Arguments advanced

Founding papers

5. The applicant devoted 9 pages of its founding papers to the condonation application, and from the remaining pages, the following can be extracted in support of the applicant’s application.

5. In respect of the condonation application, Mr Austin Elindi, deposing on behalf of the applicant, contended that the delay in filing the stay application was occasioned by the erstwhile legal practitioner of the applicant. Mr Elindi contended that the erstwhile legal practitioner notified him of the contents of the court order dated 17 June 2024, in terms of which the application to stay was to be filed by 21 June 2024.

5. Mr Elindi further stated that the erstwhile legal practitioner informed him that they would attend to the application and settle it before dispatching it to him for further consideration, however, that was not done. Mr Elindi contended that he followed up regarding the stay application and was informed that the legal practitioner assigned to the matter was out of the country during the week of 13 to 27 June 2024 and would only be attending to the application on their return. Mr Elindi stated that he was relying on the assistance and advice of his erstwhile legal practitioner, who is well acquainted with the legal process, and waiting for the application to be finalised and sent to him.

5. Once the deadline for filing the stay application had passed, Mr Elindi sought further legal assistance from a cousin, one Ms Shikongo. She reviewed the e-file related to his case and discovered that only a one-sided status report had been filed. This report indicated that a stay application would be submitted, but no actual application had been filed. Ms Shikongo advised Mr Elindi to either ask his former legal practitioner to file the stay application or to seek alternative legal counsel to assist him with his case.

5. Dissatisfied with their services, he terminated his erstwhile legal practitioner’s mandate and requested that they withdraw from the matter on 4 July 2024. Their withdrawal as legal practitioners of record took longer than anticipated.

5. Mr Elindi further stated that after the erstwhile legal practitioners finally withdrew from the matter, he engaged a few legal practitioners in an attempt to secure new counsel. However, all his attempts were futile as the legal practitioners he consulted were conflicted. Consequently, he sought alternative legal counsel and found his current legal representatives on 12 July 2024.

5. Once the current legal practitioners of record came on record, they realised that the applicants’ erstwhile legal practitioner failed to comply with rules 32(9) and (10), and they had to attend to that prior to filing the stay application. However, the parties were unable to secure a consultation until 18 July 2024, as Ms Shikongo was engaged in a hearing from 8 to 12 July 2024 and a telephonic consultation was not viable due to the nature of the matter.

5. Mr Elindi stated that the failure to comply with the court order and timeously launch the stay application was not intentional or due to the disregard of the court rules, and further stated that once he realised that the erstwhile legal practitioner was taking an unreasonable time to file the application, he immediately sought an alternative legal representative to avoid any further delays and/or prejudice to all the parties involved.

5. In respect of the stay application, Mr Elindi submitted that the applicant’s ground for the stay application is that such a stay would ultimately result in a just, effective, and cost-efficient resolution of the dispute between the plaintiff, the applicant, and UAG.

5. He stated that an application for liquidation is pending before the court, in which a creditor of the applicant seeks the provisional and, ultimately, the final liquidation of the applicant, Erongo Petroleum.

5. According to Mr Elindi, the liquidation application is currently subjected to judicial case management. The reasons and grounds for seeking the stay of the current action are premised on the fact that the liquidation application is ripe for hearing due to its advanced stage and the judgment or order before the main action reaches the case management conference stage. He submitted that the delay would be a natural consequence of a liquidation order. The liquidator must first be appointed and approved by the Master of the High Court, which process takes some time. Once appointed, the liquidator will be the only person with authority to determine Erongo Petroleum’s stance with respect to the main action and whether or not the continuation of the applicant’s defence.

5. Mr Elindi, having set out the process and consequences of the liquidator's appointment, contended that this would result in the withdrawal of the main action or a severe delay in the finalisation of the main action as the liquidator and the plaintiff would have to meet to determine the further conduct.

5. Thirdly, Mr Elindi contended that the effect of the liquidation application, in the event of success, is that all the legal costs incurred as a result of mounting a defence in the main action would be detrimental to the applicant's creditors, which may include UAG.

5. Lastly, the final effect of the liquidation application is that upon granting the said order, there would be a concursum creditorium causing the liquidator to call upon all creditors to seize legal action against the applicant and to deal directly with the appointed liquidator in respect of all the claims against the applicant.

5. All this, according to Mr Elindi, would result in a waste of judicial resources during the Judicial Case Management process and the plaintiff, UAG, would only be able to recoup a fraction of the costs to which it would be entitled.

The opposition

5. Mr Lloyd Nzou, in his answering affidavit, argued that simply filing an application to wind up a company or a close corporation does not affect any ongoing legal proceedings. He stated that such proceedings are automatically stayed only when a provisional order is granted. Even then, the stay is limited to allowing the liquidator to step into the shoes of the close corporation in order to investigate and decide whether to continue with the defence raised in those proceedings.

5. Mr Nzou further conceded that the court has the power, in terms of s 363 of the Companies Act 28 of 2004 (the Act), read with s 66 of the Close Corporation Act 26 of 1988 (Close Corporation Act), to stay the action in the event of special circumstances rendering such an order equitable. According to the deponent, no special circumstances exist for the granting of the order sought.

5. The respondents' grounds of opposition are that the applicant is ‘playing for time’, resulting in extensive delays in launching the current application. In Mr Nzou's view, this delay prejudices the respondent.

5. Secondly, the action was instituted against the applicant and First National Bank and will proceed irrespective of the outcome of the liquidation application. If the action is delayed, the respondent would suffer substantially as the sum claimed is in excess of N$100 million.

5. Mr Nzou further denies that the liquidation application is ripe for hearing or that the matter will soon be disposed of. He contended that the liquidation application is unlikely to be heard in 2024, whereafter the judgment would, in all probability, be reserved. In the event that any of the parties are dissatisfied with the outcome of the application and elect to appeal to the Supreme Court, then the current matter can be delayed for years.

5. In short, Mr Nzou contended that the applicant's application is not bona fide and seeks its dismissal.

Arguments advanced

On behalf of the applicant

5. Mr. Beukes, acting on behalf of the applicant, argued that the current interlocutory application is two-fold. Firstly, the applicant seeks condonation for their non-compliance with the court order dated 17 June 2024, by failing to file the stay application as directed. Secondly, the main proceedings under case number HC-MD-CIV-ACT-CON-2024/01388 be stayed pending the outcome of a separate liquidation application under case number HC-MD-CIV-MOT-GEN-2024/00163.

Condonation application

5. During his argument, Mr Beukes referred the court to Telecom Namibia v Michael Nangolo and others², which summarised the legal principles applicable to condonation for non-compliance with the rules of court.

5. Mr Beukes submitted that the applicant advanced a reasonable and acceptable explanation for the late filing of the stay application. He further stated that the applicant instructed the erstwhile legal practitioner to file the application and made the necessary enquiries. The applicant did not sit idly by but enquired about the cause of the delay and when he got advice from a family member, the applicant took action and ultimately terminated the service of the erstwhile legal practitioner and secured alternative counsel.

5. Mr Beukes argued that the ineptitude of the erstwhile legal practitioner cannot be imputed to the applicant, who actively engaged the erstwhile legal practitioner to attend to perform the work they have been instructed to do.

Stay application

5. Mr Beukes argued that the court retains the discretion to decide whether or not to stay proceedings and, in this regard, cited the case of Kalipi v Simon Hochobeb³, in terms of which the court summarised the circumstances under which a court may exercise its inherent jurisdiction.

5. Mr Beukes argued that Judge Geier in Kalipi ,⁴ held that:

‘To sum up: it appears from these cases that all the learned judges, who had occasion to deal with this issue, accepted:

1. that the High Court has an inherent jurisdiction to also stay civil proceedings pending the outcome of other civil proceedings;

2. that this power is to be exercised by the court to prevent an abuse of its process in the form of vexatious litigation; and if an action is already pending between the same parties on the same cause of action;

3. that in this regard the court has a judicial discretion, which must be sparingly exercised on strong grounds, with great caution and in exceptional circumstances’.

5. Mr Beukes contended that in light of the paragraphs above, firstly, the court has inherent jurisdiction to stay civil proceedings depending on the outcome of other civil proceedings. Secondly, this power is to be exercised by the court to prevent an abuse of its process in the form of vexatious litigation and if an action is already pending between the same parties on the same cause of action. Thirdly, the court must exercise it sparingly, and it should be exercised on strong grounds with great caution and in exceptional circumstances.

5. It was the argument of Mr Beukes that the bar has been set high and the applicant must meet those strong grounds as to why the court should exercise its discretion. Mr Beukes further referred the court to Schütte v Schütte⁵ and contended that when the court is exercising its discretion, it must be guided by whether the balance of convenience and equity is in favour of allowing the main proceedings to proceed.

Inherent jurisdiction

5. Counsel for the applicant argues that it is common course that this court has inherent jurisdictions to stay proceedings pending the outcome of other proceedings and this inherent jurisdiction, is supported by legislation.

5. Referring to s 363 of the Act Mr Beukes argued that this section provides that at any time after the presentation of an application for winding up and before a winding up order has been made, the company concerned or any other creditor or member may:

‘if any action or proceeding by or against the company is pending in any court in Namibia, apply to that court for a stay of the proceedings; and

(b) if any other action or proceeding is being or about to be instituted against the company, apply to the Court to which the application for winding-up has been presented, for an order restraining further proceedings in the action or proceeding, and the Court may stay or restrain the proceedings accordingly on appropriate terms.’⁶

5. Additionally, the counsel argued that the circumstances that the court should consider in granting the stay application are whether the applicant has satisfied the court that there are strong and exceptional grounds why the court should grant this stay application. Mr Beukes argued that the applicant has demonstrated that there are strong and exceptional grounds in the applicant’s founding affidavit.

Exceptional Grounds for a Stay of Proceedings

5. Counsel argued that our courts have consistently held that a stay of proceedings should only be granted on exceptional grounds. The applicant must demonstrate that exceptional circumstances exist to justify the stay of proceedings, and such discretion must be exercised sparingly, with caution, and only on strong grounds.

5. In conclusion, Mr Beukes argued that the facts of this case illustrate several exceptional circumstances which would justify a stay of the proceedings are in summary as follows:

a) There is pending liquidation proceedings against the applicant.

2. The liquidation proceedings are at an advanced stage, with all pleadings filed, and it is scheduled for a status hearing on 6 November 2024.

2. Should the applicant be liquidated, only the appointed liquidator would have the legal standing to determine the applicant's defence in the main action. The delay caused by the liquidator’s appointment and subsequent review of the case would severely hinder the progression of the main action.

2. If the liquidation is successful, all creditors, including the plaintiff (first respondent), would be required to present their claims to the liquidator. This process is not only a more efficient way to resolve the applicant’s liabilities but would also save substantial legal costs for all parties involved, as the first respondent would not need to continue litigating its claim in court.

2. The exceptional circumstances lie in the fact that the liquidation process offers a more streamlined, cost-effective resolution that benefits both parties. It is thus equitable and the balance of convenience favours all parties.

2. There is a real likelihood that the liquidation will be granted.

Arguments on behalf of the first respondents

5. Mr Marais, arguing on behalf of the first respondent, submitted that the applicant must first overcome the hurdle of condonation before the court can consider the application to have the proceedings in the main application stayed pending the finalisation of the provisional liquidation proceedings instituted against it by a third party.

5. Regarding the stay application, Mr Marais argued that it is trite that a mere presentation of an application for winding-up of a company has no effect on pending legal proceedings, and pending legal proceedings are automatically stayed upon granting an order for winding up. However, to prevent the possible diminution of the property of the company by the continuation or institution of legal proceedings against it, s 363 of the Act, together with s 66 of the Close Corporations Act, can be invoked where there is a risk of preferring one particular creditor above others.

5. Mr Marais argued that in terms of s 363 of the Act, the court may, at any time after the application’s presentation and before a winding-up order is made, stay such proceedings. Therefore, the court's powers are discretionary in this context, and the court should consider the various interests involved but only where it considers that the continuation or the institution of the proceedings is, under the circumstances, unjust and inequitable.

5. Counsel further argued that making a winding-up order, including a provisional order for liquidation, automatically stays all civil proceedings by or against the company until the appointment of a liquidator.

Inherent jurisdiction

5. Mr Marias agreed that the court has inherent jurisdiction to stay the hearing of civil or application proceedings, pending the finalisation of the liquidation proceedings. He took no issue with the applicant’s reference to the Kalipi matter⁷ and emphasised that the court must exercise this discretion sparingly and on strong grounds, with great caution and in exceptional circumstances.

5. Mr Marais listed, which he phrased as ‘brutal facts’, which weigh against the granting of the relief sought by the applicant. These are the following:

1. The first respondent claims payment of an amount of N$108 066 201,09;

2. The first respondent claims that the applicant owes them since the end of 2023;

3. The first respondent instituted action in April 2024;

4. Interest runs at 20 per cent;

5. The applicant has failed to disclose a defence on the merits;

6. A winding-up application was launched against the applicant on 19 April 2024;

7. The winding up application is opposed by the applicant;

8. The winding up application is unlikely to be finalized only in the year 2025;

9. If an appeal is launched against the winding-up order, the matter might only be finalized by 2029;

10. If an appeal is launched the first respondent’s action could be delayed for five years;

11. The applicant has failed to indicate or disclose its ability or willingness to pay should judgment be granted against it more than five years later.

12. The first respondent will be prejudiced by a stay application.

13. The applicant accepts that it had to show exceptional circumstances;

14. The only exceptional circumstance that the applicant relies on is that an application to wind up has been launched.

15. The fact that an application to wind up has been launched does not constitute an exceptional circumstance.

5. It was further argued that the applicant has not relied on s 363 of the Act and that they have not advanced facts to enable them to overcome the exceptional circumstances threshold required by s 363 of the Act. As a result, the relief sought cannot be granted under s 363 of the Act.

5. Mr Marais argued that if the applicant’s application were to be granted the first respondent would be deprived of a just, speedy, efficient and cost-effective hearing and no exceptional circumstances have been demonstrated by the applicant.

5. In the light above, it was contended that the application should be dismissed, with costs, including the costs of two instructed Counsel, which costs should not be capped in terms of rule 32(11).

Discussion and applicable legal principles

5. De Jager J in Lewfin Holdings (Pty) Ltd v Pause Financial Services CC⁸ held that:

‘…the court’s power to stay proceedings will be exercised sparingly and with great caution,

only in exceptional and clear cases, and strong grounds must be shown to justify it.’

5. Rakow J in Nawa-Mukena v Multichoice Namibia⁹ (Pty) Ltd cited the case of Randell v Cape Law Society¹⁰, albeit in a different context, wherein Smith J summarised the legal principles governing applications for leave to stay as follows:

‘The applicable legal principles can in my view then be summarized as follows:

a) Our courts have a discretion to suspend civil proceedings where there are criminal proceedings pending in respect of the same issues;

(b) Each case must be decided in the light of the particular circumstances and the competing interests in the case;

(c) In exercising its discretion the court will have regard to, inter alia, the following factors:

(i) The extent to which the persons’ right to a fair trial might be implicated if the civil proceedings are allowed to proceed prior to the criminal proceedings;

(ii) The interests of the plaintiff in dealing expeditiously with the litigation or any particular aspect thereof;

(iii) The potential prejudice to the plaintiff if the proceedings are delayed;

(iv) The interests of persons not involved in the litigation; and

(vi) The interests of the public in the pending civil and criminal litigation.

(d) The court must be satisfied that there is a danger that the accused might be prejudiced in the conduct of his defence in the criminal matter if the civil case is allowed to proceed before the finalization of the criminal case against him’. (emphasises provided)

5. The court in Aubrey M Cramer Ltd v Wells NO¹¹ 1965 (4) SA 304 (W) at 305 held that the court’s power to stay or suspend the winding up of the company is discretionary.

5. Section 363 of the Act provides that:

‘At any time after the presentation of an application for winding-up and before a winding-up order has been made, the company concerned or any creditor or member may –

(a) if any action or proceeding by or against the company is pending in any court in Namibia, apply to that court for a stay of the proceedings; and

(b) if any other action or proceeding is being or about to be instituted against the company, apply to the Court to which the application for winding-up has been presented, for an order restraining further proceedings in the action or proceeding, and the Court may stay or restrain the proceedings accordingly on appropriate terms’.

5. In terms of this section, the court may in proceedings which are pending, at any time after the application's presentation and before a winding-up order is made, stay such proceedings. The court’s powers in this context are discretionary, and the court should consider the various interests involved, however, the judicial discretion must be sparingly exercised on strong grounds, with great caution and in exceptional circumstances.¹²

5. The court agrees with the first respondent's submissions that a stay should not be granted where the proceedings would have to be determined even in the winding-up and there are no considerations of convenience to justify the stay.¹³

5. The applicant has the onus to prove the existence of circumstances warranting the stay or suspension of the winding up.

5. Mr Beukes’ departure point for his argument was that the stay application should be granted as the application for liquidation would be finalized long before the main action reaches a point of case management conference. In my view, Mr Beukes is either completely underestimating the time that the opposed liquidation will take to finalise or overestimating the pace at which the judicial case management process can advance.

5. It is common cause that the liquidation application is opposed. For the contentions in respect of the liquidation application to stand, the said application must be unopposed and then only I could agree with Mr Beukes that the process would be finalised long before the action proceedings would reach the pre-trial and trial stage. However, that is not the case.

5. Mr Beukes submitted that the court may order that the stay should only be of force and effect until the conclusion of the winding-up application and not beyond that. However, given the fact that the liquidation application is opposed by Erongo Petroleum, the current applicant, the possibility of appeal arises at the finalisation of the liquidation application by either of the parties involved in that application. If an appeal should follow, it would potentially suspend the claim of UAG mid-air for years.

5. What I find puzzling from the submissions on behalf of the applicant is that there are good prospects of the liquidation application succeeding. This is a submission coming from a litigant who is actually opposing the liquidation proceedings. I agree with Mr Marais that this raises a serious question about the bona fides of the applicant.

5. On that score, it must be pointed out that Mr Beukes actually made the submission that the court in the pending liquidation application questioned the bona fides of the current applicant. Several submissions were made with respect to the liquidation application. However, the record of proceedings is not before this court to draw any inferences on the probability of success in the liquidation application.

5. I further agree with the submissions on behalf of the first respondent that the applicant’s argument is premised on the wrong foundation by assuming that liquidation was to be granted without considering the possibility of the application being refused and the delay following such an order. The liquidation procedures would deal with the situation if and when such an order were to be granted.

5. Mr Beukes also advanced the argument that it would be equitable and in the interest of justice to stay the current proceedings pending the liquidation proceedings. Mr Marais remarked that the balance of convenience and equity is not law, and if law is determined by equity, there would be chaos. This seems to be in line with what Nicholas J said in Fisheries Development Corporation of SA Ltd v Jorgensen and Another; Fisheries Development Corporation of SA Ltd v AWJ Investments (Pty) Ltd and Others¹⁴ at 1340B – D of the judgment held:¹⁵

'The Courts do not however act on abstract ideas of justice and equity. They must act on principle. Cf the Western Assurance Co case supra at 275. And see the remarks of Innes CJ in Kent v Transvaalsche Bank 1907 TS 765 at 773 - 774:

‘(The appellant) also asked us to stay the proceedings on equitable grounds, urging that we had an equitable jurisdiction under the insolvency law. The Court has again and again had occasion to point out that it does not administer a system of equity, as distinct from a system of law. Using the word 'equity' in its broad sense, we are always desirous to administer equity; but we can only do so in accordance with the principles of the Roman-Dutch law. If we cannot do so in accordance with those principles, we cannot do so at all.'

5. The reality of the facts before me is that is a substantial amount of money involved in the current action, and to date, it is not clear what the defence is against the claim of the first respondent, if any. I must agree with the first respondent, the prejudice that it stands to suffer should the stay application be granted may cause is massive. It is further clear that the action would continue as far as it relates to First National Bank regardless of the outcome of the liquidation application.

5. Therefore, although the court has the discretion to stay the proceedings pending the winding up application I can find no exceptional circumstance which would justify the exercise of such discretion.

Condonation application

5. The Supreme Court in Sash Trading & Earthworks CC v Tsams Construction CC¹⁶ held that:

‘…an application for condonation must establish a ‘full, detailed and accurate’ explanation for the non-compliance, and also show reasonable prospects of success in the appeal…’

5. Although the applicant explained to the satisfaction of the court the reason for the delay in launching their stay application, it is trite that condonation applications are twofold. It is insufficient for a litigant to establish only a full, detailed, and accurate explanation for their non-compliance. Additionally, the litigant needs to show that they have reasonable prospects of success in the matter.

5. From my discussion above, it is clear that the applicant has no prospect of success in its main application, failing which the condonation application must be refused.

Costs

5. The first respondent argues that the application should be dismissed with costs, including the costs of two instructed counsel, which costs should not be capped in terms of rule 32(11), taking into consideration that this matter was instituted over six months ago and the applicant has failed to file any plea to date and all of the delays occasioned by this application I am satisfied that the costs should not be capped in terms of rule 32(11).

Order

62. My order is as follows:

1. The application is dismissed with costs, including the costs of two instructed counsel which costs are not capped in terms of rule 32(11).

2. The interlocutory application under case number INT-HC-OTH-2024/00585 is regarded as finalised and removed from the roll.

_____________________

J S Prinsloo

Judge

Appearances
Applicant:	F Beukes Of Metcalfe Beukes Attorneys, Windhoek
First Respondent:	J Marais SC (with him Y Campbell) Instructed by Isaacks & Associates Inc., Windhoek