CIV/APN/101/83

IN THE HIGH COURT OF LESOTHO In the Matter of :

TAIWAN CONSTRUCTION (PTY) LTD - Applicant

LESOTHO NATIONAL INSURANCE CO. (PTY) LTD - Respondent

REASONS FOR JUDGMENT

Filed by the Hon. Acting Judge, Mr. Justice J.L.
KHEOLA on the 5th day of September 1983

The applicant is asking this Court to make an order in
the following terms.

1. 
   Condoning the applicant's failure to apply within
   21
   days for the rescission of the judgment granted
   by the above
   Honourable Court against it on the
   13th December, 1982;

   
   

2. 
   Setting aside the default judgment granted
   against
   the applicant in Case Number Civ/T/416/82
   on the 13th December,
   1982;

   
   

3. 
   Suspending the warrant of execution issued in
   Case
   No. CIV/T/416/82, pending finalisation of

   
   

this application,

(d) Granting leave to applicant to defend the above

action and to file a Notice of Intention to Defend
within seven days from date of judgement herein;

(e) Costs.

This application is governed by Rule 27(6) of High
Court Rules of 1980 which provides, inter alia, that the
applicant must show good cause in order to persuade the Court to set
aside a default judgment. There is absolutely

no
doubt that the onus is on the applicant to show good

/cause..

-2-

cause by giving reasons which will satisfy the Court
that the default was not wilful. In Rabby Ramdaries v. Khadebe
Mafaesa CIV/T/56/83 (unreported) Cotran, CJ. summarised
the law when he said:

"The Court does have a wide discretion, but the
requirements are:

4. 
   the applicant must explain to the Court's
   satisfaction
   the reasons for the default,

   
   

5. 
   the applicant must persuade the Court that
   the
   application is not made simply to delay
   plaintiff's claim,

   
   

6. the
   applicant must show a bona fide defence.

   
   

In the present application the applicant is in default
in two respects -

7. 
   it failed to file a Notice of Appearance
   to defend
   having been duly served with a
   summons,

   
   

8. 
   it is now out of time to apply for rescession
   of the
   judgment granted on 13th December, 1982.

   
   

The founding affidavit was made by one James Lou who
alleges that he is the sole director of the applicant company.
He says that he left Lesotho at the beginning of November, 1982 and
returned
during the beginning of January, 1983. On his arrival he
was informed that during

his absence the respondent company had instituted an
action against the applicant company and that a default judgment was

obtained in December, 1982. He says that because of his
absence there was no one to convene a meeting of the Board of
Directors to
pass a resolution nominating and giving power of
attorney to a firm of lawyers to defend this action.

/It is ...

-3-

It is common cause that the
amount of R26,555.75 in respect of which respondent company obtained
a default judgment was in terms of
an agreement concluded in
December, 1979 whereby the respondent company was to provide the
applicant company with various types of
insurance cover over a period
of time.

It appears that in February 1981
certain storms caused damage to a pool that was under construction
and the respondent company, as
the insurers, had to make good the
damage and put the applicant company in the position in which it was
before the damage was caused.
Applicant company claims that it
entered into a contract with a company known as Olsens Olympic Pools
to repair the damage caused
to the pool. After Olsens Olympic Pools
had completed their repairs, the applicant company discovered that
the repairs had not been
properly done and materials used had been of
inferior nature; the work had to be re­done. As soon as this was
discovered Mr.
Lou informed the respondent company and asked them not
to pay Olsens Olympic Pools, in view of the fact that litigation was
pending
between applicant company and Olsens Olumpic Pools (see
annexure "B" to the founding affidavit).

Despite this request not to pay
Olsens Olympic Pools, respondent company did pay after the work had
been inspected by the respondent
company's assessor together with a
certain Mr. A. Massot who was a duly authorised official of the
applicant company. It was agreed
that the pool had been properly
repaired.

It is quite clear that there are
a number of

disputes
of fact which cannot be resolved by affidavits,

/e.g.
did ...

-4-

e.g. did Mr. Massot, acting on
behalf of the applicant company, approve that the repairs were
properly done; but before I come to
contentious issues or whether the
applicant has a bona fide defence I shall first deal with applicant's
failure to enter appearance
to defend.

The summons was served upon the
applicant company through its secretary on the 11th December, 1982.
The secretary is a duly authorised
official of the company to receive
the summons and pass them on to her superiors. Mo action was taken to
inform Mr. Lou of the action
that had been instituted against his
company. A telephone call or a telex message would have been enough
to make him come back or
give instructions to other directors. Mr.
Lou has alleged that he is the sole director of the company, but this
allegation must be
rejected by the Court because the 'letterheads' of
the applicant company shows that there are seven directors. (see
annexure "A"
to the opposing affidavit). The applicant
company has filed no replying affidavit to show that the position
changed at a specified
time. Even if Mr. Lou were the sole director
of the company he must be held to have been grossly negligent to have
gone overseas
having made no arrangements

for contingencies facing the
company. The work of the

company did not come to
standstill simply because its director

had gone overseas, the company
remained a legal person distinct from its officials and it was liable
to be sued at anytime. I, therefore,
come to the conclusion that the
absence of Mr. Lou in Lesotho when the company was served with a
summons is not a sufficient ground
upon which

/the applicant ...

-5-

applicant company can rely for
failing to enter Notice of Appearance to defend.

In his affidavit Mr. Lou admits
that during the beginning of January, 1983 he was informed by his
secretary end his attorneys that
the respondent company had obtained
a default judgment against his company. This application was lodged
with the Registrar of this
Court on 20th May, 1983, that is to say,
about five months after the default judgment had come to his
knowledge. Surely, applicant
must show very strong reasons why it
failed to take action within a reasonable time. Mr. Lou says that
during this long period the
parties were negotiating a possible
settle­ment. I do not know what kind of negotiations were going
on but it must have become
clear to the applicant company that such
negotiations were fruitless because on the 22nd February, 1983 the
deputy sheriff was instructed
to attach property of the applicant
company. But applicant did not apply to this Court immediately after
its property was attached.

I have come to the conclusion
that the applicant company has failed to show good reasons for the
default.

The applicant company has also
failed to prove a bona fide defence. The default judgment
which was obtained by the respondent company was in respect of
insurance premium cover due to the
respondent for a specified period.
Applicant company admits that the total amount was due but asks this
Court to rescind the judgment
for the simple reason that, it wants to
counterclaim an amount of

/money ...

-6-

money which was paid to Olsens
Olympic Pools for the repairs they carried out on the pool. In his
opposing affidavit Mr. Maling showed
that the pool was inspected by
respondent's assessor together with one Mr. Massot a duly authorised
official of the applicant. It
was Mr. Massot again who told Mr.
Maling that the action the applicant company intended to institute
against Olsens Olympic Pools
was in respect of a different matter and
not damage to the pool by the storms. These allegations of what Mr.
Massot said and did,
have not been denied by the applicant company.
I also had the occasion to see CC 146/81 Leston Construction (Pty)
Ltd v T.C.C. (Pty) Ltd and found out that it relates to a
different matter. I saw no counterclaim made by the applicant
company.

The application is dismissed
with costs to the respondent.

J.L. KHEOLA ACTING JUDGE

5th September, 1983

For the Applicant . Mr. Buys

For the Respondent : Mr.
Molyneaux