Starline Drive in Theatre Ltd v Federal Commissioner of Taxation
(1964) 112 CLR 45838 ALJR 259
(Decision by: Kitto J)
Between: Starline Drive in Theatre Ltd
And: Federal Commissioner of Taxation
Judges:
Kitto JTaylor J
Windeyer J
Subject References:
Income tax (Cth)
Judgment date: 5 November 1964
Decision by:
Kitto J
In my opinion the questions submitted to the Court should be answered as proposed by my brother Taylor. I have nothing to add to his Honour's reasons for judgment, except in relation to the contention of the taxpayer that none of the improvements which it covenanted to make on the demised premises should be held to be subject to tenant rights, in the sense of s. 88 (2), because its covenant with the respective lessors to remove the improvements, though creating obligations binding upon it, created no rights in its favour. The contention, which was variously expressed, came in effect to this, that while a licence by the lessor to remove the improvements was necessarily implied both in the lease of one part of the land and in the sub-lease of the other, the licence in each case was revocable, so that if, when the time came for removal, the lessor were to waive performance of the covenant and insist that the improvements be left, the taxpayer would have no right of removal. I do not think that this is the true meaning of the leases.
Bearing in mind that at the time when the leases were executed no one could tell whether removal of the improvements immediately prior to the determination of the term would be more advantageous to the lessors or to the lessee, the sense of the covenants, as I read them, is that the lessee is entitled as against the lessors as well as bound in their favour to remove the improvements, so that the lessors may not prevent the lessee from removing them if he desires to do so. In other words the manifested intention of the parties in each instrument appears to me to be that the implied licence to the lessee to remove the improvements at the stipulated time is not to be revocable at the will of the lessor. The improvements are therefore subject to tenant rights as the Court has interpreted the expression in the Consolidated Metal Products Case (1962) 108 CLR 120 . (at p460)