WESTERN AUSTRALIA. Landlord and tenant-Unregistered lease of Crown lands to partners-" lessees and H. C.
each of them "-Option to purchase-Condition precedent-Due observance and performance of covenants-Covenant against assignment-Equitable assignment of interest in term to co-tenant-Whether in breach of covenant-Dissolution of partnership-Exercise of option by continuing partner-Effectiveness-Specific performance.
An assignment by one co-tenant of his share in the demised premises operating in equity only, and not at law, to vest his share in his co-tenant does not constitute a breach of a covenant in a lease forbidding the lessees " to transfer assign sublet or part with possession of the said land " and accordingly an option to purchase the demised premises, the exercise of which is con- ditional upon the due performance by the lessees of such a covenant (inter alia), is not in such circumstances avoided.
A lease for a term of years granted by the appellant to the respondent and his brother, then carrying on business in partnership, contained a proviso " Provided always
shall have the option at any time during the said term upon giving one calendar month's notice in writing thereof to the lessor of purchasing the said lands The term " the lessees " was defined by the lease to include the lessees and each of them and their respective executors, administrators and permitted assigns unless repugnant to the sense or the context. The respondent, having by means of an assignment effective in equity acquired his brother's interest in the lease and option upon the dissolution of their partnership, gave to the appellant during the term of the lease one calendar month's notice of his exercise of the option. The notice identified the option as contained in the lease, the parties, premises and chattels being fully described, and notified the appellant that the brother had sold and transferred his interest in the option to the respondent and that the respondent was by such notice exercising the option. The notice was dated and signed by the respondent.
Held, by Dixon C.J., and Webb J. (Taylor J. dissenting) that the respondent had effectively exercised the option. Per Dixon C.J.: Upon the assumption that the definition of the word " the lessees " did not operate to enable the respondent independently altogether of his brother as co-tenant, to exercise the option, nevertheless the respondent as the equitable assignee of his brother
under the deed of dissolution occupied a position enabling him to exercise the option SO as to bind his brother as well as himself, and the notice given by the respondent, indicating as it did that he relied upon the transaction with his brother as basing his right to exercise the option, showed that he was acting under his brother's implied authority coupled with his own right. Per Webb J.: An option to the lessees and each of them is a single option to be exercised by both…
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.
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AGLC
MacDonald v Robins [1954] HCA 5
Case
[1954] HCA 5
Decision Date
CaseChat Overview and Summary
The case of MacDonald v Robins concerned an appeal from the Supreme Court of Western Australia to the High Court of Australia. The dispute arose from an unregistered lease of Crown lands granted by the appellant, MacDonald, to the respondent, Robins, and his brother, who were carrying on business in partnership. The lease contained an option for the lessees to purchase the demised lands, subject to the due observance and performance of the lease covenants. Robins, after dissolving the partnership and acquiring his brother's equitable interest in the lease and option, purported to exercise the option by giving notice to MacDonald. MacDonald contended that the option was not validly exercised, arguing that Robins' acquisition of his brother's interest constituted a breach of a covenant against assignment and that the notice of exercise was insufficient.
The legal issues before the High Court were whether Robins' acquisition of his brother's equitable interest in the lease constituted a breach of the covenant against assignment, and if not, whether the option to purchase had been effectively exercised by Robins' notice. Specifically, the court had to determine if an equitable assignment of a co-tenant's share in a lease, coupled with the co-tenant's retirement from possession, breached a covenant prohibiting transfer, assignment, subletting, or parting with possession. Furthermore, the court considered the interpretation of the lease's definition of "lessees" and whether it permitted an individual lessee to exercise the option, or if the option, as a continuing offer, required acceptance by both lessees jointly or with the implied authority of both.
A majority of the High Court, comprising Dixon C.J. and Webb J., held that Robins had effectively exercised the option. Dixon C.J. reasoned that an equitable assignment of a co-tenant's share, as opposed to a legal assignment, did not breach the covenant against assignment. He further concluded that Robins, as the equitable assignee of his brother's interest, occupied a position enabling him to exercise the option so as to bind both himself and his brother, and that the notice given, which indicated reliance on the transaction with his brother, demonstrated he was acting under his brother's implied authority combined with his own right. Webb J. found that the definition of "lessees," which included "each of them," meant the option was a single option exercisable by either lessee, and that the notice was sufficient. Taylor J. dissented, agreeing that the equitable assignment was not a breach of covenant and that Robins could have required his brother to join in exercising the option or acted in his brother's name, but he found that Robins had purported to act for himself alone, not on behalf of both lessees, and therefore the option was not effectively exercised.
The appeal was dismissed with costs, affirming the decision of the Supreme Court of Western Australia.