037-SLLR-SLLR-1994-V2-HARISCHANDRA-PEIRIS-V.-HEMACHANDRA-PEIRIS.pdf
CA
W. K M. 0. Perera v. People's Bank (Ranaraja, J.)
349
HARISCHANDRA PEIRIS
v.
HEMACHANDRA PEIRIS
SUPREME COURT.
BANDARANAYAKE. J.
PERERA. J. ANDWUETUNGA. J.
S.C APPEAL NO. 41/92.
A. LA NO. 1602/1990.
C. KALUTARA NO. 3714/SPL.
DECEMBER 08,1993.
Agreement for Judge to act qua arbitrator in case – Validity.
Where both sides entered into a deliberate agreement and requested the DistrictJudge to decide the matter and undertook to abide by the decision of the Judge,and the District Judge accepted and acted on this request, he was not actingjudicially but qua arbitrator.
I
The fact that Issues were raised and evidence was led does not in any way vitiatethe! agreement entered into by the parties to abide by the decision of the DistrictJudge on the matter of the agreement which was to determine the assets of thethird respondent company.
Ctees referred to:
Mudalihamy v. Appuhamy39 CLW 103.
Thangarajasingham, v. lyampillai 64 NLR 569.
3. William Peris v. Lucia Peris Brown's Reports 420,421.
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{1994} 2 Sri L.R.
APPEAL from judgment of the Court of Appeal.
Faiz Musthapha PC. with Manohara de Silva for appellant.
S. Sivarasa P.C. with S. Mahenthiran and Sampath Welgampola for respondents.
Cur. adv. vult.
March 24,1994.
PERERA, J.
This is an appeal from the order of the Court of Appeal dated
holding that the Petitioner had no right of appeal to thatCourt as the judgment of the District Court in DC Kalutara Case No.3714/Spl. (P2) clearly showed that the parties had agreed to thematter being decided by the Learned District Judge as an Arbitrator.(Vide P7).
The Supreme Court in the present case granted Special Leave tothe Petitioner on the following question namely – Whether the Court ofAppeal erred in holding that the order appealed against was an ordermade by the District Judge qua arbitrator.
The facts relevant to this matter are briefly as follows:
The First and Fourth Respondents to this application filed papersin the District Court of Kalutara under the provisions of theCompanies Ordinance (Chapter 145) and prayed that the ThirdRespondent company be wound up compulsorily.
The Petitioner filed objections to this application and statedinter alia that the properties from which income was forthcoming. (being the subject matter of District Court Kalutara Case No. 115/MR)were held in trust by the Third Respondent Company for and onbehalf of the father of the petitioner and the other two Respondents.
This matter came up for inquiry before the Learned District Judgeon 02.06.82. On this date the parties arrived at a settlement whichwas recorded as follows: 1
(1) The Petitioner and the Respondent shall each forward a listwith a complete description of the movable and immovable
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Harischandra Peiris v. Hemaehandra Peiris ( Patera, J.)
351
properties and the income of the said Third Respondent company. Ifany objection is raised by one party against the list provided by theother, the District Judge shall hold an inquiry and make an orderthereon, and the parties signified their consent and agreed to abideby the said order.
Once a final decision is made in regard to the matters set outin paragraph (1) the total income and value of the property shall bedivided into four parts which will be given to L. D. H. Peiris, L. H. R.Peiris, L. C. H. Peiris and L. R. H. Peiris, respectively.
The Court shall then grant permission to the Petitioner to windup the Third Respondent Company without any objection from theother parties. (Vide proceedings dated 02.06.82 marked P1)
Accordingly the Petitioner and the Respondent filed the affidavitsin terms of the above settlement. However as a dispute had arisenbetween the parties on the matters set out in paragraph (1) of P1 theDistrict Judge was called upon to resolve this dispute after inquiry asagreed upon between the parties.
At the inquiry held into this matter by the District Judge thefollowing issues were raised:
(i) Are the immovable properties mentioned in schedule A to thepetitioner’s affidavit absolutely owned by the company?
(ji) Are the movable properties mentioned in Schedule B to thePetitioner's affidavit owned by the company?
(jii) Were the incomes mentioned in schedules C, D, E. F and Gof the affidavit of L. D. H. Peiris derived by the company from theabqve properties?
Struck off
Struck off
(a) Whether deed P2 is a valid deed as the propertiesmentioned in that deed have not been transferred to L. J. Peiris andCompany Limited.
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(b) and/or had the real receiver accepted it in the correctmanner.
Are the properties as claimed by the petitioner in the affidavitheld by the company as constructive trustees of the late L. JohnPeiris.
if the answer to the above issues is in the negative, can thecompany claim ownership of these properties?
At the conclusion of the inquiry the learned District Judge deliveredjudgment on the 8th of September 1989 and answered the aboveissues as follows:
Issues 1 to 3 and 6<a) and (b) in the affirmative.
Issue 7 in the negative.
Issue 8 title with the company (Vide order dated 8thSeptember 1989 marked P2)
The Petitioner then sought Leave to Appeal to the Court of Appealagainst the order of the Learned District Judge. The Court of Appealdismissed his application holding that the Petitioner had no right ofAppeal to that Court.
In the present application Counsel for the petitioner sought specialLeave to Appeal against the said order on two matters namely,
the correctness of the decisions which have held that there isno right of Appeal where parties agree that the dispute in a case maybe fairly and finally left to the decision of the Judge acting as anarbitrator and;
whether the Court of Appeal erred in holding that the orderappealed against was an order made by the District Judge quaarbitrator.
The Supreme Court has refused Leave to Appeal on the firstquestion and granted leave only in respect of the second matter.
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The sole question therefore which this court is now called upon todetermine is whether the Court of Appeal erred in holding that theorder appealed against was an order made by the District Judge quaarbitrator.
Mr. Faiz Musthapha on behalf of the Petitioner contended that thejudgment of the Court of Appeal in the present case is erroneous andthat the Petitioner was indeed entitled to file an appeal against thejudgment of the District Court in this case. It was his contention thatissues 6„ 7 and 8 were issues of law and/or mixed questions of lawand fact which were clearly outside the scope of the settlement P1. Itwas his submission that the District Court has in the present casegone beyond the scope of the settlement for instance to determinethe validity of a deed (Vide issue 6) and a creation of a constructivetrust (Vide issue 7). Counsel also urged that the settlement P1 relatedonly to the determination of the assets of the company by the DistrictJudge and that any inquiry as an arbitrator by the District Judge onother issues is therefore invalid and/or of no force or avail in law.
In support of this submission Counsel relied upon the decision ofthe Supreme Court in Mudalihamy v. Appuhamy*'>. In this case theplaintiff sued the defendants who were co-owners for recovery ofdamages on the ground that the plaintiff had been deprived of hisshare of the crop. The defendant denied this claim. At the trial theparties agreed to “refer all matters in dispute to the final arbitration ofthe Court and the Court was to make its order after inspection of theplace". After the inspection the Court ordered the plaintiff to beplaced in possession of a portion of the field cultivated by one of thedefendant’s. The 2nd defendant complained against that order on theground that the Learned Judge had decided an issue which was notin dispute between the parties and that he had exceeded hisauthority. In the course of the order Basnayake, J. (as he then was)stated thus “I have not been able to find nor has Learned Counselbeen able to refer me to any provision of the Civil Procedure Codeunder which a Judge may step aside from the office of judge andassume the Role of arbitrator.” Counsel also referred to the case ofThangarajasingham v. lyampillai<2) where Thambiah, J. citing withapproval the decision in Mudalihamy v. Appuhamy held that theprovision of the Civil Procedure Code did not permit a judge to
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combine the role of an arbitrator appointed under the Code with hisjudicial functions.
Mr. Mahenthiran contended however, that it is now well settled lawthat where the parties nominate the judge as the sole arbitrator onany question there is no right of appeal from such an order. It wasCounsel's submission that the order of the District Judge of 08.09.89in the present case is one in respect of which there is no right ofappeal as the parties by their specific consent had given a characterof finality to that order. Counsel urged that it is apparent on a perusalof the settlement P1 that the parties to this action agreed to a totalresolution of all disputes between them relating to the assets of the3rd respondent company, on the basis of an order made by theDistrict Judge after due inquiry and agreed further to abide by suchdecision. Counsel relied on a series of decisions of this Court insupport of the proposition that no appeal lies where the parties haveagreed to be bound by the order of the judge sought to be appealedfrom.
This however is not the issue that has to be decided in the presentappeal and the cases cited by both Counsel do not have a directbearing on the matter upon which leave has been granted. If I mayreiterate, the question which this Court is called upon to determine iswhether the Court of Appeal has erred in holding that the LearnedDistrict Judge in the present case has acted qua arbitrator.
The issue then is, having regard to the facts of the present casewas there a deliberate agreement by both sides and a request to theLearned District Judge to act in a particular way and has the DistrictJudge acceded to such request? If he has, the Judge was not actingjudicially but was acting qua arbitrator.
There is support for this view in the case of William Peris v. LuciaPeris ®.
In the present case on a perusal of the agreement P1 it is veryclear that the parties had agreed to abide by the order of theLearned District Judge made after due inquiry on any disputerelating to the assets of the Third Respondent Company. It is alsoclear that the issues raised at the inquiry were within the ambit of the
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Harischandra Paris v. Hemachandra Paris ( Perera, J.)
355
authority given by the parties to the Learned District Judge. Therecord bears out that the Learned District Judge has not exceededthe authority given to him by the parties and has confined himself tothe main issue in dispute.
On this question it would be helpful to reproduce a passage fromthe order of a Learned District Judge made at the conclusion of theinquiry -"A settlement was entered into between the parties on06.02.82 and in terms of clause (1) there of each party had to submita list of assets and in the event of any party objecting to the otherslist the Court had to inquire into same and decide – "This decision”the parties agreed to abide by." Admittedly this inquiry was thereforenecessitated because of the dispute that has arisen consequentupon the respondent (the Appellant in the present appeal) filingobjections challenging the list filed by the First Petitioner in theWinding Up application. It was alleged in the objections that theproperties referred to in paragraphs 3 and 5 of the Petitioner'saffidavit did not belong to the Third respondent Company but to theestate of the late L. J. Peiries. It was manifestly clear therefore that allthe issues at the commencement of this inquiry were raised by theparties in order to assist the Learned District Judge to resolve thedispute that had arisen on the matter referred to in paragraph 1 of thesettlement P1.
I am firmly of the view that the parties have framed the issues atthe inquiry having regard to and in terms of the agreement recordedin the District Court on the 2nd of June 1982. The fact that the Courthas not gone out side the scope of the terms of the settlement isabundantly clear on a perusal of the issues raised.
In deciding the issues raised by the parties the Learned DistrictJudge had necessarily to determine the validity of a deed (issue 6)and the creation of a constructive trust (issue 7). These matters hadto be clarified in order to decide the main issue namely the assets ofthe Third Respondent Company.
Having regard to the facts of this case, I have no doubt that theparties to this action and the Judge understood the purpose forwhich this inquiry was being held. Neither the Judge nor the partiescontemplated that they were acting outside the scope of thesettlement P1 and more importantly that the Judge was to hear it
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otherwise than as a Judge and that it was not to go on subject to allthe incidents of a cause regularly heard in Court of which an appealwas one of the most important. The Judge and the parties clearlyunderstood this arrangement at the stage the agreement P1 wasrecorded.
This Court would be most unwilling to uphold the agreement P1 atall if there was any doubt that such agreement was opposed to theintention of the parties.
I regret I am unable to agree having regard to the circumstances inthis case with the submissions of Counsel for the petitioner that asissues 6, 7, 8 are issues of Law and/or mixed questions of law or factthat these issues were outside the scope of the settlement.
As I observed earlier in terms of the agreement P1 the partiescalled upon the Court to determine the assets of the ThirdRespondent company and agreed to abide by the decision of theCourt on this matter. It is admittedly in order to decide this questionthat the subsequent inquiry was held as the Court was authorised todo in terms of the agreement. In my view the fact that issues wereraised and that evidence was led at this inquiry does not in any wayvitiate the agreement entered into by the parties to abide by thedecision of the Learned Judge on this question. There is no materialwhatsoever to show that the parties resiled from this agreementbefore the inquiry. There can be no doubt that in terms of clause 1 ofthe agreement P1 both sides practically agreed to leave the decisionof the question in issue- “the determination of the assets of the thirdrespondent company" to the sole arbitrament of the District Judge.There was indeed a deliberate agreement by both sides and arequest was made to the Learned District Judge to decide this matterand the parties undertook to abide by such decision. I hold thereforethat when the District Judge accepted and acted on this request hewas not acting judicially but qua arbitrator.
The present appeal is accordingly dismissed with costs.BANDARANAYAKE, J -1 agreeW1JETUNGA, J. -1 agree.
Appeal dismissed.