Cur. adv. mtU.
• GRATIAEST J.—Banda v. Aliiamhy
June 17, 1952. Gratiaen J.—
This is an appeal from a judgment and decree of the District Court ofKurunegala declaring the plaintiff entitled as against the appellant to anundivided half-share of the land described in the schedule to the plaint.The alleged rights, based on the same chain of title, of the 2nd to the 10thdefendants to the outstanding half-share were conceded by the plaintiff butwere also disputed by the appellant. The appellant’s ease is that he wasthe sole owner of the land by virtue of long prescriptive possessionwhich had in the first instance commenced under a valid title derived bypurchase. It is common ground that the appellant was in exclusivepossession of the land at the time when this action was instituted on 22ndDecember, 1947.
The land admittedly belonged at one stage to a person named DebunaVeda who had in 1905 granted a notarially attested usufructuary mortgageover the property in favour of Dingiri Appu Naide. The mortgagee wasduly placed in possession under the agreement whereby he was to enjoy theproduce in lieu of interest until the principal debt was liquidated. Whilethe bond was still subsisting, Debuna Veda died leaving a son Kiriyaand also a daughter Pini who is alleged to have married out in diga andthereby lost her inheritance. There is a suggestion that Debuna Vedahad yet another legitimate child named Hapu, but for the purpose ofadjudicating between the claims of the parties in the present action we arerequired to assume that on Debuna Veda’s death the property in disputebelonged solely to Kiriya by inheritance from his father. The decree inthis action would, of course, not affect any rights which may hereafter beasserted by persons claiming through either Pini or Hapu.
On 9th August, 1927, Kiriya sold his rights in the property to the appel-lant under the conveyance 1D1. The plaintiff suggests, and the learnedJudge seems to suspect, that no consideration had in fact been paid for thetransfer, but that circumstance, even if established, cannot alter the legalconsequences of the transaction. Kiriya’s title clearly passed to theappellant upon the execution of the deed subject, of course, to DingiriAppu Naide’s prior rights under the subsisting usufructuary mortgagecreated in 1905.
The conveyance 1D1 in favour of the appellant was not registered untilthirteen days later, namely on 22nd August, 1927. In the meantime, Kiriyahad once again sold the same property for valuable consideration to theplaintiff and a man named Uduma Debbe in equal shares by PI of 10thAugust, 1927. This deed, though later in point of time, was duly registeredseven days earlier than 1D1 had been. It follows that if the respectiveclaims of the parties to the present dispute be determined solely by referenceto their “ paper title ”, the later deed PI in favour of the plaintiff andUduma Debbe (whose rights have since passed by inheritance to the 2ndto the 10th defendants) must prevail over the earlier instrument 1D1 byvirtue of prior registration. The appellant’s case must therefore standor fall on the issue of prescription. On that issue the learned J udge has heldagainst him, but Mr. Thiagalingam argues that the judgment under appealshould be reversed even upon the basis of the learned Judge’s findingsof fact.
GRATIAJEN J.—Banda »- Alt iamb y
25 £
The plaintiff concedes that neither he nor his co-purchaser under PIhad possessed the property or even asserted any claim to it from the dateof the execution of PI until very shortly before the present action com-menced twenty years later. The appellant, on the other hand, allegedthat he had possessed the property continuously and exclusively in hisown right from the time of his purchase. This version was, however, re-jected by the learned Judge as grossly exaggerated. It was held on thecontrary—
that the person in actual occupation of the property from 9th
August, 1927, until 30th November, 1939, had been DingiriAppu Naide, who had in fact possessed it continuously since1905 as the usufructuary mortgagee under the bond P2 ;
that the bond in his favour was discharged by payment on 30th
November, 1939;
that the appellant was thereupon, or very shortly afterwards,
admitted to possession by Dingiri Appu Naide on the footingthat he was the person who had lawfully succeeded to Kiriya’sinterests in the land ;
that the defendant had since then possessed the land adversely
not only to the plaintiff and his alleged co-owners but also, itwould appear, to persons claiming through Pini and Hapu.
Admittedly, the final period during which the appellant had personallypossessed the property on his own account was by itself insufficient tosupport a claim to prescriptive title. The real matter for considerationtherefore is whether he can claim the benefit of Dingiri Appu Naide’sproved occupation during the earlier period as constituting in fact andin law possession on behalf of the appellant as the cessionary, by law-ful purchase, of Kiriya’s rights under the usufructuary mortgage bond.As against this contention, the learned Judge accepted the argument that,whatever may have been the character of Dingiri Appu Naide’s occu-pation between 9th August, 1927, and 15th August, 1927, his occupationafter the latter date (on which PI was registered) enured by operation oflaw to the benefit of the plaintiff and his co-purchaser under the laterdeed which prevailed over 1D1 by virtue of its prior registration.
The learned District Judge did not enjoy the advantage of hearing anyargument upon the interesting question of law which was raised before us,and the trial proceeded upon the assumption that Dingiri Appu Naide’soccupation after 15th August, 1927, would, if established effectively, repelthe plea of prescription. Hence, presumably, the appellant’s distortedversion of what actually occurred during the crucial period.
We have not been able to discover any earlier precedents which preciselycover every aspect of the problem, but, after giving my best considerationto the arguments of learned Counsel, I have taken the view that Mr.Thiagalingam’s argument should be upheld. _
It is implicit in the trial Judge’s findings of fact that no privity of con-tract with Dingiri Appu Naide had been directly established at any pointof time between 9th August, 1927, and 30th November, 1939, either by theappellant claiming under 1D1 on the one hand or by the plaintiff andUduma Lebbe claiming jointly under PI ontheother. Admittedly, DingiriAppu Naide had entered into occupation of the land under a contractual
GR.ATXAJEN J.—Banda v. Alitamby
agreement with his original mortgagor Lebuna Veda, and his continuedoccupation must therefore be regarded as a precarious occupation for thebenefit, during the initial period, of his immediate mortgagor—and there-after, for the benefit of those to whom the mortgagor’s contractual rightshad from time to time been lawfully transmitted or ceded. In PabilisAppuhamy v. Peries1 Keuneman J. {Jayetileke J. concurring) heldthat “ there is a prima facie presumption that the possession of a usu-fructuary mortgagee enures to the true owner, whether it be the person whoactually gave him the usufructuary mortgage or the successor of thatperson ”. With respect, I would adopt this formula subject to the quali-fication that Keuneman J. could not, in this context, have intended thatthe identity of the “ true owner ” could legitimately be determined by aconsideration of any issue as to title. For the rights of the parties(and of their successors in interest) to a usufructuary mortgage flowfrom contract and not from ownership. Having regard inter alia to therule laid down in section 116 of the Evidence Ordinance, I venture tosuggest that the principle which Keuneman J. did intend to formulatewould be more precisely stated thus —
“ That the possession of a usufructuary mortgagee must be presumedto enure to the original mortgagor and thereafter to the person to whomthe contractual rights of such mortgagor have at any relevant pointof time been transmitted or ceded. ”
The law relating to the cession of contractual rights is summarised inWitte's Principles of South African Law 2.
Assuming, as we must do for the purposes of this appeal, that Kiriyawas the sole heir of Lebuna Veda, it follows that Lebuna Veda’s rightsunder the mortgage were on his death transmitted to Kiriya and were inturn lawfully ceded by Kiriya to the appellant upon the execution of theconveyance 1D1 of 9th August, 1927. After that date, Kiriya enjoyedno further contractual rights capable of transmission or cession under thecommon law.
Had the situation not been complicated by the supervening circum-stance of the prior registration on 15th August, 1927, of the plaintiff’s laterdeed PI, the continued occupation of Dingiri Appu Naide until 30thNovember, 1939, would, quite apart from “paper title”, have effectivelyconferred on the appellant an unassailable title by prescription. PabilisAppuhamy v. Peries (supra). The real difficulty in this case arises fromthe question whether, by reason of this circumstance, the impact of theprovisions of the Registration of Documents Ordinance (Cap. 101)altered the character of the previous legal relationship subsistingbetween the appellant and Dingiri Appu Naide.
The substance of Mr. Thambiah’s argument is that the prior regis-tration of P 1 on 15th-August, 1927, not only destroyed the “paper title”of the appellant under the earlier deed but has also automatically operatedby what he described as “ a statutory legal fiction ” to divert to the plaintiffand Uduma Lebbe the benefit which the appellant had previously en-joyed as the lawful cessionary of the rights under the usufructuary mort-gage bond in terms.- of which the mortgagee occupied the property. In* (1945) 46 N. E. B. 116.2 (1937 Ed.), page 176.
GRATIAEN J.—Banda v. AMtamby
other words, it is argued that the bare fact of registration had substitutedthe plaintiff and Uduma Lebbe as the true cessionaries of the contractualrights which Kiriya had already ceded in fact and in law to the appellant.
In examining this proposition, one must pay regard to the limitedscope and effect of the provisions of section 7 of the Registration of Docu-ments Ordinance (Cap. 101). It is clear enough that, in any competitionarising between the appellant’s claim to paper title under 1D1 and theplaintiff’s claim to paper title under the subsequent conveyance from thesame source, the latter must prevail by reason of its prior registration.On the other hand, a person who has enjoyed adverse possession (eitherpersonally or through an agent or licensee) of the property is not pre-cluded from relying on such possession, both before and after the date ofregistration of the opponent’s deed, for purposes of acquiring prescriptivetitle to the land., For, as Sampayo J. explains in Appuharriy v. Goone-tilleke 1, “ the benefit of prior registration is given to an instrument onlyagainst (another) instrument. Such registration only affects titles basedon the instruments, and has nothing to do with titles acquired otherwisethan upon such instruments. The title by prescription is acquiredby acts of possession, and I fail to see that the registration of thedeed by the owner against whom prescription is running affects theprovisions of the Prescription Ordinance. The registration of a deedcannot be regarded as the interruption of a possession which as a matter offact continues. Prescription is a mode of acquisition independent ofany documentary title which the possessor may at the same time haveand although the one may be defeated by the operation of the RegistrationOrdinance, the other remains unaffected ”. Wood Renton C.J. took thesame '•dew in his separate judgment.
Mr. Thambiah has invited us to hold that the ratio decidendi of Appu-hamy v. Goonetilleke (supra) is in conflict with an earlier ruling of thePrivy Council in McVity v. Tranouth2 on an appeal from the SupremeCourt of Canada, and that the authority of the local decision as a prece-dent should therefore be reconsidered. In his treatise on The Law of theRegistration of Deeds in Ceylon, page 120, as Mr. Thambiah points out, thelate Mr. A. St. V. Jayewardene did suggest many years ago thatc< if thesame question is raised again it will have to be considered whether thejudgment of the Privy Council did not lay down the sounder and morecorrect view ”.
It would be dangerous to regard the ruling in McVity’s case (supra) asapplicable to the present issue without first examining the extent to whichthe Canadian law of prescription and of registration of deeds correspondsto the systems obtaining in this country. In any event, Lord Macnaghten’sjudgment was concerned with an entirely different problem to thatwhich had engaged the attention of Wood Renton C.J. and Sampayo J.in Appvhamy’s case. In each case the impact of a statute relating toregistration on a statute relating to prescription arose for the Court’sdecision, but is is important to remind ourselves that the word “ prescrip-tion ” can be used in two senses, “ acquisitive prescription which is amethod of acquiring ownership or other real rights in property, andeartinctive prescription or limitation of actions which deprives a person of1 (1915) 18 N. L. R. 469.2 (1908) A. O. 60.
GBATIAEN J.—Banda v. Alitaihby
his right to bring an action Wille (supra) page 129. Appuhamy’s casedeals with the acquisitive, and MacVity’s case with the extinctive speciesof prescription, so that the analogy and the suggested conflict betweenthe precedents disappear. I therefore regard the ratio decidendi in Appu-hamy’s case (supra) as binding upon us. The statutory fiction enactedby section 7 of the Registration of Documents Ordinance is strictly limitedby the language of that enactment and has no bearing on questionsrelating to the acquisition of title under section 3 of the PrescriptionOrdinance. Prescriptive possession is based not on fietion but on reality .
The principle underlying the doctrine of prior registration under theRegistration of Documents Ordinance has been very clearly explained byClarence J. in Silva v. Sarah Appuham/y 1 and by Lascelles C.J. inKanapathypillai v. Moha/madutamby2. At the date of the secondconveyance the vendor has in truth nothing left in him to convey, “butby the operation of the Ordinance the second conveyance overrides the earlierdeed if registered before it ”. The prior unregistered deed, as LascellesC.J. explains, “ is deemed void as against the party claiming an adverseinterest under a subsequent registered deedfor reliable consideration. Thenatural and inevitable consequence is that instruments which would other-wise have become inoperative to pass title are clothed with validity”.In other words, the earlier transferee was the person who had in truthsucceeded under the common law to the interests of the original owner,but section 7 of the Ordinance confers on the transferee under the laterdeed, by reason of its prior registration, the right to supplant the earliertransferee by virtue of a superior “paper title” created by statute—a right which must, however, be “claimed” before the benefit of prioritycan take effect. Should the assertion of that right be postponed until theearlier transferee (or someone claiming under him) has acquired a pre-scriptive title, the statutory protection would be rendered valueless. Asmy brother Gunasekara pointed out during the argument, the Ordinanceprovides machinery for the registration of documents and not of title. Thecombined effect of section 7 (1) and (4) makes it clear that registrationby itself confers no validity on an instrument unless and until a claim isbased upon it.
The legal title to the property which admittedly became vested in theappellant on 9th August, 1927, was not invalidated merely because PI wasduly registered six days later, it only became liable to be invalidated if andwhen a claim to the benefit of prior registration was asserted against him by theplaintiff and his co-purchaser. For the same reasons, I conclude that thesubsisting legal relationship between Dingiri Appu Naide (as the usufruc-tuary mortgagee occupying the property in that subordinate position byvirtue of his contractual rights) and the appellant (as the cessionary of thecorresponding rights of the original mortgagor under the contract) wasnot automatically severed by the mere registration of PI in the appro-priate books maintained under the Ordinance. The character of DingiriAppu Naide’s occupation remained unaltered for a period exceeding 10years after 9th August, 1927, and it continued throughout that period toenure to the appellant's benefit because it was not interrupted at any stageeither physically or in any of the methods recognised by the common law- i (1883) Wendt 383 at page 384.2 (1912) 15 N. L. R. 177 at 179.
JM. J. Fernando v. The Queen
as sufficient to terminate a mutual relationship of that kind—such as, forinstance, (a) the institution of legal proceedings culminating in a decreecompelling Dingiri Appu Naide to recognise the plaintiff as the true ownerclaiming superior title to that of the appellant, or (b) an overt act by Din-giri Appu Naide repudiating his earlier position vis a vis the appellant onthe ground that the title to the property had subsequently become vestedin a stranger who claimed to be the true owner. Nothing of this natureoccurred during the relevant period. On the contrary, the presumptionthat Dingiri Appu Naide’s occupation enured to the benefit of the appellantwas strengthened and, indeed confirmed when the appellant was admittedto possession in his own right after the bond was discharged in 1939. Thatwas conduct which could only be construed in-the circumstances as anacknowledgment by Dingiri Appu Naide of the relationship which the lawhad previously imputed to them.
I take the view that, for the reasons which I have set out, the appellantwas entitled to succeed on the issue of prescription. The plaintiff’s claimin so far as it was based on asuperior “papertitle” (creatednot so much bysuccession as by statute) was only asserted after it had already been de-feated by the operation of section 3 of the Prescription Ordinance. Norcan his belated claim to ownership be legitimately regarded as entitlinghim retrospectively to the benefit of Dingiri Appu Naide’s precarious occu-pation which had long since terminated. I would set aside the judg-ment under appeal and make order dismissing the plaintiff’s action withcosts both here and in the Court below.
Gtotasekaea J.—I agree.
Appeal allowed.