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[2006] ZAWCHC 7
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Society of Lloyds v Romahn , Society of Lloyd's v Ilse ; Society of Lloyd's v Ilse ; Society of Lloyd's v Ilse (5108/03 , 5105/03 , 5107/03 , 8588/04) [2006] ZAWCHC 7; 2006 (4) SA 23 (C) (3 March 2006)
IN THE HIGH COURT OF SOUTH AFRICA
(CAPE OF GOOD HOPE PROVINCIAL DIVISION)
Cases No: 5108/03
5105/03
5107/03
8588/04
In the
matters between:
THE
SOCIETY OF LLOYDâS
Plaintiff
and
MARIANDL
LIESELOTTE ROMAHN
Defendant
THE
SOCIETY OF LLOYDâS
Plaintiff
and
HANSJÃRG
ILSE
Defendant
THE
SOCIETY OF LLOYDâS
Plaintiff
and
MARIANNE
ILSE
Defendant
THE
SOCIETY OF LLOYDâS
Plaintiff
and
FRIEDRICH
GEORG ILSE
Defendant
JUDGMENT: 03 MARCH 2006
VAN ZYL
J:
INTRODUCTION
[1] In the four matters under consideration the plaintiff seeks
provisional sentence against the defendants ("M Romahn",
"H
Ilse", "M Ilse" and "F Ilse" respectively)
on the basis of judgments obtained against them in the
High Court of
Justice (Queen's Bench Division, Commercial Court), London, England
(âthe English Courtâ). H Ilse is the son of
F Ilse and his wife,
M Ilse. All the matters arise from substantially the same background
facts and they all raise the same legal
issues, save that in the
matter of F Ilse the defence of prescription has not been raised. The
parties have hence agreed that the
matters should, for the sake of
convenience, be heard together.
[2] Mr A Thompson SC, assisted by Mr J E Joyner, appeared for the
plaintiff in all four matters, while Mr M Seligson SC, with Mr
E
Fagan, appeared for the defendants. The court expresses its
appreciation to them for their particularly useful presentations on
behalf of the respective parties.
[3] The judgments against each of the defendants were, respectively,
the following:
M Romahn: the amount of â¤277,013.79 and â¤500.00 costs, granted
on 22 December 1999 under 1999 folio no. 1194;
H Ilse: the amount of â¤272,001.67 and â¤500.00 costs, granted on
22 December 1999 under 1999 folio no. 1192;
M Ilse: the amount of â¤435,747.73 and â¤55,588,54 interest,
together with agreed or taxed costs, granted on 11 March 1998 under
1997 folio no. 1295;
F Ilse: the amount of â¤521,370.72 and â¤292,646,10 interest,
together with costs summarily assessed in the amount of â¤6,000.00,
granted on 13 May 2004 under 2002 folio no. 868.
[4] In its provisional sentence summons, the plaintiff averred that
the defendants had submitted themselves to the jurisdiction of
the
English Court in terms of a "general undertaking" given by
each to the plaintiff. This had occurred on 13 November
1986 (M
Romahn), 3 November 1986 (H Ilse), and 23 October 1986 (M and F Ilse)
respectively. In terms of clause 2.1 thereof, their
rights and
obligations arising from membership of the plaintiff, the
underwriting of insurance, or any other matter referred to in
the
undertaking, would "be governed by and construed in accordance
with the laws of England". By virtue of clause 2.2 they
irrevocably agreed that the courts of England would have the
exclusive jurisdiction to entertain any dispute or controversy
arising
from or relating to their membership of the plaintiff or the
underwriting of insurance business. They also agreed that a judgment
in any proceedings brought in English courts would be "conclusive
and binding upon each party and may be enforced in the courts
of any
other jurisdiction".
[5] In supporting affidavits in all four matters,
one N P Demery, a solicitor of the High Court of England and Wales
currently employed
in the "legal and compliance department"
of the plaintiff, stated that the respective judgments were "final
and conclusive"
in favour of the plaintiff. Although the
judgments could be taken on appeal, the appeal procedure had been
exhausted or the time
for noting an appeal had lapsed. In terms of
the
Judgments Act
of 1838, he added, interest on a "judgment debt" ran at the
rate of 8%
per annum
.
[6] In their affidavits opposing provisional
sentence, the defendants explained that they were underwriting
members of the plaintiff,
commonly referred to as "names".
They admitted having entered into the "general undertaking"
agreement containing
the cited clauses. They also admitted not having
paid the plaintiff the amounts claimed from them. They denied,
however, that the
plaintiff was entitled to payment of such amounts.
In this regard they relied on a number of defences, three of which
are still relevant.
The first was that the claims in three of the
four matters (excluding the claim against F Ilse) had prescribed in
terms of South
African law. The second was that the recognition and
enforcement of the judgments would be contrary to public policy
(
contra bonos mores
)
in South African law, inasmuch as the defendants were precluded from
raising fraud on the part of the plaintiff as a defence in
English
courts. The third was likewise that enforcement of the judgments
would be against public policy in South African law, in
that the
plaintiff was entitled, in English courts, to rely on a "conclusive
proof" provision regarding the calculation
of the amounts
allegedly owing by the defendants.
[7] The defence of prescription was recently
considered, under similar circumstances, in
Society
of Lloyd's v Price; Society of Lloyd's v Lee.
1
In those matters, to which I shall
refer collectively as "the
Price
case", Mynhardt J held that the
claims in question had indeed prescribed. Although this court is not
bound by the reasoning
of the learned judge, it is, of course, of
strong persuasive value and authority. I shall return to it in due
course.
BACKGROUND
[8] The background facts and circumstances giving
rise to the present disputes have been set forth in the opposing
affidavits of the
defendants, with special reference to the case of
Society of Lloyd's v Fraser and Others.
2
They were likewise dealt with in some
detail in the replying affidavits of the plaintiff, deposed to by Mr
Demery aforesaid. He professed
to have had some twenty-five years of
experience as a solicitor and to have been intimately involved in the
plaintiff's litigation
over the past decade. For purposes of dealing
with the defences raised by the defendants, he provided an overview
of the plaintiff's
operations and the background to what is known as
the Equitas reinsurance contract. I shall deal only with what I
regard as the most
salient aspects thereof for purposes of
considering the relevant issues.
[9] Although the plaintiff may trace its origins
to the seventeenth century, it was formally established only by
Deed
of Association
in 1811 and was
thereafter regulated by the
Lloyd's Act
of 1871, as amended on various occasions prior to its substitution by
the current
Lloyd's Act
of 1982. Over the years it became a very powerful and influential
financial institution in the world of insurance, both in the United
Kingdom and elsewhere in the world of commerce, including the United
States of America and Canada. It also provided investment
opportunities,
attracting a large number of investors who chose to
become underwriting members or, as they have come to be known,
"names".
[10] The increase in the number of names became particularly
prominent during the 1980s, when the plaintiff's insurance market
experienced
an under-capacity arising, for the most part, from
asbestosis claims emanating from the United States of America. It
thereupon recruited
a considerable number of new underwriting members
through the good offices of members' and managing agents, who would
advise them
as to the syndicate or syndicates they should join for
purposes of underwriting. Many of these syndicates and their members,
however,
soon found themselves in serious financial difficulties.
Inasmuch as the plaintiff's relationship with them was not that of
insurer
and reinsurer, the liability in respect of the underwritten
policies would fall squarely on the members of the syndicate which
had
underwritten the policy in question.
[11] To counter the inevitable losses facing them, groups of members
took action and successfully instituted claims for damages against
members' or managing agents and even against auditors who had
attracted liability by their conduct. With a view to averting an
anticipated
avalanche of litigation, the plaintiff developed, by
means of its bye-law 22 of 1995, a "reconstruction and renewal
scheme"
("R&R scheme"). This was directed at
settling claims, by and against its members, by virtue of a mutual
waiver of claims
arising before the end of 1992. In effect it was a
"compulsory reinsurance and run-off scheme" by which
members were required
to "run-off" their outstanding
liabilities and to reinsure them with a newly formed insurance body
known as Equitas Reinsurance
Limited ("Equitas"). Those who
accepted the scheme received the benefit of having their liabilities
discounted by means
of various debt credits. Those who refused to
accept it, while forfeiting these benefits, were still compelled to
reinsure with Equitas
and to pay premiums in respect thereof.
[12] The plaintiff's power to make bye-laws
emanates from section 6(2)(a) of the
Lloyd's
Act
1982. This authorises the
plaintiff's council to "make such bye-laws as from time to time
seem requisite or expedient for the
proper and better execution of
Lloyd's Acts 1871 to1982 and for the furtherance of the objects of
the Society". In accordance
with this power the council made
bye-law 20 of 1983, which empowered it to appoint a "substitute
agent" to take over, wholly
or partially, a member's
underwriting business. Pursuant hereto the council appointed
Additional Underwriting Agencies (No 9) ("AUA9"),
a company
in the Lloyd's stable, as a substitute agent to take over all
non-life insurance business of its members transacted before
the end
of 1992. It was in fact required to give effect to the R&R scheme
by concluding with Equitas, on behalf of each member,
a reinsurance
and run-off contract effective from 3 September 1996. On 2 October
1996 Equitas duly assigned to the plaintiff its
right to receive
premiums payable in terms thereof.
[13] The obligation of the names to comply with
the plaintiff's bye-laws, including bye-law 22 of 1995 and, pursuant
thereto, the
R&R scheme, arises from the previously cited
provisions of the general undertaking
3
given by each of the names on becoming members of the plaintiff. Of
some significance in the present matter are clauses 5.5 and 5.10
of
the R&R scheme, which read as follows:
Each Name shall be obliged to and shall pay his Name's Premium in
all respects free and clear from any set-off, counterclaim
or other
deduction on any account whatsoever including in each case, without
prejudice to the generality of the foregoing, in
respect of any
claim against ERL [Equitas], the Substitute Agent, any Managing
Agent, his Member's Agent, Lloyd's or any other
person whatsoever,
and:
in connection with any proceedings which may be brought to enforce
the Name's obligation to pay his Name's Premium, the Name hereby
waives any claim to any stay of execution and consents to the
immediate enforcement of any judgment obtained;
the Name shall not be entitled to issue proceedings and no cause of
action shall arise or accrue in connection with his obligation
to
pay his Name's Premium unless the liability for his Name's Premium
has been discharged in full; and
the Name shall not seek injunctive or any other relief for the
purpose, or which would have the result, of preventing ERL, or any
assignee of ERL, from enforcing the Name's obligation to pay his
Name's Premium.
5.10 For the purposes of calculating the amount of any Name's Premium
as set out in clause 5.1(b) and the amount of any Name's Premium
discharged by the transfer of assets or the amount realised through
the liquidation of Funds at Lloyd's for application in or towards
any
Name's Premium, the records of and calculations performed by the CSU
[a division or arm of the plaintiff] shall be conclusive
evidence as
between the Name and ERL, in the absence of any manifest error.
LLOYDâS LITIGATION IN ENGLISH COURTS
[14] There has been a spate of litigation in the English courts
arising from actions by the plaintiff, as assignee of Equitas,
against
names who have failed to pay their reinsurance premiums.
These actions have been defended on a number of grounds, including
that
clause 5.5 of the R&R scheme is not enforceable in that it
obliges members to pay the premiums despite allegations of fraud
levelled
against the plaintiff. The English courts have consistently
held against the names for failure to pay such premiums on the basis
that the said clause 5.5 is enforceable and that fraud may be raised
as a separate claim against the plaintiff, but not as a defence.
[15] Thus in two hearings before Colman J in the
case of
Society of Lloyd's v Leighs and
Others
,
4
the learned judge held,
inter alia
,
that allegations of fraud on the part of the plaintiff in inducing
individuals to become names, could not justify rescission of
their
agreement with the plaintiff. Clause 5.5, the "pay now sue
later" clause, was hence valid and binding. An attempt,
on
appeal, to argue a point not raised before Colman J, namely that
clause 5.5 had been introduced in bad faith with the "dominant
purpose" of allowing the plaintiff to escape the consequences of
its earlier fraud, was rejected.
5
[16] In a subsequent case,
Society
of Lloyd's v Fraser and Others
,
6
Tuckey J held that it would be an abuse of process for names to raise
the bad faith allegation as a defence directed at setting aside
the
R&R scheme. This, he stated, was in essence the issue already
disposed of by the Court of Appeal in the
Leighs
case. In refusing leave to appeal
against this decision, the Court of Appeal (
per
Hobhouse LJ)
7
held that clause 5.5 of the R&R scheme was enforceable despite
the allegations of fraud by the names. The bad faith argument
was
without merit in that it provided no basis for distinguishing the
previous decisions. In the absence of some persuasive evidence
to the
contrary, no inference of a "dominant purpose" to defeat
potential claims of fraud against the plaintiff could possibly
be
justified.
[17] Just as the attack by the names on clause 5.5
of the R&R scheme met with outright rejection by the English
courts, so also
was the attempt to invalidate clause 5.10 doomed to
failure. In
Society of Lloyd's v Fraser
and Others
8
Tuckey J dealt with the provisions of this clause in some depth and
stated:
9
The words mean what they say: the records and calculations are to be
conclusive evidence (that is to say the only evidence) unless
there
is a manifest error on the face of those records.
With reference to clause 5.5 the learned judge
continued:
10
My conclusion about the effect of clause 5.5 underlines that what
that clause and clause 5.10 were intended to achieve was cash flow.
Clause 5.10 does not determine what CLSF ["combined litigation
settlement funds"] or PSL ["personal stop loss"]
recoveries a name is entitled to or what his FAL ["funds at
Lloyd's"] are. It is only dealing with appropriation of those
assets in discharge of the obligation to pay premium. The records and
calculations of MSU ["members' services unit"] are
conclusive as to what assets have been appropriated but not as to
what those assets are. A name may still assert his right to those
assets in the same way he may assert any other claim despite clause
5.5.
[18] Although the various challenges directed by names at escaping
their obligation to pay the Equitas premiums were systematically
and
consistently rejected by the English courts, it did not deter them
from instituting counterclaims ("cross-claims")
founded on
alleged fraudulent misrepresentation by the plaintiff. The main
action in which this allegation was raised, was the "Jaffray
proceedings", brought by Sir William Jaffray and other names,
and directed at resolving, as a preliminary issue, what was known
as
"the threshold fraud issue". This related to whether the
plaintiff had made false misrepresentations to the names with
a view
to inducing them to become, or remain, members of the plaintiff,
while it knew that such misrepresentations were false, or
while it
was reckless, careless or unconcerned as to whether they were true or
false.
[19] The Jaffray proceedings were initiated by an
"order for directions" issued on 29 October 1999 by
Cresswell J in the
Commercial Court.
11
Paragraph 8 thereof provided that any present or former names who
wished "to reserve the right to advance allegations that they
were fraudulently induced to become or remain underwriting members of
the Lloyd's market by reason of Lloyd's failure to disclose
the
nature and extent of the market's liability for asbestos-related
claims", should give written notice to the plaintiff's
solicitors "confirming that they wish to become parties to the
litigation". Should they fail to do so they would be precluded
from advancing such allegations without the leave of the Commercial
Court.
[20] The Jaffray hearing on the threshold fraud issue commenced
before Cresswell J on 4 March 2000 and lasted for some three months,
judgment being handed down on 3 November 2000. Although the learned
judge allowed a further issue to be added, namely that relating
to
alleged negligent misrepresentation by the plaintiff prior to 5
January 1983, it was not considered in the judgment in terms of
which
the claims based on fraudulent misrepresentation (the "tort of
deceit") were dismissed. Leave to appeal was refused.
[21] The Court of Appeal subsequently granted
leave to appeal on limited grounds. The appeal, however, likewise
failed. At the end
of their lengthy and extremely comprehensive
judgment, Lord Justices Waller, Robert Walker and Clarke summarised
their conclusion,
in what they called "this difficult and
worrying case", in the following terms:
12
There was a representation in the 1981 brochure that there was in
place a rigorous system of auditing which involved the making of
a
reasonable estimate of outstanding liabilities including unknown and
unnoted losses. (Paragraph 321)
Subsequent brochures contained essentially the same representation,
even though the word 'rigorous' no longer appeared. (Paragraph
323)
The 1981 brochure also contained a representation that Lloyd's
believed that such a system was in place. So did subsequent
brochures.
(Paragraphs 321 and 323)
The globals [global reports and accounts / aggregate results]
contained no relevant representations. (Paragraphs 326 to 343)
The representations in i) and ii) were, during the relevant period,
untrue. (Paragraphs 375 and 376)
The names have however failed to prove that Lloyd's did not believe
the representations to be true or that they either knew that
they
were or became untrue or were reckless as to whether they were true
or untrue. (Section VII)
It follows that the judge was right to determine the threshold fraud
issue in favour of Lloyd's and to hold that Lloyd's is not
liable to
the names in the tort of deceit. It further follows that the appeal
on the merits, which the names had permission to
bring, fails and
must be dismissed.
[22] The plaintiff was hereafter allowed to
enforce the judgments it had obtained against the names, while the
names were given the
opportunity to consider, if appropriate, raising
negligent misrepresentation claims by way of amendments in the
Jaffray
proceedings.
When they did so, the plaintiff opposed the amendments on the basis
of the immunity bestowed on it by section 14(3) of
the
Lloyd's
Act
1982, such immunity being operative
from the date of the Royal assent to the Act, namely 23 July 1982. In
addition it averred that
any such amended claims would be time-barred
in terms of the relevant provisions of the
Limitation
Act
1980.
[23] In
The Society
of Lloyd's v Laws and Others
,
13
Cooke J considered the applications for amendment and held that the
majority of names (also known as category 1 names) should not
be
granted permission to amend. He granted leave in principle, however,
to a smaller group of names (category 2 names) to do so.
This was
subject to their filing properly particularised claims for
consideration by the Commercial Court, and was subject also to
whether or not they escaped being time- barred by virtue of their
falling within the provisions of section 14A of the
Limitation
Act
1980. This section did not apply to
"statutory misrepresentation" and any claim based on a
negligent or statutory misrepresentation
causing loss after 23 July
1982, when the
Lloyd's Act
1982
became operative, was barred by the immunity provision contained in
section 14(3) thereof. In addition the
Human
Rights Act
1998 could not affect vested
rights by being accorded retrospective effect in interpreting the
1982 Act.
[24] Cooke J's ruling meant that those names in
category 2 who were able to overcome the "particularisation
hurdle", would
be left with severely limited counterclaims. In
effect such counterclaims would relate to damages suffered in the
brief window period
between the extended time limit under the
Limitation Act
1980
and
the commencement of the plaintiff's immunity under the
Lloyd's
Act
1982. They would probably be worth
significantly less than the amounts claimed in the relevant statutory
demands.
14
Cooke J then wrapped up the issue of leave to amend by granting such
leave to only seven names (Messrs Allard, Garrow, Hardman, Ranald,
Remillard, Wilkinson and Woyka) and refusing it to all the others.
15
THE PRESCRIPTION ISSUE
General Observations
[25] It is common cause that the plaintiff took judgment in English
courts against the defendants, save F Ilse, more than three years
but
less than six years prior to service on them of the South African
provisional sentence summons issued on the strength of such
judgments. If English law should apply, as submitted by the
plaintiff, the claims on the judgments would not have prescribed or
become
statutorily limited. In the event that South African law
should apply, however, as submitted by the defendants, the claims
would
have prescribed, unless the judgments should be regarded as
"judgment debts", in which event they would not have
prescribed.
[26] At the outset it should be pointed out that,
in terms of South African law, foreign judgments, such as those in
the present matter,
may be enforced by its courts provided there is
compliance with certain prerequisites. This appears from the well
known
dictum
of
Corbett J in
Jones v Krok
:
16
⦠[T]he present position in South Africa is that a foreign judgment
is not directly enforceable, but constitutes a cause of action
and
will be enforced by our Courts provided (i) that the Court which
pronounced the judgment had jurisdiction to entertain the case
according to the principles recognised by our law with reference to
the jurisdiction of foreign courts (sometimes referred to as
'international jurisdiction or competence'); (ii) that the judgment
is final and conclusive in its effect and has not become
superannuated;
(iii) that the recognition and enforcement of the
judgment by our Courts would not be contrary to public policy; (iv)
that the judgment
was not obtained by fraudulent means; (v) that the
judgment does not involve the enforcement of a penal or revenue law
of the foreign
State; and (vi) that enforcement of the judgment is
not precluded by the provisions of the Protection of Businesses Act
99 of 1978,
as amendedâ¦Apart from this, the Courts will not go into
the merits of the case adjudicated upon by the foreign court and will
not
attempt to review or set aside its findings of fact or law â¦
[27] The learned Chief Justice then pointed out that provisional
sentence has long since been a recognised procedure in South African
courts for the enforcement of foreign judgments. Although a foreign
judgment was not a liquid document in the sense of "a written
instrument signed by the defendant or his agent evidencing an
unconditional acknowledgement of indebtedness in a fixed sum of
money",
it was "
prima facie
the clearest possible
proof of a debt due by the party condemned and that the latter must
be taken in law to have acknowledged his
indebtedness in the amount
of the judgment â¦".
[28] On the issue of prescription, it is common cause that, in
English law, judgments founded in contract are subject to a six-year
limitation period in terms of section 5 of the
Limitation Act
1980, which reads:
An action founded on simple contract shall not be brought after the
expiration of six years from the date on which the cause of action
accrued.
The limitation period for an action founded on a judgment is likewise
six years, as appears from section 24 of the Act:
An action shall not be brought upon any judgment after the
expiration of six years from the date on which the judgment became
enforceable.
No arrears of interest in respect of any judgment debt shall be
recovered after the expiration of six years from the date on which
the interest became due.
[29] The questions which arise in this regard are, firstly, whether
the period of prescription (limitation) should be determined
in
accordance with English or South African law and, secondly, if South
African law should be applicable, whether the prescriptive
period is
three or thirty years. The response to the second question depends on
whether the English judgment should be regarded as
"any judgment
debt", as referred to in section 11
(a)
(ii) of the South
African
Prescription Act
68 of 1969
, in which event the
prescriptive period is thirty years. If not, the period is, in terms
of section 11
(d)
of the Act, three years.
[30] A related question arising in this regard is whether
prescription extinguishes the action or simply bars the institution
of
an action to enforce it. In South African law it is the former, as
appears from section 10(1) of the Act, which reads:
Subject to the provisions of this chapter and of chapter IV, a debt
shall be extinguished by prescription after the lapse of the
period
which in terms of the relevant law applies in respect of the
prescription of such debt.
This means that prescription, in South Africa, is
a matter of substantive law and is not simply procedural, as was the
case under
the old
Prescription Act
18
of 1943, section 3(1) of which rendered a right of action
unenforceable without extinguishing it.
17
[31] English law hence differs from its South
African counterpart in that the above cited sections 5 and 24 of the
English
Limitation Act
1980
are indicative of a procedural bar on bringing an action rather than
of extinguishing such action. It is thus clearly, in English
legal
context, a matter of procedural rather than substantive law. The
English authorities are unequivocal in stating that matters
of
procedure are governed by the domestic law of the country where the
relevant proceedings have been instituted (the
lex
fori
). Matters of substance, however,
are governed by the law which applies to the underlying cause of
action (the
lex causae
).
This applies equally to statutes of limitation which bar a remedy as
opposed to those which extinguish a right: the former are
procedural
and the latter substantive. When the remedy is barred, the right
continues to exist although it cannot be enforced by
action.
[32] In this regard it may be appropriate to refer
to the discussion of Rule 17 by Dicey and Morris, in their well known
and frequently
cited work on international private law.
18
This Rule reads
All matters of procedure are governed by the domestic law of the
country to which the court wherein any legal proceedings are taken
belongs (
lex fori
).
In their comment on the position at common law,
19
the learned authors point out that the
lex
causae
and
lex
fori
may differ in respect of their
periods of limitation and in the nature of the limitation provisions.
They illustrate this with reference
to four different situations
which may arise, the fourth of which reads:
If the statute of the
lex causae
is procedural and that of
the
lex fori
substantive, strict logic might suggest that
neither applies, so that the claim remains perpetually enforceable.
A notorious decision
of the German Supreme Court once actually
reached this absurd result. But writers have suggested various ways
of escape from this
dilemma, and it seems probable that a court
would apply one statute or the other.
In this decision,
20
the German Supreme Court (
Reichsgericht
)
upheld a claim on a Tennessee bill of exchange which had prescribed
under both German law (the
lex fori
)
and the law of Tennessee (the
lex
causae
). In doing so the court
classified the German rule as substantive and that of Tennessee as
procedural. According to Dicey and Morris
this decision does not
appear to have been followed in more recent German cases dealing with
the same issue.
[33] This is clearly no simple matter in the
context of the conflict of laws, whether it be approached from the
English or South African
legal point of view. It would, of course, be
a simple exercise to state that, inasmuch as prescription is, in
English law, a procedural
matter, the
lex
fori
, namely South African law, should
be applied. But would, and should, that hold true where the
lex
fori
itself
regards prescription as a matter of
substantive law which will have the effect of terminating the action
and not just barring it?
That is the real question which this court
will have to address.
The Kuhne & Nagel Case
[34] In
Kuhne &
Nagel AG Zurich v APA Distributors (Pty) Ltd
21
the plaintiff, a Swiss company,
claimed an amount owing in terms of a contract which it had concluded
in Switzerland with the defendant,
a South African company. It was
common cause that Swiss law governed the transaction and that, in
terms of article 127 of the Swiss
Code of Obligations
(
Obligationenrecht
),
the claim prescribed after ten years. The defendant pleaded, however,
that, in terms of section 11(d) read with sections 10(1)
and 12(d) of
the South African
Prescription Act
68
of 1969
, the claim had been extinguished within three years after the
debt had become due.
[35] In considering the issue arising from this
conflict of law, O'Donovan J observed as follows:
22
It is settled law that procedural matters are governed by the law of
the place where the action is brought (
lex fori
), whereas
matters of substance are governed by the proper law of the
transaction (
lex causae
). Statutes of limitation merely
barring the remedy are part of the law of procedure ⦠If, however,
they not only bar the remedy
but extinguish altogether the right of
the plaintiff they belong to the substantive law and the
lex
causae
applies â¦
After pointing out that the distinction between
the two kinds of limitation of actions was well established, the
learned judge proceeded
to say:
23
One of the consequences of the view to which South African law is
committed is that, in a case where the statute of limitations of
the
lex causae
is substantive but that of the
lex fori
is
procedural, the
lex fori
will apply if its limitation period
is shorter than that of the
lex causae
.
[36] O'Donovan J was not required to deal with the
situation where prescription in terms of the
lex
causae
is procedural and in terms of
the
lex fori
substantive,
as in the present matter. He made it clear,
24
however, that the extinction or creation of a right by prescription
was a matter of substantive law, which was not affected by the
deeming provision of
section 10(3)
, or by any other provisions, of
the Act. These provisions would have to yield to the clear wording of
section 10(1).
[37] In the case where the statutes of limitation
of both the
lex causae
and
the
lex fori
were
substantive, as submitted by the plaintiff, the learned judge
considered the lack of authority on such issue and observed:
25
Strict logic would suggest that in the case now postulated
substantive statutes of limitation of the
lex causae
should be
applied. Their application would also be in conformity with the trend
of contemporary academic writing, which has become
increasingly
critical of the failure of Courts following Anglo-American conflict
rules to protect rights still in existence in a
foreign country.
On this basis O'Donovan J held
26
that the prescriptive period of the
lex
causae
, and not that of the
lex
fori
, should apply to the plaintiff's
claim. The special plea of prescription hence failed.
[38] The question inevitably arises whether, on
this approach, a court may not be confronted with the dilemma that
the prescription
rules of neither the
lex
causae
nor the
lex
fori
may be applicable. This is known
as the "gap" problem, with its associated problem of
"cumulation". It arises
when two or more conflicting rules
from different legal systems apply to the same aspect of a case, and
yet none of such rules, after
undergoing the normal characterisation
process, is applicable thereto. This was pointed out by Forsyth in
his discussion of the
Kuhne & Nagel
case.
27
He repeated it in his discussion of the
Laconian
matter, where he suggested that the problem arising in this matter
was not "an idle academic puzzle", but was in fact a
prospect that South African courts would have to face whenever the
lex causae
had
procedural, and not substantive, prescription rules.
28
This could lead to the absurd situation that a solution might be
sought which avoids the issue altogether, namely by formulating
an
ad
hoc
rule when the established rules of
international private law fail to provide a solution.
29
The Laconian Case
[39] This brings me to the decision of Booysen J
in
Laconian Maritime Enterprises Ltd v
Agromar Lineas Ltd
.
30
The applicant in that matter was a
Greek ship-owning and operating company and the respondent a
Colombian charterer. The respondent's
New York brokers and the
applicant's London brokers negotiated by telex for a voyage
charterparty, in respect of a ship owned by
the applicant, for the
carriage of grain from Buenos Aires to Barranquilla in Colombia. The
charterparty was drawn up in New York
and was signed and stamped by
the respective brokers in New York and London. It provided for
payment to be made in US dollars to
a London bank and for disputes to
be referred to arbitration in London. A dispute arose and an
arbitration award was duly made. The
applicant filed an action to
enforce the award in the United States District Court for the
Southern District of Alabama. The court
held that the action was
time-barred and fell to be dismissed. The applicant subsequently
sought that the award be made an order
of the South African court in
terms of the
Recognition and Enforcement
of Foreign Arbitral Awards Act
40 of
1977. The respondent raised two special defences, namely prescription
and the
exceptio rei iudicatae
.
The latter was based on the fact that the United States court
aforesaid had already given a judgment on the issue.
[40] After considering the "theoretical
basis" of the rules pertaining to the conflict of law, the
learned judge stated
at the outset
31
that the first step a court should take, in attempting to resolve
disputes arising in private international law, was to characterise,
classify or qualify the relevant rules. The characterisation
generally took place in accordance with the
lex
fori
, although certain academic writers
appear to have favoured a
via media
or
an "enlightened
lex fori
approach",
in the sense that the
lex causae
should
also be given consideration.
32
This led the learned judge to conclude:
33
It must be accepted that it is rules of law which are characterised.
It must be stressed that the characterisation is but a tool in the
process of reasoning in terms of which those rules are interpreted.
Characterisation cannot be regarded as an independent means of
establishing the proper choice of law and one must beware of
indulging
in "dishonest characterisation" in an attempt to
make it so.
Characterisation is part of the process of interpretation and all
interpretation, unless regulated by rules of construction, be it
of
instruments or laws, is always that of the interpreter, the forum.
It is thus not surprising that, in all cases but one in our Courts,
categorisation has taken place according to the
lex fori
.
[41] Booysen J was satisfied
34
that there was no reason for him to depart from what he termed "the
general rule of South African private international law",
namely
that classification is done in terms of the
lex
fori
. He did not, however, deem it
necessary "to state the rule and its qualifications". Yet
he was unequivocal in his viewpoint
35
that the classification of competing rules of prescription,
superannuation, time-barring or limitation was no simple matter. In
this
regard the parties were in agreement that the relevant rules of
the United States were substantive while those of England were
procedural
in character. They were likewise agreed that the rules of
Colombia and South Africa were identical, but they disagreed as to
the
nature and effect thereof. This led the learned judge to say:
36
Although I propose to classify these rules in terms of the
lex
fori
it seems to me that the rules of each of the countries would
be classified by each of the other countries in exactly the same way.
It seems to be settled law that the statutes of limitation merely
barring the remedy are part of the law of procedure whereas they
are
part of the substantive law if they extinguish altogether the right
of the plaintiff ⦠It follows that in this case the
lex fori
's
rules are substantive but that the
lex causae
's rules are
either substantive, if the law of the United States applies, or
procedural, if English law applies. If the
lex causae
is that
of the United States then it follows that the applicant's claim would
be prescribed. If the
lex causae
is English law the matter is
not that clear. It would mean if these general rules were to apply
that the
lex fori
being substantive would not apply but that
the
lex causae
being procedural would also not apply.
[42] Booysen J recognised this as the problem
identified by Dicey and Morris,
37
with reference to the "absurd result" achieved by the
notorious German decision cited by them, and observed:
38
I certainly have no wish to join the German Court in its notoriety
although strict logic might so advise. The reason I will not do
so,
however, is that it seems to me that in such an event I should apply
my own law on the basis that, if I am not enjoined by my
own law to
apply foreign law, I am enjoined by my oath to apply my country's
law. I am, no doubt, influenced to some extent by
Ehrenzweig
's
scepticism and preference for the residual
lex fori
approach
where no formulated or non-formulated rule exists which seems to me
to accord with good sense.
From this it appears that, in the absence of a
rule determining the applicable legal system, Booysen J opted for
South African law
on the basis that he was enjoined to do so by
virtue of his judicial oath to apply such law. In addition he
regarded this "residual
lex fori
approach" as being consistent with
reasonableness in the form of "good sense". The learned
judge found support
39
for this approach in the formulation of Ehrenzweig:
40
In the absence of a pervasive rationalisation of a general regime of
either the
lex fori
or the
lex causae
, and the failure
of any "weighing-of-interests" test, forum law remains the
starting point.
[43] Booysen J gave consideration
41
to the question whether the proper law of the charterparty should be
regarded as United States law, whereas the proper law of the
arbitration and award was English law and hence the
lex
causae
. The answer, he suggested,
42
was dependent upon whether the award novated the rights of the
applicant or not. That would be the case if it created a new right.
If, however, it was obtained merely for purposes of enabling the
applicant to enforce its contractual right to payment, the law of
the
contract would be the
lex causae
and not the law of the country where the award was made. On this
basis he was satisfied
43
that the
lex causae
of
the contract was the governing law.
[44] In what appears to be an
obiter
dictum
,
Booysen J observed
44
that South African law recognised "party autonomy" in
establishing the proper law of the contract. Where the parties had
hence agreed, expressly, tacitly or by implication, upon the law
governing their contract, our courts would give effect to their
intention. If they had not so agreed, the court could determine the
applicable law by imputing an intention to the parties, on the
basis
of what they "ought reasonably to have chosen".
Alternatively it could establish the system of law with which the
transaction in question has "its closest and most real
connection". In practice the different approaches would not lead
to different conclusions. Although the learned judge preferred the
"most real connection theory", he was bound by the
"intention
theory" as applied in the
Efroiken
case.
45
He pointed out, however, that, although it was not simply a matter of
counting the factors in favour of one legal system or the other,
"a
large number of factors pointing one way is a strong indicator".
46
[45] On this basis he held that, in the case
before him, English law was indicated because it was both the
lex
loci contractus
and the
lex
loci solutionis
, while London was the
place where the arbitration had taken place. The claim for
recognition had hence not prescribed by virtue of
United States law.
It had likewise not prescribed by English law.
47
In any event the rules of English law, being procedural, were not
applicable. In these circumstances he proposed to apply the South
African law as the
lex fori
.
Inasmuch as the debtor had not been in South Africa since the debt
became due, the period of prescription had not, in terms of section
13(1)(
d
)
of Act 68 of 1969, been completed. The claim had therefore not
prescribed.
The
Effroiken Case
[46] It may be convenient at this stage to refer
to the case of
Standard Bank of South
Africa, Limited v Efroiken and Newman
,
48
by which Booysen J regarded himself as being bound. In his judgment
De Villiers JA stated the following:
49
The rule to be applied is that the
lex loci contractus
governs
the nature, the obligations and the interpretation of the contract;
the
locus contractus
being the place where the contract was
entered into, except where the contract is to be performed elsewhere,
in which case the latter
place is considered to be the
locus
contractus
. That is, broadly speaking, the rule as it has been
adopted. At the same time it must not be forgotten that the intention
of the
parties to the contract is the true criterion to determine by
what law its interpretation and effect are to be governed ⦠But
that
also must not be taken too literally, for, where parties did not
give the matter a thought, courts of law have of necessity to fall
back upon what ought, reading the contract by the light of the
subject-matter and of the surrounding circumstances, to be presumed
to have been the intention of the parties.
[47] This approach was confirmed by Trollip J in
Guggenheim v Rosenbaum (2)
:
50
According to English and our law the proper law of the contract is
the law of the country which the parties have agreed or intended
or
are presumed to have intended shall govern it; and in the case of a
contract concluded in one country to be performed in another,
then in
the absence of an express term or any other indication to the
contrary, it can be presumed that the proper law is the law
of the
latter (
lex loci solutionis
).
The Improvair Case
[48] Booysen J also had regard to
Improvair
(Cape)(Pty) Ltd v Establissements NEU
,
51
in which Grosskopf J pointed out that the "traditional"
approach of imputing an intention to the parties was no longer
followed in English law. Thus in
John
Lavington
Bonython
and Others v Commonwealth of Australia
52
Lord Simonds stated that "the
substance of the obligation must be determined by the proper law of
the contract, i.e., the system
of law by reference to which the
contract was made or that with which the transaction has its closest
and most real connexion"
(the so-called "
Bonython
formulaâ). This led Megaw LJ, in
Coast Lines Ltd v Hudig & Veder
Chartering NV
,
53
to comment as follows:
I think it is not without significance to note that the connection
which has to be sought is expressed to be connection between the
transaction
, ie the transaction contemplated by the contract,
and the system of law. That, I believe, indicates that, where the
actual
intention of the parties as to the proper law is not
expressed in, and cannot be inferred from, the terms of the contract
(so that
it is impossible to apply the earlier part of the
Bonython
formula, the system of law âby reference to which the
contract
was madeâ), more importance is to be attached to what is to be
done under the contract - its substance - than to considerations
of
the form and formalities of the contract or considerations of what
may, without disrespect, be described as lawyers' points as
to
inferences to be drawn from the terms of the contract.
[49] In this regard Grosskopf J made reference
54
to the discussion of this problem in Van Rooyenâs authoritative
treatise on contract in South African international private law,
in
which the learned author stated:
55
Indien daar geen werklike regskeuse was nie, is dit volgens oordeel
van die skrywer onsuiwer om van 'n vermoedelike bedoeling te
praat.
Afgesien daarvan dat dit 'n
contradictio in terminis
is om 'n
objektiewe faktor (vermoede) naas 'n subjektiewe faktor (bedoeling)
in een asem te besig, is dit verder onrealisties om van
'n bedoeling
te praat as daar geen bedoeling teenwoordig is nie â¦
Dit word aan die hand gedoen dat daar, by gebrek aan 'n regskeuse, 'n
ondersoek van die sosiale funksie van verbandhoudende regsreëls
moet
plaasvind. Sodra die sosiale funksie bepaal is, moet die feitelike
aanknoping van die kontrak met die geldingsgebied van daardie
regsreël ondersoek word en alleen só sal bepaal kan word of die
kontrak binne die geldingsfeer van een regstelsel, ter uitsluiting
van 'n ander, val; steeds moet die engste verbonde regstelsel aldus
bepaal word. Mettertyd sal dit dan ook blyk dat die
belange-swaartepunt
gewoonlik by die een regstelsel (bv. die reg van
die verkoper) val. Op hierdie wyse sal die oplossings mettertyd 'n
eenheidspatroon
aanneem en sal internasionale regsekerheid toeneem.
Daar moet dus nie, in navolging van ons ou skrywers, 'n magiese en
allesoorheersende
betekenis geheg word aan die
locus contractus
of
solutionis
nie. Dit is dan ook te betreur dat ons howe soveel
waarde heg aan die
locus solutionis
. Veel meer waarde kan
volgens skrywer byvoorbeeld geheg word aan die gemeenskaplike
domisilie; die domisiliêre regstelsel het juis
die behartiging van
die kontraktante se belange ten doel en behoort gevolglik oor die
algemeen 'n belangrike rol te speel. Dit is
betekenisvol dat ons howe
al by geleentheid die sosiale funksie van die moontlik toepaslike
regsreël ondersoek het, eerder as om
werktuiglik oor te gaan tot 'n
toepassing van die
lex rei sitae
, die
lex loci solutionis
of die
lex loci contractus
.
Die
lex causae
is dus die gekose regstelsel of, by gebrek aan
'n keuse, die engste verbonde regstelsel.
[50] With reference to these authorities Grosskopf
J concluded:
56
The above authorities demonstrate, in my view, that the modern
tendency is to adopt an objective approach to the determination of
the proper law of contract where the parties did not themselves
effect a choice. From a practical point of view the different
formulations
would however seldom, if ever, lead to different
conclusions. The legal system "with which the transaction has
its closest and
most real connection" (
Bonython
's case
supra
) or "die engste verbonde regstelsel" (
Van
Rooyen
(
supra
)) would in most cases be the one which the
Courts would presume to have been intended by the parties. Since I am
probably bound by
the rules laid down in
Efroiken
's case
supra
it is comforting to know that application of the
Bonython
formula, which, with respect, I prefer, would not lead to a
different result.
The Laurens Case
[51] A refreshingly novel approach to determining
the relevant legal system was that adopted by Schutz J in
Laurens
NO v Von Höhne
.
57
This was a matter concerning
a claim by the plaintiff, in his capacity as liquidator of a company
registered and liquidated in Germany, for payment by the defendant
of
an amount allegedly owed by
him in respect of his contribution to the share
capital of the company. The defendant's plea was that no amount
remained owing. An
alternative plea was that the claim had prescribed
after three years in terms of section 11(d) of Act 68 of 1969. The
plaintiff's
response was that section 195 of the German Civil Code
(
Bürgerliches Gesetzbuch
)
was applicable, in which event the claim prescribed only after thirty
years. The court was hence called upon to characterise the
issue in
order to establish which legal system was applicable thereto.
[52] After stating
58
that "procedural or adjectival questions are ordinarily at least
tried according to the
lex fori
",
Schutz J went on to say
59
that, in cases involving "a multilateral conflict rule",
the nature of the issue must be characterised before applying
the
"connecting factor". Such characterisation, and the
determination of the applicable legal system, however, was
problematic
in that it constituted a "difficult question"
on which there was no direct authority.
[53] With reference to some of the authorities
dealing with the problem, the learned judge observed
60
that the "traditional rule has been that the
lex
fori
characterises according to its own
law without looking further". He referred in this regard,
however, to Falconbridge,
61
who proposed a
via media
approach
in accordance with which the court takes cognisance of both the
lex
fori
and the
lex
causae
before characterising the issue
in question. This means that the conflict rules of the forum should
be construed
sub specie orbis
,
that is, from "a cosmopolitan or world-wide point of view"
which would make it "susceptible of application to foreign
domestic rules". The court is hence required to consider the
"nature, scope and purpose" of the foreign rule in its
foreign legal context. It should then, with reference to the
applicable legal systems, make a "provisional characterisation"
before deciding on a "final characterisation", which has
regard to policy considerations.
62
[54] Schutz J enunciated his understanding of the
via media
approach in the following words:
63
The
via media
approach, it is contended, serves a particularly
useful purpose where a foreign institution is not known to the
lex
fori
. If no regard is had to foreign law, what is likely to ensue
is that the nearest analogue of the
lex fori
is laid on a
Procrustean bed and subjected to a process of chopping off or
stretching ... It is also contended for the
via media
that it
tends to create international harmony and leads to the decision of
cases in the same way regardless of which country's courts
decide
them. If one does not adopt this approach further evils may ensue, so
argues Mr
Du Plessis
[counsel for the plaintiff], namely forum
shopping and even a defendant choosing a forum whose laws best suit
him. (It is not suggested
that the defendant in this case
deliberately did that.)
Various of the academic writers, and also Mr
Du Plessis
in his
argument, welcome the apparent reception of the
via media
by
Booysen J in the
Laconian
case (above), but criticise his
judgment for not really having seen the
via media
through by
his falling back on a residual
lex fori
approach. It is not
necessary for me to go into that. For myself, I accept the
via
media
and propose to follow it through wherever it leads. We may
not dare to let our law stand still. Against this view it has been
argued
by Mr
Tuchten
[counsel for the defendant] that I am
simply not entitled to adopt the
via media
in that I am bound
by earlier decisions. I do not agree and I will say more on this
subject below, but must emphasise now that private
international law
is a developing institution internationally, and that our own South
African private international law cannot be
allowed to languish in a
straightjacket.
[55] The learned judge had no difficulty in
disposing of the various arguments raised against the employment of
the
via media
approach.
He was careful, however, to point out
64
that, even should the
via media
be applied âin a general senseâ, the authorities were clear that
procedural matters should be decided in accordance with the
lex
fori
âbecause there are good reasons
for the ruleâ. He added
65
that ânot everything that appears in a treatise on the law of
evidence has to be classified internationally as adjectival lawâ.
In this regard he observed
66
that, in determining characterisation, the court would be deciding a
question of law, and not just the facts of the case. In a later
case
there might in fact be a different characterisation because different
foreign rules of law might be proved. The difficulty was
that judges
were not always conversant with foreign procedure and evidence,
leading to the perception that this might be the reason
why judges
have been led âto relegate adjectival questions to the
lex
fori
â. The learned judge then
concluded
67
that, in applying the
via media
and for the aforesaid reasons, his decision was that, as a matter of
policy, the
lex fori
should
determine the issue before him.
[56] On the issue of prescription Schutz J
stated:
68
:
Our
Prescription Act, as
interpreted in
Kuhne
âs
case, is classified as substantive so that it is not a matter for the
lex fori
.
German law, even although their prescription laws are only
remedy-barring, characterises them as substantive. I follow the
via
media
. Looking at both the
lex
fori
and the
lex
causae
, the policy decision is in my
view obvious. German law should be applied. In this case there is no
conflict between the two systems.
The situation differs from that in
the
Laconian
case
at 530I-J, so that there is not even a temptation to fall back on the
residual
lex fori
.
I find that the plea of prescription fails.
The Abdul Case
[57] In
Minister of
Transport, Transkei v Abdul
,
69
the court had to consider the
jurisdictional competence of a counterclaim arising from a motor
vehicle collision in the formerly "independent"
Transkei,
with a view to determining whether or not it had prescribed. The
issue was whether the Transkeian legislation relied on
constituted
"statutes of limitation", which simply barred the remedy if
there was non-compliance with certain stated prerequisites,
or
whether such non-compliance extinguished the right of action. In
considering the traditional distinction between substance and
procedure, Alexander J stated
70
that the juridical significance of such distinction was that the
court in which the action was brought would apply the
lex
fori
should the
lex
causae
be procedural. By contrast it
would apply the
lex causae
should it be substantive.
[58] After discussing the "foreign"
(Transkeian) limitation provisions, the learned judge went on to
say:
71
In deciding whether these provisions are substantive or procedural,
it would appear that the Court seized of the matter is enjoined
to
pursue two items of enquiry. First, whether, according to its own
principles of interpretation, they would be held procedural.
Secondly, whether, according to the foreign law where they have their
being, they would be held procedural or substantive â¦
In view of the clearly procedural nature of the Transkeian
provisions, the court held that the
lex fori
, being South
African law, should apply, in which event the special plea of
prescription fell to be rejected. Significantly Alexander
J did not
appear to consider the effect of the substantive nature of the
currently applicable South African prescription provisions.
The Price Case
[59] In the
Price
case
72
Mynhardt J accepted that the limitation of actions or prescription is
procedural in English law and substantive in South African
law. The
underlying agreement or general undertaking signed by the parties,
however, was, in English law, substantive and was hence
governed by
the
lex causae
.
In terms of the
lex causae
,
the actions would have become unenforceable after six years and would
not have prescribed. If the
lex fori
should apply, however, the actions
would have been extinguished, and hence prescribed, after three
years.
73
[60] Counsel for the plaintiff invited Mynhardt J
to follow the approach advocated by Schutz J in the
Laurens
case.
74
The basis of the argument was that English law was the proper law of
the contract and that the English law relating to limitation
should,
pursuant to the provisions of the English
Foreign
Limitation Periods Act
of 1984, be
classified as substantive. Mynhardt J held
75
that the said Act was irrelevant in that it related to foreign
limitation provisions. The learned judge then distinguished
76
the
Laurens
case
on the basis that, in that case, prescription was a matter of
substance in both the
lex causae
and
lex fori
.
There was hence no conflict between the two legal systems and the
"policy decision" made by Schutz J was, therefore, "easy
to make".
[61] With this background Mynhardt J then
proceeded to say:
77
Strictly speaking, and logically, the South African law relating to
prescription cannot apply in the present matters because prescription
in terms of the
lex fori
, the South African law, is a matter
of substance and not procedure. The English law, the
lex causae
,
also cannot apply because the
lex causae
regulates only
matters of substance and a South African court will not apply foreign
rules of procedure in a matter to be adjudicated
upon by it. There
is, therefore, a gap and possibly no one system of law will apply.
The learned judge then opted for the residual
lex
fori
approach followed in the
Laconian
case.
78
namely that he was enjoined by his judicial oath and by "good
sense" to apply South African law where no rule determining
the
applicable legal system existed.
[62] Mynhardt J also found support in the
Abdul
case
79
in which, as he saw it, "the Court was faced with the same
problem that this Court is faced with". He then summarised the
findings in that case as follows:
80
In terms of the
lex fori
the
Prescription Act 1969
would not
apply because it is a matter of substance and not procedure. In terms
of the
lex causae
prescription was a procedural matter. Those
rules could therefore not be applied by the South African Court
hearing the matter. The
Court refused to apply the foreign law
relating to prescription or, more correctly put, relating to an
expiry period which was also
held to be procedural in nature.
[63] This led Mynhardt J to conclude
81
that he should apply South African law, in which event the
plaintiff's claim for provisional sentence against the defendants had
prescribed. He rejected
82
the plaintiff's suggestion that the defendants had "implicitly
waived" the right to rely on South African prescription
rules by
consenting, in the general undertaking, to the enforcement of an
English judgment in a court of any other jurisdiction.
[64] Mynhardt J likewise rejected
83
the plaintiff's contention that the English judgments should be
regarded as "judgment debts" which would prescribe after
only thirty years.
Section 11
(a)
(ii)
of Act 68 of 1969 did not, in his view, include a foreign judgment,
inasmuch as it merely constituted a cause of action, which
was not
directly enforceable. Only if it were made an order of a South
African court would it be regarded as a judgment debt in terms
of the
Act.
84
Submissions on behalf of the Plaintiff
[65] In his argument on behalf of the plaintiff Mr
Thompson discussed the aforesaid authorities, both English and South
African, fully
and submitted that this court should follow the
via
media
approach advocated by Schutz J in
the
Laurens
case.
85
In doing so it should take into account both the
lex
fori
and the
lex
causae
, and policy considerations would
dictate the application of English limitation law.
[66] Mr Thompson argued further that, after the
passing of the English
Foreign
Limitation Periods Act
1984, South
African law should classify English limitation provisions as
substantive. The limitation provisions of the
Limitation
Act
1980, including section 24 thereof,
he submitted, have in fact always been substantive "in the South
African sense". Although
English law traditionally classified
statutes of limitation as procedural, the blurring of the distinction
between rights and remedies
had changed this. If the
via
media
approach should be followed,
policy considerations would once again prompt the application of the
English law of limitation.
[67] In the alternative Mr Thompson submitted
that, by agreeing, in clause 2.2 of their general undertaking,
86
that a judgment obtained in an English court "may be enforced in
the courts of any other jurisdiction", they had "implicitly
waived" any right to rely on foreign limitation or prescription
rules.
[68] In the further alternative, Mr Thompson
argued that, even if the South African prescription rules should
indeed apply, the claims
of the plaintiff were based on "judgment
debts" which prescribed only after thirty years. He relied in
this regard on
E A Gani (Pty) Ltd v
Francis
,
87
where it was held that a judgment, including that of a foreign court,
novated the former debt, thereby creating a new debt on which
a suit
could be brought. He found further support for this submission in the
MV Ivory Tirupati
case,
88
in which it was held that a judgment not only "reinforced and
strengthened" an original cause of action, but could also
create
"a new and independent cause of action enforceable between the
parties in another court". Accordingly, he submitted,
the
present cause of action was based on a "judgment debt" and
not on the underlying cause of action. It had hence not
prescribed.
Submissions on behalf of the Defendants
[69] In his argument for the defendants, Mr
Seligson likewise dealt fully with the authorities discussed above
and submitted that
this court should follow the decision of Mynhardt
J in the
Price
case.
89
He found further support in the affidavit of Mr L S Kuschke, an
advocate of this court and a barrister of England and Wales, who
opined that English common law generally classified laws of
limitation as procedural rather than substantive.
90
This was also the way in which South African law, as the
lex
fori
, classified the English limitation
regime.
[70] The
via media
approach, Mr Seligson submitted, was of
no assistance where the
lex fori
and
the
lex causae
came
to different conclusions regarding classification, because then there
was no
via media
.
This situation was different from that in the
Laurens
matter
91
since there was in fact no conflict between the applicable systems of
law. In any event Schutz J's judgment on the application of
the
via
media
was
obiter
in regard to conflict situations such
as that in the present matter. In this regard he submitted that
Booysen J's approach in the
Laconian
matter
92
was, for reasons of policy, the correct one. It was far better, he
suggested, for a court to apply the law it knows than that which
it
does not know. In many instances it would be almost impossible to
apply foreign procedural rules, which tended to involve the
exercise
of an inherent jurisdiction and were not readily ascertainable on the
basis of expert evidence. Booysen J was hence justified
in falling
back on his oath of judicial office, by which he was enjoined to
apply South African law on a residual basis.
[71] On the question whether or not any of the
foreign judgments in the present matter constituted a "judgment
debt" in
terms of section 11(
a
)(ii)
of the
Prescription Act
68
of 1969
, Mr Seligson submitted that it could not be so. It was the
clear intention of the legislature that a "judgment debt"
was
restricted to a judgment of a South African court and did not
include that of a foreign court. A foreign judgment constituted a
cause
of action for the institution of legal proceedings and was not
executable in South Africa until it had been confirmed by a judgment
of a South African court. It was based on an implied acknowledgement
by the defendant of his indebtedness to the plaintiff in the
amount
of the judgment, which stood only as
prima
facie
evidence of such indebtedness. It
could be attacked only on certain limited grounds not available to an
unsuccessful defendant in
respect of a final judgment obtained in a
South African court.
93
[72] Mr Seligson rejected Mr Thompon's argument
that the exclusion of a foreign judgment would render the term
"judgment debt"
otiose. It was, he submitted, based on the
assumption that the term could not apply to a South African judgment
because the appropriate
remedy was enforcement rather than the
institution of further proceedings. This assumption was wrong in that
it did not take account
of the fact that it was possible to sue on a
South African judgment. Thus the plaintiff who had failed to obtain
satisfaction of
a judgment debt by way of issuing a writ of
execution, might institute sequestration or contempt of court
proceedings. Indeed,
section 11(
a
)
of the Act gave him thirty years within which to continue his efforts
to obtain satisfaction of a judgment debt through the execution
process. In this regard, Mr Seligson submitted, a distinction should
be made between a judgment debt and a judgment as such. A foreign
judgment became a judgment debt only once a South African court had
granted provisional sentence in favour of the defendant. Thereafter
execution could be levied to recover such judgment debt.
94
For these reasons, Mr Seligson submitted that the plaintiff's claims
(save that against F Ilse) had prescribed.
Consideration of the Prescription Issues
[73] When the authorities and arguments referred to above are
considered, it is clear that there is no straightforward answer to
the various issues raised by the parties. Both the applicable
statutory provisions and the relevant jurisprudence in English and
South African law must be carefully scrutinised with a view to
determining the meaning and ambit of the provisions in question.
Thereafter
the court is required to classify, categorise or
characterise such provisions in accordance with existing rules and
principles. If
the facts and circumstances of the particular case are
such, however, that the existing rules and principles do not provide
an obvious
classification, category or characterisation, a different
approach will have to be followed. The court will then have to decide
on
a policy approach which will achieve a just, fair and reasonable
result in the light of all such facts and circumstances.
[74] On the face of it the meaning of section 5 of
the English
Limitation Act
1980
95
is unequivocal. An action based on (simple) contract is time-barred
in that it may not be instituted more than six years after conclusion
of the contract, being the date on which the relevant cause of action
came into existence. The same time limit applies, in terms
of section
24 of the Act, to an action based on a judgment. No action may be
instituted on such judgment more than six years after
it has become
enforceable.
[75] I am quite satisfied that, in accordance with
the weight of English authority, these time-bars or limitations must
be characterised
as procedural in that the relevant remedy is
blocked, but not extinguished. This is in contrast with the
corresponding South African
provisions set forth in sections
11(
a
)(ii)
and 11(
d
),
read with
section 10(1)
, of the
Prescription
Act
68 of 1969
. A judgment debt is
extinguished by prescription after the lapse of thirty years from the
date on which it becomes enforceable, whereas
all other debts are
extinguished after the expiry of three years from the time the
relevant cause of action arises. This is a matter
of substantive law.
[76] It follows from these findings that this
court, as was the court in the
Price
matter, is confronted with a unique
situation. Whereas the relevant South African law of prescription,
being the applicable domestic
law (the
lex
fori
),
is
substantive, the English limitation law, being the law where the
underlying contract was concluded (the
lex
causae
), is procedural. When the
English rule, that all matters of procedure are governed by the
lex
fori
,
96
was devised, it was probably not envisaged that, in the
lex
fori
,
the
limitation or prescription of actions might be a matter of
substantive law and not of procedure. The compiler or compilers of
the rule would probably have been aghast if they had been apprised of
the fact that a judgment of the English Commercial Court would
be
extinguished, and not be simply time-barred, in terms of the
lex
fori
. They could not be blamed for
assuming that limitation provisions in the
lex
fori
would also be procedural, as in
English law, in which event the application of the
lex
fori
would not be problematic. The
question inevitably arises whether, if such a situation had indeed
been envisaged, the rule would not
have been qualified to read that
the
lex fori
would
be applicable to procedural matters, provided they are also
procedural in such forum. If not, such matters should revert to
the
lex causae
.
[77] Inasmuch as no such qualification was
effected, it is for this court to decide how it should fill the
lacuna
,
void or "gap" arising from the absence of any rule or
principle governing the particular situation. Quite clearly it cannot
simply be left in limbo, as would eventuate if neither South African
nor English law should apply and it should be held that the
claim in
question is not subject to any form of limitation or prescription.
That would give rise to the absurd situation that the
claim would
remain perpetually enforceable, as appears to have been held in the
notorious German decision adverted to previously.
97
[78] In the
Kuhne &
Nagel
case
98
O'Donovan J, in my respectful view, adopted an eminently practical
approach in holding that statutes of limitation which extinguish
a
plaintiff's right altogether belong to substantive law, to which the
lex causae
applies.
The learned judge was not required to deal with a situation such as
the present, where prescription is a procedural matter
in the
lex
causae
and a substantive matter in the
lex fori
.
His approach to the situation where both the
lex
causae
and
lex
fori
are substantive, however, would
appear to favour the
lex causae
in
the present case.
[79] The
Laconian
case
99
was
an important step in the right direction but, in my respectful view,
Booysen J missed a golden opportunity to develop the existing
law in
an innovative way. The learned judge took cognisance of academic
opinion favouring a
via media
,
by virtue of which not only the
lex
fori
, but also the
lex
causae
,
would be given consideration in
characterising the relevant rules of law. Yet, rather than follow the
via media
,
he held that there was no reason for him to depart from the general
rule of South African international private law, namely that
classification should be effected in terms of the
lex
fori
. This prompted him to adopt an
ad
hoc
or "residual
lex
fori
"
approach, in terms of which he fell
back on his judicial oath which enjoined him to apply South African
law in the absence of any
rule determining the applicable legal
system. This, in my respectful view, was a convenient rather than a
sensible, reasonable or
rational way to fill the gap or void caused
by the absence of such rule.
[80] In his discussion of "the proper law of
the contract",
100
Booysen J appears to have accepted that the determination thereof
should be made either in accordance with the express or imputed
agreement of the parties, or by virtue of establishing the legal
system most closely connected with the underlying transaction.
Although
he expressed a preference for the "most real connection
theory", he considered himself bound by the "intention
theory"
advocated in the
Efroiken
case.
101
[81] In the
Improvair
matter
102
Grosskopf J found himself in a similar position. Despite referring
with approval to the
Bonython
formula
and to Van Rooyen's approach to the legal system most closely
connected to the transaction in question,
103
the learned judge likewise considered himself bound by the
Efroiken
case. He opined, however, that the most
closely connected legal system would, in most cases, be that which
the courts would presume
to have been intended by the parties.
[82] I respectfully associate myself with the
preference expressed by Booysen J, Grosskopf J and Van Rooyen for
determining the
lex causae
,
as the "proper law of the contract", by establishing which
legal system is most closely connected to the transaction in
question. This is not only in line with the
Bonython
formula, which appears to have been
unequivocally accepted in English law, but it is also logical,
realistic and reasonable. It is
indeed a contradiction in terms to
speak of an "assumed intention", as pointed out by Van
Rooyen, in that an assumption
is usually determined objectively
whereas an intention occurs as a subjective expression of a person's
will. The
Efroiken
judgment
is, of course, binding on this court, but I am of the respectful view
that, if the Supreme Court of Appeal should consider
this matter
anew, it may well be persuaded to follow the
Bonython
approach.
[83] Support for a more enlightened and flexible
approach in considering issues of this nature has come with eminent
clarity from
the innovative and creative judgment of Schutz J in the
Laurens
case.
104
Although he accepted that it was no simple matter, the learned judge
had no hesitation in applying a "connecting factor"
after
characterising the nature of the issue. Despite having little or no
precedent to guide him, he fearlessly applied the
via
media
as reflecting a universal point
of view. This would enable him to take cognisance of the nature,
scope and purpose of the foreign
rule in its appropriate legal
context and with regard to relevant policy considerations. It would,
one may add, also avoid artificial
attempts to fit the issue into a
"pre-fabricated" or preconceived form or structure. In this
way he would ensure that private
international law, which was
experiencing widespread development, would not stagnate or "languish
in a straightjacket".
For these reasons he followed the
via
media
in considering both the
lex
fori
and the
lex
causae
before coming to a reasoned
policy decision.
[84] I respectfully associate myself with Schutz
J's approach. In a case like the present it is essential to adopt a
via media
approach. This means that the court must have regard to both the
lex
fori
and the
lex
causae
in considering whether the South
African prescription regime or the English limitation regime should
apply to the plaintiff's claims
against three of the four defendants.
It is clear that English law is the
lex
causae
in that it is the legal system
with which the underlying transactions between the parties have their
closest connection. It follows
that the rule relegating matters of
procedure to the
lex fori
,
being South African law, must be critically examined and appraised
before simply applying it to the facts of this case. In this
regard I
accept that limitation in English law is procedural in that it simply
bars the enforcement of an action without extinguishing
the debt it
is seeking to enforce, while prescription in South African law is
substantive because it extinguishes the debt on which
the action is
based.
105
[85] In the present matter the parties agreed that
their rights and obligations would be governed by and construed in
accordance with
English law.
106
This means that they also agreed that the rule, requiring procedural
matters to be dealt with by the
lex
fori
,
would apply. What they did not agree
upon, in that they clearly could not have applied their minds to it,
was that, in terms of South
African prescription law, their
respective claims would be extinguished by the effluxion of time. As
mentioned previously,
107
the creators of the English rule were probably blissfully unaware of
the fact that a debt, which was time-barred in English limitation
law, would be extinguished should the
lex
fori
be applied. It can scarcely be
imputed to the parties that they intended such a result.
[86] This brings me to the question whether, in
such circumstances, the rule might have been qualified to the extent
that, if a matter
of procedure in the
lex
causae
should
be a substantive matter in the
lex
fori
, it would revert to the
lex
causae
. In my view justice, fairness,
reasonableness and policy considerations dictate that this question
be answered positively. There
is, in my respectful view, no room in
our law, or in private international law generally, for a convenient
ad hoc
solution
such as that held in the
Laconian
and
Price
matters.
108
I am unable to accept that my judicial oath requires me to adopt a
"residual
lex fori
"
approach when the relevant rules do not provide a ready solution to
the issue I am required to resolve. It is not, in my respectful
view,
consonant with legal logic or "good sense".
[87] From these considerations it follows that I
must respectfully differ from the approach by Booysen J in the
Laconian
matter
and Mynhardt J in the
Price
case.
In deciding on an
ad hoc
resolution of the issue, the learned judges failed, in my respectful
opinion, to give full consideration to the effect of the substantive
nature of the South African prescription regime.
[88] I can likewise not agree with the basis on
which Mynhardt J distinguished the
Laurens
case, namely that, because there was no
conflict between the opposing legal systems, the policy decision was
"easy to make".
This did not take account of the
via
media
approach followed by Schutz J and
the need to develop the "residual
lex
fori
" approach in order to make
provision for circumstances such as those existing in the present
case. More specifically it did
not take account of the important fact
that the South African prescription regime is substantive, thereby
causing the relevant debts
to be extinguished rather than simply
time-barred, as is the case in the English limitation regime. The
Abdul
case
109
does not, in my respectful view, support Mynhardt J's approach,
simply because it did not deal with the effect of the substantive
nature and character of the relevant South African prescription
provisions.
[89] In view of these considerations I must
respectfully conclude that Mynhardt J was wrong, in the
Price
case, to hold that the claims in
question had prescribed in accordance with South African law as
lex
fori
. Inasmuch as the relevant South
African
provisions relating to prescription are
substantive, South African law, as the
lex
fori
, cannot be applicable in the
present matter and the issue must accordingly be dealt with in terms
of the relevant limitation provisions
of English law, as the legal
system most closely connected with the underlying cause of action and
hence the
lex causae
.
In the event the plea of prescription raised by M Romahn, H Ilse and
M Ilse in respect of the plaintiff's claims against them, must
fail.
[90] It follows that it is not necessary for me to
deal with the effect of the English
Foreign
Limitation Periods Act
1984 on the
characterisation of English limitation law, or with the question
whether the defendants had "implicitly waived"
the right to
rely on South African prescription rules. If I should have felt
constrained to deal with these matters, however, I would
have
strongly inclined to associating myself with Mynhardt J's outright
rejection of the arguments raised in this regard by counsel
for the
defendants. There is simply no merit in them.
[91] It is, of course, likewise not necessary to
deal with the question whether an English judgment should be regarded
as a "judgment
debt" for purposes of section 11(
a
)(ii)
of Act 68 of 1969. If I should be held to have erred, however, in
holding that South African law is not applicable in the present
case,
I would find myself in respectful disagreement with Mynhardt J's
finding that a foreign judgment cannot be regarded as a "judgment
debt" for purposes of the said section.
[92] It is quite correct that a foreign judgment
is not directly enforceable, although it constitutes a cause of
action which will
be enforced by our courts provided it complies with
the requirements set forth in the case of
Jones
v Krok
.
110
It is likewise
correct that a judgment may be regarded as having
novated the original or underlying debt, thereby creating "a new
and independent
cause of action", as held in the
Gani
and
MV
Ivory Tiraputi
cases.
111
It may be accepted, as argued by Mr Seligson,
112
that a foreign judgment is not executable in South Africa before
being confirmed, in provisional sentence proceedings, by a judgment
of a South African court. That does not, however, make it less a
judgment than any judgment emanating from this court. The authorities
relied on by Mr Seligson in this regard do not, in my view, support
his contention that the concept of "judgment debt"
excludes
a foreign debt. On the contrary, in the case of
Joosab
v Tayob
the position was stated with
great clarity by Bristowe J in the following terms:
113
I do not think it is possible to draw any distinction between the
judgment of a foreign court and the judgment of a domestic court.
I
think that the rule is that the judgment of any court constitutes a
debt. It novates the original debt, and substitutes a new one,
which
may itself, at common law, be made the subject of a new action in
another court.
[93] The
Primavera
case
114
does not, I would respectfully suggest, support Mynhardt J's decision
in this regard. In that matter it was held
115
that an arbitrator's award acquired the status of a judgment debt
only when it was made an order of court. Once that had happened
it
could be enforced like any other judgment debt. On the strength of
this principle Mynhardt J held
116
that there was "no difference in principle between an
arbitrator's award and a foreign judgment". This cannot, with
respect,
be correct. An arbitrator's award differs
toto
caelo
from a judgment of a court,
whether such judgment emanates from a South African or a foreign
court.
[94] In the event I am satisfied that the English
judgments in the present matter are judgment debts for purposes of
section 11(
a
)(ii)
of Act 68 of 1969. The claims in question have hence not prescribed
in terms of English or South African law.
THE FRAUD ISSUE
[95] As an alternative to prescription, the
defendants raised the defence that enforcement of the English
judgments by this court
would be unconstitutional and contrary to
public policy. This was because the English courts had failed to
apply the principle underlying
the right of an affected party to be
heard in legal proceedings (
audi alteram
partem
) by precluding them from raising
the defence that the plaintiff had induced them, by fraudulent
misrepresentation, to become underwriting
names.
[96] In his argument on behalf of the defendants Mr Seligson
submitted that, by precluding the defendants from raising fraud as a
defence against the claims of the plaintiff, the English courts had
effectively allowed the plaintiff to contract out of its own
fraudulent conduct. He accepted that this court would not, in
general, enter into the merits of the case adjudicated upon by the
foreign court, but this would not prevent it from investigating
whether or not the recognition and enforcement of the foreign
judgment
was contrary to public policy or unconstitutional. In this
regard he relied on section 34 of the Constitution, which provides:
Everyone has the right to have any dispute that can be resolved by
the application of law decided in a fair public hearing before
a
court or, where appropriate, another independent and impartial
tribunal.
He relied also on sections 165(1) and (2), which read thus:
The judicial authority of the Republic is vested in the courts.
The courts are independent and subject only to the Constitution and
the law, which they must apply impartially and without fear,
favour
or prejudice.
[97] On the applicability of section 34, Mr
Seligson referred to the
De Beer
case
117
in which Yacoob J stated:
It is a crucial aspect of the rule of law that court orders should
not be made without affording the other side a reasonable opportunity
to state their case.
This, Mr Seligson submitted, established the link
between section 34 and the common law right of
audi
alteram partem
, which was the essence
of a fair trial. Our courts would not enforce a foreign judgment
obtained in contravention of the principles
of natural justice, in
particular the right to be heard. By preventing the defendants from
raising fraud as a defence, he suggested,
the English courts had
denied them this right and had hence acted in conflict with the
principles of natural justice.
[98] Mr Seligson submitted further that, by
holding the defendants to the provisions of clause 5.5 of the R&R
scheme,
118
the English courts had accorded recognition to "an undertaking
by which one of the contracting parties binds himself to condone
and
submit to the fraudulent conduct of the other".
119
This would be regarded by a South African court "as
contra
bonos mores
and so offensive to the
interests of society as to render it illegal and hence void".
120
[99] In his argument on behalf of the plaintiff Mr
Thompson submitted that the court should give effect to the intention
of the parties
as evinced in their agreement. A court would not hold
any part thereof as contrary to public policy without taking into
account socio-economic
considerations relating to freedom of contract
and commerce. He referred in this regard to what Smalberger JA said
in the
Sasfin
case:
121
In grappling with this often difficult problem it must be borne in
mind that public policy generally favours the utmost freedom of
contract, and requires that commercial transactions should not be
unduly untrammelled by restrictions on that freedom.
[100] When considering the requirements of public
policy, Mr Thompson suggested, the court should have regard to the
balance of justice
and convenience. In the context of the conflict of
laws the concept of public policy should be narrowly construed for
purposes of
our internal, domestic law. Only if the enforcement of a
foreign judgment should be fundamentally contrary to the principles
of our
law would a South African court refuse to enforce it.
122
None of the issues raised by the defendants, he said, passed muster
on this score.
[101] Mr Thompson submitted further that, although
the defendants had been precluded from raising fraud as a defence in
terms of clause
5.5 of the R&R scheme, they were at liberty to
bring a separate or independent counterclaim based on fraud or
negligence. A so-called
"no set-off" clause was a standard
provision in various kinds of contract,
123
its main object being to ensure cash-flow for purposes of settling
claims. Bingham MR explained this with eminent clarity in
Arbuthnott
v Fagan and Others (No 2)
:
124
The duty of the name to pay sums required by the
agent without prevarication or deduction or delay is stated clearly
and unequivocally.
That reflects the overriding need, acknowledged on
all sides, to ensure that funds are available for the prompt
settlement of the
claims of those who have insured or reinsured at
Lloyd's.
Hoffmann LJ added:
125
The purpose of clause 9 is clear and
uncontroversial. It is designed to insulate the liability of the name
to provide whatever funds
are necessary for the underwriting business
from the state of accounts between himself and the agent. Such
insulation is necessary
for the purposes of enabling the Lloyd's
market to meet its liabilities. Otherwise the flow of funds needed to
pay policyholders'
claims may be clogged by disputes within Lloyd's
between names and their agents, to the detriment of the market as a
whole.
[102] Mr Thompson submitted that, inasmuch as
these
dicta
pre-dated
the R&R scheme, they confirmed that clause 5.5 of such scheme was
a usual, valid and essential provision for purposes
of ensuring the
proper operation and supervision of the insurance market. Without it,
he suggested, the plaintiff could simply not
function properly or
effectively.
126
The clause was not intended to protect a wrongdoer and did not
affect the right of a name to institute an action for damages in
delict (tort), or for any other relevant relief, against such person.
[103] It should not be lost from sight, Mr
Thompson stressed, that the defendants had, in their respective
general undertakings,
127
agreed that English law would govern all disputes between them and
the plaintiff. They could not now be heard to say that the various
decisions of the English courts, in respect of the binding effect of
clause 5.5 of the R&R scheme, were in conflict with South
African
public policy.
[104] Significantly, Mr Thompson pointed out,
there were similar provisions in South African legislation, such as
the limitation provisions
of section 40(5) of the
Value
Added Tax Act
89 of 1991. In his
judgment in the
Metcash Trading
case,
128
Kriegler J held that such provisions were not in conflict with
section 34, read with sevction 36, of the Constitution. He pointed
out that the principle of "pay now, argue later" was
"accepted as reasonable in open and democratic societies based
on freedom, dignity and equality as required by section 36". On
this basis, Mr Thompson submitted, the limitation of the rights
of
the defendants in terms of clause 5.5 of the R&R scheme was
reasonable and justifiable, having regard to the useful and
legitimate
purpose which it served.
[105] Finally Mr Thompson argued that the
defendants had all availed themselves of the opportunity to pursue a
counterclaim for fraud
against the plaintiff. They had been
unsuccessful parties to the
Jaffray
proceedings, in which the Court of
Appeal held that, although there had been a misrepresentation, it had
not been fraudulent.
129
It gave that decision, which was final and binding, on 26 July 2002,
prior to the plaintiffâs instituting provisional sentence
proceedings against the defendants in the present matter.
[106] I have considered the arguments for the defendants carefully
and have no hesitation in rejecting them outright. It is simply
not
correct to say that the defendants were deprived of the right to a
fair hearing in the sense that they were precluded from raising
the
plaintiff's alleged fraudulent misrepresentation before the English
courts. Although they were not permitted, in terms of their
respective agreements with the plaintiff, to raise it as a defence,
they were given all opportunity to do so by way of a separately
instituted counterclaim. When they subsequently availed themselves of
such opportunity, they were unsuccessful.
[107] What the defendants really want now, it would appear, is a
second bite at the cherry. On my reading of the relevant English
judgments, in which the allegations of fraud have been considered
exhaustively, there is little prospect that the defendants would
successfully be able to raise this defence, or counterclaim, before
our courts. In this regard I accept, of course, that I am not
permitted to enter the fray by having regard to the merits of the
case which served before the English courts. I am, however, required
to consider whether the recognition and enforcement of the English
judgments may be contrary to public policy. In doing so I fully
realise that I am required to act fairly, independently and
impartially, without fear, favour or prejudice.
[108] It is absurd to suggest, as the defendants have done, that by
holding the defendants to the terms of clause 5.5 of the R&R
scheme, they have allowed the plaintiff to contract out of its own
fraud. Even if the English courts had not held unequivocally that
there was no question of fraud on the part of the plaintiff, clause
5.5 merely has the effect of requiring full payment, without
set-off
or deductions, of the full amount owing by the name in question. It
did not prevent such name from bringing a separate action
based on
alleged fraud or fraudulent misrepresentation. There is hence nothing
untoward, unjust, unfair or unreasonable in including
such a
provision in the plaintiff's agreements with names.
[109] It is indeed essential, in an enterprise
such as that operated by the plaintiff, to incorporate a provision of
this nature into
its agreements with names. It is clearly necessary
for purposes of business and commercial efficacy in that it serves to
make funds
available for the effective functioning of the enterprise,
as explained with eminent lucidity by Bingham MR and Hoffmann LJ in
the
passages quoted above from the
Arbuthnott
decision. It is, in my view, analogous
to restrictions of a similar nature in certain kinds of legislation,
such as that relating
to the payment of income tax or value-added
tax, as Kriegler J observed with his customary perspicuity in the
Metcash Trading
case.
It is also in line with the need to protect freedom of contract in
commercial activities, as set forth in the
Sasfin
case.
[110] It follows that I am quite satisfied that
the recognition and enforcement of the judgments in the present
matter cannot be regarded
as
contra
bonos mores
. Even less can it be held
to be unconstitutional in terms of sections 34 and 165 or, for that
matter, in terms of any other provision
of the Constitution. There is
no basis on which it can be said to be in conflict with the
principles of natural justice, fairness
or reasonableness. On the
contrary, the English courts have, with respect, achieved an
eminently rational and functional balance
of justice and convenience
in considering the facts and circumstances underlying the issues they
were required to resolve. There
are, in my view, no policy
considerations prompting this court to refuse to recognise and
enforce the judgments of such courts. The
fraud issue must therefore
be resolved in favour of the plaintiff and the public policy defence
on this score must fail.
THE CONCLUSIVE EVIDENCE ISSUE
[111] This issue likewise invokes public policy in
regard to the "conclusive proof" provision contained in
clause 5.10 of
the R&R scheme and relating to the calculation of
the amounts allegedly owing by the defendants.
130
The defendants averred that the enforcement of a judgment in which
the amount (
quantum
)
of the claim was calculated in terms of this provision, would be
contrary to public policy. They indicated that they "would
have
wished to dispute those calculations" on the basis that they had
never understood how the amount of their indebtedness
to Lloyd's
under the reinsurance scheme had been calculated. They were aware of
"a considerable number of Names" who had
discovered errors
in the plaintiff's calculations.
[112] In his argument on behalf of the defendants
Mr Seligson placed great reliance on the
Sasfin
case.
131
In that matter it was held that a provision, in terms of which the
amount owing would be "deemed to be determined and proved"
by a certificate signed by a director of any of the creditors, was
contrary to public policy. The effect of this provision was that
the
certificate purported to oust the Court's jurisdiction to enquire
into the validity or accuracy of the certificate, other than
on the
ground of fraud.
132
In view hereof Mr Seligson submitted that this court should refuse to
recognise and enforce the judgments of the English courts on
two
bases. Firstly, the "conclusive proof" provision was
contrary to public policy and, secondly, it deprived the defendants
of their right to defend the plaintiffâs claims against them in
respect of
the
quantum
thereof. This was contrary to the principles of natural justice. It
was also in conflict with the provisions of section 34 of the
Constitution, in terms of which the defendants were entitled to a
fair trial in respect of the
quantum
of the claim.
[113] Mr Seligson found support for his
submissions in this regard in the English Court of Appeal's decision
in
Adams and Others v Cape Industries
plc and Another
.
133
In this matter a United States federal district court granted default
judgment against the two defendant companies in favour of 205
plaintiffs. The judgment was for damages arising from personal
injuries and consequential loss allegedly suffered by the plaintiffs
as a result of their exposure to asbestos fibres. The defendant
companies were registered in England and took no part in the
proceedings.
No hearing was held for purposes of assessing the
damages and the judge appears to have made an arbitrary award based
on his opinion
of what would represent an appropriate average award.
[114] When the plaintiffs sought to enforce the judgment in England,
the defendants raised the defence that it would, under the
circumstances,
be contrary to natural justice to do so. In the
Chancery Division, Scott J held that the failure by the United States
court to assess
the damages judicially offended against English
principles of natural (or substantial) justice. Although the award of
damages might
have been made in accordance with the applicable
procedural rules, it was arbitrary, not based on evidence and not
related to "the
individual entitlements" of the plaintiffs.
He hence dismissed the action on the basis that the relevant test was
natural justice
as perceived by the court in which the plaintiff was
seeking enforcement of the foreign judgment. An appeal to the Court
of Appeal
was dismissed.
[115] Mr Seligson submitted that the approach of these English courts
was "instructive" for purposes of adjudicating the
present
matter in that, as in that matter, the "conclusive proof"
objection was restricted to the quantification of the
plaintiff's
claim. That in itself was a good reason for refusing to enforce a
foreign judgment.
[116] In his argument for the plaintiff Mr
Thompson pointed out at the outset that clause 5.10 of the R&R
scheme had been considered
by the English courts and held to be valid
in that its main purpose was to achieve cash flow. It hence
precluded, as a defence to
the plaintiff's claim against a name, the
raising of disputes concerning the calculation of the
quantum
claimed. This was the gist of Tuckey
J's judgment in the
Fraser
case
when he refused to invalidate clause 5.10.
134
[117] Mr Thompson conceded that, in terms of the
Sasfin
decision,
conclusive evidence clauses, which provide for a certificate of
balance to constitute conclusive proof of indebtedness in
favour of a
creditor, would be
contra bonos mores
in
that they precluded rebutting evidence to prove a mistake. If the
certificate did not, however, preclude rebutting evidence, it
would
not be in conflict with public policy.
[118] In the present matter, Mr Thompson submitted, the plaintiff
indeed relied on the calculations of the MSU ("Members Services
Unit") in determining the amount of the defendants'
indebtedness. There was no evidence, however, to suggest that these
calculations
were wrong or that the plaintiff had invoked the
conclusive evidence clause against any of the defendants so as to
preclude them
from establishing that the calculations were wrong. The
defendants simply failed to make out a case that there was any error
in the
calculation of any of their liabilities. They could hence not
be heard to say that clause 5.10 was contrary to public policy. Their
attempt to do so was nothing more than a red herring.
[119] Mr Thompson emphasised that in the present
matter the plaintiff was not seeking to enforce a conclusive evidence
clause. It
was seeking to enforce judgments of an English court based
on English law, to which the defendants had agreed to subject
themselves.
English law did not, in general, regard conclusive
evidence provisions as contrary to natural justice or public policy.
On the contrary
the defendants were free to object to the calculation
of the amount claimed not only on the basis of fraud, as in South
African law,
but also on the basis of manifest error or
irrationality, in the sense of unreasonableness or perversity.
135
[120] Mr Thompson made it clear that the present matter raised very
different policy issues from those considered in the cases relied
on
by Mr Seligson. Such issues had to be considered with reference to
the fact that the defendants had agreed to be bound by English
law,
which recognises conclusive evidence clauses. It also had to take
into account the fact that comity requires a South African
court to
recognise and enforce a foreign (English) judgment.
[121] I agree with Mr Thompson that the
defendants, in raising the conclusive proof point, have merely drawn
a red herring across
the track and have achieved nothing for their
efforts. The arguments put forward by Mr Seligson are interesting and
instructive,
but have no bearing, I believe, on the facts of the case
before this court. The defendants have come nowhere near making out a
case
that they have had even the slightest difficulty with the
computation of the
quantum
in
their respective cases, let alone that it was manifestly wrong,
fraudulent or irrational. Simply to say that they have had difficulty
in understanding how the amounts have been calculated raises no issue
or dispute at all. That they "would have wished to dispute
those
calculations", without indicating on what basis they would have
liked to do so, is meaningless. This is compounded by
the unsupported
hearsay allegation that "a considerable number of Names"
have discovered errors in the calculations.
136
[122] To suggest that the mere insertion of clause 5.10 into the R&R
scheme constituted a breach of public policy, regardless
of whether
its provisions were ever invoked against the defendants, must be
rejected out of hand. By the same token the defendants
cannot be
heard to say that they have not been given a fair trial or a fair
hearing in terms of section 34 of the Constitution. If,
at any stage
during the course of the English litigation, they had had a problem
relating to the calculation or computation of the
amount or interest
claimed, they would have had the opportunity to raise it on the basis
of its being manifestly wrong, fraudulent
or irrational. If they had
effected undue payments, they would have had the right to reclaim
them. Similarly, if monies had been
owing to them, nothing would have
prevented them from laying claim thereto in a separate action. They
were not, however, entitled
to apply set-off in respect thereof, for
the simple reason that they had contractually bound themselves not to
do so.
[123] The
Adams
case
to which Mr Seligson referred does not, in my view, assist the
defendants. The facts of that matter differ totally from those
in the
present matter in that neither of the defendant companies had, in
that case, been involved in the proceedings in the United
States
court. In addition the English court had difficulty with the
ostensibly arbitrary way in which the damages had been assessed
by
the United States court. In the present matter the defendants have at
all relevant times been fully involved in the proceedings
and have
never questioned the assessment of damages claimed against them. This
last-ditch attempt to raise
quantum
as
an issue, in particularly vague and oblique terms, must necessarily
bring their good faith and sincerity into question. It smacks
of a
desperate attempt to stave off the inevitable by clutching at even
the most unsubstantial of straws.
[124] It must not be lost from sight that the
defendants expressly agreed to the provisions of clause 5.10 and
likewise agreed that
any dispute arising therefrom would be dealt
with in terms of English law. I am, of course, permitted to have
regard to the merits
of the English case only for purposes of
establishing whether it would be contrary to public policy to enforce
a judgment ordering
payment of an amount calculated in terms of such
clause. In doing so I am constrained to remark that the approach of
the English
courts to this clause is particularly persuasive, namely
that the purpose of clause 5.10, as in the case of clause 5.5, is to
achieve
cash flow.
137
This makes good commercial sense.
[125] In this regard I am of the respectful view
that the time may be overdue for the reconsideration, or at least a
qualification,
of the
Sasfin
rule.
It seems logical and rational that account should be taken of
business and commercial efficacy in considering a "conclusive
proof" provision. It also appears to be just, fair and
reasonable that the amount claimed should be subject to attack not
only
on the ground of fraud, but also on the grounds of manifest
error and irrationality, in the sense of unreasonableness or
perversity,
as is the case in English law.
[126] As for Mr Thompson's argument that comity
(
comitas
)
requires this court to recognise and enforce foreign judgments, I do
not believe that it is necessary, for present purposes, to
deal in
any depth with this well-known principle of private international
law. Suffice it to say that, since early Roman times, it
was expected
of a country, which had been victorious in battle, to treat the
inhabitants of the defeated country
comiter
,
that is to say with affability, benevolence, courtesy, generosity and
kindness. This usually entailed that their sovereignty (
maiestas
)
and dignity (
dignitas
)
would be recognised and respected by the conquerors.
138
The application of comity in this sense was not attributable to some
or other legal obligation arising from international law but
was,
rather, a moral obligation motivated by considerations of humanity
(
humanitas
)
and equity (
aequitas
).
Not surprisingly it appears to have been transferred, as a
fundamental value, to Roman-Dutch private international law, as
demonstrated
by Paul Voet (1619-1667) in his work on the conflict of
laws.
139
[127] Comity has probably, to a large extent, been a key factor in
the development of the rules and principles of private international
law. There can hence be no objection to applying it to the
recognition and enforcement of foreign judgments and orders, provided
it is not in conflict with public policy. On the facts and in the
circumstances of the present case, however, it is not necessary
to
fall back on comity in rejecting the contentions of the defendants.
There is simply no merit in them at all. It follows that the
conclusive evidence issue must also be resolved in favour of the
plaintiff. The public policy defence on this basis must hence be
dismissed.
CONCLUSION
[128] From the aforesaid considerations it follows that all the
defences raised by the defendants must fail and that provisional
sentence should be granted against them. The parties have agreed on
the dates from which interest is payable by the defendants.
ORDER
[129] In the event I grant the following order:
1. In case no. 5108/03, M L Romahn is ordered to pay the plaintiff:
(a) the amount of â¤277,513.79 (being the principal sum of
â¤277,013.79 plus costs in the agreed amount of â¤500.00);
(b) interest on the amount of â¤277,513.79 at the rate of 8% per
annum from 23 December 1999 to date of payment;
2. In case no. 5105/03, H Ilse is ordered to pay the plaintiff:
(a) the amount of â¤272,501.67 (being the principal sum of
â¤272,001.67 plus costs in the agreed amount of â¤500.00);
(b) interest on the amount of â¤272,501.67 at the rate of 8% per
annum from 23 December 1999 to date of payment;
3. In case no.5107/03, M Ilse is ordered to pay the plaintiff:
(a) the amount of â¤489,335.27 (being the principal sum of
â¤435,747.73 plus interest up to 11 March 1998 in the agreed amount
of â¤53,588.54);
(b) interest on the amount of â¤435,747.73 at the rate of 8% per
annum from 12 March 1998 to date of payment.
4. In case no. 8588/04, F Ilse is ordered to pay the plaintiff:
(a) the amount of â¤820,016.82 (being the principal sum of
â¤521,370.72 plus interest up to 13 May 2004 in the agreed amount of
â¤292,646.10 plus assessed costs in the amount of â¤6,000.00);
(b) interest on the amount of â¤527,370.72 (being the principal sum
plus assessed costs) at the rate of 8% per annum from 14 May
2004 to
date of payment.
5. The defendants, M Romahn, H Ilse, M Ilse and F Ilse are ordered,
jointly and severally, to pay the costs of suit, including the
costs
of two counsel.
D H VAN ZYL
Judge of the High Court
.
1
[2005] ZAGPHC 9
;
2005 (3) SA 549
(T) (also cited as
Society
of Lloyd's v Price; In re Society of Lloyd's v Lee
[2005]
2 All SA 302
(T)).
2
[1998] CLC 1630 (also in
[1999] 3 Lloyd's LR 156 (CA)).
3
See par [4] above.
4
[1997] CLC 759 and [1997] CLC 1012.
5
See
Society of Lloyd's v Leighs and Others
[1997] CLC 1398.
6
[1998] CLC 127.
7
In
Society of
Lloyd's v Fraser and Others
(n 2
above).
8
An unreported judgment given in the Commercial
Court on 4 March 1998.
9
At typed page 5 of the judgment.
10
A
t typed page 6 of the judgment.
11
1996 folio no 2032.
12
Jaffray and Others v Society of Lloydâs
[2002] EWCA Civ
1101
par 587.
13
[2003] EWHC 873.
14
See
Everard and
Others v The Society of Lloydâs
[2003] EWHC 1890
(Ch) par 19.
An
appeal against Cooke J's judgment failed on all counts. See
Laws
and Others v The Society of Lloyd's
[2003]
EWCA Civ 1887.
See also
The Society of
Lloyd's v Janet Anne Bowman and Others
[2003]
EWCA Civ 1886
, in which the appeal against the order granted by
Laddie J in the
Everard
matter
(
supra
)
was allowed in part. For present purposes it is unnecessary to deal
with it.
15
See
The Society of Lloydâs v Laws and Others
[2004] EWHC
71.
16
1996 (1) SA 677
(A) at 685B-E.
17
See
Protea
International (Pty) Ltd v Peat Marwick Mitchell & Co
[1990] ZASCA 16
;
1990 (2) SA 566
(A) at 568I-569A
.
At 568I Joubert JA stated
unequivocally: "The extinction of a contractual right of action
by prescription is accordingly a
matter of substantive law and not a
procedural matter".
18
The Conflict of Laws
vol 1
(13
th
edition, 2000) 157-181 par 7R-001 at 157.
19
Par 7-042 at 173-174.
20
Reported in (1882) 7
RGZ
21.
21
1981 (3) SA 536
(W).
22
A
t 537H-538A.
23
At 538B.
24
A
t 538D-539A.
25
A
t 539C-D.
26
At 539E.
27
C F Forsyth "Extinctive Prescription and the
Lex Fori: A New Direction?" in
SALJ
99 (1982) 16-22.
28
Christopher Forsyth "Enforcement of Arbitral
Awards, Choice of Law in Contract, Characterisation and a New
Attitude to Private
International Law" in
SALJ
104 (1987) 4-16 at 12-13.
29
See further T W Bennett âCumulation and Gap:
Are they Systemic Defects in the Conflict of Laws?â in
SALJ
105 (1988) 444-456.
30
1986 (3) SA 509
(D).
31
At 517G-518I.
32
See M M Loubser
Extinctive Prescription
(1996) 213 on the
extent to which a South African court should take account of a
different approach in the foreign legal system
when carrying out the
process of characterisation. He suggests that in such a case the
lex fori
should
not be "rigidly applied" and
that "a more flexible approach" should be followed, with
reference to the classification
of the rule under the
lex causae
and to factors such as uniformity of decision, applicable interests
and existing rights.
33
At 519I-520A.
34
At 521A-B.
35
At 523H.
36
At 523I-524C.
37
Par [32] above.
38
At 524E-F.
39
At 524G-H
40
A A Ehrenzweig
Private
International Law
(1967) 1125.
41
At 524I-525A.
42
At 525C-F
43
At 525F.
44
At 525F-527J.
45
Note 48
below.
46
At 528H.
47
See
530I-531F of the judgment.
48
1924 AD 171.
49
At 185 of the judgment.
50
1961 (4) SA 21
at 31A-B.
51
1983 (2) SA 138
(C) at 145F-H. "Establissements"
should read "Ãtablissements".
52
[1950] UKPCHCA 3
;
1951 AC 201
at 219.
53
(1972) 1 All ER 451
(CA) at 457-458.
54
At 146D-H.
55
J C W van Rooyen
Die
Kontrak in die Suid-Afrikaanse Internasionale Privaatreg
(1972)
217-218.
56
At 146H-147B.
57
1993 (2) SA 104
(W).
58
At 116A.
59
At 116E-F.
60
At 116H-117A.
61
J D Falconbridge
Essays
on the Conflict of Laws
(2
nd
ed 1954).
62
Reference may be made in this regard to
C C
Turpin "Characterization and Policy in the Conflict of Laws"
in
Acta Juridica
(1959)
222-228. He suggests that policy considerations and the needs of the
international community should be applied in developing
the relevant
rules of international private law. See also Kahnâs discussion of
the
via media
and
the concepts of âprovisionalâ and âfinalâ characterisation
in Corbett, Hofmeyer and Kahn
The Law
of Succession in South Africa
(2
nd
ed 2001) at 597-599 and 611-612.
63
At 117B-E.
64
At 118I-J.
65
At 119I-J.
66
At 120F-H.
67
At 121A.
68
At 121D-F.
69
1995 (1) SA 366
(N).
70
At 369B.
71
At 369G-H
72
Note 1
above.
73
Par {31] to [33] at 559G-560B.
74
Note 57
above.
75
In par [37] at 563D.
76
In par [38] at 563F.
77
In par [38] at 563G-H.
78
Note 30 above. On this approach see p
ar [42]
above.
79
Note 69
above.
80
In par [38] at 564A-B.
81
In par [38] at 564C.
82
In par [39] at 564D-H.
83
In par [40] at 564I-565E.
84
He relied in this regard on
Primavera Construction SA v
Government, North-West Province, and Another
2003
(3) SA 579
(B) at 604E.
85
Note 57 above.
86
Par [4] above.
87
1984 (1) SA 462
(T) at 466C-H.
88
MV Ivory Tirupati:
MV Ivory Tiruputi
and Another v Badan Urusan Logistik (aka Bulog)
2003 (3)
SA 104
(SCA) par [30]-[33] at 116D-117A.
89
Note 1 above.
90
This is in line with
Yew Bon Tew v Kenderaan Bas Mara
[1982]
3 All ER 833
(PC) at 835
j
-836
a
, where Lord Brightman
observed that, in most cases, the
Limitation Act
1980 "goes
only to the conduct of the suit; it leaves the claimant's right
otherwise untouched in theory so that, in the case
of a debt, if the
statute-barred creditor has any means of enforcing his claim other
than by action or set-off, the Act does not
prevent his recovering
by those means".
91
Note 57 above.
92
Note 30 above.
93
Mr Seligson relied,
inter alia
, on
dicta
appearing in
Joffe v Salmon
1904 TS 317
at 319,
Joosab v Tayob
1910
TPD 486
at 489,
National Milling Company Ltd v Mohamed
1966
(3) SA 22
(R) at 23F,
Jones v Krok
(note 16 above) at 685B
and 686A-B and the
MV Ivory Tiraputi
case (note 88 above) at
116D-117B (par [30]-[34] of the judgment).
94
Mr Seligson referred in this regard to
Kilroe-Daley v Barclays
National Bank Ltd
[1984] ZASCA 90
;
1984 (4) SA 609
(A) at 626C, where Galgut AJA
stated: "A judgment debt is the amount or subject-matter of the
award in the judgment. Execution
can be levied to recover the
judgment debt."
95
Par [28] above.
96
Rule 17 discussed by Dicey and Morris (note 18 above). See par [32]
above.
97
Note 20 above. It features in the discussion of Dicey and Morris in
par [32] above.
98
Note 21 above. It is discussed in par [34]-[37] above.
99
Note 30 above. See the discussion in par [39]-[45] above.
100
See par [44] above.
101
Note 48 and par [46] above. See also the
Guggenheim
case
(note 51 and par [47] above).
102
Note 51 and par [48]-[50] above.
103
Note 55 and par [49] above ("die engste verbonde regstelsel").
104
Note 57 and par [51]-[56] above.
105
Se par [75] above.
106
Par [4] above.
107
Par [76] above.
108
Notes 1 and 30 above.
109
Note 69 and par [57]-58] above. See Mynhardt J's reference thereto
in par [62] above.
110
Note 16 above. The case is discussed in par [26] and [27] above.
111
Notes 87 and 88 above.
112
Par [71] above.
113
Note 93 above, at 489-490. See also the
National Milling Company
case (note 93 above, at 23D-H).
114
Note 84 above.
115
At 604B-D of the judgment of Friedman JP.
116
At 566B-C of his judgment.
117
De Beer NO v North-Central Local Council and South-Central Local
Council and Others (Umhlatuzana Civiv Association Intervening)
[2001] ZACC 9
;
2002 (1) SA 429
(CC) par [11] at 439G 440B.
118
Par [13] above.
119
Wells v South African Alumenite Company
1927 AD 69
at 72.
120
Reeves and Another v Marfield Insurance Brokers CC and Another
[1996] ZASCA 39
;
1996 (3) SA 766
(A) at 775D-E.
121
Sasfin (Pty) Ltd v Beukes
1989 (1) SA 1
(A) at 9E.
122
On the "balance of justice and convenience" see
Sperling
v Sperling
1975 (3) SA 707
(A) at 722E, cited with approval in
the
Laconian
matter (note 30 above, at 519H). See also E Kahn
in
Annual Survey of South African Law
(1977) 564 at 570. He
states there that the concept of public policy "should be
confined to the violation of some fundamental
principle of justice
or good morals, such as fraud by the successful party". In the
Laurens
case (note 57 above, at 121B-C), Schutz J expressed
approval of Kahn's approach where he suggests that a foreign rule
should be
rejected on the grounds of public policy "only if it
flies in the face of some deep-rooted conception of good morals".
123
As stated in
Society of Lloyd's v Fraser and Others
(note 2
above) at 1649C.
124
[1994] 3 Re LR (Lloydâs Law Reports) 168 (CA) at 171(also in
[1995] CLC 1396 at 1399).
125
At 173 (also in [1995] CLC 1396 at 1403).
126
See
Marchant & Eliot Underwiting Ltd v Higgins
[1996] 2
Lloydâs LR (CA) 31 at 39 (also in [1996] CLC 301 at 355F (
per
Leggatt LJ): "Without some form of 'pay now sue later'
obligation, Lloyd's could not function."
127
Par [4] above.
128
Metcash Trading Limited v Commissioner for the South African
Revenue Service and Another
2001 (1) BCLR 1
(CC) par [60]-[62]
at 29D-30D.
129
See note 12 and par [21] above.
130
See par [13] above.
131
Note 121 above, at 14I-15B.
132
See also
Ex Parte Minister of Justice: In Re Nedbank v Abstein
Distributors (Pty) Ltd and Others and Donelly v Barclays National
Bank Ltd
1995 (3) SA 1
(A) at 21A-D
133
[1991] 1 All ER 929
(ChD and CA).
134
See par [17] above.
135
G
Treitel
The Law of Contract
(11
th
ed 2003) 446-447
states that contracts are contrary to public policy, and hence
invalid, "only so far as they purport to exclude
the
jurisdiction of the courts on a point of law". If the exclusion
relates to fact, it may still be challenged "on the
ground of
unfairness, bad faith or perversity". .
136
See par [111] above.
137
A stated by Tuckey J in the
Fraser
case (see par [17] above).
138
See
Digest
49.15.7.1.
139
Paulus Voet
De statutis, eorum que concursu, liber singularis
(1661) 4.2.17; 4.3.17. See in general J M B Scholten
Comitas
in het internationaal privaatrecht van de hollandsche juristenschool
der zeventiende eeu
(1952) 35-36 and 81-82 and Van Rooyen (note
55 above) at 15-16.