1933 Present: Akbar J. and de Silva A.J.

PERERA v. TISSERA et al.

28 and 29-D. C. Chilaw, 8,811 and 8,812.

Trust-Administrator and heir-Settlement of accounts-Undue influence-Mortgage bond in favour of third party-Presumption attaching against third party-Sale of property to administrator-Creation of trust in favour of heirs-Judicial settlement of accounts-Passing of final account -Trusts Ordinance, No. 9 of 1917, s. 90-English law.

Where the widow of an intestate transferred her half share of certain lands to the administrator under an arrangement, the object of which was to preserve the property for the minor children of the intestate, and where by a subsequent deed, which purported to be a deed of agreement between the administrator and the guardian ad litem of the children, the administrator undertook to sell to the children the share of the lands, which he obtained, upon payment of a certain sum of money within a stated period,-

Held, that, in the circumstances, a trust had been established in favour of the children and that all the pecuniary advantages obtained by the administrator in dealing with the lands transferred to him must be held by him in trust for the benefit of the minors.

The English law of undue influence has become part of the law of Ceylon.

The circumstances, under which the presumption of undue influence arises in the case of transactions between parent (or person placed in loco parentis) and child, and how that presumption may be rebutted under the English law, indicated.

The presumption of undue influence would arise in the case of a settlement of accounts between the administrator and the heir of the intestate, who was living with the former at the time.

When at a settlement of accounts between the administrator and the heir a deed of agreement was entered into by which the heir acknowledged liability to pay the administrator a certain sum of money, and in order to discharge that liability mortgaged her property with a third party, who was aware of the facts and attendant circumstances,-

Held, that the presumption attached against the third party as well and that he took the mortgage bond at his peril.

Held, further, that in order to disentitle a party from seeking relief from a contract on the ground of ratification by acquiescence, there must be proof not only of assent, but also assent after the party became aware of the violation of his rights.

An administrator who desires to have a conclusive settlement of accounts and of the distribution of the assets must take steps under Chapter L V. of the Civil Procedure Code. Under that Chapter, after a proper scrutiny of accounts, the Court will proceed to enter a decree under section 740 directing payment and distribution to persons entitled according to their respective rights.

The passing of a "final" account after notice to all the parties interested does not constitute a judicial settlement and does not supersede the procedure by way of a judicial settlement.

IN these two actions Nos. 8,811 and 8,812, which were tried together, the plaintiff sought to set aside deed No. 3,418 dated March 12, 1926, executed by her in favour of the first defendant and bond No. 3,482 of the same date executed by her in favour of the second defendant on the ground of undue influence.

The plaintiff is the daughter of one Albanu Tissera, who died on July 23, 1915.

The first defendant is the brother of Albanu and took out letters of administration to his estate in testamentary proceedings No. 1,102 of the District Court of Chilaw. The first defendant was admittedly in possession of Albanu's estate until March, 1926.

The plaintiff's case was there was no proper settlement of accounts and that the defendant caused her to execute the deeds by the exercise of undue influence.

It was contended on behalf of the defendant that the accounts were looked into in March, 1906, and that the impu