Bankstown Airport Ltd v Noor Al Houda Islamic College Pty Ltd

IN THE SUPREME COURT OF NEW SOUTH WALES EQUITY DIVISION

1030/02 - BANKSTOWN AIRPORT LTD v NOOR AL HOUDA ISLAMIC COLLEGE PTY LTD JUDGMENT 1 HIS HONOUR: The present is a dispute between the landlord and tenant of land at Bankstown, which is part of the Bankstown Airport site. The plaintiff is the company which has a concurrent lease from the Commonwealth over the airport site, and the defendant is a company which operates a school for pupils in years one to twelve on part of the site. 2 The matter was allocated to me from the expedition list and fully heard in the one day. Mr M D Young, of counsel, appeared for the plaintiff and Mr P T Taylor, of counsel appeared for the defendant and cross claimant. 3 The site occupied by the defendant is in two parcels; parcel A, in respect of which the present suit is mounted, is described as lot 656 in deposited plan 849381. The other land, parcel B, which is immediately to the north of it, is the subject of a lease granted in 1998. There appears to be a slight overlap between A and B, though this would appear to have been unintentional. 4 The general background to the proceedings suggests that when the initial lease was negotiated out in 1994 both parties had in mind a long term agreement in respect of a greater site than that the subject of the 1994 lease, and that the 1994 lease was really a temporary measure. However, for reasons that it is not necessary to delve into, relations between the parties soured sometime late last century and they are now insisting on their legal rights. 5 The lease, (PX10), which is subject to the conditions set out in the filed memorandum E98617 (PX02), contains the following:

3. TERMINATING DATE: 31st December 2001". 6 It is quite obvious on the face of the document that originally the typescript read "2002" in paragraph (G) 3, but someone in pen has made a "1" over the top of the "2". 7 In schedule 1 in the memorandum there is a dictionary clause which defines "expiry date" as meaning the last day of the term specified in item 17 of the reference schedule. In the lease item 17 is completed in typescript "31st December 2002". 8 The lease document itself is a rather odd document in the sense that apart from the alteration in (G) 3, that I have mentioned, the property leased is said to be lot 656 DP849381, a deposited plan which was not brought into existence as at the date of the lease, 1 December 1994. It would seem that the lease was not actually registered until 16 February 1998. 9 If it were signed on 1 December 1994 then it would seem that the discrepancy of seven years in (G) 1 and the termination date in (G) 3 was noticed by the then solicitors for the lessor. If the error was noticed before the lease was signed and backdated, a similar observation could be made. On 16 January, 1995, those solicitors sent to a principal of the defendant a letter which, so far as is relevant, said: "There are several matters which need to be tidied up. 1. The lease has to be amended by the addition of clause E which we forwarded to Mr Burrell on 13 December 1994 ... 2. The lease as drafted contained some minor typographical errors which were not noticed when the lease was signed by you. These are: The terminating date was shown as 31st December 2002 instead of 31 December 2001. ... If you are agreeable to the above amendments would you please sign the attached authority and fax it to us." 10 The attached authority, which was furnished under the common seal of the defendant on, it would seem, 3 or 9 February 1995, agreed to the amendments to the lease and authorised and directed the plaintiff's predecessor in title and its then solicitors to amend the lease in the following manner. The amendments were to be made to the lease "which the college has signed". Included in the authorisation was a proposal that the terminating date was to be shown as 31 December 2001 instead of 31 December 2002. 11 I have heard submissions as to whether the lease was in fact re-executed, and I was told that clearly on the face of it, that is what must have occurred. I must confess that I do not think that that follows clearly on the face of the lease, and the correspondence suggests to me that it was more likely than not that it was amended under the authority. 12 However, it probably does not matter at all. In my view, the authority to amend a deed or to amend a dealing in land constitutes a power of attorney and to have validity it must be registered in the Registry of Deeds under s 163 of the Conveyancing Act 1919. This authority never was registered. 13 On the other hand, there is no underhanded dealing here. Both parties knew what was going to happen and in due course, sometime in February 1998, the tenant was given a copy of the lease as registered and there was no protest. 14 Mr Taylor said that that was quite irrelevant as no questions of estoppel arose, but it seems to me in all the circumstances it probably has relevance. 15 The better view of the facts is, I think, that the lease was altered in accordance with the authority and was registered in that form. The Registrar General recorded on a memorial on the lease that it expired on 31 December 2001. 16 There is in evidence as PX11, a certificate of the Registrar General under s 96D of the Real Property Act 1900 to the effect that the lease so expired, or rather that the certificate of title so described it. 17 The prevailing view, and it is supported by cases such as Birrigan Gargle Aboriginal Land Council v Minister Administering Crown Lands Act (1999) 102 LGERA 33 at 41, is that where the Registrar General has made an endorsement on the folio of the register, whether the Registrar General be mistaken or has acted pursuant to some fraudulent instrument, or otherwise, s 40 of the Real Property Act makes the endorsement conclusive evidence. 18 There was some debate before me as to the difference between the operation of s 40 on the freehold estate and leasehold estate. I can well understand that argument because the propositions in the leading cases, such as Breskvar v Wall (1971) 126 CLR 376 at 385-6, work on the assumption that whenever there is a transfer of a freehold estate under the Torrens system what actually happens is that the Government almost mechanically regrants the estate to the new registered proprietor. However, it is difficult to apply that analogy to the situation where it is the landlord who creates an estate out of his or her indefeasible estate. Nonetheless, the analogy does seem to have been drawn, and it is quite possible that one could have a fresh indefeasible leasehold estate granted whenever a lease is registered. 19 The High Court in Mercantile Credits Ltd v Shell Co of Australia Ltd (1976) 136 CLR 326 made it clear that not only was the term of the lease given indefeasibility by the Real Property Act, but so also are all rights so intimately connected with the term which it qualifies and defines. That utterance was made in connection with the South Australian Real Property Act. It may have to be qualified in some respects because of the difference with the local legislation; see Caleo Bros Pty Ltd v Lyons Bros (Aust) Pty Ltd (1980) 1 BPR 9496, but, generally speaking, the proposition holds good under New South Wales law, a matter that has been considered on a number of occasions since, the most recent being my decision in Mulwala and District Services Club Ltd v Owners Strata Plan 37724 (2000) 50 NSWLR 458 at 461. 20 Section 40(1A) of the Real Property Act provides in para (b)(iii) that it shall be conclusively presumed that: "a person recorded in the certificate as the registered proprietor of an estate or interest in the land to which the certificate relates was, at that time, the registered proprietor of that estate or interest." 21 Mr Taylor debated the significance of the words "to which the certificate relates", but it seems to me that these words are allied with the word "land", not with the words "estate or interest". Accordingly, one has a folio of the register, which is created in respect of a parcel of land and ordinarily the certificate of title. The folio of the register and the certificate under s 96D will all set out what estates and interests there are in that particular piece of land, freehold and leasehold. Accordingly, under 40(1A)(b)(iii) if one sees a certificate from the Registrar General which says that a person holds a leasehold estate which expires on 31 December 2001, then that is conclusive evidence both as to the expiry of the estate and the fact that the reversioner is entitled to the land after that date. 22 There was some debate as to whether there was an inconsistency between 40(1A) and 40(3), and that 40(3) was not couched in terms of conclusive evidence. As is well known, there have been four or five different theories as to what s 40(3) could possibly mean, none of them particularly satisfactory. Mr Baalman's view was that all that s 40(3) did was to introduce the rule in Spencer's case into Torrens system land, and I think that is probably more likely to be correct than any other theory. That being so, s 40(3) has nothing to do with the present case one way or the other. 23 By s 40(1A) the certificate of title evidence and the certificate from the Registrar General under s 96D must be taken as conclusive evidence. 24 Even if that were not so, it seems to me that on the proper construction of the document the same result follows. I should make it clear that when construing the lease I must do so, in one sense, with blinkers on. I cannot look at the negotiations that took place before the lease was granted, except insofar as they are part of the factual matrix, nor can I look at how the document was interpreted by the parties in later years, nor, indeed, at how they conducted themselves about the lease of the second parcel in 1998. 25 There are various authorities showing some rules of thumb that are applied when one is considering a document where there are differences between the writing and the printed parts of the document, between the text and the schedule, and between the words and the figures. There is also a rule that one presumes in a deed that the earlier parts are more likely to be meant than the later parts (the reverse rule applies to wills). However, as Needham J pointed out in Cameron v Lewis (1975) 1 BPR 9137, all these rules are rules of last resort and one endeavours to find from the whole of the document itself its meaning before applying the rules. 26 The rule about figures seems to derived from the case of Saunderson v Piper (1839) 5 Bing (NC) 425; 132 ER 1163, but I am not at all sure that is a good example of the rule. That was a bill of exchange case where there was a difference between the figures (£245) and the words (two hundred pounds) and the case appears to have been decided on the basis that the ordinary custom of merchants was that in that situation one paid the amount shown by the words. It was thus not a case of construction of documents generally. 27 However, the principle is probably right, that is that when construing a document one takes into account that it is far harder to write words than figures, and that if there is some typographical error it is more likely to be in the figures. The suggestion which was made by Mr Young was that the problem could well be explained by the fact that normally if one is thinking of a seven year term from a date in 1995 one adds seven to 1995 and comes out with 2002. 28 The problem for the draftsperson in the instant case was that the lease was set to commence on 1 January 1995 and end on 31 December, which meant that one could not do that elementary mathematical calculation. Of course, that is just a theory, but it seems to be a very real possibility. 29 The case for termination in 2001 is principally based on the fact that the seven years is stated in (G) 1, and the documents, as registered, have 31 December 2001 in clause (G) 3. The case against is based on only a very subsidiary clause at the end of the lease in item 17 of the reference schedule referring to the memorandum, which is inconsistent. In my view, the words on the front page of the document, and the two clauses, which read together make a seven year lease expiring on 31 December 2001, are to be preferred in the document's construction. 30 Accordingly, in my view, the lease expired on 31 December 2001. 31 It follows that thereafter the defendant was a trespasser. However, it is at this point that procedural problems start impacting on the case. 32 There has been a very firm policy for many years that whilst this Court is available for declaratory proceedings to deal with questions that arise between landlord and tenant during the currency of the lease, the only proper process to deal with possession cases is an application under s 79 of the Supreme Court Act for possession. Indeed, the Court has set up a special possession list to deal with these sorts of claims. 33 Even before the Supreme Court Act there had been authorities such as Smart v Allen (1970) 91 WN (NSW) 241, to the effect that the court does not make declarations where the proper procedure was a summons in ejectment. That continues to be the practice of the court. 34 The instant case was really a pure ejectment case. It did perhaps raise difficult questions as to the effect of the Real Property Act, and other awkward questions, but these could have quite easily been dealt with at common law. 35 It must be remembered too that proceedings for a declaration are usually only proceedings between parties to a contract, whereas with possession proceedings other persons may be entitled to be heard and defend their rights with respect to the land. 36 In possession proceedings it is necessary for the landlord to comply with Pt 7 r 8 of the Supreme Court Rules and to nominate whether or not it seeks to disturb the occupation of occupiers. 37 The present proceedings are awkward in that they were commenced without seeking an order for possession, though para 3 of the summons provided a sort of mandatory injunction for the tenant to quit the land forthwith. That sort of injunction, of course, is not granted where possession proceedings are the more appropriate ones. 38 The tenant raised this problem with the landlord and asked whether it wished to amend the summons. The answer was "certainly not", though there was a proviso that if the judge thought that order 3 was wrong then they would. That is not the way in which litigation can be carried on in this Court. People must elect what they are going to do, not wait to see whether the judge rejects their primary submissions. 39 However, this morning, an application was made to amend the summons to add an order for possession. This was opposed by Mr Taylor, but I granted it over his opposition. A further amendment to the summons was then made stating that the landlord did not intend to disturb the occupation of the occupier. 40 Unfortunately, this left the evidence as to who really was in occupation, and under what claim of right, up in the air. One way of dealing with the matter is merely to leave it to the Sheriff to execute against all people, other than the occupier. Another way, as suggested by Mr Taylor, was to make no order at all because that scenario is really unsatisfactory. A third scenario is not to make any order at the moment, but to stand the matter over so that the question can, if either of the parties want it clarified, be clarified. 41 A second reason for taking that third course is that the evidence as to what time should be allowed for the defendant to vacate may need consideration of further facts than those before the Court today. It is understandable that not all the material is before the court today because neither party really wanted to argue the question today. 42 The defendant says that it is conducting a school on the premises and there are 657 students, including a "private forty place long day-care centre", in three separate divisions, co-education primary, a boys' high school and girls' high school, and that there are eighty-four staff members employed in the school, including those employed in child care, and that it would be a hardship to, particularly, the twenty-five year 12 students if they had to vacate in the near future. 43 Mr Young put that the school should have known before the beginning of the academic year that it had to get out, or might have to get out of the premises, so any hardship is self-inflicted hardship. Moreover, there are proceedings in the Common Law Division, which suggest that part of the site is contaminated land, and it might be injurious to the children's health if they continue on the site. 44 There is a third problem, and that is that the amended summons seeks possession of the whole of lot 656 in the deposited plan, but it would appear, and I use those words advisedly, that through some surveying error a tiny strip of the land in question is in fact subject to the 1998 lease, which does not expire until 31 December 2048. Mr Taylor said that following the dictum of the High Court in Greater Union Organisation Pty Ltd v Pappas (1967) 116 CLR 475 at 485 the land claimed is not so identifiable that any order for possession should be made. I think, however, that an appropriate order can be made without too much difficulty, but it is one that will probably need a few days to think about to get it right. 45 All this suggests that all I should do at this stage is declare that lease 3697631T terminated on 31 December 2001 and stand over the question as to whether a writ of possession should issue and, if so, when, until a time when I am Duty Judge in the weeks commencing 11 or 18 March. There should also be an order for withdrawal of caveat 8237949 by noon tomorrow. 46 I formally stand the matter over to Tuesday 19 March at 9.50 am. Provided my Associate is contacted by the Friday before, that date can be altered. 47 1. I make the declaration that I have enunciated.

2. I order that at or before 10 am on 2 April 2002 the defendant remove caveat 8237949, provided that:

(a) if no undertaking as to damages is filed in the court by 4 pm on 5 March 2002 the caveat is to be removed by 10 am on 6 March 2002; and

(b) if a notice of appeal is filed the defendant is at liberty to approach a Judge of Appeal to extend this order. 48 I will deal with the form of order, costs and whether a writ of possession should issue, and, if so, in what form and on what date, on the next occasion. 49 The above was delivered in open court. Although I asked counsel whether there was anything else that I should deal with, they like myself, thought there was nothing. However, shortly after I left the bench, I realised that I was really bound to consider three other aspects. It is expedient for me to append my reasons on these aspects to the reasons already delivered. 50 The three aspects are:

(1) My reasons for refusing to give leave to the defendants to discontinue their cross-claim;

(2) My order on the cross claim and the reasons therefore;

(3) The question as to who is an occupier for the purposes of Pt 7 rule 8. 51 I will briefly deal with these matters seriatim. 52 (1) At the commencement of the hearing, Mr Taylor sought leave to discontinue the cross claim. He had previously forecast this application when the case was being managed by Bryson J in the Expedition List. Mr Young had indicated before Bryson J and reiterated before me that he would only consent to discontinuance if there was an order that the cross claimant not be able to raise the matter raised in the cross-claim again. Bryson J merely indicated that the application should be made at the commencement of the trial. 53 The practice as to discontinuance is that parties should be permitted to discontinue (with the usual automatic penalty as to costs) prior to the commencement of the trial. 54 Even though an application to discontinue may be foreshadowed beforehand, if it is not made before the Associate announces the name of the case for hearing, the person seeking to discontinue must obtain leave: The Ritz Hotel Ltd v Charles of the Ritz Ltd (No 8) (1987) 12 IPR 75. Both parties approached the present case on the basis that leave to discontinue was required. 55 When considering the grant of leave at the commencement of the trial for discontinuance of a cross claim, the Court needs to exercise a discretion in the interests of justice. On the one hand, the Court must look at the way the issues on the claim and those on the cross claim interrelate so that they should all be tried together or not at all. On the other hand, the Court should not deny a person the right to have his or her cross claim litigated just because it is not properly ready when the claim is called on for hearing. 56 As M H McLelland J said in The Ritz case at p 77, the Court is exercising a general discretionary power the exercise of which is not to be constrained by judge-made rules or formula nor which is likely to be assisted by consideration of precedent. As his Honour said, " … the function of the court is to act in the manner best calculated to achieve justice as between the parties in the circumstances of the particular case before it." 57 His Honour acknowledged, as do I "that it is undesirable that a claimant should be compelled to pursue a claim if he no longer desires to do so." However, the real problem in the present case is that the defendant still has a desire to run the cross claim, it just does not want to do so now. 58 The cross claim in the present case seeks (a) construction of the lease; (b) rectification; (c) an order that the plaintiff is estopped from denying the proper termination date of the lease; and (d) orders under the Trade Practices Act with respect to the lease's termination. All these matters are intimately connected with the claim and the facts that need to be found on the claim. In my view if they are to be litigated, the only just way of doing so is at the same time as the claim. 59 I thus refused leave to discontinue. The proffered course of discontinuance with a restriction on raising the matter again was unacceptable to the defendant. 60 (2) The defendant gave no evidence on the cross claim other than that which was before the Court on the claim. The Court was, of course, able to look at a wider amount of evidence on the cross claim for rectification. 61 The evidence, particularly the sealed consent on January 1995 to alter the termination date in the lease shows that the cross claim cannot succeed. It must be dismissed. 62 (3) Although I do not need to decide who is an occupier, the point was discussed in argument and may need to be clarified before execution of the order takes place. One reason for this is that the amended summons does not seek to disturb the position of any occupier. 63 As I have noted earlier, the land of which the plaintiff seeks possession is used as a school. Although the evidence is not strong, it would appear that part of the school is subject to a sub-lease or licence to an independent body which conducts a child care centre. As well, teachers who are either employees or sub-contractors come on to the land to teach and there are contractual licences in parents and students to enter the land. 64 There is little discussion in the authorities as to who is an occupier under the Rule. The most extensive discussion is in the judgment of Carruthers J in National Commercial Banking Corporation of Australia Ltd v MRM Holdings Pty Ltd (1983) 3 BPR 9339, 9341-3. See also my decision in Kerr v Sheriff of NSW (1996) 9 BPR 16,215. 65 The general rule is that "wives, children, servants, friends and visitors of tenants or under tenants" (see Cole on Ejectment, (H Sweet, London, 1857) at p 84) are not considered occupiers. In particular, the occupation rights of employees are considered the occupation of the employer; see eg Mayhew v Suttle (1854) 4 E & B 347; 119 ER 133. 66 It must be remembered that the present action for possession under s 79 of the Supreme Court Act 1970 replaced the action for ejectment under the Common Law Procedure Act 1899. Although that action replaced the fictitious Doe v Roe action (see Oxford Meat Co Pty Ltd v McDonald (1963) 63 SR (NSW) 423, 426), it still carried with it some of the attributes of the still earlier action. Under the former procedure, the person named as defendant might not be the person principally interested in defending possession against the plaintiff. Indeed, the action might be a wholly collusive one between the named plaintiff and the named defendant. 67 A procedure was thus devised for a judge to grant the real defendant leave to defend which was taken up into the NSW Common Law Procedure Act 1899, s 214. The section gave a right to any person who "was in possession of the land by himself or his tenant." A person was in possession if he or she claimed de facto possession against the plaintiff: Oxford Meat Co Pty Ltd v McDonald (1963) 63 SR (NSW) 423, 428. 68 The authorities on the section and the corresponding English provision showed that the section was liberally construed. As long as an affidavit was filed that showed the applicant claimed possession, the leave was given. However, a person claiming under the defendant was not a person claiming possession. Thus, wives, licensees etc were excluded. However, sub-tenants, people in adverse possession and beneficiaries under a trust in actual possession were entitled to defend. As to this last category see Longbourne v Fisher (1878) 47 LJ Ch 379. 69 In my view, the term "occupier" in Part 7 rule 8 carries the same connotation. An occupier is a person who claims to be in possession and who would have been the sort of person to receive leave to defend under the old practice. This conclusion fits in well with the conclusion reached in National Commercial Banking Corporation of Australia Ltd v MRM Holdings Pty Ltd (supra). 70 Thus, in the present case, the body controlling the child care centre might come within the occupier category, but the teachers and students being persons claiming their rights under the defendant would not be occupiers. 71 These additional observations mean that the short minutes of order to be brought in should include a formal order dismissing the cross-claim.

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