Device to avoid Retail Leases Act not effective

Parties to long term leases sometimes attempt to avoid the application of the Retail Leases Act 2003 by purporting to invoke the Ministerial Determination of 24 August 2004 made under s.5(1) of the Act.

The Act applies to a “retail premises lease” (s.11(1)) which is not a defined expression. However, the expression “retail premises” are defined in s.4(1).

The Ministerial Determination excludes from the definition of “retail premises” in s.4(1) premises which are leased for a term of 15 years or longer and which contains provisions that:

….

(d) impose an obligation on the tenant to carry out substantial work on the Premises which involves the building, installation, repair or maintenance of:

(i) the structure of, or fixtures, in the Premises; or

(ii) the plant or equipment at the Premises; or

(iii) the appliances, fittings or fixtures relating to the gas, electricity, water, drainage or other services; or

(e) impose an obligation on the tenant or any other person to pay any substantial amount in respect of the cost of the matters set out in (d)(i), (ii) or (iii); or

(f) in any significant respect disentitles the tenant or any other person to remove any of the things specified in (ad or at any time after the end of the leases to which paragraphs (a)….apply.

(emphasis added)

If premises are not “retail premises” the lease is not a “retail premise lease” within the meaning of s.11.

In Lake Fyans Recreational Area Committee of Management Inc v Halski Pty Ltd and another  [2025] VCC 1506 the lease was a Law Institute standard form lease for a term of 21 years. The lease contained the usual standard provisions in clause 3 such as requiring the tenant to keep the premises in the same condition as at the start of the lease and providing that the tenant was not obliged to carry out structural or capital repairs or alterations or make payments of a capital nature.

Additional provision 1 said that the parties acknowledged that the Act did not apply because, pursuant to the Ministerial Determination, the leased premises were not “retail premises.

Additional provision 2 contained the basis on which it was said that the Ministerial Determination had been enlivened.

Despite any other condition contained in this Lease, and without limiting the Tenant’s repair obligations under general condition 3, the Tenant shall be responsible for all substantial work on the Premises which involves the building, installation, repair, replacement or maintenance of:

(a) the structure of, or fixtures, in the premises; or

(b) the plant or equipment at the premises; or

(c) the appliances, fittings or fixtures relating to the gas, electricity , water, drainage or other services.

(emphasis added)

The lease also provided that permanent improvements to the premises would become the property of the landlord at the expiration or determination of the lease.

Following a dispute the landlord commenced a proceeding in the County Court. The tenant contended that the court did not have jurisdiction to hear and determine the dispute because, despite additional provisions 1 and 2, the leased premises were, “retail premises” within the meaning of s.4(1). The basis for the claim was that the lease did not oblige the tenant to carry out “substantial work” as required by the Ministerial Determination. If the tenant were correct, the premises were “retail premises” and and any dispute was a “retail tenancy dispute” which the County Court did not have jurisdiction to hear (s.89 of the Act).

Macnamara J agreed with the tenant. His Honour held that the Ministerial Determination was not enlivened where the lease effectively says no more than “were there to be a deterioration in fixtures, structures, appliances et cetera which require work of a major type or dimension to be the carried out, the tenant would be obliged to carry out that work” [116]. “Substantial work” had to be identified in the lease; there had to be a clause which imposed “a real and actual obligation, as distinct from having been included for the sole purpose of engaging, or purporting to engage the Ministerial Determination” [117].

His Honour also dismissed the landlord’s contention that the tenant was estopped from claiming that the Act did not apply to the lease. The landlord’s claim was that by acknowledging in the lease that the Act did not apply, the tenant was estopped by deed from denying that the Act applied to the lease. His Honour held that an estoppel by deed could not prevail against the mandatory provisions of a statute. After reviewing the authorities, His Honour said:

…the question was whether a statute in question was intended to create a right merely in favour of an individual (which could be disclaimed by contract or otherwise) or create a rule for the benefit of the public in general.

Section 94(1) of the Act provides in part that:

A provision of a retail premises lease…is void to the extent that it is contrary to or inconsistent with anything in this Act…

His Honour concluded that s.94 “was indicative of a policy that the application of the regime under the statute is a matter of public interest rather than a matter that can be determined simply by agreement between the parties”.

Thus, if the Ministerial Determination was not enlivened because the premises were “retail premises”, additional provision 1 was void by reason of s.94.