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IN
THE SUPREME COURT OF NAMIBIA
CASE
NO: SA 25/2012
DATE:
27 OCTOBER 2015
REPORTABLE
In
the matter between
BUHRMANN
& PARTNERS CONSULTING
ENGINEERS..............................................Appellant
And
GüNTHER
WILFRIED
GARBADE...................................................................................Respondent
CORAM:
SHIVUTE CJ, DAMASEB AJA and HOFF AJA
Heard:
19 March 2014
Delivered:
27 October 2015
APPEAL
JUDGMENT
SHIVUTE
CJ (DAMASEB AJA and HOFF AJA concurring):
Introduction
[1]
Buhrmann & Partners (Buhrmann), a
partnership of consulting engineers, instituted action against Mr
Garbade for the payment of the sum of N$1 287 530,73, interest and
costs. Buhrmann’s case was that during the period March 2005 to
December 2006 it had entered into various oral agreements with Mr
Garbade in terms of which Buhrmann was engaged by Mr Garbade to act
as engineers and to provide professional consulting services to him
in the development known as 'Am Weinberg' (also referred to as the
'Am Weinberg Project') situated on [Erf 1……] in Klein
Windhoek. Buhrmann pleaded that it had performed all the
services required of it in terms of the agreements, thus entitling it
to payment of its fees and charges in the sum already mentioned.
[2]
Mr Garbade filed a special plea of
misjoinder, contending that the action should not be instituted
against him, as he had at all relevant times acted for and on behalf
of a close corporation known as Jary Enterprises One Hundred and
Thirty Six CC (Jary Enterprises), which would have been the correct
defendant. Buhrmann replicated to Mr Garbade’s special plea,
raising the defence of estoppel. On application by Mr Garbade, the
High Court ruled that the special plea should be determined first
prior to entertaining the merits of the claim. In the hearing that
ensued, Mr Garbade testified and called the Am Weinberg Project
co-ordinator, Mr Holger Oberprieler, to testify on his behalf. Mr
Siegfried Tietz and Mr Pedro Roland, both engineers and partners in
Buhrmann, testified on its behalf. The High Court upheld the special
plea and ordered Buhrmann to pay Mr Garbade's costs. Buhrmann now
appeals against the whole of the judgment and orders handed down by
that court.
[3]
The appeal raises only one substantive
issue. It is whether Mr Garbade contracted in his own name or on
behalf of Jary Enterprises. In short, did Mr Garbade contract in a
personal or representative capacity?
[4]
The answer to this question is important to
the parties, but more so to Buhrmann because it has instituted
proceedings for breach of contract against Mr Garbade personally. As
noted above, Mr Garbade’s defence is that Buhrmann is party to
a contract with Jary Enterprises and he cannot therefore be sued
under that contract. In short, Mr Garbade alleges that Burhman sued
the wrong party.
The procedural
‘dilemma’
[5]
There is a further issue of procedure that
should be dealt with at the outset. The court a
quo rightly ordered that the
proceedings be stayed pending the determination of the preliminary
issue of whether Mr Garbade was indeed contracting in a personal
capacity before the merits of the contractual claim could be heard.
This court has heard substantial arguments in which there has been
reference to extensive evidence led in the hearing of the special
plea. The concern is that should this court give full reasons for its
judgment and in it express views on the evidence and the appeal is
upheld and the matter proceeds to trial on the merits, there is a
risk that the court would in its judgment make findings that would be
binding on the court a quo.
Such findings may also impact on the final determination of the
matter on appeal should the matter go that far.
[6]
The
court invited argument on the point, which was characterised as a
‘dilemma’ by a member of the court. At the core of the
issue is the opposition between the two following principles. First,
it is given that litigants are ordinarily entitled to reasons for a
judicial decision following upon a hearing.[1]
Although not explicitly spelled out in Art 12 of the Namibian
Constitution, it seems to me that the duty on a court to provide
reasons after a hearing is usually part and parcel of a party’s
right to a fair hearing.
[7]
Second, and against the first principle, is
the concern that this court should not pre-judge the merits of the
dispute between the parties. These are properly to be considered and
decided by the court a quo in
the event that the appeal is upheld and the matter referred back to
that court for the continuation of the trial. On the other hand, the
reasons for this court’s judgment will necessarily entail
certain findings of fact that could be relevant to the substance of
the dispute.
[8]
Counsel are unanimous in their submissions
that by furnishing reasons for its judgment this court does not
necessarily have to pre-judge the merits of the case. I agree. In
particular, it is important to bear in mind that it is open to us to
determine the appeal on narrow grounds, leaving the court a
quo free to distinguish its findings
which will have had the benefit of full evidence being led on all
issues at the trial. In any case, the reasoning of this court draws
predominantly on the record of the appeal, and avoids as far as is
possible value judgments on the weight to be attached to different
pieces of evidence that the parties may tender before the court a
quo should the appeal be upheld and the
matter sent back to that court. In light of this consideration, it is
clear that the dilemma posed is more perceived than real. As such, we
ought to render a reasoned judgment.
The
evidence concerning the special plea and judgment of the High Court
[9]
As noted above, Buhrmann is a firm of
engineers who were instructed to provide professional consulting
services in respect of a building project called the Am Weinberg
Development in Klein Windhoek. This project was to be situated on
[Erf 1……], a plot of land inherited by Mr Garbade’s
wife and her sisters in 1988 and registered in the name of Jary
Enterprises in 2003. The services included the reconstruction of the
original property into a new restaurant, and the performance of
associated geotechnical investigations and compilation of pre-tender
cost estimates. These agreements took the form of oral contracts made
during the period March 2005 to December 2006.
[10]
The consideration for these services was
agreed to be N$1 287 530,73. Buhrmann claims that this sum is due to
them as they have completed their obligations under the agreement. Mr
Garbade, so far as is material, argues that the work carried out was
negligent and fell short of the contractual standard. In particular,
it is alleged that the project was over-excavated, and the
foundations were not of a sufficient standard. These allegations were
subject of arbitration proceedings. He further alleges that he cannot
be sued under the agreements as he is not party to them. Rather, he
claims, it is Jary Enterprises, a close corporation whose sole member
is Mr Garbade’s wife which is the party. As previously noted,
this is the only issue on appeal.
[11]
Buhrmann makes two arguments. The principal
one is that, in any case, the reasonable construction of the
documents and agreements associated with the development indicate
that Mr Garbade was contracting in a personal capacity. Second, they
submit in the alternative that Mr Garbade is estopped from resiling
from his alleged representations that Buhrmann was contracting with
him personally. The alternative argument will be dealt with only if
this court finds that the special plea ought not to have been
dismissed on the basis of the principal argument.
[12]
The court a
quo found that Mr Garbade was
contracting in a representative capacity for Jary Enterprises. The
judgment rests on three main pillars. First, the court below
considered a first letter that was sent to TransNamib –
implicated in the development because [Erf 1…...] has a
southern boundary adjoining to the Windhoek-Gobabis railway line –
that identified the developer as Jary Enterprises and not Mr Garbade.
A partner of Buhrmann, Mr Tietz, then also sent a second letter to
TransNamib that referred to the above correspondence. Significantly
in the opinion of the court below, Mr Tietz stated in that letter
that ‘our client had applied to TransNamib’. Given that
the first letter in question identified Jary Enterprises as the
developer, and the second letter from Mr Tietz refers to the
developer in the first letter as ‘our client’ the court
found that Mr Garbade was contracting in a representative capacity.
[13]
Further, the court relied on a confirmation
of an initial verbal agreement in 2003 that was addressed to ‘The
Manager’ of the Am Weinberg Project which was sent by Mr
Roland, another partner in Buhrmann. The court a
quo reasoned that reference to ‘The
Manager’ in the letter by Mr Roland demonstrates Buhrmann’s
understanding that Mr Garbade was not the owner of the project, and
was thus not acting in personal capacity.
[14]
Finally, the court below explained away Mr
Tietz’s testimony that ‘We always dealt with Mr Garbade.
There was never somebody else’ by stating that a natural person
must always act on behalf of a close corporation. Mr Garbade,
therefore, was this person and that is why Buhrmann dealt exclusively
with him. That Mr Tietz only dealt with Mr Garbade, so the court a
quo reasoned, was therefore not
evidence that he was contracting in a personal capacity.
[15]
The estoppel defence also failed on the
basis that the court found that since the very inception of the
contractual relationship, as demonstrated in the confirmation of the
oral agreement in 2003, Buhrmann knew that Mr Garbade was working in
representative capacity. It therefore did not behove the latter to
explain this – there were no erroneous representations to
correct.
[16]
It is my considered opinion that the court
a quo erred
in holding that Mr Garbade acted in representative capacity. What
follows are the reasons for this conclusion.
[17]
It is important to remember that the court
here has to determine a factual issue, and, to that extent, must make
a value judgment about the identities of the parties to a commercial
relationship. It is important, therefore, to construe the evidence as
a whole in light of the purpose of that relationship to ascertain
whether Mr Garbade contracted in personal or representative capacity.
With respect to the learned judge below, he lost sight of this broad
approach when he based his conclusions on the individual word
‘manager’ in the context of a string of contracts and
forensic analysis of voluminous non-contractual correspondence. This
can be seen upon further examination of the three bases for the court
a quo’s
findings.
[18]
First, the TransNamib correspondence does
not show that Buhrmann was contracting with Jary Enterprises. It is
to be noted that the second letter in question was written nearly a
year and a half after the first letter, and in any event, the
substance of the letter was only to chase up TransNamib’s
reconsideration of the application to relax the building line.
Moreover, it would make sense for the application to be initially
sent from Jary Enterprises. They, as the court a
quo notes, were the owners of the Erf
in question. It would be difficult to conclude from this alone that
Mr Garbade was contracting in a representative capacity.
[19]
Second, turning to the letter from a
partner of Buhrmann to the ‘Manager’ of the Am Weinberg
Wellness Centre, the court below extracted a dictionary meaning of
‘manager’, and found that this meant that Buhrmann would
have understood themselves to be contracting with the manager of Jary
Enterprises. This cannot be accepted as correct. Reference to ‘the
manager’ simply means that Buhrmann would have understood to
have been contracting with the manager of Am Weinberg Wellness
Centre. It should be noted that back in 2003 this was a separate and
smaller prior project, undertaken under the hand of a different
architect.
[20]
In any case the letter in question was a
brief confirmation of the verbal appointment of Buhrmann as the
project’s civil and structural engineers. I note that later
when submitting the fee estimate they explicitly refer to Mr Garbade
in his personal capacity, and correspondence from the same year and
under the same partner’s hand refers explicitly to Mr and Mrs
Garbade. That the court below relied on this letter to find that Mr
Garbade was contracting in a representative capacity is too strong of
an inference to draw.
[21]
Finally, rejecting the statement of Mr
Tietz to the effect that they only dealt with Mr Garbade on the basis
that a close corporation could never act alone underestimates the
near total absence of reference to Jary Enterprises in the initial
correspondence that gave rise to the contractual relationship. In
order to appreciate this, it is necessary to consider the purposes
behind Jary Enterprises and its exact role in the financial
architecture of the project.
[22]
The role of the close corporation was a
limited one. As per the Addendum to the Client-Architect Agreement,
Mr Garbade and the appointed architect of the subsequent work to the
project, Mr Bob Mould, agreed in the interest of providing security
for the architect’s fees, inter
alia, that ‘the CC shall be a
property holding CC involved in the construction of buildings . . . .
It is especially agreed that the CC will not have in its employ any
employees, nor will it incur any extraordinary costs, unless it is
agreed between the parties’. Further, it was agreed that the
payment of the architect’s fees would include a percentage of
the close corporation’s profits and the acquisition of a Unit
in the development. Given that it was Jary Enterprises who owned the
property in question, it would have only been possible to effect this
scheme if Mr Garbade signed the agreement in a representative
capacity.
[23]
In direct contrast to this, Buhrmann was to
be paid a lump sum of N$1 287 530,73. There would be no justification
for contracting with the close corporation with the limited purpose
as outlined above. On the contrary, Jary Enterprises had no funds
with which to pay them. Its only asset consisted of ownership of the
Erf. This would have been of not much use to Buhrmann, whose
interests lay in payment of the above sum.
[24]
Further, turning to Mr Oberprieler’s
evidence, he confirmed that Jary Enterprises had no bank account, no
letterhead and was intended to be kept dormant, without incurring
liabilities, so as to facilitate the procurement of a bank loan.
Indeed, the attempts to raise funds from financial institutions were
all made in Mr Garbade’s own name. It is in these circumstances
highly doubtful that Jary Enterprises would wish to expose itself to
large liabilities in respect of Buhrmann’s fees. That Buhrmann
would contract for a project in the region of N$50 million with a
corporation without any funds is an unbusinesslike interpretation of
the contractual relations.
[25]
Although
this situation is not strictly one where the court is called upon to
determine the meaning of a contractual provision, it is important to
bear in mind that courts should be slow to reach a conclusion that
flouts common business sense. To foist a non-commercial understanding
on commercial agreements is more likely to be a misunderstanding of
the underlying relationship rather than a realistic interpretation of
it. The point was rightly recognised by Levy J in National
Address Buro v South West African Broadcasting Corporation
1991 NR 35 (HC) at 49G.[2]
Similarly, in Natal
Joint Municipal Pension Fund v Endumeni Municipality
2012 (4) SA 593 (SCA) para 18, the Supreme Court of Appeal of South
Africa stated that
‘A
sensible meaning is to be preferred to one that leads to insensible
or unbusinesslike results . . . .’
[26]
In addition to these points of principle,
this court notes that the overwhelming majority of the documents
indicate that Mr Garbade contracted in his personal capacity. Other
contracts with different organisations involved in the project such
as Bulk Earthworks and KL Construction were concluded in his name.
The advertising and promotional material made no mention of Jary
Enterprises. Given that these are documents that can give rise to
legal liability it is inconceivable that this was due to oversight.
Tax invoices were made in his name.
[27]
It would be possible to continue
enumerating the wide range of documents that are indicia of Mr
Garbade contracting in his own name, but it is not necessary to
further burden the judgment with factual issues. There are clear
reasons of principle and fact militating against a contract between
Buhrmann and Jary Enterprises. On the contrary all reasonable
indications point to Mr Garbade contracting in person.
[28]
As
a final point, it should be observed that the onus lies on the
respondent to prove the material facts underlying his special
plea.[3] In light of the above
findings, it is unrealistic to suggest that he has done so. A
combination of factual and principled reasoning militates against the
finding of the court a
quo.
It is clear that the evidence it relied on was either taken out of
context or gave rise to too strong an inference.
[29]
Given that this court finds that Mr Garbade
was contracting in a personal capacity, it is not necessary to
address the issue of estoppel. The appeal must therefore be upheld.
Order
The
following order is accordingly made:
1.
The appeal is upheld with costs, such costs
to include the costs of one instructing and one instructed counsel.
2.
The order of the High Court upholding the
special plea is set aside and substituted for the following order:
‘The
special plea is dismissed with costs, such costs to include the costs
of one instructing and one instructed counsel.’
3.
The matter is referred to the court a
quo for the continuation of the trial.
SHIVUTE
CJ
DAMASEB
AJA
HOFF
AJA
APPEARANCES
APPELLANT:
Mr Corbett
Instructed
by LorentzAngula Inc.
RESPONDENT:
Mr Mouton
Instructed
by Mueller Legal Practitioners
[1]
Strategic
Liquor Services v Mvumbi
NO
& others
2010 (2) SA 92 (CC) para 15.
[2]
Citing
a passage by Lord Wilberforce in Reardon
Smith Line v Hansen-Tangen [1976]
3 All ER 570 at 574: ‘No
contracts are made in a vacuum: there is always a setting in which
they have to be placed . . . In a commercial contract it is
certainly right that the court should honour the commercial purpose
of the contract and this in turn presupposes knowledge of the
genesis of the transaction, the market in which parties are
operating. . . . ’
[3]
Masuku
& another v Mdlalose & others
1998
(1) SA 1 (SCA) at 11B-C