Ceedive Pty Ltd v May, Timms, McFadden and Mudway - [2005] NSWSC 222

CITATION:
CEEDIVE PTY LTD v MAY, TIMMS, McFADDEN & MUDWAY [2005] NSWSC 222
This decision has been amended. Please see the end of the judgment for a list of the amendments.

HEARING DATE(S): 3 - 6, 9 - 13 February 2004; 17 - 19 May 2004

JUDGMENT DATE :

18 March 2005

JUDGMENT OF:
Levine J

DECISION:
Direct the plaintiff to bring in Short Minutes of Orders in each action conformable with these reasons, encompassing the entry of judgment for possession, the issue of a writ of possession, the entry of a judgment for a sum for arrears of rent, any order as to an enquiry as to, or judgment for quantified, mesne profits, costs, including any special order for costs in relation to the late service of an affidavit by Mr Edds, and dismissal of the cross-claim; Order the return of the exhibits.

CATCHWORDS:
Possession of land - miners' cottages - Pottery Estate Lithgow NSW - ground leases - nature of tenancies - Landlord and Tenant (Amendment) Act 1948

LEGISLATION CITED:
Contracts Review Act 1980
Conveyancing Act 1919
Landlord and Tenant Act 1899
Landlord and Tenant (Amendment) Act 1948
Real Property Act 1900

CASES CITED:
Anderson v Toohey's Ltd (1937) 37 SR (NSW) 70
Australian Provincial Assurance Co Ltd v Coroneo (1938) 38 SR (NSW) 700
BP Refinery (Westernport) Pty Ltd v Hastings Shire Council (1977) 180 CLR 266
Bahr & Anor v Nicolay & Ors (No 2) (1988) 164 CLR 604
Barry v Heider (1914) 19 CLR 197
Billing v Pill [1954] 1 QB 70
Bonnington & Co Ltd v Lynch (1952) 86 CLR 259
Bowen v Anderson (1894) 1 QB 164
Burden v Ainsworth [2004] NSWCA 3
Citycorp Australia Ltd v O'Brien (1996) 40 NSWLR 398
Codelfa Construction Pty Ltd v State Rail Authority (1982) 149 CLR 337
Coulls v Bagot's Executor & Trustee Co Ltd (1967) 119 CLR 460
David Jones Ltd v Leventhal (1927) 40 CLR 357
Di Salvio v Manthorpe [1965] NSWR 360
Eastern Nitrogen Ltd v Federal Commissioner of Taxation (2001) 108 FCR 27
Elitestone Ltd v Morris [1997] 1 WLR 687
Federal Commissioner of Taxation v Metal Manufactures Ltd (2001) 108 FCR 150
Frazer v Walker [1967] AC 569
Greater Union Organisation Pty Ltd v Ball [1967] 1 NSWR 538
Grgic v Australian and New Zealand Banking Group Ltd (1994) 33 NSWLR 202
H A Warner Pty Ltd v Williams (1946) 73 CLR 421
Hobson v Gorringe [1897] 1 Ch 182
Holland v Hodgson (1872) LR 7 CP 328
Huffell v Armistead (1835) 7 Car & P 56; 173 ER 25
Hunt v Luck [1902] 1 Ch 428
Manchester, Sheffield and Lincolnshire Railway Co v Anderson (1898) 2 Ch 394
Marsden v Campbell (1897) 18 LR(NSW)Eq 33
McKenzie v McKenzie (1944) 62 WN (NSW) 48
Melluish (Inspector of Taxes) v B M I (No3) Ltd [1996] AC 454
Munro v Stuart (1924) 41 SR (NSW) 203
Muscolino v Ramm (1986) 5 NSWLR 385
NH Dunn Pty Ltd v LM Ericsson Pty Ltd (1979) 2 BPR 9241
National Australia Bank v Blacker (2000) 104 FCR 288
Permanent Trustee Australia Ltd v Esanda Corporation Ltd (1991) 6 BPR 13,420
Picone v Grocery & General Merchants Ltd (1963) 64 SR (NSW) 40
Radaich v Smith (1959) 101 CLR 209
Reid v Smith (1905) 3 CLR 656
Shaw v Kadwell (1960) NSWR 689
Snowlong Pty Ltd v Choe (1991) 23 NSWLR 198
Trident General Insurance Co Ltd v McNiece Bros Pty Ltd (1987) 165 CLR 107
Turner v York Motors Pty Ltd (1951) 85 CLR 55
Webb v Frank Bevis Ltd [1940] 1 All ER 247
West v AGC (Advances) Ltd (1986) 5 NSWLR 610
Wilson v Darling Island Stevedoring & Lighterage Co Ltd (1956) 95 CLR 43

PARTIES:
CEEDIVE Pty Ltd
(Plaintiff)
v
ALLEN THOMAS MAY
DONALD FRANCIS TIMMS
PHILLIP JAMES McFADDEN
GORDON MUDWAY
(Defendants)

FILE NUMBER(S):
SC 12916 OF 2002; 12917 OF 2002; 12918 OF 2002; 12919 OF 2002

COUNSEL:
M D Young
(Plaintiff)
J Needham (now of SC) / P M Lane
(Defendants)

SOLICITORS:
John F Joseph
(Plaintiff)
Robert Stoyef and Associates
(Defendants)

LOWER COURT JURISDICTION:

[2005] NSWSC 222

IN THE SUPREME COURT
OF NEW SOUTH WALES
COMMON LAW DIVISION
POSSESSION LIST

JUSTICE DAVID LEVINE

FRIDAY 18 MARCH 2005
12916 OF 2002
12917 OF 2002
12918 OF 2002
12919 OF 2002

CEEDIVE Pty Ltd
(Plaintiff)

v
ALLEN THOMAS MAY
DONALD FRANCIS TIMMS
PHILLIP JAMES McFADDEN
GORDON MUDWAY
(Defendants)
JUDGMENT (Possession of land – miners’ cottages – Pottery Estate Lithgow NSW – ground leases – nature of tenancies – Landlord and Tenant (Amendment) Act 1948)

1 By reference to the proceedings against Allen Thomas May (May), the structure of the action in each case can be identified. The plaintiff is the registered proprietor of certain land known as the “Pottery Estate” at Lithgow. The defendant is the ground lessee of a certain part of that Pottery Estate. A sum for rent (ground rent) is alleged to have been payable in respect of the ground lease, on a weekly basis, from 1 January 2001. The plaintiff says that it was a term and condition of the ground lease that in the event that the ground rental was not paid, the plaintiff might terminate the lease and evict the defendant. Further and in the alternative, the plaintiff relies on its statutory power of termination pursuant to s 85(1)(d) of the Conveyancing Act. A failure to pay rent is pleaded, as is the service of a Notice of Termination, and the failure of the defendant to give up his possession of the land or to remove his building, fixtures, fences and chattels. The plaintiff seeks judgment for possession and leave to issue a writ of possession, judgment in a certain sum, mesne profits and costs. The Amended Defence places in issue the primary averments of the plaintiff, and a Cross-Claim pleads matters of history and raises issues as to contractual licence, estoppel, reliance on the representation, wrongful interference of the cross-claimant’s enjoyment of the premises, protected tenancy and relief against forfeiture. I shall refer to the defendants / cross-claimants as the defendants.

2 On 17 May 2004, I disallowed an amendment sought by the defendants to rely upon estoppel by convention.

3 The evidence in the action as a whole was typically constituted by affidavits filed by each side with the usual cumulation of exhibits and annexures thereto. Oral evidence was given by the principals of the plaintiff company and the four defendants and other witnesses.

4 I have the advantage of the provision to me of four sets of written submissions together with oral submissions, which I shall adapt and adopt where appropriate. It is difficult to compile a structure of these reasons, taking into account the four separate actions as it were. I propose, however, to adopt the approach of the plaintiff, tempered by that of the defendants, in proceeding through the material and indicating my findings of fact and conclusions in relation thereto where expressly required.

5 The plaintiff acquired the property (Lot 503, DP 1030314) “The Pottery Estate” by contract of sale dated 12 August 1999; the acquisition was completed by transfer to it on 11 May 2000. Thus in the ordinary course of events, pursuant to s 42 of the Real Property Act, it holds indefeasible title, save for the interests recorded in its folio and subject to tenancies of which it had notice not exceeding three years (s 42(1)(d)).

6 Special condition 1 to that contract states:

“The Purchaser acknowledges that there are 29 dwellings erected on the property and

. Attached hereto is a Schedule setting out the names of those owners and the weekly rental currently being paid by each of them to the Vendor.

and will not call upon the Vendor to provide any information other than what is contained in this Agreement. On settlement the Vendor will provide a written direction to each person named in the Schedule for payment to the Purchaser of all rental after Settlement.”

7 There can be little dispute that the listed persons were obviously to be understood as owners of the dwellings in respect of which the “ground rent” was being paid and not the land on which those dwellings were. The plaintiff has never disputed that it had notice of what it says were the weekly tenancies and that the dwellings were owned separately from the land.

8 For the plaintiff, it is contended that the evidence is sufficiently strong to hold that the tenancies were weekly tenancies derived from the payment of rent on a weekly basis. The evidence is derived from the contract itself; from the affidavit sworn 9 April 2003, paragraphs 4 – 6 and “NK 1” of Mr Kerrison, the property manager / agent for the vendor company to the plaintiff; documents DMOC 4 and 5 (rent ledgers); the affidavit of Mr McFadden of 7 May 2003 and annexure A and B; the affidavit of Mr May, sworn 7 May 2003, paragraphs 5, 10 and 11; the affidavit of Mr Mudway of the same date, annexures F and O; the affidavit of Mr Timms of 7 May 2003, paragraph 2 and annexure A; and the evidence of Mr Martin, who became a property manager in 1995, to the effect that the setting of the new ground rent was always something for the company to determine and always was set as a weekly rental (T425.5-11); all ground leases according to this witness were on a weekly basis (T428.35).

9 Some of the lessees no doubt paid, as a matter of their own convenience, fortnightly or at other intervals, but that does not, it is submitted, and I agree, detract from the evidence as to the tenancies being weekly, which I so find. This is consistent with the proposition of law that would imply a tenancy from week to week from the fact that that was how the rent was fixed and indeed paid: Turner v York Motors Pty Ltd (1951) 85 CLR 55 at 70 – 72 per Dixon J.

10 A weekly tenancy, or a tenancy from week to week, is terminable on a week’s notice. Similarly, on a week’s notice the lessor can increase the rent payable, in effect offering the lessee a new tenancy from week to week at the higher rent on the expiry of his weekly tenancy: Huffell v Armistead (1835) 7 Car & P 56; 173 ER 25; Bowen v Anderson (1894) 1 QB 164.

11 It seems quite clear that little or no notice had been given by the plaintiff’s predecessors in title of increases in rent, according to Mr May’s and Mr Mudway’s affidavits and annexures thereto and the affidavit of Mr McFadden. I find, as was submitted for the plaintiff, that historically the practice was that the ground rent was to be “an amount fixed by [the Colliery Company] from time to time” – per Mr McFadden. Mr Martin also seems to corroborate this state of affairs.

12 In any event, the plaintiff notified the four defendants on completion of its purchase that the rents would be revised to $0.09 cents psm on their respective allotted land areas and the defendants were notified, by letters dated 13 December, of their new weekly ground rents from 1 January 2001. Briefly stated, it is not in issue that none of the four defendants paid the new rent. Mr May paid $40 per week; Mr Mudway paid generally $40 per week irregularly in the early period; Mr McFadden paid generally $40 per week from late 2000 very irregularly; and Mr Timms paid irregular amounts at irregular intervals.

13 Each of the four defendants was substantially in arrears of rent (as purportedly increased by the plaintiff) or indeed otherwise, by the time notices were given terminating their ground leases in September 2002 – see, for example, DMOC 54 in the matter of May. The plaintiff asserts it had both an express and statutory power to terminate the respective ground leases for non-payment of rent and exercised it in accordance with what is averred in the Statement of Claim. Upon termination, the plaintiff became entitled to possession of the land and, it is argued, to arrears of ground rent and mesne profits. That, in moderately summary form, is the content of the plaintiff’s case as it has sought to argue has been proved.

14 I propose to deal with the position of each of the defendants individually, in the way that they were dealt with in the plaintiff’s written submissions in chief.

15 Mr May’s house, property 20020, is located in the south-western corner of the Pottery Estate. It is a two-bedroom cottage of brick construction. Mr May is a pensioner, born in 1930. He left school at the age of 14 to go to work with a timber contractor. Aged 16, he obtained employment in the Estate mine. He worked for a local produce merchant for approximately 5 years; he then worked on a sheep station, and at about 32 years of age started work at the Lithgow Small Arms factory in 1961, where he remained for 32 years. He retired in 1993.

16 As to the purchase of his house, he paid $1000 to a Laurence Breen, a real estate agent, who apparently said to him words to the effect that Mr May would have the same deal as a Madge McIntyre regarding the house and the sheds. From 28 September 1969, he paid $85.80 to Mr Breen for ground rent on a yearly basis. He paid this amount until 1 October 1986 when his rent was increased to $15.80 per week. Mr May paid the rent yearly for three years after he purchased the house (exhibit 6, p 511). Mr May gave evidence to the effect that notifications as to increase were like the one he got from Coalex on 6 October 1995 (which referred to weekly rentals) and that he assumed that his only obligation was to pay weekly in advance, although rents could be paid how he wanted to pay them, and he said that a few times in fact he paid several weeks in advance. He received receipts for the original purchase and for rent paid by him. There was otherwise no formal documentation of his transaction with Mr Breen. In or about 1985, Mr May arranged for the construction of a new roof for his house at a cost of $5,500, and in 1987 he arranged for the rewiring of electricity at a cost of $2,500. There are no supporting documents for these expenditures. In December 1994 Lithgow Council required Mr May’s cooperation in alleviating the problem of a high water table and permitting the installation of a septic tank. Up until that time, Mr May had had access to the Council’s sanitary service. In May 1995, Mr May arranged for the construction of the septic system at his house. The cost was $3,200 and he received a refund of $640.

17 On 6 October 1995, Mr May received a letter from Coalex Pty Ltd requiring an increase in the ground rent to $18 per week from 1 October 1995, which sum he paid to Coalex as ground rent until 12 May 2000: this does not sit consistently with any assertion of an “annual review”. In June 1997 he received a letter from Oakbridge advising that the Pottery Estate was to be sold. That is annexure E to this defendant’s affidavit of 7 May 2003. It is to be noted that that document makes no reference to the plaintiff and on its face cannot prove anything as against Ceedive.

18 On 16 May 2000, Mr May received a letter from the plaintiff. That letter enclosed a document headed “Pottery Estate Land Holdings Conditions For Ground Rental”. Its terms are as follows (it applies to each of the defendants):

1. All previous agreements with Tagus Holdings, whether Verbal, Written or Implied are Null and Void from 11-5-2000, this being the settlement date and transfer of the above land holdings.

2. All future agreements will be with Ceedive Pty Ltd, or their agents, the new owner of the said property holdings from 12-05-2000.

3. All agreements will be for a maximum period of 26 weeks ie 6 months each time and new agreements will need to be reviewed and signed at these times.

4. All agreements will be for the “House Blocks” only. All other land will be subject yo separate negotiations if available and suitable.

5. Noting above point: all fencing, gates, buildings, etc on any adjoining lands will need to be removed.

(i) By request for Deduction from all Centrelink Payments (except Family Allowance) at the Local Centrelink Office in Mort Street, Lithgow.
Ceedive Pty Ltd Registration No. is 555 013 265V. This number will need to be quoted for deduction to be processed.
NOTE: Deduction Fee for this facility will be borne by Ceedive Pty Ltd.
Receipts will be issued on confirmation of deduction by Centrelink fortnightly.

(ii) By Direct Debit from your Bank account to our Bank account clearly showing your details ie Name and either Assessment No. or Property No.
Details of necessary numbers will be given to you on application for payment in this manner.
NOTE: Any associated fees for paying this way will be borne by the Rentee.
Receipts will be issued on confirmation of payment from Bank Statement weekly.

(iii) By payment by Cheque forwarded to the above Postal address.
NOTE: Any associated fees for paying by Cheque will be borne by the Rentee.
Receipts will be issued on clearance of Cheque, usually weekly.

(iv) By payment of Cash or Cheque between the hours of 1.00pm and 5.00pm on Mondays each week at 15 Laidley Street, Lithgow, our Registered Office.
NOTE: Any associated feed for paying by Cheque will be borne by the Rentee.
Receipts will be issued immediately for cash and on clearance of Cheque, usually weekly.

(v) By private agreement for the pick-up of Rental monies owing at other times. This can be arranged by calling 6351 2647 and a mutually agreed time can be arranged. Receipts will be issued immediately for cash and on clearance of Cheques, usually weekly.

NOTE: Any associated fees for paying by Cheque will be borne by the Rentee.

This weekly amount payable will be available from 02-06-2000 when calculations will be completed.

NOTE: This amount will need to be kept at least ONE WEEK IN ADVANCE at all times to ensure your continued agreement.

8. At this time a Ground Rental Agreement will also need to be signed which will list all relevant details including any accounts which were in Credit as at Settlement Date 11-05-2000. These people will be notified of the difference payable.

9. Until 02-06-2000 a payment of $40.00 per week will be necessary to keep your Rental up to date, ie 3 weeks= $120.00 Total.

10. Failure to pay the Figure of Ground Rental as listed above in both Item 7 & 9 will result in the immediate dissolvement of any agreements and your eviction. Continued failure will result in the demolition and removal of buildings etc on our land at your cost.

11. Ceedive Pty Ltd reserves the right to dissolve any and all agreements with Four (4) Weeks ie 1 Months Written Notice of Intention.

12. Agreements between Ceedive Pty Ltd and the current home owner cannot be transferred to any other person, relative, etc without Written Permission from Ceedive Pty Ltd.

Until such times Ground Rental will need to be continued as listed in both Items 7 & 9 above.

19 On 13 December, Mr May received a letter from the plaintiff, following upon the completion of surveys that founded the increase of rent at $0.09 cents psm. The rent “now payable” was to be $93 (rounded) from 1 January 2001. A “new ground rental agreement form” for signature was enclosed. These documents were not signed by him, nor returned as requested.

20 In March he received a communication from the Australia Post Delivery Manager, which referred to a memorandum dated 22 March 2001 which he did not receive but other residents did. The thrust of all of this is that Australia Post, through at least occupational and health considerations for its staff, was no longer prepared to deliver to the houses on the Estate, by reason of the state of the roads.

21 Although the defendant makes a point about it, it seems that postal services did stop in April, and this comes mainly from Mr Timms’ evidence. Mr May gave evidence (T268.12) that he used, in 2001, 2002 and until early 2003, an access road that went parallel to Hassan’s Walls Road and turned left to meet the Link Road. Contrary to what he asserted in his affidavit as to seeing Mr Col O’Connor of the plaintiff place a large pile of dirt on the access road, in cross-examination he could neither remember when it happened nor even which year it happened (T269.6-21). He even volunteered that he did not even recall seeing it being dumped and it was possible that it was dumped by somebody whom he confused with Mr O’Connor. He purported to mark on exhibit 7 the location of the dumped dirt. The pile of dirt did not impede access along his main access route, which was parallel to Hassan’s Walls Road. He conceded that the pile had been pushed off the road.

22 These are matters of interference with his quiet enjoyment in relation to which he bore an evidentiary burden of proof and he has failed to discharge it as far as I am concerned. Similarly, he has failed to discharge his burden of satisfying me that more probably than not any action by Mr O’Connor bending back a water pipe was of the nature he sought to ascribe to it – an action done to interfere with his quiet enjoyment, presumably out of malice. Mr O’Connor, I am satisfied, was preventing leakage. I accept Mr O’Connor’s evidence in relation to this aspect and again Mr May has failed to satisfy me of the relevant misconduct.

23 There was also some evidence given about the Estate being threatened by a large bushfire in October 2002 and Mr May’s witnessing that fire-fighters were unable to enter the Pottery Estate due to dirt barriers on the access roads. He agreed in cross-examination that there was a sealed road down Silcock Street but asserted that the fire brigade was turned away because of soil that was dumped. These barriers, as far as all this area of evidence can be understood, were put up behind the row of houses in Silcock Street to deny access to the laneway along the back of Silcock Street. The date 19 October is inconsistent with 19 July in the affidavit. He conceded that he in fact never saw the fire brigade being prevented from entering the Pottery Estate and agreed about the access road. His evidence was muddled and failed to persuade me, if this was sought to be put on the basis of some relevant misconduct by the plaintiff through Mr O’Connor or Mrs O’Connor or both, that there was any such misconduct. I accept Mr O’Connor’s evidence that the bushfire did not break out on the Pottery Estate but some two to three kilometres away and that arrangements were made for helicopter landing facilities for the fire brigade. This was by no means a major part of the case but is indicative of time spent on matters of little importance and which the plaintiff could crushingly rebut, in this instance by reference to a letter of appreciation from the NSW Rural Fire Service (exhibit H), and a report from the fire brigade disclosing that no delay was experienced. I express a similar view about Mr May being concerned, as he agreed in cross-examination, about his things or possessions – “he could look after himself” in relation to some incident involving Mrs O’Connor driving past his house late in 2002. Mr May’s armoury, which he lawfully owns, would have no doubt been a comfort to him. This was a “non-event”, as a matter of evidence or otherwise.

24 In relation to the aspect of wrongful interference with the defendant May’s enjoyment of the premises, I am of the view that Mr May has simply made no case on the evidence. It is not clear what the nature of the right is which he asserts was breached by these alleged actions. If there could be implied some covenant for quiet enjoyment, “mere temporary inconveniences” not interfering with the Estate or title or possession are not breaches of it (Manchester, Sheffield and Lincolnshire Railway Co v Anderson (1898) 2 Ch 394 at 401). A serious question would arise as to whether, the ground leases not being in writing, the implication of a term to the effect sought to be relied upon by the defendants would satisfy the High Court tests therefor: BP Refinery (Westernport) Pty Ltd v Hastings Shire Council (1977) 180 CLR 266; Codelfa Construction Pty Ltd v State Rail Authority (1982) 149 CLR 337 at 347.

25 In cross-examination, Mr May agreed that he had a credit balance of $30,106 in his Credit Union. He also agreed that he was the lessee of some 137 hectares in the Newnes area. There is an occupation permit (exhibit 16) that does not permit him to reside there. Apparently Mr May has some horses there.

26 His property, no. 20030, is located between Mr May’s and Mr Timms’. Mr Mudway is a visual arts teacher. He also teaches music, has art exhibitions and sales for cash; he was not in employment at the time of giving his evidence.

27 On or about 10 September 1991, he said he had a conversation with Mr Martin (that is Mr Gerard Martin, who was employed in turn by Coalex Pty Ltd and Oakbridge Pty Ltd as personnel manager and subsequently as property manager) in which he asked Mr Martin whether Coalex had any objection to his purchasing a house from Mrs Hetherington. He received a written response (exhibit 6), which pointed out to him that he would not get title to the land. He paid $11,000 to Alma Hetherington in respect of the purchase of the house and annexes to his affidavit a Bill of Sale dated 18 September, which contains what the defendant asserts to be “sold one miner’s cottage ex Helsh…Jones” and which the plaintiff asserts to say “cottage est Hilshire Jones”. The weight of the evidence appears to be that the home was originally that of Hillstone Jones (affidavit of V McFadden, paragraph 16; annexure B to the affidavit of Mr Mudway 7 May 2003, with the specific references to which I have just referred; the affidavit of Mr McFadden, 15 January 2004, paragraph 2). Mr Hillstone Jones died (exhibit Z) on 5 June 1979 without leaving a will. His widow, Jean Mary Jones, did not refer to ownership of the dwelling in the estate. Mrs Jones died on 19 August 1988 (exhibit AP); listed in the inventory of property was “cottage on land leased from Coalex Pty Ltd $5000”. Mrs Jones prior to her death moved into a nursing home at Bathurst / Kelso (exhibit AP, inventory of property) and the next occupant was Mrs Hetherington. Mrs Hetherington, from exhibit AP (affidavit of death) in relation to Mrs Jones, resided in Lightning Ridge where she was a housewife.

28 Mr Mudway understood his ground rent was charged weekly in advance and that he had a binding obligation to pay that ground rent, which went along with the occupation of his land. He realised that he could not stay there without paying the rent, and that if he failed to pay it his ground lease might be terminated. He said he had a general understanding of leases and that if you do not pay rent, you risk being ‘kicked out’ of the premises. The fact that Mr Mudway also gave some evidence to the effect that some people on the Pottery Estate had not paid their ground rent for years and were still living on the Estate is probative of nothing as between Mr Mudway and the plaintiff.

29 On 6 October 1995, Mr Mudway received a letter from Coalex advising of an increase of rent from 1 October. Between 6 October 1995 and 15 May Mr Mudway had a rental obligation of $18 per week, which he made in fortnightly payments of $36.

30 On 3 April 1996, Lithgow Council wrote a letter addressed to Tagus Holdings Pty Ltd, stating that an inspection had taken place on 13 March 1996 and asserting that the “dwelling and outbuildings on the premises are in such a dilapidated condition as to be prejudicial to the property in or inhabitants of [sic] the neighbourhood of such dwellings and outbuildings”. The Council intended to serve an order requiring the structures to be demolished within 90 days and attached a copy of the proposed order. Tagus was invited to make representations within 7 days as to why the orders should not be made. The letter was copied to Mr Mudway. On 15 April 1996, Mr Mudway wrote to Council stating that he intended to take action in relation to the order by replacing or repairing any unsound or unsightly corrugated iron roofing, replacing or repairing of barge-board, as necessary; completing the painting of the exterior of the house, replacing or repairing such areas of internal roofing as is necessary, and demolishing a shed and outbuildings on the western fence line. He wrote a further letter to Council, stating that he had already undertaken certain improvements: new electrical wiring, new electrical meter box, replaced or repaired a large area of roof, areas of internal flooring had been replaced and the exterior painting on the western side of the dwelling had been completed. Mr Mudway agreed that such improvements as he did to the building were done in the face of a threat of a demolition order.

31 He applied to Council to enable him to install a septic system, which he agreed was part of his response to Council’s proposed order of demolition (T288.56). Council approved the application subject to conditions which required compliance with the Local Government Act 1993, the carrying out of all plumbing and drainage work by a licensed plumber and drainer, notification to Council and various other conditions which included the entry into a quarterly service contract with the manufacturer, requiring the entry of the date that each service had occurred. Mr Mudway completed the installation of a house drainage system in September 1996 and installed a “biocycle waste water treatment system”. The cost was said to be $6,200.

32 Mr Mudway then received the same correspondence from Oakbridge and from Ceedive, as has already been referred to in relation to Mr May, before and after settlement of the conveyance to the plaintiff.

33 Mr Mudway also gave evidence about receipt of the March memorandum from Australia Post and the later letter. He said his telephone line was cut on 4 July. He said that on 19 July he saw a bulldozer, which he knew to belong to Mr O’Connor, placing a large pile of dirt on the access road near his house. He gave evidence about observing the water pipes supplying water to his house being cut; he gave evidence about its restoration by Council. He gave evidence about a fire following the demolition by Mr O’Connor of a wooden house approximately 60 metres from his house, which the Lithgow fire brigade attended. Although he did not own a car, he did use the roads for vehicular access for when his friends visited. He asked them to give him a lift in their cars. He also complained of stress and anxiety due to the conduct of Mr O’Connor.

34 In relation to Mr Mudway’s complaint about the blocking of the access road: he did not have a vehicle. There was no interference with any right he did enjoy. In fact, his evidence amounts to no more than that the pile of dirt was placed by an unnamed person on an access road. Mr O’Connor gave evidence that this was not on the main access road to the Mudway residence, which remained open, but on a bush track (see Mr O’Connor’s affidavit in the Mudway action, sworn 29 May 2003, paragraph 3 and in the May action at paragraph 2 and annexure A; see also T296.10, T297.50-56). It was put there to prevent trespassers from injuring themselves. This was a mine subsidence area and people would take shortcuts across there and risk falling into a mine.

35 As to the severing of the telephone connection, I am not persuaded that there is evidence that more probably than not that has anything to do with the plaintiff. No complaint was made about it. As to the cutting of the water pipe, according to Mr O’Connor’s evidence, which I am prepared to accept given that it was unchallenged, that happened after Mr Weeks, another resident, removed plumbing fittings. The water cutting off did not happen on Mr Mudway’s curtilage and that Mr O’Connor took prompt action to stop water escaping from a leaky underground pipe. The water main was repaired the following day. It was unknown that it served May’s or Mudway’s house. Again, Mr Mudway has failed to persuade me about the seriousness or significance of this event.

36 As to the lighting of the fire in proximity to the house, nothing happened on the Mudway curtilage. The relevant residence, that of Weeks, was a fair distance from the Mudway residence (see exhibit 7), and after being demolished, timber and rubbish was burned with the local fire brigade’s consent (see Mr O’Connor’s affidavit, paragraph 6). I am not persuaded that any of these matters could be elevated above the trivial, nor indeed that Mr Mudway suffered stress by reason of them. I do not accept his evidence in this regard for the purposes for which it was tendered.

37 The observations I have made above about wrongful interference with enjoyment of the premises apply to this and to the remaining defendants.

38 The plaintiff puts in issue both the ownership of the property 20110 in Phillip James McFadden and its occupation by him. The defendant contends that the house had been within the ownership of the family since it was built. Kevin McFadden, the defendant’s father, stated in his affidavit of 7 May 2003 that he believed that his parents, at the time of his birth, Frederick Joseph McFadden (who was also known as Frederick Penno) and Mabel McFadden lived in the house, which he asserts he now owns. It is claimed that Mrs Velma Ada McFadden corroborates the family history: Frederick McFadden’s mother (Mr Kevin McFadden’s grandmother), one Rachel McFadden, married Alfred Penno, a miner from Cobar. He “believed” that Alfred Penno’s father was William Penno who commenced work at the Lithgow Valley Colliery Company in 1887. Mr Kevin McFadden’s father lived on the Pottery Estate from the time he was a small child and commenced employment with the Lithgow Valley Colliery Company when he was about 12 years of age. Mr Frederick McFadden had built the house, which this defendant asserts is now occupied by his brother, Mr Stephen McFadden. It was built in about 1920. Between 1920 and his death in 1988, Frederick McFadden lived in the house. His mother, Mabel Ann McFadden, lived in the house between 1920 and 1988 but moved to a nursing home where she lived until her death on 7 January 2000. Mr Kevin McFadden married Velma Ada Barrett in 1956 and purchased a house from the Lithgow Valley Colliery Company on Pottery Estate.

39 In a second affidavit sworn 15 January 2004, Mr Kevin McFadden recalls his parents paying ground rent to the Lithgow Valley Colliery Company. When his father was in hospital in the 1980s, he would pay rent to the Company; he does not recall the amount. He recalled that electricity was put onto the house in which he lived in the 1940s. He himself has not lived in the Estate since 1976/8 (paragraph 9). He gives evidence about a bushfire in 2002 and of a horse-and-cart sanitary collection service.

40 Mrs Velma McFadden, the wife of Kevin McFadden, gave evidence corroborative of that of Kevin as to the purchase of the house she and he occupied until the late 1970s. She also gives evidence as to certain events, about the roads, the fire and the handiness of her having a camera with her at all relevant times. The events to which these matters relate, especially the fire, was October 2002. Photographs were also tendered for the period between May 2000 and January 2004, showing scenes on the Pottery Estate and the condition of the road from time to time.

41 Phillip James McFadden, the defendant, swore an affidavit on 7 May. He was the recipient of the documents from Australia Post as well as the plaintiff to which reference has been made in connection with other defendants.

42 On about 11 April 2001, he received an order issued by Lithgow City Council requiring that he cease using a chemical toilet in his house. There were proceedings in the Land and Environment Court and he concedes that between 27 April 2001 and 1 March 2002, the house was vacant pursuant to a non-habitation order issued by Lithgow City Council. Thereafter, he merely asserts that on 1 March 2002, his brother returned to live in the house with his permission.

43 No evidence was called from the brother.

44 It appears to me that the McFadden residence had not been occupied since 13 February 2001, though there were occasional visits by the defendant, his mother and brother. The defendant Phillip McFadden, I am satisfied, ceased living in the house long before 1998. He and his wife had acquired a 100-acre property known as “Wattlemount” in about 1990 on which he built as an owner / builder a four-bedroom brick veneer house. Exhibit R shows a contract value of $110,000, which was approved on 15 August 1994; the council documents also note inspections through to completion of the wet areas on 27 September 1995. He was unhelpfully vague in his cross-examination. I accept that the house was clearly habitable from late 1995 and that he did not leave it vacant. I find more probably than not that having expended at least $110,000 in constructing a four-bedroom brick house on 100 acres, with all the advantages to be seen in exhibit T with cattle and agricultural machinery, no one would remain in any sense in the dilapidated and tiny house on the Pottery Estate. The Wattlemount property is worth approximately $750,000.

45 That the defendant Phillip McFadden moved out of the cottage in 1996 is evidenced by the content of the statutory declaration of his father (document 466 in exhibit 6). However the brother Stephen could not have moved in prior to 1998, the date referred to in the father’s statutory declaration, and as at 3 August 1999 his address was recorded on the electoral roll (exhibit S) at 247 Limestone Creek Road. I did not find the attempts in re-examination to get around exhibit S by reference to that being his ex-wife’s address persuasive (the witness was not sure when his brother lived at the Limestone Creek address). The absence of the brother as a witness in this case, is in my view, of the significance the plaintiff urged in terms of the rule of Jones v Dunkel. Mr McFadden was an unreliable witness. He admits to non-compliance with Land and Environment orders. He agreed that as at March 1998 (exhibit U) the photographs show that the cottage was uninhabited. It is of course conceded, as I have already mentioned, that the property was certainly vacant from 27 April 2001 to 1 March 2002. The dilapidation and the illegal use of a chemical commode was entirely the defendant’s fault.

46 A claim is made for wrongful interference with this defendant’s enjoyment of the premises. As to the threat to demolish his house and outbuildings (whenever that notice might have been made) in my view it cannot arise from exhibit G to his affidavit of 7 May 2003, as there is no threat of removal of his house, but merely a requirement for him to remove it; in the event there was no issue that after the date 31 December 2000, his house was occupied illegally with an illegal chemical commode – see annexure J1 to his affidavit. This defendant was not in possession (he says his brother was, which is in issue) and therefore this defendant has no claim for wrongful interference in any event, and the threat of possession to premises, even the institution of proceedings therefor, cannot be a disturbance or interference, even where there is a covenant for quiet enjoyment: David Jones Ltd v Leventhal (1927) 40 CLR 357 at 369-370, 379.

47 He relies also on a refusal to give consent to an application to the Lithgow City Council to install a septic system; the plaintiff did not refuse to give such consent, because it was not asked to consent to the installation of such a system. Mr McFadden well understood the difference between a septic system and an enviro-cycle system. In any event, there was an arrears of rent and there was no obligation on the plaintiff to approve the enviro-cycle system in that location. The placing of an obstruction across the entry to the Pottery Estate on or about 19 July 2002 is not proved at all. As to severing water connections in about April 2001, any water connection was illegal and I do not consider it to be a wrongful interference temporarily to stop the theft of water. The complaint about lighting a fire in proximity to the house in my view is not supported by the evidence to the requisite degree, if at all.

48 This defendant has failed to satisfy me that more probably than not his brother was in fact in occupation of the cottage, lawfully or otherwise – a conclusion I have reached by reason of the overall improbability and implausibility of this defendant’s position in this litigation and the uncertainty and vagueness of the testimony on his part.

49 Mr Timms’ property is 20040; it is next to the Mudway property. In the mid-1940s it was occupied by a Les Jones; in about May 1976 Mr Timms entered into an agreement with a BJ Sutton, who swore an affidavit that he had purchased the house for $2,000 from the estate of Mr Jones. The Timms / Sutton agreement was for Timms to purchase by instalments the cottage for $3,000. Mr Timms paid $15.80 per week to Coalex. He received the letter from Oakbridge in the same form as that received by Messrs May, Mudway and McFadden (25 June 1997); he was informed of the takeover from Tagus Holdings to Ceedive Pty Ltd and received the communications from the plaintiff, including the conditions for ground rental set out above.

50 Mr Timms claims to have spent $7,000 on repairs and improvements to the house between 1976 and 1981, including constructing a new roof, rewiring the house’s electrical system and painting and general maintenance. He swears he paid $1,000 in cash to an electrician in Lithgow and $1,500 to local suppliers for electrical fittings and roofing supplies.

51 I do not accept this evidence. He was successfully cross-examined on this subject; he had no records of what he spent; the sum in the end appears to have been $2,000. He admitted that all that was involved was some roofing to a part of the roof not visible in a photograph (exhibit B, DMOC 6). All that was involved was “a few more battens” and a bit of new tin. He claimed not to have read properly his affidavit in respect of the assertion as to constructing a new roof, which was false. He resiled from his assertion in his affidavit as to the payment of the electrician and as to the work done and the amount paid, acknowledging that anything to that effect was done pursuant to the Local Council’s demolition order of 14 September 1978.

52 Further, the cross-examination of this defendant effectively demolished the stance he purports to take in this litigation. Contrary to what he swore, he had no recollection of what rent he was paying prior to the plaintiff’s acquisition of the Estate.

53 It was put to him that he told the Council in July 1996 that the demolition of his cottage would occur when his new dwelling at Wallerawang was completed, to which he replied: “Well I can’t recall whether it was in exactly in those words” (T388.10). A few questions later, he disputed ever saying the house could be demolished. He subsequently agreed he denied telling the Council that. Exhibit AD, “Table of Orders Requiring [Demolition]” from the Environmental Program Manager of the Council to Tagus with a copy to Mr Timms, bears a note informing the Council that demolition will occur when the new dwelling at Wallerawang is completed. Having received exhibit AD, he wrote to the Council promising to do the work as soon he was physically able (exhibit AE). There was a further letter in March 1997, exhibit AF, promising to do the “necessary work very shortly”. That can only be understood as complying with the demolition order, in my mind. He understood, from the letter to him from the Council of 2 July 1997 (exhibit AG) that the Council was still pressing for demolition of his cottage (see T394.50). He agreed that he gave Mr Gordon an undertaking to demolish the dwelling in 1998 (T396.48 and T397.5). He agreed that, when shown exhibit AK, a letter from the Council to the Western Sydney Tenants Service, that it was true that Council had been pursuing the 1996 demolition order for a number of years and that he told them time and again that he would have the premises demolished (T401.5). I am satisfied that Mr Timms never had an intention to demolish in compliance with the statutory order. Mr Timms then asserted that for the approximately 70 weeks for which he failed to pay rent up to mid-May 2000, it was not because he was facing the demolition and not living in the cottage, but because paying rent “just slipped his mind”. That is really an extraordinary position for a person to take when he had previously been paying rent for the land for over 20 years (see T397.24 – T398.7).

54 Despite agreeing, after a conference at Council on 24 October 2002, that he had contacted Mrs O’Connor to inspect an offered dwelling at Wallerawang (see exhibit 6, p 255), he did not contact her to inspect the property (T400.30). Another area of immense difficulty with this witness was in relation to a chemical toilet (annexure 1 to his first affidavit), which was never either the subject of any application for approval or any approval at all. There was a Council order in relation to that which was never complied with. He has taken no action in relation to the installation of a septic or “ecomax” system ordered to be installed by the Land and Environment Court on 1 March 2002 (T406.24 – T407.2; exhibit AN). It was put to him in cross-examination, in relation to the cessation of postal services in April 2001, that he and a Mrs Mullard had rented a post office box since 1987 (T441.1-40).

55 Mr O’Connor’s evidence is that Mr Timms had not been in possession since 11 May 2000 (when the plaintiff acquired the land), but usually drove to the premises on a Friday, leaving his four-wheel drive vehicle and driving away in a white utility, returning early the next week to swap the vehicles (see Mr O’Connor’s affidavit of 9 April 2003, paragraph 4). This was all substantially conceded by Mr Timms (at T403 – T404). There was little choice for Mr Timms but to acknowledge that. In 1995, he acquired 125 acres on the Cullen Bullen Road between Portland and Wallerawang (T385.14 – T386.2; exhibit AC). In 1996 he put in a development application for a new dwelling on that property; by March 1998 the Council observed in its letter to him (exhibit AH) that his Pottery Estate cottage was vacant and was being offered for sale. He agreed that he had a relationship with a lady Robyn Mullard, the lady with whom he shared the post office box; he admitted staying at her place sometimes when it was put to him that he was living there. He never disputed the Council’s assertion of vacancy (T396.15) and undertook to demolish the cottage when he was well (T397.1). This is consistent with the conduct described in relation to promises made to the Council about demolition. It is consistent with him not paying rent on the ground lease for some 70 weeks prior to 15 May 2000, when he suddenly paid $3,000 (exhibit B, DMOC 4, T397), almost coincidental in time with the transfer of the land to the plaintiff.

56 I am not satisfied on the probabilities that Mr Timms has been in occupation of the subject premises. The Wallerawang residence (exhibit AL – photographs), notwithstanding the asserted absence of water and power, is clearly inhabited and habitable and it is difficult to understand his evidence to the effect that he only stays there from time to time (T401.27).

57 Mr Timms also raises matters in relation to the interference with the enjoyment of the premises. As to the attempts to demolish the house: the only relevant and material evidence about that (apart from Timms’ promises to Council to which I have referred above) is that the order of course was binding on the plaintiff as well as Mr Timms. Mr O’Connor arranged for a removalist’s truck and repeated his offer of the Wallerawang residence and went nowhere near the property itself. This would not amount to wrongful interference. It is said that there was a refusal to give consent to an application to the Council to install a septic system. It was not an application for a septic system at all but one for an enviro-cycle system. As stated above, Mr Timms was aware of the difference. There is no available evidence to support this allegation. Nor is there any evidence capable of establishing obstruction across an entry road to the Pottery Estate; the severing or arranging for the severance of a telephone connection, on about 4 July 2002; the cutting or arranging the cutting of pipes carrying water to the house on 20 July 2002; or the lighting of a fire in proximity to the house on 22 July 2002. None of these claims has been made out.

58 The principal witnesses of course in this action were the four defendants and Mr and Mrs O’Connor, the principals of the plaintiff company. Mr Kerrison and Mr Gerard Martin already mentioned also gave evidence of matters of history principally, Mrs O’Connor gave evidence in relation to subdivisions, and Mr O’Connor as to what he did with the land and what he observed or did not observe. None of the principal witnesses was perfect. This is naturally quite understandable in litigation of this nature, in which harmony and goodwill would not be the predominating sentiments. To put it very shortly, and in the context of one miniscule piece of evidence, this case is not going to be won or lost on whether or not Mr O’Connor “gave someone the finger”.

59 I turn to the matters of law using various headings adopted by the parties in their submissions.

60 The defendants assert that the evidence clearly supports a finding that the Colliery Company and its successors and each of the defendants acted on the basis that the houses were owned by the tenants and the Company owned the land. It is said that the evidence establishes that the ground leases were on the following terms: the tenants would pay ground rent to the owner of the land; the ground rent would be fixed by the owner by reference to the annual rates imposed on the Pottery Estate; and the tenants were required to keep the houses in repair in compliance with Council requirements.

61 As I have referred to earlier in these reasons, I am satisfied that the evidence which I have outlined above (paragraph 8) is that the tenancies of the land were weekly tenancies derived from the payment of rent on a weekly basis.

62 There is no issue that the houses were owned by the tenants and the Company owned the land.

63 Further, I am satisfied by reason of, for example, annexures A and C to the affidavit of V McFadden and the evidence of Mr Martin at T435.38-T436.5 that the Company had an unrestricted right to raise ground rents, and that the evidence does not establish that the ground rent would be fixed by reference to annual rates. Merely because Mr Martin during his period as property manager (1995 – February 1999) says that he reviewed rents to defray costs applicable to rates as an internal matter, as his method of calculation does not make that a term of the lease in the sense that an internal mechanism became, as between the lessor and lessee, an agreed basis for an increase in the ground rent. As the plaintiff notes, there is a disparity in any event between the rates and the notices in evidence (exhibit 26) and individual rents paid prior to the plaintiff’s acquisition of the property.

64 The defendants assert that the contract between Ceedive and Tagus required Ceedive to recognise the rights of the persons described in the Schedule 1 to the contract. Ceedive, having acknowledged or agreed, it is submitted, to recognise such interests as the residents had in relation to the houses, took the land subject to an express or constructive trust on those terms. Special condition 1, set out above in paragraph 6, created an obligation, it is argued, not to repudiate or derogate from the interest of any resident which may be enforced against Ceedive by the person for whose benefit the condition is inserted: the defendants rely upon the decision of the High Court Bahr & Anor v Nicolay & Ors (No 2) (1988) 164 CLR 604 and the decision of Wood J in Snowlong Pty Ltd v Choe (1991) 23 NSWLR 198. To these I shall return shortly.

65 The proper construction of special condition 1, the defendants argue, is that it expresses the parties’ intention that Ceedive undertakes obligations as might be enforceable against the vendor. It expresses the convention on which the tenants and the landowner have ordered their affairs, in that it expressly states that the ownership of the land is separate from the ownership of the dwellings. The words of the condition reveal, the defendants argue, an intention that Ceedive will be bound by “whatever rights” the persons have in relation to those dwellings. This obligation goes beyond that imposed under the doctrine of constructive notice, in which a purchaser of land is fixed with notice of matters they might have learned had they made the sort of inquiries a reasonably prudent purchaser would be expected to make (Hunt v Luck [1902] 1 Ch 428, Marsden v Campbell (1897) 18 LR(NSW)Eq 33). The plaintiff argues that if a person other than the owner of land is in possession of land the obligation of a reasonably prudent purchaser is to make inquiries of the person in possession; Mr O’Connor admitted that he did not make those inquiries. Constructive notice, it is argued, is not enough by itself to subject a registered proprietor to prior interests of which they had quote “mere” notice before becoming registered: s 43 Real Property Act. Ceedive had not only agreed to protect the rights of the owners of the houses described in the Schedule but it agreed not to require the vendor to provide information in respect of them. It is argued for the defendants that Ceedive cannot now shelter behind any ignorance or misunderstanding as to the defendants’ rights: “it took the risk, in failing to enquire, that those would be more substantial than they had assumed”.

66 These submissions, with respect to the defendants, present an optimistic construction of special condition 1. I find that on its proper construction it does no more than contain an acknowledgment by the plaintiff that there were 29 “dwellings” erected on the property. Ownership of those “dwellings, as distinct from the land on which they stand” is vested in persons other than the vendor. The condition provides that Ceedive purchased the “land” subject to whatever rights those respective persons shown in the Schedule have in relation to “those dwellings” and will not call upon the vendor to provide any information other than what is contained in the agreement itself. As a matter of construction and consistency of construction, the second reference to “those dwellings” must refer to “those dwellings, as distinct from the land on which they stand”, referred to on the first occasion in the “acknowledgement”. I hold that all the special condition amounts to is a contractual obligation as between the vendor and purchaser Ceedive, which gave rights to no one else. It was restricted to protecting Tagus, the vendor, from having the plaintiff complain about the listed persons’ rights in their “dwellings as distinct from the land on which they stand”. The plaintiff, in other words, could not decline to complete the purchase, or seek to terminate the contract, because it discovered that Tagus did not have title to such dwellings in the distinct sense, or because one of the named persons in the Schedule claimed to own a dwelling (in the same distinct sense) on the land listed against that person by reference to rate notice number in the Schedule. Ceedive never failed to recognise the rights of the defendants in the “dwellings as distinct from the land on which they stand”, so no issue arose between contract and completion of the transfer. There being no express provision to the contrary, the special condition would have merged on completion in any event.

67 Thereupon, on registration, the plaintiff obtained indefeasibility of title pursuant to s 42 of the Real Property Act.

68 I do not consider it to be in any way anything other than the implicit right of the lessor to increase the ground rent under a weekly tenancy. Indeed it was consistent to a great extent insofar as it is relevant to the course adopted by Ceedive’s predecessors. There is no conflict in that history and the steps taken by Ceedive with the acknowledgement in special condition 1. The defendants have chosen to ignore their understood obligations to pay rent. It can be held, and I do so hold, that not paying rent was a breach of their weekly ground leases of which they had knowledge with the consequence at law of termination, which could be effected and proceedings for possession instituted. The plaintiff has not breached special condition 1: it has and continues to recognise the defendants’ interest in the “dwellings” – “as distinct from the land” on which the dwellings sit.

69 Bahr (No 2), supra, is a very difficult case which must be understood in the light of its very particular and different facts, which involved conduct of the purchaser / registered proprietor outside the contract. The relevant facts have been usefully summarised by Wood J in Snowlong at 205 B – C:

“In

, the facts shortly stated were as follows: The appellants, the Bahrs, by contract sold a parcel of land to the first respondent, Nicolay, who leased it back to them for three years. That contract (by cl 6) provided that upon expiration of the lease, the Bahrs would enter into a contract to re-purchase the land. Nicolay then sold the land to the second respondents, the Thompsons, under a further contract which contained a provision (cl 4) by which they acknowledged the existence of the re-purchase provision of the earlier contract. The Thompsons became registered as proprietors and informed the Bahrs that they recognised the re-purchase clause and would agree to re-sell the land on its terms. Subsequently they refused to sell the land.”

70 His Honour, with respect, usefully analyses the various approaches taken by their Honours in the High Court.

71 At 206 A – D, his Honour said this in relation to the judgments in Bahr (No 2):

“All members of the court (Mason CJ and Dawson J (at 613), Wilson J and Toohey J (at 630-631) and Brennan J (at 652-653)) confirmed the well recognised principle that there is no fraud on the part of a registered proprietor in merely acquiring title with notice of an existing unregistered interest, and then refusing to acknowledge its existence, or in taking a transfer with knowledge that its registration will defeat such an interest:

;

and

Similarly, all members of the court (Mason CJ and Dawson J (at 613), Wilson J and Toohey J (at 637-638) and Brennan J (at 653-654)) confirmed that neither of the relevant sections, nor the principles of indefeasibility, preclude a claim to an estate or interest in land being asserted against a registered proprietor, where it arises out of the acts of the registered proprietor himself

;

and

. This applies both to equities arising out of transactions with or conduct by the registered proprietor occurring before registration (

, as well as afterwards (

), so long as the recognition and enforcement of the equity does not involve a conflict with the indefeasibility provisions.”

72 These principles are apposite here. I am of the view that there was no majority of the Court in Bahr that reached agreement that could be identified as the ratio of the decision itself.

73 In Snowlong, in the end, an alternative ground for his Honour’s decision also involved fraud. I am of the view that Bahr and Snowlong are distinguishable.

74 To the extent that the defendants suggest that special condition 1 imposes some obligation upon the purchaser (Ceedive) to make enquiries about the terms on which the tenants claim to hold “the land”, that is a misconstruction of the special condition. Further, I am of the view that special condition 1 does not impose any obligation on Ceedive to investigate that matter. What the contract, including special condition 1, disclosed via the Schedule was that at least as at 25 May 1999 the land described by the various listed rate notice numbers were on weekly ground leases led to the persons listed. As the plaintiff has argued, in any event, the vendor was saying that they still led to those persons on 12 August 1999 by weekly ground leases at those rentals. If that is the situation, it does not matter: the purchaser was on notice under s 42(1)(d) of the listed weekly ground tenancies. In such circumstances there was no obligation on Ceedive to make further enquiries. Beyond that, the plaintiff was protected by s 43(1). As to the defendants’ submissions as to constructive notice being insufficient, that I accept, as the plaintiff submits, misstates the effect of the special condition. The highest that s 42(1)(d) of the Real Property Act takes the defendants is that the plaintiff held the land on registration subject to the weekly ground tenancies of which it had notice. Section 42(1)(d) refers to a “tenancy” – it does not refer to other “rights” or “interest”. Thus s 43 as well as s 42 itself protects against those in any event: none has been proved to my mind.

75 The defendants’ submissions are to the following effect. Ceedive, as registered proprietor, is subject to express exceptions to its indefeasible title as provided in the Real Property Act and to claims in personam enforceable against it arising from its conduct: Frazer v Walker [1967] AC 569. The tenancies are not short-term leases protected by s 42(1)(d). The defendants say that despite the fact that a weekly tenancy may have been created by the ordinary application of legal principles (which would satisfy s 42(1)(d) but would be “fragile” because of the entitlement to terminate on one week’s notice), the parties have adopted a course of dealings such that neither the tenants nor the landowners can deny the existence of a ground lease which persists for “the life of the building”, subject to the terms set out and adopted by the parties in their dealings prior to Ceedive’s ownership of the land. To the extent that it is relevant, and this is conceded by the plaintiff, any estoppel by convention arising at law to displace the implication of a periodic tenancy cannot meet the conditions set by s 42(1)(d), which require, amongst other things, that the lease be for a term not exceeding 3 years.

76 Thus the plaintiff argues that the rights of the tenants must be enforceable as rights in personam. Section 42 of the Real Property Act, whilst denying the benefit of registration to an unregistered dealing, does not prevent the enforcement of transactions that give rise to rights enforceable in personam (i.e. in Equity) against the registered proprietor: Barry v Heider (1914) 19 CLR 197.

77 The plaintiff posits three bases upon which Equity would intervene to protect the rights of the defendants: first, to enforce the legal rights created by a ground lease arising under estoppel by representation; second, to enforce the contractual entitlements to remain in possession of the houses on the terms of the contractual licence between the parties; third, to enforce as third party beneficiaries the promise made by Ceedive to acknowledge the tenants’ rights in relation to the houses by restraining Ceedive from varying the terms and conditions of the ground lease, so as to render the rights valueless.

78 The first basis depends on the establishment of a proprietary right (a ground lease) in respect of the houses and the well-known principle that an injunction will lie to preserve proprietary rights. The second basis depends on the existence of a contractual promise by the landowner not to revoke any licence or permission to stay on the land (if the rights fall short of the lease) by virtue of their right to possession of the houses, and an injunction will lie in aid of the implied negative stipulation not to revoke the licence while the occupants pay a reasonable ground rent to keep the premises in repair.

79 The third basis relies, the defendants submit, on the entitlement of the occupants to enforce the contractual promise of Ceedive to take the property subject to their rights. This is said to be on the basis of the decision of the High Court in Trident General Insurance Co Ltd v McNiece Bros Pty Ltd (1987) 165 CLR 107, in that the occupants were specifically contemplated as persons who would take the benefit of Ceedive’s contractual promise to Tagus. Further, it is said to be consistent with the principle expressed by Windeyer J in Coulls v Bagot’s Executor & Trustee Co Ltd (1967) 119 CLR 460 that Equity requires the promises be performed. The alternative ground advanced by Gaudron J in Trident (at 176) for enforcing a promise by a promisor in the position of Ceedive that:

“…a promisor who has accepted agreed consideration for a promise to benefit a third party is unjustly enriched at the expense of the third party to the extent that the promise is unfulfilled and the non-fulfilment does not attract proportional legal consequences.”

80 For the plaintiff, it is argued, and not unreasonably in my respectful view, that the defendants’ submissions under the heading of ‘Exceptions to indefeasibility of title’ do not rest easily with the antecedent submissions in relation to the terms of special condition 1. Those submissions required an understanding that a submission was being made that the plaintiff took notice of the short-term ground tenancies under s 42(1)(d). The assertion that the tenancies are not short-term leases protected by s 42(1)(d) is of course quite the reverse. The balance of the submissions following upon that assertion for the defendants, the plaintiff argues, is unsustainable on the evidence. There is no evidence of any lease or agreement containing such an express term as “for the life of the building” and indeed none of the four defendants has ever given evidence of having such a belief or understanding. Section 42 has the effect that the plaintiff took title free from any tenancy longer than three years.

81 As to the rights of tenants being enforceable as rights in personam, the plaintiff does not disagree with the broadly asserted submissions for the defendants. However, the Court of Appeal has held that the expressions “personal equity” and “rights in personam” encompass only known legal causes of action or equitable causes of action arising out of conduct by the registered proprietor concerned – that is, in this case, the plaintiff (or conduct for which it is responsible, that is of a servant or agent). This was so held in Grgic v Australian and New Zealand Banking Group Ltd (1994) 33 NSWLR 202 at 222 – 223 per Powell JA, where his Honour said:

“In the circumstances, it being well-established that a person who presents for registration a document which is forged or has been fraudulently or improperly obtained, is not guilty of “fraud” if he honestly believes it to be a genuine document which can be properly acted upon (Assets Co Ltd v Mere Roihi (at 210); Mayer v Coe) and that a less than meticulous practice as to the identification of persons purporting to deal with land registered under the provisions of the Act does not constitute a course of conduct so reckless as to be tantamount to fraud (Ratcliffe v Watters (1969) 89 WN (Pt 1) (NSW) 496 at 500; [1969] 2 NSWR 146 at 149) this first ground of attack upon the ANZ's title as mortgagee of the subject property must fail.

As will, I think, be apparent from the outline of his submissions which I have recorded above, Mr Lindgren accepts that, in a case such as is this, “a personal equity” sufficient to justify the removal of a mortgage from the Register, does not arise from a mere fact of forgery of the mortgage and that something more is needed. Although Mr Lindgren sought to derive a broader approach to the question of what is “a personal equity” from some of the observations of Mahoney JA in Mercantile Mutual Life Insurance Co Ltd v Gosper (at 45 to 49) and Garofano v Reliance Finance Corporation Pty Ltd (at 59,661), in common with Meagher JA (Garofano v Reliance Finance Corporation Pty Ltd (at 59,662-59,663)) I am of the view that the expressions “personal equity” and “right in personam” encompass only known legal causes of action or equitable causes of action, albeit that the relevant conduct which may be relied upon to establish “a personal equity” or “right in personam” extends to include conduct not only of the registered proprietor but also of those for whose conduct he is responsible, which conduct might antedate or postdate the registration of the dealing which it is sought to have removed from the Register.”

82 I am persuaded that this principle undermines each of the three bases to which the defendants have referred in their submissions (see paragraph 77 above). First, as no conventional estoppel in personal rights arises against the plaintiff, the defendant must show that the plaintiff has adopted the alleged assumption as to the existence of the conventional basis of its relationship. There is no evidence to this effect. It can only refer to an asserted representation that an individual defendant’s possession would not be disturbed while the defendant continued to pay a reasonable fee therefor. There is no evidence that the plaintiff made that representation being the one pleaded, but rather the evidence is that the plaintiff informed the defendants of the inapplicability of previous arrangements in accordance with the documents delivered by it to them, to which reference has been made above. In any event, any conventional estoppel rights against a predecessor are not within the exceptions provided to s 42 indefeasibility.

83 As to the second assumption, there is no contractual licence between the plaintiff and defendants. The assertion that such a licence exists as between the plaintiff and Mudway and McFadden and Timms is defeated by paragraphs 10 and 11 of their respective affidavits and the assertion of exclusive possession of the premises. Whilst continuing occupancy may have been an issue in this case, exclusiveness of the possession of the house on the particular piece of land was never in issue.

84 As to the third basis, I do not see any evidence establishing a “promise” or “contractual promise” nor has any such proposition been substantively pleaded.

85 The only term or condition of the executory agreement between the vendor and Ceedive was that the plaintiff purchased the land subject to whatever rights the listed persons had in the “dwellings” as distinct from the land. The words of special condition 1 are in substance not dissimilar to the words of the special condition considered by Harvey J in Munro v Stuart (1924) 41 SR (NSW) 203 at 204.2:

“The property is sold subject to existing tenancies or occupancies and to the conditions and reservations contained in every relative Crown grant under which it is held.”

Snowlong

“dwellings as distinct from the land”

86 Another basis for rejecting the third basis advanced by the defendants rests in notions of privity (Wilson v Darling Island Stevedoring & Lighterage Co Ltd (1956) 95 CLR 43). In Trident, the reasons given by their Honours for reaching their conclusions appear to differ. Although Mason CJ and Wilson J made statements about the unjustness of the privity and consideration rules, they concluded their reasons by stating that “the limited question” that they had to decide was whether the “old rules” applied to a policy of insurance and then held that McNiece could succeed in its claim under the relevant policy (at 123). The same conclusion was reached by Toohey J, who made it clear in his reasons that his decision was confined to the case of a claim under an insurance policy (at 172). Deane J decided the case by holding that the contractual terms and the policy benefiting the insured were held on trust for contractors and subcontractors including the respondent McNiece (at 149). Gaudron J held that McNiece should succeed by applying the principle of unjust enrichment, to which the defendants in their submissions in this case refer. Brennan and Dawson JJ, dissenting in the results, did not consider the appeal appropriate to overturn well-established doctrine. Whatever Trident might stand for in the end is not sufficient to be extended in my view to contracts for the sale of land and conditions therein, nor even on what Deane J said, to permit the creation of an express trust in the circumstances on which the defendants rely. I am unpersuaded by the defendants’ arguments as to the exceptions to indefeasibility of title.

87 By reference to standard authorities and general principles, the defendants argue that the houses are fixtures. They are prima facie fixtures as they are attached to the land and do not rest merely on their own weight: Holland v Hodgson (1872) LR 7 CP 328; Australian Provincial Assurance Co Ltd v Coroneo (1938) 38 SR (NSW) 700. The status of the houses as fixtures is determined by the intention of the party erecting the houses on the land, having regard to the degree an object of the annexation to the land: Coroneo, supra; NH Dunn Pty Ltd v LM Ericsson Pty Ltd (1979) 2 BPR 9241; National Australia Bank v Blacker (2000) 104 FCR 288. In respect of the degree of affixation, the houses were fixtures being so securely affixed that removal would result in demolition: Reid v Smith (1905) 3 CLR 656; Webb v Frank Bevis Ltd [1940] 1 All ER 247; Elitestone Ltd v Morris [1997] 1 WLR 687. In respect of the purpose of affixation, the function served by erecting the houses was to enjoy them in situ as residences – they could not serve their function otherwise: Reid v Smith, supra; Billing v Pill [1954] 1 QB 70; Elitestone Ltd, supra.

88 If the houses are fixtures and form part of the land, their status is unaffected by any private agreement or arrangement between the parties: Holland v Hodgson, supra; Hobson v Gorringe [1897] 1 Ch 182; Federal Commissioner of Taxation v Metal Manufactures Ltd (2001) 108 FCR 150; Eastern Nitrogen Ltd v Federal Commissioner of Taxation (2001) 108 FCR 27; Melluish (Inspector of Taxes) v B M I (No3) Ltd [1996] AC 454.

89 The plaintiff further submits that the persons erecting the houses had an entitlement in Equity, apart from any other agreement between the parties, to remove them from the land in the event that the arrangements between the owner of the land and the residents were terminated: Hobson v Gorringe, supra. This equitable right amounts to a proprietary interest in the land, which can be transferred to successors in title: Metal Manufactures Ltd, supra.

90 In this case the defendants say the clear understanding of the tenants and the Company was the rights of the tenant to live in the house were derived from the assumption that the houses were not to be considered part of the land. The equitable right of the occupants of the houses to which Ceedive has agreed to be subject is to remain in the houses and enjoy the right to possession of them in situ.

91 Any conclusion in respect of the equitable right to occupy, however, must be subject to the qualification that the Landlord and Tenant (Amendment) Act 1948 attaches legal consequences to the situations in which it applies, irrespective of the parties’ intentions. The defendants submit that a finding that the parties regarded the land and dwellings as separately owned does not preclude the existence of a protected tenancy in respect of the houses where the conditions were attracting the statutory regime are satisfied. To this I will return below.

92 For the plaintiff, an observation was made that the defendants’ submissions as to fixtures enjoyed a curious component, if it is assumed that the submissions are cognate to the submissions that the weekly tenancies or tenancies at will are governed by the 1948 Landlord and Tenant (Amendment) Act. The curiosity arises from what is said to be that if the defendants are correct, the dwelling houses as well as the land would vest in the plaintiff. Be that as it may, the defendants first raise in response to this part of the case generally a matter of what it says is issue estoppel. Reference is made to the Orders and Reasons of the Consumer, Trader and Tenancy Tribunal of 31 October 2002 (see, in the May proceedings, DMOC 56, 57 and 58). The Tribunal held that it had no jurisdiction to entertain the application by the four defendants in this case against Ceedive Pty Ltd. This submission on behalf of the plaintiff is a bit of a two-edged sword. It seeks to rely upon the reasons including that the house was owned by the tenant, that the house remained the property of the tenant, the agreement between the parties did not permit the tenant to occupy the house but only the land upon which the tenant’s premises are located, and the agreement was not one which the tenant had the right to occupy both land and the premises constructed on the respondent’s land, and was not a residential tenancy agreement within the meaning of the Act. The Member of the Tribunal also found that the tenant’s house was “permanently fixed to the respondent’s land”.

93 I do not propose to spend time on the issue estoppel question. I have the gravest reservations as to whether a finding of a Tribunal that it has no jurisdiction gives rise to an issue estoppel in relation to the reasons for which it came to that conclusion: see Burden v Ainsworth [2004] NSWCA 3.

94 The plaintiff rightly submits, however, that the evidence that the defendants owned their dwelling houses was all one way. The uncontested picture is one of the defendants purchasing their dwellings and then paying weekly ground rent, both sides always regarding the dwellings, i.e. the residences, as the property of the ground lessees.

95 In Coroneo, supra, one thing was made abundantly clear in the judgment of Jordan CJ, at 712 – 713, was that “in the context of intention” each case depends upon its own facts. There is no reason why even a dwelling built on land, which would ordinarily be inferred to be a fixture by the degree of apparent permanence, cannot be agreed to belong to a lessee of the ground. This is clearly what has happened over a long period of time in the history of the Pottery Estate: either the land-owning company has sold the dwelling (see, for example annexures A and C to the affidavit of Mrs V McFadden), or the same company has permitted persons, possibly then employees, to build dwellings on the Estate and agreed that they should remain the employees’ property (see, for example, the affidavit of K McFadden). There is ample evidence in this case that the land-owning company of the day permitted these to be transferred inter vivos, even ultimately to non-employees (see, for example, the Mudway affidavit of 7 May 2003, paragraphs 1 and 2 and annexure A).

96 For the plaintiff, it is submitted that in relation to the law of fixtures and intention, the law was further developed by the Court of Appeal in NH Dunn Pty Ltd v LM Ericsson Pty Ltd (1979) 2 BPR 9241, where at 9244/45 Mahoney JA said:

“In particular circumstances, statements by the owner of the chattel or of the realty as to his intention that the chattel shall or shall not be part of the realty may, if appropriately proved and evidenced, be relevant as facts probative of such matters and therefore as relevant in the determination of the ultimate fact to be proved”

“Notwithstanding Mr Coombs’ submissions, I think it is proper to have regard to the terms of the lease and the rental agreement and to draw from them such inferences as to the intention of the parties as to relevant matters as may be drawn from them. It is not necessary to refer in detail to the documents. In my opinion, they constitute part of the ‘circumstances of the case’ to which regard may be had in making the final determination.”

97 A further examination of the law of fixtures was carried out by Rolfe J in Permanent Trustee Australia Ltd v Esanda Corporation Ltd (1991) 6 BPR 13,420. At 13,425, his Honour, having referred to the judgment of Mahoney JA in Dunn, said:

“In the present case it seems to me that it is arguable that the homes were placed on the land for the better enjoyment of the land, in the sense that without their being there the cultivation and growing activities on the land could not proceed in an efficient and proper manner. On that formulation one test propounded by Jordan CJ would require a finding that there was a fixture. But it seems to me, that that is only one test stated by his Honour, and should be read subject to his Honour’s statement that the matter of importance is the intention of the person fixing it, which, as his Honour said “must be gathered from the purpose for which and the time during which user in the fixed position is contemplated”.”

98 His Honour went on further to say (at 13.427):

“The question then arises as to the intention which I should impute or presume so far as the parties in the present case are concerned.”

99 His Honour held that the houses in question were not intended to become fixtures.

100 I am of the view that the evidence here makes the intention obvious. I say that bearing in mind that the application of common sense, based upon what one can observe from the photographs, would indicate that the several dwellings are not exactly “portable” or “removable” in the sense that one often sees houses on the backs of trucks, much to one’s chagrin when travelling on country highways. Be that as it may, these houses were sold to and between ground tenants, separately from the land. The houses were sold separately to the land with the assent of the freeholder. Rents went on being charged for the land as ground rent only.

101 The plaintiff concedes that Mr May’s house which is brick and part of Mr Mudway’s house were such that some demolition would be required. No evidence that any of the defendants had the appropriate experts or removalists investigate the issue was called. Really, I think the common-sense view is the one to which I have referred above (paragraph 100).

102 The plaintiff further responds to that part of the submission for the defendants as to fixtures being unaffected by any private agreement or arrangement by distinguishing Eastern Nitrogen because the Full Federal Court held obiter that the plant was effectively transferred at common law to the bank financier (pp 37 – 38). In Metal Manufactures, the point of whether the legal interest in the relevant plant was transferred to the bank was left open, it being accepted that at least an equitable interest passed to that financier (at 165). These cases are distinguishable in that they are not cases where ownership fell to be decided between an owner of the freehold and a tenant in possession, where they are free to contract in respect of chattels or what might otherwise be fixtures as they please. Hobson v Gorringe does not really support the proposition for which the defendants advance it. The circumstances with which their Lordships were concerned involved the owner of the land, the mortgagee of the land and the hirer of what, between himself and the owner of the land, was agreed to be a chattel until the payment of all hire charges. The mortgagee entered into possession upon default by the mortgagor, and their Lordships restated the proposition that a tenant erecting fixtures for the purpose of his trade as between himself and his landlord had the right to remove them during the continuance of the term, but held in the circumstances of the case that the machine had become a fixture and consequently passed to the mortgagee as part of the freehold.

103 I am not persuaded more probably than not these cottages were fixtures as contended by the defendants.

104 Each of the residents, the defendants submit, and their predecessors in title, by their occupation and assertion of control over the premises, had possession of the premises. The residents or their predecessors in title erected outbuildings on the curtilage to the houses. They asserted a right to transfer and did transfer possession of the houses to others for valuable consideration, and the residents or their predecessors in title fenced the curtilage of the houses. Each of the residents had a right to exclusive possession of the house and curtilage by virtue of their entitlement in respect of the houses erected on the land and their entitlement to occupy the land on which the house was situated and the curtilage reasonably necessary and incidental to the use of the houses. The defendants say that the residents had a right to exclusive possession of the houses at law as the houses could only be enjoyed as residences in situ, along with such other land as was necessary for the effective enjoyment of the houses, and paid ground rent to the registered proprietor from time to time (see Radaich v Smith (1959) 101 CLR 209).

105 The residents who vacated their premises’ temporarily (Messrs Timms and McFadden) did so under compulsion of law and not voluntarily, following a non-habitation order issued by Lithgow City Council – this is a consideration important for the Landlord and Tenant (Amendment) Act 1948 component of this case.

106 The creation of a right to exclusive possession for an indefinite term creates a tenancy at will, and, on payment of rent, a periodic tenancy. At law, each of the predecessors in title to the residents would on those facts be entitled to a tenancy at will or a periodic tenancy of the land comprising the house and curtilage. A periodic tenancy is implied from facts, and in the absence of any express intention of the parties. In this case, it is contended for the defendants, that the parties have adopted a conventional basis and so the conclusion would be that which would ordinarily follow as to the nature of their legal relationship is displaced by the evidence of their actual intention.

107 This is a rather complex analysis. The defendants lease the ground or curtilages on weekly ground leases which the plaintiff’s predecessor in title having the right to, as it did, raise the ground rent when and to the extent that it saw fit. The defendants owned their houses having bought and paid for them (save in the case of Mr McFadden). That separate ownership, having been consistently recognised by the plaintiff’s predecessors in title.

108 I can indicate now that for the purposes of the 1948 Landlord and Tenant (Amendment) Act, the reason why vacant possession was obtained is irrelevant. Be that as it may, the reason for vacant possession was their failure to keep the premises in proper order and repair. As referred to above, in Mr Timms’ case a demolition order was made on 14 September 1978 (exhibit AB). A further demolition order was made on 9 May 1996 (exhibit AD). A further demolition order was made on 4 May 2001 (DMOC 30 in exhibit B). After Mr Timms commenced using a chemical toilet on 14 February 2001 without any application for permission, he received yet another order. Similarly, Mr McFadden received an order from Council having illegally and without any permission commence to use a “chemical commode” (annexure J1 to the affidavit of 7 May 2003). In both cases vacant possession was obtained as a result of the acts, omissions and defaults of the relevant defendants.

109 The defendants submit that a tenancy at will at law is presumed by s 22A of the Landlord and Tenant Act 1899. The Landlord and Tenant (Amendment) Act 1948 applies to leases of premises and includes every contract for the letting of any prescribed premises whether the contract is express or implied or is made orally, in writing, or by deed, and includes a contract for the letting of prescribed premises together with goods.

110 Under the 1948 Act (s 8), “lessor” and “lessee” mean:

“the parties to a lease, or their respective successors in title, and include respectively:

(a) a mesne lessor and a mesne lessee,

(b) a sub-lessor and sub-lessee,

(d) the persons who, by operation of section 22A of the Landlord and Tenant Act of 1899 as amended by subsequent Acts are presumed to be the landlord and tenant respectively.”

111 Under the same Definitions section 8, “prescribed premises” means:

“(a) where a dwelling-house does not form part of other premises—that dwelling-house,

(b) where premises consist only of a number of dwelling-houses—those premises and each of those dwelling-houses, and

(c) where premises consist partly of dwelling-houses and partly of other premises—such part of the premises as consists of dwelling-houses and each dwelling-house of which that part consists, and includes any land or appurtenances leased with any prescribed premises as defined in paragraph (a), (b) or (c) of this definition.”

112 The tenancies at will, so the defendants submit, are protected by the Landlord and Tenant (Amendment) Act 1948. For this proposition they rely upon the 1944 decision in McKenzie v McKenzie (1944) 62 WN (NSW) 48 and H A Warner Pty Ltd v Williams (1946) 73 CLR 421. The former was a judgment on a summary judgment application relating to wartime regulations, and Warner likewise was a wartime regulations case from Tasmania. In my view they have no relevance.

113 To prove that the 1948 Act applies, the defendants have to prove that the premises are prescribed premises, which were the subject of a lease immediately before 1 January 1986.

114 Be that as it may, the defendants go on to submit that the premises occupied by the residents fall within the definition of “prescribed premises”.

115 The scheme of the 1948 Act applies to premises rather than transactions. A tenant who occupies a “dwelling-house”, being a “prescribed premises” under a defined “lease” is a protected tenant, and significant consequences flow, both for the setting of a “fair rent” (a technical rather than a descriptive term) and for the termination of such tenancies.

116 The defendants submit that two of them, Messrs May and Timms, fall within the definition of protected tenants. Mr Mudway falls outside the definitions. Mr McFadden, depending on the findings of the Court, may be a “lessee” of prescribed premises and may fall within the provisions.

117 The defendants approach the matter by reference to the exclusionary provisions ss 5AA and 5A. Section 5AA provides:

“

5AA No new protected tenancies to be created from 1 January 1986

On and from 1 January 1986, the provisions of Parts 2, 3, 4 and 5:

(a) do not apply in respect of prescribed premises unless the premises were the subject of a lease immediately before 1 January 1986, and

(b) cease to apply, and shall not thereafter apply, to any such premises upon vacant possession of the premises being obtained or upon those provisions ceasing to apply to the premises by reason of the operation of section 5A or any other provision of this Act.”

118 In other words, unless a lease under the provisions of the Landlord and Tenant (Amendment) Act 1948 were in existence before 1 January 1986, and that lease has continued to the present day, no protected tenancy exists.

119 For the defendants it is contended that in relation to Mr May, he purchased his house and commenced paying rent to the plaintiff’s predecessors in title in 1969. Mr Timms purchased his house and commenced paying rent to the plaintiff’s predecessors in title in 1976 (title being transferred to him by Mr Sutton in 1979).

120 Mr McFadden was gifted the house in 1988. He took over a lease which was in existence prior to 1986, that is his grandmother’s lease. His occupation, it is said, can be regarded as a sub-lease consented to by the landlord by acceptance of rent. Mabel Ann McFadden died in January 2000. Section 83C of the 1948 Act provides:

83C Periodic leases may not be disposed of by will or pass on intestacy

Where a lessee under a periodic lease of prescribed premises dies on or after the date on which the assent of Her Majesty to the Landlord and Tenant (Amendment) Act 1968 was signified, the lease shall not be capable of being disposed of by the will, or of passing on the intestacy, of the lessee, except as to the balance of the periodic term current at the date of death, but nothing in this section affects the operation of section 83A of this Act or of section 61 of the Wills, Probate and Administration Act 1898, as subsequently amended.”

“lessee”

“a person who remains in possession of premises after the termination of his or her lease of the premises”

121 Section 5A makes provision for registration of leases under that section. Searches have disclosed that no leases were ever registered. Registration is a substantive requirement. Neither of the exclusions under s 5A(1)(a) and (b) applies, as in each relevant case the house was constructed prior to 16 December 1954, and in fact in the first few decades of the last century (20th).

122 The Act relates to “leases” of “dwelling-houses”. As the premises have not been exempted from the Act, if the houses of the relevant defendants fall within the definition of “dwelling-house” the relevant defendants are protected tenants. Each of the relevant defendants occupies a house, located on land belonging to the plaintiff. The lease is for ground rent but as fixtures (which I found that the premises are not). Each house is an intrinsic feature of the land. Accordingly, the land is not “vacant” or “bare” land as analysed by the High Court in Bonnington & Co Ltd v Lynch (1952) 86 CLR 259. Accordingly, the premises are “dwelling-houses” for the purposes of the Act. The definition of “lease” in s 8(1) of the Act is very wide and certainly covers, according to the defendants, the arrangements between the defendants and the lessors. Once a finding that premises are prescribed premises subject to a relevant lease, consequences for the variation of rent and the recovery of possession flow. It is said to be common ground between the parties that the notices given by the plaintiff do not comply with the 1948 Act, so it is unnecessary to go into details of those requirements. The defendants’ position is that if the Court finds that the three relevant defendants are protected tenants, the plaintiff must fail in its bid for possession.

123 For the defendants, save for Mudway, there are no exclusionary provisions of the Act that operate to the disadvantage of the three remaining defendants. The premises have not been excepted from the operation of the 1948 Act by any of the relevant circumstances. Thus the plaintiff has failed to follow the procedure prescribed in the 1948 Act and is not entitled to demand payment of the sums claimed as arrears of rent and not entitled to terminate the tenancies.

124 For the plaintiff it is argued that not only does Mudway fall outside the 1948 Act (assuming that it applies), but so does Mr McFadden. He fails because he has not proved that the premises was the subject of any lease immediately prior to 1 January 1986. Secondly, the evidence of any such tenancy as there is, is that the tenant was Mr F J McFadden, and he would appear to have been the tenant – he paid the rent (affidavit of K McFadden, 7 May 2003, paragraph 10), conformably with the evidence in the case all the male ground tenants even when married seemed to have been regarded as the tenant. Thus his widow Mabel McFadden would have nothing more than at best a s 83A right under the 1948 Act to continue in possession of the premises – a mere right in possession, which under s 83C could not be transferred to anyone else: Shaw v Kadwell (1960) NSWR 689 per Hardie J at 691/2; see also Picone v Grocery & General Merchants Ltd (1963) 64 SR (NSW) 40. Accordingly, no statutory tenancy could be assigned by her to Phillip McFadden, the relevant defendant, and no new protected tenancy could be created post 1 January 1986.

125 As to the notion of the relevant defendant (McFadden) being in some way a sub-lessee, I agree with the submissions for the plaintiff that this is even more hopeless than the antecedent propositions upon which the defendants’ rest and which I find the plaintiff’s submissions in opposition to be persuasive. The grandmother’s language does not purport to sub-let the house, and the evidence he gave was that he did not pay the estate of the grandfather or grandmother or her estate, but Coalex. He could not receive any assignment: see Picone, supra. If not a s 83A case, the grandmother was no better than a tenancy at will as the defendants’ submissions seem to accept and such a tenancy cannot be assigned (Anderson v Toohey’s Ltd (1937) 37 SR (NSW) 70 at 74). Furthermore, no assignment could be effective anyway because there is no evidence of any compliance with the requirement of a deed: see s 23B and s 54A of the Conveyancing Act. Nor would it be an equitable assignment enforceable in Equity because there was no consideration and no agreement in writing (see Meagher, Gummow & Lehane at [7-025]). Accordingly, the defendant submits, and I agree, that what happened was that Mr McFadden at best in 1988 got a new tenancy at will (Anderson v Toohey’s, supra at 74) which for reasons conceded in respect of Mr Mudway, means that there is no protected tenancy.

126 Further, the vacation of the premises by Timms and McFadden, I find, would deprive them of any benefit of any relevant operation of the 1948 legislation. Thus far, Messrs Mudway, McFadden and Timms case in relation to being protected tenants has been disposed of on the assumption that the Act would apply, but the exceptions would capture each.

127 The real issue is whether or not the Act applies at all.

128 The plaintiff submits that the leases are leases of bare land within the definition of Dixon J in Turner v York Motors Pty Ltd (1951) 85 CLR 55 at 75. As to the exception:

“If land is let upon terms that the tenants shall or may erect buildings which are not removable by him

, then I should say that the land and building when erected would form premises”

Bonnignton’s Case

Turner’s Case

Bonnington

129 This is an aspect that has demanded much reflection. The exception stated by Dixon J is critical, and I am in the end persuaded it does not apply and that in relation to each of the defendants, the question of the application of the Landlord and Tenant (Amendment) Act 1948 is irrelevant because none of the leases involves “prescribed premises” because each is a lease of bare land upon which there “is” premises owned by the lessee.

130 As stated above, in any event in the case of Timms and McFadden, the provisions of the Act relating to protection, rent increases, obtaining of possession, etc, do not apply upon vacant possessions of the dwellings being obtained: s 5AA(b). In Di Salvio v Manthorpe [1965] NSWR 360, the words “vacant possession” were held to bear their normal and literal meaning, and Wallace J held, in remitting the matter back to the Magistrate, that if the Magistrate found the premises became physically vacant, he the Magistrate should hold that he had no relevant jurisdiction (363.5). That decision was followed by Hodgson J in Muscolino v Ramm (1986) 5 NSWLR 385 at 389/390. The exclusion operates for all time (Di Salvio) and in rem on the whole premises: Greater Union Organisation Pty Ltd v Ball [1967] 1 NSWR 538.

131 Thus in relation to the protected tenancy / Landlord and Tenant (Amendment) Act 1948, it is conceded that the case cannot be made for Mudway; I find that McFadden and Timms fail for the two reasons referred to above in relation to McFadden and Timms, both on the basis of vacant possession, and certainly in relation to McFadden that there was no valid assignment of any statutory tenancy in any event. Further, that in relation to the four defendants, the Act has no application at all because none of them occupied “prescribed premises” by reason of the sub-lease being of bare land.

Contracts Review Act

132 The defendants deny any relevant contract but assert that if a contract existed, the terms of it are unjust within the meaning of the Contracts Review Act 1980, because there was a material inequality of bargaining power between Ceedive and the residents who had no alternate accommodation available to them. There was no opportunity, it is further suggested, for the residents to negotiate the terms of the proposed ground leases. Finally, it was not reasonably practicable for the residents to negotiate on the terms of the proposed conditions.

133 As I have said, the circumstances of the case are that each of the defendants had a weekly ground lease from which it follows that such leases were terminable on a week’s notice. As the plaintiff points out, historically the predecessors of the plaintiff do not seem to have bothered to give such notice (see, for example, respectively annexures A and F to the affidavits of P McFadden and Mr Mudway, both of 7 May 2003). Both those letters operated to increase retrospectively the rent, and there was no evidence of any complaint about that. Ordinarily at law, with a weekly tenancy a week’s notice would be required of the increased rent, the true analysis of what is happening being that the tenant is being offered a new weekly lease at the new rent which he can either accept by staying there or leave the premises bringing the tenancy to an end.

134 I do not consider it to be “unjust” in any sense under that Act for the plaintiff to write to the tenants, as its predecessor had done, notifying them of an increase in ground rent.

135 As to there being no opportunity to negotiate the terms of the new agreement, I find on the evidence that in fact that the reverse was the situation. The new ground leases from 1 January 2001 had a relatively substantial gestation period. In the case of each defendant (see exhibits A – D inclusive), the plaintiff wrote notifying them of completion of the purchase and of new conditions for continued ground rental. There was no response from the defendants. The plaintiff wrote again on 10 July 2000 to those with pan service notifying increases from 5 August and giving them helpful information on Council-approved replacement sanitary systems, and asking the defendants to telephone and let the plaintiff know their intentions. Again, no one replied. On 22 August 2000, the plaintiff wrote referring to increases in rates and notifying increases in ground rent. There was no response. On 13 December 2000, the plaintiff wrote to each of the four defendants referring to its May letter, and giving the new surveyed areas on which the $0.09 cents psm would be charged together with a new ground rent payable from 1 January 2001, that being the communication pleaded and relied upon. Again, there was no response from any defendant. There was no attempt, in circumstances which I find to be available, to communicate with the plaintiff with the view to negotiating.

136 It is further suggested that there was material inequality of barraging power. The plaintiff queries why this is so and I agree. Both McFadden and Timms are both owners of valuable property elsewhere, and Mr May has leased property at Newnes, and there is no evidence that any four had any relevant lack of capacity when it came to bargaining, vis-à-vis Mr and Mrs O’Connor, the principals of the plaintiff. Mr Mudway is a trained teacher who, from cross-examination, exhibited no material difference of capacity in terms of bargaining with the O’Connor’s. Mr May was a metal trades foreman and, from occasional pugnacity in cross-examination (that is a submission for the defendant, with which I agree) exhibited signs of an equal capacity to the O’Connor’s. Apparently, however, there was no evidence from any one of them that they lacked understanding of what a lease or a ground lease was, or that they did not understand the correspondence sent to them by the plaintiff.

137 It is further submitted that it was not reasonably practicable for them to negotiate the terms of the lease. The O’Connor’s were local and Mr O’Connor was daily on site.

138 I come to the conclusion that the silence was a deliberate position by the defendants. There was no evidence from any of the defendants that they felt pressured; all of them understood not paying rent was a breach of the ground lease and could lead to termination. The defendants chose to adopt a position of silence so as not to negotiate or seek to and I find there is no substance, the more so in the absence of clear and express evidence from each defendant as a complainant as it were, in the defence. As the plaintiff has put it, it is simply a case of the defendants not liking to pay the increased ground rent without any evidence that that ground rent is unreasonable. When one considers what McHugh JA said in West v AGC (Advances) Ltd (1986) 5 NSWLR 610 at 622 as to unfair conduct, no finding can be made; see also Citycorp Australia Ltd v O’Brien (1996) 40 NSWLR 398 at 419 per Sheller JA.

139 I have dealt with this above and no ground has been made out.

140 As the plaintiff rightly submits, such relief is granted only on terms that the lessee pays the outstanding rents and mesne profits, as well as the lessor’s costs. There has been no offer on the part of any of the four defendants in relation to any of these matters. A question arises as to the means of the defendants to meet those conditions of the grant of this particular form of relief, save perhaps of Mr Timms. In the case of Messrs May and Mudway, neither is employed.

141 As I have stated above, I have formed the view that the position taken by the defendants has been deliberate. I agree with the submission for the plaintiff that in relation to both Timms and McFadden, their failure to comply with court orders is such that as a matter of policy relief of this nature should not be granted. Finally, the leases are only weekly tenancies; there is no point in providing this aspect of the relief sought since the tenancies are terminable on a maximum of one week’s notice.

142 Accordingly, the ultimate position is this: the plaintiff succeeds and the defendants fail. The indefeasibility of the title acquired by the plaintiff is unaffected by any of the matters raised by the defendants. The plaintiff was entitled to increase the ground rent and is entitled, in the face of default by each of the defendants, to terminate and institute proceedings for possession and the other relief sought.

143 I direct the plaintiff to bring in Short Minutes of Orders in each action conformable with these reasons, encompassing the entry of judgment for possession, the issue of a writ of possession, the entry of a judgment for a sum for arrears of rent, any order as to an enquiry as to, or judgment for quantified, mesne profits, costs, including any special order for costs in relation to the late service of an affidavit by Mr Edds, and dismissal of the cross-claim.

144 I order the return of the exhibits.

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30/03/2005 - Correction of typographical errors - Paragraph(s) 13 and 94

30/03/2005 - Typographical error - Paragraph(s) 94

CITATION:	CEEDIVE PTY LTD v MAY, TIMMS, McFADDEN & MUDWAY [2005] NSWSC 222 This decision has been amended. Please see the end of the judgment for a list of the amendments.
HEARING DATE(S):	3 - 6, 9 - 13 February 2004; 17 - 19 May 2004
JUDGMENT DATE :	18 March 2005
JUDGMENT OF:	Levine J
DECISION:	Direct the plaintiff to bring in Short Minutes of Orders in each action conformable with these reasons, encompassing the entry of judgment for possession, the issue of a writ of possession, the entry of a judgment for a sum for arrears of rent, any order as to an enquiry as to, or judgment for quantified, mesne profits, costs, including any special order for costs in relation to the late service of an affidavit by Mr Edds, and dismissal of the cross-claim; Order the return of the exhibits.

CATCHWORDS:	Possession of land - miners' cottages - Pottery Estate Lithgow NSW - ground leases - nature of tenancies - Landlord and Tenant (Amendment) Act 1948
LEGISLATION CITED:	Contracts Review Act 1980 Conveyancing Act 1919 Landlord and Tenant Act 1899 Landlord and Tenant (Amendment) Act 1948 Real Property Act 1900
CASES CITED:	Anderson v Toohey's Ltd (1937) 37 SR (NSW) 70 Australian Provincial Assurance Co Ltd v Coroneo (1938) 38 SR (NSW) 700 BP Refinery (Westernport) Pty Ltd v Hastings Shire Council (1977) 180 CLR 266 Bahr & Anor v Nicolay & Ors (No 2) (1988) 164 CLR 604 Barry v Heider (1914) 19 CLR 197 Billing v Pill [1954] 1 QB 70 Bonnington & Co Ltd v Lynch (1952) 86 CLR 259 Bowen v Anderson (1894) 1 QB 164 Burden v Ainsworth [2004] NSWCA 3 Citycorp Australia Ltd v O'Brien (1996) 40 NSWLR 398 Codelfa Construction Pty Ltd v State Rail Authority (1982) 149 CLR 337 Coulls v Bagot's Executor & Trustee Co Ltd (1967) 119 CLR 460 David Jones Ltd v Leventhal (1927) 40 CLR 357 Di Salvio v Manthorpe [1965] NSWR 360 Eastern Nitrogen Ltd v Federal Commissioner of Taxation (2001) 108 FCR 27 Elitestone Ltd v Morris [1997] 1 WLR 687 Federal Commissioner of Taxation v Metal Manufactures Ltd (2001) 108 FCR 150 Frazer v Walker [1967] AC 569 Greater Union Organisation Pty Ltd v Ball [1967] 1 NSWR 538 Grgic v Australian and New Zealand Banking Group Ltd (1994) 33 NSWLR 202 H A Warner Pty Ltd v Williams (1946) 73 CLR 421 Hobson v Gorringe [1897] 1 Ch 182 Holland v Hodgson (1872) LR 7 CP 328 Huffell v Armistead (1835) 7 Car & P 56; 173 ER 25 Hunt v Luck [1902] 1 Ch 428 Manchester, Sheffield and Lincolnshire Railway Co v Anderson (1898) 2 Ch 394 Marsden v Campbell (1897) 18 LR(NSW)Eq 33 McKenzie v McKenzie (1944) 62 WN (NSW) 48 Melluish (Inspector of Taxes) v B M I (No3) Ltd [1996] AC 454 Munro v Stuart (1924) 41 SR (NSW) 203 Muscolino v Ramm (1986) 5 NSWLR 385 NH Dunn Pty Ltd v LM Ericsson Pty Ltd (1979) 2 BPR 9241 National Australia Bank v Blacker (2000) 104 FCR 288 Permanent Trustee Australia Ltd v Esanda Corporation Ltd (1991) 6 BPR 13,420 Picone v Grocery & General Merchants Ltd (1963) 64 SR (NSW) 40 Radaich v Smith (1959) 101 CLR 209 Reid v Smith (1905) 3 CLR 656 Shaw v Kadwell (1960) NSWR 689 Snowlong Pty Ltd v Choe (1991) 23 NSWLR 198 Trident General Insurance Co Ltd v McNiece Bros Pty Ltd (1987) 165 CLR 107 Turner v York Motors Pty Ltd (1951) 85 CLR 55 Webb v Frank Bevis Ltd [1940] 1 All ER 247 West v AGC (Advances) Ltd (1986) 5 NSWLR 610 Wilson v Darling Island Stevedoring & Lighterage Co Ltd (1956) 95 CLR 43
PARTIES:	CEEDIVE Pty Ltd (Plaintiff) v ALLEN THOMAS MAY DONALD FRANCIS TIMMS PHILLIP JAMES McFADDEN GORDON MUDWAY (Defendants)
FILE NUMBER(S):	SC 12916 OF 2002; 12917 OF 2002; 12918 OF 2002; 12919 OF 2002
COUNSEL:	M D Young (Plaintiff) J Needham (now of SC) / P M Lane (Defendants)
SOLICITORS:	John F Joseph (Plaintiff) Robert Stoyef and Associates (Defendants)