When is a lease for premises deemed to be a ‘retail premises’ under the Retail Lease Act 2003?

On 8 February 2017, Justice Croft of the Supreme Court of Victoria overturned a previous decision of VCAT in CB Cold Storage Pty Ltd v IMCC Group Pty Ltd [2017] VSC 23.  The decision he overturned was in relation to whether leased premises used to provide cold storage and logistics services to other business was “retail premises” under the Retail Leases Act 2003 (Vic).

VCAT held that the tenant’s rented premises were not “retail premises”. This decision was made on the basis that a “consumer” was a person who used goods or services to satisfy personal needs rather than for a business purpose.  The tenant’s customers ranged from large primary production enterprises to very small owner operated businesses and therefore the tenant’s customers were not consumers of the tenant’s services.

On appeal, Justice Croft held that the premises were in fact “retail premises”. He stated that VCAT erred in holding that customers that used a tenant’s service for a business purpose were not “ultimate consumers”. The main points from Justice Croft’s decision are as follows:

1. the test to determine whether the sale of goods or supply of services is retail for the purposes of the Retail Leases Act 2003 (Vic) remains the ‘ultimate consumer’ test, the breadth of which test is quite wide;
2. the ‘ultimate consumer’ test can apply to the supply of goods business-to-business, provided that the goods are used as an input into the second business rather than re-supplied; and
3. the Retail Leases Act 2003 (Vic) can apply to premises from which goods or services are supplied business-to-business, provided that those goods or services are supplied to the ultimate consumer of those services.

Further this decision may mean that the business premises you lease, or the one you are currently leasing to Tenant’s, may be regulated by the Retail Lease Act 2003 without you realising. If this is the case, as a Landlord you could be wrongfully recovering land tax and the payment of certain repair and maintenance costs from your Tenant.  Conversely as a Tenant you may be paying more to your Landlord than you are legally required.

As a Landlord or a Tenant now is an opportune time to review your Lease to determine if your premises is a retail premises for the purpose of the Retail Leases Act 2003 (Vic).

If you require advice or further information in relation to any of the matters discussed in this article, please contact our Corporate & Commercial team on 03 5273 5263.