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Present : Shaw J. and De Samp ay o J.
ItALPH MACDONALD & CO. v. THE COLOMBOHOTELS COMPANY.
11 and IS—D. C. (Inty.) Colombo, 41,574.
Discovery of documents—Interrogatories—Trial of issues of law beforeorderingdiscovery of documents—Partnership—Joinder of retired
partners in actions by or against partners when necessary—CivilProcedure Code, ss. 17, 18, 102, 109, 147.
The defendants moved for an order for the discovery of . certaindocuments. The plaintiffsobjected tothe . discovery sought, on
the ground that certain issues of'', law should be first determined, andwhich, ifdetermined in their favour, would renderthe discovery
sought unnecessary. The District/^Tudge upheld the objection.
Held, onappeal,thatas ^ there was no preliminaryissueof law
which might dispose of the action, the District Judge was wrongin refusing to order discovery.
A retired ' partner . ought, generally speaking, to join as a plaintiff,or be joined as a defendant, in every action to which, had he notretired, he would have been a necessary party.
But if on ' the retirement of a partner the debts due to the oldfirm are assigned to the newfirm by writing, as provided by
section 25 of the Judicature Act of 1873, the new firm can sue inrespect of them.
HE facts are set out in the judgment.
Bawa, K. C. (with him F. J. de Saram), for appellants.
Elliott (with him Samarawickreme), for respondents.
Cur. adv. vult.
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RalphMacdonalddo CO. V.The ColomboHotels Co.
February 27, 1916. Shaw J.—
These are two appeals from interlocutory orders of the DistrictJudge. The first is by the defendants, from a refusal of the Judgeto order discovery of certain documents, on the ground that theapplication is premature, and from a refusal of the Judge to orderthe plaintiffs to answer certain interrogatories, on the ground thatsome are premature and others irrelevant. The second is by theplaintiffs, from an order of the Judge directing, the plaintiffs toadd -certain persons as plaintiffs, and directing that if they declineto be added as plaintiffs they must be made defendants.
I will deal first with the defendants’ appeal.
The action is brought by the plaintiffs, as members of a firm of-(Ralph Macdonald & Company) building contractors, with whom thedefendant company have entered into an agreement for the per-formance of certain work, for Rs. 251,108.67, damages for allegedwrongful cancellation of the agreement. The defendants by theiranswer pleaded that one of the plaintiffs, Mr. G. F. Stevens, wasemployed by them as their architect in respect of the work, andthat it was on his recommendation that they entered into theagreement sued on. That he had falsely and fraudulently mis-represented to the defendant company his interest in the firm ofRalph Macdonald & Company, and concealed from them the fact-that other members of his firm of Stevens & Company were membersof the firm of Macdonald & Company, whereas the two firms werein fact practically' one. They further alleged misrepresentation asto the cost of the work, and alleged that bv means of- false andfraudulent misrepresentations as to the qualities and materials usedin the additions and extensions of the contract work, the plaintiffshad obtained payments to which they were not entitled, and claimedin reconvention Rs. 800,000, and damages for misrepresentations.The allegations in fact amount to a charge of fraud against theplaintiffs, which, if proved, would entitle the defendants to rescindthe agreement and recover damages.
The discovery sought is of documents relating to the formationof the plaintiffs’ firm and.of accounts and documents relating to thecontract sued on, sub-contracts entered into by them with otherpeople for the performance of the work, aud the prices paid 'formaterials used in the buildings for extras.
Objection was taken by the plaintiffs to making the discoverysought at the present stage of the proceedings, on the ground thatcertain issues of law which they desire to raise should be firstdetermined, which, if determined in their favour, would render thediscovery sought unnecessary. The Judge has adopted this view,and has refused to grant'the discovery at the present stage.
I am of opinion that the Judge is wrong. Our procedure providesfor the trial of preliminary issues of law, but only of such issuesof law* that may dispose of the action. I am of opinion that there
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no preliminary issue of law that can dispose of this action. The *******plaintiffs' suggestion, as I understand it, is that the certificates of shaav J.the architect, Mr. Stevens, are final, and that the defendants cannotre-open them. But the defendants allege that, not only the certi- Macdonaldficates, but the whole contract was a fraud, worked upon them by & c°imitboMr. Stevens, and the firm of which the plaintiffs are members. This, Hotels Co.if true, wouldentitle..them to re-open anycertificatesgiven
'by Mr. Stevens,and itis partly for the purposeof establishing the
alleged fraud and partly for the purpose of their claim to damages,
—should they establish it, that the discovery is sought. It is, in myopinion, highly inconvenient, and a cause of extra expense, foractions to be tried piecemeal, as is suggested should be done in the.present case. I would order the discovery sought to be made.
' With regard to the refusal to order interrogatories, the Judge hasrefused to ordercertainof them to be answered,on groundssimilar
to those on which herefused discovery. Forthe reasonsabove
given I think he is wrong. Some of the other interrogatories hehas refused to order I think are relevant.
I would direct the plaintiffs to answer interrrogatories 1, 3, 4, 6, 7,.
11, 13, 18, 20, the first part of 21, the first part of 22, 23, 24, 25,and 27.
With regard to the plaintiffs’ appeal, their contention is that the-original partners, who it is desired to add as plaintiffs, have retiredfrom the firm, and have assigned their interests to the presentplaintiffs; and certain letters to the defendants have been producedgiving notice to the defendants of the retirement from the firm ofthe persons it is now proposed should be added, and of the transferof their interests.
Beyond the mere production of these letters there is no evidencethat the retiring partners have, in fact, assigned their interest to-the present plaintiffs. Prima facie, all the parties to the contractshould join as plaintiffs; it is therefore, I think, the duty of the-plaintiffs to bring the partners, who are said to have retired, beforethe Court, but not necessarily as co-plaintiffs, as that is inconsistentwith the case they set up. I would vary the order of the Judgeby directing the plaintiffs to add the partners who are said to-have retired, either as plaintiffs or as defendants, and to make the*necessary amendments and services.
I would give the defendants the cost of their appeal, and make noorder as to the costs of the plaintiffs’ api—1
De Sampayo J.—
I entirely agree with my brother Shaw that the appeal of the*defendant company should be allowed to the extent which he has–indicated in his judgment. With regard to the appeal of the-plaintiffs, I desire to add a few words.
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RalphMacdonaldda Co. v.The ColomboHotels Co.
The objection taken to the constitution of the action rests on theground that the plaintiffs cannot proceed with the action in theabsence of certain partners of the -plaintiffs’ firm. The contractupon which the action is brought was made by all of them jointly,and the other partners are said to have retired while the contractwas still being carried on. There is no doubt that in the case of ajoint contract all the co-contractors should join in an action upon it.This principle is applicable to partners also. The non-joinderwould formerly have been fatal to the action, but section 18 of theCivil Procedure Code, corresponding to Order 16, Rule 11, of theEnglish Rules of Practice, provides a means by which a defect as tojoinder of parties may be rectified and the action proceeded with.The question is, whether, in the circumstances of this case, thepartners who do not join are necessary parties to the action, andought therefore to have been joined as plaintiffs or defendants?The allegation in the plaint that the partners in question had retiredwas denied in the answer, and before the hearing the defendantcompany specifically took the objection, which the District Judgestated in the form of an issue, thus: “ Can plaintiffs maintain thisaqtion without joining the parties mentioned in paragraph 2 of theplaint, namely, George Mackenzie, Kenneth Edward Mackenzie,and Arthur Charles' Payne?” The simple answer to the questionis that they cannot, unless circumstances entitling the plaintiffs todepart from the rule are proved. It was incumbent on the plaintiffs,in the first place, to prove that the persons named had retired. Therewas no evidence given, except that the plaintiffs put in three lettersby which they had informed the defendant company about theretirement of certain of their partners. I do not see how theseletters furnish the necessary evidence. They may prove that certaincommunications were made to the defendant company, but theyare not evidence of the fact of retirement. But, even if this factbe assumed for the purpose of this appeal, that does not advancethe plaintiffs' position. Lindley on Partnership (7 tit edition),page 823, thus states the law on this point: ” The retirement of apartner in no way affects his rights against or obligations tostrangers in respect of past transactions. Subject, therefore, to theabove observations, ' a retired partner ought to join as a plaintiffand be joined as a defendant in every action to which, had he hotretired, he would have been a necessary party.” The observationsreferred to are to the effect that if on the retirement of a partnerthe debts due to the old firm are assigned to the new firm by writing,as pi’ovided by section 25 of the Judicature Act of 1873, the newfirm can sue in respect of them. This is expanded by Lindley atpage 323, with the remark: ” Probably it is not now necessary tojoin as a plaintiff a retired partner against whom the defendant hasno claim, and who has no beneficial interest in what is sought to berecovered.” Now, there is no proof of any assignment of. the
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interest of the partners who are said to have retired, except that
■one of the letters, which, as I have said, are not evidence, states ^ stMP<Vft"that their shares in the partnership were acquired by the continuingj_
partners. Nor are the other conditionssatisfied. The defendantRdt 'h
company have, against all the parties to . the contract, a very large Macdonaldclaim, which they have set up in reconvention, lfiven if the colomb'oy statements in the letters are evidence,it cannot be definitelyHotels Co.
^concluded that the retired partners haveno beneficial interest in
what is sought to be recovered in thisaction. It is remarkable
—that the second plaintiff and the third plaintiff are among thosewho are said *in the letters to have retired from the partnership,
1 and I suppose that their joining as plaintiffs mean that they did•not give up their beneficial interest, notwithstanding their allegedRetirement. In my opinion it is not possible on these materials tohold that the partners who have not joined as plaintiffs are notnecessary parties. That being so, the plaintiffs, .1 think, shouldtiave availed themselves of the provisions of section 18 of theCivil Procedure Code to bring in the other partners. Undersimilar circumstances, the Privy Council, in Rajandranath Butt v.
Shaik Mohamed Lai,1 remarked: “ The appellants have not on any. occasion sought the assistance of the Court, as they might havedone under section 73 of Act VIII of 1859, to make him a party tothe suit. It was not the province, either of the High Court or theDistrict Judge, to force that course upon him:The objection was
clearly taken, and they, from motives of their own, deliberatelyabstained from making him a party to the suit." Their Lordshipsaccordingly affirmed the judgment of dismissal which had beenentered on the ground of non-joinder. Similarly, in Banda v.
Lapayar Clarence J., referring to the wording of section 17 of ourCode, said: " I take the meaning of that to be that when a non-joinder is apparent, in the' face of which the Court cannot proceed,the Court, instead of dismissing the plaintiff’s action, should allowthe plaintiff to add parties. Here the plaintiffs make no proposalto add the missing co-shareholder as a party," and on that groundthe Supreme Court refused to interfere with a decree of dismissal ofthe action. Here the District Judge allowed the plaintiff to add themissing partners as parties. I think his order is substantially right,but I agree to the modification suggested by my brother Shaw andto the order as to costs.
1 (1881) I. L. B. 8 Cal. 42.
2 (1891) 1 S. C. B. 98.