[1955] EACA 296

#### THE JUDICIAL COMMITTEE OF THE PRIVY COUNCIL

Before LORD TUCKER, LORD COHEN, LORD SOMERVELL OF HARROW and MR. L. M. D. DE SILVA

M. TAKIM & COMPANY, Appellants (Original Defendants)

FAZAL KASSAM VELJI, Respondent (Original Plaintiff) Privy Council Appeal No. 13 of 1954

(Appeal from the decision of H. M. Court of Appeal for Eastern Africa allowing an appeal from a decision of H. B. M. High Court for Zanzibar)

Broker's Note—Stamping—Sale of Goods Decree (Laws of Zanzibar, 1934, Cap.

81) section 3 (1)—Stamp Decree (Zanzibar) 1940, sections 2 (10), (11), & (13), 4, 19 & 39 and First Schedule paragraphs 5 & 41—Meaning of "at" in section 19 aforesaid.

The respondent/plaintiff sued the defendants/appellants for damages for failure to deliver a quantity of cloves under a contract alleged to be in writing. The respondent submitted that the document concerned was a broker's note or memorandum within paragraph 41 of the First Schedule to the Stamp Decree and not being duly stamped could not be admitted in evidence for the purpose of the Sale of Goods Decree.

The document (which is set out in its translated form in the judgment, *infra*), was headed "Local Contract Note" and contained at the end a note as follows: "Note.—The above-mentioned goods have been sold on the conditions written above, which are acceptable to us (If) goods do not arrive due to the reasons of war or accident then seller does not remain responsible but when goods arrive according to shipment written in the contract then buyer is to remove."

Section 3 (1) of the Sale of Goods Decree and sections 4, 19 and 39 and paragraphs 5 and 41 of the First Schedule to the Stamp Decree, together with. section $2(1)$ , (11) and (13) of the said Decree, so far as material, are set forth in the judgment (infra).

Held (19-4-55).—The document was not a broker's note or memorandum. Until signed it was not an intimation by the broker of a purchase or sale. It was, thus, outside para-graph 41 of the First Schedule of the Stamp Decree and accordingly, exempt from stamping under paragraph 5 (1) of the said Schedule.

Quare-The meaning of "at" in section 19 of the Stamp Decree.

Appeal allowed.

Cases referred to: Vagani & Co. v. Lakhani Ltd. (1949) 16 E. A. C. A. 5; Pool's Case (In re Tunnel Mining Company) (1887) 35 Ch. D. 579.

Gahan, Q. C., and J. G. Le Quesne for appellants.

L. Caplan for respondent.

JUDGMENT (delivered by Lord Somervell of Harrow).—This is an appeal from the Court of Appeal in Eastern Africa reversing a decision given by the High Court at Zanzibar. The plaintiff and defendant are both Indian merchants carrying on business inter alia as clove dealers in Zanzibar. The plaintiff sued for damages for failure to deliver 20,000 lb. of cloves under a contract alleged to be in writing. Before Gray, C. J., the plaintiff succeeded and was awarded Sh. 8,750with costs and interest. No question arises as to quantum of damage. The decision. was reversed by the Court of Appeal and the plaintiff appeals.

The contentions put forward by the respondent in answer to the claim are based on the following statutory provisions:

Sale of Goods Decree (Laws of Zanzibar, 1934, cap. 81)

3. (1) A contract for the sale of any goods entered into after the first day of October, 1921, of the value of one hundred rupees or upwards shall not be enforceable by suit in any court in the Protectorate unless the buyer shall accept part of the goods so sold, and actually receive the same, or pay not less than ten per cent of the price thereof 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.

#### Stamp Decree, 1940

#### A. Of the liability of Instruments to Duty

4. Every instrument described in the First Schedule hereto shall, unless expressly exempted therefrom by this Decree, be chargeable with duty of the amount indicated in that Schedule as the proper duty therefor-

### C. Of the Time of Stamping Instruments

19. All instruments chargeable with duty and executed by any person in the Protectorate shall be stamped within thirty days of execution:

Provided that any instrument chargeable with duty of ten cents or twenty cents or promissory notes and bills of exchange shall be stamped at or before the time of execution, or the date of the instrument whichever shall be the earlier.

Instruments not Duly Stamped.

39. No. instrument chargeable with duty shall be admitted in evidence for any purpose by any person having by law or consent of parties authority to receive the evidence or shall be acted upon, registered or authenticated by any such peson or by any public officer, unless such instrument is duly stamped:

#### Provided that-

$(a)$ any such instrument not being an instrument chargeable with duty of ten cents or twenty cents only (other than a cheque) or a bill of exchange (other than a bill of exchange presented for acceptance, accepted or payable elsewhere than in the Protectorate), or a promissory note, shall, subject to all just exceptions, be admitted in evidence on payment of the duty with which the same is chargeable, or, in the case of an instrument insufficiently stamped, of the amount required to make up such duty, together with a penalty of twenty shillings, or, when ten times the amount of the proper duty or deficient portion thereof exceeds twenty shillings, of a sum equal to ten times such duty or portion;

## **FIRST SCHEDULE**

## Stamp Duty on Instruments

Description of

**Instrument**

5. AGREEMENT OR MEMORANDUM OF AN AGREEMENT-

- (a) if relating to the sale of a bill of exchange; (b) if relating to the sale of a Government security. or share in an incorporated company or other body corporate; - $(c)$ if not otherwise provided for

#### *Exemptions*

(1) Agreement or memorandum of an agreement-

(a) for or relating to the sale of goods or merchandise exclusively, not being a Note or, Memorandum chargeable under No. 41;

41. NOTE OR MEMORANDUM, sent by a Broker or Agent to his Principal intimating the purchase or sale on account of such Principal-

> (a) of any goods of the amount or value of forty $(a)$ shillings or over;

Twenty cents.

The respondent did not dispute that if the document was admissible it contained or evidenced a contract binding on him which he had broken but he submitted (1) that the document was a broker's note or memorandum within paragraph 41 of the First Schedule, (2) that it was not duly stamped and therefore could not be admitted in evidence for the purpose of the Sale of Goods provision. The appellant admits that if both these propositions are established he cannot bring himself within section 3 (1) of the Sale of Goods Decree and the claim must fail.

The appellant submits that it is not a broker's note within paragraph $41$ and the learned trial Judge so held. He further submits that if it is, it was duly stamped. Further statutory provisions are relevant on the second point but their Lordships will consider first whether the document was exempt from the necessity of being stamped under paragraph 5 $(1)$ $(A)$ of the Schedule.

The original of the document was in Gujarati. The case below proceeded on the basis of an agreed translation which it is desirable to set out in full: —

## LOCAL CONTRACT NOTE.

Contract Note No. $24/50$ .

# Original Duplicate Triplicate

Copy

Broker MOHAMED SALEH BHALOO. MOHAMED SALEH BHALOO Broker,

Zanzibar.

## Zanzibar D.20.6.50.

Seth F. K. Velji has, on the following conditions, sold the goods mentioned in this contract to Seth M. Takim & Co. through Broker Mohamed Saleh Bhaloo.

Zanzibar or Pemba cloves. Kind of goods ...

**Proper** Stamp Duty

Twenty cents.

Twenty cents. One shilling.

**Quantity**

**Price**

Period

Shipment ...

Ready or coming.

Other conditions

Nett 20,000 lb. in words twenty thousand complete.

In gunny bags.

Customs or godown.

Fair quality.

Sh. 95 in words ninety-five complete for $100$ lb.

Cloves nett 20,000 lb. in words twenty thousand of the current year from D. 1st November up to 20th November, 1950, whenever seller gives delivery buyer is to weigh at the above price. During the period whatever delivery seller gives the buyer is to pay the account of that much. In the end the seller is to give complete delivery up to the date written in contract. The seller is to give the buyer two days' notice in advance. The seller and the buyer have made bargain with signature. That is all.

Signature of Broker

#### (Sgd.) MOHAMED SALEH BHALOO.

Note.—The above-mentioned goods have been sold on the conditions. written above, which are acceptable to us (If) goods do not arrive due to. the reasons of war or accident then seller does not remain responsible but when goods arrive according to shipment written in the contract then buyer is to remove.

| Seller's Signature | (Sgd.) FAZAL KASSAM VELJI. | |--------------------|----------------------------| | Buyer's Signature | $(Sgd.)$ M. TAKIM & CO. |

Akbar.

Gray, C. J., had compared the translation with the original and it appears from his judgment that the opening sentence apart from the names of the parties is printed; that the list of terms on the left is printed and what appears on the right opposite to these terms is in writing, that the note below the broker's signature and above the parties' signatures is printed. The broker was acting for the buyer and not for the seller.

Gray, C. J., in a carefully reasoned judgment referred first to the principle that the words of a taxing Act must clearly cover what is sought to be taxed. There was a previous decision binding on him in which a document similar in some respects had been held to be a "broker's note" within paragraph 41 (Vagani & Company v. Lakhani Ltd. (1949) 16 E. A. C. A., p. 5). Gray, C. J., distinguished that case and held that the present document did not intimate a purchase or sale, but was a draft of proposed terms to which the parties by signing could if so minded agree. If either party refused to sign there would be no contract and not a contract which was unenforceable because of the absence of a note or memorandum.

Size or weight

Packing $\sim$ $\overline{ }$ . . Delivery Samples $\cdot$ $\overline{a}$ . . Dutiable or transhipment ÷.

. .

$\overline{a}$

$\overline{ }$

$\sim$

November seller's option.

He relied on the words which appear just above the broker's signature: "the seller and the buyer have made bargain with signature". He construed these words not as referring to some other signed document but as anticipating the signatures at the foot which would alone make the document a contract.

The Court of Appeal felt unable to distinguish the case from *Vagani's* and dismissed the claim. In neither court does much reliance appear to have been placed on the important term which is introduced in the latter part of the note below the broker's signature. As a matter of construction this term is, in the opinion of the Board, outside anything that the broker has dealt with and has therefore to be accepted by the parties if there is to be a contract. In other words this makes clearly right Gray, C. J.'s conclusion that the document until signed was not an intimation by the broker of a purchase or sale. It is therefore outside paragraph 41; and is exempt from stamping under paragraph 5 $(1)$ . The respondent's contention fails and he was liable for his breach of contract.

It is unnecessary to rely on or consider the admissibility of the surround-<br>ing circumstances which were given in evidence. The broker in fact personally took the document first to the seller who was not his principal and obtained his signature before taking it to the buyer. This is the course of events which would be anticipated on the construction of the document set out above.

It was sought to rely on evidence of custom but this does not arise in the view which the Board take on construction.

The appellant submitted that apart from the "new term" and the words relied on by Gray, C. J., the form of the document took it outside the words of Article 41. Normally a broker's note is a bought or sold note reciting a sale or purchase according to the party to whom it is sent. It is not as this is bilateral in form. It is unnecessary to decide this point but brokers might be well advised to reconsider a form of document which has given rise to the present litigation and to Vagani's case. It is difficult to say anything useful about that case as the document construed is not set out in the report.

The second point does not therefore arise, but in view of one or two observations made below and the points taken before the Board it is desirable to deal with it briefly.

The broker made out and signed the document on the evening of the 19th. He did not himself stamp it. It was not suggested he was trying to defraud the revenue. It is reasonable to suppose that he adopted the same view as that taken by Gray, C. J., and the Board. The appellant when it was handed to him on the 20th signed it and then handed it to his clerk for stamping, the broker being still in the office. He seems to have taken the view that it was or might be a broker's note. The following provisions of the Stamp Decree are relied on:-

# STAMP DECREE

Section 2.—In this Decree, unless the context requires—

(10) "duly stamped", as applied to an instrument, means that the instrument bears an adhesive or impressed stamp of not less than the proper amount and that such stamp has been affixed or used in accordance with the law for the time being in force in the Protectorate;

(11) "executed" and "execution" used with reference to instruments, mean "signed" and "signature";

(13) "instrument" includes every document by which any right or

liability is or purports to be, created, transferred, limited, extended, extinguished or recorded;

Reading these provisions with section 19 the argument runs as follows. This instrument being chargeable with duty of twenty cents had to be stamped at or before the time of execution. That means at or before the time of signature, namely the evening of the 19th, whereas it was not stamped until the following day. Various submissions were made on the other side. A "note" is not within paragraph 41 until sent and a note is not sent until it leaves the sender. It did not in the present case leave the sender until the morning of the 20th just before it was stamped. The provision as to the meaning of execution is "unless the context otherwise requires". The word "at" in the phrase "at or before" in the proviso to section 19 cannot mean simultaneously with signing, and must therefore cover a reasonable time after signing. The Board was referred to *Pool's case*, 35 Ch. D. 579, in which North, J., construed the word "at" in the phrase "at or before the issue of such shares" as covering what was done if done as substantially part of one and the same transaction. Other cases were referred to. In the court below Gray, C. J., regarded it as perfectly clear that if the document was a broker's note it was not properly stamped. The leading judgment by the learned President in the Court of Appeal says that the contrary was argued but faintheartedly. The matter has been clearly more fully argued before the Board and their Lordships have found the point a difficult one. It would be undesirable to decide it on a document which does not raise it, but should a similar point arise in the future, the arguments referred to, particularly, as to the scope of the preposition "at" in its context in section 19, will require careful consideration.

The Board will humbly advise Her Majesty that this appeal should be allowed the judgment of the Court of Appeal for Eastern Africa set aside with costs and the judgment of Gray, C. J., restored. The respondent must pay the costs of this appeal.

Solicitors: Bircham & Co.; Herbert Oppenheimer, Nathan & Vandyk.