Top Trailers (Pty) Ltd & another v Kotze

Top Trailers (Pty) Ltd's board resolved on 13 August 2014 to begin business rescue proceedings under section 129 of the Companies Act 71 of 2008. Mr Sipho Sono was appointed as the business rescue practitioner on 22 August 2014. At that time, the company allegedly owed the respondent, Mr Johannes Petrus Kotze, R1,842,050.28 in royalties under a licence agreement. Mr Kotze was not given proper notice of the business rescue resolution and only became aware in May 2015. A business rescue plan was adopted by creditors on 11 February 2015 and substantially implemented. On 12 May 2016, Mr Kotze applied to set aside the business rescue resolution, claiming he was not given required notifications under sections 129(3) and (4) of the Companies Act. The appellants filed a notice of intention to oppose on 10 June 2016 (late). Without notice to the appellants' attorneys, Mr Kotze enrolled the matter on the unopposed roll for 27 June 2016. Khumalo J granted a default order setting aside the business rescue resolution. The appellants only became aware of the order on 26 July 2016 and applied for rescission on 1 November 2016.

• Whether a default judgment obtained without prior notice to the opposite party after the matter became opposed can be rescinded under rule 42(1)(a) of the Uniform Rules of Court as a judgment erroneously granted
• Whether an applicant seeking rescission under rule 42(1)(a) must demonstrate a bona fide defence
• Whether judgment granted without notice of set down to the respondent's attorney of record constitutes an 'erroneously granted' judgment
• Whether Mr Kotze required consent of the business rescue practitioner or leave of the court to institute proceedings under section 133 of the Companies Act

1. The appeal succeeded with costs, including the costs of two counsel. 2. The order of the high court (Phiyega AJ) dismissing the rescission application was set aside and replaced with an order that: (a) The application succeeds; (b) The judgment granted by default by the high court on 27 June 2016 is set aside; (c) The respondent is ordered to pay the costs of the application.

A default judgment obtained without prior notice to the opposite party after the matter has become opposed (through filing of a notice of intention to oppose) is a judgment 'erroneously granted' within the meaning of rule 42(1)(a) of the Uniform Rules of Court and must be rescinded. Where notice of proceedings to a party is required and judgment is granted in that party's absence without proper notice having been given, such judgment is granted erroneously, regardless of what appears on the record. An applicant seeking rescission under rule 42(1)(a) on the basis of lack of notice need not demonstrate a bona fide defence on the merits. The practice directives requiring service of notice of set down on the respondent's attorney of record must be complied with, particularly where a notice of intention to oppose has been filed.

The court did not need to address the substantive issues raised in the rescission application, including: whether Mr Kotze was required to obtain consent from the business rescue practitioner or leave of the court under section 133 of the Companies Act before instituting proceedings; whether the failure to notify Mr Kotze of the business rescue proceedings under sections 129(3) and (4) of the Companies Act justified setting aside the business rescue resolution; whether other affected persons should have been joined; and whether the advanced stage of the business rescue proceedings would make undoing them complicated and expensive. The court also did not address the alternative bases on which rescission was sought beyond rule 42(1)(a).

This case clarifies the application of rule 42(1)(a) of the Uniform Rules of Court regarding rescission of judgments erroneously granted. It confirms that where a matter has become opposed (through filing of a notice of intention to oppose) but is enrolled on the unopposed roll without notice to the opposing party's attorneys, the resulting default judgment is erroneously granted and may be rescinded under rule 42(1)(a). The case reinforces the importance of procedural fairness and compliance with practice directives requiring notice of set down. It also establishes that in such circumstances, the applicant for rescission need not demonstrate a bona fide defence on the merits - the procedural irregularity alone suffices. The judgment emphasizes the principle from Lodhi that a judgment can be erroneously granted even if the record appears regular, where proper notice was not in fact given.