CASE NO
CASE
NO.: A 385/2008
IN
THE HIGH COURT OF NAMIBIA
In
the matter between:
THE
MINISTRY OF AGRICULTURE, WATER AND Applicant
FORESTRY
and
UVUNGU-VUNGU
CLOSE CORPORATION Respondent
CORAM: SILUNGWE,
AJ
Heard
on: 09/01/2009
Delivered on: 12/01/2009
JUDGMENT:
SILUNGWE,
AJ: [1] This
is an urgent application in which the applicant seeks an order in the
following terms:
1. Condoning the applicant’s
non-compliance with the requirements related to form and service and
directing that the matter be heard as one of urgency as contemplated
in Rule 6(12) of the Rules of the Court.
2. Declaring the agreement
between the applicant and the respondent dated 23 July 2003 duly
cancelled, alternatively, ordering that such agreement is herewith
cancelled.
3. Ordering the respondent to
hand over custody and control of the Uvungu-Vungu Project, situated
in Rundu, Okavango Region, to the applicant.
4. Ordering the respondent to
vacate the Uvungu-Vungu Agricultural Project.
5. Directing that should either
of the parties to the management agreement intend to claim damages,
such party institutes arbitration proceedings in accordance with
clause 14 of the agreement.
6. Ordering
the respondent to pay the costs of this application.
The
application is opposed.
[2] The
applicant is represented by Advocate Narib, instructed by Conradie &
Damaseb; and the respondent is represented by Advocate Schickerling,
assisted by Advocate Van Vuuren, and instructed by Theunissen, Louw
and Partners.
[3] At
the outset of the hearing, a point in
limine
is raised by Mr Schickerling, namely, that the application is not
urgent at all.
[4] A
brief background of this matter is that, on July 13, 2003, the
parties entered into a management agreement in terms of which the
respondent was to provide full-time management of the Uvungu-Vungu
Agricultural Project (Project) located some 10 kilometres east of
Rundu, as “service provider”. The said agreement was for
a period of 12 years. It is not in dispute that, since the inception
of the management agreement, the applicant has made several capital
contributions towards the project. The respondent claims to have
invested about N$9 000 000-00 into the project. Mr Chris J Lewis is
the sole member of the respondent.
[5] On
December 7, 2005, Mr L Hugo, in his capacity as Team Leader of Green
Scheme Agency, addressed a letter to the applicant’s Permanent
Secretary informing him that the respondent was “in dire need
of funds to really get off the ground and to become fully
operational”. In concluding the letter, he stated, inter
alia:
“7 It
has become crucial that financial support is given to the scheme to
reach full production. An agreement with the manager must be reached
as soon as possible to avoid the situation becoming out of control.
8 It
is suggested that the Ministry pays back to the manager what he has
invested, provide funds to bring the scheme to full operational level
and to take
ownership
of all property.”
(Emphasis
is provided).
[6] On
May 16, 2007, in a report compiled by Mr J K Kavaria, Deputy
Director: Audit Services, in the Auditor General’s Office, and
addressed to the applicant’s Permanent Secretary, it was
recommended, inter
alia,
that:
“The
Accounting Officer should initiate an investigation into the
activities carried out by the project. Emphasis should be placed on
the following:
(a) The
fact that no action was taken by the Ministry despite the fact that
the project is still making a loss after four years in operation;
(b)
….”
[7] On
February 14, 2008, the applicant’s Permanent Secretary wrote to
the respondent threatening to terminate the management agreement in
the event of the respondent’s failure to submit a sound
management proposal within seven working days. The respondent’s
proposal was duly submitted.
[8] A
letter addressed by the applicant’s legal representative of
record to the sole member of the respondent, dated August 13, 2008,
and headed: “NOTICE OF TERMINATION OF VUNGU MANAGEMENT PROJECT
AGREEMENT” (which is annexed to the applicant’s founding
affidavit, marked CJL 6, as well as to the respondent’s
answering affidavit) reads:
“We
act on behalf of the Ministry of Agriculture, Water and Forestry, and
the Management Agreement concluded on the 23rd
of July 2003 has reference.
It
is our instructions to give you notice of our client’s
intention to terminate the said Agreement in terms of Clause 13.2 of
the Agreement.
Conradie
& Damaseb as well as Grand Namibia Auditors are appointed to
investigate the situation with regard to:
1. overall
management of the project in terms of the Agreement;
2. the
total contributions made by the Government ex contractual and
otherwise, and the application thereof;
3. the
total contributions by the service provider and the application
thereof; and
4. the
general compliance in terms of the agreement.
It
is our understanding that the project has certain obligations towards
third parties and in order to mitigate the effects of such
termination, vis-à-vis such third parties, we would like to
propose the following settlement:
“(a) that
the parties agree to the cancellation with immediate effect with due
reservation of their respective rights in terms of the Agreement”
We
await to hear from you in this regard, soonest.”
[9] The
respondent’s legal practitioners responded on September 4,
2008, stating, inter
alia,
that –
“1. the
Auditor General’s report of May 16, 2007 had never been
disclosed to their client previously;
2. the
project had made a net profit for the past number of consecutive six
months periods and their client was not entitled at that point in
time to rely on long past loss periods …
3. sudden
termination of the agreement would result in undue hardship to
employees in the project …
4. the
respondent was not averse to the idea of terminating the agreement on
certain conditions …”
[10] The
applicant’s legal representatives responded on September 18,
2008, alleging, inter
alia,
that the respondent had failed to comply with clause 13.2.1 of the
Agreement; that the applicant had complied with clause 13.2.1 by
investigating the matter through the Office of the Auditor General
whose report had been brought to the respondent’s attention;
that the fact that the applicant had not then initiated steps against
the respondent should in no way be construed as a waiver of its
rights; and that the applicant reiterated its intention to cancel the
agreement and to take full control of the project.
[11] In
a letter of November 28, 2008, addressed to the respondent’s
sole member, the applicant’s Permanent Secretary communicated
the applicant’s termination of the management agreement. This
was (as a result of the respondent’s query), followed by a
similarly worded letter by the applicant’s legal
representatives addressed to the respondent and dated December 9.
[12] Mr
Narib contends that the reason for approaching the Court is that the
applicant has terminated the management agreement between the parties
and that only after the said termination could the applicant seek
repossession of the land (upon which the project operates) as well as
the project itself, in order to safeguard the applicant’s
assets. He submits that urgency relates to the repossession of both
the land and the project (land) so that the applicant can plant pearl
millet (Mahangu) as the planting summer season for maize, which
started in October, has since ended. In the applicant’s
founding affidavit, the Permanent Secretary deposes that as no
preparations were made for the planting of maize, which is more
profitable, and that since it was too late to plant such crop, the
applicant ordered fertilizer and pearl millet seeds in order to
salvage the situation. Mr Narib further argues that, if the
applicant’s application fails, it is going to suffer additional
losses. He further argues that the applicant would not have brought
this action prior to the termination of the agreement as no relief
could then have been sought to repossess the land.
[13] For
the respondent, Mr Schickerling argues that the applicant’s
intention to terminate the agreement is based on the respondent’s
alleged non-performance, the need to repossess the project and to
carry out farming activities to avert further losses. He contends
that no urgency has been proved in the matter; that the so-called
urgency is self created; that disputes between the parties have
existed since December 2005; that the applicant’s right to
cancel the agreement is derived from the Auditor General’s
Report of May 16, 2007; that the delay of one year and seven months
since then has not been explained; that even after the applicant’s
threat of August 13, 2008, to terminate the agreement, the applicant
delayed to implement the threat until November 28, and December 9,
2008. Mr Schickerling further claims that the argument about the
applicant suffering further losses should the urgent application fail
is purely commercial urgency and cites MWEB
Namibia (Pty) Ltd v Telecom Namibia Ltd & 4 Others
Case No.: (P) A 91/2007 (unreported) in aid of his argument.
[14] A
proper reading of the papers in the matter clearly shows that
disputes that culminated in the institution of these proceedings have
come along way, as is evidenced by the Green Scheme Urgency’s
letter of December 7, 2005. Although the Auditor General recommended
in May 2007 that investigations be conducted into the activities of
the project, no steps were taken to implement the recommendation, and
yet, on August 13, 2008 the first notice to terminate the agreement
was issued by the applicant! There is, to date, no telling whether
any such investigations were ever undertaken, and, if so what the
results thereof are. In September 2008, the applicant, through his
legal representatives of record, conceded the fact that no steps had
been taken against the respondent, adding that such failure should
not be construed as a waiver of the applicant’s rights! It was
not until November 28, or December 9, 2008, that the applicant
communicated to the respondent the alleged termination of the
management agreement. Mr Narib now contends that this application
could not have been instituted until the termination of the agreement
had taken place, but no support for such contention appears in the
applicant’s founding! Hence, the contention counts for nothing.
My opinion is that it was unnecessary to wait for the termination of
the management agreement before the applicant could approach the
Court.
[15] In
any event, no good reason has been shown to persuade the Court that
urgency has been established. This, in my view, is a clear case of
remissness or inaction on the part of the applicant. Hence, the
applicant cannot succeed on the basis of urgency as the alleged
urgency is self-created. See: Bergmann
v Commercial Bank of Namibia Ltd
2001 NR 48 at 51E-F.
[16] In
conclusion, I am satisfied that the applicant has failed to establish
urgency in the matter. In the result, the following order is made:
1. the
point in
limine
is upheld and the application is, therefore, dismissed for lack of
urgency;
2. the applicant is directed to
pay the costs of the application to the respondent, such costs to
include costs of two instructed counsel.
_____________________
SILUNGWE,
AJ
COUNSEL
ON BEHALF OF THE APPLICANT:
Adv
Narib
Instructed
by: Conradie
& Damaseb
COUNSEL
ON BEHALF OF THE RESPONDENT:
Adv
Schickerling
Adv
Van Vuuren
Instructed
by: Theunissen,
Louw and Partners