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2023
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[2023] ZAGPJHC 802
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ED Advisory Services (Pty) Ltd and Others v Marsay (8994/2021) [2023] ZAGPJHC 802 (21 July 2023)
IN THE HIGH
COURT OF SOUTH AFRICA
(GAUTENG DIVISION,
JOHANNESBURG)
Case
No.
8994/2021
NOT
REPORTABLE
NOT
OF INTEREST TO OTHER JUDGES
REVISED
21.07.23
In
the matter between:
ED
ADVISORY SERVICES (PTY) LTD
First
Applicant
ECONOMIC
DEVELOPMENT MANAGEMENT AND
ADMINISTRATION
SERVICES (PTY) LTD
Second
Applicant
ED
REPORTING SERVICES (PTY) LTD
Third
Applicant
And
NICOLAS
MARSAY
Respondent
JUDGMENT
WILSON
J:
1
The applicants, to whom I shall refer collectively as the ED
Group, retained the respondent, Mr. Marsay, as a consultant providing
economic development advisory services on their behalf. Mr. Marsay
was remunerated substantially by way of commission. That commission
was equal to 5% of the revenue generated from clients of the ED Group
that Mr. Marsay sourced. Mr. Marsay’s commission was
set out in
a contract between the ED Group and Mr. Marsay, which the parties
described as a “commission agreement”.
2
It was a condition of the commission agreement that Mr. Marsay
would not solicit work for his own account from any of the ED Group’s
clients. One of the ED Group’s clients could, however, approach
and retain Mr. Marsay independently of the ED Group if it
confirmed
in writing that it had approached Mr. Marsay, and he had not
approached it; that it had obtained a quote for the same
work from
the ED Group; and that it was aware of Mr. Marsay’s fees. In
that event, Mr. Marsay could accept the work provided
that he charged
a fee calculated in a manner prescribed in the commission agreement,
and if he paid 5% of his total fee for the
work over to the ED Group.
3
The ED Group alleges that Mr. Marsay has accepted and
performed work for its clients in breach of the commission agreement.
It has
instituted an action for damages arising from this alleged
breach of contract. The ED Group now applies for an order compelling
Mr. Marsay to produce for inspection various documents evidencing his
relationship with clients it says Mr. Marsay serviced in
breach of
the commission agreement. Mr. Marsay resists such an order. He also
applies to strike out allegations raised for the
first time in the ED
Group’s replying affidavit.
4
On 19 July 2023, I granted an order dismissing Mr. Marsay’s
application to strike out, and compelling him to make the documents
identified by the ED Group available for inspection. I indicated that
I would give my reasons in due course. These are my reasons.
The application to
strike out
5
In its particulars of claim, the ED Group alleges that Mr.
Marsay had provided economic development advisory services to an
entity
it called “Wartsila Corporation”, and to an
unknown number of its “other prospective clients”. Mr.
Marsay
disclosed bank statements that appear to show payments from
Wartsila to “Orchestrator Management Services”, which is
a company he controls. But, beyond two quotations and one other
precontractual communication, Mr. Marsay did not disclose material
relating to work with any entities that might fall into the category
of “other prospective clients”. In his affidavit
in
answer to the ED Group’s application to compel, he stated that
this material could not be disclosed because it did not
exist.
6
In reply, the ED Group produced material that suggested that
Mr. Marsay had in fact provided services to a number of other
companies
in breach of the commission agreement. These, the ED Group
says, were the “other prospective clients” referred to in
its particulars of claim. The material the ED Group produced in reply
consisted of references to Mr. Marsay’s services in
those
companies’ annual reports and other public documents. The ED
Group says that the material also tends to show that those
services
probably involved the provision of economic development advice.
7
In what he called a “rejoinder affidavit”, filed
to plead over in the event that his application to strike out was
dismissed,
Mr. Marsay admitted that he had dealings with these
companies, but said that his dealings did not encompass the provision
of economic
development advisory services. That placed them beyond
the scope of the commission agreement.
8
Mr van Nieuwenhuizen, who appeared for Mr. Marsay before me,
argued that the ED Group produced the new material in its replying
affidavit to embarrass Mr. Marsay, and to create the impression that
he had sought hide his other clients. This was misleading,
Mr.
Nieuwenhuizen argued, because Mr. Marsay’s relationship with
his other clients had nothing to do with the provision of
economic
development advisory services. Mr. Nieuwenhuizen suggested that the
ED Group probably had the information evidencing Mr.
Marsay’s
other work all along, but had produced it in reply with the sole
purpose of ambushing him.
9
Material produced for the first time in reply will generally
be struck out. But a court has a discretion, in exceptional
circumstances,
to allow the introduction of new material in reply.
That discretion must be exercised having regard to “(i) whether
all the
facts necessary to determine the new matter raised in the
replying affidavit were placed before the court; (ii) whether the
determination
of the new matter will prejudice the respondent in a
manner that could not be put right by orders in respect of
postponement and
costs; (iii) whether the new matter was known to the
applicant when the application was launched; and (iv) whether the
disallowance
of the new matter will result in unnecessary waste of
costs” (
Mostert v Firstrand Bank Ltd t/a RMB Private Bank
2018 (4) SA 443
(SCA), paragraph 13).
10
If I were satisfied that the new material was produced purely
for the purposes of ambush, I would of course have struck it out. But
I was not so satisfied. ED Group has been clear all along that, other
than the Wartsila Corporation, it does not know who Mr. Marsay’s
extra-contractual clients are. It was entitled to say that in its
founding papers. It was also entitled to expect frank and honest
disclosure, in Mr. Marsay’s answering affidavit, not just of
material related to what Mr. Marsay subjectively believed were
economic development advisory services, but of material that might
reasonably be relevant to the pleaded issues in the main action
(see,
for example,
ST v CT
2018 (5) SA 479
(SCA), at 488B and
Santam
v Segal
2010 (2) SA 160
(N), paragraph 10).
11
Mr. Marsay having effectively denied in his answering
affidavit that he had any relationships other than his contract with
Wartsila
to disclose, the natural inference to be drawn from the
papers is that the ED Group cast around for information that might
confirm
or contradict that version. That material was then produced
in reply. In these circumstances, there was plainly no ambush.
12
The circumstances as I have outlined them seemed to me to be
sufficiently exceptional to exercise my discretion in favour of
allowing
the material. There was no prejudice to Mr. Marsay, because
he pleaded over, and sought admission of the “rejoinder
affidavit”,
to which the ED Group agreed, and which I allowed.
That affidavit contained all the information necessary to assess the
new material.
What is more, the new material served to highlight and
define what is likely to become one of the principal issues at trial:
whether
the commission agreement actually applies to the clients Mr.
Marsay has taken on outside of its terms. In these circumstances, the
new material had to be allowed, and the strike out application was
dismissed.
The application to
compel
13
The application to compel was initially resisted on two bases:
first that the documents the ED Group sought were not relevant to
the
pleaded issues, and, secondly, that the documents were not in Mr.
Marsay’s possession. Both objections rested on the
same
substrate: that the documents did not relate to the provision of
economic development advisory services in breach of the commission
agreement.
14
At the outset of the argument before me, it was conceded that
the documents the ED Group sought – documents related to the
provision of economic development advisory services to specified
third parties – were in fact relevant to the pleaded issues.
Mr
Marsay’s case narrowed to the proposition that he simply had no
such documents in his possession.
15
Mr. Marsay’s case involved no small degree of sophistry.
Mr. Marsay did not deny that he had documents in his possession which
evidence a relationship with third parties to whom he provides
consulting services beyond the scope of the commission agreement.
He
said only that any documents he had that concerned his relationship
with the entities specified in the ED Group’s discovery
notice
did not concern the provision of economic development advisory
services. Accordingly, so the argument went, he was not “in
possession” of the documents the ED Group sought. But, as I
have already made clear, whether Mr. Marsay is actually providing
economic development advisory services to the relevant third parties
is precisely what is in issue between the parties in the main
action.
Mr. Marsay’s duty is to disclose documents that might
reasonably relate to the provision of such services, not simply
documents that he subjectively believes relate to those services.
16
The ED Group has produced sufficient material to suggest that
documents evidencing Mr. Marsay’s relationship to the third
parties specified in its notice may well relate to the provision of
economic development advisory services. To take but one example,
there is an extract from the 2017 annual report of a company called
Hulisani. The report boasts that Hulisani has “recently
brought
in the expertise of Nicolas Marsay a leading Economic Development
Advisor . . . Nicolas will assist in optimising the existing
investments held by Hulisani and advising the business development
team on potential efficiencies within the pipeline of future
acquisitions. The areas that Nicolas will focus on will be:
sustainability, business strategy, organisational improvement, local
supply chain efficiency, local economic development and maximising
job creation."
17
I cannot say whether Mr. Marsay’s functions, so
described, amount to the provision of “economic development
advisory
services”. But nor can I say that they do not. It is
enough that they might reasonably be so construed, even if it turns
out that they actually relate to the provision of another type of
service. It follows that documents of the nature specified in
the ED
Group’s discovery notice evidencing Mr. Marsay’s
relationship with Hulisani are relevant and discoverable. The
same is
to be said for any documents in Mr. Marsay’s possession of the
nature the ED Group specifies that relate to his relationships
with
the other entities to which the ED Group has established he is
connected, or with entities to which he might reasonably be
construed
as having provided economic development advisory services during the
period specified in the ED Group’s discovery
notice.
18
It was for these reasons that I dismissed Mr. Marsay’s
application to strike out, and granted the ED Group’s
application
to compel the documents specified in its discovery
notice.
S D J WILSON
Judge of the High Court
This judgment was
prepared by Judge Wilson. It is handed down electronically by
circulation to the parties or their legal representatives
by email,
by uploading it to the electronic file of this matter on Caselines,
and by publication of the judgment to the South African
Legal
Information Institute. The date for hand-down is deemed to be 21 July
2023.
HEARD ON: 19
July 2023
DECIDED ON: 19 July 2023
REASONS: 21 July 2023
For
the Applicants:
L
Hollander
Instructed
by
Swartz
Weil Van der Merwe Greenberg Inc
For
the Respondent:
HP
van Nieuwenhuizen
Instructed
by
Nupen
Staude de Vries Atorneys