Lee's Investments (PTY) LTD v Shikongo & Anor (HC-MD-CIV-ACT-CON-2016/03394) [2020] NAHCMD 127 (24 April 2020);

Group

Headnote and flynote
Flynote: 

Consultancy contract — whether it was fulfilled and whether the consultancy fees became due — interpretation not dependent on the evidence of witnesses.

Headnote and Holding: 

Plaintiff and first defendant concluded an agreement in terms whereof first defendant was appointed as technical consultant to secure an erf in Windhoek for mixed development.  First defendant entitled to consultancy fee of N$1 Million on completion of her mandate.  Quare:  whether first defendant completed her mandate and was entitled to retain payments already made.

Held, that interpretation of contracts is the process of giving meaning to words used in the contracts in the context provided by the contract as a whole and the circumstances wherein it came into existence;

Held, that context is always relevant regardless of whether the language used, is ambiguous or not;

Held, that the interpretation and construction of a contract is a matter of law, not fact, and the interpretation thereof (during litigation) is in the domain of the court and not witnesses.

Held further, that in the result the first defendant did not complete her mandate and must repay the payments made before her mandate was completed.

Full judgment

 

 

REPUBLIC OF NAMIBIA

HIGH COURT OF NAMIBIA MAIN DIVISION, WINDHOEK

JUDGEMENT

 

                                                                    Case No:  HC-MD-CIV-ACT-CON-2016/03394

 

In the matter between:

LEE’S INVESTMENTS (PTY) LTD                                                   PLAINTIFF

 

and

 

JOHANNA HALLELUYA SHIKONGO                                            FIRST DEFENDANT

BONGOLA INVESTMENT PROJECTS CC                                   SECOND DEFENDANT

 

Neutral Citation:  Lee’s Investments (Pty) Ltd v Shikongo (HC-MD-CIV-ACT-CON-2016/03394) [2020] NAHCMD 137 (24 April 2020)

 

Coram:          OOSTHUIZEN, J

Heard:           7-10 May 2019, 14 and 15 May 2019

Argued:         10 October 2019

Delivered:     24 April 2020

 

Flynote:         Consultancy contract — whether it was fulfilled and whether the consultancy fees became due — interpretation not dependent on the evidence of witnesses.

 

Summary:     Plaintiff and first defendant concluded an agreement in terms whereof first defendant was appointed as technical consultant to secure an erf in Windhoek for mixed development.  First defendant entitled to consultancy fee of N$1 Million on completion of her mandate.  Quare:  whether first defendant completed her mandate and was entitled to retain payments already made.

Held, that interpretation of contracts is the process of giving meaning to words used in the contracts in the context provided by the contract as a whole and the circumstances wherein it came into existence;

Held, that context is always relevant regardless of whether the language used, is ambiguous or not;

Held, that the interpretation and construction of a contract is a matter of law, not fact, and the interpretation thereof (during litigation) is in the domain of the court and not witnesses.

Held further, that in the result the first defendant did not complete her mandate and must repay the payments made before her mandate was completed.

 


ORDER


 

Having heard both counsel for the plaintiff and the defendants –

 

IT IS ORDERED THAT

 

[1]        First defendant shall repay N$550 000 to the plaintiff.

[2]        First defendant shall pay interest a tempore morae on the amount of
N$550 000 at the rate of 20% per annum from 8 June 2016 until the date of final payment.

[3]        The agreement between plaintiff and first defendant dated 20 November 2012 and the Addendum dated 31 March 2014 are cancelled.

[4]        First defendant shall pay the costs of suit including the costs of one instructing and one instructed counsel.

 


JUDGMENT


 

OOSTHUIZEN J:

 

Background

 

[1]        Plaintiff is Lee's Investment (Pty) Ltd a Namibian registered private company.

[2]        First Defendant is Johanna Halleluya Shikongo an adult female technical consultant employed by the property procurement department of the Social Security Commission.

[3]        Second Defendant is Bongola Investment Projects CC, a Namibian registered close corporation of which first defendant is a member.  Cases HC-MD-CIV-ACT-CON-2016/03394 and 2017/01105 were consolidated on 4 September 2017 under case number HC-MD-CIV-ACT-CON-2016/03394.

[4]        On 20 November 2012 Mr Cheng-Yuan Lee on behalf of plaintiff and first defendant in person concluded a written agreement at Windhoek in terms whereof first plaintiff was mandated by plaintiff to secure an erf for development purposes by Landscape Development CC (of which inter alia Mr Lee and first defendant were members).

[5]        The said erf was the property of the Municipal Council of Windhoek.

[6]        Upon signature of an agreement of purchase between Landscape Development CC and the Windhoek Municipal Council, the first defendant would become entitled to a consultancy fee for securing the erf for development of N$1 Million (in the event the purchase consideration for the erf was N$15 Million or less).

[7]        First defendant advised plaintiff on the policy framework to acquire the erf for development, liased, assigned a technical team, consulted, researched and confirmed land availability, prepared a development application for the erf to the Municipal Council of Windhoek.  This took place during August and September 2012.

[8]        First defendant presented Mr Lee with the quotation and invoice for the above preparatory work in the name of second defendant and in the sum of N$11 270.  Same was paid by plaintiff on 8 August 2012 and on 8 September 2012 in two instalments of N$5 635 respectively (before conclusion of the written agreement in paragraph 4 on 20 November 2012).

[9]        The written agreement of 20 November 2012 contains a non-variation clause; unless a variation is in writing and signed by both parties (or by the party sought to be charged with the variation), it shall not be binding.

[10]      On 31 March 2014 plaintiff and first defendant varied and recorded in writing, the payment dates concerning the N$1 Million consulting fee upon signature of an agreement between Landscape Development CC and the Municipal Council of Windhoek (payable by plaintiff to first defendant).  The Addendum recorded that
N$50 000 was paid by plaintiff on 28 November 2013, N$500 000 on the date of the Addendum and N$450 000 as soon as the Deed of Sale between Landscape Development CC and the Municipal Council of the City of Windhoek has been signed in respect of Erf 2621 Avis.  N$50 000 was paid to first defendant a mere day after the Municipal Council of Windhoek resolved to sell Erf R/2621, Klein Windhoek to Landscape Development CC on sales conditions and a purchase price to be obtained.

[11]      It is common cause between the parties that first and second defendant received payment from the plaintiff under the written contract of 20 November 2012 and the Addendum of 31 March 2014 in the tune of N$550 000.  It is further common cause that payment by plaintiff to second defendant in the amount of N$500 000 was made a mere four days after the approval by the Windhoek Municipal Council of the sale to Landscape Development CC with the sales conditions and purchase price included.

[12]      It is also common cause that second defendant, on the behest of first defendant, received payment of N$11 270 prior to entering into the written contract of 20 November 2012 for preparatory work in respect of consulting, advising and for submissions to the Council of the Windhoek City.

[13]      According to plaintiff the sum of N$550 000 should be refunded to it in terms of the agreement alternatively as damages, alternatively on the basis that defendants were unduly enriched at the expense of plaintiff because the written deed of sale between Landscape Development CC and the City of Windhoek was never concluded and the N$550 000 pre-paid to the first and second defendant never became due in terms of either the agreement of 20 November 2012 or its Addendum of 31 March 2014.

[14]      According to first defendant she is entitled to keep the N$550 000 in terms of the written contract and Addendum because she was only required to secure the approval for the sale of land from the City of Windhoek and cannot be held accountable for the repayment due to the fact that the responsible Minister refused to give consent for the sale of land to proceed.

[15]      It is also common cause that the approval by the Municipal Council of Windhoek of the sale to Landscape Development CC (27 March 2014, conveyed on 3 April 2014) was subject to numerous conditions, one being that the intended sale of Erf R/2621, Klein Windhoek be advertised in terms of section 63(2) of the Local Authorities Act, 1992 (Act 23 of 1992).

The Contract dated 20 November 2012.

[16]      The following excerpts from the agreement are of relevance:

[16.1]  ‛WHEREAS LEE'S INVESTMENTS is a registered company in the Republic of Namibia and wishes to engage the services of a Technical Consultant - JH Shikongo in the establishment of a Mixed Development for LEE'S INVESTMENTS in launching and securing the approval of the sale of an Erven/Property from THE MUNICIPAL COUNCIL OF WINDHOEK for establishment of a Mixed Development by LANDSCAPE DEVELOPERS CC.

[16.2]  ‛AND WHEREAS, JH Shikongo agreed to be the Technical Consultant for LEE'S INVESTMENTS in respect of the establishment of a Mixed Development on ERF/RE 2621 AVIS and any such related matters.’

[16.3]  ‛1.2      Agreement:  shall mean this written document together with all written appendices, annexure, exhibits or amendments attached to this agreement from time to time and signed by both Parties.’

[16.4]   ‛2.1 The Agreement shall commence on date on which the Technical Consultant receives a written confirmation from Du Toit and Associates on the fulfilment of clause 3.2(2) below, to a Date upon which the Technical Consultant successfully concludes the agreement with respect to the Erven / property upon which the Mixed Development ON ERF/RE 2621 AVIS or any other Erven as may be agreed between the MUNICIPAL COUNCIL OF THE CITY OF WINDHOEK and LANDSCAPE DEVELOPMENT CLOSE CORPORATION.  This agreement is subject thereto the Special Conditions in Clause 3.1.’

[16.5]  ‛3.1      It shall be a special condition of this agreement that the Technical Consultant shall be paid an amount of One Million Namibian dollars (N$1 000 000.00) in respect of her services rendered for securing the Erven/Property to establish the Mixed Development on ERF/RE 2621 AVIS, providing the Purchase Price is N$15 000 000,00 (Fifteen Million Namibia Dollar) or less. the technical Consultant shall be paid an amount of Seven Hundred and Fifty Thousand Namibian Dollars (N$750 000.00) in respect of her services rendered for securing the Erven/Property, to establish the Mixed Development on ERF/RE 2621 AVIS, if the Purchase Price is more than N$15 000 000 (Fifteen Million Namibian Dollar).  The Technical Consultant shall, at her own cost. make all technical presentations and technical motivations with respect to the establishment of the Mixed Development.  The technical services may require that the Technical Consultant - hires at her own cost, other Technical Partners to render the required services.’

[16.6]  ‛3.2 (1)             LEE'S INVESTMENTS, shall effect payment to the Technical Consultant, any amount specified under clause 3.1 supra. free of any deductions to the Technical Consultant within three (3) days after an Agreement of Sale has been signed between LANDSCAPE DEVELOPMENT CC AND THE MUNICIPAL COUNCIL OF WINDHOEK in respect of ERF/RE 2621 AVIS or any other Erf as may be agreed between the Council OF THE MUNICIPALITY OF WINDHOEK and LANDSCAPE DEVELOPMENT CC; Registration no CC/2012/4728.’

[16.7]   ‛(2) LEE'S INVESTMENTS shall pay the amount of N$1 000 000,00 (One Million Namibian Dollar) into the trust  account of Du Toit Associates, after fulfilment of the Technical Consultants obligations in terms of the provisions of 2.1 herein above.  Du Toit Associates shall pay the said amount to the Technical Consultant after obligation in terms of provision of 3.2(1) above has been fulfilled.  If transfer of ERF/RE 2621 AVIS or any other Erf is not registered in the name of LANDSCAPE DEVELOPMENT CC due to the cancelation of the Agreement of Sale by the THE MUNICIPAL COUNCIL OF WINDHOEK, then in such event the Technical Consultant will refund the consulting fee as per 3.1 to LEE'S INVESTMENTS on demand.’

[16.8]  ‛4.1      The parties agree that the amounts payable to the Technical Consultant per clause 3.2 shall not be altered in any manner whatsoever unless such changes are specifically agreed in writing between the parties and same is added as an addendum to this agreement.’

[16.9]  ‛15.1    In the event either party is unable to perform any obligations hereunder due to any circumstances beyond its control, including the action, intervention, or decree of any government, and such circumstances are not caused by fault of the other party and continue for a period of at least 60 (sixty) days, either party may terminate this agreement by means of written notice to the other party.’

[16.10]            ‛18.1    Each Party acknowledges that this Agreement constitutes the entire, complete, and exclusive Agreement between the Parties concerned and concerning the subject matter contained herein.  No modification, amendment, consent or discharge in connection with this Agreement or its provisions shall be binding upon either Party unless made in writing and signed by the Party sought to be charged with the same.’

[17]      For ease of reference the relevant text of the Addendum dated 31 March 2014 is quoted:

WHEREAS, JH SHIKONGO is entitled to a consulting fee of 1 000 000.00 in respect of the purchase of Erf 2621 Avis by Landscape Development CC from the Municipality of Windhoek.

AND WHEREAS, it was agreed between the parties that Lee's Investments will pay N$1 000 000.00 on date of signature by both parties (Landscape Development CC and the Municipality of Windhoek) of the Agreement of Sale in respect of Erf 2621 Avis.

NOW THEREFORE, the parties agree that payment will be effected as follows:

1.         N$50 000.00 on 28 November 2013 (already paid)

2.         N$500 000.00 on 31 March 2014

3.         N$450 000.00 as soon as the Deed of Sale between Landscape Development CC CC/2012/4728 and the Municipality of Windhoek has been signed by both parties in respect of Erf 2621 Avis.’

 

Interpretation of contracts

[18]      Interpretation of contracts is the process of giving meaning to words used in the contracts in the context provided by the contract as a whole and the circumstances wherein it came into existence.[1]

[19]      Context is always relevant, regardless of whether the language is ambiguous or not.[2]

[20]      Construction of a contract is a matter of law, not fact, and interpretation of a contract (during litigation) is in the domain of the court (not of the witness).[3]

[21]      Common sense dictates that the court shall give effect to the non-variation clause which the parties have agreed upon[4] in the context of the relevant provisions of their contract, which include the circumstances know to the parties when agreeing to the contract.

[22]      The parties knew that the defendants already received remuneration for advice and preparatory work before[5] they concluded the agreement of 20 November 2012.

Findings

[23]      Applying the law of interpretation and common sense as set out previously to the facts and the disputes between the parties the following findings are recorded:

[23.1]  The main purpose of the 20 November 2012 agreement and the Addendum of 31 March 2014 was the coming into existence of a written agreement of sale between the Municipal Council of the City of Windhoek and Landscape Development CC in respect of an erf for mixed development.

[23.2]  Such an agreement was never concluded.

[23.3]  In context the words/phrase ‛securing the Erven/Property to establish the Mixed Development on ERF/RE 2621 AVIS’ mean nothing else than at least the signing of an agreement of sale between the Municipal Council of the City of Windhoek and Landscape Development CC.

[23.4]  Without a signed agreement between the Windhoek Municipal Council and Landscape Development CC or even in the event of a signed agreement which was subsequently cancelled by the Municipal Council of Windhoek which prevent transfer and registration, no payment was due by plaintiff to first defendant (or her nominee) and the consulting fee (or part thereof already paid) is refundable (to plaintiff) on demand.[6]

[23.5]  Despite first defendant's protestation that she did not nominate the second defendant as payee of the N$500 000 (on 31 March 2014), it is found that she did and that she benefitted from the payment.  She even pleaded that she is not liable to repay same due thereto that she incurred expenses for her own account in providing consultancy services for the plaintiff and was entitled to retain same.  In addition, the first defendant signed for receival of the cheque on 31 March 2014 and did not deny payment thereof.

[23.6]  First defendant's evidence contrary to the clear purpose and import of the agreement of 20 November 2012 and its Addendum, is rejected.

[23.7]  First defendant's reliance on the fact that Ministerial consent for the sale to Landscape Development CC was declined and that it was beyond her control, and constituting supervening impossibility, is ineffectual in that it could only lead to termination of the agreement.  Payments made which were not indebted are still to be refunded.

[23.8]  Plaintiff's main claim for the refund/repayment of the consulting fee in the amount of N$550 000, alternatively damages due to the breach by first defendant in failing to repay the N$550 000, is upheld.  Demand for repayment was made by plaintiff in writing on 2 June 2016 and served on 8 June 2016.

[23.9]  Costs will follow the result.

[24]      In the premises the following orders are made:

[24.1]  First defendant shall repay N$550 000 to the plaintiff.

[24.2]  First defendant shall pay interest a tempore morae on the amount of
N$550 000 at the rate of 20% per annum from 8 June 2016 until the date of final payment.

[24.3]  The agreement between plaintiff and first defendant dated 20 November 2012 and the Addendum dated 31 March 2014 are cancelled.

[24.4]  First defendant shall pay the costs of suit including the costs of one instructing and one instructed counsel.

 

 

----------------------------

G H Oosthuizen

Judge

 

 

APPEARANCES

 

PLAINTIFF   :                       Mr A Van Vuuren

Instructed by Behrens & Pfeiffer

 

 

DEFENDANT:                      Mr Phatela

Instructed by Kadhila Amoomo Legal Practitioners

 

 


[1]  Natal Joint Municipal Pension Fund v Endumeni Municipality 2012 (4) SA 593 (SCA), approved by the Namibian Supreme Court in Total Namibia (Pty) Ltd v OBM Engineering and Petroleum Distributors CC 2015(3) NR 733 (SC), both cases in paragraphs [18].

[2]  Total Namibia, op cit, paragraph [19].

[3]  Total Namibia, op cit, paragraph [23].

[4]   Vide paragraph 16.10 supra.

[5]   Vide paragraphs 7 and 8 supra.

[6]  Paragraphs 16.4 and 16.7 supra.

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