S. A. A. P. JAYATILLEKE et al , Appellant, and H. C. T. P. SIRIWARDENA et al , R

019-NLR-NLR-V-56-S.-A.-A.-P.-JAYATILLEKE-et-al-Appellant-and-H.-C.-T.-P.-SIRIWARDENA-et-al-R.pdf

JayatiUeke v. Siriwardena
73
1954Present: Gratlaen A.C.J. and Gunasekara J.S. A. A. P. J AYATTLLEKE et al., Appellants, and H. O. T. P.SIRIWARDENA et al., Respondents
S. C. 314—D. C. Gampaha, 604/5608
Co-owners—Mortgage of his undivided share by One co-owner—Amicable partitionamong the co-owners thereafter—Effect oj it on the earlier mortgage—Equitableconsiderations involved—Buie against “unjust enrichment ”.
In Ceylon, the rights of a mortgagee, to whom a co-owner has hypothecatedhis undivided share of the common property, continue to attach exclusivelyto that share notwithstanding a subsequent “ amicable partition ” of theproperty into divided allotments. The mortgage does not automatically attachto any share of the divided allotment conveyed to the mortgagor which hadnot been previously covered by the bond.• •
A, B and C who were co-owners effected an “ amicable partition ” of thecommon property, implemented by cross-conveyances. The basis of thoarrangement was that each should become the solo owner of an unencumbereddivided allotment in exchange for his original undivided share in tho largerland which each (apart from the implied warranty ugainst eviction) expresslywarranted to be unencumbered. In fact A had previously mortgaged hisundivided £ share in tho common property to D, but fraudulently suppressedthis from B and C.
Held, that, in an action by I) to enforce his mortgage bond, D was entitledto a hypothecary decree in respect of the whole land to the extent of A’s originalinterest therein which had been mortgaged. In the result, B and C receivedless than they had bargained to receive from A in the “ amicable partition ”.
By tho acquiescence of all parties, however, the execution-purchaser (whobecame the owner of an undivided J share of the larger land) adopted tho curlier“ amicable partition ” and went into occupation of A’s divided allotment,loaving B and C in continued occupation of the other allotments ; and thismode of possession continued for approximately nine years.
Held, that tho status quo could not be disturbed at the instance of A’s heirs.The rule against “ unjust enrichment ” prevented them from now assertingtitle to the unencumbered $ share of the divided allotment possessed by theexecution-purchaser, because this relief could not be granted without causingprejudice to B and C whose interests in the other allotments A and A’s heirswere under a contractual obligation to protect. The form of decree asked forby A’s heirs would be “ unjust ” because it would indirectly have the effecta of diverting the execution purchaser into occupation as a co-owner of theallotments conveyed to B and- C which A had warranted to be freo fromencumbrances.-
j^LPPEAL from a judgment of the District Court, Gampaha.
V. Pe.re.ra, Q.C., with G. T. Samarawickreme, for the 2nd and 3rddefendants appellants.
N. E. Weerasooria, Q.G., with D. S. L. P. Abeysekera, for the 1stdefendant respondent.
S. Nadesan, with J. Senathirajah, for the plaintiffs respondents.
4
—LVt
'. N. R 44906-1,590 (11/54)
Cur. adv. vv.lt.
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GRATIAEN A.C.J.—Jayat&eke v. Siriwardena
February 17, 1054. Gratiakn A.C.J.— _
Thomas, Edwin and Alexander (the 2nd defendant) were until 12thFebruary, 1028, co-owners in equal shares of Pinkumbura Estate 113acres 0 roods and 4 perches in extent. They then agreed to partitionthe property into three allotments of equal value, and to enter into deedBof exchange whereby each of them should become the exclusive ownerof one such allotment. Accordingly, Thomas obtained a conveyanceP4 from Edwin and the 2nd defendant of their undivided shares in lot A(37 acres 2 roods and 28 perches in extent) in exchange for conveyancesof his undivided interests in Lot B (39 acres 3 roods and 14 perches inextent) in favour of Edwin, and in Lot C (35 acres 2 roods and 11 perchesin extent) in favour of the 2nd defendant. The scheme of partition isshown in the plan PI filed of record.
The terms of the cross-conveyances have not been briefed to us in theirentirety, but learned counsel have agreed that they include covenantswhich, translated into English by an Interpreter of this Court, are to thefollowing effect:
*
“ Further, the said premises are free from any disputes that wouldarise as a result of leases, mortgages, dec., and no act has been donethat will cause dispute for the said premises or any part thereof,and the 2nd and 3rd parties to this document (i.e., the transferors)have not previously done any act that would render this documentvoid. Further, the 2nd and 3rd parties above referred to and theirheirs, executors and administrators and assigns further hind themselvesto warrant and defend title to the party of the 1st part above referred to(i.e., the transferee) and their aforewritten in the event of such a requestbeing made by them at the expense of the party of the 1st part inorder more fully to secure their title to the said premises.”
In addition, the implied warranties against eviction must be read intothe documents.
The amicable division was implemented as agreed upon, and the basisof the arrangement was that each co-owner should receive unencumberedBhares in one divided allotment in exchange for liis (professedly)unencumbered shares in the others.
The effect, both actual and intended, of the conveyance in favour ofThomas was that the legal title to an additional 2/3 share of Lot A passedexclusively to him, free of encumbrances. The corresponding conveyancesrelating to Lot B and Lot C were intended to produce a similar resultfor the benefit of Edwin and the 2nd defendant respectively ; but itlater transpired that Thomas (contrary to his specific assurances) hadpreviously executed in favour of Mrs. C. H. Obeysekera a duly registeredmortgage bond P2 dated 19th June, 1914, hypothecating his (then)undivided share in the whole of Pinkumbura Estate. The bond hadnot been discharged, so that Edwin and the 2nd defendant in fact receivedin respect of Lots B and C respectively a title less secure than that whichThomas had bargained to convey to them.
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GRATIAEN A.C.J.—Jayatillelce v. Siriwardena
Mrs. G. H. Obeysekera had assigned her hypotheeary rights underP2 to the 1st defendant by P3 of 6th October, 1914. Thomas diedintestate in 1933 leaving as heirs the 1st plaintiff (his widow who wasalso the administratrix of his estate) and 6 children (including the 2ndplaintiff). In 1939 the 1st defendant instituted an action to enforcethe bond, joining Thomas’ former co-owners as parties in view of theregistration of the cross-conveyances which had been executed in 1928.A decree was entered on 22nd January, 1940, and in execution thereofthe shares hypothecated by Thomas, i.e., an undivided 1/3 share of theentirety of Pinkumbura Estate, were purchased by the 1st defendantunder a Fiscal’s conveyance dated 10th June, 1940. Thomas’ debtunder the mortgage was thus discharged, and satisfaction of the decreeagainst his estate was duly entered of record.
The 1st defendant as execution-purchaser now became vested withlegal title to an undivided 1 /3 share of Lots A, B and O. She went intopossession, however, of only Lot A in its entirety, which, after the ami-cable partition of 1928, had been enjoyed by Thomas and (upon hisdeath) by his intestate heirs including the plaintiffs. Edwin (whoseinterests have since passed to the 3rd defendant) and the 2nd defendantcontinued to possess Lots B and C respectively. By this means, the1st defendant virtually adopted the arrangement arrived at Inst weenThomas, Edwin and the 2nd defendant. The plaintiffs and Thomas’other heirs acquiesced in this procedure without protest of any kind.
It is convenient to analyse the legal estate which (apart from the impactof equitable considerations) was held by each of the persons concernedin respect of Pinkumbura Estate on 10th June, 1940 :
Tlio 1st defendant had legal title to £ only of Lot A, and also |
of Lots B and C ; nevertheless she possessed the entirety ofLot A and no part of Lots B or C ;
Edwin was divested of his title to £ of Lot B whicli Thomas had
conveyed to him under the amicable partition ; nevertheless,he continued to possess the entirety of Lot B as if his legalrights had not been affected by subsequent events ;.
similarly, the 2nd defendant had lost his title to £ of Lot C which
Thomas had conveyed to him, but continued to possess theentirety of Lot C ;
the heirs of Thomas retained at least the bare legal title to the
unencumbered $ shares of Lot A which he had obtained in 1928from Edwin and the 2nd defendant; nevertheless, they claimedno interests in those shares until the present action was insti-tuted by the plaintiffs on 10th February, 1949—i.e., more than9 years after the date of the Fiscal’s conveyance in favour ofthe 1st defendant.
There can be no doubt that the 1st defendant, after the purchase in1940 of the undivided shares actually mortgaged to her, could immediatelyhave insisted, if she so desired, on being admitted by the 2nd and 3rddefendants to co-ownership of Lots B and C respectively. • Had she done
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GRATIAEN A.O.J.—Jayatilldce «. Siriwardtma
■go, the 2nd and 3rd defendants could in their turn have enforced against.the heirs of Thomas the appropriate remedies arising from Thomas’breach (a) of his implied warranty against eviction and (b) of his expresswarranty as to freedom from encumbrances which had been the founda-tion of the amicable partition of Pinknmbura Estate; for, by his sup-pression of the mortgage then subsisting over his undivided interests inthe entire property, he had induced each of them to part with an un-encumbered share of X<ot A in exchange for a share over which the 1stdefendant in fact enjoyed hypothecary rights. For over 9 years, however,the practical necessity for such retaliatory action did not arise, becausethe heirs of Thomas acquiesced in the 1st defendant’s adoption of theearlier scheme of divided possession. During this long interval, Edwinand the 2nd defendant were lulled into a sense of security, and effectedvaluable improvements on Lots B and C respectively.•
So matters stood until this action commenced on 10th February, 1949—
e., Very shortly before the rights of the heirs of Thomas to f of Lot A.would (in any view of the matter) have effectively been extinguished byprescription.
The plaintiffs had in the first instance sued the 1st defendant alonefor a declaration of title to their proportionate shares in that part ofLot A which was not covered by her Fiscal’s conveyance P4. The 1stdefendant, however, moved the Court to have the 2nd and 3rd defendantsjoined in the action so as to ensure an effectual and complete adjudicationupon all matters arising in the dispute. The application was allowed,and I entirely agree with the learned Judge that this was an appropriatecase for invoking the statutory provisions of ' section 18 of the CivilProcedure Code. A decree in favour of the plaintiffs in respect of Lot Awould inevitably have prejudiced the 2nd and 3rd defendants’ rights inrespect of Lots B and C respectively, and they were therefore directlyconcerned in the success or failure of the plaintiffs’ claim in theseproceedings.
1 The case for the plaintiffs, upon the admitted facts which I have setout, has been presented to us by Mr. Nadesan with almost disarmingsimplicity. The undivided §■ share of Lot A which passed to Thomasin termB of the amicable partition, it is argued,’ had not yet passed to thelet defendant by adverse prescriptive user, nor do her rights under theFiscal’s conveyance cover these particular interests ; on the other hand,her claim to an undivided J share of Lots B and C as against the 2ndand 3rd defendants (who are bound by the-mortgage decree of 1948)is unanswerable, so that the 2nd and 3rd defendants cannnot disputeher co-ownership in respect of Lots B and C. In other words they must(so far as issues relating to title in the present action are concerned) becontent with less than they had bargained for under the agreement topartition Pinkumbura into 3 separate allotments ; and, if they complainof any breaoh by Thomas of his express or implied warranties, theirremedy lies in independent proceedings….• •
Each defendant filed an answer which bears evidence of much researchIn an endeavour to discover some equitable doctrine which would prevent"the heirs of Thomas from taking advantage of the " fraud ” which he
GRATIAEN A.C.J – —Jayatilleke v. Siriwardena77
had perpetrated on his former co-owners. But, as the facts aronot in dispute, it matters little whether the available defences areprecisely covered by the pleadings or by the issues framed at thetrial—vide the observations of the‘Privy Council in Jayawiehrema v.A marasuriya 1.
The learned trial judge approached the case by a process of reasoningwhich is different from that winch Mr. Nadesan submitted for ourconsideration. He took the view that, under the Roman Dutch law,the amicable partition which took place on J2th February, 1928, hadthe automatic effect of converting the 1st defendant’s hypothecaryrights over a £ share of the entirety of Pinkumbura Estate into hypo-thecary rights restricted to the whole of Lot 'A ; that .is to say, theexisting mortgage over Thomas’ earlier interests in Lots B and C wasextinguished, and in its place a fresh mortgage was created by operationof law over the § shares of Lot A which he has received from Edwin andthe 2nd defendant. Proceeding from this hypothesis, the learned judgedecided that the 1st defendant had misconceived her remedy by notclaiming in the hypothecary action instituted by her in 1939 a decreeaffecting the entirety of Lot A ; similarly, the 2nd and 3rd defendants,being parties to the action, should have objected to a decree being passedin respect of any part of Lots B and C which had in truth been freed frommortgage by reason of the earlier partition ; not having done so, they toowere bound by the decree ; in the result, none of the defendants couldresist the claims of Thomas' heirs to lie placed in possession of the out-standing shares in Lot A which the decree and the Fiscal’s conveyancehad left untouched.
With regard to the 1st plaintiff’s claim, it was disclosed at the trialthat she had sold her interests in Lot A to outsiders in 1937. Her claimwas accordingly dismissed. The 2nd plaintiff was however declarodentitled to 26/504 shares in Lot A and to consequential relief upon thatbasis.
It will be observed that the entire judgment under appeal presupposesthe correctness of the proposition as to the legal effect of an amicablepartition among co-owners on an earlier mortgage created by one of themover his undivided interests :n the common property. I am satisfied,however, that this does not correctly represent the law applicable inCeylon.
Under the Roman Dutch law, “ where things are the property of severalco-ownors, each of them can only sell or transfer by delivery to thepurchaser to the extent of his own share”, subject to certain exceptions(irrelevant in the present context) in favour of the Fisc. Voet IS. 1. 14.Similarly, “ if one has mortgaged to his creditor a thing which he has incommon with another, only the debtor’s share is bound, whether thething which was in common to the debtor and another has been mortgagedto a private person or even to the Fisc. ”. Voet 20.3.3. Voot explainsthat “ among the Romans ” (by way of contrast) the position of amortgagee was more favourable.
1 (1918) 20 -V. L. li. 289 at 297.
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GRATIAEN A.C.J.—Jayatilleke v. Siriwardena
There is however, a passage in Wille : Mortgage and Pledge in S.Africa (2nd Ed.) p. 39 to the following effect:,
“ Under the Roman Dutch law, one of. several joint owners couldmortgage the joint property even against the will of the others, but•when a division or partition of the property took place, only the lot orthe share of the mortgagor was bound ”,
and Voet 20.3.3 is quoted (besides other authorities) in support of thisview. It is probable, however, that the author, who has previouslypointed out that “ a co-owner could not mortgage the common propertywithout express or implied authority from the others ”, merely intended,in the passage which I have quoted, to explain the effect of a subsequent“ partition ” on a subsisting mortgage which a single co-owner had pur-ported to create over the entirety of the common property, and not (asoccurred in the present case) over only his undivided share in the entirety.In the former case, the professedly unrestricted mortgage might well be.regarded, upon a partition, as attaching to the whole of the dividedportion which has been allotted as the mortgagor’s share—for in thatevent, the terms of the bond would have purported from the outset tocover the entirety of that allotment (and something else as well).
In Ceylon, at any rate, a mortgage over a co-owner’s interests would beentirely unaffected by a subsequent amicable partition to which themortgagee himself was not a consenting party; and even if he did consent,the provisions of the Prevention of Frauds Ordinance must be satisfiedbefore the subsisting hypothecary rights '■ could be enlarged in someresj»ects or reduced in others. A so-called “ amicable ” partition, ifit is to have immediate legal effect, must be implemented by notarialcross-conveyances. In the case of a judicial partition, on the other hand,different considerations arise, and special statutory provisions operateto determine the rights of mortgagees. (To what extent the commonlaw of partition and mortgage is regulated by statute in S. Africa, Ido not profess to know).
Applying the true principles which govern this case, I am satisfiedthat the 1st defendant did not misconceive^her remedy in the actioninstituted by her in 1939 to enforce the-mortgage bond P2 ; nor did the2nd and 3rd defendants misconceive the defences available to themin those proceedings. The hypothecary decree binding an undividedone-third share of all three allotments to secure the repayment of thedebt incurred by Thomas under the bond was the only decree whichcould properly have been entered in those proceedings, and the Fisfcal’sconveyance dated 10th January, 1340, passed to the 1st defendant legaltitle to all those interests. It follows that, although the learned Judgo’sreasons for entering judgment in favour of the 2nd plaintiff cannot besupported, the judgment itself is prima facie correct unless it ought tobe set aside, on the facts of this particular case, on. independentconsiderations founded on equity.■i
It is this part of the case which has caused us the greatest difficulty.One's instinct prompts one to believe that the law is not powerless toprevent the heirs of Thomas from directly^or indirectly obtaining, to the
GRATIAEN A.C.J.—Jayatilleke v. Siriwardena
7M
detriment of the 2nd and 3rd defendants, an unfair .adva»»+^ge from the“ fraud ” which Thomas originally perpetrated on them when he obtainedan amicable partition of the common property. Let me summarise therelevant facts :
Thomas obtained from Edwin and the 2nd defendant an enlarged
and unencumbered interest in Lot A in exchange for his existinginterests in the other allotments which he had falsely represonteato be also unencumbered ;
tho heirs of Thomas now seek to assert their ownership of property
which (but for his fraud) Thomas would never have received,and indirectly (but inevitably) to divert the 1st defendant intopossession, at the expense of the 2nd and 3rd defendants, ofproperty in respect of which Thomas was under a special dutyto protect them from eviction ;
by acquiescing for 9 years in the arrangement by which the 1st
defendant had adopted the earlier scheme of partition, theheirs of Thomas had stood by while the 2nd and 3rd defendantsimproved Lots B and C under the belief that their position wassecure.
Tho civilised rules of modem jurisprudence are not devoid of an adequatereply to unconscionable claims of this kind. The 1st defendant is contentto preserve the status quo, but, as far as she alone is concerned, theinconvenience of now taking over proportionate shares of Lots B and C(at the expense of the 2nd and 3rd defendants) in exchange for a § shareof Lot A would possibly not cause her appreciable detriment. On theother hand, the 2nd and 3rd defendants would be gravely prejudiced ifthe judgment under appeal were to be affirmed.
As for the equitable principles which govern the case, some might saythat the solution lies particularly in the doctrine against “ unjust enrich-ment ”, because Thomas, through his heirs, cannot ask the aid of a Court“to stultify his own act”—Voet 21.2.2. Others would point out,by reference to the express and implied warranties which formed thebasis of the amicable partition implemented by cross-conveyances, thata man shall not “ derogate from his own grant ” or act “ in fraud of hiscovenant ”, Tho rule of estoppel by acquiescence could also be calledin aid. Indeed, all these are allied rules, and the underlying reasonbehind each of them protests strongly against the injustice of grantingtho 2nd plaintiff the relief which he has claimed in these proceedings.
Shortly stated, the prayer of the 2nd plaintiff is that the Court shouldpermit him to oust the 1st defendant from some part of Lot A, thorebysanctioning indirectly the consequential eviction of the 2nd and 3rddefendants from a corresponding interest in Lots B and C. In otherwords, he seeks to enrich' himself at their expense by depriving them ofthose very rights which his predecessor Thomas was under a contractualand common-law duty to respect.
It is impossible to grant the plaintiff relief in respect of Lot A withoutat the same time indirectly giving judicial sanction to some consequentialinjury to the 2nd and 3rd defendants. Having regard, therefore, to the
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Got era v. SduUucumaru
contractual relationship in which the 2nd plaintiff (by succession) standsto those defendants, the “ enrichment ” which he seeks in the form of adeclaration of title in respect of Lot A would be manifestly “ unjust“ It is equitable and in accordance with the law of nature that no personshould be enriched at the expense of, and by the infliction of an injury onanother ”—Dig. 50.17.206. As Lord Kenyon observed in Doe v. Carter *,in a similar context, “ that which cannot be done per directum shall notbe done per obliquum In England, the rule against unjust enrichmenthas been adopted by gradual stages, with the assistance of legal fictionssuch as the “ quasi-contract ” and, in more recent times, the “ quasi-estoppel But in countries which are governed by the Roman Dutchlaw, thin broad and fundamental doctrine is unfettered by technicalities,and there is no need to insist on proof that the general rule has beenpreviously applied in a precisely similar situation. The comprehen-siveness of the Roman Dutch law principle must be enforced wheneverthe “ enrichment ” asked for would, in the facts of a particular case,be demonstrably “ unjust
For these reasons, I am of the opinion that the appeal should beallowed. The action of both plaintiffs must be dismissed with costs asagainst the 1st, 2nd and 3rd defendants. The 2nd plaintiff must alsopay to the appellants their costs in appeal.
Gunasekara J.—I agree.
Appeal allowed: