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[2018] ZAGPPHC 259
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Jeewa and Another v Strydom N.O. and Others; In re: Strydom N.O and Others v Jeewa ans Another (55407/15) [2018] ZAGPPHC 259 (25 January 2018)
IN
THE HIGH COURT OF SOUTH AFRICA
GAUTENG
DIVISION, PRETORIA
CASE
NUMBER: 55407/15
In
the application between:
FATIMA
BIBI FARBAROOK
JEEWA
First
Applicant
AMJAD
MAHMOOD
Second Applicant
and
PIETER
H
STRYDOM
N.O.
First
Respondent
JOHN
RG POLSON
N.O.
Second Respondent
LOUIS
STRYOM
N.O.
Third Respondent
(In
their capacities as the curators of Corporate Money
Managers
(Pty) Ltd)
In
Re the matter between:
PH
STRYDOM
N.O First
Applicant
JOHN
REDERICK GRAEME POLSEN N.O.
Second Applicant
LOUIS
STRYDOM
N.O
Third Applicant
And
FATIMA
BIBI FARBAROOK
JEEWA First
Respondent
MOHAMED
FAROOK
JEEWA
Second Respondent
JUDGEMENT
NAIR
AJ:
[1]
This is an application for the rescission of a final order of
sequestration granted on 27 October 2016. The parties will be
referred to as cited in the main application for sequestration. A
provisional order was granted against the applicants (respondents
in
the main application) on 8 September 2016. On the return date there
was no appearance for the respondents and the rule nisi
was
confirmed.
[2]
The first and second applicants are attorneys and joint curators of
Corporate Money Managers (Pty) Ltd (CMM). The third applicant
is a
chartered accountant and was also acting as a joint curator of CMM.
The respondents are husband and wife who are married in
community of
property.
[3]
CMM was an authorized agent in terms of the
Collective Investment
Schemes Control Act 45 of 2002
and owned investments worth R1.2
billion. CMM attracted investors because it offered very attractive
interest rates.
[4]
The applicants based their application for the sequestration on the
basis of the following facts: Approximately R500 million
was
made available from investor funding to the Regent Group
of Companies (Regent) to provide bridging finance and
short term
loans.
[5]
Regent was an intermediary through which investment funds in
Corporate Money Managers flowed. Regent consisted
of the following companies, Regent
Motor Finance (RMF), Regent Bond Discounting (Regent Bond) and
Regent
(Pty) Ltd. RMF changed its name to Resource Motor Finance (Pty) Ltd
(Resource) on or about 25th September 2007. Resource
provided
bridging finance to third parties including MRZ Autohaus (Pty) Ltd
(in liquidation).
[6]
A short term loan was provided by Resource to Fajita Cars in respect
of which the first respondent stood surety. On 1O September
2008,
Resource obtained judgment against MRZ, jointly and severally, the
one paying the other to be absolved, with Fajita and the
first
respondent in their capacities as sureties of MRZ for payment of R 5
954 934.
[7]
On or about the 3 August 2009, Resource duly represented by Mr Ryan
Botha became indebted to the applicants by virtue of a cession
in
terms of which Resource ceded its claims against its debtors as
security for its obligations against CMM. The cession includes
the
claim of Resource against MRZ and Fajita Cars (Pty) Ltd. Based on the
judgement in favour of RMF, which debt was ceded by RMF
to CMM, the
applicant sought and obtained the final order of sequestration.
[8]
The applicant maintains that the RMF cession included the claim which
RMF had against Fajita, and hence the first respondent
in her
capacity as surety. The applicant further contends that all cessions
by RMF, Regent Bond and Regent Factors were done simultaneously
and
signed on or about 03 August 2009, this was set out in Annexure P5.
[9]
The application for sequestration is based on a court order granted
on 1 o
September
2009 against the applicant. A copy of the judgment was attached to
the applicants opposing papers. The order was granted
on account of
the applicant having bound herself as surety for the debts of MR 2
Autohaus (Pty) Ltd in liquidation for the benefit
of Regent Motor
Finance. The correct deed of cession and surety was attached to the
answering affidavit.
[10]
The respondents opposed the application for rescission on the basis
that the deed of cession attached to the founding affidavit
in the
main application was not a cession by Regent Motor Finance as alleged
in the founding papers but a cession by Regent Bond.
This point is
conceded by the applicants who admit that it was mistakenly
attached.
[11]
The first respondent contends that Regent Bond Discounting (Pty) Ltd
does not have a judgment against her or the second respondent.
She
states that the applicants are not the curators of the company that
was a party to the Deed of Cession nor is the judgment
which the
applicant relied on in favour of Regent Bond Discounting (Pty) Ltd.
[12]
A sequestration order may be set aside at common law if the applicant
satisfies the common law requirements. These are encapsulated
in the
requirement that 'sufficient cause' for rescission must be shown.
This involves three essential elements: the applicant
must
(1) give a reasonable (and obviously
acceptable) explanation for his default;
(2) show that his
application is made bona fide, and (3) show that on the merits he has
a bona fide defence which, prima facie,
carries some prospect of
success - see Colyn v Tiger Food Industries Ltd t/a Meadow Feed Mills
(Cape)
2003 (6) SA 1
(SCA) para 11.
[13]
Rule 42(1) of the Uniform Rules of Court read as follows:" The
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) An order or judgement erroneously sought
or erroneously
granted in the absence of any party affected thereby;" Once
those three requirements are established, the applicant
would
ordinarily be entitled to succeed. He is not required to show
good cause in addition thereto. See Hardroad (Pty) Ltd
v Oribi Motors
(Pty) Ltd
1977 (2) SA 576
(W) at 578G.
[14]
In general terms a judgment is erroneously granted if there existed
at the time of its issue a fact of which the
court was
unaware, which would have precluded the granting of the judgment and
which would have induced the court, if aware of
it, not
to grant the judgement. See Nyingwa v Moolman NO
1993 (2) SA 508
Tk
at 510 D G.
"It
follows that if material facts are not disclosed in an ex parte
application or if fraud is committed (I e the facts are
deliberately
misrepresented to the court) the order will be erroneously granted."
[15]
In Kgomo v Standard bank of South Africa the applicants sought
rescission of a judgment under this sub rule based on the fact
that
the bank did not comply with the notice requirements of s
129(1) and the relevant provisions of
s 130
of the
National
Credit Act 34 of 2005
. The bank's non -compliance was plainly
an error which was apparent from the particulars of claim and
the annexures
to it on the basis of which the judgment was granted".
In granting the application and setting aside the
judgments,
Dodson J, with reference to Colyn v Tiger food Industries Ltd
tla Meadow Feed Mills (Cape) and
Lodhi
2 Properties Investments CC v Bondev
Developments (Ply) Ltd held that the following principles
govern
rescission under
rule 42(1)(a):
(a)
the rule must be understood against its common-law background; (b)
the basic principle at common law is that
once a judgment has been
granted, the judge becomes functus officio, but subject to certain
exceptions of which
rule 42(1)(a)
is one; (c)
the rule caters for a mistake in the proceedings; (d) the
mistake may either be
one which appears on the record of proceedings
or one which subsequently becomes apparent from the information made
available
in an application for rescission of judgment; (e) a
judgment cannot be said to have been granted erroneously in the light
of a
subsequently disclosed defence which was not known or raised at
the time of defaults judgement;(f) the error may arise either in
the
process of seeking the judgment on the part of the applicant for
default judgment or in the process of granting default judgment
on
the part of the court; and (g) the applicant for rescission is not
required to show, over and above the error, that there
is good
cause for the rescission as contemplated in
rule 31(2)(b).
[16]
In respect of sub-rule (1) (a) , it was held in Naidoo and Another v
Mat/ala NO and Others
2012 (1) SA 143
(GNP):
"In
general terms a judgment is erroneously granted if there existed at
the time of its issue a fact of which the judge was
unaware, which
would have precluded the granting of the judgment and which would
have induced the judge, if aware of it, not to
grant the judgment ...
It
follows that if material facts are not disclosed in an ex parte
application ... or if fraud is committed (i.e. the facts are
deliberately misrepresented to the court) the order will be
erroneously granted."
[17]
In Mercedes Benz v Mdyogolo 1997 1 All SA 154 (F);
1997 (2) SA748 (E) 'it was held that judgement
granted by
default may be set aside if good cause is shown which requires
that the applicant must
prove that
(a) he has a reasonable
explanation for his default,(b) the application
is bona fide and ( c)
he has a bona fide defence to the plaintiff's claim'.
[18]
The respondent contends that In order to obtain a rescission under
this sub rule the applicant must show that the prior order
was
'erroneously sought or erroneously granted in the absence of any
party affected thereby. Once the court holds that and order
or
judgment was erroneously sought or granted, it should without further
enquiry rescind or vary the order and it is not necessary
for a party
to show good cause for the sub rule to apply.
[19]
In Leo Manufacturing CC v Robor Industrial (Pty) Ltd t/a Robor
Stewarts & Lloyds
2007 (2) SA 1
(SCA) it was held:
'Now,
following the rationale of those two decisions, it is totally
unnecessary for the Court to rule whether the default judgment
was
void ab origine or not. The fact of the matter is, and this point has
been taken by the respondent, that there is absolutely
no mention of
a defence set out in the initial affidavit and there is the mere
mention of a possible defence in the replying affidavit.
It certainly
does not comply with the requirements that it be set out with
sufficient particularity so as to enable the court to
determine
whether or not there is a valid and bona fide defence.'
[20]
The respondents opposed the application for provisional sequestration
on the basis that they were married in community of property
and on
the fact that the surety was not signed by both parties to the
marriage in community of property. On the return
date
there was no appearance on behalf of the applicants and the final
sequestration order was granted.
[21]
It is not in dispute that Resource ceded it claim against the first
respondent to CMM and that Resource
obtained judgment against the
first respondent. The question is whether
the court
would have granted the provisional order had it been aware or made
aware that the incorrect cession was attached.
[22]
It is common cause that the incorrect deed of cession was attached to
the applicants founding affidavit in the application
for provisional
sequestration. It is also common cause that there exists a judgement
against the first respondent in favour of
RMF which ceded its rights
in that regard to CMM.
[23]
It is also common cause that the final order of sequestration was
granted in the absence of the first respondent.
[24]
The applicants admit the mistake but allege that it was a bona fide
administrative mistake. The first respondent argues that
the
applicants were the authors of their own misfortune.
[25]
The Resource (RMF) cession was done simultaneously with the Regent
Bond and Regent Factor cessions. The opposition to the application
for provisional sequestration was based on the defence that the
respondents were married in community of property and that the
surety
was not signed by both parties and the mis-joinder of the
respondent's brother instead of her husband. This error was
subsequently
amended in a separate application.
[26]
In this application, the respondent raises the locus standi defence
and an additional defence that the respondents are married
out of
community of property
contrary
to the defence raised in opposing the application for provisional
sequestration.
[27]
The first respondent does not deny that she is indebted to CMM based
on the RMF cession. Neither does she state that the order
would not
have been granted even if the RMF cession had been annexed to the
sequestration application.
[28]
It is trite that where a judgment was granted on the basis of a
technicality, the respondent cannot rely on same without setting
out
a bona fide defence which the applicant has failed to do in this
matter. An applicant for rescission of a default judgment
will not be
successful in his application if he does not set out the grounds of
his defence to the respondent's claim in the summons,
even where the
default judgment was void ab origine. (See Leo Manufacturing CC
Paragraph [6].)
[29]
It is a basic principle of our law that an order of court or judgment
stands until set aside by a court of competent jurisdiction.
Even in
the event of such order or judgment being wrong it is presumed until
the contrary is proven that the judgment is correct.
[30]
Rule 42(1)(a)
provides one of the remedies to rescind an order or
judgment erroneously granted. Whilst a court of competent
jurisdiction is afforded
a discretion whether or not to grant an
application in terms of this sub-rule, the common law remedy is not
excluded by the sub-rule.
Rule 42(1)
is unambiguous in this regard in
the words "...in addition to any other powers it may have...".
[31]
The difference between the sub-rule and the common law is that a
finding that a judgment or order has been granted erroneously
should
as a matter of cause lead to the rescinding of the judgment without
any further enquiry needed. In terms of the common law,
the applicant
is required to show good cause.
[32]
The applicant has not averred that had the correct cession been
attached that she has a defence to the application. The respondent
was represented at the hearing of the provisional application for
sequestration but did not raise the incorrect cession attachment
as a
defence.
[33]
The applicant has failed to show good cause for the rescission by
virtue of the fact that no good defence is raised. The applicant
raised another defence during the opposing of the application for
provisional sequestration and yet another in this application.
[34]
With regard to having a bona fide defence, the first respondent
states that her attorney instructed counsel to appear on the
27
October 2016 to hand to the applicant's representatives a copy of the
affidavit and to provide the court with same. Unfortunately
when the
matter was called by counsel for the respondent, she was informed
that the matter was disposed of and that a final order
was granted.
[35]
She submits that the failure to appear timeously was not due to
intentional delay or disregard for the court but the fact that
various matters are heard simultaneously in three different courts
and counsel appearing on her behalf had mistakenly not called
the
matter to have it stand down until the representatives of the
applicant appeared in court.
[36]
The applicant has not been bona fide in the manner she has
demonstrated the regime of marriage to the second applicant. The
respondent has conceded to the granting of the rescission against the
second applicant as it is common cause now that the applicants
were
married out of community of property.
[37]
In the result I find that the applicant has not shown good cause for
the rescission of the judgement.
ORDER
[38]
[38.1]
In respect of the First Applicant herein, this application is
dismissed with costs including costs of counsel;
[38.2]
In respect of the Second Applicant herein, the application is granted
and the sequestration order granted on the 27 October
2016 as against
the Second Applicant only is hereby rescinded.
______________________
NAIR
AJ
ACTING
JUDGE OF THE HIGH COURT
Date
of hearing:
Date
of Judgment:
ATTORNEYS
FOR THE APPLICANTS
: ROESTOFF AND KRUSE
COUNSEL
FOR THE APPLICANTS
: SJ VAN RENSBURG
ATTORNEY
FOR THE RESPONDENTS
: APHANE ATTORNEYS
COUNSEL
FOR RESPONDENTS
: J E SMIT