Thomas v R [1904] HCA 29; (1904) 2 CLR 127 (13 October 1904)

HIGH COURT OF AUSTRALIA

Thomas Defendant, Appellant; and The Crown Plaintiff, Respondent

H C of A

On appeal from the Supreme Court of Western Australia.

13 October 1904

Griffith C.J., Barton and O'Connor JJ.

Haynes K.C. (with him Stone), for appellant.

Pilkington (with him Hensman), for the respondent.

Haynes K.C., in reply.

October 13

Griffith C.J.

This is an appeal from a judgment of the Full Court of Western Australia granting a new trial on the ground of surprise. A new trial can only be granted upon that ground if it appears that the evidence which is alleged to be in the nature of a surprise was material. It is necessary, therefore, to consider what was the question that was being tried between the parties. The action was one by the Crown to recover possession of land alleged to be the absolute property of the Crown. The defendant pleaded possession, and by an equitable defence he said he was in possession of the land under a lease for three years which had expired in August, 1902; but that, before the expiration of the lease, it was verbally agreed, between an officer of the Western Australian Government and the defendant, that he should get a further lease for seven years on certain terms, one of which was that the defendant would allow certain alterations to be made in the premises in question, which were the markets in the city of Perth, and that he had done so to his detriment, owing to interference with his occupation, and that after the expiration of the lease the defendant continued in possession of the markets and paid the rent agreed upon between the officer of the Government and himself. The Crown replied that the alleged agreement was not in writing as required by the Statute of Frauds, and that the officer with whom the agreement was alleged to have been made had no authority to make any such agreement. Then there was a rejoinder setting up, by way of estoppel, that the plaintiff ought not to be allowed to deny the authority of the officer on the ground that it had accepted the benefit of the agreement. The case seems to have been treated as resting on a verbal agreement with the Government which, although not in writing, could be supported by proof of part-performance. At the trial before Mr. Justice McMillan and a jury, the only question left to the jury was whether what was called an agreement between the defendant and Cowen, the alleged agent, was made in fact. All other questions seem to have been left to be determined by the Judge himself. The jury found that the so-called agreement was made in fact, and application was then made by the plaintiff, the Crown, to the Full Court to enter judgment for them on the ground that there was no evidence by which the defendant could establish title against the Crown, and the plaintiff also moved for a new trial on the ground of surprise. The evidence alleged to have been in the nature of a surprise was evidence of a conversation between the defendant and the then Minister for Lands, which it may be as well to read. This occurred in February, 1902, Dr. Jameson being then the Minister. The defendant says the Minister for Lands met him in the markets, and that he (Dr. Jameson) referred to the death of Mr. Cowen. He went on to say: "The Minister looked round and said: There are a lot of improvements going on, Mr. Thomas, could you tell me something of the arrangements you made with the late secretary? I said I had agreed to pay six per cent. interest on about £1200, the estimate of Mr. Wright; that I had undertaken to ask for no rebate of rent during re-construction; that he in return agreed that I should pay the same rent as I was then paying, and that in consideration he would prepare a new lease for seven years. Dr. Jameson said it seemed an equitable arrangement. I said that there was a moral obligation on the City Council to give me a further renewal. I said I thought I was entitled to a further renewal after the seven years. He said he was going away and would return in a week, and asked me to place in writing what I had told him, so that the whole matter would be on his table before him on his return." That is the evidence. I have very considerable difficulty in seeing how that is relevant. At most, it amounts to this: The defendant said "I made an agreement with Mr. Cowen"—whether he was the authorized agent of the Government is another matter altogether—"and I told his principal the nature of the arrangement." It is difficult to see how that evidence was material to the question whether he made the arrangement or not. If that is so, the verdict of the jury should not be set aside on that ground. But there were other questions dealt with by the Judge without the jury. The alleged agreement is a verbal one, and it is not contended that a subordinate officer can bind the Government to grant a lease for a term of years. That is conceded by the defendant; but he says that the Minister for Lands, having been informed of this agreement, ratified it, and that this evidence was material for the purpose of showing what he ratified. It was also contended for the respondent that, after he had made this so-called agreement with Cowen, the Minister of Lands assented to it by receiving rent, or allowing it to be received, for the markets. Upon that, it occurs to me, first of all, to remark that the rent paid was payable under the lease, and had to be paid whether this conversation took place or not. It appears further that, about six months before this time, proposals had been made that the Government should make certain improvements in the markets at considerable expense which was then estimated at about £1000, and a letter had been written (in the preceding February) when there had been some proposals for making improvements in the markets, and the defendant was asked distinctly whether, in the event of such improvements being made, he would be willing to pay six per cent. on the cost of the improvements, in addition to the usual rent. The defendant replied on the following day by letter to the effect that he agreed to those terms.

It was contended that the evidence of the conversation was admissible, as showing that the Minister knew what agreement had been made by Cowen. If it was material to prove that it was brought to the knowledge of the Minister that there had been an actual agreement, using the term in its proper legal sense, I should be disposed to think that it was. I assume for the present that it is possible to establish an agreement against the Crown by a verbal agreement with a subordinate officer or even with a Minister of the Crown, but I must not be supposed to express an opinion that that is so. But does this conversation tend to prove any such agreement? In considering that question, one must bear in mind the relationship between the parties. This Mr. Cowen was the head of a sub-department. It must be taken for granted that everybody knew that, by law, the head of a sub-department could not grant a lease for seven years, or make any agreement binding upon the Crown. Both he and the person dealing with him must be taken to have known that he only had authority to negotiate with the defendant, and to submit the terms to the Government for their approval. The conversation ended by the Minister asking Thomas that his proposal should be put in writing, and saying that, if that were done, he would deal with it. That, so far, does not tend to suggest that there were any dealings in the nature of an agreement by which the Minister was to be bound without further consideration. That was on the 26th of February. On 28th February the defendant wrote a letter to the Minister for Lands, the terms of which are very important. He said: "As arranged by the late Secretary for Agriculture I purpose giving you as near as possible the conditions on which the market improvements were to be made and recognized by myself. £1000 or more was promised by Mr. Sommers, the late Minister for Lands—that at least £1000 should be spent on the market buildings and all work to be subject to my approval, as lessee. A portion of this money was to be devoted to putting the building into thorough repair in every way, and that when the work was completed, that I pay at the rate of 6 per cent. per annum on any outlay made by the Government and recognized by myself. I am, however, prepared to pay interest pro ratâ on all money advanced from the commencement of the alterations, and in consideration of this arrangement with the late Secretary for Agriculture, he agreed to the handing of the building over to me in good order and condition, and that he would prepare a new lease direct with this department, at the present rental of £527 10s. 0d. per annum, myself covering the insurance of the building up to £5000. Regarding the insurance premium he also considered that excessive as there is no value equal to that amount. The City Council was paying the Government something like £420 per annum, so that you will see that the department are receiving considerable advantage through me taking possession of the building. You will understand that interest on the additional outlay will be plus that of the present rent. You will be aware that the Government accepted me as a direct lessee in lieu of the Perth City Council, and I expect to be treated as liberally, at any rate, as they were. Regarding the painting of the exterior of the market, I may point out to you that the City Council was due to paint the building when the unexpired portion of their lease with the Government was surrendered to the Public Works Department, and at the time I entered a protest. Consequently you will see that I have been endeavouring to raise the interest of this institution with every possible disadvantage, and, further, I have been left to my own resources, and it is only by the unswerving object I had in my mind that the markets are now in a fairly prosperous position." The letter then goes on, "I will admit that since I came under the control of the Department for Agriculture, my position has improved, and I respectfully ask that a new lease be prepared for a term of seven years as existed with the Perth City Council, with a right of renewal, and that I engage myself to work in the best interests of the department and public. Up to the present there has been hard work for nothing, and as I have devoted my energies for so long in the interests of the market, I feel sure the Government and public will be well served by you granting what I respectfully ask. I also point out, and I think it was publicly acknowledged, that had I not taken over the markets from the Perth City Council the building would have been closed long ago. I also would respectfully point out to you that I am constantly working for cheap food supplies, which is fully appreciated by the public, and that my introduction of the frozen meat into Perth, and the markets, has brought the value of meat supplies down fully 40 per cent. And, in conclusion, I beg to suggest that these matters be discussed at the earliest possible opportunity, as I have an important project under consideration which must be completed within two months that will bring the market into still greater usefulness."

Now that letter is substantially to the same effect as the alleged conversation between the parties. In the conversation the preliminary negotiations with the head of the sub-department of Agriculture were discussed, and this letter conveyed a request that the preliminary arrangements made might be taken into favourable consideration, and nothing more. That letter of itself absolutely negatives the idea of there being in the contemplation of either party a binding agreement. The matter was treated as a project under discussion; the terms that the defendant desired were stated, and he asked the Minister's favourable consideration of the proposed arrangement. While it was under the consideration of the Government the rent and interest were paid, as they were bound to be paid, under the existing agreements. Now, the learned Judge of first instance appears to have thought, if I understand his judgment rightly, that the conversation with the Minister for Lands conveyed to his mind that an agreement, assumed to be binding, had been made with his subordinate officer; that he had forgotten all about it, but that, notwithstanding his forgetfulness, the receipt of the rent and interest operated by way of ratification. But there was at this time no suggestion on the part of the defendant that there was a binding agreement. There was merely a negotiation, and pending any new agreement the defendant merely did what he was bound to do under the existing agreements. There was nothing in the nature of a contract. Mr. Cowen had no authority to make a contract, and the Minister was dealt with on the footing that there was no contract, but he was asked to agree to one. Considerable delay occurred, and when the answer came it was to point out that Mr. Cowen had no authority either to waive or to modify the lease or to negotiate. This was the answer to the request that effect should be given to these preliminary negotiations, and from that time forward the parties were at arms' length. Upon that evidence there is nothing to show that there was any agreement to carry out the proposals made. There was only negotiation, inchoate negotiation, submitted for the approval of the Minister, but never approved. Then it has been suggested that this negotiation became an agreement by ratification and part-performance. The evidence relied upon for ratification is that to which I have already referred, that rent and interest were paid, but I have already pointed out that the defendant was bound to pay them. Now, apart altogether from the question whether part-performance can be set up against the Government of Western Australia, having regard to the Constitution and to the Land Act, acts of part-performance must be referable unequivocally to the alleged contract. The alleged part-performance is merely the payment of the rent with the addition of six per cent. interest on the value of certain improvements. The rent was already payable under the lease. The only increased rent therefore was the six per cent. interest upon the value of the improvements. But that was also under special agreement, so that it would be referable at least as much to the original agreement as to the proposed agreement. So that, according to any test that can be applied, defendant has failed to establish part-performance. It was suggested then that under the circumstances a tenancy from year to year might be implied. Upon that the facts are these. The lease expired in August, 1902, but there was a condition in it that it might be extended for a year and fourteen days on terms to be mutually agreed upon. Just after the termination of the lease the defendant intimated his desire to extend it; but the terms were not agreed upon for some time. While negotiations were going on he paid the rent as before, as he was bound to do. No doubt the holding over by a tenant and the acceptance of rent are evidence of a new tenancy from year to year; but that is only if the other circumstances of the case do not repel that inference. In this case the holding over was clearly only done pending negotiations. At the expiration of the one year and fourteen days these proceedings were commenced. Upon the admitted facts, the defendant was a tenant holding over after the expiration of his lease without any agreement as to renewal. It is therefore perfectly immaterial whether the conversation with the Minister took place or not, and the element of materiality of the evidence as a ground for a new trial is wanting. But the appeal to us is not from the grounds of the decision, but from the decision itself, and it is open to this Court to give that judgment which they think the Court ought to have given. Upon the undisputed facts of the case, the Crown is entitled to judgment. In these circumstances, the proper course for this Court is to give that judgment, unless some evidence might be given by the defendant to produce a different result; but on the admitted facts in this case, the only question to be determined is one of law, and no evidence that could be adduced can make any difference. It seems to me that the judgment of this Court must be to vary the judgment of the Full Court by giving judgment for the plaintiff.

Barton J.

I concur.

O'Connor J.

I am of the same opinion.

Pilkington. I move that judgment be entered for the plaintiff for possession of the land, with costs of the appeal, and of the proceedings in the Court below.

Griffith C.J.

Yes. The appellant will have the costs of the action and of the appeal, except the costs of the issue in which the defendant succeeded.

Judgment varied by directing judgment to be entered for the Crown with costs of the action and of the appeal, except the costs of the issue as to the agreement with Cowen.

Solicitor for appellant, A. S. Canning.

Solicitor for respondent, F. W. Sayer.