M. PATMANATHAN and 2 others, Appellants, and E. E. C. THURAISINGHAM and another,

058-NLR-NLR-V-74-M.-PATMANATHAN-and-2-others-Appellants-and-E.-E.-C.-THURAISINGHAM-and-another.pdf


I9ti
Pathmanathan v. Thuraisingham
Present : Sirimane, J., and Weeramanfry, J.
M.PATHMANATHAN and 2 others, Appellants, andE. E. C. THURAISINGHAM and another, Respondents
S. C. 327-318/66—D. C. Jaffna, 602/T
Administration of estates—Judicial settlement—-Incapacity of Court to hear disputedclaims of creditors—Immovable proper ty of testator situated outside Ceylon—Sale proceeds or income brought into Ceylon—Liability of executor to accountfor such money—Last Will—Description therein of executor as “ executor andtrustee ”—Whether the Will creates a trust—.4 legatee's renunciation of a portionof his legacy during life lime of testator—Validity—Civil Procedure Code,ss. 510. 720, 721, 720, 72S, 729, 731, 710.
Disputed claims cannot bo adjudicated upon in an inquiry relating toihc judicial settlement of tho accounts of executors and administrators underChapters 54 and 55 of the Civil Procedure Code. In such proceedings, therefore,a legatee cannot claim as n creditor that a ccrcain sum of money is duo to himfrom the estate of tho testator, if tho claim is disputed by tho executor. Sucha disputed claim can only be made by way of a separate action.
'When a testator dies leaving certain immovable property situated outsideCeylon, his executors who are granted probato in Ceylon primarily are liableto account in Ceylon for the proceeds of sale of, or tho income derived from,that property if such proceeds or income have, been brought into Ceylon bytho executors.
(in) Where a testator appoints a person as his executor and clearly entrustshim with all tho duties that an executor must perform, the mere descriptionof him in tho Will as “ executor and trustee ” does not create a trust resultingin tho position that any claim by the logatoes against tho executor must bomade by way of ft separate action under tho Trusts Ordinaneo.
(iv) Where, after a Will has been cxc.cutod and during tho life time of tlu>testator, a. legatee executes a deed by which he renounces his rights undertho Will to the value of a certain suin of moaov as ho has already receivedassets to that extent in advance, the deed of renunciation is valid. It cannotbe contended by him in the testamentary proceedings following tho testutor’sdeath that the deed is inoperative on the ground that it is on amendment orvariation of the Will.
Appeals from a judgment of the ILstrici Court, Jaffna.
C. Thiagalingum, Q-O., with E. Ii. S. R. Cooimuancata y,C. Chahcdamu, and >S C. B. Walgampaya. for the 2nd and 3rd eiiees-appelJants in Appeal No. 317, and for the 3rd and 4th eitcos-icspondentsin Appeal No. 3IS.
C. Chellttppah, for the 1st 'ittc-rcspondenr in Appeal .No. 317 and forthe 1st eitce-appellant in Appeal No. 3IS.
H. IF. Jaye-uaideite, Q.C., with O. Rtuigunalhan, Q.O.. P. Somatillalam.
J. Fernando anil D. C. Anitrasinght, for Ihe executors-respondent-in both Appeals.
Cur. adv. wit.
SIR3MAXE, J.—Palhmancuhan v. Thuraisingham
197
December 7, 1970. Sirimaxe, J.—
Bj' a joint Last Will executed in Ceylon dated 1.2.37 Albert EdvardClough, and bis wife Clara MeenachcJu bequeathed all their property andassets after the death of both of them to four of tlieir five children,namely, Balasingham {1st citec), Ernest Emmanuel {1st executor),Bose Alagamaiyy (2nd executor) and Mnhesvary (2nd citee) in equalshares. The fifth child Millie was left out as she had been dowriedearlier.
Both the testators died in Ceylon in 1937, leaving assets movableand immovable in Ceylon and Malaya. Tire executors applied for andwere granted probate in 1938. The testators had left a very valuablerubber estate called Karainagar Estate in Malaya, and the probatewas rescaled there.
On 22.2.43 a “ Final Account ” of the administration was filed by theexecutors and the Court called for a repor t from the Secretary. Despitethe fact that there is no provision for a Final Account in the CivilProcedure Code, it is the usual practice followed in our Courts. There-after, for some reason which Counsel could not explain to us, the recordseems to have been forgotten by all concerned, but the executors remainedin charge of all the assets of the estate. They did not, nor did thelegatees, more for a judicial settlement.
After the lapse of some eighteen years, i.e., on 4.11.Cl, the 2nd and3rd citees who arc husband and wife, presented a petition to Courtunder section 726 of the Civil Procedure Code naming the two executorsas respondents, and alleging, inter alia, that both before and after 1943the executors had received large sums of monies due to the estate, soldimmovable property belonging to the estate, and not accounted for themonies so received. They prayed for a judicial settlement. Whennotice of tin's application was served on the executors—(not withoutsome difficulty)—they themselves filed a petition dated 16.5.62 undersections 728 and 729 of the Civil Procedure Code, moving, at long last,for a judicial settlement of the estate. Tn para. 5 of the petition theyalleged that the three citccs were “ persons interested in the estate ”.On 18.9.62 the citees filed objections to the petition. There is no specificprovision for filing such objections, but this again is a practice adoptedby our Courts for the sake of convenience, in order to pin-point thematters which the citees dispute, with reference to the account filedby the executors together with the application for a judicial settlement.
In consequence of certain orders made by the Court thereafter, whichit is unnecessary to consider, the executors filed another petition dated9.3.64 with an account, prajing for a judicial settlement, and this appealis against certain orders made at the inquiry into that application.
—K 5170 (7/71)
19S
SIRIMANE, J.—PaihmanaJhan v. Thu raisin'] ham
Some 49 issues were raised at this inquiry, and the Court was invitedto decide what were termed “ Prcliminiary Issues ” at the outset. Theseissues related to four disputes between the parties, and may be statedas follows :—
An estate called Balarajah Estate in which the 2nd citec ownedshares had been sold by one of the testators (the husband) and theproceeds kept by him. A sum of Rs. 74,000 represented the amountdue to the 2nd citec as her share of the proceeds. She claimed thissum from the executors as a debt due to her from the estate.
The executors took up the position that such a claim could not bemade in these proceedings but only by way of a separate action.Issues 9 (a) and 9 (b), 30 and 31 relate to this dispute.
A half share of the estate called Karainagar Estate in Malayawas sold by the executors, a quarter for 175,000 Malayan Dollarswhich is the equivalent of roughly one and half times that sum inCeylon rupees. Another one quarter share was sold for 302,632Malayan Dollars. The greater part of the proceeds of the sale hadbeen brought into Ceylon and the executors paid two sums ofRs. 75,000 and Rs. 15,000 in Ceylon money to the 2nd citce. The citecsasked for an accounting of the rest of the proceeds of sale, and somuch of the income, from the balance left of the estate, which wasbrought into Ceylon. The executors took up the position that theland being situated in Malaya, they were not liable to account inCeylon for the proceeds of sale or the income. Issues 16 («) to 16 (c),45, 46 and 49 relate to this dispute.
The executors took up the position, that because the Last Willappointed them “ executors and trustees ” all the assets of thedeceased vested in them as trustees, and the citecs, if they had anyclaims in respect of those properties, should sue them in a separateaction as trustees. Issues 23 and 24 appear to relate to this dispute.
The 2nd executor had received as dowry a certain property tothe value of Rs. 100,000 during the life time of one of the testators—•her father. She executed deed Cl by which she renounced her rightsunder the Last ’Will to the extent of Rs. 100,000 as she had alreadyreceived a dowry of that value. The 2nd executor took up the positionthat this deed was inoperative, for certain reasons which I shall referto when dealing with tin's dispute.
Issues 12, 12 (a), 37 («) and 39, as amended later, appear to relateto this dispute.
The learned District Judge held against the citccs on all four ofthose disputes, and the appeals arc against that order. These were thefour matters which were argued before us and I shall deal with thesedisputes in the order set out above.
SIRIMAXE, J.—Pathmanathnn v. Thuraisingham
199
TJie 2nd citcc seeks to establish a claim as a creditor. It is not a disputebetween tjic accounting party and a legatee under the Will. Chapter54 of the Civil Procedure Code deals with “ aiding, supervising andcontrolling of executors and administrators and under section 720of that chapter a creditor may present a petition for payment of hisdebt due to him. But, when for instance, in sucJi a case the executordenies liability the Court must- dismiss the claim under section 721.Counsel for the Appellants pointed out that jnocccdings for a judicial.settlement, commence under Chapter 55 where there is no such statutorybar to a creditor presenting a disputed claim. He relied on sections751 and 740 (3) in that Chapter. Section 731 entitles a creditor or aperson interested in the. estate to make himself a party to the proceedingsfor a judicial settlement, and section 740 deals with decrees for paymentand distribution, when an estate is judicially settled. Sub-section 3of section 7-10 reads as follows :—
740 (3) '■ Where the validity of a debt, claim, or distributiveshare is not disputed, or lias been established, the decree must determineto whom it is payable, the sum to be paid, and all other questionsconcerning the same. And such decree shall be conclusive withrespect to the matters enumerated in this section upon each partyto the special proceeding who was duly cited or appeared, and uponevery person deriving title from such party. ”
One lias to bear in mind tnat it is practically impossible for aTestamentary Judge to hear disputed claims by creditors in proceedingsfor a judicial settlement of accounts. Even a single disputed claimmay involve a complicated trial. Learned Counsel for the Appellantssubmitted that in such a case the Testamentary Judge would have adiscretion to refer the alleged creditor to a separate action. But, on areading of that Chapter (Cap. 55) as a whole, I am inclined to agreewith the submission made by Mr. Jaycwardene for the executors, that ai: creditor ” (section 731) whose “ claim has been established ” (section740) means, one who has already established his claim. It docs notmean that a creditor whose claim is disputed can seek to establish thatclaim in tHe proceedings for a judicial settlement.
Tire sections of our Code relating to Judicial settlements of Accountshave been taken over almost verbatim from the Code of Civil Procedureof the State of Xcw York.
Sections 2742 and 2743 correspond to our section 239, and the thirdlimb of section 740 reproduced above, is referred to as the third sentencein Throop’s Commcntaiy on the Xcw York Code.
Commenting on section 2742 he refers to the fact that there has beenmuch controvers3r bj’ the Courts on the question whether a creditorcould prove hi s debt at a judicial settlement, and says at page 630 :—
“The statutes provide sufficient and convenient means, for deter-mining disputed claims against an executor or administrator, namely,
200
SIRMANE, J.—Pathmanathan v. Thuraisingham
by an action, in which either party may have a regular and formaltrial, and the other advantages of that mode of proceeding; or by areference, if the parties desire to avoid the expense and delay of anaction. If this Code had granted to the creditor a third remedy,he would always have had his election to pursue it; while the executoror administrator would have had no corresponding election, to compelhim to resort to it. Again, the surrogates courts ought not to beunnecessarily burdened with the trial of such issues. ”
Having regard to the practice and procedure adopted by our Courts,I am of the view that disputed claims should not be adjudicated uponin an inquiry relating to a judicial settlement, and I think that thelearned District Judge was right when he held that the 2nd citce shouldestablish her claim in a separate action.
I pass on to the sccond^point in'dispute.
It is true that Ivarainagar Estate being situated in Malaya, the MalayanCourts would have jurisdiction on questions relating to that immovableproperty. Even if it was sold the Malayan law would apply to theproceeds of sale ; if, for example, there is a charge on the immovableproperty such as a mortgate or a sum due to the revenue of that country.But, that is not the question which arises here. A share of the immovable .property has been sold by the executors and the proceeds brought intoCeylon. They (the executors) have continued to take the income fromthe rest of the estate and brought at least a part of it into Ceylon—oneexecutor is resident here. The legatees under the Last Will who arcentitled to a share of that estate, want to know what the executors havedone with the proceeds of sale of part of that estate, and the incomederived from the balance which they have brought into Ceylon. Theexecutors object to disclosing anything at all regarding the proceedsof sale or the income brought into Ceylon. In regard to income Mr.Jayewardcne contended that it is something which came into existenceafter the testators’ death and is therefore not a portion of a deceasedperson’s property’ within the meaning of section 540 of the Civil ProcedureCode on which he strongly relied.
Section 540 is as follows :—
“ If no limitation is expressed in the order making the grant, thenthe power of administration, which is authenticated by the issue ofprobate, or is conveyed by the issue of a grant of administration,extends to every’ portion of the deceased person’s property, movableand immovable, within Ceylon, or so much thereof as is notadministered, and endures for the life of the executor or administratoror until the whole of the said property is administered, according nsthe death of the executor or administrator, or the completion of theadministration, first occurs. ”
SI RJ.MANE, J.—Pa/hmanaJhan v. Thuraisingham
201
It is beyond question that an executor in Ceylon takes charge of theincome derived from property in Ceylon under the provisions of flu'svery section, and that he is liable to account for such income at thejudicial settlement. It cannot possibl}7 be argued that an executorcannot lake charge of the income or rents derived from immovableproperty on the ground that those assets come into being only afterthe testator’s death.
What then is the position in regard to income derived from a propertysituated outside Ceylon, which is brought into Ceylon ?
Dicey on the Conflict of Laws, Eighth Edition, at page 577, sets outRule 90 (2) as follows :—
Buie 90: “ The following property of a deceased person vestsautomatically in his personal representative by virtue of an EnglishGrant :
(1)(2) any movables of the deceased which after his death arc broughtinto England before any person has, in a foreign countryin which thej7 arc situated, obtained a good title theretounder the law of such foreign country and reduced theminto possession. ”
Commenting on this Rule he states later at page 57S :—
“There seems little doubt that if movables of the deceased arebrought to England before anyone has acquired a title to them undertheir lex sihts, they will vest in the English personal representative. ”
It is only a pretence to imagine that these assets have been the subjectof administration in Malaya. The complaint of the citces is that theyhave not been accounted for either here or in Malaya. As far as ohocan gather the executors have done nothing in the Malayan Courts beyondgetting the probate resealed. They do not deny having brought atleast a part of the assets into Ceylon.
The principal Court of Xdministration is the District Court of Jaffnawhich granted probate. I take the view that once the executors bringinto Ceylon proceeds of sale or the income derived from a propertysituated outside Ceylon such proceeds or income must be accounted forhere. These are assets which they got into their hands as executorsunder the colour of the grant issued to them by the District Court ofJaffna.
Williams on Executors, 12th Edition, Volume 2, says at page 1091 :—-
“ Now if the deceased died domiciled in England the grant ofadministration in England is deemed the principal or primary one.The English personal representative has, as a rule, a right to applyto the Courts of a foreign country where there arc assets for anancillary grant for himself or his attorney. But if such a grant is
202
SIRTMANE, J.—Pathmanathaii v. Thuraisingham
made the new administration thereunder is made subservient to tjierights of all creditors whose claims arc recognised by the foreign law.It is only the residuum of the foreign assets, after all such claimshave been satisfied, which is transmissible and becomes assets in thehands of the English personal representative as such. ”
The third and fourth points in dispute need not detain us for anylength of time.
A testator appoints as his executor a person in whom he has confidence,and for that reason he entrusts to that person the duty of giving effectto his wishes as expressed in his Last Will. It is in that sense that theword “ trustee ” is so often used in a Last Will. In this instance theLast Will itself states in para. (2) that the “Executors and Trustees *'will “ hereafter be called our Trustees It is sufficient to say that areading of the Last Will makes it quite clear that tjie two petitionerswere appointed executors and entrusted with all the duties that executorsmust perform. There is no dual capacity, one as executors and the otheras trustees. I am unable to accept the submission that by using thephrase “ executors and trustees ” the testator vested all tjie propertyin the “ trustees ”, so that, any claim by the legatees relating to thoseproperties or the income derived therefrom, must be made by way of aseparate action under the Trusts Ordinance. The testators did not,in my view, create a “ trust ” with tjie children as beneficiaries. DeedCl to wjiich I shall presently refer, and to which one. testator was aparty, shows that Jic intended the children to be legatees under tjie Will.
Lastly, there is the question of Cl. The 2nd executrix Jiad marriedon 11.8.37 and Jiad been given a dowry to tjie value of 11s. 100,000.By Cl sjie renounced tjie rigjits which would accrue to her under theLast Will to the extent of Rs. 100,000, as sjie Jiad already received assetsto tjiat extent in advance, I can sec notjiing wrong in that-. I amunable to agree witji tlie submission made on behalf of the executors thatdeed Cl is inoperative, on tjie ground tjiat tjicre is an amendment orvariation of the Last Will.
It was also submitted that the renunciation was in favour of the testatorand not tjie citecs. But, one Jias to look at tjie true intention of the2nd executrix wjicn slie executed Cl, on receiving property to the valueof Rs. 100,000. She was expecting to receive certain properties underthe Last Will from Jier fatjier and site renounced jier rigjits under tjiatWill to the extent of tjie benefit sjie obtained while Jier fatjier was stillalive. Though tjie Notar}- who executed tjie deed Jiad used tjie phrase“ In favour of my father ”, tjie deed itself sets out dearly wjiat sjierenounced as follows :—
“ A sum of Rs. 100,000 only, oul of tjie property available fordistribution after my fatjier’s death ns provided for bj' tlie said Last-Will and testament.”
A T-L.ES, J-—Samara pain v. £tary
203
I am of the view that (he appeal must succeed on the second, third andfourth points argued before us, and the ease will go back for inquiry intothe application for a judicial settlement on that basis.
The Ci f ccs-Appel la n( s are entitled to one set of costs of appeal againstth e Ex e cu t o rs – R espon dents.
Weehamaktuy, J.—I agree.
Appeal mainly allowed.