IN THE HIGH COURT OF LESOTHO In the matter
NKOPANE MONYANE 1ST APPLICANT
FIEE 2ND APPLICANT
MARGARET KHUBELU KAPHWIYO 3RD APPLICANT
PALOKOTELO 4TH APPLICANT
REASONS FOR JUDGEMENT
Delivered by the Honourable Chief Justice Mr. Justice
J.L. Kheola on the 30th day of July, 1999
This is an application for an order in the following
That Rules of this Honourable Court pertaining to
periods and modesof service be dispensed with.
That a Rule Nisi be and it is hereby issued returnable
on the date andtime to be determined by this Honourable Court
calling upon theRespondent to show cause (if any) why:
Applicants' contract with the Respondent shall not he
declaredto have terminated on the 1st day of July,
Relationship between Applicants and the Respondent
shall notbe declared to have ceased on the 1st day of
Disciplinary Proceedings scheduled for the 12th
day of July1999 instituted by the Respondent against the
Applicants shallnot be stayed pending finalization hereof.
Respondent shall not be directed to pay 1st
Applicant for aminimum period of two (2) years and severance pay
for aperiod of five (5) years minimum basic pay in a lump
Respondent shall not be directed to pay 2nd
and 3rd Applicantstheir salary for a minimum period
of two (2) years andseverance pay for a period of two (2) years
minimum basic payin a lump sum payment.
The intended disciplinary proceedings shall not be
declared tohave been instituted out of time and of no force and
Costs hereof in the event of opposition.
Further and/or alternative relief.
That Prayers 1 and 2 (c) operate with immediate effect
as an InterimCourt Order.
Before the hearing of this matter was started the 4th
applicant, Mr. Palo Kotelo, was joined. In other words CIV/APN/278/99
and CIV/APN/281/99 were heard as one application because the
the two cases are the same. The four applicants were managers of the
respondent. The first applicant alleges that on the
1* January, 1998
he entered into the second five (5) year contract with the
respondent. In terms of the contract he was employed
respondent as a General Manager and Managing Director for five years.
The contract is marked Annexure "A".
3 On the 11th December, 1997 the first
applicant was served with a letter of
suspension dated the 11th December, 1997.
This letter is marked Annexure "B". The purpose of the
suspension was to enable the new management to take
and operations of the respondent and to allow investigations to be
conducted into the then precarious financial position
With regard to the first contract which ended on the
31st December, 1997 the applicant was paid all his
benefits including gratuity and leave pay. On the 11th June,
1998 the respondent informed the first applicant that his suspension
was extended until further notice.
On the 2nd July, 1999, 1½ years after his
suspension the first applicant received a letter from the respondent
advising him of a disciplinary
hearing respondent intended to
institute against him. The letter is marked Annexure "K".
There were five counts, all of
which related to the period of the
first contract which ended on 31st December, 1997 for
which he had been paid all his benefits.
The first applicant alleges that the letter inviting him
to a disciplinary hearing came after commencement of provisions of
Notice No.6 of 1999 dated the 30th June, 1999. In
terms of Schedule B of that Legal Notice the sale of
4 majority stake in the respondent is being made to
the Standard Bank (Pty) Ltd.
The first applicant alleges that this clearly
constitutes a change in the shareholding of the respondent. The Legal
provides that the "proposed privatisation of the
Bank is the 1st July, 1999." The Legal Notice is
marked Annexure "L".
The first applicant avers that in terms of clause 8.2 of
his contract (Annexure "A") he shall be entitled to deem it
of himself as the Executive by the employer (who will be
in breach of agreement) where the employer shall in terms of clause
reconstruct its affairs, 8.2.1. 1 change its shareholding,
126.96.36.199 any compromise or arrangement with other organisation,
be taken or take over some other establishment, 188.8.131.52
change materially its business. He alleges that the taking of
by Standard Bank (which in terms of Annexure "L"
commenced on the 1st July, 1999) is change in respondent's
shareholding. Further, even if it were to be said that the
shareholding had not materialised
on the 1st July, 1999,
clearly an arrangement had been reached with Standard Bank at that
date as evidenced by the physical presence of management
personnel of Standard Bank Kingsway Maseru and personally known to
the 1st applicant.
5 It seems to me that the crucial issue in this case
is whether the proposed
privatization Scheme of Lesotho Bank 1999 did take place
on the 1st July, 1999 as intended. This is a question of
fact. The applicants bear the onus to prove on a balance of
probabilities that the
proposed privatisation did in fact take place.
In Schedule C of Annexure "L" certain steps are listed
which must be concluded
before the privatisation can take place -
Step (i) has apparently been taken because a new company
has been registered. It is Standard Bank (1999) Ltd.
Step (ii) transfer of title to identified landed
properties of the bank to the new company. I am not aware of such
evidence that this
has taken place.
Step (iii) liquidation of the remaining assets of the
corporation. Again I am not aware of any evidence that this has taken
Step (iv) issue of Government bonds etc. Again there
seems to be no evidence that this has been done.
6 Step(v) Signature of the sale Agreement for the
divestiture. This does
not seem to have been done.
The onus was on the applicants to satisfy the Court that
all the abovementioned steps had been concluded.
In Schedule C of Annexure "L" it is stated
that a special audit commissioner by Government is presently being
for purposes of reconfirming the balances of the assets
and liabilities to be transferred to the new company. Again there is
that this special audit has been completed.
All these matters in which there is no evidence that
they have been concluded must be looked at in the light of the
affidavit of Mr
Stephen Mustepha Swaray who holds the office of
Governor of the Central Bank and Commissioner of Financial
Institutions in the Kingdom
of Lesotho. He avers that he confirms
that no transfer of shares or material change in business has been
effected within the respondent
to date. He confirms that no
compromise or arrangement has been made by the respondent with any
He again confirms that he addressed a meeting of the
7 Accountants on the 2rd July, 1999 at the Lesotho Sun
Hotel. In his speech he
referred to the fact that a new entity named Lesotho
Bank (1999) Ltd has been registered and therefore came into existence
of 1st July 1999. This institution will as soon as it
initiates is business focus on corporate banking. The corporate
of the respondent will in due course be transferred
to the new institution. He also confirms that none of the steps
taken place thus far. The respondent is presently
continuing all its functions and in the same form as before. When the
changes will take place, is still a matter of uncertainty
and will only be initiated as circumstances permit. The proposed
of the respondent, as announced in Legal Notice No.61
of 1999, has therefore not taken place on 1st July, 1999.
I have quoted the affidavit of the Commissioner of
Financial Institutions verbatim because it is a very important piece
which states the facts that the proposed privatization of
the respondent never took place on the 1st July, 1999. He
is the person who must know these matters due to the position he is
In Wille and Milling Mercantile Law of South Africa, 7th
editions at p.751 A "Compromise" occurs when a company
discharges its obligations to creditors
8 by way of a settlement less than full payment in
cash for its indebtedness. An
"arrangement involves a reorganization of the share
capital of the company, a transaction involving the company and its
A "reconstruction" of a company, which may
flow from a compromise or arrangement, involves the company forming
a new company which is to take over its assets and its
It seems to me that none of the abovementioned things
have taken place as yet. It may be the reorganisation of the share
respondent will take place in the future but at the
present time it has not taken place.
The word "proposed" used in Annexure "L"
must be given its simple and grammatical meaning. It means "put
forward for consideration, propound; set up as an aim." "Or
put forward as a plan". See Concise Oxford Dictionary
English. Clearly what was intended to be done on the 1st
July, 1999 was not done.
In his supporting affidavit Mr. Tseko Bohloa alleges
that in reference to the status of Lesotho Bank as from 1st
July, 1999 the Governor mentioned existence "in parallel"
of Lesotho Bank 1999 Ltd. at the "old Lesotho Bank. He mentioned
that Lesotho Bank 1999 Ltd would initially focus on corporate
banking. The "old"
9 Lesotho Bank would continue its winding up process
as well as clearing
unreconciled items as well as clearing unreconciled
items as the process of being transferred to Lesotho Bank Ltd. It may
as at the 3rd July, 1999 the two banks existed "in
parallel" but we do not know what had happened to the share
capital. It is the evidence
of the Governor that the proposed
privatisation has not taken place.
Both Mr. Metlae and Mr Matooane , counsel for
applicants, have submitted that Annexure "L" amounted in
substance to an offer.
Annexure "L" was published in terms
of section 19 of the Privatisation Act 1995 which provides that upon
approval of the
Privatisation Scheme by the Cabinet, the
Privatisation Unit shall cause to be published, that approved
Privatisation Scheme in the
Gazette and in a newspaper circulating in
Lesotho. I do not agree with the submission that Annexure "L"
was an offer. It
was a publication for information to the public. In
fact at that stage there was no need to publish the name of the
The next stage appears in section 20 of the
Privatisation Act 1995 which provides that after the approval of the
by the Cabinet the Privatisation Unit shall then
identify the potential purchaser. After that the Privatisation Unit
the Minister report that fact to the Cabinet for
Cabinet's approval of the sale of a parastatal included in the
Scheme to the
identified purchaser. Annexure "L" cannot be
an offer even before Cabinet has
approved the potential purchaser. I do not think that
the Privatisation Unit can have the power to make an offer even
has approved the purchaser.
The applicants' contention is that as a result the
provisions of clause 8.2 of their various contracts they deem
because the respondent is in breach of the
agreement in terms of the above provisions of their contracts. That
after dismissal the
employer/employee relationship ceased, and that
disciplinary proceedings instituted after dismissal are redundant and
of no use.
This allegation by the applicants has now become of very
little relevance because of the above ruling of the Court that
are not yet ready for the provisions of clause 8.2 of
their contracts to become operative. In other words the
between the applicants and the
respondent is still in full force.
In any case the question which I wish to pose is this:
Supposing that during the subsistence of the first contract which
the 31st December, 1997 the first applicant had
actually stolen respondent's money or property. Supposing that the
discovery of the thefts
is found after the termination of the first
contract. What law provides that the applicant can no longer be
prosecuted because the
contract has terminated and that he was paid his full
terminal benefits? Can the employer not recover his money in a civil
Prescription Act No.6 of 1861 does not provide for that.
I was not shown any law or authority which supports the above
The respondent is entitled to institute disciplinary
proceedings against all the applicants.
For the reasons stated above on the 20th
July, 1999 I discharged the rule with costs.
J.L. KHEOLA CHIEF JUSTICE
2nd AUGUST, 1999.
For Applicants - Mr. Matooane and Mr Metlae For
respondent - Mr. Loubser
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