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:
Basson v Bester (1952) 3 SA 578;
Grant v Plumbers (Pty) Ltd (1949) 2 SA 470;
Brown v. Chapman (1938) T.P.D. 320;
Anlaby v Praetorious (1888) 20 Q.B.D. 764;
Sterkl v Kustner (1959) 2 SA 495;
Farden v Richter (1889) 23 Q.B.D. 124.
Traut v Du Toit (1966) 1 SA 69;
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,
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"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.
The party so applying mustfurnish security to thesatisfaction of the Registrar forthe payment to the other party ofthe costs of the default judgmentand of the application forrescission of such judgment.
At the hearing of theapplication the court may refuseto set aside the judgment or mayon good cause shown set it asideon such terms including any orderas to costs as it thinks fit."
Accepting, without finding, that the defendant company's Managing Director represents the company in
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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:
He must give a reasonableexplanation of his default. Ifit appears that his default waswilful or that it was due togross negligence the Court shouldnot come to his assistance.
His application must be bona fideand not made with the intentionof merely delaying plaintiff'sclaim.
He must show that he has a bonafide defence to plaintiff'sclaim. It is sufficient if hemakes out a prima facie defencein the sense of setting outaverments which, if establishedat the trial, would entitle himto the relief asked for. He neednot deal fully with the merits ofthe case and produce evidencethat the probabilities areactually in his favour (Brown v.Chapman (3) at p. 325).)"
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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
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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.
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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
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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
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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 24th 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
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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