Leases in Victoria could be caught under the operation of the Retail Leases Act 2003 (Vic)

- 20 December 2017

Many in the Real Estate and Retail sectors will have been following the IMCC Group (Australia) Pty Ltd v CB Cold Storage Pty Ltd [2017] VSCA 178  case decision with interest. There has been much commentary and debate on the decision of the Victorian Court of Appeal.

Last week the High Court of Australia refused special leave to appeal the decision. As the law currently stands, based on this decision, a substantial number of leases in Victoria could be retail leases caught under the operation of the Retail Leases Act 2003 (Vic) without the parties realising it! What is known as the 'ultimate consumer test' will remain the applicable test as to whether a premises is deemed to be a "retail premises" under the Act.

This will lead to some unintended and counter-intuitive results for parties. We expect disputes to arise in 2018 when savvy tenants seek to rely on this decision and seek recovery of what, as a result of that classification, become improperly recovered lease monies (eg land tax) from their landlords.

The landscape appears to be set for Parliament to step in and legislate around the issue. We'll continue to monitor this space. In the meantime, for landlords and tenants alike, and their advisors, it is worthwhile reviewing your lease portfolios to determine the potential risks and liabilities.

Please feel free to contact our real estate team if you need assistance with this.

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