May v Ceedive Pty Ltd

Case [2006] NSWCA 369

NEW SOUTH WALES COURT OF APPEAL

CITATION:      MAY v CEEDIVE PTY LTD   [2006]  NSWCA 369

FILE NUMBER(S):
40609/05

HEARING DATE(S):               20 September 2006

DECISION DATE:     15/12/2006

PARTIES:
Allen Thomas MAY  (Appellant) 
CEEDIVE PTY LTD  (Respondent) 

JUDGMENT OF:       Mason P Beazley JA Santow JA   

LOWER COURT JURISDICTION: Supreme Court - Common Law Division

LOWER COURT FILE NUMBER(S):          SC12916/02

LOWER COURT JUDICIAL OFFICER:     Levine J

COUNSEL:
J A D NEEDHAM SC/ P M LANE  (Appellant) 
M D YOUNG  (Respondent) 

SOLICITORS:
Robert Stoyef (Woodford)  (Appellant) 
John F Joseph (Lithgow)  (Respondent) 

CATCHWORDS:
REAL PROPERTY – Meaning of “fixture” in the case of a house purportedly sold on underleased land where the house was not severable and had been on the land for some years – lesser weight of subjective intention as against objective circumstances – to the extent it is relevant, subject intention must be that of original occupier of land and of the builder of the house, not a subsequent purchaser – “prescribed premises” for purposes of protection under Landlord and Tenant Act – whether lease of bare land. 
PROCEDURE – Issue and Anshun estoppel not arising where jurisdiction held to be absent under Residential Tenancies Act 1987 by the Consumer, Trader and Tenancy Tribunal in preliminary proceedings where no decision on merits. 

LEGISLATION CITED:
Landlord and Tenant (Amendment) Act 1948 (NSW) s5A, s5AA, s8
Real Property Act 1900 (NSW) s42(1)(d), 43(1)
Residential Tenancies Act 1987 (NSW) s6
Retail Leases Act 1994 (NSW)

DECISION:
Appeal allowed with costs.  See orders at [105]. 

JUDGMENT:

IN THE SUPREME COURT
OF NEW SOUTH WALES
COURT OF APPEAL

CA 40609/05
SC 12916/02; 12917/02; 12918/02; 12919/02

MASON P
BEAZLEY JA
SANTOW JA

15 DECEMBER 2006

Allen Thomas MAY v CEEDIVE PTY LTD

Judgment

  1. MASON P:  I agree with Santow JA. 

  2. BEAZLEY JA:  I agree with Santow JA. 

  3. SANTOW JA: 

    INTRODUCTION 

    The appellant Allen May claims to be a protected tenant of “prescribed premises” under the Landlord and Tenant (Amendment) Act 1948 (NSW) (“the Act”). It was on that basis that he unsuccessfully sought to resist removal as a tenant from the underleased property described as Property 20020 Pottery Estate. The Pottery Estate consists of former mining land at Lithgow. Its then proprietor around 1910 provided accommodation for its workers by having erected what were then (but are no longer) miner’s cottages for its workers’ use. Mr May was not a miner but acquired his underlease and interest in the house, being a portion of the Pottery estate, in 1969.

  4. At trial, the primary judge, Levine J, concluded against Mr May. He subsequently made orders for possession on 30 March 2005 in favour of the current owner of the subject property Ceedive Pty Limited (“Ceedive”), respondent in this appeal, which acquired title in 1999. Critical to that result was the primary judge’s conclusion that the house erected on the underleased land was not a fixture but a chattel and that the underlease was of “bare land”. Mr May was therefore held to fall outside the…

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May v Ceedive Pty Ltd [2006] NSWCA 369
Case
[2006] NSWCA 369
Decision Date

CaseChat Overview and Summary

The appeal concerned a dispute between Mr May (the appellant) and Ceedive Pty Ltd (the respondent) regarding the nature of Mr May's occupancy of land at the Pottery Estate, Lithgow. Mr May had purchased a house on the land in 1969 and paid weekly ground rent. Ceedive acquired the entire Pottery Estate, including the land occupied by Mr May, in 1999. The central issue was whether Mr May's arrangement constituted a lease of "prescribed premises" under the relevant legislation, which would afford him protection against termination.

The court was required to determine two primary legal issues. Firstly, whether Mr May's house was a fixture attached to the land, or a chattel owned by Mr May, thereby impacting the nature of his tenancy. Secondly, the court had to consider whether the prior determination by the Consumer, Trader and Tenancy Tribunal that it lacked jurisdiction to hear Mr May's application, due to the absence of a residential tenancy, gave rise to an Issue or Anshun estoppel that would preclude Mr May from asserting his rights in the current proceedings.

The Court of Appeal found that Mr May's house was a fixture and an integral part of the land, notwithstanding any subjective intentions to the contrary. The court reasoned that the objective circumstances indicated the house was not severable from the land. Furthermore, the court held that the prior Tribunal decision did not create an estoppel because the Tribunal had determined it lacked jurisdiction, meaning there had been no decision on the merits of Mr May's claim. The court concluded that Mr May occupied "prescribed premises" under the Act, as the subject of the demise was land with a sufficient structure upon it.

Consequently, the appeal was allowed, and the decision of the primary judge was set aside. Orders were made dismissing the respondent's summons, declaring the premises to be "protected premises" under the Act, and ordering the respondent to pay the appellant's costs of the proceedings, the cross-claim, and the appeal.

Orders

Orders of the court

The appellant thus succeeds on his grounds of appeal and

Ceedive does not succeed on its Notice of Contention. I propose the following orders:

(1) Appeal allowed.

(2) The decision of Levine J be set aside and in lieu

thereof orders that:

(a) the respondent's Summons be dismissed;

(b) on the cross-claim, declaration that the premises, property 20020 Pottery Estate, Lithgow are "protected premises" under the Act, and

(c) the respondent to pay the appellant's costs of the proceedings and of the cross-claim.

(3) The respondent to pay the appellant's costs of the

appeal.

Background

Background to the litigation

This appeal also puts in issue whether, by reason of an earlier preliminary proceeding in the Consumer, Trader and Tenancy Tribunal in which it determined it lacked jurisdiction for lack of a residential tenancy, Issue or Anshun estoppel precluded Mr May from asserting his tenancy was of prescribed premises within the Act. SALIENT FACTS Ceedive acquired the whole property (Lot 503, DP 1030314) comprised in “the Pottery Estate” by contract of sale dated 12 August 1999. It included the property comprised in Mr May’s underlease. A transfer dated 11 May 2000 completed that acquisition. Registration conferred indefeasible title (save for interests recorded in its folio and subject to tenancies of which it had notice for a term not exceeding three years (s42(1)(d) of Real Property Act). Special Condition 1 to that contract (Judgment [6]) acknowledged that there were 29 dwellings on the property owned by other persons who paid “ground rent” to the vendor each week. The history of ownership and rental of Pottery Estate was, in brief, as follows. The original owner of the land was a mining company Lithgow Valley Colliery Company Pty Ltd. It owned the land between 1883 to 1979. It was followed by a succession of other companies in the Oakbridge group of mining companies including Henry Godfrey Pty Ltd between 1979 to 1980 and Tagus Holdings Pty Ltd 1980 to 1999 with finally Ceedive acquiring title in 1999 as I have described. Between 1995 and 2000 the appellant paid rent each fortnight to Coalex Pty Ltd (also an Oakbridge group company), then to Oakbridge and then to another affiliate Tagus Holdings. The primary judge concluded that this did not detract from these being weekly tenancies, terminable on one week’s notice (Judgment [8] to [10]). None of the tenancies were registered under s5A of the Act. On 13 December 2000 Ceedive notified four tenants including Mr May that the weekly rent was to increase as of 1 January 2001. (In referring to them as “tenants” I do so for convenience; I do not pre-empt the answer to the question whether they were tenants only of the relevant land, or also (as they claimed) of the house erected thereon.) None of those tenants paid the higher rent. Nor did Mr May sign the “New Ground Rental Agreement Form” included with the notice of increase. Each of the tenants was substantially in arrears of rent by September 2002 when Ceedive gave notice terminating their ground leases. Ceedive asserted it had both an express and statutory power, which it had properly exercised, to terminate the leases for non-payment of rent. Upon termination, Ceedive was held by the primary judge to be entitled to possession of the land, arrears of ground rent and mesne profits. The Position of the Appellant, Mr May Mr May’s house (Property 20020) is a two-bedroom brick cottage within the Pottery Estate, being originally one of the miner’s cottages. He purchased the house through Laurence Breen, a real estate agent, for $1000 in 1969 on the basis that the arrangement would be the same as for a Ms Madge McIntyre, the previous tenant. On 28 September 1969 he paid $85.80 to Mr Breen for one year’s ground rent in advance. On 1 October 1986 his rent was increased to $15.80 per week. He received receipts for the original purchase price and for rent paid, but there was otherwise no formal documentation of the arrangement.

Evidence

Evidence Before The Court

Full text does not contain this section.

Decision

Reasons for decision

On 10 October 2002 Mr May filed an application for orders expressed to be in pursuance of the Residential Tenancies Act with the Tribunal. Following a letter from Ceedive’s solicitor to the Deputy Registrar (Blue, 9I 237/238) the Tribunal at the hearing made orders dismissing the application on the ground that it had no jurisdiction. The First Instance Judgment The primary judge found for Ceedive concluding that (a)these were weekly tenancies derived from payment of rent on a weekly basis; judgment [9], [61], and (b)the houses were owned by the tenants, including Mr May, and Ceedive owned the land; judgment [62]. The indefeasible title acquired by Ceedive was unaffected by the matters raised by the tenants. In broad terms, the primary judge rejected arguments that the position of the tenants was protected by reference to (a)Special Condition 1 of the contract of sale which did no more than contain an acknowledgement that there were 29 dwellings erected on the property; judgment [62]. It gave no rights to anyone else but was a contractual obligation as between vendor and purchaser, merging on completion. This was not challenged on appeal. (b)exceptions to indefeasibility based on the Real Property Act, contractual licence, constructive trust, estoppel by representation or other equitable rights, (c)the status of the houses as fixtures and an implied equitable right to possession, (d)the Act (the primary concern of the appeal), and (e)the Contracts Review Act. The primary judge also rejected a claim relating to wrongful interference with the tenant’s rights of possession. The trial judge also found that Mr May, in not paying rent as increased, was in breach of his weekly tenancy. He further concluded that the houses belonged to the tenants, borne out by the houses being sold separately to the tenant; judgment [95], [100], [101]. He was not persuaded that they were fixtures; judgment [103]. The primary judge found that the historical practice as to rent increases was that the amount was fixed from time to time by the Colliery Company; judgment [11]. The primary judge found that Mr May failed to discharge the evidentiary burden in relation to the claim of interference with his quiet enjoyment; judgment [22]. That is not challenged on appeal. The primary judge found that Ceedive had an unrestricted right to raise ground rents; judgment [63]. There was no requirement that rent would be fixed by reference to annual rates (although internal property management decisions were based on annual rates); judgment [63]. Upon registration Ceedive obtained indefeasible title; judgment [67]. Ceedive’s approach was consistent with historical practice (owners exercised the implicit right of a lessor to increase the ground rent under a weekly tenancy) and consistent with the acknowledgment in Special Condition 1; judgment [68]. The primary judge held that Mr May’s failure to pay rent breached the weekly ground leases such that termination of the underlease could be effected and proceedings for possession could be instituted; judgment [68].

Ratio Decidendi

Legal Principle Established

The house upon the land the subject of the underlease to Mr May has not been shown to be a chattel. It must be taken as a matter of law to be a fixture constituting part and parcel of the relevant land, notwithstanding expressions of subjective intention to the contrary. The operation of the Act The trial judge concluded that in relation to Mr May (and the other three original defendants) the Act has no application at all because none of the four defendants occupied “prescribed premises” by reason of the sublease being of “bare land”; judgment [131]. Ceedive in its written submissions puts the point similarly: “Accordingly even if the chattels or realty issue … were decided in favour of the appellant, it could not change the reality of the parties’ agreement as to the subject matter of the lease, this being on the basis ‘on any view what was leased to him was expressly the land, not the buildings, and therefore the lease did not fall within the [Act]”. Ultimately, the submission of Ceedive, accepted by the trial judge, was that the relevant underlease constituted a lease of bare land without a building upon it. Thus there was never a lease of “premises”, using the terminology of the earlier definition of “prescribed premises”. The same result applies as from 1 January 1969 with the replacement definition of “prescribed premises” whose terminology refers to “dwelling house” rather than “premises”. For present purposes nothing turns upon the difference between the two definitions. Clearly enough the underlease was not a lease of bare land which did not at that time have premises upon it, so that authorities such as Simms v Lee (1945) 45 SR(NSW) 352 are not in those terms applicable. In Bonnington v Lynch (1952) 86 CLR 259 the Court (Dixon CJ, McTiernan, Williams, Webb and Kitto JJ) said (at 264), “The definition of ‘prescribed premises’…has been taken to show that on the land there must be some building or structure or perhaps artificial work, which colloquially might be described as ‘premises’, and that accordingly vacant or bare land cannot constitute ‘prescribed premises’.” Bonnington (supra) involved essentially vacant land in the Sydney suburb of Pyrmont. The area had been used as a wood and coal yard for many years. Erected thereon were a small number of upright posts, a few rafters and sheets of corrugated iron and a single brick wall approximately twelve feet long. After executing a lease, the registered proprietor of the land sought a certificate of exclusion under the Landlord and Tenant (Amendment) Act 1948 (NSW). Either shortly before or after the lease was executed the new tenant removed some rubbish from the property and reconstructed the dilapidated structure on the land. The timing of this ‘clean-up’, and whether the landlord had consented to it, was disputed. Some years later the tenant was given notice to quit the land but refused to comply and commenced proceedings. In dealing with the application of the Act by reference to the term ‘prescribed premises’ the Court said (at 264-265), “…the subject of the demise must be land with a sufficient structure upon it to fulfil the definition of “prescribed premises.” This may result from the land being in that condition at the time when the lease is made. It may also result from its being put in that condition during the currency of the lease pursuant to a subsequent agreement between the lessor and the lessee amounting to a variation of the lease. But if a tenant, without the consent of his landlord, places a structure upon the land, that is another matter.”