KEUNEMAN J.—Mahomed tf Sons and Zahicrc Lye <t Co.
1898Present: Keaneman and Rose JJ-
MOHAMED & SONS, Appellants, and ZAHIERE EYE& CO., Respondents.
96—D. C. Colombo, 14,011.
Trading with the enemy—Licences to import textiles whose country of origin loo*Japan—Transfer ef licences to plaintiff—Entry of Japan into the War—Restrictions on importation of goods of Japanese origin—Plaintiff's rightto use the licences—Claim for refund—Defence (Control of Imports)Regulations, s. 8a.
Plaintiff sued on a contract dated January 13, .1911, whereby defendanttransferred to plaintiff certain licences P 2 to P 1 to import textileswhose country of origin was the Empire of Japan.
By clause 2 of the contract it was agreed as follows: —
" In the event of -the above permit system being abolished by Govern-ment for reasons unforeseen or due to Force Majeure, if you areunable to use the above permits or any portion of same we bindourselves to refund (at the same rate paid to us) such value of thelicences as may remain unused on the date of such abolition."
On the entry of Japan into the War on December 7, 1911, the Tradingwith the Enemy Begulations came into force which forbade trading in anygoods coming from enemy territory.
Under section 8aof theDefence (Control ofImports) Begulations,
read with General Licence No. 4, goods of Japanese origin could be im-ported into Ceylonprovidedthey were importedfromany territory
forming part of the British Empire. General licence No. 1 did not apply toCanada and Newfoundland and importation from Canada and Newfound*land of goods of Japaneseorigin was permissibleonlyunder special
Held, that, in the absence of proof that P 2 to P 4 were not usable forthe importation ofJapanesegoods from CanadaandNewfoundland,
plaintiff's claim for a refund was not sustainable.
Any direct legislative or administrative interference would come withinthe meaning of the phrase " Force Majeure ".
PPEAL from a judgment of the District Judge of Colombo.
H.V. Perera,K.C.(with him S..1.V. Ch elvanayagamand
Navaratnarajah, for plaintiff, appellant.
N.Nadarajah, K.C. (with him D. W. Fernandoand
G. T. Samaratcickremc), for defendant, respondent.
Cur. adv. vult.
February 16, 1945. Kecseman J.—
Plaintiff sued on contract P 1 of January 13, 1941, whereby defendanttransferred to plaintiff certain licences to import regulated textiles whosecountry of origin was the Empire of Japan. By clause 2 of P 1 thedefendant undertook as follows: —‘ ‘ In the event of the above Permit-System being abolished by the Government for reasons unforeseen, or due
102KEUNEMAN J.—Mohamed & Sons and Zahiere Lye 4 Co.
to Force Majeure if you are unable to use the above permits or any portion,of same, we bind ourselves to refund (at the same rate paid to us) suchvalue of the licences as may remain unused on the date of such abolition.’ ■Plaintiff maintained that certain licences P 1 to P 4 current from August1, 1941, up to July 31, 1942, could not be used by him, and that he wasentitled to claim a refund in respect of them from the defendant underclause 2.
It has been established in this case that shortly prior to August 1, 1941—viz., on July 27, 1941—the Finance Regulation called the “ FreezingOrder " was applied to the Empire of Japan. Financial- transactionsbetween Japan and Ceylon thereupon became impossible. The licence orpermit system was however not abolished, and in fact the licences P 2 toP 4 were issued to have validity from August 1, 1941.
It was not in dispute in this appeal that from August 1, 1941, till theentry of Japan into the War on December 7, 1941, these licences hadvalidity and were usable—though not for direct importation from Japanowing to the “ Freezing Order ”. It was, however, possible to obtaingoods of Japanese origin from India and other countries, including theBritish Empire. The entry of Japan into the War as a belligerent createda new situation. The Trading with the Enemy Regulations then cameinto force, which forbade trading in any goods “ coming from ” enemyterritory. To meet this situation the Defence (Control of Imports)Regulations had been amended on August 1,1941, by the promul-
gation of section 8a, which stated—
“ Where goods which are imported from any territory forming partof the British Empire are goods of enemy origin, such goods shall, forthe purposes of these Regulations, be deemed to be grown, produced ormanufactured in that territory notwithstanding that they are goods ofenemy origin.
In this regulation ‘ goods of enemy origin ' means goods grown,produced or manufactured in any territory which is enemy territorywithin the meaning of the Defence (Trading with the Enemy) Regu-lations, 1939.”
It is clear that under section 8a goods of Japanese origin could beimported into Ceylon provided they were imported from any territoryforming part of the British Empire. The prohibition contained in theTrading with the Enemy Regulations did not apply in such cases.
Ordinarily such goods would be imported upon licence. But underRegulation 5a of the Defence (Control of Imports) Regulations, OpenGeneral Licence No. 4 was promulgated on August 1, 1941, whereby“ the importation to Ceylon by any person of such goods of any class ordescription specified in the Schedule hereto as have been grown, producedor manufactured in any territory forming part of the British Empire,except Canada and Newfoundland or any other territory which is enemyterritory within the meaning of the Defence (Trading with the Enemy)Regulations 1939.” Admittedly the Schedule of the Open GeneralLicence No. 4 covers the class and description of goods mentioned inP 2 to P 4.
KEtJNEMAN J.—Molumed <t Son* and Zahiere Lye A Co.
It is contended for the appellant that the Defence (Trading with theEnemy) Regulations prevented the importation of goods of Japaneseorigin from allied or neutral countries, and that the licences P 2 to P 4were not usable for that purpose. It is also urged that under seotion 8aof the Defence (Control of Imports) Regulations goods of Japanese origincould be imported from the British Empire, but the promulgation of OpenGeneral Licence No. 4 made the licences P 2 to P 4 useless, because anyperson could now import such goods from the British Empire without thenecessity of obtaining a licence. But on the other hand the Open GeneralLieence No. 4 did not apply to Canada and Newfoundland which wereparts of the British Empire, and importation from Canada and New-foundland of goods of Japanese origin was permitted under licence, and itwas necessary for the plaintiff to show that the licences P 2 to P 4 werenot usable for that purpose. It was not sufficient for the plaintiff merelyto show that the use of these licences was restricted.
I agree with the -argument of Counsel for the respondent that thei plaintiffhas failed to prove that “ the permit system was abolished by the Govern-ment ”. The only question is whether the words in clause 2 of P 1, viz.," or due to Force Majeure if you are unable to use the above permits orany portion of same ” are applicable to this case. As regards the meaningof “ foree majeure ” see the judgment of McCardie J. in Lebeaupin- v.Crispin '.
“ The phrase ‘ force majeure ’ was not interchangeable with ' vis major ’or ‘ the act of God ’. It goes beyond the latter phrases. Any directlegislative or administrative interference would of course come within theterm; for example, an embargo.”
On the face of them the licences P 2 to P 4 apply to certain textileswhose country of origin is the Empire of Japan. There is no restrictionas to the country from which they can be imported, and Canada andNewfoundland are not excluded from countries from which they could beobtained. To import from Canada or Newfoundland a licence wasnecessary. There is nothing to show that these licences P 2 to P 4 werenot available for the importation of goods of Japanese origin from Canadaor Newfoundland. In this connection the questions put to the Controllerof Imports, who was a witness, are relevant.
“ Q. After the Japanese entered the War a person in Ceylon desiringto import goods from Canada and Newfoundland of Japanese originrequired a licence? A.—Yes.”
‘‘ Q.—On this licence with the conditions attached to it would it haveauthorised a holder to import goods of Japanese origin from any part ofthe Empire? No answer ”.
This evidence shows at any rate that there is no proof of any adminis-trative embargo which rendered these licences P 2 to P 4 unusable forimport of goods of the character described from Canada or Newfoundland.The witness called by the plaintiff admittedly knew nothing about thesepermits, and there is no evidence that the plaintiff tried to use thesepermits and was prevented from doing so. There is some evidence in
1 L. R. (1920) 2 K. B. 7Id at 719.
101KEUNEMAN J.—Mohamed & Sons and Zahiere Lye <* Co.
the ease that Canada and Newfoundland fall outside the sterling groupbut there is no evidence of any financial or other regulations whichrendered ' trading by persons in Ceylon with Canada or Newfoundlandimpossible.
Counsel for the appellant seeks to get over this difficulty by relying onsection 8a of the Defence (Control of Imports) Regulations. His argu-ment is briefly this. Goods imported from Canada or Newfoundlandalthough of enemy origin must be deemed to be grown, produced ormanufactured in Canada or Newfoundland. There has been a change inthe nature and the character of the goods, and the licence to import goodsof Japanese origin would have no application to those goods and could notbe used for the purpose of importing them.
I do not think this argument can be sustained. Section 8a must bprestricted to the purposes of the Defence (Control of Imports) Regulations.Those Regulations deal inter alia with the prohibition of importation intoCeylon of specified goods by order of the Governor, or of importation ofsuch goods without a licence from the Controller. Under section 8a whengoods which were in fact “ of enemy origin ” are imported from any partof the British Empire they are to be deemed to be grown, produced ormanufactured in the British Empire, and accordingly capable of beingfmported into Ceylon. But 1 do not think it is possible to apply section 8ato the interpretation of the licences P 2 to P 4. In those licences certainspecific goods whose country of origin was in fact the Empire of Japanhave been described and their import permitted. 1 do not think it will beopen to the Controller to say (as has been suggested by the appellant)that goods originating from Japan in the licence must under the circum-stances be regarded as having lost that character and become goodsoriginating in the British Empire, and that the licences are no longerapplicable. ' >
I agree with the finding of the District Judge that plaintiff has failed toprove that “ the effect of those Regulations and Orders was either directlyor indirectly to abolish the permit system, or to turn P 2 to P 4 into merepieces of waste paper ”. As the District Judge points out. the evidence ismore favourable to the view that the licences were available for use in avery restricted sense. The plaintiff’s case accordingly fails, and thisappeal must be dismissed with costs.
Rose J..—I agree, and have nothing to add.
MOHAMED & SONS, Appellants, and ZAHIERE LYE & CO., Respondents