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REPUBLIC OF NAMIBIA

HIGH COURT OF NAMIBIA MAIN DIVISION, WINDHOEK

REASONS FOR THE RULING

Case No: A 99/2016

DATE: 27 JUNE 2016

In the matter between:

WEPEX MANAGEMENT (PTY) LTD............................................................................APPLICANT

And

PUPKEWITZ HOLDINGS (PTY) LTD................................................................1^ST RESPONDENT

PURITY MANGANESE (PTY) LTD....................................................................2^ND RESPONDENT

(presently in provisional liquidation)

Neutral citation: Wepex Management (Pty) Ltd v Pupkewitz Holdings (Pty) Ltd (A 99-2016) [2016] NAHCMD 183 (27 June 2016)

Coram: ANGULA, DJP

Heard: 29 April 2016

Delivered: 27 June 2016

Flynote: Applications and motions – Urgent Applications – Rule 73(4) requirements - Court held that urgency should not be self-created.

Summary: Applications and motions – Urgent Applications – Where an applicant is seeking the court’s indulgence and has created the emergency, through culpable remissness or inaction, he cannot succeed on the basis of urgency – Consequently application struck from the roll with costs for lack of urgency

ORDER

1. The application is struck from the roll for lack of urgency.

2. The applicant is ordered to pay the respondent’s costs.

REASONS

ANGULA, DJP:

Introduction

[1] This application came before me on Friday 22 April 2016 on an urgent basis. The applicant sought for an order in the following terms:

“1. Condoning the applicant’s non-compliance with the rules of this honourable Court relating to service and forms and authorizing the applicant to bring this application on an urgent basis as contemplated in Rule 73(4) of the Rules of Court.

2. That a rule nisi does hereby issue calling upon the first respondent (and/or any other respondent opposing) to show cause, if any, why an order in the following terms should not be granted:

2.1. Interdicting and restraining the respondent from concluding any agreement with any entity whatsoever in terms whereof the first respondent alienates, sells and/or cedes its claim for payment of the sum of N$83 441 702-07 against Purity Manganese (Pty) Ltd (in provisional liquidation) together with interest accrued thereon (hereinafter “the agreement”) pending the resolution of the action referred to in paragraph 4 infra;

2.2. Interdicting and restraining the first respondent from repudiating its contractual obligations towards the applicant with reference to its oral agreement concluded with the applicant on 3 March 2016 in terms whereof the first respondent sold its claim for payment of the sum of N$83 441 702-07 against Purity Manganese (Pty) Ltd (in provisional liquidation) together with interest accrued thereon to the applicant, pending the resolution of the action referred to in paragraph 4 infra;

2.3. Compelling and ordering the first respondent to honour and comply with its obligations as per the agreement referred to hereinbefore, pending the resolution of the action referred to in paragraph 4 infra;

2.4. Directing the first respondent (and any other respondent opposing jointly and severally together with the first respondent) to pay the cost of the application, alternatively ordering that the costs of this application be costs in the cause of the main action as contemplated in paragraph 4 infra;

3. Ordering that sub-paragraphs 2.1 to 2.3 supra shall operate as an interim order with immediate effect pending the resolution of the action referred to in paragraph 4 infra.

4. Granting the application leave to sue the first respondent within 30 days from date of the order referred to in paragraph 3 above in an action whereby the applicant inter alia may claim against the first respondent an order in the following terms:

4.1. An order declaring that the oral agreement concluded with the applicant on 3 March 2016 in terms whereof the first respondent sold its claim for payment of the sum of N$83 441 702-07 against Purity Manganese (Pty) Ltd (in provisional liquidation) together with interest accrued thereon to the applicant is of full force and effect;

4.2. An order for specific performance in that the first respondent be compelled to honour and comply with its obligations pursuant to the oral agreement concluded with the applicant on 3 March 2016 in terms whereof the first respondent sold and ceded its claim for payment of the sum of N$83 441 702-07 against Purity Manganese (Pty) Ltd (in provisional liquidation) together with interest accrued thereon to the applicant, subject to the parties’ remedies for breach as contemplated therein.”

[2] When the matter was called on 22 April 2016, it was postponed by agreement between the parties to 28 April 2016 for hearing. In the meantime the applicant had to file its replying affidavit on or before 27 April 2016. Only the first respondent opposed the application.

[3] When the matter resumed on 28 April 2016, the respondent took the point that the matter was not urgent. I ruled that the issue of urgency must be determined first, separate from the merits. Having heard counsel’s submissions, I reserved my ruling for the following day. On 29 April 2016 I ruled that the matter was not urgent and struck it from the roll with costs, such costs to include the costs of one instructed counsel and one instructing counsel. I then undertook to provide the reasons for my ruling on 7 July 2016. Following below are my reasons.

Background

[4] The applicant is a South African company based at Johannesburg. Its Chief Executive Officer is Mr Adam Piper who deposed to the founding affidavit. The first respondent is a well known Namibian company with diverse business operations in the Namibian economy. Its head office is situated at Windhoek. Mr Mendelow, who deposed to the answering affidavit, is a director of the respondent. He was the acting chairman of the board of directors at the time when the transaction which is the subject matter of this application was negotiated. The second respondent is a Namibian mining company which was placed under provisional liquidation on 17 September 2015. Its liquidators did not oppose the application. I will thus only refer to first respondent as “the respondent” in these reasons and whenever it is necessary to refer to the second respondent, I will refer to it as “Purity”.

[5] According to the applicant, during the year 2015, the applicant became interested in the mining operations previously conducted by Purity. Purity was placed under provisional liquidation on 17 September 2015 on application brought by the respondent as a creditor of Purity. The rule was extended on 29 October 2015 to 2 December 2015 and was again extended to 11 May 2016. It is common cause that Purity is the holder of certain mining licences including the mining license ML35C. The sustenance of this mining licence was of vital importance to the applicant. Should Purity be finally liquidated the mining licence would be lost by operation of the law. In order to save the licence, it was agreed between the applicant and the joint liquidators that the applicant would carry out a limited geological and technical due diligence investigation on the area proscribed under ML35C in order to ascertain the feasibility of conducting mining operations in that  area. After the due diligence investigation had been concluded, a report would be compiled for submission to the Minister of Mines and Energy for consideration in support of the renewal and retention of the mining license. The agreement carried Mendelow’s approval, in fact the written agreement was prepared by him. The agreement was to be used as the basis for the extension of the rule nisi regarding the liquidation of Purity.

The dispute between the parties

[6] The dispute between the parties concerned the validity or otherwise of an alleged oral agreement, which according the applicant, was concluded between the applicant and the respondent then represented by Piper and Mendelow respectively. The applicant alleged that a valid oral agreement was concluded on 3 March 2016. According to the applicant, in terms of the alleged oral agreement, the respondent sold to the applicant the claim for N$ 83 441 702.07 it had against Purity’s estate for the sum of N$ 3 million. As a further consideration for the sale, that the respondent orally agreed to, in future, exercise its voting right as a creditor in the estate of Purity at all meetings of the creditors of Purity. The agreement was subject to a suspensive condition that the applicant pay the purchase price of N$ 3 million into the trust account of his legal practitioners. According to applicant the suspensive condition was fulfilled on 7 March 2016 when the applicant paid the purchase price into the trust account of his legal practitioners. The agreement thus became binding on 7 March 2016. It was common cause that such amount was paid by the applicant into the trust account of the applicant’s legal practitioners.

[7] The respondent’s position was that no binding agreement was concluded. It contended that the oral understanding reached between the parties was subject to such an understanding being reduced to writing; and that that understanding was not reduced to writing. The respondent further alleged that pending the understanding being reduced to writing, the respondent was entitled to consider offers from third parties.

[8] According to the applicant on, or about 10 March 2016, and while the applicant’s legal practitioner was still waiting for the draft agreement, Piper received a telephone call from Mendelow during which Mendelow informed Piper that the respondent had received a better price from a third party and that a deal had already been sealed. Piper then told Mendelow that the applicant did not accept the repudiation of the agreement.

[9] Initially when the application was launched, the applicant asked for an interim interdict that the respondent, inter alia, be interdicted from concluding any agreement with any entity in terms whereof the respondent sells its claim of N$ 83 441 702.07 against Purity; and an order for specific performance compelling the respondent to honour its obligations in terms of the oral agreement. These orders were sought pending an action to be instituted within 30 days from the date of the interim order being granted. However when the respondent filed its opposing affidavit, it transpired that the respondent had already concluded an agreement with a third party on 24 March 2016. That necessitated the applicant to file an amended notice of motion. The terms of the amended notice of motion are not relevant for the purpose of these reasons.

Whether the matter was urgent

[10] Rule 73(4) stipulates that every affidavit filed in support of an application for urgency must set out explicitly the circumstances which the applicant avers renders  the matter to be urgent and the reasons why the applicant claims he/she  cannot be afforded substantial redress at a hearing in due course. It would be apposite to summarise some of the applicable principles emanating from case law when the court is considering urgency. The applicant bears the onus to satisfy the requirements of rule 73(4) before the court can exercise its discretion in favour of the applicant. It is a well established principle that for purposes of deciding urgency, the court’s approach is that the court accepts that the applicant’s case is a good one. Commercial urgency is well recognised in our courts, provided that the commercial urgency is sufficient to invoke the provisions of rule 73. It does, however, not follow as a matter of course that just because the matter is one of a commercial nature it would entitle the applicant to have his matter treated on an urgent basis. The fact that irreparable damages may be suffered is not enough to make out a case for urgency. Although it may be a ground for an interdict, it does not make the application urgent. When the applicant is seeking the court’s indulgence and has created the emergency, through culpable remissness or inaction, he cannot succeed on the basis of urgency. In short, the urgency should not be self-created. An applicant should therefore not delay in approaching the court and wait until a certain event is imminent and then rely on urgency to have his /her matter heard.[1]

[11] Keeping those principles in mind, I will now proceed to consider the facts advanced by the applicant in support of his assertion that the matter was urgent. Piper for the applicant was informed on 10^th March 2016 by Mendelow during a telephone conversation that he was “beaten to the post”, in that an unknown third party had secured the respondent’s claim against Purity at a better price. Piper then responded that he did not accept the repudiation. After the telephone conversation, he followed up with an email in which, inter alia, he reserved the applicant’s legal right, which would include seeking relief from the courts in Namibia.

[12] It is common cause that on 14 March 2016 the legal representative for the applicant dispatched a letter to Mendelow in which letter the applicant demanded a written undertaking from the respondent by no later than 18 March 2016 that the respondent would perform its obligation in terms of the oral agreement. In the alternative, that the respondent undertook not to proceed or pursue negotiations with third parties until such time as the dispute between the applicant and the respondent had been resolved; failing receipt of such undertaking the applicant would approach this court for an urgent interim relief. It is common cause that no undertaking was received from the respondent on or before 18 March 2016. There was no explanation on paper why the applicant did not launch the application after the expiry of the deadline or shortly thereafter.

[13] Thereafter on 22 March 2016 a letter was received by the applicant from Mendelow in which it was clearly stated and reiterated that no oral agreement had been concluded between the parties as alleged by the applicant. Mendelow further pointed out that all discussions between the parties were without prejudice and that an agreement would only have come into existence once it had been reduced to writing and signed by the parties. A draft agreement was attached to the letter and the applicant was invited to consider such draft, should it still be interested in further discussions. The letter concluded by stating that in the meantime the respondent was free to consider any proposal from third parties.

[14] It is further common cause that one day after he dispatched the letter to the applicant’s legal practitioner, on 24 March 2016, Mendelow telephoned the applicant’s legal practitioner and according to the applicant’s version, Mendelow told the legal practitioner “in no uncertain terms that the deal was off”. About three days thereafter, the applicant’s legal practitioner telephoned Mendelow who again confirmed that the deal was off and all dealings, including those related to the liquidation of Purity, were off. It was again not explained why it was necessary for the applicant’s legal practitioner to telephone Mendelow after he had already been told a few days before in no uncertain terms that the deal was off.

[15] It was further common cause that on 31 March 2016 the legal practitioner for the applicant addressed yet a further letter to Mendelow in which he reiterated the demand which was made in his letter of 14 March 2016. A similar undertaking was again sought that the respondent would not seek from the court a confirmation of the rule nisi on the return date, which was due on 11 March 2016, whereby Purity would be finally liquidated. The applicant again demanded a written undertaking, to be received by no later than close of business on 1 April 2016, failing which the applicant would approach this court on an urgent basis for an interim relief pending an action to be instituted claiming specific performance of the oral agreement. It was common cause that no such undertaking was received from the respondent.

[16] It appeared from the papers that it was only on 6 April 2016 that a resolution was adopted authorising the institution of the application and for Piper to act on behalf of the applicant. The applicant did not explain why it had taken about six days between 1 April 2016 when the deadline expired and 6 April 2016 when the resolution was adopted authorising the institution of these proceedings. The intervening time period was not explained. It further appeared from the papers that the applicant is a one-man company. Piper is the chairman of the board of directors. He is also the Chief Executive Officer of the applicant. He is the directing mind and will of the applicant. He was also the person who deposed to the founding affidavit of these proceedings. Having regard to those facts, it appeared to me that it did not involve a complicated procedure to take a decision to launch the application. The applicant did not allege any logistical challenges involved in taking action.

[17] As pointed out above, the resolution to launch the application was adopted on 6 April 2016. It appeared to me that it was not a coincidence that the resolution read verbatim as the prayers in the notice of motion. The certificate of urgency was signed by counsel on 8 April 2016. The notice of motion was signed on 11 April 2016. The supporting affidavit was only commissioned on 12 April 2016 and the application was issued and served on the same day.

[18] I took the view that the urgency propounded by the applicant was self-created. The applicant did not act with the necessary urgency after he had been told in no uncertain terms that there was no agreement and that the deal was off. He made various threats to approach the court on an urgent basis which were not followed through. In my view the applicant was culpably remiss, and for that reason alone he could not succeed on the basis of urgency.

[19] Regarding the second requirement of rule 73 (4), namely the reasons why the applicant claims it could not be afforded substantial redress at a hearing in due course, the applicant stated in his founding affidavit that, due to the fact that the respondent repudiated its contractual obligation, the applicant was in a predicament which could not be dealt with in any other form of remedy. When the application was heard, it was common cause that the respondent had concluded a written agreement with a third party which was attached to the respondent’s answering affidavit. I took the view that there was an alternative remedy available to the applicant in a form of a claim for damages for breach of contract against the respondent and which the applicant could claim in due course. The applicant alleged that the date for the provisional liquidation was due to be confirmed on 11 May 2016 and therefore the applicant had no other option but to approach the court for an interim relief. The applicant was not a creditor in the insolvent estate of Purity. Its only standing was the contrived arrangement between it and the respondent which the respondent decided to repudiate. It was further alleged that if the final liquidation order were to be granted and the mining license cancelled, the applicant would suffer loss in excess of N$ 700 000 which it had already incurred in compliance with its obligations towards the liquidators of Purity in terms of the agreement made in December 2015. In terms of this agreement, the applicant undertook to carry out the limited geological and technical due diligence investigation at its own costs. Furthermore the respondent was not a party to the December 2015 agreement. It was further alleged that the applicant would suffer substantial loss due to the fact that its investment would be in vain if the respondent were to be allowed to continue with its repudiation of the oral agreement. It was not spelled out what would constitute the substantial loss or investments, other than the amount of N$ 700 000 expended on the due diligence exercise. I took the view that if the applicant could hold the respondent liable for payment of the amount of N$700 000, it had an alternative remedy in the form of a claim for damages against the respondent. For those reasons I was of the view that the applicant had also failed to satisfy the second requirement of rule 73 (4)

[20] It was for those reasons that I made my ruling on 29 April 2016.

H Angula

Deputy Judge President

APPEARANCES:

APPLICANT: Mr Strydom

Instructed by Erasmus & Associates

FIRST RESPONDENT: Mr Schickerling

Instructed by Koep & Co.

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