OtTNASEKABA J.—Subbiahpillai v. Sheriff d> Co., Ltd.
1955 Present: Gunasekara J., Pulla J. and Weerasoortya J.K. L. S. SUBBIAHPILLAI, Appellant, and M. A. SHERIFF & CO.,LTD., Respondent•S'. G. 218—D. G. Colombo, 23,718 M
Jteni Heat rid ion Act, No. 29 oj 1948—Chequee given in payment oj rent—Landlord’sJail tire to present them at the Bank—Demand for fresh cheque—Refusal bytenant—Effect on question of rent being “ in arrear ”—Section 13 (1), proviso.
When a landlord takes cheques from his tenant as conditional payment ofrents due, tlie cheques operate as payment, and the tenant is not in arrearwithin the meaning of the proviso to section 13 (1) of the Kent Kestriction Actunless the cheques are dishonoured on presentment. Nor is the tenant indefault where the reason why his cheques have not been realized is that thelandlord elected not to present them for payment. If then the landlord returnsthe cheques end asks for “ a fresh cheque to cover the entire rent due ” thetenant’s liability would be a liability on the cheques and not a liability to payrent.
Per Gltnasekaua J.— “ Moreover, the rent can be in arrear only from theday on which it became due, which is fixed by the terms of the contract oftenancy aiul cannot be varied by tbe unilateral act of the landlord in returninga cheque that ho has taken as conditional payment. ”
diPPEAL from a judgment of the District Court, Colombo.
H. V. Perera, Q.O., with G. Manohara and P. Navaratnarajah, for thedefendant appellant.
H. IP. Jayeioardene, Q.C., with N. G. J. Rustomjee and P. Ranasinyhe,for the plaintiff respondent.
Cur. adv. vult.
May 13, 1955. Gunaseeaba J.—<■
This appeal from a judgment of the District Court of Colombo washeard originally by a bench composed of Nagalingam J. and Fernando A. J.and as they were unable to agree as to the decree which shouldbe passed it was reheard by the present bench in terms of section 775 (1)of the Civil Procedure Code.
The action out of which the appeal arises was instituted by the re-spondent, a limited company, on the 26th October, 1950. The companysought to recover from the appellant a sum of Rs. 3,625 as rent for theperiod 1st October, 1947, to 28th February, 1950, at the rate of Rs. 125
-—J. S. B 171SU-I..VJ-J (S,’i6)'
GUNASEKABA J.—SubbiahpiUai t>. Sheriff <b Co., Ltd.
a month, for certain premises to which the Rent Restriction Act applied,and for ejectment of the appellant and damages for overliolding fromthe 1st March, 1900. They alleged that damages in respect of the period1st March to 31st August, 1950, had been paid by the appellant and askedfor a decree for damages only in respect of the appellant’s occupationafter that. The district court gave judgment for the respondent companyas prayed for in the plaint. The only ground on which the appeal waspressed was that the learned trial judge had erred in finding for 'the re-spondent on an issue as to whether the rent had been in arrear for onemonth after it had become due and the case was thus brought withinthe proviso to section 13 (1) of the Rent Restriction Act, No. 29 of 1948
The tenancy began on the 1st April, 1946, and the agreement regardingthe time for the payment of rent was that each month’s rent should be 'paid on or before the 10th of the next mOrith. The appellant regularlysent the respondent each month a cheque for the amount of the previousmonth’s rent, and the respondent realized all the cheques except thosethat represented the rents for the period 1st October, 1947, to 31stJanuary, 1950, which he refrained from presenting for payment. Itappears from the evidence of the managing director of the respondentcompany that it was at the company’s own request that the appellantsent them cheques for the rent. The-26 cheques in respect of the period1st October, 1947, to 30th November, 1949, were returned to the appelluntby the respondent’s proctor with a letter dated the 24th January, 1950,in which he asked for “ a fresh cheque to cover the entire rent due ”.He says in this letter that the respondent company did not cash thesecheques because “ their application before the Rent Board was pending ”and that “most of the cheques have, grown stale”. (The earliestof the cheques was dated the 7tli November, 1947, and the latest the10th December, 1949.) The application referred to was one madeon the 6th October, 1947, for the sanction of the assessment board,which was the predecessor of the rent control board established under theAct, to sue for the ejectment of the appellant. The application wasrefused on the 7th November, 1947, and the order made by the assessmentboard was affirmed by the Board of Review on the 29th October, 1948.The letter of the 24th January, 1950, from the company’s proctor to theappellant was followed by another of the 30th January, 1950, giving theappellant notice to quit on the 28th February and demanding payment of“ all arrears of rent ” up to that day. The appellant’s proctor repliedby a letter dated the 3rd February, 1950, with which he returned thecheques. He said : “ The stale cheques sent by your clients are herewithreturned. It is the doty of your client to realise the amount due on thecheques as and when cheques are sent The company’s proctor sentthe cheques back with a letter dated the 6th March, 1950, in which he saidthat the appellant had been aware that the cheques had not been cashed" on account of the application pending before the Rent Control Board ”and he repeated his request for a fresh cheque. He also said “ If yourclient still refuses to issue a fresh cheque my client will havo no otheralternative but to sue your client for ejectment on the ground they arcin arrears of rent ”. The appellant’s proctor replied by a letter dated the
( iUNASKKAHA J.—SuHidflpwai v. anerijj ta uo., !.«•.
lUtli September, 1060, returning the 26 cheques once more. Alterthe institution of the action the appellant brought into court the sum ofRe. 3,626, though he denied in his answer the respondent’s avermentthat it was due ar arrears of rent.
The learned district judge holds that the payments in question wereconditional payments and that the appellant “ cannot plead either thatthe cheques were received by tlfe plaintiff company as absolute paymentor that ie is discharged merely* by reason of the failure to present thecheques for payment before they Became stale He appears to haveaccepted an argument “ that those cheques, although they were condi-tional iMiymcnis, hud failed to Batisfy'the condition, and the debt revivedwhen the cheques became stale ” ; and it is apparently on this groundthat he hoses his finding tliat at the time of the institution of the actionthe rent hail been in arrear for one month after it had become due.
In the argument before this court the case for the respondent was puthigher than at the trial and it was contended that the giving of tho chequesdid not amount, to evon a conditional payment of tho routs inquestion.
The basis of this contention is tbat while there is ordinarily a strongpresumption that the giving of a bill or note on account of a debt is aconditional payment, there is no such presumption in a case where thecreditor already possesses a higher remedy : see Chalmers' Bills ofKjcchange, I Ith edition, py. 310,312. Thus, it was held in Davis v. Clyde 1that a promissory note given and received for rent could not of itselfextinguish the claim for such rent, which is a debt of a higher degreethan that arising upon the- note, or operate in suspension of such claim.The question that arose for decision in that case was the sufficiency of aplea to a avowry of rent, that the landlord had received from the tenanton account of tho rent a promissory note and the note was not yet duofor payment. It was held that the plea was insufficient as it mado noaverment that the note was received by way of satisfaction or upon anagreement, with the landlord that it should suspend his claim of rent.Again, in Re. ./. Defries and Sons, Limited 2, it was held that the meregiving of a cheque is not conditional payment of a secured debt so as torelease the sccmity. The reason for the presumption of conditionalpayment and the qualification of the rule was explained by Maulo J.in Belshaic v. Bush3. He said :—
“ If an agreement wero oxpressly made, that the bill should operateas payment, unless defeated by dishonour, etc., there is no reasonwhy a suit brought while the payment remained undefeated, shouldnot be barred by such agreement; and the cases in which a bill given onaccount of the debt has been held to operate as such payment, are to
1 (1336) 2 .trf. cfc R. 623 ;3 (ISST) 11 C. li. 101, at 206 ;
Ul R. li. 210.l.u R. R. in, at 460.
* (/flO^) 2 (Jh. 123.
QUNASEKARA .T.—SubbiahpiUot v. Sheriff <b Co., Ltd.
ho supported by considering that such an agreement is to bo impliedby law from giving and receiving such security on account of a debton simple contract : and the cases in which the giving of the bill hasbeen held not to suspend th& remedy on a demand by specialty, orfor rent, may be accounted for on the ground that the legal implicationof an assent that the bill Bhall operate as a conditional payment, doesnot arise, when, if it did, the plaintiff would be deprived of a bettorremedy, than an action on a bill as in Davie v. Qyde 1 in which, the debtbeing for rent, the plaintiff would part with a remedy by distress :and in Worthington v. Wigleya, where, the demand being on bond,the plaintiff might, in certain events, have recourse to other funds thanhe could in an action on a simple contract. ”
The fact of a landlord taking a bill of exchange from his tenant for rentdue is, however, some evidenco of an agreement by the landlord to suspendhis remedy by distress during the currency of the bill (Palmer v. Bramle.y 3);although it does not raise a legal implication of such agreement. Aswas pointed out by Kay 1,.J. in Palmer v. Bramley n what was decidedin Davie v. Gyde 1 was that the plea was insufficient and not that thegiving of the bill was no evidence of an agreomont to suspend thelandlord’s right of distress..
In the present case the learned district judge’s finding is not basedon a view that the mere giving and receiving of a cheque raises a legalimplication of an assent by the landlord that the cheque shall operateas a conditional payment. Besides, there is here more than the meregiving of a cheque, for the rent was always paid by cheque and was sopaid because, in the words of the company’s managing director, thecompany “ wanted cheques to be sent ”, Moreover, even when the 26cheques were returned what the company asked for in their place was afresh cheque for the total amount. In my opinion there is sufficientevidence to support the finding that the cheques were taken by way ofconditional payment, and there is no reason to disturb that finding. (Imay observe in passing that the view is expressed in Chitty’s Treatise onthe Jjaw of Contracts * that there appears now to be no difference betweenspecialties and simple contract debts, and that if nothing is said as toterms the original debt remains but the remedy is suspended till thematurity of the bill.).
The condition upon which these cheques were received as paymentof the rents due must be understood to be that the debt would reviveif they were not realized (Currie v. Misa 6) and they would operate aspayment unless they were presented and dishonoured (Marreco v.Richardson ®). There is no evidence .of.presentment or dishonour, andit is contended for the appellant that.the learned district judge’s finding
1 (1835) 2 Ad. & E. 023111 E. R. 240.
* 11837) 3 Bing. N. C. 454.' (1895) 2 Q. B. 405.
* 20th Edition, p. 201.
8 (1875) L. R. 10 Eg. 153.8 (1908) 2 K. B. 584.
GUNA&EKLARA J.—SubbidhpUIai v. Sheriff da Co., Ltd.
that the debt had revived is therefore erroneous and the rent was not inarrear at the material time. It is also contended that even if the learnedjudge is right in this finding all that follows is that the appellant’s liabilityto pay the debt is not discharged* but not that the rent is in arrear witlunthe meaning of the proviso to section 13 subsection (1) of the RentRestriction Act.
It was held by my brother Weeraaooriya in Vadivel Chetty v. Abdu 1that the meaning of the expression “ in arrear ” in that proviso is that“ the payment of the rent h<u» been in default ” and that “ a tenant whohas tendered to the landlord the rent as it fell due and has taken allreasonable steps towards the landlord’s acceptance of it cannot beregarded as in default in paying the rent The effect of the proviso isto take away from a tenant, in the circumstances there set out, the pro-tection given to him against being sued for ejectment without the sanctionof the rent control board. It seems clear that in the context the expressionmust imply not merely that the debt remains undischarged but that it isundischarged in consequence of some default on the part of the tenantand not that of the landlord. Otherwise the protection given to thotenant is rendered nugatory, for the landlord can prevent the debt frombeing discharged by merely refusing to accept the rent when it is tendered.In such a case there would be no default on the part of the tenant andtherefore tho rent, though unpaid, would not be in arrear witbin the moaningof tho proviso. Nor is the tenant in default where the reason why hischeque has not been realized is that the landlord elected not to presentit for payment. As was observed by my brother Gratiaen in the case ofThangadorai Nadar and Brothers v. Esmailjee 2,“ it would indeed be a
remarkable result if a landlord by resorting to the simple devico ofpostponing presentation of his tenant’s cheque until the bank refusedto honour it (for no other reason than that it had become stale) coulddoprivo the tenant of his statutory protection ”.
Mr. Jayawardene argued that though tho appellant was not in defaultwhile the cheques were in tbe hands of the respondent, he became liableto pay the amount of the cheques within a reasonable time after theywere returned to him and was therefore in default when he failed todischarge this liability. But any such liability would be a liability onthe cheques and not a liability to pay rent. Moreover, tho rent can bein arrear only from the day on which it became due, which is fixed bytlie terms of the contract of tenancy and cannot be varied by thounilateral act of the landlord in returning a cheque that ho has takenas conditional payment.•
In my opinion there is no evidence that tho rent was in arrear for onemonth after it became due, and the order for the ejectment of the appellantand for damages must therefore be set aside. The order for tho payment
* (1963) 55 N. f.. It. 67 at 71.
2 (1954) 56 -V. L. It. 343.
• »xo.—ovootanpuiat v. Aifiettff <£? (Jo.9 TAtl.
to tho respondent of the sum of Rs. 3,625, which the appellant depositedin court in satisfaction of the respondent’s claim, must be affirmed.
It was urged on behalf of the respondent company that in any eventno order for costs should be made in favour of the appellant, for the reasonthat ho had raised an issue as to whether his contract of tenancy was acontract with the company and had failed on that issue. It appearsfrom tlic evidence of the respondent company’s managing director.Sheriff', that lie was the owner of the demised premises and that thecompany (which was a private company in which he held the majorityof the shares) managed on his behalf this property and certain others ofwhich lie was the owner. It also appears both from his own admissionsand the relevant documents, that tho application made to the assessmentboard for sanction to sue the appellant for ejectment and the appealfrom the ordor of this board purported to. be made by him persona llynnd not by the respondent company. . Sheriff explained that this was(he result of a mistake made by his proctor, and the explanation wasaccepted by the learned judge. Having regard to the state of facts inwhich the issuo was raised I do not think that there is sufficient reasonwhy the appellant, who has substantially succeeded in both courts, shouldnot be given his costs. The order made by the learned judge in respectof costs must be set aside and the respondent company must be orderedto pay the appellant’s costs in both courts.
PrLT.E J.—I agree.
Although as a general rule the tendering of a cheque is not equivalentto payment, the Court will not require very strong evidence to show thatthe parties contemplated that payment might be made by cheque. Thisappears to be the view not only of the English Courts but also of theSouth African and American Courts. In this connection sec tho case of*S'cheider and London v. Chapman 1 which is a decision of the South AfricanCourts. The evidence in that case was that the vendor had accepted fromthe purchaser a cheque in part payment of the purchase price. Thepurchaser sent by post on the day before the balance of the purchaseprice had to be paid another cheque in settlement of the amount duo.The cheque was, however, received by the vendor only on the day afterpayment had to be made. He refused to accept it on the ground that,payment had been made too late and he sued the purchaser for breachof contract and damages. The argument of counsel for the purchaser
[JO 17) T. P. D. 407.
WKEUASOORIYA J.^—SubbiahpiUtn v. Sheriff <6 Co., Ltd.
that sending the cheque did not amount to payment (and not that it wassent too late) was rejected by the eminent Judges (do Villiers, J.P.,Wessels and Bristowe, JJ.) who heard the appeal in that case. Havingregard to the course of business between the parties do Villiers, J.P.,stated in his judgment “ It seems to me the Court would be encouragingthe veriest technicality—seeing that the money to meet the cheque was inth$ bank—if we were to hold that payment was not made as it shouldhave been The judgment of de Villiers, J.P., also contains thefollowing citation from a judgment of the American Courts in the case ofGunby v. Ingram 1 :"It may be conceded, we think, under universal
authority, that a strictly good tender cannot be made by the offer of acheque for the amount due. But it is well established that the creditormay waive the character of the money which is tendered by raising noobjection to the payment, for the reason that it is not the characterof money or specie that is called for in the obligation, or by raising somoother objection which would exclude the idea of objecting on that ground.Considering the fact, which is a matter of common knowledge, that pro-bably ninety per cent, of the business of the mercantile world is now donetlirough the medium of cheques, drafts, &c.. instead of by the transferof gold and silver coins, or even of any other species of legal tender, itwould bo a dangerous rule to announce, and one which could oasily boturnod into an engine of oppression, if the tender of a paymont ….could not be made by cheque,, where no question was raised as to thovalue of the chequo tendered, and especially, as in this case, whore itwas shown that the former payments involved in this transaction hadbeen mado by cheques, which were not objected to by tho creditor.”.
Thore is nothing in law which precludes a creditor, who already possessesa higher remedy' than mere recourse to the debtor for payment of theamount due, from accepting a cheque in settlement of tho dobt. Theauthorities cited by' Mr. Jayewardene, who appeared for the respondent,in support of his contention that,,since in the presont case tho respondenthad the higher remedy of th^li&dlord’s lien, the giving of the choque.sdid not amount to even a cojy|itional payment of tho rents in questionhave been fully' discussed by my brother Gunasokara in his judgment, andit is clear that those authorities do not help Mr. Jay'ewardono .in thatcontention as the evidence is that previous payments of rent hadthroughout beon made by cheque and accepted by the respondent withoutdemur. As pointed out by my brother Gunasekara, the evidence goesfurther, because t-lie managing director of the respondent company' statedthat the company' “ wanted cheques to be sent ”. Tnthe letter P31 datedthe 24th January, 1950, the respondent’s jjroctor requested the appellantto send a fresh cheque coveririjg not only the amount of the twenty-sixcheques returned with that Jitter and representing the rents for thomonths of October, 1947, tt^^fovember. 1949, but also the rent forDecember, 1949, which appifrently had not then been paid by thoappellant.
1 36 Law Be^Annot. .V. S. p. 232 at 234.
It is not in dispute that had. those cheques been duly presented at theBank on which they were drawn they would have been paid. Even if, asa Tesult of the respondent having chosen to withhold their presentmentand their having bocome stale in the meantime, the appellant’s obligationto pay the rents represented by the cheques was not discharged, there was,in my opinion, a valid tender of payment of the rents by the appellantwhen he Bent the cheques from time to time to the respondent. “ Theeffect of a tender, though it will not release a debtor from the necessityof making payment or fulfilment in terms of hiB tender if subsequentlycalled upon to do so, is to release the debtor from all the consequenceswhich would otherwise have arisen from his omission to mako suchpayment or fulfilment ”—Mnosdorp’s Institutes of South African Law 1.
I next turn to the argument of Mr. Jayewardene that even if theappellant was not in default while the cheques were in the respondent’shands, the failure of the appellant to pay the rents represented by themwithin a reasonable time after they were returned to him rendered him indcfau It in regard to those rents for a period of one month (and more) since hehad not paid them oven at the date of the institution of this action. Mr.Jayewardene conceded that the date on which the rent becomes due hasto be determined with reference to the contract of tenancy, but he con-tended that if at any time after that date the tenant is, for a period ofone month, in default in payment of the rent, he would lose the statutoryprotection conferred on him under the Rent Restriction Act, No. 29 of1948, against a suit for ejectment. According to Mr. Jayew'ardono theperiod of “ one month ” referred to in S. 13 (1) of that Act should, in acase like the present one, be computed from the expiry of the reasonabletime (which would bo a varying period depending on the circumstances ofeach case) within which the payment must be made. A similar argumentseems to have been advanced in the case of Vadivel Chelty v. Abdu 2 but,as stated in my judgment in that case, it was not necessary to decide thepoint since the action wras filed long before the expiry of one month evenso computed. Although the point arises for decision in the present case,in my opinion the w'ords “ the rent has been in arrear for one month afteiit has become due ” in paragraph (a) of the proviso to S. 13 (1) moan thatthe rent has been in arrear for one month reckoned front the date onwhich it became due, and the argument, therefore, fails. Moreovert-ho appellant’s liability to pay the rents in question always existednotwithstanding the giving of the cheques. That liability was notenhanced in any way, nor did a fresh liability arise, on t-ho return of thecheques.
I also agree with the order proposed by my brother Gunasekara asregards costs.
’ Vol. IV (The Law of Delicts anil the Dissolution of Obligations), 5th. erf., p. ICO.
■ * (1053) 65 N. L. 11. 67."
K. L. S. SUBBIAHPILLAI, Appellant, and M. A. SHERIFF & CO. LTD, Respondent
OtTNASEKABA J.—Subbiahpillai v. Sheriff d> Co., Ltd.