Court name
Supreme Court
Case number
SA 35 of 2009
Case name
Executive Properties CC and Another v Oshakati Tower (Pty) Ltd and Another
Media neutral citation
[2012] NASC 14
Judge
Maritz JA













REPORTABLE







CASE NO.: SA 35/2009







IN THE SUPREME COURT
OF NAMIBIA











In the matter between:






















EXECUTIVE
PROPERTIES CC




FIRST APPELLANT






FIRST
NATIONAL BANK OF NAMIBIA




SECOND APPELLANT















and


























OSHAKATI
TOWER (PTY) LTD




FIRST RESPONDENT






GEORGE
NAMUNDJEBO




SECOND RESPONDENT






REGISTRAR
OF DEEDS




THIRD RESPONDENT















Coram: Maritz, JA,
Mainga, JA etStrydom, AJA



Heard on: 19/03/2012



Delivered on: 13/08/2012



____________________________________________________________________







APPEAL JUDGMENT



____________________________________________________________________








STRYDOM AJA:




  1. By notice of motion the
    respondent, Oshakati Tower (Pty) Ltd (Oshakati Tower) claimed
    as against the first and second appellants, respectively cited in
    the Court a quo as first and third respondents, as well as
    one George Namundjebo, cited as second respondent, the relief set
    out hereunder. The Registrar of Deeds, as fourth respondent, was
    only cited for the interest he may have in the relief sought,
    namely-








1.
Declaring the agreement between applicant and first respondent in
terms whereof the latter purchased the following property from
applicant invalid and of no force and effect, i.e.







Erf No 1314 Oshakati
(Extension 4)



In the town of Oshakati



Registration division
‘A’, Oshana Region.







2. Directing and ordering
the fourth respondent to cancel the entry in the Deeds Register
indicating that the aforesaid property belongs to first respondent.







3. Directing and ordering
the fourth respondent to register the aforesaid property in the name
of applicant in the Deeds Register.







4. Directing fourth
respondent to cancel the first mortgage bond registered in favour of
third respondent against the aforesaid property.







5. Ordering second
respondent to pay the costs of the application save insofar as any of
the other respondents may oppose it, in which event ordering the
respondents so opposing it to pay the costs of the application
together with second respondent jointly and severally.







6. Further and/or
alternative relief.”








  1. Executive Properties
    (Executive), First National Bank of Namibia (FNB) and
    George Namundjebo(Namundjebo), filed notices to oppose the
    application. In regard to Executive and FNB answering affidavits
    were filed. However, although Namundjebo gave instructions to a
    legal practitioner, and a statement was drafted on his behalf, he
    never signed the statement. The statement nevertheless found its way
    into the record and formed the basis for an application to refer the
    matter for viva voce evidence, which was brought by
    Executive, supported by FNB. This application was dismissed by the
    Court a quo and the matter was decided on the affidavits
    filed by the parties.









  1. Oshakati Tower was
    successful and an order was issued by the learned Judge a quo
    substantially in the form set out in the notice of motion.









  1. Both Executive and FNB
    gave notices of appeal in which they attacked the Court’s
    refusal to refer the matter for evidence and the Court’s
    finding, on the merits, in favour of Oshakati Tower. However both
    appellants did not timeously comply with Supreme Court Rule 8(3) and
    did not inform the Registrar of the Court that they had entered into
    security for the costs of appeal of Oshakati Tower as a result
    whereof their appeals lapsed. (See Rule 8(3) read with Rule 5(5) and
    Ondjava Construction CC v HAW Retailers t/a Ark Trading 2010
    (1) NR 286 (SC) at par [5]). This necessitated both parties to apply
    for condonation and to ask this Court to re-instate their appeals. I
    shall deal with this issue at a later stage.









  1. Mr. Udo Manfred Stritter
    deposed to the founding affidavit on behalf of Oshakati Tower in the
    proceedings a quo.He, together with Namundjebo, one HE List,
    CL List and S Thieme constituted the Board of Directors of Oshakati
    Tower. The only asset of the companyconsisted of a build-up property
    situated in Oshakati Township which is the subject matter of the
    litigation in this case.









  1. During January 2005 it
    came to the knowledge of the deponent that a third party claimed to
    be the owner of the said property. Further investigation brought to
    light that the property was transferred to Executive during December
    2004. A Deed of Sale further showed that the property was sold to
    one Shamil Dirk, or his nominee, by Namundjebo, purporting to
    represent Oshakati Tower and claiming that he was duly authorized to
    conclude the sale. The purchase price was N$4.2 million which was
    paid over to Namundjebo who in turn pocketed the money and did not
    payOshakati Tower. Mr. Stritter denied that any resolution was taken
    by the Board of Directors to sell the property. He stated that if
    such a document was produced to the conveyancerit was false and it
    was furthermore untrue that Namundjebo was authorized to sell the
    property. Mr. Stritter further stated that Mr. Shamil Dirk is the
    only member of Executive in whose name the property was transferred.









  1. It was a condition of
    the sale thatthe purchaser would be able to acquire a loan to
    finance the purchase. This brought FNB into the picture. It advanced
    a loan to Executive in an amount of N$4.752 million against the
    registration of a first mortgage bond over the property in its
    favour.









  1. Mr. Shamil Dirk deposed
    to an affidavit on behalf of Executive. He stated that he bona
    fide
    believed that Namundjebo was duly authorized to represent
    OshakatiTower. Since the property was transferred to Executive, it
    had expended an amount of N$724763,08 to effect improvements to the
    property. Mr. Dirk squarely raised the issue of estoppel on the
    basis that, if Oshakati Tower was at all times aware that Namundjebo
    was endeavouring to sell the property and it stood by, knowing that
    he was not authorized to do so,the company would be estopped from
    raising his lack of authority.









  1. On behalf of FNB it was
    stated that the purchase price for the property was indeed paid to
    Namundjebo. If, at the time, FNB was aware of the allegation that he
    did not have authority to sell the property, FNB would not have
    advanced the money or agreed to take the property as security for
    the loan. It was further alleged that before re-transfer of the
    property could take place, and whatever the outcome of the
    application,Oshakati Tower will have to pay to FNB the outstanding
    amount on the bond in order to be able to effect cancellation
    thereof.A plea of estoppel was also raised by FNB on the same
    grounds as raised by Executive.









  1. The pleas of estoppel
    raised by Executive and FNB were based in anticipation of an
    affidavit by Namundjebo in which he intended to allege that Mr.
    Stritterhad been aware of the fact that he was attempting to sell
    the property.









  1. In reply Mr. Stritter
    denied that he was aware of the fact that Namundjebo was going to
    sell the property. In a supplementary affidavit Mr. Stritter
    referred to his founding affidavit in which he stated that the
    property sold was the only asset of the companyand submitted that
    such sale was prohibited by the provisions of sec. 228 of the
    Companies Act, Act No 61 of 1973, unless prior approval thereto was
    given by shareholders in a general meeting or later ratified by
    shareholders in such meeting. At the time the shareholders of the
    company were:








CL List: 1 share



HE List: 1 share



E Namundjebo: 1 share



G Namundjebo: 1 share



S Thieme: 1 share



WUM Properties Ltd: 1997
shares.









  1. Mr. Stritter further
    stated that he was also a director of WUM Properties and, as such,
    would have represented WUM Properties at any meeting of shareholders
    of Oshakati Tower.He stated that no such meeting to approve or
    ratify the sale of the property took place and further averred that
    sec. 228 was a complete answer to a plea of estoppel.









  1. Because of the
    supplementary affidavit filed on behalf of Oshakati Tower further
    affidavits were filed by FNB and Executive which dealt with the
    allegations set out in the supplementary affidavit. The deponent on
    behalf of FNB submitted that in order to establish whether a general
    meeting of shareholders took place, or whether shareholders
    informally consented to the disposal of the property, it would be
    necessary to apply to have that issue referred to oral evidence in
    terms of High Court Rule 6(5)(g).









  1. An affidavit was also
    filed by attorney BJ van der Merwe who stated that, on the
    instructions of Namundjebo, he had drafted an affidavit with
    annexures which he sent to Mrs. Aggenbach as Namundjebo wanted her
    to represent him. This affidavit with annexures was handed to
    Namundjebo and was, to his knowledge, not signed by him. Mr. van der
    Merwe submitted that in order to have a fair trial Executive should
    be permitted to hear the evidence of Namundjebo and Mr. Stritter.









  1. In reply Mr. Stritter
    reiterated his denial that he was aware of the sale of the property
    and said that he only became aware thereof during January 2005.









  1. This then constitutes
    the evidence on the main appeal but, as indicated earlier herein,
    there was also a substantive application (the referral application)
    to refer certain issues for viva voce evidence. This
    application was dismissed by the Court a quo and Executive
    and FNB also appealed against this dismissal. If the latter appeal
    is successful it follows that the matter will have to go back to the
    High Court to hear the evidenceand then to consider the main
    application afresh.









  1. Argument in the referral
    application was heard on 24 November 2008 and judgment was promptly
    given on 28 November 2008. That happened before argument was heard
    on the main application. This application was launched by Executive
    and was supported by FNB. The relief claimed by Executive in its
    Notice of Motion was as follows:








1. Condoning
the first respondent’s late filing of this additional
affidavit.







2. That the matter be referred to oral
evidence, based solely on the information currently contained in the
record and affidavits filed alternatively that the matter be referred
to oral evidence, based on the documents in the affidavit of Mr.
Erasmus, annexed hereto.







3. That the wasted costs be in the
cause.”









  1. The founding affidavit
    supporting the application was made by Mr. Erasmus, the legal
    practitioner of Executive. He gave notice of a pointin limine
    which were to be argued by counsel. Mr. Erasmus stated that he
    was approached by Namundjebo to represent him after the previous
    legal practitioner had issued summons against Namundjebo for
    outstanding fees. He accepted the brief. In the file handed to him
    he found various letters and documents which were previously sent to
    the legal practitioner of Oshakati Tower and to which no reply was
    received. Mr. Erasmus attached these documents which he alleged were
    supporting the case of his client. One of these documents was in the
    form of a settlement and, so it was alleged, clearly stipulated an
    agreement between Namundjebo and Mr. Stritter of WUM Properties Ltd.
    It was alleged that in terms thereof Namundjebo took over the shares
    of WUM Properties and that the sale of those shares were for credit.








[19] A further document
referred to was an unsigned statement by Namundjebo which was drafted
on the former instructions by his erstwhile legal practitioner, Mr.
van der Merwe. In this document it was stated that all the directors
and shareholders were aware of the fact that he, Namundjebo, was
endeavouring to sell the property. They only instituted this
application when it became clear that he was not going to pay his
debt to Ohlthaver and List.







[20] On the strength of
these documents Mr. Erasmus submitted that a case was made out for
the referral of the matter to viva voce evidence to determine
the status of the agreement between Namundjebo and Mr. Stritter and
to determine whether all directors and shareholders were aware that
he was selling the property of Oshakati Tower.







[21] In reply Mr.
Stritter denied that there was enough material put before the Court
to refer the matter for oral evidence and stated that the application
was merely a strategy by Executive to attempt to put a coherent
defence before the Court. The deponent commented on the various
documents attached to the affidavit of Mr. Erasmus and in regard to
the unsigned statement by Namundjebo he alleged that no explanation
was given why the statement was not signed and intimated that at the
hearing, application would be made to strike out the offending
portion of the paragraph in Erasmus’ affidavit, as well as the
statement itself, on the basis that it constituted inadmissible
hearsay.







[22] Mr. Stritter
admitted the agreement between himself and Namundjebo for the sale of
WUMProperties’ shares in Oshakati Tower but said that it was a
condition that the purchase price of N$3259269,82 be paid by
Namundjebo by 24 February 2006. Namundjebo failed to come up with
payment of the shares and the agreement lapsed for failure to fulfill
the condition. Mr Stritter further denied that any shareholder
consented to the sale of the property at any time or that they knew
about it, nor was the sale subsequently ratified. To this extent the
deponent attached affidavits by Mr. Thieme and Mr. List who confirmed
what was stated by him. Mr. Thieme and Mr. List were, at the time,
nominees of WUM Properties holding one share each.







[23] The point in
lime,
of which notice was given by Mr. Erasmus in his affidavit,
concerned the locus standi of Oshakati Tower to rely on the
provisions of sec. 228 of the Companies Act, 1973. It was submitted
that only the shareholders of the company could rely on that
provision. I agree with Mr. Frank that in dealings with a company the
company acts through its directors and not shareholders. There is no
indication that the articles of the company prohibited the directors
to sell the asset of the company so that, as far as the company was
concerned, their action was intra vires their powers although
ultra vires the provisions of sec. 228. (SeeFarren v Sun
Service SA Photo Trip Management (Pty) Ltd,
2004 (2) SA 146
(CPD). A reading of the cases on this issue shows that the company
may rely on the provisions of this section in regard to claims
against the company or the provisions of the section could be raised
as a defence against a claim by a company. (See generally Levy and
Others v Zalrut Investments (Pty) Ltd,
1986 (4) SA 479 (WLD);
Ally and Others NNO v Courtesy Wholesalers (Pty) Ltd and Others,
1996 (3) SA 134 (NPD) and Farren v Sun Service SA Photo Trip
Management (Pty) Ltd, supra.
)







[24] The point in
limine
must therefore be dismissed.







[25] Mr. Frank, assisted
by Mr. Corbett, in turn submitted that FNB’s interest in the
proceedings was limited to its mortgage bond and that it wasnot open
to it to rely on defences which were raised by Executive in regard to
the claim by OshakatiTower. This argument was based on the
eventuality that the Court might refuse the application for
condonation by Executive. As set out later in this judgmentI have
come to the conclusion that the application for condonation by
Executive should be allowed and consequently the argument of Mr.
Frank will have little or no effect on the issues to be decided.







[26] With reference to
the oft quoted case of Room Hire Co (Pty) Ltd v Jeppe Street
Mansions (Pty) Ltd,
1949 (3)SA 1155 (TPD), Mr. Heathcote,
assisted by Mr. Maasdorp for the appellants, submitted that the
categories set out therein when a Court will refer a matter for
evidence or trial, and more particularly the categories set out under
sub-paras (a) and (d) on page 1163 of the case, combined with Article
12 of the Constitution, apply to the present instance. Counsel
submitted that knowledge by the directors and shareholders is
material to the outcome of the case. If they all knew about the sale
of the property, as was alleged by Namundjebo in his unsigned
statement, yet sat back and only complained once Namundjebo neglected
to pay what he allegedly owed them, Oshakati Tower’s
application would have been defeated. Counsel submitted that the
learned Judge a quo, in dismissing the application, did not
apply the correct test.







[27] Counsel furthermore
pointed out that there was also the issue whether, subsequent to the
institution of these proceedings, there was a settlement of the
dispute between Mr. Stritter and Namundjebo as allegedly evidenced by
the written documentattached to the affidavit of Mr. Erasmus. He
submitted that if this document was indeed a settlement of the
present dispute it would also non-suit the application by Oshakati
Tower.







[28] Mr. Frank, in
turn,submitted that Namundjebo, who was at the time represented by a
legal practitioner, knew what serious allegations were made against
him but nevertheless decided not to answer these allegations
onaffidavit must thereby be regarded as not to dispute those
allegations. If every shareholder knew about his negotiations to sell
the property and had consented thereto there was no reason for him to
forge a resolution of a Board meeting which was purportedly held in
Windhoek on 8 December 2004. This is also proved by his reluctance to
sign an affidavit setting out those facts.







[29] Counsel furthermore
argued that even ifNamundjebo was negotiating on behalf of the
company it did not mean that he was authorized to enter into any
agreement. In terms of sec 228 of the Companies Act it was still
required for the shareholders to ratify the specific transaction.
Counsel therefore submitted that there was no basis for the
application of category (a) set out in the Room Hire case and
that reliance thereon was futile.







[30] As far as category
(d), set out in the Room Hire case, was concerned, counsel
referred the Court to various cases and the test for reference to
oral evidence laid down therein and submitted that in the present
instance there was no grounds to doubt the correctness of the
allegations on behalf ofOshakati Tower. (See Moosa Bros & Sons
(Pty) Ltd v Rajah,
1975 (4) SA 87 (D&CLD) at 92G to 93H.)
Counsel further submitted that as far as FNB was concerned the
representations made to them were minimal and unless they could show
that Oshakati Tower represented to them that the power of attorney to
transfer the property was genuine, or that they tacitly endorsed it,
they could not succeed. They in any event did not make any of the
allegations necessary to substantiate such a defence.







[31] In regard to the
settlement agreement Mr. Frank submitted that neither FNB nor
Oshakati Tower were parties thereto so that even if evidence was
permitted in that regard it would not affect the position of FNB.
Counsel further submitted that to effect a transfer of shares it was
necessary that the seller cede to the purchaser the rights sold and
that the purchaser paid the purchase price. (See LAWSA: 1st
Reissue: Vol. 4 part 1 para. 226.) Counsel submitted that there was
no evidence to gainsay the allegation by Mr. Stritter that the
agreement was conditional upon payment by Namundjebo of the purchase
price on 24 February 2006, and that two years after the date of
payment there was still no documentary evidence to substantiate a
credit sale.







[32] Although,at the time
of the hearing of the application, counsel for Oshakati Tower
submitted that the unsigned statement by Namundjebo should be struck
out the learned judge did not do so but decided that he should regard
it as a document containing allegations which were not
substantiatedby other cogent evidence and, as there was no such
evidence substantiating the statement, it could not create a dispute
of fact. In regard to the agreement between Mr. Stritter and
Namundjebo the Court found that there was no scope to interpret the
document as a credit sale or a settlement agreement between the
parties.The Court consequently dismissed the application.







[33] In the Room Hire
case the Court stated that one of the clearest ways in which a
dispute of fact arises is “(a) when the respondent denies all
the material allegations made by the various deponents on the
applicant’s behalf, and produces or will produce, positive
evidence by deponents or witnesses to the contrary. He may have
witnesses who are not presently available or who, though adverse to
making an affidavit, would give evidence viva voce if
subpoenaed”. Mr. Heathcote submitted that it was particularly
this excerpt from the case which applied to the present matter.







[34] In instances where
application is made to refer evidence on affidavit to evidence viva
voce
the general rule laid down by the South African Appeal Court
in the case of Hilleke v Levy 1946 AD 214 is as follows:








In Prinsloo
v Shaw
(1938
AD 570) it was said that it is not disputed that the general rule of
our practice is that, where the material facts are in dispute, a
final interdict will not be granted merely on the affidavits. In
Mahomed
v Melk
(1930,
T.P.D. 615), which was an application for sequestration, it was held
that even where, on the affidavits, there was a balance of
probabilities in favour of the creditor’s version, the Court
must be satisfied that a
viva
voce
examination
and cross-examination will not disturb this balance of probabilities
before making an order for sequestration on affidavits.(p 219.)”







[35] More recently the
test was restated in the case of Kalil v Decotex (Pty) Ltd and
Another,
1988 (1) SA 943 (AD) at 979 H – I as follows:








Naturally,
in exercising this discretion the Court should be guided to a large
extent by the prospects of
viva
voce
evidence
tipping the balance in favour of the applicant. Thus, if on the
affidavits the probabilities are evenly balanced, the Court would be
more inclined to allow the hearing of oral evidence than if the
balance were against the applicant. And the more the scales are
depressed against the applicant the less likely the Court would be to
exercise the discretion in his favour. Indeed, I think that only in
rare cases would the Court order the hearing of oral evidence where
the preponderance of probabilities on the affidavits favoured the
respondent.”







[36] In the matter of
Minister of Land Affairs and Agriculture and Others v D & F
Wevell Trust and Others,
2008 (2) SA 184 (SCA) at 204, Cloete,
JA, also dealt with the principles applicable where an application
was launched to refer the matter to evidence viva voce, and
stated as follows:








[55] No
affidavits were filed by valuers employed by, or officials in the
employ of or who had been in the employ of, the respondents who had
personal knowledge of what had transpired when the properties were
valued and the purchase prices determined. There was no indication
that such persons were available to the respondents, or would give
evidence in support of the allegations of fraud if subpoenaed.







[56] Where a respondent makes
averments which, if proved, would constitute a defence to the
applicant’s claim, but is unable to produce an affidavit that
contains allegations which prima facie establish that defence,
the respondent should in my view, subject to what follows, be
entitled to invoke Land Claims Court Rule 33(8) or Uniform Rule of
Court 6(5)(g). Such a case differs from the situation discussed in
Peterson v Cuthbert & Co Ltd and the Room Hire case,
alluded to in that part of the Plascon-Evans decision quoted
in para [24] above which refers to those two cases. There, the
respondent puts in issue the facts relied upon by the applicant for
the relief sought by the latter. In the situation presently being
considered the respondent may not dispute the facts alleged by the
applicant, but do seek an opportunity to prove allegations which
would constitute a defence to the applicant’s claim. In the
former case the respondent in effect says: given the opportunity, I
propose showing that the applicant will not be able to establish the
facts which it must establish in order to obtain the relief it seeks;
and in the latter the respondent in effect says: given the
opportunity, I propose showing that even if the facts alleged by the
applicant are true, I can prove a defence.(It is no answer to say
that motion proceedings must be decided on the version of the
respondent even when the onus of proving that version rests upon the
respondent, because ex hypothesi the respondent is unable to
produce evidence in affidavit form in support of its version.) It
would be essential in the situation postulated for the deponent to
the respondent’s answering affidavit to set out the import of
the evidence which the respondent proposes to elicit (by way of
cross-examination of the applicants’ deponents or other persons
he proposes to subpoena) and explain why the evidence is not
available. Most importantly, and this requirement deserves particular
emphasis, the deponent would have to satisfy the court that there are
reasonable grounds for believing that the defence would be
established. Such cases will be rare, and a court should be astute to
prevent an abuse of its process by an unscrupulous litigant intent
only on delay or a litigant intent on a fishing expedition to
ascertain whether there might be a defence without there being any
credible reason to believe that there is one. But there will be cases
where such a course is necessary to prevent an injustice being done
to the respondent.”







(See further in this
regardTrust Bank van Afrika v Western Bank en Andere, 1978 (4)
281 (AA) at 294G – 295A; Wiese v Joubert en Andere, 1983
(4) SA 182 (OPA) at 201E – H and Bocimar NV v Kotor Overseas
Shipping Ltd,
1994 (2) 563 (AD) at 587C – G.)







[37] A reference to
evidence viva voce will generally only be granted where, in
the words of Fleming, J, “it is found ‘convenient’,
wherethe issues are ‘clearly defined’, the dispute is
‘comparatively simple’ and a ‘speedy determination’
of the dispute is ‘desirable’.”(Standard Bank of
South Africa Ltd v Neugarten and Others,
1987 (3) SA 695 (WLD) at
699F). (See further Room Hire-case, supra, 1164, 1165
andWiese v Joubert, supra, at 202C-E.)







[38] In granting or
dismissing an application to refer affidavit evidence to evidence
viva voce the Court exercises a discretion and a Court of
Appeal will only interfere with the exercise of such discretion if it
was not exercised judiciously or if it was exercised on a wrong
principle. (See Cresto Machines v AfdelingSpeuroffisier S.A.
Polisie,
1970 (4) SA 350 (TPD) at 365F-G.)



[39] What this Court must
now decide (and what the Court a quo also had to decide at the
time of the application) is what the prospects are of the viva
voce
evidence tipping the balance in favour of the applicant who
applied to have the matter referred to oral evidence. In the Kalil
case, supra, it was stated that the Court would be less
inclined to refer a dispute to oral evidence where the balance of
probabilities strongly favoured the other party. In the present
instance there can be no doubt that, on the affidavits, the balance
of probabilities in the main application strongly favours Oshakati
Tower and that, without the evidence of Namundjebo, Executive and FNB
would find it difficult to overcome, more particularly, the obstacle
of sec. 228 of the Companies Act.







[40] Although the
purported statement by Namundjebo was not signed by him it seems to
me that this Court must accept that he was the source of what was set
out therein. Such finding is supported by the affidavits of Mr. van
der Merwe, the erstwhile legal representative of Namundjebo, and Mr.
Erasmus. That the statement emanated from Namundjebo was also not
denied by Oshakati Tower. (I must point out here that the statement
by Namundjebo was in answer to the founding affidavit of Mr. Stritter
and did not deal with the sec. 228 issue which was only later raised
by the applicant.) In the statement it is alleged that during 2004
Namundjebo indicated to Mr. Stritter that he wanted to sell the
property of Oshakati Tower in order to pay his debt to Ohlthaver and
List. He further stated that they were all unanimously agreed that
the property was to be sold and added that, as a result,no Board
meeting was necessary for that purpose. Namundjebo further repeated
that all the directors and shareholders were at all relevant times
aware of the purpose of the sale and that he was conducting
negotiations for and on behalf of Oshakati Tower. In the
circumstances he was of the view that it was not necessary to obtain
a proper power of attorney and he also did not inform FNB or Mr. van
der Merwe about this.







[41] Would this evidence,
if given viva voce, have the prospect of tipping the scales in
favour of Executive and through them FNB? Mr. Frank submitted that
various factors militate against Namundjebo being able to establish
such defence, but, so it seems to me, the evaluation of such
evidence, and whether it has the prospect to tip the scales, is not
only a matter of probabilities but also whether such evidence would
constitute a valid defence in law and whether, in the particular
circumstances, a referral would do justice between the parties.That
also goes for all other possible witnesses.The caveat set out
in the Minister of Land Affairs and Agriculture-case, supra,
that a court should be astute to prevent an abuse of its process by
an unscrupulous litigant who is merely out to delay the proceedings
or out on a fishing expedition, is relevant. However, I am satisfied
that the parties presently before Court, namely Executive and FNB,
are not abusing the process of the Court. On the affidavits it is
clear that neither party has personal knowledge of what had happened
between the shareholders and/or directors of Oshakati Tower and their
only access to such information is the possible evidence of
Namundjebo. It is no answer, as was submitted by Mr. Frank, that they
could have gained knowledge from another shareholder, namely Ms.
Namundjebo, as knowledge so gained is still that of the witness and
not of the parties before the Court.Knowledge of another person
cannot be ascribed to the parties.







[42] To satisfy a Court
that there are reasonable grounds that the evidence to be led will
establish a defence may, in one instance, be easier than in another
instance. Where, as is the case here, such evidence depends on the
say so of what witnesses know,the evaluation thereof, at this stage,
is much more difficult than instances where factual evidence could be
placed before the Court. I am satisfied that the evidence to be led,
and if accepted, is likely to constitute legal defences and to refuse
to refer the matter to evidence may cause an injustice to Executive
and FNB.







[43] As previously set
out the Court a quo regarded the statement of Namundjebo as
evidence which, as such, had to be given a certain weight and,
because it was hearsay and not corroborated by other cogent evidence,
was to be disregarded and was therefore not capable of creating a
genuine dispute. Category (a) in the Room Hire case, supra,
on which Mr. Heathcote relied, recognizes that a party may put
further evidence before the Court of a witness who was not available
at the time the application was launched or who refuses to sign an
affidavit but would be willing to testify if subpoenaed. As it is
incumbent upon such applicant to put information before the Court
which would enable the Court to evaluate the evidence (See the
Bocimar-case,supra, and the Minister of Land
Affairs
-case, supra) it is inevitable that such
information could be in the form of hearsay, as was submitted by Mr.
Heathcote. The purpose for which the statement by Namundjebo was put
before the Court a quowas not to prove the truth of what was
alleged therein but to inform the Court what evidence the possible
witness would giveto assist theCourt to evaluate such evidence and,
if satisfied that it has the prospect of tipping the scale in favour
of the applicant, to exercise its discretion in favour of referring
the matter to evidence viva voce. In my opinion the Court a
quo
decided the application to refer the matter to oral evidence
on a wrong principle and this Court is therefore entitled to decide
the issue afresh.







[44] The application for
referral to oral evidence has in my opinion the reasonable prospect
of raising three different defences. The first is the settlement
agreement whereby WUMProperties allegedly sold all its shares to
Namundjebo. There is no clear indication in the language used, which
established the agreement, that it contains a suspensive condition
that unless payment would be made before a specified date that the
agreement would lapse. It was submitted that the agreement in regard
of payment of the shares is also capable of an interpretation that
the sale of the shares was a credit transaction and that evidence was
necessary to clear up this issue. Although it was denied by Mr.
Stritter that credit was given, the fact of the matter is that the
document was not dated and the length of time given before payment
was due may be an indication whether this was a settlement subject to
a suspensive condition or that credit was given. If credit was given
then transfer of those shares could still be claimed by Namundjebo
and WUMProperties, no longer being a shareholder of Oshakati Tower,
will lack the necessary locus standi to bring the application.



[45] The second and third
defences depend on the evidence of Namundjebo. The evidence that all
the directors and shareholders were aware that he was entering into
negotiations to sell the property of Oshakati Tower may constitute
the defence of unanimous consent which may overcome the obstacle
raised by sec 228 of the Companies Act.







[46] This section states
as follows:








Disposal
of undertaking or great part of assets of company



(1) Notwithstanding anything contained
in its memorandum or articles, the directors of a company shall not
have the power, save with the approval of a general meeting of the
company, to dispose of –







(a) the whole or substantially the
whole of the undertaking of the company; or







(b) the whole or the greater part of
the assets of the company.







(2) …







(3) No resolution of the company
approving any such disposal shall have effect unless it authorizes or
ratifies in terms the specific transaction.”








[47] Sec. 228 was enacted
for the benefit and protection of shareholders. (See Sugden and
Others v Beaconhurst Dairies (Pty) Ltd and Others,
1963 (2) SA
174 (E) at 179G and the case of Stand 242 HendrikPotgieter Road
Ruimsig
(Pty) Ltd and Another v Gobel NO and Others,supra, at
p 4 par. 13.) In the Sugdencase, supra, the following
was stated by O’Hagen, J, in regard to sec 70dec (2) of
the previous Companies Act, Act 46 of 1926 of which sec 228 is an
exact counterpart, (at 180H – 181A) namely:







There is no
reason, in my opinion, why the principles in these decisions should
not apply to the facts of the present case. It is true that s 70
dec
(2) prescribes the formality of a general meeting for the approval of
the resolution to which the subsection relates; but inasmuch as the
subsection was designed for the benefit of shareholders, why should
the shareholders not be able to waive compliance with the formalities
that are ordinarily attendant upon the convening of a general
meeting? In my view, where the only two shareholders and directors
express, whether at the same time or not, their approval of a
transaction contemplated by s 70
dec
(2), their decision is as valid and effectual as if it had been taken
at a general meeting convened with all the formalities prescribed by
the Act.”








[48] The principle set
out in the Sugdencase was followed in many cases and gave rise
to the principle of unanimous consent. (See Levy and Others,
supra,
at p485F; Ally and Others NNO v Courtesy Wholesalers
(Pty) Ltd,
1996 (3) SA 145 (N) at 146C; Southern Witwatersrand
Exploration Co Ltd v BisichiMining plc and Others,
1998 (4) SA
767 (W) at 774 F – H. It has also been accepted by the South
African Appeal Court, see e.g. Quadrangle Investments (Pty) Ltd v
Witind Holdings Ltd,
1975 (1) SA 572 (A) at 581C – 582B;
Alpha Bank Bpk en Andere v Registrateur van Banke en ‘n
Ander,
1996 (1) SA 330 (A) at 348G – I.)







[49] Considering the
above cases I can think of no reason why the principle set out in
these cases should not also apply to sec 228 of our Companies Act.
From this it follows that the formality of a general meeting, as
required by the section, can be waived by shareholders who may give
their consent to a sale informally. This may even be done separately
by the shareholders. (See Sugden’s-case, supra.)There
is no allegation by Namundjebo that a formal general meeting was held
whereby shareholders registered their consent to the sale of Oshakati
Tower’s only asset but, as set out above, no formal meeting was
necessary and, depending on the evidence to be given, it was open for
shareholders to give their consent separately and informally.







[50] The third possible
defence is one of estoppel.







[51] In regard to the
application of the above provision Mr. Heathcote submitted that,
although it was correct that a plea of estoppel could not be raised
against the directors of a company who acted contrary to the
provisions contained in the section, it did not follow that such a
plea could not be raised against the shareholders. Counsel argued
that the section is primarily to protect the interests of
shareholders and that they could be estopped if they represented that
a state of affairs existed which resulted in an innocent party acting
thereon to his detriment.







[52] Mr. Frank submitted
that even if, what was set out in Namundjebo’saffidavitwas
reiterated under oath, it did not follow that he was authorized to
conclude the agreement. Counsel added to this that there was no
evidence that there was authorization or ratification “in terms
the specific transaction” as required by sec. 228.



[53] A reading of the
authorities concerning sec. 228 shows that there is a difference of
opinion amongst academics and also amongst judges whether, where sec
228 applies, estoppel and the rule in the Turquand casecan be
applied where directors have acted contrary to the prohibition set
out in the section. In an obiter dictum in the matter of Levy
and Others v Zalrut Investments (Pty) Ltd,
1986 (4) SA 479 (WLD),
van Zyl, J, was of the opinion that in appropriate circumstances a
party could rely on estoppel and that the rule in the Turquand
case could also be raised where an opposite party raised the defence
of non-compliance with the internal rules of the company. However,
Cleaver, J, in the matter of Farren v Sun Service SA Photo Trip
Management (Pty) Ltd,
2004 (2) SA 146 (CPD) was of opinion that,
in so far as the application of the rule in Turquand negated
the provisions of sec. 228, it could not apply. As far as estoppel
was concerned the learned Judge stated that a defence of
estoppelwould not be permitted if by doing so a result would be
achieved which was contrary to the intention of the Legislature.
(SeeStrydom v Die Land- enLandboubank van Suid-Afrika, 1972
(1) SA 801 (A).







[54] Moreover, in the
matter of Stand 242 HendrikPotgieter Road Ruimsig (Pty)Ltd and
Another v Gobel NO and Others,
2011 (5) SA 1 (SCA) the South
African Supreme Court of Appeal decided that where the purpose of
sec. 228 was to protect shareholders, the application of the
Turquandrule would deprive them of that protection. The Court
consequently found that the Turquandrule did not apply to sec.
228.







[55] Mr. Heathcote’s
concession that a defence of estoppel cannot be raised against the
directors of a companywas therefore correctly made. This is so
because, where shareholders have not consented to the sale of the
company’s only asset by its directors, allowing the defence of
estoppel to be raised against the directors would similarly have
negated the protection afforded by sec. 228 to shareholders and would
therefore not have been permissible. However, Mr. Heathcote’s
submission that a plea of estoppel can, in appropriate circumstances,
be raised against shareholders of a company has, in my opinion,
merit.







[56] To apply the
doctrine of estoppel against shareholders who, by their
representation, have caused a bona fide party to act thereonto
his detriment would, in my opinion, not result in estoppel operating
to allow a contravention of sec. 228. To allow them in such
circumstances to still claim the protection of the section runs
counter to the principle that parties should not be allowed to
benefit from their own wrongs.







[57] In the Farren-case,
supra, Cleaver, J,did not exclude the possibility of estoppel
being raised against the shareholders but it was not necessary for
the Court to decide the issue. (p157 par. 18). Also in the Stand
242-
case the issue was not decided because the argument based on
estoppel was not persisted in as it was accepted that no
representation was made by the shareholders.







[58] For the reasons set
out above I agree with Mr. Heathcote that in appropriate
circumstances the doctrine of estoppel can be raised against
shareholders who enjoy the benefit of sec 228.







[59] Because of what I
have stated earlier in regard to the statement of Namundjebo, this
Court must leave the issue whether there was any representation made
by the shareholders of Oshakati Tower on which Mr. Dirk
orExecutivehas been misled into believing that Namundjebo had been
duly authorized to enter into the sales agreement of Oshakati Tower’s
property to the Court a quo to decide after having heard the
evidence. As I have pointed out before, the statement by Namundjebo
did not address the issue of sec 228 and it is possible that further
facts may be forthcoming from the evidence to be heard by the Court a
quo.







[60] Both parties had to
apply for condonation and re-instatement of their appeals as they did
not comply with Rule 8(3) of the Supreme Court Rules namely to
provide security for the costs of Oshakati Tower. Failure to do so
resulted in the lapse of the appeals. Mr. Frank did not oppose the
application by FNB but strongly opposed the application byExecutive.
In both these instances the legal practitioners of the applicants
explained their non-compliance with the Rules of the Court.In the
former instance the legal practitioner fully explained the delay
caused, which was not inordinate.In the latter instance the problem
seems to me also to be that the legal practitioner did not know what
the Rules required. In this instance there was also a delay of some
months which was not fully explained.



[61] Legal practitioners
must take notice that ignorance of what the Rules provide is not an
acceptable explanation. If, in this instance, the practitioners had
taken the time to read the Rules, it would have been clear what was
required of them.







[62] In the matter of S
v van der Westhuizen,
2009 (2) SACR 350 (SCA) it was stated that
a Court dealing with an application for condonation must consider all
relevant facts. At p353c-d the following was stated by the learned
Judge:







Factors such
as the degree of non-compliance, the explanation for the delay, the
prospects of success, the importance of the case, the nature of the
relief, the interests in finality, the convenience of the court, the
avoidance of unnecessary delay in the administration of justice and
the degree of negligence of the persons responsible for
non-compliance are taken into account. These factors are interrelated
for example, good prospects of success on appeal may compensate for a
bad explanation for the delay.”








[63] Although expressed
in regard to a criminal matter those principles are also, in my
opinion, applicable where an application for condonation concerns a
civil matter. In neither of the two applications was there an
inordinate delay in the set down of the appeal as a result of the
non-compliance. In regard to the application by Executive, Mr. Frank
submitted that the delay of some 11months before steps were again
taken to prosecute the appeal is a clear indication that the
applicant had abandoned the appeal. I do not think that such an
inference is justified. The applicant has timeously taken all steps
to prosecute the appeal up to the time it was required to comply with
Rule 8(3). Although the explanation for the delaywas not adequate,
the delay was not,in my view, attributable to Executive. Furthermore
the matter is of great importance to Executiveas it stands to lose
the property bought by it for some N$4 million and to be left with a
debt to FNB in that amount whilst only having the cold comfort of
suing Namundjebo to make good its loss.Lastly,given the conclusion of
this Court on the merits, the appeal had very strong prospects of
success, to say the least. In these circumstances, I am of the
opinion that this Court must condone the appellants’
non-compliance of the Rules of this Court.







[64] In the result the
following order is made:







1. The appellants’
non-compliance with the provisions of Rule 8(3) of the Supreme Court
Rrules is condoned and the appeals are re-instated.







2. The appeals succeed
with costs, such costs to be inclusive of the costs consequent on the
employment of one instructing and two instructed counsel.







3. The Court a quo’s
refusal to refer the matter to viva voce evidence,as well as
that the Court’s finding in favour of the respondent on the
merits and costs, are hereby set aside,and the following order is
substituted, namely:







(a)
In terms of the provisions of Rule 6(5)(g) of the Rules of the High
Court the matter is referred for oral evidence on the following
issues:








  1. The status and effect of
    the written agreement between Mr. Stritter and Namundjebo in terms
    whereof WUM properties sold all its shares in Oshakati Tower to the
    latter;









  1. whether there was
    unanimous consent, as meant by sec 228 of the Companies Act, 1973,
    by all shareholders to the particular transaction whereby Namundjebo
    had sold the only asset of Oshakati Tower to Mr. Dirk and/or
    Executive Properties CC; and/or








(iii) whether the
shareholders, by conduct or otherwise, represented to Mr. Dirk and/or
Executive Properties that Namundjebo was duly authorized to sell the
property of Oshakati Tower and, by acting thereon, did so to his or
its detriment.







(b) The deponents to
affidavits in this matter are ordered to appear personally and the
parties shall also be entitled to subpoena any other person to give
evidence viva voce in connection with the above factual
disputes, provided that notice thereof, as well as a short summary of
the evidence to be given by such witness, is given to the opposing
party or parties at least three days before the witness will testify.







(c) The provisions of
Rules 35 and 36 of the High Court Rules in connection with discovery
and inspection of documents, shall mutatis mutandis apply.







(d) The costs occasioned
by the hearing shall be costs in the cause.







(e) The wasted costs
occasioned by the respondent’s opposition to the application
for referral for viva voce evidence shall be paid by the
respondent and include the costs of one instructed and two
instructing counsel.”


















________________________



STRYDOM AJA













I agree.











________________________



MARITZ JA










I
agree.


















________________________



MAINGA JA











































Counsel
on behalf of appellants:



Mr.
R. Heathcote



Assisted
by:



Mr.
R.L. Maasdorp



Instructed
by:



Koep&
Partners











Counsel
on behalf of first respondent:



Mr.
T.J. Frank SC



Assisted
by:



Mr.
A. Corbett



Instructed
by:



Engling,
Stritter & Partners