Radaich v Smith

What happened?

A deed of 29 May 1954 granted Mrs Radaich, for a term of five years, "the sole and exclusive license and privilege to supply refreshments to the public admitted to premises situated at ... Mosman and to carry on the business of a milk bar therein". The instrument "consistently avoids the use of the expressions 'lease', 'lessors', and 'lessee' and carefully uses the words 'licence', 'licensors', and 'licensee'" — but several of its provisions "savour more of a lease than of a licence". She went to a magistrate to have a fair rent determined for the premises, which she could do only if she was a tenant, and the case came up on a stated question about his jurisdiction.

What did the Court decide?

She had a lease. The appeal was allowed with costs, the Supreme Court's order discharged, and the stated question answered that the magistrate's decision "that he had jurisdiction and authority to determine the fair rent of the premises was not erroneous in law". What the deed called itself did not decide it; what it granted did. Windeyer J adds a general point that disposes of a common objection: a reserved right of entry to view the state of the premises or repair them "is, of course, not inconsistent with a grant of exclusive possession" (at 222). This deed reserved no such right — Menzies J notes at 221 that an entry-and-inspect provision was the "most significant difference" counsel pressed between this deed and the one in Addiscombe Garden Estates Ltd v Crabbe, and says a point-for-point comparison gains nothing.

Why does this case matter?

Because the classification is worth money. A lease is a proprietary interest and a licence is a personal permission, and which one an occupier has affects whether the right binds a purchaser — subject to the registration and priority rules of the jurisdiction, which do their own work; in New South Wales, for example, s 42(1) of the Real Property Act 1900 protects a registered proprietor subject to specified exceptions, including a qualified short-tenancy exception in s 42(1)(d). It also affects which statutory protections attach — but check the statute rather than reasoning from the common-law label, because the modern regimes do not track it. In BA v The King [2023] HCA 14, Gordon, Edelman, Steward and Gleeson JJ point out that under the Residential Tenancies Act 2010 (NSW) the "right of occupation need not be exclusive", so "a residential tenancy agreement spans the divide between leases and licences at common law". Classification still decides the proprietary question; whether a protective statute applies is its own question, on its own definition.

It is also why the case is reached for so often. A dispute about a lease or a licence is almost always a dispute where the document and the arrangement on the ground point in different directions, and that is a situation someone drafted deliberately.

Exam and application relevance

Ask one question, and ask it of the agreement rather than of the practice: construed in context, does the instrument grant a right to exclusive possession for a determinate period?

Then work the clauses, because that is where the answer is. A reserved right of entry to view or repair does not defeat exclusive possession — the owner who must be let in is conceding that otherwise they may not enter. Where the owner may move the occupier between rooms at will, ask what premises the agreement grants possession OF — an unrestricted power of reallocation leaves nothing identified to be possessed, while a power to move within defined premises for defined reasons may not. Radaich does not decide that, so argue it from the grant rather than asserting a rule. An obligation to share the space with the owner is a stronger indication, because exclusive possession is what it denies. A provision fixing hours of business is not conclusive either way — a lessee can be subject to one — but do not discard it: McTiernan J read the obligation to keep the shop open in business hours as contemplating that the occupier "is to have control of the premises, and of the persons entering them, during business hours and, indeed, at all other times" (at 215), and Windeyer J made the same move at 225 ("[c]learly she could shut it at other times"). A clause about how the space must be used can tell you who controls it.

Check your understanding

Why does a reserved right of entry to inspect not destroy exclusive possession, when sharing the premises with the owner does?