IN THE HIGH COURT OF NAMIBIA
NOT REPORTABLE
REPUBLIC OF NAMIBIA
HIGH COURT OF NAMIBIA MAIN
DIVISION, WINDHOEK
JUDGMENT
Case no: A
80/2013
In the matter between:
SCHALK WILLEM BURGER NEL
.........................................................APPLICANT
and
HENK CARL BURGER
..........................................................FIRST
RESPONDENT
WINGS OVER AFRICA CC
...............................................SECOND
RESPONDENT
NAMIBIA BASE AVIATION (PTY) LTD
................................THIRD
RESPONDENT
Neutral citation: Nel v
Burger (A 80/2013 [2013] NAHCMD 106 (11 April 2013)
Coram: SCHIMMING-CHASE, AJ
Heard: 11 April 2013
Delivered: 11 April 2013 (ex
tempore)
Flynote: Practice –
Applications and Motions – urgent applications –
principles relating to urgent applications dealt with. Interdict –
Interim interdict – Prerequisites for relief restated –
prima facie right, danger of irreparable harm, balance of
convenience favouring applicant, no alternative remedy.
Summary: Applicant launched an
urgent application for an order interdicting the first and second
respondents from proceeding with their actions instituted against the
third respondent and from engaging in proceedings in terms of section
228 of the Companies Act, 28 of 2004 to remove the first respondent
as a director of the third respondent, pending finalisation of
arbitration proceedings scheduled to take place on 14, 15 and 16 May
2013. It was common cause that the applicant had a 40% shareholding
and the first respondent a 60% shareholding in the third respondent.
It was also clear that the arbitration proceedings would ultimately
deal with the rights and interests of the applicant and the first
respondent on the third respondent.
Held: The applicant had made out a
case for urgency on the papers. The applicant had also proved a clear
right as well as the other requisites for interim relief on the
papers. The relief sought in the application was accordingly granted.
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ORDER
1.1 The applicant’s
non-compliance with the prescribed requirements relating to forms,
service and practice directives of this Court is condoned, and that
this matter is heard as one of urgency as contemplated in Rule 6(12)
of the Rules of Court.
1.2 Pending the outcome of the
arbitration between the applicant and the first respondent relating
to the sale of member’s interest in the third respondent before
the arbitrator Mr At Slabber:
The meeting in terms of section 228
of the Companies Act 2004 called by the first respondent for 15
APRIL 2013 will not proceed;
The applicant remains a director of
the third respondent;
The applicant remains in charge of
the day to day business of the third respondent;
All proceedings in case number I
646/13 and case number I 647/13 in the honourable court be held in
abeyance or, if default judgment has already been granted by the
time this application is heard, that the operation of any judgment
or order be suspended and any execution be stayed; and
Neither the applicant nor the first
respondent shall take any steps on behalf of the third respondent
which is not in the strict ordinary course of business of the
third respondent unless by prior written agreement.
1.3 The first respondent pays the
costs of this application.
EX TEMPORE JUDGMENT
SCHIMMING-CHASE, AJ
This is an application for the
following relief:
1.1 That the non-compliance with the
rules and time periods of the Court be condoned and that the matter
be heard on an urgent basis.
1.2 That pending the outcome of the
arbitration between the applicant and the first respondent relating
to the sale of members’ interest in the third respondent before
the arbitrator, Mr At Slabber:
1.2.1 the meeting in terms of section
228 of the Companies Act, 2004 called by the first respondent for 15
April 2013 not proceed;
1.2.2 the applicant remains director
of the third respondent;
1.2.3 the applicant remains in charge
of the day-to-day business of the third respondent;
1.2.4 all proceedings in Case No I
646/13 and I
647/13 be held in abeyance or if judgment default has already been
granted by the time the application is heard that the operation of
any judgment or order be suspended and any execution be stayed;
1.2.5 that neither the applicant nor
the first respondent take any steps on behalf of the third respondent
which is not in the strict ordinary course of business of the third
respondent unless by prior written agreement; and
1.3 that the first respondent pays the
costs of this application, such costs to include the cost of one
instructing and one instructed counsel
The relief relates to the third
respondent and in particular a dispute between the applicant and
first respondent concerning a written agreement in terms of which
the applicant sold 60% members’ interest in the third
respondent to the first respondent. At the time the applicant held
100% members’ interest and the third respondent was registered
as a close corporation. Subsequent to the agreement, the third
respondent was converted to a company with the applicant holding a
40% shareholding and the first respondent holding a 60% shareholding
respectively. The first respondent also holds a 100% members’
interest in the second respondent.
The applicant instituted a dispute
against the first respondent which is set down for arbitration by
agreement between the parties on 14, 15 and 16 May 2013 relating to
the agreement concluded between the parties mentioned above, and in
particular, regarding the terms of the agreement of sale of members’
interest from the applicant to the first respondent.
In essence the applicant claims, and
the subject matter of the dispute is that the agreement is void due
to alleged misrepresentation of the first respondent as a result of
which the applicant seeks an order or finding on arbitration that
the agreement is void. The applicant also seeks an order that the
60% of the members’ interest in the third respondent
transferred by him to the first respondent, be retransferred back to
the applicant and that the first respondent sign all the necessary
documentation to that effect.
I do not propose to deal with the
merits of the dispute between the parties concerning the agreement.
This is going to be dealt with at the arbitration proceedings which
have already been set down for hearing by agreement between the
parties.
In the meantime, on 4 March 2013, the
first respondent in his personal capacity issued summons against the
third respondent (in which the first respondent holds 60%
shareholding), for payment of the amount of N$363,689.53 in respect
of monies lent and advanced to the third respondent.
The summons was served on 14 March
2013 and it is common cause that this action has been stayed by
agreement between the representatives of the applicant and the first
respondent. I point out that it would be highly unlikely if not
impossible for the third respondent to at this stage resolve to
defend the above action as the first respondent who is the plaintiff
in that action, also owns a 60% shareholding in the third
respondent. There is also considerable acrimony between the parties,
and the applicant would need the co-operation of the first
respondent in order for the third respondent to resolve to defend
the action. As such, I believe that the agreement between the
parties’ representatives to stay the aforesaid action was a
wise one.
On the same date, the second
respondent, solely owned by the first respondent also issued summons
against the third respondent for payment of the amount of
N$293,835.89 for the rental by the second respondent to the third
respondent of a Gulfstream Jack. There is a dispute between the
parties as to whether or not this was a rental agreement, but I also
do not propose to deal with this aspect at this stage in view of the
order that I make; but it is apparent that again the third
respondent cannot resolve to defend these proceedings simply because
the first respondent who wholly owns the second respondent also owns
60% of the shareholding in the third respondent which the second
respondent has sued.
On 15 March 2013 the applicant also
received a telefax of a notice in terms of section 228 of the
Companies Act, 28 of 2004, of a meeting called by the first
respondent to be held on 15 April 2013 for purposes of removing the
applicant as a director of the third respondent. After receiving the
above process as well as the notice in terms of section 228 of the
Companies Act, the applicant sent the documents to his legal
practitioners on 15 March 2013 which was a Friday morning. According
to the founding papers instructions were sent to counsel who had
already been briefed for purposes of the arbitration on 19 March
2013.
On 22 March 2013 after the public
holiday, instructed counsel consulted with the applicant via
telephone. The applicant was in Swakopmund at the time. Advice was
provided by instructed counsel to the applicant, in particular to
decide whether an urgent application should be launched in the
circumstances.
On 25 March 2013 the applicant, after
discussing the matter with his father in law, gave instructions to
counsel to proceed with the urgent application. Counsel also
required further information for purposes of drafting papers.
On 26 March 2013 the applicant’s
legal practitioners contacted the first and second respondents’
legal practitioners requesting an undertaking that pending
finalisation of the arbitration, the section 228 meeting scheduled
for
15 April 2013 not proceed, that the applicant would remain a
director of the third respondent and that neither the applicant nor
the first respondent would take any steps on behalf of the third
respondent unless by private agreement. Furthermore a request was
made that the action proceedings mentioned above instituted by the
first and second respondents remain in abeyance.
In this letter it was specifically
mentioned on behalf of the applicant that “we
look forward to receiving your confirmation in this regard as soon
as possible failing which we have to continue with the urgent
application which we are in the process of preparing”.
On the same day the first and second
respondents’ legal representative advised by email that the
action in respect of the Gulf string jet instituted by the second
respondent against the third respondent would not be stayed but that
the action instituted by the first respondent in his personal
capacity would be stayed.
It was further confirmed that
different legal practitioners were representing the first respondent
in the upcoming section 228 meeting. The applicant was advised to
contact that legal practitioner and the first respondent in this
application is represented by two separate firms as well as one
instructed counsel in respect of section 228 meeting.
The notice of motion and founding
affidavit were signed on 28 March 2013, and the application was
instituted on 28 March 2013. In the notice of motion the respondents
were given time albeit truncated periods, to oppose the application
and file answering papers. The application was set down for hearing
for 11 April 2013. The first respondent filed two sets of answering
papers as different legal practitioners represented him in the two
issues already mentioned above.
As regards the question of urgency,
both counsel appearing on behalf of the first and second respondents
argue in the main that the application was not urgent and that if it
was urgent, the urgency was self-created. They rely on the decisions
of this court in Mweb Namibia (Pty) Ltd v Telecom Ltd
and Bergmann v Commercial Bank of Namibia.
The principles relating to what must be advanced in order to obtain
condonation for non-compliance with Rule 6(12) were well established
in inter alia the aforementioned decisions of this court, and
I do not propose to restate those principles, rather to apply them
to the facts of this matter.
Counsel for the first and second
respondents rely in the main for their contentions on the period
between 15 and 26 March 2013 where it is argued that the applicant
did nothing to safeguard its rights. I find this submission somewhat
artificial. The period amounts to six court days. Even if there was
a delay or the lack of an explanation for what happened during this
particular period, it is a matter of days, and not weeks or months,
and the cases involving self-created urgency or failure to
explicitly set out the circumstances that render the matter urgent
deal with more extended periods, namely weeks or months in which
there were inexplicable and lengthy delays. In any event, in my
opinion, there was no unreasonable delay in the institution of these
proceedings.
I also find that the degree of
urgency alleged by the applicant to exist on the papers was
commensurate with the time periods provided to the respondents to
oppose the application and file answering papers. It is true that
the respondents were afforded a shorter period of time but they have
answered the applicant’s allegations in full as far as my
understanding of the papers are concerned, and no request for a
postponement was made. Had such a request been made, it would have
been granted.
I find that the convenience of the
court was also taken into consideration and that the papers were
properly paginated providing the court sufficient time to prepare
for the adjudication of this matter. I therefore find that the
applicant has complied with the first parts of Rule 6 and that he
has set forth explicitly the circumstances that rendered the matter
urgent and the reasons why substantial redress could not be afforded
at a hearing in due course.
In this regard I am mindful of the fact that in deciding urgency,
the court must assume that the applicant has a right to the relief
which it seeks.
It is also well established that
factors such as the time taken to take reasonable steps preceding an
application of this nature including steps taken toward of the
institution of an urgent application, the distance between a
litigant and his legal representative, attempts to obtain
instructions and copies of relevant documentation, taking advice and
obtaining and preparing affidavits should be taken into account if
these are fully and satisfactorily explained. Taking the facts
raised by the applicant in his founding affidavit in support of
urgency which are largely undisputed, I cannot fault the applicant
for taking time to marshall his forces.
Having dealt with the question of
urgency, I now proceed to deal with the merits.
In this regard I reiterate that it is
common cause that the applicant and first respondent own 40% and 60%
shareholding respectively in the third respondent. It is also common
cause that a dispute regarding ownership in the third respondent or
the future ownership in the third respondent is set down for an
arbitration hearing on 14, 15 and 16 May 2013.
It is clear to me that whatever
issues exist between the parties (who have an extremely acrimonious
relationship) as regards the ownership and future of the third
respondent will be finally determined at the aforesaid arbitration
hearing. It is on this basis that I set out at the outset that I did
not propose to deal with the dispute of the parties that has been
referred to arbitration.
The two actions instituted by the
first and second respondents respectively against the third
respondent (one of which has been stayed), as well as the section
228 proceedings, though valid and acceptable in law are in my
opinion premature, because of the upcoming arbitration. In fact, I
hold the view that these proceedings undertaken by the first and
second respondents, in particular the first respondent, are an
attempt to harass the applicant and to create a state of affairs
that hampers and encroaches not only on the arbitration proceedings,
but on the functions of the arbitrator who is to hear and determine
the matter. There is in essence a request (as I understand the
argument on behalf of the first respondent) that the court at this
stage interfere in the arbitrator’s functions by deciding
whether or not the applicant has made out a case for the relief
sought to be determined at those proceedings. This is declined.
There is no reason why all these
proceedings cannot not wait until the finalisation of the
arbitration proceedings.
I therefore find that the applicant
has made out a clear right for the purposes of the interdictory
relief sought as the arbitration proceedings will directly affect
the applicant’s rights and for that matter the first
respondent’s rights. The requirements to be met for an interim
interdict have been cogently set out in inter alia Sheehama
v Inspector General, Namibian Police.
This court has also accepted that the stronger the right established
by the applicant “… the
less important the other matters become.”
I also find that if these proceedings
are not stayed pending finalisation of the arbitration proceedings,
that the applicant will suffer irreparable harm. There is still a
possibility that he may be removed as a director by a majority
shareholder in the third respondent when there are pending
proceedings which will determine whether or not the applicant will
become the sole owner or retain a minority shareholding in the third
respondent. The third respondent can in the meantime not defend the
second respondent’s action until a resolution is taken.
I also find that the balance of
convenience favours the applicant for the above reasons, and that
the applicant has shown that he has no other satisfactory remedy.
There is in my view no prejudice to the first respondent if the
first and second respondents wait until finalisation of the
arbitration proceedings before they take the actions they have taken
so far which they can clearly continue should they succeed and the
applicant fail at those proceedings.
In light of the above I find that the
applicant has made out a case for the relief sought and I exercise
my discretion in favour of the applicant. I accordingly grant the
relief sought in the notice of motion set out above. As the
applicant was successful, the first respondent is ordered to pay the
costs of the application, such costs to include the cost of one
instructing and one instructed counsel.
______________________
E SCHIMMING-CHASE
Acting Judge
APPEARANCES
APPLICANT: P Barnard
Instructed by Francois Erasmus &
Partners
FIRST RESPONDENT: A Botes
Instructed by Koep & Partners
W Boesak
Instructed by Nambahu Associates
Nel v Burger and Others (A 80/2013) [2013] NAHCMD 106 (11 April 2013);