Nagammai Achi V. Lakshamanan Chettiar

[IN THE PRIVY COUNCIL]

1957 Present: Viscount Simonds, Lord Oaksey, Lord Tucker,
Lord Somervell of Harrow and Mr. L. M. D. de Silva

NAGAMMAI ACHI and another, Appellants, and A. R. L.
LAKSHAMANAN CHETTIAR, Respondent

PRIVY COUNCIL APPEAL NO. 27 OF 1953

S. C. 234-D. C, Galle, X 56

Fraud-Burden of proof-Misdirection-Concealed fraud-Can agent's knowledge be imputed to the principal ?Prescription.

The equitable principle of concealed fraud is part of the law of Ceylon. It is not necessary to establish some independent act of concealment in cases where the tort is itself done furtively so that its commission will be concealed.

The plaintiff was a money lender resident in India and having a branch of his business in Ceylon. The branch was managed by the defendant, who held a power of attorney from the plaintiff. Two persons, A and B, were debtors of the Ceylon business-the former under a decree which the defendant had obtained against him, and the latter upon a promissory note given by him to the defendant. On January 25, 1933, the defendant assigned the decree and negotiated the promissory note to one Alagappa without receiving any payment for either transfer. Three days later, on January 28, 1933, he left the services of the plaintiff, and one Sinniah was appointed as his substitute. Between 1933 and 1938 Alagappa recovered sums on the decree and the promissory note, but no part of these sums reached the plaintiff or his agent Sinniah. The plaintiff had not heard of these transactions and the recovery of the monies until 1942. He then claimed these monies in the present case on the ground that the assignments were fraudulent and made in order that Alagappa might recover the monies for the defendant in fraud of the plaintiff. The defendant's main answer was that he received express instructions from the plaintiff to assign the decree and endorse and deliver the promissory note to Alagappa. He further pleaded that the causes of action were prescribed. In answer to this plea the plaintiff alleged that the prescriptive period did not begin to run until 1942 as there had been " concealed fraud ".

Held, that the burden of establishing fraud on the evidence as a whole rested plainly on the plaintiff. But once the Court was satisfied that the plaintiff had not given express instructions to assign the decree and negotiate the promissory note, it was for the defendant to establish such express instructions if, otherwise, the only conclusion possible on the evidence on the fraud issue would be adverse to the defendant; in this limited sense, therefore, there was no misdirection when the trial Court held that the burden rested on the defendant to prove that he assigned the decree and negotiated the promissory note to Alagappa at the instance of the plaintiff.

Held further, that the defence under the Prescription Ordinance failed because on the facts, in particular the entries or absence of entries in the books, there was ample evidence on which the Court could find " concealed fraud ". The fact that Sinniah, who succeeded the defendant as attorney of the plaintiff, was probably aware of the assignment could not necessarily import knowledge to the plaintiff in the absence of very precise findings of fact and, especially, as no point based on Sinniah's alleged knowledge was taken in the defendant's case.

APPEAL from a judgment of the Supreme Court reported in 50 N. L. R. 337.

Stephen Chapman, Q.C., with John Stephenson, for the plaintiffs appellants.

J. Chinna Durai, for the defendant respondent.

Cur. adv. vult.

May 16, 1957. [Delivered by LORD SOMERVELL OF HARROW]-

This is an appeal from a judgment of the Supreme Court of Ceylon setting aside a judgment of the District Court of Galle whereby the respondent (defendant) was ordered to pay to the plaintiff, since deceased, certain sums with interest. By Order in Council dated 17th March, 1955, the

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