003-SLLR-SLLR-2002-V-1-PAUL-COIR-PVT-LTD-v.-WAAS.pdf
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Paul Coir (Pvt) Ltd. v. Waas
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PAUL COIR (PVT) LTD
v.WAAS
SUPREME COURTFERNANDO, J.,
WADUGODAPITIYA, J. ANDWIGNESWARAN, J.
SC APPEAL NO. 68/2000CA NO. 535/96 (REV.)
DC NEGOMBO CASE NO. 7723fM30 APRIL AND 14 MAY, 2001
Civil Procedure Code – Appointment of a registered attorney – Proxy – Section27 of the Civil Procedure Code – Section 34 (1) (a) of the Companies Act,No. 17 of 1982 – Rectification of a defective appointment – Ratification.
The plaintiff filed action on 24. 12. 1992 to recover Rs. 400,000/- plus interestand costs from the defendant company (the defendant). On 15. 12. 1994, thedate of trial, objection was taken for the first time by the plaintiffs counsel thatthe proxy of the defendant was defective. The counsel moved that the proxy andthe answer filed by the defendant be rejected and the action be fixed for trialex parte. Both parties filed written submissions on this application, and the sameattorney-at-law for the defendant filed a fresh proxy in his favour, along with hiswritten submissions. The fresh proxy ratified and confirmed that the same attorney-at-law had earlier acted on behalf of the defendant with his authority, consent,concurrence and approval.
While the first proxy was signed by one Director with his rubber stamp affixedbut not bearing the common seal of the company, the fresh proxy bore thecommon seal of the company with signatures of two Directors as required bysection 34 (1) (a) of the Companies Act, No. 17 of 1982 and Article 110 (1)of the Articles of Association of the Company.
Held:
(1) If according to the intention of parties the attorney-at-law had in fact theauthority of his client to do what was done on his behalf although inpursuance of a defective appointment, in the absence of a legal bar, thedefect could be cured. The provisions of section 34 (1) (a) of theCompanies Act, though specific, are similar to the general provisions
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of section 27 of the Code. So are the provisions of Article 110 (1) of thedefendant's Articles of Association. Such provisions are directory and notmandatory.
(2) The fresh appointment (proxy) filed in this case cured any defect arisingout of alleged non-compliance with section 34 (1) (a) of the CompaniesAct and Article 110 (1) of the Articles of Association of the defendantCompany.
Per Wigneswaran, J.
"The only difference between natural persons and a company might bethe fact that a company is a legal entity not blessed with bones, marrow andflesh. But, a company has to work through human beings. The intention ofsuch human beings could no doubt be ascertained. In fact, the subsequentproxy filed ratifying the earlier acts of the attorney-at-law on record wasevidence of intention of the company."
Cases referred to:
Udeshi and Others v. Mather – (1988) 1 Sri LR 12 (SC).
Tillekeratne v. Wijeslnghe – (1908) 11 NLR 271.
K. Kadiragamadas v. K. Supplah – (1953) 56 NLR 172.
L. J. Peiris Co., Ltd. v. L. C. H. Peiris – (1970) 74 NLR 261.
MC Foy v. United Africa Coy Ltd – (1961) 3 ALL E.R. 1169.
Craig v. Kanseen – (1943) 1 ALL E.R. 108.
Oriental Bank Corporation v. Ottilia Louisa Sophia Corbet – (1881)4
Supreme Court Circular 158.
Silva v. Cumaratunga – (1938) 40 NLR 139.
Regina v. Jayasundera – (1917) 4 CWR 390.
APPEAL from the judgment of the Court of Appeal reported in (2000)2 Sri LR 167.
S. F. A. Cooray with C. Liyanage for defendant-appellant.
J. W. Subasinghe, PC with J. A. J. Udawatta for the plaintiff-respondent.
Cur. adv. vult.
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Paul Coir (Pvt) Ltd. v. Waas (Wigneswaran, J.)
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September 21, 2001WIGNESWARAN, J.
The plaintiff-respondent-respondent (hereinafter referred to as "the 1plaintiff") filed action in the District Court of Negombo on 24. 12. 1992to recover Rs. 400,000/- plus interest and costs from the defendant-petitioner-appellant (hereinafter referred to as "the defendant").Summons was issued and reissued and finally the Negombo Fiscalreported to Court that the Managing Director of the defendantCompany had been served with summons on 20. 07. 1993. Proxywas filed on behalf of the defendant Company on 28. 09. 1993 andCourt accepted same and gave 10. 12. 1993 as the date for answer.Further, dates were obtained and answer was filed ultimately on 26. 1004. 1994 and the case was fixed for trial on 11. 08. 1994.
On 05. 08. 1994 the plaintiff's list of witnesses and documents wasfiled by his attorney-at-law with notice to the defendant's attorney-at-law. Summons was allowed on the appropriate witnesses (vide
J.E. 8). So too on 11. 08. 1994 the attorney-at-law for the defendantwith notice to the attorney-at-law for the plaintiff filed his list ofdocuments and witnesses (vide J.E. 9). On 11. 08. 1994 the trial waspostponed for 15. 12. 1994. On 30. 09. 1994 an additional list ofwitnesses and documents was filed by the attorney-at-law for theplaintiff with notice to the defendant's attorney-at-law. (vide J.E. 10). 20
On 15. 12. 1994 an objection was taken for the first time by thecounsel for the plaintiff that the proxy filed on behalf of the defendantwas defective, marking the Memorandum and Articles of Associationof the defendant Company as P1 and P2 and the proxy as "X". Thecounsel moved that the proxy and the answer filed by the defendantbe rejected and the action be fixed for trial ex parte. Written sub-missions were called for and filed by both parties. The same attorney-at-law for the defendant also filed a fresh proxy in his favour alongwith his written submissions. The fresh proxy ratified and confirmed
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that the same attorney-at-law had eariler acted on behalf of the 30defendant with its authority, consent, concurrence and approval. Whilethe first proxy was signed by one Director of the defendant Companywith his rubber stamp affixed but not bearing the common seal ofthe Company, the second proxy bore the common seal of thedefendant Company with signatures of two Directors of the Companywith Directors' rubber stamp affixed.
The District Judge made order on 31. 07. 1996 that "there wasno valid proxy on record" and there was thus no appearances onbehalf of the defendant, and therefore fixed the case for ex parte trialfor 22. 08. 1996.40
This order was the subject of Appeal (CALA No. 197/96) andrevision (CA No. 535/96) to the Court of Appeal, which by order dated
02. 2002 confirmed the order of the District Judge and dismissedboth applications with costs. This Court granted special leave toappeal on 04. 12. 2002.
The matters in respect of which special leave to appeal wasgranted are as follows :
"(a) did the Court of Appeal err in law by holding that theprinciple [laid down in Tillakaratne v. Wijesinghe 11 NLR 270,Kadirgamadas v. Suppiah 56 NLR 172, and Udeshi v. Mather so(1988) 1 SLR 12] that the requirement that the appointment of anattorney-at-law under s. 37 of the Civil Procedure Code shall bein writing and signed by the party is only directory and not mandatory,and that a party can subsequently ratify what had previously beendone by the attorney-at-law on his behalf, applies only to naturalpersons and not to a Company registered under the CompaniesAct, in view of the provisions of s. 34 (1) of that Act;
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did the Court of Appeal err in law in holding that Peiris v.
Peiris 74 NLR 261 was wrongly decided and that an appointment
of an attorney-at-law by a registered Company must be in terms 60
of section 34 (1) (a) of the Companies Act."
The fundamental question that arises for consideration in respectof the above two matters is whether proxy "X" filed on 28. 09. 1993and accepted by Court, was void.
There is no doubt that the Court initially accepted the said proxyas evidence of the fact that the attorney-at-law mentioned in the proxywas in fact acting for and on behalf of the defendant. So did theplaintiff and his registered attorney-at-law. In fact, lists of witnessesand documents were served on him as representing his client.
There is no dispute as to the state of the law with regard to 70defective appointments of registered attorneys-at-law, in that the Courtshave held that such defects can be cured and the acts purported tohave been done on the strength of such defective appointments arecapable of being ratified by the party concerned. In fact, in this casetoo, a new proxy, ratifying the acts done by the same attorney-at-law earlier in the case, has indeed been filed.
Again there cannot be any controversy as to the fact that Courtshave consistently held in matters of this nature, that the question thathad to be considered was whether the Proctor (registered attorney-at-law now), had in fact the authority of his client to do what was sodone on his behalf, although in pursuance of a defective appointment.
It has been held that if in fact he had his client's authority to doso then the defect is one which in the absence of any positive legalbar could be cured. On the contrary if in fact he did not have suchauthority of his client, the acts done and the appearances made onhis behalf by the Proctor would be void and of no legal effect, (videJustice Athukorala in Udeshi and Others v. Mather at page 21).
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The reasons that appear to have prompted the Court of Appealto hold that the proxy was void in the instant case were :
that the law relating to curability of defective appointmentshitherto recognised by Courts in Tillakaratne v. Wijesingh42),Kadirgamadas v. Suppiah3> and Udeshi v. Mather (supra)applied only to natural persons and not to juristic persons,such as Companies registered under the Companies Act.
Under the provisions of section 34 (1) (a) of the CompaniesAct a contract may be made on behalf of the Company inwriting under the common seal, and in the absence of thecommon seal of the Company on the proxy no writtencontract of agency was established between the defendantCompany and its registered attorney-at-law.
The "proxy" filed of record was void, and since there wasno proxy the question of curability did not arise.
Peiris v. PeiridA) was wrongly decided.
In supporting this finding of the Court of Appeal learned President'sCounsel appearing for the plaintiff has submitted as follows :
An attorney-at-law must be duty appointed by a party,(section 24 of the Civil Procedure Code).
A proxy has to be in writing under the common seal of theCompany when the client who signs the proxy is a Company(section 27 of the Civil Procedure Code read with section34 (1) (a) of the Companies Act, No. 17 of 1982).
A proxy constitutes a written contract of agency. When thecommon seal of the Company is not affixed to the proxythere is no written contract of agency. The act is, therefore,
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void and thereby a nullity. (Me Foy v. United AfricaCoy LtdS5) and Craig v. Kanseeri6)).
While sections 24 and 27 of the Civil Procedure Code aregeneral provisions, section 34 (1) (a) of the Companies Actis a special provision. (Generalia specialibus non derogant).The general provisions cannot supersede, oust nor override 120the special provisions.
None of the cases such as Tillekeratne v. WijesingheP,
K.Kadirgamadas v. K. Suppiati3), Udeshi and Others v.MatheP* L. J. Peiris and Co., Ltd. v. L. C. H. Peirid4)mentioned by the counsel for the defendant had consideredany specific provisions such as section 34 (1) (a) of theCompanies Act in coming to their conclusions.
Section 34 (1) (a) of the Companies Act was a positive legalbar. Taken together with Article 110 (1) of the Articles ofAssociation of the defendant Company, the absence of 130compliance with the said Article made the proxy a nullitywhich cannot be rectified.
In Oriental Bank Corporation v. Ottilia Louisa Sophia Corbelcited by the counsel for the defendant it was the agent whoappointed the Proctor. Therefore, the question of the commonseal of the Corporation being affixed did not arise in thatcase.
The conclusion of the Court of Appeal and the supportingsubmissions above-mentioned would now be examined.
In Tillekeratne v. Wijesinghe (supra) the plaintiff granted proxy toa Proctor which, by an oversight, was not signed by the plaintiff. The 140Proctor acted on the proxy without any objection in the lower Court.When the case was taken up in appeal, the defendant's counsel
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objected to the status of the Proctor in the case. The counsel forthe defendant-respondent contended that the requirement of section27 of the Civil Procedure Code was imperative and that an authority(proxy) not signed by the client was void. Chief Justice Hutchinsonstated as follows :
“In my opinion that is only directory. If a plaintiff appearingthroughout the action by a proctor, whom he has instructed to actfor him, but whose proxy he had forgotten to sign, were to recover isojudgment, and if the omission to sign were then discovered andthe proxy signed, the Court could not, in my opinion, hold thatthe whole of the proceedings on the part of the plaintiff up to andincluding the judgment were void because of the non-signature ofthe proxy; or, if the plaintiff failed in the action and it was dismissedwith costs, the Court could not hold that the decree under suchcircumstances was of no effect against the plaintiff. No doubt theenactment means, though it does not in terms say so, that theappointment is to be signed and filed before the proctor doesanything in the action. But, if the omission to sign is not because 160the proctor has not in fact any authority, and if the client afterwardsratifies what has been done in his name by signing the authority,in my opinion that satisfies the requirements of the enactment."
In K. Kadirgamadas et al v. K. Suppiah (supra) when the petitionof appeal was filed, the Proctor who presented it had not beenappointed in writing as required by section 27 of the Civil ProcedureCode to act for some of the defendant-appellants. He was so appointedafter the appealable time had expired. He had, however, withoutobjection from any of the parties represented all the defendants atvarious stages of the proceedings earlier.170
Justice E. H. T. Gunasekera with Justice Pulle concurring held:
". . . in our opinion the irregularity in the appointment was curedby the subsequent filing of a written proxy."
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I have referred to Justice Athukorala's dictum in Udeshi and Othersv. Mather earlier.
What these three cases held was that even though specific pro-visions of the law directed that an act had to be performed in a certainmanner, the mere fact that such an act was not so performed, wouldnot vitiate the proceedings so long as the parties who should haveperformed the act together had the intention to so perform the act. i®>In other words the intention of parties was held to be as importantas the expression of such intention by a physical act. If the intentionwas suspect or illogical as in a case where there was an earlierproxy of another attorney-at-law on record, then the acts of theusurping attorney-at-law were frowned upon. Justice Maartensz heldin Silva v. Cumaratungaf8) that ". . . Court cannot recognise twoproctors appearing for the same party in the same case”.
Thus, despite an attorney-at-law being not duly appointed by a partyin terms of section 27 of the Civil Procedure Code, Courts havegranted relief if the intention to duly appoint that attorney-at-law on 190the part of the client at the relevant time was perceivable.
The only difference between natural persons and a Company mightbe the fact that a Company is a legal entity not blessed with bones,marrow and flesh. But, a Company has to work through human beings.
The intention of such human beings could no doubt be ascertained.
In fact, the subsequent proxy filed ratifying the earlier acts of theattorney-at-law on record in this case was evidence of the "intention"of the Company. What is important to remember in respect of theratio decidendi of the cases above-mentioned is that an argument wasbefore Courts that an unsigned proxy was void. In other words the 200nexus between the lawyer and the client being not visible on record,there could not be any relationship contractual or otherwise betweenthem and therefore the authority even if granted was void. Despitesuch an argument, Courts have consistently held that what wasrelevant was whether the authority of the client to the attorney-at-law
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in question to do what was done on behalf of the client, had in factbeen granted. If it had in fact been granted at the relevant time thenthe physical evidence of such grant could be subsequently madeavailable. As between a Director of a Company signing under hispersonal seal on behalf of the Company instead of affixing the CompanySeal and a natural person not signing a proxy, certainly the latteris a far more serious lapse. Still the Courts have held that if theintention to sign the proxy was there at the relevant time and no legalbar to such signing was existent as between the client and the lawyer,then such defective appointment was curable. If at all, the questionof nullity could only relate to the document of appointment in termsof the relevant sections. But, if the Courts have held that despiteirregularities in the document the intention of parties is to take prec-edence, there are good reasons for such a conclusion. Such reasonswere set out by Chief Justice Hutchinson in Tillekeratne v. Wijesinghe(supra) with which I am in respectful agreement with.
General provisions in section 27 of the Civil Procedure Code and/or specific provisions in section 34 (1) (a) of the Companies Act onlyset out the physical acts expected of parties. As stated earlier Courtshave granted relief even if such physical acts were lacking or notforthcoming, so long as the intentions of parties were definite andperceivable, despite the visible non conformation with the provisionsof the abovesaid sections. Whether there was agency visible betweenthe lawyer and the client on the basis of the documents filed wasnot what the Courts looked for. It was the real intention of partiesat the relevant time which the Courts examined. They held that suchintention could be established subsequently by ratification andconfirmation. But, certain legal bars were recognised. For example,despite intention of parties, Courts would not recognise two registeredattorneys-at-law appearing for the same party in the same case. But,such legal bars to ratification cannot be held to include provisionsof section 34 (1) (a) of the Companies Act. Those provisions, thoughspecific, are similar to the general provisions in section 27 of the CivilProcedure Code. So too the provisions of Article 110 (1) of the Articles
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of Association of the defendant-appellant-Company. Courts have held 240such provisions directory and not mandatory. But, Courts have givenrecognition to a proxy in the record on behalf of one lawyer, at atime when steps were taken by another lawyer without a proxy, [videReginahamy v. JayasundereF and Silva v. Cumaratunga (supra).]Another matter that might be recognised by Courts as a bar wouldbe the resulting conflict of interests between a client and his lawyerpurporting to act on his behalf. There would be a bar to the samelawyer appearing for both sides, for example. There could be othersuch bars. In other words what the Courts will examine is whether,despite defective appointments the lawyer concerned in the normal 250course could have appeared for the client. If he could have and nolegal bars stood in his way, then despite the defective appointmentsCourts have granted him the right of appearance provided his previousacts had been ratified and a proper appointment was filed, thoughbelatedly. Such an appointment (proxy) had been filed in this caseon 13. 02. 1996. Thus, any defect arising out of the alleged non-compliance with an article in the Articles of Association too was curedwhen the defendant Company ratified what registered attorney-at-lawMr. Rodrigo had done for and on behalf of the defendant Companyuntil such new proxy was filed.260
In this connection the decision in L. J. Peiris and Co., Ltd. v.
L. C. H. Peiris (supra) is relevant and notable. Justice Thamotheramwith Chief Justice H. N. G. Fernando concurring said at page 2(
"The learned District Judge was right when he said: 'Therelationship of a Proctor and client may well be a contract ofagency, but there is no law requiring that the contract should bein writing. A proxy is a writing given by a suitor to Court authorisingthe Proctor to act on his behalf. It does not contain the terms ofthe contract between the suitor and the Proctor. That contract isa distinct one and has nothing to do with the proxy which is an 270authority granted by virtue of that contract' …"
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"The real question to my mind is .. . had the Proctor theauthority of his client, i.e. the Company, to institute the action andotherwise do what section 27 of the Civil Procedure Code enablesa person having such authority to do? The question is not whocan act on behalf of the Company, but has the Company giventhe required authority in writing".
At page 23 –
"Section 27 of the Civil Procedure Code reads: 'the appointmentof a Proctor to make any appearance or application or do any act 280as aforesaid shall be in writing signed by the client, and shall befiled in Court'. This is a procedural requirement which must besatisfied to enable a Proctor to act on behalf of his client. Thisis not a provision of law that requires a contract of agency betweena Proctor and his client to be in writing."
. . The Court in this connection is not concerned with thevalidity of the appointment of the Proctor as the Company's agentbut with certainty that the Proctor had the authority of his clientto do what he is permitted to do under section 27 of the CivilProcedure Code."290
This was a case in which the original proxy filed on behalf of aCompany incorporated under the Companies Ordinance bore the Sealof the Company and the signature of one Director only instead oftwo Directors, which defect was corrected in a fresh proxy. I
I am in respectful agreement with Justice Thamotheram's decisionabove-mentioned and find no reasons to agree with the decisionof the Court of Appeal nor with the submissions of the learnedPresident's Counsel appearing for the plaintiff that the said case
J. Peiris & Co., Ltd. v. L. C. H. Peiris (supra) was wrongly decided.
A proxy does not constitute the contract of agency between the client 300and the attorney-at-law, and is not required to contain the terms of
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that contract. The defective proxy filed in this case was not void, andwas capable of ratification.
I thus find that the subsequent proxy filed in this case gave authorityratifying previous acts of the attorney-at-law. Such ratification confirmsthe "intention" of the defendant Company at the time the defectiveproxy was handed over to the attorney-at-law. Whatever shortcomingsthat were existent in such earlier proxy were erased as soon as theratifying and confirming new proxy was filed and the intention of theDirectorate of the Company at the time of handing over the original 310proxy, subsequently became evident.
Clearly, the Court of Appeal and the District Court have erred intheir respective conclusions. The questions on which leave wasgranted are answered in the affirmative. I set aside the order ofthe Court of Appeal dated 17. 02. 2000 and also the order of theDistrict Judge dated 31. 07. 1996 and make order that the answerof the defendant be accepted and the original Court do proceedwith the case according to law. Taxed costs will be payable bythe plaintiff to the defendant in all three Courts in respect of the 32qmatter in appeal.
FERNANDO, J. – I agree.WADUGODAPITIYA, J. – I agree.
Appeal allowed.