DESMOND DE PEREREA AND OTHERS v. KARUNARATNE, COMMISSIONER FOR NATIONAL HO

021-SLLR-SLLR-1997-V-1-DESMOND-DE-PEREREA-AND-OTHERS-v.-KARUNARATNE-COMMISSIONER-FOR-NATIONAL-HO.pdf


DESMOND DE PERERA AND OTHERS
v.
KARUNARATNE, COMMISSIONER FOR NATIONAL HOUSING
SUPREME COURT.
G. R. T. D. BANDARANAYAKE J.,
P. R. P. PERERA, J. ANDWIJETUNGA, J.
S.C. APPEAL NO. 67/93C.A. APPLICATION NO. 33/92JANUARY 25, 26 AND MARCH 21,1994.
Writ of certiorari – Ceiling on Housing Property Law, Sections 2, 8, 9 and 17A -Excess houses owned by a company – Rights of non-employee tenants topurchase excess houses vested in the Commissioner – Divesting of vestedhouses – Natural Justice.
The Commissioner for Nalional Housing decided that houses belonging toA. Baur & Co. Ltd. which had been let to non-employees had been excluded in
computing the permitted number of houses, in terms of Section 2 (3) Proviso (C)of the Ceiling on Housing Property Law. Such houses vest in the Commissioner.On an appeal by the Company, the Board of Review under the Law, affirmed theCommissioner's decision. The Company then challenged the decision of theBoard by an application to the Court of Appeal. Whilst that application waspending, the Commissioner, without prior notice to the tenants, made an orderdivesting himself of the ownership of the houses.
Cur adv. vult.
Held:
The disputed houses were excluded (by operation of Law) from the count ofhouses which the company could claim to retain. They were excess houses whichvested in the Commissioner. The tenants failed to apply to purchase these houseswithin the lime prescribed by Section 9 of the Law; hence they had no legitimateexpectation of becoming owners of the same. As such there was no duty tonotice them prior to divesting and no failure on the part of the Commissioner toobserve the principles of natural justice.
In the context of the failure by the tenants to duly apply to purchase thehouses in terms of Section 9 of the Law, the decision to divest the property afterthe Ceiling on Housing property was removed by Act No. 4 of 1988, was notmade mala fide or in defiance of the connected application pending before theCourt of Appeal. In his affidavit, the Commissioner also set out good reasons forhis decision in view of which the divesting of property was justified.
Cases referred to:
MC Innes v. Onslow Fane (1978) 3 All ER 211.
GCSU v. Minister of Civil Service (1984) All ER 935.943.944.
O'Reilly v. Mackmea (1982) All ER 1124.
P. Nagendra P.C., with Jacolyn Senevirtne and 5. M. Senaratne for appellants.
Douglas Premaratne P.C. Addl. S. G. with Mrs. Murtu Fernando for 1st and 2ndresponders.
P. A. D. Samarasekara P.C., with J. A. De Gunaratne and Brito Mutunayagam for3rd respondent.
Jacolyn Seneviratne with S. M. Senaratne for 5th and 6th respondents.
APPEAL from the judgment of the Court of Appeal
July 14, 1994.
G. R. T. D. BANOARANAYAKE, J.
The background of this case first needs to be set out. Forconvenience the Ceiling on Housing Property Law will be referred toin this judgment as the CHP law.
(A) Primary Facts:The 3rd respondent Baur & Co. Ltd. owned a building situated atUpper Chatham Street, Colombo Fort. There was a commercial areain the building used as its Head Office. There were also severalapartments used for residential purposes. The appellants and the 4thto 6th respondents were tenants of the 3rd respondent occupyingsome of the said apartments,
The Ceiling on Housing Property Law No: 1 of 1973 becameoperative on 13.01.73. Part I of that law regulated the ownership ofhouses.
The 3rd respondent Company had extensive interests in theagricultural and industrial sectors in this country and had constructeda large number of houses in the industrial and plantation sectors.These houses were for the occupation of the Company’s employeesand functionaries except a few units either temporarily unoccupied oroccupied by overstaying employees. The five storied building inUpper Chatham Street aforesaid was primarily used as its HeadOffice but had residential facilities in the upper floors for theCompany’s senior staff and foreign and local guests and friends.Some of these residential units were tenanted by the petitionersappellants and 4th to 6th respondents as aforesaid who were notemployees or functionaries of the 3rd respondent Company. A featurethat has been repeatedly stressed on behalf of the 3rd respondentwas that these residential units did not have all its constituent parts inone place. For instance, the living and dining areas could be onefloor, the bedrooms on another, staff quarters were in a differentbuilding as were the store rooms. Car parking was in the basement.Access to all units were controlled by the main doors under thecontrol of the Company as were the lifts and staircases. Electricityand services found their way to the apartment through the mainbuilding etc:
By a notice published in the news papers all Corporate bodiesowning houses were required to furnish a declaration under LawNo. 1 of 1973 before 28.02.73. This the 3rd respondent did underdate 26.02.73 but contended to the Commissioner of NationalHousing, the 1st respondent, that the apartments at Upper ChathamStreet did not come within the definition of houses or flats as set outin Section 47 of the law. The Commissioner however determined thatthey did come under the said definition of residential units in thatsection and by letter dated 14.8.74 required the 3rd respondent tofurnish a return within 14 days. The 3rd respondent complied with thisdirective. The 1st respondent thereafter by letter dated 5.7.78 -referred to as P8 informed the 3rd respondent of the determination ofthe respondent under paragraph 2(3) of the law, that the number ofhouses permitted to be owned by the 3rd respondent was 54 andthat the houses the 3rd respondent had rented to non-employees hadbeen excluded from the computation of the permitted number ofhouses in terms of Section 2(3) (C) of the said law; and among thoseresidential units so excluded were the units Nos. 7 1/3, 7 1/5, 7 1/6and 7 1/12 (tenanted by the appellants) and 7 1/7, 7 3/15 and 7 3/21(tenanted by the 4th 5th and 6th respondents.)
The 3rd respondent appealed from that decision of the 1strespondent to the Board of Review. The 1st respondent, replying tothe Board letter of 3,7.84 informed the Board of the houses vestedfrom the 3rd respondent. Among those vested were the apartmentsoccupied by the appellants and the 4th to 6th respondents vide letterP 20. The Board thereafter noticed the petitioners appellants and the4th to 6th respondents and several others who were tenants in thepremises to be present at the hearing in those appeal proceedings.The 3rd respondent objected to their presence on the ground theyhad no standing at that stage. On 16.10.80 the Board overruled theobjection and made order permitting the petitioners appellants tocome in. The 3rd respondent thereupon sought a Writ of Certiorarifrom the Court of Appeal in C.A. Application No. 194/81 to quash theinterim order of the Board of Review and for a Writ of Mandamusand/or Prohibition directing the Board to hear the appeal withoutmaking the tenants parties to the appeal. After enquiry the Court ofAppeal affirmed the order of the Board of Review and refused theWrit sought, Special leave to appeal from that judgment of the Courtof Appeal was also refused by the Supreme Court.
After hearing the appeal before it the Board of Review dismissedthe appeal of the 3rd respondent on 9.11.85. The 3rd respondentthereupon challenged that decision of the Board of Review in C.A.Application No: 1460/85. A stay order was sought and obtained bythe 3rd respondent against implementation of the said Board ofReview decision of 9.11.85. That stay order is still operative and thatapplication still pending.
We next find that by Divesting Order made under Section 17 A (1)the 1st respondent with the written consent of the 2nd respondentpublished in Government Gazette No. 516/90 dated 19.10.90divested the ownership of the residential houses described in theschedule which included Nos. 17 1/3, 17 1/5, 17 1/6 and 17 1/12tenanted by the petitioners appellants and those tenanted by the 4th- 6th respondents. Such houses are deemed never to have vested inthe 1st respondent.
No notice of the proposed divesting had been given to theappellants by the 1st respondent. The appellants and 4th – 6threspondents had been taken completely by surprise when they learntof the divesting order quite by chance. The 1st appellant had got theassistance of the Government Printer to trace the relevant Gazettenotification publishing the 'divesting' Order. That order is referred toas X8. The appellants challenged that order of divesting in C.A.Application No. 33/92 and asked for a Writ of Certiorari to quash it.The grounds on which the appellants challenged the divesting orderwere (a) that no opportunity was given to those affected by the orderof making any representations or being heard; and (b) the 1strespondent acted ultra vires and in excess of his powers. The Courtof Appeal refused the application. The petitioners appellants thenprayed for special leave to appeal to the Supreme Court from thejudgment of the Court of Appeal on several questions of law theyformulated in a written statement. The Court of Appeal granted leaveon the questions of law set out in that statement. This appealconsiders them.
The questions of law as found in that statement are:-
(1) Should not the provisions of Section 9 of the Ceiling onHousing Property Law be interpreted to mean that anapplication for the purchase of a ‘surplus house’ could bemade within four months of the house becoming a‘surplus house' within the meaning of sections 8 (1) and8 (5) of Law No. 1 of 1973 ?
Did the petitioners have expectant rights and/or legitimateexpectations of becoming the owners of the houses theyoccupied as tenants?
Is the failure on the part of the 1st respondent to givenotice to the petitioners of any proposed divesting ofvested premises under Section 17 (A) of Law No 1 of 1973and/or hearing the petitioners before making his decisionunder Section 17 A (1) aforesaid to divest the housesamount to a denial of the principles of natural justice?
Should the 1st respondent have exercised the power ofdivesting the houses under the said powers given by thestatute before the determination by the Court of Appeal inC.A. Application No. 1460/85 as that case was pendingand a stay order remained in operation?
Could the exercise of such power of ‘divesting’ under thesaid Section 17 A (1) before the determination of C.A.Application 1460/85 prejudicially affect the expectantrights and/or legitimate expectations of the appellants ofbecoming the owners of the houses they occupied astenants?
Has the power of divesting conferred by Section 17 A (1) ofLaw No. 1 of 1973 as amended been exercised mala fid&
Has the said power of divesting been duly exercised inaccordance with the law by the 1st Respondent?
1(B)It is necessary at this point to refer to certain facts and matters oflaw. These facts are not in dispute. Part I of the Ceiling on HousingProperty Law lays down provisions for the regulation of ownership ofhouses. We are here concerned only with houses which may beowned by a body of persons corporate or incorporate. Section 2 (3)declares … quote .. . “the maximum number of houses which maybe owned by any (such) body of persons shall be such number. . .
as is from time to time necessary for the purpose of providingresidence to employees and functionaries of such body." Theappellants or the 4th to 6th respondents were not employees orfunctionaries of the 3rd respondent company. That fact is not indispute.
We next find a Proviso to section 2 aforesaid. Proviso (C) declares. .. quote … 'a house owned by a body of persons which is let bysuch body to a person other than an employee or functionary of suchbody shall not be taken into account in determining the number ofhouses necessary for the purpose of providing residence to theemployees and functionaries of such body Proviso 2 (C) hastherefore to be applied. The resulting position is that the appellantsand the 4th – 6th respondent were tenants of houses owned by the3rd respondent that had to be excluded (by operation of law) fromthe count of houses which the 3rd respondent could claim to retainas being needed for housing of its employees and functionaries.Those houses thus tenanted by the appellants would necessarilycome in the category of excess houses recognised by the statuteover which the owner could lay no claim in law. Once excluded asexcess those houses vested in the 1st respondent and the 3rdrespondent was so informed on 5.7.78 by P8.
Question of point of time when an application for purchaseshould be made by a tenant.Perhaps the most important question affecting this caseaddressed to this court is the question as to when a tenant of a houseought to make his application to the 1st respondent in terms of thestatute for the purchase of that house being one in excess ofpermitted number of houses that may be owned by the owners. Thisis what is reflected in question no: (1) addressed to this Court. Shouldhe wait, perhaps many years as in this case, until the declarations ofowners of houses in excess of the permitted number of housesspecifying those which the owner proposes to retain have been madein terms of Section 8(1) and simultaneous intimation given by theowner to his tenant that ownership of such tenanted house is notproposed to be retained so that the tenant has notice of such excesshouse so as to enable him to apply to the Commissioner to purchasethe house tenanted by him? Should he wait until the provisions ofSection 8 (5) can be applied to what is now called a “surplus" housetenanted by him? It has been strenuously contended both in oral andwritten submissions on behalf of the Appellants that the tenant'sobligation and opportunity to apply to purchase a ‘surplus' house canonly arise after the provisions of Section 8 have been complied withby the owner and determination made by the Commissioner and anyappellate proceedings before the Board of Review concluded when itbecomes known as to whether the house which is tenanted by anyparticular tenant is available for purchase by the tenant it being a’surplus’ house as defined in section 8 (5) of the Law.
In fact some of the other contention of appellant's Counsel in thecourse of submissions stem from the proposition that Section 8determines the point of time from which the time frame of four monthsset out in Section 9 of the Law begins to run for making theapplication to purchase a surplus house. In fact it was evencontended by the appellants that Section 9 contains a mistake whenit used the expression … “within four months from the date ofcommencement of this Law.”…
It is therefore necessary to address oneself to this question whetherthe provisions of Section 8 overide the provisions of Section 9.
Section 9 reads thus . . . “The tenant of a surplus house or anyperson who may succeed under Section 36 of the Rent Act No. 7 of1972 to the tenancy of such house may, within four months from thedate of commencement of this law, apply to the Commissioner for thepurchase of such house . . It is observed that taken by itself, thelanguage of this Section is plain, clear and unambiguous and oughtgenerally to be given its ordinary sense and meaning unless it leadsto an inconsistency or is repugnant to the rest of the instrument.Learned Counsel for the appellants contended that to give thesection its plain grammatical meaning would result in an absurdity, itbeing inconsistent with the provision of Section 8. Counsel contendedthat within four months of the coming into operation of the law tenantwould not be in a position to know that he was occupying a 'surplus’house and therefore Section 9 was unworkable and quite inconsistentwith the provisions of the earlier Section 8 where time frames fordoing certain acts required by the instrument were variabledepending on the facts of each situation. Therefore Counselcontended, to interpret Section 9 within its own terms and give effect
to its plain unambiguous language would be repugnant to thepurpose and object of the legislation which included giving anopportunity to a tenant to purchase the house and occupy it asowner.
We have therefore to look at the general policy of the statute,identify the evil at which was directed to ascertain whether there is infact an inconsistency between Sections 8 and 9 and/or otherprovisions of the instrument. If so, should the grammatical sense of asection be abridged or modified to avoid such inconvenience?
The preamble identifies the law as one ”… to regulate theownership, size and cost of construction of houses and to provide formatters incidental thereto or connected therewith . . This law waspromulgated at a time when there was an acute shortage of housingin the country and went hand in hand with the Rent Act No, 7 of 1972.It sought to ease the inconvenience of the shortage of housing ingeneral, to make a more equitable distribution in regard to ownershipof existing housing stock. It set down time frames to enable theCommissioner of National Housing to get to know the groundsituation in regard to housing as early as possible so that theprovisions of the instrument may be implemented expeditiously.Again, it must be borne in mind that sections are the enacting part ofa statute. Each section is a substantive enactment in itself anddepends on its own language, context and setting for its truemeaning and effect. Every section must be considered as a wholeand self contained with the inclusion of subsections, saving clausesand provisos, All the parts of a section are an interdependent integralwhole and should be so constructed. A Section has only oneinterpretation and one scope. Is there another section which cutsdown its meaning?
Thus we approach the provisions of sections 8. To my mind itcontains the nuts and bolts for the working of the enactment:
Section 8(1), (2) and (3) requires declarations to be made to theCommissioner by owners.
Section 8 (3A) and (4) deals with situations where owners or othershave failed to make declarations they are obliged to make.
Section 8 (5) declares what is a ‘surplus' house.
Section 8 (6) deals with a situation where an owner has omitted todo something required of him, and provides for the vesting of housesin this category in the Commissioner. Subsection 7 enables theCommissioner to call for further particulars about declarations fromowners.
Section 8 is thus not dealing with the position of tenants as such. Itis found in the early part of the enactment and is more concernedwith the relationship imposed by law between house owners and theCommissioner. It will take its course within its own terms.
Section 9 on the other hand creates the opportunity for the tenantto opt to purchase the house he lives in. So the Section categoricallyrequires him to do only one single thing – namely, to apply to theCommissioner for the purchase of a house. This he must do within thestipulated period of four months from the date of commencement ofthe law – which was 13.1.73. The language suggests a clearmandatory provision. Such a clear imperative provision indicates thatthe legislature had just that in mind when promulgating this law sothat the Commissioner would know within the space of 4 months thetenants who have opted to purchase houses so that for example hewould bear that in mind when owners of excess houses madeapplication to sell or dispose of those houses to others under theprovisions of Section 10.
The information so provided by tenants would also make theCommissioner aware of the ownership of such houses which would inturn enable him to take steps under, for example – Section 8 (4) or (6)or {7). Thus it is seen that the provisions of Section 9 are consonantwith those of Section 8. Section 9 is quite capable of implementation.If the tenant considers himself to be in occupation of a surplus house,all that he has to do is to apply to the commissioner to purchase suchhouse. He need not further investigate at that stage whether in fact itis surplus or not. Even if it was surplus, the Commissioner can stilluse his discretion and decide to transfer it in terms of Section 12 (1)to a Local Authority, Government Department etc: instead ofpermitting the tenant to purchase it. But an application to purchase inthe hands of the Commissioner may well induce him to sell to atenant, instead of transferring under Section 12(1).
Indeed there must surely have been applications made topurchase houses by tenants in full compliance with the provisions ofSection 9. There is no material to suggest the contrary. The owner toohas rights. He has a right to know if the tenant wishes to purchase thehouse, (vide Section 10). The owner has a right to dispose of an assetwith the permission of the Commissioner. Thus it is seen that theprovision of Section 9 can be integrated into the object and purposeof the instrument. It is also to be noted that the use of the word'surplus' in Section 9 should not be misunderstood. It is a grammaticalnecessity in the context of the enactment to give it sense andmeaning as it is only a surplus house that may be purchased by atenant under the enactment and not one which is not surplus.
I therefore hold that the provisions of Section 9 are clear andunambiguous and are mandatory and contains no mistake and arenot inconsistent with or repugnant to the provisions of Section 8 orother provisions of the enactment; and that the application topurchase by the tenant of a house should have been made within 4months from the date of commencement of Law No. 1 of 1973. Theappellants have failed to prove that Section 9 contains any mistake.The application of the 1st petitioner appellant to purchase premisesNo. 7 1/3 Upper Chatham Street. Colombo 1 is dated 27.3.81 but hasbeen presented to the Board of Review and not even to theCommissioner, nearly 8 years after the time frame stipulated bySection 9 aforesaid lapsed. It is the finding of this Court that the otherappellants have so far not made any application to purchasepremises tenanted by them. Their affidavit to the Court of Appealaffirming that they had made such application is denied by the 1strespondent and is not supported by any other documentary evidenceand is therefore unconvincing. The 4th to 6th respondents likewisehave not made any application to purchase premises tenanted bythem. They are therefore all out of time. I will refer more specifically totheir situations in a later part of this judgment.
Before I pass on to consider other matters that have been raised, Iought also to state, that the reference to a tenant making anapplication for the purchase of a house contained in section 10 of theCHP law is with reference to an application for purchase made interms of section 9 of the law. Section 10 does not create a separatehead under which an application for purchase may be made.
Question of Law regardingExpectant Rights/Legitimate Expectations:The appellants claim with the coming into force of Law No. 1 of1973 the appellants acquired expectant rights of becoming theowners of the houses they occupied as tenants?
Section 2 (3) of the CHP Law declares that bodies of persons canonly own such number of houses as the Commissioner determines isnecessary for the residences of its employees and functionaries or ofcarrying out the objects of such body (other than letting the housesout on rent.)
Under proviso (C) to Section 2 (3) the 3rd respondent cannot ownhouses let to the petitioners or 4th – 6th Respondents who it isagreed are not employees or functionaries of the said3rd respondent.
Section 9 of the CHP Law requires a tenant within four months ofthe commencement of the law to apply to the Commissioner for thepurchase of such house. That is the finding of this Court in thisappeal (ante).
Section 10 of the CHP Law requires a tenant who has made anapplication for the purchase of the house as aforesaid, to givesimultaneous notice of his application to purchase, to the owners ofsuch house.
Section 12 (1) permits the Commissioner to transfer a housevested in him to a local authority, Government Department or publiccorporation on terms.
Section 12 (2) provides that if the Commissioner proposed to sell ahouse vested in him it shall be offered for sale in the first instance, tothe tenant if any, of such house and where the tenant does notaccept such offer, sell such house to any other person.
It has been argued on behalf of the 1st and 2nd respondents(whilst supporting the decision on this point made by the Court ofAppeal) that the petitioners can have expectant rights or legitimateexpectations of becoming owners only if the Commissioner elects orproposes in terms of Section 12 (2) to sell the house and the offer ismade to the tenant. It was submitted that stage must be reached
before a tenant could lay any claim to a right to purchase. That stagehad not been reached.
Likewise the contentions of the 3rd respondent on this question ofan “expectant right or" “legitimate expectation" to purchase thehouses is as follows:
the terms of Section 12 (2) offers no more than a 'hope' (to atenant) of purchase. A 'hope’ cannot amount to a “legitimateexpectation"
The appellants have put themselves beyond their power topurchase by failing to make an application in terms of the law – thecontrolling section in this regard being Section 9 of the law. The onlyinterest or right the appellants could therefore have in the premisesare their tenancy rights. Those tenancy rights are not affected by thedivesting order.
Even if there had been a proper application to purchase beforethe 1st respondent, he is not bound to offer to sell the premises to thetenants. The 1st respondent is given certain options in terms ofSection 12 of the law and it is then a matter for the exercise of hisdiscretion.
There has not been in this case any decision to sell the housesin terms of Section 12 which decision must first be made by the 1strespondent before any question of purchase by a tenant could arise.
The appellants on the other hand in their written submissionscontended that:
Under proviso (C) to Section 2 (3) the 3rd respondent cannotown the houses let to the appellants.
Under Section 8 (1) (a) (b) and (c) a body of persons owninghouses in excess of the permitted number should within six weeks ofthe determination of the Commissioner or the Board of Review as thecase may be, of maximum number of houses that may be owned bysuch body, make the declarations required by Section 8 (ii) (a) (b)and (c) and the proviso. Thereafter Section 8 (5) declares whatsurplus houses are. In this case the decision of the Board of Reviewwas on 9.11.85 – P26.
The 3rd respondent however filed C.A. Application No: 1460/85against the said decision of the Board and obtained a stay of furtheraction. Consequent to that decision there is still time for the 2nd, 3rdand 4th appellants to make their application to purchase the houses;(this submission has not included the 1st appellant on theassumption that the 1st appellant has made a valid application topurchase in 1981.)
Alternatively:If the houses occupied by the appellants are excess houses interms of Section 10, then the tenants could make their applicationsfor purchase of the houses at the appropriate time. The Court ofAppeal should have followed the principles set out in (1) Me Innes v.Onslow Fane(2) GCSU v. Minister of Civil Service(2), which held:quote – “but where a person claiming some benefit or privilege hasno legal right as a matter of private law he may have a legitimateexpectation of receiving the benefit or privilege and if so the Courtswill protect his expectation by judicial review as a matter of publiclaw.” It was submitted that the decision to divest would fall under thegrounds of irrationality and procedural impropriety set out in thatcase to justify judicial review.
The Court of Appeal should not have distinguished thejudgment in C.A. 194/80. The fact that the Supreme Court refusedspecial leave to appeal in that case, thereby affirming that judgmenthas been overlooked by the Court of Appeal.
Other authorities cited were O' Reilly v. Mackmea<3); H. W. R. Wade -“Principles of Administrative Law" 5th Edition p. 464:496.
The above submissions were crystallised in the following manner:
Did the CHP Law create an expectation or benefit or privilegethat a tenant could in certain circumstances become the owner of thehouse he tenanted?
By the act of divesting, has Governmental power underSection 17 A been exercised in an unfair and inconsiderate mannerto the disadvantage of the appellants;
Have the principles of natural justice been observed beforedivesting?
The appellants were neither informed of an intention to divest norwere heard. The divesting had taken place whilst a stay orderimposed by the Court of Appeal was in force.
In these circumstances the act of divesting was not rational orresonable or fair. The Court should therefore protect the said benefitor privilege conferred on the tenant by the law by judicial review andstrike down the act of divesting made and published by therespondent.
It does appear to the Court upon a consideration of the relevantprovisions of the CHP Law that whilst regulating the ownership, sizeand cost of construction of houses, the legislature did intend to makeavailable to tenants the opportunity to purchase houses tenanted bythem if such were available. This would be a matter incidental to theprimary aim of the enactment, as, consequent to the ceiling onownership, there could vest in the Commissioner those housesowned by a person in excess of the permitted number whichremained undisposed of by the owner (who had been permitted todispose of such excess number of houses by the Commissioner byvirtue of the provisions of Section 10.) Such excess houses vested inthe Commissioner under the provisions of section 11 could betransferred for use by public sector institutions in the discretion of theCommissioner under Section 12 (1) or sold to tenants in occupationwho wished to purchase them, or if not, sold to any other personunder Section 12 (2). Thus, subject to the exercise of theCommissioner's discretion, the statute indeed provided for purchaseof an excess house by a tenant who was given priority over otherpersons recognised by Section 12 (2). In that sense, the appellantsdid have a benefit or privilege of purchasing houses they tenanted.That was the intention of the legislation – of providing that opportunityto a tenant to purchase although subject to the Commissioner'sdiscretion:
The objections of the 1st to 3rd respondents on the footing that theterms of Section 12 (2) offers no more than a ‘hope’ which does notamount to a ‘legitimate expectation' to purchase or that the exerciseof the Commissioner’s discretion to their disadvantage would nullifytheir chances and therefore they could not be said to have derivedany benefit or legitimate expectation of purchase are thereforeunacceptable and are rejected; but the statute also prescribed thesteps he should take if the tenant decided to purchase a house. Thewillingness of the tenant to purchase a house had to becommunicated to the Commissioner by the tenant by way of anapplication. That duty was placed squarely on the tenant by Section
This is a common sense approach.
The statute could not be worked otherwise. The statute wentfurther and set a time limit for such a communication – a time of fourmonths for such an application – again Section 9.
Thus there was cast on the tenant a duty, to make the opportunity topurchase or the benefit he could receive under the law, a reality,although it was subject to many imponderables such as the exercise ofthe 1st respondent’s discretion. So, even though the statute in broadterms recognised that a tenant who could afford it, may wish topurchase the premises and made provision for such an event, subjectof course to the exercise of discretion by the Commissioner, still, if thetenant neglected to perform his duty as prescribed by the law, (ie) theduty to apply for purchase within time, his right to be considered apossible future owner ceased to exist. That is the sum and substanceof the content of Section 9 and morefully discussed and decided in anearlier part of this judgment. As the Appellants had failed to complywith the provisions of Section 9, there was no application as aforesaidbefore the Commissioner. The appellants accordingly lost theiropportunity to be considered as would – be purchasers.
It is too fate now to complain as the 1st respondent was under nostatutory duty after the lapse of four months from 13.1.73 to consideror entertain any claims of the appellants to purchase these premises.
There is therefore no question of any failure on the part of the1st respondent to observe the principles of natural justice. In theabsence of proper applications before him, the 1st respondent wasunder no administrative duty to notice the appellants or give them ahearing prior to divesting. {The question of the operation of a stayorder in CA Application 1460/85 will be considered in another part ofthis judgment.)
The appellants therefore fail in their application for judicial reviewon this ground.
Questions arising out of decision in C.A. Application 194/81dated 3.12.82 – P 18 and the legal position arising fromproceedings which are pending in C.A. Application 1460/85 andmatters incidental there to:
The applicants argue that:
(a) the Court of Appeal decided in C.A. No: 194/81 that theappellant had a right to participate in the proceedings before theBoard of Review which heard the appeal of the 3rd respondentagainst the determination of the 1st respondent limiting the number ofhouses that could be owned by the Company whilst excluding thehouses tenanted by the appellants from consideration as housesneeded for the occupancy of the 3rd respondent’s employees andfunctionaries. The 3rd respondent had contended that the CHP Lawdid not apply to its flats in Upper Chatham Street and that these flatshad not vested in the 1st respondent. The appellants were allowed toparticipate on the ground that they as tenants had an interest underthe CHP law. Leave' to appeal from that decision of the Court ofAppeal was refused by the Supreme Court. That, it was submitted,amounts to an acceptance by the Supreme Court of the legalposition. The appellants therefore argue that the findings of the Courtof Appeal in that case have a bearing on the instant case and thatthat decision should influence and be followed when decidingwhether the Divesting Order should be permitted to stand when itwas made without notice to the appellants and without affording thema hearing, in disregard of the rules of natural justice. Consequent tothe divesting order the appellants lost their privileges recognised bythe statute. The divesting order should therefore be struck down.
It is the view of this Court that as the scope and application ofSection 9 of the law had not been raised or considered in that case,the grant of a hearing to the appellants before the Board of Reviewcan in no way affect the question whether the divesting was done in alawful manner. The Supreme Court's refusal to grant leave in thatcase may have been for one or more of several reasons which arenot expressed in the orders and are therefore not known to this Court.Had section 9 of the CHP Law been considered, the absence ofapplications to purchase the premises made within time may wellhave resulted in a decision adverse to the respondents appellants.Furthermore, no order of divesting was in issue in that case. ThisCourt therefore does not consider the decisions in C.A. CaseNo. 194/81 of any relevance to the issues in the instant case.
(b) In C.A. case No. 1460/85 the 3rd respondent Company oncemore sought to challenge the decision of the Board of reviewupholding the decision of the 1st respondent in regard to thedetermination of the number of houses that could be owned by the3rd respondent. Notice issued on the respondents and an order ofstay of proceedings was – obtained by the 3rd Respondent on20.12.85 and was extended and is still in force. That case is thereforesub-judice. The appellants complain, that in the face of the stayorder, the 1st respondent secretly and without notice to theappellants of his intention to divest, and without affording them ahearing, divested all the houses they tenanted and had expected indue course to purchase. They have therefore been prejudiced asthey have been deprived of the said benefit. Furthermore theappellants submit that the circumstances of secrecy accompanyingthe divesting process and a disregard of the rules of natural justiceand in contempt of the Court's order suggest mala tides on the partof the 1st respondent. The appellants complain that the mala fide actof the 1st respondent has deprived them of the privilege to wit: achance of owning a house in Upper Chatham Street, Colombo 1.Which they could have pursued had the houses remained vested inthe Commissioner.
In the view of this Court the question whether the appellants hadmade applications for the purchase of houses in compliance withSection 9 of the law once more comes up for consideration. It is arecurring question of law pervading all aspects of this case arising asit does upon the facts.
The 1st petitioner appellant has dated his application 27.3.81 but ithas only been handed over by his attorney-at-law at the Board ofReview office on 5.5.81 – vide receipt X 3A.
Therefore for one thing, it has not been tendered to the properauthority the 1st respondent in the first instance. In any event,according to the view I have taken that it should comply with theprovisions of Section 9, it is out of time.
The 2nd petitioner appellant states at paragraph 24 of her affidavitfiled in this case on 20.1.92 that … quote … “I have also made anapplication to purchase the apartment I am occupying as tenant. Thesaid application has not been determined yet and is pending."Strangely enough, although she annexes copies of the 1st appellant'sapplication as X3 and its acknowledgment X3A she does not annex acopy of her own application or any acknowledgement of its receipt.Nor does she explain why not.
The 1st respondent by his affidavit denies any receipt of anapplication by the 2nd appellant. No other material has beenfurnished by the 2nd appellant in support of her assertion of sendingan application.
The 3rd appellant in his affidavit dated 20.01.92 has stated atparagraph 24 as follows , . . quote … "I have also made anapplication to purchase the apartment they occupy as tenants. Thesaid application has not yet been determined." It is not clear from thisstatement whether the 3rd appellant has stated that he has applied topurchase the apartment he occupies or has applied to purchasesome other apartment occupied by someone else.
If the latter is true he does not come within the law in any case.The 1st respondent denies the aforesaid paragraph 24 of the 3rdappellant's affidavit and denies that he has received any applicationto purchase a house from the 3rd appellant. It is also observed thatthis 3rd appellant was the 12th respondent in C.A. Application No.1460/85 aforesaid and in his affidavit dated 25.4.86 filed in that casehe has not stated that he had made an application to theCommissioner to purchase the house he tenanted. The 3rd appellanthas not furnished any other material or supporting evidence insupport of his assertion that he had indeed applied for purchasealthough he has provided copies of X3 and X3A aforesaid.
Similarly the 4th appellant too, apart from a bare statement in hisaffidavit that he has applied for purchase of the house he tenants hasnot referred to any supportive evidence of such fact. The 1strespondent by paragraph 13 of his affidavit has denied receipt of anyapplication to purchase from the 4th appellant.
Considering the denials of the 1st respondent of the receipt of anyapplications for purchase by the 2nd, 3rd and 4th appellant’s, thisCourt is unable to accept these appellants statements thoughcontained in affidavits, that they did indeed applied to purchase thehouses they tenanted in terms of the law. It is apparent that theybecame aware of the proceedings before the Board of Review for thefirst time only upon receipt of notice from the Board in 1989 – videpara 10 of the affidavit of the 12th respondent (who is 3rd appellant inthis case) in C.A. case No. 1460/85 aforesaid; that was nearly 7 yearsafter the time limit imposed by section 9 expired. It is noted thatthelst appellant's application has been dated 27.3.81. In thecircumstances this Court unhesitatingly accepts the denial of the1st respondent that he received any applications from the 2nd, 3rdand 4th appellants for purchase of the houses they tenanted. Wehold that the 2nd, 3rd and 4th appellants have failed to satisfy thisCourt that they applied to purchase the houses they tenanted.
In the absence of applications to purchase houses tenanted bythem in terms of the law, these appellants cannot be heard tocomplain of dereliction of duty by the 1st respondent. In the aforesaidsituation, there is no administrative duty to notice the tenants ofhouses vested that those houses are to be divested. It is anadministrative step the Commissioner can take, but with the writtenapproval of the Minister. The 1st respondent affirms that he got thatpermission on 1.8.90 and he divested on 19.10.90. We have noreason to doubt the truth of that statement. It is highly unlikely that the1st respondent would intentionally flout the law in this regard and towhat purpose?
We are therefore satisfied that the divesting order was not mademala fide to the detriment of the appellant’s interests and in disregardof the rules of natural justice or in defiance of an order of Court orwithout the permission of the minister. The 1st respondent in theseveral affidavits filed in this case has repeatedly set out the reasonsfor his decision to divest this property after the ceiling on housingproperty was removed by Act of Parliament No. 4 of 1988 in theabsence of any applications to purchase.
Those reason are that:
The architectural design of the building led to many problems inmanagement.
Constituent parts of an apartment were scattered in manyplaces. Only a part of Baurs flats at Upper Chattam Street vested inthe Commissioner; as such some apartments remained with theCompany. The situation led to many legal problems and continuouslitigation. The National Housing Department was unable to exerciseits rights of ownership.
There were certain common facilities such as – lifts service,removal of garbage, maintenance of common areas, security bothduring day and night, the maintenance of an uninterrupted supply ofwater which is done by a system of high pressure pumping from thebasement without overhead tanks. These common elements were notentirely vested in the National Housing Department.
Security considerations, as part of the building has a commonwall with President's House and a part adjacent to NavalHeadquarters. For the above reasons 1 st respondent says he formedthe view to divest whatever residential units had vested and giveback all these heavy responsibilities to the former owner the 3rdrespondent. We are of the view that the 1st respondent has amplyjustified his decision to divest this property. It is clear that decisionhas been taken bona fide in the circumstances.
In the result the appeals must fail. The 4th respondent did notparticipate in these proceedings.
The order of the Court of Appeal refusing to grant or issue an orderin the nature of a writ of certiorari to quash the said divesting ordermade by the 1st respondent is affirmed. The appeals of theappellants are dismissed with costs both in this Court and in thecourt below.
PERERA, J. – I agree.
WIJETUNGA J. – I agree.
Appeal dismissed.