044-NLR-NLR-V-59-M.-M.-MOHAMED-CASSIM-Appellant-and-A.-R.-ZANEERA-UMMA-et-al.-Respondents.pdf
ICO
H. N._Q. FERNANDO, J".—Cassim i*. Zane'era Umma
1957- Present : H. N. G. Fernando, J., and T. S. Fernando, J.'
M.M. MOHAMED CASSIM, Appellant, dnd A. R. ZANEERA.UMMA ef. al., Respondents r..
~ S. 0.619—D. G. Colombo, 6759jP.N.
Ficleicommissum—Lease of property by fiduciarius'—Improvements made bona fido. by lessee—Claim by lessee for compensation from the fideicommissnrii—-“ Unjust enrichment"…':y,f7y
A lessoo of a fuluciarius is not entitled to claim compensation from, or ajus retentionis against, tho fideicommissarii in respect of improvements made byhim on the fideicommissory property in good faith and in ignorance of the exis-tence of a fidcicommissum:Tho rights, if any, arising from a contract-between
a lessor and lossco cannot be enforced by tho lessee ns against fideicommissaryowners who wore not parties to tho contract. '
A
PPEAL from a judgment of the District Court, Colombo.
Sir Lalita liajapakse, Q. G., with O. Ghellajppah and V. G. Gunatilaka,for the plaintiff-appellant.‘.
H. V. Perera, Q. G., with. G. T. Samerawickreme and Miss MaureenSeneviratne, for the defendants-respondents. ©V
Cur. adv. vult.
September 5, 1957. H. 1ST. G. Ferkanco, J.-
Tliis is an action for a declaration of title to a property now bearingassessment No. 113, New Moor Street, Colombo, and for a sale of the pro-perty under the Partition Act. The plaintiff claimed that the propertywas held by one Ralumuth Umma under a bond of fideicommissumin favour of her descendants, and that in terms of the instrument creatingthe entail, title is now vested as to a half-share in the 1st defendant andas to a one-eighth share in each of the following, that is the plaintiff andthe 2nd, 3rd and 4th defendants, in each case subject to the fideicom-missum. The 1st defendant is a daughter of Rahimath Umma, and theother claimants are the children of another daughter now deceased. The8th, 9th and 10th defendants, being the children of the 4th defendantand therefore prospective fideicommissaries arc made parties undersection 5 of the Act.:.
None of the parties already mentioned has'contested the action, butthe 6th and 7th defendants do so in the following circumstances. Asrepresentatives of the Estate of the 5th defendant, now. deceas ed, theyfiled answer denying the existence of a fideicommissum and pleading thaton the death intestate of Rahimath Umma (in 1921) 4}er ^daughter the1st defendant became the sole and absolute, owner, ofUthe /property ;they claimed that the 1st defendant had leased tjie property to thoSthdefendant by 6 D2 of 1945 for a period of 30 years, that'rent fo:r’the first '15 years of the term (that is until 31st December I960) had lSeen paid;'in advance ; and further that in terms of the lease the 5th.defendant.had
H. 2s. G. FERXAXDO, J.—Cass it n v. Zanccra Umtna
161
erected buildings to the value of Us. 35,000. They prayed for a dis-missal of the action, or in the alternative for payment to them out oFthe proceeds of sale of the value of the buildings. At the commence-ment of the trial the contest as to title was abandoned, and the onlypoint of contest upon which the parties went to trial concerned the ques-tion of compensation. On this point too, Counsel restricted the claim to-lls. 25,000 odd which is the amount of compensation ultimately awardedin the decree. But the learned trial Judge went further than the con-testing defendants appear to have anticipated, and in ordering decree forsale declared that they would be entitled to remain in possession of ahalf-share of the premises and of the entirety of the buildings for the fullterm of the lease, that is until December 31st 1976 ! The plaintiff hasappealed against both the award of compensation and the declaration infavour of the contesting defendants.
The lease 6 D2 in favour of the 5th defendant clearly provided that thelessee should erect buildings on the land, and that lie would at the endof the 30 year term deliver possession of the buildings to his lessor withoutpaj'inent of compensation, and it is clear that the buildings were in facterected on the faith of these provisions in the lease and in ignorance ofthe fact that persons other than the lessor had any rights or interestsin the land. The question wliich arises is whether a lessee of one fidu-ciary owner who in good faith makes improvements is entitled to claimcompensation for improvements as against the other fiduciary ownersand prospective fideiconnuissaries and if so whether there is any insrelentioni-s until the payment of such compensation.
An answer to this question was formulated in the case of 6'o if set v.Mohideen 1 many years ago. Jn that case the owner of a land donatedit to A, B, C and D subject to a fideieommissum in favour of the issue ofthe donees with a provision that upon the death issuelcss of any donee theother donees would succeed to the share subject to a fideicommissum infavour of their own issue. C and D died issueless and thereafter tliodonor purported to revoke the original deed and to re-donate the propertyabsolutely to A and B who subsequently leased the property to thedefendant for a period of 15 3Tears, the lease containing a condition thatupon its termination A and B should take over any buildings erected bythe lessee, paying to the lessee half the cost of erection. Shortly beforethe end of the term stipulated in the lease, A’s children successfullyclaimed half the property on the footing of the original deed and of theinvalidity of the purported revocation. The only question that remainedwas whether the defendant lessee was entitled to claim compensationfor the buildings he had erected. The Full Court unanimously decidedthat the lessee was not entitled to compensation. The following passagesoccur in the judgment of Pereira, J. at pages 285 and 286 :—“ It isnow well-settled haw in the Colony that, in order to be entitled to com-pensation for improvements, a person should have had, not onlypossession of the property improved, but bona fide possession, of it. By'possession' is here meant what was known to the civil law as the 2^ossessiocivilis as distinguished from possessio naluralis. The former, of course,Jmeant detentio animo dornini (3 Burge). At one time it was thought that,
'1.{1914) 17 N. L. B. 219.'
3 62H. N G-. FJERXANDO, J.-*—Caasim v.'Zancera Utntna'.•’
in Ceylon, even a mala fide possessor might recover compensation forimprovements, and that a lessee might also,' in certain circumstances',even in the absence of express or implied agreement -with the lessor, doso.' But all doubts as to’ the absence of right in a mala fide possessor torecover compensation for improvements were set at rest by the judgmentof the Bull Court in the case of The General Ceylon Estates Go. Ltd. v.
. P-ulle. ” “ A lessee, however, is not without his rights in respect ofimprovements made by him on the property leased with the consent oracquiescence of the lessor of the property leased. As explained by ChiefJustice Maasdorp (Maas. Inst. Vol. II pp. 56, 57), a lessee who makesimprovements on the property leased with the consent or acquiescenceof the lessor has a right to compensation, and also a tacit mortgage, forthe value of the materials over the property improved. This of course,is a right resulting from contract, and it cannot he enforced as against aperson who is no parly to the contract. It may be that the lessor or hislegal representative may claim the benefit of the lessee’s improvementsand be entitled to compensation. The question here involved does notarise in the present case, and need not be further considered.” Inmy opinion the legal consequences of the transaction involved in thepresent case would be identical with those which flowed from the factsin jSoysa v. Mohidcen 1. In both cases the lessee acted in good faith inignorance of the existence of a fideicommissum, in both cases there hadbeen a lease by a person purporting to claim as absolute oryner but whoultimately turned out to be a fiduciary, and in both cases the lease hasto be held inoperative in view of an assertion of title by ficleieommissaryhens. In fact the present case from the point of view of Equity appearsto be stronger for the claimants ; because firstly, here the claimants arethe heirs of a deceased sister of the lessor, whereas in Soysa v. Mohideenthe claimants were the children of the lessor, although they claimed notin that capacity but on an independent title under the deed creating afideicommissum ; and secondly the lease in the present ease provided forsurrender of the buildings without compensation upon termination andnot, as in Soysa v. Mohidcen, for surrender with half compensation.While the application of that decision is in my opinion conclusive againstthe claim of the contesting defendants, I shall consider Mr. Percra’sargument that subsequent decisions have, by recognition of the principleof “ unjust enrichment ”, modified the rigour of the earlier decision.
In Livera v. Abeysinghe 2 this Court held that a purchaser from a fidu-ciary heir cannot claim compensation for useful improvements from thejideicommissarii, but upon appeal to the Privy Council (reported in 19.
N.L. R. 492) the question of law was left undecided because TheirLordships preferred to act upon the finding of fact that the improverwas not acting bona fide and had to be treated as a mere trespasser. Thesame point arose again in DassanyaJce v. Tillekeralne 3 where withoutmuch discussion this Court admitted the right of a bona fide'jrbssessor, >who was a grantee from a fiduciary, to claim compensation for improve-ments. Wijctunge v. Duu-alage Jlossie 4 was a decision of Wijeyewardene..and Jayetileke JJ. to the same effect and the Court there relied .on
1 (1914) 17 7sr. L. Jt. 279.'* (1917) 20 N. L.Tt. 89.
* (1914) IS S. L. Ji. 57.–* (1946) 47 N. L,. It. 361.-
If. X. O, l'ERXAXDO, J.—Cassiai v. Zaneera V mnvt
163
■certain Roman-Dutch authorities. These decisions arc not to my mind-a modification of the principle stated in Soysa v. JJohideen, but only^ave effect to a principle recognised in that case, namely that a person-who in good faith has the possessio civilis is entitled to compensation as■against the true owner.
In Appuhamy v. Dolosivala Tea and Rubber Co. 1 one Clarke had pur-chased the land and subsequently leased it to the defendant Company-which had planted up the land during the pendency of the lease. The-true owners of an undivided share subsequently claimed their share, andthe right to compensation for the improvements was set up not by thedefendant company but by their lessor Clarke. This Court held that Clarkehad purchased the land in good faith in ignorance of the titleof the plain-tiffs. Clarke himself was an added defendant and lie claimed compen-sation for the plantations made by the defendant Company. Thequestion of difficulty whic-b the Court had to decide was whether Clarkewas entitled to claim compensation having regard to the fact that theimprovements were made not by Clarke himself but by his lessee, the-Company. Garvin, J. observed that the question had to be decided onfirst impression, and in so considering it, stated very forcibly his reasonsfor holding that a bona fide possessor ” cannot be denied the rights ofan improver merely because it was not his hand or the hand of his agentthat made or erected the improvement. ” In reaching this conclusionthe learned Judge took account of the fact that the defendant Companyin that case was a lessee who would under the terms of his lease have• been entitled to receive compensation from Clarke. But the questionwhether the Company itself (the lessee-improver) could have claimedcompensation from the true owner was not decided for the reason that the•Company in that case was, to use the language of Jayewardene A. J.,^‘satisfied to let the lessor obtain compensation for the improvements ”.The decision is authority only for the proposition that a bona fidepossessor is entitled as against the true owner to compensation notwith-standing that the improvements are effected not by himself but by hislessee. I should add that Jayewardene A. J., in the judgment to whichI have just referred, cited, as authority for the view that a lessee canassert a right to compensation against the true owner for improvementsmade in good faith in the belief that his lessor had title, the caseof Hevavitarane v. Dangan Rubber Co. 2. That case, although decidedonly a few months before Soysa v. Klohideen, is not referred to in the FullBench decision which should in my view be followed in preference. – Thiswould be particularly so upon the present facts where the dispute, asin the Full Bench decision, is between a lessee and persons claiming undera fideicommissum. In the Dangan Rubber Compiany.case the questionwhether a lessee’s claim for compensation can be maintained againstfideicommissary claimants did not arise. The view that the decision inthat case is not applicable upon the present facts ia considerablystrengthened by the circumstance that Walter Pereira, J. who in thatease upheld the claim for compensation did not think fit to refer to itin his subsequent judgment in Soysa v. Mohideen.
1 (1923) 2o JV. L. It. 267.» (1913) 17 N. L,. It. 49.
-164 ._■ H. N. G. FERNANDO, J.-rCassim v.'Zontera Vmma • V. "v^/.’v
Silva v. JBanda 1 was a case of a claim for compensation by a lessee^,.against his lessor _ and the real ground of the decision as stated by 'Bertram O. J. was that the lessee is not restricted in his right to recover1 ;'compensation by the terms of his covenant and that his right is a general,one entitling him to compensation for improvements acquiesced in by thelessor. There was no question of any claim by a lessee against a trueowner. Nugapitiya v. Joseph 8 was a case where the owner of a land hadby a non-notarial instrument purported to lease the land to the lessee“ to build a tiled boutique thereon The claim for compensation was-preferred by the lessee against a transferee from the original owner but, ■for reasons which it is not necessary to discuss, the claim was considered .in all respects as though it had been preferred against the original owner,and that claim was determined in favour of the lessee on the ground ofacquiescence, namely that the owner had stood by and allowed theimprovements to be made. The principle applied by Garvin,-J. in this,case was not that the lessor is deemed to be a bona fide possessor, butthat an owner who acquiesces is estopped by his own fraud from pleading-the malafides of the possessor in order to take the benefits of the improve-ments without compensation. There was no question in this case of recog-nising the rights of a lessee as such because the lease was clearly null andvoid. Nor was there any determination of the rights of a lessee as-against a “ third party ’ ’ who turned out to be the true owner, because that-question was never raised, and further because in any event the plaintiffwas not a “ third party ” but asuccessor in title to the person who let thelessee into occupation. Wijeyesekera v. Meegama 3 is also a decision onlyto the effect that where a person who is in the position of a lessee makesimprovements with the consent oftheowner he is entitled to compensationas against the heirs of the owners..
The rights of a lessee as against his lessor were considered somewhatexhaustively in Jafflerjee v. de Zoysa 4 by Gratiaen, J. the real effect ofwhose opinions is that ihder the general law and in the absence of ex-press covenants to the contrary, the only right of an improving tenantis the option either of removing the materials of the improvement orof receiving compensation for the loss of materials which otherwise passed,to the lessor. The argument that a lessee has any claim to compensationagainst a true owner claiming adversely to the lessor receives no assistancewhatever from this judgment.
Having considered many of the subsequent cases I would hold thatnone of them have in any way qualified the principle laid down in Soysav, Mohideen 5 that the rights, if any, arising from a contract between alessor and lessee cannot be enforced by the lessee as against fideicoromissaryowners who were not parties to the contract. Some attempt was made- -.to set up the ground of acquiescence upon the following evidence of the -plaintiff:— -•. .
Q.' * The 5th defendant put up all the buildings on this land ? ’
A. ‘ Yes. ’-; .
Q. * In 1949 ? ’.-
A. ‘ Yes.* •'..-V
– i (1024) 2G jV. L. Tt. 07…3 (1930) 40 A R. R. 340.-
* U92C) 2S JY. L. Ji. 110.4 (10-53) o 5 X. L. It. 124.
4 (1914) 17 X. L. R. 279.
H. X. G. FJvRXAXDO, J.—Cnssim v. Znnccrn U.mm'i
1 (!5
The plea of acquiescence was in tlie teeth of the position taken up in theanswer which was a, complete denial of the fideicommissum and of thetitle of the plaintiff and the other claimants, and in any event the learnedtrial Judge was not invited to hold, and in my opinion could surely nothave held, on such slender evidence, even that the plaintiff himself, letalone his brothers, sisters and nephews, had “ stood by while the 5thdefendant improved the property ”. The contesting defendants have,therefore failed to establish right to compensation and have faileda fortiori to establish a ius retenlionis.
There are two further matters to which reference has to be made. Intheir statement of claim, the contesting defendants prayed for a refundfrom the 1st defendant of the rent already paid by them for the unexpiredportion of the fifteen year period for which rent had been paid in advanceta the 1st defendant. In regard to this matter, however, no point ofcontest was framed at the trial nor was there any evidence from theplaintiff’s side to prove the payment to the first defendant. In' the circumstances I do not feel called upon to consider this claim, whichis for quite a small amount and would appear to have been abandonedat the time of the trial.
There is also the question whether the declaration in the decree that theland is to be sold subject to the rights of the lessee can be permitted tostand. In Samaraiveera v. C unjimoosa 1 which puiports to be a decisionof a Full Bench it was held that a lease was not an encumbrance withinthe meaning of section 8 of the former Partition Ordinance (Cap. 56} andthat when a land is sold under the Ordinance a lease is extinguished“ and the lessee can only get his interest- assessed and an equivalent inmoney in the distribution of proceeds out of the share of his lessor. ”
It may well be that the law is now different because section 48 of the newPartition Act of 1951 under which the present action was brought defines“ encumbrance ” to include a lease and empowers a Court in enteringdecree for sale to preserve the interests of a lessee in entering the decree.But even if there has been such a change in the law I doubt whether thepower of the- Court can be exercised in circumstances such as thoseexisting in this case. At the best the contesting defendants can ontyclaim that the half share of the property to which the 1st defendant isentitled is subject to the lease and that therefore the decree should befor the sale of the entire property subj'ect to the leasehold interests inthat half share, but considering that the half share is itself subject to afideicommissum and will pass free of the lease to the fideicommissariesupon the death of the 1st defendant, it would be gravely prejudicial tothe interests of the latter if such a reservation were to be made in the decreefor sale. In any event the point is only academic because the contestingdefendants did not ask in their prayer for such a reservation in the eventof a sale. The connected question whether the value of the lessee’sinterest should be paid to the contesting defendants out' of the proceedsof sale also does not arise for the same reason. .-
1 (1915) 18 N. Is. R. 408.
1 GO
H. Jv. G. FKRXANDO, ,T.—Fernando v. Reuben Perera
; X would accordingly allow this appeal holding that the 6th and 7thdefendants are not entitled as^ against the plaintiff to any rights. -Thedecree for sale entered by the District Judge is amended by striking outall the directions which follow the order for the sale of the property underthe Partition Act and the bringing into Court of the proceeds thereof toabide the further orders of the Court. The 6th and 7th defendants willpay to the plaintiff Rs. 105 as the costs of contest in the District Coirt'and will also pay the costs of this appeal.
T. S. Fernando, J.—I agree.
Appcal allowed.