WELLINGTON v. AMERASINGHE

003-SLLR-SLLR-1987-1-WELLINGTON-v.-AMERASINGHE.pdf


WELLINGTON
v.AMERASINGHE
SUPREME COURT.
SHARVANANDA. C.J., RANASINGHE, J.. ATUKORALE, J.. TAMBIAH. J.
ANDL.H DEALWIS. JS.C. 15/85.
A. 215/79 (F).
C. MT. LAVINIA 230/RE.
MAY 27, JUNE 26 AND JULY 22. 1986.
Landlord and tenant – Notice to quit—Arrears of rent — Prescription – Set off of excessrent – Sections 22(1 ){a) and 22(3) of Rent Act.
When there is excess rent in the hands of the landlord there will be an automatic set off.The three years prescribed by the Prescription Ordinance should not be calculated fromthe date of answer.
In terms of Section 22(1 )(a). read with section 22(3)(£>) of the Rent Act the conditionprecedent for proper institution of action on the ground of arrears of rent is that the rentof such premises has been in arrears for three months or more after it has become dueand the tenant has not prior to the institution of such action tendered all arrears of rent.The tender of all arrears prior to the institution of action cures all default.
In terms of section 22 (3) unlike before its enactment notice of termination of tenancy inorder to be valid can be given only after the tenant had been in arrears for the requisiteperiod and not beforehand. Under the present law advantage cannot be taken of anearlier termination of tenancy by notice to quit at a time when the tenant was not inarrears of rent for the required period to institute an action under s. 22(1) of the RentAct for ejectment on the ground of arrears of rent
In the instant case notice was given when the defendant was admittedly in arrears forthree months after the rent became due The notice received by the defendant on1 1 1.1974 requiring him to quit on or beofre 31.1 1975 does not become invalid. Ason the civil mode of calculation a whole day is reckoned as one point of time a noticegiven on the first day of the month expiring at the end of the month is good.
Where there is no express agreement as to how an advance or deposit of rent in thehands of a landlord should be applied it can be set off against arrears of rent evenwithout a request by the tenant in that behalf When credit is given for excess rent andthe advance in the hands of the landlord the tenant in the instant case was not inarrears.
Cases referred to:
Wijemanne v. Fernando – (1946) 47 N L.R. 62
Mumdasa v Appuhamy – (1955) 57 N L R 108
Sinmahpillai v. Abdul Cader — (1967) 69 N L R 547
Mohideen v. Mohideen – (1975) 78 N L R 108
Hamffav. Sellamuttu – (1967) 70 NL R 200. 201
Ismail v Sheriff – f 1965) 68 N L R 19
17) Robert v Fernando – (1967) 69 N L R 572
Sidebotham v. Holland – (1895) 1 Q B.D. 378. 383
Crate v Miller- (1947) 2 All E.R 45. 46
Fernando v. De Silva – (1966) 69 N.L.R. 164
Abdul Hafeel v. Muttu Bothool – (1957) 58 N L.R. 409, 411
Tiopaizi v. Bulaway Municipality – (1923) A.D. 317
Sahul Hamid v. De Silva – (1932) 1 C.L. W. 354.
Fonseka v. Jayawickrema – (1892) CLR 134.
Thassim v. Cabeen – (1946) 47 N.L.R. 440
Kanapathi Pillai v. Dharmadasa – 58 C.L.W. 79.
Samaraweera v. Ranasinghe – (1958) 59 N L.R. 395.
Makeen v. Selliah – (1956) 58 N.L.R. 231.
David Appuhamy v. Subraniam – (1953) 55 N. L.R. 397
Meera v. Jayawardene – (1956) 58 N.L.R. 159, 161.
APPEAL from judgment of the Court of Appeal.
H. L. de Silva, P.C. with S.C. Crosette Tambiah and K. Thevarajah fordefendant-respondent-appellant.
V. C. Gunatilleke, P C. with J. C. Boange for the substituted plaintiff-appellant-respondent.
Cur. adv. vult.
November 10, 1 986.
SHARVANANDA, C.J.
The plaintiff instituted this action on first April 1975 for the ejectmentof the defendant-appellant from premises No. 24/1, CollingwoodPlace, Wellawatte, on the ground of arrears of rent. The trial judgeheld that the appellant was not in arrears of rent and dismissed theaction. The plaintiff appealed to the Court of Appeal from thejudgment of the District Judge. Pending the appeal, the plaintiff diedand the present substituted plaintiff was substituted asplaintiff-appellant to the said appeal. The Court of Appeal by itsjudgment dated 16.11.1984 allowed the appeal. The defendant haswith the leave of this court, preferred this appeal to this court. As theappeal involved an important question of law relating to the sufficiencyof the notice to quit given in respect of which there appear to beconflicting judgments pronounced by the earlier Supreme Court, anorder was made under Article 132(3) of the Constitution that theappeal be heard by a Bench of five judges. Hence this appeal wasargued before a Bench of five judges.
Though this court at the time it granted leave restricted the leave tothe question of the validity of the notice to quit purported to be givenunder section 22(3) of the Rent Act No. 7 of 1972 and expressly ruledout the question whether the defendant, was entitled to set off the sumof Rs. 1,866.24 which represented rent paid in excess during a periodof three years prior to the defendant failing to pay rent – it beingcommon ground between the parties no rent was paid by thedefendant as from April 1973 – viz: for the period of thirty-six months,commencing April 1970, as this court was of the view, that AbdulCader, J. when he granted leave was in error in assuming that onlyexcess payments made three years prior to 28.4.1976, the date ofthe defendant's answer could be set off, the appellant was permittedto argue that the aforesaid sum of Rs. 1,866.24, should be taken intoaccount in ascertaining whether the defendant fell into arrears of rent.
The tenancy of the premises admittedly commenced on-1.12.1968. The finding of the trial judge was that the rent agreedupon by the parties and collected by the plaintiff was Rs. 200 permonth from the defendant and that the defendant had at thecommencement of the tenancy paid plaintiff Rs. 600 as advance rentfor three months. It is common ground that the appellant ceasedpayment of rent as from April 1973. The authorised rent for thepremises as determined by the Rent Board, was Rs.148.16 per'month. Hence, the defendant had overpaid a sum of Rs.51/84 permonth. According to the judgments reported in Wijemanne v.Fernando (1) Munidasa v. Appuhamy (2) and Sinniahpillai v. AbdulCader (3), the defendant was entitled to credit from plaintiff in a sumof Rs. 1,866.24, being the amount of excess rent paid by defendantfor the three years preceding April 1973, when he failed to pay rent.This sum was lying in the hands of the plaintiff to be set off against therent accruing from April 1973. I agree with these judgments that thereis an automatic set off. No argument was urged by Counsel for theplaintiff in support of the view of the law taken by Abdul Cader, J. Withall respect to Abdul Cader, J., on no principle of the law can it be heldthat the three years prescribed by the Prescription Ordinance shouldbe calculated from the date of the answer.
The plaintiff by letter dated 31.10.1974 gave the defendant noticeto quit the premises on or before 31.1.1975 on the ground that therent was in arrear from 1.7.73. This notice to quit was received bydefendant on 1.11.1974. After the notice to quit was received byhim, the defendant deposited on 3.12.74 as rent a sum of Rs.350 forOctober with the Colombo Municipal Council and continueddepositing the further accruing rents in respect of the premises foreach month in the Colombo Municipal Council. In her evidence givenon 12.9.78 the plaintiff stated:
"From November 1974 the defendant deposited at the RentBranch of the Colombo Municipal Council Rs. 148/16 being the rentfixed by the Rent Board. The last payment received by me from theMunicipal Council was Rs. 148/16 in respect of June 1978."
It was not disputed in this court that the standard rent of thepremises does not exceed one hundred rupees and that the rent wasto be paid on or before the last day of the month. In this backgroundthe relevant provisions of the Rent Act of 1972 that fall forconsideration are sections 22(1 )(a) and 22(3). These sectionsprovide as follows
Section 22(1) (a) –
"Notwithstanding anything in any other law, no action orproceedings for the ejectment of the tenant of any premises thestandard ren* (determined under section 4) of which for a monthdoes not exceed one hundred rupees shall be instituted in orentertained by any court, unless where –
the rent of such premises has been in arrear for three months ormore after it has become due, or. . . "
Section 2213)-
"Tne lancrord of any premises referred to in subsection (1)shall not be entitled to institute, or as the case may be, to proceedwith, any action or proceedings for the ejectment of the tenant ofsuch premises on the ground 'hat the rent of such premises hasbeen m arrear for three months or more . after it has becomedue –
if the iandlord has not given the tenant three months' notice ofthe termination of tenancy if it s on the first occasion on whichthe rent has been in arrear. two months' notice of thetermination of tenancy, if it is on the second occasion on whichthe rent has been in arrear and one month's notice of thetermination of tenancy if it is on the third or any subsequentoccasion on which the rent has been in arrear; or
if the tenant has prior to the institution of such action orproceedings tendered to the landlord all arrears of rent;
if the tenant has, on or before the date fixed in such summonsas is served on him, as the date on which he shall appear incourt in respect of such action or proceedings, tendered to thelandlord all arrears of rent."
In terms of section 22(1 )(a) read with section 22(3)(b) of the RentAct the condition precedent for proper institution of action on theground of arrears of rent is that the rent of such premises has been inarrear for three months or more after it has become due and thetenant has not prior to the institution of such action tendered allarrears of rent. The tender of all arrears prior to the institution of actioncures all default. An action for the ejectment of the tenant lies only if itis established that the rent of the premises has been in arrears forthree months or more after the rent has become due and the tenanthad not prior to the institution of action tendered all arrears of rent. Itis not sufficient for the tenant to have fallen into arrears for therequired period at some time during the currency of the tenancy orprior to the notice terminating the tenancy is given. It is imperative thatat the time of the filing of the action, the tenant should continue toremain in arrears of rent. If prior to the institution of the action thedefaulting tenant tenders all the arrears of rent no action for ejectmenton the ground of arrears of rent will lie.
Sri Lanka Law Reports
Section 22 (3) (a) bars institution of action on the ground of arrearsof rent, if the landlord has not given the tenant three months' notice oftermination of tenancy if it ;s on the first occasion cn which the renthas been in arrears.
Sect.on 22(3)(a) is a difficult provision to construe. U wassubmitted by sen.or counsel for the plaintiff that the word "occasion-appearing r sect.on 22 (3) (a) means nothing more than the number oftimes that the tenant gets into arrears. He pointed out that the sectionrefers to "occasion on which rent has been in arrear" and said that thesection does not stipulate "occasion on which action for ejectmentcould be instituted". He urged that the defendant-appellant wasundisputedly three months' in arrears, viz for the months of August,September and October 1974 when the notice to quit P1 was given,viz. 1.1 1.1974 and that in respect of the month of August he was inarrears on three occasions, i.e. 1st September. 1st October and 1stNovember and hence was entitled to only one month's notice in termsof section 22(3) (a)
I do not agree with the counsel's construction of the Dhrase'occasion on which the rent has been in arrear'
Section 22(3)(a) provides for the length of notice required toterminate the tenancy prior to action being instituted for the ejectmentof the tenant on the ground that the rent of the premises has been inarrears for three months or more or for one month, as the case may beafter it became due. In view of the provision in section 22 (3) (b) that ifthe tenant has prior to the institution of the action tendered to thelandlord all arrears of rent, the landlord would not be entitled toinstitute action for ejectment on the ground of arrears of rent, thenotice of termination of tenancy that was given will be renderednugatory and inoperative to terminate the tenancy and the tenancy willbe revived. Then the landlord will have to wait for another occasion onwhich the rent would fall in arrears for three months or one month asthe case may be to entitle him to sue for ejectment on the ground ofarrears. This would be the second occasion on which the rent wouldbe in arrears for the specified period of three months or one month. Itthe landlord wishes to avail himself of such default by the tenant, hewill have to give two months' notice of the termination of tenancypreliminary to instituting action for arrears of rent. If again, prior to theinstitution of action the tenant tenders to the landlord all arrears, thesecond notice to quit will be rendered nugatory and the tenancy will be
revived. In the event the landlord will have to wait for a third occasionwhen the tenant would fall into such arrears. On this third occasionand on any subsequent occasion the landlord need give only onemonth's notice of the termination of tenancy to enable him to instituteaction for ejectment on the said ground of arrears of rent.
In the instant case the defendant was in arrears of rent for themonths of August, September and October 1974, after it becamedue, on 1.11.1974 when the notice to quit P1 was delivered to thedefendant. This was the first occasion on which the tenant had falleninto arrears in terms of section 22(3) of the Rent Act and it wasobligatory on the plaintiff to serve three months' notice of terminationof tenancy to entitle him to institute action for ejectment on theground of arrears. In view of what I state later as the correct legalposition, the notice to quit (PI) appears to satisfy the requirement oflaw
It was held by a Divisional Bench of the last Supreme Court inMohideen v. Mohideen (4) that where a landlord institutes action forejectment of his tenant from premises to which the Rent RestrictionAct of 1 948 as amended by Act No 12 of 1966 applied, on theground of arrears of rent it was not necessary that the tenant shouldhave been in arrears of rent for the necessary period, at the time ofservice of notice.
For the purpose of the application of section 12A (1) (a) of theamended Rent Restriction Act (1948) a notice to quit was notrendered invalid by the fact that the tenant was not m arrears of rentfor three months or more on the date of giv:ng of the notice Butsection 22(3) of the Rent Act of 1972 has altered the law r tcrrs ofthis action, notice of termination of the tenancy in order to I:a va^d r.?rbe given only after the tenant had been in arrears for the requisiteperiod and not beforehand. Hence under the present law, advantagecannot be taken of an earlier termination of tenancy by notice to quit ata time when the tenant was not in arrears of rent for the requiredperiod, to institute an action under section 22(1) of the Rent Act of1972 for ejectment on the ground of arrears of rent. In the presentcase, when the notice to quit P1 was given on 1.11.1974 thedefendant was admittedly in arrears of rent for August, Septemberand October 1974 and was in arrears of the August rent for threemonths.
Counsel for the defendant conceded that after giving credit for theexcess rent of Rs. 1,866/24 and the sum of Rs. 600 paid on accountof three months rent m advance the defendant was in arrears of rentfor August 19 74 on 1 st September. Hence when P1 was delivered tothe defendant on 1 11 74 the defendant was in arrears of rent forAugust for three months after it became due. Hence, subject to thefurther submission of counsel for 'he defendant-appellant, referred tobelow, the notice P1 satisfies the requirements of section 22 (3) (a) ofthe Rent Act that three months notice of termination of tenancy wasgiven on the basis that it was the first occasion on which thedefendant had been in arrears
The plaintiff's attack on the validity of the notice to quit (P1) isbased on the allegation that P1 reached the defendant on 1.11.74when a new monthly tenancy had already conceptually commencedon the midnight of 31.10.1974—1 1 1.1974 and that on31.10.1974, the date of the notice to quit P1, the defendant was notin arrears of rent for three months after it had become due. This lastcontention fails as the relevant date of the notice to be taken intoconsideration is 1.11.1974 when the notice was delivered to thedefendant. On 1.11.1 974 the defendant was admittedly in arrears ofthe August rent for three months after it became due. The notice P1cannot be attacked on ground that it does not satisfy the requirementof three months' arrears, specified by section 22 (3) (a) of the RentAct. In my view the notice to quit P1 conforms to the requirement ofsection 22(3) of the Rent Act.
The sufficiency of P1 was challenged mainly the ground that thetenancy in suit was tacitly renewed at midnight of 31.10.1974 andtherefore the three months notice given on 1.1 1.1974 would haveexpired at midnight of the 1st day of February, 1975, hence, thenotice to quit terminating the tenancy on 31.1.1975 was alleged tobe bad in law.
The Court of Appeal has held that the trial judge erred in law inholding that the notice to quit received by defendant on 1.11.1 974requesting the defendant to quit on 31.1.1975 did not give threemonths' notice to quit.
The Court of Appeal in reaching that conclusion has followed thejudgment in Harvffa v. Sellamuttu (5). It however, has failed to noticethe vital distinction between the notice in issue in Haniffa's case(supra) (5) and notice P1 in this case. The notice in Haniffa's case(supra) (5) dated 27 8 1964 required the tenant to quit on or beforethe first day of December, 1964. But in this case the notice P1 wasgiven on 1.11.1974 requesting the defendant to quit on or before31.1.1975. In one the date of termination of tenancy by the notice toquit was the first day of the following month while in the other the dateof commencement of the operation of the notice to quit P1 waschallenged on the ground that at the relevant time, a new monthlytenancy had come into existence. It was correctly held in Hantffa'scase (supra) (5) that the monthly tenancy commencing on the first dayof a month and ending on the last day of a calendar month couldvalidly be terminated by a notice terminating the tenancy on the firstday of the following month. It overruled the earlier decisions in Ismail v.Sheriff (6) and Robert v. Fernando (7), that the requisite notice to quitdid not terminate at the end of a current month of the tenancy. Itdisapproved the process of reasoning of Alles, J., that a notice datedMay 11,1963 requiring the tenant to quit on July 1, 1963 was badfor the reason that "at midnight a new tenancy on the same terms andconditions would have commenced which would expire at midnight on31.7.1963." It quoted with approval the rule of interpretationformulated by Lindley, L.J., in Sidebotham v. Holland (8).
"The validity of a notice to quit ought not to turn on the splitting ofa straw. Moreover if hypercriticisms are to be indulged in, a noticeto quit at the first moment of the anniversary ought to be just asgood as a notice to quit on the last moment of the day before. Butsuch subtleties ought to be and are disregarded as out of place."
In Crate v. Miller (9), Somervill, L. J., delivering the judgment of theCourt of Appeal, appositely said:
"As a matter of language a notice terminating a tenancy on thelast day of a current period may, fairly be said to mean the samething as a notice to quit and deliver up possession on the followingday, for in both cases the landlord is intimating that the last day ofthe current period is to be the last day of the tenancy According tothis view, where a tenancy had commenced on 1st April and thetenant is given notice to quit on 1st December, the notice is a validone. It does not matter whether the notice received by the tenant on1 st November requires him to quit the premises on 30th Novemberor on 1st December. The intention of the party giving notice is clear."
The question in issue in the present case is whether the notice P1which was received by the defendant on 1.11.1974 requesting him toquit on or before 31.1.75 satisfied the requirement of law stipulatingthree months notice of termination of tenancy.
Sn Lanka Law Reports
In the present case the tenancy commenced on 1st December1 968 and ran from month to month until it was terminated by amonth's notice, expiring at the end of a month. It is said in Wille on"Landlord and Tenant" 4th ed. at page 42 that-
"The essence of such a tenancy (monthly tenancy) under thecommon law, is that it continues for successive periods until it isterminated by notice, given by either party."
This concept of monthly tenancy was adopted in Fernando v. DeSilva (10), by Manicavasagar, J., (with H. N. G. Fernando, C. J.,agreeing) in preference to the view of Basnayake, C. J., expressed inAbdul Hafeel v. Muttu Bathool (11 )-
"In a monthly tenancy, the lease is tacitly renewed on the first dayof each month by the lessor not indicating to the tenant before theday that he wants to terminate the lease and the lessee remaining inthe house without notifying the lessor that he proposes to quit."
As Manicavasagar, J., observed the citation from Voet (Book XIX2.9 and 10) and the Censura Forensis (iv.xxii 14) to which referencewas made by Basnayake, C. J., in support of his view of the nature ofmonthly tenancy referred to a case of a lease for a definite period-andnot to monthly tenancy-when after the expiry of the period of thelease, the lessee continues in the enjoyment of that which was let andthe lessor permits him to do so. If on the expiration of the term of alease, the lessee does not vacate or restore to the lessor the propertyleased but remains in occupation thereof, without objection by thelessor, a fresh lease or tacit relocation of the property on the sameterms as the expired lease is presumed to have been entered intobetween the lessor and lessee. Such relocation is not a continuation ofthe old lease but is a new lease formed by fresh tacit agreement of theparties, which succeeds to the previous lease.
I agree with the judgment in Fernando v. De Silva (supra) (10) thata monthly tenancy does not terminate at the end of the month andthat is not tacitly renewed from month to month. "A monthly tenancyis a periodic tenancy, it is a tenancy which by agreement between theparties runs from month to month and is terminated by a month’snotice," per T. S. Fernando, J., in Ftaniffa v. Sellamuthu (supra) (5).
Counsel for the defendant-appellant contended that the notice P1which reached the defendant on 1.11.1974 requiring the defendantto quit on or before 31.1.1975 was not a valid three months noticeof the termination of tenancy in terms of section 22(3)(a) of the RentAct. According to him at midnight of 31st October 1974, a newtenancy on the same terms and conditions would have, prior to thereceipt of the notice P1 by the defendant, commenced which wouldexpire on 30.11.1974 and hence the said notice which could beoperative only from 1.12.1974 would not be a three months notice oftermination of tenancy. This argument is based on the conceptreferred to above that a monthly tenancy comes to an end at the endof the calendar month but is tacitly renewed on the first day of eachmonth-the tenancy stood terminatd on the midnight of 31st Octoberbut was tacitly renewed as a new tenancy operative from 12.00 a.m.of 1.11.1974 and the notice P1 which was served on the defendantduring the day of 1.11.1974 was too late to hinder the Novembertenancy from coming into existence. I do not agree with thissubmission. As explained above the contract was a letting for anindefinite period running from month to month and terminable byeither party by due notice. That being so no question of tacit relocationarises. The parties contemplated that the tenancy should remain inforce until duly terminated by reasonable notice. In the absence of anagreement as to the length of a notice, reasonable notice in the caseof a monthly tenancy has come to mean a month's notice given so asto expire at the end of a month. Therefore a monthly tenancy isterminable upon a month's notice expiring at the end of the period.The dispute in the present case is as to the computation of the threemonths time. Can a period, which begins during the currency of thefirst day and ends at midnight of the last day be properly described asa full month? The question must be answered in the affirmative on thecivil mode of calculation which reckons a whole day as one point oftime. It was held specifically in the South African case of Tiopaizi v.Bulaway Municipality (12) that a month's notice may be given at anytime on the first day of the month expiring at the end of the month. Onthe basis of this judgment. Wide states the law as follows:
"If the tenancy commence on the first day of a calendar month, themonth’s notice may be given at any time on the first day of asubsequent month and is effective to terminate the lease at the endof that month-" Landlord and Tenant-4th Ed. at page 42.
In Sri Lanka too, it has been held that notice of termination oftenancy given on the first day of the month in which the tenancy is toterminate is sufficient notice-vide Sahul Hamid v. De Silva (13).
On the other hand Withers, J.. had held in Fonseka v Jayawickrama(14) that a notice dated 1 st August 189?. requiring the tenant-
"To quit the premises on, the 31 st instant was insufficient notice,on the ground that a notice to quit must be given before thecommencement of the month at the expiry of which the tenancy isto determine so that the party noticed shall have from midnight ofthe last day of the month immediately preceding the month at theend of which the tenancy is determined by the notice to midnightlast day of the expiring month of the tenancy as thus determined forthe purpose of making fresh arrangements.
This case was followed in Thassim v. Cabeen (1 5) where it was heldthat a letter sent by the landlord asking the tenant to quit at the end ofDecember was not sufficient notice if it was posted on November 30but reached him on December first.
In this conflict of decisions I would prefer to follow the law laid downin the South African case of Tiopaizi v. Bulaway Municipality (supra)(12) that—
"A month's notice may be given at any time on the first day of themonth and such a notice covers the entire month especially as it is inaccordance with the civil mode of calculation. By that method thereckoning is ad dies; no account is taken of broken units; the wholeof the first day is excluded and the whole of the last day is excluded,so that a calendar month reckoned from any moment on the 1stDecember would terminate at midnight on the 31st." per Innes,C.J., at 321.
The civil computation of time reckons a whole day as one point oftime-Per Villiers, J at 326. Therefore I hold that the notice to quit P1is a sufficient and valid notice satisfying the requirements of section22(3) (a) of the Rent Act.
Counsel for the plaintiff contended that in the computation ofarrears due, the sum of Rs 600 admittedly paid by defendant toplaintiff as advance of rent for three months should not be taken intoaccount He submitted that this advance of Rs 600 was not availableto be set off against arrears of rent whilst the tenancy subsisted. Hesaid that it was no doubt a sum due to the tenant to be settled on thedetermination of the tenancy. He referred to Kanapathi Pillai v.Dharmadasa, (16) in support of his submission. In that caseBasnayake, C. J., observed, in relation to the facts of that case:
"In the absence of an express agreement to the confary it mayproperly be inferred from the course of conduct between the partiesfor the thirteen years of the tenancy that it was an implied term ofcontract that the rent deposited in advance was to be retained as adeposit by the landlord while the tenancy subsisted and that it didnot relieve the tenant of the obligation to pay the rent on the duedate."
In view of the fact that in that case, counsel for, the defendant tenantadmitted, that even if the advance, held by the plaintiff landlord, wasutilised against the rent payable for the three months of February,March, and April 1957 (for which months the defendant was indefault) he was unable to maintain in view of the decision inSamaraweera v. Ranasmghe, (17) that the rent had not been in arrearsfor one month after it had become due. as the defendant has not paidany rent for the following months and the action was not instituted tillJanuary 1958. In Samaraweera v. Ranasmghe (supra) (17) it was heldthat a monthly tenant should continue to pay rents even after thecontract of tenancy had been determined by notice to quit and that ifhe failed to do so, proceedings for ejectment could validly be institutedif the rent was in arrears at any time thereafter for one month after itbecame due in terms of section 13(1) of the Rent Restriction Act of1 948. In view of the stance of counsel for the defendant-tenant in thatcase, and of the course of conduct between the parties (KanapathiPillai v. Dharmadasa (supra) (16) cannot be treated as an authority forthe proposition that it is an implied term of the contract that rent paidas an advance should not be set off against arrears of rent falling dueduring the subsistence of the tenancy. Counsel referred to Makeen v.Selliah (18) as further supporting his proposition. In that case,however it was an express term of the agreement of patties that thesum deposited by the tenant was to be taken as rent for the last twomonths "on the determination of the tenancy by consent or by processof law " Here, the agreement provided for the manner of theapplication of. the deposit and hence it was correctly held that thelandlord was not bound without a request from the tenant in thatbehalf to apply the sum deposited in satisfaction of unpaid rent. In my
view, money paid as an advance of rent represents money in thehands of the landlord as debt owing to the tenant, to be set off againstarrears of rent that may fall due even without a request by the tenant inthat behalf. But, if there is an express agreement between the partiesabout the application of the advance rent or deposit such agreementidentifies the happening and manner in which the said money may beaccounted for, Pulle J., in David Appuhamy v. Subramaniam (19),brings out in relief this distinction between ordinary advance and adeposit where there is express agreement how it is to be accountedfor. In that case, the tenant paid to the landlord two months rent inadvance and also deposited a sum of Rs. 500 on the agreement thatthe deposit was to be held by the landlord and paid back to the tenanton the termination of the tenancy. In an action for ejectment on theground of the defendant being in arrears, the trial judge held that thetenant was not in arrears because the advance for two monthstogether with the deposit of Rs. 500 was well within the sum requiredto liquidate the alleged arrears of rent. In appeal, Pulle J., held that thetrial judge:
"Was wrong in setting off the rent as it fell due each month after30th April 1951 (when the tenant defaulted in paying rent) againstthe deposit held by the landlord. There was no extinguishment ofthe obligation to pay rent as it fell due because the holding of thedeposit by the landlord to be returned in terms of the tenancyagreement did not constitute a debt which could be set off againstthe rent."
It is to be noted that Pulle, J. did not fault the trial judge for setting offthe rent paid in advance against the arrears of rent. This holdingsupports my view that as distinguished from money deposited to bereturned to the tenant on the happening of some event, rent paid inadvance and lying in the hands of the landlord at the time the tenantfalls into arrears is a debt owing to the tenant by the landlord to be setoff against arrears of rent if any, without even a request from thedefaulting tenant.
T S. Fernando, J., in Meera v. Jayawardena (20), referred withapproval to this distinction drawn by Pulle, J., between rent in advanceand the deposit of money. I agree with counsel for the defendant inthis case that the sum of Rs. 600 representing rent in advance paid bythe defendant would automatically go to liquidate the arrears of rentfalling due from April 1975 and that the defendant is entitled to thecredit of the said Rs. 600 in the computation of the arrears of rent.
Thus the excess rent of Rs. 1866/24 and the three months'advance rent of Rs. 600 aggregating Rs 2,466.24 will have to becredited to the defendant in the process of ascertaining from whatdate he was in arrears. It is common ground that defendant stoppedpaying the rent of Rs 148.16 after March 1973. The sum of Rs.
will cover rent for a period of sixteen months and will leavea balance of Rs. 95.68 to the credit of the defendant. On thiscomputation after setting the sum of Rs. 2,370.36 out of Rs.
against the arrears of rent up to end of July 1974, thedefendant remained in arrears of rent for August 1974 on Septemberfirst. Thus the August rent was in arrears for three months on 1 stNovember 1974, after it became due (the rent being payable at theend of each month) The plaintiff was thereafter entitled on 1stNovember 1974 to give the defendant three months notice oftermination of tenancy, in terms of the provisions of section 22(3) ofthe Rent Act. I agree with counsel for plaintiff that the notice to quit P1given by the plaintiff on 1.1 1.1 974 was a sufficient and valid noticeunder section 22(3) (a) to terminate the tenancy by the end of January1975. But a valid termination of tenancy in terms of section 22(3) (a)of the Rent Act is only one condition to entitle the plaintiff to instituteaction for ejectment: section 22(3)(b) provides that action forejectment on the ground of arrears of rent cannot be instituted if thetenant has prior to the institution of such action tendered to thelandlord all arrears of rent. If credit is given to defendant for moneys ofdefendant in the hands of the plaintiff prior to the institution of thisaction the defendant appears to have accounted for all arrears of rentand no rent was in arrears
It is in evidence that the defendant had deposited on 3.12.1 974 asum of Rs. 350 on account of rent for October 1974 to the credit ofthe plaintiff in the Municipal Council. The defendant has, according toplaintiff's admission deposited the November 1974 rent andsubsequent rents in the Municipality and no complaint is made by theplaintiff that on 1.4.1975 when this action was instituted, defendantwas in arrears of rent in respect of these months. Then the plaintiff cansucceed in this action only if the rents for August and September1974 aggregating to Rs. 296.32 remained in arrears at the time ofthe institution of this action. Credit has to be given to the plaintiff for
the sum of Rs. 201.84 which was the amount of excess deposit bythe defendant in the Municipal Council (Rs. 350-148.16) on accountof October rent, and the sum of Rs. 95.68 representing the balanceout of the excess sum of Rs. 2,466.24 after setting off the sum of Rs.2,370.56 on account of arrears of rent for the sixteen months endingin July 1974. Hence a sum of Rs. 297.52 made up of the aforesaidsums of Rs. 201.84 and Rs. 95.68 was in the hands of plaintiff to thecredit of defendant available for set off against the sum of Rs. 296.32representing the rents for August and September 1974, which wasmore than sufficient for the liquidation of Rs. 296.32 (rents for Augustand September). On this computation the defendant has accountedfor all arrears of rent and was not in arrears of rent in respect of anymonth at the time of the institution of action, to entitle plaintiff toinstitute action for ejectment of the defendant on the ground ofarrears of rent for three months after it became due.
I allow the appeal of the defendant-appellant, set aside thejudgment of the Court of Appeal and dismiss the plaintiff's action withcosts in this court, the Court of Appeal and in the District Court.
ATUKORALE, J.-l agree.
TAMBIAH, J.-l agree.
L. H. DE ALWIS, J.-l agree.
RANASINGHE, J.
Although, with respect, I find myself unable to agree with the viewexpressed by My Lord the Chief Justice that "when P1 was deliveredto the defendant on 1.11.1974 the defendant was in arrears of rentfor August, September and October 1974 for three months after itbecame duo". I however concur, with respect, with the vow that thedefendant "was not in arrears of rent in respect of any month at thetime of the institution of the action " I too agree that this appeal beallowed, and the plaintiff's action be dismissed with costs, both hereand below
Appeal allowed