A lease of "industrial" premises used for a
storage business in an industrial zone has been found to be a
retail premises lease subject to the many protections in the Retail
In what many might consider a surprising decision, the Victorian
Supreme Court held that a lease of "industrial" premises
was a retail premises lease, with the tenant entitled to the
protections under the Retail Leases Act 2003 (Vic) (CB Cold Storage
Pty Ltd v IMCC Group (Australia) Pty Ltd  VSC 23).
The Act applies to "retail premises" which means
"premises that ... under the terms of the lease relating to
the premises, are used, or are to be used, wholly or predominantly
for ... the sale or hire of goods by retail or the retail provision
The issue for the court was whether the premises were
"retail premises" such that the lease of the premises
attracted the operation of the Act. The decision will have major
implications for landlords and tenants in Victoria, and potentially
other States if similar reasoning is followed there.
The tenant leased premises in North Laverton, in an area zoned
for "Industrial 2 use".
The premises included two freezer warehouses (approximately
2,650 sq m in total area), a forklift charging area, ramps down to
a loading dock area, an anteroom area, an office area (170 sq m),
some car parking spots and a large area for semi-trailers to back
into the loading bay ramp.
The tenant stores customers' products in the freezer
warehouses for a fee, and also arranges transport services as a
lesser part of its business. The permitted use of the premises
under the lease was "Cold and cool storage warehouse and
The office includes a sign saying "Laverton Cold
Storage" but otherwise there is no point of sale advertising
or invitation to the public to enter the premises.
Members of the public are able to, and do, walk into the office
from the street and are commonly in the office.
The tenant's services are available to any individual or
company wishing to use them and willing to pay the fee.
There was no sale or hire of goods from the premises, only
On appeal from VCAT, the Court found that the premises were
retail premises subject to the Retail Leases Act.
At the premises, the purchaser of the cold storage services buys
and uses them at the premises, and is not resupplying them (so they
are the ultimate consumers of the services). This makes the
premises "retail premises".
There are a number of important consequences that flow from this
the tenant cannot be required to pay land tax;
a rent review clause cannot include a "ratchet";
the landlord must satisfy disclosure requirements at the outset
which, if not satisfied, create qualified termination rights for
the tenant; and
subject to prescribed qualifications, the term of the lease
must be at least 5 years.
A tenant may be entitled to a refund of money previously paid.
This may include land tax, or rent wrongly paid, if there has been
reliance on a ratchet clause in a market rent review previously
What landlords should do
First, landlords should review whether there are any reasons the
Act does not apply not linked to the use of the premises. These may
include the amount of the occupancy costs (as defined in the Act),
or the tenant being a listed company, or subsidiary of a listed
company, at the time the lease is or was entered.
Second, landlords should review whether the permitted use of the
premises under the lease is qualified (or may be qualified) to
prohibit any use which would result in the premises being retail
premises under the Act.
In a proposed new lease, if it is not commercially possible to
qualify the permitted use in this way and, based on the
tenant's proposed use of the premises, the premises would be
retail premises under the Act, the landlord will need to address
the consequences of the Act applying, including disclosure
requirements and consider amending the lease to compensate for the
commercial consequences of the Act applying.
If you think the Act may apply, all may not be lost.
In both the VCAT and the Victorian Supreme Court decisions, both
judgments referred to the importance of taking all relevant
circumstances into account. This includes all terms of the lease,
but also the nature of the premises and the nature of the occupancy
and the business to be conducted from the premises (as assessed at
the outset) and actually conducted from the premises.
Clayton Utz communications are intended to provide
commentary and general information. They should not be relied upon
as legal advice. Formal legal advice should be sought in particular
transactions or on matters of interest arising from this bulletin.
Persons listed may not be admitted in all states and
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A lessee will need to demonstrate that the genuine interests of the lessor will be protected if relief is granted.
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