ARSECULERATNE v. PERERA

001-NLR-NLR-V-28-ARSECULERATNE-v.-PERERA.pdf


NEW LAW REPORTS OF CEYLONVOLUME XXVIII
Present: Garvin A.C.J. and Dalton J.
ARSECULERATNE t>. PERERA.
321—D. C. Colombo, 7,472.
Agreement for establishing partnership in mines—Assignment of lease—Notarial writing—Part performance—Ordinance No. 7 of 1840,ss. 2, 21, 22.
By a written document signed by the plaintiff and the defendantit was agreed that the defendant, who had the lease of certain mines,which had yet to run for a period of years, should assign an interesttherein to the plaintiff, and that they should become partners inthe mines and work them for their mutual benefit. The manage*ment of the business was entrusted solely to the plaintiff.
Held, that the agreement was one that affected land, and wasvoid for want of compliance with the requirements of- section 2 ofOrdinance No. 7 of 1840.
The dictum of Bertram C.J. in Nanayakkara v. Andris 1 respect-ing the application of the doctrine of part performance to Ceylondisapproved.
HE plaintiff sought to recover from the defendant the sum of 1
-■* Rs. 36,428*75 said to be the half share of losses incurred in apartnership entered into between them to carry on the business ofdigging for plumbago by working mines known as the PattagodaMines for a period of eight years. The agreement constituting thepartnership "was in writing, and was signed by the plaintiff and thedefendant. The material portions of the agreement are as follows: —
(1) Mr. J. B. M. Perera will hereby give over his interest of thelease he has taken from the owners of the said land, whichis yet to run for another eight years, to the said company.
T
1 {1921) 23 N. L. R. 193.
1j. x. B 49007-200 (11/05)
( 2 )
The sole owners of the Pattagoda MiningGompauy are Mr. J. B. M. Perera and Mr. John H.Arseculeratne, who will be entitled to the profits and lossesin equal shares ….
(2) Mr. J. B. M. Perera hereby gives over the management of themines to Mr. John H. Arseculeratne ….
‘•■h Mr. J . B. M. Perera and Mr. J . H. Arseculeratne hereby agree tocontribute equally to the expenses to be incurred on thepit or pits.
The defendant pleaded that the agreement was invalid as it wasnot notarially executed, and that no action could be maintainedupon lit. The learned District Judge upheld the plea and dismissedthe plaintiff's action.
Hayley (with E. G. J Jayatiilehr and Navaratnam).—This casemay be viewed as follows: —
(«) No notarially executed document is necessary as no interestin land is claimed. The action is purely for the enforce-ment of a partnership agreement.
(I>) If the agreement itself cannot be enforced the losing party isentitled to money which may be found to be due on anaccounting.
The document is good for the purpose of proving the partner-
ship.The Statute of Frauds cannot be used to commit fraud.
For the proof of the partnership alone the document need not benotarially executed (vide section 21 (4) of Ordinance No. 7 of 1840).
This is not an action for a breach of contract, and could be differ-entiated from Perera v. Amarasuriya,1 where the action was fordamages for breach of agreement to dig plumbago, or Filyas v.Savitnhamy,2 where the action was for the enforcement of an agree-ment on a planting contract. Also see 23 N. L. E. 193.
In Fovsicr v. Hale 3 one member of a firm of four bankers acquiredan interest in a colliery along with three other persons, and theCourt- held that there was a resulting trust in favour of the otherthree bankers to a share of the one-fourth interest in the colliery,and the letters produced were sufficient to satisfy the Statute otFrauds.
In Giriyorix v. TUlel'eratue 'l it was held 'that money paid on averbal agreement- for lease can be recovered by action.
In tlie case of Watson v. Spratley 5 it was held that a contract topass, shares in an unincorporated company was not an interest inland. Also see J Vesey 313.
1 12 y, l. It. 87.(179S) 3 Ves. Jun. 096.
* (19i18 y. L. B. 82.4 2 C. L. R. 191.
*{1854) 10 Ex. 222.
1926.
•(rtculerwfe/'
v.
pern1/
« )
An notion %m «n agreement to share in the profit* of tne purentwof a land was permitted in Dale v. Hamilton.l
Counsel also cited & G. D. (WOO) 410 and 3B.& C. Sot.
Drieberg, K.C. (with Ganakeratne and H. T Pcrera).—This is aninterest in the laud because the ownership of the mine before thepartnership >vas in the defendant.
In Dale v. Hamilton (supra), and Forster v. Hale (supra) theinterests were acquired during the partnership.
192*.
A r#cculeratn*v.
Per era
Proprietorship is not necessary to create an interest in the land.Right, title, and interest would be sufficient. Interest is used in thewidest sense. It may include possessory rights.
“ ,1. B. M. Perera hereby gives over his interest.*' It it wasnotarial it would be a transfer.
Forster v. Hale (supra). Where one partner acquires pro-perty during the partnership in his own name, no documentneed be present to evidence the fact that it was an acquisitionin trust for the other partners. The acquisition being during thepartnership, it would not be permissible to plead the Statute ofFrauds to perpetrate a fraud. This case is different^ being theowner of a land, he transfer* it to himself and another.
The old rule, by which although one cannot sue oil the contractas it* is of no force or avail in law blit one can sue for anythingarising or flowing from the contract was abolished by Fate v. Pater
In Adaicappa Chatty v, ('aruppen Ghctty 3 the Court held that oursection is more stringent than the Statute of Frauds.
In Edwards v. Edwards 4 the Court'held that if anything is nulland void the Courts of Equity would under no condition considerit valid in particular cases. A similar conclusion was arrived at inWilken v. Kohler,5 where the words were “ force or effect. " Thewords of our Ordinance are almost similar.
Counsel also referred to 17 N. L. R. 97, 14 A7. L. R. 4S9,(1909) 1 K. B. 367, 34 L. J. Eq. 106, 7 t L. 11. 36.
Hayley. in reply.
.July 29, 1038. Garvin A.C.J.—
Gut. adr. rult.
This is an appeal from the dismissal of an action for the recoveryof a sum of money, being the estimated losses incurred in an allegedmining partnership, or in the alternative, for such sum as may hefound due upon the taking of an account between the partners. Theagreement between the parties, on which the plaintiff relies, is set out .in the memorandum PI dated December 2i, 1915, and is signed byboth parties. It was successfully contended" before the Court of trialthat the agreement was one which affected land, and was for chat
*(1921) 22 X. L. R. 417.
* (1913) S. A. L. R. (App.) />#>. 141.
* (1X74) 2 $-}D. 291.
1 (1846) o Hare 369.
* (1916) IS X. L. R. 289.
( 4 )
1928.
.A.C.J.
Arseculeratne
v.
Perera
reason of no force or avail in law for want of compliance with therequirements of section 2 of Ordinance No. 7 of 1840 as to> the mannerin which such agreements should be attested.
The document PI iis as follows: —
1Colombo, December 21, 1015.
This is an agreement between Mr. -T. B. M. Perera on one part amiMr.John H.Arsecularatne on theother to prospect for plumbagoat
Pattagoda Mines under the name of the Pattagoda Mining Company.
Mr. J. B. M. Perera will hereby give over his interest of the leasehe has taken from the owners of the said land (which is yet to run for .another eight years) to the said company.
According totheagreement thePattagoda Mining Companyunder-
take to give the ground shares to the owners.
The sole owners of thePattagoda Mining Company areMr.J. B. M.
Perera and Mr. John H. Arseculeratne, who will be entitled tothe
profits and liable for losses in equal shares.
The former . owner hereby agrees to give over all the machinery whichis now lying at Pattagoda Mines to Mr. John H. Arseculeratne 'toenable him tocommencemining operations for a periodofeight years
and whatever expenses may be incurred, to improve .the machinery willbe charged to the joint account.
Mr. J. B.M.Perera hereby gives overall the managementofthe
said mines toMr. JohnArseculeratne, and he agreesto pay a com-,
mission of 2} per cent. exclusive of stamps* on all the transactions maderegarding thismine by Mr. John If. Arseculeratne, andthiscommission
is to be paid by the Pattagoda Mining Company.
All the outputof plumbago ofthe saidmines will he soldatthe
market rates, and Mr. John H. Arseculeratne is to he given the preferenceof purchasing it at each sale*
Mr. J. B. M. Perera and Mr. John H. Arseculeratne hereby agreeto contribute equallytothe expensesto be incurredonthe pitor
pits.•'
(Signed) J. B. M, Perera.
(Signed) John H. Arseculeratne.
In terms of section 44 of Ordinance No- 2*2 of 1909 I certify that a sumOf Rs. 20 only waspaid by Mr. J.H.ArseculeratneofColombofor
deficiency of stamp duty Rs. 10 and penalty Rs. 10 leviable in respectof this instrument and was credited to revenue on October 16, 1922.
Stamp Office,(Signed) H. E. Beves,
Colombo, October 16, 192*2.for Commissioner of Stamps.
Mr. John H. Arseculeratne is the plaintiff in this action, andMi*. J. B. M. Perera the defendant.
The agreement in substance is this. The defendant, who held ulease of the PattagodaMines, whichhadyet to runfora periodof
eight years, agreedtoassign an interesttherein totheplaintiff,to
the end that they should become partners iii the mine and work itfor their 'mutual benefit—the management being entrusted solelyto the plaintiff.
( « )
It was urged by Counsel for the appellant that this was not anagreement, which by section 2 of Ordinance No. 7 of 1840 is requiredto be in a writing signed by the parties in the presence of a licensednotary public and two witnesses, his submission being that this wasa partnership for the purpose of sharing the profits and losses whichmay arise from the working of a mine and not for affecting anyinterest in the mine. It was sought to draw a parallel between theposition of the plaintiff and that of a shareholder in a cost bookmining company. In the case of Watson v. Spra'tley (supra) thequestion for decision was whether the transfer of a share in a miningcompany conducted on the cost book principle was the transfer of aninterest in land and as such had to be evidenced by a writing to satisfythe 4th section of the Statute of Frauds. The judgments of thelearned Judges who decided that case contain a minute examinationof the constitution of that mining company and proceeds upon thesimilarity of the interests of a shareholder in such a company withthat of the interest of a shareholder in an incorporated company.“ It is true, ” observes Martin B., " the legal interest in such realproperty is generally vested in the corporation, and not in theindividual partner or partners; but the interest of the shareholderin the great incorporated companies and in the smallest mineconducted upon the cost book principle is in its essential natureand quality, identical.” The mine was vested in Mr. York, ashareholder. The judgment is based upon the finding that thenature and constitution of the company was such that the interestof a shareholder was an interest in the proportionate share of theprofits of the adventure and not an interest in the land.
The questions for decision in such cases are stated by Parke B.as follows: —
*' If the purser of the mine, who had himself the let or grant of themine had the mine and the machines and plant vestedin him, in trust to employ the machinery in working themine and making the most profit of it for the benefit ofthe co-adventurers, who were to share the profit only,such interest was transferable by parol, and might bebargained by parol.”
-* If he held the mine in trust for himself and the co-adventurerspresent and future in proportion to their number of shares,then there was a direct trust in the realty, for the rightto get the minerals was a real right, and could not begranted without deed, nor a trust in it transferred withoutnote in writing, nor a bargain be made for a share of thatdirect trust without note in writing.
We are not concerned here with the case of an unincorporatedjoint stock company. What we have to determine is the true natureof the agreement between the parties to this action. It is expressed
1926.
Gakvin
A.C.J.
Arsecul-era-
v.
Pereru
( 6 )
1926.
Garvin
A.C.J,
ArHecuteraine
Perera
by them to be an agreement to prospect for plumbago in the Puttu-goda Mines, of which the defendant wap. from a date anterior to theagreement the lessee. The defendant gives over his interest in thelease to the partnership thus formed and styled the PattagodftMining Company. The mining operations are to be conducted bythe plaintiff. The agreement purports to give the plaintiff aninterest in the lease, an interest in the mine and the minerals, theright to enter upon the premises and commence and conduct themining operations, and a commission on certain transactions. Thedefendant, who was the former holder of the lease, retains an interestns to a half share. The losses, if any, were to he borne jn equalshares.
In no sense is the position of the plaintiff under this agreementsimilar to that of a shareholder in such an unincorporated miningcompany as was the subject of consideration in Watson v. Spratley(supra).
The facts and circumstances of this case approximate more closelyto that of Gaddick v. Skidmore,1 which was a bill for an account of theprofits of an alleged mining partnership. The parol evidence wasthought to. have established an agreement to the effect that theplaintiff and defendant were to become partners in a colliery ofwhich the defendant had previously acquired the lease for thepurpose of demising it upon royalties which were to be dividedbetween them. Such an agreement, observes Lord Cranworth.
“ would be an agreement not capable of being enforced, unlessproved by such evidence as is required by the Statute of Frauds."
The cases of Forster v. Hale (supra) and Dale v. Hamilton (mpra)were cited as instances in which the English Courts had admittedparol evidence jn proof of partnerships which affected land. Thematerial facts of Forster v. Hale (supra) are as follows:—JosephForster, Bobert Bankin, William Kent, and John Burdon carried onbusiness in partnership as bankers. During the subsistence of thisrelationship a lease of a colliery called Hebburn was granted toJohn Burdon and three others for a term of thirty-one years. Burdondied. The bill was filed by Forster and Bankin against theexecutors of Burdon to have it* declared that Burdon took and heldthe fourth part of this colliery on account of himself and the plaintiffsami Kent respectively in equal shares; and that the defendantsbe decreed to assign the same accordingly. It was held by theMaster of the Bolls that the letters and other documents tendered*in evidence raised a trust by implication and constituted sufficientevidence in writing of the trust to satisfy the Statute of Frauds.Thus far there is no question of the proof of a partnership affecting-land, the decision is founded on the existence of a trust evidencedby writing sufficient to satisfy the requirements of the Statute ofFrauds. Upon appeal ((2800) r> Vesey 308) the judgment wassustained, both on the ground upon which the Master of the Boll
1 (1857 9 De Gf. J. $2.
I 7 )
rested it and upon the additional ground that there was evidence ofa partnership to carry on the business af the colliery which cameinto existence three months before the lease in favour of Burdonwas granted, and that under the circumstances there was uresulting trust for the partnership of the share of the lease thusobtained in Burdon’s name. ” The case/' says the Lord Chancellor," is merely n case of agreement to share profits and loss in the tradeof a colliery; which does not at all affect the ownership of the land;which is often carried on for a great number of years without anyestate in the land given to those who are to share the profits.”
The case appeal's to me to proceed, not on the ground that theagreement for a partnership which necessarily involves the creationof an interest in land in favour of the partners may be proved byparol, but that a partnership in a colliery business where the agree-ment- does not at all affect the ownership of the land and give noestate therein to the partners having been proved, the Statute ofFrauds is no bar to its enforcement so as to affect land subsequentlyacquired for the purposes of the partnership.
The Vice-Chancellor (Sir James Wigram), who rests his judgmentin Dale v. Hamilton (supra), to some extent on Forster v. Hale(supra), states with reference to that case, “ Lord Rosslyn foundedhimself entirely upon the proposition that the existence of the partner-ship drew with it the right to have the stock of the partnership,whether land or other stock, ascertained.” But the partnership withwhich Lord Rosslyn was dealing was ” merely a case of agreement toshare profit and loss in the trade of a colliery; which does not at allaffect the ownership of land.”
There can, however, be little doubt that the Vice-Chancellor did infact found his judgment in Dale v. Hamilton (supra) on the groundthat the partnership did affect land but nevertheless might be estab-lished by parol, as a supposed exception to the Statute of Fraudsestablished by Forster v. Hale (supra) and certain other cases referredto by him. In the result the Court directed the trial of two issues:first, as to whether the agreement between Dale and McAdam wasas pleaded by Dale; and secondly, if such an agreement was proved,whether it was a term in it that Dale should have no authority indetermining when the land was to be re-sold. The defendantappealed, and a cross appeal was entered by the plaintiff. Whatoccurred at the appeal ( (1847) 2 Phillips Hep. 266) is stated in thejudgment of the Land Chancellor: ” This case became embarrassedin the Court below by an attempt, on the part of the plaintiff, to getwhat appeared to be more beneficial than what I think he is clearlyentitled to, and the obtaining of which was attended with a certaindegree of difficulty from the want of an agreement in writing atthe commencement- of the plaintiff's connection with Mr. Me Adam.The Court directed issues to try the fact of partnership, which, if
1926*
Garvin*
A.C.J.
Arsecuieratoe
i
Perera
( 8 )
19B6. they were to be tried, might, I think, leave the parties in furtherGa&vxp embarrassment and without the means of coining to a conclusion a*A.CJ. to their respective rights.
Arsecideratne “ I need not, however, advert further to that part of the case;Parera because the Court below not having made any declaration in favourof the plaintiff, but having merely directed an issue for the purposeof ascertaining the right, the plaintiff is not satisfied with that decree,and has presented a petition of appeal, which came on for hearingtogether with the appeal on the part of the defendant, in which it wascontended that there was no case made, and that the bill, of course,ought to have been dismissed. The plaintiff, therefore, by appealing,,and by what is stated by his Counsel at the bar, is now willing to.take such relief as I may consider him entitled to, founded on thememorandum of October 27, 1843; and I cannot but* think that if thecase had rested on that memorandum in the Court below, all thatembarrassment which was felt in disposing of the case would havebeen entirely saved; because the case, upon that memorandumrappears to me to be a perfectly plain and straightforward one/'
The Lord Chancellor proceeded to discuss that aspect of the case-and held that a trust was sufficiently manifested by the memoran-dum. Though he has not dealt specifically with the ground onwhich the judgment under appeal was founded, there are indicationsin the Lord Chancellor's judgment which at least justify the observa-tion that it was open to question.
There are these features common to both cases—the partnership,,whatever its purpose may have been, was in existence before the landwhich was later applied for the purposes of the partnership wasacquired, and in each case the claim related to and arose out of thissubsequent acquisition. The result arrived at by Lord Rosslyn.in Forster v. Hale (supra) and Vice-Chancellor Wigram in Dale v.Hamilton (supra) seems to be in accordance with the rule of equity'stated thus in Storey’s Equity Jurisprudence, s. 1207:—
“ In cases, therefore, when real estate is purchased for partnershippurposes and on partnership account, it is wholly im-material, in the view of a Court of Equity, in whose namethe purchase is made and the conveyance taken; whetherin the name of one partner or of a stranger jointly withone partner. In all these cases, let the legal title bevested in whom it may, it is in equity' deemed partner-shipproperty not subject to survivorship, and the partners "aredeemed the cestui qui trust thereof."
What further proposition do these two. judgments establish? Itis said that they settled the law in the sense that proof may be givenby parol of agreements of partnership affecting land notwithstandingthe Statute of Frauds. In his work on the law of partnership LordLindley refers to the decision of Wigram V.C. as " an authority for
( 0 )
-the proposition that the Statute of Frauds does not preolude a person 19M.
from establishing by parol an agreement to form a partnership for
the purpose of buying and selling land at a profit.”A.C.J.
I have endeavoured to show that in Forster v. Hale (supra) Lord AneeukratneRosslyn states specifically that the agreement which he admitted to p"#proof by parol was an agreement of partnership “ which did not inany way affect land.” There remains the judgment of WigramV.C., who has undoubtedly applied the principle of Forster v. Hale(supra) to the case of an agreement of partnership intended to dealwith land exclusively.
Kekewich J. in his judgment in Nicols v. Curlier,' when dealingwith Dale v. Hamilton (supra), says: —
“ Jt is settled that there may be an agreement of partnership byparol, notwithstanding that the partnership is intended todeal with land, and that to an action to enforce the agree-ment the plea of the Statute of Frauds is of no avail.”
In each of these cases it appears to have been contended that eachwas an action to charge'persons upon a sale of land or an interesttherein, and was not therefore maintainable without a memorandum•of such sale signed by the party to be charged. The answer in each•case appears to have been that the interest in land was not created bythe agreement of partnership but arose indirectly and as a conse-quence of that relationship when the land or the interest therein wassubsequently acquired in the name of one or more of the partnersfor the purposes of the partnership and on partnership account.
The effect of the decisions seems to be that a contract of partnershipfor the purpose of dealing in land does not directly and of itself createan interest in the land; it often does so indirectly by operation of:the rule that land subsequently acquired on partnership account isheld for the purposes of the partnership despite the absence of amemorandum signed by the partners in whom the title is vested.
This is the exception to the Statute of Frauds recognized by theEnglish Courts in the case of Dale v. Hamilton (supra). It is an ex-ception which Lord Lindley observes goes a long way to repeal theStatute of Frauds. If the. appellant is to be given the benefit of thisexception he must bring himself strictly within its limits. His caseis different in essentials. The interest in this mine was vested in thedefendant long anterior to the alleged partnership, and the agreementwhich he seeks to establish is one by which he was given an interestin the mine for the purpose that they should in partnership prospectfor plumbago.
It is difficult to see how this exception or the principals of equity•on which it rests can help the plaintiff to claim as partner an interestin a mine which belonged to his partner before the formation of thepartnership. If that right was given to him it was because it was
1 (1900) 2 Ch. D. 410.
( 10 )
1986.
Garvin
A.C.J.
iw-cnleratne
v.
Perem
created by the very agreement he seeks to prove. The case is insubstance that of Caddiek v. Skidmore (supra), where the agreementcreates a direct interest in land, with the difference that here theplaintiff was in addition to have the right of sole management andcontrol of the mining operations and the disposal of the plumbago wonfrom the mine. The case of Caddiek v. Skidmore (supra) was fol-lowed in Isaacs v. Evans.1 The plaintiff alleged that he and thedefendant were partners in several joint adventures relating to goldmines, and that in pursuance of an agreement to acquire another minehe and the defendant arranged with the owner for the grant of a leaseto the defendant. He alleged that the defendant thereafter workedthe mine and refused to recognize his interests therein and prayed fora. declaration that the defendant was a trustee for him of one moietyof the property. The defendant denied the existence of a partner-ship and pleaded the Statute of Frauds. Fanvell J. said “thatnot to allow the plea of the Statute of Frauds would be to go too far.Before parol evidence could be admitted of the contract it wasnecessary to show that a partnership existed. It was not enoughmerely to plead a partnership to get rid of the Statute ….Here there could be no trust unless the partnership were proved."
To this examination of the English cases I need only add theobservation that the plaintiff has not brought himself within theprinciple of Dale v. Hamilton (supra).
The difference between the law of England and the law of Ceylonas to the proof of u partnership is this. Generally speaking, underthe English law a partnership may be proved by parol evidence :in Ceylon section “21 of Ordinance No. 7 of 1840 declares that “ nopromise, contract, or bargain, unless it be in writing and signed bythe party making the same … shall be of any force or
avail in law …. for establishing a partnership where thecapital exceeds one hundred pounds.” There is no question herethat the capital does exceed a hundred, pounds, i.c., Bs. 1,000.This section is expressly made subject to section 22, which is asfollows: —
“ Provided always that nothing in the preceding clause shall beconstrued to exempt any deed or instrument in any manneraffecting land or other immovable property from beingrequired for that purpose to be executed and attested inmanner declared bv the second clause of this Ordinance.”
The second section states that—
“ No sale, purchase, transfer, assignment, or mortgage of land orother immovable property, and no promise, bargain, con-tract, or' agreement for effecting any such object, or forestablishing any interest therein …. shall be ofany force or avail.”
' (1899) Weekly Notes ZG1.
I
( n )
The law is dear. An agreement to establish a partnership must 1926,he in writing, and if it effects a sale or assignment of or establishes an q]^7in.interest in land as well or is in effect an agreement for effecting anyA.C.J.
'•uch object, it must in addition be notarially attested. It wasargued that the document Pi was admissible as evidence of a <*.partnership to share profits mul losses in the business of mining forplumbago which did not affect the right to the land or any interesttherein, so that the plaintiff might claim an account on that basis.
This would be to make a new agreement for the parties different inessentials. Their agreement is set out in the document signed bythem and discloses an ugreement of a very different character. Theinterest of the plaintiff was not merely that of a person whose rightswere limited to a shave in the profits. The partnership grew out ofthe agreement creating in the partners as such an interest in the mineand is inseparable from it and create rights of possession and enjoy-ment therein. Jt is no doubt true that if a promise is divisible sothat, in effect there are two distinct agreements, one of which is and■one of which is not within section 2 of Ordinance No, 7 of 1840. theportion of the promise which is not within the section may beenforced though not notarially attested. Lushiiujton v. CarofrV isan instance of the application of this rule to the case of a securitybond hypothecating immovable property, the personal obligation topay money was held to be severable’ from the hypothecation andenforceable though the bond was not- notarially attested.
The agreement between the parties to this case is one. It is anagreement to become partners ill a mine upon a specified basis andupon the prescribed terms. How is this divisible into two distinctagreements? Counsel’s suggestion involves the alteration of thewhole basis of the agreement. It is a sufficient answer that theagreement affects land and is one and indivisible. If and when it; issought to prove a partnership for the purpose of buying and sellingland or for the purpose of sharing in the profits and losses of a parti-cular land, it will become necessary to consider whether the expressprovision of Ordinance No. 7 of 1840 admits of such an exceptionas was recognized in Dale v. Hamilton (mpm). But it must not beMipposed that all the incidents of partnership in so far as they affectland or other immovable property and every principle relating theretoapplies in all respects in Ceylon. The law of partnership adminis?tered in England has been introduced into this Colony by OrdinanceNo. 22 of 1866, but subject .to the proviso that no part of the lawof England relating to the tenure, conveyance, or assurance of Orsuccession to any land ov other immovable property or any estate,light, or interest therein shall be.taken to have been introduced intothis Colony. In Madar Saibo v. Sirajudem-,* Pereira J. referringto the contention that under the English law land bought by apartner in his own name out of firm's assets is deemed to be the1 (1911) 14 N. L. R. 48S* (M3) It N. L. R. 97.
( 12 )
1936,
Garvin
A.C.J.
sirsectderatne
V.
Perera
property of the firm, observed “ However that may be, it is clearfrom our Ordinance introducing the English law as to partnershipinto liiis country that the law as to the conveyance of land andrights in land is still the law of the country and not the Englishlaw.”
The Legislature has in this enactment shown no disposition toadmit any of the principles of the English law into the law in forcejn Ceylon, of which Ordinance No. 7 of 1840 is an important, essen-tial, and vital part. If the agreement sought to be established inproof of a partnership is obnoxious to Ordinance No. 7 of 1840 the cir-cumstance that the English law of partnership has been introducedinto this Colony is not a sufficient ground for admitting evidence ofa partnership which the Ordinance forbid. The Courts in Ceylonhave with hardly any exception rigidly applied and enforced theprovisions of Ordinance No. 7 of 1840. An agreement to cultivatethe land of another for a share of the crop is an agreement affectingland. Sa'jftoo v. Kalinguwa.1 This effect of the Ordinance on thecustomary form of cultivation known as anda cultivation was notfully realized, and as a result a special Ordinance, No. 21 of 1887, wasenacted to exempt from the operation of Ordinance No. 7 of 1840 con-tracts or agreements for the cultivation for a share of the crop ofpaddy fields or chena lands for any period not exceeding twelvemonths, In Eliyas v. Savunhamy (supra) we have an instance of anagreement between the plaintiff and the defendant to cultivate thedefendant's land and to share the produce in the proportion of three-eighths to the plaintiff and five-eighths to the defendant. The partner-ship had in fact been in existence for several years. It was held thatthe agreement created An interest in land, and as such was obnoxiousto Ordinance No. 7 of 1840. In all essentials the facts are similarto those of the case under consideration.
An agreement whereby a land was sublet .for a share of the gemswhich may be found" or their value was held to be of no force or availin law under section 2 of Ordinance No. 7 of 1840 (vide Nanayahharav. Andris (supra).
The only seeming exceptions to the provisions of the Ordinanceare to be found in the cases of Ibrahim Saibo v. The Oriental BankCorporation,2 Gould v. Innasitambyand Ohlmus v. Ohlmus.4They are all instances of obligations in the nature of trusts arising orresulting by implication or construction of law. The effect of therulings is that parol evidence may be given in .such cases, as it wasthought that section 2 of Ordinance No. 7 of 1840 only refers tointerests in land created by the parties as opposed to those arising by *operation of law. To this extent alone will there I think be foundin the reports of local cases any exception, whether real or onlyapparent, to the Ordinance No. 7 of 1840. But in the case of
»{1887) 8 8. C. C. 67.
* (1874) 3 N. L. B. 148.
(1904) 9 N. L. R. 177.
(1906) 9 N. L. R. 183.
( 13 )
A?anayahkara v. Amiris (supra), Sir Anton Bertram set down whathe conceived to be the extent to which and the principles in accord-ance with which our Courts are “ entitled to go behind the expresswords of our local Statute of Frauds, Ordinance No. 7 of 1840.With the exception of a few observations made with reference to theaction of “ use and occupation ” this summon' is wholly obiter, andwas set down, as the learned Judge himself observes, for the assist-ance of outstation Judges. It is a summary of the English law, theprinciples of which it was thought might be applied by the Courtsin Ceylon.
With all respect to the learned Chief Justice. I cannot agree thatthe difference between the language of Ordinance No. 7 of 1840 andthat of the English Statute of Frauds is a mere matter of phraseology.Nor do I think that there can be any justification for going behindthe express words of this legislative enactment: —
" Whenever the law enacts that the truth shall be proved by oneform of testimony only, and not by all admissible andavailable forms, there is peril of doing particular injusticefor the sake of some general good, and even of enablingsome rogue to cloak his fraud by taking advantage of astatutory prescription the policy of which was the preven-tion of fraud. This the Legislature must be taken to haveweighed before enacting the Ordinance. All that remainsfor judicial determination is its true meaning. ”—LordSumner in Pate v. Pate (supra).
There is surely a substantial difference between section 4 of theEnglish Statute of Frauds, which enacts that “ No action shall bebrought ” upon the contract, and section 2 of Ordinance No. 7 of1840, which declares that no such contract or agreement shall be of“ any force or avail in law.” “ This section,” observes Lord Atkin-son in Adaicappa Chetty v. Caruppen Ghetty (supra), “ is much moredrastic than the fourth section of the Statute of Frauds.”
His Lordship briefly indicates certain differences in the applicationof the two enactments and concludes as follows:—■
•A
“Evidence tendered by a party litigant relying upon-an agree-ment as valid and enforceable, which, if admitted, wouldestablish that the agreement was of no force or avail, isinadmissible. It would be a travesty of judicial procedureto admit it.”
/
The attention of the learned Chief Justice does not appear to havebeen called- to the above case or to the case of Wilken v, Kohler{supra), in which a Bench of five Judges of the highest eminence con-sidered a South African enactment, where the material words Were” no contract …. shall be of any force or effect unless it be
102&
Garvik
A.C.J.
Arteculerafe
u.
Perxra
( 14 )
4926.
CrABVIN
A.C.J.
ranoaterntnc
Ferera
in writing und signed by tlie parties.'' The Court held tnnt totcontract was void, lnnes J. in his judgment states: —
“ Now, a contract which is of no force and effect is void. Noemphatic adjectives and no redundant repetition couldexpress a conclusion of nullity more effectually than dothe simple words which the Legislature has employed.”
It is interesting to note that the Court considered and found itselfunable to apply the doctrine of purt performance known to theEnglish law to contracts governed by the Kouth African Act referredto. The position is exactly the same here. The Legislature hasenacted that no contracts or agreements affecting land, shall be ofany force or avail unless they are in writing signed by the partiesand notnrially attested. Its meaning is clear and free from ambi-guity. All that remains is to apply it. I have not lost sight ofthe fact that in 1917 the Legislature passed a Trusts Ordinance.Whether for the purposes of that Ordinance and within its fourcorners the. Legislature has enacted any exceptions to OrdinanceNo. 7 of 1840 will be considered when the point arises. The sub-mission that in this case the doctrine of part performance may beinvoked to admit parol evidence has been sufficiently answered.But I might add that in my judgment Counsel has wholly failed tobring this ease Within the limits of that doctrine as it is known andapplied in England.
There remains the submission of Counsel that Inasmuch as thejiartnership is. now concluded by agreement and is no longer sub-sisting lie is entitled to the account- he claims as he is not seeking toenforce the agreement. But the account can only be taken on thebasis of a partnership the proof of which is essential if the claim isto be allowed. This case is in these respects similar to Pate r.Pate (supra). In each case no relief can be granted except uponthe basis of the existence of a partnership of which the evidencerequired by law is not available.
The appeal is dismissed, with costs.
Daltox -J.—
The plaintiff sought to recover from the defendant the sum ofBs. 86,428.57 said to be the half share of losses incurred in a partner-ship between the two parties. The partnership is stated by himto have been formed on December 21, 1915, to carry on the businessof digging plumbago by working mines known as the PattagodaMines for a period of eight years. The agreement constituting thepartnership was in writing. Defendant pleaded that this docu-ment, marked as exhibit PI, was invalid in law and that therefore
( 15 )
the action could not be maintained. Various issues were framed,but the trial Judge only dealt with the first, which was asfollows: —
(1) Is the document containing the agreement betwteen plaintiffand defendant invalid in law inasmuch as it has not beennotnriaUy executed and has not been stamped.

He held that the agreement created an interest in land, andinasmuch as it had not been notarially executed it was invalid inlaw. It was therefore not necessary to deal with the further issues.
As it will be necessary to compare the provisions of OrdinanceNo. 7 of 184C with the equivalent provisions of the Statute of Frauds.
and to consider the numerous .hnglcited in the course of the argument,
the Ordinance and Statute which
Ordinance. No. 7 of 1840.
'2. No sale, purchase, transfer,assignment, or mortgage of land orother immovable property, and nopromise, bargain, contract, or agree-ment for effecting any such object,or for establishng any security, in-terest, or incumbrance affecting landor other immovable property (otherthan a lease at will, or for anyI>criod not exceeding one month),nor any contract or agreement forthe future sale or purchase of anyland or other immovable property,shall be of force or avail in lawunless the same shall be in writingand signed by tho party makingthe same, or by some person law-fully authorized by him or her inthe presence of a licensed notarypublic and two or more witnessespresent at the same- time, andunless the execution of such writ-ing, deed, or instrument be dulyattested by such notary andwitnesses.
*21. No promise, contract, bar-gain, or agreement unless it be inwriting and signed by the partymaking the same, or by someperson thereto lawfully authorizedby him or her, shall be of force oravail in law for any of the follow-ing purposes: —
a)—.
(3)—•
(3).
28/5decisions which have been
I set out here the sections ofrelevant: —
Statute of Frauds.
1. No action shall be brought
whereby to charge any executoror administrator upon any specialpromise to answer damages outof his own estate; or whereby- tocharge the defendant upon anyspecial promise to answer for thedebt, default, or miscarriage ofanother person, or to charge anyperson upon any agreement madeupon consideration of marriage, orupon any contract or sale of lands,tenements, or hereditaments or auyinterest in or concerning them; orupon any agreement that is notto be performed within the spaceof one year from the makingthereof, unless the agreement uponwhich such action shall be broughtor some memorandum or notethereof shall be in writing audsigned by the party to be chargedtherewith or some other personthereunto by him lawfully author-ized.
1928.
Daioon J.
ArsecuhratP*
v.
Porera
( 16 )
(4) Forestablishing apartner-ship . wherethe capital
exceeds one hundredpounds:Provided that this
ahall not be construed toprevent thirdparties, from
* suing partners, or personsacting as such, and offeringin evidencecircumstances
to provea partnership
existing between suchpersons, or to exclude paroltestimony concerning trans-actions by or thesettlement ofany account
between partners.
22. Providedalways that
nothing in the preceding clauseshall be construed to exempt any
deed or instrument in any' maimeraffecting land or other immovableproperty from being required forthat purpose. .to be executed andattested in manner declared bv thesecond clause of this .Ordinance.
1926.
Dajkton J.JirascM^ratne
. It ‘Would appear that the only evidence of the partnership Whichwas offered in the trial court was the document PI. Upon, thatbeing put’ in, Counsel were heard on the first issue. It is thereforenecessary to set out the agreement-in,full: —
' •' Colombo, December 21, 1915.
This isanagreement between Mr.J. B. M.Pereraononepart and
Mr. .John. H.Arseculeratne on theother to prospectfor plumbago at
Pattagoda Mines under the name of the Pattagoda* Mining Company.
Mr. .J. • B. * M. Perera will hereby give over his interest of the leasehe has taken from the owners of the said land (which is yet to. run for•another eight years) to the said company.
According to the agreement the Pattagoda Mining Company undertakes to givethe ground shares to the owners.
The sole dwners of the .Pattagoda Mining Company- are Mr. J. B. M.Perera and Mr; John H. Arseculerathe, who will be entitled to the profit!and losses in equal shares..
The former owner hereby agrees to give over, all the "machinery whichis now lying at Pattagoda Mine to John H.. Arseculeratne to enable himto commence mining operations for a period .of eight . years, and whatever'expenses may be incurred to . improve the machinery will be charged tothe joint account.
Mr.J. B. M. Perera herebygives overthe managementof ’the
mines tpMr.John H. Arseculeratne, and heagreestopaya com*,
mission ofper cent, exclusive of stamps on all the transactions made
regarding this mine by Mr. John- H. Arseculeratne. – and this commissionis to be paid to .the Pattagdda Mining Company.
(17)
All the output of plumbago of the said mines will be sold at the
market rates, and Mr. John H. Arseculeratne is to be given the preferenceof purchasing it at each sale./
Mr. J. B. 51. Perera and Mr. John H. Arseculeratne hereby agree•to contribute equally to the expenses to be incurred on the pit or pits.
(Signed) J. B. M. Perera.
(Signed) John H. ARSECur.fcRA-nfF.
It will be seen, therefore, that this agreement purported to con-stitute a partnership between the plaintiff and defendant under thename of the Pattagoda Mining Company for the purpose of plum-bago mining. The plaintiff conveys to the company his interest inthe lease of plumbago mines at Pattagoda together with existingmachinery, the defendant being appointed manager of the company,to be paid a commission and with a preferent right of purchase atmarket rates of the output of the company. It is expressly declaredthat the sole owners of the company thus formed are .the plaintiff anddefendant, who are to contribute equally to the expenses and areentitled to the profits and losses in equal shares. It is stated that■subsequently by mutual agreement the partnership was terminatedon January7 15, 1918,
In support of his contention, that the plaintiff is in no way debarredfrom bringing this action, Mr. Hayley has referred to numerousEnglish decisions. He relies for the most part oh Forster v. Hale(supra) and Dale v. Hamilton (supra).
The facts in Forster v. Hale (supra) very shortly were that in 1790Forster, Rankin, Kent, and Burdon carried on the business ofbankers under the title of “ The Commercial Bank of Newcastle.'*In 1791 a lease of a colliery was granted by one Ellison to Burdonand three others for a'term of thirty-one*years as tenants in commonin equal fourth shares. Burdon died in 1792. Forster and Rankinfiled a bill against Burdon’s executors, praying that it might bedeclared that Burdon took and held the said fourth part of thecollieryon account of himself,theplaintiffs, and Kent in equal
shares.Thedefendants set upthatthe partners in the bank were
not interested with Burdon in the colliery, and that he was sole andabsolute owner of his .fourth share.
The question that arose on the trial (see 3 Vesey 696) was as towhether a trust was raised by implication from letters, and a paperreferred to in the letters and in the handwriting of the party (Burdon)though not signed and dated, and also by operation of law fromadvances of money. The Master of the Rolls sets out the questionto be answered in the following way: —
“ The question, therefore, is whether sufficient appears to provethatBurdon did admitandacknowledge himself a trustee;
andwhether the termsandconditions upon which he was
a trustee sufficiently appear. I do not admit with the
1926.
Dalton J.
Areocutcratnc
r.
Perera
( M )1926.
' Dalton J.
A rscctderalnc
v.
Pcrcra
defendants that it is absolutely necessary that he shouldhave been a trustee from the first. It is not required bythe Statute (of Frauds) that a trust shall he created inwriting; and the words of the Statute are very particularin the clause (section 7) respecting, declarations of trust.It does not by any means require that all trusts shall becreated only by writing, but that they shall be manifestedand proved by writing; plainly meaning that there shouldhe evidence in writing proving that there was such a trust.Therefore, unquestionably it is not necessarily to be createdby writing; but it must be evidenced by writing and thenthe Statute is complied with.
After a detailed consideration of the correspondence * an unsignedand undated memorandum, entries in bankers books, and a balancesheet, he concludes that Burdon was trustee and t that the case waswithin the Statute.
Upon appeal the Lord Chancellor affirmed the decree upon thepoints decided by the Master of the Bolls, but went further.
In the course of the argument it was stated that the question waswhether there was a declaration of trust within the Statute of Frauds.Upon this the Lord Chancellor made the following observation: —
“ That was not the question; it* was whether there was a partner-ship; the subject being an agreement for land the questionthen is whether there was a resulting trust for that partner-ship by operation of law. The question of partnershipmust be tried as a fact and as if there was an issue upon it.If by facts and circumstances it is established as a fact thatthese persons were partners in the colliery in which landwas necessary to carry on the trade the lease goes as anincident. The partnership b&ng established by evidence,upon which a partnership may be found, the premisesnecessary for the purposes of that partnership are byoperation of law held for the purposes of that partnership.’*
As appears from the surrounding circumstances he would seemto be here laying down a general rule, a view which has been takenby later authorities to which I refer. He does not deal with thisquestion further, but in his judgment considers the case from anotheraspect. He says: —
“ It was treated at the Bolls as a case in which the whole questionwould arise upon the operation of the Statute of Frauds.. . . . The case appeared to me in rather a differentpoint of view. From the nature of it it seems to me therewas no occasion to affect the estate in the land, nor hasthe decree done so. It has not transferred the legal interest-in the share of the colliery to the plaintiffs. The case ismerely a case of agreement to share profit and loss in the
( 19 )
trade of a colliery, which does not at all affect the ownership 1926.of the land which is often carried on for a great number of Damon j
yeurs without, any estate in the land given to those who are
. to share the profits. Nothing is more common than, where Ar8CCt£0rat7i’a man is tenant in fee of land where there is a coal work, he Perm*partly sharing the rent- and the profit carries it on by merelicence with other persons concerned in the business of thecolliery. It is therefore merely the case of an agreementwhich may or may not be within the fourth section of theStatute. But this particular case is not even within the''fourth section because it was to be executed immediately.*'
Finally he adds: —
'* My view of the case, therefore, though it does not exactly takethe course of the argument at the Bolls, leads me perfectlyto agree with the decree. I think they had no occasion,but undertaking to establish a trust within the strict lineof the Statute, the seventh section, I think they havedouy it.**
In Dale v. HamiUou (supra) the proposition has been set out in tin*following terms. A partnership agreement between A and B thatthey shall be jointly interested in a speculation for buying, improvingfor Side, and selling lands may be proved without being evidenceby any writing signed by or by the authority of the party to becharged therewith, within the Statute of Frauds, and sucli an agree-ment being proved, A or B may establish his interest in land thesubject of the partnership without such interest being evidenced byany such writing.
The defence to the plaintiff's claim was based on the Statute ofFrauds, plaintiff admitting that- he had only oral evidence of thejoint adventure. He urged, however, that the case did not comewithin the Statute on the ground that where a partnership or anagreement in the nature of a partnership exists between two partiesand land is acquired by the partnership as a substratum for suchpartnership, the land is in the nature of the stock-in-trade of thepartnership, rind that the partnership being proved as an independentfact, the Court, without regarding the Statute of Frauds, will inquireof what the partnership-stock consisted, whether it be of land or ofproperty of any other nature. In setting out this claim advancedfor the plaintiff, the Vice-Chancellor points out that at first thisargument would appear virtually to almost repeal the Statuteof Frauds, but after a. detailed examination of other cases, andespecially Forster v. Hale (supra), he concludes the plaintiff wasentitled to succeed. It is true he points out that the principle uponwhich Forster i Hale (supra) proceeded was in part the jurisdictionof the Court to relieve against the fraud of a partner, who should
( 20 )
14*26. avail himself of bis legal rights in violation of his partnership con-J>Ai/roNtract, but he states it is clear that the LordChancellorwhilst
referring to other considerations founded himselfentirely upon the
v.proposition that the existence of the partnershipdrew withit the
Peremright to have the stock of the partnership, whether land orstock,
ascertained.
There was an appeal from the Vice-Chancellor's order, and here,as in Forster v. Hale (supra), the Lord Chancellor took a differentview from that of the lower Court, coming to the same conclusionhut on different grounds. The Lord Chancellor states (reported at•? Phil. 266):—
“ This case became embarrassed in the Court below by an attempton the part of the plaintiff to get what appeared to be morebeneficial than what I think he is clearly entitledi to, andthe obtaining of what was attended with a certain degreeof difficulty from the want of an agreement in writingat the commencement of the. plaintiff’s connection withMr. Me Adam, The Court directed issues to try the factof partnership, which, if they were to be tried, might Ithink leave the parties in further embarrassment andwithout a means of coming to a conclusion as to theirrespective rights, ’ ’
He thereupon proceeds to examine the evidence, including amemorandum signed by McAdam and the defendant, Hamilton.That memorandum stated there had been a purchase of land byMcAdam, and divided between him and Hamilton, each of- them to.have one-third share, the land to be sold, ,and the profits dividedbetween McAdam, Hamilton, and the plaintiff, Dale. This he heldto be a declaration of trust on the part of the defendants, a declar-ation recognizing a past transaction, that is, the purchase of theland. He then proceeds: —
“ Now it would be the strangest thing in the world, if the Statutebeing satisfied which it is, by finding this writing signed bythe parties, the Court could not give relief to the partywhom that document declared entitled to it. It is nothingthat the plaintiff is no party to this declaration of trust;that is not required. A declaration of trust may acknow-ledge a right in another party, if it is signed by the partydeclaring that he is a trustee for the other.”
He thereupon held that plaintiff was entitled to the one-third heclaimed.
These two cases, Forster v. Hale (supra) and Dale v. Hamilton(supra) were discussed at length by Counsel on both sides, and it is forthis reason I have set out the extracts' above. Although I have hadsome difficulty in appreciating the* niceties of the distinction sought tobe drawn, both between these cases and between these cases and the
( 21 )
case now before us, it would at any rate seem that the Lord Chan-
cellor in Forster v. Hale (supra) was of opinion that the plaintiffs in daltoh J-
that case were entitled to succeed on any of three grounds: first
the ground of express trust in accordance with the finding of the ' vVice-Chancellor, secondly that on the facts no estate in land was Pereraaffected at all, and thirdly that the question of partnership must betried as a fact, and thereupon the subject being an agreement forland the question was whether there was a resulting trust for thepartnership by operation of law. The grounds upon which theVice-Chancellor proceeded in Dale v. Hamilton (supra) cannot be sosuccinctly stated, but he undoubtedly adoptejj' and applied in theearlier part of his judgment the rule stated by the Lord Chancellorin the third ground I have mentioned. As I have already stated,it .does seem to ine that the latter lays down a rule for generalapplication in the observation he made which I have set out above.
That observation, be it noted, was made in the course of a rulingon an objection taken by the defendants to the admission of certainevidence. The view that a general rule was laid down and thatthe law in England must be taken as settled was given 'effect toin In re Nicols (supra), where Kekewich J. says: —
14 It is settled that there may be an agreement of partnership byparol, notwithstanding that the partnership is intended todeal with land, and that to an action to enforce such agree-ment the plea of the Statute of Frauds will not avail. Iusuch an action, therefore, the rights of the parties to theland, their respective interests in it, and their mutualobligations respecting it, may and must be determined andenforced notwithstanding there has been no compliancewith the statutory provision."
After alluding to Lord Lindley *s opinion, to which I refer later, hecontinues: —
" Nevertheless the reasoning of the Lord Chancellor in Forster v.
Hale (supra) seems to me to show that he intended to laydown a general rule which may be applied without extensionto the case in_hand. This was the view of Wigram V.C.in Dale v. Hamilton (supra), and also, as it seems to me, ofLord Lindley, who cites the passage from the Lord Chan-cellor's judgement in Forster v. Hale (supra) which supportsit.' The Lord Chancellor held that the question whetherthere was a partnership or not must be tried as a fact, andif it were established by evidence that there was a partner-ship, then the premises necessary for the purposes of thatpartnership would by operation of few be held for thepurposes of that partnership.">
This view has been criticised by Lord Lindley # in Ins Law ofKPartnership. At page 96 (7th edition) in a chapter dealing with the
( 22 )
1M6. evidence by which ft partnership may be proved, lie expresses theDauton J.that the Vice-Chancellor's decision in Dale v. Hamilton
„ —”(supra) is difficult to reconcile with sound principle or with a more
Vmrecent decision, Caddick v. Skidmore (,supra). In this latter case no
Porcro partnership was proved, and there was no agreement for partner-ship ns distinguished from the agreement to share the profits of thecolliery. Lord Cottenham L.C. there held that the terms of theagreement not being in writing and being in dispute tlie Statuteof Frauds was a defence to the action. This decision Farwell J.held to be binding upon him in Isaacs v. Evans (supra). Howeverthat may be, Lord Lindley, after considering the cases, sums upthe position as follows: “ In the absence, however, of any decisionof the Court of Appeal to the contrary, the law on the point- nowunder discussion must be taken to have been correctly stated inForster v. Hale (supra) and Dale v. Hamilton (supra), which havebeen treated as binding authorities in the most recent cases.” Inthe result on this point, therefore, in view of this authority, itwould seem that the law is settled in England, and if the law inCeylon is the same as that in England, I am unable to see that thegeneral rule to which expression is given in Forster v. Hale (sujrra)does not apply to the case before us.
That brings me to a consideration of the provisions of OrdinanceXo. 7 of 1840 -as compared with the Statute of Frauds. On thebasis that the question of partnership must be tried as a questionof fact and as if there was an issue upon it, – what are therequirements of the law with regard to the proof of such a fact?I have already set out the relevant sections pf the Ordinance andStatute. When set side by side it will readily be seen howmaterially the latter differs from the sections of the Ordinance.Whereas section 2 of the Ordinance enacts that deeds affectingimmovable property shall be of no force or avail unless executedbefore a notary and witnesses, , section 4 'of the Statute merelyprovides that no action shall be brought to charge any person uponany contract or sale of lands or any interest therein unless it be in'writing or unless there is some memorandum of it in writing signedby the party to be charged. In the latter case, therefore, thecontract or agreement may be verbal, provided there is writtenevidence to comply with the Statute. Under the Ordinance,however, the contract itself must comply with the provisions asregards execution to be of any force or avail.
It is interesting to trace the history of the legislation on thismatter in Ceylon to see how the provisions of the law have becomemore stringent with each enactment. The first enactment wouldappear to be Regulation Xo. 4 of 1817. It is a- very short Act,purporting to enact- “ fixed rules of law respecting the force ofunwritten promises.” It then provides, inter aliat that certaincontracts or agreements shall not- be of force or avail in law,
( 23 )
“ unless the same shall be in writing and signed by the party1926.
making the same.” Amongst- the contracts mentioned are thosej
for the sale, purchase, lease, or assignment thereof of immovable
property, or for establishing a partnership where the capital is Aree&dwaineover 1,000 Rix dollars. In 18124 it became necessary to requirePercra
further security in respect of transactions relating to land and byRegulation No. 20 of that year it was for the first time requiredthat deeds relating to land should be invariably passed beforenotaries public. That regulation, however, only applied to themaritime provinces of the Island. Then in 1834 the law wasamended and consolidated and made to apply to the whole Island.
Regulations Nos. 4 of 1817 and 20 of 1824 and a proclamation in forcein the Kandyan provinces were repealed and re-enacted togetherin Ordinance No. 7 of 1834, sections 2 and 10 thereof being in greatpart similar to sections 2 and 21 of Ordinance No. 7 of 1840.
Finally, by Ordinance No. 7 of 1840 the law was further amendedand strengthened and a new section, the present section 22, wasfor the first time brought in, making it clear that any deed ofpartnership coming within section 21, which in any manner affectedland or other immovable property, had to be executed and attestedas required by section 2. It will be seen then that whilst .theoriginal enactment that the cla.ss of agreement referred to shouldin no case be of force or avail in law remained throughout, theprovisions for execution became more stringent' with each enact-ment, and the method of proof of the existence of the contractor agreement has become simplified. This was in accordance withthe purport of the Ordinance set out in the preamble.
The difference between section 2 of Ordinance No. 7 of 1840 andsection 4 of the Statute of Frauds is self-evident. The former liasbeen described by Lord Atkinson in Adaicappa Chetty v. CaruppenChetty (supra) as “ much more drastic ” than the fourth sectionof the Statute, making an agreement of or concerning land notexecuted in conformity with the requirements of the Ordinanceinvalid. And Lord Sumner in Pate v. Pate (supra), when the PrivyCouncil over-ruled a decision of the local Courts with regard to theproof of partnership in a claim for .accounting which had beenfollowed in Ceylon for forty-one years, refers to the very definiteprovisions of the Ordinance. He points out that—“ If partieschoose to disregard so ordinary and so simple a formality ns theOrdinance requires, there is no hardship in leaving them to takethe consequences, nor is it in any case sound to misconstruea statute for fear that in particular instances some hardship mayresult. That is a matter for the Legislature, not for the Courts.
Whenever the law enacts that the trutji shall be proved by oneform of testimony only, and not by all admissible and available,forms, there is peril of doing particular injustice for the sake ofsome general good, and even of enabling some rogue to cloak Iris
( 24 )
1926.
Dalton J.
Arsectderatne
v.
Perera
fraud by taking advantage of a statutory prescription, the policyof which was the prevention of fraud. > This the Legislature must betaken to have weighed before enacting the Ordinance. All thatremains for judicial determination is its true meaning/1 I cite thisextract because, although here there is no suggestion of anyfraud, yet it fully answers one aspect of the appeal as put beforethe Court by Counsel for the appellant.
The South African case cited in the course of the argument,Wilken v. Kohler (supra), shows what effect has been given there tothe words ** No contract shall be of any force or effect/1 which arealmost the same as the words of our Ordinance, “ No sale . . . .shall be of force or avail in law.” By the Free State Ordinance 12 of1906, section 49, it is provided that “ No contract of sale of fixedproperty shall be of any force or effect unless it be in writing andsigned by the parties thereto or by their agents duly authorized inwriting.” There is a marked similarity between the terms of thisFree State Ordinance and Regulation No. 4 of 1817 which I havecited. As many of the Free State Ordinances were adopted fromthe earlier Ordinances of Cape Colony, it is quite possible that theearliest Ceylon enactment and the Free State Ordinance can be tracedto the same source. In Wilken v. Kohler (supra), as here, an argu-ment was -addressed to the Court that the contract under consider-ation cannot be said to be of no force or effect when' it had been carriedinto effect by the parties. Further it was urged that verbalcontracts, such as those dealt with by the Ordinance, were vpidableand not void ab initio, and that by performance the contract wasconfirmed. The Court unanimously held that the contract in ques-tion was, under the section, null and void. Innes J. says: ” Thelanguage of the section is perfectly plain; no unwritten contract of thekind referred to is to be of any force and effect. Now a contractwhich is to be of no force and effect is void. No emphatic adjectivesand no redundant repetition could express a conclusion of nullity moreeffectually than do the simple words which the Legislature hasemployed.” He then refers to the law in the Transvaal respectingmineral contracts, and says: ” By Yolksraad Besluit of the 12thAugust, 1866, it was enacted in the Transvaal that mineral contracts,unless notarially executed, should be ah initio void, and shouldconfer no rights of action whatever …. The wording of theBesluit may at first sight appear stronger than that of the Statutewith which we are now concerned. But in reality it is not. Atransaction which has no force and effect is necessarily void ab initio.and can under no circumstances confer any right of action.” Andon the doctrine of part performance he says: “ This agreement beingof no force and effect in law, cannot, it seems to me, be validated byTeason of the fact that it has been partly carried through. ”“ It was held in Jolly v. Herman's Executors 1 that
(2903) T. S. p. 515.
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the English doctrine of part performance can have no application 1926.to cases arising under the Transvaal Besluit already referred to, Daiton J.because that doctrine was based upon the assumption that theStatute of Frauds did not nullify contracts for the sale of landv.
entered into in disregard of its provisions; it made them voidable Eereraonly. Whereas the Transvaal law, like the present Free StateOrdinance, went further.” And Solomon J. sums up his opinionin the following words: “ Section 49, as I have already pointed out,provides that a verbal contract for the sale of land shall be of noforce or effect, or in other words, shall be null and void. Nothing canbe clearer or more precise than these words, and. in my opinion theymean exactly the same as the words in the Besluit. For if a verbalcontract for the sale of land is void, it follows, as of course, that it isvoid ab initio, and that no action could be brought upon it. If thenthe Court in the case of Jolly v. Herman's Executors (supra) wasright’ in holding that the doctrine of part performance had no applica-tion to contracts governed.by the Yolksraad Besluit, it follows that itcan have no application to contracts governed by section 49 of Ordi-nance No. 12, 1906. In my opinion the decision in that case wasperfectly right and should now be adopted by this Court.” In thisconclusion the rest of the Court, including Lord de Villiers, concurred.
In Jolly v. Herman's Executor (supra) Inneg C.J. there pointed outthat the plaintiff’s contention could not be upheld unless the Courtwas able and willing to apply to contracts under the Besluit a ” doc-trine similar to that applied by English Equity Courts to certaincontracts falling within the Statute of Frauds.” He points out thatthe cases under the Statute of Frauds were all decided on the basisthat that Statute, while barring any legal remedy upon certain, parolagreements did not render the agreement itself null, and he cites thewords of Cotton L.J. in Britain v. RossiterJ ” If such contracts (i.c.,contracts covered by the Statute of Frauds) had been rendered voidby the Legislature, Courts of Equity would not have enforced them;but their doctrine was that the Statute did not render the contractsvoid; but required written evidence, and they dispensed with that-written evidence in certain cases.*’ The reasoning on this questionin Wilken v. Kohler (supra) appears to me to be the same as that ofWendt J. in Pererd v. Amarasooriya,2 where the Court held that thedoctrine of part performance has not been recognized in Ceylon tothe extent to which it prevails in English Courts of Equity. Atten-tion is drawn to . the different terms of the provisions of the localOrdinance and the Statute of Frauds, and the principle was appliedthat the Court must refuse to admit the doctrine where the contractwas of no avail owing to the omission of the express requirements ofthe law. The Court had in view the earlier decision of Perera v.
Fernando,3 the limitations of which decision are referred to by each
>11 Q. B. D. at p.'lSO.2 12 N. L. R. at p. 91.
{1864) Ram. 83.
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1926. of- the three Judges. In Nanayakkara v. Andris,1 in commentingDalton j. uPon Ferera v. Amamsooriya (supra) Bertram C.J. expressed the
opinion that, should occasion arise, he can see nothing to prevent
Arseculerahtt ^ adoption of this doctrine as part of the legal system of thisPercm Colony. If he means,as I take it he does mean, in the present
– state of thelaw, withall due respecttothe opinion he expresses,
I am quiteunable toagree. So farastransactions governed by
section !i ofOrdinanceNo. 7 of 1840areconcerned, I am entirely
satisfied that the doctrine can have no application.
On this last point, therefore, I am satisfied that the law. as laiddown in Forster v. Hale (supra) and Dale v. Hamilton (supra) on thesubject of tfie proof of partnership has no application in Ceylon, andlor the reasons I have stated, in my opinion this appeal must fail.
The appeal must therefore be dismissed, with costs.
Appeal dismissed.