Empire Electronics Limited v. Lane Printing Works Limited. Civ. Case 2-M-62; 31/1/70; Seaton J.
This was an action for trespass to goods. The plaintiff company claimed that its goods were unlawfully seized by the defendant as a result of which it was unable to carry on its electrical business thereby allegedly suffering damages totaling Shs. 63,107/24 being the value of goods and loss of profits. The defendant admitted having seized the goods but claimed that this was done lawfully by a receiver appointed under powers contained in a debenture executed by the plaintiff company in favour of the defendant and duly registered as a charge. It appeared that just a few days before the appointment of the receiver (one M.S. Shah, who was a partner in a firm of court brokers) warrants for attachment and sale of the plaintiff’s goods had been issued in civil cases Nos. 131 and 158/10, to the said firm of court brokers. In original plaint Mr. Shah had in fact been joined as a second defendant but a preliminary objection having been taken, the suit against him was dismissed on the ground that it was time barred, the cause of action being tortuous and not contractual. The agreed issues in the present case were: - “(1) was the defendant indebted to the plaintiff in the sum of Shs. 5,624/30 acts. Or any amount on the 3rd May, 1960 when the defendant appointed Mr. Shs, i.e. the former second defendant as receiver? (2) Even if the defendant was indebted to the plaintiff on 3rd May, 1969, was the appointment of the receiver lawful? (3) If the answer to the first question is “Yes” to what relief is the plaintiff entitled to against the defendant?”
Held: (1) As regards the state of accounts between the parties, the court after reviewing all the evidence found that the defendant was indebted to the plaintiff in the sum of Shs. 1,641/80 by 3rd May, 1960. (2) “Learned advocate for the defendant has submitted that even if the plaintiff was owed some money by the defendant, so long as the debenture was subsisting and an amount owing there under, the appointment of a receiver was lawful. The instrument creating the debenture must be looked at to see under what a circumstance was to be exercised the power of appointing a receiver”. [The court quoted relevant clauses of the debenture and continued]. “As a consequence of these clauses, the debenture created a floating charge upon the plaintiff’s asset and so long as the security floated, the plaintiff was free to carry on its business. One of the events which would stop the charge floating and cause it to crystallize was the issue of distress or execution against the company which was unpaid for seven days. Once this happened, the principal moneys became immediately payable and the defendant was entitled to exercise the power of appointing a receiver. I do not find this power to protect its security was
to be lost to the defendant company because it owed the plaintiff company the sum of Shs. 1,641/80”. “Learned advocate for the plaintiff has submitted that even if the defendant was entitled to appoint a receiver and manager, he had no power to appoint a receiver alone. With respect, I do not consider this a necessary interpretation of the provisions of the debenture. If the powers granted were less than those which might have been given, I would only consider this an inhibiting factor upon the receiver’s activities. This alone would not be an invalidating factor. There is Exhibit “T” dated 2nd May, 1960 to indicate that the defendant had by writing appointed Mr. Shah a receiver of the plaintiff’s property as required by the debenture. Exhibit T set out the powers which Mr. Shah would have and there is noting in evidence indicating the plaintiff objected that the appointment was invalid. Was there then anything to prevent Mr. M.S. Shah from acting in relation to the plaintiff’s business as a receiver would.” (3) “Learned advocate for the plaintiff submitted that the court should refer to the books of equity to ascertain whether the receiver’s appointment was valid. On the other hand, learned advocate for the defendant submitted that however wrongful or anomalous may have been Mr. M. S. Shah’s conduct, I could not affect the validity of his appointment as receiver. In my view, the position of Mr. Shah in attempting to wear the two hats of receiver and court broker was so inconsistent with his fiduciary duties that his acts as receiver were affected by the conflict of interest between Mr. Shah’s two positions. The inability of Mr. Shah to separate his dual capacities tainted the appointment. He evidence is not conclusive on the point whether Mr. Shah could have in his capacity as receiver obtained better prices for sale of the plaintiff’s goods which were new at the time. But in my view it does not follow that the appointment of the receiver was wrongful even if Mr. Shah’s conduct may have been. I therefore answer the second issue in the affirmative.” (4) “As relief, evidence established that the plaintiff company was in financial difficulties from as early as 6th November, 1959, when it was obliged to seek a loan of Shs. 10,000/- secured by the debenture and these difficulties continued up to May, 1960, when the receiver was appointed. It was also established that Mr. Shah had not delivered abstract of receipts and payments to the Registrant of Companies as required by Section 290 of the Ordinance; that he was in
by the Law of Property Act, 1925 (15 Geo. 5, c. 20), s. 109(2); it is in conformity with the 1881 statute that the jurisdiction of this Court must be exercised, under s. 2(2) of the Judicature and Application of Laws Ordinance, Cap. 453. But the provisions of both statutes are similar in this respect. In Central
In the present case, it may be that the receiver was in breach of his duties, statutory, fiduciary or otherwise. Even so, this Court is precluded from giving a remedy against him in this suit, from which he has already been dismissed. It may be desirable to state that had I to give a remedy for the trespass to the plaintiff’s goods, I would have awarded Shs. 10,000/- general damages, being in my view the amount lost y the goods being sold by court brokers: no special damages for loss of profits as the plaintiff has not proved at the time he was carrying on a profitable business. It does not appear that Mr. M. S. Shah has rendered any account to the Registrar of Companies as required by s. 290 of the Companies Ordinance ….. “It would seem that the defendant company is entitled to an account from Mr. M. S. Shah as receiver, vide
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