Shaw Wallace v. Palmerston Tea Co. and Others (Samarakoon, C.J.)433
COURT OF APPEAL
ABDUL CADER, J., AND H A G. DE SILVA, J.
C.A.(S.C-) 529/73. (F)
DC. KANDY 358/RE.
MARCH 15, 16, AND 17, 1982.
Landlord and tenant – Rent and ejectment – Part of excepted premises let andassessed later – Is part let exeepted premises? – Applicability of Rent Act.
The plaintiff filed action for ejectment of the tenant on the ground that thepremises let were excepted premises. The premises let were a part of a largerpremises. The larger premises were assessed'on 1.1.68 while the part that waslet was assessed for the first time in 1970 as a separate premises. The defendantcontended that since the premises had been assessed separately in 1970 for thefirst time and since the annual-value assessed was less than the relevant ;'r y .;the Rent Act arphed.
Sri Lanka Law Reports
(1982) 2 S L R
That in this case the premisesJet to the.defendant had been separately assessedfor the first time in 1970 the assessment brings the premises within the ambitof the Rent Act.
Cases referred to:
Sally Mohamed v. Syed Mohamed (1962) 64 N.L.R. 486
Premadasa v. Atapattu (1968) 71 N.L.R. 62I •
Plate v. Ceylon Theatres Ltd. (1974) 75 N.L.R. 128.
APPEAL from judgment of the District Court of Kandy.
1 ! ** ’
C. Ranganathan, Q.C. for the appellant.
H. W. Jayewardene. Q.C., for the respondent.
Cur.adv. l ull.
May 27. 1982
ABDUL CADER, J
The plaintiff filed action to eject the defendant on the ground thatthe premises that the defendant occupied as his tenant were exceptedpremises. The defendant contended that though the premises wereexcepted premises in 1968, the premises in question being a part ofa larger premises had been assessed as a separate unit fqr the firsttime in 1970, and this action having been filed after such separateassessment, and the latter assessment being less than the assessmentrequired to make this, new unit “excepted premises’’, the plaintiffcannot maintain the action on the’basis Of excepted premises. It wasconceded that the premises let to the defendant were part of a largerpremises which were excepted premises and the premises let to thedefendant was given a separate assessment in 1970 which was lessthan the amount required to make the premises excepted premises.The learned District Judge held in favour of the defendant.
However, he gave Judgment for the plaintiff for the reason thatthe plaintiff had appealed against the separate assessment in 1970and, therefore that assessment which brought this premises withinrent control was sub judice and, therefore, it is the 1968 assessmentthat applies under which the premises were admittedly exceptedpremises (Issue 9).
CAHemachondra v. Hinni Appuhamy (Abdul Coder, J.)435
Before us, Mr. Renganathan for the defendant-appellant submittedthat the learned District Judge had misdirected himself as the rightsof parties are to be decided as on date of action and the plaintiffhad, in fact, filed that action after he filed this action aniP in' s&hyevent even that action has been since decided against the plaintiffand, therefore, issue 9 should be decided in favour of the defendant,and the plaintiffs action dismissed. If that action was reckoned forthe decision of this case, equally the dismissal of that action, too,should be reckoned at this stage' to answer issue 9 in favour of thedefendant. But I am of the view that action should not have beentaken into consideration altogether as it was the assessment as onthe date of action that was relevant. Therefore, if the plaintiff wishedto avail himself of the benefit of the appeal he should have firstobtained a revision of the assessment before he instituted this action.In fact. Mr. Jayewardene did not make any serious attempt to denythe validity of the defendant’s submissions on this point.
Mr. Jayewardene, however, contended that the plaintiff is entitledto succeed for a different reason. He referred us to amendment toRegulation 2. in the schedule to the Rent Act (Chapter 274) byGazette Notification of 9.1.69. He submitted that the second limb
“assessment for the first time’’ would riot refer to any
premises which had been already assessed on or before 1.1.68 (asfor instance a new building) and this entire building having beenassessed in 1968, the subsequent' assessment in 1970 of that part ofthe premises let to the defendant wilf have no relevance as it beinga part, has been assessed' as a part of the whole premises.
The regulations as amended reads as follows
2. ‘‘Any premisesshall be excepted premises
for the purposes of the Act, if being premises of thedescription mentioned in column 2, the annual valuethereof aS specified in the assessment made for thepurposes of any rates levied by any local authorityunder any written law and in force on the first day ofJanuary, 1968, or where the assessment of the annualvalue thereof is made for the first time after the firstday of January, 1968, the annual value as specifed inthe later assessment, exceeds the amount specified inthe corresponding entry in column 3."
Sri Lanka Law Reports
(1W2) 2 S L R
A careful study-of these regulations indicates that the submissionthat the latter part of the amended regulation applies to new buildingscannot be sustained. It is my view that regulation 2 refers to thefirst assessment of the premises let as a separate entity for the firsttime though these premises may have been assessed earlier as partof a larger premises earlier.
In the case of Sally Mohamed vs Syed Mohamed (1), H.N.G.Fernando, J. held that until the Rent Board decided otherwise,despite a later separate assessment, the 1941 joint assessment of thetwo premises let would be the yardstick for deciding the standardrent. This decision was not only obiter, but was also dissented fromin Premadasa vs. Attapattu (2) where Sirimane, J. said that the factscan be distinguished “though with respect, I would have been inclinedto take a different view.” He made the distinction that the premisesin question in that case were, in fact, in existence as separate entitiesbearing separate assessment numbers and had been assessed (thoughin conjunction with other premises) in 1941. De Kretser, J. was moreforthright. He quoted section 7 of the Rent Act and pointed outthat there is only one assessed premises despite several parts of itbeing let, and raised the question “Why is there a difference whenthe several parts are assessed”? and gave the answer that “theybecame separate premises.” He went on to say: “The resultingposition is then that a number of new premises take the place ofthe old and the basis of the authourised rent for each of them isthe amount of annual value fixed when they are assessed as separatepremises for the first time. ” He further stated on page 66 as follows:-
“I entirely .agree that if two parts have been assessed jointly- whether before or after 1941, that the authorised rent wouldhave to be calculated in terms of section 5 (1) (a) by referenceto that assessment. But I cannot agree that if thereafter separateassessments are made for each part that it is the Board thatwould have to fix a standard rent for each or both parts. Itwill be seen that the proviso makes provision only for applicationby a tenant for the fixing of a fair rent. That pre supposesthat otherwise the tenant will have, to pay *a rent which is inaccordance with the new assessment. If he thinks that rentunfair and unreasonable, he can apply to the Board and ifthe Board agrees with him, the Board will fix a rent which itthinks is fair and reasonable in lieu of the rent calculated onthe basis cf ’ .cot.' s„ade for me first irr '.
CAHemachandru v. Hinni Appuhamy (Abdul Coder, J.)437
will be noted no provision is made for a reference to theBoard by a landlord – presumably because he has been heardby the assessors and is thereafter bound by the assessmentmade for the premises. It is my view that when a premises,that is in terms of the definition of premises, a building orpart of building, has been assessed in 1941 that the authorisedrental has to be calculated in terms of that assessment. If itis assessed for the first time after. 1941 then that first assessmentis the one which governs the authorised rent, but that is subjectto the right of a tenant to get a rent which is in the opinionof the Board fair and reasonable fixed in lieu of such authorisedrent.”
In that case, the premises had been assessed as No.53 prior toNovember, 1941. For the first time is 1948 , it was separately assessedas 53. What was let to the defendant was 53. The Court held thatthe separate assessment or 53 in 1948 attracted to it the 1948assessment for the purpose. of determining the standard rent ofpremises 53. The facts of that case are very, similar to the facts ofthis case. “11A” was not in existence till 1970 though it formed partof the building assessed in 1941 and it was in 1970 that “11 A”became a separate entity and was first assessd as such.
Mr. Jayewardene contended that these decisions, especially Premadasav. Atapattu (2), will have no application for the reason that theLegislature has now fixed 1st January, 1968, as the date for considerationwhether the premises are excepted premises or not. He submittedthat the two earlier decisions reported in 59 N.L.R. 525 and 69N.L.R. 445, had decided that the words “for the time being” inRegulation 2 referred to the date of action, and since these .wordswere also open to some other constructions, the Legislature set thematter at rest by fixing a definite date 1.1.68. I .personally cannotsee any difference except that instead of. the assessment being relatedto the date of action prior to the amendment of Rule 2, ' theamendment has now fixed the assessment of 1.1.68 as the relevantassessment for deciding the question whether the premises are exceptedor not. However, since Counsel depended very strongly on theJudgment in Plate vs Ceylon Theatres Ltd. (3) and' the same case inappeal reported in 76 N.L.R. 97, I shall consider these decisions atsome length. The 75 N.L.R. Case was decided on 30th December,1971. This amendment came on 9.1.69. Therefore, 1.1.68 was notthe relevant date for the decision as regards excepted premises.
Sri Lanka Law Reports
Samerawickrame, J. stated as follows:
(1982) 2 S L R.
“Once a premises were' excepted premises on the applicationof that test there is no support to be found in the Act forthe position that a part of those premises could be premisesto which the Act applies unless that part was separatelyassessed.’’
' Mr. Renganathan does not dispute the contention that a part ofthe’premises which is not separately assessed would also be exceptedpremises if the entire premises are excepted premises, but he contendsthat when that part is separately assessed and if it is at less thanthe relevant amount, then that part will fall within the Rent Act.This is exactly what Samerawickrame, J. stated in the passage 1 havequoted above. Samerawickrame, J. went on to say further:
“There is nothing in ..the Act to suggest that the unit of lettingis to be the premises,’’
• That is exactly what Mr. -Renganathan submitted to us. He hassubmitted that it-is not the unit of letting that is relevant, but theunit of assessment, and in this case the premises numbered il/Awas assessed as a separate unit for . the first time in 1970. The lastpart of Rule 2 is to the effect that where the assessment is madefor the first time after the first day of January, 1968, the annualvalue should exceed the amount specified in the corresponding entryin column 2 to make the premises excepted premises. There is, nodoubt, that the assessment of 11/A is well below the assessmentrequired to make it excepted premises. –
Therefore, the Judgment of Samerawickrame, J. in the 75 N.L.R.Case (3) is of no assistanceto Counsel for the respondent. ” ‘
I shall jnow proceed to consider the same, case in appeal- reportedin the 76 N.L.R, Pfate ^td.. y Ceylon Theatres Ltd., 97, anotherjudgment, on which Mr. v .Jayewardene strongly relied. This was onappeal to the Court of Appeal from the.judgment quoted in 75N.L.R. .which I have fjre^dy considered. I dp not find anything inthe1 judgment of the Court,of Appeal to support the.contention ofCounsel. In that case, that part of the premises which had been.,letto the defendant had not been assessed as a separate entity. Counselhad contended, therefore, that the premises referred to. in section2(4) of the Act should be construed., (o mean; the “entity whkjhis thev subject .matter of ffce contract of tenancy and where; ,,th$t
CAHemachandra w. Hinni Appuhamy (Abdul Coder, J.).'.439
. has not been separately assessed by the loqalauthorityfor tlje purpose,of rates it will not fall within the category of “excepted premises”,and will, therefore, be “premises to which the Act applies.”
Counsel further contended that the Courts in Ceylon had consistentlyapplied what he described as “the contract of tenancy test” todetermine whether “a particular premises was subject,to the operationof the Act or exempted therefrom and that in applying the regulationin the Schedule in terms of section 2(5) to determine whether anyentity let is excepted premises the Court should not proceed to applythe test of annual value under column 3 before deciding upon thenature of the premises under column 2, and that this can be doneonly with reference to the entity let. The Court while holding thata tenancy action must necessarily relate to the subject matter of thetenancy and in order to decided whether the entity let is exceptedpremises or not the Court, of course, considers the nature of thepremises let but it does not follow that, the word “premises” in theAct is equivalent to the entity let.
Counsel relied on this finding and urged that, therefore, this Courtwill not consider the entity “let” as a criterion, for deciding whetherthe premises are subject to the operation of the Act or exemptedtherefrom. I find it difficult to agree with this submission.
Siva Supramaniam. J. stated specifically as follows:-
“If it was the intention of the Legislature that where anypremises whether excepted premises or not, are let in partsnot separately assessed, each such part should be deemed tobe premises to which the Act applies, one would have expectedexpress provision to be made to that effect.
“Where the Act refers to “premises to which the. Act applies”and to those which are “excepted premises”, it. does so withreference to the annual value as assessed by the local authorityfor the purpose of levying rates.”
Later on he went on to say:
“Section 5(2) of the Act would therefore have no. applicationto. the entity let to the appellant, as no part of premises No.267remained unassessed. If the portion let to the appellant hadbeen separately assessed by the.Municipality, there would havebeen a proportionate reduction of the annual value of thepremises No. 267. If the appellant company had desired to<:> ;at the portion let to it as separate premises it. was open to
Sri Lanka Law Reports
(1982) 2 S L R
it to have applied to the Municipality under the provisions ofthe Municipal Councils Ordinance to assess it separately onthe basis of the use to which that part was put.’’
No doubt, this statement was made for the purpose of decidingthe dispute in that case whether the premises was used for residentialor business purposes, but the view expressed is equally apt in respectof the dispute in this case. It is very clear that if there had been aseparate assessment of the premises let to the defendant-appellantin‘that case, , the Court would have held whether that portion let tothe defendant was excepted premises or not by reference to theassessment of that separate portion. But, since there has -been noseparate assessment, the Court held that the entire premises havingbeen assessed as one entity, the portion let to the defendant beinga part of the whole wbs also excepted premises. But in this case thepremises let to the defendant have been-separately assessed and thatassessment brings the premises within the ambit of the Rent Act. I,therefore, come to the conclusion that Counsel’s contention is untenableand the defendant is entitled to judgment in his favour.
The appeal is, therefore, allowed. The plaintiffs action is dismissedwith costs in both Courts.
A.G. DE SILVA, J. – 1 agree.
HAMACHANDRA v. HINNI APPUHAMY