THE SUPREME COURT OF APPEAL
OF SOUTH AFRICA
Reportable
CASE NO : 427/03
438/03
In the matter between :
METLIKA TRADING LIMITED First Appellant
HAWKER AIR SERVICES (PTY) LIMITED Second Appellant
HAWKER AVIATION SERVICES PARTNERSHIP Third Appellant
CARMEL TRADING COMPANY LIMITED Fourth Appellant
and
THE COMMISSIONER FOR THE SOUTH AFRICAN
REVENUE SERVICE Respondent
______________________________________________________________________________
Before: STREICHER, CAMERON, CONRADIE JJA, PATEL & PONNAN AJJA
Heard: 6 SEPTEMBER 2004
Delivered: 1 OCTOBER 2004
Summary: Interim interdict – appealability – an order is in effect final and appealable
if of immediate effect and not to be reconsidered at the trial or on the same
facts – jurisdiction – if respondent an incola the court may assume
jurisdiction to grant an interdict (mandatory or prohibitory) no matter if
the act in question is to be performed outside the court's jurisdiction.
______________________________________________________________________________
J U D G M E N T
______________________________________________________________________________
STREICHER JA
2
STREICHER JA:
[1] The Transvaal Provincial Division, (‘the court a quo ’), at the
instance of the respondent, ordered the third appellant to take all the
necessary steps to procure the return of a Falcon aircraft to South Africa. In
addition it granted certain further re lief relating to the aircraft. The order
was stated to be an interim order pending the finalisation of an action by
the respondent against some of the appellants and other parties. The court a
quo also confirmed the attach ment of certain assets of the fourth appellant
ad confirmandam jurisdictionem alternatively ad fundandam
jurisdictionem. The appellants appeal agains t the order that the third
appellant should take steps to procure the return of the aircraft to South
Africa1, the fourth appellant appeals agai nst the attachment order and the
third and fourth appellants appeal agains t some of the additional orders as
well. It was not contended that the appeal against the additional interim
orders should succeed in the event of the appeal against the order that steps
be taken to procure the re turn of the aircraft be ing successful. The main
issues arising for determination are whether the orders are appealable,
whether the court a quo had jurisdiction to order the third appellant to take
steps to procure the return of the ai rcraft to South Africa and whether the
authorised attachments could confirm or found jurisdiction in the court a
quo.
1 The first and second appellant did not persist with their appeal against some of the additional orders.
3
[2] David King, the deponent to the first and second appellants’
answering affidavit, describes himsel f as the South African representative
of the first and second appellants. He once told an interviewer that he loved
to create new businesses and then ex it therefrom. One su ch a new business
created by King was a company by the name of Specialised Outsourcing
Limited. Specialised Outsourcing was listed on the Johannesburg Stock
Exchange in October 1997. At that time Ben Nevis Holdings Limited (‘Ben
Nevis’), a company incorporated in the British Virgin Islands, was the
registered shareholder of approximat ely 70% of the shares in Specialised
Outsourcing. It sold virtually all th ese shares over a two year period at a
profit in excess of R1 billion whereafter King exited the company.
[3] Ben Nevis acquired various assets in South Africa. One such an asset
was the aircraft. During September 2000 it sold the aircraft to a partnership
in which the partners were Rand Merc hant Bank (a division of FirstRand
Bank ‘RMB’), Hawker Management (P ty) Ltd (‘Manco’) and the second
appellant Hawker Air Services (Pty ) Ltd (‘HAS’). At the time Manco and
HAS were wholly owned subsidiari es of FirstRand Bank and Ben Nevis
respectively. In terms of a loan agreement RMB advanced R171 110 000 to
the partnership to purchase the aircraft. The loan was to be repaid in
instalments. Ben Nevis deposited approximately R171 million with RMB
as security for the loan. The amount so deposited was to be utilised to repay
the partnership loan and the repaym ents so made were to constitute
advances by Ben Nevis to HAS and from HAS to the partnership. In
4
addition the repayment of the loan by RMB to the partnership was
guaranteed by Ben Nevis.
[4] In terms of the partnershi p agreement RMB, Manco and HAS
respectively had an interest of 99.8%, 0.1% and 0.1% in the partnership.
However, in terms of an option agr eement HAS was granted an option to
require Manco and RMB to withdraw from the partnership upon all
amounts owing under the loan agre ement having been paid by the
partnership to RMB in full or all of the obligations of the partnership to
RMB under the loan agreement having, with the prior written consent of
RMB, been delegated to a third party.
[5] The partnership agreement prov ided that the affairs of the
partnership would be conducted by a management committee. In terms of
an operations management agreement HAS was appointed as the operations
manager in respect of the business of the partnership. The loan agreement
provided that certain events would c onstitute a default which would entitle
RMB to declare it s obligations under each of the ‘transaction documents’
cancelled and to declare all amounts payable under the loan agreement
immediately due and payable. The tr ansaction documents were defined as
the financing documents, the partne rship agreement and the operations
management agreement.
[6] Ben Nevis had not decl ared to the respondent its income as a result
of the sale of its shares in Specialised Outsourcing. This gave rise to an
enquiry, during January 2002, in terms of s 74C of the Income Tax Act 58
5
of 1962. At the enquiry it came to light that, as a result of enquiries made
by an official of the respondent, all the South African assets of Ben Nevis
had been transferred to the firs t appellant, Metlika Trading Limited
(‘Metlika’), which, like Ben Nevis, is a company registered in the British
Virgin Islands. The transfer allege dly took place on 16 January 2001. It
could not have been alleged to have taken place earlier as a firm of auditors
had advised the respondent , in a letter dated 15 January 2001, that Ben
Nevis was the owner of shares in South African companies. Ben Nevis only
advised RMB on 21 February 2002 that al l assets held to its order should
be transferred to Metlika with effect from 28 February 2001.
[7] During February 2002 income ta x assessments were raised against
Ben Nevis in respect of the 1998, 1 999 and 2000 tax years in a total
amount of R1 467 844 330. King in his ow n right was assessed to tax in an
amount in excess of R900 million.
[8] As a result, no doubt, of the allege d transfer of all the assets of Ben
Nevis to Metlika, the respondent deci ded to institute an action against
Metlika, Ben Nevis and King for an order declaring that various assets
previously held in the name of Ben Nevis were in fact owned by King or
Ben Nevis and for certain specified a lternative relief. The assets included
an interest in the aircraft.
[9] Prior to the institution of the ac tion the respondent obtained an order
authorising the attachment of certain assets ad confirmandam
jurisdictionem in the case of Ben Nevis and ad fundandam jurisdictionem
6
in the case of Metlika. In addition interdicts aime d at preserving certain
assets were granted pending a retu rn day. The interim orders were
subsequently confirmed subject to amendments. In terms of this order (‘the
preservation order’) Hartzenberg J, pe nding the finalisation of the action,
granted an order:
'(a) Interdicting King, Ben Nevis and Metlika from ceding, pledging, alienating,
disposing or in any way encumbering an y of their assets excluding stock-in-
trade of businesses which could be sold in the ordinary course of business.
(b) Interdicting HAS from sell ing or ceding the aircraft or any rights therein to any
person.'
In addition Ben Nevis and Metlika we re interdicted from in any way
whatsoever disposing of their shareholding and lo an accounts in HAS and
from in any way whatsoever selling or ceding the Falcon aircraft or any
rights therein to any person.
[10] The founding affidavit filed by the respondent in the application for
the aforesaid relief made it clear that it was not considered necessary, in
order to protect the interests of th e respondent, to interfere with the
utilisation of the aircraft by the pa rtnership, or the management of the
aircraft by HAS.
[11] In a letter dated 27 February 2002 RMB notified the respondent that
HAS was the registered owner of the ai rcraft but not the beneficial owner
thereof. RMB stated that the benefi cial owner of the aircraft was an en
commandite partnership in which the discl osed partners were HAS and
7
Manco, each with a 0,1% interest. The silent partner was FirstRand with a
99,8% interest. Referring to an intima tion by the respondent’s attorney to
the attorney of King, Metlika and Be n Nevis to the effect that the
respondent was considering applying for an additional order which would
prevent the utilisation of the aircraft, RMB stated:
‘In the event of your client proceeding with an application for an additional
order for relief as intimated by you, FirstRand, as the holder of the majority interest in
the partnership, obviously has a material interest in the outcome of such application and
would expect . . . to be cited as a respondent.'
[12] The respondent chose not to appr oach the court for additional relief,
at least not until much later when the s ituation in regard to the aircraft had
drastically changed and FirstRand no longer had an interest in the aircraft.
[13] On 12 August 2002 RMB advi sed the respondent that it had
exercised its rights in terms of th e various breach clauses in the loan
agreement and that it had applied its security to part settle the amount
outstanding. Unbeknown to the res pondent RMB was in the process of
selling its partnership interest for a purchase consideration of R24 550 450
being the liability of the partnershi p to RMB after the application of
RMB’s security. Initially the purchaser, or proposed purchaser, was Qwerty
Aviation Services Limited (‘Qwerty’). The purchase price received from
the Bank of Bermuda, was, accord ing to the advice of King to his
attorneys, paid by Metl ika. Asked why the fund s to settle the Qwerty
liability were coming from Metlika Ki ng replied that it was a convenient
8
way of facilitating the payment to RMB and that arrangements for
reimbursement had been or would be made (the person concerned could not
recall which) between Metlika and Qwerty.
[14] However, the identity of the pur chaser was subsequently changed to
Carmel Trading Company Limited, th e fourth appellant (‘Carmel’), a
company incorporated according to th e laws of Mauritius. According to
King’s attorneys they were informed that the change was necessitated by
the fact that the Bermuda authorities would not allow the registration of an
aircraft in its jurisdiction unless the aircraft was maintained in Bermuda. As
this was not ‘the purchaser’s’ intenti on ‘the purchaser’ decided that the
aircraft should be based in Mauritius.
[15] The agreement of sale was c oncluded between Fir stRand, Manco,
Carmel, HAS and the partnership. In terms thereof FirstRand and Manco
sold to Carmel the RMB partnershi p interest, the Manco partnership
interest and all the claims of First Rand against the part nership under the
loan agreement. The purchase price was R24 550 450. RMB delegated to
Carmel all of its obligat ions to HAS and the part nership ‘in terms of, or
arising out of or in connection with the transaction documents (as defined
in the loan agreement) and as a partne r in the partnershi p’, Carmel agreed
to be bound by the terms and condition s of the partnership agreement and
HAS consented to the delegation. It follows that a new partnership between
HAS and Carmel came into being ('the new partnership') on the same terms
and conditions as the partnership be tween RMB, Manco and HAS and that
9
the transaction documents, which included the operations management
agreement, were not terminated. This n ew partnership is the third appellant
in this matter.
[16] On 16 August 2002, in respon se to RMB's letter dated 12 August
2002, the respondent enquired from RMB what clauses of the loan
agreement had been breached by the partnership and what the amount
owing by the partnership to RMB in te rms of the loan agreement was. The
respondent, referring to the option agreement, also wanted to know who the
present owners of the aircraft were and what rights RMB intended to
exercise. Only on 4 September 20 02 did RMB furnish the particulars
requested. It stated that its outsta nding exposure to the partnership, after
exercising its contractual rights to the deposit ceded to it as security, was
R24 550 450. It stated, furthermore, that it was ‘in the process of disposing
of its interests in, and its claims agai nst the partnership, to Carmel’. The
respondent thereupon attemp ted to get RMB to delay the transaction so as
to enable him to take the necessary steps to protect his interests but was
informed that the transaction with Carmel had been finalised on 5
September 2002.
[17] In the meantime the aircraft ha d been flown out of South African
with the intention of not returning it. Enquiries by the respondent revealed
that it was in Switzerland.
[18] These developments gave rise to the present application. The
respondent alleges that it is highly proba ble that the partnership's default in
10
terms of the loan agreement was a designed act to undermine the
preservation order. Hartzenberg J agre ed. He held that there could not be
the slightest doubt that the transacti on in terms of whic h Carmel acquired
RMB’s interest in the partnership was a contrived transaction, in fraudem
legis, to by-pass the preservation order. Carmel was a tool of King and
under his control. On that basis he granted the following order:
'1. The following interim orders made on 11 September 2002 are confirmed, which
orders will serve as interim orders pe nding the finalisation of the Applicant's
action under case number 20827/02:
1.1 The 4 th Respondent ("the Partnership") is prohibited from selling the
Falcon 900 aircraft, registration number ZS-DAV or any interest therein,
without the prior written consent of SARS, which consent may not be
unreasonably refused, or the consent of this Honourable Court.
1.2 Hawker Air Services (Pty) Ltd (3
rd Respondent) 2 is interdicted from
granting consent for the transfer of a partnership interest from the 5 th
Respondent3 to any person and/or entity without the prior written consent
of SARS, which consent will not be unreasonably refused, or the consent
of this Honourable Court.
1.3 The partners to the partnership agreement, the 3 rd and the 5 th
Respondents, are prohibited from amending the partnership agreement
without the prior written consent of SARS, which consent shall not be
unreasonably withheld, or without the consent of this Honourable Court.
2 HAS
3 Carmel
11
1.4 The 7 th Respondent 4 is requested to note this order in its registers
pertaining to the Falcon 900 ZS-DAV aircraft.
1.5 The attachment of following assets of the Fifth Respondent, Carmel
Trading Company Limited, ad confirmandam jurisdictionem
alternatively ad fundandam jurisdictionem, is confirmed:
1.5.1 Its partnership share in the Hawker Aviation Services Partnership
(4th Respondent);
1.5.2 Its loan account in Hawker Aviation Services Partnership (4 th
Respondent) in an amount of approximately R24.5 million;
1.5.3 Its share in the claim by the partnership against this Sandton
branch of First Rand Bank in respect of the credit balance in an
amount of approximately R10 797,00 available in the Fourth
Respondent's banking account, account number 62011195204;
1.5.4 Authorising and directing the sheriff or his deputy having
jurisdiction to attach the assets identified in paragraphs 1.5.1 to
1.5.3 above ad confirmandam and ad fundandam jurisdictionem
respectively.
The following orders are made which orders will serve as interim orders pending the
finalisation of the Applicant's action under case number 20827/02:
2.1 That if the R192 300 000,00 loan, or any part thereof, due by the partnership (4
th
Respondent) to Ben Nevis Holdings Limited (1 st Respondent) and/or Metlika
Trading Limited (2 nd Respondent) and/or Hawker Aviation Services (3 rd
Respondent), becomes due and payable, the payment thereof will only be made
into a trust account in the Republic of South Africa, and nowhere else, and that it
4 South African Civil Aviation Authority.
12
be kept therein pending the outcome of the Applicant's action under case number
20827/02.
2.2 That the Falcon 900 aircraft, registration number ZS-DAV, may only be utilised
for bona fide commercial charter flights as intended in the partnership agreement
and that Hawker Air Services (Pty) Ltd (3 rd Respondent) and the partnership (4 th
Respondent) be prohibited from granting consent for it to be used for any other
purpose, without the prior written consen t of SARS, which consent shall not be
unreasonably be withheld, or the consent of this Honourable Court.
2.3 That in the event of the sale of the Falcon 900 aircraft, registration number ZS-
DAV, the purchase price thereof be paid to the Partnership in South Africa, and
deposited into and kept in a trust account unless otherwise authorised by an
order of this Honourable Court, pending the outcome of the action. This order
will be subject to the Applicant launching an application to join the 5
th
Respondent in the action within 30 days after the grant of this order, with a
suitable prayer to the effect that the 5 th Respondent's interest in the aircraft
should be declared executable for the tax debts of Mr King (6 th Respondent)
and/or Ben Nevis Holding Limited (1st Respondent).
2.4 That the partnership take all the necessary steps to procure the return of the
aircraft to South Africa, and that it may only thereafter leave South Africa
temporarily for bona fide charter flights, or for other purposes, only with the
prior written consent of the Applicant, which consent will not unreasonably be
withheld, or without the consent of this Honourable Court.
2.5 That the Fourth Respondent be directed to furnish to SARS information
regarding their monthly income and expenses and proposed flight schedules of
the aircraft.'
13
[19] The first question that arises is wh ether, in the light of the decision in
Cronshaw and Another v Coin Security Group (Pty) Ltd 1996 (3) SA 686
(A), the order is appealable. Crons haw who was employe d by Fidelity
Guards was formerly employed by Coin Security subject to a restraint of
trade. Pending an action for an or der restraining him from being so
employed an interdict to that effect was granted against him. This court,
relying on Zweni v Minister of Law and Order 1993 (1) SA 523 (A) at
532I-J as to the meaning of ‘judgment or order’ in s 20(1) of the Supreme
Court Act 59 of 1959, held that the order granting an interim interdict was
not appealable in that it was not fina l in effect and was susceptible of
alteration by the court of first instan ce. As to the finality of the order
Schutz JA held that the question was decided adversely to the appellant,
Cronshaw, in African Wanderers Football Cl ub (Pty) Ltd v Wanderers
Football Club 1977 (2) SA 38 (A) at 690C.
[20] In the African Wanderers Football Club (Pty) Ltd case the African
Wanderers Football Club (Pty) Ltd cont ended that the Wanderers Football
Club, which used to manage the affair s of a professional football team, had
been incorporated as a private comp any, the African Wanderers Football
Club (Pty) Ltd, and had therefore ceased to exist. Pending an action by the
club for a declaratory order that that was not the case the club obtained an
interim interdict restraining the company from interfering with the
management of the professional football team. In the action it was common
14
cause between the parties that the issu es raised by the company’s plea were
the very issues considered by the judge who granted the interim interdict 6.
The question then arose whether the doctrine of res judicata barred
reconsideration of the issues in the acti on. This court held that it had to
examine the issues raised in the in terdict proceedings and the manner in
which they were dealt with in order to determine whether the court meant
to express a final decision thereon ie whether it intended to dispose finally
of those issues or any part thereof7. It held that it did not. 8 In this regard it
relied on the fact that the club indicated in its founding affidavit in the
interdict proceedings that it was about to institute an action against the
company for a declaration of rights c oncerning the very matter which was
in dispute in the interdict proceedings namely the right of the club to
manage its own affairs including th e management and control of the
professional team.
9 It relied, furthermore, on the fact that, from a reading of
the judgment of Howard J and having regard to the order made by him,
there could be no doubt that he inte nded that the issues raised before him
would be finally resolved in an action to be instituted by the club.10
[21] As in African Wanderers Football Club Ltd the issues in the interdict
proceedings in Cronshaw were the same as the issues which were to be
decided in a trial. Schutz JA stated that , intrinsically diffic ult as it was to
6 At 45D
7 At 46C-D
8 At 47C-D
9 At 47A-B
10 At 47H
15
decide whether a decision was ‘interlocuto ry’ or ‘final’, there had to be a
rule and that rule was st ated by Schreiner JA in Pretoria Garrison
Institutes v Danish Variety Products (Pty) Ltd 1948 (1) SA 8 39 (A) at 870
to be:11
‘. . . a preparatory or procedural order is a simple interlocutory order and therefore not
appealable unless it is such as to "dispose of any issue or any portion of the issue in the
main action or suit", or, which amounts, I think, to the same thing, unless it “irreparably
anticipates or precludes some of the relief which would or might be given at the
hearing"
.'
[22] The present case is distinguishable from African Wanderers Football
Club Ltd and Cronshaw. Whether or not the aircra ft should be returned to
South Africa and whether or not the ot her orders relating to the aircraft
should be granted is not an issue in the action pe nding which the interdict
was granted. In these circumstances , coupled with the fact that an
application for an interim interdict is a proceeding separate from the main
proceedings pending the determinati on of which it was granted (see Knox
D’Arcy Ltd v Jamieson 1996 (4) SA 348 (A) at 35 9H read with 357C) the
test in Pretoria Garrison is wholly inappropriate to determine whether the
present order granted is final in effect and thus appealable.
[23] In determining whether an order is final it is important to bear in
mind that ‘not merely the form of th e order must be considered but also,
and predominantly its effect’ ( South African Motor I ndustry Employers’
11 690E-F
16
Association v South African Bank of Athens Ltd 1980 (3) SA 91 (A) at 96H,
and Zweni at 532I).
[24] The order that steps be taken to procure the return of the aircraft to
South Africa, as well as the other orders relating to the aircraft, were
intended to have immediate effect, they will not be reconsidered at the trial
and will not be reconsidered on the same facts by the court a quo. For these
reasons they are in effect final orders . Some support for th is conclusion is
to be found in Phillips and Others v National Director of Public
Prosecutions 2003 (6) SA 447 (SCA) at par (17)-(22) in which it was held
that a restraint order in terms of the Prevention of Organised Crime Act 121
of 1998 which was considered to be an alogous to an interim interdict for
attachment of property pending litigation, was final in the sense required by
the case law for appealability.
[25] The question then arises whether the court a quo had jurisdiction to
order that steps be taken to procure the return of the aircraft. In this regard
it first has to be determ ined whether the court a quo had jurisdiction in
respect of the new partnership.
[26] On behalf of Carmel and the new partnership it was submitted that
the new partnership carried on business in Mauritius. However, there is no
evidence on the basis of which it can be found th at the new partnership
relocated its place of business to Mauri tius. At best for the new partnership
and Carmel there is evidence that it is the intention of Carmel that the new
17
partnership’s place of business be reloca ted to Mauritius, from its present
address which is within the area of jurisdiction of the court a quo.
[27] Pistorius Pollak on Jurisdiction 2 ed at 70 says:
‘Artificial as it may be to ascribe the term ‘residence’ to the place where a
partnership carries on business, it is submitted that, as in the case of companies, the
principal place of business of a partnershi p constitutes a sufficient connecting factor
with the court concerned to permit it to exercise jurisdiction over the partnership.’
[28] A partnership is not a legal entity separate from the individual
partners. In terms of rule 14(2) it may, however, be sued or sue in its own
name. Rule 14(5)(h) provides that execution in respect of a judgment
against a partnership shall first be levied against the assets of the
partnership and only after such excussi on against the private assets of any
person held to be, or he ld to be estopped from denying his status as, a
partner. The estate of a partnership may also be se questrated as such (s 13
of the Insolvency Act 24 of 1936; see also s 49(1)). In these circumstances
the court in whose area of jurisdiction the principal place of business of a
partnership is should be the most convenient forum as far as the partnership
is concerned and should in general be the court whose judgments against
the partnership could most effectively be enforced. For these reasons there
is merit in the submission that, as in the case of companie s, the location of
the principal place of business of a partnership within the area of
jurisdiction of a court should be suffi cient to confer jurisdiction on that
court in respect of the pa rtnership. It is, however, not necessary to decide
18
the question as to whether the court a quo had jurisdiction in respect of the
new partnership on this basis, as, for the reasons that follow the court a quo
had jurisdiction in respect of both th e new partnership's partners, HAS and
Carmel.
[29] HAS is a South African company wi th its registered office within the
area of jurisdiction of the court a quo . The court a quo, therefore, had
jurisdiction in respect of HAS in te rms of the provisions of s 12 of the
Companies Act 61 of 1973. Carmel is a company re gistered in Mauritius.
An attachment of its asset s was, therefore, requir ed in order to confer
jurisdiction on the court a quo or to confirm its jurisdiction over the
company. Such attachment was performe d in terms of a provisional order
granted by De Vos J which was confir med by Hartzenberg J. The assets
attached were Carmel's share in the new partnership, its loan account in the
new partnership and its share in the claim of the new partnership against
FirstRand Bank in respect of the cred it balance in the new partnership’s
banking account.
[30] The new partnership and Carmel appeal against the whole of the
order which confirmed the attachment. It was submitted on their behalf that
Carmel’s partnership share was locate d where the new partnership carried
on business, being Mauritius. As stat ed above there is no evidence on the
basis of which it can be found that the new partnership relocated its
business to Mauritius.
19
[31] Counsel for the partnership and Carmel submitted, furthermore, that
Carmel had not acquired a loan agains t the new partnership. However, the
agreement in terms of which Carmel acquired RMB’s partnership interest
specifically recorded that Carmel purchased RMB’s loan claims against the
partnership. In respect of Carmel’s interest in the new partnership’s credit
in its banking account with FirstRand Bank it was submitted that any credit
balance on the account would accrue to the previous partnership. However,
Carmel purchased RMB’s as well as Ma nco’s interests in the partnership
and therefore also their in terests in the credit bala nce. It follows that there
is no merit in respect of Carmel’s a ppeal against the orders confirming the
attachments and that it should be dismissed.
[32] The next question to be decided in so far as the jurisdiction of the
court a quo is concerned is whether it had ju risdiction to order that steps be
taken to procure the return of the aircraft.
[33] The court a quo granted the order on the ba sis that the preservation
order had been breached. In terms of that order HAS, the partner in the
partnership, as well as its holding comp any Metlika had been interdicted
from alienating or disposing of any of their assets. On the appellants’ own
version the partnership, after RMB ha d terminated the loan agreement and
had applied the deposit in respect of the outstanding balance of the loan
agreement, was indebted to RMB in an amount of R24 550 450. In terms of
the option agreement HAS would agai nst payment of that amount have
become entitled to require RMB and Manco to withdraw from the
20
partnership. Had it done so the partners hip would have come to an end and
HAS would have become the owner of the aircraft. It is common cause that
the value of the aircraft is approxima tely R190 000 000. It is self evident
that on these facts HAS would have had no difficulty in raising the funds to
acquire the aircraft for itself. By not doing so it alienated a valuable asset
being its right to acquire the aircraft and thereby breached the court order.
It did so in collaboration with its holding company Metlika. Metlika
provided the necessary funds, R24 550 4 50, to Carmel to acquire the RMB
and Manco interests in the partnership ie a 99,9% interest in an asset worth,
once again on the appellants' versio n, approximately R190 000 000.
Metlika and HAS would not have done so had Carmel been anything other
than Metlika in another guise.
[34] It does not follow that HAS and Metlika breached the order by
removing the aircraft to a foreign c ountry and by failing to return it to
South Africa. The movements of the ai rcraft were never restricted. Faced
with this problem counsel for th e respondent submitted that the
respondent's case was in actual fact ne ver that the respon dent was entitled
to the return of the aircraft on the basis of a breach of the preservation
order. It claimed to be entitled to su ch an order in order to preserve the
assets of Ben Nevis, Metlika and HAS in the light of the fact that they were
trying to defeat the right that the respondent would acquire at the successful
conclusion of the action to levy execution against the aircraft.
21
[35] An interdict at the instance of a creditor preventing his debtor,
pending an action instituted or to be instituted by the creditor, from getting
rid of his assets to defeat his cred itors has for many years been recognised
in our law ( Knox D’Arcy at 372C-F). It is similar to the Mareva injunction
in English law. The appellants did not contend that the respondent had not
established the requisites for such an in terdict ie they di d not contend that
had the aircraft been within the area of jurisdiction of the court a quo the
respondent would not have been entitle d to an interim restraining order
preserving the aircraft as an asset in, what the respondent alleges to be, the
estate of King or Ben Nevis. They argued that the aircraft was in a foreign
country and that the court a quo had no jurisdiction to order its return to
South Africa because such an order infringed the sovereignty of the foreign
country concerned and because the court a quo would be unable to give
effect to its order. They were unabl e to find any case in England or in
South Africa in which a party had been ordered by way of this type of relief
to procure the return of an asset situated in another country to England or
South Africa. Counsel for the respon dent was similarly unable to find a
case in which such an order had been granted. However, counsel did refer
us to English authority, to which I shal l refer, to the effect that such an
order is permissible.
22
[36] If the court a quo was not able to enforce compliance with the order
which it granted it had no jurisdiction to grant it.12 It is, therefore, necessary
to determine whether the court a quo could enforce co mpliance with the
order. In support of thei r submission that the court a quo could not give
effect to its order the respondents relied on Lenders & Co Ltd v Lourenco
Marques Wharf Co Ltd 1904 TH 176, Minister of Agriculture v
Grobler1918 TPD 483, South Atlantic Islands Development Corporation
Ltd v Buchan 1971 (1) SA 234 (C), Makoti v Brodie 1988 (2) SA 569 (B)
and Parents' Committee of Namibia and Others v Nujoma and Others 1990
(1) SA 873 (SWA).
[37] In Lenders & Co Ltd v Lourenco Marques Wharf Co Ltd it was held
that the Transvaal High Court had no ju risdiction to order the delivery of
timber at Delagoa Bay. Direct proceedi ngs to recover the timber had to be
brought in the court at Delagoa Bay and the same result could not be
obtained indirectly thoro ugh the medium of the Transvaal Court. That was
held to be so although the responde nt was a company registered in the
Transvaal and had its head office within the jurisdiction of the court. In this
regard Smith J stated that no author ity had been cited showing that the
court had jurisdiction, that his attention had not been directed to the work
of any writer on the Roman Dutch law a nd that he had been unable to find
12 Steytler NO v Fitzgerald 1911 AD 295 at 346; Thermo Radiant Oven Sales Ltd v Nelspruit Bakeries
1969 (2) SA 295 (A) at 307; Ewing McDonald & Co Ltd v M & M Products Co 1991 (1) SA 252 (A) at
259 D-J.
23
any case in the Courts of Equity in England in which such jurisdiction had
been exercised. 13
[38] The Roman Dutch jurists held c onflicting views in this regard. Some
were of the view that disputes as to ownership or pos session should be
aired only at the place where the th ing was situated. Others were of the
view they could also be dealt with at the place where the defendant was
domiciled.14 Voet says at 5:1:77:15
‘Movables are not tied to any definite place, but allow of restitution at every
place, having to be moved from one place to another at the discretion of the judge or
even of the unsuccessful defendant. A judge was thus able effectively to give judgment
against a defendant subject to him in respect of domicile for the making restitution of
something movable in any suitable place, including the very place of domicile. It makes
in the same direction that it has been generally laid down by commentators that
movables go with the person, and, so far as concerns legal results, are deemed to be at
the place where the owner of them cherishes domicile, even though physically they have
been stationed elsewhere.’
[39] In Minister of Agriculture v Grobler the Transvaal Provincial
Division was not prepared to grant an order that the Government should
hand over cattle held by it in Botswan a to the respondent who was entitled
to have the cattle restored to him. It refused to do so because the matter
‘had not sufficiently clearly (been) laid before the Court’ and the
13 At 180
14 Voet 5:1:77
15 Gane's translation
24
authorities were not conclusive. 16 The court had been referred to Lenders,
Voet 5:1:77 and Voet 2:1:46:47.17
[40] In South Atlantic Islands Development Corporation Ltd v Buchan the
court refused to grant an order against the master of a foreign fishing vessel
prohibiting him from fishing in the waters of Tristan da Cunha. The
respondent was only temporarily within the area of jurisdiction of the court.
The court would therefore have been po werless to enforce its judgment if
the respondent chose to ignore the order and started fishing in the waters of
Tristan da Cunha.18
[41] In Makoti v Brodie, relying on Lenders and South Atlantic Islands, it
was held that a co urt does not have jurisdiction to order incolae defendants
to deliver movable property situate outside the country because a court
could not give an order which would be effective in the sense that the court
could ensure its execution in ‘the us ual direct manner, ie by directing an
officer of the Court to take possession’ of the movable. 19
[42] The Supreme Court of S outh West Africa was, in the Parents’
Committee case, not persuaded that it could give an effective judgment
against incolae of the court for the release of detainees unlawfully detained
in Angola. From a reading of the judgment it would seem that it had not
been submitted that such a judgment could be rendered effective by way of
contempt proceedings against the respondents.
16 At 488
17 See 486
18 See 240G-H
19 At 576A and E
25
[43] Pollak 20 accepts that Lenders reflects our law as regards foreign
jurisdictions ie that the mere fact that a respondent is an incola of the court
is insufficient to confer jurisdicti on on the court to make an order for
delivery of movable property situat e outside the Republic. Forsyth Private
International Law 4 ed at 233, on the other hand, is of the view that ‘if the
respondent is an incola, the court may assume jurisdiction to grant an
interdict (whether mandatory or prohibitory) no matter if the act in question
is to be performed or restrained outsi de the court’s area’. He argues that if
‘the respondent is an incola . . . the court will have control over him and
will be in a position to ensure compliance with its order’.21
[44] In Ashtiani v Kashi [1986] 2 All ER 970 (C A) at 976 and 979 the
Court of Appeal in England, dea ling with a pre-judgment Mareva
injunction, concluded that Mareva in junctions should be limited to assets
located within the jurisdiction. Howev er, that is no longer the position in
England. Some 14 years later, in resp ect of an appeal against an order,
made after judgment, precluding the de fendants from dealin g with any of
their assets worldwide without giving five days’ notice to the plaintiffs’
solicitors in every ca se, Kerr LJ said in Babanaft International Co SA v
Bassatne [1989] 1 All ER 433 (CA) at 444b-d:
20 At 103
21 At 231-233
26
‘Apart from any EEC 22 or EFTA 23 connection, there is in any event no
jurisdictional (as opposed to discretionary) ground which would preclude an English
court from granting a pre-judgment Mareva injunction over assets situated anywhere
outside the jurisdiction, which are owned or controlled by a defendant who is subject to
the jurisdiction of our courts, provided that the order makes it clear that it is not to have
any direct effect on the assets or on any thir d parties outside the jurisdiction save to the
extent that the order may be enforced by the local courts. Whether an order which is
qualified in this way would be enforced by the courts of states where the defendant’s
assets are situated would of course depend on the local law . . .’
Lord Donaldson of Lymington MR sai d in Derby & Co Ltd and others v
Weldon and others (No 2) [1989] 1 All ER 1002 at 1007f-g:
'We live in a time of rapidly growing commercial and financial sophistication
and it behoves the courts to adapt their practices to meet the current wiles of those
defendants who are prepared to devote as much energy to making themselves immune
to the courts' orders as to resisting the making of such orders on the merits of their case.'
[45] In Derby & Co Ltd and others v Weldon and others (No 6) [1990] 3
All ER 263 (CA) the court was deal ing with the question whether the
defendants should procure the transfer of certain assets out of Switzerland.
Dillon LJ, who had given a judgment in Ashtiani, held that more recent
developments of the law in relation to Mareva injunctions showed that
views expressed by him in that judgment were wrong. 24 He stated that the
object of a Mareva injunction was ‘that within the limits of its powers no
court should permit a defendant to ta ke action designed to ensure that
22 European Economic Community
23 European Free Trade Association
24 At 272a
27
subsequent orders of the court ar e rendered less effective than would
otherwise be the case’.25 He quoted a passage from a judgment by Kerr LJ
to the effect that the test for a Mareva injunction is ‘whether, on the
assumption that the plaintiff has show n at least “a good arguable case”, the
court concludes, on the whole of the evidence then before it, that the refusal
of a Mareva injunction woul d involve a real risk th at a judgment or award
in favour of the plaintiffs would remain unsatisfied.’
26 He concluded that he
could see no objection in principle and in an appr opriate case to ordering
the transfer of assets to a jurisdicti on in which the order of the English
court after the trial would be recogni sed from a jurisdicti on in which that
order will not be recognised. 27 The other members of the court agreed that
the court had the power to make such an order. However, such an order
was not made as the judges were agreed that in the particular circumstances
of the case the order should not be made in the exercise of the court’s
discretion.
[46] English principles relating to Ma reva injunctions are of course not
automatically applicable but serve to show that no reason in principle for
not coming to the assistance of the r espondent in the present case is to be
found in the English law. The pr oblems caused by rapidly growing
commercial and financial sophistication are univers al and our courts can
25 At 273d
26 At 273e
27 At 273f-g
28
only benefit from taking note of the way in which the English courts deal
with such problems.
[47] In Hugo v Wessels 1987 (3) SA 837 (A) at 855J-856A Hoexter JA
said in regard to the question whether ef fect could be given to an order that
an immovable property situated outside the jurisdictional area of the court,
but within the Republic, be transferred:
‘Na my oordeel behoort hierdie vraag bevestigend beantwoord te word. `n
Belangrike faktor wat ommiddellik na vore tree , is die feit dat `n vonnisskuldenaar wat
nie vrywillig aan `n Hofbevel ad factum praestandum uitvoering gee nie minagting
pleeg en hom aan gevangenisstraf blootstel.’
[48] Counsel for the first and second appellants submitted in their heads
of argument that Hugo v Wessels did not assist the respondent in that it was
distinguishable and in that the or der in the present case is an order ad
pecuniam solvendam and not ad factum praestandum . The latter
submission was, quite understandably, not advanced in oral argument
before us. The order is clearly one ad factum praestandum . That Hugo v
Wessels is distinguishable on the facts is clear but that does not affect the
quoted statement at all. It applies with equal force in the present situation.
[49] In the light of the aforegoing I agree with Forsyth's view that if the
respondent is an incola, the court may assume jurisdiction to grant an
interdict (whether manda tory or prohibitory) in personam no matter if the
act in question is to be performed or restrained outside the court’s area of
jurisdiction. The authority to the contra ry is not persuasive and should, to
29
the extent not consistent with this j udgment, be consider ed to have been
overruled.
[50] The aircraft is registered in South Africa in the name of HAS, a
South African company which is a partne r in the partnership that owns the
aircraft. In terms of an operati ons management agreement with the
partnership, which agreement provided that it could not be terminated on or
before 31 August 2004, HAS was, at th e time when the order under appeal
was granted, the operations manager of the aircraft. As operations manager
it was responsible for the management and operation of the aircraft on
behalf of the new partnership. In doing so it was obliged to procure that the
aircraft at all times complied with all laws and regulations applicable in the
Republic with regard to mechanical condition, technical fit-out and general
airworthiness and that the aircraft at all times was operated only by
qualified and duly registered pilots in compliance with the laws of the
Republic. In the case of cross-border flights HAS was obliged to ensure
compliance with the immigration and ex change control regulations of the
Republic and the health and foreign tr avel requirements of the country of
destination. As consideration for its services HAS was entitled to 80% of
the amount by which the difference between the income earned by the
business and the expenses incurred by the business ex ceeded a certain
amount.
[51] It is thus clear that the inten tion was that the airc raft be based in
South Africa and that its operation to and from South Africa be managed
30
by HAS. In these circumstances it was clearly within the power of the new
partnership and HAS to procure the retu rn of the aircraft to the Republic.
The order could be enforced by contem pt of court proceedings against the
directors of HAS. The availability of th at remedy, in the event of a failure
by HAS to comply with th e order rendered the order sufficiently effective
so as to confer jurisdiction on the court a quo to grant the order.
[52] The order does not affect the sove reignty of a foreign court at all. It
is an order in personam against respondents s ubject to the court’s
jurisdiction and not against third parti es. It will, if not complied with, be
enforced in South Africa against th e respondents concerne d. For the same
reason there is no merit in the argume nt by the respondents that the order
amounts to an impermissible attempt to enforce a South African revenue
claim in a foreign state.
[53] For these reasons the appeal is dismissed with costs including the
costs of three counsel.
__________________
P E STREICHER
JUDGE OF APPEAL
CAMERON JA)
CONRADIE JA)
PATEL AJA) CONCUR
PONNAN AJA)