PARTNERSHIP AND CONTRACT OF EMPLOYMENT- BOOK DEBT-LIMITATION OF ACTION
PARTNERSHIP AND CONTRACT OF EMPLOYMENT- BOOK DEBT-LIMITATION OF ACTION
By written agreement the defendant became the employee of the 1st plaintiff as the manager and to receive an allowance of rupees 300/- per month, commission at the rate specified in the agreement and bonus out of annual profits less the annual allowance. It further provided that the defendants shall in the service under the 1st plaintiff conform to all lawful orders and directions as manager of the said “business”. The plaintiffs sued the defendant to recover monies misappropriated. The defendant took up the postion that he was a partner. Considering the evidence the trial judge held that the defendat is an employee and not a partner. The claim of the plaintiff does not constitute a book debt. Limtation of action as regards a book debt considered.
C.G.weeramanthri[ Law of contract volume 2 page 5], there is no general rule for determining what constitutes a book debt and that each case must be regarded in the light of the facts proved and the basis upon which the particular claim was presented in court[2]
Siripala Vs Maginona 59 NLR 43
Per Sansoni J. - 60 NLR 157
A.W.Abdus Salam J.
According to judgment dated 25 June 1992, the disputes relating to this appeal, were resolved in favour of the 1st plaintiff-respondent and 2nd plaintiff-respondent (hereinafter referred to as the "1st plaintiff" and “2nd plaintiff" respectively or whenever the context so requires jointly referred to as the “plaintiffs”) as prayed for in the plaint. Consequently, the claim in reconvention of the defendant-appellant (hereinafter referred to as the "defendant") was simultaneously dismissed.
The case of the plaintiffs, as averred in the plaint, briefly is that, the 1st plaintiff as the sole proprietor of the “business” carried on as “Kurunduwatta Poultry Farm" (hereinafter sometimes referred to as the ““business”"). By the agreement dated 14th October 1974 attested by M.A.Mohamed Bafique, Notary Public the 1st plaintiff and the defendant entered into a contract by which the latter became the employee of the former initially for a period of 5 years, which was subsequently extended until it was terminated on 13-03-86.
In terms of the said agreement the 1st plaintiff and the defendant inter alia agreed as follows.
►The defendant to continue and be the manager of the “business”.
►The defendant to receive an allowance of rupees 300/- per month.
►The defendant to be paid commission at the rate specified in the agreement, whenever the “business” made a profit.
►The defendant to be paid as bonus out of annual profits less the annual allowance.
►The defendants shall in the service under the 1st plaintiff conform to all lawful orders and directions as manager of the said “business”.
The plaintiffs averred that at a certain point of time the 2nd plaintiff became a partner of the “business” and the defendant continued in the employment under the plaintiffs, right up to the termination of the services and that he never became a partner of “business” or even considered as being in partnership with them in the said “business”.
The main grievance of the plaintiffs was that the defendant had misappropriated a sum of money, referred to in the plaint and therefore a cause of action had accrued to them to sue the defendant and to recover the same from him.
Conversely, the case of the defendant was that, he agreed to the terms of P1, but such terms were never implemented or acted upon. He also took up the position that he never read the contents of P1 though he signed it and that at all times material to the action he was acting as a partner and therefore was not bound by P1. Accordingly, he maintained that he was entitled not only to 1/3 of the profits but also to 1/3 of the assets of the “business”. This monetary claim made by the defendant basically constituted his claim in reconvention.
In this background one of the main issues that came to be determined in the district court was the standing of the defendant in relation to the “business”. The learned district judge rejected the claim of the defendant of his involvement in the “business” as a partner and arrived at the finding that his status in the “business” was merely that of an employee.
The finding of the learned district Judge on this question was based on the evidence led before him. As regards the alleged partnership, claimed by the defendant the learned district Judge observed that he is unable to accept such a claim as the defendant had signed the document marked as P1. Further he observed that a person in the position of the defendant who had managed the “business” from 1974 cannot be heard to say that he did not know the contents of P1 and signed the document in a blinding manner. The attestation clause of P1 clearly states that the 1st plaintiff and the defendant having duly read over the contents signed the document as required by the Notaries Ordinance. The learned President's counsel of the plaintiffs has contended that the EPF returns signed by the defendant as "manager partner" per se, could not have transformed the defendant's status as "manager" to that of "a partner" and on the contrary it only shows how the defendant had made use of his position as manager of the “business” to have grounded a claim on the basis of a partner or as managing partner which was never in the contemplation of the contracting partners as reflected in P9.
Besides, the defendant has not seriously contested the attestation clause in P1. The learned district Judge having evaluated the evidence of both parties as to the question of the status of the defendant in relation to the “business” has rightly come to the conclusion after considering P1, P9, D23 and D25 that the defendant was an employee of the plaintiffs and not a partner of the “business”, as has been asserted in the answer. Even though the learned counsel for the defendant has sought to argue that the learned district Judge has misdirected himself when he came to this conclusion, I am not inclined to accept the findings of the learned district Judge as being inconsistent with the evidence led at the trial. Further the defendant has failed to establish that the said finding followed by the judgment under appeal is wrong.
The next question that arises for determination is whether the cause of action of the plaintiff is barred by the principle of Res Judicata. It was the position of the defendant that in the earlier action No 3174/L filed against the defendant, the plaintiffs have intentionally and willfully did not claim the monies said to be due in this case. In the circumstances, the learned counsel has submitted that the causes of action set out in the plaint are now barred from being maintained. The finding of the learned district Judge on this question was that the causes of action pleaded in action No 3174/L and the causes of action pleaded in the instant case arise from two different transactions and therefore cannot be said to operate as Res Judicata against the plaintiffs. It is admitted that the earlier action No 3174/L was instituted to eject the defendant from the farm and to recover possession of the same. It is significant to note that the present action is based on a money claim arising from an allegation of misappropriation by the defendant who allegedly has unjustly enriched at the expense of the plaintiffs.
In the circumstances I am totally in agreement with the finding of the learned district Judge and that of the view expressed by the learned President's counsel that the facts and circumstances constituting the cause of action in the case under appeal is materially distinct and separate from the cause of action relied upon in the former case.
The counsel of the defendant argued that the district Judge erred in coming to the conclusion that the amount of money claimed in the present case does not constitute a book debt. In terms of paragraph 8 of the plaint the basis on which the plaintiffs made their claim inter alia was that the defendant appropriated to himself such amount of money as referred to in the plaint in excess of the legitimate amount that is due on the contract of employment. The document marked as P10 demonstrates as to how the defendant had indulged himself in the said act of misappropriation.
The learned counsel of the defendant has submitted that the issue raised by the plaintiffs with regard to the liability of the defendant was not based on misappropriation but as to whether the defendant had overdrawn monies from the “business” of the plaintiffs over and above his entitlement. In this respect it is useful to advert to the issue raised by the plaintiffs on this question. A perusal of the issues raised on 09-01-89 shows that the claim of the plaintiffs was not based on an allegation of misappropriation but on drawing money by the defendant in excess of his power. As the learned counsel of the defendant has quoted in his written submissions the issue was whether the plaintiff had overdrawn a sum of rupees 482,604.43 from 31-03-78 to 31-12-84 from the poultry farm during the period of his employment as manager of the said poultry farm.
The learned district Judge has applied the principle laid down in the case of Siripala Vs Maginona 59 NLR 433 and came to the conclusion that the cause of action pleaded in the plaint is not prescribed. In the case of Siripala (supra) it was held that the cause of action to sue for the recovery of a loan of money even without any agreement as to the time of repayment does not arise until the lender has asked the borrower for the return of the money and the borrower fails to repay the money within the time specified in the lenders demand.
Learned district Judge has also quoted the principle of law applicable in the ascertainment of a book debt. According to C.G.weeramanthri[1], there is no general rule for determining what constitutes a book debt and that each case must be regarded in the light of the facts proved and the basis upon which the particular claim was presented in court[2].
The defendant has not seriously contested the details of the accounts led in evidence to prove the alleged misappropriation of money. The learned district Judge has clearly held that the alleged misappropriation cannot be treated as book debt and therefore prescription begins to run from the date of demand. This principle of law applied by the learned district Judge appears to me as the correct approach to construe the true nature of the basis on which the claim of the plaintiffs is made. Hence, the contention of the learned counsel of the defendant is untenable.
The findings of the learned district Judge are based on factual matters that came to light in evidence at the trial. In the circumstances this Court is unable to interfere with the decision of the trial judge on questions of fact, unless it is plainly and clearly proved that the decision is wrong. Needless to state that the defendant has failed to establish that the findings and the decision followed are either wrong or perverse.
Upon a consideration of the totality of the reasoning adopted by the learned district Judge the findings and the application of the law in the given circumstances, cannot be considered as determinations that have ended up in a miscarriage of justice or perversity.
In the circumstances, I see no reason to interfere with the judgment of the learned district Judge. In the result the appeal of the defendant is dismissed with costs.
Sgd.
Judge of the Court of Appeal
OTHER DETAILS
CA 277/1992 F
D.C. (Kalutara) 2758 MR
M.D.Joseph Arsakularatne,
Vs
1. A.M.M.M.Rauf
2. Mrs. A.M.R.A.Rauf
Sanath Jayathilaka for defendant-appellant
and Dr Almaida Gunaratne P.C with Lasitha Chaminda for plaintiff-respondent
Decided on: 28.03.2008
Kwk/-
Comments
Post a Comment