Reasons for order:
DE JAGER J:
Introduction
In November 2011 the applicant, Engen Namibia (Pty) Ltd, and the respondent, Denise Carmen Jennifer Billy, concluded a notarial deed of lease (the lease) for certain property (the property) whereby the applicant leased the property from the respondent for an initial period of 15 years with provision for a renewal period of five years. Under clause 10.3 of the lease, the applicant offered the respondent the first opportunity to be appointed as the licensee for the business at the property and the parties concluded a written marketing licence agreement (the MLA) in November 2012 whereby the applicant granted the respondent a licence to market and sell the applicant’s products under their licence at the property subject to the MLA.
Together with interest and cost of suit, the applicant claims payment of N$9 161 373,28 from the respondent for their breach of the MLA. It is alleged that the respondent failed to pay the applicant various amounts due under the MLA on their due dates for petrol, lubricants, and diesel sold and delivered by the applicant to the respondent, forecourt levies and quick shop gross monthly turnover levies. The applicant alleges that because of the respondent’s breach, it cancelled the MLA on 13 April 2022. On 20 May 2023, in line with a deed of settlement concluded between the parties during May 2022, the applicant allegedly handed the property over to a third party (Sunnyside) for them to conduct the business at the property.
On 27 March 2024, summary judgment was granted in favour of the applicant against the respondent for the remainder of the applicant’s claim for payment of N$133 969, interest thereon and declaring the property executable. The respondent delivered their plea and raised a counterclaim consisting of three claims. The applicant excepted to all three claims of the counterclaim on four grounds. The court is now seized with the exception.
The first respondent’s late heads of argument
On 17 July 2024, the applicant was ordered to file their heads of argument on or before 30 August 2024 and the respondent’s heads of argument was ordered to be filed on or before 4 September 2024. The exception was set down for hearing on 10 September 2024. The applicant’s heads of argument was filed timely. The respondent’s heads of argument was only filed on 6 September 2024 and on 8 September 2024, at 20h59, ‘corrected’ heads of argument was filed on their behalf. In a status report date 8 September 2024, the respondent reported that they reloaded their heads of argument with corrected numbering as ‘the draft uploaded’ previously had defective paragraph numbering. In that status report, they sought the court’s indulgence, saying the heads of argument are ‘involved and industrious and not filed late out of any contempt of court’. No condonation application was filed. The respondent’s legal practitioner, on 10 September 2024, when the exception was heard, prayed, from the bar, that the late filing of the respondent’s heads of argument be condoned saying that they ran out of time and that it was explained in the 8 September 2024 status report.
The applicant objected to the late filing of the respondent’s heads of argument. They say the status report does not set out any reasons for the late filing and they are prejudiced by the late filing as it gave the respondent additional days for their heads of argument and resulted in the applicant having two days less to prepare for the exception’s hearing and to read all the authorities relied on by the respondent. Relying on Minister of Urban and Rural Development v Witbooi, the applicant argues that workload is not an excuse for the late filing of the respondent’s heads of argument.
The 8 September 2024 status report does not contain a full and detailed explanation for the default. It does not contain facts to enable the court to determine whether the explanation is reasonable and acceptable. Moreover, a status report is not a condonation application. Furthermore, a general statement from the bar that a legal practitioner ran out of time without any facts how that result came about does not pass muster and it too is not a condonation application. The status report does not contain any indication whether the respondent’s opposition to the exception has prospects of success. That aspect was also not properly addressed from the bar on 10 September 2024. The respondent’s heads of argument, including their list of authorities, consists of 19 pages and refers to 23 authorities, totalling 227 pages in their bundle of authorities. On the other hand, the applicant’s heads of argument and list of authorities consist of 11 pages, listing nine authorities with a bundle of authorities of 60 pages. It is understandable, in the circumstances at hand, why the applicant objects to the late filing of the respondent’s heads of argument and says they are prejudiced thereby. The applicant further indicates that the respondent’s heads of argument in the summary judgment application was also filed late. On 6 December 2023, the respondent was ordered to file their heads of argument in the summary judgment application on or before 29 February 2024. The respondent’s heads of argument was only filed on 4 March 2024. The respondent did not seek condonation for that default at the time and the applicant did not object to the late filing of the respondent’s heads of argument for the summary judgment application.
The respondent’s attitude to the late filing of their heads of argument merits criticism. They failed to bring a condonation application supported by evidence under oath. The respondent sought condonation from the bar in a nonchalant fashion that they ran out of time. The result that the respondent ran out of time and that the respondent’s heads of argument are involved and industrious are without facts how it came about for the court to determine if the explanation is reasonable and acceptable. A legal practitioner’s workload in and of itself is not a reasonable and acceptable explanation. The respondent’s conduct portrays habitual non-compliance. They failed to make out a case for the condonation sought from the bar. The court's authority in requiring compliance with its orders must be preserved. Litigants’ and their legal practitioners’ modern-day lax attitude to compliance with court orders is unacceptable and must not be tolerated. The condonation application made from the bar is dismissed. The court will, however, consider the respondent’s oral arguments. The court now turns to the exception and the counterclaim.
The exception and the counterclaim
The basis of the exception, supported by four grounds, is that the counterclaim does not contain averments necessary to sustain a cause of action against the applicant. The applicant relies on High Court Rule 45(5) and the definition of ‘cause of action’ as stated in McKenzie v Farmers' Co-operative Meat Industries Ltd referred to by the court in China Henan International Cooperation (Pty) Ltd v De Klerk and Another that the claim must contain every fact which it would be necessary for a party to prove, if traversed, to support their right to judgment, not comprising every piece of necessary evidence to prove each fact (facta probantia) but every fact necessary to be proved (facta probanda). The principles applicable to exceptions are not in dispute hence same is not repeated or dealt with.
The first counterclaim is as follows. Sunnyside trades on the property unlawfully and without a retail licence as it purportedly bought the ‘defendant’s’ retail fuel licence at an auction during May 2023. The licence is an administrative right attached to the person of a holder, the respondent. The licence is linked to a set of administrative duties that cannot be sold in execution/auctioned without administrative oversight by the relevant administrative body, the issuing authority, and without compliance with certain petroleum regulations. In the premises, Sunnyside did not buy the retail fuel licence and is trading unlawfully on the property without a retail fuel licence. The applicant is supplying fuel to an unlicenced person in contravention of the ‘Petroleum Act and Regulations’. The applicant commercially benefits from use of the retail fuel licence by Sunnyside on the property. The respondent is suffering damages as their retail fuel licence is used unlawfully and illegally while they receive no compensation for it. The applicant enables Sunnyside in their unlawful act of delict against the respondent and the applicant is knowingly part of the delictual action against the respondent by Sunnyside. Alternatively, Sunnyside is the applicant’s agent in their operations on the property, as licensee, to maintain the property as a functional trading retail fuel business. The applicant is, jointly and severally, liable with Sunnyside towards the respondent for damages in the unlawful use of the retail fuel licence, alternatively, the applicant is solely liable for it. The respondent had offers to rent her rights under the lease and her retail fuel licence for N$85 000 per month from October 2022 which income they are losing due to the applicant’s persistence in holding Sunnyside out to be lawfully trading. The respondent suffered damages of N$1 020 000 from the commencement date of the illegal/unlawful use of the retail fuel licence from May 2023 to date and every month in the amount of N$85 000. Payment of N$1 020 000 is claimed.
The exception’s first ground is against the first counterclaim as follows. The respondent pleads they suffered damages of N$1 020 000 and continues to suffer damages of N$85 000 per month without pleading that they accepted any of the alleged offers. Clause 10.1 of the lease grants the applicant exclusive use and occupation of the property throughout the lease period, including any renewal. The lease is still in existence and any alleged offers were not open for acceptance. Consequently, the respondent cannot suffer damages, and the counterclaim does not disclose a cause of action for the damages claimed.
The respondent argues that if they were given the first opportunity provided for in clause 10.3 of the lease either to be appointed as the licensee for the business on the property, alternatively, to nominate the proposed dealer to be appointed as the licensee for the business, they would have been able to go to the issuing authority and apply for a transfer of the retail fuel licence to the offeror, but they could not because they could not lease it out without the property. They say they could not accept the offers because they were deprived of the opportunity provided for in clause 10.3.
The applicant argues the lease, giving the applicant exclusive use and occupation of the property, still exists and the alleged offers were not open for acceptance as the respondent would have had to cancel the lease before any offer could have been accepted. It is correct that, under the lease, the applicant had exclusive use and occupation of the property throughout the lease period. There is no allegation that the lease is cancelled. In the third counterclaim, the respondent only pleads that they ‘herewith elects to cancel its rights under’ the lease. The lease is not alleged to be cancelled. It is thus correct, ex facie, the respondent’s pleadings, that the lease exists. On the respondent’s argument, they could not lease their retail fuel licence to an offeror without the property and they were deprived of the opportunity provided for in clause 10.3. Whether the respondent had the opportunity provided for in clause 10.3 of the lease around May 2023 comes down to an interpretational issue dealt with below. It follows that it is uncertain, at this exception stage, whether the alleged offers would have been open for acceptance.
It is, however, correct that the respondent failed to allege that they accepted the alleged offers. It does not assist the respondent to argue what they could have done regarding the alleged offers. Every fact necessary to be proved to sustain the cause of action (facta probanda) must be pleaded. What the respondent argues what they could or would have done regarding the alleged offers is not pleaded. The court finds that the first counterclaim does not disclose a cause of action for the damages claimed and upholds the exception against the first counterclaim on the exception’s first ground. The first counterclaim is set aside.
The exception’s second ground, also levelled against the first counterclaim, is as follows. As no person shall operate a retail outlet unless authorised to do so under a retail licence, a licence or the rights attached thereto may not be rented out to a third party. The applicant says neither the Petroleum Products and Energy Act 13 of 1990, nor the regulations, permit the renting out of a retail fuel licence and the damages claimed would thus stem from an illegal activity. Consequently, the applicant says, damages cannot be suffered and a cause of action is not disclosed.
The respondent argues that under regulation 29(2) a retail licence is not transferable except by way of amendment of the licence under regulation 30. They further argue that the licence can be sold or leased, and that transfer referenced in the regulations is a broad term. They contend the legislation deals with actual transfer, there can be various reasons for a transfer, and it does not refer to leasing out a retail fuel licence. The respondent says there was no point to approach the issuing authority for an amendment while they were not given the opportunity to nominate the proposed dealer, and the deprivation of that opportunity prevented them from leasing out their retail fuel licence.
The applicant, relying on Courtney-Clarke v Bassingthwaighte, argues it is trite that courts do not enforce illegal contracts, will not allow a cause of action founded on such contract and any lease of a retail fuel licence would be illegal. The applicant contends the respondent failed to plea that an application was made under regulation 30 and points out that a transfer had to be preceded by an amendment application under regulation 30.
Again, it does not assist the respondent to argue what they could have done regarding an amendment of their retail fuel licence or that there was no point approaching the issuing authority for an amendment without it being pleaded. They should have pleaded facts in support of their argument. That was not done.
The exception’s second ground can, however, not be upheld because it is founded on the basis that the damages claim stem from an illegal activity. The alleged fact that the damages claim stem from an illegal activity does not appear ex facie the first counterclaim. The regulations only speak to transfer, not the lease of a retail licence. In theory, it may be possible to lease a retail licence from someone without it being transferred to the lessee and without the lessee operating a retail outlet. The exception’s second ground to the first counterclaim thus fails.
The second counterclaim is as follows. In May 2023, when Sunnyside ‘reoccupied’ the property, the applicant did not offer the respondent the first opportunity to nominate a proposed dealer to operate on the property, while they had a duty to do so under the lease. The applicant is thus in breach of a material lease term, which they cannot rectify. The respondent suffered damages of N$14 000 000, which they could have profited in the sale of the property during May 2023, and which could have been set off against any debt to the applicant under the MLA. The respondent tenders that N$7 346 764,88, being the alleged amount due under the MLA that did not prescribe, be set off against any determination of such damages.
The exception’s third ground is raised against the second counterclaim as follows. The MLA was concluded pursuant to clause 10.3 of the lease which obliged the applicant to either appoint the respondent as the licensee under the MLA, alternatively, a proposed dealer nominated by them. The respondent exercised her election under clause 10.3 to be appointed as the licensee under the MLA. As a result, they cannot allege that the applicant breached their obligations by not affording them the right to nominate a proposed dealer and they could not suffer damages of N$14 000 000 as profits from an alleged sale of the property.
The respondent’s argument is that in May 2023, the applicant had a duty to again afford the respondent the first opportunity to nominate a proposed dealer to operate on the property. The respondent’s position is that clause 10.3 does not preclude an interpretation that whenever an operator was to be appointed, the respondent should be the first person who should be nominated, alternatively, be given the opportunity to nominate a proposed dealer. They say after the respondent was ‘spoliated’, the applicant made an election and they should again have complied with clause 10.3 at that time. They further say the applicant leased the property and that does not mean that the respondent could not sell the property but whoever would buy it would do so subject to the lease. However, if the respondent was not given the opportunity provided for in clause 10.3, they would not have been able to sell the property.
The applicant argues that the deed of settlement concluded in May 2022 had put an end to the alleged spoliation. Following urgent interdictory relief instituted by the applicant against the respondent, the respondent agreed to hand over ‘all’ possession of the property to the applicant or their designated nominee. The respondent further agreed not to object to the appointment of a caretaker or any other person/entity by the applicant to conduct the business of a fueling station, retail business or related business from the property for a period not exceeding 180 days after the date of the deed of settlement (the caretaking period) and if the property was not sold at the end of that period, both parties reserve their rights as it stood before concluding the deed of settlement.
The exception can only succeed if upon every interpretation which the counterclaim can reasonably bear, no cause of action is disclosed. The question is whether during May 2023 the applicant was again obliged to comply with clause 10.3. Ex facie clause 10.3, read with clauses 10.1 and 10.2, it is uncertain whether the proviso set out in clause 10.3 is a once-off obligation and whether the phrase ‘the first opportunity’ limits the obligation set out therein to the time when the MLA was concluded in 2012 or whether it applies every time the property is sublet or every time occupation or possession is given up. It cannot, at this stage, be said that the interpretation on which the counterclaim is based is excluded by that clause.
The exception’s third ground misses the point of the second counterclaim which relates to what happened in 2023 and not when the respondent was initially appointed as the licensee in 2012. Furthermore, due to the uncertainty stated above surrounding the interpretation of clause 10.3 and the basis set up for the third ground of the exception, it cannot succeed. The applicant failed to persuade the court that upon every interpretation the third counterclaim can reasonably bear, no cause of action is disclosed.
In respect of the exception’s third ground, the applicant further argues that their alleged breach does not entitle the respondent to the damages allegedly suffered under the second counterclaim. The applicant was understood to argue that there is no causal link between the alleged breach and the alleged damages. There may be truth in that argument, but that was not pleaded in the exception. The applicant is bound by the exception. The court can, as a result, not decide the exception’s third ground on that argument.
The third counterclaim is as follows. The respondent ‘herewith elects to cancel its rights under’ the lease. It says the applicant lost their rights to occupy the property, and consequently also the right to licence and accommodate Sunnyside as licensee on the property. They plead that the applicant and Sunnyside be ordered to vacate the property and return it to the respondent and that the deputy sheriff co-opt the Namibian Police to evict the applicant and Sunnyside in the event of failure after the deputy sheriff’s first demand. The respondent tenders to pay restitution.
The exception’s fourth ground is levelled against the third counterclaim as follows. The respondent purportedly ‘elects to cancel its rights under’ the lease. The essentialia for cancelling a contract due to a breach is a breach of the contract, the right to cancellation accrued because, for example, the breach was material, or the cancellation clause of the contract was complied with (such as prior notice allowing remedying the breach) and clear and unequivocal notice of cancellation was conveyed to the other party (unless the contract dispenses with such notice). None of the essentialia are alleged, so they say. They further say no basis is laid for the alleged cancellation, and so it fails to disclose a cause of action.
The respondent argues that where the counterclaim lacks an alleged breach, the court should have regard to the plea where the applicant’s breach of clause 10 is alleged in paragraph 4 thereof.
Clause 16.1 of the lease provides that should a party breach any of their obligations under the lease reasonably capable of being remedied and fails to do so within 30 days after receipt of written notice by the aggrieved party to the defaulting party requiring them to remedy the breach, the aggrieved party shall be entitled to cancel the lease forthwith but if the breach is not reasonably capable of being remedied within the said period of ‘fourteen’ days or should circumstances arise during the period of notice which, being partly or entirely beyond the defaulting party’s control, preventing it from remedying the breach within 30 days, the defaulting party shall be allowed such additional period as may reasonably be required therefore. Clause 16.2 further provides that, save as provided in clause 16.1, neither party shall be entitled to cancel the lease because of a breach thereof by the other party unless that breach is not reasonably capable of being remedied and would at common law be entitled to such cancellation. Clause 16.3 continues that notwithstanding the other provisions of clause 16, neither party shall be entitled to cancel the lease unless the aggrieved party shall first have delivered another written notice to the defaulting party, following any notice given under clause 16.1, informing them of their intention to cancel the lease and the reasons therefore and should the defaulting party not within 14 days following receipt of the clause 16.3 notice remedy the breach, then only shall the aggrieved party be entitled to cancel the lease upon written notice to that effect to the defaulting party.
The respondent does allege a breach of a material term of the lease, albeit not under the heading of the third counterclaim. It was pleaded in paragraphs 12.1, 12.2 and 13 under the heading of the second counterclaim. It was also pleaded in paragraph 13 that the applicant is unable to rectify the alleged breach. Looking at clause 16, including the reference made therein to a breach reasonably capable of being remedied, it is uncertain whether notices were required under clause 16 for the type of breach alleged by the respondent which the respondent says was unable to be rectified. As a result, the third counterclaim could be interpreted to mean that the notices in clause 16 need not have been given and that the lease dispensed with notice of cancellation because the alleged breach was unable to be rectified. The respondent concedes that the notices referred to in clause 16 were not pleaded but argues that the choice to appoint Sunnyside was made a long time ago in May 2023 and the notices would have been obsolete when the respondent elected to cancel in the counterclaim. As far as a party’s common law right to cancel goes, the following. The respondent did allege that the alleged breach was of a material lease term. The question remains whether the respondent conveyed a clear and unequivocal notice of cancellation of the lease to the applicant. In paragraph 16 of the counterclaim the respondent pleads that they herewith elect to ‘cancel its rights’ under the lease. Cancellation of a party’s right to a contract is not the same as cancellation of the contract itself. The court finds that the respondent did not, ex facie their counterclaim, convey a clear and unequivocal notice of cancellation of the lease to the applicant. The court finds that the third counterclaim does not disclose a cause of action against the applicant for their eviction and upholds the exception against the third counterclaim on the exception’s fourth ground. The third counterclaim is set aside.
Conclusion
The applicant prays that the counterclaim be dismissed, alternatively, that it be struck out without providing the respondent an opportunity to amend the counterclaim. Such prayers are against the invariable practice that a party should be allowed an opportunity to amend a pleading successfully excepted to. Regarding costs, both parties pray that the provisions of rule 32(11) be excluded but the facts and circumstances surrounding the exception do not warrant such an order. In conclusion, the order is as set out above. |
