CIV/APN/441/2004
IN THE HIGH COURT OF LESOTHO
HELD AT MASERU
In the Matter Between:
DEREK THOMAS MALING APPLICANT
And
THE LIQUIDATORS OF LESOTHO BANK
(IN LIQUIDATION) 1st RESPONDENT
THE MINISTER OF FINANCE, LESOTHO 2nd RESPONDENT
THE GOVERNOR OF THE CENTRAL
BANK OF LESOTHO N.O. 3rd RESPONDENT
THE MASTER OF THE HIGH COURT,
LESOTHO 4TH RESPONDENT
METROPOLITAN LIFE LIMITED 5th RESPONDENT
THE ATTORNEY-GENERAL 6th RESPONDENT
JUDGMENT
Delivered by the Honourable Madam Justice N. Majara on the 26th September 2005
Applicant herein approached this Court on an urgent basis for an order in the following terms:
1. 1.1 Dispensing with the normal modes and periods of service provided by the Rules of Court, because of the special circumstances
relating to this application, the very large number of parties having an interest in it and the fact that the great majority of such interested parties are lay people without knowledge of the Honourable Court's rules or procedure.
1.2 That service of the application be effected on Respondents and notice thereof be given to potential claimants to the funds mentioned in the Founding Affidavit in the manner as described in the Notice of Motion.
2. Calling all interested parties to show cause before this Honourable Court, why the following order shall not be made:
2.1 The Court, having heard all interested parties settles the list of
beneficiaries and the formula by which their benefits are calculated as set out in Annexure '"K" to the Founding Affidavit,
adjusted in such manner as may prove necessary by the Honourable Court's admission of claims in addition to those contained in
Annexure
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"K", or by its deletion of some of the claims which do appear therein, and taking into account any other circumstances which the Honourable Court may regard as relevant to the just and equitable disposal of such funds;
2.2 A firm of chartered accountants be appointed by the Honourable Court to calculate the amount from the available funds that each claimant will receive, after applying the formula as settled in terms of prayer 2.1 above and after providing also, for the costs of liquidation of the Fund and of this application;
2.3 Applicant is authorized to distribute the funds available from the liquidation of the pension fund directly, as set out above,
without first paying over such funds to the liquidators of Lesotho Bank (in Liquidation);
2.4 That no order as to costs be made against any claimant putting forward a reasonable and bona fide claim, whether or not it be recognized by this Honourable Court, but that, where any such claim is held to have been spurious or mala fide, the claimant or
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claimants in question may be ordered to pay the costs occasioned by adjudication of such claim or claims on the scale of attorney and client;
2.5 That any balance remaining after payment to claimants and costs as aforesaid be paid over to the liquidators of Lesotho Bank (in Liquidation).
On the 9th November 2004, Advocate Viljoen SC assisted by Advocate Woker for Applicant and Advocate Theron for intervening Respondent, Mr Pitso appeared before this Court and addressed the court on preliminary issues relating to service of process to all potential claimants and the cut-off dates when all claimants ought to have come forward with their claims before the matter could be argued on substantial issues.
After both sides had presented their arguments I made an order (which Counsel for Applicant had already drafted and but for a few
alterations was by and large agreed by Counsel for Intervening Respondents) and for which this Court is greatly indebted to them in the following terms:
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1. That the application is postponed to the 10th and 11th May 2005.
2. 2.1 The date for lodging further claim forms at the office of the Applicant's Attorney of record is extended to 30th January 2005;
2.2" After the date in 2.1 above no further claim forms shall be received and/or processed by the Applicant; 23 The Order in paragraph 2.1 should be published in the
newspapers and over the radio as specified in paragraph 1.2.2© and (d) of the Order of 16th September 2004.
3. Applicant is to file a Second Supplementary Affidavit on or before 15 February 2005, in which he deals with farther claims and/or
developments after the date of this Order.
4 The persons listed in paragraph 8 of the First Supplementary Affidavit deposed to by the Applicant and filed in this application on 8 November 2004 are to be given notice by registered post on or before 13th December 2004 at their last known addresses of the
recommendations relevant to them as set out in the said paragraph 8 of the First Supplementary Affidavit. The said notice should include notice to such claimants in terms of paragraph 6 hereof.
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5. Any claimants not recognized by inclusion in annexure "K" to the Notice of Motion, who have lodged their claims which Applicant has been unable to investigate and deal with in the First Supplementary Affidavit or who lodge claims between the date of this Order and the date referred to in paragraph 2.1 above are similarly to be advised of the Applicant's recommendations with regard to their claims in the manner described in paragraph 4 above by 28th February 2005.
6. Any claimants referred to in paragraph 4 and 5 above, who are not satisfied with the recommendations of the Applicant's attorney in relation to their claims, are to file and serve on Applicant's attorneys and on the Honourable Court an affidavit setting out their contentions, on or before 21st March 2005.
7. Applicant shall file his response to claimants' contentions in terms of paragraph 6 above by 12th April 2005.
8. With regard to the Answering Affidavit of Mr. Lekhooa Pitso it is ordered as follows:
8.1 Written authority to Mr. Pitso and/or Allan Levin & Associate to act on behalf of the persons listed in annexure "LP1"
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to his affidavit filed on 8th November 2004 is to be served on Applicant and filed of record on or before January 2005.
8.2 Applicant is to file his Replying Affidavit, if any, to that of
Mr. Pitso on or before 16th February 2005.
9. Argument is to be presented on the disputes arising from the papers on the date mentioned in paragraph 1 above. On the 10th May 2005, the matter duly proceeded before me and representations were as before. At the start of the case, Mr Viljoen, Counsel for Applicant raised an objection that the Court should not accept fresh mandates from a total of about 211 more intervening Respondents for the reason that they had filed the said mandates six (6) months after the deadline given by this Court. He argued that this denied the applicant an opportunity to investigate the authorities and to respond timely before the date of hearing especially in the light of the fact that no application to condone the late filing had been made to the Court.
In response, Mr Theron, Counsel for the intervening Respondents argued that the late filing cannot preclude a party from coming to court at this stage. He based his argument on the provisions of Rule 15 (1) of the High
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Court Rules and submitted that on the basis of this rule, an attorney is mandated to act in a manner that he deems fit and that it is not for the applicant to have a say in the matter. I reserved my ruling with regard to this objection and I now proceed to give it and my reasons thereof.
Rule 15 (1) on the basis of whose provisions Counsel for the intervening Respondent(s) based his argument reads as follows;
"Any party bringing or defending any proceedings may at any time appoint an attorney to act on his behalf, (my underlining) who shall file a power of attorney and give notice of his name and address to all other parties to the proceedings.”
From the wording of this section, I believe it is a misconstruction on the part of Counsel for the intervening Respondents to argue that it empowers parties to proceedings through their Counsel to file papers at any time they wish despite this Court's Order. The aim of this Rule is to give parties the choice to appoint a legal representative at any stage of the proceedings. This means that even if a party had initially not been represented, he may still seek legal representation at any stage as long as the matter has not yet
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been finalized. The requirement for the filing of a Power of Attorney is so that the Court gets proof that such attorney has indeed been mandated by a party. The Rule deals with the question of authority to bring proceedings. That is all there is to it.
Nowhere do I read it as authorizing parties to file papers at any time they so wish. Whether or not a party is legally represented, it still has to abide by the rules and- Orders of Court. This includes authorized attorneys of record. Mr Theron's argument that an application for condonation was unnecessary because an attorney is mandated to act in a manner that he deems fit under this Rule is in my opinion, incorrect. Otherwise why would a Court be empowered to make Orders as it deems fit in the particular circumstances of each case if attorneys of record will simply defy them as long as they think it is fit? This is a misconception.
The ruling in Eskom v Soweto City Council 1992 (2) SA 703 quoted to the court by Counsel, does not say that such an authorized attorney can ignore Rules and/or Court Orders. It simply states that if the attorney concerned is authorized to bring an application on behalf of the applicant, the application is necessarily that of the applicant. The Court held further
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that such an authorized attorney is entitled to use any witness who, in his opinion, would advance his client's case. It can therefore be distinguished from this case where the issue is not whether all the other intervening Respondents can depose to supporting affidavits but whether they should have filed their mandates as parties themselves so late in the day.
Over and above this, Mr Theron was already the attorney of record for the 1st intervening Respondent at the time I gave the Court Order. I therefore find it odd that he did not even argue that the rest of the authorities were only filed after the deadline but instead told the intervening respondents that they did not have to abide by my Order. For the above reasons I find that the said mandates do not comply with either the Rules or the Order of this Court.
However, in the light of the peculiar nature of this case, and for the reason that I do not think that by this late filing, any party, especially Applicant herein, will suffer any prejudice I will overlook the late filing in defiance of my Order and allow the mandates to be filed. My reasons are simply that arguments advanced on behalf of Mr Pitso, are basically the same for all the other intervening Respondents and the judgment which I am going
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to give on the merits of this application will affect parties herein in the same fashion.
In other words, the effect of my judgment will be the same regardless of the fact that the 211 people filed their mandates late because that is all they did without making any further averments, contentions and/or submissions necessitating any further action and/or reply from Applicant.
At any rate upon perusal of the said mandates, I find that the signatories therein pledge their support to Mr Pitso and the so-called Pre 1992 Lesotho Bank Staff Committee to oppose the relief sought in this application and that these mandates supercede any other previous ones. This being the situation, I do not think that Applicant should worry about what the implications of my accepting these mandates might be in the event that this Court finds in his favour especially insofar as the question of costs is concerned.
What I find amazing though is that upon perusal of same, (per the particulars of the signatories) ex facie the mandates, some of them actually fall outside the bracket of those people that Mr Pitso contends only they
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should benefit. For example, intervening Respondent NO. 43, Helen Machakela Lepele appears to have been in the employ of the bank from the 1st April 1999 to the 31st July 1999, yet she also signed the mandate. But be that as it may, in my opinion, the intervening Respondents herein are not some naive school children who have no idea what this application entails. They signed these mandates fully cognizant of the potential implications and I believe they, are ready and willing to accept whatever will be the outcome of this application.
But even if that was not the case, they made their choice by appending their signatures and since none of them is a minor or of unsound mind, the Court will not waste its time worrying about whether or not they indeed know what it is exactly that Mr. Pitso is seeking from the Court The presumption is they do.
Within this scenario, I may also hasten to add that these are the only mandates that this Court accepts as opposed to the resolution that was supposedly signed by members of the committee, a copy of which Mr Pitso purported to annex to his Answering Affidavit as "LP2" as per its paragraph 9 but never did. As Mr Viljoen rightly pointed out in his
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Heads of Argument, the heading in the other annexure, i.e. Annexure "LP1" relates to a different and much earlier application wherein 478 applicants were seeking a totally different relief from the one in casu, to wit; that a certain Mr. Vos, the previous Principal Officer of the Fund be removed as such and one Mr Makape be appointed in his place.
I therefore find that the said list "LPl" had nothing to do with the present application and I reject it on the grounds that it is an improper mandate. The effect of this my finding is that if any of the names which appear in that list i.e. "LP1", are not amongst those of the signatories of the mandates which were filed with this Court on the 5th May 2005 and which this Court has accepted, then their owners are not automatically included as intervening Respondents herein.
This means that they have not specifically mandated Mr Pitso and/or the committee to act on their behalf in casu and this Court does not recognize them as intervening Respondents in this present matter. See my comments in the case of Hong Xing Enterprises v Lesotho Milling Company & Another CIV/A/136A/2000 p6 (unreported) on the question of unauthorized representation before the Court
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On the merits of the Application, the facts which are by and large common cause are that Lesotho Bank which has since been placed in liquidation established a pension fund for its employees on the 1st October 1985 which Fund was to be governed by certain rules (Annexure A to the Founding Affidavit). At the time the Fund was established, the intention was that both the employer and employees would contribute towards it.
It is not disputed that this did not happen and that only the employer made contributions by paying into the fund approximately 20% of its annual salary bill from 1985 to 1991. The total contribution was paid over to 5th Respondent (Metropolitan Life Limited) for its administration. No claims were ever made from this fund.
It is also common cause that sometime in 1992, the Bank stopped making contributions to the Fund due to its financial difficulties and the then manager Mr Monyane (intervening Respondent NO. 93 herein), used the Bank's monies to establish a new fund which he administered in-house. It is also not disputed that no rules were ever made to govern this particular Fund. The Court is told that the Board never sanctioned this venture. Unlike the previous fund, the 1992 was used to pay benefits to staff upon
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resignation. In the absence of any rules, the assumption is that the benefits were calculated on the basis of the rules of the 1985 fund.
The facts also show that in 1997, Mr Monyane established yet another Fund and the Court is informed that some rules were adopted for its administration but were never signed. It was Applicant's averment that in a similar manner as the 1992 fund, creation of this third fund was not mandated by the board and that no other legal requirements appear to have been met.
It is also undisputed that for purposes of financing this latest fund an amount of M6 million was taken from the 1985 Fund which had since been lying dormant with the 5 Respondent and was invested to purchase an annuity of M150 000.00 per month. These monies are said to have been used to fund claims against the new pension fund.
At the time the Bank was placed in liquidation, an amount of about M3 million stood to the credit of the 1992 fund. Another important fact which needs mention is that when the then Lesotho Building Finance
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Corporation was dissolved, its ex-employees were transferred to the Bank as permanent employees.
At this stage, it is worthy to mention that sometime in December 1999 a group of ex-employees who had resigned from the bank brought an application before the High Court to interdict the processing of payments from the Fund. The application was dismissed by Ramodibedi J (as he then was) and the appilicants took the matter on appeal. The appeal was however withdrawn and Applicants were ordered to pay costs thereof.
The importance of that case vis a vis the present application is that the Court of Appeal suggested therein that in the light of its peculiar nature, a neutral outsider be appointed to look carefully into the affairs of the Fund and to attempt to arrive at a proposal acceptable to all in the dissolving and distribution of the Fund proceeds.
It was as a result of this suggestion that a Professor John Murphy from South Africa was appointed by the bank. Applicant avers that the professor spent some six (6) days in January 2001 investigating the status of the Fund which process included holding formal discussions with
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interested parties. On the 24th January he presented a report containing his findings and recommendations. These are contained in Annexure "GR82/110" to the Founding Affidavit.
Some of the professor's noteworthy findings were that amongst all the potential claimants, he identified three (3) interest groups who during the discussions, were represented by different lawyers and who came to be referred to as Groups A, B and C respectively. The said groups were constituted as follows:
Group A- includes all persons employed by the employer prior to 1st October 1985 (going back to April 1972) or who entered employment during the period 1st October 1985 to 31st December 1991 and who remained in employment until their retrenchment on 31st July 1999. This group was represented by Advocate Phafane and Dr Mahao.
Group B- includes persons employed by the Bank subsequent to 31st December 1991 who remained in employment until 31st July 1999. This group was represented by Attorney T. Matooane.
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Group C- includes the previous employees of the bank who were in employment before or after 1st October 1985, but who subsequently resigned prior to 31st July 1999. This group was represented by Advocate Nathane.
The professor's findings also make mention of the relevant dates used in determining the above mentioned interest groups' and these are:
1st October 1985- the commencement date of the fund.
31st December 1991- the approximate date upon which the employer ceased contributing to the fund.
31st July 1999- the date upon which the employer terminated the
employment of the members of Groups A and B on operational
requirement grounds as part of the planned liquidation of the employer.
Applicant averred that during consultations, the legal representatives of Groups B and C were in agreement that all persons employed on 1st October 1985 or who entered employment thereafter automatically became members of the Fund. The legal representatives of Group A were however of the view that only the persons in Group A and some in Group C (being those in respect of whom contributions were made between 1st
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October 1985 and 31st December 1991, the latter date being when the employer stopped making contributions), fell within the definition of members of the Fund.
In addition, per the Applicant's averments, the liquidators of the Bank are of the opinion that the fund was not legally established for the reason that when both the employers and employees were supposed to contribute towards it, only the employer did. As far as they are concerned, the money actually belongs to the employer and he can dispose of it as he wishes, including it being paid over to the liquidators.
All the six (6) Respondents which have been cited in this application are not opposing it and are agreeable that they will abide by the decision of the Court. The 3rd, 4th and 5th respondents have filed affidavits to this effect
Without further ado, I now proceed to deal with the issues that were raised herein during arguments in Court and in the respective parties' Heads of Argument. I will make reference to the pleadings as and when the need arises. The issues are as follows;
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Whether Applicant herein is the Principal Officer of the Fund established in 1985;
Whether Mr Lekhooa Pitso has the authority to represent the intervening Respondents herein;
Whether service of these proceedings was effective;
Whether, the Fund in all its three (3) phases was a legally established entity;.
Whether Mr. Pitso and the other intervening Respondents have established a clear right to be granted the prayer they are seeking;
Whether there is any material dispute of fact which would result in the Court referring this matter to trial.
Whether applicant has made out his case which would entitle him to the relief he is seeking.
Who should benefit from the fund and based on what criteria.
When did the Bank stop its operations.
I now proceed to deal with the issues.
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Is Applicant herein the Principal Officer of the Funds?
Applicant averred in his Founding affidavit that he has been appointed as such. He went on to show at paragraphs 10-12 thereof that at the time the Board decided to liquidate the Bank and dissolve the Fund, there was no properly appointed Principal Officer and a Mr Vos was appointed with instructions to dissolve the Fund.
However, the said Mr Vos resigned before he completed the task and Applicant herein was appointed. He also attached annexure (E), a copy of his appointment as proof of his appointment. The annexure is a copy of the Minutes of a Meeting of the Executive Committee of the Liquidators of Lesotho Bank of 12 September 2001. The last paragraph thereof reads as follows;
IT WAS FURTHER RESOLVED that Mr DEREK MALING be, and hereby is, appointed as the Principal Officer of the Lesotho Bank Pension Fund, with immediate effect. "
In his Answering Affidavit, at paragraph 47, Mr Pitso denied that Applicant is the Principal Officer of the fund established in 1985. However, aside from making specific reference to the 1985 Fund, he did
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not say anything else in support of his denial. It therefore remains a bare denial and does not take his argument anywhere insofar as this issue is concerned. For these reasons, I accept Applicant's averment as evidenced by annexure (E)-that he is indeed the Principal Officer of the Fund and possesses legitima locus standi in judicio to institute these proceedings.
Whether Mr Pitso has- the Authority to Represent the Other Intervening Respondents
On this question, it is my opinion that Mr Pitso has a direct interest in this matter because of the fact that he is a former employee of the Bank. Due to the peculiar circumstances of this case, this factor alone gives him the right to be heard by this Court.
As Mr Theron rightly submitted in his Heads of Argument, even if this Court had not accepted the mandates of the other intervening Respondents for reasons of their failure to comply with this Court's Order of the 9th November 2004, it would still afford him a hearing on his own. At any rate, as have already stated above, I accepted the said mandates as authorizing him to represent the other intervening Respondents.
Whether Service of These Proceedings Was Effective
With regard to this particular issue, it is not clear to this Court what the point of the intervening Respondents is as raised in their Heads of Argument. This is because they did not come out clearly to argue that the service that I ordered was not effective. Their submissions as far as this issue goes, sound more like useful information to this Court on the basis of the authorities they quoted. However, it is my opinion that authorities should be referred, to in context. I do not hear intervening Respondents saying service was as a matter of fact, not effective.
This could be attributable to the peculiar nature of this case in that, it would be difficult for any person to commit themselves to saying so unless they could place facts before this court that would support such a contention. For instance, if they could aver that they know with certainty that former employee X did not get service as evidenced by his/her failure to file a claim when (s)he should have done so, it would make sense. In the absence of such proof, the presumption is that under the prevalent circumstances, service was effective.
In addition, as far as this issue is concerned, I did agree to extend the periods within which the substituted service was to be done. This I did because I wanted to strike a balance between ensuring that as far as humanly possible, none of the potential claimants is left out and the fact that this matter which has dragged on for a long period, does reach its finality.
I could order that service be re-done in casu over and over again ad infinitum on the basis of Ex Parte Extension Investments (Pty)
Limited
1967 (4) SA 185 quoted to this Court but at the end of the day, I would still be faced with the same question; How does anyone say with certainty that at a particular time service was totally effective or not?
If I was given cogent reasons why I should revisit the issue of the service and its effectiveness herein, I would definitely do so without hesitation. However, I do not think I should do so just because it has been raised without any material facts to back it. In other words, I entirely agree with Mr Theron's sentiments, only I do not think they have been satisfactorily justified in casu for the reasons as I have just stated above.
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Were the Funds Legally Established?
It was Applicant's contention in his Founding Affidavit at paragraph 20 that according to Professor Murphy's report, 'the Fund was probably never properly constituted so as to confer full legal status on it'. He based his contention on the fact that when the 1985 Fund was established, the Rules of the Fund were not followed because of these reasons;
• The Bank failed to first seek the approval of the Commissioner of Income Tax as prescribed by Rule 4.1;
• Employees did not contribute towards the Fund as prescribed by the Rules;
• The employer failed to dissolve the 1985 Fund after ceasing to contribute towards it.
• The employer failed to seek the insurer's permission to resume payment of contributions.
• The Board did not give its mandate for the establishment of all the three Funds
In his reply, Mr Pitso contended that whether or not the fund was legally constituted cannot be determined on the Applicant's papers and neither has the committee any knowledge thereof. He also stated that
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Applicant bears the onus to place facts before the Court upon which the Court can exercise its judicial discretion. He went further to state that for this reason the committee would seek a proper adjudication of the facts other than by way of motion proceedings.
Rule 4.1 provides as follows;
"Upon approval of the Fund by the Commissioner, the Fund shall become a separate corporate body and legal persona distinct from its Members, shall be the lawful owner of its property and shall be capable in law of suing and of being sued in its own name”
Applicant's contention was that such approval was not sought and to this end he filed a supporting affidavit of one 'Masello Molumaela. The deponent avered at paragraphs 4-5 therein that she checked the records of the Lesotho Revenue Authority and she found that approval of the Fund by the Commissioner (of Income Tax) was never granted nor is there anything in the Authority's records to suggest that approval was ever sought. She also found the same to obtain with respect to the two latter funds. This was not rebutted by Mr Pitso.
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From all the above, this Court is satisfied that Mr Pitso is not in a position to dispute that the Fund was never legally established since in his own words 'the committee has no knowledge of this matter' safe to say that Applicant has the onus to place proper facts before this Court. Applicant is the Principal Officer of the Fund. He took this Court into his confidence that some of the facts he has no personal knowledge of and had to rely on information from other people as already shown above hence why he filed Supporting Affidavits to his Founding Affidavit.
In the light of the fact that as he himself so stated, neither Mr Pitso nor the committee has any knowledge of this fact and as such are not in a position to dispute it, I accept Applicant's submission as correct. I do so fully cognizant of the fact that he based his averments on the available information as gleaned from available and unchallenged records.
In addition, one of the intervening Respondents herein is the former Manager of the Bank. In my opinion, if Mr Pitso had any leg upon which to stand with regard to this argument, nothing stopped him from asking Mr Monyane or any other person who was on the management team at the material time to file a Supporting Affidavit. This information would have
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been very helpful in assisting the Court in the determination of this issue. In the absence of such information, the Court had to rely on the undisputed information as per the documents before it.
Contribution to the Fund.
With regard to this issue it is not disputed that since its inception, only the employer contributed to the fund contrary to the provisions of Rule 8 which clearly states that both the employer and the employee shall contribute in the manner as prescribed therein. I need not say more on this issue.
Non-dissolution of the Fund
It was Mr Pitso's contention at paragraph 22 of his Answering Affidavit that in terms of Rule 8.3 of the LBPF, the employer should have acted in terms of Rule 6.1 and wound up the fund (my underling). He however also contended at paragraph 69 thereof that the Fund was dissolved in terms of its rules after the expiry of the period of grace and the members who were then members of the fund are entitled to the distribution of the total amount held to the fund's credit at the time. He based his contention on the fact that in 1991, the employer ceased to contribute to the fund.
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The fact of the employer ceasing contribution is undisputed. It is also common cause that no claims were ever made from the money which had since been with 5 Respondent herein.
The said Rule 8.3.4 provides as follows;
"Should the employer fail to contribute hereunder in full within the days of grace or such extended time as the insurer may allow, the Employer shall be deemed to have discontinued payment of contributions and shall not be entitled to resume payment of
contributions without the consent on the insurer. Should the insurer not consent to the resumption of the contribution payments, the provisions of Rule 6.1 shall apply mutatis mutandis. "
Rule 6.1 in turn deals with dissolution of the fund and the processes which have to be followed in that event. The Rule provides inter alia, that;
"If the Employer is wound up, whether voluntarily or not, or of the Employer ceases to carry on business, the Employer shall instruct the Principal Officer to dissolve the Fund by dividing the monies of the Fund, after payment of all expenses incurred in terminating the Fund, among Members and persons in receipt of pensions and prospectively entitled to pensions
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in a manner recommended by the Valuator and approved by the Insurer.... "
Needless to mention, the provisions of the above two Rules were not complied with and the effect of this is that the Fund was never dissolved as a matter of fact despite the employer having stopped contributing towards it and the grace period having long lapsed. The processes as prescribed in the Rules in that event were not followed. There is a difference between the existence of a Rule and acting in compliance thereof. I cannot accept that its mere existence means automatic compliance with it. If the Fund had indeed been dissolved, then it follows that payments would have been made then. This did not happen.
In the light of the above reasons, I find that since its inception, the 1985 Fund never assumed any legal status either at the time of its constitution, during its active life, to date as was envisaged by the Rules. It is therefore not enough for intervening Respondents to approach the Court and ask it to allow them to investigate its affairs on the unsubstantiated supposition that there could be proof to the contrary. This is especially so in the light of the fact that some of them used to be part of management and they
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should certainly know if circumstances were indeed otherwise. Accepting this line of argument and allowing the prayer would amount to sanctioning a fishing expedition which is not the role of this Court.
Failure to Seek the Insurer's Permission to Resume Contributions It is not disputed that the employer having stopped paying contributions
towards the Fund could only resume same if he had first sought consent from the insurer as prescribed by Rule 833, This however did not happen in that neither was such consent sought nor were such contributions resumed. Instead a new Fund was constituted in a manner as has already been detailed above. However, as already shown above, this factor alone did not necessarily result in the dissolution of the 1985 Fund.
Absence of the Board's Mandate It is also not disputed that when the 1992 Fund was constituted the former Manager of the bank did so using monies from the 1985 Fund and that all these happened without the Board sanctioning this move. As proof, Applicant filed the Supporting Affidavit of one Mrs Nyakallo Mohapeloa wherein she averred on oath especially at paragraphs 5 to 6 that;
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"I was instructed by the present Managing Director of my present employers and at the request of the Principal Officer of the Applicant in this application to peruse the minutes of the Board meetings of the Board of Directors of the First respondent for the period 1 January 1984 to 31 January 1998 to check to see if the said Board ever approved the establishment of any of the three Pension Funds being those described by the Applicant in his Founding Affidavit.
I duly performed the exercise as instructed and I confirm that there is no Resolution of the Board of the First Respondent that ever authorized the establishment of any of the said Pension Fund.' In fact there is not even a mention at all in any of the said minutes of any Pension Fund of the Bank. In a word the mentioned Pension Fund or Funds referred to by Mr Moling in his Founding Affidavit were never discussed. "
These averments were not factually challenged by the intervening Respondents and I have no reason to reject them. What becomes evident
is that none of the three Funds were ever legally established. This finding
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has implications on whether or not the intervening Respondents herein or any of the Bank's former employees have any legal right to and a say in the proceeds of all three of them. I will deal with this aspect at a later stage.
Have the Intervening Respondents Established a Clear Right
In my opinion, for the intervening Respondents to have established a clear right to the Fund, they ought to have shown the following;
• that they are members of the Fund(s);
• the Funds were established legally;
• they contributed to the Fund in the percentage as was prescribed by the Rules;
• the Fund was indeed dissolved as envisaged by the Rules.
It is not an issue that the intervening Respondents herein were members of the Fund. However, as shown above, I have already made my findings that the Fund was not legally established, all the employees did not contribute anything towards it, and that the Fund was never dissolved when the employer stopped making contributions. In addition, on the issue of its dissolution, Mr Pitso himself averred in his Answering Affidavit that when the employer stopped making contributions, the Fund 'was
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supposed to have been dissolved' because the fact of the matter is, it was never dissolved.
I should also add that Mr Theron's contention that there is a dispute of fact on whether or not the Fund was established is wrong. This is a dispute on a point of law and not fact and this Court is within its right to make a determination thereof on the basis of the affidavits before it.
For these reasons, I agree with Applicant herein that the intervening Respondents do not have any rights to the Fund. The money solely belongs to the employer and under these circumstances, Mr Theron's submission that the employees made a salary sacrifice is baseless and unsupported by the facts.
Is There a Dispute of Fact That Would Entitle This Matter to be Referred to Trial
On the pleadings before this Court, the facts are common cause. The disputes arise only insofar as the legal interpretation of the status of the Fund(s) in the form of their constitution/establishment; who made contributions towards them; dissolution; when the bank ceased to carry on
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business and who is entitled to benefit from the Fund(s) assets is concerned.
Against this backdrop, I find that there is no real dispute of fact. Arguments and counter-arguments which have been raised are all matters of law which this Court can and will determine without referring this matter to trial. It is irrelevant that Mr Pitso
represents the majority. I am not basing my findings on whether or not it is one or a million people who want this matter to be referred to trial. Even if it was one person, I would so refer it if I had found that a dispute of fact does exist.
Applicant herein is accused of not having filed affidavits whereas in my opinion, the converse obtains. Mr Pitso is making all his contentions without a single supporting affidavit, not to mention the fact that all the arguments he raised are legal arguments and not disputes of fact. If anything, he has actually conceded to the facts.
In addition, as I have already mentioned, Mr Pitso could have asked some of the former managers of the Bank to file Affidavits in support of his averments and contentions. He did not do so despite the fact that some of
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them are intervening Respondents themselves. If his arguments had any merit at all, the said intervening Respondents would have come forward with sworn affidavits supporting his case because surely they should know how the Funds were constituted and administered. In the absence thereof, the Court finds that he has failed to make a case that there is indeed a dispute of fact.
There is a plethora of authorities on the issue of reference of motion proceedings to trial. In all those authorities, including the celebrated case of Room Hire Company (Pty) Ltd v Jeppe Street Mansions (Pty) Ltd 1949 (3) SA 1155 (T), Courts are agreed that
referral of matters to trial or viva voce evidence should only be done where there is a material dispute of fact. Courts cannot and should not allow potential abuse of Court procedures by Respondents who will allege that a dispute of fact exists without laying anything on the table as proof of what they are contending just because they want to frustrate the Court process and/or the other party and thereby waste the Court's time.
On the alternative prayer that if this application is not referred to trial it should be dismissed, the question is; Dismiss it on what basis and even if
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it is dismissed then what? I have never heard of a litigant who will ask the Court to dismiss an application yet (s)he is of the opinion that the matter before it merits action proceedings or referral to viva voce evidence. I have no idea what this alternative prayer hopes to achieve. If anything, it gives the Court the impression that the intervening Respondents' contentions and submissions are indeed illegitimate and baseless or at best, the said Respondents are indeed on a fishing expedition.
It might have sounded more logical to this Court if at least the alternative prayer was that the Court should award the Fund(s)' assets to only those people whom the intervening Respondents insist are the only beneficiaries because in casu, Fund(s) do exist and a determination as to their distribution has to be made. For these reasons, I dismiss this alternative prayer.
Has Applicant Made Out His Case?
In the light of my reasons as stated above, I find that Applicant herein has indeed made out his case. The main reason for my so finding is that the Fund(s) were indeed not legally constituted for the reasons as detailed
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above. As a result, they belong to the employer alone and none of the employees.
It was also Mr Theron's submission that the situation at hand is analogous to the English law position, where if monies are held in trust for a particular purpose and that purpose fails or comes to an end they are declared a resulting trust of the funds subscribed or the surplus as the case may be for the contributors to the purpose or if they are dead, for their personal representatives. He quoted some of the English authorities to this Court.
From the said authorities, it would appear that the English position applies to trusts which in my opinion should be distinguished from pension funds such as in casu. Herein, when the 1985 Fund was established, the intention and purpose were clearly prescribed by the Rules to wit, to benefit members of the Fund. Unfortunately the Rules were not complied with. Because of that reason, the Fund neither assumed its intended legal status nor did members acquire any rights to it since they never made any contributions as prescribed by the Rules. Instead, only the employer made
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contributions towards it not to mention that it did not dissolve it as it ought to have done when it stopped malting such contributions.
However, the very fact that the Fund was never dissolved at that time is proof that its purpose did not come to an end. The employer simply had difficulties continuing with the contributions. Had the purpose come to an end as in a trust, then surely the employer would have dissolved the Fund and distributed its assets then. This is why the Bank (in liquidation) is arguing that the assets should be distributed to all its former employees who qualify under the suggested formula.
While I accept the submission that the employer contributed on the basis that it would have no further claim against it but that it would be distributed in terms of the rules, I am also of the opinion that the spirit and letter of the Rules was that all members should eventually benefit. When the employer ceased to make further contributions, it was due to its financial difficulties not because it meant for the Fund to stop and be dissolved and distributed among those who were members then.
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I also draw the inference that failure on the part of the Bank to dissolve and distribute the Funds at that time was because there was never any intention on its part to so dissolve it. But be that as it may, since the Rules were never complied with and none of the employees contributed anything, none of them has any legitimate claim to it anyway.
That being the case, I find that the money belongs solely to the Bank. The Bank therefore should be allowed to deal with it the way it deems fit. If it wants to distribute the money to all its former employees regardless of the fact that they never contributed anything, this Court will not stand in its way.
Things would probably have been different if the employees had actually contributed to the Fund even if the other Rules had been complied with. Then, and only then, would the intervening Respondents have had a leg to stand on in advancing their case before this Court. In other words, there would be room for the submissions they made as to what considerations this Court should make before it could issue a declarator.
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However, as things stand, none of the employees has a legitimate claim to the Fund(s)'s assets. I will therefore not waste time to consider the other issues raised and authorities quoted under the heading Declarator in their Heads of Argument This brings me to the next question.
Who Should Benefit From the Fund(s)
The Applicant's submission is that all former employees of the Bank (in the respective groups) with the exception of those who were dismissed for dishonesty should benefit. In reaction, it was submitted on behalf of the intervening Respondents that if this Court accepts this submission, it would be placing its reliance on Professor Murphy's report and recommendations.
Although I agree with the Applicant's submissions and have made reference to the Professor's report, I am actually relying on the facts that have been placed before this Court. My findings are similar to those of Professor Murphy simply because he based himself of the same facts and law and I happen to agree with recommendations.
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At any rate, the Professor was appointed as a result of an advisory opinion given by the highest Court of this land in its wisdom after examining the facts of this case. I have not been given any reason to believe that the Professor gave a biased report or, that he would have any reason to as he evidently has no personal interest in the matter.
Having said this, I conclude that there is no factual and/or legal basis for the argument that claimants who were actually employed at the time the contributions were made to the 1985 Fund have a claim in personam against it. They do not. In my opinion, they are in exactly the same position as all the other Bank's employees including those who became employed after the employer stopped making contributions. None of the employees contributed, the Fund(s) never assumed a legal status, it was never dissolved, the Board never gave its mandate for its establishment and approval of the Commissioner of Income Tax was never sought.
For all the above reasons, I find that Applicant herein has successfully made out his case and that the assets belong to the Bank. Since I do not find any cogent reasons that would warrant my interference with his suggested formula in paying out the dividends I will refrain from doing
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so. Having gone through the pleadings before me, I am convinced that the suggested formula is the most fair and equitable, all things
considered. In the light of all these factors, I did not waste time determining the issue of when the Bank actually stopped carrying on business for the reason, that it will not take this matter any further.
I am however not convinced by Applicant's submission that those employees who were not dismissed for dishonesty before the liquidation process be included in the list of beneficiaries. My reasons are that once a person is dismissed from employment all benefits emanating from that contract cease forthwith. I do not foresee a situation where all things being normal, the Bank would have gone out to find all such employees and included them in the distribution process. But my opinion aside, because I have already found that the money belongs to the Bank, if it wants to include them, then it is free to do so.
I therefore order as follows:
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That the persons who qualify to receive a dividend upon the liquidation of the Lesotho Bank Pension Fund are those appearing in the List "K-15/2/2005" as annexed to the Applicant's Heads of Argument.
That the amount that each person appearing on the said list is to receive is to be calculated by PETRUS JACOBUS JOUBERT ZIETSMAN in accordance with the formula described in his Affidavit dated 6 September 2004 after providing for the costs of the liquidation of the Fund and of this Application, as instructed by the Applicant.
That for purposes of applying the formula referred to in paragraph 2 above, the periods of employment and rates of remuneration relating to each qualifying claimant as they appear in the list "K-15/2/2005" are to be applied.
That the Applicant shall only effect payments in terms of this Order after verification by a firm of chartered accountants of the calculation of benefits made by the said Mr. P J J Zietsman.
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That the Applicant is authorized to distribute the funds available from the liquidation pension of the pension fund directly, as set out above, without first paying over such funds to the liquidators of Lesotho Bank (in liquidation).
That subject to paragraph 4 above, applicant is directed and authorized to:
6.1 Effect payment in terms of this Order only after all appeals against the Order granted by this Court have been concluded (or the time to note such appeals has passed).
6.2 Pay over to the Master all amounts due to the estates of deceased former employees of the Bank who are entitled to a dividend in terms of this Order, to be distributed by the Master to the rightful heirs of such now deceased beneficiaries as she identifies as being lawfully entitled thereto.
6.3 Give notice by registered post within fourteen (14) days after all rights of appeal as contemplated in paragraph 6.1 above
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have been exhausted, to those claimants who have put in written claims and whose addresses are known to Applicant (and who have been accepted as beneficiaries) that payment will be made to them in terms of the provisions of this Order.
6.4 Concerning those entitled to benefit in terms of this order but who cannot be traced for purposes of payment to the :
To publish notices in the form of Annexure "Zl" hereto in the following newspapers:
In Lesotho:
"The Public Eye" and "Lesotho Today" newspapers;
In the Republic of South Africa:
"The Sowetan", "City Post" and "Sunday Times"
newspapers;
(b) By broadcasting on Radio Lesotho on five consecutive days after the date of this order (or, if there is an appeal from it, after the date after all rights of appeal have been exhausted) in both English and Sesotho, the announcements to be in the
form as near practicable as set out in Annexures "Z2" and "Z3" hereto.
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(c) To hold all amounts due to them in an interest-bearing account of the Applicant's choice for a period of nine months from the date of this Order (or, it there is an appeal from it, from the date after all rights of appeal have been exhausted) after which period the right of such beneficiaries to receive the said payments will be extinguished and the amounts so unclaimed, including all interest which has accrued, will be paid over to the rest of the body of beneficiaries in proportion to their entitlement after application of the formula as set out in paragraph 2 above.
6.5 To pay to persons entitled to payment in terms of this Order the respective amounts due to each of them by non-transferable cheque made out to the beneficiary as described in the list "K-15/2/2005" against identification to the satisfaction of the Principal Officer or his representative of the beneficiary to whom such cheque is handed over by a current and valid
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passport or National Identification document, and against signature by such beneficiary for the receipt of such cheque.
COSTS
There is no order as to costs against any of the claimants who put forward their submissions with Applicant except for Mr Lekhooa Pitso and the all the Other Intervening Respondents who joined him in the opposition to this application.
I totally agree that the relief sought by Mr Pitso and the other intervening Respondents on whose behalf he approached this Court was spurious and vexatious in that they embarked on a fishing expedition for the following reasons;
They based their prayer on a supposition that the 1985 Fund might have been mal-administered when they have no facts to back this
supposition, thereby causing unnecessary litigation:
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He (Mr Pitso) failed to respond to vital correspondence necessitated by previous demands he had made by his letter to the Applicant
which.response could have curtailed these proceedings;
They prayed that I should refer this matter to trial when there was no material dispute of fact;
They prayed that in the alternative I dismiss this application for no sufficient reason.
I therefore order that Mr Pitso and the other 211 intervening Respondents as per the accepted mandates should pay costs on and attorney and client scale jointly and severally the one paying the others to be absolved.
N. MAJARA
JUDGE
For Applicant : H P Viljoen SC
H H T Woker
For Respondents (Intervening) : E L Theron
