- February 17, 2023
- |Concise Law Reports (CLR), Contracts
Development Bank of Namibia v Leap Manufacturing Namibia (Proprietary) Limited NAHCMD (17 February 2023)
The first defendant, the alter ego of the second defendant, decided to commence a business venture in the manufacturing and retail of clothing at certain specified outlets in the Grovel Mall in Windhoek and later a later stage in Swakopmund, Namibia. The retail outlets traded under the name and style of “My Republic”. In order to secure funding, it approached the plaintiff for funds and submitted a comprehensive business plan in terms of which the sum of N$22 000 000 was required by way of a loan.
The plaintiff and the first defendant entered into a written loan facility agreement on 30 June 2014 in which the plaintiff lent the defendant an amount of N$4 350 000. The proposed business was set up and commenced its retail operations but soon ran into troublesome financial losses. This was due to certain factors such as a substantial decrease in its Angolan-based customer base, the general decline in the Namibian economy, and an insufficient supply of stock. The latter was due to mainly the first defendant experiencing problems obtaining the required stock levels from a supplier based in Mauritius which had undertaken the manufacturing process of the garments.
The parties entered into a second written loan facility agreement on 14 July 2015 in which the plaintiff lent a further N$4 656 000 to the first defendant. The two amounts were later consolidated. The second and third defendants’ indebtedness was premised on suretyships signed by them in favour of the plaintiff binding them as co-principal debtors for the repayment of the loan. In addition, and as part of the security advanced in respect of the repayment loan, a certain property described as Erf 800, Windhoek was mortgaged in terms of the Deed of Mortgage concluded between the parties.
The plaintiff instituted civil proceedings against the defendant for payment of the amount of N$15 518 106.81 and interest on the amount at a rate equal to the rate quoted by First National Bank on overdraft from time to time plus 3 % calculated on the daily balance of the outstanding amount, compounded monthly, from 1 October to 2019 to date of payment. The plaintiff further claimed that the bonded property be declared executable.
The defendants defended the matter, and while not disputing the claims made by the plaintiff, filed a counterclaim based on both a delictual claim and a claim based upon an alleged breach of contract. At the close of the trial, however, counsel for the defendant conceded that the factual and legal basis to establish a delictual claim was not proved.
Counsel for the defendant, in respect of the claim based upon an alleged breach of contract, contended that the agreement concluded between the parties contained certain implied terms. The terms were not contained in the pleadings and the pre-trial report. Counsel for the defendant contended that implied terms to an agreement need not be pleaded.
Upon consideration of the matter, MILLER AJ held that:
- Our courts generally accept that litigating parties remain bound by their pleadings.
- Assuming that the alleged breaches of the agreement were proved, the onus remained on the defendants to establish that such breaches resulted in the damage allegedly suffered.
- Neither of the alleged breaches were proved nor that any of the alleged breaches, if proved, can be said to have caused or materially contributed to the loss suffered.
As a result, judgment was granted in fovour of the plaintiff against the defendants jointly and severally, the one paying the other to be absolved for payment of the amount of N$15 518 106.81 and interest. The property described in the papers was declared executable. The counterclaim was dismissed and the defendants were ordered to pay the costs of the plaintiff on the scale between attorney and client, including the costs of one instructing and one instructed counsel.