Tyndall Funds Management Australia Ltd v ACN 078 545 605 Pty Ltd & Ors No. Scciv-01-1623

TYNDALL FUNDS MANAGEMENT AUSTRALIA LTD v
ACN 078 545 605 PTY LTD & ORS
[2002] SASC 177
BLEBY J (Ex-tempore)

Tyndall Funds Management Australia Ltd (the plaintiff) appeals against an order of a Master dismissing its action against three defendants.
The plaintiff is the registered mortgagee of the land comprised in Certificate of Title Register Book Volume 5398 Folios 416, 417, 418, 419 and 420. The mortgagor and registered proprietor of the estate in fee simple in the land comprised in each certificate of title is a company known as April Rain Pty Ltd (April Rain). Together the separate pieces of land comprise a series of strata titles relating to land and a building situated in Waymouth Street Adelaide.
The defendant ACN 078 545 605 Pty Ltd (ACN) is the lessee of the land comprised in each certificate of title on terms to which I will, in due course, refer. The defendants Stormy Summers Investments Pty Ltd (the second defendant) and Stormy Summers (the third defendant) are both said to be in occupation of the whole or parts of the premises described in the five certificates of title pursuant to some arrangement between them and ACN.
Prior to 9 November 2000 April Rain was in default under the terms of its mortgage. On 9 November 2000 in the District Court, an order was made by consent giving the plaintiff immediate possession of the land comprised in all five certificates of title subject to the order being stayed, as to the present second defendant, with respect to the land comprised in Certificate of Title Register Book Volume 5398 Folio 416 (Unit 1), until 16 March 2003. As to ACN, the order was stayed in respect of the land comprised in the other four Certificates of Title, also to 16 March 2003, and the order was subject to the rights of ACN pursuant to leases dated 4 June 1997 over all that land, those leases having been renewed to 16 March 2003. Those leases were unregistered. The order was also stayed generally as to the present third defendant until 16 March 2003.
It appears that the reason for the order being stayed in that matter was because of ACN’s rights pursuant to the unregistered leases over all but Unit 1, and the other defendants’ perceived rights of occupancy under those leases. The stay in the District Court has not been removed.
The failure to grant a stay to ACN in respect of Unit 1 is explained in contemporaneous correspondence between the solicitors for the parties. Unit 1 had also been leased by ACN from April Rain. The correspondence revealed that the then dispute between the parties was settled by the plaintiff agreeing to grant a new lease to ACN over Unit 1 at an agreed rent which differed from that in the original lease, but otherwise on the same terms and conditions as the leases previously granted in respect of the land comprised in the other four certificates of title.
The lease purported to be for a term also expiring on 16 March 2003. No formal lease was entered into, but there is ample evidence of an agreement in writing to lease on those terms, albeit not signed by the parties, coupled with subsequent part performance of that agreement, such as to create a parol lease for less than three years taking effect in possession: s 30(2), Law of Property Act 1936.
It was acknowledged that the plaintiff was to take possession of all five units upon the District Court order being made, and was to receive payment of rental from that date both under the new lease arrangement it had entered into with ACN in respect of Unit 1 and in respect of the other four units, in accordance with the renewed leases granted by April Rain to which, of course, the plaintiff was not a party.
The plaintiff alleges that defaults have occurred under all five leases and that the plaintiff has lawfully terminated them. It brought this action for possession of all five units pursuant to Part 17 of the Real Property Act 1886, and in particular s 192. In doing so, it used Form 3 prescribed by Rule 65.01 of the Supreme Court Rules and not the usual inter partes summons, Form 2, used to commence an ordinary action.
The original summons for possession was brought only against ACN in respect of the land comprised in all five certificates of title. It was only later that the second and third defendants entered appearances and joined with the first defendant in opposing the summary order. They, therefore, became defendants to the action: Rule 65.03(3).
Section 192, Real Property Act provides:
“192. Any of the following persons (in the following sections called “the claimant”) may cause any person in possession of land under the provisions of this Act to be summoned to appear before the Court to show cause why the person summoned should not give up possession to the claimant –
I.The registered proprietor of a freehold estate in possession:
II.Any registered mortgagee or encumbrancee where the person in possession is a mortgagor or encumbrancer in default, or a person claiming under such mortgagor or encumbrancer:
III.Any lessor with power to re-enter where the rent is in arrear for three months, whether there be or be not sufficient distress found on the premises to countervail such rent, and whether or not any previous demand shall have been made for the rent:
IV.Any lessor where a legal notice to quit has been given, or the lease become forfeited, or the term of the lease has expired.”
The purpose of Part 17 of the Real Property Act when read in conjunction with Rule 65 of the Supreme Court Rules, is to provide a form of summary relief to a person entitled to possession of real property without the necessity of proving a case on oral evidence. The requirement on a respondent is to “show cause” why possession should not be given up. The claimant’s prima facie entitlement is generally proved by affidavit. If the respondent does not appear, or appears and shows no good cause why the claimant should not have possession, then a summary order for possession may be made. However, that does not prevent a respondent from showing cause, in the sense of raising an apparently credible case in opposition to the claimant’s claim, in which case the Court may have to give further directions for resolution of the dispute, and the summary order for possession may be denied. In those circumstances the Court may need to direct pleadings and refer the summons for determination as a civil action commenced in the Court: see Corporation of the Town of Moonta v Rodgers (1980) 26 SASR 143 per Zelling J at 154 and Cox J 160; National Australia Bank Ltd v Zollo (1992) 59 SASR 76 at 86, 91.
When this application came before the Master, it was apparent from the affidavits filed that while rent under the leases had not been paid, and appropriate steps had been taken by the plaintiff to terminate the leases, the defendants were attempting to show cause on a number of grounds. They claimed that the stay order of the District Court was still in place and that the plaintiff was not entitled to possession. They also claimed a set-off sufficient to defeat the plaintiff’s claim for rent, and the third defendant was claiming rights as a residential tenant under the Residential Tenancies Act 1995. It was not argued that the action should be dismissed as being incompetent.
Nevertheless, the Master dismissed the action and directed the plaintiff to pay the defendants’ costs. He did so on the basis that the plaintiff did not qualify under any of the placita contained in s 192 of the Real Property Act. He considered that the plaintiff was in possession of the land pursuant to the arrangement entered into between the plaintiff and ACN, that this was a separate agreement, although embodying the terms and conditions of the previous leases. On that basis, the plaintiff could not bring itself within placitum II, as ACN was not in possession as a person claiming under the mortgagor. The plaintiff, he held, was not a lessor for the purpose of placita III or IV, as “lessor” is defined in s 3 of the Real Property Act as meaning “the registered proprietor of land subject to a lease”. He therefore considered that the summary procedure under the Real Property Act was not available to the plaintiff, and dismissed the action.
I turn to the plaintiff’s position with respect to Unit 1. The power of the plaintiff to grant the lease that it did must be questionable. The terms of the mortgage are not in evidence in these proceedings, so one cannot tell what power, if any, the mortgagee in possession had to grant a lease under the terms of the mortgage. The lease purported to be for a period of in excess of 16 months. A lease in its ordinary meaning, means a grant of a right to exclusive possession of land for a determinate time less than that which the grantor has himself in the land: Woodfall, Landlord and Tenant (28^th Ed) at p 2.
However, a mortgagee’s right to possession is uncertain in duration. It may cease when the mortgagor redeems the mortgage or otherwise makes good any breach of covenant of the mortgage. The mortgagee cannot do anything to clog the mortgagor’s equity of redemption. No doubt that is why s 137 of the Real Property Act confers a statutory right on a mortgagee in possession to let the land for a term not exceeding one year. So there may be a question as to whether there is a valid lease at all, or whether it is a tenancy for some lesser term from month to month. That was not argued before the Master and was not argued before me.
If there is a valid lease, I would be inclined to give a generous interpretation to the word “lessor” where it appears in placita III and IV of s 192. As defined in s 3, “lessor” means “the registered proprietor of land the subject of a lease”. “Land” is defined to include an estate or interest in the land, which the plaintiff clearly has. It has an estate or interest as mortgagee, but it is not that estate or interest which is the subject of a lease.
However, upon default in the mortgage, the mortgagee’s estate or interest includes a right to possession. That can be the subject of a lease provided that the lease is subject to termination upon redemption by the mortgagor or is otherwise authorised by the mortgage or s 137 of the Real Property Act. So the plaintiff as mortgagee in possession could be a lessor for the purposes of s 192. But even if the plaintiff did not come within the statutory definition of “lessor”, the statutory definition applies “except when (the) context or subject or other provisions (of the Act) require a different construction”: s 3. Given the statutory power to let under s 137 of the Act, I would have no difficulty in construing “lessor” in s 192 to include a mortgagee in possession who has acted under s 137 or some other lawful authority to let the land. To do otherwise would be to create a significant anomaly in the Act and to deny the word “lessor” an ordinary meaning which s 192 of the Act intended it to have. Thus, if the plaintiff has validly leased the land, it qualifies under s 192 in respect of Unit 1.
In respect of the remaining four units, I do not read the correspondence associated with the order of the District Court as cancelling the existing leases. Rather, it gives effect to them, with a requirement that future rent be paid not to the original lessor, April Rain, but to the mortgagee then in possession. In that respect, the plaintiff would qualify under placitum II as being a registered mortgagee where the person in possession is claiming under the mortgagor by virtue of the original extended lease. That right to bring a summons for possession is confirmed by s 137 of the Real Property Act. I regard s 137 and placitum II of s 192 as being complementary in that respect.
It follows that, subject to one other consideration, the plaintiff came within the provisions of s 192 of the Real Property Act in respect of the four units other than Unit 1, and may well have come within it in respect of Unit 1. On that basis, the Master was wrong to dismiss the action.
The one further consideration is the defendants’ argument before the Master that, by virtue of the District Court order, the plaintiff’s right to possession was stayed and the Master was powerless to entertain the application. In my opinion the argument has no substance. It was plain that the plaintiff’s immediate right to possession was intended to be stayed only for the purpose of giving effect to the leases and to the rights of persons claiming under them, whether the leases were continuing or to be granted, as in the case of Unit 1. The stay was not intended to protect the defendants in the event of default by them in compliance with the terms of the respective leases. There is clearly implied in the terms of the stay a right to enforce the terms of the leases in any appropriate manner, including, if otherwise permissible, ejectment.
However, even if I am wrong as to the plaintiff’s entitlement to invoke the provisions of s 192 of the Real Property Act, there was no basis for the Master dismissing the action entirely, especially without hearing the plaintiff as to whether that should occur. The plaintiff’s failure to qualify under s 192, if it was such, merely meant that it could not take advantage of the summary procedures provided by s 192 of the Real Property Act and Rule 65.
In my opinion, if he was in some doubt as to whether the plaintiff qualified for summary relief under s 192, the Master could and should have considered exercising his power under Rule 3.01 of the Supreme Court Rules to direct that, to the extent necessary, the plaintiff’s summons do stand as an inter partes summons seeking the relief claimed therein. He could then have directed that, to the extent necessary, the plaintiff’s claim stand as an application for summary disposal of the action under Rule 25.01 or 25.02. Similar considerations would then apply, in considering the entitlement to summary relief, whether he was properly dealing with the application under one of those Rules or under Rule 65. If the plaintiff was entitled to summary relief by way of possession, an order could be made. If not, the Master could then give further directions as to whether the action should proceed on pleadings or affidavits, and generally as to the further conduct of the action. In my opinion, this would have been the most expeditious way to proceed if the Master was in any doubt.
What the Master did instead was to allow procedure to become the master of justice, not its servant. Rules of procedure are not ends in themselves, but means to an end: Union Bank of Australia v Harrison Jones and Devlin Limited (1910) 11 CLR 492 at 504; Williams v Australian Telecommunications Commission (1988) 52 SASR 215 at 216.
The Master has already heard but has not decided the argument as to whether a summary order should be made. The matter should be returned to him to make any orders necessary to allow further argument, if any, to be put and to decide that question. No doubt in anticipation of the appeal being allowed and of the action being reinstated, the plaintiff has filed an application seeking orders that could give effect to the procedure that I have suggested should have occurred if there was some doubt. Some of the orders sought assume a decision on the summary application (which has not yet been decided) adverse to the plaintiff. All those matters will be for the Master to determine.
I have held that if the lease in respect of Unit 1 is valid, the plaintiff has brought itself within s 192 in respect of all Units. There may be an outstanding question of the validity of the lease of Unit 1, depending on the terms of the mortgage. That will be a question for the Master and may affect the course the master may take as to any dispensation from compliance with the Rules.
For these reasons, the appeal is allowed. The orders of the Master dismissing the plaintiff’s action and ordering the plaintiff to pay the defendant’s costs of the action are set aside. The matter, together with the plaintiff’s application filed on 28 May 2002, is remitted to the Master for further consideration generally in accordance with these reasons for judgment. It will be for the Master to determine what further argument, if any, should occur as to whether the matter should be disposed of summarily.
It should not be necessary to say so, but it is quite obvious that the matter should be dealt with with some expedition. The Master has heard most, if not all, of the argument as to the appropriateness of summary relief. It should now be relisted as a matter of urgency before the Master.
I will hear counsel as to the costs of the appeal.

[2002] SASC 177

30 May 2002