THE SUPREME COURT OF APPEAL OF SOUTH AFRICA
JUDGMENT

Reportable

Case No: 235/2015

In the matter between:

LAGOON BEACH HOTEL (PTY) LTD                                   APPELLANT

and

CHRISTOPHER D LEHANE NO

FIRST RESPONDENT
CASTORENA LTD
SECOND RESPONDENT
INVESTEC BANK LTD                                            THIRD RESPONDENT
DLA CLIFFE DEKKER HOFMEYR                  FOURTH RESPONDENT

Neutral citation: Lagoon Beach Hotel v Lehane (235/2015) [2015] ZASCA
210 (21 December 2015)

Coram:
Navsa, Cachalia, Leach, Tshiqi and Willis JJA

Heard:
06 November 2015

Delivered:  21 December 2015

Summary:  Cross-border insolvency ─ recognition of foreign trustee ─ interim
interdict serving as preservation order ─ nature of evidence required to obtain
such an order ─ practical common sense approach to the issue.

________________________________________________________________

ORDER
________________________________________________________________

On appeal from: Western Cape Division, Cape Town (Yekiso J sitting as
court of first instance) reported as Lehane NO v Lagoon Beach Hotel (Pty) Ltd
& others 2\2013 (4) SA 72 (WCC):
1 The appeal is upheld solely to the limited extent that the order of the court
a quo is altered as follows:
(a)  The reference to s 82 of the Insolvency Act 24 of 1936 is deleted from
para 3.
(b)  By the insertion of the following para 3A:
„Notwithstanding paras 2 and 3 above, the applicant shall not be entitled to sell
property belonging to Mr Sean Dunne (as contemplated in s 82 of the
Insolvency Act 24 of 1936 or otherwise) without the leave of this Court.‟
(c)  Paragraph 10 is substituted with the following:
„All questions of costs will stand over for later determination and the parties are
given leave to approach this Court, on the same papers duly amplified as
necessary, to determine the question of costs of this application after the
finalisation of the proceedings referred to in paragraph 2.5 of the Notice.‟

2 The appellant is to pay the first respondent‟s cost of appeal, such costs to
include the costs of two counsel where so employed.
________________________________________________________________
JUDGMENT
________________________________________________________________

Leach JA (Navsa, Cachalia, Tshiqi and Willis JJA concurring)
[1] The affairs of Mr Sean Dunne, an Irish businessman currently residing in
Connecticut, United States of America, lies at the heart of this appeal. He
conducted his business interests through an intricate web of holding and

subsidiary companies as well as trusts, registered in different parts of the world,
including tax havens. Although he became a man of immense wealth, he also
incurred considerable debt. On 9 March 2012, the National Asset Management
Agency Limited obtained judgment against him in the High Court of Ireland for
a sum of approximately €185.3 million. Subsequently, on 21 May 2012, the
Ulster Bank Ireland Limited obtained judgment against him for more than €163
million. That Mr Dunne found himself in straitened financial difficulties is
further borne out by him having been declared bankrupt in the United States by
a court order obtained at his instance on 23 March 2013. Thereafter, on 29 July
2013, upon a petition by the Ulster Bank Ireland Limited, the Dublin High
Court also granted an order that Mr Dunne be „adjudged bankrupt‟. Pursuant to
this order, the first respondent in this appeal, Mr Christopher D Lehane, was
appointed as „the Official Assignee in Bankruptcy‟ of Mr Dunne‟s estate (for
convenience, I intend to refer to him simply as Lehane).

[2]   Amongst his many holdings, Mr Dunne had an interest in the appellant,
Lagoon Beach Hotel (Pty) Ltd, a company which owns 205 sectional title units
that comprise the hotel and conference facilities known as the Lagoon Beach
Hotel in Milnerton, Western Cape. Until June 2012, the appellant‟s entire
shareholding was held by the company Mountbrook Homes Ltd, the name of
which was changed to Mavior on 30 March 2012.  For convenience I intend to
refer to it simply as „Mavior‟. On 29 June 2012 the second respondent,
Castorena Ltd, a company registered in Mauritius, acquired the appellant‟s
entire shareholding from Mavior. A little over a year later, on 14 November
2013, the shares were transferred from Castorena to Volcren Management Ltd,
a company wholly owned by Enia Investments Limited, which, in turn, is
wholly owned by Mr Dunne‟s wife, Gayle Dunne.

[3] She and Mr Dunne were married out of community of property in Italy
on 11 July 2004. After he had been appointed as Official Assignee, Lehane

learned of two handwritten contracts Mr Dunne had signed with his wife some
time before. The first, dated 23 March 2005, purported to have been concluded
between them at Hua Hin, Thailand, the material part of which reads as follows:
„Property transfer agreement between Sean and Gayle Dunne ─ 23 March 2005
I Sean Dunne, hereby undertake to give to my wife Gayle Dunne (née Killilea), whom I
married on 11 July 2004, 70% of the profits accrued from the sale of my share of the
following properties for the benefit of her and our son Bobby Luke and any future children
born to us:
[There are then listed six properties, including the Lagoon Beach Hotel, Cape Town.]
This transfer of money and/or assets is to secure the financial independence of my wife and
children for the future and to secure their independence from my own property investments.
The 30% of the profits left over is estimated to cover all tax and associated costs in relation
to these assets, any shortfall will be covered by me, and surplus is for my account.
Lagoon Beach: In relation to Lagoon Beach, which is owned by Mountbrook Homes Ltd, I
have to date loaned Mountbrook Homes approximately €4 million. I hereby transfer this debt
owing to me from Mountbrook Homes Ltd to my wife Gayle.
. . . .
I further confirm that I renounce on behalf of my estate all claims over or against these
properties or the amount of money derived from their sale should I die before this transfer is
fully completed.
I reserve the right to retain ownership of all these properties and transfer and value as cash or
alternatively properties at values to be agreed between us.
If no mutual agreement re values then this agreement must stand with no referral to
arbitration or legal proceedings by either party, except from the enforcement of the
agreement itself.‟

[4] The second agreement, purportedly signed on 15 February 2008, the
ostensible purpose of which was to deal with subsequent events and clarify the
earlier one, reads:
„Ref: Property Transfer Agreement between Sean Dunne and Gayle Dunne (Killilea) 23rd
March 2005
I Sean Dunne, Ouragh Shrewsbury Road, Ballsbridge Dublin 4 confirm the following in
reference to the above agreement.

As the sale of item 3, Lagoon Beach Hotel, Cape Town SA has not been possible I hereby
irrevocably transfer to my wife Gayle Dunne (Killilea) my full interest in this property with
immediate effect.
Any and all tax issues arising on the future sale of this property are also hereby transferred to
my wife Gayle Dunne (Killilea).
I also hereby transfer with immediate effect the full book value as calculated as of today‟s
date all loans made by me to Mountbrook Homes Ltd, and all of its associated companies and
subsidiaries.
The open market value of the above as of today is circa €1.95 million.
I further confirm that I hereby renounce on behalf of my estate all present and/or for further
claims over and against the assets the subject of this agreement or any monies derived from
their sale, should I die before they are sold.
I furthermore hereby renounce all claims over any present or future income derived from the
on-going trade or trade or sale of the assets the subject of this agreement.
This agreement hereby acknowledges that my obligations under the Property Transfer
Agreement between my wife and in relation to Lagoon Beach Hotel and the Mountbrook
Homes Ltd loans dated 23rd March 2005 is hereby fully satisfied and settled between us ie
full and final settlement in relation to these assets.‟

[5] After his appointment as Official Assignee, Lehane‟s investigations led
him to believe that Mr Dunne had been insolvent both at the time he concluded
these agreements and made the dispositions to which they refer to his wife. He
also heard that a third party, later identified as Great Africa 999 Investment
(Pty) Ltd (the fifth respondent in the court a quo), was in the process of
acquiring the Lagoon Beach Hotel, by purchasing either the appellant‟s assets
or its shareholding and loan account. On learning of this, Lehane did two
things.

[6]   First, he applied ex parte and as a matter of urgency to the Cape Town
High Court for relief, including an order recognising him as the Official
Assignee and interdicting the proposed transaction. He cited the appellant as the
first respondent, Castorena, the entity then thought to be the appellant‟s sole
shareholder, as second respondent, Investec Bank as the third respondent (it was

cited by virtue of its interest as a secured creditor of the appellant) and a law
firm, DLA Cliffe Dekker Hofmeyr, as fourth respondent (in its case his
information was that it might be holding the proceeds from any sale). When
Great Africa 999 Investment then applied to intervene as a respondent on 16
September 2014, the first respondent learned for the first time that it was the
proposed purchaser of the appellant‟s assets for a sum of approximately
R260 million under an agreement concluded in July 2014.

[7]   Second, Lehane instituted legal proceedings in the High Court of Ireland
alleging, inter alia, that the natural and probable effect of both agreements and
the dispositions made as a result, was to put assets (including of course the
Lagoon Beach Hotel) beyond the reach of Mr Dunne‟s creditors, and had been
concluded to „delay, defer and hinder‟ such creditors. As a result, Lehane
claimed, inter alia, the following relief:
„1.
A declaration that the transfer of all shares in Mavior, in the legal or beneficial
ownership of Sean Dunne, date 28th October 2008 from Sean Dunne to Gayle Dunne and/or
companies controlled by Gayle Dunne is void and of no effect by virtue of Section 59 of the
Bankruptcy Act of 1988 and/or by reason of the provisions of Section 10 of the Irish Statute
of Fraudulent Conveyances, 1634 (10CHAS. 1 SESS. 2, C.3);
2.
A declaration that the purported transfer of Sean Dunne‟s interest in the Lagoon
Beach Hotel, Cape Town, South Africa made pursuant to the Agreement of the 15th February
2008 between Sean Dunne and Gayle Dunne is void and of no effect by reason of the
provisions of Section 10 of the Irish Statute of Fraudulent Conveyances, 1634 (10 CHAS. 1
SESS. 2, C.3);
3.
A declaration that the purported transfer by Sean Dunne of the full book value as
calculated as of the 15th February 2008 or otherwise of all loans made by him to Mavior and
all of its related companies and subsidiaries made pursuant to the Agreement of the 15th
February 2008 between Sean Dunne and Gayle Dunne is void and of no effect by reasons of
the provisions of Section 10 of the Irish Statute of Fraudulent Conveyances, 1634 (10 CHS. 1
SESS. 2, C.3);
4.
An injunction requiring Gayle Dunne, and her servants and agents, including any
corporate entities of which she is a director or has control, to restore any assets purportedly
transferred to her by reason of the Agreement of the 15th February 2008 and/or the share

transfer of the 28th October 2008 to the Estate of Sean Dunne in bankruptcy or damages in
lieu of such injunction.‟
Those proceedings have not yet run their course.

[8] Reverting to the proceedings in this country, on 2 September 2014 Steyn
J granted a rule nisi returnable on 13 October 2014, operating as an interim
interdict pending the return day and restraining the transaction from proceeding
to its conclusion. The appellant thereafter gave notice of its intention to
anticipate the return day and to seek a reconsideration of the order under
Uniform rule 6(12)(c). On 22 September 2014, the matter came before Yekiso J
who, on 17 October 2014, confirmed the rule substantially in the form sought
by Lehane. His reasons for doing so were handed down on 23 January 2015,
and the judgment since reported as Lehane NO v Lagoon Beach Hotel (Pty) Ltd
& others 2015 (4) SA 72 (WCC). However, on 24 March 2015, the court a quo
granted the appellant leave to appeal to this court, with costs of the application
for leave to appeal being costs in the appeal.  The only parties who actively
participated in the appeal were the appellant, on the one hand, and Lehane on
the other. The third respondent, Investec Bank Ltd, employed counsel with a
watching brief to protect its interest insofar as any order might affect its rights.

[9] The debate in this court initially turned on whether the order of Yekiso J
was appealable in the light of it being interim in nature, pending the decision of
the Irish High Court. The appellant argued that not merely the form of the order
was of importance but also its effect. Consequently, so the argument went, as
the issues between the appellant and Lehane will not be revisited either by the
court a quo or the Irish court, and the confirmed rule relates to pending
litigation between parties in a foreign jurisdiction and is to endure for a period
of at least six months after those proceedings have been finalised, whenever that
uncertain date in the future might be, the matter should in effect be considered
as being an application for a final interdict – thereby bringing the rules
applicable to proceedings of that nature into play.

[10] This argument largely overlooks that almost invariably interim interdicts
seek relief different from that claimed in the pending litigation and may
involve, in effect, the rights of parties who are not parties to main proceedings -
none of which renders an interim order as being final in effect. Moreover, as
has been pointed out, inter alia by this court in Knox D’Arcy, whilst the refusal
of an interim interdict may be final in that it cannot be reversed on the same
facts, it may be open to an unsuccessful respondent against whom it is passed to
approach the court for its amelioration or to have it set it aside „even if the only
new circumstance is the practical rule experience of its operation.‟1 Certainly, in
the present case, should the Irish proceedings be unduly delayed or should there
arise some other material change in circumstances likely to have a bearing on
its continued enforcement, the appellant can apply to have the interim interdict
either varied or even set aside.

[11] In any event, no more really need be said about this issue as, during
argument, counsel for the appellants accepted that for purposes of this appeal,
save for certain paragraphs of the order which should be regarded as final (and
therefore appealable), such as the recognition of Lehane as the Official
Assignee, the remaining interdictory provisions of the order should be treated as
not being final in effect. It is trite that in respect of such a case a court has the
discretion to grant interim relief to an applicant who establishes a prima facie
right even if open to some doubt, where there is a well-grounded apprehension
of irreparable injury and the absence of another ordinary remedy.

[12] It is necessary at this stage to mention the appellant‟s strident criticism of
Lehane‟s papers, and its complaint that the court a quo took into account
evidence that it alleged was hearsay in nature or which conflicted with the so-
called rule in Hollington v Hewthorn2 which has been adopted by this court in

1 Knox D’Arcy Ltd & others v Jamieson & others 1996 (4) SA 348 (A) at 359I-360B.
2 Hollington v F Hewthorn & Co Ltd [1943] KB 587 (CA).

Hassim3 and cited with approval by the Constitutional Court in Prophet.4 The
rule is that, generally speaking, the fact that a person may have been convicted
in criminal proceedings is not admissible in subsequent civil proceedings as
proof of his guilt. Essentially, under the rule, a previous conviction amounts to
no more than an opinion which has been expressed in regard to certain facts,
and does not determine them.

[13] It was argued by the appellant that the court a quo, in having regard to the
various allegations and documents, that amounted to hearsay, impermissibly
elected to allow this into evidence on the basis of the interests of justice without
having due regard to the law as to their admissibility, to the prejudice of the
appellant who had to answer to largely incomplete and unsubstantiated
allegations. This was all the more so when the source of information was not
disclosed, rendering it impossible for the appellant to make independent
investigations to verify the accuracy of the information.  In support of this
argument the appellant invoked the following dictum in Southern Pride Foods
(Pty) Ltd v Mohidien 1982 (3) SA 1068 (C) at 1071H-1072B:
„The source of information must be disclosed to enable a respondent, confronted by an
allegation normally inadmissible as hearsay, to check its accuracy. And when the Courts
prescribed the disclosure of the source of information, they mean, in my view, a disclosure
with a degree of particularity sufficient to enable the opposing party to make independent
investigations of his own, including, if necessary, verification of the statement from the
source itself.‟

[14] That there is a great deal of hearsay in the first respondent‟s papers is
clear enough. In the circumstances of the matter, that is understandable. As
Lehane says, he „came to Mr Dunne‟s affairs as a stranger‟, and during the
course of carrying out his duties as Official Assignee, he came into possession
of documents and records relevant to Mr Dunne‟s affairs which, in turn, led him
to conclude, inter alia, that Mr Dunne had retained the true ownership of the

3 Hassim (also known as Essack) v Incorporated Law of Society of Natal 1977 (2) SA 575 (A) at 764E-765E.
4 Prophet v National Director of Public Prosecutions 2007 (6) SA 169 (CC).

shares in Mavior and that his disposition of such shares and his loan accounts to
Mrs Dunne constituted an invalid stratagem to place assets beyond the reach of
creditors. In his approach to court, Lehane made documents in his possession
available to support certain statements made by him. Some of them included
judgments of the Irish courts, which relate to certain of the facts established in
those
proceedings,
as
well
as
financial
statements
of
companies,
correspondence and statements made by others and official records of
government bodies and the like. In a case such as this, in which the first
respondent is in a position akin to that of a trustee in an insolvency in this
country, the comment in Registrar of Insurance v Johannesburg Insurance Co
Ltd (1) 1962 (4) SA 546 (W) at 547E-F that „[i]f all the people who know about
every small fact which makes up this complex case should have to make
affidavits, the matter would become quite impracticable. In a case like that a
court will relax its rules for the sake of facilitating litigation and in the interests
of justice,‟ becomes pertinent. It is also necessary to state that Lehane could not
swear positively to the facts, but was only called on to justify his suspicions.

[15] That a practical and common sense approach is required in cases of this
nature is also reflected in the decision in Naidoo.5 In that matter, the NDPP had
applied for a confiscation order under the Prevention of Organised Crime Act
121 of 1988. Twenty-two defendants were cited as persons or entities who
stood to be prosecuted, with another twenty-three respondents being cited as
persons or entities who allegedly held an interest in, or were in possession of,
realisable property. The NDPP sought to restrain them from disposing of or
dealing in any manner with such property. In the course of seeking relief, the
NDPP relied upon documents and allegations which were hearsay, and in
respect of which Rabie J said the following:6
„Without detracting from the caveat regarding “wild and unsupported hearsay allegations”,
and without proposing an absolute rule in this regard, I am of the view that it would be

5 National Director of Public Prosecutions v Naidoo & others 2006 (2) SACR 403 (T).
6 At 427d-i.

unnecessary to consider the relevance of hearsay evidence in a matter such as the present on
the basis of a strict application of the provisions of s 3 of the Law of Evidence Amendment
Act 45 of 1988 in respect of every piece of hearsay evidence in the applicant‟s papers (as it
was submitted on behalf of the defendants the approach should be). In considering hearsay
evidence in a matter such as the present, the court will necessarily have regard to factors such
as the nature and purpose of the evidence, the probative value and reliability thereof, the
reason why direct evidence was not submitted, the possible prejudice to the other party and
all the other facts, of the case. These are, inter alia, the factors which, according to s 3 of (the
Law of Evidence Amendment Act 45 of 1988), the court should take into account, but as the
veracity of the evidence is at this stage of the process not the primary question but only
whether there is evidence that might reasonably be believed and which might reasonably
support a future conviction and a consequent confiscation order, a formal ruling in terms of
Act 45 of 1988 as to the admissibility of every piece of hearsay evidence is not required.
Furthermore, in an application for a restraint order, especially one involving alleged criminal
activities of the magnitude alleged in the present case, reliance upon hearsay evidence is
virtually indispensable and even more so where the restraint is applied for before an
indictment is served. This is so because the application for a restraint will usually precede the
completion of the criminal investigation, and disclosure of evidence before completion of the
investigation might well prejudice the capacity of the prosecution to effectively prosecute in
the ensuing trial and may also, as I have indicated above, endanger the safety of potential
witnesses.‟
Although these comments were made in regard to criminal proceedings, in a
case such as this in which averments of fraudulent conduct on the part of Mr
Dunne are made to justify an interim preservation order, they encapsulate the
correct approach.

[16] Then there is the fact that a voluminous replying affidavit containing a
great deal of evidential material relevant to the issues at hand had been filed.
Relying upon authorities such a Sooliman,7 the appellant argued that it was
„axiomatic  . . .  that a reply is not a place to amplify the applicant‟s case‟ and
that the new matter had been impermissibly raised by Lehane in reply, that it
was evidential material to which the appellant had not been able to respond, and

7 Industrial Development Corporation of South Africa v Sooliman 2013 (5) SA 603 (GSJ) para 9.

that it fell to be ignored. However, again, practical, common sense must be
used, and it is not without significance that many of the hearsay allegations
complained of were admitted by the appellant in its answering affidavit. And
although Lehane had been appointed the Official Assignee to Dunne‟s estate
some thirteen months before the application was launched in the court a quo,
and the information set out in reply could therefore have been contained in the
founding affidavits, sight must not be lost of the fact that the application was
initially launched by Lehane‟s deputy official, Mr D Ryan, in the absence of
Lehane who was abroad at the time and unable to depose to an affidavit. The
detailed allegations made by Lehane speak of he, and not Mr Ryan, having been
more au fait with the facts and circumstances of the matter. Moreover, the
initial application was moved as a matter of urgency, and the courts are
commonly sympathetic to an applicant in those circumstances, and often allow
papers to be amplified in reply as a result, subject of course to the right of a
respondent to file further answering papers. Regard should also be had to the
intricacy of Mr Dunne‟s dealings that required intensive and on-going
investigations. Furthermore, the appellant, as respondent a quo, did not seek to
avail itself of the opportunity to deal with the additional matter Lehane set out
in reply, and I see no reason why these allegations should therefore be ignored.

[17] In the light of these general observations, I turn to deal with the more
specific contentions of the appellant. I have already mentioned that an applicant
seeking interim relief must show a right, albeit one that might be attended by
some doubt. The appellant‟s argument was that no right at all had been
established and therefore Lehane had not only failed to establish this essential
part of his case, but had failed to show that he had locus standi and that the
court ought not to have granted an order recognising him.

[18] It was the appellant‟s contention that Mr Dunne‟s bankruptcy fell to be
dealt with by the trustee appointed in the United States and in accordance with
the bankruptcy laws of that country, rather than pursuant to the laws of Ireland,

the standard position being that the insolvent estate will fall into the jurisdiction
of the first court which grants a sequestration order.8 Accordingly, so it was
argued, Lehane who was appointed pursuant to the proceedings in Ireland, had
no right to take the steps he had done in this court. The basis of this argument is
set out in an expert opinion provided by a practising counsel in Cape Town, Mr
Osborne, who holds himself out as an expert in the law of the United States. He
expressed the view that the effect that the original bankruptcy order issued in
the United States was to bring about a worldwide stay which the courts of the
United States have held applies extra-territorially. This worldwide stay operates
to bar any other person from obtaining possession of or commencing action to
obtain control over property falling with the bankrupt estate of Mr Dunne.
Thus, so it was argued, Lehane has no right to obtain any restraint over the
Lagoon Beach Hotel, even if it is an asset in Dunne‟s estate.

[19] There is a dispute in the papers as to the precise effect of this worldwide
stay. Lehane filed an expert report of Joshua W Cohen, an attorney admitted to
practice in the United States of America, who expressed the opinion that
although the automatic stay in bankruptcy applies extra-territorially, it only
applies to actions against property of the bankruptcy estate and that the relevant
assets do not fall within the bankruptcy estate of Mr Dunne.

[20] This gave rise to considerable debate as to whether the views of
Advocate Osborne or Attorney Cohen should be accepted. Relying on the
judgment of Wallis JA in this court in Imperial Marine Company v Deiulemar
Compagnia di Navigazione SPA 2012 (1) SA 58 (SCA) para 27, the appellant
argued that we could have regard to the United States law without further
reference to any expert opinion as the law on the issue could be ascertained
with sufficient certainty. There are in my view a number of answers to this.
First, I do not think the principles of the law in the United States of America are

8 Richard Sheldon QC Cross-Border Insolvency (4ed) paras 28-9.

so clear that this court should attempt to take judicial notice either of what it
perceives that country‟s law to be nor, for that matter, what an Irish court would
regard as being the correct position and to what extent it would recognise the
United States worldwide stay provisions. This it seems to me, is an issue far
more conveniently dealt with in the Irish Courts rather than ours. Significantly
the Irish High Court has given judgment dismissing an application by Mr
Dunne to set aside the Irish bankruptcy order, inter alia on the ground of an
objection similar to the argument advanced by Advocate Osborne – an appeal
was pending when the replying affidavits were filed in the court a quo – and it
would be inappropriate for this court in any way to be seen as interfering in that
process.

[21]   Furthermore, and most importantly, sight cannot be lost of the fact that
the American and Irish bankruptcy officials are working hand in glove to
attempt to recover assets for the benefit of Mr Dunne‟s creditors. Indeed the
American trustee of Mr Dunne‟s estate, Mr Coan, states in his letter of 12
September 2014 that he is working „in collaboration‟ with Lehane and that,
after reviewing the order of the court a quo, he concurs that „the interdict is
appropriate to protect the Irish and American bankruptcy estates.‟ This goes to
the very nub of the matter. All that is being sought is an anti-dissipation order
that seeks to protect Mr Dunne‟s creditors and ensures the integrity of the legal
process, both in the United States and in Ireland.

[22] In any event, it is clear that the effect of the worldwide stay can be lifted.
Significantly, on 12 June 2013, Judge Shiff of the United States Bankruptcy
Court granted an order at the request of the Ulster Bank of Ireland Limited to
modify the automatic stay to permit the bank to take all actions necessary under
Irish law to effect service upon Mr Dunne and to permit the continuation of
bankruptcy proceedings against Mr Dunne in Ireland. In this way, the
proceedings in Ireland were authorised. As just mentioned, there has been close
contact between Lehane and his counter-part in the United States in regard to

the proceedings taken, not only in Ireland but in this country as well. In these
circumstances, where the official representatives of both jurisdictions in effect
support each other in the bringing of this relief in the interest of Mr Dunn‟s
creditors, there seems to be no reason to refuse to recognise Mr Lehane‟s efforts
to seek a preservation of assets order, the effect of which will ensure the
integrity of the legal process of both courts.

[23] Turning to another issue, as already mentioned, the proceedings were
initially launched on the strength of a founding affidavit made by Mr D Ryan,
the deputy to the official assignee in the absence of Lehane. It was deposed on 2
September 2014, the day after Cross J in the Irish High Court, Bankruptcy had
issued an order requesting „the High Court of South Africa, Western Cape
Division and the Offices of said Court to recognise the Irish High Court and the
Official Assignee‟ as trustee of the estate of Mr Dunne, and authorising the
Official Assignee to „have liberty if recognised by the High Court of South
Africa‟ to apply in this country for „an anti-dissipation order in respect of the
proceeds of sale of the Lagoon Beach Hotel . . . and/or of the shares in (the
appellant).‟ The appellant contends that this order was fundamental to the
granting of the relief sought against it, and drew attention to the allegation in
the founding papers that a copy of the order would be made available „at the
hearing of this matter‟. It contended further that as a copy was not attached to
the founding affidavit, it had been impermissibly attached to Lehane‟s replying
papers and should be ignored; and that an essential allegation that Lehane was
obliged to establish, was therefore missing.

[24] There is no merit in this. I have already dealt with it being necessary to
approach urgent applications with a degree of flexibility and common sense. On
the papers as they stand, the allegations made in regard to the deputy‟s
appointment stand both unchallenged and supported by a court order. And for
the reasons already mentioned, I have no difficulty with that order only being
made available in reply. The appellant made no effort to challenge the

allegations made in that respect, as it could easily have done had it had any
doubt as to their correctness. Its argument in this regard amounts to no more
than a clutch at a technical straw.

[25] I turn more specifically to the recognition order granted by the court a
quo. Of course the question of locus standi is relevant to the issue of
recognition of the first respondent in this country as Official Assignee, to be
empowered to administer the estate of the bankrupt in this country and, in
particular, to conduct an enquiry into the bankrupt‟s affairs in South Africa. The
argument of the appellant is that as this is final relief, the first respondent had to
establish a clear right thereto, and as Lehane had failed to establish a case for
recognition on that basis, the order of the court a quo should be dismissed.

[26] Pertinent to this issue is the question of Mr Dunne‟s domicile. In Ex
Parte Palmer NO: In re Hahn 1993 (3) SA 359 (C), Berman J dealt
exhaustively with the authorities relevant to the recognition of foreign trustees.
The learned judge pointed out9 that it is now well established that a foreign
representative such a trustee (or in this case, the Official Assignee), who seeks
to deal with assets present in this country, must first obtain the „active
assistance‟ of a South African court by obtaining recognition of the foreign
order. Without such recognition, he or she will be precluded from exercising
authority and power, for example to convene a statutory meeting in order to
interrogate the respondent.

[27] It is unnecessary for present purposes to unduly scrutinise previous
decisions relating to requirements of recognition in this country. Suffice it to
say that they were summarised as follows by Berman J in Ex Parte Palmer:
„Certainly, insofar as the movable property found in this country belonging to a person
whose estate was sequestrated by order of a foreign Court within whose jurisdiction that

9 At 361G-I.

person was domiciled is concerned, that property vests in his trustee appointed pursuant to
that order, for our Courts.
. . . .
Indeed where movable property is concerned, a formal application for the recognition of the
foreign trustee is not strictly necessary. . . . As a matter of practice, however, such an
application is invariably made and the need for formal recognition has been elevated into a
principle . . . The position in regard to immovable property is, however, different. To deal
with the insolvent‟s immovable property situate in this country, formal recognition is
required by a foreign trustee. And its grant is no formality: the South African Courts may
grant or refuse to accord recognition of a foreign trustee in their discretion, and they will only
exercise such discretion in favour of the foreign trustee in special circumstances.
The basis for the apparent difference between the manner in which movable property of an
insolvent and his immovable property is dealt with in South Africa is that, in the former case,
such property is governed by the lex domicilii and it is a matter of convenience that a single
concursus creditorum be established; in the case of immovable property it is the lex situs
which governs the position. Thus the foreign trustee appointed in the foreign State where the
insolvent was domiciled as at the date of the sequestration of his estate by a Court of that
State has the power and authority, strictly speaking, to deal with the insolvent‟s movable
property in South Africa without the need to obtain recognition here, but that trustee must
first be granted judicial recognition in South Africa before he can deal with any immovable
property of the insolvent situate in this country.
As pointed out above, the grant of recognition to a foreign trustee to deal with an insolvent‟s
immovable property in South Africa is a matter for the local Court‟s discretion. The
discretion is absolute. It is exercised on the basis of comity and convenience.
. . . .
The aforegoing applies not only where an insolvent‟s property is situate in South Africa and
the power and authority of a foreign trustee to deal therewith is concerned. It is applicable
also in all matters relating to the administration of the insolvent estate, including the
authority of the foreign trustee to convene a meeting in South Africa in terms of the
Insolvency Act 24 of 1936 in order to interrogate the insolvent living here. In such a case,
too, the foreign trustee requires formal recognition and here again the grant of recognition is
a matter for the local Court‟s discretion, to be exercised on the basis of comity and
convenience.
The right, power and authority of a foreign trustee to deal with the movable property of an
insolvent in South Africa exists only, and the grant of recognition to him by a local Court to
deal with that insolvent‟s immovable property situate in this country is permissible only

(subject to what is set out below with regard to the question of exceptions to the proposition
here being stated), where the insolvent was domiciled in the foreign State, the Court of which
sequestrated his estate and the trustee was appointed pursuant to the sequestration order.
“Comity and convenience” is a factor which plays a part in influencing the local Court to
exercise its discretion in favour of recognising a foreign trustee; it is not a separate ground
for granting such trustee recognition.‟

[28] In the light of this, and returning to the issue of Mr Dunn‟s domicile, Mr
D Ryan the Deputy Official Assignee, expressed his understanding that
although Mr Dunne was then resident in Connecticut in the United State of
America, he is domiciled in Ireland. In support of this, he referred to what
purports to be a letter signed by Mr Dunne on 14 May 2010 which formed part
of an application he had made for a visa in order to travel to the United States,
and in which he had stated:
„I am an Irish National who resides in Ireland. I am intending to go to the United States to
develop and manage my United States‟ company pending an approved visa.
Upon termination of the investor visa status, I have every intention of departing the United
States and returning home to Ireland.‟
This is a clear indication that Mr Dunne regarded Ireland as being his place of
domicile at that time.  Although one can accept that he has since resided in the
United States, there is nothing that clearly shows that he thereafter settled
permanently in that country with a fixed and deliberate intention to abandon his
domicile in Ireland (compare Eilon v Eilon 1965 (1) SA 703 (A) at 722A).

[29] Relying upon certain later statements of Mr Dunne, the appellant argued
that the visa application was out of date, unreliable and ought not to be taken
into account in assessing Mr Dunne‟s domicile. In this regard, reference was
made to documents in judicial separation proceedings that had taken place
between Mr Dunne and his wife in Geneva in which it is stated that they had
both been domiciled in Geneva „since August 2008‟. Also mentioned was an
affidavit filed in the Irish High Court in 2013 in proceedings relating to his
bankruptcy, wherein Mr Dunne stated that he was resident and domiciled in the

United States and that, although he had travelled to Ireland frequently to visit
family and to assist in the winding-up of his business interests, he had not
resided there since early 2007. All of these allegations to some extent conflict
with each other. Importantly, Mrs Dunne in her papers does not attempt to
explain away any of these conflicts. In particular, she fails to explain how it
came about that the judicial separation proceedings took place in Geneva on the
strength of an allegation that she and her husband were domiciled there.

[30] What Mrs Dunne does say, however, is that she, and not Mr Dunne, was
the person who had invested in the United States and that he had done no more
than work in that country for her company. Bearing in mind that it would
require a fixed intention on Mr Dunne‟s part to permanently reside in the
United States for him to acquire a domicile of choice in that country, as he was
residing there under a visa granted on the supposition that he would return to
Ireland, it seems improbable that he has since 2010 lawfully acquired a
domicile in the United States. In the light of this, and the unexplained
allegations in regard to his domicile in Geneva, I am of the view that a prima
facie case has been made out that Mr Dunne has retained his domicile of origin
in Ireland.

[31] But in any event, while I accept that ordinarily a foreign trustee seeking
recognition in South Africa must establish that the insolvent party was
domiciled within the jurisdiction of the foreign court that appointed him, this is
not a law set in stone. It has been accepted that in exceptional circumstances the
requirement of domicile will not be insisted upon. As pointed out by Berman J
in Ex parte Palmer10 South African courts have recognised a foreign trustee at
times where the order pursuant to which the trustee was appointed was issued
by a court other than that of domicile, but added the proviso that those cases
„are certainly not authority for the contention that a South African court may,

10 At 364I-365B

simply on the basis of comity and convenience, grant recognition to a foreign
trustee, regardless of any consideration given to the insolvent‟s domicile‟.

[32] In the present case, even though there appears to be a prima facie case
that Mr Dunne must be domiciled in Ireland, the other allegations mentioned
are such that there is a degree of uncertainty about the issue. But because of that
uncertainty, and the fact that the American Courts have invoked the justice
system of Ireland to assist in tracing assets and administering bankruptcy
proceedings, there are in any event exceptional circumstances present that
justify a South African court also rendering assistance by taking the necessary
steps to recognise the Irish Official Assignee in order to protect the interests of
Mr Dunne‟s creditors. But it is not simply a matter of comity and convenience
to do so. It is also intimately bound up with the prima facie case made out
against Mr Dunne for his being domiciled in Ireland.

[33] In the light of these considerations, I see no reason to interfere with the
court a quo‟s recognition of Mr Lehane. It had the discretion to exercise
whether or not to do so, and in my view such discretion was properly exercised.
It also properly exercised its discretion to grant an interim interdict to preserve
assets in respect of which Lehane had established a prima facie right. In broad
terms, then, the appeal must fail.

[34] There are however, two issues arising from the order of the court a quo
that do need to be addressed. In para 3 thereof, specific reference is made to
s 82 of the Insolvency Act 24 of 1936 which, so it is stated,  are to „exist in
relation to the administration of Mr Dunne‟s estate as if the said Act applied
thereto pursuant to a sequestration order granted by the Irish Court on 29 July
2013.  Section 82 provides for the sale of property after a second meeting
between creditors, and it seems to be wholly inappropriate in a case such as this
where an order is sought to prevent property being dissipated prior to
finalisation of proceedings in another court that will determine whether or not

the property falls into the estate of the insolvent, for that section to be invoked.
This was raised with counsel for Lehane who proposed a varied order deleting
reference to s 82. This was placed before the appellant‟s legal representatives to
consider the appropriateness of the variation. No objection was made and the
variation, will be reflected in the order granted.

[35] Similarly, in para 10 of the order of the court a quo, the appellant was
ordered to pay the costs of the application. This, too, appears to be premature.
In the event of the litigation in Ireland being resolved in the appellant‟s favour,
its opposition to the proceedings in the court a quo would be justified. It is more
appropriate for the costs to be reserved, as was also suggested by Lehane‟s
counsel in the order he proposed in this court. This too will be reflected in the
order.

[36] This limited success on the part of the appellant is insufficient to deprive
the first respondent of his costs of appeal. The appellant‟s primary objective in
appealing was to have the restraint imposed by the preservation order set aside
and in that it has failed. The first respondent, on the other hand, has successfully
defended the interim relief granted by the court a quo.

[37] It is therefore ordered as follows:
1 The appeal is upheld solely to the limited extent that the order of the court
a quo is altered as follows:
(a)  The reference to s 82 of the Insolvency Act 24 of 1936 is deleted from
para 3.
(b)  By the insertion of the following para 3A:
„Notwithstanding paras 2 and 3 above, the applicant shall not be entitled to sell
property belonging to Mr Sean Dunne (as contemplated in s 82 of the
Insolvency Act 24 of 1936 or otherwise) without the leave of this Court.‟
(c)  Paragraph 10 is substituted with the following:

„All questions of costs will stand over for later determination and the parties are
given leave to approach this Court, on the same papers duly amplified as
necessary, to determine the question of costs of this application after the
finalisation of the proceedings referred to in paragraph 2.5 of the Notice.‟

2 The appellant is to pay the first respondent‟s cost of appeal, such costs to
include the costs of two counsel where so employed.

_______________________
L E Leach
Judge of Appeal

Appearances:

For the Appellant:

P B Hodes SC (with him T A Dicker SC

and M A McChesney)
Instructed by:

Barnaschone Attorneys, Sea Point

McIntyre & vd Post, Bloemfontein

For the 1st Respondent:
G W Woodland SC (with him AHA Morrissey)
Instructed by:

Alexander Cox Attorneys, Kloof

Symington & de Kok, Bloemfontein
For the 3rd Respondent:
J Muller SC
Instructed by:

Edward Nathan Sonnenbergs

Matsepes In c, Bloemfontein

THE SUPREME COURT OF APPEAL
OF SOUTH AFRICA

MEDIA SUMMARY – JUDGMENT DELIVERED IN THE SUPREME COURT OF APPEAL

From:  The Registrar, Supreme Court of Appeal
Date:  21 December 2015
Status:  Immediate

Please note that the media summary is intended for the benefit of the media and does not
form part of the judgment of the Supreme Court of Appeal

Neutral citation:
Lagoon Beach Hotel v Lehane (235/2015) [2015] ZASCA 210 (21
December 2015)

An international businessman, Mr Sean Dunne, presently living in the USA, although Irish
by descent, was declared bankrupt first in the USA and thereafter in Ireland. He had carried
on business through a web of companies, holding companies and trusts and his affairs were
complex. His Irish ‘Official Assignee on Bankruptcy’, Mr Lehane, acting with the support of
the US trustee of Mr Dunne’s estate identified the Lagoon Beach Hotel in Milnerton, Cape
Town as an asset held by a company whose shareholding had been transferred by Mr Dunne
to his wife Mrs Gayle Dunne pursuant to two handwritten contracts which Mr Lehane
contends were not genuine and had been designed to frustrate Mr Dunne’s creditors. Mr
Lehane therefore instituted proceedings in Ireland to have the dispositors made under these
agreements set aside and, in effect, to recover the Lagoon Beach Hotel as an asset in Mr
Dunne’s bankrupt estate. In the interim, Mr Lehane applied to the Western Cape High Court
and obtained an order recognising him as the Official Assignee and interdicting the proposed
sale of the hotel to a third party pending the outcome of his claim in Ireland. He succeeded,
the judgment of Yekiso J having been reported as Lehane NO v Lagoon Beach Hotel (Pty)
Ltd 2015 (4) SA 72 (WCC). With leave of the court a quo Lagoon Beach Hotel (Pty) Ltd, the
owner of the hotel, appealed to the Supreme Court of Appeal.

The appellant contended that Mr Lehane ought not to have been recognised as Official
Assignee by reason of the US order having predated that of the Irish Court declaring Mr
Dunne bankrupt, as the effect of the US order was to provide worldwide stay that vested all
assets in the US trustee, so that an Irish official could not recover any of Mr Dunne’s assets.
The SCA however held that the US trustee and Mr Lehane were working hand in glove, and
the US order had been modified to permit the Irish proceedings to take place. Furthermore,
all that was sought in this country was an anti-dissipation order to protect the integrity of the
legal process in both the US and Ireland.

It also found there to be a dispute as to whether in American law the assets in dispute fall
within the estate of Mr Dunne. The SCA held that the principles of the US bankruptcy law
were not so clear that it could take judicial notice thereof, nor what an Irish court would

decide the correct position to be and to what extent it would recognise the US worldwide
provisions.

The issue has already been adjudicated in Ireland in dismissing an application by Mr Dunne
to have the Irish proceedings set aside, and as an appeal in those proceedings was pending it
would be inappropriate to the SCA to be seen to be interfering in that process. In addition,
ordinarily a foreign trustee seeking recognition in South Africa must establish that the
insolvent is documented within the jurisdiction of the foreign court that appointed him, and a
prima facie case had been made out that Mr Dunne had retained his domicile of origin in
Ireland. Moreover this rule is not set in stone and in exceptional circumstances proof of
domicile will not be insisted upon. In the light of the uncertainty as to domicile, the fact that
the US courts have invoked the Irish justice system to trace international assets, there are
such exceptional incidents present. In all these circumstances Mr Lehane had correctly been
recognised.

The appellant also objected to hearsay evidence relied upon by Mr Lehane and the fact that
he had amplified his case in reply. The SCA however held that by the nature of things Mr
Lehane had been obliged to rely on hearsay evidence, and that a practical and common sense
approach was required. It approved the approach of Rabie J in NDPP v Naidoo 2006 (2)
SACR 403 (T) at 427 in regard to the admissibility of hearsay in cases such as this, and drew
attention to the fact that much of the hearsay had been admitted by the appellant. It also
concluded that the appellant had not sought to challenge additional matter in the replying
pages and that regard could therefore be had to such matter.

These are however certain unsatisfactory details of the court below’s order which the
respondents agreed to vary. The appellant raised no objection to these variations

In the result, the SCA upheld the appeal solely to the limited extent that there be minor
variations of the order of the court below, but ordered the appellant to pay the first
respondent’s costs of appeal.

---ends---