Bennett Attorneys Inc v Pro-Prop Construction & Civils (Pty) Ltd (2021_37739) [2022] ZAGPJHC 212.

Bennett Attorneys Inc (the applicant) represented Pro-Prop Construction & Civils (Pty) Ltd (the respondent) in arbitration proceedings before Adv Farber SC.

The applicant claims that the respondent is indebted to it for fees and disbursements incurred during the arbitration, amounting to R2,104,241.27, or alternatively, R1,729,312.52 if the respondent had paid the arbitrator directly. The applicant alleges that despite statutory demand, the respondent has failed to raise a bona fide defense to the claim for payment and has not paid the outstanding indebtedness or secured the debt. Consequently, the applicant contends that the respondent is unable to pay its debts as they fall due, as per sections 344(f) and 345(1)(c) of the Companies Act 61 of 1973.

The applicant launched a winding-up application against the respondent on 6 August 2021, based on the respondent's alleged inability to pay its debts. The respondent disputes the applicant's fees and those of the counsel who represented them at the arbitration. The respondent has denied being factually or commercially insolvent and contends that the liquidation application is an abuse of process, as the applicant has refused to have its fees taxed.

On 3 August 2021, the respondent's attorney, Mr. Marks, indicated that sufficient funds were held in trust to pay the arbitrator's fees and requested confirmation of any payments made to the arbitrator by the applicant. The respondent's attorney later confirmed that the arbitrator's invoices were paid, with proof of payment provided in a supplementary answering affidavit.

The applicant, seeking further information on the respondent's financial status, requested a 'statement of funds' held in trust by the respondent's attorneys, which led to the interlocutory application in question. The applicant sought to compel the respondent to produce this document for use in the pending winding-up application.

The ratio decidendi of the decision is that Rule 35(14) of the Uniform Rules of Court does not permit a party in motion proceedings to compel the production of a document for inspection unless certain stringent requirements are met. Specifically, the document must be:
1. Clearly specified and known to exist;
2. In the possession of the other party (not a third party);
3. Required for the purposes of pleading;
4. Relevant to a reasonably anticipated issue in the main application; and
5. Material to the proper conduct and fair determination of the case.

In this case, the court found that the applicant did not meet these requirements. The applicant was seeking a 'statement of funds' that was not clearly specified, may not have been in the respondent's possession, and was not essential to the applicant's pleadings in the main application. The court determined that the applicant's request amounted to a fishing expedition, which is not permitted under Rule 35(14). The court also emphasized that discovery in motion proceedings is only allowed in exceptional circumstances and must be material to the outcome of the case, which the applicant failed to demonstrate.

Therefore, the core legal principle underlying the decision is that the court will not allow discovery in motion proceedings unless the party seeking discovery can demonstrate that the document is essential to their case and satisfies the strict criteria set out in Rule 35(14).

The court referenced the following authorities: -

Lewis Group Ltd v Woolworths and Others [2017] 1 All SA 231 (WCC). This case was cited for the principle that discovery in motion proceedings is only permitted in exceptional circumstances and that the essential criterion is whether discovery would be material to the proper conduct and fair determination of the case.
Moulded Components and Rotomoulding South Africa (Pty) Ltd v Coucourakis 1979 (2) SA 457 (N). This case was referenced for the factors that the court considers when deciding whether to permit discovery in motion proceedings, including the stage of the proceedings, the relevance of the documents sought, and the extent of the discovery sought.
The MV Urgup: Owners of the MV Urgup v Western Bulk Carriers (Australia) (Pty) Ltd 1999 (3) SA 500 (C). The court in this case held that Rule 35(14) does not afford a litigant a license to fish in the hope of catching something useful.
Cullinan Holdings Ltd v Mamelodi Stadsraad 1992 (1) SA 645 (T). This case was used to illustrate that Rule 35(14) is designed for situations where a party requires the production of a specific document that they can precisely describe and is essential for them to plead.
Makate v Vodacom (Pty) Ltd 2014 (1) SA 191 (GSJ). Although the court in the present case distinguished Makate on its facts, it was discussed in the context of the adequacy of identifying documents for discovery and the definition of 'document' in the context of electronically stored information.

This quote encapsulates the court's stance on the application of discovery rules in motion proceedings and sets the tone for the court's subsequent analysis and decision. It underscores the exceptional nature of granting discovery in such proceedings and the high threshold that must be met for discovery to be allowed, which is materiality to the outcome of the case.