High Court overturns default judgment against Shaya Phansi Projects

The High Court of South Africa, Mpumalanga Division, Middelburg, has overturned a default judgment against Shaya Phansi Projects (Pty) Ltd, ruling that the company had established sufficient grounds for rescission.

The judgment, delivered on 4 June 2026 by Fourie AJ, with Leso AJ and Phahlamohlaka J concurring, upheld Shaya Phansi Projects' appeal against a decision of the court a quo, which had dismissed its application to rescind a default judgment granted on 29 April 2024.

The dispute arose from a July 2020 agreement for the demolition of coal silos at Anglo Goedehoop Mine, Vlaklaagte Shaft. Montgomery Plant Hire and Construction CC and Montgomery Group (Pty) Ltd claimed they had fulfilled their contractual obligations and were entitled to payment. Shaya Phansi Projects disputed this, arguing that the respondents had not properly performed their obligations and that it was entitled to withhold payment. The company also sought to raise a possible prescription defence.

A central issue before the High Court was whether Shaya Phansi Projects had provided a reasonable explanation for its default. The company argued that it had moved premises before the summons was served and had previously informed the respondents' lawyers that all legal documents should be served at its attorneys' offices.

The court found no evidence that Shaya Phansi Projects had known about the summons or had deliberately chosen not to defend the matter. Fourie AJ said wilful default required a conscious decision, with knowledge of the legal action and its consequences, to refrain from participating. "Nothing before me indicates that the appellants knew of the summons issued against them, and nothing indicates that they took some sort of wilful decision not to participate in the initial proceedings," he said.

The court further held that an applicant seeking rescission must provide both a reasonable explanation for the default and a bona fide defence with prima facie prospects of success. Shaya Phansi Projects' allegations regarding the respondents' contractual performance, the court found, could constitute a defence under the exceptio non adimpleti contractus, which allows a party to withhold performance where the other party has not fulfilled its obligations.

The court stressed that it was not required at the rescission stage to determine whether the defence would ultimately succeed. It only needed to establish whether the defence, if proven at trial, could constitute a valid answer to the claim.

The same approach was applied to the company's proposed prescription defence. The court said it would not make a final determination at this stage, as the issue may require evidence at trial. However, it found that prescription was a legitimate defence and could not be regarded as having been raised in bad faith.

"I am satisfied that the appellant made out a proper case for the rescission of the judgment granted against them in their absence, and the court a quo ought to have found as such," Fourie AJ ruled.

The appeal was upheld. The default judgment of 29 April 2024 was rescinded and set aside. The court ordered no costs in relation to the rescission application itself, but directed the respondents to pay Shaya Phansi Projects' reserved costs relating to leave to appeal and the appeal, on a party‑and‑party scale.

The ruling restores Shaya Phansi Projects' opportunity to defend the underlying contractual claim, with the substantive dispute over the demolition work and alleged non‑performance still to be determined. The matter now proceeds under South African civil procedure and contract law principles.