Rossano v Manufacturers' Life Insurance Company

JurisdictionEngland & Wales
Judgment Date07 March 1962
Date07 March 1962
CourtQueen's Bench Division
[QUEEN'S BENCH DIVISION] ROSSANO v. MANUFACTURERS' LIFE INSURANCE CO. 1962 Feb. 14, 15, 16, 19, 20, 21; March 7. McNair J.

Conflict of Laws - Contract - Proper law - Insurance policies entered into in Egypt - Insurance company's head office in Canada - Where moneys payable - Proper law of contract - Situs of debt - Contractual place of performance - Whether Egypt or Ontario - Whether Egyptian garnishee orders enforceable in England. - Conflict of Laws - Chose in action or debt - Situs - Whether foreign law of situs relevant - Insurance policies entered into in Egypt with Ontario company. - Conflict of Laws - Confiscatory or political legislation - Exchange control legislation - Effect on moneys payable under insurance policies - Place of performance. - Conflict of laws - Revenue laws - Whether enforceable in other State - Garnishee orders in Egypt in favour of Egyptian revenue authorities.

The plaintiff who, in 1940, was an Egyptian national residing and carrying on business as a cotton merchant in Egypt, applied for three 20-year endowment policies of insurance for £3,000, £4,000 and United States $10,000 with the defendant insurance company, who had branches in many parts of the world with their head office in Toronto, Canada. On October 31, 1940, the defendants' Cairo office issued to the plaintiff a single interim policy covering the two applications for sterling policies; and on November 25, 1940, the final policies were executed at Toronto in the plaintiff's favour, each policy being the form used by the defendants for foreign business. The total 20 years' premiums under the dollar policy were paid in advance to the head office in Toronto by means of a draft on a bank in Boston; and the plaintiff likewise paid the full 20 years' premiums in respect of the sterling policies by sterling cheque to the defendants' Cairo office. Under the first two policies, the parties agreed that money was to be made payable in banker's demand drafts on London for pounds sterling. As to the third policy, it was agreed that the money was to be paid in banker's demand draft on New York for U.S. dollars.

The policies all matured on March 15, 1960, and the plaintiff brought an action claiming the money due under them. The defendants relied on two defences: (a) that the proper law of the contracts being Egyptian or the situs of the debt or the contractual place of performance being in Egypt, payment by the defendants would be illegal under the Egyptian exchange control law if effected without the permission of the Egyptian control authorities; (b) that as there were two garnishee orders, served upon the defendants' branch in Egypt by the Egyptian revenue authorities in respect of tax alleged to be due by the plaintiff, payment to the plaintiff would expose them to penalties or to the risk of having to pay the money twice and they were, therefore, not liable to pay the sums claimed:—

Held, (1) that applying the test as laid down by Lord Simonds in Bonython v. Commonwealth of Australia [1951] A.C. 201, 219; 66 T.L.R. (Pt. 2) 969, P.C., and accepted by the House of Lords in In re United Railways of Havana and Regla Warehouses Ltd. [1961] A.C. 1007; [1960] 2 W.L.R. 969; [1960] 2 All E.R. 332, H.L., as being “the system of law by reference to which the contract was made and that with which the transaction has its closest and most real connection,” the proper law of the contracts was the law of Ontario, and, accordingly the Egyptian control legislation did not apply to the policies as part of the proper law of the contracts (post, p. 371).

Pick v. Manufacturers' Life Insurance Co. [1958] 2 Lloyd's Rep. 93 applied.

(2) That Egyptian exchange control legislation did not apply to the policies merely by reason of the situs of the debt being in Egypt (post, p. 371).

Kleinwort, Sons & Co. v. Ungarische Baumwolle Industrie Akt. & Hungarian General Creditbank [1939] 2 K.B. 678; 55 T.L.R. 814; [1939] 3 All E.R. 38, C.A. applied.

(3) That in considering what was the place of performance of the contracts, the relevant act of performance was the payment of the policy moneys; and that although Egypt was a permissible place of performance, the defendants had not the right to insist on payment only in Egypt, and accordingly Egypt was not the relevant place of performance and the Egyptian control legislation did not apply (post, p. 372).

Pick v. Manufacturers' Life Insurance Co. [1958] 2 Lloyd's Rep. 93, considered.

(4) That the recognition of the garnishee orders served on the defendants would offend against the well-settled principle that English courts will not recognise or enforce directly or indirectly a foreign revenue law or claim (post, p. 376); and that, accordingly, the defendants could not escape liability on the policies by reason of the garnishee orders and the plaintiff's claim succeeded.

Peter Buchanan Ltd. & Macharg v. McVey [1955] A.C. 516n. and Indian and General Investment Trust Ltd. v. Borax Consolidated Ltd. [1920] 1 K.B. 539; 36 T.L.R. 125 applied.

Per curiam. I should not be deterred from holding that the situs of the debt was not in Egypt on evidence that by Egyptian law the situs of the debt was Egypt (post, p. 380).

ACTION.

The following statement of facts is taken from the judgment of McNair J. In 1940 Charles Rossano, the plaintiff, was an Egyptian national by birth residing in Egypt where, with others, he carried on business in Alexandria as a partner in a limited partnership firm by the name of Levi Rossano & Co. At that time the Italian forces were threatening Egypt, and it was clear that Egypt might become the seat of war. In those circumstances discussion took place between the plaintiff and Mr. Harrari, the district manager of the defendants' Alexandria office, which ultimately resulted in the issue of the policies sued upon. The policies were three 20-year endowment policies and were issued as follows: (1) On November 25, 1940, for £3,000 sterling, payable on March 15, 1960, such amount being expressly made payable in banker's demand drafts on London for pounds sterling. (2) On November 25, 1940, for £4,000 sterling payable on March 15, 1960, such amount being expressly made payable in banker's demand drafts on London for pounds sterling. (3) On January 21, 1941, for U.S. 10,000 dollars payable on March 15, 1960, such amount being expressly made payable in banker's demand draft on New York for United States dollars.

The defendants were a company incorporated according to the law of Canada, and having branches in many countries outside Canada, including a branch in Egypt, through which the policies in question were negotiated. The policies matured on March 15, 1960, and the amount alleged to be due was a sum of £9,906 9s. 10d.

The plaintiff brought an action to recover this sum and the amount being due was not disputed.

The defendants relied upon two main defences. First, that the proper law of the contracts being Egyptian law, or alternatively the situs of the debt being in Egypt, or in the further alternative the contractual place of performance, that was, payment of the policy moneys, being Egypt, payment by the defendants would be illegal under the Egyptian Exchange Control laws if effected without the permission of the Egyptian Control authorities as it would involve a payment of foreign currency between two persons occupying the status of residents under that law. It was admitted that no permission had been granted by the Exchange Control.

Secondly, the defendants said that by virtue of two garnishee orders, the one dated November 16, 1960, and the second dated January 23, 1962, served upon the defendants' branch in Egypt by the Egyptian revenue authorities in respect of tax alleged to be due by the plaintiff, payment by them of the policy moneys to the plaintiff would expose them to penalties under the law of Egypt, or expose them to the risk of having to pay the money twice, and that they were not liable to pay the sums claimed. The plaintiff denied that he was under any tax liability, but in any event submitted that for a variety of reasons each of the orders was a nullity, and further, seeing that to give effect to them or either of them would be at least indirectly to enforce a foreign revenue law, the court would not recognise them.

In view of the fact that the defendants carried on business in many countries outside Canada, it was urged by the defendants that the case was of the greatest importance to them far exceeding the money involved since they might, if the plaintiff's case was well founded, be involved in great difficulties in connection with other policies issued in Egypt or in many of the other countries in which they carried on business.

John F. Donaldson Q.C. and Adrian Hamilton for the plaintiff. (1) The defence is based first on provisions of Egyptian exchange control legislation alleged to prohibit the payment of the policy moneys outside Egypt. These provisions will not be recognised in the English courts unless Egyptian law is either the proper law of the contract, or the law of the place where the contract has to be performed: Kleinwort, Sons & Co. Ltd. v. Ungarische Baumwolle Industrie AktiengesellschaftF1 and Dicey's Conflict of Laws, 7th ed., p. 919 et seq. Neither of these conditions is fulfilled.

(2) The proper law of the contracts is not Egyptian law, but the law of Ontario, or alternatively in the case of the sterling policies, English law, and in the case of the U.S. dollar policy, the law of the State of New York. The test laid down by the House of Lords in In re United Railways of Havana Ltd.,F2 adopting the test of Lord Simonds delivering the judgment of the Privy Council in Bonython v. Commonwealth of Australia,F3 is the system of law by reference to which the contract was made or that with which the transaction has its closest and most real connection. In The AssunzioneF4 the test applied by the Court of Appeal was the test of Lord Wright in Mount...

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