WIJEYEWARDENE J.—Siripala v. U. D. C., Kalutara.
I'.KiyPresent: Hearne S.P.J. and Wijeyewardene J.
SIRIPALA u. U. D. C., KALUTARA.
314—D. C. Kalutara, 20,097.
Local Government Ordinance—Sale of property by Urban District Council—Saleset aside by Council—Right of purchaser to refund of charges—OrdinanceNo. 11 of 1920, s. 230.
Section 230 of the Local Government Ordinance is not applicable toactions against an Urban District Council for the enforcement of contrac-tual or quasi-contractual obligations.
Where property belonging to an Urban District Council is sold byauction and the Council refuses to confirm the sale by virtue of thediscretion vested in it under the conditions of sale, the Council is boundto refund all the charges paid by the purchaser at the sale.
PPEAL from a judgment of the District Judge of Kalutara.
H. V. Perera, K.C. (with him C. E. S. Perera), for plaintiff, appellant.
N. E. Weerasooria, K.C. (with him U. A. Jay asunder e), for defendant,respondent.
Cur. adv. vult.
August 24, 1939. Wijeyewardene J.—
This is an action arising out of the refusal of the Urban District Council,Kalutara, to confirm a sale by public auction of a property belonging to it.
The Council authorized a licensed auctioneer to sell by public auction apiece of land called. Dombagahawatta of the extent of 30 perches situatedat Sea Beach road, Kalutara North. The sale was to be held under the
J. N. 11 17627 (5/521
H>2WIJE YEW AR DENE J.—Siripala v. U. D. C.. Kalutara.
conditions of sale marked P 1 and subject to an upset price of Rs. 937.The conditions of sale provided inter alia, that the sale should be subjectto the approval of the Chairman of the Council and could be set aside athis discretion.
The property was sold by public auction on November 23, 1935, whenit was purchased for Rs. 875 by the plaintiff’s agent, M. P. Fernando, whowas the only bidder present at the sale. The Chairman refused toconfirm the sale as the price realized was less than the upset price. Theauctioneer then put up the property for sale on November 27, 1935, whenthere were two bidders one K. T. R. de Silva and the plaintiff’s agent.
K.T. R. de Silva was the highest bidder for Rs. 1,360, the next highest bidbeing that of the plaintiff’s agent for Rs. 1,350. As Silva had no moneyto pay “ immediately after the sale ” the auctioneer’s charges and one-tenth of the purchase amount, as required by clause 3 of the conditionsof sale, the auctioneer rejected his bid and offered the property to theplaintiff’s agent for Rs. 1,350. The evidence led in the case shows thatthe plaintiff’s agent refused to buy the property for Rs. 1,350 as he thoughtthat de Silva was a puffer employed by the defendant Council to enhancethe price. On the plaintiff’s agent refusing to make the purchase atRs. 1,350 the auctioneer “ immediately put up the property for saieafresh ” in terms of clause 9 of the conditions of sale. At that sale theplaintiff became the purchaser for Rs. 950. The plaintiff paid into thehands of the auctioneer the full purchase price of Rs. 950 and auctioneer’scommission and other incidental charges amounting to Rs. 118.25 andsigned the conditions of sale which were duly attested by a notary. Asthe defendant Council delayed to excute the necessary documents theplaintiff wrote letter ,P 4 of January 19, 1936, asking for a conveyance inhis favour and received in reply P 6 of February 17; 1936, which statedthat if he did not agree to buy the property for Rs. 1,350 the sale in hisfavour for Rs. 950 will be cancelled and the property re-advertised forsale. The plaintiff thereupon wrote P 7 of March 18, 1936, saying thathe was unwilling to purchase the property for Rs. 1,350 and requestingthe defendant Council to refund the amount paid by him if the Councilwas not prepared to implement the sale for Rs. 950 in terms of the condi-tions of sale. By his letter P 9 of May 25, 1936, the Chairman of theCouncil informed the plaintiff that the Council had decided to cancel thesale and the plaintiff was asked to “ call over at the office and withdrawthe sum of Rs. 950 deposited by the auctioneer as purchase money”. Itwill be noted that this letter makes no reference to the additional sum ofRs. 118.25 paid by the plaintiff as auctioneer’s charges, &c. In view ofthe attitude taken by the Council the plaintiff presumably thought itadvisable at this stage to secure legal advice and his lawyer wrote P 10of May 29, 1936, asking the Council to refund Rs. 1,068.25 with legalinterest in the event of the Council deciding not to sell the property to theplaintiff for Rs. 950. The Council did not delay replying to this letter ason previous occasions but sent P 11 of June 5, 1936, stating that theplaintiff could withdraw the sum of Rs. 950 deposited at the office of theCouncil.
The property was again put up for sale on June 5, 1936, by publicauction and was purchased by Silva for Rs. 940. The plaintiff thereupon
WUEYEWARDENE J.—Siripala v. U. D. C„ Kalutara.
sent P 13 of June 5, 1936, and P 13 of June 16, 1936, pointing to theCouncil that in the circumstances the Council would, stand to gain byconfirming the sale in his favour for Rs. 950 instead of approving the salein favour of Silva for Rs. 940. In reply to this the Chairman sent P 14cf August 1, 1936, intimating that “ the sale of the land has been confirmedby the Council on Mr. K. T. R. de Silva ” and reiterating the willingnessof Council to return Rs. 950 to the plaintiff.
There must, no doubt, have been very strong and cogent reasons for theaction of the Council in confirming a sale to de Silva for Rs. 940 whenplaintiff was ready to purchase the property for Rs. 950 under theconditions of sale already executed, especially when, as a result of suchaction the Council was going to refuse to refund -to the plaintiff the sumof Rs. 118.25 incurred by plaintiff as incidental expenses. Though theChairman of the Council has given evidence in the case, the reasonswhich guided the Council have not been made clear. I do not think itnecessary for the purposes of the -decision of this Court to make anyfurther comment on this aspect of the case.
The plaintiff filed the present action on November 17, 1936. On March9, 1937, the defendant Council through its proctor moved that the plaintiffshould be called upon to give security for the payment of the costs of thedefendant Council as the plaintiff was resident outside the jurisdiction ofthe Court. The District Judge refused this application which seems tohave been an extraordinary one to be made in view of the fact that theCouncil admittedly had with it a sum of Rs. 950 belonging to the plaintiff.The answer of the Council was filed on April 26, 1937. The trial had tobe postponed for a few months owing to the difficulties experienced bythe Council at this stage in electing a Chairman.
The case came up for trial finally in August, 1937. The District Judgedecided against the plaintiff’s claim for a conveyance in his favour inrespect of the land but held that he was entitled to claim the entire sumof Es. 1,068.25. The Judge however upheld a plea of prescription raisedby the defendant Council and therefore entered judgment only for thesum of Rs. 950 brought by the defendant Council to Court, and orderedthe plaintiff to pay the costs of the action to the defendant Council. Theplaintiff has preferred the present appeal against that judgment.
At the hearing of the appeal, the appellant’s Counsel did not questionthat part of the judgment of the District Judge refusing to order a convey-ance in favour of the appellant or to give him damages. He howevercontended that the District Judge had erred in holding that theapplicant’s alternative claim for Rs. 1,068.25 Was barred by prescription.The District Judge appears to have thought that the action was governedby section 230 of the Local Government Ordinance, No. 11 of 1920, whichenacted that an action against an Urban District Council “ for anythingdone or intended to be done under the powers of the Ordinance” shouldbe instituted within four months next after the accrual of the cause ofaction. The appellant’s Counsel cited a number of decisions of this Court,Walker & Co. v. The Municipal Council of Kandy Jayasundere v. TheMunicipal Council of Galleand Sidambaram Chetty v. The MunicipalCouncil of Colombos, where this Court construed the analogous provisions
> (1881) I S r. 740.*(1883) 5 S. C. C. 171.* (1888) 8 S. C. C. 133.
WIJEYEWARDENE J.—Siripala v. U. D. C„ Kalutara.
of the Municipal Council Ordinance then in operation and held that thecorresponding section of the Municipal Council Ordinance, No. 17 of 1865,applied only to obligations arising ex delicto. Apart from authority, thelanguage of section 230 of the Local Government Ordinance leaves nodoubt in my mind that the section is not applicable to actions againstan Urban District Council for the enforcement of contractual or quasi-contractual obligations. The learned Counsel for the respondent did notseek to support the District Judge’s decision on the question ofprescription. He, however, contended : —
That no cause of action accrued to the plaintiff to claim from the
defendant Council the sum of Rs. 118.25 paid by him on accountof auctioneer’s charges.
That the order made by the District Judge with regard to the costs
of the action was justifiable.
The conditions of sale P 1 under which the various sales were heldcontain no provision stating what sum or sums paid by a purchasershould be refunded by the Council, if the Council exercised its discretionunder clause 15 and set aside the sale. It is difficult to believe that anyperson would have bid at the sale if he thought that as a result of theCouncil deciding to set aside the sale for no reason whatever he wouldforfeit a substantial sum paid by him to the auctioneer—an agent of theCouncil—on account of commission, &c. If the Council chooses toexercise its right under clause 15, it is fair and equitable that the purchaserwhose purchase has been set aside should be refunded all the monies paidby him under the conditions of sale. In the absence of any specificauthority compelling me to a contrary view, I do not see any reason inlaw or equity why the Council should not refund the sum of Rs. 118.25.
With regard to the question of costs it is necessary to examine thepleadings and some documents in detail.
The plaintiff gave notice of the action to the defendant Council inOctober, 1936. Along with the written notice he sent a copy of the plaintwhich indicated clearly that the plaintiff was asking for a conveyance inhis favour or in the alternative for the refund of the sum of Rs. 1,068.25and a payment of an additional sum of Rs. 500 as damages. In the plaintfiled in Court there was an obvious clerical error when the plaintiff askedin his prayer that the defendant Council should be ordered to confirm thesale or “ that the plaintiff be declared entitled to the same ”. The latterclause has no doubt been inserted by mistake in place of a prayer that theplaintiff be declared entitled to a sum of money. This is made sufficientlyclear by paragraph 9 of the plaint. The defendant Council filed answerin April, 1937, and deposited in Court a sum of Rs. 950. The defendantCouncil by its answer denied any liability, raised the plea of prescriptionand prayed that the® plaintiff’s action should be dismissed with costs.When the case came up for trial in August, 1937, the defendant Councilresisted the application of the plaintiff to amend the plaint by correctingwhat is obviously a clerical error and the District Judge allowed theamendment subject to the condition that the defendant Council shouldbe paid the costs of the day. In considering the offers made by thedefendant Council in its letters to the plaintiff it should be noted that it is
Atukorale v. Samynathan.
by no means clear that the sum of Ks. 950 was not offered in full settlementof the plaintiff’s claim. An acceptance of Rs. 950 in these circumstanceswould have barred the plaintiff from making a further claim for thebalance of Rs. 118.25. In any event there is no letter from the defendantCouncil four months after the accrual of the cause of action intimating tothe plaintiff that the Council was willing to refund even Rs. 950. Theabsence of such a letter taken together with the prayer in the answer forthe dismissal of the plaintiff’s claim seems to support strongly thecontention of the appellant’s Counsel that the defendant Council was notprepared to refund even the sum of Rs. 950 on the expiry of the periodof four months which the Council thought was the period of prescription.I am prepared however to take into consideration the facts urged by therespondent’s Counsel that the plaintiff failed in his prayer for aconfirmation of the sale and for payment of the damages.
I would set aside the judgment of the lower Court and direct judgmentto be entered for the plaintiff for the sum of Rs. 1,068.25 and half thecosts of the District Court. The appellant is entitled to the costs of thisappeal.
Hearne S.P.J.—I agree.
SIRIPALA v. U. D. C., KALUTARA