S. H. PEIRIS and another (of the firm of Billimora de Silva, Peiris and Panditar

118-NLR-NLR-V-65-S.-H.-PEIRIS-and-another-of-the-firm-of-Billimora-de-Silva-Peiris-and-Panditar.pdf


Peiria v. Municipal Council, Qalle
555
1963Present: Tambiah, J„ and Abeyesundere, J.S. H. PE IRIS and another (of the firm of Billimoria de Silva,
Perris and Panditaxatne), Appellants, and THE MUNICIPALCOUNCIL OF'QALLE, Respondent
8. C. 134/61—JD. C. GaOe, 2558/X
Quas-i-cantrad—Undue enrichment—Obligation arising therefrom—Duty of Court toframe issue on it—Condictio indebiti—Quantum meruit—Contract with a.Municipal Council involving expenditure exceeding Us. 1,500—Omission toexecute it under seal—Effect—Prescription—Municipal Councils Ordinance,ss. 227, 228, 229.
The obligation based on the principle that no one should be unjustly enrichedat the expense of another is not based on contract but arises out of performanceunder an invalid obligation which confers a benefit on another person. Theobligation based on unjust enrichment is independent of contract and is impliedby the law without there having been any previous agreement or understanding.
Where all the averments necessary to raise an issue of undue enrichment onthe part of the defendant are contained in a plaint, it is the duty of the Courtto frame such issue at the trial even if the plaintiff fails to suggest it.
The plaintiffs, a firm of architects, were engaged by the defendant, a Muni-cipal Council, to construct a building (Town Hall). The contract, althoughit involved an estimated expenditure of more than Rs. 1,500, was not containsin a Written instrument under the seal of the Council as required by the pro-visions of section 228 of the Municipal Councils Ordinance. The plaintiffs,however, performed their part of the contract and handed over the building tothe defendant. They sought, in the present action, to recover a sum ofRs.30,380/40, which they claimed was the unpaid balance out of a sum ofRs. 84,380/40 due to them as remuneration for the work,done by them asarchitects. The trial Judge dismissed the action on the ground that thecontract was void as it was not under seal and as the claim of the plaintiffswas prescribed.
Held, that the issue of undue enrichment should have bean framed andtried by the trial Judge. In construing the provisions of sections 227, 228 and229 of the Municipal Councils Ordinance, there is nothing to suggest thatcontracts not under seal, involving sums over Rs. 1,500, are illegal. Suchcontracts, not being penal, are not either expressly or impliedly illegal.
Held further, that the period of prescription in respect of the plaintiffs’ claimcommenced, in view of the evidence led, six months after the building washanded over to the defendant for ceremonial opening.
^.FPEAL from a judgment of the District Court, Galle.
V. Perera, Q.G., with Carl Jayasingke and B. J. Fernando, for thePlaintiffs-Appellants.
H. W. Jayewardene, Q.C., with F. A. Abeywardene and D. 6. Wijewardene,for the Defendant-Respondent.
Cur. adv. vult.
556
TAMBfaJEt, J.—JPairis v. Municipal Octmoii, Galls
December IS,1963. Tambiah, J.—
The plaintiffs, a firm of ftrehwiesfcs, brought this action against the defen-dant, the Municipal Council of Dalle, to recover a sum of Ks. 30,3S0/40,which they claimed, was the unpaid balance out of a sum of Ks. 84,3S0/40due to them as remuneration for the work done by them as architectsin constructing the Town Hal] of Galle.
The defendant denied generally the averments in the plaint includingthe averment that the plaintiffs were engaged by them as architectsfor the purpose mentioned and took up the legal defence that the con-tract was void as it was not under the seal of the Municipal Council.The defendant also pleaded that the claim of the plaintiffs was prescribedand counter-claimed a sum of Rs. 30,3S0/40 as set-off for damagessuffered by it due to the negligence of the plaintiffs.
The trial proceeded on various issues and the learned District Judge,in an exhaustive judgment, has held that the plaintiffs were engagedas architects by the Municipal Council and, although the contract wasnot under seal, the plaintiffs bad performed their part of tbe contractand had handed over tbe Town Hall to the defendant. He also heldthat there was no negligence on the part of the plaintiffs. But hedismissed the plaintiffs’ action on the ground that the contract was voidas it was not under seal and as the claim of the plaintiffs was prescribed.
The evidence led in the case disclosed a most unsatisfactory state ofaffairs. Although the contract entered into by the defendant involveda sum over Ks. 1,500/-, no tenders were called for and the contract wasnot contained in a written instrument under the seal of the Councilas required by the provisions of the Municipal Councils Ordinance.
At the hearing of the appeal, Mr. H. V. Perera, Q.C., who appearedfor the plaintiff-appellants, argued that the contract was merely un-enforceable and not void, but he did not press this argument and it isunnecessary for this Court to consider this aspect of the case in viewof the order I propose to make. Mr. Perera also argued that the aver-ments in the plaint are wide enough to enable the Court to frame anissue of " undue enrichment ” on the part of the defendant, and, in theinterest of justice, such mi issue should have been framed and tried bythe learned District Judge.
The plaint has been drafted in such a manner that all the avermentsnecessary to raise the issue of undue enrichment are contained therein.The duty of raising the necessary issues for a just decision of a case restson the Judge. In the instant case, it is with reluctance that the learnedDistrict Judge has dismissed the plaintiffs’ claim. He has held thatsince tbe plaintiffs had performed their part of the contract without anynegligence and had given the defendant the benefit of a Town Hall, itwould be a travesty of justice if some relief ia not given 18 tbe plaintiffs.
TAMBIAH, J.—Peiria v. Municipal Council, OaUe55%
In Jayamichreme. v. Amarasuriya1 Lord Atkinson, who delivered!the opinion of the Privy Council, posed the question " Are they ” (the=parties to the case) “to be denied justice because their pleader haschosen to over-state his clients’ case, .and. the Judge-to frame an issue‘’embodying that overstatement ? ” In that case, the relevant issuewas framed by their Lordships of the Privy Council in granting reliefto the appeEant. In the instant case, too, the learned District Judgeshould have framed the issue and should have tried it.
The doctrine of undue enrichment, which has its roots in the RomanLaw, had virile growth in the Roman-Dutch Law and has not only beenadopted in South Africa (vide The British Commonwealth Series—Yol. 5—The Union of South Africa (Hahlo and Kahn) p. 566), but also is firmlyentrenched in the legal system of our country (vide Samelis Appuhamyv. Ram Iswera2). The doctrine is based on the well-known maximcontained in the Corpus Juris (D. 50. 17. 206) :
“ Jure naturae aequum, est nerninem cum alterius detrimento et injuriafieri locupletiorem. ”
Under the Roman Law, an action would He where one person had beenunjustly enriched to tbe detriment of another. Hence, different typesof condictiones and the actio de in rem verso were available, but no generalaction based on undue enrichment existed.
In Roman-Dutch Law, the cases where an action would lie to recoverundue enrichment received extension. Many Dutch jurists consideredundue enrichment as a source of obligations and tbe various condictionesby which such enrichment could be recovered are still part of the modemlaw, though, both in Roman and Roman-Dutch Law, these actions areessentially statements on the substantive law, cloaked under terms ofvarious actions (vide The South African Law of Obligations by Leeand Honore, Section 681). The delineation of the various condictiones -should nob be taken too rigidly. The most important of these is thecondictio indebiti for which detaEed rules have been enunciated.
The condictio indebiti is the general remedy avaEable to a personwho delivers a sum of money or other property to another person inorder to pay a supposed, but non-existent, debt. The question whetherthe condictio indebiti is confined to the case of transfer of money or otherproperty has to be answered in the affirmative both in the old as wellas in modem law (Voet 5. 2. 18 ; 17. 6. 12). This remedy lies to recoverthe estimated value of services rendered if the recipient was benefited.The Italian mediaeval jurist, Paulus Castrensis (ad D. 19.5.27) says:
“ quia si praesto tibi decern operas fabriles indebite credens me teneri,non •possum repetere totidem operas fabriles tvas, sed debeo repet^re aesti-matior&m earum ; quia in totum es effectus locupletior ex meis ’’.
In Roman and Roman-Dutch Law, the condictio indebiti included allclaims for restitution where the plaintiff could have pleaded aperemptory exception before paying (Voet 12.6.4.) whilst the condictia 1
1 (1913) 20 N. L. R. p. 289 at 297.- (1954) 56 N. L. R. 221.
2*—y-fi 16S05 (3/«>)
-^oS
TAJM3BIA.H, J.—Peirif v. Mumoipal QoimoiZ, Gotti
•sine causa, in the wide sense, included all other contracts (Voei 12.7.1;Lee and Honore Ibid Section 681).
Although the Bomaai Law with regard to the various forms j}£jxnudicticmes was often highly techni.cal ahd much of it has become obsolete,nevertheless the essential principles which, underlie these condictionesform part of the modern law. It is unnecessary to use the name ofany condictiones in claiming relief (Groenewegen ad D. 13.1.1 ; Wessels,Law of Contracts (2nd Edition) Vol. II, section 3758).
The Obligation arising out of undue enrichment is not based oncontract but arises out of performance under an invalid obligation whichconfers a benefit on another person. The principle which regulatedthis remedy is succinctly stated in Justinian's Lfigesb as follows<D. 12.6.54)
“ Ex his omnibus causis, quae iure non valuerunt vel non habuenmt
affectum, secula 'per errorem solutione ccmdictione locus erit ”
The principle that the doctrine of undue enrichment is applied whereone gets the benefit of another’s labour is recognised in modem law aswell (vide Frame v Palmer 1). Therefore, the contention of Mr. H. W.Jayewardene, Q.C., counsel for the defendant-respondent, that thisremedy lies only where materials which accrue to the land are supplied,is untenable.
Mr. Jayewardene cited certain English cases and contended thatwhere contracts involving sums over a certain value were not enteredunder the seal of a public corporation, they are null and void. He reliedon the ruling of the House of Lords in the case of Young <fc Co. v. Mayorand Corporation of Leamington ^ and other English cases for the propositionthat no claim on quantum meruit can be maintained where the specificprovisions in a statute empowering a public corporation have beeninfringed. In that case, it was held that the provisions of section 174of the Public Health Act of 1875 (38 & 39 Viet. c. 55), requiring contractsfor more than 501 to be in writing, were mandatory and not merelydiscretionary and, therefore, where a duly authorised authority underthe Act contracted for the execution of certain works involving a sumover 501, such a contract, though executed, could not be enforced as itwas not under seal.
In dealing with the question whether the relief could be based on quasi-contract, Lord Blackburn said: (Vide 49 L. T. at pages 2 & 3): " Corpora-tions are liable at common law, quasi ex contractu, to pay for work orderedby their agents and done under their authority. The cases on this sub-ject are very numerous and conflicting, and they require review andauthoritative exposition by a Court of Appeal. But, in my opinion,the question thus raised does not require decision, in the present case.We have here to construe and apply an Act of Parliament. The Actdraws a line between contracts for more than 501. and contracts for301. and under. Contracts for not more than 501. need not be sealed
* 4,9 i. T. A
1 1950 (3) 3. A. 840 (O),
TAMBTA FT, J.—Feins v. Municipal Council, GaUe
559
and can be enforced whether executed or not, and without reference tothe question whether they could be enforced at common law by reasonof their tri-vial natire. But contracts for .more than-501.- are positivelyrequired to be under seal; and in a case like that before us, if we wereto hold the defendants liable for what has been done under the contract,we should in effect be repealing the Act of Parliament. ”
The rationale of quasi-contract in English Law is nebulous and theproblem of rationalisation presents exceptional difficulties (vide Wessels onLaw of Contract (2nd Ed.) p. 488); the concepts of contract and quasi-contract both developed from the writ of assumpsit and English judgesoften considered a quasi-contract to be a contract by a fiction of thelaw and thought it anomalous to enforce a void contract as a quasi-contract. The reluctance of English judges to recognise the conceptof quasi-contract could be seen in many cases, and Lord Blackburn’sconclusions in Young & Co. v. Mayor and Corporatioib of Leamington(supra) may perhaps be due to such reluctance.
Lord Atkin, while he found it necessary to admit that the action basedon quasi-contract was based upon a fictitious contract, characterised thefiction as “ obvious ”, “ fanciful ” and “ transparent He said (vide'United Australia Ltd. v. Barclays Bank Ltd.*): “These fantastic resemblancesof contracts invented in order to meet requirements of the law as to formsof action which have now disappeared should not in these days be allowedto affect actual rights. When these ghosts of the past stand in the pathof justice clanking their mediaeval chains, the proper course for the judgeis to pass through them undeterred ”.
On the other hand, the doctrine of undue enrichment, which wasadumbrated by Lord Mansfield in Moses v. Macferhn a, hks received moralsupport from later eminent judges. Lord Wright, for example, confessedhis sympathy with Lord Mansfield. “ It is clear ” be said (vide Fibrosa’scase 3) “ that any civilized system of law is bound to provide remedies forcases of what has been called unjust enrichment or unjust benefit, that isto prevent a man from retaining the money of, or some benefit derivedfrom, another which it is against conscience that he shonld keep. Suchremedies in English Law are generically different from remedies in contractor in tort, and are now recognized to fall within a third category of thecommon law which has been called quasi-contract or restitution ”.
The Roman-Dutch Law, which is a superstructure on Roman Law, hasdeveloped the doctrine of undue enrichment on rational lines. For theapplication of this doctrine it is not necessary to invoke any particularform of action (vide Principles of South African Law by Wille (2ndEdition) p. 436). Therefore, those who administer the Roman Dutch Laware spared the ghastly sight of apparitions that “ stand in the path ofjustice ”. The obligation, based on unjust enrichment, is independent of
1941 A. C. 1 alp. 29.
1943 A. C. 32 at 61.
3 (1760) 2 Burr 1005.
560
TAMBIAH, J.—Pains v.0<nmviL> Gails
contract and is implied by tbe law without there having been, any previousagreement or understanding (Bad p. 435).
In construing the provisions©! sections 257, 223 and 529 of the Muni-cipal Councils Ordinance, there is soothing to suggest that this remedy hadbeen wiped away by the Legislature. There is nothing in the Ordinanceto suggest that contracts not under seal, involving sums over Be. 1,500/-,axe illegal. Such contracts not being penal, there is no room for holdingthat such an agreement is either expressly or impliedly declared illegal.
Mr. Jayewardene also urged that the granting of the remedy based onthe doctrine of unjust enrichment may result in the public being defrauded.All that this Court seeks to do, in tbe instant case, is to compensate theplaintiffs for services performed by them to the defendant and we fail tosee bow the public, which has benefited by the plaintiffs’ services, can bedefrauded when a Court of law seeks to compensate tbe plaintiffs. If theLegislature intended that this remedy should not be invoked in caseswhere the contract is void for want of seal, it would have expressly statedthat no other remedy would lie in such cases. Bor these reasons, I am ofthe view that the issue of undue enrichment should have been framed andtried by the learned District Judge.
The learned District Judge’s finding that the claim of the plaintiffs isprescribed also cannot be supported. There is the uncontradicted evi-dence of Mr. Fieris who stated that bis duties as architect continued for aperiod of six months after the building was handed over to the defendant.It is during this period that tbe services of an architect are indispensable.It is his duty to see that there are no oracks, sinking of foundation orother defects caused by faulty workmanship. Although the building washanded over for ceremonial opening on 21st July, 1956, the duties of theplaintiffs continued for six months thereafter. The plaintiffs could onlyhave been re-imbursed in full after this period was over. Therefore, I amof the view that the claim of the plaintiffs is not prescribed. Bor similarreasons, the claim based on unjust enrich merit is also not prescribed.
Bor these reasons, I pro forma set aside the order of the learned DistrictJudge and remit the case for the issue based on undue enrichment to betried. The defendant is entitled to raise any consequential issues at thetrial.
It is a matter of regret that the defendant, a public corporation, shouldhave flouted the provisions of the Municipal Councils Ordinance. Havinginduced tbe plaintiffs to render then services, the defendant went to theextent of denying the contract and alleged negligence on the part of theplaintiffs. Such mi allegation was not substantiated and it is surprisingthat the defendant claimed in reconvention the identical, sum which theplaintiffs alleged as balance sum due to them for services rendered. Highstandards of integrity and good conduct are expected of public bodies andwe observe with regret that the defendant has, in the instant case, fallenfar short of such standards.*
SAINS ONI, J.—Junaid v. Commissioner of Inland Revenue
561
In adopting this course, we are of the view* that the law subservesjustice, though the converse is not true. In view of the fact that theplaintiffs could have raised the issue of* enriehmentrat the trial, I orderthat each party bear the costs incurred in the lower Court. The appel-lants, however, are entitled to the costs of the appeal.
Abeyesttndebe, J.—I agree.
Order set aside pro forma.