Declaration of title
S.C Appeal 125/2011 SC/HCCA/LA No. 300/2010
In the matter of an
application for Leave to Appeal under Section 5( C) of the High Court of the
Provinces (Special Provisions) Act No. 54 of 2006
Benthota
Arachchige Kanthi Pushpa Ranjini "Karunawasa",
Kiralawelkatuwa,
Embilipiriya.
PLAINTIFF
Vs.
Handagalage Dhammika
Wajirapriya Sarathchandra Textiles Pallegama Embilipitiya.
DEFENDANT
AND
BETWEEN
Handagalage Dhammika
Wajirapriya Sarathchandra Textiles Pallegama Embilipitiya.
DEFENDANT-PETITONER
Vs.
Benthota
Arachchige Kanthi Pushpa Ranjini "Karunawasa",
Kiralawelkatuwa,
Embilipiriya.
PLAINTIFF-RESPONDENT
AND NOW
BETWEEN
Handagalage Dhammika
Wajirapriya Sarathchandra Textiles Pallegama Embilipitiya.
DEFENDANT-PETITIONER-APPELLANT
Vs
Benthota
Arachchige Kanthi Pushpa Ranjini "Karunawasa",
Kiralawelkatuwa,
Embilipiriya.
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PLAINTIFF-RESPONDENT-RESPONDENT
COUNSEL: Manohara de Silva P.C. with Avindra Wijesurendra
For the Defendant-Petitioner-Appellant
Harsha Soza P.C., with Upendra Walgampaya for the
Plaintiff-Respondent-Respondent
WRITTEN SUBMISSIONS TENDERED ON:
28.10.2011 (by the Appellant)
11.11.2011 (by the Respondent)
ARGUED ON: 14.09.2015
DECIDED ON: 02.12.2015
GOONERATNE J.
This was an action filed in the
District Court of Embilipitiya for a declaration of title and eviction/damages
against Defendant-Petitioner-Appellant from the land described in the schedule
to the plaint. Defendant-Petitioner- Appellant by his answer has made a claim in
reconvention. It is pleaded inter alia in the answer that a cause of action has
accrued to the Defendant to claim for a declaration of title to the same land
in question. In paragraph 12 of the answer it is pleaded that the sums of money
referred to therein are also claimed by the Defendant for improvements, and as
such would be entitled to retain the land in question until satisfaction of the
said sum.
The land in question is in extent
of about 30 perches as described in the schedule to the plaint. In the plaint
(paragraph 4) it is pleaded that Plaintiff- Respondent-Respondent obtained a
loan from the Defendant-Petitioner-Appellant keeping as security the land
described above on a promissory deed bearing No. 1122 of 11.12.1990 marked as
'X', which deed is annexed to the plaint. The deed 'X', indicates that having
kept the land in question as security the Plaintiff-Respondent-Respondent
obtained a loan of Rs. 150,000/- from the Defendant-Petitioner-Appellant. It is
apparent that Clause 3 of 'X' refer to the position that if the amount stated
in deed 'X' is not paid in the manner described in the said deed, the land
described above, possession, ownership and all rights would pass to the
Defendant-Petitioner-Appellant. The relevant clause and condition in deed 'X'
had not been fulfilled by the Plaintiff.
In this appeal learned President's Counsel on either side
raised an interesting point of law. i.e despite non-fulfillment of the said
conditions by the plaintiff, does legal title to the property in dispute vest
in the Defendant-Petitioner-Appellant? It is the position of the
Plaintiff-Respondent-Respondent that the Defendant-Petitioner-Appellant would
be entitled only for possession of the property as per deed 'X' and that legal
title does not vest in the Appellant. The facts presented to this court would
reveal that the money due to the Defendant- Petitioner-Appellant had not been
paid by the Plaintiff within the prescribed period.
Three preliminary issues were raised before the Learned
District Judge, which had been tried by the District Judge based only on
written submissions of parties. Learned District Judge by his order of
03.02.2010 held with the Plaintiff- Respondent-Respondent, and answered the
said issues against the Defendant- Petitioner-Appellant. Being aggrieved by the
above order, Defendant-Petitioner- Appellant, filed a Leave to Appeal
application in the High Court, but leave was refused by the High Court, and the
High Court affirmed the order of the learned District Judge on 31.08.2010. This
court on 16.09.2011 granted Leave to Appeal on questions of law set out in
paragraph 20 of the petition dated 13.09.2010. The said questions are as
follows:
(a)
The said order is
contrary to law and against the weight of evidence.
(b)
The High Court erred
by holding that title of the subject matter of this action cannot be conveyed
in terms of the terms and conditions of Promissory Deed No. 1122 to the
Defendant-Petitioner-Petitioner as the Plaintiff-Respondent-Respondent
"has not executed a Deed of Transfer in terms of Section 02 of the
Prevention of Frauds Ordinance",
(c)
The High Court erred
by failing to properly consider the application of Section 115 of the Evidence
Ordinance,
(d)
The High Court erred
by holding that the Plaintiff-Respondent-Respondent was not estopped from
maintaining this action as pleaded by the Defendant-Petitioner- Petitioner,
(e)
The High Court erred
by holding that if issue Nos. 11, 12 and 13 are answered in favour of the
Defendant-Petitioner-Petitioner, his claim in reconvention would remain un
adjudicated, whereas issue No. 13 states "if the issues 11 and 12 above
are answered as "yes" is the defendant entitled to obtain any of one
of the reliefs prayed for in paragraphs (a), (b), (d) and (f) in the prayer to
the answer?
(f)
The High Court erred
by holding that it is unable to come to a decision on the admissions alone
without hearing evidence led with regard to the terms and conditions of the
Promissory Deed.
(g)
The High Court and the
District Court erred in failing to answer issue No. 11 in favour of the Defendant-Petitioner-Petitioner
notwithstanding the fact that the Plaintiff had admitted the terms and
conditions of the Promissory Deed 'X', including Clause 04 and 06 of the deed
wherein it is stated that upon non-payment of the sums set out therein, the right,
title and interest of the land would vest in the Defendant, and also by the
admission No. 5 by which it was admitted by the parties that the monies has
under the promissory deed has not been paid by the Plaintiff to the Defendant,
(h)
The High Court erred
by holding that the action of the Plaintiff-Respondent-Respondent was a rei
vindicatio action and therefore the period of prescription has not lapsed.
However in terms of the admissions recorded at the trial (vide paragraph 11
above), the cause of action, if at all, accrued on the
Plaintiff-Respondent-Respondent on 27.11.2000 and an action to set aside a
notarially executed document must be filed within 3 years from the date the
cause of action arose.
(i)
The High Court erred
in not identifying the difference between prescription of the land and
prescription of the action,
(j)
The High Court erred by not applying Section
10 of the Prescription Ordinance,
(k)
The High Court erred in holding that the
Plaintiff's action was not prescribed within 03 years (from the date of the
Deed or within 03 years from 27.11.2000) in terms of Section 10 of the
Prescription Ordinance,
(l)
The High Court erred
by holding that the Defendant-Petitioner-Petitioner has failed to prove that
the action of the Plaintiff is prescribed.
In the District Court parties recorded 5 admissions and
raised about 21 issues, and issue Nos. 11, 12 & 13 were raised as
preliminary issues, as being issues of law. It is important even for this court
to consider the initial steps that took place in the original court. In a gist
the corpus, Promissory Deed 'X' and its conditions are admitted. Further paras
7 & 8 of the plaint were also admitted. The said paragraphs refer to the
fact that possession was handed over to the Defendant-Petitioner-Appellant from
the date of executing deed 'X' i.e 11.12.1999. It is averred in paragraph 8 of
the plaint that the Plaintiff-Respondent-Respondent failed to repay the
principal sum of Rs. 150,000/- due to the Defendant and the interests due on
same within 12 months as from 11.12.1999.
The issues that were tried in the original court are as
follows:
(a) Based
on the admissions recorded, can the Plaintiff have and maintain this action?
(b) Is
the action of the Plaintiff prima facie prescribed?
(c)
If (a) & (b) above are answered in the affirmative
is the Defendant entitled to obtain the relied prayed for in sub paragraphs
(a), (b), (d) & (f) of the prayer to the answer. ((a) is for dismissal, (b)
declaration of title in favour of Defendant (d) retention of land and buildings
(improvements) till amounts reflected in prayer (d) is paid. (f) such other and
further relief as deemed by court)
The learned District Judge held in favour of the
Plaintiff-Respondent- Respondent. Having tried the preliminary issues as issues
of law, the learned District Judge also observed that although parties have
admitted the several conditions in deed 'X', parties were at variance as to
what is really meant by those conditions or its meaning " “wra:h l=ulao” "? (folio
78 & pg. 57). At folio 79 and pg. 8 of the learned District Judge's
judgment I find in its first paragraph that the trial Judge having on his own
posed several questions connecting deed 'X', observes that court cannot arrive at a conclusion
based solely on question of law, and state it is improper to do so without a
full trial of the case.
The trial Judge further elaborate
on this point as follows:
tfyhska, mqraK kvq jsNd.hloS
idlaIs fufyhjsulska miq yd tu idlaIs, wod, jsh
yels kS;suh lreKq iu. jsYaf,aIKh lr i,ld ne,Sulska f;drj, yqfolau fuu
kvqfjS igyka lr we;s ms,s.eksfuS u; muKla mokuSu meusKs,sldrshg fuu
kvqj mjrd mj;ajdf.k hd yelafla o hkakg fyj;a 11 jk kS;suh jsiosh hq;=
m%YaKhg js;a;sfha jdishg ms<s;=re iemhsug fkdyels njg ;SrKh lrus. The learned High Court Judge in its judgment has held that issues No. 11, 12 & 13 would not dispose of the entire case before the District Court, but affirm the order of the learned District Judge. Both the Original Court and the Civil Appellate Court expressed the view that the case ought to proceed to trial. As observed above the learned District Judge seems to have realized the importance of hearing evidence, which decision he could have taken at the very outset. However we in the Apex Court cannot fault either court, on certain matters, as an open judicial mind need to be maintained at any stage of the case in the best interest of justice. Trial of issues of law to be tried initially is embodied in Section 147 of the Civil Procedure Code. It reads thus:
yels kS;suh lreKq iu. jsYaf,aIKh lr i,ld ne,Sulska f;drj, yqfolau fuu
kvqfjS igyka lr we;s ms,s.eksfuS u; muKla mokuSu meusKs,sldrshg fuu
kvqj mjrd mj;ajdf.k hd yelafla o hkakg fyj;a 11 jk kS;suh jsiosh hq;=
m%YaKhg js;a;sfha jdishg ms<s;=re iemhsug fkdyels njg ;SrKh lrus. The learned High Court Judge in its judgment has held that issues No. 11, 12 & 13 would not dispose of the entire case before the District Court, but affirm the order of the learned District Judge. Both the Original Court and the Civil Appellate Court expressed the view that the case ought to proceed to trial. As observed above the learned District Judge seems to have realized the importance of hearing evidence, which decision he could have taken at the very outset. However we in the Apex Court cannot fault either court, on certain matters, as an open judicial mind need to be maintained at any stage of the case in the best interest of justice. Trial of issues of law to be tried initially is embodied in Section 147 of the Civil Procedure Code. It reads thus:
When issues both of law and of fact arise in the same
action, and the court is of opinion that the case may be disposed of on the
issues of law only, it shall try those issues first, and for that purpose may,
if it thinks fit, postpone the settlement of the issues of fact until after the
issue of law have been determined.
I would prefer to consider some
case law on the point although our courts have pronounced several judgments
under Section 147 of the Code.
Courts have power to dismiss an
action on an issue of law without recording any evidence. 15 NLR 389; to
dispose of a case on a preliminary issue, it should be a pure question of law.
As far as practical Judges of the original court should go through the entire
trial and answer all issues 1994(3) SLR 11; in what manner the issues are to be
tried is best left to the Original Court, and Appellate Courts ought to be slow
to interfere 1997(3) SLR 202. Per Hector Yapa J. in Mohinudeen Vs. Lanka
Bankuwa 2001(1) SLR 290. "Section 147 of the Code gives a wide discretion
to the trial Judge, so that even if he has decided earlier to try an issue as a
preliminary issue of law, it is open to him to decide such an issue later, if
he is of the view that it cannot be decided without taking evidence".
In a case where questions of law
are intricately tied up with questions of fact the trial court need to, as far
as possible, go through the entire trial and answer all issues. A question of
prescription could involve factual matters. As
observed
by the learned District Judge, even though the parties accept and agree
to the condition in 'X', trial Judge states that parties are at variance as to
what those conditions really mean. My attention has been drawn to
condition No. 7 of 'X'. It states in the event of a breach of condition in deed
'X' parties could have recourse to a legal remedy, or enforceable through legal
action.
Having perused both judgments of
the District Court and the High Court, I would take the view that as stated by
the learned District Judge this case ought to proceed to trial, but from the
beginning. I do not think that based on admissions alone, issue Nos. 11, 12 &
13 could be tried as preliminary issues. An important issue based on
prescription cannot be tried or should not be tried in the absence of
ascertaining all the factual positions, in a case of this nature. It is so
because deed 'X' though described as a promissory deed, it is in fact a
conditional transfer. I would fortify my views based on the following principle
of law gathered from case law.
It must be
borne in mind that both parties to the suit, had willingly entered into deed
marked 'X', and its terms and conditions must be strictly followed and applied.
Conditional
Transfers-Promissory Deed-Agreement to re-convey
If
a deed absolute on the face of it contains an agreement to re-convey,
conditions
therein
have to be complied with on time and time is of the essence of the contract.
So
said Gratiaen J. in Thambipillai v. Muthukumaraswamy 58 NLR 387
"Time
is of the essence of the contract in contracts of this nature"
Terms of the contract were unambiguous. P3 operated as an absolute
transfer. But there were conditions such as repayment.
At pg. 388
In due course, the plaintiff instituted this action
claiming a conveyance of the land from the appellants on payment of the
purchase price which was not however deposited in Court and is apparently not
yet forthcoming. Time is of the essence of the contract in a pactum de retrovendendo, and the plaintiff's
failure to tender the stipulated consideration within time is therefore fatal
to his claim. The learned Judge took the view, however, that the transaction
was in reality a mortgage and not a sale. I would reject this conclusion for
the same reasons as those recorded in the recent judgments of my brother
Sansoni and myself in Setuwa v. Ukku. Accordingly, there is no room for the
application of the principle "once a mortgage, always a mortgage".
It is unnecessary to consider whether in any event the
plaintiff could alone have exercised the option of repurchase. His claim fails in limine. owing to his omission to make a valid
tender within the time fixed in P2. I would therefore set aside the judgment,
under appeal and dismiss the plaintiff's action with costs (in favour of the
appellants) in both Courts.
So the unambiguous
terms of the deed indicate that it is a sale subject to an agreement to
re-convey.
The transferee must observe the conditions within the time stipulated.
The
tender of the price within the time agreed upon constitutes a condition
precedent to obtaining a re-conveyance.
One cannot claim a retransfer if he has not complied with the
condition. Supposing he has failed to tender the money on time.
Conditional sale having the effect of passing title on the fulfilment
of the conditions is well known to Roman Dutch Law 16 NLR at 147.
Velupillai Sanmugam and others v. Kathiravelu
Thambiaiya,B.L.R. (1990) Vol.111 Part 1 p. 27 (SC).
Notice compelled in Section 93 of the Trust Ordinance-Conditional
transfer - Trust. Held
that Dismissing the Appeal and affirming the judgment of the
District Judge (per Bandaranayake J. with H.A.G. de Silva, J and Kulatunga, J
agreeing):
1.
The conclusion of the
District Judge that the promissory note was invalid and hence insufficient to
discharge liability on the conditional transfer was unimpeachable on the
evidence;
2.
The Court of Appeal
was mistaken in coming to the view that the 'notice' contemplated in Section 3
of the Trusts Ordinance meant only notice of matters appearing on the face of
the Registers and that knowledge gathered from other sources was irrelevant.
Such a view is too restrictive and not a proper view of the Law.
3.
Where the condition
underlying the conditional transfer is not fulfilled the transferee becomes
absolute owner in terms of the agreement of parties free from any obligation to
re-transfer. No question of a trust arises in such a context as there was no
existing
contract.
Gnanasambandam
v. Bin Adaham and Another, (1998) 2 SLR L.R. 305 (CA).
Conditional transfer - Deed not signed by vendee - Rights to obtain
retransfer.
Held
that
A deed of transfer of a land embodying a condition to
retransfer on payment of the purchase price plus interest within five years
binds the vendee to retransfer the land on being paid the purchase price and
interest within the stipulated time although the vendee had not signed the
deed.
The property was transferred with a condition attached to
it. The condition cannot be disengaged from the property. The failure of the
defendant-appellant to sign the deed does not entitle him to wriggle out of his
obligation to retransfer. The obligation was intrinsic in the transfer itself.
If oral evidence is led there
could be more clarity to the conditions contained in deed 'X'. Subject to the
views expressed above it would be in the best interest of both parties to
commence the trial from the beginning. In these circumstances I would set aside
both judgments of the District Court and the High Court as per sub paragraphs
(c) & (d) of the prayer to the petition of the Defendant-
Petitioner-Petitioner, dated 13.09.2010, with a direction to commence trial de
nova.
I would answer the questions
of law (a) to (L) as follows:
(a) No
oral evidence led. Does not arise
(b) Yes,
but all necessary evidence need to be led.
(c) Yes,
to arrive at a final decision, but oral evidence should be led.
(d) Yes,
based on the limited material, but all necessary evidence need to be led.
(e) Yes
from the limited evidence, but all necessary evidence need to be led.
(f)
No
(g) Yes,
but merits of the case should be considered after leading all available
evidence.
(h) Nature of
the case is such that all available material should be placed before court to
consider the question of prescription.
(i)
Same as (h) above
(j)
Same as (h) above.
(k) Same
as (h) above
(l)
Same as (h) above
Appeal
allowed as above, subject to the directions given by this
court.
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