IN
THE LABOUR COURT OF LESOTHO

CASE
NO LC 41/98

HELD
AT MASERU

IN
THE MATTER OF:

KUENA
MAHLAKENG APPLICANT

AND

LESOTHO
BANK RESPONDENT

JUDGMENT

Applicant
was dismissed by the respondent bank on the 23^rd
December 1997 following a disciplinary enquiry into his alleged
misconduct. Applicant alleges that when he was dismissed, he was

owed an after tax amount of M11,444-76 for accrued leave and
M2,959-34 in respect of staff savings. He avers further that on the

31^st
December 1992 the respondent retained the said money and has to date
refused to pay it. Applicant further claims that during his

employment by the respondent he worked overtime which was never paid.

On
the 19^th
July 1998, the applicant approached this court seeking relief that
the respondent be directed to pay him an amount of M27,304-20
being
overtime worked whilst in the respondent’s employ. He further
sought that the respondent be directed to release to him
the sums of
M11,444-76 and M2,959-34. However, at the close of the applicant’s
case Mr. Mahlakeng wisely in our view decided
to abandon the claim
for overtime because the applicant could not prove it. In deed even
the paper on which the applicant said
he had kept the record of the
overtime he worked, which he could not produce in court, it turned
out under cross-examination that
it was not a daily record of each
day’s overtime. It was instead a compilation of applicant’s own
recollection which he made
after his dismissal. This concession the
applicant made under cross-examination. That paper could not
therefore, constitute a
satisfactory proof of the overtime worked let
alone to sustain the substantial claim of M27,304-20 which the
applicant had made.

The
applicant adduced evidence of himself in which he testified that the
money in respect of leave and staff savings was never paid
to him and
was instead paid into what was said to be his loan account.
Applicant handed in a copy of the deposit slip dated 31/12/97
which
was sent to him by the respondent as evidence that the sum of
M17,607-33 was deposited with the respondent bank on his behalf
into
his loan account. Applicant testified further that at the time of
his termination he never had any loan account with the
bank. The
only loan account he had, he testified, was a furniture loan of
M7,256-00 which he had paid in full at the time of his
termination.

In
their Answer the respondents admit that the applicant had the amounts
he claims due to him at the time of his dismissal. They
further
admit that the respondent has refused to pay the said amount despite
demand. In paragraph 3.2 of the Answer the respondents
aver that
“....applicant was granted a loan facility in the amount of
M27,523-05 as at 01/12/97 plus shortage of M21,666-45 and
a simple
interest loan which he is currently servicing and stands at M1,934-48
as at 22.07.98.” The respondent aver further
in paragraph 4.2 of
the Answer that the money being claimed by the applicant was credited
by the respondent into applicant’s
loan account to reduce his
indebtedness to the respondent.

In
Answer to these allegations, the applicant in his testimony under
oath denied obtaining a loan of M27,523-05 from the respondent.
He
went further to say that infact on the day he allegedly got the loan
namely 01/12/97 he was never at work. As regards the
shortage, the
applicant, while conceding that he had a shortage, testified that he
was never shown a shortage of M21,666-45. He
averred further that in
telling shortages often occur. As regards the simple interest loan
he stated that his furniture loan like
the loans of other members of
staff of a similar nature was transferred to a simple interest loan
account. As he testified, at
the time of his dismissal he had
finished paying that loan.

Applicant
admitted that the policy of the respondent is to make tellers pay for
their shortages and that is done by way of opening
a loan account for
the teller which he would then service. While conceding having a
shortage he categorically denied having a
shortage in the amount
alleged by the respondent. The respondent did not lead any evidence.
However, under cross-examination
Mr. Matooane sought to show the
applicant that he was dismissed after the bank found him guilty of:

1. failing
   to report the disappearance of a deposit amounting to M7,733-39;

   
   

2. failing
   to recover funds for unprocessed debits amounting to M6,711-00;

   
   

3. failing
   to explain shortage of M7,222-06.

   
   

The
applicant agreed this was correct and Mr. Matooane asked the
applicant what was wrong with the bank recovering what it found
him
guilty of? The applicant answered that the bank did not consult him.

In
submissions before the court it became clear that the entire case
centered around compensatio
or set-off as it is commonly known. We are indebted for both
counsels who had prepared brief but concise heads of argument which

we found very helpful. It was Mr. Matooane’s contention that
applicant’s benefits have been set off against the shortage he

incurred which formed the basis of his dismissal. He contended that
set off can be exercised without the permission of the other
party as
it operates ipso
jure
as a partial or total discharge of the debt. He relied on the
Appellate Division decision in Schierhout .v. Union Government 1926

AD 289.

The operation
of the principle of set-off is captured at the bottom of page 289 to
the top of page 290 of the judgment of Innes
C.J. as he then was in
the Schierhout case supra. The learned Chief Justice captures the
principle like this:

“When
two parties are mutually
indebted to each other both debts being liquidated and fully due
then the doctrine of compensation comes into operation. The one debt
extinguishes the other protanto as effectually as if payment
had been
made.”
(emphasis added).

We
have highlighted the phrase “mutually indebted to each other both
debts being liquidated and fully due” because this is the

fundamental requirement that must exist if the principle of set-off
is to be invoked. In Great North Farms (EDMS) BPK .v. RAS
1972(4)
SA7 to which we were referred by Mr. Mahlakeng on behalf of the
applicant, the learned Justice Margo quotes a number of
authorities
which shed significant light on the operation of the principle of
compensatio.
At page 8 of the judgment the learned Judge quotes Rosenow J in
Harris .v. Tancred N.O. 1960(1) SA839 where the learned Judge
had
stated:

“There
appears to be some confusion amongst the authorities as to whether
set-off operates entirely automatically, or whether it
has to be
specifically invoked as a defence to a claim.”

At page 9 he
quotes Innes C.J. again in Postmaster-General .v. Tante, 1905 T.S 582
at p.590 where the learned Chief Justice stated:

“set-off,
like payment, should be pleaded and proved,
so that the court may give effect to it, but its operation dates back
to the moment when the two persons concerned were reciprocally
liable
to one another. At that moment in intendment of the law they are
regarded as having paid cash to the other’s claim with
his own, so
far as it would go.” (emphasis
added).

Mr.
Mahlakeng referred us also to the case of Adjust Investments (Pty)
Ltd .v. Wild 1968(3) SA 29. In that case a Mr. Brink had
sold
certain farm properties and movables to the respondent for a sum of
R21,000-00. The respondent had to pay M7,000-00 of that
price on or
before 28^th
February 1967, but he only paid R4,000-00. The result was that Brink
instituted action against the respondent for the balance.
The
respondent successfully excepted to the claim on the ground that the
declaration did not disclose the cause of action. However,
the
decision was upset on appeal and the respondent was ordered to pay
costs of the appeal as well as the exception in the court
a quo. The
taxed costs of both proceedings amounted to R462-23. Respondent
failed to pay this amount. A writ of execution was
issued but he
informed the sheriff that he was not possessed of any attachable
assets. Brink ceded his claim for the R462-23 to
the applicant
company which immediately instituted insolvency proceedings against
the respondent. The latter’s estate was accordingly
provisionally
sequestrated. At the time applicant applied for provisional order of
sequestration the respondent had already instituted
a counterclaim
against Brink for the cancellation of the sale and return of the
R4,000-00 already paid in respect of the purchase
price on the ground
of alleged fraudulent misrepresentations made by Brink which had
induced him to enter into the contract.

In
argument before court the respondent sought to have the applicant’s
claim of R462-39 set off against the R4,000-00 purchase
price he was
seeking to be returned. The applicant on the other hand contended
that the alleged debt of R4,000-00 was not, pending
the outcome of
the case, a debt capable of set off. Judge Erasmus made informative
comments and references to authorities before
coming to his decision
on the case. At page 31 the learned Judge observes that in Roman
times the Judge could in his discretion
allow set-off and that
illiquidity was no bar to compensation. He remarks further that;
“the development of our law of set-off
operating ipso
jure
seems to have gone hand in hand with the development of the law of
set-off from illiquid to liquid claims and to have received
its
impetus not from the Romans but the Dutch and the French.” (see
pp. 31-33H). At p.32C-E the learned Judge refers to the
old writers
and these are the relevant excerpts:

“Van
Leeuwen R.H. Reft, 4.40.2 insists on relative liquidity ‘mits dat
sonder moeite slyke’ and in Censura Forensis, 4.3.1 he
demands
absolute liquidity. He states: ‘....liquidi enim ad illiquidum
nulla compensatio est.” Vissius, Select Jur Quaest,
IC50, is of
the opinion that causa
debendi
must be justa et vera, admitted by the other side or capable of quick
proof, whereas Zoesius, Commentarius ad Digesta, (1718) 16.2.11,

speaks of liquidity as made manifest by judgment or admission or
exigible without delay. Gerhardt Noodt accepts the theory of
payment
absolutely and so does Voet in certain respects. (16.2.2).”

The
learned Judge concludes by submitting that what is clear is that
“absolute mutual liquidity was not always insisted upon in
the
practice of Holland and set-off was a matter of judicial discretion.
This still appears to be the position to-day in South
Africa in so
far as it does not take place automatically and ipso
jure
when two liquidated debts balance each other.”

The
learned Judge again quotes De Villiers C.J. in Kruger .v. Van
Vuuren’s executrix 55.C 162 at 168 where the learned Chief Justice

stated;

“where
the defendant does not rely upon a liquid document the liquidity of
his claim must be decided by the court which according
to Vinnius
Sel. Jur. Qu. 1,50, has some degree of discretion vested in it. But
until every element of uncertainty has been removed
as to the amount
opposed in compensation set-off is not allowed.”

The learned
Judge further quotes Innes C.J. in Treasurer General .v. Van Vuren,
1905 T.S. 588 at p.589 where the learned Chief Justice
stated;

“the
law requires that a debt which it is desired to oppose by way of
set-off must be of a liquidated nature. It need not be liquid
in
the sense in which that word is now used in practice. According to
Vinnius, Select, Juris Quaest, 1.C.50, if not admitted by
the other
side it must be capable of easy and speedy proof. Pothier,
Obligations 3.C.4 sec.2 says a debt is liquidated when it
is evident
that it is due and to what amount....”

Coming now to
the Adjust Investments case the learned Judge concluded after
reviewing various decisions and the commentaries of
old writers that;

“Applying
these principles I do not think that it can be said that the
respondent’s counterclaim, relying on fraud, is capable
of prompt
ascertainment, or that it will not involve a long and intricate
investigation or that it can be established summarily
or without
difficulty or that it is a debt which is so certain that it can be at
‘once proved’.”

Coming now to
the facts of the present case, we are satisfied that Mr. Matooane for
the respondent duly pleaded the set-off to make
the court aware of
it. The next issues to determine are whether the applicant is
indebted to the respondent and if so whether
the debt is sufficiently
liquidated or if not, whether it is capable of prompt ascertainment,
or whether it will not involve a
long and intricate investigation.

It
is common cause that the applicant denied obtaining any loan facility
from the respondent on the 1^st
December 1997. The applicant also denied having simple interest loan
as he said he had paid it in full. The respondent has not
proved
these allegations in any way whatsoever. As for the shortage the
applicant concedes having a shortage but not in the amount
claimed by
the respondent. Accordingly the alleged shortage of M21,666-45 is
disputed. Even though applicant admits having a
shortage the amount
is unknown. That being the case there is no mutual indebtedness by
the parties of debts which are liquidated
and fully due. (see
Schierhout’s case supra and Pothier Obligations 3.C.4 sec.2)

Mr. Matooane
got the applicant to concede under cross-examination that he was
found guilty of the charges involving amounts which
totalled the
figure the respondent claims to have set-off from applicant’s
benefits. Despite the concession, the applicant does
not seem to us
to be indebted to the respondent for we have been shown no basis for
such a conclusion. Applicant’s negligence
or lack of diligence in
his work does not automatically make him personally indebted to his
employers for the amounts he mishandled.
Such indebtedness if any
will have to be proved to the court. No attempt was made by the
respondent to adduce evidence to support
the claim that applicant
owes them as alleged.

Now
that it has not been proved, is the alleged debt one capable of
prompt ascertainment or one that will not require long and intricate

investigation or one that is capable of summary determination? Our
answer to this question must be in the negative. The question

whether one has duly obtained a loan facility is not one that can be
summarily determined. Similarly, the fact alone that one
has been
found guilty of a disciplinary misconduct does not automatically make
him liable to the employer in the sum that may have
disappeared
negligently while in his custody. All these will require thorough
investigations and evidence to prove the allegations.

Furthermore,
there is involved in this so called set-off, staff savings which,
subject to further investigation may constitute alimenta
due in the future. As Innes C.J. puts it in Schierhout supra at
p.291 compensatio
may not “...be invoked against a claim for aliment.” The view
that we hold therefore is that the applicant has proven his
claim
against the respondent adequately and the respondent has improperly
and unlawfully withheld applicant’s monies which were
due to him as
accrued benefits at the time of his dismissal in December 1997. In
the premises applicant’s prayers (a), (b) and
(d) which read that
applicant prays for an order:

“(a),
Setting aside the purported deductions as unlawful

“(b),
Directing the respondent to release to the applicant the said sums,
of M11,444-76 and M2,959-34

“(c),
......

“(d),
Directing the respondent to pay costs of these proceedings;”

are granted as
prayed. Order (b) must be complied with within 30 days of the
handing down of this judgment.

THUS
DONE AT MASERU THIS 20TH DAY OF AUGUST, 2001.

L.A
LETHOBANE

PRESIDENT

C.T.
POOPA

MEMBER I
AGREE

P.K.
LEROTHOLI

MEMBER I
AGREE

FOR
APPLICANT : MR. MAHLAKENG

FOR
RESPONDENT: MR. MATOOANE