Swami Sivagnananda v. The Bishop of Kandy
1953Present : Gratiaen J. and K. D. de Silva J.
SWAMI SIVAGNANANDA, Appellant, and THE BISHOP OF.KANDY, Respondent
S. C. 51, with Application 95—D. C. Kandy, L 3,444
Rent Restriction Axt—Distinction between tenancy and licence—Test of exclusivepossession.
When a prospective purchaser of certain premises is permitted, pending hispurchase, to occupy the premises on payment of a stipulated sum of money,his occupation is, at best, that of a licensee and not that of a contractual tenantentitled to claim the protection of the Rent Restriction Act. If the contem-plated sale does not take place, the duration of the licence expires and thelicensee becomes a trespasser liable to be ejected at the instance of theowner of the property.
“Although a person who is let into exclusive possession is priina fq.de to beconsidered to be a tenant, nevertheless he will not be held to be so if thecircumstances negative any intention to create a tenancy. ”
./^PPEAL from a judgment of the District Court, Kandy.
S. J. V. Chelvanayakam, Q.G., with K. C. Kamakmadan andG. Candappa, for the defendant appellant.
H. V. Perera^ Q.C., with Cyril E. S. Perera, Q.C., and P. Somatilakam,for the plaintiff respondent..
Cur. adv. vult.
GRATIAEN J.—Swami Sivagnananda v. The Bishop of Kandy
July 22, 1953. Gratiaen J.—
This is a vei vindicatio action. The plaintiff purchased certain premises,■which are situated within the Municipal limits of Kandy, from theirprevious owners in June, 1951. Shortly afterwards he sued the defendant,who is the Manager of a school, for, inter alia, declaration of title and forejectment on the footing that he was a trespasser on the premises. Aftertrial, the learned District Judge entered judgment in the plaintiff’sfavour as prayed for with costs.
The basis on which the defendant contested the plaintiff’s claim inthe lower Court had not been very clearly defined in his pleadings, butthe relevant facts which form the background of his defence are not indispute. The previous owners of the premises had for some time beenanxious to sell them in the open market, and on 29th November, 1950,they entered into an informal agreement (P 6) with the defendant wherebyhe undertook inter alia to purchase the'premises for a sum of Rs. 80,000within a period of 90 days, or in the alternative to deposit within thatperiod a sum of Rs. 50,000 in part payment of the purchase price, in whichlatter event he would enter into a formal notarial agreement bindinghimself to complete the purchase not later than 30th April, 1951. Acontemporaneous, ancillary agreement was entered into whereby hewas to be permitted by the owners to occupy the premises immediatelyin anticipation of his purchase “ during the time preceding the firstinstalment ”, paying a sum calculated at the rate of Rs. 200 per mensemas consideration “ for the usage of the property ” during the interimperiod. The defendant entered into occupation in pursuance of thisancillary agreement, which made no express provision, however, forthe eventuality of his defaulting in his principal obligation to completethe purchase within the stipulated period.
As events turned out, the defendant had been over-optimistic as tohis prospects of collecting sufficient funds to implement his promise topurchase the property. He was granted one or two short postponementsof the date for completion, but ultimately the owners informed him that,unless the sale was concluded on or before 2nd March, 1951, they would sellthe premises to some one else. He failed to make payment within that time,and it was in these circumstances that the plaintiff became the purchaser.
The defendant refused to vacate the premises. In his correspondence-with the previous owners before the action commenced, he took up theuntenable position that tie non-notarial agreement of sale in his favour(which was of no force or avail in law quite apart from the expiry of thestipulated time for completion) took priority over the plaintiff’s purchase,and that the plaintiff’s only remedy was to recover from bim a sum ofRs. 80,000 representing the amount which he had promised to pay forthe premises. In this Court, Mr. Chelvanayakam contrived to presentthe defence ujjon a more respectable basis, and he argued that thedefendant’s occupation was from its inception that of a contractual tenantunder the previous owners and that the premises, by reason of theirsituation, were protected by the provisions of the Rent Restriction Act.In the result, he contends, the plaintiff’s action was misconceived, becausehe has neither pleaded nor proved that any of the circumstancesenumerated in the Act have arisen to justify a decree for ejectment
GltATIAEN J.—Swami Sivagnananda v. The Bishop of Kandy
Although this new defence was not raised specifically at the trial,all the facts necessary for a determination of the precise n&ture of the 'defendant’s occupation are before us. Upon those facts, I am satisfied,as a matter of law, that the defendant was at no time a contractual tenantof the premises, but that he was at best a licensee (in the sense in whichthat term is now understood) enjoying a “ permissive occupation whichfalls short of a tenancy ”—per Denning L.J. in Marcroft Wagons Ltd.v. Smith1. The duration of the licence granted in the original agreement(and later extended until 2nd March, 1951) had expired long before theaction commenced. In consequence, he became a trespasser liable tobe ejected at the instance of the present owner of the property.
Mr. Chelvanayakam referred us to certain earlier decisions of the EnglishCourts in support of his submission that a prospective purchaser who ispermitted, pending his purchase, to occupy the premises on payment of;an agreed consideration may legitimately be regarded as enjoying theTights of a tenant during that period. In Hoivard v. Sha-w-, however,Lord Abinger C.B. ruled that “ while the defendant occupied under(even a valid) contract for the sale of the property to him, he could notbe considered as a tenant Discussing these conflicting authorities,the Court of Appeal in England recently pointed out that “ after thelapse of a hundred years, it has become clear that the view ofLord Abinger was right. The. test of exclusive possession is by no meansdecisive ”. Errington v. Errington and Woods 3.
The question whether or not the parties to an agreement intend tocreate as between themselves the relationship of landlord and tenantmust in the last resort be a question of intention—-per Lord Greene M.R.in Booker v. Palmer 4. Similarly, Denning L.J. said in Errington’s case(supra) “ Although a person who is let into exclusive possession is primafacie to be considered to be a tenant, nevertheless he will not be held tobe so if the circumstances negative any intention to create a tenancy.Words alone may not suffice. Parties cannot turn a tenancy into alicence merely by calling it one. But if the circumstances and theconduct of the parties show that all that was intended was that theoccupier should be granted a personal privilege, with no interest in the land,he will be held to be a licensee only.”
Let us examine the terms of the informal agreement P 8 in the lightof these principles. Can it be reasonably supposed that the prospectivepurchaser who was permitted, on payment of a stipulated sum of money,to occupy the premises for a period not exceeding 90 days in anticipationof his implementing his previous undertaking to become the owner bypurchase within that time, was intended, if he defaulted in the principalobligation, to continue nevertheless to occupy the premises as acontractual tenant enjoying, in addition to all the common law rightsattaching to that status, the statutory protection of the Rent RestrictionAct ? The agreement does not say so, and to imply such term would,in my opinion, be wholly artificial in the background of the negotiationswhich preceded it. Had the defendant and the owners originally dis-cussed what should happen if the contemplated sale fell through owingto the defendant’s default, I do not doubt that they would both have
(1051) 2 K.B. 496 at 506.3 (1952) 1 K. B. 290.
S M. <b W. 118 ( — 151 E.R. 973).1 (.1942) 2 A. E. R. 676.
Ramalingam, v. JHangaleswari
declared, “ it goes without saying that the concession of occupyingthe premises must automatically ceaseTo my mind, it borders on the
fantastic to suppose that the previous owner who was so anxious to disposeof his premises could have intended to saddle the premises with a tenantenjoying substantial protection from eviction under the Rent RestrictionAct. Evershed M.R. points out in Marcroft Wagons Ltd. v. Smith 1that “ Every owner of a property today appreciates that the effect ofthe Rent Restriction Acts is such that in all human probability, shouldhe claim or desire possession of the property, he will have to go to the(County) Court for an order …. In judging from the inferenceto be drawn from such events as those which took place here, it seems tome vital to bear in mind that this is the background against which peoplemust now discuss and regulate then1 affairs. ” I quote these observationsbecause they apply so aptly to the present context.
For the reasons which I have given, I would hold that thedefendant’s occupation falls far short of that of a tenant entitled to claim'the protection of the Rent Restriction Act. Indeed, he has refused torecognise the plaintiff as his “ landlord ” by attornment. The judgmentand decree under appeal must therefore be affirmed, subject to thedeletion of that part of the decree which orders the defendant to payto the plaintiff a sum of Rs. 3,000 as damages upon the fourth cause ofaction pleaded in paragraph 12 of the plaint. Although there is littledoubt that the defendant has caused certain damage to the property sincehe commenced to occupy it, the evidence does not establish that thewrongful acts complained of were committed after the plaintiff becamethe owner. Subject to the amendment of the decree in this respect,I would dismiss the appeal with costs. I would however direct thatwrit of ejectment should not issue until 31st October, 1953. This con-cession will mitigate the hardship which might otherwise be caused to thepupils of the defendant’s school.
K. X). de Silva J.—I agree.
Appeal mainly dismissed.