Turner v. York Motors Pty Ltd

(1951) 85 CLR 58

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(Judgment by: Williams J)

Turner v
York Motors Pty Ltd

Court:

Judges: Dixon J

Williams JWebb J
Kitto J

Judgment date: 3 October 1951

Melbourne

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Judgment by:
Williams J

This is an appeal by the defendants from an order of the Full Supreme Court of New South Wales dismissing their appeal from a verdict and judgment in ejectment entered for the plaintiff by Kinsella J. pursuant to the answers of the jury to four questions submitted to them at the trial. The land in dispute is held under the provisions of the Real Property Act 1900 (N.S.W.) as amended and comprises an area of about five acres situated at the intersection of Bourke Street and Botany Road, Waterloo. In October 1946 the land was owned by one G. H. Sears. In that month he was approached by the defendant H. S. Turner with a view to leasing about one and a quarter acres of the land. Turner is the managing partner in a firm consisting of himself and the other defendants which carries on the business of building caravans and truck bodies and parking goods under the name of General Motors (Australia) Pty Sears and Turner gave evidence of the negotiations that took place principally over the telephone and their evidence is contradictory on a vital point. Sears said that he would lease the land for two years at PD6 a week, that Turner could go into immediate possession but that a lease would have to be drawn up by his solicitors which Turner would have to sign. Turner said no mention was made of a lease and that it was orally agreed that he should lease the land for two years and thereafter until the tenancy was terminated on three months' notice if Sears wanted the land for his own purposes or on six months' notice if it was resumed. No lease was ever signed although several drafts were submitted to Turner by Sears' solicitors and Turner was repeatedly pressed to execute a lease. The defendants went into immediate possession of the land and thereafter paid rent to Sears at first at the rate of PD6 per week and later at the rate of PD26 per month. They gradually encroached from the one and a quarter acres on to the balance of the five acres and at some date late in 1947 or early in 1948 Sears agreed to the defendants occupying the whole of the five acres, the rent being increased from PD26 to PD52 a month. There were further requests to execute a lease after that date.

Sears sold the five acres to the plaintiff company in October 1948. The company accepted rent at the rate of PD52 per month from the defendants for a short time. On 21st March 1949 the company served a notice to quit in writing on the defendants expiring on 25th April 1949. Upon the defendants refusing to comply with the notice the company brought the present action. The writ was issued on 2nd May 1949. The particulars of claim alleged that the defendants held the property as tenants of the plaintiff under a tenancy at will determinable by one month's notice in writing expiring at any time and that the tenancy was duly determinable by the above notice to quit. The defendants in their particulars of defence alleged, inter alia, that the tenancy was still on foot because it was a term of the tenancy that the landlord would give the tenants three months' notice of his intention to terminate it and this notice had not been given. They also alleged that the property claimed was prescribed premises and that they were tenants thereof within the meaning of s. 8 of the Landlord and Tenant (Amendment) Act 1948 (N.S.W.). They also alleged that the defendants R. M. Turner and N. P. Turner were protected persons as defined in regs. 28A and 30 of the National Security (War Service Moratorium) Regulations and that they relied on the provisions of the latter regulation. At the trial Kinsella J. in his summing up directed the jury that according to Sears the agreement was that Turner could have the land for two years at PD6 a week but that was subject to a formal lease to be drawn up by his solicitors, whereas Turner denied that there was any mention of a lease at all. His Honour said that if the intention of the parties was that the terms of the lease, whatever that might be, should be embodied in such a document the legal result would be, since no lease was executed, that Turner would not be a tenant in the terms of the lease but a tenant at will.

"He becomes a tenant even if he does not sign a lease, as long as the landlord likes to have him there, and with this qualification that the landlord cannot require him to leave with less than a month's notice". The first question his Honour left to the jury was-

(1)

Was the occupation by the defendants under an oral agreement that a formal lease should be drawn up by the solicitor for Mr. Sears to be signed by him and by the defendants? At the request of counsel for the plaintiff his Honour also left the following question to the jury-

(2)

(a)

Was the tenancy between Mr. Sears and Mr. Turner for a term of two years only?

(b)

Was the agreement for a term of two years and to continue thereafter until terminated on three months' notice? His Honour also left the following questions to the jury-

(3)

Is the land prescribed premises?

(4)

Were any of the defendants protected persons?

He directed the jury to answer these two questions in the negative. The jury answered question (1) "Yes", question (2) (a) "No" and question 2 (b) "Yes".

On these findings his Honour entered a verdict and judgment for the plaintiff. It is evident that he considered that the tenancy was one which fell within the provisions of s. 127 of the Conveyancing Act 1919 (N.S.W.) as amended. The Full Supreme Court on appeal were of the same opinion.

The first question that arises is whether this is right. It is evident from the answer of the jury to the first question, read in the light of the summing up, that they accepted Sears' evidence that the negotiations which resulted in the defendants entering into possession of the one and a quarter acres and paying rent were subject to the execution of a formal lease. Later the defendants extended their possession to possession of the five acres and the rent was increased to PD52 per calendar month. Whatever tenancy the defendants had in the one and a quarter acres was then surrendered by operation of law because there could not be two simultaneous leases in possession of the same land. It was, however, common ground that the agreement of the parties with respect to the five acres, apart from the enlargement of the area and the increase of rent, depended upon the October conversations. The plaintiff's claim that the defendants were tenants at will determinable on one month's notice in writing expiring at any time and the defendants' defence that their tenancy was determinable on three months' notice both rested on these conversations. In his summing up his Honour said

"the vital point, of course, Gentlemen, is the telephone conversation in October, 1946, because after that they (that is Sears and Turner) never agreed about anything, apparently, except, perhaps, the indirect agreement for the extension of the area from one and a quarter acres to the whole five acres, but I do not think anything very much turns on that".

Rule 151B of the Supreme Court Rules provides that no direction or omission to direct given by the judge presiding at the trial shall, without the leave of the court, be allowed as a ground for a notice of motion for a new trial or to enter a verdict etc unless objection was taken at the trial to the direction or omission by the party on whose behalf the notice of motion was filed. No objection was taken by counsel of either side to this portion of his Honour's summing up. With the consent of both parties the case went to the jury on the footing that the rights of the parties, apart from the agreement to enlarge the area and increase the rent, remained the same as they had been with respect to the one and a quarter acres. The land in dispute is under the Real Property Act 1900 (N.S.W.) as amended. The registered proprietor of the land at the date of the issue of the writ was the plaintiff. There was no memorandum of lease registered on the certificate of title. But the title of the plaintiff was subject to the tenancy whereunder the defendants were in possession by virtue of s. 42 (d) of the Real Property Act (introduced by s. 38 (a) of the Conveyancing (Amendment) Act 1930 (N.S.W.)).

The jury found that it was a condition of the bargain that the agreement of the parties should be embodied in a formal lease. Until that condition was fulfilled there was no enforceable contract. The effect of this finding was that the defendants were not in possession of the land under any concluded lease or agreement for a lease. The law does not recognize an agreement to enter into an agreement (Von Hatzfeldt-Wildenburg v Alexander ^[27] , at pp. 288, 289; Spottis-woode, Ballantyne & Co Ltd v Doreen Appliances Ltd ^[28] ; Brilliant v Michaels ^[29] ; Eccles v Bryant and Pollock ^[30] ; Summergreene v Parker ^[31] ). At common law a person who enters upon land pending negotiations for a lease or an agreement for a lease becomes a tenant at will of the owner of the land and as such liable to pay reasonable compensation for the use and occupation of the land: Coggan v Warwicker ^[32] ; Dawes v Dowling ^[33] ; Doe d. Hollingsworth v Stennett ^[34] . In those cases no rent had been paid whereas in the present case the defendants paid rent at first weekly and then monthly for the one and a quarter acres and later monthly for the five acres. If they had simply entered into possession of these respective parcels of land with Sears' consent and paid these rents, tenancies from week to week and later from month to month would have arisen by implication of law. But the defendants did not simply enter into possession and pay rent. They were let into possession pending the negotiation, preparation and execution of the formal lease and in those circumstances the payments of rent were referable to their use and occupation of the land in the meantime. They were not to be let into possession under some weekly or monthly tenancy until the lease was executed and then to have a lease of two years from that date and thereafter from year to year until terminated by three months' notice. The term of the lease was to commence from the date they entered into possession and the payments of rent which they made in the meantime would be referable to their provisional use and occupation of the land and subsequently credited in discharge of their obligation to pay rent under the lease. I can see no reason for limiting the application of such decisions as Coggan v Warwicker ^[35] and Dawes v Dowling ^[36] to cases where there has been nothing more than entry into possession pending the execution of a formal lease and no rent has been paid. The payment of a weekly, monthly or yearly rent is not conclusive evidence of a weekly, monthly or yearly tenancy. It is simply evidence of such a tenancy and the true agreement of the parties must be found as a fact from all the relevant circumstances. Agreements for weekly, monthly and yearly tenancies should not be implied where there is evidence that it was not intended to create such tenancies by entry into possession or holding over and payment of rent: Doe d. Moore v Lawder ^[37] ; Doe d. Rogers v Pullen ^[38] ; The Mayor etc of Thetford v Tyler ^[39] ; Finlay v Bristol and Exeter Railway Co ^[40] ; Smith v Widlake ^[41] ; Moore v Dimond ^[42] . Rent paid whilst a proposed tenant is in occupation pending negotiations for a lease does not convert the tenancy at will into something more (Simkin v Ashurst ^[43] ; Caulfield v Farr ^[44] ). In my opinion it follows from the answers of the jury to the first question that the defendants remained throughout tenants at will and nothing more. At common law they could have been ejected after a demand for possession, but it was evidently considered that s. 127 of the Conveyancing Act was applicable and they were served with one month's notice to quit in accordance with that section. In Burnham v Carroll Musgrove Theatres Ltd ^[45] , it was held that that section has no application to cases where before the Act no implication of a tenancy from year to year would have arisen from payment of rent. Notice under the section was therefore unnecessary. A demand for possession is all that is required to determine a tenancy at will. The notice the defendants received was therefore more than they were entitled to and valid to determine the tenancy.

His Honour only asked the second question at the request of counsel for the plaintiff. It really only arose if the jury answered the first question in the negative. They answered this question in the affirmative so that all that the answer to the second question can mean is that the parties intended the duration of the proposed lease to be for two years and thereafter to be determinable on three months' notice. But this intention could only have legal efficacy once a term to that effect had been embodied in the formal lease and that lease had been executed by the parties. Accordingly, subject to the questions of law that arise with respect to the answers of the jury to the third and fourth questions, his Honour was right in holding that the tenancy was duly determined by the notice to quit on 25th April 1949.

It is therefore necessary to consider the answers of the jury to the third and fourth questions. The third question raises the issue whether the defendants were tenants of prescribed premises within the meaning of the Landlord and Tenant (Amendment) Act 1948-1949 (N.S.W.). If they were, the plaintiff's case must fail, firstly because the notice to quit did not comply with s. 62 of that Act, and secondly because the Supreme Court is not a competent court in which a lessor of such premises can bring proceedings for the ejectment of the lessee therefrom (s. 69). In October 1946 there was a building on the land in dispute but it was the property of the Commonwealth and was in process of demolition. Otherwise, apart from a sentry box at the gate, it was bare land. The defendants, in the course of their occupation, brought two caravans on wheels on to the land, built upper stories on such caravans, connected water and electric light and used the caravans partly as offices and partly as a dwelling for H. S. Turner. An old bus was also brought on to the land and converted into a workshop and the caravans and bus were still on the land when the occupation was extended to the five acres. They remained the property of the defendants and could be removed at any time. The rent was paid for the occupation of the land and not for the occupation of any buildings. The tenancy was a tenancy of land only and not of land and buildings. Section 8 of the Landlord and Tenant (Amendment) Act defines prescribed premises to mean

"any premises, other than-

(a)

premises which are for the time being used, or which are ordinarily used, as a grazing area, farm, orchard, market garden, dairy farm, poultry farm, pig farm or bee farm;

(b)

holiday premises; and

(c)

any premises, or the premises included in any class of premises, declared by the Governor, by order published in the Gazette, to be excluded from the operation of this Act, and includes any part of any premises and any land or appurtenances leased with any premises".

The definition is taken directly from the definition of prescribed premises in reg. 8 of the National Security (Landlord and Tenant) Regulations in their ultimate form. The Supreme Courts in two States held that this definition did not include bare land (McNamara v Quinn ^[46] ; Re Mayne ^[47] ). Roper C.J. in Eq. in a third State had expressed the same opinion in Simms v Lee ^[48] when the definition of prescribed premises in the Landlord and Tenant Regulations was slightly different but to the same effect. The definition in s. 8 of the Landlord and Tenant (Amendment) Act 1948-1949 was adopted after these three decisions. It may be assumed that the New South Wales Parliament used the words in the sense these decisions have attached to them. This Court should be slow to place another interpretation on the words in these circumstances although it should not hesitate to do so if it considers the decisions are wrong (Barras v Aberdeen Steam Trawling & Fishing Co Ltd ^[49] , at p. 447; The Royal Court Derby Porcelain Co v Raymond Russell ^[50] ; Platz v Osborne ^[51] ). But, in my opinion, they are right. The word "premises" is used in a popular sense and in this sense has a wide meaning. It is wide enough to include bare land. Its true meaning in any particular statute must be ascertained from the context in which it appears and from an examination of the scope and purpose of the statute as a whole. If the word "premises" in the present definition is intended to include bare land that part of the definition which refers to any land leased with any premises would be otiose. There are cases decided under other Acts in which the same word has been held not to include bare land (Metropolitan Water Board v Paine ^[52] ; Summers v Roberts ^[53] ; Ilford Corporation v Mallinson ^[54] ). In my opinion his Honour was right in directing the jury to answer the third question in the negative.

The fourth question raises the issue whether the defendants R. M. Turner and N. P. Turner were protected persons as defined by regs. 28A and 30 of the National Security (War Service Moratorium) Regulations. These regulations, as well as the National Security (Landlord and Tenant) Regulations, were continued in force during 1947 and 1948 by the Defence (Transitional Provisions) Acts 1946 and 1947. But by an order made under reg. 7AA of the Landlord and Tenant Regulations on 12th August 1948 it was provided that the recovery of leased premises in New South Wales should cease to be restricted and the fixing of fair rents in New South Wales should cease to be controlled under these regulations from 16th August 1948. This was the date on which the Landlord and Tenant (Amendment) Act 1948 (N.S.W.) came into force. The Landlord and Tenant Regulations were discontinued by the Defence (Transitional Provisions) Act 1949. Prior to 13th August 1948 reg. 30 of the War Service Moratorium Regulations depended for its operation upon the existence of the Landlord and Tenant Regulations. But on that date this regulation was repealed by Statutory Rule 1948 No. 109 made under the Defence (Transitional Provisions) Act 1947 and a new regulation inserted in its stead having an independent operation. In Collins v Hunter [55], at p. 67, this Court held that the Defence (Transitional Provisions) Act 1948 was invalid so far as it purported to continue regulations 30A to 30AF of the War Service Moratorium Regulations in force after 31st December 1948, but this decision did not directly affect the validity of regs. 28A and 30. These regulations are contained in Part V of the War Service Moratorium Regulations and were continued in force during 1949 and 1950 by the Defence (Transitional Provisions) Acts 1948 and 1949. They ceased to have effect in New South Wales when an order was made under reg. 7 of the War Service Moratorium Regulations on 13th September 1950 that from and including 21st September 1950 Part V of these regulations should cease to have effect in that State. After the argument of the present appeal, however, the question of the validity of reg. 30 arose in the later appeal of Queensland Newspapers Pty Ltd v McTavish ^[56] and it was held that the Defence (Transitional Provisions) Act 1949 was invalid so far as it purported to continue reg. 30 in force during 1950, and I have no doubt that the effect of that decision is that the Defence (Transitional Provisions) Act 1948 was also invalid so far as it purported to continue the regulation in force during 1949. Accordingly, the defendants cannot rely on the regulation as a defence to the action.

Sections 3 and 4 of the Landlord and Tenant (War Service) Amendment Act 1949 (N.S.W.) correspond with regs. 28A and 30 of the War Service Moratorium Regulations. Both reg. 30 (2) of the War Service Moratorium Regulations and s. 4 (2) of the Landlord and Tenant (War Service) Amendment Act, so far as material, define premises as including land, any part of any premises and any land or appurtenances leased with any premises. The insertion of the word "land" in this definition before the words "any part of any premises" distinguishes it from the definition of "premises" in s. 8 of the Landlord and Tenant (Amendment) Act 1948. Bare land appears therefore to be within the scope of reg. 30 of the War Service Moratorium Regulations and s. 4 of the Landlord and Tenant (War Service) Act, although it is difficult to imagine why the definition of "premises" should differ for the purposes of this Act and the Landlord and Tenant (Amendment) Act. But the Landlord and Tenant (War Service) Amendment Act only came into operation on 6th June 1949. By that time the writ had issued and the defendants were at common law not lessees but trespassers. As that Act only applies to an existing relationship of landlord and tenant, the defendants cannot rely upon it as a defence to the action. It is therefore unnecessary to discuss the issue to which question 4 was directed, that is whether his Honour was right in directing the jury that there was no evidence that any of the defendants were protected persons within the meaning of reg. 30 (1) (a) of the War Service Moratorium Regulations and of s. 4 (1) (a) of the Landlord and Tenant (War Service) Act, which are in the same terms.

I would dismiss the appeal.