PEIRIS v. RAMYA GOONEWARDENA

011-SLLR-SLLR-1998-1-PEIRIS-v.-RAMYA-GOONEWARDENA.pdf


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Peiris v. Ramya Goonewardena
81
PEIRIS
v.RAMYA GOONEWARDENA
SUPREME COURTG. P. S. DE SILVA, CJ„
ANANDACOOMARASWAMY, J. ANDSHIRANI BANDARANAYAKE, J.
S.C. APPEAL NO. 71/95
A. APPEAL NO. 33/84 (F)
C. PANADURA NO. 1738021 JULY, 1997.
Landlord and Tenant – Consolidation of property – S. 166 of the Urban CouncilsOrdinance read with S. 233 of the Municipal Councils Ordinance – Exceptedpremises – Rent Act No. 7 of 1972 – 3rd regulation in the schedule to the Act.
The plaintiff filed action against the defendant on 22.7.1981 for ejectment frompremises No. 318. The assessment unit 318 was created in October 1980 whenthe Urban Council action under S. 166 of the Urban Councils Ordinance andS. 233 of the Municipal Councils Ordinance consolidated premises Nos. 318, 320and 322 which were business premises under the Rent Act of which the defendanthad been the tenant from 1960. The consolidation was without the knowledgeor consent of the defendant and the new assessment was cancelled on a complaintmade by the defendant after the institution of the action. The trial proceeded onthe basis of one unit of assessment as the rights of parties had to be decidedas at the date of the action. After consolidation, the new unit was given the valueof Rs. 3,750/- which value made the premises excepted premises in terms ofthe schedule to the Rent Act.
Held:
The entry in the assessment register will bind the landlord and the tenant onlyif they were parties to the inquiry before the local authority. The consolidationof three units into one unit was without the knowledge of the tenant. Hence theearlier three units continued to be three separate units for the purposes of theRent Act despite consolidation and new assessment at the time of the institutionof the action, and therefore, the premises in suit continued to be governed bythe Rent Act.
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Sri Lanka Law Reports
(1998) 1 Sri LR.
Cases referred to:
Chettinard Corporation v. Gamage (1961) 62 NLR 86.
Sally Mohamed v. Syed Mohamed (1964) 64 NLR 486.
Premadasa v. Atapattu (1969) 71 NLR 62.
Ansar v. Hussain (1986) C.A.L.R Vol.1 365.
Hewavitharane v. Ratnapala (1988) 1 Sri LR. 240.
Weerasena v. Perera (1991) 1 Sri L.R. 121.
Wlthanagamage v. Jothipala and others C.A. Appeal 397/83 C.A. minutes31 July 1991.
Daluwatte v. Premalatha C.A. Appeal 738/92 C.A. Minutes 30 November1994.
Udesiri v. Mather C.A. Appeal 783/85 C.A. Minutes 18th January 1995.
Wakkumbura v. Nandawathie C.A. Appeal 765/88 C.A. Mnutes 28 February1996.
Imbuldeniya v. De Silva (1987) 1 Sri L.R. 367.
Rajakaruna v. Laura de Silva (1971) 73 NLR 274. – Not followed.
APPEAL from the judgment of the Court of Appeal.*
C. Ladduwahetty for the defendant-appellant.
A. K. Premadasa, PC with P. A. D. Samarasekera, PC with C. E. de Silva forthe plaintiff-respondent.
Cur. adv. vult.
9th October 1997
ANANDACOOMARASWAMY, J.
This is an appeal from the judgment of the Court of Appeal. SpecialLeave to Appeal was granted on the following two questions:
Whether the decision of the Court of Appeal that thepremises in dispute are excepted premises is correcthaving regard inter alia to section 233 (1) of the MunicipalCouncils Ordinance?
Whether in applying the provisions of the Rent Act theconsolidated assessment in terms of section 233 (1) ofthe Municipal Councils Ordinance could be ignored?
The facts relevant to this appeal are briefly as follows:-
* 1995 – 2 SLR 225
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Peiris v. Ramya Goonewardena (Anandacoomaraswamy, J.)
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The plaintiff-appellant-respondent (hereinafter referred to as theplaintiff) instituted this action to eject the defendant-respondent-appellant (hereinafter referred to as the defendant) from the premisesbearing assesment No. 318, Main Street, Panadura.
The defendant's stepfather became the tenant of premises bearingassessment Nos. 304, 306, 308, Main Street, Panadura, on or about1942 and ran a business in the said premises.
After his death in 1960 the defendant became the tenant of thesepremises and ran a ceramic shop, a banana shop and a hotel andbakery, respectively in the separate premises.
Later these numbers were changed to assessment Nos. 318, 320and 322.
In October, 1980 the Urban Council made the said three premisesone assessment unit (No. 318) as a business premises with an annualvalue of Rs. 3,750/-.
The defendant came to know of this on or about 27.04.1981 about11 days after the notice to quit and by document marked V3‘ requestedthe Chairman, Urban Council, Panadura, to renumber the premisesas it was earlier.
The plaintiff then filed action on 22.07.1981 to eject the defendantfrom the new premises No. 318 on the ground that the premises werenot governed by the Rent Act as they were excepted premises underthe 3rd regulation in the schedule to the Rent Act No. 7 of 1972.
The defendant made representation against the consolidation ofthe three units into one unit to the Chief Valuer. Ultimately by P6dated 13.08.1981, the Chief Valuer directed that the consolidation becancelled and the original assessed units of Nos. 318, 320 and 322be restored. The trial proceeded on the basis that there was one unitof assessment, as the rights of parties had to be decided as at thedate of the institution of the action, but the learned District Judge hadgone on the correspondence that passed between the Chief Valuerand the Chairman of the Urban Council although the entry in theassessment register of Rs. 3,750/- for the unit No. 318 remainedunchanged when the action was filed.
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Sri Lanka Law Reports
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The first issue raised by the plaintiff at the trial was whether thesepremises were governed by the Rent Act No. 7 of 1972. At the trialit transpired that there were three units Nos. 318, 320 and 322 inexistence and have been valued for purpose of rates long prior tothe year 1968, and in 1974 the annual value was raised toRs.1,750/-, Rs.1,000/-, Rs.1,000/- respectively in respect of the saidpremises. These amounts were in existence until October, 1980 whenthe U. C. without notice to the defendant consolidated the threepremises into one and gave a value of Rs. 3,750/- which is anaggregate sum of the amounts stated earlier in this paragraph andfor the first time taking the annual value of the consolidated premisesabove the relevant amount in the schedule to the Rent Act and thustaking the premises out of the Rent Act.
After trial the Learned District Judge held in favour of the defendant,that the property was governed by the Rent Act. In appeal to theCourt of Appeal, the Court of Appeal held in favour of the plaintiffon the ground that the consolidation of the three units into one andthe aggregate sum of the sums for the three units raised the annualvalue of the consolidated premises above the relevant amount in theschedule to the Rent Act and thus taking the premises out of theRent Act. The appeal to this court is from the judgment of the Courtof Appeal.
The question before this court is whether the assessment ofthe consolidated unit of the three earlier units in October, 1980 atRs. 3,750/- was an assessment for the first time.
Learned counsel for the defendant submitted that consolidationdoes not give birth to a new premises unless there are structuralchanges or improvements or alterations of a substantial nature. Onthe other hand, learned counsel for the plaintiff submitted that oncethe earlier units are consoildated into one unit with a new assessment,it is that assessment which is material for the purpose of Rent Actand not the assessment of the earlier unit, because only the newassessment is entered in the assessment register and the landlordand the tenant are bound by the entries in the assessment register.It is not possible to hark back to the assessment of the three earlierunits prior to October, 1980. Further, the authorised rent has to becalculated according to section 4 of the Rent Act, namely:
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Peiris v. Ramya Goonewardena (Anandacoomaraswamy, J.)
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Annual value in 1955, plus,
Rates for the particular year.
Therefore if it is necessary to calculate the separate authorisedrent for January, 1981 of No. 318 or 320 or 322, it is not possibleto do so as there is no separate rate for No. 318 or 320 or 322,as all three have been consolidated. If there is no separate rate forpremises controlled by the Rent Act, then the Rent Act becomesunworkable.
This question for adjudication by this court arose more than threedecades ago.
It was held in the case of Chettinard Corporation v. Gamage(1) thatwhatever be the result of the consolidated assessment and the al-teration of the number of premises the earlier annual value of thepremises before consolidation prevails.
A similar view was taken in the case of Sally Mohamed v. SyedMohamad1*.
In the case of Premadasa v. Atapattu<3> a different view was taken.This was a case where an earlier existing premises was subsequentlydivided and assessed separately. The Court distinguishing the ChettinardCorporation Ltd. case (supra) held that the division created a newpremises. It was further held in the Chettinard Corporation Ltd. case(supra) that the premises in question was in existence as separateentities. In this case the unit in question was not in existence priorto the second assessment.
In the case of Ansar v. Hussainf4) Wanasundera J., reviewed thesecases and took a third view which was followed in Hewavitharanev. Ratnapala.(5> In that case it was decided that where separate existingpremises which had an assessment as at 1st January 1968 areconsolidated and subsequently assessed as one entity, the newassessment would apply only if a new premises has in fact comeinto being due to the physical alterations done to the separate units.
Weerasena v. Perera<e) was also a case where premises let wassubsequently divided and assessed separately and in the absenceof physical alterations it was held that a new premises had not comeinto being.
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Sri Lanka Law Reports
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The above decisions were followed in Withanagamage v. Jothipalaand Two others,m Daluwatte v. Premalatha,(B> D. N. Udeshi v. Mather&and Wakkumbura v. Nandawathie.(,0>
In Wakkumbura case (supra) it was held "minor changes such assub-division and assessment or consolidation and assessment haveno impact on the valuation and assessments (Ansar v. Hussain (supra))unless there is a significant structural or other changes of a similarnature (Hewavitharana v. Ratnapala (supra)). What is protected is thecontract of tenancy and not the premises (Imbuldeniya v. De Si!vafu)and Weerasena v. Perera (supra))".
Learned Counsel for the plaintiff relied on the decision C. Rajakarunav. Laura de Silva<,z) where it was held that in a rent and ejectmentcase, the Ccourt, the landlord and tenant are bound by entries in theassessment Register.
That was the decision by Samarawickrama, J. in an appeal to theSupreme Court from a judgment of the Court of Requests, Colombo.In view of the several decisions of the Supreme Court and the Courtof Appeal, the decision in C. Rajakaruna case (supra) can nolonger be regarded as a binding authority.
The entry in the Assessment Register will bind the landlord andthe tenant only if they were parties to the inquiry into the objectionagainst the assessment before the local authority.
Counsel for the plaintiff submitted that if the three units are con-solidated and assessment made and entered in the register therewould be no separate assessment for the three earlier units enteredin the Assessment Register and therefore the calculation of theauthorised rent is not possible. The answer to this question is in theproviso to section 233 (1) of the Municipal Councils Ordinance whichreads thus:
"The Council may from time to time as often as it may thinknecessary for the purpose of assessment divide any house, build-ings, lands or tenements whatsoever within the Municipality andassess in respect of any rate or rates leviable under this Ordinance,each such divided portion separately and each such consolidatedpremises as a whole:
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Peiris v. Ramya Goonewardena (Anandacoomaraswamy, J.)
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Provided that in the case of any such consolidation theconsolidated premises shall be assessed at the aggregate annualvalue of the serveral houses, buildings, lands or tenements of whichsuch premises are composed".
Therefore if several premises are consolidated into one unit it ispossible to ascertain the assessment of each separate unit, as theassessment of the new consolidated unit is the aggregate of the annualvalue of the several units.
Therefore the contention of learned counsel for plaintiff that theRent Act becomes unworkable cannot be sustained.
In the instant case the three units were consolidated into one unitwithout the knowledge and/or consent of the tenant and after theinstitution of the action the new assessment was cancelled on acomplaint by the defendant (tenant) after the institution of the action.This also goes to show that the entry in the Assessment Registeris only prima facie vaild.
For these reasons these earlier three units continue to be threeseparate units for the purposes of the Rent Act, despite consolidationand new assessment at the time of the institution of the action, andtherefore the premises in suit continue to be governed by the RentAct.
For these reasons I allow the appeal with costs fixed atRs. 10,500/-.
The judgment of the Court of Appeal is set aside and the judgmentof the District Court is restored for the reasons adduced above.
G. P. S. DE SILVA, CJ. – I agree.
BANDARANAYAKE, J. – I agree.
Appeal allowed.