Dorothy Nesgaard t/a Dantswana Centre v Kgomanyane (Civil Appeal No. 29 of 1995) [1996] BWCA 54 (19 July 1996)

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Dorothy Nesgaard t/a Dantswana Centre v Kgomanyane (Civil Appeal No. 29 of 1995) [1996] BWCA 54 (19 July 1996)

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IN THE COURT OF APPEAL OF BOTSWANA HELD AT LOBATSE
COURT OF APPEAL CIVIL APPEAL 2 9 OF 1995 HIGH COURT CIVIL CASE NO. 1146 OF 1994
IN THE MATTER OF:
DOROTHY NESGAARD t/a DANTSWANA CENTRE APPELLANT
AND
CATHERINE MOTLALEPULA KGOMANYANE RESPONDENT
MR ATTORNEY C. DUNCAN FOR THE APPELLANT MR ATTORNEY M.L. MOGOBE FOR THE RESPONDENT
JUDGMENT
CORAM: J.H. STEYN JA.
P.H. TEBBUTT JA. LORD W.L.K. COWIE JA.
STEYN JA.

Appellant was the unsuccessful Applicant in the Court below. In that Court she sought an Order rescinding a default judgment that had been granted against her.

Her application was dismissed with costs. She now appeals

to this Court on the following grounds:

"1. The Court a quo erred in holding that the Applicant had failed to prove that she had a good and bona fide defence.

2. The Court a quo erred in holding that the Applicant had failed to give a reasonable explanation for the delay in filing the

2 application for Rescission of Judgment.

3. The Court a quo erred in holding that the Default Judgment herein was a valid and proper one in terms of the law."

The facts are the following:
Respondent in this Court and in the Court below issued a
writ of summons (the summons) against the Appellant on July 5,
1994. In it she claimed the following relief:

"a) Payment in the sum of P15 370.00 and any further sums that may be due at the time of payment.

Interest thereon at the rate of 12% per annum a tempora morae.
c)

Costs of suit."

This claim was based on an allegation that the parties had entered into an agreement of lease on February 1, 1993 in terms of which Appellant undertook to pay a rental of P2900 a month subject to an annual escalation of 10% per annum. A copy of the lease was annexed to the summons. An implied term of interest at 12% per annum on arrear rentals was also alleged. The Respondent also averred in her particulars of claim, that in addition to the written agreement an oral agreement was also concluded between the parties that Appellant would pay P3 00 a month in respect of certain "servants quarters and the back yard".

It was in respect of Appellant's failure to fulfill her

3 obligations under the lease that Respondent sought an Order for
payment of the amount claimed under paragraph (a) cited above.
The summons was served on July 7, by one Mogobe an Attorney
practising as one of the members of a firm of attorneys acting
for Respondent. At the same time as serving the summons on her,
the attorney also negotiated and settled with Appellant an
acknowledgement of debt, annexure "FA3" to the papers. It
recorded a liability on Appellant's behalf, not of the P15,370
capital amount claimed in the summons but of a total indebtedness
P14,571, Pll,900 being in respect of capital. The details as to
how this amount was computed reflected the following:
"Capital Pll,900.00
Collection Commission P 190.00
Legal Costs P 850.00
Sheriff's Costs P 45.00
Interest to date P 586.00 Total P14,571.00" The acknowledgement of debt provided for the discharge of this capital sum at the rate of P3642 per month and for payment of interest at 10% per annum.
Appellant duly signed this acknowledgment of debt. An additional item 12 was added to the instrument in handwriting, in terms of which she Appellant undertook to vacate the property

4 " on or before the 31st July 1994".

It was Appellant's contention that by signing this acknowledgement of debt, she had settled the claims contained in the summons.

In part satisfaction of her obligations undertaken in the acknowledgement of debt, Appellant paid the sum of P1500 on August 1, 1994. A receipt for this amount issued by Respondent's attorneys was filed with the papers.

Respondent's reply to this allegation was that she

(Respondent) never signed the acknowledgement of debt and had not

accepted the terms set out in the acknowledgment of debt. She

went on to say in her response to these allegations that

" the Defendant (Appellant) had defaulted on the

acknowledgement of debt". She also contended that:

^{wa) The Defendant had paid only PI,500.00 at the time alleged.}

Such payment had been made past the due date.

Such payment fell far short of the amount reflected in the acknowledgement of debt.

Such payment was received without prejudice to my rights under these circumstances my Attorneys, acting on my instructions had every justification to proceed as they did. I reject any insinuation that they my Attorneys acted improperly."

The averment concerning rejection of "any insinuation" was

5 made because Appellant had indeed contended that, on August 5,

1994 when Respondent's attorneys had applied for default judgment

"almost half" the amount due in terms of the acknowledgement of

debt had already been paid direct to their offices. Appellant

went on to say: "Such application for judgment was therefore in

my view ill-conceived and improperly obtained, more so in view

of the fact that Plaintiff/Respondent went on to instruct a

Deputy - Sheriff to proceed and attach on the basis of the said

erroneous amount as at the 29th of August 1994."

It should be pointed out that the acknowledgement of debt contained a somewhat unusual provision:

Paragraph 11 thereof reads as follows:

"This document is an acknowledgement of debt and offer of payment on terms made by the debtor. It is binding on the debtor upon signature but, until written acceptance by the creditor of the terms of payment, the creditor's rights are reserved. The debtor undertakes to comply with the terms of his offer until acceptance or otherwise by the creditor."

An application for default judgment was filed with the Registrar on the August 5, 1994.

Although the notice issued out of Respondent's attorney's office is dated July 28, 1994 the Registrar's records indicate that it was in fact filed on August 5, 1994. The time is recorded as having been 14:05.

These facts are of some relevance inasmuch as:

1. Respondent's attorney had prepared an application for default judgment already on the 28th of July, three days before the first instalment was due, and at a time when he was not yet aware whether his claim for ejectment of Appellant should be granted by virtue of her compliance with her undertaking recorded in the additional provision in the acknowledgement of debt that she was to vacate the property on the 31st of July 1994.

2 . Two things are common cause concerning the events post 31 July 1994.

2.1

Appellant complied with her undertaking to vacate 31 July, 1994;

2.2

She failed to pay the instalment due in full but paid P1500.00 on account of her indebtedness which was accepted by Respondent's attorneys and receipted on August l, 1994.

At the bottom of the receipt is a typescript provision which
reads:
"All payments received without prejudice to client's rights."

As indicated above and despite the acknowledgement signed by Appellant, the payment of P1500.00 and the fact that Appellant had vacated the property leased by her, Respondent proceeded to move the Court for the full amount of the claim.

This judgment was granted on August 23, 1994.

The full force of the law was then employed to give effect to the judgment. On the same day a writ of execution was issued out of the High Court at the behest of Respondent's attorneys directing the deputy-sheriff to attach Appellant's movable

7 property and "to cause to be realised by public auction the sum
of P15,370.00" (the original capital sum allegedly due) with
interest and costs. In addition the officer of the Court was
charged with the duty to evict Appellant from the property
concerned even though no relief had been sought in the "Notice
of Order" submitted by Respondent on August 5, 1994.

On August 29, 1994 the deputy-sheriff attached a large number of movable items of property of the Appellant in satisfaction of the writ of execution. It is clear that even before the said attachment could be made and on August 25, 1994 Appellant had paid to the attorneys an amount of P1000. Further amounts were paid as follows:

P3500 on October 11 1994. P7500 on the same date.

A dispute arose as to whether Appellant had discharged her obligations in full; i.e. whether she was liable under the acknowledgment of debt or whether she was liable for the capital sum claimed in terms of the summons, together with interest and costs. Appellant alleged she had discharged her obligations in full as per her acknowledgement of debt. Respondent alleged that she still owed as at November 30 1994, an amount of P5,842.46.

On January 24, 1995 Respondent caused an advertisement to be published advertising the sale by way of public auction of the

goods attached. Appellant applied and obtained a stay of execution pending an application for rescission of the default judgment. This application was eventually heard and dismissed with costs in the High Court on the 7th of August 1995.

The basis on which the learned judge dismissed the application was that the defence raised on the papers that the lease had not been signed by the Appellant in her personal capacity but as the representative of a limited liability company was not a sufficiently substantial contention to justfy the rescission of the judgment. This submission was not pursued in this Court and requires no further debate.

The only other reason advanced in the judgment for rejecting

the application was that no explanation had been given why

Appellant had not defended the case "in the first place". The

learned Judge a quo said the following in this regard:

"The Defendant's explanation is that as she had signed an acknowledgement of debt previously, she thought that would take care of the matter, but she did not even ask the Attorney who served her the summons to give her an assurance when it could be expected that she would have done so, as it was the same Attorney who drew the acknowledgement of debt and obtained her signature on it.

There is evidence that since the taking of judgment and the attempt to obtain payment of the judgment amount by the Deputy sheriff the Defendant and or her company has made some payments to clear the judgment sum and costs. From the papers it is not clear to

9
me how much was paid and whether there is a balance that still remains owing."
The Court a quo then proceeded to make the following Order.
"i) That the application for rescission is dismissed with costs;

ii) Plaintiff is entitled to seek and obtain from the Defendant by sale in execution or otherwise the amount of the judgment debt and costs as reflected in the Deputy Sheriff's return less all amounts that had been paid by the Defendant and or her company since the acknowledgement of debt to date hereof;

iii) The Defendant should pay costs of this application."

The Court did not address the principal arguments advanced
before us, i.e. that:

1) Respondent had misrepresented to the Court granting the default judgment the amount due and that therefore the judgment had been granted in error. (According to the Judge's notes filed by Respondent this argument was indeed advanced in the Court below on behalf of the Appellant).

2. Appellant had signed the acknowledgement of debt subsequent to the issue and service of summons and therefore had assumed that the matter had been settled. She was in these circumstances not unreasonable in assuming that it was the obligations undertaken by her therein that governed her relationship with her creditor.

Before us Mr Mogobe for the Respondent resisted the
contention that there had been any novation of the obligations

10
to be undertaken by Appellant by virtue of her signature of the

acknowledgement of debt. For this he relied principally on the terms of paragraph 11 of this document.

The terms and implication of this clause require consideration. Mr Mogobe contended that applying the maxim caveat subscriptor, Appellant must be assumed to have taken care that the document she signed correctly reflected her intentions.

Let me assume, without so deciding, that it is correct that Appellant should have known and understood that the creditor's rights were reserved and that written acceptance was required to constitute a mutually binding and enforceable contract between the parties. Nevertheless it does not follow for purposes of determining whether Appellant's failure to enter an appearance to defend was unreasonable or that she had made "no attempt to explain why she did not defend the case,-" and that her version cannot sustain the relief claimed.

It was, in my view, in no way unreasonable for Appellant to have assumed that Respondent would not - even before any of her obligations fell due on July 31 1994 - proceed to prepare for submission to the Court, an application for default judgment based on a summons containing claims which she had reasonable grounds to believe had been "settled" . Moreover such a view would have been fortified by her complying with her obligation

to vacate on or before July 31, 1994 - as she duly did - and by Respondent accepting, without demur, payment of P1500.00 in part payment of her obligation undertaken in the acknowledgement of debt. The mere addition of the "without prejudice" stipulation on the receipt issued, would have been insufficient indication to a lay person that, despite the terms of the acknowledgement, the creditor would unilaterally seek to enforce her claim against the debtor, by obtaining default judgment in accordance with the summons. In this regard it should be borne in mind that the terms of the acknowledgement specifically provided that the obligations undertaken by Appellant were in respect of "rentals accruing on Lot No 590 Tlokweng and cause of indebtedness set out in the summons CC 1146/94." (The summons in the instant case.)

It is my view that in these circumstances it was eminently reasonable for Appellant to have assumed that there was no reason for her to defend the action initiated by way of the summons served on her on July 7, 1994. Respondent's attorney presented her with a document which she signed, and, which in my view, she was entitled to accept as now defining her obligations to her creditor.

It is true that she did not comply fully with her obligations. Nevertheless, at the very least, and even if the creditor was entitled to revive the original indebtedness

12
reflected in the summons, Appellant should have been advised that

Respondent intended doing so. Certainly it would be grossly unfair to a lay litigant, having negotiated with Respondent's attorney what she had good reason to believe was a settlement of her dispute with her landlord, to proceed to obtain a default judgment against her on the original summons without notifying her that it was Respondent's intention to do so.

It is clear from the papers read as a whole that Respondent's attorney knew at all relevant times that Appellant genuinely believed that her obligation for arrear rentals was the amount reflected in the acknowledgement i.e. Pll,900.00 and not the amount of P15,370.00 claimed in the summons. It was in all the circumstances not procedurally proper for him to seek to enforce the terms of indebtedness reflected in the summons without notice to her that he intended to do so. This on its own, would in my view have justified the Court to rescind the judgment granted in default of appearance. Proper practice would have been to have notified the Appellant of the intention to do so. Moreover, in view of the fact that the application was made ex parte, full disclosure should have been made, including disclosure of the fact that an acknowledgement of debt had been signed by the debtor for a lesser amount and that she disputed liability for the full amount of the claim.

The claim for rescission should, however, succeed on a second ground. This is that Respondent with full knowledge of Appellant's payment of P1500.00 nevertheless proceeded to apply for judgment for the full amount claimed in the summons. To compound this impropriety a writ of execution was issued and an attachment perfected, pursuant thereto, in satisfaction of the full amount of the claim.

There is clear authority for the proposition that a party who knowingly secures a judgment in excess of what is due may well ex debito justitiae have it set aside. See in this regard the judgment of Livesey Luke CJ. in the High Court of Botswana

in OVERSEAS DEVELOPMENT ENTERPRISES (PTY) LTD AND MQIQE

PROFESSIONALS (PTY) LTD. CIVIL CASE NO. 841 OF 1989. In MUIR V. JEHES 1913 (2) K.B. 412 (CA) the Court following HUGHES V JUSTEN 1894 QB 664 (CA), held that where a Plaintiff signs judgment in default of appearance for a sum in excess of that which is due to him, the Defendant is entitled to have such judgment set aside.

Buckley LJ said in this judgment that:

However, Hughes v Justine (l) is an authority for the following proposition: If the Plaintiff in the absence of Defendant, proceeding properly under the rules, signs judgment for a sum in excess of that which is due to him, the defendant is entitled to have that judgment set aside, unless the party who holds the judgment applies as he may to reduce it to the proper amount. If the application to amend be duly made it

> < ^J
14

may be right not to set the judgment aside but to reduce it to the proper sum, but unless the party who holds the judgement elects to have it put right, then upon the authority of Hughes v Justin it seems to me the Defendant is entitled to say "This is a wrong judgment, set it aside"."

Kennedy L J in the same case said:

".... it is important that we should see that claims which are based upon a judgment signed for an excessive amount are not allowed to succeed, when the course that has been deliberately taken by the creditor, has prevented that amendment for the correction of the error which might have been made

Mr Mogobe has urged us to apply the provisions of Order 4 8 (1) (b) and to vary the judgment to reflect the amount in fact due. There are two reasons why I think we should decline to do so. The first is that Respondent in this case failed to notify the unrepresented litigant that, despite the fact that it was known that she contested the full amount of the claim and had consented only to a substantially lesser amount, she, the creditor, intended to seek judgment for the full amount of the claim. This was in all the circumstances of this case, especially in view of the fact that it was an ex parte application, irregular conduct of the litigation which merits the rescission of the judgment obtained by such means.

Secondly, Respondent's attorney had ample opportunity between July 31 and August 23, 1994 to seek a variation of the

quantum of the relief sought, well knowing that an amount of

15
P1500.00 had been paid in the interim. The underlying principle

that motivates a Court to rescind rather than to vary an erroneous order in these circumstances is that an erroneous order knowingly obtained should not be allowed to stand in any shape or form. In this case the unacceptable conduct of the litigation is compounded by the fact that Respondent's attorney secured a writ of execution warranting the attachment of goods for the full amount.

In these circumstances I have no doubt that the application for rescission should have been granted. Had it not been for the dilatoriness of Appellant to discharge her obligations under the lease and the spurious nature of some of the defences raised by her, this might well have been a proper case for a punitive award of costs. Both parties, although not in equal measure, have conducted themselves with little litigious rectitude.

An appropriate order is the following. It is ordered that: The appeal succeeds with costs. The Order granted by the Court a quo is set aside. Substituted therefor is the following Order:

The judgment of the High Court in case No. CC 1146/94 dated August 23, 1994 is set aside as is the writ of execution issued on the same date as well as any attachment effected pursuant thereto.

Appellant is granted leave to defend. Appearance is to be entered within 14 days

of the delivery of this judgment. Further pleadings are to be filed in accordance with the provisions of the High Court Rules.

3. Respondent is to pay the costs of suit occasioned by her opposition to the relief claimed by Appellant in the High Court.

I would add that the parties are now only litigating about

a comparatively small sum of money. Wise counsel should dictate
the settlement of this matter without resort to further expensive
litigation.
DELIVERED IN OPEN COURT AT LOBATSE THIS 19^th DAY OF JULY 1996
J.H. STEYN JUDGE OF APPEAL

I AGREE:
P.H. TEBBUTT JUDGE OF APPEAL

I AGREE:
LORD W.L.K. COWIE JUDGE OF APPEAL

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