022-SLLR-SLLR-1997-V-1-THISA-NONA-AND-THREE-OTHERS-v.-PREMADASA.pdf
THISA NONA AND THREE OTHERS
v.
PREMADASA
COURT OF APPEALWIGNESWARAN J.
A. 689/83 (F)
C. NEGOMBO 1584/PDECEMBER 4, 1996.
Trusts Ordinance. Sections 5 and 63 – Constructive trust – Beneficial interests -Attendant circumstances – Section 2 of the Prevention of Frauds Ordinance 7 of1840.
The District Court refused the claim of the 1st defendant-appellant that P16created a constructive trust.
On appeal, –
Held:
The fact that document 1V2 was admitted by the plaintiff-respondent, the factthat the 1st defendant-appellant paid the stamp and Notary's charges, the factthat P16 was a document which came into existence in the course of a series oftransactions between the plaintiff respondent and the fact that the 1st defendant-appellant continued to possess the premises in suit just the way she did beforeP16 was executed all go to show that the transaction was a loan transaction andnot an outright transfer.
The attendant circumstances show that the 1st defendant-appellant did notintend to dispose of the beneficial interest in the property transferred.
Law therefore declares under such circumstances that the plaintiff-respondentwould hold such property for the benefit of the 1st defendant-appellant.
APPEAL from the District Court of Negombo.
Cases referred to:
Valliammi Achi v. Abdul Majeed 48 NLR 289 at 292.
Ehiya Lebbe v. Majeed 48 NLR 357 at 359.
Premawathie v. Gnanawathie Perera 1994 – 2 SLR 171.
P. Kenneth E. Perera for 1st defendant-appellant.Bimal Rajapakse for plaintiff-respondent
Cur. adv. vult.
December 4.1996.
WIGNESWARAN, J.
This is an appeal against the order dated 25.08.83 of the DistrictJudge, Negombo refusing the claim of the 1st defendant-appellantthat P16 created a constructive trust. By deed No. 7973 dated09.01.1975 attested by S. M. Wijewickrama Notary Public, Negombo(P16) Balasooriya Kankanamalage Thisa Nona the 1st defendant-appellant transferred an undivided extent of one rood from herundivided 1/3rd share out of the land called Ambagahawatte inWankapumulla in extent 1 Acre 0 Roods 20 Perches to the plaintiff-respondent Adikari Appuhamilage Premadasa for a sum of Rs. 1500/.
On P16 she claimed her title by Deed No. 7972 dated the sameday (09.01.1975) and attested by the same Notary. This was atransfer by the above said plaintiff-respondent to the 1st defendant-appellant. (P15)
On P15 the plaintiff-respondent claimed title by Deed No. 17082dated 06.12.1971 attested by D. A. S. Wijesinghe Notary Public (P14)which was again a transfer by the above said 1st defendant-appellant to him. The previous deed by which 1st defendant-appellant got title was deed of gift No. 1652 dated 24.09.1968attested by S. M. Wijewickrama, Notary Public Public. (P13)
While P13. P14 and P15 referred to undivided 1/3rd share as theshare transferred. P16 referred to undivided one rood from and out ofthe undivided 1/3rd share. Thus out of about undivided 60 perches(1/3rd of (1 Acre 0 Roods 20 Perches =) 180=60 perches] only anundivided 40 perches were transferred on P16.
Further Deed of gift P13 referred to the value of the land in 1968 asRs. 500/-. P14 by which the 1st defendant-appellant first transferredthe entirety of the undivided 1/3rd share referred to the considerationas Rs. 450/- in 1971. P15, which was a retransfer on 09.01.1975referred to the consideration as Rs. 450/-
P16 on the other hand was a transaction between the same partiesbut for a lesser share (undivided 1 Rood out of undivided 1/3rd of theentire land in extent 1 Acre 0 Rood 20 Perches). The purchase pricewas Rs. 1500/- in 1975. In other words P15 which was a retransfer infavour of the 1st defendant-appellant referred to the purchase pricein respect of undivided 60 perches as Rs. 450/- while an undividedshare of 40 perches from and out of the undivided 60 perches on thedeed written on the same date as P15 referred to the purchase priceas Rs. 1500/-. This may give the impression that adequateconsideration was paid. But. out of the consideration of Rs. 1500/- onP16 only Rs. 125/- was paid in the presence of the Notary and thebalance was acknowledged to have been received earlier. On P15 noconsideration passed in the presence of the Notary. It wasacknowledged to have been received earlier. On P14 Rs. 300/- waspaid in the presence of the Notary and the balance wasacknowledged to have been received earlier. Whether theconsideration payable on P15 was deducted from the considerationpayable on P16 is a moot point. But at pages 123-134 of the Brief themanner in which money was borrowed by 1st defendant-appellant isset out. In this background the question to be decided in this case iswhether P16 created a trust in favour of the 1st defendant-appellantin terms of the provisions of section 83 of the Trusts Ordinance.
The learned Counsel for the appellant has referred to a number ofattendant circumstances to suggest that there was a trust. Brieflythey are as follows:
The transaction was a loan transaction.
The transfer was a security for the loan.
The notarial fees and stamps were paid by the 1st defendant-appellant.
The plaintiff-respondent refused to accept Rs. 1500/- andproperty even before the 6 years mentioned in 1V2 – acontemporaneous non-notarial; document.
Possession not handed over. Appellant continued to resideeven after the transaction.
The learned Counsel for the 1st defendant-appellant thereforeargued that the order of the District Judge. Negombo dated 25.08.83should be set aside and the case decided in favour of the 1stdefendant-appellant.
The learned counsel for the plaintiff-respondent has said that theprovisions of Section 83 of the Trusts Ordinance has no bearing tothe facts of this case since
There was no evidence led to show that consideration paid onP16 was inadequate.
There was evidence that the plaintiff-respondent was inpossession of another portion of the same land owned by abrother of the 1st defendant-appellant.
There were no effective steps taken to pay Rs. 1500/- within thesix years assuming 1 1/2 is admissible despite Section 2 of thePrevention of Frauds Ordinance.
{iv) Even up to date Rs. 1500/- had not been paid nor deposited inCourt.
P16 is an outright sale with no conditions attached to it and forvaluable consideration.
All authorities cited by the Counsel for the 1st defendant-appellant smacked of trust being created. Whereas there wasno such parallel in this case since the 1st defendant-appellanthad effectively disposed both her legal and beneficial intereststo the plaintiff-respondent.
All these submissions would presently be examined
Section 83 of the Trusts Ordinance states as follows:-
“where the owner of property transfers or bequeaths it, and itcannot reasonably be inferred consistently with the attendantcircumstances that he intended to dispose of the beneficialinterest therein, the transferee or legatee must hold such propertyfor the benefit of the owner or his legal representative".
What this Court has to decide is whether the 1st defendant-appellant "intended to dispose of the beneficial interests in theproperty”or not. In this connection the following matters needconsideration.
Plaintiff-respondent admitted signing 1 V 2 a contemporaneousnon-notarial document at the time P16 was executed. If P16 wasan out right transfer and Rs. 1500/- was an adequateconsideration for the undivided 40 perches why should he hasgiven such a document? This document gives an insight intothe state of mind of the parties to the transaction. Formalitiesrequired to constitute a valid trust relating to immovableproperties are to be found in Section 5 of the Trusts Ordinancerather than in Section 2 of the Prevention of Frauds Ordinance.(Vide Valliammai Achi v. Abdul Majeed)
The 1st defendant-appellant paid the Notary’s fees and stampfees. If it was an outright transfer the purchaser would have hadto pay the charges. Why did 1st defendant-appellant willinglycome forward to pay same if the transaction was not beneficialto her in that she was receiving a loan or had received a loan forwhich a security was given in the form of an outright transfer? Infact according to the attestation clause most of theconsideration had been received by the transferor prior to thesigning of P16. In Ehiya Lebbe v. A. Majeed™, it was held that ifthe transferor paid the whole costs of the conveyance it wouldbe a test to find out the nature of the transaction. It thereforeappears that having taken the bulk of the loan earlier the 1stdefendant-appellant was forced to consent to the terms of theplaintiff-respondent. By allowing the cost of the conveyance tobe paid by the 1st defendant-appellant the plaintiff-respondentexposed the nature of the transaction.
Possession of the premises was not handed over on executionof P16. The plaintiff-respondent being a possessor of anotherportion of the land is not relevant. The 1st defendant-appellant’srights were undivided. The undivided portion in extent one Roodfrom and out of the 1st defendant-appellant’s undivided 1/3rdshare could at least have been given possession constructively.On the contrary the 1st defendant-appellant continued to staywhere she stayed before the transaction even after thetransaction. Does it not show that the 1st defendant-appellanthad not Intended to part with the beneficial interest in the landto the plaintiff-respondent? In Ehiya Lebbe v. A. Majeed (Supra)it was held that if the transferor continued to remain inpossession after the conveyance that would also be a test tofind out the nature of the transaction.
The Notary’s attestation with regard to P16, P15 and P14 showthat there had been money transactions between the parties fora considerable length of time. On P14 out of the considerationof Rs. 450/-, Rs. 350/- was paid in the presence of the Notary.The balance had been paid to the 1st defendant-appellant priorto the execution of the deed (Vide page 301 of the Brief). OnP15 no consideration was paid in the presence of the Notary.The full amount was acknowledged to have been receivedpreviously (Vide page 310 of the Brief). The fact that there hadbeen various financial transaction between the parties isbrought out at page 304 of the Brief where the transferor andthe transferee on Deed No. 7972 (P15) refers to a transfer freeof the right of retransfer, mortgage and security for loan. TheNotary has specially inserted in a printed transfer Deed form thefollowing words:-
“<5fi SeJg0 80 gSO odomm SoOffl cpesg ®t8o® {j0fi©3&s®0
This refers to the conditions set out in P14 where the 1stdefendant-appellant on payment of an agreed interest and principalwas entitled to a re-transfer. P15 and P16 were executed on the samedate one after the other before the same Notary. Thus the 1stdefendant-appellant had been called upon to execute P16 undermore stringent conditions presumably because the loan was nowRs. 1500/- unlike earlier in that no right of re-transfer was preservedon the face of the Deed P16. But such a preservation is found in IV2which reads as follows:-
*1975-01-09.
OgSetoaoQ&s.
oc6socog-6&Kg§dod o£o© qflo»p <j8gGD0@xx5i ogSgo Sffl @0 <jcg). gt®.BdoBgS aaomra @skk> qsx$h> £zd gxb cjo© 7973 135® «Jg6 80 cjoqJ §o&g o@g® 80 q@OC ®ori ej£g 6® SdgoB S^gGBOOQ § dfflo$0
fixggOo ©<®o©®gxxa Sen eafao 88d OtSog defi gsd oaXtaeJ (Cl 1500/ -) d ©)oera om&> egHstieCoA gc®> oca o®o g<3®) SOoqxj) doges soOosxd <9®Sdmftsd rsCa 060 «awdMJg 0 o®a §a0) ertfcxA tsC q8S."
Within the period of years mentioned in 1V2 the 1st defendant-appellant requests the acceptance of Rs. 1500/- but theplaintiff-respondent refused to accept payment. (Vide page 131of the Brief).
Thus it is in the light of the sequence of events and the nature ofattendant circumstances that a Court should come to its conclusionas to whether Section 83 of the Trust Ordinance should apply to aparticular case or not. The fact that 1V2 was admitted by the plaintiff-respondent, the fact that 1st defendant-appellant paid the stampsand Notary’s charges, the fact that P16 was a document which cameinto existence in the course of a series of transactions between theplaintiff-respondent and the 1st defendant-appellant, the fact that the1st defendant-appellant continued to possess the premises in suitjust the way she did before P16 was executed – all go to show thatthe transaction was a loan transaction and not an outright transfer.The attendant circumstances show that the 1st defendant-appellantdid not intend to dispose of the beneficial interest in the propertytransferred. Law therefore declares under such circumstances(Section 83 of the Trusts Ordinance) that the plaintiff-respondentwould hold such property for the benefit of the 1st defendant-appellant. [Vide case similar -Premawathie v. Gnanawathie Perera]<3>.
Thus the learned District Judge has failed to evaluate the evidencein the light of the 1st defendant-appellant’s plea of a constructive trustwithin the meaning of Section 83 of the Trusts Ordinance. Thejudgment dated 19.08.83 is thus misconceived. The said judgment istherefore hereby set aside and the appeal is allowed with incurredcosts payable in this Court.
The 1st defendant is hereby directed to deposit a sum ofRs. 1500/- with legal interest from 08.01.81 up to date of payment tothe credit of D.C. Negombo Case No. 1584/P on or before
If the said sum of money is paid as aforesaid th^ plaintiff-respondent must transfer the land and premises in suit in favour ofthe 1st defendant-appellant on or before 31.05.1997. If the said sumof money is paid as set out above and if the plaintiff-respondent failsto effect a transfer as set out above, the Registrar of the District Courtof Negombo is hereby directed to effect the transfer on or before
It is hereby directed that the plaintiff-respondent isentitled to withdraw the said sum of money above referred to onlyafter the execution of the conveyance by him or by Registrar of theDistrict Court of Negombo. It is further directed that the1st defendant-appellant shall bear all expenses of the conveyance inher favour.
Subject to abovesaid directions the plaintiff's case in the DistrictCourt is dismissed with costs incurred by the 1st defendant-appellantpayable by the plaintiff-respondent to her.
The Registrar of this Court is directed to return the record of thiscase forthwith to the District Court of Negombo so that the partiescould comply with the aforesaid directions.
Appeal allowed.