118-NLR-NLR-V-51-NADARAJAN-CHETTIAR-Appellant-and-TENNEKOON-et-al-Respondents.pdf
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SIR JOHN BEAUMONT—Xrvlarajan Chettiar t>. Tcnnel'oon
[In the Privy Council]
1950 Present: Lord Porter, Lord Oaksey, Lord Radcliffe, Sir JohnBeaumont and Sir Lionel LeachNADARAJAX CHETTIAR, Appellant, and TENNEKOONci al., Respondents
Privy Council Appeal No. 33 of 1949S. C. 443—D. C. Colombo, 12,109
Privy Council—Money Lending Ordinance (Cap. 67)—Section 2 (2)—Borrower'sright to re-open transaction—Loan already repaid at date oj action—Constructionof words in a Ceylon enactment—Decision of English Court of Appeal onidentical vxirds—Binding in Ceylon.
A borrower in ontitlod to relief under section 2 (2) of the Money LendingOrdinance (Cup. 07), in nwpoct of u money-lending transaction, although tholoan woe repaid and the I ranaact ion closed before the date of lus applicationfor rolief.
It is tho duty of courts in Coylon to follow a decision of the English Courtof Appoal on tho construction of words identical with those usod in a CeylonOrdinance, unloss there arc in a particular case local conditions which make itinappropriate.
J^^.PPKAL from a decree of the Supreme Court.
Wilfred A. Barton, K.C., with Frank (Johan, for defendant appellant.R. O. Wilberforce, for plaintiff respondent .
C'ttr. arfu. tmft.
.Turn- 21. 1950. Delivered by Sra .Torn* Beaumont]—
This is an appeal from a judgment of the Supreme Court of Ceylondismissing on February IS, 1948, an appeal from a judgment of theDistrict Court of Colombo dated March 25, 1946.
492 SIT? JOHN BEAUMONT—XwUirajan Chftlior v. Tenntkoon
The action was brought by the respondents, who arc husband and wife,as plaintiffs, against the appellant, who is a money-lender, as defendant,to have certain money-lending transactions Te-opened and for an account .The learned trial Judge decided that the transactions ought to be re-opencd,that they were harsh and unconscionable, and that they had been inducedby undue influence. He directed an account to be taken between therespondents and the appellant, and on the account being taken foundthat the appellant ought to repay to the respondents the sum ofRs. 33,095'56 and entered judgment accordingly.
So far as is necessary for the determination of this appeal the historyof the matter is as follows. In the year 1936 a loan was made by theappellant to the respondents upon security and on certain terms as torepayment. In the year 1938 there was a further money-lending transac-tion between the parties, and it is conceded that the loans of 1936 and 1938formed one money-lending transaction.
On March 9, 1940, the respondents, after raising Rs. 60,000 else-where, paid off the sum claimed by the appellant which then amounted toRs. 28,202a 35. It must be emphasised that this payment was made volun-tarily at the instance of the borrowers, and the closing of the transactionwas not brought about by the lender.
On July 1, 1940, the respondents filed the action out of whichthis appeal arises claiming relief under the Money Lending Ordinance 1918of Ceylon (c. 67 of the Revised Statutes, 1938). The substance of the claimin the plaint was that the money-lending transactions of 1936 and 1938should be re-opened, an account taken, and payment made to the plaintiffsof anything found to be due. The trial took place before R. F. Dias asDistrict Judge of Colombo. A large number of issues were framed of whichNo. 19 was in the following terms :—
“ (19) Can Plaintiffs maintain this action to rc-open the transactionsupon Bonds Nos. 1624 of July 11, 1936, and 4664 of February 19,1938, as no sums are claimed to be due to the Defendant thereonat the date of action ? ”
By agreement between the parties this issue was decided as a preliminarypoint of law, the learned judge assuming for the purposes of the argumentthat the facts stated in the plaint wrcre correct. On August 4, 1941,in a considered judgment the learned judge answered issue No. 19 in theaffirmative holding that the action of the plaintiff lay although tho accounthad been closed.
The appellant appealed against the judgment of the trial judge andthe appeal was heard by the Supreme Court on June 29, 1942, whensuch court dismissed the appeal, the learned judges, however, giving noreasons for their decision.
The action thereupon proceeded upon the facts and was tried by thelearned District Judge on March 9, 1943, and following days. OnApril 9, 1943, the learned judge gave judgment in favour of therespondents and directed that an account be taken of the transactionsbetween the appellant and the respondents on the basis of his judgment.The appellant appealed to the Supreme Court against the latter judgment
SIR JOHN BEAUMONT—-Nadarajan <7kettiar v. Tennekoon 4fl3
of the learned District Judge and such appeal w;ts dismissed by theSupreme Court on July 25, 1944, the learned judges again giving noreasons for their decision.
The action then proceeded in the District Court on the account directedand in the result the learned judge held the respondents (plaintiffs) to beentitled to the said sum of Rs. 33,095 *56 and gave judgment for thatamount accordingly.
The appellant appealed against the last-mentioned judgment of theDistrict Court and on February 18, 1948, the appeal was dismissed,the learned judges once more giving no reasons for their decision. Thepresent appeal is against that decision which was the final judgment in theaction.
Before the Board the appellant hue oh»U«ngod••
issue No. 19 which raises a question of law based on the construction of theMoney Lending Ordinance, but the findings of the courts in Ceylon thatthe loans made to the respondents were harsh and unconscionable andinduced by undue influence. In their Lordships’ view there was ampleevidence to support the finding of the trial judge, confirmed in appeal,that the loans of 1936 and 1938 were harsh and unconscionable, and theirLordships sec no reason for departing from their normal practice of notinterfering with concurrent findings of fact. In this view of the matter itis unnecessary to consider the arguments presented to the Board that therewas no evidence to support the finding of undue influence- If the loansmade by the appellant were in fact harsh and unconscionable, it mattersnot that the respondents were free from the influence of the appellant.
The important question which falls for determination is whether aborrower is entitled to relief under the Money Lending Ordinance in respectof money-lending transactions closed before the date of his applicationfor relief. It is to be regretted that in considering this question, whichis one of some importance, their Lordships have not the advantage ofknowing the reasons upon which the judges in the Supreme Court actedin dismissing the appeal against the judgment of the District Judge ofAugust 4, 1941.
The question at issuo turns upon the construction of section 2, sub-sections (1) and (2) of the Money Lending Ordinance, 1918, which are inthe following terms
“ 2.—(1) Where proceedings are taken in any court for the recoveryof any money lent after the commencement of this Ordinance, or theenforcement of any agreement or security made or taken after thecommencement of this Ordinance in respect of money lent either beforeor after the commencement of this Ordinance, and there is evidencewhich satisfies the court—
(a) that the return to be received by the creditor over and abovewhat was actually lent (whether the same is charged nr soughtto be recovered specifically by way of interest, or in respect ofexpenses, inquiries, fines, bonuses, premia, renewals, oharges, orotherwise), having regard to any sums already paid on account, isexcessive, and that the transaction was harsh and unconscionable,or, as between the parties thereto, substantially unfair ; or
4A4 RIB JOHN BEAUMONT—Nndarnjnn Chfltiar r, Tcnnrkoon
(ft) t hat I ho transaction was induced by tmdnn influence, or isotherwise such that according to any recognized principle of lawor equity the court would give relief ; or
(c) that the lender took as security for the loan a promissory noteor other obligation in which the amount stated as due was to theknowledge of the lender fictitious, or the amount due was leftblank,
the court may re-open the transaction and take an account betweenthe lender and the person sued, and may, notwithstanding any state-ment or settlement of account or any agreement purporting to closeprevious dealings and create a new obligation, re-open any accountalready taken between, them, and relieve the person sued from paymentof any sum in excess of the sum adjudged by the court to be fairlydue in TespSCt' of such principal, interest, and charges as the court,having regard to the risk and all the circumstances, may adjudgeto be reasonable ; and if any such excess has been paid or allowedin account by the debtor, may order the creditor to refund it; andmay set aside, either wholly or in part, or revise, or alter any securitygiven or agreement made in Tespect of money lent, and if the lenderhas parted with the security may order him to indemnify the borroweror other person sued.
(2) /Vny court in which proceedings might be taken for the recoveryof money lent shall have and may, at the instance of the borroweror surety or other person liable, exorcise the like powers as may boexercised under the last preceding sub-scction, and the court shall havepower, notwithstanding any provision or agreement to the contrary,to entertain any application under this Ordinance by the borroweror surety or other person liable, notwithstanding that the time forrepayment of the loan or any instalment thereof may not havoarrived. ”
Section 2 reproduces section 1 of the English Money Lenders Act, 1900(03 & 64 Viet. c. 51), section 2 (2) of the Ceylon Ordinance being expressedin language identical with that of section 1 (2) of the English Act. Theargument of the appellant is that relief under section 2 (1) can only begiven in the course of a current transaction since the sub-section onlycomes into operation when proceedings are taken in any court for therecovery of money lent. Sub-scction (2) is merely a counterpart of sub-section (1) enabling the borrower to claim reliof without waiting for thelender to sue for his money, and even before the money is due, but therelief can only be claimed in the course of a current transaction since thecourt which can grant relief must ho one m which proceedings might betoken for the recovery of money lent, and relief can only he granted at theinstance of the borrower, surety or other person liable. If the loan hasbeen repaid and the transaction closed, there is, so the argument runs,no money lent, no Court in which proceedings might be taken for therecovery of money lent, and no borrower, surety or other person liable.Certainly there is force in this argument, and it must be conceded thatif the section applies to closed transactions some words must be roadinto it to cover a claim in a Court in which proceedings might have Wen
Slit JOHN' BEAUMONT—Xudarajun Chctiiar i Tenmhoon 495
taken for tho recovery of money lent if the money had not been repaid,at tho instance of a former borrower, surety or other person who hadbeen liable. The contention of the respondents is that some such wordsought to be road into the section in order to give effect to the intentionof the legislature to be gathered from a consideration of the Ordinanceas a whole. It is suggested that the legislature can hardly have intendedthat a borrower, so long as a single instalment of his debt remains due,is to have the right to claim Telief and open settled accounts, whilst,whon thA last instalment has been repaid, he is t-o lose all his rights.Further, that a literal construction of the sub-section would lead in manycases to very difficult questions as to^ transaction was in fact
closed, or whether the closure was a mere device to enable u.v
lender to escape liability, money lenders being notoriously a class skilledin adapting legal forms to their own advantage.
The learned District Judge in his judgment stated that had the matterbeen at largo he would have felt disposed to accept the argument advancedon behalf of the monej' lender and to hold that the action of the borrowerdid not lie, but in deference to the decision of the English Court of Appealin Saunders v. NeicboUl (1905 1 Ch. 260) he held that the plaintiffs couldre-open a dosed account. Saunders v. Newbold was a considered judgmentof the English Court of Appeal in which the court expressed the viewthat a borrow er was entitled to open a closed transaction under section 1 (2)of the Money Lenders Act. The court did not, in that case, give relief inthe closed transaction since the borrower had made no application to thecourt so to do, but tho court gave him liberty to make such an applicationif so advised. The decision of the Court of Appeal was attuned in theHouse of Lords, but without any discussion on the construction ofsection 1 (2) of the Money Lenders Act, though the liberty granted tothe borrower by the Court of Appeal was expressly saved. The learnedDistrict Judge considered that the opinion of the Lords Justices on theeffect of section 1 (2) was really obiter, but this is of little consequencesince the right of a borrower to re-open a closed transaction under section1 (2) of the Money Lenders Act has been recognised in later cases in theEnglish Court of Appeal (see Part v. Bond (XXII T.L.R. 253) and Kermanv. Wainewright (XXXII T.L.R. 295)).
Mr. Wilberforce for the respondents in the first instance contended thattho legislature in Ceylon by employing in section 2 (2) of the MoneyLending Ordinance the exact w.ords used in the English Money LendersAct, must be taken to. have accepted the construction placed upon thesewords by courts of competent jurisdiction in England. He relied on therule stated by Sir W. James, L.J. in Ex parte Campbell (L.R. 5 Ch. A. 703)that “ Where once certain words in an Act of Parliament have receiveda judicial construction in one of the Superior Courts, and the Legislaturehas repeated them without any alteration in a subsequent statute, I con-ceive that the Legislature must be taken to have used them accordingto the meaning which a court of competent jurisdiction has given tothem. ” This rule has been acted upon frequently in the English courtsand was approved by the House of Lords in Barras v. Aberdeen SteamTrawling and Fishing Co. Ltd. (1933 A.C. 402). Probably in suitablecases the rule would be applied in Ceylon, as it has been in India (see
4%
Simon Wijcrainc o. Itaimti/ukc
Sirimathoo Moothoo Vijia and others v. Dorasinga Twer {2 I.A 169)).It is, however, one thing to presume that a local legislature, when re-enacting a former statute, intends to accept the interpretation placedupon that statute by local courts of competent jurisdiction with whosedecision the legislature must be taken to bo familiar ; it is quite anotherthing to presume that a legislature, when it incorporates in a local Actthe terms of a foreign statute, intends to accept the interpretation placedupon those terms by the courts of the foreign country with which thelocal legislature may or may not be familiar. There is no presumptionthat the people of Ceylon know the law of England, and in the absenceof any evidence to show that the legislature of Coylon at the relevantdate knew, or must be taken to have known, decisions of the EnglishCourts under the Money Lenders Act, there is no basis for imputing tothe legislature an intontion to accept those decisions.
Mr. Wilberforce was on safer ground when he contended that it waethe duty of courts in Ceylon to follow the decision of the English Courtof Appeal on the construction of words identical with those used in aCeylon Ordinance. In the case of Trimhlr t HiU (L.R. 5 A.C. 342), theBoard expressed this opinion:—
“ Their Lordships think the Court in the colony might well havetaken this decision (i.e., a decision of the English Court of Appeal)as an authoritative construction of the statute. . . . Their Lord-ships think that in colonies where a like enactment has been passedby the Legislat ure the Colonial Courts should also govern themselvesby it. ”
This, in their Lordships’ view, is a sound rule, though there may be inany particular case local conditions which make it inappropriate. Itis not suggested that any such conditions exist in the present ease, andthe courts in Ceylon acted correctly in following the decision of theEnglish Court of Appeal.
For these reasons their Lordships will humbly advise His Majeetythat this appeal be dismissed with costs.
Appeal dismissed.