Scott, Agent for Esanda Ltd v Irom

[1968] HCA 24

High Court of Australia|1968-07-01|Before: Owen JJ, McTiernan J, Kitto J

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Court

High Court of Australia

Decision date

1968-07-01

Before

Owen JJ, McTiernan J, Kitto J

Source

Original judgment source is linked above.

Judgment (38 paragraphs)

[1]

High Court of Australia Barwick C.J. McTiernan, Kitto, Taylor and Owen JJ. Scott, Agent for Esanda Ltd v Irom [1968] HCA 24

[2]

ORDER Appeal allowed with costs. Order of the Supreme Court of New South Wales (Court of Appeal Division) set aside and in lieu thereof order that the appeal to that Court be allowed with costs, and the question in the case stated be answered in the affirmative. Order that the matter be remitted to the magistrate to proceed according to law.

[3]

I have had the advantage in this case of reading the reasons for judgment prepared by my brother Taylor and those prepared by my brother Owen. The facts and circumstances of the matter are there fully set out and need no repetition. I entirely agree with the reasoning and the conclusions expressed and reached by each of my brothers and would not wish to add anything to what they have written. In my opinion, the appeal should be allowed both because the precise findings of fact made by the magistrate do not justify his conclusion that the appellant required the demised premises for occupation by itself or its associated company and not for demolition and because, even on the assumption that the appellant did intend that its associated company should occupy a portion of the new building which would include all space formerly enclosed in the demised premises, such an intention did not deny the proposition that it required demised premises for demolition within the meaning of the Landlord and Tenant (Amendment) Act.

[8]

The authority is the decision of the Privy Council, given upon similar New Zealand legislation in the case of McKenna v. Porter Motors Ltd. [1] , which this Court held in Morris v. English, Scottish & Australian Bank Ltd. [2] must be accepted as governing the construction of s. 62 of the New South Wales Act. McKenna's Case [1] was one in which the demised premises consisted of a parcel of land with a hotel upon it, and the lessor required possession in order to demolish the hotel and build on the land a garage for the lessor's own occupation. The ground in par. (m) could not be relied upon, for the New Zealand Act made that ground conditional upon suitable alternative accommodation being available to the lessee and none was in fact available. The only question therefore was whether the lessor could succeed upon the ground in par. (g) (ii). (I shall use throughout the distinguishing letters of the New South Wales Act.) The lessee contended that par. (g) (ii) was inappropriate to the case because "the premises" meant the whole subject matter of the lease, namely the land plus the building, and since the lessor company did not intend to occupy the building it could not be held to require "the premises" (i.e., as a whole) for its own occupation. The lessor agreed that "the premises" comprised the land and the building, but contended that to require the whole in order to demolish the building with a view to its own occupation of a new building to be erected in its place was to require the premises for its own occupation. The Privy Council indorsed the view of both parties that "the premises" meant the subject matter of the lease, including the building, and accepted the lessor's contention as to what constituted requiring that subject matter for its own occupation. As I understand the judgment, their Lordships considered that although demolishing a building is part of the occupation both of the land and of the building it is not, within the meaning of par. (g) (ii), an occupation by the lessor or by a person associated with it, unless its purpose is to enable a new building to be erected for occupation by the lessor or by such a person. If that be not its purpose, their Lordships held, the appropriate ground for a notice to quit is the ground in par. (m); but e converso if that be its purpose the ground in par. (m) is inappropriate to the case. Their Lordships evidently considered that the paragraphs had to be construed so as not to overlap, presumably because the provision as to the availability of alternative accommodation applied to the one but not to the other; and to achieve that result they held that par. (g) (ii) limited the operation of par. (m) to cases where the lessor required the premises for reconstruction or demolition for the purpose of making provision for occupation by persons other than himself and his associates.

[10]

Save that under the New South Wales Act the necessity for alternative accommodation to be available is attached to par. (g) (ii) instead of par. (m), no relevant distinction between the two statutes exists, so far as I can see. Accordingly the first step we are required to take in this case is to determine what was the subject matter of the lease. The stated case is silent as to the nature and size of Bull's Chambers, as to the dimensions and exact location of the shop, and as to the exact words of the tenancy agreement; but it was common ground on the hearing of the appeal and, we are assured, before the Supreme Court that Bull's Chambers is a building of several storeys, that the shop was slightly elevated above street level, with a basement beneath it, and that at the time of the letting the parties did not express themselves more precisely as to the parcels than by agreeing that "the shop" should be the subject of the weekly tenancy. The laconic expression "the shop" embraced, I should have thought, the entity consisting of (at least) the inner surfaces of the walls, ceiling and floor. It may have included even more of the walls, ceiling and floor: cf. Carlisle Café Co. v. Muse Bros. & Co. [1] ; Hope Bros. Ltd. v. Cowan [2] ; Goldfoot v. Welch [3] , but it certainly did not include anything above the ceiling or beneath the floor: cf. Doe d. Freeland v. Burt [4] ; Devonshire (Duke) v. Pattinson [5] . I do not doubt that the lease entitled the lessee to the exclusive right to occupy the space within the shop, for the enjoyment of that space was, in the nature of things, essentially involved in the enjoyment of the structure as a shop; but I see no need to decide whether the space, considered by itself, was part of the demised property. Though "the shop" is no doubt a corporeal hereditament: Co. Litt. 48b; Shep. Touch. 206, the correct view may be that it is so only as a structure, as "physical matter over which ownership is exercised": cf. Megarry and Wade, Law of Real Property, 3rd ed. (1966), pp. 12, 680; Izon v. Gorton [1] ; Resumed Properties Department v. Sydney Municipal Council [2] ; Re Lehrer and the Real Property Act [3] ; and compare the views of Viscount Simon and Lord Wright with those of Lord Russell and Lord Goddard in Cricklewood Property and Investment Trust Ltd. v. Leighton's Investment Trust Ltd. [4] . But whether or not it was only the structure of the shop or that structure plus the contained space that was the subject matter of the lease, the question which McKenna v. Porter Motors Ltd. [5] poses for us is whether, on the magistrate's findings, the lessor should be held to require the premises for occupation in order to demolish the structure and then have the space physically enjoyed, by means of a new building, by either its own or an associated company's officers and employees. This is a question of the character of the occupation which the lessor wishes to have up to the time when, by reason of the demolition of the structure, the subject matter of the lease will no longer exist or (if this be the better view) will no longer exist as a whole.

[36]

The learned magistrate and, on appeal by way of stated case, the Court of Appeal felt compelled to reach this conclusion by the decision of the Privy Council delivered by Lord Somervell in McKenna v. Porter Motors Ltd. [1] which this Court felt bound to follow in Morris v. English, Scottish and Australian Bank Ltd. [2] . Had it not been for those two cases I would have felt no doubt that, on the findings made by the learned magistrate, the appellant was entitled to succeed. It reasonably required the room leased to the respondent for demolition, not for occupation by itself or the Bank. It proposed to demolish the floor, walls and ceiling of that room along with the rest of the building and the fact that, when the new building was erected, it was intended that the Bank should occupy a portion of the new building which would or might contain within it some or all of the air space which was formerly contained within the floor, ceiling and walls of the room occupied by the respondent would, I would have thought, have been an irrelevant consideration. The words of s. 62 (5) (m) are clear and, with respect, there would appear to be no need to read into the paragraph something in the nature of a proviso to the effect that it is not to be available if it appears that the lessor or some person associated with him in his trade, profession, calling or occupation intends, after the premises demised have been demolished and replaced by a new building, perhaps with floor levels different from those in the existing building, to occupy the whole or some part of that building. This seems to me to accord with the view expressed in a passage in the judgment of Parker L.J. in Fisher v. Taylor's Furnishing Stores Ltd. [3] , which was referred to with approval by Lord Morton, Lord Somervell and Lord Denning in Betty's Cafés Ltd. v. Phillips Furnishing Stores Ltd. [4] and with which I respectfully agree. Each of these cases was concerned with a statutory scheme under which a tenant of business premises might, in certain circumstances, serve upon his lessor a request for a new tenancy to replace that under which he had formerly occupied the premises. The Act provided that in such circumstances the lessor might oppose an application to the court for the grant of a new tenancy on various grounds. These included ground (f) that "the landlord intends to demolish or reconstruct the premises comprised in the holding and cannot reasonably do so without obtaining possession of the holding", and ground (g) that "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". What Parker L.J. had said in Fisher's Case was as follows:

[37]

From the scheme of the Act as there laid down I should have thought that it was clear, apart from authority, that if any of those grounds of objection is established, the tenant's application for a new lease must fail. Each ground is entirely separate and independent, and each, if proved, entitles the landlord to succeed. Thus, if ground (f) is proved to the satisfaction of the court, it matters not to what use the landlord ultimately intends to put the holding. He may intend to let it when the work is done to a third party. He may intend ultimately to occupy it himself for his own business; or he may not have made up his mind at all. To suggest that, if his intention is ultimately to occupy it himself and he cannot by reason of sub-s. (2) of s. 30 rely on ground (g), he is thereby debarred from relying on ground (f), is to apply a proviso to the operation of ground (f) which is not there and for which there is no warrant. [1] I find it difficult to reconcile what was said by Parker L.J. with some of the statements, to which I will presently refer, appearing in Lord Somervell's judgment in McKenna's Case [2] . Moreover it is plain that in that case the interpretation which was placed upon a provision in the Tenancy Act of New Zealand corresponding to s. 62 (5) (m) of the New South Wales Act was based upon an implication which their Lordships thought was to be extracted from a passage in the judgment of Williams J. in Burling v. Chas. Steele & Co. Pty. Ltd. [3] , an implication which his Honour on two occasions, one before and one after the decision in McKenna's Case [2] , said that he had not intended: See his Honour's remarks [4] , when agreeing that special leave to appeal should be refused in Felser's Case [5] , and his judgment in Morris' Case [6] . I should add that Felser's Case [5] was one in which the Full Court of the Supreme Court of New South Wales had held that s. 62 (5) (m) applied to a case in which a lessor reasonably required possession of premises in order to demolish them and erect a new building in their place and that it was not to the point that he, or a person associated with him in his trade or business, intended to occupy the new building. And it was a decision against which, as I have already said, this Court refused to grant leave to appeal. I have mentioned these matters because, while I agree that we are bound by McKenna's Case [1] , they cause me to take the view that we should, with all respect, treat their Lordships' decision as limited in its application to the particular facts with which they had to deal and not give it any wider application than is necessary. The Tenancy Act 1948 of New Zealand which was there under consideration contained provisions limiting the right of a lessor to recover possession of demised premises and specified various grounds upon which possession might be recovered. One of these grounds, ground (h), corresponded with ground (g) (ii) of the New South Wales Act and another, ground (m), corresponded with ground (m) of that Act. The facts were that the premises demised consisted of a parcel of land upon which stood an hotel. The lessors sought to recover possession under ground (h), alleging that they required the premises for their own occupation. Their intention was to demolish the hotel and build a garage in place of it for the purposes of their business. What was decided by the Privy Council was that they were entitled to rely upon ground (h) notwithstanding the fact that when they recovered possession of the premises leased, namely the land and the hotel, they proposed to demolish the hotel and replace it with a garage. In the course of his judgment, however, Lord Somervell said that ground (m) of the New Zealand Act - which corresponded with ground (m) in s. 62 (5) of the New South Wales Act - should be limited in its operation in the way in which his Lordship thought Williams J. in Burling v. Chas. Steele & Co. Pty. Ltd. [2] had limited the operation of a similar provision in the National Security (Landlord and Tenant) Regulations which corresponded with what is now ground (m) of the New South Wales Act, that is to say that it should not be applied to "all demolition or reconstruction cases" but only to those cases in which the lessor required the premises for demolition or reconstruction with a view to letting or selling them or making some use of them other than for his own occupation or the occupation of a person associated or connected with him in his trade, profession, calling or occupation. It might well be thought that what their Lordships said as to the meaning of ground (m) of the New Zealand Act was obiter but it was an interpretation which this Court in Morris v. English, Scottish and Australian Bank Ltd. [1] felt bound to accept. In Morris' Case [1] , however, the facts were for all material purposes identical with those in McKenna's Case [2] , since the subject matter of the demise comprised land with the buildings thereon and the lessor's intention was to occupy the whole of the land and, after demolishing the existing buildings, to occupy the whole of a new building to be erected on it. The facts in the present case are different. The premises demised consist of one room in a building which the lessor proposes to demolish. It seems to me to be quite inapt to say that in these circumstances the lessor requires that room for its own occupation or for occupation by the Bank. What it requires is possession of the room in order to demolish it. 1. [1956] A.C. 688. 2. (1957) 97 C.L.R. 624. 3. [1956] 2 Q.B. 78, at pp. 91, 92. 4. [1959] A.C. 20. 5. [1956] 2 Q.B., at p. 91. 6. [1956] A.C. 688. 7. (1948) 76 C.L.R. 485, at p. 490. 8. [1956] A.C. 688. 9. Noted, (1953) 27 A.L.J., pp. 116, 117. 10. [Sub nom. Felser v. Walker] (1953) 53 S.R. (N.S.W.) 155. 11. (1957) 97 C.L.R., at p. 632. 12. [Sub nom. Felser v. Walker] (1953) 53 S.R. (N.S.W.) 155. 13. [1956] A.C. 688. 14. (1948) 76 C.L.R. 485. 15. (1957) 97 C.L.R. 624. 16. (1957) 97 C.L.R. 624. 17. [1956] A.C. 688.