117-NLR-NLR-V-48-EHIYA-LEBBE-Appellant-and-MAJEED-Respondent.pdf
Ehiya Lebbe v. A. Majeed.
35T
1947Present: Dias J.
EHIYA LEBBE, Appellant, and A. MAJEED, Respondent.
S. C. 235—C. R. Matale, 8,816.
Trust—Notarial transfer of land—Wot intended to be out and out sale—Informalagreement to re-transfer—How far enforceable—Trusts Ordinance,ss. 83 and 5—Jurisdiction of Court of Requests.
Plaintiff, on P 1 of 1943, conveyed a certain land to the defendant. Onthe same day by P 2 a non-notarial document, the defendant agreedto re-convey the land to the plaintiff on payment of the sum of Rs. 250within two years. The defendant refused to re-transfer on tenderof the money within the time. The Commissioner found on the factsthat when plaintiff executed P 1 it was never in the contemplation ofeither party that the defendant was to hold the property, as absoluteowner but only till plaintiff's debt to the defendant of Rs. 250 wasrepaid.
Held, that in the circumstances the defendant was a trustee for theplaintiff in terms of section 83 of the Trusts Ordinance.
Held, further, (i.) that to shut out the non-notarial document P 2would be to enable the defendant to effectuate a fraud and that section5 (3) of the Trusts Ordinance would apply ;
(ii.) that the Court of Requests had jurisdiction to entertain and trythe action although the land was worth over- Rs. 300.
(1937) 39 N. L. JR. at p. 248.
358DIAS J.—Ehiya Lebbe v. A. Majeed.
^^PPEAL from a judgment of the Commissioner of Requests, Matale.
C. T. Olegasegarem, for the defendant, appellant.
N. E. Weerasooria, K.C. (with him S. R. Wijayatilake), for the plaintiff,respondent.
Cur. adv. vult.
June 3, 1947. Dias J.—
The facts of this case lie in a narrow compass and are in the mainundisputed.
The plaintiff by deed P 1 dated October 20, 1943, conveyed a certainland to the defendant. In form this deed purports to be an out and outsale by the plaintiff to the defendant for a consideration of Rs. 250.00.In the notary’s attestation there is the following statement: “ And Ifurther certify that out of the consideration hereof Rs. 100.00 was paidin my presence, Rs. 10Q.00 was set off against the mortgage bondNo. 11674 …. and the balance acknowledged to have beenreceived previously.”
There is evidence to show that the land which was conveyed was worthRs. 750.00 at the date of the conveyance, and that it is worth Rs. 1,000.00today.
On the same day on which the deed P 1 was executed, the non-notarialdocument P 2 was entered into between the parties whereby the defendantagreed to reconvey the land in question to the plaintiff within a period oftwo years if the latter paid to the defendant the sum of Rs. 250.00 andthe expenses incurred in connexion with the deed.
The plaintiff’s case is that within the two years he offered the moneyto the defendant and asked him for a reconveyance. This the defendantrefused to do. The plaintiff, therefore, has brought the money intoCourt and asks that the defendant may be ordered to execute a deedat the plaintiff’s expense reconveying the property to him.
Two questions emerge for decision. In the first place has the Court ofRequests jurisdiction to try this action, the land being worth more thanRs. 300.00 ? In the second place, the deed P 1 being a notarial convey-ance by the plaintiff to the defendant, can the plaintiff enforce the informalagreement contained in P 2 ?
On the first question, I think the Commissioner of Requests was rightin holding that he had jurisdiction to try the case. It may be that theland in question is worth over Rs. 300.00, but the plaintiff’s cause ofaction is for specific performance of ah agreement, and not for a declarationof title to land or any such relief. The plaintiff’s cause of action is belowRs. 300.00 in value, and, therefore, the Court of Requests had jurisdictionto entertain and try this action.
On the second point the solution to the problem lies in the answer tothe question as to what precisely was the nature of the transactionembodied in the deed P 1 although it is in the form of an out and outconveyance ?
DIAS J.—Ehiya Lebbe v. A. Majeed
359
The plaintiff’s evidence is that his father having died, he was in needof money for purposes of administration. He had borrowed money andhis creditor had demanded repayment. He, therefore, turned to thedefendant who was his relative and a co-owner of the land in question.He previously owed the defendant a sum of Rs. 100.00. He thus becamethe debtor of the defendant in a sum of Rs. 250.00, and it was agreedbetween them that the deed P 1 was to be executed in favour of thedefendant who undertook to retransfer within two years on repaymentof the debt. The plaintiff swears that he would not have executed P 1if the defendant had not promised to reconvey the property on paymentof the debt. He says that he never surrendered possession of the corpusuntil he was arrested on a charge of murder.
According to the defendant, he already had a usufructuary mortgageover the land on bond D 1 and he possessed the land and planted coconuttrees and took the produce from the coconut trees. The plaintiff thenwanted to borrow more money and told the defendant that if he did notbuy the land, the plaintiff would have to sell it to an outsider. Accordingto the defendant P 1 was an out and out sale for a money consideration.Then “ a little while later ” the plaintiff wanted the informal writingin order to show his sister or somebody else. Therefore he gave theplaintiff the document P 2. This statement carries no conviction.Who is the man who executes a notarial deed without having first thoughtout all its implications beforehand ? I think it is clear that the informaldocument P 2 was part and parcel of the same transaction of which thenotarial deed P 1 was a part, and was not an independent transaction.
The law is quite clear, although its application to a particular set offacts may cause difficulty. If the deed P 1 is a genuine sale by a vendorto a vendee for valuable consideration, then the informal agreement tore-transfer would be of no avail because it refers to immovable propertyand is not notarially executed—Carthelis Appuhamy v. Saiya Nona1.On the other hand, if it appears from the facts that, although the transferis in form an out and out sale, there exist facts from which it can beinferred that the real transaction was either a money lending transactionwhere the land was transferred to the creditor as security, or that it was atransfer in trust, a Court of Equity would grant relief in such a case—Fernando v. Thamel’.
There are certain tests for ascertaining into which category a case falls.Thus if the transferor continued to remain in possession after the convey-ance, or if the transferor paid the whole cost of the conveyance, or if theconsideration expressed on the deed is utterly inadequate to what wouldbe the fair.,purchase money for the property conveyed—all these arecircumstances which would show whether the transaction was a genuinesale for valuable consideration, or something else.
Section 83 of the Trusts Ordinance (Chap. 72) enacts that where theowner of property transfers it, and it cannot reasonably be inferredconsistently with the attendant circumstances that he intended todispose of the beneficial interest therein, the transferee must hold suchproperty for the benefit of the owner or his legal representative. Section* (1945) 46 N. L. R. 313.* (1946) 47 N. L. B. 297.
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DIAS J.—Ehiya Lebbe v. A. Majeed
5 of the Trusts Ordinance provides that a trust in relation to immovableproperty must be notarially executed, but section 5 (3) expressly providesthat this rule does not apply where it would operate so as to effectuate afraud.
On the facts and circumstances it is clear that when the plaintiffexecuted the deed P 1, it was never in the contemplation of either partythat the defendant was to hold the property as absolute owner, but onlyuntil such time as his debt was repaid. To shut out the informal agree-ment P 2 would be to enable the defendant to effectuate a fraud.
In my opinion the Commissioner was right in finding for the plaintiff.The appeal is dismissed with costs.
Appeal dismissed.