Evans v Athedim [1999] VSCA 154 | Case summary

Court of Appeal (Vic)|1999-09-29|Before: TADGELL, BATT and CHERNOV, JJ.A.

For the reasons which follow, I am not persuaded that any of these findings was not open to his Honour or that he was wrong in making any of them. The case is quite unlike Voulis v. Kozary [1975] HCA 44; (1975) 180 C.L.R. 177, cited for the appellant. Paragraphs (a) and (b) are simply different ways of expressing the same finding, with the word "happy" meaning "content" or "agreeable". In fact his Honour expressed himself in three ways about this matter. He stated that Tinsley had said in evidence that he spoke to Beare some weeks after Beare and the appellant moved in and discussed the kiosk, and that Beare was "happy with Tinsley continuing to conduct" the kiosk. He listed as one of his findings of fact that in January Beare "agreed with Tinsley that the latter could continue to operate" the kiosk. Finally, he said that the evidence revealed that Tinsley talked to Beare some time in January and "it was agreed that Tinsley would continue to operate" the premises. The only evidence drawn to our attention in support of those findings was Tinsley's statement in cross-examination on behalf of the respondent that he said to Beare that Melton Cricket "were operating the kiosk and he accepted that", and that that conversation "would have been in January at some stage. I think he and Mr. Evans had been there for two or three weeks at that point". Save, perhaps, as to the date, I am of the opinion that the two findings (a) and (b) were well open to his Honour, particularly in the absence of any objection to the conclusory expression "he accepted that". It may be that his Honour should have found that the date was early February. Even if his Honour had been wrong in making the two findings, the error would have had no practical consequence. For the findings were not essential to the course of his Honour's reasoning, nor are they to that of mine.

For the reasons already given, I consider that the literal finding in paragraph (c) was well open to his Honour and indeed was correct. But, although the statement by his Honour that is referred to is expressed in absolute terms, it would seem from his Honour's later reference to "the failure to give possession of the whole of the premises" that his Honour's real finding was that vacant possession had substantially (i.e., in respect of most of the demised premises) been given by 1 February. On the other hand, the view of the facts which I have adopted earlier relates to the whole of the premises that had been let to Jirrabay.

The finding referred to in paragraph (d) may, perhaps, be partly a holding in law. In my view, that finding or holding was open to his Honour and was correct, at least so far as it relates to the effect of the agreement made at the end of February. Instead of complaining that Melton Cricket's occupation of the kiosk meant that the respondent was in breach of its obligation to deliver vacant possession of the kiosk, the appellant for himself and Beare made an agreement of which Melton Cricket's occupation of the kiosk was an essential part.

"[8.] Having regard to clause 5, and in the absence of: (a) a confrontation which produced the necessity to make a choice whether to elect [sic] or rescind; (b) prejudice to the respondent at the relevant time, a failure by the tenants to positively rescind between 28 February and 6 March cannot sustain a conclusion that they elected to affirm."

This proposition impliedly presupposes that there was a breach on the part of the respondent amounting to a repudiation of the Heads of Agreement and that avoidance under clause 5 was still possible. For the reasons given earlier, I do not accept those presuppositions. In any event, it is not the failure between 28 February and 6 March to rescind positively that constituted an election to affirm. Rather, as I have sought to show under Proposition 7(d), it is the making of the tripartite agreement at the end of February. In considering whether he should make that informal agreement the appellant was, in my opinion, confronted with the necessity to choose between affirming the Heads of Agreement (with some variation) and rescinding on the ground that the respondent had not given vacant possession of the kiosk: Immer (No.145) at 38-39, 41 and 42-43. Moreover, his payment of rent on or about 1 March when aware of the respondent's repudiation (on his version) is also an election to affirm (subject perhaps to clause 5).

I would uphold none of the propositions except the fifth, and it is not decisive. In essence, the appellants' case depends, as it seems to me, on making out at least either the first or the second of the following propositions and also the third, namely:

(i) (a) prior to 26 January 1991 Melton Cricket was a sub-lessee of Jirrabay of the kiosk; and

(b) the lease to Jirrabay of that part of the premises demised to it that consisted of the kiosk was not forfeited that day; so that

(c) as at 26 January 1991 Melton Cricket had a pre-existing lease or sub-lease of the kiosk and the Heads of Agreement was accordingly void, either wholly or as regards the kiosk; or alternatively

(ii) (a) on or between 26 January and 28 February 1991 the respondent leased the kiosk to Melton Cricket; and

(b) that lease had effect on and from 26 January 1991; and

(iii) the appellant and Beare had not by 6 March 1991 affirmed the Heads of Agreement or agreed to accept rents and profits of the kiosk in lieu of vacant possession of it.

I have said enough in considering the appellant's eight propositions to show that, in my judgment, the appellant has failed to make out any of the three propositions set out in this paragraph or any part of them with the possible exception of part (a) of the first. The difficulties and inconsistencies in the appellant's case were, I thought, made manifest when Chernov, J.A. during the course of argument asked the appellant's counsel why, if the respondent did not re-enter the kiosk on 26 January 1991, Jirrabay was not entitled to the rent and, if that was so, what was the arrangement with the respondent. The answer that it was a new lease between Melton Cricket and the respondent, as it seemed to me, not only implicitly acknowledged that re-entry upon part of the demised premises determined the whole lease, but also showed that, if there were a lease between the respondent and Melton Cricket, the respondent did not stand in the shoes of Jirrabay vis-a-vis Melton Cricket. The new lease could not be backdated to the date of re-entry.

The appeal, I consider, should be dismissed except to the extent necessary to vary the date in paragraph 4 of the judgment below.

I have had the advantage of reading in draft the reasons prepared by Batt, J.A. For the reasons which his Honour assigns, I agree that the appeal should be dismissed except to the extent necessary to vary the date in paragraph 4 of the judgment below.

"1. The agreement to demise the gym and the kiosk, not under seal, failed to create a legal interest and was void1, 2. 2. At common law: (a) the rent was reserved out of the whole demise and could not be apportioned 1, 3; (b) the whole area never delivered in possession, action on the covenant to pay rent did not lie1; (c) tenants had no privity of contract nor estate with Tinsley and could not disturb his possession4. 3. Forfeiture of the kiosk was never affected [sic] - Tinsley continued in possession with respondent's knowledge and acquiesence. The payment to respondent created a legal relationship with Tinsley which equity treated as a lease5 for the balance of the Jirrabay term6. If the agreement was not void, at best it entitled the tenants to reversion. 4. By 28 February 1991, respondent had put it beyond power to complete, so: (a) equity would not have decreed specific performance in favour of the respondent - it had not done equity, alternatively equity would not so decree for a part of a contract7; (b) Tinsley's possession was in breach (or anticipatory breach) of an essential obligation to demise the kiosk and a repudiation; (c) tenants were entitled to accept that repudiation and did so by vacating the premises. 5. Whether the appellant had other reasons or motives to terminate is immaterial (Shepherd v. Felt & Textiles of Australia Ltd. [1931] HCA 21; (1931) 45 C.L.R. 359). 6. Alternatively Tinsley's possession on 6 March &/or 15 March brought agreement to an end(clause 5). 7. The findings of facts by the trial judge that: (a) in January Beare agreed with Tinsley that Tinsley could continue to operate the kiosk; (b) the tenants were happy that Tinsley continued in possession of the kiosk; (c) the respondent had given vacant possession by 1 February; (d) the events of and after 28 February amounted to election and affirmation by tenants, were not open to the learned trial judge on the evidence. [8.] Having regard to clause 5, and in the absence of: (a) a confrontation which produced the necessity to make a choice whether to elect [sic] or rescind; (b) prejudice to the respondent at the relevant time, a failure by the tenants to positively rescind between 28 February and 6 March cannot sustain a conclusion that they elected to affirm8." 1. Neale v. Mackenzie (1836) 1 M. & W 747; 150 ER 637; 6 LJ (Ex) 263. 2. Property Law Act 1958 s.51. 3. Todburn Pty. Ltd. v. Taormina International Pty. Ltd. (1990) 5 BPR 11,173 at 11,175. 4. Freeman v. Hambrook [1947] VicLawRp 8; [1947] V.L.R. 70 and Adelstein Investments Pty. Ltd. v. Morgan [1968] 2 NSWR 170. 5. Chan v. Cresdon Pty. Ltd. [1989] HCA 63; (1989) 168 CLR 242 at 252. 6. Ronan v. Derheim (1977) 78 DLR (3d) 622 at 628-629. 7. See, for instance, E. Johnson & Co. (Barbados) Ltd. v. NSR [1997] AC 400. 8. Immer (No. 145) Pty. Ltd. v. Uniting Church in Australia Property Trust (N.S.W.) [1993] HCA 27; (1993) 182 C.L.R. 26 at 42-43; Frankcombe v. Foster Investments Pty. Ltd. [1978] 2 NSWLR 41; and Tropical Traders Ltd. v. Goonan [1964] HCA 20; (1964) 111 CLR 41.

It is, however, unnecessary to express a final view about the effect of s.53(1), for s.55(d) provides that the provisions requiring writing contained in ss.53 and 54 do not affect the operation of the law relating to part performance and, in my view, that law operated here. The trial judge's interpretation of the Heads of Agreement as an agreement for a lease has not been challenged on appeal and in any event, despite the inelegant inclusion as recitals of the contents of recitals C, D and E, I consider it correct. In my view, there was part performance of the agreement on the part of the respondent by its letting the appellant and Beare into possession of the whole (as I shall similarly show below) of the premises agreed to be demised, namely, Lot 10 and cricket court 4 (including the kiosk). The change of possession of land is the act of part performance par excellence: Regent v. Millett [1976] HCA 40; (1976) 133 C.L.R. 679 at 683 citing Williams on The Statute of Frauds, 256. It is to be noted that Neale v. Mackenzie, on which the appellant placed so much reliance, was the decision of a court of common law given both before the Judicature Act 1873 was passed and before substantial statutory enactment and amendment of the law of real property was made.

As regards paragraph (c) of the proposition, the introductory words "At common law" seem inappropriate, for the paragraph turns upon the particular facts. That aside, it too, and certainly the second half of it, is predicated upon the same two postulates. I hold under Proposition 3 that upon the forfeiture in the early hours of 26 January of Jirrabay's leasehold interest in the demised premises Melton Cricket's interest in the kiosk, as sub-lessee or licensee or otherwise, automatically came to an end and that possession of the whole was immediately given by the respondent to the appellant and Beare. If that be correct, then Melton Cricket's resumption of occupation of the kiosk later the same day (whether or not amounting to possession) must, at least in the apparent absence of evidence suggesting communication between Tinsley and Nicolaou that day, be referable to an arrangement, express or tacit, for a sub-lease or licence which Tinsley, not being prepared to do without the kiosk, made with the appellant as manager on behalf of Beare and himself as the persons having the immediate right to possession, and possession, of the kiosk as part of the demised premises. Or else Melton Cricket's occupation must be referable to the sufferance of Beare and the appellant. In short, Melton Cricket that day became either the periodic sub-tenant or the licensee or else the tenant at will or at sufferance of the appellant and Beare. The privity of any contract or estate that Melton Cricket had was with them, not the respondent. The tripartite arrangement which, as mentioned later, his Honour found was made on 28 February 1991 cannot be treated as though made on, or even shortly after, 26 January or as retrospectively affecting legal relationships created on 26 January. Compare Queensland Television Ltd. v. FC of T [1969] HCA 41; (1969) 119 C.L.R. 167 at 175.

The statements in Neale v. Mackenzie as to the effect at common law of later leases, by deed and by parol respectively, by the same lessor of premises already demised to another were accepted by Latham, C.J. and Dixon, J. in Minister for Interior v. Brisbane Amateur Turf Club [1949] HCA 31; (1949) 80 C.L.R. 123 at 148 and 162 respectively. But, so far as those statements relate to an interesse termini, they are considerably affected by s.149(2) of the Property Law Act 1958, read with the definition (imported by s.18(1)) of "term of years absolute" in the Settled Land Act 1958, and, so far as the statements relate to reversionary leases, they are considerably affected by s.149(5) and s.151(1) of the Property Law Act 1958. Further, the view is expressed in Woodfall's Law of Landlord and Tenant, 28th edn., Vol.1, para.1-0611 fn 19 that Neale v. Mackenzie is now overruled by reason of the definition of "term of years absolute". Because I am of the view, for the reasons given earlier, that, even accepting the statements in that case at their fullest, it is on the facts inapplicable, I do not find it necessary to consider its current status in Victoria. Nor, similarly, is it necessary to consider whether any relevant consequence flows from the fact that the Court of Exchequer Chamber in at (M&W) 762; (ER) 641; (LJ) 265 held that the lease of 100 acres was wholly void (which might otherwise be thought to be equivalent to the kiosk here) in the possession of a person entitled under a prior lease from the lessor. (An earlier statement by Lord Kenyon in at 79; ; at 545 that, if there was any part of the demised lands which could not be legally demised, the whole demise was void seems at odds with and was presumably overruled by it.)

Evans v Athedim

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