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[2016] ZASCA 128
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Tralex Limited v Maloney and Another (823/2015) [2016] ZASCA 128 (27 September 2016)
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THE SUPREME
COURT OF APPEAL OF SOUTH AFRICA
JUDGMENT
Reportable
Case
No: 823/2015
In
the matter between:
TRAVELEX
LIMITED
APPELLANT
and
SEAN
MALONEY
FIRST RESPONDENT
GILLIAN
MALONEY
SECOND RESPONDENT
Neutral
citation:
Travelex
Limited v Maloney
(823/15)
ZASCA 128 (27 September 2016)
Coram:
Mpati
AP, Tshiqi and Mathopo JJA and Schoeman and Fourie AJJA
Heard:
17
August 2016
Delivered:
27
September 2016
Summary:
Civil
procedure: rescission application: based on alleged lack of
jurisdiction of court that granted order of attachment
ad
fundandam et confirmandam jurisdictionem
:
ratio jurisdictionis present: no submission to jurisdiction
established.
ORDER
On
appeal from:
Gauteng
Division of the High Court, Pretoria (Teffo J sitting as court of
first instance):
The
appeal is dismissed with costs, such costs to include the costs of
two counsel.
JUDGMENT
Schoeman
JA (Mpati AP, Tshiqi and Mathopo JJA and Fourie AJA concurring)
[1]
The Gauteng Division, Pretoria refused an application by the
appellant to set aside an order granted at the instance of the
respondents attaching shares owned by the appellant in a company, FX
Africa Foreign Exchange (Pty) Limited (FX Africa),
ad
fundandam et confirmandam jurisdictionem
.
This appeal is with the leave of the court a quo.
Background
[2]
On 8 December 2010 the parties entered into an agreement related to
the sale of shares in FX Africa. In terms of the agreement
the
appellant purchased the second respondent’s shares in FX Africa
as well as those shares held by Sanderling Investments
Incorporated,
a company incorporated in the Virgin Islands.
[3]
The appellant is a peregrinus of South Africa while the respondents
are peregrini of the Gauteng Division, but incolae of South
Africa.
They are both permanently resident in the area of jurisdiction of the
Western Cape Division of the High Court.
[4]
The respondents, as applicants, brought an urgent application in the
Gauteng Division, Pretoria, on 19 November 2013 for the
attachment of
the appellant’s shares in FX Africa
ad
fundandam et confirmandam jurisdictionem.
The first respondent claimed locus standi in the Gauteng Division on
the basis that one of the suspensive conditions contained
in the
agreement was that he was obliged to deliver to the appellant and FX
Africa his letter of resignation, both as an employee
of FX Africa
and as a director of subsidiaries of FX Africa. The application for
interim relief was served on the appellant. Without
opposition, but
in the presence and with the acquiescence of the appellant’s
counsel, an interim order was granted attaching
the shares. On the
return date, 6 February 2014, the application was unopposed, but
again in the presence and with the acquiescence
of the appellant’s
legal representatives Prinsloo J confirmed the rule nisi attaching
the shares. I will refer to this order
as ‘the initial order’.
[5]
The attachment preceded an action for damages instituted by the
respondents against the appellant following an alleged repudiation
of
the agreement. Two months later the appellant launched the rescission
application, seeking, inter alia, the setting aside of
the initial
order and the action that had been instituted.
[6]
The application, according to the founding affidavit of Mr Birch, a
director of the appellant, was premised on the fact that
the court
granting the initial order did not have jurisdiction to do so. The
reason advanced was that the appellant had submitted
to jurisdiction
in the agreement and therefore an attachment order was incompetent
and impermissible. During argument in the court
a quo, counsel for
the appellant raised a further issue, namely that there was no ratio
jurisdictionis for the initial order and
the subsequent action and
that the court should therefore set aside the initial order and the
action.
[7]
The respondents answered to the allegation relating to the
appellant’s alleged submission to jurisdiction, but did not
address the issue of the ratio jurisdictionis of the court. This is
because that issue was not raised in the founding affidavit.
The
application was dismissed on the basis that the appellant did not
make out a case for rescission on those grounds, as it should
have.
[8]
The appellant did not bring the application for rescission in terms
of the common law or the provisions of Uniform rule 42(1)(
a
)
or (
c
).
The appellant argued that the court that granted the initial order
did not have the necessary jurisdiction to do so, due to the
absence
of a ratio jurisdictionis, and that the appellant had in any event
submitted to the jurisdiction of the court.
Issues
[9]
The appeal is opposed on three grounds, namely that (a) the appellant
procedurally should have brought the application for rescission
of
the initial order either in terms of the common law or the provisions
of Uniform rule 42(1)(
a
) and (
c
) and that failure to do
so resulted in the court a quo correctly dismissing the application);
(b) a recognised ratio jurisdictionis
existed and the court that
granted the initial order therefore had the requisite jurisdiction;
and (c) the appellant had not submitted
to the court’s
jurisdiction.
The
procedure in the application for rescission
[10]
In dismissing the rescission application, the court a quo did not
consider the appellant’s arguments that the court that
granted
the initial order did not have jurisdiction to do so. Although the
judgment mentions that the appellant based its application
on the
lack of jurisdiction, no reference is made in the judgment to the
arguments advanced in this regard or the issue of the
absence of
jurisdiction. Before us counsel for the appellant submitted that the
rescission application was in any event unnecessary
because the court
that granted the initial order lacked jurisdiction and that the
initial order was, therefore, a nullity and could
simply be ignored.
[11]
In
Campbell
v Botha
[1]
Streicher JA quoted with approval the following passage
by
Innes CJ in
Lewis
& Marks v Middel
1904 TS 291
at 303:
‘
[T]he
authorities are quite clear that where legal proceedings are
initiated against a party, and he is not cited to appear, they
are
null and void; and upon proof of invalidity the decision may be
disregarded, in the same way as a decision given without
jurisdiction,
without the necessity of a formal order setting it
aside
(Voet,
2. 4. 14, and 66; 49. 8. 1 and 3. . . . .
Voet
49:8:3 says:
‘
But
by the customs of today such over stressful and pettifogging
discussion on fine points of law as to whether a decision is
ipso
jure
void, or holds good by strict law and must be set aside through the
remedy of an appeal, has been as far as possible abolished.
The
ruling has rather prevailed that decisions are never annulled under
cover of nullity without appealing.
There
are exceptions when the nullity arises from a lack of jurisdiction,
or of summons or of an attorney’s mandate.
’
(My emphasis.)
[12] This was
again emphasised in
The
Master of the High Court (North Gauteng High Court, Pretoria) v
Motala NO & others,
[2]
when Ponnan JA
said:
‘
As
long ago as 1883 Connor CJ stated in
Willis
v Cauvin
4 NLR 97
at 98 – 99:
“
The
general rule seems to be that a judgment, without jurisdiction in the
Judge pronouncing it, is ineffectual and null. . . ”
Willis
v Cauvin
was
cited with approval in
Lewis
& Marks v Middel
1904 TS 291
; and
Sliom
v Wallach’s Printing & Publishing Co, Ltd
1925
TPD 650.
In the former, Mason J (with whom Innes CJ and Bristowe J
concurred) held at 303:
“
It
was maintained that the only remedy was to appeal against the
decision of the Land Commission; but we think that the authorities
are quite clear that where legal proceedings are initiated against a
party, and he is not cited to appear, they are null and void;
and
upon proof of invalidity the decision may be disregarded, in the same
way as a decision given without jurisdiction, without
the necessity
of a formal order setting it aside (Voet, 2, 4, 14; and 66; 49, 8, 1,
and 3; Groenewegen,
ad
Cod
.
2; 41; 7, 54;
Willis
v Cauvin
,
4 N.L.R. 98
;
Rex
v Stockwell
,
[1903] T.S. 177
;
Barnett
& Co. v Burmester & Co
.,
[1903] T.H. 30).
”
’
[13] The
Constitutional Court in
MEC
for Health, Eastern Cape & another v Kirland Investments (Pty)
Ltd t/a Eye & Laser Institute
[3]
affirmed this
approach:
‘
In
The
Master of the High Court (North Gauteng High Court, Pretoria) v
Motala NO and Others
2012
(3) SA 325
(SCA)
the Supreme Court of Appeal, reaffirming a line of cases more than a
century old, held that judicial decisions issued without jurisdiction
or without the citation of a necessary party are nullities that a
later court may refuse to enforce (without the need for a formal
setting-aside by a court of equal standing). This seems paradoxical
but is not. The court, as the fount of legality, has the means
itself
to assert the dividing line between what is lawful and not lawful.
For the court itself to disclaim a preceding court order
that is a
nullity therefore does not risk disorder or self-help.’
[14]
The respondents argued that even if there was a lack of jurisdiction
in the present matter that did not exonerate the appellant
from
proceeding in terms of the rules or the common law. They relied on
Bezuidenhout
v Patensie Sitrus Beherend Bpk
[4]
where Froneman
J said:
‘
I
could find no support in the cases he [advocate for the applicant]
referred to for the proposition that another court of equal
standing
could vary or discharge an order for temporary relief if the court
that issued the original order lacked jurisdiction
to deal with the
issues it did (but, to be fair, I may have misunderstood the
argument).’
[15]
The facts of the instant matter differ markedly from
Bezuidenhout
.
In that case it was found that the Competition Tribunal did not have
the competence under the
Competition Act 89 of 1998
to issue orders
in conflict with pre-existing orders of the relevant division of the
high court which had not been set aside, nor
does the tribunal have
the competence under the Act to set aside such orders. The passage
from the judgment of Fronaman J quoted
above was in response to
counsel’s contentions and is of no assistance to the
respondents.
[16]
I incline to the view that
if
a judgment or order has been granted by a court that lacks
jurisdiction, such order or judgment is a nullity and it is not
required
to be set aside.
However,
I agree with the view expressed in
Erasmus
Superior Court Practice,
that
if the parties do not agree as to the status of the impugned judgment
or order, it should be rescinded.
[5]
That is the position in the instant matter where the appellant
applied to have the order set aside on the premise that the court
did
not have jurisdiction. Therefore, the usual requirements for a
rescission application in terms of the common law or
rule 42
do not
apply.
Did
the court granting the initial order have jurisdiction?
[17]
In
Ewing
McDonald & Co Ltd v M & M Products Co
[6]
the different
bases upon which a court will assume jurisdiction in a claim sounding
in money were discussed. Of relevance to the
instant matter is point
(c) which is set out as follows.
‘
Where
the plaintiff is a
peregrinus
(foreign
or local) and the defendant is a foreign
peregrinus
both
a recognised
ratio
jurisdictionis
as well as an arrest or attachment are essential. Any arrest or
attachment merely
ad
fundandam
jurisdictionem
would not be sufficient. To be sufficient the arrest or attachment
must necessarily be one
ad
confirmandam jurisdictionem
.
(Cf
Pollak
(op cit
at 52, 58, 62 - 3);
Herbstein
and Van Winsen (op cit
at 40);
Maritime
& Industrial Services Ltd v Marcierta Compania Naviera SA; NV
Scheepsvictualienhandel Atlas & Economic Shipstores
Ltd v
Marcierta Compania Naviera SA
1969
(3) SA 28
(D)
.)’
This
was affirmed as a correct exposition of our law.
[7]
[18]
The respondents are incolae of the Western Cape Division of the High
Court and thus local peregrini of the court a quo. The
appellant is a
foreign peregrinus. Therefore it is necessary to determine: (a)
whether there was a recognised ratio jurisdictionis,
for only if
there was a ratio jurisdictionis would an attachment be competent;
and (b) if the court had jurisdiction then it must
be determined
whether or not the appellant had submitted to its jurisdiction.
[19]
In the founding affidavit, Mr Birch only referred to the submission
to the court’s jurisdiction and did not allege a
lack of a
ratio jurisdictionis. This is understandable, for if the court did
not have jurisdiction, then there could be no valid
submission to
jurisdiction. However, in the court a quo and in this court the
appellant presented these contradictory arguments
viz that there was
no ratio jurisdictionis and that the appellant had submitted to the
jurisdiction of the court. The latter cannot
happen without the
former. It is therefore necessary to determine whether there was a
ratio jurisdictionis and only if so, whether
the appellant has
submitted to the jurisdiction of the court.
Ratio
jurisdictionis for the action
[20]
The agreement, which forms the basis of the action, was signed in
Cape Town and Switzerland. The purchase price had to be paid
in Cape
Town. The appellant argued that no other performance in terms of the
contract conferred jurisdiction on the court a quo,
and as the
contract was not repudiated within the jurisdiction of the court a
quo, the court did not have the necessary jurisdiction
to entertain
the action or the application for attachment. The appellant submitted
that only the Western Cape Division had the
necessary jurisdiction.
[21]
It is the respondents’ case that this argument is incorrect, as
there were certain performances that had to take place
within the
area of jurisdiction of the court. In
Veneta
Mineraria Spa v Carolina Collieries (Pty) Ltd
[8]
it was determined that ‘[b]y prorogation a defendant subjects
his person to the jurisdiction of the Court, but that is not
enough.
One or more of the traditional grounds of jurisdiction must also be
present.’.
[22]
A court in whose area of jurisdiction a contract must be performed
has jurisdiction, as well as the court in whose area of
jurisdiction
part of a contract has to be performed.
[9]
[23]
As no evidence was presented in the founding affidavit regarding the
lack of jurisdiction, it is incumbent on the court to
rely solely on
the agreement to determine whether or not there is a contractual
connection with the court a quo’s area of
jurisdiction (Is it
not of the court that granted the initial order). The agreement
relates to the sale of shares in FX Africa,
which company has both
its registered office and principal place of business in
Johannesburg, within the court’s area of
jurisdiction. The
shares are located within the court’s area of jurisdiction and,
in terms of the agreement, delivery of
the share certificates and
other documentation had to take place within the court’s area
of jurisdiction. The grant of exchange
control approval was a
suspensive condition of the agreement and had to be performed within
the court’s area of jurisdiction.
Furthermore, in the event of
any of the suspensive conditions not being fulfilled, the respondents
had to pay an amount of R2.2
million into the appellant’s bank
account in Johannesburg, within the area of jurisdiction of the court
a quo. Although the
agreement was not entered into or payment of the
purchase price had to be effected within the court’s area of
jurisdiction
these mentioned facts bring it into the ambit of a
‘direct connection’ to the court’s area of
jurisdiction. Therefore
the necessary ratio jurisdictionis, in my
view, did exist.
Submission
to the jurisdiction of the court
[24]
The correct approach to determine whether the appellant had submitted
to the jurisdiction of the court is to ask if the cumulative
effect
of the proven facts establish a submission on the balance of
probabilities.
[10]
[25]
The respondents argued that any submission by the appellant to the
court’s jurisdiction would be incompetent, for a peregrinus
defendant can only submit to the jurisdiction of a court of which the
plaintiff is an incola. Therefore any submission by the appellant
would have had no effect because the respondents are also peregrini
of the court. They based this argument on
Tsung
& another v Industrial Development Corporation of SA Ltd
[11]
where the following was said:
‘
The
rationale for jurisdiction is often said to be one of effectiveness,
and attachment is historically and logically closely related
to this
principle; but not only has the principle of effectiveness been
eroded (Forsyth says “it is artificial and conceptual
rather
than realistic”), effectiveness is also not necessarily a
criterion for the existence of jurisdiction. In one instance,
effectiveness is non-existent, and that is in the case of submission
to jurisdiction (also referred to as prorogation). The reason
is
this: If a peregrine defendant has submitted - whether unilaterally
or by agreement - to the jurisdiction of the court of the
incola
,
an attachment or arrest to found or confirm jurisdiction is not only
unnecessary, it is not permitted. (
Consent
on its own cannot confer jurisdiction unless the plaintiff is an
incola.
)’
(footnotes
omitted, my emphasis).
[26]
In the case of a peregrinus defendant, what is additionally required,
with either attachment to found jurisdiction or a submission
to
jurisdiction, is ‘ . . . the link between the cause and the
court, a link that is established when the plaintiff is an
incola’
[12]
.
As stated in
Veneta
Mineraria SPA
at 894A-B, if the plaintiff and defendant are both peregrini,
submission to jurisdiction by the defendant alone is insufficient,
one or more of the traditional grounds of jurisdiction must also be
present. Therefore if there is a ratio jurisdictionis
,
although
the plaintiff is not an incola, the appellant was able to submit to
the jurisdiction of the court. This is the only logical
conclusion.
[27]
Mr Birch stated in the founding affidavit that:
‘
.
. .properly construed, paragraph 17 of the agreement required any
dispute to be resolved finally by way of arbitration and, in
the
event of a dispute arising, that written notice thereof be given
should any party wish to commence arbitration proceedings
to have the
dispute resolved.’
[28]
Clause 17 of the agreement deals with arbitration in the event of any
dispute arising from the agreement. It is argued that
in terms of
clause 17.7 of the agreement the appellant submitted to the
jurisdiction of the court and therefore attachment was
not allowed.
Clause
17 reads:
‘
17
ARBITRATION
17.1
Any dispute arising from or in connection with this agreement shall
be finally resolved in accordance
with the Rules of the Arbitration
Foundation of Southern Africa (“AFSA”) by an arbitrator
or arbitrators appointed
by AFSA.
17.2
Any Party shall be entitled to require that a dispute be determined
by arbitration in terms of this
17 by giving written notice thereof
to the other Parties.
17.3
This 17 shall not preclude any Party from obtaining interim relief on
an urgent basis from (or instituting
any interdict, injunction or
similar proceedings in) a court of competent jurisdiction pending the
decision of the arbitrator.
17.4
The decision of the arbitrator shall be final and binding on the
Parties to the dispute and may be
made an order of any competent
court at the instance of any of the Parties to the dispute.
17.5
The Parties hereby consent to the non-exclusive jurisdiction of the
South Gauteng High Court, Johannesburg
for the purpose of any interim
relief proceedings referred to in 17.3 and/or making the decision of
the arbitrator an order of
court.
17.6
The Parties agree to keep the arbitration including the
subject-matter of the arbitration and the evidence
heard during the
arbitration confidential and not to disclose it to any one except for
purposes of interim relief in terms of 17.3
and/or an order to be
made in terms of 17.4 or, where required by law, a court of competent
jurisdiction or under the rules of
any relevant stock exchange,
listing authority or other competent regulatory body.
17.7
The provisions of this 17 -
17.7.1
constitute an irrevocable consent by each of
the Parties to any
proceedings in terms hereof and no Party shall be entitled to
withdraw therefrom or claim at any such proceedings
that it is not
bound by such provisions;
17.7.2
are severable from the rest of this Agreement
and shall remain in
effect despite the termination of or invalidity for any reason of
this Agreement.’
[29]
To determine whether the appellant submitted to the jurisdiction of
the court a quo, it is necessary to interpret the whole
document and
specifically clause 17 thereof. Such interpretation should be
objective, starting with the words of the agreement,
while keeping in
mind that the interpretation does not occur in stages, but is
‘essentially one unitary exercise’.
[13]
[30]
The whole tenor and context of clause 17 is confined to arbitration.
Clause 17.1 determines that any dispute will be resolved
by
arbitration while 17.2 requires written notification of arbitration.
Clauses 17.3 and 17.5 relate to submission to jurisdiction
solely
pending the finalisation of arbitration. It does not deal with an
unreserved general submission to jurisdiction. Clause
17.4 determines
that the decision of the arbiter is final and 17.6 with the
confidential nature of the arbitration proceedings
and award. The
submission referred to in clause 17.7 is a submission to arbitration
and there is nothing to indicate that the appellant
considered any
other legal action.
[31]
Apart from the analysis of clause 17 the appellant chose, both in
respect of its physical address and service by facsimile,
a London
address and telephone number as its domicilium citandi et executandi.
In
Hay
Management
[14]
it was found that a foreign company’s selection of a domicilium
citandi et executandi in South Africa was a significant factor
indicating submission to jurisdiction. By parity of reasoning, the
choice of a foreign domicilium, tends to show that the appellant
did
not submit to the jurisdiction of the court.
[32]
I am of the view that the cumulative effect of the proved facts does
not, on a balance of probabilities, establish a submission
to the
jurisdiction of the court a quo.
Conclusion
[33]
It follows that, as the court hearing the application for attachment
ad
fundandam et confirmandam jurisdictionem
had the requisite jurisdiction, the application was correctly
dismissed, albeit for different reasons.
[34]
The following order is made:
The
appeal is dismissed with costs, such costs to include the costs of
two counsel.
______________________
I
Schoeman
Acting
Judge of Appeal
APPEARANCES
For
Appellant:
M J Fitzgerald SC
Instructed by:
Bowman Gilfillan, Pretoria
Matsepes, Bloemfontein
For
Respondent:
W R E Duminy SC (with him I C Bremridge SC)
Instructed by:
Ward Ward & Pienaar
Attorneys, Pretoria
Symington &
De Kok, Bloemfontein
[1]
Campbell v
Botha & others
[2008]
ZASCA 126
;
2009 (1) SA 238
(SCA) at 243I-244B.
[2]
The Master
of the High Court (North Gauteng High Court, Pretoria) v Motala NO &
others
[2011]
ZASCA 238
;
2012
(3) SA 325
(SCA)
at 331J - 332D; See also
Vidavsky
v Body Corporate of Sunhill Villas
[2005] ZASCA 53
;
2005 (5) SA 200
(SCA) para 14.
[3]
MEC for
Health, Eastern Cape & another v Kirland Investments (Pty) Ltd
t/a Eye & Laser Institute
[2014]
ZACC 6; 2014 (3) SA 481 (CC).
[4]
Bezuidenhout
v Patensie Sitrus Beherend Bpk
2001
(2) SA 224
(E) at 231H-232A.
[5]
D E van Loggerenberg and P B J
Farlam 2 ed (looseleaf) Vol 1
Erasmus
Superior Court Practice
.
Section 21
notes.
[6]
Ewing
McDonald & Co Ltd v M & M Products Co
[1990] ZASCA 115
;
1991
(1) SA 252
(A)
at
258E-259B.
[7]
Siemens Ltd v Offshore Marine
Engineering Ltd
[1993] ZASCA 87
;
1993
(3) SA 913
(A) at 929G-H.
[8]
Veneta Mineraria Spa v
Carolina Collieries (Pty) Ltd
1987
(4) SA 883
(A) at 890E - 891B; See also:
Gallo
Africa Ltd & Others v Sting Music (Pty) Ltd & Others
[2010]
ZASCA 96
, 2010 (6) SA329 (SCA) at para 10.
[9]
Roberts Construction Co Ltd
v Willcox Bros (Pty) Ltd
1962
(4) SA 326
(A) at 331H-332A.
[10]
Hay Management Consultants
(Pty) Ltd v P3 Management Consultants (Pty) Ltd
[2004] ZASCA 116
;
2005 (2) SA 522
(SCA) para 13.
[11]
Tsung v Industrial
Development Corporation of SA Ltd
[2006]
ZASCA 28
; 2006 (4) SA 177 (SCA) para
6.
[12]
Hay Management
para
23.
[13]
Bothma-Batho Transport (Edms)
Bpk v S Bothma & Seun Transport (Edms) Bpk
[2013]
ZASCA 176
;
2014 (2) SA 494
(SCA) para 12.
[14]
Para 14.