Bettcher v Murdock & Lines - [2007] SADC 100

DISTRICT COURT OF SOUTH AUSTRALIA
(Criminal: Appeal Against a Master's Decision)
BETTCHER v MURDOCK & LINES
[2007] SADC 100
Judgment of His Honour Judge David Smith
25 September 2007
LANDLORD AND TENANT
Application by landlord plaintiff for possession of a commercial property pursuant to Part XVII of Real Property Act and Rule 204 of District Court Rules 2006 - tenant defendants in breach of lease but remaining in possession - discussion as to the kind of tenancy which resulted - question of kind of tenancy is determined by deciding the intention of the parties by reference to the facts viewed objectively.
Held: the tenant defendants occupied the premises pursuant to a series of tenancies for fixed terms each of a month's duration - notice not necessary - tenants being in default were tenants at sufferance - and were liable to be ejected without notice even though they remained in possession for sometime without dissent of plaintiff landlord - landlord plaintiff entitled to immediate possession - application granted - order that tenant defendants give up possession.
Real Property Act 1886 Part 17; District Court Rules 2006 Rule 204; Statutes Amendment (Attorney-General’s Portfolio) Act 2002 No. 33 s3; Retail & Commercial Leases Act 1995 s20B(3)(b), referred to.
Andrew Knox Holdings Pty Ltd v ANZ Banking Group SASC 5429 (del 17 January 1996); Smith v Hughes (1871) LR 6QB 597; Goldsbrough Mort & Co. Ltd v Quinn (1910) 10 CLR 674, considered.

BETTCHER v MURDOCK & LINES
[2007] SADC 100
Introduction

The plaintiff has owned 138 Grange Road, Flinders Park for many years. She leased it some time ago to Emacord Autos Pty. Ltd (“Emacord”), who operated a second hand car dealership there. In 2005 Emacord was experiencing financial difficulties – on 4^th November 2005 a Receiver & Manager was appointed. Emacord was behind in its rent. In December 2005, no doubt in an effort to avoid sustaining any further losses, the plaintiff decided to lease the property to the defendants. Both defendants were closely associated with Emacord. The second defendant Lines was the sole director and shareholder and the first defendant Murdock was the General Manager of the company. Further, both had guaranteed the due performance of the lease by Emacord.
So, pursuant to the terms of a written Agreement dated 16^th December 2005 the defendants became the plaintiff’s tenants. Emacord surrendered possession to them on 22^nd December 2005.
The agreement contemplated the entry by the parties into a formal lease in registrable form, but that was never done. The defendants immediately breached the agreement by not making the first payment. That payment included the arrears of rent owing by Emacord. The second defendant’s cheque was not only less than the agreed sum, but it “bounced”.
That inauspicious beginning set the tone of the ensuing occupancy.
The defendants have remained in possession of the property since December 2005 despite their own delays and defaults and in the face of notices to quit. They contend that their occupancy is now captured by s20B of the Retail and Commercial Leases Act 1995 and that formal notices to remedy default and to quit are required before they are obliged to surrender possession.
The Issue
The plaintiff seeks an order for possession of the property pursuant to Part XVII of the Real Property Act 1886 (as amended) and Rule 204 of the District Court Rules 2006. There is now no debate that this Court has jurisdiction under Part XVII of the said Real Property Act (see s3 of Statutes Amendment (Attorney-General’s Portfolio) Act 2002 No 33).
The issue is whether the plaintiff is entitled to possession.
Some Legal Principles
I am content that the material facts are not in dispute and this application can therefore proceed summarily (see Andrew Knox Holdings Pty Ltd v ANZ Banking Group[1]). Both counsel agree that what is in dispute is not what has happened, but rather the legal consequences of it.
[1] SASC Burley J, no. S5429 17 January 1996
I further direct myself that I am deciding what the parties have agreed as to the basis of the occupancy of the property. Whilst such a decision is a conclusion about the intention of the parties the exercise is essentially objective. The question is: Upon the basis of all the relevant circumstances viewed objectively what was agreed? What was subjectively intended or thought to be the case by the parties is irrelevant (see Smith v Hughes[2]; see also Goldsbrough Mort & Co. Ltd v Quinn[3]). What was agreed will also determine the character or kind of tenancy which arose and that will have its own legal consequences. In the case of Fitzgerald v Button[4] Hickinbotham CJ, who delivered the judgment of the court, said in relation to this objective exercise of determining what was agreed:
The learned judge held that the tenancy was a yearly tenancy, and not a weekly tenancy. That was a question of fact and not of law, and it depended on what the intention of the parties was to the agreement of tenancy made and existing between them. Did they intend that a weekly or a yearly tenancy should be created between them? We think that, as in other questions of fact, this question must be dealt with on the basis of whether there was presented to the judge evidence on which a reasonable man might conclude, in the way in which the learned judge has concluded, the question – Was evidence submitted to him from which he might reasonably infer that the agreement for a tenancy made between the parties related to a tenancy from year to year, and not to a weekly tenancy.
[2] (1871) LR 6 QB 597 per Blackburn J @ 607
[3] (1910) 10 CLR 674
[4] (1891) 17 VLR 52 at 53
With these principles in mind I turn briefly to the evidence.
Findings on the Evidence
As indicated the defendants entered into possession of the property on 22^nd December 2005, pursuant to the Agreement of 16^th December 2005. After a series of breaches of that Agreement by the defendants, the plaintiff, on 8^th May 2006, terminated the lease and demanded that possession of the property be given on 22^nd May 2006.
By letter dated 19^th May 2006 the plaintiff offered to extend the time for vacating the property from 22^nd May 2006 to 21^st June 2006 provided the defendants paid the sum owing of $16,338.97 by 22^nd May 2006. In the event that the defendants made the said payment the letter made the following offer:
As I mentioned during our various telephone discussions, if that payment is made on or before 11.00 a.m. on 22^nd May 2006, you need not vacate the premises until 21^st June 2006.
If, in two weeks time, you wish to extend your occupancy of the premises by a further month, you should let me know and offer to pay $2,931.00 on or before 21^st June 2006. I will then put that to my client.
My client may accept or may refuse to accept. At least you will have two weeks within which you can vacate.
If my client accepts, the same scenario will apply the following month.
The defendants by Emacord duly made the said payment on 22^nd May 2006 and remained in possession until 21^st June 2006. They also took up the plaintiff’s offer to further extend occupancy by a series of tenancies each of one month’s duration. They made the specified payment through Emacord of $2,931 in June, July and August but did not make the payment for September on the due date, namely the 22^nd. Accordingly, by letter dated 26^th September 2006, the plaintiff demanded possession of the property by 7^th November 2006 and also demanded the payments for September and October. The defendants again by Emacord did make a payment in early October of $2,931. There were no other payments proffered by the defendants in 2006.
The plaintiff did not immediately force the issue of taking possession of the property in accordance with the notice given on 26^th September 2006 (i.e. to give possession by the 7^th November), but in November began negotiating with the defendants for a lease of one year to Emacord. In the end, nothing came of these negotiations.
The plaintiff suffered the defendants to remain in possession without any articulated dissent from shortly after 7^th November to 18^th December when the plaintiff gave the defendants another notice to quit. They did not do so.
Other payments from Emacord were proffered in 2007, but not accepted by the plaintiff or her solicitors. Rather, after correspondence between solicitors this summons was issued.
Conclusion – Kind of Tenancy - Arguments
I find that the tenancy agreement of 16^th December 2005 was properly terminated by the notice of 8^th May 2006.
I find that following the termination of the said Agreement there were a series of tenancies for fixed terms, each of one month’s duration (see Tenancy Law & Practice Victoria 2^nd Ed by A Chernov at 22; see also Commercial Tenancy Law in Australia 2^nd Ed by Bradbrook & Croft at 39–42). The evidence in support of that is the offer set out in the letter of 19^th May 2006 which was plainly accepted by the defendants when they made the required payments. A notice to quit is not necessary to terminate such a tenancy unless it be agreed that it be given. A tenancy for a fixed term by definition concludes when the fixed term elapses (see Commercial Tenancy Law in Australia (supra) at [23]). In any event, the plaintiff chose to give two such notices in the period after the termination of the agreement of 16^th December 2005 but that did not change the character of the tenancy.
Certainly the plaintiff had an immediate entitlement to possession upon default by the defendants in making the September 2006 payment. She did not do so. She gave notice and, more than that, permitted occupancy throughout the negotiations for a new tenancy. Notwithstanding that lack of dissent, there was on the evidence, no change in the agreement as to the tenancy. It remained a tenancy for a series of fixed terms, each of one month’s duration. The plaintiff, by suffering the defendants to remain in possession without payment, notwithstanding the notice in the letter of 26^th September 2006 to surrender possession by 7^th November, did not change that.
Whether the defendants be characterised as trespassers or tenants at sufferance does not matter. The right to eject them remains. What is important is that the evidence does not indicate that any other tenancy was created in this time.
In particular, I adopt the following exposition in Commercial Tenancy Law in Australia 2^nd Ed (supra) at [2.6] as to the ejectment of an over holding tenant of a tenancy for a fixed term:
[2.6] Where one who has been a lessee of premises and whose terms has come to an end remains in possession against the will of his or her landlord, that person is a trespasser: Fry v Metselaar [1945] VLR 65 at 67. Where such a person remains in possession without either the assent or dissent of his or her landlord, that person is a tenant at sufferance (Fry v Metselaar; above, at 67). The distinction is without importance so far as the recovery of possession is concerned, for even if the former lessee has remained in possession without the dissent of the lessor and so become a tenant at sufferance, he or she may be ejected without any previous notice to quit or demand of possession. Natural Gas & Oil Corporation Ltd v Byrne (1951) 68 WN (NSW) 207 at 213. Except in the case where the lease itself provides for the creation of some further tenancy, the lessor is accordingly, where the lessee remains in possession after his or her term has come to an end, entitled to recover possession without notice to quit or demand of possession, unless there has been some subsequent creation of a further tenancy either by express agreement or by conduct from which an agreement is to be inferred; see also [2.4].
The above approach applies to this case.
I disagree with counsel Mr Manetta that the evidence shows there was an oral tenancy agreement for a year struck in November 2006. His own client, the first defendant, would only go so far as saying it was an agreement “in principle” subject to the decision of the second defendant. Further, I disagree, for the above reasons, that the tenancy ever became a monthly tenancy. It is not necessary therefore to deal with the argument about the application of s20B(3)(b) of the Retail & Commercial Leases Act. I would be surprised if that enactment applied to give any relief to the defendants in this case who have been so obviously in default. Rather, as is clear, I agree with the alternative contention of counsel for the plaintiff Mr Dal Cin to the effect that after 8^th May 2006 there were fixed term tenancies each of one month’s duration.
For the above reasons, I hold that the defendants are “over holding tenants” of a series of tenancies each for a fixed term of a month. The plaintiff is entitled to immediate possession.
Final Orders
1.Within 21 days of the service of a sealed copy of this Order upon them, the defendants give up possession to the plaintiff the land comprised in Certificates of Title Register Book Volume 5835 Folios 975 and 977, being the land situated at 138 Grange Road, Flinders Park, South Australia 5025.
2.The defendants to pay the plaintiff’s costs of this application for possession to be agreed or taxed.
3.The parties may apply to the Master of this Court for further orders and directions.