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[2008] ZASCA 123
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Schmidt v Weaving (557/06) [2008] ZASCA 123; 2009 (1) SA 170 (SCA) ; [2009] 1 All SA 297 (SCA) (29 September 2008)
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REPUBLIC
OF SOUTH AFRICA
THE
SUPREME COURT OF APPEAL
OF
SOUTH AFRICA
Case number: 556/07
In the matter between:
DIETER
SCHMIDT
APPELLANT
and
BIRGITTA
WEAVING
RESPONDENT
Neutral
citation:
This
judgment may be referred to as
Dieter
Schmidt v Birgitta Weaving
(556/07)
[2008] ZASCA 123
(29 September 2008)
CORAM
:
SCOTT,
FARLAM, JAFTA, MLAMBO et MAYA JJA
HEARD
:
11
SEPTEMBER 2008
DELIVERED
:
29
SEPTEMBER 2008
SUMMARY:
Attachment
of member’s interest in close corporation to confirm
jurisdiction – whether notice to corporation required
–
whether s 25 of
Close Corporations Act 69 of 1984
applicable.
___________________________________________________________
ORDER
___________________________________________________________
On
appeal from:
High
Court, Cape Town (Desai J sitting as court of first instance).
1. The appeal succeeds
with costs, including where they were employed those of two counsel.
2. The
order of the court
a
quo
is
set aside and replaced by the following:
The
special plea is upheld with costs, including those occasioned by the
employment of two counsel.
__________________________________________________________
JUDGMENT
___________________________________________________________
FARLAM
JA (
SCOTT,
JAFTA, MLAMBO AND MAYA JJA concurring)
[1]
This
is an appeal from a judgment of Desai J, sitting in the Cape High
Court, in which the appellant’s special plea contesting
the
jurisdiction of the high court in an action instituted against the
appellant by the respondent was dismissed.
[2]
In
the particulars of her claim which were annexed to her summons the
respondent gave the appellant’s address as ‘c/o
Jan S de
Villiers, Zomerlust Estate, Berg River Boulevard, Paarl’, that
is to say, the Paarl address of his attorneys of
record.
Approximately sixteen months after the summons was issued the
respondent brought an
ex
parte
application
for an order authorising the sheriffs of the court or their deputies
to attach
ad
fundandam
alternatively
ad
confirmandam jurisdictionem
the
appellant’s ‘right, title, interest and/or claims’
to certain of the appellant’s assets for the action
which she
had instituted against the appellant. The assets to be attached were
his member’s interests in three close corporations,
viz Le Cap
International CC, TJ Walker CC and Cape Skin Clinic CC. In her
supporting affidavit in the application the respondent
stated that
the appellant resides permanently in the United States of America and
is a
peregrinus
of
the court’s area of jurisdiction. The relief sought in the
application included a prayer for leave to serve the summons
which
had already been issued.
[3]
The
application was granted by Foxcroft J. Thereafter attempts were made
by the deputy sheriff of Simonstown (in respect of the
member’s
interest in Cape Skin Clinic CC), the sheriff for Cape Town (in
respect of the member’s interest in TJ Walker
CC) and the
sheriff for Wynberg North (in respect of the member’s interest
in Le Cap International CC) to attach the assets
set forth in the
court’s order at the registered offices of the close
corporations concerned.
[4]
Approximately
a month after these attempts were made, various documents, including
the summons in this matter, were served on the
appellant in the
United States of America.
[5]
The
appellant filed a special plea to the jurisdiction of the court
together with a conditional special plea to one of the claims
contained in the respondent’s summons and a plea on the merits.
[6]
In
his special plea to the jurisdiction the appellant averred that he
resided permanently in the United States of America and is
a
peregrinus
of
the court’s area of jurisdiction. He alleged further that the
respondent was prosecuting the action against him on the
basis that
his member’s interests in the three close corporations to which
I have referred had been attached to found or
confirm the court’s
jurisdiction. He denied that any effective attachment to found or
confirm jurisdiction over him had taken
place. Among the bases on
which he denied that there had been valid attachments of his member’s
interests were the following:
(a)
Rule
45(8) of the Uniform Rules had not been complied with;
(b) the
attachments purportedly carried out were not effected in conformity
with the requirements of the law; and
(c) none
of the purported attachments was effected under authority of a writ
of attachment.
[7]
The
issues raised by the special plea of jurisdiction were heard
separately pursuant to an order made by the Judge President of
the
High Court in terms of Rule 33(4) of the High Court Rules. No
evidence was led but various documents were handed in from the
bar.
[8]
In
his judgment dismissing the special plea, the learned judge in the
court
a
quo
rejected
a submission advanced by the respondent’s counsel, relying on
Anderson
& Coltman Ltd v Universal Trading Company
1948
(1) SA 1277(W)
, that the appellant had adopted the wrong procedure.
What he should have done, so counsel had argued, was not to file a
plea to
the jurisdiction but apply to set aside the order made by
Foxcroft J. Desai J held that the procedure adopted by the appellant
was ‘at least permissible, if not desirable for the reasons
advanced by [the appellant’s] counsel.’ He held that
Rule
45, which deals with execution, does not apply to attachments to
found or confirm jurisdiction. He distinguished the case
of
Badenhorst
v Balju, Pretoria Sentraal
1998
(4) SA 132
(T), on which the appellant’s counsel who appeared
before him had relied, because, so he held, it was decided with
reference
to the specific requirements of Rule 45(8). He held that
the giving of notice to the Registrar of Close Corporations was the
equivalent
of requesting a caveat to be noted in the records of the
Registrar of Deeds. He also held that the fact that the purported
attachments
were not effected under writs of attachment was a defect
of a rather technical nature which he was at liberty to condone.
[9]
Dealing
with an attack on the effectiveness of the attachment, he held that
an attachment to found or confirm jurisdiction ‘does
not
provide an asset in respect of which execution can be levied. It may
have little or no value by the time of execution. Furthermore,
effectiveness is no longer a necessary “criterion for the
existence of jurisdiction.” (See:
Tsung
v Industrial Development Corporation of SA Ltd
[2006] ZASCA 28
;
2006
(4) SA 177
at 181).’
[10]
When
the case was argued before us Mr
Hodes,
who
appeared with Ms
Dicker
on
behalf of the respondent, indicated that in supporting the judgment
in the court
a
quo
he
was only relying on the purported attachment of the appellant’s
member’s interest in Le Cap International CC at its
registered
office, 8 Hampton Avenue, Newlands. In the circumstances I shall only
summarise the evidence in so far as it relates
to what happened at
that address.
[11] In
a document headed ‘Notice of Attachment and Inventory to
Confirm Jurisdiction’ a deputy sheriff for Wynberg
North stated
that he attached the appellant’s ‘right, title, interest,
claim and demand in and to his 33 per cent membership
interest in Le
Cap International CC’, the approximate value of which he stated
to be R1 000. In another document headed ‘TAX
Invoice –
Order of Court to Confirm Jurisdiction’ which is signed by N L
Botes, deputy sheriff for Wynberg North, and
which I shall assume is
to be treated as a deputy sheriff’s return, the following
appears:
‘
I
certify that on 17 – May – 2005 at 11:00 at 8 HAMPTON
AVENUE, NEWLANDS, I handled the abovenamed process in the manner
indicated below:
MANNER
OF SERVICE/EXECUTION:
By
proper service of a copy of the ORDER OF COURT TO CONFIRM
JURISDICTION & NOTICE OF ATTACHMENT AND INVENTORY upon the
respondent
[who is described earlier in the document as the present
appellant] by affixing a copy thereof to the main door of the
registered
office of Le Cap International CC at the above address.
PLEASE
NOTE FURTHER THAT THE PRESENT OCCUPIER, MS FLEISCHER STATES THAT THE
RESPONDENT AND LE CAP INTERNATIONAL CC ARE UNKNOWN TO
HER.’
[12]
On
18 May 2005 a letter was written on behalf of the sheriff for Wynberg
North to the Registrar of Close Corporations informing
him that the
appellant’s interest in the close corporation
had
been placed under attachment and stating that ‘the
aforementioned member’s interest may not be transferred while
under
attachment. This office’, the letter continued, ‘will
notify you in writing as soon as this attachment has been uplifted.
It will be appreciated if you could supply us with a copy of the CK1
form [ie, the Founding Statement] for the abovementioned close
corporation.’
[13]
In
a further document emanating from the office of the sheriff for
Wynberg North, and signed by Deputy Sheriff A van der Vyver,
it is
stated that a warrant of execution against movable property in this
matter was handled as follows:
‘
By
proper service of a copy of the ORDER OF COURT TO CONFIRM
JURISDICTION & NOTICE OF ATTACHMENT AND INVENTORY upon the
REGISTRAR
OF CLOSE CORPORATIONS, PO BOX 429, PRETORIA, 001, by
prepaid registered post.’
[14]
On
13 June 2005 a copy of the CK1 form relating to the close corporation
was certified to be a true copy by a senior administration
clerk in
the employ of the Registrar of Close Corporations. It was presumably
sent to the Sheriff for Wynberg North in response
to the request
contained in his letter of 18 May 2005 but it is not clear when he
received it.
[15]
Mr
Rogers,
who
appeared on behalf of the appellant, attacked the purported
attachment of the appellant’s membership interest in Le Cap
International CC on several grounds, of which it is only necessary
for me to mention one, namely that in the absence of proof that
the
purported attachment of the appellant’s membership interest had
been brought to the notice of the close corporation it
was invalid.
In support of this submission he referred to what was said by Innes
CJ, when giving the judgment of the Transvaal
Supreme Court in
Reinhardt
v Ricker and David
1905
TS 179.
That case was concerned with the attachment of an
incorporeal, in that case a mortgage bond, of which Reinhardt was the
holder,
to found jurisdiction. The original bond was in Germany and a
copy was attached and subsequently sold in execution of a judgment
against the bondholder by default. The copy was ceded to the
purchasers by the deputy sheriff and the cession was registered.
After the default judgment had been set aside the court held that the
sale in execution was invalidated by the absence of the original
bond
and its non-attachment and that no title had been conferred on the
purchasers. In a passage in the judgment from pages 185
to 187 Innes
CJ discussed how incorporeals such as debts were attached in the old
Dutch practice and in the Cape and thereafter
in the Transvaal. At p
187 he said this:
‘
[T]he
essential to be observed in all cases of the attachment of debts is
that the debtor should receive due notice, so that he
may be warned
not to discharge his obligation to
his
original creditor, and so that he may have an opportunity of coming
to the Court for relief in case he wishes to raise the question
of
the validity of the debt, or any lien, discharge or other matter
which would operate in his favour.’
[16]
Mr
Rogers
submitted
further that as a member’s interest (like a share in a company)
is a bundle of incorporeal rights against the close
corporation, the
close corporation can be likened to a defendant’s debtor in the
case of an ordinary debt. Thus for an effective
jurisdictional
attachment there has to be actual notice to the corporation because
the debtor must know that he or she may not
pay the debt to the
defendant. Absent such knowledge, the position after the purported
attachment would be the same as it was before
the purported
attachment and the relations between the debtor and the defendant
would be unaffected.
[17]
Mr
Rogers
contended
that the notice which was given to the Registrar of Close
Corporations took the case no further. Apart from the fact that
the
Registrar was told, incorrectly, that the appellant’s member’s
interest
had
been attached, there was nothing that the Registrar could have done
about the matter and Desai J’s finding that the notice
given to
him was equivalent to requesting a caveat to be noted in the records
of the Registrar of Deeds was incorrect. This was
because the
transfer of a member’s interest in a close corporation –
unlike the transfer of immovable property –
requires no
participation by the Registrar.
[18]
Mr
Hodes
endeavoured to answer Mr
Rogers’s
submissions on this part of the case by arguing that notice to the
corporation was not required for an effective jurisdictional
attachment of a member’s interest because the equivalent of a
caveat against transfer of the interest had been sought from
the
Registrar and, alternatively, that there was in any event notice
because of the fact that a copy of Foxcroft J’s order
was
affixed to the main door of the registered office of the corporation:
in this regard he relied on
s 25
of the
Close Corporations Act 69 of
1984
.
[19]
His
first argument cannot be accepted. No reason was advanced for
rejecting the
dictum
of
Innes CJ on which Mr
Rogers
relied,
which is in accord with both principle and practicality. Moreover Mr
Rogers
was
clearly correct when he submitted that a request for a caveat would
not preclude the transfer of the interest. See
s 15(1)
of the Act
which provides for an amended founding statement to be lodged where
there is a change of membership within 28 days
after
such
change.
[20]
The
second argument can, in my view, also not be accepted.
Section 25
of
Act 69 of 1984 reads as follows:
‘
(1) Every
corporation shall have in the Republic a postal address and an office
to which, subject
to subsection (2), all communications and notices to the corporation
may be addressed.
(2)
Any─
(a)
notice,
order communication or other document which is in terms of this Act
required or permitted to be served upon any corporation
or member
thereof, shall be deemed to have been served if it has been delivered
at the registered office, or has been sent by certified
or registered
post to the registered office or postal address, of the corporation;
and
(b)
process
which is required to be served upon any corporation or member thereof
shall, subject to applicable provisions in respect
of such service in
any law, be served by so delivering or sending it.’
[21]
In
my opinion the section takes the case no further. We are not
concerned here with a document which the Act requires or permits
to
be served on a corporation nor with the service of process. For the
reasons underlying the requirement of notice in cases of
this kind it
is important that
actual
notice
be given and that the fact that the bundle of rights vesting in the
member has been attached must be known to the corporation.
[22]
It
follows that the purported attachment of the appellant’s
member’s interest in Le Cap International CC was invalid
on
this ground alone. This conclusion renders it unnecessary to consider
whether the attachment was also invalid because the appellant’s
certificate of his member’s interest issued in terms of s 31 of
the Act was not attached or whether the decision in
Badenhorst
v Balju, Pretoria Sentraal, supra,
can
be distinguished and whether certain of the
dicta
therein
(especially at 138J-F) are correct. It is also unnecessary in the
circumstances to decide whether the purported attachment
was invalid
because there was no writ of attachment.
[23]
In
my view a valid attachment was required in this case for the court to
have jurisdiction. It is true that to some extent the principle
of
effectiveness has been eroded (
Thermo
Radiant Oven Sales Ltd v Nelspruit Bakeries
1969
(2) SA 295(A)
at 300G-H) but as was pointed out in that case (at
309E-F and see further
Bid
Industrial Holdings (Pty) Ltd v Strong
2008
(3) SA 355
(SCA) at 363 F-H) jurisdiction will not be founded or
confirmed if an article without some saleable value is attached:
a
fortiori
if
no valid attachment takes place at all.
[24]
In
the circumstances I am satisfied that the appeal must succeed.
[25]
The
following order is made:
1.
The
appeal succeeds with costs, including where they were employed those
of two counsel.
2.
The
order of the court
a
quo
is
set aside and replaced by the following:
‘
The
special plea is upheld with costs, including those occasioned by the
employment of two counsel.’
………………
IG FARLAM
JUDGE
OF APPEAL
APPEARANCES:
FOR
APPELLANT: O L Rogers SC
Instructed by
Jan S de Villiers,
Paarl
Hill, McHardy &
Herbst Inc, Bloemfontein
FOR
RESPONDENT: P B Hodes SC
T
A
Dicker
Instructed by
Cliffe
Dekker Inc, Cape Town
Claude
Reid, Bloemfontein