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[2014] ZASCA 120
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Wishart and Others v Blieden N.O. and Others (659/2013) [2014] ZASCA 120; [2014] 4 All SA 334 (SCA); 2020 (3) SA 99 (SCA) (19 September 2014)
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THE
SUPREME COURT OF APPEAL OF SOUTH AFRICA
JUDGMENT
Case
No: 659/2013
Reportable
In
the matter between:
Grant
Logan
Wishart
.......................................................................................................
First
Appellant
Malcolm
Grant
Wishart
..............................................................................................
Second
Appellant
Shabier
Bhayat
................................................................................................................
Third
Appellant
and
The
Honourable Mr Justice P Blieden
NO
.................................................................
First
Respondent
Advocate
John M Suttner
SC
..................................................................................
Second
Respondent
Advocate
Allan J
Eyles
...............................................................................................
Third
Respondent
Attorney
Mr Wessel J J
Badenhorst
.......................................................................
Fourth
Respondent
BHP
Billiton Energy Coal South Africa
Limited
.......................................................
Fifth
Respondent
Neil
McHardy
NO
........................................................................................................
Sixth
Respondent
The
Master of the High Court,
Pietermaritzburg
................................................
Seventh
Respondent
Neutral
Citation:
Wishart v Justice P Blieden NO
659/13
[2014]
ZASCA 120
(19 September 2014)
Coram:
Lewis, Maya, Willis, Swain JJA and Mocumie AJA
Heard:
25 August 2014
Delivered:
19 September 2014
Summary:
The common law does not recognize a right of an individual to
restrain a lawyer from acting against him or her where the individual
has never been a client of the lawyer and where the lawyer does not
have confidential information in respect of that individual.
The
application by the appellants to restrain three of the respondents
(lawyers) from examining them in an insolvency inquiry was
not
supported by the facts and this was not a case in which to develop
the common law.
ORDER
On
appeal from:
KwaZulu-Natal High Court, Pietermaritzburg (Gorven J
sitting as court of first instance):
The
appeal is dismissed with costs including the costs of two counsel
where so employed.
JUDGMENT
Lewis
JA (Maya, Willis and Swain JJA and Mocumie AJA concurring)
[1]
The appellants in this matter argued in the high court and in this
court that we should develop the law in relation to legal
practitioners acting against former clients. The high court (Gorven J
in the Kwazulu-Natal High Court, Pietermaritzburg) declined
to do so
as the facts did not support the application of the principles they
contended it should adopt. It dismissed their application
for an
interdict restraining the respondents from examining them in an
insolvency inquiry. The high court nonetheless gave them
leave to
appeal to this court.
[2]
By the time the appeal was heard the first appellant, Mr Grant
Wishart (Wishart), had been sequestrated. The trustees of his
estate
have elected not to participate in the appeal and abide the decision
of this court. Counsel for the appellants argued that
Wishart still
had a residual interest in pursuing the appeal, a matter to which I
shall turn after dealing with the merits of the
appeal.
The
history
[3]
The appellants, Wishart, his father Mr Malcolm Wishart (Wishart Snr),
and Mr Shabier Bhayat are directors and officers of a
number of
companies owned by the Wishart family through a number of trusts. I
shall refer to each of them by name, or as ‘the
appellants’
collectively. They applied to the high court for an order restraining
the respondents, Mr W Badenhorst, an attorney,
Mr John Suttner SC and
Mr Alan Eyles, the latter two being advocates practising at the
Johannesburg Bar, from interrogating the
appellants at an inquiry
into the business and affairs of Avstar Aviation (Pty) Ltd (Avstar)
in terms of ss 417 and 418 of the
Companies Act 61 of 1973. I
shall refer to the attorney and counsel collectively as ‘the
lawyers’.
[4]
A retired judge, P Blieden J, was appointed to preside over the
inquiry. At the instance of BHP Billiton Energy Coal South Africa
Ltd
(Billiton) he issued a summons against Wishart to appear at the
inquiry and disclose specified documents. Subpoenas were also
issued
against Wishart Snr and Bhayat. At the commencement of the inquiry on
20 July 2007, an attorney representing the appellants,
Mr P J
Schoerie, appeared on behalf of the Wisharts and Bhayat and advised
that they refused to be interrogated by Suttner and
Eyles since they,
and Badenhorst who had instructed them, had previously acted for
companies of which they were directors or in
which they had
interests.
[5]
After much discussion Judge Blieden ordered that the inquiry
continue: he had not been advised of the precise nature of the
appellants’ complaints; he was appointed only to see that the
inquiry was conducted fairly; privilege was not a factor that
he was
required to take into account and the purpose of the inquiry under ss
417 and 418 was to obtain a full explanation about
Avstar’s
activities, but not to make any finding in that regard.
[6]
The order prompted the application to the high court the following
day for an interdict (and other relief that is not now relevant)
against the lawyers, restraining them from examining any of the
appellants at the inquiry. Judge Blieden was cited as the first
respondent, in his capacity as commissioner. Billiton was also cited
as a respondent as was the master of the high court. Only
the lawyers
have participated in the appeal against the order of the high court
that they not be so restrained. As I have said,
the high court
refused the relief sought.
[7]
The appellants were not ever clients of any of the lawyers. But, they
argued, they had interests in and were variously directors
of
companies that had instructed Badenhorst, who had in turn instructed
Suttner and later Eyles, on certain matters pertaining
to the
companies. That, they argued, had made them ‘quasi-clients’
or ‘informal clients’, who were entitled
to object to the
lawyers acting against them on the basis that they had a conflict of
interest. It is necessary to set out the
facts that underlie these
claims before determining the legal principles.
The
companies which had instructed the lawyers
[8]
The companies in which the appellants had interests or which they
directed are, first, Avstar, into which the inquiry was instituted
after its liquidation; second, Eurocoal (Pty) Ltd (Eurocoal), which
was a holding company of entities that held coal mining rights;
third, Rietspruit Crushers (Pty) Ltd (Rietspruit) which had a quarry
and stone crushing business and fourth, Colt Mining (Pty)
Ltd (Colt),
a mining company.
[9]
Billiton, which Badenhorst had represented over a period of over
seven years, is a member of a multi-national group of companies
that
have mining interests and other businesses. It had launched
arbitration proceedings against Eurocoal in February 2007 in respect
of Eurocoal’s repudiation of a long-term coal supply agreement.
The claim for damages against Eurocoal was for some R240
million, and
Billiton has not succeeded in recovering this sum despite an
arbitration award against Eurocoal and obtaining orders
for the
liquidation of both Eurocoal and Avstar.
[10]
The lawyers have had minimal interaction with any of the companies
other than Billiton whom they represented in the arbitration
against
Eurocoal. The facts are largely common cause, and Gorven J’s
factual findings in the high court are accepted by the
appellants on
appeal. The precise relationship between the Wisharts and Bhayat, on
the one hand, and the companies which they claim
were the clients of
the lawyers, on the other, is not important for the purpose of the
appeal. Suffice it to say that they claim
to have been intimately
involved with the running of these companies although their holding
in certain instances is indirect.
The
instructions to the lawyers by the various companies
The
settlement meeting
[11]
Badenhorst had acted as Billiton’s attorney over a lengthy
period and at all times against Eurocoal in the arbitration.
Wishart
was present throughout the arbitration proceedings. The legal manager
of the various Wishart companies, Mr Rory Loader,
suggested a
meeting between Wishart and Badenhorst to discuss a possible
settlement. Loader, during a period when he was an advocate
practising at the Johannesburg Bar, had come to know Badenhorst when
he was previously serving his articles of clerkship as an
attorney.
Wishart, Loader and Badenhorst met on 7 March 2008 to discuss
settlement. Wishart made a settlement proposal to Billiton.
Badenhorst said that Billiton would consider the proposal but
signaled to Wishart that, if Eurocoal did not honour its commitment
to deliver coal, Billiton would pursue a substantial damages claim.
And if it could not satisfy the claim, Billiton would apply
to
wind-up Eurocoal and would pursue a claim under s 424 of the
Companies Act against Wishart personally. Wishart claimed
subsequently
that he had no recollection of this meeting, but Loader
did have, and said that he had advised that a damages claim was
unlikely
to yield any commercial benefit to Billiton. Billiton did
not, in the end, accept the settlement proposal.
[12]
Shortly after the meeting to discuss settlement, Badenhorst, on
behalf of Billiton, briefed Suttner to advise on the dispute
with
Eurocoal. They decided to pursue an application for the winding-up of
Eurocoal as a strategy to force it to honour the arbitration
award.
Eyles was briefed to assist Suttner with the drafting of the
application. The application was met with a legal defence and
Billiton then claimed only the costs in the arbitration against
Eurocoal.
The
Avstar instruction
[13]
On 21 March 2008, Loader and Wishart, representing Avstar, briefed
Badenhorst on a dispute between Avstar and 1Time airlines.
Loader
asked Badenhorst to assist and assured him that there would be no
difficulty with a conflict of interest as the matters
were unrelated.
Badenhorst accepted the instruction and briefed Suttner in the
matter. Loader said, in his affidavit in a different
application
brought before the South Gauteng High Court (attached to Badenhorst’s
answering affidavit in the application
before the high court in this
matter), that the reason he had approached Badenhorst was to afford
Wishart access to Badenhorst,
as the Billiton attorney, in an effort
to settle the matter between Billiton and Eurocoal. The other lawyers
were not briefed in
this matter although Badenhorst did discuss it
with Suttner informally.
[14]
Badenhorst received copies of contracts between Avstar and 1Time and
met twice with Loader and the managing director of Avstar.
It was
agreed that Loader would attempt to settle the dispute with 1Time and
Badenhorst had nothing further to do in connection
with this dispute.
The
Colt and Rietspruit instructions
[15]
Loader again contacted Badenhorst and advised that Colt and
Rietspruit had a dispute with Safair (Pty) Ltd (Safair) and that
Safair was claiming more than R37 million from each in respect
of the purchase of aircraft. Letters sent to Colt and Rietspruit
by
Safair on 26 March 2008 suggested that it would bring liquidation
applications against them. This dispute, like the Safair one,
had
nothing to do with the Billiton and Eurocoal matter. But the Wisharts
were involved in both companies.
[16]
Badenhorst agreed to represent Colt and Rietspruit, having received
the assurance from Loader that there was no conflict of
interest, and
in turn briefed Suttner to act. The lawyers decided to call for
documents relating to the dispute with Safair, including
Colt and
Rietfontein’s most recent financial statements. They drafted a
letter to Safair pointing out that both companies
were solvent, and
requesting an undertaking that no liquidation proceedings would be
instituted. In the event that the undertaking
was not given, Suttner
suggested that he and Badenhorst meet Loader, which in fact happened
on 7 May 2008.
[17]
Badenhorst and Suttner then drafted applications for Colt and
Rietspruit to forestall liquidation proceedings. They consulted
several times with Loader and on two occasions with Wishart. Wishart
advised Suttner that his father had authorized the applications
but
should not be involved in the litigation. The lawyers received the
financial statements of Colt and Rietspruit, referred to
them in the
papers and annexed them to the founding affidavits. Urgent
applications were launched and an interim order was obtained
on 9 May
2008. Eyles was briefed to assist in the applications subsequently.
[18]
After Safair had filed its answering affidavits, Suttner and Eyles
prepared replying affidavits for Colt and Rietspruit, consulting
Loader for this purpose but not Wishart. They also prepared heads of
argument. The urgent applications were set down on 3 June
2008 but
the parties agreed to submit their disputes to arbitration instead.
Suttner and Eyles started to prepare the statements
of claim for Colt
and Rietspruit in June.
The
lawyers’ withdrawal
[19]
Once the matters were referred to arbitration it became clear to the
lawyers that in the Rietspruit dispute with Safair, Wishart
would
have to give evidence. They realized that this might result in a
situation of conflict, since if the liquidation of Eurocoal
was
pursued by Billiton, they would have to interrogate Wishart at the
anticipated inquiry. They thus decided to withdraw from
the
Rietspruit and Colt arbitrations and as the lawyers for the two
companies.
[20]
Suttner and Eyles completed the statements of claim on 29 September
2008 and returned all the papers they had been given for
that purpose
to Badenhorst. And on 24 November 2008 Badenhorst wrote to Loader
advising of his withdrawal as attorney for Colt
and Rietspruit.
Loader responded that he saw no conflict in acting for Billiton in
the Eurocoal dispute, and against Safair in
the Colt and Rietspruit
disputes. He was disappointed at the lawyers’ withdrawal.
[21]
At no time did any of the lawyers meet Wishart Snr or Bhayat. And the
finding of the high court that no confidential material
was ever
given to any of the lawyers is not disputed on appeal.
The
Eurocoal Inquiry
[22]
In June 2008 Billiton cancelled the coal supply agreement with
Eurocoal. And in February 2009 it applied to the South Gauteng
High
Court for the winding-up of Eurocoal based on its claim for damages
for some R240 million. Billiton was again represented
by the lawyers.
Eurocoal’s defence was that the claim was invalid. The high
court held that the defence was not bona fide
and granted the
winding-up order.
[23]
On 10 July 2009 the master of the high court authorized an inquiry
into the affairs of Eurocoal. The lawyers continued to act
for
Billiton and Wishart was summoned to give evidence, which he did
without objection. He did, however, ask his then legal
representatives
to advise him on the propriety of his being
interrogated by the lawyers. His advisers considered that there was
nothing improper
about it and the interrogation continued.
[24]
As a result of the evidence that emerged from Wishart’s
interrogation, the lawyers, on behalf of the liquidators of Eurocoal,
instituted action against Wishart and Wishart Snr, the latter as the
trustee of a family trust. Again, there was no complaint about
the
lawyers’ involvement. But when Wishart was summoned to give
evidence in the Eurocoal Inquiry, Mr Dennis Fine SC being
the
commissioner, Wishart, now represented by Schoerie (for the first
time), did object to being interrogated by the lawyers on
the basis
that they had previously acted for Colt, Rietspruit and Avstar.
[25]
The commissioner refused to rule that the inquiry could not go ahead
and that evidence relating to any of those companies be
struck from
the record. He said that he had repeatedly pointed out during the
course of the inquiry that the lawyers were not privy
to any
confidential information such that a conflict of interest might
arise.
[26]
In April 2011 Wishart, Colt and Rietspruit applied to the South
Gauteng High Court for an interdict restraining the lawyers
from
participating in the inquiry. That application has yet to be
determined.
The
Avstar proceedings
[27]
In March 2011, Wishart Snr, acting on behalf of another company in
the Wishart group, applied on an urgent basis to the KwaZulu-Natal
High Court, Pietermaritzburg, for Avstar to be placed under judicial
management, although not contending that Avstar was insolvent.
Billiton and the liquidators of Eurocoal intervened and sought orders
setting aside the provisional judicial management order and
for the
winding-up of Avstar. The high court granted these orders and placed
Avstar in provisional liquidation, and later final
liquidation on 30
June 2011. And as I have already said, it subsequently granted the
application by Billiton for an inquiry into
Avstar’s affairs in
terms of ss 417 and 418 of the Companies Act.
[28]
It was the lawyers’ participation in this inquiry to which the
appellants objected. As I indicated earlier, Judge Blieden
refused
the request to excuse the Wisharts and Bhayat from giving evidence in
the inquiry when Schoerie complained that they had
previously acted
for companies in the Wishart group and thus had a conflict of
interest. And thus the application presently under
consideration was
launched.
The
original cause of action
[29]
The appellants sought a final interdict precluding the lawyers from
examining them in the Avstar inquiry on the ground that
confidential
information in respect of companies in the Wishart group had been
given to them when they previously represented Avstar,
Colt and
Rietspruit. The high court found that the information (primarily the
financial statements of Colt and Rietspruit) was
not confidential.
The appellants do not contest this finding and so no more need be
said about the matter.
[30]
The high court found also that none of the appellants had ever been a
client of any of the lawyers. It was the various companies
in which
they had interests which had given very limited instructions to the
lawyers. Badenhorst and Suttner had met Wishart and
Loader to take
instructions but had encountered Wishart only briefly. Wishart had
had very limited personal contact with any of
the lawyers. This too
is no longer in issue.
[31]
The appellants assert, however, that they had been ‘quasi-clients’
or ‘informal clients’ of the lawyers
and were thus
entitled to an order interdicting them from participating in the
inquiry. To this end they asked the high court to
develop the common
law so as to protect former quasi-clients of legal representatives
from being faced with adversarial litigation
conducted by former
legal representatives.
The
principle that the appellants now wish to rely upon
[32]
The appellants argued on appeal that they should be treated as
clients, and thus receive the same protection that they would
have
been afforded had they been direct clients of the lawyers. Their
interests, they contended, closely converge with the companies
that
had previously instructed the lawyers in several matters. It is trite
that our law affords protection to the former client
of a legal
practitioner such that he or she will be precluded from acting
against a former client where the practitioner has confidential
information about the former client that may be misused. The
principle is clearly set out by Wessels JA in
Robinson
v Van Hulsteyn Feltham and Ford
,
[1]
to which I shall return.
[33]
Recognizing that the lawyers had no such confidential information, as
the high court found, the appellants argued nonetheless
that this
court should develop the common law so as to ensure that as a matter
of public policy, and in the interests of the administration
of
justice, it is improper for a legal practitioner to act against a
person who had an interest in an entity for whom the practitioner
had
previously acted. They contended that this court should follow the
development of the law in other jurisdictions which have
recognized
the principle that a lawyer should not act against a person who has
had a close connection, or close convergence of
interests, with a
former client of the lawyer.
The
high court’s approach to the development of the law
[34]
Gorven J pointed out that although South African courts have followed
the English approach to restraining lawyers from acting
against
former clients, this has been confined to situations where the lawyer
was in possession of confidential information. (That
is also the
clear implication in
Robinson
.)
While it is now accepted that the lawyers in this matter did not have
access to confidential information in respect of the appellants,
it
is worth noting the English law which has been followed in several
jurisdictions. The high court cited the locus classicus in
this
respect:
Prince Jefri
Bolkiah v KPMG (a firm)
[2]
where, after discussing a lawyer’s duty to a current client,
Lord Millett said:
‘
Where
the court’s intervention is sought by a former client, however,
the position is entirely different. The court’s
jurisdiction
cannot be based on any conflict of interest, real or perceived, for
there is none. The fiduciary relationship which
subsists between
solicitor and client comes to an end with the termination of the
retainer. Thereafter the solicitor has no obligation
to defend and
advance the interests of his former client. The only duty to the
former client which survives the termination of
the client
relationship is a continuing duty to preserve the confidentiality of
information imparted during its subsistence.
Accordingly,
it is incumbent on a plaintiff who seeks to restrain his former
solicitor from acting in a matter for another client
to establish (i)
that the solicitor is in possession of information which is
confidential to him and to the disclosure of which
he has not
consented and (ii) that the information is or may be relevant to the
new matter in which the interest of the other client
is or may be
adverse to his own.’
[35]
The high court found, and again this is not contested on appeal, that
the appellants did not meet the
Bolkiah
threshold
requirements. But it referred to different approaches in other
jurisdictions where a test of perception of impropriety
has been
adopted in different guises. In essence, where a lawyer acts
against a former client, in the absence of the possession
of
confidential information, a court may restrain such conduct where it
undermines the administration of justice.
Restraint
in the interest of the administration of justice
[36]
The approach adopted in the United States Court of Appeals, where a
lawyer is no longer in possession of confidential information,
is
different from the English approach.
[3]
The courts do not ask whether confidential information has actually
been revealed, but whether the subject matters of the representations
(for different clients) are substantially related. This principle has
not been adopted in Canada
[4]
but in Australia the courts have adopted a principle that the court
has an inherent jurisdiction to restrain lawyers from acting
where it
is necessary for the administration of justice. The principle was
expressed thus by Brereton J in
Kallinicos
& another v Hunt & others
:
[5]
‘
The
test to be applied in this inherent jurisdiction is whether a
fair-minded, reasonably informed member of the public would conclude
that the proper administration of justice requires that a legal
practitioner should be prevented from acting, in the interests
of the
protection of the integrity of the judicial process and the due
administration of justice, including the appearance of justice
. . .
.
The
jurisdiction is to be regarded as exceptional and is to be exercised
with
caution. . . .
Due
weight should be given to the public interest in a litigant not being
deprived of the lawyer of his or her choice without due
cause . . .
.’
[37]
In the leading English work on conflicts of interest, Charles
Hollander QC and Simon Salzedo
Conflicts
of Interest
,
[6]
the authors state that although
Bolkiah
is silent on the question of the court’s inherent jurisdiction
in so far as the administration of justice is concerned, it
could not
have been the intention of the court to abolish it, and the test to
be applied ‘is whether a fair-minded, reasonably
informed
member of the public would conclude that the proper administration of
justice requires that a legal practitioner should
be prevented from
acting’.
[38]
That jurisdiction should be exercised with circumspection, however,
as Brereton J said in
Kallinicos
.
And the countervailing considerations relating to a client’s
right to choose his or her legal practitioner and the latter’s
right to choose a client, are important factors to be taken into
account. That principle is endorsed by the Chancery Division of
the
Queen’s Bench in England: in
Halewood
International v Addleshaw Booth & Co
[7]
Neuberger J, after referring to a client’s right to impart
information confident that it shall remain confidential, and not
be
used against him subsequently, said:
‘
It
is wrong not to overlook the countervailing factors, however. There
are the rights of the professional adviser to act subsequently
for
whatever party chooses to instruct him, and the right of third
parties to instruct whatever professional advisers they choose.
These countervailing rights also have a public interest
dimension, as does the right of the former client.’
[39]
Hollander and Salzedo point out
[8]
that the inherent jurisdiction to restrain lawyers from acting in the
interest of the administration of justice in England has
been limited
to cases ‘where the lawyer has had a longstanding professional
relationship with one party but then seeks to
act on the other side,
where the lawyer will or may be a material witness, or where he is
acting against one of two former joint
clients on a matter related to
the joint retainer’.
[40]
In this matter, however, even if we were to find that our law has
such an inherent jurisdiction, we are still dealing with
parties who
were not themselves clients of the lawyers. And so the appellants’
cause of action is yet one more step removed.
Convergence
of interest and quasi-clients
[41]
The appellants argued that the convergence of interest between the
Wisharts, on the one hand, and Avstar, Rietspruit and Colt
on the
other, was such that any protection offered to the former clients,
Avstar, and Rietspruit and Colt, should be extended to
their
shareholders and directors. Wishart, for example, was the sole
director of Eurocoal and Avstar. It is not necessary, in my
view, to
consider the details of shareholding by family-controlled trusts for
there has been no case made out for piercing the
corporate veil. That
is what would need to be done in order to find that the real client
was the shareholder or director, and not
the company. That much is
made clear by a case on which the appellants sought to rely:
Gainers
Inc v Pocklington,
[9]
a decision of the Court of Appeal, Alberta, Canada which considered
the rights of ‘near clients’. There Justice Coté
said that while a court should look at ‘more than just whose
name was on the law firm’s file cover’ as the client,
it
should not ignore the existence of companies and ‘pretend that
they are all unincorporated associations of their shareholders,
officers and directors’.
Gainers
does not, in my view, assist the appellants.
[42]
So too,
Re
a Firm Solicitors
[10]
does not support the
appellants’ request for relief. In that case the parties had
agreed that two associated companies of
the client would co-operate
with the solicitors and give confidential information to the firm
even if it might be used against
the client. The court held there
that because of the nature of the agreement and the confidential
information imparted, the companies
were ‘as good as their
clients’ and should be treated accordingly. The facts in this
case are not comparable. The information
in
Solicitors
was given in confidence to the knowledge of all concerned.
[43]
Moreover, the argument that the appellants deserved the same
protection as did the companies in which they had interests is
met by
the countervailing considerations that were discussed in
Kallinicos
and
Halewood
, cited above. In the end, what is really at issue
is whether the administration of justice would be impaired if the
lawyers were
not restrained from interrogating Wishart and the other
appellants.
[44]
What the law seeks to do in these situations is to protect a former
client of a lawyer from being prejudiced by having that
representative, in whom trust has been reposed, and who is armed with
information about that client, act against him or her. That
is hardly
in issue in this matter. The lawyers’ client was Billiton, not
the appellants. Billiton claims it will suffer serious
prejudice if
the lawyers who have been conducting its litigation against Eurocoal
for several years, and in whom it has ‘invested’
millions
of rands, is denied their continued representation.
[45]
It will be recalled, moreover, that when Loader approached Badenhorst
to act for Avstar, he did so precisely because Badenhorst
acted for
Billiton and Loader believed that that might facilitate a settlement
between Eurocoal and Billiton. Badenhorst was at
all material times
Billiton’s attorney. And he had in turn briefed Suttner and
Eyles in Billiton matters.
[46]
The submission for the appellants that the lawyers had become
familiar with the Wisharts is also without merit. None of them
had
ever met Wishart Snr or Bhayat. Badenhorst met with Wishart, as
did Suttner, on few occasions and in respect of matters
that had
nothing to do with Billiton. They had not known him at any personal
level. Moreover, the claim that they knew what kind
of witness he
would be, as argued by the appellants, was without foundation.
Badenhorst and Suttner had met him briefly to take
instructions on
other matters before the Eurocoal inquiry commenced. It was from his
examination there that they would have gleaned
any personal
information about him, and that commenced long after they had
withdrawn as the lawyers for Colt and Rietspruit. The
facts simply do
not warrant the application of the principles contended for by the
appellants.
Conclusion
[47]
The claim to be entitled to protection against being interrogated by
Suttner and Eyles is, as I see it, made all the more unjustified
by
the fact that Wishart raised no objection to being examined by the
lawyers in the Eurocoal inquiry. He accepted his counsel’s
advice that there was nothing to object to. It was cynical to raise
the objection some two years later in the Avstar inquiry.
[48]
As the lawyers argued, the heart of a client’s right to be
protected against a former legal representative taking the
other side
is the possible misuse of confidential information. In
Robinson
v Van Hulsteyn, Feltham and Ford
[11]
Wessels JA said the following:
‘
According
to our law a solicitor is an officer of the Court; the Court
exercises a jurisdiction over him and will see that in the
conduct of
his professional work he displays towards the Court and towards his
clients a very high standard of conduct. In order
to advise a client
as to his legal position the solicitor must know all the
circumstances of his client’s case, and therefore
a client is
often compelled to reveal to his solicitor the most intimate
circumstances of his life. The solicitor may thus become
the
repository of the most vital secrets of the client. These confidences
reposed in him he may not divulge, and if he does the
Court will
punish him for his breach of duty towards his client. If a solicitor
who in the course of advising a client has become
possessed of his
client’s secrets is engaged by another person to act against
his former client, his knowledge of the latter’s
secrets may be
of great advantage to his client’s opponent. Although the
solicitor may conscientiously endeavor to do his
duty to his new
client without revealing the secrets of his old client, yet he may
find himself in an invidious position and his
knowledge of the
secrets of his former client may unconsciously affect him in doing
his duty towards the other. In order to avoid
such a dilemma the
Court will restrain a solicitor in whom confidences have been reposed
by a client from acting against such a
client where it is made clear
to the Court in the words of Cozens-Hardy M R [in
Rakusen v Munday
& Clarke
(1912 1 Ch D 831
, 835)], “that real mischief
and real prejudice will in all human probability result if the
solicitor is allowed to act”.’
[49]
In this matter, the appellants were not clients of the lawyers and
they had not disclosed any confidential information –
any
secrets – to the lawyers. There was no possibility, let alone
probability, that the lawyers could use their secrets against
them.
[50]
Even if the court were to recognize the principle that there should
not be even a reasonable perception that the administration
of
justice may be impaired, this is not a case where such a principle
would have any application. And as the high court said, where
an
attorney-client relationship has come to an end, the basis for
protecting the misuse of confidential information would lie in
delict.
[12]
It is accordingly
not necessary, in this case, to find that the common law should be
extended in the manner suggested by the appellants.
[51]
The high court correctly found that the application for the interdict
against the lawyers had to fail. The appellants, then
applicants, had
shown no clear right nor proved any injury committed or reasonably
apprehended.
Wishart’s
present standing
[52]
As I said at the outset, Wishart has been sequestrated and the
trustees of his estate have elected not to participate in the
appeal.
Counsel for the appellants nonetheless contended that Wishart has a
residual interest in the appeal and remains a party.
Section 23
of
the
Insolvency Act 24 of 1936
deals with the rights and obligations
of an insolvent during sequestration. Subsection 6 reads: ‘The
insolvent may sue or
be sued in his own name without reference to the
trustee of his estate
in any matter relating to status or any
right in so far as it does not affect his estate
. . . .’
(My emphasis.)
The
appellants argued that Wishart’s application for an interdict
against the lawyers was one that related to his status:
it affected
his rights to dignity, freedom of speech and freedom and security of
person. His objection to the lawyers examining
him was based on the
proposition that the compulsive examination would be invasive and
might result in him being criminally charged
or held liable under s
424 of the Companies Act.
[53]
However, as the lawyers argued, any examination would relate only to
the assets and liabilities of Avstar. It would have nothing
to do
with Wishart’s status or his personality rights. Accordingly,
given the view of the trustees of his estate, Wishart
is no longer a
party to this appeal. The order that is made will be in respect of
the remaining two appellants.
The
conduct of the appellants
[54]
I think it necessary to say something about the conduct of the
appellants. They have alleged impropriety on the part of members
of
the legal profession and cast a shadow on their professional conduct.
They have done so without any foundation. The lawyers,
Badenhorst,
Suttner SC and Eyles, did nothing improper. When they anticipated a
possible conflict of interest they very properly
withdrew from acting
for Colt and Rietspruit. They did not act against former clients and
they did not have, let alone use, confidential
information. The
appellants’ objection to their interrogation under ss 418 and
418 of the Companies Act was made some two
years after Eurocoal was
liquidated. Their strategy was to delay the ascertainment of the
truth about Avstar and the other companies.
The litigation has been
vexatious. Had they succeeded in the application for the interdict
they would have undermined the administration
of justice.
[55]
Accordingly the appeal is dismissed with costs including the costs of
two counsel where so employed.
_________________________
C
H Lewis
Judge
of Appeal
APPEARANCES
For
Appellants: C J Hartzenberg SC and L E Combrinck
Instructed
by: Venns Attorneys, Pietermaritzburg
Phatsoane
Henney Inc, Bloemfontein
For
Second to Fifth Respondents: W Trengove SC
Instructed
by: Norton Rose Fulbright, Sandton
Webbers,
Bloemfontein
[1]
Robinson
v Van Hulsteyn Feltham and Ford
1925
AD 12
at 21.
[2]
Prince
Jefri Bolkiah v KPMG (a firm)
[1998] UKHL 52
;
[1999] 2 AC 222
(HL) at 235C-E.
Bolkiah
was
referred to with approval by the Competition Appeal Court in
American
Natural Soda Ash Corp & another v Botswana Ash (Pty) Ltd &
others
[2007] 1 CPLR 1 (CAC).
[3]
Analytica
Incorporated v NPD Research Inc
(Seventh
Circuit)
(1983) 708 F 2d 1263
(US Court of Appeals).
[4]
McDonald
Estate v Martin
[1990]
3 SCR 1235
at 28.
[5]
Kallinicos
& another v Hunt & others
[2005] NSWSC 1181
para 76.
[6]
Fourth edition (2011) pp 103-104.
[7]
[2000] PNLR 788
at 791.
[8]
Page 110.
[9]
Gainers
Inc v Pocklington
1995 ABCA 177
(CanLII).
[10]
Re
a Firm of Solicitors
[1992]
1 All ER 353.
[11]
Robinson
v Van Hulsteyn, Feltham and Ford
1925 AD 12
at 21.
[12]
The court relied in this regard on
Meter
Systems Holdings Ltd v Venter & another
1993 (1) SA 409
(W) which dealt with unlawful competition.