Court name
High Court Main Division
Case name
Klein v Caramed Pharmaceuticals (Pty) Ltd
Media neutral citation
[2015] NAHCMD 136
Judge
Parker AJ










REPUBLIC OF NAMIBIA




HIGH COURT OF NAMIBIA
MAIN DIVISION, WINDHOEK





JUDGMENT





Case no: A 17/2014





DATE: 11 JUNE 2015





In the matter between:





CHAARDI BIRGITTA
KLEIN.........................................................................................APPLICANT





And





CAREMED PHARMACEUTICALS (PTY)
LTD.......................................................RESPONDENT





Neutral citation: Klein v Caremed
Pharmaceuticals (Pty) Ltd (A 17-2014) [2015] NAHCMD 136 (11 June
2015)





Coram: PARKER AJ





Heard: 8 April 2015





Delivered: 11 June 2015





Flynote: Company – Winding-up –
Application for – Applicant averring that company (respondent)
has failed to pay its debts – Unpaid debt arising from costs
order granted in previous proceeding – Applicant relying on the
general rule of ex debito justitiae to support winding-up application
– Respondent aggrieved by costs order and desirous of taking
appropriate steps to appeal that costs order – Respondent’s
request for reasons for the costs order has to date been ignored –
Court held that the ex debito justitiae rule does not apply where
unpaid debt is bona fide disputed by company (respondent) –
Court found that in instant matter the unpaid debt is bona fide
disputed – Besides, court found that the applicant’s
demand for security for costs had been fully and duly satisfied by a
bond of security – Court concluded therefore that in the
circumstances and on the facts applicant has failed to prove to the
satisfaction of the court that the respondent is unable to pay its
debts within the meaning of s 349(f), read with s 350(1)(c), of the
Companies Act 28 of 2004 – Consequently, application dismissed
with costs.





Summary: Company – Winding-up –
Application for – Applicant averring that company (respondent)
has failed to pay its debts – Unpaid debt arose from costs
order granted without reasons in previous application proceeding –
Respondent disputes the unpaid debt – To date respondent’s
request for reasons to enable it to take appropriate steps to appeal
the costs order has been ignored – Besides, applicant’s
demand for security for costs had been fully and duly satisfied –
Court concluded therefore that in the circumstances and on the facts
applicant has failed to prove to the satisfaction of the court that
the respondent is unable to pay its debts within the meaning of s
349(f), read with s 350(1)(c), of the Companies Act 28 of 2004 –
Consequently, application dismissed with costs.





ORDER





The application is dismissed with costs
on the scale as between attorney (legal practitioner) and client,
including costs of one instructing counsel and one instructed
counsel.





JUDGMENT





PARKER AJ:





[1] In this proceeding the applicant
has launched an application by notice of motion wherein she seeks
primarily an order that –





‘1. the respondent be placed
under provisional liquidation;





2. a rule nisi be issued, calling on
all persona interested to appear and show cause, if any, to this
Honourable Court, on a date to be fixed by this Honourable Court as
to:





2.1 Why respondent should not be placed
under liquidation.





2.2 Why the costs of the application
should not be costs in the liquidation.’





The remainder of the relief concerns
service of the order and other or alternative relief. Thus, this is
basically an application for the winding-up of a company, that is,
the respondent. The respondent has moved to reject the application.





[2] The starting point in the
determination of the application is naturally the interpretation and
application of the relevant provisions of the Companies Act 28 of
2004. On the facts, the provisions that are really relevant in the
determination of the instant application are, indeed, what the
applicant relies on for relief. The provisions are contained in s
349, which says that –





‘A company may be wound up by the
court if –





(f) the company is unable to pay its
debts as described in section 350; or





(g) …





(h) it appears to the Court that it is
just and equitable that the company should be wound up.’





(Italicized for emphasis)





And s 350 provides:





‘(1) A company or body corporate
is deemed to be unable to pay its debts if –





(c) it is proved to the satisfaction of
the Court that the company is unable to pay its debts.’





(Italicized for emphasis)





[3] In virtue of these provisions, in
order to succeed, the applicant must establish the requisites set out
in s 349(f), read with s 350(1)(c), of the Companies Act. I should
point it out that para (h) is disjunctive, not conjunctive, to para
(f) and para (g); and so, it is not relevant here.





[4] Before considering the provisions
with reference to the facts of the instant case, it is important to
start with a brief relevant background to the present application. In
2010 the respondent instituted action under Case No. I 3442/2010
against the applicant who was hitherto the managing director and
accountant of the respondent. The applicant defends the action which
is ongoing.





[5] There has been several
interlocutory applications launched by the parties in the course of
events. One such application and the order made thereanent merit
special treatment because it is the genesis of, and the real basis
for, the winding-up application. According to the order granted on 13
June 2013, the applicant’s application for the dismissal of the
plaintiff’s claim in Case No. I 3442/2010 was dismissed, but
the court ordered the plaintiff to ‘pay the costs occasioned by
the application on the basis of one instructing and (one) instructed
counsel’. The court gave no reasons for the order then; and it
has to date not given any reasons. This cogent finding leads me to
the next level of the enquiry.





[6] Since 9 July 2013 the respondent
has sought reasons for the order but to no avail. It is not
contradicted that the respondent, being dissatisfied with the costs
order, has requested the reasons to enable it to appeal to the
Supreme Court against the costs order, after obtaining leave to
appeal. Meanwhile, the taxing officer taxed the costs on 18 September
2013. It is important to make the point that the taxing of the costs
and the issuance of an allocatur cannot take away the respondent’s
right to appeal which it is entitled to do after obtaining leave to
do so in due course.





[7] In this regard, I should signalize
this point: either the respondent is entitled to the reasons or he is
not. If he is entitled to the reasons – and I hold it is
entitled – any reason why the respondent has not been furnished
with the reasons, which it has requested, is immaterial; a priori,
the issuance of the allocatur cannot, on the facts and in the
circumstances of the case, whittle away the respondent’s
dissatisfaction with the costs order (which in the first place gave
the taxing officer the power to tax the costs) and the respondent’s
right to take the necessary steps to appeal against that order. The
first logical step is to request reasons for the costs order, which,
as I have said more than once, it has requested. I should add that it
is of no moment if the respondents’ legal representatives
participated in the taxation. A waiver of a right must be clearly
expressed for all to see. (Morris and Another v Government of Namibia
and Others 2001 NR 51 (HC))





[8] Apart from all else – and
this is crucial – it must be remembered that because no reasons
have been given for the costs order, it would be well-nigh difficult
for the court, acting fairly and judicially, to decide whether to
grant leave to appeal when such application is launched. For
instance, how would the court decide fairly and justly whether the
respondent has reasonable prospects of success on appeal? See, eg S v
Simon 2007 (2) NR 500, which was decided in criminal proceedings and
which applies with equal force to civil proceedings. That is the real
issue in this proceeding, and it cannot be trivialized on any
account, particularly when, as Mr Narib, counsel for the respondent
submitted, the entire basis of the winding-up application is the fact
that the respondent has not satisfied the amount of costs allowed by
the taxing officer to the tune of N$151 467,50 which, as I have said
more than once, is based on the selfsame costs order.





[9] Without beating about the bush, I
hold without a phantom of difficulty or doubt, that in the
circumstances and on the facts of the case, that amount has not
become due and payable: It will become due and payable after the
expiration of 15 days following upon the delivery to the respondent
of the reasons for the costs order that was made on 13 June 2013 in
virtue of rule 115(3) of the rules of court, as Mr Narib submitted.





[10] I have no problem with the general
rule, which the applicant is so enamoured with, that an unpaid
creditor is entitled ex debito justitiae to a winding-up order. (Re
Western of Canada Oil, Lands and Works Co (1873) 17 Eq 1, quoted in
‘The Ex Debito Justitiae Rule and the Court’s Discretion
when Hearing an Application for the Windind-Up of a Company’,
1981 SALJ 120 at 120. The rule was also enunciated in Bowes v
Directors 11 HL Cas 384; LJ Ch 574. ‘It was however soon
realized that the formulation in the Bowes case was rather wide if it
were interpreted in such a manner that the court could no longer
exercise its discretion. The most important of the exceptions to the
ex debito justitiae rule is certainly where the unpaid debt which is
relied on is bona fide disputed by the company’. (1981 SALJ
120, loc. cit.) I accept this qualification to the general rule as
good law, and so, I should apply it in this proceeding.





[11] In the instant case, as I have
found previously, ‘the unpaid debt which is relied on is bona
fide disputed’ by the respondent; hence his demonstrable and
genuine desire to have the costs order which gave rise to the taxed
costs to be set aside on appeal. It follows inexorably and reasonably
that the ex debito justitiae (general) rule is not applicable in the
present proceeding.





[12] Apart from this conclusion, I
should say that, in any case, as Mr Narib submitted further, the
amount the applicant claims from the respondent, being N$151 467,50,
is clearly less than the amount covered by the bond of security,
which is N$250 000; and, a fortiori, the bond is ‘for the
payment of any judgment in respect of Defendants costs herein (ie
herein Case No. I 3442/2010) to the defendants’. (Italicized
for emphasis; Underlining in the Security Bond) It matters tuppence,
with respect, whether the security for costs was furnished ‘at
the last minute’, as Mr Schickerling, counsel for the
applicant, submitted. What is relevant is that when the applicant
launched this application on 11 March 2014, the applicant knew that
the respondent was able to pay the indebtedness of N$151 467,50,
being the taxed costs; that is to say, the applicant’s demand
for security for costs had been fully and duly satisfied, and the
applicant knew that. Furthermore, and this is Mr Schickerling’s
own submission, the respondent had on 11 April 2013 paid ‘an
amount of N$113 299,33 in respect of a previous costs order obtained
against the respondent’.





[13] In view of the aforegoing, I
should say that any argument that the respondent is unable to pay its
debts is, with respect, fallacious and self-serving. What the
applicant avers is not established; it becomes a mere irrelevance. In
words of one syllable, I should say that the applicant knows that the
respondent is able to pay its debts. Based on these reasons, I can
see no merit in the application. After thorough consideration of the
papers and submissions and a reading of the relevant provisions of
the Companies Act and the authorities, I conclude that the applicant
has failed to establish the requisites in s 349(f), read with s
350(1)(c), of the Companies Act. In sum, I conclude that the
applicant has not proved to the satisfaction of the Court that the
respondent is unable to pay its debts. It follows inevitably that the
application should fail, and it fails.





[14] One last consideration: it
concerns costs. Mr Narib argued that since the applicant knew well
about the existence of the security for costs and that it is in
excess of the amount she claims and also that no reasons have been
provided for the costs order she wants to enforce, in the face of the
request for reasons, the applicant clearly does not have any
intention to obtain the relief she seeks and that the proceedings
were instituted merely for the purpose of delaying the trial. And for
Mr Narib, the applicant’s conduct, therefore, ‘amounts to
abuse of the Court process’; and that the application is
frivolous and vexatious, and so it should attract a special costs
order against the applicant. And what is the argument on the other
side? It is simply this. ‘Any suggestion that the applicant’s
application is frivolous, vexatious amounts to legal manoeuvring,
(and) is so demonstrably baseless that it may be rejected merely on
the papers’.





[15] I do not agree with Mr
Schickerling. As I have found previously, when the applicant launched
the application she knew too well that the respondent was able to pay
its debts. She knew too well that any costs arising from the costs
order were disputed in good faith and genuinely. She knew too well
that the bond of security was for the payment of any judgment in
respect of her costs in the matter, and that the respondent was able
to pay the present indebtedness in the amount claimed to the tune of
N$151 467.50, being the taxed costs. The applicant was very much
aware that her demand for costs was fully and duly satisfied. In sum,
surely, the applicant had, and has, no good reason to bring this
application. It has been held that the court may award costs on the
scale as between attorney (legal practitioner) and client where the
court is satisfied that the applicant (or plaintiff) has put the
respondent (or defendant) to unnecessary trouble and expense (Namibia
Breweries v Serrao 2007 (1) NR 49 (HC). On the facts, I am satisfied
that the applicant has put the respondent to unnecessary trouble and
expense. That being the case, I conclude that a case has been made
out for the grant of punitive costs.





[16] In the result, the application
fails, and it is dismissed; whereupon, I make the following order:





The application is dismissed with costs
on the scale as between attorney (legal practitioner) and client,
including costs of one instructing counsel and one instructed
counsel.





C Parker





Acting Judge







APPEARANCES





APPLICANT: J Schickerling





Instructed by Koep & Partners,
Windhoek











RESPONDENT: G Narib





Instructed by Dr Weder, Kauta &
Hoveka Inc., Windhoek