Charles Appuhamy v. Abeyesekera
1954Present : Nagallngam S.P.J. and Fernando A.J.K. CHARLES APPUHAMY, Appellant, andT. B. ABEYESEKERA,
S. C. 406—D. G. Kandy, M. R. 5,051
Rent Restriction .4 c/—Applicability to “ lease ” of a business.
d Whore a business of the nature of a hotel and tea kiosk was “ leased ” byA to It and, under the contract., A gave over to It tho mangenient, control anilconduct of the business for a term of years—
llcbl, that at the end of the specified period B was not entitled to tho pro'toction of tho Rent Restriction Act in regard to the premises in which the businesswas carried on.
■ (1906) i) X. I.. R. 114.* (1937) 39 N. L. R. 310.
(1946) 47 N. L. 11. 347.
NAGALINGAM S.P.J.—Charles Appuhatr.y v. Abeyesekera
.A.PPEAL. from r judgment of the District Court, Kandy.
II. V. Perera, Q.G., with N. E. Weerasooria,'Q.G., and W. D. Gunasekera,for the defendant appellant.
H. TP. Jayeivardene, Q.G., with P. Somaiilakam, for the plaintiffrespondent.
Cur. ndv. vult.
November 8, 1954. Naoalinoam S.P.J.—
A novel point is raised in this case and it is said to be res Integra. Theplaintiff by a document PI of 1950, which is expressed on the face of itto be an indenture of lease, “ let, demised and leased ” unto one EdwinSilva-“ the Hotel and Tea kiosk known and registered as the Kandy Res-taurant ” together with all the equipment for a term of three yearscommencing from the 1st January, 1950, at a monthly rental of Rs. 380.
Edwin Silva by deed P2 of 1950, with the consent of the plaintiff',assigned all his rights, title and interest in and to the indenture of leasePI to the defendant. The period of lease provided under the “ indentureof lease ”, PI of 1950, expired on the 31st December, 1952, and theplaintiff claimed delivery of the “ Hotel and the Tea kiosk ”. Thedefendant denied the plaintiff’s claim and has taken up the position thatas the business had been carried on in certain premises bearing assessmentNo. 39, Brownrigg Street, Kandy, to which the provisions of the RentRestriction Act apply and as the possession of the premises too had beendelivered to him by virtue of the documents Pi and P2, he is entitledto claim the protection given by the said Act to a tenant as against hislandlord.
The question therefore resolves itself into a determination as to whetherthe relationship created between the plaintiff and the defendant by virtueof the deeds PI and P2 is one of letting and hiring of immovable propertyas contended for by the defendant or whether the delivery of possessionof the immovable property was ancillary to the delivery of possessionof the business of the Hotel and Tea kiosk. It is to be observed that themere affixing of a label to a transaction by the' parties or by their legaladvisers does not control or govern the true nature of the rights andliabilities created which have to be determined by an examination of theterms and conditions of the instrument itself. Though the documentPI is described as an indenture of lease it is not a lease in the true senseof the term, for a lease relates to the letting and hiring of immovableproperty.
H one examines the document PI one would seek in vain to gatherfrom the document any letting and hiring of any immovable property—much less of 39, Brownrigg Street, Kandy, where the business was carriedon ; but on the other hand what is “ leased ” is the Hotel and Tea kioskknown and registered as the Kandy Restaurant. That the parties didnot regard the transaction that they entered into or the instrument re-cording such transaction as one of a lease of immovable property ismanifest from the circumstance that there is no description given of any
NAG ALIN GAM 8.P.J.—Charles Appuhamy v. Abeyesekera
immovable property. But on. the other hand a full description is givenof the various fittings, equipment and furniture of the business, and oneof the principal covenants to be observed on the part of the “ lessee ”is stated to be “ to manage and control the said hotel and business in aproper manner ” and to yield up, surrender and deliver the said businessknown as the Kandy Restaurant and all the movables therein describedat the expiration or sooner determination of the term of the “ leaseIt is abundantly clear therefore that the document itself is no lease anddefinitely not a lease of any immovable property.
It is however contended on behalf of the defendant-appellant thatunder the document PI the lessee was required to permit one Perera whowas carrying on the business of oilman stores in a. part of the premisesNo. 39, Brownrigg Street, to carry on that business there, and to permitthe lessor to use and occupy a room in the upstairs of the said premisesand those requirements indicate that there was in truth a letting of theentirety of the building No. 39, Brownrigg Street.
Further, it is said that de facto possession of the premises having beengiven and the quantum of rent payable in respect of the premises in accor-dance with the provisions of the Rent Restriction Act, viz., Rs. 130 amonth having been taken into computation in fixing the amount of“ rent ” of Rs. 380 a month payable by the lessee under Pi, all the essen-tial elements necessary to constitute a letting and hiring of immovableproperty have been established. I do not think this argument is sound.A simple illustration will suffice to demonstrate the fallacy underlying it.Take, for example, the case of a guest who is charged a composite sum forlioard and lodging by a hotel-keeper ; if it can be shown, as indeed iteasily can be,Jijhat in arriving at the figure the guest is charged, the hotel -keeper took separately into account the following items :—
(а)Rent for bed room,
(б)Hire of furniture, crockery and cutlery,
Cost of food,
Charges for service,
can it be said that the guest becomes a tenant of the room and that theterm ‘ ‘ guest ” is a misnomer in his case ? Obviously, the answer is “ No ”.
In the absence of any words of assurance of premises bearing No. 39,Brownrigg Street, to the lessee under PI, the covenant that the lesseeshould permit certain persons to carry on and use part of the premiseswould at best lead to the inference that the lessee had some interest inthe immovable property but non constat that such interest is a lease or aninterest in the nature of a lease. Indeed, the document PI shouldproperly have been described as Articles of Agreement entered into betweenthe two parties whereby one party gave over the management, controland conduct of the business for a term of years to the other party subjectto the stipulations contained in the document PI.
It is however necessary to ascertain what is the nature of the interestin the immovable propeity that has been recognized as having been vestedin the lessee under PI by the instrument itself. Any business, if itis to bo conveyed as a going concern, excepting that of a hawker or a
NAGAUNGAM 8.P.J.—Charles Appuhamy v. Abeyeaekera
pedlar, mast ordinarily have a place of business and when the managementof a business is handed over, particularly a business of the nature of aHotel and Tea kiosk, it is impossible to imagine that possession of the placewhere the business is carried on could be withheld. A business of aHotel and Tea kiosk does not merely consist of the equipment but mustnecessarily include the building where the beds and bedding are kept,the dining room where the tables and chairs at which customers areserved with meals and refreshments are kept, and also of the goodwillattaching to such business which may be the most valuable part of thewholo concern, namely, the name of the business and the situation of thepremises where the business is carried on, for, as is well known, a reputedname as well as a favourable site, both attract custom.
On a proper reading of the document PI, it is impossible to resist theconclusion that the transaction entered into between the parties was onenot of letting any immovable property for the purpose of enabling oneparty to carry on a business, nor the letting of the building to that partywith the option to him to carry on or not the business previously carriedon there, but of placing the “ lessee ” in charge of a business that badbeen and was being carried on for the sole purpose of its being continuedas a going ooncem and with a view to its being delivered back as suchgoing concern together with the goodwill and the improvements andadvantages gained or accrued thereto in the meantime ; and as ancillaryto the object which the partier had in contemplation it was that posses-sion of the premises was delivered. The defendant’s position was no morethan that of a licensee and is far removed from that of a tenant.
There is another matter to which I should advert before concluding myjudgment. The basis for the defendant’s claim to remain in occupationof the premises is that “ he is unable to vacate the said premises till hefinds suitable alternative accommodation for his business ”. This I considerto be a most extraordinary claim. The defendant was never the ownerof the business. The business undoubtedly was that of the plaintiff.He, the defendant, had been placed in charge of the business to be runby him, for his benefit no doubt, but for the limited period of the unexpiredterm stipulated in the document PI. But that term has expired and Icannot see how he can be permitted to claim the business as his own.If the business is not his, and he has no business of his own, then thefoundation of his claim “ that he cannot vacate the promises till he findssuitable accommodation for his business ” vanishes. Probably thedefendant does not realise that by the claim put forward by him ho isexposing himself to the charge that he is making an attempt to botraythe trust placod on him and to perpetrate a fraud on the plaintiff.
In those circumstances I do not think that it could properly bo said thatthero was a letting of immovable property to which the provisions of theKent Restriction Act apply. I am therefore of opinion that the judgmentof the learned District Judge is right and that the np]>cai should bedismissed with costs.
Fkrnanuo A.J.—I agree.
. 1 pneal rfismissrrl.
K. CHARLES APPUHAMY, Appellant, and T. B. ABEYESEKERA Respondent
Charles Appuhamy v. Abeyesekera