The famous "duck test" goes: if it looks like a duck, swims like a duck and quacks like a duck, then it is probably a duck. A similar argument is often made for leases, no matter how much the parties argue they have a licence. If it has the features of a lease, then it will likely be interpreted as a lease and, if it is in a retail setting, it will often be a "retail shop lease" that falls under the Retail Leases Act 1994 (NSW) (or its jurisdictional equivalent).
In the case of Camseg Pty Ltd atf the Hair By Cam Discretionary Trust v Napoli [2022] NSWCATCD 81, the lease/licence in question related to the use of a chair space within a hairdressing salon, part of the common industry practice of chair hiring. This case, heard in the NSW Civil and Administrative Tribunal (NCAT), considered whether the chair hire was validly renewed for a further two years or whether the agreement was terminated. Relevant to this determination was whether the hiring of a hairdressing chair constituted a retail shop lease.
Lease or Licence
The definition of "retail shop lease" under the Retail Leases Act is a premises that are used (or proposed to be used) wholly or predominately for carrying on of a business prescribed in the Act or a business (regardless of whether it is prescribed) that is based within a retail shopping centre. While an agreement to hire a hairdressing chair does not resemble the more typical "bricks and mortar" style retail shop lease, the NCAT decision noted that the definition of "premises" includes stalls at markets or counters within a shopping centre (such as a nail bar or engraver).
The NCAT decision referred to the prior Court of Appeal decision of Sydney Markets Ltd v Wilson [2011] NSWCA 201 in which a stall at Paddy's Markets was found to constitute a "retail shop" and that the term "premises" should be interpreted broadly as a space within a building, rather than a restrictive definition of "shop" as a purpose-built area. The definition of "premises" in the Act has been amended since the Sydney Markets decision to explicitly include market stalls.
In this case, NCAT found that the agreement to provide a "Chair Space" being a hairdressing chair and its surrounds amounted to a premises and as a result the agreement fell under the Retail Leases Act. The fact that under the agreement the owner of the salon business could, from time to time, designate the space that was the "Chair Space" did not impact this finding as once the space was so designated it became the "premises". It was not inconsistent with being a retail shop lease simply because the relevant space might be changed from time to time.
Implications of a Retail Shop Lease
As the agreement to supply the Chair Space was captured by the Retail Leases Act, the various provisions under the Act applied including the requirement that any new lease be accompanied by a Lessor's Disclosure Statement at least 7 days before it is entered into. While the Agreement required notice of a renewed term to be given by 1 December 2020, the commencement date of that new term was not until 1 March 2021. NCAT found that the latter date was, under the Act, the relevant date that the "lease was entered into" for the purposes of section 11 of the Act. As no Disclosure Statement was provided, section 11 allowed the lessee to terminate the lease within six months of 1 March 2021, which it did via a letter from their lawyers.
The result is that a termination of the lease, viewed by the lessor as an "early termination" was valid due to the lack of a Disclosure Statement. While not relevant to the decision at hand, many other requirements under the Act would as a result apply to the chair hire agreement. The decision is another reminder of the broad scope of the Retail Leases Act and that with agreements to hire or licence an area consideration should be taken whether the Act might apply.
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.
