020-SLLR-SLLR-1996-V-2-GUNASEKERA-v.-JINADASA.pdf
GUNASEKERA
V.
JINADASA
SUPREME COURT.
FERNANDO, J.
AMERASINGHE, J.
DHEERARATNE, J.
WADUGODAPITIYA J.
WIJETUNGA, J.
S.C. 25/95.
A. 490/84.
C. MATARA 5579/L.
11 MARCH, 1996.
Rent Act 7 of 1972- Attornment – Deposit of Rent in favour of original land-lord-Authorised Person? – Ejectment – Tenancy Action or Vindicatory Action.
The premises were let in 1960 by the Plaintiff Respondent Appellants' fatherto the father of the Defendant Appellant Respondent. Later in 1970, thePlaintiff's father gifted the premises to him, but they neither informed theDefendant's father nor called him to attorn, the latter died in 1973, theDefendant then attorned to the Plaintiff's father, the Defendant continued topay rent to the Plaintiff's father; when the Plaintiff's father refused to acceptrent from 1980, the Defendant deposited the rent with the authorised per-son, to the credit of the Plaintiff's father. The father and son by their letter of23.10.81, informed the Defendant of the Transfer and called upon him to payrent to the Plaintiff with effect from 16.11.81. The Defendant did not reply butcontinued to occupy the premises, he deposited the rent in the father's name- and continued to do so even after his answer was filed.
The Plaintiff instituted vindicatory action, the Trial Judge held that both thePlaintiff and his father had called upon the Defendant to attorn, to the plain-tiff and that the Defendant having failed to attorn to the Plaintiff was a tres-passer, and gave judgment for the Plaintiff.
On appeal the Court of Appeal reversed the judgment, holding that theDefendant had become aware of the Plaintiff's title in 1973, and that thefather continued to collect rent as the Plaintiffs agent, and that the Defendanthad not deliberately refused to accept him as landlord and had not refusedto pay him rent; and that therefore the Defendant had not been transformedfrom a tenant into a trespasser; on Appeal.
Held:Per Fernando, J.“I do not agree that simply because the Rent Act now gives tenants moreextensive privileges, the common law should now be interpreted differently,either to assist the transferee or the occupier, the question before us mustbe approached without any predisposition towards an interpretation whichwould favour either Plaintiffs or owners, on the one hand or Defendants ortenants on the other.
While it is legitimate initially to infer attornment from continued occupa-tion, thus establishing privity of contract between the parties, another prin-ciple of law of contract comes into play in such circumstances to which thepresumption of attornment must sometimes yield. When the occupier per-sists in conduct which is fundamentally inconsistent with a contract of ten-ancy, and amounts to a repudiation of that presumed contract the trans-feree has the option either to treat the tenancy as subsisting and to sue forarrears of rent and ejectment or to accept the occupiers repudiation of thetenancy and to proceed against him as a trespasser.
Per Fernando, J."The court must not apply the presumption of attornment as a trap for thetransferee, allowing the occupier who fails to fulfil the obligation of a tenant,if used on the tenancy, to disclaim tenancy and assert that he can only besued for ejectment and damages in a vindicatory action, but if faced with anaction based on title to claim that notwithstanding his conduct he is a tenantand can only be sued in a tenancy action, since it is the occupiers conductwhich gives rise to such uncertainty, equitable considerations confirm theoption which the law of contract gives to the transferee.
Payment to the authorised person in the name of the person who is notthe landlord does not discharge the tenants obligation to the landlord.
AN APPEAL from the judgment of the Court of Appeal.
Cases referred to:Seelawathie v Ediriweera – 1989-2SLR 170
De Alwis v Perera – 1951-52 NLR 433,445
Silva v Muniamma – 1955, 56 NLR 357,358
De Silva v Abeyratne – 1955, 56 NLR 574
Perera v Costa -1955- 57 NLR 283, 284
Sabapathipillai v Ramupillai -1956, 58 NLR 367,369
David Silva v Madanayake -1967, 69 NLR 396,400
Perera v Padmakanthi -1987 2SLR 1,7
Subramaniam v Pathmanathan 1984 1 SLR 252, 257
Violet Perera vAsilin Nona SC 63/94 SCM 7.7.95. (1996 1 SLR 1)
Mensina vJoslin 1981 1 SRISK LR 76
Fernandes v Perera 1974, 77 NLR 220
Fernando v Wijesekare 1969, 73 NLR 110
Naidu v Mudalige 1973, 76 NLR 385
R.K.W. Goonasekera with Ms Shiranthi Jayatilleke for Plaintiff-Respondent-Appellant.
Rohan Sahabandu with Athula Perera tor Defendant-Appellant-Respondent.
Cur.adv.vult.
September 13, 1996.
FERNANDO, J.
The Plaintiff-Respondent-Appellant ("the Plaintiff") was grantedspecial leave to appeal to this Court on the question whether tenantwho is notified by his landlord and the landlord's successor in titlethat the rented premises had been transferred and that the rent shouldbe paid to the transferee, but who ignores that request and continuesto deposit rent to the credit of the landlord (with the "authorisedperson") is in law the tenant of the transferee, and is liable to beejected only upon a properly constituted tenancy action.
When this appeal first came up for hearing, Mr. Goonasekera forthe Plaintiff submitted that it was necessary to reconsider the seriesof decisions (referred to in Seelawathie v Ediriweera, (1> )in which ithad been held that continuance in occupation by the tenant, with noticeof the transferee's election to recognize him as the tenant, consti-tutes an exercise of the tenant's option to acknowledge the transfereeas landlord; and also that there now arose for decision the questionleft open in Seelawathie v Ediriweera (supra) whether such atransferee was entitled, either in addition or in the alternative, to claimrelief based on title.
This appeal was thereupon referred to this bench of five Judgesin terms of Article 132 (3) of the Constitution, as an important question
of law was involved- whether in those circumstances a transferee isentitled to institute a vindicatory action, instead of a tenancy action.
The facts are not in dispute. The premises were let in 1960 by thePlaintiff's father to the father of the Defendant Appellant-Respondent ("the Defendant") ; in 1970 the Plaintiff's father giftedthe premises to him, but they neither informed the Defendant's fathernor called upon him to attorn; the latter died in 1973, and^theDefendant then attorned to the Plaintiff's father; the Defendant^continued to pay rent to the Plaintiff's father ; attempts were thenmade to get the Defendant to leave the premises, and the Plaintiff'sfather refused to accept the rent, whereupon, from 1980, theDefendant deposited the rent with the "authorised person" to the creditof the Plaintiff's father. Thereafter, by their letter dated 23.10.81,father and son informed the Defendant of the transfer and called uponhim to pay rent to the Plaintiff with effect from 16.11.81. The Defendantdid not reply, but continued to occupy the premises. At that time hehad paid the rent only up to April 1981. Thereafter too he depositedthe rent (of Rs. 30/- per month) in the father's name: on 12.1.82, therent for May, June, and July 1981, and on 3.5.82 the rent for the nextten months, August 1981 to May 1982. Thus, despite remaining inoccupation for six months after being asked to attorn, he not onlyfailed to pay rent to the Plaintiff, but deposited the rent for December1981 to May 1982 – which was clearly due to the Plaintiff, if he wasaccepted as the landlord – in favour of the original landlord. Thishe continued to do after this action was instituted, and even after hisanswer was filed in October 1982. The Plaintiff made no effort torecover these sums from the "authorised" person".
On 11.5.82 the Plaintiff instituted a vindicatory action for theejectment of the Defendant, averring that the Defendant had failed toaccept him as landlord and to pay him rent; and that the Defendantwas in unlawful possession from 16.11.81. In his answer filed inOctober 1982 the Defendant averred that he had not possessed thepremises otherwise than as tenant, and that he had never denied thePlaintiff's title.
The principle issue at the trial was whether the Defendant was inunlawful possession of the premises from about 16.11.81 by reason
of his refusal to accept the Plaintiff's title. The trial Judge held thatboth the Plaintiff and his father had called upon the Defendant toattorn to the Plaintiff; that there was no uncertainty as to the reallandlord; and that the defendant having failed to attorn to the Plaintiff,was a trespasser. He gave judgement for the Plaintiff.
On appeal, the Court of Appeal reversed that judgment, holdingthat the Defendant had become aware of the Plaintiff's title in 1973;that thereafter the father continued to collect the rent, acting as thePlaintiff's agent; that the defendant had not challenged the title of thePlaintiff, had not deliberately refused to accept him as landlord, andhad not refused to pay him rent (which he had continued to depositwith the "authorised person"); and that therefore the Defendant hadnot been transformed from a tenant into a trespasser.
On appeal to this Court, Mr. Goonasekera contended that upon atenant's failure expressly to attorn, a vindicatory action was the properremedy, and not an action for ejectment based on the tenancy andarrears of rent. He questioned the series of decisions which have,expressly or impliedly, upheld the presumption of attornment arisingfrom continued occupation : that "a tenant who remains in occupation,with notice of the (transferee's) election to recognise him as a tenant,may legitimately be regarded as having attorned to the (transferee)so as to establish privity of contract between them" de Alwis v Perera,{2)Silva v MuniammaP de Silva v Abeyratne,{4) Perera v de Costa,(5)Sabapathipillai v Ramupillai,<6) David Silva v Madanayake,<*> Pererav Padmakanthi,(8) Subramaniam v Pathmanathan,w Seeiawathie vEdiriweera (supra) and Violet Perera vAsilin Nona.m It was his sub-mission that in those cases the transferee had sued on the basis oftenancy, whereupon the Defendant had denied attornment, and theCourts had then drawn the presumption of attornment in favour of thePlaintiff; now, however, the Rent Act gives tenants extensive privi-leges in regard to paying up arrears of rent so that it was more ad-vantageous to a transferee to bring a vindicatory action; and in thosecircumstances, he urged, the Courts should not presume attornmentfrom continued occupation.
However, Mr. Sahabandu for the Defendant strongly relied onthose decisions as establishing that the Defendant did become thetenant of the Plaintiff. He argued that payment of rent to the Plaintiff'sfather did not militate against that presumption or affect theDefendant's status as tenant. Firstly, he claimed that the Defendant'sfather became the Plaintiff's tenant in 1970 when the premises weretransferred to the Plaintiff; that the payments made after 23.10.81were on the same basis. Secondly, he submitted that, in any event,payment to the "authorised person" discharged the tenant's obligationto the landlord. Thirdly, he contended that continued occupation after23.10.81 constituted attornment, and that even if the Defendant ha&thereafter failed to pay rent to the Plaintiff, yet he was still a tenant,albeit a tenant in arrears of rent, who could only be ejected in a tenancyaction. Finally, he urged that rent legislation over a long period oftime manifested the special care and concern which the Legislaturehad for tenants, and that the Courts should not prefer an interpretationwhich would permit a vindicatory action, which would deprive tenantsof their benefits under the Rent Act – such as the privilege of payingup arrears of rent even after action was filed.
Mr. Sahabandu's submission that the Defendant's father becamethe Plaintiff's tenant when the premises were transferred to the Plaintiffin 1970 is unacceptable. It is settled law that tenancy is a contractualrelation, which may subsist even where the landlord is not the ownerof the rented premises. Hence there is no doubt that the Plintiff'sfather continued to be the landlord even after the 1970 transfer, andthat the payments made to him (first by the Defendant's father, andafter 1973 bythe Defendant) were in the same capacity, and not asthe agent of the Plaintiff qua landlord. The Plaintiff could not havestepped into his father's shoes unless and until there was anattornment.
As for the submission that payment to the "authorised person"was sufficient, Violet Perera v Asilin Nona (supra) is authority thatpayment to the "authorised person" in the name of a person who isnot the landlord does not discharge the tenant's obligation to thelandlord.
Turning to the question of attornment, while Mr. Goonasekeraurged that the presumption had been drawn by the Courts to assist aPlaintiff to rebut the Defendant's denial of a tenancy, Mr. Sahabanduasked the Court to interpret the law so as to assist a Defendant whoasserts a tenancy. The decisions which Mr. Goonasekera questionedexplained and applied the common law; they did not seek to "assist"a transfer faced with a tenant who denied attornment, and I do notagree that simply because the Rent Act now gives tenants moreextensive privileges, the common law should now be interpreteddifferently – either to assist the transferee or the occupier. The questionbefore us must be approached without any predisposition towards aninterpretation which would favour either Plaintiffs or owners, on theone hand, or Defendants or tenants, on the other.
Mr. Goonasekera has not suggested any other reason why thosedecisions should be varied or overruled, and I am of the view thatthey are correct. Upon a transfer of the rented premises, one optionwhich the transferee has is to take the premises with the tenant; thereupon the tenant has two alternative courses of action – either to attornto the transferee (and to continue in occupation of the premises underthe transferee, but in terms of the original tenancy) or to refuse toattorn (and to leave the premises and to pursue his contractual rem-edy against the original landlord). The only way in which the tenantcould validly exercise the second option is by quitting the premises"If he refuses to continue as tenant, his first duty is to quit the premises.If he chooses to stay in occupation, he remains there as tenant" deSilva vAbeyratne, (supra). If he does not do that, and instead contin-ues in occupation, it is a legitimate inference that he is exercising hisfirst option to remain as tenant. This is the position even if he states,unequivocally, that he refuses to accept the transferee as his landlord(as in David Silva vMadnayake, (supra)) and Mensina vJoslin,w orrequests some clarification (as in Fernandes v Perera (12)Subramaniam v Pathmanathan, (supra)) and Seelawathie vEdiriweera. (supra)).
But that presumption may be displaced by the terms of anagreement between the transferee and the tenant as in Fernando vWijesekera,{'3) and Naidu v MudaiigePA) under which the latter ispermitted to continue in occupation otherwise than as a tenant. Thepresumption of attornment is therefore not irrebuttable.
Thus if the only question for decision had been "was theDefendant's occupation on or about 16.11.81 unlawful?", it would havebeen legitimate to infer that his occupation was as tenant, and was
therefore not unlawful. But that does not dispose of the matter,because the issue before us is whether the Defendant's occupationwas unlawful In May 1982. Is the presumption compelling andirrebuttable ? If the occupier by his words denied the tenancy, and byhis acts repudiated it accepting another as the owner and landlord,or by dealing with the premises as if he were himself the owner – is heentitled to continue to be regarded as a tenant? Or, rather, is thetransferee bound to treat him as a tenant ?
'i
It seems to me that while it is legitimate initially to infer attornmentfrom continued occupation, thus establishing privity of contractbetween the parties, another principle of the law of contract comesinto play in such circumstances to which the presumption of attornmentmust sometimes yield. When the occupier persists in conduct whichis fundamentally inconsistent with a contract of tenancy, and amountsto a repudiation of that presumed contract, the transferee has theoption either to treat the tenancy as subsisting, and to sue for arrearsof rent and ejectment (as in David Silva v Madanayake (supra)) or to"accept” the occupier's repudiaton of the tenancy, and to proceedagainst him as a trespasser.
When the Defendant, having failed expressly to accept theplaintiff as landlord, thereafter failed to pay him the rent for severalmonths after 16.11.81, and instead deposited that rent to the creditof the former landlord, he repudiated the fundamental obligation ofa tenancy – he denied the Plaintiff's status as landlord, and did notpay the rent due to him – a paltry sum of Rs. 30/- per month. While itwould still have been legitimate to regard him as a tenant, if the Plaintiffwished to do so notwithstanding his repudiation of the presumedtenancy, yet if the Plaintiff too no longer desired continuation of anysuch tenancy, the principle laid down by Gratiaen, J., in de Alwis vPerera (supra) does not suggest that the Courts should neverthelessimpose on the parties a contractual relationship which they haddisclaimed or denied, or are estopped from asserting.
Hence as at May 1982 when the plaint was filed, it was notobligatory to infer a tenancy. Any lingering uncertainty in that respectis removed by the Defendant's conduct in depositing rent to the creditof the former landlord even after he filed his answer in which heasserted that he did not dispute the Plaintiff's title.
This interpretation commends itself to me as being consistent alsowithequity and fairness. The Court must not apply the presumptionof attornment as a trap for the transferee: allowing the occupier whofails [o fulfil the obligations of a tenant, if sued on the tenancy, todisclaim tenancy and assert that he can only be sued for ejectmentand damages in a vindicatory action; but if faced with an actionbased on title, to claim that notwithstanding his conduct he is a ten-ant arid can only be sued in a tenancy action. Since it is the occupier'sconduct which gives rise to such uncertainty, equitable considera-tions confirm the option which the law of contract gives to the trans-feree.
Thi position might have been Different if the defendant had dulydischarged his tenancy obligations for a period – as for instance bypaying rent to the Plaintiff – and had defaulted only thereafter. But weare not called upon to decide that point.
I hold that although the Plaintiff had failed to establish his pleathat the defendant was in unlawful possession from 16.11.81, yet theevidence showed that the Defendant was in unlawful possession atthe time the action was instituted. That was sufficient to entitle thePlaintiff to succeed in the vindicatory action brought by him upon theissues Earned at the trial.
In Seelawathie vEdiriweera (supra) I refrained from commentingon thebonclusion in Fernandes vPerera (supra) and Mensina vJoslin(suprei) that a vindicatory action did not lie. The former is distinguish-able. There the tenant became aware of the transfer, and wrote tothe transferee in March, and again in April 1962, inquiring whether hewas tb send the rent to him; the transferee's Proctor told him, in May196^ to remit the rent to the transferee, and wrote to him again toattorh, and pay rent, to the transferee. In December 1962, the tenant'sProctor wrote to the transferee's Proctor saying that he had been thetenant of a third party for 18 years and that he could not attorn unlessthe transferee obtained that third party's consent to the payment ofrent to the transferee. The Court took the view that the tenant neversought to terminate the tenancy, and was always willing to pay therent, but was under a genuine difficulty as to the person entitled toreceive the rent; and held that he could not be ejected in a vindicatoryaction, but only in a tenancy action. The judgement does not sfiowthat the tenant in that case either paid rent to the third partyJitterMarch 1962, or asserted that the third party was the landlord. Therewas thus no repudiation of the tenancy under the transferee. Mensinav Joslin (supra) decided that the transferee could only file a terancyaction, even though the Defendant had disputed her title. With respect,that decision failed to recognise that the presumption is one which"may" be drawn, and is neither compelling nor irrebuttable.
I allow the appeal, set aside the judgment and decree of the Courtof Appeal, and affirm the decree of the District Court for the Jasonsset out. The Plaintiff will be entitled to costs in this Court ant) in theCourt of Appeal in a sum of Rs. 7,500/-.
AMERASINGHE, J. -1 agree.DHEERARATNE, J. – I agree.WADUGODAPITIYA, J. – I agree.WIJETUNGA, J. -1 agree.
Appeal allowed.