C. OF A.
(CIVIL) NO.: 6/87

IN THE
LESOTHO COURT OF APPEAL

In the
matter between :

HELD AT
MASERU

THE
CENTRAL BANK OF LESOTHO Appellant

and

E.H.
PHOOFOLO Respondent

CORAM :

SCHUTZ P.

MAHOMES
J.A.

AARON
J.A.

JUDGMENT

MAHOMED
J.A.

The
material facts which are common cause in this appeal are as follows:

1. The
Respondent in this appeal was appointed as Deputy Governor of the
Appellant bank on the 16th November 1981, in terms of the
Lesotho
Monetary Act of 1978 ("the Act").

2

2. On
   the 30th March 1984, the Minister of Finance, Communicated to the
   Respondent certain terms and conditions of the Respondent's

   employment, including the following:-

   
   

1. The
   appointment was for a period of 3 years, with effect from the 16th
   November 1981 .

   
   

2. "The
   duties of the post shall be those

   
   

stated in Section 11(4)" of the Act.

2. On
   the 30th October 1984, the Respondent was "re-appointed for a
   further period of 3 years with effect from the 16th November
   1984,
   in accordance with Section 11(1)" of the Act.

   
   

The terms and conditions of the re-appointment were those set out
previously by the Minister of Finance, in his communication of
the
30th March 1984.

2. On
   the 12th November 1986 the Governor of the Appellant informed the
   Respondent that an investigation into the Respondent's
   conduct with
   regard to a certain foreign exchange transaction

   
   

3

was being conducted by the Board of Directors of the Appellant..
Relying on the provisions of Section 11(4) of the Act, the Governor

purported to suspend, until further notice –

"All delegations or assignments hitherto made to you in your
capacity as Deputy Governor", under Section 11 of the Act.

2. On
   the 9th December 1986 the Chairman of the Military Council and
   Council of Ministers wrote to the Respondent, suspending him
   with
   immediate effect –

   
   

"from performing the functions of your office in terms of
Section 14(5) of the Lesotho Monetary Authority Act, as amended."

2. .
   On the 10th December 1986 Respondent was advised by the Chairman of
   an ad hoc Board that the Board would be sitting on the
   16th
   December 1986, to consider the allegations against the Respondent
   and that the Respondent was required to appear before
   the Board and
   make whatever representations he wished.

   
   

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2. On
   the 15th December 1986 the Governor of the Appellant bank wrote to
   the Respondent. He advised the Respondent that the letter
   of the
   12th November 1986, which purported to suspend all delegations or
   assignments made to the Respondent, in his capacity
   as Deputy
   Governor, was to be regarded as superseded by the sub­sequent
   letter fromthe Chairman of the Military Council
   and the Council of
   Ministers, which had suspended the Respondent from performing the •
   functions of his office.

   
   

3. On
   the 5th January 1987 the Secretary of the Military Council wrote to
   the Respondent, advising him that his letter of the 9th
   December
   1986, suspending the Respondent from performing the functions of
   his office, stood revoked with immediate effect.

   
   

4. On
   the 8th January 1987 the Governor of the Appellant bank again wrote
   to the Respondent, referring to the relevant foreign
   exchange
   transaction. The Respondent was advised that the Board of Directors
   of the Appellant had recommended to the Chairman
   of the Military

   
   

5

Council
and Council of Ministers that His Majesty, the King, should be
advised to institute investigation proceedings against the

Respondent, under Section 14 of the Act. In the penultimate paragraph
of the letter, the Respondent was advised that all powers
and duties
which had been delegated to him by the Governor of the Central Bank,
under Section 11(4) of the Act, were withdrawn
with immediate effect,
and that this directive would be operative until the conclusion of
the investigation. Finally, the Respondent
was directed not to have
any access to any files of the bank, except on the instructions of
the Governor.

The
Respondent in this appeal instituted an application in the Court a
quo for certain relief against the Appellant bank. He succeeded
in
obtaining an order from Molai, J., ordering that :-

1. the
   Appellant's suspension of the Respondent or the withdrawal of the
   powers and duties delegated to the Respondent, pursuant
   to Section
   11(4) of the Central Bank of Lesotho Act, 1978, be declared null and
   void;

   
   

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2. the
   Appellant was directed to allow the Respondent forthwith to have
   access to the files of the Appellant, in his capacity as
   a Director;

   
   

3. the
   Appellant was directed to allow the Respondent forthwith to attend
   and/or participate in all meeting of the Board of Directors
   of the
   Appellant;

   
   

4. the
   Appellant was directed to allow Respondent forthwith to have access
   to all the Minutes of the Meetings of the Board of Directors
   of the
   Appellant held since the 6th November 1986, to the date of the
   judgment;

   
   

5. the
   Appellant was directed to desist from denying to the Respondent "the
   right to exercise his rights and to carry out his
   duties under the
   provisions of the Central Bank of Lesotho Act 1978, except insofar
   as it is permissible under the said Act".

   
   

6. the
   Appellant was directed to pay the costs of the application.

   
   

7

The
relief granted to the Respondent in the Court a quo was substantially
in accordance with the relief prayed for in the Notice
of Motion.

In
upholding the claim of the Respondent, Molai, J., held that Section
14(5) of the Act was of application and that the provisions
thereof
had not been satisfied in the purported suspension of the Respondent.
Section 14(5) of the Act reads as follows:-

"If the question of removing a person from office has been
referred to an Advisory Board under this section, the Prime Minister

may suspend that person from performing the functions of his office,
and any such suspension may at any time be revoked by the
Prime
Minister and shall, in any case, cease to have effect if the Advisory
Board advises the Prime Minister that such person ought
not to be
removed from office."

(In terms
of Section 9(1) of the Lesotho (No. 2) Order of 1986, the executive
authority of the Government of Lesotho has become
vested in the King,
who in that capacity acquires the powers of the Prime Minister, (who
was previously the head of the executive
authority) in terms of
Section 11(1) of the Act).

Since it
was common cause that His Majesty, the King, had not ever suspended
the Respondent from his office, the Court a quo concluded
that the
purported suspension of the

8

Respondent
by the Governor of the Appellant on the 8th January 1987 (which
effectively rendered academic and irrelevant all previous

suspensions), was ineffective.

Counsel,
appearing for the Appellant in this Court, contended that Section
14(5), properly interpreted, dealt with the power of
the head of the
executive to suspend a Director from his office, as a Director of the
bank. It was contended that the provisions
of Section 14(5) in no way
detracted from the power of the Governor of the bank to act in terms
of Section 11 (4) of the Act, in
relation to a Deputy Governor.
Section 11(4) of the Act provides that :

"The Deputy Governor shall exercise such powers and carry out
such duties as may be delegated or assigned to him by the Governor

and, in the absence of the Governor, shall act as Governor."

'Section
15 of the Act undoubtedly refers to the position of Directors and, in
my view, Counsel for the Appellant was correct in
his submission that
Section 14(5) refers to the power of the head of the executive to
suspend a Director from performing the functions
of his office.
Section 14 does not purport to deal with a Deputy Governor.
Accordingly, it is competent for a Governor of a bank
to act in terms
of Section 11(4) in revoking or suspending

9

powers
previously assigned by the Governor to the Deputy Governor. The
effect of such a suspension by the Governor, in terms of
Section
11(4), would be to suspend only such of the powers of the Deputy
Governor as had arisen from a dele­gation by the Governor
in
terms of Section 11(4). Any other powers of the Deputy Governor,
arising by statute from his ex officio position as a Director
of the
bank, remain intact until and unless there is a valid order of
suspension by the head of the executive, in terms of Section
14(5) of
the Act.

This
conclusion does not necessarily mean, however, that the Respondent
was not entitled to any of the relief prayed in his Notice
of Motion.
Two points still need to be considered. Firstly, if any of the relief
claimed relates to the Respon­dent's statutory
duties as
director, then the suspension cannot take effect without an order
under Section 14(5). Secondly, even in respect of those
duties which
were delegated the question arises whether the audi alteram partem
rule should have been applied. Dealing with the
first point it is
clear that in paragraph (c) of the Court Order referred to above, the
Appellant was directed to allow the Respondent,
forthwith, to attend
and/or participate in all meetings of the Board of Directors of the
Appellant and, in paragraph (d), the Appellant
was directed to allow
the Respondent, forthwith, to have access to, all Minutes of the
Meetings of the Board of Directors of the
bank, held since the 6th
November 1986. The rights sought to be protected by the orders
referred to in paragraphs (c) and (d),
were the rights of the
Respondent

10

as a
Director of the Appellant bank, and not his right as a Deputy
Governor, simpliciter. Those rights were wrongly denied to him
by the
Appellant, (even on the basis that Section 14(5) applies only to the
suspension of Directors), and the relief prayed for
in these respects
had wrongly been resisted by the Appellant. This was eventually
conceded on behalf of the Appellant, after some
argument before us.
It was also conceded that paragraph (d) of the order, directing the
Appellant to allow the Respondent, forthwith,
to have access to the
files of the Appellant, in his capacity as a Director, was justified
to a limited extent, insofar as access
to the files of the Appellant
was reasonably necessary to allow the Respondent properly to
discharge his functions as a Director.

(Robinson
vs. Imroth and Others, 1917 WLD, 159, at 170 to 173; Novick and
Another vs. Comair Holdings Limited and Others, 1979(2)
S,A., 116 (W)
at 128).

As to the
second point, pertaining to the audi alteram partem rule, counsel of
the Appellant persisted in opposing paragraph (a)
of the order of the
Court a quo above, declaring as null and void the Appellant's
suspension of the Respondent, or the withdrawal
of the powers and
duties delegated to the Respondent, pursuant to Section 11(4) of the
Act. The opposition to this order was based
on the submission that
Section 11(4) of the Act was not affected by Section 14(d) and that
an order of suspension from His Majesty,
the King, was accordingly
not necessary to justify the withdrawal of the Respondent's
previously delegated

11

powers to
a Deputy Governor. For the same reasons counsel for the Appellant
resisted paragraph (e) of the Court's Order, which had
directed the
Appellant from denying to the Respondent –

"the right to exercise his rights and to carry out his duties
under the provisions of the Central Bank of Lesotho Act, 1978,
except
insofar as it is permissible under the said Act."

On behalf
of the Respondent, it was contended that the order of suspension made
by the Governor was invalid, because of a failure
to observe the audi
alteram partem rule. It was submitted that the order of suspension
was grossly prejudicial to the Respondent
and his standing in the
community, and that he should have been given a hearing before he was
suspended by the Governor.

The audi
alteram partem rule is a fundamental rule of natural justice, which
applies in all civilised systems of law. It is applied
whenever a
ministerial or administra­tive authority gives a decision,
affecting the property or liberty of an individual or
affecting his
rights or involving legal consequences to him.

(R. vs.
Ngwevela, 1954(1) S.A., 123, at 127; Minister of the Interior vs.
Bechler and Others, 1948(3) S.A., 409).

12

In more
recent times it has been extended to circumstances in which the
affected individual could be said to have a "legitimate

expectation" of being heard, although no right is being taken
away.

(Attorney-General
of Hong Kong vs. Ng Yuen Shiu, 1963(2) A.E.R. 346, at 349 H-J;

O'Reilly
vs. Mackman, WLR 1096, at 1100 to 1101); Schmidt vs. Secretary of
State for Home Affairs, 1969(1), A.E.R., 904 at 909);
Everett vs.
Minister of the Interior, 1981(2) S.A., 453 at 456.

The audi
alteram partem rule is presumed to be of applica­tion, unless the
statute "expressly, or by necessary impli­cation,
indicates
to the contrary" - (R. vs. Ngwevela, supra, at 127), or "unless
the clear intention of Parliament negatives
and excludes the
implication". –

(Publications
Control Board vs. Central News Agency Ltd., 1970(3) S.A., 479, at
489).

The
parameters of and justification for the audi alteram partem rule are
clear. The difficulty is to appreciate how the rule can
be of
application to the facts of the present case. When a Governor acts
under Section 11(4) to delegate or assign any of his own
powers to a
Deputy Governor, he is not obliged to do so. He simply decides ad
hoc, and from time to time, which of his statutory

13

powers
and duties he retains, exclusively for himself, and which of such
powers and duties he can share with, or delegate or assign
to a
Deputy Governor for logistical, practical or policy reasons. Where
the Governor elects to delegate a particular power or duty
to the
Deputy Governor, the latter does not acquire any rights for any fixed
period. It is simply a domestic administrative arrangement.
The
Governor may at any time in the future decide that the circumstances
then prevailing justify different domestic arrangements,
no longer
necessitating the delegation or assignment, previously made, or
necessitating a different kind of delegation or assignment.
The
latter decision may have nothing to do with conduct on the part of
the Deputy Governor. It might largely be motivated by policy
or
logistical considerations. There seems to me to be no reason why such
a domestic re­arrangement can therefore not be made
in terms of
Section 11(4) of the Act, without necessarily according to the Deputy
Governor a hearing as to whether it should be
undertaken. Moreover,
there is nothing in the record of the appeal which justifies the
conclusion that the Respondent in this appeal
had a "legitimate
expectation" that he would be heard before the Governor acted in
terms of Section 11(4) to withdraw
any powers or duties which he
might previously have delegated or assigned to the

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Respondent
in his capacity as Deputy Governor.

In the
result, I am of the view that the Respondent was not entitled to
claim the benefits of the audi alteram partem rule, before
the
Governor of the Appellant could lawfully act in terms of Section
11(4) of the Act, by withdrawing any power or duty which the
Governor
had previously delegated or assigned to the Respondent, in terms of
Section 11(4). This conclusion is based purely on
the terms of
Section .11(4) of the Act, and the facts of the present case.

I do not
necessarily intend to convey that a person, temporarily suspended
from office pending an enquiry in regard to his suspension
from such
office, is never entitled to the benefits of the audi alteram partem
rule. Much would depend on the relevant statute
and the circumstances
of the particular case.

The
Respondent had contended in the Court a quo that there were two
technical grounds on which the Appellant's opposition should
fail.
The first technical ground was that no resolution, evidencing the
authority of the Governor to depose to an affidavit on
behalf of the
Appellant, or to represent the Appellant in the proceedings,

15

was
filed. This objection was without substance, and was correctly
dismissed by Molai, J. There is no invariable rule which requires
a
juristic person to file a formal resolution, manifesting the
authority of a particular person to represent it in any legal
proceedings,
if the existence of such authority appears from other
facts. In the present case the authority of the Governor to represent
the
Appellant in the proceedings in the Court a quo appears amply
from the circumstances of the case, including the filing of the
Notice
of Opposition to the application.

The
second technical objection was that the Governor, who had deposed to
the Answering Affidavit on behalf of Appellant, did not
say that the
facts to which he had deposed were within his personal knowledge. In
my view there is no substance whatever in this
objection either. The
material facts to which the Governor deposed were clearly within his
knowledge and, insofar as they refer
to the issues relevant to this
appeal, were indeed common cause. The objection was rightly dismissed
by the Court a quo.

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COSTS :

In the
Court a quo the Respondent should have succeeded on some of the
prayers contained in the Notice of Motion, but he should
have failed
on the others. The Appellant wrongly opposed some of the relief
prayed for. In my view an appropriate order would be
for the
Appellant to pay half the costs of the Respondent in the Court a quo.

The
Appellant has achieved substantial success in the appeal, and is
entitled to the costs of the appeal.

ORDER :

In the
result, I make the following order :-

1. The
   appeal is upheld and the Respondent is

   
   

directed to pay the Appellant's costs on appeal.

2. The
   order of the Court a quo is set aside and is

   
   

substituted and amended, so as to read as follows:-

"It
is ordered that :-

1. The
   Respondent is hereby directed to allow Applicant forthwith to attend

   
   

17

and/or to participate in all meetings of the Board of Directors of
Respondent;

2. The
   Respondent is hereby directed to allow Applicant forthwith to have
   access to all the Minutes of the Meetings of the Board
   of Directors
   of the Respondent, held since 6th November 1986 to date;

   
   

3. The
   Respondent is hereby directed to desist from denying to the
   Applicant the rights which the Applicant has as a Director of
   the
   Central Bank of Lesotho to carry out his duties under the provisions
   of the Central Bank of Lesotho -Act of 1978;

   
   

4. The
   Respondent is directed to pay 50% of the costs of this application."

   
   

18

DELIVERED
on this the day of 1988 at MASERU.

I. MAHOMED

JUDGE OF APPEAL

I agree
W.P. SCHUTZ

PRESIDENT

I agree

S. AARON

JUDGE OF APPEAL

Deliverd
at Morem 28th day of March 1988

CHIEF
JUSTICE