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2024
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[2024] ZAECMKHC 64
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Wait v Strydom N.O and Others (Leave to Appeal) (389/2022) [2024] ZAECMKHC 64 (24 May 2024)
IN THE HIGH COURT OF
SOUTH AFRICA
(EASTERN CAPE
DIVISION, MAKHANDA)
CASE
NO: 389/2022
Reportable
YES/NO
In the matter between:
JEANE
WAIT
APPLICANT
And
PIETER
HENDRICK STRYDOM N.O
FIRST RESPONDENT
HAROON
ABDOOL SATAR
SECOND RESPONDENT
DEON
MARIUS BOTHA
N.O
THIRD RESPONDENT
JUDGMENT- APPLICATION
FOR LEAVE TO APPEAL
Cengani-Mbakaza AJ:
[1]
This is an application for leave to appeal against the judgment that
I
handed down on 26 March 2024. As a consequence of the judgment, I
issued the following order:
‘
The
application for the rescission of the default judgment is dismissed
with costs.’
[2]
In the notice of the application for leave to appeal dated 18 April
2024,
the applicant states that I erred in not finding that there was
a
bona fide
defence in the applicant’s claim. In a
nutshell, the applicant asserts that the applicant had pleaded facts
which if proved
at trial would constitute a defence in terms of
section 29 of the Insolvency Act, 24 of 1936. The applicant pleaded
that the payments
made by Free Agape Enterprises (Pty) Ltd (Free
Agape), were payments of the capital that the applicant invested, and
such payments
were made in the ordinary course of business and not
with the intention to prefer one creditor over another.
[3]
Referring to
Gazits
Properties (Pty) Ltd v Botha N.O
,
[1]
the
applicant’s counsel argued that I failed to consider that the
monies invested by the investor, remains the property of
the investor
and does not become the property and/or assets of Free Agape.
[4]
To oppose the application for leave to appeal, the respondents’
counsel referred me to the case of
Zuma
v
the
Secretary of the Judicial Service Commission of Inquiry into
Allegations of State Capture, Corruption and Fraud in the Public
Sector including Organs of the State and Others
[2]
where the law relating to the two requirements for rescission of the
default judgment under common law was re-emphasized.
[5]
Counsel argued that a reasonable explanation must be tendered for
failing
to defend the case before any consideration is given to
whether there is a defence to the claim, in the absence of such a
reasonable
explanation, the application for leave to appeal falls to
be dismissed on this ground alone. Regarding this contention, the
applicant’s
counsel argued that where there is a
bona fide
defence a court may grant an application for rescission of the
default judgment even if a poor explanation is tendered.
[6]
In dealing with the requirement of a
bona fide
defence, the
respondents’ counsel argued that the investment scheme
conducted by Free Agape was declared illegal, unlawful
and void, and
that all investment agreements concluded between Free Agape and
investors, including the applicant, were null and
void. He further
argued that the facts in
Garits Properties’
case are
distinguishable, I agree with the arguments raised in this regard. It
is not disputed that during 28 September 2017 to
21 November 2017,
Free Agape paid the applicant an amount of R478 250. The debtor
(Free Agape) made a disposition of property.
The disposition was made
6 months prior to the launching of the liquidation proceedings in the
Western Cape High Court. This payment
which was made by Free Agape to
the applicant less than six months before sequestration, had the
effect of preferring the applicant
from other investors who received
no payment once the liquidation was complete.
[7]
The application for leave to appeal is governed by
section 17
of the
Superior Courts Act 10 of 2013
which provides,
‘
[17
(1) Leave to appeal may only be given where the judge or judges
concerned are of the opinion that-
(a)
(i) The appeal would have a reasonable
prospect of success; or
(ii) There is some other
compelling reason why the appeal should be heard, including
conflicting judgments on the matter under consideration.
(b)
… … … …
(c)
… … … …’
[8]
In
Zuma’s
[3]
case, the Constitutional Court restated
the
requirements for the rescission of the judgment in terms of the
common law as follows:
‘
[71] The
requirements for rescission of a default judgment are two-fold.
First, the applicant must furnish a reasonable and
satisfactory
explanation for its default. Second, it must show that on the
merits it has a bona fide defence which prima
facie carries some
prospect of success. Proof of these requirements is taken as
showing that there is sufficient cause for
an order to be rescinded.
A failure to meet one of them may result in refusal of the request
to rescind
.’
‘
Thus,
the existing common law test is simple: both requirements must be
met
’. (My underlining)
[9]
It is gleaned from the Constitutional Court judgment that the
applicant
is obliged to first furnish a reasonable and satisfactory
explanation for his default. Furthermore, a failure to meet one of
the
two requirements may result in refusal of the request to rescind.
In his notice of the application for leave to appeal, the applicant
opted not to address the first requirement for the rescission of the
default judgment. In my judgment, I dealt with both requirements
extensively. Regarding the first one, I made the following
observations,
‘
[20]
…….. the defendant received the summons along with the
particulars of claim and the accompanying attachments. The
defendant’s attorneys filed a notice of intention to defend the
matter but neglected to file a plea resulting in an application for
default judgment. Despite being served with the application
for
default judgment, the defendant consulted his attorney but failed to
make a follow-up until the application for the default
judgment was
heard. Additionally, despite being consistently disappointed by his
attorneys, the defendant failed to undertake reasonable
measures to
mitigate further disappointment and defend the action. He never
appeared in court or took reasonable steps until the
writ of
execution was enforced.
[21]
I concur with the sentiment raised in
De
Wet’
case, that since the
defendant is the author of his misfortune, it would be unjust to hold
the other party accountable for the
harm and difficulty that resulted
from his action.
When a default judgment had been entered
against a party due to his failure to remain in communication
with his attorney or
agent regarding the progress of the case, they
cannot absolve themselves of this responsibility and complain against
the other
party to the action, alleging negligence on the part of
their appointed representatives
Upon careful
consideration of the facts presented in this regard, I find the
defendant’s explanation of his default unsatisfactory
and
unreasonable.’[Footnotes omitted]
[10]
It is a well-established principle that an application for leave to
appeal must convince
the court on proper grounds that there is a
reasonable prospect or realistic chance of success on appeal
[4]
.
A mere possibility of success, an arguable case or one that is not
hopeless is not enough. There must be sound, rational basis
to
conclude that there is a reasonable prospect of success on appeal
[5]
.
Regarding both requirements for the rescission of the default
judgment, I still stand by my reasons which are comprehensively
addressed in my judgment. In addition, I find that the applicant’s
failure to deal with the first requirement in his notice
of the
application for leave to appeal renders the application under
consideration fatal. Considering the facts of this case, there
is no
substance to the argument that a poor explanation will compensate for
bona
fide
defence’s prospects of success on appeal. Fortified by
Zuma’s
[6]
case, I conclude even at this point that absent reasonable
explanation for the default demonstrates no prospects of success on
appeal. Strictly
speaking, it is unnecessary to make findings or to consider the
arguments relating to the applicant’s bona-fide defence.
Resultantly, the application for leave to appeal cannot succeed.
Order
[11]
The following order is issued:
1.
The application for leave to appeal
is dismissed.
2.
The applicant shall pay costs in
accordance with scale B as contemplated in Rule 69 of the Uniform
Rules of Court.
N CENGANI-MBAKAZA
ACTING JUDGE OF THE
HIGH COURT OF SOUTH AFRICA
APPEARANCES
:
Counsel
for the Applicant:
Adv:
I Lambrechts
Instructed
by:
GREVENSTEIN
INC.
GQEBERHA
C/o
HUXTABLE ATTORNEYS
26
New Street
MAKHANDA
Ref:
O Huxtable /cl/02GOO3052
Email:
law1@huxattorneys.co.za
Counsel
for the Respondents:
Adv:
M Somandi
Instructed
by:
BANARD
INCOPORATED
PRETORIA
C/o
DE JAGER LORDAN INC
2
Allen Street
MAKHANDA
Tel:
046 622 2799
E-mail:
stuart@djlaw.co.za
Date
heard:
17
May 2024
Date
delivered:
24
May 2024
[1]
[2011] ZSCA 199.
[2]
[2021]
ZACC 28.
[3]
Fn 2 above.
[4]
Van
Zyl v Steyn
(83856/15)
[2022] ZAGPPHC 302 (3 May 2022).
[5]
MEC for
Health: Eastern Cape
(case 1221/2015 ZASCA (25 November 2016 at paragraph 17.
[6]
Fn 2 above.