David Leibowitz t/a Lee Finance v A T Mhlana and Others

The respondents, teachers residing in the Transkei, obtained small moneylending loans from the appellant, a Durban-based businessman trading as Lee Finance. As security, insurance policies were attached to the loan applications in Durban. In 2001 the respondents brought an urgent application in the Transkei High Court seeking interdictory and declaratory relief against the appellant and certain insurance companies, alleging that the appellant fraudulently ceded, surrendered or utilised their insurance policies without authority. The appellant raised a point in limine that the Transkei High Court lacked jurisdiction. The court of first instance upheld the objection and dismissed the application, but the full court overturned that finding and held that the High Court had jurisdiction. The appellant then appealed to the Supreme Court of Appeal.

The appeal was upheld with costs, subject to a limitation to 50% of the record preparation costs. The order of the court a quo was set aside and replaced with an order dismissing the respondents’ appeal with costs. The respondents’ attorneys were ordered to pay the costs of a prior postponement de bonis propriis on an attorney-and-client scale.

The case is an important authority on High Court jurisdiction in South African civil procedure. It clarifies the interpretation of 'causes arising' in s 19 of the Supreme Court Act, reaffirms the common-law basis of jurisdiction, distinguishes between a company’s principal place of business and a branch office, and confirms that non-opposition does not amount to submission to jurisdiction. It also underscores professional responsibility through a punitive costs order against negligent attorneys.