Wahid and Sons v Munshiram and Co (CA'. 29/1932.) [1932] EACA 53 (1 January 1932)

## COURT OF APPEAL FOR EASTERN AFRICA.

Before SIR JACOB BARTH, C. J. (Kenya), LAW, Acting C. J. (Uganda), and THOMAS, J. (Kenya).

ABDUL WAHID & SONS (Appellants) (Original Defendants)

MUNSHIRAM & CO. (Respondents) (Original Plaintiffs). C. A. $-29/1932$ .

- -Civil Procedure Rules, Order XIX, Rule 8—Application for execution. - -Civil Procedure Rules, Order XIX, Rule 49-Attachment of property in custody of public officer. - -Civil Procedure Rules, Order XIX, Rule 55-Claims and objections to attachment of attached property. - -Civil Procedure Rules, Order XX—Attachment of debts. - Held (25-1-33): Where no money is due in respect of a building contract an order for attachment is abortive. Where subsequently<br>money becomes due and is paid into a Court, it cannot be properly where money has been improperly paid out it can be recovered<br>in a separate suit by a person claiming to be entitled to it from<br>the person to whom it has been paid.

Schwartze for Appenllants:

Hogan for Respondents.

Schwartze submitted that the issues now to be determined were: (1) was there a debt on 27th November, 1931, which could be attached by appellants; (2) were respondents justified in bringing an action to recover the money from the appellants. There must be relationship of debtor and creditor to support prohibitory -order or garnishee order *nisi*. No difference between debts attachlable by prohibitory order and garnishee order. O'Driscoll and Another v. Manchester Insurance Committee (1915), 3 K. B. 499, at 510. In that case there was a contractual liability to pay out of a particular fund a sum which was incapable of being ascertained until some further time. There was nothing to prevent an attachment of moneys earned and owing by the Public Works Department in the present case. Tapp v. Jones (Pooley Garnishee), 33 L. T. R. 201. In that case an order was made upon a garnishee (inter alia) to pay to the judgment creditor "the accruing debts as they become due from time to time." The moneys paid out on 4th December, 1932, must be considered to have been in the hands of the Director of Public Works on November 27th. Chattels Transfer Ordinance, section 13 (c). There was no privity of contract between the parties, and the attachment was wrongful: Rogers v. Kelly, 170 E. R. 1102; Quilter v. Mapleson. (1882) 9 Q. B. D. 672.

Hogan.—The assignment to the respondent did not require registration. Chattels Transfer Ordinance, section 26 (1). The section does not refer to future debts. Section 45 (1) Bankruptcy Ordinance. Indian Transfer of Property Act, section 130. The agreement was with the Crown, therefore the money owing is nota debt strictly speaking. It cannot be recovered by action; only by Petition of Right, Spence v. Coleman, (1901) 2 K. B. 199 at 205. Kenya Order XIX, Rule 49, enables a public department to be liable to attachment or its equivalent. Webb v. Stenton, (1883) 11 Q. B. D. 518, at 525. Driscoll v. Manchester Insurance Committee (supra). Barnett v. Eastman, 67 L. J. Q. B. 517. The certificate referred to in this case is a condition precedent to the debt accruing due to the Public Works Department. Hudson on Building Contracts, 4th Edition, 364-370. Civil Procedure Ordinance, section 44 $(1)$ . As in this case a right to sue for damages cannot be attached. Jones v. Thompson, 27 L. J. Q. B. 234. Referred to definition of debt in Stroud's Judicial Dictionary. Petition of Right is the only remedy.

Schwartze, in reply. "Other debts" includes all kinds of debts. The certificate as to the completion of the work was not a condition precedent to the money becoming due. The money was paid out of Court under a mistake of law. $Henderson$ v. Folkestone Waterworks Co., 1 T. L. R. 329.

SIR JACOB BARTH, C. J.—In this appeal the appellants are seeking to set aside a judgment of the Supreme Court of Kenya in an action brought against the appellants by the respondents.

The matter arose in execution proceedings in an action in which the appellants recovered judgment against the defendants in that action. Messrs. Scammell Noor Mohamed & Co. (Civil Case No. 578 of 1931).

The appellants attached by way of a prohibitory order money alleged to be due to Messrs. Scammell Noor Mohamed & Co. from the Director of Public Works, the money being then stated to be in the hands of that officer, to the extent of Sh. $2.494/73$ , vide Exhibit 4. The Director of Public Works paid the money into Court in accordance with a note stamped on the order. The order is dated 27-11-31. The money was paid in on 7-12-31. Objection proceedings were lodged by the respondents. Such proceedings were disallowed and the suit from which this appeal arises was filed by the respondents (Civil Case No. 253 of 1932).

The respondents claim in the action was based on an assignment on 24th September, 1931. by Scammell Noor Mohamed of all moneys due or which would become due from the Director of Public Works under a contract with the Director of Public The Works for the erection of Asiatic quarters in Nairobi. respondents had financed Scammell Noor Mohamed and the assignment was by way of security for such advances. $\psi_{\alpha,\alpha\beta}$

Notice of the assignment was given to the Director of Public Works.

Under the contract with the Director of Public Works the sums payable to Messrs. Scammell Noor Mohamed were conditional on certificates to be issued by the Director of Public-Works or one of his assistants.

Money became due under the contract on 4th December. 1931. Therefore at the date of the prohibitory order, 27th November, 1931, there was no debt which the appellants could attach. It is settled law that to support a garnishee order there must be a debt due or accruing due: that is, there must be a debt either due or debitum in presenti solvendum in futuro. It is not sufficient to show that there is a contingent liability.

I am in agreement with the learned trial Judge's finding that at the time the prohibitory order was issued there was no debt which could be attached, the position of debtor and creditor did not arise until the necessary certificate had been issued. There was no question of a wrongful refusal to issue a certificate.

With regard to the assignment by Mr. Scammell to the respondents (Exhibit 3) of "all the moneys now standing or which shall in future stand to his credit or to the credit of the said T. Seammell & Noor Mohamed in the hands of the Public-Works Department in respect of the contract aforesaid " the learned trial Judge has held that such assignment comes within the provisions of the Chattels Transfer Ordinance, 1930, section 26, and that it took effect from the date of registration, i.e., 24th December, 1931. Mr. Hogan, for the respondents argued. that the expression "debts" in section 26 of the Ordinance included only present debts and did not cover future debts. In my judgment the view taken by the learned trial Judge was. correct. There is nothing in the section to qualify the term debts, and it is clearly within the spirit of the Ordinance that all assignments of debts whether existing or in future should be registered.

The prohibitory order of the 27th November, 1931, was abortive for the reasons stated above, and the appellants do not stand in the position of the persons set out in section 13 $(1)$ $(c)$ of the Chattels Transfer Ordinance, 1930. The assignment to the respondents is therefore not void as against them.

It remains to be considered if the action by the respondents against the appellants lay. The money was paid into Court by the Director of Public Works on the strength of the prohibitory order of 27th November, 1931, although he had notice of the assignment to the respondents, to abide the further order of the Court. There was, in fact, no valid attachment of the money and as I understand the facts there never has been a valid. attachment by the appellants. The objection proceedings brought

by the respondents were therefore wrongly conceived, and the money was paid out to the appellants by the officer of the Court by mistake. In my opinion I see no objection to the order of the trial Judge putting the respondents in the position in which they would be but for the appellants conduct.

In my judgment the appeal should be dismissed with costs.

LAW, Ag. C. J.—On the 26th November, 1931, appellants obtained a decree (C. C. No. 378 of 1931) against T. Scammell & Noor Mohamed & Co. for Sh. 2,402/03. On 27th November they applied for execution, by attachment of moneys (to the extent of the decretal amount and costs) due to those judgment-debtors in respect of a building contract with the Director of Public Works and for payment by him of such amount into Court. In consequence of that application a prohibitory order $(Ex. 4)$ was issued by the Court on the same day to the Director of Public Works, under Order 19, Rule 49, requiring him to hold Sh. $2,494/73$ out of moneys in his hands then belonging to the judgment-debtors till the further order of the Court. $\rm{It}$ is not suggested that Exhibit 4 does not conform $\quad\text{with}\quad$ the provisions of Order 19, Rule 8. It is noticed $_{\rm{that}}$ Order 19, Rule 49 speaks of "property to be attached" and not of any specific debt. An endorsement appears on Exhibit 4 to the effect that the Director of Public Works might pay the amount into Court, and that such payment would be an effective discharge as between himself and the judgmentdebtors. The Director of Public Works actually paid the requisite amount into Court on the 7th December; the full amount due by him to the judgment-debtors as on the 27th November, which exceeded Sh. 16,000, was subsequently ascertained on the 4th December, when a certificate was granted to that effect. The learned trial Judge held that Clause 17 of the Contract between the Director of Public Works and the judgment-debtors made the issue of a certificate a condition precedent to any payments to them. This construction of that clause is no doubt correct. In other words, the judgment-debtors could not claim payment till the issue of such a certificate. But nowhere in that clause is the Director of Public Works prohibited from determining, to his own satisfaction, what was due by him to the judgment-debtors at any given date before the issue of such certificate. In my view he could have done so immediately he received Exhibit 4 and paid the requisite amount into Court. and I fail to see how such action could have been questioned. or how appellants could not then have been regarded as attaching-creditors. To my mind it is not reasonable to question his subsequent action, merely because he made the payment at a later date after the full amount due to the judgment-debtors had been determined. In truth and in fact what he paid into Court on the 7th December (and more) was what belonged to the judgment-debtors on the 27th November. Had he not made any payment into Court at all, the position, to my mind, would have been the same. It is significant to note that the Director. of Public Works, on receipt of Exhibit 4, did not reply that he had no money belonging to the judgment-debtors, which might have been expected had he then no such moneys. There are certainly no admissions nor any evidence in the case that he did not have money of the judgment-debtors in his hands on the 27th November. Surely it was for respondents to establish that fact in the suit; this appears to have been assumed by them. The position on the 7th December was that the Court held Sh. 2,494/73 in respect of C. C. No. 378 of 1931, whatever considerations may be attached to the fact whether the prohibitory order was spent or not and whether the Director of Public Works was correct or not in paying the requisite amount into Court. In my opinion, the Court by receiving that amount from the Director of Public Works, and, in view of the language of Exhibit 4, substituted itself as holders of that amount. It would not be reasonable to expect the appellants, as judgmentcreditors, to have given a further and formal notice to the Court itself under Order 19. Rule 49. On the 9th December the appellants' advocates wrote to the Registrar asking for payment out to them of the amount in question. No notice of that application was sent to the judgment-debtors, nor, so far as I can ascertain was such a notice necessary. Even were this so, the judgment-debtors have not complained. I regard the letter of the 9th December as a further form of relief asked for by the. appellants under Order 19, Rule 8 (2) (i) (v) as the mode in which the assistance of the Court was sought. The appellants, at that stage, continued to be attaching-creditors. Payment out was duly made by order of the Registrar on the 11th December. It seems clear to me that such payment out could never be, and in fact never was, questioned by the judgment-debtors. It remains to be considered whether the respondents' claim can be entertained. It is noted that respondents, on the 10th December, as objectors in C. C. No. 378 of 1931, asked for payment to them of the amount in Court. Those objections were duly heard by Lucie-Smith, J., who disallowed them on the 31st March, 1932. The payment out should doubtless have been delayed till the disposal of the objection proceedings, in view of Rule (4) of the "Payment out of Court Rules, 1905" read with the proviso to Order 19, Rule 49. Nevertheless, the learned Judge, having decided the objection proceedings in favour of the appellants, must be taken to have ratified the Registrar's action in paying out without having first referred the matter to him. The respondents seek to rely on Exhibit 3, an assignment to them by the judgment-debtors. The learned trial Judge has held, with which opinion I agree, that as the assignment was hot registered till the 24th December, 1931, it was void against those classes of persons who are mentioned in section 13 (1) of the

Chattels Transfer Ordinance, 1930. The appellants, whom I. regard as attaching-creditors throughout, are within that section. For the foregoing reasons, therefore, I would allow this appeal with costs and enter judgment for the appellants with costs. In these circumstances, it is not necessary to consider the other points raised in this appeal.

THOMAS, J.-T. Scammell, Noor Mohamed & Co., having entered into a contract with the Director of Public Works, Kenya Colony, for the erection of certain buildings in Nairobi, obtained financial assistance from Munshiram & Co., and assigned to Munshiram & Co., as security, all moneys then due or which would become due from the Director of Public Works in respect of the said contract. Notice of this assignment was given to the Director of Public Works on various dates. The assignment was not registered under the Chattels Transfer Ordinance, XXIV of 1930, until the 24th December, 1931, leave having been obtained to register out of time on the 23rd of December, 1931.

On the 25th of November, 1931, Abdul Wahid & Sons instituted an action against T. Scammell, Noor Mohamed & Co.; and on the 26th of November, 1931, judgment was entered in favour of Abdul Wahid & Sons by consent. On the 26th of November, 1931, Abdul Wahid & Sons applied for execution in respect of moneys owing by the Director of Public Works.

The application for execution reads as follows: "The judgment-creditors pray that the amount due in respect of a building contract from the Director of Public Works, Public Works Department, Nairobi, be attached to the extent of the decretal amount together all costs to date and that the same be ordered to be paid into this Honourable Court. The attachment order is to be addressed to the Chief Accountant. Public Works Department, Nairobi."

$\tau_{\mathcal{F}}$

On the 27th of November, 1931, an order for attachment was made as follows: "The plaintiffs having applied, under Rule 8 of Order XIX of the Civil Procedure Rules, 1927, for an attachment of certain money now in your hands belonging to the defendants to the extent of two thousand, four hundred and ninety-four shillings and seventy-three cents in respect of a building contract I request that you will hold the said money subject to the further order of this Court."

Impressed on the order by a rubber stamp was the following notice: "N. B.-You may pay into the Court the said moneys or such less amount as you may have in your hands due to the said defendant and such payment into Court shall discharge you as effectively as if the payment were made to him, the said defendant."

On the 7th of December. 1931. the Director of Public Works paid into Court the sum of $2.494/73$ shillings.

Abdul Wahid & Sons applied by their advocates for the payment out of the moneys in Court.

Munshiram & Co. took objection proceedings under O. XIX, R. 55, and on the failure of those proceedings instituted a suit against Abdul Wahid & Sons. Judgment was given in favour of Munshiram & Sons. From that judgment and decree Abdul Wahid & Sons now appeal.

Now the money paid into Court was in respect of a building contract. On the 27th of November no sum had been certified as due; but on the 4th of December a certificate was drawn up. It has been urgued that in spite of the certificate only having been given on the 4th of December. 1931, there was a sum due prior to that date.

The case of O'Driscoll v. Manchester Insurance Committee. 1915, 3 K. B. p. 499, has been relied upon for this contention. In the course of his judgment Swinfen Eady, L. J., said that, "It was not presently payable, the amount not having been ascertained, but it was a debt to which the doctors were absolutely and not contingently entitled. The only question was the amount of the debt, the debt not being payable until the amount had been ascertained."

The amount payable under a building contract depends almost entirely upon a certificate being obtained. There is always the contingency that the architect or surveyor will reject some portion of the work done; there is the possibility of other matters. which may affect the amount payable. It is in no wise a debt to which the contractor is absolutely entitled, but a debt to which he is contingently entitled. It depends in the first place on the certificate being obtained. Until such has been obtained there is no debt.

Therefore I agree with the trial Judge that at the time of the attachment order there were no moneys in the hands of the Director of Public Works capable of being attached. Accordingly that order was abortive.

It has further been argued that the Director of Public Works paid the money into Court under an error either of fact or law. He had had notice of the assignment and he also had the attachment order served on him. Thus he was aware that the amount was being claimed by two persons. In view of the terms of the order and the notification given by the rubber stamp endorsement, which did not limit the payment to moneys actually in his hands, he may well have paid the moneys to the Court as a stakeholder between the rival claimants.

Whether such were the case, or whether it was merely a payment into Court in error, is not clear from the proceedings:

But in either event the moneys had been paid into Court to abide the further order of the Court, and that is a very different thing to a direct payment to an individual.

After the payment into Court there was property in Court and, inasmuch as the attachment order which had been obtained was abortive, a fresh notice was necessary to attach this. property. (See O. XIX., R. 49). No such notice was given. If such notice had been given then under the proviso to that rule, " any question of title or priority arising between the decreeholder and any other person, not being the judgment-debtor, claiming to be interested in such property by virtue of any assignment or otherwise, shall be determined by the Court."

Although there had been no attachment the respondents. proceeded under O. XIX, R. 55, which applies to claims or objections to attached property. That objection having been rejected then a suit might be instituted under Rule 60 of Order XIX. But that right only exists where there are attachment proceedings. Since there were no attachment proceedings the remedy under Rule 60 of Order XIX was not open to the respondents. Can it then be suggested that the respondents had no means of recovering the moneys which they might properly have asked to be paid out of Court to them? Such a suggestion. would be absurd.

They have brought their suit and in the prayer have asked for a declaration that the moneys which became due to the firm of T. Scammell & Noor Mohamed & Co. on or after the 4th day of December, 1931. and were subsequently paid out to the defendants on the 11th of December, 1931, were the property of the plaintiffs. That declaration has been made in my opinion most properly made by the learned trial Judge.

The money was paid out to the advocates for the appellants by a mistake of the Court. I would refer to the case of Slater v. Slater, reported at p. 222 of 1897, 1 Ch. Div. In the course of his judgment Kay, J., said, "He was bound to say that, so far as he could discover, the miscarriage had occurred without the slightest fault of any of the gentlemen employed in his chambers; and he was quite certain that if the matter had come before him in Court on the evidence which was submitted in chambers when the order of 28th January, 1884, was improperly obtained, he should have made precisely the same order and been deceived in the same way as the Chief Clerk was deceived."

That case is an authority for ordering the refund of money which has been improperly paid out of Court. If the application had been made to myself without knowledge of the claim of Munshiram & Co., I should have made the same order as was made by the Registry. But on the knowledge of the mistake the person receiving the moneys would be ordered to refund the amount paid out.

No application has at present been made for the firm of advocates who received the moneys to refund. In the event of the sums decreed by the judgment not being paid there would seem no reason why such an order should not be made on a proper application.

The appeal is dismissed with costs.