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[2020] ZAWCHC 124
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MV Cape Providence and Another v Nassua Maritime Holdings Designated Activity Company (AC5/2020) [2020] ZAWCHC 124 (11 September 2020)
IN
THE HIGH court of South Africa
(WESTERN
CAPE DIVISION, CAPE TOWN)
CASE
NO:
AC5/2020
In
the matter between:
MV
“CAPE PROVIDENCE”
1
st
Applicant/ 1
st
Defendant
PROVIDENCE
NAVIGATION LTD
2
nd
Applicant/ 2
nd
Defendant
and
NASSUA
MARITIME
HOLDINGS
DESIGNATED
ACTIVITY COMPANY
Respondent/Plaintiff
JUDGMENT
DELIVERED ELECTRONICALLY ON 11 SEPTEMBER 2020
INTRODUCTION
[1]
There are two applications in front of this court.
[1.1]
The first is an application in terms of rule 30A of the Uniforms
Rules of Court (“the Rules”) for an order directing
that
the respondent make the complete texts of three documents available
for inspection, such documents having been referred to
in a document
annexed to the particulars of claim of the plaintiff (the respondent
in the present matter) in the main action. These
documents were
requested in terms of Admiralty Rule 15 read with rule 35(12). After
delivery of the relevant notice in terms of
the Rules, the respondent
produced redacted versions thereof which are not to the satisfaction
of the applicants.
[1.2] The second is
a supplementary application for the production of the complete texts
of two further documents. These documents
are referred to in the
redacted versions of the documents which were produced in terms of
rule 35(12) in relation to the first
application. This application is
brought in terms of Admiralty Rule 25 and in terms of the court’s
inherent powers to grant
relief not specifically provided for in the
Rules.
BACKGROUND
[2]
During March 2020, the first respondent in the present application
(“Nassau”)
caused the first applicant, the mv “Cape
Providence” (“the vessel”) to be arrested at the
Port of Saldanha
Bay and thereby instituted an action
in rem
against the vessel. The second applicant (the second defendant in
the main action), is the owner of the vessel (“the owner”).
[3]
Nassau avers that its claim is based on a loan agreement (“the
loan agreement”)
concluded between the owner and NHS Nordbank
AG (“the Bank”). It is further averred that “all
rights and obligations
arising from the loan agreement” were
assigned to Nassau on 21 June 2019 (“the loan assignment
agreement”).
The loan assignment agreement, together with
its addenda are attached to the summons in the main action.
[4]
It is common cause that during 2008, the Bank provided loan finance
to a group of
companies, of which the owner was one, in the amount of
US$418 441 800.00 for a fleet ship building project. The
loan
was secured by, amongst other, mortgages over the vessels to be
built, including the vessel.
[5]
Nassau avers that prior to the assignment of the loan, the owner
persistently failed
to make payments under the loan agreement. This
failure to pay continued after the assignment, and by virtue of the
loan agreement,
the full outstanding amount became due by 9 March
2020. Shortly thereafter, on 13 March 2020, the vessel was arrested
in the Port
of Saldanha Bay at the instance of Nassau.
[6]
The owner attacks the standing of Nassau to have brought the in rem
proceedings, by
amongst other, disputing the validity of the loan
assignment agreement and averring that there could be no valid
transfer of rights
under the loan agreement as a matter of German
Law.
THE RULE 30A
APPLICATION
The relevant law
[7]
The three documents which are the subject of the rule 30A application
have been requested
in terms of rule 35(12). These documents have
been provided under the rule, but not to the satisfaction of the
owner, as the documents,
it is claimed, have been severely redacted
to the extent that they are almost completely obliterated.
[8]
For the sake of completeness, it should be mentioned that since these
are admiralty
proceedings, rule 35 (with the exception of sub rule 5)
is applicable by virtue of Admiralty Rule 15 which provides that
discovery
of documents in admiralty proceedings shall be in
accordance with rule 35.
[9]
Rule 35(12) provides:
“
Any
party to any proceedings may at any time before the hearing thereof
deliver a notice as near as may be in accordance with Form
15 in the
First Schedule to any other party in whose pleadings or affidavits
reference is made to any documents or tape recordings
to produce such
document or tape recording for his inspection and to permit him to
make a copy or transcription thereof. Any party
failing to comply
with such notice shall not, save with the leave of the court, use
such document or tape recording in such proceedings
provided that any
other party may use such document or tape recording”
[10]
It is trite that where the party seeking the production of documents
in terms of Rule 35(12)
and where such party is not satisfied with
the negative sanction provided for in the Rule in the event of non-
compliance, such
party may resort to Rule 30A for positive relief.
Documents that can be sought in terms of Rule 35(12) are not only
documents that
are referred to in the pleadings or affidavit
themselves, but also document referred to in annexures to such
pleadings or affidavits.
In this regard, see
Universal Studios v
Movie Time
1983 (4) 736 (D) at 750 D where Booysen J said
the following:
“
An
annexure to a pleading or an affidavit seems to me to be as much part
of the pleading or affidavit as the body itself. Many references
to
documents in annexures to pleadings are probably irrelevant to the
proceedings and would for that reason not have to be produced
but it
does not follow that the Rule does not apply to documents to which
reference is made in annexures.”
[11]
The above approach was also confirmed by Van Oosten J in
Mutch
Building Materials CC v John Hanekom
(unreported GJ case number
2013/45313 dated 6 October 2014 at para [5] as well as in
Waldeck
NO v The Land and Agricultural Development Bank of South Africa
(unreported GJ case number 4013/18 dated 14 October 2019) at
paragraph [40] where it was held that “
Rule 35(12) also
covers documents of which reference is made in annexures to the
pleadings,…”
[12]
It was however stated as obiter in
Contago Trading v Central
Energy Fund
2020 (3) SCA 58 by Cachalia JA that rule 35(12)
“
requires a reference to a document in ‘pleadings or
affidavits’ – not in its annexures – before its
discovery
is sought…”
I am mindful that this was
said in obiter and the issue cannot be regarded as settled, but for
now I am swayed by what has been
said in the
Universal Studio
case, the
Mutch Material
case and the
Waldeck
case
discussed above. I am also mindful that the mere request for
production in terms of the rule is not definitive to entitlement
to
the production of the requested documents, this always being subject
to the ability to produce the documents, to privilege and
to
relevance.
[13]
For a court to order discovery, the party applying must show that the
documents sought to be
discovered can be produced, are not privileged
and are relevant. In this regard, it was held by Ponnan JA in
Centre for Child Law v Hoerskool Fochville and Another
2016
(2) SA 121
(SCA) at [18] as follows;
“
In
my view the court has a general discretion in terms of which it is
required to try to strike a balance between the conflicting
interests
of the parties to the case. Implicit in that is that it should not
fetter its own discretion in any manner and particularly
not by
adopting a predisposition either in favour of or against granting
production. And, in the exercise of that discretion, it
is obvious, I
think, that a court will not make an order against a party to produce
a document that cannot be produced or is privileged
or irrelevant.”
[14]
It is not only during the Constitutional era that the role of
discovery has been emphasised,
but the importance thereof has been
recognised in the pre-Constitutional era. In
Crown Cork & Seal
Co Inc v Rheem South Africa (Pty) Ltd and Others
1980 (3) SA 1093
(W), at p1100 B-C, it was held:
“
But
it is to be stressed that care must be taken not to place undue or
unnecessary limits on a litigant’s rights to a fair
trial, of
which the discovery procedures often form an important part. I trust
that by holding what I have I have not opened a
new door to
interlocutory litigation or to a flood of ill-founded objections on
grounds of confidentiality. Practitioners would
do well to remember
that the normal rule is full inspection.”
[15]
In the present matter, Nassau does not claim privilege but rather
that the documents in question
are not relevant and furthermore that
it is in possession only of “lightly redacted” versions
of the documents sought.
[16]
The question of relevance in the above context was considered in
Rellams (Pty) Ltd v James Brown and
Hamer Ltd
1983 (1) SA 556
(N) where it
was held at 562 H - 564A that:
“
The
question remains whether the documents called to be produced are
relevant to any matter in the action. The test for the determining
this, as laid down in
Compagnie
Financiere et Commerciale du Pacifique V Peruvian Guano Co
(1882) 11 QBD 55
, has often been accepted and applied in our courts.
After
remarking that it was desirable to give a wide interpretation to the
words ‘a document relating to any matter in question
in the
action’, Brett LJ stated the principle as follows:
‘
It
seems to me that every document relates to the matter in question in
the action which, it is reasonable to suppose, contains
information
which may-not which must-either directly or indirectly enable the
party requiring the affidavit either to advance his
own case or to
damage the case of his adversary. I have put in the words
‘either directly or indirectly’ because
as it seems to
me, a document can properly be said to contain information which may
enable the party requiring the affidavit either
to advance his own
case or to damage the case of his adversary, if it is a document
which may fairly lead him to a train of enquiry
which may have either
of these two consequences.’”
[17]
Whether documents are relevant or not is a question for the court to
decide in relation to the
pleadings. In
Santam v Segal
2010
(2) SA 160
the following was said:
“
Apropos
relevance, the important point to note is that assessment of
relevance is objective and not subjective. It is not for a
party’s
legal representative to decide what he thinks the issues are and what
documents are relevant to them. He has to provide
access to documents
which could be part of the issues and what documents could be
relevant to them. The question of relevance is
normally answered by
reference to the pleadings. The basic principle was formulated in
Compagnie
Financiere et Commerciale Du Pacifique v Peruvian Guano Company
(1882)
11 QBD 55
at 63; and restated in
Thorpe
v Chief Constable of Greater Manchester Police
[1989] 1 WLR 665
at 668 –
‘
any
documents must be disclosed which it is reasonable to suppose
contains information which may enable the party applying for
discovery either to advance his own case or to damage that of his
adversary or which may fairly lead him to a train of inquiry which
may have either of those two consequences. Discovery is thus not
necessarily limited to documents which would be admissible to
evidence.”
The requested
documents and relevance
[18]
What then are the documents requested under Rule 35 (12) and are they
relevant to the issues
raised in the pleadings? In considering this
question, it is prudent to be mindful of the case that the owner is
facing.
[19]
During May 2008 the owner entered into a contractual relationship
with the Bank when the loan
agreement was concluded. The loan was
secured by way of a mortgage over the vessel. Nassau’s claim
against the owner is based
on a loan assignment agreement in terms of
which all the Bank’s rights and obligations were assigned to
Nassau. Needless
to say, the owner is not a party to the loan
assignment agreement. The owner denies that there was a valid
assignment by the Bank
to Nassau, which if true, may put an end to
Nassau’s standing in the main action. The owner’s denial
of a valid assignment
is set out in a great amount of detail in
paragraph 12 of its plea, which I find unnecessary to repeat, save to
mention the two
grounds repeated by Nassau in paragraph 13 in its
answering affidavit in this application, namely firstly that the loan
agreement
excluded assignment more particularly as Nassau was not a
“
Syndicate Member
” and as at the date of the
assignment, the loan had been paid in full, and secondly that
the owner had a personal relationship
with the Bank and the purported
assignment to Nassau resulted in a “
change of the contents
of the Borrower’s rights under the Loan Agreement.”
[20]
Nassau avers that the document that establishes its standing is the
assignment agreement and
in any event, the defences raised by the
owner concerns the personality of the creditor.
[21]
I must pause to mention that the documents sought are all governed by
German law, in terms of
which the principles of assignment, as an
example, may differ materially from the understanding of this and
other legal concepts
in South African law. Nassau, in its answering
affidavit, and also during argument Mr Irish who appeared for Nassau,
went into
great detail of the principles of German law. This court,
however, is in no position to make any findings in this regards
without
the evidence of experts on German law, which no doubt may
have to be dealt with eventually in the main action.
[22]
It is now opportune to consider the documents which are subject to
the Rule 35(12) request and
also their nature and function. It is
neatly summed up in Nassau’s heads of argument from which I
borrow:
[22.1] The first is
the loan, sale and purchase agreement (the LSPA”) dated 28
February 2018 referred to in paragraph (D)
under the heading
“BACKGROUND” of the loan assignment agreement attached to
Nassau’s summons as annexure “A”.
In terms of the
LSPA, the Bank sold and undertook to transfer to Promontoria Holding
260 B.V. (“Promontoria 260”) the
“full contractual
position” or, if such transfer was not legally possible, to
assign certain rights.
Promontoria 260 in
turn designated Promontoria North Shipping Designated Activity
Company (“Promontoria North”) to take
transfer of a
component of the rights and obligations under the LSPA (ie the
Shipping Portfolio) including the loans in question.
[22.2] The
second is the nomination of Promontoria Maritime Holdings Designated
Activity Company (the plaintiff, referred
to as “Nassau”
after a name change) by Promontoria North (“the Nomination”),
also referred to in the loan
assignment agreement under the heading
“BACKGROUND”. Pursuant to this nomination, and on 13 June
2019, the Bank, Promontoria
North and Nassau agreed that Nassau shall
assume the position of Promontoria North under the LSPA by way of
assumption of contract
with regard to the portfolio items.
[22.3] The
third is the funded sub-participation agreement (“the FPA”)
dated 28 November 2018 referred to in the
definition section of the
loan assignment agreement, which regulated the transfer of the
commercial (not legal) title in the Shipping
Portfolio, including the
loan agreement, from the Bank to Promontoria North. This document is
actually titled “Master Funded
Sub-Participation and Trust
(Vereinbarungstreuhand) Agreement” but I shall continue to
refer to it as the FPA.
[23]
It is Nassau’s case that the loan assignment agreement
superseded the LSPA and the transactions
concluded pursuant thereto,
including the FPA and the Nomination, thus rendering those agreements
more “
of an historical footnote
” and consequently
of no relevance to the current proceedings in the main action.
[24]
The owner, however contends that since it is contesting Nassau’s
standing in these proceedings,
it is important for it to have sight
of the three requested documents. The validity of the assignment of
the Bank’s rights
and obligations under the loan agreement will
depend upon the provisions of both the LSPA and the FPA, as well as
the document
in which Nassau was nominated by Promontoria North as
assignee of the rights in question.
[25]
It is clear that the rights which Nassau relies upon in its action
against the owner are of those
rights which were the subject matter
(or at least part of the subject matters) of the agreements that have
been requested in terms
of Rule 35(12).
[26]
What is also evident is that for the assignment agreement on which
Nassau relies to be valid,
the assignor, namely Promontoria North
(who was also an assignee, referred to as the original assignee) must
have been legally
entitled to assign the rights in question. And for
Promontoria North to have been legally entitled to assign rights to
Nassau,
it must have obtained those rights validly, which it avers it
did (from the Bank) in terms of the FPA. Tracing the rights on which
Nassau relies back even further, it seems that those rights
originally vested in the Bank by virtue of the loan agreement. In
terms of the LSPA, the Bank sold and undertook to transfer the full
contractual position emanating from the loan agreement to Promontoria
260, and if this was not legally possible, it was to assign certain
rights in terms of the LSPA, to Promontoria 260, who in turn
designated Promontoria North to take transfer of a component of the
rights and obligations under the LSPA, namely those relating
to the
Shipping Portfolio, including the loan in question. This transfer,
according to Nassau, took effect on 28 November 2018.
[27]
With the owner putting the standing of Nassau in question in the
pleadings, it can hardly be
disputed that all three documents
discussed above, either each on its own or all three collectively,
can potentially be determinative
of the question on standing. There
is no question that these documents are indeed relevant in relation
to the pleadings in the
main action, both by the pleadings filed by
Nassau who relies on rights assigned to it, and by the owner who
questions Nassau’s
standing and who is entitled, in my view, to
interrogate the validity of the documents and the contractual
consequences which they
sought to effect.
Discretion
[28]
Mr Irish, argued that even if this court finds that one or more of
the documents in question
are relevant, I should nonetheless dismiss
the application in the exercise of my discretion. Two factors are
offered as to why
the application should be dismissed in the exercise
of discretion. The first is that that pleadings have closed, or will
close
shortly, whereafter the parties will call on each other to
discover. If any party is not satisfied with discovery, such party
may
resort to Rule 35(3) to request further discovery. I do not
regard this as a good reason to exercise my discretion in favour of
dismissing the application. All that it would result in is a
proliferation of processes. With the attitude adopted by Nassau in
this application, it seems unlikely that it will volunteer to
production of the requested documents in terms of rule 35(1) and
(2)
without more.
[29]
I am also mindful that Rule 35(12) provides that a party may resort
to the rule “
at any time before the hearing
” and
is not precluded from doing so before or after the close of
pleadings.
[30]
The second reason proffered for the dismissal of the application in
accordance with discretion,
is that the Bank is not a party to this
application, and it is the Bank that is refusing to provide the
documents in an unredacted
form. It is argued further that Nassau
owes the Bank a contractual duty of confidentiality and the Bank has
refused to release
Nassau form this obligation, and the disclosure of
the full portfolio items into the public domain could have a direct
adverse
impact on the unrelated commercial dealings of the Bank, its
clients and Nassau. As is the norm with contractual obligations
of confidentiality, there is an exception in the LSPA, in clause
15.1(vi) thereof, in respect
of “any information disclosed
pursuant to any law, regulation or binding order, decree or directive
of any court, arbitral
tribunal, ...”
In terms of clause
16.2 of the FPA, the confidentiality obligations of the LSPA remains
in place, which of course is subject to
the exception as discussed.
[31]
It goes without saying that this court is not bound by the
contractual confidentiality obligations,
but it is certainly a factor
to be taken in consideration when exercising its discretion on
disclosure, especially where disclosure
implicates confidential
information of a third party. In
Santam v Segal
(supra), the
following was held in para [9]:
“
In
event of a challenge a court will only order production of documents
for inspection if this is necessary either for disposing
of the
matter or for saving costs. The burden of proof must be on the party
making the challenge. The court has a discretion to
order production
which discretion must be exercised judicially. A court will in each
case have to strike a balance between the
importance of ordering
production from the point of view of doing justice or saving costs in
the proceedings in question and respecting
confidentiality. A
distinction must be drawn between confidentiality as between the
immediate parties to the litigation and confidentiality
involving
third parties. In my view the discretion to refuse production of
documents should most commonly be applied where disclosure
would
breach confidentiality involving a third party.”
[32]
In the present matter, the requested documents can be determinative
of the standing of Nassau
in these proceedings and therefore
potentially dispositive of the matter. This justifiably directs, and
fairness dictates, that
discretion must be exercised in favour of
making the documents available.
The issue of
Redaction
[33]
I now address the issue of the format in which the three requested
documents should be made available.
Nassau avers that it is not in
possession of the “clean” versions of the documents
sought, but that it has only “lightly
redacted” versions
available, whereas the owner argue that Nassau should be ordered to
produce the complete texts of the
documents and that although the
full texts may not be in Nassau’s actual possession, it does
not suggest that it cannot obtain
the full texts from one of its
affiliated companies.
[34]
There is a general rule that where a party is unable to produce a
document not in his possession,
the court will not make an order
against him in terms of Rule 35(12).
[35]
In
Gorfinkel v Gross, Hendler & Frank
1987 (3) SA 766
(C)
Friedman J had this to say, at 774G:
“
[P]rima
facie there is an obligation on a party who refers to a document …to
produce it. That obligation is, however, subject
to certain
limitations, for example, if the document is not in his possession
and he cannot produce it, the Court will not compel
him to do so.”
See also
Moulded
Components v Coucourakis and Another
1979 (2) SA 461
(WLD), at
461 D-E and the
Centre for Child Law
case (supra), at
paragraph [18].
[36]
The above principle must surely also apply where a party has in its
possession only a certain
version, as in this case, a “lightly
redacted” version of the document in question. I must accept
that Nassau has only
“lightly redacted” versions of two
of the documents requested, the exception being the third document,
namely the Nomination
to which it was a party. That it was a party to
the Nomination is undisputed (admitted in paragraph 29 of the
answering affidavit
to this application) and plainly it must be in
possession of the clean version of this tripartite agreement.
[37]
As for the other two documents, I agree with Mr Irish that the owner
has not shown that Nassau
is in control of associated companies who
are parties to the agreements and can therefore demand clean copies
from them. I can
therefore only order the production of these
documents as per the versions (“lightly redacted”) in the
possession of
Nassau.
[38]
I have taken note of the contention that because in an email from
Nassau’s attorneys dated
29 May 2020, Nassau requested whether
the owner would agree to full disclosure of the documents subject to
conditions, this is
an indication that Nassau is in possession of
unredacted versions of the documents. I cannot make this inference as
it is not indicated
that the attorneys were in fact in possession of
unredacted documents at the time, and it is not clear exactly what
has been communicated
by Nassau to its attorneys before the tender
was made. I cannot dispute the
bona fides
of the attorney who
deposed to the affidavit on behalf of Nassau, and I am sure Mr Wragge
who appeared for the applicants also
does not do so. The attorney, Ms
Jacobs of Bowman Gillfillan Inc. states in her affidavit that they
are in possession of only “lightly
redacted” versions of
the documents, which I accept to be the case. Mr Wragge did not take
the matter further during oral
argument.
THE APPLICATION
IN TERMS OF ADMIRALTY RULE 25 AND THE COURT’S INHERENT
JURISDICTION
[39]
The second application is brought in terms of Admiralty Rule 25 which
provides:
“
(1)
The court may in any admiralty proceedings
mero
motu
or
on the application of any party or other person having a sufficient
interest give any direction which it considers proper for
the
disposal of any matter before it.
(2)
Any such direction may deviate from or supplement any provision of
these rules, or of the Uniform Rules, or of any
other rules relating
to the division in question.”
[40]
In addition to the very wide discretion with which the court is
entrusted by virtue of Admiralty
Rule 25, the owner also relies on
the inherent power of the court to order a party to produce for
inspection documents not referred
to in that party’s pleadings
or affidavits (with reference to
Moulded Components
(supra) at
461 F-H).
The documents
[41]
The documents sought are;
(1)
The
Transfer Certificate pursuant to which Promontoria North assumed from
Promontoria 260 by way of assumption of contract any and
all rights
and obligation under the LSPA pertaining to the Shipping Portfolio,
dated 28 February 2018. This certificate is an appendix
to the
Nomination dealt with hereinbefore, a redacted copy of which was
provided under rule 35(12); and
(2)
The
tripartite servicing agreement concluded between the Bank,
Promontoria North and an external signing agent, pursuant to which
the Bank continued to service the Corporate Portfolio and the
Portfolio Items relating to the Shipping Portfolio Entities. This
document is referred to in the recitals forming part of the FPA, a
redacted copy of which was also provided in terms of rule 35(12).
[42]
Neither of the two documents are referred to in Nassau’s
particulars of claim and it is
for this reason that the applicants
request these documents under Admiralty Rule 25 and in terms of the
court’s inherent
jurisdiction.
[43]
Nassau attacks this application on two grounds, namely that the
relief sought is not competent
under Admiralty Rule 25, and on the
basis of relevance. I will deal with the issue of relevance first.
Relevance
[44]
Nassau contends that that since the Transfer Certificate pertains to
the transfer from Promontoria
260 to Promontoria North and the
assignment was not made pursuant to this transfer, the Transfer
Certificate is irrelevant. The
applicants, however contends that the
Transfer Certificate is relevant in that it forms part of a suit of
contracts to which the
Bank purported to sell its rights and
obligation under the loan facility which is the basis upon which
Nassau’s claim is
based. It is evident from the owner’s
plea that it denies that a valid assignment took place. It also put
Nassau’s
standing in issue as a result. Based on this stance, I
am of the view that the Transfer Certificate is indeed relevant to
the pleaded
case of the owner who is entitled to call for its
production for purpose of interrogating its validity.
[45]
As for the servicing agreement, Nassau contends that it concerns
services provided by the Bank
to its clients and has no relevance to
Nassau’s title to enforce its claim in South Africa. Contra to
this stance, the owner’s
case is that it appears that the Bank
concluded an agreement in terms of which it continues to service the
loan on which Nassau
relies for its standing, and this seems to
contradict the averments made in the particulars of claim that all
rights and obligations
had been assigned to Nassau. For this reason,
the owner avers, it is vital for purposes of its defence to the
respondent’s
claim that its legal representatives have sight of
the servicing agreement. I agree with this contention
especially in the
light of the owner’s right to be afforded a
fair opportunity to present its case and given that the rights on
which Nassau
relies, are rights which emanated from a contractual
arrangement between the Bank and the owner, which rights now seem to
have
been assigned without the participation of the owner. It is only
fair that the owner have sight to the documents to trace the validity
of the transfer of the rights from one entity to another. Surely it
must be granted the opportunity to make sure that it is being
sued by
the correct party on the basis of a valid assignment of rights on
which the claim it is facing is based.
The competency of
the relief in terms of Admiralty Rule 25 and the court’s
inherent jurisdiction
[46]
In terms of Admiralty Rule 15, rule 35 of the Rules, with the
exception of sub-rule 5, is applicable
to admiralty proceedings.
According to Mr Irish, Admiralty Rule 25 is designed to cater for
extraordinary situations, peculiar
to admiralty, which are not
covered by the Admiralty Rules. Can Admiralty Rule 25 therefore be
invoked any purpose for which provision
is made under the Admiralty
Rules or the Rules? More specifically, can Admiralty Rule 25 be
relied upon for purposes of discovery
when rule 35 is explicitly
available for this purpose?
[47]
In
Rizcun Trades (1) mv Rizcun Trader v Manley Appledore Shipping
Ltd
1988 (3) SA 953
(CPD), Conradie J held at 955 D:
“
I
do not believe that the provisions of Rule 25 of the Rules Governing
the Conduct of Admiralty Proceedings should be invoked where
there is
a perfectly acceptable remedy in Rule 47.”
[48]
In
Rizcun
, Conradie J dealt with an application for security
for costs brought by the applicant in terms of rule 47 of the Rules.
The respondent,
seeking security for costs by way of a
counter-application in its answering affidavit, sought to rely on
section 5(2)(b) and (c)
of the Admiralty Jurisdiction Regulation Act
105 of 1983 (“the Admiralty Act”) read with Admiralty
Rule 25. The section
relied on allows for a court, in exercising its
admiralty jurisdiction, to order any person to give security for
costs. The
court correctly concluded that the respondent in
that matter should not be permitted to use this unusual procedure to
secure security
for costs where there is “
a perfectly
acceptable remedy in Rule 47”
[49]
More to the point relating to discovery, is the judgement of Thring J
in
MV Urgup: Owners of the mv Urgup v Western Bulk Carriers (Aust)
1993 (3) SA 500
, where the judge declined to apply Admiralty Rule
25 “…
to compel the applicant to disclose the
existence or non-existence of documents to which the respondents
claim no proprietary
or other right or interest, but simply for the
purpose of assisting the respondents, in an interlocutory
application, to establish
the jurisdiction or power of this Court to
order the arrest of the vessel; still less to order their production
for inspection
and copying.”
[50]
In my understanding of Thring J’s judgement, he did not
conclude that Admiralty Rule 25
can never be utilised for purposes of
discovery. In recognising the wide discretion to “
give any
direction which it considers proper for the disposal of any matter
before it”,
the learned judge was of the view that it was
not appropriate in the circumstances of the matter before him to
apply the rule. In
my view, in considering whether Admiralty Rule 25
should be applied for purposes of discovery, each case should be
considered on
its own merits, keeping in mind the applicability of
rule 35 which is specifically designed for discovery, and considering
whether
this rule should be deviated from as allowed for by Admiralty
Rule 25 (2).
[51]
In the present matter, Mr Wragge appearing for the applicants raised
both urgency and convenience
as grounds for the determination of this
matter together with the Rule 30A application.
[52]
I have little doubt that there is urgency to this application. The
vessel has been under arrest
for some time, and Nassau has now
brought an application in terms of section 9 of the Admiralty Act for
the judicial sale of the
vessel. The owner is resisting the sale, and
the requested documents (both in terms of the Rule 30A application as
well as the
Admiralty Rule 25 application) are essential for purposes
of the owner’s defence. Discovery and subsequent interrogation
of the documents may well dispose of the issue of standing, either in
favour of the owner’s case, or against it.
[53]
Even if I am wrong in concluding that in the circumstances of this
matter, given the urgency,
that discovery should be allowed by
Admiralty Rule 25, I would allow discovery of the documents by virtue
of the court’s
inherent jurisdiction. I say so in the belief
that rule 35 provides for a very detailed discovery process,
involving notices and
allowances for parties to respond thereto
within twenty days. If thereafter a party is not satisfied with
discovery, such party
may call for further and better discovery in
terms of rule 35(3) and if a party is still not satisfied with
compliance, an application
to compel may follow. This can be a rather
cumbersome process which is clearly not suitable in the circumstances
of the current
matter.
[54]
In
Continental Illinois Bank v Greek Seaman’s Pension Fund
1989 (2) SA 515
, Thirion J described the Admiralty Act as “
a
statute which eschews formalism and technicality and which aims at
the expeditious and efficacious determination of claims.”
In
his works, “Admiralty Jurisdiction Law and Practice in South
Africa” G ys Hofmeyr has the equivalent to say about
the
Admiralty Rules, as follows (at page 13):
“
The
Admiralty Rules contain innovative provisions designed to give effect
to the underlying philosophy of the admiralty, namely,
the avoidance
of unnecessary formality and the promotion of expedition.”
[55]
In my view, Admiralty Rule 25 is a stand-out example of such
innovation and is tangibly more
suited to the current matter, in the
current circumstances than rule 35.
Should conditions
be imposed upon the production of the documents?
[56]
In
Crown Cork
it was held by Schultz AJ:
“…
our
Courts have a discretion to impose appropriate limits when satisfied
that there is a real danger that if this is not done an
unlawful
appropriation of property will be made possible merely because there
is litigation in progress and because the litigants
are entitled to
see documents to which they would not otherwise have lawful access.
But it is to be stressed that care must be
taken not to place undue
or unnecessary limits on a litigant’s right to a fair trial, of
which the discovery procedures often
form an important part.”
[57]
Nassau argued that should the production of the documents be ordered,
that this is a case where
the imposition of conditions limiting the
use and disclosure of the documents would be appropriate. It seeks
conditions to be imposed
that;
[57.1] the
documents are only disclosed to the applicants and their legal
advisors and/or experts in the matter, who are properly
identified,
whether in South Africa or elsewhere;
[57.2] those
advisors and experts undertake not to disseminate the documents to
any third parties; and
[57.3] that
the documents are only utilised for the purpose of this litigation in
South Africa.
[58]
The owner is dead set against the imposition of any conditions on the
disclosure of the documents,
arguing that the conditions proposes are
unworkable for the following reasons:
[58.1] if the owner
compelled to identify its advisors and experts to Nassau before
disclosing the documents to them, this will
give Nassau an unfair
advantage. Normally the identities of experts need only be disclosed
at the time of delivery of expert notices
in terms of the Rules when
it advises on the intention to call a particular expert;
[58.2] it may
be necessary to disclose the documents to third parties for purposes
of gathering evidence, for example ex-employees
of Nassau,
Promontoria North or the Bank who may be prepared to give evidence
relating to the documents; and
[58.3]
the documents will have to be disclosed to the owner’s German
lawyers who are advising the owner in proceedings
against the Bank
and other entities in other jurisdictions. It is not possible for the
German lawyers to ignore the contents of
the documents when
furnishing advice on litigation in other jurisdictions because this
court has precluded them from disclosing
the documents in relation to
proceedings in such other jurisdictions.
[59]
I have given very careful consideration as to whether it is
appropriate in this matter to impose
conditions on making the
documents available to the applicants, being mindful of the nature of
this matter, and especially the
mainstay of the defence raised by the
owner to Nassau’s claim relating to the validity of the
assignment in favour of Nassau
and consequently the latter’s
standing in these proceedings. The significance (or not) of these
issues raised in defence
may well be garnered from the requested
documents, but then it will most certainly be necessary to discuss
the contents of the
documents in consultation with experts and/or
other potential witnesses.
[60]
I am also persuaded by the reasoning of Thring J in
Unilever plc v
Polagric (Pty) Ltd
2001 (2) SA 329
where the judge recognised
that there are cases where the imposition of conditions to the
disclosure of documents are necessary
and can be justified, but went
on to say:
“
However,
I do not think that this is one of them. It is unwise, in my view,
unless very special circumstances exist, to create a
situation in
which legal advisers or experts of a party to opposed litigation may
find themselves in possession of information
which may be highly
relevant to the litigation but which they are precluded from
communicating to their client. What are they to
do with such
information? How are they to obtain instructions in relation thereto?
How are they to advise their client on the further
conduct of the
litigation or on whether it should be proceeded with at all? These,
it seems to me, are some of the questions which
can arise and which,
in this case, could potentially place the respondent’s legal
advisers and experts in an invidious and
even untenable position.
Serious ethical questions could arise. The interest of the respondent
could be prejudiced by the fact
that it is unable to receive proper
advice based on all the relevant facts.”
[61]
Being mindful that the owner, as with Nassau, should be afforded the
right to a fair trial in
which discovery plays a very important role.
Given the potential problems with imposing conditions as articulated
in the
Unilever
matter, with which I agree can lead to serious
ethical issues, I am of the view that, in my discretion, no such
conditions as proposed
should be imposed.
COSTS
[62]
The applicants have been substantially more successful in respect of
both applications and should
be entitled to costs. I have taken note
of Mr Irish’s contention that in the event that relief is
granted to the owner, no
costs order should be made against Nassau
insofar it acted reasonably having regard to its contractual
obligations not to disclose
the documents in question. I do not agree
that the applicants should be denied the costs which it normally
would be entitled to
because Nassau acted in accordance with its
contractual obligations with a third party. Costs should follow the
cause.
[63]
In the result, I make the following orders:
1.
In relation to
the Rule 30A application:
1.1
The
respondent shall make available for inspection and copying by the
applicants, the versions of the documents in its possession,
namely
the loan, sale and purchase agreement dated 28 February 2018 and the
funded sub-participation agreement dated 28 November
2018 as
requested in the Rule 35(12) notice dated 22 April 2020.
1.2
The
respondent shall make available for inspection and copying by the
applicants, the full version without redactions, the nomination
as
requested in the Rule 35(12) notice dated 22 April 2020.
1.3
Should
the respondent fail to comply with sub-paragraphs 1 and 2 above
within 5 days of the date of this order, leave is granted
to the
applicants to apply to the court on the same papers, amplified as may
be necessary, for an order dismissing the respondent’s
claim
with costs.
2.
In
relation to the supplementary application;
2.1
The
respondent shall make available for inspection and copying by the
applicants, the Transfer Certificate (roll of deeds No. 3082/2018
D
of the acting notary Dr Thomas Diehn) and the tripartite servicing
agreement as requested in prayers 1 and 2 in the applicant’s
supplementary application dated 7 July 2020.
2.2
Should
the respondent fail to comply with sub-paragraphs 1 above within 5
days of the date of this order, leave is granted to the
applicants to
apply to the court on the same papers, amplified as may be necessary,
for an order dismissing the respondent’s
claim with costs.
3.
Costs
The respondent shall
pay the costs in respect of both applications.
_______________________
HOCKEY
AJ
For
Applicants:
Adv. M Wragge SC
Instructed
by:
Shepstone and Wylie Attorneys
For
Respondents: Adv. D Irish
SC
Adv.
D Cooke
Instructed
by:
Bowman Gilfillan Inc.