BANDA v. ROSEHAUGH TEA AND RUBBER CO., LTD.

013-NLR-NLR-V-20-BANDA-v.-ROSEHAUGH-TEA-AND-RUBBER-CO.,-LTD..pdf


( 61 )
Present : Wood Benton C.J. and De Sampayo J.
BANDA v. BOSEHAUGH TEA AND BUBBEB CO., LTD.
.263—D. G. Kandy, 2d,857.
Lease by an incumbent of a> temple for thirty years—Covenant for renewalfor another period of thirty years at the option of the lessee—Actionto set aside lease so far as option to demand renewal was concerned—Buddhist Temporalities Ordinance, 1206, s. 88—Is trustee boundby a lease by the incumbent t
Under section 38 of the Buddhist Temporalities Ordinance of1905 the question of the consistency of a lease of lands belongingto a temple with the interests of the temple must be looked at fromthe standpoint not only, or chiefly, of the past, but of the present.
“ The power conferred upon the Court by section 38 must beexercised with caution, and with due regard to the position of thelessee as well as of the lessor. Bach case must be disposed of on itsmerits. The mere fact that, at the date of the inquiry held undersection 38, temple property could' be dealt with on more advanta-geous terms would be no reason for the interference of the Court.But where, in view of the whole circumstances of the case,' the Courtis satisfied that the continued existence of any lease pending at thedate when the Buddhist Temporalities Ordinance, 1905, came intoforce is flagrantly in conflict with the vital and elementary interestsof the temple, it is bound to set that lease aside). ”
A lessee is entitled to reasonable compensation for improvementseffected by him on lands when the lease is set aside under section 38.
fj1 HE facts are set out in the judgment.
Bawa, K.G., and A. St. V. Jayetvardene, for defendants, appellants.
H• J. C. Pereira and Chitty, for plaintiff, respondent.
Cur. adv. vult.
October 9, 1917. Wood Benton C.J.—
The plaintiff is the trustee of the Aluvihare temple. The formerincumbent of that temple, by deed No. 583, dated November 18,1886, leased certain of its lands to Mr. Alexander Boss for a periodof thirty years, at an annual rent of Be. 1.50 per acre for the first
1917.
( 62 )
1917.
Wood
Rbkton C. J.
Bandav.RoeehaughTea andRobber Oo.tLid.
three years, and thereafter of Rs. 2 per acre for the remainder of theterm. The lease contained a covenant for renewal, at the samerent and generally on the conditions contained in it, at the optionof the lessee. The lands demised have now been converted into arubber estate, and are in the possession of the defendants, theRosehaugh Tea and Rubber Co., Ltd., on an assignment of the leaseby Mr. Ross, the original lessee. The lease was due to expire ox:November 18, 1916, and the defendants, through their proctor, onMarch 17, 1916, called upon the plaintiff, who was elected trusteeof the temple in October, 1915, and re-elected in 1916, to implementthe covenant for renewal. The plaintiff refused to do so, andsubsequently sold the lease to a third party at a higher annual rent,namely, Rs. 80 an acre. In the present action he sues, under theprovisions of section 38 of the Buddhist Temporalities Ordinance,
1to have the lease set aside in so far as the option to demanda renewal is concerned. The grounds of his claim are that anextension of the term of the lease for thirty years is inconsistent withthe interests of the temple, and that its conditions generally disclosean improvident alienation and inadequate consideration within themeaning of the provisions of section 38 of the Buddhist Temporali-ties Ordinance, 1905.1 The defendants deny the plaintiff’s rightto have the lease set aside. They further plead that, at the date ofthe lease the land was jungle, and that, relying on its terms, theyplanted the land with rubber at a considerable expense, and claimthat, if the lease be set aside, they should be awarded Rs. 45,000by way of compensation. The case went to trial on the followingissues: (1) Bo the averments in the plaint disclose the plaintiff’sright to the relief prayed for in the plaint ? (2) Was the term of thelease, providing for an extension of the term for thirty years,inconsistent with the interests of the temple, or does it render thelease an improvident alienation or one for an inadequate considera-tion ?(3) If he lease is liable to be set aside, what compensation,
if any, are the defendants entitled to ?(4) Is the plaintiff bound
by the covenant for a further extension of the lease ? It was agreedat the trial that the issue as to compensation should be reserved forinquiry and adjudication after the Court had disposed of the otherissues* Evidence was led on both sides, and the learned DistrictJudge, although he did not answer the issues specifically, held ineffect that the plaintiff was bound by the covenant for renewal, butthat the lease in favour of Mr. Ross was an improvident alienation,which was inconsistent with the interests of the temple, and whichmust, therefore, be set aside under the provisions of section 38 ofthe Buddhist Temporalities Ordinance, 1905.1 The District Judgeheld also that the defendants were entitled to reasonable compensa-tion from the plaintiff for the improvements which had been effectedon the lands. He made no order as to costs until the question of the
lNo. 8ofl905.
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Amount of that compensation had been determined. The defendantsappeal against this judgment in so far as the setting aside of thelease is concerned, and the plaintiff has filed a notice of objectionto that part of it 'which affirms thp right of the defendants tocompensation.
I entirely agree with the learned District Judge that the plaintiffis bound by the terms of the lease in so far as these would have beenbinding upon the original lessor. Section 19 of the BuddhistTemporalities Ordinance, 1905,1 in effect enables the trustee for thetime being of any temple to enforce rights of action arising out of.contracts between a third party and his predecessor in office. Itwould be inequitable if with this right there should not be associateda correlative liability under such contracts. Moreover, section 20of the Ordinance, under which all the immovable property of atemple vests in its trustee, expressly makes that vesting “ subjectto any leases and other tenancies, charges, and incumbrancesaffecting ” the property. In English law a covenant for therenewal of a lease runs with the land, and in this Colony it may,I think, fairly be held to come within the scope^of the expression“ charge ** or 99 incumbrance,’* as used in section 38 of the Ordinanceof 1905.1
The next question that has to be determined is whether or not acase for the setting aside of the lease under section 38 of the BuddhistTemporalities Ordinance, 1905,1 has been made out. In additionto the terms above mentioned, the lease provided that at the endof any period of three vi :*rs the lessee should be entitled to cancelit on giving six months* notice of his intention to do so, and noremedy for non-cultivation was reserved to the lessor. The secondof the issues is no doubt wide enough in its language to enable theplaintiff to contend that these circumstances, as well as the inade-quate consideration and the length of the term of the renewal, madethe lease an improvident one. I was in some doubt, however,during the argument as to whether either side had interpreted it inthat wide sense at the trial. But I have come to the conclusionthat the defendants have suffered no prejudice in this matter.Equally with the plaintiff, I think that they intended that theDistrict Judge should consider the question of the alleged improvi-dence of the lease in the light, not merely of the viva voce and otherdocumentary evidence, but of its provisions as a whole. The District-Judge has, in fact, dealt with it in this way, and the petition ofappeal does not contain any complaint against his judgment onthat ground. The evidence shows that there was nothing un-reasonable in the low rent at which the lands were originally leased,and in view of the decision of Clarence and Dias JJ. in GirigamaDewa Nilame v. Henaya* I do not think that exception could fairlybe taken to the original term of thirty years. But I agree with the
1917.
Wood
Renton C. J.
Banda V.RoeehaughTea andRubber Go.,Ltd.
'No. 8 of 1905.
* (1891) 2 C. L. R. 42.
( 54 )
1917.
Wood
Hutton 0. J.
Banda v.BoeehaughTea andRubber Oo.pLtd.
learned District Judge that the conditions entitling the lessee todetermine the lease on the expiry of any period of three years ongiving six months’ notice to the lessor, and securing to the latter noright to damages from the former if he failed to cultivate the land,are not such as any prudent owner of property would have, or anytrustee of such property ought to have, entered into. This is anobservation that arises on a mere perusal of the terms of the lease.If there is anything in the nature of temple lands * in general, or ofthe lands here in suit in particular, which is capable of throwing adifferent light on the position of matters, it was the duty of thedefendants to have proved the fact affirmatively at the trial. Thisthey have not done. These objections to the lease become all themore formidable when the question for decision is not whether itshould originally have been granted, but whether it should beextended on the same conditions for another period of thirty years.It appears to me that, even if we take as our standpoint the stateof matters at the time when the lease w;as granted, it was animprovident alienation, and inconsistent with the interests of thetemple.
In my opinion, however, section 38 of the Buddhist TemporalitiesOrdinance, 1905,1 requires us to look at the question of the con-sistency of a lease of lands belonging to a temple with the interestof the temple from the standpoint not only, or chiefly, of the past,but of the present. It provides that " whenever it is proved tothe satisfaction of a competent Court that any property of anytemple has heretofore been leased (a) for a longer term of yearsthan is consistent with the interests of such temple ; or (b) on termsshowing an improvident alienation ; or (c) for clearly inadequateconsideration,” such lease shall be set aside. The language of thisenactment indicates that the intention of the Legislature was toenable the Courts to inquire into the present consistency of leases oftemple lands existing at the time of the passing of the Ordinancewith the interests of the temple to which such lands belong. Thisinterpretation of the section is, I think, supported both by the factthat it goes on to secure to a lessee whose lease is set aside anadvantage that he would not enjoy under the common law, namely,a right to compensation for improvements, and also by the provisionin section 27 for the sanction of the District Committee, and incertain cases of the Court, being obtained as a condition precedentto the exercise by trustees of temples of their leasing powers.Section 27 appears to me to deal only with leases entered intoafter the commencement of the Buddhist Temporalities Ordinance,
1It has no application to the present case. The covenantfor renewal is practically an agreement for a lease entered into longbefore the passing of the Ordinance of 1905. The plaintiff hashimself regarded it in that light. He has treated it as an existing
* No. 8 of 1905.
( 65 )
lease, and has oome into Court to have it set aside under the pro-,visions of section 38. It is, of course, obvious that the power,conferred upon the Court by that section must be exercised withcaution, and with due regard to the position of the lessee as well asof the lessor. Each case must be disposed of on its own merits.The mere fact that, at the date of an inquiry held under section 88,temple property could be dealt with on more advantageous termswould be no reason for the interference of the Court. To apply thelaw in that way would be as injurious to temple property itself as tothe persons who had been unfortunate enough to have anything todo with it. But where, in view of the whole cfrcumstances of thecase, the Court is satisfied that the continued existence of any leasepending at the date when the Buddhist Temporalities Ordinance,
1came into force is flagrantly in conflict with the vital andelementary interests of the temple, it is bound to set that lease aside.It may be well to note in passing that no point arises on the provisionin the original lease that the new lease shall contain the same cove-nant as the old one. It is well settled (see 18 Halsbury 463,8. 935, and cases there oited) that a condition of this kind doesnot entitle the lessee' to have a covenant for renewal perpetuallyrenewed. But, if we are to take account of the present as well asthe past in interpreting section 38 of the Ordinance, the actual rentwhich would’ be reserved in the renewed lease is wholly inadequate',and the extension of the lease, at that rent and on the terms andconditions above noted, for a further period of thirty years, is soinconsistent with the best interests of the temple as to justify theinterference of the Court in compliance with the provisions ofsection 38 of the Ordinance.1 It had been held by the Courtsanterior to the Buddhist Temporalities legislation, op. VdanwitaLoTtu Banda v. Giragama Ratemahatmaya,2 that the BasnayakeNilames of temples had no power to grant long leases of. templelands, and any person accepting a lease from any of these ecclesias-tical officers must be presumed to have been aware of the fact thatthere was in law a difference between the position of his lessor andthat of any ordinary private landowner. On these grounds I thinkthat the learned District Judge has come to a right conclusion, and1 would dismiss the appeal.
It is only necessary to add a word as to the plaintiff’s cross noticeof objection on the question of compensation. The objection is.founded on the following clause in the lease: “ And the said lesseefor himself and his aforewritten hereby bind themselves peaceablyand quietly to have, surrender, and yield up the said premiseshereby demised unto the said lessor and his aforewritten at theend or other sooner determination of the term hereby granted orto be granted, together with all buildings and other erections andplantations, thereon, and it is hereby covenanted and agreed by and
f«7.
Wood-Rkj*ton ,0. J.
Banda v.BosehaughTea and
Rubber Oo.iLtd.
1 No. 8 of 1905.
* (1875) Bam. 1872-76, 185.
( 56 )
1917.
Wood
Rhnton 0. J.
Banda «.RoeehaughTea andRubber Go.,Ltd.
between the said lessee and the said lessor that he the said lesseeand hia aforewritten shall not have the right to demand of the saidlessor and his aforewritten any compensation for any such buildingand plantations or other improvements to the said premises, andthat he the said lessor or his aforewritten shall not be entitledto have or receive of or from the said lessee or his aforewrittenany compensation or allowance for the non-cultivation or non-improvement of the said premises hereby demised or for any otheract whatsoever on the part of the said lessee.”
This clause excludes any right on the part of the original lesseeor his privies in interest to claim any compensation from the lessoron the determination of the lease by effluxion of time, or, as in thecase of non-payment of rent, through the action of the Court. Ientirely agree, however, with the learned District Judge that itcannot in any way affect the defendants’ right to compensationunder section 38 of the Buddhist Temporalities Ordinance, 1905.1It contemplates the cessation of the lease only by one of the ordinaryincidents of a tenancy. Much stronger language would be necessaryto deprive the defendants of a statutory right to compensation forimprovements conferred by subsequent legislation and embodiedin the very section on which the plaintiff has elected to come intoCourt. The cross notice of objection to the judgment under appeal .must be dismissed. Although the argument of the question ofcompensation occupied a comparatively short period of time, it isone of considerable importance, and I agree with my brotherDe Sampayo that the fairest order to make as to costs is that boththe appeal and the cross notice of objection should be dismissed,without costs.
De Sampayo J.—
By deed of lease No. 583, dated November 18, 1886, SonutharaNayaka Unnanse, who was the chief priest and incumbent ofAluvihare, leased a number of lands owned by the temple toMr. Alexander Ross for a period of thirty years, with a covenant forrenewal of the lease for another period of thirty years at the optionof the lessee. The lease was assigned by the lessee to the defendantcompany. The original- period of thirty years was to expire inNovember, 1916, and the defendant company in exercise of theoption called for a renewal lease from the plaintiff, who is a trusteeof the temple under the Buddhist Temporalities Ordinance, whichwas enacted since the date of the lease. Thereupon the plaintiffbrought this action praying that the lease be set aside so far as theright to demand an extension for thirty years was concerned, on theground that in that respect the terms of the lease were inconsistentwith the interests of the temple, and showed an improvident alien-ation for inadequate consideration. The defendant company took
1 No. ft of 1905.
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issue on these points, and in the alternative claimed Rs. 45,000 ascompensation for improvements. The District Judge allowed theclaim of the plaintiff, and also decided the question of compensationin favour of the defendant company, but reserved the determinationof the amount, and the defendant company have appealed.
At the time of the lease the lands were jungle or chena, and havesince been planted with rubber, and form part of Nikakotuwe estatebelonging to the defendant company. There is no express stipula-tion that the lessee should plant or otherwise improve the lands,and it is argued for the plaintiff that even if it was a planting leasethe incumbent of the temple had no right to graAt such a long lease,and that for that reason alone the covenant for a renewal cannot beenforced. The question of long leases by such trustees as BasnayakeNilames of dewales and ecclesiastical incumbents of temples hasbeen considered in several cases. See Loku Banda v. Qiragama 1 andQiragama v. Henaya.a The first of these cases discloses the factthat under the Kandyan Government a lease of temple or dewaleland could not be granted for more than one or two years, and alease of some boutiques for thirty years was set aside as being for toolong a period and not binding on the successor of the incumbent whohad granted it. The Court did not, however, lay down a hard andfast rule as to the proper period, and added, “ Every case willgreatly depend on its own circumstances and the urgency of theneed for a departure from ordinary usage, the guiding principlebeing that a Basnayake Nilame should execute his trust consistently♦with the interest of the dewale, as one terminating with himself,hampering his successor as little as possible.11 This principle waaadopted in the second of the above cases, and a building lease forthirty-five years was upheld as being in the circumstances notunreasonable. In the present instance, if the lease was, as a matterof fact, a planting lease, as appears to be the case, a period of thirtyyears cannot be considered too long. There may, however, be aquestion whether an extension for another thirty years can bejustified or not. There was no specific issue on that point, nor wasthe evidence particularly directed to it, but I . think it is unnecessaryto consider it further, because the whole case practically turns uponthe effect of the Buddhist Temporalities Ordinance;
It may be convenient here to dispose of another objection raisedon behalf of the plaintiff. The covenant in question is such that thelessee has the right to demand a renewal for thirty years, but thelessor cannot compel him to take one, and it is accordingly contendedthat the eonvenant cannot be enforced for want of mutuality. Thereis no doubt that1 want of mutuality is a good ground for refusingspecific performance of a contract, but some qualification, or rathera right application of the doctrine, appears to be necessary. Fryon Specific Performance, s. 465 (3rd cd., p. 218), discusses with
1917.
Db SuffATOJ.
Bandav,BosehaugkTea and
Bubber Co.,Ltd.
* Bam. (1875) 185.
*2C.L. B. 42.
( 58 )
4WT.
Pe Sampavp,J.
Banda if.Boaehattgh. Tea andRubber Co.,Ltd.
reference to authorities the very case of a lessor covenanting torenew on the request of his lessee, and says that it is a case merelyof conditional contract, and that, when the condition is fulfilled by.a request to renew, the contract becomes absolute and mutual, andcapable of enforcement by either party,exactly fits the
circumstances of this case, because the defendant company did,before the action, make a request to renew, and the plaintiff is,therefore, unable in this case to stand on the ground of want ofmutuality alone. Nevertheless I think the nature of the covenant,and the effect of it, if no request to renew had been made, should betaken into account when the further question, whether the lease asa whole is improvident comes to be considered.
The rent stipulated in the lease is Be. 1.50 per acre per annum forthe first three years, and Bs. 2 per acre per annum for the rest of theterm. It is well proved on behalf of the defendant company thatthis was a reasonable rent to be paid for a planting lease at the timewhen the lease was granted, but the District Judge finds, and thereis no doubt, that it is wholly inadequate at the present time, and hehas accordingly held that the covenant to renew, which is soughtto be enforced now, amounts to an improvident alienation. Thechief question involved in this appeal is whether the District Judge’sorder setting aside th© lease on this ground is good in law. Thegeneral rule, of course, is that the issue of fairness must be consideredas at the date of the contract. But section 38 of the Buddhist.Temporalities Ordinance, 1905, appears to me intended to empowerthe Court to revise leases which may be found at the present time tobe improvident or for' an inadequate consideration. Beforeconsidering that section more particularly, 1 should like to point outthat the Ordinance contains restrictive provisions as regards theperiods for which temple lands may be leased. Section 27 prohibitsleases for any time exceeding fifty years, and requires the trustee,or where there is no trustee, the incumbent, to obtain the sanctionyt the District Court whenever he may be desirous of granting alease for a period of more than ten years. If the present lease hadbeen granted, after the coming into operation of the BuddhistTemporalities Ordinance, the covenant for renewal would un-doubtedly have been ultra vires, and the Court would not decreespecified performance. Bellringer v. Balgrave.1 The policy of theOrdinance clearly is, that the Court shall from time to time see thatthe leases proposed to be granted are in the interests of the temple.In pursuance of the same policy, section 38 provides that, where anyproperty of the temple has prior to the Ordinance been leased (1)for a longer term than is consistent with the interests of such temple,or (2) on terms showing an improvident alienation, or (3) for clearlyinadequate consideration, the Court shall set aside such lease. Ifthis is so in the case of a subsisting lease, there is still greater reason
* DeG.&S. 63.
( 69 )
for the Court refusing to recognize and enforce a covenant to renewit. Even on the assumption that it was competent for the incumbentof the temple in 1886 to enter into the covenant, it does not followthat his successor should since the enactment of the Ordinance becompelled to perform it, for the Court will not generally decreespecific performance, where to do so would be to compel a person todo what he is not now lawfully competent to do, even though at thetime of the contract the act might have been lawful. The Laws ofEngland, vol. 27, pp. 38, 39. Tfce.JJSstrict Judge, in exercising hispower under section 88 of the Ordinance, was contejat to hold that thelease was an improvident Iditaatac^ at temple property, as it wasfor an inadequate consideration. But there are other features inthe lease which, even apart froitt the length of the period, appearlikewise to make it improvident, such as the lessee *s power toterminate the lease at any time 'by giving six months* notice, andhis .express exemption from liability for “ non-cultivation or non-improvement of the said premises hereby demised, or for shy otheract whatsoever on the part of the said lease.** In my opinion theorder of the District Judge is right in respect of both law and fact.
The plaintiff has also given a cross notice of objection to the partof the order which decides the question of compensation in favourof the defendant company. The lease does, indeed, provide thatthere shall be no claim for compensation for improvements ** at theend of or other sooner determination of the term hereby granted orto be granted,” but the determination of the term by the Courtsetting aside the lease at the suit of the plaintiff is not adetermination contemplated by the lease, and I think that thedefendant company are entitled to compensation.
I would dismiss both the appeal and the cross notice, and wouldgive no costs of appeal to either side.
Appeal dismissed.
1917.
Db Sampayo
J .
Banda v.
Tea andBobber Co.,Ltd.