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[2015] ZAKZDHC 2
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Samuel v Gosai and Another (10732/2013) [2015] ZAKZDHC 2 (22 January 2015)
IN
THE HIGH COURT OF SOUTH AFRICA,
KWA-ZULU NATAL
LOCAL DIVISION, DURBAN
CASE NO: 10732/2013
In the matter
between:
SAVITHREE
SAMUEL
.........................................................................................................
Plaintiff
and
VINAY
JAYANTILAL VALLABH
GOSAI
.............................................................
First
Defendant
RABIA
ABDUL WAHHAB
MOTALA
.................................................................
Second
Defendant
JUDGMENT
Date of judgment
delivered: 22 January 2015
CHETTY.
J
:
1.
This matter relates to an interlocutory application brought by the
first defendant against the plaintiff for an order in terms
of Rule
35(14) of the Uniform Rules of Court compelling the plaintiff to
furnish copies of her
“
bank
statements for the period 1 December 2012 to 1 July 2013 and/or the
bank accounts from which the plaintiff’s alleged
payments were
made".
The
application is opposed on the grounds that the first defendant does
not require, nor is he entitled, to the documents sought
for the sake
of pleading. The second defendant was not a party to this
application, for reasons that follow.
2. It is appropriate
to set out the brief factual background to the application, and to
the action instituted by the plaintiff against
the defendants, both
of whom are practicing attorneys. In September 2013 the plaintiff
instituted an action in which she claimed
payment of R22 806 050, 00
against the first and second defendants, jointly and severally, the
one paying the other to be absolved.
The basis of the action is that
in December 2012 the first defendant represented to the plaintiff
that his law firm, together with
that of the second defendant,
comprised a consortium of firms who had obtained a tender from the
Ethekwini Municipality to develop
certain housing projects. The
second defendant allegedly made a similar representation in December
2012 to the plaintiff. The defendants
led the plaintiff to believe
that if she invested in these “projects”, the investments
would yield substantial profits
within a short period.
3. On the basis of
the representations made by the first and second defendants, the
plaintiff allegedly made deposits into the first
defendant’s
trust banking account from the period 31 December 2012 to 26 June
2013 for the total amount of R17 418 000. In
addition, from the
period 3 January 2013 to 14 June 2013, the plaintiff alleges that she
deposited the amount of R8 338 050 into
the trust account of the
second defendant. Subsequent to these deposits being made, the
plaintiff discovered that the housing projects
did not exist, and
that the first and second defendants were not part of a consortium of
law firms as she had been led to believe.
Accordingly the plaintiff
contends that she was fraudulently induced into making the
investments which she did. Prior to the institution
of the action
against the defendants, the latter are alleged to have paid the
plaintiff an amount of R2 950 000, 00, leaving a
shortfall of R22 806
050, 00 for which summons was issued.
4. The defendants’
duly defended the action, after which the plaintiff applied for
summary judgment. The first and second
defendants thereafter filed
their opposing affidavits in the application for summary judgment. On
29 November 2013 Kruger J refused
summary judgment and granted the
defendants leave to defend the matter. The second defendant
subsequently filed a plea to the demand
of the plaintiff, whereas the
first defendant proceeded to file a notice in terms of Rule 35(14),
in terms of which he sought copies
of various correspondence and
communication between the plaintiff and the second defendant, and
pertinently, for the purposes of
this application, copies of the
plaintiffs bank statements for the period 1 December 2012 to 1 July
2013, or the ‘bank accounts’
from which the plaintiff
allegedly made payments of the amounts referred to in the summons.
5. The plaintiff
responded that she was not in possession of the majority of the
documents sought by the first defendant. The response
from the
plaintiff that the first defendant did not require copies of her bank
statements in order to plead to her claim, is what
precipitated the
application to compel the production of the said documents. It is
therefore common cause that the plaintiff is
in possession of the
documents, but refuses to make them available.
6. In his affidavit
in support of the application to secure copies of the plaintiff’s
bank statements the first defendant
made reference to paragraph 6.2
of the plaintiff’s particulars of claim in which it is averred
that the plaintiff made payment
of various monies into the first
defendants practice trust banking account. The first defendant
contends that he requires the bank
statements in order to determine
whether the payments were made by the plaintiff herself or whether
she was acting as an agent
or third-party on behalf of others,
alternatively as a cessionary. The first defendant further contends
that the bank statements
are pertinent to the plaintiffs entitlement
to claim the monies and relates directly to the issue of her locus
standi. Without
the bank statements, the first defendant contends he
is unable to prepare a special plea to challenge the plaintiffs
standing to
bring the action.
7.
In support of each of the deposits which the plaintiff claims to have
made into the practice trust accounts of the first defendant,
the
plaintiff attached to her summons documentary proof in the form of
electronic banking receipts, bearing the names of the beneficiaries
as
“
Gosai
& Company Trust Acc"
and
“
Vinay Gosai
& Company’.
The
deposits into the second defendant’s account bear the name of
the beneficiary as
“
Rabiah
Motala & Assoc".
In
all of the transactions, the reference of the depositor is listed as
“
Mrs S
Samuef’.
The
first defendant contends that these documents only reflect monies
being deposited by the plaintiff, and contain no details of
the
plaintiff’s bank payment history and the source of the monies
paid out. Mr
Sion,
who
appeared for the plaintiff, correctly described the first defendant’s
intentions as being more directed as having a peep
at the
“in-coming’s” into the plaintiff’s bank
account as opposed to the “out-goings”.
8. The first
defendant somewhat cynically suggests that it is improbable that the
plaintiff, described in her particulars of claim
as a businesswoman
residing in the rather modest suburb of Chatsworth, Durban, would
have R22 000 000,00 of her own money to deposit
into the trust
accounts of the first (and presumably second) defendants. The issue
of where the plaintiff resides is irrelevant
to the merits of the
application. Her ability to have come into possession of that vast
amount of money, without any further information
of the business that
she is involved in, I have no doubt will become a contentious issue
when the matter proceeds to trial. The
critical issue which the first
defendant has to answer in his plea to the plaintiffs claim is
whether he received the monies which
the plaintiff alleges was
deposited into his practice trust account and if so, the basis for
his refusal to pay back.
9.
Other than the acknowledgment of a deposit in December 2012 by
“
Mrs
Samuels
”
in
the amount of R500 000,00 the first defendant in his opposing
affidavit to the summary judgment application simply fails to mention
the receipt of any further amounts from the plaintiff. Even then, the
first defendant contends that he received a call from the
second
defendant informing him that the deposit of R500 000 was a direct
deposit by a client of hers into the trust account of
the first
defendant. This was being done in order to avoid a delay in the
transfer of funds which the second defendant was obliged
to make to
the first defendant, pursuant to an arrangement between the
defendants for the liquidation of a debt owed by the second
defendant
to the first defendant’s client. The first defendant denies
having any knowledge of who the plaintiff is or of
having met her at
all.
10. In her opposing
affidavit to the summary judgment application, the second defendant
however states that both she and the first
defendant met with the
plaintiff on the first occasion in July 2013. The second defendant
fails to make mention in her opposing
affidavit or in her plea of any
instruction to the plaintiff to make a direct deposit of monies into
the practice account of the
first defendant. It is therefore obvious
that the truth as to whether the monies invested by the plaintiff
were paid to the first
or second defendants or both will only emerge
at trial, and through the engine of cross-examination.
11.
In his replying affidavit in the Rule 35(14) application, the first
defendant failed to deal with the material averments made
by the
plaintiff, contending that he was not constrained to the defences set
out in his opposing affidavit in the summary judgment
application.
The first defendant contends in his founding affidavit that the
plaintiff was operating an unlawful financial scheme
“
by
issuing the monies of third parties and does not possess the locus
standi to institute action. The said scheme has now collapsed
and I
believe the plaintiff has assumed liability to recover the monies to
which she has no lawful entitlement."
On
this basis, the first defendant contends that it is entitled to the
bank statements of the plaintiff for the periods set out
in the Rule
35(14) notice.
12. Rule 35 (14)
provides that:
“
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.”
In
Quayside Fish
Suppliers CC v Irvin & Johnson
Ltd
2000 (2) SA 529
(C) para 13 Traverso J (as she then was) noted that
in order for a party to invoke the procedure set out in Rule 35 (14),
the following
preconditions must be met:
‘
(a)
he/she must discharge the
onus
of
persuading a Court that an order should be made in terms of the Rule;
(b) an appearance to
defend must have been entered;
(c) the document
must be required for purposes of pleading;
(d) the documents
must be clearly specified;
(e) the documents
must be relevant to ’a reasonably anticipated issue in the
action.’
13.
In considering whether to allow discovery in terms of Rule 35(14),
the Court in
Cullinan
Holdings Ltd v Mamelodi Stadsraad
1992
(1) SA 645
(T) at 647F held that the test is whether the document in
question is
essential,
not
merely useful, in order to enable a party to plead. Van Dijkhorst J
at 648F held that the resort to the procedure in Rule 35(14)
should
be exercised with considerable caution and not to allow a party to
ensnare an opponent.
“
Myns
insiens skep Reel 35(14) nie ’n metode waardeur ’n
gedingsparty deur gebruikmaking van generiese omskrywings ’n
net kan knoop waarmee vir halfbekende dokumente gevis kan word nie.
Dit is ’n remedie wat vir besondere omstandighede geskep
is.”
14.
In interpreting the provisions of Rule 35(14), Van Dijkhorst J
appears to have ascribed to it a meaning that the documents sought
to
be discovered must be ‘necessary’ for the purposes of
pleading -
“
Die
dokumente is nie noodsaaklik ten einde te kan pleit”
(at
647E). In
Capricorn
Makelaars (Edms) Bpk & others v EB Shelf Investment No 79
(Pty) Ltd & others
(ECJ
050/2005)
[2005] ZAECHC 25
, Froneman J appeared to favour an
interpretation that the documents sought should be “reasonably
required in the circumstances”.
In doing so, he considered the
dictum of the Supreme Court of Appeal in
Clutchco
(Pty) Ltd v Davis
2005
(3) SA 486
(SCA) where Comrie AJA sought to give meaning to the word
“
required”
as
used in the legislative provision
“
required
for the protection of any other rights...”.
In
interpreting a similar provision in English Law which provides for
discovery before pleadings, in
Rome
and another v Punjab National Bank
[1989]
2 All ER 136
at 141 it was held that the court will only exercise its
powers under this heading very rarely, and would require the
“
clearest
possible demonstration from the party seeking discovery that it is
necessary for the fair disposal of the application."
On
the other hand, in
Smith
Myers Communications Ltd v Motorola Ltd
[1991]
FSR 262
it was held that an applicant must show that there was a
substantial and genuine issue to be tried, and that inspection was
essential
for
the proper determination of the case. This decision was subsequently
departed from in
Dun
& Bradstreet Ltd v Typesetting Facilities Ltd
[1992]
FSR 320
where doubt was expressed as to whether the plaintiff needed
to satisfy the test of showing that such discovery was
‘
essential’.
See
Documentary
Evidence,
4
th
ed, C Style and C Hollander, at 11-12 and the authorities cited
therein, where the learned authors note that while the test to
secure
the discovery of such documents is high, it would appear to be wrong
to place reliance on the documents being “essential”.
15.
In as much as the first defendant seeks access to the plaintiffs bank
statements from December 2012 to July 2013, I enquired
from Mr
Gunase,
who
appeared for the first defendant, what purpose would be served by the
first defendant having access to the record of payments
made to the
first defendant. True enough, the bank statements will reflect not
only what was paid out by the plaintiff, but will
also reflect the
origin of any deposits into her account. More than that though, bank
statements are inherently private documents
and their disclosure may
result in the first defendant acquiring access to information which
may neither be relevant for the purpose
of pleading, alternatively,
which is of a private and confidential nature and unrelated to the
subject matter of the litigation.
16.
The first defendant is correct when he states in paragraph 6 his
replying affidavit, that the plaintiff will be obliged
“
at
some stage to produce these documents as they will be essential when
the Plaintiff’s Discovery Affidavit is filed”.
If
that is the case the first defendant will be entitled to access the
bank statements in the normal course of pre-trial discovery.
The
issue remains whether the first defendant has made out a case for
acquiring access to the bank statements prior to him pleading.
In
other words, and having regard to the case authority referred to
above, has the first defendant demonstrated that these documents
are
‘reasonably required’ to enable him to plead? See
Firstrand Bank Ltd
t/a Wesbank v Manhattan Operations (Pty) Ltd & others
2013
(5) SA 238
(GSJ) para 31 where the Court opted for the standard of an
applicant under Rule 35(14) having to show “exceptional
circumstances”
to justifying the granting of an order.
17. The defences
alluded to by the first defendant are that the monies deposited into
his account purportedly by the plaintiff only
amount to R500 000.
These were monies which the second defendant informed him were
actually being paid on her behalf. Even in respect
of this amount,
there is a dispute in the versions of the first and second
defendants. At a factual level, the first defendant
(if he relies on
this ground) could simply deny liability and admit only to having
received one deposit into his account. The onus
of proving the claim
at all times resides on the plaintiff. Turning to the remainder of
the claim of approximately R22m, the first
defendant states that he
intends challenging the locus standi of the plaintiff to institute
the action. In my view, there is no
need for the first defendant to
have access to the plaintiffs bank statements to raise such as a
defence. He is perfectly entitled
to raise the issue of locus standi
by way of a special plea if he is of the opinion that the monies
invested with him and deposited
into his practice trust account
either belonged to someone else, or was deposited by someone else
other than the plaintiff. He
does not need access to the bank
statements to make out such a defence. Again the onus rests on the
plaintiff to prove her claim.
The same situation applies if the first
defendant wishes to take an exception to the plaintiffs particulars
of claim as not disclosing
a cause of action.
18.
In my view to grant the order sought by the first defendant would be
to reward the first defendant’s fishing expedition
which is
contrary to the purpose of the Rule. As Traverso J stated at para 16
in
Quayside Fish
Suppliers CC v Irvin & Johnson Ltd
supra:
‘
Rule
35(14) is limited in application and is aimed at operating only in
the very specific circumstances set out in the Rule. To
interpret it
more widely would make inroads into the general principle that prior
to the institution of an action a party cannot
snoop around other
people’s books.’
19.
While the first defendant contends that he is not constrained to the
defences set out in his affidavit opposing summary judgment,
what
appears to be firmly established in our law is that one party cannot
fish among the books and documents of the opposing party
to ‘test
the waters’ as to the strength of a particular defence or
claim. The views expressed by Van Winsen J in
Priday
v Thos Cook & Son (SA) Ltd
1952
(4) SA 761
(C) at 764 are relevant:
‘
I
was, however, unable to find any authority for the proposition that
one person is entitled to obtain the production for inspection
of the
books and documents of another, and in which he has no proprietary
interest, in circumstances where litigation is neither
pending
between such persons nor even certain to eventuate.
On
the other hand there are decisions in our Courts which tend to show
that it is not the policy of our Courts to encourage a person
to
search amongst the books and documents of another in order to find
out whether or not he has an action against such other. Thus
for
instance in
Rogers
v Sanitary Board of Johannesburg
1
O.R 65
the Court refused to grant an application for discovery which
was made
”
to
obtain evidence for the purpose of seeing if he (applicant) really
has a case and not with the object of using the evidence in
an action
already begun”.’
20.
I am accordingly not persuaded that the possibility of further
defences to be raised by the first defendant constitutes a basis
for
the discovery of the plaintiff’s bank statements. Moreover,
during the course of argument, Mr
Gunase
was
unable to provide a satisfactory explanation when I raised with him
that the first defendant would only have to look at his
own bank
statements to ascertain the identity of the payee of certain monies
into his practice trust account and compare those
to the details
furnished by the plaintiff in his particulars of claim. The easiest
manner to ascertain the identity of the payee
of monies one’s
account is to look at your own bank statements. The first defendant’s
use of Rule 35(14) in my view
is nothing more than a fishing
expedition aimed at constructing possible defences that he is
presently unable to do. In
ingledew
v Financial Services Board In re Financial Services Board v Van der
Merwe & another
[2003] ZACC 8
;
2003
(4) SA 584
(CC) the applicant sought an order compelling the
Financial Services Board to furnish him with certain information
before pleading
in an action instituted against him by the Board
relatingto contraventions of the Insider Trading Act, 1998. He
brought an application
under Rule 35(14) which was dismissed on the
grounds that he had not satisfied the Court that the information was
necessary for
him to plead. In addition, he relied on his right to
information in order to defend his right to a fair trial, guaranteed
in terms
of section 9, 34 and 35 of the Constitution. The
Constitutional Court at para 15 approved of the interpretation of
Rule 35(14)
given by Traverso J in
Quayside
Fish Supplies
supra,
with Ngcobo J (as he then was) noting the following :
‘
Both
s 32(1
)(a)
and
Rule 35(14) confer a right to obtain information. However, s 32
confers a general and an unqualified right to information. By
contrast, the subrule confers a limited right. It can only be invoked
during litigation by a litigant only after appearance to
defend an
action has been entered and its terms unequivocally limit the nature
of the documents and tape recordings covered by
the Rule to those
’relevant to a reasonably anticipated issue in an action’
and further limits the documents in question
to those required ’for
purposes of pleading’. There is no reasonable constitutional
construction of the Rule that could
broaden such purpose to
accommodate the construction of it contended for by the applicant.
Accordingly, the subrule grants a right
to information that is
narrower, to that extent, than the right in s 32(1
)(a).’
21.
Our courts have traditionally adopted a cautious approach to allow
pre-plea discovery or discovery outside of its usual setting,
illustrated by Thring J’s comments at 513G-I in
The
MV Urgup: Owners of the MV Urgup v Western Bulk Carriers (Australia)
(Pty) Ltd
supra
that:
‘
Discovery
has been said to rank with cross-examination as one of the two
mightiest engines for the exposure of the truth ever to
have been
devised in the Anglo-Saxon family of legal systems. Properly employed
where its use is called for it can be, and often
is, a devastating
tool. But it must not be abused or called in aid lightly in
situations for which it was not designed or it will
lose its edge and
become debased. It seems to me that, generally speaking, its
employment should be confined to cases where parties
are properly
before the Court and are litigating at full stretch, so to speak. It
is not intended to be used as a sniping weapon
in preliminary
skirmishes, such as the main application in this matter is, unless
there are exceptional circumstances present.’
Mindful
of the views expressed in
MV
Urgup,
Froneman
J in
Capricorn
Makelaars
supra
favoured an approach underpinned by transparency of litigating
parties in an action. Froneman J held at para 10 that:
'The
trend in current civil procedure is, as far as I can discern, away
from secrecy and withholding of information until the last
moment.
Pre-trial procedure is increasingly geared towards laying one’s
cards on the table before actually going to trial.
The purpose is to
ensure a quicker and more effective resolution of the real disputes
between the parties. If discovery is indeed
a ‘mighty engine
for exposing truth’ then the purpose of rule 35 (14), to expose
the truth earlier rather than later,
would be undermined by
restricting its ambit to ‘necessity’ instead of
“reasonably required in the circumstances”
as explained
in the
Clutchco
case.’
The
Court in
Capricorn
permitted
the discovery of specified documents (invoices) sought by the
applicants relating to the sale of computers. In that case,
the
invoices were sought to enable the defendants to admit or deny the
plaintiff’s claim of ownership or right to possession
of the
goods. Despite allowing early discovery of the documents, the Court
cautioned at para 11:
'This does not mean
that the rule should become the gateway for a generalised earlier
discovery process. Parties invoking its use
will need to show that
discovery is reasonably required in the particular circumstances of
their case in accordance with the limiting
requirements of the rule
itself. That implies a certain openness on their part as well. They
will have to demonstrate a “substantial
advantage or an element
of need” for the purposes of pleading, in addition to the
specificity of the documents and relevance
to reasonably anticipated
issues required by the rule. Each case, as usual, will depend on its
own circumstances and facts, so
further generalisation would serve no
purpose. But the facts and circumstances of the present matter
illustrate the point.’
22.
As the nature of the application in terms of Rule 35(14) falls within
the discretionary powers of the Court, I am required to
consider
whether the applicant (the first defendant) will be prejudiced in any
way in defending the action instituted against him,
if the
application is refused. I am of the view that no prejudice will be
sustained. As set out earlier, the first defendant is
seeking access
to documents prior to pleading. He concedes in his replying affidavit
that he may be entitled to the information
he presently seeks at
“
some
stage".
The
views expressed by Ngcobo J in
Ingledew
supra
as to prejudice (or lack thereof) suffered as a result of refusing to
entertain the appeal are relevant:
‘
[33]
The applicant seeks information for use in his pending insider
trading trial. He will not be prejudiced if leave to appeal
is
refused. Once the pleadings are closed, the issues will become
crystallised and the issues for trial will be defined. If the
applicant feels that the information presently sought is relevant to
the issues for trial, he can utilise the pre-trial discovery
procedures set out in the rest of Rule 35. It was contended on behalf
of the applicant that there is potential prejudice in obtaining
the
information later. As I understand the submission, such prejudice
derives from the fact that pre-trial discovery is limited
to issues
for trial and such information will not only be narrow but it will
come too late for him to broaden the issues for trial.
[34] The submission
rests on the assumption that the information held by the respondent
might yield further defences of which the
applicant might not be
aware. If regard is had to the nature of the allegations against the
applicant, it is difficult to fathom
what other possible defences, of
which the applicant himself has no knowledge, could emerge from
information held by others. The
complaint against him is that at the
material time he used inside information, which he had obtained as a
director to make profit
out of buying the securities of Skills.
Whether that is so is a matter that is manifestly within his
subjective knowledge. He does
not require information about what
other interrogatees said in order to determine his defence. Counsel
for the applicant was invited
to indicate the type of defence she had
in mind, but not surprisingly, she was unable to suggest any.’
23. I accordingly
find no basis for the application to succeed.
Order
24. In the result I
make the following Order:
The application is
dismissed with costs.
M R CHETTY
JUDGE OF THE HIGH
COURT
DURBAN
Appearances
:
For the Plaintiff:
Adv. B M Sion
Instructed by
Strauss Daly Inc
Ref: J Senekal
For the First
Defendant: Adv. H K Gunase
Instructed by CKMG
Attorneys, Verulam
C/o Gosai & Company
Ph: 032 - 533 0296 /
031 - 303 5549
For the Second
Defendant: Derik Jaftha Attorneys
Morningside, Durban
Ph: 031 -303 2112
Date of hearing: 30
October 2014
Date of judgment: 22
January 2015