CIV/APN/88/92 IN THE HIGH COURT OF LESOTHO

In the matter between:

LESOTHO APPAREL (PTY) LIMITED APPLICANT
V

MANICA LESOTHO (PTY) LIMITED 1ST RESPONDENT THE
DEPUTY SHERIFF (L. 'NYANE) 2ND RESPONDENT

Before the Honourable Chief Justice Mr. Justice B.P.
Cullinan on the 23rd day of October, 1992.

For the Applicant : Mr. T.T. Mahlakeng For the
Respondents : Mr. J. Koornhof

JUDGMENT

Cases referred to:

1. 
   Basson v Bester (1952) 3 SA 578;

   
   

2. 
   Grant v Plumbers (Pty) Ltd (1949) 2 SA 470;

   
   

3. 
   Brown v. Chapman (1938) T.P.D. 320;

   
   

4. 
   Anlaby v Praetorious (1888) 20 Q.B.D. 764;

   
   

5. 
   Sterkl v Kustner (1959) 2 SA 495;

   
   

6. 
   Farden v Richter (1889) 23 Q.B.D. 124.

   
   

7. 
   Traut v Du Toit (1966) 1 SA 69;

   
   

8. 
   Weinkove v Botha (1952) 3 SA 178;

   
   

(9) Spilhous & Co. v Coreejees (1966) 1 SA
525;
(10) Henriksens Rederi A/S v T.H.Z. Rolimpex: The

Brede (1974) Q.B.233.

The first respondent (the plaintiff) served a summons
upon the applicant (the defendant) on 19th September, 1991 and
obtained a judgment
in default of appearance on 8th October, 1991 in
the amount of M6l,523.59, mainly in respect of forwarding and
clearing services
rendered. The

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defendant now applies, in two applications, to have that
judgment set aside and also to have the execution stayed meanwhile.

On 11th October, 1991, the second respondent (the Deputy
Sheriff) served a writ of execution upon the defendant company and
attached
some of its property. There is an affidavit from the
plaintiff's General Manager in which he avers that only some of that
property,
namely "a quantity of old and broken sewing machines
which have no value and which will never realise the amount of the
Writ,
plus interest and costs", has actually been removed from
the defendant's premises.

The defendant obtained a rule nisi and an interim
interdict on 3rd March, 1992, in the matter of a stay of execution.
That rule has
been extended on numerous occasions until the hearing
on 28th September, which was adjourned, at the request of the
defendant, to
16th October.

The Managing Director of the defendant company has filed
an affidavit in support of each application, that is, for rescission
and
for stay of execution. He avers that when the summons was served
he was overseas on a business trip in the Republic of China. He
deposes that,

3

"it appears that the staff member who received the
summons forgot to pass it on to me on my return. I only came to know
about
it when the Applicant's goods had already been attached
pursuant to a writ of execution issued against the Company."

The application for rescission is brought under rule
27(6) of the Rules of the High Court, which reads thus:

"(6) (a) Where judgment has been granted against
defendant in terms of this rule or where absolution from the instance
has been
granted to a defendant, the defendant or plaintiff, as the
case may be, may within twenty-one days after he has knowledge of
such
judgment apply to court, on notice to the other party, to set
aside such judgment.

2. 
   The party so applying must
   furnish security to
   the
   satisfaction of the Registrar for
   the payment to the other
   party of
   the costs of the default judgment
   and of the
   application for
   rescission of such judgment.

   
   

3. 
   At the hearing of the
   application the court may
   refuse
   to set aside the judgment or may
   on good cause shown
   set it aside
   on such terms including any order
   as to costs as
   it thinks fit."

   
   

Accepting, without finding, that the defendant
company's Managing Director represents the company in

4

these matters (he has not filed the necessary resolution
of authority), it can be safely assumed that the defendant had
knowledge
(that is, actual knowledge Basson v Bester (1)) of the
judgment not later than 11th October, 1991. The application to
rescind was
made almost five months later, so that it is hopelessly
out of date. Further, no security has been furnished to the
satisfaction
of the Registrar, as required above.

In the case of Grant v Plumbers (Pty) Ltd. (2) Brink J.
after a review of the authorities, held at pp.476/477 that a
defendant seeking
rescission, "should comply with the following
requirements:

1. 
   He must give a 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.

   
   

2. 
   His application must be bona fide
   and not made with
   the intention
   of merely delaying plaintiff's
   claim.

   
   

3. 
   He must show that he has a bona
   fide defence to
   plaintiff's
   claim. It is sufficient if he
   makes out a prima
   facie defence
   in the sense of setting out
   averments which, if
   established
   at the trial, would entitle him
   to the relief
   asked for. He need
   not deal fully with the merits of
   the case
   and produce evidence
   that the probabilities are
   actually in
   his favour (Brown v.
   Chapman (3) at p. 325).)"

   
   

/.. .

5

Apart from the requirements of the rule, there is of
course an inherent jurisdiction in the Court to rescind a default
judgment in
a proper case. Where a judgment is obtained irregularly,
the defendant is entitled ex debito justitiae to have it set aside:
see
Anlaby v Praetorious (4). Thus in the case of Sterkl v
Kustner (5), where the plaintiff wrongly calculated the dies
jaduciae and did not take the days of grace into consideration and
prematurely
obtained a default judgment, Hofmeyr J. held that the
defendant had a right, quite apart from the provisions of the
relevant rule,
to apply for rescission. In the present case, however,
the regularity of the judgment is not contested, so that the
requirements
of the rule must be satisfied.

Taking the first of those requirements, though I do not
appreciate why some other employee of the defendant company could not
have
referred the summons to an Attorney, I would nonetheless be
prepared to accept the Managing Director's explanation of his
default,
standing on its own, as reasonable. It must be viewed
however in the light of the other requirements, and the facts of this
case.

I observe that there is no affidavit before the Court
from the employee who received the plaintiff's summons. Further,
there is no
explanation as to why it took the

6

defendant almost five months to apply for rescission and

a
stay.

The aspect as to whether or not the application is bona
fide, must be considered in the light of all the circumstances of the
case.
Taking the last requirement, if the judgment is regular, as in
this case, then it is an (almost) inflexible rule that there must
be
an affidavit of merits i.e. an affidavit stating facts showing a
defence on the merits: see Farden v Richter (6). In the
present case the deponent merely avers thus:

"I state that the Applicant is not indebted to the
Respondent Company in the amount stated in the summons."

That is nothing more than a blank denial and clearly
does not constitute a valid defence. Indeed, the best that could be
said of it,
in its vagueness, is that it could be interpreted as an
admission to being indebted in an amount less than that stated in the
summons.
The deponent however continues,

"7. The Respondent is presently keeping (in) its
possession the Applicant's goods worth about M193,000, an amount far
in excess
of the amount allegedly owing. See Annexure "A"
hereunto.

7

8. I submit that the Respondent's retention of the
Applicant's goods is unlawful. The Applicant never engaged the
services of the
Respondent in respect of the consignment reflected in
Annexure "A" hereunto."

The General Manager of the Plaintiff Company in his
answering affidavit deposes thus:

"AD PARAGRAPH 7:

I admit that Respondent/Plaintiff is in possession of a
certain quantity of Applicant's/Defendant's goods but deny that the
value
is as stated by Applicant/Defendant. The value of the goods is
only approximately M80,000.00.

AD PARAGRAPH 8:

I deny the contents of this paragraph and say that at
all times the Applicant/Defendant was quite content to leave the
goods in the
possession of Respondent/Plaintiff from the date when
they arrived at Respondent's/Plaintiff's warehouse. The
Applicant/Defendant
never objected to Respondent/Plaintiff
retaining

8

possession of the goods and moreover, the majority of
the goods have been released to Applicant/Defendant from time to
time.

I deny that the Applicant/Defendant never engaged
Respondent's/Plaintiff's services and state that Applicant/Defendant
had instructed
and engaged Respondent/Plaintiff to clear the goods on
its behalf from Durban."

If it is the case that the defendant has a counterclaim
against the plaintiff, then it has failed to set it out. Failure to
set out
a counterclaim fully may result in a summary judgment being
granted: Traut v Du Toit (7) : a fortiori such failure
may result in the dismissal of an application for rescission of a
regular judgment in default. While
a defendant may, in an application
for summary judgment (or in an application for rescission), set up a
defence of an unliquidated
counterclaim in an amount in excess of
that claimed (Weikove v Botha (8)), I observe that the
defendant apparently advances a counterclaim in spoliation.

The plaintiff's claim is "in respect of forwarding
and clearing services rendered, transportation charges and
disbursements made
in connection therewith by Plaintiff on

9

behalf of Defendant ay the latter's special instance and

request, during October, 1990 to August 1991",
The

annexure "A" to the affidavit of the defendant
company's General Manager, a Bill of Entry, indicates that clearing
services
were rendered by the plaintiff company on 24^th
April, 1991. That indicates that the plaintiff's charges for.
services rendered in respect of the particular consignment
reflected
on the Bill of Entry, formed but part of the plaintiff's
overall claim for M61,523.59. As I see it therefore, the connection
between
the defendant's counterclaim and the plaintiff's claim is but
peripheral. Further, while a set-off constitutes a counterclaim, a
counterclaim does not necessarily provide a set-off. While the
defendant's counterclaim might have been pleaded in a plea and
counterclaim,
purely as a matter of

convenience, on the basis ut sif finis litium, by nature

it constitutes a separate action. I cannot see how it

could constitute a defence, as such, to the present

action, just as a counterclaim for damages is not a

defence to a claim for the return of equipment: see

Spilhous & Co. v Coreejees (9).

The practice is no different in England. The following
passages, dealing with an application for summary judgment,
which apply
all the more to an application for rescission of a
default judgment, appear . under Order 14 at para, 14/3-4/13 of The
Supreme
Court

/...

10 Practice 1991, Vol..l (p. 153):

"If ... the counterclaim arises out of quite a
separate and distinct transaction or it is wholly foreign to the
claim or there
is no connection between the claim and the
counterclaim, the proper order should be for judgment for the
plaintiff with costs without
a stay pending the trial of the
counterclaim.

The degree of connection between the claim and
counterclaim, the strength of the counterclaim and the ability of the
plaintiff to
satisfy any judgment on the counterclaim are some of the
considerations which the Court may take account of in the exercise of
its
discretion whether or not to order a stay. ...

Where the counterclaim ought for any reason to be
disposed of by a separate action, it may be struck out or excluded
... In certain
circumstances, as a matter of law, a counterclaim does
not provide a set-off and, therefore, should be disregarded when
summary judgment
on the claim is sought. For example, a counterclaim
for damages for delay or damages to cargo does not provide a set-off
to a claim
for freight (Henriksens Rederi A/S v. T.H.Z. Rolimpex: The
Brede (10)."

As to the strength of the counterclaim in this matter,
the Bill of Entry referred to above is in the name of the defendant
company
as importer, and the plaintiff company as agent, showing a
rebate of duty in the amount of M111,951, in respect of goods to the
value
of M193,053, and also an undertaking, apparently by an employee
of the plaintiff company, on behalf of the defendant company, "to
comply with all the provisions of the Customs & Excise Act in
respect of the goods entered herein". In brief the

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Bill of Entry, supported by the presumption of
regularity, in no way supports the averments made by the defendant's
Managing Director.
Further, as will be seen, the defendant company,
through its representatives, has acknowledged the plaintiff's claim.
The plaintiff
claims however that its services were rendred at the
defendant's "special instance and request". The defendant
would now,
in a complete volte-face, deny that aspect in respect of
one consignment. Furthermore, as far back as 6th April this year, the
Court
granted an adjournment to enable the defendant to file
affidavits in reply to the answering affidavits. No affidavit in
reply has
been filed. The plaintiff's averments as to the defendant's
counterclaim have not therefore been rebutted.

As to whether the defendant company is acting bona fide
in the matter, there are two affidavits before the Court, in one of
which
a member of the firm of the Attornies representing the
plaintiff deposes that as far back as 28th October, 1991 , he was
approached
by two gentlemen, who introduced themselves as
representatives of the defendant company: they acknowledged the debt
owed by the defendant
company to the plaintiff, sought time in which
to make firm proposals as to repayment, requesting that the Deputy
Sheriff be meanwhile
instructed not to remove the attached assets.
Another member of the said firm deposes that on 19th November, 1991
he was approached

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by another two gentlemen, introducing themselves as
representatives 'of the defendant company. They also , acknowledged
the debt
owed to the plaintiff, but sought time to pay, that is,
until 26th November, on which date, they said, they would pay
M20,000, indicating
that the defendant's Managing Director would
thereafter negotiate payment of the balance.

That offer was rejected. Correspondence followed between
Attornies. The defendant's Attornies wrote on 5th December, 1991,
"without
prejudice", acknowledging indebtedness and
offering to pay the amount in the writ, together with all expenses
incurred in issuing
the writ, in four monthly instalments, commencing
on 20th December. That offer was rejected, on 12th December. On 9th
January this
year, the defendant's Managing Director and another
signed a deed of suretyship under rule 46(5), in order to forestall
the removal
by the Deputy Sheriff of the property attached, before
sale in execution. On 12th February, the defendant's Attornies again
wrote,
"without prejudice", seeking 60 days within which to
settle the debt, and forwarding a cheque for M5,000 in part payment.
That offer was declined and the cheque returned on 18th February.

No affidavit was filed in reply to the above
averments. Indeed it is obvious that it is the plaintiff

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company which has taken the initiative and caused these
applications to be set down for hearing. The purported defence and
alleged
counterclaim, raised in the founding affidavit filed by the
defendant, must be viewed in that light. Clearly the defendant
company
has no bona fide defence. I consider that the degree of
connection between the claim and counterclaim is such that, in the
exercise
of my discretion, I should not order a stay of execution on
the claim pending any trial of the counterclaim. Further, I have no
doubt
that the defendant company's applications are not made bona
fide and that they are made with the sole intention of delaying the
plaintiff's
claim. The rule in respect of the application for a stay
is accordingly discharged and the application for rescission is
accordingly
dismissed, with costs to the plaintiff.

Delivered
at Maseru This 16th Day of October, 1992.

B.P. CULLINAN

CHIEF
JUSTICE