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[2013] ZAECELLC 10
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Biermann v Eastern Cape Development Corporation (EL1051/10, ECD2151/10) [2013] ZAECELLC 10 (7 August 2013)
REPORTABLE
IN THE HIGH
COURT OF SOUTH AFRICA
(EAST
LONDON CIRCUIT LOCAL DIVISION)
CASE NO: EL 1051/10
ECD 2151/10
In the
matter between
PETRUS
CHRISTIAAN BIERMANN
Applicant/Plaintiff
and
EASTERN
CAPE DEVELOPMENT
CORPORATION
Respondent/Defendant
JUDGMENT
HARTLE J
1.
The applicant seeks an
order dismissing the respondent’s defence and granting judgment
in his favour as claimed in an action
which he has instituted against
the respondent for payment of various amounts alleged to be due to
him arising out of his erstwhile
employment with the respondent as
executive manager. The interlocutory application is the third
in a series of applications
to compel the respondent to make
discovery.
2.
In the action he seeks
to recover an outstanding settling-in allowance and the reimbursement
of transfer costs alleged to be payable
in accordance with the
respondent’s staff policies on the one hand and, on the other,
the balance of three short term performance
rewards earned in the
2008 to 2010 financial years respectively.
3.
In its plea the
respondent denies that any expectation exists in terms of its
policies to pay the settling-in allowance or the transfer
cost
reimbursement whereas the applicant asserts that the respondent
agreed in correspondence that the policy was of application
to his
circumstances and gave the impression that payment would be
forthcoming. Concerning the claims relating to the performance
award it pleads (in respect of the 2008 and the 2009 financial years)
that it properly discharged its obligations to the applicant
in this
regard for those two years. In respect of the 2010 claim, it
pleads that it was precluded from determining the reward
due to him
for that year because he declined to have his performance assessed
either prior to or after the termination of his employment.
It
offers to now do so and to pay him what is due to him in accordance
with the “
relevant
formula
” used
by it in the determination of such rewards. It does not
however, clarify how the limited payment of R9 003.27
- which is
conceded was in fact paid to him as and for the short-term
performance reward for the 2010 financial period, was in
fact
calculated or the basis for this payment. In a replication
filed by the applicant he submits that the amounts which
were paid to
him as rewards for the three periods in question were incorrectly
calculated in accordance with his performance agreement.
4.
The basis upon which
the short-term performance rewards would be determined and the
processes applicable towards this end are set
out in a supplement to
the applicant’s employment contract styled “
Performance
Agreement
”
(annexure “POC 2”). In order to glean a picture of
the document trail it may leave in its wake this process
involves two
formal assessments per year by the chief executive officer against
the agreed targets on a pre-ordained scale of 0
– 5. The
performance rate applicable to the bonus is the average of the two
performance ratings for the two assessments
conducted in the year.
The performance reward takes the form of a monetary bonus ranging
between 0 – 40% of the employee’s
total remuneration
package at the time the performance assessment is done.
5.
At the outset it needs
to be noted that the respondent is cited as a juristic body created
in terms of the Eastern Cape Development
Corporation Act, No. 2 of
1997. This in itself presupposes certain statutory obligations
concerning its record keeping.
Section 19 of that Act provides
that the Board of Directors, which in turn is responsible to manage
and control the operations
of the corporation,
[1]
“
shall cause
proper accounting and related records to be kept in respect of all
affairs and business of the corporation, as well
as such other books
and documents as may be necessary for the purpose of maintaining an
adequate record of such affairs and to
explain its transactions and
financial position
”.
[2]
The respondent is further obliged to cause both internal audits to be
conducted and to appoint external auditors as auditors
of the
corporation.
[3]
In addition the respondent and its Board of Directors are further
obliged generally to cause to be kept minutes of all proceedings
at
all of its meetings.
[4]
6.
The present application
had its prequel in the issue by the applicant on 24 April 2012 of a
notice in terms of rule 35(3) which
required the respondent to
discover,
inter
alia
, all documents
exchanged between the respondent and its external auditors during the
three years in question relative to the calculation
of his
performance bonuses, all documents relating to and utilized by the
respondent’s remuneration committee in the calculation
or
assessment of such bonuses and the applicant’s performance
assessments for the relevant periods stated in the notice.
With
regard to the applicant’s claims concerning the settling-in
allowance and reimbursement of the transfer costs, he requested
the
respondent to disclose all correspondence which had been exchanged
between him and it in this connection, the latter no doubt
to advance
his case that a certain impression had been given thereby.
7.
This court issued an
order on 15 May 2012 (first interlocutory application) compelling the
respondent to reply to the applicant’s
notice and
allowing him, in the event of the respondent failing to comply, to
approach it again on the same papers, suitably
amended, for an order
dismissing the respondent’s defence and for judgment against
it. The costs on that occasion were
reserved.
[5]
8.
The respondent
purported (after the issue of a second interlocutory application in
which the applicant sought a dismissal of its
defence and for default
judgment to be granted in terms of the summons) to reply to the
notice but the court made short shrift
of such attempt when, on 4
September 2012, it issued yet another order in the following terms:
“
1.
THAT the Respondent is hereby directed to file a further and
comprehensive reply to the Applicant’s
notice in terms of Rule
35(3), served on 24
th
April 2012, within a period of 10 days from the date of the granting
of this order.
2. THAT in the event
of the Respondent failing to comply with the provisions of
paragraph
(1), the Applicant shall be entitled to approach court on the same
application papers, suitabl(y) amplified where necessary,
for an
order dismissing the Respondent’s defence to the Applicant’s
claim, and for judgment to be granted against the
Respondent as
claimed in the summons and particulars of claim.
3.
THAT the Respondent is to pay the costs of this application on the
party and
party scale.”
9.
It appears from the
judgment delivered by the court on this last occasion that at some
stage after the second interlocutory application
was brought the
respondent’s attorneys had realized that the reply to the
applicant’s Rule 35(3) notice was inadequate.
They wrote
to his attorneys on 10 August 2012 and “
while
feebly asserting
(the respondent’s)
stance
that the notice did not adequately specify the documents which
(it)
was required to
produce”
(a
contention which the court promptly dismissed) offered to file an
amended notice before 17 August 2012 “…
in
order to avoid the time, expense and inconvenience of arguing an
opposed interlocutory application
”.
This notwithstanding, the offence (so the court considered) lay in
the respondent’s failure to provide a comprehensive
reply to
the notice, point by point and under oath, and stating in detail
which of the requested documents it had in its possession,
or their
whereabouts, if known. The attempt which had hitherto been
made, so the court reflected, amounted to “
token
compliance
”
with the 15 May 2012 order. Rather than replying as it ought in
terms of rule 35 (3), the respondent had “
chosen
instead
to provide, in a
rather lackadaisical manner, general and broad-sweeping replies
”.
The filing of a discovery affidavit “
in
general terms
”
without specific reference to the contents of the applicant’s
rule 35(3) notice which, according to the court’s
findings had
been couched in sufficiently clear terms to enable the respondent to
know exactly what documents it was required to
discover, was not
going to cut it. Apart from generally stating the
genus
of the documents required, the applicant had, according to the court,
been at pains to describe particular categories of documents,
both in
terms of their nature and time periods when they would have been
submitted to the auditors or remuneration committee of
its Board.
10.
Despite this failure,
however, the court was still not inclined of the view that the
conduct of the respondent and its legal representatives
justified the
drastic measure of dismissing the respondent’s defence.
The following conclusion in the judgment bears
repeating since –
according to the applicant, it sets the standard against which the
respondent’s most recent purported
compliance ought to be
assessed:
“
Though
ill-advised the Respondent’s reply may have been, it has at
least made some attempt to reply to the Applicant’s
Rule 35(3)
notice. While the reply was totally inadequate, and at worst
evasive, the Respondent did also file a further discovery
affidavit
in terms whereof further documents were discovered, ostensibly in
compliance with the notice. Moreover, it seems
that the
Respondent’s attorneys appeared to have realized their mistake
and had made a half-hearted attempt to request an
opportunity to file
a proper reply. Under these circumstances I am not persuaded
that there was any contumacy on the part
of the Respondent or its
attorneys, or that there are other circumstances which could justify
the striking out of the defence.
While the prejudice to the
Respondent will be huge if its defence is struck out, I am of the
view that any potential prejudice
to the Applicant can be
satisfactorily assuaged by an appropriate costs order.
”
11.
On the last day by when
the respondent was required to file a “
further
and comprehensive reply
”
to the applicant’s notice in terms of the court’s order,
the respondent put up an affidavit deposed to by its
chief executive
officer, Mr
Sithembele
Mase
, in which the
deponent purported now to expound separately on each of the seven
categories of documents which had been listed by
the applicant in his
notice.
12.
In respect of items 1
and 2 (the exchange of documents with the external auditors), Mr
Mase
asserts that no relevant documents have been sent to or received from
the respondent’s external auditors, yet claims that
all
relevant material prepared by the respondent or on its behalf
(presumably in the course of its audits) in relation to the matters
in issue has been disclosed. He further invites the applicant
to specify precisely which additional relevant correspondence
or
reports allegedly provided to or by its external auditors relevant to
the dispute are required to be made available for inspection.
In the absence of such particularity - so says the respondent, it is
unable to produce any further documents for inspection.
13.
Regarding item 3
(documentation of the respondent’s remuneration committee
relative to the calculation or assessment of the
applicant’s
performance bonuses), Mr
Mase
likewise submits that all relevant matter on the subject has already
been discovered. He adds that the respondent does not
have in
its possession or under its control any other relevant matter
concerning the deliberations of the remuneration committee.
14.
Concerning item 4 (the
performance assessments of the applicant), Mr
Mase
offers that those in respect of the first two financial years have
been discovered, but that no such instrument for production
in
respect of the 2010 financial year exists since the applicant failed
to submit himself for assessment for that period.
He claims
that the respondent has no record of any other performance documents
for the relevant period relevant to the parties’
dispute.
15.
Concerning item 5,
which was listed by the applicant in his notice as “
the
external audit report completed before the departure of the Chief
Executive Officer, Mr Matshama and which audit report related
to the
calculation and payment of performance bonuses for the (
Applicant
)
and/or the Chief Executive Officer
”,
Mr
Mase
alleges that the respondent is not in possession of this document.
Later he clarifies that neither does the respondent have
such a
document under its control.
16.
With regard to items 6
and 7 (which refers to the correspondence exchanged between the
applicant himself and the respondent (or
its agents) concerning the
calculation and payment of the settling-in allowance and
reimbursement of transfer fees), Mr
Mase
similarly declares that the respondent has already disclosed all
relevant matter in this connection yet again invites the applicant
to
specify precisely which additional relevant correspondence relevant
to the parties’ dispute is required to be made available
for
inspection.
17.
It was under these
circumstances that the applicant - still not satisfied that the
respondent’s further response complies
with the express terms
of the court order dated 4 September 2012, launched the present
(third) interlocutory application in which
he seeks an order that the
respondent’s defence be dismissed.
18.
One of the complaints
raised in the supplementary affidavit on the applicant’s behalf
by his legal representative, Mr
Runchman
,
is that, by the qualification what ought to be discovered with
reference to the word “
relevant
”
in Mr
Mase’s
affidavit, the respondent implies that other documentation exists
which it does not feel itself duty bound to discover as such
material
has been deemed by it not to be relevant, a determination which is
rather for the court to make. In justifying this
prospect Mr
Runchman
denounces as illogical and improbable the assertion that no documents
were exchanged with the Auditor-General whereas such flow
of
information between the office of the respondent and the external
auditor is to be expected in order to enable that institution
to
perform its functions as external auditor.
19.
The applicant further
takes issue with the respondent’s failure, at least in dealing
with items 1 and 2 (and assuming the
documents in question are not in
its possession or under its control) to deal with the issue of their
whereabouts.
20.
Concerning item 3 Mr
Runchman
points to the improbability that the documents disclosed constitute a
complete collection of documentation pertaining to the respondent’s
remuneration committee’s role in the assessment of the
applicant’s performance bonuses and again balks at the
invitation
to specify precisely additional relevant matter, the
respondent having expressly declared that all relevant documentation
relating
to or utilized by its remuneration committee including
submissions and minutes of the meetings of deliberations,
correspondence,
reports and the like have been exhaustively provided.
21.
Regarding the external
audit report listed as item 5 in the applicant’s notice in
terms of rule 35(3), he notes that the respondent
has not
unequivocally declared that it does not exist, neither has it stated
under oath that it was never in its possession or
under its control.
22.
Mr
Mase
in reply purported to deal with some of the shortcomings highlighted
by Mr
Runchman
in his affidavit, adding that he had personally conducted a search
for the additional documentation referred to under items 1 and
2 in
the notice and was able to confirm conclusively that they do not
exist. In the same breath, however, and after musing
as to why
the applicant has not approached the Auditor-General for such
documents, he reiterates that they “
are
not in the respondent’s possession
”,
leaving open the suggestion (in the applicant’s perception)
that the Auditor-General might be in possession of relevant
material
which resorts under the “
control
”
of the respondent as envisaged by the provisions of Rule 35(1).
With regard to the complaint that the respondent had
not stated under
oath that the documents listed under items 1 and 2 of the applicant’s
notice were not in its possession
or under its control, or dealt with
the issue of where they might be sourced if not in its possession, Mr
Mase
hastened to declare that they are not in the respondent’s
possession, yet added that the respondent “
does
not know their whereabouts
”,
again lending itself to an interpretation (in the applicant’s
estimation) that the documents which he asserts so
emphatically do
not exist may indeed at least exist, but be for the Auditor-General
to account for. Mr
Mase
in his reply also astutely avoids any discussion around the
applicant’s submission that it is improbable that there would
not be any exchange of documentation between the respondent and its
auditors on the issue. Concerning the issue of relevancy
he
dismisses Mr
Runchman’s
concern that a subjective view has been formed by the respondent in
this regard but hastily adds that despite the respondent’s
obligation to only discover what is relevant to the issues on the
pleadings this does not mean that it
has
relevant documents which are in its possession.
23.
Regarding the
submission that it is improbable that the documents under the third
category do not constitute a complete set, Mr
Mase
simply denies this and adverts to the applicant’s failure to
have responded to the respondent’s invitation to sufficiently
specify the documents which he believes ought to be discovered.
24.
Concerning the external
audit report, Mr
Mase’s
retort is that the respondent has strictly complied with its
obligation to state that it is not in possession of the report.
He follows this up with the statement that “
the
whereabouts of the external audit report, which is not in the
respondent’s possession, are unknown
”
(again confirming the applicant’s suspicion that such a
document may well exist and be in the external auditor’s
possession).
25.
The purpose of
discovery is to ensure that parties are made aware of all the
documentary evidence which is available before the
trial commences.
This presupposes that a party in possession or custody of documents
is supposed to know the nature thereof and
the value which the
material will play in conducing toward a just determination of the
case. Discovery plays an important
role to ensure that
issues are narrowed, and debates on incontrovertible issues are
eliminated.
[6]
It also provides important procedural rights.
[7]
26.
Discovery imposes upon
the parties to an action an obligation to discover documents relating
to any matter in question in the action
which are or have at any time
been in the possession or control of such other party.
[8]
27.
The objective is to
disclose all documents which may “
either
directly or indirectly enable the party requiring the affidavit
either to advance his own case or to damage the case of his
adversary
”.
[9]
28.
The phrase “
relating
to any matter in question
”
is given a wide interpretation and introduces the requirement of
relevance, the principle of which has been expounded upon
as follows
in
SA Neon
Advertising (Pty) Ltd v Claude Neon Lights (SA) Ltd
.
[10]
“
It
seems to me that every document relates to the matter in question in
the action which, it is reasonable to suppose, contains
information
which may – not which must - either directly or indirectly
enable the party requiring the affidavit either to
advance his own
case or to damage the case of his adversary. I have put in the
words ‘either directly or indirectly’
because, as it
seems to me, a document can properly be said to contain information
which may enable the party requiring the affidavit
either to advance
his or her own case or to damage the case of his adversary, if it is
a document which may fairly lead him to
a train of enquiry which may
have either of these two consequences.”
29.
The “
matter
in question
”
is determined on the pleadings, which means that the documentation
must be relevant or lead to a train of enquiry in relation
to a
matter raised by the pleadings.
[11]
Relevance is a matter for the court, having regard to the pleadings
and does not depend upon the litigant’s own views
(or those of
its representatives) on the matter.
[12]
30.
Courts are reluctant to
go behind a discovery affidavit, which is generally regarded as
prima
facie
conclusive,
save where it can be shown from the discovery affidavit itself, the
documents referred to in the discovery affidavit,
the pleadings in
the action, or any admissions made by the party making the discovery
affidavit, that there are reasonable grounds
for supposing that the
party has or had other relevant documents in his possession or under
his control, or has misconceived the
principles upon which the
affidavit should be made.
[13]
31.
A quick glance at the
two affidavits exchanged by Mr
Mase
in the latest salvo reflects in my view a complete misunderstanding
of what the respondent’s obligations are to make proper
discovery, perhaps best demonstrated by the inconsistent or
contradictory assertions made by him. Against the express assertion
that discovery is conclusive he leaves open the side door of
relevance (in a round about way) and complains of a lack of
specificity
in the description of the documents which the applicant
is asking it to disclose. Concepts such as possession and control (in
the
context of who the respondent is) appear to have gone over the
deponent’s head and there is perhaps a sense in which he
justifies
the position personally rather than appreciating that he is
deposing on behalf of a public accountable corporate entity. He is
further misguided as to issues of relevancy and has ostensibly failed
to grasp the significance and import of the court’s
prior order
which spelt out clearly the extent to which the respondent was
failing in its obligation and how it expected these
shortcomings to
be rectified. Two further affidavits were required to purport
to explain the respondent’s position
after the filing of the
formal response to the notice, this after three roundly doomed
attempts at putting forward what it considered
itself conclusively
obliged to discover in the first instance. Although an
attempt (again) has been made at least to
delineate broadly the seven
different categories of documents required by the applicant, the
response remains vague, unhelpful
and at worst evasive as described
before by this court. Indeed nothing much has been achieved by
this latest round of affidavits
filed to and fro. Mr
Mase
has failed in my view to deal with the essence of the applicant’s
requirements and the latter seemingly remains in the same
invidious
position he was in to start off with. Contrariwise the respondent is
adamant that it has done what the court’s
prior order
contemplated and that that is sufficient compliance with the rule.
32.
Mr
Mase
has deposed to the various affidavits in his capacity as chief
executive officer.
Ex
officio
he is a
member of the Board of Directors of the respondent which in turn is
responsible for the management of the respondent’s
affairs,
more particularly the payment of such expenditure as is the subject
matter of the parties’ dispute. He is
also the
functionary responsible for the short term performance awards
assessment. He would also,
via
the Board, have been privy to any meetings concerning these
determinations. Even if not personally involved at the time,
it
is evident from the numerous provisions of the Eastern Cape
Development Corporation Act and the Public Finance Management Act
that the record keeping envisaged by the applicant is statutorily
mandated and can hardly be dismissed by the respondent as unavailable
or not under its control whatever stage has been reached in the audit
process. Its obligation to give account for its financial
affairs persists even beyond the report of an external auditor. The
same applies to the minutes of all meetings. Independently
of
Mr.
Mase
the respondent should be able to account for all payments and
calculations made by it down to the minutest detail; all meetings
held in this connection over a period of 3 years ought to be
reflected in composite statutorily mandated minutes and this
historical
reflection of its financial affairs is likely to have been
the subject of auditors’ oversight so that even if obliquely
touched
upon in the reporting function it would constitute an
exchange between the respondent and it concerning these contentious
payments.
It could hardly be contended that it is unreasonable
to suppose that the source and related documents outlined by the
applicant
in his notice do not contain information which “
may
– not must – either directly or indirectly enable the
party requiring the affidavit either to advance his case or
to damage
the case of his adversary
”
or lead him “
to
a train of enquiry
”
having either of these two consequences.
33.
The formula proposed by
Rule 35(3) as to how the response should be formulated is further not
just rhetoric for the sake of it.
The affidavit (and
particularly the further affidavit mandated by the court under the
present circumstances by its prior order)
should comprise a
meaningful response, one which gives the assurance that nothing has
been kept in reserve which the pleadings
require the respondent to
disclose as having a bearing on the action. It supposes thereby
that the respondent is (at least
by now) mindful of the principles
upon which discovery is to be made, the express objective of the
exercise and the deficiencies
complained of. The comprehensive
reply envisaged by the order of 4 September 2012 should seek to
explain away these concerns
in a convincing manner and not simply
offer up a mantra which fails to advance the matter meaningfully. In
my view the purported
reply is again woefully inadequate and misses
the mark.
34.
Concerning items 1 and
2, the documents sought to be disclosed (well at least such of the
documents pertaining to the calculation
of the applicant’s
performance bonuses as would have been exchanged in the course of the
Auditor-General exercising his oversight)
should form part of a
natural audit trail and would obviously still be under the
respondent’s control regardless of the stage
of the audit.
35.
With regard to the
remuneration committee’s deliberations and the other specific
documents listed under 3 (a) – (g)
of the applicant’s
notice, the respondent’s generic dealing with the matter as a
category cannot suffice especially
when each sub-paragraph calls for
a different document straddling three financial years and requiring a
separate explanation as
directed by the order of 4 September 2012.
36.
Concerning minutes of
the meeting of the remuneration committee either discussing or
approving the performance bonuses of the applicant,
the documents
which have already been disclosed certainly set the pattern for the
range of input to be expected in this regard.
These minutes
must of necessity exist given that they are statutorily mandated.
For example, despite the applicant not having
submitted himself for
assessment in the 2010 year, the respondent has pleaded that a
payment was made to him in the sum of R9 003.27.
No doubt such
payment would have followed on the recommendation of the remuneration
committee and minutes and resolutions,
or submissions concerning
these, should be available. So too if minutes exist for the
2007/2008 financial year, there ought
to be minutes in respect of the
following two periods of assessment as well. The fact that a
resolution was passed on 22
January 2009 by the respondent’s
remuneration committee suggests a meeting which preceded that and,
ergo
,
minutes. If calculations and performance scores exist for the
2007/2008 period then it follows that they should exist in
respect of
the ensuing years under question as well. A document disclosed
by the respondent styled “
Performance
Bonus Calculations Post Moderation for period 2008/2009
”
suggests an event of “
moderation
”
which must be a matter of record which, according to the applicant
has not been disclosed by the respondent. Also
apparently
absent from the list of hitherto disclosed documents under this
category are the instruments according to which the
method and means
of calculation of the awards actually paid to the applicant are
indicated. The respondent’s calculations
are vital to
advance the applicant’s case (that they are incorrect) or to
damage the respondent’s case (that they were
correctly
calculated).
37.
The comments above
apply equally to items 4 and 5 referred to in the applicant’s
notice in terms of rule 35(3).
38.
With regard to items 6
and 7 the deponent submits that such documents relating to the
dispute have already been discovered, but
there is no evidence of
such discovery in the respondent’s supplementary discovery
affidavits. Mr
Runchman
confirms that no such disclosure has been made.
39.
There are therefore in
my view reasonable grounds for supposing that the respondent has
other relevant documents in his possession,
or under its control
(being those particularized by the applicant) which it has failed to
discover per its obligation and as spelt
out in the express terms
directed by the order of 4 September 2012.
40.
What to do about it is
the question. Whilst the applicant submits that the respondent has
acted contumaciously, I am not necessarily
persuaded on a balance of
probabilities that the respondent has been deliberately obstructive
or obtuse in making discovery of
the documents requested by him, or
again that the dismissal of its defence is warranted in the
circumstances. At worst for
the respondent it appears to hold
certain misguided views on the issue of what it is obliged to
discover in the circumstances.
Perhaps there is also an extent
to which Mr
Mase
has taken on a personal tone in the matter rather than appreciating
that he must declare in a representative capacity that the
respondent
has not in its possession, custody or power of its attorney or other
agent or any other person on its behalf, the specified
documents
(which this court has ruled are sufficiently described) relating to
the action.
41.
Apart from the obvious
prejudice to the respondent in dismissing its defence (which it
seemingly asserts to protect the public purse),
I mention that the
applicant may well also be disadvantaged by the lack of proper
discovery in proving his claims, even on a default
basis. It
appears to me to be necessary, therefore, to put the ball back into
the respondent’s court and to allow its
functionaries an
opportunity once again, and cautious of the comments above, to get to
grips with the applicant’s demand
and to respond meaningfully
thereto. Having so declared, it follows in my view that the
respondent who has unreasonably protracted
the matter should be held
liable for the costs of the application, including the costs which
were previously reserved.
42.
In this regard I
mention that the respondent submitted that it had been given
insufficient notice of the present application and
had not been
placed on terms before the launch of the application.
[14]
Indeed it had particularly requested the applicant’s attorneys
to advise in what respects it had failed to comply with
the order of
court after Mr
Runchman
had written to the respondent’s attorneys to inform them that
he was of the opinion (after receipt of the respondent’s
“
further
response
” on
18 September 2012), that it had yet again failed to comply with the
order of court. The request for clarification
was, under the
circumstances, a reasonable and appropriate one yet the letter
elicited no reply. The applicant’s response
had been to
set down the applicant’s application for the respondent’s
defence to be struck out.
43.
Mr
Bloem
,
who appeared on behalf of the respondent, argued that such conduct is
inconsistent with responsible litigation. In this
regard he
relied on the authority in
Szedlacsek
v Szedlacsek; Van der Walt v Van der Walt, Warner v Warner
[15]
for the proposition that it was inappropriate to issue out the
application without the applicant giving notice of his intention
to
bring it. In the collection of matters which are referred to in the
reported judgment however the court was of the view that
the
interlocutory applications had been launched by rote after the expiry
of the
dies
afforded to the litigants to comply with the separate requests and
almost as a complete surprise to them. In this instance
however
the applicant has over a lengthy period and in no mistaken terms
sought to exact compliance from the respondent of its
obligation to
discover. The situation was not in the slightest bit
ameliorated by the order of 4 September 2012. Indeed
no advance
has been made concerning pertinent discovery. Even after Mr
Runchman
explained the deficiencies in a supplementary affidavit the
respondent failed to grasp what was expected of it. I accept
that there is no sense of urgency in that the action has yet to be
set down for hearing, but I cannot criticize the applicant for
enrolling the matter on ten days’ notice to the respondent
which was more than sufficient time in my view to explain itself.
It is after all an interlocutory application which is brought “
on
notice
” as
opposed to “
on
notice of motion
”.
The requirements of rule 6(5)(d) need therefore not be strictly
complied with in such an instance.
[16]
The applicant was also authorized by the order of 4 September 2012 to
approach the court in the manner in which it did.
44.
In the result I issue
the following order:
1.
The respondent is
directed within ten (10) days of this order to file a comprehensive
response to the applicant’s notice in
terms of rule 35(3) dated
24 April 2012;
2.
In deposing to the
affidavit furnished in compliance with the provisions of rule 35(3),
the respondent shall deal separately with
each paragraph and
sub-paragraph listed in the applicant’s notice;
3.
In the event of the
respondent failing to comply with the provisions of paragraphs (1)
and (2) above, the applicant shall be entitled
to approach this court
on the same application papers, suitably amplified where necessary,
for an order dismissing the respondent’s
defence to the
applicant’s claim, and for judgment to be granted against the
respondent as claimed in the summons and particulars
of claim;
4.
The Respondent is to
pay the costs of this application on the party and party scale
including the reserved costs of 15 May and 19
October 2012.
______________
HARTLE B C
JUDGE OF
THE HIGH COURT
DATE OF
HEARING : 25
June 2013
DATE OF
JUDGMENT: 7 August 2013
APPEARANCES:
FOR
APPLICANT/PLAINTIFF :
Mr R W N Brooks instructed by Wylde Runchman Inc., East London.
FOR
RESPONDENT/DEFENDANT:
MrG H Bloem S.C instructed
byWesley Pretorius & Associates,
East London.
[1]
Section 7(1) of Act No. 2 of 1997. See also
sections 49(1) and 49(2)(a) of the Public Finance Management Act,
No. 1 of 1999,
(PFMA) which provides that the Board is the
accounting authority for purposes of that Act.
[2]
Section 19(1) of Act, No. 2 of 1997.
[3]
Section 19(2) and 19(3)(a) of Act No. 2 of 1997.
See also the relevant provisions of the PFMA which obliges the
respondent
as a “
public entity
”
(it is listed as a provincial government business enterprise under
Part D of Schedule 4 to the Act) to keep full and proper
records of
its financial affairs (section 55(1)(a) of the PFMA), furnish
financial statements to its internal auditors (section
55(1)(c))
and an annual report on its activities during the financial year to
the Auditor-General (section 55(1)(d)).
This should be read
together with
section 4(1)(g)
of the
Public Audit Act No, 25
of 2004
which provides for the Auditor-General’s obligation to
audit and report on the accounts, financial statements and financial
management of,
inter alia
,
entities such as the respondent. (See in turn section 2 of the
Eastern Cape Development Corporation Act)
[4]
See the respondent’s Articles of
Association which is a schedule to the 1997 Act.
[5]
I was advised by Mr
Brooks
appearing for the applicant that
at the hearing on 15 May 2012 the respondent had conceded that his
client was entitled to the
substantive relief claimed in the first
interlocutory application, but had resisted the applicant’s
entitlement to costs,
resulting in the decision that costs be
reserved. The effect of the concession is that the respondent
accepted that the
documents listed by the applicant in his notice
were properly identified with sufficient specificity.
[6]
Durbach v Fairway Hotel
Ltd
1949 (3) SA 1081
(SR) at
1083.
[7]
Quintessence Co-Ordinators (Pty) Ltd v
Government of the Republic of Transkei
1993 (3) SA 184
(Tk).
[8]
Rule 35(1).
[9]
Swissborough Diamond Mines (Pty) Ltd and Others v Government of
Republic of South Africa and others
1999 (2) SA 279
(T) at 316 –
317.
[10]
1968 (3) SA 381 (W).
[11]
Caravan Cinemas (Pty) Ltd v London Film Productions
1951 (3)
SA 671
(W
);
Lentz Township Co (Pty) Ltd v Munnik
1959 (2) SA 640
(W);
Lenz Township Co (Pty) Ltd v Munnik
1959
(4) SA 567
(T).
[12]
Haupt t/a Soft Copy v Brewers Marketing
Intelligence (Pty) Ltd
2005 (1) SA 398
(C) 404.
[13]
Federal Wine and Brandy Co Ltd v Kantor
1958 (4) SA 735
(E) 749;
Sandy’s
Construction Co v Pillai
1965 (1) SA
427
(N);
Continental Ore Corporation v
Highveld Steel and Vanadium Corp Ltd
1971 (4) SA 589
(W);
Tractor &
Excavator Spares (Pty) Ltd v Groenedijk
1976 (4) SA 359
(T) 363;
Rellams (Pty)
Ltd v James Brown & Hamer Ltd
1983
(1) SA 556
(N);
Swissborough Diamond
Mines (Pty) Ltd supra
at 321.
[14]
The applicant served the notice of set down on 19
October for hearing on 30 October 2012. The matter did not proceed
on this day
but was postponed, by agreement, with the costs
reserved.
[15]
2000 (4) SA 147 (E).
[16]
See my unreported judgment in
Farrington
Farming (Pty) Ltd & Others v VolcanoAgrosciences (Pty) Ltd :
Frikton CC v Chris Hani District Municipality
(ECG 75/2008 : 3245/2009).