Swaziland National Youth Council v Swazi Jive Entertainment (Pty) Ltd and Another (1244/2018) [2019] SZHC 05 (14 February 2019);

 

 

IN THE HIGH COURT OF ESWATINI

JUDGMENT

          Case No. 1244/18

In the matter between:

SWAZILAND NATIONAL YOUTH COUNCIL                Applicant  

AND

SWAZI JIVE ENTERTAINMENT (Pty) Ltd                      1^st Respondent

MUSA N. MAVUSO N.O.                                                     2^nd Respondent

In Re:

SWAZI JIVE ENTERTAINMENT (Pty) Ltd                      Applicant

AND

SWAZILAND NATIONAL YOUTH COUNCIL                Respondent

Neutral Citation: Swaziland National Youth Council vs Swazi Jive Entertainment                                     (Pty) Ltd and Another [1244/18] [2019] SZHC 05 (14^th                                                February, 2019)

Coram:                FAKUDZE, J

Heard:                 31^st October, 2018

Delivered:             14^th February, 2019

Summary:           Civil Procedure – Rescission of Judgment Application –  basis                                       that Applicant always wanted to defend matter notwithstanding                                     that no Notice of Intention to Defend was filed – based on                                   alleged correspondences between the parties, Applicant under                                       impression that Respondent will not proceed with summons –                               Application for rescission based on Rule 42(1), Rule 31 (3)(b)                                        or on common law grounds – court concludes that rescission                               under Rule 31 (3)(b) – Application filed within 21 days of                                    Applicant being aware of the judgment against her – However,                                      explanation for failing to defend not satisfactory – Application                                       for rescission dismissed with costs.

 

JUDGMENT

 

BACKGROUND

[1]     On 25^th October, 2018 the Applicant filed an urgent application on the    following terms:

          1.       Dispensing with the usual forms and rules relating to service and time                  limits and allowing that this matter be heard as one of urgency;

          2.       Condoning Applicant’s non-compliance with the rules of this                               Honourable Court;

          3.       Staying the execution of the Judgment of this Honourable Court                           issued on 14^th September, 2018 pending finalisation of this                                   Application;

          4.       Rescinding and/or setting aside the Order granted on 14^th September,                           2018;

          5.       Granting leave to file his plea in defence to the main action.

          6.       Directing that prayer 3 operates with immediate and interim effect                        returnable on a date to be appointed by the Court;

          7.       Costs of the Application in the event it is opposed; and

          8.       Further, alternative and/or competent relief.

 

[2]     The brief background of this matter is that a default judgment was granted        by the court in favour of the 1^st Respondent and against the Applicant who was the Defendant then.  This was on the 14^th September, 2018.  The reason        for the Default Judgment to be granted was that the Applicant had failed to file a Notice of Intention to Defend.

 

[3]     Following the granting of the Default Judgment, the Applicant instituted the           present proceedings in a bid to seek rescission of the Default Judgment.  The          substance of the Applicant’s case is that it has always intended defending         the action and it would have filed such notice timeously had it not been in     continuous belief that the 1^st Respondent had stayed legal proceedings    pending Applicant’s request for discussion on the basis for/and substitution   of the 1^st Respondent’s claim.  The written discussion and non responses in    acquiescence by the 1^st Respondent and his attorneys created upon the      Applicant an impression that there was space for discussion.  It is this bona       fide belief that the Notice of Intention to Defend was not filed.  There was   no wilful intention on the part of the Applicant not to defend the matter.

 

AD POINTS OF LAW

[4]     Three points of law were raised by the 1^st Respondent.  The first one pertained to the stay of the Writ issued by the Registrar on the 24^th October, 2018.     The second one pertained to the prayer for Interim Relief and the last one      pertained to the issue of urgency.

 

[5]     After lengthy deliberations by the parties on the above mentioned points of      law, it was agreed between them that focus must be on the merits of the          Application.  The points of law were then abandoned.

 

THE MERITS

The Applicant’s case

[6]     In paragraph 8 of the Founding Affidavit, the Applicant states that the    Rescission Application is based on Rule 42(1)(a), Rule 31 (3)(b) as well as      the common law.  During oral argument, the Applicant conceded that his          case does not fall under Rule 42(1)(a).  It should be considered under Rule       31 (3)(b) or the Common law.

Rule 31 (3)(b) Application

[7]     Under Rule 31 (3)(b) a judgment or a Court Order may be rescinded where       the Applicant has failed to deliver the requisite Notice of Intention to Defend          or where the Applicant has filed the Notice of Intention to Defend but has    failed to deliver the Plea.

 

[8]     Rule 31 (3)(b) of the High Court Rules states that “A defendant may within           twenty one days, after he has had knowledge of such judgment, apply to court           upon Notice to the Plaintiff to set aside such judgment and the Court upon           good cause shown and upon the defendant furnishing to the Plaintiff security      for payment of costs of the default judgment and of such application to a         maximum of E200.00, set aside the default judgment on such terms as to it seems fit.”

 

[9]     In casu, the facts in the Founding Affidavit at paragraph 21 and paragraphs     7.5 and 7.6 of the Applicant’s Replying Affidavit, reveal that the Applicant            registered and issued the application within the prescribed period in     compliance with Rule 31 (3) (b).  This is so particularly when taking into       account that the Applicant only gained knowledge of the judgment sought to         be rescinded on the 24^th September 2018 and the Application was registered          and issued on the 23^rd October, 2018,  that is, on the 21^st day after the date that       the Applicant gained knowledge of the existence of the judgment.

 

[10]   It is Applicant’s contention that an Applicant for the rescission of a        judgment under Rule  31 (3)(b) is required not only to comply with the          requirements of the Rule as regards the number of days within which the    application has to be brought after the gaining of the knowledge, but must      also show or establish good cause.  Courts generally expect an Applicant to      show good cause by (a) giving a reasonable explanation for the default; (b)         by showing that the application is made bona fide; (c) by showing a bona        fide defence to the Plaintiff’s claim which prima facie has some prospects of         success.

 

[11]   In giving 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.  This means that the Defendant must at least furnish an          explanation for his default sufficiently full to enable the court to understand          how it really came about and to assess his conduct and motives.  When      applying the principle to the Applicant’s case the Applicant states that it      cannot be said that there was gross negligence on the part of the Applicant.            A continuous outline and narrative of the occurrence of linked events after           receipt of the knowledge of the judgment including seeking assistance from Attorneys and the correspondence between the Applicant and the 1^st           Respondent’s clearly shows acquiescence and substantiation of the            Applicant’s belief that a space for discretion and clarification on the basis for   the court action had been created after the receipt of the summons.  The        Applicant was under bona fide belief that the court action had been stayed.  At      all times the Applicant did not sit on his laurels upon receiving the summons and that throughout, the Applicant desired and intended that the matter should         proceed defended.

 

[12]   On the issue that the Application is made bona fide, the Applicant states that   the Application must be bona fide and not made with the intention of merely          delaying the Plaintiff’s claim. Speaking of the bona fide defence, the    Applicant says that 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.  The Applicant’s defence is that the 1^st Respondent was informed in           various meetings that the launching of the National Youth Summit was subject        to the          approval by the Board of Directors of the Applicant, the Youth           Enterprise Revolving Fund (YERF) and the Cabinet of the Kingdom of    Eswatini. Since Applicant and the National Youth Summit were government entities, the 1^st Respondent had to furnish Applicant and the     Youth Enterprise Revolving Fund with all necessary company registration   documents of 1^st Respondent and company profile. The 1^st Respondent did not fully comply not withstanding subsequent reminders.

 

[13]   Sometime later, a proposal for the launching, subject to the necessary approval           and furnishing of document was, tabled.  The 1^st Respondent undertook not to           launch but later turned around and launched to the exclusion of the Applicant and YERF.  The Applicant was therefore under the reasonable belief that the launch was solely at the whim of the 1^st Respondent at his own cost and had    nothing to do with the Applicant and YERF.  The cost is now the subject of   the present litigation.

 

[14]   On the issue of prospects of success, the Applicant submits that it has a bona fide defence which prima facie, carries prospects of success in the merits in     that:

          (a)     The conviction of the National Youth Summit although proposed and                        planning did never find facilities as the authorising procedure had never           been finalised and the authority to proceed never obtained;

          (b)     At all times the 1^st Respondent was continuously made aware of the                           basic requirements for service engagement with the Applicant that:

                   (i)      Primarily, all the company documents required needed to be filed                      in strict compliance the prescribed policy and this never                                              materialised.  The primary compliance was not met by the 1^st                                      Respondent;

                   (ii)     The Applicant and the YERF had expressly repudiated their                                       participation prior to the         launch and the 1^st Respondent was on                                       numerous meetings requested to postpone the launch pending the                              Board of Directors’ Approval.  The 1^st Respondent insisted on                                    proceeding with its own launch introducing a different concept                                    altogether than what was being discussed during the various                              meetings.

 

Common law

[15]   On the issue of common law rescission, the principle that apply is that it will    be granted where sufficient or good cause has been shown.  Good cause has           two elements to it.  Firstly, that a party seeking relief must present a reasonable      and acceptable explanation for his default which gave rise to the court order or judgment; secondly, that such a party has to establish that on the merits he    has a bona fide defence which prima facie, carries some prospects of success.  The Applicant further submitted that the consideration with respect to Rule 31     (3)(b) rescission application, except for the 21 day period after a party has   become aware of judgment granted against it, apply with the same force        and effect to common law rescission.

 

[16]   The Applicant therefore requests the court to uphold the Application for           rescission with costs.

 

The 1^st Respondent’s Case

[17]   The 1^st Respondent states that the Applicant asserts that it had no authority to           enter into the service agreement with the 1^st Respondent.  The 1^st Respondent           pleads that the Applicant’s C.E.O had ostensible authority to enter into the           agreement. The papers filed of record show that there was a general           understanding that the 1^st Respondent should plan for an event, only they           hoped that this would not be a cost to them; this cannot be.  There is no service           provider who would provide a service for free.

 

[18]   Moreover, the Applicant continuously gave instructions to the 1^st Respondent until such time that they discovered that they did not have authority.  This      defence does not carry any prospects of success, should the matter go to trial.

 

[19]   On the Rule 42 (1) ground for rescission, a party must allege facts which show that the court made an error in granting judgment.  In the current proceedings,         the Applicant has not established any error on the part of the court, nor        introduced a fact which would have prevented the court from granting    Judgment by default.

 

[20]   On the Rule 31 (3) (b) ground for rescission, a party must approach the court           within 21 days of having had knowledge of the judgment.  The letter of    demand was served upon the Applicant on the 20^th September, 2018.  A Writ       of Execution was then issued and therefore the Applicant became aware of the   Judgment on the 20^th September, 2018.  The Applicant alleges that he became        aware of the Court Order on the 24^th September, 2018.  The 1^st Respondent    states that it took the Applicant close to 30 days to file an Application for     rescission.  This was well beyond the 21 days stipulated in the Rule.  There was also no application for condonation for the late filing of the Rescission Application.

 

[21]   On common law rescission, an applicant must show that he has good cause           which is made of a reasonable and acceptable explanation for the default,           coupled with a bona fide defence which carries prospects of success.  In   applying this principle a party must first show the court that there is a         reasonable and acceptable explanation for the default before the court can     consider whether or not there is a bona fide defence.  It is Respondent’s contention that the Applicant does not state why it did not file the notice to         defend.  The letter that was sent by the Applicant does not expressly or   impliedly state that the matter be stayed.  All that the Applicant stated is       dissatisfaction about the filed process and further indicating that in the event           proceedings are instituted, the Applicant will defend them.

 

[22]   The Applicant goes on to say that the letter created an impression that the           proceedings would be stalled.  The 1^st Respondent never created such           impression, hence the explanation.  The 1^st Respondent therefore requests the           court to dismiss the application for rescission with costs.

 

THE APPLICABLE LAW

[23]   Rule 42 (1)(a) states that “The Court may, in addition to any other powers it    may have, mero motu or upon the application of any party affected, rescind or         vary-

          (a)     an order or judgment erroneously granted in the absence of any party                         effected thereby.”

          In Nhlanhla Phakathi V The Swaziland Television Authority High Court           Civil Case No. 745/2015 [2016] Fakudze J. observed that:

                   “It seems that a judgment has been erroneously, granted if there existed               at the time of its issue a fact which the judge was unaware which would               have precluded the granting of the judgment and which would have                             induced the Judge, if he had been aware of it, not to grant the                                 judgment.”

 

[24]   It is important to note that the error must be ex facie the record for Rule 42       (1) (a) to find application.  A party seeking rescission based on the Rule need         not establish good cause.  If the court holds that an order or judgment was    erroneously granted in the absence of any party affected by it, the order should           without further enquiry, be rescinded or varied.

 

[25]   Rule 31 (3)(b) states that “a defendant may, within twenty-one days (21) after he has had knowledge of such judgment, apply to court upon notice to the   plaintiff to set aside such judgment and the court upon good cause shown and      upon the defendant furnishing to the plaintiff security for costs of the default       judgment and of such application to a maximum of E200.00, set aside the     default judgment on such terms as to it seems fit.”

 

[26]   In Allen Mango V Edward Alexander Hamilton, High Court Case No.           1784/04, His Lordship Hlophe J, in determining whether or not a Rescission           Application had been filed within the stipulated period specified in the Rule,     used the date stamp of the Registrar of the High Court as the date on which     the Applicant made the Application to the court.

[27]   On the issue of good cause it was stated in Colyn V Tiger Food Industries       Ltd           t/a Meadow Feed Mills (Cape) 2003 (6) SA 1 (SCA) Paragraph 11 as     follows:

                   “The courts generally expect an Applicant to show good cause:

1.      by giving a reasonable explanation for the default;
2.      by showing that the application is made bona fide;
3.      by showing a bona fide defence to the plaintiff’s claim which   prima facie has some prospect of success.”

 

[28] As stated earlier in this judgment, the principles applicable to Rule 31 (2)(b) applies to common law rescission.

 

Court’s analysis and conclusion

[29]        In this court’s assessment, this matter falls for determination under Rule             31(3)(b).  We indicated earlier that a defendant seeking rescission under this     Rule must do so within 21 days after having had knowledge of the    judgment.  He must also               furnish a reasonable explanation for failing to    defend the proceedings.

 

[30]        In casu, at paragraph 21 of the Founding Affidavit and paragraphs 7.5 and 7.6     of the Replying Affidavit, the Applicant alleges that he registered and issued the Application within the 21 days prescribed by the Rule.  This is so                 particularly when taking into account that the Applicant gained knowledge of     the judgment sought to be rescinded on the 24^th September, 2018 and the                 Application for rescission was filed on the 23^rd October, 2018 which is exactly                 21 days.  The Applicant’s version of when he became aware of the judgment     sounds credible.  One instance suffices to prove this point.  In paragraph 12.3    of the Respondent’s Supplementary Affidavit, dated 29^th October, 2018, the 1^st Respondent states that “the Applicant became aware of the Judgment on                 the 19^th or alternatively 24^th September, 2018 and not the 17^th October, 2018.”  “Annexure H” of the Founding Affidavit shows that the Applicant stamped it                 on the 24^th September, 2018.  There is no reason for this court to doubt that                 the Applicant only became aware of the judgment on the 24^th September,          2018.  I am therefore  inclined to find in favour of the Applicant that the 21       day period was complied with for purposes of Rule 31 (2)(b).

 

[31]        On the issue of reasonable explanation, the Applicant states that he thought     the Respondent should first respond to the correspondences between the parties that were exchanged on the 19^th March, 2018 (marked “Annexure D”    to the Founding Affidavit) and that of 21^st August, 2018.  The Respondent            further says that in the absence of a response to the 21^st August      correspondence it was assured that 1^st Respondent had acquiescenced to the     position in our letter of the 21^st August, 2018.  An email from the 1^st         Respondent was received in response directing that the Applicant deal directly    with the Attorneys of the 1^st Respondent.  The 1^st Respondent’s response is            straight forward.  There was never any intention on its part to stall the legal                 process.

 

[32]        The court’s view on whether the explanation offered by the Applicant is              reasonable or not, it is clear from the facts of the matter that the Applicant was         aware of the summons issued against it and it did nothing to defend same.    This manifests an element of gross negligence or recklessness on its part.  The explanation of the default in the present circumstances cannot be reasonable.        The second hurdle which an Applicant for rescission based on Rule 31 (2)(b)                 has to cross has not been crossed.  The Applicant’s application for rescission                 cannot succeed on this ground.  I need not consider the requirement of a bona                fide defence carrying prospects of success because of the conclusion this        court has come to with respect to the reasonableness of the explanation for                 failing to defend the matter.

 

[33]        The Application for rescission stands dismissed with costs at an ordinary               scale.  The Rule nisi issued by this court on the 25^th October, 2018 is hereby     discharged.

 

 

M. FAKUDZE

JUDGE OF THE HIGH COURT

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