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[2019] ZASCA 191
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Contango Trading SA v Central Energy Fund SOC Ltd (533/2019) [2019] ZASCA 191; [2020] 1 All SA 613 (SCA); 2020 (3) SA 58 (SCA) (13 December 2019)
Links to summary
THE
SUPREME COURT OF APPEAL
OF SOUTH AFRICA
JUDGMENT
Reportable
Case
No: 533/2019
In
the matter between:
CONTANGO
TRADING
SA
FIRST APPELLANT
NATIXIS
SA
SECOND APPELLANT
GLENCORE
ENERGY UK LIMITED
THIRD APPELLANT
and
CENTRAL
ENERGY FUND SOC LIMITED
FIRST RESPONDENT
STRATEGIC
FUEL FUND ASSOCIATION NPC
SECOND RESPONDENT
VENUS
RAYS TRADE (PTY)
LTD
THIRD RESPONDENT
TALEVERAS
PETROLEUM TRADING DMCC
FOURTH RESPONDENT
VESQUIN
TRADING (PTY)
LTD
FIFTH RESPONDENT
VITOL
ENERGY (SA) (PTY)
LTD
SIXTH RESPONDENT
VITOL
SA
SEVENTH RESPONDENT
MINISTER
OF
ENERGY
EIGHTH RESPONDENT
MINISTER
OF
FINANCE
NINTH RESPONDENT
Neutral
citation:
Contango Trading SA v Central Energy Fund SOC Ltd
(533/2019)
[2019] ZASCA 191
(13 December 2019)
Coram:
Cachalia, Wallis, Zondi, Van der Merwe and Mokgohloa JJA
Heard:
26 November 2019
Delivered:
13 December 2019
Summary:
Discovery – Rule 35(12) of the Uniform Rules of Court –
requirements – disclosure – whether legal advice
privilege over counsels’ opinions waived – litigation
privilege – whether requirements met.
ORDER
On
appeal from:
Western Cape Division of the High Court, Cape
Town (Saldanha J sitting as court of first instance):
1 The appeal by Contango
Trading SA and Natixis SA against the dismissal of their applications
for disclosure of the legal review
is dismissed;
2 The appeals by Contango
Trading SA, Natixis SA and Glencore Energy UK Ltd, against the
dismissal of their applications for disclosure
of the opinions of
counsel are dismissed;
3 The appeals by Contango
Trading SA, Natixis SA and Glencore Energy UK Ltd, against the
dismissal of their applications for disclosure
of the KPMG report are
upheld and the respondents are ordered to disclose that report within
10 days of the date of this order;
4 The appeal by Glencore
Energy Limited against the dismissal of their application for
disclosure of the PwC report is upheld and
the respondents are
ordered to disclose that report within 10 days of the date of this
order;
5 Each party is ordered
to pay its own costs of this appeal;
6 The order of the court
a quo is set aside only to the extent of its dismissal of the
applications for disclosure of the documents
mentioned in paras 3 and
4 above.
7 The costs order in the
court a quo is set aside and the following order is substituted in
its place:
‘
The respondents
are ordered to pay the costs of the applications by Contango Trading
SA, Natixis SA and Glencore Energy UK Limited,
such costs to include
those consequent upon the employment of two counsel.’
JUDGMENT
Cachalia
JA (Wallis, Zondi, Van der Merwe and Mokgohloa JJA
concurring)
[1]
This appeal is against a decision of the Western Cape High Court
[1]
dismissing two interlocutory applications in terms of Rule 30A of the
Uniform Rules of Court seeking to compel two state entities
to
discover documents following their refusal, when requested to do so
in terms of Rule 35(12).
[2]
Those entities are the Central Energy Fund SOC Limited (CEF) and its
parent body, the Strategic Fuel Fund Association NPC (SFF).
They are
the applicants in a review application (the main review) in which
they seek to set aside several of their own decisions,
as well as
certain agreements concluded pursuant thereto, concerning the SFF’s
disposal of some 10 million barrels of this
country’s crude oil
reserves. Eight of the ten respondents in the review application are
oil companies, cited because of
their interest in the impugned
decisions. Three of these companies, Contango Trading SA, Natixis SA
and Glencore Energy UK Limited,
are the appellants in the present
appeal. It is convenient to refer to them by their prefix names. The
same legal team represents
Contango and Natixis. Glencore has its own
attorneys. Where appropriate I shall refer to them collectively as
‘the appellants’,
and to the CEF and the SFF jointly as
‘the respondents’.
[3]
After receiving the main review, the appellants issued notices in
terms of Rule 35(12) requesting the respondents to produce
and
make available certain documents allegedly ‘referred’ to
in their papers. Contango’s and Natixis’s
request was
aimed at securing the production of three categories of documents
mentioned in the respondents’ founding affidavit.
Glencore’s
notice contained a more extensive list comprising thirty documents.
This included documents referred to in the
founding affidavit, as
well as those mentioned in its annexures and in a record produced by
the respondents.
[4]
The respondents refused to disclose the requested material referred
to in the founding affidavit and annexures. The appellants
then
brought ‘compelling’ applications in terms of Rule 30A in
the high court to obtain the documents. Glencore’s
notice,
however, was aimed not only at securing the documents requested in
terms of Rule 35(12), but also documents that were said
to have been
mentioned in, but omitted from the record. Its Rule 30A notice aimed
to secure those documents as well.
[5]
The court a quo dismissed both applications in a single judgment.
Contango and Natixis were not able to secure the production
of any
documents. Their appeal is against the entire order of the high
court. Glencore achieved some success: the court a quo ordered
the
production of some documents, but refused others. On the morning of
the hearing of the appeal, counsel for Glencore informed
us that it
would no longer persist in its demand for the documents mentioned in
the record, but persisted in its claims for production
of documents
referred to in the founding affidavit.
[6]
Glencore also abandoned its appeal in respect of its demand for a
‘legal report’ during the hearing. The report
was
mentioned in a minute of a meeting of the SFF held on 5 February
2016, which was annexed to the founding affidavit but not
mentioned
in the body of the affidavit. The high court refused to grant an
order to produce the legal report on the ground that
it was legally
privileged. But, as the report was requested under Rule 35(12), which
requires a reference to a document in ‘pleadings
or affidavits’
– not in its annexures – before its discovery is sought,
the request fell outside the scope of
the rule and was properly
abandoned.
[7]
Three categories of documents were sought in this appeal, namely a
‘legal review’, two legal opinions, and two reports
by
auditing companies KPMG and PwC. This judgment deals with the ‘legal
review’ and the reports by KPMG and PWC, while
that of my
brother Wallis JA, which I have read and agree with, deals with the
two legal opinions. Glencore did not seek production
of the ‘legal
review’ and Contango and Natixis no longer wanted the PwC
report, despite having requested it originally.
The respondents
referred to all these materials in their founding affidavit in the
main review to explain, and to seek condonation
for, their delay of
two years in instituting these proceedings.
[8]
Mr Luvo Lincoln Makasi, the chairperson of the CEF Board, deposed to
the founding affidavit in the main review on behalf of
the
respondents. The manner in which he dealt with the documents in
question was decisive of the issues in this appeal. It is thus
necessary to repeat the relevant parts of the affidavit in full. It
reads as follows:
‘
Enquires into
the reviewability of the sale of the Oil Reserves
319 Following the
engagement between the Minister of Finance and the Minister of Energy
in June 2016, Minister Joemat-Pettersson
directed the CEF to conduct
a legal review of all the contracts entered into by SFF, dating back
to 2014, which specifically related
to any sale of the Oil Reserves
or storage agreements.
320 Initially, the CEF’s
efforts to implement the Minister’s instruction relating to the
legal review of SFF’s
contracts were met with resistance and an
unfortunate lack of organisation on the part of its subsidiary.
[320.1] First, SFF had no
proper contract management system in place, thereby making the
process to source contracts challenging.
[320.2] Second, SFF
failed to respond to the CEF’s requests timeously, and required
repeated requests for documentation before
the SFF staff obliged. In
fact, contracts were only obtained once the then acting CEO of SFF,
Mr Godfrey Moagi, intervened and
instructed the staff to comply with
the CEF’s requests.
321 The legal review
directed by CEF was completed on 20 December 2016 when the Minister,
the CEF Board and the SFF Board were provided
with feedback. In
essence, the outcome of that process revealed that:
321.1 The sale of the Oil
Reserves did not comply with the conditions that Minister
Joemat-Pettersson set out in the Second Directive
as no “
detailed
due diligence
” had been undertaken, the “
integrity
of our Strategic Stock levels
” were not sufficiently
secured given that SFF would have to purchase oil at prevailing
market rates in the event of an emergency
or catastrophe and because
the sales took place before a trading division was formally
established.
321.2 There were
indications that the sale of the Oil Reserves did not comply with
provisions of the Companies Act and the PFMA,
and, on this basis, the
disposals were liable to be set aside in judicial review proceedings.
322 Given these concerns
relating to the legality of the sale of the Oil Reserves, the CEF
considered it prudent to engage senior
advocates to consider the
outcomes of the legal review and, in the event of their agreement,
provide legal advice on the way forward.
The first senior counsel
provided his opinion on 10 February 2017 and the second senior
counsel provided his opinion on 27 July
2017.
323 The reason for
seeking a second opinion from senior counsel concerned the financial
analysis the CEF received from KPMG.
This financial analysis was
sought for purposes of gaining a comprehensive understanding of the
financial consequences for the CEF,
SFF, and by implication, the
fiscus
, given the unlawful nature of the sale of the Oil
Reserves. (Emphasis added.)
324 KPMG issued its
report on 25 July 2017 and the CEF accordingly instructed new senior
counsel to consider the outcome of the
legal review directed by the
CEF in the light of the financial analysis it received from KPMG.
325 Although the advice
received from senior counsel is legally privileged and is not, I
submit, capable of discovery, given where
we are now, suffice it to
say that
the senior advocates agreed with the outcomes of the CEF
legal review
. (Emphasis added.)
326 However, matters were
further delayed following a series of compromising reports that
related to allegations published on various
media platforms, that one
of KPMG’s employees had engaged in unethical conduct relating
to services the auditing firm provided
to a public entity.
Subsequently,
the CEF considered it prudent to seek a second
financial analysis from PriceWaterhouse Coopers (PwC). PwC’s
report was provided
on 7 November 2017
. (Emphasis added.)
327 Along the trail of
these enquiries into the reviewability of the sale of the Oil
Reserves, four respective Ministers of Energy
presided over the
energy sector in the government. This change in guard added a further
dimension to the delay in instituting this
application as all new
Ministers had to be fully apprised of the context and circumstances
surrounding the sale of the Oil Reserves,
amongst other current
programmes underway in the energy sector.’
The
duty to provide documents in terms of Rule 35(12)
[9]
Under Rule 35(12)
[2]
any party,
who refers to a document in their pleadings or affidavits, must
produce it upon receipt of a notice calling upon it
to do so unless
the document is irrelevant, privileged or cannot be produced. In
general any reference to a document – even
if not by name –
triggers the entitlement to claim its production. A detailed or
descriptive reference to the document is
not required, but in the
absence of any direct or indirect reference thereto, a document will
not have to be produced under this
sub-rule merely because its
existence may be deduced by inferential reasoning.
[3]
Reference must have been made to it.
The
Legal Review
[10]
I begin with the ‘legal review’. As emerges from Mr
Makasi’s founding affidavit, in June 2016 Minister
Joemat-Petterson,
the then Energy Minister, directed the CEF to
conduct a legal review of all the contracts concluded by the SFF over
a two-year
period. The process was demanding because the SFF had no
proper contract management system in place, which made it difficult
to
source the contracts, and the SFF staff resisted requests for
documentation and the contracts. The review was completed on 20
December
2016, when the Minister and both respondents were briefed on
its conclusions, described at paras 321.1 and 321.2 of the affidavit.
The CEF then engaged senior counsel for legal advice on the ‘outcomes
of the legal review’.
[11]
The respondents resisted production of the legal review on two
grounds. First, they said that the review referred to a process
and
not to a document as envisaged in Rule 35(12); and, secondly, they
claimed that the process was in any event privileged.
[12]
In their Rule 30A application to compel production of the legal
review Contango and Natixis said that it was evident, from
the manner
in which it was referred to in the respondents’ founding papers
in the main review, that the legal review was
used to brief counsel
to advise on the lawfulness of contracts pertaining to the sale of
the oil reserves or storage agreements.
They therefore submitted that
the legal review was a document, which was provided to counsel for
this purpose.
[13]
In addition, they pointed to the fact that during the period 1
September 2017 to 13 November 2017, media reports indicated
that
the respondents had commissioned a report from a firm of attorneys,
Allen & Overy, to investigate and report on the fuel
trading and
sale contracts. The outcome of the investigation, which mirrored the
conclusions of the legal review referred to in
the respondents’
founding affidavit, found its way into these media reports. These
publications, they say, confirmed that
the review was a document.
[14]
In their answering papers, deposed to by Mr Lionel Frederick Egypt,
the respondents’ attorney, on 1 August 2018, the
respondents
denied that the legal review was a document and asserted that:
‘
[T]here was no
document
or
series of documents
entitled “legal
review” – rather the reference is simply shorthand for
the process of investigating whether the
contracts that were
concluded were lawful or unlawful.’
He
added:
‘
The references to
legal review in . . . the founding affidavit are made in so far as it
is stated that senior counsel was instructed
to consider the outcomes
of such review . . . . [There is no] suggestion that the legal review
was documented in any form. It is
therefore perplexing that the
respondents insist that the legal review is a document.’
[15]
In answer to the allegation that the media reports confirmed the
existence of the legal review, Mr Egypt said that the reports
referred to an ‘investigation’ commissioned by the CEF,
which reviewed the fuel trading and sale contracts. This, he
said,
was not a reference to a document.
[16]
In their reply, on 1 August 2018, Contango and Natixis said that Mr
Egypt had no personal knowledge of the process and that
his
statements on this score were therefore inadmissible. His evidence
was not credible either, they added, for two reasons. First,
they
said, the evidence from the newspaper articles referred to earlier
suggested that a document was indeed produced and referred
specifically to a report as the Allan & Overy report; and
secondly, that it was inherently implausible that an extensive review
was undertaken of the contracts entered into over a two-year period,
which culminated in feedback to the meeting on 20 December
2016 –
at which conclusions were drawn and on which counsel was thereafter
briefed for advice – all without any documentation
being
produced. Glencore lodged its Rule 30A application the following day,
on 2 August 2018. In summary it repeated the substance
of Contango’s
and Natixis’s assertions.
[17]
In response to Glencore’s application, Mr Egypt again deposed
to the answering affidavit on behalf of the respondents
on 7
September 2018. He repeated what he had said in response to
Contango’s and Natixis’s Rule 30A application, which
was
that the legal review was simply a ‘shorthand for the process’
of investigating the lawfulness of the contracts.
He then added the
following explanation, which muddied the waters:
‘
To the extent that
the legal review process could be interpreted to refer to any written
communications, documentations, notes or
memoranda that may have been
produced during the process of the legal review for instance with
internal and external legal advisors,
these are confidential
communications made for providing legal advice to the [respondents].’
[18]
This passage suggests that documents were indeed produced during the
review, but that they were privileged. It is apparent
from Glencore’s
reply, on 28 September 2018, that they understood the
respondents’ position now to be that ‘to
the extent’
that the documents existed – implicitly accepting that they did
– they were privileged. But Glencore
insisted that they were
liable to be produced because the respondents had ‘plainly
waived such privilege’.
[19]
Despite what appeared to have been at least an implicit acceptance by
the respondents that some form of documentation existed,
the
respondents produced a ‘confirmatory affidavit’ in the
Rule 30A application deposed to by Mr Abdul Farhad Haffejee,
the
Acting Legal Head of the CEF and the Company Secretary of the
respondents, on 31 October 2018. This was necessitated by
the
appellants having disputed that Mr Egypt had personal knowledge of
the legal review. Mr Haffejee ‘confirmed’ that
he had
personal knowledge of the review, and, he continued, for ‘the
avoidance of doubt . . . the references to the legal
review in the
applicant’s founding affidavit and elsewhere in these
proceedings, are references to the legal review
process
rather
than to a document’.
[20]
The high court considered Mr Haffejee’s affidavit to be
dispositive of the dispute, and found that the legal review was
not a
document that had to be produced under Rule 35(12). As I have
mentioned Contango and Natixis persisted with the demand for
its
production. Glencore no longer did.
[21]
The respondents had various – apparently inconsistent –
responses to the appellants’ request for the legal
review.
Their affidavits suggested that despite the fact the legal review was
conducted over several months; that media reports
had referred to its
outcomes including a report by Allan & Overy; that its
conclusions were presented to a meeting on 20 December
2016, and that
counsel was briefed for legal advice regarding its outcome, all
without any documentation. This stance was later
contradicted by
implying that if documents were generated during the process these
were legally privileged. More ridiculously,
they claimed legal
privilege for the entire process.
[22]
It would not have been difficult for the respondents, in opposing the
production of the legal review, simply to make clear
that during the
course of the review of contracts concluded over a period of two
years, a large number of documents were generated.
These would
presumably have included email communications, letters, memoranda,
legal reports, minutes of meetings and advice to
and from internal
and external legal advisors. They could have explained that some of
these communications might well be privileged
while others were not,
but added that no such documents were referred to directly in the
founding affidavit in the review application,
and accordingly, to the
extent that they existed, they fell outside the purview of the
sub-rule. That might well have been the
end of the dispute concerning
discovery of the legal review. Instead their contradictory and obtuse
responses to the demand to
produce the review served to obfuscate
rather than clarify. This was not the conduct of organs of state who
had a duty of candour
when compiling their affidavits, and is to be
deprecated.
[23]
Despite this failure on their part, however, the respondents’
basic contention that there was no reference to a specific
document
in the respondents’ affidavit was correct. The affidavit did no
more than refer to the legal review, which as the
respondents said
was a process by which a legal investigation into the contracts
concluded by the SFF over two years regarding
the sale of oil
reserves or storage agreements was conducted. No doubt a large number
of documents of various description would
have been generated during
this process. But Contango and Natixis, now expect the court to find,
by a process of inferential reasoning,
that the legal review referred
to a specific document. In argument they suggested that this was the
Allan & Overy report. But
this was impermissible, as I have
pointed out earlier.
[24]
In his oral submissions counsel for Contango and Natixis sought to
make the case that there was indeed such a reference to
a document
because, so he submitted, para 321.1 of the founding affidavit quoted
specifically from it by referring to the absence
of a ‘detailed
due diligence’ and the fact that the ‘integrity of the
Strategic Stock levels’ had not been
sufficiently secured.
[25]
In response to this submission counsel for the respondents produced,
without objection, the letter from which these references
were taken.
The letter dated 8 October 2015 was signed by the Minister and
addressed to the Acting Chief Executive Officer
of the SFF. It dealt
with a request by the SFF for an earlier ministerial directive to be
withdrawn and for a new directive to
be issued. It granted the
request subject to several conditions. One of these was for a
‘detailed due diligence’ to
be undertaken and the other
was that the ‘integrity of our Strategic Stock Levels’ be
secured, as quoted in this paragraph.
It is therefore beyond dispute
that para 321.1 did refer to a document – the ministerial
letter – but not to the legal
review.
[26]
There are more fundamental and practical difficulties with the demand
for the production of the legal review. I accept, as
I have said
earlier, that documentation was generated during the review. But an
order for discovery of the legal review, which
is the order Contango
and Natixis seek, would have to include, to use the respondents’
description of the material generated
during the process: ‘written
communications, documentation, notes or memoranda that may have been
produced during the process
of the legal review . . . and include for
instance “confidential communications with internal and
external legal advisors”.’
[27]
However, for a request to fall within the ambit of the sub-rule there
must be a reference to a specific document, not to a
general category
of documents, which is in effect what Contango’s and Natixis’s
request for discovery of the legal
review is. An order of that kind
would perforce include within its scope irrelevant documents and
confidential communications that
the respondents are properly
entitled to withhold. In other words it would have to include every
bit of paper generated during
the process. That is not what the
sub-rule envisages. It would amount to early discovery and
Rule 35(12) is not directed at
that purpose. So, despite my
reservations about the manner in which the respondents dealt with the
demand for the production of
the legal review, I conclude that the
reference to the legal review in the affidavit was not a reference to
a document as contemplated
in Rule 35(12). The court a quo therefore
correctly refused to order its production.
The
KPMG and PwC reports
[28]
The circumstances and, more importantly, the purpose for which these
reports were obtained appeared from the passages in Mr
Makasi’s
affidavit. The court a quo upheld the respondents’ claim that
the reports were protected from disclosure by
litigation privilege.
The appellants appeal this finding.
[29]
In
Arcelormittal
[4]
we explained that litigation privilege has two requirements: The
first is that the document must have been obtained or brought
into
existence
for
the purpose of a litigant’s submission to a legal advisor for
legal advice
;
and
second
,
that
litigation was pending or contemplated as likely at the time
.
(Emphasis added.) As I shall demonstrate below the respondents have
not brought themselves within these strictures. I begin by
referring
to what Mr Makasi himself said was the purpose for obtaining these
reports.
[30]
For ease of reference I repeat the relevant passages from his
affidavit here:
‘
323 The reason for
seeking a second opinion from senior counsel concerned the financial
analysis the CEF received from KPMG.
This financial analysis was
sought for purposes of gaining a comprehensive understanding of the
financial consequences for the CEF,
SFF, and by implication, the
fiscus
, given the unlawful nature of the sale of the Oil
Reserves. (Emphasis added.)
324 KPMG issued its
report on 25 July 2017 and the CEF accordingly instructed new senior
counsel to consider the outcome of the
legal review directed by the
CEF in the light of the financial analysis it received from KPMG.
. . . .
326 However, matters were
further delayed following a series of compromising reports that
related to allegations published on various
media platforms, that one
of KPMG’s employees had engaged in unethical conduct relating
to services the auditing firm provided
to a public entity.
Subsequently,
the CEF considered it prudent to seek a second
financial analysis from PriceWaterhouse Coopers (PwC). PWC’s
report was provided
on 7 November 2017
.’ (Emphasis added.)
[31]
It is evident from these passages that the KPMG report was obtained
after the first opinion from Counsel was obtained, and
it was
procured explicitly for the purpose of gaining a comprehensive
understanding of the financial consequences for the CEF,
SFF, and by
implication, the fiscus, of the unlawful contracts. In other words it
was not obtained for the purpose of obtaining
legal advice. The PwC
report was obtained for the very same purpose long after the second
legal opinion was given. There was therefore
simply no suggestion,
much less a clear assertion, that either report was obtained for the
purpose of legal advice or for any anticipated
litigation.
[32]
It gets worse. The respondents’ answers to requests for the
production of the documents were as obtuse, inconsistent
and
contradictory as their responses to demands for the production of the
legal review. Thus, in response to Contango’s and
Natixis’s
Rule 35(12) notice, Mr Egypt denied that KPMG’s financial
analysis was a reference to a document, when it
patently was, and
then claimed that the report was ‘legally privileged’,
without explaining why an auditor’s
financial analysis would
attract such privilege. The PwC report, he asserted, was ‘legally
privileged’ and prepared
in ‘contemplation of litigation’
even though the two reports were prepared for precisely the same
reason. Two things
were apparent from this response. First, that no
litigation privilege was claimed over the KPMG report and, secondly,
that no factual
basis for the assertion of litigation privilege was
disclosed. In response to Glencore’s Rule 35(12) notice, on the
other
hand, ‘legal privilege’ – not litigation
privilege – was claimed over both reports.
[33]
Thereafter, in response to Contango’s and Natixis’s Rule
30A application, pointing out that the report was obviously
a
document because it was a ‘report’, the respondents said,
for the first time, that the report was ‘conducted’
(obviously meaning ‘obtained’) in anticipation of
litigation and was therefore privileged. Glencore’s Rule 30A
application was met with a similarly obtuse answer. Mr Egypt said
that the ‘documents’ were protected from disclosure
as
they were ‘legally privileged on the basis of
inter alia
litigation privilege’. Once again, there was no factual basis
disclosed in support of this assertion.
[34]
The respondents and their attorneys seemed to assume that the mere
assertion of litigation privilege was, without more, sufficient
to
withhold disclosure of a document. But that was not correct. The
purpose for which the document was prepared lay at the heart
of this
analysis. In
Arcerlormittal
[5]
it was pointed out that, in our law, the position following
A
Sweiden and King
[6]
is that it suffices if a definite purpose is shown, whereas in some
Commonwealth jurisdictions the dominant purpose test is adopted.
In
this case, it is apparent from the founding affidavit in the main
review that the documents were obtained for an entirely different
purpose – to assess the financial implications of the possible
termination of the unlawful contracts. There was simply no
connection
in the affidavits between the anticipated litigation, on the one
hand, and the asserted litigation privilege on the
other.
[7]
Both documents must therefore be disclosed.
[35]
To conclude, I thus hold that the reference to the ‘legal
review’ in Mr Makasi’s affidavit was not a reference
to a
‘document’ as contemplated in Rule 35(12) and was
accordingly not liable to be disclosed. For the reasons given
by
Wallis JA privilege was not waived in respect of either legal
opinions and they too are not liable to be disclosed. In respect
of
the KPMG and PwC reports, I hold that the purpose for which the
reports were obtained was unrelated to the belated claim of
litigation privilege. Accordingly, the KPMG report and the PwC report
must be disclosed.
[36]
What remains is costs. Contango and Natixis have enjoyed limited
success in relation to the KPMG report, but have been unsuccessful
in
relation to the ‘legal review’ and the two opinions,
which took up the bulk of the argument. Glencore sought a large
number of documents in the high court and was unsuccessful in
obtaining disclosure of many of them. On appeal it abandoned its
attempts to obtain the remainder of them on the day of the hearing.
It was unsuccessful in relation to the two opinions, but succeeded
in
obtaining an order for disclosure of the KPMG and PwC reports. It is
difficult to resist the inference that it had embarked
on a fishing
expedition to obtain those documents. On balance, and bearing in mind
that the relevance of the documents of which
copies have been
obtained is not yet apparent, I think the fairest order is that all
parties should bear their own costs in this
court, but the appellants
are entitled to their costs in the high court. The costs of two
counsel will be allowed.
[37]
The following order is made:
1 The appeal by Contango
Trading SA and Natixis SA against the dismissal of their applications
for disclosure of the legal review
is dismissed;
2 The appeals by Contango
Trading SA, Natixis SA and Glencore Energy UK Ltd, against the
dismissal of their applications for disclosure
of the opinions of
counsel are dismissed;
3 The appeals by Contango
Trading SA, Natixis SA and Glencore Energy UK Ltd, against the
dismissal of their applications for disclosure
of the KPMG report are
upheld and the respondents are ordered to disclose that report within
10 days of the date of this order;
4 The appeal by Glencore
Energy Limited against the dismissal of their application for
disclosure of the PwC report is upheld and
the respondents are
ordered to disclose that report within 10 days of the date of this
order;
5 Each party is ordered
to pay its own costs of this appeal;
6 The order of the court
a quo is set aside only to the extent of its dismissal of the
applications for disclosure of the documents
mentioned in paras 3 and
4 above.
7 The costs order in the
court a quo is set aside and the following order is substituted in
its place:
‘
The respondents
are ordered to pay the costs of the applications by Contango Trading
SA, Natixis SA and Glencore Energy UK Limited,
such costs to include
those consequent upon the employment of two counsel.’
_____________________
A
Cachalia
Judge
of Appeal
Wallis
JA (Cachalia, Zondi, Van der Merwe and Mokgohloa JJA concurring)
[38]
I have read and agree with the judgment of my brother Cachalia JA
dealing with the claim for production of the ‘legal
review’
and the KPMG and PwC reports. This judgment is concerned with the
claim for production of two opinions furnished
to the respondents by
senior counsel. They were referred to in the founding affidavits but
the respondents claim privilege as the
ground for resisting their
production. The appellants accept that they were privileged, but
contend that the privilege was waived
by the manner in which the
founding affidavit made reference to them.
[39] In a lengthy
founding affidavit setting out the factual and legal basis for this
review, and when explaining the delay in commencing
review
proceedings, the deponent, Mr Makasi, explained that the respondents
had sought and obtained two opinions from senior counsel.
The
opinions were not attached and Mr Makasi’s only comment
concerning them was in the following paragraph:
‘
Although
the advice received from senior counsel is legally privileged and is
not, I submit, capable of discovery, given where we
are now, suffice
it to say that the senior advocates agreed with the outcome of the
CEF legal review.’
[40]
On the basis of that throwaway remark the appellants contended that
there was a waiver of privilege and that the opinions had
to be
produced in accordance with the provisions of rule 35(12). They
argued that the outcome of the legal review was set out broadly
in
the affidavit and had been summarised a few paragraphs earlier. Its
conclusion was that the disposals of the oil reserves did
not comply
with the conditions imposed in a Ministerial directive relating to
such disposals, and that there were indications that
they did not
comply with provisions of the Companies Act and the Public Finance
Management Act. On those grounds the affidavit
concluded that the
disposals were liable on review to be set aside. Furthermore Mr
Makasi said, at the outset of his affidavit,
[8]
that insofar as he made legal submissions these were made on the
advice of the respondents’ legal representatives. It followed,
so the argument ran, that there had been a disclosure of the contents
of the two opinions amounting to a waiver of the privilege
that would
otherwise attach to them.
[41]
It is trite that advocates’ opinions attract legal advice
privilege. That privilege may be waived. In
RAF
v Mothupi
Nienaber JA explained the basis for considering any waiver of a right
in the following terms:
[9]
‘
Waiver
is first and foremost a matter of intention. Whether it is the waiver
of a right or a remedy, a privilege or power, an interest
or benefit,
and whether in unilateral or bilateral form, the starting point
invariably is the will of the party said to have waived
it. …
The
test to determine intention to waive has been said to be objective ….
That means, first, that intention to waive, like
intention generally,
is adjudged by its outward manifestations … ; secondly, that
mental reservations, not communicated,
are of no legal consequence …
; and, thirdly, that the outward manifestations of intention are
adjudged from the perspective
of the other party concerned, that is
to say, from the perspective of the latter's notional
alter
ego
, the reasonable person standing in his shoes.’(Citations
omitted)
This
statement of the basis for finding waiver is equally applicable to
the waiver of legal advice privilege.
[42]
Arguments over the waiver of legal advice privilege do not commonly
arise when there has been an express waiver of the privilege
by, for
example, providing a copy of a privileged document to the other side.
Difficulties arise, as in this case, when it is suggested
that a
party by their actions has waived the privilege. Customarily this was
described as an implied waiver, but in
Peacock
v SA Eagle Insurance
[10]
it was suggested that it was preferable to refer to an imputed
waiver, because a waiver might arise in such a situation
notwithstanding
that there might have been no subjective intention to
waive the privilege. Farlam AJ said the following:
‘
Although
most of the authorities to which I have referred have used the
expression “implied waiver” in this context,
I have
difficulty in seeing how one can speak of privilege being lost by an
implied waiver where the party losing the privilege
has not
intended to waive it in respect of the part of the statement which he
has not disclosed. In
Attorney
General for the Northern Territory v Maurice
[1986] HCA 80
;
(1987)
61 ALJR 92
(High Court of Australia) Deane J said (at 98B - C, column
2):
“
Plainly
enough, there was no actual waiver of the right to assert legal
professional privilege in relation to such materials
as a matter of
subjective intent (see
Craine v
Colonial Mutual Fire Insurance Co Ltd
[1920] HCA 64
;
(1920)
28 CLR 305
at 326). If the right to assert the privilege has been
waived, it must be
by imputation of
law
in the circumstances of the
case.”
It
would seem preferable, therefore, to speak rather of imputed waiver,
where, as here, an actual intention to waive cannot be inferred
on
the facts.’
[43]
The necessity for a semantic change from implied waiver to imputed
waiver is unclear. Tacit terms in a contract are based upon
the
implication to the parties of an intention, irrespective of their
subjective intention. The interpretation of contracts is
objective
and evidence of the parties’ intentions or understanding of a
contract’s meaning is inadmissible in the absence
of a claim
for rectification. Similarly, the enquiry into implied waiver, as
explained in
RAF v Mothupi
,
is an objective one based on the outward manifestations of the
person’s conduct, irrespective of any mental reservations.
In
all these cases the law imputes conduct to a person irrespective of
their subjective intention.
[44]
Be that as it may, it is clear that the change espoused in that case
was terminological, not substantive. That was confirmed
by the
judgment in
Harksen
v Attorney-General
,
[11]
where this was discussed:
‘
The
requirements for an implied waiver of legal professional privilege
are, firstly, that the privilege holder must have full knowledge
of
his rights and, secondly, that he must have so conducted himself
that, objectively speaking, it can be inferred that he intended
to
abandon those rights. (See, for example,
Laws
v Rutherfurd
1924
AD 261
at 263;
Borstlap
v Spangenberg en Andere
1974
(3) SA 695
(A) at 704F--H.)
There
is also authority to the effect that legal professional privilege may
be
imputedly
waived where the privilege-holder so
conducts himself that, whatever his subjective intention might be,
the inference must
in fairness
be drawn that he no
longer relies on his privilege. (See, for example,
Attorney
General, Northern Territory v Maurice and Others
(1986)
[1986] HCA 80
;
161
CLR 475
(HCA) at 481 ((1987)
[1986] HCA 80
;
61 ALJR 92)
;
Goldberg and
Another v Ng
[1995] HCA 39
;
[1996] 185 CLR 83
(HCA);
Peacock v SA Eagle
Insurance Co Ltd
… 591--2.)
Wigmore
On
Evidence
3rd ed vol 8 in the oft-quoted passage in para 2327
does not appear to draw a distinction between an
implied
waiver
and an
imputed
waiver. Having posed the question:
“What constitutes a
waiver by implication
?” the
author supplies the following answer:
“
Judicial
decision gives no clear answer to this question. In deciding it,
regard must be had to the double elements that are predicated
in
every waiver, ie not only the element of implied intention, but also
the element of fairness and consistency. A privileged person
would
seldom be found to waive, if his intention not to abandon could alone
control the situation. There is always also the objective
consideration that when his conduct touches a certain point of
disclosure, fairness requires that his immunity shall cease, whether
he intended that result or not. He cannot be allowed, after
disclosing as much as he pleases, to withhold the remainder. He may
elect to withhold or to disclose, but after a certain point his
election must remain final.”
What
Wigmore
terms
“waiver by
implication
”
is in effect “waiver by
imputation
”
as described in the
Goldberg,
Maurice
and
Peacock
cases
supra
.’
[12]
[45]
That the terms waiver by imputation and waiver by implication are
synonymous appears from
Mann
v Carnell
,
[13]
the leading authority on this topic in the former expression’s
country of origin. The relevant passage in the joint judgment
of
Gleeson CJ, Gaudron, Gummow and Callinan JJ reads as follows:
‘
Waiver
may be express or implied. Disputes as to implied waiver usually
arise from the need to decide whether particular conduct
is
inconsistent with the maintenance of the confidentiality which the
privilege is intended to protect.
When
an affirmative answer is given to such a question, it is sometimes
said that waiver is "imputed by operation of law".
This
means that the law recognises the inconsistency and determines its
consequences, even though such consequences may not reflect
the
subjective intention of the party who has lost the privilege.
Thus, in
Benecke
v National Australia Bank
,
the client was held to have waived privilege by giving evidence, in
legal proceedings, concerning her instructions to a barrister
in
related proceedings, even though she apparently believed she could
prevent the barrister from giving the barrister's version
of those
instructions. She did not subjectively intend to abandon the
privilege. She may not even have turned her mind to the question.
However, her intentional act was inconsistent with the maintenance of
the confidentiality of the communication. What brings about
the
waiver is the inconsistency, which the courts, where necessary
informed by considerations of fairness, perceive, between the
conduct
of the client and maintenance of the confidentiality; not some
overriding principle of fairness operating at large.’(My
emphasis)
[46]
The High Court of Australia has since reaffirmed that approach in
Osland
.
[14]
The applicant had been convicted of the murder of her husband and,
after exhausting her appeals, petitioned the governor of the
state of
Victoria to grant her a pardon. When the attorney-general announced
that her petition had been denied, he issued a press
release stating
that he had appointed a panel of three senior counsel
[15]
to consider the petition and had received a joint memorandum of
advice from them recommending the denial of the petition on all
grounds. Ms Osland sought disclosure of this memorandum of advice,
claiming that privilege had been waived. The court unanimously
rejected her claim saying that the memorandum was referred to for the
purpose of making it clear to the public that independent
advice had
been sought and followed. In regard to the applicable legal
principles the majority (Gleeson CJ, Gummow, Heydon and
Kiefel JJ)
said:
‘
Waiver
of the kind presently in question is sometimes described as implied
waiver, and sometimes as waiver “imputed by operation
of law”.
It reflects a judgment that the conduct of the party entitled to the
privilege is inconsistent with the maintenance
of the confidentiality
which the privilege is intended to protect. Such a judgment is to be
made in the context and circumstances
of the case, and in the light
of any considerations of fairness arising from that context or those
circumstances.’
[47]
Lastly, while considering Antipodean authority, the Federal Court of
Australia dealt with the question of when fairness, in
the sense used
in these judgments, requires disclosure, in
Telstra
v BT
[16]
and
Adelaide
Steamship.
[17]
In
Telstra
,
after analysing a number of judgments where the privilege was held to
have been waived, the majority formulated the test for unfairness
leading to disclosure as being whether the litigant had raised ‘as
an element in the cause of action relied upon, an issue
incapable of
resolution without reference to the material.’ In
Adelaide
Steamship
the
court said:
‘
In
other words the cases are ones in which, in the substantive
proceedings brought, the privilege holder has put in issue the very
advice received. We observe in passing that it is questionable
whether advice can properly said to be in issue in a proceeding
merely because it may be relevant to an issue in it … save,
perhaps, where the proceeding is between client and legal adviser
and
the advice is relevant to the adviser’s defence of that
proceeding.’
[48]
Drawing the threads of both local and foreign authorities together
four things emerge that must be considered cumulatively.
The first is
that there is no difference between implied waiver and a waiver
imputed by law. They are different expressions referring
to the same
thing. The second is that such a waiver may be inferred from the
objective conduct of the party claiming the privilege
in disclosing
part of the content or the gist of the material. The third is whether
the disclosure impacts upon the fairness of
the legal process and
whether the issues between the parties can be fairly determined
without reference to the material. Finally,
the fourth is that there
is no general over-arching principle that privilege can be overridden
on grounds of fairness alone.
The
rule is ‘once privileged, always privileged’ and it is a
fundamental condition on which the administration of justice
rests.
Only waiver can disturb it.
[18]
[49]
I have dealt with this in some detail because there may otherwise be
some misunderstanding of the legal position and a tendency
to regard
an implied and an imputed waiver as embodying different legal
doctrines, the latter being founded solely on considerations
of
fairness. That possibility arises from the summary of the legal
position in the judgment in
S
v Tandwa and Others
.
[19]
That was an appeal against conviction on the grounds that the first
appellant’s fair trial rights had been infringed
by incompetent
legal representation at his trial. His complaint was that he had been
wrongly and incompetently advised not to give
evidence in his
defence. In response to these allegations the State delivered an
affidavit by his erstwhile advocate detailing
the legal advice given
to him. Counsel on his behalf accepted that this affidavit was
admissible in assessing his claims, so,
[20]
so that there was no issue before the court in that regard.
Obviously, once the appellant put the quality of the legal advice in
issue, he waived the privilege attaching to that advice.
[21]
[50] The summary of the
law in that case was therefore not strictly necessary for the
decision and the judgment contains none of
the careful consideration
of the authorities that would be required if the intention was to
strike out in a new direction. The
relevant passage reads as follows:
‘…
the
admissibility of his advocate’s affidavit depends on whether he
waived his right to legal professional privilege. In
Peacock
v SA Eagle Insurance Co Ltd
and
Harksen
v Attorney-General, Cape, and Others
,
the courts drew a distinction between implied and imputed waiver of
legal professional privilege. Implied waiver occurs (by analogy
with
contract law principles) when the holder of the privilege with full
knowledge of it so behaves that it can objectively be
concluded that
the privilege was intentionally abandoned. Imputed waiver occurs
where – regardless of the holder's intention
– fairness
requires that the court conclude that the privilege was abandoned.
Implied waiver entails an objective inference
that the privilege was
actually abandoned; imputed waiver proceeds from fairness, regardless
of actual abandonment.’
[51]
With respect, neither
Peacock
v SA Eagle
,
nor
Harksen
,
drew a distinction between implied and imputed waiver, much less on
the basis set out in this passage. Both judgments regarded
implied
and imputed waiver as synonymous. So did the Australian judgments
that first referred to ‘imputed waiver’.
Implied waiver
has never been concerned with whether an inference of intentional
waiver can be drawn from a person’s objective
conduct. If as a
matter of fact such an inference can be drawn the case is one of
actual waiver. Implied waiver, as all the cases
on the subject show,
arises where the conduct of the person concerned is objectively
inconsistent with the intention to maintain
confidentiality and, if
permitted, will unfairly fetter the opponent’s ability to
respond to the case or defence advanced
in reliance on the privileged
material. It arises notwithstanding any express reservation of the
right to invoke privilege. That
was the basis upon which this court
held that privilege had been waived in
Arcelormittal.
[22]
[52]
The facts in
Arcelormittal
are
instructive. The Competition Commission had received information and
documents from Scaw concerning alleged prohibited practices
in the
steel industry. Scaw made a formal leniency application in terms of
the Commission’s corporate leniency policy. The
Commission then
conducted its own investigation into pricing in the steel industry
and referred a complaint of alleged prohibited
practices to the
Competition Tribunal for adjudication. In its referral affidavit the
Commission said that Scaw had confirmed in
its application for
leniency ‘that there had been a long-standing culture of
co-operation among the steel mills regarding
prices to be charged and
discounts to be offered’. In addition there had been
arrangements for market division. It referred
to its own
investigation and concluded that it was ‘as a result of
information contained in the Scaw application’ as
well as its
own investigation that it had made the referral.
[53]
Against that background some of the parties against whom the
complaint had been made asked for production of the Scaw leniency
application. This court pointed out that reference to the information
obtained from Scaw was unnecessary, as a referral could have
been
made simply on the basis of a ‘concise statement of the grounds
of the complaint and the material facts or point of
law relied on’.
By including it the Commission made it part of its cause of action to
which the other parties to the referral
would have to respond.
Without production they could not do so. In the result this court
held that there had been an implied waiver
of the privilege that
would otherwise have attached to the leniency application.
[54]
The facts in this case are entirely different. The opinions were
referred to solely in the context of explaining the delay.
Privilege
was clearly asserted. The deponent then added the rather cryptic
statement ‘given where we are now, suffice it
to say’
that the advocates agreed with the outcome of the legal review. No
reliance was placed on the content of the opinions
in support of the
case that had been set out in some detail in the first three hundred
odd paragraphs of the founding affidavit.
The prefatory words ‘given
where we are now’ referred to the fact that the respondents’
case had already been
set out fully in the preceding portion of the
affidavit. ‘Suffice it to say’ conveyed that nothing of
substance needed
to be said about the opinions and the advice
received. Nothing of substance was then said, beyond an indication
that counsel agreed
that the disposal agreements fell to be reviewed
and set aside.
[55]
Implied waiver is always a factual enquiry and that renders reference
to ostensibly similar factual situations potentially
misleading.
However, there is a passage in the judgment in
Avontuur
[23]
that may be thought to support disclosure in the present case. Based
on Australian authority, it reads:
‘
Disclosure
of the substance of the advice will occur if the ultimate conclusion,
without the supporting reasoning process, or if
a summary of the
advice is revealed, especially if that is done for forensic or
commercial purposes (eg to emphasise the strength
and substance of
the case to be made) …’
[56]
I need make only two comments about this proposition. First, several
of the Australian cases relied on pre-dated the decisions
in
Mann
v Carnell
and
Osland
and were inconsistent with them.
Second, it propounded as a legal principle what is at most in certain
cases a finding to be made
on the facts. That is illustrated by
reference to a case relied on in
Avontuur
and one on substantially similar facts
that arrived at an opposite conclusion.
[57]
Avontuur
relied
for the proposition in question on the judgment in
Switchcorp
,
[24]
which involved a stock exchange announcement
[25]
in regard to pending litigation against the company. The announcement
saying that:
‘
The
Board’s lawyers have been instructed to vigorously defend the
claim and have advised that the plaintiffs’ claim
will not
succeed.’
The
judge held that this disclosure was inconsistent with maintaining
confidentiality and that the unfairness in not disclosing
it lay in
that inconsistency. With respect that blurred the question whether
there was inconsistency and whether it occasioned
or would occasion
unfairness in the process of litigation. In my view the decision is
inconsistent with the leading Australian
cases. It would have been
irresponsible for the Board to launch a vigorous defence of the claim
without seeking legal advice and
it was appropriate (and possibly
obligatory) for it to inform shareholders and investors of that fact.
[58]
What illustrates the danger of treating decisions on facts as laying
down legal principles emerges when one discovers that
Switchcorp
is incompatible with the decision in
GMCG
,
[26]
also by a single judge
but in a different state. There the waiver was said to arise from a
note in the company’s accounts
under the heading ‘Contingent
liability’. The note said that the company was engaged in
litigation over certain consulting
fees and ‘has received legal
advice that it has no liability whatsoever’. Having reviewed
the leading authorities already
mentioned, the court held that the
disclosure was made to explain why there was no provision for the
claim in the accounts. The
disclosure was restricted to this purpose
and nothing more. The contention that the reference to legal advice
constituted a waiver
of privilege was rejected.
[59]
It follows that the general proposition in
Avontuur
cannot be supported. Each case must be
decided on its own facts and there is no presumption that the
disclosure of the gist of legal
advice will inevitably amount to
conduct incompatible with asserting privilege in relation to the
advice itself.
[60]
The respondents referred to the opinions in setting out the timeline
of the steps taken by them in investigating the disposals.
They did
not incorporate the contents of the opinions into their case in a way
that compelled the appellants to provide a response
to those contents
without having had sight of them. All the legal points calling for
answers were fully set out in the earlier
part of the founding
affidavit.
[61] The opinions were
referred to expressly in the founding affidavit and that brought rule
35(12) into play and justified the
request to produce the opinions.
The response was to claim privilege. That was a complete answer
unless privilege had been waived.
It was for the appellants to
establish waiver. It is therefore appropriate to look at the reasons
advanced by Contango and Natixis
on the one hand, and Glencore on the
other, for seeking production of the opinions.
[62]
Mr Strachan, who deposed to the founding affidavit on behalf of
Contango and Natixis, said that the respondents had disclosed
the
content of the opinions by saying that counsel agreed with the
outcome of the legal review. He then advanced two propositions.
The
first was that privilege is lost once the contents of the document
have been disclosed. Secondly he said that fairness dictated
that the
opinions should be disclosed. He did not amplify on the
considerations of fairness on which he relied. In reply he said
that
the respondents tried to throw the weight of two counsel’s
opinions behind their contentions. Quite rightly the response
was
that the views of counsel were irrelevant and inadmissible. Courts
are only concerned with counsel’s submissions, not
their
opinions.
[63]
Both propositions advanced by Mr Strachan were inconsistent with the
law as summarised in para 48 of this judgment. Questions
of the
waiver of privilege are far more nuanced than that. The nature,
extent and purpose of the disclosure is fundamental. Considerations
of fairness come into play when the disclosure introduces into the
claim or defence contentions that can only be responded to if
there
is full disclosure is where. There is no automatic waiver as a result
of a partial disclosure, as the facts in both
Peacock
v SA Eagle
and
Harksen
demonstrate. Nor is fairness an
independent ground for holding that there has been a waiver of
privilege.
[64]
The deponent on behalf of Glencore to the founding affidavit, Ms
Smit, said that the contents of the opinions were relevant
to the
question whether the respondents acted with due expedience after
receiving the advice and also to the relief to be granted.
I am
unable to agree with either proposition. There is no suggestion that
the advice sought from and given by counsel related to
the timing of
legal proceedings or how expeditiously they should be instituted. It
was simply said that the advocates agreed with
the view of the legal
review that the disposal contracts were liable to be reviewed and set
aside. So far as delay was concerned
the opinions were relevant to
the time taken from December 2016, when the outcome of the legal
review was provided to the boards
of the respondents and March 2018
when the review was launched. It explained that two months were taken
to obtain the first opinion;
that there was then a period of five
months taken to obtain the KPMG report; and, thereafter, a further
period of two days to obtain
the second opinion. That was disclosed
and the appellants did not need the opinions in order to deal with
it. The suggestion that
the opinions may have dealt with the degree
of expedition with which proceedings should have been brought was
pure speculation.
The proposition in reply that the respondents
relied on the conclusions in the opinions to justify delay is not
borne out by the
founding affidavit in the review.
[65]
I am also unable to appreciate on what basis the opinions could bear
upon the just and equitable relief to be granted to the
respondents
if the review succeeded. That outcome would merely establish that the
views of counsel were legally correct. It is
a mystery to me how that
could influence or affect the just and equitable remedy the court
might in due course award. As with any
such case the court would hear
submissions from the parties and craft an appropriate order. If, as
was foreshadowed, the question
of remedy was to be held over until
the merits had been decided it is conceivable that the court might
require further information
to be placed before it or to have a
separate hearing on remedy.
[27]
The opinions of counsel would not affect any decision in that regard.
[66]
I accept that the statement that counsel were of the opinion that the
outcome of the legal review was correct, constituted
a partial and
limited disclosure of the conclusion reached in the opinions. In some
small measure it may also have conveyed the
gist of those opinions,
insofar as the basis for the conclusions of the legal review had been
set out earlier in the founding affidavit.
To that extent there was
conduct on the part of the respondents that could objectively
speaking be viewed as inconsistent with
preserving in full the
confidentiality of the opinions. However, that conduct must be seen
in the light of the fact that in the
very same paragraph a claim that
the opinions were privileged was asserted.
[67] In the face of that
assertion, and applying the approach set out in
RAF v Mothupi
,
there can be no question of the respondents relying on some
undisclosed mental reservation in regard to their right to claim
privilege. They asserted it directly and the perception of a
reasonable person in the shoes of the appellants would have been that
they claimed privilege in respect of the opinions. I accept that the
mere assertion of privilege will not in all cases preclude
a finding
that privilege has been waived. The extent of disclosure may be so
great; the incorporation of the substance of the document
in the
claim or defence so apparent; the necessity in all fairness for there
to be disclosure if the other party is not to be prejudiced
in its
conduct of the defence so clamant; that it overrides the expression
of a subjective intention not to waive the privilege.
But that is not
this case. The content of the opinions was not made an issue in the
proceedings and there was no need for the appellants
to respond to
them. The relevance of their contents to the litigation was not
apparent. Finally, the appellants did not attempt
to show, as opposed
to assert without explanatory detail, why it would be unfair for them
to proceed with their opposition to the
review without having seen
the full opinions. For those reasons I conclude that the legal advice
privilege attaching to them was
not waived and the appellants were
not entitled to an order for their production.
_______________________
M J D Wallis
Judge
of Appeal
Appearances
For the First and Second
Appellants:
A Bham SC (with him M Mbikiwa)(Heads of argument prepared by G Marcus
SC, with him K Hofmeyr and M Mbikwa)
Instructed
by:
Norton Rose Fulbright South Africa Inc, Sandton
Webbers,
Bloemfontein
For the Third
Appellant: A M Smalberger SC (with him
F Ismail)
Instructed
by:
Werksmans Attorneys, Cape Town
Webbers,
Bloemfontein
For the First and Second
Respondents:
T
Motau SC (with him R Tshetlo, S Scott and U Gcilishe)
Instructed
by:
Cliffe Dekker Hofmeyr Inc, Cape Town
Phatshoane
Henney Attorneys, Bloemfontein
[1]
Saldanha J sitting as the court of first instance.
[2]
‘
35
Discovery, Inspection and Production of Documents
(12)
Any party to any proceeding may at any time before the hearing
thereof deliver a notice as near as may be in accordance with
Form
15 in the First Schedule to any other party in whose pleadings or
affidavits reference is made to any document or tape recording
to
produce such document or tape recording for his inspection and to
permit him to make a copy or transcription thereof. Any
party
failing to comply with such notice shall not, save with the leave of
the court, use such document or tape recording in
such proceeding
provided that any other party may use such document or tape
recording.’
[3]
See
Penta
Communication Services (Pty) Ltd v King
2007 (3) SA 471
(C) at 476 paras 16 and 17 and
Holdsworth
v Reunert Ltd
2013 (6) SA 244
(GNP) at 246I-J, and generally ‘Discovery,
inspection and production of documents’ in Erasmus
Superior
Court Practice
2
ed (RS 6 2018) at D1-478 and the cases cited there.
[4]
Competition
Commission v Arcerlormittal SA Ltd & others
[2013]
ZASCA 84
;
2013 (5) SA 538
(SCA) para 21.
[5]
Competition
Commission v Arcerlormittal SA Ltd & others
[2013]
ZASCA 84
;
2013 (5) SA 538
(SCA) para 21.
[6]
A
Sweidan and King (Pty) Ltd & others v Zim Israel Navigation Co
Ltd
1986
(1) SA 515
(D) at 519A.
[7]
Sweidan
and King (Pty) Ltd & others v Zim Israel Navigation Co Ltd
1986
(1) SA 515
(D) at 516C-G has a useful example of the facts that must
be set out to support a claim for litigation privilege.
[8]
Vol 1, p 13, p
ara
9.
[9]
Road
Accident Fund v Mothupi
2000
(4) SA 38
(SCA) paras 15-17.
[10]
Peacock
v SA Eagle Insurance Co Ltd
1991
(1) SA 589
(C) at 591C-F.
[11]
Harksen
v Attorney-General, Cape and Others
1999
(1) SA 718
(C) paras 60-62.
[12]
In
South
African Airways v BDFM Publishers (Pty) Ltd and others
2016
(2) SA 561
(GJ) para 55, fn 18, it was said that the two
expressions are equivalent.
[13]
Mann
v Carnell
[1999]
HCA 66
;
201 CLR 1
;
168 ALR 86
para 29.
[14]
Osland
v Secretary to the Department of Justice
[2008]
HCA 37
para 45.
[15]
One
of whom subsequently became a Justice of the High Court and has
recently retired.
[16]
Telstra
Corp Ltd & Another v BT Australasia Pty Ltd & Another
[1998]
FCA 901.
[17]
Adelaide
Steamship Co Ltd v Spalvins
(1998)
81 FCR 360
at 372A-B. Approved in
Commissioner
of Taxation v Rio Tinto Ltd
[2006]
FCAPC
86; (2006) ALR 304
para 53.
[18]
R v
Derby Magistrates’ Court, ex parte B and Another
[1995] UKHL 18
;
[1995]
4 All ER 526
at 537-541, in the speech of Lord Taylor of Gosforth
LCJ, the House of Lords held that a claim of legal privilege is not
subject
to any balancing of interests between the claimant and the
party seeking disclosure. If the document is privileged that is
conclusive
on the issue of disclosure. General considerations of
fairness do not enter the picture. See also
Three
Rivers Disrict Council and Others v Governor and Company of the Bank
of England
[2004]
UKHL 48
;
[2005] 4 All ER 948
(HL) para 25.
[19]
S
v Tandwa and Others
[2007]
ZASCA 34
;
2008 (1) SACR 613
(SCA) para 19.
[20]
S
v Tandwa
para
20.
[21]
Benecke
v National Australia Bank
(1993)
35 NSWLR 110
at 111-2 dealt with precisely this point. It was quoted
with approval in the passage from
Mann
v Carnell
cited
in para 45 of this judgment.
[22]
Competition
Commission v Arcelormittal South Africa Ltd and Others
2013
(5) SA 538
(SCA) para 37. Accordingly, the dictum in para 33, based
on
S
v Tandwa
,
that ‘Imputed waiver occurs when fairness requires a court to
conclude that privilege was abandoned’ takes the matter
no
further.
[23]
Avontuur
& Associates Inc and Another v Chief Magistrate, Oudtshoorn:
Magistrates’ Court and Others
[2012]
ZAWCHC 94
;
2013 (1) SA 615
(WCC) para 43.
[24]
Switchcorp
Pty Ltd v Multimedia Ltd
[2005]
VSC 425.
[25]
Equivalent to a SENS notice on the Johannesburg Stock Exchange.
[26]
GMCG,
LLC v Agenix Ltd
[2007]
QSC 309.
[27]
As
was done in
Allpay
Consolidated Investment Holdings (Pty) Ltd and Others v Chief
Executive Officer of the South African Social Security Agency
and
Others (No 2)
[2014]
ZACC 12
;
2014 (4) SA 179
(CC).