MKM wins right to collect rentals

Lesotho Times
6 Min Read

MASERU — The High Court on Friday dismissed an application by provisional liquidators of MKM to have rentals from properties belonging to the company paid to the registrar of the High Court for safe-keeping.

In the application MKM provisional liquidators, Chavonnes Badenhorst St Clair Cooper and Daniel Gerhadus Roberts, sought to have “all tenant rentals in respect of any fixed property of any of the MKM companies to be paid into court for safe-keeping, to the registrar of the High Court bank account”.

But Court of Appeal President, Justice Michael Ramodibedi, on Saturday dismissed the application with costs.

He said the Court of Appeal could not allow piecemeal litigation.

“The issue of rentals should have been issued on July 16, 2011 when the stay of execution of liquidation order was granted,” Justice Ramodibedi said.

He said the Court of Appeal is not the High Court where this issue could have been raised.

He told counsel for applicants that they had not shown that circumstances had changed since July 16, which could have necessitated them to come to court on August 27.

The provisional liquidators approached the High Court to have rentals of Star Lion Group Ltd, Lion Star Lion Insurance Ltd, Star Lion Gold Coin Investment (Pty) Ltd (the MKM companies) paid into the account of the registrar of the High Court.

The applicants, who were the provisional liquidators, the commissioner of insurance and the trustees of the investors trust had argued that “if interim rentals are collected by and paid to the directors, ie, Mr Thebe-ea-Khale, etc, such funds will be spent or placed in a secret place and will be unavailable to be handed over to the provisional liquidators if the appeal should fail and the liquidations proceed in due course”.

The applicants argued it was necessary to make an order to ensure that such monies are “held in safe-keeping pending the appeal”.

The liquidators also argued that the interim order that rentals should be “paid into court to the registrar will ensure that the interests of all interested parties, including creditors, will be safeguarded”.

“If the appeal succeeds, the registrar will be able to release funds to the control of the directors.

“If the appeal fails, the registrar will be able to release the funds to the control of the provisional liquidators,” the liquidators said.

They said that would be a fair outcome causing no prejudice to any interested party.

Lawyers for the applicants argued that if the application was not granted and the appeal failed, there would be irreparable prejudice to the estates and the creditors since all this rental money, some M400 000 would be lost to the estates and the creditors.

“That will be an unfair outcome causing great irreparable loss to creditors,” Advocate Chris Edeling for the provisional liquidators argued.

MKM lawyers Advocate Ranale Thoahlane assisted by Advocate Makhetha Mots’oari asked the court to dismiss the application.

“This application has no basis in law,” they submitted.

They pointed out that it is not an application for varying an order granted by this court for stay of execution pending appeal.

“It is a fresh application seeking that rentals be paid into the account of the registrar of the High Court,” the MKM lawyers countered.

They asked Justice Ramodibedi to dismiss the application on the grounds that the application sought to curtail the operation of the stay of execution.

“Consequently, it is submitted that two orders that have different net effects and the effect of one is unconditional and the effect of another is to erode the effect of the first one and cannot exist at the same time,” the MKM lawyers argued.

“Those orders would be in conflict and that cannot be allowed,” they said.

Thoahlane said had the applicants asked that the earlier order of stay of execution be varied in relation to rentals, that would be a different story.

“There cannot be two kings in one kingdom neither being subordinate to the other,” he submitted.

Acting High Court judge Justice John Musi in July ordered that the four MKM companies MKM Marketing Ltd, Star Lion Gold Coin Investment (Pty) Ltd, Star Lion Group Ltd, Star Lion Insurance Ltd, be liquidated.

According to the court papers, the rentals were to be paid or addressed to the Registrar of the High Court, Standard Bank, Government of Lesotho, Account Number 101543 LSL371505.

“Deposit slips must indicate ‘MKM rental’ and the name of tenant,” the liquidators said in their papers.

The liquidators’ application came after an application for the stay of execution of liquidation was granted by the president of Court of Appeal on July 16, pending the hearing of the appeal in October.

The Court of Appeal president who ordered a stay of liquidation of the MKM companies, said the directors should be in control of the affairs of the companies which includes the right to collect rentals.

The Court of Appeal will sit next month.

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