Commercial leases often contain a covenant prohibiting a tenant
from parting with possession of the leased premises. Whether or not
a tenant has parted with possession of the Premises (as opposed to
merely sharing the occupation of the Premises) becomes yet another
enquiry dependant on the weight of the facts and circumstances of
the particular case.
The Queensland Court of Appeal recently heard the case of
Ace Property Holdings Pty Limited v Australian Postal
Corporation  and determined that, after weighing up
of the facts and circumstances of the case, that the Tenant
(Australia Post ) had parted with possession of the leased Premises
and was therefore in breach of its obligations under the particular
The circumstances of this particular case that lead to this
a wholly owned subsidiary of the tenant Australia Post was
allowed by it to exercise control over the whole of the
that subsidiary (Decipha Pty Limited) paid rent and outgoings
to Australia Post for the Premises ( even though Australia Post
continued to make its own rent payments to the Landlord );
Australia Post did not conduct any physical activities for its
own business at the Premises;
The business activities at the Premises were conducted by
employees of Decipha who were not employees of Australia Post;
Decipha carried out renovations at the Premises through its own
The business records of Decipha showed that it carried on
business in its own right, and that it exercised control over the
It was not sufficient for Australia Post to argue that it had
the power (as holding company for Decipha) to alter the situation
and resume possession of the Premises. The breach of lease was in
Australia Post having parted with possession of the Premises in the
The Court was not prepared, on the facts of that case, to treat
the subsidiary as the alter ego nor as the agent of the holding
company. The Court was cognisant of the deliberate establishment by
Australia Post and Decipha of a particular corporate structure-
which served certain industrial relations based ends, but also
brought the attendant consequences of separate corporate
personality and responsibility and limited personal liability. The
corporate veil remained intact.
For advice on commercial leasing, either as a tenant or
landlord, contact the experienced property team at Coleman Greig.
We can work with you to ensure that your actions, or those of your
tenant, are compliant with the conditions of your lease, saving you
both money and time that could be spent in dispute.
The content of this article is intended to provide a general
guide to the subject matter. Specialist advice should be sought
about your specific circumstances.
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