CIV/APN/64/88

IN THE
HIGH COURT OF LESOTHO

In the
Application of :

ESTATE OF
THE LATE NEHEMIA

SEKHONYANA
'MASERIBANE Applicant

V

CARL
STEPHAN BUYS 1st Respondent

NCHAKHA
MPHALANE 2nd Respondent

LESOTHO
MILLING CO (PTY)

LTD.
3rd Respondent

MASTER OF
THE HIGH COURT 4th Respondent

JUDGMENT

Delivered
by the Hon. Acting Mr. Justice M. Lehohla on the 13th day of April,
1988.

This
matter is closely linked with and may very well have been
precipitated by CIV/APN/42/88 Lesotho Hilling Co. (Pty) Ltd vs Estate

Late Nehemia Sekhonyana 'Maseribane wherein a provisional order of
sequestration was issued by the Chief Justice on 9th February
1988
against the present applicant. Ho determination has yet been made in
that CIV/APN/42/88. The rule nisi however in that application

directed in paragraph (2)

"That the provisional order of sequestration.... be personally
served on the Honourable Evaritus Retselisitsoe Sekhonyana
the duly
appointed executor of the Estate late Nehemia Sekhonyana 'Maseribane
and on Nchakha Mphalane the duly authorised Attorney
and Agent of the
said Executor."

In
paragraph 3 it stated

"That the Master is hereby directed to appoint Stephen Carl Buys
and Nchakha Mphalane jointly as provisional Trustees of the
estate
with the leave (in) in

2

terms of section 18(3) of the Insolvency Proclamation under the
direction of the Master to sell any property movable or immovable

belonging to the estate; (and) to conduct such enquiries as may be
necessary to ascertain the whereabouts of any property of the
estate
and further (sic) powers of (sic) as set out in the aforesaid
Proclamation."

The rule
was returnable on 26th February 1988. Parties' representatives
appeared before me that day and the rule was extended to
18th March
1988 in CIV/APN/42/88.

It
appears that on 29th February 1988 the present applicant obtained
before the Chief Justice an interim order against the present
four
respondents. The thrust of this interim order was to rid the first
and second respondents of their powers as provisional trustees
of the
estate. The interim order was returnable on 18th March 1988 when the
matter was placed before me for hearing after respondents
had filed
their opposing papers.

It is
note-worthy that applicant obtained this interim order depriving the
trustees of their power without notice.

The
effect therefore of the order was that the insolvent estate had
trustees with no powers to ad­minister it - leading to a

situation akin to a ship without a captain.

Section
18(3) of the Insolvency Proclamation 51/1957 provides that :

"A provisional trustee shall have the powers and the duties of a
trustee, as provided in this Proclamation, except that without
the
authority of the Court or for the purpose of obtaining such authority
he shall not bring or defend any legal proceedings and
that without
the authority of the Court or Master he shall not sell any propety
belonging to the estate in question. Such sale
shall furthermore be
after such notice and subject to such conditions as the Master may
direct."

3

In
response to prayers set out in the notice of motion in CIV/APN/42/88
wherein Mr. Nchaka Mphalane in a supporting affidavit in
paragraph 2
states

(i) that he is a duly authorised agent of the Executor i.e. the
Honourable Retselisitsoe Sekhonyana of the estate Late Nehemia

Sekhonyana 'Maseribane and has attached annexures "B" and
"C" i.e. Letters of Administration in favour of the
said'
Hon. Retselisitsoe Sekhonyana as executor and power of Attorney
wherein the executor has appointed Nchakha Mphalane to perform
duties
set out in paragraphs one to four therein respectively;

(ii) that in paragraph 9 he has discussed these matters (set out in
the body of his affidavit) in depth with the appointed Executor
the
Honourable the Minister of Finance Mr. E.R. Sekhonyana, and he is of
one mind with Mphalane that the only effective, just and
equitable
remedy is the immediate and urgent sequestration of the deceased
estate;

the
application in CIV/APN/64/88 i.e. in the present application relying
on the founding affidavit of the Executor seeks relief
order from
this Court calling upon respondents to show cause why Carl Stephen
Buys and Nchakha Mphalane shall not be disqualified
from acting as
provisional Trustees, and why they shall not be restrained. from
exercising their powers as such pending finalisation
of this
application and why they shall not be ordered and directed to open
all business premises operated and run by the applicant
estate
wherever situated; and to pay costs in the event of their opposition.

In
paragraph 6 the Executor avers that on 9th February 1988 the 3rd
respondent obtained an interim order exparte provisionally
sequestrating the applicant herein, and also appointing 1st and 2nd
respondents as provisional trustees of the deceased estate.

Following
that Court Order 1st and 2nd respondents came in a helicopter to the
applicant's estate on 16th February 1988, expelled
customers and
employees from the Applicant's Estate's business

4

premises
at Mount Moorosi, took all the money collected in the businesses and
left with the keys without disclosing where they were
taking them to.

The
trustees came again the following day in the some helicopter and
informed the widow of the late Nehemia Sekhonyana 'Maseribane
that
they were proceeding to the cattle posts belonging to applicant and
various other business centres where it was later known
that they
closed the shops, took away money in those shops, locked them up and
left with the keys; including also the shop Lovely
Rock situated at
L.N.D.C. Centre, Maseru.

It
appears however that after 18th February 1988 the trustees released
to the widow the keys to some shops at Mount Moorosi but
withheld
those to the Hotel and shops at Phomong, Ha Nooana, Lovely Rock and
Mafura. These places remain closed to date and it
is the fear of the
Executor that this causes irreparable harm to the estate occasioned
by loss of daily takings and good-will in
all those business pieces.

The
Executor buttresses up his contention that the provisional trustees
are disqualified by alleging that they do not possess the
necessary
expertise to act as trustees.

He points
out that Mr. Mphalane the second provisional trustee is disqualified
in law to act as such because he also holds a brief
as an attorney
for the applicant. A power of attorney marked "AA" is
attached to the Executor's affidavit in support
of this contention.
He thus contends that where a man holds a brief for his client he
cannot at once act-as trustee on behalf of
the client's creditors
without involving himself in a conflict of interests. He accuses 2nd
trustee of lack of good faith in that
having realised part of the
applicant estate the 2nd trustee nonetheless has not settled the debt
owing to 4th respondent but instead
has gleefully accepted

5

appointment
as co-provisional Trustee for the sequestration of applicant.

The
executor avers that the 1st respondent Stephen Buys is disqualified
and should not act as provisional trustee because he does
not reside
within Lesotho, and further that he was improperly appointed
co-provisional trustee on the basis of being an Attorney
as appears
more fully from the petition of Keith Casalis in CIV/APN/42/88. The
executor contends there is no evidence to show that
Stephen Buys
maintains a bona fide office within Lesotho to the satisfaction of
the Master; and further that he is the attorney
for the 3rd
respondent thus manifests lack of good faith in his handling of the
petition for the provisional sequestration of the
applicant. In
support of this contention the executor points out that the two
trustees knew that the applicant estate is not insolvent
as he
maintains Keith Casalis's petition in CIV/APN/42/88 clearly bears
this out.

In
argument Mr. Mohau for applicant submitted that the opposing papers
do not relate to points of importance. He pointed out that

CIV/APN/42/88 arose not at applicant's instance but at the instance
of Mr, Moiloa who indicated that he represented some creditors
who
had interest.

He
charged that the co-provisional trustees acted in breach of section
19(1) by personally proceeding to Quthing in the face of
the fact
that section 19(1) empowers the sheriff or his deputy or a Messenger
of a Subordinate Court to attach and make an inventory
of the movable
property of the insolvent ...... etc. as soon as he has received a
sequestration order.

I am not
certain of the basis of any serious objection raised in this regard
in view of the fact that section 69(1) says "immediately
after
his appointment a trustee shall take into his possession.............
or control all movable property....... of which he
is trustee."

6

Section
18(3) makes no distinction of function between a provisional trustee
and a trustee. Section 18(1) provides that

"as soon as an estate has been sequested (whether provisionally
or finally),.... the Master may appoint a provisional trustee
to the
estate in question who shall give security to the satisfaction of the
Master for the proper performance of his duties as
provisional
trustee and shall hold office until appointment of a trustee.

The order
that was granted in CIV/APN/42/88 on 9th February 1988 followed a
prayer seeking the appointments of Stephen Carl Buys
and Nchakha
Mphalane as provisional trustees. See paragraph 3 thereof. Needless
to say this was granted and further that contrary
to averments made
that Mr. Buys was improperly appointed for reasons stated therein I
have noticed from the' papers that he has
filed SCB - 1(e) 1(b) 1(c)
1(d) 1(e) 1(f) and 1(g) covering a small fraction of his appointments
by the Master as either a provisional
trustee or trustee in
liquidation of insolvent companies and in sequestration of insolvent
estates ranging from only 1985 to 1986.
Thus with this amazing amount
of work done within so short a period experience requires no further
proof. In paragraph 5 of his
affidavit Mr. Buys sufficiently supports
his allegation that he has been appointed as Trustee in many estates.
To suggest that
he has no expertise truly beggars description. To
imply that in all these appointments including the present the Master
has been
consistently acting improperly has a distressing ring of
hollow-heartedness in it regard being had to the fact that at the
time
in history of the promulgation of the Proclamation on whose
subsection applicant seeks to rely there were hardly any trustees
resident
in this territory; yet needless to relate numerous trustees
have been appointed from elsewhere since then up to this day.

It was
submitted for applicant that the provisional trustees acted wrongly
to have chartered a helicopter

7

from
Johannesburg to visit the various places where applicant's assets are
situated. It was suggested that if they had to go by
helicopter no
reason was given why they did not use the Lesotho Royal Defence-Force
one.

Page 2
paragraph 5 of NM10 the interim report by joint trustees however
furnishes the reason why a helicopter had to be used. Moreover
any of
these charges cannot avail because any loss occasioned by
extravagance on the part of the trustees is taken care of by means
of
security tendered to the satisfaction of the Master. Furthermore it
is the creditors' business to object as they have a chance
to do so.

The
wording in S. 19 is overcome by the use of the word "shall"
in S. 69(1) with regard to the fact that the trustee has
to take into
his possession and under his control all the movable property. It
seems to me therefore that a trustee acts properly
if he does not
wait for the sheriff as envisaged in S. 19(1) but acts promptly in
terms of S. 69(1). In any event it seems he had
a choice of which of
the two he can proceed under. Thus he cannot be faulted for opting
for one or the other.

It was
contended that trustees acted wrongly by closing the shops and
exposed applicant to loss of goodwill but S. 80(1) provides
that

"A trustee shall not carry on the business of the insolvent
concerned or any part thereof unless authorised thereto by the

creditors of the insolvent's estate or, in the absence of
instructions from the creditors, by the Master."

Paragraph
15 of Mr. Mphalane adequately amplifies the intent and practical
purpose of this section; for even if loss of income is
occasioned by
closure of business the purpose of the law of insolvency is to place
the affairs of the insolvent under the control
of a trustee, in the
interests of all concerned,

8

With
regard to the disqualification levelled at the two trustees by
applicant section 55 sets out lists of persons who are disqualified.

None of the trustees in the instant matter seems to feature in any of
them. Indeed subsection (e) disqualifies any person who has
an
interest opposed to the general interest of the creditors of the
insolvent estate.

Even if
under (d) Mr. Buys could be said to be disqualified by reason of not
residing in this Territory the fact remains that he
is a Practising
Attorney of this Court who subscribed to the oath that he would
demean himself as such. Appointment as a trustee
is in keeping with
and not contrary to the spirit and purpose of that oath. Moreover the
proviso at the end of section 55 thoroughly
covers his position as a
practicing attorney.

An
attempt was made on behalf of applicant to distinguish between the
meanings of the words "elect" and "appoint"
but
section 55 uses the two disjuncti­vely in which event wherever
any is used the other could too.

It was
argued that 1st respondent is disqualified because he represents 3rd
respondent and as proof of that he even signed the notice
of motion
not as alleged in the affidavit on behalf of Mr. Koornhof but in his
own capacity because there is no sign or indication
that he did so on
Mr. Koornhof's behalf. But whatever the case may be nothing among the
list of disqualified persons shows in section
55 that a creditor's
attorney is disqualified. The submission therefore that a
sequestrating attorney is a creditor and thus is
on the creditors'
side would seem to carry conviction if one takes the view that he is
embraced in the expression that ho and others
ore all part of the
general body of creditors.

It was
argued that 2nd respondent previously held brief for the estate
before Chief 'Maseribane's death

9

but
afterwards he had no letters of administration. But it is common
cause that he now has a power of attorney. Furthermore my reading
of
section 48 shows that a creditor whose claim against an insolvent
estate is dependent upon a condition may prove that claim
in the
manner set forth in section 44 but subject to the following
provisions :-

1. "If
   the condition is of such a nature that it will be fulfilled,
   ......... within a year of the sequestration, the creditor
   may prove
   his claim .....

   
   

2. If
   the condition is not such as is described in paragraph (a) the.
   creditor may call upon the trustee at a meeting of creditors
   to put
   a value upon the claim............."

   
   

Section
44(4) reads in part

".......... That affidavit may be made ........... by any
person' fully cognizant of the claim who shall set forth in the

affidavit the facts upon which his knowledge of the claim is based
and the nature and particulars of the claim, whether it was
acquired
by cession after the institution of the proceedings by which the
estate was sequestrated ................... and if it
consists of
movable property in his possession which he has not realised .......
(and) the amount at which he values the security,................"

A careful
look at S. 48 of Administration of Estates Proclamation 19/1935 (3) b
and c makes it clear that an Administrator is empowered
to behave
like a trustee if the estate can't pay or is insolvent, Thus the
powers in the power of attorney are not in conflict
with those
granted by the Master. Indeed apart from the fact that a trustee or
administrator is not shown to be disqualified under
section 55 it
appears that in such circumstances he does not have an interest
opposed to that of the general body of creditors
for whether he is
trustee or administrator his job is to get the highest price and pay
creditors.

10

It was
submitted that in terms of section 59(a) a trustee who is shown to
have accepted some certain benefits should be removed.
Very properly
Mr. Edeling pointed out that this section is inapplicable in the
instant case because it is designed against people
with corrupt
habits and crooks who. thrive on "kick backs".

I have no
doubt from reading Mr. Mphalane's affidavit that he acted within
provisions of section 48 of the Administration of Estates

Proclamation. Although accused of not saying what amount was realised
however page 4 of NM 10 sets out this. As a token of the
trustees'
good faith and keen sense of responsibility they undertook in terms
of page 4 NM 10 to provide guaranteed security of
tender in respect
of the animals that they suggested should be let to graze in the
Republic of South Africa. But in address to
me applicant's counsel
contented himself with confining his argument to the danger of taking
the animals outside the jurisdiction
of this Court. He never alluded
to what dangers beset the undertaking by the trustees to guarantee
payment of the sum realised
when these animals are sold at reasonable
price.

Applicant
set great stock by the fact that the amount of M5401.92 was refused
by 3rd respondent who is applicant creditor in CIV/APN/42/88.
But
applicant's letter referring to this amount urges 3rd respondent to
accept it in full and final settle- . ment; yet this was
a judgment
debt which could not have finally liquidated the debt unless interest
and taxed costs were included. These are a matter
for determination
at final sequestration. Even as at the time of the proposition to
have the amount accepted by 3rd respondent
the sum of interest and
costs would be far in excess of the minimum amount on the basis of
which sequestration could ensue. If
interest and costs are
outstanding it is permissible

11

to reject
payment effected by means of a cheque or cash.

I have
read the interim order granted by the Honourable the Chief Justice
and have not come across any ruling by which he excluded
the right of
the respondent to anticipate the return day in CIV/APN/42/88

Bearing
in mind that there are disputes of fact in this matter and further
that the requirements of prayers for interdict have not
been complied
with as set out in Mr. Mphalane's affidavit ad para 20 et seq it is
to be wondered why applicant did not seek an
alternative suitable
remedy by way of damages against the trustees knowing and seeing that
they are not men of straw.

As
pointed out by Mr. Fick for 3rd respondent this application involves
two things. First it has been brought ex-parte. Secondly
it is an
application for an interdict. Applicant is required to meet certain
requirements in order to succeed in an application
of this nature. If
these requirements have not been met then applicant cannot succeed in
en interdict.

Applicant
must show that :-

1. it
   has a clear right

   
   

2. an
   injuiry has actually been committed or that it has a well founded
   apprehension that the injuiry will be committed by a respondent

   
   

3. there
   is no other remedy open to it which will afford adequate protection
   from the mischief being done or threatened.

   
   

At page
70 of Vol. 3 of The Law of South Africa by W.A. Jobert and T.J. Scott
the learned authors say

"An ex-parte application, which by its very nature places only
one side of a case before the court, requires the utmost good
faith
on

12

the part of the applicant and failure to make full disclosure of all
material facts may lead a court to refuse an application or
to set
aside a rule nisi on that ground alone, quite apart from
considerations of wilfulness or mala fides."

C.F.
Reilly vs. Benigno 1982(4) S.A. at 370 C to F. The facts which have
not been disclosed need not be facts which could have but
might have
influenced the Court. It only surfaced from the opposing affidavit
from page 5 to 9 of Mr, Mphalane that during deceased's
lifetime
there was already an application for sequestration of his estate. It
is thus doubtful whether had the Judge who granted
a rule nisi
following an application moved ex parte known this fact he would not
have required to hear the other party to express
his views on the
matter before granting the drastic relief ex parte. At page 10 of the
executor's opposing papers in paragraph
24 in CIV/APN/42/88 he
mentions that he received a draft note on 25th February 1938 i.e.
only four days before the moving of the
present application. Can it
be said that if the Court which granted the rule nisi had known of
such note it might not have been
influenced one way or the other?
Could the court have not stayed proceedings end required the benefit
of hearing the other party
before granting the drastic relief it did
on the day in question? Indeed in the minute jotted down by C.J. on
29th February 1988
he has said

"Had I been faced with such contest (occasioned by
executor'sobjection to the application) I would not have made order
on
9th February 1988 under the circumstances."

Indeed
para 11(a) to (u) of Mr. Mphalane's affidavit brings up a whole range
of matters which no doubt must have been known by applicant
but were
not disclosed yet they are very material.

13

3. makes
   mention of judgment debts which date as far back as 1977 spanning
   the whole range of years from then till 1986 which are
   still
   outstanding.
   

   
   

4. states
   that many judgment creditors have not been paid for many years,
   "which strongly supports

   
   

"in Mr. Mphalane's words "the fact that the debtor (now
deceased and his estate) was and is not able to pay its debts".

(m) states that around 22nd May 1987 various promises were made to
creditors for payments ....... but no such payments were made,
with
the exception of certain unauthorised payments made to certain
creditors in unlawful preference to other creditors, by family

members.

In
fairness to applicant with regard to the interdict sought it seems
clear right existed because the heirs to the estate have reversionary

right. - But this seems to be all there is in applicant's favour in
this regard.

As far as
applicant's fear of suffering irreparable harm is concerned its
resort to the interdict is misconceived because the trustees
have
filed security for the safe performance of their duty. Moreover in
insolvency proceedings the Master takes close watch on.
the trustees.
Indeed the Master in such circumstances acts not merely as a watch
dog but almost as a blood hound.

I have
already mentioned that a' claim for damages lies in the event of
maladministration by trustees to the detriment of potential
heirs. So
here an alternative remedy is available. If that does not suffice the
more powerful and immediate remedy in the shape
of anticipatory
procedure could have been followed in CIV/APN/42/88 where an interim
order was obtained on 9th February 1988 returnable
on 26th February
1988. That return date was extended to 18th March 1988 thus giving
applicant further opportunity to anticipate
the return date in that
main application if it felt aggrieved

14

by the
granting of provisional order of sequestration; that is provided its
story holds that the estate is solvent for then the
rule could
automatically be discharged. But alas! it comes to this Court by way
of an urgent application ex parte to oust duly
appointed trustees and
prejudices the rule nisi which has since been standing. See
CIV/APN/402/86 Khoboko vs Khoboko & 2 Others
(unreported) at
pages 7 to 9. See also Republic Motors vs Lytton Road Service Station
1971(2) at 518 where Beck J. rightly stated

"The procedure of approaching the Court ex parte for relief that
affects the rights of other persons is one which .........
is
somewhat too lightly employed. Although the relief that is sought
when this procedure is resorted to is only temporary in nature,
it
necessarily invades, for the time being, the freedom of action of a
person or persons who have not been heard and it is, to
that extent,
a negation of the fundamental precept of audi alteram partem.

It is accordingly a procedure that should be sparingly employed and
carefully disciplined by the existence of factors of such urgency,
or
of well-grounded apprehension of perverse conduct on the part of a
respondent who if informed before­hand that resort will
be had to
the assistance of the Court, that the course of justice stands in
danger of frustration unless temporary curial intervention
can be
unilaterally obtained."

With
regard to balance of convenience it should suffice to point out that
this should be maintained not only between trustees and
the estate
but also between creditors because their interests are of vital
importance.

It has
been said that Mr. Mphalane also was not a fit and proper person to
have been appointed co-provlslonal trustee. But when
regard is had to
the position of creditors' vis-a-vis insolvency proceedings

15

taken
along with suitability of trustees it seems that this criticism
cannot hold.

Deceased
estate had certain prospects of paying creditors. It looked good on
paper but NM2, 3 and 4 told a different story. Circulars
promising to
pay did not afford creditors any satisfaction of their claims. It
must have been clear then that the estate had difficulties
meeting
its debts. The third respondent having learnt of this instituted
sequestration proceedings and on approaching the executor's
agent
found him amenable to sequestration proceedings. The criticism
levelled against him is that he should not have gone along
with the
sequestration.

But
section 48 of the Administration of Estates Proclamation shows that
executor has to satisfy himself as to solvency of the estate.
If the
estate is insolvent the executor must deal with it as if it is an
estate dealt with under the Insolvency Proclamation. Thus
the
residual heirs would have to stand in line after secured and
concurrent claims have been satisfied.

Volume
Eleven of The Law of South Afica at 129 says

"Notwithstanding the fact that a deceased estate is being
administered under the provisions of the Adminstration of estates

Act, the right of the creditor to apply to court for the
sequestration of that estate is specifically maintained ...... in the

case of sequestration of deceased estate ...... there is a choice
between administration by an executor or administration by a
trustee
in insolvency. There can be no doubt that the powers of the trustee
under the Insolvency Act are greater than those of
an executor."

The
learned author is not hesitant in asserting that under the management
of a trustee in insolvency matters the Act provides for
creditors a
superior legal machinery for the protection of their interests. I
don't find that Mr. Mphalane can legitimately be
faulted for the part
he played in these proceedings.

16

The rule
is discharged with costs on party and party scale payable from the
deceased estate. Respondents' counsel had asked for
costs on attorney
and client scale but I have declined to indulge their request for I
do recognise that it cannot be wise to burden
the estate with
punitive costs.

I may
just place on record that 4th Respondent undertook to abide by the
Court's decision.

ACTING
JUDGE.

13th
April, 1988.

For
Applicant : Mr. Mohau

For 1st &
2nd

Respondent
: Mr. Edling

For 3rd
Respondent : Mr. Fick.