M. S. PERERA (Assistant Government Agent , Kandy ), Appellant, and UNANTENNA et

110-NLR-NLR-V-54-M.-S.-PERERA-Assistant-Government-Agent-Kandy-Appellant-and-UNANTENNA-et-.pdf

ROSE C.J.—M.. S. Perera v. ZJnantenna
457
1953Present: Rose C.J. and Pulle J.
M. S. PERERA (Assistant Government Agent, Kandy), Appellant,and UNANTENNA et al., Respondents'
S. C. 9-10—D. G. Kandy, X 1,397
Mortgage—Land Redemption Ordinance, Mo. 61 of 1942, as amended by OrdinanceNo. 62 of 1947—Section 3 (1) (6)—“ Transfer ”—Includes voluntary con-veyance of mortgaged properly subsequent to date of hypothecary decree—Hypothecary decree—Does mortgage become merged in decree ?
VVhere a land is mortgaged and the mortgage is put in. suit and decree isentered against the mortgagor for the payment of the amount due on themortgage bond, a subsequent voluntary conveyance by the mortgagor infavour of the mortgagee, the consideration for which is set off in full settlementof the amount due on the said decree, is a transfer as contemplated insection 3 (1) (6) o the Land Redemption Ordinance. In such a case it cannotbe contended that, notwithstanding that the charge on the land created bythe mortgage bond existed even after the decree, the debt due from the mort-gagor personally to the mortgagee became merged in the decree and ceased toexist and that the land, therefore, was not a land which was “ transferred by itsowner … to any other person in satisfaction or part satisfaction of adebt which was due from that owner … to that other person andwhich was secured by a mortgage of that land subsisting immediately prior to thetransfer ” within the meaning of the section.
A
/APPEALS from a judgment of the District Court, Kandy.
Walter Jayawardene, Crown Counsel, with V. Tennekoon, CrownCounsel, for the plaintiff appellant in Appeal No. 9, and respondent inAppeal No. 10.
N. E. Weerasooria, Q.G., with G. T. Samaratvickreme, for the petitionerappellant in Appeal No. 10.
V. Perera, Q.C., wdth C. Thiagalingam, Q.C., and N. M. de Silva,for the 1st and 3rd defendants respondents in both appeals.
Cur. adv. vult.
May 22, 1953. Rose C.J.—
There are two appeals in this case. The first appeal is by the plaintiffwho is the Assistant Government Agent for Kandy. It turns upon theinterpretation of section 3 (1) (6) of the Land Redemption Ordinance,20Lrv.
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ROSE G.J.—JkT. jS. Per era. -u. XJnarUenna
No. 61 of 1942, as amended by the Land Redemption (Amendment)Ordinance, No. 62 of 1947. The relevant part of the amended sectionreads as follows :—
“ 3.(1) The Land Commissioner is hereby authorised to acquire on
behalf of Government the whole or any part of any agricultural land,if the Land Commissioner is satisfied that the land was, at any timebefore or after the date appointed under section 1, but not earlier thanthe first day of January, 1929—
transferred by its owner or his executors or administrators toany other person or the heirs, executors or administrators of anyother person in satisfaction or part satisfaction of a debt which wasdue from that owner or his predecessor in title to that other personand which was secured by a mortgage of that land subsistingimmediately prior to the transfer.”
The facts are sufficiently set out in the judgment of the learned DistrictJudge.
A point was taken by Mr. Thiagalingam on behalf of the 1st and 3rddefendants respondents that the authorization of the Assistant Govern-ment Agent by the Land Commissioner under section 2 (3) of the principalOrdinance was invalid. This matter, however, was not pressed in appealand, therefore, it is unnecessary to advert to it further. Similarly claimsfor declaration of title, ejectment and damages made by the 1st and 3rddefendants were not pressed and it is unnecessary to make anyobservations in that regard.
The question to be decided in this case is whether it would be correctto hold that, where a land is mortgaged and the mortgage is put in suitand decree is entered against the mortgagor for the payment of theamount due on the mortgage bond, a subsequent voluntary conveyanceby the mortgagor in favour of the mortgagee, the consideration for whichis set off in full settlement of the amount due on the said decree, is not atransfer as contemplated in section 3 (1).(6) of the Land RedemptionOrdinance, No. 61 of 1942 in that, notwithstanding that the charge on theland created by the mortgage bond existed even after the decree, thedebt due from the mortgagor personally to the mortgagee became mergedin the decree and ceased to exist and the land, therefore, was not a landwhich was “ transferred by its owner … to any other personin satisfaction or part satisfaction of a debt which was due from thatowner … to that other person and which was secured by a nportgageof that land subsisting immediately prior to the transfer ” within the meaningof the section..
Perhaps it may be convenient first to dispose of a point taken by learnedCounsel for the Assistant Government Agent that the District Judge inany event is not empowered to go behind the determination of the LandCommissioner or his delegate. On this matter I prefer the respondents’contention that the function of the Land Commissioner or any delegateof his consists of two components : first, the correct formulation of the
ROSE C.J.—M. S. Perera v. Unanienna
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question to be decided and, secondly, the answering of that question inrelation to the particular land. X agree that the second finding, which isone of fact, cannot be canvassed, but I am of the opinion thatan incorrect formulation of the question to he decided is open tochallenge.
On the main issue support for the Assistant Government Agent’s viewis to be found in two judgments of Bonser C.J., the first in a case reportedin Appendix B of 1 Browne’s Reports of Cases at page XL and the second inMadar Lebbe v. Nagamma x. In these two cases Bonser C.J. adopts aview contrary to that previously expressed in The Government Agent v.Hendrick Hamy2. This position appears to have been accepted byMiddleton J., in Ramanathan Chetty v. Cassim3 where he says at page180—
'“ The doctrine of merger of the mortgage bond in a judgment laid
down in The Government Agent v. Hendrick Hamy 4 has been repudiatedapparently by the judgments of this Court in Madar Lebbe v. Nagamma 5and O. L. Meera Saibo Lebbe v. M. B. Mohamadu Ibrahim6.”
In Madar Lebbe v. Nagamma7, Bonser C.J. says at page 23:—
“ The District Judge dismissed the action on the ground that it wascovered by a case {Government Agent v. Hendrick Hamy) reported in3 C. L. R. 86, where it was held that the mortgage was merged in thejudgment, and that if the judgment was not registered before a subse-quent conveyance, both the mortgage and the decree were gone, andthe purchaser could hold the land free from all encumbrances. Butas both the Judges who took part in the judgment in the case uponwhich the District Judge relied were subsequently parties to judgmentswhich were entirely inconsistent with the decision in that case, I thinkwe are free to consider that the judgment has been overruled, and isnot to be considered any longer as law. It. seems to me that there isno merger of the mortgage in the decree, as I said in the case reportedin Appendix B of 1 Browne’s Reports, p. 11. In that case I said thatthe personal remedy against the mortgagor upon the mortgage bondwas gone, but that the charge on the land still existed, and the decreemerely confirmed its existence.”
If the view stated above, which was accepted by the learned DistrictJudge, is correct, it, of course, disposes of the contention which wasurged on behalf of the respondents that a mortgage is necessarily trans-formed l?y a decree. Moreover, an inference may perhaps be drawn from thefact that Mr. Lee in his book on the Introduction to Roman Dutch Lawmakes no mention of any transformation or change of nature on the partof a mortgage after decree. The judgment of Buchanan J. in Estate
{1902) 6 N. L. R. 21.4 (2894) 3 C. L. R. 86.
{1894) 3 O. L. Rep. 86.a (1902) 6 N. L. R. 21.
(1911) 14 N. L. R. 177.e (2901) 2 Browne 210.
(1902)
1.
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ROSE C.J.—M.. S. Perera v. Unantenna
Turnbull v. Cowley1 has perhaps some bearing on the point. Moreover,Wills in Principles of South African Law (1937 edition, page 192) does notsupport the contention that a decree entered in a mortgage action has theeffect of extinguishing the mortgage. According to him a sale in execu-tion must follow the decree in order that the mortgage may be extin-guished. In dealing with the law as to how by a decree of court a mortgagemay be extinguished the learned author does not even suggest thatthe bare entering up of a decree in an action to enforce the mortgage hasthe effect of terminating it.
Mr. H. V. Perera for the respondents contended that while it is truethat the passages in Bonser C. J.’s judgments appear to support the viewnow contended for by the appellants, nevertheless it should not beassumed that he would have intended his observations to apply to sucha case as the present one, in that he had not considered the matter in thepresent context. Mr. Pereraalso contended on the authority of the caseof Saravanamuttu v. Solamuttu2 that upon a decree being entered in amortgage action a new charge on the land is imposed which displacesthe charge created by the mortgage sought to he enforced. In the casecited neither the mortgage action nor the decree was registered. Betweenthe date of decree and the sale in execution the mortgagor sold the landmortgaged to the plaintiff who registered the deed of sale. Thereafterthe defendant who was the mortgagee became the purchaser at the salein execution of the decree obtained by him and registered his conveyance.The question for decision was whether by reason of the non-registrationof the mortgage decree the conveyance by the mortgagor to the plaintiffafter decree and before execution prevailed against the defendant whowas the purchaser at the sale in execution by reason of priority of registra-tion. It was argued for the defendant, inter alia, that the mortgagedecree was purely declaratory and did not create an interest affectingland within the meaning of section 16 of the Registration of DocumentsOrdinance, 1891. Dealing with tliis argument Bertram C.J., saidat page 392—
“ On the institution of Us pendens, the mortgaged land becomesliable to be affected by the judgment, upon decree it becomes actuallyso affected. By the operation of the same principle, the order for thesale is binding upon any subsequent purchaser until the order has beenfinally carried out. It thus imposes a charge which prejudiciallyaffects him.”
In my opinion one cannot by implication read into this passage thatbecause the decree imposes a charge the necessary result of that chargeis to extinguish the mortgage.
While fully appreciating that it is.not difficult to formulate a powerfulargument in favour of an alternative view, I prefer to adopt the viewof the appellants in this matter which would not seem to offend againstany fundamental principle and would enable the provisions of this section 1 2
1Cape Supreme Court Reports 23 (Cape of Good Hope) 244 at 245.
2(1924) 26 N. L. R. 385.
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to apply to a case such as the present, for the exclusion of which fromthe provisions of the Ordinance no good reason would appear to exist.I quite agree with the learned Counsel for the respondents that it ishazardous, when in doubt about a question of interpretation of a statute,to be guided by one’s views of the intention of the legislature, whichviews may to some extent be based upon conjecture. While paying fullheed to this consideration I am none the less comforted by the reflectionthat the view which I propose to adopt, without doing violence to theactual language used in the section, enables the benefit of the Ordinanceto be given to a class of transaction which, it seems to me, must havebeen within the contemplation of the legislature. –
Counsel for the respondents further contends that in the presentmatters there is no “ debt ” within the meaning of the sub-section inthat a debt is an obligation enforceable by action. Counsel for theAssistant Government Agent on the contrary contends that a debt meansany obligation to pay money and would include., an obligation to paymoney as a result of the position set up by a hypothecary decree. Hereagain it is possible to present attractive arguments leading to contraryconclusions but I consider that the words of this sub-section are, at theleast, capable of the meaning ascribed to them by the Assistant Govern-ment Agent and that the matter therefore falls within the well knownprinciple laid down in Heydon’s Case1 and. Hodsoll v. Baxter2 whereWilliams J. says in considering the meaning of the word “ debt ” :—
“ I think the judgment must be affirmed. The claim is within thespirit of the enactment ; it is out of the question to suppose that thelegislature intended to omit such a case as this. If, then, the languageof the section can be construed so as to include the case, it ought to beso construed.”
For these reasons appeal No. 9 of the Assistant Government Agent isentitled to succeed. The judgment of the District Judge dated the 17thNovember, 1950, is set aside, with costs here and below payable by the1st and 3rd defendants, and the case is remitted to the District Courtfor the adjudication of the remaining issues.
Appeal No. 10 is by the mortgagor from an order dated the 23rd Febru-ary, 1951, by which an application made by him to intervene in theaction was dismissed. There is no reason for interfering with that orderwith the result that appeal No. 10 will be dismissed with costs payableto the 1st and 3rd defendants.
Puile J.—I agree.
Appeal No. 9 allowed.Appeal No. 10 dismissed.
1 76 English Reports 637.2120 Eriglish Reports at page 739.
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