Brief Summary

Interlocutory Applications — Supplementary Expert Report — Applicants sought to file a supplementary expert report without the respondent’s consent or court leave after a variation application was dismissed — Respondent contended that this constituted irregular proceedings and was prejudicial — Court held that the filing of the supplementary report was impermissible as it violated the terms of the oral evidence order, which required court leave for such submissions, and was substantively different from the initial proposal, thereby causing manifest prejudice to the respondent.

Comprehensive Summary

Summary of Judgment

1. Introduction

This judgment concerns an opposed interlocutory application in motion proceedings in the Western Cape Division of the High Court, Cape Town. The interlocutory dispute arose within a broader, still-pending main application relating to alterations to a share-block apartment and, in particular, the proposed modification of a structural concrete element referred to as an upstand beam.

The applicants were Francois Arnold du Toit N.O. and Henri du Toit N.O., acting in their capacities as trustees for the time being of the Rijsel Trust. The respondent was Clarensville Shareblock Limited, a share-block company owning an apartment building in Sea Point. The trust, as a shareholder, held rights of use and occupation in respect of a particular apartment in the building.

Procedurally, the matter had a history of interlocutory litigation. An earlier interlocutory variation application had been argued before the same judge and dismissed. That earlier interlocutory stage related to a prior order referring a limited issue to oral evidence under Rule 6(5)(g). Following the dismissal of the variation application, the present interlocutory application was launched by the respondent on the basis that the applicants had taken an irregular procedural step by delivering a supplementary expert report without consent or leave of court, in circumstances where an order regulating oral evidence had already been made.

The general subject-matter of the dispute in the main application was whether the respondent’s board had unreasonably withheld consent to a proposed alteration to the apartment (namely, modification of the upstand beam), and whether the trust should be permitted to proceed with the alteration as proposed by its engineer. The present interlocutory application focused more narrowly on case management and procedural regularity, specifically whether a late supplementary expert report could be introduced without leave and what consequences should follow.

2. Material Facts

The respondent was a share-block company that owned a block of apartments in Sea Point. The building was approximately sixty years old. The Rijsel Trust, as a shareholder, enjoyed rights of use and occupation of apartment 805.

During 2019, the trust applied to the respondent’s directors for permission to make alterations to the apartment. This application was approved in April 2019 and building works commenced. In May 2019, the trust’s contractor discovered an upstand beam in the wall which the trust wished to remove or modify to install a sliding door between a proposed lounge and the balcony.

A material background fact was that the purpose and precise location of the beam, and the implications for structural integrity, were not entirely clear, partly because of the building’s age and the absence of plans providing structural detail. The trust obtained an engineer’s opinion that the beam was “oversized” and that a designed detail would allow the alteration without compromising structural integrity. The trust was also advised that the respondent’s board had previously resolved not to allow modifications to the building’s concrete frame, which would include the beam in question.

The board’s stance evolved into a conditional permission: the alterations could proceed, but the beam had to be restored to its original condition. The trustees disputed that condition and contended that the board’s decision was ultra vires and unreasonable. A further request to allow alteration of the beam, supported by the trust’s engineer’s opinion, was refused by the respondent’s board. This refusal led to the substantive main application seeking an order declaring the withholding of consent unreasonable and authorising the proposed alteration.

For purposes of this interlocutory judgment, the critical procedural facts were as follows. An order had previously been made (by agreement) referring a limited issue to oral evidence under Rule 6(5)(g), framed around whether the beam could be altered in the manner proposed without adversely affecting the building’s structural integrity. The applicants later brought a variation application seeking, among other things, to introduce a different expert; that variation application was dismissed.

After the refusal of the variation application, the applicants sent a supplementary report to the respondent’s expert on 3 March 2022, apparently in anticipation of a joint meeting of experts scheduled for 7 March 2022. The experts met and a joint minute was produced and signed on 9 March 2022. The supplementary expert report was only filed on the respondent’s attorneys on 7 March 2022, after the experts’ meeting had already occurred.

The respondent contended that the supplementary report was delivered without consent and without leave of court, contrary to the governing court order and in a manner that was prejudicial and irregular. The applicants contended that the supplementary report was not strictly prohibited by the oral evidence order and was therefore permissible without leave.

The court also treated as material that the supplementary report was substantively different from what had originally been placed before the respondent’s board. The initial engineering material consisted of a letter and a drawing, whereas the later report was fifteen pages long and included nineteen drawings. The court further considered it material that the correspondence arranging the experts’ meeting did not record that the meeting was to consider the new supplementary report, and that the joint minute was drafted by the applicants’ counsel without the respondent and its counsel knowing this at the time.

3. Legal Issues

The central legal questions were procedural and concerned the application of procedural rules and prior court orders to the facts, rather than the determination of the substantive merits of the main dispute about reasonableness of consent.

The principal issues were whether, given the existing Rule 6(5)(g) referral order regulating oral evidence on a defined issue, the applicants were entitled to deliver a supplementary expert report without the leave of court or the respondent’s consent, and whether doing so constituted an irregular step capable of being set aside.

Closely linked to that question were issues of prejudice and fairness: whether the late and unilateral filing of the supplementary report, and the circumstances under which the experts’ joint minute was produced, undermined the respondent’s right to a fair hearing free of procedural taint.

A further issue concerned the consequences of the applicants’ prior conduct and litigation stance, in particular whether the applicants were bound by a judicial admission regarding the necessity of obtaining leave to file a further expert report, and whether they were impermissibly attempting to depart from it.

The costs issue required the court to exercise a value judgment and discretion, including whether the circumstances justified departing from the ordinary costs rule and granting a punitive costs order, at least for part of the period.

4. Court’s Reasoning

The court approached the matter from the perspective that a court order referring a matter to oral evidence under Rule 6(5)(g) defines and regulates the parties’ procedural rights and obligations for the conduct of that referral. On the court’s reasoning, the referral order did not confer a general entitlement on a party to supplement its expert case unilaterally at a later stage; rather, the proper mechanism for introducing further expert material, outside what the order contemplated, was to obtain leave of court.

In addressing the applicants’ contention that what is not expressly prohibited is permitted, the court rejected that approach in the context of an existing order governing a limited referral. The court treated the need for leave as flowing logically from the procedural framework created by the referral order. In that sense, the issue was not whether the applicants could find an express prohibition, but whether they had authorisation, within the governing procedural context, to file additional expert material.

The court also considered the expert evidence context as one that requires particular procedural discipline. It noted generally that expert witnesses often carry an aura of respectability and that the court must be attentive to the manner in which expert evidence is introduced and managed. Against that background, the court treated the lateness of the supplementary report and the unilateral manner of its delivery as significant, particularly given the long procedural history and the fact that the main application had originally been launched on urgency nearly three years earlier.

A substantial part of the reasoning turned on prejudice and the mismatch between the supplementary report and the case originally presented to the respondent’s decision-maker. The court held that the further report was not merely an elaboration of what had been before the respondent’s board, but was substantively different in design concept and detail. It had never been placed before the respondent’s board for consideration and did not, on the court’s description, align with the relief sought in the main application as originally formulated. This compounded the irregularity because the respondent would face a materially altered technical case midstream, with attendant implications of cost and fairness.

The court further evaluated the circumstances under which the experts’ joint minute came into being. It considered it material that the respondent’s attorneys were not timeously notified of the supplementary report before the experts met, and that the correspondence arranging the meeting did not reflect that the new report would be considered. The court reasoned that this lack of transparency affected the integrity of the process and could not be reconciled with a fair procedural approach. The court added that the respondent’s expert could not know whether what was presented to him was procedurally regular or whether authority was required from the respondent’s board, and therefore the court considered that little probative weight could be attached to the resulting joint minute.

In addition, the court held that the applicants’ acceptance and adoption of the position that they needed to ask the court for leave to file a further report constituted a judicial admission, relying on the authority it cited, and that the applicants were precluded from later departing from that admission. This reinforced the conclusion that the attempt to introduce the supplementary report without leave was impermissible.

On costs, the court applied the general principle that costs serve to indemnify a successful party and that costs ordinarily follow the event. It emphasised the discretionary nature of costs awards and that the discretion must be exercised judicially with regard to fairness and the circumstances of the case. While the respondent sought a punitive order for the entire interlocutory application, the court concluded that a punitive order was warranted only for a portion of the costs. The court’s explanation was that it should have become clear to the applicants, shortly after the replying papers were filed, that their opposition was doomed, and that this justified an attorney-and-client scale from a defined point in time.

5. Outcome and Relief

The court set aside the applicants’ supplementary notice delivered under Rule 36(9)(b) dated 7 March 2022, together with the attached further report of Mr Woudberg dated 3 March 2022, on the basis that it constituted an irregular step.

The court ordered the applicants, jointly and severally, to pay the respondent’s costs of and incidental to the interlocutory application on a mixed scale. Costs were awarded on the party-and-party scale from the inception of the interlocutory application up to and including 18 May 2022, and on the attorney-and-client scale from 19 May 2022 onwards.

Cases Cited

Gordon v Tarnow 1947 (3) SA 525 (A) at 531.

Union Government v Gass 1959 4 SA 401 (A) 413.

Socratous v Grindstone Investments (149/10) [2011] ZASCA 8 (10 March 2011) at [16].

Intercontinental Exports (Pty) Ltd v Fowles 1999 (2) SA 1045 (SCA) at 1055F–G.

Fripp v Gibbon & Co 1913 AD 354 at 364.

Gamlan Investments (Pty) Ltd v Trilion Cape (Pty) Ltd 1996 3 SA 692 (C).

Legislation Cited

No legislation was cited in the judgment.

Rules of Court Cited

Uniform Rule of Court 6(5)(g).

Uniform Rule of Court 36(9)(b).

Held

The court held that, in the context of an existing Rule 6(5)(g) referral order regulating a limited issue for oral evidence, the applicants were not entitled to deliver a further supplementary expert report without obtaining leave of court. The unilateral filing of the report was an irregular step, was prejudicial, and tainted the expert engagement process, including the probative value of the resultant joint minute. The supplementary notice and report were therefore set aside, and the respondent was awarded costs, including a partially punitive costs order from a specified date.

LEGAL PRINCIPLES

The judgment applied the principle that where a court has made an order regulating the procedural conduct of a matter, including a defined referral to oral evidence under Rule 6(5)(g), parties are required to adhere to that framework. The introduction of further expert material outside the scope contemplated by such an order requires leave of court, and unilateral supplementation may constitute an irregular step.

The judgment further applied the principle that litigation must be conducted in a manner consistent with procedural fairness, and that irregular steps which create manifest prejudice to an opposing party, particularly in the management and exchange of expert evidence, may be set aside. The court treated the integrity of the expert process as materially affected where new expert material is introduced late and without proper notice, especially where it changes the substance of what was previously presented.

The judgment applied the principle that a party may be bound by a judicial admission made in the course of litigation and may be precluded from later departing from it in an attempt to justify procedurally impermissible conduct.

On costs, the judgment applied the general rule that costs follow the event, subject to the court’s discretion exercised judicially in light of fairness and the circumstances. It further applied the principle that punitive costs may be warranted where a party’s conduct justifies such sanction, including where continued opposition becomes untenable and unnecessarily burdens the other party and the court process.

Du Toit N.O. and Another v Clarensville Shareblock Limited (15955 / 2019) [2022] ZAWCHC 113 (6 June 2022)