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[1990] ZASCA 86
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Bisonbord Ltd. v K Braun Woodworking Machinery (Pty) Ltd. (384/88) [1990] ZASCA 86; 1991 (1) SA 482 (AD); [1991] 1 All SA 201 (A) (10 September 1990)
Case No 384/88 - mp
IN THE SUPREME COURT OF SOUTH
AFRICA APPELLATE DIVISION
In the matter between:
BISONBORD LIMITED
Appellant
and
K BRAUN WOODWORKING MACHINERY
(PROPRIETARY)
LIMITED
Respondent
CORAM:
HOEXTER, BOTHA,
MILNE, JJA et NICHOLAS, GOLDSTONE, AJJA
HEARD:
9 March 1990
DELIVERED:
10 September
1990
JUDGMENT
HOEXTER, JA
2
HOEXTER, JA
This appeal raises the question of
the competence of a court to hear and determine an action sounding in
money instituted against
a company solely on the grounds that it was
incorporated in South Africa and has its registered office within the
area of jurisdiction
of such court. In the Witwatersrand Local
Division the appellant instituted an action for the payment of
damages against two defendants.
The first defendant in the action is
the respondent in the appeal.
Chapter
VII
of Act 61 of 1973 ("the Companies
Act") requires every company
to have a postal address and a
registered office within the
Republic of South Africa.
Subsections (1) and (2)(a) of sec
170 read as follows:-
"170 (1) Every company
including every external company shall have in the Republic -
(a) a postal address to which all
communications and notices may be
addressed; and
(b) a registered office to which
3
all communications and notices may
be addressed and at which all process may be served. (2) (a) Upon
incorporation of a
company, notice of the situation
of the registered of f ice and of the postal address shall be given
to the Registrar."
Apart from pleading to the merits
of the case the respondent filed a special plea in which it raised an
objection to the jurisdiction
of the Witwatersrand Local Division to
hear the action. Although its registered office is situated in
Johannesburg the respondent
carries on its business at Butterworth in
the Republic of Transkei. The respondent's objection to the
jurisdiction of the Court a
quo was based upon the fact that its sole
place of business is in the Transkei.
In the Court below the special
plea was resisted on a number of different grounds. The chief
contention advanced on behalf of the
appellant was that,
4
inasmuch as the respondent had its
registered office in Johannesburg, it was, within the meaning of sec
19(1)(a) of the Supreme Court
Act, No 59 of 1959 ("the SC Act")
-
" a person residing or being
in"
the area of jurisdiction of the
Witwatersrand Local Division. The matter came before J F MYBURGH, AJ.
The learned Judge ruled that
the respondent was not "a person
residing or being in" the area of jurisdiction; and he rejected
the further submissions
raised on behalf of the appellánt in
support of its argument that the trial Court was empowered to
entertain the action. The
special plea was accordingly upheld, and
absolution from the instance, with costs, was ordered.
With leave of the trial Court the
appellant appeals to this Court. The sole issue raised in the appeal
is the correctness or otherwise
of the decision by MYBURGH, AJ that
the respondent was not "a person residing
5
or being in" the area of
jurisdiction of the Witwatersrand
Local Division.
The respondent is not a natural
person but a
corporation. As pointed out by
Martin Wolff, Private
International Law 2nd ed (1950) at
295:-
"....it is useful to realize
that conceptions used in the case of natural persons, such as
nationality, domicile, or residence,
can be applied to legal persons
only by way of analogy and not without distortion of their original
and genuine meaning. Yet it seems
impossible to do without these
conceptions. For every legal system contains some rules which attach
certain consequences to a person's
nationality, domicile, or
residence without distinguishing between natural and artificial
persons."
A judgment sounding in money may
be put into effect
anywhere. From this it follows
(see Pollak, The South
African Law of Jurisdiction (1937)
at 22) that in an action
for the payment of money -
"...it is a sufficient basis
for jurisdiction that the state in whose court the action is brought
has power over the defendant."
6
Dealing with the State's supreme
power and the jurisdiction
of its courts BRISTOWE, J remarked
in Schlimmer v Executrix
in Estate of Rising
1904 TH 108
at
111:-
"Now the jurisdiction of the
courts of every country is territorial in its extent and character,
for it is derived from the sovereign
power, which is necessarily
limited by the boundaries of the State oyer which it holds sway.
Within those boundaries the sovereign
power is supreme, and all
persons, whether citizens, inhabitants, or casual visitors, who are
personally present within those boundaries
and so long as they are so
present, and all property (whether movable or immovable) for the time
being within those boundaries, are
subject to it and to the laws
which it has enacted or recognised."
Although the same common law
applies throughout South
Africa, it is trite that upon the
establishment of the
Union of South Africa the separate
judicial systems of the
four colonies were largely
preserved despite their formal
unification in the Supreme Court
of South Africa. In
terms of sec 19 of the SC Act the
original jurisdiction
enjoyed by the provincial and
local divisions is limited to
7
the extent of their respective
territorial areas. Such
territorial jurisdiction is
confirmed by sec 68(2) of the
Republic of South Africa
Constitution Act, No 110 of 1983.
In regard to the jurisdiction of
South African
courts over domestic corporations
Pollak, op cit, 94
states:-
"A corporation incorporated
in the Union is subject to the power of the South African state and
it follows therefore that on
principle South African courts should
have jurisdiction in an action for a judgment sounding in money
against it. But owing to the
non-existence of any court having
authority in respect of the whole Union and owing to the territorial
limitations imposed upon the
authority of the divisions of the
Supreme Court, this principle cannot by itself furnish a criterion of
jurisdiction in an action
against a domestic corporation. The courts
have therefore been unable to rely solely on this principle for the
purpose of determining
their jurisdiction in actions against domestic
corporations and have been compelled to supplement this principle by
another criterion
of jurisdiction. This they have found in the notion
of the principal place of business of a corporation."
The notion to which Pollak makes
reference in the
8
concluding sentence of the passage
cited above was
discussed in an early judgment of
this Court in T W Beckett
& Co Ltd v H Kroomer Ltd
1912
AD 324.
In Beckett's case
the defendant was á company
which had its registered office
and its principal place of
business in Pretoria. It also
had a branch in Johannesburg. The
plaintiff sued the
defendant in the Witwatersrand
Local Division for damages
for alleged breach of contract.
Before the trial Court an
objection was unsuccessfully
raised to the jurisdiction of
the Witwatersrand Local Division,
but on appeal this Court
held that the objection had been
properly taken. The .
judgment of this Court was
delivered by INNES, J. The
jurisdiction of the trial Court
was derived from sec 16 of
the Transvaal Administration of
Justice Proclamation 14 of
1902 according
to which enactment
(I
quote
from the
judgment of INNES, J at 331-332)
the Local Division:-
"....shall have cognizance of
all pleas and jurisdiction in all civil causes and proceedings
9
arising within the said Colony,
with
jurisdiction over His Majesty's
subjects and all other persons whomsoever residing or being within
the said Colony."
This Court held that the residence
of the appellant was at
Pretoria, where its general
administration was centred;
and that it could not be deemed to
have a residence in
Johannesburg for the service of
process in respect of a
contract entered into with its
Pretoria office. In the
course of his judgment the learned
Judge of Appeal observed
at 334:-
"Now, the terms 'reside' and
'residence' can only be used in their true significance with regard
to natural persons. The residence
of a legal persona, like a company,
artificially created, must be a mere notional conception introduced
for purposes of jurisdiction
and law .... The only home which a
corporation can be said to have is the place where the operations for
which it was called into
existence are carried on. So far as it can
be said to reside anywhere, that is where it resides. And if the
analogy of a natural
person is to be followed, one would say that it
could only reside in one place at one time. This is a point on which
from the nature
of things it is not possible to obtain Roman-Dutch
10
authority; but there is ample
support in English law - both text books and cases - for that view in
regard to the domestic aspect
of the residence of companies."
Sec 19 of the SC Act deals with
the persons over whom and
the matters in relation to which
provincial and local
divisions of the Supreme Court
have jurisdiction.
Relevant to a consideration of the
present appeal are the
introductory words of subsection
19(1)(a) and subsection
19(3) which read as follows:-
"19(1)(a)
A
provincial or local
division shall have . jurisdiction
over all persons residing or being in and in relation to all causes
arising and all offences triable
within its area of jurisdiction and
all other matters of which it may according to law take
cognizance
(b)
(2)
(3) The provisions of this section
shall not be construed as in any way limiting the powers of a
provincial or local division as existing
at the
11
commencement of this Act, or as
depriving any such division of any jurisdiction which could lawfully
be exercised by it at such commencement."
The words "causes arising"
used in sec 19(1) of the SC Act
are - in various juxtapositions -
to be found in all the
statutes establishing the colonial
predecessors of the
various provincial and local
divisions in South Africa (eg
sec 30 of the Charter of Justice
1834; sec 6 of the
Supreme Court Act (Natal) 39 of
1896; sec 16 of the
Administration of Justice
Proclamation (Transvaal) read
with sec 3 of the Establishment of
the Supreme Court and
High Court Ordinance (Transvaal) 2
of 1902; sec 3 of the
Administration of Justice
Ordinance (ORC) 4 of 1902.) See
Pollak, op cit, 7 - 8. In a long
line of cases the words
"causes arising" have
been interpreted as signifying not
"causes of action arising"
but "legal proceedings duly
arising", that is to say,
proceedings in which the court
has jurisdiction under the common
law. In Steytler NO v
12
Fitzgerald
1911 AD 295
INNES, J
(at 315) said of the
phrase "all causes arising":-
"There the word 'causes'
clearly means legal
proceedings 'Arising' of course
means duly
arising. And an action arises
where it has its origin, where the first steps to begin it can be
duly taken. So that when a Court is
given unlimited jurisdiction in
all 'causes arising' within a certain area, that is equivalent to
giving it jurisdiction to try all
matters for which by the Common Law
of the country the highest Court of first instance would in that area
be the proper forum."
In the same case LAURENCE, J put
the matter thus (at 331):
"When does a cause 'arise in
the said districts'? It appears to me that it can only so arise
when-the party, the defendant, or
the accused, is amenable to the
forum created by the Act. In civil matters he is so amenable if he
resides there, wherever the cause
of action arose, on the principle
actor sequitur forum rei."
See further: The Owners, Master
and Crew of the SS "Humber"
v The Owners and Master of the SS
"Answald"
1912 AD 546
at
553 - 4; Lek v Estate Agents Board
1978(3) SA 160(C) at
166H-167C; Softex Mattress (Pty)
Ltd v Transvaal Mattress
13
and Fumishing Co Ltd 1979(1) SA
755(D) at 757 B-D. In
Gulf Oil Corporation v Rembrandt
Fabrikante en Handelaars
(Edms) Bpk 1963(2) SA 10(T)
TROLLIP, J summarised the
position (at 17 F-H) as follows:-
"The result is that the
Court's jurisdiction uhder s 19(1) is simply determined, as hitherto,
by reference to the common law
and/or any relevant statute. In such
determination the presence or residence of the defendant or
respondent within or without the
Court's area of jurisdiction will
have that importance or relevance which the common or statute law
attaches to it (Pollak pp 9 -
14 where all the authorities are
collected.) See too s 19(3) by virtue of which the jurisdiction which
any Division had by common
law and/or statute law at the commencement
of the Supreme Court Act is retained."
In regard to the connecting
factors or rationes jurisdictionis recognised by our common law, a
convenient starting point is the classic
statement of DE VILLIERS, CJ
in Einwald v The German West African Company
(1887) 5 SC 86
at 91 -
"What then are the grounds
upon which the
14
jurisdiction of this Court can be
exercised, in respect of any contract over any defendant without his
consent, express or implied?
The grounds are threefold; viz. by
virtne of the defendant's domicile being here, by virtue of the
contract either having been entered
into here or having to be
performed here, and by virtue of the subject matter in an action in
rem being situated in this Colony."
(Emphasis supplied.)
It is no less clear, however, that
at common law residence
of the defendant entrenches the
jurisdiction of the
relevant forum. In Sciacero &
Co v Central South African
Railways
1910 TS 119
, the judgment
of INNES, CJ begins (at
121) with the following words:-
"The general rule with regard
to the bringing of actions is actor sequitur forum rei. The plaintiff
ascertains where the defendant
resides, goes to his forum, and serves
him with the summons there."
The concept underlying
jurisdiction based upon domicile
and residence of a defendant who
is a natural person in an
action for a judgment sounding in
money is described as
follows by Pollak, loc cit, at 24
- 25:-
15
"If the defendant, although
not physically present within the state, is domiciled therein, a
judgment against him sounding in
money can usually be made effective
against him. If a person is domiciled in a state he usually has his
home there. Such a person
can therefore be expected to return to the
state and to have the bulk of his possessions within the state. A
judgment sounding in
money can therefore normally be made effective
against a person who is domiciled within the state. It is true that a
person may be
domiciled in a state without having his home there, and
in such a case it may be unlikely that a judgment sounding in money
can be
made effective against him in such state. This, however, is an
unusúal case; normally a person is domiciled in the state
which
is in fact his home. It is therefore not unreasonable to
disregard the unusual case and to say that the domicile of the
defendant
within the state is a sufficient basis for jurisdiction in
an action in which a judgment sounding in money is claimed.
What has been said in favour of
domicile as a basis for jurisdiction applies egually to residence. If
the defendant is resident within
the state, then, although he is not
physically present within the state at the time of the commencement
of the action, a judgment
sounding in money will normally be
effective againt him."
I
shall return to the subject of domicile -
and then more
specifically in relation to
corporations - later in this
16
judgment after deciding whether
the Court a quo was correct
in ruling that the respondent was
not resident within its
area of jurisdiction. But it may
be as well to say at
this juncture that in the case of
Minister of the Interior
v Cowley NO 1955(1) 307(N) BROOME,
JP, in my respectful
opinion, erred (at 311 G-H) when
he stated that he was -
"....not prepared to accept
the broad rule that a Court will always have jurisdiction in a claim
sounding in money against a
defendant who is domiciled within its
area of jurisdiction."
I
further
agree with the view expressed by Pollak, loc cit,
at 41, note 1, that no
justification exists for the doubt
expressed by MASON, JP in Foord v
Foord
1924 WLD 81
, as to
whether domicile without residence
or physical presence is
a sufficient ground for
jurisdiction in an action in which
a judgment sounding in money is
claimed. At 41 Pollak
cites in this connection the
authority of . Noodt,
Commentaries on the Pandects, 5.1;
and Vromans Tractaat de
Foro Competenti (1.IV.4) who
states:-
17
"En is sodanigen Persoon
convenibel voor dien Rechter, onder wien Jurisdictie hy sijn
domicilium gekoren heeft, het zy dat hy
al-daar gevonden werd
personelijk, ofte niet."
In my view the legal position is
correctly summarised thus
by Forsyth, Private International
Law, 2nd ed (1990) at
175 -176:-
"Provided that the defendant
is an incola of the court's area of jurisdiction, the court will be
prepared to hear the case
Accordingly, if
the defendant is either domiciled
or resident in the area, this will be a sufficient jurisdictional
connecting factor. Neither of
these requirements predicates the
actual physical presence of the defendant within the court's area. If
the defendant is present,
he may be brought to court by summons in
the ordinary manner; if he is absent, then, subject to the Rules of
Court, summons may be
effected by edictal citation or substituted
service, as the case may be. Domicile and residence suggest no more
than a notional connection
with the court's area. Absence is relevant
only in regard to the procedural matter of service."
' In the instant matter MYBURGH,
AJ, in upholding
the respondent's objection to the
competence of the trial
Court, declined to follow an
earlier judgment in Dairy
18
Board v
John T Rennie & Co (Pty) Ltd 1976(3) SA 768(W), in
which
ELOFF, J had decided that in law a South African domestic company
resides at the place of its registered office. Henochsberg
on the
Companies Act, 4th ed (1985), vol 1, at 256, submits that in the
Dairy Board case (supra) the Court reached a wrong conclusion;
and
that for purposes of common law jurisdiction a domestic company
resides at its principal place of business (i e its administrative
centre).
In the
Dairy Board case meetings of the defendant company's board of
directors were held chiefly in Durban where most of its directors
lived. The business of the defendant was controlled from Durban.
However, the defendant had its registered office in Johannesburg,
and
the plaintiff instituted its action (for enforcement of an
undertaking made by the defendant in terms of sec 309(1)(a) of the
Merchant Shipping Act, 57 of 1951) in the
19
Witwatersrand Local Division.
Inasmuch as the cause of
action had not arisen in the
Witwatersrand Local Division
the trial Court was competent to
hear the action only if in
law the defendant "resided"
within its jurisdiction.
In the course of his judgment
ELOFF, J remarked
at 769 G-H:-
"As to the
significance
of the
fact of the
situation of
the
registered office
of a company,
Pollak, The
Law
of Jurisdiction,
pp 94 -
95,
states:-
'In the normal case the registered
office and the principal place of a company are one and the same
place. They may, however, be different,
and in such case the
situation of the principal place of business and not that of the
registered office, is the relevant factor for
the purposes of
jurisdiction in an action for a
judgment sounding in money against
the company.'
No authority is
quoted for this proposition, however, and there is, as far as
I
have been able to ascertain, no decided
case in which it was laid down that the place given as the registered
address of a company
incorporated in South Africa
20
is not the place where the company
resides or is."
ELOFF, J distinguished Beckett's
case (supra), in which, so
observed the learned Judge (at 770
F-G):-
" the Court did not have to
consider the
question
whether a company might not be said to reside or be where its
registered address is; it had merely to deal with the question
whether a corporation with a firmly established residence in the
sense described in the above-quoted passage" (i e where its
general administration is centred) "could acquire a second
residence by reason of having a further place of business elsewhere.
The problem with which
I
am
presently concerned is unusual for the reason, as is pointed out by
Pollak, supra, that it is reasonable to suppose that a company
will
normally select as its registered head office its principal place of
business. And
I
do
not think that is the sort of situation to which
the learned Judge of Appeal addressed his mind when
expressing
himself as he did."
Later in his judgment ELOFF, J (at
771 B-D) cited
provisions of the Companies Act
which prescribes that the
registered office is the place at
which all process
against a company may be served;
and where are kept such
21
official documents and records
appertaining to the company
as the minute book of its general
meetings; the register
of allotment of shares; the
register of members and
directors and officers; the
register of attendance of
meetings of directors and
managers; the register of fixed
assetSf and so forth. Such
provisions led ELOFF, J to
draw the inference (at 771 D-E)
that the legislature had
intended to endow the registered
office with the quality of
being the place to which the world
might look as the
company's legal home and
administrative centre. In the
opinion of the learned Judge this
view of the matter was
reinforced by considerations of
commercial convenience and
expediency. At 771 E - H he
remarked:-
" to view the registered
office as the
residence of a company is to
create certainty and
to bring about commercial
convenience
To hold that the registered office
is the place of residence for purpose of jurisdiction is to remove
all doubt as to the Court in
which a person intending to sue a
company conducting business at various places may do so. In this
22
regard it is not inappropriate to
remark that in these days companies sometimes conduct their affairs
so that it may be difficult
to determine where its 'general
administration is centred'. And although it may in fact have been
true in 1912 that a company and
a person had only one residence, one
finds it said in Palmer's Company Law, 21st ed., p 66, that:
'Moreover, a company - like an
individual - may have several residences at the same time.'
In my view, a
company registered in South Africa resides in law where the
registered office is. If its principal place of business
is situated
elsewhere it may also reside at the latter
place.
I
accordingly
hold that this Court has
jurisdiction in
the present matter."
Against the background sketched
above it is necessary
now to look more closely at the
reasons which prompted the
Court a quo to uphold the
respondent's objection to the
jurisdiction of the Witwatersrand
Local Division. In his
judgment MYBURGH, AJ relied upon
the dictum of INNES, J in
Beckett's case which has already
been quoted by me; and
which was discussed by ELOFF, J in
the Dairy Board case
23
supra.
Beckett's case is not,
I
consider,
germane to the
issue in the present appeal. The
ultimate conclusion at
which this Court arrived in
Beckett's case was a limited
one. INNES, J rounded off his
judgment (at 339) with the
following succinct remarks:-
"For the purpose of this case
it is not necessary to say more than that a Company should not be
compelled to accept service anywhere,
save at its central office, of
process the object of which is to enforce or recover damages in
respect of a contract entered into
with the officials of its central
administration."
MYBURGH, AJ further considered
that he was bound
by the Transvaal Full Bench
decision in Grimshaw v Mica
Mines, Ltd
1912 TPD 450.
It seems
to me, with respect,
that having regard to the only
issue which there arose the
judgment in that case is not
helpful in resolving the
problem which confronted the
learned Judge in the instant
matter. In the Grimshaw case the
defendant was a foreign
24
company directed and controlled in
England. It owned base
metal claims in the Zoutpansberg
which had been managed by
the plaintiff. The plaintiff sued
the defendant for
arrear wages in the court of the
civil magistrate at
Johannesburg. As a foreign company
the defendant
had complied with sec 198 of Act
31 of 1909 by filing with
the Transvaal Registrar of
Companies the name of a
person authorised to accept
service of process locally on
behalf of the defendant; and the
summons was served at
such person's registered address
in Johannesburg. The
only point in the case was whether
or not the defendant was
a person "residing or
carrying on business" in Johannesburg
within the meaning of the
Magistrates' Courts Proclamation
21 of 1902. The magistrate decided
that the defendant
neither resided nor carried on
business at Johannesburg at
the tlme of the issue of summons
and he dismissed the
summons. The Full Bench considered
that the magistrate's
25
decision was right and it
dismissed the appeal to it.
Apart from the fact that he felt
himself bound by
the Grimshaw case (supra) MYBURGH,
AJ was further minded to
rule in favour of the respondent
by invoking against the
appellant the principle of
effectiveness. In this
connection the learned Judge
remarked:-
"It seems to me to be more in
keeping with that principle that section 19(1)(a) of the Act should
be interpreted to mean that,
in the case of a company, its residence
is where it carries on its main business and not where its registered
office is, when its
registered office is not at its principal place
of business."
This last rumination does not,
with respect, commend itself
to me. If there should be found to
be present in the
instant case any of the recognised
connecting factors
sufficient to found jurisdiction,
then, so it seems to me,
the position of
the respondent is such that
the doctrine
of
effectiveness
will not militate against an
actual
exercise
of the Court's
jurisdiction.
Indeed,
as
I
shall
26
try to show later in this
judgment, the matter stands very differently.
The arguments
addressed to us may be shortly stated. Adopting the criticism
levelled by Henochsberg, op cit, Mr Blieden for the respondent
urged
upon us that the judgment in the Dairy Board case (supra) confused
the concept of a mere place at which process and notices
might
be
served upon a company with the very different concept of
jurisdiction
as contemplated by sec 19 of the SC Act; and that the Court a quo had
correctly declined to follow the judgment of ELOFF,
J in that case. A
submission set forth in his written heads of argument which sought to
rely on the doctrine of effectiveness was
abandoned by Mr Blieden,
wisely
I
think,
in the course of his argument before us. Mr Shaw, who appeared for
the appellant, submitted that there was much to be said
for the
general approach adopted
by ELOFF, J in the
Dairy Board case; and he contended that
27
in that case the objection by the
defendant to the jurisdiction of the Witwatersrand Local Division had
been properly dismissed. However,
calling to mind the intricate
webwork of the English legal principles governing the subject, Mr
Shaw owned to being wary of the concept
of "residence" in
relation to South African domestic companies. Shying away from the
word "residing" in sec 19(1)
of the SC Act, he preferred to
lay stress on the words "or being in". A meaning other (and
a requirement more flexible)
than "residence" should be
assigned to the words "being in". Counsel suggested that
while the phrase "being
in" signified some sort of
"presence", it was nevertheless a presence less habitual
and more ephemeral than that comprehended
by the word "residence".
This less rigorous requirement, so it was said, was amply satisfied
by the location of a domestic
company's registered office within a
particular area. On
28
this narrow
ground counsel for the appellant invited us to differ from the
conclusion at which the Court a quo arrived. For reasons
which follow
I
am unable to
accede to this argument.
In Schlimmer v Executrix in Estate
of Rising (supra) the defendant lived in Pretpria. Se had, however,
the monthly tenancy of . a
house in Fordsburg. This house she
sub-let, save for a single room which she reserved for her own use.
On an average she visited
Johannesburg once a week to consult her
legal advisers, and . occasionally she slept in the room. The
jurisdiction of the Witwatersrand
High Court depended (as did the
jurisdiction of the Witwatersrand Local Division in Beckett's case
(supra)) on the provisions of
the Transvaal Administration of Justice
Proclamation, 1902. The plaintiff sued the defendant in the
Witwatersrand High Court and
the latter's power to hear the action
depended on
29
whether or not the defendant was a
person "residing or
being within" the Court's
area. Alleging that she resided
in Pretoria the defendant objected
to the Court's
jurisdiction. The objection was
sustained. Having
quoted the relevant provisions of
the 1902 Proclamation
BRISTOWE, J said the following (at
110):-
"It was
contended that these sections taken together give this Court
jurisdiction over all persons 'residing or being' within
its
district, and the argument turned mainly on whether having a room
within the jurisdiction constituted 'being' within it. On
consideration
I
doubt
whether this argument is sound. Sec 16 gives
the
Supreme Court in the first place, 'cognisance
of
all pleas' which
I
take
to mean pleas of the Crown. It is from this that it derives its
criminal jurisdiction. Next it gives the Court jurisdiction in
all
civil causes arising within the colony. From this it derives its
civil jurisdiction. Thirdly, it gives it jurisdiction over all
persons residing or being within the colony. This
I
read as merely
supplementing
the criminal and civil jurisdiction
already
given, by conferring on the Court such
powers
over people in the colony as are necessary
to
enable it to give effect to its sentences, judgments, and orders.
30
If this is the true view, then the
jurisdiction of the Supreme Court in a civil proceeding depends on
whether it is a cause or proceeding
'arising' in the colony, and not
on whether the defendant is 'residing or being' within the colony;
and by parity of reasoning the
jurisdiction of the High Court in a
civil proceeding depends on whether it is a cause or proceeding
arising within the district of
the High Court, not on whether the
defendant is 'residing or being' within such district. The broad
result of this is that nothing
turns on the words 'or being'".
In the passage just quoted it
seems to me, with respect,
that by saying that the Court's
jurisdiction did not depend
on whether the defendant was
"residing or being within" the
Court's district, the learned
Judge clearly did not intend
to convey that the fact of
residence was irrelevant to the
inquiry. That he could have
entertáined no such intention
is made quite plain, for example,
by the following passage
later (at 112) in his judgment:
"The
question which
I
have
to decide is therefore
simply whether she
resides within or is an
31
inhabitant of the district covered
by the jurisdiction of the High Court, or whether she is a mere
peregrinus."
It seems to me that what Mr
Justice Bristowe here had in
mind was simply the principle
(more explicitly enunciated
by this Court in 1911 in Steytler
NO v Fitzgerald (supra))
that one situation in which a
"cause arises" is where the
defendant resides within the
Court's area and is thus
amenable to such forum.
The reasoning of BRISTOWE, J was
applied in Bank
of Africa v Cohen
1908 TH 52
, a
case which is most
pertinent to the point now being
discussed. There the
plaintiff sued the defendant in
Johannesburg for
provisional sentence on a
promissory note which had been
made in Kimberley. The defendant
was a resident of
Kimberley who had come to
Johannesburg on a visit. It was
argued for the plaintiff that the
Court had jurisdiction to
hear the case, because of the
words "or being" in sec 16 of
32
the
Proclamation. The argument was rejected by CURLEWIS, J, who said that
the words of sec 16 had come under consideration in Schlimmer's
case
(supra), and that he accepted the interpretation there placed upon
them by BRISTOWE, J. (Cf. also the remarks of GREENBERG,
J in Van Zyl
v Van Zyl
1928 WLD 195
at 196/7 and 199.)
With the
advent of Union the legal position stated above remained unchanged in
relation to the various divisions of the Supreme Court
which took the
place of the colonial Supreme Courts. Nor did the Administration of
Justice Act 27 of 1912 bring about any change
in the position. Its
provisions and their effect were summarised by TROLLIP, JA in Estate
Agents Board v Lek 1979(3) SA 1048(A) at
1061 B-H. It is unnecessary
to repeat what was said there.
I
respectfully agree with the view expressed
by
BRISTOWE, J in Schlimmer's case (supra)
that in the 1902
33
Transvaal Proclamation nothing
turned on the words "being
within". They merely affirm
but do not enlarge the
jurisdiction endowed by "causes
arising". The same
applies to the words "being
in" in sec 19(1) of the SC Act.
A similar view of the matter is
expressed by Forsyth, op
cit. Dealing with the residence of
natural persons for
jurisdictional purposes the
learned author states (at
164-165):-
"In s 19(1)(a) of the Supreme
Court Act, it is provided that the various divisions of the Supreme
Court shall have jurisdiction
over 'all persons residing or being in'
their areas of jurisdiction; but the term 'residing' is not defined
in the Act. Instead it
must be defined in terms of the common law. As
we have seen, s 19(1)(a) has been interpreted to mean little more
than that the divisions
of the court are limited to their territorial
jurisdiction according to the principles to be found in the common
law. In particular,
the courts have refused to equate 'residing' in s
19 with 'being', i e they have not considered their jurisdiction to
be dependent
either on mere physical presence or on residence. A
strict distinction is always drawn between these two concepts."
34
If, then,
a particular division of our Supreme Court is not endowed with
jurisdiction over a natural person who is an ihcola of the
Republic
but a peregrinus within its area of jurisdiction, solely because of
such person's presence ("being") within that
area at the
time of service of a summons upon him, does not the same principle
apply in the case of a company? If the customary artificial
analogy
between natural and juristic persons, which is to be found in the
cases on the topic of jurisdiction, is applied, the answer
must be
yes.
Since
"residence" is a concept based on the habits of a natural
man the notion of a company's "residence", as
has already
been pointed out, is necessarily a somewhat abstruse and nebulous
one. Insofar as the law requires the concept to be
assigned to a
corporation, however, it seems to me that the idea of the registered
office of a domestic South African company as
35
its "home"
represents a juristic abstraction which is by no means unsound in
principle. In England the decisions in Cesena
Sulphur Company Ltd v
Nicholson
(1876) 1 Ex Div 428
and Calcutta Jute Mills, Ltd v
Nicholson
(1876) 1 Ex Div 437
marked the beginning of the elaboration
of a different doctrine in England. The company concerned in each
case was a joint stock
company incorporated in England. In both cases
the ratio decidendi was that the test of a company's residence for
purposes of Income
Tax was that of control; a test later established
beyond doubt by the House of Lords in the case of De Beers
Consolidated Mines,
Ltd v Howe
(1906) AC 455.
In Egyptian Delta Land
and Investment Co., Ltd v Todd
(1929) AC 1
the Income Tax
Commissioners held that an investment company registered in England,
but controlled from abroad, was not resident
in England. In an
unanimous judgment the Court of Appeal held that a company regulated
by the 1908 Companies Act had
36
a residence (though not
necessarily a sole residence) at
its registered office. With
reference to the many
statutory reguirements imposed on
a company by the
Companies (Consolidation) Act
(1908) LORD HANWORTH, MR
remarked (see (1928) 1 KB at 167/
168):-
"If the
matter is to be determined by analogy
I
should affirm that a man with a local
habitation
and compelled to do certain acts
in accordance
with local laws could not
prevent the
inference being drawn that he
'kept home' in that locality."
However, in the House of Lords it
was unanimously held that
incorporation in England and a
registered office in that
country did not, without more and
as a legal consequence,
make a company resident in England
for Income Tax purposes.
(An illuminating discussion of the
topic of the residence
of a corporation in English law
together with a close
analysis of the case law is to be
found in Farnsworth, The
Residence and Domicil of
Corporations (1939)).
The particular evolution in
England of legal
37
rules governing the determination
of a company's residence
notwithstanding,
it is worthy of note,
I
consider,
that
there have been various judicial
pronouncements in the
English courts to the effect that
when the problem is
viewed purely as one of principle,
untrammelled by judicial
precedent and legislative
enactment, the notion that the
residence of a company is its
registered office has much to
commend itself. One such example
is provided by the
dictum already guoted from the
judgment of the Master of
the Rolls when the Egyptian Delta
case (supra) was before
the Court of Appeal. Two further
illustrations may
usefully be taken from the
speeches read in the House of
Lords when the latter upset the
judgment of the Court of
Appeal. In the course of his
judgment LORD BUCKMASTER
said (at 35):-
"The difficulty is due to
the fact that
residence is essentially a
condition applicable to men, and the tests for its determination,
such as living and sleeping, can have
no proper
38
counterpart in
an abstract entity such as an incorporated company which can neither
live nor sleep. It must, however, be assumed that
a company has a
residence, and if the question is
looked at
entirely apart from authority,
I
should
have thought that the place of the
registered office was also the place where the abstraction known as
'a company' resided."
At 40 LORD WARRINGTON OF CLYFFE
expressed himself as
follows:-
"Independently
of authority, and in the absence
of any
relevant provisions of the Income Tax Act,
1918,
throwing iight onthe meaning attributed by the Legislature to the
words 'residing' and
'resident', as used in
the Act,
I
should
probably
have been of the opinion that the
provisions of the Companies Act to which
I
have referred lead
to
the conclusion that, whatever other residence
the
company may have the Legislature has provided
that
the registered office shall be a residence.
The cumulative effect of these
provisions apparently creates for the company a statutory home where
it is to perform the corporate
functions abovementioned, and where it
is regarded as at all times present and ready to receive such
documents and communications
as are left or sent there."
39
The broad line of reasoning
pursued by ELOFF, J
in the Dairy Board case (supra)
which led him to conclude
that in South Africa a domestic
company in law resides at
the place of its registered office
has already been
examined. It should be added,
however, that in discussing
the statutory obligation of a
South African company to
accept service of process at its
registered office the
lêarned Judge regarded as
significant and he sought to rely
upon the fact that in English law
service of a writ
represents the technical
foundation of jurisdiction. In
this connection (at 770 in fin -
771) ELOFF, J remarked:-
"This
correlation between the address at which service may be effected and
jurisdiction over a corporation is,
I
think,
ï
n
accordance with what was said by Cheshire, Private International Law
7th ed., p 174, as follows:
'If he is found here he can be
served here and at common law the exercise of jurisdiction depends
upon service. It is the same in
the case of a corporation'".
40
The soundness of this line of
argument has been questioned,
albeit with his customary
scholarly diffidence, by
Professor Ellison Kahn. In The
Annual Survey of SA Law
(1976) he writes (at 524):-
"With respect, one wonders
how persuasive this rule is : jurisdiction in actions in personam
based on service of the writ, so
basic to English law, is not known
to our law. As for the general attitude of English law to the
residence of a corporation, it appears
to vary with the issue
involved. In the English law of taxation, where it is a vital
concept, the residence is at the centre of the
management and control
of the corporation's affairs, with the proviso that if control is
virtually egually divided between two centres,
the company has two
residences, one at each centre (Dicey & Morris on the Conflict of
Laws 9 ed (1973) 703 - 5, Cheshire's Private
International Law 8 ed
(1970) 186 -190, J H C Morris The Conflict of Laws (1971) 32, R H
Graveson Conflict of Laws 7 ed (1974) 224).
But in the English law
relating to jurisdiction in actions in personam - and only for that
purpose - the residence of a company is
deemed to be where it has its
registered office (Dicey & Morris 177)."
(For the sake of completeness it
may be mentioned that in .
England the current position
appears to be that a company
41
registered únder the 1985
Companies Act is regarded as present in England and service of a writ
may be effected by sending
it to the registered office of the
company. See: Cheshire & North's Private Intemational Law 11th ed
(1987) 188.)
In my
respectful view the criticism of Prof Kahn quoted above is
well-founded. Making due allowance for it, however,
I
nevertheless find attractive the remainder
of the reasoning of ELOFF, J and the conclusion to which he was
impelled, namely, that
for purposes of deciding in an action for a
judgment sounding in money whether a particular division of the
Supreme Court of South
Africa has power to entertain legal
proceedings against it, a domestic South African company "resides"
where its registered
office is.
In the Dairy Board case ELOFF, J
expressed the further opinion that if such a company's principal
place of
42
business is
situated elsewhere than at its registered office, then the company
might in law also "reside" at the latter
place. On this
point too, and f
ó
r
the reasons hereunder,
I
agree
with ELOFF, J.
It is true that in Beckett's case
(supra) at 334 INNES, J said in relation to a corporation that:-
".....if the analogy of a
natural person is to be followed, one would say that it could only
reside in one place at one time."
It seems to me, with great
respect, that the soundness of
the above-quoted proposition is
open to question. In Ex
Parte Minister of Native Affairs
1941 AD 53
this Court was
called upon to give a ruling as to
the meaning of the words
"resides" in the proviso
to sec 10(3) of the Black
Administration Act 38 of 1927. In
delivering the judgment
43
of the Court CENTLIVRES, JA
remarked at 58/59:-
" it is clear on the
authorities that a
person can have more than one
residence and should in that case be sued before the magistrate of
the place where he resides at the
time when the summons is issued."
For certain purposes English law
recognises the possibility
of dual residence in the case of
companies. In Swedish
Central Railway Co Ltd v Thompson
1925 A C 495
(HL) it was
held that for income tax purposes
a registered company
could have more than one
residence. The majority in the
House of Lords concurred in the
opinion of LORD CAVE LC.
Commenting upon the earlier
decision in the case of De
Beers Consolidated Mines, Ltd v
Howe (supra) , LORD CAVE
said at p 501:-
"The effect of this decision
is that when the central control and management abides in a
particular place, the company
has a
residence at that place; but it
does not follow that it cannot have a residence elsewhere. An
individual can clearly have more than
one
residence and in principle there
appears to
be no reason why a company should
not be in the
44
same position."
I
have
had the advantage of reading the judgment prepared in this appeal by
my Brother NICHOLAS. NICHOLAS, AJA takes the view that the
conclusion
of ELOFF, J that a company "resides" where its registered
office is, is contrary to principle and authority.
I
am unable, with respect, to share that
view.
NICHOLAS, AJA
bases his view particularly on three cases: Estate Kootcher v CIR
1941 AD 256
, Beckett's case (supra), and the Grimshaw case (supra).
I
shall
presently
consider each of these cases individually, but it is convenient to
acknowledge, in general terms, that it was
held
in each of them that a compan
ý
resides at the place where its general administration is located, i e
at the seat of its central management and control, from where
the
general superintendence of its affairs takes place, and
where,
consequently, it is said that it carries on its real
45
or principal
business. For the sake of brevity
I
shall
refer to this as the company's "place of central control".
That a company resides at its place of central control
was again
accepted in Vanderbijl Park Health Committee and
Others v Wilson and Others
1950
(1) SA 447
(A) at 466-7.
The principle
is accordingly well established in our law, and
I
can see no warrant for departing from it.
I
accept, furthermore, that it applies in
respect of matters of jurisdiction, with the result that the court of
the area where the company's
place of central control is situated
will have jurisdiction to entertain a monetary claim against the
company, on the ground that
it is resident within the court's area of
jurisdiction. On this approach it follows that, if the company's
registered office is located
elsewhere than at its place of central
control, a finding that the company is resident at the place of its
registered office for
the purposes of jurisdiction must
46
necessarily
involve an acceptance of the principle that a company can for such
purposes (i e in regard to questions of jurisdiction)
be resident at
two places at the same time. In my judgment, the cases that
I
have mentioned do
not
preclude the acceptance of such a principle, as
I
shall
endeavour
to show in a moment, and
I
consider
that this Court should now approve it. Accordingly
I
find that a company can and does have a
dual residence f or jurisdictional purposes, where its central
control and its
registered office are
located at different places.
In the case of Estate Kootcher
(supra) the Court was not concerned with any question relating to
jurisdiction and its judgment did
not touch at all on the question
now being discussed. This is pertinently demonstrated by the decision
in Appleby (Pty) Ltd v Dundas
Ltd
1948 (2) SA 905
(E). In that case a
foreign company, registered in England and with its head office in
England,
47
had a branch office in
Johannesburg, where it carried on
business. It was sued in the EDL
on contracts entered
into within that Court's area of
jurisdiction. The issue
for decision was whether the
company resided in the Union
within the meaning of that phrase
in section 5 of the 1912
Act. It was held that it did.
HOEXTER, J said (at
911-2):
"Counsel for the defendant
relied very strongly on the case of Estate Kootcher v Commissioner
for Inland Revenue
(1941 AD 256)
, in which the Appellate Division
held that the Standard Bank of S A Ltd is not, for the purposes of
section 4(a)(ii) of the Death
Duties Act, No 29 of 1922, a person
ordinarily resident in the Union. It was held that the Standard Bank
of S A Ltd resides in England,
where it is registered and where its
central management and control actually abide, and that it could not
acquire a residence in
the Union by having branches and carrying on
business here.
That case, however, dealt with
death duties and was not intended to govern the interpretation of the
word 'reside' when it occurs
in a statute concerning jurisdiction.
That it was not so in-tended may be inferred from the following
passage in the judgment of
WATERMEYER, JA at p 261:
48
'There are, however, a number of
cases in which the suggestion has been made that a corporation
"resides" or even acquires
a "domicile" at the
place where its trade or business is carried on, meaning by that
phrase the actual operations which
earn a profit and not the central
control of those operations
But those cases are all cases
in which the question was whether
the corporations concerned were amenable to the jurisdiction of
courts in the United Kingdom, and
it seems clear that the words
"residence" and "domicile" were not used in the
proper juristic sense determined
by cases such as the de Beers
case.'".
It is clear from the judgment of
HOEXTER, J at 910-911 that -
a dual residence of a company for
jurisdictional purposes
is recognised when consideration
of convenience require
that to be done. It is true that
the case concerned a
foreign company which carried on
business in this country,
but it is worthy of note that the
learned Judge, quoting
the remarks of INNES, J in
Beckett's case supra at 338
concerning the earlier case of
Wallis v The Gordon Diamond
49
Mining Co Ltd 6 HCG 43, pointedly
observed (at 910) that
the question
was left open in Beckett' s case whether the same principle should be
applied also to domestic companies.
(I
shall revert to Beckett's case on this
point below.) In my opinion the judgment in Appleby's case shows that
the recognition of a
dual residence of a domestic company, for
reasons of convenience in regard to questions of jurisdiction, would
not impinge on any
principle of our law. In this context no matter of
principle (as opposed to mere semantics) is involved in referring to
a company's
place of central control as its residence "in the
proper juristic sense", as in Kootcher's case supra, and to a
different
place where it carries on business as its "limited or
partial" residence, as in Swift v National Bank of South Africa
1923 OPD 24
at 27 (quoted in Appleby' s case at 910) or as "the
fiction of separate residence", as in Wright v Stuttaford &
Co
1929 EDL 10
at
50
37 (quoted in
Appleby's case at 911). That being so,
I
can perceive no objection in principle, in
the same context, to the recognition of a separate residence of a
domestic company at the
place of its registered office, where that is
situated elsewhere than at its place of central control.
I
turn
to Beckett's case (supra), the facts of which have already been
noted. The ambit of the actual decision in that case was a very
limited one. The decision that the Witwatersrand Local Division had
no jurisdiction to entertain the action should not indiscriminately
be extended in effect beyond the narrow confines of the facts of the
case. In so far as INNES, J in the course of his reasoning made
statements of an ostensibly general tenor, they should not be applied
to situations to which the learned Judge was not then addressing
his
mind. So, when the learned Judge said (at 334) that "the only
home that a corporatioh can be said to
51
have" was at its place of
central control, and that "one would say that it could only
reside at one place at a time",
he could not have intended to
lay down inflexible principles of universal application. Indeed, this
is apparent from the rest of
his reasoning. In reviewing the
decisions of the English Courts (at 336-7) he accepted, by
implication, the propositions that, in
regard to foreign companies,
"a corporation might be deemed to have two residences", and
that "a corporation is by
a fiction supposed to have an English
residence or domicile"; and he said that "the Courts
devised an English residence
for the company other than its real
one." True, he pointed out that the English Courts did not apply
this approach to domestic
companies, and he declined, for reasons of
convenience, to apply it to the facts of the case with which he was
dealing, saying (at
338):
"And there seems no reason
why we should in connection with proceedings founded on a contract
52
entered into with the head office
devise a fictional residence for the defendant company at
Johannesburg."
But, on the other hand, the
learned Judge expressly
refrained from holding that a
domestic company could not
have a residence, for
jurisdictional purposes, at a place
other than that of its central
control. In Wallis v
Gordon Diamond Mining Co Ltd
(supra), and in the American
case of Aldrich v Anchor Coal Co
(the relevant passage of
which is quoted in Appleby's case
(supra) at 911), it was
held that a foreign company
carrying on business in the
area of jurisdiction of a local
court is resident, for
jurisdictional purposes, in that
area, in relation to
causes of action arising out of
its business activities
there. With reference to those
cases, INNES, J said, at
338-9, in dealing with the
position of a domestic company:
"With regard to the contracts
of local branches, the balance of convenience would probably be in
favour of their being enforced
by local tribunals
53
competent to adjudicate upon the
subject matter. But whether it would be found possible in such cases
to apply to domestic companies
the principle recognised in rêgard
to foreign corporations in Wallis v Gordon Diamond Co, and also laid
down by an American
Court in Aldrich v Anchor Coal Co (41 Am State
Rep, p 831), is a point which does not arise in these proceedings.
The guestion is
one of practice, and should remain open until it
comes up directly for decision."
The question left open pertained
to a place where the
company carried on business, but,
of course a similar
quéstion in relation to the
place where a company's
registered office is situated did
not arise and was not
adverted to at all. In my
judgment, therefore, Beckett's
case did not lay down any
principle which would be
infringed by holding that a South
African domestic company
resides, for jurisdictional
purposes, also at the place of
its registered office, if that is
located elsewhere than at
its place of central control.
54
It will be recalled that in
Grimshaw' s case the Court was concerned with a statutory provision
which reguired a foreign company to
lodge with the Registrar of
Companies the names and addresses of one or more persons resident in
the Colony, authorized to accept
on behalf of the company service of
process and any notices required to be served on the company. In my
opinion the mere registration
in the Companies Office of such names
and addresses under that section cannot properly be regarded as
equivalent to the position
of a company's registered office . in
terms of section 170(1)(b) of the Companies Act. While BRISTOWE, J at
457 referred to an address
under section 198(1)(c) of the 1909 Act as
"the registered office" of the company, that was, with
respect, really a misnomer;
and that the learned Judge meant to use
the phrase in a limited sense seems to be clear from his statement at
456 that the "registered
office" was the place
55
where the
company had "chosen its domicilium citandi et executandi".
The registered office provided for in section 179(1)(b)
of the
present Act has, in my view, far
greater
significance than the registered address with which
Grimshaw's
case was concerned. Consequently
I
do
not consider that case to be of any real moment in the context of the
present discussion.
I
would
add the following observations. The fact that some companies in
practice prefer to use their registered offices as no more than
a
kind of postal depot, detached from the place where business is
actually conducted, cannot detract from the importance which the
registered office is accorded by virtue of the provisions of the Act
which are mentioned by ELOFF, J in the Dairy Board case (supra)
at
771 B-D. And when one is dealing with an artificial person, one must
perforce work with fictions. On that score,
I
do not
consider
it to be any less acceptable to regard a company's
56
residence as
being situated at its registered office, as compared to its place of
central control, or a different place where it carries
on business;
nor, with respect, do
I
think
that it is any the less artificial to regard the company as being
"present" at its registered office rather than being
"resident" there.
In my judgment, therefore, for the
reasons given, the conclusion at which ELOFF, J arrived in the Dairy
Board case (supra) was not
contrary to principle or authority. In my
respectful view his conclusion was juristically sound, and it merits
endorsement by this
Court. It appears to me, moreover, that in
reaching his decision in the Dairy Board case ELOFF, J piroper ly had
regard to considerations
of convenience. The significance of the
factor of convenience was stressed by TROLLIP, JA in Estate Agents
Board v Lek (supra). At
1067 E-F of his judgment the learned Judge of
Appeal observed:-
57
"In the present context of
our unitary judicial system of having one Supreme Court with
different
Divisions convenience and common
sense,
are, inter alia, valid
considerations in determining whether a particular Division has
jurisdiction to hear and determine the particular
cause. See the
Sonia case 1958(1) SA 555(A) at 562A and F, 564A; and cf Appleby
(Pty) Ltd v Dundas Ltd 1948(2) SA 905(E) at 911."
That finding, by itself, does not
conclude the
appeal in favour of the appellant.
The inquiry is a dual
one: (1) Is there a recognised
ground of jurisdiction;
and, if there is (2) is the
doctrine of effectiveness
satisf ied - has the Court power
to give ef fect to the
judgment sought? See Hugo v
Wessels 1987(3) SA 837(A) at
849 H - 850A. In this case the
second question is
clearly to be answered in the
affirmative. That the
respondent carries on business in
the Republic of Transkei
and that all its assets may be
found there is irrelevant.
58
In terms of sec
344 of the Companies Act a company may be wound up by "the
Court" if it is unable to pay its debts. And,
in terms of sec 12
"the Court" is any provincial or local division of the
Supreme Court within the area of the jurisdiction
whereof the
registered office of the company or its main place of business is
situate. In terms of sec 345 a company is deemed to
be unable to pay
its debts if, inter alia, a creditor to whom the company is indebted
in a sum of not less than R100 has served on
the company at its
registered office a demand for payment thereof, and the company has
for three weeks thereafter neglected to make
payment thereof or to
furnish reasonable security therefor. The amounts ciaimed by the
appellant in its action total thousands of
rands. Apart from the .
fact that (as
I
have
found) the Court a quo was competent to entertain the appellant's
action, it is clear that the Court a quo also has jurisdiction
in any
application
59
against the respondent in which an
order for its winding up
may be sought. Upon the grant of a
winding up order a
concursus creditorum is
instituted, the effect whereof is
that, to use the language of
INNES, JA in Walker v Syfret
N O
1911 AD 141
at 166:-
"....the hand of the law is
laid upon the
estate "
Winding up therefore represents a
potent means of
enforcement of the judgment sought
by the appellant against
the respondent. The order sought
by the appellant is thus
easily made effectual within the
area of jurisdiction of
the Court a quo.
It follows, in my view, that the
Court a quo should have dismissed the special plea against its
jurisdiction to hear the appellant's
action; and that the appeal must
succeed.
However,
although it was not an issue pursued at any length in argument before
us,
I
consider
further that
60
apart from the fact that the
respondent was resident within
the area of its jurisdiction, the
competence of the Court
below to entertain the appellant's
action is founded no
less securely on the existence of
jurisdiction ratione
domicilii.
In the reported cases practical
illustrations of
domicile abound, but as yet no
comprehensive and
satisfactory definition appears to
havê been formulated.
See eg Ranchod, The Concept of
Domicile in SA Law, Acta
Juridica (1970) 53 - 55; Forsyth,
op cit, 101 - 103. In
his monograph The SA Law of
Domicile of Natural Persons
Prof Kahn (at 5) quotes the
statement by R A Leflar,
American Conflicts Law (1968) at
17, that domicile is:-
"..a legal relation between a
person and a place created by law and not by the person, and designed
altogether to serve the law's
purposes."
Martin Wolff, op cit, at 106,
states:-
"A PERSON's domicile is the
place or country which is considered by law to be the centre of
61
his life, his 'centre of gravity',
as it were. This notion is common to all legal systems; but they have
very different ways of determining
the place to be looked on as such
centre."
What appears to have been the
position at common
law in England may be gathered
from Gasque v Commissioners
of Inland Revenue
(1940) 2 KB 80
(an appeal against
assessments to surtax) which
decided that the domicile of a
limited company was determined by
its place of
registration; and that such
domicile clings to it
throughout its existence. In the
course of his judgment
MACNAGHTEN, J remarked at 84 -
85:-
"It was
suggested by Mr Needham on behalf of the
appellant
that by the law of England a body corporate has no domicil. It is
quite true that a body corporate cannot have a domicil
in the same
sense as an individual any more than it can have a residence in the
same sense as an individual. But by analogy with
a natural person the
attributes of residence, domicil and nationality can be given, and
are,
I
think,
given by the law of England to a body
corporate The domicil of origin,
or the
domicil of birth, using with
respect to a company
62
a familiar metaphor, clings to it
throughout its
existence
The Solicitor-General called my
attention to the
case in the American Courts of Bergner &
Engel
Brewing Company v Dreyfus" (1898 70 Am. State
Rep.
251). "The judgment in that case was
delivered by HOLMES, J.
Any opinion of that
very eminent judge, more particularly on
any
question relating to the common law of England,
is entitled
to the highest respect in any English
Court. The head note to that
case, which
correctly represents the decision, is this :
'A
corporation has its domicil in the jurisdiction
of the state
which created it, and, as a
consequence, has no domicil anywhere
else' "
In England the Civil Jurisdiction
and Judgments Act 1982
for jurisdictional purposes
attributes a domicile to
corporations by assimilating
domicile to the corporation's
"seat"; and by
prescribing rules which rely on a
combination of the place of
incorporation, the place of the
registered office, and the place
of residence as criteria
for determining the seat. See
Dicey & Morris, The
Conflict of Laws, 11th ed. (1987)
1130 - 1131; Morris &
63
North, Cases and
Materials
on Private International Law
(1984) 79 et seq.
By
way of illustration the provisions
of subsections (3)
and
(4) of sec 42 of the Act may here be
quoted:-
"(3) A corporation or
association has its seat in the United Kingdom if and only if -
it was incorporated or formed
under the law of a part of the United Kingdom and has its registered
office or some other official
address in the United Kingdom; or
its central management and
control is exercised in the United Kingdom.
(4) A corporation or association
has its seat in a particular part of the United Kingdom if and only
if it has its seat in the United
Kingdom and
it has its registered office or
some other official address in that part; or
its central management and
control is exercised in that
part; or
(c) it has a place of business in
64
that part."
While reference to comparativê
legal systems is
useful and instructive it need
hardly be said that domicile
is an issue to be determined by
the lex fori. This rule
applies not only in the conflict
of laws to the selection
stage where the lex domicilii may
have to be determined,
but obviously also in the
determination of the issue
whether any particular division of
the Supreme Court has
the competence to hear an action
ratione domicilii. See
Ellison Kahn, op cit, 11 . The
position is neatly put by
Forsyth, op cit, 108:-
" if domicile is being used
as a
jurisdictional link rather than as
a connecting
factor in a choice of law rule
the local
court is interpreting a rule
fundamental to its own power to determine the dispute......"
Seê further Ex parte Jones :
In re Jones v Jones 1984(4) SA
725(W) at 727 E - F.
The tests for determining domicile
are more
65
elaborate and elusive than those
for mere residence. Since the ascription of either residence or
domicile to a company derives from
the equiparation of a natural
person and a juristic entity both notions - as pointed out by
MACNAGHTEN, J in Gasque v CIR (supra)
- are equally impalpable.
However transparent the fiction involved may be, its use is dictated
by legal necessity; and the concept
of domicile, no less than that of
residence, must be applied to a company as best one can.
The concept of domicile
encompasses both a physical and a mental element. The physical
element is residence at a particular place
or within a particular
rechtskring. The question of critical importance on this part of the
present case is to determine the territorial
ambit of the rechtskring
within which the respondent is domiciled. Dealing with the domicile
of corporations Forsyth, op cit, 167,
states:-
66
"A
corporation is notionally domiciled at its place of incorporation. A
córporation may, of course, be domiciled only
in the Republic
as a whole and this is not sufficient for it to be domiciled in the
area of any particular division of the Supreme
Court. Hence, for the
purpose of establishing jurisdiction in a division, domicile alone
will never suffice."
That in
the conflict of laws a company incorporated in
South
Africa with its registered office somewhere within
the
Republic will have a South African domicile is
manifest.
But it seems to me, with respect, to be far
from
obvious that in the situation where domicile is being
invoked as
a connecting factor to establish jurisdiction
such a
company cannot have a domicile territorially
narrower
and more circumscribed than a national domicile.
Whatever
may be the position in other legal systems
I
see
no ground,
in the light of the peculiar judicial structure
of South
Africa, for excluding what may conveniently be
described
as a "provincial" domicile
It has
been pointed out that despite the creation
67
of a single Supreme Court it lacks
authority over the whole
country; and that only divisions
thereof have jurisdiction
to entertain actions. For the
purposes of jurisdiction
the area in respect whereof a
defendant is an incola or a
peregrinus is the area of the
division to which the court
in which the action is instituted
belongs. To that extent
our judicial structure has a
federal aspect. The
complication consequent thereupon
is described thus in an
article on Domicile by Pollak in
(1933) Vol
50 SAW 449
at
456:-
"In the light of these
circumstances, can it be said that there is such a thing as a Union
domicile, or can one speak only of
a provincial domicile? It is
submitted that no hard and fast answer can be given to this question.
The answer will depend upon the
nature of the inquiry in regard to
which the question of domicile is raised. If the inquiry relates to
the jurisdiction of a provincial.division
domicile in
that province is necessary, and
this requirement
is not met by showing a permanent
home in another province or a permanent home in the Union as a
whole."
68
Dealing with money claims against
corporations in his
treatise on Jurisdiction, Pollak
expresses disapproval of
either residence or domicile as
connecting factors to found
jurisdiction; and he is minded to
discard both concepts.
There the learned author writes
(at 92):-
"It is proposed therefore to
state the law with regard to actions against corporations without
making use of the notions of domicile
and residence."
I
respectfully
but firmly disagree with the above approach
to the problem.
I
do not consider
that it accurately
reflects the current legal
position in South Africa.
Despite his disinclination in
principle to invoke
the domicile of a corporation as a
jurisdictional
connecting factor, it may be noted
that Pollak nevertheless
recognises and accepts the
existence of a "provincial"
domicile in the case of a South
African company. This
appears from the second part of
his article cm domicile
(see (1934) vol 51 SALJ at 36).
Having expressed
69
scepticism as to whether the
attribution of a fictitious
domicile to a corporation serves
any real useful purpose,
Pollák points out, however,
that in fact South African
courts have used the notion; and
he proceeds to discuss
"what is to be considered to
be the domicile of a
corporation". To this end the
learned author formulates a
number of rúles, the first
of which is stated in the
following terms:-
"(1) In the case of a trading
company incorporated and registered in the Union and having its
principal place of business in
the Union, the domicile of the company
is the Province in which its principal place of business is situate."
(Emphasis provided.)
It has already been pointed out
that the concept
of domicile lends itself to
exemplification rather than to
precise definition. Of the many
definitions that have been
attempted, however, it seems to me
that for purposes of the
present appeal
(and
I
hasten to
add, for those purposes
70
only) a
terse but useful statement is to be found in the
judgment
delivered almost a century ago in the case of In
re
Craignish. Craignish v Hewitt
(1892) 3 Ch 180.
There
CHITTY, J
applied (at 192) the following definition in
Story's
Conflict of Laws (1), namely:-
"that
place is properly the domicil of a person in which his habitation is
fixed without any present intention of removing therefrom."
Earlier in
this judgment it has been held that by
reason of
the situation of its registered office in
Johannesburg
the respondent has its habitation
("residence")
within the rechtskring of the Witwatersrand
Local
Division. On the particular facts of the instant
case
I
further find
that as long as the respondent retains
that
situation of its registered office, there subsists
between
the respondent and the area of jurisdiction of the
Witwatersrand
Local Division a relation, created by law,
which
renders the respondent domiciled, for the purposes of
71
founding jurisdiction, within that
area.
I
am
careful to confine the above finding in regard to the respondent's
domicile to the peculiar facts of the case, for the following
reasons. If cme accepts, as
I
do,
that a company which has its place of central control elsewhere than
at its registered office resides simultaneously at both places,
then
the guestion of the respondent's domicile might well have assumed a
different complexion had the respondent carried cm its business
not
in the Transkei but within the Republic and beyond the area of
jurisdiction of the Witwatersrand Local Division - say, for instance,
at Pretoria. While
I
have
no difficulty in accepting that for jurisdictional purposes a company
may have dual residehce, it is not easy to conceive, for
jurisdictional purposes,of the ascription of more than a single
domicile to a company. Accordingly
I
would
limit the selection of domicile as an alternative ground of
72
jurisdiction for the Witwatersrand
Local Division in this case to the particular circumstance that the
respondent has no place of
business or central control anywhere
within the Republic.
In the
hypothetical example mentioned above it might be a matter of
considerable difficulty to decide whether the company was domiciled
within the area of jurisdiction of the Witwatersrand Local Division
or that of the Transvaal Provincial Division. Since the question
need
not be investigated for purposes of the present appeal,
I
would prefer to leave it open.
The appeal
succeeds with costs, including the costs of two counsel. The order of
absolution from the instance with costs made by the
Court a quo is
set
aside, and the following order is
substituted therefor:-
73
"The first defendant's
special plea raising an objection to the jurisdiction of the Court is
dismissed with costs."
G G HOEXTER, JA
BOTHA, JA ) GOLDSTONE, AJA )
Concur
IN THE SUPREME COURT OF SOUTH
AFRICA (APPELLATE DIVISION)
In the matter between:
BISONBORD LIMITED
Appellant
and
K BRAUN WOODWORKING MACHINERY
(
PROPRIETARY)
LIMITED
Respondent
Coram:
HOEXTER, BOTHA,
MILNE JJA NICHOLAS et GOLDSTONE AJJA.
Heard:
Delivered:
9 March 1990
10
September1990
2
JUDGMENT
NICHOLAS AJA:
I
am
in respectful agreement with the whole of the
judgment
of HOEXTER J
Á
,
save in its endorsement of the
judgment in
Dairy Board v. John T Rennie and Co Ltd
1976(3)
768(W) and the decision that a
company registered in the
Republic of South
Africa resides where its registered office
is
situated.
The word "residence" has
a variety of meanings, ranging from mere physical presence to
domicile. (See Pollak . p 44). The
learned author discusses the
problem of what is meant by "residence" in relation to
jurisdiction at pp 45-48, where he
quotes from the judgment of
BRISTOWE J in
Robinson
v. C
ommi
ssio
ner of Taxes
1917 TPD 542
at 547-8. In footnote 1 on pp 46-47, he quotes a number
of other judicial attempts
3
to describe what is meant by
residence in relation to a
natural person.
There is normally no difficulty in
deciding where
a natural person resides, but when
the inquiry relates to a
company some artificial test must
be applied. For a company
is a creation of the law., and
exists only
in abstracto
.
"The artificial legal person
called the corporation has no physical existence. It exists only in
contemplation of law. It has
neither body, parts, nor passions. It
cannot bear weapons nor serve in the wars. It can be neither loyal
nor disloyal. It cannot
compass treason. It can be neither friend nor
enemy. Apart from its corporators it can have neither thoughts,
wishes, nor intentions,
for it has no mind other than the minds of
the corporators."
(
per
BUCKLEY LJ in
Continental Tyre and Rubber Co. (Great
Britain) v Daimler Co Ltd
1915 (112) LTR 324
at 333.)
In
Estate Kootcher v. C.I.R.
1941 AD 256
, the
disputed question was that whether
the Standard Bank of South Africa Ltd was in law to be regarded as
"resident" within
the
4 Union. WATERMEYER JA said at
260:
"Now it has been freguently
pointed out that when the words 'reside' or ' resident' are used in
connection with a corporation
to indicate its presence in a place for
some period of its corporate existence, the words are used in a
figurative sense and can
only be given a meaning analogous to the
meaning of the words used with regard to a human being. A human being
has a body and a mind
and the mind always accompanies the body; the
mind therefore resides (if a mind can be said to reside) where the
body resides. A
corporation has no body but it has what by analogy
can be called a directing mind. In a human being the location of the
body with
its attendant mind, if such location be periodic or usual
or habitual, determines the residence of that human being, and it is
therefore
to be expected that the residence of a corporation will be
determined by the periodic, usual of habitual location of the
directing
mind. In the case of
De Beers
Consolidated Mines
v. Howe
,
(1906, AC. 455
, at page 459, LORD LOREBURN stated the
law as follows:
'In applying
the conception of residence
to a company,
we ought,
I
think,
to proceed as nearly as we can upon the
analogy
of an individual. A company cannot eat or sleep, but it can keep
house and do business. We ought,
therefore,
to see where it really keeps
house and does
business. An individual may be of foreign nationality, and yet
reside
in the United Kingdom. So may
5
a company... A company
resides
for
purposes of income tax
where
its real
business is carried on
...
the real
business is carried on
where
the central
management and control
actually
abides
"This passage has been quoted
with approval and followed in numerous cases of the highest
authority."
Like
De Beers
,
Estate
Kootcher
was a tax case, but
the same principle was stated by
the Appellate Division in
a case relating to jurisdiction
under s 16 of the Transvaal
Administration of Justice
Proclamation. INNES J said in T
W Beckett and Co Ltd v. Kroomer
Ltd
1912 AD 324
at 344:-
"Now the terms "reside"
and 'residence' can only be used in their true significance with
regard to natural persons.
The residence of a legal
persona
like
a company, artificially created, must be a mere notional conception
introduced for purposes of jurisdiction and law (see Foote,
p. 112).
The only home which a corporation can be said to have is the place
where the operations for which it was called into existence
are
carried on. So far as it can be said to reside anywhere, that is
where it resides. And if the analogy of a natural person is
to be
followed, one would say that it could only reside in one place at one
time. The doctrine is firmly established that where a
company carries
on
6
business at more places than one
its true residence is located where its general administration is
centred. To quote the words of
Lindley
(
Companies,
6th
Ed., p. 1223), 'The residence and domicile of an incorporated company
are determined by the situation of its principal place cf
business.
This is not only the opinion of the most recent writers on private
international law, but is supported by the decisions
of our own
Courts. By the principal place of business is meant the place where
the administrative business of the company is conducted;
this may not
be where its manufacturing or other business opérations are
carried on.'"
However, in
Dairy Board v John
T Rennie and Co
(Pty) Ltd
(
supra
)
where the question was whether the WLD had
jurisdiction over the defendant
company ELOFF J held that a
company registered in South Africa
resided in law where its
registered office is. The
defendant's registered office was
within the court's area of
jurisdiction, but its business
activities were conducted from
Durban, where its management
was situated, its books of account
were kept, its directors
met most of the time, and its
business was controlled. The
learned judge posed the question,
"In the light of the
7
circumstances can it be said that
defendant resides or is in
the Witwatersrand within the
meaning of s. 19?" His answer
was affirmative:
"In my view, a company
registered in South Africa resides in law where the registered office
is. If its principal place of business
is situated elsewhere it may
also reside at the latter place." He accordingly held that the
WLD had jurisdiction in the
matter. In my respectful opinion
this conclusion is contrary
to principle and authority, and
cannot be supported.
Having referred to
dicta
in
T W Beckett
(
supra
)
ELOFF J observed that the court
did not there have to
consider whether a company might
not be said to reside or be
where its registered office is,
and said (at 770 H):
"What is, in my opinion of
importance in the judgment in
Beckett's
case, is that the
Court considered that there is a close correlation between the duty
of a company to accept service at a particular
place and its place of
residence. On p. 339 the concluding paragraph of the judgment reads:
'For the purpose of this case it
is not necessary to say more than that a company
8
should not be compelled to accept
service anywhere, save at its central office, of process the object
of which is to enforce or recover
damages in respect of a contract
entered into with the officials of its central administration.'"
I
do
not think that this passage provides support for ELOFF J's opinion.
What INNES J was saying was that a company should be compelled
to
accept seryice at its central office and at no other place - he was
not saying that if a company
was obliged to
accept service at some other place, that place
was
to be considered as its residence.
ELOFF J went on to say that this
correlation
between the place at which service
may be effected and
jurisdiction over a corporation
was
"...in accordance with what
was said by Cheshire,
Private International Law
, 7th ed., p.
174, as follows:
'If he is found here he can be
served here and at common law the exercise of jurisdiction depends on
service. It is
9
the same in the case of a
corporation.' Gower
Modern Company Law
, 3rd ed., p. 447, is to
similar effect where he says
sub voce
'The company's home':
'By the expression 'home' we mean
the
office at which the registers have
to be
kept and where service is to be
effected.'"
Cheshire is not a safe guide on
this point, because in our law, differing from the English common
law, the exercise of jurisdiction
does not depend on service. In any
event, where the question is whether a defendant resides within the
court's jurisdiction, this
is not shown by the fact that he can be
served there.
Nor does Gower provided the
learned judge with support. The sentence quoted by ELOFF J is in the
section of the book headed "Matters
requiring registration at
the Companies' Registry." The definition quoted reflects what
"we" (i.e. the authors) mean
by "home" - an
expression which is not used in the Companies Act. And the sentence
is followed immediately by the statement,
"It is not necessarily
10
its 'residence' in the technical
sense....."
ELOFF J said at 771 B-D that the
factor of the
places at which a company can be
served with process
" ...assumes importance if it
be borne in mind that sec. 170(1) of the Companies Act, 61 of 1973,
as also its predecessor in
the 1926 Companies Act mentions the
registered office as the one 'at which all process may be served'.
And not only does the Companies
Act render the registered office the
place at which service can be effected; it is also the place where a
minute book of the general
meetings of the company is to be kept
(sec. 204); as also the register of allotment of shares (sec. 93);
the register of members
(sec. 105); a register of pledges and bonds
(sec. 127); a register of debenture holders (sec. 128); a register of
directors and officers
(sec. 216); a register of material interests
of directors and other insiders in the shares and debentures of the
company (sec. 230
and sec. 231); a register of declaration of
interest in contracts by directors and officers (sec. 240); a
register of attendance
of directors' and managers' meetings (sec.
245): and a register of fixed assets (sec. 284.p 22.
The totality of these provisions
seem to me to attract the inference that the Legislature intended to
endow the registered office
with the quality of being the place to
which the world can look as the legal home and administrative centre
of the company."
I
respectfully
disagree with this conclusion. The records
11
referred to are not the
lares
et penates
of a company's home. They are kept at the company's
registered office only because the Companies Act requires it,
presumably in ofder
that they should be accessible at a fixed and
ascertainable place for inspection by those entitled to inspect them.
A company's registered
office is frequently situated at the offices
of an attorney or auditor , whose connection with the company may be
no more than professional,
and who may not otherwise exercise his
mind in the administration of the company's affairs. The presence of
the registered office
is usually indicated by a board affixed to the
wall outside the reception office, frequently among a number of
similar boards for
other companies. And no more is required of the
attendant employee concerned, than that she should accept service of
process, and
receive communications, and produce for inspection the
records above referred to. In
Grimshaw
v. Mica Mines Ltd
1911 TPD 450
BRISTOWE J referred at 456-457 to the fact that the
registered office is usually the place
12
where the company is controlled
and where the general superintendence of its affairs takes place, but
added:
"... But it is not
necessarily so. The registered
office may be merely a place where
notices and summonses can be served on the company, a mere address
for service, at which no business
at all is carried on. It cannot be
said that, because the company has a registered office where nothing
more than that is done, it
carries on business there."
And see the speech of VISCOUNT
SUMNER in
Eqyptian Delta Land
and Investment Company v Todd
1929 AC at 14-15.
I
stated
at the outset that
I
agreed
with HOEXTER JA that the Witwatersrand Local Division is the
defendant company's
forum domicilii
.
For the reasons given by my
learned
colleague it is manifest that it has a South African -
domicile.
Where the question relates to the jurisdiction of a division of the
Supreme Court however it is insufficient that a company
is domiciled
in the Republic; it is necessary that it should have a local domicile
within the area of jurisdiction of that
division.
Where it has its principal
13
place of business within such
area, it may properly be said to be domiciled there; but where it
does not have its principal place
of business in the Republic, then,
for want anything better, it must be said to be domiciled in the area
in which it is regarded
as being present.
SOLOMON ACJ pointed out in
Madrassa Aniuman Islamia
v. Johannesburg Municipal Council
1919 AD 439
at 449 that -
".. it is clear that a
company can no more 'occupy' than it can reside on a stand. For a
company is a purely legal conception:
it has no physical existence,
but exists only in contemplation of law, so that it is incapable of
being physically present at any
place."
But just as a residence can for
certain purposes be
attributed to a company, so can a
presence. And in my
opinion the legislature, in
requiring in s 170(1) of the
Companies Act that every company
shall have a registered
office in the Republic, has
attributed to the company a
statutory presence there. It is
the place at which the
14
company may always be found. The
provision in s 170(1)(d) that a change in the situation of the
registered office of a company shall
not take effect unless the
Registrar has recorded the particulars thereof, is designed to ensure
that, for any purpose of the Act,
there is always a place which is
the registered office. All communications and notices may be
addressed, and all process may be served
there, and the company's
records referred to by ELOFF J in the
Dairy Board
case may be
inspected there. Moreover s 12(1) provides that the court which has
jurisdiction under the Act in respect of any company,
shall be any
provincial or local division of the Supreme Court within the area of
jurisdiction whereof the registered office of the
company or the main
place of business of the company is situated.
The considerations of convenience
referred to in the
Dairy Board
case
(supra)
at 771 G-H,
citing
Appleby (Pty)
Ltd v Dundas Ltd
1948(2) SA 905(E)
at 911, call imperatively for some place, the location of which is
ascertainable at the
15
Companies Registry, at which the
company may with certainty
be found to be "present".
That place is the registered
office.
In the present case the principal
place of business of the defendant is in Transkei. It does not carry
on business in South Africa.
Apart from the fact that it was
incorporated in South Africa, its only connêction with the
Republic is that its registered
office is in Johannesburg. It is
therefore within the jurisdiction of the WLD that the defendant must
be taken to be domiciled.
NICHOLAS AJA MILNE JA concurs