Thompson v Easterbrook [1951] HCA 32; (1951) 83 CLR 467 (14 June 1951)

HIGH COURT OF AUSTRALIA

THOMPSON v. EASTERBROOK [1951] HCA 32; (1951) 83 CLR 467

Landlord and Tenant

High Court of Australia
Dixon(1), Williams(1), Webb(1), Fullagar(1) and Kitto(1) JJ.

CATCHWORDS

Landlord and Tenant - "Dwelling-house" - Shop and dwelling - User - Purposes - Residence - Business - Termination of tenancy - Notice to quit - Premises required by lessors for occupation in trade - Appeal from magistrate - Case stated - Landlord and Tenant (Amendment) Act 1948-1949 (N.S.W.) (No. 25 of 1948 - No. 21 of 1949), ss. 8 (1), 62 (5) (g) (i), (ii), 70 (2), 74 (1), (2), 84 - Justices Act 1902-1947 (N.S.W.) (No. 27 of 1902 - No. 3 of 1947), s. 101.

HEARING

Sydney, 1951, April 6, 9; June 14. 14:6:1951
APPEAL from the Supreme Court of New South Wales.

DECISION

June 14.
The Court delivered the following written judgment:-
This is an appeal by leave from an order of the Supreme Court of New South magistrate in an application by the appellants under the provisions of the Landlord and Tenant (Amendment) Act, 1948-1949 (N.S.W.), for the possession of certain land and premises comprising a shop, dwelling and shed situated at 119 Victoria Road, Drummoyne. (at p478)

2. The form of the notice to quit on which the application for possession was founded was somewhat peculiar, because it attempted to divide the premises into two portions, a shop and a dwelling house, and as regards the shop it claimed that so much of the premises as were not a dwelling house were reasonably required by the lessors for occupation by them in their trade, calling or occupation. It also claimed that the premises were reasonably required by the lessors for reconstruction or demolition. Obviously premises comprised in one letting cannot be subdivided into two portions in the manner proposed in the first ground, but the hearing before the magistrate proceeded without objection being taken to the form of the notice to quit. If it had been taken, the magistrate might have given leave to the lessors to rely upon a ground not specified in the notice: s. 66. If the premises were a dwelling house as defined by s. 8 of the Act, the notice to quit was invalid because under s. 62(5)(g)(i) of the Act it is necessary to allege that the premises are reasonably required by the purchaser for occupation by himself or by some person who ordinarily resides with and is wholly or partly dependent upon him. Moreover s. 70(2) provides that an order for the recovery of possession shall not be made on this ground unless the court is satisfied that the lessor had provided at the date of expiry of the notice to quit, and has immediately available for the occupation of the persons occupying such dwelling house, reasonably suitable alternative accommodation. (at p478)

3. The magistrate regarded the notice to quit as one which could be valid only if the premises were not a dwelling house within the meaning of the Act, in which case an order could be made for possession under s. 62(5)(g)(ii) if they were reasonably required for occupation by the lessors or by a person associated or connected with the lessors in their trade, profession, calling or occupation. The magistrate, after examining the facts, found that the premises were originally leased for business purposes or for business purposes in conjunction with purposes of residence, and that the lessee was bound by the purposes of the letting until such time as a different user was approved by the lessor for the premises. He found that the lessee held from the present lessors for the purposes of a shop and dwelling and that the principal or dominant use to which the premises were put at the time of the letting was, prima facie, that of business premises, with living quarters attached as a convenience to the shopkeeper. He said that in so finding he had regard to Mayer v. Smythe (1949) 66 WN (NSW) 15 . He determined that the lessors were entitled to possession of the property, and ordered that a warrant should issue for putting them into possession thereof. (at p479)

4. From such an order the Act gave a right of appeal to the Supreme Court as to questions of law only: s. 74(2); and it provided that, with that exception, there should be no appeal: s. 74(1). The lessee, being dissatisfied with the magistrate's determination as being erroneous in point of law, applied to him under s. 101 of the Justices Act, 1902-1947 (N.S.W.), to state a case for the opinion of the Supreme Court. The magistrate accordingly stated a case, by which he submitted to the Supreme Court the question whether his determination was erroneous in point of law and set out the grounds upon which it was contended by the lessee that this question should be answered in the affirmative. (at p479)

5. It was contended on behalf of the lessors in this Court that the method of appeal by way of stated case for which s. 101 of the Justices Act provides is not available to a tenant. Reference was made to the cases of Robertson v. Manders (1947) 47 SR (NSW) 437; 64 WN 127 ; Australian Red Cross Society v. Beaver Trading Co. Pty. Ltd. [1947] HCA 60; (1947) 75 CLR 320 ; and Oates v. Sieveking (1948) 48 SR (NSW) 445; 65 WN 199 , all of which were decided under the National Security (Landlord and Tenant) Regulations, and to Harle v. Christian (1949) 66 WN (NSW) 122 , which was decided under the present Act. In our opinion s. 74(2) creates a new and substantive right of appeal to the Supreme Court on questions of law only, and, as no procedure for the exercise of that right is prescribed, the procedure by way of case stated is available, according to well-settled principle, "because it is a suitable procedure and is in use in the like case" (Australian Red Cross Society v. Beaver Trading Co. Pty. Ltd. (1947) 75 CLR, at p 329 ). (at p480)

6. The question of law upon which the appeal to the Supreme Court was brought was shown by the case stated to be whether on the evidence the magistrate was bound to hold that the subject premises fell within the definition of "dwelling-house" in s. 8(1) of the Act. If he was so bound his determination was erroneous in point of law for two reasons: (1) because s. 62 of the Act, in its application to the present case would disentitle the appellants to an order for possession unless they established, as they had alleged in the notice to quit upon which they relied, that the premises were not a "dwelling-house" and were reasonably required for occupation by them in their trade: s. 62(5)(g)(ii); and (2) because, it being admitted that the appellants had not provided for the respondent's occupation reasonably suitable alternative accommodation, s. 70(2) of the Act would operate in the circumstances of this case to preclude the making of an order for possession. (at p480)

7. When the case stated came before Herron J., he held, not that the magistrate was bound on the evidence to find that the premises were a "dwelling-house", but only that the magistrate had applied an erroneous test in making a contrary finding. His Honour therefore decided to remit the case to the magistrate with his expression of opinion. The formal order which his Honour made answered in the affirmative the question submitted by the case stated, namely, whether the magistrate's determination was erroneous in point of law, and it remitted the case stated to the magistrate with that opinion and ordered him to hear and determine the information in accordance with that opinion. (at p480)

8. The appeal necessitates a consideration of the facts of the case in relation to the definition of "dwelling-house" in s. 8(1) of the Act, which is in these terms:-
"'dwelling-house' means any prescribed premises (including shared accommodation) leased for the purposes of residence, and includes - (a) the premises of any lodging-house or boarding house; (b) any part of premises which is leased separately for the purposes of residence, but does not include premises licensed for the sale of spirituous or fermented liquors." (at p480)

9. It is conceded that the premises in question are "prescribed premises" within the meaning of the Act. Paragraphs (a) and (b) of the definition of "dwelling-house" admittedly have no application. It is not suggested that the premises were licensed for the sale of spirituous liquors. The question, therefore, is whether it was open to the magistrate to conclude that the premises did not answer the description provided by the words "leased for the purposes of residence." (at p481)

10. The construction of these words may be considered first. It is clear from the terms of s. 62 that the question whether premises fall within the description must be decided as at the date of the giving of the notice to quit which is relied upon in the proceedings to recover possession. Consequently it is necessary to consider in every case whether it was for the purposes of residence that the premises in question were in lease at that date. The word "leased" in the definition must be understood in the light of the definition of "lease" contained in s. 8(1), by which that word (subject to exceptions not relevant to this case) is made to include every contract of letting of any prescribed premises, whether the contract is express or implied or is made orally, in writing or by deed, and to include, inter alia, any tenancy the existence of which is presumed by operation of s. 22A of the Landlord and Tenant Act of 1899 (N.S.W.) as amended by subsequent Acts. (at p481)

11. The purposes for which premises are leased at the date of the notice to quit are the purposes which "may reasonably be held to have been contemplated by both parties, having due regard to the terms of the lease, the character of the subject let, and other similar circumstances" (cf. Westropp v. Elligott (1884) 9 App Cas 815, at p 831 ). In that case Lord Watson said, in relation to provisions of an Imperial Act relating to a "holding let to be used wholly or mainly for the purpose of pasture", that "where the particular purpose for which the holding is to be used is not defined by contract, the legislature must have intended that the purpose should be ascertained by reference to the use or uses which the contracting parties must as intelligent and reasonable men be held to have had in their contemplation when they entered into the lease" (1884) 9 App Cas, at p 832 . This proposition may be accepted as applicable to a case arising under the Act now in question, unless, after the granting of the lease, a change has occurred in the mutual rights and duties of the parties in relation to the user of the premises. It is in line with the view which the English courts have adopted in construing the words "let as a separate dwelling" in the Increase of Rent and Mortgage Interest (Restrictions) Act, 1920 (Imp.) (10 & 11 Geo. 5 c. 17). They have held that what must be ascertained is the contemplation to be attributed to the parties at the date of the letting, according to the terms and circumstances of the letting (Wolfe v. Hogan (1949) 2 KB, at pp 203, 204 , per Evershed L.J.). Denning L.J. said in that case (1949) 2 KB, at pp 204, 205 , "If the lease contains an express provision as to the purpose of the letting, it is not necessary to look further. But, if there is no express provision, it is open to the court to look at the circumstances of the letting. If the house is constructed for use as a dwelling-house, it is reasonable to infer the purpose was to let it as a dwelling. But if, on the other hand, it is contructed for the purpose of being used as a lock-up shop, the reasonable inference is that it was let for business purposes. If the position were neutral, then it would be proper to look at the actual user. It is not a question of implied terms. It is a question of the purpose for which the premises were let". (at p482)

12. But, though the time of the letting is initially the time as at which the purposes must be ascertained, it is apparent that the parties may afterwards change the nature of the purposes. They may do this by a contract express or implied, or by conduct giving rise to an estoppel or a general waiver. Passages in the judgments in Wolfe v. Hogan (1949) 2 KB, at p 203 and Court v. Robinson (1951) 2 KB 60 support the view that where premises are initially let for business purposes and the tenant converts them into a dwelling, then, even though the lease contained a prohibition against use as a dwelling, the premises should be held to be leased for the purposes of a dwelling if a contract varying the lease to permit of the new mode of user is to be inferred. But, though we think that the same conclusion should be reached if the conduct of the parties, while not justifying the inference of a contract, effects an estoppel or a waiver as to the use of the premises as a dwelling, we do not think that a change of the purposes for which the letting was originally made can be brought about by an alteration in the mode of actual user, if that alteration is unaccompanied by anything constituting a variation of the legal relations of the parties upon the subject of the purposes for which the premises are in lease. Denning L.J. in Wolfe v. Hogan (1949) 2 KB, at p 205 expressed the view that a house originally let for business purposes does not become let for dwelling purposes unless it can be inferred from the acceptance of rent that the landlord has affirmatively consented to the change of user. We would not adopt, as applying to the Act we have to consider, the qualification contained in this proposition. In our opinion even an affirmative consent by the landlord will not suffice unless it is given by a contract between the parties, express or implied, or the circumstances lead to the conclusion that the landlord has waived any provisions of the lease inconsistent with the change of user or is estopped from objecting to the change. (at p483)

13. The application of the definition of "dwelling-house" in s. 8 of the Act to a case where it is found, in accordance with the principles we have stated, that the premises are leased for more purposes than one raises a question of considerable importance. In Mayer v. Smythe (1949) 66 WN (NSW) 15 a case decided under the National Security (Landlord and Tenant) Regulations in which "dwelling-house" was defined as it is in the Act now in question, it was held that the definition should not be construed as if the word "wholly" preceded the words "for the purposes of residence"; and to that extent the decision was plainly right. It was also held, however, that it is the principal or dominant use to which the premises are put that constitutes them a "dwelling-house". Reference was made in the judgment to Tucker v. Turner (1947) VLR 241 , in which it was held under the same regulations that premises are a "dwelling-house" if the primary or principal purpose for which they are designed to be used, or are in fact used, is that of a dwelling-house, although they may also be used for other purposes. Ex parte Belling; Re Woollahra Municipal Council (1946) 47 SR (NSW), at p 177; 63 WN 295; 16 LGR 68 was also mentioned, but that case and the later case of Bakes v. Huckle (1948) VLR 159 were decided under regulations in which the expression "dwelling-house" was used without definition. In Mayer v. Smythe (1948) 66 WN (NSW) 15 and Tucker v. Turner (1947) VLR 241 no attention appears to have been devoted to the definition, which in truth does not advert either to the use to which premises are put or for which they are designed, or to the relative importance of several concurrent uses, or to the relative importance of the several purposes for which premises are leased in a case where they are leased for more purposes than one. In our opinion, the question of fact to be decided in such a case is not to be answered by endeavouring to assess the significance of each of the purposes of the letting and concentrating upon that which is considered the principal or dominant purpose to the exclusion of the purposes which, though also within the contemplation of the parties, are adjudged to be of less importance. (at p483)

14. The course of decision in England, under the Increase of Rent and Mortgage Interest (War Restrictions) Act, 1915 (Imp.) (5 & 6 Geo. 5 c. 97) and the Acts which have replaced it, is instructive. The Act of 1915 provided that it should apply to a house or part of a house "let as a separate dwelling": s. 2(2). The Court of Appeal held, in Epsom Grand Stand Association Ltd. v. Clarke (1919) 35 TLR 525 , that a house let for the purpose of its being dwelt in was let as a dwelling-house, and none the less so because it was also let for the purposes of a public-house. The Increase of Rent and Mortgage Interest (Restrictions) Act, 1920 repeated the provisions of s. 2(2) of the 1915 Act, and added that the application of the Act should not be excluded "by reason only that part of the premises is used as a shop or office or for business, trade, or professional purposes": s. 12(2)(ii); but it was held that this provision merely affirmed the construction adopted in the Epsom Grand Stand Case (1919) 35 TLR 525 (see Vickery v. Martin (1944) 1 KB 679, at p 682 ). That construction necessarily involved the rejection of the view that where there was a plurality of purposes the dominant purpose was the test: indeed McCardie J. twice indicated a personal preference for that view but accepted the Epsom Grand Stand Case (1919) 35 TLR 525 as a binding decision to the contrary (Waller & Son Ltd. v. Thomas (1921) 1 KB 541, at p 554 ; W.H. Brakspear & Sons Ltd. v. Barton (1924) 2 KB 88, at p 92 ). (at p484)

15. In Greig v. Francis and Campion Ltd. (1922) 38 TLR 519, at p 520 Swift J. said, in reference to premises which included a shop and living quarters, that it had to be determined as a question of a fact, what was the real, main and substantial purpose of the premises. He pointed out that it well might be that whoever had to determine that question of fact might come to the conclusion that the real, main and substantial purpose of the premises was twofold, namely, to provide a shop for the inhabitants of the building to work in during business hours, and a dwelling-house for them to rest, recuperate, and dwell in during the non-business hours. The distinction intended to be drawn by the words "real, main and substantial purpose" seems to have been between uses in the contemplation of the parties as purposes to be served for their own sake or as ends in themselves and uses incidental, or subservient, to the use of the premises for another purpose. In Cohen v. Benjamin (1922) 39 TLR 10, at p 11 Bray J., in answer to a specific contention that the question to be determined was what was the dominant use to which premises were put, said that he did not think that he had to decide any such question, and that there was nothing in the statute about dominant use, nor was there any authority for the proposition so far as he was aware. Finally, when the Rent and Mortgage Interest Restrictions Act, 1939 (Imp.) (2 & 3 Geo. 6 c. 71) re-enacted the relevant provisions of the 1920 Act, Lord Greene M.R., delivering the judgment of the Court of Appeal in Vickery v. Martin (1944) 1 KB, at p 684 , said: "I decline, with the language of the sub-section before me, to embark on an inquiry what is the substantial use, or what, in the language of the county court judge, is the principal or ancillary use, of the premises." (Obviously the county court judge had used the word "ancillary" as meaning secondary or subordinate.) This case was referred to by Evershed M.R. in Kitchen's Trustee v. Madders (1949) 2 All ER 1079, at p 1081 as having decided that the provision means what it says and that one is not concerned to see how substantial the part is that is used for business purposes. (at p485)

16. The definition which has to be considered in the present case must likewise be taken to mean what it says. There is no justification for reading into it a qualification which would confine its application to cases where residence is considered of greater importance than other uses which also are within the actual or presumed contemplation of the parties. The purpose or combination of purposes to which the parties must be held to have contemplated that the premises would be put by the tenant must be ascertained by considering the provisions of the contract as it stands at the date when the notice to quit is given and any facts which at that date affect their mutual rights and duties in relation to the user of the premises; and, if the inquiry is not thereby answered, then by considering the nature of the premises and all the circumstances existing at the date of the original lease. If the conclusion be that residence was either the sole purpose or one of several purposes which the parties should be held to have contemplated, the premises must be held to be "leased for the purposes of residence"; but a conclusion that residence was a purpose of the letting is not open where the parties are considered to have had in view no residence except as part of the enjoyment of the entire premises for non-residential purposes. An illustration may be found in the case of a large city store which contains caretaker's quarters. Residence by a caretaker is one of the uses which the parties to a lease of such a building may well be found to have contemplated, yet the building could not on that account alone be held to be leased for the purposes of residence, for residence by a caretaker merely forms part of the use of the building for the purposes of a store. (at p485)

17. On this construction of the definition, the facts of the present case admit of no other conclusion than that the premises were leased for the purposes of residence. The respondent became the tenant of the premises in June 1934, the lessor being the appellants' predecessor in title. A tenancy agreement was executed, but its terms were not proved before the magistrate. The appellants purchased the premises subject to existing tenancies in June 1948, and thereafter the respondent, without any attornment or fresh agreement, continued to hold the premises as tenant, paying rent to the appellants' agents. The case is not one of a tenancy the existence of which is presumed under s. 22A of the Landlord and Tenant Act of 1899 as amended by subsequent Acts, for the notice to quit described the respondent as tenant from week to week, and the magistrate found that the relationship of lessors and lessee existed between the parties by virtue of a weekly tenancy of the premises. The contract of letting which was in force when the notice to quit was served was therefore the contract made in 1934 between the respondent and the appellants' predecessor in title. There was no proof of any variation of the lease by contract, or of any waiver or estoppel effecting the user of the premises. The contract of letting was silent, so far as appears, as to the contemplated user of the premises. The only clue to the contemplation of the parties was provided by the character of the premises themselves. They consisted of two buildings, one a shop and dwelling and the other a shed. The main building comprised a room on the street frontage having a shop window and being separated from the remainder of the building by a fibrous partition, and behind it two bedrooms, a kitchen, a bathroom and a boxroom. Thus the building was, to all appearances, adapted to serve the dual purpose of a shop and a dwelling. The shed was of a neutral character, for it might well subserve either aspect of the ostensible purpose of the main building. (at p486)

18. The magistrate found that the lessee took the premises to start a business, and to use portion as a fruit shop, portion for residence, and portion (the shed) for the housing of a motor lorry for business or pleasure. This finding is irrelevant, as it was not shown that the intentions of the lessee were known to his lessor; but even if that had been shown, the effect would only have been to reinforce the conclusion to which the character of the buildings points. (at p486)

19. There was also evidence, and the magistrate made certain findings, as to the uses to which the lessee actually put the premises during his tenancy. In brief, he used the shop portion as a shop for a period of three months only, namely, in 1936; he sub-let it to a dressmaker for six months in 1945; and from that time onwards he used it as a bedroom, darkening the window on the street frontage. These facts cannot affect the issue. They show a user subsequent to the date of the letting and unaccompanied by any consent of the original lessor or the appellants, and therefore they do not bear upon the question of the purposes for which the premises were in lease. They could have no relevance unless the magistrate had to decide, as he erroneously thought he had, which of the uses to which the buildings were adapted was the principal or dominant use. (at p487)

20. The only conclusion open to the magistrate was that the premises were leased to the respondent for the twofold purpose of business and residence. Each was obviously an end in itself; neither was merely accessory to the other. The premises were as surely leased for the purposes of residence as for the purposes of business. (at p487)

21. The determination of the magistrate was therefore erroneous in point of law, and the order made by Herron J. was correct in so far as it answered in the affirmative the question submitted by the case stated. The order proceeded to remit the case stated to the magistrate. But it necessarily follows from these reasons that only one determination was in law open to the magistrate, and that he should have dismissed the information. There is no cross-appeal by the tenant from the order of Herron J., but his Honour could have made any order that flowed from a correct decision upon the question of law. Under s. 37 of the Judiciary Act 1903-1950 (Cth.), this Court on appeal may give such judgment as ought to have been given in the first instance, and we consider that the order of Herron J. should be varied by omitting that portion of it which remitted the case to the magistrate and directed him to hear and determine the information in accordance with the Supreme Court's opinion, and by inserting in lieu thereof an order allowing the appeal brought by the case stated, discharging the order of the magistrate and dismissing the information. Otherwise the appeal to this Court should be dismissed. (at p487)

22. The appellants must pay the costs of the appeal to this Court, s. 84 of the Act having no application to this appeal (O'Mara v. Harris [1948] HCA 18; (1948) 77 CLR 490 ). (at p487)

ORDER

Order of Herron J. varied by omitting that portion thereof whereby it was ordered that the case stated be remitted to the stipendiary magistrate with the opinion of the Supreme Court and that he should hear and determine the information in accordance with such opinion, and by substituting therefor an order that the appeal brought by the case stated be allowed, that the order of the magistrate be discharged and that the information be dismissed. Otherwise appeal dismissed with costs.