Shikongo Law Chambers (SLC) v Council of the Law Society of Namibia NAHCMD 475 (16 August 2024)

Facts 

The applicant, a legal practitioner, has been practising as a sole practitioner for some 26 years under the name and style of ‘Shikongo Law Chambers’. He now wanted to convert his practice to a private company under the name ‘Shikongo Law Chambers Incorporated’ to enable him to admit two new members/partners to the practice under the incorporated company, to practice as a partnership. 

He submitted his application to the Law Society of Namibia (the LSN) for registration. Thereafter, he was informed by the LSN that it could not approve the proposed name of the incorporated company for the reason that it does not comply with the provisions of s 7(1)(c) of the Legal Practitioners Act, 15 of 1995 (the LPA), as it includes words other than the names of the present or past directors of the company. This is because the word ‘solely’ in s 7(1)(c) restricts the name of the incorporated entity to consist of only the names of present and past directors of the company.

The applicant did not agree with the LSN’s interpretation of s 7(1)(c) of the LPA. He conveyed his own interpretation of s 7(1)(c) to the LSN. The applicant for his part, contended that the word ‘solely’ in s 7(1)(c) does not refer to the words that may be included in the name of the company that may conduct a legal practice, but it refers to the names of the persons that may be included in the name of the company.

The applicant further contended that an interpretation of s 7(1)(c) of the LPA, which imposes restriction on the applicant to practice under the name ‘Shikongo Law Chambers Incorporated’ would be contrary to Art 21(1)(j)of the Constitution as being unreasonable since it infringes upon the applicant’s fundamental freedom to pursue a profession guaranteed by Art 21(1)(j).

Thereafter, the parties engaged in discussions with the aim of reaching a consensus on the interpretation of the impugned section. To that end, the LSN sought two separate counsels’ opinions which it shared with the applicant. The two opinions arrived at the same conclusion which did not agree with the applicant’s interpretation of s 7(1)(c). As a result of the disagreement, the applicant launched the present application.

In this application, the applicant sought orders declaring that the provisions of section 7(1)(c) of the LPA do not prevent the 1st applicant from exercising its right to conduct a legal practice under the name Shikongo Law Chambers Incorporated; alternatively, and only if the Court found that the provisions of section 7(1)(c) of the LPA do indeed prevent the 1stapplicant from exercising its right to conduct a legal practice under the name Shikongo Law Chambers Incorporated, that the section be declared unconstitutional in as far as it unreasonably restricts the applicants from conducting a legal practice under the name Shikongo Law Chambers Incorporated, thereby offending the applicants’ fundamental freedom guaranteed by Article 21 (1)(j) of the Namibian Constitution.

Issues

The question the court was confronted with was which of the two interpretations of s 7(1) of the Act proffered by the parties is more sensible in that it does not undermine the purpose of the section?

To the extent that s 7(1)(c) regulates that a name of a practising company may consist of only the names of any present or past director or of persons who practice on their own accounts or in partnership or any practice which may reasonably be regarded as a predecessor of the company, whether such regulation infringes the practitioners’ rights guaranteed by Art 21(1)(j) of the Constitution?

Discussion 

‘The law

The principles of interpretation of statutes and texts

[41]… The Constitution and the values enshrined in it form the starting point for interpreting statutory provisions. An interpretation consistent with advancing and giving effect to the values in the Constitution is to be preferred where a statute is reasonably capable of such interpretation. When a court interprets a statute it must give effect to the ordinary meaning of the words used to formulate the provisions being interpreted. Furthermore, the court will only go beyond the ordinary grammatical meaning of the words if such words generate an absurd or repugnant meaning that undermines the legislature’s intention. In the event of such absurdity or repugnancy, the court will consider the purpose of the provision as well as its textual background.

[42]         In addition, the court must assume that the legislature is consistent with itself, meaning that the provisions of the same statute are concurrently operational unless there is an irreconcilable conflict between the two provisions. After determining the ordinary grammatical meaning of the provision, the court must establish if there is an irreconcilable conflict between the two provisions. If the conflict is reconcilable, the court must adopt an interpretation which upholds that the two provisions are concurrently operational.’

‘Principles of interpretation of statutes applied to s 7(1)

[45] Section 7 gives a private company which is incorporated and registered in terms of s 53 of the Companies Act 61 of 1973 (now s 60(b) of the Companies Act 28 of 2004) the right to conduct a practice subject to the stipulated requirements inter alia that: the memorandum of association provides that all present and past directors shall be jointly and severally liable with the company debts and liabilities of the company contracted during such directors tenure in office; only natural persons who are in possession of fidelity fund certificates shall be shareholders or persons with interest in the share of the company, and the name of the company shall consist only of the name(s) of the present or past shareholders of the company.

[46] … The section was inherited from the pre-independence South African Attorneys Act 53 of 1979. The section was enacted so as to comply with s 53(b) of the Companies Act 61 of 1973 (the Companies Act, 1973).

[47]    Section 53(b) was an empowering section in that it empowered a private company to include in its memorandum of association a provision that the present and past directors of the company shall be liable, jointly and severally, together with the company, for debts and liabilities of the company that were contracted during their periods of office.

[48] It is generally accepted that the provisions of s 53(b) introduced a regime which extended to partnerships, the privilege of incorporation but with the preservation of partnership principles, mainly the unlimited liability of those who became ‘directors/members’ instead of ‘partners’. The interests of the directors/members were not rendered supreme over the interests of third parties, such as existing or future creditors. The objects of the Legislature were to impose on the directors/ members an entirely new statutory liability and to provide creditors with an entirely new remedy until then not available to them which would enable them to hold the directors liable singuli et in solidum, – i.e. individually and for the whole- meaning that each person is responsible for the entire amount and not just a portion  Every shareholder of the company must be a director of the company…

[49]… The parties are in agreement about the legislative purpose of s 7(1), namely, to protect the public from being misled by the name of the company. I agree with the parties’ understanding of the purpose of the section in this regard.

[51] The name of the professional company must be clear so that members of the public are certain about whom they are dealing with when an incorporated law firm is involved. The purpose of the word ‘Incorporated’ is to give constructive notice to everybody dealing with the company, that the directors of that company are liable singuli et in solidum. 

[54] Amongst the rules of interpretation, there is a presumption – contra fiscum – which is applied in the interpretation of statutes that imposes a pecuniary burden. It advocates that an onerous statutory provision must be interpreted restrictively. In this regard it was held in Fundstrust (supra) that s 6A of the Companies Act 46 of 1926 (the predecessor of s 53(b))impinged on the principle of corporate existence and imposes liability upon directors of a professional company which directors of other incorporated companies did not have, by rendering directors personally liable for the company’s debts and liabilities, it needs to be interpreted strictly, and by giving preference to its least onerous interpretation.

[56] …The word ‘solely’ is an adverb which means ‘only –nothing other than’ or ‘exclusively –to the exclusive of all else or others’. It is defined to mean ‘without anything or anyone else involved’. It is also defined to mean: ‘alone, only, or entirely’.

[61] I find the interpretation of the word ‘solely’ proffered on behalf of the LSN to be more sensible taking into account the statutory purpose of the said section. On the other hand, I find the interpretation of the word ‘solely’ as proffered by the applicant insensible and to a certain degree undermines the very purpose of the restriction namely to protect the public from being misled or confused.  

The alternative relief considered.

[79]  … An application for declaratory relief is adjudicated in two stages: the first stage involves the determination of whether the applicant is a person interested in ‘any existing, future or contingent right or obligation’. The second stage, which only arises if the answer to the first is in the affirmative, is whether the case is a proper one for the exercise of the court’s discretion in favour of the applicant seeking a declaratory.

[105] … the applicant is an interested person with ‘existing, future or contingent right or obligation’ as contemplated by s 16(d) of the High Court Act, 1990, however, the applicant has not made out a case that his right guaranteed by Art 21(1) has been infringed by s 7(1)(c) of the LPA accordingly he is not an aggrieved person within the meaning of Art 25(2) so as to put the respondents to justify the impugned section under Art 25(2)…

Determination

Held that; the Constitution forms the starting point in interpreting statutory provisions and that an interpretation consistent with advancing and giving effect to the values enshrined in it is to be preferred where a statute is reasonably capable of such interpretation.

Held that; when the court interprets a statute it must give effect to the ordinary meaning of the words used to formulate the provision being interpreted in order to establish the meaning of the provisions being interpreted.

Held that; the court will only go beyond the ordinary grammatical meaning of the words if the words used generate an absurd or repugnant meaning which undermines the Legislature’s intention. In the event of such absurdity or repugnancy, the court will consider the purpose of the provision as well as its textual background.

Held further that; on a proper interpretation of the impugned section, the intention of the Legislature was to prohibit the inclusion in the name of the practising company, words other than the names of present or past directors of the company.

Held that; section 7(1)(c) does not restrict the applicant from practising as an incorporated company and that it merely regulates how the applicant may practise as an incorporated company. 

Held further that; the purpose of the restriction is to protect the public from being misled or confused.

Held further; that the applicant did not make out a case that his right guaranteed by Art 21(1) had been infringed by s 7(1)(c)of the LPA, accordingly he is not an aggrieved person within the meaning of Art 25(2) so as to put the respondents on terms to justify the impugned section under Art 25(2).

Court order

The application was dismissed with no order as to costs.

Visit FASZ’s Concise Law Reports at: https://www.conciselawreports.com/ for more Case Law summaries.