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Case No 384/88 - mp
IN THE SUPREME COURT OF SOUTH AFRICA APPELLATE DIVISION
In the matter between:
BISONBORD LIMITED Appellant
and
K BRAUN WOODWORKING MACHINERY
(PROPRIETARY) LIMITED Respondent
CORAM: HOEXTER, BOTHA, MILNE, JJA et NICHOLAS, GOLDSTONE, AJJA
HEARD: 9 March 1990
DELIVERED: 10 September 1990
JUDGMENT
HOEXTER, JA
2
HOEXTER, JA
This appeal raises the question of the competence of a court to hear and determine an action sounding in money instituted against a company solely on the grounds that it was incorporated in South Africa and has its registered office within the area of jurisdiction of such court. In the Witwatersrand Local Division the appellant instituted an action for the payment of damages against two defendants. The first defendant in the action is the respondent in the appeal.
Chapter VII of Act 61 of 1973 ("the Companies
Act") requires every company to have a postal address and a
registered office within the Republic of South Africa.
Subsections (1) and (2)(a) of sec 170 read as follows:-
"170 (1) Every company including every external company shall have in the Republic -
(a) a postal address to which all
communications and notices may be addressed; and
(b) a registered office to which
3
all communications and notices may be addressed and at which all process may be served. (2) (a) Upon incorporation of a
company, notice of the situation of the registered of f ice and of the postal address shall be given to the Registrar."
Apart from pleading to the merits of the case the respondent filed a special plea in which it raised an objection to the jurisdiction of the Witwatersrand Local Division to hear the action. Although its registered office is situated in Johannesburg the respondent carries on its business at Butterworth in the Republic of Transkei. The respondent's objection to the jurisdiction of the Court a quo was based upon the fact that its sole place of business is in the Transkei.
In the Court below the special plea was resisted on a number of different grounds. The chief contention advanced on behalf of the appellant was that,
4
inasmuch as the respondent had its registered office in Johannesburg, it was, within the meaning of sec 19(1)(a) of the Supreme Court Act, No 59 of 1959 ("the SC Act") -
" a person residing or being in"
the area of jurisdiction of the Witwatersrand Local Division. The matter came before J F MYBURGH, AJ. The learned Judge ruled that the respondent was not "a person residing or being in" the area of jurisdiction; and he rejected the further submissions raised on behalf of the appellánt in support of its argument that the trial Court was empowered to entertain the action. The special plea was accordingly upheld, and absolution from the instance, with costs, was ordered.
With leave of the trial Court the appellant appeals to this Court. The sole issue raised in the appeal is the correctness or otherwise of the decision by MYBURGH, AJ that the respondent was not "a person residing
5
or being in" the area of jurisdiction of the Witwatersrand
Local Division.
The respondent is not a natural person but a
corporation. As pointed out by Martin Wolff, Private
International Law 2nd ed (1950) at 295:-
"....it is useful to realize that conceptions used in the case of natural persons, such as nationality, domicile, or residence, can be applied to legal persons only by way of analogy and not without distortion of their original and genuine meaning. Yet it seems impossible to do without these conceptions. For every legal system contains some rules which attach certain consequences to a person's nationality, domicile, or residence without distinguishing between natural and artificial persons."
A judgment sounding in money may be put into effect
anywhere. From this it follows (see Pollak, The South
African Law of Jurisdiction (1937) at 22) that in an action
for the payment of money -
"...it is a sufficient basis for jurisdiction that the state in whose court the action is brought has power over the defendant."
6
Dealing with the State's supreme power and the jurisdiction
of its courts BRISTOWE, J remarked in Schlimmer v Executrix
in Estate of Rising 1904 TH 108 at 111:-
"Now the jurisdiction of the courts of every country is territorial in its extent and character, for it is derived from the sovereign power, which is necessarily limited by the boundaries of the State oyer which it holds sway. Within those boundaries the sovereign power is supreme, and all persons, whether citizens, inhabitants, or casual visitors, who are personally present within those boundaries and so long as they are so present, and all property (whether movable or immovable) for the time being within those boundaries, are subject to it and to the laws which it has enacted or recognised."
Although the same common law applies throughout South
Africa, it is trite that upon the establishment of the
Union of South Africa the separate judicial systems of the
four colonies were largely preserved despite their formal
unification in the Supreme Court of South Africa. In
terms of sec 19 of the SC Act the original jurisdiction
enjoyed by the provincial and local divisions is limited to
7
the extent of their respective territorial areas. Such
territorial jurisdiction is confirmed by sec 68(2) of the
Republic of South Africa Constitution Act, No 110 of 1983.
In regard to the jurisdiction of South African
courts over domestic corporations Pollak, op cit, 94
states:-
"A corporation incorporated in the Union is subject to the power of the South African state and it follows therefore that on principle South African courts should have jurisdiction in an action for a judgment sounding in money against it. But owing to the non-existence of any court having authority in respect of the whole Union and owing to the territorial limitations imposed upon the authority of the divisions of the Supreme Court, this principle cannot by itself furnish a criterion of jurisdiction in an action against a domestic corporation. The courts have therefore been unable to rely solely on this principle for the purpose of determining their jurisdiction in actions against domestic corporations and have been compelled to supplement this principle by another criterion of jurisdiction. This they have found in the notion of the principal place of business of a corporation."
The notion to which Pollak makes reference in the
8
concluding sentence of the passage cited above was
discussed in an early judgment of this Court in T W Beckett
& Co Ltd v H Kroomer Ltd 1912 AD 324. In Beckett's case
the defendant was á company which had its registered office
and its principal place of business in Pretoria. It also
had a branch in Johannesburg. The plaintiff sued the
defendant in the Witwatersrand Local Division for damages
for alleged breach of contract. Before the trial Court an
objection was unsuccessfully raised to the jurisdiction of
the Witwatersrand Local Division, but on appeal this Court
held that the objection had been properly taken. The .
judgment of this Court was delivered by INNES, J. The
jurisdiction of the trial Court was derived from sec 16 of
the Transvaal Administration of Justice Proclamation 14 of
1902 according to which enactment (I quote from the
judgment of INNES, J at 331-332) the Local Division:-
"....shall have cognizance of all pleas and jurisdiction in all civil causes and proceedings
9
arising within the said Colony, with
jurisdiction over His Majesty's subjects and all other persons whomsoever residing or being within the said Colony."
This Court held that the residence of the appellant was at
Pretoria, where its general administration was centred;
and that it could not be deemed to have a residence in
Johannesburg for the service of process in respect of a
contract entered into with its Pretoria office. In the
course of his judgment the learned Judge of Appeal observed
at 334:-
"Now, the terms 'reside' and 'residence' can only be used in their true significance with regard to natural persons. The residence of a legal persona, like a company, artificially created, must be a mere notional conception introduced for purposes of jurisdiction and law .... The only home which a corporation can be said to have is the place where the operations for which it was called into existence are carried on. So far as it can be said to reside anywhere, that is where it resides. And if the analogy of a natural person is to be followed, one would say that it could only reside in one place at one time. This is a point on which from the nature of things it is not possible to obtain Roman-Dutch
10
authority; but there is ample support in English law - both text books and cases - for that view in regard to the domestic aspect of the residence of companies."
Sec 19 of the SC Act deals with the persons over whom and
the matters in relation to which provincial and local
divisions of the Supreme Court have jurisdiction.
Relevant to a consideration of the present appeal are the
introductory words of subsection 19(1)(a) and subsection
19(3) which read as follows:-
"19(1)(a) A provincial or local
division shall have . jurisdiction over all persons residing or being in and in relation to all causes arising and all offences triable within its area of jurisdiction and all other matters of which it may according to law take
cognizance
(b)
(2)
(3) The provisions of this section shall not be construed as in any way limiting the powers of a provincial or local division as existing at the
11
commencement of this Act, or as depriving any such division of any jurisdiction which could lawfully be exercised by it at such commencement."
The words "causes arising" used in sec 19(1) of the SC Act
are - in various juxtapositions - to be found in all the
statutes establishing the colonial predecessors of the
various provincial and local divisions in South Africa (eg
sec 30 of the Charter of Justice 1834; sec 6 of the
Supreme Court Act (Natal) 39 of 1896; sec 16 of the
Administration of Justice Proclamation (Transvaal) read
with sec 3 of the Establishment of the Supreme Court and
High Court Ordinance (Transvaal) 2 of 1902; sec 3 of the
Administration of Justice Ordinance (ORC) 4 of 1902.) See
Pollak, op cit, 7 - 8. In a long line of cases the words
"causes arising" have been interpreted as signifying not
"causes of action arising" but "legal proceedings duly
arising", that is to say, proceedings in which the court
has jurisdiction under the common law. In Steytler NO v
12
Fitzgerald 1911 AD 295 INNES, J (at 315) said of the
phrase "all causes arising":-
"There the word 'causes' clearly means legal
proceedings 'Arising' of course means duly
arising. And an action arises where it has its origin, where the first steps to begin it can be duly taken. So that when a Court is given unlimited jurisdiction in all 'causes arising' within a certain area, that is equivalent to giving it jurisdiction to try all matters for which by the Common Law of the country the highest Court of first instance would in that area be the proper forum."
In the same case LAURENCE, J put the matter thus (at 331):
"When does a cause 'arise in the said districts'? It appears to me that it can only so arise when-the party, the defendant, or the accused, is amenable to the forum created by the Act. In civil matters he is so amenable if he resides there, wherever the cause of action arose, on the principle actor sequitur forum rei."
See further: The Owners, Master and Crew of the SS "Humber"
v The Owners and Master of the SS "Answald" 1912 AD 546 at
553 - 4; Lek v Estate Agents Board 1978(3) SA 160(C) at
166H-167C; Softex Mattress (Pty) Ltd v Transvaal Mattress
13
and Fumishing Co Ltd 1979(1) SA 755(D) at 757 B-D. In
Gulf Oil Corporation v Rembrandt Fabrikante en Handelaars
(Edms) Bpk 1963(2) SA 10(T) TROLLIP, J summarised the
position (at 17 F-H) as follows:-
"The result is that the Court's jurisdiction uhder s 19(1) is simply determined, as hitherto, by reference to the common law and/or any relevant statute. In such determination the presence or residence of the defendant or respondent within or without the Court's area of jurisdiction will have that importance or relevance which the common or statute law attaches to it (Pollak pp 9 - 14 where all the authorities are collected.) See too s 19(3) by virtue of which the jurisdiction which any Division had by common law and/or statute law at the commencement of the Supreme Court Act is retained."
In regard to the connecting factors or rationes jurisdictionis recognised by our common law, a convenient starting point is the classic statement of DE VILLIERS, CJ in Einwald v The German West African Company (1887) 5 SC 86 at 91 -
"What then are the grounds upon which the
14
jurisdiction of this Court can be exercised, in respect of any contract over any defendant without his consent, express or implied? The grounds are threefold; viz. by virtne of the defendant's domicile being here, by virtue of the contract either having been entered into here or having to be performed here, and by virtue of the subject matter in an action in rem being situated in this Colony." (Emphasis supplied.)
It is no less clear, however, that at common law residence
of the defendant entrenches the jurisdiction of the
relevant forum. In Sciacero & Co v Central South African
Railways 1910 TS 119, the judgment of INNES, CJ begins (at
121) with the following words:-
"The general rule with regard to the bringing of actions is actor sequitur forum rei. The plaintiff ascertains where the defendant resides, goes to his forum, and serves him with the summons there."
The concept underlying jurisdiction based upon domicile
and residence of a defendant who is a natural person in an
action for a judgment sounding in money is described as
follows by Pollak, loc cit, at 24 - 25:-
15
"If the defendant, although not physically present within the state, is domiciled therein, a judgment against him sounding in money can usually be made effective against him. If a person is domiciled in a state he usually has his home there. Such a person can therefore be expected to return to the state and to have the bulk of his possessions within the state. A judgment sounding in money can therefore normally be made effective against a person who is domiciled within the state. It is true that a person may be domiciled in a state without having his home there, and in such a case it may be unlikely that a judgment sounding in money can be made effective against him in such state. This, however, is an unusúal case; normally a person is domiciled in the state which is in fact his home. It is therefore not unreasonable to disregard the unusual case and to say that the domicile of the defendant within the state is a sufficient basis for jurisdiction in an action in which a judgment sounding in money is claimed.
What has been said in favour of domicile as a basis for jurisdiction applies egually to residence. If the defendant is resident within the state, then, although he is not physically present within the state at the time of the commencement of the action, a judgment sounding in money will normally be effective againt him."
I shall return to the subject of domicile - and then more
specifically in relation to corporations - later in this
16
judgment after deciding whether the Court a quo was correct
in ruling that the respondent was not resident within its
area of jurisdiction. But it may be as well to say at
this juncture that in the case of Minister of the Interior
v Cowley NO 1955(1) 307(N) BROOME, JP, in my respectful
opinion, erred (at 311 G-H) when he stated that he was -
"....not prepared to accept the broad rule that a Court will always have jurisdiction in a claim sounding in money against a defendant who is domiciled within its area of jurisdiction."
I further agree with the view expressed by Pollak, loc cit,
at 41, note 1, that no justification exists for the doubt
expressed by MASON, JP in Foord v Foord 1924 WLD 81, as to
whether domicile without residence or physical presence is
a sufficient ground for jurisdiction in an action in which
a judgment sounding in money is claimed. At 41 Pollak
cites in this connection the authority of . Noodt,
Commentaries on the Pandects, 5.1; and Vromans Tractaat de
Foro Competenti (1.IV.4) who states:-
17
"En is sodanigen Persoon convenibel voor dien Rechter, onder wien Jurisdictie hy sijn domicilium gekoren heeft, het zy dat hy al-daar gevonden werd personelijk, ofte niet."
In my view the legal position is correctly summarised thus
by Forsyth, Private International Law, 2nd ed (1990) at
175 -176:-
"Provided that the defendant is an incola of the court's area of jurisdiction, the court will be
prepared to hear the case Accordingly, if
the defendant is either domiciled or resident in the area, this will be a sufficient jurisdictional connecting factor. Neither of these requirements predicates the actual physical presence of the defendant within the court's area. If the defendant is present, he may be brought to court by summons in the ordinary manner; if he is absent, then, subject to the Rules of Court, summons may be effected by edictal citation or substituted service, as the case may be. Domicile and residence suggest no more than a notional connection with the court's area. Absence is relevant only in regard to the procedural matter of service."
' In the instant matter MYBURGH, AJ, in upholding
the respondent's objection to the competence of the trial
Court, declined to follow an earlier judgment in Dairy
18
Board v John T Rennie & Co (Pty) Ltd 1976(3) SA 768(W), in
which ELOFF, J had decided that in law a South African domestic company resides at the place of its registered office. Henochsberg on the Companies Act, 4th ed (1985), vol 1, at 256, submits that in the Dairy Board case (supra) the Court reached a wrong conclusion; and that for purposes of common law jurisdiction a domestic company resides at its principal place of business (i e its administrative centre).
In the Dairy Board case meetings of the defendant company's board of directors were held chiefly in Durban where most of its directors lived. The business of the defendant was controlled from Durban. However, the defendant had its registered office in Johannesburg, and the plaintiff instituted its action (for enforcement of an undertaking made by the defendant in terms of sec 309(1)(a) of the Merchant Shipping Act, 57 of 1951) in the
19
Witwatersrand Local Division. Inasmuch as the cause of
action had not arisen in the Witwatersrand Local Division
the trial Court was competent to hear the action only if in
law the defendant "resided" within its jurisdiction.
In the course of his judgment ELOFF, J remarked
at 769 G-H:-
"As to the significance of the fact of the
situation of the registered office of a company,
Pollak, The Law
of Jurisdiction, pp 94 -
95,
states:-
'In the normal case the registered office and the principal place of a company are one and the same place. They may, however, be different, and in such case the situation of the principal place of business and not that of the registered office, is the relevant factor for the purposes of
jurisdiction in an action for a
judgment sounding in money against the company.'
No authority is quoted for this proposition, however, and there is, as far as I have been able to ascertain, no decided case in which it was laid down that the place given as the registered address of a company incorporated in South Africa
20
is not the place where the company resides or is."
ELOFF, J distinguished Beckett's case (supra), in which, so
observed the learned Judge (at 770 F-G):-
" the Court did not have to consider the
question whether a company might not be said to reside or be where its registered address is; it had merely to deal with the question whether a corporation with a firmly established residence in the sense described in the above-quoted passage" (i e where its general administration is centred) "could acquire a second residence by reason of having a further place of business elsewhere. The problem with which I am presently concerned is unusual for the reason, as is pointed out by Pollak, supra, that it is reasonable to suppose that a company will normally select as its registered head office its principal place of business. And I do not think that is the sort of situation to which the learned Judge of Appeal addressed his mind when expressing himself as he did."
Later in his judgment ELOFF, J (at 771 B-D) cited
provisions of the Companies Act which prescribes that the
registered office is the place at which all process
against a company may be served; and where are kept such
21
official documents and records appertaining to the company
as the minute book of its general meetings; the register
of allotment of shares; the register of members and
directors and officers; the register of attendance of
meetings of directors and managers; the register of fixed
assetSf and so forth. Such provisions led ELOFF, J to
draw the inference (at 771 D-E) that the legislature had
intended to endow the registered office with the quality of
being the place to which the world might look as the
company's legal home and administrative centre. In the
opinion of the learned Judge this view of the matter was
reinforced by considerations of commercial convenience and
expediency. At 771 E - H he remarked:-
" to view the registered office as the
residence of a company is to create certainty and
to bring about commercial convenience
To hold that the registered office is the place of residence for purpose of jurisdiction is to remove all doubt as to the Court in which a person intending to sue a company conducting business at various places may do so. In this
22
regard it is not inappropriate to remark that in these days companies sometimes conduct their affairs so that it may be difficult to determine where its 'general administration is centred'. And although it may in fact have been true in 1912 that a company and a person had only one residence, one finds it said in Palmer's Company Law, 21st ed., p 66, that:
'Moreover, a company - like an individual - may have several residences at the same time.'
In my view, a company registered in South Africa resides in law where the registered office is. If its principal place of business is situated elsewhere it may also reside at the latter place. I accordingly hold that this Court has jurisdiction in the present matter."
Against the background sketched above it is necessary
now to look more closely at the reasons which prompted the
Court a quo to uphold the respondent's objection to the
jurisdiction of the Witwatersrand Local Division. In his
judgment MYBURGH, AJ relied upon the dictum of INNES, J in
Beckett's case which has already been quoted by me; and
which was discussed by ELOFF, J in the Dairy Board case
23
supra. Beckett's case is not, I consider, germane to the
issue in the present appeal. The ultimate conclusion at
which this Court arrived in Beckett's case was a limited
one. INNES, J rounded off his judgment (at 339) with the
following succinct remarks:-
"For the purpose of this case it is not necessary to say more than that a Company should not be compelled to accept service anywhere, save at its central office, of process the object of which is to enforce or recover damages in respect of a contract entered into with the officials of its central administration."
MYBURGH, AJ further considered that he was bound
by the Transvaal Full Bench decision in Grimshaw v Mica
Mines, Ltd 1912 TPD 450. It seems to me, with respect,
that having regard to the only issue which there arose the
judgment in that case is not helpful in resolving the
problem which confronted the learned Judge in the instant
matter. In the Grimshaw case the defendant was a foreign
24
company directed and controlled in England. It owned base
metal claims in the Zoutpansberg which had been managed by
the plaintiff. The plaintiff sued the defendant for
arrear wages in the court of the civil magistrate at
Johannesburg. As a foreign company the defendant
had complied with sec 198 of Act 31 of 1909 by filing with
the Transvaal Registrar of Companies the name of a
person authorised to accept service of process locally on
behalf of the defendant; and the summons was served at
such person's registered address in Johannesburg. The
only point in the case was whether or not the defendant was
a person "residing or carrying on business" in Johannesburg
within the meaning of the Magistrates' Courts Proclamation
21 of 1902. The magistrate decided that the defendant
neither resided nor carried on business at Johannesburg at
the tlme of the issue of summons and he dismissed the
summons. The Full Bench considered that the magistrate's
25
decision was right and it dismissed the appeal to it.
Apart from the fact that he felt himself bound by
the Grimshaw case (supra) MYBURGH, AJ was further minded to
rule in favour of the respondent by invoking against the
appellant the principle of effectiveness. In this
connection the learned Judge remarked:-
"It seems to me to be more in keeping with that principle that section 19(1)(a) of the Act should be interpreted to mean that, in the case of a company, its residence is where it carries on its main business and not where its registered office is, when its registered office is not at its principal place of business."
This last rumination does not, with respect, commend itself
to me. If there should be found to be present in the
instant case any of the recognised connecting factors
sufficient to found jurisdiction, then, so it seems to me,
the position of the respondent is such that the doctrine of
effectiveness will not militate against an actual exercise
of the Court's jurisdiction. Indeed, as I shall
26
try to show later in this judgment, the matter stands very differently.
The arguments addressed to us may be shortly stated. Adopting the criticism levelled by Henochsberg, op cit, Mr Blieden for the respondent urged upon us that the judgment in the Dairy Board case (supra) confused the concept of a mere place at which process and notices might be served upon a company with the very different concept of jurisdiction as contemplated by sec 19 of the SC Act; and that the Court a quo had correctly declined to follow the judgment of ELOFF, J in that case. A submission set forth in his written heads of argument which sought to rely on the doctrine of effectiveness was abandoned by Mr Blieden, wisely I think, in the course of his argument before us. Mr Shaw, who appeared for the appellant, submitted that there was much to be said for the general approach adopted by ELOFF, J in the Dairy Board case; and he contended that
27
in that case the objection by the defendant to the jurisdiction of the Witwatersrand Local Division had been properly dismissed. However, calling to mind the intricate webwork of the English legal principles governing the subject, Mr Shaw owned to being wary of the concept of "residence" in relation to South African domestic companies. Shying away from the word "residing" in sec 19(1) of the SC Act, he preferred to lay stress on the words "or being in". A meaning other (and a requirement more flexible) than "residence" should be assigned to the words "being in". Counsel suggested that while the phrase "being in" signified some sort of "presence", it was nevertheless a presence less habitual and more ephemeral than that comprehended by the word "residence". This less rigorous requirement, so it was said, was amply satisfied by the location of a domestic company's registered office within a particular area. On
28
this narrow ground counsel for the appellant invited us to differ from the conclusion at which the Court a quo arrived. For reasons which follow I am unable to accede to this argument.
In Schlimmer v Executrix in Estate of Rising (supra) the defendant lived in Pretpria. Se had, however, the monthly tenancy of . a house in Fordsburg. This house she sub-let, save for a single room which she reserved for her own use. On an average she visited Johannesburg once a week to consult her legal advisers, and . occasionally she slept in the room. The jurisdiction of the Witwatersrand High Court depended (as did the jurisdiction of the Witwatersrand Local Division in Beckett's case (supra)) on the provisions of the Transvaal Administration of Justice Proclamation, 1902. The plaintiff sued the defendant in the Witwatersrand High Court and the latter's power to hear the action depended on
29
whether or not the defendant was a person "residing or
being within" the Court's area. Alleging that she resided
in Pretoria the defendant objected to the Court's
jurisdiction. The objection was sustained. Having
quoted the relevant provisions of the 1902 Proclamation
BRISTOWE, J said the following (at 110):-
"It was contended that these sections taken together give this Court jurisdiction over all persons 'residing or being' within its district, and the argument turned mainly on whether having a room within the jurisdiction constituted 'being' within it. On consideration I doubt whether this argument is sound. Sec 16 gives the Supreme Court in the first place, 'cognisance of all pleas' which I take to mean pleas of the Crown. It is from this that it derives its criminal jurisdiction. Next it gives the Court jurisdiction in all civil causes arising within the colony. From this it derives its civil jurisdiction. Thirdly, it gives it jurisdiction over all persons residing or being within the colony. This I read as merely supplementing the criminal and civil jurisdiction already given, by conferring on the Court such powers over people in the colony as are necessary to enable it to give effect to its sentences, judgments, and orders.
30
If this is the true view, then the jurisdiction of the Supreme Court in a civil proceeding depends on whether it is a cause or proceeding 'arising' in the colony, and not on whether the defendant is 'residing or being' within the colony; and by parity of reasoning the jurisdiction of the High Court in a civil proceeding depends on whether it is a cause or proceeding arising within the district of the High Court, not on whether the defendant is 'residing or being' within such district. The broad result of this is that nothing turns on the words 'or being'".
In the passage just quoted it seems to me, with respect,
that by saying that the Court's jurisdiction did not depend
on whether the defendant was "residing or being within" the
Court's district, the learned Judge clearly did not intend
to convey that the fact of residence was irrelevant to the
inquiry. That he could have entertáined no such intention
is made quite plain, for example, by the following passage
later (at 112) in his judgment:
"The question which I have to decide is therefore simply whether she resides within or is an
31
inhabitant of the district covered by the jurisdiction of the High Court, or whether she is a mere peregrinus."
It seems to me that what Mr Justice Bristowe here had in
mind was simply the principle (more explicitly enunciated
by this Court in 1911 in Steytler NO v Fitzgerald (supra))
that one situation in which a "cause arises" is where the
defendant resides within the Court's area and is thus
amenable to such forum.
The reasoning of BRISTOWE, J was applied in Bank
of Africa v Cohen 1908 TH 52, a case which is most
pertinent to the point now being discussed. There the
plaintiff sued the defendant in Johannesburg for
provisional sentence on a promissory note which had been
made in Kimberley. The defendant was a resident of
Kimberley who had come to Johannesburg on a visit. It was
argued for the plaintiff that the Court had jurisdiction to
hear the case, because of the words "or being" in sec 16 of
32
the Proclamation. The argument was rejected by CURLEWIS, J, who said that the words of sec 16 had come under consideration in Schlimmer's case (supra), and that he accepted the interpretation there placed upon them by BRISTOWE, J. (Cf. also the remarks of GREENBERG, J in Van Zyl v Van Zyl 1928 WLD 195 at 196/7 and 199.)
With the advent of Union the legal position stated above remained unchanged in relation to the various divisions of the Supreme Court which took the place of the colonial Supreme Courts. Nor did the Administration of Justice Act 27 of 1912 bring about any change in the position. Its provisions and their effect were summarised by TROLLIP, JA in Estate Agents Board v Lek 1979(3) SA 1048(A) at 1061 B-H. It is unnecessary to repeat what was said there.
I respectfully agree with the view expressed by BRISTOWE, J in Schlimmer's case (supra) that in the 1902
33
Transvaal Proclamation nothing turned on the words "being
within". They merely affirm but do not enlarge the
jurisdiction endowed by "causes arising". The same
applies to the words "being in" in sec 19(1) of the SC Act.
A similar view of the matter is expressed by Forsyth, op
cit. Dealing with the residence of natural persons for
jurisdictional purposes the learned author states (at
164-165):-
"In s 19(1)(a) of the Supreme Court Act, it is provided that the various divisions of the Supreme Court shall have jurisdiction over 'all persons residing or being in' their areas of jurisdiction; but the term 'residing' is not defined in the Act. Instead it must be defined in terms of the common law. As we have seen, s 19(1)(a) has been interpreted to mean little more than that the divisions of the court are limited to their territorial jurisdiction according to the principles to be found in the common law. In particular, the courts have refused to equate 'residing' in s 19 with 'being', i e they have not considered their jurisdiction to be dependent either on mere physical presence or on residence. A strict distinction is always drawn between these two concepts."
34
If, then, a particular division of our Supreme Court is not endowed with jurisdiction over a natural person who is an ihcola of the Republic but a peregrinus within its area of jurisdiction, solely because of such person's presence ("being") within that area at the time of service of a summons upon him, does not the same principle apply in the case of a company? If the customary artificial analogy between natural and juristic persons, which is to be found in the cases on the topic of jurisdiction, is applied, the answer must be yes.
Since "residence" is a concept based on the habits of a natural man the notion of a company's "residence", as has already been pointed out, is necessarily a somewhat abstruse and nebulous one. Insofar as the law requires the concept to be assigned to a corporation, however, it seems to me that the idea of the registered office of a domestic South African company as
35
its "home" represents a juristic abstraction which is by no means unsound in principle. In England the decisions in Cesena Sulphur Company Ltd v Nicholson (1876) 1 Ex Div 428 and Calcutta Jute Mills, Ltd v Nicholson (1876) 1 Ex Div 437 marked the beginning of the elaboration of a different doctrine in England. The company concerned in each case was a joint stock company incorporated in England. In both cases the ratio decidendi was that the test of a company's residence for purposes of Income Tax was that of control; a test later established beyond doubt by the House of Lords in the case of De Beers Consolidated Mines, Ltd v Howe (1906) AC 455. In Egyptian Delta Land and Investment Co., Ltd v Todd (1929) AC 1 the Income Tax Commissioners held that an investment company registered in England, but controlled from abroad, was not resident in England. In an unanimous judgment the Court of Appeal held that a company regulated by the 1908 Companies Act had
36
a residence (though not necessarily a sole residence) at
its registered office. With reference to the many
statutory reguirements imposed on a company by the
Companies (Consolidation) Act (1908) LORD HANWORTH, MR
remarked (see (1928) 1 KB at 167/ 168):-
"If the matter is to be determined by analogy I should affirm that a man with a local habitation and compelled to do certain acts in accordance
with local laws could not prevent the
inference being drawn that he 'kept home' in that locality."
However, in the House of Lords it was unanimously held that
incorporation in England and a registered office in that
country did not, without more and as a legal consequence,
make a company resident in England for Income Tax purposes.
(An illuminating discussion of the topic of the residence
of a corporation in English law together with a close
analysis of the case law is to be found in Farnsworth, The
Residence and Domicil of Corporations (1939)).
The particular evolution in England of legal
37
rules governing the determination of a company's residence
notwithstanding, it is worthy of note, I consider, that
there have been various judicial pronouncements in the
English courts to the effect that when the problem is
viewed purely as one of principle, untrammelled by judicial
precedent and legislative enactment, the notion that the
residence of a company is its registered office has much to
commend itself. One such example is provided by the
dictum already guoted from the judgment of the Master of
the Rolls when the Egyptian Delta case (supra) was before
the Court of Appeal. Two further illustrations may
usefully be taken from the speeches read in the House of
Lords when the latter upset the judgment of the Court of
Appeal. In the course of his judgment LORD BUCKMASTER
said (at 35):-
"The difficulty is due to the fact that
residence is essentially a condition applicable to men, and the tests for its determination, such as living and sleeping, can have no proper
38
counterpart in an abstract entity such as an incorporated company which can neither live nor sleep. It must, however, be assumed that a company has a residence, and if the question is looked at entirely apart from authority, I should have thought that the place of the registered office was also the place where the abstraction known as 'a company' resided."
At 40 LORD WARRINGTON OF CLYFFE expressed himself as
follows:-
"Independently of authority, and in the absence of any relevant provisions of the Income Tax Act, 1918, throwing iight onthe meaning attributed by the Legislature to the words 'residing' and 'resident', as used in the Act, I should probably have been of the opinion that the provisions of the Companies Act to which I have referred lead to the conclusion that, whatever other residence the company may have the Legislature has provided that the registered office shall be a residence.
The cumulative effect of these provisions apparently creates for the company a statutory home where it is to perform the corporate functions abovementioned, and where it is regarded as at all times present and ready to receive such documents and communications as are left or sent there."
39
The broad line of reasoning pursued by ELOFF, J
in the Dairy Board case (supra) which led him to conclude
that in South Africa a domestic company in law resides at
the place of its registered office has already been
examined. It should be added, however, that in discussing
the statutory obligation of a South African company to
accept service of process at its registered office the
lêarned Judge regarded as significant and he sought to rely
upon the fact that in English law service of a writ
represents the technical foundation of jurisdiction. In
this connection (at 770 in fin - 771) ELOFF, J remarked:-
"This correlation between the address at which service may be effected and jurisdiction over a corporation is, I think, ïn accordance with what was said by Cheshire, Private International Law 7th ed., p 174, as follows:
'If he is found here he can be served here and at common law the exercise of jurisdiction depends upon service. It is the same in the case of a corporation'".
40
The soundness of this line of argument has been questioned,
albeit with his customary scholarly diffidence, by
Professor Ellison Kahn. In The Annual Survey of SA Law
(1976) he writes (at 524):-
"With respect, one wonders how persuasive this rule is : jurisdiction in actions in personam based on service of the writ, so basic to English law, is not known to our law. As for the general attitude of English law to the residence of a corporation, it appears to vary with the issue involved. In the English law of taxation, where it is a vital concept, the residence is at the centre of the management and control of the corporation's affairs, with the proviso that if control is virtually egually divided between two centres, the company has two residences, one at each centre (Dicey & Morris on the Conflict of Laws 9 ed (1973) 703 - 5, Cheshire's Private International Law 8 ed (1970) 186 -190, J H C Morris The Conflict of Laws (1971) 32, R H Graveson Conflict of Laws 7 ed (1974) 224). But in the English law relating to jurisdiction in actions in personam - and only for that purpose - the residence of a company is deemed to be where it has its registered office (Dicey & Morris 177)."
(For the sake of completeness it may be mentioned that in .
England the current position appears to be that a company
41
registered únder the 1985 Companies Act is regarded as present in England and service of a writ may be effected by sending it to the registered office of the company. See: Cheshire & North's Private Intemational Law 11th ed (1987) 188.)
In my respectful view the criticism of Prof Kahn quoted above is well-founded. Making due allowance for it, however, I nevertheless find attractive the remainder of the reasoning of ELOFF, J and the conclusion to which he was impelled, namely, that for purposes of deciding in an action for a judgment sounding in money whether a particular division of the Supreme Court of South Africa has power to entertain legal proceedings against it, a domestic South African company "resides" where its registered office is.
In the Dairy Board case ELOFF, J expressed the further opinion that if such a company's principal place of
42
business is situated elsewhere than at its registered office, then the company might in law also "reside" at the latter place. On this point too, and fór the reasons hereunder, I agree with ELOFF, J.
It is true that in Beckett's case (supra) at 334 INNES, J said in relation to a corporation that:-
".....if the analogy of a natural person is to be followed, one would say that it could only reside in one place at one time."
It seems to me, with great respect, that the soundness of
the above-quoted proposition is open to question. In Ex
Parte Minister of Native Affairs 1941 AD 53 this Court was
called upon to give a ruling as to the meaning of the words
"resides" in the proviso to sec 10(3) of the Black
Administration Act 38 of 1927. In delivering the judgment
43
of the Court CENTLIVRES, JA remarked at 58/59:-
" it is clear on the authorities that a
person can have more than one residence and should in that case be sued before the magistrate of the place where he resides at the time when the summons is issued."
For certain purposes English law recognises the possibility
of dual residence in the case of companies. In Swedish
Central Railway Co Ltd v Thompson 1925 A C 495 (HL) it was
held that for income tax purposes a registered company
could have more than one residence. The majority in the
House of Lords concurred in the opinion of LORD CAVE LC.
Commenting upon the earlier decision in the case of De
Beers Consolidated Mines, Ltd v Howe (supra) , LORD CAVE
said at p 501:-
"The effect of this decision is that when the central control and management abides in a
particular place, the company has a
residence at that place; but it does not follow that it cannot have a residence elsewhere. An individual can clearly have more than one
residence and in principle there appears to
be no reason why a company should not be in the
44
same position."
I have had the advantage of reading the judgment prepared in this appeal by my Brother NICHOLAS. NICHOLAS, AJA takes the view that the conclusion of ELOFF, J that a company "resides" where its registered office is, is contrary to principle and authority. I am unable, with respect, to share that view.
NICHOLAS, AJA bases his view particularly on three cases: Estate Kootcher v CIR 1941 AD 256, Beckett's case (supra), and the Grimshaw case (supra). I shall presently consider each of these cases individually, but it is convenient to acknowledge, in general terms, that it was held in each of them that a companý resides at the place where its general administration is located, i e at the seat of its central management and control, from where the general superintendence of its affairs takes place, and where, consequently, it is said that it carries on its real
45
or principal business. For the sake of brevity I shall refer to this as the company's "place of central control". That a company resides at its place of central control was again accepted in Vanderbijl Park Health Committee and
Others v Wilson and Others 1950 (1) SA 447 (A) at 466-7.
The principle is accordingly well established in our law, and I can see no warrant for departing from it. I accept, furthermore, that it applies in respect of matters of jurisdiction, with the result that the court of the area where the company's place of central control is situated will have jurisdiction to entertain a monetary claim against the company, on the ground that it is resident within the court's area of jurisdiction. On this approach it follows that, if the company's registered office is located elsewhere than at its place of central control, a finding that the company is resident at the place of its registered office for the purposes of jurisdiction must
46
necessarily involve an acceptance of the principle that a company can for such purposes (i e in regard to questions of jurisdiction) be resident at two places at the same time. In my judgment, the cases that I have mentioned do not preclude the acceptance of such a principle, as I shall endeavour to show in a moment, and I consider that this Court should now approve it. Accordingly I find that a company can and does have a dual residence f or jurisdictional purposes, where its central control and its registered office are located at different places.
In the case of Estate Kootcher (supra) the Court was not concerned with any question relating to jurisdiction and its judgment did not touch at all on the question now being discussed. This is pertinently demonstrated by the decision in Appleby (Pty) Ltd v Dundas Ltd 1948 (2) SA 905 (E). In that case a foreign company, registered in England and with its head office in England,
47
had a branch office in Johannesburg, where it carried on
business. It was sued in the EDL on contracts entered
into within that Court's area of jurisdiction. The issue
for decision was whether the company resided in the Union
within the meaning of that phrase in section 5 of the 1912
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