122-NLR-NLR-V-19-DE-SOYSA-v.-THE-ATTORNEY–GENERAL.pdf
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[Parvy CotwcrL.]
Present : Viscount Haldane, Lord Sumner, andLord Parmoor.
DE SOYSA v. THE ATTORNEY-GENERAL.
D. C. Colombo, 35,374,
Sale of. arrack rente—Notification to prospective buyers that renter* wouldbe given licenses to distil arrack for their rents—Reference mconditions of sale to sale of arrack by wholesale by renters—Several documents forming one contract—Evidence Ordinance,s. 91—Actionagainst Government for breachof contract bynot
granting licenses—Is the only remedy an appeal to the Governor!—Ordinance No. 10 of 1844, s. 9—Consensus ad idem.
The appellantpurchased,on March 25andApril 19, 1912,the
arrack rents for the Negombo and Annradhapura Districts for theyears 1912-1913.On March4 a circularletterwas issued bythe
Government toprospective purchasers ofarrack' rents (including
the plaintiff) which stated, inter alia, that renters would be allowed i
1917.
i See (1907) 9 N. L. R. 98.—Ed.
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licensesto distiltheir ownarrack for theuse oftheir owq Itohta,
bnt that no license would be granted to distil arrack in lay lM&stills already established,Ajk this datethe appellanthadalready
establishedtwo stillsin Ceylon,andheld inrespect ofthem licenses
to distil arrack.
In the conditions of sale there was the following condition:
“ Licenses to sell arrack .by retail at the taverns enumerated ….shall be granted to suchpersons as thepurchasers maydesire.. … .
The purchaser shall alsobe allowed toestablish storehousesat the
under-mentioned places Inaddition to theabove store-houses,thepurchaser shallbe permittedto sellarrack wholesale
at not more than four places.’’
The appellant claimed therightto two distillery licenses, which
was at firstunconditionally refused, but he was subsequently
informed that the licenses would be issued if he signed a letteracceptingdistillerylicensesoncondition thatthe arrackdistilled
should besuppliedonly to arracktavernsestablishedin the two ■
districtsandforthesale of arrack by retail,, andthat he should
not sell by wholesale.
Held,thattheappellantwas entitledto the.distillery ' licenses
enabling him not only tosupply arrack for retail sale atthetaverns,
but alsoto sellwholesaleatnot more thanfour placesselected
under theprescribedconditions,andthat asthere wasa breach of
contract the appellant was entitled to damages.
A written contract referredtoin section91 of theEvidence
Ordinance may be contained in several documents.
The appellant isnot deprivedof his cause ofaction by the right
of appealto theGovernorinCouncil under Ordinance No.10 of
1844. The Government cannot' saythat theonly remedy,in case
the Government refused to carry out the contract, is an appeal toitself.
The fact that difference of opinion has arisen as to the properconstruction of the contractdoesnot showthat therewas no
consensus ad idem between the parties.
T
HE facts appear from the judgment. For the judgment of theSupreme Court see 18 N. L. R. 430.
June 26, i917. Delivered by Lord Parmoor: —
The appellant, in,. September, 1910, purchased certain arrack rentsin the districts of Negombo and Puttalam, in Ceylon, for the periodfrom January 1, 1911, to June 30, 1912. On September 21, 1910,he applied for permission to establish two distilleries on his ownlands, known as Kochchikade and Walauwawatta. This permissionwas granted, and the appellant did establish a distillery at Kochchi-kade, erecting there two stills. On June 30, 1911. the appellantwas granted licenses under the provisions of Ordinance No. 10 of1844, as amended by Ordinance No. 13 of 1891, to distil arrackat the two stills. These licenses were granted in Form A ofSchedule IV. of Ordinance No. 10 of 1844.
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De Soyea v.Attorney*General
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On February 28, 1912, 'a notice was published in the Govern-1MT.
ment Gazette in Ceylon that a Board would sit in March for the lobd1purpose of opening and considering tenders for the purchase of Pabhoobarrack rents in various districts, including Negombo and Anuradha- ^ Soyea v.pura. This notice stated that forms of conditions of sale could be Attorney -obtained, and that the privilege, which would be sold under the Generalconditions, was the right to sell arrack only by retail, and did notinclude the right to sell toddy. On March 4, 1912, the ActingController addressed to the appellant a letter in reference to thenotice of sale of arrack rents. There is no question raised as to theauthority of the Acting Controller to Bend this letter, and to bindthe Government by its terms. The fifth paragraph of the letter isas follows: —
“(5) In the event of your purchasing any arrack rents, you willbe allowed licenses to distil your own arrack for the use of your ownrents, but no license will be granted to distil arrack in any but stillsalready established or used in Ceylon, i.e., no- license to establishfresh stills will be granted, as already notified."
At this date the appellant had already established two stills inCeylon, and held in respect of them licenses to distil arrack.
It does not appear at what date the conditions of sale in respectof the various districts were issued, but the terms of the conditionsof the sale applicable to Negombo are set out in the appendix,and similar conditions applied to Alnuracbhapura. The importantcondition is 9: —
“ Licenses to sell arrack by retail at the taverns enumerated inthe list hereto marked-A shall be granted, on the application ofthe purchaser, to such persons as he may desire, provided that thesites be approved by the Government Agent. The purchaser shallalso be allowed to establish storehouses at the under-mentionedplaces, but such storehouses shall be used exclusively for supplyingtaverns, and the purchaser shall not be at liberty to sell in quantitiesof less than three gallons at a time at any such storehouse.
“ In addition to the above storehouses, the purchaser shall bepemitted to sell arrack wholesale at not more than four placesselected by him, and approved by the Government Agent, onobtaining a separate license in respect of the storehouse or store-houses situated at each of the said places under the provisions ofthe Ordinance No. 10 of 1844; but he shall not be at liberty tosell by retail at any of these storehouses, unless he shall haveobtained a special license for that purpose from the GovernmentAgent.”
The appellant became purchaser under the conditions of Bale ofthe Negombo and Anuradhapura rents for the sums respectively ofBs. 800,806 and Bs. 58,036. In each case he was declared thepurchaser of the said privilege at the above respective prices, makinga payment by way of deposit. The purchaser, under the conditions
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1917.
XiOSD
Pabmoob
De Soyaa v.Attorney-General
of the sale, might or might not have a right to a distillery lieense,but the privilege purchased includes, not only the right to a grantof license to sell arrack by retail at the defined taverns, but, in addi-tion, the right to be permitted to sell arrack at not more than fourplaces under the stated conditions. Their Lordships cannot acceptthe argument urged on behalf of the respondent that the permissionto sell arrack wholesale at not more than four places is in the natureof a limitation, or that it is allowable to read the condition as thoughthe words had been “ the purchaser shall not be permitted to sellarrack wholesale at more than the four selected places. ” After^purchasing the privilege contained in the conditions of sale inNegombo and Anuradhapura, the appellant claimed the right totwo distillery licenses under the terms of the letter of March 4, 1912.
On July 22, 1912, the appellant made a formal application for alicense to distil in his stills situated at Kochchikade. This appli-cation was unconditionally refused on July 31, 1912, in a letter fromthe Government Agent, Western Province. There was a subsequentcorrespondence between the proctors of the appellant and theColonial Secretary. The proctors claimed that, under the conditionsof sale of the rents, the appellant was entitled to wholesale licensesto sell arrack from godowns in the usual manner, in addition to theretail licenses to sell arrack at the taverns, and that he proposed toprovide himself with arrack from his own stills for that purpose.On October 12, 1912, the Acting Colonial Secretary writes to theproctors ' ‘that the Government absolutely contests, the legalposition you assume in your letter. ” After an attempt to com-promise, without prejudice, the appellant ultimately declined to signa letter accepting distillery licenses on the condition that the arrackdistilled should be supplied only to the arrack taverns establishedin the said districts and for the sale of arrack by retail, and that heshould not sell by wholesale, or in any manner whatsoever disposeof the arrack at the said stills, or either of them, except for thepurposes aforesaid. The questions to be determined in the appealare whether the Government came under contractnal obligation toissue distillery licenses to the appellant, and., if they did, what is theextent of the obligation? The Judge of the District Court decidedagainst the appellant. This decision was aflSrmed in the H&ghCourt, but the High Court did not concur in all the grounds, onwhich the Judge of the District Court based his judgment.
Before considering the main subject of the appeal, their Lordshipswould express their concurrence with the opinion expressed in theHigh Court that section 91 of the Evidence Ordinance gives nosanction to the view that a written contract, referred to in thatsection, must be contained in a single document. A writtencontract may be contained in several documents, and in the presentcase, if there is a contract, it is not the less binding that it is containedin the letter of March 4, 1912, the tender of the appellant, the
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conditions of sale, and the acceptance of*the tender of the appellant.1917.
They concur further in the opinion that the appellant is not deprivedyfAwp
of his cause of action by the right of appeal to the Governor in PabmoobCouncil under Ordinance No. 10 of 1844, or that the Government xj* Soyeav.can be heard to say that the only remedy, in case the Governmentrefused to carry out the contract, is an appeal to itself. Apartfrom the question of damage, the evidence is documentary, andtheir Lordships have not thought it necessary to review theevidence of Mr. Weigel, since, in their opinion, it is not relevant tothe questions brought before them for decision.
Their Lordships are of 'opinion that the letter of March 4, 1912,the conditions of sale, the appellant’s tender, and its acceptanceconstitute a contract which includes a term to the effect of paragraph
in the letter. No doubt a difference of opinion has arisen as tothe proper construction of this contract, but their Lordships cannotassent to the view that, because this difference has arisen, there hasbeen no consensus ad idem between the parties. It is said that atno time the appellant applied for or was willing, to accept the onlylicense which Government was willing or bound to grant; but thisdepends on the construction of the contract. If the applicationmade by the appellant on July 22, 1912, is for a license, which theGovernment, was not bound to grant, then the refusal of suchlicense would not constitute a breach of the Government obligation,and the appellant would fail, not on the ground that there had beenno contract, but that he had made a claim which the terms of thecontract did not support. It becomes necessary, therefore, toconsider what is the nature of the obligation which the Governmentundertook, and whether the alleged refusal constitutes a breach ofthat obligation.
The words in the letter of March 4, 1912, on which the appellantrelies, are: " In the event of your purchasing any arrack rents, youwill be allowed licenses to distil your own arrack for the use of yourown rents.” It was argued on behalf of the appellant that thelicenses referred to in the letter are the ordinary distillery licenses-granted under the Ordinance No. 10 of 1844, as amended by No. 18of 1891, and that rents included not only the right to a grant oflicenses to sell arrack by retail at the taverns, but also that thepurchaser should be permitted to sell arrack wholesale at not morethan four places selected by the purchaser and approved by theGovernment Agent, on obtaining a separate license in respect of thestorehouses or storehouse situate at each of the said places, underthe provisions of the Ordinance No. 10 of 1844. The license forwhich the appellant applied on July 22, 1912, was a license to distilunder Ordinance No. 10 of 1844, and the refusal of the GovernmentAgent of such a license contains no suggestion that the licenseapplied for was a different license from that referred to in the letterof March 4, 1912. The license ultimately offered to the appellant
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lWL on tiie condition of his signing the enclosure in the letter of October-£oa® 23, 1912, is in the ordinary form of a distillery license underPaiusoor Ordinance No. 10 issued by the Government Agent of the WesternDe Soffsa v. Province, witH a special condition limiting the purposes for whichthe appellant would be enabled to distil. The counsel for the*respondent did noi direct the attention of their Lordships to anyauthority under which distillery licenses could be issued at thematerial date, except the Ordinance No. 10 of 1844. Their Lordshipsaccordingly hold that the licenses referred to in the letter of March 4,1912, are licenses grantable under the Ordinance No. 10 of 1844.The granting of such licenses is in reality a necessary preliminaryBefore the appellant is entitled to distil spirits in the' stills erectedby him, and, in the absence of such licenses, the appellant wouldhave been liable to the penalty of an illicit distillation imposedunder the terms of the Ordinance No. 10. It follows that the letterfrom) the Government Agent on July 31, 1912, unconditionallyrefusing to grant a distillery license to distil under Ordinance No. lO.* of 1844, constitutes a breach of the obligation undertaken by theGovernment in the letter of March 4, ‘ 1912, at the time of the saleof the arrack rents of Negorpbo and Anuradhapura.
A further question arises as to the meaning of the words “ for theuse of your own rents."' It' was contended on behalf of the re-spondent that these words limited the use. of the distilled arrack tothe supply of arrack sold by retail at the taverns, and excluded thesupply of arrack to be sold wholesale at the selected p»laces; andthat, when subsequently an offer was made to the appellant to granta distillery license on his giving an undertaking only to use it forthe supply of arrack for retail sale at the taverns, the: appellantwas not justified in refusing to accept a distillery license with thislimitation, or that, in any event, the conduct of the appellantaffected the amount of damages to which he was entitled.
Their Lordships fully accept the account of the arrack-rentingsystem so lucidly explained in the judgment of the District Judge,and approved by the Judges in the High Court. Tt- appears, that thepurchaser was called "the renter," and that the renter acquiredthe right to sell arrack by retail in all the taverns within his rentalfarm. Every tavern had to be licensed by the Government Agent,and accordingly the renter acquired by purchase' the right to oilthe licenses the Government Agent would issue for the taverns on:his farm, according to the provisions of the Ordinance No. 10 of1844 as amended, which was then in force. Assuming, however,that in ordinary practice " rents " only carried the right to sellarrack by retail in all the -taverns within the rental farm, that doesnot solve the question of the obligations undertaken by the Govern-. ment in the letter of March 4, 1912, taken in connection with theconditions of sale applicable to the districts of Negombo andAnuradhapura.
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Number 9 of these conditions of sale not only grants the concession 1917.that- licenses to sell arrack by retail shall be issued on the application TK>pr.of the purchaser, but, in addition, that the purchaser shall be per- ■ Pabmoobmitted to sell arrack wholesale at not more than four selected places £>« fftryira r.under the prescribed conditions. In their Lordships’ opinion the Attorney-word “ rents ” in the letter is not limited to a portion only of theprivileges purchased by the appellant under the conditions of sale,but includes both the right to 'a permission to sell arrack wholesaleunder the stated conditions and the right to licensees to sell arrackby retail, with the result- that the appellant was entitled to a dis-tillery license enabling him not only to supply' arrack for retailsale at the taverns, but also to sell wholesale at not more than thefour selected places under the prescribed conditions. It may bedoubtful how far the later correspondence Is admissible, excepton the question of damage; but the terms of the undertaking, whichthe appellant refused to sign, make it clear that throughout therespondent refused to issue a distillery license, unless the appellantundertook to limit its use to the supply of arrack by retail, and thatthis refusal was in breachf of the obligations which the Governmenthad undertaken.
Their Lordships are of opinion that the decrees of the DistrictCourt dated April 19, 1915, and of the Supreme Court datedNovember 4, 1915, ought to be set aside and this appeal allowed,and that the case should be remitted to the District Court for assess-ment of the proper amount of damages, unless the parties, can agreeto them. The respondent must pay to the appellant his costs ofthis appeal and of the appeal to the Supreme Court, and the generalcosts of the action, but the costs of the issue as to damages with thecosts of the assessment of the damages must be in the discretionof the District Court. Their Lordships will humbly advise BisMajesty accordingly.
Set aside.
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