CIV/APN/361/08
IN THE HIGH COURT OF LESOTHO
In the matter between:-
MANKHASI MAHAO APPLICANT
Vs
LESOTHO ELECTRICITY CORPORATION 1ST RESPONDENT
MAREITUMETSE POSHOLI /ZULU 2ND RESPONDENT
MASTER OF THE HIGH COURT 3RD RESPONDENT
ATTORNEY GENERAL 4TH RESPONDENT
LABOUR COMMISSIONER 5TH RESPONDENT
JUDGMENT
Delivered by the Honourable Madam Justice N. Majara
on the 10th March 2009
The facts of this application are by-and-large common cause. Applicant and the late Moima Posholi are siblings. During his lifetime, the late Moima Posholi and the 2nd respondent were cohabiting. The 2nd respondent had previously been married to one Zulu who filed the supporting affidavit to the application. At some point, the 2nd respondent sought and was granted a decree of divorce against him.
The late Moima worked for the 1st respondent during his lifetime and he appointed 2nd respondent and her minor child Reitumetse as beneficiaries to the LEC Provident Fund in terms of a form styled Beneficiary Nomination Form hereunto attached and marked LEC “1”. Post Moima’s death and burial, applicant was appointed by the Posholi family as the heiress to his estate as he had died a bachelor.
Applicant then approached 1st respondent and requested that they pay out Moima’s terminal benefits and monies accruing from the Provident Fund to her as the lawful heiress. Applicant was given the amount of M10, 000.00 and M5, 000. 00 respectively out of Moima’s terminal benefits but not out of the Provident Fund. She later demanded that 1st respondent should pay out to her the amount of M11, 427. 28 inter alia, from the said Provident Fund and she was informed that the said monies had already been paid out to the 3rd respondent on behalf of the child, Reitumetse Posholi.
It is then that applicant took steps to approach this Court for relief in the following terms:-
Dispensing with the normal rules and periods relating to the mode of service on the grounds of urgency hereof;
That a rule nisi issue calling upon the respondents to show cause, if any, on a date to be determined by the Honourable Court why;
The 1st respondent shall no be restrained and interdicted from paying to 2nd Respondent monies out of the estate of the late Moima Posholi or cause 3rd Respondent to receive certain monies at the instance of Reitumetsi Mohapi (Posholi).
The 1st Respondent shall not be directed and ordered to pay all the monies due and payable to the Applicant in pursuance of her capacity as the lawful heiress to the estate of Moima Posholi forthwith.
The 2nd Respondent should not be interdicted from herself out as the wife and heiress to the estate of the late Moima Baptista Posholi.
She obtained a rule nisi in that regard. In support of its opposition to the application, 1st respondent filed an answering affidavit deposed to by one M. F. Hloaele and he averred as follows at paragraph 3 in parts:-
“The Lesotho Electricity Corporation does not have any interest in the dispute between Applicant and the Second Respondent. The LEC was the employer of the deceased herein and has dealt with the terminal benefits in terms of law and in terms of the deceased’s
instructions as contained in the Beneficiary Nomination Form hereto annexed and marked LEC “1”. The last payment was made to the beneficiary in terms of the said form on the 15th August 2008 while the other terminal benefits have also been paid and/or transferred to the Master of the High Court in terms of the law….”
Whereas in her answering affidavit 2nd respondent raised points of law in limine to wit, urgency and ex parte procedure, violation of High Court Rule 8 (19), Non-disclosure of material facts, interdict.
Urgency and ex parte procedure
It is 2nd respondent’s case that the late Moima died in June 2007 and that applicant failed to provide any explanation why she delayed in the prosecution of the application yet
she had planned to launch same as far back as August 2007. Further that applicant failed to state why she proceeded with the proceedings
without notice yet she was seeking a potentially prejudicial order against the 2nd respondent.
Violation of Rule 8 (19)
It was the 2nd respondent’s submission that applicant failed to comply with provisions of the above rule yet she joined the Master of the High Court as one of the respondents in this application i.e. she failed to serve the application upon the 3rd respondent as it is required by the provision.
Interdict
Under this point, it was 2nd respondent’s contention that the applicant had not established a clear right with respect to the monies she claims, yet she is seeking an interdict against respondents.
Material non-disclosure
In his written and verbal submissions, Mr. Mothibeli counsel for 2nd respondent stated that without subordinating the importance of the other point in limine, their point of emphasis was with respect to the issue of material non-disclosure in that in obtaining the interim Court order without
notice to the other parties, applicant failed to disclose the fact that 2nd respondent and Tseliso Zulu were since divorced. To this end he referred the Court to the case of Trakman NO. vs Livshitz and Others 1995 (1) SA at 288.
On the merits, it was Mr. Mothibeli’s submission that 2nd respondent was not disputing the appointment of applicant as the heir to the late Moima’s estate but rather that 2nd respondent was entitled to the monies under the provident fund because she was appointed as the beneficiary by the deceased and that this is the case in terms of the principle of stipulatio alteri. In this regard he referred the Court to the work of Davies D. M. Gordon and Getz; The South African Law of Insurance 4th Edition Juta & Co. Ltd p329 as well as the case of Ex Parte Calderwood No. In re Estate Wixley 1981 (3) SA 727.
Mr. Mothibeli made the submission that case law is unanimous that money from a policy wherein the insured has duly designated a beneficiary does not form part of the deceased estate. Counsel for 2nd respondent also referred the Court to the case of Ramahata v Ramahata LAC (1985-89) 184 wherein the Court of Appeal held that the stipulatio alteri principle also forms part of the law of Lesotho.
Mr. Phafane who appeared for 1st respondent aligned himself with Mr. Mothibeli’s submissions and added that insofar as the prayers sought against them go, the application was meaningless for the reason that it had long been overtaken by events in that the funds in dispute had long been transferred and that applicant should not have sought the said prayers as they were not tenable. He added that applicant should have abandoned the application as soon as she received their answering papers instead of asserting in her replying affidavit that 1st respondents transferred the funds ‘deliberately’.
In reaction to these submissions Mr. Lephuthing counsel for applicant made the contention that they had to approach the Court on an urgent basis and without notice because applicant’s
rights as the appointed heiress to the estate of the late Moima were being violated. He however conceded that they indeed violated the provisions of Rule 8 (19).
On material non-disclosure, counsel for applicant made the submission that applicant cannot be found guilty of same because she had no knowledge of the divorce order.
On the principle of stipulatio alteri, Counsel for applicant made the contention that the contract that the deceased entered into with 1st respondent of which he made the 2nd respondent his beneficiary is invalid and cannot be legally binding.
He added that the third party in LEC “1” is 2nd respondent in her capacity as wife and her son Reitumetse Posholi as the son. It was his further contention that since 2nd respondent admits on affidavit that the deceased died a bachelor but confirms that she however received a cheque amounting to M38, 201.50 under the names of Tiisetso Mohapi she must expressly state the source of the alleged right to the money.
Mr. Lephuthing made the submission that since 2nd respondent has never been the wife of the deceased and Reitumetse never his son, the allocation of the deceased’s Provident Fund monies to the two is unlawful and that 1st respondent proceeded with payment of the said money to them with full knowledge of the wrongfulness of the process. In this regard he quoted the case of Sea Lake (Pty) Ltd v Chung Hwa Enterprise Co. (Pty) Ltd & Another 1999-2000 LLR & LB 395.
I now proceed to deal with the points of law seriatim.
Application on an urgent basis and without notice to the other party(s)
It is trite that a party that approaches the Court on an urgent basis and without giving notice to other parties who might be affected by the order sought has the duty to set forth in detail the circumstances which he avers render the application urgent and also the reasons why he claims that he could not be afforded substantial relief in an hearing in due course. This is a mandatory requirement of High Court Rule 8 (22) (b) and a plethora of authorities.
For instance, in the case of The Commander LDF & Another v Tseliso Matela 1999-2000 LLR/LB 13 at 16, Steyn P (as he then was) stated that:-
“As a general rule, basic considerations of fairness and the need to prevent the administration of justice being brought into disrepute
require appropriate notice to be given. Orders should only be granted without notice where this is rigorously justified….
It is also not enough that counsel merely certifies urgency. Certificates of urgency must shortly state the grounds for urgency. Again failure to do so may well lend to a dismissal of applications and special costs orders in appropriate circumstances.”
In this case, the applicant stated her reasons of urgency in her founding affidavit at paragraph 11 in the following words:-
“The matter is urgent for the following reasons: First, if the terminal benefits alluded to above are paid over to Mareitumetse and
Reitumetse, they will be unduly enriched at my expense as there is no other remedy or way available to me except to proceed in the manner I have chosen. Second, if the monies are released to Mareitumetse, it will be totally impossible to recover damages against her given that she might be convicted and I discovered that she had deserted her matrimonial home and is a fraudster of straw.”
The averments are denied by both the 1st and 2nd respondent respectively. In the answering affidavit deposed to by Hloaele on behalf of 1st respondent, he points out that the orders sought by 1st respondent have been overtaken by events in that 1st respondent had already paid out the money to 2nd respondent in terms of the Beneficiary Nomination Form per the instructions of the deceased who was under the employ of 1st respondent.
2nd respondent in turn asserts in her answering affidavit that even if she were to ‘be unduly enriched, then applicant is free to issue summons in recovery of the enrichment unjustly so gathered.’ She also denies that she is a fraudster that is about to be convicted.
Applicant acknowledges that the terminal benefits under the Nomination Form have already been paid out but goes on to add that this 1st respondent did on purpose. Mr. Lephuthing also made the verbal submission that applicant was justified in adopting this route because her rights were being violated. This
begs the question; does that factor alone warrant that a matter should be treated as urgent without adherence to the periods and
modes of service prescribed by the Rules of Court?
Needless to say, the answer is in the negative for a number of reasons, including but not limited to the fact that litigation is usually resorted due to the very fact that others’ rights are trampled upon. This does not mean that other interested parties should not be given adequate notice and time to state their case in response to such allegations.
Further, as Mr. Phafane correctly pointed out, at the time she launched this application or at least upon being served with the answering affidavits, applicant
was well aware of the fact that the funds, the subject matter herein had already been transferred by 1st respondent to 2nd respondent. She confirms this in her reply.
Given the above scenario, I am of the view that applicant did fail to satisfy the requirements of Rule 8 as already mentioned above and therefore had no right to approach this Court on an urgent basis and without notice to the other parties. This is because, even if the money had not yet been transferred, she still had other remedies available to her. Secondly, it is clear that she was or became aware of the transfer at the pleading stage, yet she persisted with this application this factor notwithstanding.
It is my opinion that the point discussed immediately is also linked to the prayer for an interdict without notice to the other parties. As Mr. Mothibeli correctly submitted, applicant has failed to satisfy the requirements of same. Firstly, she did not establish that she has a clear right to the funds especially in the light of the contents of the Beneficiary Nomination Form in which (and this applicant does not deny) 2nd respondent was appointed as beneficiary by the late Moima. Rather, she is challenging the validity of the document for the reason that 2nd respondent is described as the wife.
Further, she failed to show that there was no other legal remedy available for her to obtain adequate redress. Authority in this regard is legion. See, The Commander LDF (Supra) p 18 as well as the case of Erasmus v Afrikander Proprietary Mines Ltd 1976 (1) SA 950 which was cited with approval by the Court of Appeal in the former. Thirdly, I accept the submission that the prayers sought by applicant are not tenable because in her reply, she is not disputing that the funds in question have since been transferred which means this Court is not in a position to can restrain and/or interdict 1st respondent from transferring them to the 2nd respondent.
Material Non-disclosure
The issue of material on-disclosure is dealt with excellently by Le Roux J in the case of Schlesinger v Schlesinger 1979 (4) SA 342 wherein the learned judge also formulated three broad principles, to wit;
“(1) in ex parte applications, all material facts must be disclosed which might influence a Court in coming to a decision;
(2) the non-disclosure or suppression of facts need not be willful or mala fide to incur the penalty of rescission; and
(3) the Court, apprised of the true facts, has a discretion to set aside the former order or to preserve it.”
In the present application, Mr. Mothibeli made the contention that applicant failed to disclose to this Court that 2nd respondent and Zulu who filed the supporting affidavit to the notice of Motion were granted divorce by this Court and submitted that if the Court had
been aware of this fact, it would not have granted the rule nisi. Although Mr. Lephuthing argued that applicant was not aware of this fact, I am of the view that she did but decided with the support of Zulu to suppress the true facts and only tell the Court about the marriage between the two. She is indeed guilty of material non-disclosure. I therefore accept Mr. Mothibeli’s submission as correct and find that this point was well taken by 2nd respondent.
Lastly, I now turn to deal with the main bone of contention which is that of the principle of stipulatio alteri i.e. contract for the benefit of a third party. This principle has been discussed in several authorities including those quoted to this Court. The position of the law as stated therein is that a contract for the benefit of a third party does not form part of the deceased estate. This means that the insured can enter into such a contract with the insurer for the benefit of another person who is not a party to the contract. However, such third party does not acquire rights to the contract unless and until he/she has accepted the benefit. See Gordon and Getz; The South African Law of Insurance 4th Edition p278.
The case of Jankelow v Binder, Gering and Co. 1927 T.P.D 364 quoted to this Court by Mr. Lephuthing does not detract from this general principle so it does not take applicant’s place anywhere. Instead, the Court therein found that on the terms of the agreement in issue, it was never intended to be a contract between the assignor and the assignee for the benefit of the individual creditor upon which the latter could sue. Greenberg J went on to state:-
“Now I think Mr. Schreiner is right when says the test whether the contract is made for the benefit of a third party is whether that third party, by adopting the contract, can become a party to it—the position being that if a contract is made by A and B, with a stipulation in it for the benefit of C, then C by adoption can enter into that contract. If one applies that test, it appears to me the present contract cannot be so described.”
In my opinion, the Judge was simply stating that insofar as the facts of that case went, a distinction could be drawn between them and a contract for the benefit of a third party. He found that the respondent had no rights under the contract against the appellant.
Per the contention of Mr. Lephuthing, 2nd respondent herein could not accept the contract because she was not married to the late Moima yet she was described as the wife under the Beneficiary Nomination Form. It is my opinion that his argument is flawed because nowhere does the stipulatio alteri requires that the third party should hold any form of status be that of a spouse or other so that in terms of this principle, status of the third party is immaterial as long as he/she accepts the benefit that was intended for him/her.
This further finds support in the case of Ramahata (also known as Phephetho) v Ramahata LAC (1985-1989) p184. In overturning the decision of the Court a quo which had decided the matter on the footing that the real issue was whether there was a marriage Schutz P (as he then was) had this to say:-
“The judge rejected the appellant’s contention that she was entitled to the M6,000. 00 not by virtue of her marriage, by virtue of her nomination as death beneficiary. The learned Judge opined that any claim would be governed by the South African Insurance Act 27 of 1943, that there was no similar statute in Lesotho, and that death benefits would pass to the son’s deceased (sic) estate. I do not agree with this reasoning at all. In passing I would point out that foreign law cannot be disregarded where it is the proper law in a case. If it such it will ordinarily be given effect to.
This case is a simple one. The appellant has established a stipulatio alteri (contract for the benefit of a third party) between the son and the insurance company; See e g Croce v Croce 1940 TPD 251. The institution of stipulatio alteri; by virtue of being part of the Roman Dutch Law, also forms part of the law of Lesotho. The contract is to the effect that she is entitled to accept the benefit of this contract, and the evidence is that she has in fact done so. Her rights therefore flow from the contract and the M6,000. 00 has nothing to do with the deceased estate.” (My underline)
On the strength of the quoted authorities, the principle is that the issue of the marital status and/or relationship between the beneficiary and the insured is immaterial. Further, the benefits that flow from such contract/agreement do not form part of the deceases’ estate. Applying this in casu, what is important is that 2nd respondent was made the beneficiary, was entitled to and did accept the benefit of the provident fund. The conditions of the principle
were thus satisfied.
It is on the basis of the above reasons, that I find that applicant has failed to make out her case for the relief sought and I therefore dismiss the application and discharge the rule nisi.
COSTS
Both Counsel for respondents prayed that the Court should make a punitive order of costs against the other side and that applicant’s counsel should be ordered to pay costs de bonis propriis. They submitted that he abused the Court’s process in that he persisted with the application in spite of the fact that he was aware that it had since been overtaken by events.
Over and above that, he approached the Court on an urgent basis and without notice to the other parties and also flaunted the other requirements for applications of this nature as already discussed above.
I agree that applicant’s counsel is indeed guilty of abuse of court process in the manner already stated and it is on the strength of the decision of the Court of Appeal in the case of Mapuseletso Mahlakeng and 55 Others v Southern Sky (PTY) LTD and 7 Others C of A (CIV) No.16 of 2003 (unreported) p 28 and the remarks in that of Matela (Supra) as well as other authorities that the applicant’s counsel is ordered to pay costs de bonis propriis.
N. MAJARA
JUDGE
For applicant : Mr. Lephuthing
For respondents : Mr. S. Phafane (K.C.)
: Mr. Mothibeli
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