CIV/A/13/89

IN THE HIGH COURT OF LESOTHO

In the Appeal of :

THULO MAHLAKENG Appellant

V
BASOTHO ENTERPRISES DEVELOPMENT CORPORATION
Respondent

Delivered by the Hon. Mr. Justice M.L. Lehohla

The appellant has appealed to this Court against the
decision of the learned magistrate in the court below given in favour
of the
respondent.

The parties will be referred to in their respective
positions and designations of the applicant and the respondent
according as they
appeared in the court below.

In his grounds of appeal the applicant sets out his
grievances as follows:

(1) The learned magistrate - misdirected
himself in
(sic) failing to apply his

mind to the papers before him in as much (sic) as on the
papers 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.

(2) The 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 noticeable...

/on

-2-

on papers ... being the lawfulness or unlaw­fulness
of the deductions effected by the respondent on the applicant's
salary.

(3) The learned magistrate erred in holding that the
loan agreement between the applicant ... and the respondent formed
the basis
of the application in as much (sic) as that is borne out by
the fact put before him.

(4) The 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 papers

(5) The learned magistrate erred in purporting to
have
summarily dealt with the application when he had
in fact
entertained a full hearing of arguments

on
the merits.

(6) The learned magistrate misdirected himself in
(sic) disregarding the provisions of Order No. XXI of the Subordinate
Court Rules.

The facts of the case gathered from the affidavits filed
in the court below show that the applicant was an employee of the
respondent
from 4th 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 intended
to terminate his contract of service with the latter
with effect from 31st March 1989. Thus a three months' notice
reckoned from
1st January, 1989 was duly given by the applicant and
in turn acknowledged by the respondent.

At the time of the termination of his contract the
applicant's gross salary was M2472.43 per month.

The 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 applicant

/an

-3-

an equal amount for the month of March 1989 the
respondent once more failed to meet this obligation, save that it
paid to the applicant
only M877.32 a clear indication that it had
deducted M761.00 from the applicant's salary.

The applicant accordingly submitted that both the
deductions and withholding of his salary by the respondent were
unlawful because
the respondent was not authorises by him to either
deduct or withhold his salary; further because the respondent in
effecting these
acts acted contrary to the provisions of the
Employment Act NO. 22 of 1967 section 48.

On behalf 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.

He denies that the retention and deductions were
unlawful basing himself on annexure "B" which is a copy of
the loan agreement
entered into between the applicant and the
respondent in respect of a vehicle purchased for the applicant
through a loan granted
him by the respondentj

The loan 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.

The respondent maintains that the loan agreement forms
the basis of the present dispute before court.

The 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

/as

-4-

as reflected in the above sub-clause is in the singular.

The respondent further indicated that section 4b of the
Employment Act No. 22 of 1987 does not say in what quantum or
percentage the
arrear 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.

The crucial issue centres on the respondent's averment
in para (c) of the affidavit that

"in terms of paragraph 2(e) the applicant has
consented to the deduction of any arrear amount owing on his loan.
In response
to the respondent's contention the applicant denies that
clause 2(e) of the loan agreement contemplates the deduction of any
arrear
amount."

As I stated earlier great significance is attached to
the fact that the above clause speaks not of any arrear amount but
rather any
arrear instalment. Any arrear instalment is understood by
me to mean any arrear amount not exceeding the equivalent of the
Ml32.05
instalment 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 said M132.35.

Clause 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 M132.85.

The sum 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
the debt the applicant would have had to pay
at least 18 instalments,

/meaning

-5-

meaning that he would have achieved this if he stayed 18
months in the respondent's employment inclusive of the period of the
three
months' notice or part of the period.

None of the papers shows the total sum of the arrear

instalments. It is not shown for how many months the

applicant was in arrears in his 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
of
his account had occurred."

However according to the loan agreement signed by the
parties on 13th March, 1987 the first instalment was due and payable
starting
in April 1987.

Because of the nature of the loan agreement i.e. in
terms of clause 2 (e) thereof that the respondent was entitled to
deduct any arrear
instalment from the applicant's salary it appears
to me that if the respondent was diligent enough there would be no
question of
the

applicant owing more than one month's instalment in

arrears; for in respect of any month expiring without

the applicant paying his 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.

In my 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 as 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 Act 22 saying :

"Where

(a)
an employer makes a loan to an employee;

/(b)

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(b) the total amount of the loan has been paid by the
employer to the employee in cash or by cheque; and

(c) in 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 the memorandum:

Provided that nothing in this subsection shall be
construed as permitting the recovery of loans irrecoverable under any
other law."

It will be seen that provisions falling under (a) (b)
and only to the extent that sub-paragraph (c) states that the loan
envisaged
under it qualified if a minimum of two instalments for
repayment are required, apply in this application.

But as rightly stated by the respondent the Employment
Act is silent about the manner of recovery of instalment arrears
while the
loan agreement itself specifies the manner of recovering
being not more than one arrear instalment from an employee's salary.

But because arrear instalments are in any case loans or
part of loans the proviso in section 48(5)(c) would apply to the
extent that
it prohibits the recovery of loans which are
irrecoverable under any other law. And nothing in the loan agreement
suggests that
the accumulated arrear instalments cannot be
recoverable under any other law .

It would seem therefore that the respondent

apprehensive 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

/not

-7-

not stipulate any such term authorising the attitude
adopted by the respondent.

The applicant complained that the learned magistrate
said he decided the application before him on the basis of there
having been
dispute of 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 reserved.

He also 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."

In the instant matter Mahanetsa's authority to represent
the repondent is amply canvassed in his affidavit.

I must 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.

But because the loan agreement does not permit the
respondent to deduct more than one arrear instalment at a time i.e.
at the end
of every month, it was wrongful of it to not only exceed
th stipulated amount deductible but

/adopt

-8-

adopt what to me appears to be self-help by retaining
the balance of the amount repayable to it. The law provides that the
respondent
could 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
way of recovering the amount due to the respondent but it
appears to be the only lawful way. The disadvantage is that it also
will
necessitate 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
and
arrogating to itself any amount in excess of one arrear-instalment
per month plus at once the outstanding balance that falls
to be
cleared in the distant future if the instalments are kept up to date.

From my unaided calculations which are liable to be
wrong though based on the armotization schedule at p. 26 it seems
that with
three more 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 therein.

In paragraph (a) of his application the applicant prays
that the respondent be ordered to release to him the M2399. 32. I
cannot
make such an order. I would rather order that the amount of
the loan debt which would have been outstanding after the payment for
last January bringing the account up to date has been effected be
released and paid back to the applicant.

In the absence of a specific clause in the loan
agreement entitling the respondent to recoup itself from the
applicant's salary over
and above the monthly

deduction of one arrear instalment I find that the

/respondent

-9-

respondent acted unlawfully in committing the acts
referred to in this judgment.

The applicant acknowledged in argument that he was
liable to be sued by the respondent for the balance owed on the loan
even if his
present claim is to be upheld in these proceedings. A
simple operation of set-off would be suitable to apply here for the
applicant
is keeping the car in any event. But he is insisting on
his pound of flesh. Unfortunately costs have to be incurred in the
process.

But 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.

The decision of the court below is accordingly set aside
and replaced by the above order.

JUDGE.
6th February, 1990.

For Appellant : Mr. Mahlakeng for Respondent : Mr.
Matsau.