Owen v Giuseppe and Margherita D'Orazio Family Trust - [2020] WADC 138

JURISDICTION : DISTRICT COURT OF WESTERN AUSTRALIA
IN CIVIL

LOCATION:   PERTH
CITATION:   OWEN -v- GIUSEPPE AND MARGHERITA D'ORAZIO FAMILY TRUST [2020] WADC 138
CORAM:   BRADDOCK DCJ
HEARD:   17 AUGUST 2020
DELIVERED          :   5 NOVEMBER 2020
FILE NO/S:   APP 23 of 2020
BETWEEN:   EDWARD SAMUEL OWEN
Appellant
AND
GIUSEPPE AND MARGHERITA D'ORAZIO FAMILY TRUST
Respondent

ON APPEAL FROM:
Jurisdiction              :   MAGISTRATES COURT OF WESTERN AUSTRALIA
Coram:   MAGISTRATE MALONE
File Number            :   FRE/GCLM/1299/2018

Catchwords:

Appeal - Extension of time - Guarantor - Lease - Unregistered - Transfer of ownership of land - Transfer of Land Act 1893 - Actual possession - Guarantee

Legislation:

The Magistrates Court (Civil Proceedings) Act 2004 (WA), s 40, s 43
The Property Law Act 1969 (WA), s 49
Transfer of Land Act 1893 (WA), s 68

Result:

The application for extension of time is dismissed
The appeal is dismissed
the appellant is to pay the respondent's costs to be taxed if not agreed

Representation:

Counsel:

Appellant	:	Mr G Jahn
Respondent	:	Mr M Curwood

Solicitors:

Appellant	:	Westmont Legal
Respondent	:	Frichot Lawyers

Case(s) referred to in decision(s):

Alonso v SRS Investments (WA) Pty Ltd [2012] WASC 168
Bride v Shire of Katanning [2013] WASCA 154
Brocklehurst v Wolinski [2015] WADC 36
Butler v Bennett [2007] WADC 107
Gumland Property Holdings Pty Limited v Duffy Brothers Fruit Market (Campbelltown) Pty Limited [2008] HCA 10; (2008) 234 CLR 237
Simmons v Lee [1998] 2 Qd R 671

BRADDOCK DCJ:

Introduction

Mr Owen is, amongst other things, a hairdresser who ran a business in Mount Pleasant. He rented shop premises for that purpose. He used a corporate vehicle called Bardot Investments Pty Ltd (Bardot).
Bardot leased premises in a complex of retail shops at 893 Canning Highway, Mount Pleasant from 1999. At some point that lease expired. Bardot continued to occupy the premises on an informal basis. In 2014, the original owners of the premises at 893 Canning Highway sold the complex to 893 Canning Highway Pty Ltd (893 Canning). Bardot was informed. 893 Canning wished to develop the premises and offered Bardot alternate premises whilst construction took place.
A lease was proposed over Unit G05/19 Ogilvie Road, Mount Pleasant. Mr Owen was given a draft to consider in July 2014. There was a disclosure statement provided and there were negotiations. On 3 February 2015, a lease was entered between 893 Canning, as landlord, and Bardot as tenant (the Lease). Mr Owen was guarantor of the obligations under the agreement for Bardot. All parties signed the Lease, Mr Owen as director of Bardot and in his own capacity as guarantor.[1]
[1] Exhibit D2, page 108.
The Lease was expressed to be for three years with the option of two one‑year renewals. The schedule gave a commencement dated of 1 July 2015, or five days after the landlord advised that the building works were complete and a council certificate of occupation had been received.
893 Canning then sold Unit G05 to Giuseppe D'Orazio, as trustee for the D'Orazio Family Trust, which resulted in the registration of Mr D'Orazio as the proprietor on 18 December 2015.
It is not in dispute that Bardot did not physically move into the premises until 1 March 2016. Mr D'Orazio charged Bardot rent from that date.
Various issues arose about the premises. These concerned storm damage and parking, amongst other things. Bardot fell behind in the rent. In June of 2018, Bardot vacated the premises, without notice, and did not attend to required reinstatement.
In October 2018, the D'Orazio Family Trust sued Mr Owen in the Fremantle Magistrates Court seeking payment of $73,942.96, under the guarantee and indemnity provisions of the Lease.

The Magistrates Court proceedings

On 13 February 2020, the matter proceeded to trial before Magistrate Malone in the Fremantle Magistrates Court. Mr and Mrs D'Orazio appeared on behalf of the D'Orazio Family Trust. Mr Owen was represented by counsel, Mr G Jahn. Evidence was called from Mr D'Orazio, John Mosegaard Norup and David Owen Wilson for the D'Orazio Family Trust. Mr Owen gave evidence in defence of the claim. Extensive documentary evidence was tendered including witness statements, the lease documentation, correspondence concerning occupation and other issues arising out of unit G05.
The D'Orazio Family Trust relied upon the Lease with Bardot in seeking the arrears of rent and the reinstatement of the premises. It sued Mr Owen in his capacity as guarantor under the Lease.
As the magistrate noted in his reasons,[2] Mr Owen, in his statement of defence, did not initially question the legality of the Lease, but appeared to focus on the potential commencement and end dates. Further, there were issues about his ability to attend to the necessary reinstatement.
[2] Reasons for decision dated 27 February 2020, page 4.
Prior to the hearing, Mr Owen appeared to have changed his position, questioning the enforceability of the Lease. After the evidence, in final submissions, counsel for Mr Owen asserted that there was no assignment or variation of the Lease such as to make the D'Orazio Family Trust the landlord. He asserted that there needed to be an assignment or written agreement. He claimed that the registration of the D'Orazio Family Trust, as proprietor of Unit G05, did not establish a Lease with Bardot and that any guarantee was required to be in writing.
The magistrate's findings of fact were not disputed in this appeal. The magistrate found that:[3]
1.Mr Owen was the director, company secretary and shareholder in Bardot.
2.Bardot ran the hairdressing business in Mount Pleasant.
3.Bardot entered into a lease with 893 Canning on 3 February 2015.
4.The D'Orazio Family Trust became registered proprietors of Unit G05 on 18 December 2015.
5.Bardot did not move in until March 2016.
6.Some criticism could be directed at the developers Norup Wilson Pty Ltd for the delay, but that Mr Owen was not attending to matters in a timely fashion.
7.The D'Orazio Family Trust acted reasonably in not charging rent until March 2016. Norup Wilson Pty Ltd took the view rent was payable from December 2015. Mr Owen was concerned about paying rent from December 2015.
8.There were issues during the tenancy. There was no legal basis for Bardot to vacate the premises without notice owing significant arrears.
[3] Reasons for decision dated 27 February 2020, pages 7 - 10.
The magistrate then calculated the sums due and owing. There is no dispute about the magistrate's calculation in this appeal.
To determine the amount owed, the magistrate was obliged to consider the commencement date of the Lease. The magistrate found that the fact that Mr D'Orazio chose to start charging rent from 1 March 2016 did not mean that the Lease extended for three years from that date.[4] Further, he found that the Lease terms provided that the Lease commenced on 10 December 2015 and thus ended in December 2018.[5]
[4] Reasons for decision dated 27 February 2020, page 10.
[5] There is a typo in the written reasons for judgment agreed by all parties that these are the correct dates.
Accordingly, the magistrate deducted claims for rent due in January and February 2016 and calculated the balance due under the Lease from October 18 to December 18.[6]
[6] Reasons for decision dated 27 February 2020, page 11.
The 'legal findings' made by the magistrate, which are the subject of this appeal, are as follows:[7]
i.the D'Orazio Family Trust purchased Unit G05, subject to the Lease in favour of Bardot;
ii.it was of no legal importance that the Lease was not registered;
iiithere was no need to execute a new Lease: any suggestion to the contrary had no proper legal basis;
iv.the Lease was in terms of the lease signed by Mr Owen as director of Bardot and as guarantor;
v.there was no legal basis to conclude Mr Owen was not bound by his guarantee;
vi.there was no legal basis for Bardot to move out of Unit G05 and the company and Mr Owen remained bound by the terms of the Lease and guarantee;
vii.the D'Orazio Family Trust had a legal entitlement under the terms of the Lease and associated guarantee to pursue Mr Owen as a result of the lease default.
[7] Reasons for decision dated 27 February 2020, pages 5 - 6.
Consistent with these findings, judgment was entered for the D'Orazio Family Trust on 18 March 2020.
Against that judgment, in the sum of $65,110.16, Mr Owen appeals.

The grounds of appeal

A notice of appeal was filed on 28 April 2020. It sets out the grounds as follows:
1.The learned Magistrate erred in law holding there was no legal need to execute a new lease between the parties and that any suggestion to the contrary had no proper basis. In fact the original Landlord, Norup Wilson Pty Ltd, terminated the original lease by email on 3 February 2016 prior to the lessee, Bardot Investments Pty Ltd even taking possession so either a new lease needed to be entered into or this was at best a monthly tenancy.
2.The learned magistrate erred in fact in stating that the terms of the lease between the Claimant and Defendant were the same terms as those provided in the original lease because the D'Orazio Family Trust were not even a party to the original lease.
3.The learned magistrate erred in law in failing to find that privity of contract provides that only the parties to the contract can enforce the contract. The D'Orazio Family Trust were not a party to the original lease and cannot enforce the original lease against the Lessee.
4.The learned magistrate erred in failing to apply basic contract law principles and s 4 of the Stature of Frauds Act by holding that Mr Owen was a guarantor in favour of D'Orazio Family Trust. There was no novation of the original lease with the Lessees consent. The D'Orazio Family Trust cannot enforce a contract they are not a party to against a Lessee or the Appellant as guarantor.
5.The learned magistrate erred in his interpretation and application of the principles in Alonso v SRS Investments (WA) Pty Ltd [2012] WASC 168 because in this case there was no written lease between D'Orzario Family Trust and Bardot Investments Pty Ltd and Mr Owen as Guarantor. The earlier lease had been terminated by Norrup Wilson Pty Ltd prior to Bardot Investments even taking possession. The facts of both cases are distinctly different.

Extension of time to appeal

The appeal was filed late. The time for filing the notice expired on 8 April 2020.
Section 40(3) of the Magistrates Court (Civil Proceedings) Act 2004 (WA) (MCCPA) now provides that an appeal cannot be commenced more than 21 days after the date of judgment, unless the District Court gives leave to do so. Whatever may have been the position historically, s 40(3) of the MCCPA, as amended by statute number 43 of 2012 s 6, results in the position that this court may extend time for appeals under s 40 of the MCCPA.
Mr Owen seeks leave to appeal out of time and has filed an affidavit sworn by himself in support, together with an affidavit sworn by Mr Gavin Jahn.
It is not necessary to give detailed consideration to the reasons given for the delay in filing the appeal. The period of extension required is only just under three weeks. In my view, the explanations proffered, viewed strictly, would not be sufficient. However, it is conceded by the D'Orazio Family Trust that there is no prejudice to its position in this appeal and that the delay is short. The application for leave was accordingly referred for consideration with the appeal of the substantive matter.

The appeal

An appeal lies to the District Court from a decision of the Magistrates Court in civil proceedings pursuant to s 40(1)(a) of the MCCPA.
Section 40(4) of the MCCPA provides that the District Court must decide the appeal on the material and evidence before the Magistrates Court and any other evidence it gives leave to be admitted.
An appeal is undertaken therefore by way of rehearing. As a rehearing, the appellate powers of the District Court are only exercisable if it is demonstrated that the decision made by the magistrate was the result of some legal, factual or discretionary error. The onus is on the appellant to demonstrate this error.[8]
[8] Brocklehurst v Wolinski [2015] WADC 36 [14]; Butler v Bennett [2007] WADC 107 [4] - [10] (Bowden DCJ).
There has been no application to admit any further evidence at this appeal, accordingly the appeal is to be determined on the materials that were before the magistrate.
Mr Owen does not challenge the magistrate's findings of fact. The five grounds of appeal make only one mention of any alleged error of fact, in ground 2. Ground 2 is, in my view, a restatement of ground 1: that there was no lease between Mr Owen and the D'Orazio Family Trust.
Taken as a whole, the grounds of appeal raise one issue: whether Mr Owen was bound by his guarantee contained in the Lease signed on 3 February 2015.
Counsel for Mr Owen on appeal argued that:
(1)there was no lease between the parties to the litigation;
(2)the original lease has been terminated by an email on 3 February 2016;
(3)there was no privity of contract between the parties to the appeal;
(4)a guarantee must be in writing; and
(5)the learned magistrate misinterpreted the principles in Alonso v SRS Investments (WA) Pty Ltd.[9]
[9] Alonso v SRS Investments (WA) Pty Ltd [2012] WASC 168.
The appeal thus raises one discrete legal matter: did the guarantee provisions in the Lease of 3 February 2015 apply between Mr Owen and the D'Orazio Family Trust.

Submissions

Counsel for both the appellant and respondent filed written submissions.
Counsel for the appellant, Mr Jahn, submitted that the magistrate was wrong to hold that there was no need for a new lease. He relied upon s 68(1A) of The Transfer of Land Act 1893 (WA) (TLA) and the transfer of the landlords' title to the D'Orazio Family Trust on 22 [sic] December 2015. He submitted that the Lease did not run with the land because the tenant was not in possession. He argued that an email of 3 February 2016, from the developers, advising the parties to enter into a new lease, was a termination of any previous lease.
As a consequence of the Lease being unregistered, in the absence of any new lease, counsel argued that, at most, there was a tenancy at will, between D'Orazio and Bardot, or 'month to month' arrangement. Further, counsel argued that there was no personal right of guarantee for the D'Orazio Family Trust against Mr Owen, as there had been no assignment of the guarantee provisions.
Mr Jahn further argued the magistrate erred in not applying contractual principles to the factual scenario. Counsel sought to distinguish the decision in Alonso v SRS Investments (WA) Pty Ltd.
The D'Orazio Family Trust's written submissions argued that the application for leave to appeal out of time should be refused on the basis there was no merit in the appeal.
In response, the D'Orazio Family Trust submitted the primary issue for determination was whether the unregistered Lease ran with the land. Counsel submitted that s 68(1A) of TLA contained an exception to the indefeasibility provisions of TLA. There were three pre‑conditions to that exception:
(1)that there was an unregistered lease;
(2)for a term not exceeding five years; and
(3)to a tenant in actual possession.
There was no dispute about the sum calculated by the magistrate as due and owing, if the obligation was established.
The D'Orazio Family Trust submitted that it was common ground before the magistrate that:
1.the Lease commenced prior to the respondents becoming registered proprietors of the land;
2.at the date the respondents became registered proprietors, they acquired a reversionary interest in the property;
3.Bardot was not in physical occupation of the property, notwithstanding the Lease had commenced; and
4.Bardot went into physical possession of the property in or about March 2016.
The D'Orazio Family Trust relied upon the express finding[10] that the commencement date of the Lease was 10 December 2015.[11]
[10] Reasons, page 10.
[11] Notwithstanding typographical error as to the year in the reasons. I was agreed at the hearing of the appeal was such an error.
If that were correct, the first issue to be determined was whether Bardot was in 'actual possession' in terms of s 68(1A) TLA.
At the hearing of the appeal, in response to direct enquiry, counsel for Mr Owen maintained that Bardot was not in actual possession because Bardot was not in physical occupation of the premises. Counsel for Mr Owen did not seek to address issues concerning actual possession raised in the written submissions of the D'Orazio Family Trust. Counsel for Mr Owen took the view that possession was solely a 'boots on the ground' possession.
Counsel for the D'Orazio Family Trust elaborated upon the concept of actual possession and referred to Bride v Shire of Katanning.[12] It was submitted that 'actual possession' in terms of s 68(1A) of TLA may only be held by one of either the landlord or the tenant. Further, the party holding actual possession is regulated by the terms of the lease agreement. It was argued that, from the commencement of the Lease, Bardot had the right to exclusive access to the property. The landord's rights were limited to those conferred in the Lease document specifically by cl 18, which concerned the landlord's right to access in standard terms.
[12] Bride v Shire of Katanning [2013] WASCA 154.
The argument was that from the commencement of the Lease, Bardot as tenant could exercise actual control of the property, whether or not Bardot had occupied the property: thus the registered proprietor could not have been in actual possession. Neither could the former registered proprietor be in possession.
For the enforceability of a guarantee, counsel relied upon s 47 of the Property Law Act 1969 (WA) (PLA), Simmons v Lee and Gumland Property Holdings Pty Limited v Duffy Brothers Fruit Market (Campbelltown) Pty Limited. [13]
[13] Simmons v Lee [1998] 2 Qd R 671; Gumland Property Holdings Pty Limited v Duffy Brothers Fruit Market (Campbelltown) Pty Limited [2008] HCA 10; (2008) 234 CLR 237.
Essentially the argument was that the tenant remained bound by the covenants in the Lease by privity of estate, not by privity of contract. Furthermore, guarantee provisions were covenants that 'touched and concerned the land' and thus were enforceable against the guarantor by the successor in title to the original landlord.

The law

In all State jurisdictions in Australia, legislation has been enacted such that title to land is maintained in registers containing a record of all land in the jurisdiction under what is called the 'Torrens System'. All persons who have interests in land will be recorded there and persons who wish to know the status of land may search the register which will reveal the nature of interest in the land and the identity of the interest holders.
In Western Australia, the legislation is found in the TLA. Primarily, the title of a registered proprietor in the State register is secure against third party claims to an interest in the land, ie: is indefeasible. But there are, of course, exceptions to this rule.
The main exceptions are: fraud on the part of the registered proprietor; rights expressly granted by statute; rights that arise by virtue of overriding and consistent legislation, and in personam rights of a person with whom the registered proprietor has dealt.
Relevant in this appeal are the provisions which touch on certain unregistered leasehold interest in land which are given some degree of recognition. In Western Australia, leases for a period shorter than five years are the relevant interest. Leases over five years are required to be registered to be enforceable.

The relevant provision is set out in s 68(1) of the TLA as follows:
(1)Notwithstanding the existence in any other person of any estate or interest whether derived by grant or transfer of the fee simple from the Crown or otherwise which but for this Act might be held to be paramount or to have priority the proprietor of land or of any estate or interest in land under the operation of this Act shall except in case of fraud hold the same subject to such encumbrances as may be notified on the registered certificate of title for the land; but absolutely free from all other encumbrances whatsoever except the estate or interest of a proprietor claiming the same land under a prior registered certificate of title and except as regards any portion of land that may by wrong description of parcels or boundaries be included in the certificate of title or instrument evidencing the title of such proprietor not being a purchaser for valuable consideration or deriving from or through such a purchaser.
(1A)Despite subsection (1), the land which shall be included in any certificate of title or registered instrument shall be deemed to be subject to the reservations exceptions conditions and powers (if any) contained in the grant thereof or transfer of the fee simple or otherwise and to any rights subsisting under any adverse possession of such land and to any public rights of way and to any easements acquired by enjoyment or user or subsisting over or upon or affecting such land and to any unpaid rates and to any mining lease or licence issued under the provisions of any statute and to any prior unregistered lease or agreement for lease or for letting for a term not exceeding 5 years to a tenant in actual possession notwithstanding the same respectively may not be specially notified as encumbrances on such certificate or instrument but no option of purchase or renewal in any such lease or agreement shall be valid as against a subsequent registered interest unless such lease or agreement is registered or protected by caveat.
(emphasis added)
The Lease executed on 3 February 2015, is for a term of three years. No argument arises as to its form or execution. It contains two options to renew for one year.
The parties initialled a disclosure statement at the time of the execution of the Lease which provided that the commencement date was 'the later date of 1 July 2015 or five days after the landlord advises that the building works are complete and Council's Certificate of Occupation is received'. The magistrate found that in accordance with those terms the Lease commenced on 10 December 2015.
Section 68(1A) of the TLA provide that:
… the land which is included in any certificate of title … is (relevantly) … subject to any prior unregistered lease or agreement for lease or for letting for a term not exceeding five years to a tenant in actual possession notwithstanding the same respectively may not be specially notified as encumbrance on such certificate …
The issue is whether this provision applies. That focuses upon whether Bardot, as tenant, was in actual possession of the property at the time that the interest in the property was registered to the D'Orazios.
'Actual possession' is not defined in the TLA or in any other relevant statutory provision. The meaning of the word 'possession' depends upon the legal context in which it is used. It has been held in Bride v The Shire of Katanning that:[14]
'actual possession' is a term which has no definite universal signification and its meaning, where used in a statute, must be drawn from the language and context of the statute. …
[14] Bride v The Shire of Katanning [11].
Bride was a different scenario. The question of construction arose under the Local Government Act 1995 (WA). However, it was said by Justice Murphy:[15]
Although a person with a freehold estate in possession may be 'in possession' in that capacity through a lease to a tenant, it is the tenant, and not the freeholder, who has the 'possession' which the law protects against interference from strangers. For this purpose, the landlord is himself or herself tantamount to a stranger because he or she has granted, out of the larger estate, the legal right of exclusive possession to the tenant for a term. It is the legal right of (exclusive) possession in the tenant which the law protects by remedies in actions such as ejectment and trespass.
(citations omitted)
[15] Bride [15].
Likewise Justice Edelman:[16]
In this case, it is not necessary to explore the boundaries or contours at common law of actual possession or the right to possession. It suffices to say that where the term is used in legislation, the meaning of 'actual' possession can be ambiguous and the answer will depend on construction of the legislation itself: Moors v Burke [1919] HCA 32; (1919) 26 CLR 265, 268 (the Court).
[16] Bride [73].
This question was not examined in any detail by the learned magistrate.
The statement of claim filed by the D'Orazio Family Trust stated:
Norup advised the building was completed and fit for occupation on 5 December 2015 and that the lease commences on 18 December 2015. Date of settlement on purchase was 9 December 2015. However, Edward claimed that the concrete floor finish was deficient for his needs which delayed occupancy until the matter was resolved in February 2016 between Norup and Wilson and Bardot Investments. Keys to the premises were available to Edward as from 11 February 2016. At no time was there any discussion nor correspondence regarding a 'rent free period'.
In his defence, Mr Owen stated:[17]
On 26 February 2016 the landlord sent me a letter stating that the lease commenced on 10 December 2015 which was when practical completion of the building supposedly occurred.
[17] Statement of claim, par 11.
Further, Mr Owen stated:[18]
Despite numerous calls and speaking directly with the landlord I was told to commence fit out in July, then September, then October and then in December 2015.
[18] Statement of claim, par 14.
In his statement of evidence, Mr D'Orazio said that in December 2015 he and his wife were invited to inspect the completed premises which he did. He said he was provided with Mr Owen's contact details and a copy of the Lease. He went on to say that Mr Owen and he made an inspection of the unit, that he (Mr Owen) pointed out the deficiencies that were not what was agreed with the developer and that he was to get in touch with the developer to have the defects corrected. Weeks passed and nothing was happening. He went on to say that he emailed Norup and Wilson explaining the defendant's case, requested a further set of keys and said that Norup and Wilson were shocked to find that the defendant was not paying rent at unit G05 as he was paying no rent at 893 Canning Highway as well. Mr Norup advised Mr D'Orazio that he was entitled to rent for December, January and February. Mr Owen strenuously objected. He said 'the dispute between Norup and Wilson and the defendant was resolved and I invoiced the defendant for rents from 1 March 2016'.
The factual context, therefore, is that there was a delay in the completion of the premises for the purposes of the Lease to Bardot. Bardot was advised of practical completion on 5 December 2015. There followed inspection of the premises which, after the purchase by D'Orazios, involved them and Mr Owen. There was a dispute about the finishes in the premises. Mr Owen in his statement for trial stated that:
In early December I received an email from Norup and Wilson stating that the premises were fit for occupation. In that email I was told that the claimant had bought the property. I was told that I would not have to pay rent until 17 December 2015 but the premises were not ready to move into. The premises were not ready and the floor had not been polished and sealed as agreed in the special conditions and the air conditioning ducts were not fitted. I spoke to Norup and Wilson about this and then I had to wait for them to be finished. The floors as per the special condition were never polished and sealed.
In my view, in accordance with the finding of the magistrate as to the commencement of the Lease, on 10 December 2015, it is clear that the only person who was entitled to actual possession of the premises at unit G05 was Bardot. Mr Owen, on behalf of Bardot, had been advised that the premises were fit to move into prior to the registration of Mr D'Orazio's interest, on Mr Owen's evidence. Bardot did not move in to conduct its business due to disputes about the finishes of the premises, which were the responsibility of developers Norup and Wilson. The only person entitled in law pursuant to the Lease to possession of the premises at that point in time was Bardot. Nobody else was physically occupying or entitled to occupy the premises.
Mr Owen on behalf of Bardot was making demands about completion of the agreed special conditions in relation to the premises. The magistrate found that it was very reasonable of Mr D'Orazio not to charge rent prior to 1 March 2016. He also found that that was not the view taken by Norup and Wilson and that Mr Owen was aware and concerned about paying rent from December 2015. Accordingly, the magistrate's view was, by inference, that rent might have been charged in that period and thus that Bardot was in possession under the Lease.
In my view, the only person in actual possession of those premises was Bardot from the commencement of date of the Lease. Bardot was the tenant, was requiring treatment of the premises in accordance with the special conditions and might have been charged rent. Bardot effectively had control of the premises.
From that, it follows as a matter of law, that Mr D'Orazio took title subject to the Lease signed on 3 February 2015.
Grounds of appeal 1, 2 and 5 fail accordingly.
It would appear that both the D'Orazios, Bardot and Mr Owen from then on acted in accordance with the terms of the Lease and exercised and enjoyed rights over the property pursuant to the Lease.

The guarantee

In this appeal, and in the court below, Mr Owen was sued pursuant to the guarantee contained in the Lease.[19] The enforceability of such guarantee is challenged in this appeal. The guarantee is included in the Lease. It covers all lease payments and compliance by the tenant of its obligations.
[19] Lease, cl 28: Guarantee and Indemnity.
The general rule is that the assignment of the benefit of a contract does not assign the benefit of a guarantee in such contract. However, an exception to this rule exists where that guarantee is a covenant which touches and concerns land. A guarantee of the performance of a tenant's covenant in a lease is itself a covenant that touches and concerns land. This is because rent issues out of and is an incident of the landlord's estate in the land, as contrasted to the case of a mortgage where the debt is the primary object.[20]
[20] Simmons v Lee.
Accordingly, on the assignment of the reversion of the Lease, Mr D'Orazio acquired the benefit of the guarantee of the tenant's obligation without specific assignment.
Essentially, matters affecting interests in land are governed primarily by the law of real property, in this case, the TLA, and the doctrine of privity of estate. This dispute is not therefore governed by general principles of contract law.
Grounds 3 and 4 of the notice of appeal must fail accordingly.
Section 47 of the Property Law Act 1969 (WA) provides:
(1)A covenant relating to any land of the covenantee shall be deemed to be made with the covenantee and his successors in title and the persons deriving title under him or them, and has effect as if those successors and other persons were expressed.
(2)For the purposes of subsection (1) in connection with covenants restrictive of the user of land, successors in title shall be deemed to include the owners and occupiers for the time being of the land of the covenantee intended to be benefited.
(3)This section applies only to covenants made after the coming into operation of this Act.
In addition, s 77 of the Property Law Act provides:
(1)Rent reserved by a lease, and the benefit of every covenant or provision contained in the lease, having reference to the subject‑matter thereof, and on the lessee’s part to be observed or performed, and every condition of re-entry and other condition contained, shall be annexed and incident to and shall go with the reversionary estate in the land, or in any part thereof, immediately expectant on the term granted by the lease, notwithstanding severance of that reversionary estate, and without prejudice to any liability affecting a covenantor or his estate.
(emphasis added)
The weight of authority is therefore against the propositions advanced on behalf of the appellant against the enforceability of the guarantee, as was held by the High Court in Gumland Property Holdings Pty Limited v Duffy Brothers Fruit Market (Campbelltown) Pty Limited at 238, 272.
Counsel for Mr Owen also argued that the Lease had been terminated by an email dated 3 February 2016 from Norup and Wilson,[21] under the name of Madison Norup, to both the appellant and the respondent stating that they would need to enter into a new lease of the premises.
[21] Exhibit D6.
Once the Lease had commenced to run, as found by the magistrate on 10 December 2015, that lease could only be determined in accordance with its terms, or by the effluxion of time, or by forfeiture. It was not suggested that any of these events operated. The opinion expressed by the author of the email could be no more than an unqualified view of the situation. The authority of the author of the email to convey such information is unclear, and the information itself is wrong in law. There is no merit in this argument whatsoever.
Ground of appeal 5 also criticises the learned magistrate's reference to and failure to distinguish Alonso.[22] The magistrate said only that he had regard to the decision and that 'the facts before him were even clearer'. It is difficult to determine precisely what this ground seeks to raise in relation to Edelman J's judgment. It is premised on there being no written lease, or that such lease had been terminated? Both of those assertions in ground 5 are unfounded. The decision concerned more the capacity in which the guarantor signed the Lease. This ground is without discernible merit.
[22] Reasons, page 5.

Conclusions

Mr Owen's arguments, both in the court below and on appeal, were based upon fundamental misconstructions of law. A transfer of land subject to a lease conveys the reversion on that lease to the purchaser, if the lease is registered, or if s 68(1A) of TLA applies. The transferee of the estate in the land accordingly takes both the benefit of and the obligations under the lease, by privity of estate.
The learned magistrate found that the Lease commenced on 10 December 2015. This finding of fact was not challenged. Therefore, when the D'Orazio Family Trust became the registered proprietors of the land on 18 December 2015, the title was subject to the Lease, if the conditions of s 68(1A) of the TLA were established. In this appeal, that question turned on the issue of actual possession.
Counsel for Mr Owen took the view that in this context 'actual possession' amounted only to physical occupation. No authority was cited in support of that proposition.
For the reasons set out above, Mr Owen was in actual possession at the time the interest in the reversion was registered by the D'Orazio Family Trust.
Thus, Mr Owen was bound by the terms of the Lease, as guarantor, as much as Bardot was, as tenant.
Mr Owen has not demonstrated that the learned magistrate was in error to hold that the Lease was enforceable against him, as guarantor.
Accordingly, leave to appeal is refused and the appeal is dismissed.

I certify that the preceding paragraph(s) comprise the reasons for decision of the District Court of Western Australia.
JM
Associate to Judge Braddock
4 NOVEMBER 2020