S. D. S. GUNATILLEKE et al , Appellant , and J. P. FERNANDO et al , Respondent

027-NLR-NLR-V-56-S.-D.-S.-GUNATILLEKE-et-al-Appellant-and-J.-P.-FERNANDO-et-al-Respondent.pdf

Gunalilleke v. Fernando
10S
1954Present: Gunasekara J. and Fernando A.J.•S. D. S. GUNATILLEKE et al., Appellants, and J. P. FERNANDOet al., Respondents
£. C. 201-202—D. C. Colombo, 21,595
Rent Restriction Act, No. 29 of 1948—"Excepted premises ’!—Significance of date ofassessment of annual value—Distinction between “ residential premises ”and “ business premises ’’—Sections 2 (4) and (5), 13, 27—Regulations 1 and2 of Schedule (prior to amendment).
Tho annual value of certain residential premises situated within theMunicipality of Colombo was assessed in November, 1941, at Its. 2,730. Thopremises were, therefore, excepted premises within the meuning of Regulation 2of the Schedule to the Rent Restriction Act. When the promises wero lotin May, 1949, and at the time of the institution of the present uction to ejectthe ovcrhnlding tenant, they were used as businoss premises.
IhJil, that tho tenant was not entitled to claim the protection of the KentRestriction Act on the plea that the annual value of the premises, regarded asbusiness promisee, did not exceed Rs. 6,000. The character of the premises thatwas material for the purpose of applying Regulation 2 was their character at thotime of tho assessment.
Premises were taken on rent by the proprietor of a school and used byhim us a hostel for the students and a place of residonce for the warden ofthe hostel and some of the tear hors. The business of the school itself wascarried on at another place.
Held, that the premises were “ residential premises ” within the meaningof suction 27 of tho Rent Restriction Act.
11 t.pponstfill v. Corea (1952) 54 N. L. R. 214 and Standard Vacuum Oil Co. v.Jayastiriga (1951) 53 N. L. R. 22, considered.
^^PPEAL from a judgment of the District Court, Colombo.
//. W. Tambiuh, with O. S. M. Seneviratne at d John de Saram, for the2nd defendant-appellant in 201 and tho 2nd defendant-respondent in202.
H. F. Perera, Q.C., with N. M. de Silva, K. Herat, G. T. Sarnara-trickreme, H. L. da Silva anti K Shintja, for tho plaintifT-respondout in201 and the plaintiff-appellant in 202.
J/. Af. K. Subramaniam, for the 1st defendant-respondent in bothappeals..
Cur. adv. vull.
100
GUNASEKARA J.-—QunalUleke v. Fernand?
October 8, 1954. Gunasekara J.—
• These appeals arise out of an action in the District Court of Colombo inwhich the plaintiif sued for the ejectment of the defendants from premisesknown as Knowsley, Bagatelle Road, Kollupitiya, upon the footing thatthe first defendant was an overholding tenant and the second and third
■■were in occupation of the premises on behalf of the first, and for therecovery of damages from the first defendant at tho rate of Rs. 750 amonth, which was the agreed rent. The premises are situated within theMunicipality of Colombo, where the Rent Restriction Act, No. 29 of1948, is in operation. The defendants alleged that the promises had beonlet by the plaintiff to the second defendant and not to the first, thatthey were business premises to which the Act applied., and that theauthorised ront was Rs. 287 • 25 a month. They also claimed in reconven-tion a sum of Rs. 8,668'10, made up of two sums alleged respectively tohave been spent on necossary repairs to the premises and to have beenpaid on the plaintiff’s behalf to his landlord’s son so that the latter mightbe provided with a house without the plaintiff being ejected from theone of which lie was the tonant. The learned district judge hold thatthe premises had beon let to tho first defendant and not to tho second,but that they were business premises to which the Rent Restriction Actapplied and the plaintiff was not entitled to a decree for ejectment oftho defendants and also that he was entitlod to recover a monthly rontof only Rs. 302'50 as the authorised rent and not the agreed ront ofRs. 750. He rejected the claim in reconvention.
At the conclusion of Mr. Tambiah’s argument in support of thesecond defendant’s appeal, No. 201, we intimated to counsel that wesaw no reason.to interfere with the findings against which the 2nd defendanthas appealed and we did not call upon counsel for the respondents inthat appeal. Appeal No. 201 must be dismissed and the 2nd defendantmust pay to the plaintiff respondent his costs of appeal.
No. 202 is an appeal by the plaintiff against the finding: that the RontRestriction Act applies to the premises and that the plaintiff is thereforeentitled to recover only Rs. 302-50 a month as the authorised rent, andagainst the learned judge’s refusal of the plaintiff’s prayer for ejectmentof the defendants..
. The main contention advanced in.support of this appeal is that uponthe facts accepted by the learned judge the premises in question areexcepted premises and the Act does not apply to them. It is providedby subsection (4) of section 2 that so long a& the Act is in operation inany area its provisions shall apply to all premises in that area, not beingexcepted premises, and byr subsection (5) that the regulations in theSchedule shall have effect for the purpose of determining the premiseswhich shall be excepted premises. Regulation 2 of these regulations. provides that any premises situated within the municipality of Colombo■ shall be excepted premises if the annual value of the premises, beingresidential premises, exceeds Rs. 2,000, or, being business premises,exceeds Rs. 6,000 ; and “ annual value ” is defined in regulation 1 as“ the annual value of the premises as assessed for the purposes of anyrates lovied by any' local authority under any written law during the
GUNASEKARA J.—Gunatilleke o. Fernando
107
mouth of November, 1941, or, in the case of premises first assessed orfirst separately assessed thereafter, such annual value as so first assessedor first separately assessed”. In November, 1941, the annual value of thepremises in question was Rs. 2,750, and the district judge has answeredin the affirmative an issue as to whether at that time they were *' resi-dential premises within the meaning of the Rent Restriction Act, No. 29of 1948”. It is contended for the plaintiff appellant that the learneddistrict judge having arrived at this finding should have held that thepremises were excepted premises, for the reason that in November, 1941,they were residential premises the annual v alue of which exceededRs. 2,000.
The view taken by the district judge is that the character of the pre-mises that is material is their character either at “ the time of filing theaction or it may be the timo when tlio Court is required to make the eject-ment order ” ; and he holds that at the timo of the institution of theaction, and indeed even at the time of the letting (which was the 1st May,1949), they were business premises, and consequently, as their annualvalue in Novomber, 1941, did not exceed Rs. 6,000, that they are notoxceptod promises. He reaches this view upon a consideration of theprovisions of sections 13 and 27 of the Act and tho absence of any expressprovision for determining the character of any promises as “ residential ’>or “ business ” premises by reference to their character in November, 1941
Section 27 provides that, unless the context otherwise requires,“ ‘residential promises ’ means any premises for the timo being occupiedwholly or mainly for the purposes of resilience ”, and “ ‘ business promises ’means any premises other than residential premises Tho learnedjudge, rightly if I may say so, holds that ” the phrase ‘ for the time being ’…. is used to suggest the idea that the character of any particular
promises must bo considered with reference to different points of timodepending on tho circumstances of each particular ease ”, and that thoircharacter may change from timo to time. A question that arises fordocision then is at what time the premises must be residential premisesso that they may bo excepted premises as defined by regulation 2. Thelearned district judgo takes the view that the answer is to bo found insection 13 which, he points out, “ provides that an action may bo broughtfor the ejectment of a tenant of any premises to wliich the Act appliesif the premises are in the opinion of the Court reasonably required foroccupation as a residence for tho landlord or for the purpose of his trade,business, etc. ” ; and in wliich “ there is nothing to prevent a landlordseeking to eject a tenant of business premises on tho ground that horequired such premises for occupation as his residence and vice versa ”.He procoeds to hold “ that one has to consider whether any particularpremises are residential or business premises with reference to theiruse ‘ for the time being ’, and so far as this action is concorned that section13 provides that the material time is either the time of filing the actionor it may be the time when the Court is required to make the ejectmentorder ”.
The argument appears to be that the expression !! for the timo being ”must, in the context of an action for the ejectment of the tenant, be takento refer to the time at which it is sought to have lum ejected, whether
108
GUNA8EKARA J.—GunaiiUekev. Fernando
that time is the time of the bringiug of the action or “ the time when thecourt is required to make the ejectment order There would have beenforce in this argument if the question regarding the premises which thecourt had to decide in the present case had been merely whether theywere residential premises. But the question was whether the annualvalue of the premies, being residential premises, exceeded Rs. 2,000 ;that is to say, whether the annual value of the premises as assessed duringthe month of November, 1941, being premises for the time being occupiedwholly or mainly for the purposes of residence, exceeded Rs. 2,000. Itseems to me that in the context of regulation 2 the expression “ for thetime being ” in the definition of “ residential premises ” refers to thetime of the assessment of the annual value. It appears also to be areasonable view that the character of the premises that is contemplatedin the regulation is its character at that time. In this view of the meaningof the. regulation the same premises cannot be brought within or exceptedfrom the operation of the Act from time to time by a mere change in thepurpose for which they are occupied. It seems unlikely that the legis-lature intended the effect of enabling landlords or tenants of any classof premises to subject them to or exclude them from the operation of theAct at will; but this effect has been achieved in respect of some pre-mises if the learned district judge’s construction of the enactment is itstrue construction.’ In my opinion the premises in question are exceptedpremises if they wore residential premises in November, 1941.
It is contended for the 1st and 2nd defendants respondent that theevidence does not support the finding that the premises were residentialpremises in November, 1941. The evidence is that they had been let in1940 to the proprietor of a school known as the Pembroke Academy, whoused them from that time until the time of the air raid in April, 1942, as ahostel for the students and a place of residence for the warden of thehostel and some of the teachers., The business of the Academy itselfwas carried on at another place, known as Duff House, until those pre-mises were requisitioned for military purposes at the end of 1941, and itwas then moved to Knowsley in January, 1942. It is contended thataccording to this evidence the main use to which the premises were putin November, 1941, was the running of a hostel, and that therefore theywere not occupied “ wholly or mainly for the purposes of residence ” andwere not “residential premises”. The ease of Hepponstall v. Corea1,decided by Swan J. and L. M. D. de Silva J., was cited as supporting thiscontention. It was laid down in that case that in order to decide whetherpremises are residential premises “ the character of the physical occupationof the premises judged by the use to which they are put by the tenantmust be examined ”, and that “ if the character of the occupation sojudged is ‘ wholly or mainly for residential purposes ’ then the premisesare ‘ residential premises ’ ”. It was held that judged by this testpremises taken on rent for the purpose of running a boarding houseand used by the tenant for that purpose and also to serve as aresidence for herself were business premises. “ There can be no doubtthat the main use to which they were put was the running of a hostel., It is clear therefore that the premises were not occupied ‘ wholly or mainly
1 (1952) 54 N. LI R. 214.
(ILfN.-iSEKARA J.—Ounatilleke a. Fernando
10!)
for residential purposes ’ and therefore they are not ‘ residential promises ’within the meaning of the ordinance. Consequently they are ‘ businesspremises ”
In an earlier case, Standard Vacuum Oil Co. v. Jayasuriya l, decided byGratiaen J. and myself, we held that certain premises taken on rent bythe Standard Vacuum Oil Company and used by it mainly as a residencefor its manager, although some portion of its business was transactedthere, were residential premises, notwithstanding that it was for thepurposes of the company’s business that it provided the manager with aresidence. This case was distinguished in Hepponslall v. Corea'2 on theground that in the latter case “ business was conducted on the premises,and was the main purpose of its occupation by the respondent ” (thetenant), while in the former “ only a very small amount of business wasconducted on the premises and the main purpose of occupation wasresidence”. It seems to me that in the present case the whole purposeof the occupation of Knowsley in November, 1941, was residence, althoughit was for the purposes of the tenant’s business at Duff House that heprovided this placo of residence for some of the students and the staff,and no part of the tenant’s business was carried on at Knowsley. Inmy opinion, therefore, judged by the test laid down in Hepponslall t>.Corea’2, the premises in question were residential premises in November,1941.
For these reasons I hold that the premises are excepted premises.The appeal must be allowed and judgment entered for the plaintiff usprayed for in the plaint. The three defendants must pay the plaintiff’scosts in the district court, and the 1st and 2nd defendants his costs ofappeal. 1 would, direct, however, that writ of ejectment shall not beissued until the lapse of three months.
Feknandu A.J.—
Having had the .advantage of reading the judgment of my brotherGuimSckara, I agree with the conclusions he has reached upon bothappeals.
The Rent Restriction Act imposes various prohibitions and restrictions;for example, the amount of rent chargeable is i-egulated (Sections 3, 4,f> & fi), the right of ejectment is controlled (Section 13), sub lettingwithout consent is prohibited (Section 9), advances and premia arcforbidden (Section 8), the family of a deceased tenant is given the optionto eontinuo the tenancy (Section 18). But each of these differentprotective provisions only applies to “ premises to which the Act applies ”,an expression the meaning of which the Legislature has taken care toexplain at the very commencement of the Act because the questionwhether any particular premises are governed by the Act is a fundamentalone. The effect of sub-section (4) of Section 2 is that all promises inColombo are premises to which the Act applies unless they aro exceptedpremises, and sub section (5)directs us to the Regulations in the Schodule,which shall apply for the purpose of determining whether any promisesare excented.
■(1952) 54 N. L. R. 214.
* (1951) 53 N. L. R. 22.
no
GUNASEKARA J.—Qunatilleke t). Fernandt
In the relevant regulation 2 in the Schedule, there occur two expres-sions, “ annual value ” and “ residential premises ”, which are assignedtheir meanings by regulation 1 and by Section 27 respectively, andwhen regulation 2 comes to be interpreted, those two expressions haveto be given the meanings so assigned. Regulation 2 therefore (whenconsidered in relation to premises in Colombo which existed in 1941)in effect provides that any premises shall be excepted premises if the annualvalue thereof as assessed in November, 1941, in the case of premises for thetime being occupied for the purposes of residence, exceeds Rs. 2,000. In thiscontext, there is no period of time mentioned, other than the period“ November, 1941 ”, to which the words “ for the time being ” can withreason be related ; and if any premises were at that time “ residential ”(as the learned Judge has found in this case), and if their annual valueat that time exceeded Rs. 2,000, they are excepted premises and cannotl>e said to be premises to which the Act applies, whether for the purposeof Section 13 or of any other provision of the Act. This mode of con-struction is not merely the natural and logical one in a statute where theLegislature has assigned a meaning to an expression ; it has also theadvantage that the important question whether the Act applies to anyparticular premises is determined with certainty by regulation 2, anddoes not receive different answers according as a Court or a landlord or atenant is considering different sections of the Act. If the question isaffirmatively answered by regulation 2, then the whole of the controlis prima facie applicable ; if negatively, then the “ control ” is altogetherinapplicable. As to this matter, I wish only to add that my opiniondoes not take account of the amendment' of the Schedule to the Actwhich was passed at a time subsequent to the date of the institutionof the present action.
The other question which wo have to decide is whether premiseswhich were occupied as a hostel or residence for persons in the employ-ment of the tenant were premises for the time being “ occupied .whollyor mainly for the purposes of residence ”. I agree with my brotherthat the test is the physical character of the occupation.■
The Legislature has not in reality differentiated between residentialpurposes and business purposes ; the relevant definitions pose only thequestion whether the premises are occupied for the purposes of residence,and if not they are to be regarded as business premises whether or notthey are actually business premises. Nor is the Legislature concernedwith the character of the tenant’s occupation. In my view therefore,the only issue to be determined is whether in fact persons actually“ resido ” (in the ordinary connotation of the word) in the premises orin the majority of the rooms which it comprises. If such is the case,the premises are residential within the meaning of the Act, and thecircumstances in which the residents come to reside in the premisesand their contractual relationships, if any,- with the tenant, do not alterthe character which the premises acquire by reason that persons residethere.■'
Appeal No. 201 dismissed.
Appeal No. 202 allowed.