Facts
On 24 June 1960 and later, on 19 November 1961, National & Grindlays Bank Ltd. granted overdraft facilities to Dodhia on the security of three shops in Nairobi. All three letters of hypothecation were identical and under them, Dodhia agreed to “hypothecate to the Bank as a continuing security for payment of the amount from time to time and for the time being owing by us in respect of the said overdraft, all goods of the description appended hereto, in our disposition which are now in, or shall from time to time hereupon be brought into . . .” the particular shop. The Bank was further empowered to enter premises, take possession and sell the hypothecated goods if repayment of the amount outstanding was not made. None of the letters of hypothecation was attested or registered in terms of the Chattels Transfer Act. On 14 and 15 July 1963 the Bank entered the shop premises and seized the goods therein, and instructed Peck & Barber as transporters, to carry the goods away from the shops. The goods were subsequently sold. The plaintiff brought an action in the High Court claiming a declaration that the letters of hypothecation were wholly void and also damages for trespass and conversion of the goods; the Bank counterclaimed for the amount owing to it by the plaintiff. The High Court found that the letters of hypothecation were void. The appellant appealed. In National & Grindlays Bank Ltd. v. Dharamshi Vallabhji and others (21) the Privy Council had decided these issues in favour of the validity inter partes of such letters of hypothecation. Subsequently appeal to the Privy Council was abolished.
Held –
(i) the Court of Appeal, while it would normally regard a previous decision of its own binding should feel free in9 both civil and criminal cases to depart from such decisions when it appears right to do so.
(ii) the same principles apply when the decision is a decision of the Privy Council on appeal from East Africa.
(iii) since the decision concerns a minor matter of construction and not of any principle, the court should not depart from the decision of the Privy Council.
(iv) the letters of hypothecation were valid inter partes (National & Grindlays Bank v. Dharamshi Vallabhji and others (21) followed).
(v) the letters of hypothecation were intended to cover all goods of the plaintiff whether present or future.
(vi) the letters of hypothecation gave the bank a means of enforcement without recourse to the courts by conferring on the bank a power of entry upon the plaintiff’s premises.
(vii) both in regard to existing goods and to future goods, seized, the bank had, before seizure, an interest in rem in the goods which precluded the plaintiff from withdrawing the licence to seize contained in the letters of hypothecation.
(viii) the bank was entitled to use reasonable force to exercise its right of seizure and the force used was not excessive.
Appeal dismissed.
Well done
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