Lockrey v Historic Houses Trust of New South Wales

The appeal concerned a retail shop lease between the Historic Houses Trust of New South Wales (lessor) and Mr Lockrey and Ms Lockrey (lessees). The dispute arose when the lessees sought to assign the lease from both of them to Mr Lockrey alone. The lease contained a provision requiring the lessor's consent to any assignment, which was not to be unreasonably withheld. The lessees contended that consent was deemed to have been given under section 41(d) of the *Retail Leases Act 1994* (NSW) and a corresponding clause in the lease, despite the lessor's refusal. The matter was heard in the Court of Appeal of New South Wales.

The primary legal issues before the court were whether the lessor's requests for information regarding the proposed assignee's financial standing were permissible under section 41(a) of the *Retail Leases Act* and the lease, and whether the lessor's refusal to consent to the assignment was reasonable. Additionally, the court had to consider whether five separate requests for consent should be treated individually or as part of an ongoing negotiation, and crucially, whether a statutory condition in section 41(b) of the Act, requiring the lessee to "furnish" a particular document to the proposed assignee, was operative in the context of a joint tenancy assignment to one of the joint tenants.

The Court of Appeal found that the lessor's requests for financial information were within the scope permitted by the Act and the lease. However, the court determined that the condition in section 41(b) of the *Retail Leases Act*, which required the lessee to "furnish" a document to the proposed assignee, was inoperative in this specific scenario. This was because it was impossible for two joint tenants, who were in joint possession of any relevant document, to "furnish" it to one of them. Consequently, the court held that the lessor's refusal to consent was not based on reasonable grounds, as the condition that would have allowed for a lawful refusal was inoperative.

The appeal was allowed, and the orders of the Equity Division were set aside. The Court of Appeal declared that the appellant and the second respondent were entitled to transfer the lease to the appellant notwithstanding the first respondent's lack of consent. The first respondent was ordered to pay the costs of the appeal and the proceedings below.