Belge S.A. v Sibilia (C.A. 21/1934) [1934] EACA 1 (1 January 1934)

## COURT OF APPEAL FOR EASTERN AFRICA.

Before LAW, C. J. (Zanzibar), LUCIE-SMITH, Ag. C. J. (Kenya), and BATES, J. (Tanganyika).

> BANQUE DU CONGO BELGE S. A. Appellants (Original Plaintiffs) $\mathbf{2}$

M. MARIO SIBILIA, Respondent (Original Defendant). C. A. $21/1934$ .

- Portion of judgment only appealed against, respondent's right to contest entire judgment—Argument on matters raised in notice served upon appellants-Unreal defence-Adjudication upon evidence not raised in pleadings and possibly extraneous thereto—Liability of drawers of promissory notes to holders in due course who debited drawees-Further interest from date of filing suit—Collateral security. - Held $(22-9-34)$ .—That a notice given by respondent under R. 30 of the Court of Appeal for Eastern Africa Rules has its counterpart in Order 58 Rule 6 of the Rules of the Supreme Court of England, and such notice permits a respondent to attack a judgment in its entirety and not that portion only against which appellant has appealed. - Held Further.-By reason of foregoing a respondent is at liberty to argue all matters raised in a notice served by him previous to the hearing of the appeal. - Held Further.—That a ground of appeal averring that the trial judge failed to direct himself that the defence plcaded was not a real one, could not be considered as it was open to appellants to have applied at the trial, under Order 6, Rule 16, Civil Procedure Code, to have it struck out. - Held Further.-That, where evidence is admitted, even although it may be possibly outside of or not properly raised in pleadings the Court is entitled to adjudicate thereon. - Held Further.-That, where securities given by respondent to a third party and endorsed by the latter to appellants, who gave credit to such third party, became dishonoured at their due dates and thereupon appellants debited such third party with the amount of same, appellants could not recover such amount from respondent. - Held Further.-That, where a judgment is silent as to interest being awarded from the date of filing of the suit it shall be deemed to have been refused. - Held Further.-That, Exhibit 11 empowered appellants to treat the promissory notes the subject of the action as continuing security for amounts owed to appellants by their customer and remained as such until appropriated or otherwise dealt with.

Bown (with Satchu) for Appellants.

Vellani for Respondents.

Appellants sued respondent in the High Court of Tanganyika for Shillings 13,389 cents 75, principal, interest and protest expenses as maker of five promissory notes in favour of Jivanjee Bros., who endorsed same to respondent for value before the respective due dates thereof.

The learned Trial Judge held that as regards the five Promissory Notes, exhibited as A, B, C, D and E, respondent paid the amount of same in 1932 to Jivanjee Bros., but that this payment did not of itself discharge the respondent as the appellants being the holders at the time were entitled to the He considered the contention of the amount of the notes. respondent that his liability had been discharged by appellants' action in receiving from Jivanjee Bros. payments more than enough to have paid the amount of the promissory notes and all moneys owed by Jivanjee Bros. to appellants since the date of dishonour of the last promissory note and the case of Field and Others v. Carr, 130 E. R. was quoted.

The learned Trial Judge considered this case and held that it did not apply in respect of the promissory notes known as B, C and E, because Jivanjee Bros. never received credit in their account with appellants in respect to these and accordingly they were not debited with same upon dishonour. He held that respondent paid the amount of these notes to Jivanjee Bros. well knowing they did not hold them and knowing, as he held, that appellants were the true holders and as such were entitled to payment from respondent. With regard to the promissory notes A and D the learned Trial Judge held that they were discounted by appellants and that Jivanjee Bros. were credited with the amount of same and that appellants upon dishonour debited Jivanjee Bros. with the amount of same and that latter received notice of such debit. He further held that when appellants debited the amount they must be deemed to have treated the said promissory notes A and D as returned and that appellants held them for no purpose other than for collection. He also held that in July, 1930, after both notes had been debited to Jivanjee Bros., they owed appellants Sh. 57,262/06 and that they had paid to appellants Sh. 76,000, which was more than enough to pay all debit items up to 31st July, 1930. He held that in respect of the promissory notes A and D the case of Field and Others $v$ . Carr applied. He did not hold that Exhibit 11 gave appellants power to hold as collateral security any bills or notes handed to them for collection.

Judgment was entered for Sh. 13,389/75 less Sh. 5,826/19, the latter amount being the principal, interest and protesting fees claimed in respect of the two promissory notes A and D and appellants were by a separate judgment allowed $8/13$ of their total taxed costs plus the entire court fees to which they were entitled. The grounds of appeal were set out in the memorandum of appeal as follows:-

1. The judgment is bad in law.

2. The judgment is against the weight of evidence.

3. The learned Judge has misdirected himself on the admission of evidence.

4. The learned Judge has failed to direct himself that the defence as pleaded is no real defence at all.

5. The learned Judge misdirected himself in admitting evidence alleging payment of the notes by Jivanjee Bros. to the Bank which is not part of the defence pleaded.

6. The learned Judge misdirected himself in considering the evidence referred to in paragraph five supra in forming his judgment as the respondent (defendant) had not obtained leave to amend his defence.

7. The learned Judge misdirected himself as to the construction and interpretation of Exhibit 11, the Bank's agreement.

8. The learned Judge was wrong in deciding that the facts of this case are identical with the facts in Field v. Carr, 130 E. R. and in applying the ruling in Clayton's case.

9. The learned Judge misdirected himself in not holding that all the Promissory Notes were intended to remain as a continuing security.

10. The learned Judge has misdirected himself in not allowing the full costs of the suit to the appellants (plaintiffs).

11. The learned Judge has misdirected himself in omitting to give judgment for further interest as asked for in prayer 2 of the plaint and in prayer 4 of the plaint.

$Bown$ —Real defence is that respondent denied owing appellants the sums claimed by them or any sum. That he paid in full satisfaction to Jivanjee Bros. all claims arising under the promissory notes and that Jivanjee Bros. represented themselves to be and were the parties entitled to payment therefor at all material times.

Note by $Court:$

Agreed by counsel (a) question of Limitation dropped, (b) appellants were holders in due course of all the notes.

Erroneous omission to object does not make evidence of what is not evidence. Mohen Ting v. Ghureba and Others, 6 Bengal L. R. p. 495; Miller v. Babu Madhodas, 23 Madras Appeals, p. 106; Satchu Hamir v. J. S. Addetia, Civil Appeal

27/33 High Court of Tanganyika; Order 58 rule 4 Supreme Court of England Rules; Jackson v. International Cable Co., Ltd., 5 T. L. R., p. 13; Kashibhai Dungerbhai Patel v. Devraj Hirji and Co., 14 K. L. R., p. 38, Kanji Devji v. Damodar Jinabhai and Co., 1 Ct. App. L. R. (E. A.) p. 87.

Tactical advantage may not be gained by argument on evidence outside pleadings. Bullen & Leake (6th Ed.) p. 502; Civil Procedure Code (Indian, 1908) Order 8, rule 2. Defendant must raise by his pleadings all matters in defence. Kara v. Issa bin Khalifa, 1 Bombay, p. 209; Field v. Carr, 130 E. R. p. 964.

Vellani.—Paras. 4, 5 and 6 of Memo are important grounds of appeal. Evidence caused no surprise to appellants. $N_0$ objection taken at trial. Cannot be allowed to take it now.

18 E. R. p. 484 (at p. 490).

By LAW, C. J. Counsel referred to: Javer Meghji and Habib Punja v. Adam Jusab, Civil Appeal, 13/32 of Court of Appeal for $E. A$ .

25 Madras. App. page 195 (at page 207).

12 Madras. App. page 171 (at page 180).

13 E. A. L. R. p. (at pp. 14 and 16).

Court of Appeal, rule 30.

If one side files an appeal the other side is relieved of the necessity of doing so and can file notice that he intends to ask for judgment to be varied. This rule is taken from Order 58, rule 6 (L. C. Rules).

Re Cavender's Trusts, 16 Ch. D. p. 270.

Ex parte Paune, 11 Ch. D. p. 539.

Civil Appeal 29/31 Court of Appeal for E. A.

Bown in reply to argument under rule $30$ .

In re Mellor (1922) 1 Ch. D. p. 312.

See Jones v. Stott, 1910, 1 K. B. p. 893 at p. 901.

ORDER.-Rule 30 of the Court of Appeal Rules, 1925, finds its counterpart in Order 58 rule 6 of the Rules of the Supreme Court (England). The decisions thereunder appear to support the argument of the respondent's learned Counsel that the notice given by respondent under Rule 30 falls within the purview of that Rule and permits a respondent to attack a judgment, in its entirety and not only that portion of it which the appellant has appealed. In particular we desire to refer to the cases of In re Cavender, 16 Ch. D. p. 270; Ex parte Payne in re Cross, 11, Ch. D. p. 539; Jones v. Stott (1910) 1 K. B. p. 893 (at p. 901). the "Bee Swing" 1885, 10 P. D. p.18 and the unreported<br>English Court of Appeal Case Lea v. Williams, dated 4th March,

On behalf of respondent, we are referred to Civil Appeal 1886. No. 29/31. Court of Appeal for E. A. (Tanganyika High Court Miscellaneous Cause No. 7 of 1931, Karimiee Jivaniee and Co. v. The Hon. the Attorney General for Tanganyika) where this practice was followed without question. We are of opinion, therefore, that the respondent is at liberty to argue all the matters raised in his notice. dated the 31st August. 1934.

Vellani resumed.

All five notes were security for what Jivanjee Bros. owed appellants. It was not until three years after April, 1930, that respondent knew appellants had the notes.

Wigram v. Buckley (1894) 3 Ch. D. p. 483. Laches.

Interest.—Promissory notes do not provide for interest.

Webster v. B. E. M. L. Ass. Co. (1880) 15 Ch. D. at p. 175. Section 34 Civil Procedure Code of India (1908).

37 Bombay p. 336 (at p. 338).

If interest not awarded it must be taken to have been considered by Court.

Costs.—Court gave reasons for depriving appellants of part of their costs. A. I. R. 1931 Allahabad, p. 126 (at p. 128) a matter for discretion.

Bown.-All India Reporter Part 134 p. 50. Point not properly raised in pleadings. In present case not raised at all. Civil Appeal $13/32$ matters by consent decided which were outside pleadings. 13 E. A. L. R. is really in favour of appellants. 1 L. R. Court of Appeal for E. A. p. 88. Evidence showed respondent owed appellants over Sh. 35,000. Promissory notes all general endorsements, not restricted to any purpose at all. Exhibit 11 gave appellants power to do what they liked with bills and therefore $Field$ v. Carr does not apply. As to continuing security see Pease v. Hirst 109 E. R. p. 396.

*Note.*—Exhibit 11 was an agreement between appellants referred to as "The Bank" and Jivanjee Bros., referred to as "The Customers", dated 28-2-27, whereby it was agreed that all bills lodged by the customers for collection or otherwise should operate as a security or deposit with the bank for all the customers' liabilities to the Bank at any of its branches, the bank having the right, at its absolute discretion, to use the proceeds of collection for adjusting any of the liabilities.

Vellani (in reply to Court).

As to Pease v. Hirst, although appellants may have acquired a charge they subsequently adopted promissory notes A and D to their own right, therefore Field $v$ . Carr applies.

LAW, C. J.-In this case appellants, as holders in due course from Jivanjee Bros., brought an action against respondent in respect of five promissory notes. The respondent's defence, substantially, was a denial of liability in that he had paid the value of those notes to Jivanjee Bros. Certain objections were taken by the respondent that the appellants were not holders in due course and that the suit was barred by limitation, but these objections were dropped <sup>3</sup>uring the course of the trial. One of the grounds of appeal is that the defence as pleaded was no real defence. In my view, it was open to appellants, at the outset, to apply to have the defence struck out (Order 6, rule 16) if they considered they were so entitled. This was not done, and, in the light of subsequent events, I am of opinion that this ground cannot now be considered. Another ground of appeal complains that evidence was improperly admitted to show that Jivanjee Bros. had paid off these notes to appellants. This evidence was in reference to Exhibit 8 which was admitted in evidence in the cross-examination of the appellants' Manager, their first witness.

It is argued, on behalf of the appellants, that this evidence was wrongly admitted, and that the erroneous omission on the part of the appellants' Counsel to object to its admission does not make the evidence admissible (Miller v. Babu Madho Das, 23 L. R., Ind. App. p. 106 at p. 116; Satchu Hamir v. J. S. Addetia C. A. No. 27 of 1933, High Court, Tanganyika). But in the present case witnesses were questioned as to transactions between appellants and Jivanjee Bros. and arguments were addressed to the Court by Counsel for both parties on this part of the case. To my mind, therefore, there was not only no omission to object but there was a consent to the admission of this evidence.

Again, the appellants argued that the learned trial Judge should not have considered this particular evidence as respondent had not obtained leave to amend his defence, and that it is not likely that had he applied for leave to amend he would have been permitted to do so in view of the fact that such amendment would have operated to change the whole nature of his defence. With regard to the latter part of this argument, I am unable to express any opinion as I cannot say how the learned trial Judge would have viewed such an application. But with regard to the former part of the argument, the evidence was in fact admitted, and, even though possibly outside of or not properly raised in the pleadings, the Court was entitled to adjudicate thereon (Javer Meghji and Another v. Adam Jusab, C. A. No. 13/1932, Court of Appeal for Eastern Africa; Krishna Chendra Gajarpeti Narayana Deo v. Mulla Remmana Das A. I. R. 1932 Journal p. $50$ ). The appellants have also taken exception to the learned trial Judge's view that Exhibit 11 did not give them power to hold the promissory notes in suit as collateral security for future transactions. As I construe this exhibit, these notes were clearly intended to be continuing security for any amount which Jivanjee Bros. at any time might owe appellants and remained as such until appropriated or otherwise dealt with.

Of the five promissory notes sued on the appellants obtained judgment in respect of three. With regard to the other two notes, referred to as "A" and "D", the learned trial Judge held that appellants had appropriated them to the credit of Jivanjee Bros.' general account with appellants and that consequently they could not recover the value thereof from respondent (Field and Others v. Carr, 130 E. R. p. 964). Against this finding the appellants have framed a ground of appeal. A careful reading of Field $v$ . Carr convinces me that this finding was correct. The only other point on which appellants have appealed is that they were not awarded further interest from the date of filing the suit. In this connection, section 34 (2) Civil Procedure Code seems to be conclusive, in that where no mention is made of such further interest it shall be deemed to have been refused. and I cannot assume that the learned trial Judge did not consider this matter or the provisions of section 57 Bills of Exchange Ordinance, when dealing with this part of the case. With regard to costs, this was dealt with by a separate order in which reasons were given for their apportionment, and the provisions of section 35 Civil Procedure Ordinance were satisfied in this respect. I am not prepared to say that a judicial discretion was not properly exercised in such apportionment or that the reasons given were not good reasons. Upon a full consideration of appellants' case I would dismiss their appeal with costs.

The respondent has filed a Notice under rule 30 Court of Appeal Rules 1925 asking for the judgment of the Lower Court to be varied on certain grounds, which are not confined to appellants' grounds of appeal. Appellants have objected to the nature of this Notice, claiming that it is not within the purview of rule 30. We have earlier given a separate Ruling on this question allowing respondent to argue all the matters set forth in the Notice.

The principal ground put forward by the respondent is that in the account of Jivanjee Bros. with the appellants the latter had received, prior to the suit, more money than was sufficient to cover the promissory notes. This appears to be founded on certain remarks in the judgment to that effect, for which I am unable to find any substantiation in the evidence. On the contrary, appellants' witness Febve states that Jivanjee Bros. owe them approximately Sh. 35,000, which is more than twice the amount claimed in the suit. Respondent's learned Counsel has certainly made no attempt to explain this matter by reference to the accounts. The respondent's other grounds do not in my opinion affect the decision in the case. With regard to Exhibits $2$ and $3$ , I am not prepared to say they were not satisfactorily proved. In the circumstances respondent must have known that appellants were holders of the notes. Though the protests to the promissory notes "A" and "D" cannot be regarded as having been properly proved, this is of little importance, as the expenses for protesting should not have been included in appellants' claim, and have not been awarded to them. It was unnecessary to protest these two notes. In my view, the grounds contained in respondent's Notice afford no good reasons for varying the judgment and I would dismiss it with costs.

The appellants' and respondents costs to be set off, one against the other.

In conclusion, I desire to observe that no question has been raised before us of non-presentment of any of the notes and the effect thereof under section 87 Bills of Exchange Ordinance, and consequently, I do not propose to discuss this aspect of the case.

## LUCIE-SMITH, Ag. C. J.-I agree.

BATES, J.-I concur in the judgment of the learned Chief Justice of Zanzibar, which I have had the advantage of reading. I would only make the following observations in relation to section 87 (1) of the Bills of Exchange Ordinance 1931 of Tanganyika which is identical with section $87$ (1) of the English Act of 1882. (1) The plaint itself appears to lack any averment that each of the promissory notes sued on, each of which appears in its body to be made payable at a particular place, had been presented at that place for payment (as to which see page 134 of the Eighth Edition of Bullen and Leake where the case of Spindler v. Grellet 1847, 1 Exh. 384; Vol. 154 E. R. 163 is referred to); (2) the plaintiff (appellant) has failed to adduce any sufficient evidence to prove that any of the promissory notes were presented for payment at any place and the defendand has denied the presentment of any of the notes. But from the start of the suit in the High Court until the conclusion of the arguments before us no submission as to the legal consequences of either of these points in relation to the provision of the law which I have mentioned has been made by the defendant—respondent's advocate: their possible importance only manifested itself to me after the conclusion of the arguments. In the result I have come to the conclusion that I should not in the particular foregoing regard now take a view adverse to the appellant.

Both the plaintiff's appeal and the defendant's cross-objection should therefore be dismissed with costs as stated in the judgment of the learned Chief Justice of Zanzibar.