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[2024] ZAMPMBHC 6
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Endress and Hauser (Pty) Ltd v Zamangwane (Pty) Ltd t/a ZMG-Watech (236/2021) [2024] ZAMPMBHC 6 (23 January 2024)
FLYNOTES:
CIVIL PROCEDURE – Discovery –
Professional
privilege
–
Requested
compliance with undertakings per pre-trial minute – Response
in respect of document 3 was not compliant with
rule – No
response received – Basis of refusal was privilege –
No basis to found privilege demonstrated
in opposing affidavit or
arguments advanced – Applicant is entitled to inspection of
document 3 – Document sought
may be relevant to matter in
question – Discovery granted – Uniform Rule 35(3).
IN THE HIGH COURT OF
SOUTH AFRICA
MPUMALANGA DIVISION,
MBOMBELA (MAIN SEAT)
CASE
NUMBER: 236/2021
(1)
REPORTABLE:
Yes
(2)
OF INTEREST TO OTHER JUDGES:
Yes
(3)
REVISED.
DATE:
23 January 2024
SIGNATURE
In
the matter between: -
ENDRESS AND HAUSER
(PTY) LTD
Applicant
and
ZAMANGWANE
(PTY) LTD t/a ZMG-WATECH
Respondent
In
re
the main action between: -
ENDRESS
AND HAUSER (PTY) LTD
Plaintiff
and
ZAMANGWANE
(PTY) LTD t/a ZMG-WATECH
Defendant
JUDGMENT
GREYLING-COETZER
AJ
Introduction
[1]
This is an opposed application to compel the
respondent to deliver documents sought in terms of Rule 35(3).
[2]
In terms of the Rule 35(3) notice, the applicant
called for the following: -
“
1.
The written agreement between the defendant and Emalahleni local
municipality in respect of the water
treatment works.
2.
Correspondence relating to termination of the agreement between the
Emalahleni local municipality
to the defendant in respect of the
water treatment works.
3.
Documents illustrating payments made by the Emalahleni local
municipality to the defendant
in respect of the water treatment
works
”
.
[3]
Conveniently and in uniformity with the
terminology used by the parties, the documents sought per paragraph
1, 2 and 3 above will
be referred to as “Document 1”,
“Document 2” and “Document 3” respectively.
[4]
On 19 October 2022, and in response to the
applicant’s Rule 35(3) notice, the respondent delivered a
formal reply. The respondent
made document 1 and 2 available to the
applicant for inspection. The respondent in this respect held out:
“
BE
PLEASED TO TAKE NOTICE THAT
defendant
makes requested documents 1-2 for (sic) available for plaintiff’s
inspection on the following date and times:
Day: Tuesday to Friday
Time:
10h00 to 12hoo
Arrangement:
Reasonable notice of intention to inspect at least 24 hours’
notice
.”
[5]
In respect of document 3 the respondent claimed
privilege. The notice stated that:
“
TAKE
NOTICE FURTHER THAT
defendant
claims privilege over the contents of document number 3 relating to
payments between the Emalahleni local municipality
and defendant
.”
[6]
The respondent thus formally expressed its
position
in re
the
documents sought in terms of the Rule 35(3) notice. Thus, this
application is not one where the respondent did not respond,
but it
responded and gave expression to the position it held in respect of
the documents. This response and the failure of the
respondent to act
in terms thereof gave rise to the present application, where in the
applicant seeks 1) the respondent to be compelled
to act in terms of
its reply to the Rule 35(3) Notice and 2) the respondent to be
compelled to provide document 3 as it is not
of a privileged nature.
[7]
Its apposite to briefly consider the remaining
background to this application, which is largely common cause.
Background
[8]
The applicant is the
plaintiff in the main action and issued summons in this court against
the respondent as defendant. The respondent
also counter-claimed
against the applicant.
[9]
Subsequent to the close of pleadings, the
respondent delivered its discovery affidavit on 24 November 2021. In
terms thereof, and
under Schedule A, the respondent discovered all
process and notices filed under case number 236/2021, an undated
letter by the
respondent to the applicant sent on/or about 19 October
2020, as well as proof of payment by the respondent to the applicant,
in
the amount of R500 000.00 and R800 000.00.
[10]
In terms of the discovery affidavit, the
respondent objects to the production of documents set out in Schedule
B on the ground that
same fall within the doctrine of legal
professional privilege. This schedule contained the standard items
and did not contain any
reference to document 3.
[11]
What followed was the applicant’s Rule 35(3)
notice and the respondents reply thereto, as already dealt with
above. Pursuant
to the respondent’s reply and per
correspondence dated 23 October 2022, the applicant enquired whether
the respondent would
provide copies of documents 1 and 2 to the
applicant electronically. The applicant further recorded that it did
not agree with
the ostensible privilege claimed in respect of
document 3, as said document merely would merely illustrate that
payments had been
made by the Emalahleni local municipality to the
respondent in respect of the water treatment works. The applicant
also recorded
that the respondent’s reply does not accord with
Rule 35(3), in that did not confirm under oath why said document was
not
being made available.
[12]
In this respect the respondent was invited to
confirm under oath the basis of the refusal to make document 3
available. This respondent
was to respond by 28 October 2022. No
response was forthcoming from the respondent.
[13]
On 7 November 2022, a telephonic and email enquiry
was directed to the respondent’s attorneys of record to arrange
for inspection
of documents 1 and 2, in line with the respondent’s
reply. Inspection was requested to take place on 8 November 2022. On
attendance, the respondent’s attorney was not available.
[14]
On 9 November 2022, the respondent’s
attorney of record was contacted by the applicant’s
correspondent attorney to arrange
inspection. Mr Khoza on behalf of
the respondent advised that a pre-trial had been scheduled for 11
November 2022, where all the
issues between the parties would be
dealt with.
[15]
On 11 November 2022 a pre-trial conference was
held between the parties. The pre-trial conference was attended by
counsel, Mrs Cilliers
and Mr Roberts on behalf of the applicant, and
Mr Meintjes on behalf of the respondent.
[16]
The issue in respect of the Rule 35(3) notice and
subsequent responses were discussed. Mr Meintjes on behalf of
the respondent
undertook to scan and e-mail document 1 and 2 to the
applicant’s attorneys by no later than 16 November 2022. At
that point
in time no stance was communicated contrary to the reply
by the respondent in terms of Rule 35(3). The respondent’s
position
remained in line with that expressed, being the applicant
was entitled to document 1 and 2. In respect of document 3 and
undertaking
was made to take instruction and to provide the
documentation requested or communicate the basis of the continued
refusal by no
later than 18 November 2022.
[17]
Although the pre-trial was held on 11 November
2022, the pre-trial minute was only prepared in January 2023 and
signed by the respondent’s
attorneys on 1 February 2023. The
respondent’s position remained unchanged between the period
November 2022 to February 2023.
[18]
Notwithstanding the reply by the respondent
tendering inspection in October 2022, the undertaking in the
pre-trial during November
2022, the recordal of the failure to adhere
to the undertaking in the minutes as signed in February 2023,
document 1 and 2 were
not made available either for inspection or by
making electronic copies available. Nor did the respondent
communicate any further
or comply with Rule 35(3) by stating its
refusal in re document 3 under oath.
[19]
On 2 August 2023, further correspondence was
addressed to the respondent’s attorney requesting compliance
with the undertakings
per the pre-trial minute to deliver the copies
of document 1 and 2, again drawing the respondent’s attention
to the fact
that its response in respect of document 3 was not
compliant with Rule 35(3). No response was received.
[20]
The present application was prepared as a result
of the respondent’s conduct, issued and served on 4 September
2023.
Judicial case
management hearings
[21]
On 4 September 2023 the matter was enrolled for
the first judicial case management, during which these issues were
raised. In the
case management the applicant sought the court to
order the respondent to provide document 1 and 2 in terms of Rule
37A(5)(c).
Mr Mhlanga appearing for the respondent confirmed that the
documents will be provided and agreed that the court could make an
order
to that effect.
[22]
The case management was stood down until 5
September 2023, and thereafter until 7 September 2023, Mr Meintjes
appeared and alleged
that Mr Mhlanga who appeared on the 4
th
of September 2023 was not prepared to “deal
in detail with the matter” and even less to make any
admissions.
[23]
The applicant was not granted relief as sought in
terms of document 1 and 2 but an order was granted in terms of Rule
37A(12)(e)
enrolled for hearing on 23 October 2023 in order to
properly ventilated the issues in respect of documents 1, 2 and 3.
[24]
The party’s respective positions and
contentions during said case management hearing are no longer
relevant in respect of
this determination, as the parties have now
exchanged affidavits formally setting out their respective
contentions and evidence
relied on.
The parties
respective contentions
[25]
The respondent in its answering affidavit has done
an about-turn compared to its reply to the Rule 35(3) notice and
undertaking
in the pre-trial hearing and minute.
[26]
In the answering affidavit the respondent states
that it has instructed its legal representative to withdraw any
undertaking regarding
the production of these documents. This
confirming that there was an earlier instruction to produce document
1 and 2.
[27]
Although not in the clearest of terms the
respondent shifts focus from privilege
in
re
document 3 to that of relevance.
This is coupled with the further contention that document 1 may
contain confidential information
and that if document 3 equated to
bank statements it is similarly confidential and privileged.
[28]
As a further all-encompassing contention, it is
alleged that all the documents are irrelevant and on that basis
notwithstanding
its formal reply to the Ruel 35(3) notice, the
documents have not provided.
[29]
The respondent contend, that documents should be
relevant to the issues between the parties and the relevance or basis
for reliance
should have been pleaded. In substantiation the
respondent contends that as the applicant has not placed reliance on
an agreement
between the respondent and the Emalahleni Local
Municipality, no basis has been laid for the discovery of such
agreement. According
to the respondent the agreement between the it
and the Emalahleni Local Municipality is over 200 pages long and
comprises of tender
documents, which include competitive pricing
strategies and scope of work, and would disclose competitive
industrial advantages,
such as expert research, laboratory tests and
highly sensitive information. The respondent alleges that on the
strength of the
applicant’s own correspondence, it was not a
sub-contractor of the respondent, nor did it ever conclude an
agreement with
the Emalahleni Local Municipality
[30]
In respect of document 3, the respondent alleges
that it did not made payments to the municipality, nor were such
payments alleged
or pleaded by the respondent, therefore same is
irrelevant. The respondent contends that it never repaid any monies
to the Emalahleni
Local Municipality upon lapsing of the 3-year
agreement, but effected accounting entries in its accounting records
to reflect credits,
off-setting amounts received from the Emalahleni
Local Municipality.
[31]
The applicant contends that the respondent’s
reply to the Rule 35(3) notice wherein the respondent agreed to make
document
1 and 2 available and relied on privilege confirmed the
respondents position in respect of the documents. This being the
position
the applicant is entitled to act upon for the purpose of
seeking an application to compel.
[32]
Further that, the respondent subsequent
undertaking in the agreed pre-trial minute amounts to an admission
that the applicant is
entitled to documents 1 and 2 and are binding.
Therefore, absent special circumstances being advanced by the
respondent why same
ought not to be regarded as binding, and the
respondent on that basis be allowed to unilaterally withdraw from
such agreements
and/or undertakings, it remained bound thereto. The
applicant contends that the respondent is not entitled in law to
unliterally
withdraw and agreement reached and the applicant is
entitled to documents 1 and 2. For this reason it is contended by the
applicant
that the relevance of these documents is not before this
court for assessment, notwithstanding the respondent’s attempt
in
its answering affidavit to unilaterally resile from the agreement
that it would provide these documents and argue the relevance.
[33]
In respect of document 3, the applicant contends
that the respondent in its reply refused to provide same, claiming
that it is privileged.
The respondent did so in circumstances where
it did not in terms of Schedule B to the discovery affidavit claim,
from the outset,
that any documents illustrating payments made by the
municipality to the respondent in respect of the water treatment
works were
privileged. And it placed reliance on privilege without
doing so under oath, as required in terms of Rule 35(3).
[34]
According to the applicant and considering the
respondent disavowing reliance on privileged in re document 3, has
now changed tact,
which illustrats the contrived attitude with which
the respondent has approached the Rule 35(3) notice, this application
and the
litigation as a whole.
[35]
The applicant further contends that
notwithstanding the about-turn, and in circumstances where the
respondent is allowed to raise
a different ground for refusal than
that which was set out in its reply in terms of Rule 35(3), said
document 3 is relevant.
[36]
It proceeds to contend that in paragraphs 17 and
18 of the respondent’s counterclaim its cause of action is
pleaded to be
that it gave notice to the applicant, requesting a
refund in the amount of R1.3 million. In annexure “F”,
being the
letter of repudiation relied on by the respondent, it
states that at the time of termination of the contract the respondent
had
already paid the applicant an amount of R1.3 million. As a
consciousness of the decision, all payments by the municipality to
the
respondents were reconciled, and the amount which the respondent
would have received from the municipality for this project was
credited back to the municipality – “
We
hereby request that you debit the invoice 6023846296 for the amount
of R2,386 951.28 and refund the R1,3 million which we had
paid on the
account
”
.
[37]
In paragraph 1.2 of the applicant’s
replication, it is expressly pleaded that the applicant was engaged
by the respondent
to procure goods from the applicant during 2016 in
respect of the agreement that the respondent had concluded with the
municipality
known as ‘
Emalahleni
Water Treatment Works’
.
Therefore, documents illustrating payments made by the Emalahleni
Local Municipality to the respondent in respect of the water
treatment works are relevant.
[38]
The applicant contends that considering the
response by the respondent that no physical repayments have been made
to the municipality,
but rather that credits have been passed in its
accounting books, the word ‘documents’ as described under
item 3 does
not mean bank statements, but documents illustrating
payments. Thus, on the respondent’s version documents should be
accepted
to mean the accounting records of the respondent
illustrating same.
[39]
The respondent takes issue with the wording of the
prayers in the notice of motion, which call for delivery. According
to the respondent,
Rule 35(3) read with 35(7) merely makes provision
for inspection and not delivery. The respondent further argues that
none of the
documents are relevant to the pleaded case of either
party, and that a court’s power to investigate the relevance
can never
be ousted by an agreement to produce the documents in terms
of a pre-trial or a reply to a Rule 35(3) notice.
Discussion
[40]
When a party responds to a notice such as a Notice
in terms of Rule 35(3) and proverbially draws the battle line the
other party
is entitled to approach an application to compel from
said basis. The applicant was entitled to approach it’s
application
to compel from the premise that document 1 and 2 would be
provided and document 3 was refused on the basis of privilege. To
hold
otherwise would amount to nothing less than allowing an abuse of
process if not litigation by ambush.
[41]
The respondent did not object to the production of
documents 1 and 2. It by contrast confirmed that it gave an
instruction to its
legal representatives to make same available and
in line therewith the reply to the Rule 35(3) notice was prepared and
inspection
tendered. This the respondent did in October 2022. This
position of the respondent remained in place pursuant to the
pre-trial
conference wherein again the respondent, through its
attorney of record, undertook to make documents 1 and 2 available
during November
2022.
[42]
It is only during the last case management hearing
and its opposition to the present application in September 2023 when
the respondent
attempted to unilaterally withdraw such an undertaking
to provide or make available for inspection documents 1 and 2. As
justification
it relies on the following:
“
Respondent’s
legal representative having learned of the nature, scope and contents
of the requested documents and upon instruction
has withdrawn any
undertaking regarding the production of document 1 and 3 …
Document 2 is an inherent component of document
1, which shall be
explained in more detail below
.”
[43]
The respondent contends that it is not bound by
its reply to the Rule 35(3) notice and may resile from the agreement
reached in
the pre-trial, as a competing instruction had been
provided to its attorney of record. Save for that quoted herein
above, there
is no explanation before court, if it is to be accepted
that it was for a lack of understanding of the scope, nature and
content
of the requested documents, what informed the earlier
instruction and what has changed since. Or when and how the legal
representative
came to better understand the scope, nature and
content of the required document. The nature, scope and content of
the requested
document have been within the knowledge of the
respondent from inception. It provided the earlier instruction to
tender inspection
and make same available.
[44]
In
Filta-Matix
(Pty) Ltd v Freudenberg and Others
[1]
the Supreme Court of Appeal was faced with circumstances wherein the
appellant in that matter was requested at a pre-trial conference
to
provide clarity, in response to which the appellant indicated that
its attack was limited to a certain document. This was again
echoed
in a written response to the pre-trial questions, confirming its
position. The appellant later sought to resile from such
an
agreement, alleging that the limitation of the issue was as a result
of confusion caused by the nature of the question posed.
The court
held that said excuse cannot, in light of the facts, be accepted, and
held that:
“
To
allow a party without special circumstance, to resile from an
agreement deliberately reached at a pre-trial conference would
be to
negate the object of Rule 37
,
which is to limit issues and to curtail the scope of litigation (cf
Price NO v Allied-JBS Building Society
1980 (3) SA 874
(A) at
882D-H). If a party elects to limit the ambit of his case, the
election is usually binding (AJ Shepherd (Edms) Bpk v Santam
Versekeringmaatskappy BPK
1985 (1) Sa 399
(A) at 415B-D; Chemfos Ltd
v Plaasfosfaat (Pty) Ltd
1985 (3) SA 106
(A) at 114I-115B). No reason
exists why the principle should not apply in this case.
”
(own
emphasis)
[45]
Parties
are bound to that which they agree to in a pre-trial conference,
unless special circumstances dictate otherwise. In the
Supreme Court
of Appeal matter of
MEC
for Economic Affairs, Environment and Tourism, Eastern Cape v
Kruizenga and Anothe
r
[2]
the Court
a
quo
was
faced with a rescission application founded on an agreement reached
in terms of a Rule 37 pre-trial conference, where the Appellant
contended it was not bound by the settlement agreement, because its
legal representative was not expressly authorised to settle
the
matter on its behalf. The court held that the party was not entitled,
in the absence of special circumstances, to resile from
an agreement
deliberately reached at a Rule 37 conference.
[3]
[46]
Considering above, there can be little room to
conclude that respondent having given an instruction to provide
documents 1 and 2,
can merely replace such an earlier instruction
with the later one to refuse same, without more. The facts before
this court does
not demonstrate that the legal representative acted
without instruction in tendering document 1 and 2 and thereafter
fortifying
the tender by agreement and undertaking in the pre-trial.
And even had that been the case it would make little different having
regard to that set out in the authorities dealt with above, absent
special circumstances being shown.
[47]
In the present matter there is no allegation that
the agreement, as reached during the pre-trial to make available for
inspection
and to e-mail documents 1 and 2, was not deliberately
reached. The respondent entitlement to distance itself from its reply
to
the Rule 35(3) notice and to resile from the agreement in the
pre-trial hinges solely on the allegation that after its legal
representative
learned of the nature, scope and contents of the
requested documents, it upon the instruction of the respondent
withdrew any undertaking
regarding the production. This allegation is
contrived and nonsensical. It does not demonstrate any special
circumstances.
[48]
The applicant is entitled to inspection and copies
of document 1 and 2 being, the written agreement between the
respondent and the
Emalahleni Local Municipality in respect of the
water treatment works and correspondence regarding the termination of
the agreement
between the Emalahleni Local Municipality and the
respondent in respect of the water treatment works.
[49]
In respect of document 3, and although the
respondent’s response to the Rule 35(3) notice was not
compliant with Rule 35(3),
the basis of refusal was clearly set out
to be that of privilege, no basis to found privilege demonstrated in
the opposing affidavit
or arguments advanced. The applicant is thus
entitled to inspection of document 3.
[50]
This basis of refusal has shifted to document 3
not being material and relevant to any aspect before the trial court.
Briefly considering
same, Rule 35(3) provides that: “
if
any party believes that there are, in addition to documents or tape
recordings disclosed as aforesaid, other documents …
which
may
be relevant to any matter in question in the
possession of any party thereto, …
”
(own
emphasis).
[51]
The
subrule does not envisage documents that are relevant, but clearly
stipulates documents that may be relevant not only to the
pleadings,
but to any matter in question.
[4]
[52]
In
respect of what is relevant, the judgment of
Swissborough
Diamond Mines (Pty) Ltd and Others v Government of South Africa and
Others
[5]
remains applicable. After remarking that it was desirable to give a
wide interpretation to the words ‘a document relating
to any
matter in question in the action’, it was held that “
it
seems to me that every document relates to the matter in question in
the action which, it is reasonable to suppose, contain information
which may – not which must – either directly or
indirectly enable the party requiring the affidavit either to advance
his own case or to damage the case of his adversary. I have put it in
the words ‘either directly or indirectly’ because
as it
seems to me, a document can properly be said to contain information
which may enable the party requiring the affidavit either
to advance
his own case or to damage the case of his adversary, if it is a
document which may fairly lead him to a train of enquiry
which may
have of these two consequences.
”
[53]
No privilege has been established in respect of
document 3, therefor the applicant is entitled to inspection and or
copies of same.
In so far as the respondent now relied on relevance,
I find that the document sought, be it bank statements or accounting
entries,
on the basis of the pleadings before court and may be
relevant to any matter in question.
Manner of delivery
[54]
As set out above the respondent contend that the
applicant is not entitled to an order for delivery of the documents
but merely
inspection. Rule 35(3) expressly state “…
.to
make same available for inspection in accordance with subrule (6)….”.
Subrule (6) provides that “…
to
inspect such documents or tape recordings and to take copies or
transcriptions thereof
.” The
applicant is thus entitled to inspect and to make copies, be it hard
copies or electronic copies.
Costs
[55]
The applicant seeks attorney client costs against
the respondent. in this respect the applicant contends that the
respondent has
failed to set out any facts to dispute the attack on
its conduct and merely alleged there is no prejudice to the
applicant. It
was submitted that the respondent therefor accepts its
conduct has been defiant to the advancement of the case and that it
had
failed to comply with the undertakings made and position
expressed in its Rule 35(3) reply.
[56]
The respondent contends that cost should follow
the event and, on a party and party scale.
[57]
In
Nel
v Waterberg Landbouwers Ko-operatiewe Vereeniging
[6]
the court gave expression to awarding of costs on an attorney and
client scale as follows: “
The
true explanation for awarding of attorney and client costs…seems
to be that, by reason of special considerations arising
either from
the circumstances which give rise to the action or from the conduct
of the losing party, the court in a particular
case considers it
just,…”
[58]
Such circumstances and conduct is present in this
matter. The necessity of this application was wholly caused by the
respondent’s
conduct. There is thus no reason why the applicant
should be out of pocket in circumstances were it acted upon the
respondents
reply in terms of Rule 35(3) and subsequent agreement
reached and undertakings in the pre-trial.
[59]
By reason of aforementioned, the following order
is made: -
1.
The Respondent is ordered to make the documents referred to in
paragraphs 1, 2 and 3 of the applicant’s
notice in terms of
Rule 35(3) dated 29 September 2022, being:
1.1 The
written agreement between the respondent and Emalahleni Local
Municipality in respect of the Water Treatment
Works;
1.2
Correspondence regarding the termination of the agreement between
Emhalahleni Local Municipality to the Respondent
in respect of the
Water Treatment Works;
1.3
Documents (duly redacted bank statements or accounting records of the
respondent) illustrating payments made
by the Emhalahleni Local
Municipality to the Respondent in respect of the Water Treatment
Works.
available
for inspection and to provide or allow the applicant to make copies
thereof, within 10 days from the date of this judgment.
2.
Should the respondent fail to comply with the orders set out in
paragraph 1 above, the applicant is
granted leave to apply, on the
same papers duly supplemented, for an order striking out the
respondent’s defence in eh action
and dismissing its
counterclaim.
3.
The respondent is ordered to pay the cost of this application on an
attorney and client scale.
GREYLING-COETZER
AJ
HEARD
ON:
23 October 2023
DELIVERED
ON: This judgment was delivered electronically by
circulation to the parties’ representatives
by way of email and
by release to SAFLII. The date and time for delivery is deemed to be
at 11h00 on 23 January 2024.
FOR
THE APPLICANT:
Adv
Hewitt
Instructed
by Barnard Incorporated Attorneys (Pta) Care of Lüneburg
Janse van Vuuren Attorneys (Mbombela)
E-mail:
celeste@ljattorneys.co.za
FOR
THE RESPONDENT:
Mr WP
Meintjes
Meintjes
& Khoza Attorneys
E-mail:
litigation5@meintjieskhoza.co.za
[1]
1998
(1) SA 606 (SCA)
[2]
2010
(4) SA 122 (SCA)
[3]
At
par [6]
[4]
Rellams
(Pty) Ltd v James Brown and Hamer Ltd
1983
(1) SA 556
(N) at 565B
[5]
1999
(2) SA 279
(T) at 316
[6]
1946
AD 597
at 607