THEATRE RENT

New Zealand Herald, Volume LXXVI, Issue 23401, 18 July 1939, Page 13

THEATRE RENT

.. SEDUCTION ISSUE EFFECT OF 1932 ACT DECISION ON POINT OF LAW A CONTRACT RESCINDED •Judgment lias boon given by Mr. Justice Ostler in tho ease in which the trustees of the Fountain of friendship Lodge Friendly Society (Mr. North and Mr. L. G. Simpson) brought action applying for exemption from the statutory reduction in the rental payable for the Regent Theatre, Queen Street, provided for in the National Expenditure Adjustment Act, 1932. The lessees wore l'our Tait brothers in Australia, but the lease is now vested in J. C. Williamson (New Zealand), Limited, (Mr. Stanton). "The lease dated August 20, 1920, was of a parcel of laud containing about n-quarter of an acre with a frontage to Quoeti Street and Lome Street," said His Honor. "It was for a term of 53 years from .Tulv 2, 1021, at a weekly rental of £'s2 for the first 10 years. £54 12s for the next 10 years. £57 <3s 6d for the next 10 years, £6O 4s for the next 10 years, £6.') 4s for the next 10 years and £66 7s 3d for the remaining three years of the term. The Premises Sub-let "The lessee covenanted to demolish the then-existing buildings and erect a new building on the land of the value of not less than £25.000. This has been, done and the land is now occupied by buildings known as the Itegent Picture Theatre, with certain shops and other premises. "The lessee was also to pay all rates, taxes and insurance, and at the termination of the lease n& compensation was payable for the improvements erected by the lessee. On May 30, 1924, the Tait brothers transferred their estate as lessees under the memorandum of lease to J. C. Williamson (New Zealand), Limited. "On August 17, 1926, J. C. Williamson (New Zealand), Limited, sub-let the premises to Williamsons' Filing (New Zealand), Limited, for the term of the lease less three days at the rents provided by the lieadlease, with an increased rental of £SOO per annum. When the National Expenditure Adjustment Act, 1932, was passed on May 10 of that year the lessee was paying rent at the rate of £sl 12s per week. Reduced to £46 Weekly "It at once applied for a reduction in its rent by an amount equivalent to 20 per cent. Thereupon correspondence ensued between the company and the solicitor for the trustees of the lodge. The company first claimed that it was entitled to a straight-out reduction of 20 per cent on its rent under the Act, and it deducted that amount from the rent which it paid on May 16, 1932. This was at once objected to by the solicitor for the trustees. "In April, 1933, Mr. Beaumont Smith, the company's managing director, visited Auckland and verbally agreed with the trustees on a reduction of the rent to £46 a week. The Company's Claim "The claim of the company is that the ti;ustebs, having contracted to accept a rent ol' £l6 a week lor the period during which the National Expenditure Adjustment Act is in torce, and that Act being still in force, have no rights to relief under the Act, and the Court has no jurisdiction to grant any such relief." After examining the contentions of the trustees, His Honor said, "change in the law will not necessarily and iai all circumstances ntl'ect the validity of j a contract. Whether it does or not must depend on the circumstances of each ease. In this case a temporary Act was passed compulsorily reducing all rents, and with the clear intention that this statutory interference with existing tenancies would be but temporary and merely for the purpose of tiding over an abnormal period. Contract Rescinded "I think there can be no doubt," said His Honor, "that, if the lessors had contemplated the event as it has happened—that this temporary Act was going to be made permanent, they would have made an express condition equivalent to the condition which 1 think is implied in the contract, namely that the temporary agreement for reduction should terminate, and that they should be remitted to their rights to object to any reductions which were given by the Act. "I have only to decide the question of law as to "whether the lessors are still bound by their contract for the reduction of the rent. I hold that the alteration of the law upon which' the contract was based has had the ellect of rescinding the contract." His Honor adjourned the application on the question of facts for further consideration, but said that as the lessors had been successful on the first question of law they were entitled to the costs of the argument, which he fixed at £8 Bs.