Metropolitan Trade Finance Co Pty Ltd v Coumbis

[1973] HCA 58

HIGH COURT OF AUSTRALIA

Barwick C.J., McTiernan, Menzies and Gibbs JJ.

METROPOLITAN TRADE FINANCE CO. PTY. LTD. v. COUMBIS

(1973) 131 CLR 396

6 December 1973

Landlord and Tenant

Landlord and Tenant—Statutory periodic tenancy—Termination by landlord—Landlord's right to possession postponed by statute—Sub-lease—Position between tenant and sub-lessee—Whether sub-lessee liable to pay rent Landlord and Tenant Act, 1899 (N.S.W.), as amended, s. 2 E*. * Section 2E of the Landlord and Tenant Act, 1899 (N.S.W.), as amended, provides: "(1) In an action of ejectment in the Supreme Court of a District Court, or proceedings under section seventeen or twenty-three of this Act, for the recovery of any land on which excluded premises, not being premises the subject of a lease for a fixed term, are situated, the Court or justices before whom the matter comes for hearing shall have no jurisdiction unless there was filed with the instrument initiating the proceedings a statutory declaration by the person taking the proceedings declaring that on a day not less than six months before the day on which the proceedings were instituted, but after the first day of January, one thousand nine hundred and sixty nine, the person taking the proceedings served upon the tenant of the premises or person claiming under him, a notice in writing stating his intention to take proceedings under this Act in respect of that land. (2) Notwithstanding the provisions of subsection one of this section a Court or justices shall have jurisdiction in any proceedings referred to in that subsection notwithstanding that a statutory declaration has not been filed as referred to in that subsection and that a notice referred to in that subsection has not been served where the person taking the proceedings alleged in the notice to quit or demand of possession that - (a) the rent has remained unpaid in respect of a period of not less than twenty-eight days; or (b) the tenant has failed to perform or observe some term or condition of the lease and the performance or observance of that term or condition has not been waived or excused by the landlord, but the Court or justices shall not adjudge the landlord entitled to possession of the land unless it is or they are satisfied that the ground specified in the allegation has been established. (3) A landlord is not entitled to possession of excluded premises otherwise than in accordance with an order entitling him to possession made in proceedings referred to in subsection one or two of this section."

Decisions

Dec, 6.
The following written judgments were delivered:-
BARWICK C.J. Nicholas Coumbis, the respondent sued Metropolitan Trade Finance Co. Pty. Ltd., the appellant, and two other defendants in the District Court of the Metropolitan District at Sydney upon a default summons for the sum of $5,499.99 as being:

"Rent payable under lease by the Defendant Metropolitan Trade Finance Co. Pty. Ltd. and guaranteed by defendants Peter Farrugia and Abraham Saffron on premises known as the 'Pink Panther' situated on the Mazzanine Floor, 41 Darlinghurst Road, Kings Cross from 21.7.69 to 30.3.1970 (36 weeks) at $160.00 p.w."

making a total of $5,760 against which a credit of $260.01 was allowed. Although a defence was entered as to the whole sum claimed, at the hearing before the District Court judge, liability was admitted for the sum of $3,908.58 being a sum calculated at the rate of $160 per week for a period of twenty-four weeks and three days from 21st July 1969 to 8th January 1970. The District Court, however, found a verdict for the now respondent for the full amount claimed. (at p398)

2. The respondent, by indenture made on 30th June 1967, had leased to the appellant the premises described in the default summons at an annual rental of $8,320 for a term of three years from 3rd July 1967. At that time the respondent held a larger area of which the subject premises formed part as tenant of the Fremarle Acceptance Corporaton Pty. Ltd. (Fremarle) under a tenancy as provided by s. 127(1) of the Conveyancing Act 1919, as amended (N.S.W.). Such a tenancy is expressed in that section to be a tenancy terminable at the will of either of the parties by one month's notice in writing expiring at any time. It is not a tenancy at will as at common law, but is a periodic tenancy from month to month terminable by a month's notice in writing expiring at any time. Such a tenancy was capable of supporting the grant of the term of three years by the respondent to the appellant of the subject premises though a determination of the respondent's interest in the land before the expiry of the term of three years would terminate the appellant's interest in the land under the sub-tenancy. There was therefore no need to resort to the estoppel created by the deed of lease to create a tenancy between the parties. (at p398)

3. The tenancy between Fremarle and the respondent became an exluded tenancy within the meaning of the Landlord and Tenant (Amendment) Act 1968 (N.S.W.). The consequence of this was that the capacity of Fremarle as lessor to terminate the tenancy by the appropriate means under the Conveyancing Act became unaffected by any restraint which might formerly have existed under the Landlord and Tenant (Amendment) Act. It is common ground that the tenancy held by the respondent of Fremarle was duly terminated on 8th January 1970. This was the date to which liability for rent was admitted in the District Court. In consequence the tenancy of the appellant and its interest in the subject premises terminated that day. That this was so is also common ground in this appeal. Nothing in the deed between the parties or any estoppel arising therefrom would preclude the appellant from relying on the termination of the respondent's tenancy as a means of ending its tenancy. (at p399)

4. However, s. 2E (1) as found in the schedule to the Landlord and Tenant (Amendment) Act 1968 (N.S.W.) precluded the recovery of possession by a former lessor under an excluded tenancy unless a notice of intention to sue for ejectment had been given at least six months before commencing proceedings to recover possession. Fremarle as the lessor under such an excluded tenancy did give such a notice. Consequently on 11th February 1970, that corporation was entitled to and did commence ejectment proceedings against the respondent and other defendants in the Supreme Court of New South Wales. But the writ of summons in ejectment was not served on any defendant other than the respondent. The Supreme Court struck out grounds of defence filed by the respondent in that action, gave leave to Fremarle to sign judgment in ejectment but deferred execution of the judgment until 31st August 1970 "provided that the defendant pay as an occupation fee the present rent payable on Monday". At the time of the making of this order the appellant was and the respondent was not in actual occupation of the premises the subject of the former sub-lease to the appellant. Whether or not the respondent was in occupation of any other part of the premises the subject of the respondent's tenancy does not appear. (at p399)

5. The Court of Appeal Division of the Supreme Court dismissed an appeal by the appellant against the judgment of the District Court. By majority, the Supreme Court held that the respondent was entitled to recover rent under the covenant to pay rent in the sub-lease in respect of the period from 8th January 1970 until the appellant vacated the premises in March 1970 (1972) 1 NSWLR 1 . (at p399)

6. The basis of the Supreme Court's decision was that the provisions of s. 2E (1), (2) and (3) as introduced into the Landlord and Tenant (Amendment) Act by the Landlord and Tenant (Amendment) Acts of 1968 and 1969 gave to the appellant a right of possession of the subject premises which was appropriate to support the claim for rent. This right to possession appears to have been equated in the mind of the majority of the Court with the notion of a so-called "statutory tenancy" arising under the Landlord and Tenant (Amendment) Act. (at p399)

7. It is common ground that s. 2E did apply in this case. But I am unable to perceive that the provisions of that section warrant the conclusion at which the majority of the Supreme Court arrived. (at p399)

8. Unlike such a provision as s. 8 of the Landlord and Tenant (Amendment) Act, it did not in any sense continue the former tenancy. All that s. 2E does, in my opinion, is -
(a) to prevent a court of competent jurisdiction, whether Supreme Court, District Court or Petty Sessions from making an order of ejectment or for the possession in the case of land which had been the subject of an excluded tenancy, not being a lease for a fixed term of years, unless the applicant for the order had given notice to the defendant at least six months prior to commencing the proceedings of his intention to seek ejectment or an order of
(b) to prevent a person having a right to possession as a result of the due termination of an excluded tenancy falling within the first subsection, from obtaining possession of the land the subject of the former tenancy, except under an order of a court of competent jurisdiction which could only be made having regard to the provisions of sub-s. (1). (at p400)

9. In other words, the only operative effect of the section was to require the giving of the notice specified in sub-s. (1) before an order of ejectment or for possession could be made and to prevent physical re-entry being affected. Otherwise the parties and Fremarle were left entirely as they stood in relation to each other under the general law. The tenancy between Fremarle and the respondent and the tenancy between the parties had each been duly determined. Fremarle had a right to possession of the whole of the premises the subject of the former lease to the respondent. Neither the respondent nor the appellant had any right to possession of the subject land as from the date of the determination of the tenancy between Fremarle and the respondent. The legislature made no provision as to what should happen with respect to payment in relation to the occupation by the former tenant from and after the date of the determination of the excluded tenancy up till the execution of an order for ejectment or for possession or the earlier yielding up of possession. That was left to be worked out as under the general law. I am unable myself to understand how any right to possession either in the respondent as a former tenant or in the appellant as sub-tenant was created by s. 2E. Of course, as already observed, the person with the right to possession, namely Fremarle, was unable to obtain physical possession except under an order for ejectment or possession. But this restraint upon the execution of his right does not, in my opinion, involve the creation of any rights in the respondent or in the appellant. In particular, no right to possession was created. The language of s. 2E(3) is ill chosen but clearly refers only to physical possession of the land. (at p400)

10. The position of the parties under the general Law was that, as from the cesser of the appellant's interest in the subject land by reason of the termination of the respondent's tenancy, the appellant was no longer liable on its covenant to pay rent: and vis-a-vis the owner of the land, Fremarle, the appellant was a trespasser liable for mesne profits or damages. See Mountnoy v. Collier (1853) 1 E &B 630 (118 ER 573) . As I have said, nothing in the Landlord and Tenant (Amendment) Act, and in particular nothing in s. 2E, altered that situation. Consequently, in my opinion, the judgment of the District Court for rent in favour of the respondent was insupportable. (at p401)

11. Something, however, needs to be said of the condition imposed by the Supreme Court (Taylor J.) when deferring execution on the judgment in ejectment. This related to the occupation by the respondent as against the owner Fremarle of the premises formerly the subject of the tenancy between them. The sum to be paid, if advantage were taken of the deferment of execution, was rated to the amount formerly payable as rent for those premises. Thus, a payment by the respondent to Fremarle was not only a matter between other parties than those to the present litigation and for that reason irrelevant, but also it was unrelated either to the appellant's occupation of the subject land or to any former liability on its part to pay rent. It may be, dependent of course on a comparison of the rent formerly payable by the respondent to Fremarle and the total amount of rent payable to the respondent in respect of all of the sub-leases of the land leased from Fremarle, that in meeting the condition of the Supreme Court's order in the ejectment action an amount was paid by the respondent which could be calculated to represent some part of the amount which Fremarle might be able to recover from the appellant as mesne profits or damages. But that circumstance, should it be the fact, has, in my opinion, no relevance to the situation of the appellant in relation to a claim for rent in respect of the period after 8th January 1970. Clearly, if sued by Fremarle for mesne profits or damages in respect of that period, the respondent's payment as a condition of the deferment of execution of the judgment in ejectment could afford the appellant no defence. (at p401)

12. In my opinion, the appeal should be allowed and the judgment of the District Court set aside. (at p401)

McTIERNAN J. I agree with the reasons of the Chief Justice and would therefore allow the appeal. (at p401)

MENZIES J. This appeal, from a judgment of the Court of Appeal of the Supreme Court of New South Wales, arises in proceedings by one Coumbis, alleging himself to have been a landlord, against Metropolitan Trade Finance Co. Pty Ltd, alleged to have been a tenant, for rent of premises known as the "Pink Panther" in Darlinghurst Road, Kings Cross, for a period from 21st July 1969, to 30th March 1970. The appeal is confined to liability to pay rent for the period between 8th January 1970, and 30th March 1970. On the former date the head tenancy between the owner of the premises, Fremarle Acceptance Corporation Pty Ltd, and Coumbis was determined. The premises were excluded premises within the meaning of the Landlord and Tenant Act 1899, as amended (N.S.W.): see Sch. N.

2. It should be stated that Fremarle took proceedings for ejectment on 11th February 1970, against Coumbis and ten other persons, including Metropolitan. These ten were sub-tenants of parts of the premises of which Coumbis was tenant from Fremarle. Coumbis entered an appearance and filed particulars of defence in the action. The other defendants did not appear. On 11th June 1970, Taylor J. struck out Coumbis' appearance and particulars of defence and gave leave to Fremarle to enter judgment against Coumbis. On the following day his Honour ordered that execution of the judgment - to be treated as of that day - was not to issue until 31st August 1970, provided that Coumbis pay to Fremarle an occupation fee up to 31st August 1970, equivalent to rent previously paid for the premises under the head lease. An appeal against this order was dismissed by the Court of Appeal. The occupation fee was paid. (at p402)

3. The problem is whether, after the termination of the tenancy of Coumbis on 8th January 1970, the relationship of landlord and tenant continued between Coumbis and Metropolitan in respect of the premises which Metropolitan continued to occupy. The Court of Appeal by a majority, Sugerman P. dissenting, decided that it did by reason of the provisions of s. 2E. (1972) 1 NSWLR 1 (at p402)

4. Section 2E (1) and (2) restricts the jurisdiction of a court or justices in an action for ejectment in the Supreme Court or a District Court or proceedings under section seventeen of the Landlord and Tenant Act, 1899, as amended (N.S.W.) for the recovery of excluded premises. Section 2E (3) is as follows:
"A landlord is not entitled to possession of excluded premises otherwise than in accordance with an order entitling him to possession made in proceedings referred to in subsection one or two of this section." (at p402)

5. The effect of sub-s. (3) here is then that Coumbis could not as landlord obtain possession of the premises from Metropolitan without an order of the court entitling him to possession. (at p402)

6. The question then arises whether this limitation upon the power of Coumbis to obtain possession of the premises continued the tenancy of Metropolitan as a "statutory tenant" liable to pay rent notwithstanding the determination of the agreed tenancy. (at p402)

7. In his judgment Mason J. A. said of sub-s. (3) of s. 2E: (1972) 1 NSWLR at p 15
"The subsection makes it clear, I think, that a landlord who terminates the tenancy of excluded premises, not being the subject of a lease for a fixed term, is not entitled to possession unless he obtains an order in that behalf in proceedings of the kind referred to in the section and then only in accordance with the terms of that order. Conversely, it follows that the right of possession or occupation of the tenant (or person claiming under him) continues until such time as, by virtue of the order, the landlord's entitlement arises." (at p403)

8. With the first proposition of His Honour's statement I agree. It accords exactly with the words of s. 2E(3) and it seems to me to matter little if the statutory provision is read literally or as if the word "obtain" were to be inserted between the words "to" and "possession". A person who cannot get possession, save by compliance with the statutory provision which prevents forcible re-entry, and defers obtaining possession by legal proceedings, is not a person accurately described as one entitled to possession until he obtains an order for possession, or, at least until the requisite steps have been taken to entitle him to such an order. With respect, however, I differ from his Honour about what he describes as the converse of the initial proposition. It seems to me that the restriction which s. 2E(3) does impose upon a landlord's right to possession does not confer upon the person in possession a right to be or continue in possession. "His interest seems to be nothing more than a status of irremovability", to use the language of Lush J. in Keeves v. Dean (1924) 1 KB 685, at p 686 . A person without any right to possession but who cannot be removed until certain formalities have been taken, is not, I think, a person entitled to possession until those formalities have been taken. If such a person left the premises he could not properly be described as a person entitled to possession. A requirement that a period of notice should be given to a trespasser before ejecting him would not entitle him to possession during the period of the notice. He would remain a trespasser. (at p403)

9. In the view I have taken, it is unnecessary to consider the effect of the order made by Taylor J. staying the order for the recovery of possession by Fremarle until 31st August 1970. The effect of that order, made on 11th June 1970, could not, I think, affect the relationship of Coumbis and Metropolitan during the period 8th January 1970, to 30th March 1970, nor convert Metropolitan's "status of irremovability" from the premises into that of a tenant of the premises for that period. Furthermore, after 8th January 1970, when his tenancy was determined, Coumbis had no reversion to which the right to rent could adhere. (at p403)

10. It remains to be considered, however, whether Metropolitan was estopped from alleging that Coumbis' title to the premises had been determined by Fremarle. I think not. I accept the statement of Collins M.R. in Serjeant v. Nash, Field &Co. (1903) 1 KB 304, at p 312 : "It is clear law that though a tenant cannot deny the title of his landlord to deal with the premises, he may prove that the title has determined." As to this I agree with what Mason J.A. has written. (at p404)

11. In my opinion, therefore, Metropolitan was not Coumbis' tenant after 8th January 1970, and Coumbis was not, as landlord, entitled to rent for the period subsequent thereto. (at p404)

12. I would therefore allow the appeal. (at p404)

GIBBS J. This is an appeal from the Court of Appeal of the State of New South Wales which, by a majority, held that the respondent, the former tenant of premises at Kings Cross, is entitled to recover from the first appellant, "Metropolitan", a company to which he had granted a sub-lease of part of the premises for a term of three years from 3rd July 1967, and from the second and third appellants as guarantors, rent payable under the sub-lease in respect of the period from 8th January 1970 to 30th March 1970. It is common ground that the tenancy of the respondent was determined on 8th January 1970 by notice to quit given by the head lessor, "Fremarle". The premises were "excluded premises" within s. 2F of the Landlord and Tenant Act, 1899 (N.S.W.) (as amended) ("the Act") and Fremarle, after serving on the respondent a notice of its intention to take proceedings under the Act, as required by s. 2E(1), brought an action of ejectment in the Supreme Court of New South Wales and on 12th June 1970 obtained judgment against the respondent. However, the Supreme Court ordered that execution on the judgment was not to issue until 31st August 1970, "provided that the defendant" (the respondent) "pay as an occupation fee the present rent payable on Monday". Metropolitan remained in possession of the part of the premises which had been sublet to it by the respondent for the whole period in respect of which rent is claimed and the learned primary judge declined to find that Metropolitan had attorned tenant to the head lessor, Fremarle. (at p404)

2. The respondent submitted that in the circumstances he had a right to remain in possession until 31st August 1970 and that he continued to be entitled to receive rent from his sub-lessee, Metropolitan, in respect of the period, prior to that date, during which Metropolitan continued to occupy the land sub-demised. Whether this submission is correct depends on the effect of s. 2E, which was inserted in the Act by s. 7(1)(c) of the Landlord and Tenant (Amendment) Act, 1968 (N.S.W.) and was amended by s. 3(1)(b) of the Landlord and Tenant (Amendment) Act, 1969 (N.S.W.). Section 2E(1) provided that in an action of ejectment or proceedings for the recovery of any land on which excluded premises (not the subject of a lease for a fixed term) were situated, the Supreme Court, District Court or justices before whom the matter came for hearing should have no jurisdiction unless it appeared by a statutory declaration filed with the instrument originating the proceedings that the person taking the proceedings had, not less than six months before they were instituted, served on the tenant of the premises or the person claiming under him a notice in writing stating his intention to take proceedings under the Act in respect of that land. Section 2E(2) created exceptions not material in the present case. Nothing in s. 2E(1) operated to prevent a notice to quit from determining a tenancy of excluded premises but the sub-section prevented the landlord's right to possession from being given effect in curial proceedings until the conditions stated in the section had been complied with. However (as was pointed out by Helsham J. in Sternhell v. Bay Investments Pty. Ltd. (1969) 90 WN (Pt 1) (NSW) 213, at p 222 ), the section, in its original form, left it doubtful whether the lessor of excluded premises could obtain possession other than by curial proceedings in a case where the lease had come to an end and a notice had been given in accordance with s. 2E(1) and the six months had expired. This doubt was removed by the Landlord and Tenant (Amendment) Act, 1969 which inserted the following new subsection at the end of s. 2E:

"(3) A landlord is not entitled to possession of excluded premises otherwise than in accordance with an order entitling him to possession made in proceedings referred to in subsection one or two of this section."

There can of course be no doubt that sub-s. (3) prevented a landlord of excluded premises from obtaining possession otherwise than in accordance with an order of a court or justices, which could not have been made unless the requirements of s. 2E(1) had been fulfilled. In my opinion it necessarily followed that notwithstanding the determination of a tenancy the landlord of excluded premises had no right to possession of them except in accordance with an order of a court or justices. (at p405)

3. Section 2E did not expressly provide for the consequences of the restriction which it imposed on the exercise by a landlord of what would otherwise have been his right to possession of the excluded premises. It did not, for example, state whether or not a tenant who remained in possession after the expiration of his tenancy was liable to pay rent and observe the other conditions of his tenancy. A similar omission in legislation in the form of the National Security (Landlord and Tenant) Regulations (Cth) and the Landlord and Tenant (Amendment) Act, 1948 (N.S.W.) (as amended) has been filled by judicial interpretation and it has become established that if a valid notice to quit has been given and the tenancy has been brought to an end by the operation of those statutory provisions, "the lessee remains protected against dispossession by the lessor whether by peaceable re-entry or otherwise unless and until an order for possession is made by a court of competent jurisdiction under the statutory provisions and the time for the execution of the order expires, the tenant being liable to pay the rent and observe the other obligations of the tenancy, so far as applicable, in the meantime": Anderson v. Bowles (1951) 84 CLR 310, at p 320 ; Bonnington &Company Pty. Ltd. v. Lynch (1952) 86 CLR 259, at p 268 . The effect of that legislation is to give the tenant a personal right to continue in occupation of the premises: Arnold v. Mann (1957) 99 CLR 462, at p 466 . Of course, the provisions of s. 2E are much less elaborate than those of the Landlord and Tenant (Amendment) Act, 1948, but the same need arises to determine, by construction of the legislation, the intention of the legislature as to what should be the rights of the respective parties to a tenancy of excluded premises after the tenancy had been determined but before the landlord had become entitled to possession. Notwithstanding the silence of the section on the point there is no difficulty in concluding that it was not intended that the tenant was to remain in occupation free of any obligation to pay rent and that such an obligation must necessarily be implied. However, the important question in the present case is whether the fact that the landlord was not entitled to possession, except in accordance with an order of a court or justices, entailed the consequence that the tenant retained the right to possession until the landlord became entitled to possession under an order. In my opinion, the section did give the tenant a right to continue in possession. It could not have been intended that no one had a right to possession during the interim between the determination of the tenancy and the date on which the landlord became entitled to possession in accordance with an order of a court or justices, and in my opinion it was necessarily implied that the tenant's right to possession continued. Such a tenant had in my opinion a right to remain in possession until an order was made giving possession to the landlord, and he was entitled to enforce that right by injunction or action for trespass against anyone, including the landlord, who infringed it. (at p406)

4. The question then arises whether the right of the tenant to continue in possession enabled him to recover rent from a person to whom he had, before the determination of his tenancy, granted a sub-lease. The tenant's right was a personal and not a proprietary one (whether or not it could be said that it created an interest in the land - cf. Chelsea Investments Pty. Ltd. v. Federal Commissioner of Taxation (1966) 115 CLR 1, at pp 6-7 ), but the question, in my opinion, depends not so much on the nature of his right as on the necessary intendment of s. 2E. It is unnecessary to consider whether a tenant could have granted a new sub-tenancy after his own tenancy had expired, but if he had a right to remain in possession and a duty to pay rent to his former landlord, as in my opinion was the case, it seems to me a further necessary consequence of the legislation that he was entitled to all the fruits of his right to possession, including the payment of rent by a sub-tenant who remained in occupation. (at p407)

5. With great respect to those who take a contrary view, I consider that the respondent was entitled to recover rent for the period claimed, since during that period Metropolitan had remained in occupation and Fremarle had not become entitled to possession under an order of the court. It is not in this case material what order the court in fact made; what is to my mind material is that the head landlord had not become entitled to possession under an order of the court during the period for which rent was claimed. (at p407)

6. It is unnecessary to decide whether, had I taken a different view of the effect of s. 2E, I should have held that Metropolitan was estopped from denying that the relationship of tenant and landlord which previously existed between itself and the respondent continued after 8th January 1970. Notwithstanding the categorical statements in Serjeant v. Nash, Field &Co. (1903) 2 KB 304, at pp 312, 314 , I do not regard it as altogether clear that a tenant who took possession under a landlord can assert that the landlord's title has determined if he retains possession and if the person having the real title (such as the head landlord in the present case) has neither claimed mesne profits from him nor made an arrangement with him which is equivalent to an eviction and a fresh grant of possession. Mason J.A., in his judgment in the Court of Appeal, has referred to certain English authorities that would suggest that the views expressed in Serjeant v. Nash, Field &Co. (1903) 2 KB 304 need some qualification, and to those cases may be added Hatfield v. Alford (1846) 1 Legge 330 and Clarke v. Spinks (1906) 6 SR (NSW) 653 . In Mountnoy v. Collier (1853) 1 E &B 630, at p 640 (118 ER 573, at p 577) , Erle J. said:

". . . there are numerous authorities to shew that a tenant is not estopped from shewing that his landlord's title has expired. And justice requires that he should be permitted to do so: for a tenant is liable to the person who has the real title, and may be forced to pay him, either in an action for use and occupation, if there has been a fresh demise or an arrangement equivalent to one, or in trespass for the mesne profits. It would be unjust if, being so liable, he could not shew that as a defence; but there are abundant authorities that a tenant may shew that his landlord's title has expired."

However, in the same case, Coleridge J. said (1853) 1 E &B, at p 638 (118 ER, at p 576) :

". . . the question will rise, whether, if a tenant from year to year sublets, and sues the subtenant for use and occupation, it is competent for the subtenant to shew, as a defence, that, before the period of occupation for which he is sued, the mesne tenant's interest had determined, and that the head landlord, claims from him the rent for that period. I do not think it is necessary, for the purpose of constituting such a defence, that the subtenant should actually have given up the possession, or that the head landlord should actually have evicted him, if there has been a claim and a new arrangement equivalent to an eviction and fresh taking."

Crompton J. said (1853) 1 E &B, at p 641 (118 ER, at p 577) :

"On principle it would seem a defence, where, in consequence of the expiration of the title, the defendant is liable to another for the mesne profits of the part in question, and that other claims them. But it is not necessary to decide that; . . ."

It is unnecessary to choose between these statements of principle in the present case, where it follows from what I have said as to the effect of s. 2E that Fremarle, having no right to possession at the material time, could neither have evicted, nor successfully claimed mesne profits from, Metropolitan. (at p408)

7. I am in substantial agreement with the reasons given by Mason J.A. in the Court of Appeal, and would accordingly dismiss the appeal. (at p408)

Orders

Appeal allowed with costs. Order of the Supreme Court of New South Wales (Court of Appeal Division) set aside and in lieu thereof order that the appeal to that Court be allowed with costs and that a verdict be entered in the District Court for the plaintiff for the sum of $3,908.58 with costs as upon a judgment entered at the commencement of the hearing upon the defendant's acknowledgment of liability in that sum.