Tsung v Industrial Development Corporation of SA Ltd

• Jurisdiction: South Africa
• Judge: Harms JA, Farlam JA, Cameron JA, Jafta JA and Cachalia AJA
• Judgment Date: 23 March 2006
• Citation: 2006 (4) SA 177 (SCA)
• Docket Number: 79/05
• Hearing Date: 10 March 2006
• Counsel: G D van Schalkwyk SC (with G Selikowitz) for the appellant. M J Fitzgerald SC (with M Mngomelulu) for the respondent.
• Court: Supreme Court of Appeal

Harms JA:

[1] This appeal raises the crisp question whether a peregrine defendant, by consenting belatedly to the local court's jurisdiction, can undo an attachment founding or confirming jurisdiction. Alleging that they have a claim of some R40m I against the appellants, in terms of s 424 of the Companies Act 61 of 1973, for fraudulently or recklessly running a local company, the respondents, who are incolae (resident locally), sought and obtained, ex parte, an order for the attachment of certain immovable properties and shares belonging to the appellants in the Cape High J

Harms JA

Court. The appellants, who are resident in Hong Kong, are peregrini, not only of that court but also of the Republic. A They became aware of respondents' intention to attach, and the existence of the order, only after the actual attachment. On the return day, they opposed the finalisation of the order on the ground that, had they known of the intended proceedings, they would have consented to jurisdiction and, in any event, since the attachment, they have, in B fact, so consented unconditionally. They did not contend that the respondents were not otherwise entitled to the order sought. Traverso DJP held that this consent was too late and could not undo the attachment, and she issued a final order. Against this, the appellants appeal with the High Court's leave. C

[2] In order to avoid confusion, it should be pointed out, at the outset, that what is said in this judgment is intended to apply to those cases where the plaintiff (or applicant) is an incola and the defendant (or respondent) is a foreign peregrinus, ie someone who is a peregrinus of the Republic, and the claim is one sounding in money. The arrest or D attachment of goods of a local peregrinus (ie someone who is an incola of the country, but not of the particular court) to found or confirm jurisdiction is by statute not permitted. [1]

[3] In the present context, the difference between an arrest or attachment ad fundandam jurisdictionem and one ad E confirmandam jurisdictionem is of no consequence. [2] The reason is that, if the defendant is a peregrinus and whether or not the court has jurisdiction over the cause, eg because the cause of action arose within the jurisdiction or jurisdiction exists ratione delictus or ratione contractus, an attachment or arrest is essential for the exercise of jurisdiction: 'A recognised F ratio jurisdictionis by itself will not do.' [3] With 'jurisdiction' is meant the power to adjudicate upon a particular case and to give effect to the judgment. [4]

[4] The practice of arrest or attachment to found or confirm jurisdiction was firmly established in Holland by the 17th century, in the interest of incolae and from considerations of G commercial convenience. It enabled them to proceed in local courts against peregrini who were, for the time being, physically within the jurisdiction area of the court, or possessed property there. [5] In addition to founding or confirming jurisdiction and to commence proceedings, an attachment had, since those days, an H

Harms JA

additional function, and that was the provision of security, enabling the plaintiff, eventually, to execute in his own A jurisdiction. Pending the finalisation of the proceedings, the defendant could not alienate or encumber the attached property. [6] This function of attachment has since repeatedly been highlighted by our courts, including by this Court some months ago. [7] B

[5] The arrest of a peregrinus, it would appear, was used not only for founding or confirming jurisdiction, but also to coerce the peregrinus to pay. [8] Today, arrest still serves to found or confirm jurisdiction, but can, obviously, no longer serve as security for a debt and, at least in this regard, there is a difference between arrest and attachment. There are C other aspects. As long as a century ago Van Zyl's Judicial Practice [9] recognised that an arrest 'affects the liberty of the subject'; and at present the arrest of a person has a constitutional dimension. [10]

[6] The rationale for jurisdiction is often said to be one of effectiveness, and attachment is historically and logically closely related to this principle; but not only has the principle of D effectiveness been eroded [11] (Forsyth says 'it is artificial and conceptual rather than realistic'), [12] effectiveness is also not necessarily a criterion for the existence of jurisdiction. [13] In one instance, effectiveness is non-existent, and that is in the case of submission to jurisdiction (also referred to as prorogation). The reason is this: If a peregrine defendant has submitted - whether unilaterally or by E agreement - to the jurisdiction of the court of the incola, an attachment or arrest to found or confirm jurisdiction is not only unnecessary, it is not permitted. [14] (Consent on its own cannot confer jurisdiction unless the plaintiff is an incola.) [15] There are good commercial reasons for this. [16] F

Harms JA

'Foreigners who submit voluntarily to the jurisdiction of our Courts should not have to fear that thereafter they or their property A are at any time and without notice subject to attachment whenever an incola can satisfy a Court that he has a prima facie case against them.' [17]

In addition, the ensuing judgment will be internationally enforceable; will be recognised by the courts of the defendant's domicile; and binds the whole property of the defendant. [18] The downside is that the plaintiff will have to pursue the defendant in order to have the B judgment enforced. [19]

[7] Applications for attachment or arrest are, as a matter of course, brought without notice and the plaintiff has, until submission, the right to apply for such an order and, if the requirements have been met, is entitled to an order. [20] On the return C day, the court has to be satisfied that the applicant has a prima facie case; [21] and that, on a balance of probabilities, the applicant is an incola and the respondent a peregrinus and the property sought to be attached is that of the respondent. [22] Whether submission is possible after the grant of the order, but before D the attachment, was the subject of Jamieson v Sabingo 2002 (4) SA 49 (SCA) in para [30], where this Court held that 'it is not too late for a submission to jurisdiction to be given before the attachment is put into effect'. [23]

[8] That brings me then to the issue in this case, namely, whether an attachment can be undone by a late consent. The case law in E this regard has a long lineage. The first case in this regard was Ellerton Syndicate v Hutchings (1893) 3 CTR 124. De Villiers CJ decided the point laconically, holding that the attachment served a double object, namely, to facilitate proceedings and to obtain security, and 'if the law gave them [the incolae] that F advantage, they were entitled to take it'. [24] Then there was Bedeaux v McChesney 1939 WLD 128 at 132, where Solomon J came to the same conclusion for the same reason. The issue was again raised before Berman AJ in Kasimov and Another v Kurland 1987 (4) SA 76 (C), who decided to follow Bedeau...