022-SLLR-SLLR-1990-V-1-BERNEDETTE-VALANGENBERG-v.-HAPUARACHCHIGE-ANTHONY.pdf
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BERNEDETTE VALANGENBERG
V.HAPUARACHCHIGE ANTHONY
SUPREME COURT.
H. A. G. de SILVA. J. . BANDARANAYAKE. J. . KULATUNGA. J.
S. C. APPEAL No. 47/88.
DECEMBER 05,06, 07. 13. 14 and 15, 1989.
JANUARY 22. 23 and 24, 1990.
Trusts – Purchase of property for mistress – Consideration -Constructive Trusts ■ Paroleevidence to vary terms of deed – Prevention of Frauds Ordinance s. 2. – EvidenceOrdinance ss, 91 and 92 – Trusts Ordinance ss. 2,5,83 and 84 – Doctrine of advancement- Application of English Law to extend doctrine of advancement to the case of a mistress.
The plaintiff. H. Anthony a middle grade hotel employee lived with thedelendant – appellantBernedette Vanlangenberg a hairdresser and mother ot lour children as man andmistress. Both worked in the same hotel Thereafter the plaintiff proceeded to Swedenwhere he learned the language and received an income of about Rs. 9.000/= a month. Thedefendant went over to Sweden for a short spell and she too found employment teceivingabout Rs 2,000/= a month. The plaintiff purchased a house property in 1976 for Rs.8,40,000/= paying the consideration out of his earnings. On 12 5 77 as he had to go toSweden again he conveyed the said house property to the defendant appellant hismistress by a deed of transfer in the attestation to which the consideration ofRs.40,000/= was acknowledged to have been received earlier. Parties fell out n Novem-ber. 1979. The plaintiff then sued the defendant for a return of the house piiniig a trustThe defendant claimed absolute title and that she paid the consideration c' Rs 40.000/=on the deed in her favour.
Held:
Section 2 of the Frauds Ordinance is not meant to govern trusts arising under chapterIX of the Trusts Ordinance i. e. constructive or implied trusts. A person has therefore tomake out a case falling within the provisions of ss. 83 to 96 of the Trusts Ordinance
The plaintiff initiated the moves to buy the house whilst still in Sweden ; he had paid thepurchase price. The defendant's resources were insufficient to enable her to pay theconsideration on the transfer to her. She had written to the plaintiff that she would transferthe house to him if he returns her gold chain and money amounting to Rs 4,000/=
The trial judge rejected the ciaim of the defendant that she paid the consideration afterconsidering the financial resources of the parties as being highly improbable. Thedefendant's claim was very probably false and her denial of the existence of a constructivecase amounts to fraud. In the result s. 2 of the Trusts Ordinance and s. 92 of the EvidenceOrdinance do not apply and plaintiff can lead parole evidence of the existence of aconstructive trust in his favour on the basis that he retained the beneficial interest in theproperty at the time he transferred it to the defendant.
sc
Bemedette Valangenberg v. Hapuarachchige Anthony
191
The presumption of advancement in favour of mistress though available in England isnot part of Sri Lankan Law. Section 2 of the Trusts Ordinance cannot be utilised to bringIn English Law.
Cases referred to :
Perera v. Fernando 17 NLR 486. 488
Adaicappa Chatty v. Karuppan Chetty 22 NLR 417.
Mohamadu v. Pathumah et al (1930) IX Ceylon Law Recorder 48.
Saverimuttu v. Thangavelauthem 55 NLR 529, 535, 536 (PC)
Sethuwa v. Ukkuwa 56 NLR 337. 340, 342
Fernando v. Cooray 59 NLR 164, 174
Siriwardena v. Don Saranelis 59 NLR 182
Muthuamma v. Thiagarajah 62 NLR 559
Saminathan Chetty v: Vanderpoorten 34 NLR 287. 294 (PC)
ValliammAchch'y v. Abdul Majid 45 NLR 169 (SC)
Valliamma Achchi v. Abdul Majid 48 NLR 289 (PC)
Muthalibu v. Hameed 52 NLR 97, 100, 101
Fernando v Fernando (1918) 20 NLR 244
Ammal v Kangany (1910) 13 NLR 65
Gissing v Gissing 1970 2 All ER 780 (HL)
Cooks v Head 1972 2 All ER 38
Ewes v Ewes 1975 3 All ER 768
Bernard v Joseph 1982 3 All ER 162
Narayan Chetty v James Finlay Ltd (1927) 29 NLR 65, 70
Jonga v Nanduwa 45 NLR 128, 130, 132
Davis Singho v Herath 64 NLR 492
Moonesinghe v Vithanage 69 NLR 97 (PC)
Nadarajah v Ramalingam 21 NLR 39
APPEAL from Judgment of the Court of Appeal.
Dr. H. W. Jayewardene O.C. with B. Rajapaksa, H. Amerasekera, and H. Cabraal lordefendant – appellant.
J.IV. Subasinghe P.C. with D. J. C. Wilanduwa and K. S. Tillakeratne for plaintiff -respondent.
Cur. adv. vult.
April 4, 1990BANDARANAYAKE, J.
The plaintiff- respondent filed action in the District Court against thedefendant -appellant claiming, that the defendant-appellant had livedwith him as his mistress for some years; that he had purchased a houseproperty to wit; 32, Temple Road, Negombo belonging to Garwin de Silva,
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Attorney-at-Law on 17.11.76 by Deed No. 3871 – marked P2 – for a totalconsideration ol Rs. 45,000/= of which Rs. 5,000/= was paid on 42.11.76- P1 out of monies saved by him whilst employed abroad; and that onDeed No. 3974 dated 12.5.77 marked P3 he conveyed the legal interestin the said house property to his mistress the defendant -appellantretaining the beneficial interest in himself; and prayed that the saidproperly be declared subject to a trust in favour of himself (the plaintiff)and for an order that the defendant .transfer the said property to theplaintifl and for other incidental reliefs.
The defendant-appellant contended that the properly was purchasedon Deed P2 on monies provided by her although she was not a party tothat transaction on the face of the deed; that upon discovery later that theconveyance on P2 was in the name of the plaintiff which was wrongfuland unwarranted she prevailed upon the plaintiff to convey the propertyto her (the defendant) which he did by P3 aforesaid; and that thereby thedefendant-appellant had become the sole and absolute owner of theproperty and that P3 was not subject to any trust in favour of the plaintiff-respondent and was never intended to be so.
After trial, the District Judge held with the plaintiff. Upon appeal, theCourt of Appeal upheld the judgment of the District Court and dismissedthe appeal. Learned Counsel for the defendant-appellant has raisedseveral matters of law and fact before us at the hearing of this appeal andsubmits that the plaintiff's action be dismissed.
The relationship between the parties is germane to the issues in thiscase; the plaintiff, a married man was receptionist at the Blue LagoonHotel, Negombo from 1971 -1974. The defedant a married woman with4 children was a hairdresser also working at that hotel. An associationdeveloped between them and they became intimate friends – they livedtogether. In 1974 the plaintiff moved to the Sunflower Hotel in Negombofrequented by Swedish tourists. Plaintiff went to Sweden on a prepaidticket to learn that language. Whilst there he attended language classesand worked in a home for elders. He was paid a salary. Board and lodgingwas free. In October 1975 plaintiff returned to Sri Lanka to the SunflowerHotel bringing with him 4500 Swedish Croners. In May 1976 the plaintiffreturned to Sweden and resumed language classes and also worked asbefore. He took with him on this occasion, the defendant's daughter. Shewas also found work and paid a honorarium. The defendant joined him in
SC Bernadette Valangenberg v. Hapuarachchige Anthony (Bandaranayake. J.) 193
Sweden three months later, the airfare having been paid by the plaintiff.The defendant was also found work and paid a honorarium.Theyreturned to Sri Lanka in November 1976. On 17.11.76 P2 was executed.The plaintiff had resumed work at the Sunflower Hotel. In May 1977 theplaintiff again went to Sweden. Three days before his departure heexecuted P3 transferring the said house property to the defendant. Thedefendant followed him to Sweden and both returned to Sri Lanka inOctober, 1977. On deed No. 4598 of 17.8.79 – P4 – the defendant leasedthe aforesaid premises for a period of two years to Ibrahim, an Arabworking for Air Lanka. Ibrahim paid a sum of Rs. 60,000/= as an advanceso that the house could be refurbished for new furniture, fittings, airconditioning, etc. to be installed. The plaintiff and defendant went toSingapore for a short trip to make the purchases forthe house. Sometimethereafter the plaintiff and defendant fell out. Plaint was filed on 23.1.80wherein plaintiff claimed a trust and demanded a transfer back of theproperty.
Counsel for appellant contended the plaintiff cannot now contradict theterms of the deed P3. He cannot say it is a deed of trust and not what itpurports to be to wit: a deed of outright transfer as he is not entitled in lawto contradict the terms of his own deed. Sections 91 and 92 of theEvidence Ordinance prohibits such a course as does s.2 of the Preven-tion of Frauds Ordinance which is a stringent provision different to theEnglish Law. For purposes of comparison he cited the English Statute ofFrauds enacted in 1676 and made effective in 1677 and the English Lawof Property Act, 1925 (Appellant’s Counsel also criticized the amendedplaint filed. He complained that by several new averments and amend-ments made to paragraph 4, so called "attendant circumstances” wereenumerated seeking thereby to set up a trust. Counsel submitted thatthese new averments were trumped up for the purpose of bringing itwithin the ambit of s.83 of the Trusts Ordinance).
Reliance was placed on a series of decisions Perera v. Fernando (1)and Adaicappa Chetty v. Karuppan Chetty (2) which held that paroleevidence was not permissible to explain or vary terms of a deed. It wasalso a contravention of the Prevention of Frauds Ordinance –
Mohamadu v. Pathumah et al (3) and Saverimuttu v.Thangavelautham (4). Counsel stressed in his argument that thiscase had been correctly decided and should be applied to the instantcase.
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Sethuwa v. Ukkuwa (5) Fernando v. Cooray(6) and Siriwardenav. Don Saranelis (7) ;Counsel also cited “Law of Trusts" by A. W. Scott,Voll, p. 38.
Appellant’s Counsel examining the contents of deed P3 highlighted that:
P3 is not a deed of gift.
it is an outright transfer “ for the absolute sale and assignment
to her of the said premisesfor considera-tion"
Plaintiff acknowledged receipt of consideration in a sum of Rs.
45,000/= “well and truly paid to the said Vendor by
the said Vendee (the receipt) whereof the said Vendor do hereby
admit and acknowledge" – not for love and
affection.
The Notary Mr. Karunaratne who testified that the considerationwas not paid in his presence has in the attestation clause stated
that "the full consideration hereinmentioned was
acknowledged to have been received"
Submission:
In the circumstances there is no room to admit parole evidence toexplain P3 was different. The provisions of s. 2 of the Prevention ofFrauds Ordinance, the provisions of ss. 91 and 92 of the EvidenceOrdinance and the provisions of s. 5 of the Trusts Ordinance all militateagainst the admission of any parole evidence to alter, explain or changethe ordinary meaning of the clear language of P3. The Court was invitedto follow the dicta of the cases cited (supra) and dismiss the plaintiff'saction and declare the defendant to be the owner of the said property.
Dealing with the plaintiff’s contention that upon the attendant facts andcircumstances a constructive trust had arisen in favour of the plaintiff, itwas the appellant's position that there were no attendant contemporane-ous circumstances which could be proved in law in this case favouring afinding of a constructive trust. Counsel submitted the treatment of thefacts by the District Judge was erroneous as the proved facts did notwarrant the inferences drawn by the Court; the Court had failed toconsider the fact that the defendant and her daughter too had earnedforeign currency in Sweden and would have contributed substantially to
SC Bernadette Valangenberg v. t-tapuarachchige Anthony (Sandaranayake, J.) 195
the joint savings; that the Court of Appeal failed to consider and criticallyexamine the facts but merely relied upon the findings of the lower Courtand that therefore it could not be said that there were concurrent findingsof fact in favour of the plaintiff which should not be interfered with.Pointing to the plaint filed appellant’s Counsel commented that it con-tained no.concise statement of the facts and circumstances relied on asconstituting an inferred trust. The amended plaint brought in severalaverments to its paragraph 4, which then for the first time made referenceto s. 83 of the Trusts Ordinance and declared that the plaintiff wasenjoying the beneficial interest in the property at the time. It was submittedthat nevertheless, s. 83 of the Trusts Ordinance covered several areasof property both immovable and movable and that s. 83 was governed bys. 5 of the Trusts Ordinance and s. 92 of the Evidence Ordinance. Thisbeing so, Adaicappa Chetty's case and Saverimuttu’s case (supra)contained correct statements of the law.
Thus, the judgments cited (supra) settled the law, and if the terms ofa document were clear and unambiguous one cannot admit paroleevidence to-show that it meant something else. Counsel confined thissubmission to situations involving transactions of immovable propertysuch as land. His arguments did not extend to situations such as financialinvestments like monies deposited in Financial Institutions orthe transferof shares in respect of which trusts may be created without a notarialdocument. Counsel contended that a problem arose because of thedecisions in Muthuamma v. Thiagaraja (8) which he submitted waswrongly decided ; wrongly because the Court admitted an oral promiseto return the property as an attendant circumstance ignoring thereby theprovisions of s. 92 of the Evidence Ordinance and s. 5 of the TrustsOrdinance. Counsel submitted that such a promise should have been bya notarially executed document. The Court had held that the father heldthe properly in trust for the son but the Court did not examine the questionwhether the son intended to convey the beneficial interest in the propertyto his father. There was also no reference to Thangavelauthams case orto Fernando v. Cooray(supra). In any event Counsel submitted this casewas not relevant for a proper consideration of the instant case. Counselalso submitted that the cases of.Saminathanchetty v. Vanderpoorten (9)and of ValliammAchchy v. Abdul Majid reported in 45 NLR 169 (S.C) (10)
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and 48 NLR (P. C) (11) were concerned with exceptional situations andhad been decided on their special facts. Oral evidence went in upon thelanguage of the deeds themselves which indicated that the land was tobe returned. In these two cases vast complicated transactions wereinvolved with creditor-debtor relationships and hence these cases shouldnot be applied willy-nilly.
To summarise the submissions made on behalf of the appellant on thisaspect of the case, it was argued that:
on the basis of the plaint and on the facts, the deed P3 was anabsolute transfer in favour of the defendant for a considerationacknowledged to have been received ; •
it was not open to the plaintiff to controvert or contradict the plainmeaning of the language of P3 by parole evidence seeking toprove that P3 created a constructive trust recognised by s. 83 ofthe Trusts Ordinance ;
no plea under s. 83 of the Trusts Ordinance of a trust is availablebecause of the stringency of the provisions of the Prevention ofFrauds Ordinance and of s. 5 of the Trusts Ordinance ;
(cf) S. 92 of the Evidence Ordinance precludes the plaintiff fromcontroverting the terms of P3 and proving a trust as alleged in theplaint ;
further, the evidence in the case does not prove a trust and thatthe fact of the marking in evidence of paragraph 4 of the amendedplaint does not make it evidence or establish the alleged trust ;
the rest of the evidence does not prove a trust.
Further,
the evidence discloses the circumstances in which the plaintiffcame to purchase the property on P2 ; that it was held by theplaintiff on his own behalf and on behalf of the defendant and onP3 when he transferred to the defendant, it must be presumed hewas transferring for a consideration he had received and whichhas not been rebutted.
SC Bernadette Valengenberg v. Hapuarachchige Anthony (Bandaranayake, J.) 197
Next, learned Counsel for the appellant contended that the doctrine ofadvancement should be applied to the instant facts ; that doctrine wasknown to our law even before the enactment ot the Trusts Ordinance .thatthe facts warranted a strong initial presumptionthat the plaintiff transferredthe property to the defendant on P3 as she had admittedly been hismistress for a number of years, they had lived together as husband andwife openly both in Sri Lanka and abroad and that presumption cannot berebutted by the application of s. 83 or s. 84 of the Trusts Ordinance.Counsel strongly relied on the case of Mutalibu v. Hameed (12) whichheld that where a father or person in loco parentis purchases property inthe name of his wife or child there is a strong initial presumption that suchtransfer was intended tor the advancement of such wife or child and theprovisions ot s. 84 of the Trusts Ordinance do not apply fo suchtransaction. The onus in such cases is on the party seeking to establisha trust to prove that fact. Fernando v. Fernando (13) and Ammal v.Kangany (14) were approved and applied by the Court in Mutalibu v.Hameed (ante). Counsel sought to extend this doctrine to the case of amistress. To do so he pointed to s. 2 of the Trusts Ordinance which hesubmitted provided for recourse to the English Law in the absence ofprovision covering the subject in the Trusts Ordinance or in any other law.Seeking to use this means Counsel cited a number of decisions of theEnglish Courts which he claimed had recently contributed to thedevelopment of the law of trusts in England vis-a-vis man and (Distress.The matrix upon which the law of trusts developed in this regard inEngland was, it was submitted, the case of Gissing v. Gissing (15) perLord Diplock where a new line was taken for the first time in the area ofthe law of trusts. Where a lady had contributed to the running ot thematrimonial house then she had rights to a beneticial interest.
“Any claim to a beneficial interest in land whether spouse orstranger in whom the legal interest in the land is vested must be on theproposition that the person in whom the legal interest is vested holdsit as trustee on trust to give etfect to the beneficial interest of theclaimant as cestui que trust."
This was extended to a mistress by Lord Denning in the case of Cooksv. Head{ 16) followed by Ewes v. Ewes{ 17)—an unmarried couple-a jointacquisition of property-transfer of property into name of one party-inference of agreement-mistress entitled to beneficial interest-appropriateshare-house to be held in trust by man-3/4 to himself-1/4 to mistress.
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Bernard v. Joseph (13). Reference was also made to Halsbury's Lawsol England, Vol 48, 4th Ed. para. 610, p. 341 under title “unmarriedcohabiters". It was submitted that these developments should be adoptedand absorbed into the law of Sri Lanka through s. 2 of the TrustsOrdinance and that therefore, the presumption that the plaintiff transferredproperty on P3 for her advancement has not been rebutted and noquestion of trust in his favour arises.
On behalf of the plaintiff-respondent learned Counsel first referred tothe relationship between the parties which he submitted must be at theforefront of this case. Intimacy between the parties commenced in 1971when they were at the Blue Lagoon Hotel. In 1974 October when plaintiffmoved to the Sunflower Hotel he rented a house in Sea Street, Negombo,repaired it and paid the rent, purchased furniture and moved in with thedefendant who came with her children. At that time the defendant wasearning Rs. 750/- per month. Plaintiff left for Sweden in June 1975 – hewent alone for 5 months, acquired proficiency in the Swedish languageobtaining a Diploma – P5. He was also employed as an attendant in ahome for elders earning Rs. 9,000/- to Rs. 10,000/- per month. He savedas he was given free board and lodging. He opened a Bank account – P6- and remitted part earnings to Sri Lanka to help maintain the defendantand her children. He returned to Sri Lanka.
Plaintiff made a second trip to Sweden in May 1976 going there on astudent visa and was again employed on the same salary with free boardand lodging. He took defendant's daughter with him. Defendant joinedhim three months later on a prepaid ticket for which the plaintiff had paidhaving given up the house in Sea Street and moving the furniture to hersister's house at Asarappa Road. Defendant stayed only for 3 monthsand returned home before the plaintiff. The plaintiff had got the defendantto assist him in his work as the defendant did not know Swedish and couldnot have got a job. Daughter also worked in a similar way. Defendant waspaid only an honorarium but with free board and lodging. So also herdaughter. It was the plaintiff's evidence that the defendant was paid sumsamounting to about Rs. 1,500/- to Rs. 2,000/- pdr month, (which wouldbe about 1/4th of what he earned), it was also the plaintiffs evidence thatwhen the defendant returned to Sri Lanka she had no money. Plaintiffwrote to one Beverly Jansz in 1976 asking him to look out for a house forpurchase. Jansz says he contacted Garwin de Silva. Jansz wrote to theplaintiff about the availability of Garwin de Silva's house. Defendant also
SC Bernadette Valengenberg v. Hapuarachchige Anthony (BandaranayaHe, J.) 199
met Garwin de Silva who testified that she told him that Hapuarachchi(plaintiff) will buy the house. Afterthe plaintiff returned home in November1976 he met Garwin de Silva, made an advance payment of Rs. 5,000/-vide P1, and on 17.11.76 when P2 was executed he paid the balanceRs. 40,000/-. The Notary says that this amount of Rs. 40,000/- was paidin his presence at the time of execution but he cannot remember bywhom. The defendant too was present at the time. She did not protestabout anything. Garwin de Silva says that the money was paid to him bythe plaintiff. The defendant did not say anything about the money. In thisrespect therefore he corroborates the plaintiff and flatly contradicts thedefendant who has said that she paid the money. The Notary also saysthat the plaintiff paid his fees and paid the stamp duty as well. As regardsP3 however, as stated earlier, the Notary says that no money was paidin his presence on that transaction but the plaintiff paid his fees as wellas the stamp duty and it was the plaintiff who gave him instructions for thepreparation of P3.
As regards the subsequent lease on deed No. 4598 of 17.08.79 by thelessor the defendant to the lessee Ibrahim, the same Notary says that heattested it. Instructions concerning the lease were given to him by theplaintiff. Both parlies i.e. Ibrahim and the plaintiff paid his fees as was thecustom in the case of a lease. It was the plaintiff-respondent s case thathe had wanted to lease the house he bought. In order to expedite mattersand as he was due to return to Sweden almost immediately, he executedP3 so that in his absence .leasing this property would be facilitated if theproperty was in the name of the defendant who was to remain in SriLanka. He left for Sweden 3 days after the execution of P3. He was in ahurry. It was submitted that as a layman he was not familiar with givinga power of attorney to someone to act on his behalf.
The parties finally separated with the plaintiff making a complaint to thePolice on 22.11.79 -P8. In that statement the plaintiff has stated in thirdperson –
“that he was living with the defendant as man and mistress and thatbecause of the confidence he had in her he had transferred his houseproperty in her name… Today when he visited the house he found shehad left- He learnt she had gone to her sister s house in AsarappaRoad, He does not know what she has removed from the house-Hemade this statement in order that a settlement be effected …"
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Counsel points out that the reason why he executed P3 is given in P8.in consequence of P8 the defendant had made a statement to the Policeon 24.11.79 P10. In F10 the defendant has stated “… this house is in myname" – P10B. Again, it says"… if my passport and my sovereign chainand R.s. 4,000/- that I had obtained from my sister are returned, I shallretransfer the land and the house".
Thus, it was the contention of respondent's Counsel that:
the evidence relating to the foreign earnings of the plaintiff assupported by P6 showed that he would have had sufficient savings tohave purchased this property on P2;
that the earning capacity of the defendant (and her daughter) waslow and that the District Judge was right in holding that she had insufficientfunds to have paid Rs. 40,000/- on P2 as asserted by her;
that the plaintiff had played a dominant role as regards P2, P3, andeven P4;
that all of the above matters were attendant circumstances withinthe meaning of s.83 of the Trusts Ordinance and could have beenproperly considered as proved facts in construing a constructive trust;
the contents of P10 were admissions made by the defendantagainst her interests.
(/) that the contradictions between the evidence of the defendant andthat of Garwin de Silva as regards the payment of consideration in P2 castthe defendant's evidence in grave doubt;
(g) that if the plaintiff wanted to gift the premises to the defendant therewas nothing to prevent him from doing so. Thus the probabilities from allthe surrounding circumstances were that the plaintiff was speaking thetruth.
With regard to the propositions of law taken on behalf of the appellantand referred to earlier in this judgment, the respondent argued that '
(a) Section 2 of the Prevention of Frauds Ordinance does not prohibitor prevent the plaintiff from proving by parole evidence attendantcircumstances as envisaged in s.83 of the Trusts Ordinance. It has
SC Bernadette Valengenberg v. Hapuarachchige Anthony (Bandaranayake, J.) 201
no application to Chapter IX of the Trusts Ordinance. SaminathanChetty v, Vanderpoortan (9), Valliamma Achchi v. Abdul Majid(10) -48 NLR 289 (PC) (11). Muthuammav. Thiagarajah' (19).It was submitted that s.2 provided only for legal interests and notequitable interests in immovables. Equitable interests may beproved by parole evidence. Reliance was placed on the decisionin Narayart Chetty v. James Finlay Ltd. (20) where it had beenargued that s.2 provided only for the legal estate and not for anequitable interest. Reference was made to the comment byGarvin, J. "Our Statute of.Frauds left out those.portions of theEnglish statute – to wit: ss. 7,8,9 and 10 that provided for equitableinterests". As those sections have not been incorporated in ourstatute, it was submitted they had been deliberately left out andsupported the submission that s.2 does not apply to equitableinterest.
The denial of a trust is a fraud – vide s. 5 of the Trusts Ordinance.Counsel referred to Valliamma Achchisc ase as the first where theprinciple of fraud was considered. Counsel also referred to “Equityand the law of trusts” by Philip H. Pettit – p.19: 80. Counselsubmitted that, in the instant case, the denial by the defendant ofa constructive trust vis-a-vis P3 was a fraud, and therefore, neithers.2 of the Prevention of Frauds Ordinance or s.92 of the EvidenceOrdinance were applicable – vide S.92(1).
that the cases relied on by the appellant (supra) which applied s.2of the Prevention of Frauds Ordinance and s.92 of the EvidenceOrdinance and declared those transactions void or held that therewas no trust could all be distinguished, as those transactions didnot relate to the creation of constructive or express trusts butrelated to other dispositions of land such as mortgages and weretherefore irrelevant for present purposes. Trusts had failed on thefacts in those cases. Chapter IX of the Trusts Ordinance was in thescheme of the written laws of Sri Lanka and had to be given effectto.
that the doctrine of advancement was not pleaded by the defen-dant, no issue was raised on it and no reference was made to it inthe evidence and not adjudicated upon in the District Court. It wasraised for the first time in appeal. The defendant's evidence has in
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fact the effect of denying it. Furthermore the evidence adduceddoes not warrant such a conclusion.
that modern trends in the development of the English Law ot Trustsas detailed by the case lav/ cited (ante) in regard to unmarriedcohabiters have no place in the lav/ of Sri Lanka. Section 2 ol theTrusts Ordinance does not permit the introduction of these trendsinto Sri Lanka Law and should never be regarded as a vehiclewhich was intended to admit new species of constructive orresulting trusts as and when they are evolved by application ofEnglish equitable principles to changing English society. Whatsituations could be regarded as creating constructive trusts are setout in Chapter IX of the statute. One cannot add more categoriesto the statute by judicial decision.
Conclusions :
Mindful of the case law that has been cited (ante) it is my view that atrust may be said to arise where a person proves a case which falls withinthe language of one of the provisions in Chapter IX of the TrustsOrdinance; therefore s.2 of the Frauds Ordinance would not be relevant.Section 5(1) of the Trusts Ordinance specially enacts that a trust createdunder Chapter II of that Ordinance must be notarially executed in themanner prescribed by s.2 of the Frauds Ordinance. In the absence of asimilar provision which makes s.2 of the Frauds Ordinance applicable totrusts arising under Chapter IX it is a safe approach to say that s.2 of theFrauds Ordinance is not meant to govern trusts arising under Chapter IXi.e. constructive or implied trusts. A person has therefore to make out acase falling within the provisions of ss.83 to 96 of the Trusts Ordinance- vide – Jonga v. Nanduwa (21). In the instant case the plaintiff has soughtto make out that he did not intend to dispose of his beneficial interest andthat the instant situation is one governed by s 33 of the Trusts Ordinance.The plaintiff also asserts that the defendant's denial that she was holdingthe property intrust for the plaintiff is fraudulent. If he succeeds in provingthis, then certainly s.2 of the Frauds Ordinance and ss.91 and 92 of theEvidence Ordinance would not be applicable and would not be a bar tohis proving a constructive trust upon parole evidence.
The plaintiff relies on a chain of facts and circumstances in support ofhis claim. Each case has to be viewed on its particular facts. In this case,
SC Bernadette Valengenberg v. Hapuarachchige Anthony (Bandaranayake, J.) 203
the parties claim to have been man and mistress. Both depended on theiremployment incomes, the plaintiff being a middle grade hotel employeeand the defendant a hairdresser with four dependent children, who,before she lived with the plaintiff, lived in her sister’s house. The contestrevolves around the purchase of a house. With their employment in-comes in Sri Lanka, neither could have had sufficient funds to purchasea house and garden. There is no evidence of their savings in Sri Lanka.Thus we see the plaintiff in 1975 seeking to improve himself – he proceedsabroad, learns a foreign language and earns and saves money and thatis the starting point of the circumstances which ultimately led to thepurchase of the house. What both earned during their spells abroad inSweden has been placed before the trial Court through P6 the plaintiff'sSwedish Bank Book. We have the evidence that the plaintiff spent alonger time in Sweden in 1975 and 1976 and plaintiff says he earnedmuch more than the defendant who spent only a few months. Thedefendant claims she earned as much as him. According to the plaintiff'sevidence he earned about Rs. 9,000 per month (converted from SwedishCroners) whereas the defendant earned about Rs. 2,000 per month andher daughter a 15 year old girl earned something for a period of 4 monthsin 1976. The defendant who knew no Swedish does not claim she workedas a hairdresser in Sweden. She has said her duty was to assist inattending to the meals and personal needs of the inmates of a home forelders. The trial Judge has considered the evidence regarding theearnings of the parties in Sweden. He has concluded that the plaintiff wasmore qualified than the defendant in that he had gained in the Swedishlanguage and therefore was better placed to secure a better paid job thanthe defendant who was there only for 3 months, had visa problems andknew no Swedish. In the result the trial Judge has accepted the plaintiff 'sevidence as more probable and concluded the defendant could not havehad sufficient money to have purchased the house. I see no reason tointerfere with those findings. No other source of income or wealthconcerning the parties has been adduced in evidence. In this backgroundone has to examine the claim of the defendant-appellant that she paid themoney on the occasion of the purchase of the house on P2 – i.e.Rs. 40,000 cash. The seller Garwin de Silva, Attorney-at-Law, specificallyalluding to this testified that it was the plaintiff who paid him first Rs. 5,000advance and then Rs. 40,000 on the date of the execution of the deed.He therefore flatly contradicts the defendant. He has to be regarded asa disinterested witness and he supports the plaintiff. There are the furtherfacts that the plaintiff paid the Notary's fees and stamp fees for both P2
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and P3 according to the Notary. There is also the evidence that no moneyin fact passed at the time of execution of P3 – vide evidence of the Notary.His mere attestation on P3 that consideration was paid is therefore of littlevalue and has been rebutted by his testimony. The attestation on P3 istherefore not conclusive.-vide- Daw's Singhov. Herath^2), Moonesinghev. Vithanage(23), Nadarajahv. Ramalingam (24).
The trial Judge has in the light of the foregoing, rejected the claim ofthe defendant that she paid the consideration on P2. He has come to afirm conclusion that the plaintiff paid Rs. 45,000 out of his money on P2.
It is also probable that no consideration was paid at the time of theexecution of P3. There is no reason to interfere with these findings. Wenow have the situation that the defendant's claim to have paid theconsideration on P2 has been rejected as highly improbable. Thesecircumstances could be regarded as showing that the defendant veryprobably made a false claim. Such conduct on her part is highly relevantto the question whether the defendant's denial of the existence of aconstructive trust in this case amounts to fraud. There is also the letter P9and the defendant's statementto the Police – P10. The trial Judge havingconsidered all relevant facts has concluded that P9 was written by the
defendant. I cannot disagree. By P9 it is stated that "Now Hapu the
house is in my namelamwillingtowritethe house in yourname
you took every cent I saved" The trial Judge points to the language
of P9 and concludes it suggests an admission by the defendant that thehouse was merely written in her name on P3. That is a finding that Courtcould have come to on the evidence. Appellant's Counsel submitted thatPlO is long after the events of 1976 and should not be regarded asattendant circumstances. But no objection has been taken to the admis-sion of P10 at the trial. The Civil Procedure Code permits a document togo in if not objected to. Furthermore, its contents to wit: that she willtransfer the house back to the plaintiff if he returns her gold chain andmoney amouting to Rs. 4,000 could be regarded as an admission againsther interests and therefore relevant and admissible. This conduct too isrelevant to the question of fraud. The findings of fact that the defendanthad insufficient savings or capita! to buy the property at the time P2 wasexecuted coupled with the high probability upon the circumstances setout earlierthat the defendant had falsely said that she paid the money asconsideration for P2 together with her admissions in P9 and P10 makesit probable that her denial of the plaintiff's assertion of the existence of aconstructive trust is fraudulent. It is my view that the plaintiff has
SC Bernadette Valengenberg v. Hapuarachchige Anthony (Bandaranayake, J.) 205
succeeded in showing fraud on the part of the defendant in denying theclaim of the plaintiff. In the result s.2 of the Frauds Ordinance and s.92 ofthe Evidence Ordinance have no application to this case and the plaintiffcan lead oral evidence of the existence of a constructive trust in his favouron the basis that he retained the beneficial interest in the property at thetime P3 was executed.
The unreliability of her evidence that she paid the money for P2 alsoaffects her evidence that she later discovered that the property had beentransferred in the plaintiff's name and she persuaded him to execute P3-.Her evidence as to the circumstances in which P3 came to be executedin her name has therefore to be rejected as probably untrue. The trialJudge has correctly answered issue 3(c) in the affirmative. This leavesone with only the plaintiff's version that he executed P3 in defendant’sname to facilitate the leasing of the property to generate further incomefor him whilst he was abroad and the trial Judge has believed him. P4 hastherefore to be viewed in this light despite the fact that the defendant wasthe lessor. I see nothing intrinsically improbable about the plaintiff’sexplanation for transferring the premises to the defendant on P3. Theplaintiff initiated the moves to buy the house whilst still in Sweden; he haspaid the purchase price; the trial Judge holds that in all the circumstanceshe retained a beneficial interest in the property. The Court was entitled tocome to this conclusion on the facts and circumstances of this case.
I now turn to the question of a presumption of advancement in favourof the defendant-appellant who admittedly was the mistress of the plaintiffand not the wife. Learned. Counsel for appellant sought to extend therationale in Mutalibu v. Hameed(ante) to the case of a man and mistressrelationship. As no such presumption can arise in such a relationship inthe law of Sri Lanka, Counsel sought to introduce modern trends in thelaw of England through s.2 of the Trusts Ordinance. I do not think this canbe done. The decisions of the English Courts have given rise to qualifiedtrusts based on property concepts and rules of English property law whichis not the law of Sri Lanka. Furthermore, the Courts of this country havebeen disinclined to introduce categories of English constructive andresulting trusts not mentioned in Chapter IX of the Trusts Ordinance. AsI said earlier this case has been fought on the basis that the defendantwas the sole owner of the property in question. I am unable to say that aninitial presumption of advancement arises on the facts.
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11990) ) SriL.R.
The trial Judge has held that the plaintiff has proved that he conveyedonly a legal interest in the property to the defendant on P3 and retaineda beneficial interest in the property and that there was a constructive trustoperating in his favour. I agree with the decision and uphold it. I accord-ingly affirm the judgment of the Court of Appeal and dismiss this appealwith costs.
H.A.G. DE SILVA, J. – I agree.
.KULATUNGA, J. -1 agree.
Appeal dismissed.