Jia Enterprises (Electrical) Limited & Anor V. British & French Bank Ltd (1962)
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The circumstances giving rise to these appeals are as follows. The first respondents, Jia Enterprises (Electrical) Limited (hereinafter referred to as Jia), brought an action in the High Court of Lagos against the second respondents, the British Common-wealth Insurance Company Limited (hereinafter referred to as the Insurance Company), claiming the sum of £22,450, as money due on an insurance policy in respect of goods and a building destroyed or damaged by fire. The appellants, the British and French Bank Limited (hereinafter referred to as the Bank), brought a motion asking to be joined as plaintiffs, under Order IV, rule 5 of the Supreme Court (Civil Procedure) Rules, which provides for the joinder of additional persons as plaintiffs or defendants where it appears to the Court “that all the persons who may be entitled to or who claim some share or interest in the subject-matter of the suit, or who may be likely to be affected by the result, have not been made parties”. In the supporting affidavit sworn to by M.J.C. Young it is stated that the deponent believes that the claim is brought under a Fire Policy No. 163189, taken out by Jia with the Insurance Company, and that under that policy the Bank are joint insurers with Jia and accordingly have an interest in any monies paid under the policy, including monies awarded in the action. The reference to joint insurers means persons who are jointly insured. A copy of the policy was not annexed to the affidavit, but the original appears to have been tendered in the suit already and its terms were referred to by counsel for Jia in the course of proceedings in this Court, so that we are at liberty to look at it. It names the persons insured as Jia Enterprises (Electrical) Li-mited and the British and French Bank Limited “for their respective rights and interests”.
The Insurance company neither assented to nor resisted the Bank’s application and has remained equally aloof both from the subsequent applications to which I shall refer later and from these appeals. Jia, however, op-posed the application, and a director of Jia named Jamil Tayar swore in an affidavit that the Bank was simply a creditor of Jia and had no interest whatsoever in the property insured. No further affidavit was filed by the Bank, and the motion was heard by Bellamy, J., who gave his decision on the 17th May, 1960, dismissing the motion on the ground that the Bank, being simply a creditor of Jia’s could not prove an insurable interest in the property insured.
On the 27th May, 1960, the Bank filed notice of a fresh motion in identical terms, supported by a new affidavit by M.J.C. Young to which was annexed a Debenture issued by Jia in favour of the Bank to secure an overdraft not exceeding £3,000, in which Jia as beneficial owner, charges with the payment of the overdraft its undertaking, all its property and assets of every description (including uncalled capital, book debts and goodwill) by way of floating security. The debenture contains the usual provision that the principal money secured shall become immediately repayable on demand or on the occurrence of any of various events, and the Bank is empowered to appoint a receiver and manager at any time after the principal has become pay-able, but it was not alleged in Young’s affidavit that the principal had be-come payable. This application was dismissed by Bellamy, J., on the 22nd June, 1960, not on the merits but on the ground that the question whether the Bank had an insurable interest was res judicata by virtue of his decision on the former application.
On the 23rd June, 1960, the Bank filed notice of yet another motion, supported by an affidavit and the Debenture, and to avoid being barred by the plea of res judicata this application was brought under Order IV rule 2, which refers to the case where a person has jointly with other persons a ground for instituting a suit. This application was no more successful than the others, and was dismissed by Bellamy, J., on the 4th July, on the ground that the Debenture was an instrument within the meaning of the Land Registration Act and that S.15 of that Act made it inadmissible in evidence as affecting land for want of registration under the Ordinance.
The present appeals are brought against all three decisions, though the Bank will, no doubt, be satisfied if they succeed on any one of them. The substance of the grounds is, as regards the first application, that the Judge had only to decide, at that stage, whether they had shown a prima facie interest, and that they had done this; as regards the second application that the question whether they had shown a prima facie interest was not res judicata and as regards both the second and the third that the debenture should have been received as evidence of an insurable interest, and that it was not registrable under the Land Registration Act.
As regards the first application I am not prepared to hold that on the material before him the Judge was wrong in refusing to join the Bank as plaintiff, though I agree that he went further than was necessary for the determination of the application in coming to a positive finding that the Bank had no insurable interest, and that it would have been enough if he had held that in the face of Jamil Tayar’s uncontradicted affidavit the bank had failed to make it appear to the court that it might be entitled to a share or interest in the subject-matter of the suit; an authority for holding that a simple creditor has no insurable interest is Macaura v. Northern Assurance Co. Ltd. (1925) A.C. 619. It is true that the Bank claimed such a share or interest, but having held that on the material before him it did not appear that the claim could have any substance in law the Judge was not required by Order IV, rule 5, to grant the application. I would dismiss the appeal as regards the first application on these grounds.
Turning to the second application, the facts of which S.53 of the Evidence Act makes a judgment conclusive proof must among other things be facts directly in issue in the case, and if, as I have already held, it was unnecessary on the first application for the Court to decide whether the bank actually had an insurable interest, the question whether it had such an interest was not a fact directly in issue. I would hold, therefore, that the Judge was wrong in treating his previous decision as concluding the matter, and that he should have considered the second application on its merits. However, if he was right in holding, on the third application, that the debenture could not be given in evidence the second application in which the existence of the debenture was the only fresh fact, must necessarily have failed like the first. The third application likewise could not succeed unless the debenture was admitted in evidence, and it will be convenient from this stage to deal with the second and third applications together in considering whether the debenture was admissible in evidence and whether, if so, it shows either that the Bank may be entitled to a share or interest in the subject-matter of the suit or that the bank has a ground jointly with Jia for instituting the suit.
As Mr. Ferguson, who appears for the Bank, has pointed out, the question whether a debenture containing a floating charge is admissible in evidence-and it will not be enforceable in law unless it is admissible-is one of great importance to the business community, from the point of view both of those who wish to raise loans on this convenient form of security and of those whose business it is to grant loans on adequate security. The nature of a floating charge was described in the following terms by Sir Wilfrid Greene, M.R., in General Accident Fire and Life Assurance Corporation Limited v. Midland Bank Limited (1940) 2 K.B. 388,400, to which Mr. Ferguson referred us-
“It floats over and comprises all the property, whatsoever it may be at any given moment, of the person giving the charge. If one piece of property is replaced by another piece of property, the first piece of property drops out, and the new piece of property comes in”, and, as was pointed out by Lord Halsbury in Illingworth v. Houldsworth (1904) A.C. 355, a floating charge enables the grantor to carry on its business in the ordinary way. If the property includes any interest in land, as it admittedly does in the present case, the question is whether the floating charge is a document affecting land whereby the person giving it confers, transfers, limits, charges or extinguishes in favour of the holder any right or title to, or interest in land. If it is, then it would appear to come within the definition of an instrument in s.2 of the Land Registration Act, and to be inadmissible in evidence as affecting land if it is not registered. It is perhaps material to point out that the first proviso to s.15 of the Ordinance makes it clear that an equitable mortgage requires registration under the Ordinance.
The difficulty which arises is that s.9 of the Land Registration Act provides that no instrument other than a Power of Attorney shall be registered unless it contains a proper and sufficient description and, subject to the regulations, plan of the land affected by such instrument, and that since the nature of a floating charge is such that the property over which it extends may vary from day to day it is impossible for
Other Citation: (1962) LCN/0983(SC)