Powell and Another v Insolvent Estate D. Lidchi (A.368.97) [1998] NAHC 2 (18 February 1998);

Group

Full judgment





POWELL. OLIVER. N.O. & 1 OTHER VERSUS INSOLVENT ESTATE D. LIDCHT




STRYDOM, J.P.


INSOLVENCY:

Vesting of movable property in trust1;uch property outside jurisdiction of Court where person declared insolvent - necessity to show that Court granting order of insolvency was Court of insolvent's domicile -Domicile - what factors Court should consider to determine domicile.

CASE NO. A.368/97




1998/02/18

CASE NO. A 368/97

IN THE HIGH COURT OF NAMIBIA




In the matter between



POWELL, OLIVER, N.O. FIRST APPLLICANT

SIMON, NORMAN, N.O. / SECOND APPLICANT




versus




INSOLVENT ESTATE D. LIDCHI RESPONDENT




CORAM: STRYDOM, J.P.



Heard on: 1997.12.09

Delivered on: 1998.02.18




JUDGMENT:

STRYDOM. J.P.: The two Applicants were appointed as joint provisional trustees in the insolvent estate of Mrs Lidchi. For sake of convenience I shall further herein refer to Mrs Lidchi as the Respondent. The estate of the Respondent was provisionally sequestrated in Johannesburg, Republic of South Africa, on 5 May, 1997. This provisional order was confirmed and the estate of the Respondent placed under final sequestration by Claasen, J, on 10 June, 1997. The granting of both these orders were opposed by the Respondent.

On the 8th September, 1997 the Applicants obtained, on a basis of urgency and ex parte, the following order from Teek, J, in the High Court of Namibia, namely -



" 1. That this matter is declared one of urgency and that the usual forms
and time periods laid down by the Rules of this Honourable Court are
dispensed with. <
,

  1. That the appointment of the Applicants as provisional trustees in the insolvent estate of Diane Lidchi ('the insolvent") is hereby recognised, and they are hereby granted the powers bestowed upon them by virtue of section 18(3) of the Insolvency Act, 24 of 1936 (S.A.) ("the Insolvency Act") made applicable in Namibia by virtue of Act 16 of 1943 (Namibia) and in particular authorising the bringing of this application and any further proceedings which flow from it.

  2. That such recognition and authority is hereby extended to the final trustees of the said estate, upon their appointment as such.

  3. That a Rule Nisi do hereby issue calling upon the Insolvent and Clara Kahan in their personal capacities and the Insolvent, Clara Kahan and Farrel Wainer in their capacities as trustees of the Clamodianel Trust and all other interested parties to show cause on Friday 31st October, 1997 why a final order should not be issued in the following terms:

4.1' Declaring that all movable property, including the shares registered in the name of Diane Lidchi in the share registers of Offshore Diamonds (SWA) Limited ("Offshore Diamonds"), Diamond Dredging and Mining CO. (SWA) Limited ("Diamond Dredging"), Moly Copper Mining and Exploration Company (SWA) Limited ("Moly Copper") and Lorelei Copper Mines Limited ("Lorelei") vest in the Applicants in their capacity aforesaid;




4.2 Declaring that the immovable property situate at Erf 266

1

and Erf 267, Luderitz vests in the Applicants and in their capacity aforesaid;

  1. Declaring that the purported resolutions of the boards of directors of Offshore Diamonds, Diamond Dredging, Moly Copper and Lorelei amexed to the founding affidavit as Annexures "OMP.14A" to "OMP.14D" are invalid and null and void and of no force or effect;

  2. Declaring that the costs of this application be costs in the administration in the insolvent estate of the Insolvent, save in the event of any party opposing this application in which event that this Honourable Court make such order in regard to the costs as it deems meet.



5. That an interim interdict is hereby granted pending the final
determination of this application that the Insolvent, Clara
Kahan, and the Clamodianel Trust are interdicted and restrained
from in any way whatever^

  1. directly or indirectly dealing in any manner with, alienating, or disposing of, encumbering or exercising any right whatever attaching to the shares in Offshore Diamonds, Diamond Dredging, Moly Copper and Lorelei, registered in the name of the Insolvent;

  2. alienating, disposing or encumbering or otherwise dealing with the immovable property situated at Erf 266 and 267, Luderitz;

  3. from in any way whatever implementing or giving affect to any of the resolutions more fully referred to in prayer 4.3 above.



6. That the costs of this application be reserved for determination
on the return date of the said
Rule Nisi.

7. That service of the Rule Nisi, and the Notice of Motion herein and the founding affidavit herein together with all annexures thereto be served on:

  1. the Insolvent at 2 Upper Park Drive, Forest Town, Johannesburg; f

  2. Clara Kahan at 2 Upper Park Drive, Forest Town, Johannesburg;

  3. Mr Farrel Wainer at c/o Fisher Hoffman Sithole, FHS i

House, 5 Girton Road, Parktown, Johannesburg.

  1. Offshore Diamonds at N.G. Church Centre, Windhoek Namibia;

  2. Diamond Dredging at N.G. Church Centre, Windhoek, Namibia;

  3. Moly Copper at N.G. Church Centre, Windhoek, Namibia;

  4. Lorelei at N.G. Church Centre, Windhoek Namibia.



9



10. That in addition to the service hereinbefore provided for, the Rule Nisi be published iiv a local newspaper circulating in Windhoek and Luderitz, Namibia and in a local newspaper circulating in Johannesburg in the Republic of South Africa."



The matter was not ready for hearing on the 31st October, 1997 and the Rule was further extended. Because of the effect of the Order and the urgency involved the matter came up for hearing on 9 December, 1997. Applicants were represented by Mr Rubens, assisted by Mr. Smuts. The Respondent was represented by Mr. Bregman.




1. BACKGROUND:



Because of the way in which the Respondent was allowed to frame her answering affidavit the application degenerated into another battle in the war between the Respondent, Mrs. Lidchi, and her brother, Mr. Kahan, (Kahan), which has now been waging for some years. From the documents it is clear that the Respondent and Kahan inherited shares from their father in a number of Companies. In a diagram, "OMP.10", a schematic exposition is given of the various Companies and the shareholding thereof. I will herein only deal with the shareholding in those Companies affected by the Court Order.

According to "OMP.10" Offshore Diamonds (SWA) Limited (Offshore Diamonds) is the parent holding company in the group with a total issued share capital of 5 393 000 shares. Kahan and his family (being himself, his wife and children) (the Kahan Group) are registered shareholders of 43,9% of the total issued share capital of Offshore Diamonds. The Respondent and her family (being herself and her daughter)(the Lidchi Group) are registered owners of 49,47% of the total issued share capital of Offshore Diamonds. I am mindful of the fact that Respondent alleged that she is holding her shares in Offshore Diamonds and other companies as a nominee for her mother, Clara Kahan, and will deal later more fully with this aspect.



The total issued share capital of Diamond Dredging & Mining Co. (SWA) Limited (Diamond Dredging) is 209608 shares. Offshore Diamonds is the registered owner of 93,41% of the shares whilst Clara Kahan and others own 1.15% of the said issued shares. According to "MPO.10" the Lidchi Group are the registered owners of 3,15% of the total issued share capital of Diamond Dredging of which the Respondent is the registered owner of 3202 shares. The Kahan Group are the registered owners of the balance of the said shares.



The total issued share capital according to "OMP.10" in Moly Copper Mining & Exploration Company (SWA) Ltd (Moly Copper) is 450 000 shares. The Lidchi group own 4.44% of the total share capital in Moly Copper of which 13 332 shares are the property of the Respondent. The balance of the shares are held by the Kahan Group and other outside shareholders.

Moly Copper is also the registered owner of a 100% of the total issued share capital
in various other private companies, as well as 99,65% of the issued shares in Lorelei
Copper Mines Limited (Lorelei) with Kahan. The Respondent and others account for
the balance of the registered shareholding. It is further alleged that the Respondent
personally owns ,1245% of the total issued share capital in Lorelei, amounting to 747
shares.
/



The companies Offshore Diamonds, Diamond Dredging, Moly Copper and Lorelei are

all companies registered and incorporated in Namibia. These four companies have as

their transfer secretaries, Welwitschia Nominees (Pty) Limited at the offices of G.J.

van Schalkwyk & Company, at N.G. Church Centre, Windhoek.

1


As previously set out the Applicants alleged that the shares in the various companies were inherited by the Respondent and Kahan on the death of their father in 1964. In this regard it is the contention of the Respondent that these shares were only held by them as nominees of their mother, Clara Kahan. From the documents filed it seems that dissension and head-on collisions soured the relationship between Respondent and Kahan. Each party blamed the other for the development of this situation.



During 1982 the parties entered into a written shareholders, or joint resolution agreement, in terms whereof it was agreed to exercise joint control in certain affected companies as defined by the agreement. See Annexure "OMP.9A". In regard to such companies unanimity was required for all resolutions of shareholders and directors and no valid or effective resolution could be passed unless it was unanimous. According to the Applicants, Offshore Diamonds, Diamond Dredging, Moly Copper and Lorelei were, and still are, affected companies. This is however denied by the Respondent and it is further denied by her that the so-called shareholders or joint resolution agreement is still in existence.



According to Kahan the relationship between himself and the Respondent came to a head during 1985 to such an extent that a deadlock ensued between them in the administration of the companies. As previously stated each one blamed the other for this situation. How it came about is not really relevant to these proceedings. However it led to Kahan initiating winding up proceedings in regard to certain companies, including Offshore Diamonds. In order to solve the impasse the parties agreed to refer their disputes to arbitration. According to the Applicants the arbitration proceeded in three phases. There was first a hearing and award in Kahan's favour by a single arbitrator, Adv. H Slomowitz S.C. Thereafter an appeal was lodged which was heard by a panel of three arbitrators. The appeal was upheld and the matter was referred for the hearing of viva voce evidence again before a panel of three arbitrators consisting of a retired Judge, the Honourable Mr. Justice Leon, Advocate M.D. Kuper SC and Advocate P.A. Solomon S.C. A final award was handed down by them on 17 March 1995 upholding the contentions of Kahan. What is of some relevance to the present proceedings is that the arbitrators rejected Respondents contention that the shareholders or joint resolution agreement was cancelled and that she as majority shareholder had control of the companies. The Respondent withdrew from the final hearing and her attitude is that the proceedings and award have no relevance and, as previously stated, the shareholders or joint resolution agreement, for various reasons, no longer govern the relationship between the parties vis-a-vis their control and administration of the companies involved.



The Applicants stated that the dispute between the Respondent and Kahan was settled during May 1995 as follows:

(i) By payment of R21 million by theJRespondent to Kahan which had to
be guaranteed within a specific time; and



(ii) by the delivery of Kahan of his shares and interests in the group of
companies to the Respondent.



It is common cause that the Respondent failed to make payment of the amount of R21 million or furnished a guarantee within the time stipulated. This lead to Kahan obtaining judgment against the Respondent in the Witwatersrand Local Division of the Supreme Court of South Africa for payment of the amount of R21 million against delivery of his shares and interests in the companies. Steps taken to obtain leave to appeal against this judgment were unsuccessful.



Pursuant to the judgment a writ of execution was issued and certain movable property was attached. Steps taken by the Respondent to interdict the sale in execution and any further attachment were dismissed. As the proceeds of the sale were insufficient to pay the judgment debt, Kahan instituted sequestration proceedings which ended in the final sequestration of the estate of the Respondent on 10 June, 1997.

From the papers filed it seems that the Respondent vigorously opposed each and every one of the proceedings referred to herein before. At this stage there are still appeals or applications for leave to appeal pending in regard to some of the orders made. That includes the final order of sequestration in regard of which a notice for leave to appeal has been lodged by the Respondent.



On the 22nd June, 1997, i.e. after the final sequestration of the Respondent's estate, meetings of the boards of directors of Offshore Daimonds, Daimond Dredging, Moly Copper and Lorelei were held in Windhoek. These meetings were attended by the Lidchi group and directors nominated by them. No notice of these meetings were given to the Kahan group. These resolutions are set out in Annexures "OMP.14A" to

"

OMP.14D.

M




The more important of these resolutions are -

1.

That Clara Kahan is authorized to act as Chairman of the group and to


pursue or enter into litigation;

2.

To authorize Clara Kahan to investigate the books of account and


records of subsidiaries, and to employ the services of forensic


accountants;




To authorize the representatives of the company on the board of the


property companies, who are subsidiaries of Moly Copper, to take steps

to ensure that a resolution is passed to arrange for the immovable properties to be realized and to take the necessary steps to advertise the properties for sale.

  1. To provide that without the written approval of Clara Kahan, or her alternate, no new signatories be permitted to operate any of the bank accounts of the companies; and

  2. That all money of any of the subsidiaries of the companies be paid into authorized bank accounts and that no money be withheld from being so deposited.

1 i

It was pointed out by the Applicants that Clara Kahan was a woman of 87 years with frail health and it was alleged that she was only set up to do the Respondent's bidding. The Applicants further stated that because of their entitlement to the shares vesting in the Respondent, any action precipitously taken at the instance of the Respondent, could diminish the value of their shareholding. The Applicants pointed out, that according to Kahan, the value of the properties runs into several million rand.



The Respondent in turn pointed out that Kahan and his son exercised unilateral control over certain of the companies and have availed themselves frequently of funds and overdraft facilities regarding these companies. As far as the joint shareholders agreement was concerned the Respondent stated that it was no longer in existence. The Respondent also referred to other alleged irregularities committed by Kahan and

further stated that the authority given to Clara Kahan was taken at properly constituted meetings of boards of directors operating in terms of the articles and memoranda of each of the companies.



The Respondent therefore did not dispute that the resolutions were taken and that they were so taken at board meetings of which the Kahan group had no notice and were not present. The attitude of the Respondent was that she was no longer bound by the joint shareholders agreement and that the resolutions were validly taken according to the articles and memoranda of the respective companies. It was further also denied by the Respondent that the Applicants had made out any basis on which to attack the resolutions.

1


In her answering affidavit the Respondent further set out various grounds on which she alleged maladministration of her estate by the Applicants and it was further alleged that the Applicants identified themselves with Kahan notwithstanding a clear conflict between their interests as co-trustees in the estate and the interests of Kahan. The Respondent further intimated that she intended to bring an application for the removal of the Applicants as co-trustees in her estate.




2. POINTS IN LIMINE



In his heads of argument, and whilst addressing the Court, Mr Bregman raised certain points in limine which, if successful, may lead to the dismissal of the application or a postponement thereof in order to give possible interested parties an opportunity to be joined in the application. It will be convenient to deal with those points at the outset.




2.1. THE APPLICATION BROUGHT WAS MISCONCEIVED



Mr. Bregman submitted that there was no necessity for the Applicants to have brought the application. His argument was that the Applicants, being provisional co-trustees in the insolvent estate, brought the application on the basis that the Respondent was domiciled in South Africa. In that event they would nomine officii take control of all movable assets of the Respondent that

there may be. All the shares are movable assets which would thus come under

i

the control of the Applicants. This would have entitled the Applicants to sit on shareholders and other meetings of the companies. Together with Kahan they could therefore control the companies and thereby undo all those resolutions which they are now complaining about.



However the Respondent vigorously opposed the application by the Applicants. This she did in an affidavit which, together with documents attached, comprised some 300 pages. In this affidavit her main defence was that, at the time that she was sequestrated in South Africa, that country was not her country of domicile. Respondent further alleged that all the movable property in Namibia, namely her shares to which the Applicants lay claim, did not belong to her but was in fact the property of her mother Clara Kahan, and that she was therefore only holding these shares in name.

In my opinion, and that was also the attitude of both Counsel, these defences go to the root of the Applicant's claims and if either should succeed it would be the end of the Application. Both these defences were foreshadowed by the Applicants in their founding affidavit. And, as previously pointed out, these defences were not only raised by the Respondent but was pursued with vigour and energy. The Applicants, aware of Jhe contentions of the Respondent regarding her domicile and that she was holding the shares only as a nominee for Clara Kahan, were, as was submitted by Mr. Rubens, entitled, and in my opinion compelled to approach this Court for a declaratory order. That is precisely what they did and I therefor do not agree with Mr Bregman's submission that the Application was misconceived. In any event although it is strictly not necessary for trustees, laying claim to movable assets in a Country other than the Country of the insolvent's domicile where the sequestration was obtained, for recognition, Berman, J, pointed out that such an application is invariably made and the need for formal recognition has now been elevated into a principle. See Ex Parte Palmer N.O: In re Hahn. 1993 (3) SA 359 (CPD) at 362 E.




2.2 JOINDER



Mr. Bregman furthermore submitted that the Court should dismiss the Application on the basis that the four companies, Offshore Diamonds, Diamond Dredging, Moly Copper and Lorelei were interested parties in these proceedings but that the Applicants have failed to join them. The main thrust of Mr. Bregman's argument was that the Court is, inter alia, asked to interdict these companies from carrying out certain resolutions and, unless they were joined as parties, any order of this Court in this regard would not be effective and would not bind these companies. It was however conceded by Mr. Bregman that the companies were aware of the proceedings and so were the Lidchi and Kahan groups. Counsel submitted however that this was not enough.




Mr. Rubens, on the other hand, pointed out that the Notice of Motion and


supporting documents as well as the Order of Court were all, in terms of the

Order, served on the companies. Furthermore that all the interested parties 1

made affidavits one way or the other and that the Respondent stated in her answering affidavit that she opposed the relief sought in her personal capacity as well as in her capacity as a director and shareholder of the affected companies. In this regard Mr. Rubens referred the Court to the case of Wholesale Provision Supplies CC v Exim International CC and Another, 1995 (1) SA 150 (T.P.D.).



It is undoubtedly so that parties who have a real and substantial interest in relief asked should be before the Court and that the Court could mero motu take such point even though the parties themselves did not take it (See Amalgated Engineering Union vs Minister of Labour 1949 (3) SA 637 (A)) Mahomed, J (as he then was) pointed out in the Wholesale Provision Supplies -case, supra, at p 158 D-G, that this rule was not absolute and that a Court must have regard also to the circumstances of a particular case. After reviewing a number of cases the learned Judge stated as follows:



"These observations clearly show, in my view, that the rule which seeks to avoid orders which might affect third parties in proceedings between other parties is hot simply a mechanical or technical rule which must ritualistically be applied, regardless of the circumstances of the case. For this reason the Court in Smith v Conelect 1987 (3) SA 689 (W) held that, where the third party has waived his right to be joined, the failure to join him as a third party was no bar when ordering the


proceedings which might affect him, because he was not prejudiced in

i

these circumstances."



In the present case the document initiating the process were served on the companies. The companies act through their directors. All those directors representing the Lidchi group deposed to affidavits in support of the Respondent, Mrs. Lidchi. The Kahan group, as represented by Kahan and his son Phillip, made affidavits in support of the Applicants. The Respondent clearly states in her answering affidavit that she also represents the affected companies as director and she amply and vigorously put their interests and _ views before the Court. As was submitted by Mr. Rubens there is nothing more that can be placed before the Court. There is in my opinion also no suggestion in the documents filed before the Court to suggest that the various companies had an interest adverse to the interests of the Respondent. (See the

Amalgated Engineering Union-case, supra, p.649).



As was stated by the learned Judge in the Wholesale Provision Suplies-case, supra, at 1581, to deny the applicants relief under these circumstances if they are entitled to it just because the companies were not formally joined as a party would be without justification in law and would in no way advance the interests of justice.




2.3 EX PARTE APPLICATION




In separate heads of argument Mr. Bregman, without arguing it, submitted that

1

the Court should dismiss the Application because it was brought ex parte and without notice to the Respondent. Counsel submitted that in those circumstances there was a duty on the Applicants to act bona fide and to place all relevant facts before the Court. (See Schlesinger v Schlesinger 1979 (4) SA 342 (W) at 353 C-D and Hall and Another v Hevns and Others, 1991 (1) SA 381 (C) at 397C).



Various grouds were mentioned in the heads such as that the Applicants failed to inform the Court of the prospects of success of the various pending applications for appeal launched by the Respondent; the shareholding disputes; the prejudice to the companies if the resolutions taken are not being give effect to; the relationship between Kahan and Applicants and their common attorney and their possible removal as provisional trustees as a result thereof; their maladministration of the estate and intended removal as a result thereof etc.



With due respect to Counsel I do not think that there is any substance in these submissions. The applicants properly placed all relevant material facts before the Court. They informed the Court of what orders or judgments applications of appeal were launched. As provisional trustees their duty was to secure and protect the interest of creditors and this was the purpose of this application. They informed the Court of the disputes regarding the companies' shares. After all that was the reason for the application. That the Applicants are in cahoots with Kahan or his attorney, or that they did not properly administer the

estate, were denied by them.

1 r

Of more substance are Counsel's submissions concerning the fact that the ex parte order, obtained before Teek, J, contains in two respects final orders to which the Respondent had no opportunity to be heard. This is the issue of urgency and the recognition of the Applicants as provisional trustees in the estate. Regarding the first point Mr. Bregman stated that the application was only launched months after the resolutions complained of were already taken and minuted. In this regard it was explained by the Applicants that the Kahan group had no notice of these board meetings. When Kahan became aware thereof he immediately informed the Applicants whereupon these proceedings were prepared and launched. I have previously set out the nature of the resolutions taken. That these resolutions were taken is common cause, and also that no notice was given to the Kahan group. As will become apparent later

I am of the opinion that the Applicants had good reason to suspect that these resolutions were calculated to, and enabled the Respondent to affect the interests of creditors of the Respondent's estate adversely. In my opinion the matter was urgent and Applicants were entitled to approach the Court on that basis.



In regard to the second point I have already referred to the fact that strictly speaking it was not necessary for the Applicants to ask the Court for recognition in order to be vested with the movable assets of the Respondent. This happened by operation of law. (See Bekker NO v Kotze and Others,


1996 (4) SA 1293 (NmHC) at 1295 I - 1296 C). As the Applicants do not ask

i

the Court to be also vested with any immovable property of the Respondent such recognition was, as regards the present application, not of great significance. More so also if this Court should decide that the Respondent was not domiciled in the Republic of S.A. at the time of the sequestration, such recognition will be a brutum fulmen.




THE MERITS OF THE APPLICATION




3.1 THE LAW



The parties seem to me to be ad idem in regard to the law applicable to an application of this nature. It was accepted that at common law a sequestration order granted by the Court of the debtors domicile ipso facto divests an insolvent of his movable property wherever situated. However a sequestration order granted by any other Court has per se no effect on a debtor's assets, whether movable or immovable, situated outside jurisdiction of that Court. (See Mars: The Law of Insolvency 8th ed at p. 177; Viljoen v. Venter NO 1981 (2) SA 152 (w) and the Bekker-case, supra,).


f

From this it follows therefore that if the Respondent was domiciled in South Africa where the sequestration order was granted all movable property of the Respondent situated in Namibia would vest in the Applicants.




3.2 DOMICILE OF THE RESPONDENT

1

i

The question of where the Respondent was domiciled at the time of the sequestration goes to the heart of the Application. The Respondent alleged in her answering affidavit that she was at the time, and still is, domiciled in Namibia. To substantiate this claim the Court was referred to the fact that she was born in Namibia and obtained citizenship of this Country soon after it became independent. Furthermore that she has immovable assets in Namibia and that her business, regarding various companies, are in Namibia. The Respondent also renders tax returns and pays tax in Namibia. It was further pointed out that when in Namibia the Respondent stayed in a hotel and when in Johannesburg she stays at the house at 2 Upper Park Drive, Forest Town. Shortly before the application for sequestration was launched the house in which the Respondent resided was transferred to her daughter, according to

Respondent, pursuant to an agreement of sale which was entered into in 1992.



The Applicants alleged that according to Kahan the Respondent was born in Namibia on 8 February, 1931. Some two years later the family moved to South Africa where they first settled in Port Elizabeth and then, since 1936, in Johannesburg where Respondent still resides to date hereof. In certain affidavits in proceedings between Kahan and the Respondent, she stated that she resides in Namibia or gave a Namibian address. This address was however always that of van Schalkwyk's office. According to Respondent she always resided at the Furstenhof Hotel when she was in Namibia and where she was always addressed on her arrival with the words "Welcome home Mrs. Lidchi." The Respondent also stated inter alia "That Namibia is my place of domicile and it is where I regard my permanent home to be."



It was first of all submitted by Mr. Bregman that there was a clear dispute of fact between the parties and that for that reason alone the matter cannot be resolved by the Court on affidavit. Further referring to the abovementioned factors Counsel submitted that it was clearly demonstrated that the "centre of gravity" of the Respondent was in Namibia. It was submitted that a distinction should be drawn between residence and domicile. A person can be resident in a country despite a tempory absence and may have two or more residences. Residence can mean more and less than domicile and Counsel referred the Court to Zwvssig v Zwyssig, 1997 (2) SA 467 at 470. The Court was also referred to Pollak: 2nd Ed p 42/43 and Lawsa, first reissue, Vol. 2 p 320 pa

Mr. Rubens denied the proposition that in general a person would have no place of residence in a country and still be domiciled there. With reference to Pollak, op. cit, Mr. Rubens submitted that when a person is domiciled in a State he usually also has his home there., Pollak, p 43, states that it is well possible for a person to be domiciled in a state without having a home there but further states that that is an unusual case. Mr. Rubens also referred the Court to Forsythe : 2nd Ed.: Private International Law, pill.



I cannot agree with Mr. Bregman that there is a clear dispute made out on the papers or that it is uncertain whether viva voce evidence might not disturb the balance of probabilities wherever they may lie in terms of the documents. (See Trustbank van Afrika v Western Bank en Andere. 1978 (4) S.A. 281 at 299 H).



The approach of a Court to this question seems to have been set out by Voet Commentaruis 5:1:98 where the following is stated:

"Whether a place or country is a man's home, is a question of fact.

Whether a place or country is a man's domicile, is a question of mixed

fact and law, or rather, of the inference drawn by law from certain facts

, "quoted in Lawsa, op cit, p 332 footnote 2.




There would in my opinion have been a dispute of fact if one or other of the facts mentioned before, and from which the Court is asked to draw its inference, were denied, but that is not the case. There is no dispute between the parties as to what facts the Court should consider in coming to its conclusion. What is vehemently disputed is the inference which the Court is asked to draw from those facts. I cannot see that evidence one way or the other could add or subtract from the factual allegations made in the affidavits, and which is in any event not in dispute. If I am wrong in this regard then, from what follows, it is in any event clear that I am of the opinion that such dispute is not genuine and that the probabilities overwhelmingly support the contention of the Applicants.



i

In my opinion it is clear that generally speaking domicile and the place of a person's residence are closely connected. There are of course exceptions. See in this regard Lawsa, op cit, p 321, Forsythe op. cit, p 111, Pollak, op cit p 42, 43.



Whether residence is accompanied by the necessary animus manendi is to be inferred from the facts. Further it must be accepted that it is always free to the propositus to choose his domiciluim.



Looking at the facts placed before the Court it seems to me that only one of the facts mentioned by Mr. Bregman, from which the Court is asked to draw its inference in favour of the Respondent, existed as an act of volition, if I may put it so, by the Respondent. That is the fact that she took up Namibian citizenship which' she was entitled to do as she was born in Namibia. The immovable property that she owned in Namibia she inherited. Those are in any event vacant plots situated in Luderitz. What interest the Respondent may have in the companies presently registered in Namibia, she also inherited or, on her version, she is only holding the shares in those companies as a nominee for her mother, Clara Kahan. As these companies are Namibian based and may be a source of income, tax returns and the payment of tax must be rendered and paid to Namibia. In this regard the Court was not informed whether she also pays tax to the Government of South Africa or not.



There is further the repeated claims by the Respondent that she always regarded Namibia as her permanent residence. Although a factor to be considered the fact remains that the Respondent is now resident in South Africa, and more particularly Johannesburg, for the past 60 years, where she also had her residence, at least up to 1992. Coupled with this is the fact that there is no place in Namibia which the Respondent can call home or where she resides. The fact that she in this regard had invariably made use of van Schalkwyk's office address demonstrates and underscores the fact that she is not resident here and has no residence in Namibia. It also belies the Respondent's claim that the Furstenhof hotel is her home in Namibia. There is no indication on the papers that the Respondent stayed in Namibia for any protracted time and the Furstenhof was in my opinion merely the place where she stayed when she was in Namibia for business purposes.

In the present instance it serves Respondent's interest to claim that she is indeed domiciled in Namibia. As was stated by Jansen, J (as he then was), in the case of Masey v Masev 1968 (2) SA 199 (T) at 200H:

"(T) he ipse dixit of an interested party in these circumstances should

be carefully scrutinized."



In the light of what I have set out herein before the say so of the Respondent that she always regarded Namibia as her permanent home seems to me to be no more than a selfserving statement which is raised at this stage to safeguard her Namibian interests against vesting in the Applicants.



In my opinion the only reasonable inference that the Court can draw from the facts is that the Respondent was indeed domiciled in South Africa at the time of her sequestration. From this it follows that any movable property which the Respondent has in Namibia vests in the Applicants by virtue of her sequestration.




3.3 OWNERSHIP OF THE SHARES:



In this regard it was alleged by the Respondent that all the shares registered in her name are almost entirely held as nominee for her mother. As previously stated there is no dispute between the parties in regard to the effect of a sequestration order on the movable property of the insolvent where such sequestration order was granted by the Court of domicile of the insolvent.

Similarly there is also no dispute between the parties that shares constitute movable property within the meaning of the definition of movable property contained in section 2 of the Insolvency Act, Act 24 of 1936. See also Standard Bank of South Africa Limited and Another v Ocean Commodities Inc. and Others. 1983 (1) SA 276 (A) at 288 and Two Sixty Four Investments (Try) Ltd v Trust Bani 1993 (3) S.A. 384 (WLD). It was further in my opinion also not disputed that such shares, if they were the property of the Respondent, entitled the Applicants to obtain registration thereof nomine officii in the register of members of the company as a result of which the Applicants, in their aforesaid capacity, will be deemed to be members of the said companies according to the provisions of sec. 103(3) of the Companies Act, Act No. 61 of 1973. Furthermore that no instrument of transfer is required to effect such registration. See sec. 133(2) of Act 61 of 1973.



Mr Bregman submitted to the Court that if the issue of domicile is decided in favour of the Applicants it would follow that all the shares registered in the Respondent's name would vest by operation of law in the Applicants which, as I understood Counsel, will make it unnecessary at this stage to decide whether the Respondent was the owner of such shares or whether she only held them as a nominee for Clara Kahan. It would then be for Clara Kahan to take out proceedings in the form of an interpleader, if she is so advised, to enforce her claim to the shares. I am sure that technically speaking Mr Bregman is correct and it is certainly a tempting thought to leave the matter there and not to deal further with it in this judgment. However to subject parties to further possible litigation when both sides have put all the material relevant to the issue before the Court and where both, at least on the documents before the Court, have asked that the matter be determined, it would, in my opinion, not be in the interests of Justice to leave this issue, hanging in the air. I am therefore of the opinion that I should deal with the issue of the ownership of those shares which are still in dispute. Jn this regard the Applicants have conceded that the Respondent did hold some shares in some of the companies as nominee for Clara Kahan. I will deal with that aspect more fully at a later stage.




Mr Rubens pointed out that there is no dispute between the parties about the 1

number of shares that are registered in the name of the Respondent and that the real issue is whether she is the owner of those shares, excluding the concessions made by the Applicants in their reply, or only the nominee. As pointed out by Counsel this claim, namely that she is only a nominee, is based on various grounds. In summary these grounds are as follows:



That Clara Kahan supported her husband and children whilst her husband was prospecting in Namibia. On his death in 1964 she was owed some R70,000 by his Estate. She was also owed payment for certain shares in terms of a divorce settlement between her and her husband in January, 1954. The transaction in regard to the shares referred to above, arose as follows. In terms of the divorce settlement it was recorded that Clara Kahan's late husband had sold 410 000 shares he held in a company Diamond Mining & Utility Company (SWA) Ltd and 20 000 shares he held in Industrial Diamonds South Africa (1945) Limited for certain amounts to Saddle Hill Diamonds (Pty) Ltd. The right to receive payment for these shares was ceded by her late husband to her in terms of the divorce settlement. It is then alleged by Respondent that Saddle Hill transferred the said shares to Offshore Diamonds without, according to Respondent, paying Clara Kahan what was owed to her or without first obtaining her consent for such a transaction.



In regard to 6666 shares in Moly Copper and 1800 shares in Diamond Dredging registered in the names of Respondent and Kahan, Respondent alleged that due to payments and oral bequests made by the three of them, namely Kahan, Clara Kahan and herself, these shares belong to Clara Kahan.



It was further alleged that over and above her legal right thereto Clara Kahan also has a moral right to these shares.



From the documentation put before the Court it seems that the source of the ownership in the shares is the will of the late husband of Clara Kahan who bequeathed these shares in the various companies to his two children, the Respondent and Kahan. At least as a starting point it seems to me that the Respondent was the owner of those shares which she inherited from her father.

Thereafter by some operation of law, rather than by any agreement or any other voluntary action by the parties, Clara Kahan became the owner of the shares, that, so I understood it, both the shares belonging to Respondent as well as Kahan. If this is not so then there is no logical explanation or reason why such a fate would only have befallen the shares inherited by Respondent and not also those of Kahan. It then further^seems strange that through all the years of struggle and deadlock Clara Kahan never stepped in and claimed what was rightfully hers. Such a conclusion as was contended for by the Respondent gives rise to some strange anomalies. One need only look at the way both Respondent and Kahan dealt with and controlled the various

companies. In this regard it is significant to note that Clara Kahan was not

1

even a party to the shareholders or joint resolution agreement which governed the basis on which resolutions etc. were to be taken in regard to the companies. This agreement inter alia also deals with such topics as shareholding and the loss thereof in the affected companies and the resultant effect thereof on the Lidchi and Kahan groups. How this could be, when the majority of the shares were Clara Kahan's shares, is not clear.



I further agree with Mr Rubens that it is difficult if not impossible to extract any legal principle from the allegations made by Respondent as a result of which it can be concluded that the said shares, at some stage, became the property of Clara Kahan.




In regard to the claim of R70,000 which Clara Kahan had against her late husband's estate the Courts attention was drawn to the fact that a claim was submitted in that regard which was reflected in the liquidation and distribution account filed in the estate and which was signed by Respondent and Kahan as joint executors thereof



Dealing with the transfer of shares from Saddle Hill to Offshore Diamonds the Respondent alleged that without payment to Clara Kahan, or her consent, these shares could not be transferred. There is no allegations that these shares were the only assets of Saddle Hill. How Clara Kahan then became the owner of the shares is set out as follows by the Respondent namely:



i

"Since Kahan and I were the registered shareholders and vendors of Offshore Diamonds shares, as nominees for our father to the extent of half of the issued shares in Offshore Diamonds, we were legally responsible to her for that default. I refer to the two letters annexed hereto, signed by myself and Kahan, marked "PI" and "P2" respectively."



How the sale of the shares by Saddle Hill to Offshore Diamonds could create this legal obligation is not clear to me. The obligation to pay Clara Kahan in terms of the divorce settlement and the cession rested on Saddle Hill and they remained so obligated in the absence of any agreement to the contrary. Annexures "PI" and "P2" do also not take the matter any further. These documents, signed by Respondent and Kahan, authorised Offshore Diamonds to allot 1 250 000 fully paid up shares to Mr. E Kahan, the father of Respondent and Kahan.



On this uncertain and unclear premis Respondent alleged that Clara Kahan then permitted herself and Kahan to act as her nominees. As was pointed out by Mr Rubens, Clara Kahan had at best a claim against her husband's deceased for the R70,000-00. And as previously set out this was in fact claimed from the estate. In regard to the shares of Offshore Diamonds no legal basis was in my opinion alleged why Clara Kahan would become the owner thereof just because of the transfer of shares from Saddle Hill to Offshore Diamonds. It is also not clear to me why such action by Saddle Hill would discharge the latter from its obligation to pay Clara Kahan.



Mr. Bregman submitted that the Court, considering what was in fact the administration of assets amongst members of a family operating at that stage in reasonable harmony, should not approach the issue too technically. Mr. Bregman further explained that the transfer of the shares by Saddle Hill divested Clara Kahan of her source of payment as set out in the divorce settlement agreement and this could therefore not have been done without her consent. I fail to see the logic of this argument. In terms of the cession Clara Kahan was entitled to payment by Saddle Hill and nothing more. There is no allegation that the shares transferred to Offshore Diamonds were the only or all the assets of Saddle Hill and even if that were so I fail to see how that would have entitled Clara Kahan to the shares of Offshore Diamonds.

Mr. Bregman submitted that although some of the allegations could have been

stated more fully the possibility of an arrangement between Respondent, Clara

Kahan and Kahan is not so farfetched that it cannot be said that viva voce

evidence could not disturb the balance of convenience as it exists on the

papers. I have already referred to some of the anomalies to which the

allegations of the Respondent will lead to., It was further pointed out by Mr.

Rubens that Respondent had made statements under oath and in correspondence

which were entirely inconsistent with her allegation that she only held the

various shares as nominee for Clara Kahan. This concerns also the so called

oral bequests of shares. All documentation seems to me to refute this claim

by the Respondent. See e.g. annexures "OMPR 28" and "OMPR 29". In my

i

opinion viva voce evidence, far from disturbing the balance, can only further strengthens Applicant's case.



It was conceded by the Applicants that 1200 shares in Diamond Dredging and 125000 shares in Offshore Diamonds are held by the Respondent as nominee of Clara Kahan and the Applicants do not claim that those shares should vest in them.




3.4 THE COMPANY RESOLUTIONS



These resolutions all affect the companies relevant to these proceedings namely Offshore Diamonds, Diamond Dredging, Moly Copper and Lorelei. The minutes reflect that these resolutions were taken on the 22 June, 1997, i.e. at a time after the estate of the Respondent was already finally sequestrated in South Africa. It is common cause that these resolutions were taken without notice to or participation by any of the directors of the Kahan group.




Mr Rubens attacked the validity of the resolutions on two grounds namely:

  1. That they were contrary to the 1982 shareholders or joint shareholders agreement in that the resolutions were taken by the Lidchi group without any participation and consent by the Kahan group; and

  2. That the resolutions were adopted for an unlawful purpose, namely to

1

circumvent the consequences of the Respondent's sequestration.



Mr Bregman on the other hand contended that the 1982 agreement was abrogated by the parties. He referred the Court to the many instances where the parties were at loggerheads and submitted that none of the parties acted in terms of the 1982 agreement.



There is no doubt in my mind that if the 1982 agreement is still valid that the resolutions adopted on 22 June, 1997 were invalid. In terms of this agreement the parties agreed to exercise joint control over certain affected companies. The affected companies, in terms of clause 1.7 of the joint shareholders agreement, were defined as Offshore Diamonds and Moly Copper. See annexure "OMP. 9A." Certain other disqualifications were written in which are in my opinion'not relevant to the present proceedings. Clause 3.1.2 further stipulated that resolutions of directors of the affected companies, or their subsidiaries, would not be effective unless agreed to by directors nominated by the Kahan group and Directors nominated by the Lidchi group. Diamond Dredging and Lorelei are subsidiaries of the two affected companies as Offshore Diamonds owns 93,41% of the issued shares in Diamond Dredging and Moly Copper owns 99,65% of the issued shares in Lorelei.



One looks in vain for any allegations that the 1982 joint shareholders agreement was cancelled by one or other of the parties. That there were

occasions when one or other of the parties breached the agreement may be so

y

but there is no indication on the documents that as a result thereof the agreement was cancelled by any of the parties. If there was such a cancellation it would have been the easiest thing to allege. Given the background of mistrust and suspicion one would expect also that such an important step would be documented. No such document seems to be in existence.



Various other grounds were set out in Respondent's answering affidavit as to why the Court should regard the 1982 joint shareholders agreement as non­existent. None of these grounds were argued or relied upon by Mr. Bregman and in my opinion they were without substance. I therefor conclude that the 1982 agreement was not terminated and that when the resolutions were taken on 22 June, 1997 they were taken in breach of this agreement and are therefor invalid.



I am furthermore satisfied that the trend of these resolutions and the way in which they were obtained, as well as various other factors such as the Respondent's stance that she is domiciled in Namibia, that she is virtually without any assets etc., were such that Applicants had every reason to view the situation with distrust and apprehension and they were therefor entitled to ask the Court for an interim interdict to safeguard the rights of the creditors in the estate of the Respondent pending the determination of those interests and rights. In my opinion these resolutions were clearly calculated to prepare the

ground for unilateral action on the part of the Respondent to deal with the

i

assets of the companies in a way which could be detrimental to the interests of creditors in her insolvent estate.






4. COSTS



Mr Rubens submitted that the Court should grant the cost of two instructed counsel on a scale as between client and own Attorney. Mr. Rubens submitted that the Respondent made unfounded and serious allegations against the Applicants, Kahan and others. It was furthermore argued that the Respondent, not being insolvent as far as Namibia is concerned, should be ordered to pay the costs and that it would not be fair to saddle the estate and the creditors with such costs.

Mr Bregman submitted that there was no reason why the Court should order the Respondent to pay costs on a client and attorney scale and that the costs should be born by the estate.



In my opinion the Respondent by making irrelevant allegations and going into issues not really related to the relief claimed opened the door for the Applicants to come back with a full scale attack and a replying affidavit which, together with annexures consisted of some 531 pages, and the whole application developed into a battle between Respondent and Kahan and which ended in nothing less than a raking up of past and present wrongdoings and accusations of injustices committed by the one against the other. No restraint was exercised by either party and it was more particularly the Respondent Who made reckless and serious allegations of dishonesty and thievery against Kahan and others. In one instance I counted the use of no less than five adjectives describing Kahan. The Applicants and the Respondent must take the blame for this situation and the fact that there may or may not be an application for the removal of the Applicants as provisional trustees is not in my opinion a good reason why the Applicants should have entered into the arena. I am therefor not going to grant an order that the costs be paid on an attorney and client or own client scale. I however also do not see reason why under these circumstances the costs should be bom in toto by the estate, and hence the creditors. It would in my opinion be fair to order the Respondent, who has assets in Namibia and who is not insolvent as far as Namibia is concerned, to pay the costs of the Application. Mr. Bregman conceded that this was an instance where the Court could grant costs for two instructed Counsel.

In the result the following order is made:

  1. Paragraphs 4.1 and 4.3 of the Rule Nisi issued by this Court on the 8th September, 1997 are hereby confirmed and it is specifically hereby declared that 1,276,852 Offshore Diamond shares, 2002 Diamond Dredging Shares, 13332 Moly Copper shares and 747 Lorelei shares vest in the Applicants.

  2. The Respondent is ordered to pay the Applicants costs which costs shall include the costs of two instructed Counsel.








STRYDOM, J.P.

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