In brief - North Bondi RSL Club forced to extend caterer's term to five years
The Administrative Decisions Tribunal recently determined that when North Bondi RSL Club Limited engaged a caterer to provide catering for its patrons and entered into a one year licence agreement, the caterer had in fact entered into a retail shop lease by virtue of this licence. This meant that the caterer's licence was automatically extended to five years.
North Bondi RSL Club engages caterer for one year term
North Bondi RSL Club engaged a caterer and entered into a one year licence agreement which commenced on 1 November 2009. The caterer was engaged to use the kitchen at the club and serve food and drink to the club's patrons.
When the one year term ended, the club asked the caterer to leave. The Administrative Decisions Tribunal determined that the caterer had entered a retail shop lease by virtue of its licence. One of the prescribed retail shop businesses is "restaurants, cafeterias, coffee lounges, food courts and other eating places".
Licence extended and capital costs recovered
The licence which had commenced on 1 November 2009 was automatically extended to five years, to end in 2014 rather than 2010. The club was ordered not to interfere with the caterer's business.
Under the licence, the caterer had been required to contribute towards capital costs of the garbage compound at the club. As this was declared to be a retail shop lease, the tenant was able to recover any capital costs from the club and was awarded the sum of $9,470.72.
Implications for owners of premises
The lesson to be learned from this case is that where owners of premises licence them to a caterer for a food service and give the caterer occupation rights of the kitchen and serving areas, that could be a retail shop lease. If you are the owner of such premises, you may have to consider complying with Retail Leases Act 1994 (NSW) whenever you put in place occupation rights for caterers or managers.
If in doubt, the licence should be treated as a retail shop lease. It is prudent to have the caterer provide a section 16 certificate to waive the automatic five year term.
Implications for caterers
If you are a caterer or have occupation rights in relation to retail parts of premises, you may in fact be entitled the many benefits of the Retail Leases Act 1994 (NSW).
For more information on commercial and retail leasing, please see the website of Colin Biggers & Paisley or contact Gary Newton at gdn@cbp.com.au
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