009-NLR-NLR-V-56-R.-SINGARAYER-Appellant-and-THE-ATTONEY-GENERAL-Respondent.pdf
GRATIAEN J.—Singarayer v. The Attorney-General
39*
1954Present: Gratiaen J., Sanson! J. and Fernando A.J.R.SINGARAYER, Appellant, and THE ATTORNEY-GENERAL, Respondent
S.G. 457 of 1951—D. C. Point Pedro, 3.905M
Customs Ordinance (Cap. 185)—Section 146—Security for costs of action—Form in-which it may be given—Meaning of word “ security ”,
Security for costs of action required under section 146 of the Customs-Ordinance may be furnished in some other form than cash. In the context,the word security includes “ every document or transaction by which thepayment of money is assured, or its recovery facilitated Security maytherefore be given in the form of the personal guarantee of a surety coupledwith a mortgage in favour of the Crown of the surety’s interest in a specified-allotment of land.
XjLPPEAL from a judgment of the District Court, Point Pedro. Owingto a difference of opinion between the two Judges before whom it was■first argued, it came up for hearing before a Bench of three Judges, interms of section 38 of the Courts Ordinance.
E. if. 8. R. Coomaraawamy, with E. B. Vannitamby and D. R. Pererafor the plaintiff appellant.
M. Tiruchelvam, Crown Counsel, with V. S. A. Pullenayagam, Crown-Counsel, for the defendant respondent.
Cur. adv. vult.
July 26, 1954. Gratiaen J.—
On 29th October, 1950, certain Customs officers seized a motor launch,of which the appellant claims to be the owner, off the coast of Thaiaidyfor an alleged contravention of regulations framed under section 68 ofthe Customs Ordinance. On 10th November, 1950, the Collector ofCustoms of the Northern Province wrote to the appellant confirmingthe seizure of the launch “ as forfeited under the Ordinance ”. Theletter added that “ for purposes of action under section 146 of the•’Ordinance security for the launch had been fixed in a sum of Rs. 35,000plus a further sum of Rs. 3,000 for costs of action ”.
That section 146 applies to a situation of this kind is now concededby Mr. Coomaraswamy. The section provides inter alia that all ships,boats, goods and other things “ seized as forfeited under the Ordinance ”shall be “ deemed and taken to be condemned ” unless the person fromwhom they are seized or their owner shall within one month give noticein writing to the Chief Officer of Customs at the nearest port that heintends to enter a claim for them, “ and shall further give security to
40GRATIAEN J.—Singcuraytir o.'TVtfAttorney.General
prosecute such claim before the Court haying jurisdiction to entertain•the samej and to restore the things seized or their value, and otherwise tosatisfy the judgment of the Court and to pay costs
Section 147 provides that no claim to anything seized under the■Ordinance shall be admitted by the Court “ unless the claimant shall at■the time of fling his libel or plaint to establish his claim satisfy the Court■that he has given notice and security as in the preceding section enacted ”,
On 28th November, 1950, the appellant gave notice in writing to the•Collector of Customs of his intention to institute the present action, and.at the same time tendered a bond in a sum of Rs. 3,000 (i.e., the amount.fixed by the Collector as security for costs under section 146) conditionedfor the due prosecution of the action and the payment of any costs thatmight be awarded against him. This bond was executed by the appellantand by his surety V. Velupillai who, in addition to his personal guarantee,hypothecated in favour of the Crown his interests in certain immovableproperty " for further and better securing the payment of all moneys due•under the bond
The appellant had explained in his letter that he was unable to tendersecurity in a sum of Rs.1 35,000 fixed by the Collector as security for the.launch ; he therefore consented to theessel'continuing to remain in thepossession of the Customs authorities pending the final decision of theaction which he proposed to institute. The Collector replied (1) that•security “ for costs of action alone ” could not be accepted, and (2) that“ the required securities should be furnished in cash”. On the next•day, he returned the notice and bond to the appellant on the ground■that the security was “ insufficient ”.
On 3rd January, 1951, the appellant filed a plaint in the DistrictCourt of Point Pedro together with (1) the notice and bond tendered on28th November, 1950, to the Collector, and (2) his affidavit in which heincorporated the correspondence to which I have already referred. Heasked that the plaint, in which he claimed,the recovery of his launchfrom the Crown, be accepted by the Court. The learned District Judgemade order accepting the plaint and ordering summons to issue for2nd February, 1951. This order must necessarily be construed as havingbeen passed on an ex parte judicial decision under section 147 of theOrdinance that, upon the materials before him, the learned judge wassatisfied that the appellant had “ given notice and security as in thepreceding section enacted
Several issues were framed at the .trial, but, by agreement, the learnedJudge gave his ruling on certain preliminary issues arising from the-Crown’s objections to the nature and sufficiency of the security furnishedby the appellant. He held in favour of the Crown (1) that the appellant■was obliged to give security to restore the launch or its value even thoughhe did not require it to be delivered up to him pending the action, and
that the security for costs that was tendered was insufficient. Forthese reasons, the appellant’s action was dismissed without an adjudi-cation on the merits. The present appeal is from that decision, and,
GRATIAEN J.—Singarayer v. The Attorney-General
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owing to a difference of opinion between the judges before whom it wasfirst argued, the matter came up for hearing before a Bench of threejudges in terms of seotion 38 of the Courts Ordinance.
Since the judgment under appeal was pronounced, this Court hasdecided in Seyaratnam v. Hudson1 that no security need be given undersection 146 for the restoration of the seized property in cases where theclaimant does not ask that it should be handed over to him pending thelitigation. Mr. Tiruchelvam therefore agrees that the only questionbefore us is whether the nature of the security tendered by the appellantas security for costs was objectionable, and, alternatively, whether itought to have been rejected on the ground of insufficiency. The firstof the issues introduces a question of law, the second a question of fact.
As to the form and nature of the security given by the bond, therewas no substance in the Collector’s original objection that it oughtnecessarily to have been furnished in cash. He was entitled undersection 146 to determine the amount of the security, but not (as forexample, in cases arising under section 70) to decide what particularkind of security would alone be approved by him. Compliance withthe requirements of section 146 is in truth a prerequisite to the institutionof a claim to the property “ seized as forfeited ” ; and it was ultimatelyfor the Court, not the Collector, to rule whether or not those requirementshad been complied with by the claimant.
The purpose of section 146 in requiring security to be furnished eitherfor costs or (where applicable) for the restoration of the property is clearenough: it is to prevent the authorities being harassed with litigationwithout some adequate assurance that, if the claim is rejected, theircosts will be met and that the property (if released pending the action)or its value will be restored to them.
In this context, the word security includes “ every document or trans-action by which the payment of money is assured, or its recoveryfacilitated”. Encyclopaedia of the Laws of England 13,204. “Thesecurity would generally consist of a right to resort to some fund orproperty for payment; but I am not prepared to say that some otherforms of security (such as a personal guarantee) are excluded. In each casehowever, where the word is used in the normal sense, some form ofsecured liability is postulated "—per Viscount Cave in Singer v. Williams2.There are many precedents in the English Courts for accepting solventpersons or even solvent foreign corporations “ as security ”.
In my opinion, the nature of the securities given by the appellant inthe present case—namely, the personal guarantee of a surety coupledwith a mortgage in favour of the Crown of the surety’s interest in aspecified allotment of land, was unobjectionable hi form. There remainsthe question whether these securities were in fact inadequate. Onthis issue, the burden was clearly on the Crown to establish inadequacy,because a judicial order had previously been made (under section 147).accepting the plaint and therefore inferentially (even though not expressly)deciding that the requirements of section 146 had been complied with.
1 (1951) 53 N. L. R. 145.* (1921) 1 A. C. 41 at 49.
Simon Perera v. Rasonayakam
i
42
Ab such, an order is necessarily made ex parte, the other party would of•coarse be entitled to have it vacated by placing before the Court materialwhich establishes that the acceptance of the plaint had in the first instancebeen improperly' obtained by the claimant. In that event, the aotion. as such is not dismissed ; it is the permission to institute the action which.is withdrawn nunc pro tunc.
The value of the surety’s interest in the property hypothecated under■the bond was admittedly only Rs. 1,000. But the Crown could not.-succeed in its objections by proof of this circumstance alone. Svenif we assume that section 46 of the Mortgage Act, No. 6 of 1949, doesapply to a mortgage unilaterally executed by one party in favour of theother as security for costs in a litigation, the Crown is not bound by itsprovisions and could therefore enforce the personal bond against the:surety in order to recover any balance amount due to it by way of costs.No evidence was led at the trial to prove that the monetary value of thesurety’s personal guarantee was insufficient. For these reasons, thepreliminary objections raised at the trial should have been over-ruled.
I would allow the appeal and remit the case to the lower Court for thetrial of the issues that remain to be tried. The appellant is entitledto his costs of this appeal and the costs of the abortive proceedings.
Saneoni J.—I agree.lFbrnando A.J.—I agree.
Appeal allowed.