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DE COSTA v.

BANK OF CEYLON (1969) 72


N.L.R. 457, 464
Facts
The plaintiff, a shareholder of a Company,
received a dividend warrant for a sum of Rs.
30,637.13.
The warrant was crossed "Not Negotiable.
The plaintiff made on the back of the warrant
the endorsement "Credit my account only"
and duly affixed her signature.
She put the warrant in an envelope,
addressed it to her Bank, viz., the City Office
of the Bank of Ceylon, and gave it to a servant
to be posted.

There was no proof of posting.
The warrant got into a hands of a third party,
one Loganathan, who was said to be the
proprietor of "Movie & Co.".
It was presented for payment at the
Wellawatte Branch of the defendant bank and
the money realized was credited to the
account of "Movie & Co.".
The plaintiff sued the defendant bank for the
recovery of the amount of the dividend
warrant on the basis that the Bank had
wrongfully deprived the plaintiff of the
proceeds of the warrant.

o The position for the plaintiff at the trial was
that the first basis of the claim against the
defendant Bank was in delict, and that on
this basis the plaintiff was entitled to
recover as for a conversion if the English
law applies.
o The position for the plaintiff also was that
even if the Roman-Dutch Law be
applicable the defendant Bank was yet
liable in delict.

The learned District Judge over-ruled a submission for
the defendant that the first cause of action was based
on contractual liability and not on conversion.

Supreme Court agreed with this ruling of the District
Judge, which was not challenged in appeal by
defendant's Counsel.

The learned District Judge considered himself bound
by a decision of Supreme Court that the Law of Ceylon
on the subject of a Banker's liability is the same as in
England.
[Bank of Ceylon v. Kulatilake1[ 1 (1957) 59 N.L.R. 188.]

The District Judge also held that the Bank had
established that it had acted in good faith and without
negligence, and that accordingly the Bank was protected
from liability by s. 82 (2) of the Bills of Exchange
Ordinance (Cap. 82).
Subsequent to above judgment of the District Judge, a
Bench of three Judges of Supreme Court decided that
the English doctrine of conversion is not applicable in
Ceylon. [Daniel Silva v. Johannis Appuhamy 2[ 2(1965)
67 N. L. R. 457.]
Also held that the case of Kulatilake v. Bank of Ceylon
had been wrongly decided.
To settle the conflict of opinion as to the Law of Ceylon
governing a matter of commercial importance, the
appeal was reserved for a decision of a Bench of five
Judges.
According to the hon. H. N. G. FERNANDO, C.J.-
The Proclamation of 1799 declared that the
Administration of Justice shall be exercised by the
Courts according to the Roman-Dutch Law, subject to
deviations or alterations-
(a) in consequence of emergencies, or absolutely
necessary and unavoidable, or evidently beneficial
and desirable ;
(b) by the Court of Directors of the East India Company
or the Secret Committee thereof or the Governor of
Fort William ;
(c) by Proclamation of the Governor;
(d) by lawful authority ordained.
But the Proclamation did not authorize any
deviations or alterations to be made by the Courts
of law.

There were several subsequent Proclamations passed
by the Governor under the power reserved by the
Proclamation of 1799.

But these became obsolete or inapplicable after a
comprehensive Charter of Justice was enacted in 1833.

Consequently, Ordinance No. 5 of 1835 was enacted by
the Governor with the advice and consent of the
Legislative Council.

This Ordinance repealed the Proclamation of 1799 and
several other Proclamations, but the repeal of the
Proclamation of 1799 was made subject to an exception
in the following terms:


"except in so far as the same (i.e. the Proclamation of
1799) . should be exercised by all Courts of
Judicature, Civil and Criminal, according to the laws and
institutions that subsisted under the ancient Government
of the United Provinces; which laws and institutions it is
hereby declared still are and shall henceforth continue to
be binding and administered through the said Maritime
Provinces and their dependencies, subject nevertheless
to such deviations and alterations as have been or shall
hereafter be by lawful authority ordained.

Thus the Legislature of Ceylon declared in 1835 that
the Roman-Dutch Law shall continue to apply in Ceylon
by virtue of the Proclamation of 1799.
After the enactment of the Ordinance of 1835,
deviations and alterations of the Roman-Dutch Law were
not permitted to any of the authorities specified in the
Preamble to the 1799 Proclamation, and were permitted
only if they were ordained by lawful authority.
From 1831 therefore, the power to make laws for
Ceylon was committed to the Governor, acting with the
advice and consent of the Council, subject to the
Governor's special powers to act without such advice.
The Proclamation of 1799 and the Ordinance of 1835
did not authorize the Courts to alter or deviate from the
Roman-Dutch Law or to apply principles of English Law
which conflict with the Roman Dutch Law.
From 1835 at least, such deviations or alterations could
be effected only by Ordinance.


Other two hon. judges, ALLES, J., and
WEERAMANTRY, J. also agreed with hon.
FERNANDO, C.J., that the English law doctrine of
conversion is not part of the common law of Ceylon.

Per SIRIMANE, WEERAMANTRY and WIJAYATILAKE, J J.-
The conversion of a cheque by a collecting banker is also a
matter of banks and banking, and thus affords another basis for
the application of English law.

Per SIRIMANE:, J.-The general law of conversion has been
considered to be part of our law from very early times. But it is
not necessary to decide it in the present case.

Per WEERAMANTRY, J.-The plaintiff is also entitled to
succeed on the basis of the law relating to unjust enrichment.