Anucha Theophilus v Giliad Shibtai

The applicant purchased property from the first respondent for US$350,000.00, which he paid in full before the agreement of sale was signed on 7 September 2018. The first respondent alleged that the applicant breached the agreement by failing to pay stamp duty and provide necessary transfer documents despite repeated demands. On 30 January 2019, the first respondent terminated the agreement and tendered a refund. The applicant filed an application for specific performance under HC 2650/19 on 29 March 2020. The first respondent filed a counter-application for a declaratur confirming cancellation of the agreement. The applicant filed an answering affidavit to the opposing affidavit but failed to file a notice of opposition to the counter-claim. The applicant's secretary allegedly forgot to print the notice of opposition. The first respondent applied for default judgment. On 21 July 2020, the main application before Zhou J could not be heard due to the pending default judgment application. The applicant's counsel wrote to Charewa J on 22 July 2020, advising of an intention to apply for joinder and upliftment of the bar. The applicant filed an application for joinder on 23 July 2020 and for upliftment of the bar on 7 August 2020. Before these applications were heard, Charewa J granted default judgment in favour of the first respondent on 12 August 2020, declaring the contract lawfully terminated. On 13 August 2020, the first respondent sold the property to a third party, Aicertina Investments, for US$200,000.00. The applicant then applied for rescission of the default judgment.

• Whether a point of law based on Rule 449 could be raised for the first time during argument when the founding affidavit was based on Rule 63
• Whether the default judgment was erroneously granted in terms of Rule 449(1)(a) when two pending applications (for joinder and upliftment of the bar) had a bearing on the matter
• Whether professional etiquette required the first respondent to alert the applicant's counsel to the defect before seeking default judgment
• Whether the applicant's failure to file a notice of opposition constituted wilful default
• The interplay between a main application for specific performance and a counter-application seeking a declaratur on identical issues

1. The application succeeds. 2. The court order granted in default by Charewa J on 12 August 2020 in favour of the first respondent in HC 2613/20 is rescinded as it was granted in error. 3. The applicant shall file its notice of opposition to the counter-claim in HC 2650/19 within 10 days from the date of issuing of this order. 4. The applicant shall pay the first respondent's wasted costs arising from a postponement of the matter at the instance of the applicant on 14 May 2021. 5. The first respondent shall pay the applicant's costs of suit.

A default judgment is granted in error under Rule 449(1)(a) when the court is not made aware of pending applications that have a direct bearing on the application for default judgment, particularly where: (i) the pending applications seek to uplift a bar to allow a matter to be determined on the merits; (ii) the main application is ripe for argument and deals with identical issues; (iii) the applicant is not barred in the main application; and (iv) determination of the main matter on the merits would dispose of both matters. The court would have stayed the default judgment application had it been aware of these circumstances. Rule 449 constitutes a point of law that can be raised at any stage of proceedings, including from the bar, even when not pleaded in the founding affidavit, because the High Court has inherent jurisdiction to invoke Rule 449 mero motu to correct errors and prevent injustice.

The court made strong observations about professional etiquette and the conduct of legal practitioners. Musithu J noted that "professional etiquette used to be the hallmark of legal practice. Now all that seems to have been thrown out of the window." The court observed that if the first respondent and their counsel were truly desirous of having the dispute determined on the merits, they ought not to have rushed to apply for default judgment behind the applicant's back when the main matter was ripe for argument. They should have brought the anomaly to the attention of the applicant's counsel before hastily seeking default judgment. The court characterized the first respondent's conduct as seeking to "snatch judgment at all costs" and described it as unreasonable. The court also noted, without determining the issue, that the alleged sale to the third party appeared suspicious given: (1) it occurred one day after default judgment; (2) the property was sold for US$200,000 when originally purchased for US$350,000; (3) the purchaser and first respondent allegedly shared the same address; and (4) the purchaser's signatory was allegedly the first respondent's driver. However, these observations were not determinative as the court noted that issues concerning the third party purchaser were "a matter for another day."

This case is significant for establishing that: (1) Rule 449 applications can be made from the bar and constitute points of law that can be raised at any stage of proceedings, even when the founding affidavit was based on Rule 63; (2) The High Court's inherent jurisdiction allows it to protect and regulate its own processes, including correcting patent errors in its judgments; (3) Courts should not grant default judgments when pending applications have a direct bearing on the matter, particularly where the main application is ready for argument on the merits and deals with identical issues; (4) Professional etiquette requires counsel to bring procedural defects to the attention of opposing counsel rather than exploiting them for tactical advantage; (5) Technical defaults should not be used to evade determination of matters on their merits when the substantive dispute is ready for adjudication. The case reinforces the principle that courts exist to do justice between parties and should not allow judgments obtained through procedural technicalities to stand when this would result in manifest injustice.