Mvelaphanda Holdings (Pty) Ltd and Another v JS and Others

• Jurisdiction: South Africa

Mvelaphanda Holdings (Pty) Ltd and Another v JS and Others
2016 (2) SA 266 (GJ)

2016 (2) SA p266

Citation	2016 (2) SA 266 (GJ)
Case No	38432/2014
Court	Gauteng Local Division, Johannesburg
Judge	Berger AJ
Heard	May 25, 2015
Judgment	September 17, 2015
Counsel	B Puncus SC for the applicants in the application to set aside the subpoena (with M Chauke) and in the interlocutory application.; C Loxton SC (with A Milovanic) for the first respondent in the application to set aside the subpoena.; D van der Berg for the first respondent in the interlocutory application.

Flynote : Sleutelwoorde G

Evidence — Subpoena duces tecum — Persons who can 'properly' produce documents — Superior Courts Act 10 of 2013, s 36(5)(b).

H Evidence — Subpoena duces tecum — Whether required to be accompanied by tender of costs — Superior Courts Act 10 of 2013, s 35(2)(a).

Evidence — Subpoena duces tecum — Can be abuse of process even where documents sought relevant to action concerned.

Headnote : Kopnota

I Mr and Mrs S, who had married in community of property, were involved in divorce proceedings. In dispute was the extent of the joint estate, and particularly whether the assets of certain trusts formed part thereof (Mrs S alleged that the trusts were Mr S's alter ego). In order to gather evidence on this issue, Mrs S subpoenaed Mr Steenkamp, a chartered accountant who was a director of a firm of accountants, to appear at the trial and to produce J documents. The firm in question was the auditor of the trusts and also of

2016 (2) SA p267

a company (Mvelaphanda), in which one of the trusts was a major A shareholder. The documents demanded were of the company and included its annual financial statements and all working papers relating to its investments, loans receivable, borrowings and other assets for each financial year of its existence (it was formed in 1997), until the date of the subpoena (August 2014). The documents were relevant to the alter ego issue in the trial proceedings in that they illuminated flows of funds between the B company and the shareholding trust, and the trusts and Mr S.

The company and Mr Steenkamp applied to set aside the subpoena to the extent that it required the production of the documents.

The issues were:

(1)

Whether, in terms of s 36(5)(b) of the Superior Courts Act 10 of 2013, C Mr Steenkamp was a proper person to subpoena to produce Mvelaphanda's annual financial statements.

The section provides:

'(5) When a subpoena is issued to procure the attendance of any person as a witness or to produce any book, paper or document in any proceedings, and it appears that — D

. . .

(b)

such book, paper or document could properly be produced by some other person;

. . .

any judge of the court concerned may, notwithstanding anything contained E in this section, after reasonable notice by the Registrar to the party who sued out the subpoena and after hearing that party in chambers if he or she appears, make an order cancelling such subpoena.'

Held, that, whether a person could 'properly' produce a document depended on the circumstances, and that the court had a discretion whether to cancel the subpoena. (Paragraphs [34] and [50] at 273B and 275A – B.) F

Here, Steenkamp was a proper person to subpoena. This was because in terms of the Companies Act a company was required to keep its annual financial statements accessible at its registered office, and Mvelaphanda's registered office was the office of the firm of accountants of which Steenkamp was a director. (Paragraphs [51] – [53] and [55] at 275C – E and 275H.)

(2)

Whether it was a requirement for a subpoena's validity that it be accompanied G by a tender of the subpoenaed person's costs. (Paragraphs [67] – [68] at 277B – D.)

Held, that there was no such requirement. A subpoena could be issued and served without a tender for costs accompanying it. (Paragraphs [67] and [72] at 277B and 278B.)

However, whether an offer of costs had been made was relevant when it came to H enforcement: it was a reasonable excuse for disobeying a subpoena that reasonable expenses had not been paid or offered (Superior Courts Act 10 of 2013, s 35(2)(a)). (Paragraph [72] at 278C.)

(3)

Whether the subpoena was an abuse of process. (Paragraph [74] at 278D – E.)

Held, that a subpoena could constitute an abuse of process, even where the I subpoenaed documents were relevant to the action concerned. This depended on the facts. (Paragraph [75] at 278E – F.)

Here there was no basis to conclude that the subpoena was such an abuse of process. (Paragraph [77] at 279A – B.)

Application dismissed. (Paragraph [98] at 281I – 282A.) J

2016 (2) SA p268

Cases Considered

Annotations A

Case law

Beinash v Wixley 1997 (3) SA 721 (SCA) ([1997] 2 All SA 241; [1997] ZASCA 32): dictum at 734F applied

Cave v Johannes NO and Others 1949 (1) SA 72 (T): dictum B at 81 – 85 approved

Laskarides and Another v German Tyre Centre (Pty) Ltd (in Liquidation) and Others NNO 2010 (1) SA 390 (W): considered

Meyers v Marcus and Another 2004 (5) SA 315 (C): dictum at 324D applied

South African Coaters (Pty) Ltd v St Paul Insurance Co (SA) Ltd and Others 2007 (6) SA 628 (D): dictum at 634D followed.

Statutes Considered

C Statutes

The Superior Courts Act 10 of 2013, ss 35(2)(a) and 36(5)(b): see Juta's Statutes of South Africa 2014/15 vol 1 at 2-280.

Case Information

B Pincus SC D for the applicants in the application to set aside the subpoena (with M Chauke) and in the interlocutory application.

C Loxton SC (with A Milovanic) for the first respondent in the application to set aside the subpoena.

D van der Berg for the first respondent in the interlocutory application.

E An application to set aside a subpoena.

Order

(a)

The record of the interlocutory application is admitted into the record of the main application.

(b)

F The main application is dismissed with costs.

(c)

The first and second applicants are liable, jointly and severally, to pay the first respondent's costs of the main application, including the costs of two counsel.

(d)

The first and second applicants are liable, jointly and severally, to pay the first respondent's costs of the interlocutory application, G including the costs of two counsel where two counsel were employed.

Judgment

Berger AJ:

Introduction H

[1] The first and second respondents are currently involved in divorce proceedings. There is no dispute that they were married to each other on 11 February 1993, in community of property, and that two children were born of the marriage, a girl (now a woman) aged 23 and a boy (now a man) aged 22. I shall refer to the first respondent as Mrs S and to the I second respondent as Mr S.

[2] It is common cause between Mr and Mrs S that their marriage relationship has irretrievably broken down. They both agree that they should be divorced, that their joint estate should be divided, and that J Mr S should maintain the children until they are self-supporting.

2016 (2) SA p269

Berger AJ

[3] That is where their agreement ends. Mrs S has filed a counterclaim A in which she inter alia disputes the extent of the joint estate and claims that it would be just and equitable for Mr S to maintain her, to provide her with a home of her choice, to pay all expenses in relation to the running of the home, and to provide her with a motor vehicle of her choice every five years. B

[4] In her counterclaim Mrs S alleges that the TJS Houghton Trust (the Houghton Trust) and the TJS Family Trust (the Family Trust) are, for the purposes of the action, to be regarded as assets of the joint estate. In particular, Mrs S pleads that Mr S exercised de facto control of the two trusts, that he took all the major decisions of the trusts, and that the trusts have been his alter ego (the alter ego issue). C

[5] The trusts were created in 1993 and 1994, both having Mr S as the donor and senior trustee, and Mrs S as a trustee. Mr and Mrs S are no longer trustees of either trust. Mr Malindi (the third respondent), Mr Xayiya (the fourth respondent) and Ms Booth (the fifth respondent, representative of the sixth respondent) have since replaced Mr and Mrs S D as trustees of the two trusts.

[6] In terms of the relevant trust deeds, a 'beneficiary' is defined as

'that person or those persons who may from time to time be selected by E the trustees in their entire and absolute discretion to be a beneficiary or beneficiaries in respect of the income or capital or both under this trust, from amongst members of the class consisting of [Mr S], [Mrs S], [their child/children], or any other children born from the marriage between [them], and their lawful issue . . .'.

Mr and Mrs S, and their children, are thus the only potential beneficiaries of the trusts. F

[7] The first applicant is Mvelaphanda Holdings (Pty) Ltd (the company). The Family Trust holds 25% of the ordinary shares of the company. The remaining ordinary shares are held by several third party trusts. G

[8] Mr S was, for many years, a director and the chairman of the company. He resigned as director and chairman in 2009. Mr Malindi is currently a director of the company. Mr Malindi therefore wears two hats in relation to the company, one as a director and the other as a trustee of one of its major shareholders. H

[9] In order to gather evidence for the trial, Mrs S has issued a subpoena duces tecum against the second applicant, Mr Steenkamp, a chartered accountant and a director of C2M Chartered Accountants Inc (C2M). C2M is the auditor of the company, the Houghton Trust and the Family Trust. I

[10] The subpoena calls on Mr Steenkamp to appear in person at the trial and to produce the documents listed in the subpoena. The documents all relate to the company and include...