THE SUPREME COURT OF APPEAL OF SOUTH AFRICA
JUDGMENT

Reportable
Case no: 219/2021
In the matter between:
CAXTON AND CTP PUBLISHERS
AND PRINTERS LIMITED

APPELLANT
and
NOVUS HOLDINGS LIMITED

RESPONDENT

Neutral citation: Caxton and CTP Publishers and Printers Limited v Novus
Holdings Limited (Case no 219/2021) [2022] ZASCA 24
(09 March 2022)
Coram:
PETSE AP and MOLEMELA, PLASKET and HUGHES JJA and
UNTERHALTER AJA
Heard:
09 November 2021
Delivered: This judgment was handed down electronically by circulation to
the parties' legal representatives by email, publication on the Supreme Court of
Appeal website and release to SAFLII. The date and time for hand-down is
deemed to be 09h45 on 09 March 2022.
Summary: Practice and procedure – Uniform Rules – rule 35(12) – production
of documents mentioned in or referred to in the other party's affidavit –

obligation on such party to produce documents sought by opponent – no
obligation to produce documents sought if such documents irrelevant or not
material or protected by privilege or no longer in the possession of the party
required to produce the documents concerned.

ORDER

On appeal from: Western Cape Division of the High Court of South Africa,
Cape Town (Baartman J, sitting as court of first instance):

1 The appeal is upheld with costs, including the costs of two counsel.
2 The order of the high court is set aside and in its place is substituted the
following order:
'2.1
The respondent is directed to produce for inspection and copying the
documents specified below within 30 (thirty) days of the date of this order
pursuant to the appellant's notice in terms of rule 35(12) delivered on
11 August 2020.
2.2.1 Judge Harms' "report" prepared pursuant to s 165(4) of the Companies
Act 71 of 2008 and submitted to Novus' Board on 28 May 2020 referred to in
paragraphs 21 to 28 of the respondent's answering affidavit in the main
application under case no 8908/2020 (the main application).
2.2.2 The "predecessors" to the "Commission Agreement", referred to in
paragraph 27 of the answering affidavit in the main application.
2.2.3 The "documentation at Novus' disposal" to which Judge Harms was
"given full access" referred to in paragraph 28 of the answering affidavit in
the main application.
2.2.4 All "reports to the Department of Basic Education (DBE)" referred to
in paragraph 195.2 of the answering affidavit in the main application.
2.2.5 All "invoices together with all supporting documents" submitted to
the DBE, as referred to in paragraph 197 of the answering affidavit in the
main application.

2.2.6 All "reports" submitted to the DBE by Lebone, as referred to in
paragraph 198 of the answering affidavit in the main application, but only to
the extent that they may be different to the reports referred to in paragraph
2.2.4 above.
2.2.7 All "annual inflation adjustments" and supporting "documentary
evidence" submitted by Lebone to the DBE, referred to in paragraphs 199 and
200, respectively, of the answering affidavit in the main application.
2.2.8 All "invoices" submitted by Lebone to Novus for the "printing of 50%
of all the required covers, tear-outs, and stickers", referred to in paragraph
201 of the answering affidavit in the main application.
2.2.9 "The contract with the DBE" that "Novus had to comply with", as
referred to in paragraph 225.1 of the answering affidavit in the main
application, and "the contract" that the "DBE made payment of invoices in
accordance with", referred to in paragraph 244 of the answering affidavit in
the main application (and each "contract", to the extent that paragraph 225.1
and paragraph 244 may refer to two separate contracts).
2.2.10 The "meticulously completed Proof of Deliveries (POD's)" that were
"collated and submitted with the invoice to the DBE", referred to in paragraph
225.1 of the answering affidavit in the main application.
2.2.11 The "other impugned agreements" and "the impugned agreements"
that were "negotiated and concluded" at the time that none of Novus's current
directors served as directors, as referred to in paragraphs 290.3 and 290.4 of
the answering affidavit in the main application.
It is further directed that the documents referred to in paragraph 2
above are to be provided subject to the following confidentiality regime:
3.1
Novus will provide the documents to Caxton's attorneys of record, and
in doing so will indicate which documents Novus claims are confidential (the
confidential documents).

3.2
Save for purposes of consulting with counsel or any independent
experts or unless the Court orders otherwise, Caxton's attorneys of record
shall not disclose directly or indirectly to any other party (including Caxton)
any part of the confidential documents.
3.3
Caxton's attorneys of record and independent experts given access to
the confidential documents pursuant to paragraph 3.2 above will sign a
confidentiality undertaking confirming that they will not disclose directly or
indirectly the contents of the confidential documents to any other party
(including Caxton) other than a party that has also signed a confidentiality
undertaking in terms of paragraph 3.2 above.
3.4
In the event that Caxton's attorneys of record, on behalf of Caxton,
dispute that any document or documents asserted by Novus to be confidential
is or are, in fact, confidential, then Caxton's attorneys of record are given
leave, on behalf of Caxton, to urgently approach the Court on the same papers,
supplemented as may be necessary, for an order providing for the exclusion
of such document or documents from the confidentiality regime.
3.5
Confidential documents may only be referred to in affidavits deposed
to by the legal representatives or independent experts of the parties, and any
such affidavits will also be treated as confidential.
Caxton is ordered to file its replying affidavit in the main application
within 20 days after receipt of all the documents pursuant to paragraphs 2 and
3 above.
The respondent in the interlocutory application is ordered to pay the
costs of such application, including the costs of two counsel where so
employed.'

JUDGMENT
Petse AP (Molemela, Plasket and Hughes JJA and Unterhalter AJA
concurring):
Introduction
[1] The Companies Act1 permits a certain category of persons2 to serve a
demand on a company requiring the company concerned to commence or
continue legal proceedings, or take related steps, to protect the interests of the
company in question.3 In the context of the facts of this case the appellant,
Caxton and CTP Publishers and Printers Limited (Caxton) falls within the class
of persons contemplated in s 165(2) of the Companies Act who may serve a
demand upon a company, namely, the respondent, Novus Holdings Ltd (Novus),
to commence or continue legal proceedings, or take related steps, to protect the
legal interests of the company concerned. If the company upon which a demand
has been served refuses to initiate or continue legal proceedings, the person who
made the demand in terms of s 165(2) may apply to court for leave to bring or
continue legal proceedings in the name and on behalf of the company
concerned.4 This is precisely what happened in this case.

The parties
[2] Novus is a public company listed on the Johannesburg Securities
Exchange. Novus' core business entails the publication and printing of books,
magazines, newspapers and related activities. It is the respondent both in the

1 Act 71 of 2008 (the Companies Act).
2 See s 165(2) of the Companies Act.
3 See s 165 of the Companies Act which is quoted in full in paragraph 5 below.
4 Section 165(5).

main application, which is still pending, and in the interlocutory application,
related to the main application, the latter application being at the centre of this
appeal.

[3] Caxton is likewise a public company and, like Novus, is one of the largest
publishers and printers in the country of books, magazines, newspapers and
related activities. It is also listed on the Johannesburg Securities Exchange.
Caxton and Novus are commercial competitors. Caxton is a minority
shareholder in Novus, holding 7,5 per cent of the latter's shares.

Background
[4] The facts upon which this appeal hinges are fairly straightforward and
may be summarised as follows. On 7 April 2020, and pursuant to s 165(2) of the
Companies Act, Caxton served a demand upon Novus to institute legal
proceedings against Lebone Litho Printers (Pty) Ltd (Lebone). According to
Caxton, the envisaged legal proceedings would seek to have a commission
agreement (and any related agreements) concluded between Novus and Lebone
declared illegal and void. In terms of the impugned agreement, Novus undertook
to pay commission to Lebone in relation to a public procurement contract
between Novus, on the one hand, and the Department of Basic Education (DBE),
on the other, for the printing, packaging and distribution of school workbooks
throughout the country.

[5] Section 165 of the Companies Act, which is headed 'Derivative actions',
in relevant parts provides:
'(1) Any right at common law of a person other than a company to bring or prosecute any
legal proceedings on behalf of that company is abolished, and the rights in this section are in
substitution for any such abolished right.

(2) A person may serve a demand upon a company to commence or continue legal
proceedings, or take related steps, to protect the legal interests of the company if the person—
(a)
is a shareholder or a person entitled to be registered as a shareholder, of the company
or of a related company;
(b)
is a director or prescribed officer of the company or of a related company;
(c)
is a registered trade union that represents employees of the company, or another
representative of employees of the company; or
(d)
has been granted leave of the court to do so, which may be granted only if the court is
satisfied that it is necessary or expedient to do so to protect a legal right of that other person.
(3) A company that has been served with a demand in terms of subsection (2) may apply
within 15 business days to a court to set aside the demand only on the grounds that it is
frivolous, vexatious or without merit.
(4) If a company does not make an application contemplated in subsection (3), or the court
does not set aside the demand in terms of that subsection, the company must—
(a)
appoint an independent and impartial person or committee to investigate the demand,
and report to the board on—

(i)
any facts or circumstances—

(aa)
that may give rise to a cause of action contemplated in the demand; or

(bb)
that may relate to any proceedings contemplated in the demand;

(ii)
the probable costs that would be incurred if the company pursued any such
cause of action or continued any such proceedings; and

(iii)
whether it appears to be in the best interests of the company to pursue any such
cause of action or continue any such proceedings; and
(b)
within 60 business days after being served with the demand, or within a longer time
as a court, on application by the company, may allow, either—

(i)
initiate or continue legal proceedings, or take related legal steps to protect the
legal interests of the company, as contemplated in the demand; or

(ii)
serve a notice on the person who made the demand, refusing to comply with
it.
(5) A person who has made a demand in terms of subsection (2) may apply to a court for
leave to bring or continue proceedings in the name and on behalf of the company, and the
court may grant leave only if—
(a)
the company—

(i)
has failed to take any particular step required by subsection (4);

(ii)
appointed an investigator or committee who was not independent and

impartial;

(iii)
accepted a report that was inadequate in its preparation, or was irrational or
unreasonable in its conclusions or recommendations;

(iv)
acted in a manner that was inconsistent with the reasonable report of an

independent, impartial investigator or committee; or

(v)
has served a notice refusing to comply with the demand, as contemplated in
subsection (4)(b)(ii); and
(b)
the court is satisfied that—

(i)
the applicant is acting in good faith;

(ii)
the proposed or continuing proceedings involve the trial of a serious question
of material consequence to the company; and

(iii)
it is in the best interests of the company that the applicant be granted leave to
commence the proposed proceedings or continue the proceedings, as the case may be.
. . .
(7) A rebuttable presumption that granting leave is not in the best interests of the company
arises if it is established that—
(a)
the proposed or continuing proceedings are by—

(i)
the company against a third party; or

(ii)
a third party against the company;
(b)
the company has decided—

(i)
not to bring the proceedings;

(ii)
not to defend the proceedings; or

(iii)
to discontinue, settle or compromise the proceedings; and
(c)
all of the directors who participated in that decision—

(i)
acted in good faith for a proper purpose;

(ii)
did not have a personal financial interest in the decision, and were not related

to a person who had a personal financial interest in the decision;

(iii)
informed themselves about the subject matter of the decision to the extent they
reasonably believed to be appropriate; and

(iv)
reasonably believed that the decision was in the best interests of the company.
(8) For the purposes of subsection (7)—

(a)
a person is a third party if the company and that person are not related or interrelated;
and
(b)
proceedings by or against the company include any appeal from a decision made in
proceedings by or against the company.
. . .
(14) If the shareholders of a company have ratified or approved any particular conduct of the
company—
(a)
the ratification or approval—

(i)
does not prevent a person from making a demand, applying for leave, or

bringing or intervening in proceedings with leave under this section; and

(ii)
does not prejudice the outcome of any application for leave, or proceedings
brought or intervened in with leave under this section; or
(b)
the court may take that ratification or approval into account in making any judgment
or order.
(15) Proceedings brought or intervened in with leave under this section must not be
discontinued, compromised or settled without the leave of the court.
(16) For greater certainty, the right of a person in terms of this section to serve a demand on
a company, or apply to a court for leave, may be exercised by that person directly, or by the
Commission or Panel, or another person on behalf of that first person, in the manner permitted
by section 157.'

[6] Invoking s 165(4), Novus appointed retired Deputy President of the
Supreme Court of Appeal, Justice Louis Harms, as an independent and impartial
person (the independent and impartial person) to investigate the demand, and
thereafter to report to its board of directors on the matters set out in s 165(4).5

5 Section 165(4) reads:
'(4) If a company does not make an application contemplated in subsection (3), or the court does not set aside
the demand in terms of that subsection, the company must—
(a)
appoint an independent and impartial person or committee to investigate the demand, and report to the
board on—

(i)
any facts or circumstances—

(aa)
that may give rise to a cause of action contemplated in the demand; or

(bb)
that may relate to any proceedings contemplated in the demand;
(ii)
the probable costs that would be incurred if the company pursued any such cause of action or
continued any such proceedings; and

Upon receipt of the independent and impartial person's report, Novus advised
Caxton that the latter's demand to institute legal proceedings against Lebone was
declined. Undaunted, Caxton instituted the main application6 against Novus, in
which leave is sought to bring the envisaged action in the latter's name and on
its behalf.

[7] Unsurprisingly, Novus has steadfastly resisted the relief sought by Caxton
in the main application. In its answering affidavit in the main application, Novus
makes reference to several documents, one of which is the s 165(4) report, in
terms of which it sought to demonstrate that the proposed action lacked any
prospect of success or was simply devoid of merit.

[8] Novus' multiple references to certain documents in its answering affidavit
prompted Caxton to ask for the production of the documents concerned by
invoking rule 35(12) of the Uniform Rules. This, too, was resisted by Novus,
who refused to make any of the documents sought available to Caxton for its
inspection and, if deemed necessary, copying. Caxton then brought the
interlocutory application in the Western Cape Division of the High Court, Cape
Town (the high court), in terms of rule 30A of the Uniform Rules, to compel the
production for inspection and copying of the documents sought. Caxton's
interlocutory application takes centre stage in this appeal.

(iii)
whether it appears to be in the best interests of the company to pursue any such cause of action
or continue any such proceedings; and
(b)
within 60 business days after being served with the demand, or within a longer time as a court, on
application by the company, may allow, either—
(i)
initiate or continue legal proceedings, or take related legal steps to protect the legal interests
of the company, as contemplated in the demand; or

(ii)
serve a notice on the person who made the demand, refusing to comply with it.'
6 The main application was instituted on 10 July 2020.

[9] In support of the interlocutory application, Mr Paul Michael Jenkins,
Caxton's chairman, stated, to the extent relevant for present purposes, as follows:
'25
I shall indicate below that all the documents forming the subject matter of this
application are (a) in Novus's possession, (b) not privileged, and (c) relevant to issues in the
main application.
In the circumstances, Caxton is entitled to the documents, and this Court should order
Novus to provide them subject to a suitable confidentiality regime.
In Novus's refusal letter, it objects to production of the documents on three broad
grounds:

27.1
It says that the documents are not relevant.
27.2
It says one of the documents (i.e. the Harms report) is privileged.
27.3
It says that the documents are confidential, and disputes that the confidentiality regime
proposed by Caxton would adequately protect the confidentiality of the documents (although
it does not propose any alternative).
. . .
The confidentiality of documents does not provide a basis for refusing to furnish them.
At best, it justifies the imposition of a confidentiality regime involving the granting of
restricted access to those documents. As I shall indicate below, Caxton has no difficulty with
the imposition of such a confidentiality regime.
. . .
In South African law there are two types of legal privilege: legal advice privilege and
litigation privilege. Although Novus appears to rely only on the latter, I briefly summarise
each below and explain why neither applies to the Harms report.
. . .
Litigation privilege protects communications between legal advisers and their clients
on the one hand and third parties on the other hand, provided that:

-
the communication was made for purposes of being placed before the legal adviser in
order to enable him or her to give legal advice;

-
the communication was made for the purpose of pending litigation or litigation that
was contemplated as likely at the time; and

-
as with legal advice privilege, the legal adviser must have been acting in his or her
capacity as a legal professional, the communication must have been made in confidence,
and the communication or advice should not facilitate the commission of a crime or fraud.
. . .
40.2
Section 165(4) requires an independent and impartial person to conduct an
investigation of a section 165(2) demand and to report to the Board of a company. The
investigator is statutorily required to report on facts or circumstances that may give rise to a
cause of action as specified in the section 165(2) demand; the probable costs of any such
action; and whether it is in the best interests of the company to pursue that action. The
investigator is not called upon to give legal advice. The mandate is investigative. The report
and its recommendations do not constitute legal advice.
40.3
Moreover, in this matter the investigator is not a practising attorney or advocate, or
even an in-house legal adviser. Judge Harms is a judge (albeit that he has been discharged
from active service). He does not hold himself out as a professional legal adviser. There is no
suggestion by Novus that Judge Harms was retained to provide legal advice in a professional
capacity. Judge Harms undertook a statutory investigation pursuant to section 165(4) at the
behest of Novus.
. . .
Moreover, section 165(5) of the Companies Act contemplates that one of the
jurisdictional requirements for an application in terms of section 165(5) is if the Court finds
that a report in terms of section 165(4) "was inadequate in its preparation, or was irrational or
unreasonable in its conclusions or recommendation". The Court could only assess this if the
report were placed before it, and if the parties could interrogate whether the report was
inadequate or was irrational or unreasonable in its conclusions. Section 165(5) therefore
makes it plain that, even if section 165(4) reports are legally privileged (which is denied for
the reasons given above), the privilege would be overridden by legislation.
If this Court were to take a different view of the matter and were to find that the Harms
report is protected by privilege, then Novus has in any event waived any privilege that may
be found to exist.'

[10] In Novus' opposition to the application to compel, Mr Neil Birch, its Chief
Executive Officer, (again to the extent here relevant) stated:

'9.
The substantive right to institute or continue proceedings in the name of the company
is created by statute and arises only when leave is granted by a court to obtain to institute or
continue proceedings in the name of the company. . . .
. . .
13.
To the contrary, Caxton insists on being granted access to the investigator's report and
to Novus' books of account and records beyond the scope of sections 26 and 31 of the Act
and whilst its rights in present context are limited to only the invocation of the procedural
leverage mechanism provided for in section 165.
14.
In doing so, Caxton thwarts the nature of the main proceedings and attempts to
convince that its own interpretation of the general processes of discovery in ordinary
proceedings between parties asserting substantive rights must trump the specific provisions
of section 165.
. . .
15.4. Yet, if Caxton is now (in the preliminary process of consideration of the exercise of
the leverage right) granted the relief sought on the interlocutory proceedings to obtain access
to Novus' books connected with the contemplated legal proceedings, Caxton (through its
agents) would be in possession of Novus' records that are protected by confidentiality and
legal privilege. The confidentiality regime does little to console. Caxton's legal representative
has acted as its advisor since at least 2014 in all of the bitter feuds that characterised the fierce
rivalry between the parties who are the biggest competitors in the market segment. Since 2016
Nortons also acted as Caxton's legal advisors in respect of the prolonged DBE tender review
proceedings. Caxton's legal representatives may be bound by their undertaking of
confidentiality, but they would hardly be able to clear their minds of the information to which
they would be made privy. To expect of them to divorce their minds in future advice to Caxton
from the information to which they have been made privy would be tantamount to assuming
godly abilities on their part.
. . .
24.
Having regard to the above, Caxton is not entitled to the documentation demanded in
the interlocutory applications. . . .
. . .
27.
The essential feature of discovery is that the person requiring discovery is in general
only entitled to discovery once the battle lines are drawn and the legal issues discovered. It is

not a tool designed to put a party in a position to draw the battle lines and establish the legal
issues.
. . .
32.
Neither the application contemplated in section 165(5) of the Act, nor the Court's rules
of procedure can be used by a disgruntled party (such as Caxton) to launch a fishing
expedition for facts to found an action. If Caxton is unable in its demand and in the founding
affidavit to the main application to set forth a cogent, albeit not necessarily with the precision
required for pleading, basis for the company to institute the contemplated proceedings,
Caxton is acting vexatiously.
. . .
70.
For the above reason, none of the documents which Caxton requires Novus to produce
for inspection are relevant to the issues in the main application:
70.1
Item 1: The Harms Report:
70.1.1. The Harms Report was prepared for the primary purpose of advising the Board
on aspects relating to the proposed litigation contemplated in the Demand. The content
of the Harms Report formed part of the information that was considered by the Board
before deciding to refuse to comply with the Demand.
70.1.2. Neither the Board's decision nor the Harms Report forms the subject-matter of
the main application and neither are relevant to the issues therein.
70.1.3. Caxton has to demonstrate with reference to documentation and evidence in
its possession why it should be granted leave, notwithstanding the Board's decision to
refuse to litigate against Lebone.
70.2. Items 2, 4, 5, 6, 7, 8, 9, 10 and 11:
70.2.1. As I have already indicated above, Caxton misconstrued the nature of the main
application and its entitlement to documentation and information.
70.2.2. Caxton is not required to convince the Court in the main application that
Novus has an unassailable case against Lebone.
70.2.3. Caxton accordingly does not have to allege every fact required to sustain a
cause of action and/or furnish the Court with evidence or facta probantia in support
of each and every of those facts.
70.2.4. What Caxton has to demonstrate is that the proceedings which Caxton wishes
to institute against Lebone in Novus' name "involves a trial of a serious question of
material consequence" to Novus.

70.2.5. None of the documents which Caxton seek under the above item numbers
relate to any aspect of section 165 of the Act which Caxton is required to satisfy.
Those documents are consequently irrelevant to the issues in the main application.
70.3
Item 3: the information that Judge Harms was given access to:
70.3.1. The Harms Report was prepared for the primary purpose of advising the Board
on aspects relating to the proposed litigation contemplated in the Demand.
70.3.2. The documents and information which was provided to him for the purposes
of conducting his investigation are irrelevant to the issues in the main application.
70.3.3. Caxton has to demonstrate with reference to documentation and evidence in
its possession why it contends that the Court should interfere in Novus' management,
disregard the Board's decision not to litigate against Lebone and grant Caxton leave
to litigate in the name and on behalf of Novus against Lebone.
. . .
77.
The very purpose of the report was to provide Novus' Board with legal advice on
aspects relating to litigation which Caxton demanded Novus should commence against
Lebone. Differently put, the Harms Report was prepared by the Board's mandatee for the sole
purpose of him advising the Board in coming to its decision whether Novus should commence
the litigation as demanded by Caxton, or not.
78.
Without the Demand, which by its very nature contemplated litigation, the Harms
Report would not have existed. The Harms Report was accordingly prepared in circumstances
and for the very purpose that litigation was contemplated. This included, amongst also the
proceedings contemplated in the Demand, the invoking by Caxton of its procedural leverage
right in terms of section 165.'

[11] Caxton's application to compel the production of the documents sought
came before Baartman J, who dismissed it with costs. In dismissing the
application, the learned Judge held, in essence, that all of the documents required
by Caxton were irrelevant. Insofar as the report of the independent and impartial
person is concerned, the high court held that it was, by its very nature and the
circumstances attendant upon its production, privileged. And, further, that
Novus had not, by quoting parts of the report, waived the privilege attaching to

the report. In elaboration, the high court concluded that the fact that the report
'was commissioned in circumstances where litigation was contemplated'7 was
reinforced by the undisputed and long litigation history between the parties, who
are business arch-rivals.

[12] Subsequently, on 2 March 2021, the learned Judge granted Caxton leave
to appeal against her judgment to this court, noting that she was 'persuaded that
there is "some other compelling reason why the appeal should be heard".'

[13] The central issue in this appeal, crisply stated, is whether the documents
sought by Caxton in terms of its rule 35(12) notice delivered on 11 August 2020,
all of which were referred to in Novus' answering affidavit in the main
application, are relevant and therefore ought to be produced for inspection and
copying. In addition, the appeal raises the question whether the report of the
independent and impartial person is privileged and thus protected against
disclosure. If the report is found to be privileged, an allied issue will arise,
namely whether in quoting virtually the entire conclusion of the report in its
answering affidavit Novus had, as a result, waived the privilege attaching to the
report.

[14] Rule 35(12) provides:
'(a) Any party to any proceeding may at any time before the hearing thereof deliver a notice
[as near as may be] in accordance with Form 15 in the First Schedule to any other party in
whose pleadings or affidavits reference is made to any document or tape recording to –
(i)
produce such document or tape recording for inspection and to permit the party
requesting production to make a copy or transcription thereof . . . .
. . .

7 Caxton and CTP Publishers and Printers Limited v Novus Holdings Limited (case no 8908/2020) (WCC)
Unreported para 18.

(b) Any party failing to comply with the notice referred to in paragraph (a) shall not, save
with the leave of the court, use such document or tape recording in such proceeding provided
that any other party may use such document or tape recording.'

[15] There are two features that strike one about the provisions of rule 35(12).
First, to invoke the rule, the pleadings or affidavits of the other party must make
reference to the document or tape recording concerned. Thus, any such reference
will trigger the right of the adversary to require that such document(s) or tape
recording(s) be produced for inspection, copying or transcription.

[16] It must, however, be pointed out that what is meant by the word 'reference'
requires some elucidation in at least two fundamental respects. The document
or tape recording must have been referred to in a party's pleadings or affidavits
in general terms, a detailed or descriptive reference is not required.8 However, a
mere reference by deduction or inference does not suffice for purposes of rule
35(12).9 On this score, what this court said most recently in Democratic Alliance
and Others v Mkwebane and Another 10  is instructive. The court said the
following:
'. . . What will not pass muster is where there is no direct, indirect or descriptive reference but
where it is sought through a process of extended reasoning or inference to deduce that the
document may or does exist. Supposition is not enough.' (Footnotes omitted.)

[17] The second point that requires emphasis is that the rationale for a party's
entitlement to see a document or tape recording, referenced in the other party's
pleadings or affidavits, is that a party cannot ordinarily be required to answer

8 Cullinan Holdings Ltd v Mamelodi Stadsraad 1992 (1) SA 645 (T) at 648A-D; Protea Assurance Co Ltd and
Another v Waverley Agencies CC and Others 1994 (3) SA 247 (C) at 248H; Business Partners Ltd v Trustees,
Riaan Botes Family Trust, and Another 2013 (5) SA 514 (WCC) at 518G-519F.
9 See, for example, Penta Communication Services (Pty) Ltd v King and Another 2007 (3) SA 471 (C) at 436B-
C; Holdsworth and Others v Reunert Ltd 2013 (6) SA 244 (GNP) at 246I-J.
10 Democratic Alliance and Others v Mkhwebane and Another [2021] ZASCA 18; [2021] 2 All SA 337 (SCA);
2021 (3) SA 403 (SCA) para 28.

issuably before they are given the opportunity to inspect and copy, or transcribe
the document or tape recording mentioned in the adversary's pleadings or
affidavits.11

[18] Further, a party failing to comply with such notice 'shall not, save with
the leave of the court, use such document or tape recording in such proceeding'.
However, the other party's failure to produce the document(s) or tape
recording(s) does not preclude the party that called for the production of such
document(s) or tape recording(s) from using the document(s) or tape
recording(s) in question.

[19] The nature and effect of the sanction against the defaulting party
contained in rule 35(12) was explained by Botha J in Moulded Components and
Rotomoulding South Africa (Pty) Ltd v Coucourakis and Another12 thus:
'The sanction provided for in Rule 35(12) is, in my view, quite different in nature and effect
from the kind of sanction envisaged in Rule 30(5). The sanction in Rule 35(12) is of a negative
nature, being to the effect that the party failing to comply with the notice shall not . . . use the
document in question, provided that any other party may use such documents. It is a sanction
that comes into operation automatically upon non-compliance with the provisions of the Rule.
Rule 30(5), on the other hand, operates in an entirely different manner. Under that Rule a
party making a request, or giving a notice, as the case may be, to which there is no response
by the other party, may give a further notice to the other party that after the lapse of seven
days application will be made for an order that the notice or request be complied with, or that
the claim or defence be struck out, as the case may be. Failing compliance within the seven
days mentioned, application may then be made to Court and the Court may make an
appropriate order. That is a positive form of relief provided for and, as I have said, in my view
it is quite different from the sanction contained in Rule 35(12).'

11 See in this regard: Protea Assurance Co Ltd and Another v Waverley Agencies CC and Others 1994 (3) SA
247 (C) at 249B.
12 Moulded Components and Rotomoulding South Africa (Pty) Ltd v Coucourakis and Another 1979 (2) SA 457
(W) at 459F-460A (Coucourakis).

[20] However, 'a party who gives notice under rule 35(12) may not be content
with just the negative sanction provided by the rule'. So said Ponnan JA in
Centre for Child Law v The Governing Body of Hoërskool Fochville and
Another,13 who went on to state that '[i]n that event it is to rule 30A that such a
party must turn'.

[21] The learned Judge of Appeal continued (para 16):
'Under rule 30A a party making a request, or giving a notice, to which there is no response
by the other party, may through a further notice to the other party warn that after the lapse of
ten days application will be made for an order that the notice or request be complied with, or
that the claim or defence be struck out, as the case may be. Failing compliance within the ten
days mentioned, application may then be made to court and the court may make an
appropriate order. That, as Botha J described it in Coucourakis (at 459H), is a "positive form
of relief".'

[22] Former rule 30(5) – which was operative when Coucourakis was decided
– was later repealed and substituted with the current rule 30A, which reads:
'(1)  Where a party fails to comply with these Rules or with a request made or notice given
pursuant thereto, or with an order or direction made in a judicial case management process
referred to in rule 37A, any other party may notify the defaulting party that he or she intends,
after the lapse of 10 days from the date of delivery of such notification, to apply for an order–
(a)
that such rule, notice, request, order or direction be complied with; or
(b)
that the claim or defence be struck out.
(2)
Where a party fails to comply within the period of 10 days contemplated in subrule (1),
application may on notice be made to the court and the court may make such order thereon
as it deems fit.'

13 Centre for Child Law v The Governing Body of Hoërskool Fochville and Another [2015] ZASCA 155; [2015]
4 All SA 571 (SCA); 2016 (2) SA 121 (SCA) para 15 (Hoërskool Fochville).

[23] As to the ambit of rule 35(12), the court in Gorfinkel v Gross, Hendler &
Frank14 stated as follows:
'[P]rima facie there is an obligation on a party who refers to a document in a pleading or
affidavit to produce it for inspection if called upon to do so in terms of Rule 35(12). That
obligation is, however, subject to certain limitations, for example, if the document is not in
his possession and he cannot produce it, the Court will not compel him to do so. (See the
Moulded Components case supra at 461D-E.) Similarly, a privileged document will not be
subject to production. A document which is irrelevant will also not be subject to production.
As it would not necessarily be within the knowledge of the person serving the notice whether
the document is one which falls within the limitations which I have mentioned, the onus
would be on the recipient of the notice to set up facts relieving him of the obligation to
produce the document.'15

[24] Much later, in Unilever plc and Another v Polagric (Pty) Ltd,16 Thring J
referred with approval to the dictum in Gorfinkel mentioned in the preceding
paragraph. However, in Hoërskool Fochville this court expressed serious
reservations about the correctness of the statement in Gorfinkel to the effect that
the party who makes reference to documents in its pleadings or affidavits bears
the onus to set up facts 'relieving him of the obligation to produce the document'
required by his or her adversary. This court said that:
'Approaching the matter on the basis of an onus may well be to misconceive the nature of the
enquiry. . . That notwithstanding, it is important to point out that the term onus is not to be
confused with the burden to adduce evidence (for example that a document is privileged or
irrelevant or does not exist).'17 (Footnotes omitted.)

[25] I propose dealing first with the law relating to the obligation of a party
who makes reference in its pleadings or affidavits to documents or tape

14 Gorfinkel v Gross, Hendler & Frank 1987 (3) SA 766 (C) (Gorfinkel).
15 At 774G-J.
16 Unilever plc and Another v Polagric (Pty) Ltd 2001 (2) SA 329 (C).
17 Hoërskool Fochville para 18.

recordings to produce those documents or tape recordings when a demand
therefor has been made by the adversary. First, it is necessary to emphasise that
the underlying purpose for production of documents for inspection and copying
or transcribing as part of the broader discovery mechanism is to assist the parties
and the court in discovering the truth and to promote a just and expeditious
determination of the case.18

[26] Unlike the other rules relating to discovery generally, rule 35(12) is
designed to cater for a different set of circumstances. Its provisions are generally
deployed to require the production of documents or tape recordings before the
close of pleadings or the filing of affidavits. In Unilever,19 the objective of rule
35(12) was explained, with reference to previous decisions of our courts,20 thus:
'[A] defendant or respondent does not have to wait until the pleadings have been closed or his
opposing affidavits have been delivered before exercising his right under Rule 35(12): he may
do so at any time before the hearing of the matter. It follows that he may do so before
disclosing what his defence is, or even before he knows what his defence, if any, is going to
be. He is entitled to have the documents produced "for the specific purpose of considering his
position".'

[27] That the ambit of rule 35(12) is very wide admits of no serious doubt. Its
extensive reach was explained by Friedman J in Gorfinkel21 as follows:
'There are undoubtedly differences between the wording of Rule 35(12) and the other subrules
relating to discovery, for example subrules (1), (3) and (11) of Rule 35. The latter subrules
specifically refer to relevance whereas subrule (12) contains no such limitation and is prima
facie cast in terms wider than subrules (1), (3) and (11).

18 Santam Ltd and Others v Segal 2010 (2) SA 160 (N) 162E-F; MV Alina II, Transnet Ltd v MV Alina II 2013
(6) SA 556 (WCC) at 563F-G.
19 At 336G–J.
20 See, for example, Erasmus v Slomowitz (2) 1938 TPD 242 at 244; Gehle v McLoughlin 1986 (4) SA 543 (W)
at 546D; Protea Assurance Co Ltd and Another v Waverley Agencies CC and Others 1994 (3) SA 247 (C) at
249B-D.
21 At 773G-J.

It is nevertheless to my mind necessarily implicit in Rule 35(12) that there should be some
limitation on the wide language used. One such limitation is that a party cannot be compelled
under Rule 35(12) to produce a document which is privileged.'

[28] In order for the production of a document to be compellable under rule
35(12) it is necessary that reference to such document must have been made in
the adversary's pleadings or affidavits. In Magnum Aviation Operations v
Chairman, National Transport Commission, and Another, 22  the court, in
ordering the applicant to produce documents to which reference had been made
in the founding affidavits, said the following relative to rule 35(12):
'In my opinion the ordinary grammatical meaning of the words is clear: once you make
reference to the document, you must produce it. Even more is it so in this case where the
implication in paras 19.4 and 19.6 is that, if the NTC had called for and looked at the financial
statements of Operations, it might well have come to a different conclusion.'23
I agree with this analysis.

[29] In similar vein, Friedman J put it thus in Gorfinkel (at 774E-H):
'As Rule 35(12) can be applied at any time, ie before the close of pleadings or before affidavits
in a motion have been finalised, it is not difficult to conceive of instances where the test for
determining relevance for the purposes of Rule 35(1) cannot be applied to documents which
a party is called upon to produce under Rule 35(12), as for example where the issues have not
yet become crystallised. Having regard to the wide terms in which Rule 35(12) is framed, the
manifest difference in wording between this subrule and the other subrules, ie subrules (1),
(3) and (11) and the fact that a notice under Rule 35(12) may be served at any time, ie not
necessarily only after the close of pleadings or the filing of affidavits by both sides, the Rule
should, to my mind, be interpreted as follows: prima facie there is an obligation on a party
who refers to a document in a pleading or affidavit to produce it for inspection if called upon
to do so in terms of Rule 35(12).'

22 Magnum Aviation Operations v Chairman, National Transport Commission, and Another 1984 (2) SA 398
(W).
23 At 400B-D. See also Penta Communication Services (Pty) Ltd v King and Another 2007 (3) SA 471 (C) para
14.

[30] In Independent Newspapers (Pty) Ltd v Minister for Intelligence Services
(Freedom of Expression Institute as Amicus Curiae) In re: Masetlha v President
of the Republic of South Africa and Another, 24  the Constitutional Court
underscored the importance of disclosure in court proceedings. It stated as
follows:
'Ordinarily courts would look favourably on a claim of a litigant to gain access to documents
or other information reasonably required to assert or protect a threatened right or to advance
a cause of action. This is so because courts take seriously the valid interest of a litigant to be
placed in a position to present its case fully during the course of litigation. Whilst weighing
meticulously where the interests of justice lie, courts strive to afford a party a reasonable
opportunity to achieve its purpose in advancing its case. After all, an adequate opportunity to
prepare and present one’s case is a time-honoured part of a litigating party’s right to a fair
trial.'
Although these remarks were made in a different context, by parity of reasoning,
they apply with equal force to the circumstances of this case.

[31] The other point that bears emphasising is that as this court rightly
observed in Hoërskool Fochville, a court considering an application under rule
30A to compel production of documents sought pursuant to rule 35(12) enjoys
a general discretion 'in terms of which it is required to try to strike a balance
between the conflicting interests of the parties to the case'.25 And that the court
'should not fetter its own discretion in any manner and particularly not by
adopting a predisposition either in favour of or against granting production'.26
In the same case, Ponnan JA added that 'a court will not make an order against

24 Independent Newspapers (Pty) Ltd v Minister for Intelligence Services (Freedom of Expression Institute as
Amicus Curiae) In re: Masetlha v President of the Republic of South Africa and Another [2008] ZACC 6; 2008
(5) SA 31 (CC); 2008 (8) BCLR 771 (CC) para 25.
25 Hoërskool Fochville para 18.
26 Ibid.

a party to produce a document that cannot be produced or is privileged or
irrelevant'.27

[32] The juridical framework within which a court considering an application
to compel production of documents or tape recordings sought pursuant to rule
35(12) was neatly captured by Navsa ADP in Democratic Alliance and Others
v Mkwebane and Another as follows:28
'To sum up: It appears to me to be clear that documents in respect of which there is a direct
or indirect reference in an affidavit or its annexures that are relevant, and which are not
privileged, and are in the possession of that party, must be produced. Relevance is assessed
in relation to rule 35(12), not on the basis of issues that have crystallised, as they would have,
had pleadings closed or all the affidavits been filed, but rather on the basis of aspects or issues
that might arise in relation to what has thus far been stated in the pleadings or affidavits and
possible grounds of opposition or defences that might be raised and, on the basis that they
will better enable the party seeking production to assess his or her position and that they might
assist in asserting such a defence or defences. In the present case we are dealing with
defamatory statements and defences such as truth and public interest or fair comment that
might be raised. The question to be addressed is whether the documents sought might have
evidentiary value and might assist the appellants in their defence to the relief claimed in the
main case. Supposition or speculation about the existence of documents or tape recordings to
compel production will not suffice. In exercising its discretion, the court will approach the
matter on the basis set out in the preceding paragraph. The wording of rule 35(12) is clear in
relation to its application. Where there has been reference to a document within the meaning
of that expression in an affidavit, and it is relevant, it must be produced. There is thus no need
to consider the submission on behalf of the respondents in relation to discovery generally,
namely, that a court will only order discovery in application proceedings in exceptional
circumstances.'

27 Ibid.
28 Paragraph 41.

[33] Recognising that some of the documents requested in its rule 35(12)
notice might well contain commercially sensitive information, Caxton proposed
that the production of such documents could, by agreement between the parties,
be made subject to an appropriate confidentiality regime limiting their
inspection to Caxton's attorneys, counsel and independent experts. However,
Novus was unpersuaded by the effectiveness of the proposed confidentiality
regime. Consequently, Novus remained steadfast in its objection to the
production of the documents sought.

[34] As already indicated, Novus' blanket refusal to produce the documents
listed in Caxton's rule 35(12) notice precipitated the delivery by the latter of a
rule 30A notice on 19 August 2020. And, in accordance with the wording of rule
30A, the notice cautioned Novus that unless it purged its non-compliance with
the rule 35(12) notice and produce the requested documents, Caxton would,
after five days of the date of service of the rule 30A notice, apply to court for an
order compelling the production of the documents sought. Similarly, Caxton's
rule 30A notice failed to elicit the desired outcome.

[35] The principles that have crystallised over the years and may be extracted
from the various decisions of our courts can be succinctly stated as follows. As
a general rule, a document to which reference has been made in a pleading or
affidavit is susceptible to production.29 Nevertheless, a court will refuse to order
production of a document that is not in the possession or under the control of
the other party or which is privileged or irrelevant.30 By relevance is meant that

29 Democratic Alliance and Others v Mkwebane and Another [2021] ZASCA 18; [2021] 2 All SA 337 (SCA);
2021 (3) SA 403 (SCA) para 41; Contango Trading SA v Central Energy Fund SOC Ltd [2019] ZASCA 191;
[2020] 1 All SA 613 (SCA); 2020 (3) SA 58 (SCA) para 9.
30 Democratic Alliance and Others v Mkwebane and Another [2021] ZASCA 18; [2021] 2 All SA 337 (SCA);
2021 (3) SA 403 (SCA) para 41; Centre for Child Law v The Governing Body of Hoërskool Fochville and
Another [2015] ZASCA 155; [2015] 4 All SA 571 (SCA); 2016 (2) SA 121 (SCA) para 18.

the document or tape recording in question 'might have evidentiary value' or
'might assist' the party seeking production in relation to any 'aspects or issues
that might arise' in light of the facts stated in the pleadings or affidavits.31

[36] To conclude on this aspect, it is necessary to emphasise that a court
considering an application to compel production of the documents or tape
recordings which are the subject of a rule 35(12) notice exercises a discretion in
a broad sense.32 A court exercising a discretion in the true sense may properly
come to different decisions having regard to a wide range of equally permissible
options available to it. A discretion in the true sense was described by E M
Grosskopf JA in Media Workers Association of South Africa and Others v Press
Corporation of South Africa Ltd ('Perskor')33 in these terms:
'The essence of a discretion in this narrower sense is that, if the repository of the power
follows any one of the available courses, he would be acting within his powers, and his
exercise of power could not be set aside merely because a Court would have preferred him to
have followed a different course among those available to him.'

[37] An appellate court may therefore interfere with the exercise of a
discretion in the true sense by a court of first instance only if it can be
demonstrated that the latter court exercised its discretion capriciously or on a
wrong principle, or has not brought an unbiased judgment to bear on the
question under consideration, 'or has not acted for substantial reasons'.34 In

31 Democratic Alliance and Others v Mkwebane and Another [2021] ZASCA 18; [2021] 2 All SA 337 (SCA);
2021 (3) SA 403 (SCA) para 41; Swissborough Diamond Mines (Pty) Ltd and Others v Government of the
Republic of South Africa and Others 1999 (2) SA 279 (T) at 316G.
32 Naylor and Another v Jansen [2006] ZASCA 94; [2006] SCA 92 (RSA); 2007 (1) SA 16 (SCA) para 14;
Gaffoor NO and Another v Vangates Investments (Pty) Ltd and Others [2012] ZASCA 52; 2012 (4) SA 281
(SCA); [2012] 2 All SA 499 (SCA) para 41.
33 Media Workers Association of South Africa and Others v Press Corporation of South Africa Ltd ('Perskor')
1992 (4) SA 791 (A) at 800E-H.
34 Benson v SA Mutual Life Assurance Society 1986 (1) SA 776 (A) at 781I-782B and the cases therein cited;
Hotz and Others v University of Cape Town [2017] ZACC 10; 2017 (7) BCLR 815 (CC); 2018 (1) SA 369 (CC)
para 28.

contrast, where the court of first instance exercised a wide or broad discretion
an appellate court is in as good a position to exercise this type of discretion and
would not hesitate to interfere in circumstances where, in its view, the court of
first instance exercised its discretion improperly.35 Accordingly, to all intents
and purposes the question here boils down to the simple fact as to whether on a
consideration of all the relevant factors the high court came to a correct decision
when it refused to order production of documents that are: (i) relevant; (ii) in the
possession of the other party; and (iii) not protected by legal privilege.
Borrowing the phraseology used by the Constitutional Court, '[t]he question is
a simple one: was the High Court right or wrong in its conclusion?'.36 This is
against the backdrop of what this court said in Democratic Alliance v
Mkwebane, that '[t]he wording of rule 35(12) is clear in relation to its
application. Where there has been reference to a document within the meaning
of that expression in an affidavit, and it is relevant, it must be produced'.37

[38] For the sake of completeness on this score, it is necessary to emphasise
that in the context of rule 35(12) the discretion with which the court is vested is
narrowly circumscribed. Thus, once the applicant has established the requisite
elements set out in this rule, the scope, if any scope exists at all, to refuse relief
to the applicant is limited. Accordingly, in the event that a court seized with an
application to produce documents subject to the rule 35(12) notice concludes
that the documents sought to be produced: (a) have been referenced in the
adversary's pleadings or affidavits; (b) are relevant; and (c) are not privileged,
the application for their production must, in the ordinary course, necessarily
succeed. It is therefore in the light of the foregoing principles that this appeal

35 Hoërskool Fochville para 30; Contago paras 28-34; Democratic Alliance v Mkwebane paras 42-45.
36 See in this regard: Helen Suzman Foundation v Judicial Service Commission [2018] ZACC 8; 2018 (4) SA 1
(CC); 2018 (7) BCLR 763 (CC) para 80.
37 Democratic Alliance v Mkwebane para 41.

must be considered and determined, with due regard to the nature of the relief
sought by Caxton in its main application.

Relief sought in main application
[39] The provisions of s 165, to the extent relevant for present purposes, have
already been quoted extensively in paragraph 5 above. As is apparent from the
text of s 165 itself, the section creates a statutory dispensation in terms of which
a person – within the meaning of the section – may bring legal proceedings in
the name and on behalf of a company. In order to do so, such a person must, as
a general rule and absent exceptional circumstances,38 first serve a demand on
the company concerned to commence or continue with legal proceedings. As
already indicated above, having received a demand from Caxton as
contemplated in ss 165(2) and (3), Novus appointed an independent and
impartial person to investigate the demand and report to its board. 39 Upon
receipt of the report, Novus declined to commence legal proceedings. As a
result, Caxton applied to court for leave to bring the envisaged proceedings in
the name and on behalf of Novus. For the court to grant Caxton leave to do so,
Caxton must establish the existence of one or more of the jurisdictional
requirements stipulated in s 165(5)(a) of the Companies Act. I interpose to
mention that this issue presents no controversy, it being common cause between
the parties that Caxton has done so.

[40] In addition, it will be incumbent upon Caxton to satisfy the court that: (a)
in seeking leave, it is acting in good faith; (b) the proposed proceedings involve
the trial of a serious question of material consequence to Novus; and (c) it is in
the best interests of Novus that Caxton be granted leave to commence the

38 See s 165(6) of the Companies Act.
39 Section 165(4).

proposed proceedings. 40  Section 165(7) of the Companies Act, in turn,
ameliorates the position of the company – Novus in this case – by creating a
rebuttable presumption that, if the proposed action is against a third party, and
the company has decided not to bring the proposed action – as Novus has –
granting leave will not be in the best interests of the company – in this case
Novus – if certain requirements are met. Some of these requirements are, for
example, whether all of the directors who participated in the decision; '(i) acted
in good faith for a proper purpose; (ii) did not have a personal financial interest
in the decision, and were not related to a person who had personal financial
interest in the decision; (iii) informed themselves about the subject matter of the
decision to the extent they reasonably believed to be appropriate; and (iv)
reasonably believed that the decision was in the best interests of the company'.41

Contentions of the parties
[41] The contentions of the parties may briefly be stated as follows. Caxton
contended that: (a) all of the documents required in terms of its rule 35(12)
notice are referred to – albeit not annexed – in Novus' answering affidavit in the
main application and are in the latter's possession; and (b) all of the documents
are relevant, and to the extent that privilege is asserted in relation to one of them
– ie the report of the independent and impartial person – the document concerned
was not created for the purpose of being placed before a legal advisor in order
to obtain legal advice; and that, in any event, even if the report is privileged,
such privilege was waived when Novus chose to quote extensively from the
report in its answering affidavit. Consequently, Caxton argued, the high court
should have ordered production of the documents requested, and therefore erred
in not doing so.

40 Sections 165(5)(b)(i), (ii) and (iii) of the Companies Act.
41 Section 165(7)(c) of the Companies Act.

[42] For its part, Novus contended that none of the documents requested by
Caxton in the latter's rule 35(12) notice is relevant. What is more, Novus
submitted, the report of the independent and impartial person prepared pursuant
to 165(4) of the Companies Act is immune from disclosure by virtue of its
privilege. The foundation for this contention was that the report came into being
for the purpose of litigation that was contemplated as likely at the time of its
production. Furthermore, it was argued that the documents are confidential and
that the confidentiality regime proposed by Caxton does not adequately protect
its commercial interests. And, more compelling, that, in any event, the high court
properly exercised its discretion in terms of rule 30A in refusing production of
the documents sought.

Were the documents sought referred to in Novus' affidavits?
[43] The touchstone for production of documents or tape recordings pursuant
to rule 35(12) is whether any 'reference' to the documents or tape recordings in
question has been made in the other party's pleadings or affidavits.

[44] In this matter Novus has, in resisting the relief claimed in the main
application, made extensive references to a host of documents to demonstrate
that Caxton's application is unmeritorious. In addition, Novus asserted that
Caxton's invocation of s 165 of the Companies Act is a ruse used in order to
harass Novus, Caxton's commercial arch-rival. Insofar as the report of the
independent and impartial person is concerned, Novus contended that it is
protected against production by virtue of the litigation privilege attaching to it.
Thus, barring the issue of privilege (and whether Novus has waived privilege)
the first requirement of rule 35(12) has been satisfied.

Are the documents required relevant to the issues between the parties?

[45] In order to determine whether the documents that are the subject-matter
of this appeal are relevant, it is necessary first to have regard to the kernel of the
dispute between the parties in the main application. As already indicated, that
Caxton has the requisite legal standing to bring the main application is not in
dispute. Nor is it contested that all the documents sought are in the possession
or control of Novus. What is, however, hotly contested by Novus is whether
Caxton has made out a case in order to satisfy the court in due course that: (a)
in instituting the main application it is acting in good faith; (b) the proposed
proceedings involve the trial of a serious question of material consequence to
Novus; and (c) it is in the best interests of Novus that Caxton should be granted
leave to commence the proposed proceedings in the name and on behalf of
Novus.

[46] With respect to all of these issues, it is as well to bear in mind that it is
not for this court in the present matter to make findings that Caxton has satisfied
the requirements of s 165(5)(b). That will be a matter for the court seized with
the main application in due course. All what Caxton need establish in this appeal
is that the documents bear relevance to the issues raised in the main application.
This can be demonstrated with reference to the fact that the documents were
called in aid and heavily relied upon by Novus in opposing the relief sought by
Caxton. In Democratic Alliance v Mkwebane,42 this court stated that reliance on
a document or tape recording by an adversary 'is a primary indicator of
relevance'. Whilst acknowledging that such reliance cannot be used as 'the sole
indicator', this court nevertheless recognised that the materiality of the document
'in relation to the issues that might arise or to a defence that is available to the
party seeking production'43 is another important consideration. As to the latter

42 Paragraph 34.
43 Paragraph 34.

aspect, there can be no doubt that in relying on the documents in question, Novus
sought to dispel the notion harboured by Caxton that its dealings with the DBE
and Lebone are tainted with impropriety on its part. That is one of the critical
issues that will loom large in the main application.

[47] In Gorfinkel, Friedman J had occasion to consider the issue of relevance
in relation to rule 35(12). After making reference to previous decisions of our
courts, and in particular Universal City Studios v Movie Time,44 the learned
Judge said:45
'With regard to relevance there must also, in my view, be some limitation read into Rule
35(12). To construe the Rule as having no limitation with regard to relevance could lead to
absurdity. It would be absurd to suggest that the Rule should be so construed that reference
to a document would compel its production despite the fact that the document has no
relevance to any of the issues in the case. It is not difficult to conceive of examples of
documents which are totally irrelevant. Booysen J in the Universal City Studios case gave
one such example. What is more difficult to decide is where the line should be drawn. A
document which has no relevance whatsoever to the issues between the parties would
obviously, by necessary implication, be excluded from the operation of the Rule. But would
the fact that a document is not subject to discovery under Rules 35(1), 35(3) or 35(11) render
it immune from production in terms of Rule 35(12)?'

[48] The learned judge then continued:46
'In my view the parameters governing discovery under Rules 35(1), 35(3) and 35(11) are not
the same as those applicable to the question whether a document is irrelevant for the purposes
of compliance with Rule 35(12). A party served with a notice in terms of Rule 35(1) is obliged
to make discovery of documents which may directly or indirectly enable the party requiring
discovery either to advance his own case or to damage that of his opponent or which may

44 Universal City Studios v Movie Time 1983 (4) SA 736 (D). at 774A-C.
45 Gorfinkel at 774A-D.
46 Gorfinkel at 774C-F.

fairly lead him to a train of enquiry which may have either of these consequences. Documents
which tend merely to advance the case of the party making discovery need not be disclosed.'
He then concluded that the party who had made reference to the documents
sought was under an obligation to produce them.

[49] As previously indicated, the high court refused to order production of the
documents sought, because it found, in essence, that they were irrelevant to the
issues raised in the main application. And that, as a result, Caxton would derive
no benefit from the production of the documents in question. In reaching that
conclusion the high court erred. As Friedman J rightly observed in Gorfinkel
'the parameters governing discovery under Rules 35(1), 35(3) and 35(11) are not
the same as those applicable to the question whether a document is irrelevant
for the purposes of compliance with Rule 35(12)'. In contrast, the scope of rule
35(12) is wide enough to cover every situation where the party calling for
production of documents requires them for purposes of assessing his or her
position.47 And this is precisely what obtains in this case.

[50] I turn now to consider the individual categories of documents whose
production Caxton sought to compel in this matter. This aspect of the case raises
the question as to whether on an objective evaluation of the issues raised in the
main application the documents sought are relevant. An allied question is
whether one of the documents, namely the report, is privileged. In resisting the
application to compel production of the documents, Novus disputed their
relevance. In its answering affidavit in the main application, Novus accepted
that the report was produced pursuant to s 165(4) of the Companies Act by the
independent and impartial person who was instructed to investigate Caxton's

47 See Democratic Alliance v Mkwebane para 34, and the authorities discussed therein.

demand and to report to the Board on the facts or circumstances that bear on the
demand. Yet, it asserted in its answering affidavit that the 'very purpose of the
report was to provide Novus' Board with legal advice relating to litigation which
Caxton demanded Novus should commence against Lebone'.

Is the report of the independent and impartial person privileged?
[51] Novus asserted that the report is privileged and therefore protected from
disclosure. In particular, it relied on litigation privilege contending that when
the independent and impartial person was appointed pursuant to s 165(4)
litigation was contemplated as likely. In order to sustain a defence based on
litigation privilege, it is incumbent upon Novus to establish that: (a) the
communication sought to be protected was made for the purpose of being placed
before its legal advisor with a view to give legal advice; and (b) the
communication was made for the purpose of either pending litigation or
litigation that was contemplated as likely at the time.

[52] In Competition Commission v Arcelormittal South Africa Ltd and
Others,48 it was stated that litigation privilege, which is one of two components
of legal privilege, is designed to 'protect communications between a litigant or
his legal advisor and third parties, if such communications are made for the
purpose of pending or contemplated litigation. It applies typically to witness
statements prepared at a litigant's instance for this purpose. The privilege
belongs to the litigant, not the witness, and may be waived only by the litigant'.
Such communications are therefore protected from disclosure unless the
privilege attaching thereto has been waived by the litigant. (See D T Zeffert and
A P Paizes The South African Law of Evidence 3 ed (2017) at 732-745.

48 Competition Commission of South Africa v Arcelormittal South Africa Ltd and Others [2013] ZASCA 84;
[2013] 3 All SA 234 (SCA); 2013 (5) SA 538 (SCA) para 20.

[53] It was contended on behalf of Novus that the s 165(4) report constitutes a
communication between Novus and the independent and impartial person, who
is a third party. And the fact that s 165(4) itself contemplates litigation by Novus
against Lebone, in accordance with the demand, places the report squarely in
the realm of professional privilege.

[54] Counsel for Caxton countered Novus' contention by submitting that the
report was sought and prepared solely for the purpose of meeting the
requirements of s 165(4) of the Companies Act. Thus, so it was argued, there
could be 'no suggestion that it was created for the purpose of being placed before
Novus' attorneys or other legal advisors so that they could provide legal advice.

[55] The contention advanced on behalf of Novus prompts the following
question: what is the object and purpose of s 165(4) of the Companies Act.
Section 165(4) was quoted in full in paragraph 5 above. Briefly stated, its
provisions are to the effect that if a company chooses not to act in accordance
with s 165(3) it must appoint an independent and impartial person to investigate
the demand and thereafter report to the board of directors on certain aspects as
therein stipulated. And, within 60 days of the demand or any extended period,
either initiate or continue legal proceedings or serve a notice on the person who
served the demand refusing to comply therewith.

[56] On this score, it is as well to remember that the logical point of departure
in any interpretive exercise is the language of the instrument itself in the light
of its context and purpose, all of which constitute a unitary exercise.49 These

49 Natal Joint Municipal Pension Fund v Endumeni Municipality [2012] ZASCA 13; [2012] 2 All SA 262
(SCA); 2012 (4) SA 593 (SCA) para 18. See also: S v Zuma and Others [1995] ZACC 1; 1995 (2) SA 62 (CC)
para 18; Kubyana v Standard Bank of South Africa Ltd [2014] ZACC 1; 2014 (3) SA 56 (CC); 2014 (4) BCLR
400 (CC) para 18.

interpretive precepts, aptly described as 'the triad of the text, context and
purpose' in Capitec Bank Holdings Limited and Another v Coral Lagoon
Investments 194 (Pty) Ltd and Others,50 were said to be 'the relationship between
the words used, the concepts expressed by [the] words and the place of the
contested provision within the scheme of the agreement (or instrument) as a
whole that constitutes the enterprise by recourse to which a coherent and salient
interpretation is determined'. Bearing these considerations in mind, it becomes
readily apparent that having regard to the language, context and purpose of
s 165(4), its manifest and primary purpose would be frustrated if the
interpretation for which Novus contended were to be ascribed to this provision.

[57] The key object and purpose of s 165(4) is, as is manifest from the text
itself, to enable a company faced with a demand pursuant to s 165(2) to obtain
an objective assessment by an independent and impartial person after
investigating the demand and advising on its implications as contemplated in
s 165(4)(a)(i)-(iii). Thus, in appointing the independent and impartial person,
Novus was constrained by the strictures of s 165(4), because it had elected not
to avail itself of the mechanism for which s 165(3) provides. Furthermore,
whatever doubt there may have been as to the purpose for which the report was
prepared is dispelled by the report itself, in which the independent and impartial
person himself explicitly refers to what he understood to be his 'obligations as
set out in s 165(4) of the Companies Act to report to the Board'. Thus, his brief
from Novus was unequivocal: consider the demand by Caxton and advise the
board on the issues spelt out in the section itself.

50 Capitec Bank Holdings Limited and Another v Coral Lagoon Investments 194 (Pty) Ltd and Others [2021]
ZASCA 99; [2021] 3 All SA 647 (SCA); 2022 (1) SA 100 (SCA) para 25.

[58] That the board might also have intended to submit the report to Novus'
legal advisers for legal advice cannot change the essential character and key
purpose of the report as explained in the preceding paragraph. In any event, as
this court pointedly remarked in Contango,51 the mere say-so of the litigant that
a document is protected by litigation privilege is not 'sufficient to withhold
disclosure of a document.52 Rather, it is the 'purpose for which the document
was prepared' that 'lay at the heart of the analysis'.53

[59] Accordingly, the point here is this: the key object of the report of the
independent and impartial person is to advise the board of directors on the
matters specified in s 165(4)(a) of the Companies Act. Put differently, the
purpose sought to be achieved under s 165(4) is to determine whether or not the
demand has substance and issues related thereto. This is therefore the overriding
consideration in determining the status of the report.

[60] That this must be so is made plain when the wording of the provisions of
s 165(4)(b)(i) is contrasted with that of s 165(4)(b)(ii). It is manifest from a
textual, purposive and contextual reading of s 165(4)(a) that the appointment of
an independent and impartial person or committee is designed to establish
whether or not the demand made on the company to 'initiate or continue legal
proceedings as contemplated in the demand' is well-founded. This is further
underscored by the fact that s 165(4)(b)(i) requires the company – within 60
days or within the extended period allowed by a court – to either initiate or
continue with the legal proceedings contemplated in the demand. Alternatively,

51 Contango Trading SA v Central Energy Fund SOC Ltd [2019] ZASCA 191; [2020] 1 All SA 613 (SCA);
2020 (3) SA 58 (SCA).
52 Contango para 34.
53 Ibid.

the company may instead 'serve a notice on the person who made the demand
refusing to comply with it'.

[61] Counsel for Novus sought to circumvent this interpretation by arguing
that the interpretation for which Caxton contended was not the sole purpose of
the provision under consideration. He submitted that the provision has a
secondary purpose which was to advise Novus' board of directors with respect
to the legal proceedings contemplated in the demand and, to that extent, the
report is protected by legal privilege. In my view such a reading of the provision,
that is s 165(4), would undermine the architecture of s 165 as a whole and render
it unworkable in some respects. If Novus' proposed meaning of s 165(4) were to
prevail, one may then rhetorically ask: how the person who has made a demand
on the company in terms of s 165(2) could, for example, impugn the report of
the independent and impartial person or committee under s 165(5)(a)(i), (ii) and
(iii) of the Companies Act if it is protected against disclosure by virtue of being
privileged.

[62] As to several purposes to which a statutory provision may be directed, the
learned author R Sullivan in her work titled Statutory Interpretation 2 ed (2007)
at 196 states:
'Even though we often speak of "the" purpose of legislation, as if there were only one, it is
apparent that every piece of legislation has multiple purposes that operate at different levels
of generality. In sophisticated purposive analysis the interpreter attempts to identify and work
with the primary objects, the secondary considerations, and the specific functions of
legislation at all levels, from the words to be interpreted and the provision in which they
appear to larger units of legislation and the Act as a whole.'
Accordingly, it seems that the various purposes of legislation – if there be more
than one – must be balanced and, if necessary reconciled in light of the context
and meaning of the Act as a whole. And, as Smith J observed in General

Accident, Fire and Life Assurance Corporation Ltd v Goldberg54 a document
does not become 'privileged merely because afterwards the persons who
obtained the report find it desirable or necessary to submit it to their legal
advisors'.

[63] A further indication of the difficulty encountered by Novus on this score
is that, as submitted on behalf of Caxton, s 165 too gives a further legislative
indication that points away from the notion 'that s 165(4) reports attract legal
privilege'. This is so, Caxton argued, because s 165(5)(a)55 of the Companies
Act 'contemplates that one of the jurisdictional requirements for an application
under s 165(5) is if the court finds that a report in terms of s 165(4) "was
inadequate in its preparation, or was irrational or unreasonable in its conclusions
or recommendations".' I agree with counsel for Caxton that a determination of
the kind envisaged in s 165(5)(a)(iii) can realistically be made only after the
report has been placed before the court, and the parties themselves have had the
opportunity to assess whether such report satisfies the requirements of
s 165(5)(a)(iii), namely if it is adequate, rational or reasonable in its
conclusions. In the final result, I accordingly find that the report is not
privileged. Thus, Novus is under an obligation to produce the report pursuant to
Caxton's demand therefor in terms of rule 35(12).

[64] This conclusion renders it unnecessary to consider Caxton's alternative
argument, namely whether Novus, by quoting the conclusion of the report
extensively in its answering affidavit thereby waived any privilege that might
otherwise have attached to the report.

54 General Accident, Fire and Life Assurance Corporation Ltd v Goldberg 1912 TPD 494 at 502.
55 Section 165(5) quoted in paragraph 5 above.

The relevance of the individual documents
[65] Having disposed of both the procedural and substantive obstacles placed
on Caxton's path to procure production of the documents sought, it is timely to
consider the individual items (of the various documents) and, briefly, the
ground(s) upon which their production was sought. As already pointed out
above, Caxton sought production of the s 165(4) report. The report itself alludes
to the limitations inherent in the investigation conducted by the independent and
impartial person pursuant to s 165(4). Its disclosure, argued Caxton, is necessary
in order to determine the bona fides of Novus' directors in declining to institute
the proposed proceedings. In addition, upon sight of the report, so it was
contended, Caxton can then determine whether the requirements of
s 165(5)(a)(iii) have been met. Thus, the question whether the report can bear
scrutiny in the context of s 165(5)(a)(iii) can only be answered once the report
has been analysed. Both Novus and Caxton have each advanced competing
contentions in the main application that seek to support the case of the one and
undermine that of the other. Consequently, the information contained in the
report may be useful to or destructive of either party's case on this score.

[66] Items 2 and 11 make reference to commission agreements concluded in
April 2018 between Novus and Lebone but effective from November 2015. In
the main application, Caxton seeks to have the commission agreements declared
illegal. Caxton asserted that for the commercial rationale for such agreements to
be properly assessed it will be necessary to scrutinise those agreements,
including those that preceded them. As the commission agreements are at the
core of Caxton's demand, there is, in my view, much to be said for this
contention.

[67] Item 3 represents the documentation that Novus placed at the disposal of
the independent and impartial person pursuant to s 165(4) of the Companies Act.
Caxton asserted that this class of documentation is critical in determining the
question whether it was of such a nature as to enable the obligation arising from
s 165(4) being properly discharged. In addition, so Caxton argued, the
documentation will have a bearing on how the presumption created in s 165(7)
would, in the end, operate; that is, in favour of, or against, either of the
antagonists in the litigation. In my view there is considerable force in Caxton's
contentions.

[68] Items 4 and 6 related to reports that Lebone prepared periodically for
submission to the DBE. According to Caxton, these reports bear relevance to
the nature and extent of the work done by Lebone and whether the amount paid
to it by Novus in accordance with their commission agreements was
commensurate with the work that Lebone performed. Thus, these reports are
relevant to the issues raised in the main application.

[69] Item 5 represents invoices and supporting documents submitted to the
DBE. In its answering affidavit, Novus asserted that:
'. . . Lebone is tasked with ensuring that a streamlined process is implemented to make sure
that the invoices together with all supporting documents are obtained and submitted to the
DBE for payment in the shortest possible time. It is mainly for the successful execution of
this function that Novus agreed to make the additional commission payments to Lebone if
timeous payment is received from the DBE.'56
From these invoices, Lebone would be paid commission ranging from 10% to
13% depending on whether the DBE effected payment in settlement 'timeously'
or not. The case sought to be made by Caxton in relation to this item in the

56 Answering affidavit in the main application para 197.

proposed action is that Novus' commission payments to Lebone were
disproportionate to the amount of work performed by the latter. This item, too,
is relevant.

[70] Item 7 relates to what is termed 'annual inflation adjustments' and
supporting 'documentary evidence' prepared and submitted to the DBE by
Lebone for which the latter was paid commission by Novus.

[71] Item 8 represents invoices generated by Lebone and submitted to Novus
in respect of 50% 'printing works for covers, tear-outs and stickers' as an integral
part of the workbooks contract between the DBE and Novus. Caxton requires
these documents which, according to it, 'will demonstrate how much Lebone
was paid for the work that was outsourced to it by Novus'.57

[72] Item 9 relates to payments made by the DBE directly to Lebone in
settlement of invoices prepared by and submitted by Lebone. Caxton asserted
that these documents are relevant in order to determine whether there was not
an overlap between the amounts payable by the DBE directly to Lebone and the
commission paid by Novus to Lebone for work done by the latter with respect
to the workbooks contract between the DBE and Novus.

[73] Item 10 relates to proof of deliveries (PODs) in respect of the workbooks
contract between the DBE and Novus. According to Novus, the PODs were
'meticulously completed' and were 'collated and submitted with the invoice to
the DBE'. The preparation and submission of these documents was Lebone's
responsibility, which was required to ensure that all was in order so that
settlement of the invoice amount to Novus could be effected without delay. For

57 Paragraph 80 of Caxton's heads of argument.

its endeavours, Lebone was paid a commission. Again, Caxton contended that
these documents are relevant to demonstrate the nature and extent of the work
performed by Lebone to justify the commission paid to Lebone by Novus.

[74] Novus' sole objection to the production of the documents in issue is that
they are all irrelevant to the proper determination of the main application. In
elaboration, Novus contended that there is no demonstrable benefit that would
accrue to its shareholders in the envisaged proceedings. On the contrary, argued
Novus, there is a real likelihood that the proposed proceedings will be
prejudicial to its shareholders. Caxton's true motives, asserted Novus, is to bring
it to its knees and thus eliminate it as a formidable arch-competitor.

[75] As to the relevance of the documents in issue, I am persuaded that a case
has been made out to compel their production. Novus itself heavily relied on
these documents to bolster its case that the relief sought by Caxton in the main
application ought to be declined. Insofar as the other bases upon which counsel
for Novus relied to object to the production of the documents, I consider that
they all represent matters that are either not in our remit or can properly be
ventilated during the hearing of the main application. For the foregoing reasons
therefore, I am prepared to order the production of the documents in issue for
inspection and copying by Caxton subject to the qualification set out in
paragraph 78 below.

[76] Novus also argued that production of the documents sought should be
refused because Caxton invoked rule 35(12) after Novus had delivered its
answering affidavit as a disguised attempt to obtain facts that Caxton requires
to support its application; and that taking cognisance of the well-established rule

that an applicant must stand or fall by its founding papers,58 Caxton's application
to compel production of documents at this stage of the proceedings ought to be
refused. These contentions cannot be sustained. The first difficulty with them is
that they entirely ignore the plain wording of rule 35(12), which accords any
party to any proceedings 'at any time before the hearing thereof' a right to call
upon any other party in whose pleadings or affidavits reference is made to any
document to produce such document. The other insurmountable difficulty for
Novus is that Caxton, as the applicant in the main application, could not have
invoked rule 35(12) until and unless reference was made to 'any document' in
Novus' answering affidavit. Thus, the invocation of rule 35(12) by Caxton was
triggered only when reference was made to the documents in question in Novus'
answering affidavits. And, as already pointed out in paragraph 26 above, unlike
rule 35(1),(2) or (3), rule 35(12) is designed to cater for a different set of
circumstances.

[77] What is more is that Caxton is entitled to have sight of the documents
referenced in Novus' answering affidavit so as to deal with them in its replying
affidavit. Thus, Caxton does not, as Novus asserted, seek the documents to make
out a case in reply but rather to deal with Novus' defences raised in the latter's
answering affidavit.

Confidentiality
[78] There is one final issue relating to the principal relief sought by Caxton
to address in this judgment. That issue concerns the contention advanced by
Novus in resisting the interlocutory application, namely that the documents
required contain sensitive commercial information that should not be disclosed,
especially to a business rival and competitor like Caxton. The disclosure of

58 Director of Hospital Services v Mistry 1979 (1) SA 626 (A) at 635-636 in fine.

sensitive commercial information by way of discovery is not novel. In
countering Novus' contention, Caxton submitted in its heads of argument that
the inspection of confidential documents may be circumscribed to protect the
commercial interests of the party asserting confidentiality. In so doing, a court
will strive to strike a fine balance between the competing interests of the
litigants. A court will, in exercising its discretion, not adopt a predisposition
either in favour of or against permitting production of the documents concerned.
This was recognised in Crown Cork & Seal Co Inc and Another v Rheem South
Africa (Pty) Ltd and Others. 59 There, the court stated that a conflict will
occasionally arise between the necessity to protect one party's confidential
information on the one hand, and 'the need to ensure that a litigant is entitled to
present his case without unfair halters' on the other.60 And all of this will be
considered against the backdrop of the importance of the role fulfilled by
discovery in the resolution of legal disputes. In order to resolve this conundrum,
Schutz AJ in Crown Cork held that a court could impose 'appropriate limits' on
the right of a litigant to have sight of the adversary's confidential documents.61

[79] In the same case, the learned Acting Judge went on to say:
'No less in South Africa than in England does the conflict arise between the need to protect a
man's property from misuse by others, in this case the property being confidential
information, and the need to ensure that a litigant is entitled to present his case without unfair
halters. And, although the approach of a Court will ordinarily be that there is a full right of
inspection and copying, I am of the view that our Courts have a discretion to impose
appropriate limits when satisfied that there is a real danger that if this is not done an unlawful
appropriation of property will be made possible merely because there is litigation in progress
and because the litigants are entitled to see documents to which they would not otherwise

59 Crown Cork & Seal Co Inc and Another v Rheem South Africa (Pty) Ltd and Others 1980 (3) SA 1093 (W)
(Crown Cork).
60 Crown Cork at 1100A-B.
61 Crown Cork at 1100B-C.

have lawful access. But it is to be stressed that care must be taken not to place undue or
unnecessary limits on a litigant's right to a fair trial, of which the discovery procedures often
form an important part.'62
The requirement for a fair trial is now buttressed by the values underpinning our
constitutional order.63

[80] As pointed out by Botha J some four decades ago in Moulded
Components, the court may, in granting the application – for production of
confidential documents – impose suitable conditions relative to their inspection
so as to protect the party asserting confidentiality as far as might be practicable.
There, the inspection of the documents subject to production was confined to
the experts of the applicant, of course as assisted by the applicant's legal
representative, to the exclusion of the litigants themselves.

[81] Permitting the production of confidential documents subject to
appropriate limits is now firmly established in our law. As it was expressed by
Mthiyane JA more than a decade ago in Tetra Mobile Radio (Pty) Ltd v Member
of the Executive Council of the Department of Works and Others:64
'. . . [I]f there was any apprehension on the part of the respondent regarding any specific
document, that concern could be met by making an order similar to the one granted by
Schwartzman J in ABBM Printing & Publishing (Pty) Ltd v Transnet Ltd [1998 (2) SA 109
(W) at 122I-J to 123A-B; 1997 (10) BCLR 1429; [1997] 4 All SA 94], where the parts of the
documents in respect of which disclosure might result in breach of confidence were to be
identified and marked as confidential and the applicant’s attorney was prohibited from
disclosing such parts to any other party, including the applicant, save for the purpose of

62 Crown Cork at 1100A-D.
63 See, for example, De Beer NO v North-Central Local Council and South-Central Local Council and
Others 2001 (11) BCLR 1109 (CC); 2002 (1) SA 429 (CC) paras 10, 11 & 13.
64 Tetra Mobile Radio (Pty) Ltd v Member of the Executive Council of the Department of Works and Others
[2007] ZASCA 128; [2007] SCA 128 (RSA); 2008 (1) SA 438 (SCA) para 14 (Tetra Mobile). See also Comair
Ltd v Minister for Public Enterprises and Others 2014 (5) SA 608 (GP); Helen Suzman Foundation v Judicial
Service Commission [2018] ZACC 8; 2018 (4) SA 1 (CC); 2018 (7) BCLR 763 (CC) paras 73-75.

consulting with counsel or an independent expert. In that way a fair balance could be achieved
between the appellant’s right of access to documentation necessary for prosecuting its appeal,
on the one hand, and the third respondent’s right to confidentiality, on the other.'

[82] The decision of this court in Bridon International Gmbh v International
Trade Administration Commission and Others65 endorsed the adoption of the
confidentiality regime crafted by the court a quo and observed that:
'As to the solution preferred by the court a quo, Bridon's main objection is that it is difficult
to apply in practice and that it provides no absolute guarantee against leakage. Though these
objections are not without substance, the types of restrictions imposed in the court a quo's
order are not novel. Despite Bridon's pessimistic predictions similar orders had been granted
before, for example, in Moulded Components and Rotomoulding South Africa (Pty) Ltd v
Coucourakis and Another 1979 (2) SA 457 (W) and in Crown Cork & Seal Co Inc and
Another v Rheem South Africa (Pty) Ltd and Others 1980 (3) SA 1093 (W). More recently,
this type of order has also been used as a mechanism in the application of s 45(1) of the
Competition Act 89 of 1998, which is very similar in wording to s 35(3), in that it requires
the Competition Tribunal to "make any appropriate order concerning access to that
confidential information" (see Competition Commission v Unilever plc and Others 2004 (3)
SA 23 (CAC) at 30F-I).'

[83] It is not without significance that whilst Caxton's notice of appeal makes
reference to a proposed confidentiality regime to be adopted in the event of the
appeal succeeding, Novus contented itself with merely rejecting the proposed
regime without suggesting an alternative regime. This was the position it elected
to adopt even in its answering affidavit when resisting the production of the
documents sought. Therefore, the task of this court is not made any easier
because of the stance assumed by Novus relative to this aspect. However, it must
be said that Novus' failure to address this aspect pertinently in its answering

65 Bridon International Gmbh v International Trade Administration Commission and Others [2012] ZASCA 82;
[2012] 4 All SA 121 (SCA); 2013 (3) SA 197 (SCA) para 35.

affidavit is not without consequences. Without any tenable explanation as to
why the confidentiality regime proposed by Caxton is inadequate, there is no
reason to fault the protection that it affords.

The replying affidavit in the main application
[84] Finally, it is necessary to deal with Caxton's quest to be afforded sufficient
time within which to file its replying affidavit in the main application. It goes
without saying that Caxton's replying affidavit is considerably long overdue.
Caxton deliberately elected not to file its replying affidavit pending the outcome
of its application to compel the production of the documents it sought from
Novus.

[85] There is nothing in the language of rules 35(12) and 30A to suggest that
once a demand has been made for the production of the documents to which the
rule 35(12) notice relates, the party seeking such documents is excused from
complying with the timeframes prescribed in terms of Uniform Rule 6(5)(d)(ii)66
or 6(5)(e),67 as the case may be. In Potpale Investments (Pty) Ltd v Mkhize,68
Gorven J rightly observed that the delivery of a notice in terms of rule 35(12) or
(14) does not suspend the period referred to in rule 26 or any other rule. Whilst
there is much to be said for the view expressed by the learned Judge, sight should
however not be lost of the fact that it is open to the court, in the exercise of its
discretion, to extend the time periods prescribed in terms of the rules whenever

66 Rule 6(5)(d)(ii) reads:
'within fifteen days of notifying the applicant of his or her intention to oppose the application, deliver his or
her answering affidavit, if any, together with any relevant documents.'
67 Rule 6(5)(e) reads:
'Within 10 days of the service upon the respondent of the affidavit and documents referred to in subparagraph
(ii) of paragraph (d) of subrule (5) the applicant may deliver a replying affidavit. The court may in its
discretion permit the filing of further affidavits.'
68 Potpale Investments (Pty) Ltd v Mkhize 2016 (5) SA 96 (KZP) para 18.

a proper case therefor has been made out by the party seeking such indulgence.
Indeed, this is what Uniform Rule 27 itself contemplates.

[86] It is as well to remember that the manifest purpose of discovery is, as was
stated in Durbach v Fairway Hotel, Ltd,69 'to ensure that before trial both parties
are made aware of all the documentary evidence that is available. By this means
the issues are narrowed and the debate of points which are incontrovertible is
eliminated'. Accordingly, discovery assists the parties and the court in
discovering the truth, and, in doing so, helps towards a just determination of the
case. This also saves costs.70

[87] As the time for the delivery of Caxton's replying affidavit has long come
and gone, it made perfect sense therefore for Caxton to ask for leave to deliver
its replying affidavit only once it has had the opportunity to inspect and copy
the documents that Novus is required to produce in terms of this judgment. And
given the voluminous nature of the documents involved, it is eminently
reasonable and fair that it be afforded a reasonable period within which to do so.
This will be reflected in the order made below. Similarly, it is only fair that
Novus should be afforded a reasonable period of time within which to produce
the documents sought. This, too, is catered for in the order below.

The order
[88] For all the foregoing reasons the appeal must succeed and, in the result,
the following order is made:
The appeal is upheld with costs, including the costs of two counsel.

69 Durbach v Fairway Hotel, Ltd 1949 (3) SA 1081 (SR) at 1083.
70 Santam Ltd and Others v Segal 2010 (2) SA 160 (N) at 162E-F; MV Alina II Transnet Ltd v MV Alina II 2013
(6) SA 556 (WCC) at 563F-G.

The order of the high court is set aside and in its place is substituted the
following order:
'2.1
The respondent is directed to produce for inspection and copying the
documents specified below within 30 (thirty) days of the date of this order
pursuant to the appellant's notice in terms of rule 35(12) delivered on 11 August
2020.
2.2.1 Judge Harms' "report" prepared pursuant to s 165(4) of the Companies
Act 71 of 2008 and submitted to Novus' Board on 28 May 2020 referred to in
paragraphs 21 to 28 of the respondent's answering affidavit in the main
application under case no 8908/2020 (the main application).
2.2.2 The "predecessors" to the "Commission Agreement", referred to in
paragraph 27 of the answering affidavit in the main application.
2.2.3 The "documentation at Novus' disposal" to which Judge Harms was
"given full access" referred to in paragraph 28 of the answering affidavit in the
main application.
2.2.4 All "reports to the Department of Basic Education (DBE)" referred to in
paragraph 195.2 of the answering affidavit in the main application.
2.2.5 All "invoices together with all supporting documents" submitted to the
DBE, as referred to in paragraph 197 of the answering affidavit in the main
application.
2.2.6 All "reports" submitted to the DBE by Lebone, as referred to in paragraph
198 of the answering affidavit in the main application, but only to the extent that
they may be different to the reports referred to in paragraph 2.2.4 above.
2.2.7 All "annual inflation adjustments" and supporting "documentary
evidence" submitted by Lebone to the DBE, referred to in paragraphs 199 and
200, respectively, of the answering affidavit in the main application.

2.2.8 All "invoices" submitted by Lebone to Novus for the "printing of 50% of
all the required covers, tear-outs, and stickers", referred to in paragraph 201 of
the answering affidavit in the main application.
2.2.9 "The contract with the DBE" that "Novus had to comply with", as referred
to in paragraph 225.1 of the answering affidavit in the main application, and "the
contract" that the "DBE made payment of invoices in accordance with", referred
to in paragraph 244 of the answering affidavit in the main application (and each
"contract", to the extent that paragraph 225.1 and paragraph 244 may refer to
two separate contracts).
2.2.10 The "meticulously completed Proof of Deliveries (POD's)" that were
"collated and submitted with the invoice to the DBE", referred to in paragraph
225.1 of the answering affidavit in the main application.
2.2.11 The "other impugned agreements" and "the impugned agreements" that
were "negotiated and concluded" at the time that none of Novus's current
directors served as directors, as referred to in paragraphs 290.3 and 290.4 of the
answering affidavit in the main application.
It is further directed that the documents referred to in paragraph 2 above
are to be provided subject to the following confidentiality regime:
3.1
Novus will provide the documents to Caxton's attorneys of record, and in
doing so will indicate which documents Novus claims are confidential (the
confidential documents).
3.2
Save for purposes of consulting with counsel or any independent experts
or unless the Court orders otherwise, Caxton's attorneys of record shall not
disclose directly or indirectly to any other party (including Caxton) any part of
the confidential documents.
3.3
Caxton's attorneys of record and independent experts given access to the
confidential documents pursuant to paragraph 3.2 above will sign a
confidentiality undertaking confirming that they will not disclose directly or

indirectly the contents of the confidential documents to any other party
(including Caxton) other than a party that has also signed a confidentiality
undertaking in terms of paragraph 3.2 above.
3.4
In the event that Caxton's attorneys of record, on behalf of Caxton, dispute
that any document or documents asserted by Novus to be confidential is or are,
in fact, confidential, then Caxton's attorneys of record are given leave, on behalf
of Caxton, to urgently approach the Court on the same papers, supplemented as
may be necessary, for an order providing for the exclusion of such document or
documents from the confidentiality regime.
3.5
Confidential documents may only be referred to in affidavits deposed to
by the legal representatives or independent experts of the parties, and any such
affidavits will also be treated as confidential.
Caxton is ordered to file its replying affidavit in the main application
within 20 days after receipt of all the documents pursuant to paragraphs 2 and 3
above.
The respondent in the interlocutory application is ordered to pay the costs
of such application, including the costs of two counsel where so employed.'

X M PETSE
ACTING PRESIDENT
SUPREME COURT OF APPEAL

APPEARANCES

For the appellant:
A Cockrell SC (with him A Coutsoudis)
Instructed by:

Nortons Inc., Johannesburg
McIntyre Van der Post Attorneys, Bloemfontein

For the respondent:
P G Cilliers SC (with him J L Mÿburgh)
Instructed by:

Van der Spuy & Partners, Cape Town
Phatshoane Henney Attorneys, Bloemfontein
THE SUPREME COURT OF APPEAL OF SOUTH AFRICA
MEDIA SUMMARY OF JUDGMENT DELIVERED IN THE SUPREME COURT OF
APPEAL
From:
The Registrar, Supreme Court of Appeal
Date:
09 March 2022
Status:
Immediate
The following summary is for the benefit of the media in the reporting of this case and does
not form part of the judgments of the Supreme Court of Appeal
Caxton and CTP Publishers and Printers Limited v Novus Holdings Limited (Case no
219/2021) [2022] ZASCA 24 (10 March 2022)
The Supreme Court of Appeal (SCA) today upheld an appeal brought by Caxton and CTP
Publishers and Printers Limited (Caxton) against the decision of the Western Cape Division of
the High Court of South Africa, Cape Town (Baartman J, sitting as court of first instance). The
appeal was upheld with costs, including the costs of two counsel. The order of the high court
was set aside and substituted with the order of the SCA in terms of which the respondent,
Novus Holdings Ltd (Novus) was directed to produce all of the documents required by Caxton
pursuant to the latter's notice under rule 35(12).

The facts may be summarised as follows. On 7 April 2020, and pursuant to s 165(2) of the
Companies Act 71 of 2008 (the Companies Act), Caxton served a demand upon Novus, in
terms of which it demanded that Novus institute legal proceedings against Lebone Litho
Printers Proprietary Limited (Lebone). According to Caxton, the envisaged legal proceedings
would seek to have a commission agreement (and any related agreements) concluded between
Novus and Lebone declared invalid and unenforceable. In terms of the impugned agreement,
Novus undertook to pay commission to Lebone in relation to a public procurement contract
between Novus, on the one hand, and the Department of Basic Education (DBE) on the other
for the printing, packaging and distribution of school workbooks throughout the country.

Invoking s 165(4) of the Companies Act, Novus appointed a retired Judge as an independent
and impartial person (independent and impartial person) to investigate the demand, and
thereafter to report to its board of directors on the matters set out in s 165(4). Upon receipt of
the independent and impartial person’s report, Novus advised Caxton that the latter’s demand
to institute legal proceedings against Lebone was declined. Undaunted, Caxton instituted the
main application against Novus, in which leave was sought to bring the envisaged action in the
latter’s name and on its behalf. Novus resisted the relief sought in the main application by
Caxton. In its answering affidavit in the main application, Novus made reference to several
documents, one of which was the s 165(4) report, in terms of which it sought to demonstrate
that the proposed action lacked any prospect of success or was simply devoid of merit.

Novus’ multiple references to a number of documents in its answering affidavit prompted
Caxton to ask for the production of the documents concerned by invoking rule 35(12) of the
Uniform Rules of Court. This, too, was resisted by Novus, who refused to make any of the
documents sought available to Caxton for the latter’s inspection and, if deemed necessary,
copying. Constrained by Novus’ unwavering stance, Caxton then brought the interlocutory
application in the Western Cape Division of the High Court, Cape Town (the high court), in
terms of rule 30A of the Uniform Rules, to compel the production for inspection and copying
of the documents sought. Caxton’s interlocutory application took centre stage in this appeal.

Caxton’s application to compel the production of the documents sought came before Baartman
J, who dismissed it with costs. In dismissing the application, the learned Judge held, in essence,
that all of the documents required by Caxton were irrelevant. Insofar as the report of the
independent and impartial person was concerned, the high court held that it was, by its very
nature and the circumstances attendant upon its production, privileged. And, further, that
Novus had not, by quoting parts of the report, waived the privilege attaching to the report. In
elaboration, the high court concluded that the fact that the report ‘was commissioned in
circumstances where litigation was contemplated’ was reinforced by the undisputed and long
litigation history between the parties, who were business arch-rivals. The high court granted
Caxton leave to appeal against the judgment to the SCA.

The central issue in this appeal was whether the documents sought by Caxton in terms of its
rule 35(12) notice delivered on 11 August 2020, all of which were referred to in Novus’
answering affidavit in the main application, were relevant and therefore ought to have been
produced for inspection and copying. A related issue was whether one of these documents,
namely the report of the independent and impartial person appointed by Novus pursuant to s
165(4) of the Companies Act to investigate the demand, was privileged and thus protected
against disclosure by virtue of its privileged status. If the report was found to be privileged, an
allied issue would have arisen, namely whether in quoting virtually the entire conclusion of the
report in its answering affidavit Novus had, as a result, waived the privilege attaching to the
report.

The SCA found that the upshot of the relevant principles was that as a general rule, a document
to which reference has been made in an adversary's pleadings or affidavits was susceptible to
production. The SCA nevertheless noted that a court would refuse to order production of a
document that was not in the possession or under the control of the other party or which was
privileged or irrelevant. By relevance, the SCA explained, was meant that the document or tape
recording in question ‘might have evidentiary value’ or ‘might assist’ the party seeking
production in relation to any ‘aspects or issues that might arise’ in light of the facts stated in
the pleadings or affidavits. Furthermore, it was necessary to emphasise that a court considering
an application to compel production of the documents or tape recordings which are the subject
of a rule 35(12) notice exercised a narrowly circumscribed discretion.

With regard to the issue of whether the documents sought were referred to in Novus’ affidavits,
the SCA found that the decisive touchstone for production of documents or tape recordings

pursuant to rule 35(12) was whether any ‘reference’ to the documents or tape recordings in
question has been made in the other party’s pleadings or affidavits. In this matter Novus had,
in resisting the relief claimed in the main application, made extensive references to a host of
documents to demonstrate that Caxton’s application was unmeritorious. In addition, Novus
asserted that Caxton’s invocation of s 165 of the Companies Act was a ruse employed in order
to harass Novus, who was Caxton’s commercial arch-competitor. Insofar as the report of the
independent and impartial person was concerned, Novus contended that it was protected
against production by virtue of the litigation privilege attaching to it. Thus, the SCA held that
barring the issue of privilege the requirements of rule 35(12) were satisfied.

With regard to the issue of whether the documents required were relevant to the issues between
the parties, the SCA found that it was well to bear in mind that it was not for the SCA in this
matter to make definitive findings that Caxton had satisfied the requirements of s 165(5)(b) of
the Companies Act. That would be a matter for the court that would be seized with the main
application in due course to determine those questions. For the SCA’s purposes, it sufficed to
state that all what Caxton needed to establish was that the documents bore relevance to the
issues raised in the main application. This could be demonstrated with reference to the fact that
the documents were called in aid and heavily relied upon by Novus in opposing the relief sought
by Caxton.

The SCA considered the individual categories of documents whose production Caxton sought
to compel in this matter. This aspect of the case raised the question as to whether on an
objective evaluation of the issues raised in the main application the documents sought were
relevant. An allied question was whether one of the documents, namely the report, was
privileged.

The SCA found that the key object of the report of the independent and impartial person was
to advise the board of directors on the matters specified in s 165(4)(a) of the Companies Act.
Put differently, the purpose sought to be achieved under s 165(4) was to determine whether or
not the demand had substance. This was therefore the overriding consideration in determining
the status of the report. Further, the SCA agreed with counsel for Caxton that a determination
of the kind envisaged in s 165(5)(a)(iii) could realistically be made only after the report had
been placed before the court, and if the parties themselves had had the opportunity to assess
whether such report satisfied the requirements of s 165(5)(a)(iii), namely if it was adequate,
rational or reasonable in its conclusions. In the final result, the SCA accordingly held that the
report was not privileged. Thus, Novus was under an obligation to produce the report pursuant
to Caxton’s demand therefor in terms of rule 35(12). This conclusion rendered it unnecessary
to consider Caxton’s alternative argument, namely whether Novus, by quoting the conclusion
of the report extensively in its answering affidavit thereby waived any privilege that might
otherwise have attached to the report.

The SCA thereafter considered the individual items (of the various documents) and, briefly,
the ground(s) upon which their production was sought. As to the relevance of the documents
in issue, the SCA found that it was persuaded that a case had been made out to compel their
production. Insofar as the other bases upon which counsel for Novus relied to object to the

production of the documents, the SCA considered that they all represented matters that were
either not in the SCA’s remit or could properly be ventilated during the hearing of the main
application. For the foregoing reasons, therefore, the SCA was prepared to order the production
of the documents in issue for inspection and copying by Caxton subject to a confidentiality
regime. This was necessary because Novus, in resisting the interlocutory application asserted
that the documents required contained sensitive commercial information that should not be
disclosed, especially to a business rival and competitor like Caxton. In countering Novus’
contention, Caxton submitted that the inspection of confidential documents may be
circumscribed to protect the commercial interests of the party asserting confidentiality. The
SCA found that the disclosure of sensitive commercial information by way of discovery was
not novel. Permitting the production of confidential documents subject to appropriate limits
was now firmly established in our law. Accordingly, the SCA held that the documents in issue
were to be produced subject to the prescribed confidentiality regime.

~~~~ends~~~~