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(V17) 2 CLR 147

1944 November 17

 

[JACKSON, C.J., AND GRIFFITH WILLIAMS, J.]

POPI N. IOANNIDES,

Appellant,

v.

DEMETRIOS O. FRANGOS,

Respondent.

(Civil Appeal No. 3752.)

Counter-claim-Independent Action Rules of Court, 1938, O. 19 r. 3-Civil Jurisdiction of District Courts -Courts of Justice Law, 1935, section 16 (5) and (7).

This action was brought in the Magistrate's Court of Limassol claiming £23. 6s. 6p. for rent. The defendant counter-claimed for damages amounting to £31. 8s. 7p. and set off against this the sum of £11. 15s. 5p., which, he alleged, was the true amount of rent due. The plaintiff raised the objection that the Magistrate could not entertain the counter-claim, as the sum claimed therein for damages, namely £31. 8s. 7p., was in excess of his jurisdiction. The Magistrate considering that the net amount of the counter-claim was only £19. 13s. 2p. overruled the objection. On appeal by the plaintiff, the President of the District Court hold that a counterclaim is a separate action and that the Magistrate had exceeded his jurisdiction. The defendant appealed.

Held: Unless a Court orders a counter-claim to be disposed of in an independent action, it is not an independent action but a part of the action brought by the plaintiff to enforce his claim. The test in applying section 16 (7) of the Courts of Justice Law, 1935, is whether the Magistrate has jurisdiction to award the maximum relief claimed by either party.

Appeal from the decision of the President of the District Court of Limassol reversing the judgment of the Magistrate.

J. Clerides for the appellant.

M. Houry (with P. Solomonides) for the respondent.

The facts are clearly set forth in the judgment of the Court which was delivered by:

JACKSON, C.J.: In this case the plaintiff-respondent sued the defendant-appellant in the Magistrate's Court, Limassol, for a sum of £23. 68. 6p. for rent of certain premises in Limassol leased to the defendant as a shop. The defendant admitted a smaller sum due for rent, £11. 15s. 5p. and counter.claimed for a sum of £31. 8s. 7p., made up as follows: £33. 1s. 3p. for damage to articles in the shop due to leaks in the roof and £1. 10s. for some electric light fittings taken over by the plaintiff at the termination of the lease, less a sum of £3. 2s. 5p. received by the defendant on the account of the plaintiff for the sale of the damaged articles on the plaintiff's instructions. From the total of this counter-claim the defendant deducted the amount admitted to be due for rent, £11. 15s. 5p., learning a balance of £19. 13s. 2p.

It was objected at the hearing before the Magistrate that the amount of the counter-claim, being over £25, was beyond the Magistrate's jurisdiction, but the Magistrate, considering that the net amount of the counter-claim was £19. 13s. 2p., overruled the objection. He gave judgment for the plaintiff for a sum of £16.11s. 2p. for rent due. He also gave judgment for the defendant on the counter-claim for £31. 8s. 7p. and, deducting from that sum the amount of the rent that he had found to be due to the plaintiff, £16. 11s. 2p., he gave judgment for the defendant for the sum of £14. 7s. 5p. On the Magistrate's own figures the latter amount should have been £14. 17s. 5p.

The plaintiff appealed to the District Court of Limassol against both parts of the Magistrate's judgment, the amount awarded to the plaintiff as rent and the determination of the counter-claim. The plaintiff maintained the original claim for rent, £23. 6s. 6p., and argued that the counter-claim was beyond the Magistrate's jurisdiction. A number of other reasons against the Magistrate's decision on the counter-claim were also put forward.

The District Court upheld the Magistrate's decision in regard to the amount of rent due to the plaintiff, but expressed this sum as £16. 6s. 6p., instead of £16. 11s. 2p. the amount awarded by the Magistrate. The District Court's figure represents rent at £14 per annum for fourteen months, and the Magistrate's figure represents rent at the same rate for fourteen months and six days. On the evidence the District Court's calculation would be right and the Magistrate's wrong.

On the counter-claim, the District Court held that "the amount involved" was beyond the jurisdiction of the Magistrate, that the counter-claim was a separate action and should be tried as such. The District Court accordingly allowed the plaintiff's appeal on the counter-claim on that ground alone and expressed no opinion on the other grounds urged against the Magistrate's decision.

The defendant has now appealed to this Court against that part of the District Court's judgment which disallowed the counterclaim and awarded the plaintiff £16. 6s. 6p. for rent. That would appear to be an appeal against the whole judgment but at the hearing before us only the disallowance of the counter-claim was contested on the defendant's behalf. The plaintiff also asks, in this appeal, that the decision of the District Court in regard to the amount of rent due by the defendant should be varied and that the plaintiff should be awarded the amount originally claimed, £23. 6s. 6p.

The evidence of the facts was complicated and in sharp conflict on essential points. The defendant is married woman and the person named as plaintiff is named as representing his wife. We do not know why the wife was not herself named as plaintiff. Neither of these women gave evidence and all the negotiations between them appear to have been conducted throughout by their husbands on their behalf. It will be most convenient therefore, in discussing this appeal, to dismiss these two shadowy figures from the scene and to refer to the plaintiff and defendant as of the male sex.

The evidence falls under two main heads, one relating to the claim for rent and the other relating to the counter-claim for damages for breach of an alleged undertaking by the lessor to repair the premises leased.

With regard to the claim for rent, it is not disputed that there were three successive agreements for leases between the parties, the first being a written agreement and the second and third verbal. The plaintiff says that the second and third agreements were conditional on the signing of written leases. The defendant was silent on this particular point but must .be taken to dispute it. The written lease related to a shop in Limassol, opening on both Athens Street and Stoa Frangou. The lease ran for a year from the 15th February, 1940, and contained the common provision that in the absence of notice of termination by either side it should run for another year. The rent was £20 for the year and there was a provision that repairs should be borne by the landlord. Rent was paid up to the 14th September, 1940, and it was then agreed verbally that as from the 15th September, 1940, the defendant should occupy only that half of the shop which opened on Athens Street, at a rent of £14 a year. This half was to be separated from the other by a partition consisting partly of the defendant's shop fittings and partly of a wooden division to be constructed by the plaintiff.

The plaintiff did not complete that part of the partition which was to have been constructed by him. He says he did not do so because his agreement to confine the lease to only half of the shop, at a reduced rent, was conditional on the signing of a new lease by the defendant and that, though a lease was sent to the real defendant, the woman, to be signed, it was never signed. The defendant says that the partition was never completed because the plaintiff failed to produce the necessary wood. He says nothing about any request from the plaintiff that a new lease should be signed and he was not cross examined on that point.

The defendant stated that after the verbal agreement to limit his tenancy to the half of the shop opening on Athens Street, he occupied only that half, but he kept the key of the whole, shop because, until the partition had been completed, his own half could have been entered from the other.

At some time in March, 1941, there was a further verbal agreement between the parties that the defendant should occupy only the Stoa Frangou half of the shop at a rent of £6 for a year and a written lease was sent by the plaintiff to the real defendant, the woman, for her to sign. The lease was in the same form as the written lease for the whole shop, except for the description of the premises and the rent. The period of the lease was for one year from the 21st April, 1941. This lease was never signed. The defendant says that his wife did not sign it because the plaintiff had not yet partitioned the shop and that, for that reason, he continued to occupy the Athens, Street half and never actually occupied the half opening on Stoa Frangou. On or about the 15th November, 1941, the whole of the premises were, by agreement, given up to the plaintiff.

The plaintiff maintained that, as no written lease had been signed for either half of the shop, the original lease for the whole shop remained in force until the termination of the tenancy. That was the basis of his claim for £23. 6s. 6p. for rent. The defendant maintained that he was liable for rent only for the Athens Street half of the shop from the 15th September, 1940, to the 20th September, 1941, and for the Stoa Frangou half from the 21st September, 1941, to the end of the tenancy. Though he continued to occupy the Athens Street half, he says he was prevented from occupying the other by the plaintiff's failure to partition the shop. It was on that basis that he calculated his admitted liability for rent, £11. 15s. 5p.

For the purposes of this appeal nothing more need be said about the evidence relating to the claim for rent.

In view of the conclusion at which we have arrived on the subject of the counter-claim for damages for alleged breach of the lessor's undertaking to repair, we do not propose to deal with the evidence on that issue. It is sufficient simply to say that it was a claim for damages caused to the defendant's trading stock which was in the leased premises and was damaged by rain-water leaking through the roof.

We turn now to the claim in this appeal for the variation of the Magistrate's decision on the amount of the rent due from the defendant, a decision affirmed by the District Court. We have explained in our summary of the evidence how, each of the parties arrived at his own estimate of that sum. The first lease, which included the whole shop, was a lease for one year from the 15th February, 1940. The lease bound neither party for more than a year and cannot he regarded as a lease for a term exceeding one year. It was not therefore a lease which was required by section 77 of the Contract Law to be in writing. But the lease was committed to writing and oral evidence to annul it or to vary it was admissible in accordance with the rules discussed in Phipson on Evidence, 7th Edition, p. 554 and in the authorities there cited. As to the two later verbal agreements, the second, as shown by the unsigned form was for a year and the implication of the evidence was that the first was for the same period. There was therefore no reason in law why they should not be valid though not committed to writing. The defendant admitted that he remained in the Athens Street half of the shop for fourteen months after the verbal agreement to vary or annul the original lease and if anything was doubtful about the terms on which he did so, the amount of the rent was not. There was ample evidence to justify the Magistrate's decision to reject the plaintiff's claim to rent for the whole shop after the date of the verbal agreement for the lease, of the Athens Street half of it. There was even more ample evidence to justify the Magistrate's decision to reject the defendant's claim that after April, 1941, he was liable only 1r the lower rent of the Stoa Frangou half. He himself says he never occupied that half. We are not therefore disposed to vary the Magistrate's decision on this point as confirmed, and arithmetically rectified, by the District Court.

The other ground of appeal is that the District Court was wrong in holding that the defendant's counter-claim was beyond the jurisdiction of the Magistrate.

The amount which the defendant included in his counter-claim for damage to his stock was £33. 1s. 3p. He reduced this by crediting the plaintiff with the sum of £3. 2s. 5p. which he says he received, on plaintiff's account, from the sale of the damaged articles. Thus his claim for damages for breach of the lessor's undertaking to repair was £29. 18s. 7p. His claim for £1. 10s. for electric light fittings taken over by the plaintiff rested on a different basis and was admitted by the plaintiff. The defendant admitted that he owed the plaintiff £11. 15s. 5p. for rent and he deducted this from 'his claim for damages, £29. 18s. 7p., plus his claim for electric light fittings £1. 10s., a total of £31. 8s. 7p. The balance which he claimed was thus £19. 13s. 2p.

It was because of the amount of the balance that the Magistrate considered that the counter-claim was within his jurisdiction and at the conclusion of the case he expressly gave judgment for the defendant on the counter-claim for the sum of £31. 8s. 7p., before proceeding to deduct from it the amount that he found due from the defendant for rent.

The statutory provision determining the civil jurisdiction of District Courts is section 16 of the Courts of Justice Law, 1935, and it is on the construction of sub-sections (5) and (7) of that section that the answer to the question now before us must depend. Those sub-sections run as follows :-

"(5) Every Magistrate shall have jurisdiction to hear and determine any action in which the amount in dispute or the value of the subject matter does not exceed twenty-five pounds:

(7) For the purposes of this section, the amount in dispute or the value of the subject matter of an action shall be the amount or value actually in dispute between the parties thereto as disclosed at the settlement of issues or upon the pleadings, notwithstanding that the amount claimed or the alleged value of the subject matter in the action exceeds that amount or value."

It is clear from the provisions of sub-section (7) that the value of the subject matter in this action is the amount actually in dispute between the parties as shown upon the pleadings, notwithstanding that the amount claimed is larger.

The District Court seems to have thought that the counter-claim was a separate action. That view does not appear to us to be in accordance with Order 19, r. 3 of our Rules of Court. That rule enables a defendant to "set up by way of counter-claim against the claims of the plaintiff any right of claim" and provides that the "counter-claim shall have the same effect as a cross-action so as to enable the Court to pronounce a final judgment in the same action, both on the original and on the cross-claim" . Order 19, r. 3, makes express reference to rule 10 of Order 21. That rule enables a Court or a judge to order at any time that a claim set up by way of counter-claim ought not to be disposed of in that way but in an independent action. It seems clear to us, taking these two rules together, that unless a Court orders a counter-claim to be disposed of in an independent action it is not an independent action but a part of the action brought by the plaintiff to enforce his claim.

There might have been grounds in this case for an application by the plaintiff, under Order 21, r. 10, to have the counter-claim determined by an independent action but there was no such application and objection to the counterclaim was taken in the Magistrate's Court on the ground of jurisdiction only. The District Court's decision rested solely on the ground that the counter-claim was a separate action and as such beyond the jurisdiction of the Magistrate. We have already expressed the view that the counter-claim cannot be regarded as a separate action and there can be no doubt that the rights claimed by the defendant in the counter-claim were, under the very wide terms of Order 19, r. 3, rights which could he properly claimed, in that way. But the question remains whether, considered as part of the plaintiff's action, it was beyond the jurisdiction of the Magistrate because the amount which it claimed in respect of damages for breach of the lessor's undertaking to repair exceeded £25. Can it be said that, because the lessor admitted no liability at all in that respect, the whole of the sum claimed by the lessee for damages was in dispute?

The plaintiff lessor says, "You owe me £23. 6s. 6p. for rent" . The defendant lessee says, "I only owe you £11. 15s. 5p. for rent, but you owe me £29. 18s. 7p. for damages for breach of your undertaking to repair and £1. 10s. for those electric light fittings that you agreed to take from me and I counter-claim for those sums." The plaintiff lessor replies, "I agree about .the electric fittings, but I owe you nothing for damages" . What is the amount in dispute? The utmost for which any Court could possibly give judgment in any event would be £23. 6s. 6p. for the plaintiff lessor or£19. 13s. 2p., for the defendants lessee, that is to say, for one or other of the sums that the parties actually claimed. In fact the Magistrate gave judgment for the defendant lessee for £14. 7s. 5p.

Viewing the claim and counter-claim as parts of the same action, and considering the claims and admissions of the parties as disclosed upon the pleadings, it is clear that the Magistrate had jurisdiction to award the maximum relief claimed by either party. That, in our view, is the test when sub-section (7) of section 16 of the Law already quoted is applied to determine the amount actually in dispute, as disclosed upon the pleadings. Where there is a claim and counter-claim it would, in our opinion, be entirely contrary to the provisions of that sub-section, as well as the provisions of Order 19, r. 3, to separate the issues raised by different parts of the pleadings and to hold that the full amount involved in each of those issues is in dispute in the action if there is no admission by the other party in respect of that particular issue. The obvious purpose of Order 19,r. 3, is to avoid multiplicity of actions and for that purpose it allows claims and counter-claims, no matter what the nature of the separate claims may be, to be joined in a single action in order that one final judgment may be given upon them. The action must be viewed as a whole and it is the value of the maximum relief sought by either party that is, in the words of sub-section (7), "the amount or value actually in dispute ".

We are therefore of opinion that, in view of the position disclosed upon the pleadings in this case, the inclusion by the defendant of a counter-claim for £31. 8s. 7p., did not put the action beyond the Magistrate's jurisdiction.

The Magistrate's decision on the counter-claim was attacked in the District Court on a number of other grounds in addition to the ground of excess of jurisdiction. The District Court however having found that the Magistrate had exceeded his jurisdiction, did not, naturally, consider the other grounds of appeal but allowed the appeal on the ground of jurisdiction alone. Consequently those other grounds have never been considered and they are not before us. We think that it is now necessary, in order that justice may be done, that they should be considered, as indeed they would have been if the District Court had taken what we hold to be the correct view on the objection to jurisdiction.

We think therefore that the proper course is that we should allow this appeal against the District, Court's decision that the counter- claim was beyond the Magistrate's jurisdiction and that we should remit the case to the District Court to consider and determine the grounds of appeal against the Magistrate's decision on the counter-claim on the basis that the Magistrate, in giving that decision, acted within his jurisdiction.

The appeal of both parties against the District Court's decision on the amount of rent due from the defendant to the plaintiff is dismissed.

The appellant is entitled to that portion of the costs of this appeal which is attributable to the issue on which his appeal has been allowed.

Appeal allowed.

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