136-NLR-NLR-V-58-EASTERN-HARDWARE-STORES-Appellant-and-J.-S.-FERNANDO-Respondent.pdf
1956Present:H. N. G. Fernando, J., and Sinnetamby, J.EASTERN HARDWARE STORES, Appellant, and ‘J. S. FERNANDO, RespondentS. C. 559—D. C. Colombo, 3i,Si9)M
Landlord and tenant—Eolicc to quit—H'aiucr—Acceptance of rent “ without
prejudice ”—Effect on pending suit—Rent Restriction Act, s. 13 {!) (a).
Compromise of suit—Sfode of proving it—Civil Procedure Code, s. JOS.
Evidence—Estoppel—Principles applicable.
Acceptance of rent for n period subsequent to notice to quit docs not re vivo>i tenancy if the money is taken by the landlord without prejudice to a pendin'*action instituted by him to eject the tenant.
Once an action has been instituted, the Court will not. take cognizance of acompromise of it unless it is proved byway of an application made un'der section-10S of tho Civil Procedure Code ; it cannot bo proved by way of issues framed atthe hearing of the action.
In order to create a valid estoppel there must bo not only action by oneparty on the faith of the declaration or act of tho other party but also suchaction must be to his detriment. Performance, therefore, of what- is a legalobligation cannot- create an estoppel. Further, there must bo a directconnection between tho action taken by tho party prejudiced and tho falseimpression created by the representation (or conduct) of tho other party.
-A-PPEAL from a judgment of the District Court, Colombo.I’. Th ilia in at h a} i. for the plaint iff-appellant.
Anandct Karunatillchc, for the defendant-respondent.
Cur. adv. mill.
November 23, 1956. Sixxetamby. J-—
The facts of this case briefly arc as follows :
Plaintiff instituted this action on 19/3/55 to eject tlie defendant- frompremises bearing No. 551, Skinners Road South. The premises inquestion arc subject to the- provisions of tho Rent Restriction Act andin order to dispense with the authorisation of the Rent Restriction Boardthe plaintiff pleaded that the defendant had been in arrears of rent forover a month after the same had become due within the meaning ofsection 13 (1) (u) of (he Act. The'plaintiff averred in his plaint thatrents were due from 1/1/54. By letter dated 20/10/54, P6, the plaintiffthrough his proctor gave the defendant notice to quit and deliverpossession on 30/11/54. With the plaint the plaintiff also asked for aninterim injunction restraining the defendant from removing themac!;Inery, fittings, equipment, etc., in the premises. This applicationfor ax interim injunction was perhaps made by plaintiff in order that hemay effectively* exercise his landlord’s lien. Along with the summonsthat ssued ojti the defendant there was also served a notice requiring thedefer lant to show cause why an injunction should not be issued and,pend og hearing of the application, enjoining him from disposing ofmach incrv, fittiners. cruimmcut. cte. The evidence is that on service
of summons and notice of interim injunction the defendant hurried tothe landlord and paid him a sum of Rs. 778*82 on account of rent anddamages up to February, 1955, and a further sum of Es. 221*18 beingCounsel fees, stamp charges and proctor’s fees. _ The plaintiff’s proctorreceived that sum without prejudice to the case and issued to thedefendant receipt D2 in winch it was so expressly stated, viz.'that themoney was accepted without prejudice to the case. A similar receiptD1 on the same terms was issued in respect of fees and stamp charges.
Several issues were framed at the trial based mainly on questions oflaw. The facts stated above were not disputed. The defendant, however,contended that plaintiff’s action must fail ciiiefly on two grounds : firstbecause there was a waiver of the notice by the acceptance of rent ondocument D2 for a period subsequent to the notice ; and secondly becausethe plaintiff expressly undertook to withdraw the action when theamounts referred to in D1 and D2 were paid. There was also a pleaof estoppel on which defendant relied. The learned District Judgeheld with the defendant on all the issues covering these matters and this*appeal is against his findings.
The plaintiff denied the allegation of the defendant that on the 23rdMarch there was an agreement by which plaintiff, in consideration of the"payments, agreed to withdraw the action but the learned judgedisbelieved him on this point and held that there was in fact such anagreement. It is quite manifest that on this matter the learned judge hascompletely misdirected himself. He has not considered the significanceof the express stipulation in documents D1 and D2 that the paymentsin question were without prejudice to the case. This can only mean onething, viz., that payments were accepted subject to the condition that theacceptance was not to affect adversely plaintiff’s rights in the case.How the learned judge came to overlook so important a stipulation isdifficult to comprehend. Obviously the payments were made becausethe issue of the interim injunction unless dissolved would have dislocateddefendant’s business as he himself admits. Acceptance of rent for aperiod subsequent to the notice revives the tenancy only if from thefacts established in the case an intention to waive can reasonably boinferred. Every such payment docs not ipso facto amount to a renewal.
In this case the very terms of the receipt issued for the payment negativesin no uncertain terms any such inference. The learned judge was clearlywrong in accepting the uncorroborated testimony of the defendant andin holding that the payment amounted to a waiver of the notice.
The learned judge also held that on the 23rd March, 1955,there was anagreement by plaintiff to withdraw the action. The only evidence onwhich ho came to that finding is the oral testimony of the defendant,but it is quite obvious that the learned judge lias nert taken a realisticview of the facts deposed to by the plaintiff and the defendant. If hisevidence is true one would have expected him as a normal prudent manto have obtained some writing to safeguard liis interests from the plaintiff.Defendant filed an answer after the alleged agreement but in his answerhe makes no mention of any undertaking by plaintiff to withdraw theaction : indeed, his averment is that plaintiff undertook to withdraw
only tlic injunction though he acids that he was to continue as a tenant.This is in the teeth of receipts X)1 and X)2. There is, however, a" morefatal objection to the acceptance of this plea. Rights of parties have tobe determined as at t-lie date of action and the Court must in decidingissues arising in a case do so only on evidence relating to facts whichexisted before the date of action. This is an elementary rule of law butthe learned judge tries to overcome it by stating that a party to an actionis entitled to waive any right that he has. A party undoubtedlyis entitled to compromise a suit by reaching an agreement after actionbrought, but a Court can take no cognizance of it unless it is duly notifiedto Court and the Court passes a decree in accordance therewith in termsof section 40S of the Civil Procedure Code. Such a course, if adopted,does not in any way infringe the cardinal rule of law that in an actionrights of parties must be determined as at the date of action. Thedefendant, not having taken steps under section 40S, is not entitled torely on an alleged agreement to withdraw the action as a defence toplaintiff’s claim. Any compromise of a suit must be determined in anapplication under section 40S of the Civil Procedure Code and not byway of issues framed at the hearing of the action. It may be open to aCourt, however, to stay proceedings in an appropriate ease to enable aparty to take steps under section 40S but such a course was not adoptedin this case.
On the question of estoppel too the learned District Judge has cometo a wrong finding. His main observations on this matter are as follows :
<: The plaintiff has agreed on 23/3/55 that there would be no furtherarrears and the defendant has acted upon that belief both on the 4tliof April and later when he continued to pay further x’ents or damagesor whatever they may be called in the receipts. In these circumstancesI hold that a valid estoppel has been created. ”
An important—indeed, the most important—element required to createa valid estoppel the learned judge has lost sight of. Ho has failed toappreciate that in order to create a valid estoppel there must be not onlyaction b- one party on the faith of the declaration or act of the otherparty but also such action must be to his detriment. What is the actionthe defendant is alleged to have taken ? The learned judge refers to two.First, he refers to the defendant’s appearance in Court on the 4th ofApril. But is that the result of the representation or is it becausethe defendant was required to so appear in response to thesummons ? Secondly, the learned jxidge refers to the fact that thedefendant continued to pay rent even thereafter. I fail to see howit could possibly be contended that defendant’s action was to his detri-ment or that payment of rent by the tenant was because of the allegedrepresentation to withdraw the action. Would it not be more reasonableto attribute the payment to the obligation created by law for an over-holding tenant to pay damages or for a tenant whose tenancy was notterminated to pay rent in terms of the agreement of tenancy ? In apica of estoppel it is most important that direct connection between,the action taken by the party’prejudiced and the false impression created
by the representation—or conduct—must be established (vide Rodrigov. Karunaralne 1). The defendant has not established that he has beenin any way prejudiced by the alleged settlement, nor has ho shown anydirect connection between his actions and the alleged agreement towithdraw the case. The plea of estoppel therefore fails.
For these reasons I would therefore set aside the judgment of thelearned District Judge and enter judgment for plaintiff as prayed forless any sums paid by defendant after date of action. Plaintiff will beentitled to costs both here and in the Court below.
H. N. G. Ferxando, J.—I agree.
Appeal allowed.