This
is an application for rescission of judgment made in terms of Rule
449(1)(a) of the High Court Rules, 1971. Rule 449(1)(a) reads as
follows:
“449
Correction,
variation and rescission of judgments and orders
(1)
The court or a judge may, in addition to any other power it or he may
have,
meru
moto
or upon the application of any party affected, correct, rescind, or
vary any judgment or order –
(a)
That was erroneously sought or erroneously granted in the absence of
any party affected thereby; or…,.”
The
facts, according to the applicant, are these.
Under
case number HC589/13, the respondent was granted a default judgment
against the applicant and other parties in terms of which it sought
to recover certain monies advanced as loans to a company. The
applicant was cited therein as surety and co-principal debtor.
According
to the applicant, it was common cause that Stir Crazy Group of
Companies, the first defendant in HC589/13, does not exist, and that
the first respondent therein ceased to exist due to its merger with
Afrasia Bank Limited, culminating in the creation of Afrasia Kingdom
Bank. The new merged entity is now in liquidation.
The
above facts were not disclosed to the court which proceeded to grant
default judgment against the applicant.
The
respondent now wishes to execute the default judgment by selling the
applicant's immovable property. Because the judgment was granted in
his absence and because the judgment affects him substantially, the
applicant argues that he is entitled to impugn the judgment on the
basis of the errors indicated above. Specifically, that;
(i)
There was no plaintiff under case HC589/13 as the respondent had
ceased to exist due to the merger with Afrasia.
(ii)
Secondly, the respondent, being a company under liquidation, ought to
have been represented by its liquidator. It had no locus
standi
to appear before the court as plaintiff or any other party without
the liquidator.
(iii)
Thirdly, the applicant avers that the loan, the subject of the
default judgment under HC589/13, had been advanced to a non-existent
company.
Now,
because there was no first defendant in that sense, the applicant
could not properly be sued on the basis of a surety agreement made in
favour of a non-existent entity.
If
the court had been made aware of these errors, it would not have
granted the default judgment. This, in a nutshell, is the factual
basis upon which the applicant launched this application. He seeks
rescission in terms of Rule 449(1)(a).
The
respondent's opposing affidavit is sworn to by Joel Chandibata, the
Recoveries Manager of Afrasia Bank Limited. Certain preliminary
points are raised. I need not be detained by these.
On
the merits, the respondent deposes as follows.
The
order the subject of this application was not sought or issued in
error. The respondent's contention is that it is the applicant who
misrepresented the correct names of his company, Stir Crazy
Investments (Private) Limited of which he was its alter ego. He
deliberately misrepresented the company as being Stir Crazy Group of
Companies (Private) Limited in some of the documents between the
respondent and his company, whilst in other such documents, he
correctly stated the company's name. He was also the Managing
Director of the correctly named company. For that reason the
applicant must be estopped from seeking to avoid the contract because
the respondent acted on the basis of his misrepresentation to its
prejudice. He, at all times, represented the “non-existent”
company. Further, the respondent submits that the innocent
misrepresentation of the principal debtor's name is a non-material
mistake which cannot void the contract. In fact, money was advanced
to this “non-existent entity” and the applicant himself, apart
from being its Managing Director, was a signatory to the various
accounts held by the company. He was also responsible for most
withdrawals and repayments on the loan account. He signed the
Suretyship Deed in support of the “non-existent” company.
The
respondent further avers that the claim under HC589/13, against the
company in question, was withdrawn, not because the company was
non-existent but because it had gone into liquidation. The same
company instituted action under HC10569/14 claiming $7,187,089=76
from the respondent under the same contracts that the applicant says
were contracted by a non-existent company. The same non-existent
company has, in writing, admitted liability and has sought a set off
against outstanding debts owed to the respondent.
The
respondent asserts that at the time the contracts were executed, the
applicant's company had not merged with Afrasia Bank, such merger
only occurring in February 2015 after the default judgment had been
entered in November 2014.
The
respondent submits that the provisions of Rule 449(1) do not apply in
this case because the applicant has not disclosed the nature and
extent of the error that the court made in entering default judgment
against his company. The mistake in the name of the principal debtor,
argues the respondent, was a non-material mistake which has no
bearing on the contracts. The applicant bound himself as surety and
co-principal debtor hence his liability is not in doubt.
I
agree with the respondent that the mistake in the name of the company
concerned is a non-material mistake. Put differently, if the judge
who dealt with the application for default judgment had been advised
that the name of the defendant should read STIR CRAZY INVESTMENTS
(PRIVATE) LTD and not STIR CRAZY GROUP OF COMPANIES, as reflected on
the papers, would he have declined to grant the order merely on
account of that error? I should think not. A reasonable judge would
have allowed an amendment correcting that error or even proceeded to
correct the error himself, and, in either case, he would thereafter
have proceeded to grant the default judgment in terms of the draft
order so amended. Nothing further would have turned on that kind of
error. The error does not affect the applicant in any substantial
way, if at all, and should not lead to the rescission of a judgment
that was, in all material respects, properly entered.
The
rest of the errors alleged by the applicant have not been properly
shown or proved by way of documentary or other evidence. The onus is
on the applicant to prove its case. I will therefore, in the absence
of such evidence, assume the respondent's averments to the contrary
not to have been disproved.
By
the same token, the point in
limine
raised by the respondent with regards section 213 of the Companies
Act is not raised in the opposing affidavit but only in its heads of
argument. It is not properly before the court and I am unable to
relate to it in the present application.
Rule
449 does not only provide for rescission of judgments entered in
error. It also provides for the variation and correction of such
judgments. It is not every error that calls for rescission of
judgment. The error as to the name of the applicant's company can
be corrected.
Accordingly,
it is ordered as follows:
1.
The application to rescind the default judgment given under case
number HC589/13, on 5 November 2014, be and is hereby dismissed.
2.
The default judgment granted under case number HC589/13, on 5
November 2014, be and is hereby corrected by the deletion of “Stir
Crazy Group of Companies (Private) Limited” wherever it occurs and
the substitution, in its place, of “Stir Crazy Investments
(Private) Limited.”
3.
The applicant shall pay the costs.
