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[2014] ZAGPJHC 41
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Adcock Ingram Critical Care (Pty) Limited v Batswadi Pharmaceuticals (Pty) Limited and Another (20402/2012) [2014] ZAGPJHC 41 (14 March 2014)
IN THE HIGH COURT
OF SOUTH AFRICA
GAUTENG LOCAL
DIVISION, JOHANNESBURG
CASE
NUMBER: 20402/2012
DATE:
14 MARCH 2014
In the matter
between:
ADCOCK INGRAM
CRITICAL CARE (PTY)
LIMITED
....................................................
APPLICANT
And
BATSWADI
PHARMACEUTICALS (PTY)
LIMITED
.................................................................................................................
FIRST
RESPONDENT
BATSWADI BIOTECH
(PTY)
LIMITED
.........................................................
SECOND
RESPONDENT
Coram: WEPENER J
Heard: 12 MARCH
2014
Delivered: 14
MARCH 2014
Summary:
Discovery and inspection – Rule 36(6)- inspection and
examination of computer on which disputed documents generated
–
Rule permits such inspection and court has inherent power to order
inspection and examination where the interests of justice
require
such inspection and examination
JUDGMENT
WEPENER J:
[1] The applicant,
who is also the plaintiff in the main action, seeks an order
directing the respondents to comply with the applicant’s
notice
in terms or Rule 36(6) of the Uniform Rules of Court (the Rules) by
making the items therein described available for inspection
and
examination by the applicant and it’s information technology
consultant for a period of ten days. The items referred
to in the
Rule 36(6) notice are:
' i) the personal
computers and / or laptops and / or iPads or other similar devices of
Christopher Whitfield (‘Whitfield”)
and Hennie Visser
(“Visser”) and their personal assistants or any other
persons whose devices were used to generate
the documents detailed
below:
ii) the server/s of
the First and Second Defendants as well as any metadata relating to
the documents listed hereunder (‘the
documents’)
iii) any backups of
the devices where the documents may have been saved;
for the purposes of
inspecting and examining the electronic versions the documents and
forensic copies thereof.
The documents are as
follows –
a) the letter
addressed by Whitfield to Visser dated 10 April 2010 (annexure SP3 to
the First Defendant’s Plea);
b) the letter
addressed by Visser to Whitfield dated 11 April 2010 (Annexure SP4 to
the First Defendant’s Plea),
collectively
referred to as the April correspondence;
c) the letter
addressed by Whitfield to Visser dated 3 November 2010 (annexure CC10
to the Second Defendant’s Plea);
d) the letter
addressed by Visser to Whitfield dated 4 November 2010 (Annexure CC11
to the Second Defendant’s Plea)’.
collectively
referred to as the November correspondence.
[2] The relevance of
the letters lies therein that the applicant challenges the
authenticity as well as the dates upon which these
documents where
created.
[3] The background
to the application is that the applicant instituted an action which
arose out of the return of various pharmaceutical
stock products. It
is in essence common cause that such products have been returned by
the applicant and that the applicant has
not received payment
therefor. The only real dispute, in addition to a counter-claim
institutied by the second respondent, is which
of the two respondents
is liable therefor.
[4] The parties’
various relationships, not only with each other but also with the
producer and supplier of the pharmaceutical
products, is governed by
a series of detailed and complex written agreements. These include a
sales agreement, a shareholders’
agreement, a distribution
agreement, a technical agreement, initial licencing agreements and
new licencing agreements.
[5] The first and
second respondents are affiliated companies. The deponents to the
affidavits are both directors of both companies,
either directly or
via trusts. They are also shareholders in both companies.
[6] The applicant
initially instituted action against the first respondent alone. The
claim was met by a defence that first respondent
was only acting as
the agent of the second respondent. The April correspondence was
proffered as proof of such agency agreement.
[7] In pleading to
the applicant’s original claim, the first respondent also
raised a special plea of the non-joinder of the
second respondent and
in doing so, relied upon and introduced the distribution agreement
and technical agreement, which I have
referred to. Those agreements
contained arbitration provisions, and accordingly, the applicant
suggested that all the parties’
disputes should be referred to
arbitration by agreement. This suggestion was rejected by both the
respondents. Despite this,
the second respondent subsequently pleaded
to the applicant’s claim and raised a special plea to the
effect that the applicant
ought to have invoked those very
arbitration provisions.
[8] The applicant
thereafter applied, and was granted, the joinder of the second
respondent on an unopposed basis and, in fact,
by consent. In that
application the applicant questioned the authenticity of the April
correspondence.
[9] The second
respondent, aside from repeating the first respondent’s
contentions regarding the agency agreement between
the two
respondents (based on the April correspondence), also initiated
various counter-claims, one of which is predicated upon
a further
alleged agreement between the two respondents being the written
portion of which is contained in the November correspondence.
[10] In pleading to
that counter-claim the applicant has directly challenged the
authenticity of the latter correspondence as well.
[11] It is with this
background that the applicant seeks an inspection and examination of
the April and November correspondence.
The applicant requires access
to the respondents’ computers upon which the aforesaid letters
were generated so as to enable
the applicant to investigate and
ascertain whether or not the letters in question are indeed genuine.
The applicant’s assertions
are that they are not.
[12] The respondents
contend that Rule 36(6) does not found the applicant’s
entitlement to the inspection and examination;
that the inspection
and examination will reveal confidential information and that the
applicant’s expert agents ought not
to be allowed access to the
respondents’ computers. The latter two issues were not pressed
during argument before me.
[13] Rule 36(6) and
36(7) should, in my view, be read together to ascertain its true
meaning and the power of the court pursuant
thereto and pursuant to
the common law. Firstly, there can be no dispute that genuiness and
authenticity of the impugned correspondence
is directly relevant with
regard to the decision in the matter at issue in the action. If the
correspondence is contrived, the
respondents’ defence is
baseless and untrue. This relevance, in itself, triggers applicant’s
entitlement to rely on
the provisions on Rule 36(6).
[14] Likewise, the
authenticity of those letters and the history as contained on the
relevant computers to which the applicant requires
access, comprise
their state or condition as contemplated in the sub-rule.
[15] Counsel for the
respondents argued that the rule is only applicable to property when
the party relying on the condition or
nature thereof is the claimant
in relation to such condition or nature thereof; that only in such
circumstances the party so relying
on the condition or nature of the
property must make it available for inspection.
[16] Rule 36(6)
provides:
‘(6) If it
appears that the state or condition of any property of any nature
whatsoever whether movable or immovable, may
be relevant with regard
to the decision of any matter at issue in any action, any party may
at any stage give notice requiring
the party relying upon the
existence of such state or condition of such property or having such
property in his possession or under
his control to make it available
for inspection or examination in terms of this sub-rule, and may in
such notice require that such
property or a fair sample thereof
remain available for inspection or examination for a period of not
more than ten days from the
date of receipt of the notice.’
I paraphrase the
Rule as follows:
‘…any
party may at any stage give notice requiring the party… having
such property in his possession or under
his control to make it
available…’
The property
referred to is property of which the state or condition of any nature
whatsoever whether movable or immovable and which
may be relevant
with regard to the decision of any matter at issue in any action. The
argument by counsel for the respondents that
the Rule only applies
when the party relying on the existence of such state or condition
required to make it available, is consequently
not correct as it
ignores the word ‘or’ contained in the Rule. As long as a
party has property, relevant to any matter
in issue in his or her
possession or under his or her control, that party is obliged to make
it available.
[17] In so far as I
may be wrong in this conclusion and to the extent that the rules may
be deficient in this respect, I am persuaded
that the order is
necessary in the furtherance of the administration of justice –
See House of Jewels and Gems v Gilbert
1983 (4) 824 (W) at 828H
where Coetzee J (as he then was) said:
‘Hence for the
applicants to succeed, these remedies must neither resist at common
law, or to the extent that these are purely
procedural matters where
rights themselves exist, the Court must be persuaded that the Rules
of Court are deficient in this respect
and that such orders are
therefore necessary in futherance of the administration of justice’.
After citing the
Moulded Component’s case, referred to below, Kotze J in M v A
1989 (1) SA 416
(O) at 428D held that an order of this nature is not
such as to create a cause of action or does not bring about a legal
result.
It is a mere source of evidence which can assist a court to
have the truth prevail and in that sense it is a procedural matter.
I
agree.
[18] The words of
Williamson J in Brown Brothers Limited v Doise 1955(1) SA 75 (W) at
77B-D are apposite:
‘In my view
this is a case where the Rules of Court as framed do not provide for
one particular set of circumstances which
can arise, and I think that
the Court has inherent power to read the Rules applicable to the
procedure of a Court in a manner which
will enable practical justice
to be administered and a matter to be handled along practical lines.
I propose to apply the remarks
of Gardiner JP, in the case of Ncoweni
v Bezuidenhout
1927 CPD 130
where he said:
“The rules of
procedure of this court are devised for the purpose of administering
justice and not hampering it, and where
the rules are deficient I
shall go as far as I can to grant orders which will help to further
the administration of justice”.
Where I am
satisfied, as I am in this case, that notice cannot be given, where I
am satisfied that the rule cannot be complied with
in the terms in
which it is framed, I feel that I am entitled to make an order which
will entitle a party to have his bill taxed
as is contemplated by the
rules’.
[19] Referring to
Rule 36(6) Lewis J said in Caltex Oil Rhodesia v Perfecto Dry
Cleaners
1970 (2) SA 44
at 47A to 48B as follows:
‘In this
regard it is of some significance that the Courts in South Africa,
before the Rules made any provision at all for
allowing a pre-trial
inspection of property, regarded themselves as having an inherent
discretion to order an inspection of immovable
property where the
interests of justice required that there be such an inspection. See
Danziger v The Worcester Exploration Gold
Mining Co. (1890) 2 S.A.R.
126; London and South African Exploration Co. v De Beers Consolidated
Mines (1893) 10 S.C. 218.
In the latter case
an action was pending in which the plaintiffs, as lessors of certain
property, were seeking a declaration of
rights entitling them to the
surrender by the defendants, as lessees, of parts of the ground
leased in terms of a condition of
lease providing for such surrender
of any portion of the ground which was discovered to be
diamondiferous. The plaintiffs had obtained
prima facie evidence that
certain ground was in fact diamondiferous and they sought the leave
of the Court for them to have access
to certain parts of the claims
to secure proof, for the purpose of the action, of the existence of
diamonds there. The defendants
opposed the application. DE VILLIERS
C.J. in granting the leave sought, said at p. 220:
“I quite agree
with the defendants’ counsel that the plaintiffs have no right
to go prospecting all over the defendants’
ground. But if the
plaintiffs have
reasonable grounds
for believing that any portion of the ground is diamondiferous and
can satisfy the Court that there is prima
facie evidence in
support of that
belief, I think the Court ought to assist the plaintiff in further
proof of that fact. If there were no precedents
to justify such a
course, the Court would be prepared in the interests of the
administration of justice to exercise a power of
this kind.”
Though it is not
specifically mentioned in the report, it seems to me it may fairly be
implied that the rights to inspect which
was granted in that case
necessarily involved some disturbance of the soil in seeking proof,
for the purpose of the trial, that
the ground was diamondiferous. The
decision in that case, and the reasons underlying it, were referred
to with approval by the
Appellate Division in the case of Globe &
Phoenix Gold Mining Co. Ltd. V. Rhodesia Exploration Co. Ltd.,
1929
A.D. 434
at p. 440, although the Court held that the decision had no
application in the circumstances of that particular case.
The English case of
Bennet v. Griffiths
[1861] EngR 155
;
(1861) 121 E.R. 517
, also provides support for
the grant of the present application. At that time sec. 58 of the
Common Law procedure Act of 1854 simply
provided that either party to
an action:
“shall be at
liberty to apply to the Court or a Judge for a rule or order for the
inspection …of any real or personal
property the inspection of
which may be material to the proper determination of the question in
dispute”.
The Court in that
case held that the section gave the Court the same power as the Court
of equity possessed, i.e. the power to order
the removal of
obstructions on the land in order to facilitate inspection, as an
ancillary to the power to order inspection, and
it rejected the
contention that the inspection was confined to mere ocular
inspections of the land as it stood without the doing
of anything
further.
Here again it seems
to me the Court felt itself free to act in the matter in the best
interests of justice. Mr. Squires for the
defendant argues that the
sole reason for the decision in that case was the suspicion that the
defendant had deliberately created
the obstruction in the form of a
wall for the purpose of concealing his encroachment on to the
plaintiff’s mine. It seems
to me, however, that their Lordships
in that case recognised the principle that in certain circumstances a
party might be permitted
to execute certain works on the other
party’s land for the purpose of proper inspection and without
which the right of inspection
would be rendered nugatory, provided
that the owner or occupier of the land in question was safeguarded
against any loss or damage
as a result of the execution of the works
in question’.
[20] In
Republikeinse Publikasies (Edms) Bpk v Afrikaanse Pers Publikasies
(Edms) Bpk
1972 (1) SA 773
, Rumpff JA (as he then was) said at 783
A-B:
‘In verband
met die vraag wat Appellant presies moes gedoen het nadat Respondent
sy aansoek gestaak het, is dit wesenlik om
te herhaal wat in die
algemeen van toepassing is nl. dat die Hof nie vir die Reẽls
bestaan nie maar die Reẽls vir die
Hof.
[21] The Appellate
Division has recognised that courts should not be powerless to act.
In Universal City Studios Inc. and Others
v Network Video (Pty) Ltd
[1986] ZASCA 3
;
1986 (2) SA 734
(A) at 755 A-E it said:
‘In a case
where the applicant can establish prima facie that he has a cause of
action against the respondent which he intends
to pursue, that the
respondent has in his possession specific documents of things which
constitute vital evidence in substantiation
of the appellant’s
cause of action (but in respect of which the applicant can claim no
real or personal right), that there
is a real and well-founded
apprehension that this evidence may be hidden or destroyed or in
some manner spirited away by the time
the case comes to trial, or at
any rate to the stage of discovery, and the applicant asked the Court
to make an order designed
to preserve the evidence in some way, is
the Court obliged to adopt a non possumus attitude? Especially if
there is no feasible
alternative? I am inclined to think not. It
would certainly expose a grave defect in our system of justice if it
were found that
in circumstances such as these the Court were
powerless to act. Fortunately I am not persuaded that it would be. An
order whereby
the evidence was in some way recorded, eg. by copying
documents or photographing things or even by placing them
temporarily, i.e.
pendente lite, in the custody of a third party
would not, in my view, be beyond the inherent powers of the Court.‘
Although these
remarks were made in an Anton Pillar-type matter, I can see no reason
why they cannot be applied in the matter before
me.
[22] Prest, in The
Law and Practice of Interdicts at page 201 says:
‘A legal
system, in its quest for the ascertainment of truth and ensuring that
justice is done, must not permit its procedures
to become so
cumbersome and time-consuming that the end to which the very system
is directed is defeated. The lesson of history
teaches that the
subject of the law is an impatient and restless creature. When a
crisis situation presents itself, he seeks expeditious
and effective
action, at least on an interim basis, until such time as the
principal dispute can be resolved. The law, if it is
to be effective,
must always keep pace with these demands. It is a servant of
circumstances, and not the master. It must not give
rise to problems;
it must provide a solution to such problems as arise out of the
requirements of modern commercial and social
developments.’
[23] I fully agree
with these remarks and indeed find support in reported cases against
the respondents’ narrow interpretation
the ambit of Rule 36(6).
In Moulded Components and Rotomoulding South Africa (Pty) Limited v
Coucourakis and Another
1979 (2) SA 457
(W), Botha J (as he then was)
decided a matter concerning an application to inspect a number of
documents and also a number of
items of machinery. (See the report at
458D and 459A.)
[24] In considering
whether a court can order a party to produce for inspection items of
machinery which are objects not being documents,
Botha J said at 461F
to 462H:
‘In broader
terms, the question relates to the Court’s inherent
jurisdiction to grant relief not specifically provided
for in the
Rules. In my opinion there can be no doubt at all that, generally
speaking, the Court has such inherent power. The cases
relied upon by
counsel for the applicant make this quite clear. He referred inter
alia, to the following cases: MacKenzie v Furman
& Pratt
1918 WLD
62
at 66: Cohen & Tyfield v Hull Chemical Works
1929 CPD 9
at
10;Van der Merwe v De Villiers and Another
1953 (4) SA 670
(T) at
672; Neal v Neal
1959 (1) SA 828
(N) at 832-833; and, finally,
Titty’s Bar and Bottle Store (Pty) Ltd v ABC Garage (Pty) Ltd
and Others
1974 (4) SA 362
(T) at 368G-H. Examples of the Court’s
inherent power to grant relief outside the terms of the Rules of
Court afforded by
these cases are the ordering of production for
inspection of machinery, including allowing the presence at such
inspection of an
expert of the party desiring the inspection
(MacKenzie’s case supra); the authorisation of the presence at
the inspection
of documents of experts to assist the party requiring
the inspection, such as accountants or other experts (Cohen &
Tyfield’s
case supra); the ordering of matter to be struck out
of an affidavit on grounds other than those specifically mentioned in
the
Rules of Court, namely vexatious, scandalous, or irrelevant
matter (Titty’s Bar & Bottle Store (supra)).
The argument for the
respondents with regard to these cases was that they were
distinguishable from the situation in the present
case. Counsel for
the respondents said that the cases relied upon by the applicant
rested on a situation where a gap was found
to exist in the Rules of
Court, or, in other words, where there was a total hiatus in relation
to a certain situation. So, for
instance, in MacKenzie's case counsel
said there was no provision in the Rules for an inspection of objects
as opposed to an inspection
of documents, and the Court could step in
and fill that gap by using its inherent jurisdiction. In the present
case, however, counsel
said the position was not the same, taking
again the example of the inspection of items of machinery. Counsel
relied in this respect
on the provisions of Rule 36 (6), which
provides for the inspection of objects with an express limitation of
the remedy to an action.
The Rule refers expressly to "any
action", and counsel argued that that showed conclusively that
the framers of the Rules
could not have contemplated that a similar
type of procedure would be possible in the case of an application.
This appears on the
face of it to be an attractive argument, but I am nevertheless unable
to accede to it. I do not consider that
if justice demands such a
course in appropriate circumstances, the Court would decline to come
to the assistance of a party where
that party requires inspection of
an object referred to in the opposing party's affidavits, simply
because Rule 36 (6) is limited
by its wording to actions and does not
expressly include within its ambit applications. If justice requires
an inspection of an
object, in application proceedings, I consider
that the Court will exercise an inherent jurisdiction to order
production for such
inspection. I should add, however, that I have no
doubt that such a situation would be an unusual one and that this is
a power
that the Court would exercise very sparingly. The point is,
however, that I believe that it is something that can be done. The
cases referred to earlier support my conclusion, in my view. In
Neal's case supra, for instance, the Court was prepared to grant
relief to a peregrinus to bring an application in forma pauperis
although the Court accepted, in the part of the judgment relevant
for
present purposes, that the Rule in question did not apply to a
peregrinus. In other words, the Court was prepared to grant
relief in
spite of the fact that the Rule did not cover the situation and that
the Rule in question was limited to another type
of situation. The
other case to which I would refer in this regard is the case of
Titty's Bar & Bottle Store (supra). In that
case, too, the Court
was not deterred from granting relief on a ground not specifically
mentioned in the Rule in question, but
on a ground outside the terms
of the Rule.’
[25] The precedent
for allowing an applicant access to the real evidence, computers in
this case, has consequently been in place
since 1979. The passage
referred to in the Moulded Component’s case has been referred
to with apparent approval in Universal
City Studios Inc. and Others v
Network Video (Pty) Ltd
[1986] ZASCA 3
;
1986 (2) SA 734
(A) at 754H.
[26]
A statement
about the importance of disclosure in court proceedings was made by
Moseneke DCJ in Independent Newspapers (Pty) Ltd
v Minister of
Intelligence Services: in Re Masetlha v President of the Republic of
South Africa and Another
2008 (5) SA 31CC
at paragraph 25:
‘Ordinarily
courts would look favourably on claim of a litigant to gain access to
documents or other information reasonably
required to assert or
protect a threatened right or to advance a cause of action. This is
so because courts take seriously the
valid interests of a litigant to
be placed in a position to present its case fully during the course
of litigation. Whilst weighing
meticulously where the interests of
justice lie, courts strive to afford a party a reasonable opportunity
to achieve its purpose
in advancing its case. After all, an adequate
opportunity to prepare and present ones case is a time-honoured part
of a litigating
party’s right to a fair trial.’ (own
underlining )
[27] It appears from
the wording from Rule 36(7) that the court, when considering an
application of this nature, has a wide discretion
and is empowered to
make an order ‘…as to him seems meet’. In the
exercise of a judicial discretion, I am of
the view that the
entitlement of the applicant to inspect the computers, is paramount.
The respondents have shown no grounds or
reason why they would be
prejudiced by such an inspection, save the grounds not further
pursued in argument before me. I am consequently
of the view that an
order allowing immediate inspection is not only permissible, but also
required in this matter.
[28] Section 173 of
the Constitution provides:
‘The
Constitutional Court, Supreme Court of Appeal and High Courts have
the inherent power to protect and regulate their own
process, and to
develop the common law taking into account the interests of justice.’
[29] In my view, the
interests of justice, whether its origin be in the Rules, common
law, the cases referred to in this matter
or the Constitution,
require that the authenticity of the correspondence be established.
[30] Although the
respondents did not persist with the argument, they also opposed the
relief based on the confidentiality of the
information. This fear can
be addressed by inserting safeguards in the order which a court
issues. This ground of opposition is
also, significantly, weakened by
the fact that on the respondents’ version the applicant’s
holding company is a 45
percent shareholder of the second respondent
which would entitle the applicant, through its holding company, to
access the information
sought by the applicant. Logic dictates that
the applicant needs experts to analyse the contents of the computers
and the safeguards
regarding confidential information will also bind
the applicant’s experts.
[31] Having come to
the conclusion herein, I am of the view that the applicant should be
entitled to establish the authenticity
of the documents relied upon
by the respondents, by also having access to the computers on which
they were generated.
[32] I issue an
order in the following terms:
32.1. The
respondents are immediately to comply with the applicant’s
notice in terms of Rule 36(6) dated 14 October 2013 by
making the
items more fully described therein available for inspection and
examination by the applicant and its information technology
consultant, Cyanre the Computer Forensic Lab, for a period of ten
days after the date of granting of the order herein.
32.2. The applicant
and its representatives and agents are to treat and regard all
commercially sensitive information which may
be revealed or disclosed
as part of such investigation and examination as strictly
confidential, and are not to utilise any such
information for any
purpose other than that which is legitimately and necessarily
required for purpose of the litigation in this
matter.
32.3. The
respondents are, jointly and severally, liable to pay the costs of
this application, the one paying the other to be absolved.
Wepener J
Counsel for
Appellant: Adv. B. Berridge SC
Counsel for
Respondent: Adv. A.J. Daniels
Attorneys for
Appellant: Read Hope Phillips Thomas & Cadman Inc.
Attorneys for
Respondent: Baker & McKenzie