Standard Lesotho Bank v Matsoso (CCA 64 of 2013) [2014] LSHC 85 (28 March 2014)

IN THE HIGH COURT OF LESOTHO (Commercial Division) HELD AT MASERU In the matter between: CCA/64/2013 STANDARD LESOTHO BANK PETITIONER AND ‘MABOTSANG MATSOSO RESPONDENT RULING Coram Date of hearing Date of Ruling : : : Chaka-Makhooane J 20th November, 2013 28th March, 2014 SUMMURY Petition for sequestration – Respondent raising points in limime – Merits not argued – Points in limine dismissed with costs. ANNOTATIONS CITED CASES 1. Alfa Construction v Wesa Construction CIV/APN/189/07 (unreported). 2. Amalgamated Engineering Union v Minister of Labour 1969 (3) SA 31 3. Commander LDF v Matela 1999 – 2000 LLR & LB 13 4. Corner Shop (Pty) Ltd v Moodley 1950 (4) SALJ. 5. Fahida Cash and Carry (Pty) Ltd & Ors v People’s Choice FM (Pty) Ltd & Ors (CIV/APN/404/05). 6. Harding and Others NNO v Standard Bank of South Africa LTD 2004 (6) SA. 7. I. Kuper Lesotho (Pty) Ltd v Maphathe and Others C of A 40/2010. 8. Khaketla v Malahleha and Others 1990 – 1994 LAC. 9. Lesotho Bank v Boliba Multi-Purpose C of A (CIV) No 43/2011. 10. Lesotho District f United Church v Rev Moyeye and Ors LAC (2007 - 2008). 11. Lesotho Milling Company (Pty) Limited v Estate Late ‘Maseribane (CIV)/APN/42/88). 12. Lijabatho Football Club v Lesotho Sports Council & 13 Others CIV/APN/304/91 13. Palime and Others v Makhulong Multi Finance (Pty) Ltd CCA/23/2012 14. Mahao v Lesotho Electricity Company CIV/APN/361/08. 15. Majara v Majara (1999 – 1994) LAC. 16. Masupha v ‘Mota 1985 – 1989 LAC. 17. Republic Motors vs Lytton Road Service Station 1971 (2) SA. 18. Schleinger v Schleinger 1979 (4) SA 342. 19. Selebalo v Netbank CIV/APN/395/06. 20. Swissbourgh Diamond Mines (Pty) Ltd & Another v Lesotho High 21. The National Executive Committee of Lesotho National Olympic Committee & 10 Others v Paul Motlatsi Morolong. BOOKS 1. Amler’s Precedents of Pleadings, 5th Ed . L. T. C Harms. Butterworths, Durban. 2. 3. Administration of Insolvent Estates. C. R Graham. Superior Courts in South Africa 2nd Edition. STATUTES Insolvency Proclamation no 51 of 1957. [1] This is a petition for the sequestration of the respondent’s estate in terms of the Insolvency Proclamation (“Proclamation”). The petitioner sought and was granted an interim order on the 6th June, 2013. [2] Whilst in the employ of the petitioner as a Relationship Manager, Corporate and Investment Banking, the respondent was responsible for the accounts of the Government of Lesotho. The Government accounts were operated by instruction letters from concerned Ministries, who would, from time to time inform the petitioner of the signatories and any changes as they happen. [3] During or about the 28th November, 2011, the Government of Lesotho issued an instruction for the closure of its eight (8) accounts held with the petitioner. In terms of this instruction, the respondent amongst others was tasked with ensuring that the accounts are closed. [4] It is further the applicant’s case that the respondent acquired a vast estate of both immovable and movable assets over a short period of time and that these assets were acquired exclusively as a result of the fraud and theft committed by the respondent. [5] On the contrary, the respondent argues that she has not stolen any money from the petitioner and that the accounts which the petitioner alleges that she stole money from, do not belong to the petitioner but to the Government of Lesotho. [6] It is necessary to mention that the respondent has raised points in limine and it would be prudent to deal with them first. NON JOINDER [7] It is the respondent’s case that the petitioner has not joined the office of the Master of the High Court (“Master”) and the Attorney General respectively, as the representatives of the Government. In terms of the Proclamation, the Master is a necessary party, more so when the prayers obtained by the petitioner direct the Master of High Court to make certain appointments in terms of the Proclamation. The petitioner has also failed to join KB Construction, KB General Dealers, Shakhane Computers, and Storm Enterprises who are alleged to have fraudulently benefitted from the scheme. Most importantly the petitioner has not joined Palo Thonkha who is alleged to have acted in common purpose with the respondent. [8] The petitioner responded by stating that it is not correct that the Master is a necessary party. The petitioner argues that sequestration is against the estate of the respondent and the Proclamation1 does not enjoin the petitioner to join the Master but merely to lodging the petition with the Master. This the petitioner duly did and the Master acknowledged the same2. On the issue of Palo Thonkha, KB General Dealers, Shakhane Computers and Storm Enterprises, the petitioner shows that the nature of the sequestration proceedings are against a particular estate and do not involve all the parties to an alleged fraud3. In any event the estate of Palo Thonkha and KB General Dealers have also been placed under provisional sequestration under CCA/66/2013 and CCA/67/2013 and the files have now been consolidated with the matter under consideration. [9] For the respondent to succeed in a plea of non-joinder it is required that he/she shows that the parties referred to have a direct and substantial interest in the application4. In casu, except for the Master, all the other parties do have a direct and substantial interest, however, since this is an application for sequestration, by their very nature such proceedings can only be against individuals or particular estates. As a matter of fact the parties referred to by the respondent are facing or are already under provisional sequestration. In this regard, this point cannot succeed. 1 Section 9 (4) 2 See the Master’s bond at page 36 f the record 3 Majara v Majara (1990 – 1994) LAC 130 4 I. Kuper Lesotho (Pty) Ltd Maphathe and Others C of A 40/2010 (See LESLII) at page 4 LOCUS STANDI IN JUDICIO [10] The respondent argues that the petitioner in this matter does not have the locus standi in judicio to file sequestration proceedings in relation to the accounts in question. It is only the Government of Lesotho that would have the capacity to make this recovery, not unless the petitioner proves that it had to compensate the Government. The respondent also argues that, there is no authority from the Government mandating the petitioner to pursue the matter, see Alfa Construction v Wesa Construction5. [11] The petitioner responds by showing that the respondent relies on fraudulent activities and the petitioner enjoys locus standi by virtue of being defrauded. The court was referred to Lesotho Bank (1999) Limited v Boliba Multi-Purpose Cooperative Society6. The petitioner submits that it was trite that if the account is debited without authority, the bank is liable to credit its customer with the amount so defrauded. [12] The respondent has been unable to support her argument on this point in limine in view of the position of the law as held in the case already referred to the court in Lesotho Bank (1999) Limited v Boliba Multi-Purpose Cooperative Society7. This point in limine stand to be dismissed. 5 CIV/APN/189/07 (Unreported) at para 20, page 7 6 C of A (CIV) No 43/2011 ( See also LESLII) 7 Supra at page 4 ( see LESLII), see also case cited there at. JURISDICTION [13] The respondent further argues that this court does not have jurisdiction to entertain this matter because there is no proof of insolvency by the respondent to warrant and justify this petition. In the circumstances, it is the respondent’s assertion that there is no debt owed to the petitioner and that there has not been any lawful demand that the respondent should pay or she is incapable of paying. In this regard these proceedings are premature and unfounded. [14] It is further submitted on behalf of the respondent that in order to obtain a provisional sequestration order, the applicant must prima facie convince the court inter alia that: (a) He has a claim against the debtor/creditor. (b) The debtor is either factually insolvent or has committed an act of insolvency. The respondent shows that in the present case, the petitioner has failed to establish that the respondent is indebted to it and further that the respondent has committed an act of insolvency or she is actually insolvent. The petitioner has also failed to furnish the court with a list of creditors to whom this would be beneficial if the respondent is sequestrated. The court was referred to the case of Corner Shop v Moodley8 [15] In response the petitioner argues that jurisdiction refers to the competency of the court to deal with the matter. He further argues that these are sequestration proceedings and the court is empowered to deal with them as 8 1950 (4) SALJ 55 per section 150(1) of the Proclamation. He further argues that as pertaining to the authority of the court to direct the Master to appoint a provisional trustee, there is no law prohibiting the court to do so in terms of sections 18 (1) and 54 respectively of the Proclamation. [16] The respondent seems to have missed the point of this application. The application was that the court should direct that the respondent’s estate be placed in provisional sequestration.9 If that is so then this court had the competency and the jurisdiction to deal with the application10. At this stage the idea was to deal with this issue as a point in limine, however, the respondent seems to cloud her arguments with matters which ought to be dealt with issuably in the merits. This point in limine stands to be dismissed. MATERIAL NON DISCLOSURE [17] The respondent contends that the petitioner has failed to disclose that Stephen Carl Buys who seeks to be appointed as the provisional liquidator is also the attorney for the petitioner and that Advocate Mpaka is duly instructed by him on behalf of the petitioner. The court was referred to Schleinger v Schleinger11. According to the respondent, the petitioner has failed to disclose this fact to the court. It is a very material fact that would have influenced the court’s discretion in granting the interim order ex 9 Paragraph 17 at 17.2 of the Petition for sequestration. 10 See section 150 (1) of the Proclamation 11 1979 () SA 342 parte, see also Selebalo v Nedbank 12 as well as Mahao v Lesotho Electricity Company13. [18] In answer to this averment, the petitioner shows that there is no law prohibiting such an appointment. Nothing has been hidden from the court as pertaining to the petitioner’s representatives and the nature of the appointment sought, so that the point is now moot as the provisional trustee appointed is Advocate Phafane KC as per E45/2013 and not the one originally sought. [19] I fail to see why the respondent persued this point since it has been overtaken by events. The court has already granted the interim order and the provisional trustee Advocate Phafane KC was appointed by the Master. I fail to see how the point of non-disclosure of that kind would have affected the court’s decision, including how the disclosure of another civil case (CIV/APN/2003/2013) against the respondent by the Government of Lesotho would have affected this application, since the issues are totally different. In this regard this point in limine ought to fail. FAILURE TO PAY SECURITY FOR COSTS [20] The respondent further argues that the petitioner has failed to file a certificate from the Master proving that security has been furnished to the Master for payments of all costs up to and including the appointment of a 12 CIV/APN/395/06 (Unreported). 13 CIV/APN/361/08 (Unreported). trustee. This is a necessary requirement and as such the petitioner has not complied with the law. [21] In response thereto, the petitioner states that security for costs has been paid as per the Master’s bond marked annexure H of the petition. [22] I need not belabour this point any further, the fact remains that the Master’s bond14 is evidence that security for costs was found by the Master hence his/her acknowledgement of the same. LACK OF URGENCY [23] The respondent bemoans the fact that the court actually entertained this matter on an urgent basis as well as ex parte basis and that no reasons were advanced before the court why the application warranted to be moved ex parte. The respondent shows that it cannot be that she would abscond or dissipate vehicles. She shows that she is an account holder with the petitioner and has a mortgage bond with the petitioner. [24] The petitioner submits that sequestration proceedings are by their very nature not only urgent but also ex parte too. The petitioner further shows that even the Proclamation itself envisages and sanctions such an approach as provided by section 10 up to 12. He also counters the respondent’s claim by showing that paragraph twelve (12) of the petition gave reasons for the urgency. 14 Annexure H at page 38 of the record [25] I am persuaded and I have no doubt that the present application calls for urgency since it involves monies and assets that could easily be moved or dissipated. The petitioner has adequately given reasons in the petition at paragraph twelve (12) why the matter was urgent. The court is convinced that the reasons advanced by the petitioner are founded on urgency15. CONCLUSION [26] I am persuaded that the petitioner’s petition makes out a prima facie case for this court to consider the petition16. It is sad that the respondent decided to persue so called points in limine rather than deal with the merits. Instead the respondent kept mixing issues that she considered as points in limine with issues that ought to be argued in the merits. [27] The Court of Appeal has on several occasions lamented and I fully align myself with this that: “[4]…the persistent practice of taking inappropriate points in limine has bedevilled the procedure in the High Court for some time and it is a usage that shows no sign of coming to an end. When a point in limine is raised, the issue for determination is whether the applicant’s affidavits make out a prima facie case. Consequently the applicant’s affidavits alone have to be considered and the averments contained therein should be considered as true for the purpose of deciding upon the validity of the preliminary point… Unfortunately the practice of converting defences on the merits into preliminary points has become so prevalent in motion proceedings that the 15 Khaketla v Malahlela and Others 1990 – 1994 LAC 275 16 Makala V Makoala (supra) at page 4 process may be regarded as being akin to the Pavlovian response. [5] It is regretted, too, that some courts of first instance appear to accept that an issue raised as a preliminary point is indeed a point in limine simply because it is given that label by respondent. This sometimes results in procedural confusion… [6] …a court should not adopt a supine attitude when it is faced with a point in limine. It is the duty of a court to regulate procedural matters in a reasonable way in order to ensure the smooth progress of the litigation.” [28] The points in limine as raised by the respondent are dismissed as a whole, with costs. It is therefore expected that parties will set the matter down for consideration of the merits as soon as possible. ________________________ L. CHAKA-MAKHOOANE JUDGE For the Petitioner For the Respondent : : Mr Mpaka Mr Molapo 12