Australia: When does retail leasing legislation apply in NSW? – Lane Cove 83 Pty Ltd v Vodafone Network Pty Ltd [2017] NSWCATCD 13

Continuing the theme of the application of Retail Legislation (or, rather, the lack thereof) we now look at the situation in New South Wales. In this case, the NSW Tribunal considers whether a telecommunications base station is a retail lease and finds three reasons why the Retail Leases Act does not apply to this lease. The case is a good summary of the limits of the Act in relation to non-retail premises.

The issue in this case was whether a lease of part of the rooftop for use as a telecommunications base station was a 'retail shop lease' for the purposes of the Retail Leases Act 1994 (NSW).

The permitted use in the lease did not in itself make the lease a 'retail shop lease', however the building, 'Rosenthal Arcade' was a retail shopping centre.

For some reason, not apparent in the decision, the landlord wanted a declaration that the lease was subject to the Retail Leases Act, and the tenant wanted a declaration that the Act did not apply.

The Tribunal found three reasons why the lease was not subject to the Retail Leases Act:

  1. It was not a lease relating to the retail industry
  2. The tenant was not carrying on a business in those premises; and
  3. Premises on the roof are not within the shopping centre.

The relevant definitions in the Retail Leases Act are:

  • retail shop lease or lease means any agreement under which a person grants or agrees to grant to another person for value a right of occupation of premises for the purpose of the use of the premises as a retail shop;
  • retail shop means premises that:
    1. are used, or proposed to be used, wholly or predominantly for the carrying on of one or more of the businesses prescribed for the purposes of this paragraph (whether or not in a retail shopping centre), or
    2. are used, or proposed to be used, for the carrying on of any business (whether or not a business prescribed for the purposes of paragraph (a)) in a retail shopping centre.

The Act is limited to the Retail Industry

The tenant argued that the word 'premises' in that definition was limited to shop premises, and that the Act would only apply to shops in shopping centres; and not to other leased areas, like aerials, ATMs, vending machines, etc.

The Tribunal reviewed a NSW Court of Appeal case (Manly Council v Malouf (2004) NSWCA 299), as well as explanatory notes found in the Act and the Second Reading Speech delivered by the Minister for Small Business in 1994 about the purpose of the Act. The Tribunal concluded that the Act was intended to only apply to leases within the retail industry. The base station lease to Vodafone is not related to the retail industry, and so is not subject to the Retail Leases Act in NSW.

The Tribunal noted "It is not the purpose of the definition of retail shop in section 3 to encompass premises that are not shops (i.e. premises where goods and/or services are not sold)."

Paragraphs 18 – 28 of the decision summarise the issue clearly. The Tribunal limits the application of the Retail Leases Act to leases that are part of the retail industry. The Tribunal based its decision on the Court of Appeal case referred to above and the Second Reading Speech.

The test applied in the Court of Appeal case Manly Council v Malouf was: "The meaning of premises in this or any other Act largely depends on its context in the particular statute. In this case where the word is used in the definition of retail shop its meaning in that context takes colour from the ordinary meaning of shop as a building where goods are sold." That does not address the problem of services (eg: mobile phone repairers).

While it is somewhat unfortunate that the Tribunal has introduced another test: "retail industry", it does seem to be a clarification of the test from the Manly Council case.

Nevertheless, it may not always be easy to determine if a premises is part of the retail industry. A vending machine is used to sell products – that seems like part of the retail industry. A local MPs office does not seem to be part of the retail industry. Are government services (Medicare or RMS, for example) part of the retail industry? What about tradesmen's offices?

The new amendments to the Retail Leases Act that commence on 1 July 2017 include a list of uses of premises that are excluded from the Act – see the list below – which hopefully will make this issue clearer.

The Tribunal also found two other reasons why the Act did not apply to this lease:

Carrying on a business

Part (b) of the definition of retail shop, includes the requirement that the lessee be carrying on a business in the premises. The tenant here provided evidence that the only thing that happened in this premises was the automated transmission of mobile phone calls. The Tribunal found that this was not carrying on a business, and for this reason, the Act did not apply.

The Roof is not in the Centre

The building contained retail shops on the ground floor and office premises on the first to third floors. The Tribunal found that the rooftop premises was not within the retail shopping centre, which was entirely contained on the ground floor – another reason why the Act did not apply to his lease.

Amendment to Retail Leases Act

Amendments to the Retail Leases Act that commence on 1 July 2017 include a new subclause 5(d) which provides: This Act does not apply to any of the following retail shops: (d) premises used only for any one or more of the purposes listed in Schedule 1A (Excluded uses).

Schedule 1A – Excluded Uses

  • Automatic teller machine
  • Car parking (not being car parking provided as part of the business of a car park)
  • Children's ride machine
  • Communication towers
  • Digital display screens
  • Display of signage (not including the use of premises from which signage is sold)
  • Internet booth (not being an internet cafe or similar use)
  • Private post boxes
  • Public tables and seating
  • Public telephone
  • Renewable energy generation
  • Renewable energy storage batteries
  • Self-storage units
  • Storage of goods for use or sale in a retail shop (not including storage on premises from which goods are sold)
  • Storage lockers
  • Vending machine

From 1 July 2017, it will be clear that leases for ATMs, Children's rides, Storage spaces, and vending machines are not subject to the Retail Leases Act. It is still not clear whether the Act applies to MPs offices, Government services and other non-retail industry uses.

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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