040-NLR-NLR-V-74-C.-SANDANAM-Appellant-and-M.-I.-M.-JAMALDEEN-and-others-Respondents.pdf
Sandanam v. Jamaldeen
145
[Pfiivir Council]
1971 Present :Lord Hodson, Lord Guesl, Lord Upjohn,Lord Donovan and Lord Gardiner
C. SANDANAM, Appellant, and M. I. M. JAMALDEENand others, Respondents
Privy Council Appeal No. 33 of 1969S. G. 215/63—.D. O. Kandy, 6642
Vendor and purchaser—Specific performance—Agreement- to sell immovable property—Provision for refund of first instalment of purchase price and payment ofliquidated damages by vendors if they fail to execute conveyance when secondinstalment is paid, within a stipulated period, at the time of execution of conveyance—Payment of the second instalment accepted by vendors within the stipulatedperiod—Jlefusal of vendors thereafter to execute conveyance—Pight of purchaserto claim specif c performance of the obligation of vendors to execute conveyance
■ —Duty of vendor to pass transfer when immovable properly is sold—Poman-Dulch Paw.
Clause 1 of an agreement to sell certain immovable property provided thatthe Vendors should, by a conveyance to be prepared and executed at the costof the Purchaser, transfer the property for the price of Rs. 3,000 on or before-the expiry of three months from ISth December 1957. Clause 2 stated thatout of tho purchase price of Rs. 3,000 a sum of Rs. 2,000 had already been paidnud that tho balance sum of Rs. 1,000 should bo paid at the time of executingthe deed of conveyance in favour of the Purchaser. Clause 3 provided forforfeiture of (lie Rs. 2,000 if the Purchaser failed to complete the purchase.Clause 4 providod that- in the event of the Vendors failing to complete thoeonve3'ance in tormsof the agreement the Vendors should refund to thoPurchasorthe sum of Rs. 2,000 already paid in advance, -until n further sum of Rs. 2,000 aslicpiidated damages and not os a penalty.
Before the date of completion tho Vendors accepted the payment of the finalRs. 1,000 due undor tho agreement and gave the Purchaser a receipt dated10th February 1957. Subsequently, when the Proctors for tho Purchaserprepared a deed of transfer and by letters dated 30th October 1961 invited theVondors to execute tho trnnsfor, the Vendors refused to do so. Thereupontho Purchaser instituted the present action in Decembor 1961 claimingspecific performance.
Held, that the conduct of the parties made it quite clear that Clause 4 of theagreement could no longer operate. Having ncceptod tho final, instalmentthe Vondora must bo taken to have accepted the position that they were undera duty to complete tho bargain, for payment of liquidated damages of Rs. 2,000•would no longer bo adequate according to the agreement of the parties. ThoPurchaser, therefore, was entitled to claim specific performance.'
x Abdeen v. Thaheer (59 N. I#. R. 385) distinguished.
Held further, that by Roman-Dutch Law tho obligation is upon t-bo Vendor of. immovable property to pass transfer and for this purpose he may'appoint hisown conveyancer nlthouah the Purchaser may bv the terms of the contract
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LORD UPJOHN—Sandanam v. Jamatdeen
bo compoUotl to pay tho costa of thdTransfor. Clauso 1 of tho agreement intho present coao dicl not in any way alter tho rights of tho parties. Accordingly,ns tho Vendors wore in default in failing to tender tho convoyanco within thestipulated poriod of t-Iiroo months, tho Purchaser was entitled to waive anycondition os to time and claim specific performance of tho agreement.
Appeal front a judgment of the Supreme Court.
F. N. Gratiaen, Q.C., with Eugene Cohan, for the purchaser-appellant-
Da aid Hands, for the vendore-respondenta.
Our. adv. vnlt.
February 2, 1971. [Delivered by Lord Upjoh.v]—
This is an appeal from the Supreme Court of Ceylon (H. N. G. Fernando,
J. and G. P. A. Silva, J.) who allowed an appeal from V. SivaSupratnaniam District Judge in the District Court of Kandy who madean order for specific performance of an agreement dated ISth July 1950whereby the three defendants (respondents to this appeal) agreed to sellto the plaintiff (appellant in this appeal) certain land which should beallotted to them in lieu of their undivided shares in certain land in aPartition Action No. P.1119 then pending in the same District. Itwill be convenient to refer to the three defendants/respondents as theVendors and to the plaint iff/appellant as the Purchaser.
The Vendors’ mother was also a party to the agreement and to thePartition Action but she died subsequently and the Vendors becameentitled to all her rights and obligations in the agreement and PartitionAction and it is not necessary to mention her further.
A Final Decree was made in the Partition Action on 18th December1957 and by admission of the parties entered on the same day whencertain land being Lot E on a plan referred to in tlie Decree was allottedto the defendants and the sole question before their Lordships’ Boardis whether the Purchaser is by virtue of the agreement of ISth July1956 entitled to specific performance of the agreement with the Vendorsto sell this land to him. Their Lordships must set out the relevantclauses of this agreement.
" 1. The Vendors shall by a valid and effectual deed of conveyancewhich shall be prepared and executed at tjie cost, and expense ofthe Purchaser sell and transfer unto the Purchaser whatever dividedshare or shares (together with the buildings plantations and.everythingthereon) the Vendors will be allotted in the said partition action. . ..
LORD UPJOFCv—Sandanam v. Jamaldcen
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for the price or sum of Rupees Three Thousand (Rs. 3,000/-) at anytime within three months of the entering of the Final Decree in thesaid partition action No. P.1119. . .
Out of the purchase price of Rupees Three Thousand (Rs. 3,000/-)a sum of Rupees Two Thousand (Rs. 2,000/-) shall be paid by thePurchaser to the Vendors at or before the execution of these presents(the receipt whereof is hereby admitted and acknowledged by theVendors) and the balance sum of Rupees One Thousand (Rs. 1,000/-)shall bo paid at the time of executing the deed of conveyance in favourof the Purchaser. ”
Clause 3 provided for forfeiture of the Rs. 2,000/- if the plaintiff failedto complete the purchase and clause 4 was in these terms :
•4.. In the event of the Vendors failing or neglecting to complete
the conveyance in terms of these presents the Vendors shall refundto the Purchasers the sum of Rupees Two Thousand (Rs. 2,000/-)paid ns advance as aforesaid together with a further sum of RupeesTwo Thousand (Rs. 2,000/-) as liquidated damages and not as apenalty.”
This agreement was notarially executed as required by the Preventionof Frauds Ordinance.
It follows that the conveyance was due to be prepared and executed■ and the balance of Rs. 1,000/- paid on or before the expiry of three monthsfrom ISth December 1957.
Had nothing intervened it was not in dispute in the Courts below orbefore their Lordships’ Board that by the law of Ceylon based on theRoman Dutch law when the completion date arrived the Vendors byvirtue of clause 4 had the option either to complete the transactionand receive the balance of the Purchaser’s money or to refuse to completeupon the terms of refunding to the Purchaser his deposit of Rs. 2,000/-together with a further sum of Rs. 2,000/- as liquidated damages. Thiswas clearly settled by the judgment of- their Lordships’ Board in Abdeenv. Thaheer.1
But in fact much did intervene before the date of completion. One ofl he Vendors, Mr. HanifTa, was anxious to get married so on 2Sth August1956 he borrowed Rs. 500/- from the Purchaser and later on after somefurther correspondence the Purchaser paid to Mr. HanifTa a further siimof Rs. 500/-.
It is clear that, these two payments were treated by all parties astogether being the payment of the final Rs.- 1,000/- due under theagreement for the Purchaser received a receipt dated 10th February 1957in these terms
; r (1958) A. O. 11C ; 59 N. Z-. Jl. 386. ■
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LORD UPJOHN—Sandanam v. Jamaideen
“ Received the sum of Rupees five hundred (Rs. 600/-) being balancedue to us for laud referred to in the agreement dated 18 July 1956attested by 3Ir. 31. W. R. do Silva of Gampola. We undertake togive the transfer to 31 r. Sandanam the £th share of the land, namedKonakkahena as per partition case No. 1119 D. C. Gampola, withoutany consideration as we received the full consideration of Rs. 3,000/-. (Three Thousand). ”
Then in 1959-60 the Vendors permitted the Purchaser to enter upon theland they agreed to sell to him and with their knowledge andacquiescence erect buildings thereon at a cost of over Rs. 25,000/-.
Matters dragged on, no one evidently was in any great hurry ; theVendors had their money and the Purchaser was in posssession developingthe land. Ultimately the Proctors for the Purchaser prepared a deed oftransfer and by letters dated 30th October 1961 they invited the Vendorsto attend at their offices on 9th November next to execute the transfer.The Vendors failed or neglected to do so and so the Purchaser commencedthese proceedings in December of that year.
In both Courts below the question of estoppel by reason of the paymentof the Rs. 1,000/- by the Purchaser and with the knowledge andacquiescence of the Vendors his entry into possession and expenditureof money on the land was much debated but before their Lordships’Board Counsel for the Purchaser recognised some difficulties in his wayin successful reliance on estoppel and did not pursue this point beforethem.
In the Supreme Court the learned Chief Justice dealt in his judgmentwith the submission that the receipt on 10th February 1957 amountedto a distinct subsequent agreement varying the original agreement (analmost conclusive point under English law),but he held that the Preventionof Frauds Ordinance prevented the proof in evidence of the receiptas a subsequent agreement and this submission failed. Counsel for thePurchaser accepted this view and did not rely on the receipt, for thispurpose.
The issue before their Lordships’ Board was therefore the short onewhich depended upon the construction of clause 4 of the agreement.The Purchaser contends that clause 4 contemplates a situation when thefinal payment- due under the agreement has not been paid. At thatstage tlie Vendors are entitled to elect to refuse to accept the finalRs. 1,000/- and to refuse to complete the transaction on paying Rs. 4,000/-to tiie Purchaser. But if the}- accept- payment of the final Rs. 1,000/-the position (he says) is changed and clause 4 cannot operato accordingto its tenor for repayment of Rs. 4,000/- in lieu of completion will notgive to the Purchaser the liquidated damages of Rs. 2,000/- for whichho lias contracted if the Vendors refuse to complete.
LORD UPJOHN—Sandanam v. Jamaldeen
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• The Vendors’ answer is even shorter. The Purchaser may have paidthe final Rs. 1,000/- prematurely but the agreement continues in existencein each and every part and operates to the full when the time forcompletion arises. This contention in substance ajjpealed to theSupreme Court-.
Their Lordships cannot agree with the Vendors’ submission nor withthe decision of the Supreme Court which really depended upon thoapplicability of Abdecn v. Tkaheer (supra). With all respect to theirjudgment Abdceen v. Thaheer no longer applied for tho conduct of theparties made it clear that clause 4 could no longer operate. Havingaccepted the final instalment the Vendors must be taken to have acceptedthe position that they were tinder a duty to complete the bargain, forpayment of liquidated damages of Rs. 2,000/- would no longer beadequate according to the agreement of the parties.
Their Lordships are of opinion that the position was accurately7 statedby7 the learned District Judge towards the end of his judgment.Having briefly7 referred to the terms of clause 4 he said :
“ That clause does not refer to the refund of any sum received by themsubsequent to the date of the agreement, and if that clause is to bogiven effect to the defendants would be liable to refund only Rs. 2,000;,.although they7 have in fact received Rs. 3,000 from the plaintiff. That,.certainly7, could not have been the intention of the parties. For theabove reasons, I hold that the substituted obligation contained inclause 4 has become inapplicable, aud tho plaintiff is entitled toenforce specific performance of the obligation on the defendants toexecute a transfer of the property. ”
Their Lordships therefore agree with the learned District Judge thatso far as clause 4 is concerned it is no longer applicable and the Purcbaseris entitled to specific performance.
But their Lordships must deal with an entirely separate point dependingupon clause 1 of the agreement which was raised for the first time in the .Supreme Court.
The Court held that under clause 1 of the agreement it was the dutyof the Purchaser to demand a conveyance. If he failed to do so withinthe period of three months from ISth December 1957 then lie could notmaintain any .action for specific performance or even for liquidateddamages, a proposition which Counsel for tho Vendors was not preparedto support.
But the Supremo Court did not have the advantage of tho argumentspresented to their Lordships nor t he citation of authority to which theirLordships were referred and will now consider. By Roman Dutch Lawthe obligation is upon the Vendor to pass transfer and for this purpose
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LORD UPJOHN'—Sandanam u. J amaldeen
ho may appoint his own conveyancer although the Purchaser may by theterras of the contract be compelled to pay the costs of the transfer.This was clearly established by the case in the Supremo Court of the-Transvaal in Jaynes v. Liquidators of the Amslerdarn Totcnship Co.1and in Wessels Law of Contracts in South Africa, 2nd edition, p. 1105,§ 4500 the author said :
”… .but where immovables arc sold and transfer has to be given,it is the active duty of the seller to pass the transfer, and for thatpurpose he can appoint his own conveyancer even though thopurchaser has undertaken to pay all tho expenses of transfer ”and lie cites James' case {supra).
It seems to their Lordships clear that clause 1 of the agreement towhich they have already referred did not in any way alter the rightsof the parties, for grammatically it must read “ The Vendors shall by avalid and effectual deed of conveyance which shall, be prepared andexecuted bp them at the cost and expense of the Purchaser. …” for aslimes C.J. pointed out in James' case {supra) only the Vendor can passthe transfer.
Accordingly it is clear that the obligation was upon the Vendors toprepare and tender the conveyance, and as the purchase price had longsince been paid, to deliver it upon payment of the costs of its preparation.But the Vendors were in default in failing to tender the conveyancewithin the stipulated period of three months and not the Purchaser.The Purchaser was of couxse entitled to waive any condition as to timeand accordingly in their Lordships’ opinion he is clearly entitled tospecific performance of the agreement. .Subsequently to the Judgmentand Order of the Supreme Court on the Purchaser’s action they heardand determined the Vendors’ counterclaim asking for the Purchaser’sejectment from the land and for damages. During the hearing theirLordships intimated that they would not hear argument on these issuesuntil they had determined the main appeal and in the circumstances ithas become unnecessary for them to do so.
Their Lordships .will therefore humbly advise Her Majesty that thoappeal be allowed, the. decree of the Supreme Court discharged and thodecree of the District Court restored save that for the date of executionof the Deed of Transfer therein there be substituted a date agreed betweenthe parties or settled by the District Court in default of such agreement.There will be no order as to the costs of the appeal to the SupremeCourt or of this appeal.
. 1 [1003) 2’ransvaal Heports 653.
Appeal allotved.