2006 (4) SA
527
(T) at 529 E-F.
[3]
Harris v Absa Bank Ltd t/a Volkskas
supra
at 530 B-531B.
[4]
1975 (1) SA 612
(D).