Fitzroy Dental Pty Ltd v Metropole Management Pty Ltd
[2013] VSC 344
•5 July 2013
| IN THE SUPREME COURT OF VICTORIA | Not Restricted | |
AT MELBOURNE
COMMON LAW DIVISION
No. SCI 2012 06074
| FITZROY DENTAL PTY LTD (ACN 120 793 982) | Plaintiff |
| v | |
| METROPOLE MANAGEMENT PTY LTD (ACN 076 656 230) (ADMINISTRATOR APPOINTED) | First Defendant |
| and | |
| METROPOLE MANAGEMENT (GROUP) PTY LTD (ACN 139 284 807) | Second Defendant |
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JUDGE: | CROFT J | |
WHERE HELD: | Melbourne | |
DATE OF HEARING: | 19 June 2013 | |
DATE OF JUDGMENT: | 5 July 2013 | |
CASE MAY BE CITED AS: | Fitzroy Dental Pty Ltd v Metropole Management Pty Ltd & Anor | |
MEDIUM NEUTRAL CITATION: | [2013] VSC 344 | |
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LANDLORD AND TENANT – Whether retail premises lease – Provision of conference and function centre services by tenant of premises – Whether the services are retail services for the purposes of the Retail Leases Act 2003 – Whether the premises are “open to the public” – “Ultimate consumer” test applied with respect to services – Scope of retail leases legislation as remedial or ameliorating legislation – 536 Swanston Street Pty Ltd v Habrut Pty Ltd (1998) V ConvR ¶54-323 – Wellington v Norwich Union Life Insurance Society Limited [1991] 1 VR 333 – FP Shine (Vic) Pty Ltd v Gothic Lodge Pty Ltd [1994] 1 VR 191 – Collector of Customs v Chemark Services Pty Ltd (1993) 42 FCR 585 – Hitech Pathology Pty Ltd v Bankberg Pty Ltd (1999) V ConvR ¶58-536 – Peppercorn Nominees Pty Ltd v Loizou (1997) V ConvR ¶54-560 – Retail Leases Act 2003 ss 3, 4(1), 81 and 89
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APPEARANCES: | Counsel | Solicitors |
| For the Plaintiff/Respondent | Mr C. R. Hanson | Quinn & Quinn |
| For the Defendants/Applicants | Mr M. McKenzie | Scanlan Carroll |
HIS HONOUR:
Introduction
By writ and statement of claim dated 26 October 2012, the Plaintiff commenced proceedings against the First and Second Defendants in the Supreme Court in relation to a lease dated 20 October 2004 (“the Lease”) over premises located at 38-40 Brunswick Street, Fitzroy, Victoria (“the Premises”).
Under the Lease, Brunswick Street Investments Pty Ltd leased the Premises to the First Defendant for a term of 14 years commencing on 20 October 2004 and ending on 30 September 2018, with the option of two further terms of 10 years each. On 23 January 2007, Brunswick Street Investments Pty Ltd transferred the freehold title of the Premises to the Plaintiff, which thereby became the freehold reversioner. The First Defendant claims that the Lease was assigned to the Second Defendant following the appointment of an administrator of the First Defendant. The effect of the appointment of the administrator and the question whether the Lease was assigned as claimed are matters the subject of the substantive proceedings. The Plaintiff, in those proceedings, seeks a declaration that the Lease is at an end, and an order for possession of the Premises, damages, interest and costs.
The Lease is a standard form Law Institute of Victoria Commercial Lease (May 2003 Revision). It is not necessary to examine its provisions for present purposes other than its provisions with respect to the permitted use of the Premises. The relevant provisions of the Lease provide:[1]
[1]Lease is exhibit BP-1 of the Affidavit of Bronwyn Paltoglou sworn 21 March 2013.
2.2 The Tenant must not, and must not let anyone else –
2.2.1 use the Premises except for the permitted use stated in Item 15.
…
SCHEDULE
…
Item 4 [1.1] Premises
38-40 Brunswick Street, Fitzroy
Land
Certificate of Title Volume 8364 Folio 239 (part)
…
Item 15 [2.2.1] Permitted Use
Conference Centre, Café/Restaurant Area and associated office and storage space.
…”
A copy of the draft Disclosure Statement provided by Brunswick Street Investments Pty Ltd to the First Defendant under the Act pursuant to the Retail Leases Regulations 2003 states that the permitted use of the Premises is “Conference Centre and Café/Restaurant”.[2] Whether an executed Disclosure Statement in this form was provided is, however, not decisive with respect to the application or otherwise of the Retail Leases Act 2003 (“the Act”) in the present circumstances.
[2]Disclosure statement is exhibit BP-2 of the Affidavit of Bronwyn Paltoglou sworn 21 March 2013. Ms Paltoglou’s evidence is that she is unable to locate a copy of the executed disclosure statement, but has exhibited a copy of the draft disclosure statement.
The Application
The First and Second Defendants made an application to this Court for a declaration that the Lease is a “retail lease” under the Act, and that the dispute between the parties is a “retail tenancy dispute” under the Act. The application was made by summons dated 18 February 2013. For the purposes of this application, it is not necessary for this Court to determine other differences between the parties, the subject of the substantive proceedings.
The application for a declaration that the Premises is “retail premises” for the purposes of the Act has jurisdictional significance for the future conduct of the substantive dispute or disputes between the parties. If the Lease of the Premises is a lease of “retail premises” governed by the provisions of the Act, any “retail tenancy dispute” in relation to the Premises must be heard and determined by the Victorian Civil and Administrative Tribunal (“VCAT”), subject to any applicable exceptions, on the basis VCAT has exclusive jurisdiction to hear and determine a “retail tenancy dispute”.[3]
[3]Retail Leases Act 2003 ss 81 and 89; and see State of Victoria v Tymbook [2005] VSC 267 (Byrne J); and Croft and Hay, Retail Leases Victoria (LexisNexis, Looseleaf) at [240,025].
The Act defines a “retail tenancy dispute” in the following terms:
“81.Meaning of retail tenancy dispute
(1) In this Part, retail tenancy dispute means a dispute between a landlord and tenant-
(a) arising under or in relation to a retail premises lease to which-
(i) this Act applies or applied because of Part 3; or
(ii) the Retail Tenancies Reform Act 1998 or the Retail Tenancies Act 1986 applies or applied; or
(b) arising under a provision of the Retail Tenancies Reform Act 1998 or the Retail Tenancies Act 1986 in relation to a lease to which that Act applies or applied; or
(c) arising under a lease that provides for the occupation of retail premises in Victoria to which none of those Acts apply or applied-
despite anything to the contrary in this Act (apart from subsection (2) and section 119(2)). Note If proceedings were in progress under the Retail Tenancies Reform Act 1998 when this Act commenced, see section 119(2) (general transitional and savings).
(2)However, retail tenancy dispute does not include a dispute solely relating to the payment of rent or a dispute that is capable of being determined by a specialist retail valuer under section 34, 35 or 37 of this Act or under section 12A or 13A of the Retail Tenancies Reform Act 1998 or section 10 or 11A of the Retail Tenancies Act 1986.”
The breath of the jurisdiction conferred by s 81 and the related provisions of Part 10 of the Act was confirmed by Byrne J in State of Victoria v Tymbook Pty Ltd.[4]
[4](2005) V ConvR ¶54-707.
Part 3 of the Act commenced on 1 May 2003.[5] Within that part of the Act is s 11 which provides, inter alia, that the Act applies to a retail premises lease entered into after the commencement of that section – being 1 May 2003. There is no dispute that the Lease commenced on 30 October 2004. Accordingly, if the Lease is a “retail lease”, it is governed by the provisions of the Act, and not the provisions of the Retail Tenancies Act 1986 or the Retail Tenancies Reform Act 1998.
[5]Retail Leases Act 2003, s 2.
Consequently, the principal question for determination in this application is whether or not the Premises is “retail premises” for the purposes of the Act.
Retail Premises
The expression “retail premises” is defined in the Act by reference to the provisions of s 4:[6]
[6]Retail Leases Act 2003, s 3.
“4. Meaning of retail premises
(1) In this Act, retail premises means premises, not including any area intended for use as a residence, that under the terms of the lease relating to the premises are used, or are to be used, wholly or predominantly for-
(a) the sale or hire of goods by retail or the retail provision of services; or
(b) the carrying on of a specified business or a specified kind of business that the Minister determines under section 5 is a business to which this paragraph applies.
The application or otherwise of this definition in the present circumstances depends upon whether the Premises, are, under the terms of the Lease, “used or to be used wholly or predominately for … the sale or hire of goods by retail, or for the retail provision of services.”
Additionally, it is not contended by the parties that the permitted use of the Premises under the Lease contemplates the sale or hire of goods by retail or that the Premises has been used for this purpose; other than perhaps incidentally to the provision of services, as indicated in the discussion which follows. Nor do the parties submit that the Lease of the Premises relates to a specified business or a specified kind of business that the Minister has determined under s 5 of the Act is a business to which paragraph 4(1)(b) of the Act applies. In addition, the parties do not submit that in the event the Lease is a “retail premises” lease, any exclusion applies under s 4(2) of the Act. There is no issue in the present circumstances with respect to residential use of the Premises or with respect to the extent of the permitted and actual use of the Premises, having regard to the “wholly or predominately” requirement in s 4(1) of the Act.
The critical issue is, in summary, whether the permitted and actual use of the Premises as a function and conference centre, with ancillary services such as the provision of food and beverages in conjunction with such use, means that the Premises is to be characterised as “retail premises” under the provisions of the Act to which reference has been made.
Meaning of “retail premises”
The expression “retail premises” has been considered by the courts in a variety of circumstances.[7] The story conveniently begins with a “cabaret, restaurant and/or discotheque” in Swanston Street, Melbourne, with 536 Swanston Street Pty Ltd v Habrut Pty Ltd.[8] In considering the meaning of “retail” in this context Kaye J said:[9]
I have been referred to several definitions by authorities of what is described as retail shop and retail trade. Perhaps the most succinct statement from which assistance is to be derived is from that made by Viscount Dunedin in his speech in Turpin v Middlesbrough Assessment Committee and Kaye & Eyre Brothers Ltd [1931] AC 451 at 474. His Lordship then said, referring to buildings, that they were buildings to which the public can resort for the purpose of having particular wants supplied and services rendered to them. It is, in my view, clear that the demised premises fall within that description of being available to members of the public for the purposes of having their food and drink requirements supplied and services of discotheque entertainment provided to them. Accordingly, in my view, the demised premises are retail premises within the meaning of the Act.
[7]See Bradbrook, Croft and Hay, Commercial Tenancy Law (3rd ed, LexisNexis, 2009), at 701-7, [23.18]; and Croft and Hay, Retail Leases Victoria (LexisNexis, Looseleaf), at [30,035]-[30,045], [120,050]-[120,055], and [180,050]-[180,055].
[8](1988) V ConvR ¶54-323.
[9](1988) V ConvR ¶54-323, at 64,088.
In Wellington v Norwich Union Life Insurance Society Limited,[10] Nathan J applied this approach in relation to premises leased to patent attorneys; having found that professional businesses of this kind, including other professional businesses such as solicitors, architects and medical specialists, conduct a business providing retail services.[11] Thus, in considering “retailing” in this context, Nathan J said:[12]
“The essential feature of retailing, is to my mind, the provision of an item or service to the ultimate consumer for fee or reward. The end user may be a member of the public, but not necessarily so. In support of this conclusion, I call in aid not only commonsense but the Macquarie Australian Dictionary which defines retail as being a sale to an ultimate consumer, usually in small quantities. When the verb is used in the transitive form, it is to sell directly to the consumer.” (emphasis added)
The fact that the advice of the patent attorneys may pass through the hands of an intermediary to the ultimate consumer or end user was not regarded as significant, provided it came into the hands of that person in a form that could not be amended and hence remained the product of the intellect of the deliverer.[13] More generally, this highlights and emphasises the importance of characterising the nature of the “service” that is being provided. Thus, in the context of Wellington, it would follow that if the position was that the patent attorneys provided advice to, for example, a solicitor who would, in turn, provide advice to his or her client, the ultimate consumer, using the patent attorney’s advice merely as an “input” in his or her advice, wholly or partially with additions and modifications on the basis of his or her professional opinion, the position would be different. In those circumstances the patent attorney’s advice could not, in a relevant sense, be said to pass through the hands of an intermediary to the ultimate consumer. It does not, however, follow that in these circumstances the solicitor may not be regarded as the “ultimate consumer” of the service for the purposes of his or her own practice; as is likely to be the case with other “inputs” for the practice such as, for example, legal research services, stationary and office supplies.
[10][1991] 1 VR 333; (1990) VConvR ¶54-387; referred to with approval in Sofos v Coburn (1992) V ConvR ¶54,439, at 65,150 (Nathan J); FP Shine (Vic) Pty Ltd v Gothic Lodge Pty Ltd [1994] 1 VR 194 (Ashley J); Hitech Pathology Pty Ltd v Bankberg Pty Ltd (1999) V ConvR ¶58-536, at 68,169 (Nathan J); Collector of Customs v Chemark Services Pty Ltd (1993) 42 FCR 585; 114 ALR 531 (Spender, Einfeld and Lee JJ); Plummer and Adams v Needham (1954) 56 WALR 1 (Dwyer CJ, Walker and Virtue JJ); Woolworths Ltd v Campbells Cash and Carry Pty Ltd (1996) 92 LGERA 244 (Sheller, Cole and Beazley JJA); Stringer v Gilandos Pty Ltd [2012] VSC 361 (Croft J). See also Bradbrook, Croft and Hay, Commercial Tenancy Law (3rd ed, LexisNexis, 2009), at 701-708, [23.18]; and Croft and Hay, Retail Leases Victoria (LexisNexis, Looseleaf), at [30,055] and [180,055].
[11][1991] 1 VR 333, at 336; (1990) V ConvR ¶54-387 at 64,753; and see FP Shine (Vic) Pty Ltd v Gothic Lodge Pty Ltd [1994] 1 VR 194 and Hitech Pathology Pty Ltd v Bankberg Pty Ltd (1999) V ConvR ¶58-536.
[12][1991] 1 VR 333, at 336; and see Brimbank City Council v Westvale Community Centre Inc [2006] VSC 100 (Williams J) where it was held that it is not essential that the “retail” use be “commercial”.
[13][1991] 1 VR 333, at 338; (1990) V ConvR ¶54-387, at 65,150 (Nathan J).
Subject to the proper characterisation of the “service” that is being provided the authorities do indicate strong support for the “ultimate consumer” test as the touchstone of retailing.[14] The cases tend to be concerned with whether or not goods are being sold by retail and although the same characterisation issues as apply to services do exist, they tend not to be focused upon as the position is likely to be more obvious with goods. Thus a sale of “widget type A” from premises by A to B who, in turn, “converts” the good “widget type A” to “widget type B for sale to C would not involve the sale of “widget type A” to C as the ultimate consumer of that type of good. Depending on the nature of the goods involved these transactions may involve sale by wholesale to B and a retail sale to C – or, alternatively, two retail sales of different goods, “widget type A” to B and “widget type B” to C.[15]
[14]See, for example, Wellington v Norwich Union [1991] 1 VR 333, at 336; (1990) V ConvR ¶54-387, at 64,753 (Nathan J); Sofos v Coburn (1992) V ConvR ¶54,439, at 65,150 (Nathan J); and Hitech Pathology Pty Ltd v Bankberg Pty Ltd (1999) V ConvR ¶58-536, at 68,169 (Nathan J); Collector of Customs v Chemark Services Pty Ltd (1993) 42 FCR 585; 114 ALR 531 (Spender, Einfeld and Lee JJ); Plummer and Adams v Needham (1954) 56 WALR 1 (Dwyer CJ, Walker and Virtue JJ); Woolworths Ltd v Campbells Cash and Carry Pty Ltd (1996) 92 LGERA 244 (Sheller, Cole and Beazley JJA). See also Bradbrook, Croft and Hay, Commercial Tenancy Law (3rd ed, LexisNexis, 2009), at 701-708, [23.18]; and Croft and Hay, Retail Leases Victoria (LexisNexis, Looseleaf), at [30,055] and [180,055].
[15]As to the distinction between wholesale and retail, see Woolworths Ltd v Campbells Cash and Carry Pty Ltd (1996) 92 LGERA 244 (Sheller, Cole and Beazley JJA); and see ActioncoPty Ltd v Pioneer Plasterboard Pty Ltd (2002) 170 FLR 403. See also Croft and Hay, Retail Leases Victoria (LexisNexis, Looseleaf), at [30,055] where these cases are discussed in detail.
It follows, in my view, from the application of the “ultimate consumer” test and the authorities to which reference has been made, particularly Wellingtons case,[16] that the fact that a good or a service is provided to a person who uses the good or service as an “input” in that person’s business for the purpose of producing or providing a different good or service to another person does not detract from the possible characterisation of the first person (and perhaps also the second person, depending on all the circumstances) as the “ultimate consumer” of the original good or service.
[16]Wellington v Norwich Union [1991] 1 VR 333; (1990) V ConvR ¶54-387.
This position is, in my opinion, reinforced by the decision of Ashley J (as he then was) in FP Shine (Vic) Pty Ltd v Gothic Lodge Pty Ltd[17] (“FP Shine”) where a caravan park was held to be retail premises for the purposes of the Retail Tenancies Act 1986. In reviewing some of the then recent authorities, Ashley J said:[18]
[17][1994] 1 VR 194; (1993) V ConvR ¶54-472
[18][1994] 1 VR 194, at 198-199; (1993) V ConvR ¶54-472, at 65,528.
In 536 Swanston Street, Kaye J had to consider a lease of premises used as a restaurant, cabaret and discotheque. Members of the public could enter the premises upon payment of an admission fee. Having paid that fee, any such person could enjoy music and entertainment provided and could use the facilities for dancing and so on. In addition, food and drink could be purchased.
His Honour held that: (1) the premises were used wholly or predominantly for carrying on a business - that is, the business of provision of entertainment; (2) the business included both sale of goods (that is, sale of food and drink) and provision of services (that is, the services of the discotheque); and (3) that the provision of goods and services were properly characterised as "retail".
In my respectful opinion his Honour's conclusions were correct and may be applied to the facts now under consideration. In the present situation the business involving the retail provision of services is the provision of serviced caravan sites with necessary ancillaries of kiosk, amenities block and recreation room. It has a retail characteristic, being provision of services to members of the public wishing to avail themselves of the services in return for payment of money. It is no less retail provision of services because they are provided by way of site hire. No doubt, by analogy, the admission to the discotheque in 536 Swanston Street was only for some limited period.
Foreshadowing discussion of the issue whether services are available to members of the public I observe that a caravan park is closer on the spectrum to the type of premises the subject of this application in that, unlike a “shop”, whether it be a cabaret, discotheque or nightclub, it is not premises necessarily open and inviting to a causal passer by as may be the case with an ordinary shop. Rather it may be necessary to make a booking and, as the facilities are finite, the desired booking may not be fulfilled. This is not dissimilar from the position with a conference or convention centre, where use requires booking and admission is, like a discotheque, or a caravan park, for a limited time.
The nature of the Premises
The Premises comprises a café/restaurant located at the front of the Premises on Brunswick Street, and a conference centre and facilities at the rear of the Premises. The Premises adjoin the Metropole Serviced Apartments at 42-48 Brunswick Street, Fitzroy (the “Adjoining Premises”). The Adjoining Premises is occupied by the Second Defendant, on which a café, hotel, serviced and conference centre business is operated.
Affidavit material has been filed on behalf of the parties in relation to the substantive proceedings. For the purposes of this application, none of the deponents to the affidavits was the subject of any cross examination.
On behalf of the Defendants, affidavit material has been filed by Ms Bronwyn Paltoglou, a director of the First Defendant (prior to it being placed into administration), and a director of the Second Defendant, on behalf of both Defendants in the substantive proceedings. Ms Paltoglou’s evidence is, among other things, that:
(a) at all relevant times, the Premises have been used predominately as a conference centre and café/restaurant;[19]
[19]Affidavit of Bronwyn Paltoglou sworn 12 March 2013, para 10.
(b) the Second Defendant, which has been in possession of the Premises since 14 March 2011,[20] continues to use the Premises predominately as a conference centre and cafe/restaurant;[21]
[20]Affidavit of Bronwyn Paltoglou sworn 12 March 2013, para 18.
[21]Affidavit of Bronwyn Paltoglou sworn 12 March 2013, para 20.
(c) the Second Defendant operates the cafe/restaurant and conference centre on the Premises in conjunction with a café, hotel, serviced apartments and conference centre business at the Adjoining Premises (at 42-48 Brunswick Street);[22]
[22]Affidavit of Bronwyn Paltoglou sworn 12 March 2013, para 23.
(d) the Premises are the subject of a general liquor licence (number 33122152) which enables the business to sell alcohol.[23] The address listed on the licence is the address of the Adjoining Premises, however the “red line plan” indicates that the licence also covers the Premises, enabling the business to sell alcohol at the Premises.[24] On the basis of her enquiries with the Victorian Commission for Gambling and Liquor Regulation regarding the address stated on the licence, Ms Paltoglou’s understanding and belief is that the licence covers both the Premises and the Adjoining Premises, and that it is “not uncommon practice for the Commission not to require addresses on liquor licences to be updated provided the “red line plan” accurately reflects the licenced area”;[25]
[23]Affidavit of Bronwyn Paltoglou sworn 12 March 2013, para 11; Supplementary Affidavit of Bronwyn Paltoglou sworn 6 May 2013, para 3.
[24]Supplementary Affidavit of Bronwyn Paltoglou sworn 6 May 2013, para 4.
[25]Supplementary Affidavit of Bronwyn Paltoglou sworn 6 May 2013, para 5.
(e) the conference centre facilities are “marketed and sold” directly to members of the public and business entities;[26]
[26]Affidavit of Bronwyn Paltoglou sworn 12 March 2013, para 21.
(f) two staff employed by the Second Defendant coordinate and manage conferences;[27]
[27]Affidavit of Bronwyn Paltoglou sworn 12 March 2013, para 21.
(g) the café/restaurant facilities in the Premises are “marketed to and sold” to members of the public and conference centre and hotel clients;[28]
[28]Affidavit of Bronwyn Paltoglou sworn 12 March 2013, para 22..
(h) the Second Defendant operates the cafe, “marketed and sold” directly to members of the public, business entities and hotel clients;[29]
[29]Affidavit of Bronwyn Paltoglou sworn 21 March 2013, para [10].
(i) in order to make a conference booking at the Premises, rooms are allocated in a booking diary;[30]
(j) clients that book conference rooms in the Premises are issued a tax invoice for the booking; and[31]
(k) confirmed bookings are then entered into booking software.[32]
[30]Supplementary Affidavit of Bronwyn Paltoglou sworn 6 May 2013, para 7.
[31]Supplementary Affidavit of Bronwyn Paltoglou sworn 6 May 2013, para 8.
[32]Supplementary Affidavit of Bronwyn Paltoglou sworn 6 May 2013, para 9.
The affidavits provided by Ms Paltoglou[33] those provided by Ms Sofia Antonakis[34] (Executive Assistant of the Metropolitan Fire and Emergency Services Board), Mr Edward Clark[35] (Occupational Health and Safety Officer the Police Federation of Australia (Victoria) and Ms Maria Falzon[36] (Office Assistant and Event Organiser for Condari Pty Ltd – trading as Qasair Rangehoods) on behalf of the Defendants evidence the nature and basis upon which the Premises has been booked and used for conferences.
[33]Supplementary Affidavit of Bronwyn Paltoglou sworn 6 May 2013; Further Supplementary Affidavit of Bronwyn Paltoglou sworn 13 May 2013.
[34]Affidavit of Sofia Antonakis sworn 7 May 2013.
[35]Affidavit of Edward Clark sworn 7 May 2013.
[36]Affidavit of Maria Falzon sworn 7 May 2013.
On the basis of the evidence of Ms Paltoglou, supported by the evidence of Ms Antonakis and Mr Clark and Ms Falzon, the Premises is and has been used at all relevant times as provided for under the permitted use provisions of the Lease.[37]
[37]As to the permitted use provisions of the Lease, see above, para 3.
Responsive material was provided in the form of affidavits by Ms Anh Tran, director of the Plaintiff, and Mr Audi Widjaja, the husband of Ms Tran, on behalf of the Plaintiff. Ms Tran authorised Mr Widjaja to swear an affidavit on behalf of the Plaintiff in these proceedings.[38] Ms Tran says in her affidavit that the negotiations as to the purchase of the Premises and the subsequent management of the Premises on behalf of the Plaintiff have been conducted by Mr Widjaja.[39]
[38]Affidavit of Anh Tran sworn 19 April 2013, para 2.
[39]Affidavit of Anh Tran sworn 19 April 2013, para 2.
In response to Ms Paltoglou’s evidence with respect to the actual use of the Premises, Mr Widjaja’s evidence is that:
(a) the Premises were and are used as an adjunct to the Metropole Hotel Apartments & Conference Centre business which is conducted principally from the Adjacent Premises (at 42-48 Brunswick Street, Fitzroy);[40]
[40]Affidavit of Audi Widjaja sworn 19 April 2013, para 19(a)(i).
(b) the Premises are not in the nature of a stand alone café/restaurant, being a two storey conference centre with an area on the ground floor which is able to be used for serving drinks and food as an adjunct to the conferences;[41]
[41]Affidavit of Audi Widjaja sworn 19 April 2013, para 19(a)(ii).
(c) the Premises do not have car parking;[42]
[42]Affidavit of Audi Widjaja sworn 19 April 2013, para 19(a)(iii).
(d) the Premises is not open to the public generally, but is only open when required for a conference or function;[43]
[43]Affidavit of Audi Widjaja sworn 19 April 2013, para 19(a)(iv).
(e) the Adjacent Premises is open to the public generally, and has a reception area and care/restaurant[44];
[44]Affidavit of Audi Widjaja sworn 19 April 2013, para 19(b)(i).
(f) The Adjacent Premises also has conference rooms[45];
(g) the Adjacent Premises has accommodation apartments, pool, gym and other facilities;[46] and
(h) the Adjacent Premises has car parking.[47]
[45]Affidavit of Audi Widjaja sworn 19 April 2013, para 19(b)(ii).
[46]Affidavit of Audi Widjaja sworn 19 April 2013, para 19(b)(iii).
[47]Affidavit of Audi Widjaja sworn 19 April 2013, para 19(b)(iv).
Further, Mr Widjaja and Ms Tran’s evidence is that their residential address is 15 Brunswick Street, Fitzroy. Mr Widjaja says in his affidavit that he has lived there with his wife, Ms Tran, prior to the Plaintiff’s purchase of the Premises. Mr Widjaja’s consulting rooms and Ms Tran’s dental surgery are also both located at 15 Brunswick Street, Fitzroy. Their residential and professional address is located on the same block in Brunswick Street as the Premises, to the south and on the opposite side of the street and they can see the Premises from this address. Both Mr Widjaja and Ms Tran say that they both pass the Premises almost every day, at all times of the day and evening, and have never seen the Premises open to the public – in the sense that diners or drinkers are freely able to come and go from the street. They also say that they each have never seen a promotional board outside the Premises, or any café/restaurant signage or menu on the window of the Premises. Their evidence is also that the front doors of the Premises are kept closed, and that during business hours the Premises appear to be unoccupied more often than not. They say that the café/restaurant next door in the Adjacent Premises is, by way of contrast, regularly open to the public, has diners or drinkers sitting inside and often has a promotional board outside.
Is the Premises “retail” premises?
Is the Premises open to the public?
It is not disputed between the parties that the Premises is only “open” and operative when booked for a function or conference. The Defendants acknowledge that other than when used in conjunction with bookings, the Premises is not otherwise “open” to the public, at least in a physical sense; but there is nothing in the evidence to suggest that it could not be booked at any time, during business hours, for use at any time. The Defendants also say that the café restaurant is only used for the purpose of providing refreshment to conference participants as an adjunct to a booked conference in conjunction with that conference. The Defendants acknowledge that the café/restaurant facilities are not the typical or usual café/restaurant where members of the public can enter and exit on their choosing. There are no tables, waiters or menus set up for members of the public to “walk in off the street”, so to speak. It is, of course, common experience that not all restaurants are open to the public in the sense that an intending diner may simply “walk in off the street” as and when he or she feels so inclined without troubling to make a prior booking – with some restaurants a significant time prior to the intended dining. So it is clear that the “walk in off the street” test must be treated with caution if sought to be used as a decisive test, the litmus test, for whether or not premises are “open to the public”.
Nevertheless, the Plaintiffs submit, in opposition to the application, that the evidence establishes that the Premises do not have the hallmarks of being open to the public. The Plaintiffs submit that because the Premises are used predominately as a conference centre, it is only open when booked for the purposes of a conference and, when operating as a conference centre, is only provided to conference attendees – not the members of the public as a whole. There is, however, no evidence that conference attendance is in any way limited to any section or class of the public. The Plaintiff also submits that the café/restaurant in the Premises is only used for the purposes of providing refreshment to conference attendees as an adjunct to a booked conference; and so is not a café/restaurant in the usual sense.
The Defendants submit that the conference facilities are open and available to the public in the same way as a reception centre, a wedding reception centre or, for example, a mediation centre is open to the public; namely on the basis that the premises can used subject to booking and the payment of a fee. The Defendants also submit that there is no bar to any member of the public booking the centre if they so desire; nor any bar to any person or class of persons making such a booking. The same applies to conference or function attendees as a general proposition; subject to obvious constraints of interest or social connection; depending on the nature of the conference or function. These constraints are, however, no more significant than would apply to a restaurant taking bookings. Consequently the Defendants submit that the Plaintiff’s contention that the Premises is not open to the public because a member of the public could not “walk in off the street” is misconceived to the extent that it is put forward as the decisive test, the litmus test.
In significant respects the evidence of the parties is not in conflict. The differences between the parties arise in relation to the consequences of the factual position with respect to the operation of the Act. In particular, the Plaintiffs do not say that the Premises is not being used for its permitted use under the Lease, rather that it is not open for business very much – on the basis of their observations from the street or by sight from their own premises across the street, outside the premises, at various, unspecified times. Additionally, the parties agree that a member of the public could not “walk in off the street” at any time – much as one might otherwise walk into a convenience store or a café/diner of the kind one sees around the suburbs and country towns – or in American films.
For the reasons I have indicated I am not satisfied that there is any basis in the provisions of the Act or the authorities for constraining the concept of “open to the public” with respect to premises to the extent that the Plaintiffs would have it constrained. True it is that it would be very difficult to imagine a situation were commercial premises which were accessible on a “walk in off the street” basis could, in the absence of specified and unusual circumstances, be said not to be “open to the public”. It does not, in my view, follow that the converse position indicates that premises are not “open to the public”.
In the present circumstances I am satisfied that the Premises is “open to the public”. There is no evidence to suggest that any person or class of persons is prohibited or otherwise prevented from being able to utilise the conference and function services provided by the Defendants at the Premises. The use of the conference and function services, and those provided by the café/restaurant (which is licenced), are available and open to any member of the public subject to booking the conference or function facilities and the payment of a fee. The fact that the Premises may not be “open” for the provision of services during usual ordinary business, such as apply to ordinary retail shops or restaurants and bars, does not detract in any way from the Premises being “open to the public” in the relevant sense. It appears from the evidence that booking requests for the Premises and booking arrangements are made to and at the Adjoining Premises. This does not, however, detract from the use of the Premises itself in accordance with the Lease and so the position with respect to the application of the Act is not affected.
The nature of the services being provided, and whether the services provided by the Defendants in the Premises can be said to be provided to the “ultimate consumer”
The other basis of the Plaintiff’s submission in opposition to the application is that as a hallmark of retailing is the provision of goods or services to the ultimate consumer the services provided in the present circumstances are not retail in nature. The Plaintiff submits that the service provided by the Defendants to a person or entity booking the conference or function facilities in the Premises is merely the provision of a space within which a conference or function can be held for the benefit of the attendees. Accordingly, the Plaintiffs submit that the provision of the service, being the provision of a space, is not provided to the “ultimate consumer”. Rather it says that the “ultimate consumer” is a person who attends a conference or function at the Premises.
More particularly, the Plaintiff submits that if a convention centre is hired by a person or entity for the purpose of providing a conference, the “ultimate consumer” of the service is each of the persons who ultimately attend the conference. On this basis the relevant service is thereby passed on to the “ultimate consumer” – hence there is then, and only then, a retail provision of services. Thus, the Plaintiff contends that the person or entity who contracts with the Defendants for the hire of a function or convention centre is not the “ultimate consumer” of the relevant service. The Plaintiff further submits that characterisation of the provision of relevant services to the hirer of a function or convention centre as the “retail” provision of services would result in an unwarranted extension of the operation of the Act. The Defendants contend that in the present circumstances the provision of services to the hirer of the Premises, the conference or function provider or organiser, is properly characterised as the “retail” provision of services – and that the operation of the Act is intended to be broad rather than narrow.
As discussed previously with reference to the authorities it is critical to identify the service or services for which leased premises are being used to provide and the extent to which, if at all, that service or services are being “on sold” or merely passed on to a third party.[48]
[48]See above, paragraphs 15 to 19.
In the present circumstances I am of the opinion that the evidence establishes that the Premises are used, under the terms of the Lease and in actual fact, for the provision of a conference centre with an ancillary café/restaurant which are provided, on a commercial basis, to a person, persons, or some corporate or other entity which uses the space and any attendant services provided at the Premises, such as café/restaurant facilities, for the purposes of a conference or function. It appears from the evidence that third parties attend conferences or functions for the purpose of education, training, general edification or enjoyment – or a combination of these things. Thus the attendees, the third parties, receive a service which is both different in nature and extent from that which is provided to the conference or function promoter or organiser. They do not receive the space, the whole of the Premises, to utilise for the provision of a conference or function, whether for profit or other reasons, indirectly commercial – such as business promotion or employee or contractor training – or for social purposes. The service the attendees, the third parties receive, involves enjoyment of the “space”, the Premises, and its services, but it includes more than this alone – and , in any event, their enjoyment of the “space”, the Premises, is constrained by the extent to which it is enjoyed by other attendees, third parties. The conference or function provider, on the other hand, enjoys the whole space for his, her or its particular purposes.
Consequently it follows, in my view, that by analogy with the authorities considered the conference or function provider is properly characterised as an “ultimate consumer” of the services provided to him, her or it at the Premises by the tenant of the Premises. These services are, in turn, an “input” into the different services provided to attendees at the conference or function but, for the preceding reasons, these are to be characterised as services of a different nature.[49] Thus there are two transactions involving the retail provision of services – first the provision of services to the conference or function provider or organiser and then the provision of different services to the attendee; though the retail characterisation of the second transaction may be affected if it is gratuitous, an issue to which I now turn.
[49]As to the characterisation of “inputs” enshrining “ultimate consumption” see above, paragraphs 16 to 19 (particularly with reference to Wellington v Norwich Union [1991] 1 VR 333.
In light of this analysis, and having regard to the present circumstances, it is appropriate to make some observations with respect to the basis upon which a service or services may be provided – commercially or gratuitously. In Wellington v Norwich Union Life Insurance Society Ltd[50] Nathan J said that the use of the word “or” between the words “the sale or hire of goods by retail” and “the retail provision of services” was disjunctive so that the definition applies to both retail sales and hirings and the provision of retail services.[51] This view was reflected in subsequent legislation and now in the corresponding provisions of s 4(1) of the Act.[52] This is not to suggest, however, that retailing, whether of goods or services, does not involve the provision of a good or service “for fee or reward”;[53] though it is not essential that the retail use be “commercial” in the generally accepted sense of the word.[54]
[50][1991] 1 VR 333; (1990) V ConvR ¶54-387.
[51][1991] 1 VR 333 at 334; (1990) V ConvR ¶54-387 at ¶64-752.
[52]Wellington’s case was decided during the operation of the Retail Tenancies Act 1986. The provisions to which Nathan J was referring were re-enacted in subsequent legislation relevantly in the same form: see Retail Tenancies Reform Act 1998 s 3(1) (definition of “retail premises”) and Retail Leases Act 2003, s 4(1).
[53]See Wellington v Norwich Union Life Insurance Society Ltd [1991] 1 VR 333 at 336; (1990) V ConvR ¶54-387 at ¶64-753 (Nathan J); and see above, paragraphs 16 to 19.
[54]See Brimbank City Council v Westvale Community Centre Inc [2006] VSC 100 at [11], [40] - [48] (Williams J).
It appears from submissions during the course of the hearing of this application and from the evidence that the provision of services to attendees at conferences or functions has been gratuitous on a number of, if not many, occasions – conferences for students, employees, members, and possibly potential customers of the organiser entity, for example.[55] The same evidence makes it clear, however, that the first transaction, the hiring of the Premises to the conference organising entity, was for monetary consideration – and there is no suggestion that these sums did not represent commercial hiring rates. Nevertheless, the fact that the second transaction – with the attendees – may not involve a “fee or reward” for the provision of services does not affect the characterisation of the first transaction. On one view it may be thought to strengthen the characterisation of the first transaction as the provision of services to the “ultimate consumer”. Neither does the fact that the organising entity hiring the Premises, in the first transaction, is a governmental authority or public body, such as a university, the Metropolitan Fire Brigade, Police Federation or industry associations. The character of such a body does not affect the characterisation of the first transaction – which remains an ordinary commercial hiring agreement. It could not be suggested that such authorities or bodies do not have capacity to effect ordinary commercial agreements of this nature.
[55]The evidence of Ms Paltoglou (Affidavit sworn 10 May 2013), Ms Antonakis (Affidavit sworn 7 May 2013), Mr Clark (Affidavit sworn 7 May 2013) and Ms Falzon (Affidavit sworn 7 May 2013) indicates that the Premises were hired to a variety of entities – with invoices raised for the hiring fee on apparently commercial rates. These entities included governmental or public authorities, universities and industry associations, including the Department of Sustainability and Environment (Land and Fire), the Metropolitan Fire Brigade – East Melbourne, Swinburne University, Police Association (Victoria), Deakin University; additionally a variety of commercial entities, including Condari Pty Ltd, also hired the Premises.
Finally, I reject the submission that the present analysis would result in unwarranted extension of the operation of the Act. The Act is clearly ameliorating or remedial legislation and in this respect the observations of Smith J in Peppercorn Nominees Pty Ltd v Loizou[56] are apposite:[57]
[56](1997) V ConvR ¶54-560.
[57](1997) V ConvR ¶54-560 at ¶66,737
The parties are broadly in agreement about the principles to be applied in interpreting s 10(1) of the Act. In particular the respondents have accepted that the legislation is remedial legislation and that such legislation should be given a beneficial construction (Re Kearney (1984) 158 CLR 426; 52 ALR 24 at 28; BC8400523). They have submitted, however, that the principle does not entitle the court to adopt a construction that does not confirm with the language of the legislation. Reliance was placed on statements of the High Court in the joint judgment delivered in Khoury v Government Insurance Office (NSW) (1984) 165 CLR 622; 54 ALR 639; BC8400510 where it was said (at CLR 638; ALR 649):
Section 18 is remedial in character and its language should be construed so as to give the most complete remedy which is consistent “with the actual language employed” and to which its words “are fairly open …” ‘.
The High Court (at CLR 638; ALR 650), however, referred to two major objections which precluded its acceptance of the particular argument relied upon:
First, the rules that remedial provisions are to be beneficially construed so as to provide the most complete remedy of the situation with which they are intended to deal must, as has been said, be restrained within the confines of “the actual language employed” and what is “fairly open” on the words used. Once the conclusion is reached that the common law duty of disclosure cannot properly be regarded as a term or condition of the contract of insurance, the language employed in s 18 simply does not extend to that duty. Secondly, and perhaps more importantly, there is no proper basis for concluding that it was ever intended that the remedial function served by s 18 should extend to the case of a breach of the ordinary common law duty.
If, which for the preceding reasons I do not accept, the proper construction of the provisions of the Act which have been considered for the purposes of this application relied upon the application of these principles of statutory interpretation I would be of the view that an interpretation of its provisions which provides a broader rather than a narrower interpretation is to be preferred.
Retail tenancy dispute
The question whether there exists a “retail tenancy dispute” under the provisions of the Act[58] is a question which requires consideration of the matters raised in the substantive proceedings, with the benefit of submissions and argument on evidence and law. This is not a process that has occurred in the course of the present application and is, in any event, a process which the dispute resolution provisions of the Act indicate is a matter for VCAT.[59] Having found that the Lease is a lease of “retail premises” and that, consequently, the provisions of the Act apply it would be entirely inappropriate for this Court to pre-empt in any way consideration of issues which the legislature has entrusted to VCAT. Accordingly, absent consideration of issues in the substantive proceedings in the course of the present application, as indicated, the Court is not in a position to address this question, even if it were appropriate that it did so.
[58]See, particularly, Retail Leases Act 2003, ss 81 and 89.
[59]And see State of Victoria v Tymbook [2005] VSC 267 (Byrne J); and see above, paragraph 8.
Conclusion
For these reasons I find that the Premises are used or are to be used under the terms of the Lease for the retail provision of services. It follows that the Lease is a lease of “retail premises” for the purposes of the Act. It also follows that to the extent that the substantive proceedings raise a “retail tenancy dispute” for the purposes of ss 81 and 89 of the Act the jurisdiction of VCAT is enlivened to the extent provided for in Part 10 of the Act.
Consequently the application is successful to the extent I have indicated. Proposed orders should be brought in to give effect to these reasons. I will hear the parties on the question of costs.
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