COLOMBO SHIPPING CO., LTD. v. CHIRAYU CLOTHING (PVT) LTD.

025-SLLR-SLLR-1999-V-1-COLOMBO-SHIPPING-CO.-LTD.-v.-CHIRAYU-CLOTHING-PVT-LTD..pdf


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Colombo Shipping Co., Ltd. v. Chirayu Clothing (Pvt) Ltd.
213
COLOMBO SHIPPING CO., LTD.
v.
CHIRAYU CLOTHING (PVT) LTD.(Case No. 2)
COURT OF APPEALDE SILVA, J..
WEERASURIYA, J.
A. NO. 61/97
C. COLOMBO NO. 16614/MRAUGUST 28, 1998
SEPTEMBER 15, 1998, DECEMBER 4, 1998
Civil Procedure Code – S. 65 – Summons to be served on the agent – Whois an agent?
The plaintiff-respondent instituted action against the 1st defendant-petitioner al-leging breach of contract in delivering goods to a party other than the consigneeand claimed damages. The summons on the 2nd defendant-respondent has beenserved on the 1st defendant-petitioners address and the same was returned tocourt. Thereafter the plaintiff-respondent obtained an order to amend the plaintto read as “1st defendant acted as agent of the 2nd defendant" and obtainedan order to serve summons on the 1st defendant-petitioner as agent of the 2nddefendant.
Held:
There are four key elements in S. 65 CPC – viz
(i) agent must personally carry on business or work of the principal withinthe jurisdiction, (ii) the principal's business must be carried on withinthe jurisdiction of the court by the agent, (iii) agent must personallycarry on such business/work at the time of service, (iv) principal mustreside outside the jurisdiction of the court.
The 1st defendant-petitioner has represented itself to be the agent of the2nd defendant and the plaintiff-respondent has acted on such representa-tions, therefore the 1st defendant-petitioner is estopped from claiming thatit is an agent for a limited purpose.
The 1st defendant-petitioner has also described itself as the agent of the2nd defendant on the "cargo receipts". It has held itself out as the agentof the 2nd defendant who has ostensible or apparent authority.
In any event the 1st defendant-petitioner has not adduced any evidencedocumentary or otherwise to show that his authority to act for the 2nddefendant is limited.
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Sri Lanka Law Reports
[1999] 1 Sri LR.
Cases referred to:
The Lalandra 1932 – All ER 391.
The Okura 1914 – 1 KB 715.
The Hostein 1936 – 2 All ER 1660.
Hely Hutchinson v. Brayhead Ltd. and another 1967 – 3 All ER 98.APPLICATION for revision of the order of the District Court of Colombo.
S. Sivarasa, PC with Basheer Ahamed for petitioner.
G. D. C. Weerasinghe for the respondent.
Cur. adv. vult.
January 29, 1999.
DE SILVA, J.
This is an application to revise the order of the learned District Judgedated 16th January, 1997 wherein the District Judge allowed anapplication to serve summons on the 1st defendant-petitioner as theagent of 2nd defendant.
The facts pertaining to this case are briefly as follows:
The plaintiff-respondent entered into a contract with a party calledCIS Incorporated in the USA for the manufacture of garments. Oneof the conditions of the contract was CIS Industries to nominate theFreight Forwarder who would ship the goods in a carrier of its choiceand to act as the agent of the CIS Industries. According to the contractparty to be notified on arrival of the goods in USA wasW. G. Company, New York, who was to clear the goods. CIS IndustriesIncorporated in USA nominated the 1st defendant as FreightForwarder.
There was a delay in the shipment and the period in the letterof credit expired. In view of this Philadelphia National Bank was namedas the consignee which opened the letters of credit. This was doneto enable the buyer to pay the Bank and obtain documents.
The goods had been cleared by Carrol & Company referred toabove who was the buyer's agent and the plaintiff was not paid.Thereafter the plaintiff-petitioner sent letters of demand to the 1stdefendant-petitioner. The 1st defendant-petitioner has not repliedthese letters.
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The plaintiff-respondent instituted action in the District Court ofColombo against the 1st defendant-petitioner alleging breach of contractin delivering goods to a party other than the consignee and claimingdamages in a sum of US Dollars 24,277.33 equivalent to Sri LankaRs. 1,068,202.52.
The 1st defendant-petitioner in its answer denied liability and interalia stated that –
That the Buyers Consolidators Ltd. had been nominated by theCIS Industries Incorporated of USA as its agent.
At all times material to the action the 1st defendant-petitioneracted as an agent of Buyers Consolidators Ltd. of Hongkong.
In view of this position in the answer the plaintiff-respondent soughtto add the 2nd defendant as a party to the action whom the 1stdefendant-petitioner was claiming as its principal. The learned DistrictJudge permitted the 2nd defendant to be added as a party. Thedefendant-petitioner appealed against this order and the Court ofAppeal by order dated 05.05.1995* set aside the order of the DistrictJudge on the basis that the addition amounted to an amendment ofthe plaint and on the ground of delay.
The plaintiff-respondent thereafter filed this action bearingNo. 16614/MR in the District Court of Colombo against the defendantson 10.06.1995 alleging breach of contract in delivering goods to aparty other than the consignee and claiming damages in a sum ofUS Dollars 24,277.33.
The summons on the 2nd defendant in this case has been servedon the 1st defendant-petitioner's address and the same was returnedto court. The plaintiff-respondent thereafter sought an amendment tothe plaint by incorporating the following words to the caption. "Throughits agent 1st defendant Colombo Shipping Company" and amendingparagraph 24 by stating "1st defendant acted as agent of 2nddefendant". The 1st defendanat-petitioner objected to this. Writtensubmissions were filed by parties and the District Judge by order dated16th January, 1997, allowed the application to serve summons on the1st defendant-petitioner as agent of the 2nd defendant. The presentapplication is to revise this order.
•1995 2 SLR 97.
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Sri Lanka Law Reports
(1999) 1 Sri LR.
The question for determination by this court is whether the 1stdefendant-petitioner is an agent of the 2nd defendant on whom thesummons may be served in terms of the provisions of section 65 ofthe Civil Procedure Code.
Section 65 of the Civil Procedure Code reads as follows : “Inan action relating to any business or work against a person who doesnot reside within the local limits of the jurisdiction of the court fromwhich the summons issued, service on any manager or agent whoat the time of service personally carries on such business or workfor such person within such limits shall be deemed good service, andfor the purpose of this section the master of a ship is the agent ofhis owner or charterer".
It is to be noted that there are four key elements in the aboveprovision that qualify the agent on whom a service of summons maybe made. Firstly, the agent must personally carry on business or workof the principal within the jurisdiction. Secondly, the principal's businesmust be carried on within the jurisdiction of the court by the agent.Thirdly, the agent must personally carry on such business or work,at the time of service. Fourthly, the principal must reside outside thejurisdiction of the court.
The object of the application of the plaintiff-respondent to the DistrictCourt was to serve the summons on the 2nd defendant through the1st defendant-petitioner. Counsel for the 1st defendant-petitionersubmitted that the plaintiff-respondent endeavoured to impose on the1st defendant-petitioner a character and obligation it does not holdor have, namely an agent on whom summons may be served andthat the 2nd defendant is appearing through the 1st defendant-petitioner.
It was also submitted that the 1st defendant-petitioner does notcarry on the business of the 2nd defendant in Sri Lanka. The 1stdefendant-petitioner does its own business and in the course of itsbusiness it received the goods on behalf of the 2nd defendant at thetime material to this action and not at the time of service of summons.
1st defendant-petitioner relied on the decisions of certain Englishcases. In the Lalandram a firm of shipping agents booked freight andsold passenger tickets in England for a foreign Corporation on a
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commission basis. The writ against the foreign corporation served onthe shipping agent was set aside, as the shipping agent merely soldand did not make contracts on behalf of the foreign corporation.
In the case of OkursP it was pointed out that the agent had noauthority to enter into contracts, but merely obtained orders andsubmitted to the foreign company for approval. The foreign companywas not doing business here by a person and therefore was notresident here.
In The HolsteinP> service of writ of summons in personam waseffected on the London agents against a foreign shipping company.The agents were general agents for shipping companies. The foreigncompany in question had no financial interest in the firm. No staffof the London agents was assigned exclusively to the business ofthe foreign company. The remuneration of the London agents waswholly by commission. They paid their own office rent. They bookedand collected freight and accepted bill of lading option declarations.As regards passenger tickets they issued them and signed as agentsfor the foreign shipping company. It was held that service on sucha general agent was bad. The question was whether the agents weresuch agents of the foreign company that it can be said that the foreigncompany is resident in England by the agent. The agents did not carryon the business of the foreign shipping company at that address oranywhere else, except in the sense as part of its own business, thefirm acted as agents for the foreign company. There was no groundto say that the foreign shipping company is carrying on business inthis country by its agent.
It appears from the decisions of all these cases that each caseis a question of fact to be decided upon the evidence.
It is an admitted fact that when the plaintiff-respondent handed overthe goods to the 1st defendant-petitioner handed over the cargoreceipts to the plaintiff-respondent. These receipts are annexed to theplaint marked F4A, F4B and F4C which are three consignments. Inthese documents the 1st defendant-petitioner described itself as theagent of the 2nd defendant.
The 1st defendant-petitioner contended that the documents were"cargo receipts" and not contracts made by the plaintiff-respondentwith the defendant and the 2nd defendant was not doing business
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by the 1st defendant-petitioner but rather through the 1st defendant-petitioner and therefore is not an agent.
At this stage it is relevant to note the wording of section 65 ofthe Civil Procedure Code, “at the time of service personally carrieson such business or work for such person”. The 1st defendant-petitioner in its answer states that it only accepts goods on behalfof the 2nd defendant. It is reasonable to conclude that 1 st defendant-petitioner work for the 2nd defendant which situation is covered bysection 65.
In any event the 1st defendant-petitioner has described itself asthe agent of the defendant on the "Cargo Receipts P4A, P4B andP4C". It has therefore held itself out as the agent of the 2nd defendantwho has ostensible or apparent authority.
In Hely-Hutchinson v. Brayhead Ltd. and another apparentauthority of an agent is thus explained by Denning, LJ. :
"Ostensible or apparent authority is the authority of an agent asit appears to others. It often coincides with actual authority. Thus whenthe Board of Directors appoint one of their members to be a managingdirector they invest him not only with implied authority, but also withostensible authority to do all such things as fallen within the usualscope of that office. Other people who see him acting as managingdirector are entitled to assume that he has the usual authority of amanaging director."
Furthermore, in the instant case the 1st defendant-petitioner hasrepresented itself to be the agent of the 2nd defendant through F4A,P4B and P4C and the plaintiff-respondent has acted on suchrepresentation. Therefore the 1st defendant-petitioner is estopped fromclaiming that it is an agent for a limited purpose. In any event the1st defendant-petitioner has not adduced any evidence documentaryor otherwise to show that his authority to act for the 2nd defendantis limited. In these circumstances I hold that the 1st defendant-petitioner is an agent within the scope of section 65 of the CivilProcedure Code and permit the plaintiff-respondent to have thesummons served on the 1st defendant-petitioner as agent of the 2nddefendant. I dismiss the application with costs.
WEERASURIYA, J. – I agree.
Application dismissed.