013-NLR-NLR-V-53-SUPPIAH-et-al.-Appellants-and-SITUNAYAKE-Respondent.pdf
Suppiah v. Situnayake
1630Present : Basnayake J., and Pulle J.
SUPPIAH et al., Appellants, and SITUNAYAKE, Respondent
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S.C. 165—D. C„ Kandy, 2,413
Contract—Notarial agreement for sale and purchase of land~Provision for durationof three months only—Evidence of subsequent oral “ extensions " of timelimit—Inadmissible—Evidence Ordinance {Cap. 11), s. 92, proviso (4)—Pre-vention of Frauds Ordinance (Cap. 57), s. 2.
Where a notarially attested agreement relating to the purchase and sale ofland provided that the agreement should be null and void at the expiration of'three months from the date of its execution— v
Held, that it was not open to a party, either under section 92 or any otherprovision of the Evidence Ordinance, to prove a subsequent oral agreementto keep the written agreement alive beyond the stipulated period of threemonths. The written agreement could be revived only by another writingattested by a notary as required by section 2 of the Prevention of FraudsOrdinance.
^y^PPEAL from a judgment o£ the District Court, Kandy.
A. Hayley, K.C. with S. J. V. Chelvanayakam, K-C-, N. Kutnara-singham and T. Arulanantham, for the plaintiffs appellants.
N, E. Weerasooria, K.C. with E. B. WikrarnanayaJte, K.C., and-
L. Jayasuriya, for .the defendant respondent.
Cut. adv. vult.
90BASNAYAKE J.—Suppiak r. Situnayake
August 25, 1950. Basnayake J.—
This is an appeal by the plaintiffsappellants (hereinafter referred toas plaintiffs) from an order dismissing their action and condemningthem to pay the defendant a sum of Rs. 30,000. The facts shortly, areas follows: —
The Crown having taken steps to acquire the estate known as MataleEstate belonging to the plaintiffs, they were anxious to purchase another.The defendant, who was negotiating with the Dangan Rubber Estates,Limited, of London (hereinafter referred to as the Dangan Company)through its Colombo agents, Lewis Brown & Company, Limited, for thepurchase of its estates in Matale, agreed with the plaintiffs to arrangefor the sale to them of an estate called Hapugahalande, in extent 749acres, for Rs. 450,000. On July 14, 1945, they executed the agreementPI whereby they agreed with the defendant to purchase Hapugahalande.The agreement provided that—
on its execution the plaintiffs should pay to the defendantRs. 15,000 as earnest money ;
(fa) that the earnest money was to be refunded in case the defendantfailed to fulfil the terms of the agreement ;
that the earnest money was to be appropriated by the defendant
in full satisfaction of his brokerage, commission, services, &c.,under the agreement if its terms were fulfilled ;
that the plaintiffs should within 30 days of being called upon by
the defendant to do so pay a further Rs. 35,000 by post-datedcheque in favour of Lewis Brown & Company, Limited,realisable on the . date of execution of the deed of transfer ;
■(e) that the defendant should negotiate a loan of Rs. 400,000 on amortgage of Matale Estate and Hapugahalande ;
if) that the defendant should negotiate a loan of Rs. 200,000 onlyon a mortgage of Hapugahalande in the event of the paymentby the Crown of the compensation for the acquisition of MataleEstate within the time contemplated by the agreement ;
(g) that the agreement should be null and void at the expiration ofthree months from the date of its execution ;
(fe) that the defendant should in addition to refunding the earnestmoney pay Rs. 45,000 as damages in case he sold Hapugahalandeto any other person.
At the time the plaintiffs and the defendant executed the agreementfor the purchase and sale of Hapugahalande the defendant had notexecuted his agreement with the Dangan Company. According tohim that agreement was executed ten days later on July 24, 1945.
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BASKAYAKE J.—Suppiah v. Silunayake
The defendant faded to carry ouT the terms of his agreement with theplaintiffs within the period of three months for which it was to endure.At the defendant's request the plaintiffs' agreed to purchase the estatedespite the expiry of the agreement. The first plaintiff says :
“ At the expiry of the three months defendant came to me andapplied for an extension of time. I gave him one month’s time.Defendant could not put through the transaction within that onemonth. Again he asked for' time and I gave another one month.Within that time too the defendant could not complete the trans-action. Again I gave him another half month’s time. Finally I gavehim time till December, 1945. Defendant was not able to completethe transaction and then I told him that I did not want that estateany more. Then I asked for the Rs. 15,000 and defendant said thathe would return the money. Defendant did not pay me the money.Therefore I filed this action. ”
The defendant states that the plaintiffs orally extended till June,1946, the period within which they were to purchase Hapugahalande andthat before that period expired they purchased another estate by nameAnkumbure and were unable to purchase Hapugahalande. He claimsthat in consequence of the inability of .the plaintiffs to cany out theirundertaking he was unable to keep his contract with the Dangan Companywith consequence loss to himself. He claims in reconvention a sum ofRs. 250,000.
Learned counsel for the plaintiffs submitted that the agreement PIcould in law not be extended without a writing notarially attestedespecially as it provided that it shall he null and void after the expirationof three months from the date of its execution. I am of opinion thatthat submission is sound and entitled to prevail having regard to theterms of the agreement PI. The “ extensions ” the first plaintiff says,he gave were not in law extensions of the agreement but were mereindications that the plaintiffs were willing to purchase Hapugahalandeif the defendant could bring about its transfer. Even after the expiryof the agreement, the plaintiffs were free, though not bound, to purchaseHapugahalande if the defendant offered it. Once the period of threemonths expired the agreement was null and void and ceased to existexcept for the purpose of enforcement of the defaulter’s liabilitythereunder. An agreement in writing such as PI can in law be revivedonly by another writing attested by a notary as required by section- 2.of the Prevention of Frauds Ordinance.
The oral evidence given by both sides regarding the so-called extensionshas in my view been wrongly admitted for neither section 92 nor anyother provision of the Evidence Ordinance permits the admission of oralevidence in the circumstances. In rejecting the contention of counselon this point the learned District Judge does not appear to have scannedtoo closely proviso (4) .to section 92. That proviso taken with the mainsection reads :
“ 92. When the terms of any such contract, grant, or other dis-position of property, or any matter required by law to be reduced to
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BASNAYAKE J.—Suppiah v. Situnayake
the form of a document, have been proved according to the las.t section,no evidence of any oral agreement or statement shall be admitted asbetween the parties to any such instrument, or their respresentativesin interest, for the purpose of contradicting, varying, adding to, orsubtracting from its terms.
Proviso (4). The existence of any distinct subsequent oral agree-ment to rescind or modify any such contract, grant, or disposition ofproperty may be proved, except tn cases in which such contract, grant,or disposition of property is by law required to be in writing, or has beenregistered according to the law in force for the time being as to the regis-tration of documents. ”
The contract in the instant case is required by law to be in writing-and has been registered. No oral evidence can therefore be given of theexistence of a subsequent agreement to modify the contract.
In that view of the matter it is unnecessary to decide whether the“ extension ” given by the plaintiffs expired in December, 1945, or inJune, 1946.
The defendant, having failed to carry out his contract within the•duration of the agreement, is not entitled to retain .the sum of Its. 15,000paid to him, and is liable to refund it.
I am afraid the plaintiffs cannot be made to pay the losses incurredby the defendant in his venture. The defendant has not produced hisagreement with the Dangan Company and its terms cannot therefore bediscussed.
The defendant is not entitled to claim his expenses from the plaintiffbecause he was not employed by the plaintiffs in any capacity which-entitles him to remuneration for his services. The agreement havingcome to an end owing to his default,- the defendant is not entitled toprofit at the expense of the plaintiffs.
The order of the learned District Judge is .therefore set aside and Idirect that judgment be entered for the plaintiffs as prayed for withcosts both here and below.
Puiae J.—
The^agreement Pi dated July 14, 1945, provided among other things,
• that the appellants should pay to the respondent a sum of Es. 400,000to complete the purchase of Hapugahalande Estate and that they should■complete the purchase when called upon to do so by the respondent.The Dangan Company was not to undertake to warrant and defend thetitle to the estate and that such warranty was to be expressly excludedby a clause in the proposed conveyance and that the sale was to be adcorpus and not ad quantitatem. There was also an agreement that, in•certain contingencies, the appellants should mortgage Matale and Hapu-gahalande Estates. The parties rightly took the view that the agreementwas one that had to be entered into in conformity with the provisions ofsection 2 of the Prevention of Frauds Ordinance (Cap. 57) and had it
Wimalaguneratne v. Weerasekera
93
registered. I agree that it was not open to the respondent to prove a-subsequent oral agreement to keep the written agreement alive beyondthe stipulated period of three months.
It was implicit in PI and the evidence is perfectly clear that theDangan Company would not have been bound to convey HapugahalandeEstate unless the respondent found purchasers for five other estatesowned by the Company. Assuming for the purpose of argument that anoral agreement extending the time for the performance of the contracttill the end of June, 1946, could have been proved, I am far from satisfied,in the absence of the agreement entered into by the respondent with theDangan Company and of the agreements alleged to have been entered intobetween the respondent and the persons who were prepared to purchaseparts or whole of each of the five estates referred to, that even if theappellants had been prepared by the end of June, 1946, to purchaseHapugahalande Estate, the Dangan, Company would have been legallybound to convey it to them.
There is evidence of draft conveyances having been prepared and ofnotarial agreements entered into between the respondent and prospectivepurchasers. It was certainly not beyond the respondent’s ability tohave produced these documents to show that all was ready by the end ofJune, 1946, for the sale of the Company’s estates, and that it was only thedefault of the appellants which wrecked the scheme.
I agree that the decree appealed from should be set aside and judgmententered for the plaintiff as prayed for with costs here and below.
Appeal allowed.