Massons

Reminder for those with Victorian leases – is your lease a retail lease?

Written by Ole Mitrevski on July 1, 2017

Under the Retail Leases Act 2003 (Vic) (RLA) “retail premises” are defined to mean premises that are used, or are to be used, wholly or predominately for the sale or hire of goods by retail or the retail provision of services.

So what does this actually mean?

Last year, the case of IMCC Group (Australia) Pty Ltd v CB Cold Storage Ltd [2017] VSCA 178, made it clear that the ‘ultimate consumer’ test is now the principle test to be applied to determine whether a tenant is undertaking a ‘retail’ business for the purposes of the RLA.

As a result of this case, a large number of leases that were previously not thought to be retail, will now be governed by the RLA.

What is the ultimate consumer test?

Case law has established that “retail” essentially means the provision of a good or service to the ultimate consumer for a fee or reward.

The “ultimate consumer” does not need to be a member of the public. In other words, it does not matter if the good or service is provided to another business who uses that service for their own business purpose. A business to business transaction could result in retail business.

What does this mean?

In short, if the answer to either of the following questions is “yes”, then it is likely that the business will be a retail business and the RLA will apply:

  • are the goods or services consumer by the purchaser; or
  • are the goods or services being used by the purchaser as input in the purchaser’s business.

Accordingly, this means that:

  • most businesses that provide services in Victoria will be found to be “retail” and will be governed by the RLA (unless another exemption applies); and
  • business that supply goods to a second business that use those goods as input into the second business are likely to be “retail”.

It is important to note that including an acknowledgment in your lease that the RLA does not apply will not save you from application of the RLA.

Implications for landlord and tenants

Landlords and tenants should carefully review any leases that may be subject to the RLA and consider if the RLA will apply.

The RLA is generally considered to be “tenant friendly”. In other words, tenants will usually have more protections under a lease governed by the RLA, than one which isn’t.

For those leases that are already on foot, some key things for both parties to consider are:

  • Under the RLA a tenant is not required to pay for land tax. Landlords of leases that are now clearly captured by the RLA may find that their tenants are now requesting refunds for land tax already paid
  • If the term of the lease is less than 5 years, the RLA automatically extends the lease to a 5-year term

For those leases that are currently being negotiated, the parties should carefully consider if the RLA will apply and if so, take the provisions of the RLA into account when negotiating clauses. Landlords may wish to narrow the permitted use to make it clear that premises cannot be used for a retail purpose.

If your lease was entered into prior to commencement of the RLA in 2003, it is good idea to speak to a lawyer before agreeing to any variation of that lease (as a variation may result in the RLA applying).

If you suspect that any of your Victorian leases may now be found to be “retail”, and would like further advice on the implications under the RLA, please contact us.

Insights

"Excellence Awardee" - Boutique Firm of the Year - 2022 Australasian Law Awards

We are delighted that Massons has been selected as an “Excellence Awardee” in the category of “Boutique Firm of the Year” at the 2022 Australasian Law Awards.

Thank you to all of our wonderful clients who have supported our nomination in this category, and to our amazing lawyers and support staff for making this possible!

Wishing all the other Awardees the best of luck and looking forward to the Gala Dinner.  A night out with our team is always cause for celebration – win, lose or draw!!

March 23, 2022

Doyle's Guide 2022

We are excited about our inclusion in Doyle’s Guide for 2022 for NSW in the following categories:

Massons – Leading Property & Real Estate Law Firms
Jodie Masson – Leading Property & Real Estate Lawyers and Leading Leasing Lawyers
Leisha de Aboitiz – Leading Property & Real Estate Lawyers and Leading Leasing Lawyers
Ben Malone – Property & Real Estate Law Rising Stars

Thank you to all of our peers and wonderful clients who have helped to achieve this recognition.

March 14, 2022

"Rising Stars" Australasian Lawyer 2022

February 28, 2022

Appointment as Senior Associate

We are excited to announce the appointment of Alex Ho as a Senior Associate at Massons.  Alex started with us as a paralegal and has achieved this milestone in record time due to his hard work, his ability to develop and sustain fantastic relationships with clients, his engagement in constantly seeking to improve himself and others in equal measure, and his absolutely infectious enthusiasm.  We couldn’t be prouder!  Congratulations Alex!

January 5, 2022

Australian Lawyer's Elite Women List 2021

December 8, 2021

We are excited to have been named as finalists in several categories in the Lawyers Weekly “Women in Law Awards 2021”:

– Massons – “Boutique Diversity Law Firm of the Year”
– Ole Mitrevski – “Senior Associate of the Year – SME Law”
– Michelle Mon – “Rising Star of the Year – SME Law”
– Nicole Caryofyllis – “Legal Support Professional of the Year”

We are proud to be recognised as a Firm which supports diversity in the workplace and are humbled to be included in the list of finalists in these categories. Win or lose, we are looking forward to celebrating the Awards night and would love to thank our peers and clients who have helped us achieve this recognition.

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Email: property@massons.com