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IN THE HIGH COURT OF SOUTH AFRICA
WESTERN CAPE DIVISION, CAPE TOWN
Case number: 10604/2020
In the matter between:
RICHARD EDEN
Applicant
and
STEVEN ELLIS
First Respondent
NEIL GORE N.O. Second Respondent
AND
Case number: 11636/2023
In the matter between:
STEVEN ELLIS
Applicant
and
RICHARD EDEN
First Respondent
MARISE EDEN (born ROSSOUW) Second Respondent
Coram: Acting Justice P Farlam
Heard: 13 August 2024
Delivered electronically: 28 November 2024
JUDGMENT
FARLAM AJ
INTRODUCTION
[1] In the previous High Court litigation between the parties, the judgment of
Rogers J (as he then was)1 commenced with the following paragraph:
‘There are two applications before me. In the first, the applicant is Mr
Steven Ellis and the respondent Mr Richard Eden. In that application,
which I shall call the enforcement application, Mr Ellis seeks judgment
against Mr Eden in the sum of R971,132.28, being the amount reflected
as owing by Mr Eden to Mr Ellis in a liquidation and distribution account
prepared by a receiver pursuant to an order of this Court dissolving an
alleged partnership between the parties. In the second application, Mr
Eden is the applicant and the respondents are Mr Ellis and the receiver,
Mr Neil Gore, who abides. By way of the second application, Mr Eden
seeks the rescission of the order dissolving the alleged partnership. It is
common g round that the success or failure of the enforcement
1 Reported as Ellis v Eden 2023 (1) SA 544 (WCC) (and referred to below as Ellis v Eden (1)).
application hinges solely on the success or failure of the rescission
application.’
[2] The present case evokes a sense of déjà vu. For again, there are two
applications: one by Mr Ellis, brought in response to a debt owing by Mr Eden;
and the second by Mr Eden, who seeks to rescind the order on which the first
application is premised. And again, the success or failure of the first
application is entirely dependent on the fate of the rescission application.
[3] As in the previous case, I consider that the rescission application should fail,
with the result that Mr Ellis should obtain the order that he seeks in his
application (the provisional sequestration of the estate of Mr Eden). My
reasons for that conclusion follow.
RELEVANT FACTUAL BACKGROUND
[4] The judgment of Rogers J referred to in paragraph 1 above summarises facts
germane to the parties’ relationship between mid -2017 and mid -2022, which
do not require repetition. In part as a result thereof, t he factual ba ckground
relevant to this judgment can be set out briefly. It is convenient to do so by
referring to relevant events in chronological order.
[5] Between mid-2017 and December 2019 , Mr Eden and Mr Ellis conducted a
partnership, under the name and style of Extru ct Exhibitions (Pty) Ltd
(Extruct).
[6] On 6 August 2020 , Mr Ellis brought an action for the dissolution of the
partnership and the appointment of a receiver (the dissolution action ), as
well as a damages action.
[7] The dissolution action was not opposed. Mr Ell is accordingly brought an
application for default judgment in respect of the dissolution action on
8 October 2020 , which was granted by this Court on 12 January 2021 .
Pursuant thereto, Mr Neil Gore was appointed as the receiver, responsible for
the prepara tion of a liquidation and distribution account ( L&D account ) to
facilitate the equal distribution of the partnership assets.
[8] The second L&D account prepared by Mr Gore reflected the amount of
R971 132.28 as owing by Mr Eden to Mr Ellis. Mr Eden did not obj ect to the
second L&D account; but he nevertheless failed to pay that amount, as
requested.
[9] On 3 November 2021, Mr Ellis consequently instituted the proceedings
referred to by Rogers J as the ‘enforcement application’, in which he sought
payment of the amount of R971,132.28 (plus interest and costs).
[10] Mr Eden did not immediately oppose the enforcement application. A no tice of
opposition was only filed on 25 January 2022 . On 15 March 2022 , Mr Eden
delivered answering papers in the enforcement application. At the same time,
he applied to rescind the default judgment order. That application was, as
indicated in the quote in paragraph 1 above, the sole response to the
enforcement application.
[11] On 6 June 2022 , this Court ( per Rogers J ) dismissed the rescission
application and consequently , too, granted the enforcement application . The
Court accordingly ordered Mr Eden to pay Mr Ellis the amount of
R971,132.28, plus interest thereon at the prescribed rate from 19 October
2021 to date of payment.2
[12] Mr Eden unsuccessfully applied for leave to appeal against the order of
Rogers J, 3 with his appl ication for leave to appeal to the Supreme Court of
Appeal (SCA) being dismissed with costs on 12 October 2022.
2 This was under case number 10604/2020.
3 Rogers J dismissed Mr Eden’s application for leave to appeal in the High Court on 28 July
2022.
[13] Writs of execution followed: on 28 November 2022 , in respect of the
enforcement application amount of R971,132.28 plus interest and costs; and
on 16 April 2023 , in respect of the taxed costs of Mr Eden’s unsuccessful
application to the SCA for leave to appeal, being R25,952.14.
[14] As Mr Eden has acknowledged, the total amount which he owes to Mr Ellis as
a result of Rogers J’s order and his unsuccess ful attempt to appeal it, is
R997 084.92, plus interest and High Court costs.
[15] The sheriff unsuccessfully attempted to execute the writ s in respect of the
Rogers J order and the SCA order on 17 February 2023 and 31 May 2023,
respectively. Being unable to attach anything to satisfy the writ s, he issued
nulla bona returns.
[16] As is undisputed, a nulla bona return is an act of insolvency, in terms of
section 8(b) of the Insolvency Act, 24 of 1936, thereby entitling the creditor to
bring sequestration p roceedings. On 17 July 2023 , Mr Ellis duly instituted an
application to sequestrate Mr Eden, which was served on 21 July 2023.
[17] Mr Eden filed a notice of intention to oppose the application on 29 July 2023.
No answering affidavit was however forthcoming fr om Mr Eden within the
prescribed time period, or in the months that followed. Accordingly, on
29 November 2023, Mr Ellis brought a chamber book application to compel an
answering affidavit in the sequestration application , failing which the
application could proceed on an unopposed basis.
[18] On 8 April 2024, Mr Eden brought an application, under case no. 10604/2020,
to rescind paragraph 2 of Rogers J’s order of 6 June 2022. 4 That application
is based on an alleged fraud by Mr Elli s, which is said to have resulted in the
4 There has been no application to rescind the SCA order which dismissed the application for
leave to appeal against Rogers J’s order. Such a challenge w as not however necessary, as the SC A
order merely rejected an application seeking to appeal that order, and thus neither replaced nor
amended the order of Rogers J.
liquidation and distribution account (L&D account) in respect of the dissolved
partnership incorrectly reflecting the amount of R971,132.28 as owing by
Mr Eden to Mr Ellis . It cites as a second respondent Mr Gore, the receiver
who prepared the second L&D account in respect of the dissolved
partnership.
[19] On 17 April 2024 , Mr Eden applied for leave to deliver, out of time, an
answering affidavit in the sequestration application (case no. 11636/2023).
That answering affida vit indicated that the rescission application constituted
his defence to Mr Ellis’s sequestration application, as if it were to succeed, the
basis for the sequestration application (the unfulfilled liquidated claim enjoyed
by Mr Ellis) would fall away.
[20] The delivery the late sequestration answering affidavit, as well as the
rescission application of a few days before, resulted in the sequestration
application being postponed on 19 April 2024, for hearing simultaneously with
the rescission application on the semi-urgent roll.
[21] The matters were again postponed on 21 May 2024 , this time for hearing on
the semi -urgent roll on 13 August 2024. On both occasions, wasted costs
stood over for later determination.
THE RESCISSION APPLICATION
[22] Mr Eden’s rescission application has been brought under the common law. As
mentioned, it is based on an alleged fraud by Mr Ellis, who, Mr Eden claims,
fraudulently misrepresented to Mr Gore the true amount of his own personal
expenses run through the bank account of the partnership. Had Mr Gore been
aware of the alleged fraud when dissolving the partnership, Mr Eden submits,
the L&D account would have looked different; while had the Court been aware
of it when considering the enforcement application, the Court would not ,
according to Mr Eden, have granted the order which it did.
Relevant legal principles
[23] The general principles applicable to common-law applications for rescission
based on fraud were set out by the SCA in Moraitis Investments v Montic
Dairy,5 where the Court inter alia stated (at para [12]):6
‘The issue [concerning the grounds on which an order of court can be
set aside] is far more nuanced than the arguments [in th e parties’
heads] suggest. The approach differs depending on whether the
judgment is a default judgment or one given in the course of contested
proceedings. In the former case it may be rescinded in terms of either
rule 31(2)(b) or rule 42 of the Uniform R ules, or under the common law
on good cause shown. 7 In contested proceedings the test is more
stringent.8 A judgment can be rescinded at the instance of an innocent
party if it was induced by fraud on the part of the successful litigant, or
fraud to which the successful litigant was party. 9 As the cases show, it
is only where the fraud – usually in the form of perjured evidence or
concealed documents – can be brought home to the successful party
that restitutio in integrum is granted and the judgment is set aside. The
mere fact that a wrong judgment has been given on the basis of
perjured evidence is not a sufficient basis for setting aside the
judgment. That is a clear indication that once a judgment has been
given it is no t lightly set aside, and De Villiers JA said as much in
Schierhout.10’
[24] As the SCA has also confirmed, a plaintiff or applicant seeking to obtain the
rescission of a judgment and order on the grounds of fraud, must, in
particular, prove: (i) that the defendant / respondent gave incorrect evidence
5 Moraitis Investments (Pty) Ltd and Others v Montic Dairy (Pty) Ltd and Others 2017 (5) SA
508 (SCA); [2017] 3 All SA 485 (SCA).
6 The footnotes in the original have been retained.
7 De Wet and Others v Western Bank Ltd 1979 (2) SA 1031 (A).
8 Ibid at 1041B-E.
9 Makings v Makings 1958 (1) SA 338 (A); Rowe v Rowe 1997 (4) SA 160 (SCA) at 166G-J.
10 Schierhout v Minister of Justice 1927 AD 94 at 98.
during the initial proceedings, (ii) that [s]he did so fraudulently with the
intention to mislead the court and (iii) that this false evidence diverged from
the truth to such an extent that the court would have give n a different
judgment had it been aware of the true position.11
[25] As observed by Zulman J (as he then was) in Nedperm v Verbri,12 ‘fraud is a
most serious matter and the type of allegation which is not lightly made and
which is not easily established’.13 It is particularly difficult to prove fraud in
motion proceedings, not least because the version of the respondent must,
save where inadequately justified or plainly implausible, be accepted. 14 In
Nelson v Nelson ,15 Govindjee J even remarke d,16 when considering an
application to rescind a court order under Rule 42(1)( c), alternatively the
common law, that ‘It has been suggested that it is, as a general rule,
practically impossible to establish fraud using motion proceedings’.17
11 Fraai Uitzicht 1798 Farm (Pty) Ltd v McCullough and Others [2020] ZASCA 60 at paras [16] -
[17], confirming Childerley Estate Stores v Standard Bank of SA Ltd 1934 OPD 163 at 169.
12 Nedperm Bank Ltd v Verbri Projects CC 1993 (3) SA 214 (W) at 220B.
13 See, too, Cilliers et al Herbstein & Van Winsen: The Civil Practice of the High Courts and the
Supreme Court of Appeal of South Africa 5th ed. Vol. 1 at p 940, where it was stated that: “ charges of
fraud are in their nature of the greatest gravity and should not lightly be made, and when made should
not only be made expressly but should be formulated with the precision and fullness demanded in a
criminal case .” See, too, Schierhout fn.10 above at 98 ; and Nelson v Nelson 2283/2021) [2022]
ZAECGHC 9 (17 May 2022), where it was stated (at para [32]) that “Courts have set an exceedingly
high threshold before countenancing an allegation of fraud”.
14 Plascon-Evans (Pty) Ltd v Van Riebeeck Paints (Pty) Ltd 1984 (3) SA 623 (A) at 634E-635C.
15 Footnote 13 above.
16 At para [31], with reference to Shomang v Moamogoe and Others [2021] ZAGPJHC 772 at
para [1],
17 In similar vein, Baker AJ (as he then was) stated in Deary v Deary 1971 (1) SA 227 ( C) at
230B-C that:
‘Had the applicant continued to rely upon a fraudulent misrepresentation which induced the Court to
grant summary judgment against him in the first instance, he would have had to proceed by way of
action to have that judgment set aside. (See Herbstein and van Winsen, Civil Practice of the Superior
Courts, 2nd ed. p. 427, and the authorities referred to in note 44). That being so, had he relied upon a
fraudulent non-disclosure, the Court would have been obliged to dismiss the present appli cation on
the ground that the remedy was misconceived.’
‘The correctness of the judgment in Deary, which was also supported by inter alia Bristow v Hill 1975
(2) SA 505 (N), was questioned by Eloff J in Santos Erec v Cheque Discounting Co. (Pty) Ltd 1986 (4)
SA 752 (W), where it was held that it was competent to bring a rescission application under the
common law either by way of motion proceedings or by way of action. I agree with Eloff J that it is not
necessarily required of a party seeking rescis sion under the common law to proceed by way of action.
However, a party seeking rescission by way of application, rather than action, faces the risk of the
Court finding that the choice of procedure was inappropriate in the light of foreseeable disputes of
fact.’
[26] As held in Schierhout, and endorsed in Moraitis, a party seeking rescission in
any event faces a difficult task, as a judgment of a court, even if incorrect, will
not easily be set aside . That was recently reaffirmed by the Constitutional
Court in City of Ekurhuleni ,18 where the Court held (in relation to an
application under the common law to rescind an order granted by consent):19
‘In assessing whether a case has been made out for rescission, it is
important to bear in mind that a consent order “brings finality to the lis
between the parties; the lis becomes res judicata (literally, a ‘matter
judged’)”. The fact that an order may be incorrect or in conflict with the
Constitution is not, on its own, a reason for its rescission. Indeed, this
Court has made it clear that it will not, in a constitutional dispensation
where court orders are sacrosanct, readily allow a widening of the
grounds for rescission. The City must be able to demonstrate a sound
and recognised legal basis for rescission.’
[27] As was also noted in City of Ekurhuleni ,20 one of the requirements for
rescission under the common law is whether the rescission application has
been brought timeously (i.e., within a reasonable time). The Court added in
this regard that:
‘What is reasonable will depend on the circumstances of the particular
case. A starting point in determining what is reasonable is the 20 -day
time period referred to in rule 31(2)(b) of the Uniform Rules of Court.
Where there has been delay, the applicant must show that there is a
reasonable explanation for the delay.’21
18 City of Ekurhuleni Metropolitan Municipality; In re: Unlawful Occupiers: 1 Argyl Street and
others v Rohlandt Holdings CC and Others (CCT 228/22) [2024] ZACC 10 (31 May 2024).
19 Ibid at para [87] (footnotes omitted).
20 Ibid at paras [86] and [88].
21 As authority for the proposition in the final sentence of the quote (that an application for
rescission must provide a reasonable explanation for any delay), the Court cited Roopnarain v
Kamalapathy 1971 (3) SA 387 (D) at 390F -391D; Nkata v Firstrand Bank Ltd 2014 (2) SA 412 (WCC)
at paras [26]-[29] and NW Civil Contractors CC v Anton Romaano Inc [2019] ZASCA 143; 2020 (3)
SA 241 (SCA) at para [21].
As observed by this Court in Williams v Shackleton Credit Management ,22 an
inordinate delay in instituting an application to rescind a default judgment may
count against the rescission applicant and result in rescission being refused. 23
That was also pointed out by Rogers J in Ellis v Eden (1) – where the
rescission application had been brought in terms of Uniform Rule 42(1) – in
which the learned judge inter alia stated, with reference to his earlier judgment
in Nkata:24
‘It has been said that the purpose of rule 42(1) is “to correct
expeditiously an obviously wrong judgment or order”, that the interests
of finality dictate that the Court should be approached within a
reasonable time, and that it would be a proper exercise of the
discretionary power to refuse rescission in the case of unreasonable
delay.’
[28] A further issue in any rescission application under the common law , as also
noted in City of Ekurhuleni,25 is ‘whether the court should exercise the ultimate
discretion it enjoys to refuse rescission, even where the formal requirements
are established ’. According to the Cour t, a court considering an application
under the common law ‘enjoys a wide discretion. It may refuse rescission if
justice and equity demand it, notwithstanding that an applicant had shown
formal compliance with the requirements for granting rescission.’26
The rescission sought in the present case
[29] As mentioned, Mr Eden alleges that Mr Ellis was guilty of fraudulent
misrepresentations to Mr Gore, when the latter was preparing the second L&D
account, thereby resulting in that account reflecting an amount owing by
Mr Eden which was not in fact ow ed by him to Mr Ellis . That in turn, so
22 Williams v Shackleton Credit Management (Pty) Ltd 2024 (3) SA 234 (WCC) at para [23].
23 See, too, Van der Merwe v Bonaero Park (Edms) Bpk 1998 (1) SA 697 (T) at 703E-G.
24 Ibid at para [63].
25 Ibid at para [86]; see, too, para [100].
26 Ibid at para [100].
Mr Eden claims, resulted in the High Court being brought under a mistaken
impression in the enforcement application, with the result (so Mr Eden claims)
that he is entitled to set aside the order of Rogers J 27 which directed Mr Eden
to pay Mr Ellis the amount of R971,132.28, together with interest at the
prescribed rate from 19 October 2021 to date of payment, and the costs of the
enforcement application (including the costs reserved on 3 February 2022).
The delay in bringing the rescission application
[30] A threshold problem faced by Mr Eden is that his rescission application
relates to an order which was handed down on 6 June 2022, and confirmed
by the SCA on 12 October 2022, and y et was only brought on 8 April 2024
(some twenty-two (22) months after the order was delivered). The rescission
application was moreover brought some eight -and-a-half (8½) months after
the sequestration application was served on Mr Eden (on 21 July 2023 ).
There is an ineluctable inference that, but for the sequestration application,
the rescission application would not have been brought, and Mr Eden would
have simply continued to ignore the Court’s order in the enforcement
application. But, even if one were to assume that it was legitimate for the
rescission application to be a response to the sequestration application, it was
a dilatory response, which prevented the timeous hearing of the sequestration
application. What is more, Mr Eden had already been war ned by the High
Court in Ellis v Eden (1) about the consequences of an unreasonable delay in
bringing a rescission application, and been told by Rogers, in the penultimate
paragraph in the body of his judgment (para [66]), that ‘assuming the
dissolution or der was erroneously granted, I would exercise my discretion
against granting rescission, having regard to the gross delay and the
unsatisfactory nature of Mr Eden’s explanations’.
[31] The delay in the bringing of the (second) rescission application was, to use
the terminology of Rogers J, “gross”. As the Constitutional Court noted in City
27 Paragraphs 2(a) and (b) of the order in Ellis v Eden (1).
of Ekurhuleni, a starting point for assessing the reasonableness of the timing
of a rescission application is the 20 -day time period referred to in Rule
31(2)(b).28 That period pales into insignificance when reckoned against the
time that passed between the handing down of Rogers J’s judgment in the
enforcement application and the institution of the rescission application –
some 22 months, and over 300 days.
[32] The explanation for the unreasonable delay is also inadequate. In summary,
Mr Eden’s attempted justification of the timing is as follows:
32.1. Mr Eden did not call for Extruct’s bank statements to check the
accuracy of Mr Gore’s L&D accounts, and more particularly the second
L&D account sent to the parties on 28 September 2021 because, after
engaging Mr Stefan van der Meer as his attorney in or about January
2022, Mr Van der Meer apparently advised him that it was unnecessary
to do so, as the enforcement application was supposedly doomed to
failure because the first rescission application (directed at the order of
12 January 2021 dissolving the partnership and appointing the
receiver) was purportedly unanswerable on a legal point. After
Rogers J held the opposite, on 6 June 2022, he applied for leave to
appeal against Rogers J’s orders, first to the High Court and then to the
SCA (both times unsuccessfully, the latter application being dismissed
with costs on 12 October 2022.
32.2. After the institution of the sequestration app lication on 17 July 2023,
Mr Eden appointed new attorneys, who briefed senior counsel. A
consultation was then held on 23 August 2023 , at which Mr Eden was
apparently advised that it was imperative for his defence in the
sequestration application for him t o obtain copies of Extruct’s bank
statements in order to prove that Mr Ellis had allegedly defrauded him
28 The relevance of that period as a guide to what constitutes a reasonable period in a common -law
rescission application was also endorsed in Nkata v FirstRand Bank Ltd 2014 (2) SA 412 (WCC) at
para [27].
by not disclosing the full extent of his use of Extruct’s bank account for
his personal expenses.
32.3. Subpoenas, apparently dated 26 October 2023, were the reafter served
upon ABSA calling on them to produce copies of Extruct’s various bank
statements.
32.4. ABSA delivered the bank statements (covering the period 1 August
2017 to 13 December 2019) on 14 December 2023. Mr Eden then
analysed them and forwarded his an alysis to senior counsel on
7 January 2024. A consultation was held on 11 January 2024, at which
a range of other documents were requested.
32.5. Some of the documents considered necessary were requested from Mr
Ellis’s attorneys, who emailed the last of these documents to Mr Eden’s
attorneys on 23 February 2024, whereafter a further consultation was
held on 24 February 2024. Other consultations followed on
29 February and 1 March 2024.
32.6. Senior counsel prepared a draft of the rescission application by
12 March 202 4. A consultation was then held on 13 March 2024,
whereafter Mr Eden sent an updated analysis of the bank statements
to his attorneys on 15 March 2024.
32.7. Largely as a result of unavailability of legal representatives, the
rescission application was thereafter issued on 8 April 2024.
[33] There are at least two problems with that explanation.
33.1. First, and importantly, if Mr Eden believed that the second L&D account
was attributable to fraud which would be revealed by Extruct’s bank
statements, he should have sought the bank statements back in 2021
or 2022, or at least after the rescission application was dismissed by
the High Court and further rejected by the SCA and thus in the last
quarter of 2022 and the first half of 2023 . Even if one were to accept
Mr Eden’s justification for not having requested the bank statements
while the rescission application was pending (and to accept his version
that he did not have the bank statements), there is no explanation at all
for why Mr Eden did not request them between June 2022 , or at least
October 2022 when the SCA dismissed his application for leave to
appeal against Rogers J’s order , and July / August 2023. By that time,
the advice on which he s tates he relied in 2021 and early 2022 – and
thus the basis for his not having requested the bank statements during
that period – had been shown to be wrong. Had Mr Eden genuinely
been desirous of disputing the second L&D account, he should
therefore have requested the bank statements then , insofar as he still
needed them.
33.2. Second, despite having been apprised by the Court in Ellis v Eden (1)
of the need for rescission applications to be brought within a
reasonable time, he (and his legal team) delayed even after the
consultation of 23 August 2023 (which was itself unduly late given the
service of the sequestration application on 21 July 2023) , with the
subpoenas to ABSA only being issued more than two months, and over
60 days, later , on 26 October 2023. That delay – which is three times
the length of the period envisaged for Rule 31(2)( b) rescission
applications – is moreover entirely unexplained. In addition, despite
knowing of the time constraints inherent in the institution of rescission
applications, Mr Eden only brought his rescission application almost
four (4) months after receiving the bank statements on 14 December
2023. Even taking into account the year-end vacation and the extent of
the information in the bank statements, that appears to be
unreasonably long (all the more so given the need for expedition in the
light of the previous delays), while the explanation is also patchy and
not entirely satisfactory.
[34] Mr Eden is effectively seeking to put the parties back in the position that they
were in back in September 2021, prior to the second L&D account being sent
to the parties. I agree with the analogous remarks of Rogers J in paragraph
[52] of Ellis v Eden (1) about the undesirable effects of such an order and how
it undermines the interests of finality, as recently affirmed by the Constitutional
Court in City of Ekurhuleni.
[35] As in Ellis v Eden (1) , I am accordingly of the view that there was a gross
delay which has not been satisfactorily explained, and which it would not be in
the interests of justice to overlook or condone. For this reason alone , the
rescission application should, in the exercise of my discretion, be dismissed.29
Failure to show fraud on the papers
[36] I am in event not persuaded that a finding of fraud against Mr Ellis can be
made on the papers, or thus that Mr Eden has shown that Mr Ellis fraudulently
misrepresented the financial position to Mr Gore, resulting in the second L& D
account substantially overstating Mr Eden’s liability to Mr Ellis.
[37] Mr Eden attempted to prove fraud by Mr Ellis by annexing to his founding
affidavit in the rescission application various schedules which he had
prepared (annexures “FA5” to “FA20”) , which referred to entries in the
Extruct’s bank statements which were alleged to relate to personal expenses
of Mr Ellis (rather than partnership expenses), which had not been treated as
such by Mr Gore, because (so Mr Eden alleged) Mr Ellis had fraudulently
misrepresented the position to Mr Gore . According to Mr Eden’s founding
affidavit in the rescission application, Mr Ellis owed him R1 006 140.69 as a
result of that alleged fraud, which exceeded Mr Ellis’ claim against him (of
R997 084.92) by R9 055.71.
29 I do not agree with Mr Eden’s counsel that the par ties’ consent to the late filing of Mr Eden’s
answering affidavit and Mr Ellis’s replying affidavit, as recorded in order of Goliath AJP of 21 May
2024, somehow precludes Mr Ellis from complaining about Mr Eden’s delay in seeking rescission of
paragraph 2 of Rogers J’s order in the rescission application. The parties were merely agreeing that
condonation applications concerning the failure to comply with the time periods in the Uniform Rules
were unnecessary. That agreement cannot impact on how the Court sh ould evaluate the factors
relevant to the granting or refusal of the rescission application (substantive issues ventilated in the
affidavits).
[38] Mr Ellis vehemently disputed the allegations of fraud. He also denied that the
schedules were accurate. Mr Ellis pointed out that some of the entries
undeniably related to partnership expenses. Mr Eden conceded this to be so
in the case of at least some of the schedules and some entries on other
schedules. Mr Eden was thus constrained to acknowledge by the time of the
hearing that his alleged claim against Mr Ellis was less than the amount that
he owed Mr Ellis pursuant to the orders of Rog ers J and the SCA (and thus
the amount of the writs against Mr Eden which had gone unsatisfied).
Mr Eden’s counsel nevertheless contended that Mr Eden was entitled to a
partial rescission of the order in the enforcement application.30
[39] It is not possible for me to conclude on the affidavits whether the second L&D
account had, as alleged by Mr Eden, incorrectly reflected personal expenses
of Mr Ellis as partnership expenses, to the detriment of Mr Eden. Mr Ellis has
in numerous instances cast doubt on Mr Ede n’s assertions in his schedules,
read with his affidavits. Where he has not addressed particular entries, I also
cannot conclude, in the light of his explanations and his numerous credible
rebuttals of Mr Eden’s version, that those entries were personal ex penses
which were wrongly recorded by Mr Gore.
[40] But, in any event, even if one assumes that personal expenses of Mr Ellis
were inaccurately represented as partnership expenses in the second L&D
account, Mr Eden has not come close to showing that any such in accuracies
were attributable to fraudulent misrepresentations by Mr Ellis to Mr Gore, or
that, as alleged by Mr Eden, ‘Mr Ellis perpetrated a fraud on Mr Gore and
[him]’. Any such errors could, on the papers, have been attributable to a
variety of reasons: for example, Mr Gore could have failed to interrogate the
expenses sufficiently with the partnership’s accountant, Mr Penderis, or Mr
Ellis, or have made incorrect assumptions; or Mr Ellis could have made
30 The circumstances in which a judgment can be rescinded in part were helpfully discussed in
Conekt Business Group (Pty) Ltd v Navigator Computer Consultants CC 2015 (4) SA 103 (GJ).
statements to Mr Gore in good faith, on the basis of assurances, express or
tacit, from Mr Penderis, and fortified by what he perceived Mr Eden to accept;
or Mr Ellis could simply have held a different view as to what could
legitimately be debited to the partnershi p to the one that Mr Eden has now
adopted.31 Mr Eden essentially relies for his allegations of fraud on inferences,
based on his assessment (sometimes speculative, and on occasions
demonstrably wrong) of entries in the bank statements ; but not only are such
inferences not justified, but hi s allegations do not meet the strict standard for
pleading fraud, and they are also incapable of being accepted in motion
proceedings in the face of Mr Ellis’s unequivocal denials.
[41] For this reason, too, Mr Eden’s rescission application must fail.
Res judicata (issue estoppel) / Abuse of process?
[42] Mr Ellis also objected in argument to the rescission application on the basis
that Mr Eden could have objected to the second L&D account when opposing
the enforcement application and that it would therefore not be a ppropriate to
permit him to attempt to do so now , as that would offend the principle of res
judicata / issue estoppel and also be an abuse of process.
[43] Mr Ellis’ counsel relied in this regard on the Full Bench decision of this Court
in Basson32 (another matter in which the fate of a sequestration application
depended on the fact of a rescission application ), in which the Court (again
per Rogers J) stated the following (under the heading “Res judicata”):
‘[49] The Basson sureties did not in their first res cission application
assert that the cession agreement was a sham. It was raised for
the first time in argument during the hearing of the application for
31 Mr Ellis alleges that he and Mr Eden agreed that some personal expenses could be paid
using the partnership’s funds, as Mr Eden’s own practice (confirmed by bank statement entries)
shows; and that Mr Eden has been disingenuous in now contending otherwise.
32 Basson NO and Another v Orcrest Properties (Pty) Ltd and two related matters [2016] 4 All SA 368
(WCC).
leave to appeal. I disagree with the submission advanced on
behalf of OPPL that the decisions of Traver so DJP and the SCA
dismissing the applications for leave to appeal can be regarded as
determining the fraud defence on its merits. The issue is thus not
res judicata in the usual sense.
[50] However the policy which underlies the principle of res
judicata is that nobody should be permitted to harass
another with second litigation on the same subject. Such
litigation can be viewed as an abuse of process. The same
policy prevents a litigant from advancing, by way of second
proceedings, something whic h he could and should have
raised in the earlier proceedings, provided that in all the
circumstances his conduct in so doing can be regarded as
an abuse of process (Janse van Rensburg & Others NNO v
Steenkamp & Another; Janse Van Rensburg & Others NNO v
Myburgh & Others 2010 (1) SA 649 (SCA) paras [27]-[30]).
[51] OPPL contended in the court [a] quo, and Traverso DJP
accepted, that the second application was an abuse of process in
the above sense. It will be apparent from what I have already said
regarding the Basson sureties’ delay in bringing the second
application that I agree.’
[emphasis added]
[44] It was clearly open to Mr Eden to have sought to resist the enforcement
application on the basis that the second L&D account was inaccurate,
whether as a result o f deliberate misrepresentations by Mr Ellis or otherwise.
As Mr Ellis’s counsel pointed out, Rogers J in fact made a comment to that
effect in paragraph [62] of Ellis v Eden (1), where he stated that ‘… even if the
dissolution order had not been timeously impeached, it was open to Mr Eden
to object to the accounts prepared by Mr Gore on the basis that particular
assets or liabilities had been wrongly excluded or included. … However,
Mr Eden chose not to challenge the accounts. Even in the present
proceedings, there has been no attempt to attack the accounts on their
merits’.
[45] Mr Eden’s counsel understandably did not seek to dispute this. His argument
was instead that a defence along those lines must be expressly pleaded by a
party, and cannot be raised for the first time in argument; and that Mr Ellis had
not pertinently pleaded reliance on that rule or thus laid a foundation in fact
which would enable Mr Eden to deal with such reliance, and he could
therefore not rely on it in argument.
[46] In support o f that contention, Mr Eden’s counsel referred to a passage from
the SCA judgment in Janse van Rensburg,33 in which Heher JA, writing for the
court, summarised the position as follows [bold emphasis added]:
‘[29] In Arnold v National Westminster Bank plc [1991] 3 All ER 41 (HL)
at 48j Lord Keith pointed out that, although Henderson’s was a case of
action estoppel, the statement of the law has been held to be
applicable also to issue estoppel. The learned law lord had earlier
referred (at 48e) to Brisbane City Council v A-G for Queensland [1978]
3 All ER 30 (PC) at 35 -36; [1979] AC 411 at 425, where Lord
Wilberforce said
“The second defence is one of res judicata. There has, of course, been
no actual decision in litigation between these parties as to the issue
involved in the present case, but the appellants invoke this defence in
its wider sense, according to which a party may be shut out from raising
in a subsequent action an issue which he could, and should, have
raised in earlier proceedings. The classic statement of this doctrine is
contained in the judgment of Wigram V -C in Henderson v Henderson
33 Janse van Rensburg NO and Others v Steenkamp and Another; Jans e van Rensburg NO and
Others v Myburgh and Others 2010 (1) SA 649 (SCA); [2009] 1 All SA 539 (SCA).
(1843) 3 Hare 100, [184 3-60] All ER Rep 378 and its existence has
been reaffirmed by this Board in Hoystead v Taxation Comr [1926] AC
155, [1925] All ER Rep 56. A recent application of it is to be found in
the decision of the Board in Yat Tung Co v Dao Heng Bank [1975] AC
581. I t was, in the judgment of the Board, there described in these
words (at 590): “. . . there is a wider sense in which the doctrine may be
appealed to, so that it becomes an abuse of process to raise in
subsequent proceedings matters which could and therefor e should
have been litigated in earlier proceedings.” This reference to “abuse of
process” had previously been made in Greenhalgh v Mallard [1947] 2
All ER 255 at 257 per Somervell LJ, and their Lordships endorse it.
This is the true basis of the doctrine and it ought only to be applied
when the facts are such as to amount to an abuse, otherwise there is a
danger of a party being shut out from bringing forward a genuine
subject of litigation.”
[30] I respectfully agree. The identification with abuse of the process
accords with the policy expressed in the maxim nemo debet bis vexari
pro una et eadem causa which underlies the principle of res judicata.
As was said in the National Sorghum case (at 241D -E) the abuse
arises when the same cause of action is raised against a defendant a
second time. But what is to be noted from both the Henderson and
Brisbane City Council cases is the additional emphasis on the
facts of each matter, for how else should a court determine
whether the conduct of a party has reached the level of being an
abuse? That being so it is for the party who relies on the
application of the rule pertinently to plead such reliance and lay a
foundation in fact which would enable the opposing parties to
deal with such reliance . In the context of the present appeal that
required that the respondent had to lay a basis for barring the
liquidators from carrying out what was prima facie their right and duty to
employ the remedy created by s 29 of the Act. But I find no such
evidence in the record of either appeal.”
[47] It is readily understandable why an argument based on issue estoppel would
require a proper factual foundation. If, for example, it were not reasonably
possible for an issue to be raised at an earlier stage, it would seem
inequitable to preclude a party from subsequently raising it. It is however
difficult to understand what more needed to be set out in the affidavits in order
for the point to be taken in argument in this case. It was after all Mr Eden’s
own version that he could have queried the accuracy of the second L&D
account in opposition to the enforcement application, and in fact seemingly
wanted to do so; but was persuaded by his then attorney that he should put all
his eggs in a ‘legal argument’ basket. 34 Mr Eden’s own case is thus that he
consciously did not advance an argument that he has now sought to raise in
the context of the rescission application. Mr Ellis also repeatedly averred in
his answering affidavit that Mr Eden was relying for his rescission on
information previ ously available to him. This therefore seems precisely the
sort of case where the res judicata / issue estoppel principle would find
application. Even if the principle cannot be directly invoked in this case, it
would moreover factor into the interests of justice consideration which informs
the general discretion that the court has in such circumstances. Had I not
already concluded that the rescission application should be dismissed, I would
therefore have been minded to reject the application for this reason as well.
CONCLUSION AND COSTS
[48] In the result, the rescission application by Mr Eden (the second application)
must fail . As the rescission application was the only answer to the
sequestration application by Mr Ellis (the first application), the relief sought in
that application (provisional sequestration and a rule nisi) must, as a result,
also be granted. No return day for the rule nisi was proposed, in the event that
I were to grant such an order. In the light of the time of year, it would however
seem appropriate to set a return date for the rule nisi which is three months
34 Whether that was actually a legal argument, or a mixed argument of law and fact, is of no
moment.
from the date of this judgment , subject to confirmation with the registrar;
alternatively such (other) return date as the registrar allocates.
[49] Given the nature and complexity of the issues, t his is not a case where
counsel’s costs should be on the default scale envisaged by Uniform Rule
67A(3), read with rule 69 : i.e., Scale A. But equally, I do not think that the
highest scale (Scale C) would be applicable. I shall accordingly order that
counsel’s costs be taxed on the intermediate scale (scale B).
[50] Mr Eden should also pay the wasted costs of 19 April 2024 and 21 May 2024,
which were ultimately attributable to his delays in bringing his rescission
application and responding to the sequestration application.35
ORDER
[51] I accordingly make the following order:
1. In regard to the rescission application (case no. 10604/2020):
a. The application is dismissed.
b. The applicant, Mr Eden, is directed to pay the costs of the
respondent, Mr Ellis , with the costs of Mr Ellis’s counsel being
taxed on Scale B.
2. In regard to the sequestration application (case no. 11636/2023):
a. The estate of Mr Eden is hereby placed under provisional
sequestration.
35 Insofar as it may be necessary formally to do so, I should also record that, as indicated at the
hearing, the further affidavits of Mr Ellis and Mr Eden in the rescission application (deposed to on
13 July 2024 and 6 August 2024, respectively) are admitted into evidence.
b. A rule nisi is issued calling upon the first and/or second
respondents (Mr Eden and his wife) and any interested parties
to show cause, if any, on 27 February 2025 (subject to
confirmation with the registrar; alternatively such return date as
the registrar allocates), as to why:
i. Mr Eden’s estate should not be placed under final
sequestration;
ii. The costs of this application should not be costs in the
sequestration of Mr Eden’s estate.
c. This Order is to be served on:
i. Mr and Mrs Eden at 2 […] B[…] Close, K […] Country
Estate, George, Western Cape;
ii. The South African Revenue Service (SARS), at 22 Hans
Strijdom Avenue, Cape Town, Western Cape;
iii. Any and all employees of Mr Eden and any registered
trade union(s) that may represent such employee(s).
3. In relation to both applications Mr Eden is to pay the costs reserved
on 19 April 2024 and 21 May 2024 (including the costs of counsel on
Scale B).
_________________________
ACTING JUDGE P FARLAM
For applicant in case no. 10604/2020 and respondents in case no. 11636/2023:
Adv Guy Elliott SC
Instructed by: Alta Roos Inc. (George) c/o Bailey Haynes Inc.
For first respondent in case no. 10604/2020 and applicant in case no. 11636/2023:
Adv Bronwynne Brown
Instructed by: B Lubbe & Associates (Blouberg) c/o Francis Thompson & Aspden