110-NLR-NLR-V-62-MUTTAMMAH-Appellant-and-THIYAGABAJAH-Respondent.pdf
BASKTAYAKB, CrrS :-^—Muttamrnah v. Thiyagarajah
559
I960 Present: Basnayake, C.J., Sansoni, J., and H. N. G. Fernando, J.MX) 1TAMMAH, Appellant, and TTTIYAG AHA J AH, Respondent
S. C. 145—D. C. Jaffna, 467(L
Trust—Gift of immovable property—No intention on part of transferor to dispose ofbeneficial interest—Parol evidence of “ attendant circumstances ”—Admissi-bility—Trusts Ordinance, ss. 2, 5 (3), 83—Evidence Ordinance, proviso (I) ofs. 92—Prevention of Frauds Ordinance, s. 2.
In September 1941, P, who was entitled to the entirety of a land, donated to T,liis son, an undivided half-share of the property. In October 1954, T donatedthe same half-share back to his father P to enable him, the more easily, to raisea loan of Its. 20,000 on a mortgage of the entire land. No reservation was madein T’s favour in the deed of gift of *1954, but by parol evidence T proved interalia that he continued to remain in possession of his share of the land and thatit was expressly understood between the parties that the share should be re-conveyed to T after payment of the mortgage debt. The loan of Rs. 20,000 wasnever raised, and P died in March 1956. In the present action instituted by Tagainst the executrix de son tort of P’s estate, T claimed that the defendantheld the half-share in trust for him.
Held, by Sansont, J., and H. N. G. Fernando, J. (BasnayakTe, C.J., dis-senting), that the plaint iff was entitled under section 83 of the Trusts Ordinanceto lead parol evidence of “ attendant circumstances ” at or about the time of theexecution of the deed showing that although T transferred his half-share toP in 1954 by what was in form an absolute conveyance it was the intention of theparties that T should retain the beneficial interest in the property and thatwhat was conveyed was only the nominal ownership to P.
Appeal from a judgment of the District Court, Jaffna.
' H. V. Perera, Q.C., with A. Sambandan and A. Nagendra, for 1stDefendant-Appellant.
C. Thiagalingam, Q.C., with C. Ranganathan and R. R. Nalliah, forPlaintiff-Respondent.
Cur. adv. vult.
October 20, 1960. Basnayake, C.J.—
The only question for decision is whether it cannot reasonably beinferred consistently with the attendant circumstances that, when.Ponnudurai Thiagarajah transferred by way of donation an undivided halfshare of the land described in the Schedule to deed No. 952/1817 attestedby Manikkam Eliatamby on 10th October 1954 (P8) to VisvanatharPonnudurai his father, he intended to dispose of the beneficial interest
660
BASNAYAKJB, G.J.—JHutlammah D. Thiyagarajah
therein. If it cannot, then by operation of section 83 of the TrustsOrdinance the transferee must hold such property for the benefit of theowner or his legal representative.
Shortly the facts are as follows :—Visavanathar Ponnuduxai was anoverseer in the Public Works Department, He married twice. Byhis first marriage he had 6 children Of whom the plaintiff PonnuduraiThiagarajah is the youngest. By deed No. 437 attested by ManikkamEliatamby on 24th September 1941 (PI) Visvanathar Ponnuduraitransferred by way of donation to the plaintiff an undivided half shareof the immovable property described in the Schedule to that deed thewhole of which he owned. The 1st defendant is his second wife by whomhe had one child, a daughter named Ratnapoopathy who married in 1954.At the time of her marriage Ponnudurai and his wife the first defendantagreed by dowry deed No. 2952 of 5th Pebruary 1954 attested by Sinn a-thurai Kanthasamy, Notary Public, (P2) to give a dowry of Rs. 80,000made up as follows :—
(а)Cash…. Rs. 35,000
(б)Immovable property. .,,38,000
Jewellery. …7,000
80,000
The cash dowry consisted of—
Rs. 9,561„ 2,000„2,500
„ 20,939
lying in deposit in Case No. 301G to Ratnapoopathy’s credit
invested in mortgages in her name
value of mortgage bonds assigned to her
paid in cash at the time of execution of the deed
35,000
Ponnudurai died on 17th March 1956 leaving a last will dated 26th March1947 attested by Velupillai Nagalingam, Notary Public, (P14) appoint-ing the 1st defendant as his executrix. By this will special bequestswere made to the daughters Ratnapoopathy and Ratnam wife of Nana-pathipillai Sellathurai, and to the sons Thambirajah, Sinnatamby andPathmanathan. The residue was left to Ratnapoopathy. The plaintiffand his brother Ambalavanarajah received nothing under the wall. Healleges that, although the first defendant agreed after his father'sdeath to convey to him the undivided half share he transferred to hisfather on deed P8, she has not done so, and this action has been institutedto assert his right to that share and compel her to transfer it to him asbeing property held by his deceased father in trust for him.
BASNAYAKTE, C.JT.—Muftammah v. Thvyagarajah
061
It is common ground that the plaintiff’s father, who. had donated the•undivided share of the land in question in 1941, when the plaintiff wasstill engaged in his scholastic studies, had asked him in 1954 tore convey it to him so that he may raise a loan on the entire land. Thefather was in debt at the time. The son was also badly in need of moneyas he was intending to go on a tour of Europe. Both parties sought toestablish the circumstances under which the transfer was made byreference to correspondence between father and son before and after thetransfer. The plaintiff produced five letters written by his father to him.The first of them P4 of 20th December 1953 does not have any bearingon the transfer. It merely conveys to the son the information regardinga marriage that had been arranged for his daughter the plaintiff’s step-sister, the amount of cash dowry and particulars regarding the bridegroom.The next letter P5 of 1st June 1954 is written after the execution of thedowry deed and relates to a loan which was being negotiated and thesettlement of the writer’s debt. The third letter P6 of 1st October 1954refers to the deed of gift in question and the plaintiff is told that he andhis wife must both sign. It is suggested that the donation should bevalued at Us. 18,000 or Ps. 15,000 and that the plaintiff’s father wasintending to borrow Rs. 20,000. It shows that after paying Rs. 5,000 tothe plaintiff bis father hoped to settle his debts with the balance. Inthe fourth letter P7 of 12th October 1954 written two days after theexecution of PS the author says : “if this amount is obtained all debtswill be cleared and your requirements also will be fulfilled. ” In the lastof the letters produced by the plaintiff P9 of 3rd March 1956 two weeksbefore the death of Ponnudurai and after the plaintiff had returned fromhis tour of Europe the author complains of his illness and expresses hisregret and pain of mind at not being able to obtain a loan to pay his debtsand requests the plaintiff to interest himself in the matter by seeingcertain officials of the Bank. He adds “ Therefore try and completethis help. There is a proverb that those who dip into honey will notwash the hand. You also will be benefited thereby. ”
On behalf of the first defendant ten letters (D4-D13) written by theplaintiff were produced. The first of them was written on 22nd February1955 and the last on 8th September 1955, all after the transfer in question.In the first of them D4 of 22nd February 1955 he informs his father thathe expected to get a loan at 9% on his Paranthan land and that he wantsto settle all his debts before he proceeds to Europe and expresses hisgratitude to him for all his father was doing for him in connection withthat land. In the next letter (D5) written on 2nd March 1955 he askshis father to make arrangements to send him Rs. 5,000 before the 26thof that month as he has to deposit his money before that date in theBank. He also informs him of his failure to raise a loan on the Paranthanland and asks his father to sound the person who undertook to take afive year lease for 5,000. He added “ I don’t mind- giving the land onlease for five years to him for Rs. 5,000 provided he gives me anotherKs. 5,000 at 9% on mortgage. Please consider and let me know as earlyas possible. If I get Rs. 10,000 I could settle my debts and pay for tho
CO 2
/BASNATTAKJS,. C.J.—Mullammah v. TKiyagarajah
new car on (51c) this end before.I-leave for England. ** The third letter(D6) is -written on 22nd April 1955 on board the P. &. 0. Canton anddescribes the journey and informs his father that he has got his wife towrite to her father to give them Its. 7,000 for the purchase of a car andadds that he may require another Rs. 2,000. The fourth letter (D7)is from London and is written on 16th May 1955. He informs his fatherthat he has booked a Hillman car and that he has to pay the sellers of thecar before the 29th of that month and asks him to deposit Rs. 7,000 in hisBank to his credit before the 27th. He repeats that his wife has.writtento her father about it and asks him to intercede on their behalf and if thewife’s father fails he asks his father to borrow the money on his behalfand to deposit the amount in the Bank. He offers to obtain a loan onhis return and pay him. In the fifth letter (D8) also written from Londonon 13th June 1955 he acknowledges the receipt of a letter sent by bisfather. He shows concern about his father’s illness and expresses hisdisappointment with his father-in-law who had failed to give him themoney he.required. He asks his father to deposit the money before 25thJune. He asks Iris father to obtain as much as. his father-in-law is ableto give and supplement the balance himself. He offers to pay backwithin two months of his return to Ceylon. In the sixth letter (339)-written from London on 20th June 1955 the plaintiff informs his fatherof his trip to Europe and gives details of the tour and asks him to see thatthe sum of Rs. 7,000 is deposited in the Bank before 2Sth June. He askshim to raise a loan and deposit the money if his father-in-law has notgiven it. He implores his father to make the deposit promising not toask any more money. The seventh letter (D10) is -written on 7th July1955 from Switzerland and describes the countries he has toured andinquires whether the money was deposited and offers to pay back theRs.' 7,000 if his father has deposited the entire sum without any contri-bution from his father-in-law. The eighth letter (Dll) is written on 5thAugust 1955 from London. He apologises to his father for troublinghim too much. He informs him that he has sold his car.and settled thedealers. He also offers to write to the Bank to refund the Rs. 3,000 hisfather had paid to his Bank account so that he may return it to the personfrom whom he borrowed the money. He also expresses his gratitudeto his father for doing his best to help him. The ninth letter (PI2) is-written on 19th August 1955 on the train to Southampton. In thatletter he asks his father to deposit another Rs. 3,000 to the credit of hisaccount offering to settle the full sum of Rs. 6,000 on arrival in Ceylon,before going to the estate on which he worked. The last of the letters,the tenth (D13) of Sth September 1955, is written from Wattala on hisarrival in Ceylon. It informs his father that his brother-in-law has senthim Rs. 2,500 and that he would not require any more money and thathe was trying to raise a loan to pay his father and his brother-in-lawbefore the end of September.
Apart from the facts revealed in the correspondence referred to abovethere are certain other facts which deserve mention. The plaintiff’sfather was his attorney during this absence abroad by reason of the power
BASNAYAK.^!, C. J.—Muttammah v. Thiyagarajah
563
of.attorney granted to him on 16th April 1955 (P 11). While the plain-tiff’s father was alive and before the plaintiff donated the half share ofthe land in dispute to his father his father had on three different occasionssold divided portions of this very land and the plaintiff though a co-ownerhad not joined in those deeds. The first of them in the order in whichthey were produced—(I>1)—executed on 17th February 1945 (deedNo. 2421 attested by Ramalingam Kanagaratnam, Notary Public) conveys38 lachchams v.c. on the Southern side to Kathiran Kandiah of Naina-tivu for Rs. 5,000. In the deed the vendor says “ I now have good rightto sell and convey the said premises in manner aforesaid. ” The second(D2) executed on 11th December 1944 (deed No. 2316 attested by Mailvaga-nara Ehamparanathan) conveys the South-Western extent of 15 lachchamsv.c. to Aiyan Nagappan and Nagappan Kanthan of Nainativu for a sumof Rs. 1,800. In that deed the vendor says “ I hereby declare that thisproperty is in my possession as per transfer deed in my favour dated 11thMay 1932 and attested by Y. Arumainayagam, Notary Public, underNo. 400, that this property is free from all alienations, that I have fullright and power to sell this in this manner ….” The third
deed (D3) executed on 28th January 1952 (deed No. 1037 attested byKanthappiUai Vairamuttu Balasingham, Notary Public) conveys theSouth-Western divided extent of 10 lachchams v.c. to Sirinavan Eliya-tamby for a sum of Rs. 3,000. The vendor states “ I do hereby declarethat that property is not in any way encumbered or alienated, and thatI have full right and power to sell and transfer that now. ” When askedto explain these sales the plaintiff stated that they were effected with hisconcurrence. But that evidence must be treated with reserve as it is notsupported by the deeds, nor is there any evidence either direct or circum-stantial to support his word. The relations between the father and sonas shown by the evidence were cordial and the father and son appear tohave freely corresponded with each other. In this state of the facts theinability of the plaintiff to produce a single letter from his father askingfor Ms consent to the sales in question must be resolved against Mm.Besides when a fact was known to two persons one of whom is dead anyassertion made by the survivor wMch is to his advantage and to the dis-advantage of the deceased must be treated with extreme caution andshould not as a rule be acted on unless supported by strong circumstan-tial or other evidence as the only person able to contradict him is dead.(See Muththal Achy v. Murugappa Ghettiar 1 and the cases cited there.See also Mwrugappa Chettiar v. Muththal Achy 2 and Borcherds v. EstateNaidooz.) The evidence of Advocate ICanaganayagam who is a witnessfor the plaintiff does not support his claim that he did not intend to disposeof the beneficial interest in the land. He, who was a close friend of thedeceased, says that the deceased wanted to settle the mortgages he hadexecuted of certain lands at Sandilipay and Achchuvely as they werecarrying a Mgh rate of interest and that he therefore contemplated raisinga loan from an institution wMch charged lower interest such as a Bank or
1 (2954) 57 N. L. R. 27.* {1956) 58 N. L. R. 25 (P.C7.).
(1955) 3 S. A.-If. R. 78.
564
BASNAYAKE, C.J.—MxUtammah v. Thiyagarajah
the Agricultural Credit Co-operative Society. He says “ For that purposesince he was entitled to a half share of the coconut estate at Nainativu hehad asked his son, the plaintiff, to give him the other half share becausehis other son Dharmu had informed him (the deceased) that the Bankhad refused to take an undivided share of the coconut estate as security.Thereafter the plaintiff donated his half share and Ponnudurai said thathe would give a portion of the money so raised to his son. ” The deedP3 (1623 attested by Ganthapillai Vairamuthu Balasingham, NotaryPublic) of 30th January 1954 which is a mortgage of lands in Achchuvelyfor Rs. 10,000 at 9% interest bears out this evidence. That the plaintiffwas to get a share of the loan finds support in the evidence of Proctor Eliya-tamby who executed deed P8. He says that he was told by the plaintiffand his brother “ that the father was going to raise a loan on this propertyand as it was undivided between the father and the son it would be difficultto raise a loan and that the son was to donate the property to the fatherfor the time being to enable the father to raise a loan and settle a part ofthe debt incurred by the father and to give a sum of Rs. 5,000 to theplaintiff to go to England. ”
The way the deceased father dealt with the land as if it was entirelyhis own and the absence of any indication in the correspondence or anyproof aliunde that the son derived any benefit from the undivided halfshare that was gifted to him by his father indicate clearly that the giftto the son was a nominal gift and that it was not acted on and thatthe donor continued to treat the entire land as his own the donationnotwithstanding.
I shall now turn to section S3 of the Trusts Ordinance. That sectionprovides :
“ When the owner of property transfers or bequeaths it, and it cannot
reasonably be inferred consistently with the attendant circumstances. that he intended to dispose of the beneficial interest therein, the
transferee or legatee must hold such property for the benefit of the
owner or his legal representative. ”
The section is designed to prevent transfers of property which on theface of the instrument appear to be genuine transfers, but where anintention to dispose of the beneficial interest cannot reasonably beinferred consistently with the attendant circumstances. Neither thedeclaration of the transferor at the time of the execution of the instrumentnor his secret intentions are attendant circumstances. Attendantcircumstances are to my mind circumstances which precede or followthe transfer but are not too far removed in point of time to be regardedas attendant which expression in this context may be understood as‘‘ accompanying ” or “ connected ■with ”. Whether a circumstance isattendant or not would depend on the facts of each case. In the instantcase there is – no evidence to show that the plaintiff did not intend todispose of the beneficial interest. The indications arc that he did for he
BASNAYAJKE, ■ C.J.-—MxtUammdh v. Thiyagarajah
565
was quite content to transfer the share unconditionally to his father toenable him to raise a loan on a mortgage of the entire land. He wascontent to let his land be burdened with the debt with all the consequencesthat such a course entailed. His father had no legal right to hypothecatethe share that was conveyed by P8 unless the beneficial interest passedthereunder. The plaintiff was in need of money for his travel abroad andto settle his debts. He hoped to get for his use a part of the loan hisfather expected to raise on the entire property. When that failed theplaintiff obtained Rs. 6,000 on a conditional transfer on 2nd April 1955(P10—deed No: 125 attested by Ponniah Wijayaratnam, Notary Public)of land at Kunchi Paranthan to one Arumugam Kathirithamby Suppiah,the condition being that on repayment of that sum'within five yearsfrom the date of sale the land was to be re-conveyed. The fact thatthe plaintiff’s father was in need of this half share to enable him to raisea loan from a public money lending institution at a favourable rate ofinterest is no indication that the plaintiff did not intend to dispose of hisbeneficial interest- To my mind the very purpose of the transfer indi-cates that he did so intend for the father would have no right to hypothe-cate the land for his debt to the kind of lending institution he had in mindunless he had full dominium.
The failure of the plaintiff or the deceased to refer in the correspondenceproduced to the secret understanding between father and son in regardto the donation effected by P8 negatives the plaintiff’s claim and supportsthe 1st defendant’s claim that although the half share was donated on PIto the plaintiff as far back as 1941 the entire land was regarded as thedeceased’s property and that the plaintiff was nominal owner of the halfdonated on PI. The deeds Dl, 3D2, and D3 strongly support this claim.The plaintiff has not been able to satisfactorily explain these deeds.Section 83 of the Trusts Ordinance is not designed to enable a transferorof property who makes no reservation in his favour in the instrument heexecuted to denounce his own act by declaring that he did not intend todispose of the beneficial interest therein. In this connexion it wouldriot be out of place to quote the words of Tindal C. J. in Shore v.Wilson 1—
“ But whilst evidence is admissible in these instances for the purposeof making the written instrument speak for itself, which without suchevidence would be either a dead letter, or would use a doubtful tongue,or convey a false impression of the meaning of the party, I conceivethe exception to be strictly limited to cases of the description abovegiven, and to evidence of the nature above detailed ; and that in nocase whatever is it permitted to explain the language of a deed byevidence of the private views, the secret intentions, or the knownprinciples of the party to the instrument, whether religious, political,or otherwise, any more than by express parol declarations made by the• party himself, winch are universally excluded ; for the admitting ofsuch evidence would let in all the uncertainty before adverted to ; it
– i (1842) 9 Cl. d F: 355 at 567.
666
SA.NSONJ, J.—uUafnmob v. ThiyctgarajaK
would be evidence which in most instances could not be met or counter-vailed by any Of an opposite bearing or tendency, and would in effectcause the secret undeclared intention of the party to control andpredominate over the open intention expressed in the deed. ”• r
In my opinion the plaintiff is not entitled to succeed and his actionmust be dismissed..
1 allow the 1st defendant’s appeal with costs both here and below.Sansoni, J.—
The plaintiff is the son of Visuvanather Ponnuthurai by his first wife.The 1st defendant is the second ■wife of Ponnuthurai, and the 2nd defen-dant is the wife of the plaintiff. Ponnuthurai, who wets entitled to theentirety of a land known as ISTainativu Estate, donated an undividedhalf share worth Its. 10,000 to the plaintiff in 1941. Shortly prior toFebruary, 1954, Ponnuthurai and the 1st defendant arranged a marriagefor their daughter Ratnapoopathy, and they agreed to give her, amongother things, Rs. 35,000 in cash as dowry. Of this sum, Rs. 14,061 waspaid out of money lying in court and by way of mortgages executed inher name, and the balance sum of Rs. 20,939 was paid to her by chequeat the time of execution of the dowry deed P2 on 5th February 1954.This sum had to be raised by Ponnuthurai on loans secured by mortgages,and apparently the mortgagees soon began to press Ponnuthurai for thereturn of the loans.
Ponnuthurai then made attempts to get the money to settle thosemortgage debts. Letters written by him to the plaintiff from June, 1954,on this subject have been produced. They show that he wanted theplaintiff to help him either by paying the debts himself or by transferringhis undivided half share of the Nainativu Estate to Ponnuthurai, in orderthnt the latter might borrow money on the security of the entire estate.By letter Po of 1st June 1954 he asks the plaintiff to send him the Naina-tivu deed in order that he might try to raise a loan from a priest.
Ponnuthurai later sent another son of his named Thambirajah to speakto the plaintiff. Thambirajah has said in evidence that his father wantedhis assistance to raise a loan from the State Mortgage Bank ; as the Bankwas not prepared to accept an undivided share as security, his fatherasked him to persuade the plaintiff to give his half share to his father onthe express understanding that the share would be given back to theplaintiff. Thambirajah said that, after much persuasion, the plaintiffeventually agreed to do so. In his letter P16 dated 1st October 1954,Ponnuthurai writes to the plaintiff and refers to that interview ; heexplains that the Bank would not accept an undivided share as security,and although it would be expensive to obtain a transfer in his name; hesays it cannot be helped. He informs the plaintiff that’ both he and his
SAHSONI, J.—-Jkfuttammah v. Thiyagarajah
567
■wife would have to sign the deed as the Bank required that to be done,and that the share should be valued at Rs. 15,000 in the deed in orderto reduce the cost of the transfer. Rs. 20,000 was to be the amountof the loan, of which Rs. 5,000 was to be given to the plaintiff andPonnuthurai’s debts settled with the balance.
i
The deed of donation P8 in favour of Ponnuthurai was signed by theplaintiff and his wife on 10th October, 1954, while Ponnuthurai signed itas donee on 27th October, 1954. By his letter P7 of 12th October, 1954,Ponnuthurai thanks the plaintiff for having sent the deed to him andinforms the plaintiff that if the loan is obtained all his debts will be clearedand the plaintiff’s requirements also will be satisfied. Apart from theevidence of Thambirajah, who was not cross-examined at all, there is theevidence of Mr. Kanaganayagam, who said that Ponnuthurai was keenon raising a loan in order to pay off the mortgage debts which he hadincurred in order to provide his daughter’s dowry. He also said that, forthis purpose, Ponnuthurai told him that he had asked the plaintiff togive him his half share because the Bank would not accept an undividedshare as security. Mr. Bliathamby who attested the deed of gift P8said that he was told by the plaintiff and Thambirajah, at the time of theexecution of the deed, that the plaintiff was donating his half share to hisfather for the time being in order to enable his father to raise a loan tosettle the debts incurred by him and to give the plaintiff Rs. 5,000 beforehe went to England ; also that the property would be reconveyed to theplaintiff. The plaintiff produced the correspondence he had with hisfather. He said in his evidence that he had no intention of parting withthe beneficial interest in the land, and that the deed was executed merelyto accommodate his father temporarily. He claimed that he remainedin possession of his half share in spite of the donation, and paid incometax on the profit derived from the produce.
The plaintiff’s case was that the deed P8 was executed in Ponnuthurai’sfavour at his request only to enable him to mortgage the entirety ofIvainativu Estate, as he was anxious to raise money to clear his debts,and to give plaintiff a sum of Rs. 5,000. With regard to this sum ofRs. 5,000 the plaintiff said that, in connection with a trip he planned tomake to Europe on holiday in April 1955, he intended to borrow a sum ofRs. 5,000 from the Eastern Bank and that he did not want a loan of thissum from his father. Ponnuthurai was, no doubt, aware of the plaintiff’sintention, and he mentioned in his letters to the plaintiff more thanonce that if the loan of Rs. 20,000 could be obtained by mortgagingNainativu Estate Rs. 5,000 of this sum could be taken by the plaintiff.I do not see that this matter, which was quite incidental to the purposefor which deed PS was executed, affects the character of the transaction.The plaintiff in fact raised a loan of Rs. 6,000 by executing conditionaltransfer P10 on 2nd April, 1955, independently of Ponnuthurai.
608
SANSONI, J.—Muttammah v. Thiyagarotjdh
The loan of Rs. 20,000 was never raised ; the plaintiff went to Europeand returned to Ceylon in September 1955, and Ponnuthurai died on 17thMarch, 1956. Just a fortnight before his death, he wrote letter P9 to theplaintiff’s brother in which he said that, although he tried to make arrange-ments to raise a loan and pay his debts, he could not do so and he askedthe plaintiff’s brother to do what he could to help him in the matter.He was still trying to achieve the object for which P8 was executed.
After Ponnuthurai’s death, the 1st defendant, according to the plaintiff,promised to reconvey the half share to him but subsequently changedher mind. He sent a letter of demand to her in November, 1956, butreceived no reply. He accordingly filed this action in June, 1957. Inhis plaint he sets out briefly the matters I have already referred to andin paragraph (7) he pleads that he never intended to dispose of the bene-ficial interest in his half share, and that the 1st defendant as executrixde son tort was holding that share in trust for him. The 1st defendantfiled an answer and later amended it, but in both her answers the firstdefence taken up is that the original deed of gift of 1941 in the plaintiff’sfavour did not convey the beneficial interest to the plaintiff but wasexecuted in trust. That defence was not, however, put forward at the trial.The other defences raised were (1) that the transfer by the plaintiff toPonnuthurai was not in trust, (2) that in the absence of a notarially attestedagreement to reconvey the half share to the plaintiff, the plaintiffcould not claim either a reconveyance or prove a trust,'and that no oralevidence could be led to vary the terms of the deed P8 in order to prove atrust, (3) that the deed P8 was executed by the plaintiff in considerationof his love and affection towards his father. These are the matters alsowhich were put in issue at the trial.
The learned District Judge held in favour of the plaintiff’s contentionthat the deed P8 was executed in trust and this appeal has been broughtagainst that finding. One important admission which the 1st defendant’scounsel made at the trial appears in the judgment :he accepted the
plaintiff’s version that Ponnuthurai wanted the plaintiff’s half share ofNainativu Estate donated to him for the purpose of raising a loan, withthe undertaking to reconvey it to the plaintiff. I think it is necessarythat the plaintiff should also establish, before a trust can be found in thiscase, not merely that the deed P8 was executed in order to enable Ponnu-thurai to raise a loan but (1) that it was executed only for that limitedpurpose and (2) that, subject to any mortgage that may be created byhim, it was intended that the beneficial interest in the half share shouldcontinue to be vested in the plaintiff. If the plaintiff has establishedthese matters, the undertaking to reconvey the half share may be con-sidered a circumstance which lends support to the plaintiff’s version of theagreement between him and his father.
669
• SANS ONI, J.—MjtUtammah v. Thiyagarajah _
?—= —••r-rr r— “—-:7~r~z—:—
The question for decision in this case, it appears to me, is whether,having regard to the attendant circumstances evidenced by the statementsand conduct of the parties at or about the time of the execution of deedP8, it was their intention that the beneficial interest of the plaintiff in hishalf share should vest in Ponnuthurai, or whether the plaintiff retainedthat interest and conveyed only the nominal ownership to Ponnuthurai.
Mr. Perera urged that the question really was whether the attendantcircumstances outside the deed P 8 negative what is stated in the deed ;and that if they do not, there is no constructive trust, while if they do,they are inconsistent with the terms of the deed and there is a constructive-trust. I see no objection to the question being framed in this form,though it must be emphasised (1) that the intention of the parties at therelevant time is all-important, and (2) that the form and terms of the deedP 8 are by no means decisive. Undoubtedly the burden lay upon theplaintiff to prove the trust, and in order to do this, the plaintiff wasentitled to lead parol evidence. Once it is established that, even thoughthe deed is in terms an absolute transfer of the half share, the partiesintended only that Ponnuthurai should be the nominal owner the 1stdefendant is guilty of fraud in ignoring the trust and claiming the halfshare as part of Ponnuthurai’s estate. For it is a fraud to set up theabsolute character of a conveyance for the purpose of defeating thebeneficial interest which was to belong to the plaintiff : see Bannister v.Bannister 1 and ValLiyammai Atchi v. Abdul Majeed 2. Fraud in thiscontext is merely the violation, even innocently because of ignorance,of an obligation which the 1st defendant as the executrix de son tort ofPonnuthurai has imposed upon her by a Court of Equity, acting as itdoes as a Court of conscience.
This brings me also to Mr. Perera’s argument that one of the attendantcircumstances to be considered included the terms of the deed P8. It isby no means a decisive circumstance, although the form of the trans-action cannot be ignored. But it must be remembered that a deedin those terms—transferring ownership of the half share to Ponnuthurai—was necessary to effectuate the purpose for which Ponnuthurai wantedthe plaintiff’s assistance.
The crucial issue, when the question is trust or no trust, is : What didthe parties intend so far as their intention can be gathered from thesurrounding circumstances % One matter of debate before us waswhether the plaintiff was seeking to prove an express or a constructivetrust. I think the issues suggested by the plaintiff’s counsel are wideenough to cover either form of trust, nor do I think it important todecide into which category the present case falls. The dividing line isextremely thin and there are many cases, and I think this is one, whichfall into both categories. I am satisfied from the circumstances provedin evidence, which I have already referred to, that it was agreed betweenthe plaintiff and Ponnuthurai that the plaintiff should continue to retain
1 (1948) 2 Jill E. R. 133.2 (1947) 48 N. L. R. 289.
570
H. N". G-. FERNANDO, ■ J".—JHuttammah v. Thiyagarajah
'’-*-■— -■ ~”" r
the beneficial interest, even after "the property had been donated bywhat is in form an absolute conveyance of all the plaintiff’s rights. Ithink it follows that the legal effect of the bargain was to create both anexpress trust and a constructive trust. Keuneman, J. in ValliyammaiAtchi v. Abdzd Jkfajeed 1 held that there was an express trust created orallyand also that there was sufficient evidence to establish a constructivetrust. I agree with the finding of the learned District Judge that theplaintiff did not intend to dispose of the beneficial interest to his father,and that the 1st defendant is holding the half-share in dispute in trustfor the plaintiff.
I would dismiss the appeal with costs.
H. N. 6. Fernando, J.—
The evidence which has been summarised by Sansoni, J. and whichwas not contradicted at the trial was, if admissible, ample to establisha constructive trust contemplated in Section 83 of the Trusts Ordinance ;for in my opinion the only reasonable construction of the intention of theparties was that, after the plaintiff’s half of the land was transferred intothe name of his father, his father would mortgage the entire land andwhen the mortgage was paid off restore to the plaintiff his half-share ;even if (as I do not think was the case) the promise to re-donate thehalf-share meant that the half-share would be restored burdened withthe mortgage, yet the intention was that the transfer to the father wasfor the limited purpose of enabling him to mortgage the land.
An important item of the “ attendant circumstances ” was the promisemade to the plaintiff, before the transfer, of a reconveyance to him by wayof gift. The principal question which arises is whether the evidence ofthis oral promise was admissible. I am inclined to agree with the argu-ment of the appellant that the express provision in Section 5 (3) of theTrusts Ordinance is of no avail to the plaintiff. That provision is in myview applicable only in cases where there was an actual intention to createa trust and the intention is carried out only orally and not in compliancewith subsection 1 of Section 5. For example, in the case of ValliyammaiAtchi v. Abdzd Majeed1 it was averred in the plaint and held at the trialthat the intention was that the transferee of the lands should hold themin trust for the benefit of the transferor. But in the present case therewas no such averment in the plaint, nor can it be reasonably supposedthat the parties had contemplated the creation of an express trust.
Nevertheless the oral promise to reconvey, which undoubtedly was an** attendant circumstance ” establishing that there was no intention to‘transfer the beneficial interest in the half-share to the plaintiff’s father,could be proved by parol evidence for two reasons.
– -. '1 (1944) 45 N. L. JR. 169. . — –
H. N. G– –FERNAND 0, 3.—M^ttctrnmah v. Thiyagarajah
1571
Firstly, Section 83 of the Trusts Ordinance creates by statutory provi-sion an obligation in the nature of a trust which had long been recognisedby the Courts of Equity in Engl and, .and I consider that Section 2 of ourTrusts Ordinance is quite wide enough to enable us to determine “ bythe principles of equity for the time being in force in the High Court ofJustice in England ” that an obligation in the nature of a trust referredto in Section 83 arose in the circumstances of the present case. Theparticular principle which would be applicable is that the provisions of astatute should not be made the instrument of fraud.
Secondly, proviso (1) to Section 92 of the Evidence Ordinance permits“ any fact to be proved …. which would entitle any person toany decree or order relating to any document … such as …
want of consideration. ** If as is often the case oral evidence that noconsideration passed for a conveyance of land is admissible despite thefact that the written conveyance states that consideration was in fact paid,then equally I think oral evidence can be admitted to contradict a state-ment in a, written conveyance to the effect that , the conveyance waseffected by way of a gift. In effect in the present case what the plaintiffsays is that in fact there was no intention to make or receive a gift andthat therefore for want of consideration the beneficial interest in. his half-share did not pass to his father.
The plaintiff sought to prove the oral promise to reconvey not in orderto enforce that promise but only to establish an “ attendant circumstancefrom which it could be inferred that the beneficial interest did not pass.Although that promise was of no force or avail in law by reason of Section2 of the Prevention of Frauds Ordinance, it is nevertheless a fact fromwhich an inference of the’nature contemplated in Section 83 of the TrustsOrdinance properly arises. The Prevention of Frauds Ordinance doesnot prohibit the proof of such an act. If the arguments of counsel for theappellant based on the Prevention of Frauds Ordinance and on Section92 of the Evidence Ordinance were to be accepted, then it will be foundthat not only Section 83, but also many of the other provisions inChapter IX of the Trusts Ordinance will be nugatory- If for example“ attendant circumstances ” in Section 83 means only matters containedin an instrument of transfer of property it is difficult to see how aconveyance of property can be held in trust unless indeed its terms aresuch as to create an express trust.
Having had the benefit of reading the judgment proposed by my brotherSansoni it is unnecessary for me to state any further reason for agreeingwith his conclusion that the judgment of the learned District Judge wascorrect and should be affirmed::; .
. . Appeal dismissed. ;