Australian Provincial Assurance Co Ltd v Coroneo

(1938) 38 SR (NSW) 700
(1938) 55 WN (NSW) 246

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(Judgment by: Jordan CJ, Davidson J, Nicholas J)

Australian Provincial Assurance Co Ltd
v.Coroneo

Court:

Judge:
Jordan CJ, Davidson J, Nicholas J

Judgment date: 31 August 1938

Sydney

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Judgment by:
Jordan CJ, Davidson J, Nicholas J

Judgment

JORDAN CJ

It is evident that it was assumed by both parties that the nature of the verdict to be entered would depend primarily upon the view taken as to whether as a matter of law the execution of the document did or could operate as a conversion, and secondarily, if so, upon the jury's findings of incidental facts going mainly to the question of damages.

His Honour, apparently taking the view that there would be an appeal in any event, did not express an opinion himself upon the question of conversion or no conversion, but simply entered a verdict for the plaintiff. Exception is now taken to this on behalf of the defendant, not on the formal ground that the verdict should have been obtained from the jury upon a direction and not entered by the judge (because it seems clear that it was impliedly if not expressly agreed that the judge should determine the question of law and enter a verdict accordingly), but on the ground that his Honour should have formed and expressed his own opinion on the question of law. I think that this view is correct. If the parties had had the benefit of the reasoned opinion of the learned and experienced judge who tried the case, upon the questions of law involved, the losing party might have been satisfied that an appeal would be fruitless; and, in any event, it was important that the Court sitting in Banco should have had the benefit of his Honour's views upon the question. However, the point is not otherwise material, because, although we have been deprived of that benefit, we are in a position to order a verdict to be entered under s7 of the Supreme Court Procedure Act, 1900.

Nothing turns on the point that a general verdict was entered, because only the first count was treated as being in issue either at the trial or before this Court.

Since it is conversion that was complained of, the burden of proof was on the plaintiff to establish that the articles in question were chattels and that at a time when he had a common law right to the immediate possession of these chattels, namely on 28th January, 1936, the defendant company, with intention to deny the right or to assert an inconsistent right, interfered with them in a way inconsistent with the plaintiff's right: Lancashire & Yorkshire Railway Co v MacNicoll 118 LT 596 at 598; 88 LJKB 601 at 605.

The material facts are as follow. The plaintiff Coroneo in or about the year 1924 purchased a piece of land at Cessnock which was under the provisions of the Real Property Act. He then proceeded to erect a hall upon the land, which was afterwards called the Strand Theatre, and in order to obtain the necessary funds he executed a number of registered mortgages of the land. The first in point of time was executed on 24th December, 1924, and was a second mortgage, because postponed to the next which was executed as a first mortgage on 3rd March, 1925. A third mortgage was executed on 17th October, 1925; and subsequently on 27th April and 9th August, 1927, respectively a fourth and a fifth mortgage were executed. When the building had been erected, the plaintiff proceeded to equip it so that it could be used for the display of moving pictures. For this purpose he installed the necessary apparatus, most of which was to a greater or less extent fixed to the building. He also provided a large number of chairs. During his occupancy of the theatre, he used it on two days a week for moving pictures, and for the rest of the time it was used for such purposes as concerts, meetings, boxing contests, and euchre parties, as opportunity offered. The chairs, which were of two sorts, were fastened together in rows; and these rows were fixed to the floor when the chairs were in use. They were unfixed and moved about as occasion required. For example, when moving pictures were displayed, the best were put at the back and the others at the front; and this order was reversed in the case of concerts. When euchre parties were given, a large number of the chairs were removed from the body of the hall and stacked at the sides to make room for tables. Sometimes also some of the chairs were hired out, which involved their absence from the hall during the period of hire.

On 29th November, 1926, the plaintiff, with the consent of the then mortgagees (whose mortgages, since they extended only to the land, gave them no interest in any chattels which had not become fixtures) leased to one J H T Smythe the land on which the Strand Theatre was erected together with a large number of specified articles of which the most important were the moving picture equipment including two biograph machines, 278 spring seat chairs, and 667 padded seat chairs, at a rental of 20 pounds per week for the term of ten years from 18th October, 1926. The lease was subject to the conditions that the plaintiff might substitute an ordinary piano for the pianola, and might at any time remove the two biograph machines; but it contained no covenant not to assign or sublet. Smythe, who was interested in other moving picture shows in the neighbourhood, acquired the theatre for the purpose of closing it as a moving picture theatre; and it has not been since used for that purpose but only for the miscellaneous purposes of a hall.

On 13th September, 1928, Smythe, by memorandum of transfer of lease registered on 2nd October, 1928, transferred to the Kurri Kurri & South Maitland Amusement Co. Ltd. all the estate and interest of which he was the registered proprietor together with all his rights and powers in respect thereof as comprised and set forth in the memorandum of lease dated 29th November, 1936, of the land comprised in the certificate of title.

At this stage, the second mortgagee on 27th February, 1929, in exercise of a power of sale contained in the second mortgage, sold the land on which the theatre was built to the defendant company, which, on 9th March, 1929, became the registered proprietor of the land by transfer. Neither the sale nor the memorandum of transfer purports to deal with anything but the land. The first mortgage has been discharged.

On 22nd April, 1931, the Kurri Kurri company, by memorandum of lease dated 22nd April, 1931, registered on 11th August, 1931, subleased to Union Theatres Ltd. (inter alia) the land the subject of the said lease "together with all the seating, furniture, fixtures, fittings, plant, biograph machines, electrical and other machinery, musical instruments and other articles and things of whatsoever description in or upon or about the premises erected on the land above described of which an inventory has been taken" from 26th July, 1930, up to and including 15th October, 1936. The defendant company, described as registered proprietor of the land, consented to the sublease on 18th May, 1931.

This sublease having been surrendered on 15th June, 1932, the Kurri Kurri company by memorandum of lease dated 9th September, 1932, registered on 30th November, 1932, subleased to Greater Union (Extension) Ltd., inter alia, the land the subject of the lease, together with things according to the above description for a term from 19th October, 1931, up to and including 15th October, 1936. To this sublease the defendant company gave a similar consent dated 5th October, 1932.

On 19th June, 1935, the Kurri Kurri company executed under seal an agreement with the Greater Union company by which it agreed to sublease to the Greater Union company (inter alia) the land on which the Strand Theatre was built, together with the theatre, together with articles of which a general description was given identical with that contained in the sublease dated 22nd April, 1931, but accompanied by an inventory setting out the articles with their replacement cost totalling 508 pounds 7s. 0d. Of these, the most important items were 371 padded seats costed at 185 pounds 10s. 0d., 326 wooden seats costed at 32 pounds 12s. 0d., 56 wooden forms costed at 42 pounds, a pianola costed at 100 pounds, a motor generator costed at 100 pounds, and a boxing ring costed at 25 pounds. The sublease was to be for a period commencing on 28th September, 1934, and terminating on 12th September, 1943. The plaintiff disclaimed any right to the 326 wooden seats.

Finally, on 28th January, 1936, the defendant company and the Kurri Kurri company executed a memorandum of lease, which has not been registered, by which the defendant company purported to lease to the Kurri Kurri company the land on which the Strand Theatre was erected "together with the undermentioned articles." Then followed a list which, since it is identical with the list contained in the lease granted by the plaintiff of 29th November, 1926, had evidently been copied by someone verbatim from that lease. The lease was for a term of ten years commencing on 1st November 1934, at the yearly rental of 468 pounds payable by weekly payments of 9 pounds, "the first of such payments having been made on the ___ day of _________ 1934." There was evidence that on 10th August, 1936, the Kurri Kurri company paid the defendant company 39 pounds as rent for the Strand Theatre, Cessnock, for the month of July, 1936, which is at the rate of 9 pounds per week, and that other monthly payments at this rate were afterwards made for subsequent months. On 7th September, 1936, at a board meeting of the defendant company it was resolved that its seal be affixed to a surrender of the lease dated 29th November, 1926, plaintiff to Smythe; but there is no evidence that it was affixed or that any surrender was ever registered. On 18th October, 1936, the lease from the plaintiff to Smythe expired.

It may be said at the outset that it is quite clear that the verdict cannot stand; because it is evident, from facts which are not in dispute, that some of the articles on the list of alleged chattels which the jury found to be none of them fixtures were in fact fixtures, and that there was no evidence that they were not.

A fixture is a thing once a chattel which has become in law land through having been fixed to land. The question whether a chattel has become a fixture depends upon whether it has been fixed to land, and if so for what purpose. If a chattel is actually fixed to land to any extent, by any means other than its own weight, then prima facie it is a fixture; and the burden of proof is upon anyone who asserts that it is not: if it is not otherwise fixed but is kept in position by its own weight, then prima facie it is not a fixture; and the burden of proof is on anyone who asserts that it is: Holland v Hodgson LR 7 CP 328 at 335. The test of whether a chattel which has been to some extent fixed to land is a fixture is whether it has been fixed with the intention that it shall remain in position permanently or for an indefinite or substantial period: Holland v Hodgson LR 7 CP 328 at 336, or whether it has been fixed with the intent that it shall remain in position only for some temporary purpose: Vaudeville Electric Cinema Ltd v Muriset [1923] 2 Ch 74 at 87. In the former case, it is a fixture, whether it has been fixed for the better enjoyment of the land or building, or fixed merely to steady the thing itself, for the better use or enjoyment of the thing fixed: Holland v Hodgson LR 7 CP 328; Reynolds v Ashby & Son [1904] AC 466; Colledge v HC Curlett Construction Co Ltd [1932] NZLR 1060; Benger v Quartermain [1934] NZLR s13. If it is proved to have been fixed merely for a temporary purpose it is not a fixture: Holland v Hodgson LR 7 CP 328 at 337; Vaudeville Electric Cinema Ltd v Muriset [1923] 2 Ch 74 at 87. The intention of the person fixing it must be gathered from the purpose for which and the time during which user in the fixed position is contemplated: Hobson v Gorringe [1897] 1 Ch 182; Pukuweka Sawmills Ltd. v Winger [1917] NZLR 81. 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: Holland v Hodgson LR 7 CP 328 at 335; Spyer v Phillipson [1931] 2 Ch 183 at 209-210. 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. But each case depends on its own facts. In Pukuweka Sawmills Ltd v Winger [1917] NZLR 81 at 90, 91, 120, a bush tramway introduced on the land for the temporary purpose of removing logs in the course of timber getting and clearing, and capable of being moved from place to place, was held not to be a fixture; notwithstanding that a relatively secure degree of fixation was necessary whilst the tramway was in use in any particular place. On the other hand, a wooden building, resting on land by its own weight but brought there for the purpose of being permanently used as a dwelling house, was held in Reid v Smith 3 CLR 656; 9 Austn Digest 176 to be a fixture.

In the present case there was evidence that at all relevant times the building in which the alleged chattels had been placed had been used for miscellaneous purposes. At no time since the end of the year 1926 was it used as a picture theatre. Prior to that it was used on some occasions as a picture theatre and on others for purposes which necessitated its being to some extent dismantled as a picture theatre. It appears from evidence which was unchallenged that some articles, the secure and permanent fixing of which was necessary in order that the place could be used for moving pictures at all, were fixed with the evident intention that they should remain in position indefinitely, so as to admit of the use of the place for moving picture purposes as and when occasion might require. To take two instances, there was a switchboard which was admittedly screwed to the wall, and a Crompton generating set, which was admittedly fastened to a concrete bed by means of bolts that went through the concrete. These were evidently intended to remain in position permanently, and have in fact remained in position through all the vicissitudes which the theatre has experienced. A verdict that these are not fixtures cannot be supported. The chairs are in a somewhat different position; and having regard to the evidence as to the purposes for which they were provided and used, and the extent and reason of their fixation on the occasions when they were fixed, I do not think that a verdict that they did not become fixtures is incapable of being supported.

Apart from this, the jury's finding that the whole of the articles claimed were on the Strand premises on 28th January, 1936 (assuming this finding to be necessary to maintain the verdict) could not be supported in view of the unchallenged evidence that 166 of the chairs had been moved by someone other than the defendant to the Empire Theatre in the year 1929 and the plaintiff's admission that he saw them still in the Empire Theatre in the year 1937.

It is contended, however, for the appellant that no new trial is required, for the reason that, assuming that there is evidence that some of the articles in question are chattels, there is no evidence that the defendant company converted them. The argument for the respondent has been that the execution by the defendant company and the Kurri Kurri company of the unregistered memorandum of lease on 28th January, 1936, operated as a surrender by operation of law of the lease of the chattels by the plaintiff to Smythe made on 29th November, 1926, that the plaintiff became thereby remitted to his possession of the chattels, and that the purported letting of the chattels by the defendant company so interfered with the defendant's right to possession as to amount to a conversion.

The first question is as to the nature of the rights which came into existence by virtue of, and under, the lease by the plaintiff to Smythe, with respect to such of the chattels mentioned in the lease as were not fixtures. As a general rule, any proprietary interest is assignable; and this now extends, even at common law, to contractual rights in the nature of choses in action. A lease of land vests in the lessee a right to assign or sublet, in the absence of some provision to the contrary; and the hirer of the chattels may similarly dispose of his right in the chattels in the absence of a stipulation to the contrary, unless the particular contract of hiring involves some special personal element: Whiteley Limited v Hilt [1918] 2 KB 808 at 822-3; although a chattel may be used only for the purposes for which it is hired. The law relating to land has so developed as to invest the lessee with a proprietary, though chattel, interest in the land the subject of the lease; but there has been no corresponding development of the law with respect to ordinary chattels; and a mere hirer of a chattel has no proprietary interest in the thing hired which he can pass by delivery of the thing: his rights are contractual only: Helby v Matthews [1895] AC 471 at 481. Hence, in order to assign his rights as hirer, in a case in which they are assignable, so that the assignment may be effectual at common law, he must, where there is nothing but a contract of hiring, comply with s12 of the Conveyancing Act 1919, i.e., the assignment must be in writing, and express notice in writing must be given to the owner; and if this be done the rights pass at law to the assignee from the date of the notice. Where, however, chattels are hired, not separately, but as part of a single inseverable transaction by which land is leased together with chattels with which the land is furnished, it is conceived that, in the absence of a covenant not to assign or sublet, or of some special circumstance, the lessee is impliedly authorised by the lessor to create, as against him, in the course of any dealing with the land, all such rights with respect to the chattels as the law enables the lessee to create with respect to the land; and where this is so, the rights of assignees and sub-lessees with respect to the chattels are common law rights and not merely equitable rights, notwithstanding that the formalities of s12 of the Conveyancing Act, 1919, have not been complied with: cf. In re Agra and Masterman's Bank; Ex parte Asiatic Banking Corporation LR 2 Ch 391 at 396-7. Indeed, in the case of the letting of a furnished house, it is conceived that the lessee would have no right, without the lessor's consent, to remove the furniture and use it in other premises.

In the present case, the lease made by the plaintiff on 29th November, 1936, vested in Smythe a common law right to the possession of the chattels until 18th October, 1936. There were subsequent dealings with the chattels by virtue of which equitable rights to possession were at various times acquired by the Kurri Kurri company, Union Theatres Ltd., and the Greater Union company; but it is open to doubt whether anyone other than Smythe ever had a common law right to possession. So far as s12 of the Conveyancing Act, 1919, is concerned, there is no evidence that written notice was given to the plaintiff of the transfer of lease or of the subleases or of the agreement for a lease of 19th June, 1935; and apart from this, the transfer of lease does not in terms purport to deal with anything but the land. The sub-leases could not operate to pass common law rights with respect to the chattels under s12, because they are for a shorter period than the lease, and under the section a chose in action cannot be assigned in part so as to pass common law rights: Williams v Atlantic Assurance Co Ltd [1933] 1 KB 81. But although the transfer of lease by Smythe to the Kurri Kurri company dated 13th September, 1928, does not mention the chattels, everyone has assumed that the right to use them passed to the Kurri Kurri company and this was evidently intended. It may well be, therefore, that by virtue of acts done in pursuance of an authority from the plaintiff to be implied from the nature of the lease of 29th November, 1926, a common law right to the possession of the chattels became vested in the Greater Union company and was vested in that company on 28th January, 1936. If it was not vested in that company, the common law right to possession must have still been vested in Smythe. On 28th January, 1936, therefore, when the unregistered memorandum of lease was executed by the defendant company to the Kurri Kurri company, the position with respect to the chattels was that the defendant company had no interest in them whatsoever, the common law right to possession was vested either in Smythe or the Greater Union company, and the equitable right to possession, and also the actual possession, were vested in the Greater Union company. The plaintiff's rights were reversionary, and would not fall into possession until 18th October, 1936. What happened on 28th January, 1936, was that the defendant company agreed with the Kurri Kurri company that the latter should have the right to possess the plaintiff's chattels until 1st November, 1944, i.e., for about eight years after 18th October, 1936, the date when the plaintiff would acquire a legal right to repossess his own chattels. There is no evidence that any change thereupon occurred in the character of the actual possession of the chattels by the Greater Union company. Now, in order to establish conversion, the plaintiff must give evidence of an immediate right to possession in himself when the alleged act of conversion was done by the defendant, and the doing by the defendant of an act which interfered with that immediate right of possession. It is clear, upon the evidence, that immediately before the execution of the unregistered memorandum of lease by the defendant on 28th January, 1936, the plaintiff had no right to possession of the chattels. That right was outstanding until 18th October, 1936. Neither the defendant company nor the Kurri Kurri company had then either a common law right to possession or actual possession of the chattels; and there is no evidence that by, or by virtue of, the execution of that lease any change took place in the character of the immediate actual possession of the goods; or that anything occurred in the nature of a wrongful dealing with the goods which at one and the same time remitted the plaintiff to a right of immediate possession and operated as a wrongful interference with that right: cf. Nyberg v Handelaar [1892] 2 QB 202. Even a purported sale of the chattels would not have operated as a conversion if unaccompanied by delivery of possession or other interference with the character of the actual possession: Lancashire Waggon Co v Fitzhugh 6 H & N 502; Bloxam v Saunders 4 B & C 941. There does not appear to be any authority which decides that there can be conversion by a defendant unless there has been some physical interference with the goods or with access to the goods by the defendant or someone for whose act he is responsible: Oakley v Lyster [1931] 1 KB 148; 47 LQR 168-171; Public Trustee v Jones 25 SR 526; 42 WN 173; Motor Dealers Credit Corporation Ltd v Overland (Sydney) Ltd 31 SR 516; 48 WN 205; or some change of the character in which a person in actual possession of the goods holds that possession, the defendant or someone for whose act he is responsible, being responsible for the change: Van Oppen & Co v Tredegars Ltd 37 TLR 504.

It is unnecessary to determine whether, as a matter of law, the execution of the unregistered memorandum of lease on 28th January, 1936, if and when rent was paid under it brought into existence a monthly tenancy of the land which operated as an implied surrender of the lease on 29th November, 1926. The defendant had no interest in the character of lessor in the lease of the chattels, and it therefore could not have operated as a surrender of any lease of the chattels.

In the present case, there is no evidence that the act of the defendant in executing the unregistered memorandum of lease on 28th January, 1936, interfered with any right to possession of the chattels which the plaintiff then had: nor indeed is there any evidence that if, after the plaintiff acquired a right to the present possession of his chattels on 18th October, 1936, he experienced any difficulty in obtaining possession of them, those difficulties were in any way caused or contributed to by the fact that some draftsman when making use of the memorandum of lease of 29th November, 1926, as a draft for that of 28th January, 1936, copied into the latter a list of articles which was contained in the former.

For these reasons, I am of opinion that there was no evidence of any conversion by the defendant company of any chattels of the plaintiff by the alleged act of conversion relied upon by the plaintiff in the action, namely the execution on 28th January, 1936, of the unregistered memorandum of lease. It follows that the appeal should be allowed with costs, the verdict and judgment for the plaintiff set aside, and a verdict and judgment entered for the defendant.

DAVIDSON and NICHOLAS JJ, concurred.