Konica Business Machines Australia Pty Limited v Tizine Pty Limited

[1992] HCATrans 367

•

,

~

•

IN THE HIGH COURT OF AUSTRALIA

Office of the Registry

Sydney No S61 of 1992

B e t w e e n -

KONICA BUSINESS MACHINES

AUSTRALIA PTY LIMITED

Applicant

and

TIZINE PTY LIMITED

Respondent

Application for special leave

to appeal

BRENNAN J
DAWSON J

McHUGH J

TRANSCRIPT OF PROCEEDINGS

AT SYDNEY ON FRIDAY, 11 DECEMBER 1992, AT 12.51 PM

Copyright in the High Court of Australia

Konica 1 11/12/92

MR D.M.J. BENNETT, QC:  May it please the Court, I appear

for the applicant with my learned friend,

MR H.J. MATER.	(instructed by Pigott Stinson
Stuart Thom)

MR B.W. RAYMENT, QC:  May it please Your Honours, I appear

with my learned friend, MR P.P. O'LOUGHLIN, for the

respondent. (instructed by Gray & Perkins)

BRENNAN J: Yes. Mr Rayment. Mr Bennett.

MR BENNETT:  I hand up to the Court an outline of

submissions.

BRENNAN J: Yes, Mr Bennett.

MR BENNETT: 

If Your Honour pleases. Your Honours, periods

of recession tend to bring certain areas of law to
the forefront of practice and one of those areas is
the problems of dealing with a defaulting tenant

who abandons the property.

McHUGH J: Is this a suitable case to raise the point of

principle having regard to the findings of fact by

Mr Justice Handley?

MR BENNETT:  Yes, Your Honour, for this reason: there would,

of course, be two points in the appeal. One is

this important question of principle, the other is

the question whether the particular correspondence,

the one letter and the three invoices and one

telephone conversation, amounted to an acceptance

of the surrender. That second point is not on its

own a special leave point. It is, however, a very

short matter which could be argued in a very narrow

compass and the case is a convenient vehicle

because the major point in the case, the other

point, involves the overruling of a long line of

common law authority.

McHUGH J: But if Mr Justice Handley was right and there was

no offer to terminate the lease, then this point of

principle is never reached, is it?

MR BENNETT: Well, Your Honour, if we lose on either point,

we lose, yes, Your Honour. We have to succeed on

both points to succeed, but the other point is, we

would submit, it is a - - -

McHUGH J:	Does that not mean that you have got to convince us that you could not lose on Mr Justice Handley's
point before we should grant special leave.
MR BENNETT:	No, Your Honour, I have to convince _

Your Honour - I would submit if I satisfy

Your Honours that one point is important and

Konica 2 11/12/92

arguable and that the other point is arguable, then
it becomes an appropriate case for special leave.

There are many cases where special leave is granted

where there are other points which arise in the

case.

McHUGH J: But you do not reach the point of principle

unless you have the facts found in your favour, and

Mr Justice Handley finds against you.

MR BENNETT: It is not a question of facts, with respect,

Your Honour. In my respectful submission, the

question which His Honour found against us was

whether a letter, three invoices and a telephone

call, which are in clear terms, which can be looked

at very quickly, gave rise to a surrender or not.

That is a matter which depends on the nature of a

surrender and the acceptance of a surrender and the

circumstances around it. In this case the letter

is - Your Honours can see what a short point it is.

The letter is set out at pages 19 and 20 where

there is a demand for possession, which we would

submit involves the acceptance of a surrender

because the landlord has no right to demand
possession if the lease is continuing. There is a
demand for an occupation fee, which in subsequent

invoices became a demand for what was called

industrial rent, and there is also a reference at

the end of the letter to a rather peculiar half-way

position saying, although we do not concede you

have got the right to stay there, in fact you are

going to be able to stay there until March because

of the difficulty of getting to the court and during that period we want the occupation fee.

Now, the question whether that amounts to a

surrender or not is a very short one.	We submit it
clearly amounts to the acceptance of a surrender

because it is inconsistent with the continuation of

the lease, and one then gets the rule in Walls v

Atcheson, which comes into that argument which says

that in so far as this constitutes a reletting, it

is a reletting of which the tenant was not

notified.

McHUGH J: Yes, but I do not know that you have faced up to

Mr Justice Handley's finding at page 32, line 20,

when he said the tenant never went out of

possession. While it went out of possession it did

not leave the property vacant.	It did not abandon
possession of the property.

MR BENNETT: Well, he does not say he did not abandon

possession. The finding there is it is a finding

that it went out of possession and we say that

Konica 11/12/92

finding, combined with the steps taken in relation

to the person allowed into occupation, amount to an

acceptance of it. The practical effect was - - -

BRENNAN J: Acceptance of what?

MR BENNETT:  Of the surrender, Your Honour.

BRENNAN J: But the whole question is whether there was a

surrender; not whether there is an acceptance on

this view.

MR BENNETT:  Yes, I am sorry, Your Honour.

MR BENNETT: Well, our submission on that is that that is a

very short point and one on which we would submit,

with respect, that His Honour was wrong.

BRENNAN J: That may be so, but that does not really get you

special leave, does it?

MR BENNETT: Well, Your Honour, it does, if there is an

important point which arises as one of the points

on which we seek to succeed, and that is the point

in Walls v Atcheson. It is -

BRENNAN J: That assumes a reletting.

MR BENNETT:	Yes, Your Honour, yes.
BRENNAN J:	The proposition here is that there was no

reletting.

DAWSON J:  It becomes a point which may or may not arise.

MR BENNETT:  Yes, I have to accept that, Your Honour. But

we would submit it would probably arise because

when one looks at what is said, we know the tenant

went out of possession, we know there is a person

not authorized by the lessor left in possession, we

know there is a covenant against assigning or

subletting without consent and no consent has been

given and we know that the lessor immediately says

to the person in occupation, "Go, demand

possession", and then accepts rent for an

intervening period. Now, Your Honour, we would be

submitting, on all those facts, that constitutes a surrender combined with an acceptance, and part of

the argument is the Walls v Atcheson point which,

in a sense gives colour to the proposition that

there was an acceptance of the surrender.

McHUGH J: Having regard to the dealings between that

assignee and TNT, the inference is almost

irresistible that TNT went into occupation at the

behest of the tenant.

Konica	11/12/92
MR BENNETT:	Yes, that is so.

McHUGH J: Well that just strengthens Mr Justice Handley's

point, does it not?

MR BENNETT:  One can abandon possession and at the same time

hand over to someone else without maintaining that

person as one's subtenant or assignee. One simply

says, "I am abandoning possession," and as a

practical matter points to someone else and says,

"You go into possession". But that does not

prevent it being an abandonment of possession and,

Your Honour, we submit the overall conduct is

clearly conduct which constituted a surrender.

May I add this, Your Honours, the point in

Walls v Atcheson is a very important point, and if

the Court is - it is a situation where the Court

of Appeal has simply said, without any reason, that

notwithstanding that the decision remains the law,

that it has been referred to in Woodfall as being

the law; it has been applied by the Supreme Court

of Canada as being the law; it has been referred to

and applied twice in Australia and it lays down a

principle which is one of the basic principles

governing the right of the landlord to relet and the Court of Appeal has said "We have decided to overrule it" .

Now that, in my respectful submission,

necessarily raises a matter of great importance to

the law of landlord and tenant and it is a point

which arises as one of the two main points in the

case and, on the other issue, it is not a difficult

thing to see the going out of possession, in these

circumstances, bearing in mind all the background

considerations, as being an abandonment; as being a repudiation. The tenant has an obligation. It has

an obligation to be in possession. It has an

obligation not to assign or sublet without leave.

Assuming you construe what is an assignment or

subletting without leave, that constitutes a

repudiation and again, one can use the word

surrender and repudiation indiscriminately in this area, that gives rise to the right of the landlord to accept it or not accept it, and that raises the

same questions including the question in Walls v

Atcheson.

So, Your Honours, in my respectful submission

the problem arises squarely. It is an important
point for the reasons given in the outline and it

is a case where special leave should be granted.

May it please the Court.

BRENNAN J:  We need not trouble you, Mr Rayment. On the

findings made by Mr Justice Handley, with the

Konica 11/12/92

concurrence of Mr Justice Priestley, the question

of principle which the applicant seeks to raise,

namely the scope of the rule in Walls v Atcheson,

(1826) 3 Bing 462, will not arise unless the

finding be reversed. It is not appropriate to
grant special leave to consider the correctness of
the finding. The case is therefore not a suitable

vehicle for considering the rule in Walls v

Atcheson. Accordingly special leave will be

refused.

MR BENNETT: If the Court pleases.

MR RAYMENT:  If it please the Court, we ask for costs.

BRENNAN J: It will be refused with costs.

MR RAYMENT: If the Court pleases.

BRENNAN J: Court will adjourn until 2.15 pm.

AT 1.03 PM THE MATTER WAS ADJOURNED SINE DIE

Konica 6 11/12/92