Gumede and Others v Subel NO and Others

• Jurisdiction: South Africa
• Judge: Mpati DP, Scott JA, Brand JA, Lewis JA and Cachalia AJA
• Judgment Date: 27 September 2005
• Docket Number: 429/04
• Hearing Date: 09 September 2005
• Counsel: P J van Blerk SC (with B M Slon) for the appellants. A O Cook SC (with M J van As) for the respondents.
• Court: Supreme Court of Appeal

Lewis JA: A

[1] The first respondent is a senior counsel at the Johannesburg Bar. He was appointed by the Master of the High Court (formerly Transvaal Provincial Division) to act as a commissioner in an enquiry into the affairs of a company in liquidation, Acquired Card Technologies (Pty) Ltd (ACT), convened under s 417, read with s 418, of the Companies Act 61 of 1973. In the course of the enquiry, at the B instance of a creditor (the second respondent, Johannes Sterenborg), the first respondent ('the commissioner') ordered the first appellant, Robert Gumede, a director of the second and third appellants, to produce certain documents that do not belong to ACT but to the second and third appellants. The appellants applied to the High C Court, Johannesburg, to set aside the ruling of the commissioner in which he refused to uphold an objection to the summons. The application was refused (by Du Toit AJ). The appeal against that decision lies with the leave of the learned Acting Judge. The commissioner does not oppose the appeal. (References in this judgment to 'the respondents' do not include the commissioner.) D

[2] The principal issue for determination on appeal is whether the right asserted by the appellants to confidentiality in the documents in question entitles them to refuse to produce the documents to the commissioner. The appellants thus rely on the right to privacy, entrenched in the Constitution, [1] whereas the respondents argue that the relevance of the documents to the E affairs of ACT is such that rights of privacy must yield to the interests of the creditors of ACT. Some background must be traversed before these issues are considered.

Factual background F

[3] Sterenborg and his wife were the sole shareholders in ACT until August 2000. Sterenborg had built up the business of ACT, which was the manufacturing of 'smart cards' for use in telephones, both by Telkom and by cellular telephone companies. The other respondents are companies incorporated in England but under the control of Sterenborg. G

[4] In August 2000 Sterenborg and his wife sold 26% of the shares in ACT to the second appellant, Gijima Afrika Smart Technologies (Pty) Ltd (GAST), of which Gumede is the executive director, for the price of R30 160 000. The balance of the shares in ACT were sold to GAST for some R2m a year later, and GAST took complete control of the business, previously run by Sterenborg, on 6 August 2001. H Sterenborg and his wife sued for payment of the purchase price for the balance of the shares in ACT shortly after the second sale, in August 2001.

[5] GAST appointed Mr G T Khaas as the day-to-day manager of ACT. Khaas was employed by the third respondent, Gijima Info Technologies Afrika (Pty) Ltd (GITA) and was made a director of GAST in I August 2001 after GAST had taken control of ACT. The appellants refer to themselves loosely as the 'Gijima Group'. Gumede alleged in his J

Lewis JA

founding affidavit that the Gijima Group had discovered, on taking A control of ACT, that the records of ACT were in disarray, that no audit of ACT had been done and that ACT had made a substantial loss in trading. Khaas had allegedly been aware of these problems. He had, however, been suspended from his duties as an employee of the Gijima Group in October 2002 and was subsequently dismissed for misconduct in B December of that year. The misconduct alleged was that Khaas had 'infiltrated and diverted confidential e-mails and other communications amongst executives, employees, customers and partners of the Gijima Group'. Khaas, alleged Gumede, had been in contact with Sterenborg and had passed information about ACT to him. An Anton Piller order was granted against Khaas, at the instance of the C Gijima Group, in May 2003 and numerous documents and computer data were seized from him. I shall return to the material that was retrieved pursuant to the order.

[6] In October 2001, shortly after GAST had taken control of ACT, Brait Merchant Bank Ltd, which was owed some R12m by ACT, applied D for the winding-up of ACT. The application was opposed by the Gijima Group. A provisional winding-up order was granted on 13 November 2001, and the order was made final some three months later on 27 February 2002, despite the opposition. E

[7] In November 2002 Sterenborg and the other appellants applied to the Master for an order instituting an enquiry into the affairs of ACT in terms of s 417 of the Companies Act. The commissioner, in terms of the order granted, was required to report to the Master on the likelihood of the recovery of money or property of ACT, and was empowered to issue such subpoenas as 'he may in his discretion regard F necessary for the proper investigation into the affairs of the company'. Each person so subpoenaed could be ordered to produce 'all of the books, documents, records and papers in their possession or custody or in their power or under their control relating to the company or their dealings with the company, its business, books, G dealings, property and affairs and as specified in each subpoena' (my emphasis). The wording of the order echoes that of s 417(3) which provides for the production of documents 'relating to the company'.

[8] Sterenborg requested the commissioner to summon Gumede to H produce a schedule of documents that had previously been seized from Khaas in terms of the Anton Piller order. Requests to the Gijima Group's attorneys for sight of the documents had previously been refused. The summons was issued by the commissioner. The appellants objected to producing the documents. The legal adviser to the Gijima Group, Mr Van der Walt, submitted an affidavit to the I commissioner in which he stated that the documents requested were not 'as a whole relevant to the affairs of ACT' (my emphasis). Sterenborg conceded, however, that he did not know what was in the documents, and a schedule listing fewer documents, but specifying categories, was then handed in as exhibit Z. J

Lewis JA

[9] The documents...