Rajasundaram & Ors v Pillay (SCA 09/2013) [2015] SCCA 12 (17 April 2015);

IN THE SEYCHELLES COURT OF APPEAL

 

[Coram:     S. Domah (J.A) , A. Fernando (J.A) , M. Twomey (J.A)

Civil Appeal SCA09/2013

(Appeal from Supreme Court Decision340/2010)

 

S. Rajasundaram

V.T. Pandiyan Pillay

(Joint Executors of the Estate of  V. Thirumeny Pillay)

 

Appellants

 

 

Versus

 

Ramesh Pillay

 

Respondent

 

 

 

Heard:             09 April 2015

Counsel:          France Bonté

 

 

                        Basil Hoareau

 

Delivered:       17 April 2015

 

JUDGMENT

 

M. Twomey (J.A)

 

 

[1]               V. Thirumany Pillay died on 15th October 2001. The Respondent is his son and one of his many heirs who also had power of attorney for his father from 1999 until his death. Relations between the heirs soured over the Respondent’s acts during that period as he transferred some of his father’s assets to himself personally. The matter was heard at the Supreme Court and Juddoo J. made an order for the distribution of the estate among the heirs. Two executors, the Appellants, were appointed to his estate. Juddoo J’s decision was appealed as he had made no distinction between the natural and the legitimate heirs in his order for the distribution of the estate.  The Court of Appeal, in a decision delivered

 

on 29th November 2006 (SCA 6/2005) ordered that the allocation made by the Supreme Court of shares to the heirs of the estate be set aside.

[2]        It further ordered that all the businesses and assets alienated by the Respondent be returned to the estate, that a surveyor be appointed by the executors of the estate to evaluate the land and buildings and that the whole estate be valued de novo and distributed to the heirs according to law.(our emphasis).

[3]        The Court of Appeal further directed that the matter be placed before another judge of the Supreme Court to ensure the implementation of its orders. On 25th July 2008, Gaswaga J of the Supreme Court in implementing the Court of Appeal’s directions, further ordered that G & M Surveys value the properties and that Wilfred Jackson be appointed to draw up an inventory of the stock of the shop of the deceased and to audit the accounts produced by the Respondent.

 

[4]        The joint executors drew up a report on 27thApril 2010 with a view to distributing the assets of the estate. They proposed to distribute the estate as follows:

 

 

 

No

Details of Estate

Ownership / lease now changed to

 

1

 

Lease-hold land comprised in parcel C4240 {limited to an area where the shop V T Pillay is situated}

 

 

 

*******************

 

Remainder

 

 

V T David Pillay,

V T Elangovan Pillay

V T Rajendran Pillay

V T Pandiyan Pillay

V T Ravinchandran Pillay

 

****************

 

V T Vengadesan Pillay

V T Ramesh Pillay

V T Kalyanaraman Pillay

V T Sathiyamoorthy Pillay

Rajeshwari Pillay {daughter}

 

 

2

 

A Retail shop at Anse Royale known as V T Pillay shop being managed by V T Ramesh Pillay. {including its merchandise, stock in trade,

 

 

machineries, fleet of vehicles, any other license under V T Pillay}

 

V T David Pillay,

V T Elangovan Pillay

V T Ranjendran Pillay

 

 

V T Pandiyan Pillay

V T Ravinchandran Pillay

 

 

3

 

A Retail shop at Anse a La Mouche known as “Sri Vinayagar Trading” being managed by V T Rajendran Pillay {Licensee Randiyan Pillay – Land Title C 283}

 

The shop remains on a lease-hold land wherein the Government of Seychelles is the Lessor

 

V T Vengadesan Pillay

V T Ramesh Pillay

V T Kalyanaraman Pillay

V T Sathiyamoorthy Pillay

Rajeshwari Pillay {daughter}

 

4

A Retail shop at Anse Boileau known as “V T K & P Pillay” being managed by V T Elango Pillay

The land and building belong to a private individual.  The shop is on private lease basis.

V T David Pillay,

V T Elangovan Pillay

V T Rajendran Pillay

V T Pandiyan Pillay

V T Ravinchandran Pillay

4

A Retail shop at Anse Boileau known as “V T K & P Pillay” being managed by V T Elango Pillay

The land and building belong to a private individual.  The shop is on private lease basis.

V T David Pillay,

V T Elangovan Pillay

V T Rajendran Pillay

V T Pandiyan Pillay

V T Ravinchandran Pillay

 

 

 

[5]        The Respondent opposed the distribution proposed by the executors contending that not only was it unlawful but that he was owed SR 4 million from the estate for his investment in one of the assets namely the building and premises on Parcel C4240. He contended that the term ‘distribute’ used in Article 1024 of the Civil Code of Seychelles was restricted to determining the shares of each heir and not to the partitioning of the estate as had been proposed in the report of the Appellants.

 

[6]        In a judgement given on 21st March 2013, the learned Chief Justice did not rule on the debt of SR4 million but found in favour of the Respondent on the issue of distribution. He found that the executors’ proposed distribution amounted to a partition of the estate and that they had no power to effect the same.

 

[7]        The Appellants have filed 5 grounds of appeal:

            Ground 1: The learned Chief Justice failed to appreciate that the executors in their report dated 27th April 2010, had only complied with the directions of the Seychelles Court of Appeal (SCA 6/2005) and in accordance with the terms of the said judgment, in terms of distribution and he further failed to appreciate that the Respondent or his attorney never objected to the report dated 27th April 2010 nor challenged before the Supreme Court of Seychelles until the date of a new Plaint.

            Ground 2: The learned Chief Justice erred in his findings in not reading the effectual judgment of the Seychelles Court of Appeal while attributing a wrong meaning to the word “distribution” thus failed to analyse his findings without any proper legal footing. (sic) The Court of Appeal in its directions made in SCA6/2005 would have made it in unambiguous terms if the distribution only involved the assignment of shares on paper.

            Ground 3: The learned Chief Justice however was it conceded by the Respondent, (sic) having dismissed the part claim of the Plaint which is linked to the distribution report ought to have appreciated the nexus and he ought to have dismissed the plaint in its entirety.

            Ground 4: The learned Chief Justice failed to appreciate the “synonymous” powers of the executors who can be fiduciaries as laid down in article 1028 of the Civil Code of Seychelles erroneously decided that the legal heirs could appoint fiduciaries themselves and at a later stage.

            Ground 5: The learned Chief Justice never considered the other legal aspects of the defence as raised by the Appellants before the Supreme Court and proceeded to dismiss the Plaint on a single issue of terminology - “distribution”.

[8]        Counsel agree that the grounds boil down to two issues: firstly, whether there is a distinction between the duties and powers of executors and fiduciaries and secondly whether the term “distribute” includes the partitioning of the estate of the deceased.

 

[9]        We shall first deal with the distinction between the powers of executors and fiduciaries. The Civil Code of Seychelles introduced the notion of executor to the law of Seychelles for the first time. The French Civil Code vests succession immediately in the heirs whether land is co-owned or not. Given the limited land mass of Seychelles, a continuation of that system would have meant further fragmentation of rights in land, already problematic in 1975 when the Code was promulgated. Articles 1025-1026 of the Code therefore provides for the appointment of executors either by the testator or failing that by the court. Executors hold the estate on behalf of the heirs where there is co-ownership of property.

[10]      The Code however does not only provide that the successors’ rights be vested in an executor but makes it clear that that an executor is also a fiduciary. This was done most probably because co-ownership most often arises in the context of a succession.  Article 724 of the Code thus states:

                  “If any part of the succession consists of immoveable property, the property shall not vest as of right in any of his heirs but in an executor who shall act as fiduciary…”

Article 1025 of the Code also clearly states:

“…Any executors appointed shall act as fiduciaries with regard to the rights of the persons entitled under the will, as provided by the Code, and also with regards to the distribution of the inheritance.”

    Further, article 1028 provides that:

“The executor, in his capacity as fiduciary of the succession, shall also be bound by all the rules laid down in this Code under Chapter VI of Title I of Book III relating to the           functions and administration of fiduciaries, insofar as they may be applicable”

 

 

 

 

[11]      It is therefore quite clear that the executor also assumes the duties of a fiduciary. He has further duties as it is incumbent on him to wind up an estate. In this respect article 1027 provides:

                       “The duties of the executor shall be to make an inventory of the succession to pay the debts hereof, and to distribute the remainder in accordance with the rules of intestacy, or the terms of the will as the case may be.”

            It is clear to us that the executor therefore is not only a fiduciary but has duties over and above a fiduciary in terms of the distribution of a succession to the heirs. The grounds of appeal relating to this issue therefore succeed.

[12]      We now turn to the second issue of whether the duties of an executor either as an executor or a fiduciary allow him to partition the property and to share it among the heirs. As pointed out Article 1027 of the Code (supra) demands that the executor carries out an inventory of the succession, pays the debts and distribute the remainder of the succession.

 

[13]      It is the meaning of the plain word “distribute” that is being challenged. Mr. Bonté for the Appellants insists that the term “distribute” must include the meaning of partitioning and allocating moveables and immoveables to the different heirs. He gave the example that if one were asked to distribute 8 mangoes to 8 heirs one would give a mango to each heir. Mr. Hoareau, on the other hand, argues that the term distribute should be restricted to simply a determination of the shares of the heirs in the estate. In other words and to use Mr. Bonté’s apt imagery, one would have to tell each heir that they were entitled to one mango each. To do otherwise, he contends would entail the concept of partitioning and not distribution. Partitioning as he understands it has to come by agreement of all the co-heirs or by a court order.

[14]      We do not need to resort to the English dictionary meaning of the word. The concept of distributing the estate is from the French concept of le partage not from an English concept.  It  is  true  that  the  Code  was  revised  to  introduce the notion of executor and

 

fiduciary but it did not do away with the concept of co-propriété (co-owned property) and the rights of the co-indivisaires (co-owners in indivision).

[15]      Some clues as to the meaning of the term distribute lie in the articulation of the duties of the executors and fiduciaries in the Code. Article 825 of the Code provides:

The functions of the fiduciary shall be to hold, manage and administer the property, honestly, diligently and in a business?like manner as if he were the sole owner of the property.  He shall be bound to follow such instructions, directions and guidelines as are given to him in the document of appointment by the unanimous agreement, duly authenticated, of all the co?owners or by the Court.  He shall have full powers to sell the property as directed by all the co?owners, and if he receives no such directions, to sell in accordance with the provisions contained in articles 819, 1686 and 1687 of this Code and also in accordance with the Immovable Property (Judicial Sales) Act, Cap. 94 as amended from time to time.

 

The fiduciary therefore has the power to sell, or in other words alienate the property. In this respect, the Code provides that if one of the co-owners objects to a private sale, the

property can be sold by public auction. The fiduciary can also resort to a sale by licitation

(article 1686) for situations where the undivided property cannot be divided conveniently.

The distribution of the estate in these circumstances is in the allocation of the proceeds of

sale to the heirs to the value of their share in the estate.

 

[16]      It is true that a co-owner may oppose a sale by the fiduciary or the executor, but in those cases the Code provides that only a postponement of the sale can take place. Further, in those situations article 821 of the Code provides that the Court may make an order for postponement of the sale two alternative grounds-

“1st  That greater hardship would be caused by refusing to grant the order staying the proceedings in licitation than by granting it.

 

2nd That the property may be conveniently and profitably divided in kind amongst those entitled.  In that case the Court, in order to effect such partition, shall decide the manner of partition and the allocation of the divided property amongst the persons entitled.”

 

[17]      It becomes clear that the fiduciary or the executor has the power to sell or alienate the property but that an heir can oppose the sale. The logical question that arises is if he can alienate the property by selling it why then would he not be allowed to partition the land to effect a distribution of the estate among the heirs? The logical answer must be that he can but similar to the circumstances of a sale an heir can oppose the partition.

[18]      It is even clearer that an executor charged with the duties of winding up the estate under article 1027 (supra) would have his duties frustrated if all he could do was to evaluate the lawful shares of each heir. An executor would not be needed for this function. Any person worth his salt can read the provisions of the Code and know and evaluate what shares they have in a succession. The aim of amending the Code was to prevent this permanent need to resort to court to wind up every succession that resulted in co-ownership and yet in effect this is what has resulted and paralysed the distribution of co-owned property since the amendment of the Code. The very raison d’être of the amendment has been lost over successive cases in which the powers of executors have been unduly limited. The result is there for all to see, executors in Seychelles remain executors for life unless removed, property remains in indivision for perpetuity and the precious supply of property for sale and investment even more limited.

[19]      We now have a chance to pronounce on this practice and do so in no uncertain terms. The purpose of an executor appointment is to have the executor share out the succession among the heirs. Winding up a succession estate means evaluating the share of the heirs under the laws of succession and then to propose and make a physical allocation of property to the heirs where that is possible and to sell the land and share out the proceeds of sale to the heirs where partition is impossible. Of course if the heirs disagree with his method of allocation they can resort to court. Mr. Hoareau predicts that the court will be flooded with such applications should that be the case. Can that be any worse than the numerous property and succession cases this court has had to deal with? We do not think so.

 [20]     Having decided that a fiduciary or an executor can propose a partition of the estate among heirs and an heir can oppose the partition, the Respondent’s objection to the partition by the Appellants (the executors) must be taken as an objection to their proposed manner of distribution and not to their right to partition the property among the heirs.   This matter has been in the annals of the court since 2002 in one guise or another. 13 years later it is time to lay this matter to rest. We have in this regard considered sending the matter back to the Supreme Court for a further assessment of the distribution of assets and partition of the property.  We are conscious however that part of the problem in this case arose from the fact that the Court of Appeal in 2005 delegated the function of overseeing the distribution of this estate to the Supreme Court. We do not think this will serve any purpose as the learned Chief Justice who heard the matter has left the jurisdiction. Indeed the two other judges who also part heard this matter at some point (Juddoo J and Gaswaga J) have also left these shores.

[21]      We are of the view that we are in as good a position as any other judge in the Supreme Court to assess the evidence adduced in this matter. The partition and distribution of the estate of Mr. V. Thirumany Pillay as proposed by the executors is supported by the survey plans and audited accounts insofar as that was possible and bearing in mind the lack of cooperation of the Respondent clearly visible from the transcript of court proceedings before us. We do not accept as is contended by the Respondent that the proposed partition is the work of only one executor. It is clear from the report of V. T. Pandiyan Pillay that he endorses the proposal of S. Rajasundaram. Further, we have been unable to find any evidence adduced to support the contention of the Respondent that he is owed SR 4 million.

[22]      In the circumstances we are of the view that this proposed partition is the best that can be done to bring a fair and conclusive end to this sorry family infighting. We therefore make the following orders:

               

1. The executors of the estate of V.Thirumany Pillay are to distribute the estate in                      accordance with the proposal submitted to the court and contained in paragraph 4 of this appeal.

            2. We make no order as to costs.

 

 

M. Twomey (J.A)

I concur:.                                ………………….                                           S. Domah (J.A)

I concur:.                                ………………….                                           A.Fernando (J.A)

 

 

Signed, dated and delivered at Palais de Justice, Ile du Port on17 April 2015