Development Bank of Namibia Ltd v SP Brick Warehouse CC and Another

• Jurisdiction: South Africa
• Judge: OS Sibeya J
• Judgment Date: 05 January 2022
• Court: Northern Local Division, Oshakati
• Docket Number: HC-NLD-CIV-ACT-CON-2019/00093
• Citation: 2022 JDR 0042 (NmO)

Sibeya J:

Introduction:

[1]

These are the reasons for the order granted by this court on 3 March 2021. This court formulates the reasons as follows.

[2]

The plaintiff claimed an amount of N$17,833,279.50 emanating from separate loan agreements entered into with the first defendant. The first defendant did not defend the claim, as a result, plaintiff obtained default judgment against the first defendant in the amount of N$17,833,279.50 plus interest and costs. The second defendant defended the claim. Plaintiff pursued

2022 JDR 0042 p5

Sibeya J

the claim against the second defendant. The second defendant was cited due to the deed of suretyship he executed for the benefit of the plaintiff. The first suretyship was executed on 29 November 2010 at Ongwediva. The second suretyship was a surety mortgage bond (B4514/2011) executed on 1 August 2011 at Windhoek. The second defendant entered into a further covering mortgage bond (B1818/2015) on 9 April 2015 at Windhoek.

[3]

The second defendant does not dispute any of the above-mentioned agreements.

The parties:

[4]

The plaintiff is the Development Bank of Namibia Limited, a public company and bank, duly incorporated in terms of s 2 of the Development Bank of Namibia Act 8 of 2002 and registered in terms of laws of the Republic with registration number: 2003/189 and its principal address is No. 12 Daniel Munamava Street, Windhoek.

[5]

The first defendant is S P Brick Warehouse CC, a close corporation, duly registered in terms of the laws of the Republic with registration number: CC/2006/1461 and its registered address is Erf 4473, Valombola, Ongwediva. As alluded to above, the first defendant did not enter an appearance to defend the claim.

[6]

The second defendant is Mr. Erwin Taukeni Paulus, an adult male resident at Erf 4473, Valombola, Ongwediva. Where reference is made in the course of the judgment to the plaintiff and the defendants jointly, they shall be referred to as the "the parties".

[7]

The plaintiff is represented by Mr. Jones instructed by Engling, Stritter & Partners, while the second defendant is represented by Mr. Ntinda.

2022 JDR 0042 p6

Sibeya J

Background:

[8]

The plaintiff and first defendant, duly represented by the second defendant, entered into several written loan agreements, where the first defendant loaned or restructured the loan facilities.

[9]

The first loan agreement was entered into on or about 29 November 2010 and 16 February 2011 at Windhoek, in the amount of N$8,063,314. The second loan agreement was entered into on or about 5 April 2012 and 10 April 2012 at Windhoek and Ongwediva in the amount of N$1,200,000.00.

[10]

On or about 14 May 2012 and 28 May 2012 at Windhoek, the plaintiff and first defendant, represented by the second defendant, concluded a written addendum to the first loan agreement in terms whereof the amount in the first loan agreement was restructured and all arrears as at 30 April 2012 recapitalised (hereinafter referred to as "the first addendum"). On or about 18 May 2014, the plaintiff and first defendant represented by the second defendant concluded a written addendum to the first loan agreement in terms whereof the amount in the first loan agreement, as amended by the first addendum, was restructured and all arrears as at 30 November 2014 recapitalised (hereinafter referred to as "second addendum").

[11]

On even date, 18 December 2014, at Windhoek, the plaintiff, on the basis of a written loan agreement entered into between the plaintiff and first defendant, represented by the second defendant, lent and advanced the amount of N$1,327,085.20 to the first defendant. The loan was by way of restructuring the amounts advanced in respect of the first loan agreement (as amended by the first and second addendums) and the second loan agreement and recapitalising all the arrears as at 30 November 2014 in respect of the aforesaid agreements which constituted the third loan agreement.

2022 JDR 0042 p7

Sibeya J

Pleadings relevant to the case:

[12]

It was pleaded in the particulars of claim that during the conclusion of all of the aforesaid agreements (the first, second and third loan agreements together with the first and second addendum), the plaintiff was duly represented by Mr. Dawid Nuyoma, Chief Executive Officer of the plaintiff at the time and the first defendant was duly represented by the second defendant, member of the first defendant. The second defendant, in his plea, admitted to the said averments.

[13]

On or about 25 October 2017 and 02 November 2017 at Oshakati and Windhoek, the plaintiff, duly represented by Mr. Martin Inkumbi, the Chief Executive Officer at the time and the first defendant duly represented by Mr. Mark Thomas Wylie. The plaintiff and first defendant agreed to restructure the existing loans, as amended by the first and second addendums, in terms of which the plaintiff shall lend and advance an amount of N$15,373,551.48 to the first defendant (hereinafter referred to as "the final loan agreement"). The loan was by way of restructuring the amounts advanced in respect of the first loan agreement (as amended by the first and second addendums), the second loan agreement and third loan agreement and recapitalizing all the arrears constituting both capital and interest.

[14]

The plaintiff claims to have complied with the terms and obligations of the final loan agreement and disbursed an amount of N$15,373,551.48 to the first defendant as agreed. The first defendant breached the final loan agreement by failing to pay the monthly installments as agreed and further failed to pay arrear interest due, resulting in the full outstanding amount due. On 25 October 2018, plaintiff's manager issued a certificate of indebtedness wit the amount of owed being N$17,833,279.50.

[15]

The second defendant alleged in his plea, inter alia, that: The final loan agreement was entered into by the first defendant represented by Mr. Mark Thomas Wylie ("Mr. Wylie"). He further pleads that Mr. Wylie became a member of the first defendant on the arrangement and facilitation of the plaintiff with the

2022 JDR 0042 p8

Sibeya J

sole purpose of fully discharging the second defendant from all loan obligations and all indebtedness to the plaintiff.

[16]

The second defendant pleads that during 2016, in view of the financial challenges faced by the first defendant at the time, the plaintiff's duly authorised employee, Ms. Sherien Podelwitz suggested to the first and second defendants that the first defendant's performance would improve if it was to be managed by someone else. With intention to relieve the second defendant from the obligations, the plaintiff's aforesaid employee suggested a certain Mr. Wylie to the first and second defendants to manage the first defendant.

[17]

The second defendant pleads that with the knowledge, consent and facilitation of the plaintiff, Mr. Wylie purchased the second defendant's 100% member's interest in first defendant on 14 December 2016 and a written sale agreement was signed. He further stated that the agreement provides that he will be released from all obligations in favour of the plaintiff, including suretyship. It was the understanding between the parties that the plaintiff would then arrange and facilitate that Mr. Wylie sign all the necessary forms for purposes of transferring liability and responsibility to him and to fully discharge the second defendant of all his obligations.

[18]

He concludes by stating that he has therefore been discharged from all obligations, alternatively the plaintiff is precluded from claiming any money from the him, for it is the plaintiff that caused the situation it found itself in.

[19]

The second defendant further pleads that the suretyship agreement was not properly stamped in terms of s 12 of the Stamp Duties Act 1993 (Act No. 15 of 1993) and is thus inadmissible in these proceedings. He further pleads that the plaintiff acted in a manner prejudicial to him by failing to perform in terms of the oral tripartite agreement and failing to ensure that Mr. Wylie signs all the relevant documents in order to transfer obligations from the second defendant to the first defendant and Mr. Wylie.

2022 JDR 0042 p9

Sibeya J

[20]

Second defendant pleads further that the property at Erf 5270 Ongwediva (Extension 11) is his primary place of residence and cannot in law be executed, given the prejudicial conduct of the plaintiff and the fact that he is not in a position to secure another primary place of residence.

[21]

Finally he pleads that in the circumstances, he is not liable for any amount in terms of the suretyship.

Issues for determination:

[22]

In the proposed pre-trial order compiled by the parties dated 26 July 2020, which was made an order of court on 27 July 2020, the parties listed the following factual issues to be resolved at the trial:

'1.1. Whether Mr Mark Thomas Wylie's membership in the first defendant was arranged and facilitated by the plaintiff with the purpose of fully discharging the second defendant from all loan obligations and all indebtedness to the plaintiff.

1.2. Whether when entering into the final loan agreement the first defendant was represented by Mark Thomas Wylie of the second defendant.

1.3. Whether the parties entered into any tripartite oral understanding in terms whereof the second defendant would be released from all payment obligations to the plaintiff and Mr Mark Thomas Wylie would take over all indebtedness of the first defendant.

1.4. Whether or not the plaintiff through its employee (Mrs Sherien Podelwitz) suggested to first and second defendants that first defendant's performance would improve if managed by somebody else.

1.5. Whether or not Mrs Sherien Podelwitz suggested that Mark Thomas Wylie should manage the first defendant.

1.6. Whether Mr Mark...