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[2007] ZASCA 27
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Moodley v Nedcor Bank Ltd (85/06) [2007] ZASCA 27; [2007] SCA 27 (RSA) (27 March 2007)
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THE SUPREME COURT OF APPEAL
OF SOUTH AFRICA
Case no: 85/06
REPORTABLE
In the
matter between:
YAGAMBARAM MOODLEY
......................
APPELLANT
and
NEDCOR
BANK LTD
......................
RESPONDENT
Before: Harms ADP, Heher, Cachalia JJA, Snyders, Theron
AJJA
Heard: 16 March 2007
Delivered: 27 March 2007
Summary: Jurisdiction - In an action upon a debt secured by a
mortgage over immovable property, the fact that the property is
situated
in the territory over which a high court exercises
jurisdiction constitutes a jurisdictional connecting factor which
confers jurisdiction
on the court.
Neutral citation:
This judgment may be referred to as
Moodley v Nedcor
[2007]
SCA 27 (RSA)
JUDGMENT
CACHALIA
JA
[1] In an action upon a debt secured by a mortgage over
immovable property the plaintiff is entitled not only to judgment for
the
amount of the debt but also to an order declaring the mortgaged
property executable where it is situated within the court’s
jurisdiction. If the immovable property sought to be declared
executable is situated within the jurisdiction of a court other than
where the cause of action for the money claim arose the question
arises whether that court has concurrent jurisdiction over the
matter.
The question presents itself in this matter against the
following background.
[2] On 30 July 1996 the appellant entered into a loan
agreement in Johannesburg in terms of which the respondent, a
commercial bank,
agreed to lend and advance to the appellant the sum
of R180 000 upon security of a mortgage bond registered against an
immovable
property situated in the Durban area (‘the property’)
within the Province of Kwazulu-Natal.
[3] On 10 August 2000 the respondent (as plaintiff)
instituted proceedings against the appellant (as defendant) in the
Pretoria High
Court for the recovery of the sum of R191 720,38 being
the capital amount which it alleged was then due and payable in terms
of the
agreement. As is the practice in matters of this nature, the
respondent also sought an order declaring the property executable. On
12 September 2000 the respondent obtained judgment against the
appellant and a warrant of execution was thereafter issued against
the property. The appellant then brought an application to stay the
sale in execution. The dispute was settled on 8 November 2002
and the
settlement agreement made an order of court. This agreement also
became a subject of dispute and the litigation recommenced.
This time
the appellant applied successfully for the order of 12 September 2000
to be rescinded.
[4] Following the rescission of the order the appellant
filed a plea and counterclaim on 2 February 2004. In his special
plea, he
alleged that the Pretoria High Court lacked jurisdiction
over the matter because the property was situated within the Province
of
Kwazulu-Natal, and also because his chosen
domicilium
citandi et
executandi
was there. The special plea was clearly bad because the
Pretoria High Court obviously had jurisdiction over the matter on the
basis
that the cause of action arose there.
1
Inexplicably however, on 31 May 2004, the
respondent withdrew its action and paid the appellant’s wasted
costs.
[5] On 15 June 2004 the respondent instituted fresh
proceedings against the appellant in the Durban High Court based on
the same cause
of action. This time the amount claimed was R365
291,06, more than double the amount of the original loan, the
increase having resulted
from further interest that had accumulated
on the loan. Once again the respondent sought an order that the
property be declared executable.
The appellant instructed the same
attorney who had represented him in the Pretoria High Court to defend
this action. A plea was filed
and the matter set down for hearing in
the Durban High Court. However, three days before the trial was to
commence, the appellant
instructed another firm of attorneys to
represent him. This necessitated a postponement of the hearing and on
2 September 2004 the
newly instructed attorneys filed an amended plea
and three special pleas on his behalf. The special pleas related to a
plea that
the court lacked jurisdiction to entertain the action; a
plea that the same dispute was pending before the Pretoria High Court
by
virtue of the appellant not having withdrawn his counterclaim
against the respondent in that court; and a plea (in the nature of
an
exception rather than a special plea) that the respondent’s
particulars of claim lacked averments to sustain its cause of
action.
[6] The matter was argued before Jappie J on 8 November
2004 and on 2 February 2005 he dismissed each of the special
pleas. On
29 August 2005 the judge heard the appellant’s
application for leave to appeal against his judgment and on 7 October
2005 he
refused the application in respect of the three special
pleas. This court however granted leave on the first special plea
only ie,
whether the Durban High Court had jurisdiction to entertain
the action.
[7] There are two issues in this appeal. The first, as
mentioned in the opening paragraph, is whether the Pretoria High
Court has
exclusive jurisdiction over the matter by virtue of the
cause of action having arisen there, as the appellant contends it
does, or
whether, as the respondent asserts, the Durban High Court
has concurrent jurisdiction on the basis that the property sought to
be
declared executable is situated within its area of jurisdiction.
The second arises only if the first is decided in the appellant’s
favour. This relates to whether in raising a special plea of lack of
jurisdiction initially in the Pretoria High Court and his failure
thereafter to object to the Durban High Court’s jurisdiction
before the pleadings had closed amounted to a waiver of his right
to
do so.
[8] I turn to deal with the first question. The
authority of a high court to decide any matter is derived from s 169
of the Constitution.
2
The Supreme Court Act 59 of 1959 regulates its
jurisdiction.
3
Section 19(1)(a) of the Act confers on a high court
jurisdiction ‘over all persons residing or being in and in
relation to all
causes arising . . . within its area of
jurisdiction’. The phrase ‘causes arising,’ with
which we are concerned
for present purposes, is sometimes mistakenly
understood to mean ‘causes of action’. The phrase has
been interpreted
to refer to ‘legal proceedings duly arising’
that is to say, proceedings in which the court has jurisdiction under
the
common law.
4
And while it is well established that a court has
jurisdiction over a matter where the cause of action arises within
its territorially
demarcated area, the jurisdiction of a court is
determined with reference not only to the cause of action but also to
all connecting
factors (
rationes
jurisdictionis
) which give rise to
jurisdiction at common law.
5
What has to be determined in this matter is whether the
location of the hypothecated property in Durban, within the
territorial jurisdiction
of the Durban High Court, constitutes a
jurisdictional connecting factor giving rise to concurrent
jurisdiction of the Durban High
Court.
[9] It has long been considered a sufficient basis for a
court to exercise jurisdiction over a matter if the nature of the
relief
claimed involves immovable property situated within its area
of jurisdiction, even where the court has no power over the defendant
or because the cause of action does not arise in the area. This is
because, as Price AJA observed in
Sonia (Pty)
Ltd v Wheeler
6
:
‘
The Court of
the area in which the property is situate can certainly control the
transfer of, or any interference with, the property
through the
Registrar of Deeds of that area, and by other means.’
This approach is based on the principle of effectiveness
– the power of the court, not only to grant the relief claimed,
but
also to effectively enforce it directly within its area of
jurisdiction.
7
It was on this basis that the court below assumed
jurisdiction in the present matter.
[10] Many years ago, in
Palm v
Simpson
8
it was held that even though the defendant was not
resident within the area over which the court exercised jurisdiction
and no property
of his had been attached to found jurisdiction for an
action claiming from him the contract price of land he had purchased,
the fact
that the land was situated in that area constituted a
sufficient basis for the court to assume jurisdiction over a claim
for rescission
of the contract of sale. That decision was approved by
this court in
Sonia v Wheeler
,
referred to above, on grounds of ‘principle, convenience and
common sense’.
9
In so approving Price AJA observed that:
‘
Palm’s
case
recognises what is a patent fact that the Court of the
situs
is the best-equipped Court to deal with matters relating to land
situated within its territorial jurisdiction.’
[11] In
Sonia v Wheeler
the
property in question was situated in East London, within the area of
the Eastern Districts Local Division (EDLD); the contract
for the
sale of the property had been entered into in the Orange Free State
and the purchase price was payable in the Transvaal where
the
defendant was resident. The plaintiff sought an order in the EDLD
cancelling the contract on the ground of fraudulent misrepresentation
and also for a refund of the purchase price. This was a money claim,
as in the instant case. The defendant was not susceptible to
the
court’s jurisdiction on any of the usual grounds of
jurisdiction for a claim of this nature. Despite this, this court
upheld
the finding of the lower court that the plaintiff was entitled
to institute the action in the EDLD solely on the basis that the
property
was situated there. It was however contended by the
defendant that even if the EDLD had jurisdiction to order the
cancellation of
the contract, its jurisdiction did not extend to the
money claims for the refund of the purchase price. It was argued in
other words
that if the money claim stood alone and there was no
claim for cancellation, the court would not have jurisdiction. In
rejecting
this contention Price AJA said the following:
‘
Assuming this
to be so, assuming that the Eastern Districts Court could not
entertain a claim for a refund of the purchase price if
that claim
stood alone, it nevertheless seems to me that every consideration of
convenience and common sense indicates that where
such a money claim
is as closely associated with a claim for cancellation of the
contract, as in this case, and is a consequential
claim, following on
the cancellation, the same Court which has jurisdiction to decree
cancellation should have jurisdiction to hear
the money claim for a
refund of the purchase price, and to order costs.’
10
[12] In relation to cases involving the transfer of
immovable property it is also a sufficient basis for jurisdiction if
the property
is situated within the area over which a high court
exercises jurisdiction. It is therefore not necessary for a high
court to have
power over the defendant, or for the cause of action to
have arisen there for a court to entertain a claim for the transfer
of immovable
property situated within the division.
11
Such jurisdiction is however not exclusive.
12
[13] Thus, as the cases in the preceding paragraphs
demonstrate, provincial divisions have exercised jurisdiction in
matters involving
the rescission or cancellation of an agreement,
13
or the transfer of immovable property where the property
is situated within their area of jurisdiction, even where none of the
other
traditional jurisdictional factors were present. Their
rationale for so doing is that they exercise effective control over
the property,
that there is a close association between the property
in question and the cause of action and also on grounds of
‘convenience
and common sense’.
14
And as was said in
Cordiant
Trading CC v Daimler Chrysler Financial Services (Pty) Ltd
,
15
the main objective for the assumption of jurisdiction in
such cases is to avoid a proliferation of proceedings.
[14] Recently in
Geyser v Nedbank
Ltd: In re Nedbank Ltd v Geyser
,
16
which appears to be the only reported case dealing with
the issue we are concerned with (whether a high court is competent to
exercise
jurisdiction over a matter on the basis only that the
hypothecated property in question is situated within its area of
jurisdiction)
Van Oosten J found that it was. He reasoned that:
‘
. . . the
property, quite apart from its executability, has another relevance
for purposes of founding jurisdiction. It undoubtedly
played an
integral if not vital part in the loan transaction which . . .
constituted the basis for the bank’s cause of action.
It was
obviously on the strength of the security of a first mortgage bond
that the loan was granted to the applicant . . . It is
accordingly my
finding that the
situs
of
the hypothecated property constitutes a jurisdictional connecting
factor giving rise to the jurisdiction of this court.’
17
I respectfully agree with and adopt his reasoning. It is
apparent that there is a close association not only between the
hypothecated
property and the nature of the proceedings ie, for
payment of money arising out of loan agreement, but also between the
nature of
the consequential relief, for the hypothecated property to
be declared executable, and the cause of action.
18
The decision by the court below to assume jurisdiction
over this matter is therefore consistent with the approach taken in
the cases
referred to above.
[15] There is another reason why I think it was
competent for the court below to have exercised jurisdiction over
this matter. The
facts show that the matter commenced in the Pretoria
High Court where the appellant objected to the jurisdiction of that
court. Appellant
concedes that the objection was ill-founded. It was
however a consequence of this objection that the respondent
thereafter instituted
proceedings in the court below and only shortly
before the trial was to commence, and pleadings had closed, that the
respondent again
objected to its jurisdiction. Apart from the fact
that the appellant has an insurmountable hurdle to overcome before he
can escape
the inference that by his conduct he had acquiesced in the
court’s jurisdiction,
19
I think that every consideration of convenience and
common sense required the court below to assume jurisdiction over the
matter.
This conclusion makes it unnecessary to deal with the issue
of the waiver any further.
[16] It follows that the appeal must fail. The following
order is made:
The appeal is dismissed with costs.
______________
A CACHALIA
JUDGE OF APPEAL
CONCUR:
HARMS ADP
HEHER JA
SNYDERS AJA
THERON AJA
1
See
s 19(1)(a) of the Supreme Court Act 59 of 1959 referred to below at
para 8
. Section 6(2) of the Act confers concurrent
jurisdiction on the Transvaal Provincial Division (TPD), also
referred to as the Pretoria
High Court, in the areas of jurisdiction
of the Witwatersrand (WLD), also referred to as the Johannesburg
High Court.
2
Section
169 provides: ‘A High Court may decide:
(a) any constitutional matter except a matter that –
(i) only the Constitutional Court may decide; or
(ii) is assigned by an Act of Parliament to another court of a
status similar to a High Court; and
(b) any other matter not assigned to another court by an Act of
Parliament.’
3
Jurisdiction
here means the power vested in a court by law to adjudicate upon,
determine and dispose of a matter (
Ewing
McDonald & Co Ltd v M & M Products Co
[1990] ZASCA 115
;
1991
(1) SA 252
(A) at 256G).
4
Bisonboard
Ltd v K Braun Woodworking Machinery (Pty) Ltd
[1990] ZASCA 86
;
1991 (1) SA 482
(A) at 486D;
Ewing McDonald
(above) at 257F-G.
5
Cordiant
Trading CC v Daimler Chrysler Financial Services (Pty) Ltd
2005
(6) SA 205
(SCA) at 211D-E.
6
1958
(1) SA 555
(A) at 562A-B.
7
Estate
Agents Board v Lek
1979 (3) SA 1048
(A) at 1063H.
8
(
1848)
3 M 565.
9
1958
(1) SA 555
(A) at 562C-D.
10
1958
(1) SA 555
(A) at 562F-H.
11
See
David Pistorius
Pollak on Jurisdiction
2 ed p 91.
12
Ward
v Burgess & another
1976 (3) SA
104
(TK) at 107B-C;
Hugo v Wessels
1987
(3) SA 837
(A) at 857C-F.
13
On
the distinction between rescission and cancellation, see RH Christie
The Law of Contract In South Africa
5
ed p 539.
14
See
Sonia v Wheeler
1958
(1) SA 555
(A) at 562F-H.
15
2005
(6) SA 205
(SCA) at 211D-H.
16
2006
(5) SA 355
(W).
17
See
Geyser v Nedbank
2006
(5) SA 355
(W) at para 11.
18
See
Estate Agents Board v Lek
1979
(3) SA 1048
(A) at 1063F-G.
19
Purser
v Sales; Purser & Another v Sales and Another
[2000] ZASCA 135
;
2001
(3) SA 445
(SCA) paras 15-18.