030-SLLR-SLLR-1997-2-WIJERATNE-v.-GUNASEKERE.pdf
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Wijeratne v. Gunasekere
291
WIJERATNE
V.
GUNASEKERE
COURT OF APPEALWEERASEKERA, J.
WIGNESWARAN, J.
A. 450/92(F).
C. 2923/RE.
NOVEMBER 15, 16.19. 29.1996.
Rent Act, No. 7 of 1972 as amended by Act No. 55 of 1980 – Sections 31, 18(A)(2) b (1). 22(2) (bb) (ii) of the Act – Deposit of 5 years rent – Computation -Whether it is Agreed Rent or Authorised Rent.
Civil Procedure Code – Sections 772(1), 756(e) – Cross appeal – Applicability ofsection 22(7) of the Rent Act – Whether it acts as a bar to the maintenance of theaction – Specified date.
Held:
The word 'Rent’ is not defined in section 48, yet the word (Rent) has differentconnotations in the Rent Act – meaning sometimes agreed rental, sometimesauthorised rent, sometimes proportionate rent etc.
If the intention of the legislature was that in section 22(2) (bb) (1) Rent shouldmean authorised rent the draftsman would most certainly have used such anadjective in front of the word “Rent” as in section 18(a) (2) (b) (ii). The conclusionis that the word “Rent” was used intentionally. That is in the case of those payinga monthly rental at the date of the Authorised Rent or higher than the AuthorisedRent, the 5 years rent should be calculated by multiplying the Authorised Rent by60, while in the case of those paying a monthly rental less than the AuthorisedRent, it would be calculated by multiplying such monthly rental by 60.
(2) What is contemplated in section 22(7) with reference to the facts of the instantcase, is if the landlord acquires ownership of the premises in suit on a datesubsequent to the specified date by inheritance or gift from her parent who hadhimself acquired ownership of such premises on a date prior to the 'specifieddate’ then the bar will not apply, otherwise by implication the bar would apply.
Generally any purchase or inheritance or gift subsequent to the specified dateover the head of the tenant bars a landlord from filing action against his or hertenant. The exception is inheritance or gift from a parent or spouse who had
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himself acquired ownership of the premises in suit on a date prior to the specifieddate. The specified date means the date on which the tenant for the time beingof the premises or the tenant upon whose death the tenant for the time beingsucceeded to the tenancy (Defendant Respondent) came into occupation of thepremises.
It is seen that the ownership of the premises was acquired by the plaintiff-appellant (landlord) on a date after 1943 (specified date). It was by a gift from aparent in 1965. To escape the bar set out in section 22(7) such parent of thelandlord shall have acquired ownership of such premises on a date prior to 1943(specified date), but the parent of the landlord acquired ownership much later in1956. Therefore the bar would apply to the facts of this case.
APPEAL from the Judgment of the District Court of Mt. Lavinia.
A. K. Premadasa, P.C. with C. £ de Silva and Mangali Wickremasena for plaintiff-appellant.
P. A. D. Samarasekera, P.C. with Yasa Jayasekera for substituted defendant-respondent.
Cur. adv. vult.
March 20, 1996.
C. V. WIGNESWARAN, J.
The plaintiff filed this case to eject the defendant and all thoseholding under her, from premises No. 25, Upatissa Road, Colombo04 in terms of section 22(2) (bb) (ii) of the Rent Act, No. 7 of 1972read with its amendments, more particularly Act, No. 55 of 1980.
The agreed rent recovered by the plaintiff was Rs. 104.75 permensem. Hence Rs. 6285/- (60 x 104.75) being five years’ agreedrent was deposited by the plaintiff in terms of section 22(2) (bb) (ii)with the Commissioner of National Housing.
The learned District Judge of Mt. Lavinia by his judgment dated01.10.1992 dismissed the action of the plaintiff on the ground that theauthorised rent of the premises in suit was Rs. 1367/- per annum andfive years’ rent therefore amounted to (Rs. 1367 x 5) Rs. 6835/-) andthe deposit of Rs. 6285/- was insufficient.
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Wijeratne v. Gunasekere (C. V. Wigrtesv/aran, J.)
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This appeal is from that judgment.
The defendant in terms of section 772(1) read with section 758(e)of the Civil Procedure Code having given notice of objection to a partof the judgment while supporting the finding that the plaintiff’s casebe dismissed, submitted that the learned District Judge had erred inholding that the provisions of section 22(7) of the Rent Act did not actas a bar to the maintenance of this action.
Thus two questions arise for decision in this case:-
Whether 5 years’ rent in section 22(2) (bb) (ii) refers to theagreed rent or the authorised rent?
Whether the provisions of section 22(7) of the Rent Act appliesto the facts of this case and therefore acts as a bar to themaintenance of this action?
These two matters would now be examined.
(1) Section 22(2) (bb) (ii) of the Rent Act.
Section 22(2) (bb) (ii) relevant to this case runs as follows:
”22(2). Notwithstanding anything in any other law, no action orproceeding for the ejectment of the tenant of any residentialpremises the standard rent (determined under section 4) of whichfor a month exceeds one hundred rupees shall be instituted in orentertained by any Court, unless where in the case of premises letto a tenant whether before of after the date of commencement ofthis Act and where the landlord is the owner of not more than oneresidential premises the landlord of such premises has depositedprior to the institution of such action or proceedings a sumequivalent to five years’ rent with the Commissioner for NationalHousing for payment to the tenant”.
Learned President’s Counsel for the defendant-respondent hassupported the conclusion reached by the District Judge, Mt. Laviniain this regard on the following grounds:-
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The only rent payable by the tenant in terms of the Rent Act isthe authorised rent.
Section 22(2) (bb) (ii) of the Rent Act does not contemplate arefund of the rent paid for the previous five years. It is nothingmore or nothing less than the authorised rent for 5 years whichis expected to be paid.
If agreed rent in excess of the authorised rent cannot be paidby a tenant since it is illegal to pay, it is equally plausible thatagreed rent less than the authorised rent should not beaccepted.
Not using the adjective “authorised" to the word “rent” was adraftsman’s error. So Court can intervene and give theappropriate meaning to the word “rent”.
Parliament's intention was payment of 5 years of “authorisedrent".
These submissions would now be examined.
The word “rent” is not defined in section 48 of the Rent Act. Yet theword “rent" has different connotations in the Rent Act meaningsometimes agreed rental, sometimes authorised rent, sometimesstandard rent, sometimes proportionate rent and so on. Eachmeaning has a specific nuance and one meaning cannot besubstituted for the other. The appropriate meaning has to be thereforegathered from the context if the relevant adjective explaining theword "rent" is riot used. But what is significant to note is that the word“authorised rent" has not been substituted by law for the word “rent”(meaning agreed rental) in the Rent Act. The Common Law of lettingand hiring still exists. The Rent Act has only brought in certainsignificant restrictions and reservations in the working of the CommonLaw. There is nothing in the Rent Act which says if the agreed rent ofa premises is an amount less than the authorised rent such amountshould be superseded by the authorised rent on the Rent Act coming
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into operation. Of course the converse is true. If the agreed rental ismore than the authorised rent the landlord shall not be able todemand, receive or recover as rent any amount in excess of theauthorised rent from the date of commencement of the Act norincrease the rent to an amount in excess of the authorised rent, [videsection 3(1) of the Rent Act]. The tenant is also prohibited frompaying or offering to pay any rent in excess of the authorised rent[vide section 3(2)]. The Act goes so far as to authorise recovery ofpayments in excess of the authorised rent or deduct such excessamount paid from the rent payable by the tenant to the landlord (videsection 32).
But section 31 of the Rent Act is significant. It says:
“31. Where an action for the ejectment of any person from anypremises occupied by him as a tenant is dismissed by any courtby reason of the provisions of this Act, his occupation of thosepremises for any period prior or subsequent to the dismissal ofsuch action shall, without prejudice to the provisions of this Act, bedeemed to have been or to be under the original contract oftenancy".
Thus the Rent Act protected the original contract of tenancysubject to the restrictions placed on such contract by the Rent Act.There was no question of new terms being incorporated byimplication into the original contract of tenancy. In other wordssubject to the landlord being restricted from collecting a rent overand above the authorised rent the original contract of tenancy wasallowed to subsist.
It is in this context that the meaning of the word ‘Rent’ in section22(2) (bb) (ii) should be gathered.
If the intention of the legislature was that in section 22(2) (bb) (ii)"Rent” should mean authorised rent the draftsman would mostcertainly have used such an adjective in front of the word ‘Rent’ as insection 18A (2) (b) (II) of the Rent Act. We must therefore come to the
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conclusion that the word "Rent’ was used intentionally. That is, in thecase of those paying a monthly rental at the rate of the authorisedrent or higher than the authorised rent the five years’ rent should becalculated by multiplying the authorised rent by 60, while in the caseof those paying a monthly rental less than the authorised rent it shallbe calculated by multiplying such monthly rental by 60. Thisinterpretation is fortified by the fact that with the passing of theAmendment Act No. 55 of 1980 in which section 22(2) (bb) (ii) wasenacted. Section 7 and 8 of the Rent Act, No. 7 of 1972 wererepealed.
Under section 7(2) of the Rent Act No. 7 of 1972 neither thelandlord nor the tenant shall demand or pay respectively, as the rentof a premises any amount “which is less than the receivable rent ofsuch premises”. Receivable rent prior to Amending Act No. 58 of1980 was the highest amount established to the satisfaction of theRent Board received by the landlord by way of rent for any monthduring the period of two years immediately preceding the date ofcommencement of Act, No.7 of 1972 or where the premises had notbeen let to a tenant such amount determined by the Rent Board.
The concept of receivable rent which fixed the Rent to anascertainable amount and which amount alone was payable by thetenant or receivable by the landlord went into disusage with thecoming in of the Amending Act No. 55 of 1980. The fact that section7 was repealed while section 22(2) (bb) (ii) was incorporated wouldmean that the word “Rent” in section 22(2) (bb) (ii) referred to theagreed rental unless such agreed rent was over and above theauthorised rent.
It would be unreasonable on the part of a tenant to pay an amountless than the authorised rent as agreed rental and then expect anenhanced amount (authorised rent) to be deposited in terms ofsection 22(2) (bb) (ii) by the landlord.
Even in section 22(1) (a) the meaning of the word “Rent” is 'agreedrental’ and not 'authorised rent’. In fact if the agreed rental is less
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than the authorised rent there is no provision in the Rent Act to suefor the difference between the agreed rental and the authorised rentthough section 32 allows the recovery of payments in excess ofauthorised rent. Even to increase the rental from a lesser agreedrental amount to the authorised amount the landlord must terminatethe original contract of tenancy based on the agreed rental and thenonly call upon the tenant to pay the authorised rent. This is becauseof the fact that the original contract of tenancy (in terms of section 31of the Rent Act) is deemed to subsist and such contract carries with itcertain rights and obligations which have to be conformed to.
Thus in the absence of any law forbidding the landlord acceptingan agreed rental less than the authorised rent it would be insensibleto call upon him to deposit 5 years’ rent based on the authorised rentwhich is higher than the rent he received for his house. If suppose theauthorised rent of a premises was Rs. 140/- per month and thelandlord was recovering Rs. 101/- per month for a long number ofyears, whereas another landlord for a similar house with a similarauthorised rent was recovering the authorised rent of Rs. 140/- permonth, according to the interpretation given by the learned DistrictJudge both landlords would have to deposit five years’ rentcalculated at Rs. 140/- per month. This would be most unreasonable.As rightly observed by the learned President’s Counsel appearing forthe plaintiff-appellant, by a process of interpretation the severity ofthe Rent Act should not be further increased. Further, the Rent Actshould not be interpreted to be uncharitable to a landlord ofcharitable disposition who willingly may have accepted a rent lowerthan the authorised rent.
The Rent Act and its predecessors no doubt were social legislationbrought in to curb the rapaciousness of heartless landlords. Suchlegislation had so many connotations one of which was the inability ofthe State to cope up with the increasing demand for houses atreasonable rentals. Section 22(2) (bb) (ii) of the Rent Act it must beremembered, carries with it a basic qualification necessary on thepart of the landlord to come under that section viz. that he “is theowner of not more than one residential premises”. Such landlords
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could not be equated to the rapacious landlords of an earlier period.The Rent Act therefore should not be used to pummel a dead serpentif one were to borrow a pithy Tamil saying.
This Court is therefore unable to agree with the submissions of thelearned President’s Counsel appearing for the defendant-respondent.In fact it is wrong to say that the only rent payable by the tenant interms of the Rent Act is the authorised rent. He could either pay theagreed rental less than the authorised rent or the authorised rent itselfsince the concept of receivable rent is no more law. When calculatingfive years rent it is certainly not a refund of money paid during fiveyears prior to the relevant time. There is a possibility of the tenanthaving paid a lesser amount as agreed rental, the partiessubsequently going before the Board and having an enhancedamount fixed as authorised rent. Then a new tenancy on the basis ofthe higher authorised rent could have come into being during the fiveyear period prior to the relevant time (i.e. time of conforming to theprovisions of section 22 (2) (bb) (ii)). Then the five years’ rent wouldbe based on the authorised rent. It shall not be part authorised andpart agreed rent. But so long as the rent paid at the relevant time[meaning the time at which the deposit has to be made in terms ofsection 22(2) (bb) (ii)] is an amount which is an agreed rent less thanthe authorised rent of the authorised rent itself such agreed rent orauthorised rent respectively shall be the basis for the calculation ofthe 5 years’ rent. There is no connection between an agreed rentalover and above the authorised rent and an agreed rent less than theauthorised rent. The lesser amount could form the basis of a validcontract of tenancy while the higher amount is made illegal bystatute. There is provision in law for the tenant to recover the excesspayment. There is no specific provision in law for the landlord torecover the difference between his lesser agreed rent and a higherauthorised rent. Under the circumstances there is no need tounnecessarily add the adjective ’authorised’ to the word ’Rent’ insection 22(2) (bb) (ii). It must mean simply the agreed rental unlesssuch agreed rental is over and above the authorised amount in whichevent the agreed rental is statutorily reduced to the authorised rent. Itwould be thus erroneous to argue that Parliament meant by "five
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years’ rent” five years’ authorised rent” in the light of what has beenhereinbefore enumerated.
Thus I come to the conclusion that the learned District Judge haderred in his determination of issues 3 and 4.
Let us discuss next the matter in issue in cross appeal.
Section 22(7) of the Rent Act.The learned President’s Counsel on behalf of the defendant-respondent has taken up the position that the plaintiff-appellant couldnot have instituted and maintained this action in view of the barcreated by section 22(7) of the Rent Act.
The relevant part or portion of section 22(7) of the Rent Act is asfollows:-
22(7) “Notwithstanding anything in the preceding provisions ofthis section, no action or proceedings for the ejectment of thetenant of any premises referred to in subsection (1) or subsection(2) (i) shall be instituted where the landlord is the owner of notmore than one residential premises, on the ground that thelandlord of such premises has deposited prior to the institution ofsuch action or proceedings a sum equivalent to five years’ rentwith the Commissioner for National Housing for payment to thetenant, where the ownership of such premises was acquired by thelandlord, on a date subsequent to the specified date, by purchaseor by inheritance or gift other than inheritance or gift from a parentor spouse who had acquired ownership of such premises on adate prior to the specified date:…”
"In this subsection, "specified date” means the date on which thetenant for the time being of the premises, or the tenant uponwhose death the tenant for the time being succeeded to thetenancy under section 36 of this Act or section 18 of the RentRestriction Act (No. 29 of 1948), came into occupation of thepremises.”
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The original tenant of the premises was defendant’s motherMrs. W. L. de Silva. After Mrs. W. L. de Silva's death the presentdefendant succeeded to her mother’s tenancy. Earlier case No.1327/L instituted on 12.06.72 and decided on 11.04.74 was betweenpresent plaintiff’s father D. D. Wijeratne and the present defendant.
When tenancy commenced plaintiff’s father D. D. Wijeratne wasnot the owner in 1943. He however got his ownership from his motherCharlotte Josephine Wijeratne in 1956 on Deed V4.
When D. D. Wijeratne acquired ownership in 1956 defendant’smother W. L. de Silva was in occupation as a tenant. The presentplaintiff became owner in 1985 by V3.
The learned Counsel for the defendant-respondent argued that theplaintiff acquired ownership subsequent to the specified date by giftfrom a parent. Such parent, he said, had not obtained ownership on adate prior to the specified date in terms of section 22(7). Thus it wasalleged that the bar created by 22(7) applied to the present plaintiff[Vide definition of “specified date” above]. He submitted that theplaintiff got ownership after the ‘specified date’ from a person whohad himself acquired ownership after the ’specified date’. Both ofthem getting the property as gifts from their respective parents willnot help the plaintiff it was argued. The learned Counsel for theplaintiff-appellant argued that in 1960 the appellant’s father D. D.Wijeratne was the owner of the premises. Defendant’s motherbecame tenant only after D. D. Wijeratne became owner. Thereafterhe gifted the said premises to the plaintiff-appellant in 1985. Sincethis gift is a gift from father to daughter over the head of the existingtenant the bar would not apply.
These submissions would now be examined.
The crucial question appears to be what is the “specified date" asper the facts of this case. Before we examine this question let us findout the import of section 22(7).
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What is contemplated in section 22(7) of the Rent Act withreference to this case is as follows:-
If the landlord acquired ownership of the premises in suit on adate subsequent to the 'specified date’ by inheritance or gift from herparent who had himself acquired ownership of such premises on adate prior to the 'specified date' then the bar will not apply.Otherwise by implication the bar would apply.
Generally any purchase or inheritance or gift subsequent to thespecified date over the head of the tenant bars a landlord from filingaction against his or her tenant. The exception is inheritance or giftfrom a parent or spouse who had himself acquired ownership of thepremises in suit on a date prior to the 'specified date'.
The 'specified date' means the date on which the tenant for thetime being of the premises or the tenant upon whose death thetenant for the time being succeeded to the tenancy (that is thedefendant-respondent in this case) came into occupation of thepremises.
Charlotte Josephine Wijeratne was the original owner of thepremises in suit. She gifted it to her son Dayananda Donald Wijeratneon 19.08.1956. The latter gifted the same property to his daughter thepresent plaintiff-appellant on 17.05.85.
In D.C. Colombo case No. 13427/L which was filed by DayanandaDonald Wijeratne the father of the present plaintiff, against thepresent defendant, it was held by judgment dated 11.04.74 that in orabout October 1960 the mother of the defendant in this case, Mrs. W.
de Silva, having died the defendant became a tenant ofDayananda Donald Wijeratne. Even though the father of the plaintiff inthis case tried to maintain in that case that the brother of the plaintiffin this case (Kenneth de Silva) was the tenant even prior to and afterOctober 1960 ample number of receipts in favour of Mrs. W. L. deSilva had been submitted to Court. The Court observed in that casethat the original tenant was Mrs. W. L. de Silva the mother of the
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defendant in this case [vide page 114 of the Brief], Issue No. 3 in thatcase was also answered in the affirmative recognising the presentdefendant as the tenant of the father of the present plaintiff. In thepresent case the learned District Judge has answered issues 10-17in favour of the defendant in this case vis-a-vis case No. 13427/L. Hehas held that the decision in Case No. 13427/L acts as Res Judicatabetween the parties.
Thus we are now possessed of all the relevant facts to answer thequestion that has arisen. A diagram would explain the matter fully.
Charlotte Josephine Wijeratne(Grand mother of Plaintiff)
gifted on 19.08.1956to son
Dayananda Donald Wijeratne(father of the Plaintiff)
gifted on 17.05.1985to daughter
from 1943 or thereaboutMrs. W. L. de Silva
died October1960
The defendant(daughter)
entitled totenancy in
terms of section 18 ofthe Rent Restriction Act.
Plaintiff
Thus the present landlord acquired ownership by gift from a parentwho had acquired ownership at a time when the mother of thepresent tenant was the tenant. The ‘specified date' for the purpose ofthis case would then be the date on which the mother ofthe defendant came into occupation of the premises in suit.That was in 1943. At that stage the father of the plaintiff was not theowner.
Therefore clearly the father of the plaintiff had acquired ownershipof the premises in suit on a date subsequent to the specified date.
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The learned President’s Counsel for the plaintiff-appellant soughtto argue that ‘specified date’ means the date on which the tenant forthe time being of the premises came into occupation. According tohim since the present tenant, after D. D. Wijeratne obtainedownership in 1956, was tenant or the premises in suit around 1960the bar would not apply. According to him the specified date wasaround October 1960 by which time the father of the plaintiff hadobtained prior ownership and thereafter subsequent to the specifieddate gifted to the plaintiff. He therefore sought to get the benefit ofthe exception under section 22(7).
There is a fallacy in this argument. ‘Specified date’ cannot meanthe date on which the present tenant came into occupation if in facthe or she had succeeded in tenancy. If the present tenant from thebeginning of the tenancy had been in occupation of the premises the'specified date’ would be the date he or she initially started thetenancy. But where he or she succeeded to the tenancy by the deathof an earlier tenant the specified date would be the date on which thedeceased (previous) tenant started the tenancy. Thus the two typesof tenants mentioned in the interpretation paragraph at the end ofsection 22(7) must be clearly understood. If the 'specified date’ wereto be always the date on which “the tenant for the time being of thepremises” came into occupation there would have been no reason toinclude the other category viz. “the tenant upon whose death thetenant for the time being succeeded to the tenancy.” The explanationthus of 'specified date' would be,
Where the tenant for the time being of the premises is theoriginal tenant who entered into the contract of tenancy then itis the date on which such tenant came into occupation of thepremises.
Where the tenant for the time being is not a person whooriginally entered into the contract of tenancy but one who hadsucceeded to the tenancy in terms of section 36 of the RentAct or section 16 of the Rent Restriction Act then it would bethe date on which the previous tenant came into occupation ofthe premises.
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The category that applies to the facts of this case is therefore (ii)above. The present tenant succeeded her mother in October 1960.But October 1960 will not be the specified date. It would be circa1943 when her mother came into occupation of the premises.
In this case the ownership of the premises in suit was acquired bythe plaintiff landlord on a date after 1943 (specified date). It was bygift from a parent in 1965. To escape the bar set out in section 22(7)such parent of the landlord should have acquired ownership of suchpremises on a date prior to 1943 (specified date). But the parent ofthe landlord acquired ownership much later in 1956. Therefore thebar would apply to the facts of this case.
It is unfortunate that the learned District Judge in this case hadfailed to consider the documentary evidence led before him when heanswered issues 6 and 7 as not being proved. Just as much as issuenumbers 10-17 were covered by the judgment in case No. 13427/L,issue Nos. 6 and 7 too were covered by the judgment in the saidcase. If he had answered issues 6 and 7 correctly he would haveanswered issue No. 9 against the plaintiff-appellant.
Thus his answers to issue nos. 3,4, 6, 7 and 9 are erroneous. ThisCourt after consideration of the evidence led before the learnedDistrict Judge both documentary and oral, and the submissionsmade by Counsel on both sides and after examining the law that isrelevant comes to the conclusion that the answers to issues 3, 4, 6, 7and 9 should have been as follows:-
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We therefore allow the apeal and vary the judgment of the learnedDistrict Judge by answering the relevant issues as stated above. Thelearned District Judge's final determination will stand, in that theplaintiff’s original action remains dismissed with costs.
Both parties shall bear their respective costs of this appeal.WEERASEKERA, J. -1 agree.
Appeal allowed.