Horgan v Equi Ventures Pty Ltd and Anor (Ruling)
[2024] VCC 1965
•12 December 2024
| IN THE COUNTY COURT OF VICTORIA AT MELBOURNE COMMERCIAL DIVISION | Revised Not Restricted Suitable for Publication |
| GENERAL LIST |
Case No. CI-24-01568
| ALISON MICHELLE HORGAN | Plaintiff |
| v | |
| EQUI VENTURES PTY LTD (ACN 615 458 789) | First Defendant |
| and | |
| JAMES THOMAS | Second Defendant |
---
JUDGE: | HER HONOUR JUDGE ROBERTSON | |
WHERE HELD: | Melbourne | |
DATE OF HEARING: | 25 November 2024 | |
DATE OF RULING: | 12 December 2024 | |
CASE MAY BE CITED AS: | Horgan v Equi Ventures Pty Ltd and Anor (Ruling) | |
MEDIUM NEUTRAL CITATION: | [2024] VCC 1965 | |
RULING
---
Subject:RETAIL TENANCIES – JURISDICTION
Catchwords: Whether premises are “retail premises” under the Retail Leases Act 2003 (Vic) – nature of business conducted from premises – whether Court deprived of jurisdiction to hear dispute by reason of s89(4) of the Retail Leases Act 2003 (Vic)
Legislation Cited: Retail Leases Act 2003 (Vic), s4, s5, s81, s89, s94; County Court Act 1958 (Vic), s37
Cases Cited:Federated Engine-Drivers’ and Firemen’s Association of Australasia v Broken Hill Pty Co Ltd (1911) 12 CLR 398; Zhang v Zemin (2010) 79 NSWLR 513; Eberstaller v Poulos (2014) 87 NSWLR 394; CSL Australia Pty Ltd v Formosa (2009) 261 ALR 441; Obeid v R (2015) 91 NSWLR 226; WGZ Pty Ltd atf the WGZ Family Trust v Arva Investments Pty Ltd [2024] VCC 1777; Sarina Investments Pty Ltd v Brotherhood of St Laurence [2022] VCC 935; Ampron Australia Pty Ltd v Quan Yang Investments Pty Ltd & Ors [2016] VCC 1138; AMJE v Mobil Oil Australia Pty Ltd [2016] VSC 777; Jones v Pun [2024] VCC 1167; Thurin v Krongold Constructions (Aust) Pty Ltd (2022) 407 ALR 187; Nicholas v The Queen (1998) 193 CLR 173; Citta Hobart Pty Ltd v Cawthorn (2022) 276 CLR 216; New South Wales v Kable (2013) 252 CLR 118; The Owners of the Ship “Shin Kobe Maru” v Empire Shipping Company Inc (1994) 181 CLR 404; Rost v Edwards [1990] 2 QB 460; Koga Nominees Pty Ltd v Loscam Australia Pty Ltd & Ors [2018] VSC 455; IMCC Group (Australia) Pty Ltd v CB Cold Storage Pty Ltd [2017] VSCA 178; Wellington v Norwich Union Life Insurance Society Ltd [1991] 1 VR 333; Fitzroy Dental Pty Ltd v Metropole Management Pty Ltd [2013] VSC 344; Cambridge Co-ordinates Pty Ltd v Vikings Press Pty Ltd (Retail Tenancies) [2000] VCAT 2646; Global Tiger Logistic Pty Ltd v Chapel Street Trust (Unreported, Victorian Civil and Administrative Tribunal, 24 October 2012)
Ruling:Proceeding dismissed for want of jurisdiction.
---
APPEARANCES: | Counsel | Solicitors |
| For the Plaintiff | Mr N Elias | Nathan Kuperholz Solicitor |
| For the Defendants | Mr H Watkins | Holding Redlich |
Table of Contents
Introduction
The Statement of Claim
The Defence
The application
The jurisdictional issue
When should the jurisdictional issue be determined?
Should the County Court or VCAT determine whether the County Court’s jurisdiction is excluded?
Upon what evidence should the question of jurisdiction be determined?
What must be considered by the County Court to determine jurisdiction?
Is the premises a “retail premises” under the Act?
Defendants’ submissions
Plaintiff’s submissions
Analysis
Conclusion
HER HONOUR:
Introduction
1By Writ and Statement of Claim dated 25 March 2024, the plaintiff commenced proceedings against the defendants in relation to a Lease dated 19 May 2019 (“the Lease”).
2By the Lease, the plaintiff, as landlord, leased to the first defendant as tenant, part of a property at 730 Clonbinane Road, Clonbinane, Victoria 3658 (“the premises”). The first defendant’s obligations under the Lease were guaranteed by the second defendant.
3The leased premises were described in Item 4 of the Schedule to the Lease as:
“PART PREMISES of 730 Clonbinane Road, Clonbinane 3658 (excluding main house and garden area adjoining the house and shared use of driveways and premises access).”
4The permitted use of the premises was set out in Item 15 of the Schedule as an “Equestrian Centre”.
5The application of the Retail Leases Act 2003 (Vic) (“the Act”) was also stated in Item 15 of the Schedule to the Lease to be:
“The Act does appl[y] because the premises are not retail premises as defined by the Act in that the Premises are not used or to be used wholly or predominantly for the sale or hire of goods by retail or the retail provision of services.”
6After commencement of the Lease, the first defendant operated an equine business from the non-residential parts of the property. The first defendant’s business provided services to fee-paying clients, including but not limited to:
(a) horse riding lessons;
(b) polo lessons;
(c) instructional polo;
(d) polo livery leases; and
(e) polo livery – full service (feeding, grooming and tacking up for use).
The Statement of Claim
7By the Statement of Claim, the plaintiff alleges she entered into a Lease with the first defendant.
8In breach of the Lease, the first defendant failed, or refused despite demand, to pay or reimburse the plaintiff various amounts (inclusive of GST) for rent, council rates, water rates, land tax, property insurance premiums, utilities and legal costs, alleged to be due and payable under relevant provisions of the Lease.
9The plaintiff claimed an entitlement to be paid the various amounts (inclusive of GST) for rent, council rates, water rates, land tax, property insurance premiums, utilities and legal costs.
10The plaintiff also claimed interest on each of the constituent amounts claimed from the dates they were due and payable until the date of payment.
11The plaintiff claimed costs against the first defendant and indemnity costs against the second defendant.
The Defence
12A Defence was filed on 21 November 2024 which raised, among other things, the question of whether s89 of the Act operated to exclude the proceeding from the jurisdiction of the County Court.
13The defendants admitted they executed a Lease with the plaintiff.
14They said further, the second defendant was married to the plaintiff’s daughter and was residing at the premises. The plaintiff represented to the second defendant that a formal lease was required for tax reasons. The Lease was between the plaintiff and the first defendant, who conducted an equestrian polo business from the property. The polo business employed staff who worked on the property and provided livery and training services to horses owned by the second defendant.
15The plaintiff represented to the defendants that notwithstanding the Lease, she only required the defendants to pay the rental sum of $1,000 per week including GST and she would accept the rental sum in satisfaction of all the defendants’ liabilities to the plaintiff under the Lease and other costs. The consequence was the plaintiff waived the requirement of the defendants to make payments beyond the rental sum.
16The first defendant paid the rental sum and operated the polo business as a going concern. The second defendant lived at the property with his wife – the plaintiff’s daughter – and undertook work on the property. The plaintiff accepted the rental sum payments and the contributions in respect of work undertaken by the second defendant at the property.
17The defendants allege that from 31 March 2020 to 27 October 2020, the plaintiff received COVID-19 pandemic relief payments. The plaintiff and the defendants agreed the defendants did not need to pay the rental sum.
18On 1 January 2021, the defendants agreed to resume paying the rental sum to the plaintiff and thereafter made payments until they vacated the property.
19In July 2020, the second defendant arranged for a client of his business to sub-let a part of the property and with the knowledge and consent of the plaintiff to pay a weekly rental of $450 per week in addition to the rental sum.
20In November 2022, the plaintiff’s daughter and the second defendant separated.
21On 30 November 2022, the plaintiff required the defendants to vacate the property.
22The defendants vacated the property on 31 December 2022.
23On 27 June 2023, the plaintiff sold the property.
24The defendants deny they are liable to pay or reimburse the plaintiff for the expenses claimed. They allege that items were left or abandoned on the property by the preceding owners. Many items were in poor condition. The second defendant repaired, maintained and replaced items. Other items were modified, removed or destroyed by the plaintiff, the defendants, the plaintiff’s daughter or the defendants’ employees with the plaintiff’s knowledge and consent. The defendants allege the plaintiff’s alleged expenses were unnecessary and not directed to the maintenance or repair of the premises and the plaintiff was estopped from denying the representations referred to.
25The defendants allege they incurred substantial costs and expenses in undertaking repairs and maintenance works on the property beyond what was required in the Lease for which the plaintiff accepted the benefit.
26Relevantly, the defendants further allege that by virtue of the permitted use under the Lease, the Lease as modified by the representations, was a “retail lease” within the meaning of the Act and therefore the County Court does not have jurisdiction over the dispute pursuant to s89 of the Act and the proceeding must be permanently stayed.
27The defendants allege the expenses claimed by the plaintiff were decided by the plaintiff and her daughter without the knowledge or consent of the defendants.
28Further, the defendants are entitled to set off the amount of their loss and damage against the amounts alleged to be payable to the plaintiff.
The application
29By application commenced by Summons dated 25 October 2024 (“the Application”), the defendants sought orders as follows:
“1.A declaration that pursuant to s 89(4) of the Retail Leases Act 2003 (Vic), the proceeding is not justiciable by the Court.
2.That the proceeding be dismissed for want of jurisdiction.
3.That the Plaintiff be ordered to pay the Defendants[’] costs.
4.Such further and other orders as the Court deems appropriate.”
30The application was returnable before the Court on 21 November 2024 and was opposed by the plaintiff.
31Upon the hearing of the application, there was no issue between the parties that the leased premises were used by the defendants to conduct an equine business. It was accepted the defendants provided polo lessons and other services to clients from the property, and provided some services to clients from premises other than the property.
32The principal issue to be determined on the application was whether the leased premises were “retail premises” as defined in s4(1) of the Act. If so, was the dispute arising under or in relation to a “retail premises lease” or a “retail tenancy dispute” for the purposes of s81(1)(a) of the Act such that it must be heard and determined by the Victorian Civil and Administrative Tribunal (“VCAT”) pursuant to s89(4) of the Act.
The jurisdictional issue
When should the jurisdictional issue be determined?
33The principal issue raises a question of the limits of this Court’s jurisdiction in retail lease cases.
34As best I could understand the parties’ submissions, the plaintiff submitted that the Court should determine the issue of whether the leased premises were “retail premises” first. The question of jurisdiction would then follow.
35The defendants’ contention was similar, although expressed differently. The statutory scheme for determining VCAT’s jurisdiction under the Act depended on there being “retail premises”. If there were no retail premises, the Act would not apply. Even if it were to be established that the leased premises were “retail premises”, this Court would only have to give up its jurisdiction under s89(4) if there were to be a “dispute about a retail premises lease”.
36In my view, where a jurisdictional issue is raised, as it is here, the first task of a court is to determine whether it has jurisdiction or whether jurisdiction is excluded.[1] The identification of the character of the jurisdiction being exercised by the court, whether state or federal, is a:
“fundamental question necessary to be considered in every case … .”[2]
[1]Federated Engine-Drivers’ and Firemen’s Association of Australasia v Broken Hill Pty Co Ltd (1911) 12 CLR 398 (“Broken Hill”) at 415; See also Zhang v Zemin (2010) 79 NSWLR 513; Eberstaller v Poulos (2014) 87 NSWLR 394, considered.
[2]CSL Australia Pty Ltd v Formosa (2009) 261 ALR 441 at paragraph [22] (original emphasis).
37As the New South Wales Court of Appeal (Bathurst CJ, Beazley P and Leeming JA) said in Obeid v R:[3]
“It is difficult to envisage situations where the question of jurisdiction should be deferred, especially if jurisdiction is contested.”
[3](2015) 91 NSWLR 226 at paragraph [9].
Should the County Court or VCAT determine whether the County Court’s jurisdiction is excluded?
38Consistent with these authorities, as the plaintiff submitted, the practice of Victorian Courts has been to determine jurisdictional questions in retail tenancy disputes for themselves, rather than to transfer consideration to an alternate court or tribunal.[4]
[4]WGZ Pty Ltd atf the WGZ Family Trust v Arva Investments Pty Ltd [2024] VCC 1777 (“WGZ”) at paragraph [80]; Sarina Investments Pty Ltd v Brotherhood of St Laurence [2022] VCC 935 at paragraph [14]; Ampron Australia Pty Ltd v Quan Yang Investments Pty Ltd & Ors [2016] VCC 1138 at paragraph [34]; AMJE v Mobil Oil Australia Pty Ltd [2016] VSC 777 at paragraph [123].
Upon what evidence should the question of jurisdiction be determined?
39The defendants submitted, consistent with the reasoning of his Honour Judge Wise in Jones v Pun[5] (“Jones”), that to determine the question of jurisdiction, all that was required was for the defendants to adduce evidence sufficient to satisfy the Court that the claim or defence – namely whether the leased premises were “retail premises” – was “‘genuinely in controversy’” and that it gave “‘rise to an issue capable of judicial determination’”.[6] That is, if the pleaded jurisdictional issue is genuinely in controversy, that is it is “‘genuinely raised and not incapable on its face of legal argument,’” then the consequence of s89(4) of the Act is that the proceeding is not justiciable before this Court.[7]
[5][2024] VCC 1167.
[6]Jones (ibid) at paragraph [42].
[7]Jones at paragraph [42].
40The plaintiff submitted that the Court was required to undertake a thorough consideration of the evidence.
41In Jones, his Honour Judge Wise based his reasoning on the decision of the Court of Appeal in Thurin v Krongold Constructions (Aust) Pty Ltd[8] (“Krongold”). In Krongold, the respondent introduced into a proceeding in VCAT, allegations of breach of a Commonwealth law against a third party, namely the Trade Practices Act 1974 (Cth). The Court of Appeal was asked to consider whether the introduction of the new allegations, which involved issues of federal law, meant VCAT lacked jurisdiction in respect of a law of the Federal Parliament within the meaning of s76(ii) of the Constitution.
[8](2022) 407 ALR 187.
42The respondent submitted that a claim formed part of a justiciable controversy not when the issue was formally joined between the parties in legal proceedings articulating a claim, but rather when, as a matter of fact, the claim was made between them.[9]
[9]Krongold (ibid) at paragraph [57].
43The Court of Appeal accepted that submission and held that once the federal claims were raised in respect of the third party, whether in pleadings or points of claim and without necessity for joinder, the matter the subject of the proceeding came within federal jurisdiction. There was a “matter arising under” a law of the Federal Parliament within the meaning of s76(ii) of the Constitution, and VCAT thereafter lacked jurisdiction to hear and determine it.[10] It was enough that the claim or defence was “genuinely in controversy” and that it gave “rise to an issue capable of judicial determination”; that is, it was “enough that the claim or defence be genuinely raised and not incapable on its fact of legal argument”.[11]
[10]Krongold (ibid) at paragraphs [58] and [60].
[11]Ibid at paragraph [55].
44In Jones, His Honour Judge Wise, interpreting the Court of Appeal’s reasoning in Krongold, held that if a pleaded jurisdictional issue, such as reliance on s89(4) of the Act, was “genuinely in controversy” and not “incapable on its face of legal argument”, the consequence of s89(4) of the Act was that the proceeding was not justiciable before this Court.[12]
[12]See Jones (supra) at paragraphs [43]-[44]; see also paragraphs [6] and [50].
45After the decision in Jones, this Court, in WGZ,[13] considered whether a dispute in respect of arrears of rent and outgoings under a lease of warehouse premises was a “retail tenancy dispute” such that the plaintiff’s claim was not justiciable in this Court. The application of the reasoning in Thurin was not raised in WGZ Pty Ltd.
[13]Supra.
46In Broken Hill,[14] the High Court made clear that the mode by which a court must be satisfied as to the existence of jurisdiction, may vary in different cases. In most cases, it will not be necessary for a court to make any inquiry. In some cases, it may be required, and it will be a matter for the court what evidence is received.
[14]Supra at 415-416.
47As Isaacs J said in Broken Hill, at 454:
“… What [the court] has to do at the outset is to satisfy its mind that it is not overstepping the bounds which Parliament has laid down for it.”
48Similarly, in that case, Barton J said, at 428:
“… Where the jurisdiction is disputed, adequate and careful inquiry is still the duty of the Court of first instance, just as it may become the duty of the superior Court. On the other hand, where the jurisdiction is not contested by the party defending, very slight inquiry may be adequate, and many cases will to the mind of the tribunal be so plainly within its competence that it will rightly forego inquiry unless the objection is taken, and the objector tenders proof of facts in its support.”
49The result is that each case will differ, but where jurisdiction is disputed, the court should undertake an adequate and careful inquiry to discharge its “duty” to determine the jurisdictional error.
50With that in mind, and in contrast to his Honour Judge Wise, I do not accept that it is enough for a defendant to satisfy this Court that the Court’s jurisdiction is excluded, to simply raise in its defence, or later make an application supported by minimal evidence, that the characterisation of the leased premises under s4 is “genuinely in controversy” and not “incapable on its face of legal argument”. Because the plaintiff has disputed jurisdiction, then consistent with Barton J in Broken Hill, an adequate and careful inquiry is still the duty of this Court.
51I do not accept the effect of the Court of Appeal’s decision in Krongold was intended to be so broad as found contended for by the defendants.
52First, Krongold dealt with whether the introduction of a matter arising under a law of Federal Parliament within the meaning of s76(ii) of the Constitution came within federal jurisdiction such that after the matter arose, VCAT thereafter lacked jurisdiction to hear and determine the dispute. The current matter does not deal with issues of federal jurisdiction, and it can be distinguished on that basis.
53Secondly, VCAT’s jurisdiction over certain matters is granted by Parliament. It cannot exercise jurisdiction over a matter not specified in legislation. The dispute in Krongold arose in a proceeding commenced in VCAT by two natural persons against a corporation. An apportionment claim was pleaded by way of defence against another corporation. The apportionment claim was based on the Trade Practices Act 1974 (Cth). At the time the claim based on federal law was raised, VCAT had no jurisdiction to hear and determine disputes arising under federal law. It was never vested with such jurisdiction. A matter arising under the Trade Practices Act was clearly a matter arising under federal law. There was no issue of jurisdiction to be determined.
54In contrast, the County Court starts from a position where it has jurisdiction to hear and determine all applications, claims, disputes and civil proceedings regardless of the type of relief sought or the subject matter unless excluded from its jurisdiction.[15] The conferral of jurisdiction is in broad terms. It carries with it the power for the County Court to do whatever is necessary or convenient to effect its exercise.[16] Accordingly, the County Court has “jurisdiction to decide its own jurisdiction”.[17]
[15]County Court Act 1958 (Vic), s37.
[16]Nicholas v The Queen (1998) 193 CLR 173 at paragraph [23].
[17]Citta Hobart Pty Ltd v Cawthorn (2022) 276 CLR 216 at paragraph [23] quoting New South Wales v Kable (2013) 252 CLR 118 at 133, paragraph [31].
55It is not appropriate to read provisions conferring jurisdiction to a court by making implications or imposing limitations which are not found in the express words of the statute.[18] Before the County Court’s jurisdiction is excluded, the County Court needs to consider the express words of the statute and undertake an ”adequate and careful inquiry” to determine if the preconditions for exclusion are met.
[18]The Owners of the Ship “Shin Kobe Maru” v Empire Shipping Company Inc (1994) 181 CLR 404 at paragraph [29]; Rost v Edwards [1990] 2 QB 460 at 478.
56Thirdly, if Krongold was intended to have as broad an effect as contended by the defendant, it would be contrary to what the High Court articulated in Broken Hill to the effect that the mode by which a court must be satisfied as to the existence of jurisdiction, may vary in different cases.
57Fourth, an extension of the principle in Krongold would also mean that any time a defendant wished to remove a matter from the jurisdiction of the County Court, it would be enough to contest jurisdiction on the basis of s89(4) of the Act by raising an issue by way of defence or by adducing only minimal evidence on an application to exclude jurisdiction.
58Fifth, if the correct approach to jurisdiction was this Court had to relinquish jurisdiction every time there was a genuine controversy, it would have done so in AMJE Pty Ltd v Mobil Oil Australia Pty Ltd.[19] It did not, because the correct approach was for the Court – not VCAT – to determine for itself whether jurisdiction should be retained.
[19]Supra.
59For these reasons, in my view, because a jurisdictional issue has been raised by the defendants, the first task of this Court is to determine whether it has jurisdiction or whether jurisdiction is excluded. To determine whether the County Court’s jurisdiction is excluded, the County Court is required to undertake an adequate and careful inquiry as to whether the preconditions for application of s89(4) of the Act are met. This requires a consideration of all evidence before the Court.
What must be considered by the County Court to determine jurisdiction?
60The jurisdictional question requires the Court to be satisfied that there is a “retail tenancy dispute” arising under or in relation to a “retail premises lease” as defined in s81(1) of the Act. A “retail premises lease” requires that the premises under the lease be “retail premises” which “are used” or “are to be used”, “wholly or predominantly for the sale or hire of goods by retail or the retail provision of services”, within the meaning of s4(1) of the Act. If there are no “retail premises”, then there is no “retail tenancy dispute” and s89(4) of the Act has no application.
Is the premises a “retail premises” under the Act?
61The 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).
(1A)…
(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.”
62The phrase “retail premises” is defined in s4(1) of the Act.
“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.”
63Where, as here, it was not contended that the Lease of the premises related to a specified business or a specified kind of business that the Minister had determined under s5 of the Act is a business to which paragraph 4(1)(b) of the Act applies, whether leased premises are “retail premises” depends on whether the premises are “used, or are to be used, wholly or predominantly for the sale or hire of goods by retail or for the retail provision of services”.
64To determine if the premises are “retail premises”, it is necessary to consider the nature of the premises at the time of the lease.[20]
[20]Koga Nominees Pty Ltd v Loscam Australia Pty Ltd & Ors [2018] VSC 455 at paragraph [28]; Section 7 and s11 of the Act.
65The starting point is the terms of the lease. A provision of a retail premises lease is void to the extent it is inconsistent with anything in the Act.[21] If a lease purports to exclude the Act, the relevant provision of the lease will be void.[22] Further, if the lease provides the Act applies, while not determinative, it is a relevant matter for the court to consider.[23]
[21]Section 94(1) of the Act.
[22]Section 94(2) of the Act.
[23]WGZ (supra) at paragraph [79].
66In considering whether goods or services provided from leased premises are “retail”, the relevant inquiry is as to the use of the premises.
67The phrase “the retail provision of services” is not defined in the Act. To determine whether the sale of goods or the provision of services are “retail” in nature, the dominant test utilised is the “ultimate consumer test”. That test was applied in IMCC Group (Australia) Pty Ltd v CB Cold Storage Pty Ltd[24] (“CB Cold Storage”); Wellington v Norwich Union Life Insurance Society Ltd[25] (“Wellington”) and Fitzroy Dental Pty Ltd v Metropole Management Pty Ltd[26] (“Fitzroy Dental”).
[24][2017] VSCA 178.
[25][1991] 1 VR 333 at 336.
[26][2013] VSC 344.
68In Wellington, Nathan J articulated the test in the following way:
“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.”[27]
[27]Wellington at 336.
69In addition to the “ultimate consumer test,” other factors relevant to determining whether goods or services provided from leased premises are “retail” include:
(a) whether a fee is paid;[28]
(b) whether the tenant’s business was open during normal business hours;[29]
(c) what percentage of the floorspace of the premises was used for retail purposes;[30]
(d) If the business involves the sale of good or services, the volume of sales in dollar terms;[31]
(e) whether the service is generally available to anyone willing to pay;[32]
(f) whether the premises are accessible to members of the public;[33]
(g) whether members of the public are able to book services online;[34]
(h) storage of goods at leased premises is a retail use;[35]
[28]See for example Wellington (supra); CB Cold Storage (supra) and Sarina Investments Pty Ltd v Brotherhood of St Laurence (supra).
[29]See for example CB Cold Storage (supra).
[30]WGZ (supra).
[31]Cambridge Co-ordinates Pty Ltd v Vikings Press Pty Ltd (Retail Tenancies) [2000] VCAT 2646 at paragraph [32].
[32]CB Cold Storage (supra).
[33]WGZ at paragraph [13].
[34]WGZ at paragraph [13].
[35]Global Tiger Logistic Pty Ltd v Chapel Street Trust (Unreported, Victorian Civil and Administrative Tribunal, Member Rowland, 24 October 2012).
70A business which provides services offsite may still operate from “retail premises”.[36]
[36]WGZ (supra).
71In CB Cold Storage,[37] the Court of Appeal noted that none of those features was sufficient to constitute the premises as “retail premises”, just as the absence of one or more of the features would not result in a finding the premises were not “retail premises”. All factors had to be considered together.
[37]Supra.
72Similarly, in WGZ,[38] her Honour Judge Kirton observed the authorities led her to the conclusion that –
“… the appropriate way to measure usage of a premises will depend on the circumstances of each case. In some cases it may be spatially (by floor space), in others it may be by volume of sales or income, in some it may be a combination of measures, and in others there may be some other measure not yet considered.”[39]
[38]Supra.
[39] WGZ (supra) at paragraph [59].
73If the premises are “retail premises” and there is a “retail tenancy dispute”, then s89 provides as follows:
“89 Jurisdiction of Tribunal
(1) The Tribunal has jurisdiction to hear and determine an application by any of the following persons seeking resolution of a retail tenancy dispute—
(a) a landlord or tenant under a retail premises lease;
(b) a guarantor of a tenant's obligations under a retail premises lease;
(c) a person who has given an indemnity to a landlord for loss or damage arising as a result of a breach by a tenant of a retail premises lease;
(d) a specialist retail valuer.
(2) In an application under subsection (1) for forfeiture or relief against forfeiture (whether or not for non-payment of rent), the Tribunal has the same jurisdiction, including equitable jurisdiction, and powers as the Supreme Court has in relation to proceedings for forfeiture or relief against forfeiture.
(3) The Tribunal's powers under subsection (2) are subject to section 92 (which provides that each party to the application is to bear its own costs).
(4) Subject to section 23(4) (key-money and goodwill payments prohibited), a retail tenancy dispute other than—
(a) an application for relief against forfeiture; or
(b) a claim under Part 9 (Unconscionable Conduct); or
(c) a retail tenancy dispute referred to in section 81(1A)—
is not justiciable before any other tribunal or a court or person acting judicially within the meaning of the Evidence (Miscellaneous Provisions) Act 1958.
(5) The Tribunal also has jurisdiction to hear and determine any other application that under this Act, the Retail Tenancies Reform Act 1998 or the Retail Tenancies Act 1986 may be made to the Tribunal.”
Defendants’ submissions
74The defendants contended the premises were “retail premises” because they were wholly or predominantly used for both the sale or hire of goods by retail and the retail provision of services.
75First, the Lease provided in the Schedule that the permitted use of the leased premises was as an equestrian centre. There was no restriction imposed on the use of the leased premises. Use as an equestrian centre necessarily entailed the attendance and participation of fee-paying clients at the premises. To the extent the Lease sought to exclude the operation of the Act, that part of the Lease was invalid.
76Second, in relation to the conversations as to the use of the premises before entry into the Lease, the defendants contested Ms McKenzie’s account. They submitted none of the evidence provided a purpose for the business and use of the premises other than an equine purpose. Mr Thomas’ evidence was simply that the nature of the business was not discussed.
77Third, the Lease was for a retail purpose because the intention at the time of entering into the Lease was:
(a) the plaintiff needed a business to lease the premises;
(b) the first defendant agreed to continue to operate its equestrian business from the premises, thereby reducing its outlay on alternative properties;
(c) it was always the intention that the premises be used to provide the equestrian goods and services to fee-paying customers;
(d) the defendant derived income from the business;
(e) both prior to and following the Lease, the first defendant’s business involved:
(i)use of the premises for the provision of equestrian services such as lessons and training, horse-care services (for example livery services), and horse-care facilities (for example livery leases);
(ii)staff being present onsite to conduct the first defendant’s business;
(iii)the use of the premises for the retail hire of goods, namely horses for events and competitions;
(iv)the receipt of a fee for the services at (i) and (ii) above from clients who were the “ultimate consumer” of the goods or services on the basis of an appointment system;
(v)marketing materials stated that the services, including provision of polo clinics and school holiday riding, were provided from the leased premises;
(vi)the absence of signage at the property is neither here nor there;
(vii)it did not matter that the first defendant’s business did not operate between 9.00am and 5.00pm because even facilities that were only open when booked could still constitute “retail premises”.[40]
[40]Fitzroy Dental (supra) at paragraphs [20] and [29].
78Fourth, the examples referred to by the defendants, to contend that the first defendant’s business was predominantly conducted offsite, for example a car-hire business, were a ‘red herring’ because the defendant in this instance provided services directly to customers or the ultimate consumer. In any event, delivery of goods offsite would not preclude the operation of a retail business from the leased premises. There is no necessity for the entire services of a business to be provided onsite. There must be a nexus between the business services conducted onsite at the leased premises and the activities conducted offsite, but it is artificial to try to hive off one part of the business from another. The essential part of the first defendant’s business was the use of the premises as an equestrian centre. It could not store the horses otherwise. The first defendant could not service its clients without that premises. It used the entire premises.
79Assuming the premises were not “retail premises”, s89 of the Act prescribed that only VCAT has jurisdiction to hear this proceeding as it is a “retail tenancy dispute” within the meaning in s81 of the Act.
Plaintiff’s submissions
80The plaintiff submitted the premises were not “retail premises”.
81First, the terms of the Lease do not support the contention that the premises were used wholly or predominantly for the sale or hire of goods by retail or the retail provision of services. Item 15 of the Schedule to the Lease permitted use of the leased premises as an equestrian centre; however, the proviso to Item 15 of the Schedule to the Lease, when properly construed, supported the position that the Act did not apply to the Lease because the premises were not “retail premises”. The proviso stated:
“Item 15: Permitted Use …
…The Act does appl[y] because the premises are not retail premises as defined by the Act in that the Premises are not used or to be used wholly or predominantly for the sale or hire of goods by retail or the retail provision of services.”
82The plaintiff submitted that there was a typographical error and the sentence lacked the word “not”. Accordingly, the proviso in Item 15 should read that “The Act does not apply”. The plaintiff contended that this construction made the most commercial sense, given the remainder of the sentence. In any case, if the correct construction would be to infer the word “not”, the proviso would have the effect of excluding application of the Act. In any event, should I find that the leased premises was intended to be a “retail premises”, s94 would nevertheless operate as to void the proviso as operation of the Act cannot be excluded.
83Second, the intention of the parties was not that the leased premises would be used for retail purposes. Ms McKenzie’s evidence was the plaintiff and the defendants agreed in discussions, reflected in the terms of the Lease, that the property could not be used for the services provided by the business.
84Third, the premises were not in fact used for retail purposes. Ms McKenzie accepted the principal focus of the first defendant’s business was on providing polo services. There was a small amount of agistment, but principally the first defendant’s business provided, trained and groomed horses for horse-riding lessons, polo lessons and instructional polo to fee-paying clients who wished to train for and compete in polo competitions. However, according to Ms McKenzie, neither of the two properties at Werribee South and Ceres were used to provide horse riding lessons, polo lessons or instructional polo.
85The leased premises was used for non-retail purposes, namely, to care for and to accommodate horses for use in polo games played in offsite locations away from the leased premises. This was consistent with Ms McKenzie’s evidence that there were between one and six employees who were employed on a full-time basis to attend to the care of the horses while the business was being conducted from the leased premises. Attending to the care of the horses was a necessary part of the first defendant’s business, but it was not a retail service for which the premises was being used.
86Further, although Mr Thomas set out the services the first defendant provided in his first affidavit, he made no mention of the hire of horses being part of the first defendant’s business. Even if it was, in his second affidavit, he fails to explain how the hire services were provided or how they related to the use of the leased premises. He suggested the hire of horses could have been on a pay-per-play basis.
87Fourth, even if the leased premises were used principally for “retail” purposes, they were not used “wholly or predominantly” to sell goods by retail or for the retail provision of services. In her written submissions, Ms McKenzie submitted the leased premises were not “retail premises” because they were used wholly or predominantly for agistment and, consequently, were excluded from the definition of “retail premises” by ministerial determination.[41] Reliance on that argument was abandoned at the hearing. The plaintiff contended only that a small amount of agistment was done on the property and said agistment generated only a very small proportion – $34,945.20 – of the first defendant’s business income. Her evidence was that only a very small part of the leased premises, principally the arena and office area, was used to operate the first defendant’s polo business. The time occupied by the first defendant in the provision of services at the premises was small in comparison to the time devoted by the first defendant to other activities. There was no business signage on the property. The property was not open to the public. Visitors were not permitted to freely enter and walk around the premises. Gates were locked with a pin code. There were some clients who came to the property, but for those clients, a special arrangement was made for them to access a pin code. Advertising was done entirely online. Further, all invoices were directed to an address in South Yarra.
[41]Victoria Government Gazette No S 435, Wednesday, 30 October 2019, Retail Leases Act2003, Notice of Determination of Premises Not Constituting Retail Premises, Hon. Adem Somyurek MP, Minister for Small Business: ( the plaintiff said that the first defendant’s business income was mainly derived from services performed offsite and not from the leased premises. It distinguished the decision of VCAT in Global Tiger Logistic Pty Ltd v Chapel Street Trust[42] on the basis that the first defendant’s business was not a transport company storing trucks which were used to perform logistics. It also referred to and distinguished examples such as a cattle production business where cattle were grazed and then sent to market or a car rally driving business where cars were stored and repaired and then only leased out to be driven. The first defendant’s business premises were used predominantly to care for horses. No money changed hands in respect of that activity. It was not a necessary input in a supply chain from wholesaler to consumer. It was removed from the supply of retail services and lacked a connection with the ultimate consumer.
[42]Supra.
89The plaintiff contended each of those matters tended against the predominant use of the premises being for retail purposes.
90Assuming the premises were not “retail premises”, the plaintiff submitted there was no retail tenancy dispute. As a result, s89(4) of the Act did not operate to exclude the jurisdiction of this Court.
Analysis
91Having considered the parties’ submissions, I am satisfied that the services provided were “retail services”.
(a) The permitted use under the Lease refers to an equestrian centre. On its face that is neither suggestive of a retail business or not;
(b) The proviso to Item 15 of the Schedule to the Lease, to the extent it says the Act does not apply, is not determinative. Rather, regard should be had to the intended use of the land. Both parties accepted the premises was to be used for the business, and the business involved the provision of horse-riding lessons. Parties cannot seek to exclude the operation of the Act in a lease;[43]
(c) The first defendant used the premises to operate an equestrian services business. That incorporated lessons and training for horse-riding lessons, polo lessons and instructional polo at offsite facilities and for polo competitions, horse-care services (for example livery services), and horse-care facilities (for example livery leases), and a small amount of agistment. The services were provided upon payment of a fee to members of the public. The horses which were provided for use in polo matches were accommodated at the leased premises. While they were cared for at the premises, I do not consider that precludes the premises being “retail premises”;
(d) The plaintiff relied much on the fact that many of the services were not provided directly at the premises; however, it is not the case that the entirety of the services provided by the first defendant, or the supply of goods must occur at the leased premises for the premises to be “retail premises”. On the contrary, cases such as CB Cold Storage[44] demonstrate that it is common for goods to be sold and services to be provided offsite, yet premises are still “retail premises”. Provided there is a nexus with the business being conducted, in my view, that is enough;
(e) Furthermore, it is artificial to dissect the first defendant’s business to the point that the care of the horses – a necessary part of being able to provide them for hire and use by the public – is seen as a non-retail component of the business such that the premises are not “retail premises”. Use of the leased premises was central to operation of the first defendant’s business;
(f) While it may be accepted that the business premises did not have signage or ready access for the public, those matters are not decisive. Given the limited market for provision of polo horses, this is not surprising;
(g) I do not accept that the amount of the premises used for the business was as confined as submitted by the plaintiff. Any business that involves livestock or animals will generally require a large amount of land in order to accommodate those animals. Therefore, although the polo and horse-riding lessons and administration of the business may have occurred in the arena and office respectively, the equestrian centre necessarily included the paddocks and stable areas where horses were accommodated. It would be artificial to distinguish this part of the land as not “retail” in an effort to undermine the “wholly or predominantly” aspect of the definition in s4 of the Act.
[43]Section 94 of the Act.
[44]Supra.
92I also do not accept the plaintiff’s submissions that if the first defendant only spent a short time working in the business, the business was not therefore providing retail services or goods. It is simply one factor to consider. Nevertheless, it appears from the invoices that services, including those conducted offsite, occurred throughout the year. The plaintiff submitted that the majority of total monies payable under the invoices were issued for grass polo lessons (which could not be conducted at the premises) or sponsorship retainers. As discussed above, services conducted offsite do not preclude the leased premises from being “retail premises”. Sponsorship retainers may also be necessary for the support and advancement of core services of the business.
Conclusion
93In my view, the leased premises under the Lease appropriately fits the definition of “retail premises” under s4 of the Act. Accordingly, the proceeding before the County Court can be classed as a “retail premises dispute”.
94Therefore, by virtue of s89 of the Act, the County Court is excluded from jurisdiction as the matter is only justiciable by VCAT. The proceeding is dismissed for want of jurisdiction.
95I will hear argument with respect to costs.
- - -
0
19
0