PATRICK LOWE & SONS AND OTHERS
v.COMMERCIAL BANK OP CEYLON LTD
SUPREME COURTS.N. SILVA, C. J.
RR.E PERERA, J. ANDBAND ARAN AYAKE, J.
SC (CHC) APPEAL NO. 6/2000H.C. (CIVIL) 62/98(1)
15th JANUARY, 2001
Clull Procedure Code – Writ of execution – Stay of sale oj Immovableproperty – Charges and fees recoverable by the auctioneer – Sections256 and 258 of the Civil Procedure Code.
The respondent company (“the plaintiff") Instituted action In the High Courtof Colombo (“Commercial High Court") against the appellants and obtainedjudgement for the recovery of money due on a banking facility amountingto Rs. 3 million. The money advanced was secured by a primary mortgageof an agricultural property. The appellants sought leave to appeal againstthe judgement, decree and proceedings for execution of the decree. Duringthe pendancy of that application the dispute was settled and consequently,the execution of the decree was stayed; and leave to appeal was grantedonly on the question of fees recoverable by the auctioneer. In thecircumstances, the auctioneer was noticed and was a party to the hearingof the appeal.
The expenses, charges and fees that could be recovered by an autloneerare only those permitted by sections 256 and 258 of the Civil ProcedureCode, What is not permitted by those provisions would be struck downby court as being in excess of authority.
Per S.N. Silva, CJ.
“It has to be borne in mind that the seizure of property, sale and connectedmeasures that are taken in execution of proceedings are highly invasive ofthe rights of the person who is entitled to such property. The rights assuredto an owner at Common Law are those specifically limited by the provisionswith regard to seizure and sale contained in the overall statutory schemeof the Civil Procedure Code for execution of a decree.”
SC Patrick Lowe & Sons and Others v. Commercial Bank qf Ceylon Ltd. 281
(S.N. Silva, C.J.)
Cases referred to :
Ashbury Railway Carriage and Iron Co. Ltd v. Hector Riche (1875)LR 653
Attorney – General v. The Great Eastern Railway (1880) 5 A.E 473.
Llyanage and Others u. Gampaha Urban Council and Others (1991)1 Sri LR 1
APPEAL from the judgement of the High CourtMohan Pelris for appellants.
Fdlsz Musthapha, PC. with C. Weerasoortya and D.D.T. Dassanayakefor the party noticed.
A. Coorey with C. Ladduwahetty for respondents.
Cur. adv. uult.
April 04, 2001.
S.N. SILVA, C.J.The Respondent Bank instituted proceedings against theDefendants Appellants in the High Court of the Western Provincesitting at Colombo (Commercial High Court) for the recovery ofmoney due on a banking facility that extends to Rs. 3 million.The money advanced on this facility was secured by a primarymortgage of an agricultural property of about 24 acres.
The causes of action are in respect of 3 Bills of Exchangeon which money was due from the Appellants. Decree wasentered against the Appellants as prayed for, by the High Court.The Appellants sought leave to appeal in respect of the decreeof the High Court and proceedings taken in execution of thedecree. The execution of the decree was stayed and when theapplication for leave to appeal was considered, partiessubmitted that a settlement had been arrived at as to the
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amount due and the Instalment payments. The only outstandingissue was with regard to the fees claimed by the auctioneer inexecution proceedings, which had been paid by the RespondentBank after the execution was stayed by the High Court. Sincethe other issues were resolved, leave to appeal was granted onlyon the question of the fees recoverable by the auctioneer. In thecircumstances the auctioneer was noticed and was a party tothe hearing of the appeal. Written submissions have been filedby the Appellants and the auctioneer.
The several items contained in the bill submitted by theauctioneer are as follows :
tfees for the publication In the gazetteRs.2445.40
tLfees for the publication of notice In the "Lankadeepa" Rs.13751.29
Hi.fees for the publication ofnotice In the “Island"Rs.13225.14
iv.for posters, banners and hand billsRs.18000.00
vfor the preparation of conditions of auctionRs.1000.00
vHLvaluation fees for Rs. 13682812 at 0.5%Rs.68414.06
lxcommission for Rs. 13682812 at 2 1/2%Rs.34070.30
Learned Counsel for the Appellant contended that theexpenses, charges and fees that could be recovered by anauctioneer are only those permitted by sections 256 and 258 ofthe Civil Procedure Code. It was submitted that since the saleitself was stayed, the amount recoverable as fees would bespecifically governed by the provisions of section 258. LearnedPresident’s Counsel for the party noticed, the auctioneer,submitted that the process of effecting a sale is based on acommission issued to the auctioneer by Court. Pursuant towhich the auctioneer tenders to court a valuation report and
SC Patrick Lowe & Sons and Others a Commercial Bank of Ceylon Ltd. 283
(S.N. Silva C.J.)
an estimate of his charges. This includes his commission. Itwas submitted that subsequent action, is taken in relation tothe sale on the approval granted by Court of the charges andcommission, included in the estimate. On this basis it wassubmitted that section 258 of the Civil Procedure Code has noapplication and that the auctioneer is entitled to recover thefull amount of his charges and commission, in respect of whichprior approval was granted by Court. It was also submitted thatthe sale was stayed on an agreement arrived at between theparties and the High Court in its order dated 10.4.2000 madeon the agreement of parties specifically stated that the expensesalready incurred by the auctioneer and the commission feeswould be payable as a pre-condition for such stay. On27.4.2000, the auctioneer submitted his claim for expenses andfees and the Court made order directing that the bill be taxedand the amount so taxed should be paid by the Plaintiff. Onthis basis it was contended that the payment that was made ison an order of Court which in turn derived its authority fromthe settlement entered into by the parties pursuant to whichthe sale was stayed.
The submissions of learned Counsel involve an Importantquestion of law relating to the application of the relevantprovisions of the Civil Procedure Code with regard to the sale ofimmovable property and the expenditure and/or fees that maybe lawfully recovered by an officer carrying out such sale.
It has to be borne in mind that the seizure of property, saleand connected measures that are taken in executionproceedings are highly invasive of the rights of the person whois entitled to such property. The rights assured to an owner atcommon law are thus specifically limited by the provisions withregard to seizure and sale contained in the overall statutoryscheme of the Civil Procedure Code for execution of a decree. Inthis statutory scheme the execution of the decree is at all timesdone under the authority of Court. The property that is liable to
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be seized, the manner of effecting seizure and the sale for therecovery of the sum decreed, are all laid down in the CivilProcedure Code. The authority of the Court Is here exercised bythe Fiscal or other person duly authorized by writing under hlshand. At present there Is no Fiscal, but the Registrar of theparticular Court Is designated Deputy Fiscal for the purpose ofcarrying out the functions that lie on the Fiscal in terms of thelaw. Section 5 of the Civil Procedure Code provides that theFiscal Includes a Deputy Fiscal. Thus the order for sale madeby the Court Is given effect to by the Registrar In hls capacity asDeputy Fiscal, by authorizing an auctioneer to carry out thenecessary functions. The auctioneer would himself thereuponbe vested with the authority that flows from the respectiveprovisions of the Civil Procedure Code.
It is a fundamental principle of law that a person whofunctions In terms of statutory power vested In him is subject toEm Implied limitation that he cannot exceed such power orauthority. The ultra vires doctrine, now recognized universally,evolved in England on this premise (vide Ashbury) RailwayCarriage & Iron Co. Ltd., vs. Hector Riche111 and the AttorneyGeneral vs. The Great Eastern Railway.'21 It follows that whatis not permitted by the provisions of the enabling statute shouldbe taken as forbidden and struck down by Court as being Inexcess of authority.
In earlier times the enabling statutory provisions werestrictly Interpreted in delineating the limits of the power orauthority that was vested. The later judgments have adopted aless rigorous approach In applying the doctrine Emd any actionwhich could be reasonably considered as being incidental to orconsequential upon that which is permitted, is not to beconsidered as ultra vires, provided such action is taken topromote the general legislative purpose in the conferment ofpower on that particular person or authority (vide Llyanageand others vs. Gampaha Urban Council and others131)
SC Patrick Lowe & Sons and Others v. Commercial Bank of Ceylon Ltd. 285
(S.N. Silva, C.J.)
When the foregoing principles Eire applied to the Instantcase It would be seen that the auctioneer has to act in terms ofthe power or authority vested In him by the provisions of theCivil Procedure Code that relate to the sale of the property seizedand the recovery of charges and fees for the work done by him.The submission of learned President’s Counsel that the relevantprovisions of the Civil Procedure Code with regard to chargesand fees that are recoverable are not applicable, Is thereforewholly untenable. The auctioneer cannot exercise the highlyInvasive power with regard to property of the judgment debtorIn terms of the Civil Procedure Code and at the same time claimthat he is not bound by the limits imposed by that provisionitself on the matter of recovering his charges and fees. Similarly,it cannot be contended that the Court could vest authority inthe auctioneer by accepting his estimate of charges and fees torecover amounts in excess of what is permitted. Even the courtis bound by the relevant provisions of the Civil Procedure Codein this matter. Rirther, even assuming that there was an impliedconsent by the parties, that too would not permit the auctioneerto recover any amount in excess of what is permitted. For, sucha process of permitting a party to pay a higher amount wouldnegate the very purpose of the amount recoverable being fixed-in the law itself.
The relevant provisions of the Civil Procedure Code withregard to the sale of immovable property are contained inSections 256, 258 and 259 of the Civil Procedure Code. Section256 provides that where the value of the property seized exceedsRs. 5000/- in addition to other notice that is required to begiven by section 255, the sale itself should be advertised in alocal newspaper or in such other manner as “the court maydirect having regard to the valuation of the property and otherrelevant circumstances.” The provisions contain the time periodwithin which such advertisement and publication of the saleshould take place. The costs and charges with regard to suchadvertisements are payable in advance, as provided.
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Section 259( 1) empowers the Court, on the application ofthe judgment debtor to postpone the sale and make such orderas to the payment of fees and charges due to the Fiscal. Section258 specifies the fees recoverable by the Fiscal or the auctioneerauthorized by him.
It reads thus :
“258. Every sale shall be held by an officer of the Fiscal, orsome other person duly authorized by the Fiscal by writingunder his hand.
When the proceeds do not exceed the sum of seven thousandfive hundred rupees, the Fiscal shall recover a fee of threeper centum on the proceeds actually recovered on returnthereof made to the court In respect of every sale and resaleof movable property, and two per centum on the proceedsof sale of immovable property belonging to the debtor.
When the proceeds, whether of movable or immovableproperty, exceed that sum, the Fiscal shall recover a fee ofone hundred and fifty rupees and of five rupees for everythousand rupees of the proceeds over and above the saidsum of seven thousand five hundred rupees.
And in every case after the seizure of property andpublication of sale thereof, in which the sale shall bepostponed or stayed at the request or with the concurrenceof the party suing out the writ, the Fiscal shall recover halfof the above fees on the estimated value of such propertyfrom the party at whose instance the writ shall be stayed,and in default of immediate payment thereof the Fiscal shallcertify the amount of such fees to the court whence theexecution issued:
Provided, however, that such fee shall never exceed fiftyrupees or the actual expenditure already incurred by the
SC Patrick Lowe & Sons and Others v. Commercial Bank of Ceylon Ltd. 287
(S.N. Silva, C.J.)
Fiscal towards carrying out the sale, whichever sum shallbe the larger. The fees recovered under this section shall bebrought to account and appropriated in such manner asthe Secretary to the Treasury shall from time to time direct.”
It is seen that the fee that is recoverable is limited in relationto three distinct situations.
The first situation is where the proceeds of the sale do notexceed a sum of Rs. 7500/-; the fee is fixed at 3% of the sumactually recoverable in relation to the movable property and2% in relation to Immovable property. This would be in additionto the costs of advertisements payable under Section 256.
The second situation is where the proceeds exceed the sumof Rs. 7500/-; the fee recoverable would be Rs. 150/- for everyRs. 1000/- of the proceeds over and above Rs. 7500/-. This wouldbe in addition to the costs of advertisement as stated above.
The third situation is where the sale is postponed or stayed.The amount recoverable as fees would be half the amount thatmay be due in relation to the first and second situations on thebasis of the estimated value of the property. However in thisinstance the fee recoverable is specifically limited by the provisoat the end of section 258 which states “that such fee shall neverexceed fifty rupees or the actual expenditure already incurredby the Fiscal towards carrying out the sale whichever sum shallbe the larger.”
The present case comes within the third situation andwould be governed by the proviso with the specific limitationreferred to above. In the result the amount that is recoverablewould be the actual expenditure incurred towards carrying outthe sale since that amount is obviously more than the sum ofRs. 50/-.
If the bill submitted by the auctioneer is examined in thelight of the foregoing it would be noted that items 1 to vii, would
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come within the description of the actual expenditure alreadyIncurred towards carrying out the sale.
Item viii relates to valuation fees, in respect of which theauctioneer is seeking to recover a sum of Rs. 68, 414.06 beingan amount computed at 0.5% of the value. It appears that suchvaluation is done prior to the stage of the sale. Section 256referred to above empowers the Court to direct that the sale be
advertised “having regard to the value of the property.” It
is a concomitant of this provision that the Court could requirea valuation to be done of the property to be sold. Such avaluation should be paid for and its cost would be anexpenditure Incurred towards carrying out the sale. Therefore 1hold that item viii being the valuation fee is also recoverable bythe auctioneer.
Item lx being the largest component of the bill is a“commission” claimed by the auctioneer of 2 1/2% of the valueof the property. The amount claimed is Rs. 342,070.30. Theauctioneer is not empowered to claim a commission based onthe value of the property in terms of section 258 or any otherprovision. The right to make such a claim cannot even beremotely implied from any of the provisions. What is recoverableis a fee on the proceeds of the sale to be computed in the mannerset out in the first and second situations referred above andwhere the sale is stayed half of that amount subject to thelimitations in the proviso to section 258. As noted above in theinstant case the amount recoverable as a fee would be the actualexpenditure that was incurred. Since that is incorporated initems i to vii, I hold that no additional amount Is recoverable asa fee or commission by the auctioneer. In the circumstances theclaim of the auctioneer for the payment of a commission of Rs.342,070.30 is disallowed. The auctioneer is directed to refundthe said amount if it has been paid. Since the parties have arrivedat a settlement as to the amount payable and the Instalments,the decree could be accordingly amended by the High Court.
SC Patrick Lowe & Sons and Others u. Commercial Bank of Ceylon Ltd. 289
(S.N. Silva, C.J.)
Subject to the foregoing the appeal is proforma dismissed. Nocosts.
PERERA, J.I agree.
BANDARANAYAKE, J. – I agree.
Appeal dismissed pro forma subject to amendment ofauctioneer’s charges.