Hatton National Bank Ltd. v. Whiffal Boustead Ltd.
Hatton National Bank Ltd.v.
Whittal Boustead Ltd.
COURT OF APPEAL.
WIMALARATNE, P. AND ABDTJL CADER, J.
S.C. (C.A.) 20/78 INTY—D.C. COLOMBO 1/1030/M,
JUNE 12, 1979.
Pleadings—Amendment of plaint—Principles governing exercise ofdiscretion by trial judge—Action for breach of contract and defamationbased on dishonour of cheques—Amendment seeking to plead endorse-ment of bank on the cheques and the person's to whom . there was •publication—Whether amendment necessary for raising real ■ questionbetween parties—Whether it will work an injustice to the other side—Civil Procedure Code, section 93.
The plain tiff-company sued the defendant-bank for the recovery ofan aggregate amount of Us. 6,500,000 arising out of a transactionrelating to the dishonour of certain cheques drawn by the plaintiffcompany on the defendant bank. The plaint averred that thedefendant acted in breach of its agreement with the plaintiff to payon the said cheques ; and further averred that the dishonour was also ,wrongful, unlawful and malicious and that the plaintiff had beendefamed by injuring its credit and business reputation. The plaintiffalleged in its second cause of action that a letter addressed by theManager of the defendant-bank to the Additional Secretary of the'Ministry of Plantation Industry contained imputations that were falsermalicious and defamatory of it. The defendant filed answer setting-out in detail circumstances leading to the return of certain cheques –drawn by the plaintiff and presented for payment and pleaded variousdefences. Thereafter the plaintiff moved to amend its plaint bypleading publication of the words “cheque irregular” to the payeesof the said cheques, who were set out in a schedule X and the severalbanks set out in schedule Y and to members and officials of the;Colombo Clearing House. In the said proposed amendment the plain-tiff also pleaded what it relied on as the meaning and imputation ofthe said endorsement on the cheques and that the aforesaid publications-were defamatory.
The defendant objected to the proposed amendment of the plaint onthe grounds that this sought to convert the action from one based on-'dishonour of the cheques to one based on publication; and – secondly?that it was not in conformity with section 40 (d) of the Civil ProcedureCode in that each publication constituted a separate cause of action.The learned trial Juage after inquiry allowed the amendment and thedefendant appealed.
Section 93 of the Civil Procedure Code which deals with the.,amendment of pleadings confers a wide discretionary power on theCourt which power should be exercised judicially. In deciding -whether there was good reason to interfere with the exercise of this;discretion by a trial judge the appellate Court would consider the two.,questions “ is the amendment necessary for the purpose of raising the real;question between the parties ? "; and “will the amendment if allowed-work an injustice to the other side”
An examination of the amendments sought to be made in the present,case showed that the plaintiff sought (a) to specify “ the answer on ■the cheques” dishonoured as being “cheque irregular”; and (b) to–enlarge the category of persons to whom such answer has been ,published. The amendment therefore did not alter the scope of theaction nor did it introduce a new cause of action .
2—A 58596 (81/08)
Sri Lanka Law Reports (1978 -79) 2 S. L. R.
The causes of action relied on by the plaintiff based on thedishonour of the cheques were in contract and in tort ; the actionfor dishonour of a cheque being a pure action for breach of contractto which the “ answer on the cheque ” is not strictly relevant, whilethe cause of action in tort was for defamation. The amendment soughtmerely to clarify by including details of the words which constitutedthe defamation and the persons to whom the words were published.The amendment appeared to be necessary for the purpose of raisingthe real issue between the parties ; nor did the amendment prejudicethe defendant from raising the plea of prescription.
Although there were as many causes of action as there werecheques dishonoured the learned trial Judge had correctly held thatthe plaintiff is not obliged to set out separately a statement of thecircumstances constituting each cause of action.
Cases referred to
Daryanani v. Eastern Silk Emporium Ltd., (1963) 64 N.L.R. 529 ;
63 C.L.W. 73.
Wijewardene v. Lenora, (1958) 60 N.L.R. 457; 56 C.L.W. L
Sharp v. Wakefield, (1891) A.C. 173 ; 64 L.T. 180 ; 7 T.L.R. 189.
Lebbe v. Sandanam, (1963) 64 N.L.R. 461; 63 C.L.W. 15
Flach v. London and South Western Bank Ltd., (1915) 31 T L.R. 334.
APPEAL from the District Court, Colombo.
E. S. Amerasinghe, with H. L. de Silva and Mark Fernando, for thedefendant-appellant.
C. Ranganathan, Q.C.„ with R. A. Kannangara, N. S. A. Goonetillekeand Ben Eliyathamby, for the plaintiff-respondent.
Cur. adv. vult.
July 13, 1979.
WIMALARATNE, P.This is an appeal from an order of the District Judge ofColombo allowing an amendment of the plaint in an actionwhere the plaintiff’s claim on two causes of action amounts toRs. 6,500,000.
The plaintiff-respondent is a company said to be doingbusiness as exporters, travel agents, printers, insurance agentsand managing agents of companies. It maintained three currentaccounts with the defendant-bank at its city office bearingnumbers 18439, 18440 and 18441. The plaintiff enjoyed over-draft facilities in respect of these accounts to a certain stipulatedaggregate maximum amount which varied from time to time.The plaintiff averred that this amount was fixed at Rs. 1,244,140as at 23.6.76. On 2.7.76 the defendant requested the plaintiff notto issue any further cheques on the said accounts without makingprior arrangements for meeting them. The plaintiff averred thatseveral cheques drawn prior to 2.7.76 in the course of its dailybusiness and in reliance on and within the stipulated aggregate
CAHalfon National Bank Ltd. v. Whittal Bousfead Ltd.259
limits, which were presented for payment were wrongfully andunlawfully dishonoured by the defendants. They are thecheques itemised in schedule X to the plaint.
Paragraph 8 of the concise statement of facts avers that bydishonouring the cheques the defendant acted wrongfully andunlawfully and in breach of its agreement with the plaintiff topay cheques drawn by the plaintiff within the aggregate limit.
Paragraph 9 avers that the dishonouring of the said chequeswas wrongful and unlawful and malicious and that thedefendant had thereby maliciously defamed the plaintiff byinjuring its credit and business reputation. The damagesuffered on these causes of action was set down at Rs. 2,500,000.
The second cause of action on which the plaintiff claimsdamages in a sum of Rs. 4,000,000 is based upon a letter dated
addressed by the Manager of the defendant-Bank to theAdditional Secretary, Ministry of Plantation Industry, therelevant portion of which is reproduced in paragraph 14. Theplaintiff averred that the imputations in that letter are false,malicious and defamatory of the plaintiff and calculated toinjure the business reputation of the plaintiff and to reflectadversely on the financial stability and probity of the plaintiffin that they were intended to mean that the plaintiff hadwrongfully and unlawfully issued cheques without funds oroverdraft facilities afforded by the defendant; conduct whichmerited the intervention of the Central Bank of Ceylon.
In its answer the defendants set out in detail the circumstancesleading to the return of certain cheques presented for paymenton 184.108.40.206 and on subsequent dates, and averred that in so doingit did not act wrongfully or unlawfully or maliciously or inbreach of any agreement with the plaintiff, and denied that itdefamed the plaintiff, as it acted in good faith, without anyintention to injure the plaintiff, and in the legitimate protectionof its interests. Further, the letter referred to in paragraph 14of the plaint was made without animus injuriandi, on aprivileged occasion, and in the legitimate protection of itsinterests.
The plaintiff moved on 17.8.77 to amend the plaint pleadingthat the dishonouring of the cheques and the publication of theletter were motivated by the express malice on the part of thedefendant. This amendment was allowed.
Sri Lanka Law Reports (1978-79) 2 S. L.R.
On 28.6.16 the plaintiff moved to further amend the plaint bythe inclusion of the following paragraphs 9 (A), (B) and (C) toparagraph 9, and a further schedule Y.
“9 (A). The defendant returned all of the dishonouredcheques with the endorsement “ cheque irregular ”,The said words were published to the payees of thecheques mentioned in Schedule ‘ X ’ annexed here-to, to the several Banks mentioned in Schedule‘ Y ’ annexed hereto, and to the members andofficials of the Colombo Clearing House.
S (B). The said endorsement meant and imputed and wasintended by the defendant to mean and imputethat the paintiff was insolvent and/or financiallyunstable and unsound and/or dishonest and/orguilty of bad faith in its dealing with thedefendant-bank.
9 (C). The plaintiff states that by reason of the saidpublication the defendant wrongfully, unlawfullyand maliciously defamed the plaintiff and injured■it in respect of its character, business reputationand credit. ”
The defendant objected to this amendment, on the groundsthat the amendment—
sought to convert the action from one based on
dishonour of the cheques to one based on 'publication;and
was not in conformity with section 40 (d> of the Civil
Procedure Code in that each publication constituteda separate cause of action.
The learned Judge made his order on 25.10.78 allowing theamendment. He has taken the view that the purpose of theamendment is “ to clarify the cause of action arising out of thedefamation”, and that the scope of the action is not beingchanged. He has also held that the plaintiff was not obligedto set out separately a statement of the circumstances consti-tuting each cause of action. The present appeal is from thatorder.
Section 93 of the Civil Procedure Code deals with the subjectof amendments of pleadings. It reads thus: —
“At any hearing of the action, or any time in the
presence of, or after reasonable notice to, all the parties to
the action before final judgment, the court shall have full
Hatton National Bank Ltd. v. Whittal Boustead Ltd.
power of amending in its discretion, and upon such termsas to costs and postponement of day for filing answer orreplication, or for hearing of cause, or otherwise, as it maythink fit, all pleadings and processes in the action, by wayof addition, or of alteration, or of ommission. And theamendments or additions shall be clearly written on theface of the pleading or process affected by the order; or ifthis cannot conveniently be done, a fair draft of the docu-ment as altered shall be appended to the document intendedto be amended, and every such amendment or alterationshall be initialled by the Judge."
This section confers a wide discretionary power on the Court,when applications for amendment of pleadings are made. Whensuch a wide discretion is vested in a court of original jurisdic-tion, the question does arise as to whether a higher court cansay anything more than that the Judge who has been given thatpower should or should not have exercised it in the particularcase. There is no doubt that the court must exercise this powerjudicially and is not vested with an absolute or arbitrarypower. There has arisen around section 93 a body of case lawwhich should be taken into consideration by the Judge whenhe comes to exercise this power. As stated by Sansoni, J. inDaryanani v. Eastern Silk Emporium Ltd. (1) “they are well-established rules of practice, and should not be treated as thoughthey were statutory rules or provisions of positive law of a rigidand inflexible nature. The two main rules which have emergedfrom the decided cases are :—
the amendment should be allowed if it is necessary forthe purpose of raising the real question between rheparties ; and
fii) an amendment which works an injustice to the otherside should not be allowed ” at 531.
This indeed had been the view taken by Basnayake, C.J. inWijeioardene v. Lenora (2) at 463, when he said that “It(section 93) must be read subject to the limitation that anamendment which has the effect of converting an action of onecharacter into an action of another or inconsistent charactercannot be made thereunder. Apart from that limitation thediscretion vested in the trial Judge by section 93 is unrestrictedand should not be fettered by judicial interpretation. Unres-tricted though it be, it must be exercised according to the rulesof reason and justice, not according to private opinion ; accord-ing to law, and not humour. Its exercise must be uninfluencedby irrelevant considerations, must not be arbitrary, vague, and
Sri Lanka Law Reports (1978-79) 2 S L. R.
fanciful, but legal and regular. And it must be exercisedwithin the limit to which an honest man competent to dischargehis office ought to confine himself—Sharp v. Wakefield (3) at179
But in the subsequent Divisional Bench judgment in Lebhev. Sandanam (4), Chief Justice Basnayake has taken the viewthat the court’s power is limited to the correction of errorsin pleadings and laid down certain rules relating to thecircumstances under which the court has no power to allowamendments.
Sansoni, J. and L. B. de Silva. J. in Daryanani’s case (supra)took a different view, and were not prepared “ to subscribe toan absolute and inflexible rule that in no circumstances maya new cause of action be added ” at 536 ; and that “ the statementof the learned Chief Justice laying down what may appear to berules for the exercise of the discretionary power of the Courtunder section 93, are not rules of law binding on our Courts ”at 539.
Are there, then good reasons for us to set aside the exerciseof the discretion by the learned trial Judge who has aliowedthe amendment ? To answer this question we ask ourselvesthe questions “ is the amendment necessary for the purpose ofraising the real question between the parties ? ” and *■ will theamendment if allowed work an injustice to the other side ? ”
Paragraph 6 of the original plaint referred to schedule Xwhich contained particulars of the cheques drawn prior to
which when presented for payment were dishonoured bythe defendant; and paragraph 9 averred that the dishonouringof the said cheques was wrongful and unlawful and malicious,and that the defendant thereby maliciously defamed theplaintiff, The defamation resulted from the dishonouring ofthe cheques in schedule X. That schedule has four columnsgiving the number of the cheques, date of the cheque, name ofpayee, and the amount. When a cheque became dishonoured,there could be little doubt that the fact of the dishonour wascommunicated by the bank to the payee. The original plaint,therefore, by disclosing the names of the payees, effectivelydisclosed the names of the persons to whom the publication ofthe fact of dishonour was made. To the original plaint wasattached a list of witnesses and documents. All the dishonouredcheques have been included in the list of documents, and almostall the payees on the dishonoured cheques have been includedin the list of witnesses. There could therefore be no doubt thatthe plaintiff intended proving the fact of publication.
Hatton National Bank Ltd. v. Whittal Boustead Ltd.
What does the second amendment seek to achieve. Paragraph9A says that the cheques were dishonoured by reason of theendorsement “ cheque irregular ”, which words were publishedto the payees mentioned in schedule X as well as to the banksmentioned in the new schedule Y, and to members and officialsof the Colombo Clearing House. Paragraph 9B says what theendorsement meant and was intended by the defendant tomean ; and 9C avers that the defamation arose as a result of sjuchpublication.
Whereas the original plaint implied the fact of publicationto the payees of the cheques, whose names were included inschedule X, the amended plaint expressly states that the publi-cation was to the same payees as well as to the banks mentionedin schedule Y and the members of the Colombo Clearing House.The amendment therefore seeks (a) to specify “ the answer onthe cheques ” dishonoured as being “ cheque irregular ” and(b) to enlarge the category of persons to whom such answerhad been published. The amendment does not in my view alterthe scope of the action, nor does it introduce a new cause ofaction. Paragraph 8 of the original plaint is based on a causeof action for breach of contract whilst paragraph 9 is basedon a cause of action in tort—namely the tort of defamation bymaliciously dishonouring certain cheques. An action for dis-honour of a cheques is a pure action for breach of contract towhich “ the answer on the cheque ” is not strictly relevant.“The answer on the cheque” (cheque irregular) is relevantonly in an action for defamation. The two claims can andsometimes are contained in one action, the claim as to the answerbeing framed in libel—Paget on Banking (6th Ed.) 255.
As to whether the answer on the cheques “ cheque irregular ”amounts to defamation is a different question altogether. Butwhat is important to note for the present purpose is that if theanswer on a cheque is couched in words which may be defama-tory, the cause of action arises because of communication ofsuch answer to the payee, and perhaps to other banks and theclearing house. Reference may be made in this connection toFlach v. London and South Western Bank Ltd. (6), whereScrutton, J. said that the words ‘refer to drawer’ amountedto a statement by the bank, “ we are not paying; go back tothe drawer and ask him to pay”. This statement can bedefamatory, but a cause of action arises because the statementis made to the payee, and that is publication. In the absenceof publication there can be no cause of action in tort for thedishonour of a cheque.
Sri Lanka Law Reports (1978-79) 2 S. L. R,
I am therefore of the view that the amendment does notalter the scope of the original action, nor does it seek to add adifferent cause of action. The causes of action based on thedishonour of the cheques were in contract and in tort. Thecause of action in tort was for defamation, and the amendmentseeks merely to clarify by including details of the words whichconstitute the defamation, and the persons to whom the wordswere published. The amendment appears to be necessary forthe purpose of raising the real issue between the parties.Besides, as the amendment does not prejudice the defendantfrom raising the plea of prescription, as conceded by counsel,the learned District Judge was right in allowing the amendment.
The learned District Judge has also correctly held thatalthough there are as many causes of action as there werecheques dishonoured the plaintiff is, however, not obliged toset out separately a statement of the circumstances constitutingeach cause of action. For these reasons I would dismiss thisappeal with costs.
ABDUL CADER, J.—I agree.
Hatton National Bank Ltd v. Whittal Boustead Ltd