CIV/APN/207/86
IN THE HIGH COURT OF LESOTHO
In the matter of:
MOLAHLI MOLAHLI Plaintiff
Vs
MOHLOUOA THEO RAMAKATANE Defendant
JUDGMENT
Delivered by the Honourable Sir. Peter Allen on the 6th day of May, 1987
The plaintiff brought this action for a spoliation order against the defendant in the following terms:-
the defendant to be ordered to restore to the plaintiff full use, possession and enjoyment of a flat rented from the defendant at Ha Mabote, Maseru for the purposes of carrying on a hair salon business,
the defendant to be ordered to refrain from inter- ferring in any manner with the plaintiff's above-mentioned business in the above mentioned flat,
the defendant to be ordered to honour the terms of the lease agreement entered into between him and the plaintiff.
the defendant be ordered to pay M7,800.00 to the plaintiff for business losses resulting from the defendant's unlawful act,
Costs of the suit.
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As there were contradictory affidavits on the file there were clearly serious issues between the parties which I decided required oral evidence to be heard.
The plaintiff and his wife testified and, for the defence, the defendant testified and called three witnesses. The plaintiff stated that he earns his living by driving his own taxi. His wife, 'Mabakuena (P.W.2), is a trained hairdresser. In 1985 they decided to find suitable premises where she could operate a hairdressing business. On 1st October 1985 the plaintiff signed a lease for a flat in the building called Mapeleng Shopping Centre at Ha Mabote in Maseru. This building belongs to the defendant and the lease (exhibit A) was between the plaintiff and the defendant personally. There was no mention of any business or business name in the document. The lease was for three years, from 1 October 1985 to 30th September 1988 and subject to renewal. The monthly rent was Ml50.00. It was not a well-drafted lease and no provision was made in it for the payment of electricity nor was any provision made for earlier termination of lease by either party. This case seems to have arisen due mainly to the omission of the above two matters unfortunately.
The business was named Las Vegas Hairdressing Salon and was run by the plaintiff's wife at first with the assistance of his sister-in-law
Thato Mpeta (D.W.3) who was paid M.100 per month. She left in February 1986 and was replaced by another girl called Selina Thitanyane who was paid M.80 per month.
The problems apparently started in June 1986. Apparently the electricity meter for the whole building was located in the flat leased by the plaintiff. The defendant, as proprietor
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of the building, thus received; one electricity bill for all flats and rooms in the Building. There was no way of knowing how much of it was to be charged to Las Vegas Hair-dressing Salon, which is a type of business that uses quite a lot of electricity. Obviously it would have been better to have asked the L.E.C. to install a separate meter for that business. At the end of 1985 they apparently shared a bill for M56.00 and by agreement, Mrs Molahli(P.W.2) paid M24.00 of it. After that the defendant asked for M24.00 each month for this purposes.
By June 1986 the question of electricity bills had become an issue between them and they were unable to meet and agree what was to be done about it.
The defendant admitted that he broke the door lock of the salon at night on 13th June 1986. He also broke one of the windows so as to reach in and switch on the electricity supply which he claimed had been switched off at the meter by the plaintiff or his wife. Thus the rest of the building was receiving no power supply at night. The defendant then boarded up the door and attached a notice (exhibit B) to the effect that he had broken the lock and warned that he had switched on the power.
The plaintiff reported the matter to the C.I.D. at Maseru, but he was disatisfied with what action they took (or the lack of such action) and he went to see the Maseru Police Commander, Lieut-Colonel Matete (D.W.4), who went with him to the premises. When it was clear to him that there was a business misunderstanding between them, the Police Commander rightly advised them to take a civil action in Court. As a result the plaintiff filed the present suit.
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The defendant told a different version of events. According to him, he and the defendant and their wives agreed to form a company for the purpose of operating this same hairdressing business. The defendant claimed that the idea was his and he wanted to add it to the numerous other companies, that he owned, such as butcheries, handicrafts, cash and carry wholesalers, and photography. He added that the company articles were being drafted and that although the company was not registered, it was a mere formality and the company actually existed as, the business had already commenoed operations. No copy of the alleged draft of company articles was exhibited to the Court. The defendant insisted that the business was being run by his wife as well as by the plaintiff's wife. In her testimony the latter stated this was net so because, although the defendant's wife was using the same room as the salon, it was for the purpose of her own business of sewing dresses and not hairdressing.
The defendant maintained that the agreed arrangement was that he would contribute 51% of the capital and the plaintiff and his wife were to provide 49%, thus he would
have control of the business. He was also to receive 51% of the net profit at the end of the first year. He offered no proof of any of this. He added that he had also paid for some of the equipment for the business, but he produced no receipts or other evidence of this.
He testified that the cash takings of the business were banked in the plaintiff's personal account. This was because so he said, he trusted the plaintiff and it was not possible to open an account in the business name until the company had been registered.
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However, each of the defendant's arguments contain fallacies. The first is in connection with the defendant's statement that he and the others were in the process of forming a company. The only evidence offered of this Was to call an accountant, one Jonas 'Moleli(D.W.2), who testified that the parties had one meeting with him in November 1985 about the idea of forming a hairdressing company and he told them what was required by law. He found that the business had already commenced before they met and they did not appear for the second meeting which had been arranged. The company was never formed, nor were even the first steps taken to form it, as far as I can see.
Section 19 of the Companies Act, 1967 quite clearly provides that on registration of the memorandum of articles the Registrar of Companies must certify that the company is incorporated and the date of such incorporation. It adds that, from the date of incorporation, the company becomes capable of exercising all the functions of an incorporated company. In other words the company comes into legal
existence on that date. That is the only way in which this can happen. There was absolutely no merit in the defendant's insistence
that the company already existed simply because the business had started operating and the parties had agreed to form a company. The idea that the actual incorporation of. the company is nothing but a mere formality is nonsence. Without incorporation there is no company. And I cannot believe that the defendant was ignorant of this requirement. In answer to my questions he stated that he has been a businessman for 27 years and that he has formed at least 8 companies in that time. So
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he must have some knowledge of the legal requirements. There was no company formed by the parties and I am sure that the defendant was well aware of this.
The second fallacy is in connection with his claim to have put up 51% of the capital of the business plus some equipment (about which there was no proof) and so he had a controlling share. In his evidence-in-chief the defendant made this significant statement:
" The premises were mine and the business firm leased the room from me. So the plaintiff paid me M.150 rent per month."
In fact the premises were leased to the plaintiff by name and not to the hairdressing business at all. Furthermore, if the premises belonged to the defendant and he owned the major share in the business and so had control, why would he lease the room to the plaintiff? It does not seem likely that someone in the controlling position of a business would lease his own premises to a junior partner. Why not just use his own premises for his own business without any lease at all? If a company had actually been formed it would have been reasonable to lease the premises to that company by name, but that never happened. What the defendant stated does not make sense.
In addition, his testimony that he owned 51% of the capital in the business was contradicted by para.3 of his own Opposing Affidavit in which he asserted that he and the plaintiff contributed equal amounts of capital. In cross-examination on this the defendant tried to explain the contradiction and inconsistency by saying that he had also contributed some equipment, but that does not hold
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water. His earlier testimony was that he had contributed 51% of the capital plus equipment.
The third fallacy concerns the defendant's reason for allowing the cash takings of the salon to be banked in the plaintiff's personal account. It was not true, as the defendant maintained, that an account could not be opened in the business name before the company was registered. The Las Vegas Hairdressing Salon existed as a business, albeit not company, and a bank account could have been opened in that name. Later, after incorporation, the funds could have been transferred into the company account. The defendant, as an experienced businessman, must have known this. No sensible, prudent businessman, especially one with such long experience, would allow the income of a business to disappear into someone's private account from where it might well never be traced or withdrawn. For all these reasons the defendant's version of this business does not ring true to me.
Thus we are left with a family business run by the plaintiff's wife in premises leased to the plaintiff by name with the business income going into the plaintiff's bank account. Apart from being the owner of the premises used, it would appear that the defendant does not come into it at all.
The defendant failed to support convincingly any of his claims to the business whereas, on the balance of probabilities I find that the plaintiff proved that part of his claim satisfactorily.
The only part on which the plaintiff has failed here is in connection with his claim under (d) for M7,800.00
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damages for business losses. This was a specific liquated sum representing a pecuniary loss and so it consisted of special damages which have to be proved substantially and precisely. In his evidence-in-chief, the plaintiff testified that the business was making M600.00 per day, from which this claim for business losses was calculated. But his wife (P.W.2), who was actually running the business, testified that they were making only between M.300-400 per day. Neither of them produced any books or accounts or receipts or anything in the way of evidence to support and prove this claim about which, in any case, they did not agree. As I said, special damages must be proved and in this type of case, something more than a mere oral statement is
required. Mr. Nthethe for the plaintiff conceded that this part of the claim had not been proved and I would have held that anyway. Consequently no award can be made in that respect. The plaintiff made no claim for general damages for trespass to property so there will be no award under that head.
Accordingly judgment is entered in favour of the plaintiff in terms of paragraphs (a), (b) and (c) of his claim together with costs in the suit.
P.A.P.J. ALLEN
J U D G E
6th May, 1987
For the Plaintiff : Mr. Nthethe
For the Defendant : In Person
