Case Summary and Outcome

The South African Supreme Court of Appeal held that a private company was not entitled refuse access to a financial report commissioned to investigate alleged auditing irregularities. Two media entities had filed access to information requests with the company after the company’s share price dropped when its auditors were unable to sign the annual financial statements. The company refused the requests, stating that the report was subject to legal privilege. The High Court had ordered that the company disclose the report, finding that it was not privileged because it had not been commissioned for the “express” purpose of anticipated litigation. The Supreme Court of Appeal agreed, adding that even if it had been privileged the company had waived that privilege and that, nevertheless, the public interest in the report’s disclosure outweighed any harm the company may suffer were it disclosed.

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Facts

In December 2017, South African company Steinhoff was unable to release its annual financial statements as their auditors, Deloitte Accountants BV from the Netherlands, had refused to sign off on the statements because of “alleged accounting irregularities”. Steinhoff’s share price lost 98% of its value, and shareholders threatened legal action.

On December 6, 2017, Steinhoff announced that it had appointed PriceWaterhouseCoopers Advisory Services Pty Ltd (PwC) to conduct an independent investigation into the irregularities. It later transpired that Steinhoff had briefed its lawyers, Werksmans, to appoint PwC. PwC handed its report to Steinhoff and Werksmans in March 2019, and Steinhoff released an eleven-page “overview of the Forensic Investigation” to the public. This overview did not “merely refer to the existence of the investigation or its outcome” but included PwC’s key findings “that massive fraud has been perpetrated within the Steinhoff Group” and that the “wrongdoers structured and implemented various transactions over a number of years, by a small group of former and non-executives, led by a senior management executive” and that these individuals had created “[f]ictitious and irregular transactions”. [para. 80] The overview explained that while the financial impact was still to be determined, it would be set out in the “restated closing balances” for 2015 to 2018, and it introduced remedial measures and “next steps”. [para. 82-84]

On March 29, 2019, Tiso Blackstar (later Arena Holdings), the owner of various South African media publications, filed an application for access to the PwC report in terms of the Promotion of Access to Information Act 2 of 2000 (PAIA). Tiso Blackstar sought access to the report as “a member of the media that investigates and exposes corporate scandals and is … responsible for providing the public with accurate information regarding issues that lie within the public interest” [High Court judgment para. 10].

On April 26, 2019, Steinhoff refused Tiso Blackstar’s request on the grounds that the PwC report contained information that was legally privileged, in terms of section 67 of PAIA.

Section 67 states: “The head of a private body must refuse a request for access to a record of the body if the record is privileged from production in legal proceedings unless the person entitled to the privilege has waived the privilege.”

On September 2, 2019, amaBhungane Centre for Investigative Journalism, a non-profit media entity, filed its own PAIA request. Steinhoff refused amaBhungane’s request on September 30, 2019 on the same grounds as it had refused Tiso Blackstar’s.

Tiso Blackstar and amaBhungane approached the Western Cape High Court in Cape Town, seeking an order setting aside Steinhoff’s decisions to refuse to grant the PAIA requests and directing Steinhoff to provide them with a copy of the PwC report.

Judge Nuku delivered the judgment of the Western Cape High Court. The central issue for the Court’s determination was whether the PwC report was covered by legal privilege and so could not be released under PAIA.

Tiso Blackstar and amaBhungane (the media groups) argued that Steinhoff could not refuse access to the PwC report because the report was “never subject to legal privilege” and “Steinhoff has waived any privilege, if any privilege applied” [High Court judgment para. 15]. The media groups referred to section 70 of PAIA – the “public interest override” – and argued that if there were sections of the report that were legally privileged, the sections which were not privileged should be severed and released, or a “judicial peak” of the report should occur.

Section 70 states: “Despite any other provision of this Chapter, the head of a private body must grant a request for access to a record of the body contemplated in section 63 (1), 64 (1), 65, 66 (a) or (b), 67, 68 (1) or 69 (1) or (2) if- (a) the disclosure of the record would reveal evidence of- (i) a substantial contravention of, or failure to comply with, the law; or (ii) imminent and serious public safety or environmental risk; and (b) the public interest in the disclosure of the record clearly outweighs the harm contemplated in the provision in question.”

The media groups argued that the right they sought to protect through the PAIA request was the right to freedom of expression, which includes freedom of the press, and the right to receive information and impart ideas. They referred to the Constitutional Court case of Brümmer v. Minister of Social Development , which had noted that “[a]ccess to information is crucial to accurate reporting and thus to imparting accurate information to the public” [High Court judgment para. 32]. One key factual element was that the first announcement from Steinhoff that PwC had been appointed to conduct a forensic investigation made no mention of their lawyers – Werksmans – and so, the media groups contended, because no lawyers were initially involved, the report could not have been obtained for the express purpose of anticipated litigation. In addition, the media groups argued that simply including lawyers in communication and marking a document as “privileged” is not sufficient to confer legal privilege on that document: the privilege results only from the purpose for which the document was created and they argued that the only possible purpose for the commissioning of the PwC report was to enable Steinhoff to report its annual financial results by addressing the auditing irregularities.

Steinhoff maintained that the report was privileged and that it had not waived that privilege: it stated that the PwC report was prepared for the “’express’ purpose of obtaining legal advice and in respect of actual or contemplated litigation”, as litigation against Steinhoff as a result of the events of December 2019 was anticipated [High Court judgment para. 42]. Steinhoff submitted that the public interest override did not apply and that the report could not be severed nor had the media groups demonstrated the conditions for a “judicial peak.” Steinhoff submitted that the Brümmer case was distinguishable from the present case as it concerned a PAIA request to a public – not private – body, and that there was no jurisprudence on the “right to freedom of expression in the context of private bodies” [High Court judgment para. 33]. Steinhoff argued that Rob Rose – a journalist at a Tiso Blackstar media house – had published various articles and a book on Steinhoff and so his (and other journalists’ who had also reported on the matter) right to freedom of expression was not affected by the refusal of access to the PwC report.

The High Court Court noted that section 32 of the Constitutions provides for the right of access to information, and that subsection (2) requires the enactment of legislation to give effect to that right. PAIA was enacted for this purpose, and covers the right of access to information held by private (as well as public) bodies. Section 50 of PAIA requires that access be given to information held by a private body if that information is “required for the exercise or protection of any rights” and if the correct procedure is followed and there are no exemptions which apply permitting the refusal of the request for access [High Court judgment para. 22]. Section 59 of PAIA permits the severability of the requested record, and requires the disclosure of all information that is not covered by any exemption and can be severed from that excluded information.

The High Court noted that it is only in respect of a request to a private body that PAIA requires the requester to demonstrate that the information sought is “required for the exercise or protection of any rights” and that as there is nothing in PAIA to indicate that only some rights can found a PAIA request, “the right to freedom of expression is among the rights which would entitle a requester to a record held by a private body” [High Court judgment para. 35]. The Court also noted that the applicants had referred to the case of M&G Media Ltd v. 2010 FIFA World Cup Organising Committee South Africa , which had held that the right to freedom of expression applies in respect of private bodies and that Steinhoff had not argued that the M&G case was wrongly decided. Accordingly, the High Court held that the media groups were entitled to argue that access to the PwC report was necessary for the exercise of their right to freedom of expression.

The High Court rejected Steinhoff’s argument that because journalists had been able to report on what happened at Steinhoff their right to freedom of expression was not impacted by the PAIA refusal. The Court acknowledged that the information in the public domain was incomplete without the PwC report, and accepted the media groups’ argument that “the fact that there is information in the public domain cannot be a basis of refusal of access to information under PAIA” [High Court judgment para. 38]. The High Court described Steinhoff’s argument as “difficult to follow” and reiterated the position taken in Brümmer that “access to information is crucial for accurate reporting” [High Court judgment para. 39]. It held that the “refusal to provide the PwC report limits the [media groups’] right to freedom of expression” and so the only relevant inquiry is whether the refusal is justified under section 67 of PAIA. In addition, the High Court emphasized that Steinhoff had not raised this point when it first refused the PAIA requests.

The High Court examined whether Steinhoff had met its burden of proving that its refusal to grant access to the PwC report was justified in terms of PAIA. It referred to the case of Competition Commission v. ArcelorMittal South Africa which had set out the requirements for proving a document is protected by legal privilege and stated that Steinhoff therefore had to prove that the PwC report was “obtained or brought into existence for the purpose of submitting it to Werksmans for legal advice in respect of litigation which was either pending or contemplated at the time” [High Court judgment para. 44]. The High Court held that the evidence provided by Steinhoff did not demonstrate that the PwC report was commissioned in anticipation of litigation and commented that even if Steinhoff appointed Werksmans when it “became nervous on learning of the alleged accounting irregularities” that would be insufficient to prove that the PwC report was privileged [High Court judgment para. 69].

Accordingly, the Court dismissed Steinhoff’s arguments and set aside its refusal to grant Tiso Blackstar and amaBhungane access to the PwC report and ordered Steinhoff to provide the media groups with a copy of the report within ten days.

Steinhoff appealed the decision to the Supreme Court of Appeal. Between the High Court case and the appeal, Steinhoff had been restructured and became Ibex RSA Holdco Limited – “a company incorporated under the laws of England and Wales, with its registered office in London and its operating office at Steinhoff’s former premises in Stellenbosch.” [para. 3] Ibex RSA had control of the PwC report and other relevant documents.

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Decision Overview

Judge Schippers delivered the decision of the unanimous five-judge bench. The central issue for the Court’s determination was whether the PwC report was privileged and so Steinhoff had been justified in refusing the PAIA requests and, if it was privileged, whether PAIA’s public interest override nevertheless applied.

Steinhoff maintained that the PwC report was covered by litigation privilege – “which attaches to communications between a litigant or its legal advisor and third parties if those communications were made for the legal adviser’s information for the purpose of pending or contemplated litigation.” [para. 41] It submitted that when it first commissioned PwC to undertake the investigation there was pending litigation.

In the appeal, Steinhoff had sought to introduce new evidence on South Africa, Dutch and European data protection laws. It argued that the PwC report contained personal information of various people and so any disclosure would be regulated by the South African Protection of Personal Information Act 4 of 2013 but also by the European Union’s General Data Protection Regulation 2016/679 (GDPR) as Steinhoff was incorporated in the Netherlands. It argued that an order that the PwC report be disclosed “‘will likely have the effect of causing Steinhoff to breach its obligations’ under the GDPR, and render it liable to serious sanctions.” [para. 27]

The Court dismissed Steinhoff’s application to adduce new evidence on data privacy. New evidence can only be admitted on appeal in “exceptional circumstances” and the Court found that Steinhoff had not demonstrated the presence of any such circumstances. [para. 28] It stressed that Steinhoff had not cited section 63 of PAIA – which requires that a request for information be refused “if its disclosure would involve the unreasonable disclosure of personal information about a third party” – in its response to the initial PAIA requests and criticized the company for “mounting what, in effect, is a s 63 PAIA defence under the guise of the GDPR.” [para. 30] The Court also noted that Steinhoff had not raised concerns about the GDPR or section 63 “at the outset” and questioned why these data privacy concerns – including of the GDPR – were only recognised when the appeal arguments were being prepared. [para. 31] The Court commented that Steinhoff’s arguments on the GDPR were based on the opinions of two attorneys from the firms that represent them in South Africa – Werksmans – and in London – Linklaters – and so neither of them were independent and that these experts disagreed strongly with the media groups’ expert – a barrister from the United Kingdom “who has practiced in data protection law in the United Kingdom and Europe since 2008, and is a member of the EU’s Multistakeholder Expert Group which assists the EU in the implementation of the GDPR”. [para. 34] The Court found that Steinhoff had not demonstrated that it would be in breach of Dutch law and the GDPR if it disclosed the Report and held that the “risk to Steinhoff is overstated.” [para. 35] The Court held that “[f]undamentally, whether the PwC report should be disclosed is required to be decided under South African Law – the PAIA.” [para. 36]

The Court acknowledged that the PAIA was the legislation enacted to give effect to the right of access to information protected by the Constitution. It referred to the case of President of the Republic of South Africa v. M & G Media Ltd and stressed that as any refusal of a PAIA request constitutes a limitation to the right “the disclosure of information is the rule and exemption from disclosure is the exception.” [para. 38] The Court emphasized that even when there is a justified ground of refusal – which the party asserting bears the onus of proving – there is the public interest override “which authorizes disclosure of a record in the public interest”. [para. 39]

The Court examined whether the PwC report was privileged in terms of section 67 of the PAIA. It described the two requirements for litigation privilege as being “(a) the document must have been obtained or brought into existence for the purpose of a litigant’s submission to its legal adviser for legal advice; and (b) litigation must have been pending or contemplated as likely at the time”. [para. 41] It referred to English case law, noting that the English courts identify a broad category of “legal professional privilege” which is then divided into the sub categories of “legal advice privilege (LAP) and litigation privilege” and noted that Steinhoff claimed both forms of privilege. [para. 42]

In ascertaining whether the PwC report was privileged or not, the Court acknowledged that it had not settled the question of what test should be used “to determine whether a document that is brought into existence for different purposes, only one of which is to obtain legal advice in pending or contemplated litigation, is protected by legal professional privilege.” [para. 56] With reference to South African academic textbooks, the Court acknowledged that South African courts have followed two approaches. The first approach was established in A Sweidan and King v. Zim Israel Navigation CO Ltd 1986 (1) SA 515 (D) which had held that “a document will be privileged if litigation is pending or thought likely and if a purpose for which the document was made was submission to a legal adviser as material upon which to enable him to advise” (italics in the original).  [para. 57] This meant that the South African law at that stage was that “the purpose requirement is met even if the communication to the legal representative is but one of several purposes present” and that “if the statement is made with a view to litigation, it matters not that it is intended for another purpose.” [para. 57]

The second approach – the “dominant purpose” test – was established by the Australian case of Grant v. Downs [1976] HCA 63; (1976) 135 CLR 674 and followed in the British case of Waugh v. British Railways Board [1980] AC 520. The Court quoted the majority appeal judgment from Grant in length, noting that that Court had held that “[t]he rationale of this head of privilege, according to traditional doctrine, is that it promotes the public interest” because of how confidentiality between a client and their legal advisor enables frank discussion. [para. 60] It noted that one of the considerations the Grant court had found to be suggestive of a confined privilege was that “[t]he claim of privilege by companies for their records ‘does little, if anything, to promote full and frank disclosure or truthfulness’.” [para. 61] The Grant Court had described the dominant purpose test as that “a document which was produced or brought into existence either with the dominant purpose of its author, or of the person or authority under whose direction, whether particular or general, it was produced or brought into existence, of using it or its contents in order to obtain legal advice or to conduct or aid in the conduct of litigation, at the time of its production in reasonable prospect, should be privileged and excluded from protection.” [para. 63] The Court cited the Waugh case where that Court had said that “[w]e should start from the basis that the public interest is, on balance, best served by rigidly confining within narrow limits the cases where material relevant to litigation may be lawfully withheld. Justice is better served by candour than by suppression.” [para. 72]

The Court held that, in the present case, the “dominant purpose in procuring the Report was the investigation of the accounting irregularities within Steinhoff, in order to finalise the consolidated financial statements of the Group for the 2017 and 2019 financial years”. [para. 74] It found that there was “no foundation in the evidence” for Steinhoff’s claim that PwC was engaged to obtain legal advice. [para. 75] Accordingly, it held that – given this dominant purpose – the Report’s disclosure “is justified.” [para. 75] The Court dismissed Steinhoff’s arguments that the PwC report had been commissioned when litigation was pending or contemplated as likely as “unsustainable” and (company secretary and main deponent in the litigation) Nicholas Lewis’s characterisation of the events as “a distortion”. [para. 46]

In examining whether, even if the PwC report was privileged, Steinhoff had waived that privilege by publishing the overview, the Court stressed that the overview’s text stating that it is privileged was insufficient as the “mere assertion of privilege does not preclude a finding that privilege has been waived”. [para. 76] It held that Steinhoff’s publishing of the overview constituted an implied waiver as it held that, on examination of the “nature, extent and purpose of the disclosure”, [para. 78] the overview constituted a “summary of the content of the Report”. [para. 85] With reference to the case of Contango Trading SA v. Central Energy Fund SOC Ltd 2020 (3) SA 58 (SCA) the Court emphasized that Steinhoff had the choice to “withhold or to disclose the outcome of PwC’s forensic investigations” and that it chose to publish the overview. [para. 90]

The Court added that “fairness and consistency dictate that the media and the public are entitled to disclosure of the full Report.” [para. 90] It described it as unfair to allow Steinhoff to “use part of the Report whilst claiming privilege over the remainder of it” and that it was inconsistent “with the confidence preserved by any privilege” as Steinhoff had voluntarily disclosed the overview, which had contained the “gist of substance of PwC’s findings”. [para. 90]

Accordingly, in finding that Steinhoff had impliedly waived its privilege over the PwC report, the Court held that section 67 of the PAIA does not apply as privilege is only a justifiable ground for refusal “unless the person entitled to the privilege has waived the privilege”. [para. 91]

Despite having found that the PwC report was not privileged and that, even if it was, Steinhoff had waived its privilege by publishing the overview, the Court then examined whether the public interest override would apply in this case. It described the “plain meaning and effect” of the legislative public interest override as being that “despite the applicability of a ground of refusal (such as privilege in s 67), the record must nonetheless be disclosed” and that this “unsurprisingly, is consistent with the common law principle that privilege cannot be invoked to commit or cover-up fraud or a crime”. [para. 93] It added that the effect of section 70 is to “prevent privilege from being invoked in the first place”. [para. 93]

The Court described the test for the public interest override as one of a balance of probabilities and so “whether a record would reveal evidence of non-compliance with the law, must be more likely than not on the material before the decision-maker”. [para. 95] It concluded that in the present case, “there can be no question that the disclosure of the Report would reveal both evidence of a failure to comply with the law; and that its disclosure is in the public interest”. [para. 95]

The Court said that the overview had recognized that the conduct of the wrongdoers at Steinhoff – including their concealing of the irregular transactions – “raises serious allegations”. [para. 96] It said that this “clear indication” of fraud having been committed meant that the public interest override should apply and the PwC report be disclosed. [para. 96] It described this as a “classic case” where the public interest in disclosure outweighs harm to the body seeking to refuse disclosure and that Steinhoff’s claims of potential harm from publication “do not bear scrutiny.” [para. 98] It added that Steinhoff’s claim that law enforcement would be hampered if the PwC report was released was “illogical”. [para. 99]

The Court stressed that the “public interest, more specifically, the right of South African society at large to know the facts about the Steinhoff scandal, goes beyond the narrow interests of Steinhoff, and is best served by exposing the nation’s biggest corporate scandal through complete transparency, to avoid a recurrence”. [para. 98] It added that Steinhoff’s share price collapse had affected a “large majority of South Africans with some form of retirement savings invested in Steinhoff” as the second largest shareholder had been the Government Employees Pension Fund, and so “[i]n contrast to the alleged harm to Steinhoff, disclosure of the Report is plainly in the public interest. [para. 100]

In conclusion, the Court held that “[t]here is simply no basis to shield the Report from public scrutiny: Parliament has decreed that the public interest override must be applied in a case such as this.” [para.103]

Accordingly, the Court dismissed the appeal. In terms of the High Court order, Steinhoff was given ten days to provide the media groups with the Report.

On December 13, 2024, Steinhoff indicated that it would not appeal the decision and that it would send the full PwC report to the media groups on December 18.

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