In brief: In the decision of CB Cold
Storage Pty Ltd v IMCC Group (Australia) Pty Ltd [2017,], the
Supreme Court last week has effectively determined that a lease
that provides for the provision of services will be governed by the
Retail Leases Act (Act), subject to the usual exceptions contained
in the Act. As such, a warehousing or logistics business is likely
to be considered retail premises under the Act. In fact, based on
the reasoning in the decision, it is difficult to envisage that any
lease that provides for a use of a service will, as of now, not be
governed by the Act.
What you need to know
If you are conducting a rent review, or providing advice to a
party (landlord or tenant) and the tenant provides services from
the premises, consideration will need to be given as to whether the
lease is governed by the Act.
Further, if the lease is governed by the Act, you should be
aware that if land tax has been paid by the tenant, the tenant may
be entitled to seek a refund of any land tax paid. As you are
aware, under a lease governed by the Act, land tax cannot be
charged to a tenant.
In the case of CB Cold Storage Pty Ltd v IMCC Group
(Australia) Pty Ltd, the tenant operated a business providing
cold storage refrigeration and logistics services. VCAT determined
that the lease for such a use was not a retail lease governed by
the Act. However, on appeal, the Supreme Court determined that the
use was a retail use under the Act. Justice Croft determined that
the "ultimate consumer" test applies. This means that if
a good or service is provided to a tenant who uses that good a
service as an input in the tenant's business to produce a
different good service, then the tenant's lease will be
governed by the Act, subject to the exceptions in the Act.
So, the decision is contrary to the wide held belief that a good
or service needed to be provided to a member of the public to be
considered "retail" for the purposes of the Act. It is a
question of whether the good or service is provided to a tenant,
who uses the good or service as an input in the tenant's
So is there any service they will not be considered retail?
Warehousing and logistics is retail by virtue of the decision.
Further, by way of example, if a landlord leases a large tract of
land for a car dealership to store motor vehicles, it will be
considered retail for the purposes of the Act. Or, if a tenant
leases premises to make raw materials, which are sold to
manufactures to make plastic containers, then the lease of the
premises by the tenant will be retail, as the manufacturers that
purchase the raw materials, are considered the "ultimate
This is contrary to the general understanding of what
constitutes "retail" under the Act, which is generally
thought to be a sale of goods or services to members of the public
and not businesses.
Careful consideration will need to be given to any lease, which
provides for sale of goods or the provision of services, as it is
now unclear as to whether that lease will be considered
"retail" and governed by the Act. Of course, the Act
still provides the exceptions for publicly listed companies and
their subsidiaries in the various other exceptions. If a lease does
not fall within one of those exceptions, we strongly recommend
obtaining legal advice as to whether the lease is governed by the
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.Madgwicks is a member
of Meritas, one of the world's largest law firm
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