Evans v Athedim (Vic) Pty Ltd
[1999] VSCA 154
•29 September 1999
SUPREME COURT OF VICTORIA
COURT OF APPEAL Not Restricted
No. 12314 of 1991
| STEVEN BRUCE EVANS |
| Appellant |
| v |
| ATHEDIM (VIC) PTY. LTD. |
| Respondent |
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JUDGES: | TADGELL, BATT and CHERNOV, JJ.A. | |
WHERE HELD: | MELBOURNE | |
DATES OF HEARING: | 23 and 24 February 1999 | |
DATE OF JUDGMENT: | 29 September 1999 | |
MEDIA NEUTRAL CITATION: | [1999] VSCA 154 | |
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LANDLORD AND TENANT – Agreement not under seal to lease premises already let – Forfeiture of existing lease by re-entry – Sub-lease or licence of part of premises thereby determined – Equitable lease by virtue of agreement neither concurrent nor reversionary – Whether repudiation of agreement – Whether affirmation.
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APPEARANCES: | Counsel | Solicitors |
For the Appellant | Mr G.A. Hardy | Findlay Arthur Phillips |
| For the Respondent | Mr M. Clarke | Dennis Raftis & Associates |
TADGELL, J. A.:
I agree with Batt, J.A.
BATT, J.A.:
This appeal concerns a kiosk forming part of the premises which the respondent on or about 18 January 1991 agreed in writing to lease to the appellant, Steven Evans, and his partner, Peter Beare. The appellant contends that the respondent did not, and indeed put it out of its power to, deliver possession of the kiosk to Beare and himself and that he was therefore entitled to abandon possession of the entire premises, as he did in the early hours of 6 March 1991, and so bring the agreement to an end. He therefore seeks on appeal, first, an order that the judgment in favour of the respondent (which, based on a finding of repudiation of the agreement by the appellant and Beare and the acceptance thereof by the respondent, was for arrears of rent, damages and a declaration that the respondent has a charge over the appellant’s house property) be set aside and, secondly, an order that there be judgment for him on his counterclaim for damages, limited (as I understand it) to damages for breach of the agreement, to be assessed.
At the trial before a judge of the Trial Division the appellant unsuccessfully raised numerous other issues which were not pursued on appeal. But in support of his contention concerning the kiosk the appellant deployed on appeal a large number of arguments, some overlapping, some in the alternative, if not inconsistent, from which it was difficult to distil the essence of his case. It would seem that at trial the appellant’s case on the kiosk was of the same nature. For his Honour, who pointed out that the appellant put forward a number of inconsistent versions as to the kiosk, was moved to remark that the complaint about the kiosk was “somewhat vague and confusing” and to speak of “the confusion in the way the [kiosk] issue was presented at trial,” though admittedly that confusion was compounded by the appellant’s evidence, rejected by the judge, that the kiosk was situated on a certain lot rather than (as his Honour found) on the lot adjoining it. There was a further difficulty on appeal. Although the appellant’s outline of argument ran to 11 pages and 54 paragraphs, only one authority was cited in it. Yet in oral argument at least 25 authorities were cited for the appellant. This marked non-compliance with paragraph 9 of Practice Statement CA 1 of 1995 ([1996] 1 V.R. 249) placed the Court under a considerable handicap during the hearing of the appeal. For these two reasons, at the conclusion of argument the Court asked the appellant’s counsel to provide on one sheet of paper a succinct summary of the propositions for which he contended. In response the Court received one closely typed page containing 8 propositions (although misnumbered as 11), of which some were subdivided. I shall confine myself to a consideration of those propositions, paying regard of course to the arguments they summarise. Before I set them out, however, it is necessary to say something more of the facts that are now material. A more detailed statement of the facts is set out in the reasons of the trial judge, who had to resolve questions of credit and numerous disputed factual matters. Some of his Honour’s findings relating to events of late January and February 1991 and conclusions as to the legal effect of such findings are challenged. Leaving those events for later consideration, I otherwise adopt and add to his Honour’s findings in what follows.
In 1981 the respondent, a company that invested in property and was controlled by one James Nicolaou, became the owner of premises at Lots 10 and 11 Reserve Road, Melton, on which was erected a sporting centre that consisted of a gymnasium and associated facilities, squash courts and indoor cricket courts and was known as Melton Sports Centre. (It may be that that name, more strictly, applied to Lot 10 only, or at any rate was not infrequently used of that Lot only.) As at January 1991 the respondent as landlord had the following two current leases of the Centre. Jirrabay Pty. Ltd. (“Jirrabay”), a company controlled by Rhonda George after she had separated from her husband, was the tenant by assignment in equity, at least, of Lot 10 and the part of Lot 11 that was indoor cricket court 4 (which included the kiosk already mentioned) for a term expiring on 30 April 1992. Melton Indoor Cricket Centre Pty. Ltd. (“Melton Cricket”), a company controlled by one Michael Tinsley, was the tenant by assignment of the balance of Lot 11, being indoor cricket courts 1, 2 and 3. From mid-1990 Melton Cricket occupied the kiosk also. It made payment to Jirrabay for its occupation, though it is not clear whether the arrangement between them was a licence or a sub-lease, whether for a term or periodical.
The business operated by Jirrabay was not successful. By the end of 1990 the appellant had been informed by Nicolaou that he wanted to replace Mrs. George with another tenant. Jirrabay was by then in arrears of rent in excess of $40,000. There were desultory discussions between the appellant and Nicolaou about the appellant’s taking over the complex at Melton. About 8 January 1991 Beare, who leased a tennis area at Altona from the respondent and had been known to the appellant for some years, having already had some discussions with Nicolaou, offered the appellant a 50-50 partnership in a business which he wished to conduct at the Melton premises. Beare approached Nicolaou and a meeting took place at Altona between the three men on or about 10 January 1991. The appellant and Beare had by then inspected the premises at Melton.
At the meeting Nicolaou outlined his problems with the existing tenant. He was determined to bring Jirrabay’s tenancy to an end as soon as possible. Beare and the appellant were keen to take over the premises. Use of cricket court 4 was discussed. Nicolaou said that it was part of the demised premises and that, if Beare and the appellant wished to sublet it, he would consent. He warned them that the kiosk then operated by Melton Cricket on Lot 11 was part of the demised premises as being part of cricket court 4, and that the termination of Jirrabay’s possession would bring any arrangement about the kiosk to an end. There was discussion of the potential problems in excluding Jirrabay: it was expected that there might be some problems. It was agreed that, if the agreement for lease under discussion went ahead, the amount of monthly rent payable by Beare and the appellant would be reduced for the first three months from that payable by Jirrabay to $7,500 for February and $15,000 for March and April. At the meeting or within the next few days, there was provided to Beare and the appellant for perusal a copy of a written agreement between the respondent and Jirrabay for the sale of chattels and fittings by the former to the latter and by which also Jirrabay agreed to execute an assignment to it of the original lessee’s lease. Copies of that lease and of variations of it were attached to the document.
Beare and the appellant spent the next eight days or so preparing and organising their proposed business at Melton. On 20 January, having over the previous days agreed on the terms of their partnership for the conduct of the business, they executed a partnership agreement. Before 18 January Nicolaou on behalf of the respondent and at any rate Beare on behalf of the partners agreed on the matters ultimately set out in Heads of Agreement dated 18 January 1991 executed by Nicolaou on behalf of the respondent and by Beare and the appellant on 18 or 19 January. The document recited that the present tenant of the Melton Sports Centre was in default and that the respondent would request possession of the premises so as to allow the appellant and Beare to be new tenants (Recital B); that the appellant and Beare were desirous either of entering into an assignment of lease from the present tenant or of executing a new lease with the respondent so as to carry on the business of a gymnasium and sports centre at the premises (Recital C); that the respondent was prepared, at its option, to consent to an assignment of lease or a new lease “on condition that it is able to obtain vacant possession of the property on or before 1st February 1991” (Recital D); and that the essential terms of the proposed lease were contained in the then current lease save as thereinafter agreed (Recital E). (As mentioned earlier, the term of that lease was to expire on 30 April 1992.) By clause 1 the parties agreed that, should the respondent obtain vacant possession on or before 1 February 1991, then time should be of the essence and Beare and the appellant acknowledged their liability to pay the rent, outgoings and liabilities prescribed in the current lease save for the variation of rent for February, March and April as above-mentioned. Clause 2 provided that the respondent would forgo rent for February 1991 in the event that the current tenant removed any fittings, fixtures or chattels in excess of $20,000 in value. Clause 5 provided:
“5.Should the Landlord be unable to secure vacant possession [to] Beare and Evans on or prior to 15th March 1991, this Agreement shall be deemed to have lapsed and .... be deemed [as] having been null and void, as if the same had never existed. The parties will however be at liberty to renegotiate or make further agreement after such date.”
By clause 6, in the event that Beare and the appellant did not use cricket court 4, the respondent acknowledged its consent to their sub-letting it for a use approved by the respondent. Beare and the appellant acknowledged by clause 7 that they had a copy of the current enforceable lease of the Melton Sports Centre and had read and understood all its terms and conditions.
At about 5 a.m. on Saturday 26 January, with Beare and the appellant present by pre-arrangement, the respondent through Nicolaou physically re-entered the premises being Lot 10 and cricket court 4 on Lot 11 and took possession. The locks were changed by a locksmith, who gave the appellant keys to the new locks. (It is clear from Tinsley's evidence in explaining photographs of the kiosk taken at a later date that the kiosk was not at the time of re-entry self-contained, fully partitioned off or lockable.) Beare and the appellant took possession of Lot 10 and cricket court 4. They commenced to operate their business. The appellant published a notice dated that day and addressed to patrons of the sports complex which stated that the Melton Health and Fitness Centre was under new management.
Later that day Mrs. George attended the premises and demanded that they be returned to her. The demand was refused. There was a dispute. Police were called and eventually Mrs. George left. During the next few days she attended the premises and made things difficult for Beare and the appellant. On 31 January Jirrabay filed a writ in the County Court against the appellant, Beare and the respondent seeking injunctions restraining those persons from using equipment and chattels owned by Jirrabay, an account of profits derived from the business from 26 January and damages. On the same day Jirrabay obtained an ex parte injunction restraining the defendants to the writ until 4 p.m. on Wednesday 6 February 1991 or further order from using information or documents that were on the Melton premises on 26 January, from removing chattels that were on the premises on that date and had not been brought there by them, and from making any representations as to the business conducted on the premises by Jirrabay. The injunction did not interfere with the possession of the premises by Beare and the appellant. It expired, unextended, on 6 February 1991. His Honour found that Beare and the appellant, after service of the injunction, continued to operate their business at the premises in exactly the same way as they had before the injunction.
Mrs. George early on 5 February 1991 entered the premises and took most of the gymnasium equipment. The appellant and Beare had to transport replacement equipment from elsewhere to the premises, but the replacement equipment did not fully make up for the equipment which had been taken. Mrs. George’s actions of 5 February meant that there was, by virtue of clause 2 of the Heads of Agreement, no rent payable for February.
On 26 February Beare quit the premises at Altona which he leased from the respondent and took with him certain equipment. By then he and Nicolaou were in a state of dispute. Nicolaou was thereafter unable to find him, though the appellant was in contact with him. By that time, too, the appellant was very concerned about the Melton business venture. Beare, to use his Honour’s words, “indicated to him by the end of February that his interest in the Melton complex was waning and he wanted to bring it to an end.”
On 28 February the appellant asked Nicolaou for a reduction in rent and that it be payable weekly, rather than monthly, in advance. The appellant demanded that Nicolaou sign an entry in the appellant’s diary that read:
“I Jim Nicolaou landlord for Athedim will exept [sic] payment on weekly basis for the month of March $2,769.”
Nicolaou signed the entry.
On 6 March 1991 without notice to the respondent and in the dead of night (about 1 a.m.) the appellant abandoned the premises and took with him certain equipment which did not belong to him. He said in evidence that he decided to abandon the premises after consulting Beare. According to the appellant, he left because of the interruption to the business in consequence of the eviction of Mrs. George, because Nicolaou had misled him about a lien over the gymnasium equipment owned by Jirrabay, because of Nicolaou’s withholding rent received for the kiosk and because of the respondent’s failure to provide him and Beare with an assignment of lease or a new lease. In re-examination he said that the last was the main reason. His Honour, whilst not denying that the conduct of the business in February was difficult, did not accept the reasons given by the appellant. He found that the real reasons were the lack of finances and Beare’s attitude to continuing, as in substance the appellant had told Nicolaou when the latter telephoned him a day or two later. The appellant did not of his own accord communicate to the respondent any reason for leaving and the only solicitor’s letter written on his behalf, dated as late as 23 August 1991, did not mention any grounds for termination, but rather asserted that the agreement had “lapsed pursuant to clause 5 thereof”.
The appellant stopped payment of his cheque dated 1 March in favour of the respondent for the week’s rent of $2,769 which he had on 1 March (or possibly 28 February) handed to Nicolaou. (At one stage in his oral evidence the appellant said that he had posted the cheque to Nicolaou on 1 or 2 March.). On or about 12 March 1991 the respondent was notified of the countermand.
On or about 12 March 1991 the respondent re-let the premises, except for cricket court 4, but at a lower rent and with an initial six-week rent-free period.
Whilst there is no doubt that the appellant has standing, and is entitled, to appeal against the judgment on the respondent’s claim, a question arises whether he can appeal without joining Beare so far as he seeks the substitution of a judgment for relief on the counterclaim, because any liability of the respondent to damages for breach of the agreement is a liability to both partners. No objection, however, was taken to the constitution of the appeal so far as it related to the counterclaim and I am content to proceed on the assumption, but without deciding, that there had been an informal dissolution of partnership and that the appeal as presently constituted is competent in relation to the counterclaim.
Before returning to the eight propositions in the summary of the appellant’s counsel, I should also state briefly the conclusions at which the trial judge arrived, but only on the issues that are raised in the appeal. They were:
(i)In so far as the Heads of Agreement (which he found to be a final, binding and concluded contract that was not void for uncertainty) was subject to a condition that the respondent would obtain vacant possession on or before 1 February 1991, that condition was satisfied. In any event, the appellant and Beare could not rely on it as they had stayed in possession until 6 March and operated a business on the premises and further had elected not to exercise the option given to them by clause 1, but rather to continue in occupation after 1 February, taking advantage of not having to pay rent for February, by reason of clause 2.
(ii)There was no condition (or misrepresentation) about a lien over fixtures, fittings and chattels of Jirrabay.
(iii)The failure on the part of the respondent (as his Honour appears to have found) to give to the appellant and Beare possession of the kiosk was not such a breach of contract by the respondent as entitled the appellant to rescind it, because later events (as found by his Honour) overtook any question of the respondent’s not giving possession of the whole of the premises. First, in January Beare (on behalf of himself and the appellant) agreed with Tinsley that Melton Cricket would continue to operate the kiosk. Secondly, at the end of February Tinsley, Nicolaou and the appellant made an agreement with respect to moneys received by the respondent from Melton Cricket which demonstrated that the parties accepted the position operating throughout January and February. Further, on any view the appellant elected not to terminate on this ground.
(iv)There were no other breaches of the contract which entitled the appellant to rescind the agreement as at 6 March 1991.
(v)The appellant and Beare were in breach of and repudiated the contract by quitting the premises on 6 March 1991 and refusing to pay rent, and the respondent accepted the repudiation and thereby rescinded the agreement.
His Honour reduced the amount payable by the appellant (and also, it should be noted, Beare) for rent under the agreement for six days in March 1991 ($2,903.22) by the amount received by the respondent from Melton Cricket referable to the period of 39 days during which the appellant and Beare were in occupation ($1,026) which the respondent had failed to pay to them.
I return to the one-page summary supplied by the appellant’s counsel. The eight propositions in it (with references for the authorities added or corrected) read:
“1.The agreement to demise the gym and the kiosk, not under seal, failed to create a legal interest and was void1, 2.
2. At common law:
(a)the rent was reserved out of the whole demise and could not be apportioned 1, 3;
(b)the whole area never delivered in possession, action on the covenant to pay rent did not lie1;
(c)tenants had no privity of contract nor estate with Tinsley and could not disturb his possession4.
3.Forfeiture of the kiosk was never affected [sic] ‑ Tinsley continued in possession with respondent's knowledge and acquiesence. The payment to respondent created a legal relationship with Tinsley which equity treated as a lease5 for the balance of the Jirrabay term6. If the agreement was not void, at best it entitled the tenants to reversion.
4.By 28 February 1991, respondent had put it beyond power to complete, so:
(a)equity would not have decreed specific performance in favour of the respondent ‑ it had not done equity, alternatively equity would not so decree for a part of a contract7;
(b)Tinsley's possession was in breach (or anticipatory breach) of an essential obligation to demise the kiosk and a repudiation;
(c)tenants were entitled to accept that repudiation and did so by vacating the premises.
5.Whether the appellant had other reasons or motives to terminate is immaterial (Shepherd v. Felt & Textiles of Australia Ltd. (1931) 45 C.L.R. 359).
6.Alternatively Tinsley's possession on 6 March &/or 15 March brought agreement to an end(clause 5).
7. The findings of facts by the trial judge that:
(a)in January Beare agreed with Tinsley that Tinsley could continue to operate the kiosk;
(b)the tenants were happy that Tinsley continued in possession of the kiosk;
(c) the respondent had given vacant possession by 1 February;
(d)the events of and after 28 February amounted to election and affirmation by tenants,
were not open to the learned trial judge on the evidence.
[8.] Having regard to clause 5, and in the absence of:
(a)a confrontation which produced the necessity to make a choice whether to elect [sic] or rescind;
(b) prejudice to the respondent at the relevant time,
a failure by the tenants to positively rescind between 28 February and 6 March cannot sustain a conclusion that they elected to affirm8.”
1. Neale v. Mackenzie (1836) 1 M. & W 747; 150 ER 637; 6 LJ (Ex) 263.
2. Property Law Act 1958 s.51.
3. Todburn Pty. Ltd. v. Taormina International Pty. Ltd. (1990) 5 BPR 11,173 at 11,175.
4. Freeman v. Hambrook [1947] V.L.R. 70 and Adelstein Investments Pty. Ltd. v. Morgan [1968] 2 NSWR 170.
5. Chan v. Cresdon Pty. Ltd. (1989) 168 CLR 242 at 252.
6. Ronan v. Derheim (1977) 78 DLR (3d) 622 at 628‑629.
7. See, for instance, E. Johnson & Co. (Barbados) Ltd. v. NSR [1997] AC 400.
8. Immer (No. 145) Pty. Ltd. v. Uniting Church in Australia Property Trust (N.S.W.) (1993) 182 C.L.R. 26 at 42-43; Frankcombe v. Foster Investments Pty. Ltd. [1978] 2 NSWLR 41; and Tropical Traders Ltd. v. Goonan (1964) 111 CLR 41.
I shall consider each proposition in turn.
Proposition 1
“1.The agreement to demise the gym and the kiosk, not under seal, failed to create a legal interest and was void.”
It is true that the agreement, not being under seal, was void for the purpose of creating a legal estate: Property Law Act 1958, s.52(1). But it was not otherwise void. It may be that by virtue of s.53(1)(a) of that Act the Heads of Agreement created an equitable leasehold interest, the commencement of the term being stated implicitly, if not explicitly, by reference to the contingency of the respondent’s obtaining vacant possession and (as I shall show below) that contingency having occurred before action brought: Halsbury’s Laws of England, 4th edn., Vol.27 (1981), 61, para.66. Thus, the Heads of Agreement would not under s.54(1) have created an interest at will only.
It is, however, unnecessary to express a final view about the effect of s.53(1), for s.55(d) provides that the provisions requiring writing contained in ss.53 and 54 do not affect the operation of the law relating to part performance and, in my view, that law operated here. The trial judge’s interpretation of the Heads of Agreement as an agreement for a lease has not been challenged on appeal and in any event, despite the inelegant inclusion as recitals of the contents of recitals C, D and E, I consider it correct. In my view, there was part performance of the agreement on the part of the respondent by its letting the appellant and Beare into possession of the whole (as I shall similarly show below) of the premises agreed to be demised, namely, Lot 10 and cricket court 4 (including the kiosk). The change of possession of land is the act of part performance par excellence: Regent v. Millett (1976) 133 C.L.R. 679 at 683 citing Williams on The Statute of Frauds, 256. It is to be noted that Neale v. Mackenzie, on which the appellant placed so much reliance, was the decision of a court of common law given both before the Judicature Act 1873 was passed and before substantial statutory enactment and amendment of the law of real property was made.
It is unnecessary to consider whether, disregarding the Heads of Agreement, the letting of the appellant and Beare into possession on 26 January 1991 for the balance of Jirrabay’s term itself constituted the creation by parol of a lease taking effect in possession for a term not exceeding three years at the best rent reasonably obtainable within s.54(2) of the Property Law Act 1958: compare Halsbury, op. cit., para.99; Ronan v. Derheim at 626.
Proposition 2
“2. At common law:
(a)the rent was reserved out of the whole demise and could not be apportioned;
(b)the whole area never delivered in possession, action on the covenant to pay rent did not lie;
(c)tenants had no privity of contract nor estate with Tinsley and could not disturb his possession.
Paragraphs (a) and (b) of this proposition are stated in the context of two leases, the later of which is not by deed. On that footing, their accuracy may be accepted for the purposes of argument. Paragraph (b) also finds support in the decision of the majority in Hughes v. Mockbell (1909) 9 SR(NSW) 343. (There were circumstances at common law where rent could be apportioned but they are not presently relevant.) But the applicability here of paragraphs (a) and (b) requires, and the appellant implicitly postulates, a certain state of affairs as at 26 January 1991, which I consider did not exist. The appellant postulates (1) that the respondent did not deliver to him and Beare possession of every part of the premises agreed to be demised, and specifically the kiosk; and (2) that the respondent was unable to do so because Melton Cricket was tenant of the kiosk pursuant to a pre-existing lease from the respondent. For the reasons given under Proposition 3, neither postulate is, in my view, correct.
As regards paragraph (c) of the proposition, the introductory words “At common law” seem inappropriate, for the paragraph turns upon the particular facts. That aside, it too, and certainly the second half of it, is predicated upon the same two postulates. I hold under Proposition 3 that upon the forfeiture in the early hours of 26 January of Jirrabay’s leasehold interest in the demised premises Melton Cricket’s interest in the kiosk, as sub-lessee or licensee or otherwise, automatically came to an end and that possession of the whole was immediately given by the respondent to the appellant and Beare. If that be correct, then Melton Cricket’s resumption of occupation of the kiosk later the same day (whether or not amounting to possession) must, at least in the apparent absence of evidence suggesting communication between Tinsley and Nicolaou that day, be referable to an arrangement, express or tacit, for a sub-lease or licence which Tinsley, not being prepared to do without the kiosk, made with the appellant as manager on behalf of Beare and himself as the persons having the immediate right to possession, and possession, of the kiosk as part of the demised premises. Or else Melton Cricket’s occupation must be referable to the sufferance of Beare and the appellant. In short, Melton Cricket that day became either the periodic sub-tenant or the licensee or else the tenant at will or at sufferance of the appellant and Beare. The privity of any contract or estate that Melton Cricket had was with them, not the respondent. The tripartite arrangement which, as mentioned later, his Honour found was made on 28 February 1991 cannot be treated as though made on, or even shortly after, 26 January or as retrospectively affecting legal relationships created on 26 January. Compare Queensland Television Ltd. v. FC of T (1969) 119 C.L.R. 167 at 175.
Proposition 3
“3.Forfeiture of the kiosk was never affected [sic]‑ Tinsley continued in possession with respondent's knowledge and acquiesence. The payment to respondent created a legal relationship with Tinsley which equity treated as a lease for the balance of the Jirrabay term. If the agreement was not void, at best it entitled the tenants to reversion.”
On the facts which I have set out earlier, it is clear that what Nicolaou on behalf of the respondent did in the early hours of Saturday 26 January, in the presence of Beare and the appellant, was to re-enter the premises demised to Jirrabay and thereby to forfeit Jirrabay’s leasehold interest. The changing of the locks made the fact of re-entry and forfeiture perspicuously clear. It was not necessary to re-enter upon every portion of the demised premises. In respect of the kiosk, that is particularly so in view of the fact that it was not partitioned off or separately lockable. Forfeiture or re-entry determines the interest of a sub-tenant (Great Western Railway Co. v. Smith (1876) 2 Ch.D. 235, CA, at 253 per Mellish, L.J.; affd. as Smith v. Great Western Railway Co. (1887) 3 App.Cas. 165; and Pennell v. Payne [1995] Q.B. 192 at 197) and, all the more so, of a licensee (Fleming v. House (1972) 224 Estates Gazette 2020). There was thus a re-entry and forfeiture as regards the kiosk and, with it, a determination of the interest of Melton Cricket, whatever that was. It is significant that the locksmith handed to the appellant in the presence of Nicolaou keys to the new locks, for thereby possession of the whole premises re-entered was given to the appellant and Beare by, or with the authority of, the respondent. (In that I respectfully differ from the trial judge as regards the kiosk.) The determination of Melton Cricket’s interest and the delivery of possession to the appellant and Beare occurred before Tinsley attended on 26 January. It is true that on behalf of Melton Cricket he that day resumed occupation and trading from the kiosk, but, subject to any arrangement that the appellant and Beare or one of them on behalf of both may have made with Tinsley that day or shortly thereafter, Melton Cricket was after the re-entry a trespasser or tenant at sufferance of them. I can see no evidence – and none was suggested in argument -that on or about that day the respondent made some agreement with Tinsley on behalf of Melton Cricket.
Even if the respondent had done so and had thereby created a leasehold interest in Melton Cricket, that interest would not have been anterior or superior to the equitable leasehold interest of the appellant and Beare, into the possession of which they had entered before the arrival of Tinsley that day.
For the foregoing reasons I reject the submission that forfeiture of the leasehold interest in the kiosk (and, with it, Melton Cricket’s derivative interest) was never effected, and also the submission that Tinsley on behalf of Melton Cricket continued in possession. Melton Cricket renewed occupation of the kiosk. Whether it did so with the knowledge and acquiescence of Nicolaou on behalf of the respondent is, I consider, immaterial, for the respondent had given both the right to possession, and possession, of the kiosk to the appellant and Beare and they alone had power to grant any sub-lease or licence to Melton Cricket. In so far as the respondent might in January have purported to grant a (concurrent) lease of the kiosk to Melton Cricket (of which, as I have said, there is no evidence), the lease would have been inferior to and later than that granted in equity to the appellant and Beare, and their right to possession, and possession, would not have been affected, so that Neale v. Mackenzie would have had no relevant application.
The statements in Neale v. Mackenzie as to the effect at common law of later leases, by deed and by parol respectively, by the same lessor of premises already demised to another were accepted by Latham, C.J. and Dixon, J. in Minister for Interior v. Brisbane Amateur Turf Club (1949) 80 C.L.R. 123 at 148 and 162 respectively. But, so far as those statements relate to an interesse termini, they are considerably affected by s.149(2) of the Property Law Act 1958, read with the definition (imported by s.18(1)) of “term of years absolute” in the Settled Land Act 1958, and, so far as the statements relate to reversionary leases, they are considerably affected by s.149(5) and s.151(1) of the Property Law Act 1958. Further, the view is expressed in Woodfall’s Law of Landlord and Tenant, 28th edn., Vol.1, para.1-0611 fn 19 that Neale v. Mackenzie is now overruled by reason of the definition of “term of years absolute”. Because I am of the view, for the reasons given earlier, that, even accepting the statements in that case at their fullest, it is on the facts inapplicable, I do not find it necessary to consider its current status in Victoria. Nor, similarly, is it necessary to consider whether any relevant consequence flows from the fact that the Court of Exchequer Chamber in Neale v. Mackenzie at (M&W) 762; (ER) 641; (LJ) 265 held that the lease of 100 acres was wholly void as regards the eight acres (which might otherwise be thought to be equivalent to the kiosk here) in the possession of a person entitled under a prior lease from the lessor. (An earlier statement by Lord Kenyon in Doe ex dem. Griffiths v. Lloyd (1800) 3 Esp. 78 at 79; 170 E.R. 544 at 545 that, if there was any part of the demised lands which could not be legally demised, the whole demise was void seems at odds with Neale v. Mackenzie and was presumably overruled by it.)
The second part of Proposition 3 relates to the agreement of late February the subject of his Honour’s conclusion (iii) set out above. More particularly, his Honour found that Tinsley, Nicolaou and the appellant had a discussion in which they agreed that Melton Cricket would continue to operate the kiosk and that the respondent would pay to Beare and the appellant the amount payable by Melton Cricket to the respondent for occupation of the kiosk. Nicolaou agreed that the respondent would account to the appellant (and, presumably, Beare) for moneys received. Despite the wording of one ground of appeal, the appellant does not dispute, at any rate seriously, his Honour’s findings concerning the agreement of late February. Indeed at first instance he pleaded and relied on the facts so found, though he challenges a conclusion which his Honour drew from them. The evidence revealed, and his Honour found, that the only payments Melton Cricket made to the respondent up to and including March 1991 were $1,600 on 21 February 1991 and $800 on 7 March 1991. The first of those payments was in respect of January and February and the second was in respect of March. Tinsley said in evidence that the amount payable was $800 per month and that that was, or was approximately, the amount which Melton Cricket had been paying Jirrabay before the re-entry. Tinsley was unable to say why he did not pay the sums to the appellant and Beare direct.
The effect in law of the agreement of late February is a nice question. It may have constituted a sub-lease (or, perhaps, a licence) to Melton Cricket by the appellant and Beare and the appointment of the respondent as their agent to receive and account for the rent or occupation fee. (Paragraph 20C of the defence, inserted by leave granted at the trial, asserts, it may be noted, a sub-letting, which, because of Jirrabay’s eviction, could not be a sub-letting by Jirrabay, but must have been by the appellant and Beare.) That analysis gathers some support from the statement by Nicolaou at the meeting that the first payment was being held in trust. On this view, the existence of the appellant and Beare as lessees makes quite inapplicable the analysis, pre-supposing two parties only, appearing in Ronan v. Derheim at 626-629 on which the appellant placed much reliance. Alternatively, and less likely, the agreement may have constituted an implied or tacit surrender by the appellant and Beare of their equitable lease so far as it related to the kiosk and the grant by the respondent to Melton Cricket of a lease of the kiosk for the balance of the term. Why, in that case, the respondent would account to the appellant and Beare for the rent is, however, not clear. Possibly, it was tacitly agreed that the consideration payable by the respondent for the surrender to it was the periodical rent payments. (The presence of the appellant at the meeting makes it unlikely that the appellant and Beare did not surrender their interest in the kiosk. Thus it is unlikely that the lease of the kiosk granted, on this second view, by the respondent was concurrent with the earlier lease of it to the appellant and Beare.) I do not think that the use in evidence and discussions of the word “rent” points conclusively to one rather than the other of the foregoing alternatives. It may be that other views of the legal effect of the agreement of late February are open.
It is unnecessary to decide which is the correct legal construction to be put upon the agreement of late February. Let it be assumed against the respondent that the agreement, coupled with Melton Cricket’s continuing in possession after 28 February and the earlier payment, gave Melton Cricket an equitable leasehold interest in the kiosk (whether or not for the balance of the Jirrabay term) and that there was no surrender by the appellant and Beare. Even if Ronan v. Derheim at 626-629 is correct and is applicable, the leasehold interest assumed could not have commenced before the date of the agreement of late February: compare Queensland Television Ltd. v. FC of T at 175. Accordingly, it could not have been anterior or superior to the leasehold interest which I have held a court of equity would recognise in the appellant and Beare from at least 26 January 1991. The Heads of Agreement, therefore, did not operate as a mere assignment or lease of the reversion for the relevant period, as the end of Proposition 3 asserts. Rather, the document operated as an agreement for a lease. (The same conclusion follows if, by reason of the payment by Melton Cricket to the respondent on 21 February and Melton Cricket’s thereafter continuing in possession, the equitable leasehold interest in the appellant and Beare is assumed to have arisen on 21 February 1991, rather than 28 February 1991.)
Proposition 4
“4.By 28 February 1991, respondent had put it beyond power to complete, so:
(a)equity would not have decreed specific performance in favour of the respondent ‑ it had not done equity, alternatively equity would not so decree for a part of a contract;
(b)Tinsley's possession was in breach (or anticipatory breach) of an essential obligation to demise the kiosk and a repudiation;
(c)tenants were entitled to accept that repudiation and did so by vacating the premises.
This proposition proceeds on the unstated assumption that the respondent had not delivered vacant possession of the kiosk to the appellant and Beare. For the reasons given under Propositions 2 and 3, I do not accept the correctness of that assumption. The respondent was not in breach of the Heads of Agreement in that regard.
But, even if vacant possession had not been given to the appellant and Beare on 26 January or even by 1 February, the agreement made at the end of February constituted, as regards the appellant and Beare and the respondent, a consensual, contractual, variation of the Heads of Agreement, whatever the precise legal mechanism or mechanisms: the appellant and Beare agreed to their not having vacant possession of the kiosk in return for receiving the rents and profits of it. Such agreement is entirely consistent with his Honour’s unchallenged finding that in the negotiations leading up to the signing of the Heads of Agreement it was accepted that the appellant and Beare did not want cricket court 4 (which included the kiosk) and that every endeavour would be made to lease it to someone else. It is also consistent with the terms of clause 6 of the Heads of Agreement, which reflect that finding. Further, paragraph 20C of the amended defence asserted, and thus may be taken to admit, that the agreement of 28 February constituted a variation of the Heads of Agreement.
Even if it could be said that, by the assumed failure to deliver vacant possession timeously, the respondent had repudiated the Heads of Agreement, the appellant and Beare had not acted on that repudiation by the time of the agreement at the end of February. Further, failing a successful challenge to his Honour’s finding that in January 1991 Beare and Tinsley agreed that Tinsley (that is, Melton Cricket) could (or would) continue to operate the kiosk (a matter considered under Proposition 8), the fact so found probably constitutes the grant by the appellant and Beare to Melton Cricket of a licence to occupy the kiosk or of a sub-tenancy of it of some nature. In any event, whether as an election not to rescind (assuming that rescission were open) or otherwise, it prevents the appellant from complaining thereafter of not having actual possession of the kiosk.
By reference to the later events above-mentioned, his Honour expressed himself as satisfied that there was nothing in the submission that the respondent had repudiated the Heads of Agreement and the appellant and Beare were entitled to rescind. I agree.
It follows from what I have said under this fourth proposition that I do not accept the correctness of its opening words; that paragraph (a) is inapplicable; that Melton Cricket was not put in possession by the respondent except, possibly, consensually by reason of the agreement of late February; and that there was no repudiation by the respondent which the appellant and Beare were entitled to accept.
In discussing this proposition, I have assumed for the sake of argument that, so far as the Heads of Agreement contained a condition as to, or were conditional upon, the respondent’s obtaining vacant possession by 1 February 1991, that condition could be relied on by the appellant and Beare, as his Honour seems to have considered. But Recital D probably means that the condition was inserted for the benefit of the respondent, which alone could rely on it. That would leave clause 5 for either party to invoke. The appellant’s case, I should say, does not depend simply upon the condition relating to 1 February, but also upon the obligation of a landlord or intending landlord to give possession of the demised premises to the tenant or intended tenant.
Proposition 5
“5. Whether the appellant had other reasons or motives to terminate is immaterial.”
This proposition is correct. But it is still necessary for the appellant to show that there was a valid ground for termination and, in my opinion, it has failed to do so. (The respondent’s failure to account to the appellant and Beare between 28 February and 5 March, although relied on below by the appellant, was not relied on in the notice of appeal, the appellant’s outline of argument or the summary. In any event, his Honour was, I consider, correct in holding that it did not constitute a repudiation of the Heads of Agreement as varied.)
Proposition 6
“6.Alternatively Tinsley's possession on 6 March &/or 15 March brought agreement to an end(clause 5).”
I reject this proposition. First, the condition upon which the Heads of Agreement was to become voidable by either party was not satisfied and could not be satisfied, because, for the reasons given earlier, the respondent did secure vacant possession to Beare and the appellant on 26 January. Secondly, the Heads of Agreement as varied had been terminated before 15 March by the repudiation by the appellant (and thus Beare) in stopping payment of the first rent cheque and abandoning possession, coupled with the respondent’s acceptance of that repudiation.
Proposition 7
“7. The findings of facts by the trial judge that:
(a)in January Beare agreed with Tinsley that Tinsley could continue to operate the kiosk;
(b)the tenants were happy that Tinsley continued in possession of the kiosk;
(c) the respondent had given vacant possession by 1 February;
(d)the events of and after 28 February amounted to election and affirmation by tenants,
were not open to the learned trial judge on the evidence.”
For the reasons which follow, I am not persuaded that any of these findings was not open to his Honour or that he was wrong in making any of them. The case is quite unlike Voulis v. Kozary (1975) 180 C.L.R. 177, cited for the appellant. Paragraphs (a) and (b) are simply different ways of expressing the same finding, with the word “happy” meaning “content” or “agreeable”. In fact his Honour expressed himself in three ways about this matter. He stated that Tinsley had said in evidence that he spoke to Beare some weeks after Beare and the appellant moved in and discussed the kiosk, and that Beare was “happy with Tinsley continuing to conduct” the kiosk. He listed as one of his findings of fact that in January Beare “agreed with Tinsley that the latter could continue to operate” the kiosk. Finally, he said that the evidence revealed that Tinsley talked to Beare some time in January and “it was agreed that Tinsley would continue to operate” the premises. The only evidence drawn to our attention in support of those findings was Tinsley’s statement in cross-examination on behalf of the respondent that he said to Beare that Melton Cricket “were operating the kiosk and he accepted that”, and that that conversation “would have been in January at some stage. I think he and Mr. Evans had been there for two or three weeks at that point”. Save, perhaps, as to the date, I am of the opinion that the two findings (a) and (b) were well open to his Honour, particularly in the absence of any objection to the conclusory expression “he accepted that”. It may be that his Honour should have found that the date was early February. Even if his Honour had been wrong in making the two findings, the error would have had no practical consequence. For the findings were not essential to the course of his Honour’s reasoning, nor are they to that of mine.
For the reasons already given, I consider that the literal finding in paragraph (c) was well open to his Honour and indeed was correct. But, although the statement by his Honour that is referred to is expressed in absolute terms, it would seem from his Honour’s later reference to “the failure to give possession of the whole of the premises” that his Honour’s real finding was that vacant possession had substantially (i.e., in respect of most of the demised premises) been given by 1 February. On the other hand, the view of the facts which I have adopted earlier relates to the whole of the premises that had been let to Jirrabay.
The finding referred to in paragraph (d) may, perhaps, be partly a holding in law. In my view, that finding or holding was open to his Honour and was correct, at least so far as it relates to the effect of the agreement made at the end of February. Instead of complaining that Melton Cricket’s occupation of the kiosk meant that the respondent was in breach of its obligation to deliver vacant possession of the kiosk, the appellant for himself and Beare made an agreement of which Melton Cricket’s occupation of the kiosk was an essential part.
Proposition [8]
“[8.] Having regard to clause 5, and in the absence of:
(a)a confrontation which produced the necessity to make a choice whether to elect [sic] or rescind;
(b) prejudice to the respondent at the relevant time,
a failure by the tenants to positively rescind between 28 February and 6 March cannot sustain a conclusion that they elected to affirm.”
This proposition impliedly presupposes that there was a breach on the part of the respondent amounting to a repudiation of the Heads of Agreement and that avoidance under clause 5 was still possible. For the reasons given earlier, I do not accept those presuppositions. In any event, it is not the failure between 28 February and 6 March to rescind positively that constituted an election to affirm. Rather, as I have sought to show under Proposition 7(d), it is the making of the tripartite agreement at the end of February. In considering whether he should make that informal agreement the appellant was, in my opinion, confronted with the necessity to choose between affirming the Heads of Agreement (with some variation) and rescinding on the ground that the respondent had not given vacant possession of the kiosk: Immer (No.145) at 38-39, 41 and 42-43. Moreover, his payment of rent on or about 1 March when aware of the respondent’s repudiation (on his version) is also an election to affirm (subject perhaps to clause 5).
Conclusion
I would uphold none of the propositions except the fifth, and it is not decisive. In essence, the appellants’ case depends, as it seems to me, on making out at least either the first or the second of the following propositions and also the third, namely:
(i) (a)prior to 26 January 1991 Melton Cricket was a sub-lessee of Jirrabay of the kiosk; and
(b)the lease to Jirrabay of that part of the premises demised to it that consisted of the kiosk was not forfeited that day; so that
(c)as at 26 January 1991 Melton Cricket had a pre-existing lease or sub-lease of the kiosk and the Heads of Agreement was accordingly void, either wholly or as regards the kiosk; or alternatively
(ii) (a)on or between 26 January and 28 February 1991 the respondent leased the kiosk to Melton Cricket; and
(b)that lease had effect on and from 26 January 1991; and
(iii)the appellant and Beare had not by 6 March 1991 affirmed the Heads of Agreement or agreed to accept rents and profits of the kiosk in lieu of vacant possession of it.
I have said enough in considering the appellant’s eight propositions to show that, in my judgment, the appellant has failed to make out any of the three propositions set out in this paragraph or any part of them with the possible exception of part (a) of the first. The difficulties and inconsistencies in the appellant’s case were, I thought, made manifest when Chernov, J.A. during the course of argument asked the appellant’s counsel why, if the respondent did not re-enter the kiosk on 26 January 1991, Jirrabay was not entitled to the rent and, if that was so, what was the arrangement with the respondent. The answer that it was a new lease between Melton Cricket and the respondent, as it seemed to me, not only implicitly acknowledged that re-entry upon part of the demised premises determined the whole lease, but also showed that, if there were a lease between the respondent and Melton Cricket, the respondent did not stand in the shoes of Jirrabay vis-a-vis Melton Cricket. The new lease could not be backdated to the date of re-entry.
The appeal, I consider, should be dismissed except to the extent necessary to vary the date in paragraph 4 of the judgment below.
CHERNOV, J.A.:
I have had the advantage of reading in draft the reasons prepared by Batt, J.A. For the reasons which his Honour assigns, I agree that the appeal should be dismissed except to the extent necessary to vary the date in paragraph 4 of the judgment below.
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