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CIV\APN\97\95
CIV\APN\100\95

IN THE
HIGH COURT OF LESOTHO

In the
matters between :

SETENANE
HABOFANOE MAPHELEBA 1st Applicant

SIMON
RAKHATI MAKOLOANE 2nd Applicant

THABANG
MOSHE 3rd Applicant

and

ERNEST
PHALE MOKOENA 1st Respondent

JULIUS
MAKAU 2nd Respondent

THABO
MAPHIKE 3rd Respondent

EUGENE
MAKHABA 4th Respondent

THABISO
JONAS 5th Respondent

MAMOHALE
MOPELI 6th Respondent

AND

LESOTHO
PUBLIC MOTOR TRANSPORT CO. (PTY) LTD Applicant

and

SETENANE
MAPHELEBA 1st Respondent

THABANG
MOSHE 2nd Respondent

SIOWELL
MATSIE 3rd Respondent

S. R.
MAKOLOANE 4th Respondent

JULEA
RAPONTS'O 5th Respondent

LESOTHO
CREDIT UNION 6th Respondent

JUDGMENT

Delivered
by the Honourable Mr. Justice T, Monapathi on the 5th day of June
1995

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This
Court was robbed of an opportunity to hear debate on the two
important aspects of the Company law of this country. The aspects

will be shown shortly. Mr. Mda for the Six Respondents in
CIV\APN\97\95 and for Applicant Company (Lesotho Public Motor
Transport
(Pty) Ltd), the Company in CIV\APN\100\95) conceded that
the meeting of the 2nd March 1995 was invalid as having not complied
with
Section 99 of the Company's Act No. 25 1967 of Lesotho. The
result would be that the Board (of six Respondents) elected on that

mentioned date was unlawfully constituted. It was that invalid Board
which resolved to bring the proceedings under case number

CIV\APN\100\95 in the name of the company.

As a
result of the concession by Mr. Mda I then confirmed the following
Orders on the 5th May 1995:

1. That
   the Applicants in CIV\APN\97\95 are the properly constituted
   directors of Lesotho Public Motor Transport Co. (Pty) Ltd (the

   Company).

   
   

2. That
   the 1st, 2nd, 3rd, 4th, 5th and 6th Respondents in CIV\97\95 are not
   properly constituted directors of the Company except
   that 2nd and
   4th Respondents remain lawful members of the Board of the Company as
   originally constituted.

   
   

3. 3

   
   

4. The
   Respondents each one and severally are interdicted from interfering
   with the Applicants and the Company in the running of
   the said
   Company's affairs except by due process of law.

   
   

It is
important to note that on the 20th March 1995 Maqutu J ordered for
consolidation of the two applications. I will later outline
the
circumstance of that particular order. On the 22nd March 1995 the
Respondents filed a note of withdrawal of the application

CIV\APN\100\95 which they justified, in their letter of the 23rd
March addressed to the Applicant's attorneys by saying "since

your clients have instituted Court proceedings as well and they are
using the Company's funds for litigation, our instructions
are to
withdraw the above application to curtail costs which in the end
shall be debited to the Company." The reply by the
Respondents
(in CIV\APN\100\95) attorneys to the above quoted letter is very
brief and says:

"The said application namely CIV\APN\100\95 and CIV\APN\97\95
have been joined by Order of Court. We do not agree to your

withdrawal of the case and in particular that the costs incurred by
your clients in CIV\APN\100\95 should be borne by your Company."

It is
correct that on the 20th March 1995 Mr. Justice Maqutu

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ordered
for consolidation of the two applications. The next sentences is in
apparent reference to the Rule 43 (1). The rule reads:

"A person instituting any proceedings may at anytime before the
matter has been set down and thereafter by consent of the
parties or
by leave of the Court withdraw such proceedings."

The
sub-rule has to be read with sub-rule 43(1) (d) whose significance to
costs cannot be mistaken. It reads:

"If there is no consent to pay costs contained in the notice of
such withdrawal or if such withdrawal or if such taxed costs
are not
paid within fourteen days of demand, such other party may apply to
Court on notice for an order for costs ."

Argument
was made on the question of the correctness of the meaning of Rule 43
(1) (a) being specifically whether :

1. The
   Applicants were entitled to refuse to accede to the withdrawal of
   /CIV\APN\100\95 for any reason or for the reasons contained
   in their
   already referred to letter. That means that the refusal amounts to

   
   

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absence
of consent.

2. It
   is correct that the rationale behind the rule is that the party who
   institutes a case is not allowed to abandon the matter
   as it were
   without the Court having the opportunity to make any of the
   following orders, namely :

   
   

(i) that the party intending to withdraw be allowed to withdraw;

(ii) that the party intending to withdraw be urged to proceed with
his case;

(iii) that the party intending to withdraw should pay the costs of
the other party.

The
object of the notice of withdrawal is to prevent the Opponents of the
party withdrawing from incurring further costs. See page
391 of Civil
Practice of Superior Courts in South Africa 3rd Edition L de v.
Winsen et al (Herbstein and Van Winsen)

I made a
finding that when Mr. Sooknanan filed the application CIV\APN\100\95
he could not have been served with the rule nisi in
the Order of the
15th March 1995. He may have had

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notice of
Che Order before he moved the application CIV\APN\100\95 as this is
reflected in the Court file but this is different
from that when he
launched the application he was aware of the Order in CIV\APN\97\95.
Neither were his clients, that is the new
Board of Directors. I
cannot find fault with Mr. Sooknanan. He is alleged to have said that
he had nothing to do with the Respondents.
That may not have been
true. But his clients were not yet served with the Order. I cannot
order costs de bonis propriis for that
reason. I can only seriously
note that having been made aware by Maqutu J. and despite that a
notice of withdrawal was filed on
the 22nd March 1995, this Applicant
Company proceeded to take the following steps:

1. On
   the 6th April 1995 it served and filed the answering affidavits of
   JULIUS MAKAU, THABO MAPHIKE, THABISO JONASE and MAMOHALE
   MOPELI in
   one bundle, in addition a voluminous answering affidavit of ERNEST
   PHALE MOKOENA and an answering affidavit of EUGENE
   MATSARANKENG
   MAKHABA in a different bundle.

   
   

2. Fourteen
   days later, on the 20th April 1995 the Respondents in CIV\APN\97\95
   filed a notice of motion supported by the affidavit
   of the
   Applicants' attorney Mr. Bikaramjith Sooknanan.

   
   

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I believe
that Mr. Sooknanan has been taken ill and has been out of office for
a considerable time. I believe that that letter accompanying
a notice
of withdrawal was only replied to and served on the 4th April 1995.
"The said reply was turning down of said . proposal
and
purporting to reject the aforesaid withdrawal." (See paragraph 9
of Mr. Sooknanan's affidavit). At the end, in paragraph
11 of the
affidavit Mr. Sooknanan says:

"I verily aver that if Applicants' attorneys replied in time,
the Respondents would have filed their answering affidavits
in time.
However, had it not been for my sickness, I could have prepared the
Respondents' affidavits in time when I noticed that
the Applicants'
attorneys were not responding to my letter and the matter could not
have been left to my Clerk."

For the
actions outlined in (a) and (b) above I would find that these
Respondents incurred costs unnecessarily. All that these Respondents

had to do if they seriously felt like withdrawing their opposition is
to patiently await the date of hearing, to approach the Court
and ask
for leave of Court in the event of the Applicant's refusal. The
Court, in the absence of agreement between the parties,
retains a
discretion whether or not to allow the withdrawal of a case (sea
Herbstein and Van Winsen at page

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391). The
refusal need not have caused them to change their Course in the
midstream. Assuming that Mr. Sooknanan carried the instructions
of
the Respondents well and fully it can only mean that as the date of
hearing there was no formal notice of withdrawal. In any
event in the
absence of such consent or leave, a purported notice of withdrawal
would be invalid. Mr, Mda was therefore making
a fresh application
for withdrawal of the case from the bar. But he was not tendering
costs. He had reasons for his decision. One
of them was that the
Company cannot be awarded costs against itself. One of the questions
would be : Were the actions of the Applicant
Company in case
CIV\APN\100\95 valid when it instituted the application Does it make
any difference that when the application was
filed the new Board of
Directors was not aware of the order of the 15th March 1995 in
application CIV\APN\97\95

I did not
find merit in Mr. Mda's argument that an award of costs should not be
made in favour of the Applicants in application
CIVAAPN\97\95 by
reason of their failure to cite the Company either as one of the
applicants or one of the respondents. I do not
want to discuss Mr.
Mathe's argument in response to that. Since this objection was not
raised on the papers it ought not to succeed.
This objection whether
properly raised or not seems properly to belong to the question
success or failure of the application itself
not to the question of

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coats.
This question of costs may even end up being decided on the basis of
a well known principle. This principle even speaks about
the presence
or absence of exceptional reason or circumstances. It is one of the
cardinal principles of our law that an award of
costs is in the
discretion of the Court. The principle is also said to override the
general rule that costs follow the event (see
LAW OF COSTS 2nd
edition 1984 by A.C. Cilliers at pages 8-9 and authorities cited
therein and also KRUGER BROTHERS AND WASSERMAN
vs RUSKIN, 1918 AD 63
at page 69) There is also a plethora of authority to the effect that
the said discretion should be exercised
judicially. A judicial
exercising of discretion has been described as a non-arbitrary act
(see LAW OF COSTS cited above and MERBER
vs MERBER 1948(1) 446 at
453).

The
Applicants in CIV\APN\9 7\95 are directors of the Applicant Company
in CIV\APN\100\95. The First Applicant is the Chairman of
the
Company. The said Company is a private Company registered on the 12th
July 1979 under number 79\94 by the Registrar of Companies.
The
requisitioning of meetings is done under section 99(2) of the
Companies Act. It has been conceded that the members attempt
at
requisitioning a meeting was irregular in that the notice did not
state the objects of the meeting and was not signed by the

requisitionists, It was not conceded however that the notice was
faulty by reason of its being not written and not deposited by

members of teh Company,

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but by
the Respondent's Attorney. Neither was it admitted that the
requisitionists were not members of the Company. In the South
African
case of MARION COURT DURBAN LTD vs KIDWELL AND OTHERS 1976 (4) SA
584(D) in commenting about Section 181(1) of the Act
61 of 1973
(which is in pari materia with our Section 99 of Company Act 1967),
Leon J had this to say :

"In terms of Section 181 (1) of Act 61 of 1973 the members are
given the right to requisition of a Company to convene a meeting.
The
requirement is that sufficient particulars should be given in the
notice to show the shareholders clearly what the objects
of the
meeting are and in order to enable them to decide whether or not to
attend."

I am
satisfied that I need not decide these questions of whether the
Respondents' attorney was authorised to issue the notice and
whether
the requisitionists must also state in the notice of motion that they
hold the necessary number of shares. It accordingly
has no bearing on
the question of costs.

I am
satisfied that the Applicants in CIV\APN\97\95 as persons and
individuals were entitled to bring the application in their own

names. Whether or not they should have joined the Company (much as it
was not debated in relation to the merits)

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has no
bearing on the question of costs. I am not prepared to get into the
subtle questions as to whose expenses were involved in
their
litigation. These may well have been the Company expenses. I take the
view that the Applicants were protecting their own
rights to
directorships and management of the Company. Even if I am wrong I do
not see on what basis I can award costs to the Company.
The question
of costs is not concerned with whether a person who appears to be
properly appointed director may validly act in that
capacity. He may
for that matter be mistaken as to the validity of his appointment.
What concerns us here is the question of idemnifying
a successful
litigant here for his costs. Costs are usually awarded to a
successful party being, normally, the party who has been

substantially successful. It is clear that I took the view that the
Applicants in CIV\APN\97\95 ought to be awarded the costs of
the two
applications. I did not find that there were any reasons to justify a
departure from the general, rule.

T.
MONAPATHI

JUDGE