About SAFLII
Databases
Search
Terms of Use
RSS Feeds
South Africa: Supreme Court of Appeal
SAFLII
>>
Databases
>>
South Africa: Supreme Court of Appeal
>>
1985
>>
[1985] ZASCA 50
|
|
Barclays National Bank Ltd. v Thompson (242/83) [1985] ZASCA 50; [1985] 2 All SA 355 (A) (29 May 1985)
69/85
Case No 242/83
mp
IN THE SUPREME COURT OF SOUTH AFRICA
(
APPELLATE
DIVISION)
In the matter between:
BARCLAYS NATIONAL BANK
LIMITED
Appellant
and
ROBERT THOMPSON
Respondent
CORAM:
CORBETT, KOTZé, CILLIé, HOEXTER
et
HEFER,
JJA
HEARD:
1 May 1985
DELIVERED:
29 May 1985
JUDGMENT
HOEXTER, JA
...
2.
HOEXTER, JA
In the Witwatersrand Local Division the appellant was the defendant in an
action for damages instituted against it by the respondent.
In what follows I
shall refer to the respondent as the plaintiff and to the appellant as the
defendant. Before the matter came to
trial the plaintiff sought an amendment of
his particulars of claim. The application for an amendment, which was resisted
by the
defendant, was heard by ACKERMANN, J. The learned Judge granted the
amendment. With leave of the Court
a quo
the defendant appeals against
the order allowing the amendment.
Sec 9
of the
Currency and Exchanges Act, 9 of 1933
, ("the
Act") empowers
the
State President to make regulations in regard to any matter directly or
indirectly affecting banking, currency or exchanges;
and in such regulations to
apply any sanctions, civil or criminal, which he thinks fit to impose. In terms
of
sec 9
of the
Act
>there
3.
there were promulgated, under Government Notice No 1111 dated 1
December 1961, the Exchange Control Regulations ("the regulations")
set forth in
the Schedule to the Notice. Reg 3(1)(c) of the regulations reads:-
"Subject to any exemption which may be granted by the Treasury or a person
authorised by the Treasury, no person shall, without permission
granted by the
Treasury or a person authorised by the Treasury and in accordance with such
conditions as the Treasury or such authorised
person may impose
(a)
(b)
(c) make
any payment to, or in favour, or on
behalf of a person resident outside
the
Republic, or place any sum to the credit
of such person."
Reg 22 penalises any contravention of the regulations by applying thereto a
criminal sanction. It provides that every person who contravenes
the regulations
shall be guilty of an offence and liable upon conviction to a fine not exceeding
R10 000, or to imprisonment for
a period not
exceeding five
4.
exceeding five years, or to both such fine and imprisonment.
The chief issue raised by the present appeal is the following. Take the case
of a plaintiff resident outside the Republic who has
a claim sounding in money
against a defendant who is an
incola
of the Republic. The, plaintiff
seeks legal redress by instituting action against the defendant in a South
African court in whose
area of jurisdiction the defendant is domiciled. In such
circumstan= ces does the absence of Treasury permission, within the meaning
of
reg 3(1)(c), for payment by the defendant to the plaintiff of the amount of the
latter's claim, or any portion thereof, entail
any disability on the part of the
plaintiff either (1) in suing the defendant or (2) in obtaining the court's
judgment in the plaintiff's
favour? Within the past decade these two questions
have arisen in a number of actions for money claims heard in the Provincial
Divisions
of the Supreme Court. The resultant decisions have not
all
5.
all been harmonious. In particular the current of judicial opinion on the
subject in the Transvaal has differed somewhat from the
views expressed thereon
in some of the decisions of the Cape and Natal Provincial Divisions. Before
examining the relevant decisions
it is convenient at this stage briefly to
indicate the facts of the instant case.
The defendant is a registered commercial bank which carries on business in
the Republic and which has its registered head office in
Johannesburg: The
plaintiff is a person resident outside the Republic. The plaintiff instituted
his action for damages in April 1974.
In February 1976 the defendant filed a
plea in bar, based on reg 3(1)(c), to the plaintiff's claim. The defendant
pleaded that in
respect of the plaintiff's claim no per= mission had been
granted by the Treasury for payment thereof by the defendant to the plaintiff.
Accordingly, so it was
averred,
6.
averred, the plaintiff's action was barred. On 3 December 1982 the
plaintiff gave notice of his intention to amend his particulars
of claim by the
introduction of a fresh paragraph alleging that on or about 6 January 1976 the
Treasury had granted permission to
the plaintiff in terms of reg 3(1)(c) for
payment of the claim to the plaintiff. In response to the above the defendant
gave notice
of its intention to raise the following point of law in its
opposition to the amendment sought. The proposed amendment was not competent
in
law, so said the defendant, as its effect would be to include a cause of action
which had not existed at the time of the issue
of the summons. In what fashion
ACKERMANN, J resolved the opposed application may more usefully be considered
after looking at the
conflicting decisions to which reference has already been
made. To an examination of these I now turn.
The ..........
7.
The first case to be noticed is that of
Rhodesian Pulp and Paper
Industries Ltd v Plastele
c
t (Pty) Ltd
1975(1) SA 955 (W), to which I
shall refer as "the
Rhodesian Pulp
case". In that case a Rhodesian
company carrying on business in that country instituted an action in the
Witwatersrand Local Division
against a defendant carrying on business in the
Republic for damages for an alleged breach of contract. To the plaintiff's claim
the defendant filed a special plea. Averring that the plaintiff was a person
resident outside the Republic, and that Treasury permission
for the payment by
the defendant of the sum claimed had not been obtained, the defendant invoked
reg 3(1)(c). It pleaded that in
the circumstances "it would not be lawful" for
the Court to grant the relief sought. The plaintiff excepted to the special
plea,
asserting that reg 3(1)(c) did did not in law represent a bar to the
relief claimed. The question arose whether permission by the
Treasury prior
to
the
8.
the institution of the action was an essential ingredient of the
plaintiff's cause of action. The Court (MOLL, J) answered this question
in the
affirmative. In the course of his judgment the learned Judge observed
(959F/G):-
"Having regard to the wide terms of the said regulations, it seems to me that it
cannot be said that an order such as is claimed
by the plaintiff could be made
by this Court in the absence of the necessary permission from the Treasury. '
Without more the defendant
is not competent to deliver to the plaintiff, i.e. to
make payment of the said amount to the plaintiff. In the ordinary course an
order such as this is made on the basis that immediate effect shall be given
thereto."
Counsel for the plaintiff in the
Rhodesian Pulp
case submitted that reg 3(1)(c) "did not have the effect
of introducing a further element into the plaintiff's common law cause of
action" (959H-960A). This submission was rejected by MOLL, J who concluded (961
C/D):-
"....that
9.
".....that it is in the present action necessary that permission from the
Treasury or a person authorised by the Treasury should
have been obtained prior
to the institution of the present action and that such fact ought to have been
stated in the plaintiff's
particulars of
claim."
Accordingly in the Rhodesian Pulp case the
plaintiff's exception to the defendant's special plea was dismissed with
costs.
The problem presented by the facts of the
Rhodesian Pulp
case in the
Transvaal in 1974 arose in Natal early in 1975 in an action for provisional
sentence which came before MILLER, J. The
Natal case is reported as
Banco
Standard Toita de Mocambique v Corbett Enterprises (Pty) Ltd
1975(3) SA 300
(D). I shall refer to this decision as "the first
Banco St
andard case".
In that case the plaintiff was a commercial bank resident in Mocambique and the
defendant a company resident in Durban.
The
plaintiff's
10.
plaintiff's summons for provisional sentence did not allege
that Treasury permission within the meaning of reg 3(1)(c) in respect of the
payments claimed by the plaintiff had been granted. The
defendant raised as a
special defence that in the absence of such permission the plaintiff was not in
law entitled to claim payment
of the amounts set forth in the summons. MILLER, J
found himself in agreement (3o5H-306A):-
"... with the conclusion reached in the
Rhodesian Pulp and Paper
case,
supra,
that it is a good defence to a claim for payment of money to a
person resident outside the Republic that the necessary permission
of the
Treasury to make such payment has not been granted."
However, the line of reasoning which led the learned Judge ' to the said
conclusion was different from that adopted by MOLL, J in
the Rhodesian Pulp
case. MILLER, J reasoned that a judgment granted in favour of the plaintiff
would be an ineffective one. Having
referred (305A/C) to a judgment
creditor's
11.
creditor's ordinary rights to
proceed to attachment and sale in execution of a judgment debtor's property, the
learned Judge proceeded
to say (305C/H):-
"But when, as in this type of case, the creditor's right to put the judgment
to use for purpose of actual recovery of what is due
to him is beyond the
Court's control or protection because his rights in that regard are entirely
dependent upon the decision of
another (the Treasury), the judgment lacks
effectiveness.
It appears to me that this is the only ground upon which the Court would be
justified in refusing, because of absence of Treasury
permission, to enter
judgment for a plaintiff who has established that a debt is owing and due. There
is no statutory bar to the
exercise by the Court of its jurisdiction to enter
judgment for a plaintiff who has established that the debt in respect of which
he claims is due and payable, but of its own volition the Court will not,
generally, enter judgment, or make an order, the right
to enforce which it
cannot protect. It has been repeatedly stated that, save for the principle of
submission, 'the basic principle
of jurisdiction is effectiveness'. (See
Sonia (Pty) Ltd. v Wheeler,
1958(1) S.A. 555 (A.D.) at p 563;
Eilon v
Eilon,
1965(1) S.A. 703 (A.D.) at p 725F-G;
Thermo Radiant Oven Sales Ltd
v Nelspruit Bakeries (Pty) Ltd
., 1969(2) S.A. 295 (A.D.)
at
12.
at p 307). That principle applies not only to the broad concept of a Court's
jurisdiction in relation to persons, territorial limits
and subject-matter, but
also, more narrowly, to specific orders or decrees which may be sought in any
case in which, in the broad
sense I have just indicated, the Court has
jurisdiction. As BROOME, JP, observed in relation to admittedly different
circumstances,
but with general application, in
Mansell v Mansell
,
1953(3) S A 716 (N) at p 721:
When, therefore, the Court is asked to make an agreement an order of Court it
must, in my opinion, look at the agreement and ask
itself the question: 'Is this
the sort of agreement upon which the obligee (normally the plaintiff) can
proceed direct to execution?'
If it is, it may well be proper for the Court to
make it an order. If it is not, the Court would be stultifying itself in doing
so.
It is surely an elementary principle that every Court should refrain from
making orders which cannot be enforced. If the plaintiff
asks the Court for an
order which cannot be enforced, that is a very good reason for refusing to grant
his prayer. This principle
appears to me to be so obvious that it is unnecessary
to cite authority for it or to give examples of its
operation.'"
Having
13.
Having decided that lack of Treasury permission would represent a valid
defence to the plaintiff's claims MILLER, J next examined
the affidavits in the
case before him to determine whether the plaintiff's contention that they
established that Treasury permision
had in fact been given was correct and, if
so, whether the plaintiff's claims were sufficiently liquid to warrant the grant
of provisional
sentence (3O6A). MILLER, J concluded (306A-307F) that the
plaintiff's claims were not sufficiently. liquid to sustain an order for
provisional sentence. In the
first Banco Standard
case one of the
arguments relied upon by counsel for the defendant (301H-302A) was that in the
absence of an allegation that Treasury
permission had been granted the
plaintiff's summons was fatally defective. The conclusion at which MILLER, J
arrived, adversely to
the plaintiff, in regard to the liquidity of its claims
rendered it unnecessary (307F/G):-
" .... to
14.
" to consider the defendant's argument
that the summons is fatally defective for want of an appropriate allegation
relating to exemption or permission."
In the result
MILLER,J refused to grant provisional sentence on four bills of exchange
accepted and endorsed by the defendant.
Subsequent to the decision in the
Rhodesian Pulp
case, and by
Government Notice No R1555 of 15 August 1975, a further regulation ("the
exempting regulation") was promulgated. The
exempting regulation is in the
following terms:-
"In terms of reg 3 of the Exchange Control Regulations published under
Government Notice Rllll of 1 December 1961, as amended, the
Treasury hereby
exempts any person from the obligation to obtain, as a prerequisite to the
institution of any court action in connection
with a transaction mentioned in
sub-reg (1)(c), permission to make a payment to or in favour, or on behalf of a
person resident outside
the Republic, or place any sum to the credit of such
person."
Also
15.
Also in the year 1975, but subsequent to the judgment delivered by MILLER, J
in the
first Banco Standard
case, a defence based on reg 3(1)(c) was
raised in an action for damages heard in the Cape Provincial Division in
McConnell v SA Stevedores Service Co (Holdings) (Pty) Ltd
1976(2) SA 126
(C). To this decision I shall refer as "the
McConnell
case". In that case
the plaintiff was a resident of British Columbia and the defence set up was that
he was not entitled to be paid
the damages claimed since at the time of the
institution of the action no Treasury permission had been granted for payment of
the
amount claimed. The action had been instituted before 15 August 1975 but was
heard after that date. While not contesting the correctness
of the view
expressed in the two earlier cases that failure to obtain Treasury permission
constituted a good defence to a claim for
payment of money to a plaintiff
resident outside the Republic, counsel for the plaintiff',
in
16.
in the
McConnell
case contended that it did not flow there= from that
such Treasury permission was a prerequisite to
the institution of his
client's action; and he submitted that the
Rhodesi
an Pulp case had been
wrongly decided.
The
McConne
ll case was heard by VAN WINSEN, J. Having examined the
regulations the learned Judge found himself unable to deduce from their terms
that in the case before him Treasury permission was a prerequisite to the
institution of the plaintiff's action. In this connection
. the learned Judge
observed (131A/C):-
"I am unable to find anything in the control regulations from which such
deductions can be made. They make no specific reference at
all to Court actions,
but deal in general terms
with the making of payments
Moreover it does not appear from the terms of the control regulations or,
having regard to the successful attainment of the objects
they were designed to
serve, viz. to prevent the transfer of money out of the Republic without
Treasury approval, that the obtaining
of the exemption or permission therein
referred to is
a
17.
a prerequisite to the institution of an action to secure such a payment. The
purpose of the control regulations would not be subverted
in the absence of such
a requirement as long as permission was obtained before payment."
VAN WINSEN, J went on to state that the true explanation for the conclusion
reached in the two earlier cases that absence of Treasury
permission represented
a good defence was to be found (131D/E):-
" in the fact that a judgment granted in
the absence of such permission lacks effectiveness because it cannot be
enforced under all circumstances. This was the reasoning adopted
in the
Rhodesian Pulp
and
Paper Industries
case, supra at p 959, and in
the
Banco Standard
case, supra at pp 304-306, and I am in respectful
agreement with the views so expressed."
The learned Judge went on, however, to point out (131F) that this conclusion,
by itself, provided no answer to the question whether
or not the fact of
Treasury permission
was
18.
was a prerequisite to the institution of the plaintiff's action; and he
expressed the further view that the latter question fell to
be answered by
recourse to the rules of pleading. . Proceeding from the premise (131F/G):-
" that if proof of a certain fact or
the fulfilment of a condition is necessary in order to enable a plaintiff to
secure a judgment in his favour then such fact or the
fulfilment of such
condition should be alleged in his particulars of claim."
VAN WINSEN, J arrived at the conclusion (131G-132A) that in his particulars
of claim the plaintiff was required to allege, "if such
was the case", that the
required Treasury exemption or permission had been granted.
In the light of certain alternative arguments raised by counsel for the
plaintiff in the
McConnell
case VAN WINSEN, J also considered the scope
of the exempting regulation and concluded that in regard to the issue before
the
19.
the Court it was of no avail to the plaintiff (132A-133C). Accordingly VAN
WINSEN, J upheld the defendant's special plea with costs.
At the end of 1975 the decision in the first
Banco Standard
case was
reversed on appeal to a full Court of the Natal Provincial Division (JAMES, JP,
SHEARER and HOEXTER, JJ) whose judgment
is reported at 1976(2) SA 196(N). I
shall refer to the latter judgment as "the
second Banco Standard
case".
The Natal full Court took the view that MILLER, J had erred in holding that the
plaintiff's claims were not liquid, and that
the learned Judge had been wrong in
refusing, for that reason, to grant provisional sentence (200A-201F). The full
Court then proceeded
to consider what MILLER, J had found unnecessary to decide,
namely, whether the summons was fatally defective for want of an allegation
of
Treasury approval; and it decided that the summons was not so defective (201
F/G). The full Court
expressed
20.
expressed the view (201H) that in the
Rhodesian Pulp
case MOLL, J had
erred in holding that prior Treasury approval was an essential ingredient of the
plaintiff's cause of action. It
indicated its full agreement (201H) with the
view expressed by VAN WINSEN, J in the
McConnell
case that there was
nothing in the language of the regulations from which it might be deduced that
Treasury approval was a prerequisite
to the institution of action; and then
remarked (201H-202A):-
"The object of the regulations is the control of foreign exchange in the
national interest. That aim is likely to be achieved just
as effectively by
securing Treasury approval, for example, during the course of an action, or
after judgment, as by securing it before
the issue of summons."
The full Court expressly dissented, however, (202B) from the opinion stated
by VAN WINSEN, J in the
McConnell
case that the rules of pleading pointed
to the conclusion that
it
21.
it was necessary for the plaintiff to allege in his summons that Treasury
permission had been granted. In the result the Natal full
Court altered the
order of the Court
a quo
, by granting provisional sentence. It should be
mentioned ' that in the
second Banco Standard
case the appeal was dealt
with on the assumption that the absence of Treasury permission was a valid
defence to the action. The Natal
full Court expressed no firm opinion as to the
correctness of the finding by MILLER, J that the absence of Treasury permission
was
in fact a valid defence.
In a number of later Transvaal decisions the correctness of the
Rhodesian
Pulp
case has been either assumed or accepted - see, for example:
Barc
lays Bank International Ltd v African Diamond Ex
porters
(Pty)
Ltd
1976(1) SA 93 (W); 1976(1) SA 100 (W); 1977(1) SA 298 (W). In
Amaral
v De Klerk
1979(4) SA 309 (W) GOLDSTONE, AJ
remarked .......
22.
remarked of the
Rhodesian Pulp
case (313E):-
"I certainly cannot find that the approach of MOLL, J is clearly wrong and it
is consequently binding on me."
In the Cape Provincial Division
McConnell's
case was approved by
GROSSKOPF, J in
Draft Negotiators Ltd v Grand Cleaners (Pty) Ltd
1977(1)
SA 788 (C), and accepted (with reluctance) as binding upon him by THERON, J
(1015H-1016C) in
Draft Negotiators Ltd vs Silwoods Investments (Pty) Ltd
1977(3) SA 1014 (C).
To complete the survey of the dissonant decisions on the subject it is
necessary to consider
Euroshipping Corporation of Monrovia v Minister of
Agriculture and Others
1978(2) SA 272(C) - hereafter
referred to as "the
Euroshipping
case". In that case the plaintiff was a Liberian shipowner
which instituted an
action
23. action for damages in the Cape Provincial Division against
local defendants. No Treasury permission for payment had been obtained
prior to
the institution of the action which took place before 15 August 1975, the date
of the promulga= tion of the exempting regulation.
The first and second
defendants filed special pleas based on reg 3(1)(c). In
terms of Rule 33(4)
of the Uniform Rules the Court was asked to determine, separately from other
issues, the following questions of
law:-
(a) Whether the failure to obtain, prior to
the institution of the action,
Treasury
permission to satisfy the plaintiff's
claims constituted a
complete defence thereto
and, in the event of this question being
answered
in the defendant's favour:
(b) whether the exempting regulation of
15 August 1975 cured the failure
to
obtain such permission.
Because
24.
Because of the conflicting decisions bearing on the questions raised the
matter was set down before a full Bench (WATERMEYER, BROEKSMA
and FRIEDMAN, JJ).
The full Bench unanimously answered the first question in favour of the
plaintiff, with costs, and handed down
the reasons for its order later. The
reasons were prepared by BROEKSMA, J. Dealing with MILLER, J's invocation of the
principle of
effectiveness in the
first Banco Standard
case BROEKSMA, J
observed (278A/B):-
"No cases were cited to us nor have I been able to find any authority with the
exception of the
Rhodesian Pulp
case supra and
McConnell'
s case
supra
which support the proposition that, where the principle of
effectiveness is thought to apply in the 'narrower sense' as mentioned
by
MILLER, J, the facts or circumstances required to render the judgment
'effective' must necessarily be in existence at the commencement
of the action
and be averred in the summons. Apart from the
Rhodesian Pulp
case
supra
and
McConnell's
case
supra
the general trend of the
cases rather appears to be against the proposition that Treasury permission is
to be part of a plaintiff's
cause of action."
Nor
25.
Nor did the full Bench consider that it was proper to determine the
ingredients of the plaintiff's cause of action by referring (as
VAN WINSEN, J
had sought to do in
McConnell's
case) to the rules of pleading. The rules
of pleading, so considered BROEKSMA, J (279C):-
" cannot resolve the questions under
discussion but follow upon their solution."
The full Bench concluded (279D) that in the case under
consideration there was no good ground for holding that
Treasury permission was a prerequisite to the institution
of the action.
The second question therefore fell away.
It was likewise unnecessary for the
full Bench to make any
finding concerning the correctness of the view stated
in
some of the earlier decisions that absence of Treasury
permission was a
valid defence. In this connection BROEKSMA, J
remarked (279 E/F):-
"Although
26.
"Although I have relied on certain of the cases in which it was held that
mere absence of Treasury permission was a good defence,
as indicative of the
correctness of the view that it was not required prior to the institution of the
action, I would emphasize that
it was, because of the limited nature of the
question before us, not necessary to express any opinion as to the correctness
of the
conclusions arrived at in those cases. I have, therefore, deliberately
refrained from expressing such an opinion."
Against the background of the decided cases reviewed above I return to the
judgment of the Court below in the present case. In granting
the amendment for
which the plaintiff asked ACKERMANN, J found:-
(a) that he was bound by the judgment of
MOLL, J in the
Rhodesi
an Pulp case: "I cannot find .... that the
approach of MOLL, J was clearly wrong and am conse= quently bound by that
judgment.";
(b) that
27.
(b)
that the exempting
regulation promulgated on 15 August 1975 did not have retrospec= tive
effect;
(c)
that the general rule that the
cause of action whereon a plaintiff relies must exist at the time of the issue
of summons is subject
to the Court's discretionary power, where exceptional
circumstances exist, to allow an amendment importing a fresh cause of
action;
(d)
that on the facts of the case
before him exceptional circumstances were
present.
It is convenient at this stage to say
something of the real issue in the appeal. The defendant has no quarrel with the
findings of
the Court
a quo
indicated in (a) and (b) above. Indeed, the
plaintiff contends that the
Rhodesian Pulp
case was correctly decided.
The defendant
seeks
28.
seeks to attack the judgment of the Court below on
the
basis that the ruling of law in (c) and the finding of fact
in (d) were wrongly made. The approach of the plaintiff
is the following. While vigorously attacking its correct=
ness he freely
concedes that should the
Rhodesian Pulp
case
wrongly have decided
that,in such cases Treasury permission
is an essential ingredient of the cause of action, then the
plaintiff's
application for an amendment was superfluous.
He points out, however, that in
December 1982 (when
he gave notice of his intention to amend) the
whole
trend of judicial opinion on the subject in question in
the
Transvaal was such that he was entitled to assume that
in adjudicating upon
his case the Court a quo would accept
the correctness of the
Rhodesian
Pulp
case. That assumption
proved to be correct. Moreover, so contends
the plaintiff,
even if he had challenged the correctness of the
Rhodesian
Pulp
case in the Court below he would have taken
into
account, as a reasonably possible hazard, that on appeal
this Court
might approve the
Rhodesian Pul
p case. The
defendants contention is
that in all these circumstances
his
29.
his application for an amendment was a reasonable and prudent step. Upon a
realistic view of all the facts in the present case it
is clear, I consider,
that despite the form and outward trappings of the appeal, the real and
substantial issue between the parties
on appeal is the correctness or otherwise
of the
Rhodesian Pulp
case. What precipitated the plaintiff's application
for an amendment was the plea in bar filed by the defendant. If the
Rhodesian
Pulp
case were correctly decided the defendant's plea in bar was
well-founded and it becomes necessary to consider whether ACKERMANN,
J was right
in deciding matters (b), (c) and (d) as he did. If, on the other hand, the
Rhodesian Pulp
case were wrongly decided, it follows that the defendant's
plea in bar was misconceived; and that the further procedural steps set
in train
by the plea in bar have no real practical significance. They can contribute
nothing to the ultimate adjudication of the
plaintiff's
30.
plaintiff's claim when the matter proceeds to trial. In the latter situation
the correctness or otherwise of the rulings of the Court
a quo upon points (b),
(c) and (d)
is a matter of no more than academic interest.
Counsel for the defendant submitted to us that the
Rhodesian Pulp
case
was correctly decided. It was urged that on the clear language of reg 3(1)(c)
there was created a general prohibition against
payment to or on behalf of a
foreign resident subject to the two exceptions mentioned, namely. Treasury
exemption or Treasury permission.
Since the fact of Treasury exemption or
permission "entitles" the non-resident plaintiff to a payment to which he would
otherwise
not be entitled, so the argument proceeds, it follows that Treasury
exemption or permission is an element in the cause of action.
Counsel further
submitted that, affecting the matter of pleading and proof in cases of this
sort
31.
sort, the legal position was correctly stated in the
McConnel
l case. I
am unable to accept the argument that Treasury exemption or permission is a fact
which "entitles" the plaintiff to payment.
This argument, as counsel for the
plaintiff pointed out, confuses legal liability with performance. What entitles
the plaintiff to
payment is the existence of a valid claim reinforced (should
the Court uphold it) by a judicial decree. The presence or absence of
Treasury
exemption or permission is relevant only insofar it may be necessary to consider
whether in making due performance of his
legal and fully exigible obligation to
the judgment creditor the judgment debtor commits or does not commit the
criminal offence
created by reg 22. The commission or avoidance of that offence
by the judgment debtor has nothing whatever to do with the independent
existence
of the plaintiff's claim and its due enforcement by legal process. I further
disagree with
the
32.
the submission that in the
McConnell
case a proper test was applied in
order to determine the ingredients of the plaintiff's cause of action. The rules
of pleading cannot,
I think, assist in this inquiry. What dictates the mould of
the pleadings is the cause of action itself. To approach the problem
as VAN
WINSEN, J did in the
McConnell
case (131 F/G) is, in my respectful
opinion, to beg the question. In this connection I find myself in agreement with
the remarks
of BROEKSMA (279C) in the
Euroshipping
case quoted earlier in
this judgment.
In passing I point out that curious and unsatis= factory results flow from
the construction of reg 3(1)(c) for which the defendant
contends. By way of
illustration one or two examples of the anomalous consequences will suffice. A
plaintiff resident within the
Republic at the time of the institution of his
action sounding in money might well be deprived of his cause of action if before
judgment
he were
to
33.
to take up residence outside the Republic. Conversely, a plaintiff resident
outside the Republic at the time of the institution of
the action would not be
entitled to judgment despite the fact that immediately after instituting the
action he took up his residence
within the Republic.
Leaving aside the exceptional case of enemy aliens in time of war, the
suggestion that plaintiffs residing beyond the Republic should
be denied access
to our Courts by a purely administrative act unrelated to the administra= tion
of justice is, I think, repugnant
both to ordinary notions of justice and to
common sense. By our common law the litigant's right of access to the Courts is
an elemen=
tary and fundamental one. That right the common law accords to every
plaintiff whether he resides within or beyond the Republic.
In my view one
cannot conceive that the legislature intended to subject litigants of the
class
with
34.
with which we are concerned to such a sweeping disability unless such a
conclusion is to be gathered clearly from the explicit language
of reg 3(1)(c)
or the conclusion is inevitable as a matter of necessary and distinct
implication. In my view the language of reg
3(1)(c) is not susceptible of the
meaning which counsel for the defendant would assign to it. Reg 3(1)(c) makes no
reference whatever
to legal proceedings. Had the object behind reg 3(1)(c) been
to make legal proceedings an instrument for the enforcement of reg 3(1)(c)
by
requiring Treasury exemption or permission as a prerequisite to an action for
the payment of money by a plaintiff living outside
the Republic, it would have
been a simple matter so to frame it. Reg 3(1)(c) is not so framed. Nor, in my
view, can it be said that
the construction for which the defendant contends is
to be derived as a matter of necessary implication. Bearing in mind the purpose
of the regulation there is, I consider,
nothing
35.
nothing in the language of reg 3(1)(c) which even remotely carries such an
implication. Embodied in the regulations is a criminal
sanction which is
designed to enforce com= pliance therewith. The penalty prescribed for
non-compliance is a stiff one. In my view
the legislation was here content with
the said criminal sanction as being sufficient to ensure compliance with reg
3(1)(c).
The issue which arises in this appeal is a matter on which this Court has not
yet pronounced. In this connection I should point out
that the remarks by STEYN,
CJ in
Nestel v National and Grindlay's Bank Ltd
1962(2) SA 390 (A) at
393H - suggesting that in cases of this nature Treasury permission is a
prerequisite to the institution of
action - were made quite incidentally in
recapitulating purely historical matters.; and were clearly
obiter
. See
further in this regard the observations of MOLL, J (958 C)
in
36.
in the
Rhodesian Pulp
case. I am consequently of the opinion that it
is open to the Court, unfettered as it is by any decision of its own, to
conclude,
as I do, that the obtaining of Treasury exemption or permission in
terms of reg 3(1)(c) is neither a prerequisite to the institution
of an action
by the plaintiff in a case such as the present, nor does its absence constitute
a valid defence to the plaintiff's claim.
It remains to consider whether in the absence of such exemption or permission
a Court has the right,
mero motu
, to decline to grant judgment in favour
of the plaintiff on the ground that such a judgment will be ineffective. For the
reasons
which follow this question must also be answered in the negative.
In this connection I agree with the submission advanced by the plaintiff's
counsel that the question
whether
37.
whether or not the Court's order for payment of money will result in
satisfaction of the judgment creditor's claim is not a jurisdictional
issue. It
is important to bear in mind, I think, that in the law of jurisdiction the
principle of effectiveness relates to the mere
power of a Court to give an
effective judgment rather than to the exertion of that power in any particular
instance. The matter is
succinctly stated by Pollak in footnote 2 on p 208 of
The South African Law of Jurisdi
ctiqn:-
" the principle of effectiveness does not
mean that a court has no jurisdiction unless it can in fact make its judgment
effective against the
particular
defendant. It means merely that the
judgment of the court should normally be effective against a person in the
position of the defendant..
That is why the domicile of the defendant, although
unaccompanied by physical presence, is a ground for jurisdic= tion in an action
for a judgment sounding in money."
The position is
further clarified, I think, by
certain
38.
certain observations of POTGIETER, JA in the judgment of this Court in
Thermo Radiant Oven Sales (Pty) Ltd v Nelspruit Bakeries (Pty) Ltd
1969(2) SA 295 (A). The judgment of POTGIETER, JA (in which STEYN, CJ concurred)
was indeed the minority judgment, but I perceive
no dissent in the Court's
majority judgment from the following general statement of the law (309 F/H) by
POTGIETER, JA:-
"Jurisdiction is a somewhat abstract
notion and I do not think that the word 'effectiveness' should be taken too
literally. It should, I consider, not be equated with
a guarantee that in every
case the judgment of the Court would be satisfied completely. It has never been
disputed that in our law,
as in English and American law, a Court has
jurisdiction in respect of a resident
incola
on the principle of
effectiveness; and the reason why the Court can give an effective judgment is
because it is considered that usually
a person's possessions are where his home
is, and that execution can be levied against those possessions. Yet it may
happen that
the amount of the judgment may to some considerable extent exceed
the value of his possessions and that execution thereon will, therefore,
not
satisfy the judgment. It has
never
39.
never been suggested that a court can exercise jurisdiction in respect of a
resident
incola
only if he has sufficient assets in the court's
territorial jurisdiction which will, on execution, completely satisfy the
debt."
I would only add that it could hardly be
successfully argued that a Court would lack jurisdiction in respect of a
resident
incola
on the principle of effectiveness for the reason that he
was a man of straw with no assets whatever.
It is necessary to deal briefly with the essential facts in the case of
Mansell v Mansell (supra)
upon which reliance was sought to be placed in
the
first Banco Standard
case. That case was heard before the Matrimonial
Affairs Act, 37 of 1953, came into operation; and it was decided according to
the
common law principle that an innocent wife had no right to claim maintenance
after divorce. According to the judgment in
Mansell v Mansell
(720 E) the
plaintiff wife was:-
"... asking
40.
" asking the Court to make an order by
consent which will give her relief which she could never have claimed in the
action."
It is not a matter for surprise, therefore,
that the request of the plaintiff wife in that case was declined. I would
respectfully
suggest, however, that in
Mansell v Mansell
the principle of
effectiveness as a criterion of the Court's jurisdiction was not in issue.
The question whether, and if so, to what extent, the competence of our Courts
has been curtailed by reg 3(1)(c) has been discussed
in a comprehensive and
lucid article by A C Beck in 1982 (vol 99) SAW at pp 125-135. In my judgment the
legal position is correctly
summed up by the learned writer in the two passages
of his article hereunder quoted:-
"The doctrine of effectiveness, it is submitted, is not of application in
this type of case, but is confined to the sense in which
it is ordinarily
understood
41.
understood. That being so, provided that the defendant is resident
within the area of the court's jurisdiction (or some other basis
exists for the
exercise of jurisdiction) the court will be able to grant an 'effective'
judgment against the defendant and, if necessary,
order execution against his
property. The purely economic requirement of exchange control, it is submitted,
in no way fetters the
court's jurisdiction or power. The plaintiff is entitled
to his judgment, and Treasury permission is a hurdle which can be jumped
when it
is reached."
(p 133)
"To conclude: The courts would do better to avoid concerning themselves with
the effects of Treasury being granted or withheld. It
is not really within the
province of the courts to try to weave around the requirement, and in their
attempts to do so a great deal
of unnecessary hardship has been caused to
plaintiffs at the expense of defaulting debtors, which was certainly not
intended by the
legislature, whose purpose is achieved whenever the permission
is given, if at all.
Treasury permission has no bearing on the jurisdiction of a court and, in
fact, does not even constitute defence to the action - it
is merely a limitation
on payment which can be removed by the Treasury at any time, and there is no
reason why the plaintiff should
have to wait for this before obtaining a
judgment."
(p 135).
From
42.
From the aforegoing it follows, in my judgment, that both the
Rhodesian
Pulp
case and the
McConnell
case were wrongly decided. That finding
disposes of the true and material issue in the appeal, and it is, I consider,
unnecessary
to debate the correctness or otherwise of findings (b), (c) and (d)
of the Court
a quo
summarised earlier in this judgment.
It remains to consider, in the somewhat unusual situation confronting this
Court, what orders should appropriately be made as to the
fate of the appeal and
the costs of the appeal. The conclusion at which I have arrived in regard to the
Rhodesian Pulp
case means in effect that the defendant's plea in bar was
bad in law; and, therefore, that the plaintiff's application for amendment
consequent thereon was superfluous. Technically speaking, therefore, the Court
below should not have granted the amendment. However,
for the reasons stated
earlier
43.
earlier in this judgment, it seems to me that one must look at the substance
of the appeal rather than its form. So viewing the whole
case I conclude that on
appeal the party achieving substantial success is the plaintiff; that the appeal
should fail; and that the
plaintiff is entitled to his costs on appeal. Nothing
turns on the , order for costs made in the Court below inasmuch as the learned
Judge ordered the plaintiff to pay the costs occasioned by the amendment,
including the costs of the defendant's opposition thereto.
In the result the appeal is dismissed with costs including the costs of two
counsel.
G G HOEXTER, JA
CORBETT, JA ) KOTZé, JA ) CILLIé , JA ) concur
HEFER, JA )