Mantheakis v Custodian of Enemy Property (Civil Appeal No. 3 of 1943) [1943] EACA 4 (1 January 1943) | Attachment Of Property | Esheria

Mantheakis v Custodian of Enemy Property (Civil Appeal No. 3 of 1943) [1943] EACA 4 (1 January 1943)

Full Case Text

# COURT OF APPEAL FOR EASTERN AFRICA

Before SIR JOSEPH SHERIDAN, C. J. (Kenya), SIR NORMAN WHITLEY, C. J. (Uganda) and GRAY, C. J., (Zanzibar)

## EMMANUEL MANTHEAKIS, *Appellani* (Original Plaintiff)

### THE CUSTODIAN OF ENEMY PROPERTY, Respondent (Original Defendant) Civil Appeal No. 3 of 1943

Appeal from<sub>\*</sub>decision of H. M. High Court of Tanganyika)

Contract-Outbreak of war-Custodian of Enemy Property-Powers and Obligations of Custodian—Trading with the Enemy Ordinance, 1939. S. 9-Executory Contract—Force majeure clause.

The facts appear from the judgment reported.

**Held** (18-5-43).—(1) There was no duty towards the appellant imposed by the Trading with the Enemy Ordinance, 1939, upon the Custodian of Enemy Property to perform or carry on any of the obligations contained in a contract made with another person by the enemy subject, of whose property the respondent had been appointed Custodian, R. & A. Kohnstamm, Ltd. v. Ludwig Krumm (London), Ltd. (1940) 2 K. B. referred to.

(2) The executory contract entered into by the enemy subject was dissolved by the outbreak of war Naylor Benzon v. Krainische Industrie Gesellschaft 1918 1 K. B. 331.<br>Porter v. Freudenberg (1915) 1 K. B. 857 referred to.

(3) The force majeure clause contained in the contract indicated that the parties to the contract contemplated the possibility of war and mutually agreed that in such event the contract should be put an end to. Per Gray, C. J.-

(4) Where postponement of the performance of mutual obligations or the cancella-<br>tion of mutual obligations, which fall due during the war, involves a substantial alteration in the contract itself, no such postponement or cancellation can take place, because an executory contract is suspended as opposed to dissolved only where the suspension does Dictum of Rowlatt, J. in *Distington Hematite Iron Co., Ltd. v. Possehl & Co.* (1916)

1 K. B. 811 approved.

Phadke for the Appellant (Chitale with him).

Cadle, Assistant Custodian of Enemy Property for Custodian of Enemy Property (Hussein with him).

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SIR NORMAN WHITLEY, C. J. (Uganda).—The substantial points raised in this $appeal$ are: —

1. Whether the contract of June, 1939, made between the appellant and the Usagara Company was automatically dissolved by the outbreak of war.

2. If not, was the Custodian bound to carry out what the Usagara Company had by the contract undertaken to do.

In my opinion the case for the Custodian on the second point is so overwhelming and conclusive that it will be convenient to deal with that first.

It is common ground that the Usagara Company being a German concern its property became vested in the Custodian of Enemy Property by reason of the provisions of the Trading with the Enemy Ordinance, 1939, and the Custodian<br>of Enemy Property Order, 1939, section 9 of the Ordinance provided that custodians might be appointed "with a view to preventing the payment of money to enemies and of preserving enemy property in contemplation of arrangements to be made at the conclusion of peace and of maintaining production thereon during the waf", section 4 of the Custodian of Enemy Property Order provides that in respect of the property vested in him by virtue of the Order, the Custodian shall "have the powers of a Receiver and Managers".

Section 5 reads "without prejudice to the generality of section 4, the powers of the Custodian of Enemy Property shall include

- (e) Subject to the approval of the Director of Agriculture in each case, power to make such arrangements for the carrying on and maintenance of work on plantations or the productivity thereof as may seem proper; - (f) Subject to the approval of the Conservator of Forests in each case, power to make such arrangements for the carrying on and maintenance of work on forest concessions or the productivity thereof as may seem to him proper; - (g) Subject to the approval of the Chief Inspector of Mines in each case, power to make such arrangements for the carrying on and maintenance of work on mining claims, licence, leases or other mining titles or the productivity thereof as may seem to him proper; - (h) Subject to the approval of the Financial Secretary in each case, power to make such arrangements for the carrying on of any other business or enterprise as may seem to him proper;

The appellant relies largely upon section 4 contending that as Receiver and Manager it is incumbent upon the Custodian to perform all obligations undertaken by the Usagara Company by the contract which it made with the appellant.

The appellant owns a sisal estate called Lembeni next to one owned by the Usagara Company called "Kissangara". Lembeni had no machinery, whereas Kissangara was amply equipped. One of the obligations undertaken by the Usagara Company in the 1939 Contract and the earlier contract was to cut, manufacture and market the sisal on appellant's Lembeni Estate and this they did until they had to discontinue on the outbreak of war. The appellant contends that the Custodian was bound to continue this work as, so to speak, the successor of the enemy concern.

In my opinion the learned Trial Judge rightly held that no such obligation is imposed upon the Custodian. It would be strange if the position were otherwise for many contracts entered into by enemy concerns before the war involved skilled personal services extending over a period of years which the Custodian could not possibly be expected to carry on. It is necessary, however, to analyse the wording of the section to which I have referred. It is submitted on behalf of the appellant that the Custodian's refusal has resulted in a fall in production of sisal and that one of the reasons for appointing a custodian set out in section 9 of the Ordinance is the maintenance of production, but it is to be observed that the production referred to in the section is production on the Enemy Property whereas the property concerned here is that of the appellant himself. I cannot see how the existence of the mortgage can make any difference seeing that the appellant has the right of redemption. In my opinion there is no duty upon the Custodian to perform these obligations of the Usagara Company under the Contract in order to maintain production by virtue of section 9.

Turning now to sections 4 and 5 of the Order, I again am of opinion that the appellant has completely failed to make out his case. The sections must of course be read together and their general effect seems to be to give wide powers to the Custodian, with certain specified restrictions, whilst at the same time imposing upon him no obligations to carry on enemy concerns or to carry out the Executory Contracts of those concerns.

Section 4 provides that he "shall have the powers of a Receiver or Manager", That is a very different thing from appointing him a Receiver or Manager. If it had been intended that it should be his duty to continue to carry on all the enemy concerns whose property became vested in him and to take over all the obligations which they had undertaken it would have been a simple matter to say so in clear words. That such was not the intention is evident from section 5 the provisions of which with the restrictions attached indicate that far from being the general rule that the custodian should so carry on, he can only do so in exceptional cases in which he has first obtained the approval of certain specified Government officers.

I accordingly feel no doubt that the learned trial Judge was right in holding that no such obligation rests upon the Custodian.

In what I have said above I have assumed for the moment that the contract was not dissolved by the outbreak of war and is still in existence. As to whether or not it was dissolved I at first entertained some doubts, but after listening to the very clear and closely reasoned arguments of Mr. Cadle I am quite satisfied that under all the circumstances and on a proper reading of the English decisions it was dissolved. It is admittedly an executory contract and as such is dissolved by the outbreak of war in the following cases (*inter alia*): $-$

(1) If it enures to the aid of the enemy.

- (2) If it necessarily involves intercourse of any kind with the enemy. - (3) Where time is the essence of the contract. - (4) Where the suspension of the contract during war would involve the making of a new contract between the parties.

(See Trotter's Law of Contract during and after the war, 4th Edition, p. 57.)

It was argued on behalf of the appellant that the contract cannot now enure to the aid of the enemy or involve intercourse because of the blockade and impossibility of transporting sisal to Germany and of communicating with that country. But it is clear upon a careful reading of the authorities and in particular the judgment of McCardie, J., in Naylor Benzon v. Krainische Industrie Gesellschaft, 1918, 1 K. B. 331, that it is not for the Court to speculate as to such matters but to construe the contract as it stands. At page 334 he observed: "Apart from such a clause the contract, if carried out, would clearly have involved a trading with the enemy and would therefore have been avoided by the war. The question to be asked in such cases is this: what dealings or communication would or might in the ordinary course of contractual performance have taken place between the parties but for the intervention of war and a consequential prohibition of intercourse". He referred to the cases of Esposito v. Bowden, 7 E. & B. 763, and Rio Tinto Co. v. Ertel Bieber (1917), 116 L. T. 810. He went on to point out that "any debt or cause of action which accrued to the enemy before the war remains to him subject to the effect of the Trading with the Enemy Acts and the vesting of such a chose in action in the Public Trustee. The dissolution of the contract leaves such debts and causes of action as they existed before the war".

Applying those principles, the contract with which we are concerned in this case seems to me to fall within each of the four categories which I have set out above and for that reason it was in my opinion dissolved by the outbreak of war.

I also agree with the learned trial Judge's finding that the reference to "force majeure" in clause II of the contract indicates that the parties contemplated the possibility of war and mutually agreed that in such event the contract should be put an end to. I have not dealt with the English authorities in detail because they have been so fully analysed by the learned Judge and I am in entire agreement with his conclusions thereon.

I would dismiss the appeal with costs.

GRAY, C. J.—The learned trial Judge has dealt exhaustively with each of the points raised by the preliminary issues in this case. I find myself in such complete agreement with him that I do not feel that I have much usefully to add to what he has already said. I would none the less venture to refer to certain additional grounds for holding that he came to a right decision.

If, as has been contended on behalf of the appellant, the outbreak of war did not put an end to the contract between him and the enemy firm, prima facie the proper person to be sued as a breach of such contract arising after the outbreak of war was the enemy firm (Porter v. Frebdenberg (1915) 1 K. B. 857). From the case of R. & A. Kohnstamm, Ltd. v. Ludwig Krumm (London) Ltd. (1940) 2 K. B. 359, it is clear that the mere fact that the whole of the property of an enemy firm has become vested in the Custodian of Enemy Property does not of itself render the Custodian liable to be sued in respect of a contract entered into by the enemy firm. I further agree with the learned trial Judge that nothing contained in the Trading with the Enemy Ordinance, 1939, or the vesting order made thereunder on 3rd September, 1939, has either expressly or by necessary implication imposed upon the Custodian any obligation to perform any contract, which was entered into by the enemy firm and which, notwithstanding the outbreak of war, might have continued to remain in force.

It is further perfectly clear to me that, apart from anything contained in the "force majeure" clause in the last of the three agreements between the appellant and the enemy firm, the entire contract of necessity came to an end owing to the circumstances, which are set out by the learned trial Judge in his judgment and which owing to the outbreak of war rendered unlawful the continued performance of such contract by the actual parties thereto. I would venture to refer to an additional ground for holding that the learned trial Judge was right. The combined effect of the three agreements entered into by the appellant, and the enemy firm was that the contract was to continue in force until the 31st December, 1945. The enemy firm were to cut sisal on the appellant's estate according to a fixed rotation of from eight to ten months. In return the appellant was to place his trolley line and trolleys at the disposal of the enemy firm for the purpose of removing the sisal. It is clear that these mutual obligations cannot be performed by the actual parties to the contract so long as the war continues. They must therefore either be cancelled or else suspended until the end of the war. That being so, contractual relations between the parties can only be resumed after the war by making what would be in effect an entirely new contract. As was said by Rowlatt, J., in Distington Hematite Iron Co., Ltd. v. Posschl & Co. (1916) 1 K. B. 811, where postponement of the performance of mutual obligations or the cancellation of mutual obligations, which fall due during the war, involves a substantial alteration in the contract itself, no such postponement or cancellation can take place, because an executory contract is suspended as opposed to dissolved only where the suspension does not involve the making of a different contract between the parties".

Finally—and this by itself completely disposes of the whole matter in dispute—the learned trial Judge was clearly right in holding that by the insertion of the "force majeure" clause in their final agreement the parties agreed that the outbreak of war should put an end to their contract and that therefore at the time of making the vesting order there was no contract in existence, which the Custodian could in any circumstances be held liable to perform.

I therefore agree that this appeal should be dismissed with costs to the respondent.

SIR JOSEPH SHERIDAN, C. J.—Having had the advantage of reading the judgments of the learned Chief Justices of Uganda and Zanzibar, with which I agree, I find it unnecessary to say more than that $Mr$ . Cadle for the respondent in a very lucid and able argument convinced me that the learned trial Judge was right in holding (1) that the Custodian of Enemy Property owed no obligation to the appellant to continue the contract entered into between the appellant and the Usagara Co., (2) that the contract between them came to an end on the outbreak of war and by reason of the outbreak of war, and (3) that the force majeure clause was inserted in the contract by the parties to provide for the termination of the contract on the outbreak of war. I would dismiss the appeal with costs.

In addition to the costs the taxing officer is directed to allow to the respondents a sum covering such expenses as were incidental to the attendance of Mr. Cadle, the Assistant Custodian.

### COURT OF APPEAL FOR EASTERN AFRICA

# Before SIR NORMAN WHITLEY, C. J. (Uganda), GRAY, C. J. (Zanzibar) and MANNING. J. (Uganda)

#### G. G. DAMBA. Appellant (Original Objector)

# ABIBU BIN ABDULLA, Respondent (Original Plaintiff) Civil Appeal No. 4 of 1943

Appeal from decision of His Majesty's High Court of Uganda

Penal Code, section 302-Money found on convicted person-Title to money-Attachment under Order 19, Rules 49, 55, 57 and 58—Order for compensa-

tion-Criminal Procedure Code, sections 177 and 178.

The facts are sufficiently set out in the judgment reported.

Held (18-5-43).—(1) Money taken from a prisoner on his apprehension may be ordered under Section 177 of the Criminal Procedure Code to be restored to some persons entitled thereto or may be applied to the payment of a fine, costs or compensation, or under Section 17 (3) of the same Ordinance to payment to an innocent purchaser.

(2) Where money is taken from a person on his apprehension, that person is not to<br>be regarded as the owner thereof. Whether the money is ever restored to him depends on<br>the subsequent order of the Court. The Police hold th the Court, and the person has no title thereto. It is possible that he never had any title. He cannot obtain a title without an order of the Court.

(3) Upon a claim or an objection to an attachment under Order 19 Rule 58, the claim is to be disallowed only if at the time the property was attached, it was in the possession of the judgment-debtor as his own property and not on account of any other person or was in the possession of some other person in trust for the judgment-debtor.

(4) The claim could not be disallowed, and in accordance with Order 19 Rule 57, an order should have been made releasing the property from attachment.

Order of Pearson, J., set aside.

Order of Resident Magistrate restored in so far as it ordered the release of the property from attachment. Appellant appealed as a papper and no costs of the appeal were allowed to him.

Appeal allowed.

Order of Pearson, J. set aside.

Order of Resident Magistrate restored in so far as it ordered the release of the property from attachment. Appellant appealed as a pauper and no costs of the appeal were allowed to him.

Order of Pearson, J., as to costs set aside.

Appellant in person.

Macken for the Respondent.

JUDGMENT (delivered by MANNING, J.).—The facts out of which this appeal arises are as follows: -

On 26th March, 1941, one Juma Hassani was arrested and charged with cheating the appellant. A sum of Sh. 403 was found in his possession when he was arrested, and was taken possession of by the police.

2. On the 3rd April, 1941, the respondent got judgment against Juma Hassani for Sh. 600 in the District Court of Kampala. On the 4th April, 1941, the respondent obtained from the District Court an order under Order 19, Rule 49, attaching the Sh. 403 in the possession of the police.

3. On the 10th May, 1941, Juma Hassani was convicted of cheating the appellant. He was sentenced to a term of imprisonment and was ordered to pay Sh. 500 compensation to the appellant, but no order was made with regard to the Sh. 403 found in the possession of Juma Hassani.

4. Under Order 19, Rule 55, the appellant preferred a claim to the Sh. 403 and objected to its attachment. Both the claim and objection were allowed by the Resident Magistrate, Kampala, and the Sh. 403 was ordered to paid to the appellant as part of the compensation awarded in the criminal case. The grounds of the decision were $(a)$ that the Court, when ordering compensation, intended that the Sh. 403 were to go as part payment of the compensation, $(b)$ that money found on a prisoner on his apprehension cannot be attached prior to the termination of the criminal proceedings.

5. The respondent appealed to the High Court. Pearson, J., reversed the decision of the learned Magistrate. He held that, when the Sh. 500 compensation was awarded, there was no indication that the Court intended to earmark the Sh. 403 as part payment of the Compensation. Such an order, he said, should have been made specifically without ambiguity. He did not deal with the other ground of the Resident Magistrate, and ordered the Sh. 403 to be paid to the respondent.

6. The appellant has appealed to this Court. We are in agreement with Pearson, J., that it cannot be assumed that the Court intended that the Sh. 403 should be paid to the appellant as part of the compensation. Section 177 of the Criminal Procedure Code contemplates the making of a specific order, and no such order was made. We are doubtful if such an order could have been made without hearing the respondent, who had an attachment on the Sh. 403.

7. As regards the other ground of the Resident Magistrate, the case which he obviously had in mind was *Brice v. Jarvis*, 49 J. P. 264. We have been unable to find a full report of the decision, but the gist of it is set out in 21 Eng. and Emp. Digest, page 621, para 2084, as follows: --

"Money in the possession of a prisoner, which is taken possession of by the Police upon his apprehension and retained by them after his conviction, does not render the Police debtors to the prisoner, and is not a debt due from them to the prisoner which can be attached by a judgment-creditor of the prisoner by garnishee proceedings".

If this note represents the decision correctly, it cannot help the appellant, because the proceedings by which the Sh. 403 were attached were not garnishee proceedings. They were proceedings under Order 19, Rule 49, for the attachment of property in the custody of a public officer. No question arose as to whether the Sh. 403 was a debt due by the Police to Juma Hassani.

8. This, however, does not end the matter. Juma Hassani was convicted of cheating under Section 302 of the Penal Code. This offence is included in Chapter XXX of the Penal Code, and any property with which the offence was concerned is subject to the provisions of Section 178 of the Criminal Procedure Code. The amount involved in the cheating charge was Sh. 1,050 and there was always the possibility that the Sh. 403 found on Juma Hassani might be identified as part of the Sh. 1,050. If that had occurred the Court would have been bound under Section 178 (1) to restore it to the appellant. Further, money taken from a prisoner on his apprehension may be ordered under Section 177 to be restored to some person entitled thereto, or may be applied to the payment of $a$ fine, costs or compensation; or under Section 178 (3) to payment to an innocent purchaser. A consideration of these provisions leads us to the conclusion that when money is taken from a person on his apprehension, that person is not to be regarded as the owner thereof. Whether the money is ever restored to him depends on a subsequent order of the Court. The Police hold the money subject to the order of a Court, and the person has no title thereto. It is possible that he never had any title, and he cannot obtain a title without an order of the Court.

9. This being the case, we turn to Order 19, Rules 57 and 58, which deal with the order that ought to be made on the investigation of a claim or an

objection to an attachment. Under Rule 58 the claim is to be disallowed only if. at the time the property was attached, it was in the possession of the judgmentdebtor as his own property and not on account of any other person, or was in the possession of some other person in trust for the judgment-debtor. On 4th April, 1941, when this property was attached, it was not in the possession of the judgment-debtor Juma Hassani, it was in the possession of the Police, and from what has been said it is clear that it was not in their possession in trust for the judgment-debtor. It was in trust for such person or persons as might be determined by a Court. It follows from this that the claim cannot be disallowed, and that in accordance with Rule 7, an order should have been made releasing the property from attachment.

10. For this reason the order of Pearson, J., must be set aside. The order of the Resident Magistrate is restored so far as it orders the release of the property from attachment. We do not think any order should be made as to the disposal of the Sh. 403; this is a separate issue to be decided by the Court which convicted Juma Hassani, but in case that Court has any doubts on the matter, we are of opinion that, now that the Sh. 403 has been released from the attachment, there is no objection even at this stage to the making of an order that the Sh. 403 should be paid to the appellant as part of the Sh. 500 compensation.

The appeal is allowed. The appellant appealed as a pauper and can have no costs in this Court; but the order of Pearson, J., as to costs should be set aside, and if any of these costs have been paid, they should be refunded to the appellant.