MUNICIPAL COUNCIL OF JAFFNA, Appellant, and DODWELL & CO. LTD., Respondent

007-NLR-NLR-V-74-MUNICIPAL-COUNCIL-OF-JAFFNA-Appellant-and-DODWELL-CO.-LTD.-Respondent.pdf


Municipal Council of Jaffna v. Dodwcll <£• Co. Lid.
25
1967Preseni: H. N. G. Fernando, C.J., and Alles, J.
MUNICIPAL COUNCIL OF JAFFNA, Appellant, andDODWELL & CO. LTD., Respondent
S. O. 116(64 (F)—D. C. Colombo, 52431(111.
Civil procedure—Amend r.cnl of issues—Scope—Incapacity of Court to permitadditional issues based upon an unpleaded cause of action which has becomeprescribed—Action for recovery of price of goods—Plaint based solely uponcontract of sale—Whether neu> issues based on a claim for unjust enrichmentcan be framed when such claim has become prescribed—Civil Procedure Code,cs. 40, 73, S3, 146.
Contract with Municipal Council—Failure to comply with statutory formalitiesimposed by the Municipal Councils Ordinance, ss. 22S, 229—Whether equitablerelief can be claimed on ground of unjust enrichment.
Section 146 of tho Civil Procedure Code does not porrnit a trial Court toframe issuos upon an unplcadcd cause of action if that cause of action has bocornoproscribed. Accordingly, whon an action is instituted claiming solely tho pricoof goods dolivored upon a contract of salo of goods, tho plaintiff cannot bopermitted to raiso at tho stngo of trial now issues based upon an unplondedcauso of action relating to unduo enrichment to tho extent of tho valuo of thogoods doliverod, if such causo of action has becoino prescribed at tho stage whontho additional issuos relating to it aro sought to bo raisod.
J ayawickrcme v. Amarasnriya (20 N. L. It. 2S9) discussed.
Quaere, whothor oquilablo roliof on tho ground of unjust enrichment can boclaimod upon a contract with a Municipal Council, despito failure to complywith tho requirements of soctions 22S and 229 of tho Municipal CouncilsOrdinanco that tho contract should havo been embodied in writing and soolodwith tho Common Seal of tho Council.
A.PPEAL from a judgment of the District Court, Colombo.
In this action for the recovery of a sum of Rs. 13,935 50 allegedto be the price of goods sold and delivered upon certain contractsof sale, the defendant, a Municipal Council, pleaded inter alia that thealleged contracts were void and/or unenforceable because they did notcomply with tho requirements of sections 228 and 229' of tho MunicipalCouncils Ordinance in that they were not embodied in writingand were not duly signed, scaled and sanctioned. In tho courseof tho trial tho plaintiff was permitted by tho Court to frameadditional issues as to whether the defendant Council received thebenefit of the said goods and, if so, what amount was duo to thoplaintiff on account of unjust enrichment. It was admitted thata separate, action for relief under tho doctrine of unjust enrichmentwas; prescribed tbreo years after tho delivery ■ of. tho goods and
LXXIV—2y …. .
!•K 2322—2.255 (3/71) ,
29H. N. G. FERNANDO, C.J .—Municipal Council of Jaffna v.
Dodiccll <b Co. Ltd.
would not have been maintainable at the time when the plaintiffsought to frame the additional issues. Nor was' it suggested thatan amendment of the plaint could have been properly allowed. But itwas contended for the plaintiff that the new issues arose on the pleadingsas they stood, and that the trial Judge rightly allowed thorn undersection 146 of the Civil Procedure Code.
C. Ranganathan, Q.C., with K. Nadarajah, for the substituteddefendants-appellants.
H. V. Perera, Q.G., with B. J. Fernando, for the plaintiff-respondent.
Cut. adv. vult.
August 28, 1067. H. N. G. Fernando, C.J.—
The plaint in this action was filed on 17th March 1961 and was amendedon 17th June 1961. The plaint as amended (read with the accountparticulars filed therewith) averred that, on certain dates between 10thNovember 1959 and 1st April 1960, the plaintiff sold and delivered to -the defendant certain goods at the price of Rs. 13,935 50, and that thedefendant had failed to make payment of the said sum. . The plaintcontinued to state that a cause of action had accrued to the plaintiff tosue the defendant for the recovery of tho said sum. In the prayer, theplaintiff asked " for judgment against the defendant for the said sum ofRs. 13,935 50 with legal interest thereon
Tho defendant, tho Municipal Council of Jaffna, filed answer on 17thOctober 1961, and pleaded, inter alia, that—
“ (a) tho alleged contracts sued on by tho plaintiff were for the supplyof articles to the Council and involved an estimated expenditureof moro than one thousand five hundred rupees ;
(6) in the absence of any writing or writings embodying the 6aidcontracts and signed by tho Mayor and tho MunicipalCommissioner and sealed with the Common Seal of the Counciltho alleged contracts are void and/or unenforceable in lawand/or do not bind tho Council;
tho alleged contracts wdro not sanctioned by the Council norwore the provisions of Sections 228 and 229 of tho MunicipalCouncils Ordinanco No. 29 of 1947 complied with ; and thosaid contracts aro thoreforo void and/or unenforceable in lawand/or do not bind the Council. ”
Issues were framed on 11th Juno 1962 on tho basis of the pleadingsas above summarised. Thereafter tho plaintiff’s first witness was called,
H. N. G. FERNANDO, C.J.—Municipal Council of Jaffna v.27
Dodwcll cO Co. Lid.
but his evidence was interrupted on 31sfc January 1964 by an applicationby plaintiff’s counsel to frame the following additional issues :—
“ (9) Did the plaintiff sell and deliver and/or supply to the defendant
goods as set out in the account particulars marked A ?
(10) If issue 9 is answered in the affirmative—
Did the defendant Council receive the benefit of the said
goods 1
If so, what amount is due to the plaintiff on account of
unjust enrichment ?
In the alternative is the plaintiff entitled to an order to
recover the said goods from the defendant ? ”
The defence objected to these additional issues on the ground that theydid not arise on the pleadings, and could only be raised if the plaint wasamended. It was further objected that such an amendment should notbo permitted because it would enable the plaintiff to rely upon a newcause of action which at the stage of amendment was already prescribed.The learned trial Judge overruled these objections and entertained thonew issues •without first ordering an amendment of the plaint. Inappeal from the Judge’s order, counsel for the defendant has argued inthe circumstances that the trial Judge erred in law in allowing the newissues to bo framed, because they involve a cause of action not pleadedin the plaint.
It has been common ground at the stage of appeal that an action fortho relief available under tho doctrine of unjust enrichment in thocircumstances of the present case would be prescribed upon the expiryof a period of 3 years from the time of the delivery of tire goods to thodefendant. It is not therefore disputed that a sejrarate action by thoplaintiff for such relief would not have been maintainable at the timewhen the plaintiff sought to frame the additional issues. It followsthat, if an amendment of the plaint had been necessary in order to enabletho plaintiff to raise the additional issues, the amendment should nothave been allowed and the new issues should not have been framed.Neither at the trial, nor in appeal, was it suggested that such anamendment of the plaint could have been properly allowed.
But counsel for the plaintiff has argued that tho new issues properlyarise on tho pleadings as they stand, and that tho trial Judge rightlyallowed them under Section 146 of tho Code. I will attempt to set outtho pith of tho argument. Tho plaint no doubt was intended only tocontain tho averments necessary in an action for the enforcementof a buyer's obligation under a contract of sale : it averred a sale anddelivery of goods to the defendant and a failure of the defendant to paytho sum duo as the purchase prico ; it further claimed tho relief availableto a seller under a contract of sale, namely the right to a decree orderingthe buyer to pay that sum, and it prayed for that relief. . But when the
, 28 ■Et. N. 6. FERNANDO, C.J.—Municipal Council of Jaffna v. ■
' Dodwell & Co. Ltd.
defendant pleaded that the contract of sale was void, there was in disputebetween tho parties, not (or not only) the question whether the defendantwas liablo to perform an obligation under a contract of salo, but (or butalso) the question whether the defendant, having accepted delivery ofgoods under a void contract, had been unjustly enriched thereby, andwas accordingly liable to perform an obligation accruing under thodoctrine of unjust cnricliment. It was argued that the requirements ofSection 40 of tho Code wore satisfied : that the plaint contained a state-ment of the facts and circumstances constituting the cause of action,i.e., the refusal of the defendant to fulfil his obligation to compensate theplaintiff on the basis of an unjust enrichment derived by the defendant;and that a demand for such compensation had been made in the plaint,when the prayer asked for a decree for tho payment of the sum ofKs. 13,93550.
In testing the validity of this argument, the prudent course for me isto first decide what would be the minimum content of a plaint designed,in the circumstances of this case, to sue the defendant upon a cause ofaction consisting of his failure to perform an obligation alleged to arise. under the principle of law which is here invoked. (I will omit formaldetails.) What are “the circumstances constituting the cause of action ”of which there must be a statement ? (Section 40 (d).) These are inmy opinion—
that the plaintiff delivered goods to the defendant;
that the delivery and acceptance of the goods purported to bo
under a valid contract of sale ;
that there was not in law a valid contract of salo ;
that by accepting and retaining the goods the defendant derived
a benefit which it is unjust for him to retain ;
that tho defendant is therefore liable to restore the goods to tho
plaintiff or compensate tho plaintiff to tho extent of the value
of the benefit derived.
There must further be in the plaint a demand of the relief claimed, inthis context -a demand for the restoration or compensation mentionedat (5) above.
The *' circumstances ” which I have mentioned at (1) and (2) above arcalso circumstances which need to bo stated in a plaint in an action toenforce a buyer’s liability under a contract of sale. They were pcrforcostated in the plaint in the instant case. But none of the othercircumstances which I have listed arc stated in this plaint; and these aretho very circumstances, a statement of which distinguished a plaint whichpleads the cause of action based on unjust enrichment. I doubt verymuch whether any counsel who drafts a plaint in terms of the present
H. N. G. FERKAXDO, C.J.—Municipal Council oj Jaffna t>.20.
Dotliccll d: Co. Lid,
one, or any other counsel who reads such a plaint filed against thodefendant, would imagine that its terms would entitlo a Judge to framean issue that the defendant was in some manner unjustly enriched.
Indeed, the argument of plaintiff’s counsel is certainly not based uponthe contents of the plaint alone. His argument depends very much onthe defendant’s plea that the alleged contract was void. The fact thuspleaded is said to establish the existence of a new dispute between theparties, namely a dispute as to tho defendant’s liabilities arising on thobasis of an unjust enrichment.
There are at least two distinct grounds which compel me to reject thisargument. The first is that Section 40 of flic Code requires the plaintto state the circumstances which constitute the pleaded cause of action.If the cause of action is dejmndent on the nullity of a contract, then theplaint must aver the fact of nullity. The plaintiff cannot claim that hemust be regarded as having duly averred that fact because the defendanthas subsequently averred it. A statement in an answer, in denial ofcontrary statement in a plaint, cannot in common sense be regarded as ithe plaintiff’s statement for the purposes of Section 40 (d). Nor can itbe said that the plaint contained a demand for the relief available underthe doctrine of unjust enrichment, namely restoration of the actualbenefit derived, i.e., the goods or, in the alternative, the value of thobenefit. The plaint prayed only for the sum of Rs. 13,935 50, whichrepresents, not the benefit derived, but the contractual purchase price ofthe goods.
The defendant’s plea that the contract sued upon was void was adenial in terms of Section 75 of the Code of the essential fact upion whichthe plaintiff’s action depended. Had the plaintiff stated to Court thathe accepted that denial as correct, then his action had to be dismissed.
He did not so state in this case, instead the very denial was put in issueas a matter in dispute. How' then can it be said that tho Judge shouldhave framed an issue on the basis that the denial had been accepted bytho plaintiff as correct ? A dispute on tho question whether the defendantis liable to make restitution under the doctrine of unjust enrichment couldnot arise unless and until the plaintiff, by amendment of his pleadings,set out new circumstances alleged to give rise to that liability.
I must reject for these reasons the plaintiff’s contention that the newissues numbered (9) and (10) a, b and c were properly framed at thetrial.
Peiris v. Minx icijyal Council, Galle 1 supports very strongly the admission. by the trial Judge of the additional issues. In that case, a firm ofarchitects had been emplo3'cd by the Municipal Council of Galle for thepurpose of the construction of a Town Hall. A total sum of Rs. S4.000became due to the architects as remuneration for work actually performed,and a part of this sum was paid by the Council, leaving a balance'ofabout Rs. 30,000. The architects sued the Council for this amount and1 {1963) 65 N. b. n. 555-
—K 2322 (3/71)
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H. N. G. FERNANDO, C.J.—Municipal Council of Jaffna v.
Doducll <£• Co. Ltd.
tho trial Court held that the amount would havo been due to them.But tho action was dismissed on the ground that the contract was voidns it was not under Seal. Nevertheless it was held in appeal that thotrial Judge could and should have framed an issue of "unjust enrichment’’on the part of tho defendant, and tho caso was remitted to the trialCourt for that issue to be tried.
The question whether the issue based on alleged unjust enrichmentcould arise on tho plaint in that case was disposed of by Tambiah J.in the following paragraph :—
" The plaint lias been drafted in such a manner that all the avermentsnecessary to raise tho issue of undue enrichment are contained therein.Tho duty of raising the necessary issues for a just decision of a casorests on tho Judge. In the instant case, it is with reluctance that tholearned District Judge has dismissed tho plaintiff’s claim. He hasheld that since tho plaintiffs had performed their part of the contractwithout any negligence and had given tho defendant the benefit of aTown Hall, it would be a travesty of justice if some relief is not givento the plaintiffs.
In Jayaivickreme v. Amarasuriija1 Lord Atkinson, who delivered thoopinion of the Privy Council posed the question ‘ Are they ’ (thoparties to the case) ‘ to be dented justice because their pleader haschosen to overstate his client’s case, and the Judge to frame an issueembodying that overstatement ? ’. In that case, the relevant issuewas framed by their Lordships of tho Privy Council in granting reliefto the appellant. In the instant case too, the learned District Judgeshould have framed the issue and should have tried it.”
In Jciyaivickreme v. Amarasuriija-, the cause of action quite plainlystated in the plaint was the failure of the defendant to fulfil a promisemade by him to make certain cash payments to tho plaintiff. In settingout tho circumstances which led to the making of the promise, tho plainthad earlier stated—
that the defendant had held certain property under an alleged
trust for the plaintiff ;
that the. plaintiff had threatened an action against tho defendant
to enforce the alleged trust obligation ; and
that tho promise sued upon was made in consideration of tho
plaintiff’s agreement not to institute tho threatened actionbased on trust.
1 {10IS) 20 N. L. It. at 297.
{191S) 20 N. L. It. 2S9.
H. N. G. FjrRNAXDO, C.J.—municipal Council of Jaffna, v.31
Dojucll it- Co. Ltd.
The Courts in Ceylon held that—
(а)there had been no trust as alleged,
(б)the threatened action Mould have been one based on an invalid
claim of trust, and the compromise of such a claim Mas notjus!a causa for the defendant’s promiso,
(c) the promise -was made out of generosity or of moral duty, aud assuch uas not made for justa causa.
On these grounds the action Mas dismissed in Ceylon.
The Privy Council agreed Avith the finding at (a) above, but held thatboth the compromise of an invalid claim and the motive of generosity ormoral duty constitute justa causa under Roman Dutch Law. Thepromise sued upon was therefore enforceable. Their Lordships stated :
“ that the female plaintiff had long asserted a claim to the land thedeceased defendant had derived from his father ; that there Avas adispute between them as to whether this claim was good ; that shethreatened to institute proceedings to enforce it, and that the deceaseddefendant agreed to compromise with her by paying her Rs. 150,000on the instalments described in satisfaction of this claim. Thevalidity of the claim, or the ultimate success of the suit brought toenforce it, is entirely beside the point. On those facts the plaintiffswere, in their Lordships’ opinion, entitled to succeed in the presentaction. The question is, Are they to be denied justice because theirpleader has chosen to overstate his clients’ case, aud the Judge toframe an issue embodying that overstatement ? ”
Every circumstance mentioned in this statement of their Lordships’decision had been pleaded by the plaintiff in her plaint. The decisiontherefore gives no semblance of approval to the framing of issues onmatters not involved in tho plaintiff’s pleadings.
Some observations Avcre, however, made concerning tho issuo to bodecided :—
“ If the learned District Judge . . . had amended tho issuo so asto suit tho facts proved, ho should, in their Lordships’ opinion havegiven a decreo in favour of the plaintiff for tho sum sued for. ”
This was only a reference to tho “overstatements” in the pleadingsand in the issues framed, i.e., the superfluous averment that there hadbeen originally a trust of property ; and the superfluous addition (totho necessary averment of tho compromise of a threatened action) thatthe threatened claim Mas a valid claim of trust. These superfluousaverments, their Lordships held, did not alter tho fact that tho plaintiffhad proved her case, i.o., a promiso to pay money in consideration of thocompromise of a claim in a threatened action, since the legal validity oftho claim Avas a superfluous matter, tho issue should have been amendedin order to excise therefrom that superfluous matter. Their Lordships
32H. N. G. FERNANDO, C.J.—Municipal Council of Jaffna v.
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surely did not intend to approve the framing of neio issues, as the plaintiffin the present case has sought to do—that is issues additional to thosopreviously framed. They contemplated only tho amendment of anissue, by retaining the relevant parts of an existing issue and deletingwhat was irrelevant or “ over stated
In substance, tho issuo which had been framed at tho trial inJayaicickreme v. Amamsuriya was :—
Did the defendant promise to pay tho plaintiff Rs. 180,000 ?
Was the promise made in consideration of the plaintiff’s
refraining from instituting an action against tho defendant 1
Was the threatened action one for t-ho enforcement of an alleged
trust ?
Was the alleged trust valid in law ?
Tho decision of tho Privy Council was that («) and (b) had to boanswered in the affirmative, and that the plaintiff was in law entitled tojudgment on those answers. The trial Judge should therefore havedeleted from the issues the “ over-stated ” points (c) and (d), tho decisionof which could have no bearing in law upon tho results of tho action.
I am satisfied that Jayaicickrenie v. Amarasuriya is in no way aprecedent for the framing in the present action of the new issues acceptedby the trial Judge. I must add my confident opinion that the judgmentdecided much less than is sometimes claimed for it.
Counsel for the plaintiff relied also on tho judgment of tho PrivyCouncil in Bank of Ceylon v. ChclliahpiUai1. Tho defendant hadmortgaged certain goods with the Bank by a bond of 1951 to sccitro futuroadvances. In 1952, he mortgaged a land as additional security for thoduo payment of the amount then due to tho Bank. The earlier bondcontained tho usual personal convcnnnt for repayment-, but tho secondbond did not.
Tho Bank sued the defendant upon the second bond only, but prayedfor judgment against- tlie defendant in the sum duo and also for ahypothecary decree for the sale of tho land mortgaged by this bond. Inanswer, tho defendant pleaded that “ no claim for the payment of thosum of money can be made on the second bond ”.
As to this pica in tho answer, tho Privy Council mado tho followingobservations :—
“ The Civil Procedure Codo gives in Section 93 amplo power toamend pleadings. Moreover, the case must be tried upon tho ‘ issueson which the right decision of the case appears to tho Court to depend '
1 (JSCS) 61 N. L. II. So. .
1J. N. G. FERXAXDO, C.J.—Municipal Council of Jaffna v.
Dodwcll dj Co. Tjd.
33
and it. is well settled that the framing of such issues is not restrictedby the pleadings ; see Section 146 of the Code, Attorney-General v.Smith1 and Silva v. Obeysekera2. By cither of theso means a pointthat is interesting and difficult but far removed from the merits of thecase might have been taken out of the controversy.'”
As I understood it, their Lordships here suggested that the omissionto plead and sue upon the personal covenant might have been rectifiedby an amendment of the joinint under Section 93 ; or else that the Courtmight have framed an issue based on the personal covenant in the earlierbond, despite the omission in the pleadings. I respectfully agree thatthe first course suggested could in all probability have been .adoptedwithout infringement of the principle that an amendment will not bepermitted if it introduces a new cause of action which has becomeprescribed. As to thcsccond course suggested, I note for present, purposesthat their Lordships didnoteven contemplate an amendment of the issuesat the stage of appeal. They instead affirmed the decisions in Ceylonthat the plaintiff Bank could not obtain a decree on the personal covenant,and was entitled only to a decree upon tire hypothecation actually pleadedin the plaint. I cannot think that their Lordships intended to state,even obiter, that Section 146 permits a trial Court to frame issues ujion anunpleaded cause of action, if that cause has then become prescribed.
To return now to the case of Peiris v. Municipal Council, Galle, wowere referred to tho plaint filed in that case. Counsel for the defendanthas pointed to certain features in the plaint which maj1, have led Tambiah J.to think that it contained a statement of circumstances approjwiatc toconstitute a causo of action based on unjust enrichment. With greatrespect, I am unable to construe that plaint in the same sense. Thojudgment contains no explanation of the reasons in favour of thatconstruction or of tho reasons for holding that tho cause of action basedon unjust enrichment had not become prescribed—both of which mattersaro of fundamental importance in connection with the framing of newissues.
I must add that I do not concur in the opinion which perhaps influencedtho decision in Peiris v. Municipal Council, Galle, namely that it wouldbo a travesty of justice to deny some relief to a plaintiff whose claimagainst a Municipal Council is based_prfa contract not under seal. Thorequirement of the seal being one imposed bj' Statute, a person who actson tho faith of such a contract has only himself to blame for ignoringtho law. It is not clear to me therefore that such a person’s hands aroso clean that they are fit to receive equitable relief. But in the instantcaso, it is not necessary for mo to decide whether or not tho doctrine ofunjust enrichment does apply to such cases.
Tho appeal is allowed with costs, and the order allowing the new issues9 and 10 is set aside. Tho trial will proceed on tho other issues.
1 (1905) 8 N L. JR. 229 at 241.- (1922) 24 N. L. R. 97 at 107.
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H. N. G. FFR NANDO, C.J.— Wijelunge v. Scnanayake
Post Scriptum—This judgment was ready for delivery in October, 1966.
But delivery was delayed on application by Counselthat an order for substitution of parties may bonecessary. Such an order was made on 2nd August,1967.
Aloes, J.—I agree.
Appeal alloiced.