118-NLR-NLR-V-41-DE-SILVA-v.-EDIRISURIYA.pdf
de Silva v. Edirisuriya.
457
1940
Present: Howard CJ. and Soertsz .1.
DE SILVA v. EDIRISURIYA.
65—D. C. Tangalla, 3,898.
Money Lending Ordinance—What constitutes the business of money-lending—Burden of proof—The bar created by section 8 not applicable to adminis-trator—Money Lending Ordinance. No. 2 of 1918, s. 8 (I) and (2)(Cap. 67).
Where a fisherman lent money on notes to persons who were not hisrelatives and there was evidence that his money-lending transactionswere not limited to occasional loans but were conducted systematicallyand continuously,—
Held, that he was carrying on the business of money-lending.
Held, further, that once it is established that a person was carryingon the business of money-lending, the burden is on him to prove that hehad complied with the provisions of section 8 (1) of the Money LendingOrdinance.
Held, also, that the bar created by section 8 (2) of the Ordinancedoes not apply to the administrator of the estate of a deceased money-lender.
HIS was an action on a promissory note to recover a sum of Rs. 877.50
with interest. The original plaintiff, who was the father of theappellant having died, the appellant was substituted as administratorof the estate. There was evidence that the original plaintiff, thoughhe was a fisherman, lent money on notes to persons who were not hisrelatives, and filed actions to recover them. The learned District Judgeheld that the original plantiff was a money-lender and that he had failedto keep books of accounts and dismissed his action.
H. V. Perera, K.C. (with him O. L. de Kretser), for substituted plaintiff,appellant.—Plaintiff is not a money-lender but a fisherman who occasionallyinvested his earnings on the security of promissory notes. The form ofissue 6, namely, “ can this action be maintained without account books?”shows that the court considered that the debt could not be proved unlessthe account books were produced in Court. There should have been an,issue as to whether plaintiff kept proper books of accounts. The District-'Judge has placed the burden of proof with regard to books wrongly onplaintiff. Pathmanathan v. Chowla ' is not binding in this case inasmuchas plaintiff has not conceded that the business of money-lending has beencarried on. The bar in section 8 of the Money Lending Ordinance is apersonal bar and only applies to the person subject to the obligationsof the section. No local or English authority is directly in point, but seeDaniel v. Rogers 3 and Hawkins v. Duche’.
N. E. Weerasooria, K.C. (with him Cyril E. S. Perera), for defendant,-respondent.—Whether a person is a money-lender or not is a question offact in each case. In this case the evidence shows—
That plaintiff had given up the business of fisherman for some time.
That the plaintiff had lent money to persons who were not
T
relatives on pro-notes.
1 13. C. L. Rec. 89.
2 (1918) 2 K. B. 229.
3 (1921) 3 K. B. 227.
4S8
HOWARD C.J.—de Silva v. Edirisuriya.
had sued on those notes—
Vide Faggot v. Fine (1911) 105 Law Times 583. Edgelow v.
Mac Elwee (1918) Law Times 177.
Issue 6 clearly means that having regard to section 8 of the MoneyLending Ordinance, plaintiff cannot enforce this action if he has not gotproper books of accounts. Pathmanathan v. Chowla {supra) places theburden on plaintiff to prove that he kept proper books of accounts. Theopinion in Daniel v. Rogers and Hawkins v. Duche (supra) relied on byplaintiff are obiter dicta.
The operation of such a bar if it exists would apply only to assigneefor value of promissory notes given for such loans. See section 11 otthe Money Lending Ordinance.
The rights of parties should be regulated by their position at thecommencement of the action—Silva v. Fernando'.
H. V. Perera, K.C., in reply.—The wording of section 8 (1) of theBusiness Names Registration Act is similar to section 8(2) of the
Money Lending Ordinance. The reasoning in these cases was followed inFernando v. Jayasinghe1 where the interpretation of section 9 of theBusiness Names Registration Ordinance was considered.
Section 11 of the Money Lending Ordinance is only a special provisionto protect a bona fide holder for value and does not modify theinterpretation to be placed on section 8 (2).
Silva v. Fernando 3 has no application to the facts of this case.
Cur. adv. vult.
August 2, 1940. Howard C.J.—
This is an appeal from a judgment of the District Judge of Tangalla,dismissing the plaintiff’s action with costs. The original plaintiff whowas the father of the appellant sued the defendant on a promissory notedated February 27, 1931, for the recovery of a sum of Rs. 877.50 andinterest. The original plaintiff having died, the appellant, after taking outletters of administration, was substituted plaintiff as administrator ofhis estate. After two witnesses had been called for the plaintiff thefollowing issues were added to those already framed : —
“ 5. Did the original plaintiff carry on the business of money-lending?
“ 6. If so, can this action be maintained without account books? ”Issues 3 and 4 were answered in favour of the plaintiff, the learnedDistrict Judge finding that at the execution of the note Rs.-500 was paidin cash by the original plaintiff to the defendant. Issues 5 and 6 wereanswered by the learned Judge in favour of the defendant and in conse-quence of those answers judgment was entered dismissing the actioninstituted by the plaintiff. Counsel for the plaintiff has argued that theDistrict Judge was wrong in his findings with regard to both these issues.It is maintained that the original plaintiff was not a money-lender. Thiscontention was not argued with great force. In fact, Counsel could onlycontend that it was doubtful whether the original plaintiff was a money-lender. There was evidence that though he was a fisherman the original
» IS N. L. R. 499.* 35 N. L. R. 231.
1 IS N. L. R. 499.
HOWARD C.J.—de Silva v. Edirisuriya.
459
plaintiff lent money on notes to persons who were not his relations andfiled actions to recover on such notes. It was in evidence, moreover,that sometime before his death he had given up fishing. The note inthis case was also on a printed form. In the course of his judgment inFaggot v. Fine1 in which it was held that a jeweller who lent money tocustomers was carrying on the business of money-lending, Bankes J.said : —
“ It is absolutely essential that the tribunal should consider not onlythe nature but the number of the money-lending transactions.It is from these transactions and from them alone that theinference can be drawn whether or not the person is carryingon the business of money-lending.”
In Edgelow v. Mac Elwee 5 a Solicitor who habitually lent money on loantransactions in no way confined to clients was held unable to recover ashe was not registered. In commenting on the essential attributes of amoney-lender McCardie J. said : —
“ A man does not become a money-lender by reason of occasional loansto relations, friends or acquaintances, whether interest becharged or not. Charity and kindliness are not' the basis ofusury. Nor does a man become a money-lender because he mayupon one or several isolated occasions lend money to a stranger.There must be more than occasional and disconnected loans.There must be a business of money-lending and the wordbusiness imports the notion of system, repetition and continuity.The line of demarcation cannot be defined with closeness orindicated by any special formula. Each case must depend onits own peculiar features.”
The question as to whether the original plaintiff was carrying on amoney-lending business is one of fact. There was evidence that the money-lending transactions of the original plaintiff were not limited to occasionalloans, but his operations were conducted systematically and continuously.In these circumstances it is impossible to say that the District Judge waswrong in holding on issue 5 that the original plaintiff carried on the businessof money-lending.
The correctness of the District Judge’s answer to issue 6 depends on thequestion raised by this issue and the interpretation to be given to section 8of the Money-Lending Ordinance (Cap. 67). Counsel for the plaintiff hascontended that the point raised by this issue is whether the debt can beproved without the production in Court of account books. The wording ofthe issue is not felicitous and if it had this limited meaning, I am of opinionthat the Judge’s finding would be incorrect. The issue must, however, beheld to raise the question as to whether, having regardto the provisions of section 8 of the Ordinance, the plaintiffcan enforce this claim if the original plaintiff did not keep or cause to bekept a regular account of this loan, clearly stating in plain words andnumerals the items and transactions incidental to the account andentered in a book paged and bound in such a manner as not to facilitate» (1911) 105 Law Times 583. '1 (1918) Law Times 177.
460
HOWARD C.J.—de Silva v. Edirisuriya.
the elimination of pages or the interpolation or substitution of new pages.There should have been an issue as to whether in fact the original plaintiffdid keep books as provided by the section. The District Judge has,however, found that no books were kept. In coming to this findinghe has in effect placed on the plaintiff the burden of proving that bookswere kept. Counsel for the plaintiff has contended that this burden ofproof rested on the defendant. In support of the District Judge’sfinding Counsel for the defendant relied on Pathmanathan v. Chowla
In his judgment in that case Dalton A.C.J. stated as follows : —
“ It is conceded that, if plaintiffs are held to be carrying on the businessof money-lending, the onus is on them to show they have compliedwith the provisions of section 8 of the Ordinance. They havefailed to do so and therefore they are not entitled in the wordsof the Ordinance to enforce any claim in respect of any trans-action in relation to which the default shall have been made.”
Mr. Perera has contended that inasmuch as the plaintiff has not “ con-ceded ” that the original plaintiff carried on the business of money-lending, this case is not an authority for placing the burden of proofwith regard to the books on the plaintiff. I do not consider that thisis the meaning of the passage cited from Dalton J’s judgment. As Iread his dictum, I understand it to mean that, if it is proved that a personcarries on the business of money-lending, the onus rests on that person toprove that he complied with the provisions of section 8. This is theposition in the present case. Pathmanathan v. Chowla (supra) is a decisionbinding on the Court. In this connection I would also refer to the fol-lowing passage in the judgment of Lush L.J. in Faggot v. Fine (supra) : —
“ It seems to me clear that in cases brought under the Money LendersAct or cases which involve questions raised under the MoneyLenders Act the defendant has to prove that the plaintiff is amoney-lender, in other words that he carries on the business oflending money. But when the defendant has given primafacie evidence of what Walton J. in Newton v. Pyke1 referred toas a certain degree of system and continuity about the plaintiff’stransactions, then if the plaintiff seeks to avail himself of anyof the exceptions under section 6 of the Act the burden is uponhim to show that he comes within them.”
On the authority of these two cases, therefore, the District Judge wascorrect in placing the burden of proof in this matter orr'the plaintiff.
There now remains for consideration the interpretation of section 8 ofthe Money Lending Ordinance. It has been contended by Mr. Pererathat the bar to enforcing a claim provided by-^uh-section <§) is a personalbar and only applied to the person subject to the obligations of thesection. We are without a decision on the interpretation of this sectionof the Supreme Court of Ceylon to assist us in coming to a conclusionon the matter. A similar provision is not to be found in the English law.We have, howevjpr, been referred to two decisions of the English Courts on» 1.1 C. L* lit/. SO.s 25 Times L. R. 127.
HOWARD CJ.—de Silva v. Edirisuriya.
461
section 8 (1) of the Registration of Business Names Act. These twodecisions are Daniel v. Rogers1 and Hawkins and another v. DucheSection 8 (1) of the above-mentioned Act is worded as follows :—
" Where any firm or person by this Act required to furnish a statementof particulars …. shall have made default in so doing,then the riglfls of that defaulter under or arising out of anycontract made or entered into by or on behalf of such defaulterin relation to the business in respect to the carrying on of whichparticulars were required to be furnished at any time whilehe is in default shall not be enforceable by action or other legalproceeding either in the business name or otherwise : Providedalways as follows : —
The defaulter may apply to the Court for relief against the
disability imposed by this section, and the Court ..
.. may grant such relief on certain conditions.
Nothing herein contained shall prejudice the rights of any
other parties as against the defaulter in respect of suchcontract as aforesaid ….”.
It will be observed that the wording of this sub-section is similar to thatof section 8 (2) of the Ceylon Money Lending Ordinance. In Daniel v.Rogers (supra) Pickford L.J. stated as follows : —
" I entertain considerable doubt whether the Act of 1916 was everintended to apply to the enforcement of a contract except asbetween the parties to it. The provisos to section 8, sub-section
, seem to me to point in this direction, certainly provisos (a)and (c) do so; but it is unnecessary to decide this point, and Ido not propose to do so. ”
The judgments of the other Judges, Bankes and Scrutton LL. JJ., werecouched in similar language. In Hawkins and another v. Duche,McCardie J. stated as follows : —
“ The contention of Mr. Carr is largely founded on the observationof the Court of Appeal in Daniel v. Rogers. The facts in thatinter-pleader issue were somewhat different to the presentfacts. Several dicta however are relied on by Mr. Comyns Carr.Pickford L.J. said:‘ I entertain considerable doubt whether
the Act (of 1916 was ever intended to apply to the enforcementof a contract except as between the parties to it. ’ Bankes L.J.expressed a similar view and pointed to the distinction betweenthe Money Lenders Act, 1900, as compared with the Registrationof Business Names Act, 1916. And Scrutton L.J.:‘ I desire
to say, although it is not necessary finally to decide the pointthat in my view the application of section 8 is limited to pro-ceedings between the parties to the contract.’ I respectfully thinkthat the above weighty dicta represent the true interpretationof the Act of 1916. That Act, I think, was meant to punish""a defaulter (unless he procured relief) .rather than innocentthird parties. Unless the dicta I have cited be good law the1 (1918) 2 K. B. 229.* (1921) 3 K. B. 227.
34-
462
HOWARD CJ.—de Silva v. Edirisuriya.
most serious consequences would follow. Innocent holders forvalue of negotiable instruments might under section 8 be unableto enforce the rights of a defaulter. The position of innocentassignees of a defaulter’s book debts would be equally imperilled.Even purchasers of goods from a trader who was in defaultunder the Act of 1916 might (if the goods were warehoused orheld by third persons) be met by a plea of the Act if action wasbegun against those persons for detention. The position wouldbe still further aggravated if the assignor defaulter in the casesabove put either absconded from the country, or refused to makeany application for relief. Take moreover the case of a defaulterwho executes a deed of assignment for the benefit of his creditorsand then leaves the country. Is the trustee of the deed ofassignment' stricken with inability to collect the assets orenforce the claims of the debtor ? I cannot think so. I shallhold that the plaintiff trustees in bankruptcy in the presentaction are not affected by the disability (if any) of M. and B.Taper. I respectfully adopt and apply the views of Pickford,
■ Bankes and Scrutton LL.JJ. in Daniel v. Rogers. I merely addthat it is still more necessary to take the view I have venturedto express when it is remembered that an argument hasarisen before me as to whether a trustee in bankruptcy can assuch apply for relief under section 8 in respect of a bankrupt whowas a defaulter under the Act of 1916. The Bankruptcy Act,1914, does not appear to expressly contemplate such circum-stances. ”
With regard to these two cases it will be observed that, whereas theobservations of the learned Judges in Daniel v. Rogers were obiter, inHawkins v. Duche McCardie J. adopted those observations and appliedthem in reaching a conclusion. The reasoning and observations of theJudges in these two cases were also applied in the case of Fernando v.Jayasinghe1 where the interpretation to be placed on section 9 of theBusiness Names Registration Ordinance was considered. It seems to methat, if the phraseology employed in section 8 (1) of the Registration ofBusiness Names Act indicates that it was only intended to impose a bar onthe actual person who was in default in complying with the requirementsof the section, the language employed in section 8 (2) of the MoneyLending Ordinance would a fortiori lead to a similar conclusion. It hasbeen argued by Mr. Weerasooria that the limitation on the operationof the bar would apply only to assignees for value of promissory notesgiven in respect of any loans. In this connection he has referred us tosection 11 of the Money Lending Ordinance which limits the protectionthereby granted to such persons. Although this is a special provisioninserted to protect bona fide holders for value, I cannot think that it canin any way modify the ordinary interpretation to be placed on thelanguage employed in section 8 (2). In Hawkins v. Duche McCardie J.held that the bar did not extend to a Trustee in Bankruptcy. The samereasoning and consideration would apply to the administrator of theestate of a deceased person. I am of opinion that such reasoning
» 35 N. L. R. 231.
A. G. A., Mullaittivu v. Selvadurai.
463
applied in thig case leads inevitably to the conclusion that the bar im-posed by section 8 (2) of the Money Lending Ordinance does not applyto claims put forward by the administrator of the estate of a deceasedmoney-lender.
In conclusion 1 must refer to the final argument of Mr. Weerasooriawho contended that even if the bar imposed by section 8 (2) of the Ordinanceapplied only to the actual person who made the loan, the rights of theparties must be regulated by their position at the time when the actionwas instituted. In this case the plaint was filed by the deceased money-lender himself and it was only subsequently that the plaintiff was substi-tuted as the administrator of the estate. In support of this decision wehave been referred to the decision of the Privy- Council in Silva v.Fernando In that case it was decided that no retrospective effectcan be given to a letter written by the Crown waiving its rights to plumbagoso as to vest in the plaintiff a title at the commencement of the action.In that case the plaintiff when he filed his claim had no cause of action.The decision has no application to the facts of the present case.
For the reasons given in this judgment I am of opinion that the appealmust be allowed and judgment entered for the plaintiff as claimed,together with costs in this Court and the Court below.
Soertsz J.—I agree.
Appeal allowed.
♦