Lewis Group Limited v Woollam and Others (17199/2016) [2016] ZAWCHC 162; [2017] 1 All SA 231 (WCC) (15 November 2016)

Lewis Group Limited v Woollam and Others (17199/2016) [2016] ZAWCHC 162; [2017] 1 All SA 231 (WCC) (15 November 2016)

Discovery in motion proceedings is an exceptional remedy, only to be granted where it is material to the fair determination of the case. In the context of an application under s 165(3) of the Companies Act, the court's inquiry is limited to whether the demand is frivolous, vexatious, or without merit, not the prospects of success of the contemplated derivative action. Woollam's request for discovery of all branch reports is aimed at assessing the factual foundation and prospects of his demand, which is irrelevant to the principal application. The evidence available, including the Saldanha branch report and the KPMG auditor's report, is sufficient for Woollam to explain the basis for his...

Citation
[2016] ZAWCHC 162
Parties
Applicant: Lewis Group Limited; Respondent: David Farring Woollam; Respondent: Johan Enslin; Respondent: Leslie Alan Davies; Respondent: David Morris Nurek; Respondent: Hilton Saven
Court
Western Cape High Court, Cape Town
Jurisdiction
South Africa
Judgment Date
15 November 2016
Case Number
17199/2016
Procedural Posture
Interlocutory Application / Determination of Interlocutory Applications for Discovery and Answering Affidavit Timelines in Principal Proceedings Under S 165(3) of the Companies Act.
Outcome
Woollam's interlocutory application for discovery is dismissed. Lewis's counter-application for delivery of answering papers is granted.
Judges
A.G. Binns-Ward
Legal Topics
Discovery in Motion Proceedings, Companies Act Section 165, Delinquent Director Declaration, Rule 35 Uniform Rules, Prima Facie Case, Costs in Interlocutory Applications
Civil Procedure Commercial and Corporate Discovery in Motion Proceedings Companies Act Section 165 Delinquent Director Declaration Rule 35 Uniform Rules Prima Facie Case Costs in Interlocutory Applications

Case Brief

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Parties

Lewis Group Limited

Applicant

David Farring Woollam

Respondent

Johan Enslin

Respondent

Leslie Alan Davies

Respondent

David Morris Nurek

Respondent

Hilton Saven

Respondent

Procedural Posture

Interlocutory Application / Determination of Interlocutory Applications for Discovery and Answering Affidavit Timelines in Principal Proceedings Under S 165(3) of the Companies Act.

Legal Issues

  1. 1 Whether discovery should be ordered in motion proceedings under rule 35(13) in the context of an application under s 165(3) of the Companies Act.
  2. 2 Whether the respondent is entitled to access all branch reports before filing answering papers.
  3. 3 Whether the demand served on the applicant is without merit for the purposes of s 165(3).

Ratio Decidendi

Discovery in motion proceedings is an exceptional remedy, only to be granted where it is material to the fair determination of the case. In the context of an application under s 165(3) of the Companies Act, the court's inquiry is limited to whether the demand is frivolous, vexatious, or without merit, not the prospects of success of the contemplated derivative action. Woollam's request for discovery of all branch reports is aimed at assessing the factual foundation and prospects of his demand, which is irrelevant to the principal application. The evidence available, including the Saldanha branch report and the KPMG auditor's report, is sufficient for Woollam to explain the basis for his...

Court Disposition

Woollam's interlocutory application for discovery is dismissed. Lewis's counter-application for delivery of answering papers is granted.

Orders

  • The application by the first respondent (Woollam) for a direction in terms of rule 35(13) is dismissed.
  • The first respondent is directed to deliver his answering papers in the principal case within 10 days of the date of this order, failing which the applicant (Lewis) may enrol the application in terms of s 165(3) of the Companies Act 71 of 2008 for hearing as an unopposed application.