Ambalal and Company Limited v Boury and Others (Civil Appeal No. 61 of 1955) [1950] EACA 68 (1 January 1950)

## H. M. COURT OF APPEAL FOR EASTERN AFRICA

## Before SIR NEWNHAM WORLEY (President), BRIGGS (Acting Vice-President) and BACON, Justice of Appeal

## AMBALAL AND COMPANY LIMITED, Appellants (Original Plaintiffs)

## (1) DURGA DAS BOURY, (2) VALAITI RAM BOURY, (3) BRAHAM SARUP, Respondents (Original Respondents) Civil Appeal No. 61 of 1955

(Appeal from the decision of H. M. High Court of Uganda, Lewis, J.)

Chose in action—Assignment—Whether assignee can sue without joining assignor —Law of Property Act, 1925, section 136 (1)—Judicature Act, 1873, section 25 (b)—Uganda Order in Council, 1902, section 15.

The High Court had held that an action by an assignee of a contract could not be maintained without joining the assignors as parties. The facts are fully set out in the judgment.

Held (21-1-56).—(1) Section 15 of the Uganda Order in Council, 1902, either imports the Judicature Act, 1873, section 25 (b) of which was re-enacted as section 136 (l) of the Law of Property Act, 1925, as a statute of general application or shows that the jurisdiction of the Courts in Uganda is based on a fused system of common law and equity and accordingly, it was unnecessary for the assignors to be joined as parties.

(2) *Quaere*—Whether evidence could be adduced to show that an assignment of a chose in action in form absolute was intended to operate as a mortgage or a charge.

Appeal allowed.

Case referred to: Balkishen Das v. Legge, (1899) I. L. R. 22 A. 149.

$N.$ B. Mehta for appellants.

Russell for respondents.

JUDGMENT (prepared by Briggs, Acting Vice-President).—This was an appeal by leave against an interlocutory ruling and order of the High Court of Uganda which decided that an action by the assignee of a contract could not be maintained without joining the assignors as parties.

Early in 1950 the Director of Public Works made a contract with Boury Bros. for the erection by them of 40 Asian bungalows in accordance with defined conditions, specifications and drawings. On 17th August, 1950, Boury Bros. made a sub-contract with Chanan Singh and Udham Singh, whom we shall call "the assignors", for the erection by them of eight of the 40 bungalows in accordance with the provisions of the principal contract at a price of Sh. 31,000 each. A completion date was provided and a penalty for late completion. There were also provisions for progress payments and for termination if the work "is too slow or is not being done to the satisfaction of the Director of Public Works or his representative". The assignors proceeded to carry out the sub-contract, but before they had completed the work they executed on 7th December, 1951, the assignment in favour of the appellant on which the appeal turns. The recitals and operative parts of the document are as follows:-

"Whereas Messrs. Boury Brothers of P. O. Box 800, Kampala aforesaid (hereinafter referred to as the Contractors) had entered into a contract (Contract No. 34 of 1950) with the Director of Public Works of Uganda for constructing 40 Asian bungalows for the Uganda Government and whereas by an agreement dated the 17th day of August, 1950 (a copy whereof is annexed hereto and marked C. & U.) and made between the contractors. of the one part and the assignor of the other part the assignor agreed with: the contractors that the assignor would build eight of the said 40 Asian bungalows described in the said agreement as quarters Nos. 6, 7, 8, 9, 10, 11, 12 and 13, Kira Road, Kampala, in accordance with and subject to the terms and conditions mentioned in the said agreement in consideration of the contractors paying to the assignor shillings thirty-one thousand (Sh. 31,000) per bungalow.

And whereas according to the assignor a balance of Sh. 35,000 to Sh. 40,000 (shillings thirty-five thousand to shillings forty thousand) will under any circumstances remain and/or become due and owing by the contractors to the assignor under the said agreement on completion by the assignor of the construction of the said eight bungalows, which, the assignor assures, will be completed on or about the 15th day of December, 1951.

And whereas the assignor has agreed with the assignee for the sale to the assignee of all the benefit to which the assignor is and/or shall become entitled under the said agreement for a sum of shillings eleven thousand, seven hundred and thirty-nine and cents ten (Sh. 11,739/10).

Now this deed witnesseth that in consideration of the sum of shillings eleven thousand, seven hundred and thirtynine and cents ten (Sh. 11,739/10) paid by the assignee to the assignor (the receipt whereof the assignor hereby acknowledges) the assignor as beneficial owner hereby assigns unto the assignee all that the hereinbefore recited agreement with the contractors dated the 17th day of August, 1950, and the full and exclusive benefit thereof together with all moneys now payable or hereafter to become payable by the contractors under or by virtue thereof to hold the same unto the assignee absolutely."

The appellant gave due notice of the assignment and later sued the partners of Boury Bros. for Sh. 28,301/55 alleged to be the balance due on the subcontract with interest and costs. On interlocutory application the defendants contended, inter alia, that the assignors were necessary parties and the High Court so held, and stayed the suit pending their joinder.

The learned Judge first held that this assignment did not purport to impose on the assignee any duty to complete the contracted works, but operated only as an assignment of the balance of moneys to become due under the contract to the assignors. With this we respectfully agree. He proceeded, however, to hold that "the whole tenor of the document is to provide some security for an advance of the said Sh. 11,739/10 and it is, therefore, only a charge. In other words the arrangement between the plaintiffs and Messrs. Chanan and Udham Singh amounted to an equitable assignment by way of charge of part of the moneys alleged to be due from the defendants."

There was no evidence of this and it appears to be based solely on the view that the assignors would be unlikely to sell, if one may so express it, a debt estimated by them at Sh. 35,000 to Sh. 40,000 for a mere Sh. 11,000-odd. But this ignores the point that the assignee took subject to all equities. When the defence is filed it may well be alleged that, so far from owing the assignors Sh. 35,000 to Sh. 40,000, or the lesser sum of Sh. 28,301/55 which is claimed, the defendants owe the assignors only about Sh. 11,000, or indeed owe them nothing at all. The assignor may have made a good bargain or he may have made a bad one. In truth, however, all this is beside the point. In form the assignment is an absolute assignment of the debt and the learned Judge was not entitled to hold that it was anything else. Indeed, it is extremely doubtful whether it would have been competent to adduce evidence to show that it was intended to operate only as a mortgage or charge. Balkishen Das v. Legge, (1899) I. L. R. 22A 149. The respondents did not support the reasoning of the learned Judge on this point, but contended that the assignors were necessary parties on other grounds. If we understood Mr. Russell correctly, he put the matter in this way. The operative words "assigns ... the ... agreement and the ... benefit thereof together with all moneys. ... " are only apt if the intention is to make the assignee liable to perform the contract, as well as to entitle him to receive moneys under it. They cannot be controlled or limited by the recitals. This contract was one which required personal performance by the assignors and therefore the obligation to perform it could not be assigned. In consequence, the remainder of the assignment. i.e. the assignment of the debt could only be effective in equity and not at law. There are numerous objections to this argument, but one is necessarily fatal to it. On the same interlocutory application as gave rise to this appeal the learned Judge was also asked to decide as a preliminary issue whether it was competent for the assignors to assign the contract as such without the consent of the Director of Public Works and/or the defendants. He decided that the contract was not one requiring personal performance, but that so long as the bungalows were correctly built it did not matter who built them. From that decision there has been no appeal. It is clear, therefore, that, even if the assignment imposed on the assignee the obligation to perform the contract, which in our opinion it does not, there would still be nothing invalid or improper about it and it would still operate as an ordinary absolute assignment at law.

We think it may be desirable to add a few words on the general nature and effect of assignments of choses in action in Uganda. It appears to be the general view of practitioners that an absolute assignment of a chose in action has here the same effect as it would have now in England under section 136 (1) of the Law of Property Act, 1925, and had formerly under section 25 (6) of the Judicature Act, 1873. The matter clearly depends on section 15 of the Order in Council of 1902, but it may be put in either of two ways. It may either be said that the Judicature Act of 1873 is a statute of general application, the effect of which is generally imported into Uganda by section 15, or it may be contended that the basis of jurisdiction of the High Court as prescribed by section 15 is only compatible with the existence in Uganda of a fused system of common law and equity such as existed in England after the Judicature Act, 1873, and is incompatible with the existence of separate systems of law and equity such as obtained before that date. It is not necessary to consider now which of these theories may be correct. It is sufficient to say that the opinion now generally held as to the effect of an absolute assignment in Uganda seems to us to be wellfounded.

For these reasons we allowed this appeal with costs and ordered that the respondents do pay to the appellant the costs of the preliminary issues.