Kater v Kater [1960] HCA 96; (1960) 104 CLR 497 (20 December 1960)

HIGH COURT OF AUSTRALIA

KATER v. KATER [1960] HCA 96; (1960) 104 CLR 497

Agricultural Holdings (N.S.W.)

High Court of Australia
Dixon C.J.(1), McTiernan(1), Kitto(1), Taylor(1) and Menzies(1) JJ.

CATCHWORDS

Agricultural Holdings (N.S.W.) - Tenancy at will - Arising from entry into possession of purchaser of land prior to completion - Necessity for notice to quit-"Contract of tenancy" - "Landlord" - "Tenant" - Agricultural Holdings Act, 1941 (N.S.W.), ss. 4 (1), 24 (1) - Conveyancing Act, 1919-1954 (N.S.W.), s. 127.

HEARING

Sydney, 1960, December 7, 9; December 20. 20:12:1960
APPEAL from the Supreme Court of New South Wales.

DECISION

December 20.
THE COURT delivered the following written judgment:-
On 2nd October 1956 the appellant undertook by a written contract of sale to The purchase price was 129,500 pounds and the obligation to pay this sum was to be discharged, as to 14,600 pounds, by the respondent assuming responsibility for the payment of the principal interest and all other moneys secured by certain mortgages on the property and, as to the balance of 114,900 pounds, by a payment of 100 pounds upon signing the contract and the residue thereof, namely 114,800 pounds, by payment on demand. By the terms of sale the appellant undertook that he would not demand payment of this latter sum before 1st July 1961 if, in the meantime, the respondent should work and maintain the property in an efficient and husbandlike manner and effect reasonable improvements thereon to the satisfaction of the appellant and otherwise observe and comply with the terms and conditions of the contract. It remains to be said that the due date for repayment of the principal sum secured by the mortgages already mentioned was 1st November 1957 and that by the terms of the contract the respondent expressly bound himself to pay this sum on the due date. (at p502)

2. The respondent was in possession of the property at the time when the contract was signed. In fact he had gone into possession on or before 1st July 1956, but the evidence does not disclose the circumstances in which this had occurred. There is, however, no suggestion that he then acquired any title superior to that which he now claims and, presumably, he was allowed into possession during the discussions which preceded the making of the contract of sale. (at p502)

3. As may be supposed from what has already been said, the contract provided that as from a specified date the respondent should become entitled to the rents and profits of the property and, conversely, that he should assume the burden of all rates taxes and outgoings. The relevant date for this purpose was expressed to be 1st July 1956, a date which preceded the making of the contract by some three months. The respondent was still in possession on 10th January 1958 when the appellant made a formal demand for the payment of the outstanding balance of purchase money. By the letter which contained this demand the appellant alleged that the respondent had not worked and maintained the property in an efficient and husbandlike manner and that he had not effected reasonable improvements thereon, but there is no evidence in the case that this was so. However, it is clear that the respondent had made default in repaying the principal money which had become due under the mortgages referred to, that he was still in default when the letter was written and that the appellant was then entitled to make such a demand. Thereafter there was further correspondence between the parties and, no part of the balance of the purchase money having been paid, the appellant on 22nd July 1958 gave notice of his intention to rescind the contract. This he did by a letter which contained the following intimation: ". . . unless your client pays all principal interest and other moneys secured by the mortgages and pays the whole of the balance of purchase money to his father, or makes arrangements in regard thereto satisfactory to him, on or before Friday the 8th August next, our client will regard the contract as rescinded on that date and will require your client to deliver up possession of 'Swatchfield' to his agent on Saturday the 9th August 1958." It is unnecessary to traverse in detail the contents of the subsequent letters which passed. There were assertions, on insubstantial grounds, that the respondent was not in default and he made it clear that he intended to remain in possession notwithstanding the appellant's demand. In fact he remained in possession and on 12th September 1958 the appellant caused a writ of ejectment to be issued out of the Supreme Court. At the subsequent hearing of the action the appellant was unsuccessful and an appeal by him to the Full Court was dismissed. This appeal is now brought from the order of dismissal. (at p503)

4. It is common ground between the parties that whatever equitable interest the respondent had in the subject land, he was, at common law, a tenant at will by implication of law and it was by force of this title alone that he sought, with success in the Supreme Court, to resist the appellant's claim to possession. It is true that at the outset some issues were raised which might have required consideration whether the respondent had any right to protection in a court of equity but, in the ultimate result, these issues were abandoned and no attempt has been or is now made by the respondent to assert any equitable right to possession. (at p503)

5. With these observations in mind the particular course of the litigation may be stated. In short, the respondent, as a tenant at will, contended that he was, within the meaning of the Agricultural Holdings Act, 1941 (N.S.W.), the tenant of an agricultural holding and that, by reason of the provisions of that Act, his tenancy could not be determined by any demand or notification other than a notice to quit which conformed to the requirements of s. 24 (1) of the Act. At the same time it was not disputed that the tenancy, being a common law tenancy at will, could have been determined by a sale of the reversion or some other act or event inconsistent with the continued subsistence of the tenancy. (at p503)

6. According to the appellant the fallacy in this argument is that s. 24 (1) of the Act does not either expressly or impliedly require the giving of a notice to quit to determine a tenancy at will. It is true that the Act provides a large degree of protection to tenants of agricultural holdings. It contains a number of provisions directed to securing compensation for them in specified circumstances and it also provides a measure of security of tenure to tenants of such holdings. But, according to the appellant, even if the respondent was a "tenant" within the meaning of the Act - which he disputed - s. 24 (1) did not place any obstacle in his way and the tenancy was duly determined prior to the issue of the writ of ejectment. (at p503)

7. Consideration of the two questions which arise requires an examination of the provisions of the Act. With the omission of some immaterial exceptions, "holding" is defined by the Act to mean any parcel of land being not less than two acres in area held by a tenant which is used or intended to be used for purposes either wholly agricultural or wholly pastoral or in part agricultural and as to the residue pastoral. In turn, "tenant" means the holder of land under a contract of tenancy and includes the executors, administrators, assigns, guardians, committee of the estate or trustee in bankruptcy of a tenant or other person deriving title from a tenant. And, of course, a common law tenancy at will is determined by the death of a tenant or by attempted alienation. The expression "contract of tenancy" which appears in the definition of tenant is itself the subject of an exhaustive definition. For the purposes of the Act that expression means "a letting of or agreement for letting land for a term of years, or for lives, or for lives and years, or from year to year, and includes a letting of land under a tenancy at will." All of these expressions are of importance when we come to consider the provisions of Pt. V of the Act. The definition of contract of tenancy is somewhat inartistic but it is clear that it does not embrace "a letting of or agreement for letting land" from month to month or from week to week, or for a fixed period of less than one year. But the defined meaning must give way if the context or subject matter of any particular provision otherwise indicates or requires. Such a context is to be found in the first section of Pt. V (s. 22) because that section applies specifically to any contract of tenancy made after the commencement of the Act where the tenancy of a holding is expressed to be for a fixed term of less than two years. Plainly enough, the provisions of that section would apply to a lease for a fixed term of six months. What this section purports to do is to extend the term of any tenancy to which it applies; the tenancy is to have and take effect as if the term of two years were substituted for the lesser fixed term specified. The next section deals with leases for terms of two years or more and its operation extends expressly to any lease which has become a lease for two years by virtue of the operation of the preceding section. Then, in the case of leases to which s. 23 applies, it is provided that the tenancy shall not terminate on the expiration of the term for which it was granted "unless not less than one year nor more than two years before the date fixed for the expiration of the term a written notice has been given by either party to the other of his intention to terminate the tenancy". Any notice so given is deemed to be a notice to quit for the purpose of the Act. It will be seen that ss. 22 and 23 deal with leases for fixed terms but when we come to s. 24 (1) we see that it deals with periodical tenancies of the character specified. It provides that notwithstanding any provision in a contract of tenancy or in any other Act to the contrary, a notice to quit a holding shall be invalid if it purports to terminate the tenancy before the expiration of twelve months from the end of the then current year of tenancy, or where the date of creation of a tenancy is unknown to the person giving the notice, before the expiration of twelve months from the date of the notice. Bearing in mind that the definition of contract of tenancy includes a letting of land from year to year and that this is the only form of periodical tenancy mentioned in the definition, the expression in s. 24 (1), "twelve months from the end of the then current year of tenancy" makes it reasonably plain that the first paragraph of that sub-section was intended to deal with the case of tenancies from year to year. But there is a second paragraph to s. 24 (1) and it is this provision which has caused the difficulty in the case. This paragraph is in the following terms: "In the application of this section to a tenancy at will the expression 'the then current year of tenancy' shall mean the period of one year (calculated from the date of commencement of the tenancy or the anniversary thereof, as the case may be) current at the date when the notice to quit is given." (at p505)

8. The respondent's argument acknowledges that apart from the provisions of the section a tenancy at will of an agricultural holding might be determined without notice to quit. But it seizes upon this very circumstance to assert that the section must be taken to require the giving of such a notice in the case of such a tenancy. Unless such an effect be given to the section then, it was said, the second paragraph of the sub-section achieves nothing. But there are in our view sound reasons why this argument should not be accepted. First of all it is abundantly clear that apart from the provisions of this paragraph there could be no foundation for the respondent's argument. If, therefore, the paragraph is to achieve anything at all in the case of a tenancy at will it must result merely from the application of the provisions of the first paragraph to tenancies at will. But when the language of that paragraph is considered it appears quite clearly that it is not appropriate to produce the result for which the respondent contends. Essentially the first paragraph is concerned with the prescription of a period of notice which must be specified whenever a notice to quit is given to determine a periodic tenancy from year to year. Naturally enough, it proceeds on the basis that a notice to quit is necessary if the lessor wishes to determine a tenancy from year to year but there is nothing in that paragraph to impose the requirement that a notice to quit shall be given in such a case. True, it may be, that sufficient may be extracted from the second paragraph to enable it to be said that the intention was that the first paragraph should apply to tenancies at will, but even when the section is so read it is impossible to say that it requires the giving of a notice to quit as a condition of the determination of such a tenancy. It may be that the second paragraph was framed in the mistaken belief that if a lessor wished to determine a tenancy at will it was necessary for him to give a notice to quit. But it is, perhaps, more likely that, as suggested in argument, the draftsman had in mind the form of statutory tenancy created in appropriate circumstances by s. 127 of the Conveyancing Act, 1919-1954 (N.S.W.). That section provides that no tenancy from year to year shall be implied by payment of rent; if there is a tenancy and no agreement as to its duration, then such a tenancy shall be deemed to be a tenancy determinable at will of either of the parties by one month's notice in writing expiring at any time. Using the language of the section, such tenancies have from time to time been referred to as tenancies at will determinable by one month's notice (Cf. Larke Hoskins and Co. Ltd. v. Icher (1); Hardy v. Battaglene (2) and Gordon v. Wilkinson (3)) but there is a clear distinction between such a tenancy and a tenancy at will at common law which will be determined by any act of the lessor inconsistent with his will that the tenancy should continue subject, of course, to the qualification that if the act is done off the land, the tenancy will not terminate until the tenant has notice of the act. However, it is unnecessary to speculate concerning the reason for the presence of the second paragraph in sub-s. (1) of s. 24; it is sufficient to say that even when that subsection is given the widest interpretation its language is quite insufficient to justify the conclusion that it requires the giving of a notice to quit for the determination of a true tenancy at will. Such a conclusion requires firmer support than a provision couched in the language of the first paragraph of the sub-section. (at p506)

9. No doubt, as was mentioned in argument, the sub-section produces an anomaly if it applies to tenancies arising under s. 127 of the Conveyancing Act and not, as seems clear, to tenancies from month to month created by express agreement. But the view that the section requires the giving of a notice to quit in the case of a tenancy at will at common law would produce an anomaly also. It would mean that whilst the section has no application to tenancies from week to week or month to month, a very extended period of notice would be required to terminate a tenancy at will. (at p507)

10. The reasons which we have given are sufficient to dispose of the appeal and for that reason it is unnecessary to go further and determine the wider question whether a tenancy at will arising by implication of law in the circumstances of this case is within the definition of "contract of tenancy" or whether the parties answer, respectively, the defined descriptions of "landlord" and "tenant". As at present advised, however, we are disposed to think that the tenancy in this case was completely outside the Act. (at p507)

ORDER

Appeal allowed with costs. Order of the Full Court set aside. In lieu thereof order that the appeal to that Court be allowed with costs and order of trial judge be set aside. In lieu thereof declare that the appellant was on the twelfth day of September 1958, and still is, entitled to possession of the subject land and adjudge that the appellant do recover against the respondent possession of the said land and his costs.