116-NLR-NLR-V-66-C.-KANAGAMMAH-HOOLE-Appellant-and-K.K.-NATARAJAN-Respondent.pdf
484
T. S. FERNANDO, J.—Hoole v. Natarajan
1961 Present: H. N. G. Fernando, J,, and T. S. Fernando, J.C. KANAGAMMAH HOOLE, Appellant, and K. K. NA TARA JAN,
Respondent
8. C. 589157—D.G. Jaffna, 39G/L
Contract—Specific performance—Agreement to sell immovable property—Scope ofright of purchaser to claim specific per for man re—Repudiation of agreement byvendor—1’ender oj price by vendee not necessary then.
The defendant entered into an agreement with the plaintiff to sell a piece ofland. Clause 8 of the agreement provided that in the event of the defendantrefusing or neglecting to convey the land on tonder of the balance considerationwithin a fixed period she should pay the plaintiff a sum of Rs. 2,000 as damages.Prior to the expiry of the time for payment of the balance consideration, thedefendant informod the plaintiff by letter D2 that she was not prepared toplace the plaintiff in possession of the land in terms of another clause of the agree-ment, and stated that the agreement had been simed by hor while she was ill andwhile she “ was not in a position to understand the nature and effect of theagreement ”.
On a proper interpretation of the entiro agreement, the stipulation embodiedin clause 8 was merely a penalty and not an alternative or subst itutedobligation. Tt was intended to bo merely accessory to the principal obligation,viz., the obligation to transfer the land.
Held, (i) that the plaintiff was entitled to a decree for specific performancecompelling the defendant to transfer the land.
(ii) that the plaintiff was under no legal obligation, after the receipt by himof letter D2, to allege or prove a tender of the balance purchase price.
A.PPEAL from a judgment of the District Court, Jaffna.
H. V. Perera, Q.C-, with C. Ranganalhan and Miss S. Wickremasinghe,for defendant-appellant.
H. W. Jayewardene, Q.C., with E. R. S R. Coomaraswamy, K. Palakidnarand C. P. Fernando, for plaintiff-respondent.
Cur. adv. vvlt.
March 24, 1961. T. S. Fernando, J.—The pubstantial question that arises upon this appeal is the interpreta-tion of a notarial instrument P.l executed on 21st November 1956by which the defondant agreed to sell to the plaintiff a certain piece of
T. S FERNANDO, J".—Hoolo v. Natarajon
486
land out of a larger land, the agreement being expressed therein in thefollowing clauses :—
The owner agrees to sell and the purchaser agrees to buy from the
owner the landed property described in the schedule heretoat the fixed pi ice of Rupees Thirteen thousand two hundredand fifty (Rs, 13,250) subject to conditions hereinafter stipulated.
The owner hereby admits and acknowledges receipt of Rupees
One Thousand (Rs. 1,000) as advance.
The owner shall fix the boundary mark as per survey plan herein-
after mentioned at her cost and fence the boundary fence.
The owner shall receive the balance consideration within any
period not exceeding six months from date hereof from thepurchaser and discharge the existing mortgage and cause aconveyance of the said property unto the purchaser.
The owner shall permit the purchaser to take possession of the said
land as from today, repair and complete the incomplete buildingexisting thereon and go into occupation of the said land anduse and enjoy the same free of any rent.
The purchaser shall pay the balance consideration within a period
of six months from date hereof unto the owner and cause aconveyance of the said property to be effected in his favourat his own cost and expense.
In the event of the purchaser failing to pay the balance considera-
tion within a period of six months herein stipulated the saidpurchaser shall pay a sum of Rupees Two Thousand (Rs. 2,000)as liquidated damages and yield up possession of the said landunto the owner and shall not claim any compensation forimprovements to the said land or buildings.
In the event of the owner refusing or neglecting to obtain the
balance consideration within the stipulated time and conveythe said property the owner shall pay a sum of Rupees TwoThousand as damages.
The owner shall permit the purchaser to draw water from the
well in the remaining portion of this land for a period of sixmonths from date hereof.
The defendant received from the plaintiff the sum of thousand rupeesreferred to in clause 2 above, but failed to give over possession to theplaintiffas stipulated in clause 5. On the plaintiff calling upon the defendantto place him in possession, the defendant by her letter D. 2 of 2nd January1957 informed the plaintiff that she is not prepared to do so, and statedthat the agreement P.l had been signed by hear while she was ill and while
& 8018 (1/66)
480T.' S. FERNANDO, J.-—Hoolt v. Natarajoti
she “ was not in a position to understand the nature and effect of theagreement ”. In answer to the plaintiff's claim in this case for specificperformance of the agreement P. 1 the defendant, while denying herliability to exocute a conveyance of title, contended, inter aha, (a) thatthe instrument was only intended to be an informal writing, (6) thatit had been signed by her on false representations made to her by thenotary and another person who acted as a broker, and (c) that theinstrument was neither read over nor explained to her. Several issues wereraised at the trial based On these allegations made by the defendantin her answer. These issues have all been answered in favour of theplaintiff and, rightly, no attempt was made to canvass before us thedecisions thereon by the learned trial judge who has also held that forsome two years before the execution of P.l the defendant had beenanxious “to sell the land in question.
In regard to the claim for specific performance the contention of theplaintiff was that the stipulation in clause 8 of P.l that in the eventof the defendant refusing or neglecting to convey the land she shallpay a sum of Rs. 2,000 as damages was a penalty and therefore merelyaccessory to the. principal obligation to execute a conveyance, while forthe defendant it was argued that it was an alternative or a substitutedobligation. The learned trial judge, after a consideration of a numberof decisions of this Court, has held in favour of the plaintiff and decreedthat he is entitled to specific performance of agreement P.l by thedefendant. Tt is this finding that has been canvassed before ua.Mr. Perera argued that in terms of clause 8 the consequence of a repudia-tion of the agreement on the part of the defendant is only a liability topay a sum of Rs. 2,000 by way of damages. He pointed to clause 7 asembodying the corresponding liability of the plaintiff had there been afailure by him to perform his part of the agreement. Apart from thecircumstance that the notary has been careful to distinguish between thedamages which the plaintiff will have to pay for the non-performanceby him of his obligation under the agreement which damages have beendescribed as liquidated damages, while in the very next clause 8 thedamages which the defendant will have to pay for non-performance by herof her principal obligation under the same agreement have been describedmerely as damages, one must not overlook the circumstance that theplaintiff has undertaken by clause 7 to forgo the common law right of animprover of land to claim compensation and to remain in possession of theland by virtue of theyus retentionis. Moreover, the agreement is silent(a) as to the return of the sum of Rs. 1,000 received by the defendantas advance—vide clause 2, and (6) in regard to the restoration of posses-sion to the defendant although clause 5 contemplated the plaintiff beingplaced in possession from the date of the execution of P.l itself. Thesecircumstances tond to strengthen the view which the trial judge formedthat the stipulation embodied in clause 8 was merely a penalty and notan alternative or a substituted obligation.
487
T..,S. PEKNANDQ, _J.—Hoolts v. Nalar aj an ..
relevant law is now fairly well settled by our own decisions. 1^it fairly recently that. Gratiaen J. (with whom Pulle J. andi J. agreed) stated in Thaheer v. Abdeen1 that—
n this country the right to claim specific performance of an agree-; to sell immovable property is regulated by the Roman-Dutchmd not the English law. It is important to bear in mind a funda-;al difference between the jurisdiction of a Court to compel per-ance of contractual obligations under these two legal systems,ngland, the only common law remedy available to a party complain-f a breach of an executory contract was to claim damages, but theCourts of Chancery, in developing the rules of equity assumed and exer-cised jurisdiction to decree specific performance in appropriate cases.Under the Roman-Dutch law, on the other hand, the acceptod view isthat every party who is ready to carry out his term of the bargainprima facie enjoys a legal right to demand performance by the otherparty ; and this right is subject only to the over-riding discretion ofthe Court to refuse the remedy in the interests of particular cases.”
This statement of the law was accepted by Their Lordships of theJudicial Committee—see Abdeen v. Thaheer 2. Their Lordships alsoapproved of another dictum contained in the same judgment that “ itis only in the absence of agreement to the contrary that the Roman-Dutch law confers on a purchaser under an executory contract the rightto elect one of two alternative legal remedies under the Roman-Dutchlaw, namely, specific performance or damages ”. Rightly construed, itdoss not appear to me that the instrument P.l contains an agreementby which the purchaser has bound himself to be confined to a receiptof compensation in the form of damages on the refusal or failure by theowner to convey the property to him.
Mr. Perera, however, drew our attention to another passage 8 in thesame judgment which I produce below :—
“ Be that as it may, I think that in a system of law which recognisesthat two alternative legal remedies are prima facie available to theinnocent party as of right, an agreement providing that, in the eventof a-breach, the defaulter shall forthwith be obliged to pay an agreedsum by way of compensation, raises, in my opinion, a presumptionthat the parties intended to rule out recourse to the other legal remedy.”
and contended that the particular provisions of the agreement construedby the Court in the case of Thaheer v. Abdeen {supra) served merely toconfirm the presumption. Relying on the passage referred to above,he argued that the absence of a confirmation of the presumption doesnot mean a rebuttal thereof. Their Lordships of the Judicial Committe ehave not felt obliged to say anything in regard to the dictum which thispassage embodies probably for the reason that it played no real partin the decision of the case, the ratio decidendi of which was that the party
1 {1955) 57 N. L. R. at p. 3.* {1958) 69 N. L. R. at pp. 388-9.
9 ll$55) 67 U. L. R. at p.*6.
48S
T. S. FERNANDO, J.—Boolt v. Natarajan
•who is ready to carry out his term of the contract prima facie enjoysa legal right to demand performance by the defaulting party, and thatthis right can be taken away only by an agreement to the contrary.In the case before us the terms of the agreement cannot reasonably besaid to lead one to the conclusion that the purchaser was content to relysolely on his claim for damages. Not only is there no provision for thereturn of the advance of Rs. 1,000, but the agreement is silent in regardto compensation for improvements where the owner is the defaultingparty ; these are circumstances which tend to show that clause 8 wasnot intended by the parties to cover all the prejudice the purchaserwill suffer. I am of opinion that the learned trial judge has correctlyinterpreted the instrument when he held that clause 8 embodied onlya penal stipulation which was intended to be merely accessory to theprincipal obligation, viz., the obligation to transfer the land.
Mr. ■JPerera, for the defendant, next raised a subsidiary point, viz.,that the plaintiff not having tendered the balance money payable by himwas not in any event entitled to demand from the defendant specificperformance of the contract. In regard to this, it must be noted thatthe question of failure to tender was at no stage raised in the issues duringthe trial. It does not appear to have been raised even as an argument inthe Court below, and the petition of appeal to this Court is bereft ofany reference to a failure to tender the balance purchase price. Mr. Jaye-waidene, in objecting to the elaboration of this argument, referredto the case of Setha v. WeeraJcoon1 where a bench of two judges held thata new point which was not raised in the issues or in the course of thetrial cannot be raised for the first time in appeal unless such point mighthave been raised at the trial under one of the issues framed, and theCourt of Appeal has before it all the requisite material for deciding thGpoint, or the question is one of law and nothing more. Having regardto issue 1 which raised the question whether the plaintiff is entitled interms of P.I to a conveyance of the land on deposit of the balance amountdue and tho evidence led at the trial which indicates that the balancesum was not tendered to the defendant, I am unable to take the viewthat the defendant was precluded from raising before us the questionof the consequences, if any, of a failure to tender the balance purchasemoney within a period of time stipulated in the contract.
The question, however, is covered by authority, both local and English.In Appuhamy v. Silva2, Lascelles C.J. dealing with tho same questionsaid (at page ?40) :—
“ There can, I think, be no question but that the defendant, byannouncing his refusal to accept the money, had waived his right tohave a formal legal tender. The principle of law has thus been statedin cases where tender is pleaded as an excuse for non-performance :“ If the debtor tells his creditor that he has come for the purpose ofpaying a specified amount, and the creditor says that it is too late,
* (1948) 49 N. L. It. 228.
• (1914) 17 N. L. B. 238.
T. S. FERNANDO, J.—Hoolt v. Natarajan
489
or is insufficient in amount, or otherwise indicates that he will notaccept the money, the actual production is thereby dispensed with,and there is a good tender of the apiount mentioned by the debtor ”.The same principle also applies where there is a contract with a conditionprecedent. The performance of the condition is excused where theother party has intimated that he does not intend to perform the con-tract. I think it is quite clear that the plaintiffs are not precludedfrom suing on the contract by failure to make a legal tender of theredemption money, inasmuch as the defendant by his own act inrepudiating the contract had made actual tender unnecessary andmeaningless. ”
This case was followed in Muthuvel v. Markandu1 where the Courtstated that “ it would seem that the appellants have successfully broughtthemselves within the principle that when a party to an agreement tore-transfer repudiates at a point of time prior to the expiration of theperiod of the option, it is unnecessary for the other party to allege orprove tender
English decisions are to the same effect. For instance in Braith-wait# v. Foreign Hardwood Company a, Mathew L.J. said :“ But they
repudiated the whole contract and by so doing clearly absolved the plain-tiff from the performance of conditions precedent which in the ordinarycourse he would have been obliged to perform Again, inSinason-Teicher Corporation v. Oilcake# Etc. Co. 3, Devlin J. expressedhimself thus :—
“ If the seller’s repudiation is such as to display an attitude whichshows that he is, in effect, saying to the buyer ;‘ Although you
are keeping the contract alive, even if you perform your nextobligation and tender your documents, I cannot accept them ’, thebuyer is relieved from the obligation of making an empty and formaltender. He may, if he wishes for his own purposes, keep the contractalive and still claim that he is relieved from the obligation of making anempty or formal tender. ”
I would respectfully follow the decisions referred to above and holdthat the plaintiff was under no legal obligation after the receipt by himof letter D.2 to allege or prove a tender of the balance purchase price.
Mr. Perera invited us to consider whether the principle that it isunnecessary for a party to an agreement to allege or prove tender whenthe other party repudiates at a point of time prior to the expiration ofthe period of option is not limited to cases where the innocent party issuing for damages and does not apply to cases whore specific performanceis claimed. I do not feel called upon to discuss this point as both thelocal cases I have referred to above, viz. Appuhamy v. Silva (supra) and 1
1 {1952) 64 N. L. R. 462.* {1905) 2 K. B. D. 643 at 555.
8 {1954) 2 A. E. R. 407 at 604.
490
H. N. G. FERNANDO, J.—Satharasinghe v. Jnriansz
Mvthuvel v. Marlcandu (supra) were cases in which the actions institutedclaimed specific performance of agreements to transfer title to immovableproperty.
For the reasons indicated above the appeal fails and must bedismissed with costs.
H. N. G. Fernando, J.— I agree.
Appeal dismissed.