Hallie Investment 142 CC v Caterplus Namibia (Pty) Ltd (1) (SA 55 of 2014) [2015] NASC 142 (7 November 2015)

Key Facts

Transaction Type

Issues

• Whether the court a quo was correct in not allowing the party whose counterclaim was found to disclose no cause of action to amend its counterclaim, if so advised, and the application of the invariable practice of granting leave to amend.
• Whether the court a quo correctly applied the test for excipiability in dealing with a counterclaim based on allegations that a cession executed between contracting parties was contra bonos mores, denying the debtor the right to claim performance under the contract and infringing constitutional rights.
• Whether the court a quo was correct in dismissing a plea to a claim based on goods sold and delivered under a credit agreement although no exception was taken to the plea.

Holdings

• The appeal succeeds in part. The High Court's order dismissing the defendants' defense and granting judgment against them for N$663,103.69 is set aside. The defendants are granted the costs of this appeal, including the costs of one instructing and two instructed counsel.
• The defendants are granted leave to amend their counterclaim within 15 days of this order if so advised. This aligns with the invariable practice adopted in this jurisdiction to allow amendment opportunities after exceptions are upheld.
• The first exception is upheld. The defendants' counterclaim is set aside with costs, including the costs of one instructing and one instructed counsel. The court a quo did not err in upholding the exception against the counterclaim.

Remedies

• The court upheld the first exception filed by the plaintiff (Caterplus) against the defendants' counterclaim, which challenged the counterclaim's basis on the unconstitutionality of the cession.
• The court granted the defendants leave to amend their counterclaim within 15 days of the order, allowing them to replead if they so advise.
• The defendants' counterclaim was set aside with costs, including the costs of one instructing and one instructed counsel, due to its failure to disclose a valid cause of action.

Legal Principles

• The court examined whether a cession of rights in a credit agreement was unconscionable (contra bonos mores) under Namibian law, particularly in relation to constitutional rights of access to court (Art 12). The High Court distinguished this case from Sasfin v Beukes, emphasizing that the cession here did not exhibit the same oppressive characteristics.
• The judgment clarified that a counterclaim based on alleged constitutional violations must present a live controversy, not an abstract issue. The court cautioned against using the constitution to avoid voluntary contractual obligations without demonstrable injustice.
• The apex court emphasized the 'invariable practice' of allowing parties to amend pleadings after a successful exception, citing South African and Namibian precedents. This procedural principle ensures fairness and avoids premature dismissal of claims.

Precedent Name

• Group Five Building Ltd v Government of the RSA (Minister of Works and Land Affairs)
• H v Fetal Assessment Centre
• Denker v Cosack and others
• Hangula v Motor Vehicle Accident Fund
• Santam Insurance Co Ltd v Manqele
• Furman v Cardew
• Rowe v Rowe
• Lampert-Zakiewicz v Marine & Trade Insurance Co Ltd
• Mushwena & others v Government of the Republic of Namibia & another

Key Disputed Contract Clauses

• Clause 7.1 in the credit agreement which irrevocably ceded, pledged, assigned, and transferred all rights, title, interest, claims, and demands of Wimpy Maerua against third parties and Caterplus to the latter, as a continuing security for debts. The cession was central to the dispute over whether it deprived Wimpy Maerua of its right to sue Caterplus or third parties, allegedly violating constitutional rights.
• Clause 7.2 in the credit agreement, which expressly retained Wimpy Maerua's right to sue in its own name and collect debts ceded under the cession on Caterplus' behalf. The High Court relied on this provision as an ameliorative factor in distinguishing the case from Sasfin v Beukes, arguing it provided a mechanism for debt resolution without constitutional violation.

Cited Statute

• Constitution of Namibia
• High Court Rules

Judge Name

• DAMASEB
• SMUTS
• CHOMBA

Passage Text

• [33] The High Court dealt with the claim that the cession is contra bonos mores and in some detail set out the salient features of the present case which the court considered distinguished the present case from the facts of Sasfin (Pty) Ltd v Beukes 1989 (1) SA 1 (A). Sasfin was relied on for the proposition that the cession was unconscionable and therefore liable to be invalidated.
• [47] I come to the conclusion that Wimpy Maerua has not set out any basis for a counterclaim that is being frustrated by the cession of its claims to Caterplus. At this stage, it is an academic question whether Wimpy Maerua has an extant legally cognisable illiquid claim against either Caterplus or any third party debtor.
• [59] The first exception against the counterclaim was well taken. The counterclaim as formulated does not disclose a cause of action and must be set aside. In keeping with the invariable practice also adopted in this jurisdiction, the defendants must be afforded the opportunity to amend the counterclaim within 15 days of this order.

Damages / Relief Type

• Defendants sought restitution of N$6,453,212.56 paid to Caterplus under the allegedly unconstitutional agreement.
• Caterplus claimed N$663,103.69 for goods sold and delivered under the credit agreement.