Moves by the Commonwealth to tear up Russia’s 99-year lease of a leafy block in Canberra for its new embassy were unreasonable or lacked good faith, lawyers acting for Russia have claimed as it fights to remain on the site.
The Russian Federation filed Federal Court proceedings last month against the Commonwealth after the National Capital Authority moved in August to terminate Russia’s lease of the Yarralumla site.
The Russian embassy’s older site in the Canberra suburb of Griffith.Credit:AAP
At a preliminary hearing in Sydney on Thursday, the Federal Court heard Russia has constructed a consular building at the site but was yet to complete a larger embassy complex with multiple buildings. The lease was granted in December 2008 and plans for the complex were approved in 2011.
The National Capital Authority argues it has a legal basis for terminating the lease because building works approved for the site have not been completed.
Russia has an existing, ageing embassy building in the Canberra suburb of Griffith.
Sydney barrister Elliot Hyde, acting for the government of the Russian Federation, told the court on Thursday “the consular building is erected; I accept that the greater embassy complex has not been completed”.
Hyde said Russia paid a “peppercorn rent of five cents per annum” to the Commonwealth and it had spent millions of dollars on construction at the site.
“It shouldn’t face losing that investment and or the embassy site,” he said.
It was “unreasonable for the Commonwealth to purport to terminate the lease” or it had breached an implied term of good faith, Hyde said.
Barrister David Robertson, acting for the Commonwealth, said “the lease was terminated on the basis that the works which had been approved on 31 March, 2011, which involved the construction of more than one building, had not been completed in time”.
If Russia sought to argue it was only required to complete one building to satisfy the terms of the lease, Robertson said “the Commonwealth’s position is … that building hasn’t been constructed as at today’s date, or as at the date of termination, in accordance with the plans and specifications”.
“The Commonwealth’s position is that the approved plans required the construction of multiple buildings, but alternatively, even if … [the lease] only required the construction of one building, that has not been erected,” he said.
“The completion of that building has not occurred in accordance with [the lease] … as at the date of termination.”
Justice Steven Rares asked if the Commonwealth was arguing “the current consulate building hasn’t been constructed”.
“Completed, yes, in accordance with the … plans and specifications,” Robertson said.
Hyde, acting for Russia, said he was concerned the “primary source of our instructions in Australia may well be expelled” from the country, which would complicate him obtaining instructions in the case.
National Capital Authority chief executive Sally Barnes said in August that “ongoing unfinished works detract from the overall aesthetic, importance and dignity of the area reserved for diplomatic missions and foreign representation in the National Capital”.
The authority has denied the decision is related to Russia’s invasion of Ukraine. Russia has previously said it has spent $US5.5m on construction at the site.
The trial is expected to take place next year.
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