Glacken v Tooth and Company Limited

This case concerned an appeal to the High Court of Australia from the Supreme Court of New South Wales. The appellant, Glacken, sought to restrain the respondent, Tooth and Company Limited, from applying to the Licences Reduction Board for a determination of the annual rental payable under a hotel lease. The application was based on a covenant in an indenture dated 4 April 1932, whereby Tooth and Company agreed to pay rent in full without diminution and not to "make any claim for the reduction of the same nor take advantage of nor endeavour to take advantage of any present legislation State or Federal relating to or having the effect of reducing rents and in favour of lessees."

The central legal issue was whether the covenant in the 1932 indenture precluded Tooth and Company from making an application under section 16 of the *Landlord and Tenant (Amendment) Act 1932* (N.S.W.), which came into force after the indenture was executed. This Act permitted lessees to apply to have the annual rent of a lease determined. The appellant argued that the covenant prevented the respondent from taking advantage of any legislation, whether present or future, that might reduce rents.

The High Court, affirming the decision of the Supreme Court, held that the covenant did not preclude the respondent from applying under the 1932 Act. The Court reasoned that the word "present" in the covenant specifically referred to legislation existing at the time the indenture was made, and therefore did not extend to future legislation. Furthermore, the Court considered that even if the covenant could be interpreted more broadly, it was not competent for parties to contract out of the rights conferred by future legislation, particularly legislation like the *Landlord and Tenant (Amendment) Act 1932*, which was designed to modify existing lease rights and conferred an affirmative right upon lessees to seek a rent determination. The appeal was dismissed.