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NEWBOLD, P.
[1] This is an appeal against a decision of the High Court made on an
application by the plaintiffs in a suit to enter summary judgment under
Order XXXV, rule 2, against Bronislaw Sirley, who was the first of the three
defendants in the suit. The High Court granted the application and ordered
judgment to be entered against Mr. Sirley. From that decision Mr. Sirley has
appealed, but he died before his appeal was heard. On the application of his
executors the appeal has been continued in their name.
[2] The facts are that Ralli Brothers Limited (Ralli Bros.) and the Standard
Bank Limited, (the Standard Bank), the plaintiffs in the suit, in 1964 lent
to the T. & T. Sisal Co. Limited (the Sisal Co.) a total sum of £600.000 Stg.
(each of the plaintiffs lending £300,000) on the security of a debenture
issued by the Sisal Co. for the repayment, which repayment was jointly and
severally guaranteed by Mr. Sirley and the two other defendants. A further
sum of £600,000 Stg. was lent by the plaintiffs to the Sisal Co. (£300,000
being lent by each of the plaintiffs) upon the similar security of a second
debenture, with a similar guarantee by Mr. Sirley and the two other
defendants. Default was made in the payment of the sums due and on 5th
December, 1966, the plaintiffs, under powers contained in the first and
second debentures, appointed a receiver and manager of the property of the
Sisal Co. The amount due to the plaintiffs at the date of such appointment
was stated to be £1,075,428.0.3d. It was stated in the plaint that no
payment had been received by the plaintiffs subsequent to that date and on
the 28th June, 1968; the plaintiffs filed a suit against Mr. Sirley and the
other two guarantors asking for judgment against them jointly and severally
for the sum of £1,243,609. 9. 8d; which was stated to be the amount due as
at the 31st May, 1968, together with interest thereon calculated in terms of
the debentures.
[3] The second and third defendants were resident outside the jurisdiction
and Mr. Sirley filed a defence on the 23rd July, 1968, in which he denied
that the sums alleged to have been lent were in fact lent to the Sisal Co.
The defence further set out that the appointment of the receiver had been
made with the approval of Mr. Sirley under the terms of a new agreement by
which the plaintiffs agreed that they would not proceed against Mr. Sirley
and his co� guarantors and that the receiver and manager had failed to act
properly in the performance of his duty; and Mr. Sirley prayed for the
dismissal of the suit or in the alternative for an account. On the same day,
that the 23rd July, 1968, the plaintiffs filed a notice of motion under
Order XXXV, rules 2 and 3, asking that judgment be entered against Mr.
Sirley for the sum claimed in the plaint, together with interest thereon. In
support of that application an affidavit was filed by Mr. Harkness, who was
the manager of the Standard Bank, in which he stated that he was duly
authorised on behalf of the plaintiffs to make the affidavit. The affidavit
has annexed to it the debentures together with the letter of demand to the
guarantors and in it Mr. Harkness stated that he had verified from the bank
records that the amounts stated to have been lent by the plaintiffs to the
Sisal Co. were, in fact, credited to the account of the Sisal Co.; that the
statements in the plaint relating to the appointment of a receiver, the rate
of interest due and the amounts due were true to the best of his knowledge
and belief; that the statement in the plaint that no payment had been made
to the plaintiffs since 5th December, 1966, was true to the best of his
knowledge, belief and information; that Mr. Sirley was truly indebted to the
plaintiffs in the sum claimed as a guarantor; that demand had been made to
the guarantors, including the appellant; that he was advised by the
advocates for the plaintiff and verily believed that Mr. Sirley had no valid
defence to the suit; and that to the extent that the statements deposed to
were not within his personal knowledge they were based on information
acquired by him as an officer of the Standard Bank and on advice received
from the plaintiffs and their advocates.
[4] In that affidavit Mr. Harkness also stated that Mr. Sirley at no time
denied liability but had sought merely for an extension of time to meet the
liabilities under the guarantees. At no time did Mr. Sirley file any
affidavit in reply though he did take out third party proceedings against
the Sisal Co. and the receiver and manager.
[5] When the application to enter summary judgment came before the High
Court it was urged by Mr. Sirley that the affidavit in support of the
application was unsatisfactory in that it failed to comply with the
provisions of Order XVIII and Order XXXV; that the provisions of Order I,
rule 12, had not been complied with; and that the defence had raised triable
issues sufficient to satisfy the High Court that summary judgment should not
be entered against Mr. Sirley, particularly as he had taken out third party
proceedings against the principal debtor and the receiver and manager and
because he was only one of three guarantors.
[6] The High Court rejected the submissions of Mr. Sirley and made an order
entering summary judgment against him for the sum claimed in the plaint,
together with interest thereon in accordance with the debenture. On the
hearing of the appeal before us, Mr. Salter, on behalf of the appellants,
repeated and developed these submissions.
[7] As regards the submission that Order I, rule 12, had not been complied
with, I entirely agree with the trial judge that the rule has no relevance
to this case. Neither of the plaintiffs sought "to appear, plead, or act"
for the other. The affidavit filed by Mr. Harkness on behalf of both
plaintiffs was filed in accordance with Order XXXV, rule 2, which permits
the affidavit in support of the motion to be made by the plaintiff "or by
any other person who can swear positively to the facts verifying the cause
of action". It is to be noted that the affidavit could not, of course, have
been made by either of the plaintiffs, as they were both companies. As
regards act as a nullity, particularly where the act relates to matters of
procedure. (See Probhudas & Co. v. The Standard Bank Ltd [1968] E.A. 670).
[8] It was urged that Mr. Harkness could not swear positively to the facts
verifying the cause of action. It is difficult to envisage, in the
circumstances of this case, of a more suitable person to swear the affidavit
on behalf of plaintiffs, who could not themselves swear to it, than Mr.
Harkness, who was the manager of the Standard Bank, one of the plaintiffs,
and who had personal knowledge of at least some of the relevant facts and
who would be intimately concerned with the accounts of the parties in the
Standard Bank. It is to be noted that according to his affidavit the amounts
lent by the plaintiffs were credited to the account of the Sisal Co. in the
branch of the Standard Bank of which he was manager. It was also urged that
the affidavit did not distinguish clearly between those facts within the
knowledge of Mr. Harkness and those facts stated on information and belief,
nor did it set out Mr. Harkness's means of knowledge, nor the grounds for
belief on matters stated on information and belief. I do not agree.
[9] There is scarcely an affidavit, or indeed any document, which cannot be
criticised. It may be that the affidavit could have been more explicit in
certain respects but there is set out therein the means of knowledge and the
grounds of belief and the source of information in respect of each of the
matters stated on knowledge, belief or information. I am satisfied that the
affidavit complied with the provisions of Order XXXV and Order XVIII and
substantially with the requirements relating to affidavits as set out in the
decisions of this Court in Assanand & Sons v. East African Records: [1959]
E.A 360 and Standard Goods Corporation v. Nathu & Company:(1950) 17 EACA 99,
to which we were referred by Mr. Salter. I am also satisfied that there is
no reason to hold that the affidavit was a nullity. If it was merely
irregular in some respects it was open to the trial judge in his discretion
to act upon it. He has done so and I see no reason whatsoever to interfere
with the exercise of his discretion.
[10] As regards the submission that triable issues had been raised by the
defence and the trial judge should have dismissed the application and given
unconditional leave to defend, it is to be noted that Mr. Sirley did not see
fit to file an affidavit in reply. Order XXXV is intended to enable a
plaintiff with a liquidated claim, to which there is clearly no good defence
to obtain a quick and summary judgment without being unnecessarily kept from
what is due to him by the delaying tactics of the defendant. If the judge to
whom the application is made considers that there is any reasonable ground
of defence to the claim the plaintiff is not entitled to summary judgment.
The mere right of the defendant to be indemnified by or to have a claim over
against, a third party in respect of the defendant's liability to the
plaintiff, or to recover from a third party or from the plaintiff by way of
counterclaim, a sum of money which does not directly reduce the liability of
the defendant to the plaintiff, does not entitle the defendant to prevent
the plaintiff from obtaining a summary judgment. Normally a defendant who
wishes to resist the entry of summary judgment should place evidence by way
of affidavit before the judge showing some reasonable ground of defence.
This is clear from the words of Order XXXV, rule 2, which states:-
"The court may thereupon unless the defendant by affidavit, or by his own
viva voce evidence or otherwise, shall satisfy that he has a good defence on
the merits, or dis�closes such facts as may be deemed sufficient entitle him
to defend, pronounce judgment accordingly."
[11] But the words "or otherwise" would enable the judge to consider the
pleadings or any other matter properly before him in order to enable him to
arrive at a decision on the application. I agree entirely with the words of
Madan, J. in Mugambi v. Gatuturu [1967] E.A 196 at 197 where he said:
"In my opinion, therefore, the expression "or otherwise" in r.2 entitles a
defendant to resist an application for summary judgment in manner other than
by affidavit or by his own viva voce evidence but only by properly
admissible means. But a method of satisfying the court otherwise than by
affidavit or the defendant's own viva voce evidence is not to be encouraged.
I would not like to see it gaining ground.�
[12] In this case Mr. Salter submits that the statements in the defence that
the plaintiffs had not lent the sums in question to the Sisal Co., that
there had been a new agreement that the plaintiffs should not proceed
against the guarantors during the appointment of the receiver and manager
and that the receiver and manager had failed to act properly in the
performance of his duty raised triable issues. The judge did not consider
this to be so as after referring to the defence and the failure of Mr.
Sirley to file an affidavit, he said:
"Looking at the substance of the matter it seems to me to be plain that in
truth there is no defence on the issue of the liability of the first
defendant as guarantor".
[13] I agree with him. The debentures, which were signed as guarantor by Mr.
Sirley, contained an acknowledgment of the liability of the Sisal Co. in
respect of the Burns lent. While this would be rebuttable by evidence the
mere denial in the defence that the sums were lent would not suffice to
raise a triable issue. Similarly, the mere statement in the defence of a new
agreement with, be it noted, no particulars as to the parties, the date, the
circumstances and the reason for the new agreement, which statement by Mr.
Sirley did not see fit to substantiate by affidavit on which he could have
been crossexamined, would not suffice to raise a triable issue. Equally, the
bare statement in the defence of a failure of duty on the part of the
receiver and manager does not suffice to raise a triable issue.
[14] Mr. Salter also submitted that the judge, having regard to the
circumstances that there were three guarantors but that judgment was sought
to be entered only against one Mr. Sirley and the fact that Mr. Sirley had
taken out third party proceedings, should have exercised his discretion and
not entered summary judgment against Mr. Sirley. Mr. Sirley's liability on
his guarantee was several as well as joint and while the matters referred to
by Mr. Salter were matters proper for consideration, as I have earlier said
the mere fact that Mr. Sirley might have a claim by way of contribution or
otherwise against any other person does not entitle him of itself to resist
summary judgment if it is clear that he severally owes the plaintiffs the
sum claimed. The judge was satisfied that he did and as I have said, I agree
with the judge.
[15] For these reasons I consider that the decision of the judge was correct
and that the appeal should be dismissed. As the other members of the Court
agree the appeal is dismissed with costs.
LAW, J.A.
[16] The facts are fully set out in the judgment of Sir. Charles Newbold, P.
which I have had the advantage of reading in draft.
[17] The main grounds of appeal were that the affidavit in support of the
application for summary judgment was defective, and that triable issues were
apparent from the pleadings. These triable issues, it was submitted by Mr.
Salter for the appellants, were a denial that the money was ever lent, and
the allegation in paragraph 4 of the defense that the respondents had agreed
not to make any claims against Mr. Sirley so long as the receiver�s
appointment continued in force. Indebtedness in respect of the loans was
specifically acknowledged in the debentures issued as security for the
loans, to which Mr. Sirley was a party. The alleged agreement is imprecisely
pleaded; one cannot ascertain, from a perusal of paragraph 4, whether it was
an oral or a written agreement, or when or where it was made, or between
whom it was made.
[18] If there ever was such an agreement, I would have expected it to be
particularized in an affidavit in opposition to the motion for summary
judgment. As to Mr. Harkness' affidavit, I consider it to have been
adequate, especially as its reliability was never challenged by
counter-affidavit. In the words of Jenkins, L.J. in Dummer v. Brown (1953) 1
All E.R. 1158:
"That affidavit, as I have said, is open to criticism, and it may be true
that the defendants could have destroyed its effect if they had condescended
to answer it by an affidavit on their behalf containing even a slight
indication of some real defence on the issue of liability. But that they
never attempted to do. They have adopted a purely passive attitude. They put
in the defence to which I have referred which did nothing except traverse in
general terms substantially all the allegations in the statement of claim,
and, having adopted that passive attitude, they say a case for summary
judgment is not made out. Defendants who take that course do so at their
peril and they have only themselves to thank if their reticence results in
the court taking an adverse view of their side of the case."
[19] I consider these words applicable to the case now before us. True, Mr.
Sirley's defence went beyond a mere traverse, but in one respect it has been
proved unreliable, and in another it alleges a subsequent agreement in terms
so vague as not to merit consideration.
[20] I am also of opinion that this appeal fails, and I concur in the order
proposed.
DUFFUS, V-P.
[21] I agree with the judgment of my Lord President. |
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