Tooth v Brisbane City Council - [1928] HCA 20

BRISBANE CITY COUNCIL

RESPONDENT. DEFENDANT,

ON APPEAL FROM THE SUPREME COURT OF

QUEENSLAND. Equitable Assignment-Lease-Land and buildings-Resumption by local authority-

Lessor and lesseeCompensation-Provision for apportionment of compensation -City of Brisbane Improvement Act 1916 (Q.) (7 Geo. v. No. 24), sec. 8. BRISBANE,

By a clause in a lease it was provided that in case the demised premises June 21, 22.

should be resumed by any authority, then out of the compensation moneys SYDNEY,

payable to the lessor and lessee the lessor shall be entitled to receive £8,440 Aug. 8.

and in addition £300 per annum or a proportionate part thereof for the unexpired term of the lease and the lessee shall be entitled to the balance. The premises were resumed by a local authority acting under statutory powers, and express notice in writing of the provisions of the lease was given to such authority. An amount of £8,190 was awarded as compensation, £7,190 for the lessor and £1,000 for the lessee. The lessor, who had received £7,190 from the local authority, brought an action against it for £1,000 awarded to the lessee.

Held, by Knox C.J., Higgins and Gavan Duffy JJ. (Isaacs and Starke JJ. dissenting), that the clause in the lease did not operate as an equitable assignment.

Decision of the Supreme Court of Queensland (Macrossan J.): Tooth V. Hill and Brisbane City Council, (1928) S.R. (Q.) 113, affirmed.

APPEAL from the Supreme Court of Queensland.

By an agreement in writing dated 11th April 1923, Robert Ernest Tooth leased to Johnstone Hill certain lands together with the

41 CLR 213

buildings thereon, in Wickham Street, Brisbane. The term of the lease was for five years from 9th April 1923. The rental varied from year to year. Hill paid £1,000 to Tooth by way of premium, and had an option of purchasing the property at the end of any year at a price varying from year to year. Clause 9 of this agreement was as follows "In case the said land and buildings thereon shall be resumed by any authority then out of the compensation moneys payable to the lessor and lessee in respect of the same the lessor shall be entitled to receive eight thousand four hundred and forty pounds and in addition three hundred pounds a year or proportionate part thereof for the unexpired term of the lease and the lessee shall be entitled to the balance." The said lands and buildings were resumed by the Brisbane City Council in the exercise of its powers under the City of Brisbane Improvement Act 1916 (Q.), the resumption taking effect from 4th July 1925. The unexpired term of the lease was then about three years. On 13th July 1925 Tooth, through his solicitors, informed the Brisbane City Council by letter of his intention to claim compensation, forwarding a copy of the agreement of 11th April 1923 made between himself and Hill. Both Tooth and Hill lodged in the Land Court of Queensland separate claims for compensation.

At…

Grounds of appeal

[14] The appellant contends that the primary judge erred in finding that the respondent had discharged the onus of establishing the matters required under the relevant provision.

[15] It was submitted that his Honour failed to give adequate weight to the evidence of the second witness, and that the findings of fact were not reasonably open on the material before the Court.

[16] The respondent, for its part, submits that no error is disclosed, and that the conclusions reached were well within the range of outcomes available to the primary judge.

Consideration

[17] It is convenient to deal first with the question of construction, as the resolution of that issue informs the remaining grounds advanced by the appellant.

[18] For the reasons that follow, we are of the view that the appeal should be allowed in part and the matter remitted for further determination.

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Details

Case: [1928] HCA 20
Decision Date: 8 August 1928

CaseChat Overview and Summary

The High Court of Australia heard an appeal from the Supreme Court of Queensland concerning a dispute over compensation moneys following the resumption of land by the Brisbane City Council. The parties were Robert Ernest Tooth (lessor) and Johnstone Hill (lessee), with the Brisbane City Council as the resuming authority. The core of the dispute revolved around the interpretation of clause 9 of the lease agreement between Tooth and Hill, which stipulated how compensation moneys would be apportioned between them in the event of resumption. Tooth sought to recover a portion of the compensation awarded to Hill from the Brisbane City Council.

The legal issue before the High Court was whether clause 9 of the lease agreement operated as an equitable assignment of compensation moneys from the lessee (Hill) to the lessor (Tooth). Specifically, the court had to determine if the clause created a proprietary right in Tooth over the compensation awarded to Hill, or if it merely established a contractual obligation between Tooth and Hill regarding the distribution of those moneys. The court also considered whether the Brisbane City Council, having received notice of the lease provisions, was bound by any equitable assignment.

A majority of the High Court, comprising Knox C.J. and Gavan Duffy J., held that clause 9 did not constitute an equitable assignment. Their reasoning was that the clause dealt with a composite sum of compensation moneys payable to both the lessor and lessee, and stipulated how this aggregate sum was to be distributed. They viewed it as an agreement for the distribution of moneys after they had been paid, rather than an assignment of a specific fund or a portion thereof. Higgins J. concurred with this view, emphasising that clause 9 was not separable from the rest of the lease and that any purported assignment would be subject to the overall contractual relationship and potential cross-claims between Tooth and Hill. Isaacs J. dissented, finding that clause 9 created a first charge on the compensation moneys and thus operated as an equitable assignment of Hill's compensation to Tooth to the extent necessary to satisfy Tooth's entitlement under the clause. Starke J. also dissented, agreeing with Isaacs J. that the clause created a contractual right to the compensation moneys and operated as an assignment.

The appeal was dismissed by a majority decision of the High Court. Consequently, the judgment of the Supreme Court of Queensland, which had also found that clause 9 did not operate as an equitable assignment, was affirmed. The Brisbane City Council was therefore not liable to Tooth for the sum awarded to Hill.

Orders