Multi-links Telecommunications Ltd v Africa Prepaid Services Nigeria Ltd (35347/13, 30004/13) [2013] ZAGPPHC 261; [2013] 4 All SA 346 (GNP); 2014 (3) SA 265 (GP) (6 September 2013)

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[2013] ZAGPPHC 261
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Multi-links Telecommunications Ltd v Africa Prepaid Services Nigeria Ltd (35347/13, 30004/13) [2013] ZAGPPHC 261; [2013] 4 All SA 346 (GNP); 2014 (3) SA 265 (GP) (6 September 2013)

REPORTABLE
THE NORTH GAUTENG HIGH COURT. PRETORIA
(REPUBLIC OF SOUTH AFRICA)
Case
Number:35347/13
DATE:06/09/2013
In
the matter between:
MULTI-LINKS
TELECOMMUNICATIONS LTD
….....................................................
Applicant
and
AFRICA
PREPAID SERVICES NIGERIA
LTD
.........................................................
Respondent
And
Case
Number: 30004/2013
In
the matter between:
TELKOM
SA SOC
LIMITED
.........................................................................................
First
Plaintiff
MULTI-LINKS
TELECOMMUNICATIONS
LIMITED
..............................................
Second
Plaintiff
and
BLUE
LABEL TELECOMS LIMITED
….................................................................
First
Defendant
AFRICA
PREPAID SERVICES (PTY)
LTD
.......................................................
Second
Defendant
AFRICA
PREPAID SERVICES NIGERIA
LIMITED
...............................................
Third
Defendant
MARK
PAMENSKY
…............................................................................................
Fourth
Defendant
PERRY-MASON
MTHUNZI
MDWABA
.....................................................................
Fifth
Defendant
THAMSANQA
(THAMI) GOODENOUGH
MSIMANGO
…....................................
Sixth
Defendant
JUDGMENT
FABRICIUS J
1.
On
19 August 2013, in my capacity as case manager, I heard the opposed
applications essentially concerning the questions whether
or not this
court has jurisdiction over Africa Prepaid Services Nigeria Limited
(“APSN”) in an action launched by Telkom
SA and
Multi-Links Telecommunications Limited (“Multi-Links")
against Blue Label Telecoms Limited (“Blue Label”)
and
others. The related question was whether “good cause” was
shown for the relief sought by Multi-Links in terms of
the provisions
of
section 3(2)
of the
Arbitration Act 42 of 1965
setting aside the
arbitration agreement contained in a Super Dealer Agreement (“SDA”)
entered into between Multi-Links
and APSN on 1 December 2008 and the
expansion to the submission to arbitration dated 6 November 2012. I
also have to decide a costs
question relating to an ex parte order
that Telkom and Multi-Links obtained from this court on 16 May 2013,
which was subsequently
set aside by agreement.
2.
The
facts:
Counsel
for Multi-Links and APSN have presented very thorough heads of
argument to me in the abovementioned context, and I am grateful
that
I can rely on them to refer to the relevant facts and the parties’
opposing submissions. The status of the relevant
parties is set out
in the particulars of claim Telkom and Multi-Links dated 17 May 2013
and it will be useful to briefly refer
thereto. The first plaintiff
in that action is Telkom SA, a state owned company in term of
section
8(2)(a)
of the
Companies Act of 2008
and a major public entity in
terms of Schedule 2 of the
Public Finance Management Act 1 of 1999
.
The second plaintiff is Multi-Links Telecommunications Limited
(“MLT”) a public company incorporated in terms of the

Nigerian Companies and Allied Matters Act, with its principal place
of business in Nigeria. MLT was a subsidiary of Telkom from
March
2007 to October 2011 and accordingly was also a major public entity
in terms of Schedule 2 of the PFMA at the relevant time.
The first
defendant was cited as being Blue Label Telecoms Limited (“Blue
Label”) a public company listed on the Johannesburg
Stock
Exchange with its principal place of business in Sandton. The second
defendant is Africa Prepaid Services (Pty) Ltd (“APS”)
a
subsidiary of Blue Label, a private company with its principal place
of business being also in Sandton. The third defendant is
Africa
Prepaid Services Nigeria Limited (“APSN”) a company
incorporated in Nigeria with its principal place of business
also
being in Lagos, Nigeria. It is alleged that APSN consented to its
attorneys accepting service of the summons on its behalf.
APSN is a
subsidiary of Blue Label by virtue of Blue Label’s 72 %
shareholding in APS which in turn holds 51 % of the shares
in APSN.
The fourth defendant is Mark Pamensky an adult businessman employed
at Blue Label’s principal place of business
in Sandton.
Pamensky was at all material times the Chief Operating Officer of
Blue Label and a director of APS and APSN, and represented
these
entities in the conduct which founds plaintiff’s claim for
damages against the defendants. The fifth defendant is Ndwaba
also
residing in Bryanston, Johannesburg who is the alleged sole
beneficiary of “Citadela” and a director of APSN.
The
sixth defendant is Msimango residing in Bryanston, Johannesburg who
was at all material times a managing director of Telkom
International
Business Unit, and a former director of MLT. As far as jurisdiction
of this court is concerned, it is alleged that
it has jurisdiction
over the defendants and in respect of the causes arising referred
to, in the particulars of claim by virtue
of the following, and I
need to set this out in some detail: All of the defendants save for
APSN are persons residing or being
in the area of jurisdiction of
this court as contemplated in section 19(1) of the Supreme Court Act
59 of 1959. It is alleged that
this court has jurisdiction to
determine Telkom’s claims against APSN by virtue of the
following:
2.1
Telkom’s
claims against APSN are for payment of certain amounts, jointly and
severally with the remaining defendants;
2.2
The
Super Dealer Agreement (“SDA”), which is central to all
claims and disputes, was concluded between MLT and APS,
a company
registered and having its principal place of business within the area
of jurisdiction of this court. Telkom, although
not a party, was
integral to the conclusion of the SDA by MLT, its subsidiary at the
time, which relied upon it for the investment
and loan capital
required to conduct its business in Nigeria;
2.3
The
factual events on which Telkom relies for the relief claimed occurred
either exclusively or substantially within the area of
jurisdiction
of this court and involved all of the defendants, save that APSN was
not involved in the conclusion of the SDA;
2.4
Although
certain of these events occured in Nigeria, no Nigerian court has
jurisdiction over the remaining defendants;
2.5
Telkom’s
claims against APSN sounding in money are made jointly and severally
against the remaining defendants and if successful,
are likely to be
satisfied only in small part by APSN which lacks the means to satisfy
such claims in full, and are likely to be
satisfied substantially by
the defendants residing and being in the area of this court’s
jurisdiction;
2.6
Disputes
arising from the SDA between the parties thereto (being MLT and APSN)
are subject to arbitration within the area of jurisdiction
of this
court and in accordance with South African law;
2.7
All
or most of the natural persons who were involved in the facts
relating to the matters arising are resident within the jurisdiction

of this court;
2.8
APSN
is an essential party to the disputes between Telkom and the
remaining defendants by virtue of the material interest that APSN
has
in the outcome of such disputes;
2.9
APSN’s
attorneys in the arbitration proceedings have consented to service of
any process on behalf of APSN;
2.10
It
is alleged that this court has therefore jurisdiction over the
matters arising herein, alternatively and in any event, this court
is
the forum of convenience in relation to the parties, the causes
referred to in the particulars of claim and the applicable law,
being
South African law.
3.
As
far as MLT’s claims against APSN are concerned, claim A is a
claim for damages, jointly and severally with the remaining

defendants, and claim B is for an order that the arbitration
proceedings will cease to have effect with reference to the disputed

questions of MLT’s entitlement to avoid the SDA, MLT’s
entitlement to avoid the cession of the SDA to APSN and MLT’s

claim for repayment of amounts paid in terms of the SDA as well as an
order that the SDA and the cession thereof are void ab initio,
and
that MLT was entitled to avoid the SDA and cession with effect from
25 November 2000. There are also two claims sounding in
money, to the
extent that those amounts are not recovered under claim A. The other
allegations made are those made also in respect
of Telkom’s
claim.
4.
The
Super-Dealer Agreement (“SDA”) was concluded by APS and
MLT on 1 December 2008. Telkom was not a party to this agreement.

APSN was formed in 2009 in order to take assignment of APS’
rights and obligations under the SDA. It did so with effect from
1
June 2009. Clause 32 of the SDA provided for this, and its purpose
was to permit APS to assign its rights and obligations in
terms of
the agreement to a Nigerian subsidiary or associate in order to
comply with Nigerian law. The SDA was implemented in Nigeria.
On 25
November 2010, MLT purported to cancel this agreement for APSN’s
breach thereof. APSN contends that this purported
cancellation
constituted a repudiation of the SDA, which it accepted and
accordingly cancelled the agreement.
5.
In
terms of the provisions of clause 22 of the SDA, APSN instituted a
claim for some $457 million on 11 June 2011 against MLT by
way of
vitiation proceedings under the auspices of AFSA. Shortly before the
initial hearing MLT introduced a special plea alleging
that it was
entitled to avoid the SDA as it had been induced by misrepresentation
on the part of Blue Label and APS, and because
it was tainted by
illegality pursuant to conduct in contravention of the Prevention and
Commenting of Corruption Act 12 of 2004.
As a result the hearing was
postponed and is now rescheduled to be heard for three months as from
February 2014. On introducing
the special plea, MLT contended that
the arbitrators did not have the jurisdiction to determine it. This
jurisdictional challenge
was resolved by MLT and APSN concluding a
deed of submission to arbitration which expanded the arbitration
agreement to allow the
arbitrators to determine the validity of the
SDA and their own jurisdiction. The expansion agreement specifically
provides in clause
2.4 that APSN and MLT submitted themselves to the
jurisdiction of the arbitrators to determine all matters arising out
of or incidental
to the issues on the pleadings and in the amendment
to the pleadings, including the issues arising out of the special
plea. The
purpose of the expansion agreement was to accommodate MLT’s
special plea, which was based on substantially the same allegations

as those upon which the action is now based. No evidence has as yet
been led in these arbitration proceedings.
6.
On
16 May 2013 Telkom and MLT obtained an ex parte order for the
attachment of APSN’s claim and the costs order made in APSN’s

favour by way of an arbitrator’s award dated 14 November 2012
to found and confirm this court’s jurisdiction over APSN.
As
MLT is a Nigerian-based entity, APSN’s claim and the order for
costs are situated in Nigeria and can only be attached
in Nigeria.
Telkom and MLT later conceded that the attachment was a nullity, and
the ex parte order was set aside by agreement
between Telkom, MLT and
APSN. There is thus no attachment of any asset belonging to APSN to
found or confirm this court’s
jurisdiction over it. The
attachment application however remains relevant to costs and I will
deal with that hereunder.
7.
The
action that I have referred to is founded in delict and is based on
allegations pertaining to the defendants’ alleged
fraudulent or
negligent non-disclosure of certain facts, and the breach of certain
fiduciary duties by the sixth defendant which
caused a wrongful
interference with the contractual relationships of Telkom and MLT.
Telkom and MLT allege that they have suffered
substantial damages
inasmuch as if the delicts had not occurred, MLT would not have
entered the SDA, or consented to the cession,
would not have made any
payments to APSN under the SDA and Telkom would have exited the
Nigerian market on 1 December 2008, and
would not have made any
further loans to MLT. MLT also advances a cause of action against
APSN (but not the other defendants) based
upon the allegation that
the Blue Label defendant paid a bribe to the fifth and third
defendants under certain circumstances.
As
I said, MLT then also claims an order that the arbitration agreement
between APSN and MLT shall cease to have effect in terms
of the
provisions of
section 2
of the
Arbitration Act in
respect of the
question whether MLT was entitled to avoid the SDA. This action is
based in the main on the conduct of the mentioned
defendants other
than APSN in the run-up to the conclusion of the SDA on 1 December
2008 as APSN was only formed and took over
APS’ rights and
obligations the following year. The third defendant lodged an
application which I heard on the same day,
in terms of which it
sought an order that this court did not have jurisdiction over it in
the said action.
8.
The
question of jurisdiction is therefore central to both applications
and before dealing with the arguments of the applicant in
the
section
3(2)
application it is convenient to briefly state what APSN has to
say in this context. It is common cause that both MLT and APSN are

Nigerian-based entities and are peregrini of South Africa. Telkom is
an incola of this court. There has been no attachment of APSN’s

assets to found or confirm the court’s jurisdiction. In the
absence of submission, both Telkom (an incola) and MLT (a foreign

peregrinus) require, as a general rule such an attachment to found or
confirm this court’s jurisdiction regardless of any
connection
between the cause and the territorial jurisdiction of this court. In
this context reliance was placed on the dictum
by Harms JA in Tsung v
Industrial Development Corporation of South Africa Ltd
[2006] ZASCA 28
;
2006 (4) SA
177
(SCA) at paragraph 3:
“
If
the defendant is a peregrinus and whether or not the court has
jurisdiction over the cause, eg because the cause of action arose

within the jurisdiction or jurisdiction exists ratione delictus or
ratione contractus, an attachment or arrest is essential for
the
exercise of jurisdiction: A recognised ratio jurisdictionis by itself
will not do.”
The
Tsung case involved a claim by incola against two foreign perigrini.
MLT
and Telkom’s argument:
APSN
contended that this court has no jurisdiction over it in respect of
the substantive relief claimed against it in the action.
On that
basis, it also challenges the jurisdiction of this court to determine
the
section 3(2)
application. The applicants in turn say that their
jurisdiction question is ultimately one for the trial court itself,
and that
no more than a prima facie case of the applicant’s
version needs to be established for this court to exercise
jurisdiction
in the application proceedings. I may add at this stage
that APSN’s counsel Mr. A. Bham SC did not during argument say
that
MLT’s case is wholly unfounded.
Section
3(2)
of the
Arbitration Act reads
as follows:
“
The
court may at any time on the application of any party to an
arbitration agreement, on good cause shown -
(a)
set aside the arbitration agreement; or
(b)
order that any particular dispute referred to in the arbitration
agreement shall not be referred to arbitration; or
(c)
order that the arbitration agreement shall cease to have effect with
reference to any dispute referred.”
In
the context of this “good cause” argument applicant says
that this avoidance question will be decided by the High
Court in
pending proceedings where all interested parties have been joined (if
this application is allowed), as opposed to the
continuation of
parallel arbitration proceedings (and the High Court action in
relation to all parties except APSN) in relation
to the avoidance
question, if relief is not granted in terms of
section 3(2).
The
“jurisdiction question” and the “good cause
question” had to be answered in the affirmative they say
for
the following main reasons:
9.1
This
court has jurisdiction to determine disputes and grant substantive
relief against foreign defendants in the absence of an attachment
to
found or confirm jurisdiction, where there is sufficient connection
between the matters arising (as contemplated in section
19(1) of the
Supreme Court Act 59 of 1959) and the area of jurisdiction of the
court,
and/or on the basis that this court is the forum of appropriateness
and convenience in relation to the matters arising in
the proposed
proceedings;
9.2
In
any event, even if this court were to decline to exercise
jurisdiction over APSN in relation to the substantive relief sought

against it in the High Court action, APSN is a necessary party to
that litigation because it is common cause that this court has

jurisdiction in the action over the defendant APS, which concluded
the SDA and ceded or purported to cede the SDA to APSN with
the
consent of Multi-Links. It is an issue both in the arbitration and
the action as to whether the conclusion of the SDA and/or
the
procurement of Multi-Links’ consent to cession thereof in
favour of APSN were induced by misrepresentation. This court’s

determination of that issue as between Multi-Links (as plaintiff) and
APS (as defendant) in the action is directly relevant to
the very
same issues which are in dispute in the arbitration proceedings
between Multi-Links and APSN;
9.3
In
any event, Telkom and Multi-Links pleaded several facts in the
particulars of claim (which facts I have set out) which, if proved
at
the trial, will tend to establish that APSN intended to submit to the
jurisdiction of the South African courts before Telkom
and
Multi-Links raised the spectrum of the action in correspondence with
APSN’s attorneys.
10
.
Jurisdictional
connecting factors and the Strang principle:
(Bid Industrial Holdings (Pty) Ltd v
Strang
2008 (3) SA 355
(SCA))
Section
19(1) (a) of the Supreme Court Act provides that the 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 ...”
(I
must add that since this hearing, the Supreme Court Act of 1959 has
been repealed by the Superior Courts Act 10 of 2013 which
for most
parts came into operation on 23 August 2013 per Government Gazette
36774. Section 21 (1), in the present context, now
reads “A
Division has jurisdiction over all persons residing in, or living in,
and in relation to all causes arising ...
within its area of
jurisdiction ... “)
Applicants’
counsel Mr. C. Badenhorst SC argued that APSN’s contention that
this court lacks jurisdiction over it rests
on the flawed premise
that only attachment to found and/or confirm jurisdiction is
sufficient to vest this court with jurisdiction
over it. He submitted
that our law has moved forward from this historical position, and
relied in the main on the “Strang
principle”. In Strang
the appellant was a South African company and the two respondents
were citizens of Australia, resident
and domiciled there. They
opposed the application on two grounds, the first one being that no
prima facie case on the merits of
the proposed claim had been made
out, and the second one being that other nationals while in South
Africa enjoyed the protection
of the Constitution, and that their
arrest to found or confirm jurisdiction would be contrary to various
provisions of the Bill
of Rights. Section 19(1)(c) of the Supreme
Court Act, that empowered such arrest, was therefore
unconstitutional. Further, because
the legislation derived from a
common-law rule, the common law had to be developed so as to abolish
the rule. It is not necessary
to deal with the merits of the
appellant’s claim in that case, but it is important to note
that Howie P said that the reach
of the constitutional issue extended
to the many other cases involving the resident plaintiffs suing
foreign defendants. It was
therefore necessary to decide the
constitutional point as a matter of principle and practice, and not
just for purposes of the
litigation before him. The court then
considered the constitutionality of jurisdictional arrest with an aim
at founding or merely
confirming jurisdiction. For the respondents it
was argued that insofar 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 insofar as it enabled the
requirement’s fulfilment. Such an arrest infringed a range of
constitutionally
entrenched rights (the right to equality before the
law, the guarantee against unfair discrimination, the right to human
dignity,
the right to freedom of movement and the right to a fair
civil trial), and neither the common law rule nor the statute could
be
saved by a limitations enquiry in terms of section 36 of the
Constitution. In that context the learned President of the court said

that essentially a court has jurisdiction over a matter if it has the
power not only of taking cognisance of the suit but also
of giving
effect to its judgment. However, it is necessary at the start of the
discussion to recognise that the issue here is whether
the
jurisdictional arrest is constitutional or not. The court was not
concerned with the question of jurisdictional effectiveness
as such.
Were the focus on attachment, not arrest, it would be concerned
squarely with effectiveness. Dealing as they were with
arrest,
effectiveness - and taking cognisance of the suit - enters the
picture only insofar as it was concerned to assess whether
the
jurisdictional arrest serves, or can possibly serve, any
constitutional permissible purpose in either respect.
11
.
It
is clear that the Supreme Court of Appeal then dealt with the common
law relating to attachment of property and arrest of a person.
The
question of attachment was not of any further relevance in those
proceedings, and the court in fact dealt with the question
whether
the arrest aspect infringed the entrenched right to freedom and
security of the person. It held that a jurisdictional arrest
would
cause extensive infringement of various of the defendants’
fundamental constitutional rights. I have mentioned them.
It held
that the infringement was profound. In the context of the limitation
requirements of section 36 of the Constitution, it
held that it would
not be reasonable and justifiable, in our constitutional society to
achieve the purpose for the arrest by subjecting
foreign defendants
to such arrest and detention. There would be less restrictive means
to establish jurisdiction, and of course
attachment of property was
one of them. Section 173 of the Constitution empowered the court to
develop the common law, and section
39(2) required it, when
interpreting section 19(1) of the Supreme Court Act and developing
the common law, to promote the objects
of the Bill of Rights. It held
that the consideration of a substitute practice can usefully start
with the observation that the
court had 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 has
jurisdiction. It could 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. Those were
pointers to the acceptability - subject to the presence of sufficient
evidential
links - of mere physical presence as being an acceptably
workable substitute for detained presence. In the context of section
19(1)(a)
of the Supreme Court Act Howie P said that jurisdiction
would fall within its terms if the matter could be said to involve a
“cause
arising” or be a matter of which the court “may
according to law may take cognisance”. A “cause arising”

is not to be confused with a cause of action, and to determine what a
“cause arising” is, is also to determine of what
court
may take cognisance, if one is driven back to the common law
jurisdictional principles. If those principles can be developed
to
accommodate a situation like the present, there would be conformity
with section 19(1)(a). In the context of the relevant jurisdictional

principles it said (paragraph 25) that if the plaintiff decides in
favour of suing in South Africa it would be open to the defendant
to
contest, amongst other things, whether the South African court is the
forum of convenience, 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. It was
also mentioned that it would also suffice to empower the court to
take cognisance of the suit if the defendant
was served with the
summons while in South Africa and, in addition, there was an adequate
connection between the suit and the area
of jurisdiction of the South
African court concerned from the point of view of appropriateness and
convenience of its being decided
by that court. Appropriateness and
convenience are lists of concepts which can be developed case by
case. Obviously the strongest
connection would be provided by the
cause of action arising within that jurisdiction (par 56). It is for
those reasons, amongst
a number of others, that the court held that
the common- law rule that arrests are mandatory to found or confirm
jurisdiction could
not pass the limitations test set by section 36(1)
of the Constitution. The common law was therefore developed by the
abolition of the arrest
rule, and by the adoption in its stead, where
attachment was not possible, of the practice according to which a
South African High
Court would have jurisdiction if the summons is
served in the defendant while in South Africa, and there was
sufficient connection
between the suit and the area of jurisdiction
of the court concerned so that disposing of the case by that court
was appropriate
and convenient. It went without saying that the new
practice could itself be subject to development with time.
12
.
On
the application on the Strang case, it was submitted that this court
has jurisdiction over APSN in the action, and therefore
in the
application on the grounds set out in the particulars of claim, which
I have mentioned. It was appropriate and convenient
for this court to
exercise such jurisdiction.
13.
In
Zokufa v Compuscan (Credit Bureau)
2011 (1) SA 272
(EC) the
respondent company was an incola of South Africa but a peregrinus of
the Eastern Cape High Court. The applicant applied
for certain credit
records, and the respondent raised the lack of jurisdiction of the
Eastern Cape Division, as it was resident
within the Eastern Cape.
Alkema J dealt with the history underlying the provisions of section
19(1) of the Supreme Court Act which
is also reflected in Estate
Agents Board v Lek
1979 (3) SA 1048
(A) at 1059C - 1060A and
emphasised that the expression “causes arising” was
interpreted not as “causes of action”
but as “legal
proceedings duly arising” within its area of jurisdiction. The
expression “all causes arising”
bore a similar meaning in
s. 19 (1) of the Supreme Court Act.
See Bisonboard Limited v K Braun
Woodworking Machinery (Pty) Ltd
[1990] ZASCA 86
;
1991 (1)
SA
482
(A) at 486D-E where Hoexter JA said in relation to section 19(1):
“
In
a long line of cases, the words ‘causes arising’ have
been interpreted as signifying not ‘causes of action
arising’
but ‘legal proceedings duly arising’ that is to say,
proceedings in which the court has jurisdiction
under the common
law.”
In
Gulf Oil Corporation v Rembrandt Fabrikante en Handelaars (Edms) Bpk
1963 (2) SA 10
(T) Trollip J (as he then was) after considering the
cases on the subject, came to the conclusion that “causes
arising within
its jurisdiction” in section 19(1) meant an
action or legal proceedings which, according to the law, had duly
originated
within the court’s area of jurisdiction. That was
still the law today. See Cordiant Trading CC v Daimler Chrysler
Financial
Services (Pty) Ltd
2005 (6) SA 205
(SCA) at paragraph 11,
where it was said that “causes arising” refers to all
factors giving rise to jurisdiction under
the common law. The
question therefore was whether the legal proceedings in the
application could be said to have arisen within
the jurisdiction of
this court. The legal proceedings were based on facts from which
legal inferences could be drawn. These are
often referred to as
“jurisdictional connecting factors” and this enquiry
depends on the nature of the proceedings,
the nature of the relief
claimed therein and in some cases on both. In the context of
interdict proceedings, the court then held,
(in Zokufa) after
analysing various authorities, if the requirements for the grant of
an interdict was satisfied by facts within
the territorial
jurisdiction of the High Court, the High Court would possess
jurisdiction to decide the matter. It made reference
to the doctrine
of effectiveness but referred to the criticism of Harms Civil
Procedure in the Superior Courts at A- 17 and stated
that this
doctrine had in fact been eroded by the Strang decision. On the basis
of that decision, it assumed jurisdiction, and
it seems that this was
ultimately done for the reasons that there was a sufficient
connection between the suit and the area of
jurisdiction of the court
concerned, so that disposal of the case for that court was
appropriate and convenient.
14.
It
is true, of course, as Mr. Bham SC pointed out, that the Strang
decision concerns the constitutionality or otherwise of an arrest
of
a peregrinus individual to found jurisdiction. It did not concern a
corporate entity, and it was on that basis that Mr. Bham
SC argued
the Strang principle was of no application herein. Corporations are
obviously not amenable to arrest. The right to security
of the person
in terms of section 12(1) of the Constitution was a right which could
only vest in natural persons, he submitted.
This is true, but Mr. C.
Badenhorst SC in turn was of the view that the Strang case laid down
a general principle and that it would
be absurd if one were to make a
distinction between natural persons and corporate entities in this
context.
15.
The
Strang decision dealt with the constitutionality or otherwise of an
arrest of an individual to found jurisdiction where attachment
had
not occurred, and wherein the court found, in developing the common
law, that considerations of appropriateness and convenience
could be
sufficient in appropriate circumstances, and that the doctrine of
effectiveness was no longer pre-eminent in questions
relating to
jurisdiction over foreign defendants. In that context Howie P has
said that the responsibility for achieving effectiveness,
absent
attachment, was essentially that of the parties and more especially
the plaintiff, and that if the plaintiff decided in
favour of suing
in South Africa it would be open to the defendant to contest, among
other things, whether the South African court
is the forum conveniens
and whether there were sufficient links between the suit and this
country to render litigation appropriate
here, rather than in the
court of the defendant’s domicile. As I said, the court was
ultimately of the view that it would
suffice to empower the court to
take cognisance of the suit if the defendant was served with the
summons while in South Africa
and, in addition, there was an adequate
connection between the suit and the area of jurisdiction of the South
African court from
the point of view of appropriateness and
convenience. The question therefore is whether all of those comments
were confined to
the case where the respondent was a natural person?
If the reasoning behind the Strang decision, although it dealt with
arrest
of an individual, and the dicta relating to appropriateness
and convenience apply in general, where there has been no attachment,

it would seem that the following facts support the applicant’s
case that this court ought to assume jurisdiction on the basis
of
appropriateness and convenience: APSN concluded the SDA as an incola
of this court’s area of jurisdiction. It agreed to
the
arbitration clause which meant that the arbitration would be in South
Africa, in accordance with the South African
Arbitration Act, in
accordance with the Commercial Arbitration Rules of AFSA, it
nominated a domicilium citandi et executandi within the area of this

court’s jurisdiction, which domicilium address was not changed
after the cession of the SDA to APSN, it agreed that South
African
law would govern the SDA and any dispute pursuing thereto, APSN as
cessionary of APS assumed the same rights and obligations
as APS in
terms of the SDA, APSN invoked the arbitration clause without
qualification, it extended the terms of reference of the
arbitration
to include determination of the special plea, its principal agent in
relation to the conduct complained of is the fourth
defendant who is
domiciled in, and ordinarily resident within the area of jurisdiction
of this court and is a co-defendant with
APSN in the action, APSN was
at all material times controlled by Blue Label and APS, of which it
is a subsidiary and both Blue
Label
and APS are domiciled within the court’s jurisdiction and the
factual events on which Telkom and Multi-Links rely for
the relief
claimed in the action occurred within this court’s jurisdiction
and involved all of the defendants in the action,
with the exception
that APSN was not involved in the conclusion of the SDA. APSN was
formed after the conclusion of the SDA in
April 2009 but this is not
important, inasmuch as these negotiations were expressly conducted on
its behalf as a company “to
be formed”. Defendants are
furthermore sued jointly and severally, and any judgment in favour of
Telkom and Multi-Links would
be capable of effective execution in
South Africa. It was therefore the applicants’ submission that
these jurisdictional
connecting factors support the conclusion that
the court was, a matter of law, likely to “take cognisance”
of the action.
Once this was so, this court had jurisdiction to
determine whether relief ought to be granted in terms of
section 3(2)
of the
Arbitration Act.
16.
In
Fleet Africa (Pty) Ltd v Cargill
Cotton Genus Limited
[2010] JOL 2633I
(GSJ)
the
plaintiff claimed an amount from the defendant arising from transport
and other logistical services rendered in collecting raw
cotton from
depots in Zambia and delivering it to a ginnery in Zambia for
processing. The defendant was a company registered in
Zambia with its
registered office in Zambia. The plaintiff’s registered office
was in Pretoria while its principal place
of business was in Pine
Town, Kwa­Zulu Natal. The alleged agreement was concluded in
Kwa-Zulu Natal and the breach of the agreement,
if such had occurred,
would have been in Zambia. It is also argued that the defendant did
not reside in, and was not, in the area
of jurisdiction of the court
within the meaning of section 19(1) of the Supreme Court Act. It was
held that while the defendant
was an international company, its
African operations were at all material times, centrally controlled
and managed from South Africa.
The defendant had a substantial place
of business at Fourways in Johannesburg, and therefore “resided”
within the area
of jurisdiction of the court. The learned Judge dealt
with a number of relevant authorities and referred to Appleby (Pty)
Ltd v
Dundas Ltd
1948 (2) SA 905
(E) where commercial convenience was
stressed when interpreting section 5 of the Administration of
Justice
Act 27 of 2012, the predecessor of section 19 of Supreme Court Act.
The Appleby decision was referred to with approval in
the case of
Bisonboard Ltd supra, and Willis J stated that he agreed with the
view of Kuny AJ in Tsichlas and Another v Touchline
Media (Pty) Ltd
2004 (2) SA 112
(W) at 119H that when it came to jurisdiction, the
test was really whether the defendant had a sufficient “presence”

to justify the court having jurisdiction. Willis J was of the view
that the Strang decision had adopted a similar view, and said
that it
seemed clear to him that the Supreme Court of Appeal has, since that
decision, adopted a more relaxed view as to jurisdiction
and that
considerations of appropriateness and convenience had to prevail. He
did not regard that decision as being distinguishable
as much as the
facts before him related to two corporate entities. It is clear from
the Zokufa decision supra that the Strang principle
was also applied
to a peregrinus defendant company.
17.
I
was also referred to the decision of the House of Lords in Spiliada
Maritime Corporation v Cansulex Ltd
[1986] 3 All ER 843
(HL) where
the following was said at 853 - 854, that it is doubtful:
“
...
whether the Latin tag ‘forum non conveniens’ is apt to
describe this principle. For the question is not one of convenience,

but of the suitability or appropriateness of the relevant
jurisdiction. However, the Latin tag (sometimes expressed as forum
non
conveniens and sometimes as forum conveniens) is so widely used
to describe the principle, not only in England and Scotland, but
in
other Commonwealth jurisdictions and in the United States, that it is
probably sensible to retain it. But it is most important
not to allow
it to mislead us into thinking that the question at issue is one of
‘mere practical convenience’. Such
a suggestion was
emphatically rejected by Lord Kinnear in Sim v Robinow (1892) 19 R
(Ct of Sess) 665 at 668 and by Lord Dunedin,
Lord Shaw and Lord
Sumner in the Societe du Gaz case 1926 SC (HL) 13 at 18, 19, and 22
respectively. Lord Dunedin said, with reference
to the expressions
forum non competens and forum non conveniens:
‘
In
my view, “competent” is just as bad a translation for
“competens” as “convenient” is for

“conveniens”. The proper translation for these Latin
words, so far as this plea is concerned, is “appropriate”.’
Lord
Sumner referred to a phrase used by Lord Cowan in Clements v Macaulay
(1866) 4 Macph (Ct of Sess) 583 at 594, viz more convenient
and
preferable for securing the ends of justice’, and said:
‘
...
one cannot think of convenience apart from the convenience of the
pursuer or the defender or the Court, and the convenience
of all
these three, as the cases show, is of little, if any, importance. If
you read it as “more convenient, that is to say,
preferable,
for securing the ends of justice,” I think the true meaning of
the doctrine is arrived at. The object, under
the words “forum
non conveniens” is to find that forum which is the more
suitable for the ends of justice, and is preferable
because pursuit
of the litigation in that forum is more likely to secure those ends.’
In
the light of these authoritative statements of the Scottish doctrine,
I cannot help thinking that it is wiser to avoid use of
the word
‘convenience’ and to refer rather, as Lord Dunedin did,
to the appropriate forum”.
18.
The
Spiliada case concerned an action brought by ship owners in England
for compensation for damage to a Liberian owned vessel carrying
on
business in British Columbia. The ship owners obtained leave ex parte
to institute proceedings against the shippers in England
on the
ground that the action concerned the recovery of damages for the
breach of a contract governed by English law. In response,
the
shippers asked that the ex parte order be discharged on the ground,
inter alia, that the case had not been shown to be a proper
one for
service out of the jurisdiction. Lord Goff set out six principles for
the test of forum (non) conveniens adopted in England.
Forsyth,
Private International Law 5 ed 2012 summarised these principles at
187-188 as follows:
“
36.1
The basic principle is that a stay will only be granted on the ground
of forum non conveniens where the court is satisfied
that there is
some other available forum, having competent jurisdiction, which is
the appropriate forum for the trial of the Action,
ie in which the
case may be tried more suitable, for the interests of all the parties
and the ends of justice ...
36.2
(l)n general the burden of proof rests on the defendant to persuade
the court to exercise its discretion to grant a stay ...
if the court
is satisfied that there is another available forum which is prima
facie the appropriate forum for the trial of the
Action, the burden
will then shift to the plaintiff to show that there are special
circumstances by reason of which justice requires
that the trial
should nevertheless take place in this country ...
36.3
The question being whether there is some other forum which is the
appropriate forum for the trial of the Action, it is pertinent
to ask
whether the fact that the plaintiff has, ex hypothesi, founded
jurisdiction as of right in accordance with the law of this
country,
of itself gives the plaintiff an advantage in the sense that the
English court will not lightly disturb jurisdiction so
established.
36.4
Since the question is whether there exists some other forum which is
clearly more appropriate for the trial of the Action,
the court will
look first to see what factors there are which point in the direction
of another forum ... I respectfully consider
that it may be more
desirable, ... to adopt the expression used by my noble and learned
friend, Lord Keith of Kinkel, in The Abdin
Daver
[1984] A.C. 298
,
415, when he referred to the ’natural forum’ as being
‘that with which the Action had the most real and substantial

connection’. So it is for connecting factors in this sense that
the court must first look, and these will include not only
factors
affecting convenience or expense (such as availability of witnesses),
but also other factors such as the law governing
the relevant
transaction ... and the places where the parties respectively reside
or carry on the business.
36.5
If the court concludes at that stage that there is no other available
forum which is clearly more appropriate for the trial
of the Action,
it will ordinarily refuse a stay ...
36.6
If however the court concludes at that stage that there is some other
available forum which prima facie is clearly more appropriate
for the
trial of the Action it will ordinarily grant a stay unless there are
circumstances by reason of which justice requires
that a stay should
nevertheless not be granted. In this enquiry, the court will consider
all the circumstances of the case, including
circumstances which go
beyond those taken into account when considering connecting factors
with other jurisdictions. One such factor
can be the fact that if
established objectively by cogent evidence, that the plaintiff will
not obtain justice in the foreign jurisdiction
... [In this case] the
burden of proof shifts to the plaintiff”.
19.
The
doctrine of forum conveniens is not foreign to our law and in this
context Mr. C. Badenhorst SC referred me to section 7 of
the
Admiralty Jurisdiction Regulation Act 105 of 1983 which provides that
a court “may decline to exercise its admiralty
jurisdiction in
any proceedings instituted that is of the opinion that the action can
more appropriately be adjudicated upon by
another court in the
Republic or by any other court, tribunal or body elsewhere”. In
Cargo Laden and Lately Laden on Board
the MV Thalassini Avgi v MV
Dimitris
1989 (3) SA 820
(A) the Appellate Division impliedly
accepted the doctrine into our law within the circumscribed context
of admiralty cases. A
more recent example is Great River Shipping
Inc. v Sunnyface Marine Ltd
1992 (4) SA 313
(C), where the court
called section 7 of the Admiralty Jurisdiction Regulation Act “the
forum non conveniens principle expressed
in statutory form.” It
was submitted that the Spiliada decision had an important effect in
jurisdictions other than in South
Africa such as New Zeeland, Canada,
Hong Kong, Singapore and Ireland. Though it was not followed in
Australia, the principle has
since been established by the fact that
the stay may be granted where the forum is clearly an inappropriate
one for the trial,
where the formulation of the test required to meet
the threshold being loaded in favour of trial in the forum. The
position under
English law was therefore authoritative support for
the contention that this court has jurisdiction by operation of the
forum conveniens
doctrine. This same doctrine has been in operation
in the United States. See Cheshire, North and Fawcett, Private
International
Law, 14 ed 2008 at 426.
20
.
It
was also submitted that there was an additional basis on which this
court has jurisdiction over APSN, even if APSN is not subject
to the
court’s jurisdiction for purposes of the substantive relief
sought in the action. APSN is a necessary party to those
proceedings,
since it is common cause that this court has jurisdiction in the
action over the defendant APS, which concluded the
SDA, and ceded or
purported to cede the SDA to APSN with the consent of Multi-Links. It
is in issue both in the arbitration and
in the action as to whether
the conclusion of the SDA and/or the procurement of Multi-Links’
consent to cession thereof by
APS in favour of APSN were induced by
misrepresentation. The court’s determination of that issue as
between Multi-Links as
plaintiff, and APS as defendant, manifestly
determines the same issue which is in dispute in the arbitration
proceedings between
Multi-Links and APSN. Consequently, the issue as
raised in the special plea filed in the arbitration not only overlap
but are virtually
identical to the main and central issue in the
action. Multi-Links relies on this fact as a self-standing basis for
jurisdiction
in its particulars of claim and also raised the
contention in its answering affidavit to the Rule 6(11) application.
It was submitted
that APSN does have a direct and substantial
interest in the subject matter of the action in the form of its legal
interest which
may be prejudicially effected by the judgment of the
court. This is particularly so because APSN derive title in the SDA
from APS.
It cannot have greater rights than its cedent APS, and this
question is manifestly one which has to be adjudicated not only as
between Multi-Links and APS, but simultaneously, and in the same
forum, as between those parties and APSN as well. Joinder of all

concerned is only possible in the action. Since this court’s
determination of the avoidance question between Multi-Links
as
plaintiff and APS as defendant has central relevance to the same
issues in the arbitration, it is beyond debate that APSN has
a direct
and substantial interest in the action. In any event, it was
submitted, that the possibility of such an interest is sufficient,

and it is not necessary for me to determine that it in fact exists.
See
Abrahamse v Cape Town City Council
1953 (3) SA 855
(C) at 859.
21
.
The
Continentia causae rule and APSN’s implied ‘submission”.
It
was also submitted on behalf of the applicant in the stay proceedings
that this court also has jurisdiction by operation of the
continentia
causae rule and APSN’s implied submission. This is the common
law doctrine of cohesion of a cause of action,
and is applicable
where a court has jurisdiction over a part of a cause of action and
considerations of convenience, justice and
good sense justify its
exercising jurisdiction over the whole cause.
See
Permanent Secretary, Department of Welfare, Eastern Cape, v Ngxuza
and Others
2001 (4) SA 1184
(SCA) at paragraph 22.
In
Roberts Construction Company Ltd v Wilcox Brothers (Pty) Ltd
1962 (4)
SA
326
(A) the court was held to have jurisdiction on the causae continentia
rule. The rationale for this principle is the avoidance of
an
unnecessary multiplicity of actions and duplication of proceedings
concerning the same subject matter which may cause inconvenience
and
result in contradictory judgments. This decision was applied and
extended by the SCA in the mentioned Ngxuza decision where
Cameron AJ
held at paragraph 22 that that court had in the past not been averse
to developing the doctrines and principles of jurisdiction
so as to
ensure rational and equitable rules. Where one court has jurisdiction
over a part of a cause, considerations of convenience,
justice and
good sense justifies it’s exercising jurisdiction over the
whole cause. In the present case it is common cause
that no other
court has jurisdiction over all the defendants. The causae upon which
Telkom’s and Multi-Links’ cases
are founded largely
occurred in this court’s area of jurisdiction involved parties
that are resident therein, and the facts
giving rise to the action
are intertwined. Mr. Badenhorst SC however also submitted that it was
inappropriate for the question
of jurisdiction to be finally
determined at this early stage of the proceedings as APSN requests in
terms of its so-called Rule
6(11) application. It is a privotable
issue which should be if required be dealt with by the trial court,
with regard to the full
facts, in due course. With reference to the
relevant dicta in Hay Management Consultants v P3 Management
Consultants
2005 (2) SA 522
(SCA) it was submitted that APSN had by
its conduct already consented to the jurisdiction of this court, that
it had intended do
so, and that the trial court may in due course
arrive at such conclusion. In that case the following facts were
considered by the
trial court whose judgment was upheld on appeal to
the SCA, namely that the defendant, an English company with no past
or present
connection with South Africa, chose as its domicile in
terms of the relevant agreement a South African address, that the
on-going
business relationship was to be conducted in a number of
different African jurisdictions with different legal systems where
English
law was an obvious option, the selection of South African law
was regarded by the court as a factor which informed the question
of
the intention to establish a connection with the South African court.
See Hay Management decision (SCA) paragraphs 14-15. Similarly,
in the
action, Telkom and Multi-Links pleaded several facts, which, if
proven at the trial, would tend to establish that APSN intended
to
submit to the jurisdiction of the South African courts. Also relevant
to the jurisdiction enquiry is that under clause 27 of
the SDA, APS,
and accordingly also its cessionary APSN, chose domicile at Blue
Label South African’s address. It was however
submitted that
these facts could not appropriately be ventilated and evaluated at
this stage of the proceedings.
22
.
Respondents’
argument (applicant in the Rule 6(11) application
I
have already mentioned, that it was submitted by Mr. Bham SC that the
Strang principle finds no application herein. There was
also no
question of APSN submitting to this court’s jurisdiction and it
was a question of fact whether it did so or not.
I agree with that
contention (the last part). I have set out the relevant facts most of
which are contained in the particulars
of claim. They could not be
construed as indications that APSN intended to submit to the
jurisdiction of any court.
Convenience
was also not an independent ground upon which I could assume
jurisdiction over APSN, where this court did not otherwise
have such
jurisdiction on one of the other recognised grounds. Convenience in
the causae continentia principle operates only within
the context of
the rationis jurisdictionis. These principles are applicable only
where the defendant over whom the court is asked
to assume
jurisdiction is a peregrinus of that court but an incola of South
Africa (i.e. a local peregrinus) and the court must
determine which
division of the High Court within the unitary judicial system in
South Africa has jurisdiction. Any connection
between the claims
advanced by Telkom and MLT against APSN in the action does not vest
this court with jurisdiction independently
of an attachment of APSN
assets or a submission to jurisdiction. Accordingly none of the
grounds on which Telkom and MLT rely in
the particulars of claim
vests this court with jurisdiction over APSN, so it was contended.
This court does therefore not have
the power to exercise any
jurisdiction over APSN, and it can accordingly not be compelled to
participate in the action. Accordingly
APSN is entitled to an order
to this effect in the interlocutory application in terms of Rule
6(11).
23.
My
reasoning:
It
is true as I have mentioned, that the Strang decision had its origin
in the application for the arrest of a foreign individual
who, when
present in South Africa, was subject to the human rights provisions
of the Constitution. !t was on that basis that the
Supreme Court of
Appeal held that an arrest to found or confirm the jurisdiction, in
the absence of an attachment, was not a justifiable
infringement of
various human rights. In that context the common law was developed so
as to not allow for such an arrest and in
that light, the provisions
of section 19(1) of the Supreme Court Act had to be interpreted in
future. In that given context however
the court also dealt with the
interpretation of the provisions of section 19(1) of the Supreme
Court Act and dealt with its interpretation
in the context of what is
“causes arising”? It is in that context that the question
of forum conveniens arose and the
question of whether there was
sufficient links between the suit and this country to render
litigation appropriate here rather than
in the court of the
defendant’s domicile.
It
is also in that context that the question of appropriateness and
convenience arose, questions which had to be dealt with on a
factual
basis and developed case by case.
I
therefore do not agree that the Strang decision is of no application
herein. I have referred to a number of decisions that followed
and
applied the Strang interpretation, and those did not relate the
question of a natural person only. The question of convenience
and
justice in the context of jurisdiction has also been similarly
decided by other jurisdictions, and I have referred to a few
of them
herein above, and of course especially the Spiliada decision of the
House of Lords. In the context of the interpretation
of s. 19 (1) of
the Supreme Court Act, and the meaning of “causes arising”
it seems to me that one must determine the
forum most suitable for
the ends of justice and because pursuit of the litigation in that
forum is most likely to secure those
ends. The appropriate or natural
forum is that with which the action has the most real and substantial
connection. In that context
then, the Court would look to all the
connecting factors including all background facts, convenience,
experts, the law governing
the relevant transaction or action, the
place where the parties reside or carry on business, etc. As far as
the continentia causae
rule is concerned, there are again strong
factual indications which would support the argument that the court
will assume jurisdiction
over APSN in the trial. I have referred to
most, if not all facts relevant to the consideration of the stay
application and the
Rule 6(11) application, which essentially overlap
insofar as the question of jurisdiction is concerned. It is my view
that Mr.
C. Badenhorst SC is correct in submitting that Multi-Links
must raise a triable issue and, with regard to the facts, that it has

done so. The relevant decisions of the various courts that I have
referred to, strongly support his argument. I am however also
in
agreement with his submission that the question of jurisdiction ought
to be finally decided by the trial court. The principles
in the SCA
decision in Hay Management give further guidance in this regard but
again, this is a question that a trial court will
appropriately
decide. I agree that I cannot and ought not make a final decision at
this stage of the proceedings.
I
am however of the view, having regard to all of the above facts and
legal principles, that the third defendant is at this stage
not
entitled to an order that this court does not have jurisdiction over
it in the action under case number 30004/2013. This application
is
accordingly dismissed with costs including the costs of three
counsel.
24.
The
stay application in terms of
section 3(2)
of the
Arbitration Act:
“
Good
cause" for relief in terms of this section must be shown. I must
exercise a judicial discretion in this context. The particular

applicant bears the onus of showing that sound compelling reasons
exist for such relief.
See Universiteit van Stellenbosch v JA
Louw (Edms) Bpk
1983 (4) SA 321
(A) at
333H-334B.
The study of case law relevant to this topic shows that cases which
have succeeded are mainly those where the arbitration
forum would not
be the appropriate one for resolving the particular dispute at hand.
See for instance Well Hockey J and Others
v Advtech Ltd and Others
2003 (6) SA 737
(W), Rawstorne and Another v Hodgen and Another
2002
(3) SA 433
(W) and Sara v De Wet
1974 (2) SA 645
(T). In this context
Multi-Links’ application is based on the following grounds:
24.1
The
two primarily interested parties are Telkom and Blue Label;
24.2
They
are not parties to the arbitration proceedings, but they are joined
in the court action. It would be extremely artificial (and
wrong) for
the key players to be excluded from the process where the avoidance
question is determined. One way or the other, the
answer to this
question would have far-reaching consequences for Telkom and Blue
Label. Even APS (the original SDA contracting
party and cedent) is
not a party to the arbitration process but it is joined in the
action;
24.3
The
fact that APSN (which is the only defendant in the action susceptible
to the arbitration proceedings) is the cessionary of APS’

rights to the SDA is a telling fact in support of
section 3(2)
relief;
24.4
Blue
Label and APS negotiated the SDA and they (and their officials
together with the sixth defendant) stand accused of untoward
conduct
and are thus pursued in the action for damages suffered by Telkom and
Multi-Links;
24.5
A
damages claim against APSN alone (in the arbitration) is futile,
since it was admittedly a “man of straw” in the context

of the amounts in issue. Only Blue Label, the JSE listed company,
would be in any financial position to pay significant damages
to
Telkom and Multi-Links;
24.6
The
question of avoidance and all the facts giving rise to it are the key
issues in the action (this will remain so whether the
APSN is joined
or not);
24.7
Determination
of the avoidance question vis-a-vis APS (in the action) will
necessarily destroy all claims based on the SDA brought
by APSN in
the arbitration if the question is determined in favour of the
plaintiffs. This is so because APS is the original party
to the
contract, whose rights were ceded to APSN;
24.8
APSN,
a cessionary, steps into the shoes of the cedent;
24.9
APSN
can never be in a better position than APS itself. If the agreement
is held to be void by the court in the action, it will
ipso facto be
void not only for APS but also for the cessionary, APSN;
24.10
Avoidance
of parallel and duplicated proceedings;
24.11
Saving
of substantial costs in the arbitration would not be incurred in the
action;
24.12
The
substantial damages claimed by Telkom and Multi-Links are raised
against the defendants jointly and severally. These claims
which turn
substantially on the facts relevant to the avoidance question, cannot
be brought in the arbitration against all the
defendants who are
being held liable;
24.13
As
I have said, it is undisputed that APSN is a “man of straw”
relative to the significant amounts claimed in the action.
It follows
that Multi-Links cannot effectively bring its damages claim
(amounting to approximately $196 million) against APSN alone
in the
arbitration proceedings. It would be futile and a waste of resources
to pursue the claim against APSN alone in the arbitration;
24.14
There
is a significant risk of competing decisions if duplicate or multiple
proceedings are allowed to continue;
24.15
Telkom
is listed as a “major public entity” in terms of Schedule
2 to the
Public Finance Management Act 1 of 1999
and is a state owned
company in terms of
section 8
of the
Companies Act of 2008
. There is
accordingly a significant public interest at stake. Telkom and
Multi-Links are claiming repayment of enormous amounts
of public
funds which are alleged to have been lost owing to “shady
business dealings” involving a public listed company
and its
senior officials;
24.16
The
avoidance question also concerns the provisions of section 217 of the
Constitution;
24.17
The
parties against whom the accusations of untoward conduct are made are
primarily Blue Label, APS, Pamensky, Ndwaba and Msimango
who are
already joined as defendants in the action. It follows that the
approach and some of the section 3(2) cases in terms of
which the
election to proceed in court (as opposed to arbitration) is given to
the accused party, as opposed to the accuser, does
not apply on the
present facts. The accused parties cannot “prefer arbitration”
above pending court process as a forum
in which to have the
accusations against them tried. At the time when the alleged shady
deals were struck (the second half of 2008)
APSN was not
incorporated.
25.
The
respondent’s argument
It
was submitted that APSN is not subject to the court’s
jurisdiction in the action. One party to the arbitration would
therefore
never be a party to the action. There could therefore never
be any multiplicity of proceedings involving MLT and APSN or any risk

of competing decisions in different proceedings involving MLT and
APSN. This undermined the fundamental basis of the stay application,

so it was contended.
26.
Although
it was said in the affidavits that MTL’s case was “wholly
unfounded”, this argument was not raised before
me by Mr. Bham
SC and in any event it is clear that numerous complex questions of
fact and law will be raised in a trial.
27.
As
I have said in the context of the Rule 6(11) application, the
relevant facts and the case law dealing with extended jurisdiction
in
terms of the provisions of section 19(1) of the Supreme Court Act
properly interpreted, a strong prima facie case has been made
out
that a trial court will indeed find for a number of reasons, that it
has jurisdiction over APSN. If the considerations that
I have
referred to under the heading of Applicant’s argument are then
also taken into account, I am of the view that I can
properly
exercise my discretion in favour of Multi-Links in this particular
context.
28.
Accordingly
I grant an order in terms of prayers 1 and 3 of the notice of motion
under case 35347/2013, such costs to include the
costs of three
counsel.
29.
Costs
in the attachment application under case number 26827/2013:
Telkom
and Multi-Links obtained an ex parte order from this court on 16 May
2013 for the attachment of APSN’s claim against
MLT instituted
by way of arbitration proceedings in Johannesburg, and the costs
order made in APSN’s favour by way of the
arbitrator’s
award dated 14 November 2012. ASPN applied for the reconsideration of
the ex parte order, inter alia on the
basis that its claim against
MLT and the order for costs were not situated in the jurisdiction of
the court, and could therefore
not be attached to found or confirm
this court’s jurisdiction in the action that Telkom and MLT
intended to institute against
APSN and others. This was because the
claim and the order for costs are personal rights against MLT and are
situated where MLT
resides, which is Nigeria.
See
MV Snow Delta: Serva Ship Ltd v Discount Damage Ltd
2000 (4) SA 746
(SCA).
Telkom
and MLT conceded that as APSN’s claim and the order for costs
were situated in Nigeria, the ex parte order fell to
be set aside.
They served a notice of abandonment of the ex parte order on APSN and
tendered its party and party costs up to the
date of delivery of this
notice on 26 June 2013. APSN did not accept this tender and sought an
order that Telkom, MLT and Mr. Biebuyck
(de bonis propriis) are
jointly and severally liable for the costs of the application on the
attorney and client scale, alternatively
Telkom and MLT are jointly
and severally liable for these costs on the attorney and client
scale. By agreement between the parties
the ex parte order was set
aside on 1 July 2013. I must add however that the tender of party and
party costs up to the date of
delivery of the notice of abandonment
was made subsequent to the answering affidavit of APSN.
30.
In
this context the main contentions of APSN were the following:
30.1
The
application was fundamentally misconceived as, contrary to trite
authorities which should have been found and disclosed to the
court,
the assets that Telkom and MLT sought to attach are not situated
within the court’s jurisdiction;
30.2
Their
attorney Mr. Biebuyck ascended into arena by adducing evidence of
which he had no direct knowledge;
30.3
He
and his clients were guilty of breaching the good faith rule in ex
parte applications of failing to disclose adverse facts material
to
the application;
30.4
In
the light of the correspondence preceding the attachment application
in which APSN expressly requested notice of the application,
it was
improper for them to have brought the application ex parte\
30.5
They
thought that APSN had submitted to the court’s jurisdiction
when they approached the court for the attachment of APSN’s

assets. As an attachment was not permissible after a submission, it
was improper for them to have sought the attachment of APSN’s

assets.
31.
On
behalf of Telkom, Multi-Links and Mr. Biebuyck it was submitted that
there was no basis at all for any punitive costs order.
As for costs
de bonis propriis, it was submitted that Mr. Biebuyck was unfairly in
the fire line. It was, so it was submitted,
not uncommon in
interlocutory applications, for the attorney who is conversant with
the issues in the proposed action to depose
to the affidavit on his
client’s behalf. Mr. Biebuyck accordingly did not do so whilst
on a frolic of his own, or for purposes
of becoming personally
involved in the dispute, but rather in the service of his clients and
in accordance with their instructions.
Mr. Biebuyk deposed in the
relevant founding affidavit to which extent he had been involved in
the preparation for the arbitration
proceedings and which facts were
to his knowledge, where common cause, or emanated from APSN’s
discovered documents or versions
advanced. It was also submitted that
APSN in fact suffered no great inconvenience than to read the ex
parte application papers,
research the situs point, and advise the
applicants that the attachments was invalid. But for the instance on
punitive costs and
desire to act in terrorem against Mr. Biebuyck,
they would have suffered less inconvenience than a litigant who in
the normal course
is put to the trouble of considering and
successfully opposing the legal proceedings. Such inconvenience does
not without more
attract costs or on a punitive scale. It is clear
from the founding affidavit that Mr. Biebuyck dealt with the relevant
assets
which they sought to be attached, and the status of the
parties in some detail. It is also denied that the principle in
question,
settled as it may be, was “trite” as claimed by
APSN’s attorney. He himself acknowledged in correspondence that

his legal team had “researched” the point. It was however
conceded that the applicant’s legal team overlooked
the point
nor did the particular Judge hearing the application raise it. The
relevant error made by the applicants in that application
was, it was
submitted, an error reasonably made in the context of immediate other
issues which had to be considered in formulating
the claims against
the defendants, and the ex parte application itself, in which ratio
jurisdictionis had to be identified and
established in the founding
papers. The proposition that the situs of an incorporeal is
determined by settled law is accepted.
However, as I have said, the
proposition that it is “trite law” is disputed. It is not
trite because it is a relatively
obscurely legal principle which
seldom comes into play, and is thus more easily overlooked than
“trite” principles
properly so-called which regularly
come into play in legal proceedings. There is therefore no basis for
a punitive costs order
de bonis propriis.
32.
I
was referred to the correspondence between the particular attorneys
but I do not propose dealing with it. It is clear to me that
they
created an Okovango delta where only a mere waterhole was visible.
They imputed the worst possible motives to each other.
I mentioned in
court during the hearing that I was disappointed when I read the
relevant correspondence between the attorneys even
before the date
for the hearing had been arranged in my capacity as case manager.
33.
It
is of course true that full disclosure of every material fact needs
to be made in ex parte applications but the real question
is whether
any undisclosed facts related to those which “might influence
the court into coming to a decision”. They
do not relate to all
conceivable matters that may be relevant to the subject matter of the
ex parte application. The usual sanction
for non-disclosure of such
facts is that the ex parte order is set aside, but that is also not
even an automatic consequence.
See Hassan AJ and Another v Berrange
NO
2012 (6) SA 329
(SCA) at
paragraphs
13 and 14. It must not be forgotten that applications for attachment
to found and confirm jurisdiction are properly brought
on an ex parte
basis.
See
Tsung v Industrial Development Corporation of SA Ltd
[2006] ZASCA 28
;
2006 (4) SA 177
(SCA) at paragraph 7. In this context the plaintiff had, until
submission to jurisdiction, the right to apply for such an order
and,
if the relevant requirements have been met, is entitled to such an
order. As a matter of principle the defendant has no interest
or
right to notice of preliminary steps taken in anticipation of the
institution of legal proceedings. A plaintiff is not obliged
to
inform a defendant of its intention to issue summons. There is no
equally no reason why it is bound to give notice of an application

for attachment. A defendant’s rights are not affected by the ex
parte nature of the application. The defendant is however
entitled to
apply to set aside an invalid attachment or seek reconsideration of
an attachment order irregularly obtained. I do
not intend to deal
with other issues emanating from the correspondence that seemed to be
on the periphery at best. I have read
and considered the argument in
the context of that correspondence relating to the role of other
defendants and the merits of any
claim in the action.
I
have referred to the tender that was made up to the date of the
delivery of the notice of abandonment. The costs relating to perusal

and consideration of the ex parte application were included in the
tender as well as the costs of the reconsideration application
itself
on the party and party scale. It was therefore submitted that APSN
should have put an end to this aspect of the litigation
by accepting
the tender. The principle that the court discourages parties from
generating substantial costs in order to secure
costs, finds
application a fortiore when the entire exercise now is aimed at
securing special costs orders, ordinary costs having
been tendered.
34.
Costs
are ordinarily ordered on the party and party scale. Only in
exceptional circumstances and pursuant to a discretion judicially

exercised is a party ordered to pay costs on a punitive scale. Even
more exceptional is an order that a legal representative should
be
ordered to pay the costs out of his own pocket. It is quite correct,
as was submitted, that the obvious policy consideration
underlying
the court’s reluctance to order costs against legal
representatives personally, is that attorneys and counsel
are
expected to pursue their client’s rights and interests
fearlessly and vigorously without undue regard for their personal

convenience. In that context they ought not to be intimidated either
by their opponent or even, I may add, by the court. Legal

practitioners must present their case fearlessly and vigorously, but
always within the context of set ethical rules that pertain
to them,
and which are aimed at preventing practitioners from becoming parties
to a deception of the court. It is in this context
that society and
the courts and the professions demand absolute personal integrity and
scrupulous honesty of each practitioner.
See
Kekana v Society of Advocates of South Africa
[1998] ZASCA 54
;
1998 (4) SA 649
(SCA)
at
655-656.
35.
It
is true that legal representatives sometimes make errors of law, omit
to comply fully with the Rules of Court or err in other
ways related
to the conduct of the proceedings. This is an everyday occurrence.
This does not however per se ordinarily result
in the court showing
its displeasure by ordering the particular legal practitioner to pay
the costs from his own pocket. Such an
order is reserved for conduct
which substantially and materially deviates from the standard
expected of the legal practitioners,
such that their clients, the
actual parties to the litigation, cannot be expected to bear the
costs, or because the court feels
compelled to mark its profound
displeasure at the conduct of an attorney in any particular context.
Examples are, dishonesty, obstruction
of the interests of justice,
irresponsible and grossly negligent conduct, litigating in a reckless
manner, misleading the court,
and gross incompetent and a lack of
care.
See
for instance Herbstein & Van Winsen: The Civil Practice of the
High Courts of South Africa (5th Edition by Cilliers and
Others) Vol
2 at p984.
See
also: Ward v Sulzer
1973 (3) SA 701
(AD) at 706 - 707.
36.
It
is my view that none of these requirements have been met in the
present instance and there is no basis to order that the mentioned

attorney pay the costs personally.
37.
I
do agree with Mr. A. Bham SC’s submission that certain general
standards apply in the context of whether or not counsel
are obliged
to bring an authority which precluded the granting of an order sought
to the court’s attention. I agree with
what
Wunch
J said in Ex parte Hay Management Consultants (Pty) Ltd
2000 (3) SA
501
(W) at 506-507: “Had I not known of it, counsel’s
ignorance of its existence and failure to bring it to my attention

would have misled me. While counsel and attorneys may not be expected
to read the law reports as they are published and their contents
or
effect, if they have to present argument on a matter, the least that
is expected of them is to consult the relevant textbooks,
the
consolidated indexes of a noter-up of the ordinary law reports and
the indexes of a noter-up on weekly or monthly reports which
had been
published after the effective of the latest consolidated index and
noter-up. I do not mention their computer services
that are available
to achieve material.”
I
could however add that I do expect counsel and attorneys to read the
law reports as they are published, as they may have a vital
impact on
litigation with which they are busy. Counsel should be up to date
with recent authorities in their field of practice
and authority that
relates to the subject matter at hand when they appear in court.
Obviously, it happens every day, that counsel’s
opponent
mentions an authority of which he (she) had either not been aware, or
had not mentioned during the address or argument.
Similarly the court
mero motu often refers to an authority that was not mentioned by the
parties. This does not per se mean that
one or other counsel was
negligent or acted improperly. It also does not mean that they had an
improper motive per se, or acted
vexatiously. Each case would depend
on its own merits, and in my view no general rule should be laid down
that would have the effect
of limiting in any way counsel’s
duty to act fearlessly but obviously honestly and ethically. As I
have said, in the present
instance, I do not find that either Mr.
Biebuyck or his counsel in the attachment application acted so
irresponsibly, that a special
costs order would be justified against
them personally.
38.
There
is however one other aspect which causes me concern. In the
correspondence it appears that APSN’s attorney specifically

required notice of any attachment application and authorised service
at his office for this purpose. The attachment application
ran to
some 219 pages and Mr. Biebuyck attached the relevant correspondence
in which APSN requested notice of this application.
He even referred
to one of the letters in which ASPN consented to service at the
offices of its attorneys. But he neglected to
say that APSN did so in
order to ensure that it would be notified of any application for an
attachment. The argument of Telkom
and Multi-Links do not deal with
this point specifically, but it does have merit. I think it is the
wrong approach to analyse each
and every criticism of the launching
of the attachment application individually, and then deciding whether
or not it, by itself,
ought to result in a special costs order. In my
view an overall balanced view of the whole of the proceedings and the
relevant
facts, ought to be taken. If a court is then left with that
undefinable feeling, which feeling must however be based on rational

analysis of the facts and legal principles, that something is “amiss”
if I can put it that way, it may justify that
by deciding that the
opposing party ought not to be out of pocket as a result of the
application having been launched. The following
dictum in Net v
Waterberg Landbouers Ko-operatiewe Vereeniging
1946 AD 597
at 607 is
in my view apposite:
“
The
true explanation of awards of attorney and client costs not expressly
authorised by Statute seems to be that, by reason of special

considerations arising either from the circumstances which give rise
to the action or from the conduct of the losing party, the
court in a
particular case considers it just, by means of such an order, to
ensure more effectually than it can do by means of
a judgment for
party and party costs that the successful party will not be out of
pocket in respect of the expense caused to him
by the litigation.”
I
have referred to some of the more material and relevant
considerations. As I have said, I do not intend to deal in this
judgment
with the considerations that I regard as being on the
periphery of the more material relevant facts. In adopting this
overall view
of all the material facts I am of the view that APSN
ought not to be out of pocket in the context of the attachment
application
proceedings.
I
deem it therefore just that the following order be made:
Telkom
SA SOC Limited and Multi-Links Communications Ltd are jointly and
severally liable for the costs of the attachment application
under
case number 26827/13 on the scale of attorney and client, which costs
include the costs of three counsel.
H.J.
FABRICIUS
JUDGE
OF THE HIGH COURT
CASE
NO: 35347/13; 30004/13; 26827/13
HEARD
ON:19 August 2013
FOR
THE APPLICANT/PLAINTIFF: ADV C. Badenhorst SC; with him,
ADV
C.E. Watt-Pringle SC
INSTRUCTED
BY: Routledge-Modise Inc. Sandton
FOR
THE RESPONDENT/DEFENDANT: ADVA. Bham SC; with him,
ADV
S. Miller and ADV C. Steinberg
INSTRUCTED
BY: Knowles Husain Lindsay Inc. Sandton
DATE
OF JUDGMENT: 6 September 2013