REPORTABLE
REPUBLIC OF NAMIBIA
HIGH
COURT OF NAMIBIA MAIN DIVISION, WINDHOEK
JUDGMENT
Case no: I 2674/2011
In the matter between:
MB DE KLERK &
ASSOCIATES
...................................................................PLAINTIFF
and
HARRY MARZELL
EGGERSCHWEILER ......................................FIRST
DEFENDANT
MWANGI CHEREBAVRAHAM
WA KAMAU .............................SECOND
DEFENDANT
Neutral citation: MB
De Klerk & Associates v Eggerschweiler (I 2674/2005) [2013]
NAHCMD 285 (16 October 2013)
Coram: DAMASEB, JP
Heard: 25 – 26
June 2013, 05 July 2013.
Delivered: 16 October
2013
Fly note: Duress –
What constitutes – Defendant raising the withdrawal of legal
practitioners as threat, alternatively duress to induce him to sign
an Acknowledgment of Debt – Such threat not constituting duress
in law – Fees – Fees charged for litigious work done –
Whether such fees liquidated or taxation necessary – Disputed
fees may be paid only after taxation.
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ORDER
I make the following
order:
1. The defendants are
liable to the plaintiff under the a-d executed by them in
favour of the plaintiff on 24 May 2011 as security for the Agency’s
liability for legal services rendered by plaintiff to the Agency,
jointly and severally, the one paying, the other to be absolved, in
the amount to be determined by the taxing master as ordered below;
2. The plaintiff must
within 30 court days of this order prepare a separate bill of costs
for attorney and own client costs in respect of legal services
rendered by the plaintiff to the Agency, and set same down for
taxation before the taxing master, on five court days’ notice
to the defendants who shall be entitled to be present and to object
to any item included in such bill, either personally or by counsel;
3. The amount taxed off
by the taxing master after having entertained representations from
the plaintiff and the defendants shall, upon such taxing off, become
due and payable and shall bear interest at the rate of 20% calculated
from 1 April 2011 to date of payment;
4. The plaintiff is
awarded costs of suit on party and party scale, to include the costs
of one instructing and one instructed counsel.
JUDGMENT
Damaseb, JP:
[1] The plaintiff, a firm
of legal practitioners, practices law under the name and style of MB
De Klerk & Associates. It sues the defendants on an
acknowledgement of debt (‘a-d’) which the
defendants executed in plaintiff’s favour, accepting personal
liability in the amount of N$ 132 587.47. The portions of the a-d
which are material for present purposes read as follows:
‘1.
[Above-cited defendants] Do hereby acknowledge being lawfully and
truly indebted to MB
DE KLERK & ASSOCIATES, ROOM 209, 2ND
FLOOR,
SOUTH BLOCK, MAERUA PARK, CENTAURUS ROAD, KLEIN WINDHOEK, the
one to pay the other to be absolved (hereinafter referred to as “The
Creditor”) in the amount of N$ 132 587.47 (one hundred Thirty
Two thousand five hundred and eighty seven Namibian Dollars and
fourty seven cents)(capital) together with all legal costs (costs),
interest and collection commission.
2.
We undertake to repay the aforementioned amount on/or before 25 June
2011.
2.1
the full balance, including costs, disbursements and interest has
been paid in full.
3.
We undertake to pay interest on the amount at a rate of 20% per annum
on the outstanding balance as from 1 April 2011 until the full amount
in respect of capital, interest, collection commission, legal fees
and disbursements has been paid in full.
9.
We hereby consent, that should we fail to make any payment on due
date, the full amount outstanding will immediately become due, owing
and payable and the Creditor shall in such extent be entitled to:
9.1
Make this Acknowledgment of Debt an order of Court;
9.2
Apply for Default Judgment for the amount outstanding at that time.’
[2]
The plaintiff’s action commenced by way of provisional sentence
summons which was duly opposed by the defendants by affidavit.
The
court (Kauta, AJ)
then adjudicated the opposed provisional sentence summons
and
dismissed it; whereafter pleadings were exchanged
and
the matter proceeded to trial before me.
[3] It is common cause
that at the time the defendants executed the a-d, they were
the directors and sole shareholders of a company, African Civil
Agency (Pty) Ltd (‘Agency’), which was the client of the
plaintiff. It is common cause further that the defendants had not
personally received legal services from the plaintiff as a result of
which there could exist any present or future personal liability for
legal costs towards the plaintiff. The fact of the matter is that the
a-d had the effect of making the defendants assume personal
liability for the obligations of the Agency. The defendants do not
dispute that they signed the a-d acknowledging liability to
the plaintiff in the amount claimed.
[4] The pre-trial order
issued by the court on 02 April 2013 based on the parties’
joint proposals identified the issues that call for determination by
the court as follows: (i) whether the first and second defendants
signed the a-d under duress and/or under pressure; (ii)
whether the document purporting to be an a-d is properly
so-called, or a suretyship agreement; (iii) whether the a-d
constitutes security for the fulfillment of a future debt, arising
from a cession agreement, and (iv) whether the cession agreement is
applicable or relevant to the plaintiff’s cause of action. The
defendants pertinently pleaded that the a-d was to secure a
future debt. That picture changed when the defendants came to testify
as I will show presently.
Plaintiff’s case
[5] Mr. Horn testified on
behalf of the plaintiff to the effect that the defendants, acting for
the Agency, had a long standing lawyer/client association with the
plaintiff firm and that the plaintiff rendered legal services to the
Agency since 2009 in various litigious matters. He further testified
that legal services were rendered to the Agency by the plaintiff of
which an unpaid account has not been settled. I wish to add in
parenthesis that Mr. Horn did not discover any account evidencing the
debt, nor did he demonstrate how the account of N$ 132 587.47 was
made up. According to Mr. Horn, he prepared the a-d and
arranged a meeting with the defendants on 24 May 2011 to have it
signed by them in view of the Agency’s inability to meet its
financial obligations. He regarded the signing of the a-d to
be based on mutual consensus and said that no objection thereto was
raised by either defendant on 24 May 2011. Mr. Horn also testified
that he had in the original draft a-d provided that the
outstanding debt was payable on 15 June 2011 but that on the request
of the defendants that date was changed to 25 June 2013. It was
implied that in so changing the payment date, the defendants applied
their minds and were not influenced by any undue pressure. Mr. Horn
therefor denied exerting any undue influence or pressure on the
defendants to sign the a-d.
[6] Mr. Horn further
testified that the cession agreement executed by the Agency on the
same date and immediately after the a-d was to cover future
legal costs to be incurred in connection with the case that was set
down for the 11th -15th July 2011. He was
emphatic that the cession bore no relationship to the a-d. He
also testified that he had explained to the defendants that accepting
the cession as security for legal services in respect of the pending
case was subject to instructed counsel, Mr. Strydom, agreeing to its
terms. He then discussed the matter with Mr. Strydom who did not
agree.
[7] In the letter written
of 5 July 2013 the plaintiff’s Mr. Horn drew the defendant’s
attention to the fact that the outstanding fee for which they
accepted liability remained unpaid and that they were not placed in
funds to do the scheduled trial.
The plaintiff thereafter
withdrew as practitioners of record for the Agency on 7 July 2011.
Defendants’ case
The pleaded defences
[8] Upon reading the
opposing affidavits deposed to by the defendants on 23 September 2011
in opposition to the plaintiff’s provisional sentence summons,
the distinct impression one forms is that the central pillar of their
case is four-fold:
there
was no outstanding debt for any legal services rendered to the
Agency and the only liability there was, was to put the plaintiff in
funds for the case that was set down for 11-15 July 2011;
the
a-d
was signed by the two
defendants under pressure and duress by the plaintiff’s Mr.
Horn, who told them that if they did not sign it, he would withdraw
from the case;
in order to secure the
legal services of the plaintiff which was yet to be rendered, the
Agency had passed a cession over its claim against the Government in
favour of the plaintiff up to an amount of N$ 500 000;
the
a-d
was
subject to the understanding agreement that the plaintiff would
continue to represent the Agency and that upon the plaintiff
withdrawing as legal practitioners of record, it was no longer
enforceable.
[9] The clear implication
of this is that the a-d was superseded by the cession. There
was no suggestion of it being ancillary to the cession.
[10] In their plea to the
provisional sentence summons, filed of record on 24 September 2012,
the defendants set out their defence to the plaintiff’s claim
as follows:
‘.
. . . The defendants plead that the plaintiff’s Annexure “A”
constitutes a suretyship agreement signed under duress and/or undue
influence exerted by an agent of plaintiff, and meant
as security for the fulfillment of a future debt
arising from a cession agreement entered into between plaintiff and a
third party namely African Civil Aviation Agency (Pty) Ltd. The
acknowledgment of debt on which plaintiff relies is a surety and
ancillary to the cession agreement.
.
. . . The defendants . . . plead that the obligation to pay was on
the third party (cessionary) mentioned supra, and that such
debt had not become due, and further that defendants were
unduly influenced by plaintiff’s agent to sign Annexure “A”.
The cause of indebtedness does not appear from plaintiff’s
Annexure “A” by virtue of the fact that it is
ancillary to the said cession agreement.
In
amplification of the aforesaid denials the defendants plead that the
principal debt derives from the cession agreement which is not the
agreement on which plaintiff places reliance for its claim.
Defendants accordingly deny that the principal debt became due
in the event of default by defendants as the principal obligation to
pay is on African Civil Aviation (Pty) Ltd.’ (Underlining for
emphasis)
[11] The plea now states
that the a-d was to be suretyship for the debt arising under
the cession. There is no mention that the cession superseded the a-d.
That aside, there are two recurrent themes in the opposing
affidavit and the plea: duress and the Agency’s liability for a
future debt. In the affidavit and the plea there is no acceptance
whatsoever that there was any existing liability for legal services
rendered by the plaintiff to the Agency - let alone the defendants.
It is clear from the plea that the defendants deny any existing
indebtedness either by them in their personal capacities, or by the
Agency. This observation is critical in view of how the defendants’
case has metamorphosed subsequently.
[12] In the pleaded case,
the defendants denied that there was any existing liability by the
Agency for outstanding accounts and for which they could incur, or
have accepted personal liability. The defendants’ written
pleadings create the impression that the only obligation the Agency
had towards the plaintiff on 24 May 2011 was to avail funds to the
plaintiff for the services of instructing and instructed counsel. As
I understand the pleaded defences, the a-d was executed in
order to meet that future liability for legal services but that it
was, in any event, superseded by the cession passed on the same day
and accepted by the plaintiff’s Mr. Horn.
[13] The further line of
defence, as I understand it, is that because the plaintiff withdrew
as practitioner of record before the case was heard in July 2011,
there was no longer any liability arising under either the a-d or
the cession. Nowhere in the defendants’ pleaded case is
any concession made that the plaintiff was entitled to any fees from
the Agency for services already rendered which were due and payable.
In fact, the defendants’ pleadings expressly deny that to be
the case.
The evidence
[14] The defendants’
evidence was that they initiated the 24 May 2011 meeting for the
purpose of informing Mr. Horn of the plaintiff that the Agency had no
funds to pay in advance for legal representation by the plaintiff and
instructed counsel.
[15] First defendant
testified that a cession agreement was then prepared to cede N$ 500
000 to the plaintiff in order to secure counsel for the July trial.
His testimony is that Mr. Horn only signed on condition that the
defendants signed the a-d, failing which the plaintiff would
withdraw from representing the Agency in the pending case. Both
defendants stated under oath that they would not have signed the a-d
had it not been for the fact that they were under pressure to retain
legal representation for the Agency’s case to be heard in July.
[16] The second defendant
supplemented the evidence of the first defendant by stating that the
defendants could not secure the services of another legal
representative because (i) the Agency did not have money (ii) the
case was voluminous and that the plaintiff was more familiar with the
facts and (iii) Mr. Horn refused to give the file to the second
defendant.
[17] In their oral
evidence at the trial the defendants under oath (especially the first
defendant) adopted the posture that they were aware that the Agency
owed some money to the plaintiff but that they did not know how much
because the plaintiff’s Mr. Horn never provided them with
statements of account and that, in any event, some of the
indebtedness must have been off-set by the favorable costs orders
they received at various stages of the litigious matters being
handled by the plaintiff on the Agency’s behalf.
[18] Based on the answers
given by the defendants under cross-examination I was left with no
doubt that they could not seriously dispute that the Agency had some
unpaid fees with the plaintiff. Their answers and demeanor in the
witness box portrayed the picture that they did not refuse then, or
now, to pay for the services rendered by the plaintiff to the Agency
and that they would do so once the Agency was successful in its
claims against the government and the plaintiff provided proof of the
fees outstanding. What is unmistakable about their answers and
demeanor is that the a-d was never intended as security on
their part for any existing debt of the Agency. They took the view
that it was obtained under duress and was, in the event, superseded
by the cession passed in favour of the plaintiff for services which
were still to be provided by the plaintiff and instructed counsel.
[19]
The acceptance under cross-examination of the possibility of an
unpaid account of the Agency is in conflict with the pleaded case.
Besides, the a-d
was never mooted as being
ancillary to the cession in the defendants’ opposition to the
provisional sentence summons and the later suggestion that it was in
fact superseded by the cession leaves me to wonder just what the
defendants’ stance is about the status of the a-d.
[20]
The myriad defences put up by the defendants seem to me to be
anomalous and inconsistent – clutching at straws really. It
seems to be a case of ‘’throw anything and everything in
the textbook at them, just in case something sticks’’. I
will explain: Reliance on duress is a tacit admission that the
underlying transaction
is valid and the document
evidencing it
a true reflection of that
transaction, but for the metus.
It seems to me to be an entirely different thing to say that the
document evidencing the transaction was intended as something other
than what it says.
The waters become even more muddled when it is suggested that the
document evidencing the transaction was replaced by another
transaction
between the plaintiff and
another legal entity.
But these are all the
defences I am called upon to fashion a remedy from in favour of the
defendants.
[21]
It is a deeply troubling thought for the court to be left to guess at
the end of the case just what a party’s case is. As Lord
Tempelsman cautioned in Ashmore
v
Corporation of Lloyd’s
:
‘The
parties and particularly their legal advisers in any litigation are
under a duty to co-operate with the court by chronological,
brief and consistent
pleadings which define the issues
and
leave the judge to draw his conclusions about the merits when he
hears the case. It is the duty of counsel to assist the judge by
simplification and concentration and not to advance a multitude of
ingenious arguments in the hope that out of ten bad points the judge
will be capable of fashioning a winner. In nearly all cases the
correct procedure works perfectly well. But there has been a tendency
in some cases for legal advisers, pressed by their clients, to
make every point conceivable and inconceivable without judgment or
discrimination’.
[My underlining]
[22] Not only do the
defendants fall foul of the wise counsel of Lord Tempelsman in that
the plethora of defences leave the court to guess just exactly what
their case is, but the evidence led at the trial was also not
consistent with the pleas and changed depending on the circumstances.
The defendants’ defence is thus gravely undermined by the
inherently inconsistent versions put up at various stages and in the
plea.
[23]
Under cross examination, the first defendant conceded that the
defendants were aware as at 24 May 2011 that the Agency had an
outstanding account with the plaintiff for services rendered. He
stated unequivocally that, as directors, he and the second defendant
never disputed the Agency’s indebtedness to the plaintiff and
that they intend to pay the plaintiff’s outstanding account
when the Agency succeeds in recovering the moneys due from the
Government. This concession flies in the face of previous denials. He
was also unable to explain significant aspects of the averments made
in the plea. For example, he could not explain the basis for the
allegation that the a-d
was a suretyship.
[24] The second defendant
testified that the cession agreement was prepared to serve the
purpose of securing the fee deposit required by plaintiff to continue
to represent the Agency on 11 July 2011, including advocate’s
fees. According to the second defendant, the plaintiff’s Mr.
Horn knew that the Agency’s source of funds were ‘Nigeria’
and ‘Libya’. He maintained that the cession passed did
not relate to any debt due and payable arising from legal services
rendered. He further testified that the a-d was executed by
them as security in the event that the Agency did not make good under
the cession and that since the plaintiff withdrew as practitioner of
record before the pending case was heard, the cession lapsed as did
the a-d.
[25] The second defendant was emphatic
that the only reason for both the cession and the a-d was to
serve as security for the payment of the legal services that were
still to be rendered in connection with the July 2011 trial as
plaintiff’s Mr. Horn insisted upon funds being kept in trust.
This defendant relied on plaintiff’s letter of 5 July as
proving that therein Mr Horn indicated that the plaintiff needs to be
placed in trust funds in order to proceed with the trial.
[26] As regards the date of 25 June
being inserted in the a-d at their request, the second
defendant’s evidence was that it was the date on which they
were to have placed the plaintiff in funds for the forthcoming trial.
The second defendant was less forthcoming than his co-defendant in
admitting that the Agency was indebted to the plaintiff for legal
services rendered but still not paid for. According to him, the
Agency paid for all legal fees of the plaintiff as and when it
received funding from its funders overseas and that whatever account
there still might have been was off-set by the favourable cost orders
against other parties.
[27] In apparent contradiction, the
second defendant stated in cross-examination that if the plaintiff
proves that the Agency remains liable for unpaid legal services, the
defendants would pay any amount still due.
[28] Significantly, the
cession records that it was not a novation of any debt then due and
outstanding. It records in part as follows:
‘This
Cession is not
a novation of any existing indebtedness
and shall not prohibit the creditor to take action against the cedent
for and in respect of any monies owing by the cedent to the creditor.
. .’ (My
underlining for emphasis)
[29] This puts to paid
any suggestion by the defendants that the cession was intended as
security for the legal services still to be rendered and had nothing
to do with any outstanding and unpaid debt for legal services
rendered.
[30] Worse still for the
defendants, the resolution which authorised the cession records as
follows:
‘It
was resolved: that the company signs a cession over its claim against
the Government of Namibia in favour of MB De Klerk for the amount of
N$ 50 000.00 (Five Hundred Thousand Namibia Dollar) in respect of an
outstanding
account at the latter for legal costs.’
(My underlining for emphasis).
[31] The second
defendant’s proposition that the date of 25 June 2011 was
inserted, not as the deadline by which an outstanding account had to
be paid, but as the deadline by which the funds required for the
pending case was to be paid, is at odds with his own evidence that
the cession served as security for the fees required for the pending
case. How could a deposit by payable on 25 June if the cession, on
his version, served that purpose?
Credibility findings
[32]
Given the rather confusing and conflicting versions put forward by
the defendants, I am left with no choice but to accept the
plaintiff’s version on the disputed factual issues.
I
accordingly find that the defendants had executed the a-d
in
favour of the plaintiff as security for the Agency’s
indebtedness to plaintiff for legal services rendered.
[33]
I also find that the cession passed by the Agency in favour of the
plaintiff was intended for the case which was to be heard on 11-15
July 2011, but was not accepted after Mr. Strydom stated that it was
not acceptable to him. I reject as false the defendants’
version that the a-d
was
a suretyship for a future debt which had not arisen on account of the
plaintiff withdrawing as legal practitioners of record.
[34]
The notion of the a-d
being
a suretyship is an afterthought which surfaced for the first time in
the plea but further compounded by the fact that on the one hand it
was suggested to be ancillary to the cession while, when the
circumstances suited it, it was suggested to have been superseded by
the cession.
The probabilities
[35]
It is common ground that
the Agency had a case pending in the High court on 11-15 July 2011.
The defendants under oath admitted some form of
liability by the Agency in respect of services already rendered: a
version which, as I have shown, is at odds with the defendants’
pleaded case. The plaintiff’s letter of 5 July threatening
withdrawal in the event of non-payment draws a distinction between
fees due and fees required for services which were still to be
rendered. The probabilities overwhelmingly favour the plaintiff’s
version that the a-d was
executed by the defendants in order to accept personal liability for
the Agency’s indebtedness to the plaintiff for legal services
rendered which were due and payable. The amount recorded in the a-d
is not some Ballpack figure but is precise down to the
last cent. It is most improbable that if the a-d
was meant to be security for legal services which were
to be rendered in future it would be so precise. It was more likely
to have been expressed and recorded as a global round-sum.
[36]
It was apparent from what the first defendant stated under oath that
he and the co-defendant considered that they personally stood to lose
substantially if the case did not proceed. They were fully aware that
the Agency was on hard times financially and could not meet its
indebtedness to the plaintiff. I find no significance in the fact
that the plaintiff did not explain the Latin terminology in the a-d.
They were aware ex facie the document that the plaintiff laid claim
to an amount of N$ 132 587.47; as we now know for legal services
rendered to the Agency at the instigation of none other than the two
defendants who were , at all material times ,
the alter ego and directing
minds of the Agency.
[37]
I
am satisfied that the probabilities do not favour the version that an
instructing legal practitioner would be satisfied with a cession of a
claim against a third party – a claim still to be litigated and
being defended by the opposing side – as security, not only for
the plaintiff’s fees for professional services, but also for
the fees of instructed counsel. That leads me to conclude that there
was no relationship whatsoever between the a-d
and
the cession - a cession which Mr. Horn testified was subject to
agreement of instructed counsel who did not agree to those terms and
therefore was no longer relied on by the plaintiff and thus its
withdrawal as legal practitioner of record.
[38]
I also reject as improbable the second defendant’s version that
to his knowledge the Agency was not indebted to the plaintiff for any
outstanding fees. In the first place, his own subsequent concession
to the contrary undermines that view but, in addition, it ignores
real live reality to argue that a favourable award of costs is
sufficient to meet a client’s attorney and own client costs
liability towards its legal practitioners: the truth of the matter is
that a client’s liability for the fees owed to its own legal
practitioners invariably far exceeds the costs recoverable from the
opponent.
[39]
The result this leads me to is that the probabilities favour the
version that the second defendant too knew on 24 May 2011 that the
Agency was indebted to the plaintiff for unpaid legal fees and that
it was that liability that the defendants were accepting by executing
the a-d.
[40]
I am satisfied that the plaintiff on preponderance of probabilities
established that the two defendants on 24 May 2011 executed the a-d
to accept joint and several personal
liability for the Agency’s unpaid account for professional
legal services rendered by the plaintiff to the Agency. That is,
however, only as far as I am prepared to find as regards the
plaintiff’s right of recourse against the defendants.
[41]
The undisputed evidence of the defendants is that the plaintiff’s
Mr. Horn had not rendered them an account showing how much the Agency
owed the plaintiff and for what services. Mr. Horn was and remains
under an ethical obligation to properly account to his client and
that ethical duty is not displaced by an a-d
whose limited purpose, on the facts before me, was to make the
defendants liable for the debts of the Agency when, otherwise, they
would not be, given that the Agency has a separate legal identity
from the defendants. I will return to that issue once I have dealt
with the defence of duress.
[42] The remaining
defence is whether the plea of duress is supported by the facts of
the case.
[43] The defendants’
defence of undue duress is premised on the basis that the plaintiff’s
Mr. Horn’s threat of withdrawal:
came about two months
before the trial;
against the backdrop of
their knowledge that this was a complex and involved case consisting
of a big volume of paper;
the Agency was
impecunious and did not have money to pay another lawyer;
as their lawyer he was
in the vantage position of being capable of exerting pressure by
refusing to give them the contents of the file.
[44]
It is implied that Mr. Horn knew that given the above, the defendants
would have no choice but to sign the a-d,
thus acting to their detriment.
[45] When the defendants
failed to pay the debt on the due date, Mr. Horn directed a letter to
them on 5 July 2011 in the following terms:
‘Dear
Sirs
RE:
AFRICAN CIVIL AVIATION AGENCY (PTY) LTD / MINISTRY OF WORKS &
TRANSPORT
We
record that you
have undertaken to pay our account on/or before 25 June 2011,
which you have failed to do.
We
have further
no funds on trust to proceed with the trails as scheduled,
and set down for.
Notwithstanding
numerous promises that Libya and Nigeria will secure and pay the
necessary funds, nothing has come of it.
In
the premises we record and after having consulted with Advocate
Strydom we are not in a position to continue. In order to facilitate
progress we have requested from Mr. Marcus as to whether they are
amenable to a postponement, each party to pay its own costs to which
they have agreed.
Should
you not be agreeable to this proposal we shall have no option but to
withdraw as your legal practitioner.
We
await payment as per the acknowledgment of debts signed by both
yourselves within five (5) days.
We
await your written further instructions.’
[46] A number of points
bear special mention about the letter of 5 July. Firstly, it was
written just six days before the pending case was to be heard.
Secondly, it makes clear that the plaintiff would withdraw unless the
Agency agreed to the matter being postponed. Thirdly, it demonstrates
that the plaintiff had negotiated favorable costs terms in the event
of a postponement; and fourthly, the plaintiff prominently raised the
non-payment of an unpaid account as a separate issue from that of the
funds required by the plaintiff to act in the matter scheduled for
11th July 2011.
[47] In the reply of the
same date on behalf of the Agency, the second defendant wrote as
follows:
‘RE:
AFRICAN CIVIL AVIATION AGENCY (PTY) LTD / MINISTRY OF WORKS &
TRANSPORT
We
are in receipt of your letter ref: SH/EER/Hr 09.6286 dated 05th
July 2011 on the above mentioned subject.
We
regret the situation with Nigeria and Lybia which we have explained
to you in detail and because of which you accepted and signed a
cession for N$ 500 000 in lieu of payment.
Please
be advised that, having consulted with Captain Harry Eggerschwiler,
we are not in agreement with your postponement proposal and
instruct that you proceed with the case as scheduled.
Should
you still not be in a position to be our legal practitioners please
urgently advice by 12.00 noon 06th July 2011.’ (My
underlining for emphasis)
[48]
The first comment to be made about the reply is that the second
defendant did not appear to treat a threat of a withdrawal, so close
to the trial date,
as bad as the one made on 24 May 2011.
How else could he insist on the matter proceeding against the
backdrop of an unconditional threat to withdraw unless a postponement
was agreed to?
[49] The demand to be
immediately informed if the plaintiff still elected not to act for
the Agency, implies that the second defendant entertained the
possibility to engage the services of another lawyer, or, as he said
under oath upon questioning by the court, to proceed without legal
representation. This does not square with the circumstances which (on
the defendants’ version) operated as undue pressure on 24 May
2011, to wit –
they would not have
access to the file contents as the plaintiff refused to release same
while its fees remain unpaid;
the Agency had no funds
to engage another lawyer;
the case was quite
complex.
[50] The defendants,
through their letter of 5 July, were placing the Agency in a position
where it had to proceed to trial without legal representation, or to
attract an adverse costs order in the event of a postponement.
The test for duress as
a ground for avoiding a contract
[51]
If a proper case for duress is made out the agreement which resulted
therefrom is voidable on the basis that there is no true consent.
The
improper influence must have been the direct cause of entering into
the transaction. The person alleging such duress bears the onus of
proof. The pressure must be directed to the party, or to his/her
family, must relate to an imminent injury to be suffered by the party
himself in person or in property. Additionally, it must be proved
that the pressure was exercised unlawfully or contra
bonos mores.
For
example, to intern someone because he is unwilling to join the army
has been held to be contra
bonos mores and
unreasonable.
[52]
Various decisions have debated the issue of the kind of pressure
necessary to justify cancellation of an agreement executed under
duress. It was held in Smith
v Smith
that:
‘The
fear ought to be justified in the sense of being grievous enough. It
should be such fear as properly descends even upon a steadfast
person. For idle alarm there is no excuse; and it is not enough for
one to have been alarmed through the influence of any sort of
freight. Nevertheless in assessing what fear must be said to be
serious enough regard must be taken of the age, sex, and standing of
person. Hence the question, namely what fear is sufficient, is one
for the investigation and discretion of the judge.’
[53]
A leading case on the nature of the threat is Union
Government (Minister of Finance) v Gowar
where
Wessels, AJA stated at 452 that:
‘.
. . an act could be set aside where it was done under circumstances
which showed that the act was not voluntary, because it was done
under pressure. What the exact amount of pressure is which will
enable a judge to set aside an act, depends very much upon the
surrounding circumstances. It is true that the judge may use his
discretion, but it must be a judicial discretion, and an act must not
lightly be rescinded as having been induced by metus.
The
pressure necessary to set aside a payment must be of such a nature
that it is clear to the court that, but for this pressure, the
payment would not have been made.’
[54]
Duress
is not satisfied if one exerts pressure in circumstances in which it
is open to the affected party to adopt an alternative course of
action for dealing with his predicament.
And
certainly there can be no duress where the party exerting pressure
acts lawfully and within its rights. Thus, in Namibian
Broadcasting Corporation v Kruger and Others
the
Supreme Court had to determine whether the defaulting party signed
the Deed of Settlement under duress from the creditors to ‘fully
and finally settle all disputes between the parties and neither party
shall have any claim against the other’.
[55]
The court pointed out (at 208H-I) that duress embraces the use of
compulsion or other pressure in order to induce the victim thereof to
do an act or make an omission which the victim would not normally
want to do or omit to do. In determining whether the circumstances
alleged in law amounted to duress, the court observed that the
defaulter was a self-confessed defaulter in relation to the payment
of water and electricity bills as well as payment of the insurance
premiums and held that the threats to disconnect the utilities from
the second respondent's residence and to cancel his policies did not
in law amount to duress. The court reasoned that all the obligations
which the party was being compelled to honour related to services
which had either been rendered to him already, or for which he was
obliged to pay in order to continue enjoying them.The
court added that a threat amounting to duress must be such as to
overcome a mind of ordinary firmness from which the victim cannot
protect him or herself.
[56]
It is trite that the relationship of client and legal practitioner
does not constitute a special relationship from which undue pressure
can be presumed.
Any
influence that arises from a special relationship of any sort between
two people does therefore not create a presumption of undue influence
and all that will be sufficient are the necessary allegations to
sustain a defence of undue influence.
The defendants’ assertion that the plaintiff’s Mr. Horn
occupied a special relationship from which undue pressure could be
presumed is not borne out by authority.
[57]
The defendants were afforded ample opportunity to explain to the
court the nature of the undue pressure or influence exerted by Mr.
Horn on them which caused them to sign the a-d.
The
first defendant became rather argumentative and agitated and offered
a most incoherent and long-winded explanation of what the pressure
amounted to. What sense I could make of it was that the threat,
pressure or duress (call it what you will) consisted in Mr. Horn
threatening to withdraw from what was a complex and ‘big’
case close to the trial. The defendants could however not offer a
plausible explanation why they simply could not part ways with Mr.
Horn and instruct another lawyer as there were about two months left
before the case was to be heard. They had a viable and reasonable
alternative course of action open to them. This must be seen against
the backdrop that a withdrawal threat more closer to trial did not
seem at all to bother them.
According
to the first defendant, he opted to sign the a-d
because
his co-director (second defendant) persuaded him to, only to again
suggest that it was because of the pressure exerted on him by Mr.
Horn.
[58]
Neither
defendant furnished a satisfactory explanation why the plaintiff’s
Mr. Horn was not entitled to withdraw if plaintiff’s fees were
not paid or if they were not placed in funds for the forthcoming
trial. It is perfectly within the rights of a legal practitioner to
cease to act for a party who does not pay him or her and it is trite
that a lawyer has a lien
over
the file in his or her possession of a client who owes him unpaid
fees. The threat of withdrawal and retention of the file was
therefore not unlawful and could not in law amount to duress.
[59] Given that the
withdrawal related to the Agency which was a separate legal entity
from them personally, the defendants were asked to explain what
prejudice they would have personally suffered if Mr. Horn executed
the threat to withdraw. Their answer to this question was telling and
clearly demonstrated to me why it was not contra bonos mores for them
to accept personal liability for the Agency’s indebtedness. The
defendants’ answer was that they stood to lose a great deal if
the Agency’s case collapsed.
[60]
I do not find anything inherently unconscionable about two sole
directors, who are also the sole shareholders and thus the alter ego
and directing minds of a corporation, accepting personal liability
for the debts of the company arising from legal services rendered to
the company at their instigation. It is the difficulty,
or
undesirability, to
clearly distinguish the owners and directors of very small corporate
entities from such corporations that has led to the principle, now
trite, that such individuals
are
not barred from personally acting in legal proceedings on behalf of a
corporation.
These
are no ordinary individuals: They are business men and professionals.
The very first affidavit they prepared without legal advice
demonstrates their intelligence
and
acumen.
[61] I am therefore
un-persuaded that the same circumstances which, close to the trial
date did not operate to influence the two defendants, operated to
unduly pressure them to execute the a-d on 24 May 2011. The
defence of duress therefore stands to be rejected.
Is the debt under the
a-d due and payable?
[62] Both defendants
during the trial conceded some indebtedness by the Agency towards the
plaintiff for legal services but consistently stated that they did
not know the true extent thereof and how it was made up as they had
three matters being attended to by the plaintiff simultaneously. They
both also testified, a suggestion never contradicted through cross
examination, that they on behalf of the Agency made payments to the
plaintiff as and when the Agency had funds in order to service the
various accounts. I asked Mr. Horn if there was any particular reason
why the invoices evidencing the amount reflected in the a-d
were not discovered and tendered in evidence to support the
plaintiff’s claim that as at 24 May 2011 when the a-d was
executed, the Agency was in fact indebted to plaintiff in that
amount. He said there was none. Given Mr. Horn’s claim that
accounts were rendered at different stages to the Agency, the failure
to discover the unpaid accounts and how they were made up, is all the
more curious.
[63] The defendants also
consistently maintained that they believed that some of the
outstanding accounts were defrayed from favorable cost orders granted
by the court to the Agency at certain stages of the litigation which
was being conducted by the plaintiff at the instance of the Agency.
This allegation too was not disputed by the plaintiff’s Mr.
Horn.
[64]
It is settled that a client is entitled to have an account
of
a legal practitioner taxed
before payment.
Malan
JA in Blake
Maphanga Inc. v Outsurance Insurance Co Ltd
at
239 held that the purpose of such taxation is to determine the extent
of the indebtedness as an untaxed bill of costs does not constitute a
liquid amount in money, especially where the bill is being disputed.
Although
it has also been held that an attorney may sue on an untaxed bill if
the client is satisfied with the quantum,
it
is an established practice that the courts assume discretion to order
a bill to be taxed.
In
such circumstances, the taxing master must determine whether the
costs have been incurred or increased through over-caution,
negligence or mistake, or by payment of a special fee.
[65]
The court also held that the taxing master’s duty to tax is not
ousted by an agreement between an attorney and a client and that even
in such circumstances the taxing master must satisfy himself/herself
that the fees charged are justified by the work done and are
reasonable.
I
see no reason either in principle or logic why an instrument
acknowledging personal indebtedness to the plaintiff by directors of
a company who would not otherwise be but for such acknowledgement of
debt, would deny them the right that the legal practitioner justifies
how that amount was made up. In my view the situation is no different
from a client agreeing to an agreed fee, which must still be
reasonable and borne out by the work actually performed.
[66] The court has the
duty to ensure that its officers do not take undue advantage of the
public. I will therefore require, in furtherance of that duty, that
the plaintiff has the account taxed by the taxing master and that
payment shall not become due until same has been duly taxed. As an
officer of this court, Mr. Horn cannot hide behind an a-d to
exact payment from a client that he is not otherwise entitled to.
[67] In the premises, it
is ordered that:
1. The defendants are
liable to the plaintiff under the a-d executed by them in
favour of the plaintiff on 24 May 2011 as security for the Agency’s
liability for legal services rendered by plaintiff to the Agency,
jointly and severally, the one paying, the other to be absolved, in
the amount to be determined by the taxing master as ordered below;
2. The plaintiff must
within 30 court days of this order prepare a separate bill of costs
for attorney and own client costs in respect of legal services
rendered by the plaintiff to the Agency, and set same down for
taxation before the taxing master, on five court days’ notice
to the defendants who shall be entitled to be present and to object
to any item included in such bill, either personally or by counsel;
3. The amount taxed off
by the taxing master after having entertained representations from
the plaintiff and the defendants shall, upon such taxing off, become
due and payable and shall bear interest at the rate of 20% calculated
from 1 April 2011 to date of payment;
4. The plaintiff is
awarded costs of suit on party and party scale, to include the costs
of one instructing and one instructed counsel.
----------------------------------
P T Damaseb
Judge-President
APPEARANCES:
PLAINTIFF: C DE JAGER
Instructed by BEHRENS &
PFEIFFER ATTORNEYS, WINDHOEK
DEFENDANTS: J DIEDERICKS
of DIEDERICKS & CO, WINDHOEK
MB De Klerk & Associates v Eggerschweiler and Another (I 2674/2011) [2013] NAHCMD 285 (16 October 2013);