Olitasha Investments CC and Others v El-Em Investments CC (HC-MD-CIV-ACT-CON-2023/05465) [2024] NAHCMD 692 (15 November 2024)

Case Title:

Olitasha Investments CC 1^st Applicant

Ndapunikwa Natasha Nghilukilwa 2^nd Applicant

Anna Kemanya Nghilukilwa 3^rd Applicant

and

El-Em Investments CC Respondent

Case No: HC-MD-CIV-ACT-CON-2023/05465

Division of Court:

Main Division

Heard before:

Ndauendapo J

Heard on: 9 August 2024

Delivered on: 15 November 2024

Neutral citation: Olitasha Investments CC v El-Em Investments CC (HC-MD-CIV-ACT-CON-2023/05465) [2024] NAHCMD 692 (15 November 2024)

The order:

1. The application succeeds.

2. The default judgment granted on 22 February 2024, in favour of the respondent, is hereby rescinded.

3. Costs shall be costs in the main action.

4. The matter is removed from the residual roll and to be docket allocated to a managing Judge, by the Registrar.

Reasons for order:

NDAUENDAPO J:

Introduction

[1] This is an application for the rescission of a default judgment granted against the applicants, in favour of the respondent.

Background facts

[2] The respondent instituted action against the applicants for breach of contract. The respondent claimed an amount of N$142 774, 56 from the applicants, for breach of contract. The applicants failed to defend the action and thereafter, the respondent applied for default judgment, which was accordingly granted on 22 February 2024. The applicants now seek rescission of said default judgment.

Applicable legal principles

[3] Rule 16 of the Rules of the High Court provides:

‘Rescission of default judgment

(1) A defendant may, within 20 days after he or she has knowledge of the judgment referred to in rule 15(3) and on notice to the plaintiff, apply to the court to set aside that judgment.

(2) The court may, on good cause shown and on the defendant furnishing to the plaintiff security for the payment of the costs of the default judgment and of the application in the amount of N$5 000, set aside the default judgment on such terms as to it seems reasonable and fair…’

[4] In Ekandjo NO v Van Der Berg (19 of 2004) [2008] NASC 20 (12 December 2008), it was held that:

‘the cause célèbre, which has been cited by both sides in this appeal and which encapsulates the three considerations set out in the preceding paragraph is Grant v Plumbers (Pty) Ltd 1949 (2) SA 47 (O). The following are the bench-marks which that case sets out, viz:

1. The defaulting party must give a reasonable explanation for his default. If it appears that his default was wilful or due to gross negligence, the Court should not come to his assistance.

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

3. He must show that he has a bona fide defence to the 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 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.’

I now turn to consider the explanation.

Reasonable explanation

[5] Ms Nghilukilwa, the second applicant and holder of 50% member’s interest in the first applicant, avers that the summons was served on an employee of the first applicant, Mr Efriam Paules, on 23 January 2024 at 14h00. Mr Paules then placed the summons underneath the calendar of the second applicant. At the time of service, the second applicant was out of office and did not return to the office later that afternoon, as the second applicant was preparing for her travel to her farm, which is located a few kilometres outside Okahandja. The second applicant travelled to Okahandja, where she stayed there for a few days before proceeding to visit her family in Okalongo, which is situated in the North.

[6] The second applicant only returned to the office on 26 February 2024, when she found the summons on her desk under a cluster of documents. She was surprised when she saw the summons and immediately commenced searching for a law firm. On 27 February 2024, she opened a file at Shikongo Law Chambers. She was however advised that, she could not consult immediately as the lawyer to whom the file was assigned was out of town. She could thus only secure a consultation on 4 March 2024, when the lawyer returned. At all relevant times, the applicants were not aware of the action brought against them.

[7] The applicants only learned that a court order was issued against them on 4 March 2024, after consultation with their legal practitioner. The applicants were then advised to bring a rescission application. A confirmatory affidavit of Mr Paules was filed. The third applicant also deposed to a confirmatory affidavit.

[8] The applicants submit that they have a bona fide defence. On 17 August 2023 and at Windhoek, the parties entered into an agreement. The parties agreed that first applicant will supply the respondent with 4580 bales of toilet paper. The parties agreed that the first applicant would provide the respondent with a discount on the above, if the respondent in addition to the 4580 bales of toilet paper purchased another 3000 bales of toilet paper for the Ministry of Works in Otjiwarongo and 1500 buckets of pine gel. The parties further agreed that the respondent will buy the toilet paper at a 20% discounted price being N$230 instead of the actual price of N$290 per bale. The parties further agreed that the respondent will pay 70% of the production cost in the amount of N$1 053 400, 00 and that once payment has been done, the respondent shall not be entitled to any refund. It was also agreed that the respondent would provide a sample and ensure that the sample provided was approved by the Ministry of Works for production.

[9] Pursuant to the agreement, the first applicant delivered 1100 bales of toilet paper to the Ministry of Works in Windhoek. The above bales were produced in line with the sample provided by the respondent. The ministry returned the 1100 bales to the applicants because the bales were not in accordance with the approved sample. The respondent is the one in breach of the agreement in that, it failed to comply with the terms of the discount and failed to purchase the 3000 bales of toilet paper and 1500 buckets of pine gel. As a result of the breach, the applicants rescinded the discount and required the respondent to pay N$290 per bale. The applicants provided the respondent with 3206 bales of toilet paper to date, which add up to 929 740. The respondent has paid N$737 380 and is therefore indebted to the applicants in the amount of N$192 360.

[10] Mr Barnabas Shikongo deposed to the answering affidavit on behalf the respondent. He avers that a letter of demand was sent to the applicants before summons was issued, but they never responded thereto. Attempts were made to discuss further steps, but that was to no avail. He confirms that the parties indeed entered into an agreement for the supply of 4580 bales of toilet paper, but denies that there was a condition of a discount. He avers that the applicants owe the respondent the amount as claimed in the summons.

Submissions on behalf of the applicants

[11] Counsel submitted that, the applicants gave a reasonable explanation for failing to defend the matter. It was also submitted that the applicants have a bona fide defence to the respondent’s action.

Submissions on behalf of the respondent

[12] Mr Kanyemba submitted that before summons was issued, a letter of demand was sent to the applicants in October 2023. In November 2023, the lawyer for the respondent contacted the 3^rd applicant and he was informed that they will respond via their lawyer. Mr Kanyemba further submitted that the applicants, not being aware of the legal action, is untrue. He submitted that it is the applicants who owe the respondent money and that is why the respondent issued summons.

Discussion

Is the explanation reasonable?

[13] Although Mr Kanyemba submitted that the applicants were aware of the legal action because a letter of demand was sent to them, what they aver is that they were not aware of the summons. They explained that Mr Paules was the one who received the summons. There is a confirmatory affidavit from Mr Paules confirming that explanation. In the circumstances, the explanation is reasonable and acceptable. The applicants have also set out a bona fide defence to the claim of the respondent. To shut the portal of justice in the face of the applicants, without giving them an opportunity to defend and ventilate the dispute in court, will be unjust.

Conclusion

[14] The applicants have demonstrated good cause as to why they did not defend the matter and they set out a bona fide defence to the action, and thus, they are entitled to the relief sought.

Order

1. The application succeeds.

2. The default judgment granted on 22 February 2024, in favour of the respondent, is hereby rescinded.

3. Costs shall be costs in the main action.

4. The matter is removed from the residual roll and to be docket allocated to a managing judge, by the Registrar.

Judge’s Signature

Note to the Parties

N NDAUENDAPO

JUDGE

COUNSEL

Applicants

Respondent

MS UGUANGA

MR KANYEMBA