About SAFLII
Databases
Search
Terms of Use
RSS Feeds
South Africa: Western Cape High Court, Cape Town
SAFLII
>>
Databases
>>
South Africa: Western Cape High Court, Cape Town
>>
2010
>>
[2010] ZAWCHC 49
|
|
Vilvanathan and Another v Louw NO (1254/2003) [2010] ZAWCHC 49; 2010 (5) SA 17 (WCC) ; [2011] 2 All SA 331 (WCC) (19 March 2010)
REPORTABLE
IN
THE HIGH COURT OF SOUTH AFRICA
(WESTERN
CAPE) CAPE TOWN.
CASE
NO.: 1254/2003
In
the matter between:
CHANDERGASIN
VILVANATHAN
First
Applicant
GERMAINE
OLGA VILVANATHAN
Second
Applicant
and
TOBIAS
JOHN LOUW N.O.
in
his capacity as Curator of
SAAMBOU BANK LIMITED
Respondent
JUDGMENT
DELIVERED THIS 19
th
DAY OF MARCH, 2010.
THRING,
J.:
The
question which arises for decision in this matter is whether a final
judgment of the High Court can be set aside simply because
it has
been satisfied in full by the judgment debtor, and the judgment
creditor consents to its rescission.
In
1996 the applicants, who are married to each other in community of
property, mortgaged their immovable property to Saambou Bank,
Limited
by way of a continuing covering mortgage bond as security for moneys
lent and advanced and to be lent and advanced by the
bank to them.
The applicants later fell into arrears with their monthly
instalments. On the 21
st
February, 2003 Saambou Bank, Limited, which was by then under
curatorship, represented by its curator, the respondent, issued
summons against the applicants under the bond for payment of the sum
of R155,405.86, an order declaring the mortgaged property executable,
and costs. The summons was duly served on the applicants. However,
they did not enter appearance to defend the action. On the 8
th
April, 2003 the Registrar of this Court duly granted the respondent
judgment as prayed in the summons by default of entry of appearance
to defend in terms of Rule 31(5). The judgment was, of course, final
in form.
This
is an application by the applicants for rescission of the judgment.
It is brought under Rule 31(2)(b). There is also an application
under
Rule 27(3) for condonation of the applicants' failure to bring their
application for rescission within the period of 20 days
referred to
in Rule 31(2)(b), which condonation will, in the circumstances, be
granted.
The
applicants were previously legally represented, but are no longer so.
The respondent does not oppose this application. At the
request of
the Court, and as
amici
curiae,
Ms
Wharton
appears for the applicants and Mr Maree for the respondent. We are
indebted to both of them for the able and conscientious manner
in
which they have assisted the Court at short notice.
The
application is founded solely on an allegation by the applicants that
after the judgment had been granted against them they
"liquidated
the outstanding judgment debt, interest and costs" and that,
consequently, they "are no longer indebted
to the plaintiff in
the amount claimed or at all." Annexed to their affidavits is a
copy of a letter from First Rand Bank,
Limited dated the 8
th
July, 2008 in which the following is said:
"We
will not appose (sic) the rescission of judgment.
1.
We
consent to the rescission of judgment.
2.
We give condonation for late bringing of the application.
3.
We confirm that your bond account is closed and bond
cancelled in deeds office.
4.
The cost for the above will be for your own account."
The
letter purports to have been written by First Rand Bank, Limited as
agent for Saambou, Limited. It can accordingly safely be
accepted
that the respondent consents to the judgment being rescinded.
The
applicants aver that if it is not rescinded they will suffer
prejudice, inasmuch as they will in future be unable to secure
credit
facilities from financial institutions. There is no suggestion
anywhere on the papers that the applicants have or have ever
had any
defence to the respondent's claims against them. Nor is any express
explanation proffered for their failure to enter appearance
to defend
the action, save for their averment
that "(d)uring
2002/2003 the financial position of the second defendant
and
myself [the first applicant] grew increasingly precarious "
The fact
that
they had no defence to the respondent's claims may, of course, have
played a role in their decision not to defend the action:
indeed, it
seems not improbable that this was a material factor in that
decision.
Be
that as it may, when the matter came before me on the 16
th
October,
2008 in the Third Division I was not satisfied that I should deal
with it sitting alone in view of the existence of apparently
conflicting decisions on the question, and in terms of sec. 13(1 )(b)
of the Supreme Court Act, No. 59 of 1959 I referred the matter
for
hearing before a Full Court. This is that hearing.
Rule
31(2)(b) under which, as I have said, the application is brought,
reads as follows:
"A
defendant may within 20 days after he or she has knowledge of such
judgment apply to court upon notice to the plaintiff
to set aside
such judgment and the court may, upon good cause shown, set aside the
default judgment on such terms as to it seems
meet."
Rule
31(5) (d) may also be relevant. It provides:
"Any
party dissatisfied with a judgment granted by the
registrar
may, within 20 days after he has acquired knowledge
of
such judgment , set the matter down for
reconsideration
by the court."
An
order or judgment may also be rescinded or varied under Rule 42(1),
which reads:
"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 judgment erroneously sought or erroneously granted in
the absence of any party affected thereby;
(b) an
order or judgment in which there is an ambiguity, or a patent error
or omission, but only to the extent of such ambiguity,
error or
omission;
(c) an
order or judgment granted as the result of a mistake common to the
parties."
However,
it is clear that Rule 42(1) has no application in the present case,
inasmuch as there is no suggestion that the judgment
here concerned
was erroneously sought or erroneously granted, that it contains any
ambiguity, patent error or omission, or that
it was granted as a
result of a mistake common to the parties: see
Lazarus
and Another v. Nedcor Bank Ltd., Lazarus and Another v. ABSA Bank
Ltd.
,
1999(2) SA 782 (W) at 785 A. Rule 42(1) can consequently be left out
of account for the purposes of this application.
Other
than by means of the machinery of Rule 31(2)(b), Rule 31(5)(d) or
Rule 42(1), a judgment or order of this Court may be set
aside by it
in the exercise of its powers under the common law: see
de
Wet and Others v. Western Bank Ltd.
,
1979(2) SA 1031 (AD) at 1042 H. I turn to this topic now, since it
seems to me to be the appropriate place at which to commence
a
consideration of the question at issue.
It
would be desirable, I think, to commence with some general
observations of the common-law power, as I perceive it, of this Court
to rescind its own final judgments and orders, as set out and
discussed in a number of decisions of the Appellate Division and
the
Supreme Court of Appeal.
A
convenient starting-point is perhaps the judgment of
Trengove,
A.J.A.
,
as he then was, in
de
Wet and Others v. Western Bank Ltd.
,
supra
.
The learned Judge of Appeal referred,
inter
alia
,
to the decision in
Childerley
Estate Stores v. Standard Bank of S.A. Ltd.
,
1924 OPD 163
, in which it was held, in effect, that this power could
be exercised only in cases of fraud or in certain very exceptional
cases
of
Justus
error
.
Trengove,
A.J.A.
found, however, at 1040 D that the Court's power to grant this kind
of relief under the common law was not confined to the grounds
specifically mentioned in the
Childerley
case. At 1041 C-E he said:
"The
Courts of Holland, as I have mentioned, appear to have had a
relatively wide discretion in regard to the rescission of
default
judgments, and a distinction seems to have been drawn between the
rescission of default judgments, which had been granted
without going
into the merits of the dispute between the parties, and the
rescission of final and definitive judgments, whether
by default or
not, after evidence had been adduced on the merits of the dispute.
(Cf
Athanassiou
v Schultz
1956(4)
SA 357 (W) at 360G en
Verkouteren
v Savage
1918
AD 143
at 144). In the former instance the Court enjoyed relatively
wide powers of rescission, whereas in the latter event the Court was,
generally speaking, regarded as being
functus
officio
,
and judgments could only be set aside on the limited grounds
mentioned in the
Childerley
case.
(Cf
Voet
2.11.9
and Loenius
Decisien
en Observatien
cas
109)."
At
1042 F - 1043 A the learned Judge of Appeal continued:
"Thus,
under the common law, the Courts of Holland were, generally speaking,
empowered to rescind judgments obtained on default
of appearance, on
sufficient case shown. This power was entrusted to the discretion of
the Courts. Although no rigid limits were
set as to the circumstances
which constituted sufficient cause (cf examples quoted by
Kersteman
(
op
cit sv
defaillant) the Courts nevertheless laid down certain general
principles, for themselves, to guide them in the exercise of their
discretion. Broadly speaking, the exercise of the Court's
discretionary power appears to have been influenced by considerations
of justice and fairness, having regard to all the facts and
circumstances of the particular case. The
onus
of showing the existence of sufficient cause for the relief was on
the applicant in each case, and he had to satisfy the Court,
inter
alia
,
that there was some reasonably satisfactory explanation why the
judgment was allowed to go by default. It follows from what I
have
said that the Court's discretion under the common law extended
beyond, and was not limited to, the grounds provided for in
Rules 31
and 42(1), and those specifically mentioned in the
Childerley
case.
Those
grounds do not, for example, cover the case of a litigant, or his
legal representative, whose default is due to unforeseen
circumstances beyond his control, such as sudden illness, or some
other misadventure; one can envisage many situations in which
both
logic and common sense would dictate that a defaulting party should,
as a matter of justice and fairness, be afforded relief."
From
the above passages in the judgment in
de
Wet's
case,
supra
,
it seems to me that the following three propositions emerge, which
are relevant to the present matter:
This
Court's common-law power to rescind its own judgments and orders, at
least in cases where the merits of the dispute between
the parties
have not been gone into, is not confined to cases of fraud or the
exceptional cases of
justus
error
which are referred to in the
Childerley
case,
supra
,
but may be exercised on wider grounds than those;
Generally
speaking, this Court, like the Courts of Holland, is empowered to
rescind its judgments and orders given in default
of appearance "on
sufficient case shown" (at 1042 F-G: the word "case"
may be a misprint here for "cause");
this is a
discretionary power, the exercise of which is influenced by
"considerations of justice and fairness, having regard
to all
the facts and circumstances of the particular case" (at 1042
H);
(3)
The applicant for rescission, who bears the
onus
in this regard, has to satisfy the Court,
inter
alia
,
that "there was some reasonably satisfactory explanation why the
judgment was allowed to go by default" (at 1042
in
fine
).
See,
also,
Silber
v. Ozen Wholesalers (Pty.) Ltd.
,
1954(2) SA 345 (AD) at 352 G.
The
term "sufficient cause" or "good cause" (which is
practically synonymous: see
Silber
v. Ozen Wholesales (Pty.) Ltd.
,
supra
,
at 352
in
fine
)
was considered in this context by die Appellate Division in
Chetty
v. Law Society, Transvaal
,
1985(2) SA 756 (AD).
Miller,
J.A.
said at 764 I - 765 E:
"The
appellant's claim for rescission of the judgment confirming the rule
nisi
cannot
be brought under Rule 31(2)(b) or Rule 42(1), but must be considered
in terms of the common law, which empowers the Court
to rescind a
judgment obtained on default of appearance, provided sufficient cause
therefor has been shown. (See
De
Wet and Others v. Western Bank Ltd.
1979(2) SA 1031 (A) at 1042 and
Childerly
Estate Stores v. Standard Bank of SA Ltd.
1924 OPD 163.)
The term 'sufficient cause' (or 'good cause') defies
precise or comprehensive definition, for many and various factors
require
to be considered. (See
Cairn's
Executors v. Gaarn
,
1912 AD 181
at 186 per
Innes,
JA.
)
But it is clear that in principle and in the long-standing practice
of our Courts two essential elements of 'sufficient cause'
for
rescission of a judgment by default are:
(i)
that
the party seeking relief must present a reasonable and acceptable
explanation for his
default; and
(ii)
that
on the merits such party has a
bona
fide
defence
which,
prima
facie,
carries
some prospect of success. (De
Wet's
case
supra
at
1042;
P
E Bosman Transport Works Committee and Others v Piet Bosman Transport
(Pty) Ltd
1980
(4) SA 794
(A);
Smith
NO v Brummer NO and Another; Smith NO v Brummer
1954
(3) SA 325
(O) at 357-8.)
It
is not sufficient if only one of these two 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
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
reasonable prospects of success on the merits."
The
two essential elements of the "sufficient cause" or "good
cause" required for the rescission of a final
judgment, both of
which must be present, are, with respect, set out with abundant
clarity in this passage, and
I
emphasize them, particularly the second, viz. that the applicant must
show that on the merits of the case he has a
bona
fide
defence which
prima
facie
carries
some prospect of success.
Most
recently, in
Colyn
v. Tiger Food Industries Ltd. t/a Meadow Feed Mills (Cape)
,
2003(6) SA 1 (SCA) the Court's common-law powers were again
considered and commented upon by the Supreme Court of Appeal. At 5
I
- 6 B (para. [4])
Jones,
A.J.A.
said:
"As
I shall try to explain in due course, the common law before the
introduction of Rules to regulate the practice of superior
Courts in
South Africa is the proper context for the interpretation of the
Rule. The guiding principle of the common law is certainty
of
judgments. Once judgment is given in a matter it is final. It may not
thereafter be altered by the Judge who delivered it. He
becomes
functus
officio
and
may not ordinarily vary or rescind his own judgment
(Firestone
SA (Pty) Ltd v Genticuro AG).
That
is the function of a Court of appeal. There are exceptions. After
evidence is led and the merits of the dispute have been determined,
rescission is permissible only in the limited case of a judgment
obtained by fraud or, exceptionally,
justus
error.
Secondly,
rescission of a judgment taken by default may be ordered where the
party in default can show sufficient cause."
At
9 C-F (para. [11]) the learned Acting Judge of Appeal continued:
"I
turn now to the relief under the common law. In order to succeed an
applicant for rescission of a judgment taken against
him by default
must show good cause
(De
Wet and Others v Western Bank Ltd (supra)).
The
authorities emphasise that it is unwise to give a precise meaning to
the term 'good cause'. As
Smalberger
J
.
put it in
HDS
Construction (Pty) Ltd v Wait:
'When
dealing with words such as 'good cause' and 'sufficient cause' in
other Rules and enactments the Appellate Division has refrained
from
attempting an exhaustive definition of their meaning in order not to
abridge or fetter in any way the wide discretion implied
by these
words
(Cairns'
Executors v Gaarn
1912
AD 181
at 186;
Silber
v Ozen Wholesalers (Pty) Ltd
1954
(2) SA 345
(A) at 352-3). The Court's discretion must be exercised
after a proper consideration of all the relevant circumstances.'
With
that as the underlying approach the Courts generally expect an
applicant to show good cause (a) by giving a reasonable explanation
of his default; (b) by showing that his application is made
bona
fide;
and
(c) by showing that he has a
bona
fide
defence
to the plaintiff's claim which
prima
facie
has
some prospect of success
(Grant
v Plumbers (Pty) Ltd,
HDS
Construction
(Pty) Ltd v Wait, supra, Chetty v Law Society, Transvaal."
A
further requirement for rescission of a judgment under the common-law
was mentioned by
Trengove,
A.J.A.
,
as he then was, in
Swadif
(Pty.) Ltd. v. Dyke, N.O.
,
1978 (1) SA 928
(AD) where, at 939 E he said:
" it
is abundantly clear that at common law any cause of action, which is
relied on as a ground for setting aside a final judgment,
must have
existed at the date of the final judgment.
There must be some
causal connection between the circumstances which give rise to the
claim for rescission and
the judgment "
On
the facts of that case the learned Judge of Appeal held at 939 G-H
that:
" when
the judgment was granted, no grounds existed for
setting
it aside. The Court was fully entitled to grant the judgment on all
the facts, and the
causa,
which
existed at the date of the judgment."
Consequently,
the Court found, the judgment could not properly be rescinded.
From
the
dicta
which I have quoted above it is apparent, I think, with respect, that
over a long period the Appellate Division and, more recently,
the
Supreme Court of Appeal, whilst being astute to emphasize the need to
preserve the width and flexibility of the Court's discretion,
has
unambiguously settled the ambit of the common-law powers of this
Court to rescind its own judgments, the limits to those powers,
and
certain aspects of the manner in which the Courts should exercise
their discretion in considering such applications for rescission.
In
particular, the requirements which must be met by an applicant for
rescission at common law have been very clearly formulated
and laid
down. I emphasize two of them especially because they are, perhaps,
the most important, and because both of them are centrally
relevant
in this matter, viz.
The
requirement that the applicant must satisfy the Court that there is
some reasonably satisfactory explanation why the judgment
was
allowed to go by default; and
The
requirement that, on the merits of the action, the applicant has a
bona
fide
defence which,
prima
facie
,
carries some prospect of success.
The
principles laid down by the Appellate Division and the Supreme Court
of Appeal were duly applied in numerous cases in various
Provincial
and Local Divisions. Examples of their application are the following:
Nyingwa
v. Moolman N.O.
,
1993(2) SA 508 (TkGD), in which
White,
J.
refused an application for rescission of a summary judgment which had
been granted by default
inter
alia
because the applicant for rescission had not satisfied either of the
two requirements for "sufficient cause" to which
I have
referred above (at 513 H-I);
Weare
v. ABSA Bank Ltd.
,
1997(2) SA 212 (D), in which
Meskin,
J.
refused to rescind a default judgment simply on the ground that it
had been satisfied, that the judgment creditor did not oppose
the
application, and that the judgment debtor was being prejudiced in his
"business activities" by its continued existence,
it being
found that this did not constitute sufficient cause for rescission
(at 215 E-F, 216 H);
Venter
v. Standard Bank of South Africa
,
[1999] 3 All SA 278
(W), in which, in the context of an application
for rescission under magistrates' court Rule 49(5),
Joffe,
J
.
applied the common-law requirement of "good cause" and
found that mere satisfaction of the relevant judgment, coupled
with
the judgment creditor's consent to the rescission thereof, did not
per
se
constitute such good cause (at 281 b-d, 283 f-g);
Saphula
v. Nedcor Bank Ltd.
,
1999(2) SA 76 (W), in which
Flemming,
D.J.P.
also refused an application for rescission based on similar grounds,
finding that the "hallmark" requirement of a
bona
fide
defence to the plaintiff's claim was lacking (at 79 C-D);
Lazarus
and Another v. Nedcor Bank Ltd.
,
supra
,
in which
Cloete,
J
.,
as he then was, also refused a similar application, finding that
"good cause" had not been made out simply by the
satisfaction of the judgment and the judgment creditor's consent to
its rescission (at 787 D-E);
and
Swart
v. ABSA Bank Ltd.
,
2009(5) SA 219 (C), in which
Veldhuizen,
J.
also
refused a similar application
inter
alia
on the ground that the cause relied on by the applicant (satisfaction
of the judgment and consent by the judgment creditor to its
rescission) had not existed at the time when the judgment was handed
down (at 221 H - 222 A (para. [5])), and that, in any event,
it did
not constitute "good cause". Yet other recent examples of
the application of the principles to which I have referred
are
Promedia
Drukkers en Uitgewers (Edms.) Bpk. v Kaimowitz and Others
,
1996(4) SA 411 (C) at 417J - 418B,
Marais
v. Standard Credit Corporation Ltd.
,
2002(4) SA 892 (W) at 895 F - H and
Harris
v. ABSA Bank Ltd. t/a Volkskas
,
2006(4) SA 527 (T) at 528I - 529F (para's [4] - [6]). There are
probably many others.
However,
in 2001, and in this Division, there came a new departure. This was
with the decision in
R.F.S.
Catering Supplies v. Bernard Bigara Enterprises C.C.
,
2002(1) SA 896 (C). This was an appeal against a magistrate's refusal
of an application to rescind a judgment under magistrate's
court Rule
49(5) after the judgment debtor had satisfied the judgment and the
judgment creditor had consented to its rescission.
The rule provides
for rescission in such circumstances. However, the magistrate
considered herself bound by the decision in
Venter
v. Standard Bank of South Africa
,
supra
,
in which it had been held that that rule was
ultra
vires
inasmuch
as it purported to make inroads into the substantive law requirements
for rescission, which requirements included "good
cause" as
that term had been expounded in
De
Wet's
case,
supra
,
and
Chetty's
case,
supra
.
In the
R.F.S.
Catering Supplies
case,
supra
,
Josman,
J.
,
with
van
ReenenJ.
concurring, disagreed at 904 D with
Joffe,
J's
conclusion in
Venter's
case,
supra
,
that magistrate's court Rule 49(5) was at variance with or in
conflict with a substantive rule of the common law. He held that
the
concept of "good cause" was sufficiently wide and flexible
to embrace the circumstances of the
R.F.S.
Catering Supplies
case, since such circumstances fell within the ambit of "justice
and fairness" which lies at the root of the "good
cause"
requirement (at 902 E-G). He relied on various passages in the
judgments in
Silber
v. Ozen Wholesalers (Pty.) Ltd.
,
supra
,
De
Wet and Others v. Western Bank Ltd., supra
,
and
Chetty
v. Law Society Transvaal
,
supra,
in which precise or comprehensive definition of the terms "good
cause" and "sufficient cause" was eschewed
by the
learned Judges of Appeal concerned, e.g. the statement of
Schreiner,
J.A.
in
Silber's
case,
supra
at 352 H - 353 A that -
"The
meaning of 'good cause' in the present subrule, like that of the
practically synonymous expression 'sufficient cause'
should
not lightly be made the subject of further
definition",
and
that of
Miller,
J.A.
in
Chetty's
case
supra
at 765 A - B that -
"The
term 'sufficient cause' (or 'good cause') defies precise or
comprehensive definition, for many and various factors require
to be
considered "
If
I understand his reasoning correctly,
Josman,
J.
held that the common law should be adapted and developed according to
the changing conditions of society so as to accommodate circumstances
such as those existing in the
R.F.S.
Catering Supplies
case and to enable judgments to be rescinded in those circumstances.
This would of course entail, it seems to me, that such circumstances
(being, in essence, the satisfaction of the judgment and the judgment
creditor's consent to its rescission) could in themselves
constitute
"good cause" without the applicant for rescission having to
comply with either of the two "essential
elements" for
rescission which are referred to in
Chetty's
case,
supra
,
at 765 B-C, which I have set out above. However, the learned Judge
said at 902 E-H:
"If
a plaintiff has consented to rescission of judgment it can be
inferred that he or she no longer wishes to execute on that
judgment;
it no longer serves any purpose. Presumably the defendant has
settled the debt or the plaintiff has forgiven the debt
and there is
no longer any need for the judgment. The procedure laid down in the
Magistrates' Courts Rules also encompasses the
situation where the
plaintiff might incorrectly have obtained judgment by default and
wishes either to initiate proceedings to
rescind the judgment or to
accommodate the defendant in doing so. All of this falls within the
ambit of 'justice and fairness',
which lies at the root of the 'good
cause' requirement. The only consideration which might militate
against such an interpretation
is that the court must be astute to
ensure that its Rules are not flouted. Since the Rules are intended
to protect the plaintiff,
the fact that he or she has consented to
the rescission reduces the risk to such an extent that it seems
unnecessary to require
the courts to act as policeman in this
situation."
He
went on to conclude at 904 D that magistrate's court Rule 49(5) was
consonant with the common law and therefore
intra
vires
.
He therefore upheld the appeal and rescinded the judgment.
The
decision in the
R.F.S.
Catering Supplies
case,
supra,
was followed in this Division by
Binns-Ward,
A.J.
,
as he then was, in the unreported case of
T.P.
and C.Y. Damon v. Nedcor Bank Ltd.,
30
th
October, 2006, case number 3970/2004. Here, again, there was an
application for the rescission of a judgment which had been
satisfied,
and to which rescission the judgment creditor had
consented.
Binns-Ward,
A.J.
,
sitting alone, considered himself bound by the two-Judge decision in
the
R.F.S.
Catering Supplies
case, and, albeit with some apparent reluctance, granted the
application. However, the learned Acting Judge expressed
"considerable
reservation about accepting that the judgment
creditor's consent should by itself be determinative of the question"
(i.e.
the question as to the criteria or considerations by which the
fairness and justice of a given case fall to be established: see
para. [9] of his judgment).
Similarly,
the decision in the
R.F.S.
Catering Supplies
case was also followed in this Division by
Griesel,
J.
,
as he then was, also sitting alone, in the matter of
D.S.
Cassisa and R. Radomsky v. Standard Bank of S.A. Ltd.
,
also unreported, 26
th
March, 2008, case number 4057/2003. The learned Judge observed at
para. [5] of his judgment that:
"The
question whether or not this court is in principle competent to grant
rescission of judgment in circumstances such as
the present appears
to have been settled - at least in this division - by the decisions
in
R.F.S.
Catering Supplies v. Barnard Bigara Enterprises C.C.
and
Damon
and Another v. Nedcor Bank Ltd.
It is accordingly not necessary for purposes of this judgment to
revisit the controversy surrounding this aspect".
In
circumstances similar to those in the
Damon
case,
supra
,
the learned Judge granted the application for rescission. However, he
indicated that he shared the reservations which had been
expressed by
Binns-Ward,
A.J.
in that matter with regard to applications such as these, based
purely on the consent of the creditor after a judgment had been
settled (at para. [10] of his judgment).
For
a number of reasons I am firmly of the view that the
R.F.S
Catering Supplies
,
case,
supra
,
was wrongly decided, and that it ought not to be followed. These are
the reasons.
First,
as I have attempted to show above, the Appellate Division and the
Supreme Court of Appeal have laid down that at common law
"it is
clear that in principle and the long-standing practice of our
Courts", there are two "
essential
elements
of 'sufficient cause' for rescission of a judgment by default"
(
Chetty's
case,
supra
,
at 765 A - B: my emphasis). These are:
(i)
that the party seeking relief must present a reasonable and
acceptable explanation for his default; and
(ii)
that on the merits (i.e. of the action) such party has a
bona
fide
defence
which,
prima
facie
,
carries some prospect of success.
Both
these elements must be present. See
Silber
v. Ozen Wholesalers (Pty,) Ltd.
,
supra
,
at 352 G,
de
Wet's
case,
supra
,
at 1042 H,
Chetty's
case,
supra
,
at 765 A-E and
Colyn
's
case,
supra
,
at 9 E - F (para. [11]). A third requirement, perhaps a logical
consequence of that numbered (ii) above, has also been laid down
by
the Appellate Division, i.e. that the circumstances which are relied
on as a ground for setting aside a final judgment must
have existed
at the date of the judgment, and not have arisen subsequently: see
the
Swadif
case,
supra
,
at 939 E.
The
principles expounded in these decisions were and are still, of
course, binding on any Judge of a Provincial or Local Division:
the
territory onto which this Court ventured in the
R.F.S
Catering Supplies
case,
supra
,
was therefore not
terra
nova
,
and the Court was not at liberty to depart in that case from the
above-mentioned principles, which had long since been settled
by the
Appellate Division and the Supreme Court of Appeal. However, it seems
to me, with respect, that the judgment in the
R.F.S.
Catering Supplies
is not compatible with those principles. The applicant in that case
had failed to establish a single one of the essential elements
of
"good cause" or "sufficient cause" for rescission
at common law, as set out in the decisions of the Appellate
Division
and the Supreme Court of Appeal to which I have referred above. Thus
there was no explanation proffered for the applicant's
failure to
defend the action other, perhaps, than that there was no defence to
it, and that does not seem to me to be reasonable
or acceptable as an
explanation. There was no allegation or even suggestion that the
applicant had any defence to the action, let
alone a
bona
fide
defence which
prima
facie
carried some prospect of success. And the facts relied upon by the
applicant in its application for rescission, viz. the satisfaction
of
the judgment and the judgment creditor's consent to its rescission,
all arose after the judgment had been granted.
Secondly,
as to the development or adaptation of the common law to which
Josman,
J.
refers at 903 A - B of the
R.F.S.
Catering Supplies
case,
supra
,
it is my respectful view that where, as here, certain principles have
been clearly laid down by the Appellate Division or the
Supreme Court
of Appeal it is not for a Provincial or Local Division of this Court
to depart from them in the name of development
or adaptation of the
law so as to meet altered social circumstances, no matter how
unpalatable or outdated such a Division may
find those principles: in
such circumstances, it seems to me, with respect, to be the exclusive
prerogative of the Supreme Court
of Appeal or, perhaps, of the
Constitutional Court, to bring about any development or adaptation of
the law which may be called
for. Otherwise, in my respectful view,
the time-honoured rules and conventions pertaining to the hierarchy
of Courts in South Africa
and the principles of
stare
decisis
would
be at risk of being eroded with a resultant detrimental dilution of
certainty in the law.
Thirdly,
I am unable to agree with
Josman,
J.
's
finding in the
R.F.S.
Catering Supplies
case,
supra
,
at 902 E - G that in cases such as the present one the dictates of
justice and fairness call for the rescission of the judgment
concerned. The judgment in that case had been regularly, properly and
competently granted, as it has in the present matter. The
fact that
the judgment was taken was due entirely and exclusively to the fault
of the applicant, who neither paid his debt when
it fell due, nor
settled with his creditor, nor entered appearance to defend the
action when he was sued for the debt. I find myself
in respectful
agreement with what was said in this regard by
Meskin,
J.
in
Weare
v. ABSA Bank Ltd.
,
supra
,
at 216 D - H:
"In
short, in my opinion, on the evidence, the respondent has only
himself to blame for the fact that judgment was taken against
him.
In
my opinion, a contention that there is sufficient cause for
rescission of a lawfully granted judgment where the judgment debt
has
been discharged, simply because the fact that the judgment was
granted is prejudicial to the former judgment debtor in relation
to
his 'business activities', is unsound. The short answer to such
contention is that, if one is concerned that there should be
no
judgment against one because its existence would be prejudicial to
one in one's 'business activities', then one should promptly
discharge the related indebtedness and thereby prevent the issue of
summons against one, or otherwise conclude, if possible, some
appropriate agreement with one's creditor. It follows that the
evidence contained in para. 14 of the applicant's affidavit does
not
assist him.
The
suggestion that it would be just and equitable to rescind the
judgment is without substance. It is neither unjust nor inequitable
to the applicant that the judgment should continue to exist where, as
I have endeavoured to indicate, the fact that it was granted
is to be
attributed entirely to the applicant's own
fault.
Accordingly,
in all the circumstances, I consider that the applicant has signally
failed to establish sufficient cause for rescission
of the judgment."
Furthermore,
it seems to me that the public has a legitimate interest in what
happens in the Courts, and, in particular, in what
judgments and
orders are handed down by them. Justice and fairness must also be
extended to members of the public other than the
judgment debtor,
including his or her potential future creditors; it cannot be
properly served, I do not think, by expunging from
the Court's
records judgments and orders which have been correctly and lawfully
granted.
Fourthly,
I also find myself in respectful agreement with the following
statements in the judgment of
Melamet,
J
.
in
de
Wet and Others v. Western Bank Ltd
.,
1977(4) SA 770 (T) at 780 H:
"A
Court obviously has inherent power to control the procedure and
proceedings in its Court. This is done to facilitate the
work of the
Courts and enable litigants to resolve their differences in as speedy
and inexpensive a manner as possible. This has
been recognised in
many decided cases which are collected by the learned authors of
Herbstein and Van Winsen,
The
Civil Practice of the Superior Courts of South Africa,
2
nd
ed., pp. 20-21.
This,
in my view, does not include the right to interfere with the
principle of the finality of judgments other than in circumstances
specifically provided for in the Rules or at common law.
Such a power is not a necessary concomitant to the inherent power to
control the procedure and proceedings in a Court." (My
emphasis)
In
my respectful view the decision in the
R.F.S.
Catering Supplies
case,
supra
,
interfered with the principle of the finality of judgments in
circumstances other than those specifically provided for either
in
the applicable rules or in the common law. I have already set out
above what I consider to be the provisions of the common law
in this
regard, as expounded in various judgments of the Appellate Division
and of the Supreme Court of Appeal. I shall return
presently to Rule
31(2)(b).
Fifthly,
it seems to me that what the applicants seek in this application is
this Court's participation in what would, I think,
be tantamount to
the publication of a fiction, that is to say, the creation of an
impression, which would be false, that the judgment
here concerned
had not been lawfully, regularly, properly and competently granted in
the first place. In
Venter
v. Standard Bank of S.A
.,
supra
,
Joffe,
J
.
said at 283 f-g:
"If
there is a commercial need for judgments properly sought and granted
in the courts to be rescinded it is for the legislature
to provide
the necessary enactment. It is certainly not the function of the
courts to make themselves a party to a fiction to satisfy
what may be
commercial needs."
In
Saphula
v. Nedcor Bank Ltd.
,
supra
,
Flemming,
DJ.P.
referred with disapproval at 78 A to "falsifying the past
(altering what is
judicata
)
only in order to make life easier for a party". At 78 G - I the
learned Judge proceeded to say:
"The
matter of the credit reputation being the only explanation of the
present application, I must also recognise that it is
known that for
several years these credit bureaus have been pushing for procedures
for rescission of judgments to readily help
a debtor who settled the
debt after judgment had been granted. What they are seeking is that
courts participate in falsifying a
true perspective of the past. To
them the only way to say that a judgment should no longer weigh (or
weigh too much) against creditworthiness
is to require court records
to create the false impression that the person never had any adverse
default. For that purpose it is
sought to prod courts into saying
that the judgment was wrong and a defence is available although the
judgment was in fact correctly
granted."
See,
also,
Lazarus
and Another v. Nedcor Bank Ltd.
,
supra
,
at 786 C - D and
Swart
v. ABSA Bank Ltd
.,
supra
,
at 222 E - G. I respectfully agree with what was said in these
judgments. More than 60 years ago George Orwell warned in "Nineteen
Eighty-four" against the dangers of attempting to rewrite
history. It cannot be done with any semblance of propriety.
Sixthly,
it is highly significant, I think, that there is and has never been
any real dispute between the parties to this matter:
there certainly
is and has never been anything between them which even remotely
resembles a triable issue. In the
Saphula
case,
supra
,
the Court said at 79 B-D:
"I
can therefore see nothing in the needs of these credit bureaus or
their masters (or of the debtor who was indebted at the
time), for
the Court process to be abused by granting leave to defend a matter
in which the cause of action is dead. The object
of rescinding
judgment is to restore a chance to air a real dispute. On a more
technical level, a requirement for the granting
of rescission remains
lacking in such cases. It has always been the hallmark of what
lawyers call a
bona
fide
defence
(which has to be established before rescission is granted), that
defendant honestly intends to pursue before a Court a set
of facts
which, if true, will constitute a defence. That requirement is
lacking in this case despite the problems which applicant
has with
inert commercial instances."
I
agree, with respect.
Seventhly,
there are, or may be, far-reaching consequences and ramifications to
the rescission of judgments such as these. Such
rescissions would
presumably operate
ex
tunc
:
the position after rescission would be as if the judgment concerned
had never been granted. The normal consequence of this would
be that
the judgment debtor would be entitled to
restitutio
in integrum
.
Does this mean that he would be entitled to recover what he had paid
to the judgment creditor in satisfaction of the judgment?
Furthermore, the rights of third parties might be adversely affected,
e.g. a
bona
fide
purchaser of property which has been sold in execution pursuant to
the judgment: must he now return the property to the judgment
debtor?
Must the judgment creditor reimburse the purchaser his purchase
price? Such questions were not considered in the
R.F.S.
Catering Supplies
case,
supra
,
nor in the cases in which that decision was followed, but were
adverted to briefly by
Cloete,
J
.,
as he then was, in the
Lazarus
case,
supra
,
at 786 D - E.
Finally,
as was said in that case at 786 E - F:
"I
further question the morality of a commercial system which considers
a default judgment (whether satisfied or not) to be
an absolute bar
to the obtaining of credit facilities, but which countenances support
of an application for the rescission of such
a judgment by the
creditor once he has been paid. The predicament in which members of
the public such as the present applicants
find themselves is not the
making of the Courts nor does the solution lie with the Courts."
I
respectfully agree. It seems to have been considered by some to be
hard, unjust or inequitable that a debtor who has failed to
pay his
debt when it fell due, and has subsequently allowed judgment to be
given against him for it by default, should thereafter
indefinitely
be barred from further credit, or should experience difficulty in
obtaining it. But such hardship as may be occasioned
in this way has
now been dealt with by the legislature, and it seems to me that,
whatever the position may have been before, there
can no longer be
any equitable need to interfere with the principle of finality of
judgments in the manner countenanced in the
R.F.S.
Catering Supplies
case,
supra
.
I refer to the provisions of
sections 43
and
70
of the
National
Credit Act, No. 34 of 2005
and the regulations promulgated under that
Act, which provide for the automatic and compulsory expungement of
default judgments
from the records maintained by credit bureaux after
the passage of a certain period. Alternatively, the regulations also
provide
for the expungement of civil judgments from such records even
before the passage of such period, where the judgment concerned has
been abandoned by the judgment creditor in terms of
sec. 86
of the
Magistrates' Courts Act, No. 32 of 1944
. Some of these provisions
were discussed by
Binns-Ward,
A.J.
in the
Damon
case,
supra
,
at para's [10] - [18]. I respectfully agree with him when he says, at
para.[15]:
"It
should therefore no longer be necessary to seek adaptations to the
common law, arguably by uncomfortable and artificial
contrivance, to
address the sort of unhappy predicament that the applicants in this
case find themselves in. In future persons
who find themselves in
this predicament through failure to make responsible use of the
machinery which the Act provides should,
in my view, have to wait out
the five year period provided under the regulations to the Act, after
which default judgments fall
automatically and compulsorily to be
expunged from the records maintained by credit bureaux."
So
that, whatever equitable need may in the past have been felt to exist
for departing from the long-established principles of law
to which I
have referred, has now been more or less effectively dealt with by
the legislature. I hasten to add that the mere expungement
of certain
information about debtors from the statutory records maintained by
debit bureaux is, of course, something entirely different
from and
far less radical than the expungement from Court records of judgments
and orders which have been lawfully, competently,
regularly and
properly handed down by the Courts.
For
the above reasons I conclude that the applicants have failed to
establish a valid basis at common law for the rescission of
the
default judgment granted against them in this matter.
I
return now to the relevant provisions of Rule 31, which I have set
out above. That is the only alternative basis, other than the
common
law, on which this application could have been brought, and, indeed,
it was the basis on which it was brought. Not much
requires to be
said about it. In the
Lazarus
case,
supra
,
Cloete,
J.
,
as he then was, dealt with it as follows
at
785 B - D:
"So
far as Rule 31 is concerned, a long line of cases, commencing with
Grant
v Plumbers (Pty) Ltd
1949
(2) SA 470
(O), has laid down the requirement that in order to show
'good cause' as required by Rule 31(2(b), or 'sufficient cause' as
was
required by previous Rules of Court which governed the position,
an applicant for rescission of a default judgment must show
inter
alia
that
he has a
bona
fide
defence
to the plaintiff's claim. On that approach, which seems to be
universally adopted by Provincial and Local Divisions in South
Africa
and by other Courts in neighbouring States, the applications could
not succeed under Rule 31(2)(b). There would also be
no basis upon
which a judgment granted by the Registrar could be reconsidered under
Rule 31(5)(d) - if a judgement granted by a
Court can only be set
aside if a
bona
fide
defence
is disclosed, the same must surely apply to a judgment granted by the
Registrar."
I
respectfully agree. An application for rescission brought under Rule
31 is doomed to failure unless the applicant can show "good
cause" or "sufficient cause", and that means that he
must establish,
inter
alia
,
that he has a
bona
fide
defence to the plaintiff's claim against him. As I have said, the
applicants in the present matter have not even attempted to satisfy
this requirement. Consequently, in my judgment their application must
fail on this basis, too.
Neither
party seeks costs from the other, and so no order will
be
made as to costs.
The
application is refused.
THRING,
J
I
agree
MOOSA,
J
I
agree
BAARTMAN,
J