HIGH COURT OF LESOTHO
matter between :
(PTY) LTD PLAINTIFF
AIRLINES 1st DEFENDANT
AIR AVIATION COMPANY (PTY)LTD 3rd DEFENDANT
by the Honourable Mr. Justice M.L. Lehohla on the 1st day of March,
Bornman representing the plaintiff and briefed by the firm of
Attorneys Messrs Webber Newdigate, appeared before this Court on 7th
August, 2001. He moved that the matter be proceeded with even though
there was no appearance on the part of any of the above defendants.
having satisfied itself that there was sufficient notice of date of
hearing given to the defendants and or their Counsel granted the
application for the matter to be heard unilaterally but not before it
ordered that the defendants'
called three times each on the Public Address System. The Court's
orderly shortly afterwards reported that there was no response. The
matter was accordingly proceeded with and evidence heard on behalf of
following day i.e. - 8th August, 2001 and at the end of the
plaintiff's case the Court made the following order :-
is granted for plaintiff as prayed and in terms of the Draft Order
attached to the Plaintiff's heads of arguments.
has found it established that there has been fraud. That fraud
resulted in damages to the plaintiff, and the consequent injury and
prejudice to plaintiff were foreseeable to the 1st and 3rd
for plaintiff is in the amount of American Dollars reflected in the
particulars of claim and at the exchange rate obtaining as on
06-08-2001 for purposes of conversion into Maluti currency in terms
of the Certificate.
Registrar is directed to sign the Order based on the Draft Order as
is filed and bears necessary revenue stamps.
to say a further application for correction of four errors appearing
in the record and referred to during proceedings was also granted.
summons sets out that the 1st defendant is a commercial aviation
company, whose physical address is Balaba novo-1, Kaluzhskaya Region,
Borovkiy Area, Russian Federation, 249000.
further observed that the 2nd defendant is a commercial aviation
company, whose physical address is 37 K, 7 Leninggradisky Pr, Moscow,
125167, Russian Federation.
the summons sets out that the 3rd defendant a Company Registration
No. 989/345 is a limited liability company duly incorporated and
registered in Lesotho in accordance with Company Laws of Lesotho,
which carries on business in the air transport industry in Lesotho,
with its registered office at C/O Du Preez
Liebetrau, 3rd Floor, Metropolitan Building, Kingsway, Maseru.
of this summons the defendants are to be informed that the plaintiff,
a limited liability company duly incorporated and registered in
Lesotho in accordance with the Company Laws of Lesotho, carries on
business as an air courier in the air transport industry in Southern
Africa, with its registered office at C/O Webber Newdigate, 2nd Floor
Metropolitan Building, Kingsway, Maseru.
action instituted against the defendants is set out in the
Plaintiff's Particulars of Claim constituting no less than 34 pages
to which are attached annexures extending to 74 pages inclusive of
the Plaintiff's Particulars of Claim.
have had to repose much reliance on Mr. Borman's well set out heads
action against the defendants is for damages.
defendant is a peregrin us and is being sued on account of the
attachment of an aircraft belonging to it. The attachment followed a
Court Order earlier obtained from one of the branches of this Court
as reflected in Annexure
to "A4" at pages 38 through 41 of the Pleadings. Needless
to repeat the 3rd defendant is registered in Lesotho as
earlier shown. However, the plaintiff is presently not proceeding
against the 2nd defendant.
important also to note that while it remains a fact that the 1st and
3rd defendants defend the action their attorneys namely Messrs Harley
and Morris nonetheless filed a notice of withdrawal on 11th July,
2001. Reference to the notice is reflected at page 2 lines 3 to 10 of
the typed transcript of proceedings.
to pleadings in Annexures "B1" to "B2" at pages
42 and 43 amply furnishes proof that the plaintiff has locus standi
in this action on account of the fact that KELJET CLOSE CORPORATION
(CC) trading as CENTRAL AIR CARGO ceded its claims for damages
against the defendants.
claims in point are set out in three alternative amounts as follows:-
main claim is for US$ 249 725.00 which at the time of issue of the
summons was equal to M2 098 139.50. This appears at paragraph 66 of
the Particulars of Claim at page 30 of the pleadings read with page
109 of bundle A showing that according to the
Bank Lesotho as at 6th August 2001 the ruling rate of exchange was as
follows:-"Selling= 8.4018 Buying- 8.0561"
alternative to the main claim above the plaintiff sues for an amount
of US$ 90 245.00 which at the time of issue of the summons was equal
to M758 220.44 . The exchange rate was subject to the ruling rate as
at 6th August 2001.
further alternative to the main or alternative claim above the
plaintiff sues for an amount of US$ 59 300.00 which at the time of
the issue of summons was equal to M498 226.74. The exchange rate
here too was subject to the ruling rate certified by the Standard
Bank Lesotho as at 6th August, 2001.
be fruitful to provide a brief background to this action. According
to this background the Court has come to observe that in around
1998 Kaljet Close Corporation (CC) trading as Central Air Cargo
otherwise known as "CAC" of Lanseria in the Republic of
South Africa entered into a lease agreement in respect of a Russian
aircraft described as Antonov aircraft AN-12 Registration number :
RA11916. Contract No 24 sets out details of this agreement Article by
Article from pages 2 to 7 in Bundle "A".
has observed that the contract was signed by the lessor namely
Key-Avia Airline the 2nd Defendant in this proceeding. This signing
was effected on 19th October 1998 in Moscow by the 2nd Defendant and
by CAC in South Africa the following month, i.e. November 9th 1998.
This detail is set out in Bundle "A" at page
Contract was negotiated on behalf of CAC by PW2 one Viorel Pruna an
appointed agent for CAC. Pages 45 to 46 of the typed record bear out
his role as an agent of CAC.
shows that the aircraft departed from Moscow to Lanseria in the
Republic of South Africa. However, at a stop-over at the Sherjah
International Airport it transpired that the lessor owed Air Cess at
the said Airport an amount of $32 000.00. (USD). PW1 Bruce Robert
Keller's attention was drawn to an urgent fax. He was the sole member
of CAC aboard the aircraft. (This evidence starts at page 13 of the
typed record). The fax appears at page 23 of Bundle "A"
demands of him to render speedily available a transferred deposit of
$ 32 000.00 into the Account of Air Cess.
with this sudden predicament CAC had no option but to make an
undertaking to pay the outstanding amount which actually amounted to
$ 33 528.00 as reflected in the CAC Operations Manager's guarantee to
AIR CESS dated 21-01-1999 at page 24 of Bundle "A".
to say not long afterwards the aircraft arrived in South Africa and
was put to use by CAC.
transpired however at the beginning of March 1999 that the true owner
of this aircraft was not the 2nd Defendant but in fact the 1st
Defendant namely Ermolino Airlines also from Moscow Russia. This
company transmitted a letter to this effect as well as a contract of
cession from the 2nd Defendant to the 1st Defendant. See Annexure D
at page 50 of the pleadings styled Contract of Cession No. 15 read
with pages 44 and 47 of Bundle A. It is interesting to observe that
one Vladimir N. Isupov signed the document at page 47 describing
himself as the General Director of the 1st Defendant.
to behold, at more or less the same time an urgent fax message from
the South African Embassy in Moscow directed to the Department of
Home Affairs in Pretoria revealed that the aircraft in question left
Russia under false pretenses. A strong plea appears at page 49 of
Bundle A that the aircraft and crew be immediately
deported/repatriated to Russia on account of the falsity by means of
which that aircraft left Moscow for instance that:
was different aircraft from one which had been inspected for
purposes of and before departure.
crew used other air companies' call signs during their flight.
were only (sic) had permission to fly to Sharjar and not Lanseria
was only supposed to be a shorter flight for a short period and
is in bridge (sic), of the lease agreement with the owners of the
retrospect it appears that these allegations were without any
substance. They amounted to a ruse to get the aircraft to Ermolino to
carry out its devious plans.
Certificate of Insurance at page 17 in Bundle A clearly specifies the
destination and routes of the said aircraft. This certificate covers
days extending from 16th January 1999 to the 16th April 1999 (both
days inclusive) and mentions flight route covering Azerbayan and
it did not seem to be of significance to PW1 at the time when he
first had sight of this document, it nonetheless specifies the 1st
Defendant i.e. Ermolino Airlines as a party who to my mind must have
had an obvious interest in the said aircraft.
occurrences surrounding this aircraft which were quite puzzling CAC
discovered that this very same aircraft was also subject to an
agreement with Airline Transport Africa of Zimbabwe. CAC discovered
at the beginning of March 1999 that the agreement with Airline
Transport Africa was concluded way back on the 23rd December, 1998.
See CAC's letter dated 10th March, 1999 and addressed to Ermolino
Airlines, in which letter CAC expressed its added
owing to the discovery of the agreement dated 23rd December, 1998
involving this aircraft. Pages 53 and 54 of Bundle A in this regard
speak for themselves.
the above led to a further agreement being concluded between CAC,
Ermolino Airlines and Transport Africa. The terms of this agreement
as set out in an extract appearing at page 75 of Bundle A are as
follows: "4. Cession CAC, Ermolino and TA hereby agree that CAC
will cede its rights, title and interest as incorporated in annexures
A and B to TA, effective upon the signing of this agreement and
subject to payment as referred to in paragraph 5.7 hereof. See pages
74-76 of Bundle A for fuller information and better perspective).
following this agreement the aircraft would in future be leased by
Transport Africa. Certain payments as evidenced in clause 5.7 had to
be made to CAC and to Ermolino also. In terms of a further oral
agreement an additional amount over and above $10 000.00 (USD)
referred to in the said clause 5.7 was to be paid by the Company
Transport Africa to CAC, to wit $ 49 300.00 (USD).
obviously the situation whichever way it was looked at, was far from
Hence because of all the raging disputes and uncertainty surrounding
it as shown above, the aircraft in question was grounded by South
African Civil Aviation Authority. This grounding was only uplifted
when a new agreement was concluded and the South African Authorities
were given assurance by CAC that it was satisfied that the grounding
could and should be uplifted.
message at page 80 of Bundle A dated 18 March, 1999, shows that South
African Civil Aviation Authority (SACAA) gave its approval for the
departure of the aircraft in question thus marking the end of the
said aircraft's grounding.
agreement had been signed a day prior to the termination of the
grounding. See page 76 of Bundle A in that regard.
the negotiations which culminated in the conclusion of the agreement
the 1st Defendant was represented by Vladimir N. Isupov of whom
mention was earlier made in this judgment. He in turn was assisted by
one Victor Granov a Director of Victoria Air Aviation Company (Pty)
Ltd the 3rd Defendant in this action.
pursuance of the provision of the latest agreement between the
parties referred to above, a flight plan was prepared and filed with
the Air Traffic Control at Lanseria Airport indicating that the
aircraft would leave Lanseria airport for the destination, Harare.
Indeed the flight plan itself provides ample evidence of this. Indeed
PW1 who testified that he is an experienced pilot alerted the Court
to the fact that FVHA signifies Zimbabwe, Harare, while FAJS
signifies Johannesburg and FXMM signifies Lesotho Maseru. Thus at
item 16 at page 82 FVHA meaning Zimbabwe Harare sticks out like the
proverbial sow thumb opposite what appears to be "Destination
Aerodrome" reflected in the Flight Plan pertaining to the
aircraft in question.
is struck by a curious act embarked upon by representatives of the
1st and 3rd Defendants who approached the Director of the Department
of Aviation Maseru on 15th March, 1999 to apply for a temporary
permit for landing and for a ground base of the aircraft in question
i.e. RA-11916. A deliberate effort in that regard was made as shown
in Bundle A at page 55 as follows:
of the Department of Civil Aviation
APPLICATION FOR TEMPORARY PERMIT
apply for a Temporary Permit for landing and a ground-based (sic) of
AN-12 aircraft which is due to arrive at Moshoeshoe 1 International
Airport between 18-03-1999 and 25-03-1999 for a period of not
exceeding 14 days.
mentioned aircraft is currently based at Lanseria airport of South
Africa and needs minor planned repair and service which will be done
at Moshoeshe 1 International Airport.
undertake obligations to pay all relevant duties and charges.
informed about registration particulars Owner : "Ermolino
Airlines, Moscow, Russsia Registration : RA-11916 Make: AN-12
to thank you in advance for your understanding and cooperation.
things stick out as most curious about this letter which is an
indicator of the 1st and 3rd Defendants' representatives' attitude or
frame of mind.
letter is written before the meeting which purportedly uplifted the
grounding was held and concluded. The letter was written on
was only held on 17-03-1999 and following the uplifting of the
aircraft took off on 18-03-1999.
trying to explain why the aircraft which was not scheduled in the
flight plan to head for Maseru Lesotho, these defendants say that it
suddenly developed an engine problem 15 or 17 minutes after leaving
of questions arise form this episode. First did plaintiff know when
making negotiations and coming to an agreement that the aircraft
should go to Harare that days before it had been concluded it would
in terms of the letter at page 55 of Bundle A above be bound for
Maseru? If the plaintiff didn't know this at the time i.e. on
15-03-1999 why was it not disclosed to plaintiff by the defendants?
Again why was it pretended by the defendants that the aircraft was
bound for Harare following the agreement with other parties while the
defendants knew full well in advance that the aircraft was going to
Maseru Lesotho instead? Why was it pretended that the aircraft was in
distress 17 or so minutes after take off from Lanseria Airport? Why
in any case should the aircraft in distress be made to fly one hour
and five minutes for attention to its distress when it would take
roughly the same 17 or so minutes to land back in Lanseria airport
for attention to its problems instead of making it go to Lesotho
where there would be less
assurance that the equipment and expertise on the ground would meet
the needs for this aircraft? Why then not risk flying to Harare which
is a slightly further distance away than Maseru if it was found
worthwhile risking to make it fly to Maseru instead of Lanseria or
anywhere in Gauteng Area where it would at most take 17 minutes?
Truly there does seem to me that the flight to Maseru by this
Aircraft and its crew more than accounts for the promise of some milk
in the coconut for the defendants than meets the eye.
accordingly endorse the plaintiff's counsel's persuasive invitation
to the Court that the request to be allowed to land in Moshoeshoe 1
International Airport in Lesotho was not without significance in that
it was received three days before the agreement referred to earlier
was concluded by the parties in terms of which the very same aircraft
would depart for Harare for use by the new lessees, namely Transport
Africa. There is certainly no mention or reference in that agreement
of an interim landing at Moshoeshoe 1 Airport Lesotho en route to the
destination ostensibly agreed to by all parties on 17-03-1999.
the learned Counsel's submission therefore that the only inference to
be drawn from these actions is that the 1st and 3rd Defendants had no
intention whatsoever to allow the agreement with Transport Africa to
take effect. The
submission has merit therefore that the only reason why that
agreement was ever concluded was merely to persuade the Civil
Aviation Authorities in the Republic of South Africa to uplift the
grounding of the aircraft and to allow it to depart from Lanseria.
This submission further commends itself favourably to me in that it
portrays the said Defendants' attitude as consistent with and
definitely not in conflict with their stance that despite the
indication in the flight plan showing that on leaving Russia this
aircraft would finally come to South Africa they nonetheless sought
to forestall that eventuality by sending a spurious fax in which a
baseless suggestion is made that the wrong aircraft had been allowed
to leave Moscow by underhand manipulation or some other form of
the cost of appearing to be repetitive I wish to endorse learned
Counsel's observation that evidence clearly shows that it would be
ludicrous for an aircraft to depart from Lanseria, fly for some 17
minutes and then when sudden unexpected engine or technical problems
manifest themselves, the crew should turn back past numerous airports
with highly sophisticated maintenance equipment and staff and fly for
one hour and five minutes to ultimately land in Moshoeshoe 1
International Airport and carry out repairs on the mysterious
technical problems that the aircraft had developed in mid-air. All
this taken along with the actual fact that clearly from the letter of
15th March, 1999 the landing at Maseru was
contemplated and arranged before the agreement with Transport Africa
and CAC was concluded, it was naive of the 1st and 3rd defendants to
imagine that the plaintiff or anybody with a good sense of the
disposition by the greedy to do evil to others, could be so easily
I have no
doubt in my mind that the actions set out above bespeak fraud of
truly serious nature. The court has had regard to the fact that fraud
is a criminal offence. In this case the gravity of the criminal
element is compounded by the trans-border nature of defendants'
reprehensible actions. It is fitting therefore by order of this court
that the two culprits involved be referred to the Director of Public
Prosecutions for investigation of their cases and consideration of
what appropriate measures to take. The Registrar of this Court is
thus directed to draw the attention of the DPP to this directive.
Bornman referred me to Standard Chartered Bank of Canada vs Nedperm
Bank Ltd. 1994(4) SA 747 A for the proposition that a misstatement
causing economic loss is sufficient ground for liability for damages
in delict. The instant case has a distinction of the misstatement
amounting to a deliberate fraud.
authority cited above the Appellate Division of south Africa ( as it
was known) found that the bank which rendered itself guilty of a
negligent statement causing economic loss is liable. It stands to
reason that so much more must such liability flow from a blatant
fraud as was perpetrated by the 1st and 3rd defendants in the instant
764 Corbett CJ in his judgment deals with the factual and legal
causation between misstatement in that matter and the loss suffered
and as to whether it is justified to link the loss to the
concluded "My conclusion is that the untrue report issued by
Nedbank was a factual cause of Stanchart's loss. In other words, it
was a condition sine qua non of such loss. That, however, does not
conclude the enquiry. It is still necessary to determine legal
causation, i.e. whether the furnishing of the untrue report was
linked sufficiently closely or directly to the loss for legal
liability to ensue, or whether the loss is too remote. The principles
applied in such an inquiry have recently been expounded by this Court
in the cases of S. Mokghethi en Andere 1990 (1) SA 32 at 39 D-41 B;
International Shipping Co (pty)Ltd vs Bentley (supra) at 700 E-701 G;
and Smit vs Abrahams as yet unreported, dated 10 May 1994-----------
appears from these judgments, the test to be applied is a flexible
one in which factors such as reasonable foroseeability, directness,
the absence or presence of a novus actus interveniens, legal policy,
reasonability, fairness and justice all play their part".
considered all these factors which Corbett C.J. regards as
indispensable in the formulation of the standard for determining
degree of liability and have found them all tending to overwhelmingly
favour the plaintiff's case in the instant matter.
strengthened in my view by the fact that it is not even necessary to
find that the precise result of the damages suffered due to the
defendants' actions were forseen by them. It is enough, as in
criminal law, that the result did not deviate materially from the
wrongdoers' contemplation. Be it recalled that consistently with the
final episode of the aircraft landing in Maseru instead of Harare the
defendants' initial attitude had been that the aircraft, despite the
route set out in proper document was that it should not come to South
Africa from Moscow. See Jowell vs Bramwell-Jones and ors 1998 (1) SA
836(w) at 884 C-J.
allowed the rectification of four errors made by plaintiff and
description of the aircraft be as follows "ANTONOV AN-12
Registration No; RA11916"
"KELJET CLOSE CORPORATION CC trading as CENTRAL AIR CARGO"
be inserted in the agreement between the words "and" and
"hereinafter" in the 3rd line of the paragraph of the first
page which commences
company "Key-Avia"AirIine------" and which ends
contract on the following".
description "Managing Director" wherever it appears in the
agreement and where this description refers to Mr. Bruce Keller is to
amended to read "Managing Member".
Annexure "Gl" to"G3" to Particulars of Claim
(pages 53 to 55 of the pleadings also at page 74 of Bundle A) the
words "paragraph 5.6 hereof are amended to read "paragraph
clear to me that the 1st and 3rd Defendants defrauded CAC into
relinquishing its rights with regard to the 1st agreement (Annexure C
to the Particulars of Claim)
then induced to enter into the cession of rights agreement, as shown
at p. 78 Bundle A, and also the agreement between CAC, 1st Defendant
and Transport Africa.
time when all this was happening it becomes now clear that the 1st
and 3rd Defendants had no intention whatsoever to honour the said
agreements. The mere fact of diverting the flight to Lesotho in the
circumstances described clearly indicates their complicity in the
fraud that was perpetrated on CAC by the 1st and 3rd Defendants.
agreements G and H to the Particulars of Claim is therefore voidable
at the instance of the plaintiff in that, the claims for damages were
ceded to the Plaintiff by CAC.
the submission that the inference is irresistible that all the
defendants conspired into manipulating CAC to enter into the original
lease and afterwards to put the 1st Defendant in the foreground to
manipulate the conclusion of the last agreement Annexure "G".
I accept also that in doing so the 1st and 3rd Defendants attracted
vicarious liability for the inability of the 2nd Defendant to perform
in terms of the original agreement.
being the case it stands to reason that they are joint wrongdoers who
are therefore equally liable jointly and severally for the losses
suffered by CAC which in turn was ceded to the Plaintiff.
the calculations made on behalf of the plaintiff and the conclusion
that the main claim accordingly translates into an unutilised period
of 499 hours and 45 minutes' use the said aircraft representing in
terms a gross income of $ 1 248 625.00 (USD) after having subtracted
the running costs as set out in paragraph 65, a nett profit of $ 249
725.00 (USD), which is the actual loss of CAC ceded to the Plaintiff.
alternative claim, it was submitted by Mr. Bornman, is based on the
facts as set out from paragraph 71 of further Particulars of Claim
(page 32 of
Pleadings) in that the Plaintiff, because of the same cession from
CAC, is out of pocket in the amount paid out which exceeds the income
generated by the aircraft up till this stage of the fraud referred to
above. The reason for this shortfall, is that before CAC had the
opportunity from January to March 1999 to make up the initial
payments, the fraud on it was committed. Had the Contract run its
full course then this situation would not have prevailed so it would
seem logic dictates.
Plaintiff maintains also that the Defendants should further be
alternatively held liable jointly and severally on the basis of the
fraud they have been shown to have committed, in that, had the
aircraft not been fraudulently diverted to Maseru, but instead
arrived at its intended destination, Harare, the payment agreed upon
in the total of $59 300.00 (USD) would have been paid to CAC by
Transport Africa. Because of the fact that the flight was diverted
CAC never received the payment agreed upon.
payment was in the knowledge and contemplation of the parties; but
knowing full well that the payment would not be forthcoming because
of their fraudulent conduct the 1st and 3rd Defendants pretended to
the Plaintiff at the meeting where the Plaintiff agreed that the
grounding be lifted, that the aircraft
leaving for Harare whereas 3 days before then these Defendants had
communicated to Maseru that this aircraft would soon be headed for
Maseru to land there and occupy the base for no less than 14 days.
Because of this deliberately unlawful conduct the said Defendants
have attracted liability to pay to the Plaintiff the amount
calculated at $ 59 300.00 (USD).
indeed trite that where parties render themselves guilty of
fraudulent conduct a special order for costs is called for. In the
instant matter the facts overwhelmingly show a careful and
deliberately a somewhat obscured manipulation of CAC. This is the
conduct the Defendants embarked upon resulting in losses claimed by
reason the Court feels justifiably at large to demonstrate its
displeasure towards the conduct of the 1st and 3rd Defendants by
awarding the special order for costs sought on behalf of the
view I derive comfort from Sentrachem Ltd vs Prinsloo 1997 (2) SA 1A
where the headnote reveals the following:-
"On appeal, the Court reiterated that an award of attorney and
own client costs had to be seen as an attempt by the Court to go one
step further than an ordinary order of costs between attorney and
client so as to ensure that the successful party was indemnified with
regard to all reasonable costs of litigation. Taxation would in such
cases be more liberal but would not sanction excessive or
unreasonable costs. It was an extraordinary order which could not be
made without good reason. (At 22B-D.) The Court was of the opinion
that there was, in view of the appellant's conduct no reason to
interfere with the trial Court's award of attorney and own client
against the appellant-------------".
also relied on Rhino Hotel & Resort (Pty) Ltd vs Forbes & ors
2000(1) S A 1180 (W) for reaffirmation of sentiments expressed in
clear in the instant matter is that what took place did not occur on
the spur of the moment, nor was it an instant temptation to take
advantage of a business situation but something that was carefully
planned and executed without regard to the precepts of fairplay or
interests of other parties adversely affected by the Defendants'
the Plaintiff's Counsel's submission that such behaviour warrants
demonstration of the Court's displeasure manifested by an award of
punitive costs against the Defendants. The Court is persuaded that it
is fully justified in awarding to the Plaintiff an order for costs on
the scale of attorney and client and inclusive therein be the actual
fees charged by Counsel for the services rendered in this matter.
finding for the Plaintiff the Court granted an order based on the
Draft order handed up with the Heads of argument submitted before
It is so
Plaintiff: Mr. Bornman S.C.
and 3rd Defendants : No Appearance
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