HIGH COURT OF LESOTHO
Application of :
by the Hon. Acting Mr. Justice M. Lehohla on the 14th clay of April,
February 1938 this application was moved ex parte before the
Honourable the Chief Justice by Mr. Fick for the petitioner
for an order :-
the estate of the respondent be provisionally sequestrated and
placed in the hands of the Master of the above Honourable
the provisional requestration order together with the petition and
annexures thereto, be served personally on the Honourable
Retselisitsoe Sekhonyane, the duly appointed executor of the Estate
Late Nehemia Sokhonyana 'Maseribane; and on Nchakha
duly authorised attorney and agent of the said Executor.
the Executor of the respondent estate and his authorised attorney
and agent be and is hereby called upon to show cause on
February 1988 why the respondent should not be finally sequestrated;
the Master be directed to appoint Stephen Carl Buys and Nchakha
Mphalane jointly as Provisional trustees of the estate with
terms of section
18(3) of the Insolvency Proclamation under direction of the Master to
sell any property, movable or immovable, belonging to the
conduct such enquiries as may be necessary to ascertain the
whereabouts of any property of the estate and further powers
out in the aforesaid Proclamation;
the costs of this application be paid out of the respondent estate.
was granted as prayed and held returnable on 26th February 1988. It
is on record that applicant's counsel informed Court
on that 9th
February 1988 as follows :-
"There is the fact that danger may be precipitated by
notice itself. Mr. Mphalane is an attorney of executor himself.
Executor agrees to sequestration."
February 1988 Mr. Fick and Mr. Mohau for applicant and respondent
respectively appeared before me but the matter was not
day save that I was informed that certain businesses in the estate
were allowed to trade by trustees under their supervision.
that this concession falls away and that the court was asked that
trustees till the extended return day should deal with
according to strict rules of the law. I duly made such order and had
the return day extended to 18th March 1988. It
was also drawn to my
attention by Mr. Holloa that he represented the Standard Bank S.A.
Radueweir Holdings Ltd, the Lesotho Bank
and some other creditor. Mr.
Moiloa begged leave to indicate his clients interest in the matter
and intimated their wish to intervene
in the proceedings moreso
because Lesotho Bank is a secured creditor. The rule was accordingly
extended to enable respondent to
file his opposing papers and serve
them on applicant and other interested parties intimated to Court by
Mr. Moiloa On 18th March,
1988 even as Mr. Mohau for respondent
trying to argue some points in limine Mr. Moiloa who had sought
adjournment in the other Court where he was engaged in order
intimate to me that should the rule be discharged his clients should
be regarded as petitioners stated that on papers the claims
Lesotho Bank are not disputed. Accordingly the notice of motion in
favour of Lesotho Bank as Intervening applicant creditor
been placed on file the previous day. Needless to say respondent
opposes this further application on the grounds that the affiant
Mafike is not shown to have been properly appointed to act on behalf
of the Lesotho Bank by reason of absence of a properly
resolution to that effect.
But in a
case that went to the Court of Appeal wherein a similar objection had
been raised it was ruled that enough had been set
out in the papers
to leave no doubt that the deponent was acting on behalf of a
juristic person so that juristic person could not
be thrown out of
court for want of locus standi. See C. of A. (CIV) Mo. 6/87 The
Central Bank of Lesotho vs L.H. Phoofolo (unreported)
at 15 where
Mohomed J.A. said
"This objection was without substance, and was correctly
dismissed by Molai J. There is no invariable rule which requires
juristic person to file a formal resolution, manifesting the
authority of a particular person to represent it in any legal
if the existence of such authority appears from other
important to note that another objection based on the fact that
deponent "did not say that the facts to which he had
were within his personal knowledge" was also dismissed because
it was clear he knew what he was talking about.
the Commissioner of Sales Tax also sought to intervene in respect of
some M296,521.78 being arrears on sales tax. Messrs
Harley and Morris
representing no less than six creditors have filed
application to intervene too.
decided that rather than hear argument on points raised in limine
first and later to hear argument on the merits the application
be argued in the ordinary wanner i.e. by applicant first end then by
respondent in turn with leave to the latter to traverse
in limine during course of his answer.
Dr. Cooper Counsel for applicant set about his argument as follows :-
that if at the hearing on the return day of the rule nisi the court
is satisfied that
petitioning creditor has established against the debtor a claim
entitling him to apply for the sequestration of the debtor's
the debtor has committed on act of insolvency,or the debtor is
is reason to believe that it will be to the advantage of creditors
if the debtor's estate be sequestrated then in terms
of 12(1) of the
Insolvency Proclma-matlon 51 of 1957, it may grant an order for the
final sequestration of the estate.
endorsed and adopted this scheme of things Mars: The Law of
Insolvency in ,S.A. at page 103 Roes further to say :
"In other words, if not satisfied as above, the court cannot
grant a final sequestration order, but if it is satisfied it
has a discretion either to grant or refuse a final sequestration
clear therefore that the court is not bound to grant the
sequestration order even if satisfied as indicated above.
sets out the acts of Insolvency and applicant's counsel submitted
that respondent has in
committed various such acts.
'Maseribane the widow of the late Chief Mehemla Sekhonyana
'Maseribane states that the estate was capable of paying the sum
M65,000.00 to selected creditors and that in fact two namely Lesotho
National Motors and Lesotho Tractors have been paid off
whilst the debts owing to Agric Bank and the present applicant have
been considerably reduced. See page 47 para 6. It
was submitted that
these payments constitute a disposition of the insolvent's property
which has the effect of preferring one creditor
above the other and
is an act of insolvency in terms of S. 8(c) of the Insolvency
indicated in a writ of execution dated 4th February 1984 there can be
no dispute that respondent is liable to applicant in the
of M5401.92 as shown in Mrs. 'Maseribane's affidavit para 6.1 at 47.
See Annexures D and E on pages 18 and 19 of the
basis that this is a judgment debt which is clearly due and payable
and not disputed it satisfies the first requirement for
of a final order of sequestration.
argument was advanced that as from 3rd March 1988 the petitioner
stopped being respondent's creditor because proper payment
to it but was refused by petitioner's attorneys. This was buttressed
by argument based on Venter vs Van Graan 1929 T.P.D,
at 438_ that the
petitioner's attorneys were bound in law to accept such payment. I
have already dealt with this aspect of the
matter in CIV/APN/64/88
that to the extent that the said payment did not include interest and
costs on the capital amount that
respondent tried to pay in full and
final settlement of the debt the petitioner was not bound to accept
It is to
be observed from page 70 in paragraph 11(a) of Nchakha Mphalane's
affidavit that in CIV/APN/258/86
the lifetime of Chief N.S. 'Maseribane the High Court granted an
order provisionally sequestrating his estate on 14th August
11(h) shows that the Executor in the deceased estate duly appointed
Mr. Mphalane by Power of Attorney dated 18th March 1987
the deceased estate. It stands to reason that by virtue of that power
of attorney Mr. Mphalane became duly authorised
to represent the
was an application based on an act of insolvency constituted or
manifested in the filing of a return of nulla bona
by the Deputy
Sheriff in respect of a total of 19 judgment debts footing up to
M946754.86. See page 70 para 11(c) where reference
to the case
numbers shows that some of the judgment debts dated from as early as
September 1977 and range through early 1980's
shows on page 71 that the petitioner in CIV/APN/258/86 Lesotho
National Development Corporation was "bought off"
sum of M24,116.96 but the older and other judgment debts were never
satisfied. Following on this observation it was submitted
that as the
respondent's estate steps into the place of the deceased, a nulla
bona return in respect of a vast amount of money
still exists and
that such constitutes an act of insolvency in terms of S. 86. Thus
applicant can therefore rely on them. Indeed
from looking at S. 8(b)
there is no doubt that the legislature attaches great importance to a
nulla bona return.
15 of applicant's heads of argument emphasises that payment to a
particular creditor at that stage constitutes a further
insolvency in terms of S. 8(c).
that the respondent's estate is in fact insolvent applicant's counsel
referred to pages 119 to 120 (the provisional trustees
report) read with page 138 where it seems that the assets amount to
M1159,945 while the liabilities amount
M1613,210.10 resulting in a deficit of M453,265.10.
list of creditors reflected on page 138 it appears that Lesotho Bank
is owed M748,835.93. Paragraph 2 of the executor's affidavit
the debt at M672,607.13. Whatever the case may be the fact remains
that Lesotho Bank is still a substantial creditor.
urged on me to consider the true meaning of the word insolvency. The
shorter Oxford English Dictionery renders it as "not
unable to pay one's debts or discharge one's liabilities, bankrupt."
on this definition it would appear that the authority in De Waart vs
Andrew and Thien hous Ltd 1907 T.S. 727 is not without
foundation; Innes C.J. at page 733 said :-
"Now, when a men commits an act of insolvency he must expect his
estate to be sequestrated.. ....... I always look with great
suspicion upon, and examine very narrowly the position of a debtor
who says, 'I am sorry that I cannot pay my creditor, but my
far exceed my liabilities.' To my mind the - best proof of solvency
is that a man should pay his debts ........ "
words were quoted with approval in Langston vs Lambert 1948(4) S.A.
N.O. vs. Lipkie 1961(3) S.A. at 67. On . page 104 Mars, in The Lew of
Insolvency in South Africa says
"To establish insolvency it must be shown that the debtor's
liabilities as a fact exceed his assets and not merely that they
might do so, and clear proof of this must be adduced, but not
necessarily the clearest proof........... such proof need not be
direct. It is enough if facts are proved from which inference of
insolvency is fairly and properly deducible. As far as the debtor
concerned, the best proof of his solvency is payment of his debts and
consequently his failure to pay is itself of significance,
particularly if he fails to pay a judgment debt .........."
pages 112 and 113 where references to
bona return have been made; and CIV/APN/211 & 212/86
Yudelman Lesotho Wholesalers (Pty) Ltd vs Tlali and.
Lesotho Wholesalers (Pty) Ltd vs Lefu Wholesalers (unreported) at 11
response to the executor's averment on page 34 para 10 that
"property valued at M45,500.00 realised M102,000.00 i.e far in
excess of its original value when sold in an attempt to reduce
Cooper submitted that no reliance can be placed in the initial
inventory because the only available approved values show that
inventory was wrong. Thus he contended that the only acceptable
evidence as to assets and liabilities comes from the provisional
trustee showing assets as M1,159,945 and liabilities as M1,613,210.10
resulting in a shortfall of M453,265.10 as reflected on pages
138 of the record. Thus he confuted respondent's allegation that
there is a positive balance of M143,000.00 as against
a shortfall of
M453,265.10 borne out by facts. On this basis it would seem that
respondent's assertion based on credibility alone
against that of the applicant based on facts and figures.
common experience that assets take a nosedive when an estate becomes
insolvent because assets have to be realised. The present
case is no
exception to this.
can infer insolvency from a totality of facts placed before it. In
this case there is a nulla bona return. Next the debtor
trying to pay creditors piecemeal. Then there is an unsubstantiated
denial that the estate is insolvent or has committed
an act of
insolvency in terms of the proclamation.
refers not only to a de facto shortfall but on the reliable figures
to numerous other factors pointing to respondent's inability
its debts. Indeed on respondent's on version at page 47 Mrs
'Maseribane indicates that the estate was only able to generate
M65,000.00 in a period of three months to pay
pay certain selected creditors It thus cannot be said to be far
fetched to conclude that this was precisely because the
not pay more for it owed. Lesotho Bank M748,835,93 as shown on page
138 and Agric Bank an amount of M31,642.17. This
constitutes an act
Mars at page 112 says ........
...... "the mere possibility of the debtor at some future date
being able to obtain financial help under the Agricultural
Act, or being in a position to pay his debts out of his earnings, was
not regarded as sufficient ground for refusing....."
order of sequestration. This refusal is regarded as even more fitting
where a judgment creditor's writ has been greeted
with a nulla bona
return instead of payment of the debt.
Cooper's submission accordingly finds favour in my view that if the
rate of payment referred to above is maintained-against
all odds that
it can as there is no evidence in that regard, even disregarding
interest-the estate would require 21 months to repay
M1,500,000 and '
25 months to repay M1,600,00. How could this be in view of the fact
that before the debts are paid, there will
be no more assets to sell?
It seems to me that if the moment of truth has arrived it would be
futile to try to postpone it.
must be paid immediately. He pays inadequately who pays slowly. The
affairs of this estate show that it is unable to pay and
unable to do so for a long time. The fact that there are many old
unpaid judgment debts is a clear enough testimony to
which amounts to insolvency.
bears "NM3" a circular which demonstrates an inability to
pay. It is circular No.2 of 1987. It says among other
"....... we must advise that due to circumstances beyond our
control we have
not been able to make out payment as promised."
the promises, I am told, have not been fulfilled.
Cooper submitted that it would be to the advantage of creditors if
the estate is finally sequestrated. By creditors here reference
the general body of creditors not a mere majority of them.
Mars at page 106 points out that
"Where an act of insolvency has been established the onus is
then on respondent to show that it is not in the interests of
creditors to make a final order of sequestration."
submitted that a very substantial immediate dividend would be paid to
concurrent creditors which in itself gives sufficient
it is clear that the powers of a trustee under Insolvency
Proclamation are greater than those of an executor. A trustee
empowered to apply to Court to set aside voidable transactions and
can conduct interrogations and convene meetings of creditors.
in Lawsa Vol. Eleven on page 129 says
"...... the Insolvency Act provides for creditors a superior
legal machinery for the protection of their interests. The effect
an order sequestrating deceased estate and the appointment of a
trustee is to suspend the rights and duties of the executor,
view the points raised in limine did not go into the heart of the
matter and therefore were dismissed.
question that the replying affidavits touched on matters never
previously canvassed fails because respondent did not avail itself
provisions of Rule 50.
already indicated on authority that the deponent for Lesotho Bank
cannot be said to have
simply because he was not equipped with a resolution showing he is
empowered to act on behalf of juristic person.
not avail the respondent at this stage to raise the point that this
matter is not urgent because that aspect of the matter
was dealt with
by the Court which granted rule nisi. So urgency no longer features
at this stage. Likewise the application to strike
out paragraph 10 of
the petition makes no difference to the dispute before court.
application to strike out pare 11 which says
"It transpired that of the sum of M2,585,100 only some M64,000
was recoverable ......"
misconceived because on page 34 Mrs 'Maseribane on behalf of
respondent in reaction to that averment says
"I admit the contents hereof."
para 9. The same goes for para 12 on page 7 vis-a-vis respondent's
response on page 34 at para 10.
important to note that it is usual to preface averments in an
affidavit with the words "I have been informed and I verily
believe." Whether subsequently the belief or information is true
is another matter.
correctly stated on behalf of application that the passages of law
relied on by respondent were correct but they were besides
While on this point I need but mention that Amod vs Khan 1947(2) S.A.
432 (N) appears in one series of Law reports of
that year but not in
the other. I owe this discovery to Mr. Mohau's insistence that the
citation he supplied was correct.
regard to the argument that the Court should disregard Mr. Mphalane's
replying affidavit respondent should have acted in terms
of Rule 30.
In any event Rule 59 should also be borne in mind. Furthermore
12(2) of the proclamation provides alternatively that
"If at such hearing the Court is not so. satisfied, it
shall........... require further proof of the matters set forth in
the petition and postpone the hearing for any reasonable period but
not sine die."
Fortiori therefore if the Court felt that further proof need have
been adduced then it would grant leave to have the affidavit
before it to furnish information that it would otherwise have to
postpone the case in order to obtain that information;
the process all the inconvenience that is attendant on postponents of
cases. Shepherd vs Mitchel 1984(3) 202 rules
that the court may have
regard to replying affidavits.
on Mr. Mphalane is not Justified because as clearly spelt out in his
affidavit on page 24 he is an administrator of the
authorised . by the executor as his agent. His role in this matter as
shown on page 27 was played in consultation with
the executor who was
"...... the only effective, just and equitable remedy is the
immediate and urgent sequestration of the respondent . . estate."
extent he supports applicant with the concurrence of the executor. On
that ground the applicant relied.
out circumstances on which he relied to advise the executor about the
remedy referred to above and on page 71 at (h) states
been empowered by the executor in terns of a power of attorney
furnished he became duly authorised to represent the
avail the respondent to say the Trustees' report came as an after
thought because naturally the report only becomes available
petitioners after order of Court.
on section 9(4) of the Insolvency Proclamation respondent indicated
that applicant furnished no proof that the Master received
a copy of
the petition on or before 9th March 1988. Counsel for respondent
discounted the fact that the Master's certificate was
issued. But papers before me show that the Master's certificate was
issued upon a copy of the petition being lodged
Furthermore if the complaint is about the fact that the
certificate was issued late then such complaint would seem
without merit because at applicant's own instance before the
Honourable the Chief Justice on 9th February 1988 it was ordered
the order should not be signed or issued until the Master's
Certificate was issued. Of significance is that even as of that
Mr. Pick informed the Court that he had with him the Surety Bond! But
there was no time to file it and this is on record together
fact that the time reflected as when the ex parte application was
moved is 5.10 p.m. It is inconceivable therefore that
if the . order
which was signed on 15th February 1988 and the signing of which was
conditional upon the issue of the Master's Certificate
only be done on receipt of the copy of the petition could lead to any
doubt whether the Master received the petition
copy before 9th March
1988. Whatever the case may be all that followed regarding the
Petition and the receipt by the Master thereof
was intimated to the
Court before hand and the indulgence of the Court was sought and
obtained. It thus becomes a futile excersise
to try and blame the
applicant in this regard. Whatever hope non-compliance with section
9(4) holds for respondent represents,
in my view, not so much a
digger's delight as a crow to pluck. Under subsection (5) the Court
is empowered to make such other order
in the matter as in the
circumstances appears to be just. So S. 9(4) cannot be dealt with in
isolation from S. 9(5) regard also
being had to the fact that the
application brought before Court then was ex parte at 5.10 p.m. as
the record abundantly indicates.
It can be assumed without being
unreasonable that the Master's office had long been closed when first
application was heard. Blaming applicant for this would amount to
barking up the wrong tree.
clear that once the trustees took charge they were in a better
position than ever to make appraisement of the estate. One
was given power of attorney by the executor. The Master concerned
made the certificate. On a balance of probabilities the
an accurate picture of the financial position of this estate.
this is what the trustees are required to give i.e. a clear picture
of respondent's financial position.
significant that no affidavit from the respondent was filed to oppose
the allegations of insolvency nor was there argument
the allegation that sequestration would be of benefit to creditors.
assuming that the replying affidavits were not filed and that, as it
is the case, no reliance was made by the court on document
for identification the handing over of which was strongly opposed by
respondent's counsel, it seems to me that whatever
affidavits were filed by the respondent's deponents were doomed to
failure in view of the statement communicated to the
court that heard
the application ex parte, that the "executor agrees to
Mr. Pick could not have sucked that statement from his thumb or
sniffed it from the air.
C.J. in Findlay vs Knight 1935 A.D. at page 71 refers to qualified
privilege and says this implies two principles of public
"(1) That the welfare of society demands that an
advocate......who pleads the cause of his client should have a large
of freedom in laying his client's case before the Court, even
though in so doing he defames the other party or even a third
........... To hamper his freedom
in this respect would be contrary to public policy, and therefore our
Courts accord ... advocates a large measure of freedom in
(2) The other principles of public policy which underlies qualified
privilege is that the process of the courts shall not be wantonly
used for the purpose of defaming either litigants or third parties."
cannot countenance abuse of privilege. It was with bated breath that
I sat listening to bitter accusation of incompetence
malice and ill
motive ascribed all to the two trustees in this matter with the
result that I could'nt help asking myself silently
: 'Sits the wind
there ?' But it required hardly any amount of scrutiny when
considering pleadings drawn and argments advanced
on behalf of the
respondent to light on a sobering notion that wind is in that other
quarter' after all.
is confirmed with costs on party end party scale. Applicants who
wished to intervene in the event that the rule was discharged
bear their own costs.
Applicant : Dr. Cooper
Respondent : Mr. Mohau.
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