v.FERNANDO AND OTHERS
COURT OF APPEAL.
A. 448/91 (F)
C. MARAWILA 25/L26th APRIL, 200020th MAY, 2000
Specific performance – Promise to sell – When agreement did not providethat remedy – Is there a discretion on Court – Intentions of parties -Damages an adequate remedy.
Plaintiff – Respondent instituted action for specific performance ofconditions contained in the Agreement; and was successful.
Court must always look for the intention of the parties to ascertainthe object of the obligations of their agreement.
On the perusal of the Agreement it is seen that in the event of defaulton the part of the vendor there is no provision in the Agreement to compelthe sale.
Sjggcific performance is a discretionary remedy and court is not atUbertyuSEgranf or withhold the remedy capriciously.
Specific performance will not be granted where damages are anadequate remedy.
APPEAL from the Judgment of the District Court of Marawila.
Cases referred to:
Thakeer v. Abdeen – 57 NLR at 4 para 2
Thakeer vs Abdeen – 59 NLR 385 (PC) *
Sunderam v. Jamaldeen – 74 NLR 145'; n
Nona Sumathi Kanaka and another v. Don Rupasinghe ArachchigeSirisena -1986 CALR 286 J
Natarajan v. Hoole – 66 NLR 489^
Thamel v. Fernando & Others
P. A. D. Samarasekera, P.C., with Kithstri Gunawardena, forSubstituted Defendant appcdlent.
C.J. Ladduwahetty for substituted Plaintiff – Respondent.
Cur. adv. vutt.
October 31, 2000.
NIMAL DISSANAYAKE, J.The d^eased plaintiff – respondent filed this action in theDistrict Court of Marawila for specific performance ofconditions contained in the Agreement No. 1543 attested byC.A.S. Rajapaksa, Notary Public and for damages in a sum ofRs. 1000/-.
The Original defendant – appellant, by his answer dated19. 01.1998 denied the averments in the plaint and prayed fordismissal of the action.
The case proceeded to trial on 15 issues and the learnedDistrict Judge by her judgment dated 16. 05. 1991 enteredjudgment for the deceased plaintiff – respondent as prayed forin the plaint.
It is from the aforesaid judgment that this appeal has beenpreferred. Counsel for the substituted defendant – appelantcontended that the learned District Judge was in ern£Sr whenshe ordered specific performance of the promise to sell whenthe agreement did not provide that remedy and in suchcircumstances the Court did not have a discretion to orderspecific performance.
The deceased plaintiff – respondent by deed No. 1543 (PI)dated 28. 05. 1980 entered into an agreement to purchase aland called Galmoragalia Owita or Talgahawatte, morefullydescribed in the schedule to the plaint from the originaldefendant – appellant for a Consideration of Rs. 40,000/- ofwhiclj Rs. 20,000/- was paid as an advance at the time ofentering into the agreement and it was agreed that the balance
Sri Lanka Law Reports
[2001} 2 Sri L.R.
sum of Rs. 20,000/- would be paid at the time the deed of salewas executed.
According to the agreement PI, the original defendant -appellant agreed to transfer the said land on or before the 31stof October, 1980 on his accepting the balance sum of Rs.20,000/-.
I set down below the clause contained in th^ody of theagreement PI which is applicable in the event & a default ofeither party to the agreement.
“In the event of default on the part of the purchaser to paythe balance sum of Rs. 20,000/- and obtain a deed oftransfer, executed by the vendor on being so requested bythe vendor the purchaser has agreed to forego his right toask for a refund of the Rs. 20,000/- paid as an advance andin addition he has agreed to pay an additional sum ofRs. 20,000/- to the vendor. In the event of the default onthe part of the vendor by not executing the deed oftransfer on the purchaser paying the balance sum ofRs. 20,000/- and requesting him to execute a deed oftransfer5)the vendor has undertaken not only to refund the<g|s. 20,000/- obtained as an advance but also to pay anaaSstional sum of Rs. 20,000/- as damages.”
Thereafter the deceased defendant – appellant sought toannul the said agreement to sell by letter dated 16th July 1980(P2) sent by his Attomey-at-law K.E.J. Perera and requestedthe deceased plaintiff – respondent to collect theRs. 16,000/- alleged to have been paid as an advance, whichwas in deposit with his Attomey-at-law.
The deceased plaintiff – respondent by his letter (P3) andletters (P4) and (P5) sent through his Attomey-at-law soughtperformance of the agreement to sell which were not heed ed bythe deceased defendant – appellant.
Thamel v. Fernando & Others
These facts led the deceased plaintiff – respondent toinstitute action in the District Court requesting specificperformance.
In cases of this nature Courts must always look for theintention of the parties to ascertain the object of the obligationof their agreement. This position is clearly explained by JusticeGratiaen the Divisional bench case of Thakeer v. Abdeen111at 4 paragraph. “The Courts in all cases, look for their guide tothe primary intention of the parties, as it may be gathered fromthe instrument upon the effect of which they are to decide, andfor that purpose to ascertain the precise nature and object ofthe obligation.”
In the Agreement (PI), paragraph 4 deals with theconsequences the parties intended to happen in the event ofdefault of either on the part of the purchaser or the vendor.
In the event of default by the purchaser to pay the balancesum of Rs. 20,000/- and obtain a deed of transfer fromthe vendor, on being so requested by the vendor, thepurchaser foregoes his right to ask for a refund pf the sum ofRs. 20,000/- paid as an advance and in addition £e has^areedto pay additional sum of Rs. 20,000/- to the vendor.
In the event of default on the part of the vendor by notexecuting a deed of transfer on the purchaser paying thebalance sum of Rs. 20,000/- and requesting him to execute adeed of transfer, the vendor has undertaken to refund thesum of Rs. 20,000/- received as an advance and also hasundertaken to pay an additional sum of Rs. 20,000/- to thepurchaser as damagesc r
There is no other consequences which will follow in termsof the agreement.
Sri Lanka Law Reports
[200i] 2 Sri UR.
In the event of default on the part of the vendor there iscertainly no provision in the agreement to compel the sale.
The facts in Thakeer v. Abdeenfsupra) were similar to thefacts in the instant case. In the above case, Clause 8 of theagreement which dealt with the situation where the seller wasin default or in breach of contract provided that in the event ofdefault –
“the vendors shall repay forthwith the saJS deposit ofRs. 12,500/- together with interest . . . And shall also paythe purchaser a sum of Rs. 15,000/- as liquidated andascertained damages and not as a penalty and thevendors shall refund to the purchaser the said deposit ofRs. 12,500/-.
Justice Greatiaen dealing with the effect of such a clausefrom the middle of page 4 in the Judgment having an alyzed thelegal effect of that paragraph concludes at the bottom of page5 as follows
“It is only in the absence of agreement to the contrary thatthe Roman-Dutch Law confers on a purchaser under anexecutory cqptract the right to elect one of two alternativeremotes under the Roman-Dutch Law, namely specificperformance or damages. But we have here a categoricalstipulation that if the primary obligation is not fulfilled for anyreason whatsoever, two specified sums shall immediatelybecome due. To my mind, the stipulated return of the deposit,being part of the purchase price, necessarily implies that theprimary obligation to sell is then to be regarded as having cometo an end. This negatives an intention that the purchaser couldstill demand, if he so chose, specific performance.”
. The Judgment of the above case was approved by the PrivyCouncil Judgment® where at,0U9 it has been held that thestipulated return of the deposit being part of the purchaseprice, necessarily implies that the primary obligation to sell is
Thamel v. Fernando & Others
then regarded as having come to an end and that this negativesan intention that the purchaser could still demand, if he sochose, specific performance.
Learned counsel for the plaintiff – respondent cited thecases of Sunderam v. Jamaldeenl3) and Nana Sumathi Kanakaand another v. Don Rupasinghe Aratchige Sirisena(4> and thecase of Natarajan v. Hoole®.
The facR^of the cases cited by the counsel for the plaintiff- respondent were different to the facts of the instant case.
In the case of Sunderam v. Jamaldeen(supra) theintention of the parties implied by their conduct where thevendor accepted the final instalment was that they were undera duty to complete the bargain and the payment of liquidateddamages of Rs. 2,000/- would no longer be adequateaccording to the agreement.
In the case of Nona Sumathi Kanaka v. Don RupasingheAratchige Sirisena(supra) where the plaintiff was put intopossession of the land by the defendant and the defendant didnot take the availability of the alternative remedy in hisanswer, this conduct of the parties did not give the impressionthat they intended payment of damages was an (alternative tospecific performance.
In the case of Natarajan v. Hoole(supra), it was held thatthe payment of Rs 2000/- damages in the event the defendantrefuses to convey the land on payment of the balanceconsideration on a fixed date, on a proper interpretation of theentire agreement that Clause 8 which provided for the saiddamages was not an alternative or substituted obligation. Itwas held to be accessory to the principal obligation, viz, theobligation to transfer tiie land.
I51 all the above three cases the Court examined theevidence relating to the conduct of the parties to find out
Sri Lanka Law Reports
12001] 2 Sri L.R.
exactly what they intended in the agreement and once theintention of the parties was found, the Courts interpreted theagreements accordingly.
C. G. Weeramantiy in his book on “The Law of Contract”,vol 2 at page 977, paragraph 977 under the heading“Principles Governing Specific Performance” has said thatspecific performance is a discretionary remedy and has statedthat a Court is not at liberty to grant or withhold^che remedycapriciously and has laid down certain princip-2s which willguide the Courts in the exercise of their discretion.
One principle is that specific performance will not begranted where damages are an adequate remedy.
In the instant case, in the event of default on the part of thevendor by not executing a deed of transfer on the balancemoney being offered, the clause in the Agreement (PI)provides that the vendor shall refund the advance ofRs. 20,000/- accepted by him and also pay an additional sumof Rs. 20,000/- as damages.
Therefore, it is relevant to observe that the parties havefixed the purchase price at Rs. 40,000/- and thereby valuedthe pife^rty M Rs. 40,000/- According to the said clause in theagreement (PI) which provides that the vendor shall pay halfthe purchase price of Rs. 20,000/- as damages in addition tothe refund of the advance payment of Rs. 20,000/- isa substantial payment of damages, which appears to bean adequate remedy considering the purchase price of theproperty.
Since in the event of default by trie vendor, the damagesspecified in the Agreement (PI) cis substantial and iscontemplated a substitute obli^ldon to specific performanceand applying the principles laid down by C. G. Weeramantiyin his book “The Law of Contracts” and the decision of Justice
Thamel v. Fernando & Others
Gratiaen, approved by the Privy Council, in Thaheer v.Abdeeri(supra), the circumstances did not empower the Courtto use its discretion to order specific performance.
According to the Clause in the Agreement (PI), whichprovides for the return of the advance deposit being part ofthe purchase price, necessarily implies that the primaryobligation to sell is then regarded having come to an end andthat this m_*atives an intention that the purchaser could stilldemand, if h^ so chose, specific performance.
For the above reasons I am of the view that the learnedDistrict Judge was in error when she ordered specific perform-ance which she declared to meet the ends of justice when theparties did not intend specific performance in their agreement(PI) and by their conduct.
I set aside the Judgment of the learned District Judge andenter Judgment for the plaintiff in a sum of Rs. 20,000/-being refund of the advance deposit and a payment by theDefendant, an additional sum of Rs. 20,000/-. The appeal isallowed with.costs.
WEERASURIYA, J.I agree.