109-NLR-NLR-V-18-DE-SOYSA-v.-THE-ATTORNEY-GENERAL.pdf
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jieae.
Present- : Wood Benton C.J. and Uhaw J.
DE SOYSA v. THE ATTORNEY-GENERAL.
883—D. C. Colombo, 36,374.
9
ScU of arrack rents—Notification to prospective buyers that teuton wouldbo given licenses to distil their own arrack—No mention of the factin the conditions of sale—Does notification form part of the contractt— SofdeneeOrdinance, s,91 —Actionagainst the Government
for breach of contract—Not granting license in. terms of contract—Ordinance No. 10 of 3044, «. 9.
The plaintiffpurchased,on March25 and April19,1912, the
arrack rentstor theNegomboandAnuradhapnraDistricts,
respectively, for the year 1912-18.J
On March 4, 1912, a circular letter was issued by the Governmentto prospectivepurchasersof arrackrents(includingtheplaintiff),
which stated, inter olio, that renters would be allowed licenses todistil their own arrackfortheuse oftheir ownrents; butth&
conditions of sale did not provide for this.
Held, thbt section 91oftheEvidenceOrdinancewasno barto
the plaintiff proving the circular as e part of his contract.
Held, further, thatthecontract contained inthenotification
(circular wasentirely distinct from theprovisionsofOrdinance
No. 10 of 1844, relating to the grant of licenses for distilling arrack,and that consequently section9of thatOrdinancewasnot abar
to an action against the Government for damages for breach ofcontract, by reason of the Government refusing to issue a licenseas stated in the circular.
A
PPEAL from ft judgment of the Acting District Judge ofColombo (G. S, Schneider, Esq.)
Elliott end Bayley, for the plaintiff, appellant.
Bawa, K.G. (with him Fernando, C.C.), for the Crown.
Cur. adv. vult.
November 4, 1915. Wood Rskton C.J.—
In this case the plaintiff, Mr. B. E. S. do Soyga, sues the defendant,the Attorney-General for the recovery of a sum of Rs. 300,000 asdamages for an alleged breach of contract by the .Government ofCeylon in regard to the issue of certain distillery licences. Thesubject-matter in dispute between the parties, and their respectivecontentions on the law and on the facts, are embodied in thepleadings and in numerous issues which were framed at the trial,and which have themselves formed the subject of previous appealto this Court. I shall endeavour, however, to consider the <$se asa whole, in the light in which both sides clearly regarded it at thetrial itself.
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0
The nature of the arrack-renting system, as it Jfcap existed in toto.Ceylon for about half a cexftury, has been explained by the learned * ^9oodDistrict Judge in language equally admirable in point of accuracy RjftmwpSr.and of expression. I would* merely refer to his observations on ^ &oy$a 9.subject, without repeating or attempting to paraphrase them. OnFebruary 27, 1912, a notification (P 22) *was issped that a board 0appointed by His Excellency the Governor would sit on •severalnamed days at the Council Chamber for'the purpose of^opening andconsidering tenders for,the purchase of certain arrack rents, for aperiod of twelve months from July 1, 1912, to June* 80,. 1913.
The rents just mentioned included those for the Negomho Districtin the Western and for the Anuradhapura District in the North-Central Provinces. The notification contained the. followingmaterial passage:—“ Attention is drawn to the fact, that theprivilege which will be sold under the conditions is the right to sellonly arrack by retail, and does not include the right to sell toddy. ’*
Appended to it was a further notice, that Government wouldgrant no license to distil arrack “ in any but stills already establishedor used in Ceylon, i.e.. that no license to establish fresh still would-be granted. 0 The admitted reason for the prohibition of theerection of new stills was that the whole of the excise system of (heColony was in process of reorganization, the intention of Govern-.ment being to take the distillation of arrack and toddy entirelyunder its own control. On 24th March a circular (P 24) was issuedby the Controller of Revenue to the prospective purchasers ofarrack rents, including Mr. de Soysa. The fifth paragraph in thecircular is in these terms:—“ In the event of your purchasing anyarrack rents you will be allowed licenses to distil your own arrack) for the use of your own rents; and'no license will be granted to distilarrack in any. but stills already established or used in Ceylon, te.,no license to establish fresh stills will be granted, as already notified. "
1 On March 25 and April 19, 1912, Mr. de Soysa became thepurchaser of the Negombo and Anuradhapura arrack rents respec-tively. The conditions of the sale (P ,25 and P 26) purport to dealwith “ the privilege of selling arrack by retail ” in the districts towhich they severally relate. Clause 9 is important:—<f Licenses tosell arrack by retail at the taverns enumerated in the list hereto
annexed shall be granted on the application of %e purchaser
to such persons as he may desire, provided thatvthe sites be approvedby the Government Agent. The purchaser shall also be allowed toestablish storehouses at the under-mentioned places, * but suchstorehouses should be used exclusively for supplying taverns, andthe purchaser shall not be at liberty to sell in quantities of less thanthree gallons at a time at any such storehouse. In addition to tyeabove, storehouses, the purchaser shall be permitted to spll arrackwholesale in not more than four places selected by him and approvedby the Government Agent on obtaining a separate license in'
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£915. respect of the storehouses <sac storehouse situated at each of theWood ° said places under the provisions of the9 Ordinance No. 10 of 1844;
&J. but he shall not be at liberty to sell by retail at any of these store-De Soysa v. Bquses unless he shall have obtained* a special license for thatAjgjjjjg; propose from the .Government Agent: “
° Mr.Soysa V contention was that the joint effect of .the notifica-
tion of February 27, 1912 (P 22), the circular (P 24) of 24thMaroh,1912., and °the conditions of sale (P 25, P 26) Swas to conferon lum a right, not merely to the retail licenses disposed of by theconditions of sale and the wholesale licenses, for the issue of whichby the Government Agent they provided, but to an unlimited,liberty of distillation lor the purpose of his own “ rents, ” that is,within the whole area of his farm. The contention of Government,on the other hand, was that Mr. de Soysa was entitled to nothingbut the licenses expressly dealt with by the conditions of sale, and arestricted liberty, which it was willing to concede under proper.'Safeguards, of distillation for the purpose of his own arrack taverns.The whole case depends on what the real contract between theparties was, and, in particular, upon the scope of the term “ rents ” ’in the. 'circular of 24th March, 1912. The learned District Judge heldin effect that the contract between Mr. de Soysa and Governmentwas embodied in .the conditions of sale, that Mr. de Soysa wasprecluded by section 91 of the Evidence Ordinance from provingthe circular 6t March 4, 1912, by which a right of distillation-waspromised to the purchaser of arrack rents, that no breach of contracton the part of Government had been: established, and that theaction must, therefore, be dismissed. The District Judge furtherheld that as Mr* de Soya’s application for the licenses in questionwas made under the old Ordinance—No. 10 of 1844—his actionfailed on another ground, viz., that by section 9 of that Ordinance,as amended by section 7 of Ordinance No. 13 of 1905, the onlyremedy against the refusal of such an application by the Govern-ment Agent was an appeal to the Governor, in Executive Council.If any damages were due, he estimated them at Bs. 136,800. -I donot sr a that there is anything in section 91 of the Evidence Ordinance-to preclude Mr. de Soysa from proving the notification (P 24) as a.part of hii contract. It held out an inducement to intending.pur chasers become actual purchasers of the arrack rents, and.contains a promise in no way inconsistent with the conditions of8&,e. 1! am unable also to accept the argument of Mr. Bswa, that anapplication to the Government Agent, not followed up by an appealto the Governor in Executive Council, is not an “application”within the meaning of the relevant provisions of Ordinance No. 10of 1844 at all. Nor do 1 agree with the learned District Judge thatthe proviso to section. 9 of Ordinance No. 10 of 1844 is-f&tal^to thepresent action, inasmuch as the application ultimately made byMr. de Soysa was an application under the Ordinance, and was not
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founded on the special contract embodied in the notification (P 24). • 1^5,The contract contained in tiiat notification was entirely distinct ° Woo$> 5fsom a license under the Ordinance, and Government could not, hi Rbnton C.Xmy opinion, be heard to contend .that the question whether or hot Da Soysa v.there had been a breach of it was one to be finally determined byan appeal to the Governor in Executive Council. The evidence,documentary and viva vooe9 shows, however, to my mind beyondall doubt, that Mr. de Soysa at no time applied for, or was willingto accept, the only licenses which Government was ready, or bound,to grant. There was, therefore, no consensus ad idem between theparties, and there was no Contract there could be no breach of acontract that did not exist.'
[His Lordship ithen proceeded to discuss the facts at length, 0and held .that the plaintiff never applied for and was never willingto accept the license to which he was entitled under the contract,namely, a license .trammelled with the condition that all arrackdistilled should be used for the purposes of his own rents. Theappeal was dismissed, with costs.]
Shaw J.—
[His Lordship set out the facts, and continued]:—
I will first deal with two points taken on behalf of the respondent.
First, that the clause in the circular letter of March 4. 1912(? 24), saying that renters would be allowed licenses to distil theirown arrack for the use of their own rents, cannot be looked at aspart of the contract which was subsequently reduced into writingby the conditions of sale and the signature thereof. Second, thatthe appellant had no cause of action, because under the OrdinanceNo. 10 of 1844 the person to grant licenses for stills is the Govern*ment Agent, and the only appeal from his decision is to the Governorin Council.
With regard to the first point, 1 do not think that section 91 ofthe Evidence Ordinance prevents the inducement, held out in thecircular to persons tendering, from forming part of the contract;and the conditions of sale, which were already in existence at thetime of the circular (see P 22), were never intended or looked uponby the parties as containing the whole of the bargain. Illustration(a) of section 91 clearly shows that the written contract referred toin the section may be contained in several documents, and in thepresent case it is; in my opinion, contained in the notification forapplications for tenders (P 24), in the tender by the appellant, andi.n the conditions of sale (P 25). Even if this were otherwise, itwould, in my view, be a collateral contract which the appellant wouldbe entitled to enforce.
With regard to the second point, the contract to grant thedistillery license for the purposes mentioned in the circular is amatter altogether apart from an ordinary application for a distiller's.
.
J?
Ve Soyea tAttorney-General *
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license contemplated by the* Ordinance^ and I do not think theGovernment can be heard jbo say that the only remedy, in case the(government refused to oafcry out Jhe contract, was an appeal to
itself.0*
In my opinion, however the appellant never applied for and was
never filling to accept the license that he was entitled to und$? hiscontract, namely, a license trammelled with the condition that allarrack distilled should be used for the purposes of fcfo own rents.The license for 1911-12 was applied for and granted for the purposesof the rent only, and licenses having been granted for this purposein the ordinary form of a distiller's Uca&ad, he, or perhaps, to speakmore correctly, his manager, Mr. Weigel, turned round and snappedhis fingers at the Government, and failed to carry out the conditionon which the licenses were granted.
When the time came for applications for tenders for the followingyear the Government made quite clear, by the circular (P 24), thecondition of the licenses they were prepared to grant, and in myopinion the appellant never applied for or was willing to take sucha restricted license, and never had an intention to abide by the .condition specified by the circular, his construction of the contractbeing that as the conditions of sale gave him a right to apply forand obtain separate licenses for four wholesale stores in the area ofhis rents, he was therefore entitled to sell any arrack distilled byhim at these wholesale stores for retail sale outside his rents. Thiscontention was, in my opinion, wrong. Arrack rents are not acreation of Statute, but have been customary in Ceylon for .the lasthundred years. They are the right to a monopoly of the sale byretail of arrack and .toddy within certain specified districts, theGovernment making its excise revenue from the sale of the rents,and not from ah excise duty on the spirit itself. A very goodqpcount of the system is given by the District Judge in bis judgment.A rent gives no monopoly for sale by wholesale in the district of therent, and although the conditions of sale give a right to the renterto apply for and obtain not more than four separate licenses withinhis district, these are not, in my opinion, any part of the rent itselfbut an ancillary privilege granted to the renter, just as was theright to a conditional distillery license given by the circular. As tothe meaning of the word “ rent," some light is thrown upon i.t byOrdinance No. 18 of 1905. where it is said to be " the exclusiveprivilege of selling arrack or toddy in any part of the Island.”This appears to confine its meaning to retail sale, as it has never beensuggested that a rent gives a wholesale monopoly within the districtto which it applies.
It appears to me, from the correspondence and evidence in the.case, that the appellant having originally obtained a license m theunderstanding that it was to be for the purposes of his retailmonopoly only, has, acting on the advice of his manager, Mr. Weigel,
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whose interest was in the distillery a£d not. in the rent, attempted • iW;to force the Government into giving him an unrestricted distillery Shaw??license, and has failed to do so. • At first he attempted to dissociate —.
the distillery from tire rants* by an attempt to got the license in the Attorney"name of a company, so as to endeavour to perpetuate its existence Omeralbeyond the life of the rentB, and having failed in this, he attempted, 0for tiie second year in succession, to obtain a license in formunhampered with restrictions, intendng to sell, as hb had doneduring tiie first year, in breach of the condition under which tirelicense was granted.v
It was strenuously argued towards the end of tire hearing of. theappeal that there was no issue before the Judge as to whether theappellant was entitled only .to a license limited to distillation for saleby retail only, or whether the condition in tiie circular restricted thelicense to be granted to that purpose, and whether or not the appellantapplied for and was refused such a license, the issue being merelywhether he was entitled to licenses " for the use of his own rents.”
In my view there was never any doubt at the .trial what the realdispute between the parties was, and although the issues are notvery definite, it is sufficiently raised by issue 7.
[His Lordship then discussed the question of damages and-diamjssed the appeal.]
Appeal dismissed)