IN THE COMPETITION APPEAL COURT OF THE REPUBLIC OF SOUTH AFRICA.

									CASE NO. 64CAC/AUG/06

In the matter between:
AMERICAN NATURAL SODA ASH CORP 					1st Appellant
CHC GLOBAL (PTY) LTD 							          2nd Appellant
And
BOTSWANA ASH (PTY) LTD 						      1st Respondent
CHEMSERVE TECHNICAL PRODUCTS (PTY) LTD                             2nd Respondent
WEBBER WENTZEL BOWENS 						      3rd Respondent
THE COMPETITION COMMISSION OF SOUTH AFRICA 		      4th Respondent

JUDGMENT: 5 JANUARY 2007

DAVIS JP:

This is an appeal against a decision of the Competition Tribunal (‘the Tribunal’) which
dismissed an application for the disqualification of first respondent (‘Botash’) from
continuing to participate as interveners in complaint proceedings brought by fourth
respondent before the Tribunal together with its legal team, being third respondent
(‘Webbers’), from continuing to represent Botash in these proceedings. The application
was brought after appellants found out that one Darryl Dingley, one time employee of the
fourth respondent and who had subsequently been employed by Webbers had been
deployed by the latter to be part of its legal team which represented Botash in these
complaint proceedings. It was common cause that Dingley had participated in
negotiations between appellants and fourth respondent which were directed to a
settlement of the complaint proceedings against appellants.
The present dispute flows from a complex and drawn out process of litigation based upon
an allegation that first appellant (‘Ansac’) was a cartel falling within the scope of section
4 of the Competition Act 89 of 1998 (‘Competition Act’) and further that it had been
guilty of predatory pricing in terms of section 8(d)(iv) of the Competition Act.
On 14 April 2000 a complaint was referred to the Tribunal and pursuant to an agreement
between the parties Botash was joined as an intervener. Sometime thereafter, the
respondent and appellant embarked on settlement negotiations in an effort to resolve their
differences. According to Mr. Reshaan Laljith, a director of second appellant who
deposed to a founding affidavit, Ansac went to great lengths to emphasize that both the
fact and the contents of the negotiations were to be treated as a confidential and under no
circumstances should they be divulged to Botash. This demand was unequivocally
accepted by fourth respondent. One of the issues with which the negotiations were
concerned was whether a penalty should be imposed on Ansac for its conduct and, if so,
on what basis and in what amount. According to Mr. Menzi Simelane, then the
Competition Commissioner, Dingley was requested as head of case analysis in the policy
and research division of fourth respondent to participate in the settlement negotiations
and to apply a financial model that he developed for the assessment of penalties.
The discussions culminated in an agreement of settlement that was signed by both Ansac
and the Commissioner. For reasons that are not relevant to this dispute, the agreement
was repudiated on the grounds that, in material respects, it supposedly failed to address
fourth respondent’s concerns.
In the period leading up to the conclusion of this agreement Dingley left the employ of
fourth respondent. He played no further part in the negotiations. In October 2005 he
joined Webbers. The partner who was designated to lead Botash’s legal team, Mr. Martin
Versfeld asked him in February 2006 to join Botash’s legal team. According to Dingley,
he immediately disclosed to Versfeld that he had been involved in the case while in the
employ of the fourth respondent. In his affidavit Dingley states: ‘After honest and
thorough consideration, I reported to Mr. Versfeld that there was no reason to believe that
I had knowledge of information confidential to the Respondents relevant to Botash’s
cause and to involve me in the matter was unlikely to result in any impropriety.’
2
Botash’s attorney wrote to Mr. Anthony Norton of Webbers on 21 June 2006 in which he
said the following:
‘As you know Daryl Dingley was an employee of the Competition Commission
before he joined your firm. In that capacity he worked intensively on this matter,
playing a significant role in the Commission’s deliberations and having access to
a considerable amount of material submitted under cover of confidentiality
undertakings, including material submitted confidentially to the Commission
alone in connection with the negotiation and discussion of the consent agreement.
In the light of this, it was with great surprise and consternation that we found him present
yesterday as a professional Webber Wentzel employee on the Botash legal team handling
this matter and fully participating in the case and meetings on your clients’ behalf with
representatives of the Commission. Given his prior employment by the Commission, this
is plainly improper, presenting serious ethical and professional issues. Indeed, on the
face of it, it appears that the situation created through his participation is such as to
compromise Webber Wentzel’s continued participation in the case.’
Dingley was then withdrawn from all involvement in third respondent’s legal team
representing Botash on 29 June 2006.
Summary of Ansac’s case
Mr. Brassey, who appeared together with Mr. MacNally, on behalf of Ansac contended
that there were three independent bases for the disqualification of both Botash and its
legal team:
1 Webbers had assigned a person to the case and thus placed themselves in a
position in which advantage might be derived from his contribution to the legal
team when he had, to their knowledge, previously participated to a material extent
in the proceedings on behalf of fourth respondent, a statutory body that as a
regulator has objects, interests, information and constraints that manifestly differ
3
or might differ from those of Botash. In short, Mr. Brassey invoked the principle
that no lawyer can in the same case represent in succession parties whose objects,
interests, knowledge and strategies cannot in law be identical or manifestly are
not identical.
2 By including a person with Dingley’s knowledge of the content of the
confidential, without prejudice, settlement discussions, the principle was infringed
that no one should place himself or allow himself to be placed in a position in
which he risks breaching obligations of confidentiality.
3 By including on the legal team, a person who might be a material witness in the
principle case, particularly on the issue of the validity and/or appropriateness of
the settlement agreement that, to his knowledge had been concluded with the
fourth respondent, the potential was created of the corruption of a witness’s
testimony.
The Tribunal’s Findings
In a careful analysis of the arguments presented by Ansac as outlined above, the Tribunal
found that, although Dingley had participated briefly in the Botash legal team and may
have been exposed to ‘without prejudice information’ in relation to the case as a result of
his employment with fourth respondent, Ansac had failed to provide evidence of more
than a possibility of harm. In the Tribunal’s view ‘the possibility of harm is insufficient
to found a case for unfairness in our law’.
4
At this stage it is opportune to refer to the evidence made available to the Tribunal of the
content of the negotiations which had taken place between fourth respondent and Ansac.
This evidence proved to be of considerable importance in that the Tribunal found that it
was incumbent on appellants to prove more than a breach of confidentiality ‘in the air’.
The content of the negotiations had not been disclosed to the Tribunal because Ansac had
adopted the approach that it would be ‘incompatible with the preservation of their
confidential, without prejudice status’. According to the Tribunal, during the course of
his argument, counsel for Botash invited Ansac and fourth respondent to permit the
Tribunal to have sight of the Commission’s file to ascertain that the documentation
indeed contained material prejudicial to Ansac. Ansac replied that they would ‘leave the
matter in our hands’. However the Tribunal recorded that counsel for Ansac had
cautioned the Tribunal against adopting the approach of allowing ‘a judicial peak’ to take
place.
He had argued that, if the Tribunal looked at the documents without hearing oral
evidence, this would constitute an irregular procedure. The documentation could not be
analyzed out of the context of the negotiations and in particular the oral exchanges that
had taken place. For these reasons, the Tribunal found ‘given Ansac’s stance we were
reluctant to take this ‘judicial peak’ at the documents and we have not done so’. The
Tribunal found that although Mr Laljith had made claims in general terms concerning
confidentiality, there was in the Tribunal’s view ‘no revelation of what the substance of
these is or even the broadest hint’. The Tribunal noted that by contrast, Dingley
characterized the negotiations as ‘guarded’ and suggested that he had no awareness of
the fact that he ‘is now a repository of Ansac’s secrets which he has unwittingly
conveyed to the rival camp’. On the basis that Ansac had not provided sufficient
evidential justification for its application, the Tribunal dismissed it.
I now turn to deal with the three key arguments which Mr Brassey raised in his effort to
persuade this court that the Tribunal had erred in dismissing the application.
Side switching
5
Mr Brassey submitted that Botash had assigned a person to the case and placed
themselves in a position in which advantage might be derived from his contributions to
the legal team which had been deployed to pursue Botash’s case. Webbers had known of
Dingley’s previous participation to a material extent in the proceedings on behalf of
fourth respondent, whose interests as a statutory regulator were manifestly different to
those of Botash.
Mr. Brassey attacked the Tribunal’s finding that a ban on side switching only applied in
circumstances where an attorney had acted for a client and then switched to acting against
the client in the same matter. In contrast, he contended that the essential test in the
present dispute was whether there existed so significant an identity, specifically of
knowledge, interest and object, between the parties, Dingley left and the party he joined
so as to satisfy a reasonable observer that no prejudice whether actual or potential might
be engendered by the switch. In particular, the question arose as to whether Dingley, by
switching sides, compromised a relationship of trust to the prejudice, whether actual or
potential, of Ansac as a party to the litigation.
The essential component of this aspect of Mr Brassey’s argument was a distinction that
he sought to draw between the position of the fourth respondent and that of Botash with
regard to their respective positions of litigants in the complaint proceedings. In this
connection he referred to an affidavit filed on behalf of fourth respondent by Mark
Worsley who said: ‘It is patently clear that there is a considerable difference between the
interests pursued by the Commission and those pursued by an intervening party’.
Mr. Brassey suggested that it was precisely because of the special status of fourth
respondent that Ansac selected it as target for its efforts at settlement in the knowledge
that it could expect a reception that in its fairness and independence would stand ‘in
marked contrast’ to what might be expected from a commercial litigant such as Botash.
Mr. Brassey emphasized the statement made in the founding affidavit of Mr. Laljith that
Ansac had revealed its views and attitudes and candidly dealt with the strengths and
weakness of its case, discussed the motives of Botash openly and elaborated to fourth
respondent on a range of potential solutions to the problem raised by the complaint
proceedings.
Accordingly, Mr. Brassey submitted that there was a distinct incongruence of interests
between Botash and fourth respondent insofar as the complaint proceedings were
concerned. He referred to the conduct of Botash in seeking to prevent a successful
settlement of the complaint between fourth respondent and Ansac. In his view, if both
6
fourth respondent and Botash had been represented by a single attorney, it was
impossible to believe that the attorney would not have felt compelled to withdraw from
the matter on the basis of a conflict of interest.
In support of these arguments, Mr. Brassey cited a series of decisions from the
United States of America as support for the general proposition that an official
employed by a regulatory authority will be disqualified from acting on behalf of a
party in a suit brought by or against the authority if: (1) when at the authority
whether as a lawyer or otherwise he personally participated in the preparation or
presentation of the suit on behalf of the regulatory authority to a degree that was
not merely formal or perfunctory but constituted a substantial contribution and (2)
in circumstances in which there may be prejudice to other parties in litigation or in
which such prejudice appears to exist. See in particular Kessenich v Commodity
Futures Trading Commission 221 US App DC 314(DC App, 1982) at [27] – [30].
In Kessenich supra, the applicant lodged a complaint before the Commodity
Futures Trading Commission (‘CFTC’) a letter of complaint was addressed to one
Clinton Burr, an attorney employed in the Division of Enforcement of the CFTC.
The complaint alleged that there were certain unlawful activities which had been
undertaken in connection with unauthorized transactions in commodity options on
Kessenich’s account with a company called Rosenthal and Company. When no
settlement was reached, the complaint was forwarded for adjudication. During the
7
proceedings the law firm that had previously represented Rosenthal before CFTC
was replaced by Rosenthal’s general counsel, the same Clinton Burr who had
previously worked at the CFTC. In finding that Burr should be disqualified from
the case, the court held ‘[O]ur decision rests on consideration beyond the immediate
case before us. The integrity, both actual and apparent, of the agency’s dispute
resolution mechanism is essential to the regulatory enforcement scheme created by
Congress.’
Mr. Brassey also found support at the other end of the world for his argument; in a
decision of the New Zealand Court of Appeal in Black v Taylor [1993]3 NZLR
403(CA). A solicitor had previously acted for members of family including the
deceased plaintiff who brought proceedings against the estate of the deceased for
breach of an alleged contract to leave him by will certain shares. Plaintiff sought an
injunction against the solicitor’s continued representation of the estate on the
ground that the solicitor had been privy to confidential information relevant to the
present dispute and hence there existed a conflict of interest. The court found that
(at [408]) ‘it would not be unreasonable for a family member to feel chagrin and
concern to find a lawyer who had built up knowledge of that kind was able
consciously or unconsciously to draw on it when acting against that member of the
family’. The court found that justice would not have been seen to be done if when
8
dissension took place within the deceased’s family, the family solicitor was seen to be
acting for one side thereof.
Although these cases are distinguishable on the facts, Mr. Brassey insisted that the
principle which was applied in both cases was applicable to this case, namely as
Richardson J had put it in Black supra at 409, there are two key principles to be
safeguarded, namely: ‘that knowledge of a client may itself disqualify a practitioner
from acting against that client and that an appearance of impropriety should be
avoided’. In the view of Richardson J while these principles did not impose legal
obligations having the force of law, they provided a clear indication of relevant
public policy concerns.
Mr. Brassey sought to apply the principles derived from these cases to contend that, as
Dingley had worked on the case for fourth respondent, he had been privy to Ansac’s
thoughts and ideas about the case and he should have been prohibited from putting this
knowledge to the benefit of Ansac’s determined opponent.
Evaluation
As Mr. Trengove, who appeared together with Mr. Chaskalson on behalf of third
respondent, submitted, at no stage had Botash, third respondent or Dingley ever
represented Ansac. On the contrary, they have at all times been the adversaries of Ansac.
Thus, the cases cited by the appellants as authority for the argument on side switching are
9
distinguishable from the present dispute. Dingley never represented Ansac and, if to the
extent that there was switching, it was from one adversary of Ansac to another.
Significantly, Ansac accepted that any disclosures to which Dingley may have been privy
were disclosures which took place within the context of settlement negotiations where
Ansac understood the risks. It accepted that ‘those members of the Commission who
were exposed to its disclosures could not insulate themselves from what they had learnt
and absorbed during the negotiations and would remain possessed of such knowledge
during the further prosecution of the matter’. Whatever was disclosed to the members of
fourth respondent therefore was available to its legal team in the ongoing litigation
between the parties. Hence the argument was made by Mr. Trengove that any question
which might be asked by a member of Botash’s legal team could be properly asked by a
member of the legal team representing fourth respondent.
Clearly the side switching cases relied upon by Ansac deal with a lawyer moving from
one party/authority to a party which is in an adversarial or materially different position
from that of the former. Thus, in order to utilize the authorities cited in support of the
side switching argument, Ansac is constrained to contend that there is a material
structural difference between the respective positions of the fourth respondent and of
Botash. This would then allow for the argument that some form of side switching had
taken place in the present dispute analogous to the facts of the cases cited above.
The motive of Botash in intervening in the complaint proceedings may well be different
from that of the statutory regulator established in terms of the Competition Act to pursue
the public interest. I readily accept that Botash is a private institution which has primarily
a private interest at heart and most certainly is not necessarily motivated to act in the
public interest
Significantly, Mr. Laljith said the following in his founding affidavit: ‘Botash has no
independent cognizable interest in the outcome of the proceedings. To the extent that it
seeks to join with the Commission in the vindication of the public interest, the
Commission is more than capable of discharging that function without Botash’s
assistance. To the extent that it seeks, by its intervention, to bolster the Commission’s
efforts in vindicating the public interest, that task can safely be left to the Commission.
What is clear, however, is that there is no prospect of Botash obtaining its own separate
relief in the proceedings.’
As Mr. Unterhalter, who appeared together with Mr. Gotz for Botash, contended the
fourth respondent seeks relief in the form of a declaratory order that Ansac’s cartel
agreement constitutes a prohibited practice in terms of section 4(1) (b) of the Competition
10
Act and further seeks the imposition of an administrative penalty. It does not seek an
interdict preventing Ansac from continuing to trade as a cartel in South Africa. Botash
however seeks such relief. As Mr. Unterhalter correctly observed, this latter relief is but
a logical extension of that which fourth respondent has pursued to date. The purpose of
Botash’s intervention was because an interdict was not sought although it is competent in
terms of section 58(1) (a) (i) of the Competition Act.
Once the relief is viewed with this framework, it follows that the interest of Botash and
the fourth respondent in the complaint referral proceedings are sufficiently
complimentary to render the jurisprudence cited by Mr. Brassey in connection with side
switching to be distinguishable from the facts of the present dispute. The facts of this case
find no application in the authorities relied upon by appellants.
Breach of confidentiality
Mr. Brassey submitted that Dingley owed a duty of confidentiality to Ansac flowing from
his participation in the settlement negotiations which were conducted on a ‘without
prejudice’ basis.
Ansac’s case on this ground is that Webbers, as lawyers for Botash assigned Dingley to
the case and accordingly placed themselves in a position in which advantage might be
derived from his contribution to the legal team in circumstances where he was bound by
statutory and non statutory obligations of ‘utmost’ confidentiality pursuant to which he
had become privy to and materially contributed to the ‘without prejudice’ negotiations in
which Ansac made disclosures of a confidential nature. In the founding affidavit Mr.
Laljith describes the basis of the confidential nature of the settlement discussions thus:
‘At the first settlement meeting, ANSAC stressed that the negotiations were being held in
the strictest confidence and without prejudice to its interests in the complaint
proceedings. ANSAC specifically pointed out that the discussions and any
documentation created specifically for purposes of discussing settlement or information
provided to the Commission must not be revealed to Botash. The Commission expressly
accepted these stipulations.
These strictures were repeated from time to time in correspondence and at further
meetings between ANSAC and the Commission. No one representing the Commission
could have been left in the slightest doubt that the negotiations were not to be divulged
without the consent of ANSAC. Nor could it be doubted that the contents of what was
being disclosed could neither be used nor exploited in the complaint or other litigation.’
This description of events does not appear to be contested by Mr. Worsley who deposed
to an affidavit on behalf of fourth respondent. The Tribunal also appeared to accept that
11
‘Dingley participated briefly in the Botash legal team and may have been exposed to
without prejudice information in relation to the case as a result of his prior employment
with the Commssion.’ Mr. Brassey submitted that, on this basis, the Tribunal should
have found that Dingley was in a position in which he, whether wittingly or unwittingly,
could disclose confidential information without the consent of Ansac. This conclusion
remained true whether the information was indeed confidential when disclosed or
whether it retained the status over time. The undertaking given by fourth respondent
covered information which had been provided by Ansac under the umbrella of the
undertaking and this remained true whatever the nature of the information.
Mr Brassey contended that in order to make out a case of disqualification on the basis of
confidentiality, all Ansac had to show was: (1) Information was given either under cover
of confidence or that it was in fact confidential; and (2.) Dingley was placed in a position
in which the confidence could be (or might possibly be) imperiled.
Mr Brassey submitted that Dingley was under an obligation not to disclose
information that had been given to him in confidence. He was under an obligation
to maintain the ethical integrity of the legal system. By his participation in the legal
team of Botash, he was placed in a position in which his memory might be
triggered or in which facts learnt by him might be divulged explicitly, implicitly or
by conduct. Accordingly, his participation in the Botash legal team, which was
working on the very case in which he had been exposed to confidential discussions
when employed by fourth respondent, had caused an irretrievable infringment of
the integrity of the legal system. For this reason, a strict test should be adopted to
protect the issue of confidentiality and thereby serve to disqualify Webbers from its
further participation in any proceedings relating to the litigation between Ansac and
Botash. Mr Brassey sought to rely upon judgements in Prince Jefri Bolkiah v
KPMG (a firm) [1999] 1 ALL ER 517 (HL); Martin v Gray [1991] LRC Comm 789
12
(SC) , cases which will presently be analyzed.
Evaluation
In order to evaluate this leg of Ansac’s case, it is necessary to examine in some detail the
evidence employed by appellants to justify their case and the comparative law cited in
support thereof. In his founding affidavit Mr. Laljith describes the basis of Ansac’s
contention that there existed, at the very least, a potential breach of confidential
information:
‘Full disclosure of the contents of the negotiations in this affidavit is obviously
incompatible with the preservation of their confidential, without prejudice status.
The best I can do in this affidavit is to give a general summary of the nature of the
negotiations and the path that they took. Directions will at the appropriate time be
sought from this Tribunal on the manner in and extent to which disclosure should
be made. In the negotiations there were two fundamental issues:
first, whether the complaint referral could be settled informally or whether its
validity and enforceability depended on the approval by the Tribunal of a consent
agreement that, at its most extreme, would have to embody a plea of guilty;
secondly, whether ANSAC Corp was a legitimate joint venture or not, and if notwhether
future trading could be regulated by the settlement and, if so, upon what
conditions (such as off shore trading);
what consequences (including trading prohibitions and penalties) might in
addition be appropriate.
On the first issue, Dingley, in common with the rest of the Commission’s team
engaged in a lengthy debate with the ANSAC team on the basis on which the
matter could be settled. In the course of these discussions, the ANSAC team
candidly expressed its own views on the merits, from a legal point of view, of
each of the contending positions. In these discussions Dingley appreciated that
the status of an unconfirmed settlement agreement was a matter of debate and
controversy and was openly made privy to ANSAC’s understanding of the
strengths and weaknesses of each legal standpoint.’
13
Laljith then attached to his founding affidavit a chronology of negotiations. Briefly the
following was recorded:
On 3 October 2001 the chief legal counsel at the Commission informed Ansac
that a subcommittee
was appointed to calculate a possible penalty. During
October 2001 the name of Dingley was mentioned as the person who talked to
the Ansac team regarding administrative penalties. On 28 November 2001 a
meeting took place between members of the Commission and legal
representatives of Ansac in which Dingley was present and in which according
to the chronology ‘Dingley advised what could be addressed in the consent
agreement, discussed possible approaches to the calculation of the penalty’.
On 15 January 2002 a further meeting between the Commission and legal
representatives of Ansac took place. The following was recorded ‘discussions
substantially led by Dingley of settlement options.’ On 7 February 2002 it was
recorded ‘Dingley has “marathon session” presenting his ideas and figures to his
superiors.’ Thereafter Dingley left the employ of fourth respondent.
With these facts in mind, it is possible to examine the key comparative cases which
were cited by counsel for the parties to this dispute. In the light of the importance
placed upon the decision of the House of Lords in the Prince Jefri case supra, it is
necessary to examine this case in some detail and seek to apply the legal principles
outlined therein to the key facts of this dispute. In Prince Jefri, defendants were a
firm of accountants employed as auditors of the Brunei Investment Agency
established to hold and manage the general reserve fund of the Government of
Brunei and its external assets, as well as to provide the Brunei government with
14
money managing services. Plaintiff had been chairman of the investment agency
until his removal in 1998. Between 1996 and 1998 plaintiff, acting in his personal
capacity, retained defendant to act for him or one of his companies in litigation in
which he was then engaged.
In the course of acting for the plaintiff in that litigation, defendant provided extensive
litigation support service of a kind usually undertaken by solicitors. Pursuant to its
duties, defendant was entrusted with or required extensive confidential information about
plaintiff’s assets and financial affairs. When plaintiff was dismissed from his position as
chairman of the agency, the Brunei government commenced an investigation into matters
pertaining to plaintiff’s conduct. The government sought to retain defendant to assist in
the investigation. Defendant adopted the approach that it could accept the instruction
because it had ceased to act for plaintiff more than two months previously. He was no
longer a client. Adhering to a ‘belts and braces’ approach it created an information barrier
around the department which carried out investigation on behalf of the Brunei
government. Plaintiff had not been informed by the defendants of this decision nor had
his consent been sought. He obtained an injunction to restrain defendants from
continuing to work on the investigation. The matter finally reached the House of Lords.
The House of Lords confirmed two fundamental legal propositions in its resolution of the
dispute being: (1) there is no absolute rule of law in England that a solicitor may not act
in litigation against a former client; (2) the solicitor may be restrained from so acting if
the restriction is necessary to avoid a significant risk of disclosure or misuse of
confidential information which belongs to the former client (at [526 (d)]).
Lord Millett then went on to say:
‘It is in any case difficult to discern any justification in principle for a rule which
exposes a former client without his consent to any avoidable risk, however slight,
that information which he has imparted in confidence in the course of the
fiduciary relationship may come into the possession of the third party and be used
to his disadvantage. Where in addition information in question is not only
confidential but also privileged the case for a strict approach is unanswerable.
Anything less fails to give effect to a policy on which legal professional privilege
is based. It is of overriding importance for the proper administration of justice
15
that a client should be able to have complete confidence that what he told his
lawyer will remain a secret’ (at 528 c – e). Lord Millett continued:
‘Once a former client has established that the defendant firm is in possession of
information which was imparted to it in confidence and that firm is proposing to
act for another party with an interest adverse to his own in a matter to which
information is or may be relevant, the evidential burden shifts to the defendant
firm to show that even so there is no risk that the information will come into the
possession of those now acting for the other party’ (at 529 d).
On the facts, the court found that the defendant firm had not discharged the heavy burden
of showing that there was no risk that information in their possession which was
confidential to plaintiff and which they obtained in the course of a formal client
relationship might unwittingly or inadvertently come to the notice members of defendant
firm working for the government of Brunei.
Although this decision did not impose an absolute rule that a solicitor may not act in
litigation against the former client, the court made it clear that, were there any avoidable
risk however slight, that if information imparted in confidence in the course of a fiduciary
relationship comes into the possession of a third party which could potentially be used to
his disadvantage, the former client must be protected.
In the present case, Dingley did not act at any time for Ansac. No information was
communicated to him pursuant to his having so acted. Mr Brassey insisted that Dingley
had access to information which was confidential and which had only been conveyed to
fourth respondent on the basis of an undertaking of such confidentiality.
Assuming therefore that the relationship between Dingley and Ansac can be
rendered equivalent to that of the defendant firm and the plaintiff in Prince Jefri,
the question still arises as to whether the appellant has made any showing with
16
regard to confidentiality of information held by Dingley which would bring
Webber’s within the scope of the approach adopted by the House of Lords in Prince
Jefri.
In what amounts to an essential factual determination of the present application,
the approach set out in PlasconEvans
Paints Ltd v Van Riebeeck Paints (Pty) Ltd
1984(3) SA 623 (A) must be considered. Hence, the question arises as to whether
the relief should be granted on the basis of the facts presented by respondent
together with the admitted facts in applicant’s affidavit and where it was clear
although not formally admitted, facts that cannot be denied and must therefore be
regarded as admitted. Within this context, it is useful to commence with
respondents evidence. Dingley states that he ‘presented the generic model to the
first applicant’s representatives and debated with him the model on a high level,
academic basis. It was not necessary for me to have regards to the merits of the
first applicant’s case to do this.’
He further contends that ‘the level of my influence over the development of consensus is
pure speculation. It is noteworthy that to the best of my knowledge and belief the
Commission has never adopted my economic model.’ He also says: ‘I have no
reconnection whatsoever of the First Applicant ‘‘revealing its hand’’ during any
17
discussion I had with its representatives…’ He also did not recall being made a party to
Ansac’s ‘confidential strategies and tactics in relation to their case or to their thoughts
and views and any of the relevant documents’.
The question therefore needs to be asked whether Ansac has shown that Dingley was
given confidential information, that the information is still confidential and that the
information is relevant to the case.
In its papers, appellants did not set out in anything more than generalization, information
which it alleged was confidential. It argued that it could not do more because this
disclosure would further subvert the possibility of it having a fair trial. Without crafting
some approach whereby the Tribunal could have undertaken ‘a judicial peak’ of that
which was alleged to be confidential, it is difficult to see how so drastic a remedy sought
by appellant can be granted on the basis of generalized statement. This difficulty is
compounded when Mr. Dingley says in his affidavit:
‘I wish to stress that it was my perception that the Respondents’ representatives
remained guarded at all times during the meetings and discussions. I have no
recollection whatsoever of the First Applicant “revealing its hand” in the sense
suggested, during any discussion that I had with its representatives. If it is being
suggested that I was made party to the Applicants’ confidential strategies and
tactics in relation to their case or to their thoughts and views on any of the
relevant documents, I simply do not remember their representatives ever doing
so. The discussions in which I was involved were about the principles and terms
on which the matter could be settled.’
There is no justification for an outright rejection of the evidence of Dingley. There was
no application to have the factual disputes resolved by the hearing of oral evidence. It
must follow, on the basis of the existing record, that appellant has not discharged even
the limited onus of showing the nature of the confidential information possessed by
Dingley. What compounds the difficulty is a point made by Mr. Trengove, namely that
when Ansac sought to speak to fourth respondent about the possibility of settlement, it
effectively consented to certain information being employed in litigation in the event that
the settlement talks would not be successful. There is no dispute that fourth respondent
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can employ any of this information in the continuing litigation.
To an extent Mr. Brassey might have been taken to rely on the clarification made
by Corbett JA (as he then was) to the approach adopted in Stellenbosch Farmers’
Winery Limited v Stellenvale Winery (Pty) Ltd 1957(4) SA 234 (C) (at 235) namely
that in certain cases a denial by respondent of a fact alleged by the applicant may
not be such as to give rise to a real genuine bona fide dispute of fact. To the
argument that there could not be a genuine factual dispute on the basis that Dingley
possessed information subconsciously
which he may well disclose in circumstances
which were neither deliberate nor conscious, the approach adopted by the Supreme
Court of Victoria represents a more than adequate response:
‘However, there is not the slightest basis for thinking that the first defendant
would intentionally use such confidential information. As I have said, the
plaintiff’s submission emphasized that danger of the unconscious use of such
information. It is at this point, I think, that the plaintiff’s argument fails. It is not
possible, in the absence of any specificity concerning the nature and content of the
supposed confidential information, to make any fair or meaningful assessment of
the likelihood that it might be used unconsciously to the unfair disadvantage of
the plaintiff.’
Grimwade v Meagher and others (1994) VIC LEXIS 816 (at 26). In Martin v Gray
[1991] LRC (Comm) 789 (SC) the Canadian Supreme Court examined the problem
of the reticence of an applicant to reveal confidential information allegedly
communicated to an erstwhile legal advisor. Sopinka J said in this regard:
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‘[o]nce it is shown by the client that there existed a previous relationship which
is sufficiently related to the retainer from which it is sought to remove the
solicitor, the court should infer that the confidential information was imparted
unless the solicitor satisfies the court that no information was imparted which
could be relevant.’ (at 805).
In that case the court was dealing with a lawyer who had worked for a firm of solicitors
who had acted in a case for one party and then had moved to work for solicitors acting for
the very adversarial party in the same case. In the present dispute, the relationship
between Dingley and Ansac, is for reasons set out above entirely different. The kind of
inference to be drawn about the communication of confidential information from client to
attorney acting in litigation does not without any further factual support apply to the
present dispute.
For all these reasons as set out, I am of the view that appellants have not provided a
sufficient factual basis for the approach adopted in Prince Jefri to be applied to the
present dispute. This conclusion must hold even if it is assumed that there was no
structural equivalence between Botash and fourth respondent.
The Corrupted testimony argument
Ansac contends that the continued participation by Botash and Webbers can not be
justified because they appointed a person to the case and placed themselves in a position
in which advantage might be derived from his contribution to the legal team when third
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respondent knew or might reasonably have anticipated that he might be called as a
material witness on the issue of the validity and/or appropriateness of the settlement
agreement that, to his knowledge, had been concluded with fourth respondent. Mr.
Brassey submitted further that Dingley’s participation on Botash’s legal team generated
the perception that his evidence when tendered cannot but favour Botash.
On the evidence, it is unclear why Dingley might or will be called as a material witness in
proceedings regarding the validity of a settlement agreement. He left the employment of
fourth respondent four months before the settlement agreement was signed. He cannot
testify to the Commissioner’s thinking or state of mind when he signed it. He had
nothing to add to the repudiation of the agreement.
Much of Ansac’s argument turns on the allegation that Versfeld should have appreciated
that Dingley could have been called as a witness in proceedings to enforce a settlement
agreement. Dingley suggests that Versfeld knew that an agreement had been concluded in
2002 and knew that an application in terms of which the settlement agreement would be
made a consent order had been withdrawn by fourth respondent in December 2005, four
months before he approached Dingley to become a member of the Botash legal team.
This means that Ansac and the fourth respondent had reentered
negotiations with a view
to concluding a new settlement agreement by which time Dingley had long left fourth
respondent. If Dingley was called as a witness he would be bound under oath to testify
truthfully about events to which he was not the only party to the settlement negotiations.
But, at best for appellants, Dingley had knowledge of the 2002 settlement but not of the
negotiations that begun in February 2005 which commenced with a view to leading to a
possible settlement.
As Mr. Trengove submitted, it would be a radical decision to expel Botash and Webbers
because one of the latter’s junior employees might one day be a witness in a case on an
issue which has not even been raised and may never be raised and which appears to be
surpassed by subsequent events.
Section 34 of the Constitution
Section 34 of the Republic of South Africa Constitution Act 108/1996(‘the
Constitution’) provides ‘Everyone has the right to have any dispute that can be
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resolved by the application of law decided in a fair public hearing before a court or,
where appropriate, another independent and impartial tribunal or forum’. In De
Beer N.O. v North Central Local Council and South Central Local Council and
Others 2001 (11) BCLR 1109(CC) at para 11 the Constitutional Court said this of
this right:
‘This s 34 fair hearing right affirms the rule of law, which is a founding value of
our Constitution .The right to a fair hearing before a court lies at the heart of the
rule of law. A fair hearing before a court as a prerequisite
to an order being
made against any one is fundamental to a just and credible legal order. Courts in
our country are obliged to ensure that the proceedings before them are always
fair. Since procedures that would render the hearing unfair are inconsistent with
the Constitution courts must interpret legislation and Rules of Court, where it is
reasonably possible to do so, in a way that would render the proceedings fair’.
See also President of RSA v Modderklip Boerdery (Pty) Ltd. 2005(5) SA 3
(CC) at paras 39 –41. In this connection Mr. Brassey contended that the conduct of
Webbers in assigning Dingley to the Botash legal team had compromised Ansac’s
right to a fair trial; at the very least by breaching the perceptual principle that
justice must not only be done but be seen to be done. By effectively including ‘a spy’
on to its legal team, the perception, no matter what the evidence may objectively
have indicated, had been created that Ansac could not obtain a fair trial in these
proceedings.
In this connection the following dictum from the judgment of The Government of
India v Cook Industries INC 569 F. 2d 737 was invoked where Mansfield J of the
Second Circuit of the United States Court of Appeal said: ‘The essential issue, is
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whether an impression is created that the attorney may have gained confidential
information from his prior relationship that is usable against his former client’.
Notwithstanding these arguments about adverse perception, the answer to whether
section 34 of the Constitution has been breached can be tested in an enquiry as to whether
Ansac’s right to a fair hearing before the Tribunal would be violated if Botash and
Webbers were allowed to continue to participate in the hearing and, if so, whether their
exclusion would not only avoid the violation and would be an appropriate remedy.
Even if the test is put on the basis of whether there would exist a reasonable perception
that appellant’s right to a fair proceeding will be compromised by the actions of
Webber’s in designating Dingley to the case, the answer has already been located in the
analysis of the facts as set out above. To summarize: In my view, the absence of any
specified factual basis for a breach of confidentiality is equally applicable to the
invocation of a right to a fair trial in terms of section 34. Similarly, it is not clear why
any question which could be asked by Botash’s legal representatives in cross examination
of an Ansac witness on the basis of the information which allegedly is in the possession
of Dingley could not be equally be asked by the fourth respondent’s legal representatives
of the knowledge gained by the representatives between the settlement negotiations. The
latter action can hardly be construed as giving rise to unfairness in the proceedings.
To the extent that appellants have argued that there is a danger of a derivative use
of unlawfully obtained information, under existing South African law there is no
absolute bar against such evidence under South African law. See Ferreira v Levin
N.O. 1996 (1) SA 984 (CC) at para [150]; Shaik v Minister of Justice and
Constitutional Development and Others 2004(3) SA 599 (CC) at paras [35] – [37].
In both these cases, the Constitutional Court rejected an absolute bar against the
derivative use of evidence and opted for direct use immunity that protected the
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examinees from their answers being used against them and no more. In Shaik supra
at para [36] Ackermann J said: ‘It (the Court in Ferreira) came to the conclusion
that in the South African context, mere direct use immunity was sufficient, bearing
in mind that the trial Judge had a discretion – in appropriate cases – to exclude
derivative evidence if that were necessary to ensure a fair trial.’
The question of relief
On whatever basis Ansac has sought to justify the relief for which it has applied, such
relief will have a most significant impact on Botash’s own rights in terms of section 34 of
the Constitution. Preventing Botash from continuing to participate as an intervener in
complaint proceedings brought before the Tribunal would be destructive of its rights
under section 34 insofar as fundamental dispute between the parties is concerned.
Even Mr. Brassey was unable to summon much enthusiasm for this aspect of the
relief. His major focus turned on the question as to whether third respondent’s
counsel and legal representatives in the proceedings, being Webbers, should be
barred. Mr. Trengove submitted that for Botash some seven years into the litigation
to proceed without its chosen attorneys and counsel who represented it in all
proceedings arising out of a dispute thus far would constitute a substantial violation
of its fundamental right to choose its legal representatives. It would force Botash to
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replace its attorneys and counsel after seven years without any meaningful
communication of the issues in the case taking place between Webbers and the new
attorneys. It would also result in a further lengthy delay of proceedings which had
been already been characterized by delays and ferocious point taking and scoring.
As the Second Circuit said in Government of India, supra:
‘We are mindful that there is a particularly trenchant reason for requiring a high
standard of proof on the part of one who seeks to disqualify his former counsel,
for in disqualification matters we must be solicitous of a client’s right freely to
choose his counsel a right which of course must be balanced against the need to
maintain the highest standards of the profession. A client whose attorney is
disqualified incurs a loss of time and money in being compelled to retain new
counsel who, in turn, have to become familiar with the prior comprehensive
investigation which is the core of modern complex litigation. The client
moreover may lose the benefit of its longtime counsel’s specialized knowledge of
its operations’
The appointment of Dingley on to the legal team may well be the kind of ethical matter
which requires the attention of the Law Society. But Ansac seeks far more then a debate
about legal ethics. It contends for wide ranging legal relief which depends on an
evidential foundation. In my view, an aggrieved party, in a case where the ‘switcher’ has
moved from a regulator which had similar interests in the case to that of the party which
he now represents, must be prepared to take the court into its confidence and provided it
with a clear evidential basis as to why, at the very least, the conduct of the parties like
Webbers may be perceived to undermine an applicant’s right to a fair hearing.
That evidence was not produced in this case. Relief that will destroy or, at the very least,
undermine Botash’s rights under s 34 of the Constitution must be justified by more than a
generalized claim to confidentiality, which claim does not even give rise to a reasonable
inference that confidentiality has been is or is likely to be breached to the detriment of
applicant’s rights.
Ansac has therefore not passed legal or evidential muster in this case. The appeal is
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dismissed with costs, including the cost of two counsel.

DAVIS JP
Mailula and Patel AJA concurred.
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