THE QUEENSLAND LAW REPORTER. OCTOBER, 1910.

[IN THE FULL COURT.]

MAYESHIBA v. HENNESSEY.

Landlord and tenant-Forfeiture on non payment of rent at option of lessor-Notice of forfeiture-Insolvency of lessee-Possession by District Receiver and Trustee in Insolvency.

S. occupied land, owned by Dr. Salter, under a lease, and there carried on business. N. procured the land and business from S. On the expiration of the lease, N. obtained another lease from the owner for three years, which was to commence in September, 1908, in the name of S., who had returned to Japan, and died. In July, 1908, N. sold the business as a going concern to M. for a certain sum in cash, and the balance by instalments, and upon terms which included a provision that any default in payment of the purchase money would result in forfeiture of all money paid, and would authorise N. to retake possession. M. made the cash payment, but being unable to meet the first instalment, applied to the plaintiff, who advanced the money for this purpose, and who also made himself liable to N., on M.'s account, for the balance of the purchase money. The plaintiff received from N., with M.'s consent, a transfer of the lease. This transfer was executed by N. in the name of S. In May, 1909, M. abandoned the premises, and a few days afterwards the plaintiff entered into possession thereof, and he alleged that in June M. assented to his act of taking possession. In August, M. filed a petition in insolvency, and the District Receiver took possession. On 4th October, 1909, the defendant was appointed trustee in M.'s insolvent estate, and he immediately took possession of the property held by the District Receiver. The plaintiff thereupon demanded possession of the land and all fixtures, plant and property in connection therewith. The defendant replied, disclaiming all interest in the land, but claimed all the other property, and offered either to remove the fixtures or to pay rent. No request to remove them was made. At the trial it was held that the buildings were affixed to the land.

On these facts the plaintiff brought an action against the defendant for possession of the land and mesne profits, damages to the buildings, and damages for detention and conversion of the chattels and loss of trade profits. After the issue of the writ, but before trial, the owner of the land terminated the lease for non-payment of rent, on 10th November, 1909, and gave notice to the defendant that he would hold the defendant responsible for rent if he did not vacate the premises.

Held, that the plaintiff had not the right to recover possession or mesne profits, or special damages in respect of the defendant's occupation after 10th November, 1909; that the only good cause of action was in respect of the defendant's occupation of the land and buildings from 4th October to 10th November, 1909; that the plaintiff as mortgagee had a remedy against the trustee by application on motion in insolvency for a declaration that the buildings as fixtures formed part

1910. June 14, 15, 24.

Cooper C.J.

Real J.

Power J.

F. C.

MAYESHIBA V.
HENNESSEY.

of his security, and for compensation for the use of the premises by the trustee, and could obtain no greater relief than he would have obtained on such a motion. A mortgagor in possession cannot be viewed in the light of a receiver for the mortgagee, and the same rule applies to the trustee of an insolvent mortgagor in possession of the mortgaged premises, or receiving the rents and profits thereof. APPEAL FROM A JUDGMENT OF SHAND J.

By his statement of claim in this action, the plaintiff alleged that on 28th August, 1909, the defendant unlawfully entered upon, and took possession of, certain land at Thursday Island, of which the plaintiff was then in lawful occupation as transferee of a lease granted by the registered proprietor, and on which the plaintiff was then carrying on business as a sauce manufacturer; that, at the same time, the defendant unlawfully seized buildings on the land, which were the plaintiff's property, and by the terms of the lease removable by him, and further seized chattels which were the plaintiff's property, and which were being used by him in connection with his business; that the defendant ever since had refused to give them back to the plaintiff, and had prevented the plaintiff from earning the profits which would otherwise have been derived from the carrying on of his business.

The plaintiff claimed-(i.) Possession of the land; (ii.) mesne profits from the 28th August, 1909: (iii.) £100 for repairs to and restoration of the buildings; (iv.) the return of the chattels or £400, the value thereof; and (v.) £400 damages for decention and conversion of the chattels, and for the plaintiff's loss of profits in his trade or business.

By his original defence, the defendant put the plaintiff to the proof of all allegations contained in the statement of claim, other than the allegation that the plaintiff was the transferee of the lease granted by the registered proprietor; and, whilst disclaiming any interest in the land, alleged that on the 10th September, 1909, and for some time prior thereto, the buildings and chattels were the property of one Seichi Miyoshi; that on the 10th September, 1909, Seichi Miyoshi was adjudicated insolvent ; and that on the 4th October, 1909, the defendant was appointed trustee of the insolvent's estate.

At the commencement of the trial, the defendant obtained leave to amend his defence, by alleging that the lease had been

QUEENSLAND LAW REPORTER. UCTOBER, 1910.

transferred to the plaintiff by way of security for the sum of £170 advanced by the plaintiff to Miyoshi, to enable Miyoshi to pay the balance due from him to the original lessee of the land, in respect of his purchase from the lessee of the buildings and chattels mentioned in the statement of claim. And at the close of the evidence Shand J. allowed the defendant to amend his defence in any manner which might enable him to raise the question of whether the plaintiff, by obtaining the insolvent's consent to his taking possession of the chattels, or by obtaining in any way the delivery to himself of the chattels, had obtained a fraudulent preference which could be void against the defendant, but no such amendment was made.

66

The facts in the case were practically undisputed, and are stated sufficiently in the judgment. It is only necessary to add that the plaintiff did not make a proof of debt in the insolvent's estate, and that the lease contained (inter alia), the following two clauses (i.) Subsec. 2 of s. 71 of the Real Property Act of 1861 shall be read and construed as if the words one calendar month were inserted therein instead of the words "six calendar months," and as if the words "without any formal or other demand" were added thereto, and upon the breach of any covenant herein, or non-payment of the rent hereby reserved at due date thereof, this lease shall, at the option of the lessor, become null and void, and all buildings upon the said land shall thereupon immediately become the absolute property of the lessor, who shall be entitled to forthwith eject the lessee or his tenants from the said lands; and (ii.) The lessee shall have the right to remove all buildings whatsoever erected by him on the land hereby leased at the expiration of the said term, provided that the said rent hereby reserved shall have been paid and this lease observed in every other respect.

SHAND J. (after stating the facts and referring to Clause 4 of the lease), said: Under these circumstances, I am of opinion that whatever right to possession of the land may have been vested in the plaintiff at the time when his action was brought on 1st November, 1909, he can no longer establish such a right, because his interest in the land terminated on 10th November,

F. C. MAYESHIBA v.

HENNESSEY.

F. C.

MAYESHIBA V.
HENNESSEY.

Clause 4 of the lease does not merely reserve to the lessor a right of.re-entry, but it provides that on non-payment of rent the lease shall, at the option of the lessor, become null and void. I think, therefore, that the plaintiff's interest in the demised premises came to an end when Dr. Salter, by his notice of the 10th November, unequivocably intimated to the plaintiff and the defendant that, default having been made in payment of rent, the lease had become null and void. See dictum of Bayley J. in Fenn v. Smart (1), referred to by Warrington J. in Moore v. Ullcoats Mining Co. (2), and James v. Young (3). For similar reasons, I am of opinion that the plaintiff cannot recover mesne profits or special damages in respect of the defendant's occupation of the land after 10th November, 1909. And it is apparent that the defendant's occupation did not begin until 4th October, 1909. Prior to that date the District Receiver had been in possession.

Strictly speaking, the termination of the plaintiff's interest in the demised premises, nine days after the date of the writ in the action, and before the statement of claim was delivered, ought, I think, to have been pleaded in the defence as an answer to the claim for the recovery of the land. But the facts are not in dispute, so that the absence of any such plea is, I think, immaterial, and could readily be cured.

Mr. Marsland, however, contended that, even assuming that the notice of November 10th operated as a forfeiture of the lease, still, by following a certain procedure-taking advantage of the provisions of The Distress, Replevin and Ejectment Act of 1867, ss. 118, 130, 131, and 132, and appealing to the equitable jurisdiction of the Court, the plaintiff could get relief from this forfeiture. But as no steps have, in fact, ever been taken to obtain this relief, although nearly five months have elapsed since the date of the forfeiture, I can only deal with the case upon the state of facts actually existing, and cannot grant the plaintiff relief in this action on the footing that the forfeiture has been got rid of.

Nor does it seem to me that even if relief against forfeiture were now to be granted, mesne profits or damages for wrongful

(1) 1810, 12 East. 443.
(2) [1908] 1 Ch. 575, at
P. 588.

(3) 1884, 27 Ch.D. 652.

THE QUEENSLAND LAW REPORTER, OCTOBER, 1910.

occupation of the land would be claimable for the whole period of the defendant's occupation.

It is true that after such relief has been granted, the necessity for the execution of a new lease no longer exists, and the lessee holds the demised premises according to the original lease. The Distress, Replevin and Ejectment Act of 1867, s. 132; and see Hare v. Elms (1). But I do not think that a lessee who obtained relief against a forfeiture would be entitled to recover mesne profits in respect of an occupation of the demised premises during the period which had elapsed between the date of the forfeiture and the date on which relief was granted against it.

On the other hand, Mr. Jameson's argument in support of the defendant's occupation of the land, in my opinion, went too far. He contended that the lease was only transferred to the plaintiff by way of security for advances to the insolvent. Of that I have no doubt whatever. But he contended, further, that under those circumstances the plaintiff was in the position of a person holding a bill of mortgage under The Real Property Act of 1861, and could not enter into possession otherwise than by receiving rents payable by subtenants (if any). I cannot assent to either of these last propositions. The plaintiff did not merely obtain a bill of mortgage. He obtained an absolute transfer of the lease to himself. And if he had merely obtained a bill of mortgage, I think that on default in payment of the moneys secured by the bill of mortgage, he would have been entitled to take possession of the mortgaged property. See s. 62 of The Real Property Act of 1861. But, in any case, the plaintiff having obtained an absolute transfer of the lease to himself, had clearly, I think, the legal right to take possession of the demised premises at any time during the continuance of the lease. What equity could the insolvent possibly oppose to the plaintiff's exercise of his legal right in this respect, so long as there was any default in payment of the sums secured by the transfer of the lease to the plaintiff ?

Mr. Jameson also contended that the letter written by the defendant's solicitors to the plaintiff on the 30th October, 1909, (1) [1893] 1 Q.B. 604.

F. C. MAYESHIBA V. HENNESSEY.