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[2007] ZASCA 144
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Bid Industrial Holdings (Pty) Ltd v Strang and Others (615/06) [2007] ZASCA 144; [2007] SCA 144 (RSA); [2008] 2 All SA 373 (SCA); 2008 (3) SA 355 (SCA) (23 November 2007)
IN THE SUPREME COURT OF APPEAL
OF SOUTH AFRICA
REPORTABLE
CASE NO 615/06
In the
matter between
BID INDUSTRIAL HOLDINGS (PTY) LTD
...........................
Appellant
and
JOHN FRANCIS
RODERICK STRANG
...........................
First Respondent
ANDREW JOHN DONALD STRANG
...........................
Second Respondent
and
THE MINISTER
OF JUSTICE AND CONSTITUTIONAL
DEVELOPMENT
...........................
Third Party
________________________________________________________________________
CORAM: HOWIE P, NUGENT, PONNAN, MAYA JJA et MALAN AJA
________________________________________________________________________
Date Heard: 27 August 2007
Delivered: 23 November 2007
Summary
:
Arrest to found or confirm jurisdiction held to be unconstitutional.
The common law developed by abolition of the requirement of
arrest to
found or confirm jurisdiction
. Jurisdiction capable of
being established on other bases without arrest and also without
attachment where no attachable property.
Citation: This
judgment may be referred to as
Bid Industrial Holdings v
Strang
[2007] SCA 144 (RSA)
________________________________________________________________________
J U D G M E N T
________________________________________________________________________
HOWIE P
HOWIE
P
[1]
The appellant is a South African company. Its registered office is in
Johannesburg.
[2]
The two respondents, John and Andrew Strang, are citizens of
Australia. They are resident and domiciled in that country. Two of
their eponymous Australian companies have extensive Southern African
interests. They are directors of those companies.
[3]
The appellant intends to sue the respondents in the Johannesburg High
Court for delictual damages. To establish or confirm that
Court’s
jurisdiction for the purposes of the suit the appellant applied for
an order for the respondents’ arrest.
[4] The respondents opposed the application. It is only
necessary to state their two main grounds. The first was that no
prima facie
case on
the merits of the proposed claim was made out on the papers. The
second was that foreign nationals while in South Africa enjoyed
the
protection of the Constitution and their arrest to found or confirm
jurisdiction would be contrary, to various provisions of
the Bill of
Rights. Therefore the legislation which, it was said, empowered such
an arrest
1
was unconstitutional. Further, because the legislation
derived from a common- law rule, the common law had to be developed
so as to
abolish the rule.
[5] In view of the constitutional challenge the Minister
of Justice and Constitutional Development was joined in the
proceedings.
In the submission of the Minister the legislation
concerned was not unconstitutional and in any event did not empower
the arrest
of foreign nationals who were outside the country when the
order sanctioning their arrest was granted. (The respondents visit
South
Africa fairly frequently on business but were not within the
country at any time relevant to the application.)
[6] The application came before Trengove AJ in the High
Court at Johannesburg. The learned judge dismissed it for want of a
prima facie
case, it
being a requirement for the success of an application for
jurisdictional arrest that an applicant present a case at least
prima
facie
established. In taking that approach
the court below applied the principle laid down in
S
v Mhlungu
2
that where it is possible to decide a case without
reaching a constitutional issue that is the course to be followed.
The learned
Judge granted the plaintiff leave for the present appeal.
[7] As the Court below observed, the
Mhlungu
principle does not amount to an inflexible rule. A
number of considerations lead me not to apply it.
[8] The first is this. A draft of the intended delictual
claim is annexed to the application papers. It details at some length
allegations
of a contractually enforceable joint venture partnership
between the appellant and the two Strang companies that have Southern
African
interests. The proposed particulars of claim then go on to
allege (a) that the Strang companies ‘in bad faith’
committed
breaches of their contractual obligations to the appellant
in terms of the partnership; (b) that the respondents ‘intentionally
and unlawfully’ procured the breaches, thereby intentionally
and unlawfully interfering with the appellant’s contractual
rights; and (c) that the respondents ‘intentionally and
unlawfully diverted the profits’ of the partnership that were
due to the appellant to the two Strang companies for the latter’s
exclusive benefit and thereafter to a third Strang company,
ultimately for their own personal benefit.
[9] On the basis of the allegations I have summarised as
(a), (b) and (c) it is proposed to allege that the respondents are
delictually
liable, jointly and severally with their contractually
liable companies, for the appellant’s damages comprising its
loss of
the diverted profits. The damages claimed amount to R31 206
000.
[10] In the Court below lead counsel for the appellant
(who did not appear on appeal) is recorded by the learned Judge as
having identified
‘the real claim’ against the
respondents as based on their wrongful and intentional interference
with the appellant’s
contractual rights. (This is effectively
encompassed by the allegations summarised above as (b)). Accordingly
the court considered
that it was on that basis that the claim was to
be judged in order to determine whether it disclosed delictual
conduct, more particularly
wrongful conduct. (If it did not, then the
appellant will obviously have failed to establish an actionable claim
at all, not merely
on a
prima facie
basis.)
[11] The gist of the learned Judge’s finding
adverse to the appellant on its thus identified ‘real claim’
was that
to fix directors with delictual liability for a breach of
contract which they commit on their companies’ behalf would
‘significantly
erode’ the law’s recognition of a
company’s separate legal personality which had, on established
authority, to
be upheld ‘except in the most unusual
circumstances’.
3
Moreover the known delict of interference with
contractual relations was a wrong committed by an outsider to the
contract, not by
one of the contracting parties. Finally, there was
no need to accord a delictual claim where the victim of the breached
contract
already had a claim in contract. It followed, in the view of
the Court below, that the alleged conduct central to the proposed
delictual
claim was not wrongful.
[12] During argument before us counsel for the appellant
contended that in confining the basis of the delictual claim to
wrongful
interference with contractual relations the court below
overlooked the thrust of the allegations summarised in (a) and (c)
above.
Essentially, so it was argued, the respondents were alleged to
have acted as strangers to their companies, not as directors on
behalf
of the companies. In addition, their alleged wrongful
procurement of the breaches and diversion of the profits effectively
meant
that the respondents were guilty of misappropriation. In the
circumstances outlined in the draft claim, therefore, the companies
were merely the vehicles for the respondents’ conduct, which
conduct was wrongful and clearly enough alleged as such.
[13] In my view it is unnecessary to go into more
detailed discussion as to whether a
prima
facie
case was made out. If the Judge were
upheld it would not require much amendment to the proposed claim to
bring it in line with what
the appellant’s counsel said the
claim was intended, and can be made, to allege. In that event the
matter would in all probability
be back in the courts and the
constitutional issue would arise again. (Obviously were the Judge
held to have been wrong the constitutional
issue would require
resolution in any case.)
[14] In the second place
Mhlungu
was decided when this Court had no constitutional
jurisdiction. Accordingly attention was not given to the input which
this court
might be able to make on a constitutional issue were such
jurisdiction one day to exist.
[15] Thirdly, as reported decisions of the
Constitutional Court since
Mhlungu
show, the lines previously regarded as demarcating a
constitutional issue have become substantially blurred. Cases have
been admitted
to adjudication in that court where it has been
considered in the interests of justice to do so rather than strictly
because of their
involving a ‘constitutional issue’ as
that term was understood at the time of
Mhlungu
.
And even that term has been given a broader application, if not a
broader meaning, than then.
[16] Finally, the reach of the constitutional issue
extends to the many other cases involving resident plaintiffs suing
foreign defendants.
It is therefore necessary to resolve it as a
matter of practice and principle and not just for purposes of the
present litigation.
[17] I accordingly leave the issue determined by the
learned Judge undecided.
[18] Turning to the constitutionality of jurisdictional
arrest, I should mention at the outset that although an asset
belonging to
one of the respondents was at one time capable of being
attached to found or confirm jurisdiction the appellant failed to
take the
opportunity to effect such attachment. In addition, although
the appellant has persistently requested the respondents to submit to
the Johannesburg High Court’s jurisdiction they have refused to
do so.
[19] As already indicated, the legislative provision
said by the respondents to be unconstitutional is s 19(1)(c) of the
Supreme Court
Act 59 of 1959. Section 19 is headed:
‘
Persons over whom and matters in relation
to which provincial and local divisions have jurisdiction.’
(Now one refers to a High Court rather than a division
and I shall do so in what follows. Paragraph (c) actually uses the
term ‘High
Court’). The relevant parts of s 19(1) read:
‘
(a) A [High Court] shall have jurisdiction
over all persons residing or being in and in relation to all causes
arising … within
its area of jurisdiction and all other
matters of which it may according to law take cognisance ...
(b) …
(c) Subject to the provisions of section 28 … any High Court
may –
(i) issue an order for attachment of property or arrest of a person
to confirm jurisdiction … also where the property or person
concerned is outside its area of jurisdiction but within the
Republic: Provided that the cause of action arose within its area of
jurisdiction; and
(ii) where the plaintiff is resident or domiciled within its area of
jurisdiction, but the cause of action arose outside its area
of
jurisdiction and the property or person concerned is outside its area
of jurisdiction, issue an order for attachment of property
or arrest
of a person to found jurisdiction regardless of where in the Republic
the property or person is situated.’ (Sic)
(Paragraph (c) was added in 1998.
4
Section 28 prohibits arrest of a defendant who is a
South African resident.)
[20] The record does not reveal where the appellant’s
alleged delictual cause of action arose and counsel for the appellant
were unable to tell us. We were, however, informed that there were
some factual connections with South Africa, and the Johannesburg
High
Court’s area of jurisdiction in particular. We therefore have
to consider the constitutionality of jurisdictional arrest
whether
aimed at founding or merely confirming jurisdiction.
[21] In contending that the requested arrest could not
infringe constitutional rights counsel for the appellant urged that
arrest
would involve no physical restraint and certainly not
detention in custody. According to the argument, apart from informing
the arrestee
of the arrest, the most that would be physically
involved was, in effect, a tap on the shoulder. In other words, the
arrest would
have no greater significance than mere symbolism.
[22] For the Minister it was submitted that s 19(1)(c)
aimed to facilitate a resident plaintiff’s forensic access
under s 34
of the Constitution and that the court in any event had a
discretion by means of the exercise of which the competing rights of
plaintiff
and defendant (the latter having the opportunity to oppose
such an application) could be appropriately balanced. In addition, s
19(1)(c)
spoke of arrest only, not detention.
[23] For the respondents it was argued that in so far as
the common law required an arrest to found or confirm jurisdiction
and the
statute enabled it, the common law had to be developed by
doing away with the requirement and the statute had to be declared
invalid
in so far as it enabled the requirement’s fulfilment.
Such an arrest infringed a range of constitutionally entrenched
rights
5
and neither the common-law rule nor the statute could be
saved by a limitations enquiry in terms of s 36 of the Constitution.
6
Specifically the challenged phrases in s 19(1)(c) are
‘or arrest of a person’ and ‘or person’ where
they respectively
appear in paragraphs (i) and (ii) .
[24] Essentially a court has jurisdiction over a matter
if it has the power not only if taking cognisance of the suit but
also of
giving effect to its judgment.
7
However it is necessary at the start of the discussion
to recognise that the issue here is whether jurisdictional arrest is
constitutional.
We are not concerned with the question of
jurisdictional effectiveness as such. Were the focus on attachment,
not arrest, we would
be concerned squarely with effectiveness.
Dealing as we are with arrest, effectiveness – and taking
cognisance of the suit
– enter the picture only in so far as we
are concerned to assess whether jurisdictional arrest serves, or can
possibly serve,
any constitutionally permissible purpose in either
respect.
[25] A court has the power to take cognisance of the
suit if the relevant cause arises in its area of jurisdiction. The
cause arises
there if it would have done so at common law. At common
law even if a jurisdictional cause (for example, contract or delict
within
the jurisdiction) was present, if the defendant was a
foreigner there had to be arrest or attachment.
8
[26] Contrary to the rule which prevailed in the Roman
Empire that foreign defendants had to be sued in the courts of their
own domicile,
the practice in Holland and several other Dutch
provinces allowed resident plaintiffs to arrest foreign nationals and
to bring them
before a local court in order to compel them to give
security for their appearance in court or to pay whatever the
judgment debt
might be. This saved the plaintiffs the expense of
proceeding in a foreign country; they could obtain judgment and levy
execution
in their own domicile.
9
[27] Summarising the position in Holland, this court has
said, speaking of attachment:
‘
the attachment … served to found
jurisdiction
and thereby
enabled the Court to pronounce a not altogether ineffective
judgment’.
10
(My emphasis.)
In the same case, after reviewing the relevant South
African cases, the conclusion was expressed:
11
‘
Ever since the time that the practice of
arrest
ad fundandam jurisdictionem
was introduced into Holland it had some purpose and was never a mere
symbolic act. If the value of the property attached be not related
in
any way to the judgment in the action, such an attachment would be a
mere symbolic act and utterly purposeless. It is unlikely
that, if
the original purpose as it existed in Holland in the very early times
ceased to exist and an attachment therefore ceased
to serve any
purpose, our Courts would still have persisted with this practice. It
appears to me that the only reason why our Courts
still require an
attachment to found jurisdiction is to enable the Court to give a
judgment which has some effect even though ultimately
the judgment
may in many cases only be partially satisfied and the “effectiveness”
of the judgment fictional to the extent
that it is not satisfied.’
[28] Although these statements were made in a minority
judgment nothing in the majority judgment (based on a different
point) conflicts
with them. A later, unanimous, decision of this
Court has expressed approval of the legal conclusions in the minority
judgment as
to effectiveness.
12
[29] On the basis of the conclusion in
Thermo
Radiant
the crucial jurisdictional purpose of
attachment and arrest in Holland was to enable an effective judgment.
Plainly, if there was
no effective judgment or security to be
obtained by, or following upon, attachment or arrest then no
jurisdiction could be established.
And if, then as now, an attachment
or arrest were merely empty symbolism there would be no basis on
which it could found jurisdiction.
[30] The common law came to deal with attachment of
property and arrest of the person in the same breath. As applied in
South Africa
it requires that one or the other has to take place to
found or confirm jurisdiction where the defendant is a foreign
national.
13
Neither can take place without the plaintiff first
obtaining an order for attachment or arrest and to secure such an
order the plaintiff
must, as I have said, make out a
prima
facie
case. (One should perhaps emphasise for
present purposes that arrest can follow upon
no
more
than a
prima
facie
case, in other words taking only the
plaintiff’s allegations into account.)
[31] The provision in section 19(1)(c), enabling an
attachment or arrest order to be given in respect of property or
persons wherever
in the country they are (not just in the issuing
court’s area of territorial jurisdiction), eschews any
implication that attachment
or arrest is essential; it says the court
‘may’, not ‘must’, issue the relevant order.
I shall revert to
the meaning and function of the provision later.
[32] The first question to be answered now is whether
arrest infringes the entrenched right to freedom and security of the
person.
14
[33] I have mentioned that arrest would, in the
submission of the appellant, involve no more than a symbolic act.
Counsel went on
to contend that an arrested defendant could in any
case secure prompt release by consenting to jurisdiction, offering
security or
even making payment in whole or in part.
[34] Strenuously as the appellant’s counsel shied
away from the respondents’ proposition that jurisdictional
arrest entailed
a serious deprivation of a defendant’s liberty,
the inescapable truth, in fact and in law, is that lawful arrest only
ceases
if there is a lawful reason for cessation and that between
those moments in time the arrestee’s liberty is inevitably
restricted.
[35] It is beside the point whether a defendant can
secure release by providing security or payment.
15
The present question has to be approached on the basis
that there is no legal obligation on a foreign defendant to consent
to jurisdiction
or to provide a monetary basis whereby to avoid
arrest or its consequence. That consequence can only be detention.
[36] Although s 19(1)(c) does not refer to detention,
the process of arrest is always to engage the relevant agencies of
the State
to effect the arrest and then to restrict the arrestee’s
freedom pending attainment of some lawful purpose. If, for example,
that purpose is not attained on the day of the arrest, the arrestee
must necessarily remain in detention by the State until it is
attained. Such detention can ordinarily only be in a prison.
16
Jurisdictional arrest, therefore, unquestionably aims to
limit the arrestee’s liberty.
[37] The constitutional right under consideration is
only infringed if there is an absence of ‘just cause’ and
a ‘fair
trial’. There is obviously no question here of a
trial so the focus is on ‘just cause’.
[38] In assessing whether establishing jurisdiction for
purposes of a civil claim can be ‘just cause’ it is
necessary,
first, to consider whether arresting the defendant can
enable the giving of an effective judgment. There is a crucial
difference
between attaching property and arresting a person.
Attachment ordinarily involves no infringement of constitutional
rights (absent,
for example, seizure of the means by which the
defendant’s livelihood is earned). But, more importantly, the
property attached
will, unless essentially worthless, obviously
provide some measure of security or some prospect of successful
execution. Arrest,
purely by itself, achieves neither. Security or
payment will only be forthcoming if the defendant chooses to offer
one or other in
order to avoid arrest and ensure liberty. It is
therefore not the arrest which might render any subsequent judgment
effective but
the defendant’s coerced response.
[39] The impotence of an arrest itself to bring about
effectiveness is illustrated by the result that would ensue were the
arrested
defendant to do nothing either before, or in answer to,
judgment for the plaintiff. Pending judgment there is no legal
mechanism
to enforce security or payment and failure to pay the
judgment debt does not expose the defendant to civil imprisonment.
17
Consequently, deprivation of liberty does not of itself
serve to attain effectiveness.
[40] Furthermore the statements in
Thermo
Radiant
18
that the practice of jurisdictional attachment can have
no justifiable foundation if that attachment is purely symbolic,
apply with
equal force were the proposed arrest in truth merely
symbolic (as protested by the appellant).
[41] Apart from the fact that arrest does not serve to
attain jurisdictional effectiveness it cannot be ‘just cause’
to
coerce security or, more especially payment, from a defendant who
does not owe what is claimed or who, at least, is entitled to the
opportunity to raise non-liability in the proposed trial. If there is
no legal justification for incarcerating a defendant who has
been
found civilly liable there cannot be any for putting a defendant in
prison whose liability has not yet been proved. And as to
the
function of arrest to enable the court to take cognisance of the
suit, that could be appropriately achieved if the defendant
were in
this country when served with the summons and there were, in
addition, significant factual links between the suit and South
Africa. I shall return to that aspect in due course. Accordingly,
there is no ‘just cause’ for the arrests sought.
[42] Although it may be said that establishing
jurisdiction is a constitutionally permissible objective, to reach it
by means of deprivation
of a foreign defendant’s liberty is to
breach the latter’s s 12 entrenched right.
[43] The most obvious concomitant would be breach of the
defendant’s respective rights to equality, human dignity and
freedom
of movement. There is also much to be said for the contention
that arrest would also compromise the right under s 34 of the
Constitution
to a fair civil trial.
19
Although it is arguable that, subject to the constraints
imposed by all the mentioned rights infringements, a detained
defendant could
still be permitted all required opportunities to
consult, give instructions and attend court, it would seem unfair to
have to litigate,
unlike the plaintiff, under such handicaps. Suffice
it, at all events, to say that jurisdictional arrest would cause
extensive infringement
of various of the defendant’s
fundamental constitutional rights. That bears heavily on the next
question.
[44] That question is whether the common-law rule, being
law of general application, can, in the respects in which it has been
challenged,
satisfy the limitation requirements of s 36 of the
Constitution.
[45] The limitation imposed by the section in so far as
it permits jurisdictional arrest strikes at those rights in
particular which
the Constitution is at pains to highlight –
human dignity, equality and freedom.
20
As I have just indicated, the infringement is profound.
The governmental purpose of the limitation is to favour resident
plaintiffs,
in line with the common law, by seeking to enable them to
establish jurisdiction which would not otherwise exist and so avoid
the
trouble and expense of suing abroad. Assuming, for the moment,
that purpose to be constitutionally permissible, I fail to see how
it
is reasonable and justifiable, in our constitutional society, to
achieve such purpose by subjecting foreign defendants to arrest
and
detention.
[46] I am unaware of currently applicable legislation or
case law in other countries which requires arrest as a prerequisite
for civil
jurisdiction over foreign defendants and no counsel
involved in this matter were able to refer to any.
[47] There are less restrictive means to establish
jurisdiction (whether founding or confirming) than by way of the
defendant’s
arrest. First and foremost there can be attachment.
Its legal competence is beyond question. However, if attachment is
not possible
because the defendant has no property here, there are
alternative possibilities. Before considering their legal competence
it is
important to note that the respondents did not argue that if
arrest were unconstitutional and attachment not possible, no
jurisdiction
could be established. Why that is important is because
if arrest were held unconstitutional and it were further to be held
that in
this case, and cases like it, jurisdiction can competently be
established without arrest, the necessary corrollary would be that
it
can also be established without attachment despite the need for
attachment not having been in issue and despite attachment,
generally,
not being unconstitutional.
[48] I do not mean to say that where attachment is
possible it is no longer a jurisdictional requirement. It is
naturally not open
to the court in this case, on the issues and
arguments involved, to override or ignore precedent or principle. We
are confined to
the issue of arrest’s constitutionality and the
inevitable consequence if it is indeed unconstitutional and the
alternative
of attachment is not possible. In other words if the
common law is to be developed by abolishing jurisdictional arrest,
that development
must necessarily involve providing practical
expedients for cases where jurisdiction is sought to be established
and there can be
neither arrest nor attachment. One could, of course,
hold that if arrest and attachment were, for separate reasons, no
longer possible,
then a resident plaintiff would simply have no basis
for establishing jurisdiction in a case such as the present. On the
other hand
it is important, in my view, to remember that the practice
of arrest and attachment came about in order to aid resident
plaintiffs
who would otherwise have to sue abroad. There is no reason
why that rationale should not still apply.
21
It represents, in my view, a rational and legitimate
governmental purpose.
[49] Because arrest and attachment have been undisputed
and long-standing jurisdictional requirements at common law the
question whether
jurisdiction in a suit against a foreign defendant
can be established without either, has not been the subject of case
law. It is
a question that must now be resolved by reference to the
court’s obligations and powers under the Constitution.
[50] Section 173 of the Constitution empowers the court
to develop the common law and s 39(2) requires the court, when
interpreting
s 19(1) of the Supreme Court Act and developing the
common law, to promote the objects of the Bill of Rights.
22
[51] It obviously involves circuitous reasoning to say
that arrest is unconstitutional if there are alternatives, the legal
competence
of which are dependent on arrest being unconstitutional.
It does not involve circuitous reasoning, however, to evaluate the
alternatives
as part of the overall process of developing the common
law, which process is envisaged as encompassing the abolition of the
practice
of arrest and the adoption of a legally acceptable
substitute practice.
[52] Consideration of a substitute practice can usefully
start with the observation that this court has accepted, for purposes
of
reciprocal enforcement of a foreign judgment, that the defendant’s
mere physical presence within the foreign jurisdiction when
the
action was instituted is sufficient, according to South African
conflict of law rules, for a finding that the foreign court had
jurisdiction.
23
It may also be noted that in England, for example,
service on a foreign defendant while physically present –
albeit temporarily
– within its borders is sufficient for
jurisdiction provided the case has a connection with that country.
24
These are pointers to the acceptability – subject
to the presence of sufficient evidential links – of mere
physical presence
as being an acceptably workable substitute for a
detained presence. One might add – a self-evidently more
acceptable substitute.
[53] In the course of argument passing reference was
made to the words ‘persons residing or being in’ in s 19
(1)(a) of
the Supreme Court Act when referring to those over whom a
High Court has jurisdiction.
25
At first blush the phrase ‘being in’ seems
to afford a basis on which it could be said that such persons include
those
who are merely physically present as opposed to those domiciled
or resident within the court’s area of jurisdiction. I do not
think the words ‘being in’ assist. A line of authority
culminating in
Bisonboard Ltd v K Braun
Woodworking Machinery (Pty) Ltd
26
holds that nothing turns on ‘being in’; for
purposes of s 19(1)(a) a court’s jurisdiction depends on
nothing short
of residence and the defendant’s residence within
the jurisdiction is one situation in which a ‘cause arises’,
the defendant then being amenable to that court.
[54] I nevertheless consider that jurisdiction in the
present case will fall within the terms of s 19(1)(a) if the matter
can be said
to involve a ‘cause arising’ or be a matter
of which the court ‘may according to law take cognisance’.
A
‘cause arising’ is not to be confused with a cause of
action, and to determine what a ‘cause arising’ is,
as
also to determine of what matter a court may take cognisance, one is
driven back to the common law jurisdictional principles.
27
If those principles can be developed to accommodate a
situation like the present there will be conformity with s 19(1)(a).
Which
is not to say that the common law must conform to the
legislation. It is rather the converse. The legislation in question
has all
along merely been concerned to reflect or implement the
common law. All one is therefore looking to ensure is that between
the Act
and the development sought to be achieved there is harmony.
[55] Obviously the jurisdictional principles we are
concerned with here have originated because courts have always sought
to avoid
having to try cases when their judgments will, or at least
could, prove hollow because of the absence of any possibility of
meaningful
execution in the plaintiff’s jurisdiction. It seems
to me that, firstly, one has to apply reasonable and practical
expedients
in moving away, where necessary, from historical practices
that cannot achieve what they were intended to. Secondly, the
responsibility
for achieving effectiveness, absent attachment, is
essentially that of the parties, and more especially the plaintiff.
Economic considerations
will dictate whether a South African judgment
has prospects of successful enforcement abroad and thus influence a
plaintiff in deciding
whether to attach and sue here or to sue there
(leaving aside, of course, other costs considerations). And if the
plaintiff decides
in favour of suing here it is open to the defendant
to contest, among other things, whether the South African court is
the
forum conveniens
and
whether there are sufficient links between the suit and this country
to render litigation appropriate here rather than in the
court of the
defendant’s domicile.
[56] In my view it would suffice to empower the court to
take cognisance of the suit if the defendant were served with the
summons
while in South Africa and, in addition, there were an
adequate connection between the suit and the area of jurisdiction of
the South
African court concerned from the point of view of the
appropriateness and convenience of its being decided by that court.
Appropriateness
and convenience are elastic concepts which can be
developed case by case. Obviously the strongest connection would be
provided by
the cause of action arising within that jurisdiction.
[57] As to the principle of effectiveness, despite its
having been described as ‘the basic principle of jurisdiction
in our
law’
28
it is clear that the importance and significance of
attachment has been so eroded that the value of attached property has
sometimes
been ‘trifling’.
29
However, as I have said, effectiveness is largely for
the plaintiff to assess and to act accordingly.
[58] Therefore it seems to me that there are legally
competent alternatives to requiring arrest as a jurisdictional
prerequisite.
Whether they can be established in the proposed
litigation between the present parties it is impossible, from the
record, to determine.
Indeed, whether there are sufficiently close
links with the area of jurisdiction concerned and whether
effectiveness is likely to
be achieved are matters dependent on the
facts of each case. They should be canvassed in the pleadings and
can, in addition, be dealt
with as separated issues in terms of Rule
33(4).
[59] For all these reasons the common-law rule that
arrest is mandatory to found or confirm jurisdiction cannot pass the
limitations
test set by s 36(1). It is contrary to the spirit,
purport and objects of the Bill of Rights. The common law must be,
and is hereby,
developed by abolition of the rule and the adoption in
its stead, where attachment is not possible, of the practice
according to
which a South African High Court will have jurisdiction
if the summons is served on the defendant while in South Africa and
there
is sufficient connection between the suit and the area of
jurisdiction of the court concerned so that disposal of the case by
that
court is appropriate and convenient. It goes without saying that
the new practice could itself be subject to development with time.
[60] As far as s 19(1)(c) is concerned, it seems to me
that the answer to the respondent’s contention that this
provision is
unconstitutional essentially requires the provision’s
interpretation. I have already said that it enables arrest, it does
not
require it. Going into more detail, one finds that the background
to the provision is this. Before its introduction by Act 122 of
1998
30
a High Court (using current terminology) had no
jurisdiction to order the arrest or attachment of a person or
property within the
area of jurisdiction of another High Court. This
was confirmed in
Ewing McDonald
31
where extension of jurisdiction was unsuccessfully
sought to be based on the terms of s 26(1) of the Supreme Court Act.
32
The extension issue was the subject of a Law Commission
report in 1993 which recommended the change eventually brought about
by the
introduction of s 19(1)(c).
[61] Accordingly the aim and function of the provision,
seen in proper context, was merely to effect an extension of a High
Court’s
jurisdiction to order certain arrests and attachments.
The word ‘may’ achieved that extension, reinforced as it
was by
the word ‘also’ in subpara (i). ‘May’
did not confer a discretion (as argued by the Minister) whether to
order arrest or not. The provision also did not subsume the
common-law rule. What it meant was that in so far as arrest was a
requirement
of the common law it could be ordered as long as the
defendant was present anywhere within the country. Section 19(1)(c)
provided
the legislative machinery by means of which the common-law
requirement could be fulfilled. Once that requirement is abolished it
follows that the challenged words in s 19(1)(c) become redundant.
They can be removed by legislative amendment and, until then, read
down. They do not require a declaration of invalidity.
[62] As to costs, counsel for the appellant submitted
that in the event of the constitutional issue being decided against
the appellant
the latter should not be ordered to pay costs. The
reason, said counsel, was that in view of the respondents’
refusal to consent
to jurisdiction the appellant had been obliged to
comply with the law as it was and to apply for an arrest order. Even
if the appellant
failed on the constitutional question it had not
erred in any respect in making the application.
[63] That submission cannot prevail. The litigation in
this case was not aimed at an organ of State nor conducted in the
public interest.
The appellant has not sought to establish or advance
a constitutional right. It has sought to pursue commercial litigation
and lost
at the threshold stage. There is no reason why it should not
pay the costs.
[64] For the respondent the costs of three counsel were
asked for. Three counsel were employed by the appellant as well. In
my view,
however, there are insufficient grounds for regarding
employment of three counsel as a reasonable precaution in this
matter.
[65] The appeal is dismissed with costs, such costs to
include the costs of two counsel.
_________________
CT HOWIE
PRESIDENT
SUPREME
COURT OF APPEAL
CONCUR:
NUGENT JA
PONNAN JA
MAYA JA
MALAN AJA
1
Section
19(1)(c) of the Supreme Court Act 59 of 1959.
2
[1995] ZACC 4
;
1995
(3) SA 867
(CC) para 59.
3
Hülse-Reutter
v Gödde
2001 (4) SA 1336
(SCA)
para 20. Also see
The Shipping
Corporation of India v Evdomon Corporation
[1993] ZASCA 167
;
1994
(1) SA 550
(A) 566;
Cape Pacific v
Lubner Controlling Investments
[1995] ZASCA 53
;
1995
(4) SA 790
(A) 803 to 804.
4
See
s
6 Act 122
of 1998.
5
The
right to equality before the law (s 9(1) of the Constitution); the
guarantee against unfair discrimination s 9(3); the right
to human
dignity (s 10); the right to freedom of movement (s 21); and the
right to a fair civil trial (s 34).
6
Section
36(1) of the Constitution provides:
‘
The rights in the Bill of Rights may be
limited only in terms of law of general application to the extent
that the limitation is reasonable and justifiable in an open and
democratic society based on human
dignity, equality and freedom, taking into account all relevant
factors, including –
(a) the nature of the right;
(b) the importance of the purpose of the limitation;
(c) the nature and extent of the limitation;
(d) the relation between the limitation and its purpose; and
(e) less restrictive means to achieve the purpose.’
7
Veneta
Mineraria Spa v Carolina Collieries (Pty) Ltd (in Liquidation)
1987 (4) SA 883
(A) at 893F;
Ewing
MacDonald & Co Ltd v M&M Products Co
[1990] ZASCA 115
;
1991
(1) SA 252
(A) at 260C-D.
8
Ewing
McDonald
, supra, at 260D-F.
9
JWW
(Sir John Wessels) ‘
History of
our Law of Arrest to Found Jurisdiction’
(1907)
24 SALJ 390
at 393, 400 and
Tsung v
Industrial Development Corporation of SA Ltd
[2006] ZASCA 28
;
2006
(4) SA 177
(SCA) para 5.
(Many writers and judgments use the terms
incola
and
peregrinus.
Incola
usually
meant domiciled resident but could include a domiciled foreigner.
Peregrinus
meant
a true foreigner. However in South Africa, with its different
provincial jurisdictions,
peregrinus
can also mean a South African citizen who is
domiciled in one province and so a foreigner in another. In our case
the appellant
is an
incola
and the respondents are
peregrini
in the true sense.)
And see:
Thermo
Radiant Oven Sales Ltd v Nelspruit Bakeries
1969
(2) SA (A) 295 at 305C-D.
10
Thermo
Radiant at
306H-307A.
11
At
310A-B.
12
Veneta
Mineraria Spa v Carolina Collieries (Pty) Ltd,
supra,
at 888E-F.
13
Ewing
McDonald
, supra, at 258E-259C.
14
Section
12(1) of the Constitution reads:
‘
Every one has the right to freedom and
security of the person, which includes the right –
not to be deprived of freedom arbitrarily or without just cause;
not to be detained without trial;
to be free from all forms of violence from either public or private
sources;
not to be tortured in any way; and
not to be treated or punished in cruel, inhuman or degrading way.’
15
Assuming
jurisdictional arrest to be constitutional, it would cease, among
other reasons, as the appellant indeed argued, on provision
of
security or payment:
Preisig v
Tattersall
1982 (3) SA 1082
(C) at
1083D.
16
Cf
Ghomeshi-Bozorg v Yousefi
1998 (1) SA 692
(W).
17
See
Coetzee v Government of the RSA, Matiso v Commanding Officer,
Port Elizabeth Prison
[1995] ZACC 7
;
1995 (4) SA 631
(CC). Although decided
under s 11(1) of the Interim Constitution, the decision applies
equally to
s 12(1) of the Constitution.
18
Para
27 supra.
19
Section
34 reads:
‘
Everyone has the right to have any dispute
that can be resolved by the application of law decided in a fair
public hearing before
a court or, where appropriate, another
independent and impartial tribunal or forum .’
20
See
s 7(1); s 36(1) itself; and s 39(2).
21
See
the remarks of Watermeyer J in
Halse v
Warwick
1931 CPD 233
at 239 –
‘... why should South African Courts not come to the
assistance of South African subjects and enable them
to litigate at
home just as the Dutch Courts came to the assistance of Dutch
subjects?’
22
Section
173 reads: ‘The Constitutional Court, Supreme Court of Appeal
and High Courts have the inherent power to protect and
regulate
their own process, and to develop the common law, taking into
account the interests of justice.’
Section 39(2) reads: ‘When interpreting any legislation, and
when developing the common law or customary law, every court,
tribunal or forum must promote the spirit, purport and objects of
the Bill of Rights.’
23
Richman
v Ben-Tovim
2007 (2) SA 283
(SCA)
paras 7 to 9.
24
Dicey,
Morris and Collins
The Conflict of
Laws
, 14
th
edition, Volume 1, 11-097, 11-103.
25
Section
19(1)(a), it will be recalled, says a High Court has jurisdiction
‘over all persons residing or being in and the relation
to all
causes arising - ... within its area of jurisdiction and all other
matters of which, it may according to law take cognisance
...’
26
[1990] ZASCA 86
;
1991
(1) SA 482
(A) at 492B-C.
27
Bisonboard
at 486C-J.
28
Thermo
Radiant
supra, at 307A.
29
Thermo
Radiant
, supra, at 309D-E.
30
See
footnote 4.
31
See
footnote 7.
32
Section
26(1) reads: ‘The civil process of a [High Court] shall run
throughout the Republic and may be served or executed
within the
jurisdiction of any [High Court].’