PRINSLOO DJP:
Introduction
Serving before court is an opposed interlocutory application in which the second, fourth, and seventh defendants seek condonation for failure to file affidavits in a timely manner, showing cause why provisional winding-up orders should not be made final. The parties are referred to as in the main action.
Brief background
On 28 March 2024, the plaintiff instituted proceedings against the defendants on 18 January 2022, seeking twofold relief: claim A and claim B. In respect of claim A, the plaintiff sought a declaratory order to transfer his 40 percent member’s interest in the second defendant to the first defendant, alternatively, to the second defendant, after valuation and against payment. In the alternative to the transfer of the plaintiff’s member’s interest, the plaintiff sought that the second defendant to be placed under provisional winding-up and the issuance of a rule nisi calling upon interested parties to show cause why a final winding-up order should not be granted.
As regards the relief sought in respect of claim B relating to the property investment partnership, the plaintiff sought dissolution of the partnership between himself and the first defendant. He further sought the appointment of a liquidator with authority to realise the partnership’s assets and for the winding-up of the third, fourth, fifth, sixth and seventh defendants.
The first defendant entered an appearance to defend, and the matter was subsequently referred to judicial case management. The parties exchanged pleadings, and on 9 September 2024, the first defendant withdrew his defence to the alternative relief claimed under claim A (winding up of the second defendant) and his defence of claim B, without tendering costs, as costs should be costs in the winding up, as prayed for. Following the conditional withdrawal of defence, the parties filed a joint status report seeking the provisional winding up of the second to seventh defendants and the issuance of a rule nisi returnable on a date to be determined by this court. Furthermore, the parties filed a draft court order requesting that the matter be regarded as finalised and removed from the roll, in light of the agreement reached by the parties for the second to seventh defendants to be wound up.
In light of the above ‘agreement’ reached by the parties, the court, on 4 October 2024, issued an order placing the second to seventh defendants under provisional winding up and a rule nisi was issued, returnable on 7 November 2024, calling upon interested parties to show cause why a final winding-up order should not be granted in respect of the said defendants. Subsequently thereto, the first defendant’s legal practitioner withdrew as legal practitioner of record, and this court issued a varied order incorporating the specified rights and obligations of the Receiver and extended the rule nisi issued on 4 October 2024 to 5 December 2025. Mr Velikoshi, who appears on behalf of the second, fourth and seventh defendants, subsequently came on record, and the rule nisi was, on 5 December 2024, further extended to 9 December 2024. Thereafter, this court, on 9 December 2024, extended the rule nisi to 30 January 2025. The second, fourth and seventh defendants failed to comply with the aforesaid orders in that they failed to show cause why a final winding-up order should not be granted. It is on this premise that the instant condonation and upliftment of bar application are brought. The plaintiff opposes the application.
The plaintiff was represented by Adv. Jones, whereas the second, fourth and seventh defendants were represented by Mr Velikoshi.
Application for condonation
The second, fourth and seventh defendants seek the following relief:
‘1. Condonation for the non-compliance with the court orders dated 4th of October 2025, 5th December 2024 and 9 December 2024 whereby the 2nd, 4th and 7th Defendants’ affidavits showing cause were not filed timeously 2. The upliftment of the bar barring the 2nd, 4th and 7th Defendants from filing their affidavits to show cause as to why the provisional winding-up orders should not be made final.’
Mr Abius Ndadi Akwaake, the first defendant in this matter, deposed the condonation affidavit. Mr Akwaake goes on a rant about how his former legal practitioner, Mr Vlieghe, was responsible for his failure to show cause why a final winding-up order should not be granted, as he did not carry out instructions and failed to properly explain legal terms such as ‘rule nisi’. In light of the allegations made against Mr Vlieghe, this court afforded him the opportunity to respond, and his explanatory affidavit has been filed of record. Although vital for the main proceedings, Mr Vlieghe's response is not material for the current application, and I do not find it necessary to dwell on the explanatory affidavit. Nonetheless, Mr Vlieghe withdrew from the matter on 8 November 2024, and Mr Akwaake subsequently appointed Mr Velikoshi as his legal representative.
According to Mr Akwaake, he was still unable to show cause by 5 December 2024 as both Mr Velikoshi and this court were unavailable. The rule nisi was accordingly extended to 9 December 2024. It is Mr Akwaake’s assertion that Mr Goraseb, from Mr Velikoshi’s office, had been negotiating with the plaintiff’s team in an attempt to reach an amicable settlement and avoid the granting of a final order. Therefore, according to Mr Akwaake, the failure to oppose the rule nisi on 9 December 2024 and 30 January 2025 was a result of a last-minute collapse of negotiations and not a delay tactic aimed at stalling the matter.
Regarding why the provisional court order dated 4 October 2024 and varied on 8 November 2024 should not be made final, Mr Akwaake avers that the varied court order was not re-advertised, despite the court's order that it must be re-advertised by publishing in one edition of the Namibian and Republikein newspapers and the Government Gazette. Furthermore, it was ordered that the varied court order should be served on the defendants. Mr Akwaake asserts that the plaintiff has not complied with the varied court order in terms of the re-advertisement. Alternatively, they have failed to serve the second, fourth, and seventh defendants.
Further, according to Mr Akwaake, the court order dated 4 October 2024 may have been erroneously issued because an unsigned settlement agreement was made an order of court, despite parties hereto never having concluded a settlement agreement, whether signed or not. Mr Akwaake asserts that he is not aware of any settlement agreement entered into between himself and the plaintiff. In fact, he avers, on 1 October 2024, a meeting was arranged for that purpose. However, the plaintiff did not show up, and as a result, Mr Akwaake and his erstwhile legal practitioner proposed another meeting for 9 October 2024 in a letter dated 2 October 2024.
Regarding the fourth and seventh defendants, Mr Akwaake asserts that he holds a 100 percent membership interest in both defendants, that the plaintiff is not a member, and that neither defendant has any connection to the second defendant. The plaintiff seeks the liquidation of both defendants solely on the grounds that Mr Akwaake provided them as security for a financial facility in favour of the second defendant. Therefore, there is no basis to wind up either defendant.
Mr Akwaake further contends that there is no need to liquidate the third, fifth, and sixth defendants separately from the second defendant, as doing so would impact the value of the second defendant, the fair share of the member’s interest and the loan accounts. The plaintiff and Mr Akwaake are members of these defendants. Regarding the partnership, it is Mr Akwaake’s contention that the properties listed in annexure POC1 of the plaintiff’s particulars of claim (other than the fourth and seventh defendants) were all financed by or are currently being financed by the second defendant. However, they are jointly owned by Mr Akwaake and the plaintiff (with the exception of the agricultural plot) and will similarly account for the members' loan account in the second defendant, which may not be liquidated separately.
Finally, Mr Akwaake submits that he has demonstrated good cause as to why a final winding-up or liquidation order should not be granted concerning the second to seventh defendants and the partnership of properties. Furthermore, Mr Akwaake asserts that he has established a case for condonation regarding the filing of his affidavit and the upliftment of bar.
Opposition
Oluwafemi Kayode Ogunboye, the plaintiff herein, deposed to the affidavit in opposition to the second, fourth and seventh defendant’s application for condonation. According to Mr Ogunboye, the parties have been engaged in settlement discussions since 2022. In their joint case management report dated 15 July 2024, the parties had indicated to this court that they were engaged in settlement discussions and that they would subsequently report to the court as the discussions advanced. As a result of these settlement discussions, the first defendant filed a conditional notice of withdrawal of defence, wherein he indicated that he no longer opposed the winding up of the second defendant, as well as the dissolution of the property partnership. Further, according to Mr Ogunboye, on 23 September 2024, the first defendant sent a notice to him, calling for a members' meeting of the second defendant to consider two resolutions: firstly, that the second defendant be wound up voluntarily under section 67(1) of the Close Corporations Act 26 of 1988, and secondly, should the members be unable to resolve the voluntary winding up, that the second defendant be wound up by an order of court. On 26 September 2024, the first defendant's erstwhile legal practitioners filed a status report wherein the first defendant reiterated his position in that he no longer opposed the winding up of the second defendant, as well as the dissolution of the property partnership.
The settlement discussions, according to Mr Ogunboye, advanced to the point where the settlement terms agreed upon between the parties were captured in a draft court order for the provisional winding up of the second defendant on 3 October 2024. In respect of the property investment partnership, the partnership between the plaintiff and the first defendant was dissolved, and the second, third, fourth, fifth, sixth and seventh defendants were also placed under provisional winding-up. A provisional winding-up order was then issued by this court on 4 October 2024. It is therefore clear from the above, and supported by the evidence, that the first defendant was, at all times material hereto, adamant that the winding up of the second defendant proceed.
Regarding the first defendant's explanation for his failure to show cause on 7 November 2024, Mr Ogunboye contends that it does not reflect the trajectory of events following the court ruling. The first defendant's claim of an inadequate understanding of the rule nisi and its implications is inconsistent with his earlier position. His defence and counterclaim explicitly demonstrate an understanding of the relief sought. His subsequent withdrawal of both in October - five months later - further contradicts this claim. According to Mr Ogunboye, the first defendant had, as early as July 2024, offered to withdraw his defence and counterclaim if Mr Ogunboye agreed to enter into settlement negotiations. To claim, six months later, that he was unaware of the implications of withdrawing his defence and counterclaim, and the resulting rule nisi, is disingenuous.
It is Mr Ogunboye’s contention that the provisional winding-up order dated 4 October 2024 was not erroneously issued but was considered by the court based on the draft court order jointly prepared by the parties' legal practitioners on 3 October 2024. In any event, the varied court order dated 8 November 2024 was re-advertised on 17 February 2025 in the Namibian Newspaper. Mr Ogunboye further contended that the varied order would be advertised in the Government Gazette on 21 February 2025.
As regards the final winding-up orders sought, Mr Ogunboye avers that in December 2024, the first defendant retrenched all but five employees without consulting him, even though Mr Ogunboye still holds a 40 percent membership interest in the second defendant. Therefore, the justification that the final winding up should not be granted to protect jobs is contradicted by this very action. In addition, the first defendant has retained full control over the finances of the second defendant, making decisions without any oversight on Mr Ogunboye’s part. This is against the purpose of a provisional winding-up order, which places the business of the second defendant in the hands of the provisional liquidator.
It is worth noting, according to Mr Ogunboye, that several retrenched staff members have reached out to him for assistance in securing employment. In his personal capacity, Mr Ogunboye has been financially supporting a number of the retrenched staff until they are able to find gainful employment. Furthermore, over the past 26 months, Mr Ogunboye has made several offers for the first defendant to purchase his 40 percent membership interest, with the last and lowest offer based on the net asset value as per the financial statements ending in December 2023, which were signed off by the first defendant. None of these offers were accepted.
According to Mr Ogunboye, the property partnership pertains to the properties listed in annexure POC1 of his particulars of claim, including those held by the fourth and seventh defendants. The actual legal title holder is irrelevant in light of the property partnership. All these properties were financed or are currently being financed by the second defendant, as stated by the first defendant in his affidavit. The second defendant has no title to these properties, nor were any agreements ever made between the properties, the respective title holders, the partners of the partnership, or the second defendant. Thus, the properties or the partnership cannot be attributed to the accounts of the second defendant's members. Consequently, to dissolve the partnership, the title holders of the properties must also be liquidated.
In around 2019, according to Mr Ogunboye, the second defendant entered into a consolidated Corporate Property Loan with Standard Bank of Namibia. The proceeds from this loan were used to finance or refinance some of the properties (or the respective CC's that were the title holder of those properties) of the property partnership, as well as to fund an investment of around N$7 million in a new venture in Flip Out Africa through Blackthorn Investment Holdings (Pty) Ltd. The second defendant opted to raise this loan as a consolidated loan, and the property partnership provided some of its property as security for this corporate property loan, as opposed to the property partnership raising finance in respect of each property separately. The fact that the third, fourth, fifth, sixth and seventh defendants hence provided security directly to Standard Bank and, further, agreed to have a bond registered over them in favour of Standard Bank, as averred by Mr Ogunboye, is of no relevance. Again, the actual title holder of the properties is also not relevant, given that the properties are held in respect of the property partnership.
Based on the documentation obtained from the Business and Intellectual Property Authority (‘BIPA’) in 2024, according to Mr Ogunboye, the first defendant is not the sole owner of the fourth defendant. The CC2, as registered with BIPA, shows that the first defendant only holds a 50 percent member’s interest. It is further Mr Ogunboye’s understanding that any costs or expenditure that the first defendant may have incurred outside the property partnership, may be proven in liquidation and does not constitute good cause as to why a final winding-up or liquidation order should not be granted as it relates to the third, fourth, fifth, sixth and seventh defendants. Furthermore, and critical to the ruling made on 29 January 2024, the affidavit of the first defendant was signed in Finland on 7 February 2025 and was submitted to the court on the same day. Accordingly, due submission was not made on 6 February 2025 as required by the court order. In the premise, Mr Ogunboye submits that the defendants have not made out a case for the relief sought and prays that the defendant's application be dismissed with costs, including the costs of one instructing and one instructed counsel.
Discussion
As a point of departure, it is prudent to note that the principles regarding condonation applications in our jurisdiction are trite. It is therefore not necessary to embark on an expeditious journey to repeat such principles. It is, however, essential to note that condonation is not to be had merely for the asking. This court must be apprised of a full, detailed and accurate account of the cause of the delay and its effect. The Supreme Court in Teek v President of the Republic of Namibia dealt with possible factors the court may consider when deliberating on whether or not to grant condonation. It held as follows at 61E-H:
‘The court has a duty to consider whether the condonation should in the circumstances of the case be granted. In this regard, the court exercises a discretion. That discretion must be exercised in the light of all the relevant factors. These factors include the degree of delay, the reasonableness of the explanation for the delay, the prospects of success, the importance of the case, the interest in the finality of litigation and the need to avoid unnecessary delay in the administration of justice. These factors are not exhaustive.’ In the instance of a rule nisi, emphasis is placed on the purpose thereof. This court in Van Zyl N.O v Ben-Tovim held as follows:
‘… a rule nisi clearly requests a respondent to show cause, on or before a return date, why a provisional order should not be confirmed. Orders of this nature never ask a respondent to show such cause after the return date. A return date can be extended- but surely there must be a good reason or reasons for such extension. Such extension may, for instance, be granted in order to afford the parties the opportunity to exchange further papers. But, and as I have just stated, before any extension occurs, there must be a valid reason for it to occur. Those reasons can be manifold – and - I would think for instance, that - on the one hand - an extension would almost automatically be granted where a rule nisi would only have been brought to the attention of the affected respondent shortly before the return date, affording such party insufficient time to file any answer in opposition to the confirmation of the rule.’ (emphasis provided) The requirement for good cause essentially entails two elements, namely a reasonable explanation for the default, i.e., for the reasons necessitating the postponement or extension of a rule, coupled with the requirement that the applying party must show a prima facie defence, which he will be able to advance if the postponement is granted. Needless to say, this matter is not, by any stretch of the imagination, a model for a reasonable explanation for default. The second, fourth, and seventh defendants do not seem to have a precise reason for their failure to comply with the court orders directing them to show good cause as to why a final winding-up order should not be granted. The said defendants appear to be grasping at straws, with their reasons ranging from their former legal representative not conducting due diligence in handling this matter to their current legal representative and this court not being available.
The second, fourth and seventh defendants do not account for the period from 18 November 2024, when their current legal representative came on record, to 6 February 2025, when the condonation application was eventually filed on record. Further, there is no explanation why they didn’t immediately file their application for condonation upon becoming aware of their non-compliance with the court orders herein. Mere mention of settlement negotiations between parties does not preclude the defaulting party from approaching this court seeking condonation for their non-compliance. This court is therefore not satisfied that the reason for non-compliance with the court orders advanced by the second, fourth and seventh defendants.
[28] As to whether the parties reached a settlement, this court finds it necessary to address this issue. On 3 October 2024, the parties filed a joint draft order signed by their legal representatives at that time, indicating that an agreement had been reached and requesting that this court issue an order in accordance with that agreement. Upon reviewing the draft order, this court issued an order as requested by the parties. It is rather distasteful for the respondents to subsequently claim that the order was issued in error. Nonetheless, even if the order may have been erroneously issued, legal practitioners are expected to be skilled in their field and familiar with the rules of this court. Therefore, the appropriate procedure should have been followed. Simply alleging that an order may have been erroneously granted and failing to take the necessary steps afterwards does not advance the case for the second, fourth, and seventh defendants any further, and such complacent approaches should be strongly discouraged.
This court must now consider whether or not the defendants have prospects of success and have shown good cause for the relief sought. The second, fourth and seventh defendants aver that the varied order dated 8 November 2024 was not served on the defendants, despite such service having been specifically directed therein. Upon careful consideration of the pleadings herein, this court notes that the court order dated 4 October 2024 directed service thereof on the defendants and such service was accordingly effected as evidenced by the respective returns of services filed of record. There is, however, no return of service filed by the plaintiff in respect of the varied order dated 8 November 2024. There is further no averment contained in the opposing affidavit regarding such service. Damaseb JP in Haw Retailers CC t/a Ark Trading v Tuyenikalao Nikanor t/a Natutungeni Pamwe Construction CC held as follows:
‘… In so doing the Court must be taken to have accepted that the respondent would suffer prejudice if she were not so served. It therefore does not avail the applicants to argue that the respondent suffered no prejudice. The Court (on the applicant’s version that it was prepared to overlook the service of the application on Petherbridge Law Chambers) must have appreciated that before the order was made final, the respondent must receive proper service analogous to the settled practice of the Court established in the Shapiro matter, supra.’ [emphasis provided] In light of the above, I am satisfied that the plaintiff failed to effect service of the varied court order dated 8 November 2024 on the defendants as directed and accordingly, find that the second, fourth and seventh defendants have shown good cause and proven a prima facie defence, which they will be able to advance should extension of the rule nisi be granted.
As regards the issue of costs, the general principle is that costs follow the event. However, given the nature of the instant proceedings, costs shall be costs in the winding up.
My order is set out above.
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