Cha to or v. General Assurance 'Society, Ltd.
1954Present: Nagalingaro S.P.J. and Fernando A.J.A. S. CHATOOR, Appellant, and GENERAL ASSURANCESOCIETY, LTD., RespondentS. C. 103 Inly.—D. C. Colombo, 27,216 M
Interrogatories—Use thereof to obtain admissions.
Interrogatories may be administered in order to enable the party interro-gating to ascertain what the case is he has to meet or what really aro the mattersin issue.
Plaintiff, an insurance company, instituted action for the recovery of a certainsum of money against the defendant who, at the dates material to the action,held ils power of attorney as chief agent in Ceylon. One cnuse of action
N AGAL.ING AM g.PJ.—■ Ohatoor c. General A en a ranee Society, Ltd.667
proceeded on the basis that the defendant had authority to effect cover notes ant 1to issue policies of insurance thereon ctn behalf of the plaintiff company. With-out any averment to the contrary and without even a suggestion of improprietyon the part of the defendant in effecting a cover note and issuing certainpolicies in pursuance of the cover, plaintiff suddenly made allegations of fraudand illegality on the part of the defendant in effecting the cover and issuingthe policies.
Held, that, in order to prevent any surprise at the trial, the defendant wasentitled to administer interrogatories for the purpose of ascertaining the factsund circumstances upon which the plaintiff made the allegations of illegalityand fraud.
.AlPPEAL from an order of the District Court, Colombo.
O. W ikrumanayake, JQ.C., with Walter Jayaieardene, K. Shinya and21. Hussein, for the defendant appellant.
E. Weerasooria, Q.G., with S. J. Kadirgamar, B. S. C. Rahvatteand A. de Vos, for the plaintiff respondent.
Cur. adv. vult.
December 20, 1954. Nagauhgam S.P.J.—
This ib an appeal from an order of the learned Additional DistrictJudge of Colombo upholding the refusal of the plaintiff company toanswer certain interrogatories administered to it by the defendant.
The action was filed by the plaintiff company which carries on businessas an Insurer for the recovery of a sum of Rs. 1,358,437'50 against thedefendant, who at the dates material to the act ion held its power of attorneyas chief agent in Ceylon. Several causes of action were set out in theplaint of which it is only necessary to notice the first, second and thirdfor the purposes of this appeal.
In the first cause of action the plaintiff company averred that thedefendant, acting as its agent, effected a cover note for his own benefit,to the extent of Rs. 3,500,000,in respect of a shipment of rubber, and thatin pursuance of the cover effected, the defendant issued three policiesof marine insurance to himself under his business name of A. S. Chatoor& Co. and that the plaintiff company became entitled to receive fromthe defendant premia payable in terms of the said policies of insuranceamounting to a sum of Rs. 311,344-50. It would be manifest, havingregard to theso averments, that the plaintiff company’s claim is basedon the tacit recognition of the right of the defendant to have effectedcover and to have issued the policies on behalf of the plaintiff company.
Under the second cause of action, the plaintiff company sets out thatthe defendant, after having paid the sum of Rs. 311,344-50 to theplaintiff company’s account at its bank as premia due to it in respectof the policies of insurance issued by the defendant, “ wrongfully, un-lawfully and fraudulently withdrew the said sum and appropriated itto himself ”.
The plaintiff company proceeded further to set out that “ there wasfraud and illegality on the part of the defendant in effecting and issuingthe said insurance policies ",
NAGAL1NGAM S.P.J.— Chatoor v. General Assurance Society, Ltd.
In the third cause of action, the allegation was that the defendanteffected the insurance at the rate of ten per cent., while the true and pro-per rate should have been 40J per cent., and that the defendant in effectingthe insurance at the lower rate, did so for his own benefit and “ actedfraudulently and/or negligently Under this cause of action, theplaintiff company claimed the sum of Rs. 1,358,437‘50, as the correctpremia due to it from the defendant.
The defendant denied the allegations of fraud and illegality in effectingthe cover note or issuing the policies and of fraud or negligence in chargingthe rate of 10 per cent, by way of premia, as well as of wrongfulness,unlawfulness, and fraud in withdrawing the sum of Rs. 311,344*50 paidto the credit of the plaintiff company’s account.
In this state of the pleadings it was that the defendant came to ad-minister the interrogatories to the plaintiff company. The only questionargued on appeal is whether the plaintiff company was justified in itsobjection to answer the interrogatories.
It will be convenient at this stage to refer to the interrogatories them-selves. Tho3r are four in number. I shall deal first of all with theinterrogatories 3 and 4 in respect of which I see no reason to differ fromthe view taken by the learned District Judge.
The third interrogatory is as follows :—:
“ What are the facts and/or circumstances on which you rely insupport of the averment in paragraph 9 of the plaint that there was :
(б)illegality on the part of the defendant in withdrawing the sum
of Rs. 311,344 *50 ? ”
The answer to that interrogatory is, in my opinion, furnished by thevery paragraph itself. It sots out the fact that the■ defendant actingas the plaintiff’s agent and having effected insurance on its behalf, paidinto the account of the plaintiff company the premia due to it in respectthereof; but that thereafter the defendant Withdrew the amount fromthe bank without any authority from the plaintiff company. Theinference is obvious that the defendant’s action was not only wrongfuland unlawful but also fraudulent having regard to the facts. Theobjection of the plaintiff company is therefore entitled to prevail.
The fourth interrogatory was as follows :—
“ What arc the facts and/or circumstances on which you rely insupport of the averment in paragraph 10 of the plaint that the defendantfirm effected the insurance at 10 per cent. :
(a) for their own benefit,
(r.) negligently ? ”
In regard to this interrogatory too, the answer is furnished by the!averments in paragraph 10 of the plaint. The plaintiff has averred that]the truo and proper rate at which the premia should have been chargedjwas 40£ per cent, and inasmuch as the insurance was effected for the‘benefit of the defendant himself he had charged a low rate of 10 per cent.,
NAQALINQAM B.PJ.— Ohatoor v. General Assurance Society. Ltd.
from which circumstances it cannot be denied an inference of fraud ornegligence on the part of the defendant would flow.- In this instancetoo there is nc reason to disturb the order of the learned District Judge.
The first and second interrogatories however are on a different footing.Those two interrogatories ran as follows :
“ 1. What are the facts and/or circumstances on which you rely insupport of the averments in paragraph 9 of the plaint that therewas :
(а)fraud, and ■
(б)illegality on the part of the Defendant in effecting tho
“ 2. What are the facts and/or circumstances on which you rely insupport of the averment in paragraph 9 of the plaint that therewas :
(б)illegality on the part of the defendant in issuing the policies ?”
The foundation for those two interrogatories is paragraph 9 of the plaint.Towards tho end of that paragraph for the first time the plaintiff companyalleges “ that there was fraud and illegality on the part of the defendantin effecting and issuing the said policies It may be remarked that theterm “ effecting the policies ” used in the first intorrogatory has referenceto the issue of the cover note.
The averments set out in respect of the first cause of action, as indicatedearlier, proceeded on the basis that the defendant as agent had authorityto effect the cover notes and issue the policies of insurance on behalf ofthe plaintiff company. Without any averment to the contrary andwithout even a suggestion of impropriety on the part of the defendantin effecting the cover or issuing the policies, the plaintiff company suddenlyplunges into making an allegation of fraud and illegality on the part ofthe defendant in effecting the cover and issuing the policies. These twointerrogatories are therefore intended to serve the purpose of ascertainingthe facta and circumstances upon which the plaintiff company has madethese allegations of illegality and fraud, with a view to prevent anysurprise at the trial.
Mr. Weerasooria contends that if there are no facts set out in the plaintfrom which an inference of fraud or illegality, in effecting the cover orissuing the policies, can be drawn, it will be open to the defendant toresist any issues of fraud or illegality being framed or tried at the trial.He relied upon the case of Silva v. Periacarupen Chettiar 1 where at thetrial Counsel took the plea ore tenus at bar that the decree upon whichthe oppoaito side had based its case had been procured by fraud althoughno fraud had been set out in the pleadings. Wijeyewardene C.J., deliveringthe judgment of the Court, said :'
" Wo arc further of opinion that if evidence was going to bo led onthe question of fraud, it should have been pleaded and specific detailsgiven.’ ’
(1949) 40 C. L. 10.
r.TONAOAlilNGAM S.P.J.— Chatoor v. General Assurance Sicichr, HI.
While this cose is an authority for the proposition contended for byMr. Wecrasooria, it also illustrates the grave risks that a party may runby ovidonce of fraud being permitted to be led. Besides, it is possiblethat an application may be made for amendment of the pleadings by theplaintiff where an objection is taken to the framing of an issue of fraud,and should an amendment be allowed at the stage, even on terms, apartfrom tho circumstance that unnecessary delay would thereby ensue,—delay which from tho defendant’s point of view may be unwelcome—tho defendant certainly would have no opportunity of administeringinterrogatories should it become necessary at that stage to do so, foronce the trial has begun, interrogatories cannot under our procedure bepermitted, furthermore even if Mr. Weerasooria’s contention be correct,which as I have indicated, does not reflect the true position, it docs notfollow that the existonco of one remedy negatives the existence of anyother remedy.
There may be more than one remedy available, or more than one methodof attack open, to a party. While undoubtedly the defendant can takeobjection at tho trial to any issue of fraud or illegality in effecting coveror issuing policies, tho existence of such a right does not prevent thedefendant seeking to administer interrogatories in order to ascertainparticulars of tho fraud and illegality pleaded for the purposes of enablinghim to get ready to meet those allegations at the trial and to prevent,his being taken by surprise and being prejudiced thereby.
No authority which could be regarded as in point, establishing thecontrary, lias been cited, but reliance has been placed upon an observationof Smith, Lord Justice, in the case of Kennedy v. Dodson 1 where thefollowing was given expression to :—
•“ In my opinion the legitimate use and the only legitimate use of
interrogatories is to obtain from the party interrogated admissionsof facts which it is necessary for the party interrogating to prove inorder to establish his case ; ”
and it lias been urged that it is not competent to the defendant to adminis-ter interrogatories for the purpose of obtaining particulars. 1 do nolthink that tho language used by the learned Judge was intended tobavo such a general import, for it is a well known rule that a judgment,should not be extended beyond tho necessities of tho facts of the ease.
In that case with which the learned Judge was dealing, an attemptthat was made by means of interrogatories to obtain informal ion regardingnot tho transaction the subject matter of the action but of other trans-actions said to have taken place over a period of about 20 years priorto the date of the action,—information which would not have beennecessary in order to establish the case of the party interrogating Imtwhich may have been remotely relevant. It was in those circumstancesthat that pronouncement was me.de by the learned Judge. This casewas referred to in tho case of Wijesekere v. Eastern Bank 2 where Nib ill J.observed :
“ In judging an interrogatory a stricter test of relevancy (than thebroad sense in which relevancy is defined in the Evidence Ordinance)1 (1893) L. R. 1 Ch. 334 at p. 341.* (1941) 43 X. h. U. 100.
NAOALINOAM 8.P J.—Ohatoor t>. General Assurance Society, Ltd.
is required. It must be relevant to a fact in issue or as leading up toa matter in issue on the action. ”It will be noticed that the leftrnoa Judge was dealing with the questionof relevancy of interrogatories and not with the question whether thelegitimate use of interrogatories is to obtain admissions. In both thesecases, it will however be apparent, that the problem raised by issues1 and 2 had not to be adjudicated upon.
It cannot however be doubted that there is another function, und a]iroj>er function which interrogatories can and do perform, and that isto enable the party interrogating to ascertain what the case is lie hasto moot or what really are the matters in issue.
The ease of Ashley v. Taylor1 was one where there was an allegationin the statement of claim that the defendants had advertised a worthlessmine by means of private newspapers and circulars containing falsestatements, ami that the plaintiff was thereby induced to take shares.The defendants administered interrogatories asking for the groundson which the plaintiff alleged that the mine was worthless and that lieshould set out the particular papers by which he had been deceived.These interrogatories were held to be proper as they were simply directedto show what was the material facts upon which the issues in the casewould be raised.
The case of Lyon v. TweddeU 2 was one for a dissolution of partnershipIietween two surgeons on the ground that the defendant had so behavedand conducted himself towards the plaintiff in the presence of many ofthe patients of the partnership as to make it impossible for the plaintiffto carry on practice with him. An interrogatory by the defendantcalling upon the plaintiff to set forth the particulars and circumstancesof the occasions on which the defendant had so behaved and conductedhimself was allowed.
In the case of Benbow v. Low 3 which laid down the proposition thatwhere the object of the interrogation is to obtain particulars of the evidenceon which the opponent relied to establish his case, the interrogationwould be disallowed, there is an interesting observation of Janies L.J. :—-
*' It appears to me the question is whether this is really asking tosee tho brief of the other side in order to know exactly what is theevidence they are going to produce, which is not permitted, or whetherit is a question which comes within the exceptional instance whichhas been referred to, where a man says, ‘ Give me particulars of themisconduct which you allege against me ’, which I always thoughtwas an exceptional and particular case …. If a man says,
‘ I mil entitled to recover an estate because you have committedbreaches of covenants the other party is entitled to ask, ‘ Tell mowjiat breach of covenant I have committed ”-
The present case falls within this dictum.
* (1678) 38 Law Times 44.* (1879) L. R . 13 CL. 376.
• (1880) L. R. Ch. 93.
GRATIAEN J.—Abdul Coder v. Commissioner R. I. P. R.
Having regard to the principles underlying these cases, I think thatthese two interrogatories, Nos. 1 and 2, are entirely proper and that theplaintiff should have been ordered to answer them.
I would therefore set aside the order of the learned District Judgein regard to Interrogatories 1 and 2 and direct that the plaintiff companyshould answer them. They will be answered within such time as maybe fixed by the learned District Judge after receipt of the record by him.
As each party has been partly successful, I think the proper order tomake with regard to costs is that both in the District Court and on appealeach party should bear his own costs.
Fernando A.J.—I agree.
Appeal partly allowed.
A. S. CHATOOR, Appellant, and GENERAL ASSURANCE SOCIETY, LTD, Respondent