Lambrou and Another v Rodoussakis (Civil Appeal No. 26 of 1956) [1950] EACA 247 (1 January 1950)

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

Before SIR NEWNHAM WORLEY (President), SIR RONALD SINCLAIR (Vice-President) and BRIGGS, Justice of Appeal

### (1) ARIADNE TZAMBURAKIS and (2) NAFSIKA LAMBROU, Appellants (Original Defendants)

# v EFTICHIA RODOUSSAKIS, Respondent (Original Plaintiff)

#### Civil Appeal No. 26 of 1956

## (Appeal from the decision of H. M. High Court of Tanganyika, Sir Herbert Cox, C. J.)

Limitation—Action for accounts—Amendment of plaint by consent—Jurisdiction to strike out amended plaint—Whether adjudication on a preliminary point an order or a decree—Tanganyika Code of Civil Procedure, sections 97 and 105 (1)-Tanganyika Rules of High Court, Order XIV, rule 2 and Order XV, rule 3.

The respondent had sued the appellants as personal representatives of the respondent's deceased brother who was co-owner with her of a sisal estate. The relief claimed was primarily for receiver and partnership accounts arising from the management of the estate by the deceased and from two leases by the respondent to her brother of her share in the estate. The first lease was from 1st April, 1945, to 31st March, 1949, and the second from 1st July, 1949, for three years. The latter came to an end as the estate was sold shortly after it was executed. The proceedings were commenced in July, 1952, and the respondents in their defence pleaded limitation. After abortive negotiations for a settlement the respondents' advocates filed an amended plaint in August, 1954. This was submitted to the appellants' advocate who consented by letter to its being filed and an order to that effect was made by consent on 1st September, 1954.

Two preliminary points were decided by Mahon, J. These were that the amended plaint should not be dismissed on the ground that it disclosed a new cause of action and that the action was barred on the ground of limitation.

The substantive action was later heard by Cox, C. J. who decreed accounts on the basis of two of the paragraphs of the amended plaint. On appeal the appellants attempted to attack the decision of Mahon, J., on the two preliminary points.

*Held* $(18-7-56)$ .—(1) There was no change of the cause of action as the respondent was always attempting to establish the right to her proper share of the revenue of the estate and that<br>the effective date for the purpose of limitation was the date of filing the original plaint.

(2) The amended plaint having been filed by leave of the Court, and the order giving leave having been a consent order, the ordinary jurisdiction to disallow amendments of pleadings no longer existed.

(3) The decision of Mahon, J., was a judgment giving rise to a preliminary decree.<br>It was an adjudication which, so far as regards the Court expressing it, conclusively deterwhich are an adjustment of the parties with regard to the two special matters which were put<br>forward for decision as preliminary issues, and that an appeal against this decision was<br>barred by section 97 of the Tanganyika C

Appeal dismissed.

Cases referred to: Naresh Mohan v. Brij Mohan, (1933) A. I. R. (P. C.) 43; Cases reterred to: Naresh Mohan v. Brij Mohan, (1933) A. I. R. (P. C.) 43; Chanmalswami v. Gangadharappa, (1915) 39 Bom. 339; Gilbert v. Endean, 9 Ch. D. 259; Ahmed Musaji v. Hashim Ebrahim, 42 Cal. v. Nobin. (1916) 44 Cal. 1 (P. C.).

#### O'Donovan and Harris for appellants.

#### Houry, O. C., for respondent.

BRIGGS, J. A.—This is an appeal from a decree of the High Court of Tanganyika. One Nico Tzamburakis now deceased and his sister, the respondent. were co-owners as tenants-in-common, having shares of $70/100$ and $30/100$ respectively, of a large sisal estate from about 1932 onwards. They developed the estate largely by raising loans and it became very prosperous. Unfortunately the deceased, who is said to have been domineering and autocratic, and his sister quarrelled continuously about the estate accounts and management. The deceased had always had *de facto* control, and in 1946 it was agreed that the respondent should lease to him for three years her 30 per cent share in consideration of a royalty on all sisal and tow produced. A lease was executed and duly registered. It was in operation from 1st April, 1946, to 31st March, 1949. There was then an interregnum of some three months during which the deceased remained *de facto*, though perhaps not *de jure*, in possession of the estate. On 14th July, 1949, the co-owners executed a new lease for three years to run from 1st July, 1949. Instead of a royalty this reserved a fixed money rent, which was duly paid. Soon afterwards, however, the estate was sold to a third party, the proceeds of sale were duly divided, and the second lease ceased to operate.

The respondent complained that the deceased had not paid to her the sums properly due for royalty under the first lease, and raised various other minor claims, and in July, 1952, she sued his widow and daughter, as his personal representatives. He had died on 6th January, 1951. The plaint is dated 23rd July, 1952, but the date of filing does not appear from our records. The original plaint alleged a partnership in the estate prior to the first lease and a revival of the partnership during the "interregnum". The first lease was said to be a lease of the respondent's share in the partnership, other than the capital assets, in respect of which the partnership was alleged to have continued. The relief asked was primarily a receiver and partnership accounts. A defence was filed in November, 1952. It contained general denials and a plea of limitation. Thereafter there were prolonged, but abortive, negotiations for settlement and arbitration proceedings.

On 10th August, 1954, an amended plaint was filed. The respondent had changed her legal advisers and the new ones evidently took a different view of her legal position. After drafting the amended plaint, they submitted it to the appellants' advocate, who consented by letter to its being filed, and an order to that effect was made by consent on 10th August, and confirmed by a note made by the Judge on 1st September, 1954. This is important, because it may well be that, if the matter had been contested, the amendment would have been disallowed. We are not, however, criticizing the giving of consent; it seems probable that it may have been an agreed step in the abortive negotiations for settlement. As it is, we must regard the amended plaint as regularly and correctly filed. It alleges the initial co-ownership, the first lease, the "interregnum", the second lease, the sale, and failure by the deceased to render accounts of production of sisal, of rent, of profits on sale of machinery and other movables,

and it gives credit for Sh. 185,685, paid in the years 1947, 1948 and 1949. It alleges that on taking the accounts some Sh. 800,000 will be found due to the respondent. The relief claimed is-

- "(a) an account (i) of all sisal produced on the sisal estate during the period covered by the first lease namely from 1st April, 1946, to 31st March. 1949, (ii) of the rent by way of royalty due to the plaintiff on such total production and (iii) of the machinery and other movables sold or otherwise appropriated by the deceased be taken and payment to the plaintiff of the amount found due on taking such accounts; - (b) that an account may be taken of the profits made by the sisal estate $(a, b)$ during the period from 1st April, 1949, to 14th July, 1949, and payment to the plaintiff of the amount found due on taking of such accounts; - (c) that an account may be taken of the movable and immovable property $(c)$ of the deceased and that the same may be administered under the decree of the Court:"

with costs and further or other relief. The amended defence objects that some of the relief claimed depends on a new cause or causes of action, relies on limitation, and contains general denials. The learned Chief Justice decreed accounts on the basis of paragraphs $(a)$ and $(b)$ above, but limiting the latter so as to end at 30th June, 1949, it having been conceded that all sums falling due after that date had been paid. He also ordered payment into Court of a sum of $£42,000$ , or that security be given therefor. The personal representatives appeal.

Before the main hearing of the suit two issues were dealt with as preliminary points by Mahon, J. They were—

- "(a) whether the amended plaint should be dismissed on the ground that it discloses a new cause of action, and - (b) whether the action is time-barred."

The learned Judge accepted the respondent's submissions and on 3rd December, 1954, answered both these questions in the negative. These issues were accordingly never before the learned Chief Justice. The appellants filed no separate appeal, but the first three grounds of their memorandum on this appeal are as follows:

- "1. The learned Chief Justice erred in law in failing to hold that a new cause of action was introduced for the first time in the amended plaint filed on the 10th day of August, 1954. - 2. The learned Chief Justice erred in law in failing to hold that the claim made in the amended plaint was wholly or alternatively partly timebarred by virtue of the provisions of the Indian Limitation Act, 1908. - 3. Alternatively the learned Chief Justice erred in failing to hold that the claim in the suit as framed originally was affected by the provisions of the Indian Limitation Act, 1908."

This appears to be somewhat unfairly critical of the learned Chief Justice, since he never decided, nor could have decided, those matters at all; but the intention of the appellants was clearly, and was stated by their counsel to be, to attack the decision of Mahon, J. They claimed to be entitled to do this on the basis that it was an "order affecting the decision of the case" within the meaning of section 105 (1) of the Code of Civil Procedure. If the decision of Mahon, J., was in law an order, whether appealable or not appealable, this would no doubt be correct, for there is no doubt that his decision affected the final decision of the case on its merits. I think Mahon, J., must have considered that it was an order, for his written grounds of decision are headed "Ruling". It may be, however, that it was not an order, but a preliminary decree. In that case appeal

would be barred by section 97 of the Code. No formal decree or order based on the decision appears in the record and it is probable that none has ever been extracted. This might have barred an earlier appeal under section 97, but it cannot affect the question whether the appellants can appeal on these issues now. Mahon, J., appears to have decided these issues under Order XIV, rule 2. Order XV, rule 3, does not appear to be in point, and the questions raised were clearly questions of law. There is the highest authority for giving a wide interpretation to the powers of the Court authorizing separate trial of severable issues, See Naresh Mohan v. Brij Mohan, (1933) A. I. R. (P. C.) 43. In spite of a number of Bombay decisions noted in Mulla's Code of Civil Procedure, 12th ed., p. 7, under the heading "Finding on issue", and in particular *Chanmalswami v*. Gangadharappa, (1915) 39 Bom. 339, I see no reason why this adjudication should not be a judgment giving rise to a preliminary decree. It is "an adjudication which, so far as regards the Court expressing it, conclusively determines the rights of the parties with regard to" the two special matters which were put forward for decision as preliminary issues. *Mulla* (p. 381) and *Chitaley* (5th ed., p. 1101), seem to agree that section 105 (1) is intended to refer to interlocutory orders. In Gilbert v. Endean, 9 Ch. D. 259, Cotton, L. J., said, at p. 268:-

"Those applications only are considered interlocutory which do not decide the rights of parties, but are made for the purpose of keeping things in statu quo till the rights can be decided, or for the purpose of obtaining some direction of the Court as to how the cause is to be conducted, as to what is to be done in the progress of the cause for the purpose of enabling the Court ultimately to decide upon the rights of the parties."

The adjudication here was clearly not of that nature. These were not merely interlocutory questions, but would otherwise have had to be decided as substantial issues on the hearing of the suit. The Bombay cases seem to lay some stress on the need for the "finding" to be "embodied in the judgment and decree". This is clearly impossible where different Judges hear the preliminary issues and the remainder of the suit, as was quite properly done in this case. I think it may be that the dividing line is to be drawn where the issues are so far severable that they can properly be heard by different Judges. I take it as clear that the types of preliminary decree expressly mentioned in the Code and Rules are not the only types that can be passed, that more preliminary decrees than one can be passed in a single suit, that a decree is still in law a decree even if it purports to be an order, and that an adjudication is either a decree or an order and cannot be both, or be split into component parts. On the last point, see Ahmed Musaji v. Hashim Ebrahim, 42 Cal. 914 (P. C.) at p. 924. It has been expressly held that it is proper to decide a question of limitation as a preliminary issue under Order XIV, rule 2. Hussain Bakhsh v. S. of S., (1935) 22 A. I. R. Lah. 982. Chitaley, 5th ed. 2010, in citing Re Palmer's Application, (1882) 22 Ch. D. 88, in his commentary on Order XIV, rule 2, obviously contemplates that a decision under this rule may be a decree and may found an appeal. Speaking for myself, and excepting the special case of an application for rejection of a plaint, I am quite unable to see how it can properly be said that the same question answered on a preliminary issue will give rise, if answered in one sense, to an order, but, if answered in the opposite sense, to a decree. In view of the distinction drawn in the definition of "decree" between preliminary and final decrees, I think this construction is untenable. On the plain wording of the definition it is the nature of the question, not the nature of the answer, which decides whether a decree or an order results. The elaborate arguments to the contrary in *Chanmalswami's case* seem to be sufficiently answered by the opinion of the Privy Council in Naresh Mohan v. Brij Mohan, where they expressly approved on grounds of convenience the hearing of certain issues and deferment of the hearing of another, and approved by implication

the embodiment of the adjudication on the earlier issues in a decree. I am of opinion that Chanmalswami's case, which was long antecedent in date to Naresh Mohan's case, is no longer authoritative. For these reasons I am of opinion that the grounds of appeal which seek to attack the judgment of Mahon, J., are incompetent; but it is not unlikely that this case may go further, and, since I may be wrong, I think it desirable to give my views on the two points which he decided.

The first issue has two quite separate aspects and to some extent governs the second. On the question whether the amended plaint should have been struck out on the ground that it raised a new cause or causes of action, I agree with Mahon, J., that, even if it did, no grounds could be shown for striking it out. It was filed by leave of the Court and the order giving leave was a consent order. In such a case I think the ordinary jurisdiction to disallow amendments of pleadings no longer exists. The other aspect is the effect of the amendment on limitation. The appellants contended before Mahon, J., and before us that, even if the amended plaint stands, the fact that it raises new causes of action results in the effective date for purposes of limitation being the date of filing the amended plaint, and not, as it would ordinarily be, the date of filing the original plaint. Mahon, J., held that no new causes of action were raised, and consequently the date of the original plaint was the operative one. It is clear that amendment as such does not ordinarily affect the date of limitation: it is also clear that amendment of a plaint to introduce a new cause of action should not be allowed, and that no amendment should be allowed if the defendant would thereby be deprived of a defence of limitation: but Rustomji, 5th ed. 448, states that where a new cause of action is introduced on amendment time will run from the date of the application to amend. This seems both involved and contradictory, but most of the authorities cited appear to support it, though they are conflicting. The rule may be designed to allow the Court to remedy an earlier mistake. But I think that for the purposes of this suit a solution can be found. I think that in relation to both the right to amend and the date for limitation the "cause of action" should be regarded not in a technical, but in a common-sense and practical way. The Court should ask itself: "What was the plaintiff really complaining about in his first plaint?" and "Is he in substance complaining about the same matters or different ones in the amended plaint?". If the substance of the complaint is the same, it matters not that the technical cause of action is different, nor that new branches of the complaint are developed. The amendment should be allowed and the date of limitation is unchanged. I think that this is substantially the reasoning underlying the decision of the Privy Council in Charan Das v. Amir Khan, (1920) 48 Cal. 110, 116. I think that, applying this principle, there was no change of the cause or causes of action in this case, since in substance the respondent was always attempting to establish her right to her proper share of the revenue of the sisal estate, and that the effective date for purposes of limitation remained the date of filing the original plaint.

On the general question of limitation, Mahon, J., said only this: —

"As to $(b)$ if I am correct that the plaint as amended discloses no new cause of action, then this suit is clearly not time-barred under either article 116 or 110 of the Indian Limitation Act, 1908."

The learned Judge does not clearly indicate which article of the Act he considers to be applicable, and I think the question is somewhat difficult. If a six-year period of limitation applies, the *terminus* would be at least some months after the inception of the first lease, and since accounts were ordered in respect of that period it seems that the Court did not act on that basis, unless, as counsel suggested to us, there was a mere miscalculation. It was common

ground that sales of sisal took place at frequent and regular intervals over the whole period of the first lease, so the rent by way of royalty fell into arrears in the same way. (I think Rangayya v. Bobba, (1904) 27 Mad. 143. (P. C.), is distinguishable, in that the rents there fell to be determined by the Court.) I think the explanation may be that the learned Judge considered that some article such as 89 or 106 applied, under which, if the account is claimed within the limitation period, it may be ordered to be taken in respect of transactions outside the limitation period as well as those within it. But, disregarding accounts of trustees under section 10, accounts of this kind appear to be only those between former partners or principal and agent. Where the suit is for an account based on a contractual relationship other than these I think article 120 is prima facie applicable, and where it applies the accounts will only be ordered for a six-year period before the plaint. The accounting party may, however, in some cases be held liable for the balance in his hands at the beginning of that period, and earlier accounts may be relevant as evidence to show that balance. There is the further question whether in this case the right to an account was ever denied, and if so when; but I think the respondent's case was that from, and even before, the inception of the first lease she was constantly demanding accounts, and the deceased consistently refused to furnish them.

I doubt, however, whether article 120 applies in this case, at least as regards the period of the first lease. All the moneys claimed in respect of that period are moneys alleged to be due under the terms of the lease, which, as I have said, was registered. If it were not registered, I think the correct view would be that the claim was for moneys due as rent under article 110 or as compensation for the breach of a contract under article 115. The tendency of the cases seems to be towards bringing under article 116 almost any money claim arising from a registered contract. It is well settled that a suit for rent under a registered lease or contract is governed by article 116, not article 110, and that six years' arrears are recoverable, although the word "compensation" seems less than apt in this context. See Tricomdas v. Gopinath, (1917) 44 Cal. 759 (P. C.). On the other hand suits for accounts which are within article 89 or 106 cannot be brought under article 116, although the contract is registered. It is said that such suits are "essentially" for accounts. I confess to some difficulty in distinguishing suits essentially for accounts from those where the account is a necessary preliminary step towards obtaining relief, but not of the essence of the action. I think, however, that there may be a distinction on these lines. In agency and partnership cases the question whether any money is payable by the defendant to the plaintiff is decided solely by the state of accounts between them. In this case there is a direct contractual obligation to pay moneys and it is only for the purpose of ascertaining the quantum that an account is necessary. The liability exists, as it were, independently of the account in a sense which does not obtain as between partners or principal and agent. See Hurrinath Rai v. Krishna Kumar, (1887) 14 Cal. 147 (P. C.), and Kothandapani v. Sreemanavedan, (1939) 57 Mad. 378. My conclusion is that this is not a suit essentially for accounts, but a suit for rent, and that article 116 governs it. I think that Mahon, J., should have held that the respondent's claim was timebarred in respect of all rent accrued due more than six years prior to the filing of the plaint. If article 120 applies, the result would, I think, be the same. I think there would not be any question in this case of charging the deceased with earlier arrears as an initial balance. I understand that principle to apply only where the accounting party has received money which it is his duty to pay to another, and not where there is a simple contract debt of an amount ascertainable only by taking accounts. I have been dealing so far with the period of the first lease and the claims thereunder. I think all those

claims are on the same footing. The claim with regard to machinery and movables depends on clauses 4 and 5 of the lease, just as the rent depends on clause 1. I now turn to the "interregnum".

It might have been thought that on the termination of the first lease by effluxion of time the deceased was holding over as tenant at will on the terms of the expired lease, but neither party so contends. One has accordingly the position of simple co-ownership with one co-owner enjoying *de facto* possession and receiving the profits of the land. In these circumstances I think the claim is "essentially for accounts". In the case of joint family property co-parceners have been held to be within article 89. Asghar v. Khurshed, (1902) 24 All. 27 (P. C.). But in that case the agency had been created by express acts and did not depend only on the relationship of co-parceners. It seems also that co-owners, where one alone receives the revenue due to both, may be within article 89. See Chandra v. Nobin, (1912) 40 Cal. 108 (reversed on another point sub nomine Nobin v. Chandra, (1916) 44 Cal. 1 (P. C.)). In that case an express agency had been created and was held to continue as between the agent and the infant heirs of the deceased principal. It seems to be a question of fact whether agency exists or should be inferred from the circumstances. I think that in accordance with these authorities agency might possibly have been found to exist in this case, but there is no such finding. The inference that it existed is not of compelling strength, and I do not think we need find now that the deceased was the agent of the respondent. If they were co-owners and nothing more, I think article 120 applies, and the claim in respect of the interregnum would not be barred. In any event, as I have said, I think Mahon, J.'s decision must stand for all purposes.

The only remaining issue on the appeal to us is one of fact and concerns a document to which I shall refer as exhibit 1.

Exhibit 1 purports to be an agreement or memorandum executed on 14th July, 1949, by the deceased and the respondent and witnessed by one George Papoudopolus, the deceased's clerk, confirming that all accounts between the parties up to 30th June, 1949, had been settled and nothing was due by either to the other. This document was produced from the deceased's papers at the very last moment before trial, and the respondent's first reaction to it was to deny that she had ever signed it. The signature was examined by handwriting experts and the witness Papoudopolus was found with some difficulty and a statement was taken from him. On the resumption of the trial the respondent modified her attitude and gave evidence admitting her signature, but saying that essential misrepresentations as to the nature of the document had been fraudulently made to her by the deceased and that *non erat factum*. The learned Chief Justice so found and that finding is attacked by the appellants. Exhibit 1 bears the same date as the second lease and operates up to the day before that lease came into effect. It appears to have been typed on the same typewriter as the second lease, and it contains the same curious error that the respondent is referred to by her maiden name, although she had been married for some years. It is common ground that the second lease was prepared and executed in the office of Mr. Desai, an advocate, who witnessed it. All this goes far to prove that Mr. Desai drafted exhibit 1, but in my opinion it does no more for the appellants than that. Indeed I think it supports the respondent's story, for if there had been a genuine settlement of accounts at the time of execution of the second lease one would have expected exhibit 1 also to be executed<br>in Mr. Desai's office and before him. The appellants contend that there was a heavy onus on the respondent on this issue, which I accept as correct. They say that she should not be believed, because she made a dishonest claim for rent under the second lease in her original plaint. I think this is going much

too far. It certainly did later appear that the deceased had paid the rent under the second lease-perhaps the only one of his obligations to the respondent which he is shown to have met-but I think it by no means follows that her claim was made dishonestly. Her initial denial and subsequent admission of her signature of exhibit 1 are relied on for the same purpose; but, assuming her contentions to be generally true, I think it is not surprising, and certainly not indicative of dishonesty, that she should say: "I never signed anything like that". In support of the probability of exhibit 1 being genuine the appellants point to the loan of £2,000 which the respondent made to the deceased after the second lease when he was in London, but there are obvious reasons which might lead to this, even though earlier accounts remained unsettled. Finally, the appellants point to large sums paid by the respondent for income tax and say that she would not have been liable for them, and would not have paid them, unless she had received large sums as income from the estate. It is, however, in evidence that she protested strongly against these claims and only paid when advised by the deceased's accountant that she must. The accounts on which he gave that advice were shown to be almost certainly incorrect and based on false information supplied by the deceased. These arguments are wholly insufficient, either separately or cumulatively, to justify us in reversing the finding of the learned Chief Justice, but I am in any event of the same opinion as he was. that fraud was proved to conclusion against the deceased.

The respondent made full disclosure of her financial position and I think it was clearly proved that she never received, either at the end of June, 1949, or earlier, the large sums apparently due to her. I think it was also proved that the deceased did not pay to her even such sums as he claimed to have paid. It was established that in 1947 he lent her $\text{\pounds}6,000$ to start or run an hotel business. This was still outstanding on 30th June. 1949, and on the insistence of the deceased was repaid when the estate had been sold in September or October, 1949. This seems wholly inconsistent with exhibit 1 being a valid and genuine document. The appellants say that the £6,000 loan was something so distinct from the estate accounts that it might well be excluded from the operation of exhibit 1. I think not: exhibit 1 does not purport to deal only with estate accounts or any other sort of accounts, but with a complete and general settlement of accounts. I agree on this issue with the reasoning and conclusions of the learned Chief Justice. I find that there was no settlement of the respondent's claims in July, 1949, and that she was induced to sign exhibit 1 in ignorance of its nature and by the fraud of the deceased.

We were asked to amend the decree in various minor respects, notably to provide for the position which would arise if on taking the accounts it were found that no money was due to the respondent. I think this contingency extremely remote, and having regard to the conduct of the deceased I think the respondent should still be entitled to her full costs of obtaining the decree for accounts. There is Privy Council authority for such an order. See Hurrinath Rai v. Krishna Kumar Bakshi, (1887) 14 Cal. 147, 159. I do not make any exception as regards the costs of examining and proving the signature on exhibit 1, for I do not think the initial denial of that signature was in the circumstances unreasonable. I would dismiss this appeal with costs.

WORLEY, President.—I also agree and cannot usefully add anything. An order will be made in the terms proposed in the judgment of the learned Justice of Appeal.

SINCLAIR, Vice-President.—I have had the advantage of reading the judgment prepared by the learned Justice of Appeal and am in entire agreement with it and have nothing to add.