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Wing on Garment (Pty) Ltd v Lesotho National Development Corporation (lndc) and Another (C of A(CIV)No. 6/99 CIV/APN/39/99)
C of A(CIV)No. 6/99
IN THE COURT OF APPEAL OF LESOTHO
In the matter between:
WING ON GARMENT (PTY) LTD APPELLANT
LESOTHO NATIONAL DEVELOPMENT
CORPORATION (LNDC) FIRST RESPONDENT
GRAYON GARMENTS MANUFACTURERS
(PTY) LIMITED SECOND RESPONDENT
Coram: Leon, J.A.
Date of hearing: 11 October 1999 Date of judgment: 15 October 1999
The applicant is the unsuccessful applicant for intervention in proceedings instituted in the court a quo by the Lesotho National Development Corporation
("LNDC") against Grayon Garment (Pty) Limited ("Grayon") for the attachment of all movable assets on premises leased by LNDC, and in respect of which LNDC had entered into a sub-lease with Grayon. Pursuant to the application by LNDC, brought ex parte and as a matter of urgency on 26 January, 1999 , an interim order was granted on the same day (operating with immediate effect), calling upon Grayon to show cause on 8 February 1999 why "all the assets presently within the premises of [LNDC].......... where [Grayon] used to carry on business of textile manufacturing and processing shall not be attached in exercise of [LNDC's] tacit hypothec, and authorising [LNDC] to sell such assets and realise the proceeds in settlement of rental arrears owed to it by [Grayon]".
On the return day, Guni, J dismissed the application by the appellant for leave to intervene, and confirmed the interim court order obtained by LNDC against Grayon.
In her judgment Guni, J set out two bases for this order.
The first is that the authority of the deponent to the founding affidavit filed in the application brought by the appellant for leave to intervene was not established.
The facts in this regard are these. The deponent to the founding affidavit was one Charles Buchler, who describes himself as a director and shareholder of International Merchandising Services (Pty) Limited ("International") a company incorporated in South Africa with its "offices" (presumably its registered office or principal place of business) in Pretoria. Buchler asserts as follows:
"I have been duly authorised to depose to this affidavit by and on behalf of the [appellant] ... I am therefore entitled to make this application".
No further facts were advanced in support of this assertion, and no resolution by the appellant's board of directors was adduced.
In answer, the LNDC's chief executive, Ms. S. Mohapi, contended in limine that the appellant "has no locus standi in judicio to bring this application", and pertinently in answer to Buchler's assertion of authority set out above, the following:
"The contents contained herein are vehemently denied and the deponent is put to the proof thereof. It is glaring that there is no relationship between [the appellant] and International Merchandising Services (Pty) Ltd".
The appellant filed no replying affidavit to this.
This issue is not a matter of mere technicality. In the leading decision in Mall (Cape) Pty) Ltd v Merino Ko-operasie Beperk 1957 (2) SA 347 (C), Watermeyer J (delivering a judgment of the Full Bench) held (at 351-2) as follows:
"I proceed now to consider the case of an artificial person, like a company or co-operative society. In such a case there is judicial precedent for holding that objection may be taken if there is nothing before the court to show that the applicant has duly authorised the institution of notice of motion proceedings..... Unlike an individual, an artificial person can only function through its agents and it can only take decisions by the passing of resolutions in the manner provided by its Constitution. An attorney instructed to commence notice of motion proceedings by, say, the secretary or general manager of a company would not necessarily know whether the company had resolved to do so, nor whether the necessary formalities had been complied with in regard to the passing of the resolution. It seems to me, therefore, that in the case of an artificial person there is more room for mistakes to occur and less reason to presume that it is properly before the court or that proceedings which purport to be brought in its name have in fact been authorised by it...... Each case much be considered on its own merits and the court must decide whether enough has been placed before it to warrant the conclusion that it is the applicant which is litigating and not some other
authorised person on its behalf.
As that judgment explains, much depends on what a respondent's own answer to the assertion of authority is. If it is a mere bare denial, or otherwise not such as to cast particular doubt upon an applicant's assertion of authority, a court will generally not be inclined to uphold the defence that the authority is not proven. It all depends on the affidavits as a whole (see too Central Bank of Lesotho v Phoofolo (unrep.) C. of A. (CIV) 6 of 1987, p 12; LTC v Nkuebe(unrep.) C. of A. (CIV) 12 of 1998, pp 18-22). The present case however is very different. The answering affidavit positively asserted that no relationship existed between the appellant and International - a contention to which the appellant chose not to reply.
Moreover placed before the court by the appellant itself- and forming part of the record before us - is the application brought urgently and without notice by the appellant on 23 December 1998 to "vest" what is described as "control" of "assets" (unparticularised in the notice of motion and the interim order made by the court on that date but evidently being the movable assets on LNDC's premises). (No grounds are suggested in the certificate of urgency by counsel as to why the matter was properly to be heard on an urgent basis, while the founding affidavit disclosed little by way of justification for an urgent and ex parte hearing. This is wholly
In that application brought purportedly on behalf of the appellant as well another company styled "Ever Eagle Company Ltd Hong Kong", Buchler asserted his authority to act on behalf of the appellant in these terms:
"2.1 I in my capacity as director of International Merchandising Services (Pty) Limited, is [sic] acting on full authority of [Ever Eagle], a company duly incorporated under the laws of Hong Kong, in terms of a validate [sic] power of attorney given onto [sic] International Merchandising Services (Pty) Limited by [Wing On] (a true copy of which I attach hereto marked ASK7).
2.2 In terms of the mentioned [sic] power of attorney I have been duly authorised by the Board of Directors of [Wing On] to pursue any or all means possible to recover money that was forwarded to [Grayon], in terms of various agreements between [Wing On] and [Grayon].
2.3 Further I am also authorised to reclaim certain assets that belong to [Ever Eagle] through the 100 per cent nominated share of [Wing On] ..." .
The terms of Buchler's assertion, and the document which he invokes as conferring authority ("AK7") are such as to merit the description of Corbett, J (as he then was) in Griffiths and Inglis (Pty) Ltd v Southern Cape Blasters (Pty) Ltd 1972 (4) SA 249 (C) at 253F, namely a
"somewhat curious document in that it creates more problems than it solves, and it generally leaves me with the impression that no formal resolution of the applicant's board of directors in regard to these proceedings was in fact taken".
Whatever may have been the position in relation to Ever Eagle, the simple fact is that in relation to Wing On, no proper basis for the claimed authority is set out in Buchler's affidavit. Not only is the affidavit near - incomprehensible in this regard but the purported power of attorney ("AK7") does not authorise International to act on behalf of Wing On.
On appeal before us, the appellant's counsel sought to dismiss this issue as one "without substance", relying on the proposition that no authority is required for a person to be a witness. That is indeed so. But the issue here is not authority to testify, but authority to institute a proceeding - a very different matter. In the present case moreover, authority was denied by the respondent with specific
reference to the fact that there was no relationship between appellant and International Merchandising Services (Pty) Ltd of which Buchler was a director. These allegations were left unanswered. The opposing affidavit indeed went further. It pertinently alleged that the application of 23 December 1998 was a collusive and mala fide endeavour to thwart a hypothec which the appellant knew existed. It further contended that the appellant's counsel was fully aware of the first respondent's interest in the matter, and that Buchler was engaged in removing the goods from the premises even before the order of 23 December 1998 was granted. These allegations, too, are left unanswered. In all these circumstances, in my view it cannot be said that the appellant established that Buchler was indeed authorised to act on its behalf.
Accordingly, in all the circumstances, Guni, J in my view correctly considered that on this basis alone the application for intervention should be dismissed.
I consider that in any event, Guni, J was correct to hold on a second ground that the application for intervention should be dismissed, and that for essentially the same reason LNDC's interim order should be confirmed. This is that the court order upon which Wing On relies for its "control" of the movable assets on LNDC's premises does not have the effect of trumping or displacing the tacit
hypothec exercised by LNDC, and protected by the interim court order granted
on 26 January 1999. Thus on its merits too, the application had to fail.
LNDC's tacit hypothec extended not only over goods of its sub-lessee brought on to the leased premises (as to which see Webster v Ellison 1911 AD 73 at 86,100; and as regards further sub-contracting parties see Reinhold and Co v Van Oudtshoorn 1931 TPD 382). It also applied (to the extent that the debt could not be fully met by Grayon) to movable property of other persons found on the premises, subject to certain conditions. The position was stated clearly by Curlewis, JA in Bloemfontein Municipality v Jackson's Limited 1919 AD 266 at 271 in these terms:
"When goods belonging to a third person are brought on to leased premises with the knowledge and consent, expressed or implied, of the owner of the goods, and with the intention that they shall remain there indefinitely for the use of the tenant, and the owner, being in a position to give notice of his ownership to the landlord, fails to do so, and the landlord is unaware that the goods do not belong to the tenant, the owner will thereby be taken to have consented to the goods being subject to the landlord's tacit hypothec, and liable to attachment".
See further Joubert (ed) Law of South Africa vol 14 para 160; Hutchison (ed) Wille's Principles of SA Law (8th ed 1991) 552.
On the facts of this matter, these requirements are met.
The real right so established was not defeated by the order vesting "control" of the assets in Wing On. That order was granted on 23 December 1998. The circumstances in which that order was obtained raise serious doubt as to the good faith of the appellant, for the reasons outlined in the opposing affidavit by Ms Mohapi (filed in the application to intervene and to which the appellant did not reply). But this aside, the simple fact is that an order vesting "control" of the assets in Wing On could not have had the effect of displacing the tacit hypothec of the LNDC. That hypothec came into existence automatically, even before the court order of 23 December 1998 (see in particular Kleinsake Ontwikkelings Ko-operasie Beperk v Santam Bank Beperk 1988 (3) SA 266 (C) at 270C-271H). To make the hypothec exigible, the court order of 26 January 1999 however was obtained. (See Webster v Ellison supra at 102). The real right conferred by the hypothec was, nonetheless, on the facts before us in place at all times material to this matter, and was not juristically displaced by the obtaining by Wing On of its order authorising "control" over the assets in question on 23 December 1998.
The appeal is accordingly dismissed with costs.
JUDGE OF APPEAL
JUDGE OF APPEAL
JUDGE OF APPEAL
For the Appellant: Mr. Maieane
For the Respondents: Mr. Makeka