Relevant to all property owners: but clubs and pubs especially
need to be wary of catering agreements
A decision handed down on 22 February 2012 shows that anyone
controlling premises can trigger retail leasing liabilities by
entering into an arrangement for someone to work in their
This has general relevance, by no means just restricted to
registered clubs or to arrangements like catering agreements.
One year catering agreement triggers five year lease
A registered club thought it had committed to a one year
catering agreement, but has found itself stuck with a minimum five
year lease because of the retail leasing legislation.
On top of that, the club has to return in excess of $9,000 that
the caterer paid as a contribution to the costs of some associated
capital works. Owners are not allowed to claim capital
contributions from certain "retail" tenants.
Another consequence not expected by the club is that the caterer
also now has other protections that the retail leasing legislation
gives to a regulated retail tenant, which places several additional
restrictions on the club.
All that came about in a situation which is not unusual,
although the club was not helped by its own formal Licence
Club grants caterer rights to use kitchen and servery
North Bondi RSL gave the caterer a one year catering agreement
that said he had exclusive use of parts of a kitchen and servery
for the purpose of providing a restaurant service. Patrons were
entitled to consume the food in most other parts of the club
It was the "exclusive use" that triggered the retail
The club unsuccessfully tried to flip the argument and claim
that if there was a "lease", then it extended to the rest
of the club premises where food was consumed. The club argued that
it was therefore entitled to the exemption that applies where a
lease is for an area greater than 1,000 square metres.
However, the club lost that argument as well.
Take care if you allow someone to work at your premises
What this means for you if you own or lease premises is that you
must take particular care before allowing someone to work at or
from your premises. No matter what you call the deal or the
document, it might create a retail lease. If so, that will have a
number of consequences you probably don't expect and don't
However, the lessons of the North Bondi RSL case also give
property owners and their lawyers the opportunity to avoid that
outcome in some similar circumstances.
It was confirmed that the law requires all of the tests to be
applied, by looking only at the terms of the actual agreement.
Make sure your arrangement is properly documented
So if an arrangement is truly and properly documented, the
legislation will not apply if the document reflects a transaction
that is not regulated.
In other words, there isn't much scope to look at how the
agreement is actually implemented. It's the original deal that
Also, the decision confirms that where there truly is a sharing
of space, then that of itself is not a form of occupation that
triggers the legislation.
Equally important, the decision also confirms that the
legislation isn't triggered for a space that has multiple uses,
unless the predominant use is one of those prescribed as relevant
under the legislation.
So, although an "eating place" is a prescribed
business, the broader areas of the club were held to have multiple
uses and their use as an "eating place" was not even the
Many retail leases include a covenant to trade, requiring the tenant to open the premises for trade during certain hours.
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