About SAFLII
Databases
Search
Terms of Use
RSS Feeds
South Africa: Kwazulu-Natal High Court, Pietermaritzburg
SAFLII
>>
Databases
>>
South Africa: Kwazulu-Natal High Court, Pietermaritzburg
>>
2012
>>
[2012] ZAKZPHC 79
|
|
UAP Agrochemical KZN (Pty) Ltd and Another v NEFIC Estates (Pty) Ltd (AR515/11) [2012] ZAKZPHC 79 (20 November 2012)
IN
THE KWAZULU-NATAL HIGH COURT, REPUBLIC OF SOUTH AFRICA
PIETERMARITZBURG
CASE
NO.: AR515/11
In
the matter between
UAP
AGROCHEMICALS KZN (PTY) LTD
............................................
FIRST
APPELLANT
PHILAGRO
SOUTH AFRICA (PTY) LTD
.........................................
SECOND
APPELLANT
And
NEFIC
ESTATES (PTY) LTD
.........................................................................
RESPONDENT
JUDGMENT
MOKGOHLOA
J
[1]
The respondents brought an application to compel the appellants to
discover documents claimed to be privileged. The court
a
quo
found in favour of the
respondent and ordered the appellants to pay the respondent's costs
on the scale as between attorney and
own client. The appellants
appeal against the whole judgement and costs order, leave having been
granted by the Supreme Court of
Appeal,
[2]
The respondents, Nkwaleni farmers, instituted action against the
appellants for damages sustained to their citrus trees after
they had
treated the fruit with Meothrin, an insecticide supplied by the first
appellant and manufactured by the second appellant.
The appellants
appointed experts to investigate the cause of the damage but the
appellants refused to make the expert reports available
to the
farmers.
[3]
The appellants defended the action and delivered their discovery
affidavits, The discovery affidavits listed each document in
respect
of which the appellants claimed privilege which included the expert
reports. The respondent challenged the appellants'
claim of privilege
and brought an application to compel the production of certain of the
privileged documents. The application
was made on two grounds;
(a)
that the documents were not privileged; an
(b)
the parties had concluded an agreement that expert reports would be
made available to the respondent for inspection.
[4]
The court
a quo
found in favour of the respondent on the first issue and did not deal
with the second.
[5]
In this appeal, the respondent argues that the appeal must fail
because:
(a)
the order ts not appealable;
(b)
the documents are not privileged;
(c)
the denial of the agreement can be rejected on the papers,
Appealability
[6]
Section 20(1) of the Supreme Court Act 59 of 1959 provides that an
appeal will lie only against a judgment or order.
[7]
In
Zweni v Minister of Law and Order
1993 (1) SA 523
(A) at 5321 - 533A Harms
AJA
(as he then was) defined 'judgment
or order' as follows:
*A
“judgment or order" is a decision which, as a general
principle, has three attributes, first, the decision be final
in
effect and not susceptible of alteration by the Court of first
instance: second, It must be definitive of the rights of the
parties;
and third, it must have the effect of disposing of at least a
substantial portion of the claim in the main proceedings.*
[8]
In
National Director of Public
Protections v King
2010 (3) All SA
304
{SCA) the court dealt with the question of appealability where a
party seeks to attack on appeal against an order made before the
proceedings have run their full course. Nugent J A said the following
at 3211-322E:
‘
[50]
There will be few orders that significantly affect the rights of the
parties concerned that will not be susceptible to correction
by a
court of appeal. In
Liberty
Life of Africa Ltd v Niselow
(in
another court), which was cited with approval by this Court in
Beinash
v Wixley
[1997] ZASCA 32
;
1997
(3) SA 721
(SCA), I observed that when the question arises whether an
order is appealable what is most often being asked is not whether the
order is capable of being corrected, but rather whether it should be
corrected in isolation and before the proceedings have run
their full
course, I said that two competing principles came into play when that
question is asked, On the one hand, justice would
seem to require
that every decision of a lower court should be capable not only of
being corrected but of being corrected forthwith
and before it has
any consequences, while on the other hand the delay and inconvenience
that might result if every decision is
subject to appeal as and when
it is made might itself defeat the attainment of justice.
[51]
In this case it was said on behalf of Mr King that the order is not
appealable because it is interlocutory. Whether that is
its proper
classification does not seem to me to be material. I pointed out
Liberty Life (supra)
that while the classification of the order might at one time have
been considered to be determinative of whether it is susceptible
to
an appeal the approach that has been taken by the courts in more
recent times has been increasingly flexible and pragmatic.
It has
been directed more to doing what is appropriate in the particular
circumstances than to elevating the distinction between
orders that
are appealable and those that are not to one of principle..,/
[9]
The question whether an order dismissing an application to compel
further discovery is appealable, was argued before Patel J
in
Santam
Ltd and Others v Segal
2010 (2) SA
160
(N). The learned judge stated the following at para 6:
‘
[6]
The gravamen of this appeal is whether the dismissal by Choudree AJ
of the application to compel further discovery constitutes
a decision
that is appealable, Before I advert to this point it is salutary to
restate the purpose of discovery. In
Air
Canada v Secretary of State for Trade
[1993]
2 AC 394
at 445-446, it was held:
"Discovery
is one of the few exceptions to the adversarial character of our
legal process. It assists parties and the court
to discover the
truth, By so doing, it not only helps towards a just determination;
it also saves costs, A party who discovers
timeously a document fatal
to his case is assisted as effectively, although less to his liking,
as one who discovers the winning
card; he can save himself and others
the heavy costs of litigation.’"
[10]
The honourable judge continued and referred to his other judgment
delivered in
Maccsand CO v Macassar
Land Claims Committee and Others
[2005]
All SA 469
(SCA) where he stated:
'”[8]
Prior to its amendment by section 7 of the Appeals Amendment Act 105
of 1982, section 20(2)
{bj
of the Supreme Court Act 59 of 1959 ("the Act") provided
that an appeal could be brought against an interlocutory order
with
leave of the court granting It. A court's decision whether to grant
leave or not was premised on the distinction between simple
interlocutory orders, which were appealable with leave, and
interlocutory orders which had a final and definite effect on the
main action which were appealable without leave. ,. Section 20(1) of
the amended Act creates a right of appeal from a 'judgment
or order*
only."’
The
court continued and stated;
“
[12]
It is settled law that in determining whether a decision is
appealable not merely the form of the order must be considered
but
also, and predominantly, its affect."
[11
] The appellants argued that once the documents in respect of which
they claim privilege have been handed over to the respondent,
the
contents thereof will become known to the respondent and there is
nothing that can be done to extract that knowledge from the
mind of
the respondent. 1 agree. Consequently, the order to hand over
privileged document has a final effect It cannot be altered
by the
judge granting it or another judge, and it is therefore appealable.
Privilege
[12]
For privilege to operate the information must have been obtained for
the purpose of obtaining professional legal advice and
must be
obtained for the purpose of obtaining that advice with reference to
actually pending or contemplated litigation. (
Euroshipping
Corporation of Monrovia v Minister of Agricultural Economics and
marketing and Others
1979 (1) SA 637
(CPD))
[13]
In
United Tobacco Companies (South)
Ltd v International Tobacco Co (SA) Ltd
1953 (1) SA 66
(T) at 67E privilege was claimed for the reports on
the ground that they had been made 'in anticipation and in
contemplation of
the litigation now pending’ and as evidence
and as information as to how evidence could be obtained for the use
of the defendant's
legal advisers to enable them to conduct the
defendant’s defence to the action and to advise the defendant
thereon, The court
accepted that litigation was contemplated and that
the reports were made for submission to the company's legal advisers,
but rejected
the claim of privilege on the ground that the privilege
does not apply to a communication between a principal and his agent
in
the matter of the agency giving information on the facts and
circumstances of the very transaction which is the subject matter of
the litigation. The court held that a likelihood of litigation is
required not a mere possibility.
[14]
In
General Accident, Fire and Life
Assurance Corporation Ltd v Goldberg
1912 TDP 494, Mason J insisted that privilege could attach to
statements from agents only if litigation was ’likely or
probable'.
[15]
The appellants submitted in their answering affidavit that they
appointed their attorney of record on 28 May 2004. According
to the
appellants, this was the time they had reasonably contemplated the
likelihood of litigation. The respondent does not dispute
this.
Therefore, all documents created after the appointment of the
attorney (i.e, 28 May 2004) are privileged as they have been
created
as part of the exercise to gather information so that the attorney
could provide legal advice. The order to compel the
appellants to
discover such documents is therefore wrong. Furthermore, the
respondent's attorney demanded payment of the sum of
R3 490 918 from
the appellants in a letter dated 22 September 2004. This demonstrates
that litigation was contemplated and the
respondent did not in their
application and at the hearing of the application request production
of the documents created after
22 September 2004. This is evident
from the respondent's founding affidavit when it stated that any
reports, investigations and
results received prior to September 2004
cannot be privileged, This means the respondent had accepted that
documents created after
September 2004 are privileged.
[16]
What remains are the documents created during the period 12 January
2004 to 17 May 2004 i.e. items 1 - 18 in the Second Schedule
of the
appellants’ discovery affidavit. In the answering affidavit,
the appellants submitted that:
[16.1]
The second appellant was initially questioned about the efficacy of
Meothrin during October 2003. The initial enquiry was
followed up by
a further telephone call regarding possible resistance to thrips.
[16.2.]
On 1 December 2003 the second appellant was requested to visit the
Nkwalini Valley because of a problem regarding non-payment
of the
first appellant’s account.
[16.3]
On 2 December 2003 the second appellant's representative visited the
Nkwalini Valley and visited three farms including the
respondent's
farm, During the second appellant’s visit to the Nkwalini
Valley 'it became apparent.,,that the problem with
thrips was far
larger than Symons had until then explained. On inspecting the
orchards where a thrips problem was present I realised
that there was
going to be a substantial culling of fruit,' This is not challenged
by the respondent.
[16.4]
The observations made during the 2 December 2003 visit to the
Nkwalini Valley were conveyed to the second appellant's managing
director on 3 December 2003, The second appellant’s managing
director expressed the view that ‘there was a very serious
problem on the horizon' and that 'he believed there was a very real
likelihood of the farmers submitting claims to the second defendant
for the damage to their citrus crops arid that they would probably
litigate in regard to those claims.’
[17]
The respondent argued that the experts were appointed before the
insurer accepted the appointment. According to the respondent,
the
insurer cannot claim privilege in respect of documents obtained
before it had given an indication that the claims might fall
under
the policies.
[18]
The appellants submitted on the other hand that the view held by the
second appellant’s managing director was not a view
expressed
in a vacuum. According to them, this was based on the nature and
extent of the damage to the crops, which damage was
extensive and
irreversible; the fact that the Nkwalini Valley was devoted to
growing export citrus; and the probability that the
claims would
probably be very significant and could not be resolved on a
commercial basis without regard to liability.
[19]
On 3 December 2003 the second appellant reported the events to its
insurance brokers who, in turn, reported the events to the
second
appellant's insurers on 8 December 2003, The underwriting manager of
the insurer allocated the claim to its claims’
manager. On 11
December 2003 the insurers instructed a specialist firm of insurance
loss adjusters. According to the appellants,
the specialist insurance
loss adjusters were instructed so that the matter could be assessed
and legal advice sought. The claims'
manager reported the matter to
the board of directors of the appellants' insurers.
[20]
It is clear that by 1 December 2003 the damage causing event had
already occurred. It had been suggested that the second appellant's
product was the cause of the damage, and some of the farmers had
identified a possible external manifestation of the problem with
the
second appellant's product, that there were colour differences
between the batches of the product. I am satisfied on the facts
that
objectively, there were clear indications of the likelihood of
litigation since December 2003. The insurance company assessed
the
risk of litigation and concluded that it was likely. Therefore, the
reports were commissioned for submission to the appellants'
attorneys
to advise and assist on the contemplated litigation,
Agreement
[21]
In its founding affidavit the respondent alleged that during January
2004 the Nkwalini farmers met the appellants at Nkwalini
farmers’
Club. The second appellant was represented by John Mansfield and Henk
van Der Westhuizen, Mansfield suggested that
experts be appointed to
investigate the issue. According to the respondent, it is at this
meeting that an oral agreement was concluded.
The terms of which,
were that the appellants would appoint experts to investigate the
nature and extent of the losses suffered
by the Nkwalini farmers and
that the investigation reports and results would be made available to
the farmers.
[22]
The appellants deny the conclusion of the oral agreement alleged by
the respondent, In the answering affidavit, the appellants
stated
that the only visit to the Nkwalini reserve where Mansfield and van
Der Westhuizen were present together was on 11 March
2004 and it was
at Fieurdale farmstall, Eshowe, On 18 March 2004 they visited various
farmers. According to the appellants, the
respondent had confused
dates. The respondent accepted in the replying affidavit that it had
confused the dates. It then stated
that the alleged agreement was
concluded on 6 April 2004.
[23]
I find it necessary at this stage to refer to the correspondence
exchanged between the parties before and after the meeting
of 6 April
2004.
[24]
On 2 April 2004 the second appellant sent the following letter to the
chairman of the Nkwalini Citrus Grower’s Association;
‘
Having
considered all the information at hand, we regret we must advise that
in our opinion Meothrin was not the cause of the damage
suffered by
certain members of your Association.*
‘
There
is one aspect that we cannot deal with at present. We do not expect
there is resistance by Nkwalini citrus thrips to Meothrin.
This
opinion is also held by John Symans and others to whom we spoke. Our
attempts to devise a way of testing Nkwalini thrips for
resistance
with the A.R.C, have been unsuccessful. There are other alternative
methods now under consideration.
We
propose the appointment of an experienced independent citrus
consultant to investigate your area and inspect the problems, To
this
end we have taken the liberty of approaching such consultant and
trust this will meet with our approval. ’
[25]
Shortly after the 6 April 2004 meeting, the respondent sent a letter
signed by van Rooyen, the deponent to the respondent’s
founding
and replying affidavit. The letter states;
‘
My
comments were as foilows:-
1.
Product was tested by SABS and proven to be on spec, although only
active ingredient was tested for,
2.
Nkwalini definitely
did not
have drought in 2004.
3.
How did John Mansfield determine that the thrips levels were higher
than previous years? I believe it is impossible to determine
the year
on year thrips level factually,
4.
Nefic Estate's cleanest orchards are surrounded by natural
vegetation.
5.
Nefic Estate* only irrigates with under tree sprinklers and there is
a huge variation in the level of thrips damage throughout
the
orchards. John Mansfield’s view on this aspect is absolute
nonsense,
6.
Meothrin is marketed for its knockdown ability and length of thrip
control, normally a minimum of 6 Weeks. Nefic and other Estates
found
reinfestation
1 day after spraying Meothrin.
In
general this presentation was absolute nonsense and once again the
Chemical Company responsible is trying to push the blame back
to the
farmers and once again the farmers must carry the cost of the product
cost of the corrective sprays and the cost of the
damage to the
fruit.'
[26]
On 7 April 2004 the second appellant sent another letter to the
chairman of the Grower’s Association. The letter recorded
the
following:
’
We
wish to place on record our appreciation for the opportunity you gave
writer to state our case” on the captioned subject
last week...
We
are in favour (as proposed in our letter dated 5 April) of calling in
an independent citrus consultant. It was suggested that
CRI (Shaun
Moore) be approached; we are just not sure of the position that CRI
in such matters. We will request Mr Bruwer and Mr
Chris Kellerman to
visit the affected farms.’
[27]
Symons, on behalf of the first appellant addressed a letter on 19 May
2004 to van Rooyen:
M
have received correspondence from Brian Kerrin of Beyers and Kerrin
C.C. Insurance Loss Adjusters as a follow up to his and Messrs
Kellerman and Bruwer's visit to Nkwalini concerning the Meothrin
non-performance issue.
He
advised me that investigations into the various complaints are still
underway by Philagro and others and that we will be advised
of the
outcome of the investigations in due course. In the meanwhile and
irrespective of the cause or responsibility, it is important
that an
exercise be conducted to ascertain the extent of the damage to each
and every orchard.'
[28]
On 22 September 2004 the respondent's attorney addressed a letter of
demand to the first appellant.
‘
Our
instructions are that none of our clients’ claims or figures
have been disputed by yourselves to date but no proposals
have been
put forward by yourselves as to a possible resolution to the problem
caused by the non performance of Meothrin'.
[29]
On 28 September 2004 the Nkwalini Citrus Grower’s Association
sent a letter to the first appellant. The letter reads
thus;
'We
are writing this letter on behalf of our growers in order to inform
UAP Agrochemicals K2N, and the suppliers of the chemical
Meothrin,
namely Philagro SA (Pty) Ltd, that the following farms and members of
the NCGA intend laying damages claims in the near
future. These
claims are as a result of citrus Thrips damage suffered due to the
non-performance of Meothrin in the Nkwalini Valley.
The
earliest reported incident of the non-performance of Meothrin,
according to our records, was November 2003 followed by a visit
by Mr
Henk Van Der Westhutzen of Philagro SA (Pty) Ltd in December 2003.
To
date we have had numerous visits by and correspondence with
representatives of Philagro SA, Henk Van Der Westhuizen and John
Mansfield, citrus consultants and Mr Brian Kerrin of the insurance
loss adjusters’
[30]
It is interesting to note that in all these letters there is no
mention of an agreement that the experts report would be provided
nor
is there a request for production of such report, The first request
for production of the report was made on 9 June 2005 by
the
respondent’s attorneys. However, even though there was a
request for production of the report, there was no reference
to an
agreement that the report would be provided.
[31]
Another disturbing feature in the respondent's version is that the
terms of the alleged alleged agreement differ from farmer
to farmer.
Its version is that the investigation reports and results would be
made available to the farmers once the investigations
had been
completed. The following farmers, who deposed to the supporting
replying affidavits, stated their version of the agreement
as
follows:
Gerrit
Zaayman stated:
'I
attended the meeting at the Nkwalini Farmers* Hall ! recall that,
after various suggestions, Mansfield insisted that Philagro/UAP
would
appoint assessors to Investigate the cause of the problem at no cost
to the growers, We insisted that we required insight
into the results
of these assessments and he confirmed that they would be disclosed to
us.’
Sean
McNally on the other hand stated:
'I
attended the meeting at the Nkwalini Farmers' Hall. 1 remember that
Wally Lathan suggested engagement of representatives from
CRI to do
an investigation into the nature and extent of the citrus/thrips
problem. Mansfield disagreed and stated that they would
appoint their
own assessors at no cost to the growers and that, on completion of
the assessment, the growers would have access
to the assessment
documents.'
Timothy
Wafer stated that Mansfield said that they (the farmers) would be
kept fully informed of the result of the investigation.
[32]
It is clear that there is no consistency amongst the farmers as to
what Was agreed at the meeting on 6 April 2004. Furthermore,
Van
Rooyen, the deponent to the respondent's founding affidavit, did not
know when the alleged agreement was reached. He was forced
to concede
his error after having sight of the version put up by the appellants,
it is therefore significant to note that the correspondence
exchanged
before and after the meeting of 6 April 2004, and the version put up
by various farmers
(supra),
do not support the respondent’s allegation that there was an
agreement that expert reports would be made available for inspection
to the respondent.
[33]
Against this background of inconsistent versions of the farmers, Mr
Marais, for the respondent, argued that it is common cause
that a
meeting took place and that certain disclosures were made at that
meeting. According to Mr Marais, the nature, date, place
and what was
discussed and agreed at the meeting can be resolved after the hearing
of oral evidence. I do not agree. A party who
alleges that there was
a meeting and that certain disclosures were made at that meeting,
must state the date and place of that
meeting and also what was
agreed in that meeting, On the other hand, the appellants deny the
existence of the agreement. Their
version is supported by
correspondence exchanged between the parties before and after the
date of the meeting of 6 April 2004.
On the
Plascon
Evans
rule, I find that the version
of the appellants is more probable than that of the respondent. In my
view, the respondent failed
to show that there was an agreement
between the parties that the expert reports will be made available
for inspection.
ORDER
1.
The appeal is upheld with costs, consequent upon the employment of
two counsel.
2.
The order granted by the court a quo is set aside and substituted by
the following;
'The
application is dismissed with costs’.
MOKGOHLOA J
I
agree
K PILLAY J
I
agree
KRUGER J
I
agree and it is so ordered
COUNSEL
Counsel
for the Appellants: Adv BW Burman SC.
I
Adv
IP Green
Instructing
Attorneys: Webber Wentzel
c/o
Stowel & Co
295
Pietermaritz Street
Pietermaritzburg
Ref;
PL Firman/ja/WEB41/0004
Counsel
for the Respondent: Adv J Marais SC
Instructing
Attorneys: Truter James De Ridder Inc
c/o
Mason Inc
3rd
Floor, Fedsure House
251
Church Street
Pietermaritzburg
Ref;
Mr M Du Plessis
Date
of hearing: 3 August 2012
Date
of Judgment: 20 November 2012