Nairobi Flour Mills v Ram (Civil Suit No. 540 of 1954) [1955] EACA 11 (1 January 1955)

ORIGINAL CIVIL

Before CRAM, Ag. J.

NAIROBI FLOUR MILLS, Plaintiff

CHETA RAM s/o MUNSHI, Defendant

Civil Suit No. 540 of 1954

Civil Procedure and Practice—Execution—Civil Procedure (Revised) Rules, 1948— Order 21, rule 7 (2), Appendix D, Form 5—Application for attachment and sale of movable property—"Subject to bill of sale, if any"—Risk on sale of vehicle which might be subject to chattels mortgage-Duty of attaching creditor—Duty on advocate as officer of the Court—Burden on Court officer Whether words objectionable as attempt to pass risk to Court officer.

A decree-holder applied, in writing, for execution under the provisions of Order 21, rule 7 (2), of the Civil Procedure (Revised) Rules, 1948, using the prescribed Form 5, Appendix D. In describing the mode in which the assistance of the Court was required he stated: -

"By an attachment on and order for sale of the defendant's vehicle No. H 2887 (subject to bill of sale, if any). . . ."

The Deputy Registrar considering that the requirements of rules 7 and 8 had not been properly complied with referred the application before a Judge, as provided for by Order 48, rule 3. The substance of his objection was that the phrase "subject to bill of sale, if any" threw an improper burden upon the Court officer. At the hearing the advocate for the decree-holder stated that he intended the words "bill of sale" to refer to an instrument comprehended by the Chattels. Mortgage Ordinance, Cap.

281.

Held (29-7-55).—(1) The risk of and responsibility for selling goods, which are known or believed to be the subject of a chattels mortgage, lies principally upon the attaching creditor. If that creditor entertains any doubt or has any express or implied knowledge<br>of a chattels mortgage then it is his duty or the duty of his advocate, as an officer of the Court, to disclose this doubt, knowledge or belief in the application. But it was not proper to use words which not amounting to express notice ex facie of the application, intended to pass any risk or responsibility to the Court officer.

(2) A duty was imposed on the Court by Order 21, rules 7 and 8 to enquire if the application was a proper one upon which to make an order. No order on a Court officer should be made upon an application into which the Court officer might reasonably, for his own protection, read a necessity, to scrutinize the Chattels Mortgage Register and to make other burdensome enquiries.

(3) As the Court did not impute *mala fides* to the application it did not order dismissal but, under the powers contained in Order 21, rule 13, ordered the application to be amended, within seven days, by striking out the objectionable words. It also ordered that none of the costs thrown away were to be charged against the judgment-debtor.

Pabarry for Dave for applicant/decree-holder.

RULING.—The decree-holder applied, in writing, under the provisions of Order 21, rule 7 (2), for execution of a decree attachment of a motor vehicle using Form 5, Appendix D, as mandatorily required by rule 6. He made the

v.

statutory declaration that his application was true to the best of his knowledgeand belief. In describing the mode in which the assistance of the Court was required he wrote:-

"By an attachment on and an order for sale of the defendant's vehicle-No. H 2887 (subject to bill of sale, if any), ..."

The Deputy Registrar, considering that the requirements of rules 7 and 8^o had not been properly complied with, referred the matter before a Judge as provided by Order 48, rule 3. The substance of his objection was that the phrase "(subject to bill of sale, if any)" threw the burden of discovering if there was any third party interest in the property to be attached upon the Court officer and this. was incorrect and should not be made an order of the Court.

At the hearing, the advocate for the attaching creditor stated that he intended the words "bill of sale" to refer to the sort of instrument described in the Chattels Mortgage Ordinance, Cap. 281, Laws of Kenya.

On referring to that Ordinance, section 6 requires registration of the instrument within 21 days and section 4 enacts that all persons are to be deemed tohave notice of an instrument when and so soon it is registered. Section 13 provides that after the expiry of the 21 days' delay an unregistered instrument is. to be deemed fraudulent and void against any person seizing the chattel in execution of the process of any Court. Section 14 declares that no unregistered instrument is without express notice to be valid against any person *bong fide* dealing with the chattels as an auctioneer, *et cetera*, in the ordinary course of his business.

Without going deeply into the liabilities of attaching and selling goods when deemed to have express or constructive notice of an instrument, the risks: attendant upon any such an act are manifest. While it may be that the Court officer has a duty to consider if the creditor is acting bona fide from his point of view as from that of the Court the creditor must also act and be seen to act. *bong fide*. The objectionable words might be read as amounting to the officer that bona fides was absent. The responsibility for accepting the risk to sell goods which: may be the subject of a chattels mortgage is principally upon the attaching creditor. He has a duty to search the Chattels Mortgage Register if he has any doubt in the matter and if he has express or implied notice of a mortgage he has a duty to bring this to the attention of the Court and Court officer when he applies for attachment. I do not consider that the attaching creditor can appear to shrug off his responsibilities and risks by applying in such a manner as might. suggest he is transferring the duty to enquire, the responsibility and risk to the Court officer or is wilfully concealing his awareness of a pledge to a third party.

That is when the advocate acting for a creditor, as here (and I may say asin a number of other cases recently brought to my notice), makes a practice of drawing up an order for attachment and sale of movable property with the rider that this attachment and sale is "to be subject to any chattels mortgage, if any", it seems, to my understanding, at least, that the Court may not unreasonably deduce certain intentions, although I am not to be taken to rule that any of these was necessarily present in the mind of this particular advocate or hisclient who may simply be following a bad practice. First, that the attaching creditor knows of the registration of an instrument but is attempting to gain some unfair advantage from a quick sale and hopes to pass the risk to the Court officer; second, that he may have express or implied notice of an instrument not yet registered within the delay (a very likely situation) and hopes to gain an advantage, the probable risk being borne by the Court officer, or, third, that he is too slothful to examine the Register and wishes to pass the burden of any such examination or other enquiry to the Court officer. In my view, if any of these intents is present or appears to be present ex facie of an application for attachment and sale of movable property, then the Court which is enjoined to ensure propriety in applications under Order 21, rules 7 and 8 ought, in terms of rule 13, either to reject the application or to allow the defect to be remedied. I should be of a mind to dismiss any application to which a taint of fraud adhered.

The manner in which this application is worded can have only one object. I do not say fraudulent and that is to pass so far as possible any risk and responsibility arising out of the attachment and sale of this motor vehicle, ordinarily upon the creditor, to the Court officer with possible hope that the Court order may operate with some additional favourable effect. Quite apart from any ulterior motive, which may move the creditor so to apply, the application in its. present form is objectionable and cannot go forward for an order. The Court has a duty not to prejudice its officer. The officer might properly object to act on the order on the ground that the words were a warning to him of mala fides or if he took no notice of the words and acted and later discovered that the words. implied an acceptance by him of the risk and from any of these aspects the Court would refuse to make an order.

In the circumstances, I order that the defect may be remedied by amending the application by striking out the objectionable words within seven days. Noneof the costs thrown away to be chargeable against the judgment-debtor.