Damji v Neb (C.A. 13/1930.) [1930] EACA 25 (1 January 1930)

# COURT OF APPEAL FOR EASTERN AFRICA.

## Before PICKERING C. J. (Zanzibar), SHERIDAN, C. J. (Tanganyika), and THOMAS, J. (Kenya).

# CASSAM SULEMAN DAMJI

#### (Appellant) (Original Applicant)

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### SIRI RAM NEB-TRUSTEE

### (Respondent) (Original Respondent). C. A. $13/1930$ .

Bills of Sale Amendment Act, 1882, section 9-form of bill of sale.

$Held:$ (Pickering, C. J. dissenting):—That the omission of the words "and interest thereon at the rate of per cent per annum" after the words "and things specifically described in the schedule thereto annexed by way of security for the payment of the said sum<br>of shillings three thousand," constituted a departure from the<br>statutory form calculated to mislead and the bill of sale was void.

This appeal was lodged against a ruling given by STEPHENS, J., in Bankruptcy Cause No. 7 of 1929 (Msa).

Burke for appellant.

Patel for respondent.

PICKERING. C. J.—The question in this appeal is whether the variation from the statutory form of a bill of sale set out in the schedule of the Amendment Act of 1882 is such a divergence as avoids the document under the provisions of section 9 of the Bills of Sale Acts. The variation consists of the fact that after the words " and things specifically described in the schedule hereto annexed by way of security for the payment<br>of the said sum of shillings three thousand " the words " and interest thereon at the rate of per cent per annum ", which occur in the statutory form, have been omitted. Later in the document stringent covenants for the payment of interest are set out. Now in my opinion there is no valid reason why although only payment of the principal monies owing be secured by the right to seize and sell certain specified chattels, the document constituting the bill of sale should not also contain a covenant to pay interest upon those principal monies. Failure to pay interest under a covenant contained in such a bill of sale would give to the grantee no right to seize the assigned chattels if the payment of the interest is not secured by the bill. In order that a right to seize may arise the default of the grantor must be either a default in payment of the monies actually secured or in the performance of a covenant or agreement which is contained in the bill of sale and is necessary for

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maintaining the security. In my opinion the bill of sale which is the subject of these proceedings constitutes a valid security for the amount paid to the grantor on the 4th day of April, 1928. It is true that there has been a departure from the statutory form, but in my opinion the divergence is not material in that the result produced is not greater or less than the legal effect of a document which follows exactly the statutory mould. I confess that I have been much exercised as to whether the departure from the form is or is not calculated to mislead those whom it is the object of the statute to protect. My doubts have been occasioned by the form of the notice of motion lodged by the appellant and out of the hearing of which this appeal arises. The terms of the appellant's notice show that he claimed that not only was the payment of the principal monies secured under this bill of sale but also the payment of the interest. At the hearing of this appeal the appellant has also confidently asserted that payment of the interest was secured by a right in the grantee to seize the assigned chattels upon a default in this respect made by grantor. As I have said I myself am strongly of opinion that by reason of the omission of the words " and interest thereon "the payment of interest is not secured by the bill of sale. The appellant confidently asserts the contrary view. I feel then that it is difficult for the appellant to say that an interested person reading the bill might not be lead into taking the view that a default in the payment of interest gave no right of seizure whereas the grantee would claim the right to seize upon such a default. If the appellant's view can be reasonably sustained then in my opinion this bill of sale by reason of a variation is calculated to mislead and the divergence should be held to be so substantial as to avoid the bill. After some consideration however I have come to the conclusion that the appellant's construction of the document is clearly wrong and that the document as drawn is not calculated to mislead. For these reasons I would remit the case with a direction that the principal monies only are secured, and that the appeal should be allowed to that extent.

SHERIDAN, C. J., and THOMAS, J.-The view taken by the learned Judge in this case, in my opinion, is the correct one. The one question for decision was whether the bill of sale was void and he held it was as not conforming with the form in the schedule to the Act. Mr. Burke in the Supreme Court and this Court contended that the bill of sale secured interest and principal sum, alternatively arguing that at least the principal was secured. There is no mention of interest being secured in the document; on the contrary the words used are "by way of security for the payment of shillings three thousand $(3,000)$ ''. There then follows a covenant to pay interest and the usual proviso that the chattels shall not be liable to seizure or to be

taken possession of for any cause other than those specified in. section 7 of the Bills of Sale Amendment Act, 1882. This. section reads:-

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"Personal chattels assigned under a bill of sale shall not be liable to be seized or taken possession of by the grantee for any other than the following causes:-

- (1) If the grantor shall make default in payment of the sum or sums of money thereby secured at the time therein provided for payment, or in the performance of any covenant or agreement contained in the bill of sale and necessary for maintaining the security. - (2) If the grantor shall become a bankrupt, or suffer the said goods or any of them to be distrained for rent, rates or taxes. - (3) If the grantor shall fraudulently either remove or suffer the said goods, or any of them, to be removed from the premises. - (4) If the grantor shall not, without reasonable excuse, upon demand in writing by the grantee, produce to him his last receipts for rent, rates, and taxes. - (5) If execution shall have been levied against the goods of the grantor under any judgment at law:

Provided that the grantor may within five days from the seizure or taking possession of any chattels on account of any of the above-mentioned causes, apply to the High Court, or to a Judge thereof in Chambers, and such Court or Judge, if satisfied that by payment of money or otherwise the said cause of seizure no longer exists, may restrain the grantee from removing or selling the said chattels, or may make such other Order as may seem just."

Now it seems to us that a creditor inspecting the register and wishing to know the position of the grantor under the bill of sale might easily come to the conclusion that on a failure to pay interest the goods the subject matter of the bill of sale could be taken possession of. The possibility of such an occurrence is best illustrated by Mr. Burke's own view that the document secured both principal and interest. There has, we consider, been a departure from the statutory form calculated to mislead and we would therefore dismiss the appeal with costs

The appeal was dismissed with costs.