O'Keefe, O'Keefe, O'Keefe and McKenna v Williams [1910] HCA 40

O'Keefe, O'Keefe, O'Keefe and McKenna v Williams [1910] HCA 40 - HCA 1910 case summary — Zoe

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lication the fees were not paid, the Minister might refuse to renew the licence. By regulation the fees were made payable in advance before Ist December in each year. Land under licence might be withdrawn from it in certain events, but not otherwise, and if the land was not so withdrawn, the licence was renewable as of right, on payment of the licence fee. In September 1899 a notice was published in the Gazette by which the licence fees claimed to be payable by O'Keefe were specified, and it was stated that licences on which fees should remain unpaid on 31st December would be notified in the Gazetle as not having been renewed for 1900, and that the lands would thereupon be open for the purposes of the Crown Lands Acts from 31st December. O'Keefe did not pay the licence fees before 31st December, and on 6th January 1900 it was notified in the Gazette that his occupation licences had not been renewed for 1900. It was held by the Judicial Committee in the case of O'Keefe v. Malone (1) that the notification was inoperative, inasmuch as by reason of circumstances to which it is not now necessary to refer O'Keefe was not in default in not paying the fees before 31st December. The legal position therefore was that he continued to be entitled to exclusive occupation of the land as before. He, however, not unnaturally, thought that the notification of 6th January was intended to operate as a notice of the Minister's intention to refuse a renewal of the licences, and on 12th January he went to the Lands Office, and after an interview with the officer charged with such business paid the licence fees, at the rate demanded, into the Treasury. The Treasury receipt was headed "Suspense Account" and had at the foot the words " Awaiting reference to Lands Department." There is reason to think that O'Keefe had in fact forgotten to pay the fees in December. His payment on 12th January was in effect, and probably in express terms, accompanied by a request that the licence might be re-instated by the Minister as the Minister had power todo. The Crown Lands Act 1891 authorizes the Minister to reverse any forfeiture, and provides that a renewal shall be notified in the Gazette as soon as practicable, but that the date of renewal shall be the date of the Minister's approval thereof. In O'Keefe v. Malone (1) the (1) (1903) A.C., 365.

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The declaration in the action contained two counts. In the first count the plaintitis, after setting out facts showing that Andrew O'Keefe was entitled to the land in question under occu- pation licences, alleged an agreement between him and the Government that the licence fees for the year 1900 and succeeding years should be determined by fresh appraisement (as the law allowed), that the cost of the re-appraisement should be borne by him, that in consideration of his bearing such cost and paying the licence fees at the rate to be so determined he should be entitled to continue to occupy the land, and that no demand for the licence fees for 1900 should be made until after the appraise- ment. I pause here to say that under the decision of the Judicial Committee in O'Keefe v. Malone (1) his right to continue in occupation arose as a matter of law upon the facts alleged. The count then went on to state that O'Keefe paid the cost of the re-appraisement and occupied the lands, but that the Government nevertheless demanded the licence fees before the re-appraisement had been made, and on non-payment published a notification that the licences had not been renewed. It then proceeded to allege a further agreement between the Government and O'Keefe that in consideration of his forthwith paying the amount demanded the notification should be revoked within a reasonable time after payment, and as from its date, and that he should be permitted quietly to enjoy the lands during the year 1900 and succeeding years free from interference, disturbance and eviction on the part of the Government, or any person claiming under it, by matters subsequent to the payment, and averred that he forthwith paid the amounts demanded, and that all conditions were performed entitling him to performance of the agreement. It assigned as breaches that the Government did not revoke the notification within a reasonable time after payment, and did not permit him to enjoy the lands free from interruption or eviction, but notified that annual leases of 7,680 acres of the land had been granted to other persons, accepted rent for that land, authorized the lessees

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facts, as I have stated them, were established by evidence. At the close of the plaintiffs' case their counsel asked to amend by adding a count, of which a draft was submitted, and which, after stating facts showing Andrew O'Keefe's right to the exclusive occupation of the land in question under occupation licences, alleged that the Government made a wrongful demand upon him for the payment of moneys in respect of the renewal of the licences and notified in the Gazette that they had not been renewed, that afterwards he tendered the money claimed on the terms that the notification should be revoked and that occupation licences should be granted to him subject to any con- flicting interests that might have arisen since 31st December - 1899, and to any applications for annual leases lodged since - that date, that the Government accepted the money on those terms (the acceptance preceding the time when any money actu- ally became due) and revoked the notification and granted to O'Keefe occupation licences for 1900 subject as aforesaid. It then alleged that the Government "in derogation of the right conferred on him by the acceptance of the money and the renewal of the licences" purported to grant annual leases to other persons, repeating in effect the fourth allegation of the first count. The amendment was resisted by the defendant's counsel. Plaintiffs' counsel submitted that no new case was being made, and referred to authorities dealing with the question of what is a derogation from a grant. Cohen J. reserved his opinion on the application to amend, but after the close of the evidence refused it. The points of law were then argued, and the plaintiffs' counsel cited and relied on cases relevant only to the question of an implied agreement for quiet enjoyment % arising from the relation of landlord and tenant. The learned Judge gave judgment for the defendant, but found specially the facts relevant to the damages, if any, recoverable by the plaintiffs. In my opinion the amendment ought to have been allowed. - Assuming that the question of the plaintiffs' right to maintain an action as for a breach of an implied agreement for quiet enjoyment could not be raised on the first count, the new count did not raise any new facts, but merely sought to put another complexion upon the legal rights flowing from the uncontroverted

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grantor cannot derogate from his grant." And he referred to cases of interference by a grantor with the stability of the pre- mises granted, such as Caledonian Railway Co. v. Sprot (1), and Elliot v. North Eastern Railway Co. (2), where Lord Chelmsford pointed out that " whether voluntary or compulsory, every grant must carry with it all that is necessary to the enjoyment of the subject matter of it." I do not read the expressions of the learned Lords Justices in Grosvenor Hotel Co. v. Hamilton (3) as laying down that an obligation on the part of a grantor not to derogate from his grant may not be implied as a matter of contract. They meant, I think, that where the acts of derogation amount to nuisance or trespass the proper remedy before the Judicature Acts would have been an action for nuisance or trespass. There is nevertheless an implied contract not to frustrate the purposes of the express agreement. In Markham v. Paget (4), Swinfen Eady J. went on to review the authorities as to implied con- tracts for quiet enjoyment, and came to the conclusion not only that the then defendant's conduct amounted to a deroga- tion from her grant, but that, where an owner "agrees to let" by a tenancy agreement, a contract for quiet enjoyment without interruption by the grantor or anyone claiming under her, where the agreement includes no such express term, is implied. His Lordship's review of the authorities included Budd-Scott y. Daniell (5), the most recent case, where the defendant counter- claimed for breach of an implied contract for quiet enjoyment. There was a written agreement not under seal, whereby the plaintiff "agrees to let" a house for a year. In the King's Bench Division Lord Alverstone C.J., with whom Darling and Channell JJ. concurred, considered that on principle and common sense an agreement for quiet enjoyment ought to be implied, and held that where there is a letting a covenant for quiet enjoyment is to be implied from the mere relationship of the parties. In this he agreed with the opinion expressed by Lord Russell of Killowen C.J. in Baynes & Co. v. Lloyd & Sons (6).

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in the Gazette as not renewed, and asked what he should do. The officer suggested that he should tender the fees to the Treasury. O'Keefe did so, and it was received on the terms of this receipt (Ex. 0): "Suspense account. The Treasury 12 Jan. 1900. Received from Mr. O'Keefe the sum of £407 9s. 7d. sterling for rent on oceupation licences Nos. 651 and 651a. Awaiting refer- ence to Lunds Department." There was in this no contract. O'Keefe had said that he had forgotten to pay the rent; and he evidently hoped that the Minister of Lands would accept it, though late. As he says, the payment "slipped his memory" (see Ex. H). It turns out, from the opinion of the Judicial Committee in O'Keefe v Malone (1), that it was unnecessary for O'Keefe to pay this money ; but that fact does not alter the actual attitude of the parties. Then, on 20th January, the Minister approved of a departmental minute as follows: - 'The licence fees for 1900 having been paid into the Treasury, the non-renewal of the above occupation licences, and preferential occupation licences, may now be reversed, subject to conflicting claims and annual lease appli- eations since 31st December." In accordance with this decision, a (razette notice was issued on 14th February, stating that so much of the notice in the Gazette of 6th January as related to the non-renewal of the licences "is hereby cancelled." This can- _ eellation, however, is "subject to any conflicting interests that : _may have arisen since 31st December last, and also subject : to any annual lease application that may have been lodged since that date." In the meantime, on 12th February, an applica- _ tion was put in by the Malones for annual leases of part of the _ land; and hence arose the action for trespass against the Malones, _ which was settled by the decision in O'Keefe v. Malone (1). The facts are fully detailed by Lord Davey in that case. It is, to my mind, perfectly clear that neither O'Keefe nor the Minister, in this transaction, were making any contract. A bar- gain was not in their minds at all. The Minister did not ask for e money ; but the Treasury received it into a suspense account atil the Minister of Lands should decide what he should do. e Minister did not bargain that if the money were paid he

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these circumstances, were, as it seems to me, right in saying that H- ©. or A. even if the new count were added, the evidence failed to support em it; and in refusing to say that the learned primary Judge was O'Kerrr wrong in declining to allow the amendment. Pe As Ihave stated, an examination of the proposed third count discloses that it makes no claim against the defendant for the breach of any covenant, express or implied, for quiet enjoyment. It certainly contains words which, when severed from the rig- marole of their context, may be taken as charging the Govern- ment with certain acts done "in derogation of the rights" conferred by the renewal of the occupation licences. The acts complained of are purporting to grant annual leases, accepting rent therefor, authorizing the (supposed) lessees to take posses- sion, repudiating the title of O'Keefe, compelling him to bring an action to recover possession, There is no covenant for quiet enjoyment alleged ; and the acts alleged are not acts which would constitute a breach of such a covenant. It is not derogation from a grant to issue another grant which is invalid (under the final words of see. 33 of the Act of 1889); or to accept rent there- under ; or to authorize the (supposed) lessee to take possession ; or to "repudiate " the title of O'Keefe ; or to compel him to bring an action to recover possession. To 'derogate from a grant is a _ different thing from breaking a covenant for quiet enjoyment. If _ the lessor purport to grant to another a lease which is invalid, he _ does not thereby derogate from his grant. But if that other

enter on the land on the faith of the invalid lease, and if the lessor has covenanted for quiet enjoyment against not only his "own acts, but the acts of persons "claiming under" him, the ssor is liable under his covenant. To my mind, it is a grave error to treat the obligation not to ogate from one's grant as if it were a mere replica of the ation under a covenant for quiet enjoyment. There would be no need to express such a covenant, there would be no need to imply such a covenant, if the grantor were already under the me obligation from the very nature of his grant. The two __ kinds of obligation may cover, indeed, much of the same ground ;
but they do not coincide. The obligation not to derogate from a

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before; and the Crown did not - although its supposed lessees did - interfere with O'Keefe's enjoyment under that title. The damages here claimed are damages for the trespasses committed _ by the Malones ; the Crown did not commit these trespasses. Bat Mr. Canaway has intimated that he applies, even at this late stage, if the Court should think it necessary, for leave to add another count, simply raising a case of breach of an implied covenant for quiet enjoyment. Nothing in this case has caused me more perplexity than the question whether it is proper to allow such an amendment at this stage, in the circumstances of this case, and especially in view of the very definite statement of Cullen C.J. (1) that "the plaintiffs did not seek to base their claim upon anything implied from the relationship of landlord and tenant." But I understand that under the New South Wales practice we have no power to dismiss this action without pre- judice to another action; and that if the plaintiffs have a just cause of action, they will be shut out for ever from enforcing it unless the amendment be made. All the material facts are before the Court that could be proved under the new count. Even on the issue as to damages the defendant adduced evidence. 'Defendant's counsel, indeed, has been informed that further evidence could be brought in mitigation of damages; but there is nothing definite, and he had the opportunity at the trial of putting in all the evidence that he had. Personally, Iam strongly in accord with the views expressed by Bramwell LJ. in Til- desley vy. Harper (2) - that a Judge should give leave to amend

unless "satisfied that the party applying was acting mald fide, ie or that, by his blunder, he had done some injury to his opponent which could not be compensated for by costs or otherwise." _ Therefore, but with much doubt, I should allow the amendment. But the question remains, should a covenant for quiet enjoy- ment: be implied? It has to be remembered that this is an action _ between the Crown and its subject - that the occupation licence _ was "issued" (or is to be treated as "issued") by the Crown to O'Keefe. Primd facie - to say the least - the Crown is not to be treated as having made in any grant a covenant by implica-

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: tion. The Crown is only bound by its express covenants "Nothing passes except that which is expressed, or which is matter of necessary and unavoidable intendment in order to give effect to the plain and undoubted intention of the grant :" Feather v. Regina (1); and see per Lord Selborne, Dixon v. London Small Arms Co. (2). By express covenant I mean a covenant which is _ expressly stated, or which is to be found in the words used by applying the ordinary rules of construction of documents (as in _ Lord vy. Commissioners of Sydney (3) ). A covenant which is found, on the proper construction of the words used, is quite '< different from a covenant which is thrust into a document by 4 implication of law ; and an implied covenant for quiet enjoyment is of the latter class. In a country such as Australia, where the Crown enters into direct transactions with its subjects in so many directions, this question, whether the Crown is to be fixed with - contracts which the words of its grant or other documents do not express, becomes of very great importance. The rule exempting the Crown may be old fashioned, may to some seem absurd ; but. it is none the less binding. It is stated even in the recent Digest of the Laws of England, which has been brought out under the guidance of the Harl of Halsbury (see, eg., vol. vi, 410, 479, 496). The Crown is not bound by laches or by estoppels, though the subject is; nor is it bound by fictions of law: (Godbolt, 299; Jenkins, 287 ; Hobart, 339; Case of Banne Fishery (4); Chitty, Prevog., 381). It will be observed that the principle to which I refer is not the mere principle of construction, that where Crown grants are doubtful in meaning they ought to be inte preted in the manner most favourable to the Crown. There here no question of construction of words at all. The quest is whether a covenant, of which there is not the slightest sugge: tion in the words used, is to be treated as inserted in the Crown licence simply because it would be treated as inserted in a ] granted by one subject to another.

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Judgment (255 paragraphs)