Gibb v Registrar of Titles (Vic) [1940] HCA 15

Gibb v Registrar of Titles (Vic) [1940] HCA 15 - HCA 1940 case summary — Zoe

[9]

The instrument of mortgage contained the following covenant : - "E. That if the principal sum is being advanced for the purpose of erection of any buildings additions reparations or other improve- ments upon the said land, the mortgagors hereby covenant with the mortgagee that they will erect or completely finish such buildings additions reparations or other improvements with all reasonable speed, and in a good substantial and workmanlike manner, fit for habitation and use, in accordance in all respects with the plans and specifications submitted to the mortgagee upon the application for the advance, and to the satisfaction in all things of the mortgagee or its architect, and the said principal sum shall not be advanced in greater sums than such architect shall from time to time certify to the mortgagee as being payable having regard to the progress made at the date of such certificate, and all the costs charges and expenses of such architect in respect of each certificate shall be deducted from the said principal sum and when paid to such architect shall be deemed to be a payment to the mortgagors of part of the said principal sum Provided always and it is hereby agreed that in the event of the mortgagors making default in erecting and completely finishing the said buildings additions reparations or other improvements (of which default the mortgagee shall be the sole judge) it shall be lawful for the mortgagee by its servants agents and workmen to enter upon the said land and to proceed to erect or do such buildings additions reparations or other improvements, and to completely finish the same in accordance with such plans and specifications, or in such other manner as the mortgagee may deem advisable at the sole risk cost and expense of the mortgagors, and all moneys whatsoever paid or expended for all or any of such purposes whether in excess of the amount agreed to be lent or otherwise shall with interest thereon at the rate of seven pounds per centum per annum calculated from date or respective dates of payment thereof be repayable to

[54]

mortgagee " as referring to specific documents and as incorporating them in the covenant. Taking this view of the covenant, he has refused to register the instrument on the ground that it is against the practice of the Office of Titles to allow such a reference to other documents as would incorporate in the mortgage agreement some- thing not included in the instrument lodged and that to frame a covenant or condition in an instrument of mortgage in such a way that, for its interpretation, it is necessary to refer to unregistered documents is a thing which the Transfer of Land Act neither authorizes nor contemplates. The registrar says that the form provided by the Act requires that covenants in a mortgage shall be set forth in the instrument and that it has not been done, with the consequence that the form has been varied in a matter of substance and in such a way as is calculated to cause confusion and embarrassment in the practical working of the office. The chief ground for thinking that some confusion or difficulty might be produced in the working of the Office of Titles must lie in the possibility of the registrar being called upon to consider the covenant for the purpose of deciding whether the mortgagee's power of sale has arisen so that he ought to register an instrument of transfer given by the mortgagee in pursuance of a purported exercise of the power. The statutory power of sale arises on notice after default either in payment of principal or interest or in the observance or performance of the covenants contained in the mortgage. In any event the mortgagee may, under the provisions of the mortgage, call up the mortgage moneys if there is a failure to perform the covenant. Such a calling up might be the first step towards, not only an attempt to exercise the power of sale, but also an application to the commissioner for a foreclosure order. In this way the registrar or the commissioner might find it indirectly necessary or desirable to inquire into the performance of the covenant. The statute relieves the registrar of any duty to call for proof of due exercise by a mortgagee of his power of sale when a transfer by the mortgagee is pending (sec. 148), but it remains within his province to do so. Apparently he regards it as inconvenient that any part of the test or criterion of the performance by a mortgagor of his covenant should be contained in unregistered documents. These

[56]

The chief ground upon which reliance was placed in support of his refusal to register the instrument of mortgage was that it departed substantially from the form given by the statute for such an instrument. The form is contained in the Twelfth Schedule and provides a place for special covenants. Included in square brackets is an italicized direction, "here set forth any special covenants." It is contended that these words show that all the acts or things to be done by the covenantor must be described in the covenant without reference to and reliance upon any other deed or writing. I am unable to agree to this interpretation of the words. They are concerned to assign a place where the parties may express their covenants, whatever they may be. In many places in the Act references will be found to provisions contained in instru- ments. The form in which these references are expressed is apparently more or less accidental, though the words " set forth or specified " are frequently used in contradistinction from " implied." Sec. 61 speaks of "the covenants and conditions set forth and specified in the instrument, or by this Act declared to be implied in instruments of a like nature." Sec. 127 provides that a transferor of land subject to an encumbrance shall be indemnified by the transferee against liabilities which it describes as "in respect of any of the covenants therein contained or by this Act declared to be implied therein on the part of the transferor." Sec. 143 implies in every sub-lease a covenant on the part of the lessee sub-lessor to "observe the covenants and agreements contained in the original lease." Sec. 146 speaks of the "observance of any covenant expressed in any mortgage or charge, or hereby declared to be implied in any mortgage." In the Ninth Schedule, which deals with leases, there is a direction, " here set forth any special covenants or conditions" ; but in the Eleventh Schedule dealing with sub-leases the corresponding direction speaks of "' covenants and conditions," and the Thirteenth Schedule requires the parties to " state (inter alia) any special covenants or powers." It appears to me that from such expressions as "set forth," "state," "specified," "contained," &c., no inference can be drawn that the legislature intended to exclude from covenants any reference to other documents.

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