Roux v Dos Reis

• Jurisdiction: South Africa
• Judge: Wunsh J
• Judgment Date: 28 January 1997
• Citation: 1997 JDR 0165 (W)
• Docket Number: 17321/96
• Court: Witwatersrand Local Division

Wunsh J:

Introduction

On 1 June 1995 the applicant and the respondent entered into a written agreement at Brazzaville in the Republic of Congo. In terms of the agreement the respondent

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sold the applicant 9 000 out of 10 000 shares in the capital of a Congolese company, abbreviated as S N Plasco SA, and certain other corporeal and incorporeal assets "used in the exploitation of the company" for a purchase price of 1 900 000 French Francs. The price was payable as to 600 000 Francs in cash and as to the balance by 23 monthly instalments as from 31 January 1996. Article 11 of the agreement provides:

"Any dispute arising from the interpretation or execution of the present will be submitted to the Courts competent at POINTE MOIRE.

It is common cause that the courts of Pointe Noire (which is in the Congo) would apply Congolese law to any dispute arising from the agreement.

The applicant paid the initial amount of 600 000 Francs but refused to make any further payment by reason of alleged material misrepresentations made by the respondent. On 25 March 1996 the applicant instituted proceedings in the Commercial Court (also called a tribunal) in Pointe Noire, claiming a decrease of the price on the grounds of the fraud to a token amount of one Franc, repayment of 59 999 999 CFA Francs and interest and 5 000 000 CFA Francs as compensation for "the irretrievable costs incurred by Mr Roux in his defence". The respondent disputes that the petition by which the Congolese proceedings were commenced was validly served on him. It was, indeed, sent to him by the applicant's attorney by registered post and received by him on 26 June 1996. The attorney acting on behalf of the respondent entered, but later withdrew, an appearance to defend the application in the Congo. The further course which the proceedings took will emerge later.

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On 23 July 1996 the respondent issued a summons in this court against the applicant, who was then residing in Bryanston, for payment of the balance of 1 300 000 French Francs, alleging that, according to the law of the Republic of Congo, it was an implied term of the agreement that if any one instalment was not paid on due date, the balance becomes due and payable.

This application seeks an order staying the South African action and declaring that this court has no jurisdiction in respect of the action. The objection (it being conceded that questions of the applicant's domicile and residence are not in issue) is based on the contention that the parties, in the agreement, agreed on the jurisdiction of the courts at Pointe Noire and that, in any event, there is a pending lis there. On 22 November, 1996, after the exchange of the affidavits in this matter, the Tribunal of Commerce of Pointe Noire granted judgment in favour of the applicant in default of the respondent for payment of the 59 999 999 CFA Francs claimed with interest, 3 000 000 CFA Francs "corresponding to the costs that cannot be claimed back" and costs. By the time of the hearing of the application the objection of lis pendens was thus converted to one of res judicata.

Res Judicata:

According to Hoffman & Zeffert The South African Law of Evidence 4th ed:

"The judgment on the merits of any court, including a foreign court, can found a plea of res judicata provided that the court had jurisdiction in the matter and the judgment is a final one. The rules relating to res judicata are characterised

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as procedural and are, therefore, governed by the lex fort. For this purpose a judgment is final if it has determined the substantive rights of the parties even if it could be reversed on appeal or rescinded, it is binding until it has been actually reversed or rescinded. (at p 344)

After saying that the judgment has to be on the merits, the authors continue:

"The requirement that the prior judgment has to be on the merits does not signify that the proceedings have to be contested: a default judgment may ground the exceptio; but care has to be taken precisely to determine what had been decided since the decision may have been made because of the ignorance, negligence or indifference of the defendants (at p 345)

For the last statement they rely on Mvaami (Pvt) Ltd v Standard Finance Ltd. 1977 1 SA 681 (R) at 867-8, in which the court referred at the start of its discussion to Kok Hoong v Leon Cheong Kweng Mines Ltd. 1964 AC 993 in which the words The fact that a defendant for unascertained reasons, negligence, ignorance or indifference has suffered judgment to go against him in the particular suit in question" occur. But it is dangerous to apply dicta of English courts without recognising that they apply two

doctrines i.e. cause of action estoppel and issue estoppel.

"(Estoppel per rem judicatam) is a generic term ... which in modern law includes two species. The first species, which I will call 'cause of action estoppel', is that which prevents a party to an action from asserting or denying, as against the other party, the existence of a particular cause of action, the non-existence or existence of which has been determined by a court of competent jurisdiction in previous litigation between the same parties. If the cause of action was determined to exist, i.e., judgment was given on it, it is

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said to be merged in the judgment, or, for those who prefer Latin, transit in rem judicatam. If it was determined not to exist, the unsuccessful plaintiff can no longer assert that it does; he is estopped per rem judicatam. this is simply an application of the rule of public policy expressed in the Latin maxim, 'nemo debet his vexari pro una et eadem cause'. In this application of the maxim, cause bears its literal Latin meaning. The second species, which I will call 'issue estoppel', is an extension of the same rule of public policy. There are many causes of action which can only be established by proving that two or more different conditions are fulfilled. Such causes of action involve as many separate issues between the parties as there are conditions to be fulfilled by the plaintiff in order to establish his cause of action; and there may be cases where the fulfilment of an identical condition is a requirement common to two or more different causes of action. If in litigation on one such cause of action any of such separate issues whether a particular condition has been fulfilled is determined by a court of competent jurisdiction, either on evidence or on admission by a party to the litigation, neither party can, in subsequent litigation between them on any cause of action which depends on the fulfilment of the identical condition, assert that the condition was fulfilled if the court has in the first litigation determined that it was not, or deny that it was fulfilled if the court in the first litigation determined that it wash (per Diplock LJ in Thoday v Thoday, (1964) 1 All ER 341 (CA) at p 352B-F)

Where a party resists an action involving the determination of an issue on the ground that that issue has been determined, either on evidence or on admission, in previous proceedings, there will obviously be limits on the effect of a judgment by default,

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because for the reasons mentioned by the Privy Council in Kok Hoong v Leon Cheong Kweng Mines Ltd. supra and quoted by Hoffman & Zeffert, the court has not truly determined the issue. But the position with regard to an action on the same cause of action is not the same.

The principle is stated as follows by Spencer-Bower and Turner op cit at pare 53:

"It seems clear from the judgments which we have been considering that while a default judgment will certainly estop the defendant from denying that the plaintiff is not entitled to the relief which it has awarded to him, it cannot be invoked to estop him by way of issue estoppel as to any question which is not eadem questio, using the words in their strictest sense. It is not enough to say that the questions are almost identical or almost certainly the same. They must be eadem questio. But if the identical question arising in the second action actually arose in the first, and has been or must necessarily be deemed to have been decided with complete precision one way or the other as the foundation of the default judgment signed by the plaintiff, then, at least while the judgment stands, that question is concluded between the parties. In New Brunswick Rail. Co., Ltd. v. British and French Trust Corporation, Ltd. Lord Maugham L.C. at least, and probably Lord Russel of Killowen and Lord Thankerton also, may be thought to have accepted this view. Lord Radcliffe in Kok Hoofing v. Leon Cheong Kweng Mines, Ltd. certainly so interpreted Lord Maugham's judgment. The same view seems to have been clearly accepted by Lord Upjohn in Carl-Zeiss-Stiftung v. Rayner and Keeler, Ltd. But it must be remembered that Lord Wright and Lord Romer (in the New Brunswick case)

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may equally well be taken to have rejected this proposition, and it is possible that the true principle may still receive further clarification when in some later case the relevant question is again sharply posed in the Lords.. (at pp 48-9) (I underline)

Cause of action estoppel can be based on a judgment of a foreign court (Spencer-Bower and Turner op cit pare 66, p 61). The distinction between default judgments, given by foreign courts and those given by English courts is drawn as follows by Spencer-Bower and Turner, op cit pare 174, p 139:

"Notwithstanding what is above written it is clear that a judgment obtained by default, like one obtained by consent, is to be regarded for the purposes of the doctrine of res judicata as a final judgment; and this is so notwithstanding that by the Rules of Court it is open to the defendant at any time to move for its rescission upon cause being shown in that regard. Unless and until steps...