1929 (6) TMI 5 - HC - Indian Laws

Summary

Issues Involved:
1. Liability under the deed of security and joint and several covenant.
2. Respondent's status as a surety.
3. Arrangement for giving time without the respondent's consent.
4. Imputed notice of the respondent's suretyship.
5. Ratification of the arrangement by the respondent.
6. Alleged further time given to the principal debtor without respondent's consent.

Detailed Analysis:

1. Liability under the Deed of Security and Joint and Several Covenant:
The action originated from a deed of security and joint and several covenant dated 21st December 1923, executed by the respondent and his brother in favor of Charles John Dunlop Bennett. The appellant had succeeded to Bennett's rights by a deed of transfer registered on 7th August 1924. The deed secured a debt originating from a promissory note for lb5,215 1s. 10d., dated 24th May 1922. The deed recited that the grantors were jointly and severally indebted to the grantee in the sum of lb5,280 and provided for repayment with interest.

2. Respondent's Status as a Surety:
The respondent claimed he was merely a surety for his co-defendant (his brother) and argued that he had been discharged from liability due to an arrangement for giving time made without his consent. The courts of the Dominion were divided on whether the appellant had notice of the respondent's status as a surety. The trial judge ruled against the respondent, while the Court of Appeal discharged him from liability, leading to the present appeal.

3. Arrangement for Giving Time Without the Respondent's Consent:
The respondent contended that an arrangement for giving time, made between the appellant and the principal debtor (his brother), without his consent, discharged him from liability. The Board examined whether the respondent was bound by this arrangement. Evidence showed that the respondent had knowledge of and implicitly consented to the arrangement through his brother, who acted on behalf of both obligants.

4. Imputed Notice of the Respondent's Suretyship:
The trial judge found that Mr. Burnard, the solicitor, did not have notice of the respondent's suretyship. The Court of Appeal, however, imputed such notice to the appellant. The Board reviewed the facts and found that the respondent's suretyship under the deed was not known or imputed to Mr. Burnard or the appellant at the critical date of the arrangement.

5. Ratification of the Arrangement by the Respondent:
The Board concluded that even if the arrangement was made without the respondent's prior consent, it was subsequently ratified by him. The respondent's actions, including his silence in response to letters from Mr. Burnard and his participation in raising money to meet the demands, indicated his acceptance of the arrangement. The Board rejected the respondent's claim that he was unaware of the facts until the writ was served.

6. Alleged Further Time Given to the Principal Debtor Without Respondent's Consent:
The respondent argued that he was discharged from liability because further time was given to the principal debtor without his consent. The Board found no evidence of such an agreement to postpone, nor any renunciation of the right to immediate payment. The claim that the principal sum was due on 20th December 1926, was incorrect, and no agreement to postpone supported by consideration was found.

Conclusion:
The Board advised that the order of the Court of Appeal of 18th October 1927, be discharged, and the order of the learned Trial Judge of 12th April 1927, be restored. The respondent was ordered to pay the appellant's costs in the Court of Appeal and of this appeal. The appeal succeeded, and the respondent's defenses were not upheld.