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[2008] ZAWCHC 97
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Marcom International Coatings Group (Pty) Limited v Ferreira (10870/2008) [2008] ZAWCHC 97 (12 December 2008)
IN THE HIGH COURT OF SOUTH
AFRICA
(
CAPE
OF GOOD HOPE PROVINCIAL DIVISION)
CASE NUMBER:
10870/2008
DATE
: 12
DECEMBER 2008
In
the matter between:
MARCOM
INTERNATIONAL
COATINGS
GROUP (PTY) LIMITED
APPLICANT
and
WILHELM PHILIPPUS
FERREIRA
RESPONDENT
JUDGMENT
BAARTMAN, A J
:
1. This is an application to set
aside the order of attachment
(the
attachment order)
granted
on 8 July 2008 by Yekiso, J. The applicant sought and obtained the
attachment order on an urgent and ex
parte
basis.
BACKGROUND
2. On 27 November 2007 the
respondent instituted action against the applicant in the Cape Town
magistrate's court, under case
number 25143/07. The respondent
alleged in his summons that he was an
incola
of this Court and
claimed an amount of R50 000 from the applicant. I do not find
it necessary for purposes of this judgment
to deal with respondent's
cause of action.
3.
The applicant is a company duly incorporated and registered in South
Africa and is also a member of the Marmoram Group of companies.
Two
members of the Marmoram Group, namely Marmoram South Africa and
Marmoram Dubai, ceded their claims against the respondent
to the
applicant, in order to enable the applicant to institute a counter
claim against the respondent. On 4 March 2008 the applicant
delivered a counter claim against the respondent based on the ceded
claims.
4. The applicant claimed that
agreements of cession were concluded as follows, (I quote from
applicant's replying affidavit):
"An oral alternatively
tacit, cession agreement was concluded between the Applicant and
Marmoram Dubai simultaneously with
the signing of the resolutions by
Marmoram Dubai and Marmoram South Africa. In concluding the cession
agreements between the
Applicant and Marmoram Dubai, Marmoram Dubai
was represented by David Rhoodie, and the Applicant was represented
by Mike Charles.
Mr Rhoodie was in Dubai at the time
and Mr Charles was in Cape
Town. Marmoram Dubai agreed to cede its claim against
the respondent to the Applicant
and the parties have agreed that if
the Applicant succeeds in its claim against the Respondent, any
funds obtained by the Applicant
from the Respondent will be
off-set against the monies currently owed by the Applicant
to Marmoram Dubai. In the
event that more money is received from the Respondent than is
currently owed by the Applicant to Marmoram
Dubai, the excess funds
will be retained by the Applicant as a loan from Marmoram Dubai to
the Applicant.
Similarly, an oral, alternatively
tacit, cession agreement was concluded between the Applicant and
Marmoram South Africa to cede
its claims against the Respondent to
the Applicant. Both the Applicant and Marmoram South Africa were
represented by Mike Charles
who was in Cape Town at the time. Any
funds received by the Applicant from the Respondent in terms of the
cession, will be used
to off-set amounts owed by Marmoram South
Africa to the Applicant."
5.
The applicant's
counterclaim exceeded the magistrate's court jurisdiction,
therefore the applicant brought an application
to stay the
proceedings in that court to enable it to institute action in this
court. On 28 March 2007 the magistrate at
Cape Town granted an order
in terms whereof the proceedings in that court was stayed for a
period of 60 calendar days.
6.
On
2 April 2007, the respondent's attorneys, informed the applicant, (I
quote from the letter):
"Our instructions are
not to comprehensively respond to the aforesaid, but to advise
that our client is and was
on date of filing of your counterclaim,
not residing either permanently or temporarily in South Africa, nor
is our client further
domicile within South Africa."
7. On 8 July 2008, this court
granted an order (the attachment order referred to above) in terms
whereof it ordered (I quote only
the section relevant to this
application):
"...That the respondent's
claim against the Applicant for payment of the amount of R50 000
(Fifty Thousand Rand) which
forms the subject matter of an
action instituted by the Respondent against the Applicant in the
Magistrate's Court for the
district of Cape Town under Case Number
25143/07 is attached to found or confirm the jurisdiction of the
above Honourable
Court in proceedings to be instituted
by the Applicant against the Respondent for the payment of the
sums..."
ISSUES FOR DETERMINATION
8. The issues for determination
in this application are:
Did the applicant conclude valid
cession agreements with Marmoram Dubai and Marmoram South Africa?
Should this Court confirm the
attachment?
9. I deal below first with the
validity of the agreements of cession and thereafter consider
whether this court should
confirm the
attachment order. I accept that when the order was granted, the
respondent was a
peregrinus.
THE CESSION AGREEMENTS
Evidence of the Cession
10. In general, there are no formal
requirements for a cession to be validly concluded. The applicant
had to prove the agreement
of cession. The applicant alleged that,
when it delivered its counterclaim on 4 March 2008, cession had
taken place.
The respondent did not seriously challenge
the circumstances under which the applicant alleged that this
cession took place.
I am satisfied on the papers before me that the
applicant did prove that it had entered into agreements of cession
with
Marmoram Dubai and Marmoram South
Africa, as set out above.
The Hippo Quarries &
Skjelbreds Rederi Decisions
11. Counsel for the applicant, in
argument, relied on the decision of
Hippo
Quarries v Eardley
1992(1)
SA 867 (A) for the proposition that the applicant
concluded
valid agreements
of cession with Marmoram Dubai and with Marmoram South Africa.
12. Counsel for the respondent,
holding a contrary view, relied on the decision of
Skjelbreds
Rederi & Others A/S v Hartless (Pty) Ltd
1982(2)
710, for the proposition that no valid agreements of cession were
concluded. Both decisions involved the validity
of
cession
agreements.
I first deal with the
Skjelbreds
decision and
thereafter with the matter of
Hippo
Quarries,
in order
to determine whether either finds application in this matter.
13. In the matter of
Skjelbreds
Rederi,
the court
a
quo
granted
an order, on an urgent basis and ex
parte
basis, authorising
the attachments of certain rights vested in the applicants. The
court a
quo,
thereafter,
refused an application to set aside the attachment order. Rabie, JA
delivered the judgment in the appeal against that
refusal.
14. Rabie, JA said the following
about cession at 733 G to H:
"The first point to bear in
mind about the agreement of cession, is the circumstances in which
it was entered into. ft is
common cause between the parties that
Freedom Tramping, being a peregrinus, cannot enforce its claim
against Skjelbreds, also
a peregrinus, in a South African Court,
and that Freedom Tramping itself cannot apply for an
additional order
to found the necessary jurisdiction. It is admitted
by the Respondent, furthermore, that it was in order to
overcome
this jurisdiction difficulty that Freedom Tramping ceded
its claim to the Respondent."
15. Rabie, JA further found that the
cession in that matter was designed to enable an
incola
to bring an action
which the
peregrinus,
the cedent, could
in law not do. This, the Court found was not allowed. The Court at
736 H to C held that:
"In light of all the
aforegoing, I am of the view that the written agreement of cession
is not a true reflection of the real
agreement between the parties
thereto; that there was no real intention to enter into an agreement
of cession; that what is stated
by the parties to have been a
cession was not in form only, designed to enable the Respondent, an
incola of the court's area
of jurisdiction, to institute proceedings
in its name against Skjelbreds; and that the true agreement between
the parties is
one in terms of which the Respondent would act as
Freedom Tramping's mandatory in enforcing Freedom
Tramping's
claim against Skjelbreds. Holding this view of the
relationship between the
parties, I consider it to
be clear that the Respondent cannot claim an attachment
order in order to found jurisdiction
when the mandatory, on whose
behalf it is acting, cannot do so."
16. In the
Hippo
Quarries
matter,
Nienaber, JA found at 875 G that:
"A cession, otherwise valid,
is in my view not assailable on the sole ground that the cessionary
was to collect a debt for
the ultimate benefit of the cedent."
17.
Nienaber, JA distinguished the facts in the
Hippo
Quarries
matter
from those in the
Skjelbreds
Rederi's
matter as
follows, at 875 G to 876 H:
"The present situation is of
course a little more complex. Here the cession was effected, not
merely for collecting purposes,
but to convert an unsecured claim in
the hands of one creditor into a secured claim in the hands of
another. Does it matter?
That question must be reconsidered in the
light of the second case cited by
counsel for the defendant. Skjelbreds Rederi A/S v Hartless (Pty)
Ltd (supra).
In Skjelbreds' case, one
peregrinus (the creditor) ceded its claim against another peregrinus
(debtor) to an incola. This was
to enable the incola to do what the
peregrinus creditor was in law incapable of doing, namely to attach
an asset of the peregrinus
debtor ad fundandam jurisdictionem. As in
the present case it was agreed, though not disclosed in the document
of cession, that
the cessionary would account to the cedent for
anything it managed to recover from the debtor. This Court held that
this transaction
was not a genuine cession because the parties in
truth intended the incola to be the mandatory or nominee (and hence
not a cessionary)
of the peregrinus creditor to enforce the claim
against the peregrinus debtor on the formers behalf. The attachment
was accordingly
set aside.
There are similarities between
Skjelbreds' case and the current one. There, too, the cession was
intended to serve a secondary
purpose for the ultimate benefit of
the cedent; no consideration
was given for it; and the
cessionary was under a duty to account to the cedent for any
proceeds recovered as a result thereof.
But there are significant
differences. Perhaps the most glaring one is this: in that case the
ostensible cession was devised to
circumvent a legal impediment or
disability - a peregrin us is disqualified in law from attaching the
property of another peregrinus
ad fundandam jurisdictionem.
In the present case there was no
legal disability. This cession was devised to capture Hippo's debtor
in the net of plaintiff's
suretyship. In Skjelbreds case the cession
was designed to achieve what, as a matter of law, the cedent was
unable to attain,
i.e. the attachment; here the cession was designed
to achieve what, as a matter of fact, the cedent was incapable of
doing, i.e.
resorting to someone else's suretyship."
18. I am of the view that the
facts in this matter are similar to those dealt with by the court in
the
Hippo Quarries
matter and
therefore the
ratio
of that matter is
applicable to this matter.
Genuine intention to cede and
valid cession
19. In this matter, Marmoram Dubai
and Marmoram South African intended, with the cession of their
claims, to enable the applicant
to institute a counterclaim against
the respondent in the magistrate's court proceedings referred to
above.
20.
The
applicant would account to Marmoram Dubai and Marmoram South Africa,
the cedents, in the event that it collected any money
from the
respondent. A cession, otherwise valid, is not assailable on the
sole ground that the cessionary was to collect the
debt for the
ultimate benefit of the cedent. (See the quote from
Hippo
Quarries
matter
above).
21. Christie, at 466, in the Law of
Contract, 4
th
edition, 2001 at 466 says:
"The Court will investigate
the true nature of an allegedly simulated cession that is carried
out in an attempt to outmanoeuvre
a defendant, but if the intention
to cede is genuine and the motive or purpose is not unlawful,
immoral or against public policy
the cession will be valid."
22.
At
the time of the cession, the respondent was an
incola
of this court.
Therefore, the parties were in law entitled to have concluded the
agreements of cession. In my view, it is not
immoral or against
public policy for members of a group, in this matter the Marmoram
Group, to cede their respective claims to
a member of the same group
to enable that member to institute a counter claim in pending
proceedings. I am of the view, that
the parties to the cession
agreement, genuinely intended to enter into agreements of cession
and that valid agreements of cession
were concluded.
23.
I
am satisfied that the parties to the cession intended to and
achieved a lawful result. The respondent was an
incola
of this court.
Therefore, there was no reason to attempt to subvert the law.
ATTACHMENT TO FOUND OR CONFIRM
JURISDICTION
24.
Having
found, as I did, that the applicant concluded valid agreements of
cession, it follows that the applicant properly
obtained the
attachment order. Erasmus, in the commentary on the Superior Court
Practice at 17 says that:
"(i) Where an incola wishes
to sue a peregrinus and no other ground to exercise jurisdiction
(ratio jurisdictionis) exist,
an attachment is necessary to found
jurisdiction. An incola may apply for attachment ad fundandam
jurisdictionem even if he sues
a cessionary from a peregrinus. The
agreement between the parties must, however, be a genuine cession
reflecting the real intention
of the parties and not a mere
agreement between principal and agent.
(ii) Where an incola wishes to
sue a peregrinus and another ground to exercise jurisdiction (ratio
jurisdictionem exist), an attachment
is still necessary to confirm
and strengthen the jurisdiction already possessed by the court."
[25] I therefore find that the
applicant is entitled to confirmation of the attachment order. I
make the following order:
(a) The application for the setting
aside of the attachment order, granted on 8 July 2008, is dismissed.
(b) The attachment order is
confirmed.
(c) Defendants are ordered to pay
the cost of the application.
BAARTMAN,
A J