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IN THE HIGH COURT OF SOUTH AFRICA

(TRANSVAAL PROVINCIAL DIVISION)

CASE NO: 7574/06

17 APRIL 2007

In the matter between:

RACHEL WELHELMINA BEUKES FIRST APPLICANT

SARA NKOSI SECOND APPLICANT

CHIPINGA CC THIRD APPLICANT

AND

AFA FINANCIAL SERVICES RESPONDENT

JUDGMENT

MAVUNDLA . J.

1. The applicants, according to their notice of motion, are seeking an order in the following terms:

1. “That the judgment and order granted by default in the First Applicant’s absence and in favour of the Respondent under case no 7574/06 by his Lordship Justice Webster on the 28 April 2006 be rescinded;

2. That the second Applicant be granted leave to file their opposing affidavit under case no. 7574/06;

3. That the costs of this application be paid by the Respondent only in the event of opposition;

4. That further and alternative relief be granted to the Honourable Court as the Honourable court deems just.”

2. The application is being opposed. During argument, after I pointed out to Mr. Mphaga the fact that, whereas the order that was granted by my brother Mr. Justice Webster was granted against all three respondents who are the applicants herein, rescission is being sought in respect of the first respondent, and also leave to file opposing affidavit is being sought only in respect of second respondent, I was informed that application for rescission and the leave to file opposing affidavits is in fact sought on behalf of all three applicants. There was no opposition to the amendment to that effect made by Ms Niewenhuizen. Accordingly I granted the amendment of the prayers in the notice of motion to be read as pertaining to all three applicants.

3. It further needs mention that it was conceded by Ms Niewunhuizen that the application for rescission was brought within 20 days upon learning of the default judgment and that it was therefore bought timeously and that therefore there is no need to deal with the application for condonation.

4. Before dealing with the merits of this matter I need to remind myself of what the authorities state with regard to an application for rescission of a judgement. There are three ways in which a judgment taken in the absence of one of the parties may be set aside, namely in terms of:

(i) Rule 31(2)(b); ¹

2. rule 42 (1)(a);

3. Common law.

5. With regard to rule 31(2)(b) it provides that: “A defendant may within twenty days after he or she has knowledge of such judgement 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.”

6. Under rule 31(2)(b) the applicant must²:

(a) Give reasonable explanation of his default. If it appears that his default was wilful or that it was due to gross negligence the Court should not come to his assistance.

(b) Show that his application is bona fide and not made with the intention of merely delaying plaintiff’s claim.

(c) Show that he has a bona fide defence to the plaintiff’s claim. It suffices if he can make a prima facie defence by setting out facts, if established during the trial, would entitle him to his relief he seeks.³

7. Rule 42 provides that:⁴

1. The court may, in addition to any other powers it may have, mero motu or upon application of any party affected, rescind or vary:

1. An order or judgment erroneously sought or erroneously granted in the absence of any party affected thereby;

2. 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;

3. An order or judgment granted as the result of a mistake common to the parties.

2. Any party desiring any relief under this rule shall make application therefore upon notice to all parties whose interest may be affected by any variation sought;

3. The court shall not make any order rescinding or varying any order or judgment unless satisfied that all parties whose interests may be affected have notice of the order proposed.

8. In regard to Rule 42 in Mutebwa v Mutebwa and Another 2001 (2) SA 193 Tk HC Jafta J at 198F said that: The prerequisite factors to grant rescission under this Rule are the following. Firstly, the judgment must have been erroneously sought or erroneously granted; secondly, such judgment must have been granted in the absence of the applicant; lastly, the applicant’s rights or interest must be affected by the judgment.

9. At common law the Court has a discretion to grant rescission of judgment where sufficient or good cause has been shown. ⁵ The applicant must, as Moseneke J, as he then was, put it in Harris v ABSA Bank Ltd t/a Volkskas 2002[3] ALL SA 215 at 217, that the applicant must show sufficient cause which means that he must give an acceptable explanation of his default and this must coexists with evidence of reasonable prospects of success on the merits. If one of the essentials is lacking then the court will not come to his assistance.

10. In the matter of Mutebwa v Mutebwa and Another (supra) at 198 I Jafta J states that: “The terms ‘sufficient cause’ and ‘good cause’ means the same thing. The only difference is that Rule 31(2)(b) refers to ‘good cause’. The requirements therefore are exactly identical. In Chetty v Law Society, Transvaal 1985 (2) SA 756 (A) the Appellate Division had occasion to consider the requirements of ‘sufficient cause’. At 765A-C Miller JA said:

‘The term “sufficient cause” (or “good cause” defies precise or comprehensive definition, for many and various factors require to be considered. (See Ciarns Executors v Gaarn 1912 AD 181 at 186 per Innes JA.) But it is clear that in principle and in long-standing practice of our Courts two essential elements of “sufficient cause” for rescission of a judgment by default are:

1. that the party seeking relief must present a reasonable and acceptable explanation for his default; and

2. that on merits such party has a bona fided defence which, prima facie, carries some prospects of success…

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 default judgment against him, no matter how reasonable and convincing the explanation of his default. And ordered judicial process would negate 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.’”

11. I was informed by Mr. Mphaga that the application is based on section 31(2)(b) as well as on common law, and that to a limited extent in so far as there is ambiguity in terms of rule 42(b). In this regard I must hasten to take note of what Jafta J in Mutebwa v Mutebwa and Another (supra) at 198 F relying on a Bakoven Ltd v GJ Howes (Pty) Ltd 1992 (2) SA 466 (E), and Nyingwa v Moolman NO 1993 (2) SA 508 (Tk) at 509I- 510D said, namely:

“On the basis of these two authorities the fact that an application is specifically brought in terms of one Rule does not mean it cannot be entertained in terms of another Rule or under common law provided the requirements thereof are met.”

12. The submissions of Mr. Mphaga can be summarised as follows:

1. The order that was granted is final. The respondent should have proven a clear right, which it did not and therefore they have not made a case for a final interdict;

2. The order is ambiguous since it has inter alia an alternative order;

3. The applicants have a bona fide defence in that the respondent relies on a restrain clause against the first applicant, whereas the order affects other members of the third respondent;

4. The applicants’ answering affidavit to the main application is ready and the matter is almost ready for trial and therefore the Court should exercise its discretion in favour of the applicants and grant rescission.

13. On the other hand it has been contended by Ms Nieuwenhuizen that the applicants are not bona fide in bringing this application. She says that on the 28 April 2006 the respondent had obtained an Anton Pillar order against the applicants and the latter had done nothing to rescind or set aside the said Anton Pillar order. Although the applicant’s intention to oppose was filed on the 22 March 2006, they failed to file their answering affidavit which was due on the 12 April 2006, nor to inform the respondent’s attorneys that they intended to file their answering affidavit out of time. Their attorneys only made an inquiry at the end of April 2006 about the documents sent to counsel and even then the applicants knew that their answering affidavit had to be filed on the 12 April 2006. The notice of motion had made it clear that, if the matter is not opposed, an order would be sought on the 28 April 2006.

14. Ms Nieuwenhuizen further submitted that there is no good cause furnished why the rescission should be granted. The applicants are not bona fide in bringing this application, since the second applicant has stated that her intention was to return to Swaziland at the end of February 2005, on the 19 January 2005 she was already a member of the third applicant, some one and a half months before her actual resignation from respondent and that her statement that she only received an offer to join the third applicant in February is therefore a calculated misstatement and devoid of any truth. It has further been submitted that the applicants must plead something, which they have not done. I have further been referred to the matter of Waste Products Utilisation (Pty) Ltd v Wilkes and Another 2003 (2) SA 515 at 571G where the Court said that: “The particular forms of unlawful competition complained of by the plaintiff, and which have found recognition in our legal system, are the unfair use of a competitor’s fruits and labour, and the misuse of confidential information in order to advance one’s own business interests and activities as the expenses of a competitor.” It is submitted on behalf of the respondent that no good cause has been shown and that the application for rescission should be dismissed with costs.

15. I must however refer in the same matter at 570 where G Lewis J says that:

“As a general principle, every person is entitled freely to exercise his or her trade, profession or calling in competition with others; GA Fichardt Ltd V The Friend Newspapers Ltd 1916 AD 1 where Innes CJ said (at 6):

‘Freedom duly and lawfully to exercise one’s own energies and to engage in one’s own activities, is an absolute right. Every person, therefore, and every company is entitled as against all the world to carry on lawful business in a way which does not trespass upon the right of others.’

That freedom, as Innes J suggested, is not unfettered. In Matthews and Others v Young 1922 AD 492 De Villiers JA (at 507) suggested the limitation thus:

‘In the absence of special legal restrictions a person is without doubt entitled to the free exercise of his trade, profession or calling, unless he has bound himself to the contrary. But he cannot claim an absolute right to do so without interference from another. Competition often brings about interference in one way or another about which rivals cannot legitimately complain.’

16. The order that was granted on the 28 April 2006, only to quote part of it, reads as follows:

“1. That the first, second and third respondents be and are hereby

interdicted and restrained not to conduct any cash loan business within the town of Kinross, Evander, Secunda and Embalenhle, district Highveld Ridge, Mpumalanga.

2. That the first, second and third respondents are interdicted and restrained not to contact or to have with, or solicit in any way, directly or indirectly, any of the applicant’s previous or existing customers with the purposes of establishing or continuing a cash loan business with such customers. A copy of the list of persons falling within the category of previous and existing customers of the applicant is attached hereto, marked “NOM1”

3. That in the alternative to prayer 1 above, the first, second and

third respondents are interdicted and restrained not to continue with any business dealings with the applicant’s previous

customers, namely persons whose names appear on annexure ‘NOM1’ attached hereto.”

17. The applicants state that whereas the first order is final, the third order is in the alternative, it is not clear whether the applicants can still continue with their cash loan business provided they do not continue doing business with. They further state that the order is ambiguous and lacks clarity.

18. In my view, the order is ambiguous, it is also too draconian and unreasonable since it proscribes the applicants from conducting their cash loan business for an indeterminable period⁶. In their answering affidavit that is attached as annexure E to their affidavit in support of the application for rescission, the applicants state that the restraint of trade relied upon by the respondent is unenforceable and or was entered into under duress thus being voidable. I need not decide this issue. However, for purposes of the rescission, if this is established during the trial, the applicants would be entitled to the relief they seek.⁷ It is therefore reasonable that the present order should be set aside and the applicants be granted an opportunity to contest the relief sought against them by the respondent. It cannot therefore be said that the bringing of this application is not bona fide since the applicants have established, in my view, a prima facie defence. Ms Niewenhuizen has also quite correctly, in my view conceded that the order is ambiguous in the sense that it provides an alternative order. She has suggested that I should vary the order by deleting the alternative part of the order. Although rule 42(1)(b) provides that the court may rescind or vary an ambiguous order only to the extent of the ambiguity, I am of the view that in the circumstances of this case, and having regard to the broadness of the order, it would be proper in the exercise of my discretion that I should have the entire order rescinded rather than to carve a new order. This must be seen in the context that Ms Niewenhout has not furnished me with any reason why I should prefer to excise the alternative part of the order and not the first part or the second part. In such circumstances, I am of the view that the Court, when exercising its discretion⁸, especially where the first part of the order is too wide, it would be a better cause to grant rescission of the entire order and let the Court that would be seized with the matter adjudicate on the merits and grant an appropriate order.

19. The reasons advanced for the defaulted judgment having been granted in their absence is that whereas they gave their attorney of record instructions to oppose the application, a notice to that effect was duly filed, (i) their attorney of record remitted the brief to counsel to a wrong address, namely Advocates Chambers, Momentum Building, Pretorious Street, Pretoria, which is now the offices of the Department of Justice, instead of remitting same to Fountain Chambers Sandton. (ii) The original brief and its documents could not be traced, thus resulting in copies having to be made; (iii)Their attorneys also informed them that this matter is a High Court matter and they then had to raise sufficient funds for the legal fees; (iv) they could only consult with their counsel in May 2006.

20. It has been submitted on behalf of the respondent that the applicants knew about this application as early as in March and they failed to file their answering affidavit timeously. They failed to even write a letter to the respondet’s attorney indicating that they intend to file an answering affidavit

21. In the matter of Cavalinias v Claude Neon Lights S.A. Ltd 1965 (2) SA 649 (TPD) at 651C the Court referring to the matter of Silber v Ozen Wholesalers (Pty) Ltd., 1954 (2) SA 345 (AD) said:

“In the judgment of the Court Shreiner, J.A., the following is said, that “good cause” was not confined to disclosing of a substantial defence (p352): that “good cause” should not be further defined (p353); that to show good cause.

“the defendant must at least furnish an explanation of his default sufficiently full to enable the Court to understand how it really came about, and to assess his conduct and motives”.

The court further proceeded at 651F-G to say that: “In Silber’s case it was also decided that even if good cause is shown it is still in the discretion of the magistrate to grant or refuse relief (p352).

As this is a case involving fault of the litigant’s attorney it is necessary to consider the cases bearing on that. In Rose and Another v Alpha Secretaries Ltd 1947 (4) SA 511 (A.D.), Tindall, J.A., said at p519:

“It seems to me undesirable to attempt to frame a comprehensive test as to the effect of an attorney’s negligence on his client’s prospects of obtaining relief under sub-rule (2), or to lay down that a certain degree of negligence will debar the client and another degree will not. It is preferable to say that the court will consider all the circumstances of a particular case in deciding whether the applicant has shown something which justifies the court in holding in the exercise of its wide discretion that sufficient cause for granting relief has been shown.”

In Auby and Patellides (Pty) Ltd v Glen Anil Investments (Pty Ltd 1960 (4) SA 865 (AD), Schreiner , JA at pp869-870, said:

“Condonation may be granted under Rule 12 ‘for sufficient cause shown’…The impossibility of attempting to frame an exhaustive definition of what constitutes sufficient cause which…as stated by Innes J., has been echoed again and again.

22. It is so that in many cases it has been stated by the Courts that the remissness of the attorney is not an excuse.⁹In casu, the applicants had in time given instructions to the attorney to defend the matter. In fact the appearance to defend was filed in time. It was, in my view, the duty of the attorney of the respondents to ensure that the answering affidavit is filed in time. The brief to counsel was sent to a wrong address. It may be so that the attorney should have taken necessary steps to protect the interest of his clients, which he failed to do. Although the mere lack of funds per se is no excuse, however taken together with the other circumstances, the explanation proferred as a whole is, in my view, satisfactory. In the matter of Mkwanazi and Another v Mantsha and Another 2003 ALL SA 222 (T) at 231b Van Rooyen AJ cites Jones AJA in Colyn v Tiger Food Industries Ltd t/a Meadow Feed Mills Cape 2003 (2) ALL SA 113 (SCA) saying that the: “…inadequacy of his explanation may well justify a refusal of rescission on that account unless, perhaps the weak explanation is cancelled out by the defendant being able to put up a bona fide defence which has not merely some prospects, but a good prospect of success.”

23. In their answering affidavit, which I have referred to herein above, the applicants further state that there is a dispute of facts. The applicants, inter alia, dispute that they plied away from the respondent the clients the respondent is complaining about. They state that these clients voluntarily engaged the applicants primarily because they are black and they could easily communicate with the second applicant in vernacular. They further allege that the first applicant was threatened with dismissal from her employment and she was coerced to sign a contract with the respondent which contains a restrain clause and that therefore such contract is void.

24. It is trite that in motion proceedings, where there is a dispute of fact, the matter is decided on the version of the respondent¹⁰. The applicants are the respondents in the main application. I do not find it necessary to interrogate these alleged disputed facts, since the applicants need only establish a bona fided defence which, prima facie, carries some prospects of success.

25. In the premises, I am of the view that under common law, suffient and good cause has been shown for me to exercise my discretion in favour of the applicants and grant them rescission of the judgemnt granted against them in their absence and grant them leave to defend the main application.

26. With regard to the question of costs, I am am of the view that although the applicants are successful in this application, it is not necessary to pronounce on the costs at this stage. I am of the view that a proper should be that the costs of this application should be costs in the cause.

27. In the premises the following order is made:

1. That the order granted on the 28 April 2006 is hereby rescinded;

2. That the applicants are granted leave to file their answering affidavit within 10 (ten) days of this order

3. That the costs of this application shall be costs in the cause.

N.M. MAVUNDLA

JUDGE OF THE HIGH COURT

HEARD ON THE: 20 / 03/2007

DATE OF JUDGMENT: 17 /04/ 2007

APPICANT`S ATT:

APPLICANT`S ADV: Mr. Mphaga

DEFENDANT`S ATT:

DEFENDANT’S ADV: Ms. N Janse van Niewenhuizen

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