[1952] EACA 162

## COURT OF APPEAL FOR EASTERN AFRICA

Before SIR BARCLAY NIHILL (President), SIR NEWNHAM WORLEY (Vice-President) SIR HENRY Cox, C. J. (Tanganyika)

## MOHAMED HUSSEIN, Appellant (Original Defendant)

## KESHAVJI JETHABHAI & BROTHERS, Respondent (Original Plaintiff) Civil Appeal No. 64 of 1951

(Appeal from decision of H. M. Supreme Court of Kenya—Clifford Knight, J.)

Sale of goods-Tanganyika Defence (Controlled Produce) Regulations, 1946. regulation 7 (1)—Illegality—Part delivery—Non-payment whether balance of delivery enforceable.

The respondents entered into an oral contract to sell 20 tons of groundnuts to the appellant. Regulation 7 (1) of the Tanganyika Defence (Controlled Produce) Regulations, 1946, provides:

- "7. (1) It shall be an offence for any person— $\frac{1}{2}$ - (a) to buy any controlled produce at an appointed selling place unless he is in possession of a permit issued under this regulation by or on behalf of the Controller authorizing him to do so; - (b) to sell any controlled produce at an appointed selling place except $(a, b)$ to a person authorized by a permit under this regulation to buy such produce."

The appellant obtained a permit authorizing the purchase of 20 tons of<br>groundnuts from respondents. The permit was expressed to be valid for four days from the date of issue. The respondents delivered about $13\frac{1}{2}$ tons between November and December and the appellant demanded the balance in January. 1949, and sued for damages for respondents' breach in failing to deliver the balance of $6\frac{1}{2}$ tons.

The respondents pleaded that the appellant had failed to take delivery within the four days' validity of the permit and that they were not therefore bound to deliver the balance. The respondents' advocate submitted that there was no case<br>to answer. The magistrate accepted the submission and dismissed the suit. On appeal to the High Court the question of illegality was argued but a further point raised was that the appellant had not paid for the $13\frac{1}{2}$ tons delivered at the time demand for the balance was made.

The High Court did not decide the question of illegality but dismissed the appeal on the ground that the appellant had not paid for the groundnuts already delivered to him. Before the Court of Appeal it was conceded that there was a complete and binding contract for the sale of 20 tons of groundnuts and that prima facie the respondents were not entitled to payment until delivery was complete. But it was argued that in the circumstances of the case the respondent was entitled to demand payment for whole 20 tons before delivering the balance and that as unpaid seller the respondent was entitled to retain the balance by reason of sections 43 and 44 (2), Sale of Goods Ordinance.

*Held* $(17-10-52)$ .—(1) The terms of payment were not affected by any question of illegality.

(2) The respondents did not purport to exercise any lien and were not therefore entitled to retain the balance.

(3) Sale and delivery are two different things in law and delivery or payment outside the four days provided in the permit did not make the transaction illegal.

Appeal allowed—inquiry as to damages suffered by appellant ordered.

## Rattansey for appellant.

Vellani for respondent.

JUDGMENT (delivered by SIR NEWNHAM WORLEY (Vice-President)).—This is an appeal brought with the leave of the High Court of Tanganyika under the provisions of section 7 (1) (c) of the Appeals to the Court of Appeal Ordinance (Chapter 23) from a decision of the Resident Magistrate, Tabora, in Civil Case No. 66 of 1949.

The history of this matter is that on 27th November, 1948, the present appellant, as buyer, entered into an oral contract with the respondent firm, as seller, for the purchase and sale of 20 tons of groundnuts at the price of Sh. 412/24 a ton. At that time groundnuts were "controlled produce" within the meaning of the Defence (Controlled Produce) Regulations, 1946 (Laws of Tanganyika, 1947, vol. VI, page 2249 *et seq.*), and they were also subject to a statutory maximum price. Regulation 7 (1) of the above-mentioned Regulations provides: $-$

"7. (1) It shall be an offence for any person— $\frac{1}{2}$

- $(a)$ to buy any controlled produce at an appointed selling place unless he is in possession of a permit issued under this regulation by or on behalf of the Controller authorizing him to do so; - $(b)$ to sell any controlled produce at an appointed selling place except to a person authorized by a permit under this regulation to buy such produce."

In compliance with this regulation the appellant, on the 27th November, obtained and presented to the respondent and the respondent accepted a permit in the prescribed form which authorized the appellant to buy 20 tons of groundnuts from the respondent firm; the permit was expressed to be "valid for four days from the date of issue".

The respondent firm delivered only approximately $13\frac{1}{2}$ tons of nuts (the actual quantity delivered being 13,388¹/₂ kg., 1,000 kg. being taken as equivalent to one ton) and in the suit which is the subject of this appeal, the appellant sued for Sh. 1,020 as damages for the respondent's breach of contract in failing to deliver the balance of $6.611\frac{1}{2}$ kg. In the written statement of defence the respondent firm pleaded, inter alia, that they were not bound to deliver the remainder of the 20 tons of nuts for the reason that the appellant had failed to take delivery of this balance during the four days validity of the permit; and, at the trial, after the appellant and his witnesses had given evidence, the advocate who then represented the respondent firm made a submission of no case to answer based on this argument. The pleadings contained conflicting averments as to the date of the partial delivery of the nuts, the plaint averring 19th December, while the statement of defence averred 30th November. The appellant's sworn evidence, however, was that he took delivery of the $13\frac{1}{2}$ tons in three lots between 27th November and 19th December and demanded delivery of the balance on 18th January, 1949. The learned Magistrate accepted the submission of no case to answer, and in a considered judgment, after referring to the facts sworn to by the plaintiff $appellant, said:$

"Even assuming these facts to be true I fail to see how, when they are coupled with the plaintiff's admission that the Controlled Produce Permit which purported to authorize the transaction was only valid for four days from its date, i.e. 27th November, 1948, any case has been made out against the defendants at all. On the face of it the plaintiff's action was an attempt to persuade the defendants to commit an illegal act which they refused to do."

He accordingly dismissed the suit with costs and from that order the plaintiffappellant appealed to the High Court. The memorandum of appeal dealt only with the point taken as to illegality and this appears from the notes of the argument to have been the main question argued on the appeal. But Mr. Vellani, who represented the respondent in the High Court, also raised the point that the appellant had not paid for the $13\frac{1}{2}$ tons delivered at the time when he demanded delivery of the balance of $6\frac{1}{2}$ tons.

It was the fact that the appellant did not pay for the $13\frac{1}{2}$ tons at the time of delivery and on 11th January, 1949, the respondent firm had sued him in D. C. Case No. 6 of 1949 for the price; the respondent did not dispute the claim and lodged in the District Court a cheque for the amount. According to his evidence, when he demanded delivery of the balance in January, 1949, the respondent firm, through their agent, demanded his cheque for the price of the remainder of the nuts, namely Sh. 2,649/26; he tendered this cheque about 24th or 25th January and it was accepted by the respondent's agent, who subsequently returned the cheque to him and refused to deliver the nuts.

The learned Judge of the High Court found it unnecessary to decide the point as to illegality, but dismissed the appeal on the ground that, even if the Magistrate's ruling on this point was wrong in law (and he was inclined to think that it was) the Court "should not permit the appellant to reopen the case, as even if he did send a cheque to the respondent on 24th January, 1949, he had not at that time paid for the groundnuts delivered to him on 19th December, 1948. In fact it was only after the respondent sued him in another case that payment was made, and it is clearly brazen effrontery for the appellant to seek to enforce what might be called the second half of this contract when, by non-payment, he had entirely failed to fulfil the first half."

With great respect, the learned Judge appears to have entirely misdirected himself on the nature of the contract in suit: he appears to have considered it as a contract for sale with delivery by stated instalments which were to be separately paid for, whereas it was indeed conceded by Mr. Vellani on the first appeal that the contract was not severable. That being so, the question as to the terms of payment was a matter of evidence only. The evidence on this point was not complete owing to the course which the respondent's advocate elected to follow in the Magistrate's Court: but it is a fair inference from such evidence as is on record that the parties did make some arrangements as to deferred deliveries and deferred payment.

Mr. Vellani has, however, sought to uphold the decision of the High Court on other grounds. He conceded that there was a complete and binding contract for the sale of 20 tons of nuts on 27th November and that, prima facie, at least, the respondent firm was not entitled to payment until the whole quantity had been delivered. But, if I have understood him aright, he argued:-

- (a) that in the circumstances of this case, the respondent firm was entitled to demand payment for the whole 20 tons before the balance was delivered; and - (b) that the respondent as unpaid seller was entitled to retain the remainder by reason of the provisions of section 43 and section 44 (2) of the Sale of Goods Ordinance (Chapter 214).

The argument in support of (a) was that the combined effect of regulations 7, 8 and 18 of the Defence (Controlled Produce) Regulations, 1946, read with section 5 of the Prices (Control) Ordinance (Chapter 209) left the respondent no option but to sell to the appellant when the latter produced his permit to buy 20 tons and that he would have been committing an offence had he refused to do so. How this, even if correct, affects the terms of payment in the instant case I have failed to understand. It is, I think, quite clear that if the respondent had been unwilling to sell to the appellant or to sell to him on credit, he could have insisted on the latter tendering the current maximum price fixed for 20 tons of groundnuts. But I can see nothing either in the Regulations or in the Price (Control) Ordinance which debars a willing buyer and a willing seller from mutually waiving that condition and making their own agreement as to terms of payment; and that, as I have said, is apparently what the parties did in the present case.

The second limb of the argument $(b)$ is answered by the fact that the respondent firm did not purport to exercise in January any lien upon the remainder of the goods sold. According to the plaintiff's evidence, which stands uncontradicted, their agent merely asked for and was given a cheque for the price of the remaining $6\frac{1}{2}$ tons; he accepted this and only later returned it saving that his employer had refused to deliver the nuts. There was also evidence that there had been previous transactions between the appellant and the respondent and that payment by cheque was the usual method of payment adopted by them. Mr. Rattansey informed us that, by that date, namely on the 15th January, the appellant had lodged in Court a cheque for the value of the $13\frac{1}{2}$ tons previously delivered: it is reasonable therefore to infer that the respondent's agent was aware of this when he demanded payment for the remaining $6\frac{1}{2}$ tons only. In my opinion, therefore, these attempts to support the learned Judge's reason for dismissing the appeal completely fail.

It remains to consider whether the learned Magistrate's ruling on the point of illegality was correct. No authority either way was cited to us on this point, Mr. Vellani contenting himself with the argument that it was a necessary inference from the provisions of the Defence (Controlled Produce) Regulations, 1946, and from the terms of the permit. For my part, I can find no justification for such an implication. It is a sound rule of construction to presume that, where the objects of legislation do not obviously imply such an intention, the legislature does not intend to encroach upon the rights of persons and it is therefore expected that, if such be its intention, the legislature will manifest it plainly, if not in express words, at least by clear implication and beyond reasonable doubt (see Maxwell's Interpretation of Statutes, 8th Edition, 249). Where the legislature interferes with the subject's right to contract, the natural liberty of contracting is to be restricted as little as possible consistent with the objects of the legislation. Now all that appears on the face of the permit is that the appellant is authorized "to buy" 20 tons of groundnuts from the respondent within four days from the date of issue. It is conceded that he did so. The respondent, however, wishes to import into the permit another restrictive condition, namely, that delivery must be made and taken within the same four days: it was said that without this implied condition the regulations would be unworkable. I am far from being convinced that this would be the result but I am not going to speculate on the matter. I am content to point out that sale and delivery of goods sold are two different things in law and that the legislature must be presumed to know this. If then it was intended to limit the time for delivery of the goods authorized to be bought under the permit, I should have expected to find an appropriate condition. In my view therefore the ruling of the learned Magistrate was wrong in law and should have been reversed on appeal by the High Court.

Since my learned brothers concur in this conclusion this appeal must succeed and it is necessary to consider what order will follow. Mr. Rattansey has asked that we direct judgment to be entered for the appellant in the District Court for the amount claimed as damages. Mr. Vellani has said that the matter should be sent back for the trial of the suit to be resumed at the point where it was dismissed. Neither course commends itself to me. It would have been better had the learned Magistrate declined to rule upon the submission of no case until the respondent's advocate had formally elected to call no evidence.

But although there is no record of any such formal election on his part, I observe that the learned Magistrate's ruling begins with the observations: "In this case the defendant's counsel stands on the submission of no case to answer in law having been made out". I infer from this that the respondent's counsel made it clear to the Court that he was content to rest upon his submission and would not call evidence. If that is so, it would be manifestly unfair to permit him to do so now.

On the other hand the Court is not bound to accept the appellant's estimate of his damages. He was cross-examined upon these figures and suggestions were made, though not accepted, that they were inflated. In my view, therefore, unless the parties are sensible and can agree upon a figure, there should be an inquiry as to the quantum of damages, if any, suffered by the appellant.

I would therefore allow this appeal, set aside the judgments of the High Court and of the District Court and direct that judgment be entered for the appellant in the District Court, with such damages as may be found after inquiry by the Resident Magistrate. The appellant must have the costs of this appeal as also of the appeal to the High Court of the trial in the District Court. The costs of the inquiry as to damages will be in the discretion of the District Court.

SIR BARCLAY NIHILL (President).—I concur with the judgment delivered by the learned Vice-President and have nothing to add. An order will be made in the terms he has proposed.

Cox, C. J. (Tanganyika).—I concur in the judgment just delivered by the learned Vice-President and agree that an order should be made in the terms proposed.