JAYASENA v. KARLINAHAMY

033-NLR-NLR-V-41-JAYASENA-v.-KARLINAHAMY.pdf


Jayasena v. Karlinahamy.
153
1939
Present: Keuneman and de Kretser JJ.
JAYASENA u. KARLINAHAMY.
166—D. C. Galle, 29,477.
Partition action—Decree for sale—Purchase of lot by improver—Price belowvalue of improvements—Right of improver to compensation—Claims ofother improvers to compensation.
Where, in a partition action, the land is sold in lots under a decree forsale and a lot is purchased by an improver,—who claimed improvementsupon it—at a price below the assessed value of his improvements,—
Held, that the improver is not entitled to the full value of hisimprovements but is bound to bring into Court the proportionate shareof the compensation due to other improvers of the lot in question.
The Court should provide in the conditions of sale that, in the eventof the sale realizing less than the appraised value, the purchaser shallpay the improvers in full or that an improver shall not buy at less thanthe appraised value of the improvements.
154
Jayasena v. Karlinahamy.
T
HIS was a partition action in which a decree for sale was entered andcertain parties were declared entitled to compensation for buildings
and plantations. The land was sold in blocks and at the sale the sixthdefendant purchased lot C for Rs. 3,555. He was entitled to compensationfor a building in the lot, which was valued at Rs. 6,000. The scheme ofdistribution provided that the sum available should be distributedrateably among all the parties including those entitled to compensationThe sixth defendant claimed that he was entitled to be paid the full valueof his building. The learned District Judge held that there should be aproportionate reduction of all claims.
H. V. Perera, K.C. (with him S. W. Jayasuriya), for the sixth defendant,appellant.—There should be one guiding principle applicable to the casewhere the land is sold at a figure in excess of the appraised value and to thecase where it fetches a figure below it. Once a valuation is made undersection 8 of the Partition Ordinance and the Court approves of it, itbecomes an order of Court and must be given effect to. The matterreally is one of res judicata as between the improver and the soil owner.See Jayawardene on Partition, p. 174.
A case of hardship cannot alter the principle. That a soil owner shouldget nothing may appear anomalous to a layman but not to a lawyer.Injustice should be distinguished from hardship.
An improvement is appraised to pay off an improver, but the soil isappraised for a totally different purpose.
In the converse case, where there is an excess, it has been held that theimprover is entitled to the value of the improvement; see Kanapathipillaiv. Nagalingam', the improvement being regarded as a fixed quantitywhich cannot be enhanced or decreased, de Silva v. Odiris
The District Judge agrees that one legal principle should governboth the cases, but assumes the anomaly in the case of a deficiency to beabsurd. The principle laid down in the later decisions is correct andshould be followed, or the whole matter should be referred to a fullerCourt.
A. Rajapakse (with him J. R. Jayawardene), for the seventy-seconddefendant, respondent.—In this case there has been no order of Courtaccepting the appraisement. The anomaly has arisen because theimprovers have purchased the lots, on which their own improvementsstand, for very much lower figures than the appraisement.
Section 8 of the Partition Ordinance does not require that the “ justvaluation ” should be approved by the Court. An anomaly or hardshipwill not arise if the Court abstains from making the valuation of theCommissioner an order of Court before the sale. The “ just valuation ”is merely a tentative figure which in the opinion of the Commissioner willbe the price the property will fetch. It is to be the upset price when theproperty is sold among the co-owners only. After the proceeds of saleare paid in, the Court should hold an inquiry into the proportion of the.respective shares of the parties, utilizing the “ just valuation ” as perhapsa guide, and then make an order of payment in such proportions.
1 22 .v. T.. It. 22-3.- Ot A’. L. R. 170.
DE KRETSER J,—Jayasena v. Karlindhamy.
155
' In the case of a partition under sections 5 and 6, the assessment of animprovement may be to pay off an improver, but in the case of a saleunder section 8, it is to ascertain the proportion payable.
An improvement connotes a rendering better of something. Theimprovement should not get a preference or swallow up the thingimproved. In fact the improvement must accede to the soil. Animprover as distinct from a soil owner are both treated as co-owners underthe Ordinance. Neither should have an advantage over the other.See sections 2, 4, and 14.
Whether the amount exceeds or is less than the just valuation, it shouldbe proportionately distributed (de Silva v. Gunawardenede Silva v.Lokuhamy’; and Disemas v. Dandu *). These cases were not cited inKanapathipillai v. Nagalingam (supra), and the decision in de Silva v.Odiris (supra) is applicable to the very special circumstances there.
Cur. adv. vult.
July 27, 1939. de Kretser J.—
In this case a decree for sale was entered and the land was to be sold“ as per Block plan No. 1236, Scheme B, made by Mr. H. B. Gunawardene,Licensed Surveyor ”. The scheme had been accepted by all the parties.
The decree declared certain of the parties to be entitled to compensationfor buildings and plantations.
The Commissioner who was appointed tendered a valuation reportgiving the value of the soil, plantations, and buildings on each block.This report is dated February 15, 1937, and was tendered with a motiondated February 16, asking for extra remuneration on account of extratrouble incurred. The Court made order regarding that request, butneither approved nor confirmed the appraisement.
The land was thereafter sold in blocks. At that sale the sixth defendant,who is the appellant, purchased lot C for Rs. 3,555. He was entitled tocompensation for a building, and in the valuation report this lot wasappraised as follows : —
Soil
Building of sixth defendantBuilding of Marthelis27 coconut trees4 jak trees6 coconut trees4 breadfruit trees
Rs. c.
710 406,000 020 0
2020 ' planters’ shares to
42 50 | Ujeris’ heirs10 0 Maishamy8 0 Ujeris’ heirs
6,992 90
Other lots were sold in the same way, and in particular lot M which waspurchased for Rs. 2,630 by the first defendant who owned a building on itvalued at Rs. 4,750, the lot being valued at Rs. 5,246.50.
After the sale the Proctor for plaintiff prepared a scheme of distribution.He allotted to the Proctor in the case Rs. 3,520.45, including Rs. 200 forhimself for preparing the scheme of distribution, and made available fordistribution among the parties Rs. 7,052.10. He seems to have
1 1 Matara Canes 43.* 1 Matara Cases 46.
J Sal. Rep. 87.
156
DE KRETSER J.—Jayasena v. Karlinahamy.
distributed this sum rateably among all the parties to the case, includingthose entitled to compensation. The appellant then raised thecontention that he was entitled to be paid compensation in full for hisbuilding and that there should be no proportionate reduction. The firstdefendant apparently was willing to reduce his claim proportionately.
The learned District Judge, after reciting the decisions of this Court onthe subject, thought that there should be a proportionate reduction of allclaims, as was decided in two earlier judgments of this Court reported atpages 43 and 46 of 1 Matara Cases.
For the respondent Mr. Rajapakse attempted to support this view onthe ground that the decree having fixed the rights of the parties and havingin effect fixed the proportion of each party, all parties should divide onthat basis, and the law as to the relations between owner and improvercould no longer operate. In fact, he suggested that it could not beapplied in cases under the Partition Ordinance. He emphasized thewords in section 8 which say “ and the purchaser shall pay into Courtthe amount of the purchase money …. to be paid over to thepersons entitled thereto, under the order of the Court, in the proportionof their respective shares ”.
Mr. Perera for the appellant urged that once the valuation was acceptedby Court, the Court fixed the value of the compensation and therefore allparties v/ere bound by the sum which the Court accepted. He also urgedthat these matters must be decided on some legal principle and theprinciple was quite clearly that laid down in the later cases which theDistrict Judge had not followed.
The earlier decisions went on the footing that the appraised value wasnot a true test, and that a proportionate increase or reduction was a fairmethod of dealing with the problem and would work satisfactorily.Whether the appraised value is a true test or not is a question of fact,which it may not be open to the parties to contest after they have acceptedit; and whether a particular method is the fairest or not is best decidedby acting on legal principles which represent the experience of many yearsand of many types of cases.
In the latest decision of de Silva v. Odiris these earlier decisions wereconsidered, as they were by Mr. A. St. V. Jayewardene (afterwardsMr. Justice Jayewardene) in his work on the Law of Partition, and adefinite legal principle was acted upon. I find myself in agreement withthe later decisions.
The law governing the relations between an improver and an owner aretoo well known to require stating again. This Court has held that aco-owner who builds on the common property has no greater rights thanan ordinary improver, vide Silva v. BabunhamyPerera v. PelmadullaTea and Rubber Co. Sanchi Appu v. Marthelis Appuhamy v. Sanchi-hamy s.
The circumstances of a particular case cannot alter that law. Hardshipmay result in a number of ways, e.g., an improver getting a decree forcompensation may issue writ and not only buy the land improved but can
1 34 X. L. R. ITS.■■ 1G N. L. R. 306.
* 16 N. L. R. 43.‘ 17 N. L. R- 297.
5 21 iV. L. R. 33.
DE KRETSER J.—Jayasena v. Karlinahamy.
157
issue writ for any balance remaining unpaid, in such a case he would getthe whole land and the owner would lose his land. Such a situation mayarise even under a decree for the partition of a land. That it happens ina case where the decree is for the sale of the land should make no difference.
I am not satisfied that the valuation report can be said to have beenaccepted by the Court, and so Mr. Perera’s argument based on res judicatafails; but the valuation has been accepted by all parties and can be usedfor the purposes of this case.
Mr. Rajapakse’s argument based on section 8 loses sight of the verystrong words in section 9 which makes the decree “ good and sufficientevidence of the titles of the parties to such shares and interests as havebeen thereby awarded in severalty The decree refers to both “ shares ”and “ interests ” and the former word may be applied to the rights of theowners of the land and the latter to the rights of those having claims tocompensation and the like. When therefore section 8 uses the wordsreferred to, there is perhaps a carelessness in expression, the idea being todefine the duty of the purchaser and not to define the rights of the partiesinter se since those have already been determined.
Mr. Rajapakse’s other argument also cannot be sustained, for the decreedoes not allot to the improver a share of the land but a fixed sum whichmust be paid first, and the owners of the land then share what remains.Even if the decree does not expressly state that the improver is to be paidbefore the owners, that is the right he has by law and that right cannotbe taken away by words of doubtful implication, and when the decree,fixes the amount to be paid to him it cannot be considered as fixing thatsum with reference to the value which the land may fetch at a sale, to bereduced or enhanced accordingly.
In Kanapathipillai v. Nagalingamde Sampayo J. approached thepresent problem unfettered by previous decisions, and he laid down thelegal principle which should govern such a case and he has ample supportfor what he decided. The case of Appuhamy v. Sanchihamy (supra),is a decision by the Full Bench of that day, and the rights of improversin a partition action can no longer be canvassed either by us or by thesubordinate Courts.
There is room perhaps for the procedure adopted in the Courts beingimproved. De Sampayo J. indicated that the Court should decide theextent of compensation payable when it enters the decree under section 4.I believe that it is usual for the Court to declare the right and to leave itto the Commissioner to report on the value of the right, and it is possiblethat Commissioners do not understand the principles on which compen-sation should be assessed. I see no objection to the Court declaring theright and then fixing a day for inquiry into the question of the amount ofcompensation payable, nor is there any objection to the Court havingthe assistance of a report from a competent Commissioner, sworn to inthe first instance and supported by evidence in the event of a controversy;but there ought to be a decision before the sale is allowed to go forward.The commission ought to indicate the lines on which the valuation shouldbe made. If the valuation be properly decided, then the improver cannever get more than the value of the land or even as much as the value of
1 22 N. L. R. 223.
15-
158
DE KRETSER J.—Jayasenu. v. Karlinahamy.
the land, and the owners of the land cannot suffer as they have the rightof buying at the sale on favourable conditions and can always see that theland realizes its proper price. If they choose to pass a low appraisedvalue and do not bid at the public auction they have only themselves toblame for the consequences. It is to the interest of all parties to havethe property justly valued under section 8, and it would serve a usefulpurpose if the Court fixed a date for consideration of the report of theCommissioner, the Court fixing that date when it makes its first order andmaking the commission returnable at an earlier date. Then on the dayfixed or an adjourned date the amount of the compensation will bedetermined and also the upset price at which the land will be sold.
One other matter remains to be considered. In the present case theland was sold in blocks to suit the convenience of parties. The Ordinancedoes not seem to contemplate such a sale, but there can be no objectionto this mode of sale being adopted if all the parties desire it. Personsowning different lands may have them dealt with in one case, and there isno objection to persons who own one land breaking it up into lots and ineffect making it a sale of different lands. But they must then take thedisadvantages as well as the advantages of such a mode of sale. Aparticular lot may fetch a low or a high figure for reasons peculiar toitself. The owners may not wish to deprive a builder of his house and sorefrain from bidding; they must then abide by their good intentions. Abuilder may value his house so much that he bids for the lot on which itstands more than its value; that should not work to his disadvantage byreason of some arrangement regarding some other lot. The truth willoften be that a sale of this kind is in reality a disguised partition by whichthe owners hope to be able to keep the land among at least some ofthemselves.
I hold therefore that the lots should be dealt with separately.
The next question is—what are the rights of an improver in such acase? There is authority as to how his rights are determined and howthose rights are to be assessed, but there is no authority covering thepeculiar situation we find in this case. There is no difficulty if we realizethat the sale of each lot is a sale of a separate land, and that improversamong themselves must share any loss; they are all entitled to be paid andstand on an equal footing.
If the improver himself buys the land before parties come into Court,he has no further claim against the owner; if another buys the land, thenew owner is liable to compensate the improver.
In the case of actions under the Partition Ordinance the remedial rightsof the improver are affected by the very nature of the action. Usuallyhe is a co-owner or acting under the aegis of a co-owner, but he may beoutside the family of co-owners. The scheme of the Ordinance is todivide in a fair manner the rights of all owning interests in the land, andfor this purpose the improver becomes one of the family, so to speak. Itis this conception which perhaps gave rise to the idea that he should sharewith the others both their good and their bad fortune. But he is anoutsider whom the law brings in because otherwise the family wouldbenefit at his expense. The law carefully restricts his rights. If at thepartition he, as a co-owner, gets a lot on which his improvements stand,
159
DE KRETSER J.—Jayasena v. Karlinahamy.
then it being found possible to give him what he is entitled to, he issatisfied. If his improvements do not come to him, then he gets a decreefor money and can execute that decree against the owner of the lot onwhich his improvements stand. It follows that the decree first entered isonly a preliminary decree which ascertains the rights of parties in orderthat the Court may see how best to give each person his due. It is not adecree which a party can execute ; it is not entered against any particularperson until the stage of experiment has passed.
The same principle must be applied to the case of a sale, and moreespecially to schemes which are a mixture of partition and sale. Thedecree for sale is entered only because division of the land is impracticableor inexpedient; it is still a mode of partition, a means of apportioning toeach person his due. The decree for sale may be final as regards therights of parties, but the partition action is still pending and the Court isstill in the process of apportioning.
What are the principles we have obtained so far ? One is thatimprovers stand on a different footing from the owners. The improversall stand on an equal footing, and any loss must be shared by themequally. There ought to be no difference whether a partition or a sale beordered, but is there nevertheless a possible case in which a differencemay rise ? Is there any difference between the case of a co-owner or animprover buying and the case of an outsider buying ?
Where an adequate sum is realized at the sale no difficulty arises,except possibly as a result of a very big bill for Proctors’ costs, and thatcase we need not now consider.
If an outsider buys below the appraised value, then clearly theimprovers must first be paid, and if there is not enough money to pay allthey must abate their claims proportionately ; they then share with theowners the loss which has occurred. Take the present case ; if an outsiderhad bought lot C for Rs. 3,555, then the sixth defendant would have lostroughly something like Rs. 2,500, the other improvers about Rs. 50, andthe owners about Rs. 800. The improvers are not called upon to makeany greater sacrifice, and the alleged equitable reduction proportionatelywould really work hardship on the improvers.
If a co-owner buys, the position seems to be the same. In both thesecases the improvers maintain an equal footing and are given priority overthe owners.
There is a difference between a sale by private bargain and one underthe Partition Ordinance ; in the former case the purchaser buys merely theowners’ rights, in the latter he is buying out everybody.
Is there any difference to be made between a case of purchase by anoutsider or a co-owner and one by an improver ? In the latter case toodoes the purchase amount take the place of the land and is that the sumwhich must be distributed ? At first sight there seems to be no difference,and it is convenient to have one principle governing all sales; but withsome diffidence I venture to say that there is a distinction.
Apart from the fact that an outsider has not the same relationship tothe parties that an improver has, a relationship which the Court ought toadjust equitably, there is the fact that an outsider actually pays readymoney. So would a co-owner if the purchase amount did not exceed
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DE KRETSER J.—Jayasena v. Karlinahamy.
the value of the improvements. But an improver—like the sixthdefendant—would pay nothing or very little, according to the numberand the value of the improvements. If one puts him on the footing ofan outsider he retains the whole of his building, gets the rest of the land,and takes back all or most of the money he is supposed to have paid atthe sale. But he is not on the same footing because, by the very nature ofthe action, he loses all claims to the balance of the compensation. Thewhole action is conceived on the basis that the rights of parties are to besatisfied within the compass of the action. Once he has obtained hisimprovements no Court would allow him something more as well. Thiswas common ground in the arguments of Counsel. In effect thereforethe sixth defendant did not buy for Rs. 3,555 but for Rs. 6,000.
in other cases improvers stand on an equal footing, they ought to do soin this case as well ; and they will if what is shared proportionately is notRs. 3,555 but Rs. 6,000. The sixth defendant will lose a little and theother improvers a little and the co-owners all, but that all is very little ;in any case they take second place. Such a mode of approach not onlymaintains uniformity of principle, but also takes into account the realitiesof the case.
In this case therefore the sixth defendant ought to bring into Court theproportionate amount due to the other improvers of lot C. Roughly itwill be about Rs. 130, if I have got the figures correctly. He will also beliable for a proportionate amount of the costs. In the long run he willprobably be paying a little over Rs. 7,000 for his lot.
I think that some attention to the conditions of sale may obviate someof the difficulties which arise occasionally. At present improvers paycosts like other co-owners but are not allowed the privilege of buying atthe first auction at the appraised value (Hamidu v. Gunasekere ’).
The difficulty can be met by the Court ordering that a second auctionbe held among the co-owners and the improvers at the value of theimprovements, and that the auction be thrown ppen to the general publiconly if none of the parties will buy. At sales in execution care is taken toprevent the creditor using his position in such a way as to keep away anyother bidders and work detriment to the debtor. Similar precautions areoften needed in cases under the Partition Ordinance, and the Court oughtto be able to make provision in the conditions to meet such contingencies ;e.g., all sales may be subject to the condition that in the event of the salerealizing less than the appraised value, the purchaser shall pay theimprovers in full, or that an improver shall not buy at less than theappraised value of the improvements. The one condition will preventdomination by the owner of a large share or by some influential outsider,the other will prevent the improver whose improvements practicallycover the value of the land from controlling the auction to his advantage.
I have found some difficulty in getting the figures in the case, and ifthere is any error the District Judge will see it rectified. The lots Y and Zhave been reserved for roads ; the decree should make it plain that theyno longer remain the property of the co-owners but have now passed asappurtenances to the lots which need them. The Court will make anappropriate amendment of the decree.
> 21 N. L. R. 143.
WIJEYEWARDENE J.—Siripala v. U. D. C., Kalutara.
161
There is also the question of the charge for preparing the scheme ofdistribution which he should consider. It is not clear on what basis it ismade or whether it has been taxed. It is the Court’s duty to draw up thescheme of distribution and, if a Proctor should assist the Court, he does sopresumably because he wishes to oblige the Court or he is drawing up theCourt’s decree ; in the latter case there is provision made for an appro-priate charge. Rs. 200 seems a large sum to charge against an insolventproperty in which some of the owners get very small sums.
The scheme shov/s that the sixth defendant was given credit forRs. 3,666.50, whereas the sale report shows that he bought lot C forRs. 3,555. So too the scheme shows the first defendant given credit forRs. 2,367 whereas he bought for Rs. 2,630. There may be other detailsrequiring attention.
The order appealed from is set aside, and the Court will now proceed inthe manner indicated in this judgment. The order in the District Courtwas that each party should bear his own costs. I think the costs ofappeal should be borne similarly, as the appellant only gains a technicalsuccess.
Keuneman J.—I agree.
Set aside.