DON v. DON

015-NLR-NLR-V-31-DON-v.-DON.pdf


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Present: Dalton and Drieberg JJ.
DON v. DON.22—D. C. (Inty.) Badulla, 4,521.
Evidence—Transfer of property—Parol agreement to execute formal agree-ment to reconvey—Fraud—Ordinance No. 7 of 1840, s. 2.
Oral evidence of an informal promise given by the purchaser ofproperty, to execute a notarial agreement to reconvey the same,is inadmissible.
Per Drieberg J.—The principle that equity does not allow theStatute of Frauds to be used as an instrument of fraud does notapply to cases where the fraud alleged is merely a refusal, after aparol agreement, to sign a written one.
PPEAL from a judgment of the District Judge of Badulla.
Plaintiff, who was the owner of Karlton estate, alleged that in1924, owing to financial difficulties, he agreed with his brothers,the defendants, that they should buy the estate for Rs. 11,000,subject to the condition that the plaintiff should have the option ofbuying back the estate at any time within ten years for Rs. 11,000plus interest thereon at 12 per cent. A notary was instructed todraw up two deeds—a transfer and an agreement to retransfer.Owing to the illness of the notary only the transfer was executed.The plaintiff, alleging that the defendants from time to time put offthe signing of the agreement, biQught this action in 1928 andprayed (a) that the deed of transfer be rectified, or (6) that he bedeclared entitled to secure an agreement for retransfer, or (c) thatthe defendants be declared to be trustees for plaintiff.
The defendants denied the agreement and at the trial objectedto evidence of such an agreement being led. The District Judgeupheld the objection and the plaintiff appealed;
Choksy, for plaintiff, appellant.—We should be allowed to provethe fraud. We are entitled to lead evidence to prove the wholeintention of the agreement (section 92 of the Evidence Ordinance).Equity gives relief against the Statute of Frauds on the groundthat where a man fraudulently prevents a document from cominginto existence, he cannot rely on the Statute of Frauds. Thedefendants are trustees for plaintiff.
There are two questions:—
Was there such an agreement ?
Can it be enforced ?
1923.
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1980. The present appeal is upon the question of admissibility ofDon v. Don evidence. All the circumstances of the fraud must be placed beforethe Court before we could ask for relief.
[Drieberg J.—The question is, if the averments in the plaintare correct, are you entitled to relief ?]
In that case defendants will be trustees (chapter IX. of TrustsOrdinance, s. 82).
It is possible to lead evidence of the circumstances surroundingthe execution of a transfer to show that it was not intended totransfer the beneficial interest.
(Section 92 of Trusts Ordinance.) Defendants have only aqualified interest. No writing is neeessary (sections 94, 96)..
Last paragraph of section 5 of Trusts Ordinance does not applywhere it will effectuate a fraud. (Underhill on Trusts, 7th ed., Art, 11.at p. 79.)
In Nanayakkara v. Andris 1 Bertram C.J. set out cases in whichequity will give relief against Statute of Frauds- What takes a caseout of the Statute is set out in Fry on Specific Performance, pp. 271,272.
In Perera v. Fernando 2 Ennis J-. comments on the absence of anallegation of fraud. The case "eported in Pronchihamy v. Don Davit *will show that the presence or absence of fraud makes a greatdifference. Fraud can be at the inception of the transaction orsubsequently. If fraud is averred I am entitled to an opportunityto prove it (Ranasinghe v. Fernando 4).
[Drieberg J.—A refusal to carry out a trust is a fraud—a refusalto carry out an obligation te not a fraud.]
Re Duke of Marlborough: Davis v. Whitehead.5 The mere factthat I was paid consideration does not conclude the case against me.The present case is similar. When the absence of a notarialagreement is due to the fraud of the defendants, they cannot set upthe absence of the document as against me.
Woodroffe and Ameer Ali; sections .573, 574, 577 of Fry ;Evidence Ordinance, 8. 92; 4 Bom. 594; 16 Mad. 80.
Keuneman, for defendants, respondents, was not called upon;but cited Amarasekere v. Rajapakse,* Arsecularatne v. Perera.''
» 23 N L. R.193, at p.199.4 24 N. L. R. 170.
*17 N: L. R.486.‘ (1894) 2 Ch. 133.
• 15 N. L. R.13.• 14 N. L. R. 110.
» 28 N. L. R
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July 18, 1929. Dalton J.—1929-
The plaintiff sought to obtain in this action a decree directing Don o. Donone of the three following alternatives:—
A decree that the defendants execute a deed of rectification
of a certain deed of conveyance No. 267, embodying anagreement to reconvey the premises transferred by thatdeed, or
A decree declaring that the defendants hold the premises
transferred subject to a trust to reconvey, or
A decree enjoining the defendants to execute an agreement
to reconvey the said premises to plaintiff.
The plaintiff is a brother of the two defendants. The plaint setsout that the former was owner of Karlton estate, which is of about30 acres in extent of which 20 acres are in tea. About the year 1924plaintiff was in financial difficulties, his liabilities amounting toabout Es. 11,000. The plaint then sets out that the defendants came,forward and offered to pay off these liabilities if plaintiff conveyedthe estate to them, they “agreeing to enter into a notarial agree-ment ’ ’ to reconvey the premises to him at such time • within tenyears as plaintiff repaid the Es. 11,000 with interest at 12 per cent.,and the value of any building erected by the defendants betweenthe date of transfer and the date of repayment.
Paragraph 5 of the plaint sets out that in accordance with thisagreement a notary was instructed to draw up the transfer andagreement to reconvey, and a deed' of transfer was executed onMarch 19, 1924 (No. 267), by plaintiff to the defendants, attested bythis same notary, but owing to the illness of the notary the drawingand assigning of the agreement to reconvey was deferred as plaintiffcould not longer delay the payment of his liabilities. Paragraph 6sets out that defendants have put off the plaintiff by promises, andhave now fraudulently refused to sign the agreement to reconvey.
The defendants deny that any such agreement was made, thatplaintiff conveyed the estate for consideration, by deed dulyattested by the notary, and that as a matter of law the agreementas alleged by plaintiff is void and of no force or avail in law invirtue of Ordinance No. 7 of 1840, and plaintiff cannot lead evidenceof any such alleged agreement.
The trial Judge has held that plaintiff cannot lead evidence of thealleged agreement or trust, from which decision plaintiff appeals.
For the plaintiff-appellant Mr. Choksy, who cited a large numberof cases, to which it does not seem necessary for me to refer in detail,has urged that plaintiff is entitled to put what he calls .the wholeagreement before the Court, and that the provisions of section 2 ofOrdinance No. 7 of 1840 cannot be made use of to effectuate a fraud;
If the whole agreement as alleged in the plaint can be proved before
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Daiton J.Don v. Don
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the Court, then he urges that the defendants are constructivetrustees for the plaintiff, and they hold the premises subject to thelimitation that the plaintiff is entitled to a reconveyance on theconditions of the agreement.
It seems to me that, assuming that the provisions of section 92of the Evidence Ordinance do not stand in plaintiff’s way and thathe was able in law to prove the agreement to enter into the agreement,to reconvey as alleged, that agreement, not being notarially executedas required by section 2, within which section it clearly falls, is of noforce or avail in law; further, in my opinion no question of anytrust arises here. Upon the case as presented by plaintiffit is admitted that the plaintiff has conveyed the estate to defendantswho have paid the purchase price set out. It is not a case ofdefendants purchasing for plaintiff, or of obtaining a conveyancein his name, or of his supplying the purchase money, as in Ohlmus v.Ohlmus1 and Gould v. Inasitamby.* All the alleged agreement setsup is that in certain eventualities plaintiff shall have the right to askfor a reconveyance by the defendants, that is, he has an optionwhich is to last for ten years- The fraud alleged against thedefendants is his refusal to sign this agreement. The case of Pererav. Fernando 3 is upon the facts very similar to this one. There theplaintiff transferred land to P. by a notarial deed, purporting on theface of it to sell the land. He sought to show by parol evidence thatthe transaction was in effect r mortgage and that P. had agreed toreconvey the, property on payment of the money advanced. It washeld that oral evidence to vary the deed was not admissible in viewof the provisions of section 92 of the Evidence Ordinance. Asregards the alleged agreement to reconvey de Sampayo J. says: —
The argument as to the deed of sale being only a mortgage hasbeen disposed of (i.e., by application of section 92 of theEvidence Ordinance), and the position then is reduced tothis: that plaintiff seeks to enforce an agreement to resellthe lands- on repayment of the amount paid by thepurchaser Diego Perera. Such an agreement does notconstitute a trust, but is a pure contract for the purchaseand sale of immovable property, and Ordinance No. 7 of1840 declares it to be void, in the absence of a notarialinstrument.
These words seem to me to be equally applicable to the agreementto enter into a notarial agreement to reconvey alleged here. TheTrusts Ordinance, 1917, has been enacted since that decision, but itin no way affects the decision. Mr. Choksy has failed to satisfy methat the present case as set out in the plaint can be brought within19 N.L. R. 185.* 9N.L.B.117.
• 11N. L. R. 486.
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aDy of the provisions of that Ordinance. Further, the mere non-performance of a contract to sign a writing is not a fraud within themeaning of the Statute oi Frauds (Fry on Specific Performance,5th ed. p. 289).
1929.
Dalton
Don v .Don
It may further be pointed out, in reference to the question of theadmissibility of parol evidence to prove agreements and the applica-tion of English authorities, that Ordinance No. 7 of 1840 differsvery materially from the Statute of Frauds. Lord Atkinson callsattention to that in Adaicappa Chetty v. Caruppen Chetty.1 Speak-ing of the deed and subsequent alleged oral agreement in that easehe says:—
The parol evidence, which must be taken to have beentendered, was properly held to have been inadmissible,for the simple reason that the agreement, if proved by it,must, under Ordinance No. 7 of 1840, sub-section (2), havebeen held not to be of " any force or avail in law.” Thissection is much more drastic than the fourth section of theStatute of Frauds. The latter section does not render aparol agreement of or concerning land invalid.
He then concludes: —
Evidence tendered by a. party litigant relying upon an agree-ment as valid and enforceable, which, if admitted, wouldestablish that the agreement was of no force or avail, isinadmissible. It would- be a travesty of judicial procedureto admit it.
We have been referred to the words of Bertram C.J. in Rana~singhe v. Fernando,2 where he states it is settled law that when aperson who has obtained possession of the property of anothersubject to a trust or condition fraudulently claims to hold it freefrom such trust or condition, he cannot be allowed to claim theadvantage of the Statute of Frauds, the more drastic terms of ourOrdinance notwithstanding. He is, I take it, summing up in a fewwords and in general terms the settled law, but this case doesnot in my opinion come within any of the authorities which apply thesettled law or which may themselves settle the law, nor does it comewithin any of the provisions of chapter IX. of the Trusts Ordinance.As I have stated, it is not in my opinion a case of trust at all, takingall the allegations set out in the plaint to have been duly proved.
For the above reasons the plaintiff cannot succeed in his claim.For the purpose of disposing of this appeal it is sufficient to statethe trial Judge’s decision that evidence of the alleged agreementto enter into a notarial agreement as set out in the plaint wasinadmissible was correct. – The appeal must therefore be dismissedwith costs….
* U N. L. It. 110.
>22 N.L.R.atp. 426.
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1929.
Don v Dot%
Drieberq J.—
The appellant says that owing to his money difficulties he agreedwith the respondents that they should buy his Karlton estate forRs. 11,000, the appellant having the option of buying back theestate at any time within ten years for Rs. 11,000, together withinterest at 12 per cent, on that sum from the date of transfer. Inaccordance wi.th this agreement a notary was instructed to preparetwo deeds, a conveyance of the estate and an agreement for recon-veyance. Owing to the illness of the notary only the deed oftransfer was ready on March 19, 1924, and this was signed on thatday by the appellant and delivered to the respondents. The plaintstates that '* the drawing and signing of the agreement was deferredowing to the illness of the said notary, and as the plaintiff could nolonger delay the repayment of his liabilities the defendants express-ing their willingness to appear and sign the agreement whenevercalled upon to do so on completion of the document, the transfer'267 was executed by the plaintiff."
The appellant alleges that the respondents put off the signing ofthe agreement and later " fraudulently refused ” to sign it. Hebrought this action on January 5, 1928, praying that the deed oftransfer be rectified by the insertion of this agreement, or for adeclaration that he is entitled to secure such an agreement from therespondents, or for a declaration that the respondents hold theproperty subject to a trust to reconvey it to him.
The respondents denied that there was an agreement forreconveyance and pleaded that the appellant was not entitled tolead evidence of such an agreement which under the provisionsof Ordinance No. 7 of 1840 would be void and of no force or availin law.
At the trial objection was taken to the admission of evidenceto prove the agreement to reconvey; the objection was upheld, andthe appeal is against this order.
This case is nothing more than a sale with an informal agreementby the buyer to execute a formal agreement for resale when calledupon to do so by the seller. Mr. Choksy, for the appellant, concededthat there is no local case in which such an agreement has beenenforced.
The law as stated in Perera t>. Fernando1 and Punchihamy v. DonDavit,3 in which the earlier cases are noted, has in no way beenaffected by the Trusts Ordinance, No. 9 of 1917. No trust arose outof this., transaction, and the alleged informal undertaking by therespondents to execute a notarially attested agreement to reconvey
is not enforceable.
'» (19U 17 N. L. R. 486.
* (1911) 15 N. L. R. 12.
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Mr. Choksy, however, contended that this was a cause oi fraudand that on the principle that equity does not allow the Statute ofFrauds to be used as an instrument for fraud, he was entitled toprove and compel performance of the agreement. This principlecannot be applied to such a case as this. It does operate in certainclasses of cases. “ It is a fraud on the part of a person to whomland is conveyed as a trustee and who knows it is so conveyed, todeny the trust and claim the land himself.* Consequently notwith-standing the statute it is competent for a person claiming the landconveyed to another to prove by parol evidence that it was soconveyed upon trust for the claimant, and that the. grantee, knowingthe facts, is denying the trust and relying upon the form of theconveyance and the statute in order to keep the land hmself.”—Lindley J., in Rochefoucauld v. Boustead. 1 The decision in ReDuke of Marlborough: Davis v. Whitehead,a which was cited to us,was based on the same reason. The facts found there were thatthe Duchess had transferred the house to the Duke simply for thelimited purpose of enabling him to borrow money by mortgaging itand that subject to the mortgage created by him it was intendedthat the house should continue to belong to the Duchess. It washeld that the Duke could not refuse to convey the equity ofredemption to the Duchess, and that the plaintiffs, who claimedunder him, were in no better position.
Belief is also given on this ground in cases where a person hasfraudulently prevented the writing from coming into existence;an example of this is given in Fry on Specific Performance, 6thed., s. 574.
But this principle does not extend to cases where the absence ofthe writing is due merely to non-performance of an informal contractto execute one. Beferring to what was at one time the view, viz., thatan allegation that it was part of the parol contract between theparties that the contract should be reduced to writing would take thecase out of the statute on the ground of fraud, Fry states:“ The
law is clearly established that such an allegation does not withdrawthe case from the operation of the statute, and that after a parolcontract a refusal to sign a written one is no fraud of which thecourt can take cognizance.” (Fry on Specific Performance, 6thed.,s. 575.)
In Wood v. Midgley3 it was alleged that the defendant hadapproved of a draft agreement but had asked that in order to savehim the trouble of waiting till it was copied, he might be allowed tocall and sign the fair copy in the morning, which he promised butfailed to do. It was held that this was not a case of a defendant
1 (1897) 1 Ch. 196.1 at p. 206.* (1894) 2 Oh. 133.
3 (1854) 5 de O. M. <fc O. 41.
1929.
Drkbkbg
J.
Don «. Don
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■Dbhebebo
j.
. .Den v. Don
by his fraudulent act preventing the formal agreement from cominginto, existence and that it was not a sufficient allegation of fraud to.preclude him from setting up the Statute of Frauds as a defence.
In this case the appellant relies upon an informal promise by therespondents to execute a formal agreement to reconvey the estatewhen asked to: do so, and this action is nothing more than anendeavour to compel performance of that promise. It was pointedout in Wood v. Midgley {supra) that when the law says that thedefendant is not to be sued unless upon an agreement signed by him,it is not “ a fraud on that law for him to say, I have agreed but I willpot sign an agreement.'’
I agree that the appeal should be dismissed with costs.
Appeal Idismissed.