Hall v Welz and Others (4960/94) [1996] ZAWCHC 3 (27 September 1996)

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[1996] ZAWCHC 3
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Hall v Welz and Others (4960/94) [1996] ZAWCHC 3 (27 September 1996)

IN
THE SUPREME COURT OF SOUTH AFRICA
(CAPE
OF GOOD HOPE PROVINCIAL DIVISION)
CASE
NO: 4960/94
In
the matter between:
DR
ROBERT MILTON HALL
Applicant
and
MARTIN
WELZ
First
Respondent
CHAUCER
PUBLICATIONS CC
Second
Respondent
ARGUS
HOLDINGS LIMITED
Third
Respondent
ANDREW
PATTERSON DRYSDALE
Fourth
Respondent
JONATHAN
CECIL BESTRICK HOBDAY
Fifth
Respondent
ALLIED
MEDIA DISTRIBUTORS
Sixth
Respondent
JEAN
LE MAY
Seventh
Respondent
JUDGMENT
DELIVERED ON 27 SEPTEMBER 1996
CONRADIE,
J:
Issue
no. 7 of a magazine called Noseweek carried an article written by
first defendant, the editor of the magazine, about the plaintiff

Robert Hall, and his dealings with the South African Reserve Bank.
The
plaintiff alleges that the article defamed and humiliated him. He
claims from the first and from the second defendant, the publisher
of
the magazine, R500 000 in damages for defamation and R50 000 for
iniuria.
I shall henceforth also refer to the first and second
defendants as the Noseweek defendants. They were at the start of the
trial
represented by
Mr
Bertelsmann
. When the
trial resumed at the beginning of the third term, the first defendant
represented himself whilst the second defendant
was represented by
Mr
Taylor
assisted by
Mr
Joubert
. After some
days
Mr
Taylor
disappeared and did not
return.
Mr
Joubert
alone then represented the
second defendant. The article complained of I shall call for short
the Noseweek article.
There
were three broad areas of criticism leveled against the plaintiff.
1.
Plaintiff’s veracity and probity –
The  Noseweek
defendants  -  so  the  plaintiff  alleged
-  said  or insinuated
about him that he-
(a)
has ‘a great way with the truth’ carrying the implication

that he is a liar;
(b)
misrepresented his residential status to the Reserve Bank;
(c)
improperly influenced Reserve Bank officials to overlook exchange

control transgressions and had an improper relationship with such
officials;
(d)
lied to the Receiver of Revenue about his assets and liabilities;
(e)
lied to the Receiver of Revenue about R693 000 which he pretended
had
accrued to him as a capital gain;
(f)
lied to the Receiver about the accounting requirements
of a foreign
corporation;
(g)
lied about knowing a Mr Grimmig;
(h)
lied about his departure from the United States of America, and
(i)
forged someone’s signature to a document.
2
Plaintiff’s exchange control manipulations
The
next broad category of statements relates to the plaintiff’s
alleged contravention of exchange control regulations. The

contraventions are said to have been repeated and extremely
profitable. They involved transactions in financial rands, or
‘fiddling
the finrand’ as first defendant put it in the
Noseweek article.
3.
Plaintiff as a tax and debt defaulter
The
third area of criticism pertains to the plaintiff’s alleged
failure to meet his financial obligations. It was alleged
that the
plaintiff failed to honour his obligations to a private citizen, Mr
Grimmig, and to the public purse. The plaintiff was
alleged to have
failed to repay money to Mr Grimmig under circumstances which
amounted to him evading his obligation.
The
criticism of the plaintiff’s tax defalcations falls into two
parts -
1.
(a)       his  failure  to
pay  tax
to  which  he  had  been
assessed in the United States of America;
(b)
his departure from the United States in order to
avoid paying such taxes;
2.
his failure  to  declare  income  to  the
South  African
fiscus
and his
consequent evasion of income tax.
Specific
allegations in these categories overlap. For example, 1(d) (e) (0 and
(h) might equally well have been included in the
tax default
category.
The Iniuria claim
The
plaintiff alleged that he had been humiliated and degraded by certain
statements in the Noseweek article which were made wrongfully
and
with the intent to injure him.
The
offending statements concerning the plaintiff were -
(a)
‘He would even have you believe self-indulgence is an
admirable
form of patriotism’
(b)
“... is it the fact that he appears to have made a successful

life-time career of self- promotion as a Nobel Prize nominee (failed
1972)”
(c)
“By his own account, Robert Hall is a mediocre dentist
who,
thirty years ago in America, struck it lucky and has never had to
work again...”
The
claim is one for R50 000.00.
On
the morning of 22 August 1996 when the trial had been running for
many days, the plaintiff moved amendments to his pleadings

accompanied by a tender of wasted costs.
The
main effect of the amendments was to remove from the area of
controversy those statements appertaining to the plaintiff’s

tax affairs i.e. his failure to pay tax and misrepresentations made
to the tax authorities. The plaintiff no longer complains of
the
statements or innuendos that he has –
(a)
misrepresented his. income or asset position to the Revenue;
(b)
never declared an income or paid tax in South Africa or the United

States of America.
The plaintiff also
abandoned his complaint about the Noseweek comment that he ‘has
a great way with the truth’.
The
Noseweek defendants deny that the article is defamatory of the
plaintiff. The defence is unsustainable and they did not persist
with
it. In the alternative, they plead that the facts are substantially
true and correct and were published in the public interest.
There are
further alternative pleas to which I need not devote attention. A
special plea was abandoned at the beginning of the
trial.
The
plaintiff also sues Argus Holdings Ltd. the owner of the Week-End
Argus (third defendant), its editor-in-chief, Andrew Drysdale
(fourth
defendant), its editor Jonathan Hobday (fifth defendant), the printer
and distributor of the newspaper, Allied Media Distributors
(Pty) Ltd
(sixth defendant) and the journalist who wrote an article in the 25
April 1994 edition of the Week-End Argus (seventh
defendant). He
alleges that this article, which I shall call the Argus article, also
defamed him. I shall henceforth refer to the
third to seventh
defendants as “the Argus defendants”. They did not all
share the same representation. The third to
sixth defendants were
represented by Mr
Kirk
Cohen
. Mr
Butler
appeared on behalf of the seventh defendant, the author of the
article. Quite late in the proceedings an amendment was moved by Mr
Butler
withdrawing  an  admission  that
the  seventh  defendant  had  been
responsible for the
headings and captions of the Argus article as
well as the body thereof. I allowed the amendment over the
protestations of the plaintiff’s
counsel who thought he saw a
defendant falling from his grasp.
There
were originally, in substance, three claims against the Argus
defendants. The first claim was for Rim damages. It was said
to have
arisen from the Argus defendants making common cause with the
Noseweek defendants, and adopting their article as their
own. In the
alternative the plaintiff alleged that the Argus article drew the
attention of its readers to the Noseweek article,
thereby increasing
its publication. For this, in the alternative, the plaintiff also
claimed Rim. The third claim is for Rim damages
arising from the
publication of defamatory matter of the Argus defendants’ own
making. A further claim of R50 000 for humiliation
and degradation
brought the total against the third to seventh defendants to R2 050
000.
The
Argus defendants admit that the Argus article, excluding captions and
headings, was written by the seventh defendant and that
it was
edited, published and distributed by the fourth, fifth and sixth
defendants. They deny that the Argus article was defamatory.
As in
the case of the Noseweek defendants, the defence was not pressed.
Again, like the Noseweek defendants, the Argus defendants
plead that
the words in the Argus article were substantially true and that
publication was in the public interest.
The
Argus defendants brought an application for absolution at the close
of the plaintiff’s case.
I
granted the application in part. The effect of the judgment was that
the Argus defendants were absolved on the causes of action
contained
in paragraphs 20 and 21 of the particulars of claim. The Argus
defendants’ point about the averments in paragraph
20 was that
the plaintiff had presented no evidence of a conspiracy or anything
which could amount to the making of common cause
between the Noseweek
and Argus defendants. The objection to paragraph 21 was really more
in the nature of an exception. The point
was that one cannot, whether
deliberately or negligently, incur liability for defamation merely by
drawing attention to defamatory
words where that does not amount to a
republication of the defamation. While the averments in paragraph 21
could have been struck
out if exception had been taken to them, those
in paragraph 20 could not. Nor could a plea of misjoinder have
succeeded since the
Argus and Noseweek defendants were alleged to be
joint wrongdoers. They were said to have conspired to defame the
plaintiff. The
misjoinder of the Noseweek and Argus defendants has
cost implications. I return to it under that rubric.
The
statements in the Argus article originally said to be defamatory of
the plaintiff, may be summarised as follows –
The plaintiff –
(a)
is a criminal or suspected criminal; a fugitive from justice
or is
wanted by the authorities.
(b)
has frequently transgressed Laws relating to exchange control and
has
made illegal profits by doing so.
(c)
is not creditworthy.
(d)
is dishonest and not law abiding.
R50
000 was claimed for
iniuria
on the ground that the
Argus defendants had implied that the plaintiff was a hypocrite.
By
way of the amendments referred to earlier the plaintiff withdrew all
his complaints against the Argus defendants save that they
published
words meaning, or carrying the implication, that he was a criminal or
suspected criminal or a fugitive from justice or
was wanted by the
authorities. The
iniuria
claim was also withdrawn.
I
turn now to the first major remaining issue between parties.
Deceiving the Reserve
Bank
The
passages in the Noseweek article bearing upon the plaintiff’s
resident status for exchange control purposes read as follows
–
“
On 7 January 1981
Dr Hall formally applied for, and was granted, permanent resident
status in South Africa. His passport was so
endorsed.
Not long afterwards - he
claims it was on the advice of the then foreign exchange manager at
Barclays Bank, Mr Ticky Gill, who was
a guest in his home at the time
- Dr Hall wrote a letter to the Reserve Bank in which he solemnly
lied that he was not permanently
resident in South Africa. Barclays
Foreign Exchange Division formally submitted the letter to the
Reserve bank on Dr Hall’s
behalf.
Mr Gill has, of course,
since become a leading light at the Reserve Bank. Ever since then,
until today, Dr Hall has been treated
by the Reserve Bank as a
nonresident, and been allowed to do repeated finrand deals which, by
law, are denied to permanent residents.”
“
None of the
Reserve Bank officials who have been entertained by Dr Hall at his
home in the Cape have asked to see his passport to
determine his
resident status. Not that they need to; he frequently declares
himself a South African permanent resident from public
platforms.”
“
What special hold
has Dr Hall got over officials of the South African Reserve Bank that
makes them indulge his repealed and extremely
profitable
contraventions of the Exchange Control laws? Do they secretly
sympathise with his curious, right-wing views? Is it because
of his
declared support for the “Buthelezi Option”?
Or is it the fact that he
appears to have made a successful lifetime career of self- promotion
as a Nobel Prize nominee (failed
1972).”
An
application for permanent residence was initiated by the plaintiff on
25 November 1980 and submitted to the department of Home
Affairs on 7
January 1981. In the application the plaintiff declared over his
signature that the details in the application were
true and correct
and that it was his “firm intention to reside permanently in
South Africa” The plaintiff’s permanent
residence permit
was issued on 29 December 1981 and endorsed in his passport on 7
January 1982.
The
first defendant was not quite right in suggesting in the Noseweek
article that the permanent resident status granted to the
plaintiff
by the department of Home Affairs determined his status for exchange
control purposes. It would, I suppose, normally
be decisive. However,
there is a category of permanent resident called a foreign national
temporarily resident. The status of foreign
national temporarily
resident is one which is accorded by the Reserve Bank’s
exchange control department to foreign residents
who, although they
might reside in South Africa indefinitely, have not decided to make
the country their new home. One may, therefore,
be the holder of a
permanent residence permit without losing one’s status as a
foreign national temporarily resident for
exchange control purposes.
This status one would only lose once one had acquired a new domicile
of choice. A person classified
as foreign national temporarily
resident is treated very much like a non resident. The only
difference is that a foreign national
temporarily resident may
operate a resident (ordinary) banking account. The account of a
nonresident is designated non- resident
and subject to formalities
because withdrawals are freely transferable overseas. Provided then
that tie plaintiff had not acquired
a new domicile of choice in South
Africa, he could legitimately claim to be a foreign national
temporarily resident and thereby
lay claim to the foreign exchange
privileges accorded to a non-resident.
Early
in 1980 the plaintiff bought a house ‘Petit Pavilion’ in
Hout Bay with finrand. An application by the Standard
Bank to the
Reserve Bank to introduce the finrand to buy Petit Pavilion was made
on 16 January1980. On 11 March 1980 a further
application, handled by
French Bank, for the introduction of more finrand was granted for
improvements to the house. The plaintiff
did not remain content with
Petit Pavilion for long. That same year he discovered Leeuwkoppie.
Leeuwkoppie was a proper gentleman’s
estate of 350 acres. It is
not what one might regard as
a pied á terre
, even for a
man with the plaintiff’s resources. Indeed that is not how
plaintiff appears to have regarded it. In a telling
letter to the
estate agent who was negotiating the sale of Leeuwkoppie he wrote on
15 September 1980 –
“
1 am moving my
entire family here from California because we have fallen in love
with this marvelous Republic, its people, customs
and its physical
beauty. It is my intention to enjoy Leeuwkoppie for the rest of our
family’s lives, since my children intend
to stay there upon my
death, keeping it as a farm and nature preserve.”
The
letter is as close an affirmation of the acquisition of a new
domicile of choice as one is likely to get. One should not forget,

also, that at about that time the plaintiff met Elsa van Zyl (born
Lindhardt) a South African citizen whom he married shortly
thereafter. The marriage no doubt cemented the bond which the
plaintiff felt with South Africa.
In
Later years the plaintiff publicly confirmed that he settled in South
Africa
animo
manendi.
In an interview
with a journalist of ‘Die Burger’ on 20 June 1987, which
published an article on ‘Stellenkloof’
the Cape-Dutch
manor house restored by the plaintiff, he is reported as having made
South Africa his new home in 1980. Since then,
he declared, he had
not looked back; he would never leave South Africa again; it was the
most wonderful country on earth. In a
fulsome video production about
himself in which the plaintiff participated he said –
“
As an American
living in South Africa, I feel rather privileged. I love this
country. I love the people. I love the scenery. I love
its location
and I’ve been very happy in the eight years that I’ve
decided to live permanently here in South Africa.”
The
video transcript bears a date 5 July 1989. That must be the date on
which the script was written. Eight years before that would
be July
1981. In another passage spoken by the plaintiff himself, he says:
“
I came to South
Africa in 1980. I’d been reading the history of South Africa
for twelve or fifteen years and have always wanted
to get here. And
once I came to Cape Town, which is very similar to Santa Barbara,
California, without the smog, I decided to settle
here in Hout Bay.”
The
impression left by these words is that the plaintiff had no
hesitation in selecting Hout Bay as his new home.
The
acquisition of a domicile of choice involves the abandonment of an
earlier domicile of choice or domicile of origin. The plaintiff’s

domicile of origin was the United States of America. One must see
whether, apart from the attraction which the plaintiff felt for
South
Africa, there was anything else which may be supposed to have
prompted his decision to give up his domicile of origin.
It
was suggested by the first defendant that the existence of huge tax
liabilities in the United States of America played a part
in the
plaintiff’s decision to leave the land of his birth. I think
that this suggestion has merit. The circumstances surrounding
the
plaintiff’s departure from his home in California without
paying his tax liabilities are dealt with elsewhere. For the
purpose
of the domicile point it is sufficient to note that it is
understandable that, having left behind him an enormous tax debt

which was year by year becoming more burdensome by the addition of
interest and penalties, the plaintiff would not have wished
to return
to the United States of America, where at any time the Internal
Revenue Service might be alerted to his presence.
Years
later, (at the end of 1995 to be exact) the plaintiff would contend
that he did not intend to settle in South Africa permanently.
He did
so  in representations made to the department of Home Affairs.
He owned, he said, a second home in Colorado, his children
lived
there, and he always contemplated returning if the political
situation in South Africa worsened. I would question this assertion.

Political situation or no political situation, the worst place in the
world for the plaintiff to go would be the United States
of America
where his mountainous tax debt overshadowed the hope of a tranquil
retirement.
Even
if I were to accept  such evidence, it would not follow that no
new domicile of choice had been acquired. Acquisition
of a domicile
of choice does not exclude the contemplation of leaving that domicile
if something untoward should happen. The law
in this regard has been
settled by the appellate division in
Ley vs Ley’s Executor
1951 3 SA 186
(A) at 190-191. The
animus manendi
is proved
by showing an intention to remain indefinitely. It does not involve
proving that the
de
cuius
has resolved to
live and, come what may, die in his adopted country.
Looking
at all the
indiciae,
I find it amply proved that by the time
the plaintiff received his South African permanent residence permit
on 7 January 1982, he
had resolved to make South Africa his new home.
The issue of the permit was the final step in the acquisition of a
new domicile
of choice. It is, therefore, with no little astonishment
that one finds the plaintiff writing to the Reserve Bank on 1
February
1982 saying this -
“
Dear Sir,
I advise that I entered
South Africa on 20th March, 1981 and am a foreign national
temporarily resident in South Africa.
Furthermore I advise that
I have foreign assets and hereby undertake not to place these or any
portion thereof, at the disposal
of any South African resident. I
understand that I may deal freely in my foreign assets and may retain
the income thereon overseas.
I also conduct a foreign banking
account.
My bankers in South
Africa are Barclays National Bank.
Yours sincerely.”
The
letter, the plaintiff has on various occasions maintained, was
written on the advice of Mr Gill who was then with Barclays National

Bank’s exchange control department. In a statement to the
Reserve Bank, much later when the Reserve Bank was investigating
him,
the plaintiff said explicitly that he had advised Mr Gill that he had
applied for a permanent residence permit and that Mr
Gill thereupon
dictated the letter of 1 February 1982 to Elsa van Zyl, who was
shortly to become Mrs Hall.
It
is clear, as
Mr
Van
den
Berg
for the plaintiff argued,
that the letter was written by a knowledgeable person. It is probable
that Mr Gill dictated it to Elsa
van Zyl. It may be, although I think
it unlikely, that the plaintiff told Mr Gill that he had received a
permanent residence permit.
But that alone, as we have seen, would
not have made Mr Gill’s suggested classification of him as a
foreign national temporarily
resident wrong. The letter of 1 February
1982 was annexed to an application by First National Bank to the
Reserve Bank since only
a commercial bank can make such an
application. In the application there is an indication of what
information the plaintiff might
have given, and probably gave, to Mr
Gill. The application sets out that the plaintiff is a regular
visitor to South Africa who
sometimes stays for extended periods. I
quote –
“
The applicant, an
extremely influential and well-connected person, visits South Africa
regularly on holiday, sometimes for fairly
extended periods. We,
therefore, attach his declaration as called for in section C2(d)(i)
of the Exchange Control Rulings.”
On
that information, which would only have come from the plaintiff, Mr
Gill chose the correct classification; and on reading those
details,
the Reserve Bank would have had no reason to query the plaintiff’s
categorisation of himself as a foreign national
temporarily resident.
There is no hint in the letter of 1 February 1982 of a special status
being negotiated for the plaintiff.
The classification as a foreign
national temporarily resident is by no means special. It is one of
the Reserve Banks standard classifications
for exchange control
purposes. Nor did the accompanying application from Barclays Bank
seek a special status for the plaintiff.
All
went well until 1985 when the plaintiff had the misfortune to
overspend on his credit card overseas. When asked to explain he
put
up a version that as an American citizen, though resident in South
Africa. He was not subject to exchange control. That was
patent
nonsense. The plaintiff could not possibly have thought that he was
exempted from exchange control. He had by then made
many applications
on behalf of himself and his companies for permission to export and
import currency.
The
one thing the plaintiff strove desperately to avoid was
categorisation as an immigrant. This is what he really was, but
classification
as such would have had consequences that the plaintiff
found unpalatable. Firstly, as a settler, he would have had a three
year
so-called window period in which to conclude foreign currency
transactions. Thereafter, he would be treated as a resident. This
was
bad but worse still was that he would have been obliged to declare
his foreign assets (and liabilities) and, after the three
years,
repatriate the income to South Africa.
There
was another vita) consideration, one may suppose, for the plaintiff’s
wishing to conceal his true status. Mr Lautenberg,
an assistant
general manager of the Reserve Bank’s exchange control
department told the court that if the plaintiff had taken
up
immigrant status he would not, as an income beneficiary of the Lion
Family Trust, have been permitted to invest financial rands
in the
country, except up to an amount of R200 000 of which R180 000 would
have had to be earmarked for buying a residence. That
would not have
been nearly enough for one whose intention was to live splendidly off
income derived from his trust.
So,
for the next decade, the plaintiff played a cat and mouse game with
the Reserve Bank, his bankers and his advisers. Despite
the fact that
he had been told in 1985 that he was regarded as a South African
resident, he described himself in 1989 as a permanent
resident who
was regarded as a non-resident for exchange  control  purposes.
By  the  end  of  1989
the  plaintiff
was  even pretending that he was one of four or five
people who had been given a ‘special
status’
.
On
28 December 1989 the plaintiff wrote to Diners Club International, in
response to a query of theirs, that for exchange control
purposes he
was regarded as a resident  with non-resident status This was a
‘special  status’ granted to
him by the Reserve
Bank. In court proceedings in 1991, the plaintiff stated that Tickey
Gill, vice president of Barclays Bank,
had secured this unique status
for him since he did not want to declare his world-wide assets and
the Reserve Bank gave him approval
not to do so. That he did not want
to disclose his overseas assets was true, but the pressure on the
plaintiff to disclose such
assets kept mounting. At a meeting with
the Reserve Bank in 1991 questions were asked of the plaintiff
concerning his residential
status. Mr Van Staden, an investigator at
the Reserve Bank, conveyed to the plaintiff that the Reserve Bank
regarded him as a permanent
resident. The plaintiff explained that he
was under the impression, ‘after the Gill letter, that he had a
special status,
although he professed to being confused in this
regard. He said not even his bankers could clarify his status.
On
25 March 1994 the plaintiff wrote to Nedbank to say that at a
‘private meeting’ with ‘Reserve Bank officials
on
31 March 1992, the plaintiff had been told that his status “had
been changed”. The change, however, had not been
confirmed in
writing. Mr Cerff, the exchange control manager of Ncdbank on 29
March 1994 proclaimed that as far as the plaintiff
was concerned he
was still a non-resident.
At
a meeting with Reserve Bank officials in May 1994 - of which a note
was kept by Mr Cerff of Nedbank - the plaintiff was asked
to submit a
report on,
inter
alia,
his residential
status. A report was faxed on 17 May 1994. The plaintiff acknowledged
having been told by Mr Van Staden on 31 March
1992 that he was a
permanent resident for all purposes. However, this, he said, had not
been confirmed in writing. In 1994 the
plaintiff was still playing
cat and mouse. The one thing that he should have done years ago, the
only honest thing to have done,
was to have acknowledged that he was
an immigrant to South Africa, having chosen to make this country his
new home. Had he done
this, all the aggravating confusion about his
exchange control status would have been avoided.
I
have no hesitation in saying that the plaintiff’s original
representation to the Reserve Bank was to his knowledge, false.
The
wording of the letter would have been suggested by Mr Gill on the
strength of information imparted to him by the plaintiff.
That Mr
Gill drafted the letter does not exonerate the plaintiff who lied to
the Reserve Bank in the hope of thereby securing for
himself
advantages to which he would not otherwise have been entitled. It is
to these advantages that I now turn.
Transgressing exchange
control
The
plaintiff’s particulars of claim allege that the Noseweek
article was defamatory of him because,
inter alia,
it
stated directly or by implication that he had frequently transgressed
the laws relating to exchange control. The Noseweek article
does not
directly state that the plaintiff contravened exchange control
regulations. It does, however, carry the implication that
he did so.
The passages in question are the following –
(a)
“He knew how never to pay tax, and how to make a living
out of
fiddling the finrand”,
(c)
“Ever since then, until today, Dr Hall has been treated
by the
Reserve Bank as a non-resident, and been allowed to do repeated
finrand deals which,, by law, are denied to permanent residents”.
(d)
“But now the doctor may find himself sharing the unique tax

status traditionally given to professional prostitutes who are
required to pay tax on their illegal earnings.”
It
is correct, as
Mr
Joubert
for the second defendant pointed out, that the innuendo
pleaded is not linked to any specific words. The position is further
complicated
by the fact that passages (a) and (c) are among those
allegations which were deleted by amendment. The passage in (b) was
deleted
in para 13.4 of the particulars of claim, but survives as
part of the passage quoted in paragraph 15.2. However, I do not
believe
that I should now, at the conclusion of a long trial,
non-suit the plaintiff for not having pleaded the words from which he
seeks
to derive the implication. All parties have throughout the
trial accepted that the plaintiff’s foreign exchange dealings
were in issue. They featured prominently in the evidence. They cannot
now be ignored because of a defect in the pleadings.
There
are really, as I see it, three categories of exchange control
contraventions. The first category relates to the plaintiff’s

true status. He should have declared himself to be the immigrant that
he really was. His deceiving the Reserve Bank about this
meant that
such permission as he did obtain from the Reserve Bank was obtained
under false pretences. The permission in every case
where the
plaintiff’s status as a foreign national temporarily resident
played a part was, therefore, invalidated by the
fraud.
The
statement that the plaintiff had been allowed to do repeated finrand
deals which a permanent resident would not have been permitted
to do,
appears in the same passage as, and is directly linked to, the status
said to have been obtained by the plaintiff under
false pretences.
Strictly speaking, all that the passage implies is that the plaintiff
misused the status which he had improperly
obtained. The innuendo
pleaded by the plaintiff goes further than this, however, so that it
is advisable to deal with two other
categories of contraventions as
well.
The
second category relates to the classification which the plaintiff had
deceitfully persuaded the Reserve Bank to give to him.
I shall call
this the plaintiff’s designated status. The plaintiff, as we
have seen, was classified by the Reserve Bank as
a foreign national
temporarily resident. A foreign national temporarily resident is
really only a special category of non-resident.
The plaintiff did not
conform to the rules governing his designated status.  He
entered into transactions for which Reserve
Bank approval should have
been sought, without seeking such approval. In some cases Reserve
Bank approval, had it been sought,
would have been granted. In other
cases it would have been refused. In either case the plaintiff did
not do what he was supposed
to do: ask the Reserve Bank’s
permission.
The
third category has to do with the plaintiff’s companies, Lenert
Property (Ply) Ltd (‘Lenert’) and Stellenkloof
(Pty) Ltd
(‘Stellenkloof'). I call them plaintiff’s companies. He
did not own the shares but he was the controlling
mind of each. As we
shall presently see, several impermissible transactions were
concluded between the plaintiff, Lenert and Stellenkloof.
Mr
Lautenberg is a high-ranking Reserve Bank official who testified on
the scope and application of exchange control rulings. Money
which
enters the country as finrand must be deposited into a financial rand
account and cannot be released without reserve bank
approval. No
finrand transactions are permitted to a South African resident. If
the Reserve Bank becomes aware of information which
would lead it to
categorise a person as a resident, it would classify him as such. An
affected person is a company of which the
shares are held by a non-
resident or a discretionary trust of which one of the beneficiaries
is a non- resident. No resident may
lend money to an affected person
without Reserve Bank approval. An affected person may borrow a
percentage of its invested capital.
A loan from one affected company
to another requires approval from the Reserve Bank. Provided that
assets entered the country as
part of the property of a foreign
national and provided that there was a genuine sale, the Reserve Bank
would permit the proceeds
to be transferred offshore by means of
commercial rand. The logic is that the country, in losing the
equivalent currency, has obtained
an asset. There is no loss to the
country. A foreign national who sells such an asset is at liberty to
use the proceeds of the
sale locally without Reserve Bank approval.
The rule is “once finrand always finrand”. Money
introduced into the Republic
in finrand remains finrand and can with
the required approval, only be utilised for legitimate finrand
purposes such as the purchase
of a dwelling or shares in an
economically viable or property owning company. If Reserve Bank
approval for the purchase of shares
in a company is given, approval
is conditional upon the endorsement of the shares of that company as
being non-resident owned,
with the consequence that they are not
tradable. On the sale of a financial rand asset, the proceeds should
be deposited back into
a financial rand account, and either
transferred back overseas or, with permission, used for a legitimate
finrand purpose. It
is not permissible, directly or indirectly, to
use finrand to defray living expenses.
Early
in his South African sojourn, the plaintiff indulged in
roundtripping. The roundtripping involved importing financial rand

and exporting commercial rand. The profit on the differential could
be quite substantial. The details of the transactions appear
from a
schedule which the Argus defendants annexed to their heads of
argument. I can do no better than incorporate it into this
judgment
as an annexure. The annexure shows in the third to sixth columns
finrand applications made by the plaintiff. The third
column details
applications to introduce finrand. The fourth column shows - in order
to illustrate the magnitude - the present
value of each application.
The fifth column details applications to transfer money out of the
country, and the sixth column the
equivalent present value.
The
‘outcome’ columns show what became of each application.
Column three shows that between January 1980 and
September
1987
R7,654m (R36 332m in present value) of financial rand were introduced
into South Africa. The money (commercial rand) which
was sent out of
the country amounted to R233 272 (present value RI 375m). The
applications to transfer money all concerned art
works that had
allegedly been sold. The transactions were questionable. In February
and April 1982 the plaintiff sold art works
to the value of R65 750
(now R375 432) to Mrs E van Zyl, the fiancée who would four
months later become his wife. Other
artworks worth R37 480 (now R21 0
000) were allegedly sold to Mr and Mrs G Prinsloo and friends. G
Prinsloo was the plaintiff’s
foreman. I think that it is on the
evidence unlikely that such art works were sold or had even been
brought into the country. They
do not appear on any inventories of
the plaintiff’s goods imported at the time of his arrival.
Moreover, it has not been
explained why the proceeds of the art works
should have been transferred overseas. At almost the same time that
an application
was made for a transferral of commercial rand, another
application was made to introduce finrand. The inference that the
plaintiff
indulged in roundtripping is overwhelming.
When
the plaintiff first came to this country, he set up an elaborate
financial structure. At the top axe two trusts. The Lion Family

Trust, a foreign trust, owns the whole of Grada Corporation, a
Panamanian registered company and all the share capital of Lenert.

Lenert owned Leeuwkoppie Estate. The beneficiaries of the Lion Family
Trust were the plaintiff and his two children. The Lion Family
Trust
had as its trustees Portman Services SA, a Geneva based entity. It
made distributions to the plaintiff through the medium
of the Grada
Corporation. It was settled by Marlene Boesch-Webber.
The
plaintiff claimed merely to be a beneficiary of the Lion Family
Trust, and a local representative of the Grada Corporation.
However,
although the trust was expressed to be a discretionary trust, it was
controlled by the plaintiff through the device of
a ‘letter of
wishes’. Mr Loch Davies, an attorney who is an acknowledged
expert in the field and acted for the plaintiff
in the early days,
told me that a letter of wishes is in off-shore jurisdictions like
Jersey a common way of retaining control
of a trust whilst making it
appear as though the trustees were exercising an independent
function.
It
is worth quoting the letter of wishes in full –
“
To the present and
future trustees of the Lion Family Trust, and to the directors of
Portman Services S A as the first corporate
trustees of the said
Trust:
I wish it to be known
that the Lion Family Trust has been settled by me in order to
establish a vehicle which will become the ultimate
owner of the
worldwide assets of Dr Robert M Hall.
While acknowledging the
Legal powers of the trustees, and not wishing to detract therefrom,
it is nonetheless my wish that during
his lifetime, the trustees
should accept the advices and/or instructions of Dr Hall with regard
to all the investment planning,
policy and strategy implementation of
decisions taken in respect of the assets of the Trust. During this
period, it is my wish
that The Board of Executors in Cape Town act in
a consultancy capacity to the Trust, and that it be authorised to
remit Dr Hall’s
advices to the trustees in Geneva.
Upon the death of Dr
Robert M Hall it is my wish that The Board of Executors should
exercise an investment planning and advisory
function and that the
trustees should then be guided by The Board of Executors as to the
investment planning, policy and strategy
implementation of the
Trust’s assets.
While recognising that
the Lion Family Trust is a discretionary settlement, it is my wish
that the assets of the Trust should be
managed entirely for the
benefit of Dr Hall and his family, and that any eventual decision as
to the distribution of any or all
of the assets of the Trust should
only be taken on the advice of Dr Robert M Hall during his lifetime
and thereafter on the advice
of The Board of Executors.
Signed in GENEVA this
13th day of January 1981.”
Plaintiff
also, through the Lion Family Trust, controlled Grada. Together they
were the vehicles for the control and ownership of
the plaintiff’s
world-wide assets. It was the non-disclosure of this relationship to
the Reserve Bank which enabled the plaintiff
to abuse his designated
status. A foreign national temporarily resident could, as we have
seen, import and export currency like
a non-resident. But a
non-resident would not have been permitted to import
finrand
if
it had been known that he was the beneficiary of a discretionary
trust.
Some
time later, in August 1983, the Elro Trust was formed. Its purpose
was to hold shares in Stellenkloof. It first owned ninety
percent but
ended up holding seventy five percent of the shares. The other twenty
five percent were held by Elsa Hall. Its beneficiaries
were the
plaintiff, his wife and the Lion Family Trust. Stellenkloof became
the owner of an estate near Stellenbosch called Nietgegundt
which was
rechristened Stellenkloof. Stellenkloof was acquired and restored
with the aid of R2.146 m borrowed from Lenert. Lenert
had the money
available because it had sold Leeuwkoppie.
The
money used by the Lion Family Trust to buy the shares in Lenert was
financial rand. Permission was granted for the introduction
of
financial rand for this purpose. Since all its shares were owned by
the Lion Family Trust., a non- resident, Lenert was an affected

person. Stellenkloof was also an affected person, because the Elro
Trust which owned its shares was an affected person. This was
so
because the Lion Family Trust, one of its beneficiaries, was a non-
resident.
These
circumstances resulted in a number of exchange control
contraventions.
Reserve
Bank approval for a loan made by Lenert to the plaintiff (a loan from
an affected person to a non-resident) was required.
Similarly a loan
made by Stellenkloof to the plaintiff would have required Reserve
Bank approval. There was a further complication.
The money lent to
the plaintiff was borrowed by Stellenkloof on the security of a bond
passed over its property which, it will
be recalled, had been bought
with money Lent to it by Lenert. Since both companies were affected
persons, the loan required Reserve
Bank approval. Stellenkloof's
unauthorised borrowing from First National Bank was also unlawful. As
an affected person it needed
exchange control approval to borrow. The
proceeds of the sale of Leeuwkoppie in Lenert’s hands would
have been finrand, but
the transaction took place between the
abolition of the finrand on
5
February 1983 and its
re-introduction on 1 September 1985. It does not seem to me that the
re-introduction of the finrand mechanism
made the Stellenkloof
property once more subject to finrand restrictions.
The
plaintiff’s own position was bizarre. He borrowed money from
Barclays National Bank (about R300 000) on overdraft. On
7 August
1989, Barclays wrote a detailed account intended for the Reserve Bank
asking for condonation for the plaintiff’s
having borrowed as a
nonresident without exchange control approval. The plaintiff was, of
course, not a non-resident. He might
lawfully have borrowed from the
bank without Reserve Bank approval. But he needed for his own
purposes, at all costs, to maintain,
as against the Reserve Bank, the
pretence that he was a non-resident. It may have had something to do
with a major transgression
of exchange control regulations in which
the plaintiff had been involved shortly before.
In
April 1989 Nicolaas Heyns and the plaintiff entered into one of their
ill-fated business ventures. They acquired a dormant company,

Firgrove Industrial Park (Pty) Ltd (‘Firgrove’), in which
each was allotted one half of the 1230 issued R1,00 shares.
Each
therefore obtained 615 shares in Firgrove for R615,00. The company
borrowed money to set up a manufacturing plant. Grada Corporation

then bought the plaintiff’s shares for R1,05m. The price was
paid in financial rands introduced on the application of Heyns.
On
15 May 1991 the plaintiff sold his shares to a South African resident
for R2.05m. That R2,05m was then paid over by the plaintiff
to
Stellenkloof to reduce the latter’s overdraft. The R2,05m
proceeds were designated financial rands which could only have
been
paid into a financial rand account, or reinvested with Reserve Bank
approval. If the Reserve Bank had been asked to authorise
investment
of the money it would not have permitted it to be used as loan
capital in a company. The money would have had to be
used to buy
equity. What made it worse was that the plaintiff had been paying his
living expenses with the Stellenkloof overdraft.
He was therefore
indirectly using financial rands to defray his living expenses. Such
a state of affairs would never have been
tolerated by the Reserve
Bank.
I
wish to make a closing comment. As late as November 1994, by which
time the Reserve Bank had repeatedly informed the plaintiff
that he
was regarded as a South African resident, he writes on behalf of
Grada Corporation to a Mr William Collins of Baring Bros
(Guernsey)
Ltd to ‘sell both contracts when the Finrand hits 400 or
below.” He was still then, in stubborn defiance
of the Reserve
Bank directives, speculating in financial rand through the (Grada
Corporation which he has always controlled).
Manipulating the Reserve
Bank
The
plaintiff’s complaint that the Noseweek defendants insinuated
that he had exercised improper influence over Reserve Bank
officials
to turn a blind eye to his transgressions of the exchange control
laws, is based on the following passages in the Noseweek
article.
a.
“The story we have to tell is curious
and amazing. But even
more interesting is what it reveals - yet again - about the
incompetence and strange actions of the South
African Reserve Bank.
What special hold has Dr Hall got over officials of the South African
Reserve Bank that makes them indulge
his repeated and extremely
profitable contraventions of the Exchange Control laws? Do they
secretly sympathise with his curious,
right-wing views? Is it because
of his declared support for the “Buthelezi Option”? Or is
it the fact that he appears
to have made a successful lifetime career
of self promotion as a Nobel Prize nominee? (Failed 1972) If it is
his millionaire status
that’s had the Reserve Bank in awe all
these years, the Receiver’s move has prompted the ever
inventive doctor to claim
a new status,- as South Africa’s
poorest millionaire!”
b.
“On 7 January 1981 Dr Hall formally
applied for, and was
granted, permanent resident status in South Africa. His passport was
so endorsed. NB: long afterwards - he
claims it was on the advice of
the then foreign exchange manager at Barclays Bank, Mr Ticky Gill,
who was a guest in his home at
the time - Dr Hall wrote a letter to
the Reserve Bank in which he solemnly lied that he was not
permanently resident in South Africa.
Barclays Foreign Exchange
Division formally submitted the letter to the Reserve bank on Dr
Hall’s behalf. Mr Gill has, of
course, since become a leading
light at the Reserve Bank. Ever since then, until today, Dr Hall has
been treated by the Reserve
Bank as a non-resident, and been allowed
to do repeated finrand deals which, by law,  are denied to
permanent residents.”
c.
“As recently as March that same year,
at a special meeting held
at the Reserve Bank in Pretoria, Hall is recorded telling officials
and his own bankers, FNB, that he
had “an investment interest”
in Grada. John Postmus at the Reserve Bank has confirmed in court
papers that he received
a formal complaint about Dr Hall’s
dealings in 1990. He claimed to have investigated the matter but, he
said, curiously,
he could not remember what he had done about it, or
what the outcome had been.”
d.
“None of the Reserve Bank officials
who have been entertained
by Dr Hall at his home in the Cape have asked to see his passport to
determine his resident status. Not
that they need to; he frequently
declares himself a South African permanent resident from public
platforms. But, as far as the
Reserve Bank is concerned, ignorance
is, and remains, bliss!”
His
unique status for exchange control purposes was the plaintiff’s
own invention. Although the first defendant suggested
that the
Reserve Bank connived at and gave him special favours, there has been
no convincing evidence of that. What has been shown
is confusion on
the part of the Reserve Bank. The Reserve Bank and its officials are
open to criticism for not having acted more
vigorously in clearing it
up. That much is certain. However, the first defendant suggested in
argument that the Reserve Bank’s
failure to act against the
plaintiff in later years was such a grotesque dereliction of duty
that I should infer from it that the
Reserve Bank had ‘indulged’
the plaintiff and by ‘treating’ him as a non-resident
‘allowed’
him to ‘do repeated Finrand deals.’
I think that the evidence, on the whole, is too insubstantial to
sustain a finding
on a balance of probabilities. There is nothing in
the mountain of Reserve Bank paper before me to suggest that, and the
only witness
from the Reserve Bank who testified had no personal
knowledge of the plaintiff’s relationship with the Reserve
Bank.
The
reasons put forward in the article for the plaintiff having a ‘hold’
over Reserve Bank officials are facetious.
They would have been
understood, particularly in a publication like Noseweek, as satirical
banter. No one would have believed that
the plaintiff could have
achieved a ‘hold’ over Reserve Bank officials for reasons
like those proffered. This would
have led the reasonable reader to
suspect that the question posed in the Noseweek article about the
plaintiff’s hold over
Reserve Bank officials is meant as a
sardonic comment rather than as a statement of fact.
However,
there is quite a strong suggestion in the article that Mr Gill’s
appointment to a high position in the Reserve Bank
was somehow linked
to favourable treatment which the plaintiff received. That in turn
may have led the reasonable reader to infer
that there was an
improper relationship between the plaintiff and Mr Gill, particularly
since the passage is open to the interpretation
that the plaintiff
lied to the Reserve Bank on the advice of Mr Gill. The impression
would have been strengthened by the suggestion
that Mr Postmus was
less than candid about his investigation of the plaintiff’s
affairs and that the plaintiff entertained
Reserve Bank officials at
this home in the Cape. I should say in this regard that no evidence
was produced of any Reserve Bank
officials having been entertained by
the plaintiff. But the question is whether the plaintiff can be heard
to complain about what
is really an assault on the Reserve Bank when
he himself neglected no opportunity to attempt to manipulate Reserve
Bank officials.
It
started with the very first application to the Reserve Bank on 1
February 1982. The application impresses upon the Reserve Bank
what
an important man the plaintiff is. The relevant passage from the
application has been cited earlier. That could only have
been
intended to impress officialdom and discourage any enquiry into the
plaintiff’s assertions. The plaintiff’s counsel
argued
that his commercial bank and not the plaintiff himself was
responsible for conveying this kind of information to the Reserve

Bank. I do not see how this exonerates the plaintiff from complicity.
Take the following distasteful name-dropping in June 1983
as an
example –
“
The
applicant is an extremely influential and wealthy man, is apparently
well-known to senators Horwood and Koornhof. We are further
advised
that the applicant is a personal friend of president Reagan of the
USA.”
That
information would on a balance of probabilities, have come from the
plaintiff himself. One need not speculate too long on why
the
plaintiff told his bankers who his friend are, nor need one speculate
long on the motive for conveying information about the
plaintiff’s
powerful friends to the Reserve Bank. The mention of the plaintiff’s
powerful political friends was calculated
to inhibit any Reserve Bank
official who might have thought of raising a query about plaintiff’s
status from doing so.
This
was the plaintiff’s
modus operandi.
One sees that from a
submission to the Reserve Bank in August 1989. The text was approved
by Ernst & Young on behalf of the
plaintiff. After stating that
the plaintiff ‘has non-resident status for South African
exchange control purposes”,
the document expands on how much
the plaintiff has done to “actively promote South Africa’s
view overseas” and
to “create an understanding of the
South African situation in other countries”. (That was heady
stuff in the eighties).
The document then proceeds –
“
As a result of his
influence and connections he was accorded a special concession by the
authorities who granted him a permanent
residence permit without
having to complete immigration formalities and the accompanying
declaration of assets. He is therefore
a non-resident with permanent
resident status.”
Although
there is no name-dropping that time, the obvious influence-peddling
is every bit as effective. It was intended to serve
the same purpose.
Although,
therefore, it might not have been quite correct to suggest that the
plaintiff in fact had a hold over Reserve Bank officials,
or that he
and the Reserve Bank had conspired to transgress exchange control
regulations, his own blatantly manipulative conduct
in relation to
Reserve Bank officials was such that it may fairly be described as an
attempt to get a hold over such officials.
In
the circumstances I believe that the Noseweek defendants have proved
their statements concerning the plaintiff’s relationship
with
the Reserve Bank to have been substantially true. They fell short of
proving that plaintiff had established an improper relationship
with
Reserve Bank officials, but proved that he
tried
by
influence-peddling and deception to do so. That is close enough to
the truth.
Income Tax - General
The
sting of the allegations concerning the plaintiff’s income tax
evasion is that he –
a.
neglected  to  pay  huge  amounts
of  tax
to  which  he  had  been assessed in the
United Stated of America.
b.
deceived the Revenue in South Africa.
The United States
The
complaint about the statements concerning his failure to pay tax in
the United States has been withdrawn. Plaintiff must be
taken to have
conceded that he neglected to pay U S taxes which he ought to have
paid.
South Africa
The
statements in the Noseweek article -
“
the doctor may
find himself sharing the unique tax status traditionally given to
professional prostitutes who are required to pay
tax on their illegal
earnings ...”
“
(he) ... has told
the Receiver of Revenue he is really, if the truth be known, a poor
man”
“
he knew how never
to pay tax.”
“
he has never
declared an income or paid tax, here or anywhere,”
read
in context were clearly intended to, and did, mean that the plaintiff
was obliged to pay lax but unlawfully failed to do so.
They would, if
untrue, plainly be defamatory. They mean that the plaintiff was and
is a tax defaulter in this country and the United
States. It has now
been conceded by the plaintiff that it was quite true (and in the
public interest) to say of him that he has
never paid tax although he
has been obliged to do so, and has never even declared his income
when he should have done so. Despite
the harm which admissions like
these cause to the plaintiff’s
fama
, he has persisted in
claiming damages in
respect
of certain specific instances of fiscal misconduct alleged by the
Noseweek defendants.
These
specific instances of misconduct were, prior to amendment, that
plaintiff had misled the Receiver by –
i.
pretending that he was too poor to pay
tax
ii.
concealing finrand transactions from which he derived
income
iii.
disguising income in the form of interest as a capital accrual;
iv.
misrepresenting the accounting requirements of an off-shore
entity
called Grada Corporation.
Having
conceded i and
ii,
he continues to maintain that he has been
defamed by the statements in iii and iv.
Disguising income as
capital
On
6 January 1990 the plaintiff, Nicolaas Albertus Heyns (‘Heyns’)
and others entered into a written agreement concerning
the sale of,
inter alia
, Greenstone Industries (Pty) Ltd (“Greenstone”).
The agreement (as originally drafted) provided that the purchase
price
would be R2 m payable in three instalments, the last and
largest being R1.3 m on 31 December 1990. It was provided that the
outstanding
balance would bear interest at 20% per annum compounded
monthly. The purchase price was to be allocated first to claims
against
the company and thereafter to the purchase price of the
shares.
The
plaintiff then began to have second thoughts about the tax
implications of the agreement. If he were to receive interest, he

would obviously be liable to income tax. Paying tax is something the
plaintiff finds abhorrent. He and his advisers then began
to cast
about for a way of restructuring the agreement so that no income
would seem to accrue to the plaintiff. The solution which
they hit
upon was to turn the interest receipts into a capital gain by the
expedient of capitalising the interest. Interest was
calculated at
R693 000. This increased the purchase price of the shares and claims
in Greenstone from R2m to R2.693m. For good
measure the increased
price of R2.693 was stated to be also in respect of a restraint of
trade by the sellers, the plaintiff and
Grada.
But
now there was a difficulty, or, rather, two difficulties. Firstly,
Heyns was obviously only prepared to pay interest on so much
of the
purchase price as remained outstanding. Secondly, Heyns was going to
want to deduct the interest paid by him as a revenue
expense. The
first difficulty was resolved by declaring that Heyns would pay the
plaintiff R15 000 per month, supposedly not as
interest but as
capital redemptions, and would be entitled to a ‘rebate’
for each month by which payment of the capital
was anticipated. This
deal was contained in a letter- agreement concluded on the same day.
I suppose it could be regarded as an
addendum to the main agreement.
It had the obvious advantage that it could be secreted from unwelcome
attention.
It
seems clear that the main agreement had been signed on the morning of
the sixth. The letter refers to the signing of an agreement
that
morning. It is also clear that certain alterations to the agreement
were made when all the parties were no longer present.
The only
reason for the modification of the agreement concluded earlier was to
make the Receiver believe, if he should find out,
that the interest
earlier agreed upon had been capitalised.
The
Receiver was not in the plaintiff1s income tax return told about the
circumstances. The accrual of R693 000 was presented to
him as though
it had simply been part of the purchase price. He could not guess
that a part of it was supposed to represent capitalised
interest. Had
he been made aware of this he could, of course, have applied his mind
to the interesting question whether or not
one can, by capitalising
interest,  change its  character  from revenue to
capital. Without the necessary information,
he could not begin to
apply his mind properly. If the plaintiff had meant to be completely
honest with the Receiver, he would have
revealed to him what he had
done, and taken his chance on the law. As it was, there was a
concealment of the material facts surrounding
the transaction.
Plaintiff’s
version of what happened is set out in a letter dated 25 November
1994 to captain Buhrer of the SAP commercial
crime unit. It appears
from his letter that the plaintiff maintains that the agreement was
signed on the evening of Saturday 6
January 1990. The assertion is
almost certainly false. Moreover, the plaintiff suggests that the
R693 000 payment was really in
respect of a restraint of trade.
Heyns, he said, was afraid that the plaintiff might market the same
quality green serpentine stone
from deposits in the vicinity of the
Greenstone mine, and was prepared to pay heavily to avoid such
competition. As it happened
the amount supposedly agreed upon for the
restraint was exactly the same as the amount which had originally
been interest. One
wonders, if the restraint was of such crucial
interest to Heyns that he was prepared to pay nearly R700 000 for it,
why no value
had been placed on the restraint in the original
agreement.
The
plaintiff’s solution to the second problem was more innovative.
Heyns might be persuaded to change his stance that the
R693 000 was
really interest after all. Of course this would cost Heyns money,
since if he did this, he would no longer be able
to treat the
interest as a tax deductible expense. This meant that Heyns would
have to be compensated.
On
5 July 1995, Heyns deposed to an affidavit which he furnished to the
SA Police Services. The body of the affidavit is a transcript
of
conversations between the plaintiff and Heyns. The police
investigation diary reflects that certain additional affidavits were

filed in the docket on 8 January 1996. Among them is an affidavit by
the plaintiff. Annexed to the affidavit are the same transcripts
of
the conversations forming part of the Heyns affidavit.
The
one conversation is revealing. It reveals that the plaintiff offered
Heyns rands or dollars to change his version of events.
It is not
necessary for me to recount the sordid details. If as a result Heyns
now stood to lose a tax deduction of R700 000, he
would require R350
000 (or US $100 000) to recoup his loss. That is what the plaintiff
offered him.
The
plaintiff protests that the transcripts are incomplete. He does
not
protest that he or Heyns did not state what is transcribed and
annexed to his affidavit, but declares that during the course of the

conversations, Heyns “kept on trying to make me say that I
should pay him money in exchange for his co-operation, and that
I
eventually agreed”.
There
is, therefore, no dispute about the existence of the fraudulent
scheme. The plaintiff’s excuse is that he did not initiate
it.
This seems to be errant nonsense. He was the one who stood to gain
from the scheme, not Heyns. These events strongly suggest
that the
plaintiff had no faith in the soundness of his case and that the
first defendant was quite right when he wrote that an
attempt had
been made to disguise the interest accrual as one of a capital
nature.
The accounts of Grada
Corporation
The
occasion for the plaintiff’s complaint that the Noseweek
defendants intended to convey the innuendo that the plaintiff
had
deliberately lied about the accounting requirements of Panama in
order to deceive the Receiver, is a passage in the Noseweek
article
reading as follows:
“
But on 30 November
1992 in reply to the S A taxman’s increasingly pressing demand
to see the accounts of Grada, CISA, a trust
management company in
Geneva, well- known in certain off-shore business circles, sent Dr
Hall a fax for him to hand to the Receiver.
As you would expect, it
read: “Grada Corporation is a Panamanian corporation and as
such has no accounts. Consequently we
regret that we cannot comply
with your request.” And the Receiver is supposed to believe
that?”
Grada
Corporation, as we have seen, is a corporation registered in Panama,
controlled by the Lion Family Trust of which the plaintiff
is a
beneficiary. Although Grada Corporation  is registered in
Panama, it is administered in Switzerland. The first
defendant’s
mock surprise about the Receiver’s credulity is not difficult
to comprehend. The facsimile message sent
to the Receiver can only
mean that a Panamanian corporation is not by law obliged to keep
accounts. It does not mean that a Panamanian
corporation may not keep
accounts.
I
do not believe that a corporation, no matter where it is registered,
can operate without accounts. The office bearers of the corporation

cannot walk about with its accounts in their heads. The corporation
must keep a record of its income and expenditure. It must have
a
record of its assets and liabilities. If it does not have these, it
would not be able to function effectively or at all. If new

administrators were to take over the corporation, they would not know
where they were. it is ridiculous to contend that a large
investment
company like Grada Corporation can carry on Without accounts. The
plaintiff, one feels sure, would not have dreamt of
permitting it.
He, after all, was the one who would be vitally interested in an
accounting. In fact, there are in the papers before
the court
examples of record keeping by Grada, just as one would expect. The
inference that the plaintiff lied about Grada’s
accounts is in
my view inescapable. In the context of the Noseweek article the
statements concerning the accounts of Grada Corporation
are therefore
substantially true.
Leaving America behind
The
plaintiff has taken offence at the suggestion in the Noseweek article
that
a.
he left the USA to avoid paying his taxes;
and
b.
lied about the reason for his departure from
America.
The
offending passage reads –
“
When Dr Hall left
America in the early Seventies, he announced he had been invited to
Germany to apply his inventive genius there.
It also happened to be
at the time when the US Internal Revenue Service planned to collect
some tax from him. (Currently still
outstanding $2,1 million plus
interest. Total $16 million). Not surprisingly he says he has cut all
ties with America and never
intends to return.”
It
became common cause during the trial that tax judgments had been
entered against the plaintiff in the USA. Some of the judgments
were
granted by consent. It appears from the orders themselves that the
plaintiff had taken the tax assessments on appeal and then

‘stipulated’ to the tax deficiencies, which means that
the orders were made by agreement. They were signed on behalf
of the
plaintiff by his attorney, a Mr William Sutton. The two most dramatic
of these orders, both dated 1 June1976, cover five
amounts to a total
of $999 827.67.   Two so-called “notices of state tax
lien” at the instance of the State
of California Franchise Tax
Board issued on 2 October 1987 and 9 October 1991 amount to $9 480.08
and $283 080.19. Those were the
amounts at the time. Interest keeps
accruing. The latter judgments or orders are not relevant to the
plaintiff’s departure
from the U.S.
There
is the circumstantial evidence that the plaintiff left his
Californian domicile not long before these two biggest judgments
were
entered against him on 1 June 1976. He himself contended that he left
in 1975. That was before the date of the tax judgments,
but
proceedings must have been instituted well before that. The inference
which I was asked to draw was that the plaintiff had
left to evade
payment of the assessed taxes. I must say that it looks very much
like it. The plaintiff has, twenty years later,
not yet paid those
taxes. It cannot be said, and has not been suggested, that he did not
have the means to do so. One must then
logically conclude that he had
departed from the Unites States to avoid paying. The plaintiff sought
to avoid this inference by
suggesting that he had always believed
that the taxes had been paid by his U.S. attorneys. He was, according
to him, dismayed to
learn, shortly before the trial, that it was
contended that the taxes had not been paid. He dispatched a legal
team to America
to investigate this disquieting state of affairs. The
legal team returned with the news that, although bad weather in
Pittsburgh
foiled some of their investigative endeavours, they did
discover from an employee of the Internal Revenue Service that no
current
tax Liability for the plaintiff was shown on their giant
Washington computer. Fortified by this discovery, the plaintiff’s

counsel suggested to the first defendant in cross-examination that he
could not say whether perhaps these amounts had not been
paid. His
answer was that he did not know but that during May 1994 when the
information concerning the tax debts was collected,
liens which had
been established to secure the debts had not been cancelled.
In
argument it was also suggested that the plaintiff had rebutted the
inference that the debts remained unpaid. I disagree. It is
pretty
well inconceivable that the plaintiff would not have demanded an
accounting from his American attorney if he had left instructions
and
money to settle his tax debts. The judgments are of great magnitude.
Even assuming a rand/dollar exchange rate of RO,75 to
$1, a 1 million
U S dollar tax liability expressed in rand in current terms would be
of the order of R8,5 million. Even if the
plaintiff’s American
attorneys had not been asked for an accounting, they must surely have
accounted to the plaintiff on
their own initiative. Moreover, an
honest man who was genuinely astonished at the fact that his attorney
had permitted judgments
of more than R8,5 million to remain unpaid,
would have contacted him to demand an explanation and an accounting.
Plaintiff’s
legal team conducted all kinds of inconclusive
investigations in the United States. They did not speak to Mr William
Sutton, the
one person who might have been expected to give them
useful information. Nor did they contact the State of California’s
‘lien
desk’ whose telephone number they had. There is
also no suggestion that any attempt has since been made to contact Mr
Sutton
although, as we all know, the United States is by E-mail
seconds away. It is interesting that in a letter from his ex- wife,
solicited
by the plaintiff, she mentions the fact that the
plaintiff’s house at Toro Canyon Road had been sold by the
Internal Revenue
Service. This, one assumes, would have caused some
consternation if the plaintiff thought his tax liabilities had been
settled
and was bound to have led to recriminations against his
attorney. When, in addition to these factors, there is brought into
account
that the plaintiff chose not to testify, there cannot be any
doubt that he had left the United States with the intention of
evading
payment of his tax obligations.
Although
the plaintiff worked for the Hans Grimmig KG., he did not live in
Germany. He lived the Life of a country gentleman in
England. It
seems unlikely that the prospect of working with or for Hans Grimmig
was the plaintiff’s principal motivation
for leaving the United
States of America. When, therefore, the plaintiff gave Mr Chet
Holcombe of the Santa Barbara News- Press
to understand that he was
leaving America to work for, or with, a large German corporation, he
was not revealing the whole truth.
It was not Hans Grimmig K.G. which
lured him from America: it was the fiscus who drove him out. By
hiding his principal motivation
for leaving, the plaintiff laid
himself open to the kind of criticism voiced in the Noseweek article.
He can, accordingly, not
succeed on either of these two issues.
Grimmig’s Gripe
There
are two complaints associated with the tale told by Noseweek about Dr
Grimmig. The Noseweek defendants are said to have conveyed
to (heir
readers that –
a.
the plaintiff fled from Germany to avoid honouring
his obligations to
Springer Verlag;
b.
the  plaintiff  lied  about
knowing  Grimmig
and  about  having received an advance of 40 000
Swiss Francs.
This
is the passage relied upon by the plaintiff –
“
He left Germany
without leaving a forwarding address, just as German industrialist
and publisher Hans Grimmig (of the massive Springer
Verlag) - who had
paid him an advance of 40 000 Swiss Francs - was becoming
disillusioned with Hall. Grimmig would later come to
South Africa in
search of his money. Arriving in Cape Town in 1983, he called Hall:
‘He denied knowing me and also denied
ever having been to
Germany’, said Grimmig recalling the conversation. ‘1
feel that such deceitful conduct should sooner
or later have legal
consequences’ “.
This
is one area of the Noseweek article where the first defendant’s
research proved to have been inadequate. There is a corporation

called Hans Grimmig GmbH. The man in charge of that business is Dr
Dieter Grimmig. He is a son of Hans Grimmig whose name, I take
it,
the corporation bears. It is common cause that Dieter is alive and
well and that Hans died in the early 1960’s. The facts,
as we
now know them, are that Dieter Grimmig, although he is a German
industrialist, is not a publisher. He has nothing to do with
the
Springer Verlag. The idea that he might have had something to do with
the Springer Verlag probably originated with an article
on the
plaintiff which appeared in the Santa Barbara News-Press on 29
December 1975. I t was written by Chet Holcombe. Mr Holcombe’s

article was relied upon by the first defendant in writing the
Noseweek article. Mr Holcombe told his readers that plaintiff had

“accepted a position offered by Grimmig KG, Heidelberg, the
publisher of his three books on the use of his surgical tools
... “A
little later in the article Mr Holcombe wrote -
“
So successful were
both sets of surgeon’s instruments that they have been used in
many countries, together with the Hall textbooks
on the use of the
tools. Springer Verlag Heidelberg is the publisher of his books,
while the Readers’ Digest and other magazines
have told of
them”.
It
is easy to see how a careless reader of this article could have
concluded that there was a connection between Grimmig K.G. and

Springer Verlag, both of which are said to be the publisher of the
plaintiff’s books. A careful reader would, on the other
hand,
have asked himself how two entities could have published the same
books and would have tried to clear it up with Mr Chet
Holcombe and
Dr Dieter Grimmig.
The
first defendant testified that he had indeed spoken to Holcombe
before writing his Noseweek article in order to satisfy himself
that
the Santa Barbara News-Press article was genuine. This testimony was
dramatically shown to be false when plaintiff’s
counsel in
cross-examination produced an obituary from the same newspaper dated
10 July 1987 mourning the death of Mr Holcombe.
Not much turns on
this, save that it illustrates the dangers of gilding the lily.
The
other documentation on which the first defendant relied in writing
the Noseweek article, was a letter from Dr Dieter Grimmig
to Heyns
recalling his encounter with the plaintiff years earlier. One does
not know how carefully the first defendant read the
Grimmig letter.
It is signed Dipl. Ing. Dieter Grimmig. There is no mention of Hans
Grimmig. When the first defendant then telephoned
Grimmig, as he
claims he did, he would, I presume, have asked to speak to the
signatory of the letter, Dr Dieter Grimmig. Had he
spoken to a person
who identified himself as Dr Dieter Grimmig, he would have - must
have - asked him about Hans, the lead actor
in the drama. He would
then have discovered that the Santa Barbara News-Press article was
incorrect. He may also have discovered
that, contrary to what
Grimmig’s letter implied, the plaintiff did not live in Germany
but only had an accommodation address
there which was the address of
Grimmig’s secretary. The first defendant would then not have
written that the plaintiff had
left Germany. Moreover, if Grimmig had
told him what the first defendant pretended he did, the first
defendant would not have remained
ensnared in his earlier error that
Grimmig had anything to do with the Springer Verlag. Again, although
the first defendant’s
evidence in this regard was
unsatisfactory and unreliable, nothing much turns on it, except that
it illustrates that lilies are
best left ungilded.
The
evidence that the plaintiff departed without leaving a forwarding
address is also a little thin. Grimmig states –
“
By hints from the
Sladmore Gallery ... I have learned of Dr Hall’s address in
South Africa ...“
I
am not at all sure that this passage means that Grimmig had to ferret
out a forwarding address which had been concealed. Persons
at the
plaintiff’s place of residence in England may have known
perfectly well where he was.
The
errors – which are attributable to the first defendant’s
carelessness first in reading and then in checking his
sources –
are, however, as I have indicated, not material. The sting of the
article is that -
a.
Grimmig advanced money to the plaintiff.
b.
The plaintiff moved away -
i.
without settling the debt.
ii.
without leaving word with Grimmig of where he had
gone.
c.
When  he  was  traced  plaintiff
falsely
denied  having  ever  met Grimmig.
I
must be satisfied that the sting of the article is true. To prove the
truth of the facts published by the Noseweek defendants,
they
tendered in evidence the letter written by Dr Dieter Grimmig to Heyns
as well as a later statement faxed by Dr Grimmig on
1 April 1996 at
the request of the Noseweek Legal advisers. Dr Grimmig could not be
prevailed upon to travel to South Africa for
the trial. The second
defendant accordingly asked for the statements to be admitted under
Section 3 of the Law of Evidence Amendment
Act. I overruled the
plaintiff's objection to the admission of these documents. My reasons
appear from that judgment. Thereupon
the plaintiff tendered an
affidavit made by the former counsel of the Noseweek defendants
concerning a telephonic consultation
with Dr Grimmig. That was also
admitted in evidence. It was said to show the unreliability of the
two Grimmig statements. I am
not satisfied that it does. I think,
rather, that an analysis of the Grimmig statements together with such
other relevant evidence
as has emerged, tends to show that the
statements, if a little vague here and there, are sufficiently
reliable for the purposes
of this case. I deal with the component
elements one by one.
Not repaying money owed
Grimmig’s
statement in this regard reads -
“
I herewith confirm
that Dr Robert Hall owes me 39,423 Swiss Francs since March 1978 and
in addition interest on this amount from
that time till today. Dr
Hall failed to comply with his obligations from a contract dating
January 1976. On the other hand he did
not return the money he was
paid.”
These
pointed allegations have not been shown to be suspect. On the
contrary, there are indications that they are reliable. When
the
plaintiff’s counsel interviewed Grimmig in Germany at the
beginning of 1996, he expressed his preparedness to prevail
upon his
client to pay Dr Grimmig the money which the latter claimed was owed
to him. Ms Patricia Thomson. the plaintiff’s
secretary, was
present at the interview. She says in an affidavit that counsel’s
offer to Grimmig to prevail upon his client
to effect repayment was
intended merely to challenge Grimmig on the foundation of his belief
that the plaintiff (and not anyone
else) was his debtor. I find his
explanation forced. Counsel must have been armed with instructions
from his client that the latter
had never become indebted to Grimmig.
The plaintiffs case seems to be that although it is admitted that
Grimmig paid him 40 000
Swiss Francs, he should have looked for
reimbursement to the American sponsors of the plaintiff.
On
2 February 1996 Ms Thomson wrote to Grimmig to ask whether he should
not have looked to the 3M Co to reimburse him instead of
to Dr Hall.
There was no reply to this letter. However, Grimmig does in his
statement deal with the topic. He says that the arrangement
was that
he would pay the plaintiff and that the plaintiff had promised him
that such amounts would be repaid by “Hall’s
American
sponsors”, failing which, he himself would repay any amounts
due. Some payments were received from the United States
but they
ceased when the plaintiff left London during or about 1979. 40 000
Swiss francs were then due.
Mr
Van Den Berg
made great play of the fact that Grimmig did not
in his earlier letter mention that the
causa
for the debt had
in reality been a guarantee. This statement, he argued, represented a
departure from the letter and made his evidence
so flawed as to make
it unreliable. I do not agree with the submission. It does not help
the plaintiff to nitpick. The only way
in which he could have
seriously challenged Grimmig’s evidence, would have been to
give evidence himself. I have nothing
from the plaintiff’s
side, not even extracurially, to suggest that Grimmig is mistaken.
There is therefore no reason for
me to suppose that Grimmig might in
cross- examination have deviated from his statement to such an extent
as to reduce its cogency.
Moving surreptitiously
It
is clear from the Grimmig letter that the plaintiff did not confide
in him where he had moved his residence. It may not have
been correct
to say that he left no forwarding address at his old residential
address but the point is a minor one. The article
suggests that he
moved slyly owing his employer money and without informing him of his
new address. That in its essentials was
true.
Denying Grimmig
Grimmig
says this –
“
1 have learned of
Dr Hall’s address in South Africa and have in May 1983 tried to
visit him in Hout Bay and to call him to
account. But Dr Hall had
himself denied. The next day I had him on the phone, but he denied
knowing me and also denied having ever
been to Germany.”
The
plaintiff’s acknowledgement of Grimmig has varied. To a
reporter of Eikestadnuus, the plaintiff recounted that he knew
no one
by the name of Grimmig. In a long statement to the Department of Home
Affairs, however, the plaintiff maintained that he
performed
investment consultancy work for “a certain Mr Grimmig”
while he was living in the United Kingdom. It is apparent
from
letters addressed by the plaintiff to Dr Dieter Grimmig that they
were at one time on quite cordial terms. It has not been
explained
what could have soured their relationship to the point where - if the
plaintiffs version is to be accepted - Dr Grimmig
would have made up
the curious story of his attempted visit to the plaintiff in Hout
Bay. It is just not the kind of story one
invents.
In
the light of the plaintiff’s ambivalent attitude to his
relationship with Dr Grimmig, I do not think that there is anything

before me which might lead me to doubt the essential soundness of the
two Grimmig statements. I am satisfied that Grimmig’s

statements are reliable. That being so, I find that the Noseweek
article concerning the Grimmig affair was, despite its inaccuracies,

substantially true.
Faking Marlene
Boesch-Webber’s signature
Marlene
Boesch-Webber is the secretary and one of the directors of Grada
Corporation. On 18 August 1987 she attended a board meeting
of Grada
at which it was resolved that she be authorised to empower the
plaintiff to be the corporation’s representative
in South
Africa. Marlene Boesch-Webber signed a power of attorney giving
effect to the resolution. By the time an agreement was
concluded on
20 April 1989 between Heyns, the plaintiff, Solvig Bowman and Grada
Corporation, the plaintiff had held that power
of attorney for 18
months. The agreement was the same one already discussed in
connection with the importation of finrand for the
purchase of shares
in Firgrove. It was pointed out in evidence by the first defendant
that the agreement, and a deed of cession
executed on the same day,
purported to be signed by Marlene Boesch-Webber, but that the
signature did not correspond with that
on the resolution and power of
attorney of Grada. It was not denied in cross-examination of the
first defendant that the plaintiff
had signed the agreement and the
cession. The contention was that the signing of Marlene
Boesch-Webber’s name had been authorised.
The signatures could
therefore not be said to have been fakes.
The
paragraph in which the statement about the faking of Marlene Boesch-
Webber’s signature occurs reads as follows –
“
Since the early
1980’s the Reserve Bank has known that Dr I-Jail operates his
off-shore business  interests
through a  trust
registered in Jersey and a Panama company known as the Grada
Corporation. He has, from time to time,
declared so himself. So
transparent is his ownership of the Grada Corporation that he does
not even bother to get one of the front
directors in Switzerland to
sign contracts on its behalf. Instead he brazenly fakes Marlene
Boesch-Webber’s signature whenever
the occasion demands.”
The
plaintiff’s counsel relied on the common law rule that an agent
may. with the necessary authority, write his principal’s
name
instead of his own. That is then taken to be the principal’s
signature. Here we have something different. The plaintiff
did not
write the name of the principal, Grada Corporation. He wrote the name
of the principal’s agent, Marlene Boesch-Webber.
He held out to
the world that this particular agent had signed on behalf of the
principal. That was, of course, not true. A different
agent, a
sub-agent, had signed her name.
There
was every reason for the plaintiff to have chosed this way of doing
things. It was important that his relationship with Grada
Corporation
should not appear from the contract. Payment was to be made in
financial rands and we know, from what has gone before,
that the
Reserve Bank would not have given permission for the transaction to
proceed if the plaintiffs incestuous relationship
with Grada
Corporation were made to appear from the contact. It is clear,
moreover, from a note dictated by the plaintiff to his
typist, that
he was careful not to be identified from the agreement as an agent
for Grada Corporation. His choice of Marlene Boesch-Webber’s

name instead of his own was therefore a concealment which could
properly have been described as a fake.
Finally,
I should say that I agree with the first defendant that the Noseweek
article does not suggest that the plaintiff was signing
the contract
in fraud of Grada. It does not suggest shameful conduct
vis
a
vis
Grada, but rather a provocative
use of the plaintiff’s own authority in and control over Grada.
The Noseweek Iniuria
claim
I
now turn to a discussion of the three statements said to have been
made intentionally to injure the plaintiff and which are alleged
to
have humiliated and degraded him. Mr Van Den Berg did not press the
iniuria claim; but he did not abandon it, so I must deal
with it.
Indulging oneself
The
remark in the Noseweek article that “he (the plaintiff) would
even have you believe self indulgence is an admirable form
of
patriotism”, is a dig at the publicity which had been given to
the plaintiffs restoration of the Cape Dutch farmhouse
on
Stellenkloof and at the opulence of Stellenkloof itself. The comment
is directed at the swan lake in the gardens, the waterfall,
the flood
lit tennis court and the pool with its timber deck. The plaintiff
represented it in interviews with journalists as a
major contribution
to the cultural heritage of the Cape and as a gift to his adopted
country. The first defendant said in evidence
that he thought the
whole thing rather pretentious. Hence the ironic comment. I quite
fail to see how this comment could have hurt
the plaintiff’s
feelings. It is the sort of criticism which a public figure - or one
who seeks public attention like the
plaintiff does - should accept
with equanimity.
Let
me suppose that I am wrong in thinking that the words were not
injurious. The plaintiff then encounters the difficulty that
he did
not testify about the injury to his feelings. Instead, he called
someone to say that shortly after having read the Noseweek
article
he, the plaintiff, looked crestfallen. There is no telling what he
felt offended about. There were many other, more seriously
damaging,
statements which he might have taken to heart. I am unable,
therefore, to find that the plaintiff has proved any damages
here.
Promoting oneself
The
plaintiff was nominated to receive the Nobel prize for medicine in
1973 by the American Society of maxillo-facial surgeons on
the
strength of his supposed contributions to the development of a range
of air-driven hand tools used in surgical procedures.
The Hall air
drill which the plaintiff claims to have invented was at the time of
its introduction onto the market a significant
advance on equipment
used in surgery to cut or shape hard tissue like bone.
There
was litigation about the Hall air drill. First of all the U.S Patent
Office found that the plaintiff and his then partner,
a man called
Roth, were entitled to the patent filed by a certain dc Groff, an
employee of Aro Corporation which manufactured the
tool. The
plaintiff and Roth had presented Aro with a list of specifications
for an air driven drill which they envisaged. The
question before the
board was whether their suggestions amounted to a complete conception
of the invention, that is to say, whether
they had conveyed to De
Groff ‘an idea of specific means for accomplishing the desired
end.’ The board found that they
had. The appeal tribunal
disagreed. It found that the inventive steps were taken by De Groff.
He had not been supplied with such
detail that he would have been
able “without the exercise of any ingenuity and special skill
on his part, to construct and
put the improvement in successful
operation.”
Dc
Groff was therefore held to be entitled to the patent. He was the
inventor. It is not as though the plaintiff has ever challenged
the
correctness of that decision. In evidence in a so-called interference
hearing’ - a hearing to determine precedence on
a patent - the
plaintiff deposed that he and his partner Roth had been selling a
piece of equipment called a Weber dental hand
piece. They felt that
this hand piece was not altogether satisfactory, so, using the Weber
hand piece as a sample, they approached
numerous manufacturers asking
them to develop a modified piece of equipment which would better
serve the needs of customers. Eventually,
after many attempts had
failed, they came to Aro Corporation and asked them if they could do
the job. They made no suggestions
as to the type of motor or brake
mechanism, or control lever, flow of air, or type of turbine. The
engineering staff at Aro Corporation
did all the work.
When,
thereafter. Roth’s attorney approached the plaintiff with a
patent application for him to co-sign with Roth, the plaintiff

refused to sign it. He refused because, not having been the inventor,
the claim would have been fraudulent. The plaintiff’s
attorney
made his client’s attitude perfectly clear in a letter dated 13
November 1963. The relevant part reads –
I have been directed to
advise you that Dr Hall is not in a position to execute the tendered
application for the following reason
-
1.
He is not the inventor, either singly or jointly
with Mr Roth, of any
of the inventions attributed to him in the tendered specification:
and he did not design, devise or otherwise
invent the structure set
forth in the tendered application.
2.
The only patentable inventions or discoveries
made by him, either
alone or with others, in the field of surgical drills are those
covered by the patent application filed in
the United States Patent
Office on May 26, 1961, (Serial No. 112, 864).
3.
In his opinion, if he were to subscribe to
the Oath, Power of
Attorney and Petition of the application signed by Daniel D. Roth and
tendered by you for his signature, he
would be committing perjury.
For the above reasons, I
have been instructed to direct that you delete Dr. Hall’s name
from the application. since neither
you nor the patent counsel
designated therein has any authority, express or implied, to
represent him in this or any other patent
application.
Very truly yours,
William D. Sutton”.
A
video recording, twice broadcast on the national television system,
made with the plaintiff’s co-operation, was tendered
in
evidence. In it plaintiff is described as the ‘man who changed
the entire course of surgical history’. At one point
the
voiceover narrator proclaims -
“
Inspired by his
dream of surgical revolution, he threw himself into years of
painstakingly difficult research and development. The
obstacles were
many, with little or no encouragement. But finally, the first major
breakthrough; and in 1963 success - the completion
of the first basic
unit”.
There
is further talk of the miraculous Hall air drill which ‘carved
a name for the inventor in the history of surgery’.
When the
truth emerged in the course of this trial - that the plaintiff was
not the inventor of the Hall air drill, the surgiotme,
the orthotome,
the neurotome or the craniotome – he was compelled to back
down. To salvage what remained of his image, he
disclosed-a patent
registered in his name for twelve drill attachments so that people
might not think he had invented nothing at
all.
There
are many examples of publication of the statement that the plaintiff
had been a Nobel prize nominee. Some of these were made
in magazine
and newspaper articles. The plaintiff would not be responsible for
the occasionally fulsome language, but that he should
have seen fit
to claim that he had been nominated for a Nobel prize because of his
inventive skills, I find breathtaking. The effrontery
of the
plaintiff’s claim to have invented the Hall airdrill (and other
major surgical devices) justifies the Noseweek comment
that the
plaintiff has made a successful lifetime career of self-promotion.
Striking it lucky
It
was conceded by the first defendant that there was no evidence that
the plaintiff had been a mediocre dentist. The statement
appears to
have derived from an utterance by the plaintiff in the video
recording made about him and his supposed accomplishments.
The
plaintiff said that he had not been a good student and had therefore
had to work harder than other students. It was probably
this
utterance which was misinterpreted by the first defendant to mean
that plaintiff had himself confessed to being a mediocre
dentist.
I
shall assume that it is hurtful to say of someone that he is
incapable of practising his profession well, particularly if the

source of that information is stated to be an admission by that
person himself. “Mediocre’ means Hof middling quality,

neither good nor bad, indifferent, of poor quality, second rate”.
The epithet is admittedly undeserved.  There is no
evidence
that  the plaintiff was a mediocre dentist. The difficulty with
this part of the claim is that mentioned earlier:
the plaintiff has
chosen not to speak of his own pain on reading the offending words.
Without having heard his own evidence on
his own distress, I am
afraid that I cannot help him.
The Argus
The
case which survives against the Argus defendants, is that the Argus
article states of the plaintiff, directly or by implication,
that he
is a:
criminal or suspected
criminal, and/or a fugitive from justice, and/or wanted by
authorities or to be arrested by authorities.
This,
it is alleged, is evidenced by the plaintiffs photograph; the
caption:
WANTED:
Millionaire Robert Hall is on the
run:
the heading “
American
sought for
Rl.5m tax debt”,
and the following extract from the Argus
article –
“
All his records
and those of his companies have been seized from the offices of
accountants Ernst and Young, Cape Town, by an officer
of the police
commercial crime unit, who was accompanied by a member of the
Receiver of Revenue’s staff.”
“
This was confirmed
yesterday by Captain John Sterrenberg, media liaison officer for the
police.”
“
The commercial
crime unit is in the process of verifying allegations pertaining to
contraventions of the Income Tax Act” added
Captain
Sterrenberg.”.
The
defence to these allegations is that the article does not bear the
meaning pleaded. It is contended that the words state explicitly,
and
would have been understood by the ordinary reader to mean, that the
plaintiff was wanted or sought by the Receiver of Revenue,
was being
pursued by the Receiver of Revenue, and was, in a sense other than
the literal one, on the run from the Receiver of Revenue.
It
was submitted by
Mr Kirk-Cohen
that the word “wanted’
could be used in a variety of meanings. It can indubitably have the
meaning contended for by
the plaintiff:
“
Want - to hunt or
seek in order to apprehend (he is wanted for murder)”
(Webster’s New Collegiate Dictionary [19741).
The word need not
necessarily connote impending or intended arrest, even when used in
this sense:
want - (as
wanted
adj)
(of a suspected criminal etc.) sought by the police. (The Concise
Dictionary of Current English [1984]).
It can have a broader
meaning of being sought for:
Want, vb (tr. often
passive) to seek or request the presence of. “You are wanted
upstairs” (Collins Dictionary of the
English Language, [19791).
The phrase ‘on the
run’ can similarly be used in a narrow (literal) sense: on the
run 1: in haste: without pausing:
2: in retreat, running away.
(Webster,
supra).
This phrase, too, has
broader connotations:
a:
escaping from arrest: fugitive b:   in rapid flight;
retreating.
c:   hurrying
from    place    to
place
(Collins,
supra).
According to the “
Shorter
Oxford English
Dictionary”
(Third Edition) the word “seek”
can have the following meanings:
1.
To go in search or quest of; to try to find, look for.
2.
To  pursue  with  hostile  intention;  to

go  to  attack, advance against; to persecute,
harass, afflict.
Which
specific meaning should be accorded the word must be ascertained by a
reading of the article as a whole, and the word in its
context. See
Demmers
v
Wyllie
&
Others
1978 (4) SA 619
(D). Where an article is
capable of two different constructions, it will be held to have the
non- defamatory meaning. See
Conroy v Nicol & Another
1951
(1) SA 653
(A) at 663C, quoting with approval,
Neville v Fine Art
and General Insurance Company
1897 A.C. 73:
“
It seems to me
unreasonable that, when there are a number of good interpretations,
the only bad one should be seized upon to give
a defamatory sense to
the document.”
The
decision in
Conroy’s
case is not quite in point. The
words presently under consideration are defamatory in all their
possible meanings. But I do consider
that
Conroy’s
case is helpful in implying, as I think it does, that if there
are shades of defamatory meaning one should not seize upon the
darkest
one, by which I mean the one that the defendants cannot
justify. The caption and headings are perfectly capable of meaning no
more
than that the plaintiff is on the defensive in an assault by the
Receiver. I do not, therefore, consider at any length Mr Van den

Berg’s argument (and Mr Kirk-Cohen’s counter-argument)
that one is obliged to consider the reaction of the ordinary

reasonable reader who would have read only the caption and headlines
and not the body of the article.
In
case I have erred on this score, however, let me say that it seems to
me that the plaintiff’s counsel tended to rely rather
too much
on cases, the facts of which are different. One cannot lay down as a
general rule that a defamatory headline by itself
does or does not
give rise to liability. That is so, because the test is the reaction
of the ordinary reader to published matter.
The reaction of the
ordinary reader to a headline will vary from one to another. It will
depend on many factors. Say the headline
forms part of a street
poster. Here, the ordinary reader may not be in a position to satisfy
his curiosity by reading the advertised
article. Or it may advertise
a newspaper that he does not normally read. The danger that the
impression left by the poster may
be the only one is very real. Or
take the case of text giving an innocent meaning to a defamatory
headline where the text is buried
so deep  in the
article  or is  so obscure  that an  ordinary
newspaper reader might overlook it.
Here again, the danger of the
ordinary reader being left with the impression created by the
headline alone, is very real. But that
is not to say that, as a
matter of law, a
prima facie
defamatory headline may be read
apart from the body of an article from which it is apparent that no,
or a lesser, defamatory meaning
was intended. All that one can say is
that whether or not the ordinary reader would have read a headline on
its own, depends upon
the circumstances, one of which is the
accessibility of the text.
In
casu,
I think that the text can be said to have been readily
accessible. I do not believe that the ordinary reader of the Argus
article
would have read only the headlines. If the headlines of the
article caught his attention - and headlines are there, after all, to

guide newspaper readers to what interests them - he would have read
the text which was not long, difficult or tucked away somewhere.
If
the headlines interested him so little that he did not bother to read
the text, he would not, I am sure, have remembered them
for longer
than it took him to put the newspaper down. His appreciation of the
plaintiff’s
fama
would not have been altered.
The
decisions in
Kritzinger
v
Pekorporasie
van
S.A.
1981
2
SA
373
(0)
and
English
and Scottish Co-Operative Properties Mortgage and Investment Society
Ltd v Odhams Press Ltd 119801
1 KB 440
(CA)
do not in the
unqualified form contended for by Mr Van den Berg “support the
contention that the heading in isolation could
sustain an action,
regardless of whether the text  was substantially correct.”
They are, at best, examples of circumstances
where an ordinary reader
would have been so influenced by the heading that it would have
coloured the rest of the article.
The
text of the article makes it quite clear that the plaintiff is not
stated to be in physical flight. No mention is made of a
departure by
the plaintiff. It would immediately have been apparent to the
reasonable reader (who must be supposed to know a little
about what
sells newspapers) that if there had been a physical departure by the
plaintiff, that would have been the sensational
event which would
have received the most coverage. Further, the text of the article
makes it clear that it is the Receiver who
is after the plaintiff’s
blood. He laid a charge with the commercial unit of the South African
police. The police acted in
response to that charge. It is not said
that they suspect the plaintiff of anything. The Receiver is the one
who suspects the plaintiff
of having contravened the Income Tax Act.
The reader is thus given to understand that the plaintiff might have
committed some statutory
offence. He would undoubtedly infer from the
seizure of the plaintiff’s records and those of his companies
that the Receiver
regards it as a statutory offence of some gravity.
Perhaps he would think to himself that the Receiver was being
excessively cautious
because there was a large amount of tax involved
and because a ‘surety’ for the tax had not materialised.
He would
have concluded that the plaintiff had got himself into
trouble over unpaid tax. The Receiver was now getting the better of
him.
The Receiver was on the offensive while the plaintiff was in
retreat. I agree with Mr Kirk-Cohen that a reading of the article as

a whole makes it clear that the word “wanted” is not used
in the sense of evading capture or arrest. The ‘pursuit”

is that of the Receiver and not that of the South African Police
Services.
I
agree, also, that the words “on the run” were in the
context of the article used in their metaphorical sense. The

plaintiff was on the run, in the sense that, although he could be
found, he was conducting his affairs in such a manner as to evade
one
who had hostile intentions. An appropriate analogy would be a debtor
who alienates his assets so as to evade his creditors.
Such a person
is “on the run” from his creditors. The words are used in
the sense that plaintiff - ostensibly a wealthy
man - is evading his
obligations to the Receiver in the manner set forth in the article:
he had been assessed; he had promised
a surety bond; none had
materialised. In the circumstances, and in the sense intended by the
article and understood by the average
reader, plaintiff was pursued
by the Receiver, wanted by the Receiver and on the run from the
Receiver.
The
Argus defendants submitted in the alternative that even if the words
complained of were to be understood in a non-figurative
sense, they
were true since the plaintiff was a suspected criminal and was and is
a criminal and a fugitive from justice both locally
and
internationally. In the light of the view which I have taken - that
the Argus defendants’ principal submission is correct
- it is
not necessary for me to devote time to the alternative argument.
The
Argus defendants relied on two sets of circumstances for the truth of
their assertion that the plaintiff was (figuratively)
running away
from the Receiver. They concern two interlinked undertakings given to
the Revenue. The plaintiff who, it was thought
at the time, was in
possession of R1.6m worth of Krugerrands undertook not to dispose of
them until he had had a surety mortgage
bond registered over the
immovable property of Stellenkloof. He was a party to a false
assurance to the Receiver that he had not
disposed of, and would not
dispose of, the Krugerrands. Then, having disposed of the
Krugerrands, he failed to have the surety
mortgage bond registered.
The Krugerrands
Stellenkloof
subdivided its property and during February and April 1993 received
the purchase prices of altogether R1.68m for three
subdivided
portions. The proceeds were deposited not, as one would have
expected, into Stellenkloof’s banking account but
into an
account of the plaintiff himself. There are several disquieting
features of this transaction.
An
amount of R1.133m in respect of the sale of two portions of
Stellenkloof was received on 12 February 1993. Three days later the

purchase price of 700 Kruger rands from the Cape Gold Coin Exchange
was debited to the plaintiffs account. On 17 February the plaintiff

bought another 400 Kruger rands from the Cape Gold Coin Exchange. On
the same day he made application to the Reserve Bank via Rennies

Travel for an additional travel allowance for an overseas trip
commencing on 27 February 1993 and ending on 28 April 1993. As is

evidenced by his passport, the plaintiff left Cape Town on 27
February 1993. He arrived back in the country some time during March

1993.
On
24 March 1993 the plaintiff paid Investec R34 000 for 50 Krugerrands.
He received into his Stellenbosch account an amount of
R469 302 in
respect of the sale of a portion of Stellenkloof on 21 April 1993.
The day after that he paid Investec R448 000,00
for an additional 400
Krugerrands. On 19 May 1993 the plaintiff applied to the Reserve Bank
via Rennies Travel for an additional
business allowance stating that
he would depart on 2 June 1993. On 25 May 1993 he faxed Investec,
saying that he would collect
the 450 Kruger rands being held for his
account two days later. There are no stamps in the plaintiff’s
passports indicating
that he left the Republic on or about 2 June
1993. However, I agree with Mr Kirk-Cohen that the plaintiff probably
had another
passport which he has not disclosed. There is no
indication of what became of these Kruger rands. No documentation
concerning their
sale has been discovered by the plaintiff. The
inference that the coins were taken overseas is in the circumstances
a strong one.
On
27 July 1993 there was a meeting with the Receiver of Revenue,
attended by the plaintiff, Mr Clegg, the tax specialist of Ernst
&
Young, the plaintiff’s accountants and auditors, and Mr Krige,
a professional assistant of that firm. The purpose of
the meeting was
to explain to the Receiver that the plaintiff was unable to pay the
tax to which he had been assessed and to ask
the Receiver to defer
payment of the tax until after the hearing of an appeal which the
plaintiff had lodged.
At
the meeting, Clegg explained to the Receiver that the plaintiff had
no assets in South Africa. In the plaintiffs presence he
advanced the
suggestion that the proceeds of the sale of portions of Stellenkloof
had reduced the company’s overdraft. This
as we now know was
not true. It was at this point that the Receiver revealed that he
knew that the plaintiff had purchased Krugerrands
with Stellenkloof’s
money. This revelation caused consternation in the ranks of the
plaintiff’s advisers. A hurried
meeting between Clegg and the
plaintiff was held in seclusion, whereupon the meeting was informed
that Stellenkloof would, as security
for the plaintiff’s tax
debt, give a surety bond by way of a second mortgage over its
property. An unequivocal undertaking
was given to the Receiver that
the bond would be registered within two weeks, and that, pending
registration of the bond, there
would be no further sale of any
Krugerrands. Mr Cowdry, a conveyancer from Syfret, Godlondton and
Fuller-Moore, was instructed
to see to the registration of a second
mortgage bond as soon as possible.
On
4 August 1993 Mr Krige wrote to the Receiver on behalf of the
plaintiff, advising him that the plaintiff had received on behalf
of
Stellenkloof an amount of R1,681m all of which he had invested in
Kruger rands on 15 and 17 February. 24 March and 22 April
1993. He
assured the Receiver that there had been no further sales or
purchases of coins. When Mr Krige at the suggestion of the
Receiver
attempted on 4 January 1994 to audit the Kruger rands, he was shocked
to find that contrary to the undertaking given to
the Receiver, 1 240
of the coins could not be accounted for. Investec held 100 of the
Kruger rands on behalf of the plaintiff,
not on behalf of
Stellenkloof, whilst 260 coins had been deposited at Nedbank.
Plaintiff
has, as I noted earlier, never explained the disappearance of these
coins. If he had disposed of them before the meeting
with the
Receiver on 27 July 1993, he would, of course, have lied to the
Receiver. If he had disposed of them after the meeting,
he would have
breached his undertaking to the Receiver in the light of the fact
that the surety bond had by 4 January 1994 not
yet been registered
and has, in fact, as we shall presently see, to this day not been
registered.
The
explanation for the disappearance of some of the coins which was
given to Mr Krige by the plaintiff’s wife was that 965
of them
had been given to her in settlement of a debt. The difficulty with
Mrs Hall's assertion is that the plaintiff had not in
any of the
contradictory statements of assets and liabilities which he had given
to the Receiver on various occasions declared
this debt as a
liability. His wife had not declared it as an asset. It was not
suggested in cross- examination how the plaintiff
would have
contracted such a large debt to his wife. Eventually, when the
plaintiffs view was sought, he told Krige that the remaining
275
Kruger rands (1240 minus 965) were sold in September and October W9,3
by Stellenkloof at a profit. The R345 000 sale proceeds
were not
accounted for. I have been shown no proof of such sales.
Mr
Tredoux argued on behalf of the plaintiff that the Receiver could
never have laid claim to the Krugerrands which were Stellenkloof’s

property. That is true; but it is the plaintiff’s attitude to
the Receiver which is under the spotlight. There is no reason
to
believe that, had the plaintiff wanted to, he could not have obtained
the necessary funds from Grada to give security or even
satisfy the
Receiver’s claim pending his appeal. Yet he was prepared to lie
and cheat in order to forestall payment of the
tax to which he had
been assessed. That is the conduct of a man who is figuratively
evading the fescues, a man who is running away
from the Receiver.
The surety bond
Mr
Cowdry of the firm Syfret Godlonton Fuller-Moore Inc testified that
the plaintiff who was his client at the time, in August 1993

instructed him to see to the registration of a surety mortgage bond
over the immovable property of Stellenkloof in favour of the
Receiver
of Revenue. The bond was to secure the plaintiff’s indebtedness
to the Receiver in respect of income tax to which
he had been
assessed pending a decision by the Income Tax Special Court. The bond
was to be for R1.6m but what with interest accruing
on the amount,
discussions ensued as to whether the amount of the bond should not be
increased.
Shortly
thereafter the plaintiff instructed Cowdry to stop work on
registering the bond. Plaintiff had changed his tax advisers.
Their
advice was to withhold registration. Ernst & Young were
embarrassed by this development in view of the undertaking given
to
the Revenue that a bond would be registered and on 27 January 1994
advised the Revenue of these new developments. On the same
day, the
plaintiffs new advisers concluded that registration should proceed,
after all, and the plaintiff advised Mr Cowdry accordingly.
On 19
February 1994 a draft bond for R1.6m was forwarded to the Receiver
for his approval. On 22 March 1994 the Revenue approved
registration
of the bond. On 2 May 1994 the bond documents were lodged for
registration. At the last moment a problem with regard
to Reserve
Bank approval arose. Stellenkloof as an affected company, could not
borrow money locally without Reserve Bank approval.
By August 1994
when the new tax consultants resigned, the bond had not yet been
registered. Then documents were lost in the post
and the whole
registration process had to start over again. Before it could get
under way the plaintiff’s latest tax adviser
wrote to the
Receiver in May 1995 declining to give any surety bond at all. The
last letter on Cowdry’s file is a threat
from the Receiver on
15 September 1995 to sequestrate the plaintiff.
We
have not been told what the advice from the latest tax adviser could
have been. Could it have been that agreements count for
nothing? That
one may break one’s word with impunity? Of course, the Revenue
has its remedies, but in the meantime three
years have gone by and
the plaintiff’s financial position is precarious. He is, as he
has confessed, insolvent. Where does
that leave the Receiver? Exactly
where plaintiff and his latest adviser intended him to be: in a much
weaker position than he would
have been if plaintiff had, like an
honourable man, kept his word.
The
history of the registration of the bond is a deplorable one. The
plaintiff had agreed to have a bond registered. He was bound
by that
agreement. He received an important
quid  pro
quo
for  it. The  Receiver  agreed  not to
enforce  the assessment immediately as he was entitled to have

done. There is no doubt in my mind, having regard to this sorry
history, that the plaintiff could be said, figuratively, to have
been
running from the Receiver. He was evading his obligations. It does
not help to protest, as the plaintiff does, that he broke
his word on
legal advice. He is still on the run and the Receiver is after him.
The public interest
The
plaintiff is a man who has sought and attained publicity. He has
actively promoted an image of himself as a famous millionaire
who
invented the Hall air drill, and other important pieces of medical
equipment. There can be no question that the plaintiff has
sought the
limelight, and has actively promoted himself as being a high-profile,
highly principled, wealthy man with a social conscience.
He has
occupied public platforms, publicly supported political campaigns,
and promoted himself whenever the opportunity arose.
He played a
quasi-political role, promoting himself as a personal friend of
former president Reagan,  calling  himself
an
unofficial  ambassador  to  South  Africa
and  an advisor to the Reagan administration
on South
Africa. The plaintiff has thrown away the shield of privacy to the
same extent as a public figure or politician.
Mr
Van den Berg argued that the Noseweek defendants should not be
permitted to raise long forgotten scandals in order to discredit
the
plaintiff. He argued that the Grimmig episode and the plaintiff’s
unhappy departure from America lay forgotten in the
mists of time and
that no one had any interest in bringing them back into the light.
I
agree with Mr Kirk-Cohen that our law will not permit buried
misdemeanors to be exhumed where a plaintiff has reformed and put

those misdemeanors behind him. Everyone is entitled to another
chance. That is clearly morally just. The plaintiff has, however,
not
started a new life. He has continued on the same road as before. He
cannot strut on the public stage and then be heard to say
that it is
against the public interest to be told what kind of a man he really
is.
It
was also argued on behalf of the plaintiff that even public figures
have a right to have some aspects of their lives kept private.
I
agree. That proposition is well established. But it applies to truly
private matters, not to dealings with public bodies and
creditors.
Conclusion on the merits
The
plaintiff has, in my view, not succeeded on any of the remaining
averments of defamation which remained in issue. In each case
the
defendants have managed to prove, on a balance of probability, and by
dint of much sustained effort, that what was said about
the plaintiff
was substantially true and in the public interest. The plaintiff’s
claims must therefore be dismissed.
The costs
a.
Generally
The
plaintiff has been unsuccessful. There is no reason to deviate from
the rule that the loser pays the costs of his opponents.
All the
defendants’ counsel have asked for costs on a punitive scale.
Their pleadings have been amended to include such a
prayer. It is to
a consideration of the merits of that request that I now turn.
The
plaintiff, as he issued summons, knew that the allegations made
against him by the first and second defendants in the Noseweek

article were true. If he issued summons with any hope of success in
the action, which I must suppose he did, it was based on the

expectation that the defendants would be unable to prove that the
statements made about him were true. His approach was, I realise
that
the things you have said about me are true, but if you do not manage
to prove them, I shall nevertheless recover very large
damages
against you.’ The plaintiff then set about making it as
difficult as he reasonably could for the defendants to prove
the
truth of their statements.
The
plaintiff’s attitude to the litigation is encapsulated in the
following passage which appears in the answering affidavit
of his
attorney, Mr Anastasios Vavatsanidis, in the application for security
for costs:
“
The defendants in
this matter published defamatory statements of and concerning
plaintiff and thereafter set up their defence on
the basis that the
allegations  which  were  published  were
not  only  true  but
also published in the
public interest. The onus in this regard is on defendants. Plaintiff
is accordingly perfectly entitled
to put the defendants to the proof
of the truth of the allegations which they published and of such
ancillary facts as they have
elected to introduce. While it may be so
that defendants would have found it more convenient if plaintiff made
factual admissions
in order to prove their case they cannot seriously
argue that this is a procedural right. Accordingly it is respectfully
submitted
that plaintiff had every right to put defendants to the
proof of the facts contained in the Court records of the United
States
of America.”
I
find it difficult to believe that the plaintiff embarked on this
defamation action to protect his
fama.
He knew that his public
image was the result of a carefully contrived and sustained
deception. He sued not to salvage his reputation
but to sustain a
colossal fraud. The whole exercise was a reckless gamble. It has been
a long, costly and futile trial. I have
repeatedly asked myself in
the course of it why the action had ever been brought. It seems a
self- destructive thing to have done.
It has engaged resources on a
huge scale. It has placed a very severe and quite unnecessary burden
on  all the  defendants.
There  never was any
real dispute on the facts. They were barely challenged. In most cases
they could not have been,
yet the plaintiff persisted in litigating
with a psychopathic ruthlessness as to the outcome. It is not even as
though the plaintiff
was taken by surprise. He was from the outset in
possession of the same evidentiary material as the defendants. This
kind of litigation
ought, in general, to be discouraged by a special
and punitive costs order.
The
cost to the Noseweek defendants has been ruinous. In the end, the
plaintiff abandoned many of the allegations against the Noseweek

defendants, but not before the trial had been made much more
expensive than it need have been. I think, in this regard,
particularly
of the falsehoods conveyed to the department of Home
Affairs in the plaintiff’s application for permanent residence.
The
evidence concerning this was relevant with regard to the
aspersion cast upon the plaintiff that he had “a way with the
truth.”
The plaintiff, in that application, answered
no
to a question whether he had left any debts abroad and
no
to a question whether he had ever been subject to a civil action.
The Noseweek defendants then sought to establish that civil judgments

for the non-payment of US taxes had been granted against plaintiff
when he lived in California. These were obtained pursuant to
civil
actions which had been taken against him. At first, and for quite a
while, plaintiff declined to admit that he was the judgment
debtor
described in the tax judgments and liens as Robert Milton Hall.
Eventually the evidence that the debtor could have been
none other
than the plaintiff became so overwhelming that he was compelled to
concede that the judgments had been granted against
him. In November
1995, before the trial started, he had set Out his version of why the
American judgments remained unpaid in a
statement to the Department
of Home Affairs. It was that his attorney had failed him. The
attorney failed to pay the more than
one million US dollars required
to discharge the debts. The story is silly, but that is not the
point. The point is that the plaintiff
never believed that there was
any doubt about the identity of the debtor in those judgments. I do
not believe that the strategy
of failing to make admissions where
admissions are due in a civil trial is a procedural right. Far from
it. The refusal to make
reasonable admissions may be, and in this
case was, an abuse of the process of the court.
Unfortunately,
the Argus defendants were also involved in all of this. It will be
recalled that the Argus defendants were sued on
the footing that they
were jointly responsible for the Noseweek article. This, I cannot
help thinking, was major  tactical
blunder  on  the
part  of  the  plaintiff.  By  the
time  the  Argus
defendants could  extricate
themselves  from  the  welter  of
complaints  made against
the Noseweek defendants, it was too
late. The costs of preparation (which) were enormous) had already
been incurred. Besides, the
Argus defendants were by then trapped in
the hearing. Their costs were appreciably increased by having to
listen to days of evidence
and argument which had nothing to do with
the plaintiff’s complaints about what they had published.
Then
there was the abandonment of the allegation that the Argus defendants
had said (or implied) that the plaintiff unlawfully dealt
in
financial rands. That came late in the day. The averment had put the
Argus defendants to an immense amount of preparation. There
were
mountains of Reserve Bank documents to work through. Some (too many
in my view) found their way into a bundle of Reserve Bank
documents
which was handed up. Where one has this kind of extensive pre-trial
research and preparation which then turns out to
have been done in
vain, only an attorney and client costs order can be adequate
recompense. The Argus defendants were also obliged
to sit through a
long application by the Noseweek defendants against the Receiver of
Revenue for access to certain of his records.
That application was in
my view ill-conceived, but the fact remains that the Argus defendants
would not have become reluctant spectators
of that skirmish if they
had not been ill-advisedly joined in the action. The plaintiff had a
rather better case against the Argus
defendants. I say this because
it - or the part of it which remained after amendment - depended on
the interpretation which a court
might give to the headings and
caption (read with or without the text) of the Argus article. Had
that been the bone of contention
from the beginning I would not have
thought of ordering attorney and client costs against the plaintiff.
Instead, and quite apart
from dragging the Argus defendants into the
Noseweek controversy about exchange control, the plaintiff sought to
blame them for
having said that he had transgressed exchange control
regulations when the article plainly said exactly the opposite. It
said that
the plaintiff was able to indulge in exchange transactions
because he had been specifically permitted by the Reserve Bank to do

so.
On
22 August 1996 the plaintiff proposed amendments to his pleadings.
They were only finally moved on 27 August, but from 22 August

everyone proceeded on the assumption that they would be granted.
Their effect has been described at the beginning of the judgment.

They considerably narrowed the issues. I think that the plaintiff
ought to be given credit for this.
I
am satisfied that the plaintiff should be ordered to pay the costs of
the third to seventh defendants on the scale as between
attorney and
client up to and including the hearing on 22August 1996. This order
applies to –
a.
the costs of the application for absolution.
b.
the qualifying fees of the expert witnesses
Salmon and Morris.
The
costs consequent upon the amendments moved on 27 August 1996 are to
be paid by the plaintiff on the party and party scale.
Onus of Proof
The
defendants at the outset of the trial launched a major application to
attempt to persuade me that the
onus
of proving truth
in the public interest, after the decision of
Holomisa
v
Argus
Newspapers
Ltd,
no
longer rested on them. The application failed. The costs were
reserved. All the defendants supported the contention that the
law
had changed. All were therefore lose. I see no reason why the costs
of this application should not follow the result. The plaintiff

employed two counsel in the trial. This was reasonable. The
interlocutory application was complex and involved considerable
research
and analysis. I think that it was therefore also
reasonable for the plaintiff to employ  two counsel in the
application.
The first to seventh defendants should jointly and
severally pay the plaintiffs costs.
Application against the
Receiver of Revenue
The
first and second defendants lost the application and were ordered to
pay the plaintiffs (and the Receiver’s) costs. The
plaintiff
submits that three trial days were lost due to the application and
that the Noseweek defendants should be ordered to
pay the ‘wasted’
costs. I do not understand the submission. The only costs that were
‘wasted’ were those
of the Argus defendants who were not
parties to the application. They would have been entitled to costs
from the plaintiff under
the general costs order for being compelled
to attend court while the Revenue application was being argued.
However, the Argus
defendants, although they were not parties to the
application, did file papers indicating (heir support and
contributing to the
case of the Noseweek applicants. In the
circumstances I think that they should pay such of their own costs as
relate to the Revenue
application, which would include the costs of
attending court while (ha application was argued.
Application to compel
trial particulars
Plaintiff
requested trial particulars on 28 February 1996. When, by 22 March
1996, two days after the start of the trial, these
particulars had
not yet been delivered, the plaintiff first set down an application
to compel. The application was not proceeded
with because the
Noseweek defendants undertook to provide the particulars by five
o’clock on that day. The Noseweek defendants,
it seems clear
enough, should in the circumstances pay the costs of the application
to compel.
The first Reserve Bank
application
The
application for access to documentation in the possession of the
Reserve Bank was necessitated by the provisions of
Section 33
of the
South African Reserve Bank Act 90 of 1989
. The order was granted by
consent. Costs were agreed to be costs in the cause. The plaintiff is
to pay those costs on the party
and party scale.
The Second Reserve Bank
application
The
next Reserve Bank application was more problematical. I he
application was settled. All the parties agreed to an order that

costs of the application be costs in the action. When the plaintiff
by amendment removed from the field of contention the allegation
that
it had been said of him that he had illegally dealt in financial
rands, the costs order was, at the insistence of the Argus

defendants, recalled. They were apprehensive that they might lose
what remained of the action against them, while at the same time

having won the financial rand battle by default. This would mean
that, in having to pay the costs of the action, they would be
obliged
to pay the costs of an application in relation to a distinct issue on
which they had been successful. The plaintiff seized
the opportunity
to argue that, despite its earlier acquiescence in the costs order,
the Argus defendants should be ordered to pay
the costs. The costs
order was not really recalled for the benefit of the plaintiff, but
for the peace of mind of the Argus defendants
who might have found
themselves in an inequitable situation because of the plaintiff’s
amendments. In my view the earlier
order that the costs of the
application were to be costs in the action should simply be
reinstated. The plaintiff is therefore
to pay such costs on a party
and party scale.
The
next question is what those costs should comprise. An advocate and an
attorney for the Reserve Bank remained in attendance throughout
the
two days of the witness Lautenberg’s consultations and
testimony. The witness, however, was in the nature of an expert

witness on exchange controls and the policy of the Reserve Bank. He
had no knowledge of the facts in dispute. I do not think that
it was
necessary to protect him so assiduously. If the Reserve Bank thought
it proper as a precautionary measure, it should pay
the costs itself.
The costs which have been ordered to be in the cause do not,
therefore, include the costs of legal representation
of the Reserve
Bank witness on the second day. The costs of the first day would in
any event have been incurred and are included.
The Hearsay Applications
a.
The foreign judgments
The
first of the hearsay applications was an application by the Argus
defendants in terms of
Section 3
of the
Law of Evidence Amendment Act
45 of 1988
to admit in evidence certain documents listed in a
schedule to the notice of motion. The documents in the schedule were
the so-called
American judgments as well as documentation in
connection with litigation between Peggoty Ann Henriques and the
plaintiff. Finally,
there was the affidavit deposed to by Mr Michael
Venter, a representative of the Receiver of Revenue in Bellville.
The
application in respect of the American tax judgments was necessitated
by the recalcitrance of the plaintiff who refused to admit
them. His
attitude was that he was “not required to make any admission
which would assist the applicants in discharging the
onus which rests
upon them at the trial”. In taking up this attitude he
knowingly ran the risk of attracting criticism from
the bench on the
conduct of his case. In a civil trial parties are expected to
co-operate in eliminating disputes. A failure to
act reasonably in
this regard may attract an adverse costs order.
The
concern of the third to seventh defendants with the United States tax
judgments arose, of course, from the plaintiff’s
allegation
that they had made common cause with the Noseweek defendants or had
assisted in spreading the Noseweek defamation. Since
no evidence on
either of these aspects was presented to the Court, absolution was
ordered. This meant that these issues as far
as the Argus defendants
were concerned, fell away quite early on 26 March 1996. That part of
the application dealing with the admission
of the affidavit of Venter
nevertheless lived on. At quite a late stage, on 5 August 1996, the
Noseweek defendants joined as applicants
in the hearsay application.
They were clearly entitled to join. They had an interest in the
issues. Only the affidavit of Venter
was then still in contention. On
28 August 1996 the plaintiff abandoned its remaining opposition to
the hearsay application by
conceding that the affidavit of Venter
could be admitted in evidence. The concession was made since there no
longer appeared to
be any reason for opposing the admission of the
affidavit. It had, in the light of other and better evidence tendered
in the course
of the trial, become unimportant.
I
consider that I should, in the light of the plaintiff’s
attitude to the conduct of the litigation, order him to pay the
costs
of this application on the scale as between attorney and client. His
only defence against the charge that he had left tax
judgments behind
him in the United States, was the forlorn hope that the judgments
might not be proved against him. The same applies
to the Henriques
judgment. The only exception is the affidavit of Venter in respect of
which the plaintiff had an arguable case.
That issue, however, formed
a small part of the application and its presence cannot save the
plaintiff from the order which I propose.
There are certain
qualifications to the order. The first and second defendants can
obviously not get any costs until after 5 August
1996. The
applicants, the Argus defendants, annexed to their founding affidavit
documentation which already formed part of the
record and could
conveniently have been accessed in other files. I refer to the
documents annexed from pages 31 to 113. The same
applies to annexure
JFL6 annexed to the Argus defendants’ replying affidavit at
pages 144 to 164. Since it was not necessary
to copy and annex these
documents, the costs are disallowed.
b.
The Grimmig statements
The
Grimmig hearsay application was a minor tussle between the Noseweek
defendants and the plaintiff. The Noseweek defendants walked
off with
the spoils of victory. However, the tussle did not end ignominiously
for the plaintiff. He ought not to pay the costs
of the application
on any but the ordinary party and party scale.
The Security application
The
security application was brought by the Argus defendants against the
plaintiff for an order directing him to furnish security
for the
applicants’ costs.
The
application was unsuccessful. The costs were ordered to stand over.
The plaintiffs conduct in the security application, it seems
to me,
is open to serious criticism. His opposition to the application was
characterised by  the evasiveness and secretiveness
concerning
his financial affairs which has been conspicuous in his conduct, not
only during this trial, but during his entire sojourn
in this
country. He starts his opposition by registering the complaint that
he was given less than a week to deal with the application,
and in
particular to deal with the expert evidence of Mr Salmon, an
accountant, who testified on the plaintiff’s solvency.
The
answer is given by a Mr Vavatsinides, the plaintiff’s attorney,
in these words:
“
In the
circumstances it has simply been impossible for plaintiff to deal
with the affidavit of the expert witness Mr Salmon as any
expert
briefed by plaintiff will have to read not only the expert report but
also the source documentation on which the said report
is based and
which runs to many thousands of pages. Such experts as I have
approached on plaintiffs behalf have simply been unavailable
to
attend to the matter at such short notice”.
The
affidavit goes on to say that, should the aspect of the plaintiff’s
insolvency be relevant, which is not admitted, the
application ought
to be postponed to enable the plaintiff to procure an expert opinion.
It was, and this became perfectly clear
later on, not necessary for
the plaintiff to consult with experts to decide whether or not he was
solvent. Since the plaintiffs
assets, by his own account, are valued
at no more than R50 796, the question whether he was able to pay to
his wife a loan debt
of R1.79m and to Lenert a loan debt of R1.3m
seemed a simple one to answer. The application was nevertheless stood
down to allow
the plaintiff time to deal with the allegations with
which he had said he did not have time to deal. On 21 August 1996,
nine days
after service of the founding affidavit, the plaintiff
produced a one and a half page affidavit in which he stated that he
was
prepared to concede that he might be commercially insolvent and
might not be able to pay the defendants’ costs from his own

resources in the event of his claims being dismissed. That was all
that was required in the first place. Instead, the plaintiff,
as he
has so frequently done, threw up a smokescreen which included
attacking the Argus defendants for supposedly being unreasonable
and
wasting the court’s time.
The
answering affidavit also made the point that the above concessions
were made “as it is impossible for me, within a matter
of a
week or two, to properly account for my current financial position”.
That kind of response is not a candid one. As I
indicated above, the
dispute was not about the value of his assets, in which  event
it  might  have  been
a
complex   matter   to   determine.
The dispute was about whether or not he has
any assets at all.
It
is not an invariable rule that a litigant who fails to obtain the
desired relief should pay his own costs. There are cases where
the
successful opponent may be ordered to pay his own costs. This in my
view is such a case. The plaintiff’s conduct has
been such that
I consider that the Court ought to express its displeasure by
depriving him of his costs of the security application.
Each party
therefore pays its own costs. The plaintiff must, as a result of
having joined the Noseweek defendants and as part of
the general
costs order, pay the costs of the Noseweek defendants which were
wasted by their having to attend court during the
hearing of the
application.
There
has been a great deal of paper handed up which was not, as things
turned out, referred to in evidence. Much of it was of marginal

relevance, and a great deal of it was repetitious. It would not be
fair to saddle other litigants bar those who introduced the
paper
with the costs of these excesses. There were many more unnecessary
documents and duplications than the ones I identify. I
purport to do
no more than make a rough and ready assessment.
Orders
1.
The plaintiff’s claims against the first to the seventh
defendants are dismissed.
2.
The plaintiff is ordered to pay
(a)
on the scale as between attorney and client -
i.
the costs
of the first and second defendants which are to include the
costs of the employment of two counsel from
5
- 22 August
1996;
ii.
the costs of
the third to seventh defendants up to and including the
hearing on 22 August 1996;
iii.
the qualifying
fees of the expert witnesses Salmon and Morris;
iv.
the costs of
the application for absolution;
v.
the costs
of the first application under the
Law of Evidence
Amendment Act of the
first to seventh defendants except for the costs
of pages 31 - 113 and 144 - 164 in respect of which the costs are
disallowed.
(b)
on the scale as between party and party the costs of -
i.
the third to seventh defendants after 22 August 1996;
ii.
the amendments moved on 27 August 1996;
iii.
the first Reserve Bank application;
iv.
the second Reserve Bank application which include the costs
of the
Reserve Bank up to and including the first day of attendance of Mr
Lautenberg;
v.
the second application under the
Law of Evidence Amendment Act.
4.
The
parties are to pay their own costs of the application for
security for costs.
5.
The defendants are ordered to pay, jointly
and severally, the costs
of the plaintiff in the application to determine the incidence of the
onus, such costs to include those
incidental to the employment of two
counsel.
6.
The first and second defendants are ordered
to pay the plaintiff’s
costs of the application for trial particulars dated 28 February
1996.
7.
The costs of the third to seventh defendants
consequent upon the
Revenue application are to be paid by themselves.
8.
Execution of the costs order granted in favour
of the plaintiff in
the Revenue application is stayed until –
a.
the costs order in favour of the first and second defendants have
been taxed; or
b.
the Court orders otherwise.
8. The costs of perusing
and copying the following documents are disallowed to the litigant
who introduced the documents. Other
litigants are entitled to their
fees for perusing such documents on the party and party scale
irrespective of any general costs
order.
J H CONRADIE