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Last Updated: 8 June 2005
THE SUPREME COURT OF APPEAL
OF SOUTH
AFRICA
Reportable
Case No 237/04
In the matter between:
CORDIANT TRADING CC
Appellant
and
DAIMLER CHRYSLER
FINANCIAL
SERVICES (debis) (PTY) LTD
Respondent
Coram: HOWIE P, ZULMAN, MTHIYANE, JAFTA AND MLAMBO JJA
Heard: 9 MAY 2005
Delivered: 30 MAY 2005
Summary: Jurisdiction – on causes – limited to causes arising within the court’s area of jurisdiction. Declaration of rights – when competent under s 19(1)(a)(iii) of Act 59 of 1959
J U D G M E N T
JAFTA JA/
JAFTA JA:
[1] Two issues were raised in this appeal: the first is whether
the Durban and Coast Local Division had jurisdiction to hear and determine
an
application brought against a South African company based beyond its area of
jurisdiction; and the second is whether a seller
of goods which were resold to
third parties in successive sales has locus standi to seek a declarator
against the original vendor who had sold them to the person from whom the
applicant had purchased the goods.
[2] In June 2000 the appellant brought
an application in the court a quo for an interdict restraining the
respondent from vindicating certain motor vehicles pending the finalisation of
an action it intended
to institute. The appellant indicated that it would seek
an order declaring that the respondent had no right to vindicate the vehicles
in
question. By agreement between the parties the application was referred for the
hearing of oral evidence on certain defined issues.
The parties further agreed
that the appellant would seek the declarator on the same papers instead of
instituting a new action.
Since the respondent had objected to both the
jurisdiction of the court and the appellant’s locus standi, the
court a quo (Nicholson J) was asked to decide these issues separately
from the merits of the matter. The learned Judge upheld both points and
dismissed the application with costs. The appellant now appeals against that
order with leave of this Court.
[3] The appellant is a close corporation
dealing in motor vehicles and sells them mainly to other dealers. It has its
principal place
of business in Durban. The respondent is a registered company
with its principal place of business at 123 Wierda Road, Centurion,
Gauteng.
The respondent also is a trader in certain brands of motor vehicles. It
purchases its stock from the manufacturers and
sells only to accredited
dealers.
[4] During July 1997 the respondent and a company called Maxine
Motor Holdings (Pty) Limited trading as Fourways Motors (‘Fourways
Motors’) concluded a written sale agreement in terms of which the
respondent sold new vehicles to Fourways Motors. It was
a term of the agreement
that ownership of the sold vehicles would remain vested in the respondent until
the full purchase price had
been paid. The vehicles forming the subject matter
of the present proceedings were sold by the respondent to Fourways Motors in
terms of that agreement. Sixteen of those vehicles were further sold to the
appellant by Fourways Motors. The appellant resold
them to other dealers who,
in turn, resold the vehicles to members of the public.
[5] In June 2000
the respondent issued a notice to the effect that Fourways Motors had failed to
pay for some of the vehicles and
that ownership thereof remained with it. As a
result the respondent demanded payment for the vehicles or their return from
persons
in whose possession they were at the time of the notice. This prompted
the appellant to launch the current proceedings on the basis
that it is likely
to face claims from its purchasers for repayment of the amounts paid to it for
the vehicles. Meanwhile Fourways
Motors was placed under liquidation after its
managing director had died under mysterious circumstances. He had represented
Fourways
Motors at the conclusion of the sales of the vehicles to the
appellant.
[6] Regarding the issue of jurisdiction, the court a
quo ruled that it had jurisdiction only in respect of two vehicles which
were found to be in its territorial area of jurisdiction at
the time the
proceedings were launched. In this regard Nicholson J said:
‘I am
therefore of the view that because it was common cause that the respondent did
not reside in this Court’s jurisdiction
that all the requirements for an
interdict, including a clear right, apprehension of harm and no alternative
remedy, arose outside
the geographical area of this Court, it consequently had
no jurisdiction to deal with all the vehicles save vehicles numbers 5 and
14 in
this application. For this additional reason the application falls to be
dismissed with respect to all the other vehicles.’
[7] As to the
issue of locus standi, the learned Judge followed, amongst others, the
decisions of this Court in Lammers & Lammers v Giovannoni 1955 (3)
SA 385 (A) and Louis Botha Motors v James & Slabbert Motors (Pty) Ltd
1983 (3) SA 793 (A), in which it was held that a seller’s liability to
his purchaser depends upon proof of a breach of the warranty
against eviction
and that this warranty binds a seller only to the purchaser to whom he had sold.
On the basis of this principle,
the learned Judge held that since the threat of
eviction was not directed at the appellant’s purchasers, it had no
locus standi to restrain the respondent from vindicating the
vehicles.
[8] Before us, counsel for the appellant submitted that the
court a quo had jurisdiction because the cause arose within its area of
jurisdiction. He mentioned various factors which he contended establish
jurisdiction. Alternatively, he submitted that since the court a quo had
found it had jurisdiction in respect of two of the vehicles in question,
considerations of convenience and common sense warranted
that it should have
jurisdiction in respect of all the vehicles. This, he argued, would prevent the
proliferation of proceedings.
Reliance was placed on Estate Agents Board v
Lek 1979 (3) SA 1048 (A) at 1067 where Trollip JA said:
‘Now I have
already pointed out that the relief against such adverse effect of the
Board’s decision which respondent was
entitled to and did seek by way of
an appeal under the Act was not mandatory but rather declaratory or empowering
in respect of the
Board. Having due regard to that fact I think that the Court
a quo had jurisdiction to entertain his appeal simply on the ground that
he was resident within its area of jurisdiction. After all, that
was the Court
immediately at hand and easily accessible to him and to which he would naturally
turn for aid in seeking to have the
diminution in his legal capacity or
personality remedied. In the present context of our unitary judicial system of
having one Supreme
Court with different Divisions, as set out earlier in this
judgment, convenience and common sense, are, inter alia, valid
considerations in determining whether a particular Division has jurisdiction to
hear and determine the particular cause.’
[9] Regarding the main
argument, counsel for the respondent submitted that the factors referred to by
the appellant were insufficient
to justify the conclusion that the cause indeed
arose within its area of jurisdiction. As to the alternative argument, he
submitted
that the present matter is distinguishable from Lek where the
appellant’s right to carry on business as an estate agent was affected
within the area of jurisdiction of the court
of first instance and that, he
argued, is not the position in the present case.
[10] The limitation as
to the territorial area of each High Court is imposed by s 19(1)(a) of the
Supreme Court Act 59 of 1959 (‘the
Act’). The section provides that
such court shall have jurisdiction over persons residing in and causes arising
within its
area of jurisdiction. For present purposes the jurisdiction of the
court a quo must be determined with regard to the requirement of
‘causes arising’. In the past, these words were construed to mean
proceedings over which a High Court has jurisdiction under the common law
(Bisonboard Ltd v K Braun Woodworking Machinery (Pty) Ltd 1991 (1) SA
482 (A) at 486 and Ewing McDonald & Co Ltd v M & M Products Co
1991 (1) SA 252 (A)). In the latter case Nienaber AJA said at
257F-G:
‘The expression “causes arising” has been
interpreted in the Bisonboard judgment supra at p 11 of the
typescript copy “... as signifying not “causes of action
arising” but “legal proceedings duly
arising”, that is to say,
proceedings in which the Court has jurisdiction under common law”. Since a
Court under the
common law would have had jurisdiction over persons domiciled
within its area of jurisdiction (who would include, although not confined
to
persons “residing or being in”), “persons residing or being
in” and “causes arising” are not
antithetical concepts; the
former is merely an elaboration of the latter.’
[11] Plainly, what
is meant in the above interpretation is that ‘causes arising’ does
not refer to causes of action but
to all factors giving rise to jurisdiction
under the common law. Of course, such factors do not exclude a cause of action.
It is
by now well-established that, in appropriate cases, a court which has
jurisdiction over the area within which a cause of action arose
is competent to
decide a matter on that basis alone.
[12] Against this background I turn
to the issue of whether the appellant had adequately established that the court
a quo had jurisdiction under the common law. The sales between the
appellant and the immediate purchasers were concluded in Durban. The
appellant’s obligation under the warranty against eviction flows from
these sales. Some of the evictions against the possession
of the vehicles in
question occurred in Durban. In my view, these facts show a sufficient
connection to the court a quo’s area of jurisdiction so as to
justify its competence under the common law to decide the case .
[13] In
addition, some of the vehicles which formed the subject matter of these
proceedings were found within the court a quo’s area of
jurisdiction. As a result it held that it had jurisdiction in respect thereof.
In order to avoid a proliferation of applications,
it would have been convenient
for the court a quo to deal with all the vehicles involved instead of
confining itself to only those found within its area of jurisdiction. Indeed the
balance of convenience has been regarded as a consideration in determining
whether or not a court has jurisdiction. In Sonia (Pty) Ltd v Wheeler
1958 (1) 555 (A) Price AJA said at 562F-G:
‘It is argued that if the
money claims stood alone and there were no claim for cancellation, the Court
would not have jurisdiction.
Assuming this to be so, assuming that the Eastern
Districts Court could not entertain a claim for a refund of the purchase price
if that claim stood alone, it nevertheless seems to me that every consideration
of convenience and common sense indicates that where
such a money claim is as
closely associated with a claim for cancellation of the contract, as in this
case, and is a consequential
claim, following on the cancellation, the same
Court which has jurisdiction to decree cancellation should have jurisdiction to
hear
the money claim for a refund of the purchase price, and to order
costs.’
See also Roberts Construction Co Ltd v Willcox Bros (Pty)
Ltd 1962 (4) SA 326 (A).
[14] The primary object of the above
approach is to avoid an unnecessary proliferation of proceedings and the
possibility of conflicting
decisions on the same cause of action, between the
same parties. In the present case the issues before the court a quo
involved the same parties. The underlying basis for the appellant’s case
was its obligation under the warranty against eviction
in respect of each
vehicle. All vehicles were originally sold by the respondent to Fourways Motors
which, in turn, resold them to
the appellant. The respondent contended that
ownership in respect of all the vehicles did not pass to the appellant and its
successors
in title because of the reservation of ownership clause in the
agreement between it and Fourways Motors which remained in force due
to the
latter’s failure to pay the purchase price. The strong consideration of
convenience in this case impels me to the conclusion
that the court a quo
had jurisdiction to entertain the application in respect of all the
vehicles.
[15] The next question relates to the appellant’s
locus standi to seek a declarator. The answer thereto depends mainly on
the interpretation of s 19(1)(a)(iii) of the Act. Subsection (1) insofar
as is
relevant provides:
‘(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, and shall, subject to
the provisions of subsection (2), in addition to any powers or jurisdiction
which may be vested
in it by law, have power ─
(i) ...
(iii) in its
discretion, and at the instance of any interested person, to enquire into and
determine any existing, future or contingent
right or obligation,
notwithstanding that such person cannot claim any relief consequential upon the
determination.’
[16] Although the existence of a dispute between
the parties is not a prerequisite for the exercise of the power conferred upon
the
High Court by the subsection, at least there must be interested parties on
whom the declaratory order would be binding. The applicant
in a case such as the
present must satisfy the court that he/she is a person interested in an
‘existing, future or contingent
right or obligation’ and nothing
more is required (Shoba v Officer Commanding, Temporary Police Camp,
Wagendrif Dam 1995 (4) SA 1 (A) at 14F). In Durban City Council v
Association of Building Societies 1942 AD 27 Watermeyer JA with reference to
a section worded in identical terms said at 32:
‘The question whether
or not an order should be made under this section has to be examined in two
stages. First the Court must
be satisfied that the applicant is a person
interested in an “existing, future or contingent right or
obligation”, and
then, if satisfied on that point, the Court must decide
whether the case is a proper one for the exercise of the discretion conferred
on
it.’
[17] It seems to me that once the applicant has satisfied the
court that he/she is interested in an ‘existing, future or contingent
right or obligation’, the court is obliged by the subsection to exercise
its discretion. This does not, however, mean that
the court is bound to grant a
declarator but that it must consider and decide whether it should refuse or
grant the order, following
an examination of all relevant factors. In my view,
the statement in the above dictum, to the effect that once satisfied that the
applicant is an interested person, ‘the Court must decide whether the case
is a proper one for the exercise of the discretion’
should be read in its
proper context. Watermeyer JA could not have meant that in spite of the
applicant establishing, to the satisfaction
of the court, the prerequisite
factors for the exercise of the discretion the court could still be required to
determine whether
it was competent to exercise it. What the learned Judge meant
is further clarified by the opening words in the dictum which indicate
clearly
that the enquiry was directed at determining whether to grant a declaratory
order or not, something which would constitute
the exercise of a discretion as
envisaged in the subsection (cf Reinecke v Incorporated General Insurances
Ltd 1974 (2) SA 84 (A) at 93A-E).
[18] Put differently, the two-stage
approach under the subsection consists of the following. During the first leg of
the enquiry the
court must be satisfied that the applicant has an interest in an
‘existing, future or contingent right or obligation’.
At this stage
the focus is only upon establishing that the necessary conditions precedent for
the exercise of the court’s discretion
exist. If the court is satisfied
that the existence of such conditions has been proved, it has to exercise the
discretion by deciding
either to refuse or grant the order sought. The
consideration of whether or not to grant the order constitutes the second leg of
the enquiry.
[19] The appellant, in the present case, was clearly
interested in the determination of the respondent’s alleged right of
ownership
on the vehicles in question because its right to seek compensation and
liability under the warranty against eviction depended on
the respondent’s
right of ownership being unassailable. Consistently with this position, the
issues which the appellant wanted
to raise were: (a) that the respondent was not
the owner of the vehicles in question and that Fourways Motors was; (b) that
the
respondent was in any event estopped from denying Fourways Motors’
ownership. The appellant could obviously raise those issues
in any of the
proceedings instituted by the respondent. Indeed the respondent’s counsel
conceded that the appellant could intervene
in any of such proceedings. However,
counsel argued that instead of launching the present proceedings, the appellant
should have
waited for its buyers first to institute proceedings against it. I
do not agree. It is clear from what is said above including the
concession by
the respondent’s counsel that the appellant had interest in the current
proceedings. I can conceive of no basis
on which such interest could be
suspended until the appellant’s buyers institute proceedings against it.
Section 19(1)(a)(iii)
certainly does not require that as a preliminary step. It
follows that the court a quo erred in holding that the appellant had no
locus standi.
[20] In the view I take of the matter, it is not
necessary to determine whether the common law principle, confining claims for
compensation
arising from the warranty against eviction to immediate sellers and
purchasers, is applicable to the present case. Suffice to say
that its
application would not, in my view, affect the interest of the appellant in these
proceedings. If it applies, it would only
mean that the appellant’s
liability is confined to its immediate purchasers.
[21] In the
circumstances the court a quo should have dismissed the points raised by
the respondent and proceeded to a consideration of the merits, thereby
exercising its
discretion as contemplated in s 19(1)(a)(iii).
[22] The
following order is made:
1. The appeal is upheld with costs including costs
occasioned by the employment of two counsel.
2. The order of the court a
quo is set aside and replaced with the following order:
‘The points
raised by the respondent in respect of jurisdiction and locus
standi are hereby dismissed with costs including
costs of two counsel.’
___________________
C N JAFTA
JUDGE OF APPEAL
Concur:
HOWIE P
ZULMAN JA
MTHIYANE JA
MLAMBO
JA
SAFLII:
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.RTF of original document