001-NLR-NLR-V-55-B.-J.-H.-BAHAR-Appellant-and-T.-K.-BURAH-et-al.-Respondents.pdf
THE
NEW LAW REPORTS OF CEYLONVOLUME LV
Present: Gratiaen J. and Pulle J.
J. H. BAHAR, Appellant, and T. K. BURAH et at.,
Respondents
S.C. 481—D. C. Tangalle, 5,838
Administration of estates—Property belonging to estate—Prescriptive claim byadministrator—Conditions necessary for such claim—Fiduciary relationshipof administrator—Trusts Ordinance, s. Ill—Prescription Ordinance, s. 3—Civil Procedure Code, ss. 540, 741.
An administrator who enters in that capacity upon any property belongingto the estate of a deceased person cannot commence acquiring prescriptivetitle to that property for himself against the intestate heirs until he has divestedhimself of his representative character by “ completing the administration ”within the meaning of section 540 of the Civil Procedure Code.
An administrator in possession of property belonging to the estate owes anequal duty by virtue of his office to all the intestate heirs without discrimination,and, so long as that fiduciary relationship subsists, the law will not permithim to say, for purposes of prescription, that he held the property for thebenefit only of those to whom he was bound by special ties of kinship oraffection.
/ PPTCAT. from a judgment of the District Court, Tangalle.
V. Perera, Q.C., with J. M. Jayamanne and J. N. David, for theplaintiff appellant.
N. E. Weerasooria, Q.C., with C. V. Ranawalce, for the defendantsrespondents.
.Cur. adv. vult.
August 7, 1952. Geatiaen J.—
The facts which arise for consideration on this appeal are beyonddispute. A young married woman named Dhane Bahar died intestateon October 18, 1926, leaving her husband (who is the first defendant)and two infant children (who are the second and third defendants).The learned trial Judge has held that according to the Muslim law whichis applicable the deceased’s parents—namely, the late Mr. B. J. H.Bahar and his widow the fourth defendant—also became her intestateheirs in addition to the first, second and third defendants^ No arguments
LV
3. N. B 27971—1,590 (7/53)
2
GRATIAJEN J.—JBahar v. Surah
were addressed to us in this Court to suggest that this conclusion waswrong, and I must assume for the purpose of this appeal that if is correct.
The late Mr. Bahar himself died intestate shortly afterwards, leavingas his heirs his widow (the fourth defendant) and his thrf.e sons (theplaintiff and the fifth and sixth defendants) who thereby succeeded tohis interests in his daughter’s estate.
Dhane Bahar’s estate was duly admitted to administration in Testa-mentary action No. 995 of the District Court of Tangalle, and letters ofadministration were issued without opposition to the first defendantby virtue of his undoubted preferential claim to the appointment as thedeceased’s widower. The property which is the subject matter of thisaction, comprising 10 allotments of land slightly exceeding 78 acres inthe aggregate, were correctly inventorised as forming part of the deceased’sestate, and the learned District Judge has held that, subject to theissue of prescription, the plaintiff and the first to the sixth defendantsinclusively were, in accordance with the Muslim law, co-owners of theproperty in the proportions set out in paragraph 11 of the plaint. Theplaintiff instituted this action on September 17, 1948, for the partitionof the property on this basis. The 7th to the 26th defendants intervenedin the action to obtain recognition of their admitted interests as planterswho had improved the property.
The learned District Judge, after hearing the evidence, dismissed theplaintiff’s action on the ground that the title of the plaintiff and of thefourth, fifth and sixth defendants had been defeated by prescriptionbefore the action commenced. He held that the first defendant who,as administrator and as an heir of his deceased wife’s estate, had con-sistently and unequivocally refused to acknowledge her parents’ claimsto heirship, had since about the year 1930 possessed the property onbehalf of himself and his minor children on the footing that the propertybelonged exclusively to them. The learned Judge accordingly decidedthat, by virtue of the provisions of section 3 of the Prescription Ordinance,the original rights of the first, second and third defendants as intestateheirs of Dhane Bahar became enlarged into full joint ownership at theexpense of the other co-owners.
I have examined the evidence led at the trial, and I am satisfied thatif the nature of the possession of the property by the first defendantwhich commenced in 1930 could properly be regarded as that of a co-owner simpliciter or as that of a mere agent, there was probably sufficientproof of an “ overt ouster ” to support the plea of prescription inaccordance with the rules laid down by the Privy Council in Corea v.Appuhamy1 and in Nagenda Marilcar v. Mohammad2 respectively. Butthe issue in the present case is complicated by the circumstance thatthe first defendant had in the first instance not entered into possessionof the property in his own right but by virtue of the statutory powersand duties vested in and imposed on him as the duly appointed administratorof his wife’s estate. Admittedly his de facto possession of the propertyhas continued without interruption ever since, but at no stage did hedivest himself of the representative character in which he first entered
(IQlfl) 15 N. L. R. 65.8 (1903) 7 N. L. R. 91.
GRAT1AEX J.—Bahai• v. Btirah
3
upon the land in such a manner as the law would consider sufficient torelieve him of the fiduciary obligations attaching to his office. In thatstate of things, he cannot, in my opinion, be heard to say that therearose some point of time when his possession qua administrator becameconverted L to possession ut dominus to the detriment of the otherco-heirs to whom he stood in a position of fiduciary relationship.
The first defendant did not choose to take any of the elementaryprecautions available to him under the Civil Procedure Code. Hecould very well have taken steps to protect his own interests in theproperty which had come into his hands as administrator so as to preventany conflict between his subsequent possession with the responsibilitiesattaching to his office. Having first settled, out of the assets availableto him, the claims of the creditors which had been brought to his notice,he should have applied for and obtained a judicial settlement of hisaccounts and then proceeded, after an inter partes adjudication as to thedisputed claims of his parents-in-law to heirship, to obtain a decree undersection 741 for the distribution of the estate (including the property indispute) among the heirs. In that event, he could properly have claimedthat, as far as the property in dispute was concerned, he had “ completedthe administration ” within the meaning of section 540 and thus becomefree to possess his share of the property and that of his minor children inhis own right and on their behalf.
So much for what the first defendant might have done. Let us nowconsider what he did in fact. On September 23, 1929, he purported tofile what is popularly but somewhat loosely described as a “ final account ”whereby he “ charged ” himself qua administrator with a sum ofRs. 28,435 (including the inventorised value of the property in dispute)and “ credited ” himself with various expenses and disbursementsamounting to Rs. 2,808"46 “leaving”—to quote his signed statementP13—“a balance of Ms. 25,629 to be distributed to those entitled theretoHe did not however obtain a judicial settlement of his account or evenhave it “ passed ” by the Court in accordance with some less formalprocedure which, though not sanctioned by the Code, seems to havegained increasing popularity with executors and administrators in recentyears. Nor did he invite the Court to inquire into the disputed claimsto heirship which had been notified to him and to the Court by Mr.Bahar and the fourth defendant. Instead, he continued, exactly as hehad previously done, to possess the property in dispute until the presentaction commenced. Can he now be heard to say that he had long sincedivested himself of the character of an administrator by reason of whatthe learned District Judge seems to regard as a “ de facto distribution ”of the property to himself on his own account and on account of his twochildren 1 As I understand the law relating to the duties and responsi-bilities attaching to the office of an administrator, I think that, for thereasons which°I shall now proceed to set outt this is an entirely untenableposition.
We must; not permit ourselves, by a process of loose reasoning or byan imperfect appreciation of the ratio decidendi of certain earlier rulingsof this Court, to assume that an administrator who has failed to obtain
4
GRATIAEN J.—Bahiir v. Burah
a judicial settlement of his accounts or to secure a decree for paymentand distribution of assets under section 740, can too readily be regardedas having divested himself of his fiduciary status. The question whetheran estate has been “ closed ” or not, and whether the assets in theadministrator’s hands have been distributed or not, is alwa^o a questionof fact to be determined with special reference to the particular cir-cumstances of a given case. For instance, when a creditor sues anadministrator for the recovery of a debt alleged to have been incurred bythe deceased, the administrator can successfully plead plene administravitif he proves that he has already parted with the assets in his hands bythe settlement of the claims of other creditors or by their distributionamong the heirs. Arunasalem Ghetty v. Mootatamby 1 ; Ramalingam v.Kalasipillai2 and Ramalingampillai v. Adguwad1 2 3. In such cases themaintainability of the plea of plene administravit is not necessarilyconcluded by the administrator’s failure to protect himself by obtaininga formal judicial settlement of his accounts. Indeed, the real issuearising upon the plea is whether or not the administrator still retainsassets out of which the creditor’s claim can be met wholly or in part.Suppramanian Chetty v. Pdlainappa Ghetty4. If, to take a situationof a different kind, an administrator who claims to have closed theadministration de facto is subsequently confronted with a claim by anheir for judicial settlement or for some other form of relief in the testa-mentary proceedings, different considerations would apply accordingto the circumstances of the particular case. In re Baban 5, Valipillai v.Ponnasamy 6 and Perera v. Simno1. Mr. Weerasuriya argued that, in thetestamentary action with which we are now concerned, the time for anadjudication as to Mr. and Mrs. Bahar’s claims to heirship had longsince passed. I do not agree. These claims had been duly notifiedto the Court and to the administrator, and the time for their adjudicationwould only have arisen if and when a decree for distribution among theheirs was applied for. Indeed, a consideration of that issue at an earlierstage, being immaterial to the question as to who should be appointed toadminister the estate, would have been premature. Fernando v. Fer-nando 8. The contrary opinion expressed by Lyall Grant J. in Nonohamyv. Punchiappuhamy9 is at best an obiter dictum, for in that case Dalton J.and Lyall Grant J. were merely considering the validity of a belatedclaim to heirship by a person who was, in fact, held not to be an heir.
The present action is not concerned with the claim of a creditor or anheir in respect of assets belonging to the estate which have ceased toremain in the administrator’s hands. On the contrary, it is concernedwith the claims of certain intestate heirs to a declaration as to their •title to the deceased’s property which had in the first instance come intothe hands of the administrator qua administrator, and which still remainedin his possession and under his control when the action commenced.His defence is that he had defeated that title by his adversg prescriptive
1(1906) 2 A. G. R. 90.
2(1942) 43 N. L. R. 425.
3(1942) 43 N. L. R. 361.
4(1904) 3 Bql. 57.
(1891) 1 G. L. Rep. 41.3 (1913) 17 N. L. R. 126.
(1915) 4 Bal. N. G. 77.
(1914) 18 N, L. R. 24,
(1929) 31 N, L. R, 220,
GRATIAJEN J.—Bahar v. Burah
5
enjoyment, partly in his own right and partly as the natural guardianof his lainor children, commencing at some date after he had takenpossession of it qua administrator.
In the circumstances of this case, the first defendant’s plea of pres-cription under section 3 of the Prescription Ordinance is incompatiblewith the character in which he commenced to occupy the land. In thewords of Bowen L.J. in Soar v. Ashwell1 “ his possession of the propertywas …. coloured from the first by the trust and confidence invirtue of which he first received it. He never can discharge himselfexcept by restoring (to the beneficiaries, i.e., the true intestate heirs ofDhane Bahar’s estate) the property which he has never had otherwisethan upon this confidence ”. The duration of the status of an adminis-trator in relation to property which he has taken over in the exercise ofhis powers of administration and which he still retains in his hands isindicated in the provisions of section 540 of the Civil Procedure Code.TTis office, and the fiduciary relationship attaching to it, endures untilthe death of the administrator or the completion of the administration,whichever first occurs. In the present case, neither of those events havingtaken place, the first defendant’s possession of the property in disputehas not yet ceased to be possession qua administrator. To my mind,this circumstance effectively disposes of the plea of prescription.
Even before the Trusts Ordinance was enacted, this Court has declaredthat, as in England, prescription does not run between trustee andcestui que trust. Antho Pulle v. Christoffel Pulle 2. In that case Clarence
J.pointed out that “ the Court would watch jealously any proposal todivest the trustee of his fiduciary character ”. In Fernando v. Fonseka 3Middleton J. and Grenier J. decided that “ so long as a fiduciary relation-ship continues, a trustee cannot set up a plea of prescription in bar ofa claim by the cestui que trust ”, and Middleton J. said, “ the factthat the trustee had not strictly carried out his obligations under thetrust deed …. cannot be relied upon by him as proving atermination of his fiduciary position ”. Both these decisions wereconcerned with express trusts, and the same ruling was authoritativelylaid down by the Privy Council in Arunasalam, Ghetty v. SomasunderamChetty4 where the Judicial Committee, after referring to Soar v. Ashwellindicated that the position would be different in the case of a bareconstructive or resulting trust which could not in the special circumstancesbe equated to an express trust.
After the Trusts Ordinance came into operation in 1918, Bertram C.J.held inter alia in Supramaniam v. ErampakuruTcal5 that section 111 (5)was intended to incorporate in statutory form the English rule laid downin Soar v. Ashwellh Section 111 expressly declares that a claim torecover “ trust property ” shall not be held to be barred or prejudicedby any grovision of the Prescription Ordinance, and section 111 (5)extends the operation of this rule to constructive trusts in cases wheresuch trusts are “ treated as express trusts by the law of England ”.
1 (£893) 2 Q. B. 390 at p. 397.3 (1912) 15 N. L. R. 398.
(1889) 1 N. L. R. 120.4 (1920) 2 N. L. R. 389.
5 (1922) 23 N. L. R. 417.
2*J. N. B 27971 (7/53)
6
GRATIAJEN J.—Bahar to, Burah
Whenever an administrator enters in that capacity upon propertybelonging to the deceased’s estate, the law requires him “ to Uct in afiduciary relation in regard to it, and a Court of Equity -will impose uponhim all the liabilities of an express trustee and will call him an expresstrustee of an express trust. The principal liability of such/ a trusteeis that he must discharge himself by accounting to the beneficiaries forall such property without regard to lapse of time Per Lord Esher M.R.in Soar v. Ashwett1 at page 394. Similarly, Giffard L.J. said in Burdick v.Oarrick a, “ where the duty of persons is to receive property, and to holdit for another, and to keep it until it is called for, they cannot dischargethemselves from that trust by appealing to the lapse of time ”. Thesewords, if I may say so with respect, perfectly describe the responsibilitiesimposed on the first defendant in relation to the property in dispute, andI would therefore reject his claim to have acquired prescriptive title,either for himself or for his children, to the shares which it was his dutyto distribute among the other heirs. The long established rule that“ possession is never considered adverse if it can be referred to a lawfultitle ” applies with special and, indeed, with uncompromising force wherea trust is impressed upon such possession.
I had suggested to Mr. H. V. Perera in the course of the argument thatsome distinction might perhaps be drawn between the case of the firstdefendant (whose plea of prescription on his own account must necessarilyfail) and that of his minor children (who could not themselves be regardedas affected by any obligation in the nature of an express trust). Mr.Perera conceded, and I am satisfied, that the position of the second andthird defendants would have been different if they had effectively receivedfrom the administrator certain shares in excess of what they were legallyentitled to as heirs, for in that event they could thereafter have reliedon their possession ut dominus of those additional shares for purposes ofprescription. But in the present case, as Mr. Perera points out, it wasthe administrator and the administrator alone who purported by hisown acts of possession to enlarge the rights of himself and his childrento the detriment of the others. I agree that this circumstance makes allthe difference to the issue of prescription. An administrator in possession of property belonging to the estate owes an equal duty by virtueof his office to all the intestate heirs without discrimination, and, so longas that fiduciary relationship subsists, the law will not permit him tosay that he held the property for the benefit only of those to whom hewas bound by special ties of kinship or affection.
I would set aside the judgment under appeal, and hold that the pleasof prescription set up on behalf of the first, second and third defendantscannot be sustained. The property in dispute belongs to the partiesin undivided shares as set out in paragraph 11 of the plaint, and therecord must go back to the lower Court with a direction that a decree forpartition should be entered allotting shares to the plaintiff qnd to thefirst, second, third, fourth, fifth and sixth defendants on this basis,subject to the interests and claims of the seventh to the twenty-sixthdefendants upon which the learned District Judge, after the inquiry,
must proceed to adjudicate according to law.
1 (1893) 2 Q. [b. 390 at p. 397.
2 L. B. 5 Ch. 233.
GUntSTASEKLARA J.—Dias v. Silva
7
The first defendant must pay to the plaintiff the costs of this appealand of the- contest in the Court below. All other costs will he in thediscretion of the learned District Judge.
Pttlle J.—V agree.
Judgment set aside.