H. N. Gr. FERNANDO, J.—Sally Mohamcd v. Syed. Mohamed
1962 Present: H. N. G. Fernando, J., and L. B. de Silva, J.
SALLY M. J. HOHAMED, Appellant, and SYED M. S.
S. C. 380j1960—D. C. Colombo, 43843}M-
Rent restriction—Joint assessment in 1941 of premises bearing separate assessmentnumbers—Separate assessments of the same premises in later years—Computa– tion of standard rent—Meaning of term “ rent "— Rent Restriction Act, ss. 4,6(1), 13(1) (a).
In November 1941, premises Nos. 102 and 104 were assessed jointly withpremises No. 100. In 1945 premises Nos. 102 and 104 were assessed together,but separately from premises No. 100. In 1955 separate assessments weromade for each of tho two premises Nos. 102 and 104.
Held, that, under section 5 (1) of the Rent Restriction Act, the standard rentof premises Nos. 102 and 194 was and is tho amount of the assessment madofor tho premises jointly with premises No. 100 in November 1941,-and thatwill remain unchanged, despite the separate assessments made in 1945 and 1955,unless the board in the exercise of the power given by the’proviso introducesan alteration by fixing separate standard rents for the two numbers. In theabsence of such a fixation by the board, the 1941 assessment still holds good,and the standard rent has to be calculated on that basis.
Where a lessee agrees to pay something more than the former rent if thoBent Control Board fixes a higher amount, the agreement cannot bo regardedas an agreement to pay extra rent in respect of any period prior to the fixationof tho higher rent by the board. But even assuming that the Common! Law
• would regard it as an agreement to pay extra rent, the “ rent ” in the proviso tosection 13 (1) of the Rent Restriction Act does not include any sum other thana rent pre-agreed between the parties.
^pPEAL from a judgment of the District Court, Colombo.
II. V. Per era, Q.C., with Nimal Senanayake, for the Defendant-Appellant.
H. W. Jayewardene, Q.C., with M. T. M. Sivardeen, for the Plaintiff-Respondent.
Cur. adv. vult.
November 2S, 1962. H. N. G. Fernando, J.—
This was an action for the ejectment of the Defendant from certainpremises which he had occupied as tenant from the year 1949. Thefirst lease to him ceased on 31st July 1962,. and the second lease wasexecuted in June 1952 for a period of three years ending in July 1955.The rent provided for in the lease was Rs. 295.83. After the termination
H. N. G. FERNANDO, J.—Sally Mohamed v. Syed Mohamed
•of the lease the Defendant continued in occupation of the premises payingas rent the same amount of Rs. 295 83. It would appear from the corres-pondence that some time prior to the year 1957 the Plaintiff" demandeda higher rent, namely sum of Rs. 524-33, and some explanation of this•demand is necessary.
The premises in question bear assessment numbers 102 & 104, SecondCross Street, Pettah. As at November, 1941, these two premises, togetherwith premises No. 100, Second Cross Street, were jointly assessed in asingle assessment for the purpose of rates, the annual value of the threejointly assessed premises being Rs. 3,000, and the rates being Rs. GOO p.a.In 1945, however, Numbers 102 & 104 were assessed together, butseparately from No. 100, the annual value then being Rs. 2,500, and the ’annual rates Rs. 500. It was apparently because of this valuation thatthe figure of Rs. 295 83 was fixed as rent, this amount being presumablythe authorised rent in terms of section 4 of the Rent Restriction Ordinance.In 1955, however, Nos. 102 & 104 were assessed separately. In conse-quence the Plaintiff appears to have been advised that these separateassessments had the effect of changing the authorised rent in the followingmanner, that is to say, for No. 102 the authorised rent became Rs. 178-75,and for No. 104 it became Rs. 345-58. It was on this basis that he madethe demand already mentioned for these two amounts in respect of thebuildings separately assessed, malting a total of Rs. 524*33.
• When this demand was made, the Defendant took up the position thatthe authorised rent for both parts of the premises still remained at theprevious figure of Rs. 295-83. His proctor, nevertheless, informed thePlaintiff that he would make the necessary application to the RentControl Board i£ to ascertain the authorised rent, but would continue(presumably pending its determination) to pay Rs. 295-83 as monthlyrent. ” The application made in March 1957 clearly shows that theDefendant was invoking the proviso to section 5 (1) of the Rent RestrictionAct in order to obtain from the Board an order fixing the authorisedrent of the premises. After making this application, the Defendant’sproctor wrote the letter P 16 of 2nd August, 1957, undertaking that hisclient would pay as from 1st March, 1957, the rent which the Board woulddetermine as the authorised rent. While stating that his client wouldcontinue to pay Rs. 295-83 until the decision of the Board, the proctorfurther stated “ my client also states that if the Rent Control Boarddecides that the authorised rent is higher than the rent whicli my clientis paying now, he will pay the difference from 1st March, 1957. ” Thisproposal was agreed to in the Plaintiff’s reply P 17.
' Por reasons which it is not necessary to mention, the application tothe Rent Control Board was withdrawn by the Defendant and dismissedby the Board on 8th February, 1958. Almost immediately the Plaintiffwrote P 18 of 12th February, 1958, demanding a sum of Rs. 2,513-39,** being the difference of rent due as from 1st March, 1957, to the end of.January 1958 He demanded this payment on or before 17th February,
H. N. G. FERNANDO, J.—Sally Mohamedv. Syed Mohamad.
threatening action in the even of default. This amount was calculatedon the basis that the authorised rent was to be determined accordingto the two separate 1955 assessments making a total ot Rs. 524*33. TheDefendant duly paid rent for February and March, 1958, on this new basisbut he failed to pay the sum of Rs. 2,513*39 until 31st March, 1958. Bythis time the PlaintifF had already instituted an action for the recoveryof that sum which was claimed in the action to be due as arrearof rent*. A short while later he instituted this present action for ejectment.
The principal question agitated at the trial related to the matter of thetrue authorised rent, and the District Judge decided in favour of thePlaintiff that the authorised rent ot No. 102 was Rs. 178*75 and of No. 104was Rs. 345*58. In view of another point upon which Mr. H. V. Perera hasrelied, it is not necessary to decide the dispute as to the authorised rent,but it is in the interest of the parties that our opinion on this dispute bestated. Section 4 of the Act declares that the authorised rent of anypremises shall be its standard rent together with the addition of increasespermitted by section 6. Under sub-section (1) of section 5, the standardrent is—
the amount of the annual value specified in the assessment in
force during November, 1941, or
if the assessment of the annual value of the premises is made for
the first time after that month, the amount of such annualvalue as specified in such first assessment.
The difficulty which arises in this case is that in November 1941,Nos. 102 and 104 were assessed jointly with No. 100. On this groundit is argued for the PlaintifF that there did not attach to Nos. 102 and 104,in November 1941, a standard rent. One answer to this argument maybe that although Nos. 102 and 104 were not the subject of a separateassessment in November 1941, nevertheless there had been then in forcean assessment of the premises though made for them jointly with No. 100,in which case under section 5 (1) the standard rent would be the annualvalue of the. three numbers assessed together. Considering that theobject of the Legislature was to fix an upper limit of permissible rents,the circumstance that Nos. 102 and 104 together would have a standardrent determined by an assessment of these premises jointly with No. 100would mean only that for lack of separate assessment of Nos. 102 and 104,their standard rent would be somewhat higher than reasonable. Sucha consequence would in the light of the intention of the Legislature bepreferable to the only alternative situation, namely that Nos. 102 and 104had no standard rent, and could therefore have been let at any figurewithout restriction. But even if this second alternative has to be adopted,the change of assessment in 1945 clearly brought the premises within theambit of paragraph (a): if it be correct to say that Nos. 102 and 104 werenot assessed in November 1941, then clearly they were assessed as onepremises in 1945, and the amount of the standard rent would be
H. N. G. FERNANDO, J. —Sally Mohamed v. Syed Mohamed
determined by that assessment. This position was not challenged by thePlaintiff and indeed he had accepted it in fixing Rs. 295*83 as the agreedrent in the lease. It is argued, however, that the standard rent becamechanged again in 1955, and that when separate assessments were thenmade for each of the two numbers, the standard rent of each became theannual value as assessed in the respective assessments. There is nosupport for this proposition in paragraph (a) of section 5 (1) the fullcontents of which .has been set out earlier in this judgment. But insupport of this the Plaintiff relies on the second proviso to section 5 (1) :—
“ Provided, further, that in the case of any such premises whichare first assessed or first separately assessed after the appointed date,the board may, on the application of the- tenant, fix as the standardrent of the premises such amount as may in the opinion of the boardbe fair and reasonable .”
It should be noted that this proviso does not state that any assessmentis to determine the standard rent. It provides only for two matters,namely, that in the case of any premises which are (i) first assessed, or(ii) first separately assessed, after the appointed date, the board may fixa reasonable amount as the standard rent. In other words, the provisoin my opinion merely permits the board in either of the two cases to altera standard rent by substituting some new amount for the amount whichwould otherwise in terms of section 5 (1) (o) be the standard rent. Thus[if premises were assessed by the Municipality for the first time in the year/19j43, the annual value as so assessed would in terms of section 5 (1) (a)be the standard rent; but the board would have power to fix some amountin lieu of the assessed amount. As for the seoond case, if two parts ofpremises have been assessed jointly whether before or after November 1941,the standard rent would be determined in terms of seotion 5 (1) (a) byreference to that assessment: but if thereafter, separate assessments aremade for the two parts, then the board would have power to fix a standardTent for each or both parts. In the instant case, therefore, in my opinion,the standard rent of Nos. 102 and 104 was and- is the amount of theassessment made for the premises jointly, with premises No. 100, inNovember 1941, and that will remain unchanged, despite the separateassessments made in 1945 and 1955, unless the board in the exercise ofthe power given by the proviso introduces an alteration by fixing separateTents for the two numbers. In the absence of such a fixation by the >board, the 1941 assessment still holds good, and the standard rent hasto be calculated on that basis. Counsel for the Plaintiff .stated that onthat basis the authorised rent would be something less than Us. 400 p.m. I
I pass now to the decisive argument urged by Mr. Perera. When thepresent action for ejectment was instituted in May 1958 the Defendant' was not in default for the months of February, March and April 1958, forhe had paid rent for those months at the demanded rate of Rs. 524*33,which according to my opinion was higher than the authorised rent. The
■190H. N. G. FFRNAjSJDO, J.—Sally Mohamcd v. Syecl Moliamcd
basis of the action was that in respect of the period March 1957 to January1958, the Defendant had paid at the rate only of Rs. 295-S3 and that hewas in arrears on the score that he had not, in response to the demandin the Plaintiff’s letter of 12th February 1958, paid up the sum of Rs.2,513*39 representing the difference between the monthly rents of Rs_295*83 actually paid and the new monthly sum of Rs. 524*33, whichaeoording to.the Plaintiff became payable forthwith upon the dismissalof the Defendant’s application to the Rent Control Board. Havingregard to my opinion that the proper authorised rent was somethingconsiderably less than Rs. 524*33, it may will be that the Defendant was-entitled to ignore the Plaintiff’s demand for the sum of Rs. 2,513*39which was in excess of the difference in rent which could have beenlegally demanded. But Mr. Perera’s argument goes further.
Under section 13 (1) of the Act as applicable in the instant case thePlaintiff had no right to institute his action unless, in terms of paragraph(a) of the proviso to that sub-section, “ rent had been in arrear for onemonth after it had become due . ” Clearly, in the case of a monthlytenancy paragraph (a) was intended to apply if the tenant had failed to-pay the rent for any month on the due date and a further period of onemonth had expired after that date. It is contended, however, that thatparagraph does not apply in the event of failure to pay the sum whichwas claimed by the Plaintiff in February 1958. In this connection,counsel relied on certain observations of the text-writers :
Willc (“ Landlord and Tenant ”, 3rd Edition at page 34) : •“ If thoparties purport to enter into a lease but no agreement has been madefixing the rent or making it ascertainable, there is no lease. Nor canoccupation by the reputed tenant following on such agreement turnit into a lease, though Voet says that under the Roman Law, and in.his time, the localio was nevertheless valid as there was consideredto have been' a tacit agreement for that amount of rent which it wascustomary to promise..
“ The occupier is liable, however, to pay the owner a reasonableamount for the ‘ use and occupation ’ of the property. Such paymentis frequently described as ‘rent’, which is not strictly correct. Thisdescription has been used in cases where a tenant remained in occupationafter the termination of his lease while negotiations for a renewal ofthe lease were in progress, and where occupation, originally with theowner’s consent, was terminated by the latter giving notice to quit. ”
Lee (“ Introduction to Roman-Dutch Law ”, 5th Edition, at page301): “ Voet, 19.2.22. Strictly speaking, where no rent is agreedthere is no contract of letting and hiring, but the owner of the propertyis entitled to compensation for ‘ use and occupation ’. ”
It would seem, therefore, that even for the purposes of the CommonLaw the agreement in the present case to pay something more than theformer rent if the Rent Control Board did fix a higher amount would not
H. N. G. FERNANDO, J.—Sally Mohamed v. Syed Mohamid
be regarded as an agreement to pay extra rent in. respect of any periodprior to the fixation of the higher amount by the board. But even if theCommon Law would regard it as an agreement to pay extra rent, there isat least much room for doubt whether the Legislature intended in theproviso to section 13 (1) of the Act to include within the term “ rent ”any sum other than a rent pre-agreed between the parties. Since theproviso qualifies the protection given to a tenant by the substantivepart of the section, the doubt as to its scope must be resolved iq thetenant’s favour.
There is yet another ground upOD which the Plaintiff’s action fails inmy opinion. The Defendant’s letter P 16 read with the Plaintiff’sreply and other relevant correspondence shows that the parties had inmind three alternatives as to the correct amount of the rent for thepremises, namely,
the former amount of Rs. 295 83 ;
the demanded amount of Rs. 524-33 ;
such other sum ar- the board might fix as reasonable.
The board not having fixed sucb a sum as would have fallen under (3)above, there remained only the first two alternatives as being within thecontemplation of the parties. The second alternative sum of Rs. 524-33being, as I have held, in excess of the proper authorised rent, it couldnot lawfully be claimed or paid, since such • a. claiin or payment wasprohibited by section 5, and therefore there remained only the firstalternative contemplated in the agreement, namely the former rent ofRs. 295-83. Although if there had been a doubt on the part of thePlaintiff as to what the true authorised rent was, the Defendant wouldundoubtedly have agreed to pay it if and when such true rent, had beenascertained, there was in fact no agreement to pay such an “ intermediateamount The correspondence does not show that either party hadrealised that the Statute itself (without the intervention of the board)provided for the particular case an intermediate sum as the authorisedrent. Although such an intermediate sum might have been claimed,there was in fact no claim for it nor an agreement to pay it. In thisview of the matter there was no contractual obligation to pay anythingmore than the former rent, and consequently no question of. arrears■Whether of back rent or of any extra sum due in respect of use andoccupation.
; iFor these reasons, the appeal is allowed and the Plaintiff’s actiondismissed with costs in both courts.
L. B. de Silva, J.—I ag
SALLY M. J. HOHAMED, Appellant, and SYED M. S. MOHAMED, Respondent