- January 25, 2023
- |Concise Law Reports (CLR), Legislation
Bank WHK v Fair View Properties CC NAHCMD (Registration No. 2022/1575) (25 January 2023) and Bank Windhoek Limited v Rehoboth Properties CC (Registration No. 2000/1028) NAHCMD (25 January 2023)
The applicant (a commercial bank) brought winding-up applications to wind up two sister close corporations. In opposing the applications, the respondents raised six points in limine, whose discussion sheds light on the requirements of liquidation. Paker AJ:
Security bond and service on the Master of the High Court and Master’s Certificate
The security should be provided prior to the hearing and not prior to the launching of the application and the Master’s Certificate may be filed even after hearing of the application but before judgment is delivered (Van Wyk v Windhoek Renovations [2021] NAHCMD 545 (23 November 2021). The court found that security had been filed and rejected this point in limine.
Service of process: On the respondent and respondent’s employees and their trade unions and on the Receiver of Revenue
The court found that the respondent was been duly served and the application was properly before the court. The court further that the respondent made no allegations as to the existence of any employees and whether they were unionised. It should be remembered, the requirement that such application be served on employees and trade unions is to protect any rights or benefits – whether preferential or not – that could enure in favour of employees upon the winding up of their employer. Service of process on the employees or trade unions is therefore not for the benefit of the employer respondent. The employees or their trade unions could do nothing in law – nothing at all – to stop the judicial winding up of the employer respondent.
Considering the aforementioned purpose that service of process in such applications on employees or trade unions is to achieve, who better than the Labour Commissioner to receive such service? The Labour Commissioner has the appropriate resources to enquire and determine whether the respondent has employees and whether they are unionised. And more important, the Labour Commissioner is well placed to advise any employees and trade unions free of charge as to their rights and benefits upon the winding up of the respondent. Besides, I find that the Receiver of Revenue and the Ministry of Finance have been served.
The court further rejected the argument that although those public authorities were served, they were not cited as being weak. The respondent simply failed to resist the application on the merits. The applicant sought no order against those public authorities; and what is more, an order to wind up the respondent will not be brutum fulmen, albeit the public authorities have not been cited but served with process. For completeness, the order granted in this proceeding shall be served on the served public authorities for their information. Accordingly, these points in limine were rejected.
Absence of nulla bona return in respect of disposable property
Act 26 of 1988 does not require a nulla bona return to be filed with the court for the purposes of the winding up of a close corporation under it. Consequently, this point in limine was rejected. What is relevant and required is income sufficient to satisfy the debt owed by the respondent to the applicant. In its answering papers, the respondent made out no case tendering to establish that there was any cash or viable cash flow available to satisfy the debt. The court already found that the respondent is deemed unable to pay its debts. Despite allegations that it has been receiving rental on its property, none of those funds – if, indeed, they were received, were being paid to the respondent to be used to satisfy the debt. Doubtless, a liquidator will be in a better position to investigate to whom the funds have been paid or by whom they have been dissipated, and then recover those funds for the benefit of the creditors (Laicatti Trading Capital Inc and Others v Greencoal (Namibia) (Pty) Ltd 2016 (2) NR 363 (HC) paras 31-32).
Lis alibi pendens
In her submission, counsel for the respondents listed a number of matters involving the parties that were withdrawn, and argued that the matters were not prosecuted ‘until their finality’. It does not lie in the province of the court to concern itself with counsel’s worry. If the applicant qua plaintiff withdrew matters without tendering costs that should not bother the court. The respondent qua defendant has an adequate remedy in terms of the rules of court. Consequently, this point in limine was rejected.
Disputed claim amount
All that the applicant was required to establish is a debt of not less that N$200. The debt proved to the satisfaction of the court was way higher than the prescribed minimum amount based on the loan agreement and the mortgage bond which were common cause between the parties. The respondent did not placed one iota of evidence before the court to dispute the debt which it owed to the applicant; neither did it allege that the debt was less than N$200. Moreover, it did not dispute that the debt was owed and payable. It is not about the debt being disputed simpliciter, but it is about the amount being disputed on bona fide and reasonable grounds for the court to take note of it and consider it. (Klein v Caramed Pharmaceuticals (Pty) Ltd). The respondent did not dispute the indebtedness on bona fide and reasonable grounds. The fact that the exact amount is disputed does not affect the situation, unless there is proof that the indebtedness itself is disputed (Prudential Shippers SA Ltd v Tempest Clothing Co (Pty) Ltd and Others 1976 (2) SA 856 (W) at 867F).
As to the charge of unconstitutionality of the balance certificate, the certificate is prima facie proof of indebtness (Standard Bank of Namibia Ltd v Schameerah Court Number Seven CC and Others [2018] NAHCMD 378 (27 November 2018) para 11). The bare denials of the amount owed cannot amount to bona fide and reasonable dispute of indebtedness. There was no sufficient and satisfactory proof of what in the respondent’s view it owed the applicant. The prima facie proof, in that regard became conclusive and there is nothing ‘unconstitutional’ about that.
In any case, there are some 70 basic human rights protected by the Namibian Constitution. The respondent failed to prove in what manner the balance certificate violated all the 70 constitutional rights, or which one or which ones, in relation to it ( Kauesa v Minister of Home Affairs and Others 1995 NR 175 (SC). In other words, the respondent failed to establish which constitutional right or rights it approached the court to vindicate.
‘[31] Without beating about the bush, I should say this. Such absurd, ill-conceived and self-serving constitutional attack should be condemned by the court. It is labour lost. It does not conduce to a development of our constitutional law which has served us well in promoting the vindication of constitutional rights of individuals. Such futile constitutional challenge is not permissible. And what Ms Lardelli overlooks is that the principle pacta sunt servanda is part of our law (Erongo Regional Council and Others v Wlotzkasbaken Home Owners Association and Another 2009 (1) NR 252 (SC). Indeed, what the respondent ‘avers is not established; it becomes a mere irrelevance’ ( Klein v Caramed Pharmaceuticals (Pty) Ltd footnote 1 para 13). In sum, the charge of unconstitutionality is unproven. It is roundly rejected.’
Sabotage by the applicant
It was argued that the applicant sabotaged the Respondent in that there had been wrongful, unauthorized and fraudulent or unlawful deductions on the respondent’s accounts held with the applicant. Doubtless, the allegations of fraudulent and unlawful conduct against a Bank are serious. The court, in fairness to both the respondent and the applicant, requires sufficient and satisfactory evidence from the accuser to prove what it alleges. On the evidence, it was unsafe and unsatisfactory to put any currency on the unproved allegations. They are incapable of resisting the applicant’s claim. Consequently, the preliminary objection was rejected.
As a result, all the points in limine were rejected.