Arnold v Mann

Arnold v Mann - [1957] HCA 64 - HCA 1957 case summary — Zoe

[6]

The ground stated by the notice to quit is within that prescribed by s. 62 (5) (b) (i) of the Act and, if in truth the covenant was broken by the work caused to be done by the lessee Towers, his tenancy would end at the expiration of the notice on 18th July 1952. That is the effect that has been ascribed to s. 67. If, as Towers did, the tenant continues in occupation of the premises he does so not in the exercise of the proprietary right the lease gave him before it was determined but in reliance upon the protection given him by the Act. As provided by s. 62 (3) the lessor may proceed in a competent court as defined by s. 69 to recover possession from him and that court must take into consideration before making an order many matters besides the fact that the tenancy has been lawfully determined: s. 70. But unless and until an order is made the tenant may continue to occupy the premises notwithstanding that his tenancy has been determined by a valid notice to quit given on a ground authorised by s. 62 (5) which in point of fact truly existed. See Anderson v. Bowles [1] ; Andrews v. Hogan [2] ; Bonnington and Co. Pty. Ltd. v. Lynch [3] ; Read v. Morris [4] . His possession or occupancy however involves no more than a personal right and it does not pass by assignment to a stranger to the former tenancy; Richardson v. Landecker [5] . But to assign his tenancy of the land is precisely what Towers proceeded to do. By a deed dated 24th October 1952 he purported to assign to Arnold and Warzecha, the present defendants appellants, the weekly tenancy arising under the lease in consequence of his holding over after the expiry of the term. The assignment was a formal document reciting the lease and its relevant provisions including that already mentioned deeming the lessee to be a weekly tenant at a rent of £5 per week if he was permitted to hold over. It recited that he was holding over under the lease and assigned the weekly tenancy of him Towers as weekly tenant as aforesaid at £5 per week in the said premises. In September 1953 Mrs. Keen transferred the estate in fee simple in the land to her daughter Mrs. Mann who is the claimant respondent.

[9]

The first question which naturally suggests itself is whether, on the assumption that Towers at the date of the assignment no longer occupied the land in virtue of a tenancy but only under the protection of the statute, an action of ejectment in the Supreme Court would lie against Arnold and Warzecha who came in as his purported assignees. In other words do sub-ss. (1) and (3) of s. 62 apply to such a case and give exclusive jurisdiction to a court of competent jurisdiction as defined by s. 69? It is, I think, convenient to repeat a passage from what I said in Andrews v. Hogan [1] concerning the possibility after the determination of a lease of maintaining in the Supreme Court an action of ejectment against persons who had come in under the tenant but whom I did not regard as within the definition of lessee contained in s. 8 (1). The passage is as follows: "The question is whether such a proceeding comes within the fair meaning of the words of s. 62 (1). The words are "to recover possession of the premises from the lessee or for the ejectment of the lessee therefrom". These words should, I think be given the widest meaning of which they are capable. They are obviously directed at all forms of proceeding for obtaining the possession which belongs to or is attributable to the lessee. In s. 62 (3), the correlative provision, the lessor is authorised to take proceedings in a court of competent jurisdiction subject to the prescribed conditions for the recovery of prescribed premises, but in that case the description of the proceedings is not limited by any mention of the character of the person from whom there is to be the recovery. In s. 70 (1) (a) the hardship to be considered is that of the lessee or any other person, and in s. 70 (2) the requirement of suitable alternative premises is made a condition of an order for recovery of any dwelling house in terms capable of including a proceeding directed against anyone and for that matter in any court. In s. 82 (3) and (4) provision is made for the protection of sub-tenants when the lessee receives a notice to quit and is proceeded against. All these provisions show that the plan of the Act is to throw the protection it gives round the tenant and those claiming under him as sub-tenants. The plan makes it important that a wide application should be given to the leading prohibition against proceedings for recovery of possession from the lessee upon which the whole plan hangs. I think therefore the words of that provision should be interpreted as extending to a proceeding by writ of ejectment where, although the lessee is not named, the direction of the writ to persons by description is sufficient to include him and he may defend the action and where a judgment for the claimant would terminate his possession by the sub-tenants who are defendants [1] ".

[22]

It will be seen that up to this point nothing appears in evidence which would warrant the conclusion that Towers continued in occupation otherwise than under the protection of the Landlord and Tenant (Amendment) Act. The notice to quit had, according to the hypothesis demanded by the jury's verdict on the first trial, been validly given on a statutory ground existing in fact and it had expired. Towers had been asked if he would get out and had refused to do so. Nothing else had been done except that he paid rent and it was received as s. 80 contemplates. But Towers's solicitors then proposed a transfer of "the existing lease" and submitted the credentials of the proposed transferees on the apparent footing that the covenant against assignment without consent contained in the old lease still applied. Five weeks later, namely on 24th October 1952, Towers assigned his supposed tenancy to the defendants. If such a tenancy was created it must have arisen out of what took place in the interval. Of course what had occurred before and what occurred afterwards might have the one a prospective and the other a retrospective value as evidence because of some light it might throw on the conduct of the parties during that five weeks. But, as it seems to me, in the end it must be what they did and said in the period between 19th September and 24th October 1952 that governs the question whether a new tenancy had been created. For so far as the evidence discloses the facts it seems clear enough to me that up to 19th September it had not done so. Materials however were soon forthcoming to provide a footing for the contention that at all events Mrs. Keen's solicitors took the description "weekly tenant" to be apt to describe Towers, whatever the legal result of that might be. For on 23rd September 1952 they wrote - "We wish to acknowledge receipt of your letter of 18th instant and to our subsequent telephone conversation with your Mr. Hill" (Towers's solicitor). "We confirm the fact that your client desires either an assignment of his present weekly tenancy or a fresh weekly tenancy granted in favour of the purchasers. We wish to advise that we have requested instructions of our client and as soon as we receive the same we shall again communicate with you".

[30]

Once the notice to quit expires the old tenancy is gone. It is too late to continue the old tenancy by a common agreement that the notice to quit shall be withdrawn. Indeed according to Tayleur v. Wildin [4] , the facts of which are much better stated in [5] , even before the expiration of the notice to quit nothing can save the old tenancy: a new one must be created. One would have thought that if by mutual consent the unexpired notice were withdrawn a conventional estoppel would arise requiring the parties to treat it as if it had never been. For the term or interest had not at that time been destroyed. But be that as it may, after the destruction of the tenancy nothing but a new tenancy will serve. If a new tenancy between Towers as tenant and Mrs. Keen as landlord had arisen, it might perhaps be argued that the assignment expressed as it is to relate to the tenancy under the lease would be insufficient to pass it. However as the new tenancy would be an identical interest though under a different title it would seem that it would pass under the provisions of s. 68 of the Conveyancing Act 1919-1943 construed with the definitions in s. 7 of the words conveyance and property. Again, although a new tenancy must be created and an intention, express or implied, must be found that there shall be a weekly tenancy between the parties, certain distinctions must be kept in mind. On the one hand what is needed is a common intention that there shall be a tenancy: not an intention that the tenancy shall be a new one as opposed to a revival or continuation of the old one. If the parties really intended to revive or continue the old tenancy mistakenly believing that they could do so, for example, by a retraction ex post facto of the notice to quit, this might perhaps be construed as the creation of a new tenancy. On the other hand a mistaken belief that the notice to quit had not destroyed the tenancy is not the same as an intention to revive or continue it. Such a mistake might quite well arise from reliance upon the doctrine of Krupa v. Zacabag Pty. Ltd. [1] , and a failure to realise that, at all events after the decision in Andrews v. Hogan [2] , it was no longer law: see Read v. Morris [3] . Again a fear on the part of Mrs. Keen or her advisers that a magistrate would refuse to turn out Towers and an acquiescence in his remaining in occupation would not be the same as an intention to revive or continue the old tenancy.

[37]

Before examining the facts further it is necessary to consider the effect of the expiration of a notice to quit duly given in accordance with the provisions of the Landlord and Tenant (Amendment) Act. The case of Anderson v. Bowles [1] was concerned with the National Security (Landlord and Tenant) Regulations and the Landlord and Tenant Act 1948 of Queensland. The material provisions of those regulations and that Act did not differ materially from those of the New South Wales Act here in question, and in that case the law was stated thus: - "A body of judicial decision exists for the view that, after a valid notice to quit has been given in accordance with reg. 58 (which corresponds with s. 41 of the Act) and expires, a tenancy is brought to an end by virtue of reg. 62 (s. 46), but nevertheless the lessee remains protected against dispossession by the lessor whether by peaceable re-entry or otherwise unless and until an order for possession is made by a court of competent jurisdiction under the statutory provisions and the time for the execution of the order expires, the tenant being liable to pay the rent and observe the other obligations of the tenancy, so far as applicable, in the meantime [1] ". The effect of this is that on the expiration of the notice the tenancy and the true relation of landlord and tenant come to an end, and (what is the important point for present purposes) the rights and immunities given by the Act to the tenant are personal to him and not capable of assignment. A considerable number of cases decided by State Courts was cited in Anderson v. Bowles [2] as supporting the passage quoted above, and these included the New South Wales case of Richardson v. Landecker [3] . In Krupa v. Zacabag Pty. Ltd. [4] a different view was taken by the Full Court of New South Wales. It was held in that case that the expiration of a notice to quit given under the Act did not terminate the tenancy, but that the tenancy continued to subsist until the tenant vacated the premises or an order for possession was obtained under the Act. If an order was applied for and refused, the position continued as before the giving of the notice to quit. Krupa v. Zacabag Pty. Ltd. [4] was followed in Furness v. Sharples [5] . Those two cases, however, were overruled in Read v. Morris [6] ; where the law was again stated as in Anderson v. Bowles [2] and Richardson v. Landecker [3] . It must clearly now be taken that the effect of a valid notice to quit under the Act is the same as that of a valid notice to quit at common law. That is to say, it terminates the tenancy as from its expiration.

[47]

In the present case, as in Blyth v. Dennett [3] , the agreement, if any was made, was made after the expiration of the notice to quit. It is therefore clear, whatever may be thought of Tayleur v. Wildin [4] , that, if any agreement were made, it would have technically the effect of creating a new tenancy. It is not, therefore, wrong to say that the ultimate question in the case is whether the landlord and the tenant agreed that a new weekly tenancy should follow on the old weekly tenancy, which had been terminated by the notice to quit. But such a statement of the question is apt to be very misleading. For it is not to be supposed that a tenant in the position of the appellants fails to establish the subsistence of a tenancy at the material time unless he shows that there was a conscious intention on the part of himself and his landlord to create a new tenancy as distinct from continuing the old. If (to take a very clear example) the tenant wrote to the landlord, saying: - "I ask you to allow my tenancy to continue as from the expiration of your notice to quit", and the landlord wrote back, saying: - "I am quite agreeable to that course", the tenant would have a clear defence in an action of ejectment. The result would be the same if the actual terms of their agreement were that the notice to quit should not be regarded as having terminated the tenancy. What the law says in such cases as this is not that the parties must have consciously assented to a new tenancy, but that, if they have assented to the existence of a tenancy, the tenancy which their assent creates is a new tenancy. In other words, a new tenancy may be effectively created after the expiration of a notice to quit, although the parties never addressed their minds to a new tenancy as such, but have thought throughout in terms of an uninterrupted and unchanged relation of landlord and tenant. There are passages in Blyth v. Dennett [1] and in Clarke v. Grant [2] , which might at first sight appear to be opposed to the view which I have expressed, but they were clearly, I think, not intended to deny that view. If that view were incorrect, tender and acceptance of rent could never be sufficient evidence of the existence of a tenancy. Yet it is well settled at common law that tender and acceptance of rent, if unexplained, will establish the existence of a tenancy: see Blyth v. Dennett [1] , per Jervis C.J. [3] and per Maule J. [4] .

[56]

On 1st October 1952 the lessor's solicitors wrote to the lessee's solicitors a letter, which did not refer to the proposal for an assignment or to the references as to the purchasers, but offered a lease to the purchasers of a reduced area of land. The lessee's solicitors replied on 10th October "placing on record" that they had not requested a lease but had requested "approval to the transfer of the existing tenancy". They add that they can only assume from the correspondence and telephone conversations that the lessor has refused to consent to the proposed assignment, and they say that such refusal is a breach of the covenant in the lease that consent to an assignment shall not be unreasonably withheld. The next letter was written on 13th October by the lessor's solicitors to the lessee's solicitors. It begins by taking a rather nice point by "presuming" that when the lessee's solicitors speak of the transfer of the existing tenancy they mean an assignment. There follows a rather obscure reference to "the question of the weekly tenancy", which I take to refer to a contention which had been put forward some time before by the lessee that he was entitled to a renewal of the lease as distinct from a weekly tenancy, a contention which seems to have been untenable and which had been emphatically rejected before the notice to quit was given. The letter repeats the offer of a lease, but says that the references submitted are definitely not satisfactory. It says that any assignment without consent will be the subject of immediate ejectment proceedings and concludes: "However, should the purchasers wish to obtain an assignment, if the usual documentary evidence is submitted to us, we will forward the same to our clients with a request for further instructions". A further reference was forwarded by the lessee's solicitors on 14th October, and on 15th October the lessor's solicitors write saying that, if the lessee is prepared to have his tenancy varied by excluding part of the premises, the landlord will be prepared to grant a lease at a rental of £3 10s. 0d. per week. They add that they are "still not satisfied with the references produced". This letter again appears to me clearly to recognise the existence of a tenancy.

[62]

The position as I see it was simply this. Towers was asserting throughout that the weekly tenancy which followed on the expiration of the term of his lease was still existing notwithstanding the notice to quit. This was no idle assertion. Apart altogether from the fact that this assertion may have seemed to be supported by Krupa v. Zacabag Pty. Ltd. [1] he might have denied breach of covenant or asserted that any breach had been remedied within a reasonable time. The lessor's solicitors knew from the beginning that he was maintaining that he had a weekly tenancy. He remained in possession without challenge after the expiration of the notice to quit and in September he asked for the lessor's consent to an assignment of his existing tenancy. The reply to this request refers to his present weekly tenancy. The lessor does not wish to consent to an assignment but desires to grant a new lease of a smaller area to the assignees. Knowing that the lessee's purpose in obtaining references is to effect an assignment, she expresses dissatisfaction with the references forwarded regarding the character and financial resources of the appellants, and further references are obtained. She says that a mere invitation to make inquiry of a bank is insufficient, because it is "the purchaser's obligation to place the relevant evidence before the lessor." The lessee is asked to agree to "have his tenancy varied" by excising a portion of the area. With regard to the references she remains dissatisfied. The lessee then expresses the view that consent to an assignment has been unreasonably withheld, and he assigns without consent. No suggestion that the lessee had nothing to assign is made until many months afterwards. Nothing at all is said or done by the lessor for some two months, and then she makes no suggestion that the lessee had no tenancy. Instead, in a letter which refers to the "outgoing lessee", she says that the statutory requirement that consent shall not be unreasonably withheld was qualified by the terms of the lease. In other words, she relies, and relies only, on the view that the assignment could not be justified on the ground that consent had been unreasonably withheld. No question of consent could arise if there was no tenancy to assign. Looking at the whole of the facts and the correspondence, I think the conclusion inescapable that, between the expiration of the notice to quit and the assignment, the lessor and the lessee were dealing with one another on the agreed and accepted basis that the weekly tenancy had not come to an end but was still subsisting. And the legal result is, in my opinion, that a new tenancy was created between them.

[72]

The material relied upon by the appellants to establish that a new tenancy arose between Mrs. Keen and Towers after 18th July 1952 consisted of the fact that Towers thereafter remained in possession, the fact that he made and Mrs. Keen accepted payments of rent eo nomine, and the contents of a body of correspondence between the parties' respective solicitors. The payments of rent were accepted in respect only of periods within six months after the giving of the notice to quit; and, that being so, Mrs. Keen's acceptance of them cannot of itself be regarded as constituting evidence of a new tenancy, for s. 80 of the Landlord and Tenant (Amendment) Act 1948 so provides. What weight it should be given in a consideration of the facts as a whole is another matter; though even in such a consideration the existence of s. 80 must be taken into account as a relevant circumstance. Indeed the existence of all the provisions of the Landlord and Tenant (Amendment) Act as they applied to the situation must be borne constantly in mind, for it provides a background against which the conduct of the parties may take on an aspect quite different from that which it would wear if it had occurred in a situation governed only by the common law. This has been recognised time and again by the courts both in England and in this country. One of the earliest cases in which it was brought out was Davies v. Bristow [1] . We do not need in the present case to consider whether the learned judges in Davies v. Bristow [2] were right in the view they appear to have taken that at common law a landlord's acceptance of money tendered by his former tenant as rent in respect of a period after the expiration of a notice to quit is not conclusive evidence of a tenancy in that period. The Court of Appeal has agreed with that view in Clarke v. Grant [3] , but without adverting to the question whether the landlord should be allowed to set up that money offered to him for one purpose he has wrongfully retained for another: see a learned article by Mr. J. F. Clerk [4] ; Foa's General Law of Landlord and Tenant 7th ed. (1947) p. 608, note (o). But even if, in a state of affairs unaffected by statute, proof of an acceptance of rent in respect of a period after the expiration of a notice to quit is conclusive at common law to establish the creation of a new tenancy, it is clear enough that it cannot be conclusive when the period in question is one in which the former tenant is protected by statute from being dispossessed. In England there is no such provision as is made in New South Wales by s. 80; yet the fact that because of protective legislation the landlord has no choice but to leave the former tenant in possession has been consistently held, except in Hartell v. Blackler [5] where the effect of the statutory provisions was not brought to the court's attention, to create a situation in which of necessity the inquiry must always be whether a contract of tenancy in respect of a period after the expiration of the notice to quit was formed by an actual agreement between the parties: Shuter v. Hersh [6] ; Felce v. Hill [7] ; Morrison v. Jacobs [8] ; Marcroft Wagons Ltd. v. Smith [9] . See also the Australian cases cited by Davidson J. in Long v. Fairbank [10] , and the more recent cases of Piggott v. Seeberg [1] and Christopher v. Wright [2] . What is said in these cases in relation to payments of rent illustrates the broader proposition, that words and conduct upon which a former tenant relies as having created a new tenancy must be considered and interpreted in the context of the statutory situation as known to the parties at the time.

[76]

The first of the letters which needs to be noticed was written by Mrs. Keen's solicitors to Towers's solicitors on 3rd July 1952, the notice to quit being then current. They referred to a written acknowledgment by Towers that the covenant (scil. as to the structural alterations) had been broken and a statement that the breach had been rectified. After asking whether Towers was prepared to vacate the premises on or before 18th July in accordance with the notice to quit, they threatened ejectment proceedings if he should not. The reply, dated the next day, was that Towers was definitely not prepared to vacate the premises. Apart from payments of rent, which in the circumstances must be regarded as equivocal, nothing more was said or done by either side until some communication of an undisclosed nature occurred between Towers and Mrs. Keen which led to a letter being written by Towers's solicitors to Mrs. Keen's solicitors on 19th September 1952. This letter referred to "previous correspondence in connection with premises (describing the subject premises) in respect of which our client, Mr. James Towers, is the Tenant of Mrs. M. I. Keen of a Butcher Shop". It stated that Towers was contemplating a sale of his business, enclosed references in respect of the proposed purchasers, and requested Mrs. Keen's approval "to the transfer of the existing tenancy" to the purchasers. This was, clearly enough, an assertion that Towers had an assignable tenancy of some unspecified description. The reply, dated 21st September 1952, said "We confirm the fact that your client desires either an assignment of his present weekly tenancy or a fresh weekly tenancy granted in favour of the purchasers"; and it added that the client's instructions had been asked for. The words quoted were regarded by Maguire J. as merely a recapitulation of what was understood by the request for approval of a "transfer of the existing tenancy"; but it is to be noticed that they not only speak of an "existing tenancy" but describe it as a weekly tenancy. The addition of this description makes the words more than a recapitulation; they show that Mrs. Keen's solicitors either were under the impression that because of the operation of the Landlord and Tenant (Amendment) Act the weekly tenancy in respect of which the notice to quit had been given was undetermined, or that the Act had given rise to new rights in Towers which might be described as a weekly tenancy. But whichever it was, two things are clear: the letter evinces no intention on the part of the writer to affect in any way the legal situation existing between his client and Towers, and so far as appears the writer had no authority from Mrs. Keen, who as yet knew nothing of the inquiry to which the letter was a reply, to express for her any intention or to make for her any promise concerning the property. In truth the letter is no more than an admission, which turns out to have been misconceived on any view of its meaning. It was not contractual in character. It was not a response to anything which sought a declaration of Mrs. Keen's intention as to whether or not a tenancy should be taken to exist. There seems to me to be a wide distinction between, on the one hand, an assent by one party to an assertion by the other that a consensual tenancy is to be taken to exist between them, and, on the other hand, an assent by one party to an assertion by the other that a tenancy exists between them in consequence of the operation of a statute and independently of any consensus. The former may have the effect of an acceptance of an offer. The latter cannot be, or be understood as, anything more than an admission of an existing fact; it leaves unaltered the relation of each party to the property, and, subject to any question of estoppel, it may later be withdrawn. Of the latter kind is the admission in the letter of 23rd September 1952. It does not support a conclusion that a tenancy was created "by two assenting minds": cf. Maconochie Bros. Ltd. v. Brand [1] .

[77]

Mrs. Keen's solicitors wrote again on 1st October 1952, saying that subject to certain conditions being fulfilled their client was prepared to grant to the purchasers a lease of a reduced area at a weekly rental of £4. Apparently a few days later they altered this offer by telephone, reducing the area still further, increasing the rent to £4 10s. 0d., and requiring a premium of £200. To this the solicitors for Towers replied on 10th October 1952, placing on record that neither they nor the proposed tenants had requested a lease but in fact had requested approval to (they quoted) "the transfer of the existing tenancy". They said they could only assume that Mrs. Keen had refused to consent to the proposed assignment, and that her consent had been withheld unreasonably. Mrs. Keen's solicitors answered this in a letter of 13th October 1952. Though not remarkable for clarity, this letter showed that the question whether the references which had been submitted in regard to the proposed purchasers were satisfactory had been considered from the point of view only of granting a new lease. A statement which Towers's solicitors had made, that Mrs. Keen might refer to a certain bank, was answered by saying that it was the purchasers' obligation to place the relevant evidence before the lessor in order that a decision might be arrived at. In the context, the only decision which this can be taken to have contemplated was a decision as to whether the purchasers were suitable to be given a fresh lease. But there followed two paragraphs which plainly admitted that Towers had an assignable tenancy. One said that "any assignment without consent will be the subject of immediate ejectment proceedings", and the other said that "should the purchasers wish to obtain an assignment, if the usual documentary evidence as required in these cases is submitted to us we shall forward the same to our clients with a request for further instructions". This admission, like the admission in the letter of 23rd September 1952, must mean either that the weekly tenancy under the holding-over provision of the old lease was thought to be, by reason of the statute, undetermined by the notice to quit, or that after the determination of that tenancy an assignable statutory tenancy had arisen in favour of Towers. But here again it must be recognised that the admissions, occurring as they do in a discussion of possible future dealings, disclose no intention to produce by their own force any effect upon the existing situation, either by creating a tenancy or by confirming or continuing a tenancy. And, as I have pointed out, admitting in the course of a discussion as to future action that a tenancy exists as a consequence of the operation of a statute is a very different thing from expressing an intention to join in creating or keeping on foot a consensual tenancy.

At a glance

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Decision date

Before

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Judgment (81 paragraphs)

Parties