September 28, 2022

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Retail Leases Amendment Regulations 2022 come into effect on 1 December 2022

Some amendments to the Retail Leases Regulations 2022 (Vic) have been published that come into effect on 1 December 2022.

A copy of the amending regulations is attached to this post.

The amendments bring in some changes to landlord’s disclosure statements.

I suggest that practitioners check the Victorian Government legislation website to see when the Retail Leases Regulations 2022 (Vic) are updated with the new changes (I just checked and it is not yet updated, but it might be by the time you read this).

Once the official version of the Regulations has been updated to reflect the new amendments, I suggest that practitioners update their precedent disclosure statements to reflect the changes.

July 15, 2022

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A lease is not retail unless it is ‘open to the public in the required sense’

Remember when all we had to think about was whether or not a lease was retail and there was no such thing as the CTRS to occupy our minds on a Friday afternoon?  Well, as we return to a post-Covid normal we can start thinking about these things again.

For those who need a refresher, have a look at my earlier (ancient?) posts here.

One of the issues that was referred to by the Court of Appeal in C B Cold Storage was the requirement for a retail premises to be ‘open to the public’.  This was also discussed in some detail in Fitzroy Dental (see here).

Until now, there was only one case that I was aware of where a lease was held to not be retail because it was not open to the public.  That case was Bulk Powders Pty Ltd v Seicon Pty Ltd [2018] VCAT 2000 discussed in an earlier post here.  In that case, the tenant occupied a warehouse with an office from which it sold protein powders and other supplements.  It did not allow customers to attend the premises other than customers already known to management, there was no signage and most sales took place online.

VCAT has this week ruled in Eastcombe Pty Ltd v Fagersta Steels Pty Ltd (Building and Property) [2022] VCAT 780 on another case in which a lease was held not to be a lease of retail premises under the RLA 2003. The Tribunal held that the evidence did not satisfy the ultimate consumer test when the lease was entered into.  However, the finding that might interest practitioners in this area was that the premises also was not open to the public in the required sense.   

After reviewing the authorities, the Tribunal held that:

48   Business signage is one factor to take into account in classifying the retail aspect of a lease. 

49   There is limited signage for the Tenant on the Premise. I accept Ms Taranto’s evidence that when she inspected the Premises in February 2021 the Tenant’s name did not appear on the list of tenants in the industrial park on the directory sign at the front of the park. 

50   A photograph of the sign outside the warehouse roller door shows the sign is about the height of an A4 sheet and length of about three A4 sheets. It is located around head height on the wall to the left of the roller door. From only a short distance it appears illegible in one of the photographs, the pale blue colour of the name blending into the silver background of the sign. The sign sits above other small signs advising that safety vests, foot protection and head protection must be worn in the area. 

51   The Tenant’s opening submissions state that the evidence will show that business signs are placed outside the warehouse doors and at the warehouse stores inviting the public to enter. The evidence does not go this far. The signage does not invite the public to enter. The signage only references the Tenant’s name. 

52   One photograph of unknown origin and date, relied upon by the Tenant, shows a sign printed on a sheet of A4 paper sticky taped to a corner of one of the front windows of the portable office with the words “Cash Sales”. 

53   A photograph taken of the same window on 30 October 2017 during the Crabtree inspection shows no such sign. 

54   Ms Taranto’s evidence which I accept is that there was no sign for cash sales on the portable office during her inspection in February 2021. 

55   The temporary nature of the cash sales sign and the lack of evidence about when it was taped to the window are not persuasive. 

56   At its highest the Tenant’s evidence establishes that: 

(a) it sells stainless steel products to customers including members of the public from the Premises; 

(b) the products are sold to the public by prior appointment, or by attending the Premises during business hours; 

(c) members of the public gain entry to the Premises through the warehouse doors of the Premises; 

(d) the warehouse doors are open between 6.30am and 3.30pm, Monday to Friday except on public holidays; 

(e) products can be purchased at the warehouse store and at the office; and 

(f) on at least one occasion a paper sign reading “cash sales” was taped to the portable office. 

57   The Tenant’s evidence goes no further than establishing that members of the public can attend and buy steel from the Premises. The frequency of such visits is unknown. The percentage of sales directly to members of the public is unknown. 

58   The evidence in support of the Premises not being open to the public in the retail sense includes: 

(a) members of the public gain access through the warehouse roller door;

(b) attendance by customers is restricted. Customers must be accompanied by a staff member when in the warehouse. Signs state people entering must wear special clothing and be accompanied by a member of staff to enter the Premises;

(c) the absence of signage at the entrance to the business park to identify that the Tenant is an occupant of the business park; 

(d) a small discreet sign beside one of the warehouse roller doors with the Tenant’s name; 

(e) the external office/reception area door of the Premises is kept locked; 

(f) there is no contact number displayed at the front office/reception area door; 

(g) the nature of the business being a wholesaler although the customer base is unclear; 

(h) the lay out of the warehouse depicted in photographs showing huge racks of product sometimes stacked to the ceiling and stacks of large steel sheets and overhead cranes; and 

(i) no obvious sales area or showroom other than the portable office. 

59   Unlike in Fitzroy Dental and FP Sunshine where customers are required to pay a hire fee or an entrance fee to gain entry, a member of the public cannot enter the Premises and walk around unaccompanied. Their access remains restricted. 

60   While I accept the Tenant’s evidence that it is possible for a member of the public to attend the Premises during business hours and make a purchase, I am not persuaded that the Premises operate or have ever operated since the commencement of the Lease as a retail premises in the sense required by the RLA. 

This, coupled with the decision in Bulk Powders, suggests that:

  1. the Tribunal is taking a practical approach to the assessment of whether a premises is ‘open to the public’ in the required sense;
  2. the question will be assessed on a case-by-case basis taking into account the circumstances of the particular tenancy;
  3. signage at the premises is an indicator of whether the premises is open to the public;  and
  4. the extent that visitors can freely walk around the premises unsupervised is also an indicator of the extent to which the premises is open to the public.

A copy of the decision has not found its way onto Austlii yet.  Those who cannot wait to read it can download a copy here:

April 4, 2022

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New commercial and retail leases list the Supreme Court of Victoria

The Victorian Supreme Court has announced that it has started a dedicated commercial and retail leases list to promote an efficient approach to the management of commercial and retail lease disputes.

The Judge in charge of the list is Justice M Osborne.

The list will deal with disputes involving commercial leases that are issued at first instance in the Supreme Court and also with appeals of retail tenancy disputes from VCAT.

The list will be administered through the Commercial Court registry.

For more information, see here: https://www.supremecourt.vic.gov.au/law-and-practice/practice-notes/notice-to-the-profession-establishment-of-commercial-and-retail

The Court’s note to the profession expressly states that the Court’s jurisdiction does not include resolution of retail tenancies disputes at first instance, and that VCAT has exclusive jurisdiction to hear those disputes.

March 22, 2022

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The Limitation of Actions Act 1958 (Vic) in VCAT

In the recent decision of Lanigan v Circus Oz & Ors [2022] VSC 35, McDonald J in the Supreme Court of Victoria held that VCAT was not a Court for the purposes of the Limitation of Actions Act 1958 (Vic)(Limitation Act) and, as a result, the limitations periods imposed by that statute did not apply to proceedings issued at the Tribunal.  

His Honour was considering whether a proceeding was statute barred by operation of sub-s 5(1)(a) of the Limitation Act, which states that (emphasis added):

(1)        The following actions shall not be brought after the expiration of six years from the date on which the cause of action accrued—

(a)        Subject to subsections (1AAA), (1AA) and (1A), actions founded on simple contract (including contract implied in law) or actions founded on tort including actions for damages for breach of a statutory duty;

Sub-section 3(1) of the Limitation Act defines ‘action’ as follows:

action includes any proceeding in a court of law;

His Honour said:

[20]     Ms Lanigan advances two submissions as to why the VCAT Proceeding is not subject to s 5(1)(a).  First, the VCAT Proceeding is not a ‘proceeding in a court of law’ for the purposes of the definition of ‘action’ in s 3(1) of the Limitations Act.  In the alternative, if the VCAT Proceeding is a proceeding in a court of law, a claim alleging a contravention of the EO Act is not an ‘action founded on tort’ for the purposes of s 5(1)(a).  I accept both of these submissions.  

[21]     It is common ground in the present proceeding that no Victorian court has previously considered the question of whether the Tribunal is a court of law for the purposes of ss 3(1) and 5(1)(a) of the Limitations Act.  For the reasons which follow, this question is to be answered in the negative. 

After considering a number of authorities on the issue at paragraphs [22] to [34], his Honour concluded that:

[35]     The Tribunal is not a court for the purposes of the definition of ‘action’ in s 3(1) of the Limitations Act.  Ms Lanigan’s VCAT Proceeding is not a proceeding in a court of law.

This finding may affect leasing cases for the following reasons.

First, leases are usually evidenced by a deed and the limitation period for suing under a deed is 15 years (see s 5(3) of the Limitation Act).  However, there are exceptions to this such as when the lease is not formalised into a deed and only recorded as an agreement to lease and when the tenant exercises its option by notice in writing but no deed of renewal is executed.  In those cases, the parties probably only have a contract and the limitation period is probably six years under sub-s 5(1)(a) of the Limitation Act.

Secondly, s 18 of the Limitation Act limits actions for the recovery of rent to six years, stating that:

No action shall be brought to recover arrears of rent or damages in respect thereof after the expiration of six years from the date on which the arrears became due.

It is unusual for a landlord to allow rent to accrue in arrears for more than six years, but I have seen it from time to time.

Thirdly, tenants often respond to a landlord’s attempt to re-enter premises by setting up a counterclaim that the tenant then seeks to set off against the landlord’s claimed rent.  It is not unusual for tenants in these circumstances to press counterclaims that are quite old.  

For example, in the recent case of BWS Hospitality Pty Ltd v DGA Australia Pty Ltd (Building and Property)[2022] VCAT 233 (3 March 2022) the tenant pressed a counterclaim based on alleged misleading and deceptive conduct that took place as far back as 2013-14.  While the tenant in that case found another way to overcome the limitation period, the case illustrates how an old counterclaim can be used to prevent re-entry based on current arrears.

Another example is the recovery of the cost of essential safety measures under s 251 of the Building Act 1991 (Vic) or the cost of landlord’s repair and maintenance under s 52 of the Retail Leases Act 2003 (Vic).  The usual limitation period for the recovery of these sums is six years under sub-ss 5(1)(a) and (d) of the RLA 2003.[1]  Tenants facing re-entry for non-payment of rent may seek to recover old ESM and s 52 repair and maintenance costs paid by the tenant and seek to set off those costs against rent arrears.  The decision in Lanigan allows a tenant to reach back further into time and potentially claim a larger sum. 


[1] Although there is also an argument that s 52 of the RLA 2003 implies a covenant into a lease deed, which has a 15 year limitation – but that is a debate for another blog post! 

February 2, 2022

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The VSBC’s FAQs are RTG!

Ok, so maybe RTG is pushing it, but …

… the Frequently Asked Questions on the website of the Victorian Small Business Commission are … Ready To Go …

They are available here: https://www.vsbc.vic.gov.au/fact-sheets-and-resources/faqs/

The FAQs have been a great resource during the CTRS, and all readers should have a look at them as they navigate the next stage of the State’s response to the covid pandemic for landlords and tenants.

February 1, 2022

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First comments the new CTRS Regs

The new CTRS Regulations are based on the Commercial Tenancy Relief Scheme Regulations 2021 (Vic) and largely mirror those regulations.  However, there are some notable changes.

My first comments on the new CTRS Regs are:

  1. The new regulations cover the period 16 January 2022 to 15 March 2022.
  2. The extension applies only to tenants or corporate groups with a turnover of less than $10M, down from $50M in the previous versions of the CTRS.
  3. The definition of ‘turnover’ continues to include Victorian government COVID-19 business support grants received by the tenant during the relevant period (which caught out a few tenants last time around).
  4. The new CTRS Regs apply to leases that were in effect from 16 January 2022, so will apply to very new lettings.
  5. Generally, the turnover test period and the comparison period are January 2022 and January 2020 respectively, but there are exceptions and alternative comparison turnover methods prescribed.
  6. The most notable exception is if the tenant’s business was unexpectedly closed for more than a week in January 2020 (ie the January before COVID), in which case the tenant’s trading figures for December 2021 and December 2019 are used.
  7. The form and content of a tenant’s request for rent relief is largely unchanged.  Last time, requests for rent relief would only apply retrospectively if they were made before 30 September 2021.  There appears to be no equivalent in this version of the CTRS Regs.  However, it is still prudent for tenants to make their requests for rent relief as soon as possible.  
  8. The new regulations do not expressly address whether a new request for rent relief must be made if the landlord and tenant are still negotiating about rent relief for the period 28 July 2021 to 15 January 2022.  There was some suggestion that a new request was not required in similar circumstances under the CTRS back in 2020 (does anyone still remember it?).  However, that was because the CTRS in 2020 was extended by varying the then-existing regulations.  The new CTRS Regs take the form of a whole new piece of delegated legislation, so the same reasoning might not apply.  Consequently, it is prudent for tenants who are still negotiating rent relief for 28 July 2021 to 15 January 2022 to make a fresh request under the new regulations as soon as possible.
  9. Payment of deferred rent under previous agreements for rent relief has been pushed back to 15 March 2022.
  10. The prohibition on rent increases from the previous version of the CTRS has been retained without change, so under the new regulations landlords cannot apply a rent review that would have occurred between 16 January 2022 and 15 March 2022.  

As always, my friend Paul Nunan at Eastern Bridge Lawyers has produced a note summarising the contents of the new regulations with breathtaking speed.  A copy of his discussion is available here: https://www.easternbridge.com.au/post/ctrs-2022-regulations-released

Paul’s note identifies some confusion caused by regulation 14(b).  For those looking at this issue, Paul and I have discussed this with Jamie Bedelis of Bedleis Lawyers and we think the answer is probably to read reg 14 with reg 21. This, in turn, leads to the exception referred to in paragraph 6 above.

Thanks also to Mark Schramm from the VSBC for alerting me to the new regulations and his input in our discussions.

February 1, 2022

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The Commercial Tenancy Relief Scheme Regulations 2022 (Vic) have been published

Attached is a copy of the anticipated new CTRS Regs. I have not had a chance to review them yet and will post some notes about them shortly.

For those interested in reviewing them now, a copy is attached here:

January 15, 2022

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CTRS extended to 15 March 2022

In breaking news, the CTRS will be extended to 15 March 2022.

In a press release today, the Minister for Small Business stated that:

The extended scheme will be available to businesses with an annual turnover of $10 million or less and which have suffered a decline in turnover of at least 30 per cent due to COVID-19.

Landlords will be required to provide continued proportional rent relief in line with a reduction in turnover.

The eviction moratorium will continue. Landlords will not be able to lock out or evict tenants without undertaking mediation through the VSBC.

The new regulations will take effect from 16 January 2022. Tenants and landlords should abide by the conditions in their existing agreement. Small and family businesses that already have a deferment will have more time for repayments as a result of this extension.

Eligible commercial landlords that have provided rent relief to their tenants have received support through the $20 million Commercial Landlord Hardship Fund. They will continue to do so while their tenants are eligible for the scheme.

The full text of the Minister’s press release is available here: https://www.premier.vic.gov.au/commercial-tenancy-support-extended

More information is available at the VSBC website here: https://www.vsbc.vic.gov.au/news-publication/victorian-government-announcement-commercial-tenancy-relief-scheme-to-be-extended/. That site also notes that:

The ban on rent increases … will continue …

I will post a copy of the new regulations and any amendments to the empowering statute as soon as they are available.

October 29, 2021

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CTRS mandatory re-assessment due on Sunday

Mot people seem to be on top of this already, but if you’re not – DON’T FORGET THAT THE MANDATORY RE-ASSESSMENT IS DUE ON SUNDAY!!!!!!!!!!

My friends at Eastern Bridge Lawyers have written a useful post on the requirements for the mandatory re-assessment here: https://www.easternbridge.com.au/post/ctrs-2021-reassessments-due

One of the requirements for making a mandatory reassessment is that the parties have already entered into an agreement for rent relief. However, the Regulations do not expressly address what happens if the tenant has made a request for rent relief already but the parties are still negotiating without an agreement having been reached. I suggest that it is prudent for tenants to make a request for re-assessment anyway because:

  1. most tenants will want their September 2021 trading figures to form part of the ongoing negotiations; and
  2. the tenant cannot later be criticised for not having made the request for mandatory re-assessment.

September 29, 2021

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Rent relief requests are due tomorrow – don’t forget!

This is just a quick reminder to practitioners acting for tenants who want to claim rent relief for the period 28 July to 30 September 2021 that your request for rent relief is due tomorrow.

There is a precedent application and supporting statutory declaration on the VSBC website that is very easy to complete: see https://www.vsbc.vic.gov.au/news-publication/small-businesses-must-apply-for-rent-relief-by-30-september-to-get-backdated-relief/

Also, remember that both your application AND supporting affidavit AND supporting documents must be in tomorrow if you want to claim rent relief from 28 July 2021 (see reg 28 of the CTRS Regulations).

There is a bit of an ongoing issue about how to deliver the request that I wrote about in my last post.

Section 67 of the CTRS Regulations states that (sorry about the formatting):

67        Giving notices—general

(1)       A notice or other document to be given to a person under the Act or these Regulations by the Small Business Commission must be given—

(a)       by delivering it personally to the person; or

(b)       by leaving it at the person’s usual or last known place of residence or business with a person apparently over the age of 16 years and apparently residing or employed at that place; or

(c)       by sending it to the person by post addressed to the person’s usual or last known place of residence or business; or

(d)       if the person is a corporation— 

(i)        by sending it by post to the registered office in Victoria of the corporation; or

(ii)       by giving it to a person who is an officer of the corporation who is authorised to accept service of notices and who is employed at the registered office of the corporation; or

(e)        by electronic communication in accordance with the Electronic Transactions (Victoria) Act 2000.

(2)       If a notice or other document is to be given to a landlord under these Regulations, in addition to the methods set out in subregulation (1), the notice or document may be given—

(a)       by delivering it to the landlord or to the landlord’s agent or to the person who usually collects the rent; or

(b)       by sending it by post addressed—

(i)        to the landlord at the landlord’s address for service of documents; or

(ii)       to the landlord’s agent at the agent’s usual place of business; or

(iii)      by giving it to a person employed in the office of the landlord’s agent.

You will need to make sure that your method of delivery complies with that section.

Service by email probably requires landlord’s consent, so make sure you have that consent in writing in advance if you want to deliver the documents by email. Otherwise, you will need to use one of the other methods of delivery prescribed by the Regulations.

Sub-regulation 67(2)(a) appears to allow the request to be sent to a managing agent who receives the rent on the landlord’s behalf. However, you will still need the managing agent’s consent (preferably in writing) to send the document by email.

Be careful sending the documents by post as documents sent by post are usually presumed to have been received in the ordinary course of post (which may cause your document to be received late) and the presumption may be rebuttable by evidence that the letter was not received or was received late.