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

  • Author : Samuel Hopper - 19-07-2022

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.

 

This post originally appeared on samhopperbarrister.com

About the Author

Samuel Hopper

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