Hülse-Reutter and Others v Gödde

The first and second appellants were German citizens resident outside South Africa, and the third appellant was a foreign company incorporated in the Isle of Man. The respondent, also a German citizen, applied ex parte in the Cape Provincial Division for the attachment of property belonging to the appellants to confirm the court’s jurisdiction in a contemplated action. The contemplated action arose from a 1995 agreement in terms of which the respondent agreed to cede claims against an insolvent debtor, Harksen, to the third appellant (Goldleaf Properties Ltd) in return for payment of DM 4 million. Goldleaf failed to pay by the stipulated date. Instead of suing Goldleaf, the respondent sought to hold the first and second appellants personally liable, alleging that they controlled Goldleaf and had fraudulently caused it to enter into the agreement with no intention of performing. The attachment was granted and later confirmed by the court a quo. The appellants appealed to the Supreme Court of Appeal.

The appeal was upheld with costs. The order of the court a quo confirming the attachment was set aside and replaced with an order discharging the rule nisi and directing the respondent to pay the appellants’ costs, including the costs of two counsel.

The case is a leading authority on the evidentiary standard required to establish a prima facie case in attachment proceedings and on the limits of the doctrine of piercing the corporate veil in South African law. It confirms that courts will not lightly disregard separate corporate personality and that allegations of fraud must be supported by concrete facts.