Connecting the dots between sections 9 and 14 of the Civil Procedure Code and the perils of a ‘dummy’ defendant

This post briefly considers the interplay between sections 14 and 9 of Sri Lanka’s Civil Procedure Code of 1895 (the ‘CPC’ or the ‘Code’) and how that might affect a court’s jurisdiction in light of observations made in passing  by the Court of Appeal in Suriyaarachchi and others v People’s Bank and another [2018] CA Case No 272/1997 (F) (unreported). The former provision is concerned with joining several defendants in a single action, while the latter is concerned with the local limits of a court’s jurisdiction.

Section 14 lays down the following rule as regards joining multiple defendants in a single suit: ‘All persons may be joined as defendants against whom the right to any relief is alleged to exist, whether jointly, severally, or in the alternative, in respect of the same cause of action.’ This section is significant for two reasons. First, in its most fundamental sense, it proceeds on the basis that in order for a person to be sued and named a defendant for that purpose, the person bringing the suit (the ‘plaintiff’) must have a cause of action against the defendant. A cause of action in a nutshell is the cause to sue another for a legal ‘wrong’ committed in violation of one’s legal rights. Second, it sets out a technical rule as to when several defendants can be ‘joined’ or made party to a single action. As the Supreme Court explained over a century ago in Lowe v Fernando [1913] 16 NLR 398, a plaintiff can claim a right to relief against  multiple defendants, whether jointly, severally or in the alternative, provided they are all liable for one and the same ‘wrong’ which gives the plaintiff a cause to sue or a cause of action in the sense described above.

The rule in section 14 is sometimes – for tactical reasons – honoured in the breach, usually without fatal consequences for the action. This is because section 17 of the CPC says that ‘no action shall be defeated by reason of the misjoinder or non-joinder of parties’ and sections 18 and 22 of the Code entitle any person who has been improperly joined in an action to ask the court to have them removed or ‘struck out’ as a party to an action provided, they do so at the earliest available opportunity and before the hearing.

However, that does not necessarily mean that an action will always go unscathed if section 14 of the Code is not complied with. Indeed, a failure to comply with section 14 of the CPC may have a decisive impact on the local limits of a court’s jurisdiction under section 9 of the CPC. In that regard, section 9 of the Code, as a general rule, sets out four alternative bases for working out where and in which court a defendant can be sued. In particular, section 9 says that ‘… an action shall be instituted in the court within the local limits of whose jurisdiction:

(a) a party defendant resides; or

(b) the land in respect of which the action is brought lies or is situate in whole or in part; or

(c) the cause of action arises; or

(d) the contract sought to be enforced was made.’

A plaintiff must satisfy one or more of those four jurisdictional bases to bring his action in a particular court. As set out above, one of those bases is that a party defendant resides within the local limits of the jurisdiction of a court (e.g. if a defendant resides in Kandy, a plaintiff can sue the defendant in the District Court of Kandy).

In Hussan v Peiris [1932] 34 NLR 238, the Supreme Court ruled that where there are several defendants, it is sufficient if the action is brought in a court within whose jurisdiction any one defendant resides and affirmed the decision of that court in Fernando v Waas (1891) 9 SCC 189.[3] However, the court went on to suggest a qualification to that rule. It said that where a plurality of defendants is sued, the plaintiff cannot set up one of their number as a ‘dummy’ – against whom the plaintiff has no cause of action – purely for the sake of constituting the action brought, based on the residence of the ‘dummy’ defendant. Although, the court had in mind situations where the plaintiff set up a friendly or nominal defendant in his or her ‘pocket’ the court also said that the defendant put forward by a plaintiff has to be a ‘real’ or ‘substantial defendant’ against whom a right to relief is alleged to exist. In arriving at that conclusion, the court reasoned that when section 9(a) of the CPC speaks of a party defendant residing within the local limits of a court’s jurisdiction, it must necessarily mean a defendant ‘against whom the right to any relief is alleged to exist’ under section 14 of that Code and in other words against whom a cause of action is asserted. Those views were recently picked up and endorsed by the Court Appeal in Suriyaarachchi and others v People’s Bank and another [2018] CA Case No 272/1997 (F). The learned judge in that case, A H M D Nawaz J having referred to section 9 of the Code and the cases above, echoed the judgment of Macdonell CJ in Hussan  in saying albeit in passing that the term ‘party defendant’  does not include ‘…a person made a party for the reason only that this is necessary for the proper constitution of the action, but not because any relief against him is claimed by the plaintiff.’

The upshot of that analysis might be that where a right to relief is claimed against some defendants to the action who are resident outside the jurisdiction of the court but no relief is claimed against the defendant or defendants residing within the jurisdiction of the court, then the court will have no jurisdiction to hear and decide the action, unless the plaintiff is able to satisfy one of the three other jurisdictional bases in section 9(a) of the Code and has made an appropriate averment to that effect in his or her plaint.

No doubt, a lack of territorial jurisdiction under section 9 of the CPC is one of latent (as opposed to patent) lack of jurisdiction, which can be ‘cured’ by agreement, acquiescence, wavier, inaction or by any other manner of conduct which indicates that the party or parties have subjected themselves to the authority of the relevant court. Moreover, where an objection is taken to a court’s jurisdiction and as a result the action is rejected, the plaintiff is not barred from subsequently bringing his or her suit in the proper court. That said, even where a plaintiff is willing to incur further expense to bring his suit within the proper court, time may not be on his or her side, if the original suit was initiated close to the expiry of the applicable limitation or prescription period for the bringing of that action. The reason for this is that time for the purposes of limitation or prescription does not stop running until an action is brought in the correct court.

The observations of the Court of Appeal in Suriyaarachchi and others means that section 14 of the CPC merits further consideration given its possible impact on section 9 of that Code, particularly in the context of multi-defendant suits, specifically where a ‘dummy defendant’ is not just a mere party but the lone jurisdictional anchor of the suit. Not doing so might at best be an invitation to a jurisdictional objection (and the undesirable satellite litigation that inevitably follows); and at worse a risk that a jurisdiction founded upon a ‘dummy’ may very well be a jurisdiction built on sand.

There may well be other arguable reasons to support that analysis. Firstly, to permit the naming of a ‘dummy’ defendant against whom no relief is sought, solely for the purposes of bringing an action within the local limits of a particular court by reason of his or her residence,[4] might give license to ‘forum shopping’ in circumvention of section 9 of the CPC. Though the issue of jurisdiction was not addressed, this was squarely the concern of the court in Dr. Ariyaratna and others v Padmakulasuriya [2004] CA/LA 488/2003 (unreported), where the court had reason to believe that the 3rd defendant in that case had been made a defendant solely for the purpose of bringing the suit within the local limits of the District Court of Tissamaharama. Second, it may obviate the need to specifically add a party pursuant to the second limb of section 18(1) of the Code, whose presence before the court may be necessary in order to effectually and completely to adjudicate upon and settle all the questions involved in that action. That latter provision is resorted to in circumstances, where the plaintiff has no cause of action against the party to be added in the pending proceedings but whose presence may be necessary for instance, if he or she will be bound by the determination of the pending action;  if the determination of the pending action will affect his or her legal rights or otherwise affect his or her pecuniary or commercial interests; or if his or her addition is necessary to enable one of the parties to effectually and completely establish their case or to effectually and completely obtain the relief they seek in the action (see: New Lanka Merchants Marketing (Pvt) Ltd and others v Seylan Bank PLC and others [2017] SC Appeal No. 198/2014 (unreported).

Section 45 of the CPC requires every plaint to contain a statement of facts setting out the jurisdiction of the court to try and determine the claim in respect of which the action is brought.

Lily Fernando v Ronald (alias R A Vanlangenberg) [1969] 75 NLR 231. As regards a latent lack of jurisdiction, section 39 of the Judicature Act of 1978 (as amended) provides that: ‘Whenever any defendant or accused party shall have pleaded in any action, proceeding or matter brought in any Court of First Instance neither party shall afterwards be entitled to object to the jurisdiction of such court but such court shall be taken and held to have jurisdiction over such action, proceeding or matter.’

Authors

Drushika Amirthanayagam
Senior Litigator