- October 13, 2023
- |Civil Law, Practice, And Procedure, Concise Law Reports (CLR)
Arch Resources (Pty) Ltd, the plaintiff, filed a lawsuit against Candino Mining and Construction CC, a close corporation, and Jurius Nkoshi, a prominent male businessman. The plaintiff sought to address an exception raised under Rule 57 of the court rules. The exception argued that the plaintiff’s particulars of claim failed to establish a valid cause of action or were, alternatively, vague and embarrassing. Initially, the parties attempted to resolve the matter amicably, following the provisions of Rule 57(2). However, they were unable to reach an agreement, leading to the hearing of the exception.
The core of the plaintiff’s case rested on a written agreement entered into on April 7, 2021, between the parties. Mr. Justus Hausiku represented the plaintiff, while the first defendant was represented by the second defendant. According to this agreement, the plaintiff was to provide construction support for the Katima Mulilo Airport runway rehabilitation on behalf of the first defendant. A crucial aspect of this agreement was the issuance of a performance guarantee valued at N$9,610,205.73, equivalent to 10% of the project’s value, by Momentum Short-Term Insurance, on behalf of the first defendant to the Ministry of Works and Transport. The first defendant agreed to pay facility fees amounting to N$4 million to the plaintiff, with half payable upon the first progress payment and the remaining half upon the second progress payment.
The second defendant offered an ‘unlimited suretyship’ to the plaintiff concerning the guarantee provided to the first defendant, making them jointly and severally liable for any debt owed to the plaintiff by the first defendant.
The plaintiff contended that it fulfilled its obligations under the agreement. It caused the performance guarantee to be issued by Momentum around April 23, 2021. Furthermore, the first defendant completed the project by November 5, 2022, and received all the progress payments by that date.
However, a dispute arose when the first defendant failed to pay the remaining N$1,750,000 to the plaintiff, thereby breaching the agreement. This breach triggered the second defendant’s liability as a surety and co-principal debtor, rendering them jointly and severally responsible for the N$1,750,000 debt. Consequently, the plaintiff sought the outstanding amount, along with a 20% interest rate applied from November 5, 2022, and the costs of the legal proceedings.
The agreement and the performance guarantee were attached to the particulars of the claim as Annexure ‘A’ and ‘B’, respectively. The defendants raised four grounds of exception.
Firstly, the defendants argued that the plaintiff’s reliance on a written agreement, referred to as ‘Annexure A,’ did not align with the allegations made in the plaintiff’s pleadings. The plaintiff claimed that the agreement contained certain terms, express or implied, but the document did not support these claims. Secondly, the defendants contended that the plaintiff’s assertions of compliance with obligations under the agreement were unsustainable since these obligations were not apparent in ‘Annexure A.’ Thirdly, the defendants challenged the plaintiff’s attempt to hold the second defendant jointly and severally liable with the plaintiff, as the terms and conditions of the second defendant’s suretyship were not reflected in ‘Annexure A.’ They further argued that such terms should have been documented in a written agreement, which was not the case. Lastly, the defendants pointed out that a document titled ‘CONSTRUCTION SUPPORT FACILITY,’ mentioned in ‘Annexure A,’ was not attached to the particulars of the claim as required by Rule 45(7).
In the context of legal principles, it’s important to note that exceptions serve the purpose of preventing unnecessary evidence in a trial, specifically when a claim is argued to lack a cause of action. The court assumes the truth of the plaintiff’s allegations and evaluates whether, even with these facts admitted, a cause of action is still lacking. Exceptions are only appropriate if no possible evidence can establish a cause of action.
Regarding exceptions based on vagueness and embarrassment in pleadings, the burden falls on the party raising the exception to demonstrate that the pleading is indeed problematic, causing real prejudice to their ability to prepare a defence. Courts should not overly scrutinize pleadings and should consider whether the opposing party faces genuine difficulties in responding adequately to the case.
The defendants in this case challenged the plaintiff’s claims on multiple grounds, mainly centred around discrepancies between the written agreement and the allegations made. They raised these issues through exceptions, seeking to establish that the plaintiff’s claim lacked a valid cause of action or was vague and embarrassing, as permitted by established legal principles in handling exceptions.
PRINSLOO J:
The first two grounds of exception in this case were closely related and concerned the alignment between the plaintiff’s pleadings and the written agreement (Annexure ‘A’) on which the plaintiff relied. The defendants argued that the particulars of claim did not match the terms and content of the written agreement. Specifically, discrepancies arose in paragraphs 6.1 and 6.3.3, where the plaintiff’s allegations did not correspond with the terms in ‘Annexure A.’ While the plaintiff argued that there was no contradiction between the particulars of claim and ‘Annexure A,’ the court found that they did not align on critical aspects, leading to the exception’s acceptance.
The third ground of exception focused on the suretyship of the second defendant. The plaintiff claimed that the second defendant, as a member of the first defendant, had provided an unlimited suretyship. However, this claim was based on ‘Annexure A,’ which contained a one-line reference to a suretyship but lacked clarity on key points. The agreement was signed by Jurius Nkoshi, identified as the managing member, raising questions about the nature and validity of the suretyship. Additionally, the agreement did not clearly indicate that Mr. Nkoshi had bound himself as a surety in his personal capacity. These uncertainties led to the exception being upheld on this ground as well.
The court accepted the first two grounds of exception due to discrepancies between the plaintiff’s pleadings and ‘Annexure A.’ The third ground found merit in the defendants’ challenge of the suretyship’s clarity and validity, given the ambiguities in the agreement and the second defendant’s role as a managing member.
As a result, the defendants’ exception was upheld. Consequently, the plaintiff’s particulars of claim was set aside, and the plaintiff was granted the opportunity to amend its particulars of claim within 15 days from the date of this order. Furthermore, the plaintiff was directed to cover the defendants’ costs related to the exception, which include the expenses incurred by one instructing and one instructed legal practitioner.