Turner v
York Motors Pty Ltd

Judges: Dixon J
Williams J
Webb J

Kitto J

Judgment date: 3 October 1951

Melbourne

Judgment by:
Kitto J

The appellants in this case were the defendants in an action of ejectment brought against them by the respondent company as claimant in the Supreme Court of New South Wales. The action was tried before Kinsella J. and a jury. The jury were asked by the learned Judge to answer four questions, and in view of the answers they returned his Honour entered judgment for the claimant for possession of the subject land and for mesne profits. The defendants moved the Full Court of the Supreme Court to set aside the judgment for the claimant and to enter a verdict for the defendants or alternatively to order a new trial of the action. The motion was refused, and the defendants now appeal to this Court.

The claimant by its writ claimed to have been entitled to the possession of the land therein described on and since 26th April 1949. Particulars of claim filed with the writ alleged that the claimant was seised in fee simple, that the defendants held the property as tenants to the claimant under a tenancy at will determinable by one month's notice in writing expiring at any time, and that the tenancy was duly determined by one month's notice in writing expiring on 25th April 1949. The defendants by their particulars of defence set up a number of defences. It is necessary here to mention only that they denied the allegations in the particulars of claim, and alleged that in or about October 1946 they became lessees of the property claimed, that the tenancy had never been determined, and that they were in occupation of the property claimed pursuant to the terms of the tenancy agreement. The claimant gave particulars in reply which alleged, inter alia, that the defendants were not in occupation of the property in pursuance of any tenancy agreement and that any tenancy the defendants had had of the property had been duly determined.

It was thus common ground that the defendants had been tenants to the claimant of the property claimed, and the claimant rested its case upon the efficacy of a notice to quit, which it had served upon the defendants, to determine the defendants' tenancy. The notice to quit was put in evidence, and service of it on 23rd March 1949 was admitted by the defendants at the trial. The notice required the defendants to deliver up possession of the land mentioned in the writ on Monday, 25th April 1949, and it described the land as being held by the defendants as tenants at will.

The claimant neither alleged in its particulars of claim nor sought to prove at the trial a tenancy at will at common law. Its case was that the defendants' tenancy was a statutory tenancy at will under s. 127 (1) of the Conveyancing Act 1919, which provides as follows:

"No tenancy from year to year shall, after the commencement of this Act, be implied by payment of rent; if there is a tenancy, and no agreement as to its duration, then such tenancy shall be deemed to be a tenancy determinable at the will of either of the parties by one month's notice in writing expiring at any time."

It is settled by the decision of this Court in Burnham v Carroll Musgrove Theatres Ltd [65], that the second limb of this sub-section applies only to cases in which, but for the enactment of the first limb, a tenancy from year to year would have been implied from payment of rent: see also Larke Hoskins & Co Ltd v Icher ^[66] , and Dockrill v Cavanagh ^[67] .

At the trial there was a conflict of evidence as to some questions of fact, but as to others there was no disagreement amongst the witnesses. The facts as to which there was no dispute may be briefly stated. The defendants had gone into possession of a portion of the subject land, comprising about one and a quarter acres, in October 1946, after a telephone conversation had taken place between the defendant H. S. Turner and the then owner of the land, one Sears. Sears had told Turner that he was willing to lease the one and a quarter acres to the defendants at the rental of PD6 per week and that they could take possession immediately. This they did, and thereafter paid him rent, at first paying PD6 every week and later paying PD26 every month. The defendants gradually extended their occupation on to the balance of the land, which had a total area of about five acres. Late in 1947 or early in 1948, after Sears had made unsuccessful efforts to confine the defendants to their one and a quarter acres, the defendants increased their payments to PD52 per month, and Sears accepted these payments and either expressly agreed to, or at least acquiesced in, their continuing to occupy the whole area and paying PD52 per month as rent. Sears sold the land to the claimant in October 1948, and for a short period thereafter the claimant accepted rent from the defendants at the rate of PD52 per month for the whole area. No formal lease was ever executed. On two points relating to the telephone conversation in 1946 the witnesses were in conflict. One was as to whether it was agreed that a formal lease should be executed, and the other was as to whether it had been agreed that the letting should be for two years, or for two years and to continue thereafter until determined by six months' notice if the land should be resumed and three months' notice otherwise.

On these points the claimant relied on the evidence of Sears. As to the first of them, Sears deposed that he had expressly stipulated that a lease would have to be drawn up by a solicitor and signed by the defendants. His evidence was interpreted by the learned judge in his summing up as meaning that the agreement come to between Sears and Turner was subject to a lease being drawn up. No objection was raised by either side to this interpretation of the evidence, and the conflict between Sears and Turner was not as to whether the stipulation for a formal lease was superadded to a concluded oral agreement or was a condition precedent to the making of a concluded agreement; Turner's attitude was that there was no mention of a formal lease at all. The learned judge told the jury that he would ask them to answer the question whether the agreement was "subject to the drawing up of a formal draft lease." The first question he ultimately put to them was framed, with the concurrence of both counsel, in these terms:

"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?"

To this question the jury answered: "Yes". In view of the explanation which the jury had been given as to the import of the question, I should take their answer to mean that the telephone conversation resulted only in an agreement subject to the drawing up of a formal lease. If that is the meaning of the answer, there was no concluded agreement for a lease at all (Spottiswoode, Ballantyne & Co Ltd v Doreen Appliances Ltd ^[68] ; Summergreene v Parker ^[69] ). However, the jury went on to answer the second question, which was divided into two parts:

(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?"

The jury answered: (a) No, and (b) Yes. If the answer to the first question has the meaning I have mentioned, the answers to the second question must mean no more than that the parties had a common intention that the formal lease to be drawn up should provide for a term to endure for two years and thereafter until terminated on three months' notice. (Apparently no one troubled about the stipulation for six months' notice in the event of resumption, as the land was in fact not resumed.)

On this interpretation of the jury's answers, the situation must be taken to be that the defendants entered into possession of the one and a quarter acres as tenants of Sears and paid him rent at the rate first of PD6 per week and later of PD26 per month, without any concluded agreement for a lease for a term. In my opinion the implication of law from the payment and acceptance of rent is that a periodic tenancy was created (cf. Bishop v Howard ^[70] ). If that implied tenancy would have been a tenancy from year to year apart from s. 127 (1) of the Conveyancing Act, that section would have operated to make it a tenancy at will determinable by one month's notice expiring at any time. But there was nothing from which a yearly tenancy could be implied at common law. On the contrary, the rent being reserved and paid at a weekly rate, and later at a monthly rate, the implication of the law is that the tenancy was first a weekly and then a monthly tenancy. A letting without any agreement as to a period, followed by entry and payment of rent, does not result in a yearly tenancy unless the rent is reserved by reference to a year or an aliquot part of a year (Richardson v Langridge ^[71] ; Moore v Dimond ^[72] ; Anthony v Stanton ^[73] ; Willshire v Dalton ^[74] ); and in the statement of this rule a rent reserved by reference to an aliquot part of a year means a rent which is a yearly rent though payable at intervals constituting aliquot parts of a year: Halsbury's Laws of England, 2nd ed., vol. 20, p. 126, note (1).

The case is unlike Moore v Dimond ^[75] , because in that case there was entry and payment of rent under an agreement for a lease for a term of years, and the fact that the rent was reserved by the week was held insufficient to make the tenancy a weekly tenancy, having regard to the agreed duration of the intended lease. Here, on the assumed interpretation of the jury's finding, there was no concluded agreement for a lease for a term. There were only negotiations for such a lease, and the character of the tenancy created by entry and payment of rent cannot be affected by the fact that the negotiations had reached a stage at which the duration of the proposed term was not one of the matters outstanding between the parties: cf. Doe d. Bingham v Cartwright ^[76] ; Coggan v Warwicker ^[77] .

But the matter does not end there. In 1947 or 1948 Sears accepted PD52 per month as rent for the whole five acres. The payment and acceptance of that rent created a new tenancy, and that involved a surrender by operation of law of the tenancy of the one and a quarter acres: cf. Fenner v Blake ^[78] ; Knight v Williams ^[79] , at p. 257; Foa's General Law of Landlord and Tenant, 7th ed. (1947), p. 618. The new letting was a general letting at PD52 per month, and in my opinion a monthly tenancy should be held to have arisen.

To such a tenancy s. 127 (1) of the Conveyancing Act has no application, and a month's notice expiring at any time is not effective to determine it; there must be a month's notice expiring at the end of a complete month of the tenancy (Lemon v Lardeur ^[80] ; Amad v Grant ^[81] ; Willshire v Dalton ^[82] ). Whether this rule is satisfied by a notice to quit which expires, not on the last day of a month of the tenancy, but on the first day (see Sidebotham v Holland ^[83] ; Quartermaine v McCleery ^[84] ), is a question which need not be considered here. As to the date of commencement of the original tenancy of the one and a quarter acres Sears was unable to give any evidence, as he said he could not swear to the date of the telephone conversation. Turner, however, fixed that date as 9th October 1946. There was no precise evidence as to the date of commencement of the tenancy of the whole five acres, but, as this tenancy arose from the acquiescence of Sears in the continuance of the formerly unauthorized encroachment by the defendants on to the portion of the area beyond the one and a quarter acres and his acceptance of an increased monthly rental, the only conclusion open on the evidence is that this tenancy commenced at the end of a month of the earlier tenancy. A proper notice to quit must therefore have expired on a date which could not be later than the 10th day of a month, if Turner's evidence fixing 9th October 1946 as the date of the telephone conversation were accepted. If his evidence on this point were not accepted, the date of commencement of the tenancy, and therefore the proper date for expiration of a notice to quit, were not established at all. The claimant, if in doubt as to the correct date to choose for the expiration of its notice to quit, might have given a notice so expressed as to expire on a specified day

"or at the expiration of the current month of your tenancy which shall expire next after the end of one month from the service of this notice"

see Cole on Ejectment, (1857), p. 51; Queen's Club Gardens Estates Ltd v Bignell ^[85] , at p. 126; Amad v Grant ^[86] . But it did not do so; it misconceived the tenancy as being one to which s. 127 (1) of the Conveyancing Act applied, and it gave notice to quit "on Monday the 25th April 1949". Failing to adduce any evidence upon which it could be found that that was a date upon which a notice to quit could be made to expire so as to be effectual to determine the tenancy, the claimant failed to make a case for the possession which it claimed in the action.

In the Supreme Court the learned Judges who composed the Full Court were apparently disposed to take this view, but they declined to give effect to it, because they considered that the point had not been raised at the trial. They gathered from the transcript that, although it had been contended by counsel for the defendant that the tenancy was a monthly tenancy, it had never been contended that the proper notice to quit was other than a three months' notice. But the sufficiency of the notice to quit was put in issue by the particulars of defence, and counsel for the defendants made the general submission that there was no evidence to go to the jury and that the notice to quit was insufficient. I do not think that the point should be treated as having been raised on appeal for the first time; but even if it was, since it was a point fatal to the claimant and incapable, according to the evidence, of being cured at the trial, the defendants were entitled to rely upon it in the Full Court (Adams v Chas. S. Watson Pty Ltd ^[87] , at p. 548).

On the footing, then, that the jury's findings mean that Sears and the defendants never reached a binding agreement for the lease which they intended should be drawn up, I should be of opinion that the defendants were entitled to judgment. But the questions put to the jury were not framed with precision, and the answers to them may well have been intended to express a finding that there was a concluded agreement for a term to continue for two years and thereafter until determined by three months' notice, and that the stipulation for the execution of a formal lease did not deprive that agreement of immediately binding force. If that is the meaning of the answers, it appears to me to be a necessary consequence that, when the defendants' tenancy of the one and a quarter acres was replaced by a tenancy of the five acres without any further agreement as to period or notice, the new tenancy was for the unexpired balance of the two years and was to continue thereafter until terminated by three months' notice. A finding that the defendants, when they obtained the larger area, gave up such security of tenure as they had with respect to the smaller area, would require evidence of an agreement to that effect, and there was no such evidence. It is true that the jury did not make any finding as to the terms of the lease of the five acres, but in my opinion there was no room for any other conclusion than that which I have stated. It therefore becomes unimportant to consider whether the tenancy after the expiration of the two years was a monthly tenancy or a yearly tenancy, for in either case it was competent for the parties to make any agreement they wished as to the length of notice which should suffice to determine the tenancy. Even if the tenancy should be regarded as a yearly tenancy implied by payment of rent, it was not one as to the duration of which there was no agreement, and s. 127 (1) of the Conveyancing Act therefore had no application to it.

In my opinion, the claimant could not have been entitled to succeed on the jury's findings unless it had obtained further findings establishing first, that the creation of the tenancy of the five acres marked a completely new departure so that the terms of that tenancy should be ascertained without reference to the terms of the pre-existing tenancy of the one and a quarter acres, and, secondly, that the new tenancy was one which at common law would have been a yearly tenancy implied by payment of rent. But no such findings were made or could properly have been made on the evidence. Indeed a finding which would support the first proposition would have destroyed the possibility of establishing the second; for, since the rental agreed upon and paid for the new tenancy was a monthly rental, there was nothing from which a yearly tenancy could be implied by payment of rent unless the character of the tenancy of the five acres were affected by the fact that the tenancy of the one and a quarter acres had been for an agreed term of two years. A tenancy which arises when a tenant holds over and pays rent may no doubt be held to be a yearly tenancy having regard to the duration of the original term and the fact that the rental is payable monthly (Beattie v Fine [88], at p. 374); but such a conclusion would be excluded in this case by the hypothesis that the agreement for the tenancy of the five acres was made without reference to the agreement for the tenancy of the one and a quarter acres.

I am therefore of opinion that judgment should have been entered for the defendants. They raised additional defences upon which the trial judge ruled in the claimant's favour, but I need not consider those defences in view of the conclusion I have stated.

In my opinion the appeal should be allowed and the order should be in the terms proposed by Dixon J.