White Oak Trade & Speciality Finance Cayman LLC v Santam Structured Insurance Limited & others
| Jurisdiction | http://justis.com/jurisdiction/166,South Africa |
| Judge | Adams J |
| Judgment Date | 22 February 2023 |
| Citation | 2023 JDR 0494 (GJ) |
| Docket Number | 13311/2020 |
| Court | Gauteng Local Division, Johannesburg |
Adams J:
I shall refer to the parties as referred to in the main action, in which the
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plaintiff claims from the first defendant, alternatively, from the second defendant, further alternatively, from the third defendant payment of US$4.3 million, alternatively, AU$7.3 million, further alternatively other sums, on the basis of an 'ex gratia settlement' agreement between the plaintiff and the first defendant, alternatively, on the basis of a 'Guarantee Policy' issued by the first defendant in favour of the plaintiff. The aforegoing is a simplification of the cause or causes of action of the plaintiff, who, in sum, contends that it, as an innocent party, contracted in good faith with the first defendant, represented by the third defendant. And the plaintiff simply seeks relief against the defendants on the basis of the binding contractual relationships with the defendants. The first and second defendants aver that the third defendant, whom they accuse of fraud, was not authorised to bind the first defendant and they therefore deny that his conduct can be attributed to either the first or the second defendant. And on this basis the claims by the plaintiff are resisted in the main action.
Before me are two interlocutory applications, one by the plaintiff and one by the first and second defendants. In the first application the plaintiff applies in terms of uniform rule of court 35(7) for an order compelling the first and second defendants to comply with one of its rule 35(3) notices, being the one dated 7 November 2022. In the second application the first and second defendants apply in terms of the same rule for an order compelling the plaintiff to comply with their (the first and second defendants') rule 35(3) notice.
Plaintiff's Application to Compel Better Discovery
On 7 November 2022, the plaintiff delivered its rule 35(3) Notice, calling upon the first and second defendants to make available for inspection further documents in its possession, which documents the plaintiff believed to be in possession of the first and second defendants and which are relevant to matters in question in the main action. On 25 November 2022, the first and second defendants replied by serving their affidavit in terms of rule 35(3). With reference to each and every one of the documents requested to be inspected by the plaintiff, the first and the second defendants gave responses ranging from the plaintiff being referred to documents previously discovered by them to requested
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documents being attached to the said affidavit and to confirmation that the documents requested were not in the possession of the first and second defendants nor under their control. In respect of some of the documents requested, the first and second defendants refused to make available to the plaintiff those because, so the defendants allege, they are not relevant to any of the matters in the action in addition to being confidential and/or privileged. And in some cases, discovery was refused on the basis that the request for the discovery of certain documents was framed too widely.
For the most part, the plaintiff was satisfied by the responses provided by the first and second defendants, excepting only responses to about sixteen paragraphs, in respect of which the plaintiff, being dissatisfied with those replies, persist in this application for an order compelling the defendants to discover those documents. I deal with those specifically requested documents later on in this judgment.
Rule 35(3) provides as follows:
If any party believes that there are, in addition to documents or tape recordings disclosed as aforesaid, other documents (including copies thereof) or tape recordings which may be relevant to any matter in question in the possession of any party thereto, the former may give notice to the latter requiring him to make the same available for inspection in accordance with subrule (6), or to state under oath within ten days that such documents are not in his possession, in which event he shall state their whereabouts, if known to him.'
In the case of those paragraphs not responded to by the first and second defendants to the satisfaction of the plaintiff, the first and second defendants in the main object to the production of the documents on the basis that they are irrelevant or privileged. I interpose here to mention that in their formal replies to these paragraphs, as well as in their answering affidavit in this application to compel, the defendants also objected to the production of the said documents on the basis of confidentiality. However, during the hearing of the application on 7 February 2023, Mr Ismail, who appeared on behalf of the first and second defendants, indicated that in respect of all the items in question, they were no longer persisting with confidentiality as a ground of objection to the production of the documents. This, in my view, was a prudent approach especially if regard is
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had to the fact that it is trite that confidentiality, on its own, does not trump a party's obligation to make discovery of documents relating to any matter in the action [1] .
The first set of documents which the plaintiff requires of the defendants is as per paragraphs 49 to 51 of its rule 35(3) notice dated 7 November 2022, in which was requested certain email or other correspondence between the first defendant and its insurer/s. The request was triggered, inter alia, by an email from the first defendant to its insurer on 11 September 2019 in terms of which its Executive Head of Operations, a Ms Paula Meyer, advised the insurance company that the second defendant had reason to suspect that a fraud had been committed by the third respondent, who was, at that stage or shortly before then an executive director of the first defendant. The defendants resisted the production of further insurance-related documents on the basis that they are irrelevant to the pleaded issues and/or that they are legally privileged, which include, so the defendants aver in their answering affidavit, 'common interest' or 'joint' privilege.
It was contended by Mr De Oliveira, who appeared on behalf of the plaintiff, that these insurance-related documents sought (comprising of the correspondence and other documents between the defendants and their insurers) are relevant to the matters pleaded in the main action as they speak to the relationship between the first and second defendants, and indeed to the liability assumed by one in relation to the conduct of another. I agree. There can, in my view, be little doubt that these documents are plainly relevant to, inter alia, one of the triable issues as set out in the list of triable issues agreed upon between the parties, that being whether the second defendant and/or the third defendant were authorised to represent the first defendant in presenting or concluding the 'Guarantee Policy' and/or the 'Ex Gratia Settlement' offer to/with the plaintiff.
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In that regard, Mr De Oliveira, referred me to the case of Rellams (Pty) Ltd v James Brown & Hamer Ltd [2] , in which the Full Court accepted the following dicta with approval:
'It seems to me that every document relates to the matter in question in the action which, it is reasonable to suppose, contains information which may – not which must – either directly or indirectly enable the party requiring the affidavit either to advance his own case or to damage the case of his adversary. I have put in the words "either directly or indirectly" because, as it seems to me, a document can properly be said to contain information which may enable the party requiring the affidavit either to advance his own case or to damage the case of his adversary, if it is a document which may fairly lead him to a train of enquiry which may have either of these two consequences.'
On the basis of this dictum, I reiterate that the insurance documents are relevant. They may, at the very least, by way of example, shed light on the question of the third defendant's conduct, and his ability to conduct himself in the way that he did, for or on behalf of the first and the second defendants, whilst presenting or concluding the Guarantee Policy to/with the plaintiff. This is certainly relevant to the issues as pleaded and agreed upon between the parties. In any event, as correctly submitted on behalf of the plaintiff, if only part of a document is privileged or irrelevant, and the party obliged to produce the document for use in court or for inspection by his adversary wishes to preserve that part as secret, the proper course is for him to cover over or otherwise conceal the portion in question from the adversary.
The next issue to be considered relates to whether the first and second defendants are entitled to object to the production of the insurance documents on the basis of privilege, in the form of 'common interest' or 'joint' privilege.
Recently, this Court (per Windell J) in Anglo American South Africa Limited v Kabwe and 12 Others [3] , had the following to say about 'common interest' or 'joint' privilege:
'Legal professional privilege extends to common interest privilege. Common interest privilege entails the preservation of legal professional privilege where the third party, recipient or creator
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of a communication has a common interest in the subject of the privilege with the primary holder. The key principle is that privilege is not lost where there is limited disclosure for a particular purpose or to parties with a common interest. In Turkcell, the court found that joint and common interest privilege forms part of South African law by virtue of the provisions of section 42 of the Civil Proceedings Evidence Act, but even if...
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