Jones v Krok

• Jurisdiction: South Africa
• Judge: Corbett CJ, van Heerden JA, Kumleben JA, Nienaber JA and Olivier AJA
• Judgment Date: 29 November 1994
• Docket Number: 721/92
• Court: Appellate Division
• Hearing Date: 16 May 1994
• Citation: 1995 (1) SA 677 (A)

E Corbett CJ:

In the Court a quo, the Transvaal Provincial Division, the appellant sought provisional sentence against the respondent on a foreign judgment. The action was opposed and opposing and replying affidavits were filed. The case was heard by Roux J, who dismissed the action with costs and refused leave to appeal. An application for leave to appeal in F terms of s 21(3) of the Supreme Court Act 59 of 1959 was referred to this Court for argument. Counsel were directed to present full argument on the merits, as well as argument on the application for leave to appeal, so as to enable this Court, if leave were granted, to determine the appeal. This was done.

G The judgment on which provisional sentence was claimed was delivered by the Superior Court of the State of California for the County of Los Angeles ('the US Court') in favour of the appellant. In terms of it (a) the respondent, Arlene Krok and Sharon Feuer were ordered to pay to the appellant 'compensatory damages' in the sum of US $13 670 987 and (b) each of them was ordered to pay to the appellant, in addition, 'punitive or H exemplary' damages in differing amounts. In respondent's case the amount was US $12 000 000. All these awards carried interest at the rate of 10% per annum from the date of the 'verdict' to the date of payment. A duly authenticated copy of the order of the US Court was annexed to the provisional sentence summons.

I The basic facts, as they appear from the summons and the affidavits, are hardly in dispute and may be summed up as follows. The respondent is a wealthy South African businessman and part-owner of a large pharmaceutical company, known as Twins Pharmaceutical. Arlene Krok and Sharon Feuer are his daughters. According to the appellant, she first met Arlene Krok and J her father in 1980. This meeting led to the establishment of a

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A company in California known as A-Plus Products Inc ('A-Plus'), which was incorporated with the object of marketing and distributing certain products for children and infants. The appellant obtained a 20% interest in A-Plus, the other 80% being held by Arlene Krok and Sharon Feuer. Nevertheless, A-Plus was, so appellant alleged, under respondent's sole direction and control.

B It was further alleged by appellant that in 1987 she was invited by respondent to participate in a joint venture with himself and his daughters to market and distribute certain feminine personal care products in the United States. This was to be done through the medium of a new company, Epilady USA Inc ('Epilady'), which would utilise A-Plus's C employees, offices, warehouse, telephone, credit and bank account. Appellant would be expected to market and sell Epilady's products to the 'mass merchandisers'. In return appellant would be entitled to a 20% share in the profits of Epilady.

Appellant claimed that she accepted this offer and that a joint venture D along these lines came into being. She permitted Epilady to utilise A-Plus's aforementioned facilities; and she made numerous sales trips on Epilady's behalf and represented Epilady's interests at a number of trade shows in 1987 and 1988. In 1989 and after the business run by Epilady had generated 'enormous profits', respondent denied that there was a joint venture or that appellant was entitled to a share of Epilady's profits.

E Appellant thereafter instituted action in the US Court against the respondent and his daughters based upon an alleged breach by them of the joint venture agreement. The action was defended by respondent and Arlene Krok and Sharon Feuer. Epilady had also been cited as a defendant, but at the time of the trial was 'in bankruptcy' and did not take an active part F therein. The main defence of the defendants was that no joint venture such as that alleged by appellant was ever entered into and that there was no basis upon which appellant could be entitled to a share of the profits of Epilady. In addition, certain legal points were raised.

The case was tried before a Judge and jury. The trial ran for some 22 days and culminated in the jury finding for the appellant and awarding G compensatory damages in the sum decreed by the judgment of the Court, to which reference has already been made. In addition to seeking compensatory damages, appellant also claimed punitive damages against the defendants on the ground of alleged fraud and conversion of Epilady's assets. This issue was tried separately, after the finding that the defendants had breached the joint venture agreement and were liable in H compensatory damages had been made by the jury. In this connection reference was made in one of the affidavits, filed on behalf of the appellant in the provisional sentence proceedings, to s 3294 of the California Civil Code which provides, under the heading 'Exemplary Damages', inter alia, as follows:

I 'In an action for the breach of an obligation not arising from contract, where it is proven by clear and convincing evidence that the defendant has been guilty of oppression, fraud, or malice, the plaintiff, in addition to the actual damages, may recover damages for the sake of example and by way of punishing the defendant.'

At the end of this second phase of the trial, the jury awarded amounts of J punitive or exemplary damages against the three defendants individually.

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A The jury award was, it seems, subsequently reduced with plaintiff's consent and the final figure in respondent's case was US $12 000 000.

The written judgment or order of the US Court is dated 31 July 1991. In pursuance of an appeal as of right, respondent, his daughters and Epilady on 12 August 1991 lodged appeals to the Court of Appeal of the State of California, Second Appellate District ('the US Court of Appeal') against the 'entirety' of the judgments and orders granted against them. At the B time when the action for provisional sentence was dealt with by Roux J (viz 10 April 1992) this appeal was pending. This was still the position when this Court heard the matter.

In his judgment Roux J, after expressing reservations as to whether C provisional sentence was 'the proper vehicle' for enforcing foreign judgments, proceeded to consider whether the judgment which appellant sought to enforce was a final one. After referring to certain expert evidence on the law of California placed before the Court on affidavit, the learned Judge came to the conclusion that while the appeal was pending the judgment of the US Court was not a final one. This was sufficient to D dispose of the action, but the Judge a quo proceeded to consider certain other aspects of the case. He held that the award of punitive damages was not only not part of our law, but also offended against public policy and that a foreign order for such damages would not be enforced by our Courts. He further held that even the award of what was termed 'compensatory damages' in the order of the US Court rested 'upon the same foundations' E as those which supported the assessment and award of punitive damages and that it would be contrary to public policy to encumber a person, subject to the jurisdiction of the Court a quo, with liability for such an award. Finally, he emphasized the 'potentially Gilbertian situation' which would arise if the Court were to grant judgment on claims which, translated into F the currency of this country, would total about R77 million, and thereafter the appeal to the US Court of Appeal were to succeed. This potential situation weighed, together with other considerations, against the granting of provisional sentence. The learned Judge refused to postpone the action to await the conclusion of the appeal in California, G as was suggested by appellant's counsel, saying:

'In my view the plaintiff, when she issued this summons, either had or did not have a cause of action and on that basis I must consider the matter.'

Prior to the hearing of the application/appeal by this Court counsel were asked to deal in argument with the question as to whether, in the light of H the decisions in Zweni v Minister of Law and Order 1993 (1) SA 523 (A) and Trope and Others v South African Reserve Bank 1993 (3) SA 264 (A), it was competent for leave to appeal to be granted against an order refusing provisional sentence. This was done and the first question to be determined is whether any appeal can lie in this case and accordingly, whether it is competent for leave to be granted.

I In Zweni's case supra this Court undertook a comprehensive review of the question as to whether a decision of a Court is an appealable 'judgment or order' in terms of s 20(1) of the Supreme Court Act 59 of 1959 and the principles to be applied in resolving this question in individual cases. At 531H-533F of the report of the case Harms AJA (who delivered the J judgment of the Court) summed up the position in nine numbered

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A paragraphs. For the purposes of this case I would emphasise and quote the following portions of this summary:

'5. Section 20(1) of the Act no longer draws a distinction between "judgments or orders" on the one hand and interlocutory orders on the other. The distinction now is between "judgments or orders" (which are B appealable with leave) and decisions which are not "judgments or orders" (Van Streepen & Germs (Pty) Ltd v Transvaal Provincial Administration 1987 (4) SA 569 (A)).

. . .

7. In determining the nature and effect of a judicial pronouncement, "not merely the form of the order must be considered but also, and predominantly, its effect" (South African Motor Industry Employers' C Association v South African Bank of Athens Ltd 1980 (3) SA 91 (A) at 96H).

8. A "judgment or order" is a decision which, as a general principle, has three attributes: first, the decision must be final in effect and not susceptible of alteration by the Court of first instance; second, it must be...