Retail Leases update

What is this all about

A case that has extended the definition of what constitutes a retail tenant will have wide ramifications for practitioners who deal with commercial leases, the Victorian Small Business Commissioner (VSBC) Judy O’Connell has warned.

Providing commercial services

The Victorian Court of Appeal’s (VCAT) decision on the IMCC Group (Australia) Pty Ltd v CB Cold Storage Pty Ltd resulted in a change to the interpretation of the Retail Leases Act 2003 that means that the premises of businesses that supply commercial services to other businesses may now be regarded as retail premises, covered by the Retail Leases Act 2003.

The facts

In the CB Cold Storage case, the warehouse was tenanted by a business providing refrigeration services to mostly business customers. The tenant claimed that the Retail Leases Act applied, and therefore it should not have been required to pay land tax, water and council rates that were passed on to it by the landlord, and commenced VCAT proceedings against the landlord to recover those charges.

In its decision VCAT determined that the warehouse was not a retail premise and therefore not covered by the Act. But its decision was overturned by the Supreme Court on appeal on the basis that the tenant’s business customers purchased its services as the end user of the services, and that it therefore met the requirements of a retail lease under the Act.

For further details follow this link The report

The Consequence

Landlords of those business tenants will no longer be able to charge the tenant land tax, certain repair and maintenance costs, or management fees – unless the premises are in a shopping centre or building that is managed by the landlord.