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IN THE HIGH COURT OF SOUTH AFRICA

GAUTENG DIVISION, PRETORIA

 

(1)     REPORTABLE: YES/NO

(2)     OF INTEREST TO OTHER JUDGES: YES/NO

(3)     REVISED: YES/NO

26/11/2021

Case no: 39697/2014

 

In the matter between:

 

MARTIN PETER SMITH                                                                                        Applicant

 

And

 

KINTRU TRUCK HIRE (PTY) LTD

t/a EMIT REVERSING TIME                                                                                 Respondent

 

JUDGMENT

 

LABUSCHAGNE AJ

[1]        The respondent instituted action against the applicant on 3 June 2014 for the payment of the sum of R5,174,237.98 in respect of a credit facility agreement concluded between the respondent and MPS Express Services (Pty) Ltd (now in liquidation) (hereafter referred to as "MPS"), for which company the applicant signed a suretyship on 3 July 2013.

[2]        The summons was served on the applicant and on 10 March 2016 the applicant entered into a settlement agreement, which settlement agreement was made an order of Court on the same day. At the time of negotiating the settlement agreement, the applicant was represented by legal representatives. The settlement agreement provides in the first paragraph that the settlement would be made an order of Court. In the second clause the applicant consented to judgment. The settlement agreement provides that execution would be suspended for 24 months in order for the applicant to assist with collection of the debt in respect of MPS. Should the applicant assist with the recovery of an amount of at least R1,3 million, the respondent would abandon judgment against the applicant if requested to do so by the applicant.

[3]        On 7 June 2021 the applicant launched the present proceedings for a rescission of judgment and for a declaration that the settlement agreement was void ab initio, on the basis of fraud, alternatively iustus error. At the calling of the matter counsel for the applicant advised that the applicant does not persist with Prayer 2, i.e. for a declaration of invalidity of the settlement agreement.

[4]        The applicant contends that he was not advised of his defences by his erstwhile attorney. He contends that the respondent duped him into entering into the settlement agreement and the applicant alleges fraud. It is difficult to discern the exact misrepresentation relied upon for purposes of the allegation of fraud. The applicant's counsel argued that the respondent had no intention of enabling him to assist in making the recovery of funds from MPS, and later failed to provide him with the means of assisting him to avoid execution.

[5]        The applicant contends that this application for rescission is based on the common law. It suffices to state that this is not a rescission of a default judgment, since the applicant was legally represented at the time of entering into the settlement agreement and consented to the judgment being entered into against being entered. As a general rule a Court has no power to set aside or alter its own final order. Once a Court has pronounced the final judgment, it becomes functus officio and its authority over the subject matter ceases. It is recognised to be in the public interest that judgments be final.

See:     Firestone South.Africa (Pty) Ltd v Gentiruco AG 1977(4) SA 298 (A) at 306 F - G and 309 A.

 

[6]        At common law a judgment, not granted by default can be set aside on the grounds of fraud, iustus error and, in exceptional circumstances, when relevant new documents have been subsequently discovered.

See:   Freedom Stationary (Pty) Ltd and Others v Hassam and Others 2019 (4) SA 459 (SCA).

 

[7]        The setting aside of a final judgment on the grounds of fraud is not done lightly. However, if the judgment was procured by the fraud of one of the parties, it may be set aside.

See:   Schierhout v Union Government 1927 AD 94 at 98.

7.1         It must further be shown that the successful party was a party to the fraud.

See:   Makings v Makings 1958(1) SA 338 (A).

7.2         It must be shown that, but for the fraud, the Court would not have granted the judgment.

See:    Robinson v Kingswell 1915 AD 277 at 285.

7.3         There must be a causal connection between the fraud and the judgment.

7.4         The fact that the judgment was obtained by consent is not a bar to an action to have it set aside on the grounds of fraud.

See:     Rossouw v Haumann 1949(4) SA 796 (C) at 800.

 

[8]          The rescission of a judgment needs to be brought within a reasonable time. A failure to raise a defence of fraud timeously requires a detailed explanation.

See:      Basson NO and Another v Orcrest Properties (Pty) Ltd [2016]       4 All SA 368 (WCC) at [47].

 

8.1       In this matter the applicant explains the 5 year delay in bringing these proceedings as follows:

8.1.1        He   contends   that   he   was   unaware              that the settlement agreement had been made an order of Court. He did not hear from the respondent for 3 years. He returned to the United Kingdom in 2016 and returned to South Africa in 2019. He only became aware of the judgment when the Sheriff arrived at his door in May 2019;

8.1.2        He could initiate proceedings then due to a lack of funds. However, he only launched the application for rescission in June 2021, more than 2 years later.

8.2       The delay in bringing this rescission is inordinately long. The settlement agreement in itself suspends execution thereof for 24 months, provided the applicant renders assistance in recovering debts from MPS. It is therefore no surprise that a few years passed without enforcement steps being taken against the applicant.

[9]        The interests of justice require parties to agreements to be bound to what they had agreed. When a settlement agreement is made an order of Court, the interests of justice and finality are additional considerations why the pacta servanda sunt principle needs to be applied.

[10]     I am not satisfied that a reasonable explanation for the delay in bringing these proceedings has been advanced.

[11]     Further, the allegations of fraud are so implausible that it is difficult to determine what false misrepresentation was made to the applicant that could have induced him to enter into the settlement agreement. He repeatedly states that he was represented by attorneys who did not advise him of his defences. That would provide him with a remedy against those attorneys. He makes no mention of this in his papers.

[12]     The case for setting aside of the settlement agreement on the grounds of fraud is so poorly formulated that, if rescission is granted, it has very slim prospects of being established, if at all. The applicant's contention that the respondent never intended involving him in recoveries from MSP is dispelled in a series of emails in the period June 2016 to August 2016 in which he is called upon to assist repeatedly. He failed to respond until too late.

[13]     The defences other than fraud, that the applicant intends pursuing, are equally without merit. Firstly, he contends that as surety he did not renounce the benefits of excussion and division. MPS was not sued, and he contends that no judgment could have been entered against him. This point does not address at all the fact that the applicant agreed to enter into a settlement agreement in which he bound himself personally and consented to the settlement agreement being made an order of Court.

[14]       The applicant further contends that he would raise the defence of prescription on behalf of MPS. In the same breath, however, he says that MPS was never liable for the debts (Founding Affidavit, paragraph 7.2.2). If MPS was never liable, the issue of prescription would never arise. It is therefore no a valid defence.

[15]       The last defence is that he contends that he would institute a damages claim on behalf of MPS. Of necessity this would be a derivative claim in the name of MPS and not a claim in the hands of the applicant. Further, MPS has been put into liquidation. He would not have locus standi to act on behalf of MPS instead of its liquidators. This defence therefore has no prospects of being established at all.

[16]       In the premises I conclude that there has been an unreasonable delay in bringing the rescission application, that the prospects of establishing fraud or any of the other defences are so poor as not to warrant further consideration and that the application has to fail.

[17]       An allegation of fraud by the applicant against the respondent attracts an onus to establish that allegation with cogent evidence. It is a serious thing to content that the respondent has committed fraud. If this contention cannot be advanced on the basis of cogent evidence, it warrants a punitive cost order. In my view the applicant has made implausible allegations of fraud against the respondent that warrant a special cost order. In the exercise of my discretion, I nevertheless decline to impose it.

[18]       The following order is made:

1.          The application is dismissed with costs

 

 

 

 

E LABUSCHAGNE

ACTING JUDGE OF THE HIGH COURT

GAUTENG DIVISION, PRETORIA

 

 

 

 

Date of Hearing:                   16 November 2021

Judgment Delivered:            22/11/2021

For the Applicant:                 Adv M Coetsee

Contact no: 012 012 5067

Email address: keegan@elliottattorneys.co.za

For the Respondent:             Adv JHF LE Roux

Contact no: 082 449 0865

Email address: jhfleroux@clubadvocates.co.za

 

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