030-SLLR-SLLR-1986-V-2-DEEJAY-INDUSTRIES-LIMITED-v.-DEHIWELA-MOUNT-LAVINIA-MUNICIPAL-COUNCIL.pdf
DEEJAY INDUSTRIES LIMITED
v.
DEHIWELA-MOUNT LAVINIA MUNICIPAL COUNCIL
COURT OF APPEAL.
G. P. S. DE SILVA, J. (PRESIDENT) AND DHEERARATNE, J.
CA/LA APPLICATION No. 14/81.
D.C. MT. LAVINIA 39/SPL.
JULY 14, 1986.
Municipal Councils Ordinance-Dissolution of Municipal Council-Perpetualsuccession-Special Commissioner-Corporation sole-Action against SpecialCommissioner nomine officii to reduce assessment-Constitution of new MunicipalCouncil-Substitution of new Council in the room of the Special Commissioner -Application to amend plaint-Municipal Councils Ordinance, sections 236 and277-Notice under s. 307 (1) of the-Municipal Councils Ordinance.
The provisions of the amended s. 277 of the Municipal Councils Ordinance show thatthe Special Commissioner is a statutory functionary capable of holding rights and is thesuccessor of the dissolved Municipal Council. What is contemplated is a succession ordevolution of rights to the Special Commissioner who is appointed once the Council isdissolved. Section 277 (2){a) read with s. 277(4)(A) of the Municipal CouncilsOrdinance manifests an intention to invest the Special Commissioner with the attributesof a corporation sole and he can be sued nomine officii.
The expression "perpetual succession" denotes no more than the continuing existenceof a company or a corporation irrespective of changes in its membership. In the case ofa corporation sole the transfer, resignation, retirement or death of the holder of theoffice for the time being does not bring its corporate existence to an end. This does notand cannot mean that the legal existence of the corporate body cannot be brought to anend. A corporate body is not capable of destruction. The extinction of a body corporateis called its dissolution. A Municipal Council is a corporate body created by statute, itcan be dissolved in the manner provided by the statute to which it owes its origin. Oncethe Municipal Council is "dissolved" in terms of s. 277 it means the cessation of its legalexistence. Dissolution cannot be reconciled with its continued existence. Upondissolution it suffers a legal death and cannot sue or be sued.
Hence an action instituted against the Special Commissioner after his appointmentupon the dissolution of the Municipal Council is properly constituted. When thereafter anew Municipal Council is constituted, substitution of the new Council in the room of theSpecial Commissioner is proper and the application for amending of the plaint for thispurpose should be allowed.
Section 236 of the Municipal Councils Ordinance requires action to be instituted within30 days of receiving the notification of the decision'made upon the objection to theassessment. Hence s. 307(1) which makes one month's prior notice in writing of the
proposed aetfon an imperative precondition of a suit against the Council does notinclude-Statutory proceedings in terms of s. 236 and is not applicable to a suit under s.236.
Cases referred to:
Wilson v. The Kandy Municipal Council – S. C. 402/71 (F) 0. C. Kandy 11304/MR.S.C. Minutes of 14th July 1977.
Hinni Appuhamy & Sons v. Municipal Council. Kandy – CA (SC) 22/73 IntyD.C.Kandy 7589 S.C. Minutes of 15.3.1978.
Ladamuttu Pillai v. Attorney-General – (1957) 59 NLR313. 325.
Samarasekera v. Secretary – D.C. Matara-(1949) 51 NLR 90.
Salih v. Valliyammai Atchl -(1961) 63 NLR 73 (P C.).
Land Commissioner v. Ladamuthu PiHai – (1960) 62 NLR 169 PC.
APPEAL from order of the District Judge of Mt. Lavinia.
H. L. de Silva, P. C. with P. Naguleswaran for the plaintiff-petitioner.
Dr. H. W. Jayewardene, Q.C. with N. Mahendiran and Miss T. Keenavmna for thedefendant-respondent.
Cur. adv. vult.
September 16,1986.
G. P. S. DE SILVA, J. (President, C/A)
The plaintiff filed this action in October 1978 under the provisions ofsection 236 of the Municipal Councils Ordinance for a declaration thatthe assessment of its premises, 181, Tempters Road, Mount Lavinia,at an annual value of Rs. 583,000 for the year 1976 was excessiveand unreasonable and to have the assessment set aside. It is to benoted that the defendant named in the caption to the plaint and in theplaint was 'The Special Commissioner, Dehiwala-Mt. LaviniaMunicipal Council."
The defendant in the answer pleaded, inter alia, that summons wasserved on "The Special Commissioner, Dehiwala-Mt. Lavinia MunicipalCouncil" and that the plaintiff cannot have and maintain this actionagainst the defendant named in the caption inasmuch as (a) there isno such person recognised by and/or known to the law; (b) that theseproceedings could if at all only have been taken against theDehiwala-Mt. Lavinia Municipal Council.
It is not in dispute that the Dehiwala-Mt. Lavinia Municipal Councilwas dissolved in terms of section 277 of the Municipal CouncilsOrdinance on 15th February 1977. The Municipal Council was
reconstituted with effect from 1st July 1979. The plaintiff accordinglymoved in August 1979 to amend the plaint by (a) deleting the words"The Special Commissioner' in the caption and (b) by deletingparagraph 2 and substituting therefor the following:
"The defendant is the Dehiwala-Mt. Lavinia Municipal Councilexercising the rights, privileges, powers, duties and functionsvested in it by the Municipal Councils Ordinance".
In short, the purpose of the proposed amendment was to substitutethe Municipal Council as the party defendant.
The proposed amendment to the plaint was opposed by thedefendant and. after inquiry, the District Judge disallowed theapplication. He held that there is no person or legal entity known to thelaw as the "Special Commissioner' and since the action is not merelyagainst a wrong person but against no person at all, the plaint was badin limine and the application for the amendment of the plaint wasaccordingly refused. The present appeal, with the leave of this Court,is against this order.
The question that was argued before us was whether "The SpecialCommissioner" appointed under the provisions of the MunicipalCouncils Ordinance was a person or legal entity known to the law andcould be sued nomine officii. Mr. H. L. de Silva for theplaintiff-petitioner submitted that having regard to the provisions ofsection 277 of the Municipal Councils Ordinance as amended by theLocal Authorities (Special Provisions) Act No. 42 of 1968 and TheMunicipal Councils (Amendment) Law No. 8 of 1974 the SpecialCommissioner is invested with corporate personality and can be suednomine officii. On the other hand. Dr. Jayewardena for thedefendant-respondent contended that the office of SpecialCommissioner was not incorporated; that it was not a legal personand could not be sued nomine officii and that he should have beensued by name. Dr. Jayewardena also maintained that the proper partydefendant should have been the Municipal Council despite itsdissolution under section 277 of the Municipal Councils Ordinanceand relied very strongly on the judgment of the then Supreme Court inWilson v. The Kandy Municipal Council (1). In that case the SupremeCourt held that-
'Despite the dissolution of a Council under section 277
and the appointment of a Special Commissioner
the status of the Council by its name and
designation will always continue and it could sue and be sued bysuch name and designation assigned to it under the Ordinance. It isonly the rights, privileges, duties and functions of the Council thatcease and are exercised by the Special Commissioner
I do not think an action against a Council by its
name and designation is badly constituted even if such action wasinstituted after the dissolution of the Council and the appointment ofa Special Commissioner"
It is right to add.that Mr. H. L. de Silva relied on a very briefjudgement also of the former Supreme Court, Hinni Appuhamy & Sonsv. Municipal Council, Kandy (2), where the view was expressed thatonce a Municipal Council was dissolved it did not exist in law. Both Dr.Jayewardena and Mr. de Silva agreed that in these circumstances thisCourt was free to follow one or the other of the decisions whereincontrary views were expressed in regard to the same point.
The first matter for consideration is whether the provisions of theMunicipal Councils Ordinance manifest an intention to incorporate theoffice of Special Commissioner. No doubt the Ordinance does notexpressly create the Special Commissioner a Corporation Sole nordoes it enact that he may sue or be sued in a corporate name. Butwhat is relevant for present purposes is that "to constitute creation it isnot necessary that any particular form of words should be used in thestatute; it is sufficient if the intent to incorporate is evident"(Halsbury’s Laws of England, 4th Ed., Vol. 9, para 1 246).
The material part of section 277 of the Municipal CouncilsOrdinance as amended reads thus ;
"277 (1) If at any time, upon representations made or otherwise itappears to the Minister that a Municipal Council is notcompetent to perform, or persistently makes default inthe performance of. any duty or duties imposed upon it.or persistently refuses or neglects to comply with anyprovision of law, the Minister may, by Order published inthe Gazette, direct that the Council shall be dissolved andsuperseded and thereupon such Council shall withoutprejudice to anything already done by it, be dissolved, andcease to have, exercise, perform and discharge any of therights, privileges, powers, duties and functions conferredor imposed upon it, or vested in it, by this Ordinance orany other written law.
(a) The President may appoint for a stated period or
from time to time a Special Commissioner or SpecialCommissioners to have, exercise, perform anddischarge such of the rights, privileges, powers,duties, functions conferred or imposed upon, orvested in, the Council or the Mayor by this Ordinanceor other written law as may be set forth in suchOrder, or in any Orders amending the same; or
(b) The Minister may direct that a new Municipal Councilin accordance with the provisions'of this Ordinanceshall be constituted for the Municipality in place ofthe dissolved Council.
Every Order made under this section shall contain suchdirections as. may be necessary for the purpose of givingeffect to the Order, and shall, on publication in theGazette, have the force of law.
(A) At any time after the dissolution of the Council and
after the appointment of a Special Commissioner orSpecial Commissioners under sub-section (2), theMinister may by Order published in the Gazettedirect that a new Municipal Council in accordancewith the provisions of this- Ordinance shall beconstituted for the Municipality in place of thedissolved Council.
Whenever in consequence of the exercise of the powersconferred by this section, it becomes necessary for any.period of time to elapse between the dissolution of theCouncil and the appointment of a Special Commissioneror Special Commissioners or the constitution of a newCouncil, or between the cessation of the holding of officeby the Special Commissioner or Special Commissionerswho was or were appointed and the constitution of anew Council, the Municipal Commissioner shall duringsuch period:
(a) have, exercise, perform and discharge all the rights,privileges, powers, duties and functions vested in orconferred or imposed on the Council the Mayor, orthe Deputy Mayor by this Ordinance or by way ofother written law, and
(b) be the successor of the dissolved Council or theSpecial Commissioner or Special Commissioners, ascan be.
(A) The Special Commissioner or SpecialCommissioners appointed under sub-section (2)upon the dissolution of a Council shall:
if the appointment was made immediately after thedissolution of the Council, be the successor orsuccessors of the dissolved Council, and
if the appointment was made after the MunicipalCommissioner under sub-section (4) had exercised,performed, and discharged, the rights, privileges,powers, duties and functions referred to in thatsub-section, be the successor or successors of theMunicipal Commissioner."
On a scrutiny of the above provisions it is seen that the SpecialCommissioner is a statutory functionary having the legal capacity "tohave, exercise, perform and discharge such of the rights, privileges,powers, duties and functions conferred or imposed upon or vested inthe Council". In other words what is envisaged and what is significantfor present purposes is the creation of a functionary capable of holdingrights. The matter does not end there. Section 277 (4) (A) enacts thatthe Special Commissioner upon the dissolution of the Council is thesuccessor of the dissolved Council. Therefore what is contemplated isa succession or devolution of rights to the Special Commissioner whois appointed, once the Council is dissolved. In my opinion, section 277(2) (a) read with section 277 (4) (A) of the Municipal CouncilsOrdinance manifest an intention to invest the Special Commissionerwith the attributes of a corporation sole and I accordingly hold that theSpecial Commissioner appointed under the Municipal CouncilsOrdinance can be sued nomine officii. To hold otherwise would causeserious hardship and inconvenience to persons in the position of theplaintiff, when the holder of the office at the time of the institution ofthe action is subsequently transferred, or removed from office, orresigns or retires. In this connection the observations of Basnayake,C.J., in Ladamuttu Pillai v. Attorney-General (3) are not withoutrelevance.
It is not without significance that our courts have recognised certainoffices as possessing the attributes of a corporation sole for theproper discharge of the functions of the office. Under section 520 ofthe Civil Procedure Code, prior to its amendment in. 1977, when therewas no fit and proper person to be appointed as an administrator theDistrict Court was empowered to appoint the Secretary of that courtas the administrator. Basnayake, J. (as he then was) in Samarasekerav. Secretary, D.C., Matara (4), held that the Secretary quaadministrator was a quasi corporation sole, in the course of hisjudgment the learned Judge expressed himself thus:.
"Although the Secretary of the court is not a corporation sole inthe true sense of the term, having regard to the fact that the CivilProcedure Code provides for the appointment of the Secretary ofthe Court as administrator it may safely be assumed that thelegislature intended that the Secretary of the Court should possessall such attributes of'a corporation sole as are necessary for theproper discharge of his functions qua administrator. Such offices fallinto the category of quasi corporations sole".
This judgment was expressly approved by the Privy Council in Salih v.Valliyammai Atchi (5). Delivering the advice of the Privy Council, LordRadcliffe stated:
"The sum of their judgment was expressed in their holding thatthe Civil Procedure Code intended the Secretary of the Court topossess 'all such attributes of a corporation sole as are necessaryfor the proper discharge of his functions qua administrator'. TheirLordships accept this as a correct proposition. Despite thedifficulties created by the wording of certain sections and of theprescribed forms, they think that, having regard to the functions tobe performed by the Secretary of the District Court and the evidentintention that his office should carry a continuing responsibility forthe property to be administered, it must have been intended that thecode should create the holder of the office a corporation sole forthis purpose".
It seems to me that the decision of the Privy Council in LandCommissioner v. Ladamuttu Pillai (6), is of hardly any assistance tothe respondent in the present appeal. The provisions of the LandRedemption Ordinance are not comparable to the provisions of the
Municipal Councils Ordinance in this regard. The Privy Council rejectedthe submission that the Land Commissioner can be regarded as acorporation sole for the reason, inter alia, that no legislative enactment"seems to reveal any intention to incorporate".
I now turn to the submission of Dr. Jayewardena that the properparty defendant should have been the Municipal Council despite itsdissolution, under the provisions of section 277 (1). Section 34 (1)which sets out the attributes of corporate personality in relation to aMunicipal Council reads thus:-
"Every Municipal Council shall be a corporation with perpetualsuccession and a common seal and shall have power, subject to thisOrdinance, to acquire, hold and sell property, and may sue and besued by such name and designation as may be assigned to it underthis Ordinance".
Emphasis was laid on the concept of "perpetual succession" in orderto support the argument that the Council continues to exist eventhough an order for its dissolution was made.
No decision was cited before us which considered the concept of •"perpetual succession" in relation to a Corporation or a Company,other than Wilson's case (supra) referred to above. Gower in hisPrinciples of Modern Company Law (Fourth Edition) discusses theconcept of "perpetual succession" in the following terms:
"One of the obvious advantages of an artificial person is that it isnot susceptible to 'the thousand natural shocks that flesh is heir to.'It cannot become incapacitated by illness, mental or physical, and ithas not (or need not have) an allotted span of life. This is not to saythat the death or incapacity of its human members may not causethe company considerable embarrassment; obviously this will occurif all the directors die or are imprisoned or if there are too fewsurviving members to hold a valid meeting, or if the bulk of themembers or directors become enemy aliens. But the vicissitudes ofthe flesh have no direct effect on the disembodied company. Thedeath of a member leaves the company unmoved; members maycome and go but the company can go on for ever. The insanity ofthe Managing Director will not be calamitious to the companyprovided that he is removed promptly; he may be the company'sbrains but lobectomy is a simpler operation than on a naturalperson", (pp. 104 and 105).
"An essential element in the legal conception of a corporation isthat its identity is continuous, that is that the- original member ormembers and his or their successors are one,. Accordingly, once aliability or obligation has become binding on a corporation, whethersole or aggregate it will bind the successors, even though they arenot expressly named." (Halsburys Laws of England,, Vol. 9, 4th Ed.para. 1208).
It seems to me that the expression "perpetual succession" denotesno more than the continuing existence of a company (or a corporation)irrespective of changes in its membership. In the case of a corporationsole, the transfer, resignation, retirement or death of the holder of theoffice for the time being does not bring its corporate existence to anend. This, however, does not and cannot mean, that the legalexistence of the corporate body cannot be brought to an end. ThusSalmond on Jurisprudence (12th Ed.) states:
"The birth and death of legal persons are determined not bynature, but by the law. They come into existence at the will, of the
" law, and they endure during its good pleasure They are in their
own nature capable of indefinite duration, this being indeed one oftheir chief virtues as compared with humanity, but they are notincapable of destruction. The extinction of a body corporate is calledits dissolution – the severing of that legal bond by which its
members are knit together into a unity". (The emphasis is
mine).
A Municipal Council is a corporate body created by statute. It can bedissolved in the manner provided by the statute to which it owes itsorigin. Part I of the Ordinance provides for the constitution ofMunicipal Councils. Part XIV provides inter alia for their dissolution. Assubmitted by Mr. de Silva, "dissolution" is the antithesis of"constitution". Once the Municipal Council is "dissolved" in terms ofsection 277 it means the cessation of its legal existence. Dissolutioncannot be reconciled with its continued existence. Upon dissolution itsuffers a legal death and cannot sue or be sued.
On a consideration of the matters set out above, I am of the viewthat the present action was originally properly constituted and the,application for the amendment of the plaint ought to have beenallowed.
Before I conclude I wish to refer to one further matter. The DistrictJudge in his order states that nowhere in the plaint is it averred thatnotice of action in terms of section 307 has been given to thedefendant. As submitted by Mr. de Silva, this is an action instituted interms of section 236 of the Municipal Councils Ordinance whichrequires the action to be instituted within 30 days of receiving thenotification of the decision made upon the objection to theassessment. It is therefore impossible for the plaintiff to comply withthe provisions of section 307(1) which enacts that no action shali beinstituted until the expiration of one month next after notice in writingshall have been given to the defendant. It seems to me therefore thatthe "action" contemplated in section 307(1) would not includestatutory proceedings in terms of section 236.
For these reasons the appeal is allowed, the order of the DistrictJudge dated 26.1.81 is set aside and the plaintiff-petitioner is allowedto amend the plaint in terms of the motion dated 21st August 1979(marked P3 in the papers filed in this court). The plaintiff-petitioner isentitled to the costs of the inquiry in the District Court, and the costsof appeal fixed at Rs. 210.
DHEERARATNE, J.-l agree.
Appeal allowed.