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[2012] ZAECPEHC 47
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Cordustex Manufacturing (Pty) Ltd v Building Product Design Ltd (1792/2012) [2012] ZAECPEHC 47 (3 August 2012)
Reportable/Not
Reportable
IN THE HIGH COURT OF
SOUTH AFRICA
EASTERN CAPE –
PORT ELIZABETH
Case No: 1792/2012
Date Heard: 29 June
2012
Date Delivered: 3
August 2012
In the matter between
CORDUSTEX
MANUFACTORING (PTY) LTD
…..........................
Applicant
and
BUILDING PRODUCT
DESIGN LTD
….....................................
Defendant
JUDGMENT
REVELAS J
[1] The applicant seeks
confirmation of a rule
nisi
, issued on 12 June 2012, which it
had obtained in an
ex parte
application for the attachment of
certain equipment (“the equipment”) in its possession,
which is the property of the
respondent. The respondent herein is a
peregrine company based in England. The purpose of the attachment is
to confirm the jurisdiction
of this Court in an action to be
instituted by the plaintiff against the respondent for payment of the
purchase price for goods
sold and delivered to the respondent.
[2] In terms of the
rule
nisi
issued, the Sheriff was directed to keep the
equipment in attachment until its release. The applicant was also
given leave to serve
the rule
nisi
and the founding papers by
way of edictal citation at the respondents registered office and
principal place of business in Cheshire,
England.
[3] The respondent then
anticipated the return date (7 August 2012), in terms of rule 6(8) of
the Uniform Rules of Court, by six
weeks to 26 June 2012. Its main
objection to the attachment of its property is that the agreement
between the parties, which pertains
directly to the applicant’s
possession of the equipment, contains an ouster clause which excludes
this court’s jurisdiction.
The existence of this particular
clause was not disclosed by the applicant in its founding papers
attached to its
ex parte
application. The respondent also
applied to have certain averments in the applicant’s replying
affidavit struck out.
[4] The factual
background to this matter is briefly this: The applicant is a
manufacturer and distributor of polypropylene spunbond
textiles used
mainly in the construction and industrial markets. The respondent is
a manufacturer of building products, including
construction membranes
for roofs and walls. The equipment, the property of the respondent
sought to be attached in this application,
is a 3.2 metre single beam
non-woven spunbond machine (known as line 3). On 17 April 2008, the
applicant and the respondent entered
into two agreements, referred to
respectively as the Equipment Loan Agreement (“ELA”) and
the material Supply Agreement
(“SMA”). In terms of the
ELA the respondent lent the equipment under consideration to the
applicant for a period of
five years terminating on 13 April 2013,
against payment by the applicant of royalties. In terms of the MSA,
the respondent was
obliged to purchase a stipulated annual quantity
of the material manufactured by the applicant, at prices to be agreed
upon from
time to time. By virtue of the terms of the ELA, the
equipment is in the possession of the applicant at its premises in
Walmer
Industrial, Port Elizabeth.
[5] The action which
the applicant intends to institute against the respondent is for
moneys owing in respect of materials supplied
by the applicant to the
respondent pursuant to the MSA during 2011. It is not in dispute that
the amounts of GBP 96 485.70
and GBP 79 678.80
respectively, were due and owing to the applicant in January and
February 2012.
[6] On 19 March 2012,
the respondent launched an application on an urgent basis under case
number 929/2012 in this court seeking:
(1) Confirmation of its
termination of the ELA, which it had effected in two written notices.
The validity of the latest notice
was in dispute;
(2) Access to the
applicant’s premises and to have its equipment re-in-stalled,
dismantled and transported to or loading dock
or similar facility.
[7] The matter was
postponed for the filing of further affidavits and was only enrolled
for hearing, on 10 May 2012, when it came
before Eksteen J who heard
the application and reserved judgment. The present application was
argued while Eksteen J was preparing
his judgment which was handed
down on 3 July 2012. Due to
inter alia
, the several disputed
facts issues which arose on the papers in that application, Eksteen J
held that the question relating to
the validity of the notice of
termination could not be determined on the papers before him, and he
referred the matter to trial
with the necessary procedural
directions.
[8] In the present
application before me, the applicant only made a cursory reference to
the application which was argued before
Eksteen J where it was cited
as the respondent, in brackets, and as follows:
“
(The
continued validity of the ELA is the subject of an ongoing dispute
between the Applicant and the Respondent, which is being
heard in a
contested application in this Court under case number 929/12)”.
[9] Noteably, no
reference was made to the vindicatory nature of the relief sought in
that application,
namely the return of the very
same equipment the applicant sought to attach in these proceedings,
in order to found jurisdiction.
[10] The respondent
challenged the confirmation of the rule on two grounds. It contended
that the applicant had acted in bad faith
since it was obliged to
attach the MSA to its
ex parte
application which it failed to do,
and
further that it should have drawn the attention of the court issuing
rule, to clause 17 of the MSA which reads:
“
The
construction, interpretation, meaning validity and performance of
this agreement shall be governed by
English
Law which is agreed to be the proper law of this Agreement
,
and each party hereby submit to the
exclusive
jurisdiction
of
the English Courts”
(emphasis
added).
[11] The respondent
argued that the terms of clause 17 of the MSA, an ouster clause,
precluded this court from ordering the attachment
of the equipment
for purposes of founding jurisdiction. The respondent argued for a
punitive costs order to be made against the
applicant whom it accused
of abusing the court process and deliberately causing delays to
“stifle any possible future competition
from the respondent”,
which it maintains, was demonstrated by the applicant’s failure
to provide for a time limit its
ex parte
application, for the
institution of its intended action.
[12] The respondent
also pointed out that it had always been represented by attorneys in
Port Elizabeth, a fact which the applicant
had been aware of, and
accordingly there was no need for an application on an
ex
parte
basis.
[13] The first question
to be determined is whether clause 17 of the MSA precludes this court
from granting an order for the attachment
of the respondent’s
property which is in Port Elizabeth. In my view,
it
does not. The words “
each
party hereby submit to the exclusive jurisdiction of the English
Courts
”
might
be a strong indication that the parties intended for the matter to be
adjudicated upon in an English Court, and the South
African trial
court may very well hold that view but that is ultimately for the
trial court to decide. Hearing an application to
found jurisdiction
and actually deciding upon jurisdiction are separate matters.
[14] Attachment to
confirm jurisdiction is an extraordinary remedy which should be
granted with caution, but all the applicant must
establish is a
prima
facie
case
against the respondent.
1
That much must have
been accepted by court who granted the rule and it is supported by
the fact that the respondent had admitted
that it owed the applicant
the amounts as alleged in the founding affidavit.
A
court has no discretion, but to grant an order for attachment
ad
fundandam jurisdictionem
of
the property of a peregrine defendant, once an
incola
plaintiff has
established
prima
facie,
good
cause of action against the defendant, if other requirements are
satisfied. It may also not enquire into the merits as to whether
it
is fair in the circumstances to grant such an order
2
.
The same would apply to
where the attachment is sought
ad
confirmandam jurisdictionem
3
.
[15] The ELA (the other
agreement concluded by the parties on 17 April 2008) contains an
identical clause to clause 17 of the MSA
(Clause 24.1). It also
contains clause 24.2 which provides that:
“
Notwithstanding
the provisions of clause 24.1 with respect to jurisdiction only, BPD
[the respondent] retains the right and will
be entitled to, in its
discretion, commence legal proceedings in the courts of South Africa
for the recovery of the equipment.
CDX [the applicant] hereby
irrevocably waives any objection to, and agrees to, the jurisdiction
of such other courts”.
[16] The respondent
exercised that right and had already commenced litigation in a South
African Court for the recovery of the equipment,
and
the trial in that matter will be proceeded with in the Port Elizabeth
High Court in terms of the order by Eksteen J referred
to above. For
practical and financial considerations it is certainly more
advantageous for the two matters to be adjudicated in
the same court,
which is a factor which would be considered by the trial court.
[17] In these
circumstances, clause 17 of the MSA, does not present an obstacle to
the attachment of the equipment which is already
in the applicant’s
possession for purposes of founding jurisdiction.
[18] The fact that the
parties agreed that English law will apply, should also not preclude
an attachment to found or confirm jurisdiction.
South African Courts
will, as a general rule, tend to give effect to exclusive
jurisdiction clauses and provisions in contracts
4
.
Even if the matter is
adjudicated in South Africa, the English Law could be applied. At
common law the applicable foreign law is
ordinarily proved by the
evidence of an expert witness about it. However, section (1) of the
Law of Evidence Amendment Act, 45
of 1998 has changed that position
somewhat and provides that:
“
(1)
Any court may take judicial notice of the law of a foreign state and
of indigenous law, in so far as such law can be ascertained
readily
and with sufficient certainty: . . .
(2) The provisions of
subsection 1 shall not preclude any party from adducing evidence of
the substance of a legal rule contemplated
in that subsection which
is
i
in
issue in the proceedings concerned”.
[19] Exactly how to
“readily” ascertain foreign law with “sufficient
clarity” may not always be possible
5
,
and therefore the aforesaid section should not be interpreted to mean
that expert evidence is no longer required where the provisions
in
the aforesaid Act are not met
6
.
Eksteen J approved of this approach adopted in the cases cited in
footnotes 2 and 3 below,
when
he had to consider clause 24 of the ELA and the questions of
jurisdiction raised in it, but for different purposes than those
presently under consideration. In any event, as I have said, it is
for the trial court to decide how to go about applying the English
law in determing the dispute between the parties.
[20] The view I take in
this matter renders it unnecessary to deal with the respondent’s
application to strike out certain
paragraphs in the replying papers.
I had no regard to them in coming to my decision herein.
[21] I do however wish
to state that I strongly disapprove of the conduct of the applicants’
legal representatives in not
making full disclosure of the nature of
the litigation which was before Eksteen J in these papers, especially
in view of the potential
complications which could have presented
themselves if Eksteen J granted that application. It is also
significant that the applicant
sought to attach equipment which was
already in its possession, while another judge was preparing a
judgment in a matter where
the order sought was for it to release
that same equipment. Counsel for the applicant, who appeared before
me on the return day,
did not appear in the
ex
parte
application. The legal representatives
who appeared then,
filed affidavits with an
explanation to the effect that whereas they have come to see the
error of their ways, at the time of drafting
the papers,
they
did not think it necessary to attach the MSA to the application or
refer to clause 17 in particular.
[22] The failure to
disclose the vindicatory nature of the other application pertaining
to the same equipment (thus a competing
claim) was not addressed in
the explanatory affidavits and neither was the reason why the
application was brought
ex parte.
Clearly it ought to have been brought on notice to the
applicants. Since these were my main concerns, the explanation given
did
very little by way of assuaging my disapproval of their conduct.
Notwithstanding the view I take of their conduct, it is
per
se
no bar to the relief sought by the
applicant. The question was whether the applicant had met all the
requirements for an attachment
order and it did.
However
as a mark of my disapproval of the aforesaid conduct, I am inclined
to grant the relief sought, but I decline to make any
order as to
costs against the respondent.
[23] The following
order is made:
The rule is confirmed.
___________________
E REVELAS
Judge of the High Court
Counsel for the
Plaintiff : Adv J Nepgen
Port Elizabeth
Instructed by :
Ruchmere Noach Inc
Port Elizabeth
Counsel for the
Defendant : Adv J Huisamen
Port Elizabeth
Instructed by : Joubert
Galphin & Searle
Port Elizabeth
Date Heard : 29 June
2012
Date Delivered : 3
August 2012
1
Owners
of the
MT “Tiger” v Transnet t/a Portnet
[1998] 3
All SA 453
(SCA) at 459;
Simon NO v Air Operations of Europe AB
and Others
1991(1) SA 217 (A);
Ex parte Acrow Engineers (Pty)
Ltd
1953 (3) SA 319
(T) at 321 G-H.
2
Pollak
The South African Law of Jurisdiction
at 64;
Naylor and
Another v Jansen; Jansen v Naylor and Another
1978 (2) SA 705
(W) and see:
Longman Distillers Ltd
v
Drop Inn Group of
Liquor Supermarkets (Pty) Ltd
[1990] ZASCA 39
;
1990 (2) SA 906
(A) at 914 E-G.
3
Chetty
J in
Frost NO and Others v Vermaak,
unreported judgment under
case number 3753/2011 dated 1 June 2012.
4
Society
of Lloyds v Prince; Society of Lloyds v Lee
[2006] JOL 175
(SCA)
at para [41] pages 24-25.
5
As
recognized by Flemming DJP in
Harnischfeger Corporation and
Another v Appleton and Another
1993 (4) SA (W) at 485 D-E and
more particularly,
C Hoare and Co v Runewitsch and Another
1997
(1) SA 338
(W) at 340 G-I.
6
The
MT Yeros v Dawson Edwards and Associates and Another
[2007] 4
All SA 922 (C).
i