Katiti v Namibia Institute of Pathology Ltd (HC-MD-CIV-ACT-CON-2019-02012) [2024] NAHCMD 150 (5 April 2024)

Facts

The plaintiff, Mr Katiti, issued summons against NIP, his former employer. The claim was based on an attempt to enforce clause 12.5 of his employment contract entered into on 1 April 2014, in terms of which certain restraint of trade restrictions would apply against him for a period of two years after the termination of his position as CEO. In turn, considering the restraint imposed, NIP would pay Mr. Katiti a once-off amount for each year of restraint. 

NIP defended this action and, in turn, raised several counterclaims against the plaintiff. In replication, the plaintiff denied the allegations of NIP and further pleaded to the counterclaim, challenging same on several grounds. 

The matter went to trial whereat the plaintiff confirmed the contents of his witness statement deposed to under oath as provided for in rule 18(2)(p) of the Rules of Court. He was not cross-examined, and the plaintiff closed his case. No evidence was led on behalf of the defendant in opposition to the main claim.

An application for absolution from the instance followed, which was dismissed. Thereafter, evidence was led by the defendant in support of its counterclaims against the plaintiff. The plaintiff testified in rebuttal of the defendant’s case. 

Issues for determination

Regarding the plaintiff’s claim, the question for determination was whether the interpretation of clause 12.5 of the employment contract is enforceable on a contextual interpretation.  

Whether the plaintiff acted in breach of his fiduciary duties to the defendant and whether it resulted in the losses pleaded by the defendant, i.e., the counterclaims.

Discussion

‘Evaluation of the evidence 

General

[151] From the onset, it is important to point out that the plaintiff was not cross-examined regarding the main claim. The cross-examination was regarding the counterclaim…

[152] It is important to remember that the defendant’s counterclaim is a claim in its own right, and it is a matter of convenience for the main claim and counterclaim to be adjudicated simultaneously.

[154] ... There was no evidence advanced in defence of the plaintiff’s case.  A defence, as the name suggests, is the defendant’s opportunity to defend the allegations made in the plaintiff’s particulars of claim.  There was neither cross-examination nor evidence produced in rebuttal of the plaintiff’s claim in convention. This fact cannot be reasoned away. This does not mean there is no evidence before the court, as Mr Imbili testified at length during his evidence on the counterclaim, also concerning the main claim. During his evidence, he testified about clause 12.5 of the plaintiff’s employment contract. The question is, however, what value can be attributed to the evidence advanced during the claim in reconvention in an attempt to refute the main claim (claim in convention).

The witnesses 

[155] The plaintiff was the sole witness in his case. He substantiated his case with documentary evidence. As a witness, the plaintiff made a favourable impression on this court. His evidence was clear and concise, and he knew his case back to front. 

[157] Five witnesses testified on behalf of the defendant with respect to the counterclaim. Mr Imbili was the main witness who testified on behalf of the defendant. It is also against the evidence of Mr Imbili that the plaintiff was the most critical. Mr Imbili had limited personal knowledge with respect to many of the issues, and had to base his evidence solely on documents at his disposal.

[161] Critically important witnesses in this matter would have been the erstwhile chairpersons of the board. Unfortunately, Mr Mandela Kapere passed away. The late Mr Kapere negotiated the plaintiff’s employment contract. His successor was Dr Diina Shuuluka. Dr Shuuluka also served on the board when the plaintiff was appointed, and was the chairperson of the board at the time of the plaintiff’s suspension and subsequent dismissal. Therefore, Dr Shuuluka would have intimate knowledge of the proceedings and the allegations relating to the plaintiff.

[162] Despite extensive efforts by the defendant’s legal practitioner, the defendant could not secure Dr Shuuluka’s attendance in court…

Mutually-destructive versions

[163] The versions before the court are mutually-destructive…

[164] … if a matter cannot be resolved on probabilities, the court can consider the credibility of witnesses to determine which of the two versions should be preferred. In this process, the court can have regard to the candour and demeanour of witnesses, self-contradiction or contradiction with the evidence of other witnesses who are supposed to testify about the same event, or where the evidence presented contradicts an established fact.

Onus

[165] Each party was liable to discharge the onus resting on it on a balance of probabilities with respect to their claims.’

Having discussed the defendant’s counterclaim and the plaintiff’s claim, PRINSLOO J concluded that:

‘[250] In light of my discussion above, I find that the plaintiff has proven his case on a balance of probabilities and should succeed in his claim in the amount set out in para 251. The defendant, on the contrary, did not prove its counterclaim on a balance of probabilities and stands to be dismissed. The costs must follow the result.’

Findings 

Held that the versions before the court are mutually destructive. Each party bears the onus to discharge the evidentiary burden resting on it on a balance of probabilities.

Held that the first audit of PwC, dated 7 December 2018, regarding the ST Freight matter, made it clear that the senior officials involved did not perform due diligence. As a result, disciplinary proceedings were recommended against Ms Kaupirura, Mr Kaura, and Mr Mbahijona. 

Held further that no findings of wrongdoing or recommendations were made concerning the plaintiff.

Held that in a second forensic report compiled by PwC dated 23 January 2019. This report did not identify any wrongdoing on the part of the plaintiff. 

Held that PwC, with all the documents at its disposal during the investigation, did not point out non-compliance on the part of the plaintiff. 

Held that there is no basis whatsoever to hold the plaintiff liable for the amounts claimed in respect of the ST Freight matter. There was no breach of fiduciary duties by the plaintiff, and this claim stands to be dismissed.

Held that no evidence was provided to suggest that the furniture purchase resulted in a loss for the defendant. 

Held further that PwC’s investigation also dealt with the Roma Kitchens matter but only recommended disciplinary action against the Chief Financial Officer for improper record keeping and administration but did not refer to any loss suffered by the defendant. As a result, the court is of the view that there is no merit in the defendant’s claim for any amount, nor was there any breach of the plaintiff’s fiduciary duties. This claim, therefore, stands to be dismissed.

Held that the disinvestment was done to comply with the obligations of NIP, namely the payment of salaries, creditors, and taxes. There is no evidence before this court to suggest that the plaintiff’s actions caused any losses to the defendant. 

Held further that the issue of the disinvestment of the funds served before the Audit, Risk and ICT Committee of NIP and thereafter was considered and disposed of by the Board at a meeting held on 24 March 2017. This matter was thus resolved. Therefore, the claim against the plaintiff regarding the disinvestment of funds is without merit and stands to be dismissed. 

Held that no evidence was presented in court to the effect that the Board believed that the NIP incurred any losses as a result of the appointment of the three employees. Additionally, there was no evidence suggesting that the Board was of the view that the plaintiff should be liable for the salaries and benefits of these employees for a period of 12 months. 

Held furthermore that in the court’s view the argument that this decision by EXCO caused a fundamental breach by the plaintiff of his fiduciary duties holds no water and stands to be dismissed.

Held that to now belatedly argue that the Board did not approve the employment contract, inclusive of clause 12.5, is without merit. The one person who would have been in the best position to shed light on the discussions by the Board in this regard is Dr Shuuluka, who chose not to testify. 

Held further that there is no evidence before this court that Mr Kapere, during the course of his negotiations with the plaintiff, went beyond the limits of his authority. 

Held that NIP, via its officials, drafted the employment contract, which was signed by Mr Kapere in his capacity as chairperson. This binds the defendant to the agreement as a whole and not just certain clauses thereof. The court accepts that the parties intended to insert this specific clause in the agreement.

Held further that the defendant’s version that the Board did not approve clause 12.5, is without merit.

Held that the definition of remuneration in the Labour Act is distinguishable from remuneration in the context of the Public Enterprises Governance Act, as remuneration in terms of the Labour Act refers to all payments in money or kind arising from the employment of the employee. In terms of the Public Enterprises Governance Act, performance and incentive payments stand separate from annual guaranteed pay, and in the context of the Act, the latter appears to be the remuneration. In the court’s view, the payment of the restraint clause does not fall within guaranteed pay/remuneration.

Held that the averment that there were no protectable interests that would require a restraint clause was not developed further during the trial. Held further that there is no basis on the facts or law to find that the restraint clause was against public policy. 

Held that regarding the approval by the portfolio minister, there can be no doubt that the appointment of the plaintiff was presented to Cabinet by the minister of health and social services, and it was endorsed. The portfolio minister sits in Cabinet, and therefore, the only inference to be drawn is that the plaintiff’s appointment was made with the concurrence of the portfolio minister, inclusive of his remuneration levels/payments and benefits.

Held that the plaintiff’s claim was for his full package, which included his total guaranteed pay as well as his other benefits. This, in the court’s view, cannot be correct, as it is clear that the intention was that the total guaranteed pay would be in line with the Directive. Therefore, the two years guaranteed pay at 65% of his total package would amount to N$2 494 328.92 and not N$3 837 429.12 as claimed.

Held furthermore that the plaintiff must succeed in his claim. 

Court order

The plaintiff is to be paid an amount of N$2 494 328.92 with interest. The defendant’s counterclaim was dismissed with costs. 

Visit https://consultfasz.com/ for more Concise Law Reports.