Rankoane t/a Pro Links Systems v The Liquidator Lesotho Bank (C of A (CIV) 51 of 2011) [2012] LSCA 22 (27 April 2012)

IN THE COURT OF APPEAL OF LESOTHO C OF A (CIV) No. 51/ 2011 APPELLANT In the m a tter b etw een: THATO JOSEPH RANKOANE T/ A PRO LINK SYSTEMS AND THE LIQUIDATOR LESOTHO BANK (IN LIQUIDATION) RESPONDENT CORAM: SMALBERGER, JA SCOTT, JA MOSITO, AJA Hea rd: Delivered: 17 APRIL 2012 27 APRIL 2012 Summa ry Ap p ella nt a lleg ing he ha d rep a id a lo a n to resp ond ent in Dec em b er 1996 w hen – resp ond ent c la iming p a ym ent fo r first tim e 6 yea rs la ter – loa n b ec a m e rep a ya b le d ela y unexp la ined – held a p p ella nt ha d d isc ha rg ed b urd en o f p roving rep a yment. JUDGMENT SCOTT, JA [1] This is a n a p p ea l a g a inst the jud g m ent o f Lyons AJ sitting in the Co mm erc ia l Divisio n o f the Hig h Court. [2] On 31 Oc to b er 1996 the Ap p ella nt entered into a w ritten a g reem ent of loa n with the Lesotho Ba nk, no w in liq uid a tion (“ the resp ond ent” ). The loa n wa s fo r M22 000 a nd b o re interest a t the ra te o f 22 p erc ent p er a nnum . It w a s rep a ya b le in two m onthly insta lm ents o f M11 034.55 ea c h. The first w a s p a ya b le a t the end of Novemb er 1996 a nd the sec o nd a t the end o f Dec emb er of tha t yea r. [3] In Novemb er 2002 the resp o nd ent issued sum mons a g a inst the a p p ella nt in whic h it a lleg ed tha t no monthly insta lm ents ha d b een p a id a nd tha t a s a t 5 Sep temb er 2002 the a m o unt owing ha d g ro wn to M45 207.33. Defa ult jud g m ent w a s sub seq uently ta ken a g a inst the a p p ella nt b ut w a s set a sid e on 28 Aug ust 2006. [4] The a p p ella nt p lea d ed tha t he ha d rep a id the loa n in full in Dec em b er 1996 b ut w a s una b le to p ro d uc e w ritten p ro of o f p a ym ent a s a ll his rec o rd s, w hic h w ere kep t in his offic e a t the Sa nla m Centre, Ma seru, w ere d estro yed b y fire d uring the riots o f 1998. It w a s a c c ep ted b y the c ourt a q uo tha t the a p p ella nt b o re the onus o f p roving on a b a la nc e of p rob a b ilities tha t he ha d rep a id the lo a n see Pilla y: v Krishna a nd Another 1946 AD 946 a t 958, Sta nda rd Ba nk of SA LTD v Onea na te Investments (PTY) LTD (In Liquida tion) 1998 (1) SA 811 (SCA) a t 823 D. The issue in this a p p ea l is w hether the a p p ella nt d isc ha rg ed tha t onus. [5] In term s o f the loa n a g re em ent, the loa n a nd interest w ere to b e p a id “ into a c c o unt numb er 6516268615 held in the na m e of the b o rro wer w ith the Ba nk.” The a c c o unts relied up on b y the resp ond ent to esta b lish the a m o unt o utsta nd ing a nd tha t no p a ym ents ha d b een ma d e b o re d ifferent numb ers. The exp la na tion g iven fo r this w a s b riefly a s follow s. The c om p uterised system o f a c c o unting on w hic h the resp o nd ent o p era ted in 1996 w a s c om monly kno wn a s the “ T. C.3” system . Und er this system the a p p ella nt’ s a c c ount numb er w a s 6516268615, b eing the num b er referred to in the lo a n a g reem ent. In June 1997 the resp o nd ent c ha ng ed from the so -c a lled “ T. C.3” system to a more so p histic a ted c om p uterised system kno wn a s “ The Eq ua tion 3” system . The c ha ng e resulted in the resp ond ent b eing g iven a new a c c ount numb er, na m ely, 0010-061358-300. In a d d ition, a nd b ec a use the resp ond ent d id no t ha ve a n o rd ina ry c urrent a c c ount from w hic h rep a ym ents of the lo a n c o uld b e d ed uc ted , a n a d d itiona l a c c o unt, c a lled “ a lo a n fund ing a rrea rs a c c o unt” w a s op ened in whic h a ll rep a ym ents wo uld b e reflec ted . The c o urt a q uo a p p ea rs to ha ve und ersto od this a c c o unt to b e o p ened o nly when the b o rro w er d efa ulted . This is not c o rrec t. The evid enc e o f Mr Teb oho Sop eng , a retired exec utive o f the resp ond ent, is c lea r. A loa n a rrea rs fund ing a c c o unt is o p ened w henever there is no c urrent a c c o unt. In the p resent c a se the resp ond ent’ s lo a n a rrea rs fund ing a c c o unt numb er w a s 00100631358-800. The c onversion of the a c c o unts rela ting to loa ns to the new system w a s d o ne m a nua lly a nd over a p eriod of so m e time. In the c a se o f the a p p ella nt’ s a c c o unt, the c onversion w a s only c a rried o ut in Feb rua ry 1998. The m a nua l c onversion p ro c ess w a s effec ted und er the sup ervision o f the hea d o f the lo a n d ivision. Neither he o r the p ersons a c tua lly d oing the c onversion g a ve evid enc e, a nd there w a s a c c o rd ing ly no evid enc e a s to wha t the p roc ess involved a nd ho w the w o rk w a s c a rried o ut. [6] The a mo unt c la im ed in the summ ons, i.e M45 207-33, w a s sta ted to b e the a m ount d ue o n 5 Sep temb er 2002. Ac c o rd ing to the lo a n a rrea rs fund ing a c c ount, ho w ever, tha t w a s the a m ount d ue a s ea rly a s Ma rc h 1999. No exp la na tion w a s fo rthc o ming a s to w hy the a c c o unt b ec a m e fro zen in Ma rc h 1999. It c o uld not ha ve b een on a c c o unt of the in d up lum rule (a s to w hic h see Sta nda rd Ba nk of SA v Onea na te Investments, sup ra , a t 827H-829H) b ec a use the sum o f M45 207-33 inc lud ed the sum of M23 207-27 in resp ec t of interest whic h exc eed ed the c a p ita l a mo unt of the loa n. [7] There is a lso no exp la na tion a s to w hy it too k the resp ond ent until Novemb er 2002 to issue summ ons, in other wo rd s a d ela y of a lmo st 6 yea rs. Ac c o rd ing to Mr Sop eng , the p roc ed ure a d o p ted b y the resp ond ent w a s to telep hone a c ustom er in the event of his fa iling to ma ke p a ym ent o f a n insta lment within 30 d a ys a fter its b ec o ming d ue. If a no ther mo nth w ent b y the c usto m er w a s sent a w ritten d em a nd a nd a fter 3 m onths the m a tter w a s ha nd ed over to the resp ond ent’ s la w yers. The a p p ella nt insisted tha t he ha d rec eived no w o rd fro m the resp ond ent o f its la wyers p rio r to the issue o f sum mons a nd there wa s nothing to g a insa y his evid enc e. It is true tha t the resp ond ent w ent into liq uid a tion a nd tha t this c o uld a c c o unt fo r some d ela y, b ut tha t only ha p p ened in Ja nua ry 2001, so m e 5 yea rs a fter the rep a ym ent b ec a m e d ue. [8] The a p p ella nt testified tha t he ha d b o rro w ed the M22 000 fro m the resp ond ent in o rd er to b e a b le to sup p ly c erta in g o o d s to the Governm ent. There w a s a d ela y in rec eiving p a ym ent fro m the Governm ent with the result tha t he wa s una b le to p a y the first insta lm ent to the resp ond ent a t the end o f Novem b er 1996. Ho w ever, o n b eing p a id b y the Governm ent in Dec em b er 1996, he rep a id the full a m o unt o f the lo a n, w hic h he d id b y d ep o siting the a m ount in a c c ount numb er 6516268615. He sa id his c o p y o f the loa n a g reement a nd a ll rec o rd s whic h wo uld ena b le him to p rove p a ym ent w ere lost w hen his o ffic e w a s d estro yed b y fire in the riots o f 1998. The d estruc tion o f his o ffic e, w hic h wa s situa ted in Sa nla m Centre, w a s not c ha lleng ed a nd must b e a c c ep ted a s true. [9] The lea rned jud g e c ritic ised the a p p ella nt a s a witness, d esc rib ing him a s eva sive a nd rejec ted his evid enc e tha t he ha d rep a id the loa n. A rea d ing of the rec o rd d o es not sup p o rt the find ing tha t he wa s eva sive. Ad mitted ly when a sked w ha t the “ level of [his] ed uc a tion” w a s, he q ueried the releva nc e o f the q uestion. But tha t in m y view d id no t justify the find ing tha t he w a s eva sive. The line of c ro ss exa mina tion a d op ted b y resp ond ent’ s c o unsel w a s, to sa y the lea st, so m ewha t unrea listic . It w a s this: b ec a use the a p p ella nt ha d a leg a l tra ining he therefo re m ust ha ve a p p rec ia ted the imp o rta nc e o f c o rro b o ra tive evid enc e a s fa r a s p roving p a ym ent wa s c onc erned a nd yet he fa iled to ob ta in suc h evid enc e w hen his o ffic e w a s d estroyed . The a p p ella nt’ s resp onse w a s tha t a fter the la p se of m o re tha n a yea r sinc e he ha d rep a id the lo a n the la st thing he w o uld ha ve exp ec ted w a s tha t the resp ond ent w o uld sud d enly a c c use him o f no t ha ving p a id . This strikes m e a s eminently rea sona b le. In simila r vein, the c o urt a q uo c ritic ised him fo r no t g oing to the g overnm ent d ep a rtm ent c onc erned to g et c o rro b o ra tive evid enc e of its d ea ling s with it. It no ted tha t the a p p ella nt ha d testified tha t he ha d ta ken the c heq ue he rec eived fro m the g overnm ent to the resp o nd ent a nd rep a id the lo a n with it, a nd c onsid ered it to ha ve b een “ hig hly likely tha t the very c heq ue he sa id he ha d b a nked wo uld ha ve b een returned to the d ep a rtm ent end o rsed a s p a id – a nd w ith the a c c o unt/ b a nking d eta ils.” Ba sed o n this rea soning the jud g e d rew a n a d verse inferenc e a g a inst the a p p ella nt c iting a s a utho rity fo r d oing so a n Austra lia n a nd a Ca na d ia n d ec ision. In my view the inferenc e w a s w holly unjustified . It w a s no t the evid enc e o f the a p p ella nt tha t he rep a id the resp ond ent with the very c heq ue he ha d rec eived from the g overnm ent, in o ther wo rd s, b y end o rsing it in fa vo ur o f the b a nk. The p a ssa g e on w hic h the jud g e relied fo r find ing tha t it w a s, rea d s a s follo w s:- “ HL: He b o rro wed mo ne y to fina nc e the up c o ming g overnment [c o ntra c t] , the g o vernment p a id slo wly a nd everyb o d y is no t surp rised b y tha t. He wa s ho p ing tha t the y wo uld p a y in Novemb er a nd Dec emb er tha t is why he to o k a sho rt lo a n a nd the y d id n’ t p a y until Dec emb er, when yo u g o t the c heq ue it wa s Dec e mb er 1996 his evid enc e is tha t, he used tha t c heq ue to p a y the lo a n, tha t is yo ur evid enc e isn’ t it? DW: Tha t is my evid enc e My Lo rd .” This q uestion, in the fo rm o f a sta tem ent a d d ressed b y the jud g e a p p a rently to b o th c ro ss exa mining c o unsel a nd the a p p ella nt, p urp o rted to c o mp rise a c ryp tic summ a ry o f the a p p ella nt’ s evid enc e. It w a s not simp ly d irec ted a t ho w the a p p ella nt ha d effec ted the rep a ym ent; it c overed a num b er o f other issues a s w ell. Imp o rta ntly, the a p p ella nt ha d a t no sta g e in his evid enc e p reviously sa id tha t he ha d rep a id the lo a n with the very c heq ue he rec eived fro m the g overnment. His evid enc e w a s a s follow s:- “ I wa s wa iting fo r the g overnment to p a y b ec a use I to o k a lo a n to sup p ly so me g o o d s to the g overnment o f Leso tho a nd the c heq ue wa s d ela yed fo r so m etime. I o nly g o t m y mo ne y in Dec em b er a nd I p a id up the lo a n in Dec emb er 1996.” Clea rly when a g reeing with the jud g e’ s c ryp tic sum m a tion of his evid enc e, the witness und erstoo d the jud g e to m ea n b y the p hra se “ used tha t c heq ue to p a y” tha t he used the p roc eed s from the c heq ue to p a y the loa n. He d id no t und ersta nd tha t wha t w a s b eing p ut to him w a s tha t he ha d litera lly used the very c heq ue rec eived from the g overnm ent to rep a y the lo a n. The c o urt’ s find ing tha t this w a s his evid enc e c onstituted , in m y view , a c lea r misd irec tion. In a ny event, a s p ointed o ut b y the a p p ella nt’ s c o unsel, it w o uld b e a m o st rem a rka b le c oinc id enc e if the a mo unt o f the g overnment c heq ue w a s the p rec ise a m o unt tha t ha d to b e rep a id to the resp o nd ent. [10] As to the a p p ella nt’ s fa ilure to a d d uc e evid enc e o f his g overnm ent c ontra c t, p ro o f tha t he ha d a c ontra c t with the g overnm ent a nd w a s p a id in Dec emb er 1996 w a s ha rd ly c o rro b o ra tive evid enc e o f his p a ym ent to the resp o nd ent. Ag a in the fa c t tha t the a p p ella nt ha d a leg a l tra ining d id no t in m y view rend er unrea sona b le his exp la na tion tha t a fter a la p se o f mo re tha n a yea r sinc e rep a ying the lo a n a nd no t ha ving hea rd a nything further from the resp ond ent the la st thing he exp ec ted w a s to b e a c c used o f not ha ving p a id . [11] The a p p ella nt testified tha t when he rec eived the sum mons (in Novemb er 2002) he w ent to the o ffic e o f the resp ond ent’ s a tto rneys a nd exp la ined to a wo m a n w ho a ttend ed to him tha t he ha d long sinc e rep a id the loa n. He sa id tha t she und erto o k to g o into the m a tter a nd c o me b a c k to him. This evid enc e to o , w a s c ritic ised a s b eing “ q uite unsa tisfa c to ry fo r a leg a lly tra ined p erso n [who] m ust ha ve b een a w a re of the p rop er p ro c ed ures to ta ke onc e served w ith a sum mons.” I c a nno t a g ree. After a la p se o f m o re tha n 6 yea rs even a leg a lly tra ined p erson w o uld b e rea sona b ly entitled to a ssum e tha t the sum mo ns ha d b een issued in erro r a nd to seek to so rt the ma tter out witho ut ha ving to fo rm a lly op p o se the a c tion w hic h w o uld p rob a b ly req uire him to inc ur the exp ense of eng a g ing a n a tto rney. [12] In the result, the c o urt a q uo w ent to som e leng ths to find fa ult with the evid enc e of the a p p ella nt. In m y view it misd irec ted itself in d oing so . And yet, the c o urt ha d nothing to sa y a b o ut the extra o rd ina ry fa ilure of the resp ond ent to ta ke a c tion a g a inst the a p p ella nt fo r som e 6 yea rs. Ha d the a p p ella nt ind eed no t rep a id the lo a n it wo uld seem a lmo st inc o nc eiva b le tha t the resp ond ent w o uld ha ve d one nothing a b o ut it fo r so long . Yet no evid enc e wa s tend ered to exp la in the d ela y w hic h g ives c red enc e to the a p p ella nt’ s version tha t he rep a id the lo a n. In the c irc um sta nc es it is p ro b a b le tha t his sing le p a yment w a s either erroneo usly not rec o rd ed o r the rec o rd o f the rep a ym ent w a s sub seq uently lo st. As to the la tter p o ssib ility, it is no teworthy tha t the evid enc e a d d uc ed b y the resp ond ent to esta b lish the non-p a ym ent o f the lo a n wa s b a sed entirely on the a c c o unting system o f the resp o nd ent a s it p resently exists. No evid enc e w a s tend ered a s to ho w the “ c o nversion” o f the a p p ella nt’ s a c c o unt in Feb rua ry 1998 w a s c a rried o ut a nd w hether o r to wha t extent the p o ssib ility o f erro r w a s exc lud ed . All the c o urt a q uo wa s told wa s tha t the p ro c ess w a s c a rried o ut “ m a nua lly” . In these c irc um sta nc es, a nd g iven the a b senc e o f a n exp la na tion fo r the d ela y I c a n see no p ro p er b a sis fo r rejec ting o r find ing imp rob a b le the evid enc e o f the a p p ella nt. On the c ontra ry, in m y view the p ro b a b ilities fa vo ured his version. It follow s tha t the c o urt a q uo sho uld ha ve d ismissed the resp o nd ent’ s c la im with c o sts. [13] The following o rd er is ma d e:- (1) The a p p ea l is up held with c o sts (2) The o rd er o f the c o urt a q uo is set a sid e a nd the following sub stituted in its p la c e. “ The p la intiff’ s c la im is d ismissed with c o sts.” _________________ D. G SCOTT JUSTICE OF APPEAL I a g ree: ___________________ J. W SMALBERGER JUSTICE OF APPEAL I a g ree: ___________________ K. E. MOSITO ACTING JUSTICE OF APPEAL For the Appella nt For the Respondent : : Ad v R. J. Lesenyeho Mr. H. P. J. Ma b a tho a na