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A contract for certain catering services to be made available to
staff from within your leased premises, may be a "retail shop
lease" governed by the Retail Leases Act in NSW.
In the Administrative Decisions Tribunal case of Lytton v
North Bondi RSL Club the tribunal decided that if the
agreement between the parties granted rights of occupation for the
caterer to provide goods and services, then that agreement may be a
retail shop lease.
The Lytton case revolves around an RSL Club that engages a
person, by way of a licence agreement, to operate a bistro or
provide "food services" from within the Club's
premises. Those services included "exclusive use of the
kitchen".
The Club argued that the Act should not apply as the Club's
premises, to which the caterer had access to, had a multitude of
activities and it could not be said to be "used wholly or
predominantly" as a restaurant by the caterer. In the
alternative, the Club sought to argue that the caterer had
"access" to a large area of the Club's premises (in
excess of 1,000 metres squares anyway) and that would exclude the
application of the Act.
However, the Tribunal having considered the terms of the
agreement and the exclusive right granted to the caterer to occupy
at least the kitchen area, the agreement constituted a retail shop
lease. It was further decided that there was insufficient control
over or no "constant use" of any other part of the
Club's premises to constitute it as an occupier of those other
parts of the Club in the sense in which that term is used in the
Act.
The Tribunal was of the view that "a mere right to use or
access" premises is very different from a "right of
occupation" which the Act contemplates for a retail shop
lease. On that basis, the caterer's right of access to other
parts of the Club's premises was not a grant of a retail shop
lease for those premises but ancillary to the right to occupy the
kitchen premises.
In the common scenario where a tenant that occupies multiple
levels of a building, engages a caterer to provide cafeteria and
catering services (to essentially staff) from one of its leased
floors, it would not be so extraordinary if that catering agreement
was determined to be a retail shop lease – especially if
it otherwise satisfied the requirements of a retail shop lease
under the Act.
It is important to keep in mind the reach of the Retail Leases
Act whenever you propose to allow a right of occupation to a person
providing goods or services (as prescribed by the Act) regardless
of who the customer may be.
Case Reference: Lytton v North Bondi RSL
Club (RLD) [2012] NSW ADTAP8
The content of this article is intended to provide a general
guide to the subject matter. Specialist advice should be sought
about your specific circumstances.
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