Smith v Porritt and Others

• Jurisdiction: South Africa
• Court: Supreme Court of Appeal
• Judge: Scott JA, Streicher JA, Brand JA, Ponnan JA and Combrinck JA
• Judgment Date: 23 March 2007
• Citation: 2008 (6) SA 303 (SCA)
• Hearing Date: 08 March 2007
• Docket Number: 536/2005
• Counsel: B Roux SC (with him H Kooevertjie) for the appellant. JM Suttner SC for the first and second respondents. No appearance for the third, fourth and fifth respondents.

Scott JA:

[1] The appellant, a superintendent in the South African Police Service, was subpoenaed to attend a meeting of creditors in D EBN Trading (Pty) Ltd (in liquidation) and, on a different day, a meeting of creditors in Awethu Trust (in sequestration). The subpoena to attend the former was issued by the Master in terms of the provisions of s 414(2) read with s 415(2) of the Companies Act 61 of 1973. The subpoena to attend the latter was issued by the Master by virtue of his powers in terms of s 64 of the Insolvency Act 24 of 1936. (The subpoena refers incorrectly to E s 414(2) of the Companies Act but no issue was made of this.) The appellant applied to the High Court, Pietermaritzburg, for an order setting aside the subpoenas. The application was heard by Msimang J who dismissed it with costs but granted the appellant leave to appeal.

[2] The first respondent is Mr Gary Porritt. I shall refer to him by name. F The second respondent is Synergy Management (Pty) Ltd (Synergy). Porritt is one of its directors. The third and fourth respondents are the liquidators and trustees, respectively, of EBN Trading (Pty) Ltd (in liquidation) and Awethu Trust (in sequestration). I shall refer to the former as EBN and to the latter as Awethu. The fifth respondent is the Master. No relief was sought against the third, fourth and fifth respondents G in the court below.

[3] Final orders of liquidation and sequestration were granted by Theron J against EBN and Awethu, respectively, on 4 February 2004. The applicant in those proceedings was PSC Guaranteed Growth Ltd (in liquidation). I shall refer to it as PSC. The applications were strenuously H opposed by both EBN and Awethu. Both denied indebtedness to PSC. After hearing oral evidence the court found that the respondents were indebted to PSC and that the latter accordingly had locus standi to seek the orders in question. Porritt is a former director of EBN and a former trustee of Awethu. I

[4] Porritt is a creditor of EBN. Synergy is a creditor of Awethu. The subpoena in the EBN matter was issued at the instance of Porritt and the subpoena in the Awethu matter at the instance of Synergy. In terms of the former the appellant was required to produce at the meeting 'the books, records and documents' or copies thereof, relating to the claim J

Scott JA

A proved by PSC in his possession or under his control. They were further identified by reference to the persons or entities from whom the appellant would have received them. The subpoena in the Awethu matter was in similar but not identical form. The documents sought were those 'relating to Awethu and the claim proved by PSC against Awethu'. B Both subpoenas required the presence of the appellant 'in order that [he] may be examined'.

[5] In his founding papers the appellant sought to have the subpoenas set aside essentially on two grounds. The one was that the documents were privileged. The other was that the issuing of the subpoenas amounted to C an abuse of the process in that they were issued with the ulterior motive of prematurely obtaining information relevant to ongoing criminal investigations involving Porritt and others. Porritt, it appeared, had been arrested but released on bail as long ago as 14 December 2002.

[6] The appellant in his founding affidavit referred at some length to the D allegations of criminal conduct involving Porritt and others which he was in the process of investigating. Much of this evidence was irrelevant. What was relevant related to Porritt's alleged conduct in relation to PSC. Shortly stated, it was this. In April 2000 Porritt and others established PSC, an investment company, which was to compete in the unit trust E industry. Contrary to representations contained in the prospectus, funds received by it from investors were channelled to entities controlled by Porritt, including EBN and Awethu. The claims subsequently relied upon by PSC (then under provisional liquidation) in its application for the liquidation and sequestration of EBN and Awethu, respectively, were for the repayment of the amounts so paid to EBN and Awethu which F were said to have been loans. The claim...