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[2015] ZAGPPHC 739
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Travelex Limited v Maloney and Another (28866/2014) [2015] ZAGPPHC 739 (22 July 2015)
IN
THE HIGH COURT
OF SOUTH AFRICA
(GAUTENG
DIVISION,
PRETORIA)
22/7/14
CASE
NO: 28866/2014
In
the matter between:
TRAVELEX
LIMITED
Applicant
and
SEAN
MALONEY
First
Respondent
GILLIAN
MALONEY
Second Respondent
JUDGMENT
TEFFO,
J:
[1]
On 19 November 2013 the respondent obtained an order in this court in
terms of which shares owned and registered in the name
of the
applicant in FX Africa Foreign Exchange (Pty) Ltd ("FX Africa")
were attached
ad fundandam
et
confirmandem
jurisdictionem
an action which the respondent
intended bringing against the applicant for damages for the alleged
repudiation of a contract between
the parties in
the sum of R33 800 00,00 interest thereon and costs
of suit.
[2]
The order was granted in the
form of a rule nisi returnable
on 6 February 2014 and the applicant was given leave to
anticipate the return date so ordered upon 48 hours' notice in
writing
to the respondents' attorneys of record.
[3]
On 6 February 2014 the rule nisi was confirmed.
[4]
The applicant now seeks an order setting aside the attachment
order granted on 19 November 2013 under case
number 69578/2013.
[5]
It also seeks an order directing the respondents forthwith to deliver
to it its shares in FX Africa and that the action instituted
by the
respondents in this court under case number 76041/2013 pursuant to
the attachment of the shares in FX Africa be set aside
("the
action")
[6]
In the alternative it seeks an order directing that the action be
stayed pending the final determination of any arbitration
proceedings
commenced by the respondents in terms of clause 17 of the agreement
concluded between it and the respondents on 8 December
2010.
[7]
The applicant bases this application on the following grounds:
7.1
This court did not have jurisdiction to attach the shares in question
and or authorise the
institution of an action pursuant to such
attachment;
7.2
In paragraph 8.3 of the respondents' founding affidavit in their
application for the attachment
of its shares ("the previous
application") they contended that in terms of clause 17.2 read
with clause 17.1 of the agreement
"any party to the agreement is
entitled to require any dispute arising from or in connection with
the sales agreement to be
determined by arbitration in accordance
with the Rules of the Arbitration Foundation of Southern Africa ("
AFSA") by
an Arbitrator";
7.3
Clause 17 of the agreement entitled "arbitration" indicates
that this allegation
in the respondents' previous application
was a misrepresentation of its true effect as clause 17.2 of the
agreement
did not afford the parties an election to proceed either by
way of an action in the High Court or by way of arbitration;
7.4
Clause 17.1 of the agreement provides as follows:
"Any
dispute arising
from
or in
connection with its agreement shall
be
finally resolved
in accordance
with
the Rules
of AFSA
by an arbitrator
or arbitrators
appointed
by AFSA.
"
7.5
Clause 17.3 and 17.5 further provides that notwithstanding the
referral of any dispute to
arbitration, it remained open to any party
to the agreement to approach the South Gauteng High Court,
Johannesburg for interim
relief on an urgent basis pending the
decision of the arbitrator;
7.6
It contends that the entitlement to reqmre any dispute to be
determined by arbitration as
recorded in clause 17.2 of the agreement
and relied upon by the respondents in paragraph 8.3 of their founding
affidavit in their
previous application was peremptory;
7.7
According to it clause 17 constitutes a written submission by the
applicant to arbitration
proceeding in respect of any dispute arising
from or in connection there with and to the extent set out in clause
17.3, to the
jurisdiction of the South Gauteng High Court,
Johannesburg.
7.8
It further referred to clause 17.7 of the agreement which provides
that the provisions of clause
17 constitute an irrevocable consent to
any proceedings in terms hereof.
7.9
It further contends that the attachment of its shares in FX Africa is
not competent in law.
7.10
The applicant further contends that because according to it the order
of attachment granted on 19 November
2013 was incompetent in
law, it follows that this court does not have jurisdiction to
entertain the action which was improperly
commenced. It also
contended that the shares it has in FX Africa which forms the subject
matter of this application should forthwith
be delivered to it.
7.11
The applicant also challenged the previous application on the basis
that the facts relied thereon as the
respondents' cause of action
were not established on the papers.
7.12
The applicant is a company with limited liability incorporated and
registered in accordance with the company
laws of England and Wales.
The first respondent is a businessman of Claremont, Cape Town while
the second respondent is a female
person of Constantia, Western
Cape. The parties concluded a contract of sale for the purchase of
shares in Cape Town.
[8]
The application is opposed.
[9]
The respondents raised points
in limines
to the application
which I deal with hereunder: -
9.1
As regard the relief sought in paragraph 4 of the application,
the
respondents contend that the applicant should have raised a special
plea of arbitration in order to stay the proceedings and
object to
them further proceeding with the action they have instituted against
the applicant under case number 76041/2014.
9.2
They contend that the applicant has not applied for rescission
of the
order granted on 19
November 2013 and
confirmed on 6 February 2014 under 69578/2013
but chose to bring an application for setting aside the attachment
order.
9.3
It was also contended that the applicant chose not to oppose the
granting of the order obtained on 19 November 2013 and its
confirmation on 6 February 2014 after it was given ample opportunity
to do so by the presiding judge who ordered that the
ex parte
application be served on the applicant before he could hear it
and even stood the matter down on 19 November 2013 to afford
the applicant's attorneys an opportunity to be notified that the
matter was being heard on that day. A
rule
nisi
was also granted on 19 November 2013 which was returnable after
two months on 6 February 2014.
9.4
It was submitted on behalf of the respondents that an order
of court
once made, cannot simply be set aside. It can only be rescinded in
appropriate circumstances. The respondents contend
that the applicant
should have proceeded in terms of rule 42 of the Uniform Rules of
Court or in terms of common law to rescind
the order that was granted
on 19 November 2013.
9.5
The respondent also contended that the fact that the applicant failed
to oppose the previous application despite being notified about it
and having sent its counsel to court during the hearing of the
application, shows that it has conceded to the order and has thus
waived its right to challenge the order and by reason of its
consent
to the granting of the order and confirmation thereof, it is estopped
from doing so.
9.6
The respondents further contend that no averments and facts have been
set out in the
application to the
effect that the order of 19 November
2013 was erroneously sought
or granted in its
absence, or that there is an ambiguity, or a patent error or omission
in the order or that
the order was the result of a mistake common to
the parties.
9.7
As regards the question whether the application is a resc1ss10n
application under common
law, the respondents contend that in terms
of paragraph 54 of Birch's founding affidavit it was only on 4 April
2014 that the cause
of action upon which it relies for contending
that it did not oppose the attachment application, arose (the fact
that its previous
attorneys gave it erroneous advice not to oppose
the application). It was submitted that the application made for the
main relief
set out in paragraph 1 to 3 of its notice of motion in so
far as it is based on common law, lacks averments necessary to
sustain
a cause action for the rescission of the order granted on 19
November 2013 because on its own papers the applicant became aware
of the alleged erroneous
advice only after 6 February
2014 and
19 November 2013.
[10]
In
Colyn
v
Tiger
Food
Industries
Ltd
t/a
Meadow Feed
Mills
(Cape)
2003 6 SA 1
(SCA)
it was held
that under the common law judgment was final once given. The
court went on to say the following: -
"Since
the Judge became functus officio he or she could not thereafter alter
or rescind thejudgment. There were exceptions
to this rule:
(1)
rescission was
permissible
where
the judgment
had been obtained byfraud
or,
exceptionally,
Justus error;
(2)
rescission of a default
judgment was
possible
where
the party in
default
was
able
to
show
sufficient
cause,
and
(3) judgments could
in certain
circumstances
be corrected,
altered
or supplemented (these
were
conveniently
summarised in
Firestone South
Afica
(Pty) Ltd
v
Genticuro AG
1977
4
SA
298
(A)
306H
-
308A.
There also existed
an
exceptional
procedure under the
common
law
which
allowed
a
court
to
recall
its
order
immediately after having
given
it,
or within a reasonable time thereof, either mero motu or on
the application of a
party.
"
[11]
The court in the
Colyn
matter
supra
further held
that it was against this background that Rule 42 of the Uniform Rules
of Court, which catered for mistakes by granting
the court a judicial
discretion to vary or rescind orders and judgments, was introduced.
Rule 42 was confined, the court held,
by its wording and context to
the rescission or variation of an ambiguous order or an order
containing a patent error or omission
[Rule 42(1)(b)]; an order
resulting from a mistake common to the parties [Rule 42(1)(c)]; or an
order erroneously sought or erroneously
granted in the absence of a
party affected thereby [Rule 42(1)(a)].
[12]
The court in
Chetty v Law Society,
Transvaal
1985 2 SA 756
(A)
said the following:
"Jn
terms
of common
law,
the
court has
power
to rescind
a
judgment
obtained on
default
of
appearance
provided
sufficient
cause
therefor
has
been
shown. The term 'sufficient cause ' defies precise
or
comprehensive
definition
but it is clear
that in
principle and
in the
long-standing practice
of our
courts
two essential elements
thereof
are:
(1) that
the party
seeking
relief
must present a
reasonable
and
acceptable
explanation for
his
default
and (2)
that on the merits such party
has a bon
a
fide
defence which, prima
facie, carries
some
prospect of success.
It
is not sufficient
if
only one of
these
requirements
is
met;
for
obvious reasons a
party showing
no
prospect
of success
on the merits
will
fail in an application for
rescission
of
a
default judgment
granted against
him,
no matter
how
reasonable
and
convincing
the explanation
of his
default.
And
ordered
judicial
process
would
be
negated
if, on the
other hand, a
party
who could offer no explanation of
his default
other
than
his
disdain
of
the Rules
was
nevertheless permitted to have
a
judgment
against
him rescinded
on the
ground
that he had a reasonable prospect
of
success
on the merits. It may be
that
in certain
circumstances,
when
the
question
of
sufficiency
or otherwise of a defendant's
explanation
for
his being in default is finely
balanced,
the
circumstances
that
his proposed
defence
carries reasonable or good prospects of success on the merits
might tip the scale in his favour in the application for rescission.
But this is not to say that the stronger the prospects of success the
more indulgently will the court regard the explanation of
his
default. "
[13]
It is common cause between the
parties that the order dated
19
November 2013 and confirmed on 6 February 2014 which the applicant
seeks to set aside, was brought
ex
parte.
It
is further common cause between the parties that prior to the
attachment application being heard, the presiding judge insisted
on
the application being served on the applicant. The application was
served on the applicant's attorneys who also communicated
their
acknowledgment of receipt of the application to the respondent's
attorneys. The applicant's attorneys did not oppose the
application
and on 19 November 2013 the presiding judge stood the matter down to
allow the applicant's attorneys to be notified
that the court was
hearing the application. At that time the applicant's counsel was
present in court and the matter proceeded
without any opposition.
[14]
The court still issued a rule nisi returnable on 6 February 2014 and
the applicant was granted leave to anticipate the return
date upon 48
hours' notice in writing to the respondents' attorneys of record. The
applicant did nothing and on 6 February 2014
the rule nisi was
confirmed. Two months after confirmation of the rule nisi the
applicant launched this application for the setting
aside of the
order on the ground that it was not competent in law and that the
court does not have jurisdiction to entertain the
action instituted
against it by the respondents. It contends that it was
erroneously advised
by
its prev10us attorneys not
to oppose the
application.
[15]
It is strange and unusual that the applicant did not oppose the
application when it had the opportunity to do same. Its counsel
was
in court when the order of 19 November 2013 and confirmed on 6
February 2014 was obtained. The applicant was served with the
application but decided not to oppose it. It now challenges the order
that was granted without its opposition. After being confronted
with
a contention by the respondents that the application does not meet
the requirements of rescission under Rule 42 of the Uniform
Rules of
Court and common law, the applicant contended in paragraph 20 of its
replying affidavit that its application is not one
for rescission in
terms of common law but one on the basis that the court always has an
inherent discretion and power to rectify
the consequence of an order
which never should have been issued in law. On the other hand while
disputing that the basis of the
application is the knowledge of the
correctness or otherwise of the legal advice, the applicant contends
that the application could
be considered to be one as contemplated in
Rule 42(l )(a) and/or (c) in that according to it, it was erroneously
sought and/or
that all the parties were mistaken as to the true legal
position.
[16]
It is trite that a judgment once given, was final. It cannot
just simply be set aside. I have referred
supra
to
instances when judgments or court orders can be altered or rescinded.
Rescission was permissible under common law where judgment
was
obtained by fraud or exceptionally justus error.
(
Colyn
v
Tiger
Food
Industries
Ltd
supra)
There
is no allegation in the papers that the order of 19 November 2013 was
obtained fraudulently or under justus error. Further
to the above
rescission of a default judgment was possible where the party in
default was able to show cause and the word "cause"
has
been defined in the
Chetty
matter
supra
as
referring to two essential requirements, namely, ( 1) that the party
seeking relief must present a reasonable and acceptable
explanation
for his default and (2) that on the merits that such party has a
bona
fide
defence which,
prima facie
carries some
prospect of success.
[17]
It is clear from the papers that the applicant does not seek a
rescission of the order of 19 November 2013. It seeks the setting
aside of the order. For the applicant now to come in the back door
and contend that the application could be considered as an
application for rescission under rule 42(1)(a) and (c) of the Uniform
Rules of Court is neither here nor there.
[18]
The explanation given by the applicant for its failure to file its
opposing papers in the attachment application as well as
its
non-appearance at court when the matter was heard is that its
previous attorneys of record advised it that there was no basis
in
law upon which the attachment order could be successfully opposed.
This advice is now according to its present attorneys of
record
erroneous. The applicant should have come to court and presented its
case for the court to determine whether that advice
was correct or
not. It failed to attend court. The applicant is not entitled to the
inherent discretionary powers of the court
to correct a so-called
defective order. It cannot be heard afterwards while it did not want
to be heard when the opportunity was
granted to it. It was aware of
the relief sought by the respondents and chose not to oppose it. It
decided to waive its rights
by not opposing the application. I agree
with the respondents' contention that the applicant should be
estopped from challenging
the order of 19 November 2013. The
applicant took the risk of an adverse order taken against it.
[19]
Nowhere in the papers is there any averment that both parties
laboured under a misapprehension as to the correct legal position.
If
that was the case the respondents would not have proceeded to obtain
the order sought to be set aside by the applicant.
[20]
I find the explanation given by the applicant for not opposmg the
attachment application not satisfactory,
unacceptable and unreasonable
(
Colyn
v
Tiger
Food Industries
Ltd).
I
also find that the reasons given are disingenuous and cannot subsume
the wilful default which was blatant. The applicant had ample
opportunity to oppose the attachment application. Its actions were
reckless and in wilful disregard of
court rules and processes. The applicant was in reckless wilful
default. The explanation thereof cannot be
bon
a
fide.
[21]
I further do not find any averments in the application that
satisfies the requirements of a rescission either under common
law or
under rule 42 of the Uniform Rules of Court. The application does not
also meet the requisites referred to
supra
in the
Chetty
and the
Colyn
matters. It therefore falls to be
dismissed with costs which include costs attendant upon the
employment of two counsels.
[22]
In the result I make the following order: -
22.1
The application is dismissed with costs which costs include costs
attendant upon the employment of two counsels.
_____________________
M
J TEFFO
JUDGE
OF TH HIGH COURT
(GAUTENG
DIVISION,
PRETORIA)
COUNSEL
FOR THE APPLICANT
M J Fitzgerald SC
INSTRUCTED
BY
Bowman Gilfillian Inc
COUNSEL
FOR THE RESPONDENTS R A Brusser SC & I Bremridge
INSTRUCTED
BY
Ward Ward & Pienaar Attorneys
DATE
HEARD
4 NOVEMBER 2014
DATE
OF JUDGMENT
22 JULY 2015