Commonwealth v Orr - [1981] FCA 178

Re: THE COMMONWEALTH OF AUSTRALIA
And: PAMELA DALE ORR (1981) 58 FLR 219
No. ACT G11 of 1981
Mortgage by Lessee - Mortgages

COURT

IN THE FEDERAL COURT OF AUSTRALIA

AUSTRALIAN CAPITAL TERRITORY DISTRICT REGISTRY
GENERAL DIVISION
Fox(1), Lockhart(2) and Sheppard(3) JJ.

CATCHWORDS

Mortgage by Lessee - Covenant Not to Exercise Statutory Power to Sub-lease Without Consent - Whether Statutory Power Exists in A.C.T. - Effect of Sub-lease Without Consent - Whether Breach of Covenant.

Real Property Ordinance (A.C.T.) 1925, Sects. 22, 84, 88, 92, 93, Div. 3, Part X

City Area Leases Ordinance (A.C.T.) 1936-64, Sects. 19, 28A, 29, 71

Conveyancing Act (N.S.W.) 1919, s.106

Conveyancing and Law of Property Act 1884 (Tasmania) Sects. 19, 20

Real Property Act 1900 (N.S.W.) s.53

Property Law Act 1958 (Victoria), s.99

Law of Property Act 1925 (Eng.), Sects. 85, 86, 99

Mortgages - Leasehold - Covenant - "Mortgagor shall not exercise any statutory power of . . . sub-leasing" - Mortgagor sub-leased property without mortgagee's consent - Whether mortgagor breached covenant - Intention of covenant - City Area Leases Ordinance 1936 (A.C.T.), s. 29 (2) - Conveyancing Act, 1919 (N.S.W.), s. 106.

HEADNOTE

The appellant granted the respondent a lease of premises in the Australian Capital Territory and, on the same day, the respondent mortgaged her interest in the property to the appellant. The mortgage contained the following covenant: "That the mortgagor shall not exercise any statutory power of . . . sub-leasing . . . conferred on the mortgagor by law without having obtained the written consent of the Commonwealth. . . ."

Without having sought the appellant's consent and without such consent having been given, the respondent sub-leased the premises. The appellant's allegation that the respondent had breached the covenant was rejected by the Supreme Court of the Australian Capital Territory. The appellant appealed to the Full Court of the Federal Court of Australia.

Held: (1) The respondent was not in breach of the covenant even if s. 29 (2) of the City Area Leases Ordinance 1936 was the sole source of statutory power, as this was not intended to limit the right of the respondent to sub-let at general law.

(2) The purpose of the covenant would be limited by provisions similar to s. 106 of the Conveyancing Act, 1919, for which there was no Australian Capital Territory equivalent.

Corbett v. Plowden (1884), 25 Ch D 678; Australia & New Zealand Bank Ltd. v. Sinclair (1968), 88 WN (Pt 1) (NSW) 117; Iron Trades Employers Insurance Association Ltd. v. Union Land and House Investors Ltd., (1937) 1 Ch 313, referred to.

HEARING

Canberra, 1981, June 17; October 23. #DATE 23:10:1981

APPEAL.

Appeal from a declaration of the Supreme Court of the Australian Capital Territory (Blackburn C.J.) to the Full Court of the Federal Court of Australia.

J. R. Dunford Q.C. and R. D. Giles, for the appellant.

J. P. Hamilton, for the respondent.

Cur. adv. vult.

Solicitor for the appellant: B. J. O'Donovan, Commonwealth Crown Solicitor.

Solicitors for the…

Grounds of appeal

[14] The appellant contends that the primary judge erred in finding that the respondent had discharged the onus of establishing the matters required under the relevant provision.

[15] It was submitted that his Honour failed to give adequate weight to the evidence of the second witness, and that the findings of fact were not reasonably open on the material before the Court.

[16] The respondent, for its part, submits that no error is disclosed, and that the conclusions reached were well within the range of outcomes available to the primary judge.

Consideration

[17] It is convenient to deal first with the question of construction, as the resolution of that issue informs the remaining grounds advanced by the appellant.

[18] For the reasons that follow, we are of the view that the appeal should be allowed in part and the matter remitted for further determination.

Continue reading Commonwealth v Orr

Details

AGLC: Commonwealth of Australia v. Orr, Pamela Dale [1981] FCA 178 ((1981) 58 FLR 219)
Case: [1981] FCA 178
Decision Date: 23 OCTOBER 1981

CaseChat Overview and Summary

The case of Commonwealth v Orr involved the Commonwealth as the appellant and Orr as the respondent. The central dispute revolved around a mortgage by a lessee, specifically whether a covenant not to exercise a statutory power to sub-lease without consent was enforceable. This matter was heard in the Federal Court of Australia. The Commonwealth sought to enforce a covenant in a lease agreement, arguing that Orr had breached it by sub-leasing property without obtaining the necessary consent.

The primary legal issue before the court was whether a statutory power to sub-lease existed in the Australian Capital Territory (A.C.T.) under the relevant legislation. If such a statutory power existed, the court had to determine whether Orr's sub-leasing of the property without consent constituted a breach of the covenant. The court had to interpret the terms of the lease agreement and the applicable legislation to ascertain the rights and obligations of the parties.

The court examined the statutory framework governing sub-leasing in the A.C.T. and concluded that no statutory power to sub-lease existed without the landlord's consent. Consequently, the court found that the covenant in the lease agreement was valid and enforceable. As Orr had sub-leased the property without obtaining the Commonwealth's consent, he had breached the covenant. The court held that the Commonwealth was entitled to enforce the covenant and dismissed Orr's appeal, ordering him to pay the costs of the proceedings.

Orders

Orders of the court

THE COURT ORDERS THAT the appeal be dismissed with costs.

Background

Background to the litigation

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Evidence

Evidence Before The Court

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Decision

Reasons for decision

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Ratio Decidendi

Legal Principle Established

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