Victorian Retail Leases Australia news; Some may consider 15 December 2017 to be an auspicious day for commercial tenants throughout Victoria and an unlucky day for landlords. It was the day, special leave to appeal relating to the Victorian Supreme Court of Appeal’s decision in IMCC Group Australia Pty Ltd v CB Cold Storage Pty Ltd [2017] VSCA 178 was dismissed by the High Court. [1]
With this dismissal, it is clear the Victorian Supreme Court of Appeal’s decision on 5 July 2017 is here to stay – leading to a widened scope of the Retail Leases Act 2003 (VIC) amongst commercial tenants and landlords. [2]
Why this decision is relevant to Retail Leases Act 2003 (VIC)
The good news with the decision is that for commercial tenants, a greater number of them should now enjoy the protection of the Retail Leases Act 2003 (VIC).
But first, to enjoy any form of that protection, the premises leased must be a ‘retail premises.’ [3]
What is a ‘retail premises’?
Whether your premises constitute ‘retail premises’ is generally determined by a legal test called the ‘ultimate consumer test.’
Particularly, in the CB Cold Storage Decision Series (we say this, to refer to the decisions from VCAT to Victorian Supreme Court of Appeal), there was confusion to how the test should be applied.[4] In everyday terms, how this test is applied affects commercial tenants and landlords in Victoria.
For example:
- Could the premises your business is located be a ‘retail premises’ because you sell goods or services to ordinary people?
- What if you ran a manufacturing business? Would the premises be considered a ‘retail premises’ because you don’t sell to ordinary people directly?
These were the kind of questions wrestled. Fortunately, with the clarity brought by the Victorian Supreme Court of Appeal in CB Cold Storage Decision Series, the test is now much broader than once commonly understood.
What happened?
A tenant leased a property as a cold and cool storage warehouse and transport facility. As part of their business:
- there were car parking bays onsite;
- office opened during business hours;
- receptionist was staffed;
- people could walk into the office off the street;
- people could enquire about services; and
- guided tours of the warehouses were available. [5]
Interestingly though, while the tenant did cater to a wide variety of customers, the tenant served, twenty main customers, compromising primarily of companies such as:
- producers;
- manufacturers;
- distributors;
- importers; and
- exporters. [6]
Because of these main customers, did this mean that the tenant’s premises, was ‘retail premises’?
Some may argue it is not retail premises because the services were not directed to the public at large as generally understood by the term ‘retail.’
But the Court decided otherwise. So why was this the case? We explore that below.
What did the Courts decide exactly?
- VCAT (Victorian Civil and Administrative Tribunal)
The case was first brought to VCAT. Here, VCAT found that premises did not constitute a ‘retail premises’ because the customers were ‘producers, manufactures, distributors, importers and exporters,’ and this did not fit within ‘the ordinary meaning of retail.’ [7]
Sounds familiar to what was discussed about, yeah?
More importantly, VCAT said if the premises were ‘retail premises’ then “such an interpretation would give the word ‘retail’ in the section no meaning at all.” [8]
- Supreme Court of Victoria
The Tribunal’s decision was brought to the Supreme Court of Victoria. There, the judge struck the Tribunal’s decision!
Why did the Judge come to that decision?
The judge considered “in my view… that ‘consumers’ can be persons who use a service for business or a purpose other than for personal needs.” [9]
When the judge’s decision was taken to the Court of Appeal, the Court of Appeal dismissed the appeal, and agreed with the judge by noting that consumer has generally been used in ‘a broader sense to mean a person who uses the service.’ [10]
What other things were mentioned in the decisions?
Importantly, references to decided cases (some would call this, ‘judge-made law’) that the Courts considered are ‘retail premises’ may include: [11]
- leased property as a restaurant, cabaret and discotheque which were open to the public on payment of an admission fee. [12]
- office of a patent attorney, even though advice provided was to large foreign-owned chemical companies. [13]
- leased property used to operate a caravan park. [14]
- serviced apartments depending on the circumstances. [15]
- premises as a function and conference centre. [16]
- premises let as an office and warehouse from which a logistic services business was operated. [17]
How does this affect tenants?
It could be the case that your lease now is governed under the Retail Leases Act 2003 (VIC). This is in fact, good news as the rights and protection under that Act could benefit you, the tenant!
For example, the Retail Leases Act 2003 (VIC) provides protection including:
- mandatory disclosure requirements;
- minimum of five-year lease; and
- certain outgoings not paid by tenant. [18]
Make sure to seek advice to determine whether your premises can be considered ‘retail premises.’
How does this affect landlords?
Landlords should ensure their lease are revised and checked to determine whether the definition of ‘retail premises’ apply. If so, there are mandatory obligations and disclosure requirements owed by Landlords to their Tenants. Furthermore, there are certain outgoings that cannot be recovered by Landlords.
Ultimately, the decision reduces the overall legal position of Landlords by broadening the scope of the Retail Leases Act 2003 (VIC).
Our Thoughts – Retail leases Australia
With the High Court’s dismissal of appeal, it is apparent that the new widened scope of the Retail Leases Act 2003 (VIC) is here to stay.
Landlords and Tenants leasing any premises for commercial activity should now consider inspecting the leases and the business conducted on site to determine whether the Act applies, and with it, mandatory statutory obligations.
For general assistance, the Victorian Small Business Commissioner may be able to assist in your disputes as retail tenants or landlord: see here. Moreover, If you have any concerns or queries with how the CB Cold Storage Decision Series may have affected you, then AMK Law may be able to help in your leasing matters.
Important disclaimer: The material contained in this publication is of a general nature only and it is not, nor is intended to be, legal advice. This publication is based on the law as it was prior to the date of you reading of it. If you wish to take any action based on the content of this publication, we recommend that you seek professional legal advice.
[1] IMCC Group (Australia) Pty Ltd v CB Cold Storage Pty Ltd [2017] HCATrans 268.
[2] IMCC Group (Australia) Pty Ltd v CB Cold Storage Pty Ltd [2017] VSCA 178.
[3] Retail Leases Act 2003 (VIC) ss 4, 11.
[4] CB Cold Storage Pty Ltd v IMCC Group (Australia) Pty Ltd (Building and Property) [2016] VCAT 1866; CB Cold Storage Pty Ltd v IMCC Group (Australia) Pty Ltd [2017] VSC 23; IMCC Group (Australia) Pty Ltd v CB Cold Storage Pty Ltd [2017] VSCA 178.
[5] IMCC Group (Australia) Pty Ltd v CB Cold Storage Pty Ltd [2017] VSCA 178 [11] – [12].
[6] Ibid [13].
[7] CB Cold Storage Pty Ltd v IMCC Group (Australia) Pty Ltd (Building and Property) [2016] VCAT 1866 [68].
[8] Ibid.
[9] CB Cold Storage Pty Ltd v IMCC Group (Australia) Pty Ltd [2017] VSC 23 [27].
[10] IMCC Group (Australia) Pty Ltd v CB Cold Storage Pty Ltd [2017] VSCA 178 [44].
[11] Ibid [16]-[23].
[12] 536 Swanston Street Pty Ltd v Harbrut Pty Ltd (1988) V ConvR ¶54-323 64,088.
[13] Wellington v Norwich Union Life Insurance Society [1991] 1 VR 333, 338.
[14] FP Shine (Vic) Pty Ltd v Gothic Lodge Pty Ltd [1994] 1 VR 194, 198.
[15] Stringer v Gilandos Pty Ltd [2012] VSC 36 [65].
[16] Fitzroy Dental Pty Ltd v Metropole Management Pty Ltd [2013] VSC 344 [44].
[17] Global Tiger Logistics Pty Ltd v Chapel Street Trust (Unreported, Victorian Civil and Administrative Tribunal, Member L Rowland, 24 October 2012) [16] – [17].