IN   THE  SUPREME  COURT  OF  APPEAL
OF  SOUTH  AFRICA
Reportable
Case No   34/2000
In the matter between
HANNS-CHRISTIAN HÜLSE-REUTTER
First  Appellant
SIMONE HÜLSE-REUTTER
Second Appellant
GOLDLEAF PROPERTIES LTD
Third Appellant
and
JOSEF GöDDE
Respondent
CORAM
:  HEFER ACJ,   HARMS,  SCOTT,  MTHIYANE JJA
et  FRONEMAN  AJA
HEARD
:  6  SEPTEMBER 2001
DELIVERED
:  25 SEPTEMBER 2001
Attachment to confirm jurisdiction – prima facie  case – mere assertions
not enough – piercing corporate veil – need for some misuse or abuse of
distinction between company and those who control it.
J U D G M E N T
SCOTT  JA/…

SCOTT  JA:
[1] The first and second appellants are German citizens and
peregrini of the Republic of South Africa.  The third appellant is a company
with limited liability incorporated and registered according to the laws of the
Isle of Man.   It is not registered in South Africa, nor has it established a place
of business in this country. On 3 December 1998 the respondent, also a
German citizen and peregrinus of South Africa, applied ex parte to the Cape
Provincial Division for a rule nisi calling upon the appellants to show cause
on a specified day why certain property of the first and second appellants
should not be attached to confirm the jurisdiction of the Court in an action
which the respondent proposed instituting against them.  An order for an
interim attachment was also sought and granted pending the return day.  No
relief was claimed against the third appellant which was joined by reason of
the interest it had in the proceedings.  The property sought to be attached

comprised certain trust monies said to be in the possession of a firm of Cape
Town attorneys as well as substantial claims which the first and second
appellants had against the insolvent estate of one Jürgen Harksen.  It
subsequently transpired that the firm of attorneys, which was cited as the
fourth respondent in the Court below, was not in possession of the trust
monies in question and it played no part in the proceedings.  The first and
second appellants’ claims against the insolvent estate were however attached
in pursuance of the interim order.  On the return day the matter was opposed
and in due course  set down for hearing on 20 April 1999 before E Steyn AJ.
On 7 September 1999 judgment was granted confirming the rule.  The first,
second and third appellants appeal with the leave of the Court a quo.
[2] At common law, where both the plaintiff and defendant are
peregrini, as in the present case, an attachment or arrest is insufficient to
establish jurisdiction.  There must be present, in addition, a recognised ratio

jurisdictionis.  In its absence an attachment or arrest will be refused.  (See  eg
Ewing McDonald & Co Ltd v M & M Products Co 1991 (1) SA 252 (A) at
258 I  - 259 D.)  The appellants sought leave to appeal on the ground that no
ratio jurisdictionis had been established and it was on this basis that leave
was granted.   In this Court, however, the appellants sought and were granted
leave to broaden the scope of the appeal by raising certain other issues and in
particular whether the respondent had succeeded in making out on the papers
a prima facie case in respect of his claim against the first and second
appellants. (Cf Douglas v Douglas [1996] 2 All SA 1 (A) at 8 i – 9 d;  S v
Fourie 2001 (2) SACR 118 (A) at 120 i – 121 h.)
[3] In response to the respondent’s founding  papers two short
affidavits were filed on behalf of the appellants.  No attempt was made to deal
with the respondent’s cause of action.  Instead the deponent, who was the
appellants’ attorney, contested the existence  of a ratio jurisdictionis

necessary to establish jurisdiction and raised certain other legal issues.  The
argument that the respondent had failed to establish a prima facie case was
accordingly advanced solely on the basis of the respondent’s own papers.  It
was common cause that unless the respondent had succeeded in doing so, the
appeal had to be upheld.
[4] The respondent was one of Harksen’s creditors.  In February
1995 he entered into a written agreement with the third appellant (“Goldleaf”)
in terms of which he was to cede to Goldleaf his claims against Harksen in
return for payment of the sum of DM 4 million (four million Deutsche
Marks).  In view of the importance of the agreement to the respondent’s cause
of action, it is necessary to refer briefly to some of its more significant
provisions.  In entering into the agreement the respondent acted both on his
own behalf and on behalf of others, including Eva and Uwe Graul, all of
whom were creditors of Harksen.  The other parties to the agreement were

Siegfried Greve  and a company he controlled, Tercur iL, which was likewise
a substantial creditor of Harksen.  Tercur was to be paid DM 12 million for
the cession of its claim.  Greve, Tercur and the respondent were referred to as
the “sellers”.  The term was defined as meaning the three of them “jointly and
severally”.   Detailed provisions were made for the cession of the claims to
Goldleaf and for payment to the sellers.  The latter undertook upon signing
the agreement to deliver the documents evincing or embodying their claims to
their own attorney who was to keep them in trust pending payment by
Goldleaf.  (The last of the sellers to sign was the respondent who did so on 13
February 1995 at Heinsberg, Germany.)  The sellers’ attorney was required to
deliver a list of such documents  to Goldleaf’s attorney on or before 22
February 1995 and the documents themselves upon payment by Goldleaf
which was to be made on or before 10 March 1995.   In the case of the
respondent the DM 4 million was to be paid into a bank account in

Switzerland.  In terms of clause 3.3 of the agreement it was agreed that if
Goldleaf failed to pay the sellers by or on 10 March 1995 “this agreement will
become null and void”.   Clause 6.6 recorded that the parties  waived any
defence “of whatsoever nature that may be raised against any party wishing to
enforce this agreement.”
[5] The respondent’s cause of action, briefly stated, was the
following.  He contended that notwithstanding Goldleaf’s failure to pay on or
before 10 March 1995 the agreement remained  in full force and effect;  the
reason for this, he said, was that clause 3.3 had been inserted solely for the
benefit of the sellers and that by reason of clause 6.6 Goldleaf was precluded
from relying on clause 3.3 as a defence.  He furthermore pointed out that
Goldleaf itself had sought to enforce the agreement against Greve subsequent
to 10  March 1995 and clearly regarded the agreement as binding.  The
respondent’s claim for payment of the DM 4 million was, however, not

directed at Goldleaf but at the first and second appellants (“the appellants”)
who are husband and wife and the beneficial shareholders and in control of
Goldleaf.  He alleged that the appellants were personally liable to perform
Goldleaf’s obligations under the agreement by reason of their conduct in
causing the company, acting in collusion with Harksen, to enter into the
agreement for fraudulent purposes and in particular for the purpose of
obtaining a respite for Harksen from his creditors with no intention of the
company ever honouring its obligations.   Initially, reliance was placed on s
424 of the Companies Act 61 of 1973.  When, however, it was drawn to the
respondent’s attention that Goldleaf was a foreign company and not a
company within the meaning of the Act (see s 2 (2)),  the respondent sought
to rely on the so-called common law doctrine of “piercing the corporate veil.”
It was common cause in this Court that s 424 was inapplicable.

[6] The respondent appended to his founding affidavit various
extracts from pleadings and affidavits in litigation which followed the
conclusion of the Goldleaf agreement, as well as  certain other documents, in
an attempt to show that the appellants’ conduct was such as to justify the
relief which was to be sought against them in the main action.  From these
documents one is able to establish the principal events which preceded and
followed the conclusion of the agreement and which serve to throw some
light on what motivated the parties in entering into it.  The contents of certain
of the affidavits and other documents are also instructive.  It is convenient
therefore to set out these events as briefly as the circumstances permit and
where appropriate to comment upon them.
[7] It appears that Harksen’s estate had been provisionally
sequestrated at some stage prior to the conclusion of the Goldleaf agreement.
The order was, however, discharged on 22 February 1995.  In the meantime

and on 13 February 1995, being the date upon which the respondent signed
the Goldleaf agreement, Tercur, one of the other sellers in terms of the
agreement, was placed in compulsory liquidation in Germany.  In due course
Reinhard Titz was appointed as liquidator.  On 17 March 1995 Goldleaf
brought an application in the High Court, Cape Town, against Greve, Titz (in
his capacity as liquidator of Tercur) and Greve’s attorney for an order for the
attachment of property to confirm jurisdiction in an action to be instituted for
an order declaring the Goldleaf agreement to be of full force and effect.  In
the supporting affidavit Siegwart (the same person who had signed the
Goldleaf agreement on behalf of Goldleaf) alleged that Greve had breached
the Goldleaf agreement by ceding one of the claims forming the subject
matter of the agreement to a third party.  He alleged further that Goldleaf had
tendered full performance of its obligations under the agreement on two
occasions.   The application for the attachment of property was presumably

granted and on 21 June 1995 Goldleaf issued summons for the declaratory
order in question.  The respondent was joined as a party but no relief was
sought against him.   In its particulars of claim Goldleaf alleged that it had
tendered payment against proper performance by Greve and Tercur both prior
and subsequent to 10 March 1995.
[8] In the meantime, on 29 March 1995 Harksen’s estate was again
provisionally sequestrated, this time at the instance of Greve.  On 22 April
1995 Goldleaf applied for leave to intervene in order to resist the granting of a
final sequestration order.  The application was supported by an affidavit made
by the first appellant who averred that initially Goldleaf had been precluded
from making payment by reason of Tercur’s liquidation and that, by the time
payment could be made, Greve and Tercur had breached the agreement in
respect of one of the claims acquired by Goldleaf.  He affirmed Goldleaf’s
willingness to perform its obligations against proper performance by Greve

and Tercur and reiterated Goldleaf’s tender to do so.  He also stated that
Goldleaf had cash and other readily realisable  assets which in value exceeded
the purchase consideration payable under the agreement.  He explained, too,
that Siegwart had signed the agreement on behalf of Goldleaf as he and his
wife  did not want their involvement to be disclosed at that stage.
[9] On 23 August 1995 the second sequestration order against
Harksen was discharged, apparently on the strength of an undertaking made
by him to pay all his creditors within 14 days.  No payment was forthcoming
and he was provisionally sequestrated for a third time on 21 September 1995.
[10] On 5 October 1995 Uwe and Ive (spelt “Eva” in the agreement)
Graul gave notice of their intention to apply for leave to intervene in the
application for a final order of sequestration of Harksen’s estate.  The
supporting affidavit to the application to intervene was made by the
respondent on behalf of the Grauls.   He stated that he carries on business as

an agent for the collection of debts and confirmed that he had entered into the
Goldleaf agreement on his own behalf and on behalf of others, including the
Grauls.  In support of his averment that the Grauls had claims against Harksen
he contended that when payment had not been received by or on 10 March
1995 the Goldleaf agreement had in terms of clause 3.3 become null and void
and of no force or effect.   This contention is of course the very opposite of
what the respondent contends in the present proceedings.  The only feasible
explanation he could offer for the discrepancy is that he was wrongly advised
by the Grauls’ legal representatives.
[11] Against this background I return to the issue of whether the
respondent succeeded in discharging the burden of establishing a prima facie
case in respect of his claim against the appellants.  The respondent’s founding
papers abound with assertions of fraud and reckless conduct on the part of the
appellants.   In particular, a variety of fraudulent or improper motives are

attributed to them by the respondent for causing Goldleaf to enter into what I
have called the Goldleaf agreement.  It becomes necessary therefore to
consider what weight, if any, is to be given to assertions of this kind when
determining whether a prima facie case has been established.
[12] The requirement of a prima facie case in relation to attachments
to found or confirm jurisdictions has over the years been said to be satisfied if
an applicant shows that there is evidence which, if accepted, will establish a
cause of action and that the mere fact that such evidence is contradicted will
not disentitle the applicant to relief – not even if the probabilities are against
him; it is only where it is quite clear that the applicant has no action, or cannot
succeed, that an attachment should be refused.  This formulation of the test by
Steyn J in Bradbury Gretorex Co (Colonial) Ltd v Standard Trading Co (Pty)
Ltd 1953 (3) SA 529 (W) at 533 C – D has been applied both by this Court
and the Provincial Divisions.  (See eg Cargo Laden and Lately Laden on

Board the MV Thalassini Avgi v MV Dimitris 1989 (3) SA 820 (A) at 831 F –
832 B;  Weissglass NO v Savonnerie Establishment 1992 (3) SA 928 (A) at
936 E – H.)   One of the considerations justifying what has been described as
generally speaking a low-level test (MT Tigr : Owners of the MT Tigr and
Another v Transnet Ltd t/a Portnet (Bouygues Offshore SA and Another
Intervening)  1998 (3) SA 861 (SCA) at 868 I) is that the primary object of an
attachment is to establish jurisdiction;  once that is done the cause of action
will in due course have to be established in accordance with the ordinary
standard of proof in subsequent proceedings.   (See the Bradbury Gretorex
case, supra, at 531 H – 532 A.) No doubt for this reason Nestadt JA, in the
Weissglass case,  supra, at 938 H, warned that a court “must be careful not to
enter into the merits of the case or at this stage to attempt to adjudicate on
credibility, probabilities or the prospects of  success.”

[13] Nonetheless, the remedy is of an exceptional nature and may
have far-reaching consequences for the owner of the property attached.   It
has accordingly been stressed that the remedy is one that should be applied
with care and caution.  (See Thermo Radiant Oven Sales (Pty) Ltd v Nelspruit
Bakeries (Pty) Ltd 1969 (2) SA 295 (A) at 302 C – D;  Simon NO v Air
Operations of Europe AB and Others 1999(1) SA 217 (SCA) at 228 E – F.)
More recently, in Dabelstein and Others v Lane and Fey NNO 2001 (1) SA
1222 (SCA) at 1227 H – 1228 A, it was suggested that the time may come to
reconsider the approach adopted in the past and to have regard also, in the
assessment of the evidence, to the allegations in the respondent’s answering
affidavit which the applicant cannot contradict.  In the present case, however,
the affidavits filed on behalf of the appellants are such that the issue does not
arise and it is unnecessary to consider whether the test should be refined in
the manner suggested.

[14] What is clear is that the “evidence” on which an applicant relies,
save in exceptional cases, must consist of allegations of fact as opposed to
mere assertions.     It is only when the assertion amounts to an inference
which may reasonably be drawn from the facts alleged that it can have any
relevance.  In other words, although some latitude may be allowed, the
ordinary principles involved in reasoning by inference cannot simply be
ignored.  The inquiry in civil cases is, of course,  whether the inference sought
to be drawn from the facts proved is one which by balancing probabilities is
the one which seems to be the more natural or acceptable from several
conceivable ones.  (See Govan v Skidmore 1952 (1) SA 732 (N) at 734 B – D
as explained by Holmes JA in Ocean Accident and Guarantee Corporation
Ltd v Koch 1963 (4) SA 147 (A) at 159 B – D.)    While there need not be
rigid compliance with this standard, the inference sought to be drawn, as I
have said, must at least be one which may reasonably be drawn from the facts

alleged.   If the position were otherwise the requirement of a prima facie case
would be rendered all but  nugatory.   As previously indicated, there are
exceptional cases where the requirement may be relaxed, such as for example
where a defendant seeks to attach the property of a peregrine alleged by the
defendant, in the alternative to a denial of liability, to be a joint wrongdoer (cf
the MT Tigr case, supra, at 868 I – 871 B).  But nothing like that arises in the
present case and the ordinary principles must apply.
[15] Reverting to the facts, it was common cause in this Court that the
evidence justified the inference that the appellants caused Goldleaf to enter
into the Goldleaf agreement with the sole object of affording Harksen a
respite from his creditors.  It was also common cause that they chose to act
through the medium of Goldleaf in order to conceal their identity as
Harksen’s benefactors.  Their conduct in so doing was clearly insufficient to
justify the relief sought.  Notwithstanding the wide range of allegations of

fraud in the papers the only ground upon which counsel for the respondent
ultimately relied for contending that the appellants’ conduct had been
improper or fraudulent entitling the Court to pierce the corporate veil was that
they had caused Goldleaf to enter into the agreement with no intention  of
Goldleaf ever honouring its obligations in terms of the agreement.  The
question that arises is whether, applying the principles set out above, this
inference is justified.
[16] In support of the inference, counsel placed much emphasis on the
fact that although having the means to pay in terms of the agreement,
Goldleaf had failed to do so.  He relied, too, on the appellants’ use of
Goldleaf to conceal their identity as well as a letter written by Harksen to his
counsel which the respondent had somehow acquired and in which Harksen
explained why he had not paid Greve’s claim.   As far as the letter is
concerned, the context is such that it does not assist, nor does the concealment

of the appellants’ identity support the inference sought to be drawn.  That
leaves the non-payment.
[17] What immediately strikes one is that the Goldleaf agreement was
so structured that Goldleaf would not acquire the claims until it had paid the
sellers and that unless it paid on or before 10 March 1995 the agreement
would be null and void.  If indeed it had been Goldleaf’s intention never to
pay, all it could have hoped to achieve was a moratorium for Harksen of a
month.  That would hardly have served the latter’s purpose.  There was
certainly nothing in the papers to suggest that it would have.
[18] Counsel’s response was to contend that Goldleaf’s subsequent
attempts to enforce the agreement and to tender payment were all part of a
fraudulent scheme to keep Harksen’s creditors at bay without paying their
claims.  But this far-reaching assertion has no basis.  From the appellants’
point of view, the object of the exercise was for Goldleaf to acquire all the

claims of the sellers.  If any claim was not acquired, it could have been
enforced against Harksen and in that event the Goldleaf agreement would
have served no purpose.  There was nothing in the papers to suggest that
Goldleaf’s contention that Greve and Tercur were in breach was without
substance.  If it is accepted that they were in breach, as Goldleaf alleged, there
really can be no basis for contending that the tender to pay and the attempt to
enforce the agreement were not genuine.  It follows too that the assertion that
the appellants never intended Goldleaf to honour its obligations under the
agreement similarly lacks allegations of fact necessary to support it.
[19] In any event, even if the appellants had intended Goldleaf not to
honour its obligations and in this way perpetrate a fraud on the respondent, it
would not follow, in my view, that the respondent would be entitled to the
relief he seeks.  It is important to note that the respondent does not claim
damages for fraud; nor do the facts support such a claim.  (There is no

evidence of the respondent having suffered a loss;  in other words, there is no
evidence that Goldleaf would be unable to pay if sued.   The respondent says
no more than that he has been advised that if he were to obtain judgment
against Goldleaf the appellants would most likely strip the company of its
assets.)  Instead, what the respondent seeks to do is to enforce his contractual
rights arising under the Goldleaf agreement against the appellants rather than
the party with whom he actually contracted, namely Goldleaf.  The
justification for this is said to be that because the appellants used the company
as a vehicle to perpetrate a fraud, therefore the distinction between the
corporate entity and those who control it should be ignored and the latter held
liable on the contract.  I cannot agree.
[20] There can be no doubt that the separate legal personality of a
company is to be recognised  and upheld except in the most unusual
circumstances.  A court has no general discretion simply to disregard the

existence of a separate corporate identity  whenever it considers it just or
convenient to do so.  (See Cape Pacific Ltd v Lubner Controlling Investments
(Pty) Ltd and Others  1995 (4) SA 790 (A) at 803 A – H.)   The circumstances
in which a court will disregard the distinction between a corporate entity and
those who control it are far from settled.  Much will depend on a close
analysis of the facts of each case, considerations of policy and judicial
judgment.  Nonetheless what, I think, is clear is that as a matter of principle in
a case such as the present  there must at least be some misuse or abuse of the
distinction between the corporate entity and those who control it which results
in an unfair advantage being afforded to the latter.
[21] On the facts appearing from the papers I can see neither the
abuse nor the advantage.  The respondent entered into an agreement with a
foreign corporation in terms of which he acquired contractual rights against
that corporation.  At the time he was unaware of the identity of the persons

behind it and their identity could not have played a role in persuading him to
enter into the agreement.  There is no evidence that the corporation would be
unable to pay if sued;  there is nothing to suggest that the respondent was
unfairly prejudiced by the distinction which exists between the company and
those who control it.  The truth of the matter is simply that the respondent
seeks to ignore the party with whom he contracted and to enforce his rights
against a more convenient defendant.
[22] Counsel for the respondent sought to rely on the Cape Pacific
Ltd case, supra, and in particular on a dictum of Smalberger JA at 805 G to
the effect that there was “no reason why piercing of the corporate veil should
necessarily be precluded if another remedy exists”.    Counsel contended that
the existence of a remedy against Goldleaf did not preclude the respondent
from proceeding against the appellant on account of the latter’s fraud.

[23] I do not understand the learned judge as having suggested that
the existence of another remedy is an irrelevant consideration  nor,  I think,
should the dictum be read out of context.  The facts of the case were very
different from the present one.  There, the plaintiff sued company A for the
delivery of shares in company B which entitled the holder to occupy a
particular flat.   The plaintiff obtained judgment but in the meantime the
shares in question had been transferred from company A to company C at the
instance of an individual who controlled both  and who had effected the
transfer with the object of thwarting the plaintiff’s rights.  It was in these
circumstances that it was held on appeal in subsequent proceedings that the
veil of corporate personality should be pierced in relation to company A’s and
C’s fraudulent dealings with the shares.  In coming to this conclusion the
Court rejected the contention that the plaintiff was not entitled to succeed as it
could have recovered the shares from company C had it timeously joined that

company in the original action on the basis of the so-called “doctrine of
notice”.  In the present case the respondent’s contractual rights are
enforceable in the first instance against Goldleaf.  The very exceptional nature
of the relief which the respondent seeks against the appellants requires, in the
circumstances of the present case, that he should have no other remedy.  Quite
apart from the other considerations mentioned above, the failure to show that
Goldleaf would be unable to pay if sued is therefore  fatal to the respondent’s
case.
[24] It follows that in my view the respondent failed to discharge the
burden of establishing a prima facie case in respect of his claim against the
appellants.  It is accordingly unnecessary to consider the issue of the existence
or otherwise of a ratio jurisdictionis.

[25] The appeal is upheld with costs, including the costs occasioned
by the employment of two counsel.  The order of the Court a quo is set aside
and replaced with the following:
“The rule nisi is discharged.  The applicant is to pay the costs of first,
second and third respondents, including those occasioned by the
employment of two counsel.”
D  G  SCOTT
JUDGE OF APPEAL
CONCUR:
HEFER
ACJ
HARMS            JA
MTHIYANE     JA
FRONEMAN   AJA