Constructive trust- limitation of action-effect of Section 111
BLOGGER SPEAKS
From the judgemnt
In Senaratne Vs. Jane Nona reported in (1913) 3 C. A. C. 83. In that case the plaintiff’s brother bought a land for the plaintiff utilising the funds of the latter. On the strength of the purchase made by the brother, the plaintiff went into possession of the land in 1895 and remained there until 1912. The brother who bought the land for the plaintiff died in 1912 and his administratrix included the said land in the inventory of immovable properties of the deceased. The plaintiff filed action against the administratrix for a conveyance. The administratrix took up the position that the cause of action was barred by prescription in as much as the action was not brought within three years of the date of purchase. Lascelles C.J. with Wood Renton J. concurring over-ruled the previous judgment in Marthelisappu Vs. Jayawaradena 11 NLR 272 and proceeded to hold that the cause of action arose when the property was included in the inventory and that the action was not barred.
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IN THE COURT OF APPEAL OF THE DEMOCRATIC SOCIALIST REPUBLIC ODF SRI LANKA
JUDGMENT
This appeal raises several important legal questions. The main question that arises for determination is whether the action is time barred or improperly constituted. The plaintiff maintained that the cause of action relied upon should not be held to be barred or prejudiced by the provisions of the Prescription Ordinance. The defendants contended that the cause of action was prescribed as at the time of institution of the action. The learned district judge took the view that the alleged cause of action upon which the action of the plaintiff has been founded is misconstrued.
The action of the plaintiff is based on an instrument of
trust. Litigation commenced, as a result of the alleged betrayal of confidence
reposed to in the trustee. The trust in question demonstrates the kind of
affection and the sense of moral duty intended to be discharged by an author of
a trust towards the plaintiff who is the sole beneficiary. Factual background
of the controversy filtering out unnecessary details can be summarized as
follows.
The plaintiff-appellant (hereinafter referred to as the “Plaintiff
") was born on 9 May 1934 and lost his mother at his infancy. One Salha
Umma, a sister of the plaintiff’s father Abdul Rahuman, thereafter brought him
up. She was the owner of the entirety of premises presently bearing No
47, Thimbirigasyaya Road, Columbo 5. By deed No 54 dated 5 November 1942,
attested by A.L.M.A.Thassim Notary Public of Colombo, She gifted an undivided
one half (1/2) share of the said premises to her son Ahamed Adham
who was 28 years old at that time.
On the same day by deed No 55 attested by the same Notary,
Salha Umma (hereinafter sometimes referred to as the "author of the
trust") gifted the remaining undivided one half (1/2) share of the said
premise to her aforesaid son Ahamed Adham (hereinafter referred to as the
“trustee”) subject inter alia to the condition that Upon the marriage of the
plaintiff or his attaining the age of 21 years, whichever shall occur
first, hand the said property to him. (Emphasis added)
The plaintiff attained the age of 21 years in the year 1955.
The trustee failed and neglected to hand over the property referred to in deed
No 55 to the plaintiff. Although the plaintiff married subsequent to his
attaining the age of 21 years, the marriage of the plaintiff is not
relevant to the alleged cause of action. The failure and neglect on
the part of the trustee to hand the subject matter as expressly mandated by the
author of the trust was a blatant violation of the legitimate right and
expectation of the plaintiff.
The trustee died on 22nd August 1979, leaving a Last Will
bearing No 1035 dated 18 May 1976. By the said last will he inter alia devised
and bequeathed the premises bearing assessment No 47 to his son the 2nd defendant.
At the time when the said last will was executed the trustee was a co-owner of
an undivided 1/2 share premises No 47 and held the balance undivided 1/2 share
of the premises as the trustee appointed under deed No. 55.
The 2nd defendant-respondent made an
application to prove the last will of his father bearing No 1035, after the
lapse of 14 years of the death of the Testator, despite the procedural
requirement to have applied for probate within three months of finding the
Will. He adduced no reasons for the delay in making the application and the
plaintiff was not made a party to the said testamentary proceedings
either. The last will was admitted to probate in testamentary proceedings
and by executors conveyance No 15 dated 4 July 1995 attested by S.Safaya Hassan
Notary Public of Colombo the subject matter was transferred to the 2nd defendant
respondent.
The plaintiff averred in his plaint that he was unaware of
the provision of his beneficial interest in the said deed of gift No 55 until
he was able to obtain a copy thereof on 4 March 1994[2]. The plaintiff further stated that
notwithstanding the demand made by him to convey the subject matter, the
defendants continues to be in wrongful and unlawful possession of the same.
Therefore the plaintiff inter alia sought a declaration that conveyance bearing
No 55 shall convey the said half share of the properties to the plaintiff upon
the plaintiff completing the age of 21 years or getting married whichever event
occurred first.
The defendants who are the intestate legal heirs of Ahamed
Adham in their answer inter alia took up the position that under the last will
No.1035 the entirety of the premises in suit was bequeathed to the 2nd defendant-respondent.
They further took up the position that the said Will was proved in testamentary
proceedings No. 33139/T and admitted to probate. They further
maintained that the plaintiff upon reaching the age of 21 years on 9 May 1955
or upon his marriage on 21 April 1964 did not prefer a claim to the half share
of the premises in suit and therefore not entitled to maintain the
action.
The matter of the dispute proceeded to trial on 21 issues. The plaintiff gave evidence and in addition led the evidence of B.Fernando, a lawyer's clerk who had assisted the plaintiff to obtain a copy of deed No 55 and closed his case reading in evidence P1 to P7. The 2nd defendant respondent Fasal Ahamed Adham gave evidence and the defendants closed their case reading in evidence D1.
The trial judge by judgment, dated 25 October 2000,
dismissed the plaintiff’s action on the ground that the trust had completely
exhausted upon the plaintiff reaching the age of 21 years, i.e. on 9 May
1955. He further held that as the plaintiff filed this action on 19
October 1995 when there was no such trust in existence, he is not entitled to
maintain the present action. The learned district judge also held that upon
reaching the age of 21 years in terms of deed No 55, the plaintiff had
become the owner of an undivided 1/2 share of the land and premises in question
and therefore he cannot maintain an action to assert any rights as the
beneficiary of the instrument of trust. Consequently, the learned judge held
that issues 1to19 do not arise for determination.
Consequential issue No 20 was recorded at the instance of
the plaintiff. By the said issue, the court was required to determine as to
whether the defendants were entitled to set up a prescriptive title to the
subject matter and in addition entitled to take up the position that the
plaintiff’s cause of action is prescribed by reasons of the provisions
contained in the Trust Ordinance. The learned district judge did not answer
this issue too. He observed that issue No 20 also does not arise for
determination.
Issue No 21(a) and (b) were raised in the course of the trial on behalf of the defendants, inviting court to determine as to whether by 9 May 1955 the purpose of the trust had been completed and if it be so whether the plaintiff could maintain the action. The learned district judge answered issue 21(a) in the affirmative and 21 (b) in the negative. He also arrived at the decision that since the plaintiff had reached the age of 21 years on 9 May 1955, he should have filed action for a declaration of title and ejectment of the defendants.
The plaintiff has preferred the present appeal to challenge
the propriety of the said findings, judgment and decree of the learned district
judge. The principal point of law that was argued before me was the
extent to which the provisions of the Prescription Ordinance regarding limitation
of suits are applicable to the cause of action pleaded in the plaint. To be
exact, the position of the defendants was that the 2nd defendant
respondent had acquired a prescriptive title to the property in suit and in any
event, the alleged cause of action based on the instrument of trust was time
barred since the plaintiff had attained the age required to hold the property
on his own in the year 1955.
It is useful to advert to the relevant part of the
judgment, which deals with the extinction of the trust and the inability of the
plaintiff to maintain the action. A translation of the relevant passage of the
judgment into English would reveal the trial judge's verbal expression as
follows:
“According to the certificate of birth produced marked as
P1, the plaintiff was born on 9 May 1934. Hence, the plaintiff had
reached the age of 21 years on 9 May 1955. As stated in the plaint even
if there was a trust created by deed No 55 in favour of the plaintiff, it had
been in existence only until the plaintiff passed the age of 21 years, i.e.
until 9 May 1955. After that date, in terms of deed No 55 there was no
trust in operation in favour of the plaintiff. As mentioned above the
plaintiff has filed the present action against the defendants on 19 October 1995.
By that time there was no trust in existence in favour of the plaintiff
affecting the subject matter of the action under and by virtue of deed No 55.
For these reasons, the action cannot be decided in favour of the plaintiff as
prayed for in the prayer to the plaint. In terms of deed No 55, on the
9th May 1955 when the plaintiff had completed 21 years, he has become the
owner of 1/2 share of the relevant property. He thus became the owner of
the property in terms of the conditions laid down in the deed. Therefore
the plaintiff is not entitled to maintain an action against the defendant for a
declaration that the relevant property is subject to a trust as at 19th October
1995”.
There cannot be any doubt that deed No. 55 created an
obligation annexed to the ownership of property arising out of a confidence
reposed to in the trustee for the benefit of the plaintiff while the trustee
was nominally vested with the ownership. On a perusal of deed No 55, the
obligation thus created can be classified as follows.
The ownership of the subject matter shall nominally
to vest in the trustee for a certain period.
The trustee shall out of the rents, profits and income of
the subject matter liberally spend for the maintenance and education of the
plaintiff.
On the marriage of the plaintiff or his of attaining the
age of 21 years, whichever event shall first happen shall hand the property to
the plaintiff.
In terms of section11, the trustee is bound to fulfil the
purpose of the trust and to obey the directions of the author of the trust
given at the time of its creation. Turning to the question as to whether the
trust in question had ceased to exist at the time of the institution of the
action , I would like to observe that the learned trial judge has manifestly
erred, when he came to the conclusion that plaintiff had no cause of
action to sue the defendants on the instrument relating to the trust, as the
property in question had vested in him upon his reaching the age of 21 years.
Section 11 of the Trust Ordinance dealing with the duties and liabilities of
trustees enacts that a trustee is bound to fulfill the purpose of the trust and
obey the directions of the author of the trust, given at the time of its
creation, except as modified by the consent of all the beneficiaries being
competent to contract. In terms of this section, where a beneficiary is
incompetent to contract, his consent may for that purpose be given by
Court.
By deed of gift No 54 executed in favour of Ahamed Adham,
Salha Umma has parted with an undivided one half (1/2) share of the land and
premises bearing No 47. On the same day and before the same notary by P3[3] she gifted the remaining one half (1/ 2)
share of the premises No 47 to her son Ahamed Adham subject to the
conditions referred to therein. It is quite clear that Ahamed Adham was 28
years and the plaintiff was 8 years old at the time of the execution of the two
deeds.
She made the donations on two different deeds making Ahamed
Adham the absolute owner of an undivided one-half (1/2) share of the land and
premises bearing No 47 without any qualifications. This was followed by the
execution of another deed by virtue of which the said Ahamed Adham again
featured as the donee of the balance share, subject to several conditions laid
down with farsightedness and careful thought. This shows the seriousness of her
intention and the state of purity of mind she had attempted to maintain
with regard to the level of her magnanimity.
Salha Umma being the author of the trust in question was
quite concerned of the welfare of the plaintiff and never wanted to
discriminate him in any manner. She was conscious of her obligation to ensure
that the plaintiff was provided with the basic requirements in life during his
upbringing. She was equally keen to confer him with absolute ownership of the
remaining one half (1/2) share of the property upon his attaining maturity or
his contracting a marriage if he decided to do so prior to his attainment of 21
years. In order to make her benevolent scheme a reality she wrote out two
separate deeds in quick succession. This is indicative of her intention. It was
never her desire or wish that her son should own the balance
half share during the lifetime of the plaintiff, whether he married or remained
a bachelor. In other words during the lifetime of the plaintiff she
unmistakably intended her son to be a trustee over the remaining undivided
one-half (1/2) share of the land and premises in question.
In order to arrive at the finding that the trust was extinct at the time of the institution of the action the learned trial judge should have satisfied that the purpose of the trust had been completely fulfilled. As mentioned above one of the purposes of the trust was to make the plaintiff the title holder of the property with absolute right to possess the same. One of the ways in which the purpose of the trust could have been fulfilled was to convey the title and/or hand the property to the plaintiff as required by the author of the trust. (Emphasis mine).
Admittedly the trustee has not only failed and neglected
to hand the trust property as required by the instrument of trust and
undertaken by him but devised and bequeathed the same to his son the
2nd defendant thus rendering intention of the author of the will and its
purpose meaningless.
The resulting position is that it can hardly be construed
as the trust had reached the stage of extinction as contemplated under section
79 of the Trust Ordinance, as the trust property had not been handed to
the beneficiary. On a perusal of deed No 55 it would be seen that the trustee
has specifically undertaken and accepted the gift subject to the conditions
laid down. When reproduced verbatim from deed No 55 the relevant
portion, reads as "……. to have and to hold the said land and
premises…… subject to the conditions that……on the marriage of the said Abdul
Rafeek or on the said Abdul Rafeek attaining the age of twenty one years,
whichever event shall first happen, shall and the said property to the said
Abdul Rafeek". The gift made on deed No 55 had been accepted by the
donee (Trustee) clearly subject to the conditions laid down therein. The
operative words in the deed read as " and the said donee doth hereby
thankfully accept the gift hereby made subject to the conditions herein before
contained”.
In terms of section 58 of the Trust Ordinance, the
plaintiff is entitled to have the intention of the author of the trust
specifically executed to the extent of the interest of the beneficiary. The
trustee has recurrently attempted to defeat the purpose of the trust. He has
further attempted to negate the intention of the author as well. At the
same time, the trustee has acted in flagrant violation of the guaranteed
protection and interest of the beneficiary under section 58 of the Trust
Ordinance. The limited purpose of the creation of the trust was to maintain the
plaintiff and to provide for his education liberally and for the
trustee to hold the property for the benefit of the plaintiff until such time
he became qualified under the instrument of trust to hold the same on his own.
(Emphasis mine).
The
question would then arise for consideration is whether the trustee could be
deemed to have been discharged from his office upon the plaintiff reaching the
age of 21 years. It cannot be so, as the purpose of the trust and the
intention of the author of it had not been carried out effectually by
handing the trust property to the beneficiary. When one looks at
the evidence led at the trial, it would be seen that there is not a vestige of
evidence of the trustee handing the property over to the
beneficiary or at least inviting him to take possession of it. This clearly
shows that the trust created had not reached the stage of extinction. The
trustee cannot be said to have completed his duties under the trust, to have
him discharged from the office of trusteeship or to infer as being discharged
from performing his functions as a trustee, amidst the convincing evidence
warranting the irresistible conclusion that he has concealed the precise nature
of the trust from the beneficiary and in addition has intentionally refrained
from handing the property as required by the instrument of
trust. In the circumstances, it is safe to assume that the trustee had
continued in such capacity until his death. Hence, it is my considered view
that the trustee cannot be regarded as having been discharged from his duties
in terms of section 73 of the Trust Ordinance.
In the circumstances the learned district judge has
manifestly erred when he concluded that the trust was extinct as at the time of
filing the action. Needless to say that if the trust was partly fulfilled and
therefore extant the learned trial judge's finding that the plaintiff is
not entitled to maintain an action for a declaration that the property in
question is subject to a trust is also equally blameable.
The learned district judge has misdirected himself in law, when
he concluded by necessary implication that the action of the plaintiff in any
event is time barred. If he was properly guided by the version of the
plaintiff that he became aware of the precise nature of his interest in the subject matter on
4th March 1994 subsequent to his obtaining a copy of deed No 55, the
trial judge would not have arrived at such a conclusion[4]. Based on paragraph 9 of the
plaint, the contents of which were duly proved at the trial, it is irrational
to hold that the action is prescribed in law.
In
Ismail et al. v. Ismail NLR - Vol.22, Page No - 476 dealing with the
construction of the starting point of the specific performance for purpose of
reckoning the period of prescription it was laid down that when the time for
the performance of an obligation is fixed so that there can be a definite
starting point for the running of the period of prescription, the breach of
contract occurs when the performance does not take place within the
time so fixed. But when there is
no
fixed date for the performance, but there is only an obligation to do any act
within a reasonable interval after a given date, there is no breach,
unless there is a refusal either on demand or otherwise to perform the
obligation, or unless the person liable has in
some
way disabled himself from performing the contract.
In the case of De Silva vs. Margret
Nona 40 NLR 251 the mother of the plaintiff gifted a property by deed No 742 of
March 2, 1923 to the defendant subject to the condition that the donee shall by
a valid deed of gift convey a one half of the premises to the plaintiff upon
his arrival from Kingston, Jamaica. The original plaintiff arrived in
Galle in June 1925 and since then was in possession of the entire premises in
question. The plaintiff demanded a re-conveyance of the undivided ½ share
of the property by letter dated 10 May 1935. The defendant replied on 13
May 1935 refusing to comply with the demand. The defendant’s Counsel argued
that the claim of the plaintiff for a conveyance under the terms of P 1 was
prescribed. Even though it was strenuously argued that the re-conveyance of the
half share was required only upon the arrival from Kingston Jamaica, Keuneman
J. affirmed the judgement of the learned district judge directing the defendant
to effect a re-conveyance taking into account the fact that the plaintiff may
not have known the existence of the deed P 1, and the fact that something in
the nature of acceptance of the terms and conditions of P 1, was
required of the plaintiff. His Lordship construed the requirement to effect a
re-conveyance as being an act to be performed within a reasonable time after
the arrival of the plaintiff at Galle. It was emphatically laid down in the
said case that prescription runs only from the refusal of the demand for the
conveyance. The de facto possession of the interest in question, was taken into
account to cure the long delay in making the request for a conveyance. In
coming to this conclusion His Lordship gave due weightage to the principle
established in the case of Senaratne v. Jane Nona (1913) 3 C. A. C. 83.
It was further held that reasonable
time had expired when the demand for the conveyance was made and
refused in 1935 and
prescription
began to run only from the date of refusal to effect the conveyance.
For purpose of completeness a
brief reference need to be made to the principle established in Senaratne Vs.
Jane Nona reported in (1913) 3 C. A. C. 83. In that case the plaintiff’s
brother bought a land for the plaintiff utilising the funds of the latter. On
the strength of the purchase made by the brother, the plaintiff went into
possession of the land in 1895 and remained there until 1912. The brother who
bought the land for the plaintiff died in 1912 and his administratrix included
the said land in the inventory of immovable properties of the deceased. The
plaintiff filed action against the administratrix for a conveyance. The
administratrix took up the position that the cause of action was barred by
prescription in as much as the action was not brought within three years of the
date of purchase. Lascelles C.J. with Wood Renton J. concurring over-ruled the
previous judgment in Marthelisappu Vs. Jayawaradena 11 NLR 272 and proceeded to
hold that the cause of action arose when the property was included in the
inventory and that the action was not barred.
In the instant case, it
is somewhat unfortunate that the trial judge has not properly addressed his
mind to document marked as P5. P5 is a letter written by the plaintiff to
the 1st defendant and dispatched by registered post. The letter
P5 has been properly addressed to the 1st defendant. Where a piece of evidence has been admitted without
objection, it is not open to the opposite party to challenge it at a later
stage, except to counter the evidence. In the case of Cinemas Ltd vs
Soundararajan[5] it was held that in a civil case when a
document is tendered the opposing party should immediately object to it.
Where the opposing party fails to do so, afterwards the trial judge has to
admit the document unless the document is forbidden by law to be received in
evidence.
P5 is dated 09 January 1994.
The plaintiff in P5 inter alia draws the attention of the defendants to his
visits to the house of the defendants on several occasions to inquire about his
share of the property. He further refers to the promise held out to give the
plaintiff his due share of the property. He also draws the attention to the
request made by the defendants on a previous occasion begging for time to come
to a settlement, as they were looking forward to resolve their problem regarding
the property at Old Moor Street. In the final paragraph of P5, the
plaintiff has urged that he be informed as to when he would be given possession
of his half share of the property.
The contents of P5 were not
contested, except a bear statement made by the 2nd defendant that P5 was not
received. However, the 1st defendant to whom the letter was addressed did
not give evidence. P5 and P5a had been tendered at the trial without any
objection. None of the defendants had taken the trouble to reply
P5. The learned President's counsel has adverted me to the various
positions taken up by the 2nd defendant with regard to the failure to reply
P5. Learned President's counsel has drawn the attention of court that at
one point of time, the 2nd defendant had given evasive answers to overcome
certain difficulties resulting from the failure to reply to P5. Later the 2nd
defendant attempted to maintain that his father paid the plaintiff off and that
it would have been so because of the last will. On another occasion, the
2nd defendant was trying to maintain that no reply was sent as
P5 did not specify a particular property. Yet at another stage he said
that no reply was sent as he was under the impression that the plaintiff was
paid off by his father.
The disinclination exhibited by the 2nd defendant
to properly answer the questions relating to P5 and his peculiar attitude that
was lacking corporation towards the elicitation of the truth as to the entire
dispute compels me to comment adversely on the credibility of the defence put
forward and the evidence adduced through the 2nd defendant. The failure of the defendants
to controvert the contents of P5 by way of a reply in writing or otherwise
is equivalent in effect to the defendants having
acknowledged the existence of the trust. Based on the said
acknowledgement and fraudulent acts carried out in concert by the trustee and
the 2nd defendant to defeat the existence of the trust, it cannot be said that
the plaintiff’s cause of action is time barred.
The letter marked as P5 clearly
shows that the plaintiff has admittedly sought the delivery of possession of
the subject matter on 9 January 1994. It is common ground that the
defendants did not reply this letter, even though the plaintiff has requested a
reply within 14 days of the letter. The plaintiff initiated proceedings
on 19 October 1995. Based on P5 the refusal to fulfil the obligation, in
terms of P3, i.e. to hand the property to the plaintiff should be regarded as
having taken place within a period of 14 days from 9 January 1994.
On the other hand, though the
plaintiff in this case did not have de facto possession as in the case of
Margrett Nona to demonstrate an admission to the right to possession, the
plaintiff’s entitlement to be placed in possession has been admitted by the
defendants by their unusual silence and inactiveness towards P5. As such,
it does not appear to be in harmony with the commonsense principles or the
provisions of law to rule that the plaintiff’s action is time barred.
P3 required the trustee to hand
the property of the plaintiff upon the happening of one of the two events
referred to therein. It only fixed the enabling point of time to hand the
property to the plaintiff but did not fix the terminal point of time. The plaintiff
did not know the precise nature of his right until 1994. His demand by P5
has been made within the period that enabled him to take possession. P3
does not prohibit him from being placed in possession at any time after the
happening of one of the events concerned (which ever occurred first) but it
certainly disentitled him from handling the property prior to the happening of
one of the specified events. In the circumstances, it is my considered view
that the demand P5 has been made at the appropriate time and upon
non-compliance of the demand, the plaintiff filed the action within the time
frame permitted in law.
The 2nd defendant
in his evidence admitted as having been told by his father that the plaintiff
was paid a sum of rupees 5000/- towards the purchase of his rights in the
subject matter. This version of the defendants appears to be unreliable, as
they have not taken up this position in their answer. In the result the
claim of the 2nd defendant that the plaintiff compromised his beneficial interest
in the subject matter for a sum of rupees 5000/- appears to be an afterthought
to circumvent P3.
Saravanamuththu vs De Mel 49
NLR 529 is a case where the election of the respondent to the Parliament of
Ceylon was challenged on many grounds including impersonation. One Rosalin
Nona, apparently a supporter of the respondent was imprisoned on her pleading
guilty to a charge of impersonation. Having to face severe hardship at
the prison she wrote to the respondent. Secondary evidence of the contents of
the letter was led at the inquiry. The secondary evidence revealed that Rosalin
Nona wrote to Mr, R, A, de Mel at his Colombo address stating that she was
suffering as she voted for Mr. de Mel impersonating another. She appears
to have written in the same letter that she had called at the respondent's
house and handed him the summons in her case before she went to the
Magistrate's Court. In the said letter she had also referred to a person
by the name Sam Silva, as the the one who bailed her out suggesting thereby
that Sam Silva was a person whose name would be familiar to the respondent. She
recalled in her letter of having been detected at Kanatte polling booth. She
also categorically inquired from De Mel in the said letter as to whether he too
had not seen her there. Emphasising that she had never served a jail term
before, she appealed to Mr. De Mel to help her out. She further added that some
of her relatives visited her in jail told her that Mr, de Mel would come to see
her.
The respondent De Mel admitted
the receipt of this letter. The explanation given by him for the failure to
reply was twofold. He stated that he was not proficient in Sinhala language to
read the letter and that he was pestered with such letters which compelled him
to consign them to the waste paper basket unread. Taking into consideration
that the respondent was a public man, elected twice as Mayor of Colombo, His
Lordship took the view that the reasons given by the respondent against failure
to reply the letter was inconceivable. It was admitted on behalf of the
respondent that, it demanded a reply as to whether the contents of the letter
were either true or false, had it been read.
Applying the principal so
explicitly laid down in the case of Sarawanamuththu (supra), I find it
difficult to accept the 2nd defendant’s explanation, given in
respect of the failure to reply P5. The plaintiff in P5 has clearly said the
following, to wit:
That he had visited the 1st defendant on several occasions.
The purpose of the said
visits was to inquire about the plaintiff’s share of the property.
On the previous occasion the
1st defendant and her children promised to give the plaintiff
his share.
4. However, the defendants
required time to fulfil the promise, as they were trying to resolve certain
problems affecting a property at Old Moor Street.
The problem affecting the
property at old Moor street had been resolved.
When will the defendants
deliver possession of the plaintiffs half share in the property?
7 A reply should be sent
within 14 days.
Having given my anxious
consideration to the contents of the letter P5, I am not inclined to think that
any reasonable and prudent man would ever take the risk of remaining silent
after reading P5. Therefore I assume that the imputations, assertions and
observations made in the said letter have been conceded by the defendants. The
fact that the letter in question had been sent by registered post strengthens
the plaintiff’s case. when a letter of the kind of P5 is sent by registered
post, it ordinarily assumes the nature of a legal document than a personal note
and the defendants ought to have replied the same. In the circumstances, I have
no option but to apply the rules laid down in the case of Sarawanamuththu.
The defendants are the intestate legal heirs to the estate of the trustee. The 2nd defendant respondent is one of the beneficiaries of the last will of the deceased trustee. The defendants have admittedly intermeddled with the estate of the late Adham even prior to the filing of the testamentary case.
The law relating to executors de son tort is well
recognized under our law. After the death of Adham and prior to the filing of
the testamentary action during a period of well over 13 years (from 22 August
1979 to 18 January 1993), the defendants (including the surviving spouse) have
dealt on many occasions with the estate of Adham. Hence, I am quite
satisfied that the defendants particularly the widow of Adham and the 2nd
defendant respondent can be regarded as executors de son tort of the estate of
Adham.
Even if the trust is to come to an end with the death
of the Trustee, yet the Trust Ordinance requires the 2nd defendant
respondent to hold the subject matter for the benefit of the plaintiff as
directed under section 96.
In the circumstances, I have no hesitation in endorsing
the view expressed by the learned President's counsel that the defendants could
safely be regarded as executors de son tort and bound by the
trust to the same extent as the trustee himself was bound by it . Even
otherwise as submitted by the learned President's counsel they would be
constructive trustees in terms of section 96 of the Trust Ordinance and as such
they would be bound by sections 11, 58 and 79 (a).
In terms of section11, the trustee is bound to fulfil
the purpose of the trust and to obey the directions of the author of the trust
given at the time of its creation. Section 58 confers the right on the
beneficiary to have the intention of the author of the trust executed to the
extent of the beneficiary's interest. It is laid down by section 79 that
a trust is extinguished when its purpose is completely fulfilled.
Another important point of law raised by both parties in this appeal pertains to the applicability of the provisions of the Prescription Ordinance with regard to limitation of action. The plaintiff takes up the position that he was totally unaware of the precise nature of the trust. To quote the learned presidents counsel the plaintiff was kept at bay by the non-disclosure on the part of Adham and thereafter by the defendants.
It appears that the plaintiff had been also kept in the dark about the nature of the trust for obvious reasons. As the plaintiff indirectly suggested, it has been suppressed from the plaintiff with an ulterior motive. In any event, it is irrational to hold that prescription would begin to run against the plaintiff from the time he qualified himself to hold the property free from any external control, as he was unacquainted with the instrument of trust and his rights and privileges flowing from the same, until he obtained a copy of deed No 55.
The plaintiff has obtained a copy of the deed which created the trust in 1994. The evidence of B.Fernando, a clerk attached to a lawyer's office corroborates this position. This stand of the plaintiff was not seriously contested in the course of the cross examination by the defendants. The defendants countered this with an unconvincing argument that the plaintiff should have known the creation of the trust through his father or by himself, ignoring the implied admission that the plaintiff was an 8-year-old child when P3 was executed. From the above the safest conclusion the district court ought to have reached was that the action of the plaintiff had been instituted within the period of limitation, even if it is to be conceded for purpose of argument that the Prescription Ordinance with regard to limitation of suits is applicable to the cause of action averred in the plaint.
The alleged prescriptive title of the defendants commences from 22 August 1979. The defendants had chosen to claim prescriptive title to the subject matter from 22 August 1979 as the demise of Adham had taken place on that day.
At this stage, it would be appropriate to make reference to one of the earliest judgments, Danial Appuhamy Vs Aranolis 30 NLR 247 in which Fisher CJ. expounded the intricacies of the law relating to the point of commencement of the prescriptive title, when the beneficial interest remained in the claimant. In that case, the plaintiff sought to establish a claim to a certain property purchased in the name of the defendant conveyed to the plaintiff on the ground that he had provided the purchase money. It was held that the cause of action in such a case arise either when the defendant definitely declined to do what is requested of him or when it comes to the knowledge of the plaintiff that the defendant has taken a definite step indicating that he regards himself as the absolute owner of the property.
According to the material available before the learned district judge, Adham and the defendants have clearly perpetrated a fraud to keep the plaintiff away from the subject matter. The attempt made by Adham to bequeath the subject matter by his last will and the 2nd defendants endeavour to convert the subject matter for his own use by filing the testamentary action after 13 years, in my opinion constitute a perpetration of a massive fraud.
On behalf of the plaintiff, it was submitted that the only definite step taken by the defendants in respect of the property was the filing of the application for probate, which was done only in 1993, far from repudiating the plaintiffs claim recognized by P3.
In any event, both Adham and the defendants were aware of the trust and by the efforts to pay the plaintiff off have perpetrated a fraud on their part. Section 111 (1) of the Trust Ordinance specifically provides that the provisions of the Prescription Ordinance shall not bar any claim to trust property inter alia in the following situation.
111 (1) (a) in the case of any claim by any beneficiary
against the trustee founded upon any fraud or fraudulent breach of trust to
which the trustee was a party or privy
111 (1) ( b) in the case of any claim to recover any trust
property, or the proceeds thereof still retained by the trustee, or previously
received by the trustee and converted to his use.
The Learned President's counsel has
submitted that the 2ndrespondent's father
Adham was aware of and acknowledged the trust. He attempted to offer
money to the plaintiff and extinguish the plaintiff's right to the said
property, and thereby he attempted to commit a fraud on the plaintiff. In
the circumstances, section 111 of the Trust Ordinance is applicable in my view
and as such, the plaintiff’s action would not be barred by section 111.
It is pertinent to note that the 2nd respondent has not relied upon the possession of Adham to claim prescriptive title. This is evident from the fact that, in the testamentary proceedings filed by the 2nd respondent, he had relied on P 3 (deed of trust) to establish his title. This is also corroborated by the stand taken up by the defendant respondents in their written submissions.
Section 111 (5) reads as follows.
111 (5) This section shall not apply to constructive
trusts excepting so far as such trusts are treated expressed
trust by the law of England.
In other words if a trust arise by construction of law
is governed by prescription. However if such constructive trust is treated as “express
trust” by law of England, then such a trust is not affected by the statute
relating to limitation of suits.
The learned counsel of the
defendants therefore concedes that Ahamed Adham being a trustee under an
express trust cannot raise the plea of prescription by reason of section 111 of
the Trust Ordinance. Since the 2nd defendant is neither an express trustee nor
a constructive trustee within the meaning of section 111 of the Trust
Ordinance, according to the learned counsel a plea of prescription defeat the
maintainability of the action is available.
The learned president’s counsel has submitted that even
though the 2nd defendant and the other defendants are no
express trustee's, they hold under constructive trust in terms of section 96 of
the Trust Ordinance which provides that where a person has possession of
property but does not have the whole beneficial interest to the same he must
hold the property in trust. Even a constructive trust would not be
protected from the provision of Prescription Ordinance where such trusts are
treated as express trusts by the law of England-section 111 (5) of the Trust
Ordinance.
In this context the judgement
in the English case of Soar vs Aswell 1893 2 Q. B 390 is of much importance to
determine the question as to whether the defendants could be regarded as
holding the property in question under an express trust.
The facts that led to the
lawsuit in Soar vs Aswell (supra) are somewhat similar to the facts of this
case. In Soar vs Aswell a trust fund was held by trustees under a will in
trust for two persons in equal shares for their respective lives and, after the
death of each, in trust as to his share for his children. The fund was
entrusted by the trustees to a employed by them as solicitor to the trust, and
was by him invested together with other monies belonging to different trusts or
an equitable mortgage by deposit of title deeds, in his own name. The
mortgage being paid off in January 1879, the solicitor received the money so
invested from the mortgagor and distributed one moiety of it, the tenant for
life having died among his children, who by his death had become absolutely
entitled to the same. He did not account for the other moiety to the
trustees, but retained the same in his own hand. On February 21, 1891 an
action was brought by the surviving trustee under the will against the personal
representative of the solicitor, who had died in November 1879 claiming an
account of the monies so retained by him. It was held that he must be considered
as having been in the position of an express trustee of such money and
therefore the lapse of time did not act as the bar to the action. The
basis of this decision was that the solicitor had received the money in a
fiduciary capacity as trustee for his clients, the trustees; Kay LJ thought
that the solicitor despite being a stranger to the trust, had assumed to act
and had acted as a trustee and had received the trust money under breach of
trust in which he concurred.
The plaintiff’s claim in the
instant case is also based on a claim to recover possession of the trust
property which was unlawfully retained by the trustee and converted to his own
use and the use of the 2nd defendant by way of fraudulent breach of trust. The
fraud is of such a magnitude that the trustee and the 2nd defendant along with
the other defendants have misled a court of law to believe that the entirety of
premises No 47 is a part of the estate of the testator and is free of any
trust. The evidence led at the trial establishes beyond reasonable doubt as to
the fraud committed by the 2nd defendant and the trustee concerned.
As was expressed in Soar vs Aswell the following type of person are regarded as holding property under an express trust.
a. A trustee de son tort and/or a stranger who assume to act in an expressed trust as if they were the duly appointed trustee.
b. A stranger to the
trust who is privy to and participates in the fraudulent breach of trust
by the trustee
c. a stranger to
the trust who receives the trust money knowing them to be such and deals with
them in a manner inconsistent with the trust.
d. one who is in a
fiduciary position and on the footing of such position obtains possession of
trust property.
In relation to the trust property claimed by the
plaintiff in this case, the defendants for a period of 13 years have
intermeddled with the estate of the deceased Adham and that of the trust
property and came to be identified as executors de son tort and trustee de son
tort. Besides that the defendants being strangers to the express
trust have assumed to act as trustees by holding on to
the trust property and holding out a promise to the plaintiff to hand over the
trust property, as referred to in P5, as if they were trustees or have assumed
to act as duly appointed trustees.
The deceased Ahamed Adham had no rights to bequeath the undivided ½ of the property referred to in Deed No 55, to which he was holding on in flagrant violation of the instrument of trust. By his last Will 1035 the testator having bequeathed the entirety of premises bearing assessment No 47 has undeniably acted in breach of the trust. The 2nd defendant being a stranger to the trust by its endeavour to prove the last Will and to appropriate the entirety of premises No 47 to him (including the ½ share which is subject to trust) was undoubtedly was privy to and participated in the fraudulent breach of trust.
Based on the evidence referred to above in situations
contemplated under (a) and (b) above the 2nd defendant
respondent and the other respondents, should be considered as holding the trust
property under an express trust. On account of the reasons set out herein
before the action of the plaintiff is not barred by prescription and the
learned trial judge has erred in law in coming to the conclusion that the
plaintiff is not entitle to maintain the action to recover the trust property.
I have
already stated that the defendants have admitted the trust. The plaintiff has
proved on a balance of probability that it was in the year 1994 he became aware
of the precise nature of the trust. As referred to earlier even at the time
when the trustee passed away the purpose of the trust had not exhausted and
therefore had remained operative and extant.
Even
though it may not be strictly relevant it is useful to refer to the attitude of
the defendants who denied the paternity of the plaintiff, when there was ample
evidence relating to his paternity in P3 itself. The certificate of the plaintiff
has been produced marked as P1. In P1 the name of the mother of the plaintiff
is mentioned as Ummu Hamina and the father as Abdul Raheem. In cage 7 of P1 the
question as to whether the parents are married has been answered in the
affirmative. The statement made by the author of the trust (deceased) in P3 as
to the paternity of the plaintiff, certificate of birth marked as P1 and the
evidence of the plaintiff give rise to the presumption of legitimacy of the
plaintiff under section 112 of the evidence Ordinance. The defendants were not
able to rebut that presumption.
It is surprising to observe as to how the defendants could
say that the father of the plaintiff was a subscribing witness to deed No 55
and should have known the existence of the trust through his father. This is in
fact contradictory and speaks for itself as to the object the defendants were
trying to achieve, at any cost.
On the admissions made and the evidence led through the plaintiff and his witness the plaintiff has established his case on a balance of probability as opposed to the case presented on behalf of the defendants. In the light of the overwhelming evidence pointing to the existence of the trust and the maintainability of the action, the irresistible conclusion the learned district judge should have arrived at was to decide the case in favour of the plaintiff and to dismiss the defendants claim. When the plaintiff has unfolded such a strong case a substantial part of it has been either plainly or by necessary implication admitted by the defendant, it would be a travesty of justice if the reliefs prayed for in the plaint are not given to the plaintiff.
The judgment of the learned district Judge therefore is perverse. His findings do not appear to be consistent with the law and the facts revealed at the trial. The judgment is totally inconsistent with the evidence adduced at the trial. Upon a comparative analysis of the totality of the evidence, the only decision the learned district Judge could have come to was to disbelieve the 2nd defendant and to accept the plaintiff’s version as being correct and truthful.
Consequently,
I set-aside the judgment and decree of the learned district judge and answer
the issues afresh in the following manner.
1. Did Abdul Gaffoor Salha Umma by deed No 55 convey an undivided ½ share of the property referred to in the schedule to the plaint subject to an express trust by reserving the beneficial interests of the said property in favour of the plaintiff? Yes.
2. 2. Have the conditions of the
said trust being fulfilled during the lifetime of Cassim Lebbe Marikkar Ahamed
Adham? The condition relating to handing over of possession as laid
down in deed No.55 had not been fulfilled.
3. 3. Was the plaintiff unaware of
the beneficial interests reserved in him as referred to in paragraph 9 of the
plaint until he obtained a copy of the deed in the year 1994? Plaintiff was
unaware and cannot be expected to be aware.
4. 4. Are the defendants who are
the legal heirs of Cassim Lebbe Ahamed Adaham in possession and control of the
said trust property? Yes
5. 5. Did the defendants and their
predecessor unreasonably fail and neglect to enforce the said trust? Yes
6. 6. If the above issues are
answered in favour of the plaintiff, is the plaintiff entitled to relief as
prayed for in the plaint? Yes. The plaintiff is entitled to the reliefs prayed
for in paragraphs (a) to (d) of the prayer to the plaint.
7. 7. Is the plaintiff not a son
of Abdul Rahuman? The plaintiff is a son of Abdul Rahuman.
8. 8. Did Abdul Gaffoor Abdul
Rahuman remain a bachelor until his death? No
9. 9. Did Cassim Lebbe
Marikkar Ahamed Adham depart this life on 22.8.1979 leaving the last will
bearing No.1035 dated 18.5.1976 attested by Rukmani M.Fernando, notary public
of Colombo? Yes.
1 10. Was the said last will proved and the 2nd defendant issued with probate in case No.33139 T in respect of the last will 1035? As the probate and the order relating to the proof of last will have not been produced at the trial issue cannot be answered in the affirmative.
1 11. As pleaded in paragraph 9 of the answer by last
will 1035 was the subject matter of this action devised and bequeathed to the 2nd defendant?
Purported to have been bequeathed by the last will.
1 12. As pleaded in paragraph 10 of the answer by
executor’s conveyance No.15 attested by S.Safaya, notary public of Colombo did
the 2nd defendant become the owner of the subject matter? No
1 13. As pleaded in paragraphs 11 & 12 of the answer
did the 2nd defendant and his predecessors in title possess the
subject matter of the action from 1942 and acquire a valid prescriptive title?
No prescriptive title has been acquired by the 2nd defendant to
the subject matter.
14. Has the plaintiff failed to establish his rights if
any, to the subject matter in proceedings No.33139/T? Subject matter cannot
form part of the estate of the testator by reason of the trust created by deed
No.55.
15. If so, is the defendant estopped from setting up
any title to the subject matter? No
1 16. In any event, is the cause of action of the
plaintiff prescribed in law? No
1 17. As pleaded in paragraphs 15 & 16 of the answer
by deed No.55 dated 5.11.1942, wasn’t there any trust created in favour of the
plaintiff? No.
1 18. If the above issues 7-17 or any one of them are
answered in favour of the defendant, should the plaintiff’s action be
dismissed? No
1 19. Is the 2nd defendant entitled to a
declaration of title to the subject matter in his favour? No
20. Are the defendants entitled to plead prescriptive
title in respect of the subject matter and to take up the position that the
plaintiff’s action is time barred, by reasons of the provisions contained in
the Trust Ordinance? Not entitled.
2 21(a) Even if there is a creation of a trust by deed
No.55 dated 5.11.1942 upon the plaintiff attaining the age of 21 years on
9.5.1955, has the trust ceased to exist? No
(b [B]M If the above issue is answered in the affirmative,
is the plaintiff entitled to an undivided half share of the land and premises
referred to in the deed? The plaintiff is entitled to an undivided half share
as referred to in deed No.55.
(c [C]]If the above issue is answered in the affirmative, can the plaintiff have and maintain this action? Action is maintainable.
For the foregoing reasons, it is my candid opinion that
the defendant's claim of prescription should be rejected and the plaintiff who
has been fraudulently kept at bay deserves to be permitted to enjoy the benefit
of the trust.
Subject to the re-determination of the issues as mentioned hereinbefore, I proceed to reverse the judgment and decree of the learned district judge and allow the appeal. Learned district judge is directed to enter decree accordingly.
Sgd.Judge of the Court of Appeal
AWA Salam J
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