Kahan v Lidchi and Another Kahan v Clara Kahan and Others (APPEAL 329 of 1999) [2000] NAHC 19 (30 May 2000)

(P) A 3 2 9 / 99 LEVY. AJ 2 0 0 0 / 0 5 / 30 PHILLIP ERNEST KAHAN a nd ELIANE LIDCHI CHRISTOPHER RAYNER in re: PHILLIP ERNEST KAHAN a nd CLARA KAHAN DIALE LIDCHI ELIANE LIDCHI CHRISTOPHER RAYNER FARREL WAINER OFFSHORE DIAMOND (SWA) LTD DIAMOND DREDGING & MINING COMPANY (PTY) LYF PRACTICE SUMMARY JUDGMENT - This is t he R e t u rn Day of a Rule nisi in an Application m a de by t he Peregrinus to s ue a n o t h er Peregrinus by Edictal Citation. Applicant m u st apply to a t t a ch property of Defendant s i t u a t ed in Namibia a nd show t h at t he c a u se of action arose within the jurisdiction of t h is Court. The Applicant m u st also show t h at it h as a p r i ma facie case. An agreement c a n n ot be application of t h is n a t u r e, b ut only in an action. interpreted on motion or on Prescription is an i s s ue for t he trial Court. Rule nisi m a de absolute. CASE NO.: (P) A329/99 IN THE HIGH COURT OF NAMIBIA In the matter between: PHILLIP ERNEST KAHAN APPLICANT and ELIANE LIDCHI FIRST RESPONDENT CHRISTOPHER RAYNER SECOND RESPONDENT in re: PHILLIP ERNEST KAHAN PLAINTIFF and CLARA KAHAN DIALE LIDCHI ELIANE LIDCHI FIRST DEFENDANT SECOND DEFENDANT THIRD DEFENDANT CHRISTOPHER RAYNER FOURTH DEFENDANT FARREL WAINER FIFTH DEFENDANT OFFSHORE DIAMOND (SWA) LTD SIXTH DEFENDANT DIAMOND DREDGING & MINING COMPANY (SWA) LTD SEVENTH DEFENDANT CORAM: LEVY, A. J. Heard on: 2000.05.19 Delivered on: 2000.05.30 JUDGMENT LEVY, A. J.: The Applicant herein is represented by Adv. D. F. Smuts and the Respondent by Adv G H Oosthuizen. The territorial jurisdiction of the High Court of Namibia extends throughout the Republic of Namibia up to the Republic's geographical boundaries, but no further. For the purposes of litigation, anyone residing within the said boundaries, whose residence is not temporary, even though it may be indefinite, is said to be an incola of Namibia. Such person need not be a citizen of, nor even domiciled in, Namibia. A person not so residing is said to be a peregrinus. c.f. Joosub v. Salaam 1940 T. P. D 177 at 179 Kallos a Sons (Pty) Ltd v. Mavromati 1946 W. L. D 312 at 315. Because the jurisdiction of the High Court does not extend beyond the geographical boundaries, any litigant whether an incola or a peregrinus desirous of sueing out of the High Court of Namibia, a peregrinus, such litigant must obtain the leave of the High Court to sue by edictal citation. Originally Courts, in the aforesaid circumstances, were reluctant to permit such an action, in that effect to a judgment, could not be given. The Courts therefore required that when the litigant applied for leave to sue by edictal citation, such litigant must also attach property belonging to the peregrinus which was situate within the Court's jurisdiction. Such attachment was referred to as an attachment ad confirmandam iurisdictionem or ad fundandam jurisdictionem, depending upon the circumstances of each case. For a number of reasons immaterial hereto, the requirements of effectiveness became irrelevant, and property of any value, could be attached. Where the litigant who is sueing is itself a peregrinus, in addition to the attachment of the property, the litigant must rely on a cause of action which arose within the Court's jurisdiction. Only then will the court grant the attachment and permit the litigant to sue the peregrinus by edict. There is, however, another requisite. The applicant for leave to attach and to sue, must satisfy the Court that he has a prima facie case. Because there is no jurisdiction until the property is attached and the litigant has leave to sue, the application to Court must by necessity be ex parte. Time, costs and the duplication of proceedings are saved by joining different parties instead of bringing separate actions. Apart from consideration of convenience, if a third party has a direct or substantial interest in any order the Court might make in proceedings, or if such an order cannot be sustained or carried into effect without prejudicing that party, such party is deemed to be a necessary party and must be joined in the proceedings. Amalgamated Engineering Union v. Minister of Labour 1949 (3) SA 637(A). Even if some defendants are incolae while others are peregrini, they must all be joined. On 15 December 1999, the Applicant (who is a peregrinus) applied to the High Court of Namibia for leave to attach certain property (more fully set out hereunder) and for leave to sue by edict First Respondent, Eliane Lidchi, a peregrinus and Second Respondent, Christopher Rayner, also a peregrinus . The property, the Applicant sought to attach was A. First Respondent's assets situate in Namibia comprising. :- 1. 1264 400 shares in Offshore Diamonds (S. W. A) Ltd 2. 3. 6666 shares in Moly Copper Mining and Exploration Company (SWA) Ltd 3400 shares in Diamond Dredging and Mining Company (SWA) Ltd The share registers, Applicant said, are at the registered offices of the respective companies being the office of one Van Schalkwyk & Co, 1st floor N G Church Center, 17 Luderitz Street, Windhoek. B. Second Respondents assets in Namibia comprising:- 2 one share in Diamond Dredging and Mining Company (SWA) Ltd; one share in Moly Copper Mining and Exploration Company (SWA) Ltd. The share registers of the said Companies, Applicant said, were also at their registered offices which was the office of the aforesaid Van Schalkwyk and Co. A copy of the intendit wherein the Applicant set out its cause of action was annexed to its Application for leave to attach and for leave to sue. In terms of the intendit (which Applicant described as Particulars of Claim), Applicant alleged, as far as is relevant to the present proceedings that:- 1 The Plaintiff (Applicant) resides in Johannesburg and is therefore a peregrinus and sues:- 1.1 in his personal capacity, and 1.2 in his representative capacity as beneficiary of the Clara Kahan Family Trust, a trust registered in South Africa and on its behalf. The trust is registered in terms of the Trust Moneys Protection Act 34 of 1934, alternatively, the Trust Property Control Act 57 of 1988. 2. First Defendant is a widow Clara Kahan residing at 9 B Promenanden Street, Windhoek, and who is therefore an incola and is sued, 2.1 in her personal capacity, and, 2.2 in her capacity as trustee of the Clamodianel Trust, a trust registered in Namibia in terms of the Trust Moneys Protection Act, 34 of 1934. 3. Second Defendant is Diane Lidchi who was sequestrated in South Africa but who resides at 9 B Promenanden Street Winhoek and is therefore an incola, and she is sued; 3.1 in her personal capacity and where necessary with the assistance of the trustee of her insolvent estate Olivier Micheal Powell and Norman Simon and 3.2 in her capacity as trustee of the said Clara Kalan Family Trust and 3.3 in her capacity as trustee of the Clamodianel Trust 4. The Third Defendant is Eliane Lidchi, an architect residing in Johannesburg and sued; 3.2 in her personal capacity, 3.3 in her capacity as trustee of the Clara Kahan Family Trust 5. The said Powell and Simon agreed to abide the judgment of this Court. 6. The Fourth Defendant is Christopher Rayner an adult businessman residing in Johannesburg and a peregrinus, in his personal capacity and in his capacity as trustee of or alternatively as a former trustee of the said Clara Kahan Family Trust. 7. The Fifth Defendant is Farrel Wainer of Johannesburg, a peregrinus and sued in his capacity as trustee of the said Clamodianel Trust. 8. The Sixth Defendant is Offshore Diamonds (SWA) Ltd a duly registered company with its registered office at the office of the aforesaid Van Schalkwyk, Windhoek, and is therefore an incola of this Court. 9. Seventh Defendant is Diamond Dredging and Mining Co. (SWA) Ltd, duly registered with its registered office at the office of Van Scalkwyk at aforesaid, and is therefore an incola of this Court. 10. No relief was sought against Sixth and Seventh Defendants who were joined by reason of their substantial interests in the outcome of the proposed action. 11. At all material times: - 11.1 Sixth Defendant was the holding company of a group of companies including Seventh Defendant. 11.2 The Sixth and hence the other companies in the group including the Seventh Defendant were directly or indirectly controlled by the Kahan and Lidchi families headed by one George Kahan and First Defendant who were brother and sister. 11.3 The Plaintiff is a member of the Kahan family, the First Respondent is his grandmother and Second and Third Defendant (being mother and daughter) are members of the Lidchi family and the Plaintiffs aunt and cousin respectively. 12. On or about 8 January 1987, and in Johannesburg First Defendant acting as donor, concluded a trust agreement with Second, Third, Fourth Defendants and one Max Levenberg as trustees. Plaintiff annexed the trust deed to his pleadings and marked it "P2" (I shall also refer to the trust deed as "P.2") 13. The terms of the trust deed express or implied or tacit were inter alia, that:- 13.1 First Dependents donated to and settled on the said Defendants and the said Levenberg in their capacity as aforesaid the cash sum of R1000.00 upon trust for the intents and purposes of the agreement, and on the terms set out therein, 13.2 the trust fund would comprise the amount so donated, all additions and accruals thereto and all property and moneys vested in them in terms thereof. 13.3 the trust thereby created was to be known as The Clara Kahan Family Trust, and would terminate 90 days after the death of the last survivor of the Second Defendant and the said George Kahan and the Third Defendant (whichever was the later) or 90 days after their simultaneous deaths, 13.4 "The DL beneficiaries" were defined to mean only beneficiaries who were lawful descendant of the Second Defendant including the Second Defendant herself. 13.5 "the PK beneficiaries" were defined to mean any beneficiary who was a lawful descendant of the Plaintiff (including the Plaintiff himself), 13.6 "the trust capital" was defined to include reference to property and rights other than money, and the trust fund meant the property of the trust for the time being, including money and rights, 13.7 "the trust fund" as constituted and remaining on the termination of the Trust would then be awarded by the trustee to such beneficiaries as the trustees may choose, and if to more than one, in any proportions determined by the trustees, provided that 50% of the total award at any one time was made to the PK beneficiaries and 50% thereof was simultaneously made to the DL beneficiaries. 13.8 during the subsistance of the trust, the trustees could in their absolute and unfettered discretion make awards of capital from the trust fund to any beneficiary or beneficiaries, and if to more than one, in any proportions determined by the trustees. There would be no limit to the extent of such capital award, or any such capital award, and it would even be within the discretionary power of the trustees to exhaust the trust fund entirely by this means, should they so think fit; provided that 50% of the total award at any one time was made to the PK beneficiaries and 50% thereof was simultaneously made to the DL beneficiaries, 14. Sub-clauses 5.1 and 5.2 of "P2" (the Clara Kahan Family Trust) were initially incorporated in the trust deed without the provisos referred to in 13.7 and 13.8 supra. As in evident form "P2" the provisos are in a typescript which differs from the main body of the said sub-clauses. 14.1 On a proper construction of sub-clause 5.2 of "P2" and in the light of the background and surrounding circumstances the proviso contained therein was inserted in substitution of the words " the trustees may in their absolute and unfettered discretion make awards of capital from the trust fund to any beneficiary or beneficiaries and if to more than one, in any proportions determined by the trustees " 15. Pursuant to the said trust deed: 15.1 the Clara Kahan Family Trust was registered with the Master of the High Court of South Africa, Transvaal Provincial Division; 15.2 the Second, Third and Fourth Defendants and the said Levenberg were appointed as trustees by the Master of the High Court of South Africa, Transvaal Provincial Division, who issued them with letters of Authority, and subsequently the said Levenberg resigned, 15.3 at all material times the trust fund was constituted of both income and capital at all material times including; 15.3.1 295 000 shares in the Sixth Defendant 15.3.2 3000 shares in the Seventh Defendant 15.3.3 N$ 100,000.00 15.4 the Plaintiff accepted the benefit conferred upon him in terms of the Clara Kahan Family Trust and he has no descendants as contemplated by the trust deed, and is accordingly the sole "PK beneficiary" as contemplated therein; 15.5 the Second and Third Defendants are the sole "DL beneficiaries" as contemplated therein. 16. At all material times hereto, the Second, Third and Fourth Defendants were obliged to administer the Clara Kahan Family Trust in the interest and for the benefit of the beneficiaries, including the Plaintiff, and in accordance with the terms of "P2" (the Trust Deed) the provisions of the Trust Money Protection Act, 34 of 1934, the Trust Property Control Act, 57 of 1988 and the common law. 17. In particular, the said Defendants were obliged to: 17.1 exercise their powers with the care, diligence and skill which can reasonably be expected of a person who manages the affairs of another. 17.3 administer the settled moneys and trust fund diligently and properly 18.3 perform their duties in a due can faithful manner, 18.4 desist from prejudicing the interest of the beneficiaries, 18.5 keep and maintain full books, records, accounts and documents relating to the administration of the trust, disposal of it property, investment thereof, safe custody, control, administration, alienation or distribution thereof, 18.6 satisfactorily perform any duty imposed upon them by or under the said legislation and the trust deed, 18.7 conserve the trust property in accordance with the provisions of the trust deed, 18.8 pay the income and deliver or transfer the capital thereof to the persons entitled thereto in accordance with the terms of the trust deed, 18.9 avoid a position where the trustee's duties and private interests conflicted 18.10 disclose to the beneficiaries all the information needed for them to form a judgment as to whether a proposed cause of action for which their consent was required or asked was in the interest of all the beneficiaries, 18.11 furnish to the co-trustees and/or any beneficiary on request an accounting for the state of the administration of the trust, and of any dealings with the trust property, such account to be comprehensive and to give a true picture both of income and expenditure during the period covered, supported by the relevant vouchers, 19. During or about September 1996, the First Defendant as donor, concluded a trust agreement with herself, the Second and Fifth Defendants as trustees. ( A copy of the agreement was also annexed to the interdict marked " P 3" and is the Clamodianel trust) 20. In terms of the Clamodianel Trust agreement: 20.1 The First Defendant donated and settled upon the said Defendants as trustees:- 20.1.1 295 000 shares in the Sixth Defendant 20.1.2 3000 shares in the Seventh Defendant 20.1.3 certain other assets, for purposes of the Clamodianel Agreement 20.2 The trust fund of this trust would comprise the monies and shares so donated as well as additions and accruals. 20.3 The Clamodianel Trust would continue after the death of the First Defendant and would terminate 90 days after the death of last survivor of the Second and Third Defendants or 90 days after their simultaneous deaths, 20.4 "beneficiaries" were defined to include the First Defendant, Second Defendant and Third Defendant, but did not include the PK beneficiaries, 20.5 "the capital", "trust fund" and "income" and the powers as the trustees to award same to the beneficiaries were defined in substantially the same terms as appear in the Clara Kahan Family Trust; but without the proviso that any award should be as to 50% to the PK beneficiaries and 50% to the DL beneficiaries. 21. Pursuant to the Clamodianel Trust Agreement 21.1 the Master of the High Court of Namibia, Windhoek, appointed First, Second and Fifth Defendants as trustees of the Clamodianel Trust, and issued them with letters of authority, 21.2 the said Defendants assumed the duties previously listed above in relation to the Clamodianel Trust and its beneficiaries, 21.3 the First, Second, Third, Fourth and Fifth Defendants delivered the assets of the Clara Kahan Family Trust to the First Defendant or to the Clamodianel Trust (the Plaintiff at present being uncertain as to which) such delivery was unlawful for the reasons set out below. If the delivery was affected to the First Defendant then she was a mere conduit for delivery to the Clamodianel Trust and in fact delivered such assets to that Trust. 22. During or about January 1997, and without the knowledge and consent of the Plaintiff 22.1 the Second, Third and Fourth Defendants purported to wrongfully terminate the Clara Kahan Family Trust, and 22.2 purported to award the full extent of the trust fund of the Clara Kahan Family Trust (including the said 295 000 shares in the Sixth Defendant and 3000 shares in the Seventh Defendant) to the First Defendant, alternatively, via the First Defendant to the Clamodianel Trust without the consent of the Plaintiff and without awarding 50% thereof, or any portion to the Plaintiff as the PK beneficiary and pursuant to such award caused the delivery of the assets of the Clara Kahan Family Trust. 23. Plaintiff says that the aforesaid conduct was unlawful, was in breach of the duties of a trustee and was ultra vires the terms of the Clara Kahan Family Trust, and in breach of the provisions of the said Trust, or it was made in error and in the absence of a valid cause and brought about an unjust enrichment of the Clamodianel Trust. 24. Plaintiff alleges that by reason of the aforesaid conduct the Clara Kahan Family Trust has in fact not terminated. Plaintiff concludes his intendit making five claims the first three in the alternative. Plaintiff says that the personal interests of Second and Third Defendants with whom Fourth Defendants acted jointly conflicted with their duties as trustees of the Clara Kahan Family Trust and that the said transactions were not for the benefit of the Clara Kahan Trust or its beneficiaries but for the benefit of inter alia Second and Third Defendants. As a consequence Plaintiff says the transactions are voidable, and the Clamodianel Trust is obliged to restore the said 295 000 shares to Sixth Defendant and 3000 shares in the Seventh Defendant to the Clara Kahan Family Trust as well as all additions accruals thereto. Plaintiffs first claim i.e. Claim A, is for an order that the Clamodianel Trust as represented by First, Second and Fifth Defendants in their capacity as trustees restore the aforesaid shares and accruals to the Clara Kahan Family Trust. Plaintiffs Second Claim i.e. Claim B, made in the alternative to A, is that the Clamodianel Trust was unjustifiably enriched by not less than N$l 500 000 00 and that that trust is obliged to replay the Clara Kahan Family Trust the said amount. In the alternative to both claims A and B, and as his third Claim i.e. claim C, Plaintiff says the value of the aforesaid shares was NS1500 000.00 and that Second, Third and Fourth Defendants jointly and severally, the one paying the other to be absolved are obliged to compensate the Plaintiff for the damages he has suffered, and which amount to half of the value of the said shares in the said Defendant companies, amounting to the sum of NS750 000 00 which would have accrued to him had the trustee complied with the provisions of the Clara Kahan Family Trust and their duties in terms thereof and he accordingly claims the said sum from Second, Third and Fourth Defendants in their personal capacities jointly and severally the one paying the other to be absolved. Plaintiffs fourth claim i.e. claim D is that Second, Third and Fourth Defendants account to him supported by vouchers for all their dealings with the Trust Fund of the Clara Kahan Family Trust from the date of their appointment to date. Plaintiffs fifth claim i.e. claim E, is for payment by Second, Third and Fourth Defendants in their personal capacities jointly and severally the one paying the other to be absolved the sum N$50 000 00. The Application of the Plaintiff with the said draft intendit and the annexures thereto which included The Clara Kahan Family Trust Agreement, were placed before the Court and the Court therefore granted the Rule Nise referred to above, the return day whereof was postpone from time to time. On 20 January 2000, First and Second . Respondent (i.e. Eliane Kahan and Christopher Rayner) gave notice of intention to oppose and an affidavit by the aforesaid Eliane Kahan was filed. Therein she contended that the cause of action relied on by Applicant did not arise within the jurisdiction of the High Court of Namibia and that therefore the Rule Nisi should be dismissed. In the application the Applicants alleged that First, Second, Third, Fourth and Fifth Defendants delivered the assets of the Clara Kahan Family Trust to the Clamodianel Trust the situs of which Trust is Namibia and the Master of the High Court of Namibia appointed the trustees in respect of the said Trust. If the aforesaid assets were wrongfully and unlawfully removed from The Clara Kahan Family Trust and delivered to the Clamodianel Trust which is wrongfully and unlawfully retaining same and if such wrongful and unlawful conduct is actionable at the instance of Applicant/Plaintiff, then indeed, the cause of action arises within the jurisdiction of the High Court. Furthermore, if the said acquisition of those assets by the Clamodianel Trust unjustifiably enriched the said Trust, the High Court would have jurisdiction to hear an action arising therefrom. Furthermore First and Second Respondents who are trustees of the said Clamodianel Trust are incolae of Namibia. Adv Oosthuizen representing First and Second Respondents argued vigorously that there was no prima facie case in that the Applicants claim if any had been prescribed. Prescription must be pleaded by a Defendant. It is therefore a matter for decision by the Trial Court and Applicant in his replying affidavit says that the evidence will disclose that Plaintiff could not reasonably have acquired knowledge of the circumstances giving rise to the indebtedness of the First and Second Respondents more than three years prior to the service on them of the intendit. Furthermore if the evidence established that the Clamodianel Trust may be retaining assets to which it is not entitled, prescription may well not be an issue. Mr Oosthuizen also presented an argument that on a proper interpretation of the Clara Kahan Family Trust Agreement if the said assets were transferred to the Clamodianel Trust, such transfer was not wrongful, unlawful nor ultra vires. The proper way to interpret agreements, no matter what there nature is, is by way of Summons and appropriate pleadings, and then evidence at the trial. Agreements cannot be interpreted by way of motion proceedings or affidavits as in the instant case. I am satisfied that Applicant has made out a prima facie case in this application and that the Rule Nisi issued on 15 December 1999 should be made final. In the Application, Applicant had asked that costs of the application (unless opposed) be costs in the main action. I am of the view that Respondents were entitled to present their case and that a fair and just order would be to make the costs, costs in the cause. Accordingly the Order of this Court is:- (a) The Rule Nisi issued on 15 December 1999, the return day whereof postponed from time to time, is hereby made final (b) The costs of this Application shall be costs in the cause. ON BEHALF OF APPLICANT Instructed by: ADV D F SMUTS Lorentz & Bone ON BEHALF OF Ist AND 2nd RESPONDENTS ADV G H OOSTHUIZEN Instructed by: Van der Merwe & Greeff