Minister forming opinion directors of state enterprise unable or unfit to discharge function of office of director – Minister requiring directors to show cause why should not be relived of duties as directors – such directors making representations; Minister relieving directors of appointment thereafter;
High Court setting aside Minister’s decision on grounds Minister not entitled to form opinion before hearing directors and audi alteram partem rule not observed;
On appeal, held directors given opportunity to be heard – Minister entitled to, and has to, form opinion before requiring directors to show cause; further, in terms of s 8(7) of Lesotho National Development Act 1967, director ceases to hold office upon Minister forming opinion director is unable or unfit to hold office and instructing director to vacate office;
Approach to consolidation of cases and to joinder of parties discussed
IN THE COURT OF APPEAL OF LESOTHO
C of A (CIV) No. 78/2019
HELD AT MASERU
In the matter between
MINISTER OF TRADE AND INDUSTRY 1ST APPELLANT
THE ATTORNEY GENERAL 2ND APPELLANT
LESOTHO NATIONAL DEVELOPMENT CORPORATION 3RD APPELLANT
ACTING CHIEF EXECUTIVE OFFICER -LNDC 4TH APPELLANT
LESOTHO NATIONAL DEVELOPMENT CORPORATION
BOARD OF DIRECTORS 1ST RESPONDENT
LEBAKENG TIGELI 2ND RESPONDENT
MAKHETHA THAELE 3RD RESPONDENT
MAMPHO TJABANE 4TH RESPONDENT
LEHLOHONOLO CHEFA 5TH RESPONDENT
NTSIUOA JAAS 6TH RESPONDENT
LEFULESELE LEBESA 7TH RESPONDENT
MOSITO NTEMA 8TH RESPONDENT
CORAM : DAMASEB AJA
HEARD: 16 OCTOBER 2020
DELIVERED: 30 OCTOBER 2020
CHINHENGO AJA :-
Grounds of appeal
“1. The court erred in not deciding whether the specific prayers in the notice of motion of each application was granted or refused, but instead rather making a global order.
2. The notice of motion in CIV/APN/119/2017 sought various interdicts in respect of diverse matters which had to be proved, and the court erred in not addressing whether each of those prayers were proved, and had the court a quo determined each prayer separately, as it had to, it would have found that all the prayers ought to have been dismissed.
3. Prayer (3) in the notice of motion in CIV/APN/119/2017 sought a declarator, which was not proved.
4. The court a quo erred and misdirected itself in not finding that the prayers in the notice of motion in CIV/APN/119/2017 were moot.
5. The notice of motion in CIV/APN/119/2017 sought in prayers 2(a) and (b) interdicts directed at the possible new appointments of replacement board members and the court erred in not finding that when it made its decision the prayers were moot as it was common cause that the new board members had been appointed.
6. The court erred in finding that the first appellant did not act lawfully when he terminated the membership of the respondents as board members.
7. The court erred and misdirected itself in holding that the letter of the first appellant is capable of being construed as prejudging the complaints that the first appellant levelled against the respondents.
8. The court erred in finding that the letter of the first appellant was a pre-judgment especially regard being had to the fact that there is direct authority of the Court of Appeal to the contrary, in the matter of Econet Telecom Lesotho v Rasekila.
9. The court a quo erred and misdirected itself in finding that the applications had any merit and should have dismissed the same with costs.”
Whether CIV/APN/119/2017 and CIV/APN/127/2017 were consolidated
“(1) That under the common law, there exists a rebuttable presumption of “legality of official action” – expressed in Latin as “omnia praesumuntur rite esse acta” – it is assumed that an official of the state exercises powers vested in him according to law.
(2) That in casu the Minister purportedly exercised his powers under section 8(7)(b) of the Act and it was for the applicant to show that in exercising those powers the Minister had either acted ultra vires or violated principles of natural justice.
(3) Granting reinstatement would in effect render the dismissals non scripto (sic).
(4) It has not been disputed that under the law, the Board of Directors of LNDC sits four times a year or quarterly. Their non-reinstatement would in no way prejudice materially the day-to-day management of LNDC. On the other hand, an expeditious and final determination of the impugned legality of the dismissals would perhaps serve the interests of justice than granting a reinstatement which would last until only till the day of final judgment on the legality of the dismissals.
The issues of consolidation and joinder all revolve now upon the legality of the dismissals of the 7 directors by the Minister.
For the reasons stated above the following order is made:-
Order: Prayer I is granted.
Prayer 2(a) is refused.”
“[By agreement between counsel Teele KC and Advocate Maseko, CIV/APN/119/2017 and Case No. CIV/APN/127/2017 were consolidated because the fundamental relief was common.”]
and paragraph  where he states:
“The main legal issue in this consolidated application is the manner and circumstances the Minister of Trade and Industry exercised his powers to dismiss the directors of the board under section 8(7)(b) of the LNDC Act….”
“(1) The purported termination of the appointments of each and all the applicants by the then Minister are set aside.
(2) Costs to the applicants in this Consolidated Applications (sic).”
Further background facts
“Dear Board Member,
Re: Request for representations and reasons why you should not be removed from the Directorship of the LNDC
The above matter refers.
I the Minister of Trade and Industry have formed the opinion that you are unfit to hold office of Director within the Lesotho National Development Corporation (LNDC). You have in the execution of your duties abrogated your fiduciary duty as a member of the said Board in that on or about the 23rd of March 2017 you signed or were part of a resolution that amongst others undermined my authority as the minister and also committed an act of corruption in terms of section 28(1) read with section 34 of the Prevention of Corruption and Economic Offenses Act 1999.
The relevant part of the said resolution is paragraph 2 with the heading and couched as thus:
2.2 payment of Director’s Retainer Fees “The Board resolved to approve payment of the retainer due to Board Members as calculated in December 2016.”
This is despite the fact that you were aware that I as the Minister responsible had declined payment of the same for reasons disclosed to the Board.
This is also despite the fact that you were directly conflicted but failed to disclose such conflict but otherwise dismissed the Chairman from the meeting with the pretext that she was conflicted in the matter.
You are therefore given a period of five working days within which to make representations and to give reasons why your appointment as LNDC Board Director shall not be terminated.
Senator Joshua P Setipa
Minister of Trade and industry.”
“It is with deep regret that I am forced to advance representation why I should not be removed … in light of the opinion that the Honourable Minister has already formed regarding my perceived lack of fitness to hold office as director. It is regrettable that the Honourable Minister has already formed such an opinion without having followed the due administrative process of the law in respect of the audi alteram partem rule and the request for representations itself follows on an earlier termination of my appointment through a letter from your good office … dated 24 March 2017.
If there was any doubt in my mind that the Honourable Minister had not as yet formed such opinion … and made up his mind to remove me… such doubt was erased by your termination letter dated 24 March 2017.”
“In spite of the comments that may have been made obiter by the court a quo in its judgment, it is clear that the ratio of the court a quo is that the Minister issued a letter after he had formed an opinion, when he invited the respondents to make representations why the appointments may not be terminated, meant that he had prejudged the issue and therefore the dismissal is vitiated on that account.”
“What is surprising with these requests [to make representations] was that the Minister had written in clear terms that he had already formed an opinion that the Board members were no longer fit and proper to hold the positions of Board Members at LNDC. This happened despite the fact that these matters were sub-judice as they were still pending in this Honourable Court.”
“It is important to note that when the Minister said that he had formed an opinion, that this was before he could hear the applicants and he had actually already decided to dismiss them from office of Director.”
“3.1 Whether the Court a quo was correct in setting aside the Minister’s purported termination of each member of the Board.
3.2 Whether the Court a quo was correct to hold that indeed the Minister was micro-managing the corporation contrary to the principles of good governance.”
“(4) A Director appointed under subsection (3) holds office for 3 years from the date of his appointment unless he sooner resigns, or his appointment is terminated by the Minister under subsection (7).
(7) A Director appointed under subsection (3) shall vacate his office of Director –
(8) If a Director appointed in terms of subsection (3) has been instructed to vacate office under subsection (7) or if a director has resigned his office under subsection (6), the office of that Director is vacant and the Minister shall by notice in the Gazette, fill that office by a new appointment in accordance with subsection (3). A person appointed under this subsection holds office for the unexpired portion of the term of office of the former Director to whose office he has been appointed.”
“For the Minister to form an opinion this must not be done arbitrarily, maliciously and without a cogent reason. Public power – especially where its exercise affects the rights of other people, must be exercised with full responsibility. In the Lesotho’s constitutional dispensation, fair treatment and the rule of law are all essential in public affairs. Board members cannot be just dismissed at a stroke of a pen. He or she must be afforded an opportunity to know what transgression, he or she has committed to call for dismissal and his or her response thereto.”
“ There is no evidence that prior to the formation of opinion any of the members of the Board were afforded any opportunity to make any representations to respond to the serious allegations of insubordination (tello) antagonism, of arrogance to the Minister and defiance to obey his instructions. Since he had already formed an opinion upon which he justified the termination of their appointments, his later withdrawal of dismissal indeed confirmed his ill-advisedness but also that the show cause letters were but cosmetic certainly made after he had decided to dismiss them en bloc. It is difficult to cloak them with any legality or fair play. In my view, the power under section 8(7)(b) was abused and the Board was subjected to unfair treatment. It is not necessary to detail the individual allegations of transgressions or what is alleged in the founding affidavit of Mr. Tigeli.
 The internecine friction between the Minister and the board is well demonstrated by acrimonious correspondence exchanged….
 Mr Chefa, a Board member, catalogues a series of acts [in] which he describes instances of interference or high-handedness on the part of the Minister of Trade and Industry – and that the Minister was intending to micro-manage (as he puts it) the Corporation.
 It need no fine expertise in corporate law to understand that a parastatal corporation as in casu needs to function as a separate legal entity from government (its creator) and it needs corporate autonomy (in fact it outlives the Government). It is clear that micro-management by Government Minister was per se clearly antithetical to its parastatal corporate autonomy affirmed by section 4 of the LNDC (Amendment) Act No. 7 of 2000. Otherwise the LNDC would perpetually become an extended department of the Ministry of Trade and Industry!
 it is not necessary to test each act alleged by Board members against the Minister except to clearly state that the Minister’s summary decision to terminate the appointment of the Board of Directors does not pass the muster of legality. It is hereby declared null and void. Gone are the days when Ministerial powers are absolute and untrammelled. Today if such powers still prevail, they all [have] to be interpreted very restrictively subject to the principles of natural justice and the Court of appeal has gone to the extent that unless the audi principle is expressly excluded in the statutes, the courts will assume that it operates.
 In the conflict climate that existed between the Minister and the Board, the exercise of power to suspend and finally to dismiss the directors was totally ill-advised, misfired and is ulta vires and unlawful.”
“that the law vesting ministerial power was very clear and unambiguous and vouchsafed no formal hearing and that the court could not alter this statutory position.”
“The court takes cognisance of the era [in] which the first LNDC Act was passed… this ministerial power has become fossilised into the corporate structure of LNDC. In [post] 1993 era, … Parliament of Lesotho has valiantly passed laws that recognise natural justice audi principle.”
“13. A hearing thus means an opportunity to be heard. There are no requirements as to how such opportunity is to be structured or when it should be afforded. Plainly, the words do not mean “at the time of dismissal”, literally, on dismissal or even immediately before dismissal. As the Labour Appeal Court points out, a hearing could be afforded even before the declaration of an ultimatum.
14. The law’s overriding requirement is that dismissal must be procedurally fair, cf Commander of the LDF v Mokoena LC 2000-2004 at 545A-F. Assessment whether due fairness was observed in any case depends of the facts and the circumstances of that case. The norm is for the employer to afford the employees to state their reasons opposing dismissal. However, as s 66(4) shows there may be circumstances where it would not be reasonable to expect the grant of that opportunity.
15.Where the circumstances allow for the opportunity for the employees to be heard, the question is whether in fact the opportunity was given”
1. The appeal is dismissed with costs.
2. The order of the court a quo is set aside, and the following order is substituted-
“The application in CIV/APN/119/2017 and in CIV/APN/127/2017 as consolidated is dismissed with costs.”
ACTING JUSTICE OF APPEAL
African Law (AfricanLII)
Ghana Law (GhaLII)
Laws of South Africa (Legislation)
Lesotho Law (LesLII)
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