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IN THE HIGH COURT OF SOUTH AFRICA

GAUTENG DIVISION, PRETORIA

 

CASE NO.: 25048/17

12/9/2019

 

 

In the matter between:

 

SAMWOL PROPERTIES (PTY)LTD	APPLICANT
and
NEDBANK LIMITED	RESPONDENT

 

JUDGMENT

 

 

VAN DER WESTHUIZEN, J

 

[1]        The applicant seeks that a default judgment granted against it in favour of the respondent on 26 July 2017 be rescinded in terms of the provisions of Rule 42(1)(a) of the Uniform Rules of Court. The respondent opposes the relief sought by the applicant on various grounds.

 

[2]        The order now sought to be rescinded was granted against the applicant and two other parties, who were sureties for the applicant’s due compliance with its obligations, in favour of the respondent. The two sureties do not seek a rescission in their favour.

 

[3]        The applicant only relies on the provisions of R42(1)(a) for the relief it seeks. That Rule provides as follows:

 

“The court may, in addition to any other powers it may have, mero moto 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)       …”

 

[4]        It is trite that once a court has duly pronounced upon a final judgment, it becomes functus officio as itself has no authority to correct, alter or supplement the order of judgment.[1] The purpose of this rule is to correct expeditiously an obvious wrong judgment or order.[2] It caters for mistake.[3]  It being a Rule of Court, its ambit is entirely procedural.[4]

 

[5]        Although a court has a discretion to set aside an order under this rule, it does not have a discretion to set aside an order where one of the jurisdictional facts required in terms of sub-rule (1)(a) does not exist.[5]

 

[6]        It was held in Lodhi 2 Property Investments CC v Bondev Developments (Pty) Ltd[6] that a judgment or order was not granted erroneously if a defence is subsequently disclosed.

 

[7]        The applicant alleges that procedurally the order was granted in the absence of it and was erroneously sought and granted in view of the fact that at the time the order was sought and granted, the applicant had been finally wound-up. In that regard, the provisions of section 359(1)(a) of the Companies Act, 61 of 2008 (the Act), applies which provides that the respondent’s application had been stayed.

 

[8]        The common cause relevant facts are as follows:

 

(a)       During 2010 the applicant concluded an Agreement of Loan with the respondent. It defaulted on its obligations and on 6 April 2017 summons was issued against it. In the respondent’s favour, two suretyship agreements were concluded. The respondent also issued summons against the two sureties. None of the parties defended the action as they had no defence to the monetary claims;

 

(b)       In April/May 2017, the main application for default judgment was issued against the applicant and the two sureties and served in an appropriate manner on all the parties. This application was also not opposed presumably for the same reason. All the parties were duly aware that the application for default judgment had been set down for 26 July 2017, but failed to appear.  Judgment was granted on 26 July 2017 against all three parties;

 

(c)        However, on 18 July 2017, a final winding-up order was granted against the applicant. It is alleged that none of the parties were aware of the granting of the winding-up order. That order was subsequently set aside by the court by agreement between the parties to those proceedings.  The parties to the setting aside of the final winding-up order had settled the disputes between them and that settlement was made an order of court. Furthermore, the order granted on 18 February 2018 further directed that the Companies and Intellectual Property Commission endorse its records to record that the applicant was not in winding-up proceedings and that it was in business. The respondent was unaware of the granting of the final winding-up order and the subsequent setting aside of that order;

 

(d)       The premises upon which this rescission application is brought, is in terms of the provisions of section 359 of the Act which provides that the respondent’s application for default judgment on 26 July 2017 was stayed.

 

[9]        Rule 31(4) provides that where a defendant is in default, the plaintiff may apply for default judgement upon five-days’ notice to the defendant of the set down and where the defendant is in default of delivering a notice of intention to defend, no notice of the set down is required. The Practice Directive of this Division requires notice of set down where an order declaring immovable property especially executable, in particular where the property is the primary residential property of the defendant (applicant in this instance).

 

[10]      In the present instance, it is common cause that the property sought to be declared especially executable, is that of the applicant and it is not the primary residential property of the applicant, it being a registered company.[7]

 

[11]      It is further common cause that the applicant, the two sureties and the respondent were not aware of the granting of the final winding-up order of the applicant on 18 July 2017. The granting of that order was only subsequently discovered and set aside by agreement between the applicant and the judgment debtor in that matter on 18 February 2018.

 

[12]      The applicant in these proceedings avers that the granting of the final winding-up order constitutes a procedural error which is capable of rescinding the default judgment that is presently under discussion.

 

[13]      The procedural jurisdictional facts of the granting of the default judgment against the applicant in terms of the provisions of Rule 31(4) are:

 

(a)       The process of the main action was served upon all the parties in the prescribed manner;

 

(b)       None of the parties filed a notice of intention to defend the action in that they had no defence to the granting of the monetary order;

 

(c)        The defendants were acutely aware that the respondent had set the application for default judgment down for adjudication on 26 July 2017 and chose not defend it and furthermore did not attend at court on that day.

 

[14]      The provisions of section 359 of the Act, at best for the applicant, constitute a defence to the granting of a default judgment or other order against it where a final winding-up order is in place. The fact of the existence of a final winding-up order, does not impact on the procedural requirements for the granting of a default judgment. At best it is an extraneous fact, i.e. a statutory defence that may impact on the merits of the granting of the default judgment. 

 

[15]      As a defence, it requires that the fact of the winding-up order is to be brought to the attention of the judgment creditor in other proceedings and to the court hearing such proceedings. As recorded earlier, none of the interested parties were aware of the granting of the final winding-up order.

 

[16]      At the date upon which the default judgment was granted, the applicant had no defence to the merits of the application. It concedes that it could not comply with the claim for payment of the due and payable monetary amount. It was further aware that the judgment would be sought on 26 July 2017 and did not oppose it, nor attended at court.  No other issue is taken in respect of the compliance with procedural requirements other than the final winding-up order.

 

[17]      The Constitutional Court in Ferris et al v FirstRand Bank Ltd[8] held as follows:

 

“It follows that Mr and Mrs Ferris’ breach of the debt-restructuring order entitled FirstRand to enforce the loan without further notice. However, even if further notice were required, its absence is a purely dilatory defence – a defence that suspends proceedings rather than precludes a cause of action – and is not an irregularity that establishes that a judgment has been ‘erroneously granted’, justifying rescission under rule 42(1)(a).”

 

[18]      It is submitted on behalf of the applicant that the foregoing passage is mere obiter dictum and hence not relevant. Even if the passage is obiter dictum, it is very persuasive coming from the Constitutional Court.[9]

 

[19]      In my view, a defence with reliance upon the provisions of section 359 of the Act is merely dilatory. That section explicitly provides that “all civil proceedings by or against the company concerned shall be suspended until the appointment of a liquidator”.

 

[20]      Furthermore, the final winding-up order was set aside by agreement in terms of the provisions of section 354 of the Act on 18 February 2018.[10] In my view, generally the effect of an order that is set aside places the parties in the position that they were immediately prior to the granting of that order. To hold otherwise would defeat the purpose of the setting aside of the order granted, for whatever reason.[11]

 

[21]      The application for this rescission was launched on or about 3 June 2018, after the setting aside of the final winding-up order on 18 February 2018. Thus, when this application was launched, no final winding-up order was in place. Furthermore, no winding-up proceedings were pending in view of the fact that the order of 18 February 2018 directed the Companies and Intellectual Property Commission to endorse its records to reflect that the applicant was not in winding-up proceedings and that it was in business.

 

[22]      It follows that the setting aside of the order of 18 July 2017 effectively also set aside the application for the final winding-up of the applicant, particularly in the present instance where the parties by agreement set the order aside and came to an agreement in respect of their dispute.  That much is to be gleaned from the wording of the order of 18 February 2018.

 

[23]      It follows further that the order granted on 26 July 2017 in favour of the respondent against the applicant was not erroneously granted.  Consequently, that order does not fall within the ambit of Rule 42(1)(a) and therefor does not stand to be rescinded under this Rule.

 

[24]      The application for rescission only being brought under the provisions of Rule 42(1)(a), the application cannot succeed. There is no reason why the costs of this application should not follow the event.

 

I grant the following order:

 

(a)       The application for the rescission of the order of 26 July 2017 is dismissed;

 

(b)       The applicant is to pay the costs, such cost to be taxed upon the scale as between attorney and client.

 

 

 

C J VAN DER WESTHUIZEN

JUDGE OF THE HIGH COURT

 

 

 

 

 

 

On behalf of Applicant:       L Hollander  

Instructed by:                      John Joseph Finlay Cameron      

 

On behalf of Respondent:  L van Rhyn van Tonder     

Instructed by:                      Adams & Adams Attorneys

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