Perpetual Trustee Co Ltd v Morley

[1968] HCA 83

HIGH COURT OF AUSTRALIA

Barwick C.J., McTiernan, Kitto, Taylor and Owen JJ.

PERPETUAL TRUSTEE CO. LTD. v. MORLEY

(1968) 121 CLR 659

11 December 1968

Agriculture

Agriculture—Agricultural holdings (N.S.W.)—Tenancy of holding expressed to be for fixed term of less than two years—Substitution by statute of term of two years—Lease granted for term of two years from date prior to its execution—Whether tenancy expressed for fixed term of less than two years—Agricultural Holdings Act, 1941 (N.S.W.), ss. 22, 23*.

Decisions

December 11.
The following written judgments were delivered : -
BARWICK C.J. Mr. Bell has argued this appeal, on behalf of the appellant, very ably. But, though the use by the draftsman of what I consider are unnecessary and inapt words, namely, "expressed to be" in s. 22 of the Agricultural Holdings Act, 1941 (N.S.W.), has raised considerable difficulties in my mind as to the proper application of that section, I have come to the clear conclusion that the intention of the legislature sufficiently expressed in ss. 22 and 23 is that tenancies in the sense of legal interests in land, for fixed terms of less than two years, shall be treated as tenancies for two years so as to fall within the operation of s. 23. To so conclude is to treat ss. 22 and 23 as complementary. But they can only be regarded as complementary if s. 23 is confined in its operation to those contracts of tenancy (as defined) which have resulted in the creation of tenancies for fixed terms of years. A combination of the definitions of "holding" and "tenant" with that of "contract of tenancy" in their application to s. 22 can achieve this, though it does result to my mind in the virtual elision from the section of the words "expressed to be", words, incidentally, which in my opinion do not in that context necessarily connote futurity. (at p661)

2. Consequently, I agree with the construction placed upon s. 22 by the majority of the Supreme Court (1968) 70 SR (NSW) 161 ; 88 WN (Pt 2) 48 and with the conclusion as to the notice to quit dated 18th November 1963, to which they came. I would dismiss the appeal. (at p661)

McTIERNAN J. I agree with the construction placed by the majority of the Court of Appeal of the Supreme Court of New South Wales on s. 22 of the Agricultural Holdings Act, 1941 (N.S.W.), and as to the relation between this section and s. 23. (at p662)

2. The appeal in my opinion should be dismissed. (at p662)

KITTO J. By a written instrument in the form of a memorandum of lease under the Real Property Act, 1900 (N.S.W.), made on 24th August 1945, the appellants' predecessors in title let to the respondent (therein called the Lessee) certain land, which admittedly was and still is a "holding" within the meaning of the Agricultural Holdings Act, 1941 (N.S.W.), "to be held by the said Lessee as tenant for the term of two years computed from the first day of February one thousand nine hundred and forty-five" at a yearly rent. (at p662)

2. On 13th December 1963, the respondent being still in possession of the holding, the appellants gave him a notice to quit expiring on 1st February 1965. It is conceded that unless consideration of certain provisions of the Agricultural Holdings Act requires a contrary conclusion the notice was effectual to determine the tenancy arising from the respondent's holding over after the expiration of the lease of 1945. The respondent contends, however, that s. 23 of that Act applies to the case and results in the invalidity of the notice to quit. That section provides that in the case of a tenancy of a holding for a term of two years or upwards, the tenancy shall not terminate on the expiration of the term for which it was granted unless a certain notice be given which in the present case was not given. If no such notice is given, the section proceeds, the tenancy shall, as from the expiration of the term for which it was granted, continue as a tenancy from year to year, but otherwise so far as applicable on the terms of the original tenancy. (at p662)

3. These provisions do not apply here of their own force, for the tenancy was not for a term of two years or upwards. Since, as is trite law, "the habendum of a lease can only be considered as marking the duration of" (the lessee's) "interest, and its operation as a grant is merely prospective" : Wyburd v. Tuck (1799) 1 B &P 458, at p 464 (126 ER 1009, at p 1012) ; Shaw v. Kay (1847) 1 Ex 412 (154 ER 175) , the lease of 24th August 1945 created a tenancy commencing on that date and lasting until 1st February 1947. It was a tenancy for less than two years. But the preceding section, s. 22, provides that where by any contract of tenancy (which by definition in s. 4 includes a letting for a term of years) made after the commencement of the Act (i.e. after 1st July 1943), a tenancy of a holding is expressed to be for a fixed term of less than two years, the contract of tenancy shall have and take effect as if the term of two years were substituted for the fixed term so expressed. The question for decision is whether the case is within this section, for, if it is, s. 23 applies by force of a provision in s. 23 (5) to the effect that in the application of s. 23 the term of two years which s. 22 notionally substitutes for an expressed term of less than two years shall be deemed to be the term for which the tenancy was granted. (at p663)

4. Whether s. 22 applies depends upon whether the lease of 24th August 1945 is "expressed to be" for a fixed term of less than two years. The matter came before a magistrate who held that s. 22 did not apply and that the notice to quit was therefore effective to determine the tenancy. An appeal by stated case to the Supreme Court was upheld, a majority of the Court being of opinion that the lease was "expressed to be" for a fixed term of less than two years. From that decision this appeal is brought. In my opinion the decision was correct. True, the habendum of the lease speaks of "the term of two years", but by fixing a past day as the day from which the two years shall be computed it gives to the provision that the premises are "to be held" for that term the meaning that they are to be held for less than two years, namely until 1st February 1947. As Parke B. said in Cooper v. Robinson (1842) 10 M &W 694, at p 696 (152 ER 651, at p 652) :

"The 'term' in the lease only designates the time for which it is to run, by way of calculation, not as conveying any interest. It is but a different way of saying that it is a term for twelve years and eight months to come"

(that being the portion unexpired at the date of the lease of the "term" specified in the habendum in that case). (at p663)

5. I do not feel any great difficulty about the words "is expressed to be". The contrast that is drawn is between the period which the instrument expresses as the term of the tenancy and the period which the section proceeds notionally to substitute for it. The question whether a tenancy "is expressed to be for a fixed term of less that two years" is to be answered, I think, by ascertaining from the instrument which creates or governs the tenancy, as properly interpreted, whether or not its intention is that the tenancy shall endure for a fixed period of less than two years. In a case like the present the answer may be given in the language of Parke B. which I have quoted, by saying that the provision that the premises are to be held for a fixed period which at the date of execution of the document had less than two years to run "is but a different way of saying" - a different way of expressing - that the fixed term is for the residue of that period only. Unless "is expressed to be" should be allowed the meaning which is thus satisfied in cases of the class to which the present belongs the Act unaccountably omits to provide for such cases ; and it seems to me unthinkable that that result should be produced by declining to interpret the words of s. 22 in accordance with the well-established understanding of what a lease does express when it measures the duration of the grant from a date that has passed. (at p664)

6. The operation of s. 22 in the present case, in my opinion, is to require that the lease be treated as if the habendum read: "to be held by the said Lessee as tenant for the term of two years computed from the date hereof". Accordingly I would uphold the decision of the Supreme Court that s. 23 applies to the case, and would dismiss the appeal. (at p664)

TAYLOR J. In my view the majority of the Court of Appeal were right in holding that the lease in this case was "expressed to be for a fixed term of less than two years". I have nothing to add to the observations of the Chief Justice and Kitto J. on the point. (at p664)

OWEN J. For the reasons given by my brother Kitto I agree that the appeal should be dismissed. (at p664)

Orders

Appeal dismissed with costs.