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2024
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[2024] ZAFSHC 38
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Ubuntu Chicken Products (Pty) Ltd and Another v First Rand Bank Ltd t/a First National Bank (5036/2021) [2024] ZAFSHC 38 (13 February 2024)
IN
THE HIGH COURT OF SOUTH AFRICA
FREE
STATE DIVISION, BLOEMFONTEIN
Case
no: 5036/2021
Reportable:
YES/NO
Of
Interest to other Judges: YES/NO
Circulate
to Magistrates: YES/NO
In the matter between:
UBUNTU
CHICKEN PRODUCTS(PTY)LTD
G.J.
BREDENKAMP
and
FIRST
RAND BANK LTD t/a
FIRST
NATIONAL BANK
In
re:
FIRST
RAND BANK LTD t/a
FIRST
NATIONAL BANK
And
UBUNTU
CHICKEN PRODUCTS (PTY) LTD
G.J.
BREDENKAMP
First
Applicant
Second
Applicant
Respondent
Plaintiff
First
Defendant
Second
Defendant
JUDGMENT
BY:
MOLITSOANE,
J
HEARD
ON:
9
NOVEMBER 2023
DELIVERED
ON:
13 FEBRUARY 2024
[1]
In this interlocutory application, the
Applicants seek an order in terms of Uniform Rule 35(3) to compel the
Respondent to make
additional discovery to the extent set out in the
Notice dated 6 July 2022. The application is opposed by the
Respondent on the
basis that the documentation sought is irrelevant
and that there exists no triable issue in respect of the same.
[2]
The plaintiff/respondent and the first defendant/first applicant and
second defendant/second
applicant will conveniently be referred to as
plaintiff and first defendant and second defendant in these
proceedings
[3]
The plaintiff instituted an action against the defendants for money
lent and advanced,
based on a written Covid 19 loan agreement between
the plaintiff and first defendant as principal debtor and second
defendant on
a written suretyship in which the second defendant bound
himself as surety and co-principal debtor in solidum for the
obligations
of the first defendant to the plaintiff.
[4]
The defendants jointly pleaded that either the Reserve Bank and/or
the National Treasury
guaranteed the payment of the obligations of
the defendants to the plaintiff. The defendants also pleaded that
they were entitled
to a ‘hiatus’ of payments in respect
their obligations to the plaintiff arising from the Covid 19 and
suretyship agreements.
[5]
The defendants delivered on the plaintiff a Notice in terms of Rule
35(1),(6),(8)
and (10). The plaintiff responded to the Notice and
duly delivered a discovery affidavit. The defendants were not
satisfied with
the discovery made and in the belief that there are
additional various documents of a so called ‘
Covid 19 Loan
Guarantee Scheme”
in the possession of the plaintiff which
may be relevant to the dispute in the action proceedings, filed a
Notice in terms of Rule
35(3).
[6]
In response to the Rule 35(3) Notice, the plaintiff said the
following on affidavit:
“
The
Plaintiff submits that the aforesaid notice in terms of Uniform Rule
35(3) dated 6
th
of July 2022 constitutes an
impermissible abuse of the court rules in pursuance of an ulterior
purpose. The Plaintiff thus submits
that it is entitled to refuse to
provide the documentation so requested.”
[7]
It is submitted on behalf of the defendants that not only are the
documents relevant and necessary for
the defendants to prepare for
the trial, but also that provision of the documents boils down to the
heart of the defendants’
defence.
The defendants also
submitted that the plaintiff did not replicate to the plea of the
defendants as set out in the relevant parts
as in paragraph [10]
below
.
The further
contention of the defendants is that the plaintiff does not aver that
the requested documents are non-existent or are
not in possession of
the plaintiff.
[8]
It is submitted on behalf of the plaintiff that the defendants by
filing this Rule 35(3) request,
seek to impermissibly gain access to
facts in order to support their defence. This submission is based,
according to the plaintiff
on the failure of the defendants to plead
material facts to support the proposition that the first defendant
was entitled to a
hiatus from its payment obligations. According to
the plaintiff, the defendants failed to plead the particulars of the
agreement
in accordance with the prescripts of Rule 18.
[9]
In
Durbach
v Fairway Hotel Ltd
[1]
it
was held that the object of discovery was to ensure that before the
trial, both parties should be made aware of all documentary
evidence
that is available. Such discovery is meant to assist the court and
the parties to arrive at the truth. In
Ferreira
v Endley
[2]
it was held that discovery
of
affidavits
are important documents in any trial and the party requesting
discovery is entitled to have full and complete discovery
on oath.
The court in
Ferreira
v Endley(supra)
went further to say:
“
The words ‘all
documents relating to any matter in question in such action whether
such matter is one arising between the
party requiring discovery and
the party required to make discovery or not’ appearing in Rule
35, must be given a wide interpretation,
and will include any
document which may lead to a train of enquiry which may ultimately
serve to advance the case of the party
seeking discovery or damage
the case of his adversary.”
[3]
[10]
The defendants pleaded as follows to the plaintiff’s particular
of claim:
“
3.2
During or about 2020 the South African Government and banks (in
particular
the plaintiff)
facilitated what is known as the COVID-19 loan guarantee
scheme.
3.3
In terms of the aforementioned guarantee scheme, the Reserve Bank of
South
Africa and/or National
Treasury and/or South African Banking Council entered
into
an agreement with banks and in particular the plaintiff herein.
3.4 In
terms of the aforementioned agreement the purpose was to allow banks
to deviate from its normal loan and recovery
schemes in particular in
respect of small businesses like the first defendant, who suffered
financial distress as a result of the
COVID-19 pandemic.
3.5 In
particular the plaintiff invited such small businesses, and in
particular the first defendant, to apply for financial
assistance.
3.6
The purpose of such financial assistance, would be to assist the
first defendant to obtain finance to pay
its basic expenses and
operational costs at a time when businesses were restricted due to
the pandemic and the regulations issued
in terms of the Disaster
Management Act, Act 57 of 2002.
3.7 It was
particularly understood that such financial assistance was to be
guaranteed in repayment by the South African Reserve
Bank and/or
National Treasury.
3.9 In
those circumstances, the plaintiff invited the first defendant to
obtain financial assistance from it on the
understanding that
although the South African Reserve Bank and/or National Treasury
guarantees the payment of the amounts so forwarded,
the first
defendant would receive financial assistance and, would, repay the
aforementioned amount from time to time, and, in the
event, it being
needed, through a hiatus from time to time.
3.14 Notwithstanding
written request by the first defendant to plaintiff to obtain a copy
of the COVID-19 loan guarantee scheme
agreement, first defendant has
not been able to obtain same.
4.1
Second defendant in particular pleads that he signed
annexure “POC4” on the understanding that the agreement
for the financial assistance were on the terms and conditions as
stated herein.
4.2
Second defendant avers that in view of the COVID-19 loan guarantee
scheme in terms whereof the Reserve Bank
and/or National Treasury
would guarantee payment on behalf of the first defendant, there is
and was no need for second defendant
to sign the document as
required.”
[11]
Careful analysis of the defendant’s
plea shows that the defendants have not pleaded material
facts in
support of the proposition that the first defendant was entitled to a
hiatus from its payment obligations. Rule 18(6)
provides that a party
who in his pleading relies upon a contract shall state whether the
contract is written or oral and when,
where and by whom it was
concluded. The defendants joint plea falls short of what Rule 18(6)
requires. As contended by the plaintiff,
the defendants do not
particularise the identity of the third party who guaranteed their
payment in case of non-payment. According
to paragraph 3.9 of the
plea, it is either the South African Reserve Bank and/or the National
Treasury. The defendants do not aver
who the parties were to the
agreement and when and where the agreement was concluded.
[12]
The proposition of the hiatus pleaded herein, is based on no
foundational facts to entitle the
defendant to arrive at its
conclusion. The pleaded case is silent on the specific terms of the
alleged hiatus.
[13]
A party is required to discover all documents and records which are
relevant to any pleaded issue
in dispute. Relevance is thus linked to
the pleadings and must not be determined outside of the four corners
of the pleadings.
With reference to the particulars of claim, the
court in
Swissborough
Diamond Mines (Pty) Ltd v Government of the Republic of South
Africa
[4]
held that:
“
In determining
relevance, regard can only be had to allegations contained in the
plaintiff’s particulars of claim. Insofar
as the further
particulars for trial seek to widen the issues they cannot be taken
into account.”
In my view, the
sentiments expressed herein apply equally to a plea. Absent any
triable issue raised, there can be no matter in
question as envisaged
in Rule 35 to which the documentation can relate.
[14]
A party is not allowed to raise a defence after the fact with
information obtained from the discovery by
his/her adversary. It
follows that a party cannot venture into discovery in order to
ascertain the basis for the defence or to
look for information in
order to garner evidence or to structure a defence.In Marillac v
Plax
[5]
, the court referred to
with approval to Yorkshire Provident Life Assurance Company v Gilbert
and Rivington where the following
was said:
“
Now for the
purpose of this application I am prepared to guide myself by the
course that was pursued in the case of the Yorkshire
Provident Life
Assurance Company v Gilbert and Rivington (1895, 2QBD 148), a
decision which is brought up in Halsburg (vol. 10,
sec. 512) as being
the leading case. That case decided that
where there is a
general allegation against a plaintiff, and justification of such a
general allegation is pleaded and particulars
are given how the plea
is going to be justified and proved, that then the defendant in such
a, case is not entitled to ask the
plaintiff to produce documents
relating to the sale and carrying on of his business generally; he is
only entitled to call upon
him to produce, and entitled to inspect,
such books, documents and papers as related to the specific instances
which were indicated
of which proof would be given before the Court
by way of justification.
Otherwise, as the Judge in that case
said, it would be a very bad precedent to suggest that a person can
simply by libelling another
obtain access to all his books and see
whether he can justify what he has said or not. It seems to me that
is really what the applicant
is in this case asking to be allowed to
do, and I am not prepared to accede to his request to the extent
asked for”. (emphasis
added).
[15]
In STT Sales v Fourie &
Others
[6]
the court observed as
follows:
“
The essential
feature of discovery is that a person requiring discovery is in
general only entitled to discovery once the battle
lines are drawn
and the legal issues established.
It is not a tool designed to put
a party in a position to draw battle lines and establish the legal
issues.
Rather, it is a tool used to identify factual issues once
legal issues are established. (my emphasis)
[16]
The predicament the defendants find themselves in, is that they
elected not to comply with Rule
18 and plead and identify the facts
they rely upon for the alleged hiatus of payment obligation. It
cannot thus be open to them
to use the discovery process to seek such
facts. Allowing the application would amount to assisting the
defendants to go on a fishing
expedition and hunt for facts to
support their defence. That cannot be correct. The application must
accordingly fail. The costs
should follow the cause.
ORDER
1.
The application is dismissed with costs, which costs shall include
the costs occasioned by the employment
of two counsel.
P.
E MOLITSOANE, J
On
behalf of the Plaintiff:
Adv.K.W
Luderitz SC
Appearing
with
Adv.
S Tsangarakis
Instructed
by:
Symington
& De Kok Attorneys
BLOEMFONTEIN
On
behalf of the Defendant:
Adv.
P du P Greyling
Instructed
by:
Bredenkamp
Attorneys
BLOEMFONTEIN
[1]
1949(3)
SA 1081(SR) at 1083.-
[2]
1966(3) SA 618(E) at 621 C-D
[3]
At
622A-C.
[4]
1999(2)
SA 297(T) at 325 H.
[5]
1941
CPD 206
at 208.
[6]
2010(6)
SA 272(GSJ) at para [16].