CIV/APN/88/89

IN THE
HIGH COURT OF LESOTHO

In the
matter between;

PAGES
STORES (LESOTHO) (PROPRIETARY) LIMITED Applicant

and

THE
LESOTHO AGRICULTURAL DEVELOPMENT BANK 1st Respondent

THE
MINISTER OF THE INTERIOR 2nd Respondent

KINGSWAY
CONSTRUCTION (PROPRIETARY) LIMITED 3rd Respondent

BEREA
CONSTRUCTION 4th Respondent

C.R.
HOUSEHAM 5th Respondent

G.C.
McPHERSON 6th Respondent

J.P.
MULLAN 7th Respondent

J DE V
BRINK 8th Respondent

JUDGMENT

Delivered
by the Honourable Mr. Justice J.L. Kheola on the 9th day of June,
1989

This is
an application for an order reviewing and setting aside the
declaration by the second respondent, in terms of section 44
of the
Land Act No.17 of 1979, of plots numbers 12284-024, 12284-034 and
12284-358 Maseru Central, Maseru Urban Area, as a selected

development area as published in Government Gazette vol. XXXIV No.12
dated the 7th February, 1989 (Legal Notice No.17 of 1989).

The
applicant seeks an order interdicting the respondents from acting on
the said declaration or taking any steps whatsoever to
effect it and
costs of suit, including the costs of the interdict

2

proceedings,
to be paid by first and second respondents jointly and severally, the
one paying the other to be absolved; and further
and/or alternative
relief.

The
applicant has set out its grounds of challenging the aforesaid
declaration in paragraph 30 of its founding affidavit. It alleges

that the second respondent exceeded the powers granted to him in
terms of section 44 of the Land Act,. 1979 (the Act) in making
a
declaration relating to a particular building complex which amounted
to no more than a single development that was proceeding
in any event
without the need for second respondent to have considered it
necessary to declare such an area a selected development
area. The
development in question was not part of a scheme to which the second
respondents power is limited, and in the circumstances
the
declaration by the second respondent is ultra vires his powers.

It
alleges further that the real purpose and objective of the exercise
by the second respondent of his powers was prompted by the
perceived
desirability of freeing first respondent from its obligations towards
applicant under the lease agreement, which first
respondent felt to
be unfavourable and an unwarrantable burden on it. As much this
constitutes a use of his power by the second
respondent for an
improper or ulterior purpose, and not in fact for the purpose of the
public interest as required by the Act.

The
second respondent's decision was, in the circumstances, unreasonable,
arbitrary and vitiated by bad faith.

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The
applicant further deposes that the second respondent's decision
involves a significant loss of valuable property rights for

applicant, which was vitally affected by such decision. In the
circumstances applicant was entitled to a proper hearing before
the
decision was made. Moreover applicant entertained a legitimate
expectation that if any steps were to be taken which would prejudice

its rights, it would be given a fair opportunity to make any relevant
statement in regard thereto, prior to any decision being
taken in the
matter. Furthermore it is submitted that applicant was entitled to
receive a copy of the motivation for the application,
to entitle it
to effectively object.

The
applicant alleges that should the premises be demolished, it will
suffer irreparable harm to its rights to enjoy accruing to
it by
virtue of the lease agreement. It will obviously be compelled to
cease trading for an undertermined period, and it will be
in a
position where it has no alternative premises readily available to it
to enable a prompt recommencement of trading. The loss
incurred
through ceasing to trade will in addition not be amenable to proper
quantification.

The
second respondent has set out his reasons for decision to declare the
area in question a selected development area in paragraphs
15-26 of
his answering affidavit. He alleges that the proposed development is
by common consent a massive re-construction and development
exercise
ever to be carried out in the city of Maseru. Especially in view of
the fact that this project is being undertaken by
a parastatal
organisation, as the Minister of the Interior it is his clear duty
and obligation to ensure that the

4

project
becomes a reality. The needs of future developments of Maseru and
indeed the public interest of the entire Kingdom made
it imperative
that the Government as a whole should lend its weight behind this
project. In so doing, he and the Government of
Lesotho was only
actuated to ensuring the development of Maseru and the interests of
the Basotho community in general.

The
second respondent has stated that the proposed huge building will
have eight first class shops on the ground floor, there will
be huge
parking space on the ground floor and on the first floor. The first
respondent will occupy only the first three floors.
The rest of the
ten floors are proposed to be leased out to several business
enterprises. This in turn will generate additional
resources to the
first respondent which it will plough out in the course of
agricultural development in this country. In the perception
of the
Government of Lesotho this is a capital development whose spin-offs
will regenerate the economy of this country.

He states
that to make the first respondent's project a reality, the first
respondent needed extraispace and plot no. 59 Maseru
Central which
housed the Old Police Headquarters and is currently housing the
Traffic Branch . had to be included in the proposed
development.

On the
21st September, 1988 he received a representation from the first
respondent setting out their plans for re-construc­tion
and
developments of plot numbers 12284-034, 12284-024 and the Lesotho
Government site No.59 Maseru Central. The letter reads as
follows:

5

"Honourable
Minister of Interior,

C/O
Commissioner of Lands,

Ministry
of Interior,

MASERU

Ntate,

REQUEST
FOR DECLARATION OF PLOTS 12284-024, 12284-034 AND PLOT 59 MASERU
CENTRAL AS SELECTED DEVELOPMENT AREA.

The Lesotho Agricultural Development Bank requests you, with the
support of the Police Department, that you declare plots 12284-024,

12284-034 and site 59 Maseru Central to be selected development area
in terms of Section 44 of the Land Act 1979.

The reasons for this request arise from the desire of the Lesotho
Agricultural Development Bank (Lease holders of Plots 12284-024
and
Plot 12284-034 and the Lesotho Government lease holders of Site 59
Maseru Central, to redevelop these three plots soonest to
provide new
headquarters for the Lesotho Agricultural Development Bank and effect
improvement on Site 59 Maseru Central.

We are advised by our architects and other professional advisers that
traffic congestion on Kingsway has become a serious problem
and is
likely to exacerbate in the near future. It became necessary in our
redevelopment plans to bear this factor in mind. The
planned
redevelopment has taken into account the need to keep Kingsway as
clear of client traffic as possible and to accommodate
such traffic
as much as possible on the project itself. This involves adjustments
to boundaries on Site 59 Maseru Central and to
Kingsway and
Parliament road.

The redevelopment of these three plots is estimated to cost Twenty
Four Million Maloti. We enclose building plans prepared for
us for
the proposed redevelopment. We draw your attention to the ground
plans and architects model of the redevelopment and what
the building
and its environs will look like when complete. The new building will
comprise Thirteen (13) Floors and its construction
will be tackled in
two phases. The following features of the redelopment are significant
for your assessment of the economic and
physical merits of the
proposed project:-

1. total
   redevelopment costs estimates are Twenty Four Million Maloti.

   
   

2. phase
   one of the project is ready to begin immediately and funding for
   this phase (M9,000,000-00) has already been procured. Phase
   one will
   consist of the first four (4) floors of the new building;

   
   

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3. phase
   two will consist of a further Nine (9) floors and is geared to start
   immediately upon completion of the first phase;

   
   

4. on
   5th September 1987 the Lesotho Agricultural Development Bank
   building which housed our banking hall burned down. Since that
   time
   the Lesotho Agricultural Bank is without a proper bank building and
   the security position of the Lesotho Agricultural Development
   Bank
   is extremely weak. The redelopment of entire sites must be done
   together and with the long term needs of Lesotho Agricultural

   Development Bank in mind;

   
   

5. the
   redevelopment will encompass Kingsway and Par- liament road and will
   clearly enhance the physical appearance of Kingsway/Parliament
   road
   and Consti­tution road;

   
   

6. the
   economic impact and value of plots 12284-024 and 12284-034 and Site
   59 Maseru Central will be increased far beyond present
   values;

   
   

7. the
   security of movement of cash in and out of the Lesotho Agricultural
   Development Bank is going to be vastly improved by the
   planned
   redevelopment;

   
   

8. part
   of the Police Department is going to enjoy the use of improved
   facilities on Site 59 Maseru Central as provision has been
   made for
   this to happen in terms of the building plans.

   
   

Sir, in
view of the urgent need to house the Lesotho Agricultural Development
Bank properly and the cost escalation factors involved
we shall be
grateful for your early decision. We indemnify the Lesoth Government
from any claims that may arise from . any source
as a result
favourable decision.

C.S.
MOLELLE

MANANGING
DIRECTOR."

The
second respondent deposes that after a careful appraisal of all the
information available to him, he came to the conclusion
that the
three plots in question should be declared a selected development
area in terms of section 44 of the Act. The development

7

has a
much large objective because at the moment Maseru is suffering from
totally inadequate office accommodation. The Lesotho Highlands

Development Project which is already in steam requires very
considerable office space which is not available in Maseru at the
moment. The building of the thirteen-floor building complex will
hopefully alleviate the situation.

I propose
to deal first of all with the question of whether the second
respondent was bound to afford the applicant a hearing before
he
declared the area in question as a selected development area in terms
of section 44 of the Act. Section 44 reads as follows:-

"Where it appears to the Minister in the public interest so to
do for purposes of selected develop­ment, the Minister
may, by
notice in the Gazette declare any area of land to be a selected
develop­ment area and thereupon, all titles to land
within the
area shall be extinguished but substitute rights may be granted as
provided under this Part."

Mr.
Dison, counsel for the applicant, has submitted that the second
respondent was not entitled to make the said declara­tion
without
first giving applicant a hearing as to the propriety of the said
declaration. He submitted that it is firmly establi­shed
in law
that when a statute gives powers to an officer of State to make an
order prejudicially affecting the rights of persons or
property, in
the absence of an express provision or a clear intention to the
contrary, there is a presumption that the power so
given is to be
exercised in accordance with fundamental principles of justice. He
referred to the much quoted dictum of centlivres,
C.J. in R. v.
Ngwevela, 1954 (1) S.A. 123 (A.D.) at p. 131:

8

"The maxim (audi alteram partem) should be enforced unless it is
clear that parliament has expressly or by necessary implication

enacted that it should not apply or that there are exceptional
circumstances which would justify the court's not giving effect
to
it."

The same
principle was stated in a recent South African case. Attorney
General, Eastern v. Blom and others, 1988 (4) S.A. 645 at
p. 662
where Corbett. J.A. said:

"I prefer the approach which holds that in the circum­stances
postulated, viz a state empowering a public official to
give a
decision which may prejudicially affect the property or liberty of an
individual, there is a right to be heard, unless the
statute shows,
either expressly or by implication, a clear intention on the part of
the legislature to exclude that right."
(Att Mr. Geldenhuys and
Mr. Tampi, counsel for first and second respondents respectively,
have submitted that by necessary impli­cation
Parliament has
excluded the principle of audi alteram partem in acting under section
44 of the Act. They referred to various sections
in the Act which
expressly required notice to be given or tobe deemed to have been
given.

It is
common cause that in enacting section 44 Parliament did not expressly
exclude the application of the principle audi alteram
partem and that
the issue to be decided by the Court is whether it has done so by
necessary implication. It is also common cause
that as a sub-lessee
the applicant has a right of occupation. I agree with the submission
that in deciding this difficult question
I must look at some other
provisions of the Act. Section 42 deals with the termination of
leases where the lessee is in breach
of certain conditions of the
lease. Subsection (2)

9

provides
that notice of termination of the lease shall be served by the
Commissioner upon the lessee, the sub-lessee (where the
whole of the
lessee's interest has been sublet to one sub-lessee) and to the
mortgagee. In the present case the applicant is a
sub-lessee of only
part of the plot. The other parts of the plot were sublet to other
people and the first respondent held another
part of the plot for its
own use.

It is
clear that under section 42 (2) of the Act the rights of a sub-lessee
who is holding only part of the plot are ignored and
no notice of
termination is given to him. The purpose and effect of section 44 is
to terminate a lease because it provides that
upon publication of an
area as a selected development area all titles to. land within the
area shall be extinguished.

Section
55 of the Act deals with land acquired for public purposes. It
provides that prior to the publication in the Gazette of
the
declaration notice the Minister shall cause a copy of the notice to
be served upon any person known to be in occupation of,
or to have an
interest in, the land, in the manner indicated in section 86. Under
section 44 of the Act there is no provision for
a notice to be given
to the lessee or occupier of the land declared as a selected
development area. If the Legislature had intended
that such a notice
had to be given it would have said so in no uncertain terms as it has
done in section 42 and section 55 as well
as in section 13 and
section 14.

The first
respondent is the lessee of the plot occupied by the applicant. The
contract of a sub-lease is between the applicant

10

and the
first respondent. All what the second respondent did was to give
consent that the parties could enter into such a contract
which does
not bind the second respondent in any way. On the 21st September,
1988 the first respondent wrote the letter shown above
requesting the
second respondent to declare plots 12284-024, 12284-034 and site 59
Maseru Central to be selected development area.
This
application/request was made by the holder of the lease pertaining to
the first two plots. I find it absurd to suggest that
at that stage
the second res­pondent ought to have invited the applicant and
asked him to make representations. I am of the
opinion that the
second respondent was under no obligation to ask the applicant to
make representations because the declaration
was being made at the
request of the lessee. The contractual obligations of the first
respondent towards the applicant are no concern
of the second
respondent. If the first respondent is in breach of certain
conditions of the lease contract between itself and the
applicant
that is an entirely different matter which cannot . affect the second
respondent's decision in any way.

The
applicant was not entitled to be heard before the declaration was
made on the ground that taking into account the other provisions
of
the Act which provide that notice must be given publication is made
in the Gazette or before a revocation of allocation is made,
or that
upon publication notice shall be deemed to have been made, it is
clear that by necessary implication the Legislature excluded
the
principle audi alteram partem when acting under section 44 of the
Act. Secondly, the application that the second respondent
must
declare the area in question a selected development area was made by
the holder of the lease. The

11

applicant
has locus standi to bring interdict proceedings against the first
respondent to stop it from demolishing the building
which it is now
occupying but it has no locus standi or rights to challenge the
decision of the second respondent to declare the
area in question a
selected development area on the ground that it has no contract with
the second respondent and that the motivation
came from the lessee.

The
decision of the second respondent is challenged on the ground that it
was ultra vires the powers affored him under section 44
of the Act,
by virtue of the fact that the development in question is no more
than a conventional commercial project with no direct
public interest
component, and as such it is not part of scheme to which the second
respondent's powers under section 44 are limited.

In
section 2 of the Act "selected development area" is defined
as an area set aside under section 44 for –

1. "
   development or reconstruction of existing built-up areas;

   
   

2. construction
   or development of new residential, commercial or industrial areas;

   
   

3. re-adjustment
   of boundaries for the purposes of town planning."

   
   

It was
submitted that the word "areas" suggests that the power in
paragraph (a) is limited to a scheme involving several
areas. That
the power must be construed as relating to reservation, for town
planning purposes, of an area consisting of built-up
areas that
require urban renewal or an analogous form of urban

12

development.
That the notion of developing an existing built-up area raises the
question of what is meant by development of an area
that is already
built-up. A reasonably possible interpre­tation is that it is
limited to urban renewal of such areas, an idea
which fits in well
with the use of the word "reconstruction". That accordingly
the power is limited in relation to already
built-up areas to –

1. a
   town planning scheme of development involving several areas;

   
   

and

2. urban
   renewal.

   
   

I do not
agree with this interpretation of section 2 read with section 44 of
the Act. A proper interpretation of the above two sections
is that
the second respondent is empowered to declare "any area" of
land a selected development. I have underlined the
words "any
area" to show that there is nothing in the Act which requires
that the declaration must always invol.ve more
than one area. Even
the plural used in section 2 (a) under the definition of "selected
development area" does not exclude
the idea that one built-up
area may be declared as a development area. Take the area from the
first respondent's plots to the Lesotho
Bank's Development House near
the charge office; covering close to about three hundred yards and
several plots. Is that to be regarded
as a single built-up area or
several built-up areas? If we take the construction of the sections
suggested by the defence it means
that the second respondent cannot
declare the whole of that area because it involves one built-up area.

13

The area
in question involves two plots which belonged to the first respondent
and one plot which belonged to the Government of
Lesotho. There is
nothing in the Act to suggest that the second respondent could not
declare such an area a selected development
area and that he must
wait until there is another area or other areas which must be
declared simulta­neously with it. I am
of the opinion that
development or reconstruction of the existing built-up areas can be
done to a single built-up area and that
even to that single built-up
area development and reconstruction can be done to a single block of
buildings.

It is
further submitted that the second respondent exercised his powers
under section 44 of the Act for an improper and ulterior
motive. He
merely wanted to free the first respon­dent of his obligations
under the lease agreement. It seems to me that this
serious
allegation against the second respondent is not supported by any
evidence. The second respondent has denied the allegation
(See
paragraph 28 the third paragraph of the second respond's opposing
affidavit.) In the letter of the 21st September, 1988 the
first
respondent did not inform the second respondent that it had problems
with the applicant and that it wanted to get rid of
it. The applicant
ought to have supported its allegations with evidence that the second
respondent was aware of the dispute between
the first respondent and
itself.

The next
question is whether the declaration by the second respondent was in
the public interest. In Clininal Centre (PTY) LTD.
v. Holdgates
Motors Co. (PTY) LTD., 1948 (4) S.A. 480 (W.L.D.) it was held that
the scheme is "in public interest" if
it is to the general
interest of the community that it should be carried out, even if it

14

directly
benefits only a section or class or portion of the community. In that
case the reconstruction by a company for the benefit
of providing
more office accommodation and parking space for the general public
but in particular for ex-servicemen. The Court
held that the scheme
was in public interest. In the present case the scheme is undertaken
by a parastatal organisation and the
proposed scheme is going to
provide office accommodation and parking space for the general
community. In the long run the rentals
from the tenants will enable
the first respondent to lend money to more farmers than it is able to
do at the moment. I think the
scheme is without any doubt in public
interest.

It is
quite correct that the applicant is going to face some financial
hardship if it loses the present premises but that is the
matter
between the first respondent and the applicant . It has nothing to do
with the decision of the second respondent to declare
the area in
question a selected development area which is undoubtedly in the
public interest.

It was
further submitted that by virtue of the fact that second respondent
considered himself bound to ensure that the project became
a reality
since it was undertaken by a parastatal organisation, and secondly by
virtue of the fact that he considered himself entitled
to afford the
first respondent preferential treatment, second respondent
misdirected himself by fettering his discretion, taking
into account
extraneous matter and failing to apply his mind thereto.

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I am of
the opinion that despite the use of the words "my clear duty and
obligation to ensure that the project is a reality"
the second
respondent still applied his mind property to the matter before him
because he starts by saying that "the proposed
development is by
common consent a massive re-construction and development ever to be
carried out in city of Maseru". He condudes
by saying that "the
future developments of Maseru and indeed the public interest of the
entire Kingdom made imperative that
the Government as a whole should
lend its entire weight behind the project. In so doing, I and the
Government of Lesotho was only
actuated to ensuring the development
of Maseru and the interests of the Basotho Community in general".
These words clearly
show that the second respondent properly
exercised his discretion in terms of section 44 of the Act.

In the
result the application (as amended) is dismissed with costs.

J.L.
KHEOLA

JUDGE

9th June,
1989.

For the
Applicant - Mr. Dison

For the
1st Respondent - Mr. Geldenhuys

For the
2nd Respondent - Mr. Tampi.