MACDONELL CJ.—Macpherson v. Appuhamy.
1933Present: Dalton A*C*J. and Maartensz A.J.
FERNANDO et al. v. JAYASINGHE et. al92—D. C. Colombo, 30,181.
Registration of Business Names—Contract entered into by person in defaultsAssignment of rights under contract—Action by assignee—OrdinanceNo. 6 of 1918, s. 9.
The disability imposed by section 9 of the Business Names Registra-tion Ordinance upon a person who has failed to comply with the pro-visions of the Ordinance does not extend to a bona fide assignee of thecontractual rights of the defaulter.
HIS was an action instituted for the recovery of arrears of renton a hire purchase agreement entered into by the plaintiff, who
was carrying on business as Ceylon Auto-Carriers Company, and thedefendants on May 28, 1926, by which the plaintiff hired to the defendantsa Stewart bus according to certain terms.
Fernando v. Jayasinghe.
On November 7, 1930, the plaintiff by deed No. 1,039 assigned thebusiness carried on by. him to Avitchi Chettiar, who was added as aplaintiff on February 18, 1931. The added plaintiff filed his plaint onMarch 6, 1931, in which he claimed the arrears of rent sued for by theplaintiff. The defence to the action were (1) that the District Courthad no jurisdiction to entertain it, (2) that the plaintiff had failed tocomply with the requirements of the Business Names RegistrationOrdinance. The learned District Judge overruled the first objection andupheld the second. He held that the added plaintiff being an assigneeof the plaintiff could be in no better position and could not maintainthe action!
H. V. Perera (with him Rajapakse, Nadesan, and D. W. Fernando), forplaintiff-appellant and added plaintiff-appellant.—The plaintiff is nota defaulter under section 9 of Ordinance No. 6 of 1918. Prima facie hehas purged his default by the registration effected on May 14, 1928 (P 5).The plaintiff and one Thambyah were carrying on business under the nameof Ceylon Auto-Carriers Company at the date of the execution of thehire purchase agreement sued upon. There is nothing to show thatthey had not registered their business name under the provisions ofOrdinance No. 6 of 1918. On the contrary there is documentary evidencefrom which it may be inferred that the business of plaintiff and Thambyahwas registered. P 5 is a certificate of registration granted pursuantto a statement of change under section 7 of the Ordinance. A certificatein the Form P5 can only be granted if there has already been a priorregistration of a business and a change has taken place in respect ofsuch business. Therefore the registration (P 5) cured not merely thedefault of the plaintiff but also the default of the plaintiff and Thambyah,if there was any default at all.
The added plaintiff is the assignee of the business of the plaintiff.He is an innocent assignee for value. Even if plaintiff is a defaulterunder section 9 of the Ordinance an innocent assignee for value fromhim is not affected by such default. This point is covered by casesdecided in the English Courts. Section 8 (1) of the Registration ofBusiness Names Act, 1916, is the same as section 9 of our Ordinance.It has been held under section 8 (1) of the English Act that the disabilityimposed by section 8 is limited to the defaulter and does not pass to hisinnocent assignees. (Daniel v. RogersHawkins and another v. Ducho.‘)These cases are in point and support the contention that the addedplaintiff is not affected by the default of the plaintiff.
H. E. Garvin (with him S. Alles), for defendants, respondents.—Thedefault committed is the. default of plaintiff and Thambyah and it cannotbe cured by registration by the plaintiff alone. Registration to purgethis default must be by both plaintiff and Thambyah. Until suchregistration the hire purchase agreement is not enforceable.
The added plaintiff is not an innocent assignee. He had notice of thedefault on the part of the plaintiff. Even if he is not affected by thedefault of the plaintiff he cannot maintain this action, for the rightto sue on contracts did not pass to him under the deed of assignment (P 3).> (ifliei 2 k. n. m.2 (lost) 3 k. d. m.
DALTON A.CX—Fernando v. Jayasinghe.233
The agreement sued upon is one of sale and the plaintiff under such anagreement cannot keep the bus and also recover the rent which representsthe value of the bus.
September 8, 1933. Dalton A.C.J.—
I have had the advantage of reading the judgment of my brotherMaartensz, and I agree that the appeal must be allowed.
The issue raised in the lower Court, having reference to Ordinance No. 6of 1918, was whether the plaintiff or added plaintiff had complied with therequirements of the Business Names Ordinance. From a practicalpoint it is clear that it is of no assistance to defendants’ case if the Courtholds that the added plaintiff, as an assignee, is not subject to the dis-abilities of that Ordinance, even if the plaintiff himself was in defaultwhen the action was instituted. With regard to the plaintiff, there wouldseem to be no doubt that at the time the contract sued on was completedand the action was instituted by him, he had complied with the provisionsof the Ordinance, for he produced a certificate of registration (P 5) datedMay 14, 1928. It is not, I think, questioned that the particulars thenfurnished and registered disclosed a correct and complete account of thefirm as required by the Ordinance as at the date of this registration.That registration was made pursuant to a statement of change furnishedunder section 7 of the Ordinance, but the certificate of registrationissued on that date is the only certificate given to the person registering,the old certificate being handed in with notice of any changes requiredto be made. There must necessarily in this case have been some earlierregistration under the Ordinance, but no evidence was given of theparticulars registered earlier. If there was however any earlier default,which is not clear, it seems to me, so far as plaintiff is concerned, thatdefault has been cured.
With respect to the added plaintiff, the learned Judge, having foundthat plaintiff was in default of complying with the provisions of theBusiness Names Ordinance, held that the added plaintiff, as an assignee,could not be in any better position than the assignor. On this pointhe was however at a disadvantage in not having certain English author-ities which decide this question brought to his notice. The localOrdinance is based upon the Registration, of Business Names Act, 1916, *and with little change reproduces the provisions of that Act. There is aprovision in section 8 of the Act enabling the Court, during an action,to give relief to a defaulter which is not enacted in the local Ordinance,but I think a mistake has been made in the case of Jamal Mohideen & Co.v. Meera Saibos, cited in the course of the argument before us, in com-paring section 9 of the Ordinance with section 8 of the Act. That casepurports to point out a further distinction between the provisions of thetwo sections but I cannot find the words which appear to be quotedin the judgment from section 8 in section 9, nor do they seem to be acorrect paraphrase of the words used in the section. However thatmay be, I can find no variation between the provisions of the Act andOrdinance which would suggest that whereas thd disability imposed by theAct is imposed on the defaulter only and does not extend to his assignees,the disability imposed by the Ordinance extends also to his assignees,i 6 & 7 Geo. V. c. 58.3 22 N. L. B. 268.
234MAARTENSZ A.J.—Fernando v. Jayasinghe.
It has been held in England that the disability does not extend to theassignees of a person in default under the Statute. In Hawkins and anotherv. Ducho & Son and another1 McCardie J. adopted the dicta of the Judgesin the Court of Appeal in an earlier case Daniel v. Rogers*. Incidentallyhe compares section 8 of the Act with section 4 of the Sale of GoodsAct, 1893. The latter provides that “a contract …. shall notbe enforceable by action unless . . . ." Section 8 bf the Act of1916, however, says that the “rights of that defaulter under or out ofany contract” shall not be enforceable. He then goes on to quote thedicta referred to, subsequently giving his own reasons for his conclusion.In the earlier case Pickford L.J. states: “1 entertain considerable doubtwhether the Act of 1916 was ever intended to apply to the enforcemenlof a contract except as between the parties to it”. He certainly adds“ but it is Unnecessary to decide this point and I do not propose to do so Bankes L.J. points out a distinction in the Money Lenders Act. 1900,as compared with the Registration of 3«ssiness Names Act, 1916, andstates that primd facie section 8 of the latter Act means that therights under or arising out of the contract are not to be enforceableagainst the other party to the contract. Scrutton L.J. whilst alsopointing out that it is not necessary finally to decide this point, expressesa strong opinion that the application of section 8 is limited to proceedingsbetween the parties to the contract, the language of the section beingamply satisfied by applying it only to proceedings between those parties.
I would therefore apply that decision and those dicta to the casebefore us, with the result that the disability, if any, extending to plaintiff,does not apply to the added plaintiff. There is no question raised as tothe bona fide nature of the assignment.
I have nothing that I can usefully add' to what my brother has statedon the further points raised, and agree with his conclusions thereon.The appeal must therefore be allowed with costs, and I concur in theorder proposed.
This was an action for the recovery of the arrears of rent due on a hirepurchase agreement entered into by the plaintiff, who was carrying onbusiness as the Ceylon Auto-Carriers Company, Colombo, and thedefendants on May 28, 1926, by which the plaintiff hired to the defendantsa Stewart “bus” in consideration of the payment of Rs. 1,500 whenthe agreement was executed and an undertaking to pay Rs. 5,885 bymonthly instalments of Rs. 392.33 commencing from June 28, 1926.When the action was filed on October 8, 1928, there was due as monthlyrental the sum of Rs. 3,1139.36.
On November 7, 1930, the plaintiff by deed No. 1,039 assigned thebusiness carried on by him under the name of the Ceylon Auto-CarriersCompany to S. V. S. T. Avitchi Chettiar, who was added as a plaintiffon February 18, 1931.
The added plaintiff filed his plaint on March 6, 1931, in which he claimedthe arrears of rent sued for by the plaintiff. The main defences to theclalmjwere (1) that the District Court of Colombo had no jurisdiction
i am) 3 k. b. zzc.2 liois) z k. b. zzs.
MA ARTENSZ A.J.—Fernando v. Jayasinghe.
as the' agreement was executed in Lindula outside the jurisdiction of theCourt, and (2) that the plaintiff at the date the hire purchase agreementwas execftted, was carrying on business in partnership with one Thambyahand did not register it under the Business Names Ordinance, No. 6 of 1918.
The learned District Judge overruled the first objection and upheldthe second. He further held that the added plaintiff being an assigneeof the plaintiff could be in no better position and could not maintainthe action although he had himself complied with the provisions of theRegistration of Business Names Ordinance.
The District Judge’s decision on the question of jurisdiction was notquestioned by the respondents. The appellant’s counsel contendedthat the learned District Judge was wrong in holding that the plaintiffhad not complied with the provisions of the Ordinance and that he wasalso wrong in holding that the added plaintiff was in no better positionthan the plaintiff in regard to the maintainability of the action.
I am of opinion that both contentions must be upheld. W. D. Fer-nando, the plaintiff, was, when the agreement was executed, carrying onbusiness with one Thambyah. According to the evidence this Thambyahwas a man, and we are therefore unable to accept a certificate of registra-tion produced at the argument of the appeal according to which W. D.Fernando and Minambikai Thambyah were registered as partnerscarrying on the business of Motor Mail and Transport Contractors,because, as was admitted in appeal, Minambikai is a woman’s name.But by May, 1928, Thambyah, whether a lady or a man, had ceasedto be a partner, and Daniel Fernando has produced a certificate (P 5)according to which he was registered as carrying on the business ofMotor Mail and Transport Contractors under the name of the CeylonAuto-Carriers Company, Colombo. Prima facie, therefore, he had purgedhis default. But it was contended for the defendants that the defaultcommitted by himself and Thambyah had not been cured by the subse-quent registration evidenced by P 5.
I do not think this contention is a sound one. The default, if there wasa default, which is doubtful as P 5 indicates that the registration referredto in it was made pursuant to a statement of change under section 7,was I think cured by the registration effected oh May 14,1928.
However that may be, the added plaintiff’s contention that he wasnot in default and that he was therefore entitled to maintain the actionis, in view of the authorities cited to us, clearly right. These authoritieswere not cited to the learned District Judge, and I must confess thatbut for these authorities I would have arrived at the same conclusionas the District Judge.
The authorities we were referred to were Daniel v. Rogers' and Hawkinsand another v. Ducho These were cases which considered the effect ofsection 8 (1) of the Registration of Business Names Act of 1916 on aninnocent assignee from a person in default.
Sub-section 8 (1) corresponds to section 9 of our Ordinance and is inexactly similar terms except that the words “at any time” whichcome after the word “enforceable” in our Ordinance appear after theword “ first ” in the English Act.
> (1918) 2 s. B. m.
* (1921) 3 X. B. 226.
236MAARTENSZ A.J.—Fernando v. Jayasingke.
In my opinion this variation does not make any difference in theeffect of the two sections, and the English cases cited to us are authoritieson which we are entitled to rely in deciding whether an assignee is effectedby any failure to comply with the provisions of the Registration ofBusiness Names Ordinance on the part of his assignor.
In the first case the Court of Appeal expressed the opinion that section8, sub-section (1), is limited to prohibiting the enforcement of contractscoming within its scope as between the immediate parties thereto. Nodoubt the opinion was obiter to the question at issue in the case.
In the latter case, the plaintiff was the trustee in bankruptcy of oneMayer Taper (or Tapor) and sued the defendants to recover damages' for breach of contract made between the defendants and M. and B. Taper.
The facts of the contract are not material and need not be stated.One of the defences to the action was that the M. and B. Taper with whomthe contract was made was one person Meyer who had neglected toregister his business name as required by section 1 of the Registration*ofBusiness Names Act of 1916, and that as he was in default the plaintiffwas precluded by section 8 (1) of that Act from enforcing Meyer Taper’srights under the contract by action.
The plaintiff applied for relief under sub-section E of the Act but it wasrefused. In appeal it was held that the relief should have been granted.The question whether the disability applied to the trustees in bankruptcyneed not have been decided, but McCardie J. before whom the actionwas tried decided the question as the point was fully argued and as it was ofpractical importance. After referring to Daniel v. Rogers (supra) McCardie
J.said that he respectfully agreed with the dicta in that case as representingthe true interpretation of the Act of 1916 and added: “unless thedicta I have cited be good law the most serious consequence wouldfollow. Innocent holders for value of negotiable instruments mightunder section 8 be unable to enforce the rights of a defaulter. Theposition of innocent assignees of a defaulter’s book debts would beequally imperilled. Even purchasers of goods from a trader who wasin default under the Act of 1916 might (if the goods were warehousedor held by third parties) be met by a plea of the Act if action was begunagainst those persons for detention ”.
I am of opinion that the reasons given by the learned Judge for holdingthat the disability imposed by section 8 is limited to the defaulter anddoes not pass to his trustee in bankruptcy or other assignees are equallyapplicable to section 9 of the Registration of Business Names Ordinance,No. 6 of 1918, and I respectfully adopt them.
There is no evidence in this case that the added plaintiff was not aninnocent assignee for value. One of the circumstances mentioned byMcCardie J. as necessary in determining whether the disability should orshould not attach to the assignee was that he should be an innocentthird party. That being so, the added plaintiff is entitled to plead thathe is not affected by the disability imposed by section 9 and his pleamust be upheld.
It was however argued that the deed of assignment relied on by theadded plaintiff did not pass to him the benefit of the agreement sued on.This argument cannot be upheld. The deed P 3 is expressed in most
MAARTENSZ AJ.—Fernando v. Jayasinghe.
comprehensive terms; by it W. D. Fernando assigned to the addedplaintiff all the business conducted by him under the name of the CeylonAuto-Carriers Company together with the goods, effects, and assetsincluding' the book and other debts and for the purpose of enablingthe added plaintiff to recover the book and other debts W. D. Fernandoappointed the added plaintiff his attorney.
I am of opinion that by the deed P 3 the claim sued on was -assignedto the added plaintiff.
Another argument addressed to us in support of the decree was thatto District Judge was wrong in deciding issue 4 against the defendants.Issue 4 is as follows:—(a) Does the agreement pleaded contain theterras set out in 4 (d) of the plaint of 1931 ?(b) if not, can the action be
4 (d) of the plaint avers that by the agreement P 1 it was agreedthat in the event of the defendants failing to pay any of the agreedinstalments the plaintiff should be at liberty forthwith to institute anaction for the recovery of the sum of Rs. 7,385 that may be due on suchagreement after allowing for payments made on account prior to suchfailure on the part of the defendant.
Plaintiff’s counsel admitted that the averment cannot be justifiedby any clause of the agreement. But I do not see that the error inpleading in any way affects the claim.
The plaint of 1931 was filed by the added plaintiff, who pleads theagreement P 1, which was filed by the plaintiff with his plaint, whichcontains the same averment also numbered 4, and it is clear from theother averments that the plaintiff and the added plaintiff were seekingto recover the unpaid rent.
The absence of such an agreement as is averred in paragraph 4 of theplaint in no way affects the right of the plaintiffs to recover the amountdue, and I am of opinion that the 4 (b) issue was rightly decided againstthe defendants.
In the course of the argument regarding paragraph 4 (d) it was submittedthat the contract was one of sale and that in any event the plaintiffcould not keep the bus of which they had recovered possession andalso recover the rent which represented the value of the bus. I do notthink either submission to be well founded. P 1 is clearly an agreementin the nature of a hire purchase contract, in terms very similar to theagreement held to be a hire purchase contract in the case of Mather andSon v. de Silva et al.1
The bus was seized on March 11, 1929, when the rent sued for hadalready become due and the plaintiffs were entitled to take possessionof the bus and sue for the arrears of rent under clause F of the agreementwhich provides that should the hirer fail to pay the rent or hire instal-ment on the due date …. the owner may (without prejudiceto his rights to recover arrears of rent and damages for breach of theagreement) terminate the hiring and retake possession of the bus.
I am accordingly of opinion that the claim of the plaintiffs should nothave been dismissed.
1 (1933) IS Ccy. La a Recorder p. 211.
233MAARTENSZ A.J.—Fernando v. Jayasinghe.
The plaintiff has also appealed from the decree of the District Courtdeclaring the second defendant entitled to recover from the added plaintiffin reconvention a sum of Rs. 2,800, the damages he alleges he/sustainedby reason of the plaintiff’s agent, James Jayasinghe, failing to insurethe bus in breach of his undertaking to do so after receipt of the amountdue to pay the premium.
The appeal was argued on the footing that the decree on the claim in'reconvention had been entered against both the plaintiff and addedplaintiff, but it has been entered against the added plaintiff only,, as thejudgment does not specify the plaintiff against whom the judgment wasentered in reconvention it is possible that the decree is not in accordancewith the judgment.
In view of the conclusion I have come to that the order cannot besustained, it is not necessary to determine whether the District Judgeintended to cast both plaintiffs or only the added plaintiff in damages.
The learned District Judge has found that James Jayasinghe wasplaintiff’s (W. D. Fernando’s) agent in Hatton and that, although theagreement cast the duty of insuring the bus on the hirer, the Companyhad arranged to insure it and James Jayasinghe received the cheque 2 d 7for Rs. 205 in payment of the premium on June 13, 1926, which heendorsed in the course of business. This cheque appears to have beenendorsed and cashed by one M. B. Simon who was said to have beenan employee of the Auto-Carriers Company.
The evidence of James Jayasinghe and the second defendant has beenaccepted by the learned Judge in spite of the fact that it is open to agreat deal of suspicion. James Jayasinghe is a brother of the firstdefendant and when giving evidence was the second defendant’s father-in-law, and there is no evidence that the second defendant at any time madeany inquiries regarding the policy of insurance, nor is there any evidencethat the sum of Rs. 205 was received by the Auto-Carriers Company.
I would, but for the strong finding, have been for these reasons inclinedto reject the evidence of James Jayasinghe and the second defendant.
The bus according to the second defendant’s evidence was taken outby an unauthorized person on February 21, 1927, and went over a preci-pice on the Ramboda Pass near Nuwara Eliya and was smashed topieces and the driver killed. It cost him Rs. 350 to raise the bus to theroad and Rs. 2,800 to have it repaired. In another place he said thesum of Rs. 2,800 included the sum of Rs. 350.
The second defendant’s evidence of what he paid to have the busrepaired is most unsatisfactory. He said in the course of his evidence“ in regard to this Rs. 2,800 I have paid it in two part for the bodyRs. 750 and the balance for repairing the chassis, and so on. I paid itto Davit Singho of Talawakele and for the body to the Talawakeleblacksmith. I got no receipt from him ”.
Later on he said “I have no account to show that I spent Rs. 2,400on repairs. I only have got my statement that I spent Rs. 2,400. I gotthe repairs done by Davit Singho ”.
A third version was “ I paid this Rs. 2,400 to several persons. I havereceipts from some. I do not know where Davit Singho lives. Thatsum that I paid him was Rs. 800 for repairing the bus and Rs. 750 for
Vellasamy Pulle v. Mokideen.
the body to another man. His name is Charles. To Rowlands I paidRs. 250 for towing the bus, I paid Rs. 60 to a driver from Nuwara Eliya.Rs. 60 I paid for three watchers for three days. For the radiator I paidRs. 125, and four tyres and tubes Rs. 423, and Rs. 108 licence”. Thelast item is unintelligible.
Lastly he says “ The name of the man who repaired the bus for me isDavit Singho. I say he is too ill to come and give evidence ”.
The bus I have little doubt did meet with an accident and had to berepaired but the second defendant has failed to prove what he spent onrepairs. In view of his claim for damages it is most surprising that hedid not obtain receipts and keep an account of the sums expended by himin having the bus repaired.
The only definite evidence is the receipt from Rowlands Garage forRs. 350, but the second defendant is not entitled to recover that sumas his evidence leaves me in doubt whether it is included in the sum ofRs. 2,800 or not.
I accordingly hold that the second defendant has not established hisclaim to the sum of Rs. 2,800 made in reconvention.
It is therefore unnecessary to discuss the various legal objectionstaken to the claim by appellant’s counsel.
I allow the appeal and enter judgment for the added plaintiff for thesum of Rs. 3,239.36 with interest as prayed for and costs against bothdefendants.
The second defendant’s claim in reconvention is dismissed withoutcosts as it does not appear that his claim involved the plaintiffs in extracosts.
The plaintiffs will also be entitled to their costs of appeal. But theplaintiffs will not be entitled to more than one set of costs either in appealor in the District Court.
The dismissal of plaintiff’s claim for goods sold and delivered is affirmed.
FERNANDO et al v. JAYASINGHE et al