CORNELIUS PERERA and others, Appellants, and LEO PERERA,Respondent

076-NLR-NLR-V-62-CORNELIUS-PERERA-and-others-Appellants-and-LEO-PERERARespondent.pdf


Cornelius Per era v. Leo Per era
413
Present: Basnayake, C.J., K. D. de Silva, J., and Sansoni, J.CORNELIUS PERERA and others, Appellants, and LEO PERERA,
Respondent
S. C. 103, with Application 346—D. C. Panadura, 2808
Compromise of action—Consent order—Agreement caused by mistake of fact—“Mistake”
—Apreal—Restitutio in integrum—Civil Procedure Code, ss. 91, 40H.
In an action for a right of cartway across the defendants’ lands, one of thecontesting defendants (the 6th defendant.) stated that a right of way to theplaintiff’s land traversed across one D’s land (lot 162). In cross-examinationhe denied that lot 162 was fully built on and persisted in asserting that it was avacant land. After challenge and counter challenge were thrown out by therespective Counsel as to the correctness of the statement, it was agreedbetween the parties that if, on inspection by Court, the 6th defendant could notsatisfy Court .inter alia that lot 162 was a vacant land, judgment should boentered in favour of the plaintiff. On the next day, when the District .Tudgoinspected the land. Counsel for the 6th defendant stated that the 6th defendanthad made a mistake of fact in stating that lot 162 was a vacant land.The fact that the 6th defendant was mistaken was beyond question. Hetherefore sought to resile from the terms of agreement entered into on the pre-vious day. The Court refused the application and entered judgment in termsof the consent order.
Held, that, on the ground of mistake, the consent order and the judgmentbased on it should be set aside.
Quaere, whether, in such a case, the remedy of the aggrieved party Is by wayof appeal or by way of an application for restitutio in integrum ?
2*J. N. R 15402 (2/61)
414
B ASNAYAJK.E, C. J.—Gornelitcs Per era v. Leo Perera
A
JL A.PPEAL, with, application for restitutio in integrum, from a judgmentof the District Court, Panadura.
H. W. Jayewardene, Q.C., with D. R. P. Ooonetilleke, L. C. Senevi-ratne and H. E. P. Cooray, for 6th, 7th and 8th Defendants-Appellantsin the Appeal and for 6th, 7th and 8th Defendants-Petitioners in theApplication.
N. K. Choksy, Q.C., with D. O. W. Wickremasekera, for Plaintiff-Respondent in both the Appeal and the Application.
D. R. P. Goonetilleke, for 1st and 2nd Defendants-Respondents in boththe Appeal and the Application.
D. S. Siriwardene, with A. A. de Silva, for 4th and 5th Defendants-Respondents in both the Appeal and the Application.
Cecil de S. Wijeratne, with J. V. M. Fernando and A. A. de Silva, for9th Defendant-Respondent in both the Appeal and the Application.
Cur. adv. vult.
December 19, 1960. Basnayake, C.J.—
This is an action for a right of cartway. The plaintiff sued the eightdefendants for a declaration that he. was entitled to a cartway over thelands described in paragraphs 4 to 9 and 9a of the amended plaint filedon 20th April 1956, for damages, and for ejectment. He also prayed aright of cart way of necessity in the event of the Court holding that hewas not entitled to a cartway by right of user. Although there wereeight defendants the action was fought by the plaintiff on the one handand the 6th and 8th defendants on the other.
In the course of his evidence the 6th defendant said—
“ …. I say that there is no right of way over my land to
the pltflf’s land. The land between the pltflf’s land and the duplicationroad belongs to Mrs. P. C. H. Dias. That land is not built upon. It ispossible conveniently to have a roadway along the northern orsouthern boundaries of Mrs. P. C. H. Dias’s land to lead to the pltfif’sland. I know Mr. Karunaratne’s land. Mr. Karunaratne’s land is tothe south and abuts the plaintiff’s land. There is a house built on thisland. I have been to the pltflf’s land through Mr. Karunaratne’s land.There was a roadway leading to Mr. Karunaratne’s house. ”
BASNAYAKE, C.J.—Cornelius Perera v. Leo JPerera
415
In the course of his cross-examination plaintiff’s counsel showed hire,town plan 1D4 and in answer to his questions the 6th defendantsaid—
“ …. This is a town Plan. Lot 164 in this plan is pltff’s
land. It is lots 162 and 163 in this plan that belong to Mrs. P. C. H.Dias. I cannot say whose land lot 161 is. That lot is immediatelyto the north of lots 162 and 163. I deny that lot 162 belongs toMr. Dunstan Cooray. I state that it belongs to Mrs. P. C. E.Dias.
Q : I put it to you that lot 162 is fully built on ?
A: No. It is vacant land.
If one goes there even today he can see this land. I know Dr. Cooray’shouse. Dr. Cooray’s house is at the junction of the duplicationroad and the 5th Cross Street. That is what is shown as 116 in1D4. ”
In answer to the Judge the 6th defendant said—
“ …. I still say that the two blocks of land which adjoinsthe pltff’s land on its east is vacant land. That is the two blocksbetween the duplication road and the pltff’s land. My mother wasliving in Colombo at the time the case was filed against her by Mr.C. E. A. Perera. She has been living in Colombo since 1914. Isay that a 10 foot road can be given from the duplication road over thetwo vacant blocks of land I spoke of to the pltff’s land. ”
At this stage the counsel for the plaintiff challenged the 6th defendantto point out a 10 foot roadway which can run over the two vacant blockson the land immediately to the east of the plaintiff’s land and betweenthe plaintiff’s land and the duplication road. He stated that he waswilling to have his action dismissed if such a road is pointed out. Counselfor the 6th and 8th defendants stated that he was unable to accept thechallenge as only one of his clients was present in Court. Thisincident occurred before the luncheon adjournment. When the Courtresumed after lunch counsel for the 6th and 8th defendants stated thathe had consulted his clients and that he was willing to accept the challengeof the_ plaintiff made by his counsel. Then plaintiff’s counsel stated thathis challenge was in respect of lots 162 and 163 and if the defendant canpoint out a 8-10 foot cart road over those lots he was willing to stand byhis challenge. He added however that the road to be pointed out mustbe reasonably straight and it must not run through buildings or parapetwalls.
416
3ASNAYAKE, C. J.—Cornelixt8Perera v. Leo Perera
Counsel for the 6th and 8th defendants stated that he was willing toaccept even that challenge. He stated that he would point out a 8-10foot road running over lots 162 and 163 to the plaintiff’s land which isreasonably straight. Thereupon the District Judge made the followingrecord :—-
“ It is agreed between the parties that the 6th deft, will point out a8-10 foot road from the duplication road to the pltff’s land on lots 162and 163 in plan 1D4.
It is agreed that the Court should decide whether the said road isreasonably straight. It is also agreed that the road to be pointed outmust not run through parapet walls or buildings.- '
It is further agreed that if the 6th defendant points out such aroad and the Court considers that it is reasonably straight, then thepltff’s action is to be dismissed with costs.
If, however, the 6th defendant is unable to point out such a road orpoint out a road which does not entirely fall on lots 162 and 163 orwhich is not in the opinion of the Court reasonably straight, thenjudgment should be entered for the pltflf declaring him entitled to aroadway 8 feet wide along ZLMCBAN Oin plan marked PI withoutpayment of any compensation and with costs to the pltflf against 1, 2and 6-8 defendants.
It is also agreed that the Court should inspect the 8-10 foot roadthat will be pointed out by the 6th defendant. If the Court is unableto decide whether the said road way falls within lots 162 and 163 it isfurther agreed that this Court should avail itself of the assistance ofMr. J. M. R. Fernando, Surveyor, in arriving at a decision on thatpoint.
The 6th and 9th defendants are present. The terms are explainedto the parties and they agree to the terms.
Inspection tomorrow at 9.30 a.m. ’ ’
On the following day when the District Judge inspected the landcounsel for the plaintiff and counsel for the 1st, 2nd, 6th, 7th, 8th and9th defendants were present instructed by their respective Proctors.The plaintiff and the 1st and 6th defendants were present. Thefollowing record was made by the District Judge :—
“ Mr. Adv. Goonetilleke wants it noted that the 7th and 8th deftswere contacted by Mr. D. It. de Silva his Proctor during the luncheoninterval yesterday afternoon after the first challenge by the pltflf wasrecorded. He states that the 7th and 8th defts had no notice of thechallenge made in the afternoon after the challenge of the morning wasaccepted, after the luncheon interval.
J3 ASN' AY AKE, C.J.—Cornelius Per era, v. Leo Per era
417
Mr Adv. GoonetiUeke states that the 6th deft accepted the challengeby a mistake of fact, the mistake of fact being that the vacant landbetween the duplication road and the pltff’s land was comprised oflots 162 and 163 and that he now suspects that the vacant land betweenthe duplication road and the pltff’s land is not lots 162 and 163 althoughhe was led to believe that it was so by the pltff.
Mr Adv. Goonetilleke therefore states that his clients want to resilefrom the terms of agreement entered into yesterday.”
Upon this the learned Judge made the following order :—
“ I am not at all satisfied with the explanation given by learnedCounsel for resiling from the agreement. The terms of settlementwere explained to the parties in detail by Court and they understoodvery accurately the nature of the terms.
The 7th and 8th defendants were represented by their ProctorMr. D. R. de Silva who was instructing Counsel Mr. Adv. T. P. P.Goonetilleke who appeared for them.
Agreement was entered into by Mr. Adv. T. P. P. Goonetilleke onbehalf of the defts he represented. I therefore hold that all the deftswhom Mr. Adv. Goonetilleke represented are bound by the agreemententered into yesterday.
I call upon the 6th deft to point out the 8-10 foot roadway on lots162 and 163 running to the pltff’s land from the duplication road asagreed by him yesterday. He states that he is not talcing part in theinspection in view of the statement made by his counsel earlier. Hedoes not point out any roadway to me.
Mr. Adv. Perera states that the defts are not entitled to resile fromthe agreement entered into yesterday, and they have failed to pointout the road. He moves that judgment be entered according to theconsent order of yesterday.
Documents to be filed by all parties before the 13th. Judgmenton 14.3.57. ”
On that day the District Judge pronounced judgment declaring theplaintiff entitled to a right of cartway 8 feet wide along the trackZLMCBAN Oin plan No. 6S8 marked PI over the defendants’ landwithout payment of any compensation. He also directed the 1st, 2nd,and 6th-Sth defendants to pay the plaintiff the costs of the action. •
That the 6th defendant was mistaken when he said he could pointout a roadway 8-10 feet wide from the duplication road to the plaintiff’sland over lots 162 and 163 in plan 1D4 is beyond question. Must hesuffer for that mistake ? I think not.
It is contended that he is bound by his mistake and cannot resilefrom it even after it became evident that he consented to have his actiondismissed on a mistaken impression that lot 162 was a land without
<418
BASNAYAKE, C.J.—Cornelius JPer era v. Leo Per era
buildings. I am unable to assent to so unreasonable a proposition.Although it is generally recognised that in litigation there is an elementof chance I cannot bring myself to think that it is so much a matter ofchance as to come within the realm of betting or wagering, for whathappened. in this case savours of it. Challenge and counter challengewas thrown out by the respective counsel each confident of the correctnessof his assertion of a factual situation which was easily verifiable and wasin fact verified when the Judge inspected the allotment over which the6th defendant asserted and the plaintiff’s counsel denied that a cartwaycould be demarcated.
A Court of law is the forum for the determination of disputes by aJudge upon evidence and not upon challenge and counter challenge.The Civil Procedure Code makes no provision for what happened in this-case. Decision of a cause in the way in which this action was decidedis utterly foreign to our Code and I know of no system of Civil Procedurein which such a procedure finds acceptance.
The expression “ mistake ” is too well known to need a definition butX think it would be useful to indicate its scope in law and I think the bestway of doing it would be to quote Story’s definition of it which has stoodthe test of time. It runs thus :
“ This (mistake) is sometimes the result of accident, in its largesense ; but, as contradistinguished from it, it is some unintentionalact, or omission, or error, arising from ignorance, surprise, imposition,or misplaced confidence. ’ ’
Mistakes are for the purpose of deciding their legal consequences dividedinto two classes—mistakes of law and mistakes of fact. The former classof mistakes need not be referred to here as the question for decisionrelates to a mistake of fact. It is accepted on all hands that a Court inthe exercise of its equitable Jurisdiction will, where a mistake of factcalls for it, grant relief. To my mind the instant case falls into thatcategory of cases in which a Court would grant relief especially when therelief is sought by way of appeal.
An appeal is not barred in the instant case because in my view thedecree is not one passed under section 408 of the Civil Procedure Codewhich provides that a decree passed thereunder is final. Thatsection provides :
“ If an action be adjusted wholly or in part by any lawful agree-ment or compromise, or if the defendant satisfy the plaintiff in respectto the whole or any part of the matter of the action, such agreement,compromise, or satisfaction shall be notified to the court by motionmade in presence of, or on notice to, all the parties concerned, and thecourt shall pass a decree in accordance therewith, so far as it relatesto the action, and such decree shall be final, so far as relates to so muchof the subject-matter of the action as is dealt with by the agreement,compromise, or satisfaction. ”
23ASNAYAKE, C. J—Gomeli'us Per era. v. Leo Per era
419
The procedure adopted here as already observed does not satis fythe requirements of section 408 and even if the consent given by counselfor the 6th and 8th defendants had not been vitiated by a mistake of factthe decree entered in terms of an arrangement such as we have here willnot attract the finality given to decrees passed under section 408. Wherea statute provides special machinery which if resorted to renders a decreefinal, the finality prescribed in the Act does not attach to a decree unlessthere is a clear manifestation of a conscious intention of the parties toresort to that machinery with a knowledge of the consequences it involvesand there has been a strict compliance with the requirements of the statute.Here there was not even an attempt to comply with 'the requirements ofsection 408. The Code (s. 91) requires that a memorandum in writing ofevery motion should be delivered to the Court at the time it is made bypleader or counsel. No such writing has been tendered by counsel,nor is it clear from the record that the parties gave their mind to everypart of what has been recorded by the trial Judge especially the words—
“ If, however, the 6th defendant is unable to point out such aroad or point out a road which does not entirely fall on lots 162 and 163or which is not in the opinion of the Court reasonably straight, thenjudgment should be entered for the pltff declaring him entitled to aroadway 8 feet wide along ZLMCBANO in plan marked PIwithout payment of any compensation and with costs to the pltffagainst 1, 2 -and 6-8 defendants. ”
In this connexion the following opinion expressed by Burnside C.J. inJPhillippu v. Ferdinands1 is relevant :—
“ And I should hold that any admission which might be made forthe defendants attempting to bind them to their manifest prejudicein the very essence of the defence on their pleadings and contrary totheir contention on their evidence would not bind them without shewingthat they had expressly authorized their counsel to make it and with afull knowledge of its effect. ”
It is not necessary to discuss the cases cited by learned counsel as nocase which directly affects the question involved on this appeal has beenreferred to, nor is it necessary to discuss the submissions made by learnedcounsel on the subject of an advocate’s authority to effect a compromisein the course of an action.
Decisions on mistake in the law of contract are of little assistance inthe decision of a question such as we have before us.
Por the reasons stated above I set aside the judgment and decree anddirect that a trial de novo be held.
The appellants are entitled to costs both here and below.
K. D. de Selva, J.—I agree.
1 {1802) 1 Matara Cases 207 at 210.
"420
SANSONT, J.—Cornelius Perera v. Leo Perera
Sansoni, J.
There is an appeal by the 6th to 8th defendants and there is also anapplication for restitutio in integrum filed by them. Both were heardtogether. Since the judgment entered by the District Judge followedupon an agreement entered into between Counsel appearing for the res-pective parties, I would hold that no appeal lies either from that judgmentor from the order refusing to allow the appellants to resile from theiragreement. Their proper remedy is an application for restitutio inintegrum.
The plaintiff filed an answering affidavit in the application for restitutio,in paragraphs 3 and 4 of which he refers to the 6th defendant’s evidencegiven at the trial; the 6th defendant described the two lots between theplaintiff’s land and High Street, as shown in the Town Survey Plan 1D4,as vacant lots and said that the plaintiff could easily get a right of wayover those two lots. There is no doubt, and I do not think Mr. Choksycontested that position, that the plaintiff all along knew that of those twolots, lot 163 was vacant land, but lot 162 was entirely built upon ; theplaintiff therefore knew that it was not possible to have a roadway overlot 162. This position, as the plaintiff says in his affidavit, was specificallyput to the 6th defendant in cross-examination, but the 6th defendantpersisted in stating that lot 162 was vacant land.
Thus it is abundantly clear that the agreement into which the partiesentered through their counsel was the result, so far as the 6th to 8thdefendants are concerned, of a mistake made by the 6th defendant inthinking that lot 162 was vacant land. His counsel, no doubt on the 6thdefendant’s instructions, and acting on behalf of the 7th and 8th defen-dants also, was influenced by the same mistake. The main question thatarises for decision is whether the 6th to 8th defendants are entitled tohave the agreement set aside because of that mistake.
Now the Roman Dutch Law enables a person to avoid an agreementfor mistake on his part when the mistake is an essential and reasonableone. It must be essential in the sense that there was a mistake as to theperson with whom he was dealing (error in persona) or as to the nature<or subject matter of the transaction (error in negolio, error in corpore).A mistake in regard to incidental matters is not enough. The test ofreasonableness is satisfied if the person shows either (1) that the errorwas induced by the fraudulent or innocent misrepresentation of the otherparty, or (2) that the other party knew, or a reasonable person shouldhave known, that a mistake was being made, or (3) that the mistake was,in all the circumstances, excusable {Justus et probabilis error) even wherethere was absence of misrepresentation or knowledge on the part of theother party. An agreement entered into in the course of an action, likeany other agreement, may be set aside on these grounds.
In the present case the mistake made by the 6th defendant and counselappearing for the 6th to 8th defendants is with regard to an essentialmatter. They were mistaken in regard to the location of the particular
SANSONT, J.—Cornelius Per era v. Leo Per era
42 L
lots over which the road was to run, and as to whether those lots werevacant or built upon. Has the test of reasonableness also been satisfied 1I think it has, and I think the case falls within the second of the threecategories of reasonableness which I have just set out. This is a casewhere the plaintiff knew that the 6th defendant and his counsel werelabouring under a mistake as to the true situation and the nature of theland over which the proposed road was to run. Mr. Choksy urgedthat the 6th defendant persisted in his mistake after his attention wasrepeatedly drawn to the correct position. That would have been asufficient answer if the 6th defendant’s plea had been that his mistakewas excusable, or in other words fell within the 'third category ofreasonableness. In such a case negligence or persistent disregard of themeans of knowledge disqualifies the party from pleading juslus error, butit is different where one party is mistaken and the otner party knowsthat he is mistaken. Such knowledge is decisive and makes all thedifference, because in a case like that the party who knows the truestate of facts knows also that his intention is different from that ofthe mistaken party, and no agreement of minds is possible in such asituation.
The law therefore allows the mistaken party to claim that the contractis void ab initio because there was no consensus on the terms of the con-tract. In such a case there is a radical variance between the offer andthe acceptance. The reason is set out in the following passage from thejudgment of Hannen, J. in Smith v. Hughes1 : “ The promisor is notbound to fulfil a promise in a sense in which the promisee knew at the timethe promisor did not intend it …. if by any means he knowsthat there was no real agreement between him and the promisor, he isnot entitled to insist that the promise shall be fulfilled in a sense to whichthe mind of the promisor did not assent. ” This case is cited by Wesselsin his Law of Contract in South Africa (2nd Edition) Vol. I, Section 911.A South African case frequently cited in this connection is Logan v. Beit 2,the headnote of which reads ; “ Where the terms of a contract are unam-biguous, one of the contracting parties is not entitled to restitution on theground that he misapprehended its meaning, in the absence of proofthat the other contracting party knew, or had reason to know, at thetime of the contract that he was so misapprehending it. ” Tree andHonore in The South African Law of Obligations, section 40, havingreferred to this case, make the comment that if there was or should havebeen such knowledge on the part of the other contracting party, theabsence of jtistus error, that is, a mistake that is reasonable and justi-.liable, makes no difference. Another case where a Court granted relief,imputing to the offeree knowledge of the mistake made by the offeror,is Webster v. Cecil 3. There Cecil, who had already refused to sell hisland to Webster for £2,000, wrote a letter offering it to him for £1,250.Webster accepted by return of post and Cecil immediately gave himnotice that he had mistakenly written £1,250 for £2,250. The Court
1 (1871) 6 Q.B. 597.2 (1890) 7 S C. 197.
*(1861) 30 Beav. 62.
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SA2STSONT, J.—Cornelius Per era v. Leo Per era
set aside the contract. Wessels cites this case in section 975 for theproposition: “ If the mistake was known to the other party or if areasonable man would have detected the mistake, it would be dolus toinsist upon the contract being carried out with the error. ”
There is, in fact, no difference between English Law and RomanDutch Law on this matter. Cheshire and Fifoot in the Law of Contract(4th Edition, page 173) call this particular type of mistake ‘ unilateral ’,where one only of the parties is mistaken and the other party knows ormust be taken to know that the first party is mistaken. In such a casethe judicial approach to the problem is subjective, in that the innocentparty is allowed to prove the effect upon his mind of the error in orderto avoid its consequences. The distinguishing feature of a case ofunilateral mistake is that only one party is mistaken and the mistake ofthat party is known, or ought to be known, to the other. The party whichknows of the mistake in such a case knows also that there is a completelack of agreement and, therefore, cannot maintain that there is a con-tract such as there would have been if the objective test had been applied.The knowledge of the error is decisive and makes it impossible to applythe objective test of intention, which is the test applied where the partiesmisunderstand each other and both are mistaken without either beingaware of any mistake. That type of mistake is termed “ mutual ”.
The next question that arises is whether the agreement of the 6th to 8thdefendants’ counsel to the terms of the settlement, binds the 6th to 8thdefendants. For the reasons I have already given I would hold that thisis not a case where the 6th to 8th defendants should be bound by theagreement made by their counsel. The mistake of the 6th defendantbeing known to the plaintiff, the settlement entered into by their res-pective counsel derives no validity from the mere fact that their counselagreed to the terms. This Court has ample powers to give relief by settingaside a judgment which has been entered upon an agreement based onmistake. No Court will lend its authority to compel observance of anagreement so arrived at. I see nothing irregular or objectionable in theagreement itself. It is a common and well-established method of solvinga dispute such as arose in this case. The District Judge, however, hadno power to set aside the agreement entered into, and the appeal filedagainst his judgment entered in terms of the agreement was misconceived.It is unnecessary, in the view I have formed of the situation arising fromthe mistake made by 6th to 8th defendants’ counsel, to consider the argu-ments addressed to us on section 408 of the Code. I reserve my opinionon the interpretation of that section. I would only add that I am notprepared to whittle down the powers of counsel to enter into settlements.It has often been held by this Court that counsel has, by reason of hisretainer, complete authority over the action and the mode of conductingit, including an abandonment of it. He can compromise in all mattersconnected with the action and not merely collateral to it, even contraryto the instructions of his client, unless the opposite side had knowledgethat he was acting contrary to authority. In my view, he does not requirehis client’s authority to make an admission.
BL. D. DE SILVA, J.—Perera v. JKarunanayake
423
I agree that the judgment and decree should be set aside and a trialde novo held. But with regard to costs, I would not award the appellantsany costs of the appeal since they mistook their remedy in appealing.I would award them the costs of the application for restitutio in integrum,
which I hold that they have succeeded. And I would order the partiesbear their own costs of the abortive trial since they are equallyblame for the inconclusive agreement.
Judgment set aside.