Sherani v Jagroop [1973] FJLawRp 18; [1973] 19 FLR 85 (24 October 1973)

[1973] 19 FLR 85

IN THE SUPREME COURT OF FIJI
SHER MOHAMMED KHAN SHERANl
v.
MANOHAR JAGROOP AND OTHERS

[SUPREME COURT, 1973 (Tuivaga J.), 24th October]
CIVIL JURISDICTION

Contract - lease and option to purchase beneficial interest in residuary estate - whether

such disposition legally enforceable prior to the administration of the estate.

Contract – certainty - whether contract for lease unenforceable for lack of certainty of subject matter.

Executors and trustees - powers of executors to sell and lease land for the purposes of administration - Succession Probate and Administration Ordinance 1970, s. 11 (1) (2) (3) - whether purported lease and sale effected in course of administration.

Under the will of the deceased, the third defendant was given one undivided half share of the residuary estate. The third defendant was granted probate whereupon he agreed with the plaintiff to lease to him his one half undivided share of all the land comprised in a particular Certificate of Title together with the shop premises erected thereon. Under the terms of the lease the plaintiff acquired an option to purchase the undivided half share for $2500, which option was exercisable at any time during the currency of the lease. A month later the plaintiff exercised his option to purchase.

Subsequently the third defendant was removed from the executorship of the estate and was replaced by the first and second defendants as the new executors. By order of the Supreme Court the estate became vested in the first and second defendants. The plaintiff then requested the new executors to transfer to him the third defendant's undivided half share in accordance with their agreement, but the executors refused to acknowledge the plaintiff's alleged rights to any part of the estate.

Held: 1. Until the residuary estate had been ascertained in the course of administration and distributed, a residuary legatee and devisee under a will had no claim or any right of dealing with his share. In the present case the administration of the estate was still incomplete and the third defendant had no right in his personal capacity to enter into any agreement for a lease.

2. According to the Succession Probate and Administration Ordinance 1970, s. 11(3) the powers of an executor to sell and lease real estate can only be exercised for the purposes of administration. Even if the third defendant was acting as an executor, the purported lease and sale by him of his own undivided half share in the Certificate of Title could not be construed to have been carried out in the course of administration of the estate, but was a private commercial transaction.

3. It was, in any event, impossible to ascertain and identify the particular area and nature of the land which the third defendant purported to lease to the plaintiff.

Cases referred to:

Bernado's Homes v. I.R.C. [1921] UKHL TC_7_646; [1921] 2 A.C. 1.
Lord Sudeley v. Attorney General [1896] UKLawRpAC 53; [1897] A.C. 11.
Re Kemnal and Still's Contract [1923] 1 Ch. 293.

Action by the plaintiff against the first and second defendants as executors and the third defendant for breach of agreement for a. lease.

F. M. K. Sherani for the plaintiff.
K. Parshotam for the first and second defendants.
R. G. Kermode for the third defendant.

TUIVAGA J. [24th October 1973]-

This action is brought by the plaintiff against the 1st and 2nd defendants as executors and trustees of the estate of Sohan Jag Roop s/o Jag Roop and the 3rd defendant for breach of an agreement for a lease allegedly entered into by the plaintiff and the 3rd defendant when the 3rd defendant was executor of the said estate.

The plaintiff claims -

(i) specific performance; or alternatively;

(ii) refund of $1430.50 paid as consideration damages for breach thereof; and

(iii) costs of this action.

The facts in this case are substantially not in dispute and I hold them to be as follows. On the 8th August 1960 Probate No. 6859 in the matter of the estate of Sohan Jag Roop (deceased) was granted to the 3rd defendant and one Sanohar s/o Jag Roop who had died prior to the dealing in question. Paragraph 1 of the Will of the said Sohan Jag Roop states:-

"I GIVE DEVISE AND BEQUEATH all my real and personal property whatsoever and wheresoever to my^- trustees UPON TRUST to sell call in and convert into money such parts of my estate as shall not consist of money or of investments (with power in their absolute discretion to postpone such sale calling in or conversion without being responsible for any loss occasioned thereby) and out of the ready moneys of which I shall be possessed at my death and the clear moneys to arise from such sale calling in and conversion to pay my death duties funeral and testamentary expenses and to stand possessed of the residue of the proceeds of such sale calling in and conversion and of such investments and of all parts of my estate for the time being unsold (hereinafter called my "residuary estate") upon the following trusts:

(a) to divide my residuary estate into two equal parts and to give one such part to my said son Baldeo absolutely.

(b) to divide the other such part into four equal shares and to give one such share to my brother Nohar and his son Balichand as tenants in common in equal shares, and one such share to my brother Manohar, and one such share to my brother Sanohar and one such share to my brother Lalchand."

Thus it is clear that under the Will one undivided half share of the residuary estate of the testator was to be given to the 3rd defendant while the other undivided half share was to be divided in four equal shares and given respectively to the 1st and 2nd defendants and other named beneficiaries. On the 21st September 1967 the plaintiff and the 3rd defendant entered into an agreement (Ex.7) whereby the third defendant agreed to lease to the plaintiff his one undivided half share of all land comprised in Certificate of Title No. 7108 being Lot 1 on Deposited Plan No. 2882 containing 1 acre, 3 roods and 23.9 perches together with the shop premises erected thereon. Under the terms of the lease the plaintiff acquired an option to purchase the 3rd defendant's undivided half share in Certificate of Title No. 7108 for a sum of £2,500 and this option may be exercised at any time during the currency of the lease. It was further agreed that in the event of the option being exercised by the plaintiff the land would be subdivided and the costs involved would be paid out of the sum of £2,500. On the 12th October, 1967 the plaintiff exercised his option to purchase and paid the 3rd defendant a sum of £40 In cash being part payment towards the purchase of his one undivided half share in Certificate of Title No. 7108. The operative parts of the agreement whereby the plaintiff exercised his option to purchase are as follows:

"WHEREBY IT IS AGREED AS FOLLOWS:

(i) the lessee has this day exercised his option to purchase and has paid the lessor the sum of £40 (Forty pounds) in cash being part payment towards the said purchase price of £2,500 at the request of the lessor. (The receipt of which said sum of £40 the lessor does hereby admit and acknowledge);

(ii) the lessor undertakes to proceed with the subdivision of the demised land;

(iii) the lessor shall be paid the balance of the purchase price of £2,650 or such sum as may be due and owing when the subdivision is completed and when the lessor is able to give a title free from all encumbrances at the rate of £50 (Fifty pounds) per month."

On the 15th September 1968 the 3rd defendant was removed from the executorship of the estate of Sohan Jag Roop and was replaced by the 1st and 2nd defendants as the new executors. By the order of the Supreme Court the estate became vested in the 1st and 2nd defendants as executors and trustees. On or about the 5th of March 1969 the plaintiff through his solicitors made representations to the 1st and 2nd defendants as executors of the estate to transfer to him the 3rd defendant's undivided half share in Certificate of Title No. 7108 in accordance with the agreements of 21st September 1967 and 12th October 1967 but the 1st and 2nd defendants have refused to acknowledge the plaintiff's alleged rights to any part of the estate. It is admitted that a total sum of $1,430.50 was paid by the plaintiff to the 3rd defendant towards the purchase price of his one undivided half share in the said Certificate of Title No. 7108. The plaintiff was and is still ready, willing and able to pay the balance of the purchase price.

Counsel for the plaintiff submits that the agreement to lease the 3rd defendant's undivided half share in Certificate of Title No. 7108 and the exercise of this option to purchase same was binding at law in as much as the 3rd defendant as executor at the material time had powers by virtue of Section 11 of the Succession, Probate and Administration Ordinance, 1970 to enter into a lease or sale of the testator's land. Section 11 provides:-

"11.-(1) The real as well as the personal estate of every deceased person shall be assets in the hands of the executor to whom probate has been granted, or administrator, for the payment of all duties and fees and of the debts of the deceased in the ordinary course of administration.

(2) No executor or administrator shall by virtue of such office have or exercise any right of retainer in priority to the other creditors of the estate in respect of any debt due to him.

(3) An executor to whom probate has been granted, or administrator, may, for the purposes of administration, sell or lease such real estate, or mortgage the same, with or without a power of sale, and assure the same to a purchaser or mortgagee in as full and effectual a manner as the deceased could have done in his lifetime."

Apart from the above provisions which give wide powers to the 3rd defendant as executor of the estate the 3rd defendant as a beneficiary and sui juris was entitled to enter into an agreement in his personal capacity to lease or sell his interest in Certificate of Title No. 7108.

Counsel for the 3rd defendant has made submissions with which counsel for the 1st and 2nd defendants has expressed full agreement. Counsel for the 3rd defendant submits that at the material time the 3rd defendant had no vested title in the land in question as to enable him to dispose of it by way of lease or sale. It follows that there was no binding contract. Thus as there could not have been any breach of contract the question of specific performance cannot possibly arise in the circumstances of this case. Counsel referred to the following statement in paragraph 367 of Halsbury's Laws of England (2nd Edition):-

"Want of mutuality is in general a ground for refusing a judgment of specific performance: if a contract cannot be enforced against one party by reason of circumstances existing at the date of the contract, such as personal incapacity or the nature of the contract, that party will not be enabled to enforce the contract against the other party. Thus............ a vendor of property in or over which he had no estate or power at the time of the sale may be met by this fact as a defence to a suit by him of specific performance."

Counsel also referred this Court to paragraphs 382 and 385 which state:-

"382. Where it is sought to enforce specific performance of a contract, the Court must be satisfied (1) that there is a concluded contract in fact; (2) that the contract so concluded is not incomplete by reason that the parties have failed to agree, expressly or by implication, on some essential matter; (3) that the contract is precise and certain, or, in other words, that, although all essential matters may have been dealt with, there is not such uncertainty and vagueness that exact performance cannot be ordered.

385. The Court, before enforcing a contract, must be satisfied that it is certain.

Uncertainty may arise in various ways, which may be classified as follows:

(1) where the contract is so vague in its general terms that the obligations of the parties are not ascertainable; (2) Where the subject-matter of the contract is not sufficiently identified; (3) Where the parties are not sufficiently identified; (4) Where in the case of a sale, the price is not ascertained; and (5) Where some material term of the contract is omitted."

It is also submitted that the agreement was oppressive as against the 3rd defendant. Under the terms of the agreement he was required to pay the costs of the subdivision out of his own purchase price of the lease i.e. out of £2500. In this connection Counsel refers to paragraph 414 which states:-

"The discretion of the Court to grant specific performance is not exercised if the contract is not "equal and fair." In such a case, even though no fraud such as to justify rescission is alleged, the Court does not interfere to enforce the contract."

It is also submitted that supervision of the Court would be required for specific performance. The testator's Will does not make any specific devise to the 3rd defendant whose share must await the ascertainment of the residuary estate.

Thus they will be faced with an overwhelming practical problem of enforcement. Furthermore it is submitted that the agreement to lease or the option to purchase is legally unenforceable on the ground of uncertainty of the land purported to be demised.

On the evidence adduced before this Court I think it is quite clear that the 3rd defendant purported to enter into the agreement for lease with the plaintiff not in his capacity as executor of the estate but in his personal capacity. The real question therefore is whether the 3rd defendant could legally dispose of his beneficial interest in the residuary estate by way of lease or sale in his personal capacity and before the estate has been administered. It is clear from the authorities that until the residuary estate has been ascertained in the course of administration and distributed a residuary legatee or devisee under a will has no claim or any right whatsoever of dealing with his share. The legal position is summarised in Parry's Law of Succession (4th Edition) at page 225 as follows:-

"A residuary legatee or devisee, however, has no claim to any of the deceased's estate in specie nor to any part of that estate until the residue is ascertained. His right is to have the estate administered and then applied for his benefit."

In support of the above statement the case of Bernado's Homes v. I.R.C. [1921] UKHL TC_7_646; [1921] 2 A.C. 1 was cited amongst others. In that case Viscount Cave at page 10 observed:

"When the personal estate (and undoubtedly including real estate) of a testator has been fully administered by his executors and the net residue ascertained, the residuary legatee is entitled to have the residue as so ascertained, with any accrued income, transferred and paid to him; but until that time he has no property in any specific investment forming part of the estate or in the income from any such investment, and both corpus and income are the property of the executors and are applicable by as a mixed fund for the purposes of administration."

A similar observation was made in the same case by Viscount Finlay where at page 8 he said:

"It appears to me that the present case is really decided by the decision of this House in Lord Sudeley's case [1896] UKLawRpAC 53; [1897] A.C. 11. It was pointed out in that case that the legatee of a share in a residue has no interest in any of the property of the testator until the residue has been ascertained. His right is to have the estate properly administered and applied for his benefit when the administration is complete."

In similar vein Lord Atkinson at page 11 said:

"The case of Lord Sudeley v. Attorney-General [1896] UKLawRpAC 53; [1897] A.C. 11 decided in this House conclusively established that until the claims against the testator's estate for debts, legacies, testamentary expenses, etc., have been satisfied, the residue does not come into actual existence. It is a non-existent thing until that event has occurred. The probability that there will be a residue is not enough. It must be actually ascertained."

There is no evidence that at the time of the purported lease to the plaintiff the residuary estate had been ascertained and administered in accordance with the will nor is there any evidence that Certificate of Title No. 7108 forms part of the residuary estate of the testator and in which he was to take one undivided half share. In these circumstances I would infer that administration of the estate was still in process and is not yet complete so that the 3rd defendant had no right in his personal capacity at the material time to enter into an agreement for a lease with the plaintiff in the manner which he purported to have done. It follows in my opinion that the agreement to lease and the option to purchase cannot be legally enforced.

If contrary to my finding of fact, the 3rd defendant was indeed acting as executor of the estate when he purported to lease and sell the land in question, the plaintiff would still have to overcome in my opinion the difficulty raised by section 11 of the Succession, Probate and Administration Ordinance. I do not think the section gives an executor such wide powers of leasing and sale of land as counsel for the plaintiff contends. Subsection (3) thereof makes this I think quite clear. It states:-

"(3)-An executor to whom probate has been granted, or administrator, may, for the purposes of administration, sell or lease such real estate or mortgage the same, with or without a power of sale, and assure the same to a purchaser or mortgagee in as full and effectual a manner as the deceased could have clone in his lifetime."

According to these provisions the powers of an executor to sell or lease real estate can only be exercised for the "purposes of administration". This is a restriction which has always been recognized in this branch of the law. (See Re Kemnal and Still's Contract [1923] 1 Ch. 293). On the evidence before this Court I do not think it can be said that the purported lease and sale by the executor of his own beneficial interest in the form of one undivided half share in Certificate of Title No. 7108 was done in the course of administration of the estate. I think there can be no doubt that the arrangement between the executor of the estate and the plaintiff concerning Certificate of Title No. 7108 was more in the nature of a commercial dealing quite unrelated to any question of realization of assets of the testator. These statutory provisions would therefore appear to afford little or no assistance to the plaintiff in support of his claim.

There is a further difficulty against the plaintiff's claim arising from the contention which I wholly accept that the contract for a lease is unenforceable for lack of certainty of the subject matter of the contract. The description of the property, the subject matter of the alleged lease, is in the following terms:

"lease of one undivided half share of all that land comprised in Certificate of Title No. 7108 being Lot 1 on Deposited Plan No. 2882 containing 1 acre 3 roods and 23.9 perches together with the shop premises erected thereon and more particularly delineated in the sketch plan annexed hereto and marked RED to which the lessor is beneficially entitled."

As matters stand and having regard to the evidence it would be impossible to ascertain and identify the particular area and nature of the land which the 3rd defendant purported to lease to the plaintiff. This was not ascertained nor can it possibly be ascertained even with parol evidence because there are other beneficiaries who are also entitled by way of undivided shares in the same residuary estate and in particular in Certificate of Title No. 7108 and who clearly have not been consulted about the purported lease of the property in question to the plaintiff.

For the reasons I have indicated in the foregoing the substantive action against the defendants must fail and is accordingly dismissed. The payment by the plaintiff to the 3rd defendant of a sum of $1430.50 having been admitted, a refund thereof is ordered. The plaintiff must pay the costs of the 1st and 2nd defendants. No order as to cost is made as between the plaintiff and 3rd defendant who must each bear his own costs.

Plaintiff's action dismissed.

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