Roadway Motors Limited v Ahluwalia (Civil Appeal No. 4 of 1940) [1940] EACA 3 (1 January 1940)

## COURT OF APPEAL FOR EASTERN AFRICA

# Before SIR JOSEPH SHERIDAN, C. J. (Kenya), WHITLEY, C. J. (Uganda), WEBB, C. J. (Tanganyika)

# RODWAY MOTORS LIMITED, Appellants (Original Plaintiffs)

### RAM CHAND AHLUWALIA, Respondent (Original Defendant) Civil Appeal No. 4 of 1940

(Appeal from decision of H. M. Supreme Court of Kenya)

Civil Procedure—Amendment of plaint—Costs—Amendment not relinquishing original cause of action pleaded but including a second, alternative or<br>subsidiary cause of action the alleged facts of which had not come to plaintiffs' knowledge until after institution of suit.

An interlocutory application made in good time before the case was set -down for hearing to amend a plaint so as to read as follows:—

"The above-named Plaintiffs state as follows: -

1. The plaintiffs are motor car dealers and garage owners carrying on business at Victoria Street, Nairobi, in the Colony of Kenya, and their address for service is care of Messrs. Shapley, Schwartze & Barret, Advocates and Solicitors, Clarke's Chambers, Northey Street, Nairobi aforesaid.

2. The defendant is an Insurance Agent residing and working for gain. at Nairobi aforesaid.

3. On or about the 5th day of August, 1938, the defendant entered into a Hire Purchase Agreement in writing at Nairobi for the hire and purchase from the plaintiffs of a 25-horse power, 6 cylinder Dodge motor car (registered No. J 791) for the sum of Sh. 4,605 payable as under: —The sum of Sh. 1,280 was credited to the defendant on his handing over a second hand motor car belonging to him, and the balance of the said purchase price, namely the sum of Sh. 3,325 was agreed to be paid by 18 monthly hire instalments of Sh. 180 payable on the 5th day of each month commencing from the 5th day of September, 1938, and a final instalment of Sh. 85 payable on the 5th day of March, 1940.

4. The hire purchase of the said motor car was subject to all the terms and conditions set out in the said Hire Purchase Agreement, of which the two following provisions formed part: -

Under Clause No. $5(L)$ .—That the defendant would insure and keep insured the said motor car in the joint names of the plaintiffs and the defendant, and for their respective interest therein against fire, theft, collision and loss or damage from whatsoever cause arising, including third party risks, in the full value thereof in some insurance office of good repute, approved by the plaintiffs in writing.

Under Clause No. $5(O)$ .—That the defendant would keep the plaintiffs indemnified against all loss of or damage to the said motor car from whatsoever cause arising and from all claims arising out of accidents, either to persons or vehicles, caused by the motor car or the driver thereof.

5. The defendant duly paid to the plaintiffs the monthly hire purchase instalment up to and including the month of December, 1938, amounting to the sum of Sh. 720 but failed to pay the instalment of Sh. 180 due on the 5th day of January, 1939, and in consequence the hiring of the said motor car was immediately determined under the provisions of the said Hire Purchase Agreement, without prejudice to the right of the plaintiffs to claim arrears of hire payments or for damages for breach of the said Agreement of Hire Purchase.

6. In consequence of the defendant's breach of contract referred to in the preceding paragraph hereof the plaintiffs have suffered damage.

7. The defendant has not exercised his right to terminate the said Hire Purchase Agreement as provided by Clause 6 thereof by returning the said motor car to the plaintiffs in good and sound condition.

8. The plaintiffs have applied to the defendant for payment of the said sum of Sh. 180, being the instalment due on the 5th day of January, 1939, and have also claimed damages from the defendant in the sum of Sh. 2,425 as aforesaid, and have further called upon him to implement the indemnity under Clause 5(O) of the said Hire Purchase Agreement referred to in paragraph 4 hereof, but the defendant has failed or neglected to pay the same or any part thereof, and repudiated liability under the Agreement for an indemnity or otherwise.

9. On or about the 26th October, 1938, the defendant insured the said motor car for Sh. 4,000 with the Newzealand Insurance Co. In breach of Clause No. 5(L) of the said Hire Purchase Agreement defendant insured the same in his own name only and thereby constituted himself a trustee of any moneys which might thereafter be paid to him or anyone on his behalf by the Insurance Company aforesaid in pursuance of the said Insurance.

10. On a date early in the month of January, 1939, the said motor car was reported by the defendant to have been stolen and on or about the 17th January, 1939, it was found submerged in the Sagana River.

11. In the month of April, 1939, the defendant informed the plaintiffs that he had lodged a claim with the Insurance Company in respect of the loss or disappearance of the said car as mentioned in paragraph 10 hereof and admitted his liability to the plaintiffs in respect of all amounts which were or might become due to them under the said Hire Purchase Agreement subject to his recovery from the said Insurance Company of the amount for which the said car was insured as aforesaid.

12. The plaintiffs will contend that by reason of the matters stated in the preceding paragraph hereof the defendant is estopped from denying his liability to the plaintiffs in the event of his recovering from the said Insurance Company any sum of money in respect of his said claim.

13. The cause of action arose at Nairobi and this Honourable Court has jurisdiction to try this cause.

Wherefore the plaintiffs pray for judgment: -

- (a) For the sum of Sh. 180 being the Hire Purchase instalment unpaid on the 5th January, 1939; - (b) For damages in the sum of Sh. $2,425$ ; - (c) A declaration that defendant holds any sum of money recovered and/or to be recovered from the said Insurance Company in respect of the insurance as trustee for the plaintiffs and/or as money had and received to their use: - (d) An order for payment of such sum to the plaintiffs as shall be found due to them from the defendant as trustee and/or as money had and received to the use of the plaintiffs;

- (e) A declaration that the defendant is liable to indemnify the plaintiffs against all loss or damage to the said motor car from whatsoever. cause arising; - (f) For the costs of this suit; - $(g)$ For such order or alternative relief as this Honourable Court may think fit."

(The addition of the words in italics and the deletion of the word underlined comprised the amendment sought.)

The application was allowed on terms that the plaintiff should pay the defendant all the costs of the action up to date of the amendment including the costs of the application in any event before the hearing.

Plaintiff appealed.

$\mathcal{L} \rightarrow \mathcal{L}$

Held (8-5-40).—That the proper order as to costs was that the plaintiff should pay only the costs thrown away and inasmuch as the original cause of action had not been abandoned and the appellant might ultimately succeed on his original claim the costs could not be ascertained until such time as the action had been heard and determined.

Archer for Appellants.

#### Mangat for Respondent.

SIR JOSEPH SHERIDAN, C. J.—To my mind to give the costs of the action up to the date of the amendment would be to act on a wrong principle. The appellant never abandoned his original claim as is seen from its incorporation in the amended plaint. It would appear that it was only when he obtained information of the recovery of insurance money by the respondent that he was in a position to apply for the amendment. It is conceivable that the appellant may yet succeed on his original claim and should he do so it would be a manifest injustice that the respondent should have the costs of the action.

The appellant in my opinion is at least entitled to what Mr. Wright has asked for, namely that the respondent should only have the costs thrown away and these costs cannot be ascertained until such time as the action has been heard and determined.

I would substitute this order for the one appealed against. The appeal will be allowed with costs.

WHITLEY, C. J.—The order as to costs appealed against is a very drastic one, namely that the plaintiffs (appellants), as a condition of being allowed to amend their plaint, must pay forthwith all the defendant's costs of the suit up to date.

I agree with Mr. Mangat, who appeared in support of the order, that the question of costs is one for the discretion of the Judge, that the Court of Appeal should not vary an order as to costs merely because it may feel that it would have made a different order itself and that it should only interfere when it is of opinion that the Judge has applied a wrong principle.

I would add that it seems to me that this Court may properly feel less reluctant to vary an interlocutory order as to costs than an order made on the final determination of a suit, inasmuch as in interlocutory matters an appellate Court, with the record before it, is in just as good a position as the Judge who makes the order, whereas in the case of a final order it cannot possibly be so advantageously placed as the Judge before whom the case has been tried.

In the present case at the time of filing their original plaint the appellants were not aware of the true position in connexion with the insurance of the car by the respondent, firstly because the respondent had insured the car in his own name and not jointly in his name and that of the appellant as he ought to have done under the terms of the hire purchase agreement and secondly because the respondent failed to keep them informed as he had undertaken to do.

They based their claim upon the agreement itself and in particular upon the indemnity clause. Later they found out that the respondent had succeeded in his claim against the Insurance Company and it then appeared to them desirable to add an alternative ground of action based upon the recovery by the respondent of insurance money, the bulk of which, since the car under the agreement still remained their property, would properly be payable to them. They accordingly applied for leave to amend. They did not abandon their original claim on the indemnity clause and although Mr. Mangat suggests that they could not have succeeded on the plaint as originally framed, it seems to me that that is a question which cannot be properly determined until the case has been fully argued and tried.

It may be that the Court will eventually decide in their favour on the indemnity clause. If so it would seem to be grossly inequitable that they should have had to pay the whole costs to date of an action which as originally framed had proved to be well founded. It would be a different matter if the case had proceeded to trial on the original plaint and then during the course of the hearing it became apparent that they must fail unless the plaint were amended in such a way as to change completely the nature of the claim. In such a case the Court does frequently order that the amendment shall be allowed only on condition that all costs up to date are paid. But here the application for the amendment has been made in good time before the case has been set down for hearing.

It seems to me that the proper order as to costs under these circumstances would have been the usual one, namely that the costs thrown away by the amendment should be the respondent's in any event. I do not see how the Taxing Master can possibly say what costs have been thrown away until the Judge has finally decided the suit. It would then be for the Judge to consider how far costs had been thrown away by the amendment and to what extent the fault lay with the respective parties, and he would no doubt give directions which would guide the Taxing Master as to what items he should allow. From the correspondence it would appear possible that the appellants may not have been in a position to plead earlier the alternative ground of action set up in the amendment because of the respondent's lack of candour and failure to keep them informed as to the progress of his claim against the Insurance Company as he had promised to do. In such case the Judge might consider that the only costs of amendment which could fairly be made payable to the respondent by the appellants would be very small indeed and possibly limited to the costs of the application in Court.

However that may be, I am satisfied that the learned Judge applied a wrong principle. He gave no reasons for his order but its effect is to penalize the appellants at a stage when it is too early to say whether in fact they deserve to be so penalized.

I would allow the appeal with costs and I agree with the order proposed by the learned President.

WEBB, C. J.—I have had the advantage of reading the judgment of His Honour the Chief Justice of Uganda with which I agree and to which I have nothing to add.