A recent decision in the Victorian Supreme Court highlights the
severe consequences that can be paid by parties who try and avoid
the Retail Leases Act. In this case, the landlord/vendor lost about
$90,000.00 to which they thought they were entitled to receive
under the lease.
Mr & Mrs Spirovski owned a hotel premises in Fitzroy. In
January 2008, an agreement was entered into to lease the premises
to Univest Asset Merchants Syndicators Pty Ltd.
The agreement provided that Univest would pay $90,000.00 to the
Spirovski's on signing the lease, and a further $90,000.00 upon
exercising the option (if this occurred). This payment was not
expressed in the lease, but was expressed in a contract for the
sale of business, although no business was being sold.
Univest paid the initial contribution of $90,000.00 to the
After this payment had been made, Univest sought to recoup this
money by arguing that the payment was a 'premium' under the
Retail Leases Act and that the provision in the contract was void
and the money should be refunded to them. Under the Retail Leases
Act, it is illegal for the lessor to ask for any money in relation
to entering into a lease.
The court decided that the payment of the $90,000.00 was a
'premium' under the Retail Leases Act, and ordered the
lessor to repay the money to the lessee.
The court held that the contract for the sale of business which
expressed the payment of $90,000.00 to the lessor was a sham, and
that the contract for sale of business was a disguise for what was
actually a 'premium' under the Retail Leases Act.
This case serves to illustrate the point that you cannot
contract out of your obligations under the Retail Leases Act, and
you cannot disguise payments in ancillary documents instead of the
lease. The lessor paid the price for trying to deceive the lessee,
and the lessee was entitled to a full refund of the $90,000.00 they
had paid to the lessor.
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guide to the subject matter. Specialist advice should be sought
about your specific circumstances.
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