Bafani Construction (PTY) Ltd V Road Fund Secretariat & Ano. (C of A (CIV) 85/2024) [2025] LSCA 40 (2 May 2025)

Bafani Construction (PTY) Ltd V Road Fund Secretariat & Ano. (C of A (CIV) 85/2024) [2025] LSCA 40 (2 May 2025)

LESOTHO
IN THE COURT OF APPEAL OF LESOTHO
HELD AT MASERU C of A (CIV)/85/2024 CCA/0048/2024
In the matter between –
BAFANI CONSTRUCTION (PTY) LTD APPELLANT
and
ROAD FUND SECRETARIAT 1ST RESPONDENT
PEHMAN CONSULTING (PTY) LTD 2ND RESPONDENT
CORAM: DAMASEB, AJA
CHINHENGO, AJA
VAN DER WESTHUIZEN, AJA
HEARD: 16 APRIL 2025
DELIVERED: 2 MAY 2025
FLYNOTE
Contract — Arbitration — Interim interdicts — Specific performance — Spoliation — Jurisdiction of High Court in presence of arbitration clause — Whether Road Fund has locus standi — Arbitration Act 1980, s 22 — Public Finance
Management and Accountability Act 2011 — Finance (Road Fund) Regulations 2012.
The appellant, a construction company, appealed against a High Court decision granting interim interdicts and compelling it to refer a contractual dispute to arbitration, despite the existence of an arbitration clause in the contract with the respondent, the Road Fund Secretariat. The appellant contended that the High Court lacked jurisdiction due to the arbitration agreement, and that the Road Fund lacked legal standing as a litigant. The High Court had also granted a spoliation order in favour of the appellant, restoring its possession of the construction site.
Held, dismissing the appeal:
The High Court correctly held that the arbitration clause ousted its jurisdiction over the merits of the contractual dispute. However, the court retained jurisdiction to grant interim interdicts and orders necessary to preserve the status quo pending arbitration by virtue of section 22 of the Arbitration Act 1980. The court rightly dealt with urgent matters, including spoliation and interdicts to prevent the removal of equipment and the disruption of tollgate operations.
A party cannot approbate and reprobate — having relied on the arbitration clause in correspondence and pleadings, the appellant could not impugn the court’s reference to arbitration as an act of specific performance under the contract.
The High Court did not err in finding that the Road Fund, although not a statutory corporation, was a universitas personarum capable of litigating in its own name. It had perpetual succession, control of funds and assets, contractual capacity, and practical legal personality, consistent with the established jurisprudence of Lesotho and South Africa.
The appeal was misguided and self-defeating, given that the appellant had obtained the very relief it sought: an order referring the dispute to arbitration, and restoration of possession through a successful spoliation application.
Consequently, the appeal was dismissed
JUDGMENT
J VAN DER WESTHUIZEN AJA:
Introduction
[1] In order to avoid long hotly disputed court cases, alternative resolution mechanisms have become justifiably popular. Arbitration is one of these. Yet, issues around the boundaries between arbitration and the jurisdiction of courts often emerge, especially when exceptions and interim relief enter the picture. In this case spoliation is central.
[2] This is an appeal against a judgment by Mokhesi J in the Commercial Division of the High Court, delivered on 7 November 2024.
Background
[3] The first respondent, the Road Fund Secretariat (the Fund), embarked on a construction project to upgrade the toll infrastructure at Maseru Bridge. The appellant, Bafani Construction (Pty) Ltd (Bafani), was awarded the tender. Thus, a written agreement was concluded between the Fund and Bafani. The second respondent, Pehman Consulting (Pty) Ltd (Pehman), is the Fund’s consulting engineer.
[4] Clause 40 of the agreement deals with disputes, particularly arbitration:
“40.1 Should any disagreement arise between the employer, including his principal agent or agents, and the contractor arising out of or concerning this agreement or its termination, either party may give notice to the other to resolve such disagreement.
40.2 Where such disagreement is not resolved within ten (10) working days of receipt of such notice it shall be deemed to be a dispute and shall be referred by the party which gave such notice to either –
40.2.1 Adjudication [41.3] where the adjudication shall be conducted in terms of the edition of the JBCC Rules for adjudication current at the time with (sic) the dispute was declared, or
40.2.2 Arbitration [40.1} where the arbitrator is to be appointed by the body selected by the parties [41.3] whose rules shall apply ….”
[5] Bafani allegedly failed to complete the work on time. The parties exchanged correspondence. On 20 March 2024 the Fund informed Bafani that it had terminated the contract; and demanded that Bafani vacate the site.
[6] On 2 April 2024 Bafani wrote to the Fund that it had practically completed its agreed task. It raised some queries. It had not vacated the site. Several accusations were levelled in further correspondence. On 6 May 2024 Bafani, in writing, contested the termination of the agreement. It conveyed its intention not to hand over the keys to the site, based on the exercise of its right to a lien.
[7] Bafani communicated its non-recognition of the termination on 8 May 2024, in a letter signed by its Managing Director. It
maintained that there had “not been any termination”. It furthermore stated that in view of their disagreement –
“… there is a dispute between the contractor and the Principal Agent and the Employer on the one hand whether or not there is termination, we reiterate that the parties should find a common ground to see how to resolve the dispute.
In the circumstances, we hereby invite the Employer to invoke the provisions of clauses 40.1 and 40.2 to amicably resolve the matter within the stipulated time”.
High Court
[8] A stalemate having been reached, the Fund approached the High Court with an urgent application on 21 June 2024. The interim relief sought included that Bafani –
“2.1 immediately return or surrender al keys and unconditional access and use, to (thev Fund);
2.2 be interdicted and restrained from removing … any equipment installed at the site relating to relating to the completion of construction and upgrading … ;
2.3 be interdicted and restrained from disrupting the use of the site and the tollgates, in any manner whatsoever … ;
3 Pending finalisation of this matter the (above) reliefs … operate a(s) interim relief with immediate effect.”
[9] The “Final Prayers” were:
“4 Directing (Bafani) to refer the dispute declared by itself … to arbitration in terms of clause 40.2 of (the) contract … within 10 working days of this Honourable Court’s order.
5 Directing the respondent to pay costs of this application
6 … further and/or alternative relief ….”
[10] In the High Court’s judgment it is stated that, on the day the application was to be moved, counsel for Bafani raised from the Bar the lack of jurisdiction of the court, in view of the arbitration clause in the agreement between the parties. Mokhesi J “made an ex tempore ruling that (the case cited as authority on behalf of Bafani) is distinguishable … as some of the reliefs sought in the present matter are directed at interdicting the respondent from disrupting the smooth functioning of Maseru Bridge border tollgates”.
[11] The judge further reasoned “that the main order which is sought is for specific performance, specifically seeking to force the respondent to arbitrate the dispute in terms of the agreement”.
[12] The High Court granted prayers 2.2 and 2.3 of the Notice of Motion (in [8] above). In view of the claim regarding a lien, it deemed it necessary to hear both sides and declined to grant 2.1.
[13] When the matter was finally heard, three in limine points were taken by Bafani, namely (1) the jurisdiction of the High Court in view of the arbitration clause; (2) the alleged lack of standing of the Fund as first applicant; and (3) the alleged lack of standing of Remahn as second applicant.
[14] Bafani also brought a spoliation application. It asked that the Fund be interdicted from interfering with its possession of the construction site; that the Fund be ordered to restore Bafani’s possession and surrender all the keys to the locks barring entry to the site; and that the Fund be prevented from evicting Bafani from the site. It added the police and attorney general as respondents and asked that they be ordered to ensure full compliance with the High Court’s order.
[15] In a fairly lang and indeed well-reasoned judgment the High Court dealt with the above issues and referred to several academic authorities and judicial precedents. Finally, it granted the main application, with costs; and ordered (the Court used the term “directed”) Bafani to refer the dispute it had declared to arbitration. It furthermore granted the spoliation application, with costs, and ordered the Fund to restore ante omnia Bafani’s possession of the construction site.
This Court
[16] Bafani was dissatisfied with the decision of the High Court. It approached this Court on appeal.
[17] In spite of the fact that a record of ten volumes, written heads of argument, plus (after the hearing) supplementary heads, as well as bundles of authority consisting of several hundreds of pages were put before us, the issues to be determined are few and narrow.
[18] Bafani listed eight grounds of appeal. Before this Court counsel for Bafani divided them into groups. The first four address the jurisdiction of the High Court. The third ground specifically
attacks the granting of the relief sought by the Fund on the basis of specific performance under the contract. The fifth and sixth deal with the standing of the Fund and Pemahn; and the seventh and eighth with the evidence and onus of proof, or, as counsel put it, “the merits”.
[19] During oral argument seven out of the eight grounds were effectively abandoned. Nevertheless, the issues raised in some of them are very briefly dealt with.
Jurisdiction
[20] It is common cause that the dispute between the parties has to go to arbitration. Thus, the High Court had no jurisdiction to adjudicate the issue of termination of the contract. Indeed, in its letter of 8 May 2024 (in [7] above) it specifically referred to clause 40 of the contract, on dispute resolution and arbitration. The Fund asked the High Court for a referral to arbitration. The Court did just that.
[21} Bafani got what it wanted. Its objection seemed to revolve around the High Court’s use of the term “specific performance”, presumably because referral for arbitration is stipulated in the contract. Nothing turned on it.
[22] The High Court correctly dealt with the interdictory relief sought. Fairness and simple logic show that urgent matters such as spoliation, the removal of equipment and possible disruption cannot be put on hold to be dealt with in arbitration proceedings to resolve a dispute over alleged breach and termination of a contract. Counsel for Bafani conceded that if the High Court lacked
jurisdiction, the spoliation order compelling the Fund to restore Bafani’s possession would be null and void!
[23] The question is settled by section 22 of the Arbitration Act 12 of 1980. Under the heading General powers of the court it states:
“(1) For the purposes of and in relation to a reference under an arbitration agreement, the court shall have the same power of making orders in respect of –

(f) an interim interdict or similar relief;”
Lemahn’s standing
[24] Appeal ground 6 attacks the High Court’s alleged finding that Pemahn, the Fund’s consulting engineer, “had the necessary locus standi to institute the current proceedings”. In Bafani’s written heads of argument lengthy submissions on more than five pages, with several references to authority, backed up this ground. However, the High Court found the opposite: Pemahn lacked standing! In response to a question from the Bench, counsel for Bafani – remarkably - conceded this.
The Fund’s standing
[25] The only remaining issue is the standing of the Fund as first applicant before the High Court. The judgment of that Court deals with it, with reference to several authorities.
[26] The Fund was established in terms of Regulation 15 of the Finance (Road Fund) Regulations of 2012. The Regulation followed from section 21(3) of the Public Finance Management and
Accountability Act of 2011, empowering the Minister of Finance to establish funds, such as the Road Fund, for the effective management of public money.
[27] The High Court described the Fund as “essentially an off-budget fund”. The Regulation shows that the Fund is empowered to procure services and to hold funds from which it pays its staff salaries and benefits. It has its own bank accounts. The Minister’s role is restricted to three activities, namely appointment of the board; reviewing and approving adjustments to sources of revenue; and the approval and facilitation of appropriations from the consolidated fund on the advice of the board.
[28] The Fund is not incorporated as a legal entity. The High Court referred to the parties’ submissions in this regard. On behalf of the Fund, it was argued that it was a universitas. For Bafani it was submitted that it was not a universitas, but a creature of statute and that the principal legislation had not bestowed it with the power to litigate.
[29] By relying on case law, such as “the oft-relied upon dictum in Webb & Co v Northern Rifles 1908 TS -TH 462 at 464- 465”, the High Court considered the “principles pertaining to universitas personarum”. Webb concerned a volunteer corps formed under Ordinance 37 of 1904. The Court pointed out that the court in Webb “did not hesitate to find that the … corps was an universitas capable of suing an being sued, having perpetual succession and capacity of acquiring property apart from its members”. It found no legal basis for Bafani’s argument that an entity created by a statute cannot be a universitas.
[30] The High Court concluded that the Fund was a universitas, capable to sue and be sued. It had standing. It stated that it was quite ironic that Bafani was questioning the legal capacity of the Fund, after having entered into a contract with it.
[31] In this Court the parties further pursued the above arguments in their written heads of argument, as well as supplementary heads of argument handed in after the hearing and oral submissions.
[32] Bafani again argued that in view of the legal framework establishing the Fund, it clearly did not have the capacity to litigate. It was “a non-existing body not entitled to feature in litigation”, according to Bafani’s legal representative. The Regulations do not give the Fund the right to litigate. The Minister is the authority that may sue and be sued.
[33] The fact that the Fund can enter into contracts does not mean that it can sue and be sued, as it contracts as an agent, so argued counsel for Bafani. The real contracting party is the Minister.
[34] In their supplementary heads counsel for the Fund referred to this Court’s judgment in Mamaish-Proma v Likonelo Ntsaoana (C of A (CIV) 15 /2024 at para 19). A claim that an entity is a universitas can be countered by showing that it (1) does not exist distinct from its members; (2) is not capable of owning funds, resources, or property apart from its members; and (3) lacks perpetual succession or existence after the individuals who created it have left. According to these yardsticks, the Fund indeed has legal personality.
[35] Counsel for the Fund referred to cases within this jurisdiction wherein proceedings had been instituted by the Fund, or where it had been sued. (Selemela Construction (Pty) Ltd v Road Fund and Others (CCA/0084/2021) [2021] LSHC 21 (26 November 2021); Bataung Chabeli Constructions (Pty) Ltd v Road Fund (C of A (CIV) 34/2020 (2021) LSCA 17 (14 May 2021)). Counsel for neither side was able to bring any matter to this Court’s attention where the Funds standing had been challenged, successfully or at all.
[36} I have not been persuaded to conclude that the High Court’s judgment on the Fund’s standing was a material error or misdirection. No compelling reason has been presented to upset what appears to have been general practice in this jurisdiction.
Conclusion
[37] The inevitable conclusion is that Bafani’s appeal cannot succeed. It is not entirely clear why Bafani appealed. It wanted the dispute about the termination to be referred to arbitration. This was ordered by the High Court. It obtained a spoliation order against the Fund to restore its possession and protect its related interests. If the Fund had no standing and the High Court no jurisdiction, as submitted on appeal, Bafani might well have been worse off than it is now. Arbitration still has to take place, so it is not the end of the road for Bafani.
Costs
[38] There is no reason why costs should not follow the result.
Order
[3] The appeal is dismissed with costs.
______________________________
J VAN DER WESTHUIZEN
ACTING JUDGE OF APPEAL
I agree:
_________________________
PT DAMASEB
ACTING JUSTICE OF APPEAL
I agree:
__________________________
M CHINHENGO
ACTING JUSTICE OF APPEAL
FOR THE APPELLANT: MR Q LETSIKA
ADV M LEROTHOLI
FOR THE 1ST RESPONDENT: ADV ET KALAKE

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Judgment
1
SUMMARY: Interdict pendente lite – financial considerations alone not enough to justify urgency – Applicant still required to state why it could not be afforded a substantial relief in a hearing in due course – requirements for temporary interdict need to be demonstrated and assessed in conjunction with one another

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