SAMARAKOON, C.J. – Nismalm u Shanthi
1977 Present: Udalagama, J., Sharvananda, J. and Ratwatte, J.
THE CEYLON MERCANTILE UNION, Appellant and THE INSURANCECORPORATION OF SRI LANKA, Respondent.
S. C. 347/74(F) – D. C. Colombo 2857fL
Registered Trade Union – Action on behalf of its members – Locus Standi.
Plaintiff, a registered trade union, instituted action on behalf of its membersagainst the defendant Corporation for declaration that according to the contracts enteredinto between its members and the defendant certain revised rates of allowances werepayable to them.
That a trade union has no locus standi to institute an action for any relief based onthe contracts of its members. The provisions of the Civil Procedure Code do not' contemplate or countenance in a Court of Law an action or suit by a trade union on behalfof its members.
jA-PPEAL from a judgment of the District Court of Colombo.
V. A. S. Pullenayagam with K. Shanmugalingam, K. Balasubramaniamand Miss S. Gnanakaran for the plaintiff-appellant.
Douglas Premaratne Senior State Counsel for the defendant-respondent.
Cur. adv. vult.
New Law Reports
(1978) Vol. SON.L.R.
July 12, 1978. Sharvananda, .J.
The plaintiff in this action is a duly registered Trade Union and thedefendant is a Corporation duly established under the provisions of theInsurance Corporation Act, No. 2 of 1961.
The plaintiff – Trade Union, in its plaint dated 28.9.73, averred asfollows:-
“(4) The plaintiff – Trade Union has a Branch in the work-place of thedefendant-Corporation consisting of employees of the defendant-Corporation and the said Branch has a membership of about 77 percent ofthe non-executive staff of the defendant-Corporation. All the saidmembers of the said Branch Union are members of the plaintiff-union.
All the employees, including the members of the plaintiff-Unionemployed by the defendant-Corporation, were recruited on a basic salaryplus rent allowance and other allowances as paid to employees in thePublic Service. In conformity with the said contracts of employment, thedefendant-Corporation has been paying the said allowances as-stipulatedabove as paid to employees in the Public Service.
The Interim Report of the Salaries & Cadres Commission, 1969,headed by Mr. L. B. de Silva, dealt with the salaries structure ofemployees in the Public Service and the allowances payable to them. Thesaid Report recommended revised rates of allowances and the saidrecommendations were implemented by the Government of Ceylon witheffect from 1.10.69 in the Public Service and other institutions, except thedefendant-Corporation where allowances were paid at Government ratesin terms of the contracts of employment.
But the defendant-Corporation, even after 1.10.69 up to date, hasbeen paying and is continuing to pay allowances at the old rates payableprior to October, 1969, and which old rates ceased to be operative in thePublic Service after 1.10.69.
The plaintiff-Union states that the failure of the defendant-Corporation to pay living allowances as recommended in the said InterimReport of the Salaries & Cadres Commission of 1969 and implemented inthe Public Service from 1.10.69, and the payment by the defendant-Corporation of allowances at rates that are non-operative after 1.10.69 areirregular, wrongful and unlawful, amounting to a deliberate failure on thepart of the defendant-Corporation to fulfil its contractual obligations.
SC SHARVANANDA, J. – Mercantile Union v. Insurance Corporation of Sri Lanka ■ 311
The plaintiff-Union states that the contracts of employmentmarked XI and X2 (which are specimen copies of letters of appointmentissued to the employees by the defendant-Corporation) undertaking to payall allowances as in the Public Service could, after 1.10.69, only beimplemented by paying the allowances as recommended in the aforesaidInterim Report.
(13) A cause of action has thus accrued to the plaintiff to sue thedefendant for the declaration that the defendant-Corporation is liable topay and the employees of the defendant-Corporation are entitled toreceive the allowances under their contracts of employment (asrecommended in the Interim Report referred to above) with effect from1.10.69.”
By its answer, the defendant-Corporation stated, inter alia, that it hadacted in terms of the directive given by the Minister of Foreign and InternalTrade dated 18.10.72, as it was in law bound to do, and that in thecircumstances the defendant has acted lawfully in terms of the InsuranceCorporation Act No. 2 of 1961. As a matter of law, the defendant furtherpleaded that the plaintiff cannot have and maintain this action in law and thatthe plaintiff had no legal right or status to seek for the declaratory reliefprayed for in the plaint.
The case proceeded to trial on the following preliminary issues, viz. issues5 and 6:-
Is the plaintiff-Union, in law, entitled to the relief asked for in the
(a) According to the Cabinet decision, has the Minister for Foreign
and Internal Trade directed that the above-mentioned allowancesshould not be paid?
If so, has the Court the jurisdiction to compel the defendantCorporation to pay the said allowances?
If so, is the plaintiff-Union legally entitled to the relief asked for ?
By order dated 27.9.74, the learned District Judge held that the plaintiffcannot have and maintain this action and also that the Corporation wasbound by the directive issued by the Minister of Foreign and Internal Trade,in terms of the provisions of the Insurance Corporation Act, not to pay theadditional allowance and was justified in refusing to pay the additionalallowances. He dismissed the palintiff’s action on these grounds. From thesaid order, this appeal has been preferred.
New Law Reports
(1978) Vol. 80 N.L.R.
This appeal involves an important question of law as to the status of theplaintiff-Union to institute and maintain an action in respect of thecontractual rights of its members with their employer. The matter fordecision is whether the plaintiff-Union has a cause of action against theemployer-Corporation. If it does not have a cause of action, its action fails onthe ground that the plaintiff does not have a locus standi to institute andmaintain this action in its own name or on behalf of its members.
The Civil Procedure Code defines an action as a proceeding for theprevention and redress of a wrong — a proceeding by which one party seeksin a Court to enforce some right against or to restrain the commission of awrong by another party. This concept of an action implies the existence ofparties, of an alleged right, of an alleged infringement thereof, and of a Courthaving jurisdiction to enforce such right, or to grant the necessary relief.Thus the essential ingredients of an action are:
Opposing parties, viz. plaintiff and defendant;
a subject in dispute between the parties;
A cause of action; and
A demand for relief.
In order that an action may be properly instituted, there must be at leasttwo persons: one, the plaintiff who complains of an infringement of his rightand claims relief, and the other the defendant against whom the right to anyrelief in favour of the plaintiff is alleged to exist. Basic to action is therequirement that the injury which gives rise to the cause of an action shouldbe the injury suffered by the plaintiff. A person cannot be a plaintiff unlesshe has a vested interest in the subject-matter of the action; he must claim arelief or advantage for himself.
In an action founded on a contract, the proper plaintiff is the person withwhom or on whose behalf the contract was made, or in whom the rightsunder the contract are vested. In Dunlop Pneumatic Tyre Co. Ltd. v. SelfridgeandCo.Ltd.' Lord Haldane stated:
“In the Law of England, certain principles are fundamental. One is that
only a person who is a party to a contract can sue on it. Our law knows
nothing of a jus quaesitum tertio arising by way of contract.”
"(I9I5) A.C. 847 al 853.
SC SHARVANANDA, .J. – Mercantile Union v. Insurance Corporation of Sri Lanka 313
Under our law, which is the Roman Dutch Law, a stipulation in a contractfor the benefit of a third party may be enforced by such party where it hasbeen accepted by him. Jinadasa v. Silva;2 de Silva v. Margaret Nona?. Butwhere a contract does not purport to confer any benefit on a third party, sucha party cannot sue on the contract to which he is a stranger; he has no causeof action against the party who has committed a breach of the contract – hehas no locus standi to sue the party in default. It is on the fundamentalprinciple that an issue may not be brought to Court by a stranger that theelaborate structure of pleadings in our law is erected. The plaintiff must be aperson in whom a right to relief is alleged to exist. The alleged right to reliefalone gives competence to the plaintiff to institute the action.
Section 11 of the Civil Procedure Code provides that all persons may bejoined as plaintiffs in whom the right to any relief is alleged to exist, whetherjointly, severally, or in the alternative in respect of the same cause of action.Thus, the right to relief in the action is the sine qua non to acquire locusstandi as plaintiff in an action. The plaint must show that the plaintiff has anactual existing interest in the subject-matter of the action. The cause ofaction complained of by the plaintiff is the particular act of the defendantwhich gives the plaintiff his cause for complaint.
Section 40 of the Code sets out the requisites of a plaint. The plaint mustcontain a prayer and a concise statement of the circumstances constitutingthe cause of action and a demand for the relief which he claims. Section 34requires every action to include the whole of the plaint which the plaintiff isentitled to make in respect of the cause of action. Lord Esher defines a causeof action as every fact which it would be necessary for the plaintiff to proveif traversed in order to support his right to the judgment of the Court. (Readv. Brown).4
It is a fundamental rule of practice and pleading that two or more differentplaintiffs, each having a separate and different cause of action though similar,cannot be joined in the same action. Under this rule, no two members of theplaintiff-Union could have joined in one action to sue for a declaration thatthe defendant-Corporation was liable to pay each one of them the allowancereferred to in the plaint; for the grievance of each is separate, and distinctthough similar; they had no joint cause of action and hence could not havejoined in one action to sue for the relief prayed for.
In this case, the plaintiff is a registered Trade Union. While it is not alegal person, it is endowed by the legislature with many rights characteristicof a Corporation – rights which an unincorporated Corporation does, notpossess. It can own property through its trustees. (Section 42 of the TradeUnion Ordinance, Chap. 138). A registered Trade Union may sue or be sued
!(1935) 34 N.L.R. 344.■‘(1889) 22 Q.B.D. 128 at 131.
J( 1939) 40 N.L.R. 251.
New Law Reports
(1978) Vol. 80 N.L.R.
in its registered name (section 30). Every Trade Union shall be liable on anycontract entered into by it or by any agent acting on its behalf (section 28).It can be sued by its own member for wrongful expulsion, i.e breach ofcontract. (Bonsor v. Musicians’ Union.*) A registered Trade Union might suein its own name for defamation where the defamatory statement touches itscollective reputation. (General and Municipal Workers v. Gillian.6) Aregistered Trade Union may thus be described as having been given a quasicorporate status by the legislature which has however carefully avoidedconferring corporate personality on a Trade Union. A registered Trade Unionhas thus been given recognition by law as a body distinct from individualswho from time to time compose it, although it is an unincorporated body. Byregistration, the Trade Union acquires some ‘existence’ in law apart from themembers. It is thus a statutory legal entity capable of rights and duties. “ATrade Union (which is a body unincorporate) is a separate entity.” — perLord Denning in Willis v. Association of Universities.1
The question that arises in this case is whether the plaintiff-Union has, asa quasi-Corporation, a cause of action which would entitle it to thedeclaratory judgment prayed for. “I cannot call to mind any action fordeclaration in which the plaintiff claims no right for himself.” — perViscount Maugham in London Passenger Transport Board v. Moscrop.8 Theplaintiff is an Association having as its members, among others, 77 percentof the non-executive staff of the defendant-Corporation, each one of whomentered into individual contracts with the defendant-Corporation on the basisof the specimen agreement referred to as X and Y. But the plaintiff-Unionhas as such not entered into any such contract. The dispute complained of inthe plaint is the dispute of each member with the Corporation. The plaintiff-Union has no direct interest in the said dispute. In the circumstances, it hasno locus standi at all and is not entitled to come to Court for any relief basedon the contracts of its members. The breach alleged to have been committedby the defendant does not affect the plaintiff in its corporate status.Mr. Pullenayagam however contended that in view of the definition of aTrade Union given in the Trade Union Ordinance, viz: “A Trade Unionmeans an Association .. . .having among its objects the representation … ofeither workmen or employers in trade disputes”, the plaintiff-Union has thestatus to represent its members in a Court of Law in the dispute which itsmembers have with the defendant-Corporation. This definition does nothowever warrant the institution"of an action by the Union on behalf of itsmembers. The representation referred to in the definition is notrepresentation in a proceeding in a Court of Law. Civil proceedings in aCourt of Law are governed by the provisions of the Civil Procedure Codeand, as stated earlier, the provisions of the Code do not contemplate orcountenance in a Court of Law an action or suit by a Trade Union on behalfof its members. A representative action in a Court of Law can only be
’(1956) A.C. 104; (1955) A.E.R.5I8.’(1964) 2AII E.R. 39 at 42.
"(1945) 2 All E.R. 593.'(1942) A.C. 332 at 344.
SC SHARVANANDA, J. – Mercantile Union v. Insurance Corporation of Sri Lanka315
brought by following the.procedure laid down in section 16 of the Code.Section 16 of the Code provides that when there are. numerous personshaving a common interest in bringing or defending an action, one or more ofsuch parties may, with the permission of Court, sue or be sued, or maydefend in such an action on behalf of all the parties so interested. This rulepresupposes that each one of the numerous persons by himself has a right ofsuit. A person who has no right of suit cannot therefore be allowed to sue ina representative capacity. It is essential for the application of this rule that therepresentative must himself have a right of action. If the representative hasno such interest, he cannot sue or be sued. Mr. Pullenayagam conceded thatthe present action is not tenable under the said section 16. Of course, whereunder the substantive law itself a person is entitled to represent a body ofpersons having the same interests in a certain matter and sue on behalf ofsuch a body, he can do so without following the procedure referred to insection 16. Thus, though an action under section 102 of the Trust Ordinanceis a representative one, the procedure laid down in section 16 need not to befollowed. But, unfortunately for the plaintiff, the legislature has not madeany provision giving legal sanction for a registered Trade Union to institutean action on behalf of its members in a Court of Law. It is to be notedhowever that the legislature has, in the Industrial Disputes Act (Chap. 131),provided that a Trade Union could, on behalf of a workman who is a memberof that Union, make an application in writing to a Labour Tribunal for relief(section 3 IB). Thus, though the legislature is aware of the status and functionof a Trade Union, it has to date failed to make statutory provision for aregistered Trade Union to represent its members in civil proceedings in aCourt of Law.
In view of the above, I.agree with the District Judge that the plaintiff-Union has no legal status to institute or maintain this action and hence thepresent action fails in limine. In view of the above finding of the plaintiff’slocus standi to institute this action on behalf of its members, it is notnecessary to go into the next preliminary question as to how far theMinister’s directive to the defendant-Corporation that the allowance shouldnot be paid is an effective defence for the defendant-Corporation, need not tobe gone into. However, I must state while passing that there appears to somesubstance in Counsel’s argument against the defendant’s contention.
In the circumstances, the appeal is dismissed without costs.
Udalagama, J. — I agree.
RATWATTE, J. — I agree.