A recent decision by the Victorian Supreme Court has expanded the scope of the Retail Leases Act 2003 (Vic) (‘Act’) by redefining the meaning of “retail premises”. In IMCC Group (Australia) v CB Cold Storage  VSCA 178, the Victorian Court of Appeal confirmed that since a cold storage facility satisfied the “ultimate consumer test”, it fell within the parameters of “retail premises”. The effect of this decision is that the tenant in that case was able to claim back from the landlord land tax payments and certain outgoings which would have been prohibited under the Act.
In this case, CB Cold Storage Pty Ltd (‘Tenant’) entered into a commercial lease with IMCC Group (Australia) Pty Ltd (‘Landlord’) to operate its cold storage business, commencing 1 September 2012. The Tenant offered its facilities to its customers to store and freeze their food products in exchange for a storage fee.
On appeal, the Court of Appeal confirmed the decision of the Trial Judge also concluding that the premises were “retail premises”. The court considered that the appropriate test to clarify the scope and meaning of “retail premises” was the “ultimate consumer test”.
They also provided secondary services of transportation and product handling to their customers. Despite having customers on the upper end of the supply chain, such as production companies, manufacturers and distributors, the Tenant’s premises were equally accessible for the members of the public.1
On 18 April 2016, the Tenant brought proceedings against the Landlord in the Victorian Civil and Administrative Tribunal (‘VCAT’) to recover payments and costs that were charged to them, which the Tenant submitted was, beyond the authority of the Act. The Tenant argued that the premises were “retail premises” under the Act and therefore they were not liable for the payment of land tax and other outgoings as provided for in their lease. At first instance, VCAT determined that the premises were not used for the retail provision of services.
The Tenant appealed the VCAT decision. After considering the circumstances as a whole, the Victorian Supreme Court found that the Tenant’s premises were deemed to be “retail premises”. 2
The Landlord appealed the Trial Judge’s decision.
Therefore, unless a tenant’s customers or sales are in their true nature, the wholesaler of goods and or services, the premises upon which the business is operated will be deemed to be retail premises.
However, the court has warned against relying on these features definitively or in discarding previous interpretations of retail premises.1 Instead the court has encouraged the consideration of these features in light of the circumstances of each case.4
A “retail lease” provides various legal protections to a tenant.
In light of this new “ultimate consumer test”, landlords and tenants will need to reconsider any pending lease agreements to ensure that their respective expected commercial outcomes are achieved. On the other hand existing lease arrangements may be challenged.
If you are unsure of how you may be affected by these changes, please do not hesitate to contact our team.