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[2016] ZAGPPHC 335
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Potch Boudienste CC v Firstrand Bank Limited (23898/15) [2016] ZAGPPHC 335 (25 April 2016)
IN
THE HIGH COURT OF SOUTH AFRICA
GAUTENG
DIVISION, PRETORIA
25/4/2016
CASE
NO: 23898/15
Not
reportable
Not
of interest to other judges
In
the matter between:
POTCH
BOUDIENSTE
CC
Applicant
and
FIRSTRAND
BANK
LIMITED
Respondent
JUDGMENT
Tuchten
J
:
1.
This is an application for production of documents, under rules
35(14) and 35(12) respectively. In addition, the relief sought
is
that production be effected under oath, pursuant to rule 35(11). The
present application is interlocutory to an application
under the same
case number (the main application) by the respondent (the Bank) for
the liquidation of the applicant (Potch).
2.
The Bank has delivered a lengthy founding affidavit in the main
application, replete with documentary annexures. In fact the
main
application was preceded by an earlier liquidation application which
was withdrawn.
3.
The essence of the Bank's easer for liquidation is simple: it lent,
it says, and advanced to Patch some R37 million in 2007.
Patch has
failed to repay the loan as required under the loan agreement and is
presently indebted to the Bank in an amount, as
at 4 April 2013, of
over R45 million. Subject to the
in duplum
rule, any amount
owed to the Bank of course carries interest so the amount of the
debt, on the Bank's analysis, would today exceed
R50 million. The
Bank sent Patch a letter under
s 69
of the
Close Corporations Act, 69
of 1984
, demanding that Patch pay this sum to the Bank. Patch has not
done so, raising the inference, thus the Bank, that Patch is unable
to pay. In addition, the Bank relies on an alleged factual inability
to pay.
4.
Potch has not yet delivered an answering affidavit. This is important
because the issues raised in the main application have
therefore not
been identified. Patch has, though, in correspondence, identified
some areas which might be in contention.
5.
From an
early stage Patch has sought access to documents which it says will
inform its defences. Indeed, during oral argument, counsel
for Patch
said that although Patch could assert its defences, it could not
prove them without documents. But until the defences
have been
identified in an answering affidavit, there is no way of knowing with
precision what these defences are. And because
one does not know
precisely what these defences are, one does not know what is
genuinely in issue between the parties and what
documents might be
necessary to achieve the fair resolution of each such issue.
[1]
6.
The main application was instituted by notice of motion dated 1 April
2015. By notices dated 3 June 2015, Patch sought access
to a long
list of documents. There has been correspondence between the
attorneys for the parties. By notice dated 4 August 2015,
Patch
called upon the Bank under
rule 30A
to supply the documents on pain
of an application to compel production. The Bank's responses did not
satisfy Patch. It launched
the present application by notice of
motion dated 21 August 2015. The Bank delivered an answering
affidavit setting out its defences
to the present application. Patch
replied. On these papers I am asked to order production of the
documents mentioned.
7.
I shall deal first with the application under
rule 35(14).
The
subrule reads:
After
appearance to defend has been entered, any party to any action may,
for purposes of pleading, require any other party to make
available
for inspection within five days a clearly specified document or tape
recording in his possession which is relevant
to a reasonably
anticipated issue in the action and to allow a copy or transcription
to be made thereof.
8.
Rule 35(14)
does not apply to motion proceedings but can be made
applicable to motion proceedings by special order under
rule 35(13).
The subrule similarly does not provide for production under oath. But
Patch relies on
rule 35(11)
which reads:
The
court may, during the course of any proceeding, order the production
by any party thereto under oath of such documents or tape
recordings
in his power or control relating to any matter in question in such
proceeding as the court may think meet, and the court
may deal with
such documents or tape recordings, when produced, as it thinks meet.
9.
Rule 30A
, to which I referred earlier; reads:
(1) Where a party
fails to comply with these rules or with a request made or notice
given pursuant thereto, any other party
may notify the defaulting
party that he or she intends, after the lapse of 10 days, to apply
for an order that such rule, notice
or request be complied with or
that the claim or defence be struck out.
(2) Failing
compliance within 10 days, application may on notice be made to the
court and the court may make such order thereon
as to it seems meet.
10.
Two trite but important principles underlie the present application.
Firstly, unless exceptional circumstances are present,
a court will
not direct discovery at all in motion proceedings. Secondly, absent
exceptional circumstances, the production of documents
in any case
will not be ordered until the issues have been delineated by
pleadings or, by extension of reasoning applicable to
motion
proceedings, the filing of affidavits.
11.
Counsel for Patch urged upon me in both written and oral argument the
factors which courts have taken into account in exercising
their
powers under
rule 35(14).
I have considered all the factors advanced.
It seems to me that the failure to deliver an answering affidavit
must be decisive
against Patch in the present case. This means that
court cannot presently assess the
bona tides
of the request
for discovery or the need for it in the context of the case as a
whole. This is because I do not have a comprehensive
statement of
Patch's defences to the Bank's claim. It is true that Patch has
selectively addressed issues which might, if advanced
in an answering
affidavit, raise a genuine dispute as to parts of its indebtedness.
But I decline to exercise my discretion in
favour of Patch while it
declines comprehensively to address the allegations made against it.
12.
There is
authority for the proposition that the obligation of a party seeking
the production of documents under
rule 35(12)
to deliver its
answering affidavit is suspended by the request for and the
adjudication of its claim for production of documents.
There is a
risk that an adroit lawyer, acceding to the instructions of a cynical
or desperate litigant to invoke the machinery
of
rule 35(12)
without
just cause, can delay the resolution of the true dispute between the
parties.
[2]
The legal profession
calls the technique of using procedural and interlocutory mechanisms
to delay the resolution of the merits
of a dispute, a technique
admired or deplored according to the individual lawyer's ethical
values, ducking and diving.
[3]
13.
I simply do
not accept that Potch is unable adequately in an answering affidavit
to formulate its answers to the Bank's allegations
until it gets the
documents. Patch has books and records of its own. So the documents
which Patch says it wants are not
essential
for the
purpose of "pleading".
[4]
What I suspect Potch wants to do is identify,
before
it delivers an answering affidavit,
areas
in which it thinks the Bank's case might be assailable and then,
opportunistically, make those areas the basis for a defence.
14.
Whether or not this suspicion is grounded, the absence of an
answering affidavit opens the way for abuse, regardless of the
motives of an applicant in seeking discretionary production under
rule 35.
The purpose of the rule is to facilitate the ventilation of
disputes. The rule is not meant to be an end in itself.
15.
Another problem facing Potch is the very large amount of the claim
that the Bank asserts. While the correspondence suggests
that Potch
asserts defences in relation to R6 million and R12 million of the
claim against it, it is less than forthcoming in relation
to its
defences to the balance of the claim. I can see no reason why Potch,
with the help of its accountant, cannot calculate what
(if
anything) it says, on the information available to it, is owing
or, depending on identified contingencies, would
not be owing. This
is important because the Bank's claim is not for a money judgment by
for liquidation which depends on the Bank
proving an indebtedness of
no more than R100.
16.
The question whether I should order production on oath is still alive
in relation to the request for documents under
rule 35(12).
This is
important because the Bank has firstly responded to the notices by
letter dated 9 July 2015 and secondly tendered in a
letter dated 18
May 2012 to allow Patch "insae in hierdie aangeleentheid wat
[die Bank] in hierdie aangeleentheid beskikbaar
het." Counsel
for the Bank has submitted that there is no good reason to order
production under oath.
17.
There seems to me no good reason why in the light of the Bank's
attitude, I should exercise in favour of Patch the power to
direct
production on oath. In any event, the contents of both letters have
been confirmed by the Bank under oath in affidavits
filed in the
present and the main applications. After some urging on my part, the
parties informed me that they had agreed on a
meeting to take place
on 9 May 2016 to implement the undertaking made in the letter of 18
May 2012.
18.
For all these reasons, I decline to make the provisions of
rule
35(11)
applicable to this case or to direct production under
rule
35(14).
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19.
I turn to the notice under
rule 35(12).
The subrule reads:
Any
party to any proceeding may at any time before the hearing thereof
deliver a notice as near as may be in accordance with Form
15 in the
First Schedule to any other party in whose pleadings or affidavits
reference is made to any document or tape recording
to produce such
document or tape recording for his inspection and to permit him to
make a copy or transcription thereof. Any party
failing to comply
with such notice shall not, save with the leave of the court, use
such document or tape recording in such proceeding
provided that any
other party may use such document or tape recording.
20.
There is
one matter I must first get out of the way: counsel for the Bank
submitted that as the subrule had its own self-contained
remedy (the
inability of the party failing to comply with the notice not being
allowed to use the document in the proceeding),
it was not competent
for me to order production. This submission is against SCA
authority.
[5]
The self-contained
remedy is described as the negative remedy. In addition, there is a
positive remedy: a party using the machinery
of
rule 30A
is entitled
in a proper case to compel production of the document identified
pursuant to
rule 35(12).
21.
Before I
turn to the dreary task of dealing with the many individual documents
and categories of documents sought under
rule 35(12)
, I must discuss
another matter of principle. A party is entitled only to those
documents to which reference is made. This does
not include documents
which it can inferentially be deduced from the affidavit
[6]
must exist or would probably exist.
[7]
It is the reference to the document in the affidavit that triggers
the obligation, all else being equal, to produce.
22.
The courts
have described how one must identify whether "reference is made"
to a document in an affidavit. It is now settled
that a court will
not make an order against a party to produce a document that cannot
be produced or is privileged or irrelevant.
[8]
I would respectfully add that a court should generally not order the
production of a document that has already been provided by
the party
on whose behalf the affidavit has been made because the repeated
request for production will probably constitute an abuse.
23.
I agree
with those decisions which say that although a reference to a
document which is not detailed or descriptive will trigger
the
obligation to produce, when the existence of a document can only be
deduced by a process of inferential reasoning, the rule
is not
triggered.
[9]
From this it
follows that where a document identifies a process by which documents
can (or even probably or certainly will be or
were) created, that by
itself does not trigger the obligation under the rule. As I shall
show, this is of relevance in the present
case.
24.
I now turn to the 25 categories of documents sought under the
rule
35(12)
notice. The issues must be determined in the light of the
letter dated 9 July 2015. It is trite that the court will not be
astute
to go behind a party's discovery affidavit. On the same
principle, the court should not go behind a party's response not made
on
oath to a request for production of documents where there is no
obligation to respond on oath.
25.
Items 1 and 25: These were produced before the present application
was launched.
26.
Item 2:
This is described as the documentation which was provided to the
State as referred to in paragraph 93 at p49.
[10]
The Bank has stated on oath that this documentation was given to a
representative of Patch, Mr Prakke. The Bank's attorney asserted
this
through a letter to Patch's attorney dated 17 March 2013. The
assertion was never disputed. I decline to order production
of a
document already provided by the Bank to Patch before the present
application was launched.
27.
Item 3: Copies of documents provided to Prakke as referred to in
paragraph 96.3 at p50. As these documents have been provided,
I
decline to order that they be again provided.
28.
Item 4: Copies of loan agreements and underlying documentation in
respect of such loan agreements in respect of the loan provided
to
Turquoise Moon as referred to at p57. This is a reference to
paragraph 100.6. The reference is not to a document but to a loan.
I
decline to order production under this item.
29.
Item 5: copies of certifications referred to in paragraph 2.1 at p84.
The reference there is to a process, not a document. I
decline to
order production under this item.
30.
Item 6: copies of necessary delegations referred to in paragraph 3.1
at p84. The reference there is to a process, not a document.
I
decline to order production under this item.
31.
Item 7: the publication of effective change of prime rate referred to
in paragraph 6.3 at p105. The reference there is to a
process, not a
document. I decline to order production under this item.
32.
Item 8: A copy of any notice to remedy a breach as proposed in clause
12.1.1 at p 108. The reference there is to a process,
not a document.
I decline to order production under this item.
33.
Item 9: A list of standard fees as referred to in clause 8.5 on p107.
The reference there is to a process, not a document. I
decline to
order production under this item.
34.
Item 10: A copy of the signed agreement of pre-sales as referred to
in the release schedule (p116) and as stipulated in the
first
paragraph of the repayment schedule at p115. The reference there is
to a process, not a document. Idecline to order production
under this
item.
35.
Item 11: Suitably assessed
security assessment reports referred to in clause 1 of the valuation
conditions at p117. The reference
there is to a process, not a
document. I decline to order production under this item.
36.
Item 12: A copy of the study referred to in clause 2 if the valuation
conditions at p 117. The reference there is to a process,
not a
document. I decline to order production under this item.
37.
Item 13: A copy of the conveyance certificate as set out in clause 1
under property conditions at p117. The reference there
is to a
process, not a document. Idecline to order production under this
item.
38.
Item 14: A copy of the written confirmation as referred to in clause
1 under financial information conditions at p117. The reference
there
is to a process, not a document. I decline to order production under
this item.
39.
Item 15: Updated statements of assets and liabilities of four named
persons as referred to in clause 2 of the financial information
conditions at p117. The reference there is to a process, not a
document. I decline to order production under this item.
40.
Item 16: Copies of signed agreement as referred to in clause 1 of the
pre-sales conditions at p 117: The reference there is
to a process,
not a document. I decline to order production under this item.
41.
Item 17: Written evidence in relation to the fact that conditions had
been met as referred to in clause 1 of the pre-sales conditions
at p
117: The reference there is to a process, not a document. Idecline to
order production under this item.
42.
Item 18: A copy of the draft agreement referred to at p118: The
reference there is to a process, not a document. I decline to
order
production under this item.
43.
Item 19: Copies of proof acceptable as referred to in clause 2.3 at
p118. The reference there is to a process, not a document.
I decline
to order production under this item.
44.
Item 20: Copies of engineering clearance certificates as referred to
in clause 1.1 of other conditions at p118. The reference
there is to
a process, not a document. I decline to order production under this
item.
45. Item 21: Copies of
clearance certificates as referred to in clause 1.2 under other
conditions on p118. The reference there is
to a process, not a
document. I decline to order production under this item.
46.
Item 22: Copy of an engineering clearance certificate as referred to
in clause 1.3 on p118. The reference there is to a process,
not a
document. I decline to order production under this item.
47.
Item 23: Copy of an approved general plan referred to in clause 1.4
at p118. The reference there is to a process, not a document.
I
decline to order production under this item.
48.
Item 24: The documents referred to in the letter at p 245. This is a
letter dated 13 April 2012 by Patch's attorney in which
Patch's
attorney sought the production of documents by the Bank. The
reference, in paragraph 80 at p45 is to the letter, not to
the
documents referred to in the letter. The letter was attached at p244.
I decline to order production under this item.
49.
Items 25 and 26: Signed affidavits and annexure A to a letter at
p324: These were provided before the present application was
launched.
50.
Item 27: Copies of documentation pertaining to or in support of any
proof of an existing mortgage bond which necessitated the
issuing of
the letter of guarantee as referred to in the letter of guarantee at
p339. The reference there is to a process, not
a document. I decline
to order production under this item.
51.
Potch has therefore failed to obtain any relief at all in the present
application. This is not necessarily the end of the road
for Patch in
its alleged quest to obtain documents. I have referred to the tender
by the Bank to allow Patch's representative to
view its
documentation. In addition, if at any stage during the proceedings,
the production of an identified document is legitimately
required by
Patch for the protection of its rights, Patch will have remedies
available to it under the Rules.
52.
Finally as to costs: counsel for the Bank asked for a punitive order.
I carefully considered this request but decided in the
exercise of my
discretion not to accede to it.
53.
I make the following order:
The
application is dismissed with costs.
___________________
NB
Tuchten
Judge
of the High Court
22
April 2016
[1]
Compare the language in
s 34
of the Bill of Rights.
[2]
And thereby frustrate the core value sought to be protected and
promoted by
s 34
of the Bill of Rights: "Everyone has the right
to have any dispute that can be resolved by the application of law
decided
in a fair public hearing before a court or, where
appropriate, another independent and impartial tribunal or forum."
[3]
Compare the remarks of Didcott J in the unreported judgment of
Raydean Investments (Pty) Ltd v Shire Plant Hire (Pty) Ltd and
Another, delivered on 25 October 1979, referred to in Webb and
Others v Botha
1980 3 SA 666
N 672.
[4]
Which, adapted for motion proceedings, translates to the delivery of
an answering affidavit. See Erasmus, Superior Court Practice,
vol 2
(looseleaf ed) notes sv
rule 35(14).
[5]
Centre for Child Law Hoerskool Fochville and Another
2016 2
SA 121
SCA para 16, approving
Moulded Components and Rotomoulding
South Africa (Pty) Ltd v Coucorakis and Another
1979 2 SA
457
W 654C-D.
[6]
Or, of course, pleading.
[7]
I refer to this class in what follows as a "process".
[8]
Centre for Child Law v Hoerskool Fochville and Another
2016 2
SA 121
SCA para 18
[9]
See eg Penta Communication Services (Pty) Limited v King and Another
2007 3 SA 471
C paras 15-17. See also Holdsworth and Others v
Reunert Ltd
2013 6 SA 244
GNP para 12.
[10]
In this context, the references are to paragraphs and paginated
pages in the founding affidavit in the main application.