East Africa Roofing Co. Ltd v Pandit (Civil Suit No. 992 of 1953) [1954] EACA 86 (1 January 1954)

### ORIGINAL CIVIL

#### Before CRAM, Ag. J.

# EAST AFRICA ROOFING CO. LTD., Plaintiff $\mathbf{v}$

## UMIASHANKAR ANANTKUMAR SHANTI PANDIT, Defendant

# Civil Suit No. 992 of 1953

Company Law—Civil Procedure and Practice—Civil Procedure (Revised) Rules, 1948—Order 9, rule 14—Suit dismissed for want of appearance—Order 9, rule 15—Application by plaintiff company for an order to have dismissal set aside-Intention to appear at hearing by "manager"-"Manager" per incuriam attending at wrong court—Whether limited company can appear by "manager"—Whether sufficient cause.

The plaintiff, a limited liability company, registered under the Companies Ordinance (Cap. 288), set a suit down for hearing *ex parte*; but, on no appearance being made on its behalf, the Court dismissed the suit under the provisions of Order 9, rule 14. The company then applied under rule 15 for an order to set aside the dismissal and appeared at the hearing of the application by counsel. The grounds praying for the exercise of the Court's discretion were that the company had intended to be represented at the hearing by its "manager," but in error he had attended at the wrong Court.

Held (22-10-54).—(1) A corporation aggregate such as a limited company cannot appear in person, not having as a legal entity any visible person and having no physical existence and cannot, at common law, appear by its agent but only by its attorney.

(2) Neither the Companies Ordinance (Cap. 288) nor the Civil Procedure (Revised) Rules, 1948, Order 3, rule 1 has altered the common law rule so as to permit a limited company to appear in Court by any of its officers.

(3) Even if the company's "manager" had attended the proper court at the hearing, such attendance could not have amounted to an appearance as required by the rules. Implicit in the submission of "sufficient cause" was that had the "manager" appeared such an appearance would have been valid. As any such appearance would have been a mere nullity, the excuse of "error" could not amount to a sufficient cause to move the Court to exercise its discretion to set aside the order in dismissal.

Quare: Whether the company could have appeared by a "recognized agent" under the provisions of Order 3.

Cases cited: Scriven v. Jescott, (1908) 53 S. J. 101; Re an Arbitration between the the London County Council and London Tramways Co., (1897) 13 T. L. R. 254; Kinnell & Co. v. Harding Wace & Co., (1918) 1 K. B. 405 (C. A.).

Authorities cited: Blackstone, Commentaries Vol. 1, 476; Year Book 21 Edw. 4.

Bowyer for applicant.

### J. S. Patel for respondent.

RULING.—The plaintiff company prepared a plaint signed by the secretary of and presented by the company which was a limited liability company. The defendant entered an appearance and filed a defence admitting the sum claimed, but praying for payment by instalments. The secretary of the company set down the suit for hearing ex parte and without notice to the defendant, this being

contrary to the provisions of Order 9, rule 9 $(1)$ , a defence having been filed. On the day fixed, when the suit was called for hearing, no appearance was made by either party and the Court, acting under the powers afforded by Order 9, rule 14, ordered that the suit be dismissed.

The plaintiff company was left with the remedy contained in Order 9, rule 15 to bring a fresh suit; but it has elected to select another remedy afforded by the same rule, which to my mind, in the circumstances, is not available, and that is to apply by motion for an order to have the dismissal set aside. On this occasion, the company appears by an advocate.

The company showed cause in that it intended to appear by an official termed its "manager" and that the manager per incuriam went to another court. Now, implicit in this submission is that such an appearance if made could have been a valid one. The issue is, therefore, could such an appeaarnce have been in law a valid appearance? For, if it could not have been, then it could not be ruled a sufficient cause. For example, if it is eventually found that the company could not lawfully have been represented by the "manager" then the result would have been the same whether the "manager" attended at the right court or the wrong one. There would still have been no appearance by either party and the Court would have been entitled to have dismissed the suit for want of appearance. It would be idle and illogical to put forward as a sufficient cause that there was a mistake if it were found that, even if there had been no mistake, still there would still have been no appearance, because any such appearance was a nullity.

The rule as to appearance by parties or their representatives is laid down in Order 3, rules 1, 2 and 3, $viz :=$

"I. Any application to or appearance or act done in any court required or authorized by the law to be made or done by a party in such court, may, except where otherwise expressly provided by any law for the time being in force be made or done by the party in person or by his recognized agent or by an advocate duly appointed to act on his behalf:

(The provisos have no relevance).

- 2. The recognized agents of parties by whom such appearances, applications and acts may be done are— - (a) persons holding powers of attorney authorizing them to make such $(a)$ appearance and applications and to do such acts on behalf of parties. - (b) persons carrying on trade and business for and in the names of parties not resident within the local limits of the jurisdiction of the court within which limits the appearance, application, or act is made or done, in matters connected with such trade or business only where no other agent is expressly authorized to make and do such appearances, applications and acts."

A corporation aggregate can only appear in an action by an attorney, according to English practice. The authorities which affirm that proposition go back to the Year Book, 21 Edw. 4. Blackstone, Commentaries, Vol. 476, describes this incident as a disability attaching to a corporation aggregate. In Scriven $v$ . Jescott, (1908) 126 L. T. J. 100, Bray J. described the necessity of appearing by attorney as "an infirmity of a company." That being the common law rule, it could only be affected by statute in the Colony. I have searched the Companies Ordinance (Cap. 288), but this, like its counterparts the Companies Acts in England, nowhere modifies or alters the common law rule. Nothing in Order 3

∕

(6) The effect of the proviso to section 41 of the Limitation Ordinance is not to revive the limitation part of the Indian Limitation Act, 1877, after repeal, but merely to provide for unseen contingencies, by taking certain periods of limitation, formerly provided by the Act and by its own force and authority retaining them in the law of the Colony. It is the Limitation Ordinance and not the Orders in Council, which causes the<br>Schedules of the Act to remain in force. Where the contingency is provided for by the Ordinance, by reason of the repeal, there can be no recourse to the Act.

(7) Section 5 (1) of the Ordinance provided a period of six years' limitation for simple contracts. Since a contract for a loan of money is a simple contract the period of limitation provided by that sub-section applied. The periods of limitation contained in Articles 57 and 58 of the Act were irrelevant to the issue.

Cases cited: Don v. Lippmann, (1837) 5 Cl. & Fin. 1 (7 E. R. 303); Pardo v. Bingham, (1869) L. R. 4 Ch. App. 735; Société Anonyme Métallurgique de Prayon v. Koppel, (1933) 77 S. J. 800; McCoy v. Esmail Alibhai, (1938) 5 E. A. C. A. 70; R. v. Hoare, (1859) 1 F. & F. 647 (175 E. R. 890).

Distinguished: Ali Lalji v. Idi s/o Mhembe, (1941) 8 E. A. C. A. 20

Also referred to: Chitty on Contract 20th Edition page 5; Diccy Conflict of Laws 6th Edition, page 861.

Mrs. Kean for plaintiff.

Hunter for defendant.

JUDGMENT.—The defendant pleaded in his written statement of defence "if the alleged friendly loan was made to the defendant at Delhi, India, on 15th November, 1948, then the said claim is time-barred under the provisions of Article 57 or alternatively Article 58 of the Indian Limitation Act".

From the submission made by the learned counsel for the defendant at the hearing I had some difficulty in distinguishing whether the defendant was pleading that as the contract was made in India the proper law of the contract was the law of India which law, therefore, should be applied or whether he was arguing that, as the Indian Limitation Act, 1877, had been applied to this Colony, it was part of the lex fori and so applied as part of the Colony's law. He submitted that section 11 of the Act governed the contract but whether as the lex loci *contractus* or as part of the *lex fori*, I found it difficult to comprehend.

One inescapable fact is that the suit has been instituted in the Kenya Courts so that if the ordinary rule of International Private Law were applied, the lex fori would govern the contract in a matter of limitation. This follows from the inclusion of matters of limitation into the law of procedure. The principle that procedure is governed by the *lex fori* is of general application and universally admitted, but the courts of a country can apply it only to proceedings which take place in, or at any rate under the law of, that country. That is the maxim that procedure is governed by the *lex fori* means in effect that it is governed by the ordinary law of Kenya without any reference to any foreign law whatever. The maxim is in effect a negative rule and it follows that the Supreme Court, in common with English courts, pursues its ordinary practice and adheres to its ordinary methods of investigation whatever be the character of the parties or nature of the cause which is brought before it.

The Indian Limitation Act, 1877, was applied to this Colony by Article 11(b) of the East Africa Order in Council, 1897, and was preserved fom the revocation of that Order by the first proviso to Article 11 of the Kenya Colony Order in Council, 1921. Until 1934, the law of limitation, in these Courts, was ascertainable from that Act. In that year, however, was passed the Limitation Ordinance (Cap. 11) which by section 41 legislated: $-$

"The Indian Limitation Act, 1877, as applied to the Colony, save in so far as it relates to prescription is hereby repealed".

It would be a contradiction in terms to repeal an Act relating to limitation were it saved in so far as it related to limitation and as what is saved is not limitation but prescription, it behoves me to inquire if there be a difference between prescription and limitation. This distinction is dealt with by Dicey, Conflict of Laws, 6th Ed., page 860:—

"The law on this point is well settled in this country, where this distinction is properly taken that whatever relates to the remedy<br>to be enforced must be determined by the *lex fori*—the law of the country to the tribunals of which the appeal is made—but that whatever relates to the rights of the parties must be determined by the proper law of the contract or other transaction on which their rights depend— $Don v$ . Lippmann, $(1837)$ 5 C1 & F.1.

Our Rule is clear and well established. The difficulty of its application to a given case lies in discriminating between matters which belong to procedure and to matters which affect the substantive rights of the parties... English lawyers give the widest extension to the meaning of the term "procedure". The expression ... includes all legal remedies, and everything connected with the enforcement of a right. It covers, therefore, the whole field of practice; ... as well as every rule in respect of the limitation of an action or of any other legal proceeding for the enforcement of a right... Any rule of law which solely affects not the enforcement of a right but the *nature* of the right itself does not come under the head of procedure. Thus, if the law which governs, e.g. the making of a contract, renders that contract absolutely void, this is not a matter of procedure, for it affects the rights of the parties to the contract and not the remedy for the enforcement of such rights.

Hence any rule limiting the time within which an action may be brought, any limitation in the strict sense of that word, is a matter of procedure governed wholly by the lex fori. But a rule, which, after the lapse of a certain time, extinguishes the right of action—a rule of prescription in the strict sense of that word-is not a matter of procedure, but a matter which touches a person's substantive rights and is therefore, governed, not by the lex fori, but by the law whatever it may be which governs the right in question. Thus, if in an action for a debt, incurred in France, the defence is raised that the action is barred under French law for lapse of time, or that for the want of some formality an action could not be brought for the debt in a French court, the validity of the defence depends upon the real nature of the French law relied upon. If that law merely takes away the plaintiff's remedy, it has no effect in England. If on the other hand the French law extinguishes the plaintiff's right to be paid the debt, it affords a complete defence to the action in England".

For example X contracts a debt to A in Scotland. The recovery of the debt is not barred by lapse of time according to Scots' law, the proper law of the contract, but it is barred by the English Limitation Act, the lex fori. A cannot maintain an action against X in England. Pardo v. Bingham, (1869) L. R. 4 Ch. App. 735. Otherwise, X incurs a debt against A in France. The recovery of such debt is barred by the French law of limitation, the proper law of the contract, but is not barred by any English statute of limitation. A can maintain an action for the debt against X in England. Société Anonyme Métallurgique de Prayon $v$ , Koppel, (1933) 77 S. J. 800.

Clearly, therefore, limitation can be differentiated from prescription. Limitation merely bars the remedy whereas prescription extinguishes the right. Looking at the Indian Limitation Act, 1877, therefore, it is seen to have duality of purpose. It not only limits remedies in many cases, but in others it also extinguishes rights. Plainly, therefore, what is saved from repeal by section 41 of the Limitation Ordinance is that part of the Act legislating for prescription which part is still applied to this Colony, and what is repealed by section 41 is all that part of the Act dealing with limitation which, therefore, no longer is applied to this Colony.

In my view, therefore, section 11 of the Act which deals with limitation has been repealed and the law governing suits on foreign contracts and the application of foreign limitation law, formerly provided for by that section is no longer law in this Colony and the law applicable is the law of the Colony which is contained in section 37 of the Ordinance which enacts the ordinary rule of International Private law cited. Whatever the proper law of this contract may be, whether the law of India or the law of Kenya, the suit has been instituted in Kenya and the defendant has submitted to the jurisdiction of the Supreme Court here. If he can show that the proper law of the contract is the law of India and that law has extinguished the plaintiff's right to use, then his defence will succeed. If, on the other hand, even if the proper law of the contract is the law of India, but that law merely bars the remedy, then, unless he can show that articles 57 and 58 of the Indian Limitation Act still have force in Kenya, he will have to take the law of limitation here as he finds it.

The proviso to section 41 of the Limitation Ordinance runs: —

"Provided that where in the said Indian Limitation Act any act, matter or thing is required to be done within a specified period and a period of limitation in respect of any such act, matter or thing, is not provided for in this Ordinance or in any other law or Ordinance now or hereafter in force in this Colony then, notwithstanding the provisions of this section, the period of limitation provided for in the said Indian Limitation Act in respect of the said act, matter or thing, shall remain in full force and effect."

That is although the Act in regard to limitation is repealed and no longer at all applies to this Colony, if there is a period of limitation not provided for in the Limitation Ordinance which was formerly provided by the Act, then any such period is to remain in full force and effect. That is, I take it, that the proviso does not revive the Act in regard to limitation; it cannot do so for the Act is specifically repealed, but the Ordinance takes those periods under its ægis and by its own force and authority retains them in the law of the Colony.

In support of this proposition, I refer to McCoy v. Esmail Alibhai, (1938) 5 E. A. C. A. 70 where Whitley, C. J. said: -

"Section 41 repeals (save as to prescription) from 1st December, 1934, inclusive, the old Indian Limitation Act with that one exception and the whole of the Indian Limitation Act is thenceforward dead and has no longer any effect as law. The proviso does not keep alive any part of the Indian Limitation Act. It merely provides for any unseen contingencies which might have been overlooked. It provides that if, in the new Ordinance (which is now the law) no period is laid down for such cases, then the periods shall be the same as were laid down in the now extinct Indian Limitation Act. It is the new Ordinance which makes such periods the periods prescribed by law for the future just as they have been prescribed by the Indian Limitation Act in the past.

It is this section of the new Ordinance which, by proviso, fixes what shall be the period under the existing law. It does not say that the Indian Limitation Act is not repealed in such cases. If it had meant that it would have been worded like this 'The Indian Limitation Act is hereby repealed save in so far as it relates to-

$(a)$ prescription;

(b) such cases as those contemplated by the proviso'." $(b)$

I have now to consider whether a period of limitation is provided by the $\Gamma$ Limitation Ordinance for, if none is given, then article 57 of the Indian Limitation Act provides for the contingency.

Looking to section 5 (1) of the Ordinance it runs inter alia: $-$

"... all suits founded upon any simple contract shall and may, unless otherwise specifically provided for in this Ordinance, be commenced and sued within six years next after the cause of such suits and not after".

What I have to construe are the words "simple contract". Does this phrase embrace a contract of loan? On referring to Chitty on Contracts 20th Ed., page 5, the learned jurisprudent states: -

"Contracts are of three classes—Contracts of Record, Contracts under Seal and Simple Contracts."

"A simple contract is by far the most common and important kind of contract."

Further, at page 13, he defines a simple contract as: $-$

"Simple contracts are made either by word of mouth, when they are termed oral, or by writing without seal; and both kinds of simple contract are frequently spoken of in English law as parol contracts."

At page 1050 he says: $-$

"The contract of loan of money differs from bailment in that the actual money lent is not to be redelivered by the lender but an equivalent sum is subsequently to be repaid. It is a simple contract not necessarily requiring writing."

Plainly, therefore, the contract of loan in this suit is a simple contract and the limitation affecting it is provided by section 5 (1) of the Ordinance and not by the proviso to section 41 and article 57 or 58 of the Act. I observe that in Ali Lalji v. Idi son of Mhembe, (1941) 8 E. A. C. A. 20, the Court of Appeal held that, in an issue of deposit, article 60 of the Indian Limitation Act applied; but the Court was careful to distinguish deposit from a contract of loan of money. This was one of the principal issues in that case. That decision is, therefore, not binding on this Court. A loan of money is not a bailment unless the identical coins are to be restored, R: v. Hoare, (1859) I. F. & F. 647. The basis of this decision may be, although it is not so stated, that deposit or bailment is not a simple contract.

In the result, the defence of limitation fails, the period of limitation being six years which had not lapsed from the time the money was lent before the suit was instituted.