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REPUBLIC OF NAMIBIA
HIGH COURT OF NAMIBIA MAIN DIVISION, WINDHOEK
RULING: COSTS AT A HIGHER SCALE AND EXCEPTION
CASE NO: HC-MD-CIV-ACT-CON-2018/02683
In the matter between:
SAFLAND PROPERTY SERVICES NAMIBIA (PTY) LTD PLAINTIFF
and
CHRISTIAAN LILONGENI RANGA HAIKALI FIRST DEFENDANTHAROLD SCHMIDT SECOND DEFENDANTPRINCE SHIIMI THIRD DEFEDANTSIMEON NEGUMBO FOURTH DEFENDANTFREDRICK GANASEB FIFTH DEFENDANTRICHARD FRANKLE SIXTH DEFENDANTANDREW KAMWI MWAZI N.O. SEVENTH DEFENDANT
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AUGOSTINHO FERREIRA N.O. EIGHTH DEFENDANTKAREL PETRUS VAN DER MERWE N.O. NINETH DEFENDANTJEREMY CHARLES ROSSOUW N.O. TENTH DEFENDANTGOVERNMENT INSTITUTIONS PENSION FUND ELEVENTH DEFENDANTNGUNI PROPERTY LIMITED TWELFTH DEFENDANT
Neutral citation: Safland Property Services Namibia (Pty) Ltd v Haikali (HC-MD-CIV-
ACT-CON-2018/02683) [2019] NAHCMD 302 (19 August 2019)
Coram: PRINSLOO JHeard: 27 July 2019
Delivered: 19 August 2019
Reasons: 23 August 2019
Flynote: Civil Practice – Practice Directive 21 – Exceptions are interlocutory
proceedings – Rule 32(11) – Onus rest on the party to convince court that limitation in
terms of rule 32(11) should not apply.
Civil Practice – Rule 57 – Exception raised that particulars of claim do not disclose a
cause of action – Pleading only excipiable if no possible evidence led on pleadings
could disclose a cause of action
ORDER____________________________________________________________________________
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1. Application by first defendant for cost at a higher scale :
(a) Application dismissed. Cost to remain capped in terms of Rule 32(11).
2. Exception raised by second to sixth defendants :
(b) Exception(s) is dismissed with costs.
(c) Costs to include the cost of one instructing and one instructed counsel.
(d) Costs not to be limited in terms of Rule 32 (11).
3. Further conduct of the matter:
(e) The case is postponed to 12/09/2019 at 15:00 for Case Planning Conference
hearing (Reason: Parties to file joint case plan).
(f) Further joint case plan must be filed on or before 09/09/2019.
______________________________________________________________________
RULING____________________________________________________________________________
PRINSLOO J
Introduction and Background
[1] The plaintiff is the appointed fund manager of Frontier Property Trust (the ‘FPT’)
which is a bewind trust registered in terms of the laws of Namibia which, through the
trustees, manages, administers and controls the fund, being the aggregate of all
portfolio investments and other assets held for and on behalf of the investor
participants.
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[2] The 11th defendant is the founder of the FPT. The plaintiff together with the 11 th
defendant are the investor participants of the trust as a consequence of which they hold
ownership in and to the assets and investments of the trust.
[3] The governing board of the trust comprises the trustees so appointed in terms of
the trust deed and in accordance with the terms and conditions embodied therein.
[4] The plaintiff, as appointed fund manager on behalf of the investor participants, is
obliged to provide and render management services as determined in the Management
Agreement in lieu of payment of management fees determined by the mentioned
agreement.
[5] All investments of the trust must be done in accordance with the investment
policy guidelines of the Investment Charter.
[6] Since March 2017 the investment committee of the FPT met from time to time in
order to discuss the proposed listing on the Namibian Stock Exchange (NSX). On 15
June 2017 during a meeting the investment committee resolved to recommend to the
governing board of trustee to proceed with the proposed listing of the FPT. Pursuant to
such recommendation, the governing board during June 2017 discussed the option of
listing, and resolved that in the event of the listing proceeding, it would be done under
the name of the 12th defendant, being Nguni Property Limited and not the Fund. It was
contemplated to transfer the shareholding and ownership in property holding entities
owned by the FPT to Nguni and to rename Nguni as ‘Frontier Property Fund (Pty) Ltd’.
[7] During 11 to 13 October 2017 the governing board resolved inter alia that certain
of the trust’s assets be transferred to Nguni for purposes of such possible listing but that
such transfer of assets would be subject to a further resolution of the board to approve
the final listing of Nguni, as well as subject to other conditions set out in the resolutions,
which will not be repeated in detail for purposes of this ruling.
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[8] A meeting of the governing board was held on 21 November 2017 and it was
apparently recorded that in order to continue with the proposed listing procedure a
resolution needs to be signed to authorize the continuation of the listing. It was agreed
that the resolution will be signed through ‘round robin’ by each of the trustees, amongst
whom, the defendants.
[9] On 22 November 2017 the first defendant sent an email stating in essence that
the trustees won’t sign the proposed resolution1. Then on 27 November 2017 a
purported resolution of the governing board, signed by the third defendant, in his
capacity as chairperson of the FPT, with the acquiescence of the first, second, fourth,
fifth and sixth defendants, was sent to the 12th defendant, with reference to the trustees
meeting held on 21 November 2017, stating that the trustees unanimously decided not
to be part of the listing2.
[10] As a result of the aforementioned incident the plaintiff instituted action against the
defendants with the aim of removing the first to the sixth trustees from office and as
trustees of the FPT in terms of section 7 of the Trust Monies Protection Act 34 of 1934
(‘the Act’), alternatively the common law, alternatively clause 11 of the Trust Deed3.
[11] The plaintiff claims in its amended particulars of claim that the first and third
defendants in an email and a subsequent resolution deliberately and intentionally
communicated a factually incorrect position regarding the FPT (ie that the trustees
resolved not to participate in the listing whilst they had in fact decided to proceed with
the listing), which resulted in the listing not proceeding. This conduct, the plaintiff
alleges, was contrary to the provisions of the trust deed and in breach of the trustees’
fiduciary duty, constitute a false, alternatively grossly negligent misrepresentation and a
failure to administer settled monies diligently and/or honestly. This, the plaintiff asserts,
justifies the removal of the trustees. The plaintiff furthermore alleges in respect of the
1 Annexure I to the Particulars of Claim.2 Annexure J to the Particulars of Claim.3 Para 57 of plaintiff’s amended particulars of claim.
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other trustees4, that they allowed this conduct or were accessories to it which renders
them equally liable.
Issues for determination
[12] In this application brought before me there are more than one issue for
determination. Firstly, and in respect of the first defendant, it is the issue regarding the
scale of cost pursuant to the raising of an exception against the original particulars of
claim of the plaintiff and the subsequent amendment of the particulars of claim.
Secondly, the exception raised by the second to sixth defendant (the ‘defendants) to
plaintiff’s amended particulars of claim5 on the basis that: (1) it lacks the averments
necessary to sustain an action; and (2) same not disclosing a cause of action.
The issue on costs
[13] The plaintiff instituted action against the defendants on the 10 th of July 2018. On
28 September 2018 the second to sixth defendants filed their plea which contained
several special pleas against the plaintiff’s claims. The first defendant in answer to the
plaintiff’s claim raised an exception in terms whereof the first defendant alleged that the
plaintiff’s particulars of claim failed to disclose a proper cause of action in terms whereof
the plaintiff could successfully proceed with its suit against inter alia the first defendant.
It is the first defendant’s argument that the first defendant fully complied with rule 32(9)
and (10) however, in spite of the first defendant’s attempts to settle the exception
amicably the plaintiff was apparently not open to be convinced. Yet, subsequent to the
filing of the exception, the plaintiff filed an extensive amendment of its particulars of
claim.
[14] It is common cause that the plaintiff tendered the costs as contemplated in rule
32(11) in respect of both the exception raised and the subsequent amendment of the
particulars of claim. The first defendant was however not satisfied with the tender made 4 Specifically the first, second, fourth, fifth and sixth defendants.5 Dated 27th of February 2019.
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and argued that this court should make a determination in terms of the scale of costs
and, specifically, whether the capping of costs contemplated in Rule 32(11)6 should
apply in this instance.
[15] This argument is substantiated by first defendant through the following
reasoning:
(a) First defendant’s exception was the first interlocutory in the life of this case;
(b) Despite due compliance with rule 32(9) proceedings and due (and ample)
warning being given to plaintiff through correspondence regarding first
defendant’s intention to raise an exception, plaintiff persisted with its claim of
damages;
(c) Plaintiff subsequently amended its particulars of claim to exclude the said
damages claim which brought finality to major claims of damages which the
plaintiff initially pursued against the first defendant. In this context the exception
went beyond the scope of an interlocutory, and the first defendant scored a clear
victory as such in his opposition to the two claims in question.
(d) Senior counsel was appointed on plaintiff’s behalf in pursuit of its claim against
the first defendant;
(e) Plaintiff’s case is built around complex issues of law and fact and therefore
merited first defendant’s employment of one instructing and two instructed
counsel;
(f) The amendments introduced were not in accordance with the provisions of rule
52 in that plaintiff failed to identify those parts it wanted to amend;
(g) Rule 52(8) of the rules of the High Court dictates that the party amending its
pleadings should pay the other party, noting that costs in the said rule is not
capped; and
(h) Plaintiff has failed to set out any reasons why the normal costs result as
contemplated in rule 52(8) should not be followed.
6 Rule 32(11) states that ‘despite anything to the contrary in these rules, whether or not instructing and instructed legal practitioners are engaged in a cause or matter, the costs that may be awarded to a successful party in any interlocutory proceeding may not exceed N$ 20 000’.
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[16] Counsel for the plaintiff argued that the first defendant is not entitled to costs of
his exception and that it is entitled to costs in terms of rule 32(11) only, given that the
first exception filed by him was never argued. Same was resolved by plaintiff through
amending its particulars of claim, which in effect eliminated the need for the exception to
be heard.
[17] Despite the aforementioned, Ms Bassingthwaighte conceded on behalf of the
plaintiff that the defendants are entitled to cost emanating from the plaintiff’s amended
particulars of claim and again tendered costs to first defendant in terms of Rule 32(11)
for the first unargued, settled exception raised.
Legal principles relating to costs
[18] It is common cause that in terms of Practice Directive 21 exceptions are to be
dealt with as if they are interlocutory proceedings despite it being trite that an exception
is regarded a pleading. The taking of an exception is procedural in nature and is
interposed before the filing of a plea. It is therefore understandable why it is treated as
interlocutory.
[19] To this end cost in respect of interlocutory proceedings are regulated by rule
32(11) of the Rules of Court which stipulates that:
‘Despite anything to the contrary in these rules, whether or not instructing and instructed
legal practitioners are engaged in a cause or matter, the costs that may be awarded to a
successful party in any interlocutory proceeding may not exceed N$ 20 000.00.’
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[20] However, notwithstanding the aforementioned, this court’s discretion remains
and can be exercised should circumstances dictate.
[21] In South African Poultry Association v The Ministry of Trade and Industry,7 this
court observed the following factors to be determinative in the exercise of the court’s
discretion with respect to rule 32(11):
‘[67] …. this court has discretion to grant costs on a higher scale and that given the
importance and complexity of the matter and the fact that the parties are litigating at full stretch,
the court should in exercise of its discretion grant costs on a higher scale. … The rationale of
the rule is clear: to discourage a multiplicity of interlocutory motions which often increase costs
and hamper the court from speedily getting to the real disputes in the case. A clear case must
be made out if the court is to allow a scale of costs above the upper limit allowed in the rules…
The onus rests on the party who seeks a higher scale. To add to the factors…: the parties must
be litigating with equality of arms and it will be a weighty consideration whether both crave a
scale above the upper limit allowed by the rules. Another critical consideration will be the
reasonableness or otherwise of a party during the discussions contemplated in rule 32(9).
Another important consideration is the dispositive nature of the interlocutory motion and the
number of interlocutory applications moved in the life of the case; the more they become the
less likely it is that the court will countenance exceeding the limit of the rules.’
[22] It is quite clear from the above passage that in order for a party to be allowed
cost on a higher scale it is not just for the asking, which is the case in the current matter.
The fact that counsel were engaged in the matter does not automatically mean that the
limitation should not apply. There is an onus that rest on the party to convince the court
that the limitation should not apply.
[23] The following issues are common cause:
(a) Plaintiff’s particulars of claim were subject to exceptions raised by the first
defendant;
7 (A 94/2014) [2014] NAHCMD 331 (07 November 2014), para 67.
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(b) The exception filed by first defendant was not argued however the plaintiff
proceeded to amend its particulars of claim; and
(c) Plaintiff subsequently amended its particulars of claim after complying with the
rule 32 proceedings8.
[24] Upon perusal of the court record and specifically all the rule 32(10) reports and
status reports filed the following was clear: (a) neither the first defendant nor the other
defendants raised any objection to the plaintiff’s notice of its intention to amend its
particulars of claim; and b) no issues were raised in respect of the costs pertaining to
the interlocutory matters. I therefore find it peculiar that first defendant raises various
issues in his heads of argument regarding plaintiff’s non-compliance to Rule 52
pertaining to amendments at this stage of the proceedings and even more so
subsequent to him filing his plea.
[25] I accept that the particulars of claim appears to be voluminous as the particulars
of claim and all the annexures thereto consists of 175 folios. These documents include
the trust deed and management agreement, which are bulky documents. I also accept
that this matter has a higher degree of complexity and that the preparation for the
exception would be time consuming, however this matter does not distinguish itself from
other similar matters.
[26] I fully associate myself with the sentiments of Masuku J when he said in the
Brink & Another v Erongo All Sure Insurance & Others9 matter that there must be a
measure of flexibility allowed as matters, even at the interlocutory stage, differ in terms
of complexity and time expended, both in preparation and argument. Some matter may
be straightforward whereas in others, there may be a need to chart new territories, thus
requiring a lot of research and application.
[27] In spite of the higher degree of complexity in the matter in casu I do not believe
that it falls within the latter category. 8 First defendant’s heads of argument at 6 para 6. Plaintiff’s heads of argument at 15 para 44.9 (I 3249/2015) [2016] NAHCMD 200 (8 July 2016).
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[28] Ultimately the exception was never argued and the amendment of the particulars
of claim was not opposed nor argued. Therefore, having considered the arguments
advanced for and against cost at a higher scale, I am not convinced that the first
defendant is entitled to cost on a higher scale. The costs will therefore remain capped
in terms of Rule 32(11).
The issue on the exceptions raised
[29] As indicated earlier the defendants attack the plaintiff’s amended particulars of
claim on two different fronts, namely that (a) the plaintiff’s amended particulars of claim
lacks the averments necessary to sustain an action; and (b) that it does not disclose a
cause of action.
[30] I must however point out that although there is reference to a second exception,
ie no cause of action, the defendants only appears to rely on one ground for their
exception and assert in their exception that the plaintiff’s reliance on the defendants’
alleged misconduct is not a sound basis for a cause of action for the following reasons:
(a) The FPT is a bewind trust that does not own the assets purported to sell to the
12th defendant and thus could never transfer assets to the 12th defendant;
(b) The FPT is prohibited by its investment charter from investing in listed equities,
therefore the entire scheme is ultra vires and in breach of the trust deed;
(c) The purported sale of the assets also breaches clause 5.1 of the trust deed and
is ultra vires the governing body, especially clause 12.10.1 of the trust deed;
(d) The purported sale of the assets held by the FPT, had it been concluded, would
have the effect of terminating FPT because it would remove its reason for
existence and its entire sub-stratum;
(e) The listing of the 12th defendant is within the discretion of the Namibian Stock
Exchange, which did not happen and could be refused. (A potential novus actus
interveniens);
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(f) The purported resolution of 27 November 2017 on which reliance is placed does
not manifest a breach of any duty or obligation by the defendants nor does it
constitute a delict;
(g) It does not constitute a failure to administer the settled money diligently or
honestly, but in fact preserved the assets of the FPT and prevents a breach of its
investment charter and trust deed;
(h) The allegation that advise furnished by the first and third defendants is a failure
to administer settled money diligently and/or honestly as per sub-para 48.9 of the
particulars of claim is a conclusion devoid of primary facts;
(i) As a consequence the jurisdictional requirements for the court to consider
removing the trustees have not been met and no case has been made out for the
court to exercise its power under s 7 of the Act.
Defendants’ submissions
[31] Mr Coleman, on behalf of the defendants’, contended that plaintiff pleads
conclusions and not primary facts when it stipulated the following in its particulars of
claim (with emphasis on paras 47 to 50 of the particulars of claim):
‘47. The advice furnished by first and third defendants to the twelfth defendant and
recorded in annexures I and J was, to the knowledge of first to sixth defendants, deliberately
inaccurate, factually incorrect and intended to, and did mislead the recipients thereof, one of
which was Nguni.
48. The advice furnished by the first and third defendants as recorded in annexures I and J, to
the knowledge of the first to sixth defendants –
48.1 Was inconsistent with the discussion of the meeting held on 21 November 2017,
and
48.2 Was factually inaccurate;
48.3 Was not one authorized by the trust deed, and
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48.4 Was not preceded by or reached at a meeting of trustees,
48.5 Did not result from the consultation, consent or participation of all the trustees, in
particular, at least, the seventh to tenth defendants; and
48.6 In the premises is ultra vires the trust deed and void ab initio;
48.7 Was reckless and in breach of the fiduciary duty owed by the defendants to the
trust;
48.8 Constituted a false, alternatively grossly negligent, misrepresentation, and
48.9 Constituted a failure to administer settled monies diligently and / or honestly.
49. In the premises, the conduct of the first to sixth defendants was, to their knowledge,
willful, in bad faith and dishonest, constituted a deliberate false misrepresentation and was thus
reckless, alternatively grossly negligent, constituted misconduct and a breach of the fiduciary
duties which they owe to the FPT.
50. As a consequence of the misconduct of the first to sixth defendants as aforesaid the
bookbuild contemplated by annexure g did not and could not proceed, which rendered any
prospects of the listing remote.
. . .
52. The conduct of the first to sixth defendant described in paragraphs 42 to 50 above
constituted misconduct, manifests a failure to act honestly and diligently and /or to administer
settled monies diligently and/or honestly, and was prejudicial to the interests of the FPT and to
the investor participants.
53. But for such conduct, the bookbuild would have taken place.
54. The plaintiff and the eleventh defendant are beneficiaries of the FPT and have an
interest in the trust property and / or settled monies by reason of their ownership of the
investment funds and thus “interested parties” and, thus have locus standi to seek the removal
of the first to sixth defendant as trustees of the FTP in terms of section 7 of the Act, and,
moreover, in terms of the common law and the Trust Deed.
55. In this latter regard, clause 11.1.2 of the trust Deed properly construed, alternatively as
tacit term thereof, contemplates the disqualification and therefore the removal in terms of clause
11.2 of the Trust Deed (if currently in office) of a trustee “from an office of trust on an account of
misconduct.”
56. The conduct of the first to sixth defendants more fully described in paragraph 42-50
above constitutes willful misconduct and / or misconduct as contemplated by clauses 13, 11.1.2
read with clause 11.2 of the Trust Deed respectively and / or misconduct in terms of the
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common law, alternatively a breach of their fiduciary duties as trustees as they are not fit and
proper to hold office, and justifies their disqualification and removal as trustees.’10
[32] Mr Coleman further argued that the alleged misconduct of the first to the sixth
defendants, as pleaded by the plaintiff is a legal conclusion, while in fact the listing was
suspended because the trustees refused to sign the proposed resolution.
[33] He further argued that in an attempt to sustain a case for the removal of the
trustees under s 7 of the Act the plaintiff pleaded a series of further conclusions as set
out in paras 52 to 56 above. Counsel submitted that the essence of the plaintiff’s case is
contained in para 52 wherein the plaintiff alleges the following:
‘52. The conduct of the first to sixth defendant described in paragraphs 42 to 50
above constituted misconduct, manifests a failure to act honestly and diligently and/or to administer settled monies diligently and/or honestly, and was prejudicial to the interests of
the FPT and to the investor participants.’(emphasis added)
[34] Mr Coleman therefore maintains that significantly para 52 does not contain facts
on which possible evidence can be led. It therefore constitutes conclusions to be
reached on the facts set out in paras 42 to 50 supra.
[35] Mr Coleman further argued that the facts pleaded do not sustain these
conclusions as there is no single fact pleaded that suggests that the trustees are guilty
of misconduct, or that they ‘failed to administer settled monies diligently and/or
honestly’. He argued that it is clear from the plaintiff’s case that there is no settled
monies involved in this matter and no allegations of criminal convictions in respect of
the trustees are alleged in the amended particulars of claim, which remotely can have
the court form an opinion in this context.
10 As per defendants’ heads of argument. Noting specifically that the issue of primary facts not being pleaded and rather conclusions, was only raised in defendants’ exception in terms of paragraphs 48.9 of the plaintiff’s particulars of claim.
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[36] Mr Coleman further argued that ultimately the plaintiff’s cause of action, based on
the facts pleaded, is that the trustees refused to sign a resolution that would authorize
all the assets held in trust to be sold to another company and would then be listed on
the NSX and posed the question on whether this constitutes wrongdoing in any way or
form by the trustees to justify their removal in terms of s 7 of the Act.
[37] In conclusion Mr Coleman submitted that the plaintiff’s facts pleaded do not
sustain the conclusion reached in its particulars of claim, and in some instances the said
facts contradict the conclusions reached by plaintiff.
Plaintiff’s submissions
[38] In response to defendants averments that the FTP is not the owner of the assets
it purported to sell to the 12th defendant and the resultant thereof that it cannot transfer
ownership of the said assets, Ms Bassingthwaighte argued on behalf of the plaintiff that
it is incorrect to state that the FTP could never transfer ownership in assets/investments
as it is authorized by the trust deed.11 With regard to the aforementioned, counsel goes
on to argue that the investor participant is excluded from administrating, controlling and
managing the assets in the fund and these powers are specifically vested in the FPT
through the fund manager. Counsel pointed out that the trust deed regulates the
making of sales, disposals and realization of those investments where after the
proceeds are paid to the investor participants in accordance with clause 26 of the trust
deed.
[39] Regarding the FTP’s investment charter, which prohibits it from investing in
listed equities, Ms Bassingthwaighte referred this court to clause 7.3 of the said charter
which stipulates that:
‘7.3 Investments in listed equities is prohibited, provided that for the sake of clarity
investments in listed companies which are to be delisted as part of investment in question, are
11 Same is contemplated in clauses 5.1, 6.1, 6.2, 6.3, 6.4, 6.5, 12.10, 15.1, 15.2, 22.1, 24.1, 26.1.1 and 31 of annexure b and clause 7 of annexure c to the trust deed.
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permitted, as well as where, as part of the exit strategy from investment, the listing of a Portfolio
Company is contemplated.’
[40] Given the aforementioned, Ms Bassingthwaighte argued that the scheme is not
ultra vires or in breach of the trust deed and she highlighted that the governing board
contemplated, evidently by round robin resolution dated 11 to 12 October 2017, the sale
in respect of particular assets to 12th defendant as contemplated in clause 7.3 of the
investment charter.
[41] The defendant alleged that the purported sale of assets breaches clauses 5.112
and 12.10.113 of the trust deed and is therefore regarded being ultra vires. In response
to this averment, Ms Bassingthwaighte argued that the aforementioned clauses should
not be considered in isolation and the alleged breaches is not evident from the
pleadings and therefore evidence should be led.
[42] In the exception application it is claimed that the entire substratum and/or reason
for the existence of FTP would have been terminated by the purported sale of the said
assets. In response thereto Ms Bassingthwaighte clarified the plaintiff’s position by
arguing that ‘the termination would have happened without compliance with clause 31 of
the trust deed which provides that the assets should be released and distributed to the
investment participants which would not have happened had the intended resolution
been implemented’. Ms Bassingthwaighte furthermore argued that this statement is
factually incorrect and despite the incorrectness thereof argued that this issue should
similarly be introduced in defendants’ plea. It is further the plaintiff’s argument that the
FPT was not intended to exist indefinitely. The term of the trust (in terms of clause 7
read with clauses 1.2.33 and 1.2.61 and annexure A – Details Schedule) is 1 June 2011
to 1 June 2021 unless the FPT resolves otherwise. Clause 31.1.2 also makes provision 12 Record 39: ‘5. OBJECT OF THE TRUST AND ITS INVESTMENT OBJECTIVES 5.1. The main object of the Trust is to make investments for the benefit of the Investor participants in accordance with investment policies and criteria set out in the investment charter and to carry on any activities which may be necessary for and/or ancillary thereto.’13 Record 45: ‘PART III – REGULATORY MATTERS AND MANAGEMENT 12. PROCEEDINGS OF GOVERNING BOARD…12.10. The resolutions, contemplated in clause 12.9.1, shall be those which relate to any of the undermentioned matters – 12.10.1 the making of investments, including follow-on investments by the Fund and the making of binding commitments relating to such investments.’
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for other events which could trigger the termination of the trust, one of which is the
expiry of the commitment period, when all portfolio investments have been disposed of
and a special resolution is passed in terms of which it is resolved to terminate the fund.
Thus, all investment can be disposed of and the trust can resolve to terminate the fund.
[43] With regard to the listing of the 12 th defendant, which is in the discretion of the
NSX, counsel argued that this is not a proper ground for an exception and therefore
defendants would have to plead it as a defense and prove that their conduct was not the
cause for the failed listing and that the listing would have failed due to the refusal by the
NSX.
[44] Ms Bassingthwaighte similarly argued the question on whether any conduct
alleged on the part of the defendants constitutes a breach of a duty or obligation or
whether such conduct constitutes a delict and indicated that that should be pleaded as a
defense. In amplification of this argument Ms Bassingthwaighte submitted that whether
the actions or the conduct of the defendants constitutes a failure to administer the
settled money diligently or honestly or whether it was in fact a preservation of the assets
of the FPT, is to be decided by the court after evidence has been led.
[45] Regarding the allegation that the advice furnished by first and third defendants
as recorded in annexures “I” and “J” is a failure to administer settled money diligently
and/or honestly is a conclusion devoid of primary facts as no settled monies are
involved; is countered by plaintiff with reference to the treatment of the difficulties within
the South African context and with referencing to case law.
The applicable legal principles
[46] The remedy of exception is only available where it goes to the root of the claim or
defence, and that the main purpose of an exception that a claim or defence does not
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disclose a course of action is to avoid leading unnecessary evidence at the trial, that is,
evidence that cannot establish the claim or defence14.
[47] The law applicable to exceptions was set out authoritatively by the Supreme
Court in the case of Alwyn Petrus Van Straten N. O. and Another v Namibia Financial
Institutions Supervisory Authority.15 The court said the following regarding exceptions:
‘Where an exception is taken on the grounds that no cause of action is disclosed or is
sustainable on the particulars of claim, two aspects are to be emphasized. Firstly, for the
purpose of deciding the exception, the facts as alleged in the plaintiff’s pleadings are taken as
correct. In the second place, it is incumbent upon an excipient to persuade this court that upon
every interpretation which the pleading can reasonably bear, no cause of action is disclosed.
Stated otherwise, only if no possible evidence led on the pleadings can disclose a cause of
action, will the particulars of claim be found to be excipiable.’
[48] The approached followed in the Van Straten matter was again confirmed in the
matter of Claud Bosch Architects CC v Auas Business Enterprises Number 123 (Pty)
Ltd16.
[49] An exception is regarded a matter of substance which – in essence – affects a
right of action brought and where an exception does not destroy the whole cause of
action it is considered bad in law.
[50] Evidently, a complete chain of relevant material and primary facts relied upon by
a plaintiff in its action must be set out. Failure to link material facts will break the
sequence and will render any conclusion false and an exception will be sustained.
[51] It is important for purposes of deciding an exception to also have regard to rule
45(5) of the Rules of Court which stipulates that every pleading must contain a clear
14 Caterplus Namibia (Pty) Ltd t/a Blue Marine Interfish v Hallie Invesments 142 CC t/a Wimpy Maerua and Another 2014 (4) NR 1182 (HC).15 Case No. SA 19/2014 para 18.16 2018 (1) NR 155 (SC).
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and concise statement of the material facts on which the pleader relies for his/her claim,
with specific particularity to enable the opposite party to reply and in particular set out
the nature of the claim and such particulars of any claim as are necessary to enable the
opposing party to identify a case.17 The purpose of pleadings is to clearly define the
issues for all the parties involved, including the trial court.
[52] As indicated above the defendants argued that the alleged misconduct of the first
to the sixth defendants, as pleaded by the plaintiff is a legal conclusion.
[53] In Trope v SA Reserve Bank18 the court found the following in this regard:
‘It is trite that a party has to plead with sufficient clarity and particularity the material facts
upon which he relied for the conclusion of law he wishes the Court to draw from those facts
(Mabaso v Felix 1981 (3) SA 865 (A) at 875 H). It is not sufficient, therefore, to plead a
conclusion of law without pleading the material facts giving material facts giving rise to it.’
[54] Further to this in Cilliers v Steenkamp19 para 23 the court held that:
“A pleader is required to allege the primary facts upon which he or she relies as well as
the conclusion sought to be drawn from those facts. A pleading will be defective if a conclusion
is asserted without pleading the primary facts to support it: see Trope and Others v South
African Reserve Bank 1993(3) SA 264 (AD) at 273 A – B.”
[55] And lastly in Buchner v Johannesburg Consolidated Co Ltd20 the court held with
reference to the South African rule 18(4)21, which is somewhat similar to our rule 45(5),
that:
17 Noting, specifically, that it is not necessary in a pleading to state the circumstances from which an alleged tacit term can be inferred.18 1993 (3) SA 264 (AD) at 273 A – B.19 2015 JDR 2564 (WCC).20 1995 (1) SA at 216.21 Rule 18(4) Every pleading shall contain a clear and concise statement of the material facts upon which the pleader relies for his claim, defence or answer to any pleading, as the case may be, with sufficient particularity to enable the opposite party to reply thereto.'
20
‘The necessity to plead material facts does not have its origin in this rule. It is
fundamental to the judicial process that the facts have to be established. The court, on the
established facts, then applies the rules of law and draws conclusions as regards the rights and
the obligations of the parties and gives judgment. A summons which propounds the plaintiff’s
own conclusion and opinion instead of the material facts is defective.’
[56] Considering the fact that I am to accept the facts of the plaintiff’s pleadings as
correct and the defendants are to persuade me that upon every interpretation which the
pleading can reasonably bear no cause of action is disclosed, I will keep the principles
as set out above at the back of my mind as I proceed to consider the paragraphs in the
particulars of claim that are the target of the exception.
Application of the law to the facts
[57] When due regard is had to the aforementioned arguments presented by and on
behalf of plaintiff and defendants in the above paragraphs 31 to 45 of this judgment, it is
evident that these arguments pertains to the interpretation of the trust deed and not so
much as presentable arguments for rebutting or upholding an exception for none
disclosure of a cause of action.
[58] Defendants take issue with plaintiff’s particulars of claim not disclosing a cause of
action in that it pleads conclusions and not primary facts. It is argued on behalf of the
defendants that legal conclusion(s) is the courts prerogative and mandate, whilst it is
the pleaders duty to present the material facts clearly and concisely.
[59] Not only is this argument supported by Rule 45(5), but also by the Cilliers and
Trope matters expounded on supra. Defendants indicated in its heads of argument that
conclusions and/or secondary facts were pleaded in paragraphs 47 to 50 of the
plaintiff’s amended particulars of claim. I mention this specifically as I have noticed
21
upon closer inspection of the defendants’ exception that this exception was only taken
in terms of paragraph 48.9 of the plaintiff’s particulars of claim.22
[60] The question which therefore begs an answer is – if I do find that paragraph 48.9
is a conclusion pleaded and not primary facts – whether the said exception goes to the
heart of the plaintiff’s claim? Noting that material facts are regarded primary facts 23 and
are therefore facts which enables the drawing of inferences about the existence or non-
existence of secondary facts. The distinction between primary and secondary facts is
important and more so the principal that facts must be pleaded and not evidence.
[61] Another important principal is that a conclusion must be supported by facts to
justify it, therefore should it be that there are no primary facts established, secondary
facts becomes conclusions which do not constitute evidential material capable of
supporting a cause of action.
[62] I have expressed my stance regarding the issues on the interpretation of the trust
deed in para 57 supra. I regard interpretational issues of this deed, issues to be
addressed in a plea, given the fact that the removal of trustees is not only in terms of
(‘the Act’) but alternatively in terms of the trust deed, and alternatively in terms of the
common law.
[63] I interpose at this juncture to highlight the fact that all the parties involved in this
special purpose vehicle (FTP) are highly regulated with respect to what is expected of
trustees and investment managers. The inference to be drawn is that duties can be
implied regardless of whether the trust deed, fund management agreement or
legislation provides for it or not. In short, some duties can be implied or derived ex
lege.
22 Paragraph 1.12 of defendant’s exception stipulates that plaintiff reached a conclusion not supported by primary facts in its particulars of claim ad paragraph 48.9 thereof. Similarly, ad paragraph 2.1.8 defendant refers to paragraph 48.9 of plaintiff’s particulars of claim which is devoid of primary facts.23 Brink No and Another v Erongo All Sure Insurance CC and Others 2018 (3) NR 641 (SC).
22
[64] In Phillips v Fieldstone Africa (Pty) Ltd24 it was stated that:
‘There is no magic in the term ‘fiduciary duty’. The existence of such a duty and its
nature and extent are questions of fact to be adduced from a thorough consideration of the
substance of the relationship and any relevant circumstances which affect the operation of that
relationships.’
[65] In thoroughly considering the relationship and relevant circumstances which
affect the operation of the relationship between the plaintiff and the defendants and,
ultimately, in establishing a breach of fiduciary duty and more so whether para 48.9 are
conclusions pleaded, plaintiff must allege facts from which the existence of the duty can
be deduced; make the necessary allegations about the duties imposed by the
relationship; plead facts concerning the breach of the duty from which accountability
arises; and identify the scope of the duty.
[66] Plaintiff is not required to label the claim as one based on breach of fiduciary duty
provided that the pleadings construed, represent a claim of breach of fiduciary duties.
Therefore, for purposes of determining whether the plaintiff’s para 48.9 constitutes a
conclusion pleaded, I have disregarded (and effectively deleted and not considered) the
said para (the perceived obstacle) in its totality in order to establish whether on the face
the said document, plaintiff has established a cause of action against the defendants.
[67] Plaintiff alleged the following facts for which the existence of fiduciary duties can
be inferred:
(a) FTP is a registered “bewind” trust;
(b) The defendants are appointed trustees of FTP;
(c) The trust is regulated by the Act;
(d) FTP’s trust deed sets out the objects of the trust, establishing the possession and
ownership of the fund’s assets, the terms, capital commitments of the initial
investor participants, regulating the appointment of trustees, proceedings of the 24 [2004] 1 All SA 150 (SCA), 2004 (3) SA 465 (SCA) para 477 H – I.
23
governing board, discretions and exemptions of trustees, setting out the powers
of the governing board, management and control of the funds etc.;
(e) The said deed of trust establishes that the plaintiff and the Government
Institutions Pension Fund (GIPF) (Registered Pension Fund) is regarded the
investment participants and that the trust was established for their benefit; and
(f) FTP entered into a management agreement with the plaintiff in terms of which
plaintiff is appointed as fund manager of the fund on behalf of the investor
participants.
[68] The following allegations were made about the duties imposed through the
relationship established between governing board, being the governing board of the
trust, comprising of the trustees and the trust regulated through the Trust Deed;
alternatively, made these allegations about the scope and ambit of the duties imposed
on the defendants:
(a) Proceedings of FTP’s governing board and specifically governances regarding
the board is regulated by para 12 of the trust deed25 with specific reference to the
manner in which meetings are to be convened and held, the election of
members, voting powers of trustees, quorums and resolutions, delegation of
powers and the establishment of committees and the keeping of minutes;
(b) In terms of the trust deed ownership of the investments are vested in the plaintiff
and the GIPF participation ratios and the investments of FTP constitutes ‘settled
monies’ as envisaged by the Act; and
(c) Plaintiff as the fund manager is exclusively authorized to manage, administer and
control the fund on behalf of the investor participant under the terms of a
management agreement.
[69] With regard to the aforementioned, Rule 45(8) dictates that it is not necessary to
state the circumstances from which an alleged tacit term can be inferred. This I mention
in relation to the trust deed and on the back of the fact that the environment in which the
25 Para 22 of the particulars of claim.
24
parties operate is highly regulated by legislation, the Namibia Financial Institutions
Supervisory Authority (NAMFISA) and as such the Master of the High Court and the
Financial Intelligence Centre (FIC) and because fiduciary duties of trustees are primarily
contained in common law; it can be inferred tacitly that trustees have a duty to act with
due care and diligence and to act in the best interest of the trust fund.
[70] Plaintiff pleaded the following facts concerning the breach of the duty from which
accountability arises – noting:
(a) FTP’s governing board recorded a decision taken on 21 November 2017 to
proceed with the listing of Frontier Property Fund Ltd and subsequent thereto on
or about 22 November 2017 first defendant authored and sent an e-mail letter
referring to the said resolution which according to the e-mail incorrectly and
dishonestly stated that: ‘The trustees have read the resolution and it was decided
that none of the trustees will sign such a resolution.’
(b) Plaintiff furthermore alleges that on or about 27 November 2017 a purported
resolution of the FPT signed by the third defendant, in his capacity as the
chairperson of the FTP, was, with the acquiescence of the first, second, fourth,
fifth and sixth defendants sent to the 12th defendant in which it was stated, by
reference, inter alia, to the trustees meeting held on 21 November 201726 that:
‘The trustees having consulted widely have unanimously decided not to be party of
the listing.’
(c) Plaintiff alleges that the advice by first and third defendant to the other
defendants was deliberately inaccurate, factually incorrect and intended to, and
did mislead the recipients thereof. In addition to the aforementioned it is alleged
that this decision was not authorized by the trust deed, was not preceded by or
reached at a meeting of the trustees, did not result from the consultation, was
reckless and in breach of the fiduciary duty owed by those defendants to the trust
and constituted a failure to administer settled monies diligently.
26 The minutes of which are attached and marked ‘H’.
25
[71] Plaintiff identified the scope of the duty of the trustees pertaining to the duty to
act honestly and diligently and or to administer settled monies diligently and or honestly.
[72] In having regard to the assessment above it is clear that plaintiff established in its
particulars of claim a breach of fiduciary duty without considering the alleged conclusion
pleaded by plaintiff as highlighted in paras 1.12 and 2.1.8 of the defendant’s exception.
[73] Lastly, in the defendants’ heads of argument it is asserted that no settled monies
are in involved in this matter. In considering the issue of ‘settled monies’ and the
application thereof in the current matter due consideration was given to the case law27
presented in argument by the plaintiff and the common cause issue being that currently
trusts are regulated by the Act. Specifically noting that courts have found that settled
monies include trust assets consisting of shares and that the word money is capable of
various meanings including that of purchasing power hence possessions or property. I
am therefore in agreement with Ms Bassingthwaighte that settled monies are capable of
various meanings and same is of application in the matter in casu.
[74] The argument advanced by the defendants that the plaintiff failed to administer
settled monies diligently and/or honestly and that it is clear from the plaintiff’s case that
there is no settled monies involved would therefore in my considered opinion not be
correct and cannot sustain the exception raised.
[75] Having considered the arguments advanced by the parties and the relevant
principles and case law, I am not convinced that on every interpretation which the
particulars of claim can bear, no cause of action is disclosed.
[76] The last issue to address in respect of the exception is the issue of costs. The
parties were in agreement that the costs in respect of the exception raised by the
second to the sixth defendant should not capped.
27 Ex Parte Mackenzie NO and Hemp 1950 (2) SA 47 (O); and Ex Parte Holmes 1949 (2) SA 327 (N).
26
[77] I therefore make the following order:
Application by first defendant for cost at a higher scale:
(a) Application dismissed. Cost to remain capped in terms of Rule 32(11).
Exception raised by second to sixth defendants:
(b) Exception(s) is dismissed with costs.
(c) Costs to include the cost of one instructing and one instructed counsel.
(d) Costs not to be limited in terms of Rule 32 (11).
Further conduct of the matter:
(e) The case is postponed to 12/09/2019 at 15:00 for Case Planning Conference
hearing (Reason: Parties to file joint case plan).
(f) Further joint case plan must be filed on or before 09/09/2019.
___________________________
JS Prinsloo
Judge
27
APPEARANCES
Costs
APPLICANT: J Strydom
On the instructions of De Klerk Horn and
Coetzee Inc.
RESPONDENT: N Bassingthwaighte
On the instructions of Koep &
Partners
Exception
EXCIPIENT: G Coleman
On the instructions of ENSAFRICA NAMIBIA (LorentzAngula
Inc.)
RESPONDENT: N Bassingthwaighte
On the instructions of Koep & Partners