Contributed By Werksmans Attorneys
Save for shareholdings in private and public companies and ownership of fixed property, details of a party's assets are not publicly available. Public and private companies are obliged under Section 26 of the Companies Act 71 of 2008 to allow any party wishing to determine the ownership of the shares to inspect their share registers. Ownership of fixed property may be ascertained from publicly available online searches.
There are two types of provisional relief available to a party to obtain security for judgments to be obtained. The first is a temporary interdict to preserve the asset over which the plaintiff has a claim. The second is an anti-dissipation interdict over the property of a defendant who intends to dispose of assets to defeat a plaintiff's claim. There is an important difference between the two types of interdict. In the first type, the plaintiff has an interest in the property over which the interdict is sought. In the second case, the plaintiff has no proprietary interest in the property of the defendant.
The applicant for an anti-dissipation interdict must show that:
A default judgment may be granted where the defendant fails to act or adhere to the time limits prescribed by the rules of court after receiving notice of the process against him. For example, if a defendant fails to deliver a notice of intention to defend within the prescribed time period after service of the summons has been effected, the plaintiff is entitled to apply for default judgment. Other instances where default judgment may be obtained are:
Summary judgment is a procedure available to a plaintiff who, after receiving a plea in defence from the defendant, has made an application to court after verifying the cause of action and amount claimed, identifying any point of law relied upon by him/her and the facts upon which the plaintiff's claim is based, and explaining why the defence as pleaded by the defendant does not raise any triable issue. It aims to provide a plaintiff with prompt judgment, avoiding the expense associated with a full trial. Summary judgment may be applied for only in respect of the following claims:
Judgment on Confession
A defendant may at any time confess in whole or in part to the claim contained in the summons. The defendant must sign the confession personally, accompanied by an attorney, other than his own attorney, as witness or verify the defendant's signature by affidavit. The plaintiff may then apply in writing to court for judgment on the basis of the confession received.
South African High Courts are empowered to make declaratory orders on the rights of parties. A court, for example, may thus make a declaration on the meaning and effect of clauses in a contract.
South African courts may grant interdictory orders preventing certain conduct by parties. For example, an anti-dissipation interdict may be sought to prevent the disposal of identifiable assets by the defendant which has been claimed by the plaintiff. Interim interdictory relief may be granted where the court is satisfied that:
Final interdictory relief is granted where the court is satisfied that the applicant has:
Provisional sentence is a procedure for the relatively speedy enforcement of a liquid document (which is a document evidencing an unconditional acknowledgment of indebtedness).
The plaintiff asks for an order for payment of the amount reflected on the document as owing to the plaintiff. The defendant is given time within which to set out his/her defence on affidavit. The plaintiff has a right of reply.
If the defendant is not able to put up a defence in his/her affidavit a court will grant a provisional sentence judgment against him. The defendant is then obliged to pay the plaintiff the debt reflected in the document and is then entitled to enter into a principal case, which is a trial action at which oral evidence is led. The defendant can only enter into the principal case once he/she has paid the amount claimed. The plaintiff is obliged to provide security for the repayment of the amount to the defendant if the court ultimately dismisses the plaintiff's claim. If the defendant is able to put up a prima facie defence on affidavit, the court will order him/her to deliver a plea to the summons and the matter will proceed as an ordinary trial action.
The Constitutional Court of South Africa in Twee Jonge Gezellen Proprietary Limited and Another v The Land and Agricultural Development Bank of South Africa 2011 (3) SA 1 (CC) has ruled that the provisional sentence procedure may be inconsistent with the constitution where it does not give a court the power to refuse provisional sentence where the defence raised requires oral evidence and where the defendant is unable to pay the amount claimed to enter into the principal case. Thus the Constitutional Court has provided the courts with a discretion to refuse provisional sentence where the defendant can show on affidavit that he was unable to satisfy the judgment debt, an even balance of prospects of success in the main case and a reasonable prospect that oral evidence at the main trial may tip the balance of success in the defendant's favour. Plaintiffs seeking to claim money based on a liquid document should therefore be wary of using this procedure.
There are two types of final judgment which may be obtained at the end of trial proceedings:
The relief is final and binding, and must be complied with. If a defendant fails to comply with a judgment, various options are available to the plaintiff to enforce the judgment, which are discussed in 2.2 Enforcement of Domestic Judgments, below.
Execution of a Judgment
In the case of a judgment ordering the payment of money, a judgment creditor is entitled to execute the judgment against the defendant's property if the judgment debtor refuses to comply with the order. Execution entails the attachment of the defendant's property by the sheriff who may sell the property (be it movable, immovable or incorporeal property) by public auction to realise the money required to satisfy the judgment debt. The judgment creditor is entitled to execution regardless of a third party's right to the debtor's property even if that right arose prior to the judgment creditor's cause of action.
Rule 45 of the High Court Rules governs the execution of a judgment against the defendant's general and movable property. Debts owed to the debtor by a third party may be attached by a garnishee order. Here the sheriff attaches the debt and serves notice on the third party that it must make payment to the sheriff in the amount required to satisfy the judgment debt. However, if the sheriff is of the opinion that the garnishee process will cost more than the amount to be recovered, the sheriff may sell the debts in the same way as other movable property or cede the property at the nominal amount to the judgment creditor with his consent (Rule 45(12)(f)).
In terms of Section 65J of the Magistrates' Courts Act, an emolument attachment order can also be sought to order payment of a portion of the judgment debtor's salary to the judgment creditor until the judgment debt has been paid in full.
Rule 46 of the High Court Rules governs the attachment of and execution against immovable property. Because the right to housing is enshrined in the Constitution of the Republic of South Africa 1996, there are stringent requirements to be met to execute a judgment against a debtor's immovable property. No writ of execution against the immovable property of any judgment debtor may be issued unless the sheriff confirms that the person does not have sufficient movable property to satisfy the writ; or the immovable property subject to the writ has been declared to be specially executable by the court or judgment has been granted by the registrar of the court.
A court is required to establish whether the immovable property subject to execution is the primary residence of the judgment debtor and if so, it must consider alternative means by the judgment debtor of satisfying the judgment debt. The court may not order execution against the primary residence of a judgment debtor unless is it absolutely warranted. It is important to note that this provision only operates against execution of the primary residence of the judgment debtor, and additional immovable property such as a holiday home is not covered by this rule.
There is substantial case law dealing with sales in execution of a debtor's residence. For example, in Gundwana v Steko Development and others 2011 (3) SA 608 (CC), it was held to be unconstitutional for the Registrar of the High Court to order residential property, regardless of whether it is a primary residence, specially executable when ordering default judgment and that this competence lies exclusively with the court.
In Jaftha v Schoeman and others; Van Rooyen v Stoltz and others 2005 (2) SA 140 (CC), it was held that the court must consider all legally relevant circumstances in determining whether to declare the primary residence of a judgment debtor specially executable, such as:
The court may also consider any other factor relevant to the particular case. In considering the proportionality consideration, it was held in Gundwana that one cannot avoid execution if there is no other means to satisfy the judgment debt (625H-626B). Further considerations a court must take into account are:
Contempt of Court
In the case of a judgment ordering performance, if the party against whom judgment was given fails or refuses to comply with the order, the judgment creditor may bring an application to court to have the judgment debtor held in contempt of court and committed to jail. It was held in Consolidated Fish Distributors (Pty) Ltd v Zive 1968 1 All SA 64 (C) that the applicant must show that:
The respondent will then have an opportunity to raise a defence of bona fides or reasonable mistake.
An order for contempt of court is most often given in the form of a suspended sentence or a fine.
Where a judgment orders the payment of money and the debtor does not have sufficient realisable assets to satisfy the judgment debt, execution is not possible and the creditor may seek a sequestration order against a natural person in terms of the Insolvency Act 24 of 1936, or a liquidation order against a company in terms of the Companies Act 71 of 2008 or Close Corporations Act 69 of 1984. Upon the judgment debtor being declared insolvent, the judgment creditor will be able to use measures provided for in the Insolvency and Companies Acts to determine the location of the insolvent's property which can subsequently be used to satisfy the judgment debt. These measures are discussed in 2.4 Post-judgment Procedures for Determining Defendants' Assets, below. Once this property has been located, sections 26 to 31 of the Insolvency Act may be used to set aside and recover property improperly disposed of by the insolvent to satisfy the judgment debt. These provisions apply equally to companies that have been liquidated (Section 339 of the Companies Act 61 of 1973).
The typical costs involved in enforcing a judgment typically include attorney's fees, court charges for copying documents such as orders, and sheriff's fees. Attorney's fees are charged at a rate per hour for drafting the writ of execution, issuing it in court, for time spent instructing the sheriff of the High Court to execute the writ, and generally supervising the attachment and sale in execution of the attached goods belonging to the judgment debtor and will depend on the amount of work done and time spent by the attorney. Court charges are limited to charges for copies of the court order. The rules of court caps the fees chargeable for each copy of the court order at ZAR2 for every 100 words typed and ZAR1 for every A4 page photocopied. The maximum fees chargeable by the sheriff for the service of the court order (ZAR63); attempted service of the order (ZAR47); travel allowance (ZAR5 per km); for the execution against immovable property (ZAR186) and movable property (ZAR614.50) as well as various other services.
Length of Time
A final judgment is immediately enforceable. However, if execution is required, the length of time attempting to execute the judgment depends on the avenue taken in 2.2 Enforcement of Domestic Judgments, above.
Execution against movable property is the most efficient means. An attachment and enforcement application is prepared and the writ of execution, once obtained, must be served by the sheriff on the judgment debtor. Execution against the immovable property of the debtor is more complex, takes longer, and is a more costly process particularly in circumstances where the judgment debtor alleges that the property is his primary residence. The writ of execution in this instance must also be issued by the court. However, execution against immovable property may be more efficient where it provides a greater incentive for the judgment debtor to satisfy the judgment.
The commencement of sequestration or liquidation proceedings are the least efficient and most costly option, because various steps have to be taken in terms of the Insolvency and Companies Acts in commencing these proceedings as well as attempting to locate and recover the property owned by the insolvent company or insolvent individual. This option is also undesirable in that upon successful liquidation, winding-up or sequestration, the judgment creditor is placed in the same pool as other concurrent creditors of the judgment debtor.
No general provision is made for post-judgment proceedings to determine a defendant's assets. However, where a judgment debtor is deemed to be insolvent (such as in the instance of 2.2 Enforcement of Domestic Judgments, above), and the debtor is a natural person, the creditor may invoke Section 152 of the Insolvency Act 24 of 1936 to determine from the insolvent or any other person what assets are held by the insolvent and where they are located. If the debtor is a company, an enquiry under Section 417 of the Companies Act 61 of 1973 may be held to determine from a director or officer of the company, or anyone who is believed to be in possession of property of the company information relating to assets held by the company and where they are located.
In the case of a Magistrate's Court judgment, Section 65A of the Magistrates' Courts Act 32 of 1944 allows the court to hold an inquiry to determine the financial position of the judgment debtor, during which the location and extent of the judgment debtor's assets may be determined.
Once a final judgment is obtained, the judgment creditor has the right to execute (rather than enforce) it through the office of the sheriff, who is duly empowered by Rules 45 and 46. Judgments pending appeal are automatically suspended. Execution is thus stayed pending the appeal. If the judgment creditor seeks to execute the judgment nonetheless, the judgment debtor may oppose execution on this basis, and obtain an interdict preventing the judgment creditor from executing the judgment.
As stated above, any final judgment can be executed. However, should leave to appeal be granted, the judgment will be unenforceable pending the outcome of the appeal.
There is no register of domestic judgments in South Africa.
Foreign judgments are not directly enforceable in South Africa. Rather, they constitute a cause of action that will be enforced by South African courts if certain requirements are met. These requirements, affirmed in the leading case of Jones v Krok 1995 (1) SA 677 (A), are:
Generally, the common law governs the enforcement of foreign judgments in South Africa. The Enforcement of Foreign Civil Judgments Act 32 of 1988 is a legislative attempt to facilitate the enforcement of foreign judgments of designated countries by registration in the magistrates' courts in South Africa. However, since its enactment in 1988, only one country (Namibia) has been designated in the Act and there is no indication that further countries will be designated.
South Africa is not party to any international treaty or convention relating to the enforcement of foreign judgments.
In proceedings to enforce a foreign judgment in South Africa against a foreign defendant, a South African plaintiff is first required to attach an asset in South Africa belonging to the foreign defendant in order to establish the jurisdiction of the South African court in the enforcement proceedings. The asset required to be attached can be of any commercial value and need bear no relation to the quantum of the judgment to be enforced. The asset remains under attachment until the foreign judgment is recognised and enforced, thereby providing security for the plaintiff's claim.
Where in enforcement proceedings both the plaintiff and the defendant are foreign, in addition to the attachment of an asset of the defendant, the court will only have jurisdiction if there is a factor which links the matter to the South African court. A linking factor would be, for example, where the judgment is based on a contract, the fact that the contract was concluded or breached in South Africa. If there is no linking factor in such instance, the court will lack jurisdiction in enforcement proceedings.
South African courts adopt a uniform approach to the enforcement of foreign judgments. A foreign judgment will be enforced if the standard requirements for enforcement are met. A foreign default judgment will be enforced if the court is satisfied that it is final (in other words, if it cannot be altered by the court which granted it). Foreign judgments ordering specific performance are enforceable in South Africa if they can be given effect to in South Africa.
Generally if a South African court cannot give effect to a foreign judgment, it will not be enforced. Thus, a foreign judgment relating to immovable property outside South Africa cannot be enforced in South Africa because South African courts have no jurisdiction over actions relating to foreign immovable property.
As mentioned, one of the requirements for enforcement in South Africa is that the foreign judgment must be final in the sense that it cannot be altered by the court which gave it. Thus, foreign default judgments and foreign summary judgments will not be enforced if they are capable of being rescinded or varied by the court which gave them. Similarly, foreign temporary injunctions are not enforceable in South Africa because they are capable of alteration by the foreign court which gave them.
There are three methods of enforcing a foreign judgment in South Africa.
The first is by way of application proceedings which are brought where no dispute of fact (which would have to be resolved by means of oral evidence) is anticipated. These proceedings are brought on affidavit. The applicant deposes to a founding affidavit setting out all the material facts and showing that all the requirements for enforcement have been met. The defendant has an opportunity to oppose the application in an answering affidavit. The applicant has the final say by way of a replying affidavit which deals with issues raised by the defendant.
The second method of enforcement is by way of an ordinary trial action commenced with the issue of an ordinary summons to which particulars of the claim are attached. The particulars of claim set out the cause of action and must allege that all the requirements for enforcement have been met. The defendant is required to deliver a notice of intention to defend the action and is required to set out his/her defence in a plea admitting or denying the allegations in the particulars of claim. The issues in the trial are determined after the hearing of oral evidence.
The third method of enforcement is by way of provisional sentence action. Provisional sentence is a procedure for the relatively speedy enforcement of a liquid document (which is a document evidencing an unconditional acknowledgment of indebtedness; a foreign judgment is a liquid document for this purpose). The plaintiff is required to annex a certified copy of the foreign judgment to the provisional sentence summons and must allege the existence of a final judgment, that the defendant has failed to pay the judgment debt and that the requirements for enforcement have been met. The plaintiff asks for an order recognising and enforcing the judgment in South Africa. The defendant is given time within which to set out his/her defence on affidavit. The plaintiff has a right of reply.
If the defendant is not able to put up a defence in his/her affidavit a court will grant a provisional sentence judgment against him/her. The defendant is then obliged to pay the plaintiff the amount of the claim awarded by the foreign court and is then entitled to enter into a principal case, which is a trial action at which oral evidence is led. The defendant can only enter into the principal case once he/she has paid the judgment debt. The plaintiff is obliged to provide security for the repayment of the judgment debt to the defendant if the court ultimately refuses to enforce the foreign judgment. If the defendant is able to put up a facie defence or affidavit, the court will order him/her to deliver a plea to the summons and the matter will proceed as an ordinary trial action.
The Constitutional Court of South Africa in Twee Jonge Gezellen Proprietary Limited and Another v The Land and Agricultural Development Bank of South Africa 2011 (3) SA 1 (CC) has ruled that the provisional sentence procedure may be inconsistent with the constitution where it does not give a court the power to refuse provisional sentence where the defence raised requires oral evidence and where the defendant is unable to pay the judgment debt to enter into the principal case. Thus the Constitutional Court has provided the courts with a discretion to refuse provisional sentence where the defendant can show on affidavit that he/she was unable to satisfy the judgment debt, an even balance of prospects of success in the main case and a reasonable prospect that oral evidence at the main trial may tip the balance of success in the defendant's favour. Foreign judgment creditors should therefore be wary of using this procedure.
In all three methods of enforcement, the plaintiff is required to attach to the process a certified copy of the foreign judgment. If the foreign judgment is in a language other than English, it is required to be translated into English by a sworn translator.
The cost and time taken to enforce a foreign judgment in South Africa will depend largely on the method of enforcement chosen, and, in the case of length of time, the Division of the High Court in which enforcement is sought, each Division being subject to its own case load and practice directives.
Generally speaking, the cost and time factors will be affected by the complexity of the defences raised to enforcement.
The process to enforce a foreign judgment by way of application takes approximately five months.
Enforcement by way of trial action takes approximately 12 to 18 months.
Enforcement by way of provisional sentence summons takes about five months to the granting of provisional sentence and a further approximately eight months for the principal case to be determined.
Generally, enforcement by way of the application procedure is the quickest and most cost-effective option.
A South African court judgment recognising and enforcing a foreign judgment, is appealable with the leave of the court which granted it. The appeal process takes approximately 12 months.
The typical costs incurred in enforcement procedures are attorney's fees and disbursements, which includes advocates' fees (South Africa, like England, has a split bar and side bar). Costs of appeals include attorneys and advocates' fees and the cost of preparing the appeal record. Court fees are not levied in South Africa.
In enforcement proceedings, a South African court may not revisit the merits of the case giving rise to the foreign judgment. In other words, it may not sit as a court of appeal on the foreign judgment. A defendant is therefore generally limited in his defences to the question of whether the requirements for enforcement have been met.
As mentioned earlier, a South African court will only enforce a final foreign judgment. A foreign judgment is final for enforcement purposes if it is not subject to variation by the foreign court which gave it. In the case of Jones v Krok 1995 (2) SA 30 (A) the defendant in opposing enforcement of a Californian judgment argued that the California judgment was not final because it was pending appeal in California. The Appeal Court held that:
One of the most common defences to enforcement is that the foreign court lacked international competence, or jurisdiction. In advancing this defence, a defendant must show that:
Another common defence is that the foreign judgment falls foul of the Protection of Businesses Act 99 of 1978. The Act requires the consent of the Minister of Trade and Industry for the enforcement of foreign judgments which arose from an act or transaction which is connected with the mining, production, importation, exportation, refinement, possession, use or sale of or ownership of any matter or material, of whatever nature, whether within, outside, into or from South Africa. The wide language of the Act seemingly embraces every foreign judgment and has been fertile ground for defendants seeking to oppose enforcement. South African courts, however, have interpreted the Act very narrowly and have restricted its application to acts or transactions connected with raw materials or substances, and thus in all other instances ministerial consent is not required.
Lack of notice of the proceedings giving rise to the judgment is a valid defence to enforcement and is regarded as contrary to public policy in South Africa.
Foreign punitive awards were long regarded by the South African courts as being contrary to South African public policy. In the case of Jones v Krok 1996 (1) SA 504 (T), the defendant opposed the enforcement in South Africa of a punitive damages award granted against him in the amount of USD12 million by the Superior Court of the State of California for the County of Los Angeles on the basis that to enforce it would be contrary to South African public policy. The court held that the mere fact that awards are made on a basis not recognised in South Africa does not entail that they are necessarily contrary to South African public policy and further that whether a judgment is contrary to public policy depends largely upon the facts of each case. The court held in this case that the punitive damages were equal to the capital amount claimed by the plaintiff and to enforce them would be contrary to South African public policy.
A defence based on invalid service in the foreign jurisdiction is unlikely to succeed if nevertheless the defendant received adequate notice of the proceedings against him.
A defendant may raise as a valid defence the fact that the claim to enforcement has prescribed.
In terms of Section 11(d) of the Prescription Act 68 of 1969, claims are extinguished by prescription three years after they arise. According to the principles of South African private international law, matters of procedure are governed by the domestic law of the country in which the relevant proceedings are instituted (the lex fori). Substantive law matters, however, are governed by the law applying to the underlying transaction (the lex causae). In South Africa, prescription is regarded as substantive law. Therefore, a South African court seized with a question of whether a claim to the enforcement of a foreign judgment has prescribed must apply the relevant foreign law. Thus, if the claim to enforcement has prescribed under the foreign law, a South African court will not enforce the foreign judgment.
As mentioned above, it is not a defence to enforcement that the foreign default judgment was obtained without representation by the defendant. It is sufficient for enforcement that the defendant receive notice of the default proceedings against him in the foreign jurisdiction.
Domestic arbitral awards may be made an order of court in terms of Section 31(1) of the Arbitration Act 42 of 1965. Application for such an order is made to a South African court of competent jurisdiction by any party after notice to the other parties. Once an award has been made an order of court it may, in terms of Section 31(3) of the Act, be enforced in the same manner as any judgment or order to the same effect.
With regard to the enforcement of foreign arbitral awards, South Africa acceded to the New York Convention on the Recognition and Enforcement of Foreign Arbitral Awards without reservation on 3 May 1976. The New York Convention is given effect to by the International Arbitration Act 15 of 2017, which is based on the Model Law on International Commercial Arbitration as adopted by the United Nations Commission on International Trade Law (UNCITRAL). Section 18 of the International Arbitration Act provides the limited grounds on which a court may refuse to recognise or enforce a foreign arbitral award. A court may only refuse to recognise or enforce a foreign arbitral award if it finds that:
South African courts adopt a uniform approach to the enforcement of foreign arbitral awards.
Any foreign arbitral award that is contrary to South African public policy will not be enforced. Public policy is a broad concept and embraces breach of the rules of natural justice.
Enforcement of a foreign arbitral award is by way of application to court on affidavit. The applicant is required in a founding affidavit to present all the material facts relevant to the enforcement of the award, including the fact showing that all the requirements for enforcement are met.
In terms of Section 17 of the International Arbitration Act, the party seeking recognition and enforcement of a foreign arbitral award must produce to the court the original award, or a certified copy, and the original arbitration agreement, or a certified copy, in terms of which the award was made. If the award is in a language other than English, it is required to be translated into English by a sworn translator.
If the foreign arbitral award is sought to be enforced in South Africa against a foreign defendant, the party seeking enforcement is required first to attach an asset in South Africa belonging to the foreign defendant in order to establish the jurisdiction of the South African court in the enforcement proceedings. The asset to be attached must be of some commercial value and its value need bear no relation to the size of the amount sought to be enforced in the arbitral award. The asset will remain under attachment until the award has been recognised and enforced, thereby providing security for the party seeking enforcement.
The time taken to enforce a foreign arbitral award will depend largely on the particular division of the High Court in which enforcement is sought, each division being subject to its own case load and practised directives.
Generally speaking, the cost and time factors will be affected by the complexity of the defences raised to enforcement. The enforcement process takes approximately five months. An appeal, with leave of the court, will take approximately 12 months.
The typical costs incurred in enforcing a foreign arbitral award include attorney's fees and advocates' fees (South Africa, like England, has a split bar and side bar).
The grounds on which a defendant may oppose enforcement are limited in terms of Section 18 of the International Arbitration Act which give the limited grounds on which a court may refuse to enforce a foreign arbitral award. These grounds are discussed in 4.1 Legal Issues Concerning Enforcement of Arbitral Awards, above. Thus, in terms of Section 18(1)(b)(vi), where a plaintiff seeks to enforce an award which is subject to appeal, the defendant can oppose it on the basis that it is not yet binding on the parties.
Where a foreign arbitral award is made an order of court it becomes a judgment of the South African court and may be enforced as such. A party dissatisfied with the judgment enforcing the foreign arbitral award may appeal it, with the leave of the court.
A party may raise as a defence to enforcement the fact that the claim to enforcement has prescribed.
In terms of Section 11(d) of the Prescription Act 68 of 1969, claims are extinguished by prescription three years after they arise. According to the principles of South African Private International law, matters of procedure are governed by the domestic law of the country in which the relevant proceedings are instituted (lex fori). Substantive law matters, however, are governed by the law applying to the underlying transaction (the lex causae). In South Africa, prescription is regarded as substantive law. Therefore a South African court seized with a question of whether a claim to the enforcement of the foreign arbitral award has prescribed must apply the relevant foreign law. Thus, if the claim to enforcement has prescribed under the foreign law, a South African court will not enforce the foreign arbitral award.