CASE NO
“SPECIAL
INTEREST”
CASE
NO.: I 1098/2008
SUMMARY
AARON
MUSHIMBA versus
AUTOGAS NAMIBIA (PTY) LTD
DAMASEB,
JP
07/10/2008
PRACTICE
– SUMMARY JUDGMENT
“SPECIAL
INTEREST”
CASE NO.: I 1098/2008
IN THE HIGH COURT OF NAMIBIA
In the matter between:
AARON
MUSHIMA APPLICANT/PLAINTIFF
and
AUTOGAS NAMIBIA (PTY) LTD
RESPONDENT/DEFENDANT
CORAM: DAMASEB, JP
Heard on: 5th
August 2008
Delivered on: 7th
October 2008
________________________________________________________________________
JUDGMENT
DAMASEB, JP:
[1] The first order of
business when this application for summary judgment was called before
me- was a point in limine
taken by the
respondent to the effect that the summons is defective in the sense
that it was not ‘signed and issued by the registrar’ of
this Court as is required by Rule 17(3) of the Rules of this Court.
Amongst the documents filed of record there is a Combined Summons
with a stamp of the registrar of the High Court bearing the date of
the 7th
of April 2008 - being the same date on which the summons is dated and
signed by Messrs M B De Klerk & Associates acting for the
plaintiff. Next to the signature of M B De Klerk & Associates is
provision made for the signature of the registrar and in that space
the registrar’s signature appears with the High Court date
stamp bearing the date of the 7th
of April 2008? There is, therefore, no merit in the point in limine
and it was for that
reason that I dismissed it
with costs.
[2] I have before me an opposed
application for summary judgment based on two claims for liquidated
amounts arising from debts under two separate agreements concluded
between the parties, respectively on 28 June 2007 (“the
suretyship agreement”) and 14 September 2007 (“the loan
and pledge agreement”). In respect of claim 1, the applicant
claims N$482 500, 00 plus agreed interest at the rate of 20%
calculated from 19 November 2007until date of payment - and in
respect of claim 2 the amount claimed is US$44 452.98 plus interest
on that amount at the agreed prime rate of interest of Standard Bank
of Namibia from time to time, plus 2% calculated from 1 March 2008
until date of payment. In respect of claim 2 and on the strength of
clauses 4.1 – 4.3 of the loan and pledge agreement the
plaintiff seeks an order declaring that the plaintiff be allowed
without further notice to the defendant to cause all or any of the
securities to be sold presently held in pledge either by public
auction or by private treaty and to convey valid title in the
securities to any purchaser thereof in satisfaction of the aforesaid
debt in the event of the defendant failing to satisfy the judgment
debt.
Claim1
[3] I will now set out in some
particularity the allegations pertaining to claim 1. On 28th
June 2007 the plaintiff and the defendant concluded a written
agreement of suretyship (the suretyship agreement) in terms of which
the plaintiff provided a letter of credit to Easigas (Pty) Ltd for
the purchase of gas by the defendant in the amount of N$481 500.00
(“the guarantee amount’’). The defendant then
bound itself as guarantor to the plaintiff in the amount of N$481
500.00 in respect of the letter of credit.
[4] The defendant undertook (in
terms of clause 4.1 of the suretyship agreement) to pay to the
plaintiff the guarantee amount after receiving 30 days’ written
notice from the plaintiff, alternatively to release the plaintiff
from the letter of credit- failing which (in terms of clause 4.2 of
the suretyship agreement) the guarantee amount plus interest at 20%
per annum “shall immediately become due and payable’’
to the plaintiff by the defendant. Clause 4.3 then provides as
follows:
“In
the event of AUTOGAS failing to fulfill its obligations as aforesaid,
then and in such an event AUTOGASS hereby irrevocably authorizes
Messrs M B de Klerk & Associates to lodge and register the share
transfer forms as envisaged in clause 3.2 on the instructions of
MUSHIMBA’ so as to release AUTOGAS from its guarantee and to
transfer the 5% shares to MUSHIMBA.”
[5] For completeness, clause
3.2 - which is described in the suretyship agreement as a ‘condition
precedent’ –states:
“The
Shareholders of AUTOGAS signing and completing share transfer forms
for 5% of its shares to MUSHIMBA, which share transfer forms shall be
kept in trust by Messrs M B de Klerk & Associates pending the
fulfillment by AUTOGAS of its obligations in terms of clause 4
hereunder.’’
[6] In terms of clause 3.1,
the suretyship agreement “is conditional upon Easigas (Pty) Ltd
accepting the Letter of Credit and delivering the envisaged gas
shipment to AUTOGAS within 60 (sixty) days’’ from the
date of signing of the agreement - being 28 June 2007. On a
contextual construction of the suretyship agreement, it is clear to
me that the effect of clauses 4.1 and 4.3 is to give the plaintiff
the election, in the event that the defendant fails to make good on
the guarantee, to exact payment of the guarantee amount or to
transfer the 5% shareholding in the defendant into his name.
[7]The suretyship agreement
contains a ‘non-variation’ clause in the following terms:
“No
variation or consensual cancellation of this Agreement shall be of
any force or effect unless reduced to writing and signed by both
parties’’
[8] The particulars of claim
also allege that the plaintiff executed the letter of credit in
favour of Easigas (Pty) Ltd in the amount of N$481 500.00. The letter
of credit is not attached to the summons in support of this
allegation. On 19 October 2007 the plaintiff demanded payment from
the defendant in the amount of N$481 500.00. This demand was not
complied with in that neither the amount of N$481 500.00 was paid,
nor did the defendant release the plaintiff from his obligations
under the letter of credit.
[9] On 24 December 2007, the
defendant wrote a letter to the plaintiff’s legal practitioner
in the following terms:
“We
would like to inform you that as per the Agreement Autogas is unable
to meet its obligations as per paragraphs 4.1 and 4.2 and hereby
authorizes yourselves to exercise paragraph 4.2 of the agreement.”
[10] On 20 February 2008
plaintiff’s legal practitioner of record wrote to the defendant
in, amongst others, the following terms:
“We
also confirm that in respect of the Agreement of Suretyship, our
client is not willing to exercise his rights in terms of paragraph
4.3 of the Agreement , but in fact wishes to proceed in terms of
clause 4.1 as read with clause 4.2 of the Agreement.’’
Claim 2
[11] On 14 September 2007, the
plaintiff and defendant concluded a written agreement of loan and
pledge (“the loan and pledge agreement’’). The
plaintiff agreed in terms of that agreement to provide a letter of
credit for the purchase by the defendant of ‘securities’
in the amount of US$44 452.98. This was in return for the defendant
pledging to the plaintiff all its rights, title and interest in the
said securities. If the defendant breached any obligation under the
agreement, the plaintiff had the right to sell the securities either
by public auction or by private treaty. In terms of the loan and
pledge agreement the loan thus granted was to be repaid according to
an agreed schedule in six equal monthly installments of US$7 408.83,
commencing on 31 January 2008 and ending on 30 June 2008. (Vide
clause 6 of the loan and pledge agreement)
[12] It is a term of the loan
and pledge agreement that upon breach by the defendant of its
obligations, and failing to remedy same within 7 days of a notice to
remedy such breach, the plaintiff is entitled to demand immediate
payment of all amounts which defendant may then owe, together with
the agreed interest. The
agreement of loan and pledge contains the following non-variation
clause:
“No
variation, cancellation, whether unilateral or consensual, or
novation hereof shall be of any force of effect unless reduced to
writing and signed by both Autogas and Mushimba.”
[13] It is alleged that the
plaintiff advanced the amount of US$44 452.98 to the defendant for
the purchase of the securities aforesaid and the defendant proceeded
to obtain delivery of the pledged articles and has since exercised
its right of retention of the same. It is also alleged that the
defendant failed to make any repayments in terms of the agreed
schedule of payment contained in clause 6, and by letter dated 7
February 2007 admitted breach and stated the following amongst
others:
“Our
agreement for repayment was based on our conviction that the
cylinders will be in the country as early as December 2007 to allow
Autogas to trade and be able to generate funds for repaying the debt.
Unfortunately up to now the cylinders have not reached the Autogas
depot and we now expect them during the third week of February 2008.
The failure to have these cylinders has limited our capacity to
generate income and has had a major impact on our cash flow hence our
failure to meet the initial installment. Our Managing Director has
been trying to reach Mr A Mushimba but we are made to believe that he
is out of town.
We
are making a commitment to start repayment on
30 March 2008 at the agreed rate
and by virtue of this letter we sincerely request your permission to
proceed as proposed.
We
would be grateful for this consideration as
well as a written letter of acknowledgement and acceptance of this
matter.”
(My underlining)
[14] The plaintiff’s
legal practitioner replied to that letter in the following terms by
letter dated 20 February 2008:
“2. We
have discussed the contents of your letter with our client, but our
client has instructed us to advise you that unless the outstanding
payments for January and February 2008 are paid before
or on 28 February 2008, and
the subsequent monthly payments are made on a monthly basis
thereafter as stipulated in the agreement, we are to issue Summons
against your company without any further notice herein.’’
(My emphasis)
[15] It is alleged in the
particulars that notwithstanding demand, the defendant failed to
remedy the breach.
[16] The defendant’s
affidavit in opposition to the application for summary judgment
discloses the following defences:
(i) That the letter of credit
actually passed and honoured was in the amount N$479 406.07 and not
the N$481 500.00 claimed by the plaintiff and verified as such in the
affidavit in support of summary judgment. The defendant then annexes
to its affidavit “AN2’’ with the clear implication
that it is the letter of credit actually passed in the amount of
N$479 406.07.
(ii) That the suretyship
agreement was conditional upon Easigas (Pty) Ltd accepting the letter
of credit and delivering the gas to the defendant within 60 days from
the 28th
of June 2007; it being alleged that this pre-condition was not met.
As proof that gas was not delivered within the period envisaged,
defendant annexes documents AN3, AN4 and AN5 to the affidavit in
opposition to summary judgment. (More about these documents later);
(iii) That the plaintiff,
following the breach by the defendant , exercised the option under
clause 4.3 through his legal practitioner MB de Klerk and Associates
and transferred into his (plaintiff’s) name the 5% shares in
the defendant- an election which precludes the plaintiff from now
exacting payment of the guarantee amount.
(iv) In respect of claim 2, the
defendant’s defence is that with the knowledge of the plaintiff
it was unable to meet the payment schedule in clause 6 of the loan
and pledge agreement and proposed to the plaintiff – who
accepted the same trough his agent Phillip Hikumwah- a new repayment
schedule (with an amount of N$50 000 already made in terms of the new
payment schedule). It is alleged that the plaintiff cannot now claim
breach based on the original loan and pledge agreement. The defendant
does not attach to the affidavit any proof that the 5% shares had
been transferred to the plaintiff. In fact, in Annexure AN6 to the
defendant’s affidavit, being a “Valuation Report on
Autogas Namibia (Pty) Ltd” date June 2008, the defendant’s
owners are reflected as follows:
“Table I:
Shareholding structure
Name %
Shareholding
A.
Mendonca (Managing Director) 58.00%
M.
Nangombe 2.00%
A. Ipinge
2.00%
J.
Haufiku 13.75%
M.
Nogueira 5.10%
M. Shivute
3.62%
S. Polera
7.50%
Oshiwana Trust
5.03%
H.
Ndume 1.00%
U. Shivute
2.00%
Total
100.00%
Source: Autogas
shareholders’ register.’’
Discussion
[17] The difficulty facing the
defendant is its admission in the letter of 24 December 2007 that it
‘‘is unable to meet its obligations as per paragraphs 4.1
and 4.2” of the suretyship agreement, and its “authorizing
the plaintiff to exercise paragraph 4.2 of the agreement’’.
This is a clear admission that (i) the plaintiff’s demand for
payment in terms of clause 4.1 was proper and that (ii) in terms of
clause 4.2 of the suretyship agreement, the guarantee amount plus
agreed interest immediately became due and payable. These admissions
put to paid the assertion that the clause 3.1 precondition had not
been complied with. The defendant’s obligation to pay the
guarantee amount and the plaintiff’s corresponding right to
demand payment thereof - alternatively to exercise the clause 4.3
election to take transfer of the 5% shares - could not have arisen
if, as alleged in the defendant’s affidavit, the clause 3.1
precondition had not been complied with. I am satisfied that Easigas
had accepted the letter of credit and delivered the gas to the
defendant. The defendant annexes to its affidavit documents AN3-AN5
which it alleges represent proof that the gas was not delivered
within 60 days from 28 June 2007. Having looked at the annexures I
agree with Mr. Strydom for the plaintiff that AN3–AN5 are not
related to the delivery of gas under the suretyship agreement. They
relate to the delivery of empty cylinders (not gas) and to a
corporate entity not envisaged under the suretyship agreement.
Did the plaintiff take
transfer of the 5% shares?
[18] I have already referred to
the plaintiff’s legal practitioner’s letter of 20
February 2008 which made clear that the plaintiff did not wish to
acquire the shares and intended to exact payment of the guarantee
amount. Annexure AN6 supra
to the defendant’s affidavit establishes clearly that as
recently as June 2008, the plaintiff was not a shareholder in the
defendant: Summons in the present case was issued in April 2008, i.e.
before ‘AN6’; while service of the summons on the
defendant took place on 10 May 2008. There is therefore no bona
fides in the
allegation- or an arguable case- that the plaintiff took transfer of
5% shares in the defendant in tandem with clause 4.3 of the
suretyship agreement which debars him from exacting payment of the
guarantee amount. The plaintiff is therefore entitled to summary
judgment in respect of the guarantee amount in terms of the
suretyship agreement.
[19] It has been held (as to
which see Gulf Steel
(Pty) Ltd v Rack-Rite Bop (Pty) Ltd
1998 1 SA 679 (O)) that summary judgment should not be granted even
in the absence of a bona
fide defence where
the plaintiff fails to make out a claim clearly on the papers and
does not present pleadings which are technically correct. I, however,
prefer the approach adopted in Standard
Bank of SA Ltd v Roestof
2004 2 SA 492 (W) 498B-C where it was held that the preferable
approach should be to consider the papers forming part of the summary
judgment application as a whole and not punish the plaintiff simply
because his papers are technically wanting albeit in an insignificant
respect. In my view, if the pleadings disclose a clear cause of
action although defective in a minor respect, and it is clear on the
papers looked at as a whole that the plaintiff has an unanswerable
case, summary judgment should not be refused.
[20] In
casu the defendant
alleges that the amount actually honored under the letter of credit
is less than what is claimed in the combined summons. Regrettably the
plaintiff’s papers do not attach the letter of credit actually
honored. The guarantee amount in the agreement relied on and the
amount claimed in the summons are, however, the same, while AN2 to
the defendant’s papers at best seems tentative only and part
of some inchoate negotiation which still had to be finalized- not as
alleged by the defendant the actual letter of credit. Besides, it was
made clear to me during argument that the plaintiff is not persisting
with the claim that the defendant pay him the full guarantee amount
of N$481 500.00 envisaged in the suretyship agreement of 28 June 2007
- and Mr. Strydom submitted that the plaintiff would instead seek
judgment in the amount N$479 406.07 which is admitted by the
defendant as the amount actually honored under the letter of credit.
Being satisfied that no real factual dispute exists and that the
defendant has no bona
fide defence to
claim 1 in the summons, I would enter judgment in the lower amount in
respect of which indebtedness is not denied.
The second Claim
[21] As we have seen, the
defendant’s defence is that clause 6 of the loan and pledge
agreement was varied by agreement between the parties. The defendant
does not aver that the alleged new repayment schedule was agreed to
in writing by both parties as required by the non-variation clause.
The plaintiff’s letter of 20 February 2008 in any event does
not support such a conclusion. In the absence of proof that a
novation of the plaintiff’s rights in clause 6 took place in
terms of the non variation clause, and in the absence even of as much
as a bare allegation that the plaintiff accepted the alleged new
repayment terms and what it constituted, I am not persuaded that the
acceptance by the plaintiff of the payment of N$50 000 after the
breach by the defendant of the agreed re-payment schedule, was a
waiver on the plaintiff’s part to hold the defendant to the
terms of the original agreement. Ms van der Westhuisen for the
defendant made the rather courageous submission on behalf of the
defendant that the payment of N$50 000 (i.e. in Namibian currency and
not in USS$ as required by the loan and pledge agreement) is proof:
(i) of the existence of a new
agreement as to repayment varying clause 6; and
(ii) the plaintiff’s
acceptance that he would henceforth be paid in Namibia dollars at
such intervals as the defendant is able to pay and not in terms of a
specific time-frame. Nowhere in the defendant’s affidavit or
annexures is such an agreement discernable or alleged.
[22] Where the parties have
incorporated a non-variation clause in their written agreement, any
attempt to agree informally on a topic covered by the non-variation
clause is not permissible. See: Brisley
v Drotsky 2002 4 SA1
(SCA); HNR
Properties CC v Standard Bank of SA Ltd 2004
(4) SA 471 (SCA) at 479 C-F. An oral agreement to alter the terms of
payment (e.g. extension of time) where the parties have bound
themselves to a non-variation clause is therefore not permissible
unless it is reduced to writing and agreed by both parties: Van
Tonder v Van der Merwe 1993
2 SA 552 (W) E-G.
[23] In addition, clause 15 of
the loan and pledge agreement provides as follows:
“15. NON-WAIVER
15.1 Neither
party shall be regarded as having waived, or be precluded in any way
from exercising, any right under or arising from this Agreement by
reason of such party having at any time granted any extension of time
for, or having shown any indulgence to the other party with reference
to any payment or performance hereunder, or having failed to enforce,
or delayed in the enforcement of, any right of action against the
other party.
15.2 The
failure of either party to comply with any non-material provision of
this Agreement shall not excuse the other party from performing the
latter’s obligations hereunder fully and timeously.”
[24] I am satisfied that the
defendant does not raise a factual or legal dispute which is fit for
trial because all available proof produced by the defendant itself
provides no evidence of the existence of an agreed new repayment
schedule. In fact, in its letter of 7 February 2008 the defendant
said it committed itself “to start repayment on 30 March 2008
at the agreed rate’’. Since no mention is made in that
letter (or any other correspondence forming part of the summary
judgment pleadings) of a new agreed schedule, the “agreed
rate’’ can only mean the repayment schedule contained in
clause 6 of the loan and pledge agreement which the defendant is
admittedly in breach of. That further negates the existence of a new
agreed repayment regime. The defence raised in respect of claim 2 is
thus “obviously untenable’’: See Bonnet
en Andere v Snaar Dorpsontwikkelaars
1978 4 SA 212 at 217C-D – and does not raise a triable factual
or legal dispute.
Conclusion
[25] I wish to echo the
following words of wisdom by Didcott J in Cloete
v Government of the Republic of SA; Matiso v Commanding Officer ,
Port Elizabeth Prison 1995
4 SA 631 (CC) at 648H-I.
“Credit
plays an important part in the modern management of commerce. The
rights of creditors to recover the debts that are owed to them should
command our respect, and the enforcement of such rights is the
legitimate business of our law. The granting of credit would
otherwise be discouraged, with unfortunate consequences to society as
a whole, including those poorer members who depend on its support for
a host of heir ordinary requirements. That does not mean, however,
that the interests of creditors may be allowed to ride roughshod over
the rights of debtors.’’
[26] I am satisfied that the
defences raised against plaintiff’s claims 1 and 2 are bogus
and are only intended to delay the satisfaction of a good claim. The
success of the defences raised is not just unlikely (in which case I
must refuse summary judgment) – it is improbable. A case has
therefore been made out to grant the plaintiff relief in respect of
both his claims 1 and 2.
Special costs order?
[27] The plaintiff asks for a
special costs order. Neither in the pleadings nor in the heads of
argument was any basis laid for me to make such an order. I will
therefore not make such an order.
The order
[28] I accordingly make the
following orders:
Ad Claim 1
The defendant is ordered to pay
the plaintiff:
(i) The amount of N$479 406.07;
together with
(ii) Interest accrued on the
aforesaid amount at the agreed rate of 20% per
annum calculated
from 19 November 2007 until date of payment;
Ad Claim 2
The defendant is ordered:
(i) To pay to the plaintiff the
amount of US$44 452.98 minus N$50 000 and minus any other amount
subsequently paid by the defendant in US$ or any other currency in
partial payment of the US$44 452.98; together with
(ii) Interest calculated on the
aforesaid amount at the agreed rate of prime rate of Standard Bank of
Namibia Limited from time to time plus 2%, calculated from 1 March
2008 until date of payment;
And it is declared:
(iii) That the plaintiff may
without further notice to the defendant cause all or any of the
securities to be sold presently held in pledge either by public
auction or by a private treaty and to convey valid title in the
securities to any purchaser thereof in satisfaction of the debt in
respect of claim 2 in the event of the defendant failing to satisfy
the judgment debt.
IN RESPECT OF BOTH CLAIMS
[29] The defendant is ordered
to pay to the plaintiff’s costs of suit on a party and party
scale consequent upon the employment of one instructing and one
instructed counsel.
_______________________
DAMASEB, JP
On behalf of the Applicant:
Mr Strydom
Instructed by: M B De
Klerk & Associates
On behalf of the Defendant:
Ms Van Der Westhuizen
Instructed by: BD
Basson Inc.
Mushima v Autogas Namibia (Pty) Ltd (Case No.: I 1098/2008 ) [2008] NAHC 112 (07 October 2008);