Sostenus Wilherm
The trustees of the Namibian Procurement Fund II Fund are seeking to recover N$1.78 million from FlowCentric Mining Technology Namibia (Pty) Ltd over a disputed financing agreement involving an automated water filtration plant, after an arbitration process found that the agreement had lapsed because several conditions were not fulfilled.
The matter is before the High Court in Windhoek, where the fund has given notice of its intention to amend its particulars of claim against FlowCentric.
The proposed amendments introduce new claims based on alleged misrepresentation, unjust enrichment and the circumstances surrounding the disbursement of almost N$3 million for the acquisition of the filtration equipment.
According to the court documents, the fund entered into an equipment lease agreement with FlowCentric in May 2019 involving an Automated Self-Cleaning Filters Plant with a capacity of 250 cubic metres for a river water system.
The agreement provided for a total rental price of N$2.95 million, with the fund required to disburse the money only after several suspensive conditions had been fulfilled.
These conditions included the signing of the necessary resolutions and security documents, the commissioning and acceptance of the plant, confirmation from NamWater and the conclusion of agreements involving FlowCentric, NamWater and its South African joint venture.
However, the Fund now alleges that these conditions were not fulfilled when the money was disbursed.
The proposed amended claim states that on 1 April 2020, the Fund paid N$2,953,951.35 to Hydac Technology (Pty) Ltd, the supplier of the filter plant, in what it describes as a bona fide but mistaken belief that the conditions had been met and that the agreement was valid and binding.
The matter subsequently went to arbitration before advocate Herman Steyn.
According to the proposed amended particulars of claim, the arbitrator issued a final award on 19 December 2022 dismissing the Fund’s contractual claims after finding that the agreement had lapsed because the suspensive conditions were not fulfilled.
The fund says the arbitrator did not adjudicate its alternative enrichment claims because he found that he did not have jurisdiction to determine them.
The fund now accepts the arbitrator’s findings and is not seeking to review or set aside the award.
It has instead amended its case to pursue alternative legal grounds for recovering the money.
The fund says it received N$1,169,864.75 from FlowCentric, leaving a net amount of N$1,784,086.60 that it is seeking to recover, together with interest at 20% per annum.
One of the new claims centres on alleged representations made by FlowCentric representative Engelhard Haihambo before the disbursement.
The Fund alleges that Haihambo represented that the conditions had been fulfilled, including that the filtration plant had been commissioned and accepted by NamWater.
It also alleges these representations were false and that Haihambo knew, or ought reasonably to have known, that the conditions had not been fulfilled.
It further alleges that the plant had failed to pass commissioning after several attempts because of technical challenges inherent in its design.
“The fund suffered prejudice because of these representations, in that it disbursed the sum of N$2 953 951.35 which it would not have disbursed had it known that the conditions precedent had not been fulfilled,” the amended claim states.
The fund is also seeking to join three individuals who signed unlimited suretyships connected to the agreement, namely Charles Bothma, Engelhard Haihambo and Andrew James Ian Tee.
The proposed amendments further allege that FlowCentric has taken inconsistent positions regarding the agreement.
The fund claims that while FlowCentric maintained during arbitration that the agreement had lapsed and was unenforceable, it later pursued payment from NamWater in relation to the same filtration plant.
According to the court papers, a letter of demand issued in June 2023 sought more than N$4 million in accrued rental, N$6.5 million for improvements and further damages, bringing the total claim to more than N$13.5 million.
The fund alleges that FlowCentric also issued invoices to NamWater and received payments relating to the filtration plant.
It argues that FlowCentric cannot reject the agreement when facing claims from the fund while relying on the same agreement in dealings with NamWater.
In addition to the N$1.78 million claim, the fund is asking the court to order the return of the automated self-cleaning filtration plant within 10 days of an order, or alternatively payment of its value.
The fund’s proposed amendments are subject to the procedural requirements of the High Court rules. The notice states that FlowCentric has 10 days from service of the notice to object to the proposed amendments.
