Wijesundera v. Neela Wickremasinghe
COURT OF APPEALWEERASURIYA, J. (P/CA) ANDDISSANAYAKE, J.
CA NO. 158/94 (F)
DC PANADURA NO. 2410/SplNOVEMBER 02, 2000DECEMBER 01, 2000JANUARY 06, 2001FEBRUARY 23, 2001APRIL 02, 2001MAY 02 and 28, 2001JUNE 29, 2001JULY 25, 2001OCTOBER 01, 2001
Trust Ordinance – Constructive Trust s. 84 – Ingredients – Transfer Mortgageto Bank same day – Who paid the loan instalments? – Vital issue.
The plaintiff-respondent instituted action seeking a declaration that the defendant-appellant was holding the property in trust for the plaintiff-respondent. The defendant-appellant denied the said contention and sought a declaration that he is the owner.It was the position of the plaintiff-respondent, that the property was purchasedin the name of the defendant-appellant, and on the same day, it was mortgagedto the Bank and the plaintiff-respondent provided the money to the defendant-appellant to pay the instalments to the Bank.
The District Court held with the plaintiff-respondent. On appeal it was contendedthat it was the defendant-appellant who had paid the instalments, to the Bank.
(1) Under s. 84, the plaintiff-respondent in order to succeed has to establish
that the consideration was paid or provided by the plaintiff-respondent,though that property was transferred in the name of the defendant-appellant
that the plaintiff- respondent did not intend to pay or provide suchconsideration for the benefit of the defendant-appellant.
Sri Lanka Law Reports
 2 Sri L.R.
On the material available, it is difficult to reject the position that it wasthe defendant-appellant who had paid the instalments in respect of theloan secured by way of mortgage to the Bank.
The plaintiff-respondent failed to produce a single receipt relating to thepayment of loan instalments from the commencement of payment. All thereceipts were in the defendant-appellant’s name. Even the advance paymentsto the seller had been affected jointly.
APPEAL from the judgment of the District Court of Panadura.
Rohan Sahabandu for the defendant-appellant.
Faiz Musthapa, PC with Hemasiri Witanachchi for plaintiff-respondent.
Cur. adv. vult.
July 01, 2002
WEERASURIYA, J. (P/CA)
The plaintiff-respondent brought this action against the defendant-appellant seeking, inter alia, a declaration that the defendant-appellantwas holding the allotment of land described in Schedule B to the plaintand depicted in plan No. 2500A, dated 11. 12. 1962, in trust for theplaintiff-respondent.
the defendant-appellant in his answer whilst praying for dismissalof the action sought a declaration that he is the owner of the allotmentof land described in the Schedule B to the plaint.
This case proceeded to trial on 13 issues and at the conclusionof the case, learned District Judge by her judgment dated 28. 01.1994, entered judgment for the plaintiff as prayed in the plaint. Thisappeal is from the aforesaid judgment.
Wijesundera v. Neela Wickramasinghe (Weerasuriya, J.)
At the hearing of this appeal, learned Counsel for the defendant-appellant contended that learned District Judge has erred by failingto focus her mind on issues that are relevant on the question whethera trust has been created in favour of the plaintiff-respondent.
The case of the plaintiff-respondent was presented in the DistrictCourt on the following basis :
that the plaintiff-respondent got married to the defendant-
appellant on 28. 01. 1980 after a long period of courtshipand in or about 1978 the plaintiff-respondent madearrangements to purchase lot No. 8 together with lot No. 13for a sum of Rs. 40,000 from Uparis;
that as an advance payment, the plaintiff-respondent paida sum of Rs. 2,000 on 03. 04. 1978 and another sum ofRs. 6,000 on 06. 04. 1978 to Uparis;
that lot No. 13 was purchased in the name of the plaintiff-respondent by deed bearing No. 1340, dated 06. 04. 1978;
that on the same day lot No. 13 was mortgaged to theNational Savings Bank by indenture No. 126, for a sum ofRs. 3,700;
that lot No. 8 was purchased by the plaintiff-respondent inthe name of the defendant-appellant on deed of conveyanceNo. 1341, dated 06. 04. 1978 and on the same day, it wasmortgaged to the National Savings Bank for Rs. 20,000 byindenture No. 127;
(/) that Rs. 1,300 was paid to Uparis by the plaintiff-respondentat the time of the execution of the deed No. 1340 andRs. 5,000 was paid to Uparis by the plaintiff-respondent at
the time of execution of deed No 1341;
Sri Lanka Law Reports
 2 Sri L.R.
that the plaintiff-respondent took over possession of bothallotments upon the execution of both deeds and continuedto possess them;
that the plaintiff-respondent had provided money to thedefendant-appellant to pay the instalments due to the NationalSavings Bank;
(/) that the plaintff-respondent had effected improvements to thehouse standing on lot 8 to the value of Rs. 80,000.
0) that the defendant-appellant had refused to accept moneyfrom the plaintiff-respondent to pay the loan instalments due 50to National Savings Bank with an intention to defraud her.
The case of the defendant-appellant was presented in the DistrictCourt as follows :
that at the time of purchase of the said property, Rs. 5,000was paid by the defendant-appellant and the loan ofRs. 20,000 was raised by him on mortgage of that property.
that the defendant-appellant had permitted the plaintiff-respondent and the members of her family to reside in thesaid house;
that the defendant-appellant after marriage resided in the said 60house and on 17. 03. 1981, he left this house having fallenout with the plaintiff-respondent;
that the loan instalments were paid by the defendant-appellantfrom his own funds;
that the construction of the bathroom, toilet, upstair room andparapet wall was carried out by the defendant-appellant.
Wijesundera v. Neela Wickremasinghe (Weerasuriya, J.)
It is apparent that the plaintiff-respondent sought to establish aconstructive trust falling within the scope of the provisions of section84 of the Trust Ordinance which reads as follows :
”84 – Where property is transferred to one person for a 70consideration paid or provided by another person and it appearsthat such person did not intend to pay or provide such considerationfor the benefit of the transferee the transferee must hold theproperty for the benefit of the person paying or providing theconsideration.”
On the basis of the above provisions, the plaintiff-respondent inorder to succeed in her action has to establish the following elements :
that the consideration was paid or provided by the plaintiff-respondent though the property was transferred in the name
of the defendant-appellant.so
that the plaintiff-respondent did not intend to pay or providesuch consideration for the benefit of the defendant-appellant.
It was not in dispute that the need for a house was on the plaintiff-respondent, who was living with the members of her family in arelative’s house. The defendant-appellant conceded that the plaintiff-respondent was prompting him to buy a house and initial discussionswith the seller Uparis had been done by the plaintiff-respondent. Itwas revealed that the plaintiff-respondent had the intention to purchaseboth lot No. 8 and lot No. 13 which were contiguous lands as oneentity. However, the position of the defendant-appellant was that he 90too wanted to buy the entire property for both of them. The needfor a bank loan has arisen since the seller Uparis desired to disposeof both lots together, and the arrangement of the bank loan had beenfacilitated due to the initiative taken by the plaintiff-respondent. Theplaintiff-respondent sought to assert that portion of the considerationwhich could not be met by her own funds, was arranged through thebank by her and the defendant-appellant was only a passive participantwho lent his name to the loan application.
Sri Lanka Law Reports
 2 Sri L.R.
The plaintiff-respondent placed the following facts to buttress herclaim that she and she alone was interested in buying the propertyand that every aspect of the matter was attended to by her to securethat objective :
that it was the uncontroverted testimony of Mr. Mathew,Notary, that it was the plaintiff-respondent who came to hisoffice accompanied by her sister;
that the two allotments of the land were not physically dividedon the ground,-
that after execution of the deeds the vendor Uparis handedover the keys to the plaintiff-respondent in the presence ofall parties;
that the plaintiff-respondent and members of her family wentinto occupation of the house on the day following the executionof the deed.
It was not in dispute that the plaintiff-respondent and the defendant-appellant were planning to have a house of their own. Therefore, itwould be natural for the plaintiff-respondent during the period ofcourtship to take the initiative to look for a land and to take stepsto buy a house by way of arranging loan facilities.
However, the crucial question to be examined is the manner inwhich loan instalments in respect of the mortgage bond bearingNo. 127, dated 06. 04. 1978 were paid.
The plaintiff-respondent sought to assert that she provided themoney to the defendant-appellant to pay the loan instalments and thedefendant-appellant with the intention to defraud her, refused to acceptmoney in 1982.
To examine this question, it is necessary to consider the relationshipthat persisted between the plaintiff-respondent and the defendant-
CAWijesundera v. Neela Wickremasinghe (Weerasuriya, J.)313
appellant during the period of the execution of the mortgage bondand thereafter. It is common ground that from 1967 the plaintiff-
respondent and the defendant-appellant were in love aspiring to getmarried. The disputed mortgage bond was entered into as evidentfrom the said bond on 06. 04. 1978. The parties got married in 1980and the separation occurred in 1981. Thus, the marrige was confinedto the period between 1980 to 1981.
Therefore, on the assertion of the plaintiff-respbndent, the periodwithin which she alleged that she provided the money for the paymentof loan instalments has to be identified as the period from 1978 toMay, 1981. Thus, there cannot be a dispute on the fact that fromMay, 1981, upto redemption of the mortgage bond, the defendant-appellant has paid the loan instalments.
Nevertheless, the plaintiff-respondent failed to produce a singlereceipt relating to the payment of loan instalments from thecommencement of payment in 1978. All the receipts which wereproduced by the defendant-appellant were in his name. If in fact, theplaintiff-respondent was paying the loan instalments, it is surprisingthat she has not taken the initiative to secure the receipts relatingto such payments.
It is significant that even advance payments to Uparis reflectedin documents P1 and P2 had been effected jointly by the plaintiff-respondent and the defendant-appellant.
Therefore, on the material available, it is difficult to rejectthe position that it was the defendant-appellant who had paid theinstalments in respect of the loan secured by way of mortgage oflot 8 to the National Savings Bank by identure bearing No. 127,dated 06. 04. 1978.
In terms of section 84 of the Trust Ordinance what is vital is toascertain whether the consideration was paid or provided by a personother than a transferee. It is clear that Rs. 20,000 was paid to Uparisby mortgaing the property to the National Savings Bank and the moneyso obtained was paid to Uparis, transferor. Therefore, there was no
Sri Lanka Law Reports
[20021 2 Sri L.R.
question that consideration was paid or provided by the palintiff-respondent. The money having being secured by a mortgage to theNational Savings Bank and the redemption of bond being theresponsibility of the defendant-appellant by use of his resources, theintention of the plaintiff-respondent in respect of the transaction hasno relevance.
On the material available, it is not justifiable to conclude that onlythe plaintiff-respondent was interested in securing this property, albeitit was a joint effort by the plaintiff-respondent and the defendant-appellant to secure a home to settle down presumably after marriage. 170
The fact that the loan facility was obtained due to active participationof the plaintiff-respondent is not sufficient to satisfy the requirementsnecessary for a constructive trust in terms of section 84 of the TrustOrdinance.
Learned District Judge has failed to consider the crucial issues inthis case. She has failed to consider the applicability of section 84of the Trust Ordinance to this transaction. In the circumstances, theplea of trust raised by the plaintiff-respondent within the meaning ofsection 84 of the Trust Ordinance cannot be sustained.
The learned District Judge has failed to make a finding on the isoquestion as to who effected the improvements to the house. It is tobe borne in mind that the defendant-appellant has asked for a declarationthat he be declared the owner of lot 8. In the absence of a findingas to who effected the improvements, which is vital on the questionof compensation and matters arising therefrom, it is not prudent toconsider the question of a declaration of title in favour of the defendant-appellant.
For the foregoing reasons, the judgment of the learned DistrictJudge dated 21. 08. 1994 is set aside.
However, I make no order as to costs.190
DISSANAYAKE, J. – I agree.