About SAFLII
Databases
Search
Terms of Use
RSS Feeds
South Africa: Western Cape High Court, Cape Town
SAFLII
>>
Databases
>>
South Africa: Western Cape High Court, Cape Town
>>
2020
>>
[2020] ZAWCHC 40
|
|
Mfwethu Investments CC t.a Recharger Prepaid Meters v Citiq Meter Solutions (Pty) Ltd t/a Citiq Prepaid (13124/19) [2020] ZAWCHC 40; 2020 (6) SA 578 (WCC) (19 May 2020)
THE
HIGH COURT OF SOUTH AFRICA
(WESTERN
CAPE DIVISION)
JUDGMENT
Case
No: 13124/19
In
the matter between
MFWETHU
INVESTMENTS CC t/a RECHARGER PREPAID METERS
APPLICANT
and
CITIQ
METER SOLUTIONS (PTY) LTD t/a CITIQ PREPAID
RESPONDENT
Coram:
Rogers J
Heard
:
11 May 2020
Delivered:
19 May 2020
This judgment was handed
down electronically at approximately 12:30 on Tuesday 19 May 2020 by
circulation to the parties’
legal representatives by email. On
the same day it was released to SAFLII.
JUDGMENT
Rogers
J
[1]
This opposed motion was argued by audio-visual link. I was in Cape
Town, counsel for the applicant in Durban and counsel for
the
respondent in Johannesburg.
[2]
The applicant,
Mfwethu
Investments CC t/a
Recharger Prepaid Meters (‘Recharger’), seeks a final
interdict against the respondent, Citiq Meters
Solutions (Pty) Ltd
t/a Citiq Prepaid (‘Citiq’). Recharger and Citiq are
among various firms which compete in the wholesale
and retail supply
of prepaid electricity sub-meters (‘meters’). Each meter
has a unique 11-digit number. Each supplier
has its own supplier
group code (‘SGC’). The meters it supplies, each with its
own 11-digit number, are linked to that
supplier’s SGC.
[3]
After a customer has bought a meter, the meter needs to be activated
on the supplier’s platform. This a customer does
by telephoning
the supplier’s call centre. The supplier provides vendors
(retail outlets which sell electricity tokens) with
details of the
meters activated on its platform. When the customer purchases a token
in such circumstances, the meter number will
match the SGC, and the
resultant token number can be successfully punched into the meter.
The supplier earns a service fee whenever
a token is purchased.
[4]
Recharger alleges that Citiq has activated Recharger meters on
Citiq’s platform (ie has linked such meters to Citiq’s
SGC) and has supplied particulars of such meters to vendors. Although
a consumer can buy a token in respect of such a meter, the
token
number cannot be successfully punched into the meter, because there
is a mismatch between the meter’s number and the
SGC. This,
Recharger alleges, causes harm to the consumers, and is damaging to
Recharger’s business, because the consumers
complain that
Recharger’s meters are defective when that is not the case. In
some instances Recharger, in order to appease
customers, has to buy
fresh tokens for them or even arrange for the customers to be
transferred to the Citiq platform by providing
a key-change code.
[5]
It is unclear how many of Recharger’s meters have been
incorrectly activated in this way. In the papers there is a schedule
listing 51 meters. Both counsel acknowledged in argument that the
number of affected meters is small (‘a drop in the ocean’)
in relation to the total number of meters supplied by their
respective clients.
[6]
Citiq has raised a preliminary objection to this court’s
jurisdiction. I have come to the conclusion that the objection
is
sound, and as a result I will not be addressing the merits of the
case.
[7]
Recharger is a South African close corporation with its principal
place of business in Durban. Citiq is a South African company.
It has
a places of business in Cape Town and another in Midrand, Gauteng.
The Midrand office is its registered office in terms
of s 23(3)(
b
)
of the Companies Act 71 of 2008 (‘the 2008 Act’).
[8]
Recharger does not assert that Citiq’s allegedly wrongful
conduct was perpetrated, wholly or partly, in the area of this
court’s jurisdiction. This court will thus only have
jurisdiction if Citiq’s presence within the court’s
territory
confers such jurisdiction.
[9]
For purposes of s 21(1) of the Superior
Courts Act 10 of 2013 (formerly s 19(1)(
a
)
of the Supreme Court Act 59 of 1959), the question whether a cause
‘arises’ within a court’s area of jurisdiction
is
determined by common law. The provision that the court has
jurisdiction ‘over all persons residing or being in’
such
area does not enlarge the jurisdiction endowed by the words ‘causes
arising’. At common law, however, the residence
(but not the
mere physical presence) of a defendant or respondent within the
court’s area of jurisdiction is, in most types
of claims, a
circumstance which enables one to say that the cause ‘arises’
within the court’s area of jurisdiction
(
Bisonboard
Ltd v K Braun Woodworking Machinery (Pty) Ltd
[1990] ZASCA 86
;
1991
(1) SA 482
(A) at 490 H-492I;
Bid
Industrial Holdings (Pty) Ltd v Strang & others
[2007]
ZASCA 144
;
2008 (3) SA 355
(SCA) para 53).
[10]
It follows that, to the extent that Recharger’s argument is
that the court has jurisdiction merely because Recharger’s
office in Cape Town causes it to be physically present within the
court’s territory, the argument is unsound and must be
rejected. The court will only have jurisdiction – or to put it
differently, the cause at issue in the present case could
only be
said to be one arising within this court’s territory – if
Citiq resides in this court’s territory.
[11]
Recharger’s counsel made extensive reference
to the recent judgment in
Apleni v
African Process Solutions (Pty) Ltd & another
[2018]
ZAWCHC 160.
He emphasised passages in the judgment which referred to
effectiveness. However, and as the cases cited by the learned judge
in
that matter show, effectiveness, while it may lie at the root of,
or be the rationale for, the common law grounds of jurisdiction,
is
not itself an independent ground of jurisdiction (
Gallo
Africa Ltd & others v Sting Music (Pty) Ltd & others
[2010] ZASCA 96
;
2010 (6) SA 329
(SCA) para 10).
The writ of a
division of the High Court runs throughout South Africa
(s 42(2)
of the
Superior Courts Act), so
that in principle any division could
give an effective judgment against an
incola
of South Africa
who is a
peregrinus
in that division’s territory, yet it
is clearly not the law that every division in South Africa has
jurisdiction over any
person who is resident somewhere in South
Africa.
[12]
For the rest,
Apleni
is authority for the trite proposition
that in a delictual claim the court will have authority over a
defendant who is resident
in its area, even though the delict was
committed elsewhere. Since the delict in our case was not committed
within this court’s
area of jurisdiction, the question is
whether Citiq is resident within this court’s territory.
The
residence of a company – the legal position before the 2008 Act
[13]
The majority judgment in
Bisonboard
answers the question as to
when a company can be said to ‘reside’ within the
territory of a court. A company resides
(a) at its principal place of
business in South Africa; (b) and also at its registered office.
This means that if the principal
place of business and the registered
office of a company are in different places, the company resides in
two places (and so, potentially,
in the areas of two different
provincial divisions). Residence in either form suffices for
jurisdiction (493B-495H).
[14]
Where a company has more than one place of business in South Africa,
the ‘principal place of business’, in the
jurisdictional
sense, means the place where the company’s ‘general
administration is centred’, the ‘
seat
of its central management and control, from where the general
superintendence of its affairs takes place’
. This may or
may not be where its manufacturing or other business operations are
carried on (
T W Beckett & Co Ltd v H Kroomer Ltd
1912 AD
324
at 334);
PMG Motors Kyalami (Pty) Ltd & another v
Firstrand Bank Ltd, Wesbank Division
[2014] ZASCA 180
;
2015 (2)
SA 634
(SCA) para 9).
[15]
The question whether a particular place is a company’s
principal place of business in this sense is a factual matter
which,
if disputed, would involve evidence as to where the company’s
general administration takes place.
[16]
If a company is to be regarded as resident within a particular
court’s territory on the basis of the location of its
principal
place of its business, it does not suffice that the company has a
place of business within that court’s territory,
even a
significant one. The question is whether that place of business is
the company’s principal place of business in South
Africa. If
the company’s general administration is centred elsewhere, the
company does not reside in the court’s territory.
[17]
For purposes of service of process, rule
4(1)(
a
)(v)
of the Uniform Rules states that service on a company may be effected
by delivering a copy of the process to a responsible
employee at the
company’s registered office ‘or its principal place of
business within the court’s jurisdiction’.
A company
which has several places of business within a court’s territory
may have a place of business which can be regarded
as its ‘principal’
place of business within that area. Service at that place is
permissible. However, this is irrelevant
when it comes to
jurisdiction, because for this latter purpose it does not suffice
that the place of business is merely the company’s
principal
place of business within the court’s area; it must be the
company’s principal place of business in South
Africa. (See
Leibowitz t/a Lee Finance v
Mhlana
& others
[2005]
ZASCA 126
;
[2006] 4 All SA 428
(SCA) para 9.)
Corporate
residence in terms of the 2008 Act
[18]
In terms of the Companies Act 61 of 1973 (‘the 1973 Act’),
there was no requirement that a company select, as its
registered
office, its principal place of business in South Africa, hence the
possibility of dual corporate residence. Section
23(3)(
b
) of
the 2008 Act has effected a change, because now, if a company has
more than one office in South Africa, it must register the
address of
its ‘principal office’. Although the new Act speaks of a
‘principal office” rather than a ‘principal
place
of business’, I do not think that there is a distinction
between the two expressions. Both refer to the place where
the
company’s general administration is centred.
[19]
The implications of the new regime were considered by Binns-Ward J
in
Sibakhulu Construction (Pty) Ltd v Wedgewood Village Golf
Country Estate (Pty) Ltd (Nedbank Ltd intervening)
[2011] ZAWCHC
439
;
2013 (1) SA 191
(WCC). The learned judge concluded that in the
new regime a company can only be resident in one place in South
Africa, namely at
its registered office. For purposes of
jurisdiction, a court cannot enquire into the question whether a
company has erroneously
registered, as its address, a place which is
not its ‘principal office’. That is a matter to be taken
up with the Companies
and Intellectual Property Commission (‘CIPC’).
[20]
Sibakhulu Construction
, although a decision of this court, was
concerned with the question whether the division of the High Court
sitting in Port Elizabeth
had jurisdiction to determine a business
rescue application which had been instituted in that court. This was
relevant to the question
whether liquidation proceedings pending
before the High Court in Cape Town had been suspended in terms of
s 131(6) of the
2008 Act. In the course of his reasoning,
Binns-Ward J said that his conclusion entailed that in respect of
every company there
would be only a single court in South Africa with
jurisdiction in respect of winding-up and business rescue matters
(para 23).
[21]
The learned judge’s statement, insofar as it concerns
jurisdiction in liquidation matters (as distinct from business
rescue
proceedings), appears to me to have been
obiter
, and
subsequent decisions have cast doubt on its correctness in that
respect. The reasoning in the later decisions has been based
on item
9 of Schedule 5 of the 2008 Act, which has preserved the provisions
of the 1973 Act in liquidation proceedings, including
the old Act’s
conception of a ‘court’ and the provisions of s 12
of the old Act relating to a ‘court’s’
jurisdiction. Section 12(1) of the old Act provided that a ‘court’
had jurisdiction under that Act if the company had
its registered
office or main place of business within its area of jurisdiction.
(See, eg,
Van der Merwe v
Duraline (Pty)
Ltd
[2013] ZAWCHC 213
;
Wild
& Marr (Pty) Ltd v Intratek
[201
9]
ZAGPPHC 613 and decisions discussed therein.) The 2008 Act does not
have an equivalent of s 12 of the 1973 Act. It appears
that in
Sibakhulu Construction
Binns-Ward J’s attention was not
directed to the possible implications of item 9 of Schedule 5.
[22]
It is unnecessary for me to decide whether the
obiter dictum
in
Sibakhulu
Construction
concerning jurisdiction in liquidation proceedings is right. The
ratio
of
the decision is that, at least in relation to matters entirely
governed by the new Act (including business rescue proceedings),
a
company can have only one place of residence, namely its registered
office. Later decisions do not impugn Binns-Ward J’s
reasoning in regard to matters wholly governed by the new Act, and it
was followed in
Navigator Property
Investments (Pty) Ltd v Silver Lakes Crossing Shopping Centre (Pty)
Ltd & others
[2014] ZAWCHC 103
;
[2014] 3 All SA 591
(WCC) para 19).
[23]
I do not think that Binns-Ward J’s decision is plainly wrong.
On the contrary, I find his reasoning persuasive. In particular,
I
regard as significant that the lawmaker saw fit to introduce
s 23(3)(
b
) as a novel provision in our corporate law, to
omit the former s 12 of the 1973 Act, and to include among the
stated purposes
of the Act the provision of a ‘predictable and
effective environment for the efficient regulation of companies’
(s 7(
l
)). It is highly desirable that there should be
certainty as to where a company is resident in South Africa, and the
lawmaker appears
to have been intent that there should be only one
such place, easily ascertainable as a matter of public record.
[24]
The office registered in terms of s 23(3)(
b
) is in law
the company’s registered office’ as that expression is
defined in s 1 of the Act. When the Act lays
down certain
requirements with reference to the ‘registered office’,
most importantly the location or accessibility
of its company records
(s 25) and accounting records (s 28(2)), it is referring to
the address as actually registered.
The company could not ward off a
complaint of non-compliance with these sections by proving that its
registered office is not in
fact its principal office and that the
records are available at its principal office.
[25]
If, as I consider to be the case, the lawmaker intended to do away
with dual corporate residence, it seems to me that there
are only two
possibilities: either (a) the registered address is dispositive
of the company’s place of residence or
(b) the registered
address can always be called into question, in which case the office
which is in fact the company’s
principal office is dispositive,
even though it is not the registered office. If the latter were the
true position, a company could
not be said to be resident at its
registered office as well as at its actual principal office, because
the registration is
ex hypothesi
wrong and not reflective of
the true position.
[26]
In my view, third parties are better served by treating the
registered office as dispositive. In order to know in which court
to
sue, third parties need only consult the information registered with
the CIPC. If they could not place complete reliance on
the
registration, the company might notionally object to jurisdiction on
the basis that its principal office is in fact in the
territory of
some other court. Third parties cannot be expected to know, and may
have no means of finding out, where the general
administration of a
company is centred.
[27]
However, and even if I were to assume that
Sibakhulu Construction
is wrong, and that a company may for purposes of jurisdiction be
regarded as resident at its principal place of business in South
Africa, even though that is not its registered office, it was for
Recharger to establish facts to show that Citiq’s Cape
Town
office, rather than its Midrand office, is its principal place of
business in South Africa, and that this court thus has jurisdiction
(
Mayne v Main
2001 (2) SA 1239
(SCA) para 1).
[28]
The applicant in its founding papers alleged that the Cape Town
office was Citiq’s principal place of business, and this
allegation Citiq denied in its answering papers. Neither side
proffered evidence about where the general administration of the
company was centred. To say that a particular office is a company’s
principal place of business is a mere conclusion. The
deponents for
the parties may not even have had the correct legal test in mind,
since they may have been judging the question of
principality with
reference to number of employees based at the office or the
physically size of the office or the scale of operations
(as distinct
from administration) conducted at the office.
[29]
In response to the denial in the answering papers, Recharger provided
evidence, from its inhouse legal adviser, Ms
Feroza
Aziz, of two telephone calls she made to a Citiq telephone number,
the first about two weeks before the application was instituted,
the
second about two months after institution. Citiq filed a
supplementary answering affidavit in which it dealt with these two
telephone calls. The telephone number in question was for Citiq’s
call-centre, which is staffed by about 40 call-centre telephonists.
Citiq says that these telephonists are not trained in matters
relating to corporate organisation.
[30]
The first call was answered by an unidentified telephonist. This
person allegedly said that Citiq’s ‘head office’
was in Cape Town. The second call was answered by a Ms Refilwe
Ndlala. With this information, Citiq was able to track down the
call,
which had been recorded for quality and training purposes. After
opening pleasantries, Ms Aziz said that she knew that Citiq
had an
office at a particular address in Cape Town and asked if that was
‘your principal place of business’. Ms Ndlala
said yes.
After Ms Aziz had taken down the spelling of Ms Ndlala’s name,
the conversation continued:
Aziz
: So, um, and,
um, it is your principal place of business this, um, Citiq Prepaid,
Pinnacle, Burg Street, Cape Town?
Ndlala
: Yes, um,
we have, actually have two offices, one is in Joburg, the other one
is in Cape Town, so that is the only one in Cape
Town.
Aziz
: Okay. Thanks
you so much, Refilwe.
[31]
In my view, this evidence is insufficient to establish that the Cape
Town office was in fact Citiq’s principal place
of business. In
the second call, the only one of which there is an exact record, the
portion of the conversation I have quoted
suggests that Ms Ndlala may
have meant no more than that the address Ms Aziz had mentioned was
the company’s only, and thus
its principal, office in Cape
Town. (This is how Ms Ndlala explained herself in her confirmatory
affidavit.) Even if one or both
of the telephonists thought that the
Cape Town office was the company’s ‘head office’ or
‘principal place
of business’ in South Africa, neither of
them was qualified to speak on that question. Bald statements of this
kind, by persons
who cannot by virtue of their positions be assumed
to be possessed of the requisite knowledge, do not count for much.
[32]
Accordingly,
in the absence of evidence about the activities carried on at the two
offices, the
prima
facie
position
established by the registration has not been displaced. I observe, in
this regard, that the company’s registered
office, which has
always been in Gauteng, was changed to the address reflected in the
current registration – Howick Gardens,
1 Mac Road, Vorna Valley
Extension 21, Midrand – in June 2016.
[1]
This was nearly two years after Citiq’s deponent, and its only
active director, Michael Franze, became a director of the
company
(the second director is described as non-executive).
[2]
This address in Midrand was nominated some years after the 2008 Act
came into force, and must represent an endeavour to nominate,
as the
registered office, the company’s ‘principal office’
in South Africa. By law, this is where the company’s
records,
and particularly its financial records, must be located or
accessible.
[33]
Recharger’s counsel submitted, somewhat faintly, that I should
refer the application to oral evidence if I were not satisfied
that
the Cape Town office was Citiq’s principal place of business.
For two reasons I decline to follow this course. First,
the question
as to Citiq’s
de facto
principal place of business only
arises if my primary finding on the effect of s 23(3)(
b
)
is wrong. Second, this is not a case where the evidence relevant to a
particular issue is in dispute. Rather, there are two competing
bald
conclusions. For all I know, the evidence (as distinct from the
conclusion), had it been placed before the court, would be
uncontested.
[34]
Given my finding that this court lacks jurisdiction, it is
undesirable that I express any opinion on the merits of the case,
as
they may need to be decided by another division of the High Court.
[35]
I make the following order:
The
application is dismissed with costs.
Owen
Rogers
O L
Rogers
Judge
of the High Court
Western
Cape Division
APPEARANCES
For
Applicant
M
S Khan SC
Instructed
by
Bilal
Malani & Associates, Durban
c/o
Dunsters Attorneys
Keerom
Street
Cape
Town
For
Respondent
L
J du Bruyn
Instructed
by
Werksmans,
Sandton
c/o
Werksmans
Level
1, No 5 Silo Square
V
& Waterfront
Cape
Town
[1]
Record 96.
[2]
Record 91.