080-NLR-NLR-V-69-M.-DAVID-SILVA-Appellant-and-S.-K.-MADANAYAKE-Respondent.pdf
396
SAMERAWICKRAME, J.—David Silva v. Madanayake
1967 Present :Sirimane J., and Samerawickrame, J.M.DAVID SILVA, Appellant, and S. K. MADANAYAKE,Respondent
S. C. 545j64—D. C. Colombo, 54048/M
Landlord and tenant—Sale, by landlord, of premises let—Resulting relationship betweenpurchaser and tenant.
When a landlord sells premises which have been rented by him, tho tenanthas the option of cancelling or surrendering his tenancy and pursuing hisremedy upon tho contract against his landlord or of retaining occupation oftho premises. If the tenant elects to retain occupation of the premises, he isbound to pay rent to the purchaser if the purchaser calls upon him to do so.In such a case, if tho tenant, or his licensee, refuses to recognise the purchaseras his landlord and continues to remain in possession of the premises withoutpaying rent, the purchaser is entitled to maintain an action for ejectment of thetenant.
.A.PPEAL from a judgment of the District Court, Colombo.
H. V. Peseta, Q.C., with C. Ranganaihan, Q.C., Eric Amerasinghe,G. D. C. Weerasinghe and B. J. Fernando, for defendant-appellant.
II. W. J ayejvardene, Q.C., with M. D. K. Kulatunga and D. S. Wije-wardene, for plaintiff-respondent.
Cur. adv. vult.
March 7, 1967. Samerawickrame, J.—
The plaintiff-respondent instituted this action against the defendantfor his ejectment from premises in Ward Place, stating that thedefendant, who had been his tenant, continued in unlawful occupationof the property after the tenancy had been terminated. Thedefendant-appellant filed answer in which he stated that the tenant ofthe premises was a Company called Lanka Chemists Ltd. and he deniedthat he was at anytime a tenant of the plaintiff-respondent.
It would appear that David Silva, the defendant, became the tenant ofthese premises in 1947 having taken them from Mudaliyar Madanayake,who was the father of the plaintiff-respondent. The defendant carriedon the business of a dispensing chemist under the name “ Lanka Chemists ”on the ground floor of the premises and he resided on the top floor. Onthe 24th March, 1955, the defendant’s business was incorporated into aLimited Liability Company known as Lanka Chemists Ltd. and thedefendant was Managing Director of the Company. The defendantcontinued to reside on the top floor of the premises till the year 1959.
SAMERAW7ICKRAME, J.—David Silva v. Afadanayake
397
After the Company was formed, rent had been paid by cheques of theCompany but the rent appears to have been forwarded by and receiptsgiven in favour of the defendant, David Silva. The defendant hasproduced two receipts D1 and D2, D1 in favour of Lanka Chemists andD2 in favour of Lanka Chemists Ltd. The translation of D2 states thatLanka Chemists Ltd. was the tenant of the premises but on an examina-tion of the original, which is a printed form in Sinhala, it shows that thewords which had been translated as “ tenant ” have been scored off inthe original. The receipt D1 is in favour of Mr. M. David Silva (LankaChemists Ltd.). The plaintiff-respondent has produced the counterfoilsof all the other receipts issued before and after D2 and shown that theyhave been issued in favour of David Silva personally. Mudaliyar Mada-nayake, the father of the plaintiff, who was the original landlord diedin the year 19C3 before the trial of this action. The defendant has givenevidence but he has not spoken to any agreement between the partieswhereby the Company was accepted as tenant in place of himself. Thelearned District Judge has held that the Company did not become thetenant of these premises and that the defendant David Silva continuedto be the tenant even after the incorporation of the Company.
Mr. H. V. Perera, Q.C., who appeared for the defendant-appellant,,did not seriously ask us to reverse this finding of fact by the learnedDistrict Judge. He submitted, however, that the evidence in regard tothe transaction between the parties was relevant to the next point,namely, that the defendant had not elected to become the tenant of thepresent plaintiff.
By deed No. 1334 of 10th September, 1957, Mudaliyar Madanayaketransferred the premises in suit to the plaintiff-respondent. It appearsthat at that time the plaintiff-respondent was pursuing his studies inEngland and the defendant continued to be the tenant of and paid rentto Mudaliyar Madanayake. On the 15th March, 1961, Proctors actingfor the plaintiff wrote letter (P 26) to both the defendant and LankaChemists Ltd. stating that the premises had been transferred by MudaliyarMadanayake to the plaintiff and that the plaintiff would recognise andaccept rent from David Silva, the defendant. On the 28th March,1961, Proctors for the defendant-appellant sent a letter in which theyacknowledged receipt of the information regarding the change ofownership of the premises and forwarded a cheque for the rent for themonths of February and March. On the 3rd April, 1961, letter waswritten on behalf of the plaintiff requesting the Proctors for the defendantto confirm that the cheque was forwarded on account of Mr. David Silva.No reply appears to have bejn received and a further letter had beenwritten on the 29th April calling attention to the earlier letter. On the11th May, 1961, Proctors for the plaintiff wrote to the defendant statingthat he and not Lanka Chemists was the tenant of Mudaliyar Mada-nayake and that he and not Lanka Chemists was the tenant of theplaintiff. The letter further stated that the cheque forwarded by theProctors for the defendant-appellant and a further cheque sent by Lanka
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SAMERAWICKRAME, J.—David Silva v. Madanayake
Chemists Ltd. was returned as they purported to be payment by LankaChemists Ltd. On the 24th May, 1961, Proctors for the defendant-appellant sent a letter forwarding a cheque for Rs. 612/45 in settlementof the rent for the premises for the months of February, March and April1961. Proctors for the defendant-appellant also sent a letter on the 13thMay, 1961 forwarding a cheque in respect of the rent for May 1961. Onthe 2nd June, 1961 letter was sent on behalf of the plaintiff-respondentto the Proctors for the defendant-appellant asking them to confirm thatthe tenant is Mr. M. David Silva and that the payments are from him.To this letter, the Proctors for the defendant-appellant replied by theirletter dated 7th June, 1961 stating that they were surprised at thecontents of the letter and that the plaintiff-respondent was aware thatthe tenant of the premises was Messrs Lanka Chemists Ltd.
Learned counsel for the defendant-appellant submitted that hiBclient had not become the tenant of the plaintiff-respondent upon thetransfer by Mudaliyar Madanayake of the premises to the latter, becauseit was the tenant who had the option of continuing the tenancy and if thetenant was unwilling to be the tenant of the purchaser, the latter did notbecome his landlord. In order to examine this contention, it is necessaryto consider the rights of parties upon the sale or transfer of premisesthat have been let. Under the Roman Law, the purchaser of propertywhich had been let was not bound by the lease unless it had beenstipulated in the contract of sale that the lease should remain in force.Consequently, the purchaser could, as soon as he became owner, ejectthe tenant and the latter's only remedy was an action on the contractagainst his landlord. The rule of the Roman Law was, however, modifiedby the customary law of Holland to this extent that the purchaserhad to allow the lessee to remain in occupation till the end of his term.Grotius, 3-19-16 states, “it is also a rule with us that a purchaser mustallow a lease or hiring which has been granted by the seller ”. Voet,19-2-7 states, “ it has been decided that purchase gives place to lease(dot Huur Voor Koop goat) unless something different has been expresslyarranged between lessor and lessee. This is so whether the sale takesplace privately or publicly or by the order of the Magistrate on a petitionof a creditor with employment of the formalities of the auction-sphere andthe lessor enjoys the right of retention if he prefers to continue with thehire ”. Later, at 19-2-19, Voet states, “ on the other hand also wheneverby Statute or consent sale gives place to a lease, a particular successoris only bound to bear up to the end with a resident in occupation or atenant in enjoyment if the lessee is ready to pay the rent to him for theensuing period. ”
It would appear, therefore, that a purchaser of property that had beenlet was bound by the lease and had to permit the lessee to continue inoccupation till the end of the term of the lease. The purchaser may ofcourse, as against his vendor, insist on vacant possession or, in the alter-native, claim rescission of the sale, but if he desires to abide by the sale,he can only take possession along with the lessee in occupation if the
SAMER A WICKR AME, J.—David Silva v. Madanayake
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latter chooses to continue with the lease. The lessee had the option ofcancelling or surrendering the lease and pursuing his remedy upon hiscontract against his landlord or of retaining occupation of the propertyin terms of his lease against the purchaser. But in the event of hispursuing the latter course, he was under an obligation to pay rent to thepurchaser and it appears to me also to perform all the other obligationsdue by him as tenant to his landlord. The option of privilege that thetenant had to decide whether he would become a tenant of the purchaserconsisted in this, that it w'as open to him to cancel or surrender the leaseif he did not desire to become a tenant of the purchaser. Where hechose to continue in possession as tenant of the premises, it does notappear to me that he had any right to refuse to pay rent or to fulfil theother obligations of a tenant to the purchaser.
In some cases, reference has been made to the privilege of the tenant todecide whether he would continue under the purchaser on the basis of adictum in Bayne on ‘ Landlord and Tenant I have examined thepassage in Bayne and I find that it does not in anyway run counter tothe conclusion which I have arrived at. It is to the following effect,“ ‘ Hire goes before sale’, or ‘dal Huur voor Koop goat’, is an axiom of ourlaw, and purchasers of, and persons succeeding to the possession oflanded property, are bound by the leases previously made by the vendors.From this arises the privilege of the tenant, either to remain the tenantof the new landlord, the purchaser, or to cancel the lease. But thenew landlord, the purchaser, cannot, according to this rule, eject thetenant, but must await the expiration of the lease, or the occurrence ofsome circumstance which will operate as giving a right of re-entry —vide Bayne : Landlord and Tenant, page 37.
Referring to the maxim “ dot Huur voor Koop gaat ”, Greenberg J.P.in the case of Boshoff v. Theron1 states—
“ The maxim had no place in the Roman law, under which a purchaserof property was not bound to recognise a lease on the property unlessit was a condition of the sale that he should. Without such a condition,a sale was regarded as a termination of the lease, leaving the lesseewith no claim to remain in occupation of the property, but giving him aright to damages against the seller. But in Roman-Dutch law, interms of several of the codes in the Netherlands, it was provided that‘ the purchaser must acknowledge the lease entered into by hispredecessor in title, viz. the vendor, according to the maxim huur gaatvoor koop ’. (Wessels, History of the Roman-Dutch Law, page 622).
This has been adopted in South Africa and it is a recognised principlethat the purchaser steps into the shoes of the seller as regards theenforcement of the lease and the latter’s obligation under a lease enteredinto with the seller (de Wet v. Union Government 1934 A. D. 59 at page63).”
11940 T. P. D. 299 at page 302.
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SAMERAWICKRAME, J.—David Silva v. Madanayake
Later in his judgment, the learned Judge states, “In de Jagerv. Sisana(1930 A. D. ’ll) Wessels, J. A. (at page 82) after referring to the Romanlaw principle which I hwe already mentioned, said ‘ tins principlehowever was modified by the Roman-Dutch Ls w and that systemadopted the rule that the sale does not break the lease but that thepurchaser becomes the landlord of the tenant under the same conditionsas his lease with the seller The words ‘ becomes the landlord ofthe tenant, etc. ’ may be used loosely, but in their ordinary significancethey mean that the relationship of landlord and tenant which existedbetween seller and tenant before the sale has given place to a relationshipof this kind between purchiser and tenant.”
In 52 N. L. R. page 445 Gratiaen J. considered the position and cameto the following conclusion. “ Finally, thore is the position arising whorethe purchaser elects to recognise the tenant but the tenant does notspecifically attorn to him. Sampayo J. took the view ‘ but not withoutsome hesitation ’ 16 N. L. R. at page 317, that in such a case the purchaserwould enjoy the right not only to claim rent but also to sue for damagesand ejectment. In 18 N. L. R. page 168 the earlier ruling was re-atfirmed.It would, therefore, seem that a tenant who remains in occupation withnotice of the purchaser’s election to recognise him as a tenant maylegitimately be regarded as having attorned to the purchaser so asto establish privity of contract between them
In Silva v. Muniamma1, Sansoni J. stated, “ He has, however, held thatbecause the defendant refused to comply with the plaintiffs’ request topay rent to them, the plaintiffs cannot bring an action to recover rent asthe defendant has not attorned to the plaintiffs. He cites a judgment ofthis Court in Zackariya v. Benedict, but the point decided there wasdifferent. Mr. Justice Swan was dealing with the case where a tenantrefused to pay rent to the vendee of the landlord and all he held was thatthe vendee could give the tenant notice to quit and sue the tenant forejectment, but there are numerous authorities in support of the propositionthat when a landlord sells premises which have been rented the purchasersteps into the landlord’s shoes and is entitled to claim the rent from thetenant. Of course, it is not incumbent on the tenant to remain inpossession if he does not wish to acknowledge the vendee as his landlord.He is quite entitled to give up the tenancy and quit the premises, but solong as he remains in possession h» must pay the rent to his new landlord,that is the vendee
In the present case, the position is that before and after the transferby Mudaliyar Madanayake to the present plaintiff, the defendant was inpossession of the premises in question through his licencee the LankaChemists Ltd. After he was informed of the transfer to the plaintiffand was called upon to pay rent to him, he continued to be in possessionin the same manner. As stated in the authorities referred to above, itwas not open to him to remain in possession of the premises and refuseto recognise the plaintiff as his landlord and pay rent to him.
1 (1955) 56 N. L. R. 357.
MANICAVASAGAR, J.—NamanaJhan v. McIntyre
401
I am, therefore, of the view that plaintiff was entitled to maintain thepresent action for ejectment of the defendant. I think the luirned Judgehee come to a correct conclusion, and I dismiss the appeal with costs.
Sibimane, J.—I agree.
Appeal dismissed.