Business Owner-Occupier Alert.  An Appeal Court has again confirmed that even if the owner of a property and the business therein are the same, the business may not be entitled to resumption compensation (relocation, loss of profits, etc) if there is no formal lease or similar arrangement between the two entities.

In this case, the land was owned by the sole directors and shareholders of a company operating a manufacturing and retailing enterprise.  Although the same people that owned the property also owned and controlled the business, it was found that the property and business were separate legal identities.

There was no formal lease or similar arrangement between them.

The Court found that the business occupied the property under a “bare licence” which was terminable at will by either party and could not be transferred to another entity. 

This case highlights the importance for those involved in any common related party arrangements to carefully consider the potential ramifications.  These might include: # A self-managed super fund leasing a commercial property to the beneficiary’s business # A trust or trustee leasing to the beneficiary or the beneficiary’s business # A company leasing land from the company directors and/or shareholders # Leases between family members

Olde English Tiles Australia Pty Ltd v Transport for New South Wales [2022] NSWCA 108

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