016-SLLR-SLLR-2000-V-2-PAUL-COIR-PVT-LTD-v.-WAAS.pdf
PAUL COIR (PVT) LTDv.
WAAS
COURT OF APPEAL.JAYASINGHE. J.JAYAWICKREMA. J.
CA 535/96 (REV).
DC NEGOMBO 7723/M.09™ DECEMBER. 1999.
Civil Procedure Code, Ss.24. 27(1)- Proxy of a Company – Conyjanies Act,No. 17 of 1982. Ss.34(l), 38(1) – Applicability – Contract of Agency -Requirement of placing the common seal.
The Plaintiff Respondent instituted action against the DefendantRespondent (Company). The proxy of the Defendant RespondentCompany, was signed by one of the Directors and it did not bear thecommon seal of the company. The proxy contained the rubber stamp ofthe Managing Director. The Plaintiff Respondent moved that the proxyand the answer of the Defendant Respondent Company be rejected, andthe matter taken up exparte. The Defendant Respondent tenderedwritten submissions, and thereafter filed a fresh proxy signed by twoDirectors under the common seal. The Court upheld the objections of thePlaintiff Respondent and fixed the matter for trial exparte.
It was contended by the Defendant Respondent that the first Proxy wasnot defective, and that in any event, the second proxy cured the allegedlydefective proxy.
Held :
An Attorney at Law acts as an agent of his client. An agencyrelation-ship is constituted by way of a contract. Under S.34(l) A.Companies Act a contract may be made on behalf of Lhe company inwriting under the common seal: in the absence of Lhe common seal, noagency relationship is constituted between the Defendant and theAttorney.
There is no proxy before Court, as the 'Proxy' filed of record is void,and since there was no proxy the question of curability does not arise.
APPLICATION in Revision from the Order of the District Court ofNegombo.
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Cases referred to :
L.J. Pieris & Co. vs L.C.H. Pieris 74 NLR 261
In Re Wijesinghe 14 NLR 43
MacFoy vs United Africa Co. Ltd., (1961) 3 ALI ER 1 169
Craig vs Kanseen (1943) 1 ALL ER 108
Tilakeratne vs Wijesinghe 11 NLR 270
Kadiraganiadas vs Suppiah 56 NLR 172
Udeshi vs Mather (1988] 1 Sri.L.R. 12
S.F.A. Cooray with Chitrananda Liyanage, Niroshini de Silva and MudithaPremachandra for Defendant Petitioner.
J.W. Subasinghe P.C.. with J.A.J. Udawatte and Tilart Liyanage forPlaintiff Respondent.
Cur. adv. vult.
February 17, 2000.
JAYASINGHE, J.The Plaintiff-Respondent instituted action in the DistrictCourt of Negombo against the Defendant-Petitioner limitedliability Company for the recovery of a sum of Rs. 400.000/-with interest at 24% and for costs. The Defendant- Respondentfiled proxy on 28. 09. 1993 and its answer on 26. 04. 1994denying the Plaintiffs claim. When the case was taken up fortrial on 15. 12. 1994 the Counsel for the Plaintiff objected tothe proxy filed by the Attomey-at law, W. L. A. Victor Rodrigoand moved that the said proxy and the answer of theDefendant be rejected and urged that the action be fixed fortrial exparte. The content of the Plaintiffs objection was thatthe proxy filed by the Defendant was signed by one of theDirectors of the Defendant Company and that it does not bearthe Common Seal of the Company. The proxy contained therubber stamp of the Managing Director. Parties thereafter filedwritten submissions. After the filing of written submissions bythe Plaintiff a fresh proxy had been tendered by the Defendantalong with its written submissions. The said proxy had beensigned by two Directors having placed the Common seal.
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The learned District Judge upheld the Plaintiffs objection andrejected the Defendant's proxy and proceeded to fix the case fortrial exparte. The learned District Judge refused to considerthe proxy filed by the Defendant along with its writtensubmissions. This application is to revise the said order of thelearned District Judge.
Two question of law came up for consideration before thisCourt when this application was taken up for consideration:-
Firstly whether the proxy which bore the signature of onlyone Director was defective and
secondly whether the second proxy filed along with theDefendant's written submissions cured the allegedly defectiveproxy and consequently fixing the action for exparte trial waserroneous. Mr. Cooray submitted that the requirement of theappointment of an Attomey-at-law are contained in Section27(1) of the Civil Procedure Code.
Section 27(1) provides that; •
“the appointment of a Registered Attorney to make anyappearance or application, or do any act as aforesaid, shall bein writing signed by the client and shall be filed in Court, andevery such appointment shall contain an address at whichservice of any process which under the provisions of thischapter may be served on the Registered Attorney, instead ofthe party whom he represents, may be made".
He submitted that there was an appointment of aregistered Attorney and that if the Court is satisfied there iscompliance of Section 27(1) in that it was signed by the clientthere was a valid proxy and that in any event a technical defectin the said appointment was curable by the second proxy filedalong with the written submissions. Mr. Cooray also sought torely on Section 38(1) of the Companies Act No. 17 of 1982.
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Section 38(1) provides that:
“A document or .record of proceedings requiringauthentication by a Company shall be signed by a DirectorSecretary or other authorized Officer of the Company and maynot be under its Common Seal”. In L. J. Pieris & Co. us. L. C.H. Pieris01 it was held that a document, that is a proxy to be filedin Court can be said to be signed by a Company when it isauthenticated as required by Section 34(1) of the CompaniesOrdnance. Here the proxy by a company in favour of a proctorhad been signed by only one Director although it bore theCommon Seal. Thamotheram, J. observed that “the real
question to my mind ishad the proctor the authority
of his client, i. e. Company, to institute action and otherwisedo what Section 26 of the Civil Procedure Code enables aperson 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. Section 34(1) of theCompanies Ordinance states that a document or proceedingrequiring authentication by a Company may be signed by aDirector Secretary or other authorised Officer of the Companyand need not be under its Common Seal. “Authenticate"means to establish the truth of, to establish the authority of,make valid. This is all that is required for the purpose of a validproxy. The original proxy in this case was in writing andpurported to be signed by the proctors client, the Company.The question for decision of the Court was whether in fact itwas signed by him when it was purported to be signed. It ishere that section 34(1) has relevance. The Court in thisconnection is not concerned with the validity of theappointment of the proctor as the Company's agent but withcertainty that the proctor has authority of his client to do whathe is permitted to do under Section 27 of the Civil ProcedureCode. I am of the view that the original proxy is good".
Mr. Cooray also submitted that even if the first proxy wasdefective that defect was cured by the second proxy which wastendered with the written submissions of the Defendant. The
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second proxy had the Common Seal which was placed in thepresence of two Directors who had also placed theirsignatures. The Defendant Company appointed the sameAttomey-at-law again and the Defendant company in effectwent on to ratify whatever that has been done by the saidMr. Rodrigo in this case including the filing of answer.
Mr. Subasinghe, President’s Counsel submitted thatunder section 24 of the Civil Procedure Code, a parly to anaction may either act in person or by an Attomey-at-law dulyappointed by that party under the mandatory provisions ofSection 27(1). The appointment of the Registered Attorneyshall be in writing signed by the client and filed in Court. Hesubmitted that this section would ordinarily apply unlessother statutory provision is enacted prescribing a differentprocedure in specific instances. He argued that the proxyconstitutes a contract for rendering professional servicesbetween the Registered Attorney and the client. The learnedPresident's Counsel relied on a passage from “ProfessionalEthics and Responsibilities of a Lawyer" by Dr. A.R.B.Amerasinghe. He has observed that “The Registered Attorneyperforms the functions previously performed by proctors inemploying and instructing Counsel, carrying out his adviceand organising the case behind the lines for eg. in obtainingthe evidence which Counsel needs, in taking proofs fromwitnesses, securing their attendance and the likes, Where hefails in his duty he may be guilty of being in breach of hiscontract. . . . “Where an Attorney intends to function in acontentious civil matter, only as a registered Attorney and notalso as Counsel he should ensure that the Attorney who is toappear as Counsel is retained and instructed. Otherwise hewould be acting in breach of his contract in terms of his proxyand also in breach of his contract in terms of his proxy and alsoin breach of his duty of care”. He also relied on an observationmade by Hutchinson C. J. in Re Wijeyesinghel2, “a proctor or aprocurator is one who acts as agent for another person". Herelied on these authorities to satisfy Court that therelationship between a proctor and his client arises out of a
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contract of agency. He submitted that this contract has to bemade in conformity with the prescribed procedure i. e. setout in Section 34(1) of the Companies Act. Mr. Subasinghesubmits that the Defendant being a juristic personincorporated under the Companies Act No. 17 of 1982 andspecial provision is made in Section 34(1) of the statute for theexecution of a contract made by an incorporated Company.The proxy given by such a Company has therefore to be inwriting under the Common Seal of the Company. He submitsthat the said proxy does not conform to Section 34 is thereforevoid and a nullity, He relied on a dictum by Lord Denning inMacFoy vs. United Africa Co. Ltd.,131 “If an act is void then it isin law a nullity, it is not only bad but incurably bad. There isno need for an order of court to set it aside. It is automaticallynull and void without much a do, though it is sometimeconvenient to have the Court to declare it to be so and anyproceeding which is founded on it is also bad and incurablybad. You cannot put something on nothing and expect it tostay there; it will collapse”. He submitted that the proxy isincurably bad and cannot be rectified. For instance as it washeld in Craig vs. Kanseen141 a failure to serve summons wasnot a mere irregularity but a defect which is a nullity.Mr. Subasinghe further submitted that L. J. Peiris and Co. vs.L. C. H. Pieris(supra) has been wrongly decided in that thedecision was based entirely upon the consideration of section34 of the Companies Ordinance and that the application ofsection 30 has not been taken cognizance of. He submittedthat the decision has been made per incuriam and should notbe followed. Mr. Subasinghe also submitted that the secondproxy dated 08. 02. 1996 has been tendered to Court withoutnotice to the Plaintiff and thus the Plaintiff has been deprivedof an opportunity to raise an objection when it was tendered.He submits that the first proxy being void and a nullity cannotbe rectified. Section 38 of the Companies Act refers to theauthentication of documents and translations. It provides thata document or record of proceedings requiring authenticationby a company may be signed by a director and need not be
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under its Common Seal. I am inclined to agree withMr. Subasinghe’s submission that L. J. Peiris & Co, Ltd. (supra)has been wrongly decided. In the case of a proxy thequestion of authentication does not arise. It is not open forthe Defendant to rely on Section 38 which deals withauthentication and section 38 has no application to thepresent situation. I am also inclined to agree withMr. Subasinghe's submission that this is a situation whichfalls properly within section 34 of the Companies Act and thatit is a Contract of Agency.
In Tilakaratne vs. Wyesinghe,sl by an oversight the proxyhad not been signed by the Plaintiff and the proctor had actedwithout any objection in the lower Court. An objection was
taken up in appeal.
The Court held that the mistake could be rectified by theplaintiff signing it. In Kadiragamadas vs. Suppiah161 the proctorwho filed the petition of appeal on behalf Of the substitutedDefendants had not been appointed in writing. The courtpermitted the Defendants to cure the defect by filing a writtenproxy. In Udeshi vs. Mather*71 it held that a defective proxy canbe rectified and the acts done there on ratified by the principalwhere the defects are curable. The question is whether theproctor had the authority of his client to do what was done onhis behalf although in pursuance of a defective appointment.If in fact he had his client’s authority to do so then the defectis one which in the absence of any positive legal bar could becured. On the contrary if in fact he did not have such authoritythe acts done and the appearances made in his behalf by theattomey-at-law would be void and of no legal effect. Tilakaratnevs. Wyesinghe(supra) and Kadiragamadas vs. Suppiah(supra)related to transactions between natural persons and theappointment of the Attorney was in terms of Section 27(1) ofthe Civil Procedure Code. In this instance the Defendant beinga juristic person, section 30(1) A provides that a contract onbehalf of a Company may be made as follows:
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(a) a contract which is made between private persons wouldbe by law required to be in writing, may be made on behalfof the Company in writing under the common Seal of theCompany.
There is no doubt that an Attomey-at-law acts as an agentof his client. An Agency relationship is constituted by way of acontract. Under section 34(l)(a) contract may be made onbehalf of the Company in writing under the Common Seal, inthe absence of the Common Seal, no agency relationship isconstituted between the Defendant and the attorney. 1 aminclined to the view that there is no proxy before Court as the‘proxy’ filed of record is void. Since there was no proxy thequestion of curability does not arise. The application isdismissed with costs fixed at Rs. 2100/-.
JAYAWICKRAMA, J. – I agree.
Application dismissed.