Is a student accommodation business a retail premises lease under the Retail Leases Act 2003 (Vic)?

In the recent decision of Wang v Orion Holdings Australia Pty Ltd (Building and Property) [2014] VCAT 812, VCAT held that premises let as student accommodation was a retail premises, even though most guests stayed for six months.

In Stringer and Ors v Gilandos Pty Ltd [2012] VSC 361, discussed here, Croft J held that a lease of a serviced apartment complex was a retail premises lease.  However, his Honour gave the following caution:

68 I should, however, sound a note of caution in relation to this finding by emphasising that whether or not premises described as “serviced apartments” is to be characterised as “retail premises” depends upon the particular circumstances, including the nature of the premises, the manner in which occupancy is provided and the nature of that occupancy.[citation omitted] As I have said, the term or description, “serviced apartments”, is not a term of art. Rather, it is a term or description of premises which connotes a range of possibilities. At one end of the range one would find premises managed and occupied in a manner indistinguishable from a motel or hotel and at the other end premises indistinguishable from long term residential accommodation, separately let but with the attribute of being serviced. In the former case it would be expected that the Acts would apply on the basis that the premises are “retail premises” and in the latter case they would not, any more than they would to any block of residential units. In between there are a range of possibilities each of which may have different consequences in terms of the application of the Acts.

In Wang v Orion Holdings at [67] to [79], Senior Member Farrelly considered whether a lease of student accommodation was a retail premises lease.

Relying on the decision in Stringer, the landlord argued that the lease was not retail because most guests occupied their rooms for 6 months.

However, despite these apparently extended stays, Senior Member Farrelly found that the tenant was operating a retail business, partly because she was also:

• providing personal advice and assistance on a range of daily issues to Chinese students;
• selling meals;
• providing tutoring services; and
• letting rooms for short periods to visiting academics and others.

This represents the high water mark of medium to long stay accommodation businesses characterised as retail premises under the Retail Leases Act 2003 (Vic) (RLA).

The decision was considered in an application for leave to appeal.  However, although this issue was argued in the application, the Court refused to grant leave to appeal without needing to consider this point.

Practitioners should be aware of the decision when advising landlords and tenants of their obligations under leases in which the tenant provides medium term accommodation facilities, as a characterisation of the business as retail premises under the RLA may significantly alter their rights.

Practitioners should also bear in mind that every case turns on its own facts, and should have reference to Croft J’s decision in  Stringer and Ors v Gilandos Pty Ltd [2012] VSC 361, discussed here.

The Court’s reasons in refusing leave to appeal are not available on AustLii.  A copy of the Court’s reasons can be found at: Orion Holdings Pty Ltd v Wang (unreported, 4 September 2014, Supreme Court of Victoria, Mukhtar AsJ).

Sam Hopper and Thomas Steains