THE SUPREME COURT OF APPEAL
OF SOUTH AFRICA
Reportable
CASE NO. 422/2004
In the matter between
DAVID LEIBOWITZ t/a LEE FINANCE Appellant
and
A T MHLANA AND OTHERS Respondents
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CORAM: MPATI DP, STREICHER, LEWIS, VAN HEERDEN
and JAFTA JJA
HEARD: 16 NOVEMBER 2005
DELIVERED: 1 DECEMBER 2005
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Summary: Jurisdiction – s 19(1)(a) & (b) of the Supreme Court Act 59 of
1959 – meaning of ‘causes arising’ – meaning of principal place of
business – submission to jurisdiction.
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JUDGMENT
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JAFTA JA
[1] This appeal concerns the jurisdic tion of a high court. The first to
eighth respondents (‘the re spondents’) instituted an application in the
Transkei High Court for an interdict against three insurance companies and
the appellant. The appellant raised an objection in limine to the court’s
jurisdiction. The court of first inst ance (Maya J) ruled that it had no
jurisdiction and dismissed the application with costs. The respondents
appealed to the full court which held that the court of first instance had
jurisdiction, dismissed th e appellant’s point in limine with costs and
referred the matter back to the court of first instance to deal with the merits
of the application. The present appeal is against the latter order with the
leave of this court.
[2] The background facts are brie fly these. The appellant is a
businessman residing in Durban. In 1997 he carried on a moneylending
business in that city. The respondents are teachers in the Transkei where
they also reside. In 1997 they applied, in Durban, for loans of small sums
of money from the appellant. As wa s the practice in the appellant’s
business, he required that insurance po licy contracts be attached to such
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applications as security. The respondents complied with this requirement
and later on they were granted loans.
[3] In January 2001 the respondents brought an urgent application
against the appellant and the insuran ce companies for an order restraining
them from facilitating or assisting in th e cession, surrender or utilisation of
the policies that have a connection with the appellant; declaring that
purported cessions, surrenders, sureties and other contracts relating to these
policies are null and void; and directing that the insurance companies
release from cession and reinstate policies that had been surrendered or
utilised by the appellant. The case of the respondents is that they never
ceded their policies to the appellant a nd that they never gave him authority
to cede, surrender or utilise the policies. They contend that his actions in
this regard were fraudulent and it is on this basis that the order was sought.
[4] As previously stated, the appella nt resides in Durban, carried on
business and came into possession of the policies in Durb an. The contracts
relating to the policies were conc luded in Durban. The insurance
companies have their principal places of business in either Durban or Cape
Town. Counsel for the respondents submitted that the court of first instance
had jurisdiction because payment in term s of the agreements of loan had to
be collected in the Tran skei. However, in the li ght of the respondents’
cause of action the place where payment in respect of the loans had to be
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made is irrelevant. In any event the acknowledgments of debt in respect of
the loans expressly provided that payment had to be made in Durban.
[5] All the actions concerned took place or may in future take place in
either Cape Town or Durban in resp ect of policies which were handed to
the appellant in Durban. In these circ umstances the court of first instance,
in so far as the appellant was concerne d, could only have had jurisdiction if
he had consented to the jurisdiction of the court or, in terms of s 19(1)(b) of
the Supreme Court Act 59 of 1959 (‘th e Act’) if the appellant had been
joined to legal proceedings in respect of which the court of first instance
had jurisdiction. The latter would be the case if the insurance companies
had their principal places of business within the area of jurisdiction of the
court or if the insurance companies submitted to the jurisdiction of the
court.
[6] Subsections 19(1)(a) and (b) of the Act provide:
‘19(1)(a) A provincial or lo cal division shall have ju risdiction over all persons
residing or being in and in relation to all causes arising . . . within its area of jurisdiction
and all other matters of which it may according to law take cognizance . . .
(b) A provincial or local division shall also have jurisdiction over any person
residing or being outside its area of jurisdiction who is joined as a party to any cause in
relation to which such provincial or local di vision has jurisdiction or who in terms of a
third party notice becomes a party to such a cau se, if the said person resides or is within
the area of jurisdiction of any other provincial or local division.’
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[7] In Gulf Oil Corporation v Rembr andt Fabrikante en Handelaars
(Edms) Bpk 1963 (2) SA 10 (T) at 17D-H Trollip J stated that ‘cause’
means an action or legal proceeding (not a cause of action) and that ‘a
cause arising within its area of juri sdiction’ means ‘a n action or legal
proceeding which, according to the law, has duly originated within the
Court’s area of jurisdiction’. Further support for this interpretation is to be
found in the Afrikaans text of s 19(1)(a) and (b) where the words ‘gedinge
wat . . . ontstaan’ and ‘geding met be trekking waartoe’ are used as the
Afrikaans equivalent for ‘causes arisi ng’ and ‘cause in relation to which’.
Trollip J concluded:
‘The result is that the Court’s jurisdiction under sec. 19(1) is simply determined, as
hitherto, by reference to the common law and/or any relevant statute.’
This statement is quoted with approval in Bisonboard Ltd v K Braun
Woodworking Machinery (Pty) Ltd 1991 (1) SA 482 (A) at 486H-J.
[8] The court a quo held that the in surance companies as well as the
appellant submitted to the jurisdictio n of the court of first instance by
reason of the fact that they were pa rties to other proceedings in the High
Court, Transkei. The court a quo erred in this regard. The fact that a court
has jurisdiction in respect of certain legal proceedings does not confer
jurisdiction on such a court in respect of other legal proceedings. The onus
of proving submission was on the respondents. They failed to make out any
case whatsoever that e ither the appellant or the insurance companies
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submitted to the jurisdiction of the cour t of first instance. The mere failure
to oppose an application, as in the case of the insuran ce companies, does
not constitute submission to the court’s jurisdiction (see Du Preez v Philip-
King 1963 (1) SA 801 (W) at 803A-H) and Girdwood v Theron 1913 CPD
859 at 862).
[9] The court a quo also held that the court of first instance had
jurisdiction over the insurance comp anies by reason of their principal
places of business being within the Transkei. In Bisonboard at 499C-D this
court held that a company resides at its registered office as well as its
principal place of business. Relying on Federated Insurance Co Ltd v
Malawana 1986 (1) 751 (A) the court a quo he ld that where a company has
a branch office within the jurisdictio n of the court that place should be
regarded as its principal place of bus iness for purposes of jurisdiction.
However, in Malawana this court interpreted ru le 4(1)(a)(v) in terms of
which service of a summons on a co mpany ‘shall be effected . . .by
delivering a copy . . . at its principa l place of business within the Court’s
jurisdiction’ (758I-J and 762A-E). It held that Federated Insurance’s branch
office in East London was its princi pal place of business within the
jurisdiction of the court concerned (762F). However, there is a vast
difference between ‘a company’s prin cipal place of business’ and ‘a
company’s principal place of business w ithin the court’s jurisdiction’. The
principal place of business of a compa ny for jurisdictional purposes is the
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place where the central control and mana gement of a company is situated
(Bisonboard at 496C). The court a quo, ther efore, erred in holding that the
court of first instance had jurisdic tion over the insurance companies by
reason of their principal places of business being situated within the
Transkei.
[10] The appeal record was overburdened with mate rial which was
wholly unnecessary for the adjudication of the present appeal. This material
consists of heads of argument filed in the court below, papers in the
application for leave to appeal a nd other documents. Such documents
constituted approximately half of the record placed before us. It was the
duty of the appellant’s attorneys to ensure that such documents were
excluded from the record as required by Rule 8(9). That they failed to do
and there is no explanation for the breach . In the light of repeated warnings
issued by this co urt in the past ( Salviati & Santori (Pty) Ltd v Primesite
Outdoor Advertising 2001(3) SA 766 (SCA) and Zulu and Others v Majola
2002(5) SA 466 (SCA) at 470B-E), I c onsider it appropriate to limit the
costs to which the appellant is entitled for the preparation of the record to
50 per cent.
[11] On 15 September 2005 the hearing of this appeal was postponed at
the request of the respondents. They had failed to file heads of argument
and their counsel was not ready to argue the matter. We were then
informed by counsel that the respondent s were not aware of the date of the
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hearing because they had not received the notice of set down. As a result
counsel was only instructed on the prev ious day to draw heads of argument
and to appear for them.
[12] On granting the postponement this court ordered that the
respondents’ attorneys should furnish an explanation for their unreadiness
and show why they should not be held liable for the costs of the
postponement. In his affidavit Mr Edward Bikitsha (the respondents’
attorney) states, contrary to what we were told on 15 Se ptember, that he
received the notice of set down. The onl y explanation he now furnishes for
the respondents’ state of unprepare dness is that he had not received the
appellant’s heads of argument.
[13] Although the respondents’ attorney was, on his own admission,
aware of the date of hearing he took no steps in preparation for it. He had
appointed correspondent attorneys in Bloemfontein for, inter alia, receiving
documents served. He did not enqu ire whether the heads had been
delivered there, even after the appella nt’s attorneys had, by a letter dated 9
September, asked for the respondents’ heads. He only made such enquiry
after he was advised by th e appellant’s attorneys that such heads had been
delivered. The fact that the appellant’s heads had not been delivered to him,
in Mthatha, cannot be an excuse for ta king no steps at all. In my view, his
failure to act amounted to gross neglect of his professional responsibilities.
The attorney’s tardiness is aggravated by the conflicting reasons furnished.
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It is clear that this court was misled during the hearing of the application
for postponement which resulted in wast ed costs. The blame for such costs
lies entirely on the respondents’ attorney . It would be unfair to expect the
respondents to bear any part of those costs. I consider it proper to order that
the respondents’ attorney must pay such costs de bonis propriis and on the
scale as between attorney and client.
[14] The following order is made:
1. The appeal is upheld with costs, save that the appellant is entitled to
only 50 per cent of the costs of preparing the record.
2. Bikitsha and Associates are ordered to pay the costs of the
postponement on 15 September 2005 de bonis propriis and on the
scale as between attorney and client.
3. The order of the court a quo is set aside and replaced with the
following order:
‘The appeal is dismissed with costs.’
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C N J A F T A
J U D G E O F A P P E A L
MPATI DP )
STREICHER JA ) CONCUR
LEWIS JA )
VAN HEERDEN JA )