REPORTABLE CASE NO.: SA 49/2008

IN THE SUPREME COURT
OF NAMIBIA

In the matter between:

And

Coram: Shivute
CJ, Strydom AJA et Mtambanengwe AJA

Heard on:
01/03/2010

Delivered on:
09/06/2011

APPEAL JUDGMENT

SHIVUTE CJ:

1. This
   is an appeal from the judgment and order of the High Court
   dismissing an application for the rescission of a default judgment
   made by the appellant, as applicant, in the Court a quo on
   the basis that the default judgment was erroneously sought or
   granted in his absence. The appellant and one Laurenza van der
   Merwe were members of a close corporation known as Executive
   Computer Systems CC (the close corporation) that was finally
   liquidated by the order of the High Court dated 30 October 2006.
   The respondent, as plaintiff, instituted action against Ms van der
   Merwe and the appellant, as first and second defendants
   respectively, seeking inter alia to hold the defendants
   personally liable to the respondent for the alleged indebtedness of
   the close corporation (in liquidation) in terms of s 64(1) of the
   Close Corporation Act, 1988 (Act No. 26 of 1988) as well as payment
   of the amount of N$466 054,75.

   
   

2. Mr
   Corbett argued the appeal on behalf of the appellant. The appeal is
   unopposed and so we have not had the benefit of hearing argument on
   behalf of the respondent.

   
   

3. It
   is apparent from the record that after the summons had been served
   on the appellant, the appellant had signed a power of attorney
   appointing a firm of legal practitioners as his legal
   representatives and a notice of intention to defend as well as a
   plea were subsequently filed on his behalf by his legal
   practitioners on 23 June 2008. The notice of set down dated 19 June
   2008 informed the parties that the matter had been set down for
   trial on a continuous roll from 30 September 2008 to 3 October 2008.
   
   

   
   

4. On
   30 September 2008, neither the appellant nor Ms Van der Merwe nor
   their legal representatives were present in Court and so the learned
   Judge seized with the matter handed down a default judgment in terms
   whereof the appellant and Ms Van der Merwe were found to be liable
   for the debts of the close corporation (in liquidation) in terms of
   s 64(1) of the Close Corporation Act, 1988 (the Act) and were
   furthermore ordered to pay the amount of N$466 054,75 to the
   respondent as well as the costs of suit. Only the appellant had
   sought rescission of the judgment and Ms Van der Merwe played no
   part in the proceedings in the Court below or in this Court.
   

   
   

5. The
   uncontested evidence presented in the application for rescission of
   judgment is that since the filing of the plea, the appellant had
   neither been notified of progress in the matter nor had he been
   informed of the date of set down. The evidence is furthermore that
   the appellant had consequently remained oblivious to the date of the
   commencement of the trial and only became aware of the judgment
   after 8 October 2008 when he was served with a writ of execution.
   Upon being served with the writ, the appellant promptly instructed
   his legal practitioners of record to obtain the documentation
   relating to the matter from the Court file. The information gleaned
   from the Court file established that on 8 July 2008, the appellant’s
   erstwhile legal practitioner filed a notice of withdrawal, giving
   notice in respect of the then defendants as follows:

   
   

“A copy of this Notice has been
directed to the First Defendant to the last known address on the date
indicated hereunder as per the attached registered slip.

Second Defendant acknowledge (sic)
receipt of a copy of this notice as per acknowledgement of
receipt on page 3 hereof.” (Emphasis supplied).

The part where the
appellant was supposed to have signed in acknowledgement of receipt
of the notice was in fact not signed and the appellant says that he
did not receive a copy of the notice of withdrawal at all and was
accordingly unaware of his erstwhile legal practitioner’s
withdrawal. Thus, contrary to what was stated in the notice of
withdrawal, the appellant never acknowledged receipt of the notice of
withdrawal in any form since the appellant seemingly never received a
copy of the same.

6. On
   31 October 2008, the appellant filed an application on notice of
   motion, supported by an affidavit, seeking to set aside the default
   judgment. The application, which was unopposed, was heard and
   refused on 28 November 2008. Reasons for judgment were given on 16
   July 2009 subsequent to the lodging of the appeal in this Court on
   21 November 2008 and after the appeal record had been filed. The
   judgment of the Court a quo is reported under De Villiers
   v Axiz Namibia (Pty) Ltd 2009 (1) NR 40 (HC). In the light of
   the late furnishing of the reasons for judgment, the
   appellant was constrained to lodge an application for condonation in
   this Court for the late filing of a supplementary record embodying
   the reasons for judgment. Having considered the reasons furnished
   in the application for condonation, we considered that sufficient
   cause therefor had been shown and the application was accordingly
   granted.
   

   
   

7. The
   record of proceedings giving rise to the present appeal shows that
   when the matter was called, the learned Judge directed counsel to
   address him on the merits. Counsel then briefly addressed the Court
   on the merits and concluded with the submission that in light of
   what counsel contended was a vague and embarrassing summons, there
   was an arguable case which would entitle the appellant at the very
   least to attempt to persuade the trial Court why the claim should
   not succeed. Having heard brief argument from counsel, the Court a
   quo dismissed the application forthwith and as earlier
   mentioned, gave reasons at a later stage.

   
   

8. In
   his reasons for judgment, the learned Judge found that there was no
   indication or reference “whatsoever” on the papers that
   the application for rescission was brought in terms of Rule 44(1)(a)
   of the Rules of the High Court. On the contrary, the Court a quo
   found that the appellant had expressly stated in his founding
   affidavit that he would rely on the Court’s common law powers
   to rescind the judgment. I will endeavour to present further
   findings of the Court a quo hereunder when considering the
   question whether or not that Court was correct in its holding that
   the application for rescission of judgment had been brought under
   common law only and not also in terms of Rule 44(1)(a) of the Rules
   of the High Court and it is to this aspect of the appeal that I
   propose to turn next.

   
   

9. The
   wording of our Rule 44(1)(a) is identical to the wording of Rule
   42(1)(a) of the South African Uniform Rules of Court and as such the
   commentary and South African case law on their Rule 42(1)(a) are of
   high persuasive authority. It is a well-known principle that a
   judgment taken in the absence of one of the parties in the High
   Court may be set aside in three ways, namely in terms of Rule
   31(2)(b) or Rule 44(1)(a) of the Rules of the High Court or at
   common law. (Cf. De Wet and Others v Western Bank Ltd
   1979 (2) SA 1031 (A) at 1037; Bakoven Ltd v G J Howes (Pty)
   Ltd 1992 (2) SA 466 (E) at 468H.) Rule 31(2)(b) is obviously of
   no application to the facts of this case since it applies to a
   situation where the applicant was in default of delivery of a notice
   of intention to defend or of a plea. (See Rule 31(1)(a) of the
   Rules of the High Court.) Counsel submitted and I agree that Rule
   44(1)(a) is of application to the facts of this appeal. In so far
   as it is relevant to the facts in issue, Rule 44(1)(a) provides as
   follows:

   
   

“(1) 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 –

1. an
   order or judgment erroneously sought or erroneously granted in the
   absence of any party affected thereby;
   

   
   

2. …
   

   
   

3. …”
   

   
   

10. The
    difference between the application brought under the common law and
    the one brought pursuant to Rule 44(1)(a) (the Rule) is that in the
    case of the former, an applicant is required to establish “good
    cause” or “sufficient cause” for the rescission of
    the judgment granted in his or her absence in the sense of an
    explanation for his default and bona fide defence while in
    the latter case “good cause” need not be shown. (See,
    for example, Promedia Drukkers & Uitgewers (Edms) Bpk v
    Kaimowitz and Others 1996 (4) SA 411(CPD) at 417I; Herbstein and
    Van Winsen’s The Civil Practice of the High Courts
    of South Africa 5^th Edition Vol. 1, by
    Cilliers, Loots and Nel on page 938.)
    

    
    

11. The
    Court a quo dismissed the application for the rescission of
    judgment on the basis that the application had not been brought in
    terms of the Rule; that it had been brought under the common law;
    that appellant was therefore required to establish “good
    cause”, and that he had failed to do so. Crucially, it
    observed in para [18] of the judgment as follows:

    
    

“In this application there is no
indication or reference whatsoever neither in the notice of
motion and its (sic) founding affidavit and annexures thereto
nor in argument presented by the defendant’s counsel in Court
and also not in the applicant’s/second defendant’s notice
of appeal to the Supreme Court that the application for rescission is
brought in terms of Rule 44(1)(a).” (Emphasis added).

The High Court went on to
record that on the contrary, the appellant had expressly stated in
his founding affidavit that his application had been brought under
common law and held in para [25] of the judgment that while it was
prepared to accept “albeit with some reservations” the
explanation offered for the default, the application for rescission
of judgment “must be treated as one brought under the common
law and that the appellant was therefore required to show ‘sufficient
cause’”.

12. Having
    considered the appellant’s plea, founding affidavit and the
    annexures to the application at length, the learned Judge reasoned
    that neither the plea nor the founding affidavit nor the annexures
    had established a bona fide defence to the respondent’s
    claim. The Court below found furthermore that the founding
    affidavit had not adequately dealt with the allegations of
    recklessness or gross negligence in the running of the close
    corporation and concluded that the appellant should be held liable
    for the debts of the close corporation in terms of s 64(1) of the
    Act.

    
    

13. For
    the reasons that follow, I am of the firm view that the finding by
    the Court a quo that the application for rescission of
    default judgment in this case had not been brought under the Rule at
    all is a clear misdirection. A close examination of the record
    shows that although the appellant had not cited the Rule by name, he
    had employed its language and appeared to have been guided by its
    spirit in the formulation of his application for rescission of
    judgment. A consideration of some of the salient allegations and
    contentions in the founding affidavit makes this abundantly clear.
    In this respect, the appellant stated in paragraph 4.9 of his
    affidavit as follows:

    
    

“4.9 On 24 October 2008 my
lawyers phoned the lawyer of the Respondent, Mr. Agenbach, who
informed my lawyer that default judgment was granted by the High
Court of Namibia due to absence of myself and my legal
representative. My lawyer also informed Mr. Agenbach that I
have instructed him immediately to bring an application for
rescission of the judgment granted against me (sic).”
(Emphasis is mine)

14. In
    paragraph 8 he said:

    
    

“8. In all the aforementioned
circumstances, I respectfully submit that the failure to have
appeared in Court was not as a result of willful neglect and/or
default on my part…” (Emphasis as in
the original)

15. In
    paragraph 9 of the affidavit the appellant informed the Court and
    contended as follows:

    
    

“9. I am furthermore advised and
respectfully submit that:

9.1.1 inasmuch as I will rely
hereafter on the term that the default judgment was erroneous
sought and/or erroneous granted in my absence on 30 September 2008,
it is not necessary for me to deal fully with the merits of my
defence as was already done by my previous lawyers under
pressure…; but

9.1.2 inasmuch as I will rely on the
Court’s common law powers to rescind the judgment granted by
the High Court, I state that I in any event have a defence.”
(Emphasis added)

16. In
    paragraph 10 it is stated:

    
    

“10.1 I shall now deal with the
reason why I submit that the Respondent sought and the High Court
granted the default judgment erroneously... and

10.4 I accordingly submit that the
default judgment was erroneously sought and granted and for
that reason alone the judgment should be set aside.” (Emphasis
is mine)

17. This
    last contention was followed by a heading “Ad
    application in terms of the common law/merits” in which the
    appellant essentially denied, in two paragraphs, that he had entered
    into a transaction with the respondent in a reckless, negligent or
    fraudulent manner as alleged in the particulars of claim.
    

    
    

18. During
    the proceedings of the application for the rescission of the
    judgment, counsel for the appellant in the Court a quo (not
    the same counsel who argued the appeal) made it quite clear at the
    outset what the grounds for the application for rescission were and
    it is apparent from the record that he had initially advanced the
    ground based on the Rule and in doing so, did not deal with the
    merits at all. It was only after he had been pressed by the learned
    Judge to address the Court a quo on the merits that he had to
    switch to the common law ground and then dealt with the merits in
    his oral submissions. It is apparent from the record that when the
    case was called, the appellant’s counsel in the Court a quo
    submitted that the papers were in order and prayed for relief in
    terms of the relevant prayers in the notice of motion. The learned
    Judge then reasoned that although he was persuaded that there had
    been an acceptable explanation for the default, he remained
    unconvinced that the appellant had had a bona fide defence or
    that there were prospects of success on the merits. The Judge then
    invited counsel to address the Court on the merits. Counsel asked
    the matter to stand down so that he could address the Court at the
    end of the roll. On resumption, counsel commenced his address by
    stating as follows:

    
    

“My Lord, I can only refer this
Court to page 9 paragraph 9.1.1, which reads as follows, ‘In as
much as I will rely hereafter on the term that default judgment was
erroneously sought and/or erroneously granted in my absence on
30 September 2008, it is not necessary for me to deal fully with
the merits of my defence as was already done by my previous
lawyer under pressure.’” (Emphasis supplied)

Counsel next referred the
Court a quo to a passage on page 697 of the 4^th
edition of Herbstein and Van Winsen’s The Civil Practice of
the Supreme Court of South Africa (as the book was then titled)
where the principle that I have previously mentioned, viz.
that an applicant who seeks to set aside a judgment in terms of the
Rule is not required to establish good cause, was stated and
concluded his brief address by submitting:

“It is submitted that a case was
made out why such default Judgment was granted in his absence which
is not the Applicant’s fault…”

19. I
    am of the opinion that although the appellant’s affidavit read
    as a whole was evidently not a model for elegant draftsmanship,
    there can be no doubt that by referring to and paraphrasing the
    contents or requirements of the Rule as exemplified by the
    highlighted phrases in the paragraphs of his affidavit quoted above,
    the appellant evidently relied upon the Rule in addition to the
    common law ground for rescission of judgment without necessarily
    invoking the Rule by name. Although it is not stated in so many
    words, it seems to me, upon
    the reading of the founding affidavit as a whole,
    that the merits were dealt with therein only to the extent that it
    was required to show good cause in terms of the common law ground
    relied on in the alternative. As was pointed out by Jafta J in
    Mutebwa v Mutebwa 2001
    (2) SA 193 (Tk HC) at para [12],
    the fact that an application for rescission is brought in terms of
    one Rule does not mean that it cannot be entertained pursuant to
    another Rule or under common law provided,
    of course, that the requirements of each of the procedures are met.
    (See also Bakoven Ltd v G J Howes (Pty) Ltd
    (supra) at 468I;
    Nyingwa v Moolman NO 1993
    (2) SA 508 (Tk GD) at 510C.)
    It follows that the Court a quo
    erred in holding that the application for rescission was brought
    only in terms of the common law. In finding that the affidavit did
    not spell out a case for rescission on the ground based on the Rule,
    the Court below impermissibly appears to have laid emphasis on the
    form rather than the substance of the appellant’s affidavit.
    

    
    

20. It
    is abundantly clear that in the submissions he made, counsel for the
    appellant in the Court a quo had also employed the language
    of the Rule. Since he alternatively relied on the common law
    ground, he was required to deal with the merits and it was in that
    context, so it appears to me, that the merits were also dealt with.
    It is also plain that by citing the passage in the earlier edition
    of Herbstein and Van Winsen where the equivalent of the Rules was
    mentioned, as already noted, counsel also explicitly cited the Rule
    and pertinently relied on it in his submissions. It must follow
    then that the Court a quo also erred in its finding that
    there was no indication or reference “whatsoever” in
    argument presented by appellant’s counsel that the application
    for rescission was brought in terms of the Rule.
    

    
    

21. The
    next question for consideration and decision is whether the
    appellant had shown that the judgment was erroneously sought or
    granted in his absence as required by the Rule. An order or
    judgment that was erroneously sought or granted in the absence of
    any party affected by it should without further enquiry be rescinded
    or varied. (See the South African cases of De Sousa v Kerr
    1978 (3) SA 635(W) at 638A-B; Topol and Others v L S Group
    Management Services (Pty) Ltd 1988 (1) SA 639(W) at 650D-J).
    There does not appear to be consensus among the decisions of the
    South African High Courts on the question whether or not in the
    consideration of an application in terms of their equivalent of the
    Rule, a Court is entitled to consider facts that are not on the
    record of the proceedings of the Court that has granted the order
    sought to be rescinded. As far as I was able to ascertain, the
    majority of the reported judicial pronouncements on the subject in
    that jurisdiction establish that relief under the Rule may be
    granted inter alia where at the time of the issue of the
    order or judgment complained of, there existed a fact of which the
    Judge was unaware, which would have precluded the granting of the
    judgment or order and which would have induced the Judge, if he or
    she had been aware of it, not to grant the judgment. (See Nyingwa
    v Moolman NO (supra); Weare v ABSA Bank Ltd 1997
    (2) SA 212 (D & CL) at 217B; Stander & Another v ABSA
    Bank 1997 (4) SA 873 (E).) In Bakeoven Ltd v Howes
    (supra) on the other hand, Erasmus J held at 471F, that in
    deciding whether a judgment was “erroneously granted”, a
    Court is, like a Court of appeal, confined to the record of
    proceedings. The learned Judge went on to observe at 472H that
    unless an applicant for rescission could prove an error or
    irregularity appearing on the record of proceedings, the
    requirements of the Rule cannot be said to have been satisfied and
    rescission cannot therefore be granted. Erasmus J reaffirmed this
    position in Tom v Minister of Safety and Security [1998] 1
    All SA 629 (E). In Stander and Another v ABSA Bank (supra),
    Nepgen J declined to follow Erasmus J’s holding in this regard
    and pertinently observed at 882E-G as follows in reference to the
    phrase “in the absence of any party affected thereby” in
    the Rule:
    

    
    

“It seems to me that the very
reference to ‘the absence of any party affected’ is an
indication that what was intended was that such party, who was not
present when the order or judgment was granted, and who was therefore
not in a position to place facts before the Court which would have or
could have persuaded it not to grant such order or judgment, is
afforded the opportunity to approach the Court in order to have such
order or judgment rescinded or varied on the basis of facts, of which
the Court would initially have been unaware, which would justify this
being done. Furthermore the Rule is not restricted to cases of an
order or judgment erroneously granted, but also to an order or
judgment erroneously sought. It is difficult to conceive of
circumstances where a Court would be able to conclude that an order
or judgment was erroneously sought if no additional facts, indicating
that this is so, were placed before the Court.” (Emphasis
supplied)

The Stander v ABSA
Bank approach was followed in cases such as President of the
RSA v Eisenberg and Associates 2005 (1) SA 246(C); Smith v Van
Heerden [2002] 4 All SA 461(C) at 467 F-H. In Mutebwa
v Mutebwa (supra), while agreeing with Erasmus J’s
dictum in Bakeoven (supra) that the error should
appear on the record, Jafta J observed that such a requirement
applied only in cases where the Court acts mero motu or on the
basis of an oral application made from the Bar for rescission or
variation of the order. For in those circumstances, so the learned
Judge reasoned, the Court would have had before it the record of the
proceedings only. The learned Judge continued to remark as follows
in para [20]:

“The same interpretation cannot,
in my respectful view, apply to cases where the Court is called upon
to act on the basis of a written application by a party whose rights
are affected by an order granted in its absence. In the latter
instance the Court would have before it not only the record of the
proceedings but also facts set out in the affidavits filed of record.
Such facts cannot simply be ignored and it is not irregular to adopt
such a procedure in seeking rescission. In fact, it might be
necessary to do so in cases such as the present, where no error could
be picked up ex facie the record itself… It is not a
requirement of the Rule that the error appear on the record before
rescission can be granted.”

22. I
    respectfully endorse what was stated by both Nepgen J in Stander
    and Another v ABSA Bank and by Jafta J in Mutebwa v Mutebwa
    in the dicta quoted above. I consider that the approaches on
    the point under discussion adopted in those cases and others that
    followed them, are with respect, sound and should be followed by
    this Court. In the consideration of the application for rescission,
    a court would therefore be entitled to have regard not only to the
    record of the proceedings of the court that had granted the impugned
    judgment or order, but also to those facts set out in the affidavit
    relating to the application for rescission. In the present appeal,
    it is not in dispute that judgment was granted by default in the
    absence of the appellant and Ms Van der Merwe. Counsel contended
    that the order of the Court a quo of 30 September 2008 was
    “erroneously granted” in the absence of the appellant
    since the appellant was neither informed of the trial date nor was
    he informed of the withdrawal of his former legal practitioners as
    contemplated in Rule 16(4) of the Rules of the High Court, which
    provides in full as follows:

    
    

“(a) Where counsel acting in any
proceedings for a party ceases so to act, he or she shall forthwith
deliver notice thereof to such party, the Registrar and all other
parties: Provided that notice to the party for whom he acted may be
given by registered post.

(b) After such notice, unless the
party formerly represented within 10 days after the notice, himself
or herself notifies all other parties of a new address for service as
contemplated in sub rule (2), it shall not be necessary to serve any
documents upon such party unless the Court otherwise orders: Provided
that any of the other parties may before receipt of the notice of his
new address for service of documents, serve any documents upon the
party who was formerly represented.

(c) The notice to the Registrar shall
state the names and addresses of the parties notified and the date on
which and the manner in which the notice was sent to them.

4. The
   notice to the party formerly represented shall inform the said party
   of the provisions of paragraph (b).”
   

   
   

23. Counsel
    submitted further that it is clear from the notice of withdrawal
    that unlike in the case of Ms Van der Merwe in respect of whom the
    chosen mode of service was by registered post, in respect of the
    appellant the chosen mode of service of the notice of withdrawal was
    by way of an acknowledgement of receipt of the notice, which is
    missing from the record. I think that counsel is right. That there
    was no proof that the appellant had been notified of his erstwhile
    legal practitioner’s withdrawal would have been apparent from
    the record. This would have alerted the respondent and indeed the
    Court seized with the matter on the trial date that there had not
    been proof that the withdrawal of the legal practitioner had been
    brought to the attention of the appellant.
    

    
    

24. The
    appellant’s misfortunes were entirely due to his erstwhile
    legal practitioner’s neglect to inform the client of the trial
    date and of his withdrawal from the case without giving notice to
    the appellant as required by Rule 16(4)(a) of the Rules of the High
    Court. It is, of course, trite law that a litigant is under an
    obligation to keep in touch with his or her legal practitioner and
    cannot simply leave matters in the hands of the lawyer without
    enquiring on progress. It is also a well-known principle of our law
    that there is a limit beyond which a litigant cannot escape the
    consequences of his or her legal practitioner’s remissness.
    However, as was pointed out by Van Reenen J, in Promedia Drukkers
    & Uitgewers (Edms) Bpk v Kaimowitz and Others 1996(4) SA 411
    at 420A-B, it would appear that those cases that have laid down this
    principle were decided in the context of clients, who with the
    knowledge that action was required, sat passively by without
    directing a reminder or enquiries to their legal practitioner
    entrusted with their matters. See, for example, the two cases cited
    by Van Reenen J, of Saloojee and Another NNO v Ministry of
    Community Development 1965 (2) SA 135 (A) at 141C-H; Moraliswani
    v Mamili 1989 (4) SA 1 (A) at 10B-D. In this matter, there is
    no evidence or allegation that the appellant is the author of his
    misfortune in the sense that he kept quiet and had not enquired
    about progress from his legal practitioner. His lawyer withdrew as
    legal practitioner of record leaving the appellant in the lurch and
    without informing him of the trial date and his subsequent
    withdrawal. In the circumstances, the appellant has established
    that the judgment was erroneously granted in his absence in that had
    the Court that granted the default judgment been aware that the
    appellant had not been informed of the trial date by his legal
    practitioners, it might not have granted the default judgment.
    

    
    

25. In
    any event, by finding that the appellant was personally liable for
    the debts of the close corporation (in liquidation), in terms of s
    64(1) of the Act, the Court below essentially exercised a
    discretion. Section 64(1) of the Act provides as follows:

    
    

“If it at any time appears that
any business of a corporation was or is being carried on recklessly,
with gross negligence or with intent to defraud any person or for any
fraudulent purpose, a Court may on the application of the Master, or
any creditor, member or liquidator of the corporation, declare that
any person who was knowingly a party to the carrying on of the
business in any such manner, shall be personally liable for all or
any of such debts or other liabilities of the corporation as the
Court may direct, and the Court may give such further orders as it
considers proper for the purpose of giving effect to the declaration
and enforcing that liability”.

26. It
    seems to me that the exercise of discretion in terms of s 64(1) of
    the Act, involves an element of making a value judgment based on the
    appellant’s attitude or state of the mind necessary to
    establish recklessness or gross negligence or in the case of fraud,
    the intent to defraud.
    

    
    

27. As
    the Court a quo also acknowledged, the South African Supreme
    Court of Appeal pointed out in Philotex (Pty) Ltd and Others v
    Snyman and Others 1998 (2) SA 138 (SCA) at 142H, (a judgment
    concerning the interpretation of s 424(1) of the South African
    Companies Act, 1973 (Act 61 of 1973) which is worded not too
    dissimilar to s 64(1) of the Act), the finding that a person carried
    on a business recklessly should not be made lightly. That Court
    furthermore observed at 144B:
    

    
    

‘In the application of the
recklessness test to the evidence before it a Court should have
regard, inter alia, to the scope of operations of the company,
the role, functions and powers of the directors, the amount of the
debts, the extent of the company's financial difficulties and the
prospects, if any, of recovery.”

28. Paraphrasing
    in the above dictum “company” for “close
    corporation” and “director” for “member”
    how are those factors and the appellant’s culpability in the
    running of the Close Corporation to be ascertained in the
    circumstances where no oral evidence was led at the trial to support
    the claim based on s 64(1) of the Act? I am unable to see that the
    factors mentioned in the dictum in Philotex (Pty) Ltd v
    Snyman and Others above could be ascertained simply by reading
    “the summons and other documents filed of record” as the
    order issued by the Court that had granted the default judgment
    indicates.

    
    

29. In
    the light of the findings that the application for rescission had
    been brought pursuant to the provisions of the Rule and that the
    appellant had established that the judgment was granted erroneously
    in his absence, it is not necessary to consider the points of
    argument so ably presented by counsel for the appellant based on the
    relief sought in terms of the common law. I would accordingly allow
    the appeal.

    
    

30. I
    must finally consider the issue of costs. Counsel for the appellant
    in his heads of argument urged us to order the respondent to pay the
    costs of the appeal. It is noted, however, that no costs were
    sought against the respondent in the High Court unless it had
    opposed. As already noted, the respondent did neither oppose the
    proceedings in the High Court nor did it oppose the appeal. In
    those circumstances, the respondent should not be mulcted in costs.
    The following order is accordingly made:

    
    

1. The
   appeal is allowed.

   
   

2. The
   application for condonation for the late filing of the record
   embodying reasons for judgment is granted.

   
   

3. The
   order of the Court a quo dated 21 November 2008 refusing the
   application for rescission of judgment is set aside and the
   following order is substituted therefor:

   
   

“(a) The application for
rescission of judgment is granted.

(b) The default
judgment granted by the Honourable Mr Justice Muller under Case
Number (P) I 11/2007 on 30 September 2008 is rescinded and set aside.

(c) Any process
issued by the respondent on the strength of the said default judgment
is set aside”.

4. 
   No order as to costs is
   made
   

   
   

________________________

SHIVUTE CJ

I concur

_________________________

STRYDOM AJA

I also concur

_________________________

MTAMBANENGWE AJA

COUNSEL ON BEHALF OF THE APPELLANT: Instructed by:	Mr Corbett Chris Brandt Attorneys
COUNSEL ON BEHALF OF THE RESPONDENT:	No appearance