Travinto Nominees Pty Ltd v Vlattas

Travinto Nominees Pty Ltd v Vlattas - [1973] HCA 14 - HCA 1973 case summary — Zoe

[63]

The other matter with which I need deal is the effect of the registration of the lease under the Real Property Act upon the validity or enforceability of the option to renew. I think it proper at the outset to point out that what the Real Property Act sets out to do is to make the registered title conclusive or in the jargon which has grown up, "indefeasible", by the series of sections to which attention was called in Frazer v. Walker [1] . Though as a term "indefeasibility" is convenient enough, it must always be remembered that it is the title to and possession of the land or of the interest in the land of which there is a registered proprietor which is rendered secure by the registration. In the case of a leasehold it may be and frequently is the case that the extent of the leasehold interest is not merely described by reference to a term of years but must of necessity be determined by reference to the operation and effect of those terms and conditions of the lease which affect or qualify the interest in the land which the lease purports to create. It may be noted that the Real Property Act recognizes that there may be terms and conditions in the memorandum of lease, see the Real Property Act s. 53 (3). These considerations seem to me to result in the conclusion that registration of the memorandum of lease does not ensure the validity of every term and condition of the lease or indeed of the enforceability of every covenant it contains. In my opinion, it must depend on the nature of the covenant and its relation to the limitation of the interest created in the land by the memorandum of lease itself. For example, a collateral covenant tying the lessee to the lessor in respect of some matter of trade does not obtain any validity or consequence simply because the memorandum of lease is registered. The validity or enforceability of such a covenant will remain a question under the general law. The same, in my opinion, is true of the option to renew the lease. It does not mark out the extent of the term created by the lease. It is an agreement to grant a new lease contingently on the exercise of the option and the observance during its term of the covenants of the lease. Whether such an agreement creates an immediate though defeasible equitable interest must ultimately depend on the specific enforceability of that agreement. I agree with the members of the Court of Appeal that the availability or unavailability of the remedy of specific performance if the option were duly exercised will determine whether the grant of the option creates any such interest in the land. I leave on one side as unnecessary for decision in this case the question whether an equitable interest arising on the grant of an option, which when exercised is capable of specific performance, forms part of the interest in the land which the registration of the memorandum of lease protects. I do so because in this case quite clearly, in my opinion, as in the view of the Court of Appeal Division, the option to renew if exercised would have been incapable of being ordered to be specifically performed because of the provisions of s. 88B of the Industrial Arbitration Act. It is not, in my opinion, the fact that the statute made the option void which is of consequence in this connexion. It is the fact that it made it illegal; and therefore incapable of specific performance which is the critical circumstance. I therefore find it unnecessary as did Mason J.A. as a member of the Supreme Court to decide whether Roberts v. District Land Registrar at Gisborne [1] and Pearson v. Aotea District Maori Land Board [2] ought to be followed. Here I agree with Mason J.A. that the fact that the statute renders the giving of the option illegal is sufficient to prevent the specific performance of an agreement which would flow from an exercise of the option.

[95]

The cases to which I have already referred, including In re Jackson and Haden's Contract [1] and Ashburner v. Sewell [2] , in my opinion, show firstly that in a contract using the formula "error or misdescription of the property", that expression refers to the physical nature of the land the subject of the contract; secondly, that decisions on the particular language of a compensation clause by individual judges are not authoritative in the sense that they form precedents; thirdly, that an error or misdescription whether "in the particulars" or "of the property" may result in the exposure of a defect in title; and that therefore in such a case, where the right to rescind upon the requisition or objection as to title cannot equitably be allowed, compensation can be ordered. They also establish that an error or misdescription which can be the proper subject of a requisition or objection as to title may, in some circumstances, lead to rescission by the use of a clause such as cl. 14 of the present case. If it would be reasonable to rescind under that clause, the fact that the objection to title disclosed an error or misdescription within the compensation clause will not be a reason for refusal to allow rescission. This relative operation of the two clauses is expressed as "overlapping" or by a statement that they are not mutually exclusive in the reasons for judgment in these cases. Thus, an error or misdescription which is properly within a compensation clause will not cease to be such because it also amounts to or discloses an objection to title: and it is clear that in some circumstances an objection to title may be based upon an error or misdescription of the property. What is relevant error or misdescription will be decided in the manner I have earlier indicated. But it certainly does not follow that because there are cases where what forms an objection to title amounted to a relevant error or misdescription, all valid objections to title constitute relevant errors or misdescriptions. The cases to which Harvey C.J. in Eq. referred in Grace v. Mitchell [3] certainly, in my opinion, did not decide that they do. An appeal in Grace v. Mitchell [3] was dismissed by this Court in April 1926. No reasons were given for that course: but it is clear from the notice of appeal that no question of law arose. Rather the appeal related to the primary judge's conclusion as to the vendor's right of rescission. In Svanosio v. McNamara [4] , Grace v. Mitchell [3] was referred to as establishing that a misdescription as to a building on the land is a misdescription which is "an objection to title". As I have said earlier a misdescription, properly so called, may ground an objection to title.

[129]

where the contract work is of a class or type in respect of which a price or rate is for the time being fixed by an award or agreement for employees engaged therein, but does not apply to any such contract under or in pursuance of which the contract work is to be carried out or performed by employees of the principal and by such employees only. Section 88B (2) (a) provides that "A contract to which this section applies shall not be entered into unless" the industrial commission or the relative committee "has approved" of its terms and conditions, and s. 88B (3) provides that "Where a contract to which this section applies is entered into without the approval of the commission or a committee" (inter alia) - (a) every person who is a party to the contract shall be liable to a penalty not exceeding two hundred dollars; and (b) the contract shall be void. In my opinion the words "any contract under which a person leases or agrees to lease" can only be given a sensible meaning if the word "under" is read as meaning "by" or "pursuant to". These words therefore refer to a lease, as well as to an agreement for a lease. Moreover, it seems to me impossible to escape the conclusion that the lease in the present case was granted with a view to the lessee carrying out, or causing to be carried out, or arranging for the carrying out, of the work of hairdressing on the demised premises. The lease contained a covenant (cl. 3 (b)) by the lessee in the following terms: That the lessee or the permitted assigns for the time being will not use or suffer to be used the premises for any purpose other than as a Hairdressing Salon and Tobacconist Shop and will manage and conduct the same in an orderly and quiet manner and shall conduct the same so that it shall not become noxious noisome or offensive and the said lessee will at all times of the year during the usual business hours keep the demised premises open for carrying on the said business. Clearly this clause obliged the lessee (including in that expression his permitted assignee) to carry on the business of a hairdressing salon and tobacconist shop on the premises throughout the term of the lease. The business of a hairdressing salon could not be carried on unless the work of hairdressing were carried out. It is true that the lease had in view that other work also might be carried out on the premises, viz., the work of a tobacconist. However, the fact that the lease was granted with a view to other work additional to the "contract work" being carried out does not render the section inapplicable. According to its terms the section applies to a contract under which a person leases premises to another person with a view to that other person carrying out the "contract work" and it is immaterial that it is intended that he should carry out other work as well. It was not disputed that the work of hairdressing is of a class or type in respect of which a price or rate is for the time being fixed by an award for employees engaged therein or that under the lease the contract work was not to be carried out only by employees of the "principal," that is, the lessor. It follows that the lease was a contract to which s. 88B applied. I see no need to discuss in detail the provisions of the other sub-sections of s. 88B, which, although in some respects difficult of application, do not lead to any different conclusion. Since the lease was entered into without the approval required by the section it was illegal and void. The provisions of sub-ss. (2) and (3) make it clear that a contract to which the section applies will only be valid if the approval of the commission or committee was obtained before the contract was entered into. It is not possible to save from invalidity such a contract, if entered into without such previous approval, by implying a condition that the contract will not become effective until approval is obtained. In this respect the section has a similar effect to the legislation considered in George v. Greater Adelaide Land Development Co. Ltd. [1] and is distinguishable from that considered in Butts v. O'Dwyer [2] . 1. (1929) 43 C.L.R. 91. 2. (1952) 87 C.L.R. 267.

[133]

In the alternative the appellant submitted that, assuming the lease to be illegal and void, its registration under the Real Property Act, 1900 NSW, as amended ("the Real Property Act ") conferred on the lessee an indefeasible title to the interest in respect of which he was registered and that the covenant to renew was an integral part of the lease itself and shared in its indefeasibility. This argument took as its starting point Frazer v. Walker [6] , which was decided on the Land Transfer Act 1952 NZ but which is applicable to the similar real property legislation of the Australian States: see Breskvar v. Wall [7] . The decision establishes that the registration of a void instrument is "effective to vest and to divest title and to protect the registered proprietor against adverse claims" [8] . There can be no doubt that ss. 3 ("proprietor"), 40, 41, 42, 53 and 124 of the Real Property Act have the effect that upon the registration of a lease the lessee obtains a title to the estate or interest specified in the lease notwithstanding that apart from registration the lease would be void and ineffective and that subject to the exceptions mentioned in the statute, none of which is here applicable, that title is immune from attack. However, the Industrial Arbitration Act, 1940 was passed subsequent to the Real Property Act. According to ordinary principles of construction effect must be given to its provisions notwithstanding any contrary provision in the Real Property Act. "If there is an inconsistency between one statute and a later statute, the later statute prevails"; "if the later enactment contains clear language from which it is plain that its provisions were intended to apply to land under the Act and to apply in a manner inconsistent with the Real Property Act, then they must operate according to their meaning. For the later enactment of the legislature must be given effect at the expense of the earlier": South-Eastern Drainage Board (S.A.) v. Savings Bank of South Australia [1] . I have already said that the provisions of s. 88B of the Industrial Arbitration Act apply to leases. There is nothing in s. 88B to indicate that it was intended to apply only to leases of land not subject to the provisions of the Real Property Act and there would be no rational ground for excepting land under the Real Property Act from the application of the section. The provisions of s. 88B on their proper interpretation operate to avoid a lease, to which they apply, whether or not the lease is registered under the Real Property Act. Effect must be given to the section notwithstanding that under the Real Property Act the title of the registered lessee is indefeasible.

[141]

The learned primary judge held, however, that the respondents were estopped by their conduct from asserting that the lease and option to renew, as it was called, were not valid. Briefly, the facts relevant to this question were as follows. I have already referred to the statement in the contract between the appellant and the respondents which recited that the land was subject to a lease. On 3rd July 1969, after the appellant had exercised the option to purchase the premises, the respondents' solicitor informed the appellant's solicitor that the lessee had an option to renew and thereafter wrote letters which referred to the option without casting any doubt on its validity. The appellant then claimed to be entitled to compensation but the respondents denied liability to pay compensation. The appellant's solicitor suggested, without prejudice to the claim for compensation, that an investigation should be made as to whether the lessee had defaulted in payment of his rent or in the performance of his covenants and was thus disentitled to a renewal. The respondents' solicitor agreed to this suggestion but apparently no default was discovered. The purchase was completed on 15th July 1969. Thereafter, on 18th May 1970, the appellant paid to the lessee $21,000 in exchange for surrenders of the lease (which by that time had almost expired) and of the option. The learned primary judge considered that the respondents must be taken to have represented that there was a valid lease and a valid option to renew and that there was implicit a representation that any approval required under s. 88B had been obtained. He held that this was a representation of fact on which the appellant acted to its detriment by paying the $21,000. In truth neither the appellant nor the respondents knew at any material time of the effect of s. 88B or that any approval was required under that section. With great respect, I am unable to agree with the conclusion of the learned primary judge. In all the circumstances, and particularly having regard to the fact that the representations were made in the course of a conveyancing transaction in which the appellant was represented by its own solicitor who might be expected to advise the appellant as to the legal position, there is no justification for implying into the representations any statement as to the legal effect of the lease or of the option to renew. The representations should not be taken at any more than their face value, and they simply meant that there was in fact a lease containing an option to renew. Certainly they were neither intended nor understood to mean that the approval required by s. 88B had been obtained. In any case, there is no evidence that the appellant, who was throughout advised by its solicitor, was induced by the representations to pay the money to the lessee. In my opinion the evidence does not make out the elements necessary to ground an estoppel.

At a glance

Court

Decision date

Before

Source

Judgment (145 paragraphs)

Parties