CONOID PTY. LIMITED & ANOR. v INTERNATIONAL THEME PARK PTY. LIMITED

The Application of Section 16 to the Retail Shop Leases Between the Parties With Their Terms Extended (Prima Facie) to Five Years Would Be Inconsistent With the Terms of the Head Lease Under Which the Defendant Holds the Retail Shops (see Section 16(5)) . 105 It remains to consider whether or not section 16 of the Act applies to the relevant concession agreements (retail shop leases) of the plaintiffs because its application, resulting in the extension of the term of each of those agreements (retail shop leases) to a term of five years, would be relevantly "inconsistent" with the terms of the defendant's tenancy (head lease) under which the defendant holds the retail shops. 106 It was submitted on behalf of the plaintiffs, contrary to the above heading, that section 16 of the Act did so apply because the relevant concession agreements (retail shop leases) were not inconsistent with any of the terms of the defendant's tenancy (head lease) under which the defendant holds the theme park (including the relevant retail shops). It was submitted on behalf of the plaintiff that this was so because it was the position under the general law that a periodic tenant of land could grant a sub-lease of that land for a term longer than the period of the (head) tenant's periodic tenancy, without the grant of such a sub-lease resulting in an assignment of the head periodic tenancy to the sub-lessee. 107 It was submitted, on the other hand, on behalf of the defendant, that, by reason of the fact that in such circumstances, under the general law, the sub-lease could be terminated, simply by termination by notice and without any breach of the head periodic tenancy, the concession agreements (retail shop leases) of the plaintiffs were clearly inconsistent with the terms of the head periodic tenancy under which the defendant held the relevant "retail shops", because the potential for the bringing to an end of a sub-lease for a term of years without any breach, by the bringing to an end of a head lease, being a periodic tenancy, without any breach, was necessarily inconsistent with a sub-lease for a term which was enforceable as such according to its terms. 108 In my opinion, the submission made on behalf of the plaintiffs is correct, so far as it goes, but the correctness of that submission, so far as it goes, does not, in my opinion, produce the result that the relevant concession agreements (retail shop leases) between the parties, with their terms extended to five years, are not inconsistent with the terms of the head periodic tenancy (head lease) under which the defendant holds the retail shops, within the meaning of section 16(5) of the Act. 109 The correctness of the plaintiffs submission is reflected, so far as it goes, in the following passages, inter alia, from certain of the cases upon which the plaintiffs relied:- "… within a few weeks at the most the sublessor would have been either a weekly or monthly tenant, or a tenant at will under s.127 of the Conveyancing Act 1919. Such a tenancy will support a sublease for a term of years because it may outlast that sublease: see Oxley v James (1844) 13 M & W 209; 153 ER 87, Wilson v Jolly (1948) 48 SR (NSW) 460 at 465, 469 and William Skelton & Son Ltd. v Harrison & Pinder Ltd. (1975) QB 361": per Handley JA in Lee v Ferno Holdings Pty. Ltd. (1993) 33 NSWLR 404 at 410. "… It is clear, according to the cases of Pike v Eyre and Curtis v Wheeler , that, if a tenant from year to year demises for a term of years, and the original tenancy from year to year lasts beyond that term, such a demise is not an assignment, but there is a reversion, on which covenant may be maintained": per Pollock , C.B. in Oxley v James 153 ER 87 at 89 . 110 It is also the fact however that, consistently with these principles, a sub-lease for a term of years granted by a sub-lessor in his capacity as a tenant under a periodic tenancy of the land may be brought to an end (is defeasible) by the bringing to an end of the periodic head tenancy, which may be brought to an end, without breach, by appropriate notice of either party to that head tenancy. That this is so is made clear, inter alia, in the following passages from various authorities:- "The respondent, by indenture made on 30th June 1967, had leased to the appellant the premises described in the default summons at an annual rental of $8,320 for a term of three years from 3rd July 1967. At that time the respondent held a larger area of which the subject premises form part as tenant of the Fremarle Acceptance Corporation Pty. Ltd. (Fremarle) under a tenancy as provided by s.127(1) of the Conveyancing Act 1919, as amended ( NSW). Such a tenancy is expressed in that section to be a tenancy terminable at the will of either of the parties by one month's notice in writing expiring at any time. It is not a tenancy at will as at common law, but is a periodic tenancy from month to month terminable by a month's notice in writing expiring at any time. Such a tenancy was capable of supporting the grant of the term of three years by the respondent to the appellant of the subject premises though a determination of the respondent's interest in the land before the expiry of the term of three years would terminate the appellant's interest in the land under the sub-tenancy": per Barwick C.J. in Metropolitan Trade Finance Co. Pty. Ltd. v Coumbis (1973) 131 CLR 396 at 398. "… Suppose that a tenant under a lease from week to week entered a sub-lease from week to week, from month to month, or for a term of years, and then surrendered his weekly tenancy, what was the position at common law as between the head lessor and the sub-lessee? It was held that such a sub-lease was valid as a sub-lease but determined upon the determination of the lease: Oxley v James ; Peirse v Sharr " per Jordan C.J . in Wilson v Jolley (1948) 48 SR(NSW) 460 at 465. "… the holder of any such tenancies is deemed to have a lease of longer duration than for practically any fixed time. For example, he might underlet from week to week, year to year or even for 21 years or more which is regarded as a lesser period than the periodical term … But the inherent nature of such under-leases means that they are operative only during the continuance in legal effect of the term out of which they were granted and no longer: Pike v Eyre; Oxley v James: per Davidson J in Wilson v Jolly, supra, at 469. 111 In my opinion, the submission on behalf of the defendant should be upheld. In my opinion, a head periodic tenancy (head lease) which can be terminated without breach, for example, on one month's notice, which termination then results in the termination on one month's notice (as it were) without breach, of a sub-lease for a term of years, is necessarily inconsistent with the sub-lease for a term of years, because the head periodic tenancy (head lease) has the potential within its terms to prematurely bring to an end the sub-lease for a term of years without any breach of either the head lease or the sub-lease. 112 It would, in my opinion, be extraordinary in the context of the Act, that a head periodic tenant (head lessee) of a retail shop under a periodic tenancy terminable on, for example, one month's notice could, by granting a sub-lease of a retail shop for a term of, say, five years, produce the result under section 16 of the Act that the sub-lessee of the retail shop had a lease for a term of five years which would bind not only the periodic head tenant (sub-lessor), but also the head lessor who had granted no more than a periodic tenancy to his tenant. In my opinion, the Act could not have been intended to produce such a result and indeed, it is plain, in my opinion, that the legislative purpose of section 16(5) of the Act was to protect the position of a head lessor from what would otherwise have been an unintended consequence of section 16.