May v Ceedive Pty Ltd [2006] NSWCA 369 (15 December 2006)

Last Updated: 19 December 2006

NEW SOUTH WALES COURT OF APPEAL

CITATION: MAY v CEEDIVE PTY LTD [2006] NSWCA 369



FILE NUMBER(S):
40609/05

HEARING DATE(S): 20 September 2006

DECISION DATE: 15/12/2006

PARTIES:
Allen Thomas MAY (Appellant)
CEEDIVE PTY LTD (Respondent)

JUDGMENT OF: Mason P Beazley JA Santow JA

LOWER COURT JURISDICTION: Supreme Court - Common Law Division

LOWER COURT FILE NUMBER(S): SC12916/02

LOWER COURT JUDICIAL OFFICER: Levine J

COUNSEL:
J A D NEEDHAM SC/ P M LANE (Appellant)
M D YOUNG (Respondent)

SOLICITORS:
Robert Stoyef (Woodford) (Appellant)
John F Joseph (Lithgow) (Respondent)

CATCHWORDS:
REAL PROPERTY – Meaning of “fixture” in the case of a house purportedly sold on underleased land where the house was not severable and had been on the land for some years – lesser weight of subjective intention as against objective circumstances – to the extent it is relevant, subject intention must be that of original occupier of land and of the builder of the house, not a subsequent purchaser – “prescribed premises” for purposes of protection under Landlord and Tenant Act – whether lease of bare land.
PROCEDURE – Issue and Anshun estoppel not arising where jurisdiction held to be absent under Residential Tenancies Act 1987 by the Consumer, Trader and Tenancy Tribunal in preliminary proceedings where no decision on merits.

LEGISLATION CITED:
Landlord and Tenant (Amendment) Act 1948 (NSW) s5A, s5AA, s8
Real Property Act 1900 (NSW) s42(1)(d), 43(1)
Residential Tenancies Act 1987 (NSW) s6
Retail Leases Act 1994 (NSW)

DECISION:
Appeal allowed with costs. See orders at [105].


JUDGMENT:

IN THE SUPREME COURT
OF NEW SOUTH WALES
COURT OF APPEAL

CA 40609/05

SC 12916/02; 12917/02; 12918/02; 12919/02

MASON P

BEAZLEY JA

SANTOW JA

15 DECEMBER 2006

Allen Thomas MAY v CEEDIVE PTY LTD

Judgment

1 MASON P: I agree with Santow JA.

2 BEAZLEY JA: I agree with Santow JA.

3 SANTOW JA:

INTRODUCTION
The appellant Allen May claims to be a protected tenant of “prescribed premises” under the Landlord and Tenant (Amendment) Act 1948 (NSW) (“the Act”). It was on that basis that he unsuccessfully sought to resist removal as a tenant from the underleased property described as Property 20020 Pottery Estate. The Pottery Estate consists of former mining land at Lithgow. Its then proprietor around 1910 provided accommodation for its workers by having erected what were then (but are no longer) miner’s cottages for its workers’ use. Mr May was not a miner but acquired his underlease and interest in the house, being a portion of the Pottery estate, in 1969.

4 At trial, the primary judge, Levine J, concluded against Mr May. He subsequently made orders for possession on 30 March 2005 in favour of the current owner of the subject property Ceedive Pty Limited (“Ceedive”), respondent in this appeal, which acquired title in 1999. Critical to that result was the primary judge’s conclusion that the house erected on the underleased land was not a fixture but a chattel and that the underlease was of “bare land”. Mr May was therefore held to fall outside the Act’s protection, there being no lease of “prescribed premises” within the Act.

5 The primary judge found in consequence that Ceedive as current owner of the subject land was entitled to increase Mr May’s rent on a weekly basis and to give only one weeks’ notice of termination of the lease. Rent so increased had fallen into arrears when notice was given. Accordingly, the primary judge concluded that Ceedive was entitled to possession, to all arrears of rent and to mesne (intermediate) profits to date, ordering costs against Mr May.

6 Mr May on appeal challenges each of those findings. In particular he contends that the trial judge was in error in concluding that the house on Property 20020 was a chattel or the lease one of bare land. He submits that the house was in law a fixture and comprised within the underlease so that as a lessee of “prescribed premises” he enjoyed the protection of the Act both against increases in rent beyond a “fair rent” and against termination other than in accordance with the Act.

7 This appeal also puts in issue whether, by reason of an earlier preliminary proceeding in the Consumer, Trader and Tenancy Tribunal in which it determined it lacked jurisdiction for lack of a residential tenancy, Issue or Anshun estoppel precluded Mr May from asserting his tenancy was of prescribed premises within the Act.

SALIENT FACTS

8 Ceedive acquired the whole property (Lot 503, DP 1030314) comprised in “the Pottery Estate” by contract of sale dated 12 August 1999. It included the property comprised in Mr May’s underlease. A transfer dated 11 May 2000 completed that acquisition. Registration conferred indefeasible title (save for interests recorded in its folio and subject to tenancies of which it had notice for a term not exceeding three years (s42(1)(d) of Real Property Act). Special Condition 1 to that contract (Judgment [6]) acknowledged that there were 29 dwellings on the property owned by other persons who paid “ground rent” to the vendor each week.

9 The history of ownership and rental of Pottery Estate was, in brief, as follows. The original owner of the land was a mining company Lithgow Valley Colliery Company Pty Ltd. It owned the land between 1883 to 1979. It was followed by a succession of other companies in the Oakbridge group of mining companies including Henry Godfrey Pty Ltd between 1979 to 1980 and Tagus Holdings Pty Ltd 1980 to 1999 with finally Ceedive acquiring title in 1999 as I have described. Between 1995 and 2000 the appellant paid rent each fortnight to Coalex Pty Ltd (also an Oakbridge group company), then to Oakbridge and then to another affiliate Tagus Holdings. The primary judge concluded that this did not detract from these being weekly tenancies, terminable on one week’s notice (Judgment [8] to [10]). None of the tenancies were registered under s5A of the Act.

10 On 13 December 2000 Ceedive notified four tenants including Mr May that the weekly rent was to increase as of 1 January 2001. (In referring to them as “tenants” I do so for convenience; I do not pre-empt the answer to the question whether they were tenants only of the relevant land, or also (as they claimed) of the house erected thereon.) None of those tenants paid the higher rent. Nor did Mr May sign the “New Ground Rental Agreement Form” included with the notice of increase.

11 Each of the tenants was substantially in arrears of rent by September 2002 when Ceedive gave notice terminating their ground leases. Ceedive asserted it had both an express and statutory power, which it had properly exercised, to terminate the leases for non-payment of rent. Upon termination, Ceedive was held by the primary judge to be entitled to possession of the land, arrears of ground rent and mesne profits.

The Position of the Appellant, Mr May

12 Mr May’s house (Property 20020) is a two-bedroom brick cottage within the Pottery Estate, being originally one of the miner’s cottages. He purchased the house through Laurence Breen, a real estate agent, for $1000 in 1969 on the basis that the arrangement would be the same as for a Ms Madge McIntyre, the previous tenant. On 28 September 1969 he paid $85.80 to Mr Breen for one year’s ground rent in advance. On 1 October 1986 his rent was increased to $15.80 per week. He received receipts for the original purchase price and for rent paid, but there was otherwise no formal documentation of the arrangement.

13 Mr May’s evidence was that he received written notice of successive rent increases. Thus there was a letter calling for increased rent dated 6 October 1995 (Blue 2, 298). His understanding was that he was obliged to pay rent a week in advance, although he could chose the payment mode (for example he sometimes paid several weeks in advance). He paid the increased amount required on 6 October 1995 ($18 per week) until 12 May 2000.

14 Mr May carried out various repairs and improvements. Around 1985 Mr May arranged construction of a new roof at a cost of $5, 500. In 1987 he arranged for electrical rewiring at a cost of $2,500. In December 1994 Lithgow Council required Mr May’s cooperation in changing the septic arrangements at the house. In May 1995 Mr May arranged for the construction of a septic system at a cost of $3,200 (and received a refund of $640).

15 In June 1997 Mr May received a letter from Oakbridge advising that Pottery Estate was to be sold (see Blue 1, 23).

16 On 16 May 2000 Mr May received a letter from Ceedive including a document headed “Pottery Estate Land Holdings Conditions For Ground Rental”, reproduced at [18] in the judgment. It is expressed to be for the House Blocks only. It provided for increased ground rental (cl 7), modes of payment (cl 6) and concludes with the following clauses which cover, inter alia, the consequences of failure to pay as asserted by Ceedive:

“10. Failure to pay the Figure of Ground Rental as listed above in both Item 7 & 9 will result in the immediate dissolvement of any agreements and your eviction. Continued failure will result in the demolition and removal of buildings etc on our land at your cost.

11. Ceedive Pty Ltd reserves the right to dissolve any and all agreements with Four (4) Weeks i.e. 1 Months Written Notice of Intention.

12. Agreements between Ceedive Pty Ltd and the current home owner cannot be transferred to any other person, relative, etc without Written Permission from Ceedive Pty Ltd.

13. Home Owners who have received “Expression of Interest to Purchase” should be notified within the next Two (2) Months of further arrangements to purchase. This is allowing for Plans to be completed and submissions to Council.

Until such times Ground Rental will need to be continued as listed in both Items 7 & 9 above.”

17 In March 2001 the residents were advised by Australia Post that mail would no longer be delivered, due to health and safety concerns (although Mr May did not in fact receive the relevant notice).

18 On 10 October 2002 Mr May filed an application for orders expressed to be in pursuance of the Residential Tenancies Act with the Tribunal. Following a letter from Ceedive’s solicitor to the Deputy Registrar (Blue, 9I 237/238) the Tribunal at the hearing made orders dismissing the application on the ground that it had no jurisdiction.

The First Instance Judgment

19 The primary judge found for Ceedive concluding that

(a) these were weekly tenancies derived from payment of rent on a weekly basis; judgment [9], [61], and
(b) the houses were owned by the tenants, including Mr May, and Ceedive owned the land; judgment [62].

20 The indefeasible title acquired by Ceedive was unaffected by the matters raised by the tenants. In broad terms, the primary judge rejected arguments that the position of the tenants was protected by reference to

(a) Special Condition 1 of the contract of sale which did no more than contain an acknowledgement that there were 29 dwellings erected on the property; judgment [62]. It gave no rights to anyone else but was a contractual obligation as between vendor and purchaser, merging on completion. This was not challenged on appeal.
(b) exceptions to indefeasibility based on the Real Property Act, contractual licence, constructive trust, estoppel by representation or other equitable rights,
(c) the status of the houses as fixtures and an implied equitable right to possession,
(d) the Act (the primary concern of the appeal), and
(e) the Contracts Review Act.

21 The primary judge also rejected a claim relating to wrongful interference with the tenant’s rights of possession.

22 The trial judge also found that Mr May, in not paying rent as increased, was in breach of his weekly tenancy. He further concluded that the houses belonged to the tenants, borne out by the houses being sold separately to the tenant; judgment [95], [100], [101]. He was not persuaded that they were fixtures; judgment [103].

23 The primary judge found that the historical practice as to rent increases was that the amount was fixed from time to time by the Colliery Company; judgment [11].

24 The primary judge found that Mr May failed to discharge the evidentiary burden in relation to the claim of interference with his quiet enjoyment; judgment [22]. That is not challenged on appeal.

25 The primary judge found that Ceedive had an unrestricted right to raise ground rents; judgment [63]. There was no requirement that rent would be fixed by reference to annual rates (although internal property management decisions were based on annual rates); judgment [63].

26 Upon registration Ceedive obtained indefeasible title; judgment [67]. Ceedive’s approach was consistent with historical practice (owners exercised the implicit right of a lessor to increase the ground rent under a weekly tenancy) and consistent with the acknowledgment in Special Condition 1; judgment [68].

27 The primary judge held that Mr May’s failure to pay rent breached the weekly ground leases such that termination of the underlease could be effected and proceedings for possession could be instituted; judgment [68].

28 The primary judge held that Special Condition 1 did not oblige Ceedive to make enquiries about the terms on which the tenants held the land; judgment [74]. Ceedive had notice under s42(1)(d), Real Property Act, of the listed weekly ground tenancies but was otherwise protected by s43(1). This was only notice of the tenancy, not notice of any associated rights or interests; judgment [74].

Were the houses fixtures?

29 The tenants, including Mr May, argued that the dwellings were fixtures, such that their status was unaffected by any private agreement between the parties; judgment ([87]-[88]). The tenants had argued that an equitable right to possession arose from the assumption that the houses were not part of the land; judgment [90]. Any conclusions as to an equitable right to occupy were however subject to the overriding effect of the Act; judgment [91].

Ceedive’s Notice of Contention – Issue Estoppel based on Tribunal’s determination?

30 The tenants including Mr May sought to raise an issue estoppel based on the decision of 31 October 2002 of the Consumer Trader and Tenancy Tribunal (“the Tribunal”). The primary judge expressed grave reservations about whether the Tribunal’s finding (that it had no jurisdiction as there was no “residential tenancy agreement” within the meaning of its Act) could be the basis of such an estoppel but did not decide that issue (citing Burden v Ainsworth [2004] NSWCA 3); judgment [93].

31 The evidence that the tenants owned their dwelling houses was all one way; judgment [94]. Evidence of intention is relevant to such a finding (NH Dunn v LM Ericsson (1979) 2 BPR 9241 per Mahoney JA; Permanent Trustee Australia v Esanda Corporation (1991) 6 BPR 13420 per Rolfe J); judgment [96], [97]. In the present case the primary judge was not persuaded that these cottages were fixtures, notwithstanding that they could not be easily removed; judgment [100], [103.

The rights of the Tenants

32 The tenants had a right to exclusive possession of the houses and incidental curtilage for an indefinite period. This created a tenancy at will; judgment [104]-[106]. The ground leases were weekly tenancies with Ceedive (and its predecessors) raising rents as they saw fit. The tenants owned the houses; judgment [107]. For the purposes of the Act, the reason why vacant possession was obtained is irrelevant; judgment [108].

Were the residents protected tenants under the Act?

33 The tenants argued the tenancies at will were protected by the Act. The primary judge rejected application of the authorities cited in support of this view (McKenzie v McKenzie (1944) 62 WN(NSW) 48 and H A Warner v Williams [1946] HCA 45; (1946) 73 CLR 421) as they referred to wartime regulations: [112]. To prove that the Act applied, the tenants needed to prove the premises were “prescribed premises” that were subject to a lease immediately before 1 January 1986; judgment [113].

34 Mr May argued that he was a protected tenant within the meaning of the Act. This finding depended on the existence of a lease under the Act before 1 January 1986 that continued to the present day (s5AA of the Act); judgment [118]. The leases were not registered under s5A of the Act. Registration in this context is a substantive requirement; judgment [121].

35 The primary judge found that the exclusions in s5A(1) of the Act did not apply as the houses were constructed prior to 16 December 1954; judgment [121].

36 The primary judge found that the relevant houses were “dwelling houses” within the meaning of the Act; judgment [122].

37 The primary judge found that the arrangements between the tenants and Ceedive were within the wide definition of “lease” in s8(1) of the Act; judgment [122].

38 The primary judge found that the rent notices given by Ceedive had not complied with the Act; judgment [122].

39 The primary judge found that the Act did not apply in any event as none of the dwellings amounted to “prescribed premises” within the meaning of the Act. The primary judge found that the tenants were lessees of bare land and the exception articulated by Dixon J in Turner v York Motors [1951] HCA 52; (1951) 85 CLR 55 at 75 did not apply; judgment [129].

Grounds of Appeal

40 The appellant appeals the following parts of the decision of the primary judge:

(a) The finding that the house on the property was not a fixture but was merely a chattel;
(b) The finding that the arrangement between the owner of the land from time to time and Mr May as tenant with respect to the house was a lease of bare ground, and that the premises were not “prescribed premises” within the meaning of the Act;
(c) The finding that Mr May was not a tenant protected under the Act;
(d) The finding that the owners of the land could increase the rent on a weekly basis, and give one weeks’ notice of termination of the lease;
(e) The decision that Mr May was liable to pay to Ceedive any amount as ground rent and/or mesne (intermediate) profits.

41 The appellant does not challenge the findings of the primary judge that:

(a) Ceedive was not bound by any equitable obligation to permit the appellant to remain on the property through a contractual licence, constructive trust, or estoppel enforceable in equity;
(b) Special Condition 1 of the contract of sale under which Ceedive acquired the land did not impose any burden on the title of Ceedive when it became registered as proprietor of the land;
(c) The appellant’s subjective intention was that he owned the house which stood on the land, but not the land itself.

42 There are ten grounds of appeal:

(1) The trial judge erred in holding that the house erected on the property known as Property 20020 Pottery Estate was a chattel and not a fixture.
(2) The trial judge should have held that the house on Property 20020 was a fixture.
(3) The trial judge erred in holding that the arrangement between the appellant and predecessors in title to the appellant was a lease of the ground only.
(4) The trial judge should have held that the terms of the lease included, as a matter of law, or as a matter of fact, the house which stood on Property 20020.
(5) The trial judge erred in finding that the house standing on Property 20020 was not “prescribed premises” within the meaning of the Act.
(6) The trial judge should have found that the house standing on Property 20020 was “prescribed premises” within the meaning of the Act.
(7) By reason of paragraph [6] hereof the trial judge erred in holding that the owner of the land could increase the rent for Property 20020 on a weekly basis, and had only to give the appellant one weeks’ notice to terminate the lease.
(8) The trial judge should have found that the appellant was protected under the provisions of the Act from

(a) Increases in rent; and
(b) Termination of his interest in the land,
otherwise than in accordance with the legislation.

(9) The trial judge erred in holding that the appellant was liable to pay to Ceedive any amount which was not the ‘fair rent’ for the land as defined in the Act.
(10) The trial judge should have held that Ceedive was not entitled to charge the appellant more than the ‘fair rent’ for the land.

Notice of Contention

43 Ceedive contends that the decision of the Court below should be affirmed on grounds other than those relied upon, as follows:

(a) The appellant brought proceedings No RT 02/42875 in the Consumer, Trader and Tenancy Tribunal in 2002 against Ceedive in respect of the property the subject of these proceedings claiming certain orders under the Residential Tenancies Act 1987.
(b) On the hearing of those proceedings on 31 October 2002 the Tribunal noted the agreement of the parties that the appellant’s house remained the property of the appellant. It found that the agreement between the parties did not permit the Applicant to occupy the house but only the land upon which the appellant’s premises are located.
(c) It further found that the lease being of land alone was not a lease of “residential premises” and accordingly the Tribunal had no jurisdiction to hear the matter since there was no residential tenancy agreement as defined under its Act, and
(d) Accordingly, the appellant was issue estopped or Anshun estopped from asserting in these proceedings that:

(i) The house was the property of Ceedive rather than the appellant’s property;
(ii) The lease was a lease not just of land but of the house and premises as well.

DISPOSITION

44 The principal question to be answered is whether Mr May had the benefit of the provisions of the Act as a tenant of “prescribed premises” within the meaning of s8 of that Act. In particular:

(a) did the house standing on Property 20020 constitute a fixture rather than a chattel, and
(b) did the lease include as a matter of law or as a matter of fact, the house which stood on Property 20020 such that the lease was not a lease of “bare land”?

45 The definition of “prescribed premises” is to be found in s8 of the Act in the following terms:

“’prescribed premises’ means -

(a) where a dwelling-house does not form part of other premises – that dwelling-house;

(b) where premises consist only of a number of dwelling-houses – those premises and each of those dwelling-houses; and

(c) where premises consist partly of dwelling-houses and partly of other premises – such part of the premises as consists of dwelling-houses and each dwelling-house of which that part consists,

and includes any land or appurtenances leased with any prescribed premises as defined in paragraph (a), (b) or (c) of this definition;”

46 Under s8(1A) “dwelling house” is defined in somewhat circular fashion as meaning “any prescribed premises ... leased for the purposes of residence ...”. The remainder of the definition is not relevant for present purposes.

47 Earlier the definition of “lease” includes “every contract for the letting of any prescribed premises, whether the contract is express or implied or is made orally, in writing or by deed, and includes a contract for the letting of prescribed premises together with goods ...”.

48 A leasehold term arises and the relationship of landlord and tenant is created, whenever one person, called the landlord or lessor, confers upon another, called the tenant or lessee, an interest in land involving the legal right to the exclusive possession thereof for a definite period. The critical question here is whether the house was a fixture, so that the underlease over the land upon which it was affixed necessarily comprehended the house also, so rendering Mr May’s interest in that house an interest in land involving the legal right to exclusive possession for a definite period.

49 Before turning to the circumstances that obtained when Mr May first acquired any interest in house and land, I should emphasise at the outset that whatever may have been Mr May’s intention or understanding, or that of the real estate agent with whom he dealt, if the house was in reality part and parcel of the underleased land, in other words a fixture, his view of what he was acquiring cannot override the legal position; that the house, as an inseverable part of the realty, could not be bought and sold separately from the land to which it was affixed. Moreover Mr May’s intention could not be relevant to status as a fixture for a further reason; he was not the original occupier at the time the house was built and who dealt with the then landowner. In turning to the factual background in more detail, it needs to be considered with those strictures in mind.

50 It is clear as a matter of evidence that when in 1969 Mr May first acquired an interest in the property that the receipt given to Mr May on 21 September 1969 was expressed to be “for the purchase of the house and outbuildings”. It was not a receipt for the purchase of the land, which was instead underleased for a ground rent.

51 In his affidavit of 7 May 2003 Mr May says that “on 21 September 1969 I paid $1,000 to Laurence Breen, a real estate agent ... for the purchase of the house and out buildings situated at Lot 20020 Pottery Estate”. He annexes the receipt which as I have said was expressed to be for “$1,000 for purchase price, brick cottage in Pottery known as [indecipherable] together with all contents”.

52 Separately, a week later on 28 September 1969 he states that he “paid $85.80 to Laurence Breen, a real estate agent representing the Lithgow Valley Colliery Company Limited, for ground rent for one year in advance”, again annexing the receipt. The latter does not state the purpose of the payment but it can be taken to be for ground rent, that not being disputed. Mr May also attests in his affidavit that on the day before he “purchased the house”, which would be therefore 20 September 1969, “Laurence Breen said to me the following words; ‘you will have the same deal as Madge McIntyre regarding your house and the sheds, you will own them but still pay ground rent for the land’ or words to that effect”.

53 The history of the dwelling house is recorded in a valuation prepared by Mr Begg on 29 January 2002 for Mr May “for negotiation purposes”. Under “Improvements” the valuation has the following: “erected on the land is a brick cottage with a corrugated metal roof built between 1910 and 1915. The cottage has some historic significance, as it was built of bricks made on-site by employees of the coalmine which once owned the land”.

54 Turning to what was described as “the same deal as Madge McIntyre”, at Blue, 555 there is a “Memorandum of Agreement” dated 23 August 1966 between Lithgow Valley Colliery Company Limited and Mrs Madge McIntyre.

55 Clause 1 of that agreement is in the following terms:

“(1) THE said Vendor shall sell to the Purchaser and the Purchaser shall purchase from the Vendor the dwelling house at present occupied by the Purchaser as tenant of the Vendor and erected on land owned by the Vendor and situate in Pottery Estate Lithgow for the price of One thousand two hundred dollars of which the sum of three hundred dollars ($300.00) shall be paid by the Purchaser to the Vendor by way of deposit upon the signing of this Agreement and the balance of purchase money namely nine hundred dollars ($900.00) shall be paid to the Vendor by weekly instalments of two dollars per week, the first of such weekly instalments to be paid on the thirtieth day of August 1966 subsequent instalments at regular weekly intervals thereafter.”

56 Clause 2 provides for interest on what is described as the balance of the purchase money.

57 Clause 3 then provides:

“(3) THE sale does not include the land on which the abovementioned dwelling house is erected and payments of ground rental in an amount fixed by the Vendor from time to time shall be paid by the Purchaser to the Vendor in addition to the instalments of purchase money payable hereunder.”

58 Clause 5 provides that the “Vendor” being Lithgow Valley Colliery Company Limited shall keep the “said dwelling” insured in the joint names of “the Vendor and the Purchaser” (the purchaser being Mrs Madge McIntyre). This is only until payment of the whole of the purchase money and interest thereon.

59 Likewise clause 6 provides that “until payment of the whole of the purchase money and interest thereon the Purchaser shall keep the said dwelling house in good and substantial repair and shall not pull down, alter or remove the same ... without the consent in writing of the Vendor had and obtained”.

60 Clearly the implication of clause 6 is that once the full amount of $1,200 has been paid, it is Madge McIntyre who becomes responsible for insurance and there is no longer an embargo on Madge McIntyre pulling down or altering the dwelling house with the consent in writing of “the Vendor”.

61 Clause 7 of the agreement provides that the said Madge McIntyre as Purchaser “attorns tenant to the Vendor”, clause 7 being in the following terms:

“(7) THE Purchaser hereby attorns tenant to the Vendor from week to week of the said dwelling house from the date hereof at the weekly rent of two dollars such rent to be paid weekly. The production of this agreement and of the duplicate of any Notice to Quit shall as between the Vendor and Purchaser and all persons claiming through or under him or them be deemed to be conclusive evidence in any proceedings in any Court for recovery of possession of the premises and of the creation of the tenancy and the determination thereof. All sums paid as rent hereunder shall be accepted firstly in or towards satisfaction of the interest and secondly in or towards satisfaction of the instalments of purchase money.”

62 The clear purpose of clause 7 was to secure the payments said to be for the purchase of the dwelling house. The history of attornment by a mortgagor to mortgagee is stated in Woodville “Landlord and Tenant – General Principles” (LBC, 1978) at 789-80:

“For the purpose of securing mortgage interest by the preferential powers of distress for rent, it became the practice for mortgagors to ‘attorn tenant’ to their mortgagees, and the practice was continued even when for reasons dealt with elsewhere in this work the rent reserved under the attornment clause had become reduced to a nominal or peppercorn rent, in order to obtain the advantages of summary judgment on a specially indorsed writ; but changes in law and procedure have rendered the clause obsolete and points argued in modern cases have shown that it is indeed undesirable to retain it.” [omitting footnotes]

63 The trial judge concluded that “the uncontested picture is one of the defendants [including Mr May] purchasing their dwellings and then paying weekly ground rent, both sides always regarding the dwellings, i.e. residences as the property of the ground lessees”; judgment [94].

64 The description that the trial judge gave of what “has happened over a long period of time in the history of the Pottery Estate” was of a sale by the land-owning company (Lithgow Valley Colliery Company Limited) rather than that company permitting persons “possibly then employees, to build dwellings on the Estate and agreed that they should remain the employee’s property”; judgment [95].

65 The appellant does not challenge the findings of the trial judge that “the appellant’s subjective intention was that he owned the house which stood on the land, but not the land itself”. The essence of the appellant’s submission which I accept, is twofold. First, subjective intention of Mr May, who thought he was buying a house, and the estate agent, who it can be presumed thought he was selling one, cannot prevail over the position at law which obtains if the house were a fixture to the underleased land; it necessarily is leased with that land. Second, the intention which determines the question whether an object has, in law, become affixed to the land, or, to use the paraphrase emphasised in Elitestone Ltd v Morris [1997] UKHL 15; [1997] 1 WLR 687 at 690-1, 693, become part and parcel of the land by affixation is at least predominantly, “the objective intention of the person who brings the object on to the land and affixes it there”. That question is determined according to rules of law; Reid v Smith [1905] HCA 54; [1905] 3 CLR 656.

66 The starting point under those rules is to identify where the onus of proof lies. If an item is affixed to land to any extent (other than merely resting by its own weight), it is presumed, though the presumption is rebuttable, to be a fixture. The burden of proof lies on those who assert that such an object so resting is not a fixture. Clearly enough the house in question does not rest on its own weight but is affixed to the land. The picture of the house (Blue, 163) and the valuation report of Mr Begg earlier referred to make it clear enough that not only is the house affixed to the land but its removal is not equivalent to putting a portable house on the back of a truck and removing it elsewhere. It is a reasonable inference which I draw that its removal would involve significant destruction of the house if not its total destruction. As Lord Lloyd said in Elitestone Ltd v Morris (supra) at 692-3:

“A house which is constructed in such a way so as to be removable, whether as a unit, or in sections, may well remain a chattel, even though it is connected temporarily to mains services such as water and electricity. But a house which is constructed in such a way that it cannot be removed at all, save by destruction, cannot have been intended to remain as a chattel.”

67 Moreover Elitestone Ltd v Morris, in the judgments of both Lord Lloyd and Lord Clyde discounted the relevance of subjective intention, holding that the parties’ intention is relevant only to the extent it can be derived from the degree and object of the annexation. Rather the law seeks an objective intention deduced from the surrounding circumstances including the degree of annexation. Thus at 693 Lord Lloyd and at 698 Lord Clyde concluded that the parties’ subjective intention cannot affect the question of whether a chattel has, in law, become part of the freehold.

68 The authorities in Australia, while emphasising likewise that the original affixer’s intention is determined objectively, allow of the possibility that the original affixer’s actual (subjective) intention may have limited bearing. This is “at least to the extent that it helps indicate such matters as the period of time the item is intended to remain in position and the function to be served by its annexation”; Peter Butt “Land Law” (LBC, 2006) at [307] and the authorities cited in footnote 27.

69 Turning therefore to the very limited information available and recognising that the onus falls not upon Mr May but upon Ceedive, we know from the Begg valuation that the house was constructed on the premises from bricks made by employees on site, who were working for the coalmine which had once owned the land, namely Lithgow Valley Colliery Company Limited. However, it is not clearly established that those employees actually built the house and certainly no suggestion that it was literally brought on to the land as some kind of portable house akin to a piece of machinery or chattel brought on to the land by a tenant. There is a suggestion in Mr Begg’s valuation that “originally the coal company allowed some of its employees to construct dwellings on the land for their use” [emphasis added]. But that falls well short of establishing that this dwelling was so constructed by the original tenant. Ms Thelma McFadden in her affidavit of 8 January 2004 and who was born on 19 December 1936 some years after the construction of the house stated that she “believed that the company owned the cottages”; see para 4 of her affidavit at Blue, 65. She says that “from listening to my parents and other relatives I believe that the mining company workers were allowed to build their own houses on the estate”; para 5 of her affidavit. That again could not be determinative.

70 Finally there is the evidence of Mr May at para 19 of his affidavit which comes closest, though even if correct it does not avail the respondent. I quote “my house was built by Mr William Brain between 1910 and 1915 [who] was a bricklayer employed by the Lithgow Valley Colliery Company” and who “resided in the house until February 1948 ...”.

71 The appellant fairly summarises the limited evidence at para 9 of the written submissions; Orange, 16 which I quote below:

“a. The nature of a residential dwelling house is that it is normally regarded as part of the reality on which the house is constructed (Billing v Pill [1954] 1 QB 70).

b. Since it was built the house has been used as a residence on the site on which it was constructed;

c. There is no specific evidence on the degree of affixation, but the inferences from the evidence are that the house is incapable of being moved without demolition. His Honour found that a common sense view of the matter was that the dwellings were not portable or removable (Judgment para [100], Red, 69);

d. There are no explicit statements of intent in evidence concerning the intention with which the house was constructed, but the inferences that should be drawn from the evidence is that the house was not constructed as a demountable or temporary structure. It is of solid brick construction.

e. The purpose for which the house was constructed should be inferred to be as a residential dwelling house. Mrs McFadden’s evidence is that the house was occupied as a residence during the period of her recollection; [Velma McFadden affidavit 8 January 2004 Blue, 68]

f. The evidence of Mr Martin [Blue, 89, Black, 411] is that the Company accepted the position that the residents on the Pottery Estate (including, it is to be inferred, the occupant of Property 20020) ‘owned’ their houses. But his evidence does not, and could not, go to proving any agreement between the person who constructed the house, and the registered proprietor, at the time the house was constructed. There is no evidence of any agreement between the builder and the Colliery Company concerning the status of the house.”

72 Moreover, I would agree with the submission of the appellant that the primary judge erred in considering the intention of Mr May to be relevant to the question of whether the house had the initial status of a fixture or a chattel. It was not Mr May who affixed the house to the land in the first place but his predecessor more than 50 years back. Therefore Mr May’s subjective belief that he was purchasing the house, based upon the documentation earlier referred to, would not alter the position at law. This on the evidence was that the house as a matter of law remained the property of the registered proprietor of the land. The earlier documentation between Mr May and Mr Breen, the real estate agent, presumably representing the relevant owner in 1969 could not alter the position otherwise obtaining. There was never for example, any agreement that the house could be dealt with separately from the underlease, or even that it could be severed. This is quite apart from the likely physical impossibility of doing so other than as building materials.

73 One important factor pointing strongly in favour of the house being a fixture is the fact that all the evidence points to the house being affixed with the intent that it remain in position permanently or for an indefinite or substantial period, in this case from at least since 1910. No predecessor to Mr May purported to sever or remove it, nor has Mr May. There is certainly no suggestion that the house was intended to remain in position only for some temporary purpose such as a mining operation that had long ceased; clearly the houses have remained whether for mining purposes or otherwise for their continued occupation on the Pottery Estate. The house thus satisfied the test enunciated by Sir Frederick Jordan in Australian Provisional Assurance Co Ltd v Coroneo [1938] 38 SR(NSW) 700 at 712-13, quoted below.

“If a thing has been securely fixed, and in particular if it has been so fixed that it cannot be detached without substantial injury to the thing itself or to that to which it is attached, this supplies strong but not necessarily conclusive evidence that a permanent fixing was intended. On the other hand, the fact that the fixing is very slight helps to support an inference that it was not intended to be permanent.” [omitting references]

74 If one were instead to look, as more recent authority suggests, at all the surrounding circumstances (see for example N H Dunn Pty Ltd v L M Ericsson Pty Ltd (1979) 2 BPR 9241 at 9246 per Glass JA and more recently NAB v Blacker [2000] FCA 1458; (2000) 104 FCR 288 at 295-6 per Conti J) and not simply the degree of annexation to the realty and the function served by that annexation, the circumstances here in their totality do not rebut the presumption in favour of the house being a fixture. On the contrary, the circumstances indicate fairly clearly that the house is affixed to the land.

Conclusion

75 The house upon the land the subject of the underlease to Mr May has not been shown to be a chattel. It must be taken as a matter of law to be a fixture constituting part and parcel of the relevant land, notwithstanding expressions of subjective intention to the contrary.

The operation of the Act

76 The trial judge concluded that in relation to Mr May (and the other three original defendants) the Act has no application at all because none of the four defendants occupied “prescribed premises” by reason of the sublease being of “bare land”; judgment [131].

77 Ceedive in its written submissions puts the point similarly: “Accordingly even if the chattels or realty issue ... were decided in favour of the appellant, it could not change the reality of the parties’ agreement as to the subject matter of the lease, this being on the basis ‘on any view what was leased to him was expressly the land, not the buildings, and therefore the lease did not fall within the [Act]”.

78 Ultimately, the submission of Ceedive, accepted by the trial judge, was that the relevant underlease constituted a lease of bare land without a building upon it. Thus there was never a lease of “premises”, using the terminology of the earlier definition of “prescribed premises”. The same result applies as from 1 January 1969 with the replacement definition of “prescribed premises” whose terminology refers to “dwelling house” rather than “premises”. For present purposes nothing turns upon the difference between the two definitions.

79 Clearly enough the underlease was not a lease of bare land which did not at that time have premises upon it, so that authorities such as Simms v Lee (1945) 45 SR(NSW) 352 are not in those terms applicable.

80 In Bonnington v Lynch [1952] HCA 46; (1952) 86 CLR 259 the Court (Dixon CJ, McTiernan, Williams, Webb and Kitto JJ) said (at 264),

“The definition of ‘prescribed premises’...has been taken to show that on the land there must be some building or structure or perhaps artificial work, which colloquially might be described as ‘premises’, and that accordingly vacant or bare land cannot constitute ‘prescribed premises’.”

81 Bonnington (supra) involved essentially vacant land in the Sydney suburb of Pyrmont. The area had been used as a wood and coal yard for many years. Erected thereon were a small number of upright posts, a few rafters and sheets of corrugated iron and a single brick wall approximately twelve feet long. After executing a lease, the registered proprietor of the land sought a certificate of exclusion under the Landlord and Tenant (Amendment) Act 1948 (NSW). Either shortly before or after the lease was executed the new tenant removed some rubbish from the property and reconstructed the dilapidated structure on the land. The timing of this ‘clean-up’, and whether the landlord had consented to it, was disputed. Some years later the tenant was given notice to quit the land but refused to comply and commenced proceedings. In dealing with the application of the Act by reference to the term ‘prescribed premises’ the Court said (at 264-265),

“...the subject of the demise must be land with a sufficient structure upon it to fulfil the definition of “prescribed premises.” This may result from the land being in that condition at the time when the lease is made. It may also result from its being put in that condition during the currency of the lease pursuant to a subsequent agreement between the lessor and the lessee amounting to a variation of the lease. But if a tenant, without the consent of his landlord, places a structure upon the land, that is another matter.”

82 See also Simms v Lee (supra) per Roper J at 357, who stated (obiter) in relation to the use of the term “prescribed premises” in the Landlord and Tenant Regulations, “[the definition of prescribed premises] contains a strong indication that the word “premises” does not include land without more...premises must be restricted to something in the nature of buildings”.

83 The court in Bonnington approved the approach of the Court in Turner v York Motors Pty limited [1951] HCA 52; (1951) 85 CLR 55, which was decided in the previous year. In Turner (supra) the tenants occupied certain land and paid rent on a monthly basis. No formal lease was executed. The tenants originally occupied about 1¼ acres of land but later extended their occupation to the total area owned by the proprietor, which was around 5 acres. The owners objected but later accepted payment of twice the original rent for the whole area. Temporary buildings located on the land were gradually removed, but the tenants brought two caravans onto the land during their occupancy. The tenants were later given notice on the basis that they occupied the land as tenants at will. The tenants refused to comply and the owner instituted proceedings. The tenants argued the land was “prescribed premises” under the Landlord and Tenant (Amendment) Act 1948 (NSW).

84 Dixon and Williams JJ held that “prescribed premises” for the purposes of the Landlord and Tenant (Amendment) Act 1948 did not include bare land. Dixon J in Turner (at 75) identified an exception to this principle in the following terms,

“If land is let upon terms that the tenant shall or may erect buildings which are not removable by him but will pass with the freehold, then I should say that the land and building when erected would form premises.”

85 In the same case Williams J said (at 83),

“The word "premises" is used in a popular sense and in this sense has a wide meaning. It is wide enough to include bare land. Its true meaning in any particular statute must be ascertained from the context in which it appears and from an examination of the scope and purpose of the statute as a whole. If the word "premises" in the present definition is intended to include bare land that part of the definition which refers to any land leased with any premises would be otiose.”

86 Handley JA drew on these older authorities in Manly Council v Malouf t/as Fusion Point [2004] NSWCA 299; (2004) 61 NSWLR 394, a case concerning the Retail Leases Act. He noted (at 398) that the provisions in that act referring to “land” or “area” were similar to the provisions in landlord and tenant legislation that turned on the term “premises”.

87 Here the factual circumstances are very different from those in Bonnington and Turner. From the outset of Mr May’s occupation of the land, there was an actual house erected upon the property in no way constituting a removable structure physically nor the subject of any conferred right to remove in any documentation. Moreover, the conditions for ground rental as notified to Mr May on 16 May 2000 made no distinction between the land and the building, describing the agreements in fact as being “for the ‘House Blocks’ only”; para 4 at Blue, 25.

88 While it appears that Mr May never signed the actual new ground rental agreement sent to him in December 2000 (Blue, 28), that proposed ground rental agreement refers merely to the “land” being “property No 20020”, with no express exclusion of the house, nor expressed right to remove it.

89 That Mr May paid valuable consideration separately for the dwelling, as evidenced by the receipt of 21 September 1968, with a separate receipt for ground rent does not to my mind alter the position. Nor does the “same deal” as Madge McIntyre obtained, the subject of the earlier quoted conversation between Mr May and Mr Breen on 20 September 1969, alter that position. This is so, though it be the case that such an agreement, mutatis mutandis with that of Mrs McIntyre, would in its terms constitute a “purchase” of the house upon the subject land. There is nothing in the memorandum of agreement with Mrs Madge McIntyre containing any right to remove the building as would render the underlease more plausibly a lease of bare land rather than a lease of land let upon terms that the tenant may remove the buildings erected.

90 Indeed the case is stronger than that dealt with by Dixon J in Turner. In Turner the exception to which Dixon J made express reference was where the tenant had actually erected the building. Here Mr May took an underlease of the land with the building already erected, such that the further payment could as easily be characterised as a premium over and above the ground rental, reflecting the value of the house affixed to the subject land.

91 Even if it could be said that the vendor by so treating with Mr May did not regard the house as its property, that subjective intention does not prevail over the presumption in favour of the house being the property of the owner of the land by reason of its affixation and the other matters to which I have earlier made reference.

92 I am thus satisfied that there was here a lease of prescribed premises constituted by the dwelling house upon the subject land within the Act so conferring upon Mr May a legal right to exclusive possession of both the house and its curtilage. What was created was a right to exclusive possession for an indefinite term creating a tenancy at will, and on payment of rent, a periodic tenancy.

93 Under s98A of the Act, the premises are deemed to be prescribed premises unless the contrary is shown. Ceedive has not satisfied the onus of demonstrating either that the lease was of “bare land” or that the premises were otherwise not “prescribed premises” before Mr May’s tenancy commenced. I agree with the appellant’s submission that the trial judge in error reversed that onus; judgment [112].

Conclusion

94 It therefore follows that, subject to the estoppel question dealt with below, the appellant succeeds on each of his ten grounds of appeal earlier listed.

Estoppel

95 Ceedive sets out the basis upon which it contends that the appellant is precluded by issue estoppel or Anshun estoppel from asserting in these proceedings that:

(a) the house was the property of Ceedive rather than the appellant’s property, and
(b) the lease was a lease not just of land but of house and premises as well.

96 The relevant facts pertaining to these asserted estoppels are not themselves in dispute and are set below.

97 By application filed on 10 October 2002 Mr May sought that the Consumer, Trader and Tenancy Tribunal (“the Tribunal”) make eight orders relating to his tenancy of Property No 20020 from Ceedive; Blue, 232-236. Mr May was represented by the Western Sydney Tenants’ Service (Blue, 236). In his supporting “Reasons for requesting Orders” the claim was made that “the house (was) owned by the tenant” (see cl 3 and also 5, Blue, 235).

98 The Member, after hearing that preliminary matter, noted that “it is agreed that it remains the property of the applicant”. (Blue, 240, “D”) He found:

“F. The agreement between the parties does not permit the applicant to occupy the house but only the land upon which the applicant’s premises are located. Thus the land alone does not constitute “residential premises” within the first limb of the definition. (in s3 of the Residential Tenancies Act 1987)”

99 Because the agreement was determined to be not one which granted “the applicant the right to occupy both the land and premises constructed on the respondent’s land”, it was not a “residential tenancy agreement” within the meaning of that Act. Otherwise the Tribunal made no determination as to the nature of the agreement between Mr May and Ceedive. There was no appeal.

100 The effect of the foregoing was that the Tribunal determined that it did not have jurisdiction.

101 The determination of lack of jurisdiction proceeded under a statute, where the existence of a state of things, namely “residential premises” was a condition precedent to the jurisdiction of the Tribunal. The statute is the Residential Tenancies Act 1987 (NSW). This is not a case where a statute constitutes the Tribunal as the judge of the existence or otherwise of the state of things which constitutes a condition precedent, such that the decision of the Tribunal on such a point would constitute a res judicata; cf Spencer Bower Turner and Handley “Res Judicata” (Butterworths) at 118 and earlier at 116-7. In such a case, the decision, that the relevant agreement did not constitute a residential tenancy agreement so that in consequence any decision thereon would be outside jurisdiction, is without effect as a res judicata, such decision being clearly reviewable; see Handley (supra) at 117 and the authorities cited at footnote 27.

102 The principle that no res judicata could arise is equally applicable to issue estoppel. Nor is there any basis for the application of the principles subsumed in the shorthand expression Anshun estoppel or the extended notion of estoppel based on abuse of process; Port of Melbourne Authority v Anshun Pty Limited [1981] HCA 45; (1981) 147 CLR 589. There were simply no hearing on the merits of the rights inter partes in that court, once it decided it was without jurisdiction.

103 Another basis for concluding that there was an absence of jurisdiction is the provisions of s6(2) of the Residential Tenancies Act. It in sub-paragraph (a) provides that the Act does not apply to “premises to which Parts 2, 3, 4 and 5 of the Landlord and Tenant (Amendment) Act 1948 apply.

104 I would also agree with the submission or the appellant that the scope of what was before the Tribunal under the Residential Tenancies Act was much narrower than the issues the subject of the present appeal. In the absence of any hearing on the merit of these issues, no Issue or Anshun estoppel could arise.

OVERALL CONCLUSION AND ORDERS

105 The appellant thus succeeds on his grounds of appeal and Ceedive does not succeed on its Notice of Contention. I propose the following orders:

(1) Appeal allowed.
(2) The decision of Levine J be set aside and in lieu thereof orders that:

(a) the respondent’s Summons be dismissed;
(b) on the cross-claim, declaration that the premises, Property 20020 Pottery Estate, Lithgow are “protected premises” under the Act, and
(c) the respondent to pay the appellant’s costs of the proceedings and of the cross-claim.

(3) The respondent to pay the appellant’s costs of the appeal.

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LAST UPDATED: 15/12/2006