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[2012] ZAWCHC 316
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Recruitment Worldwide (Pty) Ltd t/a Global Personnel Selection v Pride Internation Management Company LP (2377/2011) [2012] ZAWCHC 316 (20 September 2012)
Republic of South Africa
IN THE HIGH COURT OF SOUTH AFRICA
(WESTERN CAPE HIGH COURT,
CAPE'TOWN)
Case No: 2377/2011
Before: The Hon. Mr Justice
Binns-Ward .
In the matter between:
RECRUITMENT WORLDWIDE (PTY) LTD
t/a GLOBAL PERSONNEL SELECTION
.....................................................................................
Applicant/
Defendant
and
PRIDE INTERNATIONAL MANAGEMENT
COMPANY LP
.....................................................
Respondent/Plaintiff
JUDGMENT DELIVERED: 20 SEPTEMBER
2012
BINNS-WARD
J:
[1] This is an application in
terms of uniform rule 31(2)(b) for the rescission of a judgment
granted against the applicant in default
of any entry by it of
intention, to defend the action brought against it by the respondent.
Rule 3 l(2)(b) provides:
A
defendant may within 20 days after he 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.
[2] The
requirements that an applicant making an application in terms of rule
31(2)(b) must satisfy are well established. They were
recently
rehearsed by the Supreme Court of Appeal in
Colyn
v Tiger Food Industries Ltd t/a Meadow Feed Mills (Cape)
2003 (6) SA 1
(SCA);
[2003] 2 All SA
113
, at para. 11, as follows (footnote references included witMn
square brackets):
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
[1979 (2) SA 298.
(E) at 300 in fine - 3010]:
'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 plaintiffs claim which.
facie
has some prospect of success (
Grant
v Plumbers (Pty) Ltd
[1949 (2) SA
470
(O) at .476],
HDS Construction
(Pty) Ltd
v
Wait
supra, [At 300F - 30 l.O],
Chetty
v
Law Society,-Transvaal
[1985 (2) SA 756
(A) at 7641 - 765F]).
(It is of
no moment that the court in
Colyn
was concerned with an application for rescission in terms of 42(1
)(a). The applicable approach is the same;)
[3] In
determining how to exercise its discretion the court can overlook an
inadequate explanation of default if the defence shown
appears to be
good and strong. The court does not however take a mechanical
approach in this respect. Thus in
Chetty
v
Law Society, Transvaal
1985 (2) SA 756
(A), at 767J-768D, Miller JA commented as follows:
As
I have pointed out, however, the circumstance that there may be
reasonable or even good prospects of success on the merits
would
satisfy only one of the essential requirements for rescission of a
default judgment. It may be that in certain circumstances,
when the
question of the sufficiency or otherwise of a defendant's
explanation for his being in default is finely balanced, the
circumstance that his proposed defence carries reasonable or good
prospects of success on the merits might tip the scale in his
favour
in the application for rescission. (Cf
Melane
v Santam Insurance Co Ltd
1962 (4)
SA 531
(A) at 532.) But this is not to say that the stronger the
prospects of success the more indulgently will the Court regard the
explanation of the default. An unsatisfactory and unacceptable
explanation remains so, whatever the prospects of success on the
merits. In the light of the finding that appellant's explanation :
is unsatisfactory and unacceptable it is therefore, strictly
speaking, unnecessary to make findings or to
consider
the arguments relating to the appellant's prospects of success.
Nevertheless, in the interests of _ fairness to the appellant,
it is
desirable to refer to certain aspects thereof.
Cf. also
Wright
v
Westelike Provinsie Kelders Bpk
2001 (4) SA 1165
(C) at para.s 54-57;
Harris
v
Absa Bank Ltd t/a Volks has
2006 (4) SA 527
(T) at para.s 9-11
[4] Having summarised the manner
in which the application falls to be judged, and determined, it is
time to turn to its content.
It is convenient to begin by sketching
its historical context.
[5] The
respondent instituted action against the applicant company for
payment of the; sum of US$450 000. The claim was based
on an alleged
agreement in terms of which the applicant, had undertaken to
indemnify Pride Foramer (an Angolan company) and its
parent,
subsidiary or affiliate companies in respect of any claim made
against them by the heirs of an : employee of the applicant,
one
Desmond Louw, who . had; died while working oh a vessel
:
; owned or controlled by Pride Foramer. The respondent was alleged
to have been an affiliate; company of Pride Foramer and a
subsidiary
of Pride International Inc, a company registered.: in the United
States of America. It alleged that it had settled
the claim by
Louw-S heirs in the sum of US$450 000 upon the written request of
the applicant.
[6] A copy of the indemnity
undertaking relied upon by the respondent was annexed: as annexure A
to the particulars of claim.
It was contained in a letter from the
applicant to Ms Lucy Starbranch at Pride International Inc in
Houston, Texas, dated 30
April 2009. It read:
Dear
Lucy
RE:DEMAND
FOR DEFENSE AND [NDEMTNITY - DESMOND LOUW D/L MARCH 4 2009
Recruitment Worldwide T/A Global Personnel Selection hereby
grants
indemnification and defense to Pride Foramer, its parent,
subsidiary, and affiliate companies (-‘Pride”) in
any
claim against Pride by the heirs of our employee, Desmond Louw.
Yours
sincerely
[signed]
FIONA
RHODA
DIRECTOR
(Ms. Rhoda is the sole director
of the applicant.)
[7] The claim referred to as
that of the heirs of Desmond Louw was subsequently settled in the
amount of US$450 000. The deed
of settlement was annexed to the
supporting affidavit in the rescission application. The deed records
the receipt by the claimants
of payment of the settlement sum from
and on behalf of Pride International Inc., Pridb foramer, GPS (i.e.
the applicant) and
the vessel Pride Venezuela.. The settlement
records the release and discharge from any further liability to the
claimants by
Pride Interactional Inc., Pride Foramer and the
applicant.
[8] It is evident that the Pride
Group presented the deed of settlement to the applicant for the
purpose of obtaining performance
of the indemnity, given in terms of
the applicant’s letter of 30 April 2009. The applicant
responded in an email from Ms
Rhoda to Daniel Pipitbne (who would
appear from his email address to have been a legal representative)
and Ms Starbranch, dated
24 September 2009. A copy thereof is
annexed to the particulars of claim. It read as follows:
Subject:
Louw Matter Dear Daniel/Lucy
I
have had a response from Mike Tucker, who has perused the settlement
document. Based on his advice I would like to state the
following:
GPS
remains committed to underwriting/paying our contribution to the
settlement, we are however hesitant to actually make payment
at this
time for fear of compromising our position under the Contractors
Liability policy until such time as our underwriters
have reverted
formally one way or the other; and will not be doing so at this
time, taking into consideration that Pride and
GPS have been advised
that the settlement is the most efficient means of disposing of the
litigation, Pride has a duty to contain
or minimise any claim
against GPS for contribution/indemnification, we suggest that Pride
should proceed to conclude settlement
and pay the settlement sum to
the claimants, with reservation of its position vis a vis GPS, and
vice versa.
We
trust that you will give the abovementioned due consideration.
Kind
regards
Fiona
Rhode (sic)
GLOBAL
PERSONNEL SELECTION
[9] The payment to the Louw
claimants was made on 1 October 2009.
[10] The
summons w
r
as
issued on 8 February 2011. It was served at the. applicant’s
registered office on 10 February. The registered office
was at the
offices of. Vassen Bros., 60 Sir Lowry Road, Cape Town. According to
the tenor of the sheriff s return, the correctness
of which has not
been called into question (cf;
:
s
36(2) of the Supreme Court Act 59 of 1959
1
),
sendee was effected on a clerk, Ms T. Dien. No appearance to defend
the action having been entered, the respondent applied
for and was
granted default judgment, as contemplated in terms of uniform rule
31, on 28 March 2011. A writ of execution was
issued against the
applicant to enforce the judgment. Ms. Rhoda, became aware of the
writ on 5 May 2011, when she found a letter
from the sheriff
concerning the intended execution, of the writ in her letterbox at
22 Cambridge Close, Milnerton, Cape Town,
Ms Rhoda avers that this
was the first inkling she received of the litigation. She states
that upon enquiry she ascertained from
‘a certain Ms Suray
Dien
5
at Vassen Bros., who were the applicant’s accountants, that
‘they, in general, receive summonses on a daily basis
for
clients and that they could very well have omitted to forward the
summons to the Applicant
5
.
[11] The
applicant applied on 3 June 2011 for the rescission of the judgment.
Ms Rhoda expressly acknowledges in her supporting
affidavit in the
application for rescission that she was aware that the application
was required to be made by 2 June 2011 (i.e.
within 20 days of 5
May). The tenor of the relevant averments in the affidavit suggests
that the document must have been drafted
well before that date, for
Ms Rhoda avers (in para. 11 of her affidavit), ‘Inasmuch as
this application will be served
and filed on/before the 2
nd
June 2011. 1 confirm
that I am well in
compliance with the requirements for this application’.
Notwithstanding the aforementioned averment, the
affidavit was
deposed to only on 3 June 2011, The application was filed at the
registrar’s office on the same date. It
is not apparent on the
papers when the application was served on the respondent. There is
no application, in terms of rule 27,
for an extension of the period
prescribed in terms of rule 31 (2)(b). There is also no explanation
why the rescission application
has been brought out of time.
[12] Despite the fact that the
sub-rule provides for the application to be brought on notice,
proceedings in the current matter
were brought On notice of motion,
which allowed the respondent until 17 June to deliver notice of
opposition, and until 8 July
to deliver answering affidavits, if
any. The notice of motion, stated, that if the application were,
unopposed it would proceed
on (Friday) 15 July 2011. Friday, 15 July
2011. was a date, in the court’s winter recess. Unopposed
matters, other than
those brought in terms of rule 6(12), are heard
in the Western Cape High Court only on Tuesdays during recess,
periods. The matter
thus could not have been enrolled for hearing as
an unopposed matter on 15 July. The result, even had the application
been unopposed,
is that further delay would have been entailed. In
this regard it may be observed that had the application been brought
on notice,
as prescribed, it could feasibly have been accommodated
on the motion court roll, after reasonable notice to the respondent,
before the commencement of the winter recess on 17 June. If it had
become opposed, it would in the ordinary course have been referred
for hearing on this court’s semi- urgent roll. That course
would have brought the matter to hearing as an opposed application
during either the third or fourth term of 2011.
[13] The respondent delivered
notice of its intention to oppose the application on 17 June (the
notice was served on the applicant’s
attorneys on 15 June and
filed at court on 17 June). Its answering papers followed on 5 July.
[14] The applicant did not reply
to the respondent’s answering papers. It also took no steps to
enrol the matter for hearing
as an opposed application. The
respondent thereupon, on 25 August 20T1, itself took steps to enrol
the matter. It did not apply,
as it might have been advised to, for
a date on the semi-urgent roll. In the event the matter was set down
for hearing on 5 September
2012. The registrar issued a notice of
set down for that date on . 10 April 2012.
[15] In
terms of the uniform rules of court, and also the practice
directions of this court,
2
the applicant was obliged to prepare the documents for the hearing,
by paginating and indexing them. The applicant neglected
to comply
with this obligation, which rendered the application susceptible to
being struck off the roll on that account alone.
The respondent’s
attorneys attended to preparing the court file for. the hearing.
[16] In
terms of PN 50 the applicant was required to deliver full heads of
argument 10 days before the hearing; and the respondent
likewise
five days before the hearing. The applicant did not comply with this
obligation. Heads of argument were delivered timeously
by the
respondent. The practice directives of this court require that in
the event of a party finding itself in breach of compliance
with the
requirements concerning the delivery of heads of argument it shall
apply without delay for condonation.
3
The applicant’s heads of argument were handed up only when the
case was called on 5 September 2012. They were accompanied
by an
application for condonation for their late delivery. The heads of
argument were dated 4 September, and the accompanying
application
for condonation 5 September.
[17] The application for
condonation sought costs against the respondent in the event of the
application being opposed. The respondent
was anxious for the matter
to be determined, and was fearful that order striking the matter
from the roll would result only in
further delay.
It therefore left the matter of
condonation in the hands of the court. It was nevertheless quite
extraordinary in the context
of the lateness of the application and
the thinness of the explanation for non-compliance with the practice
requirements that
the applicant could have given notice that it
would seek costs against the respondent .in the event of opposition.
[18] The
application for condonation was supported by an affidavit by the
applicant’s attorney, Mr Mark Meyer, a professional
assistant
in the employ of the applicant
5
s attorney of ! record. He referred in the affidavit to his
employer, Mr Titus,, somewhat incongruously* as
:
his ‘principal’.
[19] Mr Meyer testified that
the: reason for the failure to comply with the rules and. practice ;
note requirements was the applicant’s
failure to provide his
firm with the requested financial cover to enable counsel to be
instructed. He averred in this regard-
3.
The applicant was informed of the date of the .hearing of the matter
and also
;
informed of the need to put counsel in fees by depositing the
requisite amount of money in the .iriist-account of the
abovementioned
firm.
4.
I initially informed my principal, Mr Titus, of the impending date,
who; then
:
undertook to converse with the Applicant in this regard. I also sent
a letter to the Applicant remind her of this fact.
5.
As I was not prepared to brief counsel in the matter until such fees
had been received the matter was delayed as a result of
the
Applicant not depositing the fees as aforesaid;' As .late as:
yesterday [i.e. 4 September, the day before the hearing] I
took the
matter up with Mr. Titus who expressed surprise at this fact and
further informed me that he was of the view that I
had been liaising
with the Applicant client in this regard. I then reminded him that
he had undertaken to do so.
6.
Due contact was made with the Applicant yesterday [i.e. the day
before the hearing] again to remind it of the need to place
counsel
in fees and client gave a formal undertaking that this would be done
no later than 08h00 this morning [i.e. two hours
before the
scheduled commencement of proceedings].
7.
While I had been of the view that the aforementioned: letter sent as
well as communication from Mr. Titus vvith the Applicant
would have
been sufficient to alert Applicant to the need to make the requisite
payment it has transpired that Mr. Titus had
been under the
impression that I had been communicating with the Applicant in this
regard.
8.
As stated already hereinabove 1 was able to formally instruct
counsel to draft the Heads of Argument in this matter as late
as
yesterday.
[20] A copy of the attorney’s
letter informing the applicant of the date of the hearing and the
need to make provision for
counsel’s fee was not annexed to
the affidavit. The court thus has no information as to when the
letter was sent. The affidavit
also indicates that counsel was in
fact instructed, albeit at the eleventh hour, even before the
Applicant had provided its attorneys
with financial cover. There is
no reference toy or explanation of the applicant’s failure to
have set the principal application
down, or . to have put the papers
in order for -the ' hearing, in the affidavit in support of the
condonation application. Moreover,
there were fid confirmatory
affidavits by Mr. Titus or Ms. Rhoda.
[21] The
application for condonation is woefully deficient. It does not make
out an adequate explanation for the non-compliance.
It raises more
questions than it answers.
:
That, viewed together with the manner in which the principal
application was initially prosecuted, and thereafter, by all outward
appearances, entirely neglected, has resulted in the applicant ' :
falling short on its obligation to show that the principal
application was brought, or persisted with,
bona
fide.
[22] The
explanation for the applicant’s default is also thin. It was
not supported by an affidavit from the person upon
whom the summons
was served. There is no explanation of what became of the summons
after it had been served by the sheriff at
the applicant’s
registered address. A company’s address is the place at which
the outside world is invited to deal
with the company. Under the
2008 Companies Act (Act 71 of 2008) the registered
office
is required to be at the same place as the company’s principal
office.
4
An adequate explanation for the default would have set out the basis
on which the Applicant interacted with its registered office,
and
described the measures in place to ensure that documents delivered
there came to the attention of its sole director. The
applicant
sought to cast aspersions again at the respondent for having served
the summons at its registered address. Ms Rhoda
expressed ‘surprise'
that the summons had not been served at a
domicilium
;address
chosen in terms of a contract to which the respondent was stranger,
and which did not bear on the cause of action. The
respondent
obviously had no right to serve at that
domicilium
,
and Ms. Rhoda's complaint was thus wholly misplaced.
[23] Turning now to consider the
defences that the applicant alleges it has to the' claim. The
applicant raises three points.
[24]
Firstly, it points to the fact that it was not joined as a party in
the litigation in which the Louw claim was prosecuted.
It is not
apparent from the affidavit why the applicant considers this to be
significant. It merely states that it was to be
expected ‘
upon
:
litigation so being commenced that Applicant would be joined to such
litigation as the indemnifying party’. There does
not appear
to be any merit in this point. It is not apparent in which
jurisdiction the Louw litigation took place, but there
is a general
presumption in the absence of proof to the contrary that foreign law
is the same as ours.
5
It might have been appropriate for the defendants in the Louw
litigation to have joined the applicant as a third party in the
litigation if they wished to obtain judgment against it on the
indemnity simultaneously with any judgment given against them
in
favour of the Louw claimants. But they were not obliged
:
to join the applicant. On the contrary, in view of the indemnity
agreement, and the absence
of any
indication that the applicant would not honour it, it is not
surprising that the defendants in the Louw litigation did
not join
the applicant as a third party.
[25]
Secondly, referring to the email of 24 September 2009, quoted above,
the applicant contends that upon a proper construction
thereof it
makes out a request that payment not be made until the applicant had
received a response from its insurance underwriters.
That is not
what the email says. It says
c
we
suggest that Pride should proceed to conclude settlement and pay the
settlement sum to the claimants'’
.
The qualification attached to that statement in the following words
'with reservation of its position
vis. a vis GPS,, and vice versa
’
is meaningless. What, position was to be reserved? The deponent to
the. supporting affidavit does not explain. The terms
of . the
indemnity required the applicant to ..indemnify any Pride company in
respect a liability on the Louw claim. No conditions
were attached
to the indemnity. Difficulties which the applicant may have been
experiencing with its insurance brokers and underwriters
were
therefore no concern of the companies to which the applicant had
given an unqualified and unconditional indemnity. The suggestion
by
the applicant in an email to Pride’s management that the
settlement amount should be paid triggered the indemnity. There
were
no ‘positions’ available for reservation in the
circumstances; a reservation of rights is meaningless if there
are
no rights available to be reserved. What the email does convey is
that the applicant intended to withhold discharging its
obligation
under the indemnity until it had settled matters with its insurance
underwriters. It was not entitled to adopt this
position, and the
fact that the Pride Group appears to have accommodated it by holding
off the institution of recovery proceedings
for more than 16 months
is entirely incidental.
[26] Thirdly, the applicant
points to the fact that it was not a party to the settlement
agreement. The simple answer is that
nothing about the indemnity
agreement required it to be. As mentioned , it is clear from the
terms of the settlement agreement
that the settlement discharged the
applicant from any liability in respect of the Louw claim.
[27] In
the circumstances the applicant has failed to show good cause (i)
why it should be granted condonation for the late filing
of its
heads of argument, (ii) why its application, for rescission of
judgment brought put of time should be entertained and
(iii) in any
event, why its application for rescission should be granted. I
intend to reflect these conclusions in an order simply
dismissing
the rescission application with
:
costs,
including the. costs of the condonation: application.
[28] The following order is
made:
The application for rescission
of judgment is refused with costs, including the costs the
application for condonation.
A.G. BINNS-WARD
Judge of the High Court
1
Section
36(2) of Act 59 of 1959 provides:
‘
The
return of the sheriff or a depiny-sheriffof what has been done upon
any process of the court, shall be prima facie evidence
of the
matters therein stated.'
2
The
practice directives of the Western Cape High Court are published in
Van Loggerenberg & Farlam,
Erasmus
,
Superior
Court Practice
(Supplementary
Volume) at D31 -24.
3
PN
50(3) provides
'Failure
on the part of a plaintiff, applicant, excipient or appellant (as
the case may be) to comply with the provisions of these
directions
may result in the matter being struck from the roll or dismissed
Failure on the part of defendant. or respondent (as
the case may.
be) to comply with the said provisions- will result in the court
making such order as it deems fit, unless in each
case condonation
of such failure is sought on good cause shown by way of written
application and is granted; and the court may
make such order or.
orders as to costs as may to it appear appropriate.'’
4
See
s 23(3)(b).
5
Cf.
e.g.
Yorigami
Maritime Construction Go Ltd
v
Nissho-IwaiGo
Ltd
1977
(4) SA 682
(C) at 692D-E;
MV
Heavy Metal; Belfry Marine Ltd v Palm Base Maritime SDN BHD
1999
(3) SA 1083
(SCA) at para. [65]. :