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[2021] ZAGPJHC 451
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Tarsus Distribution (Pty) Ltd v Grandbridge Trading 74 (Pty) Ltd t/a Red Apple Furniture (2018/45674) [2021] ZAGPJHC 451 (22 September 2021)
REPUBLIC
OF SOUTH AFRICA
IN
THE HIGH COURT OF SOUTH AFRICA
GAUTENG
DIVISION, JOHANNESBURG
CASE
NO: 2018/45674
REPORTABLE:
NO
OF
INTEREST TO OTHER JUDGES: NO
REVISED:
YES
22
SEPTEMBER 2021
In the matter between:
TARSUS DISTRIBUTION (PTY)
LTD
Applicant/Defendant
and
GRANDBRIDGE TRADING 74
(PTY) LTD
T/A RED APPLE
FURNITURE
Respondent/ Plaintiff
JUDGMENT
MUDAU,
J:
[1]
This is an application
in
terms of Rule 35(7) of the Uniform Rules of Court
to compel further and better discovery and to order the production
for inspection of certain documents. The applicant is the defendant
in an action pending in this Court in which the respondent is the
plaintiff. It will be convenient to refer to the parties as the
plaintiff and the defendant respectively. The pleadings in the action
have closed, but the matter is yet come to trial.
The notice of motion is couched in relevant parts thus:
“
1
That the Respondent comply with paragraph 2, 3, 4 and 5 of the
Applicant's Notice in terms of Rule 35(3) and (6) dated 30 March
2021
("the Notice”).
2
That the Respondent make available for inspection and copying the
documents specified in paragraph 2, 3, 4 and 5 of the Notice
in terms
of Rule 35(3) read with Rule 35(6) within 5 (five) days of this order
alternatively to state on oath within 5 (five) days
that such
documents or tape recordings are not in the Respondent's possession,
in which event the Respondent shall state their
whereabouts, if
known.”
[2]
Paragraph 2 of the Notice required the plaintiff to produce for
inspection "
AII documentation (including but not limited to
instructions, memoranda, meeting notes, file notes and other
communications) between
the plaintiff and Sizwe IT Group instructing,
and appointing Sizwe IT Group to prepare annexures Qf to Q3 of the
Plaintiff's Particulars
of Claim
". Paragraph 3 of the Notice
required the Plaintiff “
to produce for inspection but not
limited to instructions, memoranda and notes) between the Plaintiff
and Sizwe IT Group relating
to any work carried out by Sizwe IT Group
for the Plaintiff
.”
[2]
Paragraph
4 of the Notice required that the plaintiff produce for inspection
documents relating to the quantification of the plaintiff’s
claims, such as its annual financial statements (or any similar
documents of a financial nature setting out its profit, loss, assets,
expenses, liabilities, and the like). Paragraph 5 of the Notice
requires that the plaintiff produce for inspection documents relating
to paragraphs 20.13.1, 20.13.2 and 20.13.3 of the Particulars of
Claim. (i.e. the documents supporting its figures alleged in its
calculation of the loss of profits equalling R 38 000 000.00).
[3]
The
plaintiff opposes the application on the basis that the documents
sought by the defendant in paragraphs 2 and 3 of the Notice
have
since been provided by way of a supplementary discovery affidavit
that were lost due to technical difficulties. On plaintiff’s
version, there are no further documents in its possession in response
to paragraph 2 and 3 of the Notice. The plaintiff contends
that, the
documents sought in paragraphs 4 and 5 of defendant’s notice
are irrelevant to the dispute between the parties.
Flowing from the
closing arguments between the parties it remains to deal only with
paragraphs 4 and 5 of the notice as well as
the question of costs.
The
nature of the plaintiff’s claim
[4]
The
plaintiff’s action was instituted in December 2018. The
plaintiff’s cause of action is founded on a partly written
and
partly oral contract. The plaintiff claims that the contract was
entered upon on or about 16 January 2015. The terms and scope
of the
agreement however, are in dispute. The agreement was terminated by
notice at the instance of the plaintiff on 20 February
2017.
According to the plaintiff, the defendant was to deliver and install
a complete e-commerce system for the plaintiff that
would be fully
functional for its purpose.
[5]
The
plaintiff pleads that prior to the conclusion of the agreement with
the defendant, it had determined to deploy “a new
business
model, based on a proof of concept blueprint, for an all -in -one
fully integrated e-commerce digital technology platform”.
In
order to implement the e-commerce platform, the plaintiff required
the components of the e-commerce platform to be designed,
implemented
and commissioned by the defendant.
[6]
The
plaintiff emphasises and alleges that the defendant’s
obligations in terms of the agreement was to provide the necessary
hardware and software, and commissioned the integrated e-commerce
platform so that the proposed business operations could commence.
The
plaintiff alleges that it incurred a loss in sum of R 1 070 650.00 in
the acquisition of additional resources, contractors
and equipment or
items that were redundant or wasted because of the defendant's breach
of the Agreement. The plaintiff claims this
amount from the defendant
in prayer 1.1 of its Particulars of Claim.
[7]
The
plaintiff alleges that, it suffered damages
inter
alia
for loss of profits in the amount of R 38 000 000.00 over a
three-year period brought about by "the delay to the Plaintiff
in the launch of its E-Commerce Platform" and calculated on
several revenue amounts that are pleaded in paragraph 20.13 of
the
plaintiffs Particulars of Claim. The plaintiff claims R 38 000 000.00
from the defendant in prayer 1.3 of its Particulars of
Claim.
[8]
The
defendant denies that it was contracted to install a full solution
but that is was only required to deliver certain goods.
The
discovery process
[9]
Following
exchanges of notices in terms of Rule 35(1) calling upon both parties
to discover, the plaintiff served and filed its
discovery affidavit
on 4 March 2020. As indicated, the defendant served and filed the
notice in terms of Rule 35(3) and (6) on
30 March 2021. In the Notice
the defendant stated that it believed that, in addition to the
documents already disclosed by the
plaintiff in its discovery
affidavit, there were other documents (including copies) which might
be relevant to the matters in question
and that such documents were
in the possession of the plaintiff. According to the defendant, the
documentation sought in paragraph
4 and 5 of the Notice is relevant
to the issues as pleaded in the action as “
Defendant
is entitled to interrogate the quantification of the loss of profits,
calculations of the Plaintiffs’ sums and other
damages that it
contends it is owed, how they are made up and whether such
documentation supports the said amounts claimed”.
[10]
In
response, the plaintiff served a document entitled "Plaintiff's
response to Defendant's notice in terms of Rule 35(3) and
(6)".
The document purports to be an affidavit, however, on page 4 of the
said document the indicated space for a commissioner
of oaths’
signature has not been completed. Accordingly, the document does not
comply with Regulation 4(2)(a) of the Regulations
Governing the
Administering of an Oath or Affirmation, GN R 1258 of 1982 appearing
in Government Gazette 3619 of 21 July 1972 as
amended. In addition,
an undertaking was given that
it
would supplement its documentation provided in response to questions
2 and 3 "within the next ten days".
[11]
Consequently,
on 2 June 2021 the defendant's attorneys of record wrote to the
plaintiffs’ attorneys recording that the "Plaintiff's
response to Defendant's notice in terms of Rule 35(3) and (6)"is
defective in that it does not constitute an affidavit for
the reason
set out above and noting that the Plaintiff has failed, to date, to
supplement its affidavit as it said it would”.
It was pointed
out that the plaintiff is not entitled to withhold relevant
documentation. On 3 June 2021, the plaintiffs’
attorneys
responded, recording that they
attached
the corrected affidavit signed by their client on 7 May 2021, which
they erroneously “omitted lo furnish after it
was received."
[12]
The
plaintiffs’ attorneys, in a subsequent email, confirmed that
one of the plaintiff's computer hard drive storage devices
which
contained emails relevant to its relationship with Sizwe IT group
(“Sizwe”) had failed and was unrecoverable
and that the
plaintiff was endeavouring to trace all correspondence with Sizwe
from other computers. The defendant took the position
when it
launched the current application on 7 June 2021 that the plaintiff
has, however, failed to set out a proper response to
the documents
required under paragraph 2, 3, of the notice under oath as required
in terms of Rule 35(3) and unduly withheld relevant
documentation
required in paragraphs 4 and 5 of the notice after pointing out that
it will deal with the damages claim by way of
an expert report.
[13]
On
11 June 2021, the plaintiff’s attorney directed correspondence
to the defendant’s attorney notifying them that the
plaintiff
had received correspondence between it and Sizwe and would furnish
the said correspondence by way of a supplementary
affidavit which
they did on 30 June 2021 in response to paragraphs 2 and 3 of the
notice. On 2 July 2021, despite receiving the
plaintiff’s
supplementary affidavit, the defendant’s attorney served a
notice of set down of the current application
on plaintiff’s
attorney coupled with a request for the hardcopies for the
documentation that the plaintiff discovered and
tendered reasonable
photocopy charges. On 5 July 2021, the plaintiff’s attorney
advised in writing that they will calculate
the
costs
involved and revert to the defendant. In addition, that, if the
application was pursued they will file their intention to
oppose on 6
July 2021 by close of business.
[14]
In
a replying affidavit, the defendant pointed out that the plaintiff
only complied with its obligations in that regard when it
filed its
answering affidavit at 14h32 on 20 July 2021
[1]
.
As pointed out earlier, paragraphs 2 and 3 has since become moot but
for the question of costs. In resisting this application,
the
plaintiff contends that his claim is not for past loss of profits but
for prospective loss of profits that would have been
made in relation
to a business that has not been launched during the time period for
which the defendant’s seeks financial
statements precisely
because of the defendant’s breach of contract which formed the
subject matter of the claim. According
to the plaintiff, the damages
claim for loss of profits are based on what profits would have been
made by the plaintiff had the
defendant not breached its contract.
[15]
The
plaintiff argues that its claim is for profits that has not been made
before, has not been quantified based on its financial
statement and
for that reason its financial statements has no relevance to the
claim. The plaintiff undertakes to provide the relevant
expert
reports to the defendant to explain how the vacuum would have been
filled upon completion. The defendant contends that the
plaintiff is
withholding the information sought in paragraph 4 and 5 without any
lawful grounds.
Rule
35 (3) entitles a party who believes that there are
documents which may be relevant to give notice that
these
be made available for inspection.
[16]
Rule
(35) (3) of the Uniform Rules provides:
“
If
any party believes that there are, in addition to documents or tape
recordings disclosed as aforesaid, other documents (including
copies
thereof) or tape recordings which may be relevant to any matter in
question in the possession of any party thereto, the
former may give
notice to the latter requiring him to make the same available for
inspection in accordance with subrule (6), or
to state an oath within
ten days that such documents are not in his possession, in which
event he shall state their whereabouts,
if known to him or her”.
[17]
It
is trite that the purpose of discovery before trial, is to ensure
that the parties are made aware of all the documentary material
available. The function of discovery is to provide the parties with
the relevant documentary material so as to assist them in apprising
the strength or otherwise of their respective cases and thus provide
a basis for a fair disposal of the matter. The test as to
a whether
document should be discovered is relevance with due regard to the
issues as defined in the pleadings.
Rule
of Court 35(3) entitles a party who believes that there are documents
which may (and not must) be relevant to give notice that
they be made
available for inspection
[2]
.
The
onus of establishing relevance lies with the party seeking discovery
or inspection on a balance of probabilities. An application
of this
nature has to be considered on its own facts and circumstances and
whether on the totality thereof an applicant has shown
on a balance
of probabilities that there are documents which require
production.
[18]
The
courts from numerous decisions are reluctant to go behind a discovery
affidavit which is regarded as conclusive, save where
it can be shown
either (i) from the discovery affidavit itself, (ii) from the
documents referred to in the discovery affidavit,
(iii) from the
pleadings in the action, (iv) from any admission made by the party
making the discovery affidavit, or (v) the nature
of the case or the
documents in issue, that there are reasonable grounds for
supposing
that the party has or has had other relevant documents or tape
recordings in his possession or power, or has misconceived
the
principles upon which the affidavit should be made
[3]
.This
court has a discretion whether or not to enforce discovery or
inspection
[4]
. It follows,
accordingly, that the discretion by the court has to be exercised
judiciously.
[19]
If
a party requires more time to respond to a request ‘for further
and better discovery’, it is seeking an indulgence,
and in the
absence of an extension being agreed upon to by the other party,
would be required to make application for an extension
of time under
rule
27(1)
[5]
.
T
he
documents that the defendant seek are
prima
facie
,
relevant and of evidential value. They are
relevant to its defence and, what is more, they are relevant
to a central issue of the quantification of damages
in the litigation.
[20]
The
expert report that the plaintiff will rely on, inevitably, will
require facts upon which the expert will rely to base his or
her
opinion for admissibility purposes. An expert witness, it is trite,
is someone who gives an opinion either because he or she
has special
skill and knowledge on a topic where the court is incapable of
forming an opinion without assistance
[6]
.
[21]
As
counsel for the defendant pointed out, the defendant is entitled to
relevant documents in preparation for the trial; investigating,
interrogating, assessing the correctness of the alleged basis for,
rebutting and plaintiff’s calculation of its claim for
lost
profit. Hence the requirement of giving an of opposing party notice
of the party intention to call and expert witness and
the deliverance
to the opponent the summary of the expert’s opinions and
reasons
[7]
. Proper compliance
with this procedure enable experts to exchange views before giving
evidence and to reach agreement on some of
the issues which in turn,
save costs and court time. As correctly pointed out, these documents
are necessary for the defendant
to prepare its own expert witness
report, preparation for trial and ultimately cross examination of the
plaintiff’s expert
witness. It was not contended that the
documents were not in the plaintiff's possession. It is trite, where
the material facts
are in dispute, a final order will only be granted
on notice of motion if the facts as stated by the respondent together
with the
admitted facts in the applicant's affidavit justify such an
order
[8]
.
[22]
As
indicated, the defendant is instead asking for documents which were,
will, or would be used by the plaintiff and its expert witness
in
arriving at the allegations in paragraphs 20.13.1 to 20.13.3 of the
plaintiff’s particulars of claim in arriving at the
figures as
alleged. I find, accordingly, that there is no substance in this
objection by the plaintiff. If the documents are in
the plaintiff’s
possession and are relevant they ought to be made available for
inspection. In the just and fair resolution
of the current dispute
between the plaintiff and the defendant, given the nature of the
claim under consideration, this court must
be slow in the exercise of
a discretion against the defendant who persists in disputing the
claim. In all probability, the documents
that the defendant seeks,
will in due course resolve the matter one way or the other.
[23]
Having
considered each party’s position separately and cumulatively, I
have accordingly come to the conclusion that, at this
stage, the
defendant has justified its contention that the plaintiff ought to be
ordered to make discovery or allow inspection
of such documents that
are the subject of paragraphs 4 and 5 of the notice. There is no
reason why costs should not follow the
result.
ORDER
[24]
Accordingly, I make the following order:
24.1
The Plaintiff /respondent is directed to comply with paragraph 4 and
5 of the notice dated 30 March 2021 given
by the Defendant /applicant
in terms of Rule 35 (3) and (6) (“the notice”);
24.2
That the respondent makes available for inspection and copying the
documents specified in paragraph 4 and 5 of
the notice within sixty
(60) days of this order alternatively to state on oath within sixty
(60) days that such documents or tape
recordings are not in the
plaintiff’s possession, in which event the plaintiff shall
state their whereabouts, if known;
24.3
That the applicant is given leave, in the event of the respondent
failing to comply with the orders in paragraph
1 above, to approach
the above Honourable Court on the same papers, supplemented if
necessary, for an order striking out the respondent’s
relevant
claim in the above matter, and;
24.4
That the respondent is ordered to pay the costs of this application.
T
P MUDAU
[Judge
of the High Court]
Date
of Hearing : 23 July 2021
Date
of Judgment : 22 September 2021
APPEARANCES
For
the Applicant : Adv G W Amm
Instructed
by
: A B Scarrott Attorneys
For
the Respondent: Adv C Whitcutt SC
Adv C van Castricum
Instructed
by
: RCA Attorneys
[1]
Reference to 20 October 2021 in the replying affidavit is a patent
error. The matter was heard on 23 July 2021.
[2]
Rellams
(Pty) Ltd V James Brown & Hamer Ltd
1983
(1) SA 556 (N).
[3]
Continental
Ore Construction V Highveld Steel & Vanadium Corporation Ltd
1971
(4) SA 589
(W) at 598 D-E; Swissborough Diamond Mines (Pty)
Ltd v Government of the Republic of South Africa
1999
(2) SA 279
(T)
at 320F–H
).
[4]
Continental
Ore Construction v Highveld Steel & Vanadium Corporation
Ltd
1971
(4) SA 589 (W)
at 594H–595E; Venmop 275 (Pty)
Ltd v Cleverlad Projects (Pty) Ltd
2016
(1) SA 78
(GJ)
at 93C–H
.
[5]
Eloff
v Road Accident Fund
2009
(3) SA 27
(C) 34C-E.
[6]
Coopers
(South Africa) (Pty) Ltd v Deutsche Gesellschaft Für
Schädlingsbekämpfung Mbh
1976 (3) SA 352
(A)
.
[7]
Rule 36 (9) of the Uniform Rules.
[8]
Plascon-Evans
Paints Ltd v Van Riebeeck Paints (Pty) Ltd
[1984] ZASCA 51
;
1984
(3) SA 623
(A)
at 634G - I.