006-SLLR-SLLR-1985-V1-MEDONZA-v.-DE-SILVA.pdf
MEDONZA
v.
DE SILVA
COURT OF APPEAL.
TAM8IAH. J. AND MOONENIALLE. J.
CA 285/80 (F) – D C. COLOMBO 2558/RE.
OCTOBER 10. 11 AND 15, 1984.
Landlord and Tenant – Rent and ejectment – Receivable rent determined by RentBoard – Whether receivable rent payable only from date of determination of Rent Boardor from date of coming into operation of Bent Act – Sections 3(1). 7 (1) (a). 7 (2),7 (3) fa). Section 8 (1). Section 22 (2). Section 22 (3) (c) and Section 22 (5) of RentAct. No. 7 of 1972 – Regulations 23. 25. 26. 27. 28. 33. 34 and 37 under Section43 of Rent Act.
After the coming into operation of the Rent Act. No. 7 of 1972. the tenant inoccupation of premises which were excepted premises became liable to pay therecetvabfcrept under section 7 of the Rent Act, No. 7 of 1972. On application made tothe Rent Board the receivable rent was fixed at Rs. 675 per mensem by its order dated19.2.1976. The landlord then claimed arrears on the basis that rent at Rs. 675 permonth was payable from 1.3.1972 (when the Rent Act came into force). The tenanttftho had until then being paying rent at Rs. 350 per month claimed that receivable rentat Rs. 675 per month was payable only from the date of the order of the Rent Boardand accordingly began paying Rs. 675 per month from 1.3.1976. On 17.9.1976 thelandlord served notice to quit on or before 31.12.1976 on the tenant and thereafterfled action on 12.9.1977 for ejectment and arrears of rent. The defendant depositedthe amount due on 20.9.1977 to the credit of the case and sought relief in any eventunder section 22 (5) of the Rent Act. The District Judge held in favour of the landtoidplaintiff.
Held-
The receivable rent of Rs. 675 per month was payable from 1.3.1972 and notfrom the date of the order of the Rent Board and therefore the defendant was in arrearsof rent for well over a month after it had become due within the meaning of section22 (2) of the Rent Act.
Relief in view of the tender of errears of rent by the deposit in Court under section22 (3) (c) of the Rent Act was not available to the tenant as the money had beendeposited by the tenant after he had entered appearance and there was no valid tenderof the arrears to the landlord.
Relief under section 22 (5) of the Rent Act was not available as the failure to (Ay*rent was not due to illness, unemployment or other sufficient cause but to a disclaimerof liability to pay.
Tender of rent to the landlord under section 22(3) (c) must be by actual productionof the money or. as in this case cheques have been accepted by the landlord in the past,by cheque.
Case referred to:
Razik v. Esufally (1957) 58 NLR 469. 471.
APPEAL from a judgment of the District Court, Colombo.
H. L. de Silva P.C. with S. C. Crossette-Tambiah for the defendant-appellant.
Nimal Senanayake P C. with P. A. D. Samarasekera. Mrs A. 8. Dissanayake and Mrs.Thelespha for plaintiff-respondent.
Cur. adv. vult.
November 27, 1984.
TAMBIAH, J.
The plaintiffrrespondent filed action for the ejectment of thedefendant-appellant from premises No. 112. Reid Avenue, Colombo,on the ground that he was in arrears of rent in a sum of Rs. 17,895from 1,3.72 up to 31.8.77.
The premises are situated at the junction of Bullers Road and ReidAvenue, [t is an upstair house on 40 perches of tend. Oh the groundfloor, there are 6 rooms, a verandah, bath-room and lavatory. 2servants’ rooms and a garage ; the upper floor consists of an officeroom, 3 bed rooms and a bath-room. The floor area is 4,419 squaffefeet.
The premises were excepted premises and not rent controlled. Thedefendant came into occupation in 1952. The agreed rental wa6Rs. 180. In 1967, parties entered into a lease agreement, No. 1152,dated 2.7.67, The lease was for a period of ten years commencingfrom 1.7.67, the rental payable was Rs. 180 per month with anoption to the defendant.to renew the lease for a further period of tenyears at the same rental. Though the lease bond did not mentionabout the payment of taxes, the defendant agreed to pay the taxes,Rs. 450 per quarter and it would also appear that the defendant had
also paid on certain occasions a further sum of Rs. 100 which hasbeen described by the plaintiff in one of his letters as "paga" money. Inall, therefore, the defendant was paying monthly Rs. 180 plus Rs. 1509 in all, Rs. 330 as rent. Obviously, the dealings between the partieswere not on a business – like footing. According to the evidence, theparties had known each other for 27 years, they were very goodfriends and in addition, the plaintiff's sister was married to thedefendant's brother. The evidence also shows that the defendant is abusinessman and a director of 3 or 4 companies and the plaintiff was
a sick man, in and out of hospital.
•
. The Rent Act. No. 7 of 1972. which came into operation on1.3.72. declared void all existing leases. S. 7 introduced a newconcept of "receivable rent" in relation to residential premises whichwere not rent controlled, and in respect of which exorbitant rents werecharged by landlords. The classes of premises which would comewithin the operation of S. 7 are –
Residential premises, where the first assessment of annualvalue was made before the Act came into operation, and theannual value as at 1.1.69, or if the assessment was made after1.1.69, as specified in such first assessment, exceeds 150%of the relevant amount. The method of determining thereceivable rent is set out in S. 7(1) (a) and (b) . Where thepremises have been let to a tenant, the highest amount,established to the satisfaction of the Board, received‘by thelandlord as rent for any month during the period of two yearspreceding 1.3.72 (S. 7 (1) (a)). Where the premises have notbeen let to a tenant, or where in the opinion of the Board, therent referred to in (a) is low, and in all other circumstances not
. provided in para (a), such amount as determined by the Board(S. 7 (1) (£»).
Residential premises, where the annual value on 1.1.69 did notexceed 150% of the relevant amount, and the Board is calledupon to fix the standard rent under s. 4 (5) (c). If the fair and
. reasonable standard rent that is fixed is on the basis of anannual value which exceeds the relevant amount by 150%,-•such-premises also become subject to the receivable amount:
In the present case, the annual value of the premises as at 1.1.69was Rs. 3,460, and the relevant amount under the Rent Act isRs. 2,000. Even in. 1963, the annual value was Rs. 3,460. Theannual value exceeded 150% of the relevant amount, and s. 7(1)therefore applies to the premises in suit.*
Under s. 7 (2), a landlord shall not demand, receive or recover andthe tenant shall not pay as rent, in respect of any period commencingon or after the date of commencement of the Act, any amount whichis less than the receivable rent. On or after the date of commencementof the Act, it shall be unlawful for the landlord to demand, receive orrecover as rent an amount in excess of the receivable rent (s. 3(1)).Under s. 42, a contravention of s. 3(1) or s. 7 (2) is an offence and ispunishable. The local authority within whose administrative limits, thepremises are situated shall levy on the landlord, in addition to rates, aspecial tax amounting to 75% of the difference between the receivablerent and the authorised ,rent of such premises (s. ,7 (3) (a)). Thespecial tax so-collected has to be remitted quarterly to theCommissioner of National Housing (s. 7 (3) (b)) and has to bpcredited to the "Repairs Fund" established under s. 8 (1).
Some of the relevant regulations madeby the Minister under s. 43in connection with the 'Receivable Rent" and the 'Special Tax' make ita duty cast on every landlord and tenant of any residential premises, towhich s. 7 (1) applies, to apply, to the Board to .have the receivablerent determined (Reg. 33); the application is to be made, in cases ofpremises let prior to commencement of the Act,.within thr#ea monthsfrom the date of the coming, into force of the Regulations, i.e.,20.5.72.(Reg. 34); where the application is to have the receivablerent determined, the Board shall also determine the authorised rer^t,and where the application is to determine the authorised rent, theBoard shall, where applicable, also determine the receivable rent (Reg.37) ; every local authority is required to maintain a Receivable RentRegister and every entry relating to receivable rent shall, unless variedby the Board, be the basis for the imposition of the special tax (Regs23, 26); the 'Special Tax' shall be collected by each-local authorityfor the month of March 1972 and quarterly thereafter (Reg. 25);where any objection is received by -the local authority to a notice ofassessment of the special tax. the authority shall' refer Such objectionto the Board, which aftbr'dbelnquiry.Vshalbmake^ decisjon ,on suchobjection (Reg. 27); if as a result of any order made by the’Board,
there has been an excess or shortfall in the special tax paid, the localauthority shall give credit or recover such shortfall, as the case may. be(Reg. 28).
• The certified extract from the Special Tax Register (P 2) shows thatthe receivable rent was fixed at Rs. 800 by the local authority. Byletter (D 9) dated 1.12.73, the plaintiff's attorney-at-law wrote to thedefendant and informed him that the Municipal Council had requiredthe plaintiff to pay the "Special Tax" amounting to Rs. 2,171/83 for1972 ^nd Rs. 2,606/20 for 1973 , that the amount has beencalculated by the Municipality on the basis that the receivable rent isps. 800 per month ; that giving credit to the monthly rent of Rs. 330paid, there is due Rs. 470 per month as from 1.3.72 up to November1973, making an aggregate sum of Rs. 9,870. The letter requestedthe defendant to pay this amount within two weeks, and informed himthat as from December 1973. he should pay receivable rent atRs. 800 per month. The defendant replied by his letter D 10 dated28.12.73 and stated that he has been advised that the receivable rentis not Rs. 800 but should be calculated on the basis of the highestamount he has paid for the last two years and that s..7 (2) applies tofuture payments only; that until the position is clarified, he wouldcontinue to pay the old rent.
On 3.1.74, the defendant applied to the Rent Board for thedetermination of the rent payable. The plaintiff too applied to have thereceivable rent fixed. The application of the defendant came up forhearing on 19.2.76 and the Rent Board by its Order dated 19.2.76fixed the receivable* rent at Rs. 675, the standard rent at Rs. 550 andthe authorised rent at Rs. 613, The attorney-at-law who appeared forthe plaintiff informed the Board that the plaintiff's application will bewithdrawn.
The plaintiff's attorney wrote the letter D 26 dated 1.3.76, andreferred to the order of 19.2.76 and informed him that he was liableto pay the receivable rent of Rs. 675 per month as from 1.3.72 ; thatthe amount due up to 29.2.76 was Rs. 32,400 and giving credit topayments made from 1.3.72 to. 31.12.75 at Rs. 330 per month,aggregating to Rs. 15,180 there was due as at 29.2.76,Rs. 17,220. The letter called upon him to pay this amount within 14days, and informed him that in the event of his failure to do so, thetenancy would be terminated and legal action would be taken forrecovery of the said sum and for ejectment. The defendant replied and
stated that he does not agree with the particulars regardingoutstanding rents, and on 21.4.76 he sent a cheque for Rs. 675 forMarch 1976. The defendant, thereafter, continued to send rent at therate of Rs. 675 per month which amounts were set off by the plaintiff*against the arrears. On 17.9.76, a notice to quit was sent to thedefendant requiring him to vacate the premises on or before
and demanding arrears amounting to Rs. 17,220 and thedefendant by his letter D 37 acknowledged the notice, but denied hisliability to pay this amount.
•
The plaintiff filed action on 12.9.77 and sued the defendant forejectment on the ground of arrears of rent for well over one monthafter it has become due in terms of s. 22 (2) and for the recovery ofRs. 17,895 being arrears and damages up to 31.8.77. It was hiscase that the receivable rent of Rs. 675 was payable by the defendantwith effect from 1.3.72. The defendant filed answer and denied hewas in arrears ; his case was that the Rent Board order fixing thereceivable rent operates only from 1.3.76. It was also his case thatthe plaintiff cannot maintain the action inasmuch as the defendant hasdeposited to the credit of the case Rs. 17,895, and that in any event,this is an appropriate case for relief under s. 22 (5) of the Pent Act, asthe default in the payment of the rent was due to the uncertainty andindefiniteness in the amount due as rent from 1.3.72 to 28.2.76.
The basic question is whether the receivable rent becomes payableas from 1.3.72 or from the date of determination by the Rent Board.The learned District Judge, having regard to s.*7 (2) and Regulation25, has held that the order of the Rent Board fixing the receivable rentat Rs. 675 a month is effective from 1.3.72, and that the rent hasbeen in arrears for well over one month after it has become due withinthe meaning of s. 22 (2).
The learned District Judge then proceeded to consider whether thedefendant is entitled to the benefit under s. 22 (3) (c) and for reliefunder s. 22 (5).
According to the judgment, the defendant deposited the money on
; summons was sent by registered post on 20.9.77 ;s. 399 (1) of the Administration of Justice (Amendment) Law, No. 25of 1975, requires the defendant to enter an appearance within 15days of the date of service of summons ; the defendant would havereceived summons on 21.9.77 ; the defendant has entered his
appearance on 28.9.77 ; to get the benefit under s. 22 (3) {c), thedefendant should tender to the landlord all arrears of rent on or beforethe date when he appears in Court in response to the summons ; the• rponey has been deposited long after he entered appearance. Thelearned Judge held that the defendant is not entitled to the benefitunder s. 22 (3) |c).
As regards relief under s. 22 (5), the learned Judge has held that itwas not the defendant's position that rent has been in arrears onaccounj of his illness, unemployment or other sufficient cause, butthat he took up a legal position that he is not liable to pay. He thereforeqannot claim relief under s. 22 (5)
. Before us, learned President's Counsel for the defendant submittedthat in the first instance, there has to be an application to the Board tohave the receivable rent determined or fixed. The Board determinesthe receivable rent either in terms of (a) or (t>) of s. 7 (1). Thereceivable rent is actualised or comes into existence only when theBoard so determines. The liability to pay receivable rent arises onlywhen it is determined. The determination of receivable rent operatesprospectively and not retrospectively.
Learned President's Counsel gave an example. In the two yearspreceding 1.3.72, there were two tenants. The 1 st tenant paid a verymuch higher rental than the 2nd tenant. The Board determines in1976 the ^ st rental as the receivable rent. Should then the 2nd tenantbe saddled with the burden of paying the highest rental that was paidduring the period of two years as. from 1 .3.72 to 1976 ? He furthersubmitted,*as in this case, the tenant pays the agreed rental. By anevent that occurred later,- the tenant is deemed to be in aiTears and histenancy is in jeopardy. The legislature could not have contemplatedstTch harsh results. S. 7 (1) must be construed as prospectively only.He cited Maxwell (11th Edn. pp. 205. 206):
‘If the enactment is expressed in language, which is fairly capable*of either interpretation, it ought to be construed as prospective only.But if the language is plainly retrospective it must be so
interpreted.Every statute, it has been said, which takes
away or impairs vested rights acquired under existing laws, orcreates a new obligation, or imposes a new duty, or attaches a newdisability in respect of transaction or considerations already past,must be presumed, out of respect to the legislature, to be intendednot to have a retrospective operation."
I agree that if the Court is in doubt whether an enactment wasintended to operate retrospectively, it must resolve that doubt againstsuch operation. I also agree that s. 7 created a new obligation inrespect of a past transaction, and that the presumption is that it is notto have a retrospective-operation, but, it is only a presumption and i?'displaced when the intention of the legislature, either expressed or tobe gathered by necessary implication is otherwise'. This intention is tobe gathered from 'a consideration of the Act as a whole or from theterms thereof". (Bindra 'Interpretation of Statutes', 6th Edn., at pp.734. 735).
S.7 (1) has to be read with the other provisions in the Act and the*Regulations made by the Minister which form part of the Act. Unders. 7 (2) the landlord is obliged in law to accept, as from the date of thecommencement of the Act, only the receivable rent; likewise, thetenant is also obliged in law to pay only the receivable rent as from thatdate. S. 42 (1) makes the failure to comply with s. 7 (2) an offence.The local authority is required by law to levy a special tax ($. 7 (3) (a)),maintain a Receivable Rent Register (Reg. 23), and collect the specialtax for March'72, and quarterly thereafter (Reg. 25). The entry in theRegister as to receivable rent is the basis for the imposition of thespecial tax (Reg. 26). A duty is cast on both landlord and tenant toapply to the Rent Board within the three months of the coming intoforce of the Regulations (Regs. 33, 34). The Regulations came intoforce on 20.5.72. If in consequence of the Board's determination,there is an excess or a shortfall in the special tax paid, the localauthority is obliged to give credit or recover such shortfall (ffeg. 28).
On a consideration of these provisions, it appears to me that thelegislature has explicitly declared its intention that s. 7 (1) shouldoperate retrospectively, as from 1.3.72. These provisions, particularlys. 7 {2) and Regulation 25. leave no room for any ambiguity as towhether s. 7 (1) was intended to be prospective or retrospective. #
Learned President's Counsel for the defendant rightly conceded thatthe defendant cannot claim relief under s. 22 (5), for, it contemplatesa case where the tenant on account of his illness or unemployment orother sufficient cause, i.e., similar misfortunes, could not pay, in thesense that he did not have the funds to pay. Here, the defendant'sposition was that he did not want to pay, as he had been advised thats. 7 (2) applies to future payments only.
There remains to consider whether the plaintiff could maintain hisaction in view of $. 22 (3) (c), as the defendant has deposited themoney in Court.
«
The correct position appears to be that on 29.9.77, the defendantapplied for a deposit note and Court made order for the issue of thenote ; on 6.10.7 7, the money was deposited at the Kachcheri and theKachcheri receipt dated 6.10.77 was filed in Court on 19.10.77.
Learned President's Counsel for the plaintiff submitted that allarrears of rent, in terms of s. 22 (3) (c) must be "tendered to thelandlord’ and that the defendant cannot get the benefit under thesection.
'To constitute tender the readiness to pay must be accompaniedby production of the money that is offered in satisfaction of thedebt". (perBasnayake, C.J. in Razikv. Esufallyat p. 471)
"But the law considers a party, who has entered into a contract todeliver goods or pay to another, as having substantially performedit, if he has tendered the goods or the money. .. . provided onlythat the tender has been made under such circumstances that theparty to whom it has been made has had a reasonable opportunityof examining the goods or the money tendered, in order to ascertainthat the thing tendered really was what it purported to be. Indeedwithout such an opportunity an offer to deliver or pay does notamount to a tender."
{Law of Contract by Cheshire and Fifoot, 4th Edn. p. 445).
So, it seems to me to constitute a valid tender of all arrears to thelandlord under s. 22 (3) (c), there must be actual production ofmoney, or, as in this case cheques have been accepted by the plaintiffVi the past, payment by ct eque. The tender of the money or thecheque must be made to the landlord.
I affirm the judgment of the learned District Judge and dismiss theappeal with costs.
MOONEMALLE, J. – I agree.
Appeal dismissed.