In November 2024 the County Court issued a ruling on a question of whether a premises used by a warehousing and logistics business was subject to the Retail Leases Act.

The landlord in W.G.Z Pty Ltd atf the W.G.Z Family Trust v Arva Investments Pty Ltd [2024] VCC 1777 had brought a claim in the Country Court against the (former) tenant seeking unpaid rent up to the end of the lease together with damages arising after the end of the lease. The matter came to hearing on an application by the tenant to have the proceeding struck out for want of jurisdiction on the basis that the Retail Leases Act applied to the lease (which would see the Tribunal holding exclusive jurisdiction over the dispute).

Large elements of the decision were unremarkable, with the Court following the principles set out in various prior decisions, notably the CB Cold Storage decision - the Court found that the tenant used the premises for the warehousing of customer's goods and on that basis that the Act applied to the lease.

The more interesting elements of the decision were around the edges and in this regard there are two interesting outcomes:

The Act will apply where a premises is used "wholly or predominantly" for the retail provision of services.

The landlord in this matter tendered financial statements of the tenant demonstrating that prior to commencement of the lease the tenant's income from warehousing activities was just over $250,000 while its total income (taking into account income from its transportation business) was more than $14.5 million. On that basis, the landlord argued, the 'retail' (warehousing) component of the tenant's business constituted less than 2% of the tenant's total business.

The landlord argued that the amount of floorspace used for the retail service (evidence was provided that more than 50% of the premises was used for warehousing) was not the test of predominance and that the Court should assess the value of the retailing to the tenant's broader business.

In considering the question Kirton J found:

Accordingly - in a test on predominance of use there is no definitive test. Predominance will be assessed on a case-by-case basis. In this matter the Court found that the use by the tenant of greater than 50% of the space for unquestionably retail warehousing met the predominance test.

In concluding the decision in this regard Kirton J found:

Although not definitive, the comment (in its context) seems to indicate that if a tenant can establish predominance on any measure then it will satisfy the test of predominance in the Act.

Kirton J provided an alternative position if the finding as to the predominance of warehousing services was not correct.

Applying the 6-prong test that has been long established and perhaps best enunciated by SM Forde Eastcombe Pty Ltd v Fagersta Steels Pty Ltd Kirton J found that the transportation services conducted by the tenant "at or from" the premises made the premises a retail premises for the purposes of the Act.

Kirton J rejected the landlord's position that for the premises to be retail "the entire service must be performed at the premises that it is provided from" and found instead that use of the premises as a base for transport services conducted outside the premises gave the premises a sufficient nexus to the service as to comprise a retail premises.

The relevant finding is as follows:

The implications of this finding are substantial. The finding would seem to expand the definition of 'retail premises' beyond previous decisions and capture premises which form a central role in a tenant’s broader retail provision.

Landlords would be well advised to carefully consider the decision and the fact that a premises used “as a logistical base” of a separate retail operation might now be found itself to be retail. Similarly tenants might find themselves the beneficiaries of the protections of the Act in a broader range of circumstances than previously understood.

As always - if you would like advise on your particular circumstances please do not hesitate to contact our office.