Sri Lanka Law Reports
(1999} 2 Sri LR.
SUPREME COURTG. P. S. DE SILVA. CJ..
PERERA. J. ANDWIJETUNGA, J.
S.C. APPEAL NO. 124/97
A. NO. 490/92 (F)
C. KEGALLE NO. 2798/LDECEMBER 10. 1998
Prevention of Frauds Ordinance – Section 2 of the Ordinance – Transfer of landby deed – Informal agreement to retransfer the property – Relevance of suchagreement where fraud is established.
The plaintiff alleged that as a result of a fraud practised by the 1st defendantand her father (the 2nd defendant), he transferred to the 1st defendant by a deed(PI) 3 acres of rubber land for Rs. 6,000. In his evidence the plaintiff stated interalia, that on the day the transfer was executed, the 1st defendant also executedinformal writing (P2) witnessed by her father agreeing to retransfer the land tothe plaintiff upon the plaintiff tendering the sum of Rs. 6,000 within a period of4 years. The 1 st defendant refused to retransfer the property as agreed; and thatthe actual value of the land was Rs. 30,000. The plaintiff alleged that the deedPI was invalid on the ground of fraud.
P2 being a non-notarial document was of no force or avail in law in viewof section 2 of the Prevention of Frauds Ordinance. However, in a casewhere fraud is pleaded, put in issue and is established by the evidenceon record, it is open to the court to take into consideration such document.
Per G. P. S. de Silva, CJ.
"The rigour of the provisions of section 2 of the Prevention of FraudsOrdinance may, on proof of fraud as in the present case, be relaxed onthe principle that the Statute of Frauds may not be made an instrumentof fraud."
SC Dissanayakage Malini v. Mohamed Sabur (G. P. S. de Silva, CJ.) 5Cases referred to:
Setuwa v. Ukkuwa – 56 NLR 337.
Fernando v. Cooray – 59 NLR 169.
APPEAL from the judgment of the Court of Appeal.
Surath Piyasena for 1st defendant-appellant.
D. A. E. Thewarapperuma with Mrs. S. Rajoo for plaintiff-respondent.
Cur. adv. vult.
January 18, 1999.
G. P. S. DE SILVA, CJ.
The plaintiff by deed of transfer No. 185 dated 15th March, 1975,attested by S. Wickremasuriya, Notary Public, (P1) transferred the landin suit to the 1st defendant for a sum Rs. 6,000. The 2nd defendantis the father of the 1st defendant. On the same day (15. 3. 75), the1st defendant executed an informal writing by which he agreed toretransfer the said land to the plaintiff upon the plaintiff tendering thesum of Rs. 6,000 within a period of 4 years. The informal writing dated15. 3. 75 was marked as P2 at the trial. The 2nd defendant wasone of the witnesses to P2.
The plaintiff instituted these proceedings against the 1st and 2nddefendants seeking, inter alia, an order directing the retransfer of theland conveyed on P1 on payment of the sum of Rs. 6,000 by theplaintiff to the 1st defendant, and a declaration that P1 is null andvoid on the ground of fraud.
At the trial the plaintiff raised, inter alia, the following issues (astranslated) :
Did the deed bearing No. 185 dated 15.3.75 which stated thatthe consideration was a sum of Rs. 6,000 reflect the true natureof the transaction between the parties?
If issue No. 1 is answered in the negative, has the plaintiff beenfraudulently deceived?
Sri Lanka Law Reports
(1999) 2 Sri LR.
If so, is the plaintiff entitled to a retransfer of the land morefullydescribed in the schedule to the plaint and the aforesaid deeddated 15.3.75?
After trial, the District Court answered issue No. 1 in the negativeand issues Nos. 2 and 3 in the affirmative and entered judgmentin favour of the plaintiff. The appeal of the defendants to theCourt of Appeal was unsuccessful; hence the present appeal bythe 1st defendant to this court against the judgment of the Courtof Appeal.
The plaintiff in his evidence stated inter alia –
That in January, 1975, he was in urgent need of a sum ofRs. 10,000 to redeem a mortgage and for some other purpose.
He contacted a broker named Dias Abeysinghe and had told thebroker that the only land he had was a rubber land of 3 acresin extent.
The broker had contacted the 2nd defendant who told the plaintiffthat his daughter, the 1st defendant, had the required money,but the money cannot be given on a conditional transfer of theland. The 2nd defendant insisted on an outright transfer of theland.
The plaintiff was reluctant to execute an outright transfer of theland but the 2nd defendant had informed the plaintiff that the1st defendant would retransfer the property to the plaintiff withina period of 4 years provided the plaintiff repaid the considerationof Rs. 6,000.
The aforesaid promise to retransfer the property was set out inthe informal writing P2 which was signed by the 1st defendantwith the 2nd defendant being one of the witnesses.
As agreed by P2, the plaintiff has within the stipulated periodof 4 years requested the 1st defendant to retransfer the property;the 1st defendant refused to accede to this request.
Although the consideration set out in‘ P1 was only Rs. 6,000,the actual value of the land was Rs. 30,000.
SC Dissanayakage Malini v. Mohamad Sabur (G. P. S. da Silva, CJ.) 7
The crucial issue in the case was whether the 1st defendanttogether with her father, the 2nd defendant, had practised a fraudupon the plaintiff. On this issue the District Court, upon a carefulconsideration of the evidence, accepted the plaintiff's evidence. Thefinding of the District Court was that the defendants together haveacted with a fraudulent intention in avoiding the plaintiff's repeatedattempts to tender the sum of Rs. 6,000 within the stipulated periodof 4 years. At the trial the 1st defendant who was the vendee onP1 did not give evidence. It was only the 2nd defendant who gaveevidence and his evidence that the plaintiff failed to tender the sumof Rs. 6,000 within the stipulated period of 4 years was rejected bythe trial Judge. The Court of Appeal affirmed the finding of the trialJudge that the defendants have together committed a fraud upon theplaintiff. On a consideration of the totality of the evidence, I am ofthe opinion that the concurrent findings on the issue of fraud mustremain undisturbed.
Mr. Piyasena for the 1st defendant-appellant relied strongly on thecase of Setuwa v. Ukkuwat'K as well as the case of Fernando v.Coora/2). It is to be noted that no fraud was alleged in these twocases and hence these judgments are of little assistance in decidingthe present appeal, (see Fernando v. Cooray (supra) at 173, 2ndparagraph).
It is true as submitted by Mr. Piyasena for the appellant that P2is a non-notarial document and is of no force or avail in law in viewof section 2 of the Prevention of Frauds Ordinance. However, in acase where fraud is pleaded, put in issue, and is established by theevidence on record it is open to the court to take into considerationthe non-notarial document P2. The rigour of the provisions of section2 of the Prevention of Frauds Ordinance may, on proof of fraud asin the present case, be relaxed on the principle that "the Statute ofFrauds may not be made an instrument of fraud". It seems to methat on the proved facts and circumstances of this case the applicationof this principle is warranted.
For these reasons the appeal fails, and is dismissed with costs.PERERA, J. – I agree.
WIJETUNGA, J. – I agree.