008-SLLR-SLLR-1993-2-UVAIS-v.-PUNYAWATHIE.pdf
46
Sri Lanka Law Reports
[1993] 2 Sri LR.
UVAIS
v.PUNYAWATHIE
SUPREME COURTFERNANDO, J.
AMERASINGHE, J. ANDDHEERARATNE, J.
SC APPEAL NO. 14/88CA NO. 331/77 (F)
DC COLOMBO 1961/REJUNE 10 AND 11, 1991.
Landlord and tenant – Increase of rent after notice of termination – Doesit create a new tenancy? – Civil Procedure Code, Sections 75, 146, 148 and150 (Explanation 2).
Held :
The variation of one term of the contract by an increase of rent does notcreate a new contract of tenancy. The landlord can demand the increased rentwithout withdrawing the notice of termination.
It is sometimes permissible to withdraw admissions on questions of law butadmissions on questions of feet cannot be withdrawn. Quite apart from anyquestion of estoppel or prejudice, to permit admissions to be withdrawn inthese circumstances would subvert some of the most fundamental principles ofthe Civil Procedure Code in regard to pleadings and issues. Section 75 not onlyrequires a defendant to admit or deny the several averments of the plaint, but
sc
Uvais v. Punyawathie (Fernando, J.)
47
also to set out in detail, plainly and concisely the matters of fact and law, andthe circumstances of the case upon which he means to rely for hisdefence ; sections 46 (2) and 148 oblige the Court upon the pleadings or uponthe contents of the documents produced, and after examination of the partiesif necessary, to ascertain the material propositions of fact or of law upon whichthe parties are at variance, and thereupon to record issues on which the rightdecision of the case depends ; section 150 explanation (2), prohibits a party frommaking at the trial, a case materially different from that which he has placedon record and which his opponent is prepared to meet; the facts proposed tobe established by a party must in the whole amount to so much of the materialpart of his case as is not admitted in his opponent's pleadings.
Per Fernando, J. : The alleged absence of an agreement to pay an increasedrent was not a fact or circumstance on which the defendant relied for hisdefence ; nor a proposition on which the trial Court found the parties atvariance ; evidence on that matter was prohibited to the defendant, andsuperfluous for the plaintiff *.
Cases referred to :
Gunaratne v. Thelenis (1946) 47 NLR 433.
Siddick v. Natchiya (1954) 55 NLR 367.
Vincent v. Sumanasena (1954) 55 NLR 478.
Samaraweera v. Ranasinghe (1958) 59 NLR 395.
Theivandarajah v. Sanoor (1967) 71 NLR 12.
De Silva v. Perera (1928) 29 NLR 206.
Sellahewa v. Ranaweera (1956) 59 NLR 66.
Abdul Rahaman v. Justin (1973) 79 NLR 97.
Nadarajah v. Naidu (1965) 68 NLR 230.
APPEAL from order of District Court of Colombo.
Eric S. Amerasinghe, P.C. with P. A. D. Samarasekera, P.C., Gamini Jayasingheand Miss Rajepakse for substituted plaintiff-appellant.
H. L de Silva, P. C. with Laksman Perera and N. M. Musafertor defendant-respondent.
Cur. adv. vuft
September 05, 1991.
FERNANDO, J.
The plaintiff-appellant (the 11 plaintiff ") purchased the premises insuit in 1968, and the tenant, the defendant-respondent (the" defendant"), attorned to the plaintiff; the authorised rent wasRs. 529.28. On 17.12.69 the plaintiff gave the defendant noticeto quit, to enable the plaintiff to demolish the building and construct
48
Sri Lanka Law Reports
[1993] 2 Sri LR.
a new building ; the plaintiff then applied to the Rent Control Boardfor written permission under section 13 (1) of the Rent RestrictionAct, No. 29 of 1948, as amended, to institute action for the ejectmentof the defendant, the defendant however continued in occupationpaying rent at the rate of Rs. 529.28 per month. In March, 1970 theMunicipal Council increased the assessment of the annual valueof the premises and in consequence the authorised rent becameRs. 552.41 per month. The defendant objected to this assessment.While the inquiry into those objections was pending, the plaintiff byletter dated 8.5.70 informed the defendant:
“….the assessment for taxeshas been revised and you are
liable to pay damages from 1.4.70 at the rate of Rs. 552.41. Thisnotice is given to you without prejudice to the notice to quitserved on you and the application pending before the RentControl Board."
The defendant continued to pay Rs. 529.28 per month as rent.The plaintiff accepted these payments on account of damages dueand without prejudice to his right to file action. By letter dated 19.9.70the defendant informed the plaintiff that she had remitted the usualrent because the appeal against the assessment had not yet beendecided, and that thereafter the correct amount with all arrears, ifany, would be paid. On 19.5.71 the defendant's appeal against theassessment was dismissed, and accordingly the authorised rent asfrom 1.4.70 was Rs. 552.41. By letter dated 30.6.71 the defendantrequested information as to the total amount which she had topay by way of increased rent, and by letter dated 13.7.71 the plaintifffurnished particulars as to the increased amount payable as damages.The defendant however continued to pay Rs. 529.28 per month. Theplaintiff thereupon gave a second notice to quit dated 27.9.71, callingupon the defendant to vacate the premises on 31.12.71 on the groundof arrears of rent. Action for ejectment was instituted on 18.1.72;in the plaint the first notice to quit was not even mentioned; it waspleaded that as a result of an increase in taxes, the authorised renthad been raised to Rs. 552.41 per month, and that the defendanthad been given notice to pay rent at that rate from 1.4.70. It wasfurther pleaded that the defendant had agreed to pay the authorisedrent upon the determination of her appeal against the increasedassessment of the annual value, but, despite the dismissal of thatappeal, had failed and neglected to pay such authorised rent. In
sc
Uvais v. Punyawathie (Fernando, J.)
49
her answer the defendant expressly admitted that she had agreedto pay the increased rent but had not done so, and the entireproceedings at the trial related to defences based on her inabilityto pay the sums due because of illness and financial difficulties. Thosedefences were rejected and judgment was given for the plaintiff.
In the Court of Appeal it was contended on behalf of the defendantthat the main issue arising upon the plaint was whether there hadbeen arrears of rent; that the plaintiff had demanded damages andthat the defendant had offered to pay an increased amount asrent ; there was thus no demand for payment of an increased rent,and therefore no agreement to pay the higher amount. This wasadmittedly a new point not raised at the trial, and it was contendedthat it was a question of law arising upon the evidence. It was furthersubmitted that the admissions in the answer were in the teeth of thecorrespondence and arose from a reconstruction of the documentsby the defendant's lawyers ; such admissions were not binding andcould be withdrawn unless there is an estoppel ; the plaintiff hadnot acted to his prejudice and hence the defendant was entitled toraise that matter. These submissions were upheld ; the Court ofAppeal held that the plaintiff had failed to prove that the defendantwas in arrears of rent and allowed the appeal. Leave to appeal wasgranted by the Court of Appeal. The plaintiff died while the appealwas pending in the Court of Appeal, and the substituted plaintiff-appellant was substituted in his place.
Three questions arise. Did the parties agree, after notice oftermination, that the respondent would pay an increased rent ofRs. 552.41 per month? If so, did the acceptance of such rent bythe appellant create a new tenancy? Was the respondent entitled atthe stage of appeal, to withdraw the admissions that she had agreedto pay the increased rent, but had failed to do so?
Learned President's Counsel for the defendant contended thatwhile the plaintiff demanded damages, the defendant tendered rent,and hence there was no agreement as to the character of the sumspaid. While it is correct that a sum offered by the debtor in satisfactionof a particular liability cannot be appropriated by the creditor insatisfaction of a different liability, that is not the position here.Quite apart from the admissions in the answer, analysis of thecorrespondence reveals that there was no uncertainty as to the
50
Sri Lanka Law Reports
[1993] 2 Sri LB.
liability which both parties had in mind-namely the payment duein respect of the occupation of the premises. Although onedescribed it as " rent", and the other as “ damages ", no mistakeor misunderstanding resulted ; and the notice to quit dated 27.9.71referred to arrears of rent : thus there was agreement that anincreased rent would be paid ; but despite this, the defendant failedto pay the increase in rent, and was in arrears when notice to quitwas given.
It is well established that the acceptance of rent by the landlordafter notice of termination does not create a new tenancy, unlessthere is a clear intention to create a new tenancy. It was contended,however, that the landlord was entitled to accept rent, after noticeof termination, without giving rise to a new tenancy only where theamount of such rent did not exceed the rent paid prior to the noticeof termination, and that this was the position in all the decided cases(Gunaratne v. Thelenis (1); Siddick v. Natchiya (2); Vincent v.Sumanasena(3); Samaraweera v. Ranasinghe (4)). Learned President'sCounsel sought to distinguish Theivendrarajah v. Sanoon (5), asbeing a lease expiring by affluxion of time, and not a tenancyterminated by notice. In that case Sirimane, J., held that thelessor was entitled to demand and to receive the authorised rent,even though that was more than the rent paid under the lease.The underlying principle is that in order to secure the protection ofthe Rent Restriction Act, the “ statutory tenant" must pay, ifdemanded, what the landlord is statutorily entitled to receive,namely that authorised rent, including the increases premitted fromtime to time. If for instance a drastically revised assessment resultsin an increase in rates which exceeds the rent previously paid, thelandlord will be out of pocket unless he is entitled to recover theincreased amount from the statutory tenant. Learned President'sCounsel for the defendant submitted that in such a situation thelandlord should withdraw the notice of termination (and anypending action), demand the permitted increase, give a freshnotice of termination, and thereafter institute another action. Inthe absence of. plain words compelling the conclusion thatthe legislature intended such a protracted procedure and aninequitable result, I must decline to accept that contention. It is notdisputed that prior to notice of termination, the landlord is entitledto demand and to receive an increase in rent equivalent to theincrease in rates. Although a tenant is not normally obliged to pay
sc
Uvais v. Punyawathie (Fernando, J.)
51
an increased rent unless he agrees (de Silva v. Perera (6); Sel/ahewav. Ranaweera m), the position is different in regard to an authorisedincrease of rent, of which the tenant is only entitled to notice (AbdulRahaman v. Justin (8), Nadarajah v. Naidu (9)). While the Rent Actsare intended to protect a tenant even after the contractualrelationship has come to an end, I find nothing to suggest alegislative intention to enlarge the rights of a tenant after termination.In regard to the landlord's right to receive the rent, or the increasedrent, payable under the Rent Acts, there is thus no basis wherebythe position of a statutory tenant, after the termination of a leaseby affluxion of time, can be distinguished from that of a statutorytenant after the termination of a monthly tenancy by notice oftermination. Both claim the same statutory protection, and both mustpay the same price; the rent or other payment which the landlordis statutorily entitled to demand. It was also contended that whenan increased rent is agreed upon, necessarily a new contract comesinto existence. Where there is a subsisting contract of tenancy, thevariation of one term of that contract does not usually result in anew contract ; negotiating an increased rent does not give rise toa new contract, but merely results in the variation of one term ofthe contract. The plaintiff was therefore entitled to demand and toreceive the increased authorised rent of Rs. 552.41 per month,without being obliged to withdraw the notice of termination, andwithout thereby creating a new tenancy.
In the present case by the time the matter came up for decisionin the trial Court, difficulties as to whether parties meant rent ordamages, and the need for the tenant's consent to an increasedrent, had been completely removed by reason of the defendant'sexpress and unambiguous admissions that she had agreed to paythe increased rent of Rs. 552.41 per month, but had not done so.On that basis, she pleaded inability to pay that rent, for reasonswhich the learned trial Judge properly rejected. Those admissionswere not withdrawn during the trial, and the judgment of the trialJudge was therefore perfectly correct. Even if those admissions aredisregarded, the documents establish that the parties had agreedupon an increased rent, and that the defendant had failed to paythe increase, and was in arrears of rent. However, it is necessaryto state my view that the Court of Appeal was in error in holdingthat the defendant could withdraw those admissions at the stageof appeal, and take up a completely different position not pleaded,
52
Sri Lanka Law Reports
[1993] 2 Sri LR.
not suggested to the plaintiff in cross-examination and not supportedby the defendant or her witnesses; and in giving judgment in favourof the defendant on a basis which the plaintiff never had anopportunity to explain. While it is sometimes permissible towithdraw admissions on questions of law, the admissions nowunder consideration are primarily questions of fact; what the partiesintended and understood by their letters, and their conduct in relationthereto, hardly involve questions of law. In any event, in the absenceof evidence as to the circumstances in which those admissionswere made, it would be speculative to regard them as resulting fromthe misconstruction of documents by the defendant's lawyers : theymay equally well have been the result of express instructions givenby the client. An additional circumstance is that, had theseadmissions not been made, the plaintiff would have had anopportunity of reconsidering this position, and may then have decidedto withdraw his action and to institute another action on a differentbasis ; the denial of that opportunity was a potential source ofprejudice, and the Court of Appeal was in error in assuming thatthe plaintiff had suffered no prejudice, or had not acted to hisdetriment, where he had no chance of explaining how he would haveacted. Quite apart from any question of estoppel or prejudice, topermit admissions to be withdrawn in these circumstances wouldsubvert some of the most fundamental principles of the Civil Pro-cedure Code in regard to pleadings and issues. Section 75 not onlyrequires a defendant to admit or deny the several averments of theplaint, but also to set out in detail, plainly and concisely, the mattersof fact and law, and the circumstances of the case upon which hemeans to rely for his defence ; sections 146 (2) and 148 obligethe Court upon the pleadings, or upon the contents of documentsproduced, and after examination of the parties if necessary, toascertain the material propositions of fact or of law upon which theparties are at variance, and thereupon to record issues on which theright decision of the case depends ; section 150, explanation (2),prohibits a party from making at the trial a case materially differentfrom that which he has placed on record, and which his opponentis prepared to meet; the facts proposed to be established by a partymust in the whole amount to so much of the material part of hiscase as is not admitted in his opponent's pleadings. The allegedabsence of an agreement to pay an increased rent was not a factor a circumstance on which the defendant relied for his defence ;nor a proposition on which the trial Court found the parties to be
sc
Uvais v. Punyawathie (Fernando, J.)
53
at variance; evidence on that matter was prohibited to the defendant,and superfluous for the plaintiff.
I allow the appeal, and set aside the judgment of the Court ofAppeal. The judgment and decree of the District Court is affirmed.The substituted plaintiff-appellant will be entitled to costs in a sumof Rs. 5,000 in this Court, as well as costs in both Courts below.
AMERASINGHE, J. – I agree.
DHEERARATNE, J. – I agree.
Appeal allowed.