SIRIMEVAN BIBILE, CHAIRMAN, BOARD OF REVIEW, CEILING ONHOUSING PROPERTY LAW AND OTHERS
COURT OF APPEAL,
S. N. SILVA, J.
C.A. APPLICATION NO. 206/88
14 JUNE, 17 JULY, 19 AUGUST AND 13 SEPTEMBER, 1991.
Ceiling on Housing Property – Ceiling on Housing Property Law, No. 1 of 1973 -Vesting order – Purchase by tenant – Order of the Board of Review – Discretion ofCommissioner – Duty to consider the equities – Reasonableness.
The Ceiling on Housing Property Law, No. 1 of 1973 was enacted inter alia, toregulate the ownership of houses. There were two principal methods of suchregulation:
The imposition of a ceiling on the number of houses that may be ownedby individuals or other bodies (Section 2);
Giving a right to any tenant to make an application to the Commissionerfor the purchase of a house rented to him. This will be applicable inrespect of the houses that come below the ceiling imposed by law(Sections 13 and 17).
The right given by Section 13 to a tenant is not in absolute terms. It is availableonly “where no action or proceedings may under the Rent Act, No. 7 of 1972 beinstituted for the ejectment of the tenant of such house on the ground that suchhouse is reasonably required for occupation as a residence for the landlord ofsuch house or for any member of his family".
When an application to purchase is made by a tenant in terms of section 13(1),the Commissioner has to satisfy himself of the following matters:
“(a) that such house is situated in an area which in his opinion will not berequired for slum clearance, development or redevelopment or for anyother public purpose;
that it is feasible to alienate such house as a separate entity; and
that the applicant is in a position to make the purchase."
The Commissioner has an element of discretion in addition to the consideration ofthe above. He must consider “the equities of the case", i.e. he must considerwhether his vesting of the house is fair and reasonable in relation to therespective interests of the parties. The requirement on the part of theCommissioner is nothing more than the normal requirement in Administrative Lawthat where a discretion is vested in an authority, it should be exercisedreasonably. In English Administrative Law, this is commonly referred to as“Wednesbury's unreasonableness”. It requires that a person entrusted with adiscretion must direct himself properly in law. He must call his own attention to thematters which he is bound to consider. He must exclucle from his considerationmatters which are irrelevant to what he has to consider.
The standard of reasonableness is not that of “the man on the Claphamomnibus".
It is the standard indicated by a true construction of the Act which distinguishesbetween what the statutory authority may or may not be authorised to do. The oneprinciple that unites the several grounds of unreasonableness is that powers mustbe confined within the true scope and policy of the Act.
Section 13 was introduced as a measure of regulating ownership. It remained inoperation until the amendment effected by Act, No. 4 of 1985 which provided thatno application could be made for the purchase of a house after 1.1.1987. Theceiling also ceased to be in operation from that day. The policy of the law up tothat point was that a tenant who was in occupation of a house let to him at thetime the present landlord became owner and who continues as tenant under thepresent landlord, is entitled to apply for the purchase of that house. This policyalso involves the vesting of such house without the consent of the landlord,and “this category of tenants has a preponderant or pre-emptive right ofpurchase."
Where the Commissioner was guided by the fact that the tenant had paid rent fortwenty-six years at the time of his application, did not own any other house, hadseveral children while the landlord regularly visited India where he had interests,had not paid any interest on the mortgage of the house for over 12 years, was theowner of a jewellery business but adduced no evidence of his income, while thetenant and his wife were pensioners, he was being fair and reasonable.
Cases referred to:
Biso Manika v. deAlwis and Others S.C. 59/81 – S.C. Minutes of 11.05.1982.
Caderamanpulte v. Keuneman and Others S.C. No. 15/79 – S.C. Minutes of19.09.1980.
Associated Provincial Picture Houses Ltd. v. Wednesbury Corporation (1948)1 K. B. D. 223.
Mendis v. Perera C.A. 1953/79 (C.A. minutes of 10.12.80) and C.A. 768/84(C.A. minutes of 06.02.91).
APPLICATION for a writ of certiorari to quash the decision of the Commissionerof National Housing and Board of Review.
S.Mahenthiran for petitioner.
Miss M. Seneviratne, P.C. with H. Seneviratne for respondents.
13th December, 1991.
S.N. SILVA, J.
The Petitioner has filed this application for Writs of Certicra.1 toquash the order of the 1st, 2nd and 3rd Respondents constituting theBoard of Review under the Ceiling on Housing Property Law No. 1 of1973, and the decision of the Commissioner for National Housingwhich preceded that order. The Board of Review by its order affirmedthe decision of the Commissioner to recommend the vesting of housebearing No. 201, Jampettah Street, Colombo 13, to the Minister, interms of section 17 of the Ceiling on Housing. Property Law. The 5thRespondent became tenant of that house in March, 1947. At that timethe owner was a Catholic Nun who was at the Negombo convent.Rents were paid to the Procurator-General of the Archbishop's House.On 6.6.1962 the Petitioner purchased the house and by letter dated23.6.1962 sent by his Proctor, he requested the 5th Respondent topay rent to him. The Petitioner filed an action in the District Court forthe ejectment of the 5th Respondent which was dismissed. There isanother action pending against the 5th Respondent on the ground ofarrears of rent.
On 27.2.1973 the 5th Respondent made an application in terms ofsection 13 of the Ceiling on Housing Property Law for the purchase ofthe house. A decision was taken to vest the house in theCommissioner upon that application. The validity of that decision waschallenged in an application for judicial review filed in this Court (C.A.2478/80) and on 2.3.1982 a Writ of Certiorari was issued to quashthat decision. The basis upon which the Writ of Certiorari was issuedwas that the Petitioner had not been afforded an opportunity toappeal to the Board of Review and that there was a violation of theprinciples of natural justice. The Court noted that there was a validapplication under section 13 and that it was open to theCommissioner to inquire into it, afresh, with notice to parties.Accordingly an inquiry was held by a Deputy Commissioner, at whichboth parties were represented by Counsel. This inquiry was held onseveral days during the period 7.5.1983 to 1.10.1984. The entireproceedings of the inquiry have been produced by the 5thRespondent with his objections. The Commissioner decided torecommend the vesting of the house upon this inquiry. On beingnotified of this decision, the Petitioner filed an appeal dated20.11.1984 to the Board of Review. At the hearing before the Board,both parties were represented by Counsel. These hearings tookplace on several days from 16.6.1986 to 18.4.1987. The order of theBoard appears at the end of the proceedings marked ‘P4’.
Learned Counsel for the Petitioner submitted that theCommissioner and the Board took into account irrelevant matters inconsidering the equities. That the views of the Commissioner and theBoard were tainted by the fact that the Petitioner was visiting Indiafrequently and that the decisions are not based on an objectiveevaluation of the merits.
Learned President’s Counsel for the 5th Respondent analysedeach ground set out in the petition of appeal to the Board andthereafter in paragraph 23 of the petition filed in this Court. It wassubmitted that the Commissioner and the Board considered theequities correctly upon the evidence adduced and that certaingrounds urged by the Petitioner in the petition of appeal and thepetition filed in this Court are based on misrepresentations of fact.
The analysis done by learned President’s Counsel shows that thePetitioner has urged different grounds in the petition of appeal to theBoard and in paragraph 23 of the petition filed in this Court. Some ofthem are demonstrably baseless and have not been pursued. Forinstance, in the petition of appeal it was stated that the Commissionerfailed to consider the effect of the mortgage of the house by thePetitioner to the State Mortgage Bank on which he is "continuing topay instalments”. But, the documents marked X1 and X2 produced atthe hearing before the Board reveal that the Petitioner had not paideven the interest due from 14.11.1974. On 5.1.1987 he haddeposited Rs. 2000/- in the Bank after an application was made tosummon the Bank before the Board. Furthermore, in the petition filedin this Court it is stated that the Petitioner could not exercise the rightof Appeal, to the Board meaningfully, because he was unaware of thereasons for the decision of the Commissioner. But, as pointed out bylearned President's Counsel the record of the proceedings before theBoard reveals that counsel who then appeared for the Petitionerquoted extracts from the decision of the Commissioner in hissubmissions. Counsel had not addressed any complaint to the Boardof any difficulty in presenting his appeal. Hence, this ground (notpursued by Counsel in his submissions before Court) is alsobaseless. It is seen that there is merit in the submissions of learnedPresident’s Counsel with regard to misrepresentations made by thePetitioner in his petition of appeal and the petition filed in this Court.However, I am not inclined to dispose of the application on thatground itself because a perusal of the proceedings before the Boardshows that the alleged failure of the Commissioner to consider theequities properly is the only ground urged by Counsel before theBoard. This is also the only ground urged by Counsel before thisCourt. Although baseless grounds have been stated, there isconsistency in the grounds urged, at all stages. It has also to benoted that the Petitioner has not urged any ground of law as barringthe vesting.
The Ceiling on Housing Property Law No. 1 of 1973 was enactedinter alia, to regulate the ownership of houses, as stated in the longtitle to the Law. Part i of the Law is titled “Regulation of ownership ofhouses”. An examination of the provisions of this Part shows thatthere are two principal methods of such regulation. They are:
the imposition of a ceiling on the number of houses that maybe owned by individuals or other bodies. This ceiling isprovided for in'section 2;
by giving a right to any tenant to make an application to theCommissioner for the purchase of a house rented to him. Thisright is introduced by section 13 of the Law read with section17 and will be applicable in respect of the houses that comebelow the ceiling imposed by law.
The first method of regulation namely, the imposition of the ceilingon ownership is not relevant to this application since admittedly thehouse in question is within the permitted number of houses that maybe owned by the Petitioner. Submissions made by learned counselrelate to the second method of regulation namely, the right given to atenant to apply for the purchase of’a house let to him.
The right given by section 13 to a tenant is not in absolute terms. Itis available only "where no action or proceedings may under the RentAct No. 7 of 1972 be instituted for the ejectment of the tenant of suchhouse on the ground that such house is reasonably required foroccupation as a residence for the landlord of such house or for anymember of his family”. In the case of Biso Menika v. de Alwis andothers (1)Sharvananda, J. (as he then was), considered the impact ofthe restriction thus contained in section 13. In the course of hisjudgment he observed as follows:
“The integration of section 22(7) of the Rent Act into thescheme of the Property Law via section 13 of the Law has thefollowing effectthe pre-emptive right of purchase under thatsection of the Law (a) accrues only in the event of there being atransfer or devolution of the premises from the original landlordto a new owner, such as referred to in section 22(7) of the Act,subsequent to the date when the tenant came into occupationof the premises and (b) is available only to the person who wasthe tenant of the premises prior to such transfer or devolutionend who continues to be tenant under the new owner."
Hence this category of tenants have in the words of Sharvananda, J.a “pre-emptive right of purchase.”
Where such an application has been made in terms of section13(1) of the Ceiling on Housing Property Law the Commissioner hasto satisfy himself with regard to the following matters:
“(a) that such house is situated in an area which in his opinion willnot be required for slum clearance, development orredevelopment or for any other public purpose;
that it is feasible to alienate such house as a separate entity;and
that the applicant is in a position to make the purchase.”
In the case of Caderamanpulle v. Keuneman and others™,Thamotheram, J. held that the Commissioner has an element o'.discretion, in addition to the consideration of the foregoing r.r't: . ,The relevant portion of his judgment is as follows:
“This does not mean that every application purporting to bevalidly made under section 13 has to be acted on and anotification made to the Minister under section 17 even if a, b,and c of the latter section are satisfied. It was rightly concededby Mr. H. L. de Silva that there was an area of discretion left tothe Commissioner for him to consider the equities in the caseand decide whether the application should be entertained.Before gong into the questions raised at a, b, and c of section17 he must decide whether he is gong to accept an applicationunder section 13 and notify the Minister that an application hasbeen made under this law. The Commissioner is not a mereconduit pipe through whom an application of a tenant undersection 13 goes to the Minister even if conditions a, b, and c aresatisfied. There is duty cast on the Commissioner to act fairly.The failure therefore to inform the landlord of theCommissioner’s decision or determination under section 17before the order of vesting was made deprives the landlord ofhis right under section 39 to appeal to the Board of Review."
It is seen from the foregoing passage that the Commissioner has inaddition to the three matters specified in section 17(1) to consider“the equities in the case”. Thamotharam, J. did not elaborate as towhat was meant by the phrase 'equities’ in the case'. However, it isclear from the context that what he had in mind was the requirementon the part of the Commissioner to consider whether the vesting ofthe house is fair and reasonable in relation to the respective interestsof the parties. This requirement on the part of the Commissioner,emanating from the judgment of Thamotharam, J. is nothing morethan the normal requirement in Administrative Law that where adiscretion is vested in an authority, it should be exercised reasonably.The principle of reasonableness in administrative action is wellentrenched in English Administrative Law. The elements ofreasonableness are stated in the oft-quoted dictum of Lord Greene.MR in the case of Associated Provincial Picture Houses Ltd. v.Wednesbury Corporation®. In later cases this dictum is commonlyreferred to as “Wednesbury's unreasonableness”. Lord Greene in thatcase considered the validity of certain conditions imposed by a localauthority for the grant of a licence for cinematography performanceson Sundays. It was held that these conditions were imposedunreasonably. In the course of the judgment he dealt with therequirement that discretion should be exercised reasonably in thefollowing way:
“It is true the discretion must be exercised reasonably. Nowwhat does that mean? Lawyers familiar with the phraseologycommonly used in relation to exercise of statutory discretionoften use the word “unreasonable” in a rather comprehensivesense. It has frequently been used and is frequently used as ageneral description of the things that must not be done. Forinstance, a person entrusted with a discretion must, so tospeak, direct himself properly in law. He must call his ownattention to the matters which he is bound to consider. Hemust exclude from his consideration matters whichare irrelevant to what he has to consider., If he does notobey those rules, he may truly be said, and often is said,to be acting “unreasonably". Similarly, there may besomething so absurd that no sensible person could everdream that it lay within the powers of the authority. Warrington,
L.J. in Short v. Poole Corporation (I) gave the exampleof the red-haired teacher, dismissed because she had redhair. That is unreasonable in one sense. In another sense it istaking into consideration extraneous matters. It is sounreasonable that it might almost be described as beingdone in bad faith; and, in fact, all these things run into oneanother.”
Dealing with the standard of reasonableness, Professor H. W. R.Wade has in Administrative Law, 1988 (6th edition) stated that it is notthe standard of “the man on the Clapham omnibus". It is the standardindicated by a true construction of the Act which distinguishesbetween what the statutory authority may or may not be authorised todo. (at page 407). In a later section he has observed, dealing withthe several grounds of unreasonableness that “the one principle thatunites them is that powers must be confined within the true scopeand policy of the Act."
Section 13 was introduced as a measure of regulating ownership.
It remained in operation until the amendment effected by Act No. 4 of1985 which provided that no application could be made for thepurchase of a house after 1.1.1987. The ceiling also ceased to be inoperation from that day. The policy of the law up to that point was thata tenant who was in occupation of a house let to him at the time thepresent landlord became owner and who continues as tenant underthe present landlord, is entitled to apply for the purchase of thathouse. This policy also involves the vesting of such house without theconsent of the landlord. Therefore, the tenant had a "pre-emptive”right as observed by Sharvananda, J. or a “preponderant right” asobserved by Thamotharam, J. In considering what is fair andreasonable, the Commissioner has to attach due weight to this righton the part of the category of tenants entitled to make applicationsunder section 13.
A perusal of the order of the Board of Review reveals that theBoard was guided by the following matters:
(i) that the 5th Respondent (tenant) had been in occupation ofthe premises paying rent for a period of 26 years at the time hemade the application.
that the tenant did not own any other’house and had severalchildren;
that the Appellant (Petitioner) had interests in India. That two ofhis children were in India and that he went there to enable hisdaughter to contract a marriage. That his absence from thiscountry even when the inquiry was going on before theCommissioner leaves room to surmise that he has interests inthat country;
that the documents marked X1 and X2 produced at thehearing of the appeal establish that the. Petitioner did not payany interest on the mortgage of the house from 14.11.1974 upto 5.1.1987. On the latter date a sum of Rs. 2000/- had beenpaid by the Petitioner after an application was made tosummon the Bank to produce documents pertaining to themortgage;
that the Petitioner is the owner of a business called “SakthiJewellers” and the 5th Respondent was a retired municipalemployee whose wife was a retired teacher. That the Petitionerdid not adduce any evidence with regard to his income.
The submission of learned counsel for the Petitioner is that thematters set out in (iii) above are irrelevant. He has called it the “Indianweb”. On a perusal of the proceedings before the Commissioner andthe Board, it appears that this “Indian web" surfaced from nowherebut the Petitioner himself. The Petitioner absented himself fromproceedings on the basis that he was in India or sought longpostponements on that ground. (Vide proceedings of 2.9.1983,29.10.1983 and 12.7.1984). In evidence, the Petitioner was asked aspecific question as to why he goes to India “very often”. His answerwas, that he had relations there. It appears from the order that theBoard was not satisfied as to the truthfulness of this answer. TheBoard has drawn, in my view a reasonable inference, that thePetitioner had other interests in India. This inference is not irrelevantin considering whether the house should be vested and sold to atenant who has been in occupation for almost 30 years and who is apensioner having all his interests and children in Sri Lanka. The
Board was also not in error when they held that the law is intended toassist tenants of this category. This basis is supported by theanalysis of the relevant provisions done in the preceding sections ofthis judgment.
As regards the submission that the Commissioner and the Boardviewed this matter with some bias against the Petitioner, I have tonote that an allegation of bias has not been made by the Petitioner inhis affidavit. If such a submission is to be made with any degree ofseriousness it has to be supported by a specific averment in theaffidavit of the Petitioner. It is clear from the proceedings that thePetitioner appeared before the Commissioner and the Board, at allstages, without making any allegation of bias. Hence I cannot attachany weight to that aspect of the submissions of learned Counsel.
In the cases of Mendis v. Perera<4) relied upon by learned Counselfor the Petitioner there had been a complete failure on the part of theCommissioner and the Board to consider the equities, that Is i;the vesting is fair and reasonable in relation to both parties. .V-instant case there has been a full inquiry before the Commies-nnrand the Board with regard to this aspect. The Petitioner had anunfettered right to adduce evidence and to make submissions. TheBoard has set out the reasons, on the basis of which it upheld thedecision of the Commissioner. I am of the view that there is no meritin the grounds upon which these reasons are now challenged. Inthese circumstances I make order dismissing the application of thePetitioner. The Petitioner will pay a sum of Rs. 2000/- as costs to the5th Respondent.
KATHIRESAN v. SIRIMEVAN BIBILE CHAIRMAN BOARD OF REVIEW CEILING ON HOUS