Beware of contracting with non-residents
There are several questions a person who is about to enter into a
contract should ask himself.
One such question is – if the other party does not comply with his
obligations under the contract, how – and in what court – will I
enforce the contract against him?
This is a particularly important question where the person with whom
you are about to enter into a contract is resident outside South
Africa. If you had to sue to enforce the contract, could you sue in
the South African courts?
Litigation is expensive and difficult enough on your home turf.
Having to sue someone in a foreign court is a fearsome prospect.
You may ask – won’t the South African courts come to my
assistance, given that I am a South African resident? Won’t they
automatically allow me to sue a non-resident in this country?
Here we come up against a fundamental principle of litigation and
jurisdiction. A court will not take on itself the adjudication of a
dispute if, at the end of the proceedings, it would be unable to
enforce its judgment.
The underlying logic is clear. The courts would fall into disrepute if they were to give judgments that cannot be enforced.
If you are suing a foreign peregrinus (i.e a person not domiciled or resident in South Africa) and your claim is sounding in money, the peregrinus must be arrested or his/its property must be attached. The position may, however, be different if you are suing a foreign peregrinus and your claim involves immovable property situated in South Africa.
In Manna v Lotter 2007 (4) SA 315 the Cape High Court held that where the subject of the litigation involves a claim for the transfer of immovable property situated within the area of the jurisdiction of the court (in this case, the property in dispute was a plot of ground in the Cape village of Sedgefield) it is not necessary to attach the property in order to confirm the court's jurisdiction, even though the defendant resides abroad.
As the court said (at [10]) –
"The property in question is situated within this Court's area of jurisdiction, with the result that it is immaterial where the respondent may find himself".
Very wisely, in this case, the plaintiff applied to court, before he began the lawsuit proper, for an interdict to prevent the non-resident from transferring the property to anyone else. (See the judgment at [11].) If he had not taken this precaution, he might have found that, by the time judgment was given, the defendant had sold and transferred the property to someone else.
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