023-NLR-NLR-V-47-WIJEMANNE-CO.-LTD-Appellant-and-FERNANDO-Respondent.pdf
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80ERTSZ S.P.J.— Wijetrtanne <b Co., Lid., v. Fernando.
1946Present : Soertsz S.P.J. and Cannon J.
WIJEMANNE & CO., LTD., Appellant, and FERNANDO,Respondent.
223—D. C. Colombo, 15,540.
Landlord's action for ejectment—Alternative accommodation for tenant—Agreement by tenant to pay rent in excess of standard rent—Validity of—Computation of standard rent—-Overpaid rent extinguishes, pro tan to,rent due—Rent Restriction Ordinance, No. GO of 1942, ss. 5 (2) (b), 8, 17.Suitable alternative accommodation for the tenant is a question ofimportance and has to be taken into account when considering whether,under section 8 of the Rent Restriction Ordinance, premises are“ reasonably required ” for the landlord.
Section 17 of the Rent Restriction Ordinance does not enable a landlordto recover a rental above the standard rental even although the tenantundertook to pay it.
Where the tenancy is one in which the landlord pays the rates thestandard rent has to be determined in the manner provided by section5(1) (b), that is to say, by adding the annual value and the amount ofrates leviable for the year and dividing the result by twelve.
In regard to computing whether a tenant is in arrear with his rent forone month, any sum in the hands of the landlord overpaid as rentextinguishes pro tanto the rent due.
PPEAL from a judgment of the District Judge of Colombo.
H. V. Perera, K.C. (with him H. W. Jayawardene), for the defendant,appellant.
A. Rajapakse, K.C. (with him E. B. Wikramanayake), for theplaintiff, respondent.
Cur. adv. wit.
February 25, 1946. Soertsz S.P.J.—
The respondent to this appeal sued the appellant to recover rent forthe month of March, 1944, in respect of the premises bearing assessmentNo. 26, Bagatelle road, which he had let to the appellant on a contractof monthly tenancy, and he also asked for ejectment, and for damageson the ground that the appellant was overholding the premises after thetenancy had been duly determined by notice. In view of the RentRestriction Ordinance, No. 60 of 1942, he pleaded that he required thesepremises as a residence for himself and that the rent had been in arrearfor one month after it had become due. The appellant filed answeradmitting that he had received notice to quit, alleging that there hadbeen no demand made by the respondent for the rent for the month ofMarch implying that, in the absence of such a demand, his failure to paythe rent for that month was not legally imputable to him. He prayed
SOERTSZ S.P.J.—Wijemanne eft Co., Ltd., v. Fernando.
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that the respondent’s action be dismissed. But, when the case came upfor trial, issues were framed raising not only the questions involvedin the pleadings, but other questions as well, for instance the questions—what the standard rent for these premises is ; whether the respondenthad been in receipt of a rental in excess of the standard rent; andwhether, taking the overpayment into account, the appellant could besaid to have been in arrear with the rent for March, 1944. In the courseof the final address made by the respondent’s Co tinsel, he appears to havemade a further submission in which he contended that because the rentcharged was charged in accordance with a written agreement betweenhis client and the appellant, his client was protected by section 17 of theOrdinance.
In the judgment delivered by the learned trial Judge, he said that ifhe had to answer the question whether, in all the circumstances of thecase, the respondent “ reasonably required ” the premises for occupationas a residence for himself, on the evidence before him he would have heldin favour of the appellant as “ his necessity was perhaps greater than thatof the plaintiff ”. Counsel for the respondent asked us to reverse thatfinding and to hold that, in all the circumstances, the respondent“ reasonably required ” the premises. I do not think we ought to accedeto that request. This question of reasonableness has to be consideredand determined in view of the relative difficulties of the landlord and ofthe tenant in regard to the acute disproportion between supply anddemand in the matter of housing accommodation today and for thatreason, suitable alternative accommodation is a question of importanceand has to be taken into account. The evidence in this case shows thatthese premises were taken on rent by the appellant for conducting atutorial academy, and for that purpose laboratories for scientific workwere installed at a fairly high cost. It would be very difficult indeed,under the conditions prevailing at the date of this action, for theappellant to find suitable alternative accommodation. I am, therefore,of the opinion that the trial Judge was right when he said that theappellant’s necessity was greater than the respondent’s and we shouldnot disturb that finding, although it may be said to have been madeobiter.
The grounds on which the trial Judge found for the respondent were :{a) that in view of the written agreement (P 4) by which the appellantundertook to pay a rental above the standard rental, the respondent wasentitled in virtue of section 17 to recover that rental; (6) that, on thatbasis, the appellant was in arrear with his rent for the month of March.In regard to (a), the view taken by the trial Judge appears to me to bequite untenable. Section 17 enacts that “ Nothing in this Ordinanceshall be deemed to authorise any increase of the rent of any premisesotherwise than in accordance with the terms of' any lawful agreementrelating to the tenancy of those premises or with the provisions of anylaw applicable in that behalf ”. The reasoning by which the trial Judgereached his conclusion is clearly fallacious in as much as it ignores thefact that it is not merely a voluntary agreement to pay an increased rentthat justifies the payment of such a rent by one party and-the receipt of it
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SOERTSZ S.P.J.—Wijemanne <£,• C'o., Lid., v. Fernando.
by the other, but a voluntary as well as lawful agreement. But section 3provides that “ It shall not be lawful for the landlord …. todemand, -receive, or recover …. any amount in excess of theauthorised rent”, and section 14 penalises the breach of that requirement.If I may say so, the view taken by the Judge, if given effect to, wouldresult, as he himself appears to have appreciated, in a reductio adabaurdum of the whole Ordinance. It is not in dispute between theparties that the rent received and recovered is in excess of the authorisedrent.
In regard to (6), the learned Judge, has found that assuming over-pay-ments during the relevant period, the total sum resulting from those over-payments was not sufficient to make good the rent due for March, 1944,and that, therefore, the appellant must be held to have been in arrearwith his rent and, in that way, liable to be ejected in accordance withsection 8 of the Ordinance. Here again there is a fallacy in the reasoningof the learned Judge. In this case, the tenancy was one in which thelandlord paid the rates, and for that reason, the standard rent has to bedetermined in the manner provided by section 5 (1) (b), that is to say,by adding the annual value and the amount of rates leviable for the yearand dividing the result by twelve. The learned Judge, however, appearsto have divided the result by ten evidently misled by the fact that theannual value represents the monthly rental multiplied by ten. If he hadaddressed himself to the calculation in the manner provided by section5 (1) (6) he could not but have found that there was in the hands of therespondent, by way of payments in excess of the authorised rent, anamount larger than the recoverable rent for March. In other words,he would have found that it could not be said, having regard to theprovisions of the Rent Restriction Ordinance, that the appellant was inarrear with his rent for March at the date of the institution of this action.Counsel for the respondent, however, if I may say so without intendingany offence at all, sought to surmount this difficulty by juggling withwords. He submitted that the appellant had not pleaded a set off or acounter claim and was, consequently, debarred from asking that theoverpaid amount he applied in payment of the rent for March. Butthe answer to that is that the overpaid amount in the hands of therespondent overpaid as rent, and not for any other purpose, extinguishedpro tanto by operation of law, the rent as it fell due. In other words thelaw secured for the appellant what, in other circumstances, the appellantwould have had to achieve for himself.
For these reasons the appeal must be allowed and the plaintiff’s actiondismissed. Ordinarily, costs follow the event, but in the specialcircumstances of this case, I am of the opinion that we should departfrom that rule and make no order for costs either here or below.
Cannon J.—I agree.
Appeal allowed.