HIGH COURT OF LESOTHO
Appeal of :
ENTERPRISES DEVELOPMENT CORPORATION Respondent
by the Hon. Mr. Justice M.L. Lehohla
appellant has appealed to this Court against the decision of the
learned magistrate in the court below given in favour of the
parties will be referred to in their respective positions and
designations of the applicant and the respondent according as
appeared in the court below.
grounds of appeal the applicant sets out his grievances as follows:
learned magistrate - misdirected himself in (sic) failing to apply
his mind to the papers before him in as much (sic) as on
filed of record no objection has been raised by the respondent in
its answering affidavit and no new matter had been
added by the
appellant (applicant) in his replying affidavit.
learned magistrate ... erred .... in holding that "a clear
dispute of fact existed" in as much (sic) as on the papers
filed of record no dispute of fact had arisen, the only dispute
on papers ... being the lawfulness or unlawfulness of the
deductions effected by the respondent on the applicant's salary.
learned magistrate erred in holding that the loan agreement between
the applicant ... and the respondent formed the basis
application in as much (sic) as that is borne out by the fact put
learned magistrate erred in holding .that the fact of the applicant
owing a certain amount of money to the respondent was
the basis of
the application in disregard of all the facts disclosed on the
learned magistrate erred in purporting to have summarily dealt with
the application when he had in fact entertained a full
arguments on the merits.
learned magistrate misdirected himself in (sic) disregarding the
provisions of Order No. XXI of the Subordinate Court Rules.
of the case gathered from the affidavits filed in the court below
show that the applicant was an employee of the respondent
July, 1984 till 31st March, 1989. The service contract between the
parties was governed by the terms and conditions set
out in T M I.
It was in
persuance of those terms and conditions that on 15th December , 1988
the applicant intimated to the respondent that he
terminate his contract of service with the latter with effect from
31st March 1989. Thus a three months' notice reckoned
January, 1989 was duly given by the applicant and in turn
acknowledged by the respondent.
time of the termination of his contract the applicant's gross salary
was M2472.43 per month.
applicant contends that at the end of February the respondent was
obliged to pay him M1638.32 net salary but the respondent
did not do
so. Again, even though the respondent was obliged to pay the
amount for the month of March 1989 the respondent once more failed to
meet this obligation, save that it paid to the applicant
a clear indication that it had deducted M761.00 from the applicant's
applicant accordingly submitted that both the deductions and
withholding of his salary by the respondent were unlawful because
respondent was not authorises by him to either deduct or withhold his
salary; further because the respondent in effecting these
contrary to the provisions of the Employment Act NO. 22 of 1967
of the respondent the deponent Tlepu Mahanelsa swore that he admitted
virtually the entire averments made by the applicant
save the last
but one contained in paragraph 11 of the founding affidavit to
the effect that the retention and deductions
of the applicant's
salary by the respondent were unlawful.
that the retention and deductions were unlawful basing himself on
annexure "B" which is a copy of the loan agreement
into between the applicant and the respondent in respect of a vehicle
purchased for the applicant through a loan granted
him by the
agreement obligated the applicant to repay to the respondent a
monthly sum of Ml32.85 with effect from end of April 1987.
It is an
express term of the loan agreement that the Ml32.85 monthly
instalment shall be deducted from the borrower's salary.
respondent maintains that the loan agreement forms the basis of the
present dispute before court.
deponent for the respondent averred further that; in terms of
annexure B, the loan agreement, Clause 2(e) provides that
"any arrear instalment shall be deducted from the Borrower's
salary at the end of every month."
It is to
me significant that the word "instalment
reflected in the above sub-clause is in the singular.
respondent further indicated that section 4b of the Employment Act
No. 22 of 1987 does not say in what quantum or percentage
instalments may be deducted in terms of the loan agreement and goes
further to express the view that on the contrary
this Act supports
the notion contained in the loan agreement according as interpreted
by the respondent in terms favourable to
its side of the case.
crucial issue centres on the respondent's averment in para (c) of the
"in terms of paragraph 2(e) the applicant has consented to the
deduction of any arrear amount owing on his loan. In response
respondent's contention the applicant denies that clause 2(e) of the
loan agreement contemplates the deduction of any arrear
stated earlier great significance is attached to the fact that the
above clause speaks not of any arrear amount but rather
instalment. Any arrear instalment is understood by me to mean any
arrear amount not exceeding the equivalent of the
as shown in Clause 2(d) of the loan agreement; whereas any arrear
amount means an arrear instalment either in
excess of or below the
2(b) of the loan agreement shows that the loan in the amount of
M4000.00 was payable in thirty six months at the rate of
of the amounts on which the applicant's grievance is based is
Ml638.32 plus M761.00 making M2399.32. It seems that to liquidate
debt the applicant would have had to pay at least 18 instalments,
that he would have achieved this if he stayed 18 months in the
respondent's employment inclusive of the period of the three
notice or part of the period.
the papers shows the total sum of the arrear instalments. It is not
shown for how many months the applicant was in arrears
payments. The respondent merely says that
"at the end of March, 1989 the applicant had failed to maintain
regular payments in terms of the agreement and a build-up
account had occurred."
according to the loan agreement signed by the parties on 13th March,
1987 the first instalment was due and payable starting
in April 1987.
of the nature of the loan agreement i.e. in terms of clause 2 (e)
thereof that the respondent was entitled to deduct any
instalment from the applicant's salary it appears to me that if the
respondent was diligent enough there would be no question
applicant owing more than one month's instalment in arrears; for in
respect of any month expiring without the applicant
instalment the respondent would in terms of the loan agreement have
been entitled to deduct, during the subsequent month
the amount of
the instalment which should have been but was not paid in the
previous month, from the applicant' s salary.
view taking account of the fact that due to the respondent's
indiligence a build-up of arrears was allowed to occur, the
respondent is entitled to retain an amount of the accumulated
instalment arrears which would have brought-the account up to date
of 31st March 1989. Any amount in excess of such figure should fall
to be treated under section 48 (5)(c) of the 1967 Employmnet
employer makes a loan to an employee;
total amount of the loan has been paid by the employer to the
employee in cash or by cheque; and
any case where the loan exceeds an amount equal to half the
employee's wage for one month, a memorandum of the transaction
has been made and signed by or on behalf of the employer and
employee providing for the repayment of the loan by two or more
instalments, the employer may, ... deduct from the wages due to the
employee such instalments at such times as are agreed in
that nothing in this subsection shall be construed as permitting the
recovery of loans irrecoverable under any other law."
be seen that provisions falling under (a) (b) and only to the extent
that sub-paragraph (c) states that the loan envisaged
qualified if a minimum of two instalments for repayment are required,
apply in this application.
rightly stated by the respondent the Employment Act is silent about
the manner of recovery of instalment arrears while the
itself specifies the manner of recovering being not more than one
arrear instalment from an employee's salary.
because arrear instalments are in any case loans or part of loans the
proviso in section 48(5)(c) would apply to the extent
prohibits the recovery of loans which are irrecoverable under any
other law. And nothing in the loan agreement suggests
accumulated arrear instalments cannot be recoverable under any other
seem therefore that the respondent
of the fact that the applicant's resignation made the respondent lose
the only means of tying the appplicant to it
and of compelling
compliance with the terms of the loan agreement decided to treat the
arrear instalments and the outstanding balance
owed as if they
instantly fell due and payable. But the loan agreement does
stipulate any such term authorising the attitude adopted by the
applicant complained that the learned magistrate said he decided the
application before him on the basis of there having been
fact whereas he had heard the merits. I find no merit in this ground
of appeal because nothing in the law prevents a
judicial officer from
reserving his decision on a point of law and hearing the merits
subsequent to which he disposes the matter
on the point of law
complained that Mahanetsa was not authorised to make his affidavit.
See page 28 para 2(a) and para 4.1. But in C of A (CIV)
No. 6 of 1987
The_Central_Bank_nf Lesotho vs E.H. Phoofolo (unreported) at p. 12.
Mahomed J.A. said :
"There is no invariable rule which requires a jurisdic person to
file formal resolution, manifesting the authority of a particular
person to represent it in any legal proceedings."
instant matter Mahanetsa's authority to represent the repondent is
amply canvassed in his affidavit.
also point out that the respondent's averment that the loan agreement
is the basis of the proceedings in this application
is not without
substance. It was on the basis of the contents of that document that
I was able to achieve a semblance of success
in determining the real
issues betweeen the parties. The applicant ought to have supplied
that document in the first place for
it is not as if he didn't know
why the respondent was withholding his salary or even refusing, to
pay part of his salary.
because the loan agreement does not permit the respondent to deduct
more than one arrear instalment at a time i.e. at the end
month, it was wrongful of it to not only exceed th stipulated amount
what to me appears to be self-help by retaining the balance of the
amount repayable to it. The law provides that the respondent
recover the balance due to it by going to court and that is what it
should have done. This may sound a rather round about
recovering the amount due to the respondent but it appears to be the
only lawful way. The disadvantage is that it also will
incurring of extra costs but a genuinely aggrieved party cannot be
disobliged if he comes to court to ask for redress.
Moreover it seems
to me that by its conduct in allowing a build-up of arrear
instalments the respondent is estopped from siezing
arrogating to itself any amount in excess of one arrear-instalment
per month plus at once the outstanding balance that falls
cleared in the distant future if the instalments are kept up to date.
unaided calculations which are liable to be wrong though based on the
armotization schedule at p. 26 it seems that with
instalments if the applicant had been up to date with his payments
reckoned from January 1990 he would have paid all
that is owing. It
would be a different story if clause (a) of the loan agreement
applied. But nothing in the papers shows that
the applicant was a
subscriber to any pension scheme to which the respondent would have
had resort in order to recoup itself from
the benefits accruing
paragraph (a) of his application the applicant prays that the
respondent be ordered to release to him the M2399. 32. I cannot
such an order. I would rather order that the amount of the loan debt
which would have been outstanding after the payment for
bringing the account up to date has been effected be released and
paid back to the applicant.
absence of a specific clause in the loan agreement entitling the
respondent to recoup itself from the applicant's salary
above the monthly deduction of one arrear instalment I find that the
acted unlawfully in committing the acts referred to in this judgment.
applicant acknowledged in argument that he was liable to be sued by
the respondent for the balance owed on the loan even if
claim is to be upheld in these proceedings. A simple operation of
set-off would be suitable to apply here for the applicant
the car in any event. But he is insisting on his pound of flesh.
Unfortunately costs have to be incurred in the process.
because of the defects highlighted in the applicant's case; including
more especially the fact that he did not place before
this Court the
loan agreement yet he must have known that it forms a very vital part
of these proceedings as truly stated by the
respondent, he will be
awarded only 45% of his costs.
decision of the court below is accordingly set aside and replaced by
the above order.
Appellant : Mr. Mahlakeng
Respondent : Mr. Matsau.
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