IN THE SOUTH GAUTENG HIGH COURT OF SOUTH AFRICA

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<p>IN THE SOUTH GAUTENG HIGH COURT OF SOUTH AFRICA</p> <p>18</p> <p>IN THE SOUTH GAUTENG HIGH COURT OF SOUTH AFRICA(JOHANNESBURG)</p> <p>Case No: A5025/2011Appeal Court Case No: 580/2011Court a quo Case No: 29063/2005Date of Appeal: 21 May 2012 </p> <p>In the matter between: </p> <p>CARGILL COTTON GINNERS LIMITED Appellant</p> <p>And </p> <p>FLEETAFRICA (PTY) LTD Respondent </p> <p>JUDGMENT</p> <p>C. J. CLAASSEN J: </p> <p>INTRODUCTION</p> <p>This is an appeal against the judgment of Willis J in which the learned judge found that the South Gauteng High Court in Johannesburg was vested with jurisdiction to entertain the action instituted by the respondent (FleetAfrica) against the appellant (Cargill). The learned judge dismissed Cargills special plea alleging lack of jurisdiction of this court. </p> <p> Cargill applied for leave to appeal the aforesaid decision. Willis J refused the application for leave to appeal. Cargill then petitioned the Supreme Court of Appeal for leave to appeal. Leave to appeal to the full bench of this Court against the judgment of the court a quo was granted on 30 June 2011. </p> <p>THE PLEADINGS</p> <p>FleetAfrica instituted action against Cargill for the payment of an amount allegedly due in terms of a partly oral and partly written agreement concluded between the parties on 16 March 2007 in Pinetown, Kwazulu-Natal. A copy of the written portion of the agreement is attached to the particulars of claim as annexure A. It was therefore common cause that the contract was concluded outside the jurisdiction of this court. </p> <p> FleetAfrica alleged that Cargill had its principal place of business or branch office at Building No 5 Fourways Office Park, Corner Roos and Fourways Boulevard, Fourways, Johannesburg, Gauteng (the Fourways address). This allegation was specifically denied in paragraph 2 of Cargills plea on the merits. Cargill further placed the jurisdiction of this Court to entertain the action in dispute in its special plea filed simultaneously with the plea on the merits, i.e. prior to litis contestatio. The special plea contained the following allegations: </p> <p>1. The defendants principal place of business is, and at the time of the commencement of this action was, situated at 2762 Nasser Street, Chipata, Zambia and not at the address alleged by the plaintiff, viz. Building No 5 Fourways Office Park, Corner Roos and Fourways Boulevard, Fourways, Gauteng. </p> <p> The defendants registered office address is, and at the time of the commencement of this action was, situated at Plot 2386 Longolongo Road, The Globe Building, Lusaka, Zambia. </p> <p>The plaintiffs principal place of business is, and at the time of the commencement of this action was, situated at 47 Oppenheimer St, Pinetown, Kwazulu-Natal and not at the address alleged by the plaintiff, viz. Super Group Park, 27 Impala Rd, Chislehurston, Sandton, Gauteng. </p> <p>The plaintiffs registered office address is, and at the time of the commencement of this action was, situated in Centurion, Pretoria. </p> <p>In the circumstances, at the time of the commencement of this action: </p> <p>the defendant did not reside in, and was not in, the area of jurisdiction of this Court within the meaning of section 19(1) of the Supreme Court Act, 1959; </p> <p> the defendant was (and the defendant still is) a peregrinus, both in respect of the area of jurisdiction of this Court and in respect of the Republic as a whole. </p> <p>the plaintiff was an incola of the Republic, but a peregrinus in respect of the area of jurisdiction of this Court. </p> <p>2. 2.1The cause of action pleaded by the plaintiff is based on a partly oral and partly written agreement which: </p> <p>2.1.1is alleged to have been concluded at 47 Oppenheimer Street, Pinetown, Kwazulu-Natal; </p> <p>was to be performed and was performed in Zambia where the plaintiff provided the service of transporting cotton seed from locations in Zambia to the defendants gin in Chipata in Zambia; </p> <p> was allegedly breached in Zambia; </p> <p>In the circumstances, the causa underlying the plaintiffs claim arose outside of the area of jurisdiction of this Court. </p> <p>On the grounds set out in 1 and 2 above, the defendant denies that this Court has jurisdiction to entertain this action.</p> <p>In reply to Cargills request for further particulars for trial, FleetAfrica relied on the following facts for its allegation that Cargill had its principal place of business or branch office at the Fourways address, namely: </p> <p>All meetings with Cargills executive director took place at the Fourways address; All report-back meetings regarding performance of the agreement occurred in Fourways; </p> <p>All invoices were delivered to Fourways and all payments were effected by Cargill in Gauteng; The breach occurred in Gauteng. It was agreed at the pre-trial conference to separate the issues arising from the question of this Courts jurisdiction from the merits of FleetAfricas claim. The trial thereafter proceeded on the basis of dealing exclusively with the issue of jurisdiction. </p> <p>THE EVIDENCE FleetAfrica, as plaintiff in the court a quo, commenced leading evidence on the issue of jurisdiction. It called three witnesses on its behalf namely Mr Gerhardus Kotze, Mr Sukdeo and Mr Cloete. On behalf of Cargill, Mr Coburn and Mr Thomas testified. </p> <p> KotzeKotze testified that he was the country manager for Zambia in the employ of Cargill RSA (Pty) Ltd. Cargill RSA (Pty) Ltd (Cargill RSA) is a different company to the appellant, Cargill Cotton Ginners Ltd (Cargill). It was common cause that the appellant, Cargill, was a Zambian company registered in Zambia having its registered office in Lusaka and a principal place of business in Chipata. </p> <p>Kotze was housed in Cargill House at the Fourways address from which he managed Cargills Zambian operations. The management team in Zambia reported to him in South Africa and he in turn reported to Mr Iles, Cargills managing director and Mr Coburn who headed the financial part of the Cargill operations. Kotze categorically stated that the only presence of Cargill in Fourways was himself. He further stated that there was a procurement department at the Fourways address in Johannesburg which procured the requirements of Cargills operations in Zambia, Zimbabwe and Malawi. He stated that all logistics were arranged from Fourways by Cargill RSA. </p> <p>Initially he was required to spend ten days per month in Chipata and the rest at Fourways. He was then required to spend more time in Zambia and ultimately Cargill decided that he could no longer manage its Zambian business by remote control from the Fourways address and required him to relocate to Zambia in order to manage the business from there. Kotze refused to do so and resigned effectively from 26 July 2007. Had he not resigned and taken up full time employment in Zambia, he would no longer have been employed by Cargill RSA but indeed by Cargill itself. </p> <p>He stated that the Fourways premises were occupied by Cargill RSA. This building called Cargill House, housed all the employees of Cargill RSA. Nowhere was any signboard to be found indicating that Cargill had any offices there. The receptionist answered the telephone in the name of Cargill RSA and under the latters telephone number in South Africa. </p> <p>The procurement of insecticides, wool packs, fertilizer and the like for Cargill was undertaken by Cargill RSA and its employees. Payment of FleetAfricas invoices was effected in Johannesburg. </p> <p>SukdeoThe evidence of Sukdeo was not relevant to the issue of jurisdiction nor did the court a quo refer to any of his evidence. His evidence concerned the identity of the entity with which the agreement was concluded between Cargill and FleetAfrica. </p> <p>CloeteCloetes evidence, insofar as it was relevant to the issue of jurisdiction, was the following: </p> <p>1.He was involved in the cotton trade from May 1997 until March 2010; </p> <p>He first worked for Clark Cotton in Zambia. It was taken over by Afgri and thereafter by Cargill in 2005. He stayed on until 2010. </p> <p> He started off as Director: Grower Debtors with Clark Cotton and Afgri. At Cargill, in the beginning, he was made Manager: Grower Debtors in Chipata.</p> <p>Policies which had to be implemented by Cargill in Chipata, all came from Johannesburg. It was set out by top management in Johannesburg.</p> <p>When he said that he was employed by Cargill he was referring to Cargill, the Appellant. </p> <p>Richard Dettmer (Dettmer) replaced Kotze as the Zambian country manager of Cargill. He was based in Lilongwe, Malawi. He came to Chipata for two or three days per week. </p> <p>7.Prior to 2007 he received payment of his salary partly in Rands in Johannesburg and partly in Zambian Kwacha in Zambia. From some time in 2007 his entire salary was paid to him in Zambian Kwacha by Cargill.CoburnThe first witness called by Cargill was Mr Coburn. </p> <p> Coburn stated that the principal place of business of the various operations in Africa were not at the Fourways address. Each of these operations was contained in a legal entity in the country where they were based. Those operations were managed in that country. He and Mr Iles simply provided oversight of these operations at group level. </p> <p>More specifically, he stated that the principal place of business of Cargill was not at Fourways but indeed in Chipata. Cargill had no presence in Cargill House at Fourways, Johannesburg, nor were any of Cargills employees based in Fourways. </p> <p>He confirmed that Kotze was employed by Cargill RSA as country manager for Zambia operations. However, such arrangements were temporary until such time as Kotze could relocate to Chipata and manage the business of Cargill from there. Coburn is in fact a director of Cargill. </p> <p>Coburn confirmed that a strategic meeting held during February/March 2007 was attended by Kotze and a representative of Super Rental, Mr Sodayo. The remaining attendees were all employees of the Zambian operation and one individual from the Zimbabwe operations. </p> <p>Coburn further stated the following: </p> <p>The defendant, MLord, Cargill Cotton Ginners Limited based in Chipata was the primary business that was originating cotton from smallholder farmers and processing that cotton or ginning that cotton which would involve separating the fibre from the seed. The fibre would be pressed into bales and that fibre would be known as cotton lint. We had earlier an explanation of how that cotton lint was exported. The other aspect of the business was the cotton seed which was the by product of the ginning process. That was also sold as part of the cotton operation.The defendant had roughly between 250 and 300 employees. During the actual buying season and the ginning season we would employ another 300 odd employees on a seasonal basisA number of them would be based at the cotton gin in Chipata. It was very labour intensive. It involved shifting cotton in bags into the ginnery and offloading those bags to be processed in the gin and then shifting the bales once the cotton has been processed and put them into a warehouse. So it is highly labour intensive. Also there were a large number of full staff based out in the field responsible for the origination of the cotton dispersed over large areas in and around Chipata and they were responsible for buying the cotton from the farmers and loading it onto the trucks to move into the cotton ginnery for processing</p> <p>When Cargill bought the Clark Cotton business in South Africa and Mr Kotze became an employee of Cargill RSA, were there discussions with him about the management function that he had in relation to the defendants business? --- MLord, I was not directly involved in those discussion, but I am well aware that myself and Mr Isles were not comfortable with the situation which we had inherited from Clark Cotton whereby Mr Kotze and Mr Helberg were managing the Zambian business on behalf of Cargill RSA by remote control and it was certainly made clear by me to Mr Helberg that he would have to relocate to Chipata and take up employment there and as far as I am aware those very same discussions were taking place with Mr KotzeAnd what was Mr Helbergs reaction to the news that he was required to relocate to Chipata? Did he agree? --- He was not comfortable with that arrangement. He told me directly that he would not be prepared to relocate which I accepted and we came to an amicable agreement that he would move on from Cargill and subsequently we hired his replacement, which was referred to earlier, Mr Solomon Chirwa to be employed by Cargill Cotton Ginners Limited and to be stationed in ChipataWill it be correct to say that Mr Helberg was retrenched in January 2007? --- MLord, that would be correct</p> <p>You are now being handed a copy. That is Mr Kotzes letter of resignation. He gave 30 days written notice for his resignation as employee of Cargill RSA on 26 June 2007. Are you aware of the reason that led to his resignation? Or rather let me put it differently. Are you aware of the reason for his resignation? --- Yes, MLord, I am.What was it? --- MLord, Mr Kotze did not want to relocate away from South Africa to live in Lilongwe to perform his duties in Chipata despite a number of conversations taking place with Mr Kotze where he accepted that he would have to perform his duties based out of Chipata. In the end he decided that he would not see that through and he handed in his resignation as a result.It was put to Mr Kotze and he agreed with it, that because employees of Cargill RSA, which clearly would have included yourself and Mr Isles, Mr Helberg and Mr Kotze, provided management services on behalf of Cargill RSA to the defendant, the defendants nerve centre was at the Fourways address. What do you say about that? --- MLord, that would not be possible. As I mentioned earlier Cargill Cotton Ginners Limited employed several hundred people. It was a very extensive operation that required on hand management on the ground in Chipata. It would be impossible to manage that business remotely from South AfricaMr Kotze gave evidence that he procured inputs while he was at Fourways in the form of chemicals and the like, spares for the cotton gin for Cargill Zambia. Could you explain to his Lordship about the procurement operation? --- Cargill RSA, MLord, one of its businesses was to procure supplies for the other cotton operations in the region. So in addition to Cargill Cotton Ginners Limited in Zambia (it) would include Cargill Malawi, Cargill Zimbabwe and from time to time Cargill Tanzania. Now those Cargill RSA employees would act, would provide effectively a service to those other companies in the regions for which they were charged a fee and the reason they did that was because there was value to be gained from consolidating orders with large suppliers in South Africa for the region. It made sense for Cargill RSA to do that for which it received a feeMLord, Cargill RSA would purchase those supplies for its own account. It would be invoiced by the suppliers in South Africa. It woul...</p>

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