FERNANDO v. COOMARASWAMY

120-NLR-NLR-V-41-FERNANDO-v.-COOMARASWAMY.pdf


466
-r
Fernando n. Coomarastcamy.
1940Present: Soertsz and Nihill JJ.
FERNANDO v. COOMARASWAMY.
132—D. C. Colombo, 8,805.
Agreement to transfer lands—Agreement embodied in terms of settlementrecorded in an action—Agreement non-notarial—Validity of agreement—Failure to carry out agreement—Action for damages—Civil ProcedureCode, s. 408 (Cap. 86).
An agreement to transfer lands in accordance with the terms ofsettlement filed of record in an action and accepted by Court is bindingon the parties to the settlement although the agreement was not notariallyexecuted and was not embodied in a formal decree.
The party entitled to the transfer is not precluded from bringing aseparate action for damages against the other party for failure to carryout the terms of the agreement.
HIS was an action brought by the plaintiff to recover damages fromthe defendant for failure to carry out an agreement to transferland in terms of a settlement recorded in a mortgage action brought bythe defendant against the plaintiff.
In execution of the hypothecary decree entered in the action theplaintiff’s property was put up, for sale but on application of the plaintiffto set aside the sale the action was settled.
The terms of settlement were that the property should be transferredto the defendant subject to a right of retransfer in the plaintiff on pay-ment of the purchase price within a certain period.
The plaintiff took steps in the case in which the settlement was enteredand succeeded in the end in securing specific performance of the agreementto transfer.
The present action was. brought to recover damages sustained inconsequence of the delay on the part of the defendant to give the transfer.
H. V. Perera, K.C. (with him C. Thiagalingam and A. S. Ponnambalam),for the defendant, appellant.—It cannot be said that this action is basedon the decree entered in a case. The motion P 28, „ containing the termsof. the settlement, was submitted after the sale in pursuance of the hypo-thecary decree had already taken place and at the stage of the inquiryto set aside that sale. That portion, therefore, of the agreement providingfor the retransfer of certain lands was foreign to the subject-matter anddecree of the hypothecary action. The words of the settlement shouldnot be paraphrased and given the effect of a decree.
> 20 N. L. R. 140.
Fernando v. Coomaraswamy.
467
Assuming that the settlement acquired the force of a decree, the effecton it of the judgment of the Supreme Court in the appeal taken earlierhas to be considered. The order of. the Supreme Court set aside the earliersettlement and provided for the execution of the conveyance at a laterdate. It gave further time to pay the money and further time to executethe reconveyance. Inasmuch as the judgment of the Supreme Courtsuperseded the earlier decree, the earlier obligation ceased to exist to theextent of the variation. There cannot be two obligations contradictoryof each other.
The terms of settlement in P 28 cannot constitute a valid agreement.Under section 2 of the Prevention of Frauds Ordinance any contractrelating to land has to be notarially executed. The fact that it is embodiedin a decree would make no difference. The District Judge has purportedto follow Meis Singho v. Josie Perera et al.' but a close reading of thejudgment in that case does not support the view he has taken. Thetransfer that was executed was not on the basis of the agreement whichwas non-notarial but on the basis of the order of Court.
If the agreement is valid and it is possible for the- plaintiff to rely on it,we submit that there was no tender of the money on her part. Tendermeans the actual production of the money. The contract provides forpayment before the execution of the retransfer. In point of fact themoney was not really available when the tender was made.
In regard to the right of the plaintiff to bring an action for damagescaused by the delay in executing the retransfer, no separate action ispossible. Damages were not provided for in the order of the DistrictCourt. The only remedy of the plaintiff was by way of application undersection 334 of the Civil Procedure Code and, even then, a contumaciousdisobedience of the order of the Court has to be proved. No action canbe maintained on an obligation imposed by a decree—Ismail v. Ismail The District Judge in adopting Kolintavita Mama Amma v. KolintavitaHaji Kandi* has misapplied that case.
N. Nadarajah (with him N. K. Choksy and C. X. Martyn), for theplaintiff, respondent.—Settlements under section 408 of the CivilProcedure Code can include terms which may not be strictly relevant tothe questions at issue—Hemanta Kumari Devi v. Midiiapur ZamindariCo.1-, Chitaley & Rao’s Commentary on the Civil Procedure Code, Vol. 2,page 2189, Note 19. Notarial execution is not necessary where theagreement relating to land is embodied in a settlement under section 408of Civil Procedure Code. See In re U. L. M. Alim'; Meis Singho v.Josie Perera’.
In the earlier proceedings in the Supreme Court, no point was takenabout any failure of tender or about the non-notarial nature of theagreement. At that stage, we could not have asked for mesne profits inanticipation. An action upon a decree is possible—M. K. Avichchi Chettyv. Marikar and Nainamu ’; Weerawagoe v. Fernando *. A conflicting viewwas taken in Ramen Chetty v. Frederick Appuhamy °. It has been held
1 {1929) 31 N. L. B. 168.8{1921)3 G. L. Bee. 5.
{1920) 22 N. L. B. 190.8{1929)31 N. L. B. 168.
»I. L. B. (1907) 31 Mad. 37.’ (1904) 1 Bal. Bep. 106.
I. L. B. 47 Cal. 485 ; (1919)8(1893)2 C. L. Bep. 207.
A. I. B. (P. C.) 79.*(1906)9 N. L. B. 133.
468
SOERTSZ J.—Fernando v. Coomaraswamy.
that an assignee of a decree can maintain an action—Mohamado Hanifav. Lavina Marikar et alThe fact that there is a remedy available under
section 344, Civil Procedure Code, does not debar a separate action—Sultanv. Packeer et al. *. A different view was taken in Perera v. Abeyratna et al. *and Goonetilleka v. Goonetilleka A separate action for mesne profits liesfor profits obtained subsequent to the date when action was brought fordeclaration of title and ejectment—Sarkar et al. v. The Secretary of Statefor India in Council et al."; Bhirav v. Sitaram *; Sheo Kumar v. NarainDas'. Section 334, Civil Procedure Code, could not have served to catchup the mesne profits which we ask for in the present case. Section 344too was inapplicable because we are asking for damages regarding abreach which occurred subsequent to the date of our application to Courtfor retransfer. Those two sections relate to the execution of the maindecree in a case, not to the enforcement of incidental matters which arisesubsequently.
The plaintiff is entitled to mesne profits. A vendor is in a fiduciaryposition, in relation to the purchaser, for the rents and profits—Plews v.SamuelFry on Specific Performance (6th ed.), page 655, para. 1436.
The decree of the Supreme Court did not supersede the agreement ; it,in fact, interpreted it. The agreement has already been acted upon andthe defendant is estopped from questioning its binding nature andvalidity—S. Golam Lall v. Beni Prosad “; John v. Mendoza10.
Oji the question of tender, the evidence is clear that it was the conductof the defendant which prevented the execution of the retransfer.
H. V. Perera, K.C,, in reply.—The law in Ceylon is that an agreementrelating to land, which is not notarially executed, is null and void.Hemanta Kumari Devi v. Midnapur Zamindari Co. {supra) is not applic-able because, in India, any agreement embodied in a decree of Court is, bythe law of the land, made valid. Indeed on the basis of that Privy Councildecision alone the appellant is entitled to succeed. In re U. L. M. Alim(supra) is not applicable’because that was a testamentary case and a Courtcould, under section 741, Civil Procedure Code, pass a decree embodyingterms relating to immovable property.
Cur. adv. vult.
February 19, 1940. Soertsz J.—
Although the promiscuous manner in which issues were framed in theCourt below makes this case appear formidable, the questions submittedto us on appeal as the questions in controversy are few, and the factsnecessary for their determination lie within narrow compass, and may bestated briefly.
The appellant held a mortgage over forty blocks of land belonging tothe respondent. He put his bond in suit in case No. 17,049 of the DistrictCourt of Kalutara, and, at the sale held in execution of the decree heobtained, he was declared the purchaser of those lands. The sale appears
1 (1908) 11 N. L. R.177.• I. L. R. (1894) 19 Bom. 532.
« (1910) 14 N. L. R.52.7 I. L. R. (1902) 24 All. 501.
(1912) 16 N. L. R.414.■ L. R. (1904) 1 Ch. 464.
(1912) 15 N. L. R.272.• I. L. R. (1879) 5 Cal. 27.
I. L. R. (1890) 17 Cal.- 968.10 (1939) 1 K. B. 141.
SOERTSZ J.—Fernando v. Coomaraswamy.
469
to have been conducted on conditions that made its confirmation by theCourt a necessary step towards vesting the purchaser with title. Beforethis confirmation could be given, the respondent presented to the Courtpetition P 26 supplemented by P 27 praying that the sale be set aside onthe ground that there had been material irregularities in the mode ofadvertisement of the sale, and in the mode of the sale itself, and allegingthat in consequence she had suffered substantial injury.
May 14, 1936, appears to have been the day appointed for inquiryinto this matter. On that day, the parties and their lawyers came to anagreement, and submitted to the Court a written motion (P 28) in thefollowing terms : —
" It is agreed that—
fl) The sales of lands 1 to 40 be confirmed, land 1 to 39 inclusive atRs. 37,053.12 and land No. 40 at Rs. 2,092.50.
The plaintiff (the present appellant) agrees to sell and retransfer
the lands 1 to 39 to the first defendant (the present respondent)or her nominee if within the space of one year from the datehereof the first defendant pays a sum of Rs. 35.500 to theplaintiff.
The plaintiff be given possession of the lands purchased on or
before June 1, 1936.
<4) The plaintiff is entitled to all the coupons in respect of lands 1 to 39of the March issue now in the hands of the Rubber Controller.
When the first defendant obtains the transfer in her favour, theexpenses of the transfer will be borne by her ”. Thereupon,the Court made order (P 29) as follows : —“ of consent, sale oflands No. 40 in the sale report confirmed. Sale of lands1 to 39 confirmed subject to the terms of settlement filed ”.
In March, 1937, the appellant was about to embark for Europe onfurlough, and the respondent began correspondence, at first, with theappellant, and later, with his attorney with a view to obtaining thetransfer provided for in the agreement of May 14, 1936. But whenMay 10, 1937, arrived, she was still without a transfer, and in a difficultsituation inasmuch as the appellant’s attorney was refusing to act inthe matter till he had heard from his principal with whom, he said, hewas in communication, and was suggesting to her to safeguard herselfin the meantime by depositing in Court the sum of Rs. 35,500 agreedupon (P 15.) In this state of things, the respondent felt compelled toinvoke the assistance of the Court and on May 11, 1937, the proctorsacting for her in the mortgage suit submitted a motion P 22 to the Courtasking it to direct the appellant’s attorney “ to appear in Court on the14th instant and to sign the necessary conveyance on payment of thesaid sum of Rs. 35,500, or on his failure to do so, that the Court do executethe necessary conveyance in terms of the settlement ”. The DistrictJudge heard counsel on both sides in regard to this motion and said“ I order the defendant to deposit the amount in -Court before he cancompel the plaintiff to execute the necessary conveyance ”. Therespondent appealed from this order and when the appeal came up for
470
SOERTSZ J.—Fernando v. Coomaraswamy.
hearing, it would appear, and we were so informed at the Bar, the presentappellant who had, by this time, returned to the Island was willing togive the transfer asked for, and this Court on being addressed to thateffect, delivered judgment holding that “ in view of the fact thatthere is no mention in the settlement of May 14, 1936, in regard to thepayment of this amount into Court …. the Judge was wrongin holding that it must be deposited in Court before the execution of theconveyance ”. The order appealed from was set aside and directionwas given “ that if within one month of the receipt by the District Courtof our order, the defendant should pay Rs. 35,50Q to the plaintiff, theplaintiff shall at the same time execute the necessary conveyance ”. Inaccordance with this order, the appellant executed a conveyance onFebruary 1, 1938. The respondent now brings this action alleging thatthere was default on the part of the appellant between May 14, 1937,and February 1, 1938, and claiming a sum of Rs. 7,406.08 as the lossshe suffered in consequence of this default. In her plaint she put forwarda further claim, but with that we are no longer concerned.
On a broad view of the facts established by the evidence in the case,unhampered by questions of legal form and of legal procedure, I findmyself in agreement with the conclusion to which the trial Judge came,for I am convinced that the respondent when she sought the assistanceof the Court on May 11, 1937, had done everything that could reasonablyhave been expected of her to obtain the transfer that had been unequi-vocally promised, and that she was driven to Court by the intransigenceof the appellant’s attorney, and that, therefore, the appellant is responsiblefor the delay that occurred. But, it is said that the law. stands in theway and prevents us from giving effect to this view. If that is the case,there can be no question but that the law must take its course andprevail.
The question, then, is whether the law compels us in this case to aconclusion which, on the ultimate facts as found by the trial Judge andconcurred in by us, appears inequitable.
Let us now examine the contentions on which counsel for the appellantrelied. He submitted firstly that the agreement of May 14, 1939;involved a transaction that was obnoxious to section 2 of the Preventionof Frauds Ordinance, and that it was of no force or avail in law, and thatthe respondent was, therefore, out of Court if her action be treated asbased on the agreement. In regard to the respondents’ counsel’sargument that this action is on the decree of May 14, 1936, counselfor the appellant contended (a) that only so much of the agreementas related to the action could have been embodied in the decree, andthat the part of the agreement providing for retransfer of these landsdid not relate to the subject-matter of the action and could not be con-sidered a part of the decree, (b) that even if the part relating to thetransfer of these lands be regarded as part of the decree, it was, none theless obnoxious to section 2 of the Prevention of Frauds Ordinance. Anagreement prohibited by section 2 did not acquire validity by beingembodied in a decree.
SOERTSZ J.—Fernando v. Cooniarasvoamy.
471
It seems clear from the plaint filed by the respondent that her actionis based on the order made by the District Court of Kalutara on May 14,1936. No formal decree was entered in terms of that order, but I donot think it is or can be disputed that if a minister of the Court addressedhimself to the task of. putting the order in the form of a decree, he wouldhave included in the- decree a direction that the plaintiff (in that case) doexecute a transfer of lands 1 to 39 to the defendant (in that case) onthe latter paying within one year the sum of Rs. 35,500 and the expensesof the transfer, for those were terms 2 and 5 of the agreement, and theJudge had ordered “ sale of lands 1 to 39 confirmed subject to terms ofsettlement now filed”. The respondent’s action must therefore, beregarded as an action on the decree. The questions then are thoseinvolved in the contentions I have set forth as (a) and (b). As regards (a)my opinion is that the interpretation given by Counsel to “ action ” and“ subject-matter of action ” in section 408 of the Civil Procedure Codeis too narrow. The “ action ” at the stage of the case at which thesettlement was reached was the proceeding that arose from the appli-cation, on the one hand, by the appellant to have the sale confirmedand by the respondent on the other hand, to have it set aside in respectof the lands involved in the sale, and not in respect of any other lands.The compromise was that the sale of those lands should be confirmed,but that, within a year it should be open to the respondent to obtain atransfer of lands 1 to 39 by fulfilling certain conditions. Clearly,therefore, the compromise related to the subject-matter of the action.3 cannot entertain the submission that the subject-matter of the action,at that stage, was purely and simply the question whether the sale shouldbe confirmed or not.
In regard to lb), appellant’s counsel argued -that the case of HemarvtaKumara Devi v. Midnapur Zemihdari Co.1 relied on by the respondent’scounsel strongly supports not the respondents’ case but his own, Ihave examined that case carefully and, in my view, the opinion of thePrivy Council delivered by Lord Buckmaster is not of much assistancein this case in view of the fact that we are here concerned with section 2of the Prevention of Frauds Ordinance, and its bearing on section 408of our Civil Procedure Code, whereas in the Indian case the Privy Councilexamined two sections of the Indian Registration Act of 1908 which arevery different from section 2 of the Prevention of Frauds Ordinance,in relation to section 375 of the Indian Code of Civil Procedure which is-almost identical with our section 408. But as counsel relied so muchon this case I think I ought to give some account of it. Kumara Bebi,the appellant in that case, instituted two actions, No. 72 against theGovernment and No. 73 against W. & Co., to obtain possession of certainlands. Action. 73 was compromised on terms agreed upon, one of whichwas that W. & Co. were to retain possession of the lands involved in thatcase, recognizing the appellant as the owner thereof, and that theappellant should grant them a jote settlement of the lands involved in theGovernment suit 72 if, and when, she. succeeded in that suit. Thisagreement was reduced to writing and a petition of compromise was filed
11. L. R. 47 Cal. p. 485.
472
SOERTSZ J.—Fernando v. Coomaraswamy.
in case No. 73, and judgment was given in terms of the compromise anddecree was entered thereon. The appellant succeeded in her case againstthe Government, but refused to grant the jote settlement to W. & Co.in regard to those lands. The respondents, the successors of W. & Co.,brought this action for specific performance of the agreement. Theappellant denied having made or authorized the agreement and objectedthat the petition and consent decree were not admissible in evidenceagainst her because, treated as an ordinary contract, it had not beenregistered in terms of section 17 of the Registration Act of 1908, andbecause, as a decree, it was inoperative in relation to the lands in disputewhich were not the subject-matter of the action in which the compromisehad been made. Lord Buckmaster who delivered the opinion of the PrivyCouncil held that the agreement to give the jote settlement was not,in the circumstances, an agreement to lease, as it was contended it was,and that, therefore, registration was not necessary in that way; and inregard to liability to registration under section 17 (1) (b) of the IndianRegistration Act which, required registration of “ other non-testamentaryinstruments which purport or operate to create, declare, assign, limit orextinguish, whether in present or in future, any right, title or interestwhether vested or contingent of the value of one hundred rupees andupwards to or in immovable property ”, His Lordship pointed out thatby sub-section 17 of the Registration Act, decrees of Court were exemptedfrom the requirement of registration. The question that remained waswhether the agreement relied on was a part of the decree entered inpursuance of the compromise. It was contended for the appellantin that case that the decree was that part of it which referred to thelands involved in the suit that was compromised and that the lands insuit 72 which were the lands in respect of which the jote settlement wasgiven were foreign to the decree and outside it. The Board rejectedthat contention and held that the decree included the whole agreementbecause the agreement in regard to the lands outside the action had alsobeen submitted to the Court as part of the compromise.
Now Mr. Perera submits that there is no equivalent in our law to section17 (2) exempting decrees from the purview of section 2 of the Preventionof Frauds Ordinance and that, therefore, the fact that the agreementin question is embodied in a decree is of no avail in our law. I cannotfind anything in the opinion of the Privy Council in the Indian case thatsupports this contention of the appellant’s Counsel. The point in thepresent case did not arise before the Board.
So far as local authorities go, there is the ruling of Ennis A.C.J. andShaw J., in the case' of JThe Estate of N. L. M. A. L. M. Alim,1that “ the Code of Civil Procedure has made an express provisionin section 408 with reference to agreements in settlements of disputesand compromises, and does not require such agreements if they relate toland to be notarially executed”. That undoubtedly is the view on whichour Courts have acted.
1 3 c. L. Re. 5.
SOERTSZ J.—Fernando v. Coomaraswamy.
473
It is also submitted that deed D 14 given by the auctioneer to theappellant alter the sale had been confirmed is an absolute conveyanceand contains no agreement to retransfer. That is so. But there is referenceto the confirmation given by the Court on May 14 and in view of allthe attendant circumstances, it cannot be inferred that the respondent’sbeneficial interest was disposed of by that deed. The appellant was.therefore, his constructive trustee. In point of fact, he fulfilled thetrust eventually.
The next point taken by counsel for the appellant is that if this decreewhich is implicit in the order of May 14, 1936, is good and operativein regard to the transfer of lands that was undertaken by the appellant,the respondent can obtain only as much relief as she may, by executingthe decree and not by a separate action. The . answer to this, as Iconceive it, is that the respondent has executed so much of the decreeas was executable. She took steps in the case in which the settlementwas entered and succeeded in the end in securing specific performanceof the agreement to transfer. Her present suit is to recover damages,she says, she sustained in consequence of the delay on the part of theappellant to give her the transfer. It is true that it was open to the partieswhen they were compromising their dispute, to take a long view and tomake provision for damages in the event of default or delay. But, theywere not bound to do that. In point of fact, they did not do that, andI am not aware of any rule of law or procedure which can be said todebar the respondent from bringing a suit to recover damages thatresulted from a breach of one of the directions given in the order. Partiesare entitled to act, and generally do act, on the assumption that agreementsand undertakings will be performed, and not broken.
Appellant’s counsel also submitted that the judgment of this Courtdirecting that the appellant should execute a conveyance on paymentbeing made to him by the respondent within a month of the order of thisCourt being received in the Court below, superseded the agreement ofthe parties and the decree thereon, and that for this reason, the appellantcould not be said to have made default. But by the time this Courtmade its order, the default had already occurred, and there is nothingto show that either by agreement or by direction of Court, it was under-stood that performance at the time indicated in the judgment of thisCourt was to be regarded as performance nunc pro tunc.
Finally, it was submitted that the respondent- failed because therehad not been “ tender ” of money as required by law. “ Tender ”, saysHarris in the 1908 edition of his book on that subject at page 1, " is theinstinctive resource of the oppressed against the exactions of therelentless ”. The question, then, is whether the respondent madeproper use of this resource. The learned trial Judge records his findingson this point in these words “To my mind it is perfectly plain that themoney was available for payment to the defendant or his attorneyif the retransfer transaction materialized, or if the attorney had definitelystated that the reconveyance would be made But, it is objected thatthe money that was being offered was not money at the disposal of therespondent, that it was'money belonging to Messrs. Lee Hedges & Co.
474
SOERTSZ J.—Fernando v. Coomaraswamy.
and would come to be the respondent’s money only when the respondentobtained a transfer from the appellant and gave Messrs. Lee Hedges &Co. a mortgage of the lands transferred to him. This appears to havebeen the position at a certain stage of this transaction. See for instanceP 5 and P 8. Those letters indicate that Messrs. Julius & Creasywere then acting for Messrs. Lee Hedges & Co. But by P 10 Messrs.Julius & Creasy wrote on April 29, 1937, that they were acting for therespondent as well, although Messrs. Lee Hedges & Co. were still envisagedas mortgagees P 12. By P 14 Messrs. Julius & Creasy informed theappellant’s attorney’s proctor on May 8, 1937, “ this money is now inour office and we are in a position to pay it to your client upon hisexecuting the appropriate conveyance …. we suggest that thismatter be completed at say 2 p.m. on Tuesday the 11th instant when weshall be pleased to call at your office and obtain your client’s signatureto the conveyance against payment of the amount due. ”
They followed up with their letter of May 11, 1937, in which they say“ Mrs. Fernando has now nominated Messrs. Lee Hedges and Co., Ltd.,to receive the transfer …. and we accordingly tender anamended draft conveyance in their favour. ” It will be remembered thatthe agreement P 29 provided for a Transfer to the respondent or hernominee. There was no longer any question of money not being immedi-ately available to the appellant’s attorney. In the face of all this, tohold that the money was not duly tendered would be to make the Lawof Tender a horrible snare.
It was also paid that the money was not actually produced, but thatobservation sits ill on the lips of the appellant when we find the appellant’sattorney replying to the letters of Messrs. Julius & Creasy on May 1saying “ my client has yet to decide whether he should execute theretransfer and he will decide the question only after the money is paid ifthe same is paid within time ” ; again on May 7, “ in the event ofMrs. Fernando paying the amount as well as the cost of retransfer withintime, my client if so advised will execute a deed on May 10 P 15 “Myclient has been advised not to sign any deed of retransfer without writteninstructions from the principal. Mr. Coomarasamy has been writtento, but a reply has not been received. Until a reply is received my clientwill not sign any deed of retransfer ”. To have produced the moneyto one who was taking up this attitude, would have been an idle formality.
It is not without significance that till answer was filed in this casethere was not a word said or heard to suggest that there had not beenproper tender. I must, therefore, find that the respondent did every-thing she had to do to entitle her to the transfer. She took her horseto the water but she could not make him drink.
For these reasons, I am of opinion that the trial Judge came to acorrect conclusion, that the appeal fails and that it must be dismissedwith costs. The case will go back for the assessment of damages.
Nihill J.—I agree.
Appeal dismissed.