ALLES, J .—Gunaicardtna v. Ba/idarann j/cika
Present : Alles, J., and Siva Supramaniam, J.
A. GUNAWARDENA, Appellant, and S. BANDARANAYAKA and
S. C. 335/1965—D. C. Badulla, 2130/L
Compensation for improvements—Value of the fruits of the improvements cannot bededucted.
A bona fide possessor who is entitled to compensation for improvementseffected by him is under no liability to account, to the owner of theproperty improved, for the vnhie of the fruits which h*- derived from his ownimprovements.
Appeal from a judgment of the District Court, Badulla.
Bala Nadarajah, for the plaintiff-appellant.
T.B. Dissanayake, with Nairn Abeysekera, lor the defendants-respondents.
Cur. adv. vult.
February 13, 1967. Alles, J.—
The plaintiff instituted this action against the two defendants as heirsof the late T. B. M. Bandaranayake for a declaration of title to a portionof land called Hirimoletenne described in the schedule to the plaint, orin the alternative that the defendants be ordered to pay to the plaintiffcompensation for the value of the improvements made by him in the eventof the defendants being declared entitled to the land. According to theplaintiff, he cleared the land in 1947 when it was in scrub jungle,constructed some buildings and made certain plantations. The plaintiffmaintained that prior to his death in 1952, Bandaranayake gave theland to him on an informal verbal agreement, having received a sum ofRs. 200 as consideration and promising to give him a deed later. Thisevidence has not been accepted by the learned District Judge. ByIndenture of lease No. 15545 of 22nd July, 1953 marked P4, Bandara-nayake’s widow leased an undivided seven acres in extent from the landcalled Hirimoletenne of ten acres extent to the plaintiff. The lease wasto continue for five years, at the expiration of which the plaintiff wasrequired to hand over possession of the leased premises to the defendants.According to the terms of the lease bond it was expressly agreed betweenthe parties that the plaintiff would not be entitled to compensation for anyimprovements effected by him. It was the plaintiff’s case that the portionleased to him on P4 did not constitute any part of the land in suit whilethe defendants contended otherwise. The learned District Judge hasaccepted the evidence of Surveyor Balasingham to the "effect that theland in suit falls within the premises leased to the plaintiff on P4.
ALLES, J.—Gunauardena v. Bandaranayaka
The learned Judge’s findings on the above facts may be summarised asfollows :—
(а)that the plaintiff is not entitled to a declaration of title in his favour
to the land described in the schedule to the plaint ;
(б)that although the said land was subsequently included in the lease
bond P4, the plaintiff was a bona fide possessor of the said landand is entitled to compensation for the improvements effectedby him.^
We see no reason to disturb the aforesaid findings. –
When the lease expired in 1957, the plaintiff continued to remain inpossession of the land and in 1958 the widow, the first defendant in thepresent action, sued the plaintiff in the Court of Requests, Badulla, inCase No. 15453 for ejectment from the land and claimed damages at therate of Rs. 25 per year till she was restored to possession. The presentplaintiff, who was the defendant in that case, filed answer on 20th January1961 claiming title to the land. The case however did not proceed to*trial and the present plaintiff undertook to file an action for declaration oftitle and the present action was instituted on 6th May 1961. The learnedDistrict Judge has held on a balance of evidence that the buildings and ;plantations had been made by the plaintiff prior to the execution of thelease and that therefore these improvements did not fall within the ambitof the covenant in the lease that the plaintiff was not entitled to claimcompensation for the improvements.
The learned Judge has assessed the compensation payable in respect ofthe buildings at Rs. 3,000. As regards the compensation payable inrespect of the plantations, he has accepted Welgolla’s valuation. SurveyorWelgolla valued the lime plantation at Rs. 634 and the other permanentplantations at Rs. 49. There were also temporary plantations which hevalued at Rs. 180. The sum payable as compensation for the permanentplantations is therefore Rs. 683 and not Rs. 634 as stated by the learnedJudge. The total compensation payable is Rs. 3,683.
Having held that the defendants were liable to pay compensation for theimprovements effected by the plaintiff, the learned Judge proceeded tostate :
<l From this amount, however, the plaintiff has to restore to thedefendants who are the owners of the soil, all the fruits actually gatheredby him after the ‘ litis contestatio ’, that is, after the closing of thepleadings in the action with reference to the possession or ownershipof the ground, because by the * litis contestatio ’ a bona fide possessorbecomes converted into a mala fide possessor. ”
He fixed the date of litis contestatio to be 20th January 1961, being thedat£ on whiclf answer was filed in the C. R. action ; and he determinedthe value of the fruits at Rs. 700 per annum on the basis of an admission
ALLES, J.—Gunawardena v. Bandarcinayaka
by the plaintiff in the course of his evidence that he sold limes from thetrees on the land for Rs. 900 in 1962 and for Rs. 500 in 1963 and on theaverage for about Rs. 600 a year. Although the plaintiff did not saythat the sums stated by him represented the nett profits from the saleof fruits, the learned Judge appears to have assumed that they were nettprofits. He has held that on a set-off of the value of the fruits payable bythe plaintiff to the defendants against the compensation payable by thedefendants to the plaintiff, no sum of money is payable by the defendantsand has dismissed the plaintiff’s action.
In arriving at the aforesaid conclusion, the learned Judge has erredboth on the facts and in law. In view of the finding that the plaintiffwas a bona fide possessor who was entitled to compensation for improve-ments, the plaintiff was under no liability to account to the defendantsfor the value of the fruits which he derived from his own improvements.Voet in his Title on Vindications (Book 6, Title 1, Sections 38 and 39)states :
“ … .since decisions to the contrary are also found, 1 consider thatthe opinion of those is better founded on reason who hold it unfair thatthe fruits of improvements should be set off against the improvementsthemselves. ”
vide Gane’s translation at p. 252 of Vol. 2). The reasons given by Voetfor this view are worthy of reproduction. He says :
H such set-off were to be allowed, the ridiculous consequence wouldin the first place flow from it that a possessor in good faith would seehis own improvements paid for out of his own property and his ownfruits, which had been received by him in right of ownership from hispersonal funds invested in the benefit. Thus when the result islooked at, the possessor in good faith would for the whole period ofsuch possession receive precisely no benefit from his own funds disbursedin the hope of profit, but the owner of the property alone would feelit. Not only that, but bear in mind that a possessor in good faith neverrecovers a greater value for improvements than what they are worthat the time of restoration, so that the whole expenditure is at the riskof such possessor, and he gets either little or nothing according as eitherlittle or nothing is left of the improvement made. Thus if set-offis allowed, the effect would surely be that all gain from disbursementsindeed would pass to the owner of the property improved, but the burdenof the risk of them would fall only and solely on the possessor in good
faith. ”“ To this may be added that the more careful
the possessor in good faith has been, and the more zealous like a goodfather of a household to bring the property which he thinks his owninto a better statg, the worse by so much would be his condition ; butthe n*ore careless he has been so much the more would Tie profit. * Noone can help seeing how far that departs from natural fairness. ”
ALLES, J.—Gunawardena v. Bandaranayalca
Voet’s view has been adopted in South Africa—vide Fletcher and Fletcherv. Bvlawayo Waterworks Co. Ltd.1 and in Ceylon—Beebee v. Majid8 andNeumam v. Mendis3. In the latter case, Browne, J. at p. 80 states asfollows :—
“ And though in assessing compensation for impensae utiles themesne profits including fruits consumed are to be taken into accountyet the fruits of the expenditure itself, fructus ex ipsa meliorationspercepti, are to be excluded from the accounting and not to be set offas against the claim (1 N. L. R. 226). The reason thereof seems obvious.The mesne profits arise out of the original capital of the parties, theland itself, the fruits of improving the expenditure arise from theadditional capital brought in by the improver. ”
In the case of Bilindi v. Aththadassi Thero4 all the earlier authoritieswere referred to and this Court held that in a claim for compensation forimprovements a bona fide possessor need not deduct the value of thefruits obtained by him, before the date of assessment, from the improve-ment itself. The date of assessment was held to be the date of thejudgment. The finding, therefore, that the plaintiff should account tothe defendants for the value of the fruits of his own improvements iswrong in law.
The learned Judge has also overlooked the fact that, in the answerfiled by the defendants they did not claim a set-off of the value of thefruits gathered by the plaintiff from the land and there was no issue onthat point raised at the trial. All that the defendants prayed for, apartfrom a declaration of title in their favour and the ejectment of the plaintiff,was a decree for damages in a sum of Rs. 250 and continuing damages atRs. 50 per annum from the date of the answer, namely, 25th October 1961,until possession of the land w as restored to them. Issue 9 (6) suggested bythe defendants was as follows :—
" What damages are the defendants entitled to ? ”
No evidence was placed before the Court by the defendants on that issueand the learned Judge did not answer that issue, stating that it didnot arise for consideration.
On the basis that he was a bona fide possessor, the plaintiff wasentitled to remain in possession of the land until the compensation dueto him was paid. The defendants are not entitled to claim any damagesuntil they pay to the plaintiff or deposit in Court to the credit of theplaintiff with notice to him the sum of Rs. 3,683 payable as compensation.On the date of such payment or deposit, the plaintiff will be liable to deliverpossession of the land to the defendants and, on his failure to do so, willbe liable to pay to the defendants the entire income derived or derivablebv him from the said land (which will include reasonable rental for the
• 1 (1916) A. D. 636 at 651 and 660.3 (1900) 1 Browne 77.*
* (1929) 30 N. L. R.361 at 362.* (1946) 47 N. L. R. 276.
ALLES, J.— Gunauunltna v. Bandaranai/aka
buildings) from the said date, in addition to damages calculated at Rs. 50per annum until possession of the land is restored to the defendants. Inthat event, the learned Judge will, after holding such enquiry as he maythink fit, determine the amount that should be paid by the plaintiff to thedefendants as refundable income.
We set aside the decree entered in this case and direct that a fresh decreebe entered—
(а)dismissing the plaintiff’s action for a declaration of title to the
land set out in the schedule to the plaint and declaring thedefendants entitled to the said land ;
(б)ordering the defendants jointly and severally to pay to the plaintiff
a sum of Rs. 3,683 as compensation for improvements ;
for ejectment, as prayed for in paragraph (c) of the defendants
answer, the writ of ejectment to issue only on deposit in Court oron proof of payment to the plaintiff of the sum of Rs. 3,683 bythe defendants ; and
ordering the plaintiff to pay to the defendants, with effect from the
date of payment to the plaintiff or deposit in Court with noticeto the plaintiff by the defendants of the sum of Rs. 3,683, allincome derived or derivable by him from the said land, inclusiveof reasonable rental for the buildings thereon, along withdamages calculated at Rs. 50 per annum from the said date,until possession of the said land is restored to the defendants.
The parties will bear their own costs in the lower Court. The appellantwill be entitled to his costs in appeal.
Siva Suphamaniam, J.—I agree.
Decree set aside and a f resh decree entered.
A. GUNAWARDENA, Appellant, and S. BANDARANAYAKA and another. Respondents