047-SLLR-SLLR-1995-2-SYDNEY-V.-ABEYRATNA-AND-OTHERS.pdf
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Sydney v. Abeyratna and Others
265
SYDNEY
V.
ABEYRATNA AND OTHERS
COURT OF APPEAL.
S. N. SILVA. J. (P/CA)
DR. R. B. RANARAJA, J.
A. 471/83(F)
C. COLOMBO 4272/RE
MAY 03. JULY 14 AND 29.1994.
Landlord and Tenant – Rent Act 7 of 1972 amended by Act No. 55 of 1980,S. 22(2) (bb) ii of Rent Act- Ejectment – Deposit of 5 years Rent – Applicability ofS. 22(7) (b) (ii) – Acquisition over the Head of Tenant – Applicable Annual Value -Relevant amount – Sub-division of existing Building – Consolidation S. 233(1), S.237(1) Municipal Councils Ordinance – S. 10(13), 10(14), 19, 26(1), 48 of theRent Act.
The Plaintiff-Respondent filed action for ejectment in terms of S. 22(2) (bb) (ii) ofthe Rent Act (as amended) upon depositing 5 years rent with the Commissionerof National Housing. It was admitted that the Plaintiff has satisfied therequirements of S. 22(2) (bb) (ii), but the Defendant contended that the actioncould not be maintained for ejectment in view of S. 22(7) (b) (ii), as the Plaintiffhad acquired the premises over the Head of the Tenant. The Tenant came intooccupation prior to 1.3.72 and the Plaintiff purchased the premises on 10.3.79.The Plaintiff successfully relied on the proviso to S. 22(7) (b) (ii) which removesthe application of the bar to premises where the annual value exceeds 150% ofthe “relevant amount.”
Held:
The definition of the phrase “annual value" in S. 48 has two main parts. Thefirst part defines the ‘annual value” generally as to mean the ‘annual value ofpremises as assessed by the relevant Local Authority, the second part: give aspecific meaning to the phrase “annual value” when used in relation to the“phrase relevant amount.”
It is this part which is applicable to the decision in this case. There are twoseparate limbs contained in this part of the definition which state the applicableannual value of two distinct categories of premises.
The distinction in these two limbs is based upon “premises" in respect of whichthere was an assessment in force in the month of January 1968. The second limbdeals with premises in respect of which an assessment is made for the first timeafter January 1968.
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The definition of “annual value" in both limbs is in relation to "premises” asdefined in S. 48 of the Act to mean “any building or part of a building."
In this instance there was a building or part of a building assessed as premisesNo. 99 as at January 1968, the Defendant was in occupation as a tenant of part ofthe building. Therefore the contract of tenancy relates to premises that wereassessed as at January 1968 and on that basis first limb would be applicable.The second limb will apply only if the building or part of the building constitutingpremises No. 99 had not been assessed as at January 1968, and are assessedfor the first time thereafter. In other words this limb will apply to new premises thatare assessed after January 1968.
It is seen that in the scheme of the Act where the term “premises” is used inrelation to annual value, it refers to the building or part of the building constitutingthe unit of assessment of rating and not necessarily to the unit of letting.
The provisions of the Rent Act reveal that the Act is intended to apply tosituations where the “annual value” is assessed by the rating authority for a largerentity, a part of which constitutes the unit of letting. Therefore when the unit ofletting forms part of a building which is the unit of assessment for levying rates,the applicable annual value would be of the premises (building) as assessed.
There are specific provisions in sections 10(13), 10(14) and 26 that apply in thisregard. The legislature has made no such reservation in relation to the provisionsof Section 22(7). Hence the applicable annual value would be of the premises, asassessed.
Cases referred to:
Weerasena v. A. D. R. Perera- 1991 1 SLR 121.
Hewavitharana v. Ratnapaia 1988 1 SLR 240.
Plate Ltd. v. Ceylon Theatres Ltd. 76 NLR at 130.
AN APPEAL from the judgment of the District Court of Colombo.
Faiz Musthapha PC. with Hemasiri Withanachchitor Petitioner.
A. A. De Silva with M. C. Jayarathna for Petitioner
Cur. adv. vult.
September 23,1994.
S.N. SILVA, J. (P/CA)
The Defendant has filed this appeal from the judgment dated27.9.1983. By that judgment Learned Additional District Judgegranted the reliefs prayed for to the Plaintiff and ordered inter alia theejectment of the Defendant and those holding under him from thepremises in suit and the payment of damages in a sum of Rs, 400/-per mensem from 1.7.1980.
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The Plaintiff-Respondent filed action for ejectment in terms ofsection 22(2) (bb) (ii) of the Rent Act No. 7 of 1972 as amended byAct No. 55 of 1980, upon depositing 5 years rent with theCommissioner of National Housing for payment to the tenant. It isadmitted that the Plaintiff has satisfied the requirements of section22(2) (bb) (ii) but the Defendant pleaded that the action could nothave been instituted for ejectment in view of the provisions of section22(7) (b) (ii) because the Plaintiff had acquired the premisessubsequent to the “specified date” (over the head of the tenant). It isadmitted that the tenant came into occupation of the premises priorto 1.3.1972 and that the Plaintiff purchased the premises on10.3.1979. Therefore, ordinarily the bar in section 22(7) (b) (ii) willapply on the basis that acquisition of ownership by the Plaintiff wasover the head of the tenant. But, the Plaintiff relied on the proviso tothat subsection which removes the application of the bar to premiseswhere the “annual value” exceeds 150% of the “relevant amount”. Itis not disputed that the applicable “relevant amount”, in terms ofsection 48 is Rs. 2000/-. The only dispute in this case is as regardsthe applicable “annual value”.
The action has been instituted in respect of premises bearingassessment No. 99, 1st Division, Maradana being the subject of thecontract of tenancy. Certified extracts from the Assessment Registersof the Colombo Municipal Council, in respect of premises No. 99have been produced for years 1941 to 1982 (P6 to P17). It issubmitted on behalf of the Plaintiff that the applicable annual value, interms of section 48 of the Rent Act is that of January 1968 which isRs. 3925/-. That annual value exceeds 150% of the relevant amountof Rs. 2000/-. Therefore, the bar in section 22(7) will not apply to theaction for ejectment instituted by the Plaintiff. On the other hand, it issubmitted by the Defendant-Appellant that the premises assessed asNo. 99 from 1941 up to 1979 was a larger building of which only apart was occupied by him as tenant. In 1979 the part occupied byhim as tenant was separately assessed under the same number 99and its annual value was fixed at Rs. 3000/-. The remaining portion ofthe building was assessed as No. 97 and its annual value was fixedat Rs. 5340/-. On that basis it is submitted that the annual value of1979 should be considered as the first assessment in respect of thepremises in suit and since it does not exceed 150% of the relevant
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amount, the proviso will not apply. Therefore, the matter in dispute iswhether in the application of the proviso to section 22(7) of the RentAct the annual value of the premises should be taken as that of 1968or whether it should be taken as that of 1979.
As noted above premises bearing No. 99, 1st Division, Maradanahas been assessed for purposes of levying rates by the MunicipalCouncil from 1941 onwards. These premises were first described asa hospital, dispensary and residence. The description continued upto 1973. Thereafter it was described as a furniture shop andresidence. In 1979 premises No. 99 has been described only as aresidence. Premises No. 97 has been described as a furniture shop.There has been no physical alteration or change in the structure ofthe building constituting premises No. 99 at any stage. In 1979 theMunicipal Council subdivided the premises and attached the samenumber to the premises in suit and assessed the remaining area ofthe building under No. 97. The question to be determined is whetherthe assessment done upon this subdivision can be taken as the firstassessment of the annual value of premises No. 99 in applying theproviso to section 22(7).
The proviso to section 22(7) reads as follows:
“Provided, however, that the preceding provisions of thissubsection shall not apply to the institution of any action orproceedings for the ejectment of the tenant of any premisesthe annual value of which exceeds one hundred and fifty percentum of the relevant amount where such tenant had comeinto occupation thereof prior to the date of commencement ofthis Act.”
The phrase “annual value” is defined in section 48 of the Rent Actas follows:
“annual value” of any premises means the annual value ofsuch premises assessed as residential or business premises,as the case may be, for the purposes of any rates levied byany local authority under any written law and as specified inthe assessment under such written law, and where used in
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relation to the relevant amount, means the annual value of thepremises as specified in the assessment in force during themonth of January, 1968, or if the assessment of the annualvalue of the premises is made for the first time after thatmonth, the amount of such annual value as specified in suchfirst assessment.”
Section 48 defines the term premises to mean “any building orpart of a building together with the land appertaining thereto”.
It is clear on the evidence that from 1941 there had been abuilding (constituting premises within the meaning of the Rent Act)which had been assessed for levying rates by the appropriateauthority. The subject of the contract of tenancy in respect of whichthe action has been filed, is part of that building and bears the sameassessment number that has been assigned to the premises from1941. The Defendant has not given evidence and there is noevidence that any alterations or modifications whatsoever, wereeffected to the premises prior to the sub division in 1979. Accordingto the evidence of the Plaintiff one room of the building had beenassessed in 1979 under the No. 97. Therefore, it has to be concludedthat the sub division was not effected in 1979 because a newpremises came into existence but was done solely for the purpose ofrating. In that background of the facts we have to consider theapplication of the definition of the phrase “annual value" asappearing in section 48.
The definition has two main parts. The first part defines the phrase“annual value” generally as to mean the annual value of premises asassessed by the relevant local authority. The second part gives aspecific meaning to the phrase “annual value” when used in relationto the phrase “relevant amount”. It is this part which is applicable tothe decision in appeal. There are two separate limbs contained in thispart of the definition which states the applicable annual value of twodistinct categories of premises. The distinction in these two limbs isbased upon the date of assessment in respect of the premises. Thefirst limb deals with premises in respect of which there was anassessment in force during the month of January 1968. In thiscategory of premises the applicable annual value will be that ofJanuary 1968. The second limb deals with premises in respect of
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which an assessment is made for the first time after January 1968. Inthis category of premises the applicable annual value will be thatmade at the first assessment of such premises. The Plaintiff contendsthat the premises are governed by the first limb stated abovewhereas the Defendant submits that the second limb applies.
The definition of the phrase “annual value" in both limbs is inrelation to “premises". As noted above the term premises is definedin section 48 of the Act to mean any building or part of a building. Ifthe question is posed whether there was a building or part of abuilding assessed as premises No. 99, as at January 1968, theobvious answer is that there was such a building. The Defendant wasin occupation as tenant of a part of the building. Therefore thecontract of tenancy relates to premises that were assessed as atJanuary 1968 and on that basis the first limb of this part of thedefinition will apply. The second limb will apply only if the building orpart of the building constituting premises No. 99 had not beenassessed as at Janauary 1968 and are assessed for the first timethereafter. If the argument of the Defendant that this limb shouldapply is to be accepted, we have to import an artificiality and act onthe basis that there was no assessment in force in respect of thisbuilding as at January 1968. Such an inference is not possibleconsidering the fact that there had been a building which wasassessed from 1941 under the number 99. The words “for the firsttime”, appearing in the second limb clearly contemplate a situationwhere there had been no assessment in respect of the building as atJanuary, 1968. In other words, this limb would apply to new premisesthat are assessed for the first time after January 1968.
A similar question has been considered by this Court and theSupreme Court in several cases in relation to the application ofRegulation 3 in the Schedule to the Rent Act. This Regulation dealswith excepted premises. Business premises are excepted if theannual value of 01.01.1968 or if the assessment is made thereafter,the first annual value exceeds the amount stated in the Regulation.The words in the definition of the phrase “annual value” in section 48and the relevant words in Regulation 3 are broadly similar. In the caseof Weerasena v A.D.R. Perera (1> the Supreme Court took the viewinter alia that a mere sub division of existing premises does not give
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birth to a new premises. Upon a review of the previous decisionsDheeraratne, J expressed his view on the matter as follows:
“Considering the absence of any physical alterationswhatsoever made to premises No. 97B, I am unable to hold thatnew premises have come into existence. The originalassessment in force as at January 1968 will continue to governthe entire premises.”
Dheeraratne, J took a similar view whilst he was President of thisCourt in the case of Hewavitharana v Ratnapala(2) in relation to aconsolidation of two existing buildings by constructing acommunication door. The assessment done upon such consolidationwas held not to constitute the first assessment of the premises. Heattributed the assessment made, to section 233(1) of the MunicipalCouncils Ordinance which deals with assessments made upon a subdivision or consolidation of existing buildings. The finding is that anew (first) assessment is made of an existing building only where“physical alterations” are effected to the building and as provided insection 237(1). As noted above, in this case no physical alterationshave been done but a mere sub division was effected in terms ofsection 233(1) of the Municipal Councils Ordinance.
An examination of the provisions of the Rent Act reveals that theAct is intended to apply to situations where the annual value isassessed by the rating authority for a larger entity, a part of whichconstitutes the unit of letting. Sections 10(13), 10(14), 19 and 26(1)contain specific provisions in this regard. Thus it is seen that in thescheme of the Act where the term “premises” is used in relation to“annual value” it refers to the building or part of the buildingconstituting the unit of assessment or rating and not necessarily tothe unit of letting. In the case of Plate Ltd. v Ceylon Theatres Ltd.<3)Samarawickrame, J dealt with this matter as follows:
“Learned counsel for the Defendant appellant submitted that forthe purpose of the. Act it was the unit of letting that should bethe premises. The definitions of residential and businesspremises show that the nature of the occupation is relevant andis to be taken into account. There is nothing in the Act to
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suggest that the unit of letting is to be the premises. On theother hand the references in sections 7 and 9 to premises let inparts or in part suggest otherwise.”
Therefore when the unit of letting forms part of a building which isthe unit of assessment for levying rates, the applicable annual valuewould be of the premises (building) as assessed, subject to thespecific reservations made in the provisions referred above. Thelegislature has not made any reservation in relation to the provisionsof section 22(7). Hence the applicable annual value would be of thepremises as assessed.
For the reasons stated above, I see no error in the finding of theLearned Additiional District Judge that the annual value of thepremises exceeds 150% of the relevant amount and that the bar insection 22(7) will not apply in relation to the premises. The appeal isdismissed. The Defendant-Appellant will pay a sum of Rs. 7500/- ascosts to the Plaintiff.
RANARAJA J, -1 agree
Appeal dismissed.