MASERU — Court of Appeal President Justice Michael Ramodibedi yesterday set aside a High Court order to liquidate MKM pending the hearing of the case in the Appeal Court in October.
The judgment effectively halts the liquidation proceedings against MKM.
Delivering judgment in an urgent application yesterday Justice Ramodibedi said there were chances that MKM could win its case against the Central Bank of Lesotho (CBL) when the Court of Appeal sits in October.
He then granted the MKM’s application to stay execution of the burial society’s three companies saying “the appellants have good prospects of success in the appeal”.
Justice Ramodibedi told the parties yesterday that the “execution of the lower court’s order shall be stayed pending the determination of the appeal”.
Justice Ramodibeli said he would give written reasons for the decisions later as he had limited time because he was hearing appeal cases in Botswana.
MKM’s lawyer, Kananelo Mosito, is expected to file his heads of arguments on August 8 while the CBL’s counsel, Chris Edeling, will submit his on August 19 to give the bench enough time to ponder on them in preparation for the October hearing.
During the hearing Ranale Thoahlane, who was standing in for Mosito, said Justice Musi had usurped the powers of the Master of the High Court when he appointed provisional liquidators in his May 18 judgement against the trouble company.
“The Companies Act gives the power to appoint liquidators to the Master of the High Court only and the court can only direct that the Master appoint liquidators,” Thoahlane said.
When Edeling said the Master of the High Court later appointed the liquidators, Thoahlane argued that the Master did not have powers to rectify the mistakes of law.
“It doesn’t rectify the mistake of the law if later the Master purports to appoint the liquidators,” Thoahlane said.
“According to the administrative law, the mistakes of the High Court orders cannot be rectified by the Master,” he said.
He also argued that the lower court erred when it ordered that MKM should be liquidated when nobody had asked for liquidation in the particular application that was before Acting High Court judge Justice Musi.
Thoahlane said no one had applied for liquidation because the CBL governor, the late Moeketsi Senaoana, did not have locus standi to appear in this case.
Senaoana had signed the affidavits as the commissioner of insurance applying for liquidation of MKM’s companies but his position was severely challenged.
Edling told Justice Ramodibedi that the CBL board had given Senaoana powers to sign all documents for the case and appoint attorneys.
But Thoahlane argued that the board did not give Senaoana powers to be a commissioner of insurance but to merely sign documents and appoint attorneys.
“The board did not give the governor powers to institute action as a commissioner of insurance, he was just acting on behalf of the bank because he was its governor,” Thoahlane said.
“The commissioner of insurance is the bank not its governor,” he said.
Edling also submitted that MKM deserved to be liquidated because it was running illegal insurance and banking businesses and its subsidiary companies owed the mother company.
The indebted companies, Edling said, were unable to pay the debts and they did not have legitimate businesses.
“There is no evidence before this court that the appellants are conducting any legitimate business but they want stay of execution,” Edling said.
Thoahlane’s replied that such subsidiary companies should lodge their claims according to procedure as creditors.
He said Edling could not press for liquidation as creditors had not submitted that their claims should be paid.
Creditors who applied for intervention seeking liquidation following Senaoana’s institution of action should fall off because of his lack of locus standi, he said.
In May MKM approached the High Court seeking an order to stop the liquidation process pending its appeal against a May 18 ruling by Justice Musi which said the company should be liquidated so its nearly 400 000 investors could be paid their dues.
Justice Musi, in his judgment, appointed Chavonnes Badenhorst of St Clair Cooper in Bloemfontein and Daniel Gerhardus Roberts from Webber Newdigate as joint liquidators.
MKM had argued that because the Court of Appeal will only hear its case in October, the central should stop the liquidation process pending the appeal case.
Should the liquidation process continue and the Court of Appeal overturns Justice Musi’s May judgment MKM would have suffered irreparable damage, the company’s lawyers argued.
But on June 16 Justice Musi, a respected judge who had been hired from South Africa to preside over the MKM matter after a number of local judges had recused themselves, rejected the application.
MKM decided to take the battle to the Court of Appeal to have Justice Musi’s judgment overturned.
MKM made the application under Rule 18 of the Court of Appeal Rules 2006 which allows for urgent applications to be heard before the normal sitting of the Court of Appeal.
An audit by PricewaterhouseCoopers revealed that out of the M400 million invested in MKM, M300 million could not be accounted for.
The Court of Appeal heard the MKM’s appeal six days after a South African burial society pledged to bailout the troubled company.
The chairman of Iketsetseng Family Life Cooperative Limited, Chief Ntsukunyane Matete, told a press conference on Monday that his burial society had raised M2.5 billion to bail MKM.
Matete said his burial society’s 500 000 members had each contributed M5 000 to rescue the MKM.
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