Lesotho Bank v Mpaka (CIV/APN 197 of 2000) [2000] LSCA 130 (12 October 2000)

CIV/APN/197/2000 IN T HE H I GH C O U RT OF L E S O T HO In the matter between : L E S O T HO B A NK P E T I T I O N ER and M P A KA J E R E M I AH M P A KA R E S P O N D E NT For Petitioner : M r. T. Hlaoli For Respondent: Adv. H. V an Heerden (Instructed by Du Preez, Liebetrau & Co.) J U D G M E NT Delivered by the Honourable M r. Justice T. Monapathi on the 12th day of October 2000 My full reasons will follow. It will be recalled that on the 29th this Court decided that points-in-limine and merits should be argued together and I am merely making this speech today to decide the matter and my full reasons will follow. I decided the points-in-limine by saying firstly loco standi. W h en admission was made firstly by the Respondent that he dealt with the Petitioner as a customer and that he was indebted to the Petitioner in a demonstrable way I do not see how loco standi could be questioned when it was undisputed that there have been dealing with Lesotho Bank and then Lesotho Bank Limited which is, as said from the bar, a successor to Lesotho Bank unless something more was shown by Respondent. On urgency I said it may be that Respondent felt that he should have had notice of the application in which case he still must have spoken about and shown prejudice which was said to have been caused by the application having been made exparte. The prejudice in the way the application was served. That is when the rule nisi had already been issued. But urgency was justified by Petitioner when it showed that Respondent had gone about to change the nature of his business in a way that could suggest most probably an intention to divert the activity or dissipate the commercial assets to the prejudice of creditors. W h en this was unanswered there was a proper case for having moved the case exparte without notice for the rule nisi. On that question of conflict between provisional trustee and his firm of attorneys I spoke about the remote way in which the likelihood of conflict of interest was said to have been suspected between the appointed firm and the appointed trustee. I felt that the Respondent's argument was not persuasive enough in the light of and in the context of the Petitioner having in fact been represented in these proceedings by the firm of T. Matooane & Co. It may be, objectively, having regard to the resolution of the Board and annexure " C" that conflict would be suspected but it is no easy matter unless there is more of a demonstration of this likelihood because the principle is that the Master exercises control over the liquidation of the estates such as the instant one. The participation by the creditors, the respondents such as the present one in respect of accounts, administration of accounts, closing of the statement, inventories lessens the likelihood of that conflict. Unless the complaint has to do with the integrity or honesty of a trustee which is a serious allegation which the Court cannot be said lightly and which when seriously suggested the Court will take cognisance of it by way of a proper investigation. There was an allegation that there had been absence of hearing, when the Respondent said he has not been given a hearing. I felt this point was unfounded and had not been seriously demonstrated. As the law stands it is the practice to issue rule nisi originated by ex parte motions which are premised on urgency which I have already commented about. It is rare that on confirmation of an order a respondent will not have been afforded a hearing to be heard or an opportunity. In such a rare case one would correctly speak of a hearing not having been afforded and the final rule being a nullity. That would be where for example there has been no service of rule nisi at all. Indeed one cannot suggest that the procedure of provisional liquidation will not spell hardships to the Respondent. But it is a procedure which is recognized and still stands together with our rules of Court. In some countries such as South Africa as I have been informed the South African Law Commission is looking for ways of changing the procedure of interdicts and notices on respondents in liquidation or insolvency cases. This is being done presumably to ameliorate certain difficulties or hardships. M ay be this question of ex parte procedure is one of the issues that are being addressed by the said Commission. On this question of the section 165 and 166 of the Labour Code whereby there is an objection to the appointment of the Trustee, in way it has been put, my comment would be that the labour regulations regulating labour issues cannot invalidate authority given by Court to a Legal Practitioner admitted in this Court when being appointed as a Trustee. Alternatively the trusteeship relationship or such a status as this o ne in a liquidation situation is not a master a nd servant relationship. O ne c an arguably be appointed or an a p p o i n t m e nt can arguably be m a de in a situation such as this o ne w h e re Mr B u ys is appointed by virtue of being an Attorney not as being an e m p l o y ee n or an employer. On the merits I feel that the petitioner has proved a claim w h i ch w as not denied that the R e s p o n d e nt has c o m m i t t ed acts of insolvency. He has failed to discharge the o n us of rebutting prima facie case mainly that his estate w as insolvent a nd w as not p a y i ng its debts. I did not see a ny dispute of fact w h e re the indebtedness to the Petitioner w as not challenged. It is not a dispute of fact that the R e s p o n d e nt merely said that the Petitioner should h a ve filed an action as against going for liquidation procedure. A g a in on the vexed the question of a p p o i n t m e nt of M r. B u y s, the allegation is m a de against h im about his having dealt with certain estate or estates in a dilatory careless or negligent m a n n e r. T h is does not take into account that the trustee is effectively speaking a servant of the C o u rt a nd of the Master of the H i gh Court. T he administration of an estate is u n d er the supervision of the Master. T h e se allegations against M r. B u ys are scanty a nd are unsubstantiated. I w o u ld loath to act on the allegations w h i ch appear on their face to be v a g ue as those. If there w as m o re or e n o u gh evidence for e x a m p le of the M a s t er or from people intimately associated with the alleged badly dealt with estates I w o u ld perhaps h a ve been persuaded to consider this matter. It is unsafe for the C o u rt to lightly take allegations that border on or are disguised charges of dishonesty against Legal Practitioners not least on a n y b o dy or a citizen. It w o u ld be interesting as to h ow the M a s t er dealt with these complaints against M r. B u ys if there w e re such complaints. I had no hesitation in confirming the rule with costs to the estate. I have already dismissed the points-in-limine with the c o m m e n ts I have already m a d e. As I said my reasons will follow. T. M o n a p a t hi J u d ge