Two Court cases have clarified the question of ‘What are retail premises?’ in considering the coverage of the Retail Leases Act 2003 (the Act).
The Victorian Court of Appeal decision in IMCC Group (Australia) Pty Ltd v CB Cold Storage Pty Ltd  VSCA 178 has interpreted the Act to confirm that premises used for supplying commercial services to other businesses are covered by the Act. The County Court’s decision in the case of Access Solutions International Pty Ltd v Gamet Pty Ltd  VCC 1563, followed the CB Cold Storage Decision.
The decisions held that the premises in those cases are used for supplying services to other businesses as ‘ultimate consumers’ of those services and as such are covered by the the Act.
Landlords and tenants who have a commercial lease may be unaware of the effect of the decisions as they clarify the Act may have greater coverage than first thought in applying to premises used for selling goods to an end user which can be another business.
- The sale of flour to a bakery which uses that flour to make bread and pastries would be a retail sale.
- The provision of car repair services to a car-hire company which uses the repair services for its fleet of vehicles would amount to a retail provision of services.
- The provision of legal or accounting services to a University which uses those services in its administration would amount to the retail provision of services.
- The sale of shelves to Myer or David Jones for use by them to display their goods would be a retail sale of the shelves.
- The sale of mixed concrete to a builder for use by the builder to construct a driveway would amount to a retail sale to that builder.
The coverage provided by the Act is important as there are key differences between a commercial and retail lease. Examples include under a retail lease, a tenant cannot be required to pay land tax or capital costs. A further example is that a tenant does not have to pay outgoings unless they are provided with an annual estimate of outgoings beforehand.
For more information, refer to the VSBC’s guidelines, What are Retail Premises?