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[2016] ZAGPJHC 153
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Life Diamond Cutting Works (Pty) Ltd v Astra Diamond Manufacturing Ltd (16354/2015) [2016] ZAGPJHC 153 (10 June 2016)
REPUBLIC OF SOUTH
AFRICA
IN THE HIGH COURT
OF SOUTH AFRICA
GAUTENG
LOCAL DIVISION, JOHANNESBURG
CASE
NO. 16354/2015
DATE:
10 JUNE 2016
In
the matter between:
LIFE
DIAMOND CUTTING WORKS (PTY)
LTD
..............................................................
Applicant
(
Registration
Number 1997/019539/07)
And
ASTRA
DIAMOND MANUFACTURING
LTD
.................................................................
Respondent
JUDGMENT
NOCHUMSOHN
(AJ)
1.
This is an application brought by the
Respondent for the setting aside of an
ex
parte
attachment order obtained by the
Applicant
ad fundandum
alternatively
ad confirmandum
jurisdictionem
in which the Applicant
obtained an edictal citation authorising service of the papers upon
the Respondent, a periginus, in Israel.
On 13 May 2015, her
Ladyship Modiba J, granted to the Applicant,
ex
parte,
an Order directing the sheriff
to attach certain movable property, allegedly belonging to the
Respondent, presently in the possession
of the Applicant in
Johannesburg, comprising 1090.847 carats of diamonds, in order to
found jurisdiction in respect of intended
rei
vindicatio
legal proceedings to be
instituted on Notice of Motion for an order directing the Respondent
to return to the Applicant, six diamonds,
alternatively to pay their
value in the sum of US$4.702 584.50.
2.
As part of the
ex
parte
attachment order, this court
directed that service of the Applicant's intended Notice of Motion
for the aforesaid relief be effected
at the Respondent's principal
place of business in Tel Aviv by the empowered and authorised process
server in the State of Israel,
the Respondent being a company
registered with limited liability in accordance with the company laws
of the State of Israel, having
its principal place of business in Tel
Aviv.
3.
Finally, in granting the
ex
parte
Order, this court directed that
the costs of the application be costs in the legal proceedings to be
instituted, save in the event
of opposition.
4.
At the commencement of the hearing, Mr
Bhana SC for the Applicant argued that the main vindicatory
proceedings were before me.
This was hotly contested by Mr
Peter SC for the Respondent, who argued that the only issue before me
was the Respondent’s
application to have the
ex
parte
order set aside. After
argument on this point, I ruled that indeed the only issue before me
was the Respondent’s application
for the setting aside of the
order obtained
ex parte
.
The intended notice of motion had not been issued in terms of Rule
5(1) and served, but was merely attached as Annexure
X to the noticed
of motion for the granting of the
ex
parte
relief in which the edictal
citation and the attachment were authorised.
5.
On 27 July 2015, the Respondent filed an
Answering Affidavit deposed to in English by certain Shimon Dassa,
setting out all the
respects in which the Applicant’s case was
lacking for the grant of the
ex parte
order and in which the Respondent sought the setting aside of such
Order. The Applicant signed a replying affidavit on 26
August
2015 but as a result of an e-mail error on the part of its attorneys,
same was only delivered in December 2015.
6.
The Respondent launched an Application in
terms of Rule 30 for the striking out of the Applicant's Replying
Affidavit, as a result
of it having been delivered out of time.
The Applicant launched an application for a postponement of these
proceedings, seeking
leave to supplement its papers. Such
applications were enrolled for hearing on 3 February 2016 before his
Lordship Norman
AJ, who postponed the strike out and application to
set aside
sine die
and
granted to the Applicant leave to supplement its Founding Affidavit,
within thirty days. In so making such order, costs
for such
application were awarded against the Applicant on the scale as
between attorney and client.
7.
On 16 March 2016, the Applicant filed an
extensive Supplementary Affidavit to which the Respondent has not
filed a reply.
8.
On 31 May 2016, an Application on Notice of
Motion was delivered by the Applicant, in which it seeks the
condonation of the late
filing of its Replying Affidavit. It is
apparent from such application that the reasons for the failure to
have delivered
the Replying Affidavit were attributable to an email
error on the part of a candidate attorney in the employ of the
Applicant’s
then attorneys. The error was
understandable and there is no prejudice to the Respondent in
condoning the late filing.
However the Respondent should not be
visited with any prejudice in relation to such error.
Accordingly, I am inclined to
grant the condonation sought and
dismiss the application under Rule 30A, albeit on the basis that the
Applicant ought to bear the
costs of both interlocutory skirmishes.
9.
The Applicant was initially represented by
Hirschowitz Flionis, whose mandate was terminated on 14 January 2016
and who was replaced
on the following day by the Applicant's current
attorneys of record, Fairbridges Wertheim Becker.
10.
On 19 January 2016 the Respondent
challenged the authority of Fairbridges to act as the attorneys of
record for the Applicant.
The Respondent also challenged the
authority of one Chelchinskey, who deposed to the Applicant's
Replying Affidavit, which was
signed on 26 August 2015. These
challenges came about by way of service of a notice by the Respondent
upon the Applicant
in terms of Rule 7(1). Whereas the
Applicant’s initial founding affidavit was deposed to by
certain Levy, its replying
affidavit was deposed to by Chelchinskey,
as was its supplementary affidavit.
11.
Counsel for the Applicant, in his Heads of
Argument filed for the hearing on 03 February 2016, set out that:
11.1.
the deponent to the Founding Affidavit,
Shalom Levy, was the sole director of the Applicant, who had been
removed and replaced by
Chelchinskey, appointed on 30 July 2015.
11.2.
arising out of this change of directorship,
litigation had commenced between the Applicant and Levy.
11.3.
the litigation between the Applicant and
Levy addressed the question of composition of the Applicant's
shareholding and the lawfulness
of Levy's removal as a director as
well as the appointment of Chelchinskey.
11.4.
as a consequence, it was necessary for the
Applicant to consider pursuing relief in a form of a derivative
action in terms of
Section 165
of the
Companies Act 71 of 2008
in
order to continue with the current application, in the light of the
Respondent's
Rule 7(1)
notice.
12.
In the Applicant's Supplementary Affidavit
of 16 March 2016, the Applicant avers that:
12.1.
Levy had caused the removal of
Chelchinskey's name as a director on CIPC, after he, Levy, had been
removed as a director; and
12.2.
CIPC subsequently rectified Levy's unlawful
change by way of the registration of a COR.39 form showing that
Chelchinskey was a director
with effect from 21 July 2015.
13.
There is no further evidence in the
Supplementary Affidavit in connection with the aforesaid submissions
which were made in the
Applicant’s Heads of Argument filed for
the February hearing. I am left in the dark as to the true status of
the Applicant's
intended proceedings under
Section 165
of the
Companies Act 71 of 2008
, or its true status relating to the identity
of its directors, shareholders, or authority of the Applicant to deal
with and convey
meaningful instructions for the prosecution of these
proceedings.
14.
When I raised these concerns with Mr Bhana
for the Applicant, in argument, the terse response was that in
Chelchinskey’s replying
affidavit to the postponement
application, deposed to on 02 February 2015, he says the summons was
withdrawn but the Applicant’s
attorneys have been advised that
it will be re-served imminently.
15.
In the light of the prior revelation of the
Levy litigation, one would have expected a very detailed explanation
in the Supplementary
Affidavit informing the court of the basis of
such litigation, in order to satisfy the court on a balance of
probabilities that
Chelchinskey is now the authorised director of the
Applicant and can speak to the facts and circumstances of the case.
Not only
does the Supplementary Affidavit severely lack in such
detail, but it further lacks any form of corroboration by Levy, who
has
not deposed to a Confirmatory Affidavit, in circumstances where
Levy clearly refuses to lend his assistance to this litigation.
16.
On Chelchinskey's own version in the
Supplementary Affidavit, he was a director of the Applicant with
effect from July 2015.
Yet, the detailed historical background
set out in the Supplementary Affidavit, in which the Applicant
endeavours to plug the gaping
holes left in the Founding Affidavit,
speaks to the history and events in 2014, preceding Chelchinskey's
directorship. For
example, such Affidavit speaks
inter
alia
to:
16.1.
the approach in May 2014 by Dassa, the
deponent to the Respondent's Answering Affidavit, to Levy, with a
view to convincing the
Applicant to permit Dalior Diamonds to cut and
polish certain of the Applicant's diamonds;
16.2.
the provision by the Applicant of rough
diamonds to the entity named 3-Diam, for measuring and assessment by
way of a Galaxy machine;
16.3.
the agreement by Dassa, Levy and one
Daleyot to send the diamonds to Israel for cutting and polishing;
16.4.
the dispatch of the diamonds to Israel in
June 2014;
16.5.
the invoicing by the Applicant to Dalior
and the error reflected thereon by the use of the term, "Tax
Invoice" in lieu
of the term "Consignment";
16.6.
the running accounts between Dalior and the
Applicant;
16.7.
the insistence by the Applicant that the
contract with the Respondent was one for cutting and polishing;
16.8.
the request by Dassa in June 2014 to vary
the transaction and the provision to Levy with the requisite approval
to vary the transaction
with the regulator for the substitution of
Dalior with the name of the Respondent who would attend to the
cutting and polishing
of the stones;
16.9.
the adjusting of the invoice in June 2014
to correct the transaction as one of "Consignment";
16.10.
the visit by Levy to Israel, shortly after
the diamonds were dispatched, in order to observe the cutting and
polishing at the Respondent's
premises during or about July to August
2014;
16.11.
The Applicant’s original intention to
sell and deliver the diamonds to Dalior and the change in such
intention after payment
by the Respondent, in that the diamonds were
to be retained by the Applicant in South Africa for on-sale on behalf
of the Applicant.
17.
The
filing of a Confirmatory Affidavit by Daleyot does not cure the
completely hearsay nature of the Affidavit, which for the most
part
speaks to events prior to Chelchinskey's directorship and more
importantly events decided upon by Levy, who has not signed
a
Confirmatory Affidavit. The purpose of this Supplementary
Affidavit was to plug the holes left in the initial Founding
Affidavit, in circumstances where Levy had become uncooperative with
the Applicant, was in litigation with the Applicant over its
true
directorship and shareholding and was clearly no longer prepared to
lend his assistance to this litigation. Having regards
to both
the majority and minority judgements in
President
of
the Republic of South Africa and Others
v
M & G
Media
Ltd
2012 (2) SA 50
(CC)
,
a deponent’s assertion that information is within his personal
knowledge is of little value, without some indication of
how that
knowledge was acquired. Mr Chelchinskey does not say how he
acquired knowledge of any of these facts, did not personally
experience any of the events and does not say how he deduces such
knowledge. Without confirmation by Levy of the extensive
events
set out in the Supplementary Affidavit, I can have little regard to
its contents.
18.
In the Answering Affidavit, the Respondent
objected to the jurisdiction of this court and specifically pointed
out that by participating
in the proceedings because a response was
necessary, it was not capitulating to the court's jurisdiction.
19.
The Respondent takes issue with the service
of the Application inasmuch as they had not been translated into
Hebrew, being the official
language of the State of Israel, for which
reason it disputes that there was compliance with the
ex
parte
Order. Nothing turns on this
point, as the Answering Affidavit of Dassa is deposed to in English,
without any translation having
been necessary for the deponent.
20.
The Respondent’s senior counsel, Mr
Peter, raised the following legal arguments to justify the setting
aside of the
ex parte
order:
20.1.
An order granted
ex
parte
is by its nature provisional and
there is no reason why the Applicant ought to have been in a better
position purely as a result
of the defendant having been unaware that
it had been called upon to submit to the court's jurisdiction.
Moreover, a party's
right to a hearing cannot be lost by the failure
to have provided for a return day in an
ex
parte
Order,
Pretoria
Portland Cement Co Ltd & another v Competition Commission &
others
2003 (2) SA 385
(SCA) at 404 paragraphs 45 and 47
,
Ghomeshi-Bozorg v Yousefi
1998
(1) SA 692
(W) at 696 D
.
20.2.
An applicant cannot be placed in a better
position that he would have been, if the respondent had been given an
opportunity of opposing
the relief.
Weissglass
N.O. v Savonnerie Establishment
[1992] ZASCA 95
;
1992 (3) SA 928
(A) at 936 G; Cargo
Laden & Lately Laden on Board the MV Thalassini AVGI v M V
Dimitris
1989 (3) SA 820
(A) at 834 D - E
.
20.3.
Notwithstanding that an
ex
parte
order may be final in form, it is
provisional in substance and in any
ex
parte
application, all of the facts
must be disclosed, which may influence the court in deciding, and the
failure to make full disclosure
could be met by the setting aside of
the Order,
Hassan &
another vs Berrange N.O.
2012 (6) SA 329
(SCA) at 335 paragraph 14.
20.4.
There are two requirements to be met on a
balance of probabilities, in an application to found jurisdiction:
20.4.1.
First, there must be evidence of a
prima
facie
case
Thalassini
at 834 (C);
and
20.4.2.
Secondly the goods sought to be attached
must be those of the respondent,
Lendalease
Finance Ltd v Corp De Mercadeo Agricola & others
1976 (4) SA 464
A at 489 B - C;
The
Shipping Corporation of India v Evdomon Corporation & another
[1993] ZASCA 167
;
1994 (1) SA 550
(A) at 556 F
.
20.5.
Where a
peregrines
has not taken delivery of property, an
application to attach such property to found or confirm jurisdiction
is not competent.
This was held in the Southern Rhodesian High
Court in
ex parte
Smith
1956 (1) SA 272
(SR
), where per
Beadle J
,
an applicant had applied
ex parte
for
an order authorising him to sue by edictal citation for some £750
and to attach three trucks in order to confirm the court's
jurisdiction. There was a lengthy debate about whether or
not delivery had been passed fictitiously by way of
traditio
longa manu
and it was held that the
mental element of the transferee at the time of delivery is just as
vital in delivery
longa manu
as
with any other form of delivery and that it is clear that if the
transferee refuses to accept delivery, however unlawful that
refusal
might be, the ownership of the thing delivered does not pass.
Thus it would not be competent to attach something
belonging to a
peregrines
in
order to found a court's jurisdiction, where the
peregrines
had not taken delivery.
20.6.
Where delivery has taken place to a
peregrines
pursuant
to a cash sale but the purchase price has not been paid, pending
payment, the
peregrines
purchaser
does not become the owner and an attachment to found jurisdiction is
likewise not competent,
Drive
Control Services (Pty) Ltd v Troycom Systems (Pty) Ltd (N-Trigue
Trade CC Intervening)
2000 (2) SA 722
W;
Bominflot
Ltd v Kien Hung Shipping Co Ltd (Central Leasing Corporation &
another Intervening)
2004 (2) SA 556
(C).
20.7.
A South African court will not grant an
order to which it cannot give effect,
Steytler
N.O. v Fitzgerald
1911 AD 295
at 346;
Thermo
Radiant Oven Sales (Pty) Ltd v Nelspruit Bakeries (Pty) Ltd
1969 (2)
SA 295
(A) at 307;
Ewing
McDonald & Co Ltd v M & M Products Company & others
[1990] ZASCA 115
;
1991 (1) SA 252
(AD) at 259 D - J;
20.8.
A court cannot grant an order for the
performance or the restraint of an act in a foreign jurisdiction
against a foreign defendant.
Only if the respondent is an
incola
,
may the court assume jurisdiction to grant an interdict in
personam
,
if the act in question is to be performed or restrained outside the
court's area of jurisdiction,
Metlika
Trading Ltd & others v Commissioner South African Revenue Service
2005 (3) SA 1
(SCA) at 19 D.
20.9.
Motion proceedings are not appropriate for
the bringing of an illiquid claim for damages,
Room
Hire Co (Pty) Ltd v Jeppe Street Mansions (Pty) Ltd
1949 (3) SA 1155
(T) at 1161.
20.10.
The two requirements for a
rei
vindicatio
are, the applicant must show
that he is the owner of the item and secondly that the respondent is
in possession thereof,
Graham v
Ridley
1931 TPD 476.
20.11.
Where a plaintiff in vindicatory
proceedings has conceded a right to lawful possession on the part of
the defendant, the plaintiff
bears the onus to allege and prove a
valid termination of that right, failing which the defendant is
vested with the right to hold
and the claim would therefore fail to
disclose a cause of action,
Chetty
v Naidoo
1974 (3) SA 13
(A) at 20 E - G
.
20.12.
Where goods are sold on consignment or
delivered to a consignee, the consignee is authorised to on-sell the
goods,
Quenty's Motors (Pty) Ltd v
Standard Credit Corporation Ltd
[1994] ZASCA 41
;
1994 (3) SA 188
(A) at 199.
20.13.
Where work is done on material creating
something new, then, if that material can no longer be restored to
its original form, ownership
may be acquired by its maker, as
distinct from ownership of another in the materials, subject to the
terms of an agreement between
the owner of the material and the
maker,
Aldine Timber Co v
Hlatswayo
1932 TPD 337
at 341.
21.
In the application of the above legal
principles to the facts of this case:
21.1.
The primary relief sought by the Applicant
in the main proceedings is vindicatory against the Respondent, a
peregrines
Israeli
company that has no presence in South Africa, for the delivery of
movable property situated in Israel.
21.2.
Even if there is an attachment of property
belonging to the Respondent in South Africa, this court has no
jurisdiction to grant
such order to found jurisdiction for the main
claim, which it is not capable of enforcing. The attachment
order to found
jurisdiction was thus not properly granted, nor was it
competent for the Applicant to seek leave to serve process out of
South
Africa, as this court cannot enforce the delivery of property
situated in Israel to the Applicant.
21.3.
The alternative relief in the intended main
motion, is for payment of unliquidated damages equating to US$4.700
000 alleged to represent
the value of the property sought to be
vindicated. It is not competent to launch a claim for
unliquidated damages on notice
of motion. For this
reason, the relief sought and granted, to serve papers outside of the
Republic, was not properly
granted.
21.4.
The Applicant's case is that the Respondent
paid for the diamonds to be attached, but there has been no
delivery. At best
for the Applicant, it endeavours to establish
the delivery by means of
constitutum
possessorium
in paragraph 30 of the
supplementary affidavit where Chelchinskey speaks of a change of
intention after payment by the Respondent,
in that the diamonds were
to be retained by the Applicant on behalf of the Respondent, for
on-sale. However, I am stuck with
the fact that I can have
little or no regard to these averments for the reasons already
mentioned. Thus, on the Applicant's
version it has failed to
prove that the diamonds forming the attachment order were the
property of the Respondent, for want of
delivery, rendering the
attachment illegitimate which would leave this court without
jurisdiction to hear the intended proceedings.
21.5.
The Applicant has not made out a
prima
facie
case. It baldly alleges to
be the owner of rough diamonds, unsupported by any evidence as to
how, when and where it acquired
same.
21.6.
There are three versions portrayed by the
Applicant in its own Founding papers, the first being that the
diamonds were sent to Dalior
Diamonds for cutting and polishing, the
second being that reflected in the export documentation attached to
the Founding papers
reflecting a “COD” sale to Dalior,
with the third version lying in the amended export document,
reflecting a “consignment”
sale to the Respondent.
21.7.
If the diamonds sought to be vindicated had
been dispatched to the Respondent on consignment, that would give
rise to lawful possession
in the hands of the Respondent. If
the Applicant seeks vindicatory relief, it needs to demonstrate a
cancellation of the
Consignment Agreement, which it has not done,
failing which there is no cause of action.
21.8.
Moreover, there is no clear evidence that
the Respondent, as opposed to Dalior is in possession of the diamonds
to be vindicated.
Thus on the Applicant's own version the
diamonds were sent to Dalior for cutting and polishing and it is hard
to see how the diamonds
ended up in the possession of the Respondent,
absent confirmation by Levy of the explanations set out in the
Supplementary Affidavit.
21.9.
On the Applicant's papers, the items to be
vindicated in the intended Notice of Motion may no longer exist. What
is claimed are
rough diamonds, but on the Applicant's version the
rough diamonds were to have been cut and polished by Dalior.
The diamonds
may have been converted into two or more cut and
polished stones which would create a separate identity from the raw
material.
By reason of
specificatio,
the old materials may no longer exist
and would be incapable of being restored to their original form
leaving vindicatory relief
in respect of the rough diamonds no longer
possible.
22.
I raised with both counsel that in
paragraph 27 and 28 of the Applicant’s supplementary affidavit,
Chelchinskey says out of
the 2065-64 carats of diamonds, 1159-73
carats remained in the Applicant’s possession and 905-91 carats
were couriered to
Israel. Chelchinskey says that the 1159-73
carats referred to in “FA9” at page 77 are the very
diamonds which
were attached in the
ex
parte
order. However, this cannot
be so, as the notice of motion and the
ex
parte
order granted speaks to the
attachment of 1090-847 carats, which inconsistency is dramatic and
could not be explained by Mr Bhana.
I am thus left in the
dark as to whether the 1090-847 carats which were attached are in
fact the same diamonds to which Chelchinskey
speaks.
23.
Mr Bhana asserted in argument that I must
overlook all of the above points and deal with the Application on the
basis that the Respondent
has failed to place a version before the
court, where it could and should have done so. I cannot agree
with this supposition
in circumstances where the Applicant, on its
own papers, has failed to make out a
prima
facie
case.
24.
The Respondent seeks costs on the scale as
between attorney and client. The Applicant approached this
Court
ex parte
,
with inconsistent versions, without a cause of action and continued
to pursue its resistance to the counter-relief without merit
to its
case, exacerbated by its own in-house dilemma, which was not properly
ventilated and addressed in its supplementary papers,
which was
uncorroborated. Such conduct in my view should be met with a punitive
costs order.
25.
Accordingly, I order the following:
25.1.
The application under
Rule 30
is dismissed
with the Applicant, Life Diamond Cutting Works (Pty) Ltd, to bear the
costs of the Respondent, Astra Diamond Manufacturing
Ltd;
25.2.
The application for the condonation of the
late filing of the Replying Affidavit is granted with the Applicant,
Life Diamond Cutting
Works (Pty) Ltd, to bear the costs of the
Respondent, Astra Diamond Manufacturing Ltd;
25.3.
The
ex parte
Order granted on 13 May 2015 and all
process issued pursuant thereto be and is hereby set aside;
25.4.
In respect of these proceedings, the
Applicant, Life Diamond Cutting Works (Pty) Ltd, is ordered to bear
the costs of the Respondent,
Astra Diamond Manufacturing Ltd, on the
scale as between attorney and own client, including the costs of
senior counsel;
25.5.
All of the costs orders granted above are
so granted on the scale as between attorney and client.
NOCHUMSOHN,
G
ACTING
JUDGE OF THE HIGH COURT
On
behalf of Applicant: Mr R Bhana S.C.
With
him: Mr I Gioia
Instructed
by: Fairbridges Wertheim Becker
(incorporating
Nathanson Bowman & Nathan)
On
behalf of the Respondent: Mr J Peter S.C.
Instructed
by: Shapiro-Aarons Inc
Date
of Hearing: 06 June 2016
Date
of Judgment: 10 June 2016