Corzel Investments (Pty) Ltd (Nam) and Another v Mutterfirma RR Seven Holdings (Pty) Ltd (Nam) (HC-MD-CIV-ACT-CON-2022/00311) [2025] NAHCMD 254 (16 May 2025)
Corzel Investments (Pty) Ltd (Nam) and Another v Mutterfirma RR Seven Holdings (Pty) Ltd (Nam) (HC-MD-CIV-ACT-CON-2022/00311) [2025] NAHCMD 254 (16 May 2025)
REPUBLIC OF NAMIBIA
HIGH COURT OF NAMIBIA MAIN DIVISION, WINDHOEK
RULING: APPLICATION TO COMPEL DISCOVERY
CASE NO: INT-HC-COMP-2025/00054
Main Case Number: HC-MD-CIV-ACT-CON-2022/00311
In the matter between:
CORZEL INVESTMENTS (PTY) LTD (NAM) 1st APPLICANT
CORNELIS HILDEBRAND DERKSEN 2nd APPLICANT
and
MUTTERFIRMA RR SEVEN HOLDINGS (PTY) LTD (NAM) RESPONDENT
Neutral citation: Corzel Investments (Pty) Ltd (Nam) v Mutterfirma RR Seven Holdings (Pty) Ltd (Nam) (HC-MD-CIV-ACT-CON-2022/00311) NAHCMD 254 (16 May 2025)
CORAM: PRINSLOO DJP
Heard : 15 April 2025
Delivered: 16 May 2025
Flynote – Civil proceedings – Application to compel – Rule 28 – Discovery of all relevant documents – Assessment of relevance is objective and not subjective – Reasonable grounds for believing that the documentation in the opposing party’s possession – Documents need not be set out – Documents sought were listed in detail – Application to compel must succeed.
Summary – Corzel Investment (Pty) Ltd and Cornelis Hildebrand Derksen filed a lawsuit against Mutterfirma RR Seven Holdings (Pty) Ltd on 31 January 2022. The case's progression included various applications, with pleadings closing in July 2024.
A key issue was specific discovery, with the plaintiffs seeking around 169 items of evidence, leading to their application to compel discovery. In September 2017, Corzel entered a subscription agreement with Mutterfirma to purchase redeemable preference shares for N$5 million, with a put option to sell back the shares after three years for N$7 025 000. Derksen Sr had a similar agreement for N$2 million and a put option of N$2 810 000. Both plaintiffs exercised their put options, but Mutterfirma failed to make payments or convert the shares, prompting the lawsuit. The plaintiffs' claims include the cancellation of the agreements and repayment of the subscription prices, enforcement of the put options, and if the shares are converted with no value, seeking minimum payments based on prior agreements.
On 8 February 2023, the plaintiffs requested document discovery from Mutterfirma, which only provided recent bank statements. Unsatisfied, they submitted a further request on 15 August 2024, for additional documents related to financial records, assets, liabilities, and management reports dating back to 2017.
Held that: Rule 28 regulates discovery, and rule 28(8), read in the context of the rule as a whole, requires discovery of all documents ‘which may be relevant to any matter in question’ in the action.
Held further: A party seeking an order that documentation sought in terms of a rule 28(8)(a) Notice must be provided must show that there are reasonable grounds for believing that the documentation, analogues or recording are in the opposing party’s possession or under its control.
Held further: There is no need to describe documents referred to in the discovery affidavit: identification of them is sufficient. The contents of documents need not be set out unless that is the only way of identifying them.
Held further: The application to compel must succeed.
ORDER
The application to compel succeeds.
The defendant shall discover and make available for inspection to the plaintiffs 15 days from the date of this order, the documents listed in Annexure ‘A’ hereto attached.
The defendant shall pay the costs of this application, such costs to include the costs of one instructing and two instructed counsel.
The application is removed from the roll and regarded as finalised.
RULING
PRINSLOO DJP:
Introduction
The plaintiffs, Corzel Investment (Pty) Ltd (Nam) (‘Corzel’) and Cornelis Hildebrand Derksen (‘Derksen Sr’), instituted action against Mutterfirma RR Seven Holdings (Pty) Ltd (Nam) (‘Mutterfirma’) on 31 January 2022. Pursuant to a case plan issued on 28 March 2022, the parties exchanged their pleadings and filed their discovery affidavits during June 2022.
Various interlocutory applications were filed during the case's progression, and the pleadings closed only in July 2024. One of the ancillary issues raised between the parties was specific discovery as outlined in rule 28(8). This specific discovery comprised of a list of approximately 76 items, with various sub-items included. In total, the plaintiffs seek about 169 items. Since the parties were unable to resolve the issue regarding the documents requested, the plaintiffs initiated their application to compel specific discovery.
Background
In September 2017, Corzel concluded a written agreement with Mutterfirma, titled ‘Subscription agreement for Redeemable Preference Shares’, under which Corzel purchased preference shares in Mutterfirma. I do not intend to discuss the details of the terms of the agreement reached between the parties.
The gist is, however, that Corzel would subscribe in cash for the subscription shares, namely 100 redeemable preference shares in Mutterfirma, with a par value of N$50 000 at the subscription price of N$5 million.
The parties agreed that after a period of three years, Corzel would be entitled to exercise the ‘put option’ in terms of which Corzel would offer and Mutterfirma would have to buy back the preference shares for an agreed amount of N$7 025 000.
During 2018, Mr Derksen Sr entered into a similar agreement with Mutterfirma but for a subscription price of N$2 million with the ‘put option’ in terms of which Mutterfirma would have to buy back the preference shares of Derksen Sr for an agreed amount of N$2 810 000.
The plaintiffs exercised their rights in terms of the ‘put option’ in terms of the agreement at the lapse of the respective three-year period.
The agreement(s) provided that if Mutterfirma was unable to make payment within a certain period, it would have to convert the preference shares into ordinary shares at a guaranteed value of N$7 025 000 and N$2 810 000, respectively, or the market value of the shares, whichever was greater. The market value of the share had to be determined by an independent valuator within 20 days from the date on which Mutterfirma had failed to rectify the breach.
Corzel and Derksen Sr exercised their ‘put option’, but Mutterfirma neither made payment nor converted the ordinary shares. This resulted in the plaintiffs instituting action against the defendant.
In their amended particulars of claim, the plaintiffs claim in the main and alternative as follows:
a) The first claim of each plaintiff is based on the cancellation of the subscription agreement, tendering the return of the defendant’s subscription fees and seeking repayment of the Subscription Price.
b) The second claim of each plaintiff, in the alternative, is that the agreement is no longer in force and effect, tendering the return of the defendant’s subscription fees and seeking repayment of the Subscription Price;
c) The third claim of each plaintiff, in the alternative to the first and second claims, the plaintiffs seek the enforcement of the ‘Put option’ and tender the preferential shares against the payment of the ‘Put Price’ of N$7 025 000 and N$2 810 000, respectively.
d) The fourth claim of the plaintiffs, in the alternative to the above claims, and only in the event that the preferential shares was converted to ordinary shares, and because the shares had no or zero value, the plaintiffs seek payment of the minimum value of the shares of N$7 025 000 and N$2 810 000, respectively.
Application for additional discovery in terms of rule 28
As far back as 8 February 2023, the plaintiffs sought the discovery of documents, analogues, or digital recordings in the possession of the defendant that are relevant to the current matter. The list is similar to the documents currently sought. Of all the documents requested for discovery, Mutterfirma discovered its latest bank statements.
Not satisfied with the adequacy of the defendant’s discovery, the plaintiffs filed a further notice in terms of rule 28(8)(a) on 15 August 2024, seeking further or better discovery of a substantial list of items, which consists of approximately 76 items, not including the lists of sub-items. In order not to overburden this ruling, I do not intend to replicate the list. The documents required are inter alia the following:
Bank statements and other documents to ascertain the amounts paid to Mutterfirma for the preference shares;
The documents evidencing the assets and liabilities of Mutterfirma;
the management records and reports of Mutterfirma, all documents evidencing cash flow, and the balance sheets of Mutterfirma, from 2017 onwards;
the financial and assets register of Mutterfirma from 2017 onwards;
documents relevant to the projects referred to in par 15.2 of Mutterfirma's original plea;
all correspondence with EGS Chartered Accountants to perform the 'desktop valuation' of the shares in Mutterfirma and documentation;
listed documents in respect of the financial statements of 30 April 2017 (para 19 to 23);
listed documents in respect of the financial statements of 30 April 2018 (para 24 to 32) ;
listed documents in respect of the financial statements of 30 April 2019 (para 33 to 41);
listed documents in respect of the financial statements of 30 April 2020 (para 42 to 51);
listed documents in respect of the financial statements of 30 April 2021 (para 52 to 62);
listed documents in respect of the financial statements of 30 April 2022 (para 63 to 64);
Further documents (para 65 to 72);
Documents in respect of the defendant (para 73 to 76).
Mr Pieter Reyneke, the director of Mutterfirma, deposing to the defendant’s discovery affidavit in terms of rule 28(8), responded as follows to the documents sought to be discovered:
Para 1: the documents sought are irrelevant to the dispute raised by the parties in the pleadings;
Para 3: the documents sought are irrelevant to the dispute raised by the parties in the pleadings and it is unclear what documents and amounts the plaintiff is referring to;
Para 4: the documents sought do not exist and are irrelevant;
Para 11: the documents sought do not exist;
Paras 12 to 15: the documents sought are irrelevant and do not exist and the plaintiffs are referred to the defendant’s annual financial statements;
Paras 19, 24, 33, 42 and 52: the financial statements are accompanied by an independent auditor’s report, and it is not the plaintiffs’ prerogative to determine the accuracy of the financial statements;
Paras 17, 18, 20-23, 25-32, 34-41, 43-51, 53-62, 65-67:the defendant is not in possession of the bundle referred to by the plaintiffs;
Para 63-64, 65-67: the documents are irrelevant to the dispute raised by the parties in the pleadings;
Para 68: the documents are confidential in nature and contain trade secrets in relation to subsidiaries and/or associated entities of the defendant, and the documents are irrelevant to the dispute between the parties;
Para 69-72: the plaintiffs are already in possession of the documents requested;
Paras 73.2-73.7: the defendant is not in possession of the documents;
Paras 73.9-73.10: documents do not exist.
Paras 74-76: the documents are irrelevant to the dispute raised by the parties and are confidential in nature and contain trade secrets in relation to subsidiaries and/or associated entities of the defendant, and the documents are irrelevant to the dispute between the parties.
Dissatisfied with the defendant’s response under oath, the plaintiff launched the current application on 22 January 2025 to compel the discovery sought on 15 August 2024. The plaintiffs seek an order in the following terms:
‘1. The defendant be ordered to deliver to the plaintiff, within a period of 30 days from the date of which the court grants judgment herein in favour of the plaintiffs, all the documents as requested by the Plaintiffs in terms of their Notice in terms of Rule 28(8)(a) dated 15 August 2024. 2. The defendant shall pay the plaintiffs’ costs of this application, including the costs of one instructing and two instructed counsel, which costs shall not be limited by rule 32(11).
3. Further and/or alternative relief.’
In support of the application, the plaintiffs filed the founding affidavit deposed to by Suzette Brink, and confirmatory affidavits deposed to by Neil McHardy, Cornelis Hildebrand, Lynne Derksen and Barend van der Merwe.
Ms Suzette Brink, deposed to the founding affidavit, as the director of the first plaintiff and as the daughter of Derksen Sr, asserting that she possesses the requisite authority to launch the present application.
Ms Brink stated that although Mutterfirma contended that it converted the Corzel and Derksen preference shares into ordinary shares in 2022, this did not happen. This failure became apparent when Mutterfirma failed to provide the relevant share certificates. These share certificates were also not discovered or annexed to the witness statement of Mr Jaques Reyneke, deposing to the statement on behalf of Mutterfirma.
According to Ms Brink, the defendant’s discovery affidavit included only a limited number of documents, namely, the 25 September 2017 subscription agreement for redeemable preference shares and the correspondence from Mutterfirma’s South African Legal representatives.
Ms Brink submitted that the plaintiffs seek discovery of the financial information necessary to determine the value of the ordinary shares and are entitled to the requested documents. She further stated that it is important to receive the bank statements and other documents to ascertain that the amounts paid by the plaintiffs to Mutterfirma for preference shares were invested in the company, expressing the view that a refusal to disclose these documents might indicate that the funds paid by the plaintiffs were misappropriated.
She further emphasised that the plaintiffs pleaded that Mutterfirma induced the conclusion of the subscription agreements through misrepresentation, while Mutterfirma maintained that it genuinely believed the profits from its projects would materialise by January 2021. Therefore, the sought documents relevant to the projects are significant to the current proceedings.
Ms Brink also addressed the claims made by Mr Reyneke concerning the confidentiality of the requested documents, however, I do not plan to examine these documents individually. She, however, opined that there is a trend to hide relevant and important information by Mutterfirma, which is mala fide.
It was further contended that as a result of the fact that the plaintiffs’ redeemable subscription shares were not converted into ordinary shares within the period stipulated in clause 3.1.3 of the agreement, the plaintiffs are entitled to all such financial information as an independent expert valuator may require to do a proper valuation of ordinary shares at the relevant time. In this regard, the plaintiffs filed a confirmatory affidavit deposed to by Neil McHardy, a chartered accountant and registered auditor. Mr McHardy was approached to prepare an independent report and valuation of the share value of the defendant. Mr McHardy indicates that the items set out as items 73, 74, 75 and 76 are of extreme relevance to the determination of the true share value of the defendant. Mr McHardy further indicated that he requires the documents listed with respect to the subsidiary and associated companies of the defendant.
Mr Pieter Reyneke, in the answering affidavit deposed to on behalf of the defendant, confirmed the position taken in the discovery affidavit that many of the documents requested are either irrelevant, confidential and/or privileged. He stated that the number of items requested by the plaintiffs in terms of rule 28(8) is unheard of and further submitted that if there is no reasonable basis for the belief that there are some relevant documents, analogues or digital recordings that were not disclosed, then it can be characterised as abuse of the discovery procedure.
In the answering affidavit, Mr Reyneke largely reiterated what he had already stated in the discovery affidavit regarding the documents he considered either irrelevant to the dispute between the parties or confidential in nature. He denied Ms Brink’s assertion that the refusal to provide the documents was mala fide.
Arguments advanced on behalf of the parties
On behalf of the plaintiffs
Mr Heathcote drew the court’s attention to the amended particulars of claim and argued that at the heart of the current matter is how the value of the shares is to be determined. In order to resolve the issue, the plaintiffs have to appoint an expert, and the documents specifically sought are clearly relevant to the dispute between the parties.
Counsel on behalf of the plaintiffs provided the court with a spreadsheet consisting of the request for specific discovery and the discovery affidavit, and linked thereto the relevant portions of the founding, answering and replying affidavit. This was done, obviously with the aim of assisting the court, but in addition thereto according to Mr Heathcote, to illustrate that all the documents requested should be discovered and further to illustrate that the court should go behind the discovery affidavit and order the defendant to make the discovery and a special cost order against the defendant.
During the course of his submissions, Mr Heathcote pointed out that in response to the request for additional discovery, the defendant blows hot and cold. In some of the responses by Mr Reyneke on behalf of the defendant, the answering affidavit does not address the discovery affidavit or contradicts itself by stating that a document does not exist, and then adds that if it did exist, it would be irrelevant. In other instances, Mr Reyneke does not say the document is not with the defendant, but then thereafter relies on trade secrets. This, according to Mr Heathcote, seems to be the general thread in the response of the defendant.
In addition thereto, it is argued that the defendant feigns ignorance regarding the specific documents which are requested and that the protestations of Mr Reyneke in this regard are not genuine.
On behalf of the defendant
Mr Boonzaier argued that the requested evidence must be relevant to the dispute in either proving or disproving certain facts, and must have a proportional influence on ‘tipping the scales’, and influence on the case at hand must be deductible.
He also argued that when a court orders additional and specific discovery, it is exercising discretion. Moreover, in exercising this discretion, the court needs to determine whether the requesting party’s request convincingly shows the need for further discovery. In response to such a request, the opposing party is obliged to present evidence to the court, through an affidavit, outlining the reasons for resisting an order for further discovery.
Mr Boonzaier further contended that the requesting party must provide a certain level of specificity. Similarly, the objecting party is required to respond based on the same criteria. The factors guiding a court in exercising its discretion include whether the requesting party satisfies the court regarding belief, relevance, and proportionality with precision relating to the evidence sought, and whether the requested party clearly outlines his/her/its objections based on possession, destruction, or confidentiality with precision.
In this instance, Mr. Boonzaier argued that determining the value of the plaintiffs’ ordinary shares is not an issue for assessing the quantum of the plaintiffs’ claims, nor does it form part of the plaintiffs' case as presented in the pleadings. He asserted that the contentions made in the particulars of the claim and those of the founding affidavit do not agree with each other.
On the issue of the contentions by the plaintiff that the expert valuator identified the documents required to do a share valuation, Mr Boonzaier pointed out that Neil McHardy identified items no 73 to 76 as extreme relevance to the determination of the true share value of the defendant and that Mr McHardy never referred to the relevance of any of the other items listed in the rule 28(8) notice.
The entities and subsidiaries from which the documents are required are separate from the defendant. Some of these are subsidiaries, while others are merely associate companies, distinct from the defendant. These third parties are not joined to the current proceedings, and the tax returns and assessments of these entities are confidential, and the plaintiffs failed to make out a case for the discovery of those documents. However, the plaintiffs, who are aware of the identities of these third parties may, should they be so advised, subpoena those in possession of the documents to produce them at the trial.
Mr Boonzaier further argued strongly that no case has been made out for going behind the discovery affidavit, as no case has been made out on the papers that there was fraudulent conduct on the part of the defendant.
The applicable legal principles
Rule 28 regulates discovery, and rule 28(8), read in the context of the rule as a whole, requires discovery of all documents ‘which may be relevant to any matter in question’ in the action. The emphasis for the current proceedings is on further or additional discovery in terms of rule 28(8).
Therefore, if a party believes that there are in addition to the documents, analogues or recordings already discovered, further documents, analogues or recordings in possession of a party, the former may give notice in terms of rule 28(8) to the latter to either (i) deliver the documents, analogues or digital recordings to the party requesting them within a specified time; or (ii) state on oath or by affirmation within ten days of the order that such documents, analogues or digital recordings are not in his or her possession, in which case he or she must state their whereabouts, if known to him or her.1
A party seeking an order that documentation sought in terms of a rule 28(8)(a) notice must show that there are reasonable grounds for believing that the documentation, analogues or recordings are in the opposing party’s possession or under its control. In Herbstein and Van Winsen it is recorded that the requirement of ‘reasonable grounds’ or grounds for suspicion’ has been held to mean that the court must be satisfied to a degree of conviction approaching practical certainty.2
The learned authors further stated:
‘In Rellams (Pty) Ltd v James Brown & Hamer Ltd, however, a Full Bench of the Natal Provincial Division held that, while it is generally true that a court should not and will not go behind a party's affidavit that the contents of a document are irrelevant, such an affidavit is nevertheless not conclusive: after an examination of the recognised sources, as well as the pleadings and the nature of the case, the court may come to the conclusion that the party making discovery in all probability has other relevant and disclosable documents in possession or power, and may then order further and better discovery or production in conflict with the claim in the affidavit.’
Considering the issue of relevance, Silungwe J in Kanyama v Cupido3 remarked as follows:
‘[14] It is trite law that relevancy is determined from the pleadings and not extraneously therefrom. Hence, a party may only obtain inspection of documents relevant to the issues on the pleadings: Swissborough Diamond Mines (Pty) Ltd and Others v Government of the Republic of South Africa and Others 1999 (2) SA 279 (T) at 311A. The meaning of relevance is circumscribed by the requirement in sub-rules (1) and (3) of Rule 35 that the document (or tape recording) relates to, or may be relevant to, “any matter in question.” The “matter in question” is determined from the pleadings. In Swissborough Diamond Mines, supra, at 316d-G, Joffe, J., made reference to the test for relevance in these terms:
“The test for relevance, as laid down by Brett LJ in Compagnie Financiere et Commerciale du Pacifique v Pervivian Guano Co. 1882 11 QBD 55, has often been accepted and applied. See, for example, the Full Bench judgment in Rellams (Pty) Ltd. James Brown & Hamer Ltd. 1983 (1) SA 556 (N) at 564A, where it was held that:
‘After remarking that it was desirable to give a wide interpretation to the words: ‘a document relating to any matter in question in the action’, Brett LJ stated the principle as follows:
“It seems to me that every document relates to the matter in question in the action in 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.”
See also Continental Ore Construction v Highveld Steel & Vanadium Corporation Ltd. 1971 (4) SA 589 (W) at 596H; and Carpede v Choene NO and Another 1986 (3) SA 445 (O) at 452C-J.
[15] On the basis of the principle enunciated by Brett, LJ, in Compagnie Financiere et Commerciale du Pacific, supra, it would appear reasonable to suppose that each of the documents in issue prima facie contains information that may, either directly or indirectly, enable the defendant either to advance his own case or to damage the case of his adversary, to wit, the plaintiff.’
The basic principle on the issue of relevance formulated in Compagnie Financiere et Commerciale Du Pacifique supra has been accepted in this jurisdiction many times over as the correct position. In Santam v Segal,4 Patel J made the following remark:
‘(10) Apropos relevance, the important point to note is that assessment of relevance is objective and not subjective. It is not for a party’s legal representative to decide what he thinks the issues are and what documents are relevant to them. He has to provide access to documents which could be part of the issues and what documents could be relevant to them. The question of relevance is normally answered by reference to the pleadings.’
The defendant also avers that the documents are not in their possession. In this regard, in Walvis Bay Salt Refiners (Pty) Ltd v Blaauw’s Transport (Pty) Ltd and 4 Others,5 Usiku J held that:
‘[11] I am of the opinion that a litigant who has been requested to discover documents under Rule 28(8) cannot acquit himself of that duty by merely saying: the requested documents “do not exist” or “are no longer in existence”. To accept, as sufficient an affidavit to that effect, would be to open widely the door to evasion.
…
[12] A litigant requested to discover documents under Rule 28 (8) must clearly indicate:
(a) the documents he/she presently has in his/her possession, and,
(b) the documents he/she previously had in his/her possession, and if no longer in possession of such documents he/she must state in whose possession they are now, if known to him/her.
[13] In the event of a document that is lost, the recipient of a Rule 28(8) notice must show that a thorough and exhaustive search has been conducted as a result of which the document in question was not found and that it is not possible for the defendant to do anything further in compliance with the plaintiff’s request.’
Discussion
From the outset, I must point out that the defendant is blowing hot and cold in respect of the issue of discovery. This is clear from the annexures attached to Ms Brink's affidavit. In the correspondence from the defendant’s legal practitioner dated 27 August 2024, it was recorded that the defendant was in the process of collecting the documents requested as per rule 28(8) dated 15 August 2024, but required more time to do so. On 29 August 2024, the plaintiffs were informed that the defendant does not object to providing the documentation requested. Yet in the very next breath, the defendant raised the issue of the relevancy of the documents.
The spreadsheet provided by Counsel on behalf of the plaintiffs was significantly helpful to this court, as the papers in the current application fill several arch lever files. It was very beneficial to see at a glance the averments the defendant had regarding the requested documents, in contrast to those of the plaintiffs.
From this, it is clear that Mr Reyneke is evasive and vague. It is not enough to say that the defendant is no longer in possession of a document, but fails to explain where the document is now. It is also not helpful to state that the document does not exist, and if it did, it would be irrelevant. This is contradictory at best.
There can be no complaint of specificity in the request of the plaintiff, as the documents sought were listed in detail. I, therefore, find it odd that the defendant would contend that it was unclear what documents were sought by the plaintiff. There is no need to describe documents referred to in the discovery affidavit, identification of them is sufficient. The contents of documents need not be set out unless that is the only way of identifying them.6
I do not intend to address every item and the response thereto, as it would overburden this ruling. I will briefly refer to some of the main headings under which the defendant’s opposition invoked.
Relevance: If one considers the amended particulars of claim, it is clear that the documents sought are relevant to the dispute between the parties. In the context of the particulars of claim the plaintiffs wish to establish a case that the total of N$7 million was not only paid to Mutterfirma but was also duly received and further alleges that the funds were misappropriated and it is the plaintiffs argument that bank statements spreading over a period of five years would be insufficient. I must agree with the argument advanced on behalf of the plaintiffs, and these bank statements must also be considered at the hand of the pleaded case. The bank statement would be the only way to determine how the funds were utilised and is thus relevant.
Confidentiality: In para 24 of the particulars of claim, Corzel pleaded that Mutterfirma induced the conclusion of the subscription agreement by misrepresenting that it would be able to make the payments due in terms of the subscription agreements from the income of its projects. Mutterfirma pleaded throughout that it held a genuine belief that the profits of the projects would pay out, yet when the relevant documents are requested, the defendant contends that these documents are confidential.
Mutterfirma also raised confidentiality because it contains trade secrets with respect to its subsidiaries, but does not elaborate, despite the fact that the onus rests on the defendant to show that the documents are confidential.
Relevance and document do not exist: As indicated earlier, this is a contradiction in terms. If the documents do not exist, then Mutterfirma is obligated to explain that statement. The court’s attention was drawn to the fact that when the plaintiff sought management records of Mutterfirma, evidencing cash flow and balance sheets, the defendant responded that those documents do not exist, which in itself is concerning and requires a better response.
Mr McHardy: It was argued that, according to Mr McHardy, there are only a few documents that are of extreme relevance, yet the plaintiff requires a host of other documents. Having considered the papers in this regard, it is patently clear that the documents listed will be required for the determination of the share value of Mutterfirma, and I am satisfied that the plaintiffs have made out a case for the discovery of the documents required by Mr McHardy.
This court is urged to go behind the affidavit but will only do so if it is satisfied: (i) from the discovery affidavit itself; (ii) from the documents referred to in the discovery affidavit; (iii) from the pleadings in the action; (iv) from any admission made by the party making the discovery affidavit; and (v) from the nature of case and the documents at issue; that there is a probability that the party making the affidavit has had other relevant documents in his possession or power or misconceived the principles upon which the affidavit should be made.7
I am not necessarily of the view that the facts of the current matter indeed call for this court to go behind the discovery affidavit. However, I am satisfied that the plaintiffs managed to establish that there was insufficient discovery made by the defendant and that the plaintiffs’ application should succeed.
The defendant is directed to fully and properly respond in compliance with rule 28. If the defendant no longer possesses certain specified documents in ‘A’, they should be stated clearly, and the whereabouts of such documents should be indicated. The defendant should further affirm under oath that a diligent search for the requested documents has been conducted. Regarding the pleaded confidentiality, the defendant must fully and properly respond in compliance with rule 28 and explain why the said documents are confidential. For the remaining documents, the defendant is directed to provide the relevant documents to the plaintiffs for inspection.
Conclusion
Having considered the papers and the arguments advanced, I am of the view that the application to compel must succeed and make the order as per the draft order annexed hereto as ‘A’.
Costs
On the issue of cost. I am of the view that the costs should follow the result, which will include the costs of one instructing and two instructed counsel. I am further of the view that the costs should not be limited to rule 32(11).
In the premise, I make the following order:
The application to compel succeeds.
The defendant shall discover and make available for inspection to the plaintiffs 15 days from the date of this order, the documents listed in Annexure ‘A’ hereto attached.
The defendant shall pay the costs of this application, such costs to include the costs of one instructing and two instructed counsel.
The matter is removed from the roll and regarded as finalised.
__________________________
J S Prinsloo
Deputy Judge President
Annexure ‘A’
All bank statements (other than the month June 2023) of all bank accounts held by Mutterfirma for the period January 2017 to 15 August 2024.
All contracts and further documents evidencing an entitlement of Mutterfirma to proceeds, profits, or funds.8
Share certificates no. 1, 2, 6, 11 and 14 of Mutterfirma.
The share register of Mutterfirma.9
All correspondence and communication between the defendant and EGS chartered accountants.10
The attachment to the email dated 9 September 2017 at page 239 (Index: 301) of the bundle titled "Index: Discovery Affidavits".11
The "notice given to members" dated 23 August 2017 referred to on page 272 (Index: 302) of the bundle titled "Index: Discovery Affidavits".
In respect of the Financial statement of 30 April 2017:
Any and all documentation provided to the auditors for purposes of preparing the annual financial statements for the year ended 30 April 2017, and all written communication between (to and from the auditors and Mutterfirma in this regard.
The "company's cash flow forecast for the year to 30 April 2018" referred to on page 290 (Index: p 303) of the bundle titled "Index: Discovery Affidavits".
Any documents and contracts relevant to "Investments in subsidiaries", "Investments in associates", and "Loans to group companies" referred to on page 294 (Index: 304) of the bundle titled "Index: Discovery Affidavits".
The share certificates in terms of which 100 shares were issued as referred to on page 296 (Index: 305) of the bundle titled "Index: Discovery Affidavits".
Any and all contracts relevant to the content set out under item 9 "Contingencies" referred to on page 300 (Index: 306) of the bundle titled "Index: Discovery Affidavits".
In respect of the Financial statement of 30 April 2018:
Any and all documentation provided to the auditors for purposes of preparing the annual financial statements for the year ended 30 April 2018, and all written communication between (to and from the auditors and Mutterfirma in this regard.
The "company's cash flow forecast for the year to 30 April 2019" referred to on page 325 (Index: 307) of the bundle titled "Index: Discovery Affidavits".
Any documents and contracts relevant to "Non-Current Assets", "Investments in subsidiaries", "Investments in associates", and "Loans to group companies" referred to on page 329 (Index: 308) of the bundle titled "Index: Discovery Affidavits".
Any documents and contracts relevant to "Cash flows from operating activities" referred to on page 332 (Index: 309) of the bundle titled "Index: Discovery Affidavits".
Any and all documents, contracts and proof of payment relevant to the content set out under item 3 "Investments in associates" and item 4 "Loans to (from) related parties" referred to on page 335 (Index: 310) of the bundle titled "Index: Discovery Affidavits".
Any and all documents, contracts and proof of payment relevant to the content set out under item 8 "Trade and other payables" referred to on page 336 (Index: 311) of the bundle titled "Index: Discovery Affidavits".
The loan agreement between Reydev Holdings (Walvis Bay) Pty Ltd and Mutterfirma referred to on page 335 and 336 (Index: 312 – 313) of the bundle titled "Index: Discovery Affidavits”.
Proof of receipt of the interest in terms of the loan agreement between Reydev Holdings (Walvis Bay) Pty Ltd and Mutterfirma referred to on page 335 and 336 (Index: 314 – 315) of the bundle titled "Index: Discovery Affidavits" for the period from the commencement of the loan to date hereof.
Any and all documentation relevant to the change in "Fair value adjustments" (item 10) referred to on page 337 (Index: 316) of the bundle titled "Index: Discovery Affidavits".
In respect of the Financial statement of 30 April 2019:
Any and all documentation provided to the auditors for purposes of preparing the annual financial statements for the year ended 30 April 2019, and all written communication between (to and from the auditors and Mutterfirma in this regard.
The "company's cash flow forecast for the year to 30 April 2020" referred to on page 352 (Index: 317) of the bundle titled "Index: Discovery Affidavits".
The contract with and/or mandate to EGS chartered accountants for their appointment as the auditor of Mutterfirma referred to at page 353 (Index: 318) (item 8) of the bundle titled "Index: Discovery Affidavits".
Any and all documents, contracts and proof of payment relevant to "Non- Current Assets", "Investments in subsidiaries", "Investments in associates", and "Loans to group companies" referred to on page 356 (Index: 319) of the bundle titled "Index: Discovery Affidavits".
Any and all documents, contracts and proof of payment relevant to "Cash flows from operating activities" referred to on page 359 (Index: 320) of the bundle titled "Index: Discovery Affidavits".
Any and all documents, contracts and proof of payment relevant to the content set out under item 2 "Investments in subsidiaries", item 3 "Investments in associates" and item 4 "Loans to (from) related parties" referred to on page 362 Index: 321) of the bundle titled "Index: Discovery Affidavits".
Any and all documents and contracts relevant to the change in issued ordinary shares set out under item 7 "Share capital" under the subheading "Issued" referred to on page 363 (Index: 322) of the bundle titled "Index: Discovery Affidavits".
Any and all documents, contracts and proof of payment relevant to the content set out under item 8 "Trade and other payables" referred to on page 363 (Index: 323) of the bundle titled "Index: Discovery Affidavits".
Any and all documentation relevant to the change in "Fair value adjustments" (item 10) referred to on page 364 (Index: 324) of the bundle titled "Index: Discovery Affidavits”.
In respect of the Financial statement of 30 April 2020:
Any and all documentation provided to the auditors for purposes of preparing the annual financial statements for the year ended 30 April 2020, and all written communication between (to and from) the auditors and Mutterfirma in this regard.
The "company's cash flow forecast for the year to 30 April 2021" referred to on page 427 (Index: 325) of the bundle titled "Index: Discovery Affidavits".
The contract with and/or mandate to EGS chartered accountants for their appointment as the auditor of Mutterfirma referred to at page 428 (Index: 326) (item 8) of the bundle titled "Index: Discovery Affidavits".
Any documents, contracts, and proof of payment relevant to "Non- Current Assets", "Investments in subsidiaries", "Investments in associates", and "Loans to group companies" referred to on page 431 (Index: 327) of the bundle titled "Index: Discovery Affidavits".
Any and all documents, contracts and proof of payment relevant to "Cash flows from operating activities" referred to on page 434 (Index: 328) of the bundle titled "Index: Discovery Affidavits".
Any and all documents, contracts and proof of payment relevant to the content set out under item 2 "Investments in subs", item 3 "Investments in assocs" and item 4 "Loans to (from) group companies" referred to on page 437 (Index: 329) of the bundle titled "Index: Discovery Affidavits".
Any and all documents, contracts and proof of payment relevant to the content set out under item 7 "Trade and other payables" referred to on page 438 (Index: 330) of the bundle titled "Index: Discovery Affidavits".
Any and all documentation relevant to the change in "Fair value adjustments" (item 9) referred to on page 438 Index: 331) of the bundle titled "Index: Discovery Affidavits".
Any and all documentation in support of or relevant to the "Profit before taxation" of R7, 747, 724 referred to on 439 (Index: 332) [of the bundle titled] [“Index: Discovery] Affidavits[“].
The agreement of sale dealing with the "Sale of shares in subsidiary" referred to on page 439 (Index: 333) of the bundle titled "Index: Discovery Affidavits".
In respect of the Financial statement of 30 April 2021:
Any and all documentation provided to the auditors for purposes of preparing the annual financial statements for the year ended 30 April 2021, and all written communication between (to and from) the auditors and Mutterfirma in this regard.
The "company's dividend policy" referred to on page 449 (Index: 334) of the bundle titled "Index: Discovery Affidavits".
The "company's cash flow forecast for the year to 30 April 2022" referred to on page 448 (Index: 335) of the bundle titled "Index: Discovery Affidavits".
The contract with and/or mandate to EGS chartered accountants for the appointment as the auditor of Mutterfirma referred to at page 450 (Index: 336) (item 8) of the bundle titled "Index: Discovery Affidavits".
Any documents, contracts, and proof of payment relevant to "Non-Current Assets", "Property, plant and equipment", "Investments in subs", "Investments in assocs", and "Loans to group companies" referred to on page 453 (Index: 337) of the bundle titled "Index: Discovery Affidavits".
Any documents, contracts, and proof of payment relevant to "Administration and management fees" referred to on page 454 (Index: 338) of the bundle titled "Index: Discovery Affidavits".
Any and all documents, contracts and proof of payment relevant to "Cash flows from operating activities" referred to on 456 (Index: 339) of the bundle titled "Index: Discovery Affidavits".
Any and all documents, contracts and proof of payment relevant to the content set out under item 3 "Investments in subs", item 4 "Investments in assocs" and item 5 "Loans to (from) group companies" referred to on page 460 (Index: 340) of the bundle titled "Index: Discovery Affidavits".
Any and all documents, contracts and proof of payment relevant to the content set out under item & "Trade and other payables" referred to on page 461 (Index: 341) of the bundle titled "Index: Discovery Affidavits".
Any and all documentation relevant to the change in "Fair value adjustments" (item 1 1) referred to on page 461 (Index: 342) of the bundle titled "Index: Discovery Affidavits".
Any and all documentation in support of or relevant to the "Profit before taxation" of R10,029,335 referred to on page 462 (Index: 343) of the bundle titled "Index: Discovery Affidavits".
The Financial statement of 30 April 2022:
The Financial statements of Mutterfirma for the year ended 30 April 2022.
Any and all documentation provided to the auditors for purposes of preparing the annual financial statements for the year ended 30 April 2022, and all written communication between (to and from the auditors and Mutterfirma in this regard.
Further documents:
All contracts relevant to the three projects referred to in the e-mail on page 410 (Index: 344) of the bundle titled "Index: Discovery Affidavits".
The "Report of Factual Findings and Valuation" referred to on page 465 (Index: 345) of the bundle titled "Index: Discovery Affidavits".
Any and all documentation upon which the "Report of Factual Findings and Valuation" referred to on page 465 (Index: 346) of the bundle titled "Index: Discovery Affidavits" is based.
The financial statements of the subsidiaries of Mutterfirma for the period 2017 to 15 August 2024.
In respect of the Defendant: 12
Income tax returns and assessments;
Management accounts at 30 September 2017;
Management accounts at 28 February 2021 ;
Latest current period management accounts;
The property, plant and equipment register;
The Shareholders' agreement;
The share register;
Any prior valuations of the business as a whole; and
Any immovable property valuations, if applicable.
The documents listed in paragraphs 73.1 - 73.10 but in respect of the Defendant's following subsidiary companies:13
African Cable Manufacturers (Pty) Ltd;
Ondumbu Properties (Pty) Ltd;
Redev Mining (Pty) Ltd;
Reydev Oil Holdings (Pty) Ltd;
Vildev Holdings (Pty) Ltd.
The documents listed in paragraphs 73.1 - 73.10 but in respect of the Defendant's following associate companies:14
Fore St Holdings (Pty) Ltd;
Reydev Holdings (Pty) Ltd;
Reydev Holdings (Walvis Bay) (Pty) Ltd.
The annual financial statements of the following related parties:
Egrobuzz (Pty) Ltd;
Messrs Elize Investments (Pty) Ltd;
Omajowa Consult (Pty) Ltd;
Reydev Exploration (Pty) Ltd;
SaBro;
Tribeca Property Del (Pty) Ltd; and
Vinetz trust.
APPEARANCE:
APPLICANTS: R Heathcote
Instructed by Van der Merwe-Greeff Andima Inc.,
Windhoek
RESPONDENT: M Boonzaier
Instructed by Kloppers Legal Practitioners,
Windhoek
1 Rule 28(8)(b)(i) to (ii).
2 Herbstein & Van Winsen, Civil Practice of the High Courts and the Supreme Court Appeal of South Africa, 5th Ed, 2009 at 816.
3 Kanyama v Cupido 2007 (1) NR 216 (HC) para 14.
4 Santam v Segal 2010 (2) SA 160 (N) at 165 D-G.
5 Walvis Bay Salt Refiners (Pty) Ltd v Blaauw’s Transport (Pty) Ltd (I 36682014) [2019] NAHCMD 23 (15 February 2019) paras 11-13.
6 Wainwright & Co v Trustee, Assigned Estate S Hassan Mahomed (1908) 29 NLR 619; Wallis & Wallis v Corporation of London Assurance 1917 WLD 116; Estate Michel v Cullen 1924 WLD 290. The decision in Wallis & Wallis affords an example of what constitutes sufficient identification.
7 Kanyama v Cupido supra at footnote 3 para 17.
8 Summary p 6 – 7.
9 Summary p 11 – 16.
10 Summary p 22 – 23; Defendant’s Heads of Argument par 21.
11 Annexure K commencing at p 301 of the court record.
12 Summary p 61 – 68.
13 Summary p 68 – 69.
14 Summary p 69 – 99.