044-NLR-NLR-V-50-THIDORIS-PERERA-et-al.-Appellants-and-ELIZA-NONA-Respondent.pdf
176
BASNAY AKE J.—Thidoris Perera «. Eliza Nona
1948Present:Wij eye war dene A.C.J. and Basnayake J.THIDORIS PERERA, et dl., Appellants, and ELIZA NONA,
Respondent
S'. C. 293—D. C. Colombo, 127 jZ
Trusts Ordinance—Agreement to sell divided, lot under final decree in partitionaction—Registered—Sale to third party after final decree—Specificperformance—Is it existing contract ?—Section 93.
By an agreement duly registered, first and second defendants agreedto sell to the plaintiff within three months of the final decree in a partitionaction then pending the divided lot that would be allotted to themin the final decree. They however sold this lot to the third defendant.In an action by the plaintiff for specific performance of the agreement—Held that the agreement was an existing contract within the meaningof section 93 of the Trusts Ordinance and that specific performancecould be enforced.
-A.PPEAL from a judgment of the District Judge, Colombo.
H. V. Perera, K.C., with K. Herat, for third and fourth defendants,appellants.
V. Ranawake, with H. A. Kottegoda, for plaintiff, respondent.
Cur. adv. volt.
July 9, 1948. Basnayake J.—
By interlocutory decree entered of record on Ma 20, 1931, in D. C.,Colombo, Partition Case No. 32,434, the first and second defendantsto the present action (hereinafter referred to as the vendors) were each
BASNAYAKE J.—Thidoris Per era v. Eliza Nona
177
declared entitled to an undivided, one-twelfth share of an allotment ofland called Dawatagahawatta marked lot A in plan No. 2,470 datedDecember 10, 1929, made by James Rodrigo, Surveyor. By agreementNo. 1,022 dated June 8, 1938, which was duly registered, they agreed tosell to the plaintiff-respondent (hereinafter referred to as the purchaser)** the divided lot or lots that may at the final partition in pursuance ofthe said interlocutory decree of the said lot A of Dawatagahawatta beallotted to them at or for the aggregate price or sum of Rupees Onehundred (Rs. 100) Its conditions are as follows :—
“ Now it is hereby agreed—
That in consideration of the sum of Rupees One hundred (Rs. 100)lawful money of Ceylon well and truly paid to the vendors by the saidpurchaser the said Atukorale Aratchige Sirisena Perera and AtukoraleAratchige Chandrasena Perera shall within three months from the dateof the final decree in the said partition case No. 32,434 of the DistrictCourt of Colombo by a valid deed assign transfer set over and assureunto the said Jayasinghage Eliza Nona or her heirs or assigns thedivided lot or lots or in the event of the said purchaser being allottedone lot in common with the vendors their interest in such lot as may beallotted to them in the scheme of partition from and out of the saidland called lot A of Dawatagahawatta fully described in the schedulehereto free from encumbrance with all the right title and interestwhatsoever of the said vendors and of each of them in to out of orupon the same.
That the purchaser shall herself bear the cost of the said deed oftransfer and also the pro rata costs if any of the said partition action.
The vendors bind themselves their heirs executors and adminis-trators and purchaser binds herself, her heirs, executors, administratorsand assigns for the performance of the foregoing obligation ”.
The final decree was entered in the partition action on December 16,1940, and the vendors were declared entitled to the lot marked A4 inplan No. 3,138 dated September 5, 1939, made by James Rodrigo, Sur-veyor. But the vendors, instead of transferring to the purchaser lot A4within the stipulated period of three months or thereafter, by deedNo. 6,998 dated August 10, 1944, attested by D. R. de S. Abayanayake,Notary, transferred it to the third defendant-appellant, who by deedNo. 1,963 dated November 8, 1944, attested by Clive Abeywardene,Notary, mortgaged it to the fourth defendant-appellant.
The purchaser seeks by this action against the vendors and theappellants to enforce specific performance of the agreement by thevendors and to have the sale by the vendors to -the third defendant-appellant and the mortgage in favour of the fourth defendant-appellantset aside. The vendors filed no answer. The appellants, who are thethird and the fourth defendants, took up the position that the purchaserhaving failed to obtain a transfer within the stipulated time has lost allher rights under the agreement. They also challenged the allegationof the purchaser that she requested the vendors both within the threemonths and thereafter to transfer the land to her. The only evidence
178
BASNAYAKE J.—Thidoris Perera v. Eliza Nona
in the ease is that of the purchaser. The learned District Judge acceptsthe purchaser’s evidence, which is uncontradicted, that she called uponthe vendors both before and after the three months to carry out theagreement. He has given judgment for the plaintiff as prayed for, andthe third and fourth defendants appeal therefrom.
The main contention of learned counsel for the appellants is that theagreement in question is not an existing contract within the meaning ofthat expression in section 93 of the Trusts Ordinance. He submitstherefore that that section has no application. Learned counsel referredus to the cases of Paiva v. Marikar et al-1, Sockalingam Chetty v. Kali-muttu Chetty 2, and Abeysuriya et al. v. Gunawardene et al.3.
The questions that arose for decision in the first of the eases cited werewhether the agreement was of such a kind as would entitle the plaintiffto ask for specific performance and whether the agreement can . beregarded as an existing contract within the scope of section 93 of theTrusts Ordinance, It was held that the words “ if the said amountis not paid, the second party (the plaintiff) can recover the same accordingto law ” in the agreement set out the only remedy that the partieshad agreed should be available to the plaintiff in the event of a breach,and that therefore he was not entitled to claim specific performance.In regard to the second question it was held that, as specific performancecould not be enforced, section 93 of the Trusts Ordinance had noapplication.
The second is a case in which, in pursuance of an agreement to sell aland, a conveyance obnoxious to section 17 of the Partition Ordinancewas executed pending partition proceedings in respect of that land.The trial Judge held that, although the conveyance with all the covenantstherein was void and of no avail in law, the covenants in the agreementto sell were unaffected. This Court held that the agreement was per-formed within the period stipulated therein by the execution of theconveyance which turned out to be void, and that it was discharged byperformance and that there was no existing contract.
In the third case the first defendant in a partition action entered,pending the partition proceedings, into an agreement to convey within amonth of the entering of the final decree the divided portion that maybe allotted to him under that decree. The other covenants in the agree-ment were that the purchaser should pay the pro rata costs and that,in the event of a breach of the agreement, the vendor shall be liable torefund the purchase price of Rs. 750, which was paid at the executionof the agreement, together with Rs. 500 as liquidated damages. Thevendor died pending the action and the District Judge in entering theinterlocutory decree declared that the share allotted to the intestate heirsof the vendor was subject to the agreement. This Court modified thedecree by omitting all reference to the agreement.
These eases have no application to the question that arises for decisionhere. Not one of them is in respect of a contract of which specific perfor-mance could be enforced. If the instant case had not been complicated by
1 (1936) 39 N. L. R. 255.* (1943) 44 N. L. R. 330.
(1946) 47 N. L. R. 397.
B A SN AY AKE J.—Thidoris Per era v. Eliza Nona
179
the sale to a third party there is no doubt that it is a contract of whichspecific performance could be enforced. This Court has held, in a numberof cases x, decided before the enactment of the Trusts Ordinance, thatspecific performance of a contract to sell a land cannot be enforced againsta third party to whom the land has been sold in violation of the contract,except in the case of fraud, even though the agreement had been registered.That view is based on a reading of Voet 19.1.14, which according toNathan 1 2 is not an authority for the proposition that a sale to a thirdparty purchaser with notice of a prior contract to sell cannot be re-scinded in an action for specific performance. But in view of section 93of the Trusts Ordinance the question is now of only academic interest.That section declares the right to claim specific performance against aperson who acquires property 'with notice that another person has enteredinto an existing contract affecting that property. It has been held inthe case of Silva v. Salo Nona et al.3 that registration of the instrumentof agreement under the Registration of Documents Ordinance is byitself notice and satisfies the requirement of that section as to notice.
The only question that arises for decision on this appeal is whetherthe contract “ A ” is an existing contract. A thing is said to existwhen it is alive and not dead. The word " exist ” means “ to be, to haveactual being, to live, to continue to be ”. An existing contract is there-fore a contract that is in being, alive, and not at an end. In the presentcase we have a contract of which there has been a breach. Can it there-fore be said that it is at an end ? I think not. The contract is notextinguished by the breach; for no one may discharge himself from hiscontract by breaking it; and the other party may enforce the contractafter the breach 4. As the learned author of Anson on Contract observes-—
“A breach does not of itself alter the obligations of either partyunder the contract; what it may do is to justify the injured party,if he chooses, in regarding himself as absolved or discharged fromthe further performance of his side of the contract. But even if hedoes so choose, that again does not mean that the contract itself isdischarged or rescinded, if those terms are taken to imply that it isthereupon brought to an end and ceases to exist for all purposes ;the contract still survives, though only, as it has been said, ‘ for thepurpose of measuring the claims arising out of the breach’. ”s
A contract does not come to an end until the vinculum juris establishedby a contract has been loosened and the parties restored to their former-freedom of action.
The term “ existing contract ” is, in my view, used in section 93 ofthe Trusts Ordinance in the sense of a contract in which the
1Carimjee Jofferjee v. Theodoris et al. (1898) 5 Bed. 20. Matthes Appuhamvy v.Raymond et al. (1897) 2 N. L. R. 270. Wickrdmanayake v. Abeywardene et al.(1914) 17 N. L. R. 169 at 171 and 172. Fernando v. Peris (1916) 19 N. L. R. 281.
2Nathan's Common Lazo of South Africa, ~Vol. II. p. 675, sec. 840.
3(1930) 32 N. L. R. 81.
* Williams on Vendor and Purchaser (4th Edn.), Vol. II., p. 993.
6 Anson on Contracts (19th Edn.), p. 318.
180
BAS N A YAK K J.—Thidoria Per era, v. Eliza Nona
vinculum, juris still remains unloosened at the time of action. Thevinculum juris is loosened in the generality of cases by performance orpayment, mutual agreement or operation of law. Wessels states1 :
“ Until the contract has been performed or mutually cancelled orset aside by a competent court, the bond which unites the contractingparties remains intact ”.
On a breach of contract to sell land the injured party may rescindthe contract and sue for restitution to his former position, or affirm thecontract and sue either for damages for the breach or for the specificperformance of the agreement. The plaintiff in the present case haschosen to affirm the contract and sue for specific performance. As I haveindicated above, the contract which the plaintiff seeks to enforce is aliveand may correctly be described as an existing contract for the purpose ofsection 93 of the Trusts Ordinance.
The words “ existing • contract ” occur in section 91 of the IndianTrust Act, 1882, which is word for word the same as our section 93 exceptfor the proviso which is not in the Indian section. The Indian decisionswhich I have examined show that those words have been given by theIndian courts the meaning I have indicated above. The case of HimallalMotilal and others v. Vasudev Ganesh Mhaskar 2 appears to be on allfours with the present case. The right to obtain specific performanceof a contract of this nature is the same in England. The law is thusstated in Dart on Vendors and Purchasers 3 :
“ Equity will enforce specific performance of the contract for sale,against the vendor himself, and against all persons claiming under himby a title arising subsequently to the contract, except purchasers forvaluable consideration who have paid their money and taken aconveyance without notice of the original contract ’ ’.
An examination of the contract before us reveals that as far as thepurchaser is concerned she has performed all her obligations thereunder.She has paid the purchase price. She has paid, as agreed, the pro ratacosts of the vendor in the partition action. From the date of the finaldecree she entered into possession of the lot A4 which the vendors hadcontracted to sell. It was only when the third defendant-appellantentered on the land and began to clear it that her possession wasdisturbed. What remained was only the performance of the obligation ofthe vendors, to execute a valid transfer in terms of the agreement. Thisthey failed to do though requested by the purchaser many times bothbefore and after the period of three months. I am clearly of opinion thatthe contract is an existing contract the performance of which could beenforced.
The plaintiff in my view is entitled to succeed in her action. Theappeal is dismissed with costs.
Wijeyewabdeke A.C.J.—I agree.
Appeal dismissed.
1 Wessels’ Law of Contract in South Africa, Vol. II., p. 912, sec. 3152.
9 I. L. R. 36 Bombay 44:7.
3 Dart on Vendors and Purchasers (8th Edn.), Vol. II., p. 883.