Case No.:

(AC-Appeal- 13-1960)

Court:

Court of Appeal

Issue No.:

1960

Principles

·  Partnership—Whether foreign firm of partners can sue in the Sudan—Can sue under Civil Justice Ordinance, Order V. r. 1—Partnership Registration Ordinance, s.4-  Registration of Business Names Ordinance. S.5 Contract—lllegality—Effect of statute requiring traders to have licence on contracts made by unlicensed traders—Traders’ Licence and Taxation of Business Profits Ordinance, ss. 4. 9

A foreign firm carrying on business in the Sudan can sue in the Sudan courts. If it is registered as a company in the foreign country in question, but semble not otherwise, it is exempted from registration as a partnership in the Sudan..
A statute requiring traders to obtain a licence before trading does not Invalidate contracts made by unlicensed traders, in the absence of clear and express provision to that effect.
Abdo Robu Salih v. El Sayed Salih Hussein (AC-Revision-96-1955) applied. Cope v. Rowlcinds (1836) 2 M. & W. 149; Abrahams & Co. v. Dunlop Pneumatic lyre Co. [1905] 1 K.B. 46; Brightnlan & Co., Ltd. v. Tate [1919] 1K.B. 463 followed.
 

Judgment

(COURT OF A PEAL)

ABDEL GHANI ALl MOUSA & SONS v. FUHRMEISTER & CO.

(AC-Appeal- 13-1960) 

Appeal

The judgment at first instance is reported in (1959) S.L.J.R. 38. )

Advocates: Ibrahim Ahmed Ibrahim ... for appellants

                      Abdullah Nageeb………….for respondents

December 4. 1960. Babikir Awadalla I.: —The facts of this appeal are learly set out in the judgment of the Hon. the Judge of the High Court and we see no reason to restate them here. The learned advocate for appellants is pressing two points, viz.:

(a) The capacity of the respondents to sue in the Sudan, and

(b) The legality of the transaction-giving rise to these proceedings.

As to (a): He contends that the respondents’ firm, being a foreign firm created outside the Sudan and not registered in the Sudan, cannot sue on the contract, and

(b): that as the respondents were not, at the time of making the contract, in possession of a trader’s licence under the Traders’ Licenc and Taxation of Business Profits Ordinance, the contract is illegal.

As regards the first point, the learned advocate for respondents failed to satisfy this court as to what obligation there was on respondents to register in the Sudan under the Partnership Registration Ordinance. 1933.

*Court: M. A. Ahu Rannat Cf., Babikir Awadalla J. M. A. Hassib J.

Section 4 clearly exempts partnerships made abroad from the provisions of the Ordinance, for it says that those provisions do not apply to “any company or association . . . which is trading in the Sudan and is registered as such [i.e., as such company or association] under any foreign law.” It was proved by respondents that the firm in question is registered under German law at the Commercial Registry of the local court at Hamburg and it is therefore no doubt an association which is registered as such an association under a foreign law and is therefore exempt from registration under our Ordinance, and entitled to all the privileges which a firm registered under that Ordinance has. Amongst these is the right to sue and be sued in the firm name. Rule 1 (1) of Order V says:

“Any two or more persons claiming or being liable as partners and carrying on business in the Sudan may sue or be sued in the name of the firm (if any) of which such persons were partners at the time of the accruing of the cause of action.”

As regards the second point, again there is no requirement that the foreign firm itself should obtain a trader’s licence, for section 9 (4) of the Traders’ Licence and Taxation of Business Profits Ordinance exempts foreign traders carrying on business in the Sudan from the requirement of obtaining a trader’s licence if they are solely carrying on business through an agent.

We are therefore going to assume in favour of appellants’ advocate that he meant to say that the agent himself in this case did not hold a trader’s licence at the time the transaction was concluded and to see whether the wording of the Ordinance justifies the assumption that in such cases the agent himself must be licensed under the Ordinance. As it was not con tested by respondents that the agent was carrying on business on their behalf within the meaning of section 4 of the Ordinance, there is no doubt that he should be licensed under its provisions. But what is the effect of failure to obtain a trader’s licence on contracts concluded by the defaulter?

The learned advocate for appellants contends that this is an enactment that aims at the protection of the public and as such any contract that is opposed to the general policy and intent thereof must necessarily be illegal. He cites Cope v. Rowlands—an English case decided in 1836—and Chitty on Contracts, p. 52I, where it is said that:

“if the object of the Statute is the protection of the public from pos sible fraud or the promotion of some object of public policy, the infer ence is that contracts made in contravention of its provisions are prohibited.”

But the passage cited continues to state that the contrary is usually the case where the object is merely the protection of the revenue. This court had already decided in AC-Revision-96-I955 (Abdo Robu Salib Hussein v. El Sayed Salih Hussein) that this Ordinance is a piece of administrative law or a law for raising revenue and therefore according to the criterion laid down by the authority quoted by the learned advocate himself, a contract made contrary to its provisions is not necessarily illegal. In fact that was the decision in AC-Revision-96-1955

The above is sufficient to justify a decision against appellants on this appeal; but before concluding we would like to refer to the contention of the learned advocate for appellants both in his submissions in the court below and in his grounds of appeal that the issue as fo non-payment was not proved by the respondents. In fact the onus of payment is on appel lants and they should not be allowed to make capital out of a mistake in the framing of the issues. Before us, the learned advocate for appel lants admitted non-payment, but contended that the agreement was dis charged by accord and satisfaction. That is an allegation, which ought to have been clearly set out in the pleadings. Advocate for appellants had done his clients great harm by traversing the allegation of payment instead of making a confession and avoidance.

This appeal is therefore dismissed with costs.

M. A. Abu Rannat CI. —l concur.

M. A. Hassib I.: —l am of the same opinion. This appeal is a failure and should be dismissed.

“Fuhrmeister & Co.” is a business name registered in the Sudan but whether this name represents a company or a firm was never disclosed in the plaintiffs’ plaint nor in the Statement of Claim.

However, it was contended in defence that plaintiffs were not a company incorporated in the Sudan and as such were not able to sue under their business name. The plaintiffs’ pleadings made no specific reply to, or explanation of, this contention of defence but on the general reply of joining issues made by the plaintiffs, the court made the contention a point at issue (first and second issues) and the suit then proceeded for trial.

At the trial the fact that the plaintiffs are not a company but merely a foreign firm was a surprise to the defence when it was disclosed by the statement of plaintiffs’ agent on oath that the plaintiffs were a partnership registered in Germany according to German law. This witness produced documents duly authenticated by the German Embassy in Khartoum and the Sudan Ministry of Foreign Affairs verifying the existence of the firm in Germany.

It is obvious that a partnership firm is not a legal person but is merely a collective name of the individuals who are members of the partnership.

The law as to firms carrying on business in the Sudan is provided for by Order V of the Civil Justice Ordinance and according to rules 1and 2 of this Order any two or more persons claiming as partners ann carryui on business in the Sudan may sue in’ the name of the firm and where a suit is instituted in the name of the firm the plaintiffs arc bound, (in the demand by defendants or the court, to deliver a statement containing the names and places of residence of all the persons constituting the firm.

The provision in rule 2 is intentionally made to protect the public against fraud and the defendants (appellants) could have invokei rule 2 for disclosure of the real persons making up the firm, had it not been for the misleading manner in which the plaintiffs put the plaint, the statement of Claim and also the reply to defence. The plaintiffs in their pleadings ever disclosed that they were suing as a firm and that was the reason why the first and second issues were framed for the trial with a view to ascertaining whether plaintiffs were suing as a company. Phis irregu larity caused the perplexity of the defence when the plaintiffs assumed another attitude in proving their capacity by disclosing in the evidence of the plaintiffs’ agent that the plaintiffs arc merely a limited partnership registered in Germany.

In the light of this the learned advocate for appellants now contends that the respondents, being a foreign firm created outside the Sudan and not registered in the Sudan, cannot sue on the contract?

It is admitted and also duly proved that plaintiffs are a foreign firm carrying on business in the Sudan under a registered business name. The question arising therefore is whether a firm of this nature is exempted from registration in the Sudan and if the answer is in the negative, can such a firm sue on the contract?

The law in the Sudan is the Partnership Registration Ordinance, 1933. By section 5 (1) of this law the registration of every partnership carrying on business in any town in the Sudan is required. There it is provided that no partnership shall commence business before registration. An exception to this rule in respect of partnerships carrying on business in the Sudan is provided for by section 4 (b), which reads:

“Section 4. The provisions of this Ordinance shall not apply to:

(b) Any partnership of which the total capital is less than £S.500 in value.”

From the provision of law referred to above it is clear that registration of plaintiffs’ firm in the Sudan is required by the law. Section 4 (a) does not exempt plaintiffs’ firm from registration in the Sudan. Section 4 (a) exempts only companies or associations; weign partnerships are not covered by this section. The section says:

“which are registered as a Company.”

Plaintiffs are not a company registered outside the Sudan and therefore section 4 (a) does not apply to their case.

Plaintiffs, being a firm registered as a firm outside the Sudan, are under a duty to register their company in the Sudan, before commencing business in the Sudan. This is the Sudan law.

Let us now consider the consequences of failure of plaintiffs’ firm to register itself in the Sudan on the contracts entered into by the plaintiffs in the Sudan. Can such a firm sue on its contracts? The answer to this question depends on whether the Ordinance is intended to protect the public or is one merely for the protection of the revenue.

In the preamble of the Ordinance was set forth the object of its enact ment. It is an Ordinance for the registration of partnerships only. The point was already referred to in AC-REV-96-1955 as a dictum. In the result I am of opinion that though foreign partnerships are not exempted from registration, failure to register any partnership does not by itself render the contracts entered into by such a firm illegal.

I have already mentioned that there was a mistake in the pleadings and that by that mistake the appellants (defendants) were not able to invoke rule 2 of Order V in order to avoid confusion at the trial.

The question now arises whether the irregularity in procedure depriving the defence of the chance of availing themselves of the provisions of rule 2 amounts ‘to a defect in the trial, gross enough to render the trial of the case most unfair, and justifies intervention by this court by an order of retrial.

In considering this point I do not see that the irregularity is so grave. It is true that rule 2 of Order V is a protection to the public and the defen dants could not invoke it unless they were aware what the plaintiffs were, but owing to the omissioi the defendants were not in a position to demand disclosure of the names and places of the persons constituting the firm before trial. However, this disclosure of the names was actually made by the plaintiffs’ agent at the trial when he produced on oath the certificate of registration of the firm in Germany and that was what the law required by rule 2 and the defence canrlbt go further and question the existence of the firm in that manner. The court has no jurisdiction to direct cross- examination on the point or order a separate issue to determine the question whether a person whose name has been disclosed was a partner at the time of the accruing of the cause of action. The authority for this principle is to be found in Abrahams & Co. v. Dunlop Pneumatic Tyre Co. [1905] 1 K.B. 46.

As to the second point of illegality of the transaction owing to the fact that the plaintiffs were at the time of dealing not holders of a trader’s licence, I agree that such failure does not invalidate the contract. It is a question depending on sshcther the Ordinance is a revenue law or one intended for the protection of the public.

McCardie J. in Brightman v. Tate [1919] I K.B. 463 made a statement of the distinction between the two kinds of contract. He referred to a dealer who was dealing in tobacco without having a licence in compliance with the law. He said:

I think the object of the legislature was not to protect a contract of sale by dealers who have not taken out a licence pursuant to the Act of Parliament; if it was they certainly could not recover, although the prohibition was merely for purpose of revenue.”

In the Sudan the point was already tackled in AC-REV-96-1955 and need cause no further trouble.

In the result, I agree that the appeal be dismissed.

                                                         (Appeal dismissed)