101-NLR-NLR-V-29-WEERASURIYA-v.-SENEVIRATNE.pdf
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Present: Drieberg J.
WEERASURIYA w. SENEV1RATNE.
310—P. C. Matara, 45,262.
Local Government—Member of Urban District Council—Auction ofleases—Bid on behalf of another—Concern in contract—OrdinanceNo. 11 of 19201 s. 287 (I).
Where, at a public auction, at which an Urban District Councilput up for competition the lease of certain blocks of land, a memberof the Council, with the permission of the Chairman, bid for andobtained a lease on behalf of another person, whose name wasgiven as that of the purchaser,—
Held, that under the circumstances the member was not** concerned in a contract with the Council *' within the meaning ofsection 237 (1) of the Local Government Ordinance.
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E appellant, a member of the Urban District Council ofMatara, was convicted of an offence under section 237 of the
Local Government Ordinance, No. 11 of 1920, and sentenced to paya fine of Es. 20. The section penalizes any member, officer, orservant of the Council 1 ‘ who shall be either directly or indirectlyconcerned in any contract or work made with or executed for theCouncil.*’It appears that the Urban District Council, having
resolved to lease certain blocks of land which it owned, put themup for public auction. The sale was carried out by a Sub-Committeeconsisting of the Chairman, the Vice-Chairman, Mr. W. Gooneratne,and the appellant. For a certain lot, the appellant, with thepermission of the Chairman, hid Bs. 10 on behalf of one D. A.Ranaweera. As there was no advance on the bid, it was acceptedand the name of Ranaweera was entered as the purchaser. Thelearned Police Magistrate convicted the appellant.
1928
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19B8
Weeraauriya
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Hayley, K.C. (with Weera&ooriya), for accused, appellant.—ThereIs no completed contract, only an auction to sell a right. Theoffender must be '* concerned ” or “interested in’1 the contract.An interest in the contractor is no interest in the contract.A thing may be interesting to a person, and yet he may not be“ interested in."
This is a penal provision and must be strictly construed. Thebenefit of any doubts must be given to the accused. (See Everett v.Griffiths 1 and Ford v. Newth. a)
H. V. Perera (with Basnayake), for respondent.—A completedcontract is not necessary. Here is a contract. A valid offer andan acceptance. Eatification of the contract does not enter into thequestion. What the provision seeks to prevent is that conflict ofinterest and duty. The “ interest in the contract " and the duty tothe Council. A member cannot appear in two roles, liis primaryduty is to look after the affairs of the Council. This should not beallowed to clash with his interest in contracts with the Council.Local Government should be pure, and even the semblance ofsuspicion should be avoided.
Counsel cited the following authorities:—Barnaoh v. Clark,*Todd v. Robinson,4, England v. Inglis,5 Hyde v. H os ford * Nvxttonv. Wilson.7
July 12, 1928. Drieberg J.—
The appellant, a member of the Urban District Council of Matara,was convicted of an offence under section 287 of the LocalGovernment Ordinance, No. 11 of 1920, and sentenced to paya fine of Es. 50. By this section any member, officer, or servant of■any District Council who “ shall be either directly or indirectlyconcerned in any contract or work made with or executed for theGouncil " is liable to a fine not exceeding Es. 500 and becomesincapable of sitting as a member of the Council or holding any officeor employment under the Ordinance.
The Urban District Council of Matara resolved to lease certainblocks of land which it owned. Each lease was to be for a term of83 years, and the lessee was obliged to erect a building approved bythe Council to cost Es. 3,000. The Council put up to auctionthe right to the leases, the amount so paid being in the nature of apremium. The sale was carried out by a Sub-Committee consistingof the Chairman, the Vice-Chairman, Mr. W. Gooneratne and theappellant. For the lot in question, No. 18, there was a bid of Es. 5by Charles Abeysooriya, the appellant bid Es. 10, and as there was
1 (1924) 1 K. B. 941.4 14 Q. B. D. 744.
* [1901) 1 K. B. 683.5 (1920) 2 K. B. 636.
8 11900) 1 Q. B. 279.4 (1911) 46 Ir. L. J. 69.
7 (1«W) 22 Q. B. D.t p. 744.
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no advance his bid was accepted, and the name of D. A. Banaweerawas entered as purchaser and a receipt in his favour granted to theappellant. The respondent says that/ the appellant bid andpurchased the land for himself, and that ne got the receipt drawn inBanaweera’s favour merely for deception.
The learned Police Magistrate, however, in a very full andcarefully considered judgment has found that the conduct of .theappellant was quite straightforward and honest.
The facts are these. The appellant, who is a notary, was muchinterested in this sale. Twenty-five copies of the sale notice weresent to him by the Secretary, and he thought it his duty to distributethese among his friends. A day before the sale, D. A. Banaweera,a person of substantial wealth and a friend and client of ttieappellant, asked him to bid for him at the sale for one lot up toBs. 100. Before the sale started he told the Chairman, Mr. G. P.Keuneman, of Banaweera’s request and inquired whether therewas any objection to his bidding on behalf of Banaweera, andMr. Keuneman said that he saw no harm in his doing so. He appearsto have done so quite openly; he spoke in Sinhalese, andin the presence of the other members of the Committee. This washeard by Mr. W. Gooneratne, but not by the Vice-Chairman,.Mr. B. B. Gunaratne. The Secretary issued the receipt in favourof D. A. Banaweera on the directions of the Chairman.
The sale was subject to the approval of the District Council and.of the Local Government Board, and if allowed the purchaser wouldbe entitled to the lease.
Now, the appellant was to have no shore in the lease,, he got noadvantage pecuniary or otherwise by Banaweera being declaredthe purchaser of it, and if his action brings him within this section,it must be for the reason only that he represented Banaweera;personal concern in the contract he had none. Mr. Hayley con-tended that even if his concern or interest in the transaction was ofthe nature contemplated in this section, the transaction was not a" contract or work made with or executed for the Council.” Theconditions of sale and the purchase were not notarially attested,the whole transaction was dependent on the sanction of the Counciland the Local Government Board, and it is tirue that there wasno legally enforceable contract to lease.
I cannot agree with this contention. The acceptance of thefinal bid did create contractual rights, though the right to the leasedepended on other conditions; the Chairman was bound to submitBanaweera as the highest bidder, and it gave him the right, whichhe could enforce, to have his claim to the lease considered by theCouncil and the Local Government Board. If this contention' iscorrect it would enable a Councillor to agree with the Couneil for29/35
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Dmbps J.
WtmuwiyQ
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the execution, e.g,t of a lease in which he had a financial interestDuibbbbo an4 evade the law by disposing .of his interest before execution oE'. . tlp deod of lease.
.The question in this appeal is one of great importance, andSfawiivme though it has not expressly come up for decision in any of thenumerous cases on similar enactments in England, the principlesunderlying recent decisions lead to the conclusion that theappellant's conduct is not within the section.
It was observed by McCardie J. in Everett v. Griffiths 1 that it wasa matter for comment that Parliament in dealing with the samesubject-matter should for no apparent purpose use. different insteadof similar words in the various enactments.. He said this withreference to the wording of section 12 (1) (c) of the MunicipalCorporations Act, 1882, where the words were " has directly orindirectly by himself or his partner any share or interest by himselfor his partner in any contract with, by, or on behalf of the Councilhe held that in substance these words were similar to those insection 46 of the Local Government Act of 1894, and that thedecisions on the former should not be overlooked in dealing with thelatter, with which the case was concerned.
Section 46 of the Local Government Act of 1894 uses these words:
* *concerned in any bargain or contract entered into
with the Council or Board or participate in the profits of any suchbargain or of any work done under the authority of the Council orBpard.”
In Everett v. Griffiths {supra), the defendant, who was a member ofa board of guardians was employed as manager of their wheelwright'sshop by a dairy company which had a considerable contract withthe board for the supply of milk. The defendant wielded a powerfulinfluence on the board, and when several tenders were opened,including one from this company, which was not the lowest, hemoved a resolution, which was carried, that amended tenders becalled for, and the tender of this company was then accepted. Hereceived no bonus from the company, or any sum in respect of thecontract in question. The defendant's membership of the boardstabilized his position with his employers (the company), and gavehim indirectly many possible advantages, but it was held that heWas not concerned in the contract. It was said that a man was“ concerned " in a contract if he was in any way a party to it,whether as sole contractor or as a partner or as an undisclosedprincipal.
Lapisk v. Braithwaite * was a case under the Municipal Corpora-tions Act, 1882; I have quoted the material words of the sectionin question. The defendant was the managing director on a fixed1 ilOU)lK.B, 941.
:*il92S) 1K. B. 474 (A. 0.) / 131 L. T. 58$ ; (192$) A. 0. 275; (ff. of L.) ;
134L.T.481.
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salary of £2,400 a year of a company which, had a large contractwith the Corporation of Leeds, of which he .Was aldennaru– The onlyevidence in reference to his taking any part in the making- of- thecontract consisted in the fact that he Was one of the directors of•the company who signed the document as witnesses .to the .affixingof the company's seal. The correspondence which led" up.,to thecontract was conducted by the secretary. of the company. – TheCourt of Appeal, following the principle in Everett v. Griffiths- (supra),held that the defendant had no interest in the contract.-.
What was said by McCardie J. to be Jfebe most striking extensionof the meaning of the words “ share or interest in any .contract ”was given in the case of England v.Inglis1'; 'it was an action undersection 12 of the Municipal Corporations Act, 1882. The defendantcouncillor was a jeweller and optician, and had a son who wa& apaid assistant in his shop. The son took a contract for the supplyof spectacles to the City Council's schools. The defendant had noshare in *the son’s Contract, but he allbwed him to do the contractwork in his shop, and when, the son was on war service he had paidfor an assistant to do the contract work; If the son had to payestablishment charges there would have been no profit in thecontract. The spectacles were supplied in cases which bore theson's name and the address of the defendant's shop. Though thedefendant had in some ways a pecuniary interest of an adversekind in the contract the burden was not sustained for nothing,for there, was the possibility, even the probability, of an actiia)benefit to the defendant from the useful advertisement of hisbusiness on the spectacle cases, and that this gave him a reasonableexpectation of a pecuniary advantage in the contract.
These cases show clearly that the “ concern or interest ” must be.in the contract itself, and not merely an interest in the contractor orhis business such as an employee would have. Such an interestthe appellant in this case did not have.. It was contended that the' action alone of the appellant in bidding on behalf of Banaweeramade him concerned or interested in the contract. I might dealwith this by quoting the following passage from 'the judgment ofScrutton L.J. in Lappish v. Braithwaite (supra)
1 ‘ A man may be interested in a thing without having an interestin it. But in any event I cannot think that the relationof an employee paid by fixed salary to his company involvesan interest, even indirect, in the contracts made by hiscompany within the meaning of a penal statute, even if hetakes part in negotiating or performing those contracts. ”Considering the facts of the case the concluding words of thispassage cannot be taken as altogether obiter, but even so,' they arein keeping with the principle underlying the cases referred to. If1 (1920) 2 K. B. 636 ; 123 L, T. 376.
Dbhbbbbg
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WesHM&iya
Benseirakit
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Weerazuriya.■ *•
Senewatne
the appellant could have acted as lie did if he wa9 the paid servantof Ranaweera his ease here is stronger, for he acted without fee orreward.
The Magistrate has dealt with another aspect of the case as areason for his finding* He finds that the appellant’s conversationwith the Chairman was not heard by the people present—it was notheard by the Vice-Chairman and the Secretary—and that he couldfairly assume that intending bidders believed that the appellant wasbidding for himself and did not wish to bid against a councillor,Charles Abeysooriya said that he had the rent of a market from theCouncil and that he did not wish to bid against a councillor ; hiswas the first bid, and he did not bid further for this reason. Th»:appellant says this would not deter Abeysooriya, who has broughtactions against the Council and is in no fear of him. It should,I think, have been made clear to those present that the appellantwas not bidding for himself. This may be a matter for considera-tion when the sale has to be confirmed, but it has no bearing onthe question of the appellant’s liability.
I allow the appeal, and set aside the conviction and sentence.
Set azide.