procedural. Application struck out for lack of jurisdiction; no order as to costs.
Key principles
There was no tenancy agreement (lease) between Mr Paterson and Seamore: exclusive possession alone, in the circumstances of this case, did not establish a lease; on the facts the...
Because there was no tenancy agreement within the meaning of s 3 of the Residential Tenancies Act 1997, the Tribunal lacked jurisdiction under the Act to grant the restraining...
Where a party asserts that the Residential Tenancies Act does not apply, s 507 places onus on that party to satisfy the Tribunal on the balance of probabilities; the respondent...
Issues before the court
Does the applicant's occupation of the residence constitute a tenancy agreement (lease) as opposed to a licence?
If a lease exists, do any statutory exclusions in the Residential Tenancies Act 1997 apply?
Can equitable part performance save an oral agreement to create a lease contrary to s 126 Instruments Act 1958?
Cited legislation
Plain English Summary
Mr Paterson lived in a house on a large rural property owned by Seamore. He had exclusive possession from 1998, paid no rent, and had no written agreement. Seamore leased the entire property commercially to a company (Yarra Valley Spring Water) in 2003 and re-entered the property in 2008 for breach of that lease. Paterson applied to VCAT for orders under the Residential Tenancies Act. The Tribunal held there was no tenancy agreement between Paterson and Seamore: the occupation was a licence rather than a lease because there was no agreement, no consideration or acts amounting to part performance, and contradictory evidence about any intention to grant a lease. Because the Act did not apply, the Tribunal struck out the application for lack of jurisdiction.
AI-generated legal information, not legal advice. Zoe can make mistakes. Check the cited source, and for advice about your situation consult a qualified Australian lawyer.
Deep Dive
1,803 words · generated 15/07/2026
What happened
James Paterson had lived since 1998 in a house located on a 73-hectare rural property. The property was used for a spring water bottling business for several years. Ownership and commercial occupation of the whole property changed hands and structures: Glenmorton (a company associated with the Patersons) owned and operated the business until liquidation; a syndicate acquired title; Seamore Pty Ltd bought the land on 2 July 2003 and concurrently granted a commercial lease of the whole property to Yarra Valley Spring Water on the same day (the head lease). The head lease contemplated the tenant could sublet or licence the house subject to landlord consent (lease clause 11.2).
1 cited instrument linked from this judgment.
Paterson continued to live in the house without paying rent, and without any written agreement concerning his occupation. On 7 December 2008 Seamore re-entered the property under the head lease for non-payment of rent and purported to terminate the lease. Paterson sought VCAT relief restraining interference with his occupation, invoking the protections of the Residential Tenancies Act 1997 (RTA). Interim restraining orders were made ex parte. At the full hearing the Tribunal had to decide whether Paterson occupied under a tenancy agreement (a lease) covered by the RTA; if not, VCAT lacked jurisdiction under the RTA and the application had to be struck out. The Tribunal found no tenancy agreement; it concluded the occupation was a licence and struck the application out for lack of jurisdiction (Order and Reasons dated 15 January 2009).
Why the court decided this way
Three analytical pillars underpinned the Tribunal's decision:
The statutory definition: s 3 of the Residential Tenancies Act 1997 defines "tenancy agreement" as an agreement, whether written or implied, under which a person lets premises as a residence. Thus the threshold legal question was whether there was an agreement (express or implied) between Paterson and the owner (Seamore) which let the house as a residence.
The writing requirement and part performance: the Instruments Act 1958 s 126 requires that an interest in land be in writing. The Tribunal acknowledged that equitable part performance may save an oral agreement, but the acts relied upon must be referable to the agreement to create a lease, typical examples being entry into possession combined with payment of rent or handing over keys/security (Reasons citing Bradbrook et al.). Paterson had exclusive possession from 1998 but had not paid rent and did not provide identifiable consideration referable to a lease; any work he performed was performed in capacities connected to the business rather than as caretaking in lieu of rent.
The exclusive possession test considered contextually: the Tribunal recognised Radaich v Smith as authority that exclusive possession is critical in distinguishing a lease from a licence, but it stressed that exclusive possession is not automatically decisive and that exceptional cases exist where exclusive occupation is given without a lease. The Tribunal compared the facts to authorities and concluded the correct analogy was to Bufalo Corporation Pty Ltd v Leone, where an oral arrangement produced only a licence. On the evidence, contradictory testimony about any promise of a perpetual right to occupy, lack of terms, no rent, and absence of part performance acts, the Tribunal found no intention by Seamore to confer a lease. Consequently, no tenancy agreement existed under s 3, the RTA did not apply, and VCAT had no jurisdiction under that Act to make the restraining orders sought.
The Tribunal also noted the statutory onus under s 507 RTA that the party asserting the Act does not apply bears the onus; Seamore satisfied that onus on the balance of probabilities (Reasons).
Before and after state of the law
Before this decision, the familiar legal principles were:
Radaich v Smith: the seminal High Court articulation that exclusive possession is a crucial indicator of a lease rather than a licence, subject to qualification in exceptional circumstances where exclusive occupation may be accorded without a lease.
Instruments Act s 126: interests in land must be in writing; equitable part performance is the recognised exception.
Authorities such as Bufalo v Leone and academic commentary (Bradbrook et al.) illustrate fact-sensitive balancing when exclusive possession is present but other indicia of a lease are absent.
Paterson v Seamore applies these settled principles to its specific facts and emphasises that exclusive possession, without more, will not automatically found a lease where the surrounding circumstances show an intention that no proprietary interest be conveyed. The decision reaffirms existing law rather than changing it: it is an application of established tests to a fact pattern where oral promises and informal arrangements among company associates left no demonstrable lease.
Afterwards, the case stands as a Victorian Tribunal application of Radaich and Bufalo: it will be cited in contexts where occupiers with exclusive possession claim tenancy protections but cannot point to an agreement or acts amounting to part performance. It underlines that informal promises, absence of rent and absence of defined obligations or consideration commonly point to a licence.
Key passages with plain-English translation
"A key question in this case is whether possession is sufficient to establish that there was a lease, and in particular whether the fact that Mr Paterson had exclusive possession is sufficient." (Reasons)
Plain English: The Tribunal posed the core legal issue, does living alone in the house (exclusive possession) mean you have a lease? The answer depends on the total context, not possession alone.
"I find that in this case there is no lease." (Reasons)
Plain English: The Tribunal concluded Paterson did not hold a lease or tenancy agreement; he only had permission to occupy, a licence, so RTA protections do not apply.
Discussion of Instruments Act and part performance: "The act of part performance must be referable to an agreement to create a lease... Examples include where a tenant enters into possession and pays rent, or where keys are handed over and a security deposit is paid."
Plain English: To enforce an oral agreement about land despite the writing rule, the tenant must have done clear, contract-related acts, such as paying rent or receiving keys. Merely living in the property without these acts is generally not enough.
Reliance on Bufalo: the Tribunal quoted the decision which held that an oral agreement gave only a licence where it was never intended by the parties that an interest in the property be created.
Plain English: If the people who arranged the occupancy never intended to make the occupier a tenant with property rights, the occupier has only a licence, even with exclusive occupation.
What fact patterns trigger this precedent
This decision will be engaged when the following pattern arises:
An occupier has exclusive possession of premises.
There is no written lease or tenancy agreement.
No rent is paid and no clear consideration is given in lieu of rent.
The occupation arose through informal, internal or familial/company arrangements (friends, directors, shareholders) where an express grant of a proprietary interest is not documented.
The registered owner has a separate head-lease or commercial arrangement with a third party (as here, Seamore leasing to Yarra Valley Spring Water).
The owner invokes proprietary or contractual rights against the occupier and the occupier seeks statutory residential tenancy protection.
In such cases, Paterson v Seamore indicates courts/tribunals will look beyond mere exclusive possession to the substance of arrangements, parties' intentions, presence or absence of consideration, and acts referable to an agreement (part performance). If those elements are lacking, the occupation will likely be characterised as a licence and statutory tenancy protections will not attach.
How later courts have treated it
This VCAT decision is a tribunal-level application of long-standing High Court authorities. It does not purport to create new law; it applies Radaich and Bufalo. Later courts and tribunals faced with similar fact patterns are likely to follow the analytical approach used here: identify whether an agreement exists, ask whether the Instruments Act writing rule or its part-performance exception is engaged, and examine whether exclusive possession was intended to reflect a lease. The decision will be useful for tribunals assessing jurisdictional questions where applicants assert RTA protection in the absence of conventional leases.
Because the decision is a VCAT member's reasons, it is persuasive in later VCAT matters, particularly within the Residential Tenancies List, but not binding on courts. It will be cited as a clear example of the application of the exclusive-possession and part-performance principles to informal occupation arising from internal company/shareholder dealings.
Still-open questions
Degree and quality of consideration required where no rent is paid: The Tribunal accepted that rent is not essential but found no consideration in Paterson's case. A borderline factual situation where an occupier provides substantial caretaking or operational services with clear benefit to the owner might prompt a different outcome. The decision leaves open exactly how substantial or specific such services must be to found a lease by implication or part performance.
The role of inter-company relationships and agency: Here the house occupation was intertwined with corporate ownership and director/shareholder relationships. The decision treats the informal arrangements as indicative of a licence. Future cases could explore whether, where the head lessor and occupier operate within the same corporate group, ostensible authority or agency could yield a tenancy interest against the owner.
Treatment of subletting/licensing clauses in a head lease: The head lease here contained an express sublet/licence provision (clause 11.2). The Tribunal did not find that a sublease or licence grant to Paterson had been properly created under that clause. But the decision does not comprehensively analyse what evidence would suffice to prove a lawful sub-licence created under such a head lease where no written sub-agreement exists.
The borderline between tenancy at will and licence: The Tribunal mentions tenancy at will as a possible form of a lease-like arrangement where no rent is paid. Distinguishing a tenancy at will from a mere licence can be finely balanced; this decision does not exhaustively map that boundary.
Remedies outside the RTA: The Tribunal noted but did not determine claims under the Fair Trading Act 1999 because they were not pleaded by the applicant. Where an applicant cannot establish a tenancy, alternative equitable or statutory claims might remain available; the limits and prospects of those remedies in the particular corporate/family arrangements exemplified here remain matters for separate litigation.
Conclusion: Paterson v Seamore is a fact-focused application of well-established principles. It is a cautionary example that exclusive possession alone, absent agreement or part-performance acts referable to a lease, will not attract the protections of the Residential Tenancies Act. Practitioners advising occupiers or owners in informal occupation settings should ensure clear written arrangements or be prepared to argue part-performance or other equitable grounds if they wish to create or resist proprietary occupation rights.
Judgment (27 paragraphs)
[1]
The application is struck out for lack of jurisdiction.
[2]
Ms J Treleaven instructed by Russell Kennedy Solicitors
[3]
The applicant, Mr Paterson lives in a residence on a property at 45 Reserve Road Don Valley. The property is in a rural location, covers approximately 73 hectares, and includes a number of sheds, water tanks, a spring water source, and the residence in which Mr Paterson lives. Until recently the spring water source and part of the property were used for commercial purposes, in particular for the bottling and sale of spring water. I will refer to the house in which Mr Paterson lives as the residence, and the 73 hectares including all buildings as the property.
The respondent, Seamore Pty Ltd.(Seamore), is the company which owns the property.
Until recently, a commercial lease, dated 2 July 2003, was in place between Seamore and Yarra Valley Spring Water Pty Ltd (Yarra Valley Spring Water) for the lease of the property by Yarra Valley Spring Water to operate its water bottling business.
There is a complicated history of connections between Yarra Valley Spring Water, Seamore, and previous owners of the property. I will summarise these connections shortly.
On 7 December 2008 Seamore re-entered the property according to the terms of the lease, on the basis that no rent had been paid for the lease of the property for the entire term of the lease.
Mr Paterson applied to the Tribunal for an order restraining Seamore from interfering with his tenancy of the residence. Interim ex parte restraining orders were made on 15 December 2008. The matter was listed for hearing before the Tribunal on 19 December 2008. It was adjourned in order to allow Mr Paterson to attend in person, and also to allow two hours to be set aside for the hearing. The matter was then part heard on 7 January 2009 and continued on 9 January 2009. At these hearings Mr Paterson and Mr Hack, director of Seamore, gave evidence, and counsel for both parties made extensive submissions.
The key question I needed to determine was this: does Mr Paterson live in the residence subject to a residential tenancies agreement covered by the Residential Tenancies Act1997? If so, it is open to me to make the restraining orders sought. If not, the matter must be struck out for want of jurisdiction.
[4]
In July 1998 Mr Paterson, his fiancée Ms Burns, and his mother, Ms Helen Paterson decided to purchase the property. They paid a deposit. The vendor agreed to allow Mr Paterson and Ms Burns to move into the residence immediately. In September 1998 Mr Paterson and his mother applied for a water licence to draw water from the property. Settlement of the property took place in December 1998; the nominated purchaser was Glenmorton Holdings Pty Ltd (Glenmorton), a company of which Mr Paterson and his mother were shareholders and directors. An access agreement allowed Mr Paterson and Helen Paterson the right to access the property for the duration of the water licence.
Mr Paterson and Ms Burns continued to live in the residence. They made no agreement with Glenmorton as to the terms of that residency, and paid no rent.
Glenmorton operated a commercial spring water bottling and distribution business at the property from 1999 to August 2001, when Glenmorton was placed into liquidation. Mr Paterson continued to live at the premises, paying no rent.
On 19 March 2002 a Contract of Sale for the property was made following negotiations between Mr and Ms Paterson and the liquidators for Glenmorton, and what was described in evidence as a syndicate of purchasers (the syndicate). It was said that Mr Paterson was a director of one of the member companies of the syndicate. The price was $575,000.00. It is unclear when settlement took place, except to state that the Land Victoria Historical Search Statement records that there was a transfer of land by endorsement from Glenmorton to the syndicate on 3 July 2003, and then a transfer of land by endorsement from the syndicate to Seamore also on 3 July 2003.
The Contract of Sale dated 19 March 2002 records that:
[5]
"The purchaser admits that the dwelling offered for sale as part of the property and inspected by the Purchaser is currently occupied by the former directors of the Vendor on terms unknown to the Vendor. The Purchaser shall not make any requisition, claim compensation or delay settlement of the sale by reason of such occupation and the purchaser accepts all responsibility for evicting any such occupants on and from the settlement date."
[6]
Mr Paterson continued to live in the residence.
In January 2003 Mr Hack (the director of Seamore) began discussions with Mr Paterson and Helen Paterson about the business and the property. He was a friend of Mr Paterson's brother, Richard Paterson. Ultimately Mr Hack said that he was interested in investing in the water business, but only if he owned the property.
The arrangements that Mr Hack and the Patersons agreed to were that a new entity, to be known as Yarra Valley Spring Water, would operate the business from the property. Mr Hack, Helen Paterson, Richard Paterson and Mr Paterson (the applicant) would hold equal shares in Yarra Valley Spring Water. Mr Hack's company, Seamore, would purchase the property and lease it to Yarra Valley Spring Water.
On 2 July 2003 a Contract of Sale was entered into between the syndicate as vendor and Seamore Pty Ltd (as trustee for the RM Hack Land Trust) as purchaser. The Contract of Sale does not refer to the residence. The Schedule records that there are no encumbrances, including no leases.
On the same day, 2 July 2003, Seamore and Yarra Valley Spring Water signed a lease over the property. This document recorded the lease of the whole property to Yarra Valley Spring Water on commercial terms, at an annual rental of $86,712.30. The lease included the following clause:
[7]
(a)The Tenant, subject to receiving the consent of the Landlord, is entitled to sublet, share or licence the House to a new person.
[8]
(b) The Landlord must give consent to the Tenant:
[9]
If the new person signs any agreement and provides an security (for example: personal guarantee, bank guarantee, security deposit) the landlord reasonably requires; and
If the Tenant is not in breach of this Lease.
[10]
There is no other reference to the residence in the lease.
Mr Paterson continued living at the residence. He continued to pay no rent for the residence.
Indeed it appears that no rent was paid at all, although there was some discussion about whether a payment made by Yarra Valley Spring Water at one stage was rent for the property, or a maintenance payment. As the issue of whether commercial rent was paid for the property was not my concern, I did not pursue this. On 18 November 2004 a Notice of Default was sent by Seamore's solicitors to Yarra Valley Spring Water, demanding $135,126.69 arrears of rent. A letter from Seamore's solicitors to Yarra Valley Spring Water dated 4 December 2008 advised that the whole of the rent due under the lease from 2 July 2003 to that date remained outstanding and amounted to $507,374.80. The letter advised of Seamore's intention to take possession of the property and terminate the lease by re-entry pursuant to the breach provisions of the lease. The lease, which was for five years from 2 July 2003, included an over-holding provision at clause 3.2.
Mr Paterson became bankrupt on 17 May 2007 and is still bankrupt.
Mr Hack now lives on the property in a caravan.
[11]
There was no written agreement between Mr Paterson and any of the owners of the property in relation to his occupation of the residence. One or more discussions about arrangements took place.
In Mr Paterson's affidavit he stated that his recollection of the discussions that took place prior to the signing of the Contract of Sale and the Lease on 2 July 2003 included some discussion about the residence. He stated that:
[12]
"I would continue to reside at the house located on the Property (in this respect, Richard Hack said to me 'you just live there, that's a given, the house is yours, you have always lived there' or words to that effect.)"
[13]
Mr Paterson confirmed this in oral evidence. When it was put to him that "You have never been told you could live there forever?' Mr Paterson said "Yes, Mr Hack said the house would always be mine."
Mr Hack refuted this. He said, in his affidavit and in oral evidence, that the only discussion he had about the residence was with Helen Paterson, on 2 July 2003 as they were leaving the solicitors' offices after signing the Contract and the Lease. Helen Paterson asked if her son would be able to continue to live at the residence. Mr Hack said that he told Helen Paterson that this was a matter for Yarra Valley Spring Water. He was leasing the property as a wholly commercial operation, and whatever Yarra Valley decided to do with the buildings on the property was their concern. He did say that he had no objection to Mr Paterson living there. It was unclear whether he said this as director of Seamore, the Landlord under the Lease, or as a shareholder and director of Yarra Valley Spring Water, the Tenant.
Mr Hack said that when he re-entered the property on 7 December 2008 he spoke to Helen Paterson, with whom he still has a cordial relationship. He asked her whether she wanted him to speak to Mr Paterson about leaving the residence. He said that Helen Paterson told him that she would speak to her son and tell him that he needed to leave the residence. She later advised Mr Hack that her son would not leave.
[14]
It was undisputed that Mr Paterson has had exclusive possession of the residence, from 1998 to the present.
He has paid no rent.
There was no bond.
There was no expectation placed on Mr Paterson that he provide services in lieu of rent. He did say that he kept an eye on the property but that these were not caretaking services. He said that he did so "only because I live there - Yarra Valley Spring Water may have benefited from it." Mr Paterson said that the evidence given by his mother at an earlier hearing, that security was provided in lieu of rent, was inaccurate, and that any work he did around the place was part of being involved in the bottling business.
[15]
Mr Dragojlovic, for Mr Paterson, succinctly pointed out that in order to determine whether or not Mr Paterson is entitled to the protections afforded under the Residential Tenancies Act 1997, I need to be satisfied that:
a lease, as opposed to a licence, exists between Seamore and Mr Paterson,
the premises are used as a residence, and
none of the statutory exemptions in the Act apply.
He submitted that a tenancy at will was created between Glenmorton and Mr Paterson in December 1998, and that the terms were that Mr Paterson was entitled to exclusive possession of the premises for an indefinite period of time and was not obliged to pay rent. He submitted that this tenancy at will was assigned to the syndicate in March 2002, and then to Seamore in July 2003. The commercial lease signed in July 2003 was concurrent, he argued. As there was already a lease with respect to the residence, the only interest the written lease could grant was reversionary. Yarra Valley Spring Water then became the landlord of the residence. When Seamore terminated the lease with Yarra Valley Spring Water in December 2008, Yarra Valley Spring Water ceased to be the landlord with respect to the house and the rights of the landlord reverted to Seamore. Alternatively, Mr Dragojlovic argued, Yarra Valley Spring Water granted a sub lease to Mr Paterson on 2 July 2003, and when the head lease was terminated in December 2008, a tenancy at will was created.
He further submitted that the fact that Mr Paterson had exclusive possession of the residence was conclusive of the fact that the nature of his interest was a lease, and not a licence, and referred to the High Court case of Radaich v.Smith[1959] HCA 45; (1959) 101 CLR 209 as the authority on this point.
[16]
Ms Treleaven for the respondent submitted that no tenancy agreement existed between the applicant and the respondent. She submitted that possession on its own is not enough to imply the existence of a tenancy agreement unless it is referable to an agreement, either written or oral, between the parties. Ms Treleaven referred to Regent v Miller[1976] HCA 40; (1976) 10 ALR 496 at 499 on this point, and submitted that no agreement either written or oral was made between the parties as to the residence. She further submitted that any arrangement for Mr Paterson to occupy the premises was made between Yarra Valley Spring Water and himself, and was characteristic of a licence conditional upon Yarra Valley Spring Water being in possession of the property. Ms Treleaven referred to Bufalo Corp PtyLtd v Leone (2001) 40 ACSR237 in order to distinguish the situation from that of Radaich v. Smith.
[17]
The questions I address in making findings are as follows:
Does Mr Paterson's occupation of the residence derive from a lease or a licence, that is, is there a tenancy agreement in place?
If there is a lease, or tenancy agreement, do any of the exclusionary provisions in the Residential Tenancies Act 1997 apply?
Section 507 of the Residential Tenancies Act places the onus of establishing that the Act does not apply on the person claiming that it does not apply; in this case the respondent Seamore.
[18]
Section 3 of the Act defines "tenancy agreement" as "an agreement whether or not in writing and whether express or implied, under which a person lets premises as a residence".
If there was a lease, or tenancy agreement [1] created in this case, then it is covered by the Residential Tenancies Act (subject to any exclusions), as the premises are used as a residence.
Section 126 of the Instruments Act1958 requires that for an interest in land to be created it must be in writing. The equitable doctrine of part performance provides an exception to this rule. The act of part performance must be referable to an agreement to create a lease. [2] Examples of sufficient acts of part performance include where a tenant enters into possession and pays rent, or where keys are handed over and a security deposit is paid. [3]
There is no written agreement between Mr Paterson and the respondent, nor between Mr Paterson and any previous owner of the property. The first owner of the property was Glenmorton, a company owned by Mr Paterson and his mother. This was when Mr Paterson took possession of the residence.
When the syndicate purchased the property, they entered no agreement with Mr Paterson for lease of the residence. The Contract of Sale recorded that a person was living in the residence, but there was no reference to the nature of the person's right to live there.
On 2 July 2003 Seamore purchased the property. Mr Paterson's evidence was that during the discussions which took place prior to the purchase, Mr Hack said that Mr Paterson could continue to live in the residence. Mr Hack did not own the property at this stage. Mr Hack contradicted this evidence, saying that the only conversation he had about the residence was with Helen Paterson after the signing of the contract. He said that he told Ms Paterson he had no objection to Mr Paterson living in the house, but that it was not his concern except insofar as he was a shareholder of Yarra Valley Spring Water. He said he was leasing the whole property to Yarra Valley Spring Water on a commercial basis, and they could decide what they wanted to do with the buildings on the property. Neither Mr Paterson's evidence nor that of Mr Hack satisfies me that Seamore intended to enter into a tenancy agreement with Mr Paterson.
There are numerous exclusionary provisions in the Act. Having decided that there is no tenancy agreement, I do not now need to consider whether or not those provisions apply.
I note that the applicant did not ask me to consider the matter under the Fair Trading Act 1999, no doubt for the reason that if I decided that there was a mere licence it would be determinable at will. I further note that the respondent did ask me to consider the Fair Trading Act, but as this was not the respondent's application it was not open to me to amend this application at the respondent's request.
Section 507 of the Residential Tenancies Act1997 places the onus on the respondent to satisfy me on the balance of probabilities that the Act does not apply. I am so satisfied.
I have made no order as to costs, for the reasons given orally on 9 January 2009. In summary, Section 109 of the Victorian Civil and Administrative Tribunal states that each party before the Tribunal bears their own costs, save for in certain circumstances as set out in the section. In general, none of those circumstances apply in this case. In particular, in response to the respondent's submission, the adjournment on 19 December 2008 was granted, not only to allow the applicant to be present, but also in order for sufficient time to be set aside for the hearing.
I therefore make the order as set out on page 1.
[21]
[1] Bradbrook, MacCallum, Moore Australian Real Property Law 4th edition Law book Company 2007 at p505: the terms lease and tenancy agreement can be used interchangeably and there is no distinction between them.
The authors refer to Whitlock v. Brew(1968) [1968] HCA 71; 118 CLR 445 , in which Tiernan J states that 'In order to have a lease there must be, in addition to the parties and the property, an ascertainable period for its duration, an ascertainable rent, and an ascertainable point of commencement." At p454
Paterson v Seamore Pty Ltd (Residential Tenancies) [2009] VCAT 458 (15 January 2009)
(1959) 101 CLR 209
(1976) 10 ALR 496
AI Analysis
Outcomeprocedural
Disposition:
Application struck out for lack of jurisdiction; no order as to costs.
A key question in this case is whether possession is sufficient to establish that there was a lease, and in particular whether the fact that Mr Paterson had exclusive possession is sufficient. Mr Paterson has argued, citing Radaich v Smith[4], that it is. This case stands for the proposition that exclusive possession is the critical test in determining whether a lease, as opposed to a licence, exists, although some of the judges qualified this. For example, Taylor J, at page 217, stated that "exceptional cases may arise in which it will be seen that a right to exclusive occupation or possession has been given without the grant of a leasehold interest".
A difference between Radaich v Smith and this case is that in the former the parties were subject to what was called a licence, but looked like a lease. Rent was paid, the terms were clear. In this case, Mr Paterson had never paid rent, and had no intention of doing so. He offered no in-kind services in lieu of rent; any maintenance or caretaking of the property he may have done was in his capacity as director, and employee, of the business. It provided no benefit to Seamore. There were no terms; Mr Paterson believed that "the house would always be mine". There were no agreements about maintenance of the residence, and no other duties were specified. As Bradbrook, MacCallum and Moore state: "Contrary to popular belief, rent is not an essential feature of a lease. For this reason, for example, a tenancy at will may arise in circumstances where no rent has been paid. However, except where the lease is in deed form, under normal contractual rules some consideration must be provided by the tenant in return for the grant of a lease. ...Rent may be in kind, or may be paid by the provision of services..." [5]
I find that in this case there is no lease. I refer also to the case of Bufalo Corporation Pty Ltd v. Leone[6] in which McDonald J held that "The oral agreement between the defendant and Mr Bufalo did not give the defendant anything more than a licence to occupy the property until it was needed. It was never the intention of either person that the defendant would have an interest in the property." At paragraph 47 His Honour stated that " Although the defendant lived in the premises at the property at the invitation of Tony Bufalo and although she was to meet the expenses that I have referred to, I am unable to conclude that by the oral agreement entered into between them she obtained a right to exclusive occupancy of the premises for a term. She had nothing more than a mere licence to occupy the premises. ...In my view, in the circumstances existing between the defendant and Tony Bufalo it was never the intention of the defendant and Tony Bufalo that she would have an interest in the property. She lived there as a convenience to herself and for the benefit of the plaintiff company in order that someone may be occupying the property ..."
I consider the situation in this case to be closer to that of Bufalo v Leone than that of Radaich v Smith. Indeed there was even less formality between Mr Paterson and Mr Hack as director of Seamore than there was between Ms Leone and Mr Bufalo. Mr Bufalo specifically agreed that Ms Leone would live in the premises on certain terms, although these did not include the payment of rent. According to the evidence before me, at most Seamore offered no objection to an arrangement made between the directors and shareholders of Yarra Valley Spring Water about what would happen with the residence while Yarra Valley Spring Water leased the property.