of A (CIV) No. 16/2007
APPEAL COURT OF
the matter between:
LIQUIDATORS, LESOTHO BANK Appellant
DEPUTY SHERIFF Second
JA SMALBERGER, JA GAUNTLETT, JA
against refusal to rescind default judgment - unreasonable delay by
judge in delivering reserved judgment.
The appellant is the liquidator of the Lesotho Bank. On 31 January
2001, the Lesotho Bank (Liquidation) Act, 2 of 2001, was promulgated.
It made provision for the voluntary liquidation of the Lesotho Bank,
for the appointment by the Minister of Finance of a liquidator,
for the powers of the latter. On 22 February 2001 Legal Notice 20
published the consent of the Commissioner of Financial Institutions
(in terms of s56(2) of the Financial Institutions Act, 1999) to the
voluntary winding up of the Lesotho Bank and recorded "the
Harley and Morris joint venture" as liquidator. On 6 April 2001
formal letters of administration were issued by the Master
the joint venture's appointment as liquidator. It appears that the
joint venture has at all times been represented by
an attorney, Mr.
Seymour Harley, and an accountant, Mr. Anthony McAlpine. (Whether it
is in law strictly regular for an entity such
as a joint venture or a
company to be appointed a liquidator, as opposed to designated
individuals, is not a matter raised on the
papers or otherwise an
issue in the appeal).
Some three years after these events - on 12 May 2004 - the appellant
received a letter from legal representatives of the respondent.
asserted an entitlement to payment of M4 500 000,00 (with interest
claimed at the rate of 18,5% per annum) for services related
archiving and scanning of six million pages six years previously,
"during or about July 1998". The appellant replied
weeks later, recording that no trace had been found during the
liquidation process of the alleged services or indebtedness, and
noting that no claim had been lodged with the liquidator "by the
stipulated deadline of 31 July 2001". The belated claim
A legal process ensued which can only be described as chaotic. A
summons swiftly followed the letters. The appellant failed to
appearance to defend within seven days, and default judgment was
taken. That gave rise to the present matter. The appellant
an urgent order for a temporary stay of execution of the default
judgment "pending the finalization of this matter", and
rescind the default judgment. The temporary order was granted. On the
return day, Guni J heard argument. Two years later she handed
judgment. She held that "this application must fail". That
was the full extent of her order. Presumably she intended
by this to
discharge the rule nisi operating as an interim interdict, and to
refuse rescission. However she omitted to do so, or
to address the
issue of costs.
There is little point in seeking to summarise the High Court's
judgment. This is so for two reasons. The first is that on both
arguments were presented which were characterized by maximal
confusion and technicality and minimal merit. The second is that
court in turn allowed itself to be distracted by these arguments from
the true issues, and - despite the two-year delay - the
in a form which in material respects is not coherent. This is one
is the really purpose of the use of these many shades? Is it to cloud
and obscure the really identity of the really parties?
obscurity of the identity of the really parties, is the actual
endeavour, in that there is a reasonable success. It is really
difficult to follow exactly who is who in these papers. The conduct
of the parties greatly assisted me in determining exactly who
in this matter".
Before us, the inquiry narrowed to three main issues. The respondent
contended that the temporary order staying the execution
correctly (in the result) discharged and rescission refused because
the appellant had failed to show that it had any bona
defence to the claim and hence to seek rescission of the judgment;
secondly its failure to enter appearance to defend and to oppose
default judgment was wilful; and thirdly that a proper basis to
discharge the temporary order was that it had been improperly
contentions - relating to the authority of McAlpine to depose to
affidavits and to bring the applications for the appellant;
(arising from the confusion engendered by the founding affidavit's
confused distinction between the appellant and its "liquidation
department") - were wisely not pressed in oral argument. They
are without merit.
It is logical to begin with the last contention first: if sound, the
appeal must fail for that reason alone. But in my view it
sound. It is correct that orders are only to be obtained ex
in the most exceptional circumstances, as this court has time and
again made clear. Here the circumstances were these: the appellant,
as a liquidator, holds a statutory office; its assets are distinct
from those of the Bank in liquidation; the writ procured by the
respondent did not respect that basic distinction, but authorized the
deputy sheriff "to attach and take into execution the
goods of KPMG/Harley
& Morris Joint Venture"
for the debt allegedly due not by it but
by the Bank
to the respondent; these "movable goods" included computer
equipment containing confidential information; the deputy sheriff
already attached the goods and at any time could remove them. In my
view these were truly exceptional circumstances such as to
application. It is unsurprising that the court a quo
did not discharge the temporary stay on this basis.
I turn to the remaining two issues. In my view, the appellant clearly
has a bona
defence to the claim. The respondent's summons disregards the
requirements of s.226 of Lesotho's Companies Act, 25 of 1967. No
was ever proved by the respondent within the stipulated six
month time period (thus by 31 July 2001). The declaration is devoid
any allegation that such a claim had been lodged; that it had been
rejected; and that (via s 226) the court was asked to set aside
rejection. There was no dispute before us that Lesotho insolvency law
does not permit a creditor simply to pursue a debt by way
Counsel for the respondent indeed conceded before us that the
appellant, in the circumstances, has a bona
Lastly in my view there is no merit in the contention that the
appellant's failure to oppose default judgment was "wilful".
What happened is explained in the replying affidavit: there was an
oversight by a clerk in ensuring that notice of intention to defend
was filed within seven days, it at all times being the intention of
the appellant to resist the claim. The respondent full well knew
to be the case: the prompt and categorical denial of the claim in
response to the letter of demand made that clear.
For these reasons, in my view the appeal must succeed. As regards
costs, counsel for the appellant candidly acknowledged the parlous
nature of the founding affidavit and the pursuit by counsel then in
the case of wholly misconceived legal contentions. He also recorded
his instructing attorney's apology for these matters. Fairly he
proposed that the costs of the application - as regards which, as
have noted - the court a
simply failed to make an order - together with the costs of the
appeal should be costs in the principal action instituted by the
I would accordingly make this order:
The appeal is upheld.
judgment of the court a
is set aside.
following order is substituted:
judgment granted by default is rescinded and the applicant is granted
leave to note its intention to defend the action instituted
on 24 May
2004 under case No.CIV/T/288/04.
costs of the application shall be costs in the action."
The costs of the appeal shall be costs in the action.
A last matter remains. This is the two-year delay in delivering
judgment in a matter essentially procedural in nature and not
judge in particular from the judgment) requiring particular legal
research. The winding up of a bank placed in liquidation by
instrument has been delayed. The rights of others have been affected.
No explanation at all for the delay is advanced in
"[D]elays destroy public confidence in the judiciary. There
rests an ethical duty on judges to give judgment or
any ruling in a
case promptly and without undue delay and litigants are entitled to
judgment as soon as reasonably possible"
Clicks SA (Pty) Ltd v Minister of Health
2005 (3) SA 238 (SCA) at 261 C - 262 B). In Goose
v Wilson Sandford & Co
the Court of Appeal of England and Wales, censuring a judge for an
eight-month delay in delivering a reserved judgment (leading to
resignation), noted that such delay, if "(l)eft unchecked ..
would be ultimately subversive of the rule of law "(TheTimes
(Feb. 19, 1998) 85 at 86). The delay in the present matter by Guni J
is nearly three times that in either of these instances, and
is to be
for the appellant G.
him, P.U. Fischer)Counsel for the respondent S.
African Law (AfricanLII)
Ghana Law (GhaLII)
Laws of South Africa (Legislation)
Lesotho Law (LesLII)
Liberian Law (LiberLII)
Malawian Law (MalawiLII)
Namibian Law (NamibLII)
Nigerian Law (NigeriaLII)
Sierra Leone Law (SierraLII)
South African Law (SAFLII)
Seychelles Law (SeyLII)
Swaziland Law (SwaziLII)
Tanzania Law (TanzLII)
Ugandan Law (ULII)
Zambian Law (ZamLII)
Zimbabwean Law (ZimLII)
Commonwealth Countries' Law
LII of India
United States Law