Llesotho Building Finance Corporation v Bofelo (CIV/T 148 of 88) [1991] LSCA 21 (11 February 1991)

C I V / T / 1 4 8 / 88 IN T HE H I GH C O U RT OF L E S O T HO In t he m a t t er of : L E S O T HO B U I L D I NG F I N A N CE C O R P O R A T I ON P l a i n t i ff V J A M ES S E H L O HO B O F E LO D e f e n d a nt J U D G M E NT D e l i v e r ed by t he H o n. M r. J u s t i ce J. L. K h e o la on t he 11th day of F e b r u a r y. 1 9 9 1. T he p l a i n t i ff is a p p l y i ng f or p r o v i s i o n al s e n t e n ce on a r e d u c i b le m o r t g a ge bond g i v en as s e c u r i ty f or loan f a c i l i t i es f or p a y m e nt of an a m o u nt of M 2 5 , 0 0 0 . 00 and an a d d i t i o n al sum of M 1 , 2 5 0 . 00 t o g e t h er w i th i n t e r e st on b o th a m o u n t s. C l a u se 1 of t he m o r t g a ge b o nd p r o v i d es t h at t he p l a i n t i ff may at its d i s c r e t i on from t i me to t i me m a ke f u r t h er a d v a n c es to or p a y m e n ts to or on b e h a lf of t he d e f e n d a nt s u b j e ct to t he t e r m s, c o n d i t i o ns and p r o v i s i on of t h is b o n d. C l a u se 12 of t he m o r t g a ge b o nd p r o v i d es t h at a c e r t i f i c a te p u r p o r t i ng to be s i g n ed by t he M a n a g er or A s s i s t a nt M a n a g er f or t he t i me b e i n g, or any p e r s on a c t i ng in any of such c a p a c i t i e s, s h o w i ng t he a m o u nt o w i ng t he p l a i n t i ff in r e s p e ct of t he c a p i t a l, a d d i t i o n al /sum -2- sum and i n t e r e st and f or all a d v a n c es and p a y m e n ts m a de (in a d d i t i on to t he c a p i t a l) to or f or a c c o u nt of t he d e f e n d a nt or o t h e r w i se a u t h o r i s ed to be m a de u n d er t h is b o nd and o t h er l o a ns g r a n t e d, t o g e t h er w i th i n t e r e s t, s h a ll be s u f f i c i e nt and s a t i s f a c t o ry p r o of f or t he p u r p o s es of o b t a i n i ng p r o v i s i o n al s e n t e n ce or s u m m a ry j u d g m e nt u n d er t h is b o nd or f or any o t h er p u r p o se and it s h a ll r e st w i th t he d e f e n d a nt to p r o ve t h at s u ch a m o u nt is n ot o w i ng to t he p l a i n t i f f. T he p l a i n t i ff h as a t t a c h ed to t he s u m m o ns s e r v ed u p on t he d e f e n d a nt a c e r t i f i c a te s i g n ed by t he p l a i n t i f f 's m a n a g i ng D i r e c t or c e r t i f y i ng t he a m o u nt o w i ng as M 75 1 0 6 . 33 as at t he t i me of t he s u m m o ns w as i s s u e d. O ne of t he o b j e c t i o ns r a i s ed by M r. M p h a l a ne on b e h a lf of t he d e f e n d a nt w as t h at t he m o r t g a ge b o nd s u p p o r t ed by a c e r t i f i c a te of t he p l a i n t i f f 's M a n a g i ng D i r e c t or is n ot a l i q u id d o c u m e nt u p on w h i ch t he p l a i n t i ff can rely to o b t a in a p r o v i s i o n al s e n t e n ce d e s p i te t he f a ct t h at t he p a r t i es a g r e ed in t he m o r t g a ge b o nd t h at s u ch c e r t i f i c a te s h a ll be v a l id as a l i q u id d o c u m e nt a g a i n st t he d e f e n d a nt f or p u r p o s es of o b t a i n i ng p r o v i s i o n al s e n t e n c e. He r e f e r r ed t he C o u rt to B a r c l a ys B a nk v. L e h l o h o n o lo K h o b o ko C I V / T / 5 8 6 / 35 ( u n r e p o r t e d ). T he f a c ts of t h at c a se w e re t he s a me w i th t he f a c ts of t he p r e s e nt c a se e x c e pt t h at in t h at c a se a s e c o nd m o r t g a ge bond w as i n v o l v e d. T he c o u rt c a me to t he c o n c l u s i on t h at n o t w i t h s t a n d i ng t he c e r t i f i c a te of t he p l a i n t i f f 's M a n a g e r, t he m o r t g a ge b o nd l a c k ed / s u f f i c i e nt - - s u f f i c i e nt l i q u i d i ty f or t he p u r p o s es of p r o v i s i o n al s e n t e n ce and t h at a c t i on w as d i s m i s s e d. A liquid d o c u m e nt is d e f i n ed as a d o c u m e nt w h e r e in t he d e b t or a c k n o w l e d g es o v er h is s i g n a t u r e, or t h at of a d u ly a u t h o r i z ed a g e n t, or is in law r e g a r d ed as h a v i ng a c k n o w l e d g e d, w i t h o ut h is s i g n a t u re b e i ng a c t u a l ly a f f i x ed t h e r e t o, h is i n d e b t e d n e ss in a f i x ed and d e t e r m i n a te sum of m o n e y. T he a m o u nt of t he d e bt m u st be a s c e r t a i n ed and t he d o c u m e nt m u st be s u f f i c i e nt in itself and not r e q u i re e x t r i n s ic e v i d e n ce to p r o ve t h at the d e bt is d ue (See I n t e r - U n i on F i n a n ce v. F r a n s k r a a l s t r a nd and O t h e r s, 1 9 6 5 ( 4) S. A. 180 ( W . L . D .) at p. 181 and t he c a s es r e f e r r ed to t h e r e i n .) It s e e ms to me t h at in t he p r e s e nt c a se t he m o r t g a ge bond in q u e s t i on d o es n ot s a t i s fy t he r e q u i r e m e n ts of l i q u i d i ty b e c a u se it r e q u i r ed e x t r i n s ic e v i d e n ce in o r d er t h at t he i n d e b t e d n e ss of t he d e f e n d a nt to t he p l a i n t i ff c o u ld be e s t a b l i s h e d. T h at e x t r i n s ic e v i d e n ce is t he c e r t i f i c a te of t he p l a i n t i f f 's M a n a g i ng D i r e c t o r. T he m o r t g a ge bond r e f e rs to o n ly t wo a m o u n t s, v i z ., M 2 5 , 0 0 0 . 00 and M 1 , 2 5 0 . 0 0; t he a m o u nt now c l a i m ed by t he p l a i n t i ff is o v er M 7 5 , 0 0 0 . 00 and in o r d er to p r o ve t h is a m o u nt t he p l a i n t i ff h as to rely on e x t r i n s ic e v i d e n ce in t he form of a c e r t i f i c a te of t he p l a i n t i f f 's M a n a g i ng D i r e c t o r. M r. M a l e b a n y e, on b e h a lf of t he p l a i n t i f f, s u b m i t t ed t h at t he p a r t i es a g r e ed in t he m o r t g a ge b o nd t h at t he c e r t i f i c a te of t he p l a i n t i f f 's M a n a g er or A s s i s t a nt / M a n a g er -4- M a n a g e r, or any person acting in such c a p a c i t i e s, shall be s u f f i c i e nt e v i d e n ce upon w h i ch the p l a i n t i ff may seek p r o v i s i o n al s e n t e n ce or summary j u d g m e n t. He submitted that the p a r t i es are bound by t h e ir a g r e e m e nt and that t h e re is no p r e j u d i ce to the d e f e n d a n t, I do not agree with this s u b m i s s i on which implies t h at parties to an a g r e e m e nt can c h a n ge the law and a g r ee that a d o c u m e n t, w h i ch a c c o r d i ng to our law is illiquid, shall be regarded a liquid by them for p u r p o s es of p r o v i s i o n al s e n t e n ce or summary j u d g m e n t. In Wollach v. B a r c l a ys B a n k. 1 9 8 3 ( 2) S. A. 543 (A. D.) the h e a d n o te reads as f o l l o w s: "In a series of d e c i s i o ns since B r o - T r u st ( P t y) Ltd. v. Pieters 1 9 7 3 ( 3) S. A. 5 20 (T) it w as held or accepted that p r o v i s i o n al s e n t e n ce could be granted if a d e b t o r, in a w r i t t en i n s t r u m e nt such as a covering bond or deed of s u r e t y - s h i p, admitted indebtedness for an i n d e t e r m i n a te amount s u b j e ct to a fixed m a x i m u m, provided that the i n s t r u m e nt stipulated that the e x t e nt of the d e b t o r 's liabi- lity at any given m o m e nt could be proved by a d o c u m e nt such as a c e r t i f i c a t e, and p r o v i d ed that the p l a i n t i ff obtained and relied on such c e r t i f i- c a t e. This a p p r o a c h, w h i ch was adopted in the s e v e n t i e s, is in c o n f l i ct with the r e q u i r e m e nt of liquidity in p r o v i s i o n al s e n t e n ce p r o c e e d i n gs as it evolved in p r a c t i ce over a long p e r i o d, and this e x t e n s i on cannot be justified by practical or o t h er c o n s i d e r a t i o n s. An a c k n o w l e d g m e nt that an i n d e t e r m i n a te a m o u nt is d u e, a l b e it coupled to a fixed m a x i m u m, e v i d e n t ly does not comply with the a c k n o w l e d g ed r e q u i r e m e nt of l i q u i d i t y, in terms of which t he e x i s t e n ce and e x t e nt of the debt must a p p e ar from the w r i t t en i n s t r u m e n t. /Liquidity - 5 - L i q u i d i ty c a n n o t, so to s p e a k, be r e t r o s p e c t i- v e ly c o n f e r r ed by t he a g r e ed i s s ue of a c e r t i- f i c a t e. R e n u n c i a t i on of t he e x c e p t io n on n u m e r a t ae p e c u n i ae by t he d e b t or w i ll a l so n ot s a t i s fy t he r e q u i r e m e nt of l i q u i d i t y: t he e x c e p t i o n, and c o n s e q u e n t ly a r e n u n c i a t i on t h e r e o f, is m e a n i n g f ul o n ly w h e re a g e n u i n e, u n c o n d i t i o n al a c k n o w l e d g e m e nt or p r o m i se to pay a p p e a rs f r om t he w r i t t en i n s t r u m e n t ." In t he r e s u lt t he a c t i on is d i s m i s s ed w i th c o s t s. J . L. K H E O L A. J U D G E. 11th F e b r u a r y, 1 9 9 1. F or P l a i n t i ff : M r. M a l e b a n ye F or D e f e n d a nt : M r. M p h a l a n e.