Singh v Jeram (Civil Appeal. No. 8 of 1944) [1945] EACA 4 (1 January 1945)

Full Case Text

## COURT OF APPEAL FOR EASTERN AFRICA.

## Before Sir Joseph Sheridan, C. J. (Kenya), Sir Norman Whitley, C. J. (Uganda), and MARK WILSON, Acting C. J. (Tanganyika)

JIWAN SINGH, Appellant (Original Appellant-Defendant)

# RUGNATH JERAM, Respondent, (Original Respondent-Plaintiff)

## Civil Appeal. No. 8 of 1944

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

Contract—Sale of Goods Unlicensed premises—Kenya Sale of Goods Ordinance,

1930, section 6 (1)—Kenya Traders licensing Ordinance, 1936, sections 2 and 4—Oral agreement varying written contract—Admissibility of oral evidence -Indian Evidence Act, sections 91 and 92—Short delivery of goods—Rejection of goods—Kenya Sale of Goods Ordinance, 1930, section 13 (1) (c), 31 (1)—Practice—Costs—Kenya Civil Procedure Code, section 27—Successful party failing on certain issues—Entitled to full costs.

The respondent was the owner of a chalk quarry and had in a godown at the back of his house about $12\frac{1}{2}$ tons of chalk. The premises were not licensed under the Traders Licensing Ordinance, 1936. The appellant being minded to purchase some chalk for his soap-making business inspected the chalk in respondent's godown and a written contract for the supply of 12 tons of chalk was entered into in the following terms:

"24.12.38. Please deliver me at Nakuru at your godown two tons white chalk packed in second-hand bags which I shall take delivery within week time. Price at Sh. 30 ton. Terms cash. Bag charges extra.

Further please book me ten tons white chalk within one month time at same price and packing in second-hand bags. Bags charges extra. Price at Sh. 30 ton f.o.r. Nakuru.

(Sd) Rugnath Jeram (in Gujerati)

## (Sd) Jiwan Singh".

On 6th January, 1939, the appellant took delivery at Nakuru of 1/2-ton of chalk and it was then agreed orally between the parties that the balance of the first two tons, i.e. $1\frac{1}{2}$ tons should be delivered at Eldoret by rail along with the other 10 tons. Oral evidence of this variation of the mode of performance of the contract was allowed at the trial.

In due course the respondent despatched to Eldoret 10 tons 14 cwt. of chalk, i.e. a quantity short by 16 cwt. of the amount which should have been sent in accordance with the terms of the written contract as varied by the subsequent oral agreement. The appellant rejected the goods on the ground that the chalk was not according to the order. The respondent did not plead the oral variation of the contract and the appellant in his defence claimed the right to reject the goods on the ground of excess delivery of 14 cwt. At the trial, however, respondent was allowed to prove the oral variation of the written contract and the appellant based his claim to the right to reject the goods on the ground of short delivery.

Held $(20-2-45)$ .—(1) An agreement for the sale of goods is not rendered illegal by the fact that it is entered into on unlicensed premises.

*Per Mark Wilson, Acting C. J.* The definition of "store" in section 2 of the Traders Licensing Ordinance, 1936, "points rather to a habitual or, at all events, a continued course of conduct on the part of the person allege act of selling".

Per Whitley, C. J. "The fact that something is forbidden under a penalty in order to protect or produce revenues does not necessarily render void the thing done and the Court has always drawn a distinction between statutes denying a legal effect to instruments by declaring them to be void to all intents and purposes and statutes which merely require formalities to be observed and the Court will not readily construe contracts so as to bring them within the prohibition of a statute. The test to be applied is, as a rule, whether the statute was passed to enforce some object of public policy or conduct or for some indirect object such as facilitating the collection of revenue".

(2) Oral evidence to vary the terms of the written contract was rightly admitted under section 92 of the Indian Evidence Act.

(3) (Whitley, C. J., dissenting.) That the contract of sale was neither severable nor for specific goods. That the quantity was a material term of the contract and not a mere condition the breach of which can only be treated as a breach of warranty and that as the variation in quantity was substantial the purchaser was entitled to reject the goods.

(4) The general rule is that the party who on the whole succeeds in the suit gets the general costs of the suit but where the suit involves separate issues the costs of any particular issue go to the party who succeeds upon it. For the decision of an issue to have the effect of entitling the party successful on that issue, though unsuccessful on the main issue in the suit, to his costs on that issue, it must be an issue which has affected the result of the suit in whole or part.

Appeal allowed.

Payne & Roth v. Lillico & Sons 36 T. L. R. 569, British & Benningtons, Ltd. v. N. W. Cachar Tea Co., Ltd. (1923) 1 A. C. 48, Bessler & Co. v. South Derwent Coal Co., Ltd. (1937) 4 A. E. L. R. 556, Braithwaite v. Foreign Hardwood Co. (1905) 2 K. B. 543, Co., Elac. (1991) A. C., v. Bailey & Co. (1904) 3 A. E. R. 60, North Western Salt Co. v. Electrolytic Alkali Co. (1914) A. C. 461, Morris v. Baron & Co. (1918) A. C. 1, Field v. The Great Northern Railway Company 3 Ex. D. 261, Q. B. 272, Reid, Hewitt & Co. v. Joseph (1918) A. C. 717, Blank v. Footman, Pretty & Co. 39 Ch. D. 678 referred to.

Gautama S. C. (with him Gautama R. C.) for the Appellant.

### Khanna for the Respondent.

SIR JOSEPH SHERIDAN, C. J.—Having arrived at the same conclusions on every aspect of the case as the learned Acting Chief Justice of Tanganyika whose judgment, about to be read, I have been privileged to read, I cannot usefully add to what he has said, with all of which I am in agreement.

MARK WILSON, Ag. C. J.—This is a second appeal from the decision of the Acting Resident Magistrate, Nakuru, in a case concerned with the sale by the respondent to the appellant of a certain quantity of local chalk for soap-making on 24th December, 1938.

The magistrate gave respondent (plaintiff) a decree for the value of the chalk delivered by him, rejecting various defences to the action put forward by the appellant (defendant). On appeal to the Supreme Court his decision was confirmed on all grounds save in respect of a point as to set-off or counter-claim with which we are not here concerned.

In the appeal to this Court two main issues have been argued. The first is as to whether the written contract (or contracts) dated 24th December, 1938, were not void for illegality. It was submitted that in entering into the contract in question the plaintiff was performing an act of trading on his premises at Nakuru, that these premises were not currently licensed under the Traders Licensing Ordinance, 1936; that his act of trading without a licence is prohibited under penalty by section 4 and was therefore illegal; and that the contract was therefore void and unenforceable.

I have come to the conclusion, as did the learned Judge in the Court below, that there is nothing in this point. In the first place, as counsel for the respondent said, the proof that respondent was in fact trading on the premises in question is altogether too vague and tenuous. As the point was not raised in the pleading the attention of the witnesses (certainly that of the plaintiff's witnesses) was not

attracted to the question and no opportunity was offered to the plaintiff to explain anything which might be suspicious in his activities in this respect. The appellant indeed relies, in order to prove the fact of the trading, on a number of insubstantial straws which may or may not, owing to their individual weakness, show the way the wind was blowing. There is also the point that, even if the facts were more satisfactorily established by the evidence than they are, it is not at all certain that "trading" as defined in the Ordinance, i.e. "the selling of goods for profit in a store" has been made out. A "store" is defined in section $2$ as "any building or part thereof in which goods are sold or exposed for sale". Strangely enough, it does not mean, as one might think, a building in which goods are stored, the local fashion in nomenclature calling that a godown; in this respect the Kenya fashion follows the American in giving the name "store" to what the ordinary Englishman calls a shop. It is not clear from the evidence that the plaintiff's Nakuru premises were used at the relevant time for the sale or exposure for sale of goods in the ordinary meanings of those terms. The premises are referred to by all the witnesses merely as a "house" and there is nothing to show the presence there or the sale of any goods other than the white chalk in bags which was lying in what on witness describes as a covered compound at the back of the house in which plaintiff was living. All the evidence suggests that the chalk was merely stored there, as in a godown, for which it was never suggested a licence is required. The appellant did argue that this one act of sale of the chalk which took place on the premises on 24th December, 1938, rendered the premises "a building... in which goods are sold...", i.e. a "store", which under the Ordinance must be licensed if goods are sold therein for profit, as the chalk undoubtedly was. I am unable to agree with this contention. I think the words of the definition point rather to a habitual or, at all events, a continued course of conduct on the part of the person alleged to be trading, than to an isolated act of selling, which is all that is proved in this case. After all, as counsel for the respondent pointed out, a man might lawfully on a particular occasion make an agreement to sell goods in his club or in a hotel, and I cannot see that it makes much difference if, instead, he makes such an agreement in his dwelling-house. Such an act is not prohibited by any law and the agreement could not be regarded as void or unenforceable merely because the house was not licensed under the Ordinance.

The next issue is whether the appellant had a right to reject the chalk sent to him at Eldoret by the respondent in pursuance of the contract of 24th December, 1938. The decision of this issue involves the consideration of a number of subsidiary points, which were argued at considerable length. They are concerned mainly with the interpretation of the written memorandum of the contract of 24th December, 1938.

This memorandum (Ex. 1) reads as follows: $-$

"24.12.38. Please deliver me at Nakuru at your godown two tons white chalk packed in second-hand bags which I shall take delivery within week time. Price at Sh. 30 ton. Terms cash. Bags charges extra.

Further please book me ten tons white chalk within one month time at same price and packing in second-hand bags. Bags charges extra. Price at Sh. 30 ton f.o.r. Nakuru.

> (Sd) Rugnath Jeram (in Gujerati) (Sd) Jiwan Singh."

It is necessary to decide whether this was a single entire contract, or two contracts. The learned Judge on appeal, and the magistrate before him, thought that the memorandum constituted two distinct contracts. I differ from that view. The goods are identical, the price is identical and the packing is identical in the

two cases and only the mode of delivery is different. On such facts I think it must be held (see Benjamin on Sale: 7th Ed. at p. 201) that the contract is a single contract, though divisible as regards the mode of performance.

The importance of this finding is that it is admitted that a few days after the making of the contract the defendant (appellant) took delivery of half-a-ton of the chalk in his own lorry and it is admitted that this was an acceptance of part of the goods within the meaning of that term in section 6 (1) of the Sale of Goods Ordinance, 1930. From this it would follow that the contract thus satisfied the requirements of section 6 (1) of the Ordinance, which reads: $-$

"A contract for the sale of any goods of the value of two hundred shillings or upwards shall not be enforceable by action unless the buyer shall accept part of the goods so sold, and actually receive the same, or give something in earnest to bind the contract or in part payment, or unless some note or memorandum in writing of the contract be made and signed by the party to be charged or his agent in that behalf."

In other words the contract between the parties was after the 6th January, 1939 (when defendant took delivery of the half-ton) enforceable on two grounds: (i) that a memorandum of the contract had been made and signed, and (ii) that defendant had taken delivery of and accepted part of the goods.

It was alleged by plaintiff at the trial that defendant at the time of taking delivery of the half-ton at Nakuru asked plaintiff to forward the balance of the first two tons, i.e. $1\frac{1}{2}$ tons, to Eldoret by rail along with the other ten tons and that this was agreed. No written memorandum or note of this alleged oral variation of the mode of performance was made and appellant now argues that the evidence as to this variation allowed at the trial was inadmissible.

I have come to the conclusion that such evidence was admissible. Section 91 Indian Evidence Act lays down that "when the terms of a contract... have been reduced to the form of a document, and in all cases in which any matter is required by law to be reduced to the form of a document, no evidence shall be given in proof of terms of such contract,... or of such matter, except the document itself or secondary evidence of its contents in cases in which secondary evidence is admissible under the provisions hereinbefore contained." Section 92 then goes on to provide: "When the terms of any such contract... have been proved according to the last section no evidence of any oral agreement or statement shall be admitted, as between the parties to any such instrument, or their representatives in interest, for the purpose of contradicting, varying, adding to, or subtracting from its terms." But to this general rule there are added six provisos of which proviso 4 reads: -

"The existence of any distinct subsequent oral agreement to rescind or modify any such contract ... may be proved, except in cases in which such contract ... is by law required to be in writing ...

On the appeal the learned Judge held that the evidence as to variation of the contract in the present case was admissible, and rightly admitted, under proviso 4 to section 92. I am of opinion that his conclusion was right though I do not follow his reasoning. He seems to have agreed with the argument that "the contract was, under the Sale of Goods Ordinance, 1930, required to be in writing, as being a contract for a sale of goods above the value of Sh. 200." That, of course, would be a perfect reason, if it were true, for excluding, rather than admitting, the evidence of a subsequent oral agreement varying the written contract of 24th December, 1938, and would not justify the learned Judge's conclusion that there was a subsequent oral agreement falling within proviso 4 to section 92 of the Indian Evidence Act and sufficient to make the evidence complained of admissible."

In fact, according to my view, the evidence as to variation was admissible in this case for the reason that the present contract in order to be enforceable was not required by law to be in writing. It would have been, had there not been an acceptance of part of the goods by the defendant on 6th January, 1939, but once he took delivery and accepted the half-ton of chalk on that date the contract ceased to be one which to be enforceable was required by the law to be in writing. Hence it does fall correctly within proviso 4 and the evidence of the variation of the contract by subsequent oral agreement was admissible and was rightly admitted in the Magistrate's Court.

The effect of the variation of which evidence was given and accepted at the trial was that the balance of $1\frac{1}{2}$ tons of chalk under the first part of the contract, which originally was to have been taken delivery of by defendant himself at Nakuru, was now agreed to be dispatched to Eldoret by rail along with the other 10 tons. In fact all that was dispatched to Eldoret by the plaintiff was 10 tons 14 cwt. in all, i.e. a quantity short by 16 cwt. of the amount which should have been sent in accordance with the terms of the written contract as varied by the subsequent oral agreement. Defendant (appellant) claims that in view of this short delivery he was entitled under section 31 (1) Sale of Goods Ordinance, 1930, to reject the goods. This contention was negatived in the Magistrate's Court and also on appeal. The law on the point was not very fully discussed in the magistrate's judgment. He seems to have decided the point against the appellant on the ground that he had never intended to reject the goods on the ground of short delivery. He says (at pp. 9-10 of the proceedings): "Defendant, had he ever intended to reject on that ground would have ascertained the quantity from the railway waybill and not accepted the chalk sent". The learned Judge on appeal went into the matter at greater length. In his judgment at p. 3 he said: $-$

"With regard to "quantity": It may well be that if the defendant could have established this point he might have been able to rely upon the provisions of section 31 of the Ordinance which gives the buyer in such cases the right to reject. There is some force in the magistrate's contention that, if this were the ground upon which the defendant intended to reject the goods, he could have ascertained the quantity from the railway waybill instead of accepting delivery of the consignment. I am satisfied, however, from the evidence that there was a variation of the contracts and I am not prepared to hold that the short delivery was of such a nature as would entitle the buyer to invoke the provisions of section 31."

The meaning of the above passage, with respect, is not very clear. For example, what is the point which it is said the defendant failed to establish? He certainly established the point of short delivery for which section 31 (1) gives a remedy. Again it is not clear what the learned Judge meant by saying that he was not prepared to hold that the short delivery was of such a nature as would entitle the buyer to invoke the provisions of section 31. One would like to have been given the reasons for this statement.

The provisions of section 31 (1) Sale of Goods Ordinance, 1930, are quite clear and simple. It reads: $-$

"Where the seller delivers to the buyer a quantity of goods less than he contracted to sell, the buyer may reject them, but if the buyer accepts the goods so delivered he must pay for them at the contract rate."

Now in the present case the quantity of chalk which the seller (respondent) had to deliver to appellant by booking it to Eldoret by rail from Nakuru at appellant's expense was 111/2 tons, according to the written memorandum of the contract as varied by the subsequent oral agreement, both of which were set up by respondent as part of his case. In fact he sent 16 cwt. less than that amount. On the face of it then, unless section 31 (1) is not applicable to this case, the appellant would be entitled to reject the goods sent as being less in quantity than contracted for.

**Respondent**, however, has submitted that section 31 does not apply in the case of specific goods, and he argued that the chalk in this case was specific goods. He pointed to section 13 (1) (c) of the Sale of Goods Ordinance, 1930, which $says:$

"Where a contract of sale is not severable, and the buyer has accepted the goods, or part thereof, or where the contract is for specific goods, the property in which has passed to the buyer, the breach of any conditions to be fulfilled by the seller can only be treated as a breach of warranty and not as a ground for rejecting the goods and treating the contract as repudiated, unless there be a term of the contract, express or implied, to that effect."

Respondent submitted that in this case not only were the goods specific goods but the contract was an entire contract, not severable, and there had been part acceptance of the goods by the buyer. Therefore, he said, section 13 (1) $(c)$ applies and the seller could treat the short delivery only as a breach of the warranty and not as a ground for rejecting the goods.

In deciding this point I do not think it is necessary to enter into the long argument that took place as to whether certain evidence was rightly admitted in the Magistrate's Court to prove that the subject of the contract of 24th December, 1938—"two tons white chalk" and "ten tons white chalk"—was specific goods, that is, "goods identified and agreed upon at the time a contract of sale is made" (section 2 (2) of the Ordinance). Assuming that the evidence in question was admissible I nevertheless find some difficulty in coming to the conclusion that defendant agreed to buy the actual chalk he looked at in the back yard of plaintiff's house. No doubt he inspected it to satisfy himself that chalk of this kind was suitable for his soap-making business but I am very doubtful whether he had any intention of tying the plaintiff down to the delivery of this particular chalk. The contract contains no words to suggest that, such as "two tons of the white chalk lying at your premises" or "two tons of the white chalk I have inspected." The contract simply says "two tons white chalk". Moreover the quantity of chalk at plaintiff's place was only roughly estimated—according to the number of bags there should have been at least $12\frac{1}{2}$ tons. But defendant did not contract for that amount or even for the "200 bags or over" which are said to have been in the yard. He contracted to buy definite amount-12 tons-and specified the goods no more closely than by the general term "white chalk". In view of the fact that the plaintiff was the owner of a chalk quarry 1 do not think it is unreasonable to think that defendant merely ordered 12 tons of white chalk and that plaintiff was free to deliver him 12 tons of the chalk inspected or 12 tons of similar chalk, just as he pleased. So, whether proviso 6 of section 92 Indian Evidence Act is wide enough to justify the admitting of evidence to show that, when the parties signed a contract for the sale of "two tons white chalk" and "ten tons white chalk", they were referring to the approximately 200 bags of chalk of the average weight of 140 Jb. which defendant is said to have inspected at plaintiff's house on the day the contract was made, we cannot in any event go outside the plain and clear terms of the contract. The defendant agreed to buy 12 tons of chalk-no more and no less. In my opinion that was a material term of the contract. No qualifying words such as "about" or "approximately" or "more or less" were inserted in the contract, and it is (under section 91, Indian Evidence Act, already quoted) to the written memorandum and to that alone that we must look for the terms of the contract. No doubt a small excess or shortage in delivery would not give ground for rejection, but the allowable limits of variation are narrow. In Payne and Routh v. Lillico and Sons 36 T. L. R. 569 it was said that the allowable variation is only a few pounds or ounces in the case of tons or hundredweights. But in the present case there was a shortage of sixteen hundredweights (over $\frac{3}{4}$ of a ton) in quantity of twelve tons. That cannot be said to be a negligible variation in quality, to which the rule de minimis non curat lex might be applied.

Now if the matter of quantity is, as I have held above, a material term of the contract, a breach of such a term cannot, in my opinion, be cured by invoking section 13 (1) (c) of the Ordinance, for all that sub-section says is that in certain cases set out in the sub-section as quoted above the breach of any conditions to be fulfilled by the seller can only be treated as a breach of warranty and not as a ground for rejecting the goods. The delivery of a certain quantity is not in my opinion a mere condition to be fulfilled by the seller; it is a material term of the contract. In other words I take the view that section 31 and section 13 (1) (c) are in no way inconsistent with each other, whether the goods are specific or not, and section 31 refers equally to all goods whether specific or not.

The difficulty of interpreting section 13 (1) (c) is referred in Benjamin on Sale 7th Ed. at pages 588-9, where in discussing the corresponding section 11 (1) (c) in the English Sale of Goods Act, 1893, he says: $-$

"The provisions of clause $(c)$ , so far as they relate to the entirety of contracts, mean that, after part acceptance of the benefit of an entire consideration, the buyer cannot repudiate the contract as a whole, and refuse to pay for the goods, or to accept the residue. This was the rule at common law, where a party who had accepted part performance, so that the parties could not be put in statu quo, could not repudiate the contract, and recover back any money he had paid. But, in order that the buyer's conduct should have this effect, it must amount to an acceptance, as distinguished from a mere receipt of the goods. For example, there is no acceptance by merely retaining part of the goods delivered by instalments where each instalment is not to be separately paid for.

Some difficulty arises in the interpretation of this clause, so far as it deals with "specific goods the property in which has passed to the buyer." If there be an unfulfilled condition in the proper sense, the property can never pass to the buyer by the contract, though it may pass by the buyer's subsequent acceptance. By the common law the existence in the contract of a "warranty", that is to say, a stipulation as to some quality or incident of the goods, not forming part of their description and consequently not a condition, but collateral to the main purpose of the contract did not prevent the property passing, if otherwise it would pass; and when it passed, the buyer, having been benefited by becoming the owner of the goods, could not afterwards reject them for breach of warranty, and repudiate the contract, unless there was an express agreement to that effect. Accordingly, a contract of sale of specific goods was ordinarily a bargain and sale. But clause $(c)$ , though evidently intended to enact this law, uses the word "condition". The case, it would seem, contemplated by the clause is one where the property passes by the buyer's *subsequent* acceptance of the goods by a waiver of the right of rejection. But the logical arrangement of section 11 is thereby destroyed, for the suggested waiver is a voluntary one—a case already dealt with by clause (a)—whereas clause (c) deals only with compulsory waiver."

Under the present contract there had been an agreement to deliver chalk in two instalments, the first to the buyer himself at the seller's Nakuru godown and the second to be booked to Eldoret by rail. No doubt the acceptance by the buyer (appellant) of the $\frac{1}{2}$ -ton at the Nakuru godown was an acceptance of part of the goods within the scope of section 6 (1) of the Sale of Goods Ordinance, 1930, rendering the contract enforceable, but I do not see how it could possibly be held to rule out the buyer's right of examination of and rejection of the second instalment, when sent by rail, on any ground that was open to him. There is certainly nothing that I can see in section 13 (1) (c) of the Ordinance to justify such a view. In this connexion it is pertinent to remark that the apparent finding of the trial magistrate that defendant accepted the 10 tons 14 cwt. of chalk at Eldoret railway station is not legally tenable. It is true that he took delivery of the chalk, as he was compelled to do in order to exercise his right of examination (which exists in the case of all goods, specific or otherwise), but taking delivery does not necessarily mean acceptance. In fact he at once wrote the letter of 20-1-39 categorically rejecting the goods.

Defendant now bases his claim to the right to reject on the ground that the delivery to him was short by 16 cwt. It was pointed out that in his plaint he had claimed to reject the goods not on this ground but, inter alia, on the ground that by delivering 10 ton 14 cwt. the plaintiff had delivered 14 cwt. in excess of the 10 tons which the second part of the contract called for. Such an objection by the respondent is without substance or merit. In his original plaint the respondent did not plead an oral variation of the written contract, but he was allowed to put it forward at the trial. As he had not pleaded such a variation the appellant obviously could not reply to it or base his defence on it. To say that appellant cannot now be allowed to suit his argument to the new material facts not contained in respondent's pleading which respondent was allowed to give evidence of at the trial would be to penalize the appellant for an error of the respondent's. The same remarks apply to the appellant's use in argument of section $6$ (1) of the Sale of Goods Ordinance, 1930. It was justified by the fact that it became necessary for him to rely on it (without having pleaded it) because respondent had omitted in his pleading to plead an oral variation of the written contract on which alone he seemed to be basing his case originally.

The final argument of counsel for the respondent was that if he failed in all else he must succeed on one particular aspect of the case. He alleged that the first time the defendant had claimed to reject the goods on the ground of variation in quantity was when he filed his defence, having throughout the previous correspondence claimed to reject them on the grounds of quality. He submitted that in those circumstances defendant was precluded from claiming in his defence the right to reject them on the new ground of variation in quantity. Actually what defendant said in his letter of rejection dated 20th January, 1939, was "Received your white chalk which is useless for me. I shall be glad if you will let me know what I should do with it. The same is lying at your risk .... The chalk is not according to the order". This last phrase: "The chalk is not according to the order", is of course wide and comprehensive and might perhaps be said to in include objection to the quantity as well as the quality of the goods delivered.

It is not, however, on that ground that I would dispose of the point. At the hearing of the appeal the attention of the Court was drawn by the learned President to the case of British and Benningtons, Limited v. N. W. Cachar Tea *Company, Limited* (1923) 1 A. C. 48, in which it was said by Lord Sumner (at p. 71), discussing a certain aspect of the decision of the Court of Appeal in *Braithwaite* v. Foreign Hardwood Company (1905) 2 K. B. 543:-

"I do not think that the case, as reported, lays it down that a buyer, who has repudiated a contract for a given reason which fails him, has, therefore, no other opportunity of defence, either as to the whole or as to part, but must fail utterly. If he had repudiated giving no reason at all, I suppose all defences in the action, partial or complete, would be open to him. His motives certainly are immaterial, and I do not see why his reasons should be crucial."

This passage, which is in quite general terms, would seem to be sufficient authority for saying that the appellant, even if he at first rejected the chalk on grounds of quality, may yet, when litigation arises, show that he had good reason for rejecting it on the score of variation in quantity also, though he did not raise that objection at the time, or until he filed his defence to the buyer's claim for the price of the goods.

On this being brought to his notice respondent's counsel cited the case of Ross T. Smyth and Company v. Bailey and Company (1940) 3 All E. R. 60 in which Lord Wright in his judgment (at p. 72) used the expression: "It has the appearance of an afterthought and of a lawyer's point" in referring to a contention by the respondents in that case that the sending of an amended invoice by the appellants, after a previous invoice had been rejected as not being in accordance with the contract, constituted a repudiation of the contract. After a careful perusal of that case I can find no analogy between its facts and those of the present case, and I see no way in which it can detract from the authority of Lord Sumner's general dictum as quoted above.

I am of opinion that in the circumstances of this case the appellant was entitled to reject the consignment of chalk sent to him by the respondent. I would accordingly allow the appeal and set aside the decree in favour of the respondent. The question of costs is reserved for further consideration.

SIR NORMAN WHITLEY, C. J.—Mr. Gautama's first point in this appeal is that the learned magistrate and Lucie-Smith, J., on appeal were wrong in not holding that the contract was void and unenforceable by reason of being in contravention of section 4 of the Traders Licensing Ordinance, 1936, which provides that no person shall trade unless he holds a licence under the Ordinance. "Trade" is defined in section 2 as the selling of goods for the purposes of profit in a store. His proposition on this point is that if a trader sells goods in a store without having first taken out a trader's licence he is by law precluded from suing for their price. Admittedly, the chalk, the subject-matter of this claim, was sold at the house in Nakuru where plaintiff resides and he has no licence for those premises although he has a licence for his shop in Solai. From the point of view of commercial morality there are no merits in this point but the appellant is of course entitled to take it. In my opinion it is easily disposed of. In order to succeed on this point the appellant has to show that the respondent has been guilty of an offence against a penal section of an Ordinance. The respondent has not been convicted of such an offence. Two courts have in effect already held that such offence is not established by the evidence. Before this Court can say otherwise it seems to me that we must be satisfied on the record that such offence has been proved beyond any reasonable doubt. I cannot see how on what is before us we can possibly do that. The respondent has never been charged with such an offence and it was not even pleaded in the defence. If he had been charged or if an issue on the point had been raised in the pleadings he might have adduced evidence to support a number of defences which would have been open to him. In North Western Salt Company v. Electrolytic Alkali Company (1914) A. C. 461 at page 469 Lord Haldane observed:-

"My Lords, it is no doubt true that where on the plaintiffs case it appears" to the Court that the claim is illegal, and that it would be contrary to public policy to entertain it, the Court may and ought to refuse to do so. But this must only be when either the agreement sued on is on the face of it illegal, or where, if facts relating to such an agreement are relied on, the plaintiff's case has been completely presented. If the point has not been raised on the pleadings so as to warn the plaintiff to produce evidence which he may be able to bring forward rebutting any presumption of illegality which might

be based on some isolated fact, then the Court ought not to take a course $\leftrightarrow$ which may easily lead to a miscarriage of justice. On the other hand, if the action really rests on a contract which on the face of it ought not to be enforced, then, as I have already said, the Court ought to dismiss the claim, irrespective of whether the pleadings of the defendant raise the question of illegality."

In the present case the contract sued on is clearly not one which on the face of it ought not to be enforced and if this Court were now on the incomplete material before us to overrule the magistrate and Lucie-Smith, J., we should I think be taking a course which might easily lead to a miscarriage of justice.

For this reason if for no other I would decide against Mr. Gautama on this point. Furthermore I am far from satisfied that this Traders Licensing Ordinance is anything more than a revenue collecting measure. The facts that something is forbidden under a penalty in order to protect or produce revenues does not necessarily render void the thing done and the Court has always drawn a distinction between statutes denying a legal effect to instruments by declaring them to be void to all intents and purposes and statutes which merely require formalities to be observed and the Court will not readily construe contracts so as to bring them within the prohibition of a statute. The test to be applied is as a rule, whether the statute was passed to enforce some object of public policy or conduct or for some indirect object such as facilitating the collection of revenue (see 31 Hailsham 543 and 557). The Ordinance does not contain any provisions requiring certain qualifications before a person can obtain a trading licence and I am disposed to regard it as having for its object the collection of revenue and not the protection of the public.

In my opinion the contract is one which can be enforced and sued upon.

The next ground of appeal is that the Courts below were wrong in admitting oral evidence to vary the terms of an agreement or agreements in writing. In my opinion in the circumstances of this case and on the wording of the contract, proviso 6 of section 92 of the Indian Evidence Act applies. The words "10 tons of chalk" might appear *prima facie* to mean any chalk but they are also capable of meaning certain identified chalk which had been selected and which weighed ten tons and oral evidence was rightly admitted to show what was really the subject-matter of the contract. The evidence having been admitted satisfied both the magistrate and Lucie-Smith, J., that what was bought was the chalk seen and inspected by the appellant at the back of respondent's house, the weight of which was estimated at about 12 tons. This being a finding of fact no appeal against it lies to this Court.

Oral evidence was also admitted and I think rightly of an agreement between the parties to vary the mode of delivery by having the balance of the chalk sent by rail to Eldoret where the appellant took delivery. He wrote complaining that the chalk was not in accordance with order being yellow rubbish and not white chalk as contracted for. There was no complaint about the place or mode of delivery. As Lord Atkinson observed in Morris v. Baron and Company 1918 A. C. 1 (quoted with approval in Bessler and Company v. South Derwent Coal Company, Limited 1937 4 A. E. L. R. at p. 556: "There is a clear distinction, however, between cases such as these and cases like Agle v. Vane (Earl) 1868 L. R. 3 Q. B. 272 where one party at the request of and for the convenience of the other forbears to perform the contract in some particular respect strictly according to its letter. As, for instance, where one party, bound to deliver the goods, sold upon a certain day, at the request of and for the convenience of the other postpones delivery to a later day. In such a case the contract is not varied at all, but the mode and manner of its performance is, for the reasons mentioned, altered." I

can see no distinction between place of and date of delivery and regard that passage as direct authority for admitting oral evidence as to substitution of Eldoret for Nakuru as place of delivery.

Since in my opinion the contract was for the sale of specific ascertained goods (as found by the magistrate and Lucie-Smith, J., a finding of fact which in my opinion we cannot question in this second appeal) and delivery was made in accordance with a mutually agreed variation it follows that there was no right to reject and the plaintiff was as the magistrate held entitled to succeed in his claim. The shortage of 16 cwt. could in my opinion be no good ground for rejection if, as is my view, the contract was for the sale of specific ascertained goods estimated at a certain weight. The respondent did exactly what had been contracted for. He delivered the specific goods ordered in the mode and to the place eventually agreed upon between the parties. For some reason the appellant has no longer wanted the chalk and has tried to evade his bargain first by complaining of quality, then of shortage of weight, then of wrong place of delivery and finally by raising the trading licence point. I would dismiss the appeal.

ON THE QUESTION OF COSTS the following judgment was read by Sir Joseph Sheridan, C. J.—A question was raised in this appeal by Mr. Khanna as to costs. He asked that an apportionment order should be made on the ground that although he had failed in the action as a whole he had succeeded in gaining the decision on certain of the issues raised by the appellant.

The relevant law is contained in section 27 of the Civil Procedure Code which reads as follows.

$\sim$ "27. (1) Subject to such conditions and limitations as may be described, and to the provisions of any law for the time being in force, the costs of and incident to all suits shall be in the discretion of the Court or Judge and the Court or Judge shall have full power to determine by whom and out of what property and to what extent such costs are to be paid, and to give all necessary directions for the purposes aforesaid.

The fact that the Court or Judge has no jurisdiction to try the suit shall be no bar to the exercise of such powers.

Provided that the costs of any action, cause or other matter or issue shall follow the event unless the Court or Judge shall for good reason otherwise order.

$\therefore$ (2) The Court or Judge may give interest on costs at any rate not exceeding 6 per cent per annum and such interest shall be added to the costs and shall be recoverable as such."

The important part of that section is the proviso, on the construction of which depends the decision of Mr. Khanna's submission.

The first question is what is meant by "the event". In Field v. The Great Northern Railway Company, 2 Ex. D 261, it was held by Kelly, C. B., and Mellor, J., that "the event" meant "the result of all the proceedings incidental to the litigation" and quoting from Mellor, J.'s judgment at p. 262 "the event is the result of the entire litigation".

It is clear, however, from the lengthy judgment of Lord Finlay, L. C., in the leading case of Reid, Hewitt and Company v. Joseph (1918) A. C. 717 (with which Viscount Haldane and Lord Dunedin agreed and from which Lord Parmoor expressly stated he did not dissent) that the word "event" is to be regarded as a collective noun and to be read distributively, so that in fact it may mean the "events" of separate issues in an action. In that case it was held (according to the headnote) that "the expression 'the costs shall follow the event'... means that the party who on the whole succeeds in the action gets the general costs of the action, but that, where the action involves separate issues, whether arising under different causes of action or under one cause of action, the costs of any particular issue go to the party who succeeds upon it. An issue, in this sense, need not go to the whole cause of action, but includes any issue which has a direct and definite event in defeating the claim to judgment in whole or in part."

But it is not on every issue in a suit that success will bring a right to the. costs of that issue. In this respect the short judgment of Lord Dunedin in Reid, Hewitt and Company v. Joseph (supra) is illuminating. In it he compared the principles on which the English rule on this subject is based with those guiding the practice of the Scottish courts on the same matter, and found them to be in harmony. He began by asking what is the measure of success which entitles the successful party in a suit to get his costs, and went on to discuss the respective effects on the question of costs of total and divided success. In case of total success the successful party may be deprived of the costs of a separate issue on which he was unsuccessful if it was a matter involving inquiry (e.g. the calling of witnesses) and not merely arguments of counsel. But it is quite clear from the judgment that for the decision of an issue to have the effect of entitling the party successful on that issue, though unsuccessful on the main issue in the suit, to his costs on that issue, it must be an issue which has, in a money suit, affected the amount of the decree.

So far as the present case is concerned, the decision of those issues on which the unsuccessful party (the respondent) succeeded did not in any way affect the eventual result, in which the appellant succeeded in resisting the original claim of the respondent in toto. Such subsidiary issues as were raised and argued were in the nature of alternative defences in law to the whole claim. The appellant's success on one of these was sufficient to give him total success in the action. There was in effect only one large significant issue derivable from the pleadings: Was the defendant entitled to resist the plaintiff's money claim? As a result of protracted litigation it was held by the Court of Appeal that he was. In other words he was held to be entirely successful on the one issue in the case which could affect the question of costs. In resisting the claim he had recourse to different alternative defences, but it cannot be said that any of the defences were frivolous or were put forward unnecessarily.

The words of Kekewich, J., in Blank v. Footman, Pretty and Company 39 Ch. D. 678, at p. 685, seem appropriate: "The defendant is entitled to put his back against the wall and to fight from every available point of vantage. I think it would be extremely hard on defendants if as a rule they were told at the end of a trial: 'You have beaten the plaintiff, but because you have raised some points on which you have not succeeded you shall not have all the costs of the action".

There seems to be no "good reason" in this case for making a distributive order as to costs. The successful appellant will therefore have his taxed costs in this Court and in the Courts below, the order for costs against him in those Courts being set aside.