094-NLR-NLR-V-72-M.-V.-G.-FERNANDO-Appellant-and-MEL-MENDIS-LTD.-Respondent.pdf
H. X. O. FERNANDO, C .J.—Fernando v. Mel Mend is LUTM,*
Present: H. N. G. Fernando, C.J., and Siriraane, J.
M.V. G. FERNANDO, Appellant, and MEL MENDIS LTD., Respondent
S. C. 400163—D. C. Nation, 6636
Contract—Presumption oj undue inJJuence—Applicability as between employer andemployee.
The presumption of undue influence docs not apply in tho caso of a strictlycontractual relationship of employer and employee, which is not of a fiduciarycharacter. Accordingly, vrhero an employee, having freely admitted his,liability to pay a sum of money to his employer, enters into a contractvoluntarily to pay that amount, no presumption of undue influence attachesto such contract, even though tho motivo for the contract on tho part of theemployee may be to avoid a criminal prosecution.
_/_PPEAL from a judgment of the District Court, Hatton.
H. IK. Jayeuardene, Q.C., with T. S. P. Senanayake and S. S.Basnayake, for the defendant-appellant.
C. Ranganathan, Q.C., with E. Gooneratne, for the plaintiff-respondent.
Cur. adv. vult.
June 8, 1967. H. N. G. Ferxando, C.J.—
Counsel for the appellant in this case did not request us to review thefindings of fact which the learned trial Judge reached—that the defen-dant had voluntarily admitted his liability to pay to the plaintiff companythe amount of about Rs. 20,000 representing the value of keroseneoil found short on a verification of stocks, and had agreed by his letterPI to pay that amount, and that the defendant executed the conveyanceP2 and the promissory note P3 voluntarily, and not in consequence ofundue influence or in consideration of any agreement by the ManagingDirector of the company to desist from instituting criminal proceedingsagainst the defendant.
The argument pressed in appeal was one of law : that because of therelationship of emplojer and employee subsisting between the companyand the defendant, there is a presumption that undue influence wasexercised, and that the presumption is either not rebuttable, or elsewas not rebutted by the evidence in this case. We do not agree thatsuch a presumption is applicable merely because of the existence ofthe relationship of emploj'er and employee—Ckitty on Contracts(21st Ed. 573) and Wille’s Principles of South African Law (p. 322—5th Ed.) refer to the presumption as being applicable in the case of an
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1«J 12282—€.256(8/70)
434
Tiyadasa v. The Queen
attorney and his client, a doctor and patient, a parent and child, aguardian and' ward, a spiritual adviser and liis disciple. In all thesecases, the one party occupies a position of a fiduciary nature to theother, and the other party reposes a trust or confidence in him. Thepresumption arises because of this special relationship, and does notattach in the case of the strictly contractual relationship of employerand employee, which is not of a fiduciary character. Even the cases inwhich the presumption has been held to apply are easily distinguishablefrom the present case. Here there was ail admitted antecedent liabilityto pay to the plaintiff company a specific sum of money. The liabilitywas discharged by the conveyance P2 and the promissory note P3.Thus the foots establish that the causa for the conveyance was thedischarge of the defendant’s liability (in part) to pay the sura of moneyto the company. The case then is no different- from one in which anemployee, having freely admitted his liability to pay a sum of moneyto his employer, makes a cash payment to discharge the liability. Eventhough the defendant may have entertained a hope that, he might avoida criminal prosecution, that was only a motive for his executing theconveyance ; the causa or consideration was the discharge of the admittedliability.
For these reasons, I would affirm the judgment and decree, and dismissthe appeal with costs.
Sirimane,agree,
Appeal dismissed.