IN THE HIGH COURT OF LESOTHO

 

 

CIV/APN/511/2010

 

In the matter between:-                                                 

 

 

LESOTHO STONE ENTERPRISES (PTY) LTD.             1^ST APPLICANT

MR. LU BEN LIU                                                            2^ND APPLICANT

WANG BIN                                                                     3^RD APPLICANT

ZHUANG XIAOHUA                                                       4^TH APPLICANT

 

AND

 

ZHAI FENG FU                                                              1^ST RESPONDENT

MR. ‘MUSI (THE DEPUTY SHERIFF)                           2^ND RESPONDENT

MR. MONYAKO (THE DEPUTY SHERIFF)                             3^RD RESPONDENT

MR. MIKA (THE DEPUTY SHERIFF)                            4^TH RESPONDENT

PHILLIP MOKHALI                                                        5^TH RESPONDENT

THE COMMISSIONER OF POLICE                               6^TH RESPONDENT

THE ATTORNEY GENERAL                                         7^TH RESPONDENT 

 

 

 

JUDGMENT 

 

 

Delivered by the Honourable Madam Justice M. Mahase

On the 21^st January, 2011

 

Civil Procedure – Practice – Applications – Company Law – Directors and share holders – Authority to sue on behalf of company – None Directors’ locus standi in Judicio – Material non-disclosure.

 

 

This is an application in which the applicants have moved this court to grant them the following orders:-

 

1.  Dispensation with the Ordinary Rules of this Court pertaining to the modes and service due to the urgency of this matter.

 

2.  A rule nisi be and is hereby issued returnable on the date and time to be determined by this Honourable Court calling upon the respondents to show cause (if any) why:-

 

a)   It shall not be declared that the 1^st respondent is not a director of the 1^st applicant.

 

b)  That the respondents be interdicted from carrying out any of the demands detailed out in Annexure “LYW4” hereunto attached pending final determination of the present applicant.

 

c)   That the 2^nd to the 5^th respondents herein be interdicted from going to any of the business sites and/or offices of the 1^st applicant pending final determination of this application.

 

d)  That the 1^st respondent be interdicted from holding himself out as a director of the 1^st applicant.

 

e)   That the respondents be interdicted from going to the place of residence of the applicants pending final determination of this application.

 

f)    That the respondents be interdicted from removing any of the properties of the 1^st applicant from the offices and/or place of business of the 1^st applicant pending final determination of this application.

 

g)   That the respondents shall not be ordered to pay costs of this application on attorney and client scale one paying others absolved and including costs consequent upon the employment of two counsel.

 

h)  That the 6^th respondent and/or officers subordinate to her shall not be directed to assist in the execution of this order.

 

3.  The applicants shall not be given such further and/or alternative relief as this Honourable Court may deem fit.

 

4.  That prayers 1, 2 (b), (c), (e), (f) and (h) operate with immediate effect as interim orders.

 

The application was moved ex parte; on the 17^th September 2010.

 

When this Court, so granted that rule nisi, it indicated its concern on the issue pertaining to the unlawful conduct and an abuse of the Court process by the 1^st respondent as well as by the Deputy Sheriffs of this Court.  I must once again indicate that other than that observation, I see no reason why three of the Deputy Sheriffs of this Court had to go out to execute only one Order of Court.

 

The application is being opposed.  The respondents have raised some points in limine to wit:-

 

-      Lack of authority and locus standi

-      Non disclosure of material facts

-      Jurisdiction of Court.

 

I will deal with same in due course.  I now briefly outline the facts of this application.  I must indicate at this juncture that in fact these facts are common cause and that same have not been specifically denied by the respondents.

 

The present applicant and the present 1^st respondent have been embroiled in many of cases since 2009.  To be precise, the 1^st respondent has been battling with the former directors of the 1^st applicant since 2009 over the operations of the 1^st applicant, and vice versa.

 

All in all some eight cases in this regard between 1^st applicant, 1^st respondent and the former shareholders or directors of the 1^st applicant have been instituted initially by the now the 1^st respondent and by the now 1^st applicant and other shareholders at various stages.

The 1^st respondent has equally since the year 2010 pursued the same applications or actions against the present applicants to date.  The bone of contention here is that the 1^st respondent wants to take over the management of the 1^st applicant.  This is a matter of common cause between the parties herein, see paragraph 1.3 of the respondents’ heads of argument and paragraph 5.1 of the applicants’ heads of argument – particularly 5.1 (iii) and (iv).

 

The proper reading of the papers filed herein is that in fact the 1^st respondent has since the year 2009, been rendering the company or 1^st applicant inoperative so that he could then have it liquidated.  The first attempt by him failed while the said company was being run by the former directors of the 1^st applicant.  He did not end here, 1^st respondent has once more, and using the same methods been rendering the company in which he claims to be not an ordinary shareholder but a sole director, inoperative much to the detriment of the company and its other shareholders/directors, who are 2^nd to 4^rd applicants herein.

 

The applicants are among others challenging the alleged sole directorship of the 1^st respondent in the 1^st applicant.  It is their averment that in fact and according to annexure LB1 (page 24) of the record; the 1^st respondent is not a director of the 1^st respondent, because he has never been so appointed by the shareholders of the 1^st applicant, i.e. by the 2^nd to 4^th applicants.

 

According to the applicants’ averment, the 1^st respondent was in April 2010, removed from the directorship of the 1^st applicant/the company; when there were changes effected as to the shareholding in the company in question, vide annexures “LBH1” and “LYW2”.

 

There is nothing on the said annexures indicating and or suggesting that the 1^st respondent in the instant application was appointed one of the directors of the 1^st applicant.

 

The 1^st respondent has in fact not pleaded issuably or at all to the applicants’ averment in this regard, neither has he disputed or challenged the existence or the authenticity of two annexures “LBH1 and LYW2”.  The 1^st respondent has also not denied nor challenged the applicants’ averment that he had personally not attended the shareholders’ special meeting of April 2010 but that he had been represented by his elected proxy Adv. Nathane, and that he was not elected a director of 1^st applicant.

 

It is noted further that Adv. Nathane has not supported 1^st respondent to the effect that he was elected a sole director of the 1^st applicant in April 2010.  Neither has advocate Nathane confirmed nor denied in anyway that 1^st respondent attended that meeting.  He also has not supported 1^st respondent that he – Advocate Nathane had attended the said meeting as proxy for 1^st respondent.

 

It is an undisputed fact that following that shareholders special meeting in which the 1^st respondent was not appointed a director of the 1^st applicant, he instituted CIV/APN/253/2010 in which the 1^st respondent alleges that the judgment was delivered in his favour; although he does not specify in which particular regard the judgment in question was delivered in his favour.  A copy of the judgment in that CIV/APN/253/2010 has been annexed to the papers in the instant application, as annexure LYW3 – page 31 etc of the notice of motion in the instant application.

 

The purport or the gist of the said judgment in CIV/APN/253/2010 is that in effect, the 1^st respondent has been granted undisturbed access into the financial records and books of accounts etc of the 1^st applicant herein (the 8^th respondent) and the 2^nd to 3^rd applicants in the instant application (who were then the 1^st up to the 3^rd respondents) have been ordered not to conduct the business of the present applicant (now 1^st applicant) in exclusion of the instant 1^st respondent and nothing else.

 

However and in clear violation of the said judgment, the 1^st respondent, in the company of the deputy sheriffs of this Court committed the unlawful actions against the 1^st applicant as well as against the 1^st applicant as well as against applicants numbers 2 up to 4.  Refer to applicants’ founding affidavit paragraph 5.6 – up to 5.9 – pages 13 up to 22.

 

What this Court finds more disturbing and which fact has not been denied by the 1^st respondent is that, the 1^st respondent and the 6^th respondent’s officer had been accompanied to the offices of 1^st applicant and later to the residential home of the 2^nd up to the 4^th applicants by the 5^th respondent who is an employee of the applicants’ rival company known and trading as Lesotho Smart Sandstone.  This the 1^st respondent did for reasons best known to himself, but which reasons cannot under any circumstances be interpreted as having been for the benefit of or in the best interests of 1^st applicant, and its shareholders (including the 1^st respondent himself).

 

Indeed I pause to observe that the actions of the 1^st respondent and those who had accompanied him to the offices of the applicants on the pretext of executing an Order of this Court are highly questionable, suspect and unacceptable to say the least.

 

The applicants’ allegation that the 1^st respondent in particular abused the Court Order in question to attain some ulterior motives only known to the respondents holds water.  There is absolutely no justifiable reason why in the first place the 1^st respondent had to engage a battalion of deputy sheriffs and an employee of a rival company to that of the 1^st applicant in which he claims to be a shareholder and render that same company’s business inoperative by committing flagrant unlawful acts, contrary to an Order of Court which has purportedly been obtained or issued to among other things protect his interests as a shareholder or as a sole director as he wants this Court to believe him.

 

I have read the judgment in CIV/APN.253/2010 over and over again but I have not come across a single sentence wherein the actions of the 1^st respondent and of those in his company whilst at the offices and the residential house of applicants have been specifically authorized by that judgment or by an order of Court in question.

 

For instance, there is nowhere where the 1^st respondent nor any of the deputy sheriffs of this Court have been ordered by this Court to search and take away the business tools and any money allegedly belonging to the 2^nd and 4^th applicants’ as shareholders or directors  of 1^st applicant.

 

Now the salient question to be asked is what has the 1^st respondent done with those items and money.  I must indeed hasten to say that the 1^st respondent’s actions herein complained about or subject – matter in the instant application – border on actions of criminality.  This I say with the greatest respect.

 

This brings me to the issue that even counsel for the 1^st up to 5^th respondents conceded in argument before this Court that when annexure “LYW4” was written, this was written before the applicants had been made aware of the existence of the contempt of Court application; which application was brought to the applicants knowledge only after the 1^st respondent had illegally committed the actions which the applicant complain about in the instant application.

 

How then in the circumstances of this case could 1^st respondent expect the applicants to ignore the illegal search and actions committed against them and which actions literally paralysed the business operations of the 1^st applicant; the company in which applicants number 2 up to 4 as well as the 1^st respondent are shareholders or directors?

 

In fact, it is further observed by this Court that there is nowhere in the papers before this Court nor in the Order of Court not in the judgment in CIV/APN/253/2010 where any of the respondents have been granted an Order to the effect that they should write to the applicants annexure LYW4 as a way of enforcing whichever Order of Court had been granted in favour of any of the respondents.

 

The letter, annexure LYW4, which has specifically been addressed to Mr. and Mrs. Chen, and which letter has been signed by Mr. Buys, 1^st respondent’s instructing attorney is a clear indication of the extend to which the 1^st respondent is prepared to go in his quest to paralyse the business operations of the 1^st applicant.

 

This is also a clear demonstration of the intent of the 1^st respondent to further distort the contents of the Order of Court in question as a way of paralyzing the operations of the 1^st applicant and indeed, the contents of this letter, whose basis of its existence has not been established are threatening to say the least.  If indeed, the 1^st respondent wants this Court to belief him that he is acting bona fide and in furtherance of the best interests of the company in which he alleges to be its sole director, he should not have written that letter.

 

A proper reading of the judgment of this court dated the 8^th September 2010 (if this is the Order referred to by the 1^st respondent) does nowhere authorize the 1^st respondent to take control of the 1^st applicant, to lock its offices nor to take any property including money from the 1^st applicant’s offices.

 

Put differently an order of Court to the effect that 2^nd up to 4^th applicants should allow 1^st respondent unhindered access and participation etc in the affairs of the company does not by any stretch of imagination entail paralysis of the company’s business operations.  The contrary is what was envisaged.

 

Indeed, in the light of ample unchallenged evidence that the said Court Order was being used unlawfully against the applicants and to their prejudice and for ulterior motives, the applicants were justified in having approached this Court as they did; namely ex parte.  The fact that among others, the 1^st respondent went to the applicants’ residential place/home where he committed further acts of illegality cannot be ignored.  The applicants were therefore entitled and justified in approaching this Court on ex parte basis.

 

The applicants have properly approached this court as they did in the attendant circumstances of this case.

 

This Court has nowhere changed nor has it reviewed any existing final Order of any Court.  What it has done is to prevent the acts of illegality which were being committed under the auspices of its Order.  This Court has jurisdiction to prevent an abuse of its Order(s) – Vide Chobokoane v. Solicitor General  C of A (CIV) No. 15 of 1984.

 

This is moreso because the 1^st respondent has not denied that in                  allegedly enforcing the Order of Court in question, he acted contrary to the clear, unambiguous contents of that Order and committed acts of criminality.

 

The 1^st respondent has nowhere controverted the evidence in papers herein that he did unlawful acts contrary to the contents of the Order of this Court.  This undenied fact must therefore be taken as having been admitted vide Plascon-Evans paints v. Van Riebeek Paints LTD 1984 (3) S.A. 620 A.D.

 

 It is noted that the 1^st respondents attorney wrote annexure LYW4 some five days after the alleged Order of Court was issued against the present applicants, and presumably after 1^st respondent had realized that he has not been successful in being granted authority to take full control of the affairs of the 1^st applicant in exclusion of other shareholders.  It therefore changed its strategies by writing this intimidating or threatening letter to one of the employees who are not shareholders nor directors of the 1^st applicant’s company and who are also not parties to this present application.

 

It is indeed abundantly clear that at the time this letter which had not been addressed to any of the 2^nd to 4^th applicants, but which is addressed to some people who are not parties to this instant application, it was written before the contempt of Court application was served upon the applicants.  My view in this regard is fortified by the format of this letter which is in a form or tone of a letter of demand. 

 

If indeed, the contempt of Court application, which 1^st respondent alleges to have already  served upon the applicants was already in existence and so served why would he place ultimatums not sanctioned by an Order of Court in question demanding applicants’ employees to do or to refrain from doing this and that?  Why did 1^st respondent not just lawfully have the Order of Court in question executed straight away without first having to write annexure LYW4?

As I have indicated annexure LYW4 was written on the 13^th September 2010.  That is; it was written some five days after the judgment, annexure LYW3 (page 31) of the record had been delivered.  The 1^st respondent was indeed aware by that time that he had been allowed access into the 1^st applicant’s company and nothing else.

 

The actual Order of Court which the 1^st respondent and those in his company (2^nd to 6^th respondents) allegedly executed when they literally and unlawfully closed down the 1^st applicant and also later ransacked the residential house in which the 2^nd to the 4^th applicants reside, has not been attached to the papers in this instant application.  This Court is therefore unable to read it.

 

However, it becomes clear from the reading of annexure LYW3 – page 35 last paragraph that the 1^st respondent’s prayers of shutting down the 1^st applicant and interdicting the now 2^nd to 4^th applicants from conducting the business of the 1^st applicant were not granted.  Vide 4^th line and so on.

 

It was observed thereat that the now 1^st respondent then proceeded in his prayers to ask that he be allowed free and undisturbed access in the business of the 8^th respondent/now 1^st applicant and that he should not be excluded in its activities.  The Court per my Brother Justice Nomngcongo observes and remarks that: (I quote)

 

“I must say at once that it is illogical that I should shut the business and then order that applicant should have access in its running.  I cannot grant this prayer.  The rest of the prayers are basically prayers for access to the records and financial affairs of the 8^th respondent company.”

 

It then becomes immediately clear to this Court, from the proper reading of the above quotation that the 1^st respondent in the instant application has deliberately and for reasons best known to himself misinterpreted the order of Court in question so as to permanently render inoperative the business of the 1^st applicant so that he could then have the 1^st applicant liquidated.

 

It is also worth noting that long before the 8^th September 2010, the 1^st respondent had already instituted liquidation proceedings against the 1^st applicant.  This is unprocedural because there are no valid, justifiable nor reasonable reasons in law for him to bring such proceedings against a company which is still operating.

 

This clearly and without doubt indicates that the 1^st respondent has all along since 2009 been dragging the former and present directors and shareholders of the 1^st applicant to Court for ulterior motives.  That also explains why 1^st respondent has among others, been seen in the company of an employee of a rival company (5^th respondent) at the time when he and his group were unlawfully allegedly executing the order of this Court.

 

In fact the actions of the 1^st respondent complained about by the applicants in the instant application are reminiscent of the so called Anton Pillar application proceedings which 1^st respondent once obtained against the 1^st applicant and its former directors; and which order was set aside by this Court in the many former cases which the 1^st respondent has brought against the 1^st applicant.

 

The 1^st respondent has also raised a point that the applicants or one of them have no or lack authority to bring this application on behalf of the 1^st applicant.  The reason for this being that they have not been properly authorized by an official of the company by annexing an affidavit together with a resolution authorizing them to do so.

 

The applicants deny the above and they in fact, say this issue was never interrogated in argument before this court.  They also among others deny that 1^st respondent is a director of this company.  In essence they in turn argue that 1^st respondent, being not a director of this company, has not been authorized in any way to defend this application.

 

This court has already pointed out that the 1^st respondent has neither denied nor challenged the fact that he was never appointed a director of the 1^st applicant, and also that he has not at all pleaded issuably to the fact that it is the applicants who are directors of this company/1^st applicant as appears clearly in annexure “LB1” hereunto annexed.

 

In other words, the denial by the 1^st respondent that the deponent to the 1^st applicant’s application is unauthorized is a bare one.  It can therefore not stand.  It is trite that there is no invariable rule which requires a juristic person to file a formal resolution, manifesting the authority of a particular person to represent it in any legal proceedings, if the existence of such authority appears from other facts – vide Central Bank of Lesotho v. Phoofolo 1985 – 1989 LAC 253 at 258J – 259B.  

 

See also – Tattersall and Another v. Nedcor Bank LTD 1995 (3) S.A. 222 (A) where it was held that, a copy of the resolution of a company authorizing the bringing of an application need not always be annexed.  This is particularly so where there is sufficient aliunde evidence of authority and where the denial of authority is a bare one, like in the present case.

 

Indeed the unlawful entry and unlawful acts carried out by the 1^st respondent and his group at the applicants’ offices and residential house also conferred locus standi on the occupants and owners of the premises to approach the Court to claim relief against those trespassers.  That is, even in that regard alone the 2^nd to 4^th applicants have locus standi to institute proceedings against the 1^st respondent and his group – i.e. the 2^nd up to the 5^th respondent including an officer from the 6^th respondent.

 

All of them were alive and aware of the fact that they should never have gone to the applicants offices and residential house to commit illegal acts contrary to an Order of this Court.  These and the threatening contents of the letter annexure “LYW4”, whose contents this Court has alluded to justified the launching of this application by the applicants in the manner in which they have done.  The 1^st respondent’s actions have among others, and contrary to an Order of this Court brought to a standstill the business operations of the 1^st applicant much to its and its shareholders prejudice.  This is aside from the fact that 1^st respondent who was actually running the show as he ordered his co-respondents around in the name of executing an Order of Court in question was deliberately, acting unlawfully, in allegedly executing that order for ulterior motives.  This fact has also not been denied by the 1^st respondent.  It is therefore admitted as such.

 

With the greatest respect, and contrary to what counsel for respondents alleges in his heads of argument, at paragraph 7.3.2, there is nothing in the Order of Court or judgment of court referred to therein which enjoined the 2^nd to the 4^th respondents to unlawfully enforce an Order of Court.  The 1^st respondent, has himself to blame for engaging in unlawful actions in allegedly enforcing an Order of Court, he has in fact, denied himself the access and or undisturbed access in the business operations of the 1^st applicant.

 

I note, with concern, that being not a Deputy Sheriff of this Court, 1^st respondent should not have had himself directly involved in the execution of the alleged Order of this Court.  He should have left that duty to the Deputy Sheriffs of this Court who would probably have not acted with partiality and emotions.  As it has been alluded to above, there is nowhere in the judgment and presumably, in the Order of Court in question where the 1^st respondent and his group were authorized to remove the property to wit, company computers and money at the 1^st applicant’s offices and at the residential home of the 2^nd to the 4^th applicant.

 

Lastly, it is observed by this Court that in the attendant circumstances of this case, the applicants had no other remedy but to approach this Court as they did.  Being directors or shareholders of the  1^st applicant, and 1^st respondent and his group acting contrary to the contents of the Order or judgment of Court, and applicants being lawful occupiers of the house which had been unlawfully invaded by the 1^st respondent and his group, and in which house 2^nd to 4^th applicants  had a right to reside, they had a clear right not only to reside and operate in the offices of 1^st applicant undisturbed by anybody including the 1^st respondent, they also had a right to prevent the unlawful execution of an Order of the Court.  I have already indicated above that having access and or undisturbed access in the business of 1^st applicant does not also entail rendering inoperative the business operations of the 1^st applicant.  This was never sanctioned by an Order of Court nor by the judgment of this Court referred to above.

 

I must in conclusion point out that the modus operandi herein engaged in since 2009 by the 1^st respondent, who is now in business with, a rival company is clearly calculated to bring to a stand still the business operations of the 1^st applicant, so that 1^st respondent can then have the 1^st applicant liquidated much to the prejudice and demise of this company and its directors or shareholders.  1^st respondent is persisting in this kind of behaviour even where the Court has granted him his prayer to have access into the business of the 1^st applicant.  This constitutes a gross abuse of the Court process and very unfortunately he has been actively assisted in this kind of behaviour by the Deputy Sheriffs of this Court who are able to read and execute an Order of Court.  This must come to an end.  The Deputy Sheriffs of this Court should never allow themselves to be allowed to engage in unlawful acts by any of the parties herein.

 

It is for the above reasons that this Court grants the application of the applicants in the instant application with costs to the applicants on an attorney and client scale; one paying the others to be absolved.

 

The reasons for the awarding of costs on this scale is obviously that 1^st respondent had deliberately and with persistence executed the Order of Court herein unlawfully and this he did in an unacceptable, unlawful and threatening manner as indicated by annexure “LYW4” which unfortunately was written for no justifiable reason by his experienced instructing attorney thereby burdening the record unnecessarily.

 

I have also indicated that there is no justifiable reason why he had to engage about all the Deputy Sheriffs of this Court in having this simple straight forward Order of Court, which he executed unlawfully.  That has unnecessarily necessitated the citing of all of these Deputy Sheriffs in this application thereby increasing costs.

 

The 1^st respondent has not denied that he has been abusing the Court process persistently since 2009 in his endeavours to paralyse the business operations of the now 1^st applicant.  This is unacceptable behaviour.

 

 

M. MAHASE

JUDGE

 

For Applicants         -       Dr. K.E. Mosito K.C

                                        Adv. Setlojoane

 

For Respondents      -

No. 1 up to 5                    Adv. T.R. Mpaka

 

For Respondents

No. 6 to 7                 -       No appearance