NOORUL ASIN AND OTHER v. PODINONA DE ZOYSA AND OTHERS

003-SLLR-SLLR-1989-V-1-NOORUL-ASIN-AND-OTHER-v.-PODINONA-DE-ZOYSA-AND-OTHERS.pdf


CA Noorul Asin and Other v. Podinona de Zoysa and Others (Viknarajah J.)63
NOORULASIN AND OTHERV.
PODINONA DE ZOYSA AND OTHERS
COURT OF APPEAL
S.B. GOONEWARDENA J. and K. VIKNARAJAH J.
A.NO. 119/81 with C.A. 120/81.
C. COLOMBO NO. 2957/ZLMAY 20 and 23. 1 988.
Contract — Specific performance — Agreement to sell — Performance by,purchaser of her obligations on the agreement. — Substituted obligation to paydamages.
In terms of the agreement between .them, the vendors as well.as the purchaserwere entitled to claim specific performance in case of default by either party.There was a fair balance of sanctions.
Held
The right to claim specific performance of an'agreement to sell immovable■ property is regulated by Roman-Dutch law and not English law. Uhder the
Roman-Dutch, law every party who is ready to carry out his terms.of thebargain prima- facie enjoys a legal right to demand performance by the'other party and this right'is sub'jeot only to the overriding discretion of the.Court to refuse the remedy in the interests of justice in particular cases. Butin English' law the.only common law remedy for breach of-an executory ,contract is damages but-the Chancery Court developed the rule whereby. specific performance could be ordered in appropriate .cases. In the.abse.nce 'ofxagreement to the. contrary the Roman-Dutch lavy confers on a purchaser ■re.ady to fulfil his obligations under'an. executory contract the right to electone of two alternative remedies namely, specific performance or damages.The party that has broken his contract does not get the option of purginghis default by payment of money. It is against conscience .that such a party''should have, the right.of election whether he vyould perform his contract or.only pay damages for breach of" it. .The election is rather with the. injuredparty subject to the discretion of Court. This is the Roman-Dutch law.
The question always is ; 'What is the contract ?’ The Court must be guidedby the primary intention of-the parties to be gathered from the instrumentembodying the agreement. •
. 3. The agreement P1 in clear and unambiguous terms has given the option tothe party who has performed, his part of the contract to demand and compelperformance by the other party. The plaintiff has performed her part of theobligations under the contract. Therefore, she is entitled to a decree forspecific performance.
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Cases referred to :
Thaheer v. Abdeen 57 NLR 1
Abdeen v. Thaheer 59 NLR 385. 388.
Kanagammah v. Kumarakulasingham 76 NLR 529.
Woo/e.v. Natarajan 76 NLR 484.
5.. Kumaraswamy v. Nagahngam Amirihalinga/n CA (SC) 174/71 (F)D.C. Jaffna 2904 — Court of Appeal Minutes of 5.4.1 979.
APPEALS from'judgment of the District Judge,. Colombo (Appeal No. 128/81was withdrawn).
H.L. de Silva. P.C. with R. Manickkawasagar for 2nd Defendant — Appellant inCA 1 19/81 and for 4 and 5 Defendants^Appellants in CSA 120/81.
Eric Amerasinghe. P.C.. with D.R.P. GoonetiHeke and C. Ilangakooh for Plaintiff-Respondent in both appeals.
Cur. adv. vult.
JULY 15/1988•.•
VIKIMARAJAH, J.
Plaintiff-respondent instituted an action against 1st and 3rddefendant-respondents and ■ the 2nd defendant-appellantclaiming a decree for specific performance of'the agreement tosell the. land and premises No. 31. Siripa Road. Colombo 5•described in the schedule to the plaint. The said agreement No.643 dated'6.3 J 975 attested by;S. Balakumaran N.P. has been'produced'.markedPT. The1- 4th. and '5th defendants-appellantswere added as defendants because in the answer of the 2nddefendant-appellant'it was disclosed .that the 1st. 2nd and 3rddefendants had' sold and transferred the said premises by deedof Transfer No. .184 dated'2.4th December 19,77 to the 4th and5th defendants. ' '‘'
The learned Trial Judge after trial delivered judgment in favourof the plaintiff ordering and: directing tbe'-1st. 2nd’and'3rd-defendants to execute , a dedree of transfer in favour .'of theplaintiff on the plaintiff depositing a sum of Rs. 8000/-. . .
CA No'orul Asin and Other v. Podingna de Zoysa and Oth'ers (Viknarajah J.)65
Appeal No. 119/81' (F) is the appeal by the 2nd defendant-appellant and appeal No. 120/81 (F).is the appeal by the 4th'and 5th defendants-appellants.
During the course of the hearing of the appeal learnedPresident's Counsel appearing'for- the-.2nd. 4th and ■ 5th.appellants' moved to withdraw the appeal of the 4th arid 5thdefendants-appellants bearing No. 120/81 (F) .for the followingreasons: (1) the plaintiff sought no relief against the 4th and 5th'defendants (2) no issues raised -by .the plaintiff or any otherdefendants cast any liability on the 4th and 5.th defendants-appellants (3) there is no finding in the judgment by-which the4 th and 5th defendants are restrained from doing-any-act and (4)the judgment does'not in'any way cast any liability on the 4thand 5th defendants:.This Court allowed such vyithdrawal .and theappeal No. 1 20/81 (F) of the 4th and 5-thdefehdarits^appellantswas dismissed with.costs fixed at Rs. 525/-.
Counsel for 2nd.defendant-appellant submitted—
(1) that in terms of the agreement P1 the; plaintiff-respondent,who was the purchaser undertook to pay the balance purchaseprice of Rs. 35.000/- to the .1 sf defendant before 6th September. 1 975 and as he had failed to comply with the said condition.theagreement P1 is deemed to have been cancelled and of noeffect..
(-2) that in any event, the plaintiff is not entitled-to claim specific,performance of the agreement P1 as the said agreement P1provided for the substituted obligation of payment of an agreedamount or sum of.Rs. 1 5.000/-! by way of liquidated damages.
I shall deal with the first submission —–
The agreement P1 is between the 1st, 2nd and 3rd defendantsas vendors and the plaintiff, as purchaser.
The owner of- the premises in suit was Nasamal Dass therriother of 1st. 2nd and 3rd defendants. Nasamal Dass died on26.6.72 leaving last will- bearing No. 400 dated 3rd February1972 attested by S. Bala'kumaran of Colombo Notary Publicwhereby she gave, devised and bequeathed the said-premisesunto her son-the 1 st defendant. The intestate heirs'of Nasa.malDass are 1st, 2nd and 3rd defendants.
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According to P1 the 1 st defendant as owner of the premises insuit along with the 2nd and 3rd defendants agreed to sell andthe purchaser (plaintiff) agreed to purchase from the defendantsthe said premises free from all encumbrances at or for the priceof Rs.-50.000/-.’
The 2nd and 3rd defendants were joined as vendors in P1. atthe request of the plaintiff because the Last Will had not yet beenadmitted to probate. This is so stated in the recital, in theagreement P1.
According to P1…the plaintiff has deposited with the 1stdefendant a sum of Rs. 1 5.000/- by way of deposit which is to.be applied by the defendants in part payment of the said sum of
Rs. 50.000/-…….
The purchase shall be .completed by the purchaser i.e. plaintiff
. (a) tendering to the defendants for execution at'the office of■Mr. John Wilson Attorney at Law and Notary Public within6 months from.date of execution of PT a deed ofconve-■ yance gf the said premises in favour of the purchaser adraft of which, shall have previously been submitted to. – ■ and approved'by the defendants’lawyer, •
" (b) paying to the 1st named vendor (1st defendant) the… balance sum. of Rs. 35,000/- and all such other moneys, .(if any).as shall be payable by the purchaser in terms ofthe provisions of -P1 or any other arrangement with' thefirst named vendee (1 st defendant)..
. It was.also -agreed that the 1 st .named vendor shall soon afterthe signing of. PI allow and permit, the purchaser (plaintiff) tooccupy a part of the downstair building Of the said premises andfurther undertook to hand over .full effectual and vacantpossession of the entire premises within the. period of six monthsupon which event.the purchaser shall complete the purchase interms of, PT: In the event of the 1 st named vendor (1 st defendant)being unable to .hand over vacant possession of the entirety .o.fthe'.said premises at the end of Six monthsperiod, the vendees
• CANooru/ As in and Other v. Podioona de Zoysa and Others (V/knarajah J.)67
o..•w
shall execute the Deed of Transfer in favour of the purchaser• subject however that the purchaser shall be entitled to retain a-sum of Rs. 6000/- as liquidated damages and not as penalty forthe failure to give vacant possession by the first named vefidor. .'
It was.further agreed that the first named vendor .shall soonafter the execution of P1 take steps to have-the Last will No. 400admitted to-Probate and pay and settle the estate duty assessed'on the said premises and fh the event.of his failure the purchasershall be entitled to. retain a further sum of Rs. .2500/- to meet.the Estate Duty and other Testamentary expenses.-
The plaintiff gave evidence. On -behalf of the defendant onlyThassirh Attorney-at-Law for defendant gave evidence. None of thedefendants gave evidence. Thassim stated that'he knew nothingabout the transaction between the plaintiff and the 1st. 2nd and3rd'defendants with regard to the exe'cution'of the agreement P1and the transaction between them thereafter.
•At the execution of the agreement P1 plaintiff paid the 1st-defendant Rs. 15.000/-. By the document P3 dated 18.4.75 the.plaintiff has paid a further sum of Rs. 3750/: to 1 St.defendant.This sum of Rs. 3750/- is made' up as follows Rs. 2100/-.
‘ Rs. 600/- and Rs. 1000/- paid on 6.4.75, 8.4.75 and 18.4.75..This document shows that the defendants have been in the habitof getting small sums of money from the plaintiff. These twopayments of’fls. 15.000/- and Rs. 3750/- are conceded by-the '.defendants. The plaintiff in evidence stated that she gave afurther-sum of Rs. 2000/- to- 1st defendant on 25.5.75 on thedocument P4. -According to P4 it is stated that the sum of Rs.2000/- is being paid as a loan for interest, full -payment to be .made when transfer is settled. Plaintiff stated that she did notknow English and the document P4 was given to her. She statedthat she did not give a; loan but it was payment towards themoneys due on P1. Similarly, a further sum of Rs; 1250/'- hasbeen paid by plaintiff to 1st defendant on the document P5. This-document also shows that it has been paid as a-loan but plaintiffin evidence stated that it was not a loan. Thus after the execution -of the agreement PI the, plaintiff paid the 1st defendant Rs.3750/- Rs. 2000/1 and Rs. 1 250/- aggregating to Rs.' 7000/-.Counsel for 2nd defendant .appellant did not dispute these,payments.
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Plaintiff stated in evidence that'the premises in suit was subjectto a mortgage by Bond No. 394 dated 21st January 1972attested by S. Balakumaran Notary Public and there was a sum ofRs. 20.000/- due to the mortgagees. Under the agreement P1the 1st defendant was obliged to convey the premises in suit toplaintiff free from any encumbrances. Plaintiff stated that at therequest of the'1st defendant she paid Rs. 20.000/- to themortgagees and obtained an assignment of the mortgage in herfavour by deed No. 644- dated 12th March 1975 becauseotherwise the property would be sold in execution. The plaintiffthus became the mortgagee. It was submitted .on behalf of the2nd defendant—appellant that in terms of the agreement P1 thebalance purchase price should be paid to the 1st defendant andthat therefore the payment of Rs. 20,000/- to the mortgagor onmortgage Bond'No. 394 is not payment to. 1 st defendant.
I do not agree with this submission because under theagreement the 1st defendant was. obliged to transfer thepremises free from.any encumbrancesand the purchase price ofRs. 50:000/- was agreed upon on that basis and it-was at 1stdefendant's request and on his behalf that plaintiff paid Rs.20,000/- to the mortgagees. This payment of Rs. 20.000/- wasmade on 12.03.75. The learned trial Judge has correctly heldthat payment of Rs. 20,000/- by plaintiff to the mortgagees.onBond No. 374 is payment on behalf of debt due by 1st. 2nd and3rd' defendants on' the mortgage bond and that plaintiff isentitled to.deduct this sum of Rs. 20.000/- from the balancepurchase price due on P1. The judge has correctly held thatplaintiff has paid Rs. 27,000/- in addition to the sum of Rs.15,000/- paid at the execution of the agreement P1 bothaggregating to Rs. '42;000/-. ..■
In terms of clause 4 of the agreement P1 the 1st defendant isobliged to hand over vacant possession of the entire premiseswithin'6 months upon which the. purchaser shall complete thepurchase. If vacant possession is not handed over the Deed ofTransfer, shall be executed subject however that the plaintiff is.entitled to retain Rs. 6000/- as liquidated damages. •
• According to the evidence of plaintiff she. got possession of theground floor only but the top floor was occupied by others and•She .did not get vacant possession. This .evidence is. uncontradicted. Thus the plaintiff is entitled to retain Rs. 6000/-.
CA Noorul Asin and Other v. Podinona de Zoysa and Others (Viknarajah J.)69
• Again under clause 10 plaintiff is entitled to retain Rs..2500/-because 1st defendant had* not taken steps,'to obtainprobate of the Last Will.,;
Thus under clauses 4 and 10 the plaintiff w.as entitled toretain Rs. 8500/- and out of the balance purchase-price Of Rs.35,000/- the plaintiff is obliged to pay only Rs. 35,000/- lessRs: 8500/- amounting to Rs. 26.500/-. But the plaintiff has infact paid Rs. 27,000/-. ■
Plaintiff stated in evidence, that she through her lawyer'requested the 1st defendant to sign the deed.of Transfer whichhad been drawn up by Notary John Wilson in terms .of agreementP1 but defendant failed to sign the deed of transfer. Thereafterplaintiff through her lawyer sent the letter P6 dated 2919.75requesting 1st defendant. to sign the deed of transfer. Thedefendants failed to do so and did not even reply the letter.P6.
Thus the plaintiff has performed the terms and 'conditions.ofthe agreement P1 within the Stipulated'period of six mq'nths butthe 1st, 2nd and 3rd defendants have failed and neglected tocomplete the sale.
the' next matter to be considered, is whether the plaintiff isentitled,to a decree for specific performance."
. It will be useful to set out the sanctions which the parties haveagreed to in the agreement P1. in case of .default of either by thevendors or by the purchaser. -'
Under clause 7 of PV if the purchaser shail fail tb Complete the .purchase then in that event
either (i) this agreement shall ,forthwith , be deemed to becancelled and be of no effect and-, the sum of Rs.
1 5,000/- deposited'with the first named vendor by the ■purchaser shall- {hereupon be forfeited to the firstnamed vendor as-liquidated-and ascertained damagesand not as a penalty. • -,
or' (ii), the' first named vendor shall have the right toenforcethe specific performance of the agreement entered intoby- the – purchaser and to claim damages (if any)
suffered, by the first named vendor by reason of the
failure of the purchaser to complete the purchase.
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Under clause 8 of P1 if upon the purchaser duly observing andperforming the terms and conditions set forth in the agreementP1 the vendors shall fail refuse or neglect to complete the sale
either the first named vendor shall repay to the purchaser thesaid sum of Rs. 1 5.000/- and the purchaser shall beentitled to recover from the first named vendor a likesum of Rs. 15.000/- as and by way of liquidated'damages and not as a penalty.
or the purchaser shall be entitled.to enforce the specificperformance of the agreement entered into by thevendors and to claim the damages if any suffered by thepurchaser by reason of the vendors to failure completethe purchase.
It will be seen from the above clauses 8 and 9 that the sanctionviz.the right to claim specific performance is mutual. The vendors,as well' as the purchaser- are entitled to claim specificperformance in case of default by either of them. There is a fair'balance of sanctions,‘
The law regarding specific' performance is now fairly wellsettled by .the. decisions of our .Courts. •
■ Gratiaen J (with whom P.ulle J. and.Sanso.ni J. agreed stated'inThaheer v, Abdeen (1) .
" In this country the right to claim specific performance ofan'agreement to sell immovable property is regulated by theRoman-Dutch'Law and . not by the English Law. It is■ important'to bear in mind a fundamental difference betweenthe1 jurisdiction of .a- Court to compel, performance ofcontractual obligations under these Mq'legal systems..In' England .'the only common law remedy–available, to a partycomplaining 'of a breach of an executory contract- was toclaim damages but the Courts of'Chancery in developingthe-rules of equity-assumed and exercised jurisdiction todecree specific performance in' appropriate cases. Underthe Rorman-Dutch Law. on the other.hahd the accepted view
CA Nporul Asirt and Other v. Podinona de Zoysa and Others (Viknarajah J.)7.1
■ is that every party who is ready to carry out his terms of thebargain prima facie enjoys a legal right to dema'rjdperformance by the other party; and this .right is subject'only to the overriding discretion of the Court to refuse theremedy in the interests of justice in particular cases..
So much, for the distinction between English law andRoman-Dutch Law on this topic. But in either system theterms of a particular contract may expressly or by.necessaryimplication exclude the remedy. For instance in England ifthe seller had bound himself either to convey the propertyor at his discretion to pay a sum of money by way ofsubstituted performance".'■
This statement of the law was accepted by Their Lordships ofthe Judicial Committee of the-Privy Council in Abdeen v. Thaheer
. •'
Their Lordships also approved of another dictum contained inthe same judgment that " .it is only in the absence of agreementto' the contrary that the Roman-Dutch' Law confers on a.purchaser under an executory contract the right to elect one oftwo alternative remedies under the Roman-Dutch Law namely .specific performance or damages
In the case of Thaheer v. Abdeen (1) the agreement whichcame up for interpretation, in that case provided inter alia that inthe event of the ' vendees ' failing,, refusing or- neglecting toexecute and, cause to. be executed a'deed of transfer, of the landwhich was the subject matter of the agreement they.shall refundforthwith to the ' purchaser ' a sum of Rs. 12.000/j. depositedas against the purchase price and also pay him a sum of Rs.
1 5,000/- as liquidated damages. In dealing with this provisionGratiaen -3.' observed to my mind, the stipulated return of thedeposit being p.art of' the purchase price reasonably-implies thatthe primary obligation, to sell is. then to be regarded as hayingcome To ari end. This negatives an intention that the purchasercould still demand, if he so chose, specific performance ".
In the' case of Kanagammah v. Kumarakulasingham (3) theCourt' had1 to interpret an agreement where there was noreference to specific performance but only a reference to
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payment of-calculable sum of money to cover the purchase priceand all the expense incurred in case of default and the Courtheld that specific, performance cannot be claimed under thisagreement.
In the case of Hoole v. Natarajan (4) the Court had to interpretan agreement where it was .provided that in'the event of thedefendant refusing or neglecting to convey the land.on tender ofthe balance consideration witbin a fixed period of time sheshould pay.the plaintiff a sum of Rs. 2000/- as-damages.TheCourt held on a proper interpretation of the agreement that theplaintiff was entitled to a decree for specific performancecompelling the'defendant to transfer-the land.
In the above .cases which I have referred to including the caseof Thaheer v. Abdeen (1) there was no reference in the contractto specific performance. The contract was silent with regard tospecific performance and the Court had recourse to the Roman-Dutch Law for the principles which should guide it to come to afinding'whether parties are entitled to specific performance.
' In the instant case'before us the agreement PI in clear and■ unambiguous terms has given'the option to the party who hasperformed his part of the contract to demand and compel'.performance'by the other party.-This, option is given to vendorsas'well as to. the purchaser.. .In fact the legal right to specificperformance.which-.Gratiaen J. has set out in his judgment hasbeen'expressly,set'out in clauses 8 and 9 of the agreement P1.
' .In the ease of Thaheer v. Abdeen. {. 1) Gratiaen J. after settingout:thelaw regarding specific performance states as follows
So mu.ch for the general .principles : but it is theirapplication to particular . cases which often presentsenormous difficulties.':The question always is of courise whatis the. contract /The.Courts must in all.cases look'for theirguide to the primary intention'of the parties, as Jt may be■gathered from the instrument upon the effect of which theyare to decide and for that purpose t6 ascertain' the precisenature and object of the obligation "…
CA Noorut Asin and Other v. P-.dmona de Zoysa and Others (Viknarajah J.)73
In the instant case, the intention of the parties , is clearly andexpressly set out in the agreement P1. The intention is to give theoption to. the party' ready and willing to perform his part of thecontract to compel performance by the other party who is indefault. This option is mutual.' t-
•In Wessels Law Of Contract. (Second Edition) Section 3103 it isstated as. follows
It is therefore part of our law that a defendant who hasbroken his contract has not got the option of purging hisdefault by the payment of money. For in the .words of Story(Equity Jurisp. s 71 7 (a)) it is against conscience that a partyhave a' right of election whether he would perform, hiscontract. or only pay. damages for the breach of it. Theelection* is rather with the injured party subject to the’ discretion of Court ",
In the unreported case of Kumaraswamy v. NagalingamAmirtha/ingam.{5) Victor Per.era J. stated as follows .
The authorities dealing with the. right ..to claim specificperformance make it clear that specific performance is, ingeneral, aimed at the doing of some particular apt and .istherefore sought when damages are not an adequateremedy in cases where it is desired to enforce the.observance of a particular contract. According toWeeramentary Law of Contract Vol 2 page 965 " it is afeature of specific performance that although a plaintiff isentitled at his . option to the remedy to claim damagesinstead, a similar right is not given'to the defendant, whocannot therefore elect to pay damages instead of having anorder of specific performance entered against him ", It isthus clear that the option to claim one other of the remedies" is entirely with the plaintiff. This position is-endorsed byGratiaen J. in .57 N.L.R, (Supra) at .page 3 when he says" every party who is. ready to carry out his terms of thebargain pri'ma facie enjoys a legal right to demandperformance by the other party ". Mr. Renganathan however
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contended that 1st defendant (seller) had the right to theoption whether to transfer the property or to pay thedamages and the right so to elect arose on the tender of thebalance consideration. This contention is untenable and thedefendant had no right to.elect
This right of election which Victor Perera J. states a plaintiff isentitled to has been expressly given in the agreement P1 to theplaintiff namely either to .claim damages or to claim specificperformance.
I hold that under the agreement P1 the plaintiff is entitled to adecree for specific performance.
. Under t-he agreement the 1st defendant is the party to whomthe moneys were' paid and who is’entitled to the property underthe Last Will. The present appeal is only by the 2nd defendant.
I affirm the judgment of the learned District Judge and Idismiss the appeal No. 11 9/81 of the 2nd defendant-appellant• with costs.
S.B. GOONEWARDENE. j.. — I'agree.
Appeal dismissed.