JAYASENA PERERA v. RATNADASA

037-SLLR-SLLR-1981-1-JAYASENA-PERERA-v.-RATNADASA.pdf


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JAYASENA PERERA
v.RATNADASA
SUPREME COURT
SAMARAKOON, C. J., SHARVANANDA, J„
AND WANASUNDERA, J.
S.C. APPEAL NO. 66/80
A. APPEAL NO. 209/79(F)
C: COLOMBO CASE NO. C/1192/MMARCH 9.1981
Contract — Ownership of lorry — Contract of sale — Agreement to sell — Sale ofGoods Ordinance s. 2(3)18, 19, 50 and 57 — Difference between "sale"and “agreement to sell" — Motor Traffic Act s. 12, 13 and 14.
Property (in the lotry) passes on sale at the time when the parties intend it shall.The intention .of the parties can be ascertained regard being paid to the terms of thecontract, the conduct of the parties and the circumstances of the case. When there wasonly a promise to sell, though possession was given to the prospective buyer on paymentof a part of the agreed price with the reservation that the seller is absolved of all respon-sibility for damage caused by the lorry, the intention is that property in the lorry shouldnot pass until the full purchase price was paid. There was here only an agreement to sellrather than a sale. The delivery of possession is not conclusive.
Where under a contract of sale the property in the goods is transferred from theseller to the buyer, the contract is called.a "sale", but where the transfer of the propertyin the goods is to take place at a future time or subject to some condition thereafter tobe fulfilled, the contract is called an "agreement to sell". An "agreement to sell"becomes a sale when the time lapses, or conditions are fulfilled subject to which theproperty in the goods is to be transferred. An "agreement to sell" is a contract pure andsimple, whereas a "sale" is a contract plus a conveyance.
In a sale the thing which is the subject of the contract becomes the property of thebuyer the moment the contract is concluded and without regard to the fact whether thegoods be delivered to the buyer or remain in the possession of the seller, whereas in theagreement to sell, the property is to pass at a future time or subject to the fulfilment ofsome condition and the goods remain the property of the seller till the contract isexecuted; and he can dispose of them. On a sale, if the seller fails to deliver the goods,the buyer has not only a personal remedy against the seller, but also has the usualproprietary remedies in respect of the goods, such as an action for conversion. Where anagreement to sell is broken by the seller, the buyer has only a personal remedy againstthe seller. By an agreement to sell a mere jus in personam is created, by a sale a jus inrem is transferred.
If there was a sale of the lorry, the statutory provisions of the Motor Traffic Acts. 12,13 and 14 should have been complied with.
Case referred to
(1) NUabdeen v. G. W. Silva (1976) 78 NLR 454
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APPEAL from judgment of the Court of Appeal.
Walter Jayawardena O.C. with Nimal Senanayake, Kith sir! Gunaratne and Miss & Sena-ratne for the defendant-appellant.
R. Manikkavasagar for the plaintiff-respondent.
Cur. adv. vult.
April 8,1981
SHARVANANDA, J.
Claiming to be the owner of motor lorry No. 22 Sri 3593, theplaintiff instituted this action against the defendant for a declara-tion that he is the owner of the motor lorry and for consequentialreliefs.
The plaintiff pleaded that the defendant on 1.4.74 sold anddelivered to him the motor lorry No. 22 Sri 3593 belonging to thedefendant for a sum of Rs. 36,000/- and that he paid a sumof Rs. 16,000/- as part purchase price of the said lorry. He statedthat the defendant represented to him that he had misplaced theregistration book of the lorry and that he would hand over theregistration book to him on or before 21.4.74. He further pleadedthat it was agreed between them that on the defendant handingover the registration book and signing the necessary transferforms, he, the plaintiff, would finance the lorry through a FinanceCompany and pay the balance sum of Rs. 20,000/- to thedefendant. According to the plaintiff, after the purchase he hadhad the lorry repaired and had his name painted on the bodyof the lorry and had used the lorry for his business; though thedefendant had promised to hand over the registration book tohim on 21.4.74, he had never handed over the book to him.On 18.8.75, he had, at the request of the defendant, broughtthe lorry to Colombo to get the registration book and to havethe lorry valued, but when the lorry was so brought, the defendanthad forcibly taken possession of the said lorry from him. Theplaintiff's case is that title to the said lorry had passed to him;the contract of sale of the lorry has been completed and that heis presently the owner of the said lorry even though he had stillnot paid the balance Rs. 20,000/- of the purchase price.
The defendant denied that he had sold the lorry to the plaintiff'on 1.4.74. According to him, on that date the parties had onlyentered into a written agreement to sell the lorry and he hadaccepted the sum of Rs. 16,000/- not as part of the purchaseprice, but on the terms set out in the said agreement and hehanded over possession of the lorry in terms of the agreement tosell. The defendant admitted that he took possession of the lorry
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on 18.8.75 as the plaintiff had violated the terms of the agreementto sell.
After trial, the District Judge held that the plaintiff was theowner of the motor lorry and awarded him damages in a sum ofRs. 1,500/- per month from 18th August 1975 until possession ofthe said lorry was restored to him and that the balance sum ofRs. 20,000/- of the purchase price of the lorry could be deductedfrom the damages payable to the plaintiff. This judgment wasaffirmed in appeal by the Court of Appeal.
The defendant has, with the leave of the Court of Appeal,preferred this appeal to this Court
The plaintiff framed this action on the basis that the defendanthad sold and delivered the lorry No. 22 Sri 3593 to him on 1.4.74and that he had become thereby the owner of the said lorry.
The basic question in the case is: was there a sale of the lorryby the defendant to the plaintiff on 1.4.74, or was there merely anagreement by the defendant to sell and transfer the lorry to theplaintiff on his paying the balance purchase price ?
The determination of the above question depends on the properconstruction of the written agreement entered into between theparties on 1.4.74. The agreement which is in Sinhala is in twoparts, both on the same side of one sheet of paper, each partdefining the obligations of the respective party. To ascertain theintention of the parties, both parts have to be read together, andthe agreement as a whole must be looked at. The first part P1signed by the defendant reads as follows:
(English Translation)
"I D. J. Perera of Talahena, Malabe, hereby solemnly statethat I have received an advance of Rs. 16,000/- on 1.4.74 fromR. A. Ratnadasa of Malwalawatte, Veyangoda, on the promiseof selling him the Lorry (Morris) No. 22 Sri 3593 owned by me.at the price of Rupees Thirty-six Thousand (Rs.36,000/-) andthat the lorry is not assigned or mortgaged to an individual oran institution against a loan and I certify that I am agreeable toreceive the balance Rupees Twenty Thousand (Rs. 20,000/-) dueto me in respect of the lorry before 21.4.74 by financing thelorry."
The second part D2 signed by the plaintiff reads as follows:
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(English Translation)
"I, R. A. Ratnadasa.of Malwalawatte, Veyangoda, certifythat I have taken delivery today, 1.4.74, of Morris lorry No. 22Sri 3593 of D. J. Perera, Talahena, Malabe, on payment ofRupees Sixteen Thousand (Rs. 16,000/-) as an advance and havetaken over all responsibilities for the lorry and I should stateclearly that hereafter Mr. D. J. Perera will not be responsiblefor any damages caused to the lorry or for any damages causedby the lorry and I will take action to raise the balance paymentof Rs. 20.000/- due to Mr. D. J. Perera before 21.4.74 from aFinance Company."
The trial Judge has found that possession of the lorry was givento the plaintiff on 1.4.74 and that he had thereafter had the lorryrepaired and had painted his name on the body of the lorry andhas used the lorry for his business. He also found that the defen-dant had misrepresented to the plaintiff that he had misplaced theregistration book, when, in fact, the registration book was at thattime in the custody of the Magistrate's Court of Maho in M.C.Maho Case No. 28999 and was released to the defendant only on23.10.74 and that the defendant was not in a position to producethe registration book before 21.4.74 as promised by him. He hasalso accepted the evidence that it was not possible to obtainfinance on a motor vehicle without the registration book beinghanded over to the Finance Company. The record in M.C. Maho28999 shows that on 16th March 1974 the lorry No.22 Sri 3593was produced in the Magistrate's Court in connexion with a com-plaint of transporting timber without a permit and was released tothe defendant on 20th March 1974 on his furnishing security in asum of Rs. 5,000/- and undertaking to produce the lorry when req-uired.The significance of this undertaking and of the registrationbook being in the custody of Court till 23.10.74 has been over-looked by the trial Judge. Had the defendant transferred the lorryto the plaintiff on 1.4.74, he would have run the risk of beingunable to keep his undertaking to Court.
The decisive question is: what was the effect of the agreementP1 and D2 ? If one looks at the Sale of Goods Ordinance (Cap. 84),the material section is section 18, which states the fundamental' rule that the property passes at the time when the parties intendedit shall.
Section 18 (1) Where there is a contract for the sale ofspecific or ascertained goods, the propertyin them is transferred to the buyer at such
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time as the parties to the contrapt intendedit to be transferred.
(2) For the purpose of ascertaining the inten-tion of the parties, regard shall be had tothe terms of the contract, the conduct ofthe parties, and the circumstances of thecase.
In section 19 there are certain specific rules which are to applyfor ascertaining the intention of parties. But section 19 does notapply to the facts of this case, because section 19 can only applyaccording to its terms, unless a different intention appears. Thatrefers back to section 18, and, as I construe 'the agreementbetween the parties, a different intention does appear. In myjudgment, the terms of the contract, the conduct of the partiesand the circumstances of the case, all manifest an intention thatthe property in the lorry shall not pass until the purchase iscompleted by payment of the balance purchase price.
It is to be borne in mind that at the time of the transaction,the plaintiff was a stranger to the defendant and the latter had nosecurity for the payment of the balance sum of Rs. 20,000/-if he transferred the lorry to the plaintiff.
By P1 the defendant acknowledges receipt of the advance ofRs. 16,000/- and promises to sell to the plaintiff the lorry atthe price of Rs. 36,000/-. The defendant has not stated thereinthat he has sold the lorry for Rs. 36,000/- to the plaintiff andreceived a part-payment of Rs. 16,000/-. By this assurance set outin D2, the plaintiff absolves the defendant of all responsibility forany damage caused by the lorry of which he had taken deliverythat day. This assurance on the part of the plaintiff is explicableonly on the basis that title to the lorry continued to be in thedefendant and the defendant was concerned with potential liabili-ty that stems from his ownership of the vehicle for any damagecaused by the lorry.
In my view the parties have, in terms, expressed the intentionthat the property in the lorry should not pass until the full pur-chase price was paid. The writing consisting of P1 and D2 recordsan agreement to sell, rather than a sale, it is a matter of significancethat the plaintiff, in his list of documents annexed to his plaint undersection 383 of the Administration of Justice Law, describes theabove document as "agreement to sell lorry bearing registeredNo. 22 Sri 3593" and not as "sale agreement".
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Great reliance was placed by Counsel for the plaintiff -respondent upon the fact that possession of the lorry was givenby the defendant to the plaintiff on 1.4.74. Though delivery ofpossession is a relevant factor in determining the intention ofparties, it is not conclusive. The totality of the circumstances inwhich delivery of the goods was made has to be considered.
According to the Sale of .Goods Ordinance, unless the contextor the subject-matter otherwise requires, "contract of sale"includes agreements to sell as well as "sales" ;"buyer" means aperson who buys or agrees to buy goods; and "seller" means aperson who sells or agrees to sell goods (section 59(1)). Whereunder a contract of sale the property in the goods is transferredfrom the seller to the buyer, the contract is called a "sale"; butwhere the transfer of the property in the goods is to take place ata future time or subject to some condition thereafter to befulfilled, the contract is called an "agreement to sell" (section2(3)). An "agreement to sell" becomes a sale when the time lapses,or conditions are fulfilled subject to which the property in thegoods is to be transferred (section 2(4)). An "agreement to sell" isa contract pure and simple; whereas a "sale" is a contract plus aconveyance. In a sale the thing which is the subject of the contractbecomes the property of the buyer the moment the contract isconcluded and without regard to the fact whether the goods bedelivered to the buyer or remain in the possession of the seller;whereas in the agreementto sell, the property is to pass at a futuretime or subject to the fulfilment of some condition and the goods-remain the property of the seller till the contract is executed andhe can dispose of them. On a sale, if the seller fails to deliver thegoods, the buyer has not only a personal remedy against the seller(sections 50(1) and 51), but also has the usual proprietaryremedies in respect of the goods, such as an action for conversion.Where an agreement to sell is broken by the seller, the buyer hasonly a personal remedy against the seller (section 51). By anagreement to sell,-a mere jus in personam is created; by a sale a jusin rein is transferred.
The Motor Traffic Act (Cap. 203) contains certain provisionsspelling the obligations of parties when change of possessionconsequent on a change of ownership takes place. The relevantprovisions of the Motor Traffic Act are sections 12(3), 13 and 14.
Section 12(3) provides that on a change of possession of a lorryupon a voluntary transfer made by a registered owner, the'registered owner shall within 14 days after such.change of
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possession forward to the Registrar a statement in the prescribedform together with the revenue licence for the motor lorry andshall deliver to. the new owner the certificate of registrationrelating to the lorry or a duplicate thereof.
Section 13 provides that “every application for the registrationof a new owner upon any change of possession of any motor
vehicle shall be made in the prescribed form
and shall be signed by the person claiming to be entitled to beregarded as the owner of the motor vehicle."
Section 14 enacts that “no person shall be registered as anew owner of a motor vehicle unless the application for registra-tion is accompanied by a certificate of registration or a duplicatethereof relating to the motor vehicle".
If, as claimed by the plaintiff, there had been a transfer of thelorry to him on 1.4.74 and he had become the new owner of thelorry from that date, he should have complied with the-statutoryprovisions of the Motor Traffic Act referred to .above. However,the plaintiff never made any application to have himself registeredas new owner, and the defendant as registered owner of the lorrydid not take any steps required by section 12(3). The defendant'sconduct is consistent with the position that he did not transfer thelorry to the plaintiff.
These circumstances militate against the plaintiff's contentionthat he was the owner of the motor vehicle.
It would appear that in April 1975 the defendant had gonealong with the plaintiff to the. Alliance Finance Co. Ltd. to assistthe plaintiff to obtain finance on hire-purchase. The proposal formD2 has been signed by the plaintiff as 'proposer', and thedefendant has signed as 'guarantor'. The defendant has beendescribed therein as "owner of lorry No. 22 Sri 3593". The aboveentry in the document confirms the contention of the defendantthat both parties regarded the defendant as the owner of the saidlorry, even as late as 22nd April 1975 when the plaintiff wasseeking to obtain finance on hire-purchase. The evidence disclosesthat the proposal failed as the plaintiff was unable to find anotherguarantor.
It is to be further noted that the plaintiff at no time sought,on the basis of his alleged ownership of the vehicle, to obtainthe revenue licence or insurance policy in his name. He had notapplied for the revenue licence for the year 1975, nor had he
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sought to take out insurance on the vehicle. Until it was takenpossession of by the defendant on 18.8.75, the plaintiff had,in breach of the law, been running the vehicle without a revenuelicence for the year 1975 and without a policy of insurance inrelation to the use of the said vehicle. These omissions on the partof the plaintiff cannot be reconciled with his claim of ownershipof the lorry in question.
Reliance was placed by the plaintiff on the case of Nilabdeen v.G. W. Silvawhere on similar facts the claimant succeeded. Themain question involved in that case was, who was "the personentitled to possession" for the purpose of an order under section102 of the Administration of Justice Law. The Court quiteproperly held that the person who had come into possession ofthe vehicle on a document similar to P1 was lawfully in possessionof the vehicle. The observations in the judgment on the aspect ofpassing of property in terms of section 18 of the Sale of GoodsOrdinance a re obiter dicta, the correctness of which is open toquestion.
For the reasons set out above, I am of the view that the plain-tiff had not established that he had become the owner of thevehicle in question by the transaction of 1.4.74 between him andthe defendant The basis of the plaintiff's claim of ownership ofthe vehicle fails and his actidn has to be dismissed.
I allow the appeal and set aside the judgment of the DistrictCourt and of the Court of Appeal and dismiss the plaintiff's actionwith costs. The defendant-appellant will be entitled to costs in theDistrict Court and to costs of appeal to the Court of Appeal andto this Court.
SAMARAKOON, C.J.
I agree
WANASUNDERA, J.
I agree
Appeal allowed