Does a Company ‘reside’ in your neighbourhood? | Daily News

Does a Company ‘reside’ in your neighbourhood?

A defendant in the District Court being sued for causing an accident that ended in the death of an individual – the son of the plaintiff – pleaded that the organization the son was employed in – was not a natural person and was therefore not residing within the jurisdiction of the Court. The father appealed the DC order subsequently in the Court of Appeal. (Martin Silva and Another v. Central Engineering Consultancy Bureau and Another - SLR - 228, Vol 2 of 2003 [2002] LKCA 25; (2003) 2 Sri LR 228 (May 14, 2002)).

The aforementioned DC action was dismissed as described in the Appeal Court order: “The plaintiff-appellants brought this action against the defendant-respondents seeking damages in a sum of Rs. 881,000 arising from an accident which caused the death of their son Dharmasiri Silva. The defendant-respondents in their joint answer whilst denying liability prayed for dismissal of the action. This case was taken up for trial on 31.03.1995 and issues Nos. 7 and 8 were accepted as preliminary issues of law for adjudication. Learned District Judge having directed the parties to tender written submissions by her order dated 07.05.1996, dismissed the action. It is from the aforesaid order that this appeal has been preferred.”

The issues of natural persons and legal persons – this for the layman in particular – concerns legal entities other than individuals (natural persons), such entities being considered legal persons for the purposes of Court. Such legal persons have the right to sue and be sued as if they were natural persons., i.e., flesh and blood individuals who aren’t corporate bodies or companies.

These legal persons however have not been accepted by Counsel as being able to sue and be sued, in many legal forums. In the case under review the corporate body that is being sued – the Central Engineering Consultancy Bureau – does not ‘reside’ in the jurisdiction of the Court and therefore the case should be dismissed, counsel for the defendant contended. The case was thereupon dismissed by the District Judge.

However, the plaintiff appealed and the Appeal court considered the petitioner’s case, noting among other things:

“The first defendant-respondent admitted in its (‘its’ as in corporate body, not person, this emphasis being mine) answer: (1) that it is a duly incorporated bureau by an Act of Parliament and it is a legal person; and (2) that the registered office of the first defendant-respondent is situated at the address given in the caption namely No.415, Bullers Road, Colombo 7.”

As the Court of Appeal judgement has it, learned counsel for the plaintiff-appellants contended that a person can be a natural person or a legal person and therefore the “party defendant referred to in Section 9 includes a natural person as well as a legal person”.

The entire legal wrangle became even more vexed because the counsel for plaintiff respondent, the Deputy Solicitor General contended that Section 9 of the Civil Procedure Code, being a section conferring jurisdiction on the District Court does not apply to a legal person as it does not ‘reside’ within the meaning of Section 9 of the Civil Procedure Code. He cited the case of Govindarajulu Naide v Secretary State where it was held that the word ‘resides’ must be taken to refer to natural persons and not to legal entities such as limited companies or Governments. 

Obviously the respondent party was seeking a narrow literal interpretation of the word resides – a technicality – as a way of wriggling out of having to accept liability for the fatal accident.

The Appeal Court, it appeared would have none of it. The Appeal Court judgement made the following observations: “In Bindra’s Interpretation of Statutes (8th Edition – 1997 p.582) it is stated that there is a difference in the matter of construction between a law dealing with substantive rights which are already vested and one relating to procedure. It emphasises that procedural enactments should be construed liberally in such manner as to render the enforcement of substantive rights effective and that rules of procedure are not by themselves an end but the means to achieve the ends of justice.”

Procedural matters, however, were considered not liberally as advised in the above cited judgement, but literally, in the District Court that dismissed the plaintiff’s application, leaving no recourse for the parent that had lost a son to an accident.

In the UK, literally, a company was held to be able to reside within a certain jurisdiction in certain instances: “In De Beers Consolidated Mines Ltd. v Howe (8) it was held that for the purposes of Income Tax Acts a foreign corporation may be “a person residing within the United Kingdom”.

The matter of the ‘residency’ of bodies corporate, i.e., legal persons, was to be clarified but was never addressed as the Appeal Court judgement states in further detail:

“Despite the failure to effect the legislative clarification as spelt out in the Civil Courts Commission Report - Draft Code Section 3(1) (a) (published as Sessional Paper No. XXIV of 1955), it seems to me that a liberal interpretation is permissible to include a corporate body as residing at his registered office where there is no other place of business. In the instant case, the defendant-respondent did not take up the position that it has several branch offices in the island. The first defendant-respondent stated in its answer that it has its registered office at No. 415, Bullers Road, Colombo 7”.

“In Somasiri v Ceylon Petroleum Corporation furthermore, it was held that even if the residence of the corporation is not distinctly and clearly averred, it is no ground to reject the plaint or dismiss the action, when the plaintiff-appellant has averred the principal place of business at the mentioned address as within the jurisdiction of the Court,”

What does this mean? Basically, that though the plaintiff may not have made the case for ‘residency’ of the corporate body the plaint had established the headquarters of the business by way of its address, which address being included this way in the plaint, was sufficient to determine jurisdiction.

In the case under review, the plaintiff-appellants have distinctly averred that the registered office of the first defendant was at No.415, Bullers Road, Colombo 7. Therefore, this averment is sufficient for the purpose of conferring jurisdiction on the District Court of Colombo, Court of Appeal held.

“The common law has developed the doctrine of ‘identification’ to impose criminal liability directly on the company irrespective of the fact that the acts or omissions which amounted to a violation of the law are the acts or omissions of its employees or agents,” it was held in a separate case in the Supreme Court, Central Bank of Sri Lanka and three others vs. Lankem Tea and Rubber Plantations (Pvt.) Ltd., (S. C. Appeal No. 81/2004.)

Though that paragraph excerpted from the aforementioned Supreme Court judgement does not concern the matter of the physical location, i.e., the address of the Company, it goes into the issue of identification of the legal person as a distinct entity liable to be sued irrespective of the fact that the employees were the violators of the law, and not the legal person or the Company, in a strict sense.

(The writer can be contacted at [email protected]).

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