High Court of Australia Gibbs CJ Mason, Aickin, Wilson and Brennan JJ. Rodgers v Moonta Town Corporation ORDER Appeal dismissed with costs. Aug. 19. Gibbs CJ These proceedings were commenced by an application made under s 192 of the Real Property Act, 1886-1975 SA, by the respondent, the Corporation of the Town of Moonta (to which I shall refer as "the Council") for an order that the present appellants, Mr and Mrs Rodgers, give up possession of the land described in the summons. The application was refused by Zelling J., but the appeal to the Full Court of the Supreme Court was allowed and the Full Court ordered that the appellants deliver up possession of the land in question on or before 16th January, 1981. This appeal is brought from that decision. On 9th July, 1973, the appellants submitted to the Council a tender for a lease of a caravan park at Moonta Bay at a rental of $2,036 per annum plus payment to the Council of a 5 per cent commission on gross revenue from the business of the caravan park. The words of the tender showed that it was assumed that the period of the lease was to be ten years and this was made clear by a further letter which Mr Rodgers wrote to the Council on 30th July, 1973. The Council met on 6th August, 1973, and passed a resolution which is recorded in the minutes as follows: That R. F. and M. E. Rodgers be granted a five year lease of the Moonta Bay Caravan Park on the basis of their tender and letter of 30th July, 1973, and that the extension of the term of the lease to ten years be negotiated with Mr and Mrs Rodgers in August 1974. Mr Rodgers gave oral evidence that he was present at the meeting although not at the time when the resolution was passed. He said that afterwards the Mayor, Mr Dowling, told him what had been decided. In evidence-in-chief he said that Mr Dowling told him that "in essence I was to have the park for an initial term of five years, but in implication it be ten". When asked to say what Mr Dowling had told him and not what was implied he said: "As long as I conducted myself within the fidst twelve months I would be granted a lease as I had originally submitted, ten years." In cross-examination he resiled from this evidence, saying that nothing was said about him having a ten-year lease but that he was told that he definitely had five years. However, it is not in contest that on 9th August, 1973, the town clerk wrote to the appellants a letter in the following terms: As I have already advised you verbally, the Council has granted you a five year lease of the Moonta Bay Caravan Park on the terms set out in your tender of 9th July, 1973, namely — An annual rental of $2,036, plus 5 per cent of the gross revenue from the park. The Council has undertaken to review the lease in August 1974, and to consider, in the light of the experience of the first twelve months, the possible extension of the term of the lease to ten years. A draft lease agreement will be prepared as soon as possible and submitted to you for comment. The date of commencement of your lease will be 7th August, 1973. The appellants took possession of the caravan park and although it is not altogether clear when this occurred it may have been before the letter was received, although nothing appears to turn on that point. Thereafter the appellants expended money on effecting improvements and providing amenities to and for the park. According to the evidence of Mr Rodgers, this was done in the belief, or at least in the hope, that a ten-year lease would be granted. At some time during 1973 a draft lease was prepared by the Council and submitted to the appellants. The draft lease was for a term of five years, expiring on 6th August, 1978, and provided for an annual rental of $2,036, plus 5 per cent of gross revenue, and required the lessees to pay the rent by equal instalments of $509 in August, December, February and June and to pay the 5 per cent of gross revenue before 1st June each year. Clause 3.2 of this draft lease provided as follows: The lessor shall renegotiate this agreement with the lessee in August 1974, with a view to extending the term for a further period of five years to expire on the sixth day of August 1983, on the condition that the lessor is satisfied with the lessee's tenancy and management of the "Moonta Bay Caravan and Tourist Park" over the first twelve months of this agreement. No lease was in fact ever executed. On 29th July, 1974, the Council resolved that consideration of the extension of the appellants' five-year lease be deferred for twelve months and considered again in August 1975. The appellants were informed of this resolution. In August 1975 the Council resolved that the matter be left in abeyance, although strangely enough at the same meeting it was later resolved that no extension of the lease be granted. On 25th May, 1976, the solicitors for the Council gave the appellants notice to quit the land on or before 30th June, 1976. The solicitors made complaints concerning the appellants' conduct of the caravan park but that question does not concern us. In reply the appellants' solicitors asserted that there was a valid and binding agreement for a lease that would not expire until 7th August, 1978. The Council took no further action until 30th August, 1978, when it wrote to the appellants saying that the leasing arrangements had expired on 6th August, 1978, and demanding possession. The present proceedings were commenced on 15th September, 1978. On 6th December, 1978, the appellants paid to the Council the sum of $509. At the time the payment was made Mr Rodgers delivered to the Council a written note which read: "I've been informed that I have to pay this rent sooner or later, so here you are. Sorry I'm late. Receipt please." Mr Rodgers in his affidavit said that this payment was made in respect of present and past occupancy. There was evidence that on 7th August, 1978, the appellants owed the Council about $5,000 for rent. That evidence was not, in terms, disputed and it was certainly not proved that $509 was not due in respect of past rent at the time the payment was made. The relevant sections of the Real Property Act, 1886-1975 SA, are the following. Section 192 provides, inter alia: Any of the following persons (in the following sections called "the claimant") may cause any person in possession of land under the provisions of this Act to be summoned to appear before the Court to show cause why the person summoned should not give up possession to the claimant — IV. Any lessor where a legal notice to quit has been given, or the lease become forfeited, or the term of the lease has expired. By s 195 it is provided: If the person summoned shall appear, the Judge shall hear the summons, and may make such order thereon and impose such terms as he may think fit. There follows an immaterial proviso. Section 196 states: The dismissal of any such summons shall not prejudice the right of the claimant to take any other proceedings against the person summoned to which he may be entitled. Zelling J. said that it was the inveterate practice in South Australia that the court hearing an application under s 195 "will not make orders where disputed questions of fact and law can only be resolved by remedies available in the ordinary jurisdiction of the Court". He held that the issues in the present case could only be satisfactorily resolved by proceedings in the ordinary jurisdiction in which the issues are explored after the delivery of proper pleadings. In his opinion four main questions arose: (1) whether, if the draft lease submitted by the Council is binding on the Council by reason of the doctrine of part performance, it could be rectified if it did not correctly set out the terms of the agreement between the parties; (2) whether, if there were a lease for a term exceeding five years, it would be illegal by reason of the provisions of s 44 of the Planning and Development Act, 1966 SA; (3) whether the appellants are entitled to set up an equitable estoppel against the Council, and (4) whether the acceptance by the Council of the amount of $509 paid in December 1978 was an admission that the appellants were lawfully in possession after the expiration of the five year period. Before us, the appellants relied strongly on an additional contention, namely that in the circumstances they had become tenants from year to year and that that tenancy had never been determined by an effective notice to quit. The provisions of s 192 and the following sections of the Real Property Act do not, in terms, limit the power of the court to make an ejectment order to cases in which no triable issue has emerged. However, assuming that the court has a discretion to decline to proceed with the determination of disputed questions of fact and law, it is apparent that it would not be right to refuse to make an order for possession if the relevant issues before the court had been fully explored and the evidence revealed that the applicant had a right to possession. In the present case the first three questions mentioned by the learned primary judge all depend on whether there was any evidence of an agreement or understanding between the parties that the appellants should have a lease for ten years, or that a promise or representation to that effect was made by the Council, or that an expectation to that effect was created or encouraged by the Council. If there was no such agreement, understanding, promise or representation, and no expectation created or encouraged by the Council, no question of rectification or equitable estoppel, or illegality of the kind suggested, could arise. Clearly there is in the present case no evidence on which any such agreement, understanding, promise or representation could properly be found, but counsel for the appellants particularly relied on the argument that it would be enough to give rise to an equitable estoppel that the Council had encouraged in the appellants the expectation that there would be a ten year lease and that they had spent money on the land on the faith of that expectation. He relied on a line of cases founded on the judgment of Lord Kingsdown in Ramsden v. Dyson (1866) L.R. 1 H.L. 129, at p. 170 where his Lordship said: If a man, under a verbal agreement with a landlord for a certain interest in land, or, what amounts to the same thing, under an expectation, created or encouraged by the landlord, that he shall have a certain interest, takes possession of such land, with the consent of the landlord, and upon the faith of such promise or expectation, with the knowledge of the landlord, and without objection by him, lays out money upon the land, a court of equity will compel the landlord to give effect to such promise or expectation. His Lordship went on to say (at p. 171): If, on the other hand, a tenant being in possession of land, and knowing the nature and extent of his interest, lays out money upon it in the hope or expectation of an extended term or an allowance for expenditure, then, if such hope or expectation has not been created or encouraged by the landlord, the tenant has no claim which any court of law or equity can enforce. It is, of course, not enough to give rise to an equitable estoppel in the present case that the appellants should have spent money on the faith of an expectation that they would get a ten-year lease. It would be necessary that the expectation was created or encouraged by the Council. In other words, it would be necessary to prove that the Council, by its words or conduct, held out to the appellants that they would have a ten-year lease, and so created or encouraged the expectation on the faith of which the appellants expended their money. However, there is no evidence to support any such conclusion. The documentary evidence is overwhelming, and the oral evidence of Mr Rodgers, when viewed as a whole, is perfectly consistent with the documentary evidence. It is clear that the Council did no more than agree to negotiate about a possible extension of the lease from five to ten years. The evidence appears to be complete and we have not been informed of the details of any evidence that might have been, but was not, called. On these issues the appellants must fail. They must fail also on the fourth question referred to by Mr Justice Zelling, since the payment of $509 in December 1978 does not assist their case, unless it was shown to have been made in respect of rent that had fallen due after the expiration of the five-year period in August 1978. That, as I have said, has not been established. It remains to consider the argument that a tenancy from year to year arose as a result of the entry of the appellants into possession of the caravan park under an uncompleted agreement, coupled with the payment of rent referable to an aliquot part of a year. In the present case there was a completed agreement for a term of five years and the appellants' possession and payment of rent are referable to that agreement, although some other terms and conditions of the contemplated lease, including the suggested term providing for an extension, remained in negotiation. It may be conceded that in these circumstances a tenancy from year to year did arise. However, such tenancy would be one which expired at the end of the five-year term without the necessity to give a notice to quit. The applicable principles are discussed in Moore v. Dimond (1929) 43 C.L.R. 105, at pp. 112-114, and in Turner v. York Motors Pty Ltd (1951) 85 C.L.R. 55, at pp. 65-67 and 90. In the former case, in the judgment of Knox C.J., and Rich and Dixon JJ., the following appears (at p. 113): In Hamerton v. Stead (1824) 3 B. & C. 478, at p. 483, Littledale J. said: "Where parties enter under a mere agreement for a future lease they are tenants at will; and if rent is paid under the agreement, they become tenants from year to year, determinable on the execution of the lease contracted for, that being the primary contract." This statement was approved by Hill J. in Anderson v. Midland Railway Co. (1861) 3 E. & E. 614, at p. 622. It was well settled at law that the terms and conditions of the agreement, save in so far as they are inconsistent with a tenancy from year to year, apply to the tenancy. It was further settled that the tenancy from year to year continued only during the term contracted for, and expired at the end of that term by effluxion of time without notice to quit, being in the meantime liable to a sooner determination by notice to quit. In the present case, the appellants had a tenancy from year to year which expired in August 1978. It follows that the Council was clearly entitled to possession. It appears that a small proportion of the caravan park comprised land not under the Real Property Act, but that provides no reason for declining to make an order in respect of the balance which is under that Act. The Full Court rightly made an order for possession, and in my opinion the appeal should be dismissed. Mason J. I agree. Aickin J. I agree. Wilson J. I agree. Brennan J. I agree.