Crooks National Stores Pty Ltd v Collie - [1957] HCA 80 - HCA 1957 case summary — Zoe

CTHHCA

Crooks National Stores Pty Ltd v Collie

[1957] HCA 80

High Court of Australia|1957-07-01|Before: Kitto JJ, Williams J

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Source facts

Court

High Court of Australia

Decision date

1957-07-01

Before

Kitto JJ, Williams J

Source

Original judgment source is linked above.

Judgment (32 paragraphs)

[1]

High Court of Australia Dixon C.J. McTiernan, Williams, Webb and Kitto JJ. Crooks National Stores Pty Ltd v Collie [1957] HCA 80

[2]

This is an appeal by Crooks National Stores Proprietary Limited from an order of the Full Supreme Court of Victoria discharging an order nisi to show cause why an order of the court of petty sessions at Malvern made on 2nd April 1957 under the provisions of the Landlord and Tenant Act 1948-1955 Vict. for the ejectment of the appellant from a grocer's shop situated at 107 Waverley Road, East Malvern should not be reviewed. The respondents to this appeal, the complainants named in the complaint and summons pursuant to which the order of ejectment was made, are the executors and trustees appointed by the will of Edward George Whiteford deceased to whom probate was issued on 17th February 1953. One asset in the estate of the deceased, who died on 27th March 1952, is land situated at the corner of Burke and Waverley Roads, Malvern, on which is erected a two-storeyed building. The ground floor is for the greater part occupied by a son of the deceased, Edward Carter Whiteford, who carries on there the business of a motor garage proprietor and panel beater under the title "Whiteford Motors". The remainder of the ground floor consists of a grocer's shop fronting the corner of the two roads and an electrical shop and a butcher's shop fronting Waverley Road. The land owned by the testator does not include the land on which the electrical and butcher's shops are erected. The upper floor includes two residences, of which one is occupied by E. C. Whiteford and the other is vacant. E. C. Whiteford is desirous of occupying the whole of the ground floor so that he can enlarge his garage and equip it to the extent necessary to become the agent in the Malvern district for Volkswagen motor vehicles. In particular he requires the grocer's shop to convert it into a showroom. If he can provide the necessary facilities he has been promised the agency, which he has already been given temporarily. He is purchasing on terms the land on which the electrical and butcher's shops are erected both of which are occupied by tenants but by arrangement with the tenant of the electrical shop he already occupies part of the rear area of that shop.

[3]

By his will the testator devised the whole of the land he owned at the corner of Burke and Waverley Roads, Malvern, therein called "my second property" to his trustees upon trust to retain the same until 1st January 1962, and out of the income therefrom to make certain payments and as to the balance then remaining to pay the same to certain beneficiaries "Provided that should my said son Edward Carter Whiteford so desire he shall be entitled to remain in possession of the said second property paying therefor a weekly rental to be assessed by three independent valuers to be appointed by my Trustees And at the expiration of the period of trust hereinbefore provided Upon Trust that my Trustees shall as soon as conveniently may be after that date offer to my said son Edward Carter Whiteford the option of purchasing the said second property at a valuation to be made by three independent valuers to be appointed by my Trustees to allow my said son a space of one calendar month from the time of making such offer to him - for - determining whether he will accept or refuse same And if my said son shall accept such offer of my said second property within the space aforesaid Then upon payment to my Trustees of the purchase money for the same my Trustees shall transfer the same unto my said son But if my second property shall not be purchased by my said son pursuant to the trust last aforesaid Then upon Trust that my Trustees shall sell and absolutely dispose of the said property by public auction or private contract" and to divide the net proceeds therefrom amongst certain beneficiaries. At the dates of the testator's will and death, E. C. Whiteford was not in possession of the whole of the "second property" so that the wording of the proviso that if this son should so desire he should be entitled to remain in possession thereof at a weekly rental to be assessed by three valuers to be appointed by the trustees is somewhat inapt. But when the devise is read as a whole it would appear to be clear that the options to lease and purchase the "second property" refer to the whole of this property. By the will therefore E. C. Whiteford is given the option to rent the whole of the "second property" until 1st January 1962 from the trustees and an option to purchase it upon that date.

[7]

Paragraph (i) of sub-s. 5 of s. 37 of the Act contains three requisites, (1) that the lessor is a trustee or personal representative; (2) that the premises are reasonably required by a beneficiary under the trust or in the estate; and (3) that the beneficiary reasonably requires the premises for his personal occupation or for the occupation of some person who ordinarily resides with him or is wholly or partly dependent upon him. The words "a beneficiary under the trust" include in their ordinary natural grammatical signification any person who is a beneficiary under the trust. The trust in question must of course be or comprise a trust of the premises. It is in respect of such a trust that the person requiring the premises must be a beneficiary. In Ex parte Keirnan; Re Permanent Trustee Co. of New South Wales [1] the Full Supreme Court of New South Wales held, in relation to par. (i) of sub-s. (5) of reg. 58 of the National Security (Landlord and Tenant) Regulations (S.R. 97 of 1945), which was in the same terms as par. (i) of sub-s. (5) of s. 37 of the Landlord and Tenant Act except for the words which have been italicised that the regulation was applicable wherever the trustee intended to make the premises available for the personal occupation of a beneficiary under the trust or of some person as mentioned in that clause and the magistrate was of opinion that they were reasonably required by that beneficiary or person and that there was nothing in the paragraph to suggest that it was intended to be applicable only where there was a sole beneficiary, or a beneficiary who was absolutely entitled, or entitled under the terms of the trust instrument, or in the discretion of a court of equity, as against the trustee, to the possession of the premises. That decision was followed by the Supreme Court of Tasmania in Nichols v. Wilson [1] . In Keirnan's Case [2] Jordan C.J. delivering the judgment of the court said: "I think that it is applicable wherever the trustee intends to make the premises available for the personal occupation of a beneficiary under the trust or of some other person as mentioned in the clause, and the magistrate is of opinion that they are reasonably required by that beneficiary or person. If there are a number of competing requests to the trustee by beneficiaries, it is for the trustee to decide whether he will take any proceedings at all, and whether, if he does, on whose behalf, and whether if on behalf of several he will leave it entirely to the magistrate to determine whether the premises are reasonably required by any of the competitors to whom the trustee would be prepared to dispose of the premises, and if so by which of them" [3] . With that statement we agree. There is nothing in the language of the paragraph which would justify the court in reading the words "a beneficiary under the trust" as meaning anything less than any beneficiary under the trust. It was sought to confine their meaning to a beneficiary who is entitled under the trust to possession of the premises or a beneficiary whom the court of equity in the exercise of its discretion would let into possession of the premises. It was submitted that it was necessary to limit the generality of the language in this way because the premises could only reasonably be required by a beneficiary who had some legal or equitable right to enter into or to be placed in personal occupation of the premises. It would be a breach of trust for a trustee to let any other beneficiary into personal occupation and no beneficiary could reasonably require the premises for his personal occupation if the trustee could only let him into possession by committing a breach of trust. The short answer to this contention is that a trustee who has the management of property, in the absence of any express power to grant a lease contained in the trust instrument, or conferred by statute, has an implied power to lease the premises for a reasonable period unless expressly or impliedly restrained from doing so by the trust instrument: Underhill, Law of Trusts and Trustees, 8th ed. (1926), p. 344.

[10]

Counsel for the appellant relied strongly upon the decision of the Court of Appeal in Frish Ltd. v. Barclays Bank Ltd. [1] . It was submitted that the reasoning of their Lordships in that case is inconsistent with the reasoning of Jordan C.J. in Keirnan's Case [2] and shows that the latter case was wrongly decided. The Landlord and Tenant Act 1954 Imp. contains provisions authorising a tenant whose tenancy is expiring to apply for a new tenancy and for the landlord to oppose the application. One ground on which the landlord may oppose the application is contained in s. 30 (1) (g) "that on the termination of the current tenancy the landlord intends to occupy the holding for the purposes, or partly for the purposes, of a business to be carried on by him therein, or as his residence."Section 41 (2) provides that "Where the landlord's interest is held on trust the references in paragraph (g) of sub-section (1) of section 30 of this Act to the landlord shall be construed as including references to the beneficiaries under the trust or any of them." The Court of Appeal held that the only beneficiary under the trust who could intend to occupy the premises for the purposes or partly for the purposes of a business to be carried on by him therein or as his residence would be a beneficiary who had such an interest under the trust as either to entitle him to be put into occupation, or, at all events, to justify the trustees on his application, if they thought fit to do so, in letting him into occupation. Lord Evershed M.R. said: "if the intended occupation is to be that of a beneficiary, it must be shown that it is the intention that he should so occupy by virtue of his quality or right as a beneficiary" [3] . Jenkins L.J. said: "As some limit must be placed upon the words, it seems to me that in the context, and having regard to the manifest intention of par. (g), the limit must be, broadly speaking, of the nature suggested by Mr. Avgherinos. That is to say, the beneficiary, who intends to occupy, must have such an interest under the trust as either to entitle him to be put in occupation, or, at all events, to justify the trustees on his application, if they think fit to do so, in letting him into occupation. That would cover, besides the case of an absolute beneficial owner with the legal estate outstanding in a trustee, such interests as that of a life tenant" [1] . The United Kingdom Act provides that references to the landlord should be considered as including references to the beneficiaries under the trust or any of them so that it provides in effect for the beneficiaries or any of them being substituted for the landlord as the person or persons entitled to oppose the application. But in order to oppose the application the beneficiary or beneficiaries had to show that he or they were persons who intended to occupy the holding for the purposes of a business to be carried on by him or them therein, or as his or their residence. In such an Act it is not difficult to understand why the Court of Appeal should have considered that the language must be given a limited meaning. That decision does not appear to throw any light upon the meaning of par. (i) of sub-s. (5) of s. 37 of the Landlord and Tenant Act 1948-1955 Vict.. If this paragraph, even before it was amended in 1955, stood alone there would be "no context or manifest intention" to indicate that "a beneficiary under the trust" should be limited in any way. But there is the 1955 amendment which extended its provisions to intestacy and placed a beneficiary in an intestate estate in the same position as a beneficiary under a trust. No beneficiary in an intestate estate has any right to possession against the personal representative except in special cases such as where the value of the estate is such that the widow would be entitled to the whole of it or where all the beneficiaries agreed upon one or more of them going into possession. Finally there are the provisions of s. 52 already extracted which clearly contemplate that a trustee who recovers possession under par. (i) will do so in order to lease them to a beneficiary who requires them for his personal occupation. But a beneficiary who is entitled to possession or to be let into possession under the trust as a legal or equitable tenant for life or as the absolute owner would not require a lease from the trustee for that purpose. The only beneficiary who would require a lease would be a beneficiary who otherwise would not be entitled to possession or to be let into possession.

[16]

The main ground of objection to the order was that Edward Carter Whiteford, for whose occupation the respondents said in the notice to quit that the premises were required, was not such a beneficiary as is intended by s. 37 (5) (i). He was (as the Supreme Court said) a beneficiary with "very real interests" in the subject premises. It was argued, however, for the appellant that the words "a beneficiary" should receive a limited meaning because of the presence of the word "required". The definition given in Kiely v. Loose [1] was relied on. There, the word "required", in a comparable context, was held to mean "demanded" or "claimed", and not, "needed". For my part, I would think, upon a general survey of the whole Act, that the present provision contemplates a beneficiary needing rather than demanding premises for his occupation. In the present case, the definition in Kiely v. Loose [1] was used to support reading the words "a beneficiary" as applicable only to a person with an equitable right to possession, presumably because no beneficiary would, unless so qualified, demand possession. I think it would be contrary to the rules of interpretation to imply such a limitation on the words "a beneficiary". The word "beneficiary" is used in a general sense without any express limitations. But if a person is a beneficiary only nominally in the premises sought to be recovered, the trustees could hardly say with any more reason that the premises were reasonably required by him than if the description "a beneficiary" did not fit him at all. On behalf of the appellant use is made of the decision in Frish Ltd. v. Barclays Bank Ltd. [2] . It is argued that there the Court of Appeal limited the meaning of "beneficiaries" in the way contended for on behalf of the appellant in the present case. But I think that there is not sufficient similarity between the comparable provisions to introduce into s. 37 (5) (i) the limitations which were implied on beneficiaries in s. 41 (2) of the English Act. Reliance is placed for the respondents on s. 52 (2) (b) (ii) of the Victorian Act as shedding light on what is contemplated by a beneficiary in s. 37 (5) (i). I think that it is evident from the former provision that the latter is not intended to be applicable only in a case in which the beneficiary is entitled to possession or would, in the discretion of a court of equity, be put into possession, by virtue of his equitable rights. For, s. 52 (2) (b) (ii) deals with the beneficiary, for whose occupation premises have been recovered, as if his occupation may have to depend on a tenancy. Speaking of reg. 58 (5) (i) of the National Security (Landlord and Tenant) Regulations, with which s. 37 (5) (i) is comparable, Jordan C.J. said that the regulation contained nothing which suggested that it was intended to be applicable only where there is a beneficiary entitled to the possession of the premises: Ex parte Keirnan; Re Permanent Trustee Co. of New South Wales [1] .

[23]

As to the meaning of "beneficiary": in Frish Ltd. v. Barclays Bank Ltd. [1] Lord Evershed M.R. said that the words "beneficiaries under the trust" in s. 41 (2) of the Landlord and Tenant Act 1954 Imp. must be given some limitation [2] , and their Lordships found that limitation in a provision in the English Act which does not appear in the Victorian Act. Still I understand it to be common ground here that there is a limitation, e.g., that a beneficiary does not include a mere annuitant, but that there is a difference of opinion as to the extent of the right the beneficiary must have under the trust, that is to say, whether he must have the right to possession of or to occupy the land, or whether it is sufficient that he should have an interest in the land short of any such right. The Full Court of Victoria took the latter view; but with great respect I prefer the former view as being more in accordance with the meaning of "beneficiary" in that context and in a section with the history of s. 37. No doubt the interest of this beneficiary is substantial and extends to the land, as he is not only entitled to share the income of the land for a period of years but is also given the option to purchase the land on the expiration of that period, although at what would appear to be its true value. However one would suppose it would have been no part of Parliament's intention to protect a beneficiary's right to possession of or to occupy the land, unless and until he should become entitled to that right under the trust, and the will gives this beneficiary no such right, and the option to purchase the land is postponed until 1962. If the will had given him the right to a lease s. 52 (2) (b) (ii) would have authorised the trustees to grant him the lease, notwithstanding the prohibition in s. 52 (1) against re-letting within twelve months. In those circumstances a beneficiary is properly so designated, even if he has to pay full rent and not a reduced rent, because he is given the right to the lease under the will without competition, and so he can then be said to have a benefit conferred on him and not to be simply a tenant on a commercial basis.