SOMARATNA v. LUWIS NONA

051-SLLR-SLLR-2002-V-2-SOMARATNA-v.-LUWIS-NONA.pdf


CA
Somaratna v. Luwls Nona
371
SOMARATNA
v.LUWIS NONA
COURT OF APPEALWEERASURIYA, J. (P/CA) ANDDISSANAYAKE, J.
CA NO. 242/95 (F)
DC MT. LAVINIA NO. 439/SplNOVEMBER 22, 2000JANUARY 23, 2001MARCH 20, 2001MAY 20, 2001
Right of Administratrix to recover business carried out in part of building – Canan intestate/co-owner be evicted? – Business not included in inventory – Canaction be instituted to recover same? – Should the Administratrix plead title to■ the immovable property? Should letters be stamped? – Civil Procedure Code -Cap. LIV – Amendment No. 19 of 1977, No. 20 of 1997, S. 35, 217, 386, 530,530 (2) 531, 533, 534, 538, and 547, form 87. Estate Duty Ordinance No. 8of 1919 – S. 30 – Estate Duty Ordinance, No. 1 of 1938 – Stamp Ordinance1909.
The plaintiff-respondent administratrix of the estate of one M instituted action torecover the business owned and run by late M in a part of the building whichhe resided. The defendant-appellant resisted the application on the basis that,he is a co-owner and therefore cannot be evicted.
The District Court held with the plaintiff-respondent.
On appeal it was contended that –
The defendant-appellant being an intestate heir/co-owner cannot beevicted.
The business was not included in the inventory.
The plaintiff-respondent has not prayed for a declaration of her status,and therefore is precluded form seeking possession of the property.
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[2002] 2 Sri LR.
Held:
The subject-matter of the action is the business. The possession of thematerials and the occupation of the premises are merely an adjunct orancillary to the business. An action for the recovery of a business hasto be distinguished from an action for the recovery of possession of thebuilding where the business is being conducted.
The assets to be collected is the business and is not an immovable property.An administrator is vested with the duties of collecting assets of a businessby way of equipment, utensils, book debts from customers and goodwill,therefore the question that the defendant-appellant is a co-owner does notarise.
Compilation of an inventory is a subsequent step, provided for by s. 538after grant of letters. According to the scheme of the C.P.C. the administratoris required to fulfil his duties and then render a true and accurate inventory,which is a step in the culmination of the process of administration of theestate to be followed by the distribution of the estate.
Even under the old s. 547, CPC, no reference has been made to aninventory. The request that letters should be stamped was in terms ofthe Stamp Ordinance. The Estate Duty Ordinance repealed the provisionsof the Stamp Ordinance applicable to the stamping of letters/probate.Thereafter, there was no requirement of duly stamping of letters/probate.Legislation has thus rendered unnecessary the provisions relating to thedue stamping of letters/probate.
Per Weerasuriya, J. (P/CA)
JThe reference to the inventory had been made presumably for the purposeof ascertaining whether the letters were duly stamped since the best evidencefor the full value of estate could be found in the inventory. The requirementof an inventory which was the incidental step adopted to test whether thedocuments was properly stamped ceased to exist.'1
As the subject-matter of the action is the business, occupation of thepremises and possession of the materials are merely an adjunct or ancillaryto the business. Therefore, plaintiffs title to the immovable property doesnot arise.
APPEAL from the judgment of the District Court of Mt. Lavinia.
CA
Somaratna v. Luwis Nona (Weerasuriya, J:)
373
Cases referred to :
Charles Appuhamy v. Abeygunasekera – 54 NLR 243.
Mustaffa v. Nizam – 1981 – 1 Sri LR 58.
Somasundaram v. Wijeratna – 66 NLR 193.
Fernando v. Unnanse – 20 NLR 378.
Chelliah v. Wijenathan – 54 NLR 337.
Silva v. Weerasuriya – 10 NLR 73 – Distinguished.
Wijesinghe v. Attorney-General – 48 NLR 56.
Pathirana v. Jayasundera – 58 NLR 169,
Jayasinghe v. Tikiri Banda – 1988 2 Colombo Appellate Law Reports 24.Nihal Jayamanne, PC with Ms. Noorani Amarasinghe for defendant-appellant.Gamini Jayasinghe with P. P. de Silva for plaintiff-respondent.
Cur. adv. vult.
August 24, 2001.
WEERASURIYA, J. (P/CA)
This action was instituted by the plaintiff-respondent in her capacityas administratrix of the estate of D. S. Meeriyagalla, to recover thebusiness that was owned and carried on by late Meeriyagalla, in apart of the building where he resided.
The defendant-appellant who had come to reside with him as astudent seeking support and later assisted in the business, claimedthat he was an intestate heir of the late Meeriyagalla and thereforea co-owner of the premises No. 45/1, Udahamulla, Nugegoda.
This case proceeded to trial on 13 issues and the learned DistrictJudge by his judgment dated 05. 06. 1995, entered judgment for theplaintiff-respondent. It is from the aforesaid judgment that this appealhas been preferred.
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[2002] 2 Sri LR.
At the hearing of this appeal, learned President's Counsel for thedefendant-appellant did not canvass the following findings of theDistrict Judge:
That the defendant-appellant was accommodated andsupported in Meeriyagalla's household for the purpose ofattending a tutory.
That after the completion of studies the defendant-appellantwas taken in as a helping hand in the management of the 20business by Meeriyagalla.
(d) That the business was owned exclusively by Meeriyagallawho was a man of considerable means.
However, learned President's Counsel advanced the followingarguments in canvassing the aforesaid judgment:
That the defendant-appellant being an intestate heir of thedeceased, is a co-owner of the property in suit and thereforethe plaintiff-respondent cannot seek his ejectment.
That since the business which the plaintiff-respondent hassought to recover, was not included in the inventory of the 30testamentary proceedings, she is not entitled to file actionfor the recovery of the said business.
That the plaintiff-respondent has not prayed for a declarationof her status in respect of the substantive reliefs claimedand therefore is precluded from seeking possession of theproperty. I
I propose to deal with the above submissions in the same sequence.
CA
Somaratna v. Luwis Nona (Weerasuriya, J.)
375
By deed bearing No. 596 dated 19. 05. 1985 attested by H.J.H.M.
Fonseka, NP deceased Meeriyagalla and the plaintiff-respondent becameowners of the land and the building bearing No. 41/5, Udahamulla,Nugegoda. The claim of the defendant-appellant was that after thedeath of Meeriyagalla he became an intestate heir as one of thechildren of the sister of Meeriyagalla. It was common ground thatdeceased Meeriyagalla had 4 brothers and 1 sister who had defendant-appellant and 5 other children. On the strength of the deed markedP1, the plaintiff-respondent is entitled to half share and heirs of thedeseased Meeriyagalla would be entitled to other half share. Theplaintiff-respondent was entitled to half share of such rights being hiswidow. The balance 1/4 rights devolved on the brothers and sisterof Meeriyagalla and their descendants. On the basis of this devolution,the defendant-appellant being one of the 6 children of Meeriyagalla'ssister would be entitled as an intestate heir to a fractional shareof 1/120.
In dealing with this question it is significant to note that, the subject-matter of the present action as set out in the prayer to the plaintand crystalized in the issues is the business. The possession of thematerials and the occupation of the premises are merely an adjunctor ancillary to the business. An action for the recovery of a businesshas to be distinguished from an action for the recovery of possessionof the building where the business is being conducted.
In the case of Charles Appuhamy v. Abeygunasekerathe leaseof a business was described as the giving over of management, controland conduct of the business, and the possession of the premises weregiven as ancillary to the primary object.
In the case of Mustaffa v. Nizam® where the question that arosefor determination was the effect of written agreement by which theplaintiff purported to lease to the defendant a business known as "ThajHotel1’ without notarial attestation it was held that on a considerationof all the terms and conditions of the said agreement, it was only
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so
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a lease of the business and the defendant therefore only become a ?olicensee of the premises in which the business was carried on in orderto enable him to carry on the same. This case highlighted the principlethat where the dominant or primary intention of the parties to atransaction was to effect the lease of the business, then the fact thatthe lessee of that business has a personal priviledge of occupyingthe land exclusively, does not give him any interest affecting land(vide P. 65).
Applying the above principles to the present case it would appearthat the plaintiff-respondent (the administratrix) was seeking to recoverthe business from a person who had held a subordinate capacity under 80the proprietor and set up a right in himself after his death. Therefore,the present action is not an action to recover an immovable propertybut an action to recover a business.
This leads to the further question whether a person who wasengaged in the business in a subordinate capacity and therefore livingin the business premises as a licensee of the deceased could resistthe claim of a duly appointed administratrix on the basis of a claimto an infinitisimal share of the premises.
In the case of Somasundaram v. Wijeratna(3) at 200 the duties of
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an administratrix were spelt out in the following manner :
"His duties are to bury the deceased, to collect the estate,and if necessary convert it into money; to pay the debts intheir proper order, then to pay the legacies and distribute theresidue among persons entitled thereto."
Chapter LIV of the Civil Procedure Code makes provisions foraiding and assisting executors and administrators in the discharge oftheir duties.
CA
Somaratna v. Luwis Nona (Weerasuriya, J.)
377
The following observations of De Sampayo, J. in the case ofFernando v. UnnansdA) at 383 are highly relevant to the question inissue:
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"The very object of appointing a legal representative is thatthere may be one recognized person who is entrusted withthe duty as well as the power of collecting assets, paying debtand necessary expenses and distributing the estate in thecourse of administration. He is liable to account for assetsand disbursements and is responsible to the Court as wellas to the parties interested for his proceedings. The realizationof assets by the heirs for distribution among themselvesaccording to their will and pleasure and without anyresponsibility is not only highly inconvenient, but in my opinion, nodisallowed by law."
In the light of the foregoing reasons, the assets to be collectedis a business, and is not an immovable property. An administratoris vested with the duties of collecting assets of a business by wayof equipment, utensils, book debts from customers and goodwill.
In the circumstances, the question that the defendant-appellant wasa co-owner of the premises and therefore cannot be ejected therefrom,does not arise.
To deal with the contention of learned President's Counsel thatthe business that the plaintiff-respondent sought to recover was not 120included in the inventory and therefore she is not entitled to file actionfor the recovery of the said business, it is useful to examine theprovisions of the Civil Procedure Code relating to the application andto the grant of letters of administration.
It is to be recalled that Meeriyagalla died on 14. 12. 1983 andletters of administration in respect of the intestate were obtained bythe plaintiff-respondent on 21. 12. 1984 (vide admissions at page 32of the brief).
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Therefore, the provisions of the Civil Procedure Code reintroducedby Act No. 19 of 1977 and amended by Act No. 20 of 1977 are 130applicable.
Section 530 of the Civil Procedure Code makes provision for anapplication to be made to the District Court for grant of administrationwhere a person dies without making a will. The mode of making theapplication is by way of petition setting out the relevant facts to thebest of the petitioner's knowledge, supported by sufficient evidenceto afford prima facie proof of the material allegations in the petition,naming the next of kin of the deceased as respondents. The petitioneris entitled to tender with the petition the consent in writing of suchrespondents who consent to the application.
In terms of subsection (2) of section 530 the petitioner is requiredto tender with the petition –
the declaration of property referred to in section 30 of theEstate Duty Ordinance in triplicate;
draft order Nis’r,
the requisite stamps for the order Nisi and service thereof;
draft notice of order Nisi in the form No. 84A in the firstschedule;
proof of payment of the estimated charges to cover the cost
of advertising the notice of order Nisi.150
Section 531 provides that upon an application for grant ofadministration being made, if the Court is of opinion that the materialallegations of the petition are proved to make an order Nisi declaringthe petitioner's status accordingly and making the grant prayed for.This section makes it obligatory to serve such order upon the respondentand upon such other person Court directs.
CA
Somaratna v. Luwis Nona (Weeraauriya, J.) ■
379
In terms of section 533 if on the day appointed for final hearing,if any respondent or any person upon whom order Nisi has beendirected to be served, or any person appearing to be interested inthe administration of the deceased's property, satisfies Court that there 180are grounds of objection to the application, Court is obliged to frameissues, and direct them to be tried on a day appointed undersection 386.
Section 534 stipulates at the final hearing, if it appears to the Courtthat the prima facie proof of the material allegations of the petitionhave not been rebutted, then the order Nisi shall be made absoluteand the grant of administration shall issue.
The form of the letters of administration is contained in form 87of the first schedule to the Civil Procedure Code.
In ascertaining the extent of the power of administration the following 170observations of Gratien, J. in Chelliah v. Wijenathari5> at 339 areuseful:
"The terms of grant in favour of the appellant in this actionhave been taken over from form 87 recommended in the firstschedule to the Code. If the language of this grant be examinedand summarised it becomes apparent that the authority of theappellant qua administrator, extended to all the well-recognizedpowers of administration namely: (1) the recovery and collectionof the assets of the estate (2) payment of debt, expenses, etcand (3) finally payment and distribution in terms of a decree 180under section 740 of the Code …"
Therefore, as a necessary corailary form that process of recoveryand collection of assets, would arise a process of litigation againstpersons withholding such assets.
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Learned President's Counsel for the defendant-appellant cited thecase of Silva v. Weerasuriya!6' in support of the proposition that anadministrator is not entitled to maintain an action in respect of property,which is not mentioned in the inventory and the value of which hasnot been included in the sum on which stamp duty has been paid.
It would be apparent from the sections of the Civil Procedure Code 190spelt out hereinbefore that the compilation of an inventory is asubsequent step, provided for by section 538 after a grant of lettersof administration. According to the scheme of the Civil Procedure Codethe administrator is required to fulfil his duties and then render a trueand accurate inventory which could be justifiably described as a stepin the culmination of the process of administration of the estate tobe followed by the distribution of the estate.
The case of Silva v. Weerasuriya (supra) has been decided in 1906.
The head note in this case states that an administrator is not entitledto maintain an action in respect of property wihch is not been mentioned 200in the inventory and the value of which has not been included in thesum on which stamp duty has been paid.
In order to understand the true significance of the decision in Silvav. Weerasuriya (supra) it is necessary to make reference to the section547 of the then Civil Procedure relevant to the decision in that case.Section 547 in the old Civil Procedure Code read as follows:
"No action shall be maintainable for the recovery of anyproperty, movable or immovable in Ceylon belonging to orincluded in the estate or effects of any person dying testateor inestate in or out of Ceylon, where such estate of effects 210amount to exceed in value of a sum of Two Thousand FiveHundred rupees, unless grant of probate or letters ofadministration duly stamped shall first have been issued tosome person or persons as Executor or Administrator of suchtestate or intestate …"
CA
Somaratna v. Luwis Nona (Weerasuriya, J.).
381
Even in section 547 of the old Civil Procedure Code no referencehas been made to an inventory. The requirement that letters ofadministration should be duly stamped, was in terms of Stamp Ordinancewhich was in force till 1919. The Estate Duty Ordinance No. 08 of1919 repealed the provisions of the Stamp Ordinance of 1919 applicableto the stamping of letters of administration and probate. Thereafter, 220there was no requirement of duly stamping of letters of administrationor probate. With the enactment of the Estate Duty Ordinance No. 01of 1938 the Commissioner of Estate Duty was required to issue acertificate upon a declaration of property. It is to be noted that byAct No. 20 of 1977 (Civil Procedure Code) the words 'duly stamped’were removed from the section.
Therefore, the reference to the inventory had been made presumablyfor the purpose of ascertaining whether the letters of administrationwas duly stamped since the best evidence for the full value of theestate could be found in the inventory. Since 1919 no provisions 230relating to the affixing or cancellation of stamps were to be foundin any statutory enactment. Legislation has thus rendered unnecessarythe provisions relating to the due stamping of probate or letters ofadministration, (vide Wijesinghe v. Attorney-Generalm at page 59).
In the light of the above material the requirement of an inventorywhich was an incidental step adopted to test whether the documentwas properly stamped has ceased to exist. The failure on the partof the legal representative to pay the Estate Duty, is now being treatedas a revenue matter for which other remedies have been providedfor in the Estate Duty Ordinance.240
In view of the foregoing reasons, the principle enunciated in thedecision of Silva v. Weerasuriya (supra) has no application today.
There remains to consider the last of the arguments advanced byCounsel for the defendant-appellant namely, the failure of the plaintiff-respondent to pray for a declaration of status.
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Learned Counsel for the plaintiff-respondent contended that so longas the plaintiff in the action pleads and put in issue the ingredientsessential to establish his legal entitlement, he is entitled to the reliefflowing from such findings of fact and law without seeking in addition 250a declaration.
Section 217 of the Civil Procedure Code enumerates, the decreethat the Court may make against a defendant under sub headsA – G. What is relevant for purposes of this appeal are found insub heads B, C and D.
Sub head B provides for a decree for delivery of immovableproperty. Sub head C provides for a decree to yield possession ofimmovable property, while sub head G provides for a decree to declarea right or status.
It is necessary to emphasise that any one of these decrees may 260be pleaded to stand by itself or in combination with each other.However, section 35 of the Civil Procedure Code stipulates certainrestrictions in respect of joinder of claims in actions for immovableproperty.
The following observations of Gratien, J. in Pathirana v.Jayasunderaf® at 173 is useful in examining this question:
"A decree for a declaration of title may of course be obtainedby way of additional relief either in a rei vindicatio actionproper or in a lessor's action against his overholding tenant… as to procedure in section 35 of the Code permits the zjojoinder of certain forms of relief in an action for the recoveryof immovable property and/or for declaration of title."
In Jayasinghe v. Tikiri Banda® where section 35 of the Civil ProcedureCode was analysed, it was held that although plaintiff has not askedfor a declaration of title it does not prevent him from seeking the relieffor ejectment.
CA
Somaratna v. Luwis Nona (Weerasuriya, J.)
383
It has to be reiterated that the subject-matter of the present actionas indicated on the prayer to the plaint and the issues framed, isthe business and therefore the occupation of the premises andpossession of the materials are merely an adjunct or ancillary to thebusiness. Therefore, pleading title to immovable property does notarise. The title to the business has been pleaded and learned DistrictJudge has come to the finding late Meeriyagalla was the sole ownerof the business upto his death.
For the foregoing reasons, it seems to me that the plaintiff-respondentas administratrix is entitled to sue and recover the business describedin the plaint.
Therefore, this appeal is dismissed with costs.
DISSANAYAKE, J. – I agree.
Appeal dismissed.
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