East African Estates Limited v Khalfan and Others (C.C. 126/30 (Mombasa).) [1932] EACA 49 (1 January 1932)

### $\begin{array}{c} \text{ORIGINAL} \quad \text{CIVIL}. \end{array}$

#### Before THOMAS, J.

### THE EAST AFRICAN ESTATES, LIMITED (Plaintiffs) $v.$

## ABDULLA ALIMOHAMED KHALFAN AND OTHERS $(Defendants).$

# C. C. 126/30 (Mombasa).

- Agreement for sale of land—Purchase price to be paid by instalments—No provision in agreement to pay interest on unpaid instalments—Purchaser $_{\rm let}$ $into$ possession—Order-in-Council, 1921, Article 4 (2)—Rule of Equity. - *Held* (2-5-31):—Where under an agreement to purchase land and to<br>pay the purchase price by instalments the purchaser is let into<br>possession, interest is payable on the unpaid instalments by virtue<br>of the Rule of Equity ap Article $4(2)$ .

Atkinson for Plaintiffs. ------

Ross for Defendants.

By an agreement, dated 20th January, 1928, the plaintiff company agreed to sell and the defendants agreed to purchase an estate at Gazi, containing 2,126 acres together with buildings erected thereon, trees and growing crops, at price of Sh. 400,000. Of this sum Sh. 8,000 were paid on or before the execution of the said agreement. The balance of the purchase price was to be paid by instalments as follows:—

1st November, 1928: Sh. 20,000 1st November, 1929: Sh. 40,000 1st November, 1930: Sh. 40,000 1st November, 1931: Sh. 60,000 1st November, 1932: Sh. 60,000 1st November, 1933: Sh. 60,000

and 1st November, 1934: Sh. 40,000.

The instalment of Sh. 20,000 due on the 1st November, 1928, was paid, but the defendants did not pay the instalment of Sh. 40,000 due on the 1st November, 1929. This amount was claimed together with interest at 9 per cent per annum by suit No. 126 of 1930. By Civil Suit No. 172 of 1930 a similar claim was made in respect of another unpaid instalment and interest. The defendants had been let into possession of the lands the subject of the agreement. By consent it was agreed that judgment in the first suit should also govern the second suit.

JUDGMENT.—Civil Cases 126 and 172 are two suits brought by the East African Estates, Limited, to recover successive insalments due in respect of the purchase by the defendants Abdulla Ali-Mohamed Khalfan, Luis Fidelis de Mello and Abdulrasul Alimohomed Khalfan of an estate at Gazi. The cases were heard together by consent.

$2.$ The instalments in question are those which fell due on the 1st of November, 1929, and the 1st of November, 1930.

The defendants by their defence objected that the contract was void for want of mutuality. Evidence was called and at the close of the plaintiffs' case Mr. Ross, advocate for the defendants, stated that having seen the documents produced he did not now resist the claims...

There remained the claims in respect of interest at 9 per-4. ćent. The defendants objected to payment of interest on the ground that no mention of interest was made in the agreement of the 20th of January, 1928. In support of this contention it was argued for the defendants that the Act dealing with interest in England is 3 & 4 William IV, and whether the matters dealt with by that Act were matters of Contract or Civil Procedure both had been dealt with either by the Civil Procedure Ordinance, 1924, or the Indian Contract Act, which has been applied to this Colony. Under such circumstances the English Statute could not be in force in this Colony.

5. It was suggested for the plaintiff company that the question had already been decided. Search has been made for any such decision. Reference has been made to His Honour the Chief Justice who has, however, no recollection of such a decision. He refers me to the Transfer of Property Act. section 55. sub-section 4 (b). That section commences as follows: $-$

"In the absence of any contract to the contrary the buyer and seller of immovable property respectively are subject to the liabilities and have the rights mentioned in the rules next following, or such of them as are applicable to the property sold."

And sub-section. (4) (b) says: $-$

"(The seller is entitled).-Where the ownership of the property has passed to the buyer before payment of the whole of the purchase money, to a charge upon the property in the hands of the buyer for the amount of the purchase money, or any part thereof remaining unpaid and for interest on such amount or part."

That sub-section would seem with all respect to provide for a charge in respect of interest and does not provide for the payment of interest. At page 221 of Shephard's Transfer of Property Act, 1882 (6th Edition) I find the following:—

"There is no provision for the case in which the buyer is let into possession before the sale is complete. According to English law a buyer in those circumstances is on the completion of the sale bound to pay interest on the purchase money, for otherwise the vendor during the interval would be left without his land and also without interest on his money. (See Ballard v. Shutt, 15 Ch. D. 122.)"

The decision in that case depended on a rule of equity which is referred to in the judgment of Denman, J., as "the rule of equity that the purchaser shall pay interest on the purchase money from the time he takes possession."

In the case of the General Manager of the Uganda Railway v. Tarachand and others, 9 E. A. L. R., page 37, Pickering, J. (now C. J., Zanzibar), said: "If the Land Transfer Act could be regarded as a complete exposition of the law as regards any transfer of any property I should feel that there might be some force in this suggestion. I find a contrary declaration in the preamble to the Act which runs, 'Whereas it is expedient to define and amend certain parts of the law relating to the transfer of property.'"

Section 55 is not in my opinion an exclusive dealing with the rights and liabilities of sellers and purchasers of land; and the mere non-reference to the right of a seller to interest on his unpaid purchase money does not exclude him from the right to recover the same provided it is given to him from some other means.

The Order-in-Council of 27th of June, 1921, provides as $follows: -$

"Subject to the other provisions of this Order, such civil and criminal jurisdiction shall, so far as circumstances admit be exercised in conformity with the Civil Procedure and Penal Codes of India and the other Indian Acts which are in force in the Colony at the date of the commencement of this Order and subject thereto and so far as the same shall not extend or apply shall be exercised in conformity with the substance of the Common Law, the doctrines of equity and the Statutes of General Application in force in England on the 12th of August, 1897."

Now the provisions of 3 & 4 William IV were extended to India by a special Act; viz., Act XXXII of 1839. That Act has not been applied to this Colony and it may be that in not extending that Act reliance was placed on the words of the Order-in-Council as to Statutes of General Application. I do not, however, consider it necessary to deal with that question since I am of opinion that the omission to deal with the question of interest with regard to the unpaid purchase money for land enables the seller to have recourse to the rule of equity under the Order-in-Council.

There will be judgment in each case for the plaintiff company for the instalment claimed with interest from the date at which the instalment fell due at 8 per cent per annum until judgment and costs and interest on the decretal amount at 6 per cent until payment.