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2024
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[2024] ZAFSHC 291
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Barnard N.O and Others v Route Holdings (Pty) Ltd (5907/2023) [2024] ZAFSHC 291 (10 September 2024)
IN
THE HIGH COURT OF SOUTH AFRICA
FREE
STATE DIVISION, BLOEMFONTEIN
Not
reportable
Case
no: 5907/2023
In
the matter between:
CHRISTIAAN
JOHANNES BOTHA BARNARD N.O
First
Applicant
GERT
LUKAS MULLER N.O
Second
Applicant
GERT
LUKAS MULLER
Third
Applicant
RADIQAL
INVESTMENTS CC
Fourth
Applicant
And
ROUTE
HOLDINGS (PTY) LTD
Respondent
In
re
:
In
the matter of
ROUTE
HOLDINGS (PTY) LTD
Plaintiff
And
CHRISTIAAN
JOHANNES BOTHA BARNARD N.O
First
Respondent
GERT
LUKAS MULLER N.O
Second
Respondent
GERT
LUKAS MULLER
Third
Respondent
RADIQAL
INVESTMENTS CC
Fourth
Respondent
Neutral
citation:
Route Holdings (PTY) LTD v
Barnard N.O & onother (case no 5907/2023)
Coram:
MAHLANGU AJ
Heard:
29 August 2024
Delivered:
10
September 2024
Summary
:
Condonation-late filing of the replying affidavit-application to
compel-Rule 35(14)
ORDER
1.
That the condonation application for
the late filing of the replying
affidavit is granted;
2.
That the applicants to pay costs incurred
in the condonation
application jointly and severally the one paying the other to be
absolved on a party and party scale A.
3.
That the respondent is directed to comply
with paragraph 1.2 of the
applicants’ notice in terms of Rule 35(14) within 10 days of
service of this Court order in terms
of this application by making
available for inspection within five days the ledger accounts of
Entle Trading 504 (Pty) Ltd for
the financial years ending on 28
February 2022 and 28 February 2023 and allow copy or transcript
to be made thereof as contemplated
by Rule 35(14) of the Uniform
Rules of Court.
4.
That the respondent pay costs of the
application to compel in terms
of Rule 35(14) on a party and party scale B.
JUDGMENT
MAHLANGU
AJ
INTRODCUTION
[1]
This is an interlocutory application which emanates from the action
brought by the respondent
against the applicants. The following two
applications were brought before this court for adjudication: the
condonation application
for the late filling of the replying
affidavit and the application to compel in terms of Rule 35(14) of
the Uniform Rules
of Court. Both these applications were opposed by
the respondent.
BACKGROUND
FACTS
[2]
The first and second applicants are the trustees of SWP Trust and the
third applicant was authorised
to represent the G.L Trust. The fourth
applicant is represented by the third applicant in his capacity as
its director. The plaintiff
and the first and second defendants
concluded the sale of shares agreement on 2 July 2020.
[3]
The terms of the sale of shares agreement briefly included that, the
SWP Trust as the beneficial
owner of 70% of the par value shares of
Entle Trading 504 (PTY) LTD (Entle) sells the aforesaid shares and
make over, transfer
and assign the full value of the SWP Trust’s
claims in Entle, in one indivisible transaction, to the respondent.
In
casu
, the purchase price of the sale of shares and claims
was in the amount of R39, 200, 000.00.
[4]
On 13 July 2020, the parties entered into a loan agreement in which
the respondent lend and advance
an amount of R10,385,869.60 to the
SWP Trust, represented by its trustees being the first and second
defendants. The capital amount
of loan shall from 1 June 2023, bear
the interest at a rate to the prime rate plus 2% which interest shall
be calculated and be
capitalised monthly in arrears.
[5]
The respondent submitted that it complied with its contractual
obligations by making the payment
of R20 000 000.00 to the
SWP Trust with the R9 614 130.00 constituting a provisional
payment towards the purchase
price and R10 385 869.00
constituted and advance in terms of the loan agreement. The
respondent further submitted that,
its auditors rendered the
valuation of Entle to the value of R9 614 130.00.
[6]
Based on the above agreements that were entered between the parties,
the respondent seeks to claim
payment of R10 385 869.60
plus interest and costs from the applicants. The summons were issued
and before the applicants
could plea to the respondent’s claim,
they served the respondent with a Rule 35(14) notice requesting the
respondent to provide
them with the annual financial statements of
Entle for the financial years ending on 28 February 2021, 28 February
2022 and 28
February 2023 (financial statements) and the ledger
accounts of Entle for the financial years ending on 28 February 2022,
28 February
2022 and 28 February 2023 (ledger accounts). In response
to the Rule 35(14) notice, the respondent provided the financial
statements
and the ledger account for the year 2021 and did not
provide the ledger accounts for the year 2022 and 2023. The
respondent indicated
that the request for the ledger accounts does
not comply with the rules of court due to their vagueness.
[7]
The applicants submitted that, the ledger accounts are necessary to
enable them to plead to the
respondent’s claim in terms of Rule
22. The applicants auditor indicated in his report that, the annual
financial statements
prepared by the respondent’s auditor are
inaccurate for the purposes of valuation. The only plausible method
to remove doubt
regarding the accuracy and reliability of financial
statements are to conduct a detailed comparison of the financial
statements
to the underlying accounting record ledgers of Entle. The
applicants require access to the ledger accounts in order to state
material
facts upon which it relies when responding to the
respondent’s claim. The applicants do not want to file a mere
denial plea
to the allegations made by the respondent, but wish to
plead meaningfully that is why they requested the ledger accounts of
the
respondent.
[8]
The respondent is of a view that the request by the applicants is not
competent. The applicants
could plead without the ledger accounts
that they have requested. The applicants are on a fishing expedition
and they require evidence
which is not permissible in the pleadings.
What the applicants are attempting to do according to the respondent
is to bring discovery
in terms of Rule 35(1) through Rule 35(14)
which it is not designed for. The respondent is therefore of
the opinion that,
the applicants do not need the ledger accounts for
them to can be able to plead.
[9]
Mr Steyn for the applicants referred the Court to the following case
which summarised the legal
position of Rule 35(14) in
Western
Reefs Primary School v Erasmus Jooste Inc
[1]
:
“
[65]
The test whether production of a specific document should be ordered
under Rule 35(14) is whether
the document is essential in order to
enable the party requesting the document to plead, and not whether it
is merely useful to
that party. In this regard with reference to
(inter alia) the Cullinan Holdings and MV Urgup, Erasmus says the
following: This
subrule [i.e Rule 35(14) does not provide a mechanism
whereby a party, by making use of generic terms, can cast a net with
which
to fish for vaguely known documents. In this respect the
subrule differs markedly from sub rule 12 and its ambit is much
narrower
than that of sub rule’. [
66]
There is also valid criticism to the earlier qualification reflected
in Cullinan Holdings Ltd case, supra note 16, that the document
requested is essential, and not only useful in the formulation of the
plea. In Herbstein Van Winsen, the Civil practice of the
High Courts
of South Africa (Volume 1), at 790, critism is correctly reflected
that: ‘ the decision cannot be supported.
There is no authority
for the additional requirement that such document or (tape) recording
should be essential for the purposes
of pleadings. It is also in
conflict with the rules of equity. See Story Commentaries on Equity
Pleadings 7
th
edition (Boston: Little, brown, and Company, 1865) para 324(a). it
must also be shown, upon the face of the bill, (Bill of Discovery)
that the discovery is material to the defence at law of the party,
seeking the discovery and how and in what manner it is material.
But
it is not necessary to aver, that the discovery is absolutely
necessary or indispensable to that defence. It will be sufficient
and
show that it is material evidence.
[67]
Pete at al correctly submits that: “The purpose of the rule is
presumably to ensure that a party is in a position to reply
to
pleadings, which it does not open the door to the general discovery
at this stage of the proceedings. A defendant may not use
rule 35(14)
… in order to gather information needed to decide whether he
has a cause of action for a counter claim.”
A party’s
motive for seeking access to a document under subrule (14) is
irrelevant. That party has to show that the document
sought in its
notice in terms of Uniform Rule 35(14) is relevant to a reasonably
anticipated issue in the main action/application.
[68]
In its plea, the current applicant (as the defendant in the action)
bears a duty to deal with all facts which the Respondent has
raised
in its declaration (in the action) in order to point out what the
bais of its defence is. This is imperative in terms of
Rule 22(2) of
the Uniform Rules of Court. See in this regard FPS Ltd v Trdent
Construction (Pty) Ltd where Eksteen JA ruled that:
‘In my view
the learned Judge was fully justified in coming to this conclusion.
One of the rpime functions of pleadings is
to clarify the issues
between the parties. To this end the Rules of Court require a
defendant in his plea to: ‘admit or deny
or confess and avoid
all the material facts alleged in the combined summons or declaration
or state which of the said facts are
not admitted and to what
extent…..’ (Rule 22(2)). A defendant must therefore give
a fair and clear answer to every
point of substance raised by a
plaintiff in his declaration or particulars of claim, by frankly
admitting or explicitly denying
every material matter alleged against
him.’
[69]
Traverso J, in Quayside Fish Suppliers CC had the following to say in
the application and interpretation of Rule 35(14): ‘It
is
apparent from the wording of the Rule that before a party can invoke
the provisions thereof (a) He/she must discharge the onus
of
persuading a court that an order should be made in terms of the Rule;
(b) An appearance to defend must have been entered; (c)
The document
must be required for the purposes of a pleading; (d) the document
must be clearly specified; (e) the document must
be relevant to ‘a
reasonably anticipated issue in the action.’
[70]
In Titus v RNE Holdings (Pty) Ltd, Jafta AJP as he was then qualifies
the judgement of Traverso J as follows: ‘However, it
is
significant to note that the sub-rule itself does not require the
applicant to have knowledge of the documents and to describe
them in
precise terms. Instead the applicant is required to specify such
documents clearly. The purpose of this requirement is
plainly that
the party from whom the documents are sought should be able to
identify which documents he is asked to produce and
also be in a
position to determine whether such documents were sought for the
proper purpose and further that they would be relevant
to an issue in
the action. Therefore the term “clearly specified” means
a description with sufficient detail to enable
proper identification
of the document. It is only after such identification that a
determination on whether it meets the other
requirements in the
sub-rule can be made.”
[10]
I am of a view that it would be impossible for the applicants to
plead to the respondent’s claim in
terms of rule 22(2) without
the ledger accounts. Rule 22(2) provides that, the defendant in the
plea must admit or deny or confess
or avaoid all material facts
alleged in the combined summons or state which of the said facts are
not admitted. The applicants
had to be provided with the ledger
accounts to can be able to give a fair and clear answer to the facts
raised by the respondent
in its claim.
CONDONATION
APPLICATION
[11]
The applicants filed the condonation application for the late filling
of the replying affidavit to the application
to compel in terms of
rule 35(14). The replying affidavit was filed two days late. The
condonation application was opposed by the
respondent on the basis
that, the applicants did not take the Court into confidence regarding
the true reasons why the replying
affidavit was not filed timeously.
[12]
The applicants’ attorney, Mr Oosthuizen informed the
respondents attorney Mr Jones that the applicants
no longer intended
to proceed with the application to compel in terms of rule 35(14) but
to file a plea. The applicants’
response to this submission was
that, their attorney, Mr Oosthuizen did not have instructions to
abandon the application to compel.
It is the applicants’
contention that, even if the impression was created with the
respondent’s attorneys that the
applicants’ intend to
abandon the application to compel and plead, such was not their
instructions.
[13]
According to the applicants’, the application for condonation
was bona fide in that, the Rule 35(14)
application does not intend to
frustrate the respondent. The instruction to proceed and file the
replying affidavit was obtained
a few days before the filling of the
replying affidavit and the counsel who was to draft the replying
affidavit had other matters
to attend to.
[14]
One of the requirements for the condonation application is that the
indulgence sought must not prejudice
the opposite party. I do not
foresee any prejudice to the respondent as the replying affidavit was
only two days late. The applicants
referred the court to the matter
of
Ferris
v FirstRand Bank Ltd
[2]
in which it was held that lateness is not the only consideration in
determining whether an application for condonation may be granted.
It
held that the test for condonation is whether it is in the interest
of juice to grant it and in this regard, that an applicant’s
prospects of success and the importance of the issue to be determined
are relevant factors.
[15]
The principles relating to condonation have become settled in our
law. In the matter of
Federated
Employers Fire and General Insurance Co Ltd and Another v McKenzie
[3]
the following factors were used by the Court to decide whether or not
there is good cause for the condonation being sought:
“
..(1) the
degree of non-compliance; (2) the explanation for it; (3) the
importance of the case; (4) the prospects of success; (5)
the
respondent’s interest in the finality of his judgement; (6) the
convenience of the court; and (7) the avoidance of unnecessary
delay
in the administration of justice
.”
[16]
In
Dengetenge
Holdings (Pty) Ltd v Southern Sphere Mining and Development Company
Limited
[4]
at paragraph 11 it was held that, the degree of none-compliance, the
explanation thereof, the importance of the case and the avoidance
of
unnecessary delay in the administration of justice are among the
factors that usually weigh with a court when it considers an
application for the condonation.
[17]
In
MEC
for Education KZN v Shange
[5]
it was stated that the court is to exercise a wide discretion, that
“good cause” may include a number of factors that
are
entirely deponent on the facts of each case, and that the prospects
of success in the main action play a significant role.
[18]
It is submitted that, the court must be mindful of the fact that not
only the explanation for the delay,
but also the prospects of success
in the main action, are important factors in determining whether
condonation should be granted
or not. If strong merits of success are
shown, it may mitigate the fault of the applicant in applications for
condonation. The
court may then exercise its discretion in favour of
the applicant, despite a poor explanation for the delay.
[19]
In the matter of Rance supra, the Supreme Court of Appeal held that
“
condonation
must be applied of as soon as the party concerned realizes that is
required
”.
In the case of
Van
Wyk v Unitas Hospital
[6]
at paragraph 20 the court confirmed that the requirement that an
applicant must give a full explanation for the delay, “
In
addition, the explanation must cover the entire period of delay
”,
the court stated. In the present application, as stated above the
dalay in this matter is two days.
[20]
In this matter, the applicants require that the respondent provide
them with the ledger accounts for them
to properly plea to their
claim. I am convinced that the applicants did not disregard the rules
of this Court by filling the replying
affidavit out of time. It is in
the interest of justice to grant this condonation application. The
respondent would not be prejudice
should the court grant this
application.
[21]
The following order is therefore made an order of court:
(1) That the condonation
application for the late filing of the replying affidavit is granted;
(2)
That the applicants are to pay costs incurred in the condonation
application jointly and severally
the one paying the other to be
absolved on a party and party scale A.
(3)
That the respondent is directed to comply with paragraph 1.2 of the
applicants’ notice in
terms of Rule 35(14) within 10 days of
service of this Court order in terms of this application by making
available for inspection
within five days the ledger accounts of
Entle Trading 504 (Pty) Ltd for the financial years ending on 28
February 2022 and 28 February
2023 and allow copy or transcript
to be made thereof as contemplated by Rule 35(14) of the Uniform
Rules of Court.
(4)
That the respondent pay costs of the application to compel in terms
of Rule 35(14) on a party
and party scale B.
MAHLANGU
AJ
Appearances:
For
the applicants:
Adv
JW Steyn
Instructing
attorneys:
EG
Cooper Majiedt Inc
17
Third Avenue
WESTDENE
BLOEMFONTEIN
For
the Respondent:
Snellenburg
SC
Instructing
attorneys:
Honey
Attorneys
Northridge
Mall
KENETH
KAUNDA ROAD
BLOEMFONTEIN
[1]
Western
Reefs Primary School v Erasmus Jooste Inc NWHC case number KP530/18.
[2]
Ferris
v FirstRand Bank Ltd 2014(3) SA 39 (CC) at 43G-44A
[3]
Federated Employers Fire and General Insurance Co Ltd and Another v
McKenzie
1969 (3) SA 360
(A) at 362F-H
[4]
Dengetenge Holdings (Pty) Ltd v Southern Sphere Mining and
Development Company Limited (2013) 2 All SA 251 (SCA)
[5]
MEC for Education KZN v Shange 2012(5)SA 313 (SCA)
[6]
Van Wyk v Unitas Hospital 2008(2) SA 240 (CC)