Nrma Insurance Limited v Individual Homes Pty Limited [1988] ACTSC 33 (10 June 1988)

SUPREME COURT OF THE ACT

N.R.M.A. INSURANCE LIMITED v. INDIVIDUAL HOMES PTY LIMITED
S.C. No. 433 of 1988
Real Property

COURT

IN THE SUPREME COURT OF THE AUSTRALIAN CAPITAL TERRITORY
Kelly J.(1)

CATCHWORDS

Real Property - Mortgage under Real Property Ordinance 1925 - Power of sale exercisable - Mortgaged properties subleased - Whether mortgagee entitled to agreements for sublease and keys held by mortgagor - Security given for rent payable in respect of one of subleased properties - Whether mortgagee entitled to possession of the security.

Australian Capital Territory Supreme Court Act 1933 - ss.11(a), 24.

Rules of Supreme Court, A.C.T. - O.29, r.5, O.57.

Law of Property Act (England) 1925 - s.106(4)

Conveyancing Act (N.S.W.) 1919 - ss.112(8) and 112(9).

HEARING

CANBERRA
10:6:1988

DECISION

This is an originating summons brought by the plaintiff, NRMA Insurance Limited, as mortgagee, against Individual Homes Pty Limited, seeking the declarations set out in paragraph 1 of the orders for relief sought and consequential orders in respect of certain keys and tenancy agreements.

2. The plaintiff sought -
(1) a declaration that it was entitled to sell all of

the estate and interest of the defendant in the
land comprised in certificates of titles
registered volume 948 folios 51-62 inclusive;
(2) orders consequent upon the declaration sought in
paragraph (1) above that the defendant deliver
forthwith to the plaintiff keys and tenancy
agreements for each of the units comprised in the
said property and do no act which hinders the
plaintiff in effecting such sale;
(3) a declaration that the plaintiff has been, since
28 March 1988, entitled to receive all rents and
profits from the tenants of the units comprised in
the said property;
(4) orders consequent upon the declaration sought in
the third paragraph, just referred to, that the
defendant pay forthwith to the plaintiff the
amount of such rents and profits received by him
since 28 March 1988 and pay to the plaintiff any
such rent and profits received by it hereafter.

3. Further relief has been sought in connection with a document purporting to be a security for certain rent payable in respect of one of the properties. That document became Exhibit C and is in these terms:-

"I, Tony Moore and Ruth Coulter, tenants of
unit 8 have left a red Holden Torana, engine
number 1053118 with 'Individual Homes Pty
Limited' of No.8 Grund Place, Kambah, as
security for total rent of $720, rent due
6.5.88 ($360) and rent due on 20.5.88
($360). Next rent due on 3.6.88 will be paid
3.5.88 (sic)."

4. Whether that amounts to a bill of sale or not is a matter about which I need not concern myself at this stage. I note however that it was dated 30.5.88 and has not been dealt with under the Instruments Ordinance as a bill of sale.

5. The first question which I have to decide is one of jurisdiction. The application is said to be made pursuant to the provisions of s.11(a) of the Australian Capital Territory Supreme Court Act 1933 which says that:-

"The Supreme Court -
(a) has, subject to this or any other Act or
to any Ordinance, in relation to the
Territory, the same original
jurisdiction, both civil and criminal,
as the Supreme court of the State of New
South Wales had in relation to that
State immediately before the 1 January
1911;"

6. While I am looking at that Act, I refer also to s.24 which requires that:-

"The Supreme Court, in the exercise of the
jurisdiction vested in it by this Act, shall,
in every cause or matter pending before the
Court, grant, either absolutely or on such
terms and conditions as the Court thinks
just, all such remedies whatsoever as any of
the parties thereto may appear to be entitled
to in respect of any legal or equitable claim
properly brought forward by them in the cause
or matter, so that, as far as possible, all
matters in controversy between the parties
may be completely and finally determined, and
all multiplicity of legal proceedings
concerning any of those matters avoided."

7. I am satisfied that the Court has jurisdiction to entertain the application made provided that the originating summons be amended to set out that the declaration sought and the orders sought depend upon a question of construction. That does not presently appear in the documents and I think it may have led to some confusion on the part of the defendant. What I say now (I should add that I intend to make the declarations and grant the orders sought) will depend, and the declarations and orders will be made, upon the filing of a suitably amended originating summons.

8. I am satisfied that by a combination of s.11(a) of the Supreme Court Act 1933, s.10 of the Equity Act 1901 (New South Wales), as in force on 1 January 1911 and O.29, r.5 and O.57 of the Rules of this Court, there is jurisdiction to deal with the questions which are at the heart of this matter, namely, whether upon the facts that have happened and upon the true construction of the mortgage document, which is the basis of the action, and upon the true construction of the Real Property Ordinance 1925, there is a right in the plaintiff to the orders and declarations it seeks.

9. It seems to me that there is a true question of construction which arises, not from a matter of express statement to be found in the mortgage but as a matter of implication. The question really is whether there is to be implied in the mortgage a clause that in the events which have happened the mortgagee is entitled to documents of title in relation to leases of the subject properties which have been mortgaged.

10. I make the following findings of fact.

11. I am satisfied that in the circumstances which have arisen the mortgagee plaintiff is entitled to exercise its power of sale under the mortgage. I am satisfied that there are in existence title deeds, these being agreements for lease between the defendant and the tenants of the individual units comprised in the property mortgaged.

12. I am satisfied that the defendant, by its managing director, Mr Martin, has keys in respect of the several units, the subject of the mortgage. I am satisfied of the making of what I have referred to as the security for the car which amounts to security for rent in respect of Unit 8 of the property which is mortgaged. I am satisfied that the defendant, by its agent, is resisting a claim for production to it by the mortgagee of the title deeds or the leasehold contracts and of the keys.

13. In those circumstances the question becomes one as to whether I should find that there is implied in the mortgage an agreement that when the mortgagee came to exercise its powers, should that become necessary, the contracts of lease between the mortgagor and the tenants of the several units comprised in the mortgage should be handed over to the mortgagee.

14. As a corollary of that, the question of whether there is an implied agreement in respect of the handing over of keys in respect of the mortgaged units arises for decision and I think also the question whether in the events which have happened there is an implied agreement to hand over any security in respect of rent. I note that in the Law of Property Act 1925 in England there is provision that when the statutory power of sale under that Act becomes exercisable the person entitled to sell may demand and recover from any person, other than someone with a prior interest in the mortgaged property, all deeds or documents relating to the property or to the title thereto which a purchaser might be entitled to demand and recover from him.

15. There is a similar provision in the Conveyancing Act 1919 of New South Wales, s.112(8). So far as I can ascertain - and counsel have not been able to assist me further on this point - there is no equivalent provision in the law of the Australian Capital Territory. But I note also that s.112(9) of the Conveyancing Act 1919 says that:

"This section does not apply to mortgages or
encumbrances under the Real Property Act 1900
(the equivalent of the Real Property
Ordinance 1925)."

16. There being no statutory provision which covers the point, I proceed to deal with the matter as a matter of construction. In my opinion there is to be implied in a mortgage by which a power of sale is exercisable, when that power becomes exercisable, a condition or covenant that in the event that the power becomes exercisable and there are leasehold agreements in respect of all or any part of the mortgaged property, the mortgagor shall hand over those leasehold agreements to the mortgagee so that it may exercise its power of sale. To hold otherwise would be a derogation from the grant of the mortgage by the mortgagor and I do not think that that can be permitted in the circumstances of this case.

17. That being said, it seems to me that for similar reasons the methods of entry into the mortgaged premises ought to be available to the mortgagee. I say this having regard particularly to the provisions of s.120(a) of the Real Property Ordinance 1925 which provides that:-

"In every memorandum of lease there shall be
implied the following powers in the lessor:
(a) That he may by himself or his agents,
twice in every year during the term at a
reasonable time of the day upon giving
to the lessee two days' previous notice,
enter upon the leased premises and view
the state of repair thereof, and may
serve upon the lessee or leave at his
last or usual place of abode in the
Territory or upon the premises, a notice
in writing of any defect, requiring him
within a reasonable time, to repair the
premises in accordance with any covenant
expressed or implied in the lease;"

18. It seems to me that that covenant, implied by the Statute, means that, subject to restrictions on forcible re-entry and any covenant for quiet enjoyment, the lessor can enter on having given reasonable notice, and certainly he would be entitled to enter by use of an appropriate key.

19. Since the law frowns upon violence, it seems to me to be essential that the lessor should have a key for that purpose or should be allowed to retain a key for that purpose and that that constitutes one of the rights which enures to the lessor and upon the exercise of the power of sale to his mortgagee as his successor in title in respect of the property.

20. The only other point I wish to make is this. Because of the requirement of s.24 of the Supreme Court Act, I have considered it inappropriate in this case to require that there be pleadings. It seems to me that all the matters of fact are in short compass and I have made findings on them, findings which I do not think are capable of challenge, having regard to the evidence I heard yesterday, and I see no particular reason why the question of construction cannot be dealt with without a statement of claim being filed.

21. In the circumstances, I propose to make the declarations and orders sought.

22. In action number 433 of 1988, I order that the plaintiff's costs of and incidental to the action be taxed as though the defendants in action number SC432 of 1988 had been joined in the action, the claim for relief in respect of caveat number 606763 had been made in this action and the affidavits referable to that claim had been filed in this action, and be paid by the defendant, Individual Homes Pty Limited.