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REPUBLIC OF SOUTH AFRICA
IN THE HIGH COURT OF SOUTH AFRICA
GAUTENG DIVISION, PRETORIA
CASE NO: A206/2025
26468/2020
In the matter between:
UNEMPLOYMENT INSURANCE FUND 1st Appellant
MINISTER OF EMPLOYMENT AND LABOUR 2nd Appellant
DIRECTOR GENERAL FOR THE DEPARTMENT OF 3rd Appellant
EMPLOYMENT AND LABOUR
and
VANTAGE MEZZANINE FUND II PARTNERSHIP 1st Respondent
VANTAGE MEZZANINE FUND II (PTY) LTD 2nd Respondent
RE: ACTION:
VANTAGE MEZZANINE FUND II PARTNERSHIP 1st Plaintiff
VANTAGE MEZZANINE FUND II (PTY) LTD 2nd Plaintiff
and
REPORTABLE: NO
OF INTEREST TO OTHER JUDGES: NO
REVISED: NO
03 SEPTEMBER 2026 ______________________
DATE SIGNATURE
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UNEMPLOYMENT INSURANCE FUND 1st Defendant
MINISTER OF EMPLOYMENT AND LABOUR 2nd Defendant
DIRECTOR GENERAL FOR THE DEPARTMENT OF 3rd Defendant
EMPLOYMENT AND LABOUR
SOMNIPOINT (PTY) LTD (IN LIQUIDATION) 1st Third Party
MURRAY N.O CLOETE 2nd Third Party
MAHLANGU N.O; KHATAZILE SIMON 3rd Third Party
JUDGMENT
FRANCIS-SUBBIAH, J
(JANSE VAN NIEWENHUIZEN et MOKOSE JJ concurring)
[1] The appellant, Unemployment Insurance Fund ( “UIF”) appeals against the
judgment of the court of first instance, with leave from the Supreme Court of Appeal.
The appeal concerns the First Respondent, Vantage Mezzanine Fund II Partnership
and the Second Respondent, Vantage Mezzanine Fund Proprietary Limited
(collectively, “Vantage”), which successfully obtained an order striking out the UIF’s
defence on the basis of its failure to comply with an order compelling discovery.
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[2] There are three questions for determination on appeal . This is whether the
UIF had complied with the order compelling discovery, bearing in mind its contention
that it could not discover documents that were not in its possession or under its
control. Secondly, if non -compliance with discovery is found , was an order striking
out the appellant’s defence an appropriate order made in the circumstances of
exercising a judicial discretion. Finally, should the appeal succeed, it will be
necessary to consider whether the respondents' conditional cross-appeal, seeking a
separation of issues, be upheld.
Background Summary
[3] In April 2015, the UIF entered into a lease agreement with a company called
Somnipoint (Pty) Ltd (“Somnipoint”), the landlord for office space in the ABSA Tower
building in Pretoria CBD. Somnipoint had previously purchased the ABSA Tower with
a l oan facility taken from Vantag e. The ABSA Tower was used as security for any
obligation under the loan agreement. Somnipoint had ceded the ABSA Tower rental
income to Vantage during March 2014. The parties concluded a written Cession and
Pledge agreement.
[4] Subsequently, in September 2017, Somnipoint defaulted in its repayment
obligations under the loan agreement. In November 2018 Vantage, in exercising its
rights in terms of the cession, gave UIF notice of Somnipoint’s cession of its rentals.
The effect of this meant that UIF had to pay to Vantage the monthly rental amounts
due. In other words , the UIF as tenant and creditor , legally had to pay Vantage as
cessionary, the monthly rental amounts owed to Somnipoint – the landlord. On 13
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December 2019, Vantage addressed a written letter of demand to UIF demanding
payment.
[5] The UIF accepts that it received Vantage’s cession and demand notice but
initially failed to abide by it and continued paying the ceded monthly rentals to
Somnipoint. Vantage, as a result c ontends that UIF had voluntarily assumed the
obvious risks of disregarding the cession notice . Nonetheless, at a later stage the
UIF acknowledged the cession rentals and notices and began to directly pay rent to
Vantage. It is submitted that only between October 2019 and May 2020 that the UIF
honoured and partly complied with the cession notice s by making payments directly
to Vantage. The outstanding amount due to Vantage includes rent, utilities, and other
charges.
[6] In September 2020, Vantage instituted high court action against UIF due to
UIF’s failure to comply with the cession and demand notice s seeking a money
judgment in the amount of R36.6 million. Vantage likewise sought an order for the
compulsory winding -up of Somnipoint, which owed Vantage approximately R300
million in terms of the loan facility and an order declaring ABSA Towers especially
executable.
[7] The action proceedings between Vantage and UIF were under com mercial
case management by the court of first instance per Bam, J who had heard the fully
ventilated arguments on the st riking out of the defence . The key reasoning in the
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judgment to strike out the UIF’s defense was the n on-compliance with the previous
court order and further request requiring them to provide discovery as per Rule 35(3)
of the Uniform Rules of Court. Vantage contended that the UIF’s responses were
‘deficient, inadequate and non -compliant with the rules ’ and did not address specific
requested documents, such as lease agreements, correspondence, and proof of
payments. UIF p rovided general statements of non -possession and lack of
knowledge, without addressing specific requests or statutory duties.
[8] Vantage argued that UIF’s failure to provide documents prejudiced them
against their ability to prepare for trial and caused unnecessary delays, as they had
to bring multiple interlocutory applications to compel compliance. They also disputed
UIF’s claim that delays were caused by Vantage and provided a detailed chronology
to show th at UIF was responsible for the delays. It was emphasised that UIF’s
obligations under the Public Finance Management Act 1 (PFMA) were to maintain
proper records and ensure transparency. They argued that the lack of documentation
was inconsistent with these statutory duties.
[9] The UIF claimed they had fully complied with the court order and discovery
obligations, asserting that after July 2022, there were no further requests from
Vantage. They argued that their supplementary affidavits and discovery schedules
addressed the plaintiffs' requests. They maintained that they had a valid defence and
11 of 1999
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intended to proceed with it, arguing that striking out their defense would cause them
prejudice, while Vantage would not be prejudiced by any alleged non-compliance.
[10] UIF invoked section 34 of the Constitution of the Republic of South Africa,
19962, emphasizing the drastic nature of striking out a defense and the need to
protect their right to a fair hearing to defend a substantial claim involving public
funds. Although not pleaded they argued that the cession agreement was invalid
under section 217 of the Constitution and procurement legislation, suggesting any
payments to Vantage would have been unlawful.3
[11] The court of first instance found that UIF’s responses on discovery to be
vague, non -compliant, and inconsistent with their statutory obligations as a public
entity. Their delays and failure to comply undermine d the administration of justice
and public confidence. Failure to produce relevant documents prejudiced Vantage in
proceeding with its claim. The court further emphasized that the power to strike out a
2Section 34 provides as follows:
“Everyone has the right to have any dispute that can be resolved by the application of law decided in a fair
public hearing before a court or, where appropriate, another independent and impartial tribunal or forum”
3 Constitution of the Republic of South Africa, 1996. Section 217 provides as follows:
“1. When an organ of state in the national, provincial or local sphere of government, or any other institution
identified in national legislation, contracts for goods or services, it must do so in accordance with a system
which is fair, equitable, transparent, competitive and cost-effective.
2. Subsection (1) does not prevent the organs of state or institutions referred to in that subsection from
implementing a procurement policy providing for
a. categories of preference in the allocation of contracts; and
b. the protection or advancement of persons, or categories of persons, disadvantaged by unfair
b. the protection or advancement of persons, or categories of persons, disadvantaged by unfair
discrimination.
3. National legislation must prescribe a framework within which the policy referred to in subsection (2) must
be implemented.”
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defence is discretionary and not limited to cases of willful disobedience (contumacy )
4 but can be exercised where the integrity of the court process is at stake.
The Legal Basis
[12] It is trite that the Court of Appeal first determines whether the court of first
instance ha d a narrow or wide discretion. 5 The rational for an appellate court’s
restraint was set out in Florence v Government of the Republic of South Africa ,6
where Moseneke DCJ commented that the
“principle of appellate restraint preserves judicial comity. It fosters certainty in the
application of the law and favours finality in judicial decision-making”.7
[13] The Constitutional Court in Trencon Construction v Industrial
Development Corporation,8 noted that two types of discretion have emerged in our
case law in determining the standard of interference that an appellate court is
justified in applying when considering the exercise of a discretion by a court of first
instance. First, discretion in the narrow (true/strict) sense and second, discretion in
the wide (broad/loose sense).
4 Wanson Company of South Africa (Pty) Ltd v Establissements Wanson Construction De Material Thermieque
Societe Anonyme 1976 (1) SA275 (T) at 280C-D – a finding of contumacy is not obligatory before striking out a
defence.
5 Giddey N.O v JC Barnard and Partners 2007 (5) SA 525 (CC) at para 19.
6 2014 (6) SA 456 (CC).
7 Id at para 113.
8 2015 (5) SA 245 (CC) at para 83. Also see: Government Printing Works v Public Service Association and
Another [2024] ZALAC 63 at para 15.
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[14] Where appellate court exercises a narrow, strict and circumscribed approach
the Constitutional Court in Giddey NO v JC Barnard and Partners 9 held that the
discretion exercised is a discretion in a strict sense and could succeed only on
limited grounds on appeal. O’Regan, JA held that:
“…the appellate court will not consider whether the decision reached by the
court of first instance was correct but will only interfere in limited
circumstances; for example, if it is shown that the discretion has not been
exercised judicially or has been exercised based on a wrong appreciation of
the facts or wrong principles of law.”10
[15] Moreover, the appeal court is not entitled to substitute its own discretion
merely because it would have reached a different conclusion. The decision involves
a value judgment, although the Judge does not exercise an unfettered discretion. In
Media Workers Association of South Africa and Others v Press Corporation of
SA Ltd, 11 the Supreme Court of Appeal explained that a narrow discretion would
entail that the court may choose from a range of options. This type of discretion is
said to be “true” as the court has an election of which option to apply and each
option is entirely permissible. 12 This position was also adopted in the recent
Constitutional Court judgment of Sustaining the Wild Coast NPC and Others v
9 2007 (5) SA 525 (CC).
10 Giddey N.O at para 19.
11 (1992) (4) SA 791 (A) at 800D-E.
12 Also see Hewetson v Law Society of the Free State 2020 (5) SA 86 (SCA) at para 52.
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Minister of Mineral Resources and Energy and Others; Natural Justice and
Another v Minister of Mineral Resources and Energy and Others ,13 where the
court stated that “[a] true discretion exists when a lower court has a choice of equally
permissible options.”
[16] In Mystic River Investments 45 (Pty) Ltd and Another v Zayeed Paruk
Incorporated and Others ,14 the court held that the court of first instance erred by
applying a wrong principle and further misread a judgment relied on. It held that
“[t]his misdirection justifies interference by this Court. That being so, this Court is at
large to consider the application afresh.”15
Wide sense
[17] Essentially, where discretion is applied in the wide sense, (broad/loose) the
appellate court is equally capable of determining the matter in the same manner as
the court of first instance and can therefore substitute its own exercise of the
discretion if it considers that the order of the first instance court was wrong.
[18] In Knox D’Arcy Ltd and Others v Jamieson and Others ,16 the appellate
court described the exercise of a discretion in the wide sense to mean “no more than
13 [2026] ZACC 33 (14 August 2026) at para 86.
14 2023 (4) SA 500 (SCA).
15 Id at para 15.
16 1996 (4) SA 348(A).
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that the court is entitled to have regard to a number of disparate and
incommensurable features in coming to a decision”.17
[19] The distinction is not merely one of semantics as it determines the standard of
interference that an appellate court must apply. It is thus critical for an appellate court
to ascertain whether the discretion exercised by the court of first instance was a wide
or narrow discretion.18
[20] Accordingly t he power to strike out a defence is found in Rule 35(7) which
provides:
“If any party fails to give discovery as aforesaid or having been served with a
notice under subrule (6), omits to give notice of a time for inspection as
aforesaid or fails to give inspection as required by that subrule (6), the party
desiring discovery or inspection may apply to a court, which may order
compliance with this rule and, failing such compliance, may dismiss the claim
or strike out the defence.” 19
[21] The striking out of a defence constitutes a drastic remedy. The exercise of this
power is discretionary and must be approached with due judicial circumspection. 20
17 Id at 361 G-I.
18 Trencon above para 83.
19 Rule 35 (7) of the Uniform Rules of Court.
20MEC for The Department of Public Works and Others v Ikamva Architects and Others (235/2021) [2022]
ZAECBHC 13; [2022] 3 All SA 760 (ECB); 2022 (6) SA 275 (ECB) (17 March 2022) at para 18.
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The court of first instance referring to Leask21 similarly acknowledged that the
ultimate remedy, the dismissal of an action or the striking out of a defence, is a
drastic remedy which is discretionary and is to be exercised judiciously.
Striking out a defence- narrow or wide discretion?
[22] A court possess es inherent jurisdiction to safeguard the integrity of its
process.22 Therefore the court has the power to strike out a claim or a defence in the
exercise of this jurisdiction. This discretion exercised judicially is fact specific. The
court’s power to strike out is embodied in several rules of court, under this subrule
the court has a discretion whether or not to enforce discovery . The Rules provide
remedies for non -compliance with the rules. 23 When considering a strike -out
application courts consider factors such as the gravity of the non -compliance,
reasons for the non -compliance, prejudice to the parties, interests of justice and
contumacy. 24
[23] In our view, a court of first instance, when exercising its discretion in
determining whether to strike out a defence, exercises a discretion falling within the
narrow sense. The striking of a defence is “a matter incidental to the civil
21 Leask v East Cape Forest Products CC t/a Highbury Treated Timbers (1285/07) [2008] ZAECHC 171 (2
October 2008).
22 Millu v City of Johannesburg Metropolitan Municipality and another 2024 JDR 1329 (GJ) at para 17.
23 Kansai Plascon (Pty) Ltd v Rednec Services (Pty) Ltd and Others [2025] ZAGPJHC 152 at para 5.
24 Kansai above at paras 8-9.
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proceedings”,25 and it is clear that the court considering such an application has a
wide variety of options in terms of the Rules of Court. The interference by an
appellate court is thus circumscribed.
[24] UIF submitted in its appeal that the court of first instance failed to consider
any of the numerous, more appropriate, lesser remedies available to it. Such as
ordering a further and better affidavit, a cost order, or barring the UIF from relying on
any un-discovered document. Vantage counter argued that the UIF has no defence
to its action and it therefore does not seriously or genuinely want the action to
proceed to trial. It has intentionally and recklessly delayed the finalisation of
Vantage’s claim and its third-party proceedings since 2021.
[25] During the pre -trial conference held on 10 November 2022, Vantage alerted
the UIF that they will bring th e striking off application in the event that the UIF fail to
provide satisfactory discovery . The court of first instance had judicially case
managed the matter and provided the UIF with every opportunity to provide the
requested discovery.
[26] The UIF’s response to Vantage’s Rule 35(3) notice is criticised as vague and
inadequate, as they merely stated that they did not know where the requested
25 Giddey above at para 22.
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documents were and had no knowledge of their existence. UIF maintains that this is
a factual enquiry determinative of the UIF’s defence against Vantage and any claim
against a third party. However, even at the current Appeal hearing the documents
remain unavailable.
[27] The court of first instance found this problematic because the response leaves
Vantage uncertain about whether the documents were previously in UIF’s
possession but can no longer be located or whether the documents once existed but
were destroyed or lost, for example through a cyberattack; or whether the
documents never existed in the first place. Accordingly, the court held that the
defendants’ statement effectively amounted to no proper response to their
obligations under Rule 35(3).
[28] UIF’s arguments regarding compliance, prejudice, and section 217 of the
Constitutional procurement defence that any payments to Vantage would have been
unlawful were rejected. The Court a quo considered the appellants defence in their
plea den ying the cession that Somnipoint was not entitled to cede and assign its
rights and obligations in terms of the lease agreement without notifying and/or
obtaining the UIF’s consent. Particularly that Somnipoint, had expressly informed the
UIF that the cession had not taken place and that this induced the UIF to continue
making the rental payments to Somni point. Further, Somnipoint continued to present
invoices to the UIF for rental, and accepting payment made under such invoices, it
breached clause 13.2.2 of the cession.
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[29] The prejudice complained of by Vantage is the failure to pay the ceded rental
amounts due to them. They pleaded that it is near impossible that no
correspondence was exchanged between Somni point and the UIF as tenant for the
period 1 November 2018 to 1 May 2022, and no proof of payment exists, given the
common cause payments made by the UIF to Somni point, during the period
identified in the notice.
[30] The court of first instance concluded that the interests of justice required
striking out the UIF’s defense due to their disregard for court orders ,26 the rules of
litigation and the authority of the court by undermining the integrity of the court
process and the prejudice suffered by Vantage. Considering Millu27 the Court
emphasized that courts enjoy an inherent jurisdiction to protect the integrity of the
court process. The court further indicated that the defendants’ obligations were
heightened because the UIF is an organ of state and is subject to duties imposed by
legislation such as the Public Finance Management Act (PFMA).
[31] In summary, Vantage cleared the procedural and substantive hurdles raised
by the UIF, expressly showing their entitlement to enforce the lease and recover the
arrear rental . The cession agreement gives the plaintiffs superior rights to claim
arrear rental, regardless of any alleged breach or misrepresentation by Somnipoint.
26 The public interest in the functioning of the courts for the land is undermined when parties simply ignore the
rules - see Leask above.
27 2024 JDR 1329.
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The liquidation of Somnipoint, coupled with its lack of a legal interest in the
proceedings, meant that it was not required to be joined as a party. Also, the
statutory notice requirement did not apply to the contractual claim for specific
performance. The discretion to strike out a defence found no genuine, triable
defence with reasonable prospects of success. We find no misdirection exercised by
the court of first instance.
[32] Two of the questions for determination on appeal have been answered. The
UIF failed to co mply with the order compelling discovery, it failed to discover
documents that were critical to support its defence including the document from
Somnipoint informing UIF not to make payments to Vantage. In addition , in the
November 2022 pre -trial conference the UIF was invited again to cure the non -
compliance with Rule 35 (3) discovery order – after 21 July 2022, but still failed to do
so.
[33] On the second question, the finding of non-compliance with the discovery
obligations is found, and the court of first instance ’s exercise of a narrow judicial
discretion to strike out the appellant’s defence , were appropriate in the
circumstances. In line with the principles in Giddey, the Court properly considered
the UIF’s right to have its dispute adjudicated on the merits. However, that right is not
absolute and must be weighed against the interests of justice , the protection of the
integrity of the court process and the prejudice suffered by the opposing party.
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[34] Even if Somnipoint misled the UIF regarding the cession, such conduct would
not in itself constitute a defence to Vantage’s claim ag ainst the UIF. The UIF
accordingly failed to demonstrate a genuine, triable defence with reasonable
prospects of success.
[35] As stated in Capitec Bank Limited v Mangena and Another,28
“In the context of action proceedings, which are generally longer
lasting, more costly, and procedurally more complex than motion
proceedings, the rules permitting a claim to be dismissed or a defence
to be struck out are important procedural tools. They enable a court to
ensure that a party with a frivolous claim or defence is not permitted to
delay the trial process through sheer noncompliance with the rules
designed to move the trial forward. They also enable the court to
protect its process against a wide variety of other potential abuses.”
[36] In the circumstances, the court was entitled to balance the UIF’s constitutional
right to have its case heard against Vantage’s entitlement to the expeditious and fair
determination of its claim, as well as the prejudice caused by the UIF’s non -
compliance with its discovery obligations. Accordingly, the exercise of the court of
first instance’s discretion to strike out the UIF’s defence was appropriate and cannot
be faulted.
28 2023 JDR 0779 (GJ) at paras 3-4.
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[37] Finally, the appeal is dismissed, and it is therefore not necessary to consider
the third question pertaining to the conditional cross -appeal, seeking a separation of
issues.
[38] Court Order:
The appeal is dismissed with costs, including the costs of the application for leave to
appeal in the court of first instance and the Supreme Court of Appeal, such costs to
include the costs of two counsel where applicable on scales B and C.
________________________
FRANCIS-SUBBIAH, J
JUDGE OF THE HIGH COURT
GAUTENG DIVISION, PRETORIA
Counsel for the Appellant: Adv. W Mukhari (SC)
Adv. TV Mabunda
Attorneys for the Appellant: The State Attorney
Counsel for the Respondent/s: Adv. GW Amm (SC)
Adv. SG Dos Santos
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Attorneys for the Respondent: Cliffe Dekker Hoffmeyer Inc.
Date of Hearing: 03 June 2026
Date of Judgment: 03 September 2026
The judgment has been delivered by uploading onto the court online digital data
base of the Gauteng Division, Pretoria and by e-mail to the attorneys of record of the
parties. The deemed date and time for the delivery is _03 September 2026.