Sri Lanka Law Reports
[2003) 3 Sri L.R
NANDAWATHIECOURT OF APPEALDISSANAYAKE, J.SOMAWANSA, J.
C. KANDY 11093/XNOVEMBER 08, 2001JANUARY 17, 2002
Trust Ordinance – S. 83, S.111 – Constructive trust -Attendant Circumstances
Prescription Ordinance ■ S.10 – When does prescription commence to run?
Cause of action – Demand – Civil Procedure Code – S. 44, S. 187.
The plaintiff-respondent instituted action in 1984 seeking a declaration thatDeed No.397 dated 5.2.1976 is invalid or in the alternative that a constructivetrust has accrued to him within the meaning of the Trust Ordinance. The defen-dant appellant contended that the land was unconditionally transferred to him.The District Court held with the plaintiff-respondent.
Though Deed No.397 – exfacie an outright transfer was executed on5.2.1976 – prescription commences to run only from the time when thecause of action arose and that was when the defendant-appellant failed
Gunaratna v Nandawathie (Somawansa, J.)
and neglected to reconvey the land as promised though demanded -which was in 1983.
As the action was instituted within 3 years there was no necessity to com-ply with section 44 C.P.C.,
Failure to answer a particular issue causes no prejudice to the defendant-appellant.
The attendant circumstances show that the plaintiff-respondent never hadthe intention to effect an outright transfer.
APPEAL from the judgment of the District Court of Kandy.Dr. Jayantha de Almeida Gunaratne for defendant-appellant.A.A.de Silva P.C., with H.Sarojah for plaintiff-respondent.
Cur. adv. vult
March 15, 2002SOMAWANSA, J.
The plaintiff-respondent instituted action No.11093/x in the 01District Court of Kandy seeking a declaration that deed No. 397 isinvalid or in the alternative that a constructive trust has accrued tothe benefit of the plaintiff-respondent within the meaning of theTrust Ordinance and for a declaration of title to the land describedin the Schedule to the plaint. The plaintiff-respondent's pleadedcase was that the defendant-appellant fraudulently induced her totransfer the said land to the defendant-appellant to be kept as secu-rity to obtain a loan from the Bank in order to purchase a vehiclewith a promise to re transfer the land once the loan is settled. The 10plaintiff-respondent averred that the defendant-appellant after set-tling the loan failed and neglected to reconvey the land aspromised though demanded on several occasions. The positiontaken up by the defendant-appellant is that the land was uncondi-tionally transferred to him for valuable consideration by the plaintiff-respondent and denied any constructive trust or the allegation offraud and averred that the transfer was an absolute transfer. Hencethe defendant-appellant prayed for a dismissal of the action. Theparties went to trial on 11 points of contest and the learned District
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Judge by his judgment dated 21.08.92 held in favour of the plain-tiff-respondent. It is from this judgment that the defendant-appellanthas preferred this appeal.
At the outset it must be said that although the plaint allegedfraud no issue was raised based on fraud and consequently nofinding to that effect has been made by the learned District Judgethus the dispute boiled down as to whether the transfer by theplaintiff-respondent to the defendant-appellant was subject to aconstructive trust as contemplated in section 83 of the TrustOrdinance.
At the hearing of this appeal one of the matters raised by thecounsel for the defendant-appellant was whether the judgment ofthe learned District Judge can be allowed to stand in as much asthe learned District Judge has failed to answer issue No.9(c) cru-cial to the defendant-appellant's case. Accordingly it was contend-ed that the judgment was not in compliance with section 187 of theCivil Procedure Code. The second matter raised by the counsel forthe defendant-appellant was whether in failing to answer the saidissue the learned District Judge failed to consider the implicationsor the impact of section 111 of the Trusts Ordinance. As these twomatters raised by the defendant-appellant are interwoven I shalldeal with them together. Issue No.09(c) raised on behalf of thedefendant-appellant is as follows:
“On the plaintiff's own averment was she in law entitled to
have deed bearing No.397 set aside”.
On an examination of the judgment one has to concede thefact that issue No.9 (c) has not been answered. It is the contentionof the counsel for the defendant-appellant that this issue is raisedon the impact of the provisions of section 111 of the TrustsOrdinance read with section 10 of the Prescription Ordinancewhich is demonstrable ex facie on the plaint itself.
Section 111 of the Trusts Ordinance deals with prescription inrelation to trusts. The relevant provision in the said section referredto by the counsel for the defendant-appellant are the following:
“111.(1) In the following cases, that is to say –
In the case of any claim by any beneficiary
CAGunaratna v Nandawathie (Somawansa, J.)99
against a trustee founded upon any fraud or fraudulentbreach of trust to which the trustee was party or privy:
In the case of any claim to recover trust prop-erty, or the proceeds thereof still retained by a trustee,or previously received by the trustee and converted tohis use; and
In the case of any claim in the interests of anycharitable trust, for the recovery of any property com-prised in the trust, or for the assertion of- title to suchproperty.
The claim shall not be held to be barred or prejudicedby any provision of the Prescription Ordinance.
(2) Save as aforesaid, all rights and privilegesconferred by the Prescription Ordinance shall beenjoyed by a trustee in all actions and legal proceed-ings in the like manner and to the like extent as theywould have been enjoyed if the trustee had not been atrustee.
Provided that in the case of any action or other pro-ceeding by a beneficiary to recover money or otherproperty, the period of prescription shall not begin torun against such beneficiary, unless and until the inter-est of such beneficiary shall be an interest in posses-sion.
(5) This section shall not apply to constructivetrusts, except in so far as such trusts are treated asexpress trusts by the law of England.”
Section 10 of the Prescription Ordinance reads thus:
“10. No action shall be maintainable in respect ofany cause of action not herein before expressly pro-vided for, or expressly exempted from the operation ofthis Ordinance, unless the same shall be commencedwithin three years from the time when such cause ofaction shall have accrued”.
Applying the provisions contained in Section 111 of the Trusts
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Ordinance and section 10 of the Prescription Ordinance to theinstant case, I am inclined to take the view that this action is notprescribed. In that though the deed No.397 marked P1 was exe-cuted on 5th February 1976, prescription commenced to run onlyfrom the time when the cause of action accrued and that wasaccording to the pleadings only when the defendant-appellantfailed and neglected to re convey the land as promised thoughdemanded by the plaintiff-respondent and according to the evi-dence of the plaintiff-respondent and his witness Wickramaratna in1983 and certainly not from the date on which the deed marked P1 100was executed as averred by the counsel for the defendant-appel-lant. The action has been instituted on 23.03.84. In the circum-stances, the plea of prescription raised by the defendant-appellantcannot succeed as the action has been instituted well within threeyears as prescribed by section 10 of the Prescription Ordinance.Hence there was no necessity for the plaintiff-respondent to com-ply with provision contained in section 44 of the Civil ProcedureCode in claiming exemption to any prescription. Furthermore, evenif issue No.9 (c) is answered the defendant-appellant could neversucceed in this action as his plea of prescription would fail. Hence noeven if provisions of section 187 of the Civil Procedure Code hasnot been complied with by the learned District Judge, by his failureto answer issue 9(c) no prejudice would be caused to the defen-dant-appellant.
I might also mention that the deed marked P1 is ex facie anoutright transfer, thus conveying title to the property in suit to thedefendant-appellant. Also one has to accept that there is no evi-dence of a promise in writing to re transfer the land once the loanis settled. However when one considers the attendant circum-stances in this case as transpired in evidence would show the 120plaintiff-respondent never had the intention to effect an outrighttransfer of her title to the property, in that it transpired in evidenceled on behalf of the plaintiff-respondent that the property trans-ferred on deed marked P1 was very much more valuable than theconsideration of Rs.2000/- said to have passed on the conveyance.There is also the evidence of the needy circumstances of thedefendant-appellant and the evidence that having obtained a con-veyance on a promise to re transfer defendant-appellant did repu-diate the existence of this promise. All in all, I am inclined to take
Gunaraina v Nandawathie (Somawansa, J.)
the view that the learned District Judge having considered and 130analysed the evidence very carefully has come to a correct finding.
In the light of the above reasoning, I see no reason to disturbthe judgment of the learned District Judge. The appeal is dismissedwith costs.
DISSANAYAKE, J.- I agree.
GUNARATNA v. NANDAWATHIE