Ewing McDonald & Co Ltd v M & M Products Co

• Jurisdiction: South Africa
• Judge: Van Heerden JA, Smalberger JA, Nicholas AJA, Friedman AJA and Nienaber AJA
• Judgment Date: 28 September 1990
• Hearing Date: 10 September 1990
• Court: Appellate Division

Nienaber AJA:

The appellant company is the cessionary of a claim against the first respondent (hereinafter referred to as 'the respondent') for I damages for breach of contract. The appellant is anxious to pursue that claim in the Witwatersrand Local Division of which it is an incola. The respondent is a corporation which is registered in the United States of America. Its principal place of business is in Atlanta, Georgia. The respondent accordingly is a peregrinus of the Republic. The agreement was concluded elsewhere but it was common cause at the hearing of the J appeal

Nienaber AJA

A that it was to be implemented throughout the Republic of South Africa so that Johannesburg was a locus solutionis and the Witwatersrand Local Division a forum solutionis.

Notwithstanding this ratio jurisdictionis the appellant correctly thought it necessary to attach property of the respondent in order to vest the Witwatersrand Local Division with jurisdiction to try the B contemplated action. The appellant accordingly brought an ex parte application in the Witwatersrand Local Division before Van Dyk J for an order inter alia authorising the attachment ad fundandam, alternatively, ad confirmandam jurisdictionem, of the respondent's right, title and interest in and to certain trade marks held by the respondent and C registered in South Africa. This application was successful. Pursuant to that order the deputy sheriff for the district of Pretoria attached the trade marks specified in the order.

However, those trade marks were all registered in Pretoria and as such fell outside the area of jurisdiction of the Witwatersrand Local Division. (Cf Sportshoe (Pty) Ltd v Pep Stores (SA) (Pty) Ltd 1990 (1) SA 722 (A) D at 726F - G; Rembrandt Fabrikante en Handelaars (Edms) Bpk v Gulf Oil Corporation 1963 (3) SA 341 (A) at 348H - 349B.) The respondent thereupon launched an application in the Witwatersrand Local Division, on notice to the appellant, seeking to reverse the earlier order authorising the attachment. This application, before MacArthur J, in turn also succeeded. The entire order granted by Van Dyk J as well as E the actual attachment were set aside, with costs. It is against that order that the appellant, with leave of the Court a quo, now appeals. The deputy sheriff for the district of Pretoria and the Registrar of Trade Marks were cited as parties. Neither of them took an active part in the proceedings, either in the Court below or in this one.

F The central issue, which is a controversial one, is thus whether one Division of the Supreme Court of South Africa has jurisdiction to order the attachment ad fundandam or ad confirmandam jurisdictionem of property which is situated outside its area of jurisdiction but within that of another Division.

Jurisdiction in the present context means the power vested in a Court G by law to adjudicate upon, determine and dispose of a matter (cf Graaff-Reinet Municipality v Van Ryneveld's Pass Irrigation Board 1950 (2) SA 420 (A) at 424; Veneta Mineraria Spa v Carolina Collieries (Pty) Ltd (in Liquidation) 1987 (4) SA 883 (A) at 886D). Such power is purely territorial; it does not extend beyond the boundaries of, or over H subjects or subject-matter not associated with, the Court's ordained territory. In the most recent pronouncement on the topic of jurisdiction by this Court, Bisonboard Ltd v K Braun Woodworking Machinery (Pty) Ltd, case No 384/88, in a judgment delivered on the day the present matter was argued in this Court, Hoexter JA, at p 6 of the typescript copy of I the judgment, quoted, with approval, the following remarks of Bristowe J in Schlimmer v Rising's Executrix 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 over which it holds sway. Within those boundaries the sovereign power is supreme, and all persons, whether citizens, inhabitants, or casual visitors, who J are personally present within those boundaries and so long as

Nienaber AJA

A 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.'

Hoexter JA then went on to say (at p 6):

'Although the same common law applies throughout South Africa, it is trite that upon the establishment of the Union of South Africa the B separate judicial systems of the four colonies were largely preserved despite their formal unification in the Supreme Court of South Africa. In terms of s 19 of the Supreme Court Act the original jurisdiction enjoyed by the Provincial and Local Divisions is limited to the extent of their respective territorial areas. Such territorial jurisdiction is confirmed by s 68(2) of the Republic of South Africa Constitution Act 110 of 1983.'

Being territorial, the original jurisdiction of each Division is C nowadays to be exercised within the particular geographical areas specified in the First Schedule to the Supreme Court Act 59 of 1959 (cf Estate Agents Board v Lek 1979 (3) SA 1048 (A) at 1059D; Veneta Mineraria Spa v Carolina Collieries (Pty) Ltd (in Liquidation) (supra at 886G)). The territoriality of each Division is epitomised in s 19(1) of D the Supreme Court Act 59 of 1959 ('the SC Act') which, insofar as it is relevant for present purposes, reads:

'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... within its area of jurisdiction and all other matters of which it E may according to law take cognisance....'

This section, the latest in a line of legislative enactments broadly restating the common law, differentiates between 'persons' and 'causes arising'. The expression 'causes arising' has been interpreted in the Bisonboard judgment supra at p 11 of the typescript copy '... as signifying not "causes of action arising" but "legal proceedings duly F arising", that is to say, proceedings in which the Court has jurisdiction under the common law'. Since a Court under the common law would have had jurisdiction over persons domiciled within its area of jurisdiction (who would include, although not confined to persons 'residing or being in'), 'persons residing or being in' and 'causes arising' are not antithetical concepts; the former is merely an G elaboration of the latter. (Cf Steytler NO v Fitzgerald 1911 AD 295 at 315.) The phrase 'persons residing or being in' harks back to the rule of Roman law: actor sequitur forum rei. According to that rule an incola who wished to pursue a peregrinus was obliged to travel to the latter's forum to do so but, by the same token, was only liable to be sued in his H own. (Cf Sciacero & Co v Central South African Railways 1910 TS 119 at 121.) To assist its own incolae the law of Holland adopted a procedural expedient, borrowed from Germanic custom, of arrest of the person of the defendant or the attachment of his property ad fundandam jurisdictionem. In Thermo Radiant Oven Sales (Pty) Ltd v Nelspruit Bakeries (Pty) Ltd 1969 (2) SA 295 (A) Potgieter JA at 305F explained: I

'The reason for the arrest ad fundandam jurisdictionem was to avoid the costs which citizens would have to incur if they had to pursue the foreigner to the court of his domicile and was conceived primarily for the benefit of the incola. (See Peckius Verhandelinghe van Handoplegsen part II, para 6; Vromans De Foro Competenti 1.3.15, n 34, Bradbury Greatorex Co (Colonial) Ltd v Standard Trading Co (Pty) Ltd 1953 (3) SA 529 (W) J at 532.) Originally the purpose of the arrest or

Nienaber AJA

A attachment was a kind of compulsion to which the foreigner was subjected so that he could be induced to pay his creditor rather than endure the worry of arrest or the retention of his property.'

After discussing certain other aspects, Potgieter JA then stated (at 306H - 307A):

B 'It appears to me therefore, that in the law of Holland already one of the purposes of the attachment of property to found jurisdiction was to enable the incola to execute on that property after judgment. In other words, the attachment of property served to found jurisdiction and thereby enabled the Court to pronounce a not altogether ineffective judgment.'

(See also Longman Distillers Ltd v Drop Inn Group of Liquor Supermarkets (Pty) Ltd C 1990 (2) SA 906 (A) at 912B - E.)

It is this principle of effectiveness which, in conjunction with s 26(1) of the SC Act, is the central theme of the appellant's argument.

But before elaborating on it and in order to put the argument into perspective, it may be helpful briefly to recapitulate the grounds, D apart from voluntary submission, on which a Division of the Supreme Court according to current law and practice will assume jurisdiction in respect of claims sounding in money.

(a)

Where the plaintiff (or the applicant) is an incola and...