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Thursday, 11 December 1930

Senator H E ELLIOTT (VICTORIA) . - I move -

That regulation 9 of the City Area Leases Regulations, made on 20th October, 1930, under the Seat of Government (Administration) Ordinance, 1930, and the City Area Leases Ordinance, 1924-29 of the Territory for the Seat of Government be disallowed.

Regulation 9 of the City Area Leases Regulations reads -

After regulation 8 of the City Area Leases Regulations the following regulation is "inserted : - " 9. Any lessee who commits a breach of any covenant contained in his lease, which is to the following effect, namely: -

(a)   That he will use the leased land only for a certain purpose specified in the lease;

(b)   That he will not, without the previous approval in writing of the Minister, erect any building on the leased land, or make any structural alterations in any building erected on the leased land ; or

(c)   That he will permit any person or persons authorized in writing by the Minister in that behalf to enter (upon production of such authority) upon the leased land at all reasonable times and in any reasonable manner and inspect the land and buildings, erections and improvements thereon, shall, if the covenant is one in respect of which no action for breach can be taken under the lease, be liable, upon conviction, to a penalty not exceeding Five pounds, or, where the breach is a continuing breach, to a penalty not exceeding Five pounds for every day during which the breach continues.".

I have carefully studied this regulation, and although I have had a legal training, I find myself incapable of giving it a definite meaning. It is not fair to place on a tenant, who has no such training, the responsibility of interpreting such a regulation. If there has been a breach of a covenant of a lease, surely action of some kind can be taken to enforce it. Otherwise the lease is a mere juggling of words. A covenant is an agreement under seal, and obviously the court should enforce it in the usual way, either by granting an injunction or giving damages, or something of that nature. Apparently, that is not intended, because the regulation includes the words, " If the covenant is one in respect of which no action for breach can be taken under the lease." I cannot conceive of such a situation arising. If there is a covenant, obviously, there must be a remedy for any breach thereof. Some court would have to give a meaning to it.

Senator McLachlan - Is not the regulation merely the addition of another covenant to those already entered into?

Senator H E ELLIOTT (VICTORIA) - The only way of enforcing an obligation under a covenant is to bring an action of some kind. I do not see how a covenant can be an enforceable agreement that is of any value at all, unless it can be the subject of an action. And, in that case, the remedy is entirely a civil action. To give this regulation any meaning a civil proceeding would have to be converted into a criminal action, the lessee prosecuted and if convicted, punished by a fine. Each tenant in the city area of the Territory for the Seat of Government has entered into an agreement which is binding on him for 99 years. It is impossible for him to obtain financial assistance from any banking institution or trustee company ; unless he can finance himself, he is practically at a dead end. What is his position if, in addition to that disability, a provision is to be inserted in his lease to which no one can give any definite meaning? He cannot surrender his lease until its full period has elapsed without losing all he has expended on the property. In the past Parliament has been careful to preserve the rights of people with whom it has entered into contracts. When dealing with legislation it has always avoided doing anything which might invalidate contracts entered into by a previous government with companies or individuals. In this amendment additional obligations are being imposed on lessees. If this practice is permitted where will it stop? Certainly, such a state of affairs was never contemplated by any lessee who accepted a lease at any of the sales which have been held.

There is a further objection to this procedure. If the regulation be not disallowed by the Senate, the interpretation of these regulations, which at present is the function of a High Court judge, will be cast upon a police magistrate, who may not have had the necessary legal training to enable him to arrive at a just decision.

In my experience a title to land is a matter which is always reserved to the higher courts.

Senator Ogden - Is forfeiture of the lease the penalty for a breach of other covenants ?

Senator H E ELLIOTT (VICTORIA) - A breach of covenant of a lease may result in an action for damages or for an injunction; it depends on the court. Should the controlling authority attempt to forfeit the lease the court may restrain it from doing so. Apparently, that is the stumbling block. The Government is afraid to take action to forfeit a lease for fear that the High Court would say, "No, this is not a breach of a covenant which justifies the forfeiture of the lease." It is going to cast the responsibility on an unfortunate police magistrate, who is to be asked to fine the man £5 or £5 a day if he has erected a building or structure of some kind and so is continuing to offend from day to day. The decision of the police magistrate may have substantial effects as, if he decided that there has been a breach of covenant, the authorities may forfeit the man's lease, although it may have upon it a building worth thousands of pounds.

Senator Guthrie - What is the object ?

Senator H E ELLIOTT (VICTORIA) - Heaven only knows. It is for this Senate to ascertain the object.

Senator Ogden - There must be some specific case with which the authorities had to deal.

Senator H E ELLIOTT (VICTORIA) - I have endeavoured to gather from the department what it is aiming at, but have been unable to obtain a definite reason. There is another objection to this procedure. I have never heard of a breach of an agreement being treated as a criminal offence. I can quite imagine what an outcry there would be from supporters of the Government if, say, the Victorian Parliament passed legislation that permitted the launching of a criminal action against a tenant for a breach of covenant. Why should there be a reversal of the usual treatment in the Federal Capital Territory, simply because the Government happens to be the landlord? In the States the tendency has been to protect the rights of the tenant. Despite any provision contained in his lease, a lessee, for example, may remove the fixtures connected with his business, which he may have erected in the buildings or on the leasehold. Moreover, if the lease provides that a tenant cannot assign his lease without the written consent of his landlord, it is implied by statute that that consent cannot be unreasonably or arbitrarily withheld.

Senator McLachlan - That does not apply to this 'case. The class of breach is limited to the provisions of paragraphs a, b and c.

Senator H E ELLIOTT (VICTORIA) - I am merely citing that incidentally, to demonstrate how State legislation lightens the obligations of the tenant, as against those of the landlord. Here, the unfortunate tenant is to be treated as a criminal if he departs from a covenant of his lease. I protest against what is actually a breach of faith on the part of the Government with the unfortunate people who have been decoyed into buying leases in the Federal Capital Territory and erecting buildings on them.

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