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[2011] ZAGPJHC 197
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Machingawuta and Others v Mogale Alloys (Pty) Ltd and Others (2011/12549) [2011] ZAGPJHC 197 (23 September 2011)
REPORTABLE
SOUTH GAUTENG HIGH COURT,
JOHANNESBURG
CASE NO:
2011/12549
DATE: 23/09/2011
In
the matter between:
NOEL CHENJERAYI MACHINGAWUTA
JOHAN FEDERICK OOSTHUIZEN
SHANE TREVOR FERGUSON
in their capacities as trustees for
the
time being of the MOGALE ALLOYS
TRUST
…...................
First
Applicant
PGR MANGANESE (PTY)
LTD
...........................................
Second
Applicant
and
MOGALE ALLOYS (PTY)
LTD
.............................................
First
Respondent
RUUKKI SOUTH AFRICA (PTY)
LTD
.............................
Second
Respondent
DEZZO TRADING 184 (PTY)
LTD
......................................
Third
Respondent
PGR 17 INVESTMENTS (PTY)
LTD
.................................
Fourth
Respondent
JUDGMENT
NOTSHE AJ:
[1] The Applicants brought an
application in terms of section 252 of the Companies Act to set aside
a management agreement concluded
in December 2010 between the
Respondents.
[2] The Respondents filed an answering
affidavit to the application brought by the Applicants.
[3] Thereafter the Applicants
delivered upon the Respondents a notice in terms of Rule 35(12) of
the Uniform Rules. The aforesaid
notice required the Respondents to
produce for inspection by the Applicants the following documents:
“
1.
The
‘numerous documents’ referred to in paragraph 29.1 of the
affidavit of Ruiters.
The ‘original company
statutory documents’ referred to in paragraph 29.1 of Ruiters
affidavit.
The ‘contracts’
referred to in the first line of paragraph 29.2 of the affidavit of
Ruiters.
The ‘copies of all
contracts’ referred to in the first sentence of paragraph 29.2
of the affidavit of Ruiters.
The ‘contacts register’
referred to in the third sentence in paragraph 29.2 of the affidavit
of Ruiters.
The ‘previous agreements’
referred to in the sixth sentence in paragraph 29.2 of the Ruiters’
affidavit.
The ‘documentation’
referred to in paragraph 31 of the affidavit of Ruiters.
The minutes of the board meeting
referred to in paragraph 49 of the affidavit of Ruiters (the
respondents have attached only certain
pages of those minutes).
The ‘listing requirements’
referred to in paragraph 52.1 of the affidavit of Ruiters.
The ‘papers’ referred
to in paragraph 74.2 of Ruiter’s affidavit.
The existing contracts referred to
in the second sentence in paragraph 82.1 of Ruiter’s
affidavit.
The ‘contract register’
referred to in the second sentence in paragraph 82.1 of Ruiter’s
affidavit.
The purchase agreements, credit
applications, slag processing agreements, rental agreements, lease
and purchaser agreements, toll
smelting agreements, security
contracts, I.T. mandates, Eskom agreements, purchase and recovery
contracts of EAF Dust and the
gas supply agreements etc referred to
in paragraph 82.2 of Ruiter’s affidavit.
The correspondence referred to in
the first sentence in paragraph 82.3 of Ruiter’s affidavit.
The ‘secretarial files’
referred to in the first sentence of paragraph 85.1 of Ruiters s
affidavit.
The ‘documents’
referred to in the second sentence of paragraph 85.1 of Ruiter’s
affidavit.
”
[4] The Respondents furnished only
documents mentioned in paragraphs 8, 9 and 10 of the request, namely,
the minutes of the board
meeting referred to in paragraph 49 of the
affidavit of Ruiters, the listing requirements referred to in
paragraph 52.1 of the
affidavit of Ruiters and papers referred to in
paragraph 74.2 of Ruiters’ affidavit.
[5] In respect of the remainder of the
documents requested their response was variously that they do not
have the documents in their
possession, or that they are irrelevant
or that they are privileged. As a result thereof the Applicants
brought the present application
to compel the production of such
documents.
[6] The Respondents have opposed the
application on the grounds that the Applicants are not entitled to
the relief that they seek
and that in any event the documents sought
do not exist, are irrelevant or are privileged.
[7] As regards the defence of absence
of remedy, as I understand it, is to the effect that Rule 35(12) does
not provide a relief
that is sought by the Applicants. The relief
provided for in the aforesaid Rule is to the effect that the party
who fails to comply
with the notice in terms of the aforesaid Rule
should not be allowed to use such document in such proceedings save
with the leave
of Court, so the argument goes. It is then argued that
the Applicants are confined to that relief only.
[8] I am of the view that the
Applicants are not confined to the relief provided in Rule 35(12)
only.
1
The relief provided in rule 30A is wide enough to cover the failure
to comply with the request made in terms of Rule 35(12) of
the
Uniform Rules. Rule 30A provides as follows:
“
Where
a party fails to comply with these Rules or with a request made or
notice given pursuant thereto, any other party may notify
the
defaulting party that he or she intends, after the lapse of 10 days,
to apply for an order that such rule, notice or request
be complied
with or that the claim or defence be struck out.
”
[9] The “
rules
”
referred to in rule 30A refer to all the Uniform Rules
2
including rule 35(12).
[10] The fact that the Applicants in
their notice referred to Rule 35(12) does not imply that they rely
only on the relief provided
in 35(12).
[11] In the circumstances the
Applicants are entitled to rely also on the provisions of 30A for the
relief that they seek.
[12] The respondents further aver that
the documents sought to be produced fall outside the documents
required to be produced in
terms of rule 35(12).
[13] The entitlement and the
obligation to produce the documents arise as soon as reference is
made thereto in the pleadings or
affidavit. Rule 35(12) reads as
follows:
“
Any
party to any proceeding 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 document or tape recording
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 proceeding
provided that any
other party may use such document or tape recording.”
[14] There is no dispute that the
respondents did refer, in their affidavits, to the requested
documents. The question, however,
is whether a party who receives a
notice to produce the documents that he referred to in the pleadings
or affidavit may object
to the production on the grounds that he does
not have them in his possession, or that they are not relevant or are
privileged.
[15] There can be no dispute that a
party may resist a request to produce documents on the grounds that
they are not in his possession.
3
He will however be obliged to state their whereabouts, if known to
him. The remaining question would be whether that party is truthful
in its response or not.
[16] As regards the question of
whether such a request can be resisted on the grounds that the
requested documents are privileged
or irrelevant, the authorities are
not unanimous.
[17] In
Universal
City Studios v Movie Time
4
Booysen J said the following:
“
It
seems to me though that it must be implied that the document should
be relevant to the issues between the parties and therefore
reasonably required by the opposing party before it can be said to be
hit by the provisions of this Rule. So, for example, if a
wife
seeking an interdict to prevent her husband from assaulting her were
to allege that he assaulted her shortly after she had
read the
evening newspaper, there being no relevance alleged of the paper, one
could hardly imagine that her husband, the respondent,
would be
entitled to production of that newspaper.
”
The problem I have with this dictum
is that it does state the provisions, words or circumstances from
which such an implication
should be drawn. On the contrary the other
provisions of rule 35 seem to indicate otherwise. (more of this
hereunder)
[18] In
Magnum
Aviation Operations v Chairman NTC
,
5
this Court, per Vermooten J, held that the grammatical meaning of the
words in Rule 35(12) are clear and are to the effect that
once a
reference is made to a document it must be produced. The Court
therein compared the provisions of Rule 35(12) to the provisions
of
Rule 35(1). Rule 35(1) provides that discovery must be made of
documents “
relating to
any matter in question in such action
”.
The Court held that it is significant to note that no such
qualification is made in Rule 35(12).
[19] In
Gehle
v McLaughlin
,
6
the decision in
Magnum
Aviation Operations
was
followed. Therein it was held that the purpose of Rule 35(12) was to
entitle a party to production of documents referred to
in an
opponent’s pleading or affidavits to enable him to consider his
position.
[20] In
Gorfinkel
v Gross, Hendler and Frank
,
7
the Western Cape High Court (previously the Cape Provincial
Division), Friedman J, refused to follow the
Magnum
Aviation Operations
and
Gehle
decisions. That Court held that in any event the
dictum
in
Magnum Aviation
Operations
was
obiter
.
It said the following:
“
There
was no question in the Magnum Aviation case that the documents in
question were relevant; it was accordingly unnecessary for
the Court
to decide whether relevance was a requirement of the Rule or not.
”
[21] That Court concluded that it is
implicit in the wording of rule 35(12) that a party cannot be
compelled under rule 35(12) to
produce a document which is irrelevant
or privileged. It said the following:
“
There
are undoubtedly differences between the wording of Rule 35(12) and
the other subrules relating to discovery, for example subrules
(1),
(3) and (11) of Rule 35. The latter subrules specifically refer to
relevance whereas subrule (12) contains no such limitation
and is
prima facie cast in terms wider than subrules (1), (3) and (11).
It is nevertheless to my mind
necessarily implicit in Rule 35(12) that there should be some
limitation on the wide language used.
One such limitation is that a
party cannot be compelled under Rule 35(12) to produce a document
which is privileged...
With regard to relevance there must
also, in my view, be some limitation read into Rule 35(12). To
construe the Rule as having no
limitation with regard to relevance
could lead to absurdity. It would be absurd to suggest that the Rule
should be so construed
that reference to a document would compel its
production despite the fact that the document has no relevance to any
of the issues
in the case. It is not difficult to conceive of
examples of documents which are totally irrelevant. Booysen J in the
Universal
City Studios case gave one such example. What is more
difficult to decide is where the line should be drawn. A document
which has
no relevance whatsoever to the issues between the parties
would obviously, by necessary implication, be excluded from the
operation
of the Rule. But would the fact that a document is not
subject to discovery under Rules 35(1), 35(3) or 35(11) render it
immune
from production in terms of Rule 35(12)?
In my view the parameters governing
discovery under Rules 35(1), 35(3) and 35(11) are not the same as
those applicable to the question
whether a document is irrelevant for
the purposes of compliance with Rule 35(12). A party served with a
notice in terms of Rule
35(1) is obliged to make discovery of
documents which may directly or indirectly enable the party requiring
discovery either to
advance his own case or to damage that of his
opponent or which may fairly lead him to a train of enquiry which may
have either
of these consequences. Documents which tend merely to
advance the case of the party making discovery need not be disclosed.
As
Rule 35(12) can be applied at any time, ie before the close of
pleadings or before affidavits in a motion have been finalised, it
is
not difficult to conceive of instances where the test for determining
relevance for the purposes of Rule 35(1) cannot be applied
to
documents which a party is called upon to produce under Rule 35(12),
as for example where the issues have not yet become crystallised.
Having regard to the wide terms in which Rule 35(12) is framed, the
manifest difference in wording between this subrule and the
other
subrules, ie subrules (1), (3) and (11) and the fact that a notice
under Rule 35(12) may be served at any time, ie not necessarily
only
after the close of pleadings or the filing of affidavits by both
sides, the Rule should, to my mind, be interpreted as follows:
prima
facie there is an obligation on a party who refers to a document in a
pleading or affidavit to produce it for inspection
if called upon to
do so in terms of Rule 35(12). 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 the Moulded Components
case supra at 461D - E.)
Similarly, a privileged document will not be subject to production. A
document which is irrelevant will
also not be subject to production.
As it would not necessarily be within the knowledge of the person
serving the notice whether
the document is one which falls within the
limitations which I have mentioned, the onus would be on the
recipient of the notice
to set up facts relieving him of the
obligation to produce the document. Cf Quilter v Heatly
(1883) 23 ChD
42
at 51.”
[22] In
Penta
Community Services (Pty) Ltd v King
8
the Court followed the decision of the court in
Gorfinkin
.
It held that
prima facie
there is an obligation on a party who refers to a document in a
pleading or affidavit to produce it for inspection unless the
document is not in his/her possession and it cannot be produced or
the document is privileged or irrelevant. It further held that
the
onus
is on the party receiving the notice to set up the facts relieving it
of the obligation to produce documents.
9
[23] As matters stand the decision of
this Court in the Magnum case has not been overruled by this Court or
a court of higher status.
The court that refused to follow it is the
then Cape Provincial Division (now Western Cape High Court) – a
decision of a
single Judge of another division.
[24] The question is which of these
two decisions I must follow. I am obliged to look to the rules of
judicial precedent for guidance.
The Supreme Court of Appeal recently
said the following regarding judicial precedent
10
:
“
The
doctrine of precedent, which requires courts to follow the decisions
of coordinate and higher courts in the judicial hierarchy,
is an
intrinsic feature of the rule of law, which is in turn foundational
to our Constitution. Without precedent there would
be no
certainty, no predictability and no coherence. The courts would
operate in a tangle of unknowable considerations, which all
too soon
would become vulnerable to whim and fancy. Law would not rule. The
operation of precedent, and its proper implementation,
are therefore
vital constitutional questions.
”
[25] The import of this decision is
that - as a starting point I am bound to follow one of the two
streams of decisions unless I
come to the conclusion that they are
both wrong. As a Judge sitting alone I am bound to follow the
decision of the Court within
my division.
11
In this case I am bound to follow the decision of the South Gauteng
High Court. I am therefore bound by the
ratio
decidendi
of this Court in
the
Magnum Aviation
Operations
case.
[26] Even if the rules of judicial
precedent did not oblige me to follow the
Magnum
case I would have still followed it. The Court in the
Gorfinkin
case refused to follow the decision of this Court in Magnum Aviation
case on the bases that the issue of relevance in that case
did not
arise. I cannot agree with that view. The dictum of the Court in
Magnum Aviation
is wide enough to include the issue of relevance. The
Gorfinkin
decision did not place significant attention on the fact that
subrules 35(1), (3) and (11) differ from the provisions of rule
35(12) because they all expressly require that the documents to be
discovered must be relevant to the matters.
12
Rule 35(12) does not have such an express requirement.
[27] In my view the express
requirement of relevance in subrules 35(1), (3) and (11) and absence
of such in subrule 35(12) is a
clear indication that relevance is not
a requirement in respect of subrule 35(12). Otherwise it would have
been expressly required
as in other subrules. There is no other
plausible explanation.
[28] I am not even convinced that
privileged documents are excluded from the ambit of subrule 35(12).
Why would a document be referred
to in an affidavit or pleadings if
it is privileged? How does the other party deal with the contents of
that document if he is
prohibited from demanding that it be produced?
These questions demonstrate that once a document is referred to in
the pleadings
or affidavit it is liable to be requested to be
produced.
[29] In any event, insofar as there is
a difference between the decisions in the
Magnum
Aviation
and the Gorfinkin
cases
supra
I prefer the former. Accordingly I approach the case on that basis.
[30] The Applicants no longer
proceeded with the request contained in paragraphs 1 and 2 of the
Rule 35 notice. The documents sought
in paragraphs 8, 9 and 10 have
been furnished. Counsel for the Respondents has referred me to the
affidavit in respect of documents
sought in paragraphs 3, 4 and 5 of
the notice. The paragraphs referred to in the answering affidavit and
read in its context indicate
that the contracts are not in the
possession of the Respondents. I am of the view that the Respondents
have met their obligation
and indicated that the documents are not in
their possession.
[31] Insofar as the other documents
are concerned the Respondents are obliged to produce those.
[32] Even if I were to follow the
decision of the Court in
Gorfinkin
matter the Respondents in my view have not succeeded in their
defense. In terms of the aforesaid dictum the Respondents had an
onus
to set up facts relieving them of the obligation to produce the
documents. In this case the Respondents have not set up any
facts
that relieve them of the obligation to produce the requested
documents.
[33] As a result I make the following
order:
1. The Respondents are directed to
produce documents referred to in paragraphs 5, 6, 7, 11, 12, 13, 14,
15 and 16 of the Applicants’
notice in terms of Rule 35(12)
dated 27 June 2011.
2. The Respondents are directed to
pay the costs of this application.
__________________________
V.S
NOTSHE
ACTING
JUDGE OF THE HIGH COURT
Counsel
for the Applicants:
P.J
Van Blerk SC
Attorneys
for the Applicants:
Martini
– Patlanski
Counsel
for the Respondents:
A.
Bava SC
Attorneys
for the Respondents:
Cliff
Decker Hofmeyer Incorporated
Date
of the Hearing:
9
September 2011
Date
of Judgment:
23
September 2011
1
See: Moulded Components and Rotomoulding SA (Pty) Ltd v Coucourakis
and Another
1979 (2) SA 457
(W) at 460 – 461
Universal City Studios v Movie Time
1983(4)SA736 (D) at 746.
2
Rules regulating the conduct of the proceedings of the several
provincial and local divisions of the High Court of South Africa.
3
See: Moulded Components and Rotomoulding SA (Pty) Ltd v Coucourakis
and Another
1979 (2) SA 457
(W) at 461.
4
Supra.
5
1984(2) SA 398 (W)
6
1986(4) SA 543 (W)
7
1987(3) SA 766 (C)
8
2007(3) SA 471 (C)
9
See also: Gorfinkin v Gross, Endler and Frank, 1987(3) SA 766 (C)
10
Per Cameron JA (as he then was) in True Motives
84 (Pty) Ltd v Mahdi and Another
2009 (4) SA 153
(SCA) at 185 [100].
11
The South African Legal System and its
background, (Hahlo and Kahn) (Juta) 1968 at 252.
12
Subrules 35(1) and (11) require the discovery of
documents “
relating to any matter
in question in such action…
”,
whereas rule 35(3) refers to documents “
which
may be relevant to any matter in question …
”