H. N. G. FERNANDO, S, P. J.—Ounasekera v. Lewis Appuhamy
1966 Present: H. N. G. Fernando, S.P.J., and Abeyesundere, J.A. P. GUNASEKERA, Appellant, and R. A. LEWIS APPUHAMY,
S. C. 123/1964—D. C. Gampaha, 9559/DT
Prescription—Donation—Reservation of life interest in donor—Subsequent transfer bydonor's heirs—Prior registration of his deed by the transferee—Anterior exclusivepossession by donor and donee—Rights of donee as against the subsequenttransferee—Contractual character of donor's possession—Registration ofDocuments Ordinance, 8. 7.
Where an owner of a land transfers it by gift to a person, reserving to himselfa life interest, the donee becomes the true owner from the date of the gift. Thedonor’s right of usufruct is, from that time, a contractual one arising from thecontract of donation, and his possession enures to the benefit of the donee forthe purpose of enabling the donee to acquire prescriptive title to the land asagainst a third party.
Where A gifts a land to B reserving to himself a right to possess a half-shareof the land during his life time, his possession of the entirety of the land fromthe date of the gift enures to the benefit of B for purposes of prescription. Ifthe deed of gift is unregistered and A’s heirs subsequently transfer a portionof the land to C, who registers the deed of transfer, B can still claim prescriptivetitle to the land as against C, if the transfer to C was executed ten years after Aand, after A’b death, B had been in exclusive possession of the land.
A.PPEAL from a judgment of the District Court, Gampaha.
H. W. Jayewardene, Q.C., with Eric Amerasinghe and G. A.Amerasinghe, for the defendant-appellant.
H. V. Perera, Q.C., with F. A. Abeywardene, for the plaintiff-respondent.
Cur. adv. milt.
October 22, 1966. H. N. G. Fernando, S.P.J.—
One Carolis, who was the owner of the land to which this action relates,gifted the land in 1947 to his son the Appellant. The gift was subjectto the condition that Carolis was to possess half-share of the land duringhis life time. Carolis died in 1953. The learned Judge has held on the■evidence that Carolis possessed the entirety of the land until then, andthat the Appellant possessed the land thereafter. The transfer of 1947to the Appellant was not registered.
H. N. O. FERNANDO, S.P.J.—Gunaaekera v. Lewis Appuhamy
In 1961, another sod of Carolis, who had left 7 children in all, purchasedfrom one of his sisters a one-seventh share of the land, and thentransferred to the Plaintiff a two-seventh share. These deeds wereduly registered, and the Plaintiff soon thereafter instituted this actionfor partition, claiming for himself a two-seventh share.
It was not disputed that the transfer to the Appellant was void asagainst the Plaintiff who claimed an adverse interest on the registeredtransfer to himself in 1961.
To meet this claim, the Appellant put forward a plea of prescription,which when properly understood was on the basis :—
(а)that, from 1947, the possession of Carolis was that of an usufruc-
tuary and must enure to the benefit of the true owner, and wasnot adverse to the true owner ; and
(б)that from the time of Carolis’s death and until the time of the action,
the Appellant had himself been in exclusive possession of theland.
The point at (a) above was rejected by the trial Judge on the groundthat Carolis’s right to possess was not a contractual one, and Mr. Pererahas also relied on this ground in appeal. When an owner of land wishesboth to transfer by gift the title to some other and to reserve to himselfan interest for life, it can at first sight appear that the subject of thetransfer is the dominium, less the right to possess for a period ofunspecified duration, and that in that way the right of possession doesnot-arise from contract, but is a right which the former owner continuesto enjoy despite the contract of donation. To accept such a propositionis to recognise that there is a distinction between a case where a donorreserves the usufruct for himself from a case where, for instance, hereserves the usufruct for his wife or some other third party. In the lattercase, the wife’s right is purely contractual depending on an agreementbetween herself and the'donee—and it seems to me that equally the donor’sown right of continued possession in principle depends on agreement. Letme take also a case where a donor reserves to himself a right to possess theland for a specified period. At the end of that period, he will be under acontractual duty to yield up possession to the donee. If then the rightto possess becomes terminated by operation of the contract, it seemsclear that the right of possession itself arose from the same contract.The position would be different in principle only in a case where a personalready holding an usufruct agrees to transfer his right at the end of aspecified period. I
I hold that Carolis’s right of usufruct arose from the contract of dona-tion. That being so, his possession was referable to that right and mustenure to the benefit of the Appellant, who was acknowledged by the deedof donation to be the true owner of the land. The Appellant would be
416 H. N. G. FERNANDO, S.P.J.—Qunasekera v. Lewis Appuhamy
entitled to that benefit even if there had been a reservation of a life interestto CaroliB in the entirety of the land. A fortiori will the benefit enurewhen as here Carolis had an usufruct only in a half-share. Had theJudge not misdirected himself on this point, there was nothing in theevidence to counter the presumption which arose in favour of theAppellant.
But Mr. Perera advanced also another argument based on Section 7 ofthe Registration of Documents Ordinance. That Section he said declares(in the present context) that the donation to the Appellant “ shall bevoid ” as against the plaintiff, who claims an adverse interest on his dulyregistered transfer of 1961. The deed of donation is therefore void“for all relevant purposes ”. That being so, the Appellant cannot relyon any of the legal implications of the deed for any relevant purpose ;therefore the Appellant cannot (as against the plaintiff) claim that thedeed gave Carolis a legal right of possession and that Carolis possessedthe land in virtue cf that right ; it must follow that the Appellant cannothave the benefit of the implication of law that Carolis’s possession washis possession.
Mr. Perera’s argument has in my opinion been answered in thejudgment in Banda v. Alitambyl. The land in that case had been subjectto an usufructuary mortgage, and the mortgagee was in possession.On 9th August 1927, the land was sold by A (the owner) to B ; thistransfer was not registered until 22nd August 1927. But on the 10thAugust A sold the land to X, who registered his deed on 16th August.In terms of Section 7, X’s deed gained priority over that of B by priorregistration. The usufructuary mortgagee nevertheless continued inpossession for well over ten years from 1927, and the heirs of X onlyclaimed the land after that period had expired. In discussing the effectof Section 7, Gratiaen, J., made the following observations :—
"It is clear enough that, in any competition arising between theappellant’s claim to paper title under 1 D 1 and the plaintiff’sclaim to paper title under the subsequent conveyance from the samesource, the latter must prevail by reason of its prior registration.On the other hand, a person who has enjoyed adverse possession(either personally or through an agent or licensee) of the property isnot precluded from relying on such possession, both before and afterthe date of registration of the opponent’s deed, for purposes ofacquiring prescriptive title to the land. For, as Sampayo J. explainsin Appuhamy v. Ooonetileke (18 N. L. R. 469), ‘ the benefit of priorregistration is given to an instrument only against anotherinstrument. Such registration only affects titles based on the .instruments, and has nothing to do with titles acquired otherwise thanupon such instruments.’ 1
1 (2952) 64 N. L. R. 249.
H. N. G. FERNANDO, S.P.J.—Ghinasekera v. Leitrif Appuhamy 417
“ The legal title to property which admittedly became vested in theappellant on 9th August, 1927, was not invalidated merely because Piwas duly registered six days later, it only became liable to be invalidatedif and when a claim to the benefit of prior registration was assertedagainst him by the plaintiff and his co-purchaser. For the same reasonsI conclude that the subsisting legal relationships between Dingiri AppuNaide (as the usufructuary mortgagee occupying the property in thatsubordinate position by virtue of his contractual rights) and theappellant (as the cessionary of the corresponding rights of the originalmortgagor under the contract) was not automatically severed by themere registration of PI in the appropriate books mentioned under theOrdinance. The character of Dingiri Appu Naide’s occupationremained unaltered for a period exceeding 10 years after 9th August,1927, and it continued throughout that period to enure to theappellant’s benefit because it was not interrupted at any stage eitherphysically or in any one of the methods recognised by thecommon law as sufficient to terminate a mutual relationship ofthat kind. ”
In describing B (the appellant in that case) as “ the cessionary of the■corresponding rights of the original mortgagor under the contract ”,Gratiaen J. clearly thought that the unregistered transfer to B waseffective in law to create a contractual relationship between B and theusufructuary mortgagee. The transfer could not have been thuseffective if (as is argued by Mr. Perera) the transfer became void “ forall relevant purposes ” as against X. Before the transfer, the possessionof the usufructuary had been in law the possession of the owner-mortgagor. But possession after the transfer was in law the possession•of the transferee because, in the contractual relationship between theusufructuary and mortgagor the transferee took the place of themortgagor. This substitution was a consequence of the transfer, whichto that extent could be relied on, despite the operation of Section 7.
On a parity of reasoning, the Appellant in the present case, althoughhe cannot rely on the donation of 1947 to assert title as against theplaintiff, can nevertheless rely on the donation as establishing, betweenhimself and Carolis, the contractual relationship of owner andusufructuary. Since the Appellant himself possessed after the death ofCarolis in 1953, that possession together with the possession of Carolisfrom 1947 (which must enure to his benefit) resulted in the Appellantacquiring a prescriptive title before the plaintiff claimed his rights byvirtue of priority of registration.
418 H. N. G. FERNANDO, S.P.J.—Gunasekero v. Lewis Appuhamy
Mr. Perera also argued that if an unregistered transfer is not regarded,,as against a subsequent registered instrument, as void “ for all relevantpurposes ”, the benefit accruing from prior registration could be quitevalueless. He took an example like the following:—A has possessed aland for nine years and some months prior to 1st January 1950 ; on thatday, he transfers the land to B by an instrument which is not registered ;again, on 1st January 1951, A transfers to C, who promptly registers hiBdeed and claims the land from B in an action. If in that action thetransfer of 1950 to B is not regarded as void for all relevant purposes, then,(it was argued) B can claim a decree on the ground of prescription byadding his possession of one year to A’s earlier possession of nine plusyears. It seems to me however that in such a case B’s attempt is to relyon the unregistered transfer as being a transfer to him of A’s title, andconsequently to rely on A’s earlier possession as that of his predecessor intitle. That attempt must fail because Section 7 prevents B from assertingagainst C that he has or had title under the unregistered instrument.But in a case like the present one, or that decided by Gratiaen J., theunregistered instrument is not relied on as an assertion of the devolutionof title; it is relied on only to establish a contractual relationship byvirtue of which actual possession, after an unregistered transfer, enuresto the benefit of a party to the contract.
The correctness of this view is borne out by a consideration of anothercase, different in fact, but not different in principle. Suppose B has notitle at all, but purports to transfer the usufruct of the land to C fortwelve years by an unregistered instrument, and that C does possessthe land for twelve years. If X after that obtains a transfer from thetrue owner, B can meet X’s claim by relying on C’s possession as usu-fructuary under him. The facts of the present case differ only in thatthe unregistered instrument, which created the contract of usufruct, inaddition purported also to convey Carolis’s title to the Appellant. Whilethe unregistered instrument is void qua conveyance, it can neverthelessbe relied upon as establishing the contractual relationship.
The learned trial Judge erred in my opinion in holding that thepossession of Carolis did not enure to the benefit of the Appellant. Onthe ground that the Appellant acquired a prescriptive title before theplaintiff made his claim, I would allow this appeal and dismiss theplaintiff’s action with costs in both Courts.
AbeYEStryDEBE, J.—I agree.
A. P. GUNASEKERA, Appellant, and R. A. LEWIS APPUHAMY, Respondent