FREEZING WORKS LEASE.

Poverty Bay Herald, Volume XXVI, Issue 8408, 6 January 1899, Page 4

FREEZING WORKS LEASE.

At the special meeting of the Harbor Board yesterday afternoon one of the subjects of consideration was whether the Board should grant its approval to a sublease of its property leased to the Gisborne Freezing Company, from the Company to I Messrs Ritchie and Pearce. The Board 1 had previously, without prejudice, decided to grant permission for the execution of the lease, which had been forwarded them for their seal, and, the Chairman explained, in accordance with a resolution that all documents for sealing should be sent to the Board's solicitor, it had been forwarded for his approval. Mr Finn had thereupon sent the following opinion : —

"Gisborne Freezing Company, Ltd., to Ritchie and anotheb.— l have perused . the document herein submitted to the Board for its seal. Mr Shelton, by his letter dated the 21st ultimo, asked the Board's ' formal consent to a memorandum of transfer by way of sub-lease' by the Giabqrne Freezing Company ' to trustees to secure debenture- holders of the ComCy.' By this document the Company leased to Messrs Ritchie and Pearce all the lands comprised and described in the lease recently granted by the Board to the Company, to be held by Messrs Ritchie and Pearce, as tenants, for the balance of the term of years created by the said lease, tzeept the lail day thereof, at 'the yearly rental of one shilling, if demanded,' and contains an express covenant that the Company will during the continuance of this lease pay the rent reserved by the head lease, 'and will perform and observe all covenants by the Company, as tenant, under such head lease, and conditions in Euch lease container! and implied, and keep Meßsrs Ritchie and Pearce and their assigns indemnified against all actions, suits, and proceedings, costs, damages, claims, and demands, which may be incurred or sustained by reason of the non-payment of the said rent or any part thereof, or the breach non-performance or non-observance of the said covenants or conditions or any of them. The Board is asked to give its unqualified consent thereto. If it was a transfer then a similar covenant would by Section 84 of the' Land Transfer Act 18S5 be implied on the part of Messrs Ritchie and Pearce to I pay the rent. &c, and to indemnify the' Company, but as it is not such, then there is no covenant, expressed or implied, on the part of Messrs Ritchie and Pearce, to pay any rent, except the one shilling if demanded ; nor to observe or perform any of the covenants contained in the head lease. In other words this document will on registration vest all the Company's estate in Messrs Ritchie and Pearce for the remainder of the term without any obligation whatsoever on their part, and if the Board executes the consent endorsed the effect will, it appears to me, be that if any default of rent Ipe hereafter made, or any of the covenants in the head lease broken, then -such will not affect them in the smallest degree, nor will it affect their rights to hold for the balance of the term except the last day, provided they pay the one shilling rent. This document is simply an under-lease, but to all intents and purposes a transfer, but cannot in law he regarded as such. 7he only interest retained by the Company i$ that for the last day. Suppose default was made in payment of rent, and all or any of the covenants in the lease was broken after the seal of the Board was affixed, then what position would the Board be in ?. They could not recover from Messrs Ritchie and Pearce because there is no privity of contract between the Board and Messrs Ritchie and Pearce, and they could only re-enter and determine the present lease, subject to the under lean vetted in Messrs Ritchie, and Pearce. In fact, there would be nothing except the last day to re-enter. It is true they could 9ue the Company and recover, but beyond doing so I do not see what else could be done. Messrs Ritchie and Pearce will not be the tenants of the Board but of the Company at the rental of one shilling a year. "In all under leases there are substantial rents reserved in consideration of which the landlord covenants to pay the ' rent reserved in the head lease, to perform the covenants, and to indemnify the tinder tenants, .but that is nob so here. Suppose again the Company was wound up, of which there is not the slightest danger, that would not affect Messrs Ritchie and Pearce, who would continue to hold by virtue of their tmrler lease at the rental therein reserved. The Board has by Mr Shelton's. letter received notice that the under tenants hold, as trustees, and therefore if the Bpaid, gives its consent, I think it becomes a party in the creation of the trust; at least, it would be at all times hereafter, during the continuance of the lease, bound by ouch consent. The Board does not concern itself with the arrangements between the Company and Messrs Ritchie and Pearce, nor with the object of the under lease, but must see that its rights under the head lease are protected, and that nothing is done which might hereafter interfere with its rights as the landlord. It is true the practice here has been for the landlord to give his consent by signing an endorsement on the under lease 'I consent to this under lease' as in this case, but in all such cases, as I have already stated, the landlord sees that the rent paid by the under lessee is a substantial rent, etc., and in very many eases such consent is given only (and lias embodied therein that such consent is given) ' Bubject nevertheless to the payment of the rent and the performance and observance of the covenants and conditions of the original lease and on the lessees' part to be paid, performed and observed.' Here the consent asked for is not subject to any condition's whatsoever. So that the under lease will, if the consent be given, hold, notwithstanding the non-payment of rent or breach of the covenants contained in the head lease. For these and other reasons I feel it ray duty to advise the Board not to consent to this under lease in its present form.— Yours faithfully, Hugh J. Finn. "P.S. — Since preparing the above opinion I may add thereto that the under lease to which the Board is asked to affix its seal was sot submitted to your solicitor until after it was executed by the parties thereto and stamped. As stated in the opinion, the consent of the Board should not be given unless all its rights under the head lease are protected. If this is done then there cannot be any objection to such consent being given.— H.J.F." The opinion having been read to the meeting, the Chairman said that the Board would have to insist on a new lease being prepared to include all the covenants of the head lease in the sub-lease. That was the advice of the solicitor, and it was the only thing the Board could do. Mr Matthewson said the lease extended for forty years, and though the Freezing Company were sound enough, they did not know what might happen hi that time. The Chairman said the form of the lease did not bind the sub-lessees to fulfil the covenants, but absolutely relieved them from fulfiling them and from all responsibility but the payment of one shilling a year. Mr Matthewsou : If the Company relinquishes business, then the Shaw, Savill, ana Albion Company (of which Mr Pearce, of Wellington, and Mr Ritchie, of Dnncdin, are trustees) would go in and occupy the whole at a shilling a year. We should insist on every covenant in the lease being embodied in the sub-lease. Mr Hepburn : That is the only position we can take up. Mr Matthewson said he would move that the application be not complied with, but that there be no objection to a transfer of the lease, provided the clauses in it be embodied in the transfer, thus fully protecting the rights of the landlord. ; Mr Sievwright said the gist of Mr Finn's opinion was contained in the postscript, which stated that the lease should have been submitted to the solicitor of the i Board. Ho agreed that it should have been submitted to Mr Finn. They took it ! for granted the Board would consent to anything the new sublessees wanted. They had simply made a siih-leasc for the ! whole term, except the last day. If it had ' been for the whole term it would have been a transfer ; the last day was execpted, and, ; therefore, in his opinion the covenants of the lease stood, and all the rights of the Board could be enforced. What Air Finn had added in his postscript confirmed that ' view, he thought. He said: "The con- '. sent of the Board should not bo given ' unless all its rights under tlio head lease i are protected. If that is done there cannot be any objection to such consent being given. : Mr Matthewson : If the Freezing Coin- < pany makes default we have no claim. Mr Sievwright: I entirely differ, but ] you may be a better lawyer. 1 Mr Matthewson : 1 have common-sense. ' Mr Sievwright said it was only right for f the Board to understand what it did. If i it unreasonably refused its consent to a i transfer, which by the terms of the lease ' it was bound to give, the Company might. ( commence an action against, them for s damages. He did not see why they should ( adhere to strict technicalities and hang the 1 matter up. t Captaiu Tucker thought the nutter c would be met by the addition of these a words in the attestation clause, "On s condition that its rights under the original c lease are not affected." They could refer c it to their solicitor to add such words to i the attestation clause as would protect a them,

Mr Clark thought that would be Ihe proper thing to do. Captain Tucker said it was ridiculous to say that they would have the property for a shilling a year. They could not take a I man's property without paying him what was covenanted to be paid. The Chairman said in view of their solicitor's opinion they could not be too careful, and he did not know why they should not have a fresh sub-lease.

. Captain Tucker explained that the stipulations of the sub-lease applied only as between the parties.

The Chairman : It is between the parties, but when we put our seal to it wo become a party to that agreement. Mr Sievwright : Only as far as it goes. The Chairman : You don't know how far some of these tilings go.

Mr Sievwright moved " That if words be added to the contract which will protect the rights of the Board under the lease and will ensure due fulfilment and payment under the covenant of the lease, it will affix its seal." He said that if they compelled the execution of a new lease they would hang things up. and perhaps hamper the Freezing Company in its finance.

Captain Tucker seconded the motion, which was agreed to, and it was decided that on an addition, approved by the Board's solicitor, being made to the lease, the seal be affixed by two members of the Board.