IN THE HIGH COURT OF MALAWI LILONGWE DISTRICT REGISTRY

Transcription

1 IN THE HIGH COURT OF MALAWI LILONGWE DISTRICT REGISTRY COMMERCIAL DIVISION COMMERCIAL CAUSE NO. 17 OF 2010 IN THE MATTER OF REGISTRATION OF A FOREIGN JUDGMENT AND IN THE MATTER OF THE INSOLVENT ESTATE OF OCKERT PHILLIPUS PRETORIUS AND IN THE MATTER OF THE INSOLVENCY ACT BETWEEN JOHANNES ZACHARIAS HUMAN MULLER AND THREE OTHERS APPLICANTS AND OCKERT PHILLIPUS PRETORIOUS. RESPONDENT CORAM : THE HON. JUSTICE MBENDERA, SC : Mr. Chilenga, Counsel for the Applicants : Mr. Chakudza, Court Interpreter Place and Dates of hearing : Lilongwe, 26 th, 27 th, 28 th & 30 th April, 2010 Place and Date of Judgment : Lilongwe, 20 th May,

2 JUDGMENT Mbendera SC., J. Material Facts 1 The Proceedings before me emanate from proceedings now pending in the Northern Gauteng High Court, Pretoria in the Republic of South Africa (hereinafter called the South African Court). The Applicants assert that they obtained orders/ judgments in the South African Court. They now seek recognition, registration and/or enforcement of the orders of the South African Court. 2 The matter comes before me in this way. It is alleged that in case No /2010 one Ockert Phillipus Pretorius (ID ) was declared insolvent by the South African Court. An order of sequestration was granted against him on 22 April The Master of the South African Court appointed the present Applicants the provisional joint trustees of the estate of the insolvent. The Applicants filed an application under S 18(3) of the Insolvency Act (Act No. 24 of 1936) of the Republic of South Africa. On 22 April 2010, the South African Court granted to the Applicants a Letter of Request to this Court seeking: 2.1 Recognition by this Court of the order of sequestration granted against the insolvent. 2.2 The implementation of the Letter of Request issued by the South African Court. 2.3 The attachment of all the assets of the insolvent in the Republic of Malawi. 3 Armed with the authenticated Letter of Request and the order of 22 April 2010 authorizing the issuance of the said letter, the Applicants filed these proceedings. The proceedings were by ex parte originating summons for recognition of the judgment of the South African Court. The relevant summons were intituled In the matter of Registration of a foreign judgment and The originating summons is supported by an affidavit sworn by Mr. Johan Loots, a South African attorney who acts for the Applicants. In these proceedings, the Applicants were represented by Mr. Marshal Chilenga of T. F. & Partners. 4 The matter was placed before me as an urgent application. It was pressed upon me that the insolvent was a fugitive from justice. It was alleged that the insolvent had fled to many countries until he was traced by International Police (Interpol) to Malawi. The remedies sought by the proceedings needed to be implemented quickly. There was the ever present danger that the cunning insolvent could make the assets in Malawi disappear. I heard the matter on 26 April 2010 at 17:00 hours. I then issued a provisional order attaching the assets in Malawi to preserve them. I adjourned the proceedings to 12:00 noon the following day ( that is 27 April, 2010) to make a final order upon further consideration of the material before me and the relevant law. 2

3 Interim Findings 5 I retired to Chambers and studied the material before me as well as the law. I was not satisfied that I had the necessary jurisdiction to grant the remedies sought by the Applicants. The matter had been pursued on the basis of O1 r 5 of the High Court (Commercial Division) Rules, The summons and the Letter of Request sought the recognition and enforcement of the order of sequestration granted by the South African Court. But the sequestration order was not on the record. The order appointing the Applicants as provisional joint trustees was not on the record. Further, it had been argued before me that an order of condonation under the law of South Africa is equivalent to an order of bankruptcy in Malawi. When I examined the order of 22 April 2010 made by the South African Court I came to a different conclusion. Condonation as used in the order means that due to the urgency of the matter the Court was prepared to relax the rules of practice. The South African Court would condone non-compliance with the rules pertaining to service, form and time limits as provided in the rules of practice. In addition, when I considered the legal framework, I was not satisfied that a judgment or order of a South African Court could be enforced in Malawi by a process of direct registration. My findings made the provisional order unsound. It had been granted per incuriam. 6 I accordingly notified counsel that I needed him to attend before me for further arguments. I set the matter down for 16:00 hours on 27 April When counsel appeared, I raised the jurisdictional issue. Further, I drew attention to the gaps in the record. For these reasons I informed counsel that I was inclined to rescind the provisional order I had made on 26 April 2010 unless he convinced me to the contrary. The effect of my order would be to set aside the attachment which was then in place. Mr. Chilenga asked for time to consider the issues I had raised with him. The matter was then stood over to 11:00 hours on Wednesday, 28 April In view of the enlargement of time, I ordered that the attached assets should not leave Malawi. I was compelled to make the order in view of the many hurdles that stood in the way of the Applicants. I also considered that the insolvent was entitled as a matter of right to challenge any order registering the judgment and subsequent enforcement of the same. O 71 rr7 and 10 RSC are directly on point. The Issues 7 The case raises one issue only. That issue is whether South African judgments can be enforced by a process of direct registration. The Applicants Position 3

4 8 By a twist of misfortune, Mr. Chilenga was unable to attend before me on 28 April Mr. Malera, his partner appeared before me and sought adjournment. I adjourned the case to 10:00 hours on Friday, 30 April Mr. Chilenga did appear before me on 30 April, The matter was argued de novo. 9 Mr. Chilenga opened his address by saying that he had not clarified with his clients on the legal meaning of condonation as used in the order of 22 April, He also stated that he was not able to deposit with the court the order of sequestration, or the order appointing the Applicants. Equally, he advised the court that he did not have the founding affidavits which had led the South African Court to issue an order absolute against the insolvent almost a month earlier when the order nisi, according to the record, had been made returnable on 18 May He reported that Mr. Loots office (the South African attorney) had undertaken to send the relevant file to him by DHL. Despite the lacunae, I allowed Mr. Chilenga to argue the matter but so that when he receives the documents from his clients he should file them to complete the record. I ordered this to be done within 10 days. To this date, the applicants have not filed any supplementary affidavits to fill the gaps. 10 Turning to the legal basis of the application, Mr. Chilenga argued four principal grounds. First, that this court has jurisdiction to enforce foreign judgments. He cited O1 r 5 of the High Court (Commercial Division) Rules, Secondly, he contended that under the Judgments Extension Act, 1868, this court has power to register and enforce a foreign judgment. He contended that Heyns v Demetriou Civil Cause No. 1 of 2000 was wrongly decided. It was his view that the Heyns case was decided per incuriam as the court never considered the 1868 Act. It was his argument that had Mwaungulu J considered the 1868 Act, he would not have set aside the registration of the South African judgment. He buttressed his argument by calling in aid pp418 to 422 of Dicey & Morris, The Conflict of Laws, 11 th Edition. Thirdly, Mr. Chilenga argued that this court must follow English rules relating to insolvency. He contended that under English law, courts dealing with bankruptcy proceed on the basis that there is need for assets to be traced across jurisdictions so that there can be proper distribution by the trustees in bankruptcy. He relies on Dicey & Morris, The conflict of Laws, 11 th Edition, Vol II p 1101 and Re Atora Emanos (1890) QBD 640. On this point, Mr. Chilenga had the maturity to draw my attention to the Bankruptcy Act (Cap 11.02) of the Laws of Malawi. The Act recognizes foreign bankruptcy orders. However, for this to happen the President must gazette the countries whose bankruptcy orders Malawi will recognize. The only country in the schedule is Uganda. South African bankruptcy orders are excluded. It is here that Mr. Chilenga contended that I ought to exercise my inherent jurisdiction to allow recognition or registration of the orders issued by the South African Court. Fourthly, Mr. Chilenga relied on the Constitutional provisions. He stated that S11 of the Constitution is very pertinent. Courts are required by S11 (2) (c) to have regard to comparable foreign case law in the interpretation of the Constitution. In his view, we have a curious position in which we extensively rely on South African Court decisions to guide us in 4

5 interpreting the basic law from which all subordinate law emanates, and yet find that we cannot enforce that country s judgments in Malawi. He reminded me that O 1 r 5 of the High Court (Commercial Division) Rules, 2007 expressly grants jurisdiction to this Court to enforce foreign judgments. He lamented that no rules have been promulgated as to when and how the jurisdiction granted in O 1 5 aforesaid may be exercised. He argued that the solution is not to abandon the responsibility but to exercise inherent jurisdiction in order to fill the gaps and do justice. Resolution of the Application 11 I must commend counsel for spirited argument in an area of law that is presently unsatisfactory. This is one area where the SADC countries ought to work to create an enabling environment in which enforcement of judgments should be eased across territories and jurisdictions. It is therefore with a great deal of circumspection that despite the elaborate industry put up by counsel, I am unable to accede to the view that South African Court judgments can be enforced in Malawi by a process of direct registration. The matter was settled by Heyns v Demetriou. But before I go into the reasons for my decision, let me straight away clarify some confusion that has crept into this matter. 12 First, there is a world of difference between recognition of a foreign judgment and its enforcement. It is plain that, while a court must recognize every foreign judgment which it enforces, it need not enforce every foreign judgment it recognizes. Further, as Dicey & Morris argues, not every judgment is capable of enforcement (See page 419). A judgment dismissing a claim is obviously incapable of enforcement. Equally, a declaratory judgment, for example one declaring the status of a person or the title to a thing is incapable of enforcement. A glaring example is a decree of divorce. Mostly, such declaratory judgments are enforced through ancillary orders and not directly. I make this observation to emphasize that it is important for parties to be clear as to what they are seeking in proceedings. The documents before me show confusion. The heading suggests that registration of a foreign judgment is required. But the application itself seeks mere recognition of the foreign judgment. Recognition of the judgment and orders of the South African Court is achieved simply by authentication. An apostille under the Convention de la Haye du 5 Octobre 1961 would satisfy me and indeed any court that the document is what it says it is. However, when it comes to enforcement of the judgment and orders, the applicants are required to decide the mode of enforcement. It was for the Applicants to decide whether to bring a fresh action in Malawi on the foreign judgment/orders or to apply for direct registration as they did in these proceedings. The decision as to which mode to follow has consequences as I shall discuss later in this judgment. 13 Secondly, parties must understand that when they adopt the mode of direct registration as their preferred process towards enforcement, they should be careful with the documentation they bring to the court. The court only registers foreign judgments that are final. There is no process for registering letters of request. Letters of request do not qualify as judgments. 5

6 They are ancillary processes to support the judgments requiring enforcement. In the present case care was not taken to place the sequestration order before me. Equally, parties intending to enforce a foreign judgment must prove their right to do so by direct evidence. The Applicants claim that they were appointed trustees by the South African Court. But the order appointing them was not placed before the court. The effect of these errors was that neither the right to move this court nor the judgment requiring enforcement was proved before me. This is a fundamental omission which would cause the application to fail 14 I have stated that I am constrained to follow the decision in Heyns v Demetriou. That was a reluctant decision of Justice Mwaungulu. After a detailed and careful examination of the law, that illustrious judge set aside registration of a judgment from the Republic of South Africa. Registration of the foreign judgment had been secured under the Administration of Justice Act 1920 of England. Clearly the English Statute of 1920 had no application to Malawi. Mr. Chilenga now boldly argues that Heyns decision was made per incuriam. He contends that had Mwaungulu, J s attention been drawn to the Judgments Extension Act 1868, he would have allowed the registration to stand. The Applicant s case stands or falls on this narrow premise. If the 1868 Act applies to Malawi I must ignore Heyns decision. If not, Heyns decision is good law and this application must fail. What is the essence of the Judgments Extension Act, 1868? To understand this we need to look at the forerunner Act of It is the Crown Debts Act This Act provided for the reciprocal enrolment and the enforcement of English and Irish Exchequer orders and Chancery decrees. (See page 422 Dicey & Morris). The 1868 Act as its name implies, broadened the innovation under the Crown Debts Act 1801 by extending its application to Scotland. The 1868 Act never applied to any other territories other than Scotland. Malawi applies certain English Statutes that were in force on 11 th August However, such statutes must be of general application. The 1868 Act was confined to Scotland. It is not a Statute of general application. It therefore does not apply to Malawi. It is no different from the Administration of Justice Act 1920 whose application was rejected by Mwaugulu, J. in Heyns case. 15 There is a further ground why the 1801 and 1868 Acts of England have no application to the present case. Both statutes only apply to judgments for debts, damages and costs (See Sections 1, 2 and 3 of the Act). Thus many decrees of a court of equity together with injunctions, judgments in action for the recovery of land and the like are excluded. (See paragraph 276, Vol 7 Halsbury s Laws of England, 3 rd Edition). Similarly at paragraph 277 it is stated that where an order of the Chancery Division of the English High Court has been extended to and enrolled in Ireland it cannot be enforced by sequestration. This remedy is excluded by the statute. 16 Therefore for the foregoing reasons the application for registration of the judgment and orders sought in these proceedings must fail. Firstly because there is no reciprocity between the Republic of South Africa and Malawi to allow for enforcement by way of direct registration. Secondly, because the Judgments Extension Act 1868 is not part of our 6

7 received law and therefore does not apply in Malawi. Thirdly, because even if that Act were part of our received law, its application to present proceedings would be excluded because the orders sought to be registered and enforced in Malawi are not for debts, damages or costs. 17 That should have concluded the matter. However, it would be unfair to counsel and his clients if I did not examine the other arguments raised before me. Firstly, counsel stated that I ought to exercise my inherent jurisdiction because O 1 r 5 of the High Court (Commercial Division) Rules 2007 clearly intended to grant power to this Court to enforce foreign judgments. I agree that that rule grants power to this court to enforce foreign judgments. However, Rule 5 (g) is predicated on the existence of a law enabling the exercise of such a power. The clear support for this view is the use of the expression subject to the provisions of the law in Rule 5 (g). Presently there is no law enabling this court to permit registration of a judgment of the South African Court. This does not mean that decisions of the South African Court are incapable of enforcement. On the contrary, the common law remedy might still be available to the Applicants to pursue their case in Malawi. The common law remedy requires a party seeking to enforce a foreign judgment to commence proceedings on the judgment. Such a party is then entitled to proceed to summary judgment on the basis that the defendant has no defence. He is allowed to rely on the judgment as conclusive. The Applicants did not bring a suit to enforce the judgment of the South African Court. In those circumstances it cannot be argued nor can it be justified to appeal to the inherent jurisdiction of the court to provide a remedy. 18 Secondly, it has been argued that this court should follow the English Rule in bankruptcies. The rule in point is that the court should recognize foreign bankruptcy orders. I accept counsel s argument that the English Rule makes perfectly good sense. Assets should be followed across jurisdictions for proper distribution by the trustees in bankruptcy to take place. As counsel rightly argued, S 148 of the Bankruptcy Act (Cap. 11:02 of the laws of Malawi) provides for recognition of foreign bankruptcy orders. However this recognition requires the President to include a particular country in schedule of countries whose bankruptcy orders Malawi would recognize and enforce. Presently, that recognition was granted to Uganda and no other country. It follows therefore that bankruptcy orders from the Republic of South Africa are not recognized in Malawi under the Act. 19 The last argument pertained to Constitutional provisions. Specifically, counsel laid ground on S11(2) (c ) of the Constitution. That provision enables a court of law to interpret the provisions of the Constitution by resorting to public international law as well as comparable foreign case law. This has allowed the courts to accept and apply decisions from other countries including the Republic of South Africa. He lamented that this creates a curious situation where foreign cases are recognized but enforcement of those decisions is not permitted. He thought that this is an anomaly which should not be perpetuated. I have already joined counsel on the need to have reciprocal arrangements in the SADC region to ease the process of enforcement of judgments. The progressive economic integration that is taking place in the SADC region is fostering the establishment and movement of businesses, capital and trade across borders. This phenomenon will naturally increase the incidents of disputes across borders. It is vitally important that those with the 7

8 responsibility of policy formulation in the Ministry of Trade and Commerce, the Ministry of Justice and the related bodies should create an environment where judgments can be readily enforced in the SADC region. It may perhaps be an opportunity for the SADC Lawyers Association to take up this issue and lobby their respective governments for the reciprocal arrangements akin to those which the government of the United Kingdom has entered into with various countries. It is disheartening that the United Kingdom has reciprocal arrangements with almost each and every country in the SADC region and yet the SADC countries do not have similar arrangements between themselves. 20 The foregoing discussion however is of no consequence to the decision in these proceedings. The issues I have touched on are policy issues best left to the governments to decide. The case presented by the Applicants and their counsel justify the negotiation of relevant protocols. Until that is done, the law is where it is and I must apply it. Regrettably therefore these weighty arguments have not persuaded me to discard Heyns v Demetriou. The result is that the application is hereby dismissed. 21 I am not without sympathy for the case of the Applicants. I am inclined to allow the attachment order to remain for a limited period of 21 days to enable the Applicants take such steps as they may be advised to remedy the mischief that may be created by the immediate discharge of that order. Therefore despite dismissal of the application, I hereby order that the attachment order I made on 26 th April do remain for 21 days from the date hereof. I have made this order because I accept the evidence before me that the Respondent owes over R80 million to various parties in South Africa. I also accept that the Respondent has been a cunning fugitive from justice fleeing to different territories to escape the long arm of the law. It is my duty not to perpetuate this mischief. However I must balance the interests of the Applicants with the rights of Respondent. The continuation of the attachment order is conditioned upon the following premise, that is to say, that the Applicants should within 24 hours from the date hereof deliver the attached assets of the insolvent to Interpol office in Malawi. PRONOUNCED in Chambers on the 20 th day of May, 2010 in Lilongwe. M. Mbendera, SC JUDGE 8