In recent years, there has been a notable trend in Victoria towards a broader interpretation of what constitutes ‘retail premises’ under section 4 of the Retail Leases Act 2003 (Vic) (Act). This shift has significant implications for both landlords and tenants, as it affects the applicability of the Act’s protections such as:
- prohibition on the recovery of land tax (even though expressly permitted under the lease);
- market rent reviews that do not allow for rent decreases will be void; and
- on assignment, tenants and their guarantors may be released from their ongoing obligations.
Recap: CB Cold Storage
In CB Cold Storage Pty Ltd v IMCC Group Pty Ltd [2017] VSC 23 (CB Cold Storage) the Victorian Court of Appeal held that a lease of a wholesale cold storage facility was a ‘retail premises lease’ to which the Act applied. That judgement applied the ‘ultimate consumer test’ as one of the key factors to consider when deciding whether there is a retail provision of goods or services.
Key developments
Post-CB Cold Storage, courts and VCAT have favoured and applied the ultimate consumer test adopted in CB Cold Storage. Consistent with the trend demonstrated by CB Cold Storage, decisions have tended to broaden the application of the Act, enabling an increasing number of tenants to access the protections set out in the Act.
Below we set out a snapshot of several cases in this area since CB Cold Storage:
| Case | Key points | Outcome |
|---|---|---|
| Verraty Pty Ltd v Richmond Football Club Ltd [2020] VSCA 267 | The Victorian Supreme Court of Appeal confirmed that a retail premises lease cannot ‘jump out’ of application of the Act during the term. | If the Act applies to a lease at the time it is entered into, the Act will not cease to apply during the term of the lease. |
| W.G.Z Pty Ltd atf the W.G.Z Family Trust v Arva Investments Pty Ltd [2024] VCC 1777 | The County Court of Victoria held that a lease for warehouses in Laverton North used for 'warehousing and distribution of general freight' was considered 'retail premises' under the Act.
The court applied the ultimate consumer test and found it was satisfied, following the precedent set by the CB Cold Storage case. | Reflects the increasing trend to include within ‘retail premises’ industrial/warehouse premises. The appropriate way to measure usage of a premises (to determine the ‘predominant use’) will depend on the circumstances of each case and may include:
|
| Horgan v Equi Ventures Pty Ltd (Ruling) [2024] VCC 1965 | The County Court of Victoria held that an equine centre, which utilised a portion of the premises for an arena and office for the provision of horse riding lessons/polo lessons and a large part of the premises for the purposes of caring for/housing horses, was 'retail premises' for the purposes of the Retail Leases Act. It was held that the ministerial determination exemption for 'agistment' did not apply as this related to a small portion of the land and the horses occupied the land as part of the purpose of the carrying on of the tenant's business on the land. | In addition to the ‘ultimate consumer test’ the following factors are relevant to determining whether goods or services are ‘retail’ in nature:
|
Recommendations for landlords
Landlords need to be aware of the potential application of the Act to leases previously assumed to be exempt (for example industrial or warehouse leases) and in particular:
- review existing leases where a tenant provides services from leased premises; and
- consider the potential application of the Act during lease negotiations where the tenant will be providing a service to its customers for a fee (particularly where those services are available to members of the public).
The current trend suggests more rather than less premises will be coming under the application of the Act.
For more information, please contact our team.
Published
13 March 2025This update does not constitute legal advice and should not be relied upon as such. It is intended only to provide a summary and general overview on matters of interest and it is not intended to be comprehensive. You should seek legal or other professional advice before acting or relying on any of the content.