GUNASEKERA AND ANOTHER
COURT OF APPEALJAMEEL, J. AND ABEYAWIRA, J.
A. 329/74 (F).
C. COLOMBO 12617/L.
DECEMBER 1 AND 5. 1986.
Trusts – Transfer by deed – Ss. 91 and 92 of Evidence Ordinance – Oral evidence oftrust-Constructive trust.
The plaintiff executed a transfer in the name of 1 st defendant all arrangements for thetransaction being made by the 2nd defendant. The plaintiff sued the defendants for adeclaration that they held the property in trust for her alleging an oral agreement toretransfer the property to her within three years on payment of Rs. 17,000. In themeantime the plaintiff was to remain in possession and service the housing loans whilethe defendants would assist her to raise a loan from a third party if the need arose.Although the consideration on the deed in favour of the 1 st defendant was stated to beRs. 17,000 only Rs. 10,000 was paid in terms of the agreed arrangement. Theplaintiff’s suit was filed after the lapse of the three years and no tender of the moneyhad been made within the three years.
Apart from the fact that ss. 91 and 92 of the Evidence Ordinance do not permit thereceipt of evidence to vary the terms of a notarially executed deed so as to superimposeon a simple transfer deed characteristics such as mortgages or agreements toretransfer yet even on the facts no trust can be held to have been established. Time wasof the essence of the alleged oral agreement and the constructive trust yet there was noevidence that the money was even tendered in time.
Cases referred to:
Perera v. Fernando -(1914) 17 NLR 486.
Adaicappa Chetty v. Caruppen Chetty-(1921) 22 NLR 417 (P.C.).
Setuwa v. Ukku – (1953) 56 NLR 337.
William Fernando v. Roslyn Cooray -(1957)59 NLR 169.
Siriwardena v. Sarnelis – (1957) 59 NLR 182.
Saminathan Chetty v. Vendor Poorten – (1932) 34 NLR 287 (P. C ).
Vallyammai Atchi v. Majeed -(1947)48 NLR 289.
Saverimuttu v. Thangavelautham – (1954) 55 NLR 529 (P C ).
APPEAL from judgment of the District Court of Colombo.
Dr. H. W. Jayewardene, O. C. with T. B. Dillimuni. Miss Keenawinna and Miss Wattegefor defendant-appellants.
J. W. Subasinghe, P.C. with Miss Saman Seneviratne and Miss K. de Silva forplaintiff-respondents.
Cur. adv. vult.
January 20, 1987.
The plaintiff-respondent by his deed No.359 (PI) of 19.8.1986transferred the corpus in this case to the 1 st defendant-appellant whois the mother of the 2nd defendant-appellant.
On the face of it deed P1 is a simple outright unconditional transferof this land for a sum of Rs. 17,000. Both the attestation by Notary U.R. Wijetunga to this deed and so also his evidence given in this caseshows that out of the consideration of Rs. 17,000 only Rs. 10,000had been paid in cash at the time of the execution of the deed. Thebalance Rs. 7,000 was said to have been 'previously received'.
The plaintiff has admitted the execution of this deed. His position isthat he neither handed over the deed P1 nor the possession of theland to the defendants. The 2nd defendant admitted that it was hewho negotiated this sale and it was he who had requested the notaryto make the necessary search in the Land Registry. According to the2nd defendant it was to be an outright sale for Rs. 35,000 as he hadundertaken the burden of settling a National Housing loan ofRs. 18,000. He further alleged that Rs. 7,000 had been paid earlierand that after the execution of the deed the plaintiff had agreed tohand over vacant possession within three months with a promise topay Rs. 600 as rent for those three months. It transpired in evidencethat this money was not paid nor was mother or son placed inpossession of the premises as promised.
The plaint in this case has been filed on 17.12.1969. Thereafter theappellants have paid Rs. 5,200 to the Commissioner of NationalHousing in part liquidation of the loan (Vide: D6 to D9). It is theplaintiff's case that there was no requirement for the defendants tohave paid any part of that loan. Indeed, the plaintiff’s case is that thisdeed was written in that form at the request of the 2nd defendantfrom whom, he the plaintiff, had obtained a loan of Rs. 10,000. Theplaintiff denied that he had ever agreed to give vacant possession ofthe premises at any time to any one and further denied that he hadagreed to pay any rent whatsoever. On the contrary his position wasthat he had agreed to repay Rs. 17,000 within three years of theexecution of the deed P1, that is to say on or before 10.8.1969 andobtain a retransfer of the premises.
The 2nd defendant does admit that about three weeks after theexecution of P1 the plaintiff did come to him and had requested theretransfer of the land. It is the 2nd defendant's position that he hadvery reluctantly agreed to do so only if the money was repaid in a veryvery short time. The next time he heard from the plaintiff was when theplaintiff came with a retransfer agreement deed drafted by the samenotary Mr. Wijetunga. The 2nd defendant refused to sign that deed.Notary Wijetunga speaks of having drafted such a deed at the requestof the plaintiff, and that he had done so shortly after the execution ofdeed P1. Nevertheless that 2nd defendant had then agreed to effectthe retransfer should the plaintiff repay the money within a week.However he had categorically denied the plaintiff's claim that therehad been such an agreement either before or at the time of theexecution of P1.
The evidence quite clearly reveals that the 1 st defendant in whosename the deed had been written had had no part in the negotiations,nor in the drafting of the deeds. We have only the 2nd defendant'sstatement that she had provided the cash Rs. 10,000 that had beenpaid in the presence of the Notary. Apparently she had not beenconsulted when the 2nd defendant had agreed to the retransfer in thecircumstances as admitted to and deposed to by him. She appears tobe no more than a nominee of the 2nd defendant for the purposes ofcircumventing the financial regulations. It does not appear, on theevidence, that even the 2nd defendant had intended that thebeneficial interests should pass on to the 1 st defendant.
According to the plaintiff the beneficial interest was not to havepassed even to the 2nd defendant. The full agreement as stated bythe plaintiff was that
(1) The plaintiff would be paid Rs. 10,000 which he was urgentlyin need of at that time.
That within three years of the execution of the deed the plaintiffwas to repay Rs. 1 7,000,
That the deed would therefore be prepared as for aconsideration of Rs. 17,000, and in favour of the 1stdefendant,
That the defendants will render to the plaintiff all assistanceneeded to enable the plaintiff to raise a loan from a third party ifthe need to do so arises, and
That in the meantime the plaintiff will keep paying all instalmentsthat fall due for payment on the housing loan.
It is the existence of these terms, says the plaintiff, that imposes onthe defendants the obligation to hold the property in trust for him. Thelearned District Judge has accepted this position and has enteredjudgment for the plaintiff. It is from that judgment that the defendantshave preferred this appeal.
Learned Queen's Counsel for the appellants strongly relied on thedecisions of the Privy Council and of our Supreme Court in the cases ofPerera v. Fernando (1), Adaicappa Chetty v. Caruppen Chetty (2),Setuwa v. Ukku (3), the 5-bench decision in the cases of WilliamFernando v. Roslyn Cooray (4) and Siriwardena v. Sarnelis (5). Itappears from these decisions that while parole evidence is alwaysavailable to prove a trust (vide the Privy Council decisions inSaminathan Chetty v. Vendor Poorten (6), Vallyammai Atchi v. Majeed(7) and Saverimuttu v. Thangavelautham (8) and while the courts willnot permit the Statute of Frauds to be used so as to perpetuate a fraudsections 91 and 92 of the Evidence will not permit the receipt ofevidence to vary the terms of a notarially executed deed which on theface of it (as in PI) is a simple straightforward transfer and moreparticularly will prevent parole evidence being led to superimpose on asimple transfer deed characteristics such as mortgages or agreementsto retransfer-even when those agreements between those parties arecontained in contemporaneous non-notarially executed documents.However as this appeal can be disposed of on the facts a detailed
analysis or review of the principles enunciated in these decisions isunnecessary.
At the best, the conditions which the plaintiff seeks to havesuperimposed on the deed and accordingly the duty which he seeks toimpose on the defendants is that they should have, for a period ofthree years from the date of P1, namely, 10.8.1966, held theproperty in trust and that he the plaintiff had a right to reclaim it on thepayment of Rs. 17,000 to the second defendant. The plaintiff alsourges that the defendants should have given him a letter addressed tothe State Mortgage Bank indicating that they were prepared totransfer the premises to him. He states that this letter would havehelped him to negotiate a loan from the Bank and so pay off thedefendants. The defendants had not acceded to his request. At themost, such a refusal could give rise only to an action for damages forbreach of contract (as stated in P10 itself). It cannot be an excuse fornot finding the money otherwise and so paying off the defendants onor before 10.8.1969. Thus, the plaintiff has failed to do what he hadto do even if that condition is enforced. There is no evidence that hehad even tendered the money prior to the appropriate date. This plainthas been filed only on 17.12.1 969, that is to say, after the lapse ofthree years. Time, was of the essence of that alleged oral agreementand the Constructive Trust, if at all cannot be a trust contrary to theterms of the agreement itself. In the circumstances therefore, theplaintiff has failed to redeem his property in time and thus his actionmust fail.
Accordingly, we set aside the judgment and decree and enterjudgment dismissing the plaintiff's action but without costs. There willbe no judgment for the defendants in reconvention.
ABEYAWIRA, J. – I agree.
Plaintiff's action dismissed.
GUNASEKERA AND ANOTHER v. UYANGODAGE