Sheth and Another v Hussein Brothers (C.A. 18/1936.) [1936] EACA 88 (1 January 1936)

#### COURT OF APPEAL FOR EASTERN AFRICA.

## Before SIR JOSEPH SHERIDAN, C. J. (Kenya); DALTON, C. J., and HEARNE, J. (both of Tanganyika).

### REVASHANKER DEVCHAND DOSHI and AMRITLAL **UJEMSHI SHETH**

Appellants (Original Defendants).

# HUSSEIN BROTHERS, Respondents (Original Plaintiffs). C. A. 18/1936.

- Money-lender—Business effected outside country of registered address—Isolated transaction—Money-lenders Ordinance (Kenya) No. 45 of 1932. - $Held$ (4-11-36).—That the fact that a money-lender registered as such in Zanzibar, but not in Kenya, effected one loan in Kenya does not prove him to be a money-lender in Kenya as defined by section 2 (1) of the Kenya Money-lenders Ordinance, No. 45 of 1932. - Sed quaere per Dalton C. J.—That evidence of all the circumstances affecting the making of the loan might show that such a person was a money-lender in Kenya although but one loan was effected in Kenya.

Patel for Appellants.

Atkinson (with Sethna) for Respondents.

One M. N. J. a registered money-lender of Zanzibar, but not of Kenya, while on a visit to Mombasa, lent appellants a sum of Sh. 10,000. In return therefor the appellants gave him two promissory notes for Sh. 5,000 each. One of these notes had been repaid and the action was in respect of the other note whichwas passed to the respondents for collection.

By a collateral agreement between the appellants and the said M. N. J. the appellants undertook to pay interest at the rate of 18 per cent per annum on the said loan but this agreement was not assigned to the respondents.

The respondents obtained judgment against the appellants in the Supreme Court of Kenya for Sh. 5,000 and interest thereon at the rate of 18 per cent per annum.

The appellants appealed from the said judgment on the grounds following:

(1) The learned trial judge ought to have held that the 10an was a money-lending transaction and unenforceable at law as being made in Kenya by an unlicensed money-lender.

(2) That the learned trial judge erred in allowing interest on the promissory note sued upon at the rate of 18 per cent per annum.

Note by Court.—Counsel for the respondents concede that the appellants must succeed on the question of interest.

Patel.-Since the respondents' predecessor in title was a registered money-lender in Zanzibar, the case of Cornelius $v$ . Phillips (1918 A. C. 199) applies, and the loan was a moneylending transaction.

If he had not been a money-lender, a solitary transaction. will not make him a money-lender.

Atkinson.—The fact that a person is a moneylender in Zanzibar does not show that he is a money-lender in Kenya. and the case of Cornelius v. Phillips (supra) does not apply, because in that case the loan was effected in the same country as the registered address of the money-lender. The appellants must prove that the respondents' predecessor in title carried on. the business of money-lending in Kenya, section 5 of the Moneylenders Ordinance. A single transaction does not prove a business. There must be continuity, regularity and repetition. He referred to Smith v. Anderson (15 Ch. D. 247 at 277), Newman v. Oughton (1911 1 K. B. 792) and Edgelow v. MacElwee (1918 1 K. B. 205 at 206).

Patel replied.

SIR JOSEPH SHERIDAN, C. J.—In my opinion the learned judge was correct on the facts before him in deciding that the person. who made the loan was not carrying on business as a moneylender. Admittedly he carries on that business in Zanzibar but the question is whether he carried on a business of the kind in Kenya. One solitary transaction coupled with his being a registered money-lender in Zanzibar is all the material from which one is asked to infer that he carried on a money-lending business in Kenya and it is insufficient in my opinon.

In Edgelow v. MacElwee (1918 1 K. B. 205) at 206 McCARDIE J. said: "A man does not become a money-lender" by reason of occasional loans to relations, friends or acquaintances, whether interest be charged or not. Charity and kindness are not the basis of usury. Nor does a man become a moneylender merely because he may upon one or several isolated occasions lend money to a stranger. There must be more than occasional and disconnected loans. There must be a business of money-lending and the word 'business' imports the notion of system, repetition and continuity." There is nothing to suggest system, repetition and continuity in relation to Kenya in the present case. Mr. Patel for the appellants referred to the case

of Cornelius v. Phillips (1918 A. C. 199). In that case the respondent was a registered money-lender whose registered address was in Liverpool; he entered into a money-lending transaction at Formby near Liverpool where he did not have a registered address and it was held that this fact avoided the transactoin. LORD PARMOOR at p. 217 said: "In my opinion the respondent in effecting a money-lending transaction with the appellant was in the ordinary sense carrying on the moneylending business, and it is immaterial whether a single transaction or a number of transactions are involved". It will be seen that the facts of this case are quite different from those in the case under appeal. In the former case the respondent was a registered money-lender holding himself out as a money-lender at a particular address and he entered into a money-lending transaction at another place in the same country. In the present case the person who made the loan is not a money-lender in Kenya and does not hold himself out in that country as a money-lender and no such inference can be drawn from the solitary transaction of a loan in his case as was drawn in the former case. I agree with the learned judge's finding on the point. With regard to that part of the appeal relating to interest, Mr. Atkinson notified the Court that he did not propose to support the decision on the point. The result will, therefore, be that the appeal in so far as the principal amount is concerned is dismissed and is allowed on the point of interest. The respondents will have the costs of the appeal in respect of the issue on which they have succeeded and the appellants the costs on the issue in respect of which they have succeeded. In the Supreme Court the respondents will have the costs with the exception of the costs of instructions and hearing on the interest item which will be the appellants. The appellants will also have the Court costs in respect of the interest item. Mr. Atkinson has asked whether the costs of the appeal allowed to him include instructions fee; my answer is yes. The same applies to Mr. Patel.

DALTON C. J.-I agree that the appeal must be dismissed. I am not prepared, however, to hold that the fact that the person who made the loan carried on the business as a moneylender in Zanzibar was not relevant to the question whether, in the isolated money-lending transaction at Mombasa, he was not carrying on the business of a money-lender at the latter place on the occasion in question. It might, in my opinion, have an important bearing on that question.

Here, however, the defence led no evidence at all in regard to the circumstances surrounding the transaction, resting their case entirely on the bare admission that Nassor Jindani was a registered money-lender in Zanzibar and that the loan in question was made to the appellants in Mombasa.

That being so, I am not prepared to say the trial judge was not entitled to hold on the evidence before him that it has not been established that the lender in his case was carrying on the business of a money-lender in Kenya. I agree with the order proposed.

HEARNE J.—The respondents have agreed that the appeal should be allowed in respect of the claim to interest decreed in their favour. In my opinion, on the evidence before him, the learned trial judge was right in holding that when the loan of Sh. 10,000 was made by Jindani he was not engaged in the business of money-lending in Kenya. I would dismiss the appeal except as to the interest allowed and would make the same. order as to costs as has been proposed by the learned President.