038-SLLR-SLLR-2007-V-1-MILTON-SILVA-v.-SUMANASIRI.pdf
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MILTON SILVAv
SUMANASIRI
COURT OF APPEALEKANAYAKE, J.
SARATH de ABREW, J.
CALA 412/2000 (LG)
DC KALUTARA L/4611FEBRUARY 10. 18, 2005JUNE 23, 2006
Civil Procedure Code – Section 76 3 (2) amended by Act 53 of 1980 – section149 – Judicature Act 2 of 1978 – section 23 – Amended by Act 37 of 1979 -Writ pending appeal – Substantial loss – Substantial questions of law – Burdenon whom – Discretion of Court to make a fit and proper order as justice maydemand – Issue framed after proceedings were concluded – Bad in law?
Held:
The law applicable to stay execution of decree pending appeal iscontained in section 23 of the Judicature Act 2 of 1978 as amendedby Act 37 of 1979 and section 763 (2) of the Civil Procedure Codeas amended by Act 53 of 1980. However these two provisions arenot linked.
Per Sarath de Abrew, J.
"It goes without saying that if a writ is stayed to avoid substantial loss beingcaused to the judgment debtor equally anticipated loss or damage to a certaindegree would result to the judgment creditor who is unable to enjoy the fruitsof his victory after protracted litigation”.
Court should be satisfied of the probability of substantial lossresulting to the judgment debtor if the writ is not stayed and mereinconvenience and annoyance is not enough to induce the Court totake away from the suffered party the benefits of the decree.
As far as section 23 of the Judicature Act is concerned, the rule isthe execution of the writ whereas the exception is the stay of thewrit. Other than the mandatory provision compelling the entering
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into a bond, section 23 does not spell out or specify any otherprecautions as to under what conditions writ may be stayed, butleaves the entire exercise to the judicial discretion of the DistrictJudge concerned to make a fit and appropriate order.
In assessing loss pecuniary or otherwise, the mere expectation orbelief of the defendant as recited by him unsupported by othercredible material may not be sufficient to satisfy Court of itsexistence – in the instant case the defendant has failed to dischargehis burden.
Held further:
The learned District Judge by raising an issue without notice toparties after the judgment had been reserved to the effect that whathad been leased is the business only and not the premises – raisesthe question of the existence of substantial questions of law.
APPLICATION for leave to appeal with leave being granted from an order of
the District Court of Kalutara.
Cases referred to:
Grindlays Bank Ltd. v Mackinon Mackenzie & Co. of Ceylon Ltd – 19901 Sri LR 19.
Esquire Industries Garments Ltd. v Bank of India – 1993 – 1 Sri LR 130(SC)
Saleem v Balakumar- 1981 – 2 Sri LR 74.
Kandasamyv Ghanasekaram – CALA 78/81 – C.A.M. -17.7.1981.
Shajehan v Mahabooh and others – CALA 78/81 – CAM 17.7.81
Mustapa v Thangamani – CALA 70/91
Cooray v lllukkumbura -1996 – 2 Sri LR 263
Fauz v Gyl and others – 1999 – 3 Sri LR 347
Charles Appuhamy v Abeysekera – 56 NLR 243
Sediris Singhov Wijesinghe- 70 NLR 181
Sokkal Ram Sait v Nadar – 41 NLR 89
Wijayadasa Rajapakse PC with Rasika Dissanayake and
Ananda De Silva instructed by Nimal Dissanayake for the plaintiff-petitioner-
petitioner.
Defendant-respondent-respondent absent and unrepresented.
Cur.adv.vult
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February 23, 2007SARATH DE ABREW, J.
This is an application for leave to appeal from the order of thelearned District Judge of Kalutara dated 02.10.2002 (P11) wherethe petitioner had sought to set aside the aforesaid order of theDistrict Judge staying the execution of the decree pending appealand thereby sought to execute the decree pending appeal. Leavehad been duly granted by this Court on 30.01.2004.
The plaintiff-petitioner-petitioner (hereinafter referred to as theplaintiff) instituted the aforesaid action bearing No. 4611/L in theDistrict Court of Kalutara to recover vacant possession of the landand shop premises belonging to him bearing assessment number461, Galle Road, Kalutara, wherein a bakery business under thename and style of "Pradeepa Bake House" had been conducted bythe defendant-respondent-respondent (hereinafter referred to asthe defendant) in terms of the lease agreement No. 35 (marked P1at the trial), on the basis that the aforesaid lease expired on10.02.1977. After trial, judgment was entered in favour of theplaintiff.
Being dissatisfied with the judgment, the defendant lodged anappeal to the Court of Appeal. Thereafter the plaintiff filed anapplication for the execution of the decree pending appeal. Thethen learned District Judge of Kalutara, who had succeeded thelearned Judge before whom the trial was conducted, consequent toan inquiry held with regard to the application made by the plaintiff,made order on 02.10.2002 (P11) refusing the application for theexecution of the decree pending appeal. It is against this order thatthe plaintiff has made the present application in the Court ofAppeal.
The law applicable to stay execution of decree pending appealis contained in the provisions of section 23 of the Judicature ActNo. 2 of 1978 as amended by Act No. 37 of 1979 and section763(2) of the Civil Procedure Code as amended by Act No. 53 of1980.
Before examining the material placed before Court as to themerits and demerits of this application it is opportune to examineand assess the implications of the above statutory provisions.
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Section 23 of the Judicature Act fas amended by Act No. 37 of1979 provides as follows:
"Any party who shall be dissatisfied with any judgment, decreeor order pronounced by a District Court may (excepting wheresuch right is expressly disallowed) appeal to the Court of Appealagainst any such judgment, decree or order from any error or infact committed by such Court, but no such appeal shall have theeffect of staying the execution of such judgment, decree or orderunless the District judge shall see fit to make an order to thateffect, in which case the party appellant shall enter into a bond,with or without sureties as the District Judge shall considernecessary, to appear when required and abide the judgment ofthe Court of Appeal upon the Appeal".
It is noteworthy to observe that, as far as the above provisionis concerned, the rule is the execution of the writ whereas theexception is the stay of the writ. Furthermore, other than themandatory provision compelling the entering into a bond, theabove provision does not spell out or specify any otherpreconditions as to under what conditions a writ may bestayed but leaves the entire exercise to the judicial discretionof the learned District Judge concerned, to make a fit andproper order as the justice of the case may demand.
On the other hand, section 763f21 of the Civil Procedure Codefas amended bv Act No. 53 of 19801. which is not linked to theprovision in the Judicature Act, stipulates a distinctive condition asfollows,
"Court may order the execution to be stayed upon such termsand conditions as it may deem fit, where:
The iudament-debtor satisfies the Court that substantialloss mav result to the judgment-debtor unless an order forstay of execution is made, and
Security is given by the judgment-debtor for the dueperformance of such decree or order as may ultimately bebinding upon him.
On a construction of the above provision, the discretion of thelearned Judge is not unfettered to the extent that in order to stay awrit, there must be sufficient material placed before Court that
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substantial loss may result to the judgment-debtor. It goes withoutsaying that if a writ is stayed to avoid substantial loss being causedto the judgment-debtor, equally anticipated loss or damage to acertain degree would result to the judgment-creditor who is unableto enjoy the fruits of his victory after protracted litigation.
However, what matters is not the balance of convenience orinconvenience of the parties concerned, but the fact that on thematerial placed before Court, the judgment-debtor shoulddischarge the burden placed on him to the satisfaction of Court thatsubstantial loss would be caused to him unless the execution of thewrit was stayed. Therefore it is now settled law that a writ must bestayed until the final disposal of the appeal if the iudament-debtorsatisfies the Court that substantial loss mav result to him unless anorder for stay of execution is made by Court.
In the case of Grind lays Bank Ltd. v Mackinon Mackenzie &Co. Ceylon Ltd.p) it had been held that Court should be satisfied ofthe probability of substantial loss resulting to the judgment-debtor ifthe writ is not stayed and mere inconvenience and annoyance isnot enough to induce the Court to take away from the successfulparty the benefit of the decree. Further in the case of EsquireIndustries Garments Ltd. v Bank of Indian the concept ofsubstantial loss had been extended not only to include theimmediate pecuniary loss of the judgment-debtor but also toinclude the social and economic impact on the employees in thepresent social context.
Provisions of section 763 of the Civil Procedure Code is notexhaustive in respect of the relief available to the judgment-debtor. InSaleem v Balakumar.W Abdul Cader, J. with O.S.M. Seneviratne, J.agreeing a substantial question of law to be adjudicated upon at thehearing of the appeal was considered a sufficient ground to stay thewrit till the disposal of the appeal. This judgment had been deliveredsoon after section 763(2) was introduced to the Civil Procedure Codeby Amendment Act No. 52 of 1980. A long line of judgmentsthereafter had followed this concept where it had been held that evenin the absence of substantial loss caused to the judgment-debtor, theexistence of a substantial question of law to be decided at the appealwas sufficient ground to stay the execution of the writ. In this respectthe following cases may be cited.
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Kandasamy v Ghanasekaram (4>
Shajahan v Mahaboob and others <5>
Mustapa v Thangamani («)
Cooray v lllukkumbura (nFauz v Gyl and others <w
It was held in the latter case of Fauz v Gy/ that questions oflaw arising for determination must be substantial in relation tothe facts of the case at hand and that one of the interpretationsof the word "substantial" is to mean "actually existing".
Therefore, with regard to the impugned order of the learnedDistrict Judge of Kalutara dated 02.10.2002 (P11), in order todetermine the correctness of the order, the material placed beforeCourt should be carefully examined as to the presence of any oneof the following requirements in order to justify the stay of theexecution of the writ.
Whether the defendant (judgment-debtor) has placedsufficient material before Court for the learned DistrictJudge to be satisfied that substantial loss would incur tothe defendant if the execution of the writ was not staved.
Whether Court could be satisfied of the existence of asubstantial question of law that has arisen fordetermination at the hearing of the appeal.
On a perusal of the written submissions filed by the petitionerand the oral submissions tendered, the petitioner had argued thatneither of the above requirements were present in this case.Though the respondent was absent and unrepresented when thematter was taken up for argument, in the written submissions filedon behalf of the respondent, it was the contention of the respondentthat both the above requirements were present in this case thatjustified the stay of execution of the writ.
I shall now proceed to consider the grounds urged by thedefendant upon which he claimed substantial loss unless executionwas stayed.
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The following grounds had been urged on behalf of thedefendant in this regard.
The defendant was carrying on a bakery business"Pradeepa Bake House" in the premises in suit.
About eight employees were working under him in the saidbusiness.
The defendant had been carrying on the said business forwell over ten years from the date of the lease agreement
to the date of the impugned order of theDistrict Judge of Kalutara, namely 02.10.2002, and built upgoodwill with regard to his business.
The defendant made efforts to find an alternative locationfor his business but failed.
The defendant is married and having three children, two ofthem of school going age, and the entire family issupported from the proceeds of this business.
The learned District Judge in his impugned order had failed toevaluate the evidence in order to determine whether substantialloss would be caused to the defendant but has erred in law andbased his decision to stay the execution of the writ on the followinggrounds.
The fact that several questions of law had been raised onbehalf of the defendant. The learned Judge had notconsidered whether they were substantial questions oflaw.
The fact that eight employees working under the defen-dant would loose their livelihood.
On a balance of convenience, the loss caused to thedefendant would be much greater than that caused to theplaintiff.
However, on a careful perusal of the material available toCourt, on a consideration of the grounds urged by the defendant inorder to sustain substantial loss. I am inclined to take the view that
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the defendant had failed to satisfy Court as to the existence ofsubstantial loss for the following reasons.
Though the defendant had stated he has eight employeesworking under him, he has failed to satisfactorily explain why hecannot deploy them at an alternative place of business. Further, ona perusal of the documents produced with regard to ETF payments,document P7R7 reveals only six names, while the other documentsP7R8 to P7R10 reveal only the name of one employees, namelyPremalal Perera. Further the defendant had failed to produce anysupporting documentary evidence such as attendance registers orduty rosters as proof that such employees were working under him.
The defendants claim that he made efforts to find analternative place of business in close proximity to the premises insuit is only supported by a purported newspaper advertisementinserted in the Silumina of 16.09.2001 (P7R6). Judgment had beendelivered against the defendant on 07.03.2001 (P1) while thedefendant had filed objections against the execution of writ on
(P4). Therefore it is quite evident that placing anewspaper advertisement more than six months after the judgmentas the writ inquiry approached cannot be considered a genuineeffort on the part of the defendant to find a suitable alternative placeof business. Furthermore it is quite significant to find thedefendant's address in the pleading given as 497/1, Galle Road,Nagoda, Kalutara which is in close proximity to the premises in suit,461, Galle Road, Kalutara. Therefore it appears that the defendantheld and possessed an alternative premises in close proximitywhere he may have continued his bakery business without affectingthe goodwill.
In assessing substantial pecuniary or otherwise, the mereexpectation or belief of the defendant as recited by himunsupported by other credible material may not be sufficient tosatisfy Court of its existence. Therefore on a consideration of thetotality of the above factors militating against the defendant. I haveto determine that the defendant has failed to discharge the burdencast on him to satisfy Court of substantial loss caused to him.
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Therefore the first ground with regard to stay of execution of writcannot succeed.
Now it is left for Court to determine whether the defendant cansucceed on the second ground, namely the existence of asubstantial question of law to be determined at the final appeal. Thefollowing grounds have been urged by the defendant as substantialquestion of law, denied by the petitioner in his writtensubmissions.
The action of the learned trial judge in formulating issueNo.2A without notice to parties after judgment had beenreserved, purportedly under Section 149 of the CivilProcedure Code, is bad in law.
As the issue thus framed changed the scope of the actionand allowed no opportunity for the defendant to answerthis issue and give evidence, this occasioned a failure ofjustice.
In any event the learned trial Judge had erred in law bygiving an incorrect construction to the lease agreement(P1) by holding only the business was given on lease,whereas a proper construction of the instrumentapparently indicates that the land and building togetherwith the business had been rented out, in which case thedefendant was entitled to the protection of the Rent Act,and therefore the action should have been decided infavour of the defendant.
I have considered the totality of the material placed beforeCourt inclusive of the written submissions tendered by both partiesand the oral submissions tendered by the petitioner. I have alsoconsidered the authorities submitted by the petitioner in the courseof oral submissions, namely:
Charles Appuhamy v Abeysekerd9) – Nagalingam, S.P.J.
Sediris Singho v Wijesinghe(10) – Sansoni, CJ.
Sokkal Ram Salt/ Nadar(11)- Keuneman, J.
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On a perusal of the above, I am strongly of the view that thedefendant has succeeded in establishing the existence ofsubstantial questions of law for adjudication at the appeal, for thefollowing reasons.
The opening passage of the judgement of the learned trialJudge dated 07.03.2001 indicates that issue No. 2A had beenframed outside Court proceedings after all the proceedings wereconcluded when the matter was due for judgement, without noticeto the parties, purportedly under Section 149 of the Civil ProcedureCode.
On a perusal of the issues raised at the trial, issue No. 01raised by the plaintiff relates the lease agreement to the land, hotelbuilding and implements mentioned in the lease. However thelearned trial Judge, while referring to the condition "co" of the lease,on his own, had apparently raised issue 2A to the effect that whathad been leased out is the business only and not the premises.Having answered this issue in the affirmative, the learned trialJudge had decided the case in favour of the plaintiff, whereas hadthis additional issue not been raised, and if the learned Judgeallowed the case to proceed solely on the issues framed by theparties, the lease agreement would have been construed as alease of land and premises with the business, in which case thedefendant would have received the protection of Rent Act, and thejudgement would have been in favour of the defendant.
Perusal of the lease agreement indicate that the subjectmatter of the lease was a 13 perch land with a bakery shoppremises and other utensils used for bakery business as clearlystated in the schedule thereto, even though there are restrictiveclauses in the instrument with directions as to how to run the bakerybusiness.
On the strength of the above findings. I am satisfied thatsubstantial questions of law exist for determination at the finalappeal. Therefore the stay of the execution of the writ is justified onthe above ground.
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On the basis of my findings and reasons enumerated earlier inthis judgement, I hold therefore that the impugned order of thelearned District Judge of Kalutara dated 02.10.2002 to stay theexecution of the writ is correct, though not for the reasons given bythe learned Judge in his order, but for the reasons specified by meabove.
In view of the foregoing findings and reasons, the applicationof the plaintiff-petitioner to set aside the order dated 02.10.2002 ofthe learned District Judge of Kalutara is hereby dismissed withcosts fixed at Rs. 7500/-. However, I set aside that part of theaforesaid impugned order which required the defendant-respondent to enter into a bond for Rs. 1,50,000/- before theRegistrar, and instead make order for the defendant-respondentjudgement-debtor to furnish security in a sum of Rs. 100,000/- incash with two sureties acceptable to the learned District Judge ofKalutara and enter into a bond for the same amount for dueperformance of the decree if and when required once the appeal isheard.
EKANAYAKE, J. – I agree.
Appeal dismissed.