NOT REPORTABLE

CASE NO: A 205/2010

IN
THE HIGH COURT OF NAMIBIA

In
the matter between:

RACHEL
NATHANIëL-KOCH, N.O.
…..............................................1^st
APPLICANT

RACHEL
NATHANIëL-KOCH
…......................................................2^nd
APPLICANT

and

EVERHARDUS
PETRUS FACKULYN GOUS N.O. ….................1^st
RESPONDENT

CHRISTOFF
TSCHARNKTE N.O. …...........................................2^nd
RESPONDENT

JOHN
PULESTON AS THE DEPUTY SHERIFF

OF
TSUMEB
….............................................................................3^rd
RESPONDENT

LA
ROCHELLE (PTY) LIMITED
…...............................................4^th
RESPONDENT

BANK
WINDHOEK OF NAMIBIA LIMITED …..............................5^th
RESPONDENT

THE
MASTER OF THE HIGH COURT OF NAMIBIA …...............6^th
RESPONDENT

THE
REGISTRAR OF THE HIGH COURT

OF
NAMIBIA
….............................................................................7^th
RESPONDENT

THE
REGISTRAR OF COMPANIES
….........................................8^th
RESPONDENT

THE
EXECUTOR OF THE ESTATE LATE

DANIE
VAN VUUREN
…...............................................................9^th
RESPONDENT

MUNICIPAL
COUNCIL FOR THE MUNICIPALITY

CORAM:
SMUTS, J

Heard
on: 23 May 2011

Delivered on: 07 June 2011

JUDGMENT

SMUTS
J: [1] The applicant has brought this application in
her personal capacity and in her capacity as executor of the estate
of her late husband, Mr HJ Koch. The applicant met the late Mr Koch
in 2004-2005 and married him in 2006. He died in October 2008. He was
a German national who was subjected to lengthy extradition
proceedings in which he ultimately succeeded in staving off his
extradition to Germany. Those proceedings were initiated in 2002. He
finally succeeded in his appeal in the Supreme Court against an
extradition order some four years later.

[2]
On 1 November 2002, Mr Koch was instrumental in creating a trust
although he was not the original founder or one of its original
trustees. Its two trustees are the first and second respondents in
this application, although the second respondent was only appointed a
trustee some time after the trust was established.

[3]
Several years before establishing the trust, it would appear that Mr
Koch was instrumental in the acquisition of shares in a company, La
Rochelle (Pty) Ltd, which owns two farms in the Tsumeb area. The
shares in this company, cited as the fourth respondent in these
proceedings, were originally held by the late Mr Koch’s
previous wife until December 1997 when they were transferred to the
late Mr Koch in December 1997. According to the share register, a
certain Ms Rita Schwalm with whom
Mr Koch subsequently cohabited,
acquired the shares held by him. In terms of a deed of settlement
attached to the papers,
Ms Schwalm transferred the shares to the
trust in November 2002 in exchange for a consideration referred to in
that settlement. It would appear from the settlement that there were
disputes between the late Mr Koch and Ms Schwalm and that their
cohabitation ended at the time. The parties were represented and
entered into that deed of settlement. Since then, the shares have
been held by the trust.

[4]
Before Mr Koch’s death and in November 2007, he and the
applicant executed a joint will in which they each nominated each
other as sole heir/heiress of their respective estates.

[5]
Prior to Mr Koch’s death, the trust had loaned a substantial
amount to the company (fourth respondent). This loan was thereafter
called up by the trustees in an action instituted against the company
for payment of the loan in the sum of N$11,25 million. It was
instituted on 9 December 2009. On 15 December 2009 the applicant’s
former legal practitioners of record served a notice in that matter
entitled “Notice to Intervene (join) and Defend”. This
notice is attached to the applicant’s founding affidavit. It
states:

“Kindly
take notice that Rachel Nathaniël-Koch who was served with a
summons in the above matter shall be instituting proceedings in due
course to join the action and to defend.”

[6]
No application for intervention was subsequently filed and default
judgment was granted by the Registrar on 10 March 2010 in favour of
the trustees and against the fourth respondent for the amount
claimed.

[7]
In this application, the applicant seeks wide ranging relief against
several respondents. In the first instance, Part A of the notice of
motion is directed against the default judgment. The applicant seeks
to review and set it aside, alternatively to declare the granting of
a default judgment as unlawful. Part B of the notice of motion is
however directed at declaring the transfer of shares in the fourth
respondent by Ms Schwalm to the trust as unlawful and declaring that
the shares belong to the estate of the late Koch. An order is also
sought in part B to declare the trust, created in November 2002, as
unlawful and unenforceable and declaring that the shares in the
fourth respondent belonged to the estate of the late Koch and that
the loan account was thus in favour of the estate of the late Koch
(instead of the trust).

[8]
The trustees, cited as first and second respondents, and the fourth
respondent, oppose the application.

[9]
Ms Schwalm is cited as the third respondent and the Registrar of the
High Court cited as seventh respondent. The executor of the estate of
one of the capital beneficiaries of the trust is also cited as a
respondent. But the three other capital beneficiaries, two of whom
are apparently located in Germany, are not however cited in this
application. Certain other parties are cited for reasons best known
to the applicant. These include Bank Windhoek of Namibia Limited, the
Master of the High Court and the Registrar of Companies. They do not
oppose this application.

[10]
The applicant also seeks to sets aside a settlement agreement entered
into by her. She contends that that settlement agreement is unlawful
and unenforceable, alternatively that clause 1 of that agreement is
unlawful and unenforceable. The applicant also seeks costs against
any respondent opposing the application.

[11]
When the matter was called, the applicant appeared in person and
submitted both written and oral argument. This had followed prior
postponements in the matter after the withdrawal of her erstwhile
legal practitioners of record. The postponements were granted in
order to afford the applicant the opportunity to secure the services
of other practitioners. That did not occur and the applicant appeared
in person. The first, second and fourth respondents were represented
by Mr Schickerling although written heads of argument were prepared
in advance of the hearing by Mr Heathcote SC and
Mr Schickerling.

Factual background

[12]
Before turning to the relief sought by the applicant, I first briefly
refer to certain provisions in the deed of trust. The trust
contemplates two kinds of beneficiaries. In the first instance, there
are current beneficiaries. These are defined as persons or bodies who
benefit from the income and capital of the trust during the currency
of the trust in terms of the discretionary powers vested in the
trustees. They are defined as the late Mr Koch and his spouse or
consort from time to time and any of their descendants and their
spouses and any charitable organisation which the trustees select
with the consent of the late Mr Koch.

[13]
The second class of beneficiaries are the capital beneficiaries.
There are four of them specified in the deed of trust. The vesting
date of the trust is defined as the date upon which the trust fund or
a part thereof vests in the capital beneficiaries in whose favour the
trust has been created. The vesting date further defined is to be
either a date upon which the trustees made distributions which then
vested in them or the day after the death of Mr Koch subject to the
proviso that the trust would continue until the capital beneficiaries
have reached the age of 25 years.

[14]
During Mr Koch’s lifetime, the applicant was a current
beneficiary in her capacity as his spouse until his death.

This
application

[15]
The applicant contends that the default judgment should be reviewed
and set aside on the basis that she was entitled to a hearing after
serving the notice which I referred to above – indicating an
intention to bring an application to intervene. She also contends
that the allegations contained in the summons do not make out a case
in law and that the Registrar did not properly apply her mind to the
enquiry before her when granting default judgement. In her written
and oral arguments, the applicant primarily confined herself to the
procedural question of being entitled to be heard as a consequence of
her notice.

[16]
The applicant’s attack upon the transfer of shares in the
fourth respondent and upon the legality of the deed of trust and
subsequent settlement are based upon assertions that the
establishment and creation of the trust was illegal and unenforceable
because it was established at the time when the extradition
proceedings were to commence and for the purpose of concealing assets
given the uncertainty about the outcome of the extradition
proceedings. As the applicant only met Mr Koch in 2004 the events
leading to the setting up of the trust were not within her knowledge.
She relies upon a number of hearsay allegations lacking in
specificity with reference to her claim of the trust being illegal
and unenforceable.

[17]
The respondents raised a number of defences to the application. The
first instance, they take issue with the applicant’s locus
standi to claim both forms of relief sought by her. Secondly,
they contend that the relief sought in respect of the trust is
precluded by the settlement agreement which she also attacks. The
respondents also contend that the application should also fail on the
merits as the applicant has not made out a case for the relief which
she seeks.

The
counter application

[18]
The fourth respondent has also brought a counter-application against
the applicant in her personal capacity for her eviction from the farm
La Rochelle and for her to pay the costs of the counter-application.
It is common cause that the applicant continues to reside on the farm
La Rochelle where she lived with the late Mr Koch during their
marriage and has stayed on the farm after his death. The
counter-application is based upon the fourth respondent’s
ownership of the farm and that the basis upon which the applicant
stayed after the deceased’s death was an appointment as manager
of the lodge which has since come to an end. It was alleged that she
was appointed to that position by the former director of the fourth
respondent on 12 February 2009 for a period of 1 year but that this
agreement had been terminated when the applicant commenced employment
with the Legal Aid Directorate of the Ministry of Justice at the end
of July 2009. Correspondence setting out these developments is
attached as well as the letter of appointment, setting out
conditions, as well as notices provided to her are attached to Mr
Holz’s affidavit in support of the counter-claim. The
correspondence includes reference to the termination of employment
and requesting her vacation of the premises. Mr Holz is the current
director of the fourth respondent.

[19]
In answer to the counter-application, the applicant admits her
occupation of the farm. She disputes the appointment of the current
director and his authority to bring the application. She does so
without any evidential support. She also does not properly dispute
her employment but rather submits, quite inexplicably, that the
letters amount to inadmissible hearsay evidence as they were not
confirmed by the authors. This despite the fact that the author of
the letter, Mr Knouwds, made an affidavit to confirm the
correspondence which he directed to her in his capacity as former
director of the company. The applicant instead contends that she was
“given a lifelong right to use the house (on the farm) by
the late Koch at a time when he was the director”. This is
the right asserted by her to be in possession or occupation of the
farm after Mr Koch’s death in defence to the counter
application for her eviction.

Default
judgment

[20]
The respondents’ attack upon the applicant’s locus
standi to review the
default judgment is in my view well founded. The applicant had not
brought any application to intervene after providing her inept notice
to which I have referred. The applicant also does not provide any
explanation as to why this was not done prior to the granting of
default judgment. It is common cause that there were negotiations
between the parties’ legal representatives at the time. But no
explanation is provided why a simple intervention application could
not have been brought.

[21]
Rule 12 of the Rules of this Court entitles a person to join as a
defendant in an action on notice to all parties at any stage of the
proceedings and to apply for leave to intervene. In such an
application, this Court has held that an applicant must establish a
direct and substantial interest in the subject matter of the
litigation and that the application is made seriously and not
frivolously. ¹
It is presumably because of this
requirement that no application was brought, given the fact that the
applicant does not establish in her founding affidavit a direct and
substantial interest in the subject matter of the action in question.
In the absence of intervening as a defendant in the matter, as the
applicant was entitled to seek by way of application, there was no
need or requirement for the Registrar to accord the applicant any
form of hearing by virtue of the inept notice filed on her behalf.
For this reason alone, the relief directed at the granting of the
default judgment must fail.

[22]
Part A of the notice of motion directed at the default judgment would
also fail by reason of the fact that the applicant has not
established any proper basis for that relief. In oral argument, the
applicant accepted that she bears the onus of establishing review
grounds to set aside the default judgment. As I have already
indicated, the applicant had no right or even any expectation to be
heard by the Registrar in the absence of a proper intervention
application as a defendant. Furthermore, the challenge upon the cause
of action set out in the summons was not addressed in her written
heads of argument nor raised in her oral argument. This was
understandable. This is because it is clear to me that the simple
summons did indeed disclose a cause of action by stating that the
claim was for:

“Payment
in the sum of N$11,250,000.00 being respect of monies lent and
advanced at the defendant’s special instance and request by
means of a shareholders’ loan, which amount was due and payable
on demand but which amount, demands notwithstanding, the defendant
failed to pay the plaintiff to date.”

[23]
The applicant has thus failed to discharge the onus upon her to show
why it should be set aside. This is quite apart from lacking the
standing to seek that relief in the first place.

Attack
upon share transfer and deed of trust

[24]
The applicant’s standing in respect of Part B of the notice of
motion in which this relief is sought is also challenged by the
opposing respondents. They contend that a current beneficiary would
not have standing to seek this form of relief upon vesting as such a
beneficiary would no longer have an interest in the trust. It is not
necessary for me to express a final view on this issue by reason of
the conclusion I reach with regard to the relief itself. The
applicant would in any event have standing to apply to set aside the
settlement agreement she entered into.

[25]
At the hearing, the applicant also accepted that she had the onus of
establishing the requisites for the relief sought and directed at
setting aside the share transaction, the deed of trust and the
settlement agreement which she had entered into.

[26]
This the applicant would need to discharge with reference to
admissible evidence. As I have already indicated, the applicant’s
allegations concerning the establishing of the trust are based upon
inadmissible hearsay evidence. The respondents have understandably
brought an application to strike out the inadmissible hearsay
evidence in that regard raised by the applicant in these proceedings.

[27]
As was correctly pointed out on behalf of the respondents, joinder of
Ms Schwalm as a respondent, if it were a misjoinder, would not cure
the inadmissible nature of the hearsay attributed to her. In the
founding papers, the applicant merely contends that the trust was
created in fraudem legis and was a sham transaction, illegal
and/or against public policy and invalid and unenforceable. These
legal conclusions are asserted without a proper evidential
substratum.

[28]
It is correctly contended on behalf of the respondents that the
applicants in essence seek relief in the form of an actio
pauliana. In order to be successful in such an action, it should
be brought by a creditor who would need to establish that the late Mr
Koch alienated his assets and thereby diminishing his estate and that
the alienation did not belong to the person who received same and
that this was done with the intention to defraud his creditors and
indeed had that effect. Not only is the applicant in either capacity
not a creditor of the late Mr Koch, but she also fails to identify
any creditors from whom assets were allegedly concealed or who were
defrauded in the process. It would not seem to me that the actio
pauliana would find application in the present factual context.
This is because the requisites for that form of relief have not been
established. But quite apart from this, the applicant has not
established with reference to any admissible evidence that the trust
itself was a sham or was illegal or unenforceable or against public
policy.

[29]
In the absence of establishing this in a proper manner, the applicant
would not be entitled to the relief sought directed at setting aside
the share transfer and the deed of trust. There is also nothing
before me which could give rise to the setting aside of the share
transfer in question.

Attach
upon the settlement agreement

[30]
The applicant also challenges the deed of settlement she entered
into, alternatively clause 1 of the agreement which provides:

“ACCEPTANCE
OF DEED OF TRUST

The parties hereto agree that the
deed of donation into trust dated the 1^stof
November 2002 of the La Rochelle Ranch Trust, executed by Danie
Jansen van Vuuren on that date is accepted by all parties cited
herein as valid and binding on them.”

[31]
The applicant says in her founding affidavit that after the death of
the late Mr Koch, she became involved in a dispute with the trustees
which resulted in an urgent application being brought in December
2008. The application became settled and a settlement agreement was
entered into by her at a time when she was then represented by senior
and junior counsel. It embodied clause 1 quoted above and certain
further other provisions. Clause 5 of the agreement states:

“In full
and final settlement of all applicant’s claims against any of
the respondents jointly and severally from whatever cause and how so
ever arising, the parties hereto agree that on distribution of the
trust assets of the La Rochelle Trust, the trustees shall pay the
second applicant 20% of the amount to be distributed to the Namibian
Capital Beneficiaries, being the second and third respondents.”

[32]
The second applicant referred to in clause 5 is the applicant in this
application (in her personal capacity). The applicant contends that
the settlement agreement was unenforceable and against public policy
because, she in essence contends, the trust is a sham and an
illegality and that she would not be bound by her assent to the
agreement

[33]
It was pointed out by the respondents that in her urgent application,
(which resulted in the settlement agreement), the applicant had in
late 2008, already then questioned the validity of the trust and the
deed of donation which established it. In particular, I was referred
to the following passage in her affidavit in support of that urgent
application:

“Applicants’
legal practitioners will investigate all of this in a forensic way.
All the transfers of shares in La Rochelle (Pty) Ltd will also be
forensically examined. The applicants reserve all their rights in
this regard. All of this will be addressed in the trial to come”.

[34]
Instead of proceeding with an investigation in that regard, the
applicant elected, upon advice, to settle the urgent application and
in doing so accepted the validity of the trust and that it was
binding upon her.

[35]
Despite the declared intention to forensically investigate the trust
and its establishment and the share transactions referred to and
thereafter accepting that they were, where applicable, binding upon
her, the applicant has not established quite why this deed of
settlement should not be binding upon her. Despite her stated
intention, there is no reference to any factual matter or inference
arising from an investigation after the urgent application. On the
contrary, the applicant has not established any basis for the relief
sought in Part B. There is instead a mere resort to empty epithets
and legal conclusions and a failure to place any material before me
which would lead to the trust and the transfer and settlement
agreement being set aside or declared unenforceable.

[36]
The applicant’s attack upon the prior settlement agreement is
thus unsupported and also unsupportable in the circumstances. It
follows that this attack must also fail.

Counter-application

[37]
I have already referred to the basis for the counter-application
seeking the eviction of the applicant from the farm La Rochelle. I
have also referred to the applicant’s defence to it.

[38]
It is clear to me that the applicant has not properly placed in issue
the factual basis for the claim for eviction, based upon her
employment following the death of the deceased, on the basis of the
Plascon-Evans
test with regard to disputed facts in
motion proceedings. ²

[39]
The applicant instead bases her defence upon what she terms to be a
“lifelong right to use the house” given to her by
the late Mr Koch at a time when he was director of the fourth
respondent.

[40]
For such a right to be valid and enforceable, it would need to have
been created by way of a testamentary disposition or in writing and
would only be valid and binding upon third parties if registered
against the title deed of the farm, as is correctly submitted by the
respondents. Furthermore, the applicant does not even contend that
any right was accorded to her by the registered owner of the farm
itself, but rather by the late Mr Koch at a time when he was a
director of the fourth respondent, and not by the fourth respondent
itself.

[41]
The applicant would also appear to base her claim upon her right to
reside on the land by virtue of her marriage to Mr Koch. The
respondents however point out that the nature of such a right is
personal and not a real right in land and not enforceable against
bona fide third
parties and that it would only exist during the marriage and would
cease when the marriage is dissolved by death. They do so with
reference to Dique NO v Van
der Merwe en andere. ³
The holding of that judgment is neatly
summarised in the head note where the following is stated in the
English translation:

“The right
which one spouse has to reside on the property of the other during
the subsistence of the marriage relationship is a sui
generis
right.
It is a personal right and not a real right in land because it is not
enforceable against bona
fide
third
parties. It exists only during the marriage and ceases to exist when
the marriage is resolved by death.”

[42]
I accept that this also reflects the position in Namibia.

[43]
It follows that the applicant has failed to properly raise a defence
to the counter-application and that it should thus be granted.

Conclusion

[44]
In the result, I make the following order:

1. The
   application is dismissed with costs.
   

   
   

2. The
   counter-application is granted with costs and the second applicant
   is evicted from the farm La Rochelle.
   

   
   

3. The
   costs in question will include the costs of two instructed counsel,
   where engaged.
   

   
   

___________________________

SMUTS, J

ON BEHALF OF THE APPLICANTS In
person

ON BEHALF OF 1^st,
2^ndAND 4^th

RESPONDENTS Adv Schickerling

Instructed by: Koep & Partners