IN THE CONSTITUTIONAL COURT OF SOUTH AFRICA
CASE NO.
In the matter between:
MICHAEL LANE N.O. First Applicant
EILEEN FEY N.O. Second Applicant and
HEINO DABELSTEIN & OTHERS Respondents
AFFIDAVIT
I, the undersigned,
ROBERT DE ROOY
hereby make oath and say:
1. 1.1 I am the attorney of record of Applicants’ herein.
1.2 The facts deposed to herein are true and correct and fall within my personal knowledge, unless where otherwise indicated, in which latter case I verily believe the information conveyed to me to be true and correct. 2
1.3 I am duly authorised by the Applicants to depose to this affidavit on their behalf.
1.4 The parties in these proceedings will be referred to with reference to their status in this application.
BACKGROUND
2. 2.1 The proceedings in the Court of first instance (the Cape High Court) were instituted by three Hamburg-creditors, namely Messrs Holz, Heick and Rekur Klinik GmbH, (a company registered in Germany) in the name of the provisional trustees (Michael Lane N.O. and Eileen Fey N.O, the Applicants herein) of the Insolvent Estate of one Jürgen Harksen ("Harksen"). The latter had been provisionally sequestrated on 21 September 1995, and was thereafter finally sequestrated on 16 October 1995 in the Cape High Court. The above proceedings were instituted in terms of Section 32(1)(b) of the Insolvency Act, No. 24 of 1936 ("the Insolvency Act").
2.2 The above Hamburg-creditors sought to attach:
(a) the claims of First to Thirteenth Respondents, who were all peregrini of the Cape High Court and who at all material times were resident in the Federal Republic of Germany, amounting to DM 68 007 480, against Harksen's Insolvent Estate; and
(b) R696,47 held in trust by the firm of attorneys Fairbridges, on behalf of such Respondents; 3
for purposes of founding the jurisdiction of the court of first instance in an action to be instituted against the Respondents, for the setting aside of certain dispositions made to them by Harksen.
2.3 A rule nisi and interim order:
(a) for the attachment of the said claims to confirm jurisdiction; and
(b) for an interdict restraining Fairbridges from dealing with the said R696,47 in its trust account, pending the determination of the question whether such monies should be attached;
was granted on 30 March 1998 by Viljoen AJ, and the attachment of both the above claims and the said sum of monies was confirmed by Van Zyl J on 24 November 1998.
3. 3.1 An application for leave to appeal against the confirmation of the rule nisi was launched, and leave to appeal to the Supreme Court of Appeal was granted to the Respondents on 16 March 1998.
3.2 The appeal was heard on 14 November 2000 by the Supreme Court of Appeal (Hefer ADCJ, as he then was, presiding).
4. 4.1 Judgement was given by the Supreme Court of Appeal (per Hefer ADCJ) on 28 November 2000.
4.2 A copy of the above judgement was annexed to this application as annexure "A". 4
4.3 The judgement dealt with only one of the various grounds of appeal relied upon by the Respondents, namely the question whether the Applicants had made out a prima facie case for the relief that they intended to pursue against Respondents, and found that Applicants had failed to do so.
4.4 The Supreme Court of Appeal accordingly made the following order (page 10 of the judgement):
" The appeal is accordingly upheld with costs, including the
costs of two counsel and the costs occasioned by the application to adduce further evidence. The order of the Court a quo is set aside and replaced with an order discharging the rule nisi with costs including the costs of two counsel."
THE EFFECT OF THE ABOVE RULING
5. 5.1 The Respondents are peregrini of the Courts of South Africa.
5.2 The common law of South Africa requires that, before a South African Court will have jurisdiction to entertain an action against a peregrine defendant:
(a) an original ground of jurisdiction must be present; and 5
(b) an attachment or arrest of the property or person of the Defendant must take place, or the Defendant must submit to the jurisdiction of the Court (to confirm the jurisdiction of the court);
See: Veneta Mineraria Spa v Carolina Collieries (Pty) Ltd 1987 (4) SA 883 AD at 894B
(c) but where no original ground of jurisdiction exists, that an attachment or arrest must take place to found the jurisdiction of the Court.
5.3 Failing such attachment or arrest, or a submission to jurisdiction, and notwithstanding the existence of a ground of jurisdiction that would have vested jurisdiction in such Court in an action between two incolae litigants, the Court will not have any jurisdiction to entertain the proceedings against the peregrine Defendant.
6. 6.1 The effect of the order by the Supreme Court of Appeal was to set aside the attachment ordered by the Cape High Court, that vested jurisdiction in such latter court, by the confirmation of the jurisdiction
that would have sufficed in an action between two incolae.
6.2 By reason of such order (of the Supreme Court of Appeal), it was effectively ruled that the Cape High Court had no jurisdiction to entertain the action against the Respondents (that the Applicants wished to pursue in the Cape High Court). 6
6.3 Such order accordingly denied the Applicants any access to a Court that could properly, after ventilation of all the issues between the Applicants and Respondents, and after presentation of all oral evidence and/or documentary evidence, consider all such evidence before it, so as to bring out a fair, just and proper judgement in the disputes between the parties.
THE CONSTITUTIONAL VIOLATIONS
7. 7.1 I respectfully say that the order by the Supreme Court of Appeal:
(a) violated the Applicants' constitutionally entrenched right of access to a court for purposes of having the disputes between them and the Respondents resolved by the application of the proper law relating to trial actions, and relating to the legal principles upon which their cause of action was based, in a fair public hearing; and
(b) unreasonably and unjustifiably discriminated against Applicants and violated their right in terms of Section 9 of the Constitution of the Republic of South Africa, Act No. 108 of 1996 (hereinafter "the Constitution"), to be treated on an equal footing to Plaintiffs litigating against incolae Defendants, before the law, by imposing requirements (from the common law) upon Applicants that are more onerous than those applicable to Plaintiffs litigating against incolae Defendants; 7
(c) ignored, or failed to familiarise itself with, or failed to consider, crucially important evidence and/or allegations made on behalf of the Applicant in their affidavits, thereby violating the Applicants’ right to a fair trial and to fair justice.
7.2 The Applicants accordingly contend that their rights in terms of Sections 9 and 34 of the Constitution have been violated by the said order and judgement of the Supreme Court of Appeal.
7.3 The grounds upon which Applicants rely in such regard are set out hereinbelow.
SUMMARY OF GROUNDS
8. 8.1 The grounds upon which Applicants rely are broadly summarised as set out hereinbelow:
(a) The Supreme Court of Appeal erred in finding (factually) that Applicants had failed to make out a prima facie case for the cause of action to be pursued in the action to be instituted against the Respondents;
(b) The requirements of:
(i) an attachment, arrest or submission to jurisdiction under
circumstances where an original ground of jurisdiction exists; 8
(ii) having to make out a prima facie case with reference to evidence (as opposed to the averments that suffice for such purposes in a Particulars of Claim);
imposed upon a litigant in the position of the Applicants, wishing to litigate against a peregrine Defendant, a more onerous burden, than what is required from a Plaintiff litigating against an incola Defendant under circumstances where;
(c) no reasonable or justifiable ground for such additional and/or higher burden, and/or limitation of such Plaintiff's constitutional rights, exists.
THE FACTUAL FINDING THAT APPLICANTS FAILED TO MAKE OUT A PRIMA FACIE CASE
THE CAUSE OF ACTION: APPLICABLE LEGAL PRINCIPLES
9. 9.1 Section 32(1) of the Insolvency Act stipulates:
" (a) Proceedings to recover the value of property or a right
in terms of Section 25(4), to set aside any disposition of property under Section 26, 29, 30 or 31 of for the recovery of compensation or a penalty under Section 31, may be taken by the trustee.
(b) If the trustee fails to take any such proceedings they may be taken by any creditor in the name of the trustee 9
upon his indemnifying the trustee against all costs thereof."
9.2 A disposition without value can be set aside in terms of Section 26 of the Insolvency Act, under appropriate circumstances. A voidable preference can similarly be set aside in terms of Section 29 of the Act, and an undue preference to creditors can be set aside in terms of the provisions of Section 30 of such Act.
9.3 The definition of a "disposition" is set out in Section 2 of the Insolvency Act:
" "Disposition" means any transfer or abandonment of rights
to property and includes a sale, lease, mortgage, pledge, delivery, payment, release, compromise, donation or any contract therefore, but does not include a disposition in compliance with an order of the Court; …" (emphasis supplied)
THE CAUSE OF ACTION: THE FACTS
10. 10.1 The insolvent to whom the above proceedings related, one Harksen, concluded two agreements with the Respondents, namely on:
(a) 31 March 1994, in terms of which the Respondents received DM 3,5 million (annexure “R1” hereto); and 10
(b) 23 August 1995, in terms of which such Respondents received DM 500 000,00 (annexure “R2” hereto).
10.2 Both the above agreements were, subsequent to their conclusion, made orders of Court by the Cape High Court, by consent.
10.3 Neither of the above two court orders followed upon an investigation of the facts relied upon as basis for such orders, by either of the two courts which had granted such consent orders. (In the above regard, Van Zyl J, in the Cape High Court, held in his reported judgement –
Lane & Another v Dabelstein & Others 1999 (3) SA 150 CPD at 171B: “Our courts are approached regularly to grant orders by
agreement. Such orders are routinely granted unless there is some or other obvious reason ex facie the provisions of the agreement, which prompts a court to refuse the bidding of the parties. In cases such as present, it cannot be expected of the judge granting an order by consent to question the validity of the agreement unless his attention is drawn to possible or potential problems in this regard”. (Neither of the two above amounts (paid
in terms of such agreements) was paid to Respondents as payment of a claim for which a summons had been issued against Harksen).
10.4 No contention was made in the Supreme Court of Appeal on behalf of Respondents that such dispositions, but for the fact that they had been made orders of court by consent between Harksen and the Respondents, would not have been impeachable. 11
10.5 The Applicants contend that it is almost incontrovertible that, had such agreements not been transformed into orders of court by consent, that same would have been impeachable, without further (bona fide) resistance from the Respondents.
10.6 The only question that arose (in the above context) in the Supreme Court of Appeal, was whether, notwithstanding the provisions of Section 2 of the Insolvency Act defining a "disposition" as not including a disposition "in compliance with a court order", a prima facie case for the setting aside of such dispositions made in terms of the consent orders, were made out by Applicants.
THE FINDING OF THE SUPREME COURT OF APPEAL
11. 11.1 The Supreme Court of Appeal held:
(a) At page 5 of it's judgement:
" However, accepting the statements at face value, it is
plain that an applicant must at the very least make all
the allegations in his founding affidavit that will sustain a cause of action. I accept for purposes of the argument that there are cases where dispositions in compliance with orders of court may be set aside. On the view that I take of the matter it is not necessary to decide on precisely what grounds this may be done. I
will assume that fraud or collusion or perhaps other kinds of reprehensible conduct on the creditor's part in 12
procuring an order will suffice. Plainly, however, it will not be sufficient merely to bring the disposition within the ambit of one or more of the relevant provisions of the act as was done in Sackstein and Venter. An alienation of property may e.g. be set aside under Section 26 as a disposition without value, but if it occurred in compliance with an order of court, additional allegations will have to be made in order to nullify the effect of the exclusion in Section 2 (cf Swadif (Pty) Ltd v Dyke N.O. 1978 (1) SA 928 A at 938B – 939H). If fraud is relied upon, then fraud must be alleged: and so with collusion and any other conduct relied upon."; (emphasis supplied) and
(b) At page 8 thereof:
" The replying affidavit goes some way towards showing
that the Dabelsteins must have suspected that Harksen was in insolvent circumstances, but it is quite clear from all the evidence that the parties were at arms length when the settlements were concluded and that
there could not have collusion. Moreover, even in this affidavit, collusion is not alleged; nor is fraud on the Dabelsteins’ part nor the improper motive upon which Respondents' counsel now seeks to rely." (emphasis supplied) 13
(The patent and incontrovertible erroneous nature of the last underlined sentence of the passage of the above finding will be referred to hereinbelow).
11.2 Insofar as the above dicta implied that court orders can only be set aside if "fraud or collusion or perhaps other kinds of
reprehensible conduct on the creditor's part in procuring an order" will justify the impeaching of a disposition made in compliance with a court order by consent, under the provisions of the Insolvency Act, I respectfully say that the Supreme Court of Appeal erred in so finding.
11.3 It is respectfully submitted that a distinction should be drawn between:
(a) A disposition in terms of a Court order which originated the obligation to pay, and which followed upon a judgement which the party who has to pay/perform did not agree to; and
(b) A disposition which originated from an agreement between the parties which was made an order of court by agreement; and
(c) In the (b) category above, between a bona fide and mala fide agreement that became embodied in a court order.
See: - Meskin, Insolvency Law at 5.100;
- Sackstein & Venter N.N.O. v Greyling 1990 (2) SA 323 OPA at 326G – 327D 14
- Mars, The Law of Insolvency in South Africa, 1988 (8th Edition) at 208:
" Where an agreement, which would
constitute what normally would be a voidable disposition clearly preferring one creditor above another, is by consent made an order
of court, this is probably not a
disposition "in compliance with an order of court"" (emphasis supplied)
- Muller & Another N.N.O v John Thompson 1982 (2) SA 86D at 92G:
" Prima facie, it appears to me that the
reason why the legislature has excluded such a disposition from attack under the
Insolvency Act, is that the insolvent has been compelled to do something by an order of court". (emphasis supplied)
11.4 It is clear from the above authorities that it is neither practicable or feasible that the grounds upon which a disposition made in terms of a court order can be impugned, should be limited to instances where "fraud, collusion or perhaps other kinds of reprehensible conduct on the creditor's part in procuring an order" occurred. 15
11.5 It appears that the exclusion envisaged by Section 2 of the Insolvency Act intended to apply to only such cases where the court order, as opposed to the will and/or agreement of the parties, obliged performance of the promised prestation.
11.6 It is submitted that such distinction should be the overriding factor in considering whether the exclusion envisaged by Section 2 applies to a disposition, or not.
11.7 Applicants accordingly respectfully contend that the Supreme Court of Appeal erred in limiting, as a finding on the legal principles involved, the grounds upon which a disposition in terms of a court order can be set aside, to grounds tainted by "fraud", "collusion" or "reprehensive conduct" by a creditor.
11.8 Applicants will however contend that, even if the above principles were correctly applied or found to be applicable (by the Supreme Court of Appeal), the Applicants have clearly made out (more than) a prima facie case for "reprehensible conduct" on the part of the Respondents and/or their representatives in having concluded the above
agreements. Proper reference to the facts relating to such "reprehensible conduct", will be made hereinbelow where I deal with the facts relied upon for purposes of averring that a proper prima facie case was made out by the Applicants.
12. 12.1 The Supreme Court of Appeal further held (at page 6 of their judgement): 16
" In the present case the Applicant's reliance on a lack of
bona fides is mentioned (at 170B-C) but not pursued in the judgement (by Van Zyl J in the Cape High Court). Lack of
bona fides was not the ratio for the conclusion that a prima facie case had been established. That conclusion, it seems, was based on the view that no judgement by agreement can be regarded as an order for purposes of the exclusion and that a case had been made to set the settlement agreement aside under Section 29 or 30. I cannot accept that an order does not qualify as an order for purposes of the exclusion merely because it was made in terms of an agreement. Admittedly, as observed in Muller & Another N.N.O v John Thompson Africa (Pty) Ltd & Another (2) SA 86 D & CLD at 92 A – C, it may open the door to abuse if a person who is in insolvent circumstances were to make an agreement that would in the ordinary course of events be a voidable disposition and consent to have the agreement an order of court. But, at 92H Milne J indicated, rightly in my view, that the same cannot be said of all consent orders." (emphasis
supplied)
12.2 The finding that a lack of bona fides on the part of the Respondents was "mentioned, … but not pursued in the judgement", is submitted to be incorrect, if regard is had to the contents of the judgement of Van Zyl J in the Cape High Court.
12.3 In the above judgement it was held by Van Zyl J (at 170A et seq): 17
" In his argument Mr Barnard submitted that an order by
consent to confirm a contractual agreement is not a disposition as intended by Section 2 of the Act. On the second leg of Mr Hodes’ argument he pointed out that the Applicants were not relying upon "collusive dealings" in terms of Section 31 of the Act, but on voidable or undue
preferences in terms of Sections 29 or 30 of the Act. He submitted that the agreements between Harksen and the Dabelsteins were not bona fide since both parties knew that Harksen was effectively insolvent at the time and Harksen was in fact intimidated by the pressure of a Mareva Injunction and Anton Piller order granted against him.
And at 171B: "I must respectfully associate myself with the
ratio set forth in this dictum. It would be unjust and inequitable if parties to an impeachable transaction should be able to avoid proceedings to set aside such transaction by agreeing to have it made an order of court. Our courts are approached regularly to grant orders by agreement. Such orders are routinely granted unless there is some or other obvious reason ex facie the provisions of the agreement, which prompts a court to refuse the bidding of the parties. In cases such as the present, it cannot be expected of the judge granting an order by consent to question the validity of the agreement unless his attention is
drawn to the possible or potential problems in this regard. I am, therefore, satisfied that the exclusive provision of 18
Section 2 of the Act is not applicable to such cases… As for the suggestion that there is no prima facie case made out on the papers, I have no hesitation in rejecting it. There is more than enough factual material contained in the founding affidavit and elsewhere to justify the inference that the disputed agreements between Harksen and the Dabelsteins may indeed be impeachable and liable to be set aside in terms of the provisions of Sections 29 or 30 of the Act. I am quite satisfied that more than a prima facie case has been made out by the Applicants" (emphasis and italics supplied)
12.4 The finding by the court of first instance (Van Zyl J), to the effect that "more than a prima facie case has been made out by the Applicants" “in the founding affidavit and elsewhere”, clearly related to the submissions made to such court relating to the lack of bona fides of the Respondents, and is by clear implication premised upon a finding of such a lack of bona fides.
13. 13.1 The reasoning behind the dictum of the Supreme Court of Appeal,
referred to in the paragraph 12.2 above, is respectfully contended to be incorrect:
(a) The finding (whether correct or not) that the lack of bona fides on the part of the Respondents was "mentioned, … but not pursued in the judgement" of the Cape High Court, cannot detract from the fact (independently from what the court of the first instance recorded in its judgement) that more than enough 19
allegations for purposes of making out a prima facie case, had been made on the papers before such court.
(b) The proper source of reference for determining whether the Applicants had made out a proper case, would have been the Applicants’ founding and replying papers (read with admissions or averments made in the Respondents' opposing papers) and not the judgement of the Court a quo. (The replying papers of the Applicants are conceded to be only relevant for such purposes to the extent that it embroidered upon a case already made out in the founding papers, and not as source of new allegations, or where it dealt with a defence raised by the Respondents.)
14. 14.1 Relating to what the case was that was relied upon by Applicants, the Supreme Court of Appeal held (at page 7):
" This brings me to the so-called lack of bona fides in the
conclusion of the agreements relied upon by the Applicants. Their counsel argues that the parties were not bona fide in that:
(1) Harksen knew that he was insolvent at the time whilst the Dabelsteins'-attorney who brokered the agreements suspected that to be the case;
(2) both parties intended to prefer the Dabelsteins above other creditors; and 20
(3) the agreements were converted into orders of court for the very purpose of procuring the exclusion provided for in Section 2 of the Act. This is the argument but what does the founding affidavit say? The only pertinent allegations therein are the following: "
(10) I accordingly respectfully say that:
10.1 The Dabelsteins received the payment of DM 3,5 million on 31 March 1994, at a time when Harksen's liabilities far exceeded his assets;
10.2 The above payment was clearly intended to prefer the recipients thereof above the other creditors of Harksen;
10.3 The above (intention to prefer) is to be inferred, inter alia, from the fact that:
(a) at the time of the payment Harksen had already contemplated his own (voluntary) sequestration or surrender of his estate for several months …;
(b) Harksen himself, clearly as advised by his lawyers, demanded from the trustees 21
… that the above dispositions be set aside.
10.4 The payment of DM 3,5 million to the Dabelsteins accordingly clearly stands to be set aside in terms of Section 30 of the Insolvency Act.
11. In respect of the payment of DM 500 000 to the Dabelsteins in August 1995, I respectfully say that such payment:
11.1 Occurred within 6 months of the date of Harksen's sequestration in October 1995;
11.2 Clearly had the effect of preferring of his creditors above others;
11.3 Took place at a time when Harksen's liabilities far exceeded his assets;
11.4 Was not made in the ordinary course of business …; (specific reference will be made hereinbelow to the crucial omission, in the quotation by the Supreme Court of Appeal, of pertinently relevant allegations, at this juncture);;
11.5 Was also a disposition without value; 22
11.6 Stands to be set aside in terms of Section 26 or 29 or 30, or all three such sections, of the Insolvency Act.
12. I accordingly respectfully say that the Applicants made out a prima facie case for the setting aside of the above dispositions."
From this it will be seen that, apart from Harksen's de facto insolvency, none of the other matters is addressed in the affidavit. Nor can they be inferred (as the Applicants' counsel invited us to do) from the grains of fact interspersed between a mass of hearsay, bald allegations and inferential reasoning in the founding affidavit." (emphasis supplied)
14.2 The above findings of the Supreme Court of Appeal contained several patent errors:
(a) The evidence referred to was not the "only pertinent allegations" in the founding affidavits of the Applicants. Reference will be made hereinbelow to various and substantially crucial allegations made elsewhere in the papers on behalf of the Applicants, or appearing elsewhere in the contents of the annexures to such affidavits. 23
(b) The submissions on behalf of the Applicants, as well as the allegations recorded in the affidavits on behalf of the Applicants, did not suggest that the attorney of the Dabelsteins "suspected" that Harksen was insolvent at the time when he concluded the said agreements with Respondents. Specific and pertinent allegations were recorded in the Applicants' affidavits to the effect that such attorney knew that Harksen was insolvent, and that he had deposed to affidavits in which he recorded the facts upon which his such knowledge had arisen, and upon which his beliefs in such regard had been based. The evidence in such regard also appears from the more comprehensive references that I will make hereinbelow to the evidence upon which the Applicants relied for purposes of averring that they had made out a prima facie case in the court of first instance.
(c) The finding that the submission by Applicants counsel that "the agreements were converted into orders of court for
the very purpose of procuring the exclusion provided for in Section 2 of the Act" was an argument not based on allegations in the affidavits on behalf of the Applicants, is patently incorrect. The wording of the above submission referred to by the Supreme Court of Appeal, corresponds almost verbatim with allegations recorded by Applicants in their replying affidavit. Such contents of the replying 24
affidavit dealt with a denial of an allegation a lack of bona fides on the part of the Respondents.
(d) The omission (in the quotation by the Supreme Court of Appeal) of crucial averments in paragraph 11 of the affidavit of the Applicants, is inexplicable, especially insofar as the omitted portion of such evidence clearly provided a material and crucial basis upon which an allegation of a lack of bona fides could be based. The omitted section, following upon the recorded portion of paragraph 11.4 within the italicised quotation, reads:
" 11.4 … was not made in the ordinary course of business, as it can hardly be said that a person owing millions of Deutsche Marks acted in the ordinary course of business when he paid a creditor of his a sum minimal compared to his indebtedness to such creditor, to have the sequestration order against him set aside". (emphasis supplied)
(e) The above dictum by the Supreme Court of Appeal criticised the "inferential reasoning" in the founding affidavit, in relation to proof of a lack of bona fides on the part of the Respondent. I respectfully point out that, insofar as a lack of bona fides, or presence of mala fides can only be alleged by making "inferential" conclusions upon the facts of a 25
case, there could have been no other basis upon which the Applicants could have recorded their reliance on mala fides, or a lack of bona fides, on the part of the Respondents, other than by "inferential reasoning".
15. 15.1 In elaboration of what I have recorded hereinabove, I respectfully point out that the above extract from the papers relied upon by the Supreme Court of Appeal as the "only pertinent allegations" averred by the Applicants to make out a prima facie case, represented only some of the "conclusions" that the Applicants sought to draw on all the facts, but were not "the only pertinent allegations" in such regard.
15.2 The "pertinent" allegations in such regard were recorded thus (by Applicants):
(a) Record 11, paragraph 4 to Record 22, paragraph 12:
"4. 4.1 Having invested the amount of DM 5,8 million with
Harksen, and not having received either repayment of the capital, or payment of any interest or profits, the Dabelsteins initiated certain proceedings against Harksen under Case No. 3433/1994 (it was common cause in the court of first instance that such proceedings were Anton Piller- proceedings, and did not include proceedings based on a summons against Harksen) in the Cape
Provincial Division of the Supreme Court of South Africa (as it then was) for relief related to the 26
repayment of the above sum as well as to the repayment of certain alleged loans granted by some of the Respondents (predominantly 12th Respondent), to Harksen and his wife, Jeanette Harksen, which loans totalled approximately DM 3 125 624 in capital. …
4.3 The loan agreements referred to above were reflected in … the founding affidavit of one David Michael Greene (hereinafter "Greene") in the above Case No. 3433/1994.
4.4 Greene has at all relevant times been, and still is, the London-correspondent attorney of the Dabelsteins, whose first legal confrontation with the Harksens occurred when he (Greene) initiated some proceedings against the Harksens (on behalf of the Dabelsteins) in England in or during the latter part of 1993. To the best of my knowledge, the instructions of Kurz (of 14th Respondent) since 1994, and presently, have emanated party from Greene, and party directly from the Dabelsteins.
5. 5.1 A settlement agreement under Case No. 3433/1994 was concluded on 31 March 1994 between Jurgen and Jeanette Harksen (the First and Second 27
Respondents in such application) and the Dabelsteins, in terms of which Jurgen Harksen undertook to pay to "Applicants" (ie. All thirteen Respondents in this application) the sum of
DM 3,5 million in settlement of the claims of First, Second and Twelfth Respondents against the Harksens (in such proceedings) based on loan
agreements and the sale of goods.
5.2 I annex hereto as Annexure "EH1", a copy of the above settlement agreement.
5.3 Ex facie the terms of such settlement not only the respondents who had claims against the Harksens in terms of the annexures listed in paragraph 1 of the settlement agreement (First, Second and Twelfth Respondents) benefited from such payment, but in fact all thirteen Respondents so benefited.
5.4 It is significant that the conclusion of such agreement, as well as the performance thereof (ie. payment in terms of clause 2 of the agreement) took place within the area of jurisdiction of this Honourable Court i.e. in Cape Town.
5.5 The amount of DM 3,5 million was duly paid in terms of the stipulations of the settlement 28
agreement, and was, to the best of my knowledge, shortly after such payment expatriated to an account of Greene in London.
5.6 It is furthermore significant that the above "loan- claims" were practically and effectively paid in full by Harksen, despite his denials, under oath, in his opposing affidavit filed under Case No. 3433/1994, that such monies were due for payment to the Dabelsteins. …
5.7 In view of Harksens denial under oath that such monies were due for payment, I respectfully say that it can hardly be said that the payment of DM 3,5 million was effected in the "ordinary course of business".
6. 6.1 The estate of both Jurgen and Jeanette Harksen was subsequently provisionally sequestrated on 21 October 1994 at the behest of the Hamburgische Landesbank under Case No. 12686/1994. (It was common cause in the court of first instance that the attorney who launched such sequestration proceedings against the Hamburgische Landesbank, was the selfsame Greene who brokered the agreements embodying the 29
dispositions that the Applicants are seeking to set aside).
6.2 On 11 November 1994, and upon certain undertakings given by Jurgen and Jeanette Harksen, an order was granted by agreement between the Harksens and the Hamburgische Landesbank (the latter again represented by attorney Greene) suspending the operation of
the said provisional order of sequestration.
6.3 A settlement agreement was later, subsequent to the suspension of the provisional order of sequestration, reached between the Hamburgische Landesbank and the Harksens in, to the best of my knowledge, approximately March 1995, in terms of which the provisional order of sequestration against the estate of Jurgen and Jeanette Harksen was discharged and Jurgen Harksen was to pay the bank the sum of DM 21 million. To the best of my knowledge, such sum was never paid to the Hamburgische Landesbank, (as represented by attorney Greene) who, for
the apparent reason that Harksen personally had completely divested himself of all his assets, did not pursue any further 30
sequestration proceedings against Harksen at that stage.
7. 7.1 Subsequent to the above proceedings, a creditor of Harksen, namely Greve, successfully applied for the provisional sequestration of Harksen's estate in March 1995. The provisional order of sequestration was discharged by agreement between Harksen and Greve and other intervening Applicants on 23 August 1995, on the basis inter alia that Harksen would pay his creditors in full on or before 12 September 1995. As the payment of Harksen’s creditors did not take place, a fresh order for the provisional sequestration of Harksen's estate was granted on 21 September 1995 at the behest of Greve, and made final in October 1995. The Hamburgische Landesbank
supported such application as an intervening creditor, as the claim upon which they had provisionally sequestrated the Harksens in October 1994 remained unpaid.
7.2 I accordingly respectfully say that it is clear that the above facts and circumstances indicate that no material change occurred in 31
the financial circumstances of Jurgen Harksen between 31 March 1994 (when the payment to the Dabelsteins was made) and October 1994 (when Harksen was provisionally sequestrated by the Hamburgische Landesbank (the latter as represented by attorney Greene) and later
March and September 1995 (when Harksen's estate was provisionally sequestrated by Greve) and October 1995 (the date of Harksen’s final sequestration). I respectfully say that it is clear that, throughout these periods, Harksen’s liabilities far exceeded his assets and that he, during such period, clearly was de facto insolvent and has so remained to date hereof … (Paragraph 7.3 of the above affidavit referred to annexures to such affidavit that indicated:
(a) the fraudulent basis upon which Harksen had alleged that he was a person of substance; and
(b) evidence of Harksen's insolvency) …
7.4 I accordingly respectfully say that neither "the investment" relied upon by Harksen, nor 32
the above trustees (who according to Harksen administered such investment) exist, and that
the taking of funds from investors by Harksen had taken place in terms of a grand fraudulent scheme of mind-boggling proportions.
8. 8.1 Subsequent to the provisional sequestration of Harksen’s estate in March 1995, the Dabelsteins (except for 11th and 13th Respondents), amongst other parties, entered into the agreement with Jurgen Harksen (referred to in paragraph 7.1 hereinabove) in terms of which the provisional order of sequestration against Harksen’s estate was discharged on 23 August 1995 and in terms of which Harksen undertook to, "in consideration for the lifting of the provisional order of sequestration", paid to the Dabelsteins the sum of DM 500 000. I annex hereto as annexure "EH4A", a copy of such agreement..
8.2 To the best of my knowledge, as I am informed by my legal representatives, the above amount was indeed paid to the Dabelsteins … during August 1995. Such 33
payment was clearly made from Harksen's personal funds, hence his instructions to the trustees to set the above disposition aside and reclaim such monies from the Dabelsteins. The above amount was also included in the total amount demanded from the Dabelsteins in the trustees' letter of demand to the attorneys of the Dabelsteins.
9. It is common cause that the other creditors of Jurgen Harksen remained unpaid, save for certain creditors who received partial payments of the amounts due to them, and of costs incurred by them, from third parties (and not from Harksen) in terms of the above settlement agreement of 23 August 1995." (emphasis and italics supplied)
15.3 The above evidence preceded the "conclusions", referred to by the Supreme Court of Appeal as being the "only pertinent allegations",
relating to Applicants’ prima facie case, that the Applicants came to for purposes of proving the impeachable nature of the dispositions.
15.4 As stated above, the Supreme Court of Appeal, for some inexplicable reason, omitted some of the most "pertinent" allegations in the above context from the passage quoted by itself, namely the portion of the quoted paragraph 11.4 referred to in paragraph 14.2(d) hereinabove. 34
15.5 The above evidence co-existed with further crucial evidence relating to the bona fides of the Respondents and their attorneys as at the time when the impugned agreements were concluded.
16. 16.1 The facts and circumstances upon which Applicants relied to demonstrate the absence of bona fides of the Respondents and their attorneys, were inter alia, recorded thus:
A IN THE FOUNDING AFFIDAVIT
(a) Record 26, paragraph 17: (The evidence referred to hereinbelow
provided the general basis upon which specific and pertinent allegations of mala fides were later recorded)
" 17.1 I respectfully say that it is clear from the aforegoing
that the trustees have steadfastly refused, and still refuse to take the relevant proceedings against the Dabelsteins.
17.2 I also respectfully say that the reasons for such refusal are evident:
(a) Attorney Kurz of 14th Respondent is the attorney of record of both the trustees (in practically all the litigation in which the trustees are currently involved), and of the Dabelsteins; 35
(b) Attorney Kurz was also the attorney that negotiated and drafted the agreements in terms of which the dispositions were made to the Dabelsteins;
(c) The trustees, at present, take advice from Kurz in respect of the question of what proceedings to take in almost all matters relating to Harksen’s insolvent estate, and Balsillies (who addressed the letters to my attorneys on behalf of the trustees) have adopted a passive approach and have
allowed 14th Respondent to dictate to the trustees what proceedings should be taken in the above regard;
(d) The prospects are, I respectfully say, nil that Kurz would advise his trustee clients to take action and/or proceedings against his Dabelstein clients for the setting aside of transactions carefully brokered, negotiated and implemented by Kurz himself (reference will be made later hereinbelow how the above allegation relating to the "careful planning" of the agreements affected the bona fides of the Respondents);
(b) Record 31, Paragraph 20.6: 36
“ 20.6 The only group of significant creditors that effectively can be prejudiced by the actions of the Section 32 creditors, is accordingly the Dabelsteins.
20.7 It is therefore clear why attorney Kurz would do everything within his power to prevent the institution of any Section 32–proceedings relating to the insolvent estate of Harksen for purposes of protecting his clients' (the Dabelsteins) proven claim of DM 68 million (to which reference will be made hereinbelow to place such "proven claim" in its proper perspective) against the claims of any creditors acting in terms of Section 32. …
20.8 To place the "proven claim" of DM 68 million of the Dabelsteins in its proper perspective, I wish to refer to the following facts and circumstances. The Dabelsteins in total invested a capital amount of only DM 5,883 million with Harksen. During August 1995, when the provisional sequestration order was discharged against Harksen, the Dabelsteins procured a settlement (the one agreement, annexure “R2” hereto, that gave rise to the disposition attacked by the Applicants) in
their favour amounting to approximately 37
DM 68 million. As Harksen at the time had no intention to honour the terms of the settlement agreement, he clearly simply closed his eyes and agreed on any amount that the Dabelsteins wished to record in such settlement, as he (Harksen) clearly sought the above settlement solely for purposes of having the sequestration order against him discharged for a short period within which he could procure the "legitimate" transfer of assets allegedly belonging to his wife, to certain trusts, to safeguard such assets against the operation of the provisions of Section 21 of the Insolvency Act. The above settlement figure (DM 68 million) reflected the capital of DM 5,883 million invested with Harksen, together with the profits promised by Harksen to the Dabelsteins at 1 300% minus 10% commission payable to Harksen. The Dabelsteins accordingly obtained a "liquidated claim" against the insolvent estate of Harksen, through a settlement in August 1995 in respect of both the capital and profits promised to them, whereas most of the other creditors so far have only relied upon the capital investment with Harksen, together with interest thereon, in computing their claims against the insolvent estate of Harksen. The presiding magistrate at the first meeting of 38
creditors ruled that no profits or returns on capital invested could be admitted as claims against the Insolvent Estate, as such claims were not liquidated. The Dabelsteins accordingly were not affected by such ruling, as their claims for "profits" were liquidated by the granting of the court order under Case No. 3952/1995 on 23 August 1995. This "liquidated claim" presently gives the Dabelsteins an artificial approximately 50% interest in all proceeds of assets recovered for the benefit of Harksens estate, hence the vigorous efforts by Kurz to recover assets, ostensibly for the benefit of the general body of creditors of Harksen, but in effect predominantly for the benefit of the Dabelsteins. …
20.9 Through the above settlement effected in their favour amounting to DM 68 million, the Dabelsteins enjoy an unfair advantage over other proven creditors, insofar as the other proven creditors, in relying on only the capital and interest owed to them by Harksen in computing their claims, are claiming substantially less from the Insolvent Estate of Harksen". (emphasis supplied)
(c) The settlement agreement of August 1995 shows the following: 39
(i) The settlement (relating to the payment of DM 500 000) was to be made an order of court, by consent, under Case No. 7238/1994 (which proceedings were totally unrelated to the claiming of a payment of DM 500 000), despite the fact that it was recorded as a judgement under Case No. 7391/1995 (see clause 6 of such agreement), and despite the further fact that such settlement was intended to effect the sequestration application under Case No. 3952/1995. The settlement thus bore no relation to any specific claim for DM 500 000, but was specifically aimed at avoiding (on unlawful grounds) the sequestration of Harksen’s estate:
- See the preamble of the agreement:
" And whereas the Dabelsteins applied for
leave to intervene in the application for a compulsory sequestration of Harksen, under Case No. 3952/1995 and certain ancillary relief";
- Read with Clause 7 of such agreement:
" 7. In consideration for the lifting of the
provisional order of sequestration:
7.1 Harksen shall cause to be paid to the Dabelsteins the sum of DM 500 000 on or before 14h00 on 40
29 August 1995." (Which passage clearly showed the impeachability and improper nature of both the above agreement and the payment of the sum made in terms thereof);
- Read with Clause 16.1 and 16.3 of such agreement:
" 16. This agreement shall have no force or
effect unless:
16.1 the provisional order of sequestration granted under Case No. 3952/1995 is discharged on or before Wednesday, 23 August 1995, and; …
16.3 the application to intervene and/or for other ancillary relief brought by the Hamburgische Landesbank is
withdrawn on or before 23 August 1995";
(ii) The wording of clause 2 of the above agreement suggests that the Respondents were endeavouring to circumvene the fact of Harksen’s insolvency, by recording that Harksen
"agrees to pay or cause to be paid" (the Respondents specifically relied on this clause in their opposing affidavit 41
for purposes of nullifying the effect of their knowledge of Harksen's insolvency at the time when the above agreement was concluded, by alleging that the said amount had been paid to them by third parties, which allegation was denied by the Applicants);
(iii) The improper nature of such agreement was clearly evident from the contents of clause 19 thereof which read: "Harksen agrees and undertakes that, in the event of
any non-compliance by him or Hildebrandt, with any material stipulation of this agreement, the Dabelsteins
shall have the right to forthwith on 24 hours’ notice to Harksen to apply for a provisional order of sequestration against Harksen, based on the liquid claim of the Dabelsteins against Harksen as envisaged in clause 6 above, which application Harksen agrees not to oppose, on any grounds whatsoever." (The above "right" of the Dabelsteins to apply for the sequestration of Harksen, presupposed Harksen’s
insolvency, and presupposed the fact that Respondents were clearly aware of the existence of such insolvency at the time when the agreement was concluded.)
(iv) On a proper construction of the above clause, the Respondents were clearly aware of the fact that: 42
- Harksen was insolvent and unable to pay all his creditors;
- their seeking payment of only their claim was to amount to either an undue preference, or a disposition without (lawful) value, or a voidable preference under the Insolvency Act; as
- if their claim were to remain unpaid, they (the Dabelsteins) were to continue to rely on Harksen’s insolvency, by applying for a sequestration order against him.
B IN THE OPPOSING AFFIDAVIT ON BEHALF OF THE RESPONDENTS
(a) Attorney Greene confirmed, relating to the settlement agreement dated 23 August 1995 (at Record 377, paragraph (bb)):
" (bb) The second settlement, which was also made an order of court, agreed (sic) not to proceed with
their intervention application and not to ask for an order of sequestration against Harksens estate".
C IN THE REPLYING AFFIDAVIT ON BEHALF OF APPLICANTS
(a) In response to certain denials by Respondents, and in elaboration of the facts on record in the founding papers, it was 43 averred by and/or on behalf of Respondents (Record 682, paragraph 126):
" 126 At paragraph 12 thereof
126.1. The contention is raised herein that, for purposes of the Insolvency Act, a "disposition does not include a disposition in compliance with an order of the court".
126.2. I am advised that in the above context, the word "order" does not mean an order which specifically enforces a pre-existing contractual obligation to pay money. I am advised that the "order" in the above context envisages one which originates the obligation to pay.
126.3. It is clear from the documents before this Honourable Court that a "settlement agreement" preceded the making of the "order of court" in which the settlement was contained. It is noteworthy that the above settlement was made at a stage where the matter under which such settlement was effected, was not in any way ripe for hearing. It was in fact made at a time when summons in the above regard had not even 44
been issued against the Harksens. It is clear that such "settlement" was made pursuant to the making of an Anton Piller- order which merely would have had the effect of preserving evidence in the action that the Dabelsteins still were to institute at such time.
126.4. I will indicate hereinbelow that the above
settlement was made at a time when, to the knowledge of Greene, Harksen was insolvent. It was accordingly imperative for Greene to give the above agreement a guise of "validity" for purposes of invoking the defence that such disposition had been made in terms of a "court order". Such defence, clearly as contemplated by Greene, would have deprived any trustee and/or creditor of the right to set such disposition aside. I accordingly respectfully say that not only was the conclusion of such agreement lacking in bona fides (insofar as Greene knew and/or foresaw, at the time, that he was concluding an agreement with a person who was practically insolvent, and
which agreement could be set aside) but that the agreement was specifically made an 45
order of court on the instructions of Greene, to avoid the possibility that it could be set aside.". (emphasis and double emphasis supplied)
(b) Further evidence was recorded thus (Record 686 to 696, paragraph 131 to 139):
" The requirement of good faith
131. 131.1 I respectfully say that neither the Dabelsteins, nor their attorney (Greene) acted in good faith when the transaction constituting the said disposition was concluded.
131.2 In support of my above averment, I wish to refer to the facts and circumstances set out hereinbelow.
132. 132.1 I am advised that, if the Dabelsteins and/or their attorney Greene, the latter who clearly acted, at the time of the disposition, on behalf of the Dabelsteins, knew or foresaw that Harksen was insolvent, or likely to be so at the time when he (Harksen) undertook to pay the amount of DM 3,5 million to the Dabelsteins, the latter persons and/or their 46
attorney could not have concluded such agreement in good faith.
132.2 The above knowledge on the part of the Dabelsteins and/or their attorneys would clearly have indicated the lack of good faith in concluding such agreement. The facts and circumstances set out hereinbelow thus become important.
132.3 The agreement that originated the obligation to pay (on Harksen’s side) was concluded on 31 March 1994.
132.4 On 20 October 1994, barely 7 months after the conclusion of the above agreement, the Hamburgische Landesbank (hereinafter "HLB") launched an application for the sequestration of Harksen's estate in the Cape Town Supreme Court under Case No. 12686/1994. The selfsame Greene represented the HLB in such proceedings.
132.5 Greene deposed to an affidavit in support of the above application. A copy of the affidavit is annexed hereto as annexure "EH35". 47
132.6 The above affidavit was clearly predicated upon the premise that Harksen had defrauded his creditors, and that the outrageous return (mostly 1 300% on the respective "investments"), promised to Harksen by such creditors, constituted claims that Harksen simply could not pay back. (In the above respect it is respectfully contended that Greene would also have known, when he concluded the August 1995 agreement which had been transformed into a consent order of the Cape High Court, that the 1 300% that he had negotiated as profit on the limited capital investment that his clients had made with Harksen, would not represent a true and enforceable claim against Harksen. Greene accordingly, on a balance of probabilities, also concluded such agreement for the purpose, lacking in bona fides, to obtain
a liquidated claim of DM 68 million against Harksens Insolvent Estate, which would procure for the benefit of his clients, the Respondents, an undue preference over the other creditors of Harksen’s estate who had been limited to claim only the capital portion of their investments from Harksen (as evidenced by the extracts from the evidence referred to 48
hereinabove)). The gist of such affidavit was
that Harksen allowed formidable, substantial and irrepayable contractual obligations against him to arise clearly for purposes of fraudulently convincing and causing the investors to part with their monies.
132.7 The above allegations in Greene's affidavit appeared predominantly in paragraphs 8 to 15 thereof.
132.8 It is clear that the facts and circumstances relied upon by Greene to paint the above picture postulated that, from the inception of such fraudulent scheme by Harksen, the latter caused himself to be insolvent, as the contractual obligations to pay the (impossible to achieve and fictitious) 1 300% returns clearly constituted claims that far
exceeded the real funds that Harksen received in consideration for such promises.
133. 133.1 Not contenting himself with reliance upon the above facts, Greene, in a sanctimonious display of judicial outrage, clearly for purposes of showing that Harksen had been 49 disposing of his assets in a state of insolvency, deemed it necessary to "draw this Honourable Courts attention in particular to:
29.2.1 The sequestration proceedings brought in April 1994 in this Honourable Court under Case No. 4397/1994 by Josef Gödde and Werner Bosch which was settled in terms of a deed of settlement which provided for payment of the sum of R3,5 million; and
29.2.2 The application by the Dabelsteins in this Honourable Court under Case No. 3433/1994, referred to above, which was settled on 31 March 1994 in a settlement (which gave rise to the first disposition impugned by Applicants)
recorded in a written agreement, a copy of which is annexed hereto marked "DMG9". In terms of the settlement Mr Harksen undertook to pay to the Dabelsteins the SA Rand equivalent of DM 3,5 million by not later than close of business on 50
Thursday, 31 March 1994. Such payment was in fact completed on approximately 5 April 1994".
133.2 It is common cause that the above agreement referred to by Greene, was brokered by himself (Greene explicitly referred thereto in paragraph 1 of his affidavit:
" I was the attorney responsible for the orders annexed hereto as annexure "DMG805 to DM807"… and conducted the negotiations leading up to the conclusion of the two settlements which form the subject matter of the proposed action".
133.3 The payment to the Dabelsteins in terms of the very agreement brokered by Greene, was relied upon Greene himself in proceedings on behalf of the HLB, in support of the sequestration application against Harksen. (I submit that the above evidence clearly demonstrated the mala fides of Greene, and the Respondent). 51
134. 134.1 In paragraph 30.8 and 30.9 of the affidavit in support of the sequestration application by the HLB, Greene recorded the following facts:
" 30.8 In my respectful submission it is clear from the aforegoing that Mr and Mrs Harksen have given notice in writing to the Applicant, as one of their creditors, that they are unable to pay any of their debts due to the Applicant. I respectfully submit that this constitutes an act of insolvency in terms of Section 8(g) of the Act No. 24 of 1936.
30.9 I point out further, as appears from paragraph 8.3 of the founding affidavit in the sequestration application under Case No. 4397/1994 (the application by Gödde and Bosch) that Mr Harksen committed a further act of insolvency as referred to 52
therein. In this regard I annex hereto "DMG10" and "DMG11" respectively copies of a letter from Mr Harksen to Volker Graul, together with an English translation thereof and a letter form C&A Friedlander to Mr and Mrs Schlueter dated 8 March 1994.”
134.2 Greene accordingly clearly relied upon the application by Gödde and Bosch for Harksens sequestration (in 1994), for
purposes of showing that, already at the time of such application by the said two Applicants (the notice of motion and supporting affidavits in the above application are annexed hereto as annexure "EH36") and prior to the date thereof,
Harksen had been insolvent. The contents of the supporting affidavit by attorney Fortes cannot otherwise be interpreted (ie. other than alleging that Harksen had already at the time of the conclusion of the settlement agreement with the Dabelsteins been insolvent). 53
135. 135.1 In paragraph 31 of his affidavit in the HLB application, Greene elaborated as follows:
" In any event and notwithstanding reference by Mr Mahnkopf in paragraph 44 of his affidavit (Record, page 20) to a statement of Mr Hildebrandt in a video recording I respectfully submit that the only inference to be drawn from the failure by Mr and Mrs Harksen to make a payment of their admitted
indebtedness to the bank is that they cannot make such payment. I accordingly submit further that this inability to make payment leads to the further inference that Mr Harksen does not have assets of the magnitude suggested by Mr Hildebrandt and all indications are that Mr Harksens assets are exceeded by his liabilities. As Mrs Harksen's are inextricably bound up with those of Mr Harksen I respectfully submit that the estates
of both Mr and Mrs Harksen are in fact insolvent.” 54
135.2 The failure of the Harksens to have paid their debts to the HLB commenced substantially before 31 March 1994. If the failure so to have paid justify the inference that both the Harksens had been "in fact insolvent" such insolvency clearly existed at the time of the disposition to the Davelsteins.
135.3 In view of the intimate knowledge of Greene of the affairs of the Harksens, it is inconceivable that this knowledge did not exist in the mind of Greene (directly or constructively) at the time when the agreement was concluded.
136. 136.1 In paragraph 32.2 to 32.5 of the affidavit in the HLB application, Greene described the advantage to creditors, in the event that Harksens estate would be sequestrated (inter alia) as follows:
" 33.2 It will enable the highly complicated and complex affairs of Mr and Mrs Harksen to be administered by an impartial trustee elected by 55
creditors so as to ensure an equitable distribution of the proceeds of the assets amongst all their creditors in the legal order of preference;
33.3 The trustee will be able to investigate all the affairs of Mr and Mrs Harksen;
33.4 The sequestration of Mr and Mrs Harksen will prevent certain creditors being unjustly preferred above others, in which regard investigations have disclosed that the claims of certain creditors have been settled".
136.2 Greene accordingly raised the fact that settlements, inter alia, the settlement with the Dabelsteins (that he himself brokered)
which effective "unjustly preferred" them (the Dabelsteins) "above others", could be prevented if Harksen was to be sequestrated. 56
136.3 The astute observation that "investigations have disclosed that the claims of certain creditors have been settled" was simply disingenuous. No investigation would have been necessary to have reminded Greene of the agreement that he himself brokered, in favour of the Dabelsteins.
136.4 The total and absolute lack in character of
the reliance by Greene upon his own absence of bona fides having brokered and negotiated an agreement with Harksen clearly knowing the latter to be insolvent, for purposes of achieving the sequestration of Harksen, is clearly evident from the above facts and circumstances.
137. Harksen's estate was indeed provisionally sequestrated on 21 October 1994 on strength with inter alia the averments of Greene referred to above. The provisional order of sequestration was thereafter discharged when Harksen, once again through an agreement brokered by Greene, paid a portion of the claim to the HLB. This once again occurred under circumstances where Greene clearly knew, on strength of his own allegations in 57
the supporting affidavit in the HLB application, that Harksen was in fact insolvent.
138. 138.1 In February 1995, to my personal knowledge, a company named Goldleaf Properties Inc. entered into a settlement agreement with Greve … The intention behind such agreement was that the above company, and not Harksen himself, would pay the settlement figure to Greve.
138.2 When Harksen failed to cause such company to pay the settlement figure, it appears (from the letter dated 17 March 1995 annexed hereto as annexure "EH37") that even Harksen’s own legal representatives questioned Harksen’s failure to have procured the payment by the company to Greve in terms of such settlement.
138.3 In response thereto, Harksen responded by stating:
" Independently from the above there exists a danger of a new sequestration application if I pay Siegfried Greve. Mr Greene has told Mr Goldfine that the payment to Greve 58
is in itself a ground for new sequestration proceedings because it would be prejudicial to other creditors. I am personally of the opinion that Mr Greene's statement is a paradox, because he has himself settled a claim with me".
138.4 It is accordingly clear that the attitude of Greene recorded in his affidavit in the HLB matter (regarding prejudicial settlements with creditors), evidenced clear knowledge of the questionable validity of settlements with Harksen who, though not subject to a current and operative sequestration order, was de facto insolvent, and that this attitude
was reconfirmed by what Greene had told to Goldfine. (The above utterings attributed by Harksen to Greene were never denied by
Greene in his opposing affidavit in the court of first instance, or elsewhere). (As at 17 March
1995 Harksen was not subject to any sequestration order). The provisional order of his sequestration granted at the behest of Greve was granted on 29 March 1995 … 59
139. 139.1 In view of the aforegoing, I deny that the Dabelsteins, or their legal representatives acting on their behalf, acted in good faith as required by Section 33(1) for purposes of resisting the claim for the restoration of the monies paid to the Dabelsteins.
139.2 The above contention is clearly supported by the objective evidence and
documentation referred to hereinabove. I respectfully say that a well-founded likelihood exists that, when the said Greene would be exposed to cross-examination at the trial of the main proceedings, more facts and circumstances in support of my above contention would be exposed." (emphasis supplied)
17. 17.1 I am perplexed and cannot explain upon what basis the Supreme
Court of Appeal ignored the above evidence that demonstrated the mala fides and reprehensible conduct on the part of the Respondents and their attorneys, and upon what basis the Supreme Court of Appeal could have reconciled such evidence with their finding that "moreover, even in this affidavit, (referring to the replying affidavit) a collusion
is not alleged; nor is fraud on the Dabelsteins part nor the improper motive on which Respondents' counsel now seeks to rely".(emphasis supplied) 60
17.2 The unfortunate, but inescapable inference is that the evidence on record had not properly been perused by the judges of the Supreme Court of Appeal, and that by reason thereof, vital, crucial and material evidence was disregarded by such court.
17.3 Whatever the reason was for the failure by the Supreme Court of Appeal to have had any regard to the above evidence, or for not having referred to such evidence when the finding was recorded that no "fraud" or no "improper motive" had been relied upon in the replying affidavit, is immaterial. The simple fact that such evidence had not been considered by the Supreme Court of Appeal for purposes of their judgement, is clear, and is contended to have violated the Applicants' right to a fair trial, entrenched in the Constitution of our country.
18. 18.1 The Supreme Court of Appeal did not hold that the evidence relied upon in the replying affidavit should have been disregarded. It effectively recognised the permissibility of evidence in a replying affidavit (dealing with a defence raised by the Respondent in his opposing affidavit).
18.2 I respectfully point out, in such regard, that it cannot be expected of an Applicant to fully canvass all the possible defences that a Respondent may raise in his opposing papers, in seeking to make out a prima facie case in his founding papers. If a Respondent raises a defence in his opposing papers (as the current Respondents did in the court of first instance), the Applicant would be entitled to comprehensively deal with such defence in the replying papers. There was accordingly no 61
suggestion of whatsoever nature that the rebutting evidence relied upon by the Applicants in their replying papers (to rebut the defence by the Respondents to the effect that the dispositions had been made in a bona fide manner and in compliance with a court order), were not to be considered for purposes of establishing whether the Applicants had (generally) made out a prima facie case, both with reference to their cause of action as well as to the defence raised by the Respondents, for the setting aside of the dispositions in terms of the court orders by consent.
19. 19.1 The Supreme Court of Appeal held (in the above regard):
" Moreover, even in this affidavit, collusion is not alleged, nor
is fraud on the Dabelsteins' part nor the improper motive on which Respondents' counsel now seeks to rely.
The above "improper" motive that the Supreme Court of Appeal had in mind, was the one articulated at page 7 of its judgement:
" that the agreements were converted into orders of court for
the very purpose of procuring the exclusion provided for in Section 2 of the Act."
19.2 The above finding of the Supreme Court of Appeal is accordingly simply incorrect and proven to be erroneous by the clear and unequivocal allegations recorded in especially paragraph 126.4 of the replying affidavit. 62
19.3 The above submission by Applicants’ counsel in the Supreme Court of Appeal (which the Supreme Court of Appeal held had not been based upon any allegations on record) almost to the letter corresponded with the allegations in paragraph 126.4 of the said replying affidavit.
20. I accordingly respectfully aver that, bearing in mind the low threshold requirement relative to the making out of a prima facie case, the Supreme Court of Appeal erred in holding that Applicants had failed to make out a prima facie case in the action to be instituted.
See: Bradbury Gretorex Company (Colonial) Limited v Standard Trading Company (Pty) Ltd 1953 (3) SA 5-9W at 533C-E:
" The authorities and considerations to which I have referred seem to justify the conclusion that the requirement of a prima facie cause of action, in relation to an attachment to found jurisdiction, is satisfied where there is evidence which, if accepted, will show a cause of action. The mere fact that such evidence is contradicted would not disentitle the Applicant to the remedy. Even where the probabilities are against him, the requirement would still be satisfied. It is only where it is quite clear that he has no action, or cannot succeed, that an attachment should be refused or discharged on the ground herein question". (emphasis supplied) 63
21. The above passage was approved by the full bench of the TPD in Inter-
science Research and Development Services (Pty) Ltd v Republica Popular De Mocambique 1980 (2) SA 111 T at 118H and 119A.
22. 22.1 The rationale behind the above reasoning (articulated in the Bradbury Gretorex-matter) is submitted to be clear and well-founded: the right of access by a litigant to the courts should not be undermined by requiring such a litigant to prove his entitlement to litigate, upfront. In the above regard it was said (albeit in the context of the right of a party to litigate where an allegation was made that such party was impecunious) by Solomon JA in Western Assurance Company v Caldwell’s Trustee 1918 AD 262 at 273:
" Now it is needless to say that strong grounds must be
shown to justify a court of justice in staying the hearing of
an action. The courts of law are open to all and it is only in very exceptional circumstances that the doors will be closed upon any one who decides to prosecute an action." (emphasis supplied)
22.2 In Wallace N.O. v The Commercial Union Insurance Company of South Africa Limited 1999 (3) 804 C at 810B, Foxcroft J approved the above dictum of Solomon JA and added:
" That approach has been steadily adopted ever since". 64
22.3 The above approach is contended to apply to any infringement of the right of access of a litigant to the courts of our country, irrespective of the basis upon which such right is infringed.
23. 23.1 I respectfully aver that the Supreme Court of Appeal furthermore appeared to have employed a stricter test than the above one (apparent from the Bradbury Gretorex-matter) which Applicants contend should have applied.
23.2 In the above regard, it was held (at page 5 of the record):
" It was said in Simon N.O. v Air Operations of Europe AB &
Others 1999 (1) SA 217 SCA at 228C-D that the requirement of a prima facie case in an application for attachment to found to confirm jurisdiction is satisfied where there is evidence which, if accepted, will show a cause of action, and that the mere fact that such evidence is contradicted will not
disentitle the Applicant to relief. The time may come to reconsider these dicta for, as observed elsewhere in the passage referred to, an order of attachment ad fundandam jurisdictionem is an extraordinary remedy which should be applied with care and caution, and it seems to me that allegations in a Respondent's opposing affidavit which the Applicant cannot contradict must weigh in the assessment of the evidence.". (emphasis supplied)
23.3 If an attachment is an extraordinary remedy “which should be applied with care and caution”, such requirement for purposes of 65
giving a party the right to litigate, should be abandoned, to bring the rights of such party in line with the rights of an incola Plaintiff wishing to litigate against an incola Defendant. It is contended that the burdening of an incola Plaintiff with having to comply with “an
extraordinary remedy which should be applied with care and caution”, where an incola Plaintiff litigating against an incola Defendant has no such obligation, makes a substantial inroad in the constitutional rights of the litigant upon whom such duty is imposed.
23.4 Despite the fact that the Supreme Court of Appeal held that an Applicant's averments must be accepted at "face value", the ignoring of the vital evidence referred to above, that Applicants recorded for purposes of making out a prima facie case, seems to indicate that the conclusive finding of the court was likely influenced by its views relating to a stricter test.
23.5 I respectfully point out that there could be no reason to make the burden resting upon an Applicant who wishes to litigate against a peregrine Defendant substantially more onerous than the burden of a
party who wishes to litigate against an incola Defendant. The tendency that the Supreme Court of Appeal seems to have propagated by its above finding, runs against the spirit of the Constitution, and more particularly Sections 9 and 34 thereof, the latter section which simply reconfirmed the old adage that had been recorded in the judgement of Solomon J in the Western Assurance Company-matter (supra), as far back as in 1918. 66
24. 24.1 I accordingly submit that the Supreme Court of Appeal, in holding that Applicants had failed to make out a prima facie case, effectively violated the Applicants' rights under the Constitution relating to both a fair trial, and to Applicants' access to a court for purposes of having the disputes between the parties resolved and adjudicated upon.
24.2 I also respectfully contend that the failure by the members of the Supreme Court of Appeal to have given any consideration to the clear evidence recorded on behalf of the Applicants relating to the lack of bona fides and the "improper motive" on the part of the Respondents, violated the Applicants' right to a fair trial.
THE NECESSITY FOR AN ATTACHMENT WHERE AN ORIGINAL GROUND OF JURISDICTION ALREADY EXISTS
25. 25.1 I respectfully point out that the notion of a "confirmation" of jurisdiction appears to signify that an attachment to "confirm" an already existing jurisdiction, serves little, if any, purpose other than a symbolic gesture initially (more than two centuries ago) directed at and intended to achieve purposes which are obsolete, and inconsistent with prevailing and modern business, legal and constitutional principles.
25.2 I refer to the article under the heading "History of our law of arrest to found jurisdiction", 1907 SALJ 390 at 9, by one JWW (at 395), in which it was pointed out:
67
" It seems difficult to see how a jurisdiction which already
existed over a foreigner could be increased or strengthened by an arrest. If the judge had the jurisdiction to compel the foreigner either to pay the debt due to an incola or to give security judicatum solvi, he has all the powers that he wants".
And at 396 to 397:
" I would therefore suggest that by the words firmandae
jurisdictionis gratia Voet meant at the most "for the purpose of asserting his jurisdiction". If then we examine Section 18 we find that Voet means that, if the judge intervenes merely for the purpose of asserting his jurisdiction, he acts not so much ex necessitate as ex utilitate, because it is cheaper for a creditor to sue foreigners before the local judge than to sue them in their own courts. I am not, however, sure that Voet meant more by "firmare" than it did by "fundare". He seems to use the phrases above quite indiscriminately. The word "firmare", unless used in its classical sense, will easily bear the meaning of "making firm or establishing". It certainly was used in an extraordinary use by medieval writers. Thus we find expressions as "firmare psalmos" for "singing psalms"; …".
25.3 The dictum by Potgieter JA in Thermo Radiant Oven Sales (Pty) Ltd v Nelspruit Bakeries (Pty) Ltd 1969 (2) SA 295 A, at 311, 68
highlighted the apparent senselessness (in the context of the notion of "jurisdiction") of an attachment to confirm jurisdiction (At 311E):
" I agree that the authorities show that even if a court has
jurisdiction on the ground that the contract was entered into within the territorial jurisdiction of the court, attachment is nevertheless necessary to found jurisdiction in an action against a perigrinus." (emphasis supplied)
25.4 The apparent lack of relation between an attachment and/or arrest to confirm jurisdiction, and any of the essential components of "jurisdiction" as a concept, appear from what is set out hereinbelow:
(a) The true purpose of an attachment or arrest (ostensibly to found and/or to confirm jurisdiction), in the courts of Holland, had nothing to do with jurisdictional grounds: it had as its purpose the totally outdated, unacceptable, and (currently) unconstitutional and unconscionable purpose of avoiding the due processes of law, and of harassing a foreigner into payment of an alleged debt by making the option of proper and fair litigation as unattractive and as practicable unfeasible, as possible, to him.
See: Thermo Radiant Oven Sales (supra) at 305D et seq:
" The courts of Holland recognised two kinds of attachments: 69
(1) Attachment in securitatem debiti arising ex necessitate and
(2) Attachment ad fundandam jurisdictionem arising ex utilitate. The former class of arrest was granted both against the citizen and the non-resident stranger, as for instance, when the Defendant was suspectus de fuga. The latter class was granted only against the peregrinus…. The reason for the arrest ad
fundandam 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. …Originally the purpose of the arrest or 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. Bort who wrote many years thereafter is more or less to the same effect. He says in chapter 1 paragraph 15, of his work Van Arresten:
" Arrests have been introduced by us in order
that the arrested person affected by the worry of his arrest, may appear before the local 70
judge and pay the debt or give security that he will appear before the court and pay the amount of the judgement, so that lawsuits may be cut short and the costs or expenses avoided which are necessarily incurred when a foreign debtor domiciled in another country has to be sued there”" (emphasis supplied)
(b) Such reasoning, or raisons d'etre, for an attachment or an arrest to found or confirm jurisdiction can hardly withstand scrutiny from current and modern constitutional, moral, business and judicial points of view.
26. 26.1 It is accordingly not surprising that earlier authorities were confused as to the true intention and/or effect of an attachment/arrest purportedly effected for jurisdictional purposes.
26.2 According to the author Peter, Attachment to Founded Jurisdiction and the effect of consent, 1989 SLAJ 27 at 33, the distinction between an arrest to found jurisdiction and an arrest to confirm jurisdiction was adopted for the first time in South African case law in Murphy v Dallas 1974 (1) SA 793D by Leon J, without any justification for such distinction to be found in our common law.
26.3 In earlier cases no such no such distinction was made.
See: Einwald v The German West African Company (1887) 5 SC
86 at 9; 71
- Brooks v Maquassi Works 1914 CPD 371 at 376;
- Cape Explosive Works Limited v SA Oil & Fat Industries Ltd; Lever Bros SA Limited 1921 CPD 244 at 278;
- Atherstone v Critchlow 1928 EDL 292 at 295;
- Ex parte Naidoo 1930 CPD 792 at 793;
- Veneta Mineraria Spa v Carolina Collieries (Pty) Ltd 1987 (4) SA 883 AD;
- Thermo Radiant Oven Sales (Pty) Ltd (supra) at 311E.
26.4 The passages from the article by the author JWW also indicate that attachments and/or arrests to confirm jurisdiction, stem from an incorrect interpretation of the word "firmare", as used by Voet.
26.5 The strained efforts to justify the continued existence of the necessity for an attachment and/or arrest to "confirm" jurisdiction where an existing ground for jurisdiction already exists, lead to the espousing of the argument that such an arrest/attachment is necessary for purposes of serving the doctrine of effectiveness.
26.6 Apart from the fact that such doctrine (of effectiveness) has nothing to
do with proper and true jurisdictional issues, such doctrine has never been applied to cases where an incola sues another incola e.g. by requiring an up-front examination to establish whether the Defendant has assets against which the Plaintiff can execute his judgement. 72
26.7 I accordingly respectfully submit that to continue to link the requirements relating to the doctrine of effectiveness to jurisdictional requirements, simply amounts to:
(a) a judicial non-sensicality; and
(b) a strained effort to disguise the doctrine of "attachment" initially employed to "harass" peregrini into submission, and to circumvene due processes of law, as some or other fiction relating to the establishment of jurisdiction.
26.8 The requirement that an incola Plaintiff should, in addition to the existence of an original ground of jurisdiction, effect an attachment, unconstitutionally discriminates between Plaintiffs litigating against incola Defendants, and Plaintiffs litigating against peregrine Defendants, under circumstances where no reasonable and justifiable grounds exist for such discrimination, and where the implementation of such requirement, as occurred in the circumstance of this case, could have the effect, where such an attachment cannot be effected, that such Plaintiff’s right of access to the courts as entrenched by Section
34 of the Constitution, are denied and/or infringed.
THE MODERN DAY UNTENABILITY OF THE DOCTRINE OF EFFECTIVENESS AS THE RAISON D'ETRE FOR THE REQUIREMENT OF AN ATTACHMENT
27. 27.1 The doctrine of effectiveness, used in conjunction with and as a
justification for an attachment to confirm jurisdiction, is: 73
(a) outdated; and
(b) in modern law no more than an obsolete fiction eroded by many considerations and developments in our legal system.
27.2 My above submission is based on the following grounds, set out in paragraphs A to D hereinbelow.
A THE ATTACHMENT OF THINGS OF TRIFLING VALUE
28. 28.1 It is trite that things of trifling value, bearing no relation to the value of a Plaintiff's claim, may be attached to confirm jurisdiction.
See: In re Bell (1891) 1 CTR 241;
- Ex parte Smith: In re estate Main 1912 CPD 45;
- Ex parte Seltzer (1903) 20 SC 505;
- Murphy v Dallas 1974 (1) SA 793 D at 797 C:
" It has also been contended, relying upon King and Sons v Jamel (1887) 8 NLR 1-9, that the procedure (referring to the procedure of attachment) is technical and
might even result in an absurdity where, for example, the proverbial toothpick is attached (see the remarks of Connor CJ at page 130) I have already alluded to this
latter point. It may be correct to hold that the true reason for an attachment ad confirmandam 74
jurisdictionem is not in order to render a judgement effective but in order to complete the court’s jurisdiction which, without such attachment, is only notional and not complete. I find it unnecessary, however, to express a firm view on this point because it seems to me that the practice of our courts and the authorities compel me to hold that an attachment is necessary". (emphasis supplied)
28.2 By permitting such attachments (i.e. of things of trifling value),, our courts have signified that the doctrine of effectiveness simply no longer plays any justifiable role in requiring an attachment of goods or assets which purports to "confirm" jurisdiction.
B THE PERMISSION OF THE ARREST OF THE PERSON OF A DEFENDANT TO CONFIRM JURISDICTION
29. 29.1 It is trite that such an arrest can serve as a method to confirm the jurisdiction of a court.
29.2 The "person" of a debtor (in the sense of the “matter” arrested) in itself has no financial value (except in countries where slavery still prevails).
29.3 No court will allow the continued detention of a Defendant arrested for purposes of confirming jurisdiction, where the debtor is impecunious "and is inequably extorted by the attachment".
See: Bettencourt v Kom & Another 1994 (2) SA 513 TPD at 517D-E 75
" It is in any event my view that the correct way to relieve the
position of a Defendant, who consents to jurisdiction after an attachment and who is inequably extorted by the attachment, even if he has a good defence, is by an application, as was done in the case of Banks v Henshaw 1962 (3) SA 464 D. In such an application a court ought to be at large to look at all the circumstances of a case, such as the amount of the claim, the likelihood of the Plaintiff succeeding, the financial position of the Defendant, the ease or otherwise of executing on a judgement in a country of domicile of the Defendant, the hardship to the Defendant if
the attachment remains and similar considerations. The court can then decide if the attachment is to remain unaltered or if it is to be reduced, set aside, or substituted with some other form of attachment or security." (emphasis supplied)
- Banks v Henshaw 1962 (3) SA 464 D;
- Himelsein v Super Rich CC 1998 (1) SA 929 WLD at 938D.
29.4 If a court can set aside an attachment by reason of the above considerations, the doctrine of effectiveness no longer plays any role in attachments to confirm jurisdiction.
C A SUBMISSION TO JURISDICTION 76
30. 30.1 A submission to jurisdiction prior to an attachment to confirm jurisdiction, purportedly "completes" the jurisdiction of such court, rendering an attachment impermissible.
See: Blue Continent Products (Pty) Ltd v Foroya Banki PF 1993 (4) SA 563 CPD.
See also: Veneta Mineraria (supra) at 894B.
30.2 A submission to jurisdiction after an attachment is currently treated as sufficient for purposes of replacing the prior attachment.
See: Ghomeshi-Bozorg v Yousefi 1998(1) SA 692 WLD at 695E:
" In my view, the decisions in those cases have no application where the attachment is to confirm jurisdiction, in which case the attachment is dispensable for the purpose of conferring jurisdiction if the Defendant consents thereto."
30.3 It is trite that such a submission, either to avoid or to replace an attachment, need not be accompanied by any security of whatsoever nature.
30.4 The permitting of such a submission to take the place of an attachment, demonstrates that the doctrine of effectiveness can no longer be treated as justification for an attachment to confirm jurisdiction. 77
D ATTACHMENT OF PERISHABLE ASSETS OR LIVESTOCK
31. 31.1 The destruction of an asset, or death of livestock attached to confirm jurisdiction, does not affect the jurisdiction of a court.
See: Thermo Radiant Oven Sales (supra) at 301D;
" It is, I think, correct to say that a court which initially has
jurisdiction retains that jurisdiction until the suit is concluded. See R v De Jager 1903 TS 36 at 38, and Milner v Friedman 1911 TPD 935 citing Voet 5.1.64 which latter De Villiers JP in Milner’s case renders as follows:
" … For when once the action has been commenced, their its (sic) must also be brought to an end. The
Defendant cannot claim to have the case removed to some other tribunal if perhaps during the course of the suit the reason for his subjection to the jurisdiction of such tribunal should cease to exist."
And at 310F:
" If therefore, at the time of the institution of the action
there is an asset which will in all probability still exist at the time of judgement such an asset is capable of attachment to found jurisdiction. If such an asset is, for some reason or another destroyed before institution of the action, such attachment ought on application to 78
be set aside. If the asset is, however, destroyed after the institution of the action, jurisdiction will, in accordance with the principle enunciated above, not cease to exist. This principle of continuation of jurisdiction may of course produce a result which is in direct conflict with what I have said before, because if the asset is destroyed after the institution of action there is nothing to execute on, and the court's order will in that event not be effective in the sense indicated in this judgement". (emphasis supplied)
31.2 The uncertainty apparent from the above dicta of Potgieter JA clearly illustrates the fact that our courts have, as far as 30 years ago, recognised the strained reasoning required to justify the continued existence of the doctrine of effectiveness as rationale for an attachment to "confirm" jurisdiction.
31.3 The conclusion of the court above (by Potgieter JA) at 310H: ("Apart from this anomaly …"), simply made no effort to provide a logical
reason in law to extend the lifespan of a doctrine initially based on the "harassment" of peregrine Defendants.
CONCLUSION
32. It is clear, I submit, on the contents of the above paragraphs, that the doctrine of effectiveness can no longer be used for purposes of justifying the continued necessity of an attachment to "confirm" jurisdiction. 79
THE UN-CONSTITUTIONALITY OF THE IMPOSING OF CONDITIONS, BEFORE AN INCOLA CAN LITIGATE AGAINST A PEREGRINUS, WHERE NO SUCH CONDITIONS ARE IMPOSED UPON AN INCOLA LITIGATING AGAINST ANOTHER INCOLA
33. An incola can freely litigate against another incola and need not:
(a) preserve assets, or comply with any variant of the doctrine of effectiveness, by effecting an attachment;
(b) satisfy the court upfront by a reference to evidence that he has a prima facie case against a Defendant.
PRESERVATION OF ASSETS OR THE NECESSITY OF AN ATTACHMENT
34. 34.1 As far as the above requirement is concerned, it is specifically provided by Section 28(1) of the Supreme Court Act, No. 59 of 1959:
" No attachment of person or property to found jurisdiction
shall be ordered by a court of any division against a person who is resident in the republic".
34.2 The onerous requirement imposed upon an incola to, when litigating against a peregrinus, attach an asset of the peregrinus, is submitted to unlawfully discriminate against such category of Plaintiff, and violates the constitutional right of such a Plaintiff of free access to the courts, and the right to be treated equally before the Courts. 80
34.3 I accordingly respectfully point out that the above requirement violates both the provisions of Section 9 and Section 34 of the Constitution.
ARE THERE ANY GROUNDS UPON WHICH SUCH LIMITATION OF ENTRENCHED CONSTITIONAL RIGHTS ARE REASONABLE AND JUSTIFIABLE?
35. 35.1 The application of the rule requiring an attachment can lead to the fact that an incola Plaintiff who has suffered (in South Africa) a wrongdoing or a loss at the hand of a peregrinus, may never be permitted to pursue an action against such peregrinus, if the latter has no assets in South Africa or ensures that he is never present, in person, in this country. The pursuit of the peregrinus in a foreign court (by the South African incola) can be rendered extremely onerous, or even impossible, if:
(a) South African law would apply to the resolution of such dispute; and
(b) The costs of pursuing the action in a foreign country renders such proceedings impossible; or
(c) The country of domicile and/or residence of the Defendant- wrongdoer does not recognise South African law.
35.2 The rationale behind the reasoning that led to the requirement of an attachment to be imposed upon an incola litigating against a peregrinus, found its origin in views that prevailed in times when 81
modern communication-systems were not in existence, and judgements were extremely difficult to enforce in foreign countries (inter alia, particularly by reason of the reluctance of foreign countries to recognise South African legal processes, at the time when such countries sought avenues through which to express their abhorrence of the internal policies of the "old" South Africa).
35.3 The above considerations clearly no longer apply.
35.4 South Africa has become a recognised part of the global and international commerce. As Forsythe, Private International Law, 3rd Edition at 200, put it:
" Two points should be made: first where a Defendant
submits to the jurisdiction of a foreign court, then irrespective of where the cause of action arose and whether the Defendant was a peregrine of that court or not, the foreign judgement will be enforced against him locally. Is there any good reason why the internal law of jurisdiction should be so different? Secondly there are, indeed, good
reasons why the local laws should allow submissions to
operate more widely. For good and obvious reasons – convenience, speed, judicial reputation, expense, neutrality (ie. no link with any of the parties) – the parties to international contracts frequently submit their disputes to resolution by courts with which they have little connection. It is to the benefit of international commerce that this should 82
be so; and most developed legal systems encourage such submission. The South African courts should, as a matter of judicial policy, do likewise. As economic development in Southern and Central Africa proceeds, there is no reason, other than archaic restrictions on the exercise of jurisdiction, why the local courts should not develop an international role akin to that of a commercial court in London. The message should not be "peregrines go home" but "peregrines welcome". (emphasis supplied)
36. 36.1 The "requirement" of an attachment, that was initially intended to assist incolae, cannot, it is submitted, in a manner incongruous with the purpose of such requirement, now be permitted to stultify, impede, or even render unattainable the relief that an incola Plaintiff can obtain against a peregrinus.
36.2 It is accordingly submitted that, on the above grounds alone, the requirement of an attachment, and the concomitant sub-requirements related to such an attachment to be satisfied by an incola before he
can litigate against a peregrinus, are unconstitutional, and that the implied finding by the Supreme Court of Appeal that Applicants have not established such right to litigate against the Respondents, violates their right of free access to the court, as well as their constitutional rights in terms of Section 9 of the Constitution to be treated on a equal footing to a litigant pursuing relief against an incola Defendant. 83
36.3 The above distinction between an incola Plaintiff acting against a peregrine Defendant, and an incola Plaintiff acting against an incola Defendant, cannot, it is submitted, be justified upon any grounds.
36.4 The above reasoning was echoed in the criticism recorded in a note entitled "Submission and attachment to found jurisdiction" SALJ Vol 110 part 2 page 208 to 212 by Vrancken, against the decision in Briscoe v Marais 1992 (2) SA 413W, in which matter it was held that a submission to jurisdiction cannot take the place of an attachment to found jurisdiction (at 212 of the above note):
" … To argue that the Respondent's submission does not
sufficiently justify the loss by the Applicants of the security constituted by the object of the attachment means to maintain a distinction between the case where submission occurs before attachment and the case where submission
occurs after attachment, a distinction which appears contrary to justice and fairness, as well as international commerce, and does not appear to be justified on any convincing ground." (emphasis supplied)
36.5 The above sentiments were also echoed in the article of Kelbrick,
The incola Plaintiff, consent and arrest or attachment to found jurisdiction XXV CILSA 1992 at 332.
UPFRONT PROOF OF EVIDENCE SHOWING PRIMA FACIE CASE 84
37. 37.1 An incola Plaintiff litigating against an incola Defendant need not prove any evidence upfront, for any purposes, before it can proceed to litigate against its opponent.
37.2 He (such incola Plaintiff) only needs to record allegations which, if upheld at a subsequent trial, would entitle him to his relief.
37.3 It is submitted that the imposition of a test requiring from an incola Plaintiff litigating against a peregrine Defendant, to prove evidence upfront, whether prima facie or in terms of the more stringent test articulated by the Supreme Court of Appeal at page 5 of its judgement in the current case, unlawfully discriminates against an incola Plaintiff, and infringes such litigant’s rights in terms of both Section 9 and Section 34 of the Constitution.
ARE THERE ANY REASONABLE AND/OR JUSTIFIABLE GROUNDS FOR SUCH LIMITATION?
38. It is submitted that, as in the case of the obligation referred to in paragraph 34.2 above, there can be no reasonable and/or justifiable limitation of the said rights of Applicants, or an incola Plaintiff, generally, for the imposition of the above requirement.
39. The requirement that an Applicant in an application to attach has to make
out a prima facie case, with reference to evidence, on the papers of such application, loses sight of the crucial fact that: 85
39.1 A Plaintiff is entitled to effect an amendment of its particulars of claim, so as to employ further offensive bases for his relief sought. If a once- off assessment is made of the evidence recorded by an Applicant in an application to attach an asset to confirm jurisdiction, and the doors of the courts are closed to such litigant on the basis of such assessment, the court making such assessment precludes such Applicant from:
(a) effecting amendments (as Plaintiffs litigating against incola Defendants may do) to the formulation of his claim as a result of evidence obtained after the initial setting out of its case in a founding affidavit;
(b) obtaining further evidence through discovery that could or would have the effect of supplementing aspects of the evidence initially assessed as being inadequate or unsatisfactory by such court making the upfront assessment.
39.2 Cross-examination of the Defendant or his/her witnesses is a powerful and effective measure for purposes of providing evidence to support
allegations (as opposed to evidence) by a Plaintiff, in respect of which allegations a Plaintiff might have had, initially, minimal factual evidence at his own disposal.
39.3 Especially in a case such as the one under consideration, where the state of mind and the bona fides of a witness or a party is of crucial importance, a court should not finally dispose of such proceedings before or prior to the trial of such matter, where it may emerge that of 86
the parties had acted fraudulently, or where considerations that would persuade the trial court to find in the Plaintiff’s favour, may arise.
See: Sackstein & Venter N.N.O. v Greyling 1990 (2) SA 323O at 327D-E
40. In short, the test to be applied to the case to be made out by the Applicants should have been no more than the test to be applied to a Particulars of Claim of a Plaintiff at the stage where an exception is taken to such Particulars of Claim.
See: Pete's Warehousing & Sale CC v Bowsink Investments CC 2000 (3) SA 833E at 839F:
" It was also correctly not in dispute that the test applicable in this matter was to be posed as follows: In order to succeed an excipient has the duty to persuade the court that upon every interpretation which the pleading in question, and in particular the document on which it is based, can reasonably bear, no cause of action or defence (as the case may be) is disclosed; failing this the exception ought not to be upheld. Sun Packaging (Pty) Ltd v Vreulink 1996 (4) SA 176A at 183D-F; Lewis v Oneanate (Pty) Ltd & Another 1992 (4) SA 811A at 817F-G." (emphasis supplied)
CONCLUSION
41. 41.1 Under the circumstances I respectfully submit that: 87
(a) The issues referred to above upon which the Applicants rely are constitutional matters as envisaged by Section 167 of the Constitution; and that
(b) The Applicants have good prospects of success on appeal, relating to the above issues.
41.2 I accordingly respectfully request that special leave be granted to the Applicants to appeal against the judgement of the Supreme Court of Appeal, which:
(i) indirectly enforced the above (averred to be) unconstitutional requirements upon Applicants as prerequisite before Applicants could institute and/or proceed with the action against the Respondents;
(ii) directly held that Applicants have failed to comply with one such requirement, namely the establishing of a prima facie case.
41.3 I respectfully point out that, if leave to appeal is granted to Applicants,
they (such Applicants) will in addition pray that the order of this court granting such appeal, shall state:
(a) that an incola wishing to institute legal proceedings against a peregrine opponent need not, where the court in which the proposed proceedings are to be instituted is possessed of original jurisdiction, attach and/or arrest the property and/or 88
person of the peregrinus for purposes of confirming jurisdiction; and
(b) that the rights and obligations, respectively, of such incola shall be no more or no less, respectively, than those of an incola litigating against another incola;
and in the alternative to the above or in any event
(c) that Applicants be given leave to pursue their proceedings against the Respondents, on the basis of either of:
(i) the orders in (a) and (b) above; or if such orders are not made, upon the basis of
(ii) the finding that the Supreme Court of Appeal erred in holding that the Applicants had failed to make out a prima facie case entitling them to the attachment to confirm the jurisdiction of the Cape High Court.
CONCLUSION
42. I accordingly pray that the relief set out in the notice of motion herein be granted to Applicants.
______ROBERT DE ROOY
89
Signed and sworn to by the deponent at CAPE TOWN this DECEMBER 2000, the deponent having acknowledged that he/she knows and understands the contents of this affidavit and the oath having been administered in the form and manner set out in Government Notice R1258 dated 21 July 1972, as amended by Government Notices R1648 dated 19 August 1977, R1428 dated 11 July 1980 and R774 dated 23 April 1982.
______COMMISSIONER OF OATHS NAME: DESIGNATION: AREA OF APPOINTMENT, OR OFFICE HELD IN TERMS OF WHICH APPOINTMENT EX OFFICIO