005-SLLR-SLLR-1993-2-A.-D.-H.-PERERA-v.-GUNAWARDENA.pdf
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Premasiri v. Officer-in-Charge, Police Station, Matara (Grero, J.)
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D. H. PERERA
v.GUNAWARDENA
SUPREME COURTFERNANDO, J.
AMERASINGHE, J. ANDWADUGODAPITIYA, J.
SC APPEAL 27/91CA NO. 1052/90DC MT. LAVINIA NO. 1352/REJULY 08. 1991.
Appeal – Execution pending appeal – Substantial loss – Judicature Act, s. 23.
An application for writ of execution to eject the defendant-appellant was allowedon security being furnished although an appeal had been filed. Acting in revisionthe Court of Appeal reversed the order permitting execution.
Held:
As the defendant-respondent had failed to satisfy the Court that substantialloss may result unless execution was stayed, the plaintiff was entitled toexecution pending appeal.
While some consideration of the degree of hardship to the judgment-creditormay perhaps be relevant especially in borderline cases, there is certainly no burdenon him to establish comparatively greater hardship as a condition of the grantof execution. The burden is on the judgment-debtor to satisfy the Court that theloss would be substantial.
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[1993] 2 Sri LR.
The owner of a business is not entitled to the maximum tenure that the lawallows. Such a proposition would effectively deny execution pending appeal andintroduce a new test under the guise of interpretation.
Mere assertions of the judgment-debtor's opinion that serious loss wouldresult, unsupported by averments of fact in regard to the nature of the business,its turnover and profits (or losses), the difficulties and expenses which relocationwould occasion and similar matters, are insufficient. The material upon yvhichsuch assertions were based should have been made available to enable theCourt to assess the loss, and to determine, in relation to the judgment-debtor,whether such loss was substantial, and also to determine the quantum of security.While generally goodwill does attach to a business, there is no presumption thatevery business has a goodwill and certainly not as to the extent of the goodwill.
Case referred to :
Charlotte Perera v. Thambiah (1983) 1 Sri LR 352.
APPEAL from order of Court of Appeal.
P. A. D. Samarasekera, P.C. with W. P. Gunatilleke, C. Nilanduwa and U.S. Sooriyarachchi for plaintiff-respondent-appellant.
A K. Premadasa, P.C. with Faiz Mustapha, P.C. and Miss F. Abeyratnetor sub-defendant-petitioner-respondent.
Cur. adv. vult.
September 05, 1991.
FERNANDO, J.
The plaintiff-respondent-appellant (the " appellant") instituted thisaction on 15.1.1981 against the original defendant for ejectmentfrom business premises No. 97, Stanley Tillakaratne Mawatha,Nugegoda, which are admittedly excepted premises.
The original defendant died on 11.11.1981, and in 1982 theappellant applied to substitute the widow ; she objected to substi-tution on the ground that the business carried on at the premiseshad been a partnership business between the defendant andhis daughter the substituted defendant-petitioner-respondent (the“ respondent “) who was continuing to carry on that business in thepremises, and that it was the daughter who should be substituted.Thereupon the appellant applied to substitute the respondent, whowas duly substituted and filed her answer on 25.7.1983. On 3.5.1985the respondent filed an amended answer averring that the
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A D. H. Perera v. Gunawardena (Fernando, J.)
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defendant had left a Last Will No. 260 dated 5.11.1981 attested byJauffer Hassen, Attomey-at-Law and Notary Public, and claiming thather mother, as the executrix named in the Last Will, should havebeen substituted in place of the defendant, Jauffer Hassen wasthe Attomey-at-Law who had filed proxy on behalf of the originaldefendant, and proxy and answer for the respondent; it seems thathe had also appeared for the widow.
The trial commenced on February, 1989. On 10.2.89 and 27.2.89several issues were raised. One group of issues raised the questionwhether the deceased defendant had left a Last Will under whichthe widow was named executrix, and if so whether the action wasmaintainable against the respondent. Upto this stage, no referencewas made to the grant of probate or the institution of a testamentarycase. Issues relating to other defences were also reused byCounsel for the respondent, but on 13.3.89 he withdrew all theseissues, leaving only the issues relating to substitution.
On 3.1.90 the learned District Judge gave judgment in favour ofthe appellant, for ejectment, arrears of rent and damages in a sumof Rs. 48,200, continuing damages and costs. The respondent fileda notice of appeal. On 3.5.90, the appellant applied for executionpending appeal under section 763 of the Civil Procedure Code ; therespondent filed objections, with a supporting affidavit, averring thatthe respondent was a spinster of 28 years, that she was carryingon a business called New Lanka Shoe Palace at the premises, thatthe income from that business was her only means of livelihood,and the said business would be completely ruined if the writ wasexecuted, that the respondent had no alternative premises and allefforts to obtain alternative premises had failed ; that the issues onwhich the case was decided, and the question whether it wassection 398 or section 404 of the Civil Procedure Code which wasapplicable in respect of the substitution effected in this case, involvedimportant questions of law.
The matter was taken up for inquiry on 21.8.1990 ; no evidencewas led, and the parties were content to rely on their affidavitsand written submissions. On 22.10.1990 the learned District Judgeallowed the appellant's application for execution pending appeal, onsecurity being furnished. The respondent applied to the Court ofAppeal to revise that order, and that application was allowed 15.1.91.The appellant now appeals against that order with special leave.
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Three matters were urged in the Court of Appeal. After judgmentwas reserved, both parties submitted additional material in regardto alternative accommodation allegedly available to the respondent,namely shop premises obtained by her in 1987 at the Nugegodasupermarket. The Court of Appeal declined to go into that question,which we too need not consider in view of our decision on the otherquestions.
Secondly, it was contended on behalf of the respondent that asubstantial question of law was involved in the appeal. The Courtof Appeal did not consider this submission which it regarded as amere technicality intended to delay proceedings.
It was the third aspect which the Court did consider:“ the questionof relative hardships and the irreparable loss to the respondent" ;It was held that the ejectment of the respondent would causeirreparable loss, because-
“ It is a fact that the premises in question is a business premisesas conceived by law. The petitioner's father has established abusiness in the shoe trade. It is an incontrovertible fact thatgoodwill attaches to a business. It is a valuable accrual to abusiness. Not the least important element in this factor is thelocation of the business itself. The owner of such business isentitled in the circumstances to have the maximum tenure thatthe law could permit him to avail of. The learned trial Judge hasin my view not addressed his mind to (this) important factor."
It was further held that
“ a competing claim of urgency or substantial loss as a resultof delay in being quieted in possession has not been made outbefore the teamed trial Judge by the plaintiff. He has in fact notgiven cogent reasons to justify comparatively greater hardship onthe part of the plaintiff. "
Learned President's Counsel for the respondent very properlyconceded that the Court of Appeal was in error in consideringthat" irreparable loss " to the judgment-debtor, and " comparativelygreater hardship" to the judgment-creditor, were the relevantfactors. Execution pending appeal may be stayed under section763 where the judgment-debtor satisfies the Court that" substantial
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loss ° to him may otherwise result (Charlotte Perera v. Thambiah,(1>) ; while some consideration of the degree of hardship to thejudgment-creditor may perhaps be relevant, especially in borderlinecases, there is certainly no burden on him to establish comparativelygreater hardship as a condition of the grant of execution. Hecontended that the objections and affidavit filed by the respondenthad not been controverted by a counter-affidavit, and that the partieshad invited the Court to make an order upon the application forexecution on the basis of affidavits and written submissions ; thatthe appellant thereby accepted the truth of the averments in therespondent's affidavit, in which she had averred that the income fromthe business was her sole means of livelihood, that the businesswould be completely ruined if she was ejected, and that even ifshe was restored to possession after winning the appeal thebusiness could not thereafter be rehabilitated ; therefore, he sub-mitted, substantial loss had been proved.
It was certainly open to the parties to agree to the Court makingits order on the basis of affidavits ; however, in the absence of anexpress admission it cannot be presumed that the parties acceptedone affidavit or the other as correct. Here, the appellant's affidavitaverred, for various reasons, that execution pending appeal wouldnot cause substantial loss to the respondent; the respondent averredthat execution would ruin her business. This conflict in the affidavitscould not be resolved by assuming, despite the absence of a recordedadmission, that the contents of the later affidavit (of the respondent)were impliedly admitted by the appellant. While ejectment from anypremises, residential or business, would cause loss, the burden ison the judgment-debtor to satisfy the Court that such loss would besubstantial. In any event, mere assertions of the judgment-debtor'sopinion that serious loss would result, unsupported by averments offact in regard to the nature of the business, its turnover and profits(or losses), the difficulties and expenses which relocation wouldoccasion, and similar matters, are insufficient. The material uponwhich such assertions were based should have been made availableto enable the Court to assess the loss, and to determine, in relationto the judgment-debtor, whether such loss was substantial; and alsoto determine the quantum of security. While generally goodwill doesattach to a business, there is no presumption that every businesshas goodwill, and certainly not as to the extent of such goodwill. TheCourt of Appeal considered that the trial Judge erred in fouling toconsider the question of goodwill, but in the absence of any evidence
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regarding goodwill the trial Judge could not have come to any findingin that respect. The Court of Appeal also erred in holding that theowner of such business is entitled to the maximum tenure that thelaw allows ; such a proposition would effectively deny executionpending appeal to every judgment-creditor in respect of businesspremises : not because substantial loss has been proved, butbecause the premises are business premises. This would be replacingthe test enacted by the legislature with a different test devised bythe Courts under the guise of interpretation.
The respondent having failed to satisfy the Court that substantialloss may result unless execution was stayed, the appellant wasentitled to execution pending appeal.
Learned President's Counsel for the respondent submitted thatthe respondent's appeal against the decree of ejectment involvedan important and substantial question of law, as to whether therespondent had been property substituted, and that executionshould have been stayed under section 23 of the Judicature Act.Under that section, the Court has a discretion, if it " shall seefit", to make an order staying execution. The failure to disclose theexistence of the Last Will, the delay in applying for probate, thewidow's objections to substitution, and the withdrawal of all theissues relating to the "substantive defences, were all circumstancesrelevant to the exercise of the discretion under section 23, and itis not surprising that the Court of Appeal regarded these as dilatorytactics. Since the respondent has failed to establish the loss andprejudice that would be caused if execution was allowed, it can hardlybe said that the refusal to exercise the discretion under section 23was in any way illegal or improper. No prejudice is caused, for, asheld in Charlotte Perera's case, there is adequate provision to restorean evicted judgment-debtor to occupation if he succeeds in his appeal. I
I therefore set aside the judgment and order of the Court ofAppeal, and restore the order of the District Court. The appellantwill be entitled to costs in a sum of Rs. 5,000.
AMERASINGHE, J. – I agree.
WADUGODAPITIYA, J. – I agree.
Appeal allowed.