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2012
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[2012] ZAKZPHC 72
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Wishart and Others v Blieden NO and Others (7136/2011) [2012] ZAKZPHC 72; [2013] 1 All SA 485 (KZP); 2013 (6) SA 59 (KZP) (15 November 2012)
1
REPORTABLE
IN THE KWAZULU-NATAL HIGH COURT, PIETERMARITZBURG
REPUBLIC OF SOUTH AFRICA
CASE NO: 7136/2011
In the matter between:
GRANT LOGAN WISHART
.........................................................
1
st
Applicant
MALCOLM GRANT WISHART
..................................................
2
nd
Applicant
SHABIER BHAYAT
......................................................................
3
rd
Applicant
and
THE HONOURABLE Mr JUSTICE P BLIEDEN NO
...............
1
st
Respondent
Adv JOHN M SUTTNER SC
.....................................................
2
nd
Respondent
Adv ALLAN J EYLES
................................................................
3
rd
Respondent
WESSEL JJ BADENHORST
......................................................
4
th
Respondent
BHP BILLITON ENERGY COAL
SOUTH AFRICA LTD
................................................................
5
th
Respondent
NEIL McHARDY NO
.................................................................
6
th
Respondent
THE MASTER OF THE HIGH COURT,
PIETERMARITZBURG
..............................................................
7
th
Respondent
___________________________________________________________
JUDGMENT
___________________________________________________________
GORVEN J
The three applicants were summonsed to appear before
the first respondent on 20 July 2011 in an enquiry convened under
s 417
of the Companies Act 61 of 1973 (the Act). The enquiry
relates to Avstar Aviation (Pty) Ltd (Avstar). The second and third
respondents
are advocates practising at the Johannesburg Bar. The
fourth respondent is an attorney. The applicants do not want to be
examined
at the enquiry by the second, third and fourth respondents.
They did not attend the enquiry. Their present attorney of record
appeared instead. He submitted that the first respondent should not
allow these respondents to represent the fifth respondent
(Billiton)
in the enquiry. The first respondent declined to make such a ruling.
This application resulted. Part of the relief
sought was to review
and set aside this decision. That relief is not longer pursued. The
application moves to interdict the second,
third and fourth
respondents from examining the applicants in the enquiry. Unless
further particularity is necessary, the second,
third and fourth
respondents shall be referred to jointly in this judgment as the
respondents. The second to fifth respondents
are the only ones who
have opposed the application.
The applicants say that it would be improper for the
respondents to participate in the examination of the applicants.
They raise
a fundamental objection
ad hominem
. This is the
nub of the interdict application. The applicants say that the
respondents are subject to a conflict of interests
and are privy to
confidential information. This is said to have been disclosed to
them during consultations.
It is necessary to set out the facts in some detail so
as to assess these contentions. Most of the facts set out below are
uncontested.
I shall in due course indicate those which attract a
challenge.
There are three other companies which feature in this
application. They are Eurocoal (Pty) Ltd (in liquidation)
(Eurocoal), Rietspruit
Crushers (Pty) Ltd (Rietspruit) and Colt
Mining (Pty) Ltd (Colt). The first applicant is the sole director of
Avstar and Eurocoal.
All of the applicants are directors of
Rietspruit. The second applicant is the sole director of Colt and
the father of the first
applicant. In addition to being a director
of Rietspruit, the third applicant is the financial manager of
Rietspruit and Colt.
Billiton has proved claims in insolvency
against both Eurocoal and Avstar. The claim against Eurocoal
resulted from arbitration
proceedings which took place between 26
September and 5 October 2007. The fourth respondent has at all
material times represented
Billiton, including in the arbitration
proceedings. The first applicant was present every day of the
arbitration and was fully
aware of the fourth respondent’s
position. The arbitrator made an award in favour of Billiton.
In an attempt to settle Billiton’s claim, a
meeting was held on 7 March 2008 (the settlement meeting). The
fourth respondent
represented Billiton in those negotiations. The
persons who represented Eurocoal included the first applicant and
one Rory Loader
(Loader). Loader was, at the time, a director of
Avstar. He was also the ‘legal manager’ of Avstar and of
many of
its associated companies. In 1997, the fourth respondent
came to know Loader. At the time he was a candidate attorney and
Loader
was practising at the Johannesburg Bar. The fourth respondent
briefed Loader both then and later. At the settlement meeting a
proposal was put to Billiton by Loader and the first applicant on
behalf of Eurocoal. In response, at the settlement meeting,
the
fourth respondent indicated that Eurocoal must deliver coal to
Billiton under their agreement. If it did not, Billiton would
consider taking a number of steps. It would pursue a substantial
damages claim against Eurocoal. If that claim was not satisfied,
it
would bring an application for the liquidation of Eurocoal. It would
then move for an enquiry to be convened under s 417
of the Act
and thereafter pursue a claim under s 424 of the Act against
the first applicant. Loader responded that this
route would not be
likely to yield any substantial commercial benefit to Billiton. The
first applicant says he does not recall
any such conversation. He
does not deny that it took place or that he was present. He merely
says that he was confident that
the matter between Eurocoal and
Billiton would settle and things would not progress that far. He
also says that he does not consider
that any action taken against
him under s 424 of the Act would be well founded because he has
done nothing wrong.
Three days after the settlement meeting, the fourth
respondent briefed the second respondent to represent Billiton in
the dispute
with Eurocoal. On 13 March 2008 the second and fourth
respondents discussed with the in-house counsel of Billiton the
strategy
to be employed in this dispute. They agreed to attempt to
wind up Eurocoal to force it to honour the award made against it in
the arbitration. On 13 June 2008 the third respondent was briefed on
behalf of Billiton. An application was prepared between 16
and 20
June 2008 for the arbitrator’s award against Eurocoal to be
made an order of court. An answering affidavit was delivered
prior
to 25 August 2008 which took a legal point and, as a result, all
that was sought against Eurocoal was the costs of the
arbitration.
On 25 September 2008 an order was granted by consent requiring
Eurocoal to pay those costs.
During that period, one or more of the respondents
represented Avstar, Rietspruit and Colt in specific disputes. This
came about
as follows. Shortly after the settlement meeting, Loader
telephoned the fourth respondent and asked whether he would be
prepared
to act for Avstar. The fourth respondent agreed to do so.
He had no knowledge at the time as to the identity of Avstar’s
directors. The dispute was between Avstar and 1-Time over aircraft
leased by Avstar to 1-Time. Two engines had failed and had
been
replaced by engines leased at R500 000 per month per engine.
1-Time looked to Avstar for these costs and for those
to repair the
failed engines. As a result, 1-Time had withheld the monthly lease
payments to Avstar. After certain consultations
were held over this
matter, Loader indicated that the assistance of the fourth
respondent would no longer be needed. Whilst instructed
in the
matter, the fourth respondent informally mentioned to the second
respondent the nature of the dispute. He thought he might
need to
brief him. This need did not arise. Loader says that the decision to
instruct the fourth respondent was taken by him
and the first
applicant because this access to the fourth respondent may
facilitate a settlement of the Eurocoal dispute. The
first applicant
denies any such intention saying that, because he had been employed
at Billiton, he knew the key people to talk
to and was confident he
could settle the matter without assistance.
Shortly thereafter Loader contacted the fourth
respondent and indicated that Colt and Rietspruit had received
letters sent in
terms of s 345(1)(a)(i) of the Act. These
letters claimed that they each owed Safair (Pty) Ltd (Safair) more
than R37 million.
They clearly foreshadowed liquidation applications
on the basis that they would be deemed to be unable to pay their
debts. Loader
told the fourth respondent that these matters were
totally unrelated to the dispute between Billiton and Eurocoal and
that there
could be no conflict of interest. He requested him to
assist. The fourth respondent agreed to do so and briefed the second
respondent
for a consultation to be held on 24 April 2008. He told
him what Loader had said about the matters in no way impacting the
Billiton
dispute with Eurocoal. The facts and underlying disputes
between Safair and each of the two companies were, to all intents
and
purposes, identical.
The consultation on 24 April involved the second and
fourth respondents. The fourth respondent instructed the second
respondent
that the companies disputed the debts claimed by Safair.
They agreed to request documentation and evidence relevant to the
dispute,
including the most recent annual financial statements of
Rietspruit and Colt. The disputed debts formed the main focus of a
possible
application to interdict the bringing of liquidation
applications by Safair. As a precaution, the second respondent began
to
prepare interdict applications on 5 May 2008. On 6 May 2008 it
became known that bonds of security had been taken out for
liquidation
applications against Rietspruit and Colt. The second and
fourth respondents met that day. A letter was sent disputing the
indebtedness,
indicating that both Colt and Rietspruit were solvent,
trading companies and requesting an undertaking that no liquidation
applications
would be brought. In case this was not forthcoming, the
second respondent requested that the fourth respondent arrange a
consultation
with Loader on 7 May 2008. The second respondent met
Loader for the first time on 7 May 2008 at the consultation.
Loader’s
only involvement with, and knowledge of, Rietspruit
and Colt related to this litigation.
Between 5 and 8 May 2008, therefore, the second
respondent settled a letter and drafted papers for applications to
be launched
by Rietspruit and Colt. He charged for three days of
consultations. He consulted mainly with the fourth respondent but
also with
Loader and even less with the first applicant. Very few
facts were elicited from Loader and the first applicant. Those
elicited
related to the terms of the agreements in question and the
facts underlying the dispute with Safair. The second respondent was
informed that Rietspruit was controlled by the second applicant. He
was told that the second applicant had authorised the proceedings
in
question. He was requested to keep the second applicant out of the
matter at all costs. In addition, the second respondent
requested
and was given limited information extracted from the 2007 audited
annual financial statements and the 2008 drafts.
The statements were
not shown to the second respondent prior to the applications being
launched. The affidavits set out the profits
made for the relevant
financial years and the assets and liabilities, including cash, of
each company. This was to support an
averment that the companies
were thriving, solvent, companies able to pay their debts as and
when they fell due. The respondents
and Loader say that there was no
discussion with Loader or the first applicant about the nature of
the business of either company
or how it was conducted. 90% of the
time spent by the second respondent dealt with the dispute
concerning the indebtedness to
Safair.
The application was launched on 9 May 2008 on an urgent
basis and interim relief was obtained. Once the opposing papers were
received,
the second respondent requested assistance and the third
respondent was briefed as his junior. For the purpose of the
replying
affidavit, the respondents consulted with Loader but not
with the first applicant. Prior to argument, a two-hour consultation
took place involving the respondents, Loader and the first
applicant. This was to update them and to advise on the prospects of
success. They also discussed the possibility of referring the
overall disputes to arbitration rather than to evidence if it was
agreed between the parties that the factual disputes could not be
resolved on the papers. The Rietspruit dispute was referred
to
arbitration. It was agreed that the Colt dispute would follow the
result. The fourth respondent briefed the second and third
respondents for a pre-arbitration meeting to be held on 28 August
2008. A statement of claim, prepared by the second and third
respondents, was delivered on 29 September 2008. The only further
consultation relating to Rietspruit and Colt took place amongst
the
respondents. After the statement of claim was finalised, the second
and third respondents returned their briefs and did not
act any
further for Rietspruit or Colt.
Once the Rietspruit matter was referred to arbitration,
it became clear that the first applicant would need to give
evidence.
If Billiton was successful in liquidating Eurocoal, the
respondents would end up examining the first applicant in an enquiry
under s 417 of the Act. The respondents decided, as a result,
to withdraw from further representing Rietspruit. This was
communicated to Loader by letter dated 24 November 2008. The
respondents currently represent Billiton and the liquidators of
Eurocoal. On behalf of the latter they have instituted actions
against some of the applicants or their family members and companies
or trusts associated with one or more of the applicants. They are
briefed, effectively by Billiton, in enquiries convened under
s 417
into the affairs of both Eurocoal and Avstar. The enquiry relating
to Eurocoal is subject to a similar application
in the South Gauteng
High Court.
It is necessary, in addition to having set out the
factual common ground between the parties, to deal with some of the
assertions
made by the first applicant which are disputed by the
respondents. The first applicant says that the evidence of the
second and
third applicants ‘will inevitably overlap with
privileged information [he] previously provided to the Second, Third
and
Fourth Respondents about the business, trade, dealings, property
and affairs of Avstar’. He says that this is so because
the
business and affairs of Avstar were ‘intermingled’ with
those of Rietspruit and Eurocoal. When challenged on
having
consulted at all about Avstar, he concedes that he did not do so at
all. He then asserts, contrary to the evidence of
Loader, and
without claiming to have been present, that Loader must have
imparted confidential information. He initially claims
that the
second, third and fourth respondents were briefed in the Avstar
matter. When this is denied, he accepts that only the
fourth
respondent was instructed.
The first applicant also claims to have consulted with
the second, third and fourth respondents to draft the application
papers
in the Rietspruit and Colt matters. Once again, when
challenged, he accepts that the third respondent was only briefed
after
the replying affidavit had been delivered and was not involved
in drafting the papers at all. He initially states positively that
he told the respondents of inter-company loans at the consultations
for the Rietspruit and Colt applications. In response to
a denial by
the respondents, he retracts this evidence and says that ‘to
the best of [his] recollection’ he did so.
He initially claims
that the 2007 audited annual financial statements for Rietspruit and
Colt were shown to the respondents at
the consultations prior to the
application being launched. Again, when challenged, he accepts that
he phoned the third applicant
for the relevant information to be
included in the affidavits. The statements were not shown to the
respondents at that stage
but were provided to the fourth respondent
later, when they were annexed to the papers.
He initially claims that the respondents were engaged
in work which ‘entailed litigation, dealing with disputes, in
respect
of which Avstar and [he] personally sought legal advice from
the Second, Third and Fourth Respondents. [He] did so in
confidence’.
In response to a challenge he states that,
although he did not consult any of the respondents concerning ‘any
of [his]
exclusively personal interests, they were fully aware of
the fact that [his] interests in fact coincided with those of the
entities
whom [he] represented when [he] consulted with them’.
He does not say in what respect this is so or give any concrete
example
of the kind of personal matter which overlaps. When it is
denied that he had attended many consultations, he says he cannot
remember
how many consultations he attended with the respondents. He
says that he seems to recall that the third respondent was present
at one of them.
It is clear from this that the applicants make out no
case on the papers that confidential disclosures concerning Avstar
were
made to any of the respondents. The initial assertion of the
first applicant to this effect is withdrawn. Loader does not say so.
The second and fourth respondents say that nothing of the sort
happened.
There is no challenge to Loader’s evidence that
he had no knowledge of Rietspruit and Colt beyond the confines of
the disputes
in question. He was therefore not in a position to
divulge confidential information concerning any other aspects of
their operations.
The first applicant makes only general claims to
having given the respondents confidential information. He is
challenged to disclose
the information but declines to divulge it,
saying that this would defeat the object of the application since it
would then no
longer be confidential. He does not even state the
nature of it, without disclosing the content. The only concrete
claim is that
Loader provided the fourth respondent with unspecified
documentation which dealt with the contractual relationships between
Avstar,
Rietspruit and Colt. Again, he does not say that he was
present on this occasion. In argument the only submission which is
offered
is that this refers to the financial statements put up in
the Rietspruit and Colt applications. The first applicant refers
repeatedly
to discussions about the ‘intermingling’ of
the affairs of companies run by the Wishart family. Again, when
pressed
in argument, this boils down to the respondents having seen
the 2007 audited financial statements for Rietspruit and Colt and
the draft ones for 2008 which showed certain inter-company loans.
The respondents say that they did not see the statements at
the
consultation and even when they had been annexed to the affidavits,
did not look at inter-company loans since these were
not relevant.
In any event, because they were put up in those applications, the
documents relied upon have entered the public
domain. No
confidentiality attaches to them. Any person tasked with examining
any of the applicants at the s 417 enquiry
would have access to
them. The applicants have also, therefore, not made out a case that
confidential information relating to
Rietspruit and Colt was
divulged to the respondents.
The only confidential information personal to the first
applicant that he says was disclosed is that his interests coincide
with
those of the companies in question. Quite what is meant by this
is also not said. During argument it was conceded that the only
information personal to the second applicant disclosed in the
consultations was that he was the sole director of Rietspruit.
This
information was required in order to establish under whose authority
the application was being launched. In addition, the
first applicant
requested that the second applicant be kept out of the Rietspruit
application at all costs. No information personal
to the third
applicant is mentioned in the papers.
Before dealing with the substance of the application,
it is necessary to deal with an application which was brought for my
recusal.
The application was refused. These are the reasons. Before
argument commenced I indicated that, during the course of my
practise
as an advocate, I had had dealings with the second
respondent. The applicants brought an application for my recusal. In
response
to a suggestion, I placed on record the precise nature of
my dealings with the second respondent to the best of my
recollection
as follows. Between 2004 and mid-2006 I was briefed to
appear in certain meetings of creditors following the liquidation of
certain
companies and the sequestration of the controlling
individual. The second respondent was also briefed to appear in such
meetings,
representing a different creditor who broadly made common
cause with the party I represented. My recollection is that there
were
no more than three such meetings at which both of us appeared.
Prior to one such appearance, the second respondent came to the
establishment where my instructing attorneys, counsel representing a
different creditor and I were staying overnight and a discussion
took place regarding the attitude of our clients and the strategy
which we intended to adopt at the meeting the following day.
We were
at no stage co-counsel or briefed by the same set of attorneys in
the matter.
Thereafter the applicants persisted in the application.
They submitted that there was a lingering concern arising from the
professional
interaction between the second respondent and me on
these occasions. Since aspersions are cast in the application as to
the propriety
or otherwise of the manner in which the second
respondent has conducted himself, it was submitted that, despite the
applicants
having full confidence in my integrity, I might still be
influenced in deciding the application. It was further submitted
that,
because I had deemed it necessary to make the disclosure, I
must have had well founded misgivings. The respondents opposed the
application on the basis that this had not been a personal but a
professional relationship and no reasonable person could have
a
reasonable apprehension that I would be influenced by my contact
with the second respondent in the circumstances.
Article 13 note 13(iv) of the relevant portion of the
Code of Judicial Conduct is to the following effect:
‘
If a judge is of the
view that there are no grounds for recusal but believes that there
are facts which, if known to a party, might
result in an application
for recusal, such facts are to be made known timeously to the
parties, either by informing counsel in
chambers or in open court,
and the parties are to be given adequate time to consider the
matter.’
1
This provision in the Code is what prompted me to make
the disclosure, not any concern that there were
prima
facie
grounds for my recusal.
The test for the recusal of a judicial officer is as
follows:
‘
The question is whether a reasonable,
objective and informed person would on the correct facts reasonably
apprehend that the judge
has not or will not bring an impartial mind
to bear on the adjudication of the case, that is a mind open to
persuasion by the evidence
and the submissions of counsel. The
reasonableness of the apprehension must be assessed in the light of
the oath of office taken
by the judges to administer justice without
fear or favour; and the ability to carry out that oath by reason of
their training
and experience. It must be assumed that they can
disabuse their minds of any irrelevant personal beliefs or
predispositions. They
must take into account the fact that they have
a duty to sit in any case in which they are not obliged to recuse
themselves. At
the same time, it must never be forgotten that an
impartial judge is a fundamental prerequisite for a fair trial and a
judicial
officer should not hesitate to recuse herself or himself if
there are reasonable grounds on the part of a litigant for
apprehending
that the judicial officer, for whatever reasons, was not
or will not be impartial.’
2
As was submitted by the respondents, my dealings with
the second respondent were at a purely professional level. No
personal beliefs
or predispositions developed which are in any way
relevant to the present application. I am required to deal with
issues argued
on the papers. I am therefore not called upon to make
any credibility findings or deal with the cross-examination of
witnesses,
including that of the second respondent. I am confident
that I can fulfil my oath to administer justice to all persons in
this
application without fear, favour or prejudice in accordance
with the Constitution and the law.
3
I was, and am, of the view that, on the facts, a
reasonable, objective and informed person would not reasonably
apprehend that
I would not bring an impartial mind to bear on the
adjudication of the application.
As I have indicated, a final interdict is sought. The
test remains clear and uncontroversial. The requisites are ‘a
clear
right, injury actually committed or reasonably apprehended,
and the absence of similar protection by any other ordinary
remedy.’
4
It will be useful to sketch the legal contours which
bear on the relief sought at this stage. This will provide a
backdrop against
which to evaluate the specific issues which were
argued before me. Different jurisdictions have divergent views as to
the basis
upon which a court will intervene to prevent legal
practitioners from representing certain clients in certain contexts.
All of
them locate the origin in an existing or previous
attorney-client relationship. For the purposes of this application,
it is not
necessary to deal with the former category since none of
the respondents is in an existing attorney-client relationship with
any of the applicants or the companies in which they are involved.
The position in English law is fairly clear. In
Prince
Jefri Bolkiah v KPMG (a firm)
,
5
Lord Millet accepted the law set out in the decision of
the Court of Appeal in
Rakusen v Ellis,
Munday & Clarke
.
6
He held that
Rakusen
was authority for two propositions, namely:
‘
(i) that there is no absolute rule of law
in England that a solicitor may not act in litigation against a
former client; and (ii)
that the solicitor may be restrained from
acting if such a restriction is necessary to avoid a significant risk
of the disclosure
or misuse of confidential information belonging to
the former client.’
7
In his speech he first dealt with the position where
solicitors represented two clients on opposing sides of a conflict at
the same
time. He then went on to say the following:
‘
Where the court’s intervention is
sought by a former client, however, the position is entirely
different. The court’s
jurisdiction cannot be based on any
conflict of interest, real or perceived, for there is none. The
fiduciary relationship which
subsists between solicitor and client
comes to an end with the termination of the retainer. Thereafter the
solicitor has no obligation
to defend and advance the interests of
his former client. The only duty to the former client which survives
the termination of
the client relationship is a continuing duty to
preserve the confidentiality of information imparted during its
subsistence.
Accordingly, it is incumbent on a plaintiff who seeks to restrain his
former solicitor from acting in a matter for another client
to
establish (i) that the solicitor is in possession of information
which is confidential to him and to the disclosure of which
he has
not consented and (ii) that the information is or may be relevant to
the new matter in which the interest of the other client
is or may be
adverse to his own.’
8
Only once these have been proved does an evidential
burden shift to the solicitor to show that there is no risk to the
former client
if the solicitor acts in the matter.
9
Posner J, in the majority judgment of the United States
Court of Appeals, Seventh Circuit, in
Analytica
Incorporated v NPD Research Inc
,
10
explained the position in their law as follows:
‘
For rather obvious reasons a lawyer is
prohibited from using confidential information that he has obtained
from a client against
that client on behalf of another one. But this
prohibition has not seemed enough by itself to make clients feel
secure about reposing
confidences in lawyers, so a further
prohibition has evolved: a lawyer may not represent an adversary of
his former client if the
subject matter of the two representations is
"substantially related," which means: if the lawyer could
have obtained
confidential information in the first representation
that would have been relevant in the second. It is irrelevant whether
he actually
obtained such information and used it against his former
client….’
11
The American courts, therefore, do not enquire into
whether confidences were actually revealed in any one situation. They
simply
apply the ‘substantial relationship’ test referred
to in that matter.
In a leading Canadian case, the approach in the United
States was rejected. The alternative approach of Canadian law was
articulated
by Sopinka J in delivering the majority judgment as
follows:
In my opinion, once it is shown by the client that there existed a
previous relationship which is sufficiently related to the retainer
from which it is sought to remove the solicitor, the court should
infer that confidential information was imparted unless the solicitor
satisfies the court that no information was imparted which could be
relevant.’
12
The minority judgement in that matter, delivered by Cory
J, preferred the approach in
Analytica
.
13
In addition to the confidential information basis,
Australian law has added another basis for an injunction. This was
applied
by Young J in
Geelong School Supplies
Pty Ltd v Dean
.
14
Here the court restrained a solicitor from acting in a
matter on the basis of the court’s ‘inherent
jurisdiction to
control the conduct of its own officers so as to
ensure the due administration of justice and the integrity of the
judicial process’
15
(the inherent jurisdiction approach). He held that the
leading English case of
Bolkiah
,
16
although it did not address it, did not exclude this
approach.
17
He accepted as correct the following test of Brereton J
in
Kallinicos & another v Hunt &
others
:
18
‘
The test to be applied in this inherent
jurisdiction is whether a fair-minded, reasonably informed member of
the public would conclude
that the proper administration of justice
requires that a legal practitioner should be prevented from acting,
in the interests
of the protection of the integrity of the judicial
process and the due administration of justice, including the
appearance of justice’.
19
Brereton J distilled the following principles governing
the exercise of this jurisdiction from previous cases:
‘
· [T]he court always has inherent
jurisdiction to restrain solicitors from acting in a particular case,
as an incident of
its inherent jurisdiction over its officers and to
control its process in aid of the administration of justice…
· The test to be applied in this inherent jurisdiction is
whether a fair-minded, reasonably informed member of the public
would
conclude that the proper administration of justice requires that a
legal practitioner should be prevented from acting, in
the interests
of the protection of the integrity of the judicial process and the
due administration of justice, including the appearance
of justice…
· The jurisdiction is to be regarded as exceptional and is to
be exercised with caution…
· Due weight should be
given to the public interest in a litigant not being deprived of the
lawyer of his or her choice without
due cause…
· The
timing of the application may be relevant, in that the cost,
inconvenience or impracticality of requiring lawyers to
cease to act
may provide a reason for refusing to grant relief….’
20
The inherent jurisdiction of the court is
discretionary.
21
In
Spincode Pty Ltd v Look
Software Pty Ltd & Ors
,
22
Brooking JA held that the inherent jurisdiction
approach arose from a line of cases dealing with the power of the
court to keep
control over all its officers. In this regard, he said
the following:
‘
Since the earliest days of attempts to
prevent solicitors from acting against their former clients it has
been recognised that a
basis - I use the indefinite article advisedly
- of the jurisdiction is that which the court has over solicitors as
it officers.
Sir Samuel Romilly, for Lord Clinton, said that there
were two heads of jurisdiction: irreparable injury which supports an
injunction
and in addition the general jurisdiction over an officer
of the Court.’
23
He concluded as follows:
‘
There is a good deal of authority for the
view that a solicitor, as an officer of the court, may be prevented
from acting against
a former client even though a likelihood of
danger of misuse of confidential information is not shown.’
24
Some Australian courts have introduced a third basis
for intervention by invoking the test of ‘a duty of loyalty’
to former clients. This was explained by Batt JA, in
McVeigh
& Anor v Linen House Pty Ltd & Rugs Galore Australia Pty Ltd
& Ors
,
25
in the following way:
‘
The authorities established that a court
will restrain a solicitor from acting for a litigant not only in
order to prevent disclosure
of confidences of a client or former
client, but also to ensure that the solicitor’s duty of loyalty
to the former client
is respected, notwithstanding termination of the
retainer, and to uphold as a matter of public policy the special
relationship
of solicitor and client.’
26
Brooking JA, in
Spincode
,
accepted the ‘duty of loyalty’ approach and held the case
proved on all three bases as follows:
‘
[F]irst, the danger of misuse of
confidential information; secondly, breach of the fiduciary’s
duty of loyalty; thirdly, the
desirability of restraining the
solicitors as officers of the Court.’
27
Because he found that the injunction should be granted
on the confidential information point, his treatment of the latter
two bases
must be regarded as
obiter
.
28
Neither of the other two judges sitting with Brooking JA
supported the survival of any fiduciary duty beyond the contract
which
underlies the ‘duty of loyalty’ approach. The
‘loyalty’ basis has been upheld in Victoria, in some
cases
in Australian Capital Territory and Western Australia, but has
not been followed in New South Wales or Tasmania, to mention only
a
few States.
29
It appears now to have been rejected in Western
Australia.
30
The facts in
Cleveland
31
bear mention. The solicitors had acted for a company,
Ficaro Pty Ltd (Ficaro) to resist Cleveland’s claim. Evans had
served
a cross-claim against Ficaro before Ficaro instructed the
solicitors. The solicitors had taken instructions from Evans who
was,
at the time, the sole director of Ficaro. The nature of these
instructions could obviously not be disclosed to Cleveland although
there was some evidence to suggest that the solicitors had written a
letter to Cleveland dealing with Evans’s personal
position
arising from a notice served on Evans to produce. When Evans was
removed as a director of Ficaro, the solicitor’s
instructions
to act for Ficaro were terminated. A notice of discontinuance was
served on Ficaro by Cleveland, after which Ficaro
remained in the
litigation solely as the cross-defendant in the claim brought
against it by Evans. Cleveland could accordingly
not rely on the
confidential information basis. A costs consultant employed by
Ficaro asked what had taken place in a consultation
for which the
solicitors had charged Ficaro. The solicitors refused to indicate
what took place on the basis that there were
still proceedings
between Ficaro and Evans. The solicitors also refused to disclose to
Ficaro the contents of a consultation
held with Evans on behalf of
Ficaro when the solicitors acted only for Ficaro. It was held that
the solicitors were in a position
to use knowledge concerning Ficaro
to the advantage of Evans in the cross-claim and in defending the
claim of Cleveland against
Evans. Cleveland applied to restrain the
solicitors from acting. The court held that there was a parity of
interest between Cleveland
and Ficaro in the circumstances. The
court issued an injunction preventing the solicitors from acting for
Evans on the basis
of the inherent jurisdiction approach.
I have sketched the position in these jurisdictions
fairly fully because, as will become clearer later, the applicants
invite
me to develop our law by applying the inherent jurisdiction
approach along the lines done in Australia in
Geelong,
Kallinicos, Cleveland
and other similar cases. They do not argue
for the continuing duty of loyalty approach. They also do not
contend for the approach
employed in the United States of America or
Canada. The applicants accept that, until now, the approach in our
law has been similar,
at least in its outworking, to that of
Bolkiah
. It is therefore necessary to examine the legal
underpinnings of our law.
The starting point for the legal position on fiduciary
relationships in general has been carefully and cogently dealt with
by
Stegmann J in
Meter Systems Holdings Ltd v
Venter & another
.
32
This case dealt with unlawful competition. It is to the
following effect:
‘
[O]ur law recognises fiduciary
relationships which, as a matter of law, give rise to an obligation
to respect the confidentiality
of information imparted or received in
confidence, and to refrain from using or disclosing such information
otherwise than as permitted
by law or by contract.’
33
This obligation, or legal duty, arises within one of two
contexts, contract or delict. Within the law of contract, such a
legal
duty is implied by law as a term of the contract. The legal
duty so implied can, however, be limited by agreement.
34
When it is not founded in contract, ‘it is
necessary to look to the law of delict, and in particular to the
principles of
Aquilian liability, in order to ascertain the extent of
the legal duty to respect the confidentiality of information imparted
or
received in confidence.’
35
Stegmann J held further that:
‘
These aspects of the law, including both
the content of the contractual term relating to confidential
information implied by law
in a contract giving rise to a fiduciary
relationship, and also the content of the legal duty relating to
confidential information
imposed on Aquilian principles, are
currently in a process of development. They appear to be developing
in parallel in the sense
that the emerging definition of the legal
duty relating to confidential information for the purpose of the law
of delict arising
out of a fiduciary relationship
not
based on contract is not materially different from the emerging
definition of the contractual term implied by law arising out of
a
fiduciary relationship that
is
based on contract. Indeed, it would be surprising if any significant
differences were to develop in these two closely related topics’
36
The development in our law of delict here, he said, has
taken place within what Corbett J called ‘the broad and ample
basis
of the
lex Aquilia
’
37
and is along similar lines to the development in English
law by way of its principles of equity.
38
An attorney-client contract, which of course includes
that with an advocate if one is briefed, gives rise to a fiduciary
duty
towards the client. This fiduciary duty precludes a legal
professional from acting for two clients with conflicting interests
at the same time. What of the position, however, with a former
client? The respondents point out that the approach in
Bolkiah
has been adopted by the Competition Appeal Court in two
cases.
39
They submit that it should be applied here. In
American
Natural Soda Ash Corporation (Ansac)
Davis
JP considered the approach in
Bolkiah
and concluded that the appellants had not established
sufficient facts to make it applicable.
40
In
Monsanto
,
Davis JP accepted a submission that the test for confidentiality
outlined in
Ansac
required
the appellant to satisfy three requirements, viz.:
‘
1. Was first respondent given confidential
information?
Is the information still confidential?
Is the information relevant to the merger?’
41
In neither case is it stated on what basis
Bolkiah
applies in our law. The Competition Appeal Court neither discusses
this nor pertinently holds that the principles underlying the
use of
confidential information in English law are consonant with those in
our law. It is therefore necessary to examine the position
more
closely.
As was mentioned by Stegmann J, our law recognises two
contexts within which legal duties concerning confidential
information
arise. The question is how these relate to the issue at
hand. Once the attorney-client relationship has come to an end, the
only
basis on which any legal duty can remain is if an implied term
of the contract provides for this or Aquilian principles impose
one.
42
It was held, in
Meter Systems
,
that the legal duty in question was ‘to respect the
confidentiality of information imparted or received in confidence,
and to refrain from using or disclosing such information otherwise
than as permitted by law or by contract’.
43
If the legal duty arose from the attorney-client
contract, it would be introduced by an implied term. In the case of
delict, it
would be imported by way of public policy.
44
The approach to the legal duty in our law thus accords
with the approach in
Bolkiah.
In
essence the dictum of Stegmann J and the requirements set out in
Bolkiah
mean that a
former client would need to prove that:
Confidential information was imparted or received in
confidence as a result of the attorney-client relationship;
It is relevant to the matter at hand; and
The interests of the present client are adverse to
those of the former client.
The duty is more limited than that recognised in
American or Australian law. It also does not approach the question of
the onus
in the manner of Canadian law. There is no ongoing fiduciary
relationship or duty of loyalty owed by the legal practitioner to the
former client at however residual a level. Any legal duty to the
former client is limited to respecting confidential information
acquired during the course of the attorney-client relationship.
With the legal position sketched, it is appropriate to
turn to the issues argued before me. The first issue for decision is
characterised
by the applicants as the
locus standi
point
(the issue as to standing). The second is whether, if this is
decided in favour of the applicants, the matter should be
referred
for the hearing of oral evidence to resolve factual disputes. The
respondents do not refer to the issue as to standing
as the
locus
standi
point. They submit, in their heads of argument that the
‘applicants…do not have standing to enforce such duties
as [the respondents] might owe to Avstar, Rietspruit and Colt’.
In argument, the respondents raise three related aspects
on this
issue. First, that the right to protect any confidential information
disclosed during the time that the respondents acted
for the three
companies inheres in the companies themselves and not in the
applicants. Secondly, that no attorney-client contract
ever came
into effect between the applicants and the respondents and thus no
fiduciary duty ever arose to them. Thirdly, that
the applicants do
not in any event make out a case that any confidential information
personal to them was divulged to the respondents
whilst they
represented the companies. The issue as to standing was raised in
the respondents’ heads of argument and prompted
a last-minute
application to join Rietspruit and Colt, as applicants, and the
liquidators of Avstar, as respondents, in the application.
In the
face of opposition from the respondents, however, the applicants
asked for leave to withdraw that application, which leave
was
granted without opposition.
Locus standi
is established
if a litigant has a direct interest in the subject matter of the
litigation.
45
In an interdict application, this translates into a
direct interest in the relief sought. The applicants seek to prevent
the respondents
from participating in their examination in the s 417
enquiry. The applicants clearly have a direct interest in this
relief.
They do not seek to interdict the continuation of the
enquiry or the involvement of the respondents in examining other
persons.
They do not suggest that any rights or interests of Avstar,
Rietspruit, Colt or the applicants personally will be adversely
affected
by the enquiry itself. The first issue is, therefore, not
properly framed by the applicants as one bearing on the
locus
standi
of the applicants in this
application. The applicants clearly have
locus
standi
.
More properly, the issue as to standing questions
whether the applicants have established the first requirement for
the grant
of a final interdict, viz. a clear right. The right on
which the applicants rely is not clearly formulated by them. I shall
revert
to this later. For present purposes it suffices to say that
they seek to rely upon rights which they say arose from and during
the attorney-client relationships of the respondents with Avstar,
Rietspruit and Colt. It was agreed that this point should be
dealt
with initially. It was also agreed that it can be determined on the
papers.
The factual matrix is largely common ground. It is
accepted that no attorney-client contract was concluded between any
of the
applicants and any of the respondents. The contracts were
with the companies. The contracts also related to disputes in which
the companies, not the applicants personally, were involved. None of
these disputes in any way bore on that between Billiton and
Eurocoal. All communications by Loader and the first applicant were
made to the respondents on behalf of the companies. There
was no
communication between the second and third applicants and any of the
respondents at any time. The attorney-client contracts
in question
are no longer in existence. The companies are not asserting any
right to confidentiality.
The first aspect to the issue as to standing is whether
the applicants have the right to protect information confidential to
the
companies. The short answer is that the applicants do not seek
any such relief. They seek to protect themselves. It is true to
say
that the applicants seem to confuse their own interests and rights
with those of the companies. The application is largely
concerned
with confidential information of the companies or privileged
communication supposedly made by the officers of the companies
on
their behalf. Very little is said of information personal to the
applicants. The applicants are clearly not entitled to rely
on the
protection of information confidential to the companies in question
or privilege which vests in the companies. As I have
said, however,
they do not, in any event, make out a case that any such information
was disclosed to the respondents. Privileged
communication is
mentioned often but nowhere particularised.
Having disposed of the first aspect, the second point
on the issue as to standing must be considered. The respondents say
that
no attorney-client contract ever came into effect between the
applicants and the respondents. The applicants accept this. They
submit, however, that the first applicant was an ‘informal
client’ of the respondents. They confine their submission
in
this regard to the first applicant. They do not say what they mean
by that in terms hitherto understood in South African law.
They do
not say whether they rely on a fiduciary duty and, if so, in what
context this is said to have arisen. It does not seem
to me that
they can claim that a contract came into effect between the
applicants and the respondents. At best for the applicants
it must
mean that, in the peculiar circumstances of the matter, a legal duty
towards them arose under Aquilian principles.
They rely on an article by Goubran
46
for authority for the submission that the first
applicant should be regarded as an informal client. He says that,
where a company
is the client, ‘[i]n rare instances…the
client’s officers will be considered as the client’.
47
Goubran refers to two cases in support of this
proposition. The first is
Macquarie Bank Ltd
v Myer & others; Toycorp Ltd (Receivers & Managers
Appointed) v Myer & others
.
48
Here it was said that:
‘
[I]f a company retains solicitors by means
of instructions given by the then current board, then that current
board might, in certain
circumstances, be able to claim that although
not the client, strictly speaking, it was in “as good as”
a position
as the client for relevant purposes. Counsel for the
defendants was, I think, correct, however, when he submitted that
every case
must depend upon its own particular circumstances and that
it was not desirable to lay down in advance strict criteria
concerning
the circumstances when information from the non client
might attract the status of information from a client.’
49
In the first place, this was not held to be the case on
the facts in
Macquarie
and
is thus
obiter
.
Secondly, it is said that it ‘might’ in ‘certain
circumstances’ be the position. This is doubly speculative
language which, at best, is clearly reliant on the facts of each
case. Thirdly, the situation clearly arises from the English rules
of
equity which may well differ from principles concerning Aquilian
legal duties.
The second case is
Re a Firm of
Solicitors
.
50
In this matter, all three judges accepted, without it
appearing to be contested in that matter, that a company should be
regarded
as ‘informal or quasi-clients’
51
of a firm of solicitors or ‘as good as their
clients and…should be treated accordingly’.
52
The client of a firm of solicitors requested this
company to give information to the firm. This was for an
investigation which
took place over a period of three years at the
instance of the client. The client then sued a particular individual
who instructed
a different department of the firm of solicitors. The
defence raised was closely bound up with the matters being
investigated
and on which the solicitors had been given confidential
information by the company in question which would be of value to
the
defendant. In this regard, Staughton LJ said the following:
‘
[I]n the unusual circumstances of this
case, the duty of the solicitors in relation to that confidential
information is the same
as if it had been provided by a client of the
firm, although those who provided it were not in fact clients but
rather in dispute
with the actual clients at the time…’.
53
The investigation had attracted great public interest
and much discussion in legal circles and in the insurance profession.
The
real issue in the matter was whether the firm could put in place
a sufficient ‘Chinese wall’ or ‘information
barrier’
54
so as to prevent confidential information given to the
members of the firm who had consulted with the ‘informal
clients’
reaching members of the firm dealing with the
litigation from which the solicitors were sought to be barred. The
firm had over
100 partners. The court of appeal upheld the injunction
with two judges holding that there was a possible, but real, risk
that
the information barrier was not sufficient and one holding that
it was sufficient.
Before considering the vexing question of the legal
basis in our law whereby the applicants might be recognised as
informal clients,
I must find, on the facts, that the first
applicant deserves to be treated as an informal client. As
mentioned, he claims that
his interests are co-extensive with those
of the various companies in question but does not say what he means
by this. He says
that nothing was discussed which was personal or
confidential to him. I have dealt above with the vague claims of
intermingling
of the companies which boil down in argument to
disclosure of the financial statements in the Rietspruit and Colt
applications.
The contact of the first applicant with the
respondents differs both in quality and duration from the company in
Re a Firm of Solicitors.
In my view, this comes nowhere near
to the situation where the first applicant can be described as
having been an ‘informal
client’ or ‘as good as’
a client as was the case in that matter. Even assuming, without
deciding, that the
approach suggested by Goubran and applied in
Re
a Firm of Solicitors
should apply in our law, it can do so only
if the facts warrant it. Since the facts in the present case do not
warrant it, whether
or not and, if so, the basis upon which this
might become part of our law need not detain me further. The vexing
question of
the legal principles underlying any such recognition can
therefore stand over.
The third aspect on the issue as to standing is whether
confidential information personal to the applicants was disclosed. I
have
dealt with this above. I have found that, on the papers, none
has been highlighted by the first applicant. I have mentioned that
the only information personal to the second applicant disclosed is
that he controls Rietspruit and that the first applicant desired
that he should be kept out of the application in which Rietspruit
was involved at all costs. This is hardly confidential information
requiring protection. That concerning his directorship is available
from the Companies and Intellectual Property Commission established
under
s 185
of the
Companies Act 71 of 2008
. Since the concern
expressed by the first applicant was limited to keeping him out of
the Rietspruit application, this has no
relevance to the
s 417
enquiry. Neither of these can therefore conceivably prejudice the
second applicant if the respondents examine him in the enquiry.
No
mention is made of any confidential information disclosed about the
third applicant. No case is therefore made out on the
papers that
any confidential information personal to the applicants was
disclosed to the respondents.
This means that, applying the principles of our law as
it stands at present, the issue as to standing must be decided in
favour
of the respondents. Properly construed, it seems to me that
the right asserted by the applicants in support of their claim to a
final interdict is a right not to be examined by the respondents in
the
s 417
enquiry. Within the context of this application on
the present state of our law, proof of that right would require
proof that:
The applicants had a previous attorney-client contract
with the respondents;
Confidential information of the applicants was
imparted or received in confidence as a result of that contract;
That information remains confidential;
That information is relevant to the matter at hand;
and
The interests of the present client of the respondents
are adverse to those of the former clients.
55
None of the first four of these requirements is met. In
the present case, therefore, no legal duty on the part of the
respondents
arose towards the applicants or is present now. As a
result, the applicants have failed to show on the confidential
information
approach that they have the clear right which is required
to found an interdict. In the context of our law as it is at present,
the application must fail on the basis of the issue as to standing
raised by the respondents.
The applicants, however, submit that this is too narrow
an approach. They say that the inherent jurisdiction approach of
Australian
law should apply in this matter. I am invited to develop
the common law accordingly. The applicants submit that, because our
courts have long accepted that they are the ultimate
custos morum
of the legal profession, that development should take place along
similar lines to the inherent jurisdiction approach in Australian
law. The courts should intervene in situations beyond those which
relate only to respecting confidential information acquired
during
the course of an attorney-client or even an informal attorney-client
relationship.
Our law recognises two general bases for developing the
common law. First, our courts have always possessed an inherent
power
to develop the common law.
56
Secondly this has been made explicit in s 173 of
the Constitution which expressly empowers the courts to do so.
57
It has been held that the need to develop the common
law might arise in two instances:
‘
The first would be when a rule of the
common law is inconsistent with a constitutional provision.
Repugnancy of this kind would
compel an adaptation of the common law
to resolve the inconsistency. The second possibility arises even when
a rule of the common
law is not inconsistent with a specific
constitutional provision but may fall short of its spirit, purport
and objects. Then, the
common law must be adapted so that it grows in
harmony with the “objective normative value system” found
in the Constitution.’
58
This can involve the indirect application of fundamental
rights provisions to private law.
59
In addition, the context of confidential information
provides a specific basis for development, as has already been
mentioned. In
Meter Systems
Stegmann J held that our law is in a state of
development as to ‘both the content of the contractual term
relating to confidential
information implied by law in a contract
giving rise to a fiduciary relationship, and also the content of the
legal duty relating
to confidential information imposed on Aquilian
principles’.
60
It is therefore clear that there is no bar to this court
developing the common law in appropriate circumstances. It must be
decided
whether these circumstances are present in this matter.
I do not understand the applicants to say that the law
as it presently stands transgresses any aspect of the Bill of Rights
or
the Constitution as a whole. They do not say that it falls short
of the spirit, purport and objects of the Constitution. They accept
that the procedure under s 417 has been held to pass constitutional
muster.
61
The applicants also do not say whether, on the one
hand, the development should take place by developing the content of
the contractual
term arising from a fiduciary relationship or the
legal duty imposed on Aquilian principles or, on the other hand by
way of the
entirely novel basis of the court interdicting the
respondents in its role as ultimate
custos
morum
of the profession. I cannot conceive
that it could be done along contractual lines for the simple reason
that no contract has
ever been concluded between the applicants and
the respondents. Even if the applicants were to be held to be
‘informal
clients’ this does not give rise to a contract
but may set up a basis for a legal duty in delict. The latter seems
to me
to be the best route for any such development rather than the
inherent jurisdiction approach. Before further debating the issue,
however, it is as well to evaluate whether the facts in this matter
warrant any development at all.
Australian courts invoke the inherent jurisdiction
approach in order to serve ‘the interests of the protection of
the integrity
of the judicial process and the due administration of
justice, including the appearance of justice’ where other
grounds
of jurisdiction do not exist.
62
The applicants say that the participation of the
respondents in examining the applicants is calculated to infringe
the applicants’
right to dignity,
63
privacy,
64
just administrative action
65
and freedom and security of their persons.
66
Since, as I have indicated, they accept that the
procedure of s 417 enquiries passes constitutional muster, they
rely on
the participation of the respondents in this procedure. The
only content given to this is that, as mentioned above, they claim
that the respondents were conflicted when they simultaneously
represented Avstar, Rietspruit and Colt on the one hand and Billiton
on the other. This is because, by the time they consulted the first
applicant, Billiton and the respondents had formulated a
strategy to
liquidate Eurocoal, hold an enquiry under s 417 and thereby
attempt to establish the personal liability of the
first applicant
under s 424 of the Act. Apart from the issue of confidential
information which I have dealt with above,
the submission boils down
to the contention that the respondents are armed with knowledge of
how best to cross-examine the first
applicant. This was dubbed the
‘getting to know you’ factor. It clearly does not apply
to the other two applicants.
The Australian test is whether a reasonably minded
person would consider the judicial process and due administration of
justice
to be threatened if the respondents examine the applicants
at the enquiry. For this to be the case, it seems to me that the
applicants
must show that, if the respondents do so, this will
prejudice the applicants. The only basis of which I am aware on
which the
Australian courts have invoked this jurisdiction relates
to the possibility of confidential information being misused where
no
fiduciary duty concerning that information exists. This was the
case in
Cleveland
where the applicant did not know, and could
not establish, whether confidential information had been disclosed.
Another situation
may be if it is known that confidential
information was disclosed but the applicant is unable to establish
what that information
might be. The facts in the present matter come
nowhere close on either basis.
I was not referred to, nor have I come across, cases
where the inherent jurisdiction approach has been applied because
the legal
representatives have, by consulting witnesses representing
companies who are clients, been put in a position to assess their
likely performance in the witness box. All that is said by the first
applicant in this regard is that the second respondent gained
his
confidence and was placed in a position to make an assessment of his
strengths and weaknesses as a witness. I do not consider
even the
test in Australian law to be satisfied. In other words, a reasonably
minded person in possession of all the relevant
facts would not
consider the judicial process and due administration of justice to
be threatened if the respondents examined
the applicants at the
s 417 enquiry. In my view the Australian courts would not apply
the inherent jurisdiction approach
on the facts of this matter. It
should be borne in mind that Australian law accepts that this
jurisdiction is exceptional and
should be exercised with caution.
67
The need to develop the common law by applying the
inherent jurisdiction approach in Australian law has, therefore, not
been established
in the present matter. In my opinion the interests
of justice are adequately served in this matter if the current state
of our
law is applied. The facts do not warrant consideration of any
such development. I consider the common law, as applied to the
facts, to be in harmony with the ‘objective normative value
system’ found in the Constitution.
68
In other words, even if the inherent jurisdiction
approach formed part of our law, the applicants do not make out a
case for its
application in the present matter. This case is
therefore not an appropriate one in which to consider developing our
law in the
suggested manner. I do not, of course, exclude the
possibility that this may be appropriate in different circumstances
but it
would be unwise to express a positive view on the point.
It was agreed that, if the issue as to standing was not
determined in favour of the applicants, the other issues do not
arise.
There was a dispute as to how to proceed if the issue as to
standing was determined in favour of the applicants. The applicants
submit that there are factual disputes on the other issues which
require resolution by a reference to oral evidence. The respondents
disagree.
In case I am wrong on the first issue it is appropriate
to deal briefly with whether the question of disclosure of
confidential
information requires a reference to oral evidence due
to factual disputes. The established facts have been dealt with
above and
a summary will suffice. In the first place, the
information disclosed was that of the companies. It related to the
three discreet
disputes in which the companies were involved at the
time. Although the first applicant was clearly challenged by the
respondents
to mention the nature (as opposed to the actual content)
of the confidential information personal to him he claims was
disclosed,
he does not do so. In fact, he disavows any such
information beyond his shared interests with the companies he
represented. I
have dealt with the question of personal information
concerning the second and third applicants. The information given to
the
respondents concerning Rietspruit and Colt was made public in
the two applications. This leaves Avstar which is in liquidation
and
does not claim privilege. In any event, as already indicated, no
case is made out for any such information having been disclosed.
Only genuine, material factual disputes should be referred to oral
evidence.
69
I am of the view that there are no genuine, material
factual disputes which render it necessary or desirable to refer the
matter
for oral evidence.
In
National Director of Public
Prosecutions v Zuma
,
70
Harms DP said that where a ‘version consists of
bald or uncreditworthy denials, raises fictitious disputes of fact,
is palpably
implausible, far-fetched or … clearly untenable
that the court is justified in rejecting it merely on the papers.
71
Stated positively, it has been said that a ‘real,
genuine and bona fide dispute of fact can exist only where the court
is
satisfied that the party who purports to raise the dispute has in
his affidavit seriously and unambiguously addressed the fact
said to
be disputed’.
72
I have dealt above with the disputes raised by the
first applicant. He makes a number of bold assertions. When they are
challenged,
he retracts them and often attempts to make others. It
is clear that many of the assertions are reckless, sweeping and
unfounded
in fact. One such example is his claim not only to have
consulted in the Avstar matter, disclosing confidential information
about
Avstar, but to have done so with the respondents. It cannot be
said that he addressed these facts seriously and unambiguously.
Any
remaining disputes raised by him can be characterised as clearly
untenable and can be rejected on the papers. In
Kalil
v Decotex (Pty) Ltd & another
73
the court remarked as follows:
‘
Thus, if on the affidavits the
probabilities are evenly balanced, the Court would be more inclined
to allow the hearing of oral
evidence than if the balance were
against the applicant. And the more the scales are depressed against
the applicant the less likely
the Court would be to exercise the
discretion in his favour. Indeed, I think that only in rare cases
would the Court order the
hearing of oral evidence where the
preponderance of probabilities on the affidavits favoured the
respondent.’
74
In
Bocimar NV v Kotor Overseas
Shipping Ltd
,
75
the court held that these observations in
Kalil
apply to applications generally. It is my view that the
probabilities favour the respondents on the affidavits and no
reference
to oral evidence is appropriate.
The applicants have therefore failed to prove the clear
right required for an interdict. They have also not proved any
injury
actually committed or reasonably apprehended. Two of the
three requisites for the grant of an interdict are therefore not
present.
In the result, the application is dismissed with costs,
including the costs consequent upon the employment of two counsel
where
this was done.
DATE OF HEARING: 28 September 2012
DATE OF JUDGMENT: 15 November 2012
FOR THE APPLICANTS: CJ Hartzenberg SC and LE Combrink,
instructed by JACOBS & PARNERS, locally represented by SCHOERIE &
SEWGOOLAM
FOR THE RESPONDENTS: W Trengove SC and K Hofmeyr,
instructed by NORTON ROSE SOUTH AFRICA, locally represented by LOGIN
ATTORNEYS.
1
The
Code was promulgated in Government Gazette No. 35802 of 18 October
2012. At the time the matter was argued, the Code was in
draft form
and this provision, in identical terms, formed note 12D.
2
President
of the Republic of South Africa & others v South African Rugby
Football Union & others
[1999] ZACC 9
;
1999 (7) BCLR 725
(CC) para 48.
3
Section
174(8) read with paragraph 6(1) of Schedule 2 of the Constitution of
the Republic of South Africa, 1996.
4
Setlogelo
v Setlogelo
1914 AD 221
at 227.
5
[1998] UKHL 52
;
[1999]
2 AC 222
(HL).
6
[1912]
1 Ch 831
,
[1911-13] All ER 813.
7
Bolkiah
at 234B-C.
8
Bolkiah
at 235C-E.
9
Bolkiah
at 237F-G.
10
708
F.2d 1263.
11
Para
9.
12
MacDonald
Estate v Martin
[1990] 3 SCR 1235
at p28.
13
MacDonald
at p36.
14
[2006]
FCA 1404.
15
Per
Young J para 1.
16
Prince
Jefri Bolkiah v KPMG (a firm)
[1998] UKHL 52
;
[1999] 2 AC 222
(HL).
17
Para
32.
18
[2005]
NSWSC 1181.
See also
Cleveland Investment Global Ltd v Peter
Evans
[2010] NSWSC 567
, para 3.
19
Kallinicos
para 76. This test has been accepted throughout Australia. See, eg.,
Cleveland
para 5 which, like
Kallinicos
and
Geelong
,
used the inherent jurisdiction approach as the sole basis for
granting an injunction. In
Yu Xin Li v Tao Wu
[2012] FCA 164
,
the court accepted this test but found that the facts did not
support an injunction on this or the confidential information
basis.
20
Kallinicos
para 76. The references in this paragraph have been omitted.
21
Para
51. In this regard, the fifth bullet point was considered in
Geelong
by Young J in the exercise of his discretion.
22
[2001]
VSCA 248.
23
Para
32.
24
Para
38.
25
[1999]
VSCA 138.
26
Para
23.
27
Para
60.
28
This
was held to be the case by Bergin J in
Asia Pacific
Telecommunications Ltd v Optus Networks Pty Ltd
[2005] NSWSC
550.
29
A
brief synopsis is given in
Ismail-Zai v The State of Western
Australia
[2007] WASCA 150
paras 20-23.
30
Ismail-Zai
para 23.
31
Footnote
18.
32
1993
(1) SA 409
(W).
33
At
426E-F.
34
At
426I.
35
At
426I-J.
36
At
427A-C – emphases in the original.
37
In
Dun & Bradstreet (Pty) Ltd v SA Merchants Combined Credit
Bureau (Cape) (Pty) Ltd
1968 (1) SA 209
(C) at 218E-F.
38
At
427F-G. Stegmann endorses the cautionary note sounded by Van
Dijkhorst J in
Atlas Organic Fertilizers (Pty) Ltd v Pikkewyn
Ghwano (Pty) Ltd & others
1981 (2) SA 173
(T) at 179B-C,
185F-H and 190D-191A where he says that it is important to note that
the English authorities on confidential information
do not deal with
a remedy which is based on Aquilian principles (if the source of the
legal duty is in delict) or which is necessarily
based on an implied
contractual term (if its source is in contract). Stegmann says, in
Meter Systems
at 427G-I, however, that ‘no inherent
conflict of principle or legal policy has yet emerged in this field
between the broad
and ample basis of the
lex Aquilia
and
English notions of equity. Therefore, when English lawyers have
analysed and solved a problem in this field on the lines
of their
rules of equity, it can be of considerable assistance, in analysing
and solving a similar problem on Aquilian principles,
to have regard
to their work. There can be no question of an uncritical or slavish
adoption of English precedents in South Africa.
Nevertheless, the
historical record shows how often it has turned out that a solution
similar to that found by an English Court
is the appropriate
solution according to the principles of our own law in this field.’
39
American
Natural Soda Ash Corp & others v Botswana Ash & others
[2007] 1 CPLR 1(CAC)
at 11;
Monsanto South Africa (Pty) Ltd &
another v Bowman Gillfillan & others
[2011] ZACAC 5
(18
August 2011).
40
At
pg 13.
41
At
p10 of the judgment. I have carefully perused the judgment in
Ansac
but have been unable to find any reference to the three requirements
which were said to have been accepted in that case as the
test.
42
In
my respectful opinion, Stegmann J correctly characterised this as an
implied term rather than a tacit term. In other words,
in the
distinction drawn between these by Corbett JA in
Alfred McAlpine
& Son (Pty) Ltd v Transvaal Provincial Administration
1974
(3) SA 506
(A) at 531D-532G, the term is one ‘imposed by the
law from without’ rather than a tacit term which is an
‘unexpressed
provision of the contract which derives from the
common intention of the parties’. There may, of course, be an
express
or tacit limitation of the term.
43
At
426E–F.
44
There
is, as far as I am aware, no precedent recognising the existence of
a legal duty in delict arising from attorney-client
relationships.
Hefer JA, in
Minister of Law & Order v Kadir
[1994] ZASCA 138
;
1995 (1) SA
303
(A) at 318D-J, held that the approach to the recognition of a
legal duty in a novel area is as follows: ‘As the judgments
in
the cases referred to earlier demonstrate, conclusions as to the
existence of a legal duty in cases for which there is no
precedent
entail policy decisions and value judgments which “shape and,
at times, refashion the common law [and] must reflect
the wishes,
often unspoken, and the perceptions, often dimly discerned, of the
people” (
per
M M Corbett in a lecture reported
sub
nom
'Aspects of the Role of Policy in the Evolution of the
Common Law' in
(1987)
SALJ
104
at 67). What is in effect
required is that, not merely the interests of the parties
inter
se
, but also the conflicting interests of the community, be
carefully weighed and that a balance be struck in accordance with
what
the Court conceives to be society's notions of what justice
demands. (
Corbett (op cit
at 68); J C van der Walt 'Duty of
care: Tendense in die Suid-Afrikaanse en Engelse regspraak' 1993
(56)
THRHR
at 563-4.)’
45
Cabinet
of the Transitional Government for the Territory of South West
Africa v Eins
1988 (3) SA 369
(A) at 388B-I.
46
S
Goubran: ‘Conflicts of Duty: The Perennial Lawyers’ Tale
– A Comparative Study of the Law in England and Australia’
(2006) 30(1) Melbourne University Law Review 88.
47
Goubran
at p97.
48
[1994]
1 VR 350.
49
Judgment
of Jd Phillips J at p10 of the judgment.
50
[1992]
1 QB 959 (CA).
51
Per
Parker LJ at 970E-F.
52
Per
Sir David Croom-Johnson at 976E-F.
53
At
971G-H.
54
The
latter term was preferred by Staughton LJ at 975C-D.
55
These
requirements apply the principles derived from
Meter Systems
,
Bolkiah
and
Monsanto
.
56
Linvestment
CC v Hammersley & another
[2008] ZASCA 1
;
2008 (3) SA 283
(SCA) para 25.
57
In
Bogaards v The State
[2012]
ZACC 23
(CCT 120/11) 28 September 2012 para 47, the Constitutional
Court recently summarised the approach to be taken as follows:
‘Section
8(1) of the Constitution provides that the Bill of
Rights applies to
all law
in
South Africa, which includes the common law. It binds all branches
of the State, including the judiciary. There is no law or
conduct
that is exempt from being tested against the Constitution. Any law
that is inconsistent with a right in the Bill of Rights
must be
declared invalid. Hence, all conduct of the judiciary, including the
manner in which the common law is interpreted by
judges, must be
harmonious with the Constitution. Section 173 of the Constitution
grants inherent power to the Constitutional
Court, the Supreme Court
of Appeal and the High Courts “to develop the common law,
taking into account the interests of
justice.” Taken together,
these provisions oblige the courts to develop the common law where
it is inconsistent with the
Constitution’ (references
omitted).
58
S
v Thebus & another
[2003] ZACC 12
;
2003 (6) SA 505
(CC) para 28.
59
Du
Plessis & others v De Klerk
& another
[1996] ZACC 10
;
1996 (3) SA 850
(CC) para 60. That matter was decided under the 1993 Constitution.
The interpretation section in the Constitution, 1996, is to
similar
effect. Section 39(2) provides: ‘When interpreting any
legislation, and when developing the common law or customary
law,
every court, tribunal or forum must promote the spirit, purport and
objects of the Bill of Rights.’
60
At
427A-B.
61
Ferreira
v Levin NO & others; Vryenhoek & others v Powell NO &
others
1996 (1) SA 984
(CC).
62
Kallinicos
footnote 18 para 76, second bullet point in the quotation in para 30
above.
63
Section
10 of the Constitution.
64
Section
14 of the Constitution.
65
Section
33 of the Constitution.
66
Section
12 of the Constitution.
67
Kallinicos
,
footnote 18, para 76, third bullet point in the quotation in para 30
above.
68
Thebus
,
footnote 58, para 28.
69
Room
Hire Co (Pty) Ltd v Jeppe Street Mansions (Pty) Ltd
1949 (3) SA
1155
(T) at 1162, 1165.
70
[2009] ZASCA 1
;
2009
(2) SA 277
(SCA).
71
Zuma
para 26.
72
Per
Heher JA in
Wightman t/a JW Construction v Headfour (Pty) Ltd &
another
[2008] ZASCA 6
;
2008 (3) SA 371
(SCA) para 13.
73
1988
(1) SA 943
(A).
74
At
979H-I.
75
[1994] ZASCA 5
;
1994
(2) SA 563
(A) at 587F.