African Cotton Corporation Ltd v Greig and Another (C.A. 32/1931.) [1932] EACA 2 (1 January 1932)

## COURT OF APPEAL FOR EASTERN AFRICA.

Before SIR JACOB BARTH, C. J. (Kenya), SHERIDAN, C. J. (Tanganyika), and Law, J. (Uganda).

## AFRICAN COTTON CORPORATION, LTD. (Appellants) (Original Plaintiffs)

$v_{\cdot}$

## HUNTER AND GREIG (Respondents) (Original Defendants). C. A. $32/1931$ .

Advocate—negligence of—Retaining fee—Legal presumption as to duties.

Held (26-3-32): - That where an advocate accepts instructions from a client his duty is to give effect to such instructions without<br>delay, notwithstanding that in his opinion the effect of so doing might not be in the best interests of the clients.

Schwartze (Ishmael and Angus with him) for Appellants.

Priestly for Respondents.

This application arose out of a suit brought by the appellants as plaintiffs, against the respondents in the High Court of Uganda inter alia for damages against the respondents in respect of negligence. It was alleged in the plaint that the respondents were employed as advocates by the appellants to perform certain legal work on behalf of the appellants, viz.: to lodge a caveat with the Registrar of Titles in respect of a title on the Register: The plaintiffs alleged that the caveat was not lodged in due time or at all. The respondents in their written statement of defence denied negligence or that the appellants had suffered or would suffer damage. They also averred that the retainer referred to was subject to registering the title to which the caveat referred and to the prior registration of a caveat on behalf of other clients in respect of such title.

The issues framed in the High Court were:-

1. Was there negligence by defendants.

2. Was there a special retainer.

The suit was dismissed with costs and from the decree therein this appeal was brought.

Schwartze.—The points for consideration are (1) Did respondents accept a retainer to file a caveat for appellants or to file it only after he had filed a caveat for other clients, and (2) If he accepted a retainer, and if the retainer was a special one, was he negligent in not carrying out his instructions.

There was misdirection as to issues.

Allen v. Bone, 49 E. R. 429.

Ex parte Swinbanks in re Shanks, 1879, 11 Ch. D. 525. Wilson v. Brett, 152 E. R. 737, at 739; 11, M. & W. Grill v. General Iron Screw Collier Co., Ltd., L. R. 1 C. P. 600, at $612$ ; 1866, 35 L. J. 321.

26 Halsbury 753—Article 1251.

Moody v. Cox & Hatt (1917) 2 Ch. D. 71, at 81.

Stevenson v. Rowand, 6 E. R. 668, at 674.

Battison v. Hobson (1896) 2 Ch. D. 403.

Bank of Montreal v. Stuart and another (1911) A. C., at 120, 139.

Argued that there was not full disclosure by respondents as to relationship with other clients whose interests were in conflict with those of appellants.

In rc Birt (Birt v. Birt), 1883, Ch. D. 604, at 608.

In any case no excuse for respondent not filing the caveat immediately Khaderbhoy's caveat was on a register.

Priestly.—Question in issue—was there such negligence as would entitle appellants to damages.

42 E. & E. Digest Part IV, para. 827, p. 91.

Purves v. Landell, 8 E. R. 1332.

Negligence must be more than error of judgment.

Colonial Securities Trust Company v. Massey and .others, 1896, 1 Q. B. p. 38.

Schwartze replied.

SIR JACOB BARTH, C. J.-In this appeal it is sought to set aside the judgment of the learned Chief Justice of the High Court of Uganda dismissing a suit for negligence on the part of an advocate. The facts found by the learned Chief Justice show that on Sunday, 16th March, 1930, Mr. Damani on behalf of the appellants, with Mr. Vyas, the respondent's clerk, interviewed Mr. Priestly, a member of the respondent's firm, who was then staying with a friend. Mr. Priestly somewhat naturally objected to being disturbed on a Sunday morning. Mr. Priestly first refused to handle the matter at all as he was already instructed by other parties. He finally agreed to act for the appellants on the distinct understanding that a caveat to protect Khaderbhoy's interest must first be registered. He informed Mr. Damani that he was acting for Khaderbhoy, and that gentleman gave Mr. Priestly his work with that knowledge. He told Mr. Damani that he was acting for the Provincial Cotton Co., on the transfer of the Mpami Ginnery to it. Such company appears from Ex. 1 to consist of four partners. The transfer was registered on 21-3-30. A caveat further to protect the interests of Adamali Ismailji and Adamali Ebrahimji (Kaderbhoy & Co.), who already were registered as mortgagees, was registered also on 21-3-30, at 3.32 p.m. It would have been possible for Mr. Priestly to have sent the appellant's caveat for registration at the same time as the Adamali caveat, but he has told us that he wished to see the copy of the certificate of title with the record of the Adamali caveat duly endorsed thereon before he sent it back with the appellant's caveat for registration. The result was that the appellant's caveat was not sent or received. by the Registrar of Titles until the 26th March, 1930, and by that time a telephonic notice had been received by him that the property had been attached in a High Court suit, and the Registrar refused to register the caveat. It has been suggested that Mr. Priestly was acting for other creditors of the Provincial Cotton Co., and intentionally delayed sending the appellant's caveat for registration in order that they might not be secured and thus make a bigger sum available for the general creditors of the concern. It does appear that Mr. Priestly was informed by Mr. Baerlein, another advocate, that the registration of the caveat would result in the bankruptcy of the partnership, and that this fact affected Mr. Priestly's actions in the matter. Whatever view Mr. Priestly may have taken of the best course to follow in the interests of the appellant, in my judgment he was going beyond his instructions in delaying the registration in the manner in which he did without at least further reference to them

I do not for a moment believe that there was any intention so to delay registration that the appellants might be deprived of any security which the registration of the caveat might have given them. In matters of registration of title time is obviously a matter of the greatest importance, and the delay which actually occurred must be deemed to be a breach of duty owed by the respondents to their clients.

I therefore find that the learned Chief Justice's judgment must be reversed and the case be remitted to the High Court of Uganda to find what, if any, damage the appellants have suffered. The appellants to have the costs of the appeal.

SHERIDAN, C. J.—On the issue as to whether the respondent, when on the 16th March, 1930, he undertoook to register a caveat on behalf of the appellant, disclosed that he was already acting for another client Khaderbhoy, and that he could not register the caveat until such time as Khaderbhoy's caveat had been entered in the Register of Titles, I do not find it necessary to say much. From the evidence before the learned Chief Justice I am satisfied that his finding of fact that Mr. Priestly had so informed the appellant is correct. Even assuming that the onus of proving a special or unusual retainer had been placed on the respondent, as I consider should have been the case, nevertheless. I would have arrived at the same conclusion that Mr. Priestly had informed the appellant that he was acting for another client. and that the appellant knew that client was Khaderbhoy. In his opening address Mr. Schwartze passed severe strictures on the conduct of Mr. Priestly, urging us to believe that not only did Mr. Priestly not disclose that he was acting for Khaderbhoy, but that he also failed to disclose that he was acting for twoother clients, the East African Ginneries, in which company heholds a qualifying share, and the Liverpool & Uganda Cotton Co. After hearing the arguments put forward by Mr. Priestly and. studying the evidence, I am satisfied that there were no good grounds for the strictures, and that the respondent was notrepresenting either of the companies named at any date material to this case. I have a note in my file that Mr. Schwartze abandoned his contention in so far as the East African Ginneries. were concerned. I will take the finding of fact to be found at page 11 of the judgment reading. "The 21st March was a Friday. It was possible for Mr. Priestly to have entered the plaint ff's caveat on the Register between 3.32 p.m. and 4 p.m. on the Friday or on Saturday morning." Mr. Priestly, before this Court, admitted that he could have done so and I have not been able to discover from the record in the High Court or the arguments addressed to this Court why Mr. Priestly did not doas he could have done. His doing so would in no way have jeopardized the interests of Khaderbhov, whose caveat was safely on the Register at 3.32 p.m. on Friday, the 21st March. The urgency of having the appellant's caveat on the Register at the very earliest opportunity must have been present to Mr. Priestly's mind from the moment when the appellant waited onhim on the morning of Sunday, the 16th March. It would seem to me that in the case of the appellants urgency was just as. much of the essence of the matter as in the case of Khaderbhoy. It now remains to be considered whether the failure of Mr. Priestly to register the caveat amounts to negligence. The The instructions of the appellant to Mr. Priestly were definite and there is no question of a misunderstanding in the case. $\mathbf{Mr}.$ Priestly, at pages 22 and 23 of the typed record in giving evidenceas to what passed between him and the appellant Damani on Sunday, the 16th March, stated, "I told him I did not want tohandle the matter at all, as I was already instructed by other parties. He asked who they were and I naturally refused to tell him. He said is it Provincial Cotton Agency. I said I was acting for them on the transfer. He then said is it Adamali, because if it is it will be quite all right. Adamali comes before us in our charge. So nothing you can do for us will prejudice Adamali's position. I said on that distinct understanding that I watch the interests of Adamali first, I will do what I can tohave your caveat put on later after he is covered. I then went

into matters with him as to what this charge was and I warned. him that if it were registered it would probably result in thebankruptcy of the Provincial Cotton Agency as this was a chargethat was given for a debt not yet due and would not fall duefor another six weeks. I also told him that if their principal (Provincial Cotton Agency) are made bankrupt within three months that charge would constitute a fraudulent preference, but if three months had expired before the bankruptcy their claim would probably be a good one. I said it was a doubtful matter. but I would put it on the title when I could." It is admitted and found as a question of fact that Mr. Priestly did not put thecaveat on the title in accordance with the last sentence quoted from his evidence, and this departure from instructions in regard to a duty of a solicitor, where there could be no possibility of a inisunderstanding as to what he should do or should not do. constitutes, in my opinion, negligence. There was no question here of an error of judgment or of points of doubtful construction. The instructions were clear and the appellant, despite the risk of bankruptcy wished to have his caveat registered. That the appellant was consistently persistent in wanting to have hiscaveat registered is shown by subsequent conduct. Mr. Priestly's diary shows that after hearing from Mr. Baerlein on the 24th March that his clients, Parikh & Co., would make the Provincial Cotton Co. bankrupt if any of the creditors were given a preference, he telephoned through to his Jinia office to inform appellant of what Mr. Baerlein had said. My note at page 9 records Mr. Priestly as having said that the appellant, on receipt of the information, instructed him to proceed with the registration of the caveat. Mr. Priestly argued that his failure to register the caveat did not constitute negligence for which he could be held liable. but with this argument I cannot agree. The circumstances of the case clearly point to the necessity for the greatest expedition and the carrying out of the instructions needed no thinking. It was a case where Mr. Priestly, so far as the appellant was. concerned, had to discharge his duty by blind obedience. Mr. Schwartze, for the appellant, quoted two cases to show that there was no distinction between gross negligence and negligence. One is the case of Wilson v. Brett, 11 M. & W., p. 739, in which Rolfe, B., in the case of a gratuitous bailee said, "I said 1 could see no difference between negligence and gross negligence-—that it was the same thing, with the addition of a vituperative epithet ... " In referring to dictum of Rolfe, B., in the case-Grill v. General Iron Screw Collier Co. (Limited), L. R. Common Pleas Cases, Vol. 1, p. 600, Willes, J., at page 612, stated in hisjudgment, "It is further complained that the Lord Chief Justice misdirected the jury because he made no distinction in this casebetween gross and ordinary negligence. No information, however, has been given to us as to the meaning to be attached to gross negligence in this case; and I quite agree with the dictum of Lord Cranworth in Wilson v. Brett that gross negligence is

ordinary negligence with a vituperative epithet—a view held by the Exchequer Chamber." I am of the opinion that negligence on the part of the plaintiff respondent has been established, and I would allow this appeal with costs and direct that the trial should proceed on the issue of damages.

Law, J.-On the 7th January, 1931, the appellants filed an action against the respondents for damages for negligence. The negligence complained of relates to the manner in which the respondents conducted certain business on behalf of the appellants, the particulars of which are shortly, in effect, as follows: -

The respondents accepted an unqualified retainer from appellants on the 16th March, 1930, and undertook thereby to lodge a caveat with the Registrar of Titles on behalf of appellants against the property of a partnership known as the Provincial Cotton Agency, by virtue of a letter dated the 14th March, 1930, given by that company to appellants in respect of an advance made by appellants to that company.

The respondents, by their written statement, admit a retainer from the appellants, but allege that it was specifically agreed between them that it should be subject to the interests of Messrs. A. H. Kaderbhov being first safeguarded, who had already instructed respondents to register no other incumbrances till their own caveat had first been registered. Also, they allege that it was not possible to register any caveat against the property in question till the 21st March, 1930, on which date it was transferred into the names of the partners of the Provincial Cotton Agency from the names of certain other persons who were, prior to that date, registered as the owners thereof. Further, they allege that on the same day they also registered a caveat on behalf of Messrs. A. H. Kaderbhoy against the property which then stood in the names of the partners of the Provincial Cotton Agency. In view of the foregoing, and in that respect, respondents claim to have accepted the retainer from appellants. The respondents have also generally denied appellants' claim for damages and have further pleaded that appellants could not have been protected, in the circumstances, even if their caveat had been duly registered. In their written statement respondents also plead that on the 21st March, 1930, the Registrar of Titles received a letter from two of the former partners of the Provincial Cotton Agency forbidding him to register any further caveats against their property unless such caveats were signed by all the four partners. In this connexion it is observed that this pleading is in error. The actual date of the letter referred to is the 21st March, 1930 (see Annexure A to written statement), but its receipt by the Registrar of Titles was on the 24th March, 1930 (see $Ex: 22$ ). It is also observed that the caveat presented by respondents, on behalf of Messrs. A. H. Kaderbhoy, to and accepted by the Registrar of Titles on the 21st March, 1930

(Ex: 15) was in a similar form to the caveat (attached to $Ex: 5$ ) presented by respondents, on behalf of appellants, to and refused by the Registrar of Titles on the 26th March, 1930.

By consent of parties the case went to trial on the issue as to negligence only and was framed in the following words:-

" Was there negligence by defendants? (Respondents)."

The learned trial Judge held that the onus of proving the nature of the retainer lay on appellants.

The trial occupied several days and a great deal of evidence was recorded. There was considerable conflict of evidence as to the precise terms of the retainer and with regard to this the learned trial Judge accepted the version put forward by respondents. He came to certain findings of fact, which are reproduced from his judgment, as follows:-

"As I have already said I accept Mr. Priestly's version of the interview and it therefore follows that in my opinion the nature of his retainer, was that he undertook to place the plaintiff's company's caveat on the Register as soon as Kaderbhoy's interests had been posted (? protected) . . .

The retainer, as I understand it, was that Mr. Priestly would have the caveat entered on the Register as soon as he was satisfied that Kaderbhoy and Company's interests had been safeguarded and the interests to be safeguarded were such as subsisted at the time when he took final steps to safeguard them, and those steps could be taken as soon as the title was clear. There had been transfers of this ginnery and the completion of the title had been held up by reason of the absence of a necessary consent. On the 21st March the Registrar of Titles informed Mr. Priestly that as the consent was being unreasonably withheld bewould dispense with it, and on that day the transfer was registered and Kaderbhoy's charges were entered by way of caveat on the Register. The registration entries were effected by these documents on the 21st March, 1930, at 3.30, 3.31 and 3.32 p.m., and thereafter Mr. Priestly was free to enter the plaintiffs" company's caveat . . .

The 21st March was a Friday. It was possible for Mr. Priestly to have entered the plaintiffs' caveat on the Register between 3.32 p.m. and 4 p.m. on the Friday or on Saturday morning. On the 24th March (Monday) Mr. Priestly had an interview with Mr. Baerlein, advocate for Parikh & Co., and Mr. Baerlein informed Mr. Priestly that if the Provincial Cotton Agency attempted to give a preference to any of their creditors he would at once file a petition in bankruptcy against them ...

The entry of the caveat after the 24th March would, in my opinion, have been a futility and would have precipitated the bankruptcy of the Provincial Cotton Agency ... It is plain from

Mr. Priestly's evidence that all along he had the probability of bankruptcy at the back of his mind, from the moment Mr. Damani came to see him on the 16th March. Any advocate of Mr. Priestly's considerable local experience could not have failed to regard bankruptcy as extremely probable. Between the 21st March and the 26th March no entry was made on the Register with regard to the Mpigi Ginnery. If therefore the plaintiffs' eaveat had been registered on the 24th or 25th March, their interests would have been protected to the same extent as if it thad been entered immediately after Kaderbhoy & Co.'s caveat entered at 3.32 p.m. on the 21st March . . Mr. Priestly was trying to avoid bankruptcy proceedings in the interests of the various creditors (the plaintiffs and Kaderbhoy & Co., anyhow) and of the Provincial Cotton Agency . . . In the circumstances can it be said that Mr. Priestly was negligent in not proceeding with the entry of the caveat? In my opinion, Mr. Priestly certainly was not negligent. Further, apart from the above consideration, I should have great difficulty in holding that the failure to enter the caveat on the Register between 3.32 p.m. Friday afternoon and Monday (when bankruptcy was $\cdot \mathrm{on}$ threatened) was negligence about which a solicitor could be held liable."

From those findings of fact by the learned trial Judge it is clear that not only were bankruptcy proceedings threatened on the Monday (24th March), but that the probability of such proceedings existed in Mr. Priestly's mind for eight days previously, namely, from Sunday, the 16th March. Also that, although conscious of this state of affairs, Mr. Priestly omitted to register appellants' caveat after 3.32 p.m. on Friday the 21st March, from which time he had been free so to do, as he himself agrees:

The appellants' preliminary Memorandum of Appeal was -elaborated in their further grounds of appeal, dated the 9th November, 1931, which are principally, in effect, covered by the following points:—

(1) That the onus of proof as to the nature of the retainer should not have been placed on appellants.,

(2) That the evidence in no way substantiates the allegation by respondents that the retainer in question was of a special mature.

(3) That the learned trial Judge should not have been concerned with the effect of respondents not entering a caveat on appellants' behalf at any other time than the first opportunity to do so.

(4) That the learned trial Judge erred in not holding on the evidence that respondents were guilty of negligence.

With regard to the first point, the position appears to be that appellants alleged a retainer and respondents admitted it, but pleaded that it was qualified in certain respects. In effect, it seems that had no evidence been called by either party, and in view of the pleadings, judgment should have been given thereon for appellants. (Sec. 101 et seg Evidence Ordinance.) In this case, however, the point appears now to be somewhat academical. inasmuch as both parties have adduced evidence from which this matter could be decided.

Regarding the third point, consideration could only be given to the evidence touching the issue of negligence. Whether appellant's or respondents' version was correct it was not necessary to ascertain what respondents' motives were in delaying the registration of appellants' caveat or when the caveat could have been entered on the Register after Friday, the 21st March, 1930. In view of respondents' evidence that appellants' caveat could have been entered on the Register immediately after 3.32 p.m. on the 21st March, it seems that it was only necessary to consider. whether respondents' action in omitting to do so on that date or at any time thereafter amounted to negligence on their part, and if so, at what stage they were negligent.

With regard to the second and fourth points, the learned trial Judge has found as a fact that the nature of the retainer was that respondents should enter appellants' caveat on the Register as soon as Kaderbhoy & Co.'s interests had been protected. There was ample material on which he could come to such a finding. In such cases, a Court of Appeal will hesitate before it disturbs findings of fact by a trial Judge (Khoo Sit Hoh v. Lim Thean Tong, 1912 A. C. p. 323), except where he has failed to observe inconsistencies or to take account of material circumstances or probabilities. It is in this connexion that the fourth point must be particularly considered. In other words, did the material circumstances as found by the learned trial Judge justify his conclusions that respondents had not been guilty of negligence? In this particular case Mr. Priestly, the solicitor who had the handling of this business for appellants, has been in practice for nearly twenty years, and was described in the judgment of the Lower Court as an advocate of considerable local experience. As a solicitor he holds himself out to his clients as possessing adequate skill, knowledge and learning for the purpose of properly conducting all business that he undertakes, whether contentionus or non-contentious (Halsbury, Vol. 26, pp. 753 to 736). If therefore he causes loss or damage to his client owing to want of such care as he ought to exercise he is guilty of negligence giving rise to an action for damages by his client, and in addition he forfeits the right to receive costs in respect of the work rendered useless to his client by reason of his negligence. Negligence is the absence of such care as should be devoted in that particular matter. In non-contentious

matters it is a solicitor's duty to carry them out according to the regular method prescribed by statute, rule or custom, and he is guilty of negligence, where, for instance, he fails to give proper notices to secure priority for a charge taken on his client's behalf (Watts v. Porter, 1854, English Reports, Vol. 118, p. 1319), or where he fails to register a mortgage if registration is necessary. (Re Patent Bread Machinery Co. ex parte Volpy & Chaplin, 1872, 7 Ch. App. p. 289.) Mr. Priestly explains his delay in registering appellants' caveat because he desired first to see that Kaderbhoy & Co.'s caveat had actually been effected. There does not appear to have been any necessity for this; Mr. Priestly must assume that the Registrar of Titles would do his work properly. Even so, and knowing the urgency and importance attached to the matter by appellants he could have sent their caveat to the Registrar of Titles for registration on the afternoon of the 21st March with the request that it should be registered immediately after Kaderbhoy & Co.'s caveat had been put on the Register. There appears to be no adequate excuse why Mr. Priestly did not register appellants' caveat on the Friday afternoon or the Saturday morning at the latest. From the evidence it is seen that the Registrar of Titles can be communicated with from Kampala by telephone. If this had been done by Mr. Priestly, the appellants' caveat-would have been registered on the 21st or at the latest on the 22nd March. The respondents' absence of care which occasioned a delay in the registration of appellants' caveat permitted two partners of the Provincial Cotton Agency to forbid registration of appellants' caveat; this prohibition was acted on by the Registrar of Titles. Further it also enabled other creditors to attach the property in question before judgment, and thus get ahead of appellants' caveat. In the latter case it is observed the order for attachment was telephoned from Jinja to the Registrar of Titles.

In the circumstances I am of opinion that the delay occasioned by respondents in taking steps to register appellants' caveat amounts to negligence on their part. This finding disposes of the issue as to negligence in appellants' favour and it is not necessary further to consider any other aspects of the case. I would allow the appeal, therefore, with costs thereof to the appellants, and send the case back to the High Court of Uganda for trial on the issue as to damages.