Gooneratne and Others v. Premachandra
and Others (S. N. Silva, J. P/CA)
DHEERARATNE, J. ANDPERERA.J.
S.C. APPEAL NO. 62/94
A. NO. 550/88 F
C. KALUTARA NO. 3316/LSEPTEMBER 12,1994.
Emergency (Rehabilitation of Affected Property, Business or Industries)Regulations No. 2 of 1964 (the REPIA Regulations) made under section 5 of thePublic Security Ordinance – REPIA Regulations 9(1), 9(2). 10(1), 12, 13(1), 14(1),14(2) (a) and (b), and 19.
The defendant purchased the premises in suit on 15,7.82 for Rs. 13,000/-; on6.12.82 he sold the premises to one Jane Nona for the same amount subject tothe condition that she would re-transfer it to him if he repaid that sum within oneyear. The defendant remained in occupation but was compelled to leave thepremises because of the July 1983 riots. He did not tender the agreed sum toJane Nona within the year or at any time thereafter. On 29.12.83 Jane Nona soldthe premises for Rs. 20.000/- to the plaintiff-appellant who entered into
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possession. The defendant submitted an undated declaration to REPIA stating,inter alia, that he had been the sole owner of the premises since 1982. Theconditional transfer to Jane Nona and his failure to fulfil the condition were notdisclosed. He thereby obtained from REPIA an authorisation dated 2.3.84 issuedunder Regulation 13(1) of the REPIA regulations, which entitled him to enter,remain in and occupy "the aforementioned affected property".
With this authorisation and Police assistance, the plaintiff was remanded and thedefendant took possession of the premises.
The plaintiff thereafter sued the defendant for declaration of title. The defendantdied pending action and his widow was substituted in his place. The substituteddefendant's contention was that the premises vested in the State and continued tobe so vested until divested on 12.3.84 and the divesting did not revalidate theDecember 1983 alienation. The plaintiff's case was that the premises were notaffected property and therefore never vested in the State. There was no divestingon 12.3.84, but only a binding statutory declaration.
There was no admission that the premises were affected property.
The authorisation of 2.3.84 under regulation 13(1) was issued on the basisthat the premises were affected property but this did not give it the effect of adeclaration under regulation 9(2). The authorisation was issued upon a deliberateand material misrepresentation and the audi alteram partem rule was applicable.This authorisation under Regulation 13 was not also a declaration underregulation 9(2). The mere statement that "the aforementioned affected propertyvests absolutely in the State" does not show that a serious question was beingdecided. Only a fact was being assumed. The authorization was not issued upona decision made under regulation 9(2).
On an affidavit submitted by Jane Nona to REPIA that authority issued adocument to her which amounts to a decision that the premises were not affectedproperty and does not purport to divest property. Hence it is unnecessary todecide, whether the effect of divesting was to revalidate the alienation to whichregulation 12 applies.
Appeal from judgment of the Court of Appeal.
Champaka Ladduwahetty for plaintiff-appellant.
Rohana Jayawardene for substituted defendant-respondent.
Cur. adv. vutt.
Rupasinghe v. MadattifM. D. H. Fernando, J.)
M.D. H. FERNANDO, J.
The right decision of this appeal depends entirely upon theinterpretation and application of the Emergency (Rehabilitation ofAffected Property. Business or Industries) Regulations, No. 2 of 1984(“the REPIA Regulations"), made under section 5 of the PublicSecurity Ordinance (Cap. 40). The following are the relevantregulations:
“9(1) Every affected property, industry or business shall, with effectfrom the date these regulations come into force, vest absolutely in theState free from all encumbrances.
9(2) Where any question arises as to whether any property,industry or business is an affected property, industry or business,such question shall be decided by REPIA by a declaration in writing,and such declaration shall be final and conclusive and shall not becalled in question in any court in any proceedings whatsoever.
10(1) Any person authorised in that behalf by REPIA may takepossession of any affected property, industry or business vested inthe State under regulation 9.
No person shall, after the date of coming into force of theseregulations, alienate any affected property, industry or business, andaccordingly any alienation made in contravention of this regulationshall be deemed for alt purposes to be null and void.
(1) No person shall, unless he has been authorised in writing byREPIA, enter, remain in, or occupy any affected property.
14(1) Notwithstanding that any affected property, or industry orbusiness has vested in the State by reason of the operation of theseregulations, REPIA may at any time by Order published in theGazette divest such property, industry or business.
14(2) The following provisions shall apply to a divesting Ordermade under paragraph (1):
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the property, industry or business shall be deemed never tohave vested in the State by reason of the operation of theseregulations, and any question which may arise as to any right, title orinterest in or over such property, industry or business shall bedetermined accordingly.
the divesting Order shall have the effect of reviving anyarrangement, agreement or other notarially executed instrument inand over that property, industry or business subsisting on the date onwhich such property, industry or business vested in the State.
19. In these regulations, “affected property" means anyimmovable property damaged or destroyed on or after July 24,1983,by riot or civil commotion, and includes any immovable propertyused for the purposes of an affected business or industry."
(I have quoted from the REPIA Regulations, No. 1 of 1983, which wasproduced at the trial, and both Counsel have assured us that therelevant previsions in the 1984 Regulations are identical.)
The Defendant purchased the premises in suit on 15.7.82 forRs. 13,000/; on 6.12.82 he sold the premises to one Jane Nona forthe same amount, subject to the condition that she would retransfer itto him if he repaid that sum within one year. The Defendant remainedin occupation, but was compelled to leave the premises because ofthe July 1983 riots. He did not tender the agreed sum to Jane Nonawithin the year (or even at any time thereafter). On 29.12.83, JaneNona sold the premises for Rs. 20,000/- to the Plaintiff-Respondent-Appellant (“the Plaintiff"), who entered into possession. TheDefendant submitted an undated declaration to the Rehabilitation ofProperty and Industries Authority (“REPIA"), which was establishedby the REPIA Regulations, stating, inter alia, that he had been thesole owner of the premises since 1982; the conditional transfer toJane Nona, and his failure to fulfil the condition, were not disclosed.He thereby obtained from REPIA an authorisation (D2) dated 2.3.84,issued under regulation 13(1) of the REPIA regulations, which entitledhim to enter, remain in, and occupy “the aforementioned affectedproperty"; this also stated:
Rupasinghe v. Madatti (M. D. H. Fernando, J.)
“It is to be noted that in accordance with regulation 9(1)… theaforementioned affected property vests absolutely in the State,free from all encumbrances.*
With this authorisation and Police assistance, the Plaintiff wasremanded, and the Defendant took possession of the premises.
Defence Counsel elicited in cross-examination, from a REPIAwitness called by the Plaintiff, that Jane Nona had submitted anaffidavit to REPIA; this was not produced. However, the Plaintiffproduced a document (P1) dated 12.3,84, issued to Jane Nona Ijythe Chairman of REPIA, declaring “in terms of" the REPIA regulations(but without reference to a specific regulation) that:
“the above property is not an affected property for the purposeof these regulations.”
Later, a similar document (D3) dated 14.9.84 was issued to theDefendant.
By letter dated 16.5.84 the Plaintiffs Attorney-at-law called uponthe Defendant to deliver vacant possession to the Plaintiff, stating thatREPIA had declared that the premises were not an affected property,that the conditional transfer to Jane Nona had become absolute, andthat Jane Nona had transferred the premises to the Plaintiff. TheDefendant's Attorney-at-law replied on 7.6.84, claiming that REPIAhad decided that the premises were affected property; but it was notsuggested that the Defendant had tendered, or attempted to tender,the sum due to Jane Nona for a re-transfer.
On 4.9.85, the Plaintiff instituted this action for a declaration of titlerelying on the conveyance from Jane Nona, and pleading that theDefendant had wrongfully entered into, and remained in, possessionof the premises upon the REPIA authorisation dated 2.3.84. TheDefendant having died thereafter, his widow was substituted in hisplace. The substituted Defendant-Appellant-Respondent (thesubstituted Defendant”) filed answer on 17.12.86 admitting the
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conditional transfer to Jane Nona, and claiming that the Defendanthad written to her giving notice of his intention to repay the moneyand obtain a re-transfer; but no attempt was made at the trial toproduce any such document. It was further pleaded that thepremises had been damaged during the July 1983 riots; that it hadbeen decided under the REPIA regulations that the premises wereaffected property; that accordingly the transfer of the premises byJane Nona on 29.12.83 was unlawful; that the Plaintiff's possession ofaffected property, without an authorisation from REPIA, was thereforeunlawful; that accordingly she had been kept in remand until^ssession was delivered to the Defendant (and released on bailonly thereafter); that the Defendant and his family had been in lawfulpossession of the premises since 2.3.84; and that the Plaintiff was notentitled to question the REPIA order and decision dated 2.3.84.
No issues were raised at the trial as to whether (a) the premiseshad in fact been damaged, (b) the premises were “affected property"within the meaning of regulation 19, (c) REPIA had made adeclaration in terms of regulation 9(2) that the premises were“affected property", and (d) such declaration was immune fromchallenge as provided in regulation 9(2). The only issues relating tothe REPIA regulations were answered as follows:
4. Have the premises been divested by REPIA?Yes
Are the premises subject to the REPIANo,
11. In terms of the REPIA regulations could thePlaintiff or her predecessor in title Jane Nonaacquire any right to the premises?Yes
The learned trial Judge's answer to issue (6) might have beenconstrued as meaning that P1 was a declaration under regulation9(2), that the premises were not affected property; however, scrutinyof the judgment reveals beyond any doubt that the real reason for hisdecision was his view that the property had been divested by P1. It
Rupasinghe v, Madatti (M. D. H. F&rnando, J.)
was on that basis that he gave judgment for the Plaintiff; in so doing,he failed to consider the effect of regulation 12.
On appeal by the substituted Defendant, the Court of Appeal heldthat every affected property (including the premises in suit) vestedabsolutely in the State; that the premises alienated by Jane Nona on29.12.83 being affected property, that alienation was void because ofregulation 12; that P1 dated 12.3.84 was a divesting order underregulation 14, and that such divesting did not revalidate the alienationto the Plaintiff, because regulation 14 only revived agreements andinstruments which were subsisting at the time of vesting, and notthose invalidated by regulation 12. Accordingly, the Court of Appealheld that the Plaintiff did not acquire title on 29.12.83, or on 12.3.84.The appeal was allowed, and the Plaintiff’s action was dismissed withcosts, whereupon the Plaintiff appealed to this Court with specialleave.
The substituted Defendant contends that the premises vested inthe State; that they continued to be so vested until divested by P1 on12.3.84, and that such divesting did not revalidate the December1983 alienation. Since it was her case that Jane Nona had no title toconvey to the Plaintiff, because the premises had vested in the State,in order to succeed she had to discharge the burden of proving thatthe premises were affected property. If she failed to do so, her attackon the Plaintiff’s title necessarily failed.
The Plaintiff’s case is that the premises were not affected property,and therefore never vested in the State, P1 not being a divestingorder but only a binding statutory declaration to that effect that thepremises were not affected property; and, alternatively, that thepremises were divested by P1. and that consequently the December1983 alienation was revived.
There are thus two matters for consideration:
(1) Did the Court of Appeal err in holding that the premises wereaffected property within the meaning of regulation 19, because-
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the issues and the evidence led at the trial did not warrantsuch a finding, or
there was a binding decision, under and in terms of theREPIA Regulations, to the contrary?
(2) If the Court of Appeal was right in concluding that the premiseswere affected property (in which event, admittedly, the premisesvested in the State under regulation 9(1), and the December1983 alienation was void), yet nevertheless-
were the premises divested by P1 of 12.3.84, and
did such divesting revalidate or revive the December 1983alienation?
“AFFECTED PROPERTY”Despite reference in the answer to damage to the premises, thesubstituted Defendant framed no issue and led no evidence in regardto such damage. Learned Counsel seized on an averment in theplaint that she had spent Rs. 22,000/- on repairs as being anadmission of damage during the riots. However, that is not a clearand unambiguous admission of damage covered by regulation 19:that averment may well have referred to repairs necessitated bynormal wear and tear. In any event, if that was how Counsel for thesubstituted Defendant understood the Plaintiff's pleadings, he shouldhave insisted upon an admission being formally recorded at thecommencement of the trial. I hold that upon the pleadings, issuesand evidence, there was no admission that the premises wereaffected property, and a finding of fact to that effect was not possible.
It is true that the authorisation (D2) under regulation 13(1) couldonly have been issued on the basis that the premises were affectedproperty: and, in fact, the authorisation so stated. However, this didnot give it the effect of a declaration under regulation 9(2). For onething, it was issued upon a deliberate and material misrepresentationby the Defendant that he was the owner at the relevant time: he had
Rupasinghe v. Madatti (M D. H. Fernando, J.)
no excuse for concealing the fact that he had not been the ownerwhen the premises became affected property (if indeed they everdid), and that it was Jane Nona who had been the owner since6.12.82. More important, the audi alteram partem rule wasapplicable: even assuming that the Plaintiff’s possession could havebeen temporarily disturbed by means of an ex parte order, yet if thatauthorisation was to be regarded as being also a declaration underregulation 9(2) it would affect the title of a third party, and hence itcould not have been made without prior notice to that party. Thepurported restriction of the right of challenge makes this positioneven clearer. Finally, I cannot treat this authorisation under regulation13 as being also a declaration under regulation 9(9). Not only is thereno express reference to regulation 9(2), but there is not even anindication of a conscious intention to exercise the powers vested bythat regulation, by deciding a question which had arisen. The merestatement that "the aforementioned affected property vests absolutelyin the State" does not show that a serious question was beingdecided: only that a fact was being assumed. I therefore hold that D2was only an authorisation issued under regulation 13 upon anassumption resulting from the Defendant’s ex parte representations,and was not consequent upon a decision made under regulation9(2) in respect of a question which arose for consideration.
This conclusion is perfectly consistent with the scheme of theREPIA regulations. Although an authorisation under regulation 13affects possession, an aggrieved person was allowed an opportunityto question such authorisation. There was evidence that after theauthorisation dated 2.3.84 was issued, Jane Nona submitted anaffidavit to REPIA, whereupon P1 was issued to her. Although P1made no reference to regulation 9(2), it was clearly referable to thatregulation, and to no other. It is not clear whether the Defendant washeard before P1 was issued, but no complaint has been made onthat score; and obviously he suffered no prejudice as he himselfobtained a similar document (D3) on 14.9.84. I hold that, by P1REPIA decided that the premises were not affected property, andsince there was no evidence whatever to the contrary, the onlypossible conclusion was that the premises were not affectedproperty, It is necessary to decide whether that declaration wasimmune from challenge in legal proceedings.
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DIVESTINGThe Court of Appeal, the learned trial Judge, and learned Counselfor the substituted Defendant, were clearly in error in regarding P1and D3 as divesting orders under regulation 14. They are ex faciedeclarations, and do not purport to be orders; they declare thatcertain property is not “affected property”, and do not purport todivest property; and they have not been gazetted, which wasessential had they been divesting orders. It is true that issue (4),raised by the Plaintiff, contributed to the confusion, by suggestingthat the premises had been divested, but it was for the substitutedDefendant to establish that the premises had vested in the state, andit was for her to obtain the necessary admissions, and to suggest theappropriate issues, upon which the success of her case depended.
I hold that P1 and D3 were not divesting orders. It is thereforeunnecessary to decide whether the effect of divesting was torevalidate an alienation to which regulation 12 applied. I
I allow the appeal, set aside the judgment of the Court of Appeal,and affirm the judgment of the District Court, for the reasons I haveset out. The Plaintiff will be entitled to a sum of Rs. 15,000/- as costsin this Court and in the Court of Appeal.
DHEERARATNE, J. -1 agree.
PERERA, J. -1 agree.