018-SLLR-SLLR-1993-1-GUNASEKERA-v.-AMERASEKERA.pdf
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GUNASEKERA
v.AMERASEKERA
SUPREME COURT.
FERNANDO, J., RAMANATHAN, J. AND PERERA, J.
SC APPEAL NO. 72/92.
CA NO. 737/81 (F).
DC MT. LAVINIA NO. 419/2.
MARCH 12th, 1993.
Laesio enormis – Expert evidence – Value of land – Reduction of sale pricefor reasons of love and affection – Burden of Proof — Knowledge of value.
It is for the judge to determine whether the witness had undergone sucha course of study or experience as will render him expert in a particular subject,and it is not necessary for the expertise to have been acquired professionally.There was no or inadequate evidence that the surveyor was an expert in valuationin the instant case.
While it may well be that the burden lies on the vendee (who resists aclaim based on laesio enormis) to prove the vendor's knowledge of the true value,and/or that love and affection induced the vendor to agree to a reduced price,yet being a matter essentially within the knowledge of the vendor, circumstantialevidence would suffice prima facie to discharge that burden ; thereupon it willbe for the vendor, affirmatively, to prove that he had no such knowledge, or thathe did not fix a reduced price out of love and affection. In the present case,the evidence shows prima facie that a reduced price was fixed despite theavailability of independent advice, and in circumstances pointing to the vendorhaving stipulated a reduced price out of affection for the recipient.
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(a) The defendant had failed to prove that the true value of the property
in suit was more than double the consideration shown on the face of the deed.
(b) Any reduction in value was motivated by love and affection.
Cases referred to:
Jayawardene v. Amerasekera (1912) 15 NLR 280, 281.
Ponnupillai v. Kumaravetpillai (1963) 65 NLR 241, 248.
R. v. Silverlock (1894) 2 QB 766.
Tarrant v. Marikar (1934) 36 NLR 145, 157.
Sobana v. Meera Saibo (1940) 5 CLJ 46.
Coetzee v. Pretorius (1903) TS 638, 641.
APPEAL from a judgment of the Court of Appeal.
R. K. W. Goonesekera with D. F. H. Gunawardena for plaintiff-appellant.
A. A. de Silva with Miss S. N. Jayatilleke, M. C. Jayaratne and Prashantha deSilva for defendant-respondent.
Cur. adv. vult.
April 02, 1993.
FERNANDO, J.
The defendant-appellant-respondent ("the defendant”) a spinster inher sixties, transferred her property at No. 35, Albert Place, Dehiwela,by deed No. 154 (”P1“) dated 13.1.79 to her nephew, theplaintiff-respondent-appellant ("the plaintiff), for a consideration ofRs. 100,000. The plaintiff was employed abroad, and used to visithis aunt whenever he was in Sri Lanka ; they were undoubtedly oncordial terms, and he used to bring her gifts ; he was the soleremaining relative of the defendant, and had she died intestate, hewould have been her sole heir. The property consisted of 35 perchesof land, together with a rather old and dilapidated house, situatedon a lane leading from the Galle road towards the sea. The daybefore the deed P1 was executed, by a document dated 12.1.79 itwas agreed that the defendant would be allowed six months to vacatethe house, in which she was then living. The defendant failed to doso, and the plaintiff's Attorney in Sri Lanka ("the Attorney") promptlyinstituted this action on his behalf on 29.10.79 to obtain possession.The defendant in her original answer dated 8.8.80 denied that thedeed P1 was her act and deed, and pleaded, in the alternative, thatthe property was worth Rs. 650,000 and that her signature had been
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procured by fraud and undue influence ; in her amended answerdated 8.3.81 she also pleaded laesio enormis. At the trial the deedP1 was admitted ; consequently the only remaining defence waslaesio enormis. The plaintiff and the defendant each raised twoissues, which were answered by the learned District Judge asfollows
a Surveyor called on behalf of the Defendant. The Attorney testifiedto the cordial relationship between the parties ; that the plaintiff usedto visit the defendant on his trips to Sri Lanka, and that the Attorneyaccompanied him ; that on one such visit in late 1978 there hadbeen a discussion at which the defendant agreed to sell the propertyfor Rs. 150,000 ; that the defendant had not accepted another offer;that when the plaintiff asked for the title deeds, the defendant repliedthat these were with her lawyer, Mrs. L C. Fernando of Julius& Creasy ; that the title deeds were then sent to the plaintiff'slawyer, who prepared a draft deed of transfer ; that the defendant'slawyer made some minor changes ; and that he had been presentwhen the deed P1 was signed at Mrs. L. C. Fernando's residence,Mrs. Fernando being one of the attesting witnesses. In thesecircumstances it is not surprising that the original defences were notpursued. The Attorney also testified that when he learnt that thedefendant had not found alternative accommodation, he had
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attempted to help her ; that he had found a suitable place, but thatshe had been unable to move there because she wished to takeher pet dogs, to which the landlord had not agreed. His evidencewas not challenged in cross examination.
The defendant's surveyor testified that he was a licensed surveyor,as well as a Court Commissioner of many Courts ; and that he hadfive years' experience in "surveying land and valuing buildings". Inevidence-in-chief he said nothing whatever about any special skill,qualification or experience in valuing land. As for the property in suit,he said it was a 50 to 60 year old house, 2,300 sq. ft. in area, builtof brick, with a tiled roof and cement floors, and jak timberframes ; being of solid construction, despite damage caused byvandals and through neglect, he valued the house (as at January1979) at Rs. 100,000. The land he valued at the rate ofRs. 15,000 per perch, i.e. Rs. 525,000. The property wasthus worth Rs. 625,000 in his opinion. He did not give anyexplanation as to how he arrived at these figures. In crossexamination he admitted that various parts of the house were in astate of disrepair; and he was unable to say whether concrete hadbeen used in its construction, and whether there were toilets. Heasserted that, in his opinion, in January 1979 land frontingthe Galle road was worth Rs. 80,000 per perch in Kollupitiya,Rs. 40,000 to Rs. 50,000 per perch in Wellawatta, and Rs. 30,000per perch in Dehiwela ; but he had not done valuations of landin any of these areas, nor did he testify as to any sales of landcomparable to the property in suit. Perhaps advisedly, crossexamining Counsel refrained from probing his qualification andcompetence, but there were two answers of some relevancethereto : that he had submitted valuation reports to the StateMortgage Bank, including reports in respect of residential sites ;and that he had recently submitted a valuation report to aninstitution in respect of property in Ratmalana. No further detailswere elicited in re-examination.
The learned trial Judge observed that it was essential for thedefendant to give evidence that she had personally been unawareof the real value of the property, and that the consideration ofRs. 100,000 had been agreed upon due to her ignorance of thatvalue ; that sometimes the price is fixed low, knowingly, in viewof the affection or love of the vendor for the vendee ; that in this
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case there was evidence of a very cordial relationship betweenthe defendant and her sole intestate heir over a long period ; andtherefore it was essential for her to show that the price had not beenkept low on account of love or affection. There being no evidencefrom the defendant that she had been unaware of the true value,and that a lower consideration had not been fixed out of affection,the defendant was not entitled to relief on account of laesio enormis.Although the surveyor's evidence of value was referred to, the learnedDistrict Judge did not come to any finding thereon. Learned Counselfor the defendant contended that by implication that evidence hadbeen accepted. I cannot agree, not only because it is unsafe to acton the basis of any such implication, but because of the answerto issue 3. If issue 3 was correctly recorded, the defendant wasseeking to establish the value of the property by proving that shehad entered into an agreement to sell for (or perhaps had receivedan offer of) Rs. 500,000. The surveyor's evidence was irrelevant tothat question, and the answer "Not proved" is perfectly correct. Onthe other hand, if as the Court of Appeal observed, that issue hadbeen incorrectly recorded, and the real question was whether theproperty had been worth over Rs. 500,000, then that answer meantthat the learned trial Judge had found that this had not been proved.
The defendant's appeal to the Court of Appeal came up forconsideration ex parte, the plaintiff being absent and unrepresented,and was allowed on 21.10.88. The plaintiff asked for relisting,seeking to explain his default. On 15.6.90 the appeal was relisted,because one of the judges who heard and allowed the appeal hadbeen the District Judge who had heard and determined the action.On 8.7.92 the Court of Appeal allowed the appeal, holding that thesurveyor's evidence that the property was worth Rs. 625,000 in 1979had not been contradicted ; that there was no evidence to supportthe inference that the defendant had known the real value of theland when P1 was executed ; that the burden of proving thatthe consideration had been fixed at a lower figure out of love andaffection was on the plaintiff, and not on the defendant, and thatthere was no evidence to that effect ; accordingly deed P1 wasset aside, relying on the observations of Lascelles, C.J., inJayawardene v. Amerasekera,w.
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0 It is clearly laid down in Voet 18.5.17, that a proprietor whoknows the value of his property is not entitled to rescission merelyby reason of ihe fact that the price at which he sold the propertyis less than half its true value. The proprietor, in such a case,has only himself to thank for any loss he may have
sufferedThe case is otherwise where the property is sold at
a price grossly disproportionate to its true value. In that case thelaw is on the side of the party who stands to lose by thetransaction, and not on the side of the party who stands to makean unconscionable profit0.
The submissions of learned Counsel for the defendant, on appealto this Court with special leave, can be summarised as follows :
The surveyor's evidence as to value should not have beenaccepted, as there was no evidence that he was speciallyskilled in regard to the valuation of land, and it had not beenestablished that, as a valuer, he was an "expert" within themeaning of section 45 of the Evidence Ordinance ; further, hisvaluation was a mere assertion, and there was no explanationas to how it was arrived at – whether by reference to comparablesales, or any of the other recognised methods of valuingbuilt-up land ; and his valuation of the old house, with itsmany defects, at a round figure of Rs. 100,000, without anyexplanation, was clearly arbitrary.
The circumstances leading up to the execution of the deed P1justified and required the inferences that :
the defendant had independent advice in regard to thetransaction, including the value of the property, from asenior practitioner, Mrs. L. C. Fernando of Julius andCreasy, who was her regular legal adviser; and thereforein the circumstances of this case she must be presumed(in the absence of contrary evidence from her) to haveknown its true value ; and
the special relationship between the plaintiff and thedefendant justified the inference that the considerationhad been reduced out of love and affection.
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The dictum of Lascelles, C.J., in Jayawardene v. Amerasekera(at p. 281) that where the property is sold at a price whichis not merely less than half of the true value, but is grosslydisproportionate to the true value, the vendor's knowledge ofthe true value is irrelevant, is not the law.
In regard to the surveyor's evidence, learned Counsel for thedefendant submitted that the surveyor's qualifications as an experthad been sufficiently established, and that he need not haveexplained the basis of his valuation. He referred to Ponnupillai v.Kumaravetpillai(2) where the Privy Council had acted upon theevidence of a surveyor in determining the value of land in order toapply the doctrine of laesio enormis. In that case there were severalwitnesses in regard to value, the surveyor having been also theChairman of the local authority ; further, there is nothing to suggestthat the necessary evidence to qualify him as an expert had notbeen led. Cross, Evidence (6th ed., p. 442) observes :
"It is for the Judge to determine whether the witness hadundergone such a course of special study or experience as willrender him expert in a particular subject, and it is not necessaryfor the expertise to have been acquired professionally " (referringto R. v. Silverlock (3).
Similarly, Coomaraswamy, Evidence (2nd ed., vol. 1, p. 624)observes:
" Any person who, from his circumstances and employment,possesses special means of knowledge, has given the subjectparticular attention, and is more than ordinarily conversant withits details, will be considered ' specially skilled ' for the purposesof this section ".
Learned Counsel for the defendant submitted that laesioenormis applied even if the vendor was aware of the true value,citing Wessells, Law of Contract, 2nd ed., vol. 2, page 1344, section5100 :
"There is a considerable dispute amongst the jurists whetherthe remedy applies in the case of a person who knows the truevalue of the thing, but nevertheless sells it for less than half, or
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purchases property knowing that it is only worth half. Voet seemsto consider that in both cases the remedy cannot be invoked(Voet, 18.5.17).
The better opinion, however, seems to be that it does notmatter whether a vendor knew or did not know the true value. Ineither case the vendor can invoke the benefit of laesio enormis"(citing Vinnius, Quaest Select, 1.56).
He submitted that the views of Vinnius should be preferred to thoseof Voet. Weeramantry, Law of Contracts (Vol. I, P. 38), observes thatof the Dutch jurists, Voet is the most highly considered in Sri Lanka[Tarrant v Marikar, (4) ; our Courts have observed that as in SouthAfrica the opinions of Voet would usually (though not always) befollowed in case of a conflict of authority. The ratio decidendi ofJayawardene v. Amerasekera (supra) is that an owner who knowsthe true value of his land is not entitled to plead laesio enormis. Theviews of Voet have thus been expressly approved eighty yearsago. Counsel then sought to rely on the further observation ofLascelles, C.J., in that case, suggesting that knowledge isimmaterial where the price is grossly disproportionate to the value,pointing out that this dictum was cited in Walter Pereira's Laws ofCeylon, 2nd ed., (1913), p. 657. However, that appears to be anobiter dictum not supported by the opinion of any Roman Dutchjurist ; and indeed does not appear in the first edition of WalterPereira's work; it is also not cited by Weeramantry, in his discussionof laesio enormis. In Sobana v. Meera Saibo (S), it was held that theplea of leasio enormis could not be entertained where, assuming theland to have been worth Rs. 500, the plaintiff knew that fact at thetime he sold the land for Rs. 100. Although Jayawardene v.Amerasekera was cited with approval, that obiter dictum was notapplied. While there appears to be some substance in the contentionthat this obiter dictum does not correctly set out the Roman-Dutchlaw (and is possibly based on a misunderstanding of the concludingportion of Voet 18.5.17), the matter need not be decided now in viewof my decision on the other questions arising in this case.
While it may well be that the burden lies on the vendee (whoresists a claim based on laesio enormis) to prove the vendor'sknowledge of the true value, and/or that love and affection inducedthe vendor to agree to a reduced price, yet being a matter essentially
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within the knowledge of the vendor, circumstantial evidence wouldsuffice prima facie to discharge that burden ; thereupon it will befor the vendor, affirmatively, to prove that he had no such knowledge,or that he did not fix a reduced price out of love and affection. Inthe present case, the evidence shows prima facie that a reducedprice was fixed despite the availability of independent advice, andin circumstances pointing to the vendor having stipulated a reducedprice out of affection for the recipient as in Coetzee v. Pretorius, (6)where the plea failed :
“ This is not a case where parties treated with one anotherat arm's length. It is a case in which family affection played avery important part. The object of Pretorius in selling this groundto his son-in-law was to benefit him and indirectly to benefit hisdaughter. I an satisfied that he was well aware of the value ofhis property, and that he knew that he was selling it for muchless than it was worth ; but he accepted a low price because ofhis affection for his daughter."
I therefore hold that –
the defendant has failed to prove that the true value of theproperty in suit was more than double the considerationshown on the face of the deed, and
that any reduction in value was motivated by love andaffection for the plaintiff.
The appeal is allowed, and the judgment of the District Court isaffirmed for the reasons set out in this judgment. There will be nocosts in the Court of Appeal and in this Court.
RAMANATHAN, J. – I agree.
PERERA, J. – I agree.
Appeal allowed.