In the case of Access Solutions International Pty Ltd v Gamut Pty Ltd (Access Solutions), County Court found that a lease that provided that the permitted use was the manufacture and sale of steel gates was retail, within the meaning of the Retail Leases Act 2003 (Vic) (Act).
What you need to know
- A lease, even for the manufacture of goods, can be characterised as being subject to the Act.
- On each occasion, it is necessary to undertake an analysis of whether the good or service is supplied to the so-called “ultimate consumer”.
In Access Solutions, the tenant leased premises in North Coburg from which it manufactured steel gates for private commercial corporations and government authorities and a small number for private residences. The lease also contained an acknowledgement by the tenant that the Act did not apply.
The landlord and tenant had a strained relationship, and there were a number of disputes between them, which are not relevant for present purposes. However, the Court was required to ascertain whether the lease of the premises was governed by the Act.
In a curious decision, the Court concludes that the tenant was supplying gates, mostly to builders who were the ultimate consumers of the gates as the builders supplied the gates as part of their service in constructing buildings for the private commercial corporations, government authorities and private residence owners.
The Court also found (not unsurprisingly) that the provision in the lease that the Act did not apply was invalid, as section 94 of the Act effectively operates so that parties cannot avoid the Act. As such, a party cannot agree that the Act applies or does not apply.
The finding of the Court is troubling, and I now query which leases will not be considered retail under the Act where the tenant is manufacturing goods and supplying those goods to a party who uses the goods in their business.