(COURT OF APPEAL)*

THE PORT SUDAN INDUSTRIAL & TRADING CO. LTD V. SUDAN IMPORT & EXPORT CO. LTD.

AC-REV-3

 Principles

·  Civil Procedure—Cause of action—Meaning of cause of action—There may be more than one relief in a cause of action

·  Civil Procedure—Cause of action—Civil Justice Ordinance, s. 51—Suit must include all reliefs available to a cause of action

·  Contract—Cause of action—One and same contract gives rise, to only one cause of action

·  Contract—Cause of action—One and same contract may give rise to more than one cause of action-This depends on the contract itself and the nature of the breach

A cause of action, which is the foundation of a suit, means: “the fact or combination of facts from which a right of action may arise.” In one cause of action there may be more than one relief available, therefore, according to Clvii Justice Ordinance. s. 51, the suit must include all reliefs available to the cause of action.

A cause of action, which is the foundation of a suit, means: “the fact or combination of facts from which a right of action may arise.” In one cause of action there may be more than one relief available, therefore, according to Clvii Justice Ordinance. s. 51, the suit must include all reliefs available to the cause of action.

A cause of action, which is the foundation of a suit, means: “the fact or combination of facts from which a right of action may arise.” In one cause of action there may be more than one relief available, therefore, according to Clvii Justice Ordinance. s. 51, the suit must include all reliefs available to the cause of action.

A cause of action, which is the foundation of a suit, means: “the fact or combination of facts from which a right of action may arise.” In one cause of action there may be more than one relief available, therefore, according to Clvii Justice Ordinance. s. 51, the suit must include all reliefs available to the cause of action.

Judgment

Osman El Tayeb 1.: One and same contract gives rise to only one cause of action; therefore subsequent suit based on same cause is barred.

Babiker Awadalla C.J.: One and same contract may give rise to more than one cause of action. This depends on the contract itself and the breach of the contract. Therefore separate suits can be instituted in respect of every cause of action arising out of same contract.

Advocates:  Abdin Ismail……………. for applicant

Abdel Wahab and Tigani………………….. for respondent

Osman El Tayeb J. May 22,1966: -This is an application for revision from the decision of Province Judge, Khartoum, dated July 6, 1964, dis missing a preliminary objection raised by applicants (defendants in the original suit) under Civil Justice Ordinance, s. 51; that respondents in respect of the same cause of action, in which they failed to include the present claim.

Plaintiffs instituted a civil suit by their statement of claim filed on January 10, 1963, in which they stated:

That on or about April 14, 7960, they entered into a contract by virtue of which defendants agreed to refine for plaintiff crude cotton-seed oil at the price of £S. per ton. A certain amount of oil was refined and certain sums were paid by plaintiffs to defendants.

They alleged that they discovered that the maximum rate for refining was £S.6.000m/ms. per ton, and for the amount refined defendants charged them with more than this price, as defendants charged them with the contract price.

They further alleged that commercial industrial loss according to trade usage in the process was 7.34 per cent. While the loss that actually to place in the amount refined was 31 per cent.

Plaintiff prayed for relief on these two allegations as follows:

(a) Recovery of value of the oil lost after deducting the commercial industrial loss at the rate of 7.34 per cent, amounting to 10,889 Kgs,

…………S.3373.920

(b) The sum of £S.1484.820m/ms, being the sum charged by the defen dants over and above the maximum rate £S.1484.820

In reply to this statement of claim defendants raised a preliminary objection as follows:

That on November 14, 1962, plaintiffs instituted a suit (HC-CS-783- claiming the sum of £S.725.642mfms. being balance of account arising out of that same contract of refining crude cotton-seed oil. The said sum was paid in full in final settlement of all claims by plaintiffs arising out of that contract. Therefore, plaintiffs were barred from bringing this suit under Civil Justice Ordinance, s. 51 (3).

An issue was framed on the objection and evidence was heard on it. The relevant material facts proved were: that by their letter dated July 29, 1962, advocates for respondent communicated to applicants the claim of their clients under three items; the same two items in the present case and the same item in the former case. Applicants were warned to settle all three sums or that judicial proceedings would be taken against them. Then the suit for the balance of account was instituted on November 14, 1962. With regard to this suit applicant’s advocate wrote to respondent’s advocate the following letter dated December 27, 1962:

“Dear Sir,

HC-SC-783-1962

I refer to our meeting of today regarding the claim of your clients Messrs. Sudan Import and Export Co. Ltd. against Messrs. The Port Sudan Industrial and Trading Co. Ltd., subject-matter of the above civil suit.

Whereas the dispute arising out of the original agreement dated April 14, 1960, between the parties has been settled by an agreement reached and reduced into writing on March 7, 1961, and as a result of the latter agreement which has been executed and acted upon by the parties, there was a balance of £S.725.645m/ms, due to your clients, I have the pleasure in sending your cheque for the said amount in full and final settlement of all and any claim by your said clients.

Please acknowledge receipt thereof and arrange for the above civil suit to be dismissed on settlement.”

In reply to this letter, respondents’ advocate sent their letter dated February 2, 1963, that reads:

“Dear Sir,

HC-CS-783-1962

Reference is made to your letter of December 27, 1962, and the cheque enclosed therewith.

Our clients have other claims arising out of original agreement dated April 14, 1960, relating to the industrial loss and difference of industrial expenses. Therefore we cannot accept the sum paid by your clients in full and final settlement of all and any claim by our clients.

We accept the said sum in part settlement of the clajm of our clients. We will proceed with action to recover the court fees and advocate’s costs.”

It also appears in the evidence that after applicants had processed about half the quantity of oil agreed upon, the parties met and took accounts. The result of the accounts was that applicants owed respon dents a balance of about £S.527.945m/ms. and it was said that as a result of further accounts the balance due to respondents was the sum of the former suit. It appears that that balance was made out of the difference between the sums received by applicants on the one hand, and the cost of the refining made, and other small things including costs of empty drums.

The learned Province Judge decided that the former suit does not bar the second one. He thought that the cause of action in the former is different from tbe cause of action in the latter, and though the two causes of action are arising out of one and the same contract, separate suits can be instituted in respect of every cause of action. He referred to the two opposing views held by the Indian authorities and said: “one view is that all causes of action arising out of the same contract ought to be lumped together in one suit, If one cause of action is left out then it cannot be subject-matter of a subsequent suit. The other view is that causes of action arising out of the same contract do not bar one another. Each cause can be the subject-matter of a separate action.” The learned judge preferred the latter view.

This statement, as submitted by advocate Abdin Ismail, is inaccurate:

The two views of the Indian authorities, as they appear to me are: under the same contract or for reliefs or claims arising under the same contract, there is one and only one cause of action; and the second view is that under the same contract may arise different causes of action.

This distinction is important; in so far as the meaning of Civil Justice Ordinance, s. 51 is concerned, which determines this case. This section requires that “Every suit shall include the whole of the claim which the plaintiff is entitled to make in respect of the cause of action Sub section (3) reads: “A person entitled to more than one relief in respect of the same cause of action may sue for all or any of such reliefs: but if he omits, except with leave of the court, to sue for all such reliefs, he shall not afterwards sue for any relief so omitted.”

The question is whether the plaintiff has one cause of action, or more than one cause of action; if he has only one, then he has the right for one suit, in which he may combine all the reliefs available to him. But if he has more than one cause of action, then for everyone he has a right for a separate suit. This leads to the meaning of a cause of action, and as to whether under the same contract different causes of action may arise.

The meaning of cause of action is described by the Privy Council in the Indian case of Muhammec Hafiz v. Muhammed Zakariya (1922) 49 I.A. 9/14 as follows: “the cause of action is the cause of action which gives occasion for and forms the foundation of the suit, and if that cause enables a man to ask for larger and wider relief than that to which he limits his claim, he cannot afterwards seek to recover the balance by independent proceedings.” I Mulla, Code of Civil Procedure (12th ed., 1953), p. 527,after the preceding quotation says. “Cause of action for the purpose of this rule means all the essential facts constituting the rights and its infringe ment.” In other words, a cause of action is the fact or combination of facts from which a right of action may arise.

The second important point is whether under the one and same con tract more than one cause of actioh may arise. In my opinion the general rule is that under the one and the same contract there is one cause of action. A contract normally creates an obligation or more than one obligation which the obligee has to perform, and if he fails in the performance, then there arises a cause of action in favour of the other party. In order to show that he has a cause of action, the claimant must state the first fundamental fact, that a contract was made, then the other pertinent facts about the obligation created, and that failure in perform ance thereof has occurred, Lastly he has to state the relief or items of reliefs resulting therefrom. Here there is one cause of action.

The failure in performance or breach relied upon, may be in respect of more than one obligation; and that there may be more than one relief in the case, the claimant has to sue for all those reliefs in one suit, but if he omits one of them, except with leave of the court, he is not allowed to sue afterwards for any relief so omitted.

If I am correct in the above opinion, I would be agreeing with the majority decision in the Indian Court in Anderson v. Karagarla (1886) 12 Col.339 1 Mufla, Code of Civil Procedure (12th ed., 153), p. 536, where A agreed to buy ten bales of Yarn from B. A received seven bales and refused to take delivery of the remaining three, and he further failed to pay the price of those seven. B sued A for damages for the failure to take delivery of the three bales. He, subsequently, sued A for the price of the seven bales received, it was held that he was barred from so suing by the former proceedings, since under that contract there was one cause of action.

In the present case, the fact of the making of the contract for refining of crude cotton-seed oil is the basis of the cause of action. The other facts, as they relate to the obligations created by that contract or matters incidental to those obligations, and that breach in respect thereto occurred, then they give rise to different reliefs but not to different causes of action. The first relief was that put in the former suit, which was balance of account with respect to sums of money paid in excess of the amount of oil refined at the time of repudiation of the contract, according to the contract prices. The other two reliefs, the subject-matter of the second suit, are: first, the cost of oil lost due to bad processing; and secondly, the difference between the contract price and the maximum legal price for the amount of the oil processed.

In my opinion the cause of action is one in the two cases, being the fact of the making of the contract, and the obligation created by it and the failure of defendant in performance of them. So the latter suit is barred by the former.

This application is allowed, and the order of the learned Province Judge is set aside with costs.

Babiker Awadalla C.J. May 22, 1966: —In my view the question as to whether or not under a certain contract there can arise more than one cause of action cannot emphatically be answered one way or the other without examining the contract itself and the nature of the breach. It is therefore with diffidence that I find myself compelled to disagree with anyone who seeks to pose the questiOn in the abstract and then try to give a definite answer. Such an answer in the abstract is in my view impossible.

The reason for this is that a contract may contain only one promise on either side, e.g., a contract to sell one specific article at a stated sum. Or it may contain a series of promises, e.g., a contract to sell goods over a long period in which delivery and payment are to be made by e.g., monthly instalments. Of the latter type of contract is a contract of service.

In the case of the single promise contract a breach on either side operates to discharge the contract and to give rise to a single cause of action and no more. If the seller of the specific article fails to give delivery or the buyer to pay the price when the seller is ready and willing to deliver, then the contract is discharged and the innocent party has but one cause of action under that contract.

In the latter type of contract on the other hand, a breach does not ipso facto bring about a discharge. It does so only if its effect is to render it purposeless for the disappointed party to proceed further with per- formance. The authorities agree that this state of affairs occurs only when the party at fault has clearly evinced an intention to be no longer bound by the contract. Evidence of such an intention is in most cases manifested by breach of a stipulation of major importance, i.e., a breach of a fundamental as opposed to an ancillary term in the contract.

The rule against successiveness of the cause of action under one and the same contract is operative only where the contract is completely discharged by breach. If the breach is one of an ancillary nature, which does not bring about a discharge of the contract then it keeps the contract alive for all purposes including the right to sue one more if there is another breach. In other words, so long as a breach does not destroy a contract, it does not destroy its capacity to reproduce further causes of action. The only breach that affords the sole or the last cause of action is the fundamental breach that brings about a total discharge of the contractual relation.

In International Correspondence Schools ltd. V. Ayers, defendanj entered into an agreement with plaintiffs who carried on a system of tuit.io by correspondence. Defendant agreed to pay £S.14.10s for the whole course of which 10s. was paid at the time of signing the contract and the balance by instalments of 10s. a month. Defendant paid only one instal ment and shortly afterwards gave notice to plaintiffs that he did not propose to continue the course. Plaintiffs had always been ready and willing to continue the course for which they punctu fly posted the requisite instruction. It was held that they were entitled o sue for each and every instalment as it became due whether defendant refused to receive the instruction or otherwise. In this case, the refusal to accept the monthly instruction was treated as an ancillary breach that did not destroy the contract and therefore it gave plaintiffs twenty-eight successive causes of action.

According to the criterion outlined above, the plaintiff in the Indian case of Anderson v. Karagarla (1886) 12 Col. 339, I Mulla, Code of Civil Procedure (12th ed., 1953), p. 536, could not have sued twice on the con tract bccause the defendant, by taking delivery of seven bales of yarn and rc to take delivery of the three remaining ones has committed a breach which brought about a discharge of the contract. To refuse to pay the price of the bulk of the goods delivered at the same time refraining from taking delivery of the remaining part of those goods is so far as non-payment is concerned, a breach of a major stipulation and so far as refusal to take delivery is concerned the most cogent evidence of an intention to repudiate. Once the contract is discharged a plaintiff must be careful under our Civil Justice Ordinance, s. i, to sue for all the reliefs to which be would be entitled and if he does not, he has only himself to thank.

It is to be noted that the rules enunciated above apply whether the discharge is unilateral, i.e., by breach or bilateral and by consent, i.e., accord and satisfaction. Once a contract is discharged by mutual agree ment, it ceases to give birth to any cause of action and if a new contract is substituted therefor then it is the second agreement which is to be considered for a new cause of action. Again, the principle applies where the discharge occurs independently of the will of both parties, e.g., by frustration.

A bilateral discharge is, of course, applicable only to a contract that is either wholly or partly executory (cf. Cheshire & Fifoot, Law of Con-tract (6th ed., 1964), p. 468. According to that authority, it assumes three forms, namely:

i. Dissolution—i.e., extinction of the original contract without replace ment by any new contract. This form of discharge is valid only if the contract is party executory on either side.

ii. New contract—parties agreeing to make a new contract in place of the old one, which is cancelled.

iii. Modification—partial alteration of the original contract.

In my opinion the third form is but an instance of the second. How ever what concerns us here is the first method because it is the one relevant to the facts of the present case. The parties entered into an agreement on April 14, 1960 under which applicants agreed to refine 300 tons of crude oil belonging to respondent at £S.16.250m/ms. per ton. After having gone half way and for reasons which are not apparent on the evidence available, the parties agreed by mutual consent to dissolve the contract and on March 7, 1961, an account was made in which appli cants admitted liability to respondents under the original contract for a sum of £S.725.645m/ms. It appears that under the contract, respondents were making advance payments and the amount above-mentioned repre sented the balance after allowing for all the services referred to in the written statement of account made at the time of dissolution.

On November 14, 1962, respondents instituted a suit claiming the above sum of £S.725.645m/ms.

Applicants by their letter dated December 27, 1962, admitted the claim and paid it before hearing so that a decree for costs only was passed.

About two months later, respondents instituted the present suit claiming a total of £S.4858.74om/ms. being as to £S.3373.920m/ms. damages for breach of an implied term in the contract, and as to £S.1484.820 the total of overcharges unlawfully made by respondents.

Applicants defended the suit on the ground that it is barred under the Civil Justice Ordinance, s. 51, in that it represents nothing but a claim for a relief, which had already been relinquished when the formet suit was instituted.

The case was heard by Mudawi Province Judge who framed on pre liminary issue as to whether the claim was barred by the previous suit and ultimately decided that issue in the negative. Hence this application.

In my view this application should be allowed.

There is no doubt that the contract between the parties was duly dis charged by dissolution after having been partly executed on both sides and such a dissolution is binding on both parties and operates wholly to wipe out the first contract. Under the dissolution agreement, the parties made an account and applicants agreed to return to respondents advance payments made under the first contract together with charges on other minor items. They were sued under the dissolution agreement and they paid the amount claimed. That suit has in my view exhausted the only cause of action, which respondents had in this affair.

Respondents by their present suit are trying to resuscitate the contract, which they had by their consent discharged by dissolution and such an attempt on their part is bound to fail. To all intents and purposes the first contract is dead and is incapable of affording any cause of action. That contract was discharged, not because applicants committed a funda mental breach thereof, but because of the mutual agreement of the two parties to release each other from all obligations save those specifically agreed upon.

This application is therefore allowed with costs and the decision of His Honour the Province Judge to hear the case is hereby set aside.