THE ARCHBISHOP OF COLOMBO
THE LAND REFORM COMMISSION AND OTHERS
DHEERARATNE, J. ANDP. R. P. PERERA, J.
S.C. APPEAL NO. 101/94
A. NO. 156/86(F)
C. COLOMBO NO. 14130L
DECEMBER 09,1994 AND JANUARY 12,1995.
Abolition of Fideicommissa and Entails Act, No. 20 of 1972 ss. 4,5,9- Exclusion of‘agricultural land' in Land Reform Law No 1 of 1972 – Sections 66(1)(d) and (e) ofLand Reform Law – Charitable Trust – Fideicommissum – Trusts Ordinance,Sections 6,99( 1)(a) – Agricultural land.
The testator by his last will dated 30.12.62 left 234 acres of Goluwapokuna Estate tohis wife prohibiting her from selling, mortgaging, gifting, leasing or otherwisealienating the said land and after her death the lands to go to the Roman CatholicChurch.The testator died in 1964 and after his death, his widow married ArthurLeonard Dias Bandaranaike by whom she had two children Asanka Roshana andBrian Suresh. After the enactment of the Abolition of Fideicommissa and Entails Act,No. 20 of 1972 and the Land Reform Law No. 1 of 1972, the Land ReformCommission made a statutory determination (s.19 of the Land Reform Law) of 50acres to the testator’s widow and an inter family transfer of about 100 acres to twochildren (Section 14 of the Land Reform Law). The plaintiff (Archbishop of Colombo)instituted this action in 1981 against the Land Reform Commission and the testator’swidow (original 2nd defendant) claiming a declaration that the property was subjectto a charitable trust created by the last will and the determination and orders which
treated the 2nd defendant (widow of the testator) as having been the owner of theland as null and void. The 2nd defendant (widow of the testator) during thependancy of the suit and her husband and two children were substituted in herplace. In the District Court the plaintiff's case was that the last will created a usufructin favour of the original 2nd defendant and not a fideicommissum and the Abolitionof Fideicommissa Act did not apply; and the property because it was a charitabletrust was excluded from the operation of the Land Reform Law. However in theCourt of Appeal and Supreme Court it was common ground that the last will createda fideicommissum the original 2nd defendant being the fiduciary and the plaintiffthe fideicommissary. The questions in appeal were –
The fideicommissum created by the last will, the fideicommissary’s interestwas not absolute but subject to a charitable trust.
The fideicommissum did not come to an end despite the Abolition ofFideicommissa Act and hence the property continued to be vested in the 2nddefendant as fiduciary.
Because the property was subject to a charitable trust, exclusion (d) ofS. 66(1) of the Land Reform Law took it out of the definition of “agriculturalland” and so the land did not vest in the Land Reform Law.
Accordingly when the fiduciary transferred part of the property in 1974 in breachof the prohibition on alienation the entirety vested in the plaintiff subject to thecharitable trust.
Act No. 20 of 1972 came into operation on 12.5.72 and the Land Reform Lawcame into operation on 26.8.72 with retrospective effect from 29.5.71.
A valid charitable trust had been established; the trust property was identifiedwith certainty and there was a clear intention that plaintiff should hold the propertyfor a charitable purpose falling within Section 99(1 )(a) of the Trusts Ordinance.Although the trust property did not vest, immediately upon the death of thetestator, in the designated trustee, that did not mean the charitable trust would beconstituted or come into existence, only when, and if, the trust property vested inthe plaintiff. A charitable trust will not fail for work of trustee. Despite thepostponement of vesting until the happening of an event – an event which wascertain to occur – a charitable trust was constituted, even though incompletelyconstituted.
Although Section 6 of the Trusts Ordinance makes the transfer of trust property tothe trustee an essential requisite of a trust, yet this is subject to an exceptionwhere the trust is declared by will.
Upon the testator’s death the charitable trust, declared by his last will, came intoexistence, or was constituted, even though the vesting of the trust property in thetrustee, and the operation of the trust, were postponed until the death of thefiduciary or a breach of the prohibition on alienation.
It is a settled rule of interpretation that a proviso is limited in its operation tothe ambit of the section which it qualifies, unless the language plainly shows thatit was intended to have an operation more extensive than that of the provisionwhich it immediately follows.
The proviso to Section 5 of the Abolition of Fideicommissa Act, No. 20 of 1972 isneither an exception to Section 4 nor a general bar to charitable trusts beingaffected by the Act.
On 12.5.72 by reason of Section 4 of the Abolition of Fideicommissa Act, thefiduciary interest of the original 2nd defendant enlarged into full ownership; thatinterest not having been previously subject to a charitable interest, the 2nddefendants ownership was not subject to a trust, and the fideicommissary interestof the plaintiff, as well as the charitable trust to which that interest was subject,was extinguished. The plaintiff’s action fails.
Even if the fideicommissary interest had not been extinguished, the propertyin suit was not excluded from vesting as agricultural land under the Land ReformLaw with effect from 29.5.71.
Case referred to:
(1) L.R.C. v. Ganegama Sangarakkita Thero (1987) 2 Sri LR 411.
APPEAL from the judgment of the Court of Appeal.
H. L. de Silva, P.C. with S.C. Crosette-Thambiah for plaintiff-appellant.
P. G. Dep, S.S.C. for the 1st defendant-respondent.
£. D. Wickramanayake with Gomin Dayasiri for substituted respondents.
Cur. adv. vult.
The questions of law which arise in this appeal relate to themeaning and effect of Sections 4, 5 and 9 of the Abolition ofFideicommissa and Entails Act, No. 20 of 1972, and exclusion (d) ofthe definition of “agricultural land” contained in Section 66 of the LandReform Law, No. 1 of 1972. The relevant provisions are as follows:
“4. Where under the terms of any will, deed or otherinstrument, executed prior to the commencement of this Act,any fideicommissum, entail, settlement, restraint on alienation,limit, or curtailment exists, the property in question shall fromthe commencement of this Act be and for all purposes bedeemed to be vested absolutely, free of any fideicommissum(etc.) in the person in whom the title to such property is at thecommencement of this Act vested subject to suchfideicommissum (etc.) and no other successor, whether namedor described therein or not, shall be deemed to have any rightor title to such property under the terms of such disposition.
5. Where under the terms of any trust, whether created beforeor after the commencement of this Act, there is provision for thesuccession to the interest of a beneficiary by any othersucceeding beneficiary … then the interest of the beneficiary inwhom the beneficial interest is vested shall be and for allpurposes shall be deemed to be absolute, and no othersucceeding beneficiary shall have any right to succeed theretoby way of remainder or reversion to such interest:
Provided, however, that the preceding provisions of this sectionshall not apply to charitable trusts as defined in the TrustsOrdinance … or any trust under which the beneficiary in whomthe beneficial interest is, on the commencement of this Act,vested, is –
a person of unsound mind;
a mentally deranged person;
a mentally deficient person; or
a person who is incapacitated due to old age or mental orbodily infirmity or disease.
9: Nothing contained in this Act shall be construed to affectthe creation or the continued validity of any trust, other than atrust of the nature referred to in Section 5, or of any usufruct orother personal servitude of a like nature which a person mayenjoy in property belonging to another.”66. In this Law . . ."agricultural land" means … but shallexclude –
any such land which on May 29, 1971, constituted acharitable trust as defined in the Trusts Ordinance, so long andso long only as such land continues to be so owned orpossessed as such trust;
any such land held in trust on May 29, 1971, under theBuddhist Temporalities Ordinance so long and so long only assuch land is held in trust under that Ordinance.
By his Last Will No. 2033 dated 30.12.62, Vernon Rajapakse, thehusband of the original 2nd Defendant-Respondent (“the 2ndDefendant”) devised 234 acres out of Goluwapokuna Estate, which isthe subject-matter of this action, to the 2nd Defendant, “subject to thecondition that she is prohibited from selling, mortgaging, gifting,leasing or otherwise alienating the said lands … and that she is onlyto possess and enjoy the income of the said lands during her lifetimeand after her death the said lands . . . shall devolve (on the Plaintiff]for the use and benefit of the Roman Catholic Church in Ceylon”. Hefurther provided that any such alienation would be void, and thatupon a breach of the prohibition on alienation too, the property woulddevolve on the Plaintiff subject to the same condition. He alsodirected his wife to erect, within three months of his death, aprominent granite slab on the Estate with the inscription“Goluwapokuna Estate – gifted to the Roman Catholic Church byVernon Rajapakse in memory of his parents…”.
The testator died in 1964, and the 2nd Defendant entered intopossession. She married Arthur Leonard Dias Bandaranaike, by whomshe had two children. After the enactment of the Abolition ofFideicommissa Act and the Land Reform Law, the 1st defendant, theLand Reform Commission, purported (a) to make a statutorydetermination under Section 19 of the Law, specifying the portion of theEstate to be retained by the 2nd Defendant, and (b) to permit the 2ndDefendant to transfer about 100 acres out of the aforesaid Estate to hertwo children, under Section 14. The plaintiff instituted this action in1981 against the Land Reform Commission and the 2nd Defendant,claiming declarations that the property was subject to a charitable trustcreated by the Last Will, and that determinations and orders made bythe 1st Defendant (which treated the 2nd Defendant as having beenthe owner of the Estate) were null and void. The 2nd Defendant diedwhile the matter was pending in the Court of Appeal; her husband andtwo children, the 2nd to 4th defendants-respondents-respondents (“thesubstituted defendants) were substituted in her place.
In the District Court the plaintiff’s case was that the Last Willcreated a usufruct in favour of the 2nd Defendant, and not afideicommissum; if so, the plaintiff acquired title to the property, andthat title was not affected by the Abolition of Fideicommissa Act; andthe property, because it was subject to a charitable trust, wasexcluded from the operation of the Land Reform Law. However, bothin the Court of Appeal and in this Court, it was common ground thatthe Last Will created a fideicommissum, the 2nd Defendant being thefiduciary, and the Plaintiff the fideicommissary. It is thereforeunnecessary for me to consider whether in truth, under the Last Will,the property vested in the plaintiff, whether by reason of a usufruct orotherwise – because the plaintiff had neither obtained leave toappeal, nor addressed any argument to us, on that basis.
The District Court was invited to consider four preliminary issues,which, together with the answers thereto, may be summarised asfollows:
1.Did the Last Will create a charitable trust?NO
Did the Last Will create a fideicommissum?YES
By virtue of Act, No. 20 of 1972, did the fiduciaryinterest of the 2nd Defendant enlarge into
If issues 16 and 17 are answered in favour of the2nd Defendant, can the plaintiff have and maintain
the presently constituted action?NO
Accordingly the plaintiff’s action was dismissed.
The Court of Appeal dismissed the plaintiff’s appeal, holding that:
"… although the lands in suit constituted a charitable trust as at29th May 1971 they cannot be excluded under Section 66(1 )(d)[s/c] of the Land Reform Law as the trust was not in operation.”
Their reason for stating that the “trust was not in operation” wasthat-
“the fideicommissary was to be the trustee of the charitable trustbut the trust was to be operative after the death of the fiduciaryor if she alienated the said properties. If not for the aforesaidLaws passed by the Parliament the charitable trust would havecome into operation by reason of the said last will. But theaforesaid Laws . . . changed the legal position. Thefideicommissum was abolished and the properties vested in theLand Reform Commission subject of course to the inter-familytransfer and the provision regarding charitable trusts. Charitabletrust property is exempt from the Land Reform Law by reason ofSection 66(1 )(d) [sic] “so long and so long only as such landcontinues to be owned or possessed as such trust”. Here too itis common ground that the fiduciary owned or possessed theproperties till 20.12.74 but in terms of the Law it was vested inthe Land Reform Commission as at 29th May 1971. As thecharitable trust was to be operative from a future date the landcould not be regarded as “land continues to be owned orpossessed as such trust”. Therefore it cannot be excludedunder Section 66(1 )(d) [s/c] of the Land Reform Law No. 1 of1972.”
Upon an oral application, the Court of Appeal granted leave toappeal on the following question:
“Does Section 66(1)(d) [s/c] of the Land Reform Law No. 1 of1972 apply only to a charitable trust in operation as at 29th May1971 or is it equally applicable to a charitable trust constitutedprior to 29th May 1971 and continuing in force, but withoperation thereof postponed to a future event?”
The Plaintiff’s case in appeal involved three contentions: (1) thatunder the fideicommissum created by the Last Will, thefideicommissary’s interest was not absolute but subject to acharitable trust; (2) that this fideicommissum did not come to an enddespite the Abolition of Fideicommissa Act, and hence the propertycontinued to be vested in the 2nd Defendant as fiduciary; and (3)that because the property was subject to a charitable trust, exclusion
took it out of the definition of "agricultural land”, and so it did notvest in the Land Reform Commission. The Plaintiff therefore claimsthat when the fiduciary transferred part of the property in 1974, inbreach of the prohibition on alienation, the entirety vested in thePlaintiff subject to the charitable trust.
The substituted Defendants contend that (1) there was nocharitable trust; but even if there was a charitable trust, (2) thefiduciary’s interest enlarged into full ownership by virtue of section 4,and thereupon the charitable trust, if any, came to an end; and (3) inany event that trust was not in operation on 29.5.71 or at any timethereafter, and exclusion (d) did not exempt trust property where thetrust was not yet in operation, so that the interests of both the 2ndDefendant and the Plaintiff – fiduciary and fideicommissary – vestedin the Land Reform Commission.
CHARITABLE TRUSTThe Court of Appeal held that “the lands in suit constituted acharitable trust as at 29th May 1971 ”.
A scrutiny of the relevant provisions of the Last Will confirms that avalid charitable trust had been established: the trust property wasidentified with certainty, and there was a clear intention that thePlaintiff should hold the property for a charitable purpose (fallingwithin section 99(1) (a) of the Trusts Ordinance). Although the trustproperty did not vest, immediately upon the death of the testator, inthe designated trustee, that did not mean that the charitable trustwould be constituted or come into existence, only when, and if, thetrust property vested in the Plaintiff. If a testator directed his executorto discharge debts and estate duty, and then to pay a certain sum ofmoney, or to transfer a specified property, to a named person to beheld in trust for a charitable purpose, it cannot be argued that notrust would be constituted or come into existence unless and until thetrust property was vested in the trustee. A charitable trust will not failfor want of a trustee. Despite the postponement of vesting until thehappening of an event – an event which was certain to occur -a charitable trust was constituted, even though incompletelyconstituted.
Although section 6 of the Trusts Ordinance makes the transfer oftrust property to the trustee an essential requisite of a trust yet this issubject to an exception where “the trust is declared by will". Itherefore hold that upon the testator’s death the charitable trust,declared by his Last Will, came into existence, or was constituted,even though the vesting of the trust property in the trustee, and theoperation of the trust, were postponed until the death of the fiduciaryor a breach of the prohibition on alienation.
THE ABOLITION OF FIDEICOMMISSAAct, No. 20 of 1972 came into operation on 12.5.72, before theLand Reform Law. Mr. H. L. de Silva, P. C., contended on behalf ofthe Plaintiff that although section 4 provided, without any expressexception, that fiduciary’s interest under a fideicommissum wouldenlarge into full ownership, yet the legislature did not intend to affectcharitable trusts. He argued that such a legislative intention was tobe found in the proviso to section 5, as well as in section 9.
It is a settled rule of interpretation that a proviso is limited in itsoperation to the ambit of the section which it qualifies, unless itslanguage plainly shows that it was intended to have an operationmore extensive than that of the provision which it immediately follows(Maxwell, Interpretation of Statutes, 12th edition, pp 189-190). Herethe proviso is expressly limited to the preceding provisions “of thissection” – not “of this Act”; it cannot by a process of interpretationbe applied to another section or to the whole Act. Further, sections 4and 5 deal with two completely different subjects – the extinction ofthe interests of fideicommissaries, and the extinction of the interestsof succeeding beneficiaries; a proviso referring to trusts andbeneficial interests cannot be assumed to apply to fideicommissaryinterests dealt with in another section. The proviso only prevents theextinction of a succeeding beneficiary’s interest under a trust if thetrust is a charitable trust (or the beneficiary is of unsound mind etc),and cannot be interpreted as preventing the extinction of afideicommissary interest. The legislature could easily have made thisproviso applicable to section 4 (and perhaps also to section 2), andits omission to do so must be presumed to be deliberate.
I therefore hold that the proviso to section 5 is neither an exceptionto section 4, nor a general bar to charitable trusts being affected bythe Act.
Mr. de Silva then attempted to interpret section 9 as if it constituteda proviso to section 4: submitting that even a fideicommissum whichfalls fairly and squarely within the ambit of section 4 would survive ifthe fideicommissary’s interests was subject to a charitable trust. If thiscontention is correct, since, section 9 applies not only to section 4but to the entire Act, it would follow that a fideicommissum can becreated even now, despite section 2, simply by making thefideicommissary’s interest subject (wholly or perhaps even partly) toa charitable trust (or a usufruct).
It was submitted on behalf of the Plaintiff that section 9 should notbe regarded as being subordinate to sections 1 to 8 simply becauseit appeared after those sections; since the Act should be interpretedas a whole, section 9 should be given the same meaning whether itappeared before or after those sections; therefore one should not firstassume that the intention of the Act was to extinguish fidecommissacompletely, and then seek to give a meaning to section 9. It wasurged that section 9 set out the principles applicable to theconstruction of sections 1 to 8, and that one of those principles wasthat those sections should not be interpreted so as to extinguish acharitable trust; therefore, if a fideicommissary interest was found tobe subject to a charitable trust (or a usufruct) section 4 mustnot be construed so as to “affect” that charitable trust (or usufruct);since that charitable trust (or usufruct) could only survive if the
fideicommissary interest continued, necessarily the fideicommissumwas not extinguished.
Although this argument is not without attraction it is significant thatsection 9 does not provide that “nothing … shall affect", but that“nothing … shall be construed to affect". The former expression maywell have sufficed to create an exception to the plain words of section4 (cf. the phrase “shall not apply" appearing in the proviso to section5) but the latter is, in my view, insufficient to create an exception or aproviso. It seems to me that “nothing shall be construed to affect"was only intended to restrain any extended interpretation of section 4which sought to make section 4 applicable to other legalrelationships, besides those expressly mentioned.
The object of the Act appears to be (a) to extinguish allfideicommissa (section 2 to 4), (b) to wipe out the interests ofsucceeding beneficiaries under a trust (section 5), except in casescoming within the proviso to section 5, and (c) to make consequentialprovisions (sections 6 to 8). In that context, when section 9 providesthat nothing in the Act shall be “construed” to affect a (charitable)trust, it was not intended to sanction a process of interpretation whichwould derogate from the preceding provisions but was merelyintended to declare a legislative intention that the provisions of theAct should not be given an extended construction so as to apply tolegal relationships other than fideicommissa and one category oftrusts. Taking the Act as a whole, there is no doubt that the “mischiefwhich the legislature sought to remedy was the practice of “tying-upof property” (and rendering it inalienable), by providing for thesuccessive ownership of property by two or more persons – whetherthat ownership was dominium or beneficial ownership under a trust;the legislative remedy was to extinguish the right of the successor.Nothing in the provisions preceding section 9 applies to legalrelationships involving the distribution of the rights of ownership,concurrently, among two or more persons – such as the equitableownership of a trustee concurrently with the beneficial ownership ofthe beneficiary under a “simple” trust, as well as life interests,usufructs, servitudes, etc.; in all these no “succession” was involved.
It seems to me that the use of the word “construed” in section 9 wasonly intended to preclude an extended construction being given tothe Act in order to extinguish or affect rights under such other legalrelationships; and not to qualify or derogate from the precedingprovisions.
Not surprisingly, Mr de Silva waxed eloquent on the “unfairness"of extinguishing a charitable trust. But that is hardly a matter for thejudiciary. Section 5 allows a testator to provide for a mentally orphysically disabled beneficiary to be succeeded by anotherbeneficiary, by way of a trust; but section 4 does not permit a similarresult to be achieved by means of a fideicommissum. That too seems“unfair”. So also, to thwart a testator’s desire to restrain a spendthriftspouse on child (e.g. by granting him only a fiduciary interest), or toprovide for a minor child (e.g. by granting him a fideicommissaryinterest) can be considered as "unfair” as to prevent him frombenefitting charity by means of a fideicommissum. The legislaturecannot be presumed to have been unaware of the different formswhich fideicommissa could take, and its obvious intention – insofar asthat appears from the words it used – was to extinguish allfideicommissary interests, and to free the title of all fiduciaries fromthe rights of successors. Subjective perceptions as to “fairness”cannot distort or thwart that intention.
I therefore hold that on 12.5.72, by reason of section 4 of theAbolition of Fideicommissa Act, the fiduciary interest of the 2ndDefendant enlarged into full ownership; that interest not havingpreviously been subject to a charitable trust, the 2nd Defendant’sownership too was not subject to such a trust; and thefideicommissary interest of the Plaintiff, as well as the charitable trustto which that interest was subject, was extinguished. The Plaintiff’saction therefore failed.
The substituted Defendants’ alternative contention was that, evenif the fideicommissum had not been extinguished on 12.5.72, yet on26.8.72 when the Land Reform Law came into operation the interestsof both fiduciary and fideicommissary vested in the Land ReformCommission, with retrospective effect from 29.5.71.
It is common ground that the property in suit was land used orcapable of being used for agriculture, and thus within the definition of“agricultural land”, unless, as the Plaintiff contended, exclusion (d)applied.
Exclusion (d) is most unhappily worded. Land can neither"constitute” a charitable trust, nor be owned or possessed “as suchtrust". In sharp contrast, exclusion (e) uses clear and simplelanguage: “any such land held in trust… so long and so long only assuch land is held in trust …”. If that was what was intended, it isdifficult to understand why similar language was not used inexclusion (d). However, Counsel have not been able to suggest whatother meaning was intended, and I will therefore assume thatexclusion (d) applied to land used or capable of being used foragriculture which was “held subject to a charitable trust [or, inrespect of which a charitable trust had been constituted] on May 29,1971, so long and so long only as such land continues to be soowned or possessed as such trust”. The meaning of “possession”was considered in L.R.C. v. Ganegama Sangarakkita Therom. Itseems to me that the phrase “as such trust” is narrower than “held intrust" or “subject to such trust”, and requires that the land be ownedor possessed “as part of” or “on behalf of” such trust, on 29.5.71 andat all material times thereafter. This the Plaintiff was unable toestablish, for admittedly both dominium and possession were with the2nd Defendant from 29.5.71 upto 26.8.72.
Mr de Silva submitted that the mere creation or “constitution” of acharitable trust was enough, urging that the second limb of exclusion
should be ignored. Words used by the legislature cannot lightlybe disregarded. Further, in this instance, some qualification wasnecessary, because otherwise land which was subject to a charitabletrust during the period May 1971 to August 1972 only wouldnevertheless be totally excluded, than and for all time. Suchqualifications are found in the other exclusion clauses as well, andhence cannot be ignored selectively. The language used is certainlyobscure, but even leaning in favour of ownership by the citizen andagainst vesting in the State, an interpretation which requiresownership or possession by or on behalf of the trust cannot beavoided.
I therefore hold that even if the fideicommissary interest had notbeen extinguished, the property in suit was not excluded fromvesting under the Land Reform Law with effect from 29.5.71, thoughnot for the reasons which persuaded the Court of Appeal.
The Plaintiff’s appeal is dismissed, but having regard to all thecircumstances, without costs.
DHEERARATNE, J. – I agree.
PERERA, J. -1 agree.