Brief Summary

Access to Information — Promotion of Access to Information Act — Application for access to financial records — Applicant seeks annual financial statements of a private body for the years 2014 to 2020 — Respondents' failure to respond constitutes deemed refusal — Legal issue revolves around whether the records are required for the exercise or protection of rights — Court finds that the applicant has established the necessity for access to the records, thus compelling the respondents to provide the requested financial statements.

Comprehensive Summary

Summary of Judgment

1. Introduction

This matter was an application brought in terms of the Promotion of Access to Information Act 2 of 2000 (PAIA). The applicant sought an order compelling access to and delivery of the annual financial statements of the second respondent for the financial years ending 2014 to 2020 inclusive.

The parties were Anthony James Hyde as the applicant, and Peter Allan Hyde as the first respondent. The second respondent was Jonkerberg Farm CC, a close corporation of which the first respondent was the sole member. The third respondent, Spence and Associates, was the second respondent’s firm of auditors responsible for preparing its annual financial statements. The first and second respondents opposed the application, while the third respondent abided the court’s decision.

The procedural history showed that the applicant delivered written requests under section 53 of PAIA to the second and third respondents in December 2019, and later delivered a further section 53 request to the first respondent in May 2020. No substantive decision was given by the first and second respondents, and the third respondent refused to provide the record without a court order. The present proceedings followed upon this non-response and refusal. The court recorded that the non-response constituted a deemed refusal under section 58 of PAIA.

The dispute concerned access to corporate financial statements within the context of a long-running commercial relationship between brothers, framed by the applicant as a dispute about information relating to a partnership asset and the applicant’s ability to exercise or protect partnership rights.

2. Material Facts

It was common cause that the applicant and the first respondent are brothers who were involved in a series of commercial partnerships over many years, and that there was a “fifth partnership” between them which had not been liquidated, wound up, or had its profits (if any) distributed. It was also common cause that the first respondent was the sole member of the second respondent, and that the third respondent acted as the second respondent’s auditors and prepared its annual financial statements.

The applicant’s PAIA requests were sent on 10 December 2019 to the second and third respondents. The third respondent replied on 11 December 2019 indicating that it would provide the record only once compelled by court order. The second respondent’s attorney responded on 17 December 2019 indicating that instructions were being taken. A further section 53 request was sent on 5 May 2020 to the first respondent, to which the first and second respondents’ attorney replied that he would revert, but no substantive decision followed. The court recorded that the failure by the first and second respondents to decide constituted a deemed refusal under section 58, and that the third respondent’s refusal did not comply with section 56, particularly section 56(3).

The applicant alleged, in detail, that the second respondent (and the farm it owned) was an asset within the fifth partnership. On the applicant’s version, a farm known as Uitsig was purchased pursuant to partnership activity, with an agreement that it would be registered in a close corporation with the first respondent as sole member, while remaining partnership property. The second respondent was registered on 3 July 2003, and Uitsig was transferred to it on 15 October 2003. The applicant alleged that Hyde Construction CC (of which he was the sole member) funded payments related to the acquisition and financing of Uitsig and the second respondent’s farming operations, including payments towards the purchase price and loan obligations. He also alleged that, over time, he was progressively denied access to information needed to perform administrative functions, culminating in the cancellation of his bank access towards the end of 2018.

The applicant further alleged that Uitsig was sold on 20 December 2018 for R30 million and transferred on 24 June 2019, and that he had not been accounted to in relation to the proceeds or other assets. He relied on bank statements he could access as indicating substantial flows of funds through the second respondent’s bank account during the relevant period. He also alleged that attempts to obtain information from the bank and the third respondent were blocked on the basis that instructions had been given not to provide him with information.

The first respondent denied that the second respondent formed part of the fifth partnership, but did not substantively engage with the applicant’s factual allegations supporting the applicant’s contrary contention. The first respondent asserted that disclosure obligations depended on a judicial finding in civil proceedings that the second respondent was part of the partnership, and he contended (in substance) that the applicant should pursue remedies in partnership litigation, using discovery or subpoena processes.

3. Legal Issues

The central legal question was whether the applicant met the threshold in section 50(1)(a) of PAIA, namely whether the requested annual financial statements were required for the exercise or protection of any rights. The first and second respondents accepted that the procedural requirements in section 50(1)(b) and the absence of any established ground of refusal under section 50(1)(c) were satisfied, leaving section 50(1)(a) as the decisive issue.

A subsidiary issue was whether the respondents had raised a real, genuine and bona fide dispute of fact concerning whether the second respondent formed part of the alleged partnership, and whether that dispute could preclude relief in motion proceedings. Closely related to this was the question of the correct legal standard the applicant had to meet in demonstrating the relevant “right” for purposes of section 50(1)(a), and whether the applicant had to prove that right on a balance of probabilities.

Another legal issue was the extent to which a section 50 request could be refused on the basis that it amounted to impermissible pre-litigation discovery, particularly where litigation might follow the disclosure of the record.

The issues largely concerned the application of law to facts, including the characterisation of the applicant’s asserted partnership right, and the evaluative assessment of whether the record would assist in exercising or protecting that right (rather than being sought merely to assess whether to institute proceedings).

4. Court’s Reasoning

The court proceeded from the common cause position that the first and second respondents’ non-response constituted a deemed refusal under section 58. It also accepted that the third respondent’s refusal did not comply with section 56, with specific reference to the requirements in section 56(3).

On the alleged dispute of fact, the court applied the principle that in motion proceedings a real dispute of fact exists only where the party purporting to raise it seriously and unambiguously addresses the facts said to be disputed. The first respondent’s approach—explicitly declining to engage with the applicant’s detailed partnership allegations while simultaneously asserting a dispute—was treated as inadequate to establish a genuine dispute on the papers. The court described it as extraordinary, particularly because the allegations concerned matters within the first respondent’s knowledge and which he was positioned to answer.

The court then addressed the parties’ shared assumption that the applicant had to obtain a definitive “judicial finding” in separate civil proceedings establishing that the second respondent formed part of the partnership before PAIA could operate. Relying on Claase v Information Officer, South African Airways (Pty) Ltd, the court held that the test in a section 50 application is not proof on a balance of probabilities. Instead, an applicant must put up facts which prima facie establish the existence of a right, even if open to some doubt, in a manner akin to the standard in applications for interim interdicts. Applying that approach, and for purposes of the PAIA enquiry (without making a definitive finding on the ultimate partnership dispute), the court accepted that the applicant had met the prima facie threshold to treat the second respondent as an asset of the fifth partnership and accepted that the record existed and was under the control of the first and third respondents.

In analysing whether the record was “required” under section 50(1)(a), the court applied Unitas Hospital v Van Wyk and Another, which emphasised that the meaning of “required” is context-specific, and also cautioned that pre-action discovery should remain the exception rather than the rule, available only where an “element of need” or “substantial advantage” is shown. The court further relied on the formulation endorsed in Cape Metropolitan Council v Metro Inspection Services (Western Cape) CC and Others, namely that an applicant must identify the right to be exercised or protected, identify the information sought, and explain how the information will assist in exercising or protecting the right.

The court accepted that the applicant had identified the right and the record sought, and focused on whether the record would assist the applicant in exercising or protecting his partnership rights. The court reasoned that a partner owes fiduciary duties to co-partners, including making full disclosure and rendering accurate accounts concerning partnership affairs under that partner’s control, and disclosing information affecting the partnership. Against that background, the court treated annual financial statements as an appropriate and direct means of providing the information to which the applicant claimed entitlement as a partner in relation to partnership assets.

The court rejected the characterisation of the request as impermissible pre-litigation discovery on the facts presented. It reasoned that the applicant’s primary purpose was framed as obtaining information to which he said he was entitled as a partner concerning the performance of an alleged partnership asset and the treatment of funding and proceeds, particularly given that his attempts to obtain information by other means had been blocked. While the court recognised that litigation might follow once the statements were received, it treated that as secondary to the stated primary purpose. The court distinguished this from a case where records are sought only to evaluate whether to institute proceedings, which it indicated would be impermissible, referring in this context to Mahaeeane v AngloGold Ashanti. The court also considered the content of the applicant’s section 53 requests as consistent with the applicant asserting an existing partnership right to profits and accounting rather than merely seeking material for contemplated litigation.

Finally, the court noted that the first respondent had claimed the second respondent was dormant and that the farm (said to be its only asset) had been sold, but had not explained what happened to the proceeds and had not suggested repayment of the alleged loan account. This supported the conclusion that the applicant’s asserted partnership entitlement to information was engaged, and that the record would assist in exercising or protecting that entitlement.

5. Outcome and Relief

The court granted relief reviewing and setting aside the refusals. It declared that the first and second respondents’ failure to respond to the section 53 request constituted a deemed refusal in terms of section 58 of PAIA, reviewed and set aside that deemed refusal, and also reviewed and set aside the third respondent’s refusal to provide the record.

The court directed that the respondents furnish the applicant with the annual financial statements of the second respondent for the years ending 2014 to 2020, or certified copies, within 15 days of the order.

On costs, the court ordered that the first respondent in his personal capacity pay the costs of the application on the party-and-party scale, including the costs of one senior junior counsel and the reasonable travel and accommodation costs of the applicant’s counsel for attendance at the hearing.

Cases Cited

Wightman t/a J W Construction v Headfour (Pty) Ltd and Another [2008] ZASCA 6; 2008 (3) SA 371 (SCA).

Claase v Information Officer, South African Airways (Pty) Ltd 2007 (5) SA 469 (SCA).

Unitas Hospital v Van Wyk and Another [2006] ZASCA 34; 2006 (4) SA 436 (SCA).

Cape Metropolitan Council v Metro Inspection Services (Western Cape) CC and Others 2001 (3) SA 1013 (SCA).

Mahaeeane v AngloGold Ashanti 2017 (6) SA 382 (SCA).

Legislation Cited

Promotion of Access to Information Act 2 of 2000 (sections 7(1)(a), 50(1), 53, 56(3), 58).

Rules of Court Cited

No rules of court were cited by name in the judgment. The judgment referred to discovery and subpoena duces tecum conceptually in argument, but did not rely on specific provisions of the Uniform Rules of Court.

Held

The court held that the applicant satisfied the requirements for access to records of a private body under section 50 of PAIA, with the decisive element being that the requested annual financial statements were required for the exercise or protection of the applicant’s asserted partnership rights. The court held that the applicant was not required to prove his right on a balance of probabilities, but only to establish it prima facie. It further held that the respondents had not raised a genuine dispute of fact on the papers sufficient to defeat motion proceedings, and that the request was not impermissible pre-action discovery on the facts because it was directed at exercising an asserted existing entitlement to partnership information and accounting. The refusals (including the deemed refusal) were reviewed and set aside, and production of the annual financial statements was ordered.

LEGAL PRINCIPLES

PAIA section 50(1)(a) requires that an applicant show that the record sought is required for the exercise or protection of a right, and that requirement is assessed with reference to the facts and context of the specific case rather than in the abstract.

In a PAIA section 50 application, the applicant does not bear an onus to prove the asserted right on a balance of probabilities. The applicable standard is that the applicant must place facts before the court that prima facie establish the right relied upon, even if those facts may be open to some doubt, aligning the threshold with that applicable to interim interdictory relief.

A party opposing relief in motion proceedings cannot create a genuine dispute of fact merely by asserting a dispute while declining to engage with detailed factual allegations. A real, genuine, and bona fide dispute of fact requires that the disputing party seriously and unambiguously address the facts said to be disputed.

Pre-action access under section 50 is not automatically excluded because the information may later be obtainable through discovery once litigation is instituted. However, pre-action access should generally remain exceptional and is justified where the requester demonstrates an element of need or substantial advantage at the pre-action stage. An applicant must identify the right, identify the record, and explain how access to the record will assist in exercising or protecting the right.

Within a partnership context, the judgment proceeded from the principle that partners owe fiduciary duties to one another, including duties of full disclosure and rendering accurate accounts concerning partnership affairs under a partner’s control, and disclosing information affecting the partnership.

Hyde v Hyde and Others (8509/2020) [2021] ZAWCHC 9 (3 February 2021)