Segment Woods Pty Ltd v Brockbridge Pty Ltd
[2009] VCC 1531
•11 December 2009
| IN THE COUNTY COURT OF VICTORIA | Revised |
Not Restricted
AT MELBOURNE
CIVIL DIVISION
COMMERCIAL-GENERAL DIVISION
Case No. CI-09-01865
| SEGMENT WOODS PTY LTD | Plaintiff |
| ACN 007 008 817 | |
| v | |
| BROCKBRIDGE PTY LTD | First-named Defendant |
| ACN 005 661 138 | |
| MICHAEL HENRY ROTH | Second-named Defendant |
| and | |
| JIM MENG | Third-named Defendant |
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| JUDGE: | HIS HONOUR JUDGE GINNANE |
| WHERE HELD: | Melbourne |
| DATE OF HEARING: | 22 - 23 October 2009 |
| DATE OF JUDGMENT: | 11 December 2009 |
| CASE MAY BE CITED AS: | Segment Woods Pty Ltd v Brockbridge Pty Ltd & Ors |
| MEDIUM NEUTRAL CITATION: | [2009] VCC 1531 |
REASONS FOR JUDGMENT
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Catchwords: Landlord and tenant – Lease – permitted use – office warehouse with factory direct to public sales – whether premises were retail premises – nature of tenant’s use of premises – eBay sales – whether dispute between landlord and tenant within the exclusive jurisdiction of the Victorian Civil and Administrative Tribunal – Lease expiring due to effluxion of time – Order for possession: Retail Leases Act 2003 (Vic)
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| APPEARANCES: | Counsel | Solicitors |
| For the Plaintiff | Mr J K Arthur | Cariss & Co |
| For the First and Second Defendants | Mr M Roth, the second | Neil Ogge Lawyers |
| defendant, appeared in person | ||
| HIS HONOUR: |
1 The plaintiff seek orders for possession of premises situated at 140-142 Langridge Street, Collingwood (“the premises”).
2 The main issue in these proceedings is whether the premises are retail premises as defined in the Retail Leases Act 2003 (“the Act”). If they are then the plaintiff must bring its claim against the first defendant for the possession of those parts of the premises that it occupies in the Victorian Civil and Administrative Tribunal (VCAT).
3 The plaintiff’s case is that the lease, under which the first defendant occupies part of the premises, has expired through effluxion of time and that the Court has jurisdiction to make an order for possession of premises in favour of the owner of the premises.
4 The first defendant’s Amended Defence pleads that:
“The tenancy of the First Defendant is subject to the Retail Leases Act 2003 and these proceedings have been brought in the wrong jurisdiction.”
5 On 3 September 2009, the Court ordered that the trial of the issue raised by the defence as to whether the relevant premises are retail premises pursuant to the definition in the Act and whether the County Court or VCAT has jurisdiction to determine the dispute between the parties in the proceeding. There is also before the Court a summons filed by the plaintiff on 10 August 2009 seeking, inter alia, judgment against the first and second defendants for possession of the premises pursuant to the summary judgment provisions in Rule 22.02 of the County Court Civil Procedure Rules 2008.
6 The plaintiff was represented by Mr J.K. Arthur of Counsel. Mr M Roth, the second defendant and director of the first defendant, to represent himself and I permitted him to represent the first defendant. In all respects relevant to this proceeding the first defendant acted through the second defendant.
7 The case is not pursued, at this stage, against the third defendant.
8 The parties relied on affidavits of directors of the plaintiff: Mr Rashad Aziz of 6 August 2009 and 24 September 2009 and Mrs Nahed Aziz of 24 September 2009, and on oral evidence of Simone Harms, a law clerk employed by the plaintiff’s solicitors. Mr Roth filed affidavits sworn on 7 and 21 October 2009. The Court had ordered that the evidence-in-chief of the parties on the principal issue to be tried was to be by affidavit, subject to any other direction.
9 Mr Aziz, Ms Harms and Mr Roth were cross-examined.
Applicable Legislation
10 When the lease was entered into in April 2001, the legislation applicable to retail leases was the Retail Tenancies Reform Act 1998 (the 1998 Act). The Retail Leases Act 2003 repealed the 1998 Act. Next, the Retail Leases (Amendment) Act 2005, amended the 2003 Act, and applied retrospectively from 1 May 2003. All parties contend that the Lease was renewed from 1 April 2004. All parties submit that the Act, as amended by the 2005 Act, was applicable to the determination of the principal issue. I proceed on that basis.
11 Section 4 of the Act, as amended by the 2005 Act, defines ‘retail premises’ as follows:
“(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.”
12 Section 4(2) excludes certain premises from the definition of retail premises. Those exclusions are not applicable to this case.
13 The term retail is not defined by the Act.
14 Section 89 (1) and (4) of the Act state:
“(1) The Tribunal has jurisdiction to hear and determine an application by a landlord or tenant under a retail premises lease, or by a specialist retail valuer, seeking resolution of a retail tenancy dispute. . . . (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)— is not justiciable before any other tribunal or a court or person
acting judicially within the meaning of the Evidence Act 1958.”
15 Section 81 of the Act defines the term “retail tenancy dispute” as follows:
“(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
. . .
(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.”
16 The plaintiff did not rely on s.81(2), or assert that this matter was properly characterised as a dispute solely relating to the payment of rent.
17 Section 64 of the Act deals with the requirements for the notification of the landlord’s intentions concerning renewal. Section 64(2) provides that:
“(2) The landlord must, at least 6 months but no more than 12 months
before the lease term ends, give written notice to the tenant—
(a)
offering the tenant a renewal of the lease on the terms specified in the notice (including a term setting out the rent); or
(b)
informing the tenant that the landlord does not propose to offer the tenant a renewal of the lease.”
18 Section 64(4) and (5) provide that:
“(4) If the landlord fails to comply with subsection (2)—
(a) the landlord must give the tenant a notice containing the same information as the notice the landlord was required to give under subsection (2); and (b) the lease continues (on the same terms and conditions as applied immediately before the lease term ends) until— (i) the day specified in the notice that the landlord is required to give under paragraph (a) (which must be at least 6 months after the notice is given to the tenant); or
(ii) if the tenant gives the landlord a notice under subsection (5), the day specified in that notice.
(5)
If the landlord fails to comply with subsection (2), the tenant may, whether or not the landlord has given the tenant a notice as required under subsection (4)(a), give written notice to the landlord terminating the lease from a day that is not earlier than the day on which the term of the lease expires.”
Dealings Between the Plaintiff and the First and Second Defendants
19 The plaintiff is the registered proprietor of the premises, having acquired them in February 1999.
20 The first and second defendants had previously occupied part of the premises prior to their acquisition by the plaintiff.
21 Following discussions between Mr Aziz and Mr Roth about rental and other lease issues, after the plaintiff acquired the premises, the plaintiff permitted the first and second defendants to remain in possession of the premises, subject to payment of the agreed rental and to agreement upon the remaining terms of a lease.
22 In May 1999, the plaintiff’s solicitors wrote to the first and second defendants enclosing an Agreement for Lease. That document was not signed by the defendants because of disagreements about terms of the lease. On 5 December 2000, the plaintiff served a Notice of Termination of Tenancy on the first and second defendants, and on 21 December 2000 the first defendant commenced proceedings against the plaintiff in VCAT. On 9 April 2001, the day scheduled for the hearing of the proceeding, the matter was resolved and a lease executed.
23 Thereafter the first defendant commenced further proceedings in VCAT concerning alleged breaches of the terms of settlement. They were resolved by consent orders made on 12 July 2001.
24 The term of the Lease agreed between the parties was three years, commencing on 1 April 2001. Rent was to be paid calendar monthly in advance on the first day of each month. The Lease contained an option for one further term of five years.
25 The permitted use of the premises was: “Office warehouse with factory direct to public sales”.
26 The first defendant occupied the premises pursuant to the Lease from 9 April 2001 until 1 April 2004. The plaintiff submits that it renewed the lease pursuant to its terms, following a letter of the first defendant dated 1 January 2004 which in part stated:
“We confirm our intention to exercise the lease options subject to the
terms and conditions of the lease of the aforementioned property.”
27 The plaintiff says the further term was for five years from 1 April 2004 to 31 March 2009 and that the Lease then terminated through the effluxion of time. The first defendant disputes that the Lease has expired and submits that the Lease has not been validly terminated in accordance with the provisions of the Act. However, the first defendant does not dispute that the Lease was renewed for a further term of five years – indeed it relies on the fact that such a renewal occurred. No party suggested that the letter of 1 January 2004 did not validly renew the Lease.
28 The plaintiff wrote to the first defendant on 6 November 2008 stating that:
(a) the Lease was due to expire on 1 April 2009; (b) it would not be offering a further term; and (c) it required vacant possession of the premises by that date. 29 Mr Roth states that on 13 February 2009, Mr Aziz visited him and insisted that the first defendant vacate the premises after the Lease ended on 31 March 2009 or he would have him forcibly evicted. Mr Roth told Mr Aziz in substance that the first defendant would be vacating the premises in accordance with the procedures required by s. 64 of the Act and that he would start looking for alternative accommodation after he received the notice, that is the notice required by that section.
30 The plaintiff alleges, and it is not disputed, that the first defendant and the second defendant as its director, have not quit or given up possession of the premises, but still occupy them. The plaintiff alleges that rent totalling $2,428.21 is outstanding as at 22 October 2009.
Description of the Premises
31 The premises are at the corner of Langridge and Cromwell Streets, Collingwood. They consist of a two-storey warehouse building and offices. The ground floor consists of a shop front facing Langridge Street, warehouse space and a double garage at the rear of the building facing Cromwell Street. The second storey consists of an office/showroom, kitchen storage area and toilets.
32 The first defendant occupies a downstairs warehouse area adjacent to the front foyer, the entrance part of the ground floor, which accesses the first floor of the premises, the mezzanine area and the first floor.
33 A section of the ground floor extending to the rear of the building (under the mezzanine floor) is leased to the third defendant.
Permitted Use of the Premises under Planning Law
34 The premises are zoned “Industrial 1” and require a permit for uses including: convenience shop, lighting shop, office, party supplies, restricted retail premises (other than equestrian supplies, lighting shop and party supplies); and retail premises (other than shop). Use of the property as a shop (other than an adult sex bookshop, convenience shop and restricted retail) was prohibited.
35 No permit has been issued in relation to the property.
Use of the Premises by First and Second Defendants
36 Mr Aziz’s affidavits stated that he had, during the period 2001 to 2009, attended the premises on numerous occasions, where he had often met Mr Roth, but that he had never observed any retail activity. He stated that the premises were not used at all for the sale or hire of goods by retail, or the retail provision of services, or at least not used wholly or predominantly for those purposes, but were used for a business of an importer and wholesaler of goods.
37 Mr Aziz stated that he had never seen any customers attending the premises, there were no permanent signs or banners, which might indicate retail activity was being undertaken, or a shop operated from them. He described the outward appearance of the premises as “unattractive and dowdy and not in keeping with retail activity”. On various occasions over the years Mr Roth had advised him that he was an importer of goods from China.
38 Mr Aziz exhibited to his affidavit a card for the business “N F Eye”, which was conducted by Mr Roth, the address of which was the first floor of the premises. On the back of the card, the business was described as “importers, wholesalers and distributors of licensed products”. Home-made signage, in the form of two A4 sheets of paper displaying the name “NF Eye”, were attached to the glass front of the premises.
39 Mr Aziz stated that the name N.F. EYE has been removed from ASIC’s National Names Index.
40 The plaintiff tendered a copy of the “About me” page for “NF Eye” contained on the website “ebay.com.au”. The page stated:
“NF Eye are importers and wholesalers of various products including Pro Audio and Lighting Products. Value for Money Most Items offered on eBay are ex Showroom display equipment and are offered at Trade Prices and below.
NF Eye is an Australian domiciled Company with fulfilment Centres in Australia (Melbourne), USA (California) and United Kingdom (Manchester).”
41 Under the heading “Pickups” the document stated:
“Pickups actually interfere with our regular Routine and is not offered.
Please do not ask”.
42 The plaintiff tendered photographs taken by Ms Simone Harms, a law clerk in the employ of the plaintiff’s solicitors, on an inspection of the premises on 3 September 2009. Those photographs did not feature any obvious retail activity.
43 Ms Harms inspected the premises with Ms Nahed Aziz. Subsequent to that inspection, Mrs Aziz swore an affidavit on 24 September 2009 in which she stated that the premises did not have the appearance of a shop or retail premises. The ground floor area was “dowdy, dirty and decidedly unkempt and looks decidedly unlike a shop”.
44 Mrs Aziz also stated:
“The entrance is not inviting and no attempt has been made to make it look like a shop or retail premises. There is no lighting or signage to indicate a shop or retail premises but the entrance and premises has the look of a warehouse or offices. The front entrance is simply a room with a simple steel framed staircase leading up to the first floor. At the top of the stairs is a door with a wall into the premises. Again there is no signage to indicate a shop or retail premises. …”
45 With reference to her inspection of the premises on 3 September 2009, Mrs Aziz stated:
“We walked about the premises and observed an open plan layout consisting of an office and warehouse. There was no indication that the premises were used for retail activity apart from the party hire poster at the front entrance. He showed us some party lighting equipment on the floor but there was nothing to suggest that this was being, or had been, hired. The premises were evidently being used to store a variety of equipment, including sound, lighting and other equipment.
When questioned about his use of the premises, Mr Roth said that he sometimes hired out some party equipment and even had some units hired to a nearby hotel. He refused to produce any business or financial records to show the extent of the Party Hire business he stated he carried on from the Premises.
. . .
The only indication whatsoever of anything remotely retail is an amateurish poster offering ‘Party Hire’. Apart from this there was no other indication that the premises were used for retail of any goods and services. …
Immediately inside the front of the premises … is a staircase which leads to the premises occupied by the First Defendant. … There is no indication of any retail activity either on the stairs or on the door or entrance to the upstairs premises occupied by the First Defendant.
The area described in paragraphs 8 and 9 is depicted in photos taken by Simone in my presence. Now produced and shown to me and marked ‘NA-4’ are twelve photographs showing the interior of the premises occupied by the First Defendant. As deposed above, there was no indication of any retail activity but rather of a store-room-cum warehouse.
From my observations there was no retail activity conducted by the premises by the First or Second Defendant.”
Mr Roth’s Evidence
46 Mr Michael Roth swore two affidavits, the principal one being dated 7 October 2009. In that affidavit he stated that the premises were retail premises pursuant to the definition in the Act. He stated that the first defendant retailed party and DJ lighting, both online and on the premises, and operates a DJ and party lighting hire business and conducts other business activities. These activities included, but were not limited to:
ƒ Sample evaluation
ƒ Photography
ƒ Creational supervision of artwork for online advertisements ƒ Testing and demonstration of goods offered for sale ƒ Packaging design ƒ Fielding sales calls
ƒ Pack and ship
ƒ Storage
ƒ Display
ƒ Answering Sales Emails and similar ƒ Most other activities associated with both online and offline retail
sellingƒ Direct cash and carry selling to retail buyers off the street.
47 Mr Roth stated that the first defendant was an indent importer and wholesaler of apparel accessories and manchester, distributing to retail stores Australia- wide and that the nature of its distribution and product range continually evolved. It was also a retailer of VOIP telecommunications and advertises direct to public sales, by placing advertising sandwich boards in the foyer at street level. Those signs could be seen in the photographs tendered by the plaintiff. One was under the ‘DJ and Party Lighting for Hire’ sign and the second propped up against the truss adjacent to the staircase in the foyer and clearly visible through the front door.
48 An area close to the upstairs entrance is currently used to display and store some, ready to rent, party lighting equipment. Substantial window billboards, advertising party lights for hire, were originally affixed to street-level foyer windows. The window display and advertising changes and has currently reverted to party hire equipment.
49 Direct to public auctions of DJ lighting were trialled in 2002 but discontinued. Advertising flyers and catalogues were produced to entice retail buyers to the sales.
50 A dedicated retail showroom for DJ lighting and rental equipment was established in the rear showroom in 2001 and dismantled in 2008 as the plaintiff refused to repair a leaking roof.
51 Demonstration movies of the lighting equipment were filmed in both the downstairs warehouse and in the rear showroom and were published online at and and under the user names of NFI Exports Direct, China Laser Shop and NF Eye.
52 The first defendant uses several trading names including NFI Eye, NFI Exports Direct, NFI Lighting Hire & Light Shows and others. An online search of the Yellow Pages Directory using the search parameters “NF Eye” and specifying postcode 3066 revealed five results, including under the Category of Hire - Party Equipment.
53 An online search of eBay sellers using the search parameters “nfi. exports.direct” revealed multiple results of products offered for sale by retail.
54 Mr Roth did not dispute substantially Mr Aziz’s description of the premises which I have summarised above, but said that the intended retail image had always been as a factory outlet, rather than a traditional retail store. He said that an exhibit to Mr Aziz’s affidavit demonstrated retail signage in the foyer area. He disputed that the signs referred to by Mr Aziz were homemade, but said that they demonstrated “retail activity with a factory sale vibe”. He said that there were multiple retail indicators and that the poster was not amateurish but “bestowed the vibe of a genuine factory bargain sale”.
55 He gave evidence that Mr Aziz and his daughter had purchased retail goods and hired lighting equipment from the first defendant.
56 Mr Roth responded to Mrs Aziz’s evidence by stating that she was not a qualified retail expert, but had assumed that retail activity was no more than the hiring or selling of goods in a traditional retail shop. He stated that on the day of Mrs Aziz’s visit there was ample display and demonstration of online retail activity and ancillary services. However, the business was not actually trading on the day of the inspection, because it followed a Court hearing earlier in the day. He stated that the first defendant was unable to conduct any sales on that day, as he was required to attend Court. It had foregone between $3000 and $11,000 in sales because of his presence at Court and his inability to receive retail and other sales calls.
57 Mr Roth stated that during the inspection on 3 September 2009, Mrs Aziz and her lawyers were shown the areas where Party and DJ Lighting for hire were located, the position of the previous showroom, which is now dismantled, including the holes in its roof, and also the areas used for photography and movie making, the shipping and post preparation area for online retail sales and the computer system used for online advertisement creation. Mrs Aziz and her lawyers were also shown hire catalogue sheets and a hire price list and were offered a hire catalogue. He stated that the photographs taken by Ms Harmes also contained images of retail sandwich boards offering “Engine Phone Services” and a lighting display stand. A table, which was located on the first floor on the inspection day, contained sound to lighting effects and shelving, and contained goods for retail and hire.
58 Mr Roth’s description of the business or businesses that the first defendant carried on at the premises was as follows. At the time of the commencement of the lease, the first defendant was an importer or wholesaler of apparel and accessories selling to department stores or chain retailers Australia-wide on a bulk basis. From time to time at the end of a season there were warehouse clearance sales, but that was not the primary focus. Mr Roth accepted that originally, that is, at the commencement of the lease, there was little retail activity.
59 Mr Roth said that in about 2000 to 2001, with the advent of the internet and his visits to China, the product ranges diversified. The first defendant commenced the sale of lights, initially selling Christmas lights to retailers and DJ and party lights wholesale and on a ‘cash and carry’ business. Later event sales were conducted and advertised in trade papers and in the Age. This practice was discontinued as it was unprofitable.
60 A hire business was created, which was not large, and was carried out on a cash or invoice basis in a dedicated area of the warehouse showroom.
61 In about 2003, the first defendant began trading goods on eBay. This involved online listings on eBay, publication of those listings and the development of logistics to deliver goods to consumers. All of this was carried out from the premises. Some of the eBay listings were placed in Germany where listing rates were cheaper.
62 Mr Roth produced samples of products that the first defendant had listed on eBay, including a fluorescent lantern with torch and a mini blacklight. He agreed that he did not encourage customers to attend at the premises to pick up purchases that they had made.
63 The premises were also used for photography, particularly students’ photography, in-house and movie making.
64 From about 2005, the business changed following the emergence of discount retail stores and the practice adopted by the major stores of bypassing wholesalers and obtaining their goods directly. Thereafter, the first defendant became more focused on retail activity.
65 Mr Roth, under cross-examination, accepted that there was no large signage at the premises and that it did not appear as a shop. One of the windows did state “trade only”. There was no window display or signs showing trading areas. There was no cash register. He stated that he was unaware that the premises were zoned ‘Industrial’.
66 He said that although today the business might be characterised as a “one- man show”, in that the first defendant had no employees, that had not been the case over the last three to five years.
Notice to Produce
67 The plaintiff served a Notice to Produce dated 15 October 2009 on the first defendant seeking cash register receipts, daily sales records, sales ledgers and records for alleged retail activities conducted at the premises during the last three years. Mr Roth, in an affidavit of 22 October 2009, stated that the daily cash register receipts and daily sales records were not produced. He said by way of justification, that the daily trade figures and sales ledgers were confidential, that Mr and Mrs Aziz’ son, was engaged in similar retail activity and that over 3000 separate documents would have to be produced. What Mr Roth described as “a random selection of monthly Retail Sales Summaries from one trading division only“ was produced. This consisted of four pages of figures for the months of July and August 2009 and August and September 2008. These figures provided no light on the issue for determination.
68 No documents were produced by the first defendant that demonstrated that any significant retail activity had been conducted at the premises.
Legal Submissions of the Plaintiff
69 The plaintiff submitted that the time for determining whether the lease was a lease of retail premises was when the lease was renewed and a new term created.
70 It submitted that the first and second defendants bore the onus of showing that the claim was not maintainable in this Court, that the premises were “retail premises” and that the lease was governed by the Act.[1]
[1] Onus v Alcoa of Australia Ltd (1981) 149 CLR 27, at 57; Wickstead v Browne (1992) 30 NSWLR 1, at 11
71 The plaintiff submitted that the premises were not used wholly or predominantly for retail activities. Nor were they used, or to be used, wholly or predominantly for the sale or hire of goods by retail or, the retail provision of services. Rather, they were used as a warehouse, and any retail activity was minor and incidental.
72 The plaintiff advanced a definition of the word “predominant” as :
“1 Present as the strongest or main element. 2 Having the greatest control or power.”
73 The first defendant was primarily, or initially, an importer and wholesaler of children’s apparel which wholesaled to chain retailers on a bulk basis. The “showing” area was not retail. There was very little retail activity. The business had evolved in or about 2005. Most of the floor space at the premises was warehouse space and this use was permitted without the need to obtain a permit under the planning scheme for an Industrial 1 Zone.
74 The eBay business was not retail, pickups were not encouraged and most stock was directly supplied from the wholesaler in China. The first defendant acted as a middleman for stock supplied from the wholesaler in China.
75 The light hire business was very small.
76 The plaintiff relied on the fact that no real evidence was produced in response to the Notice to Produce dated 15 October 2009 to demonstrate retail activity.
77 The plaintiff submitted that the premises bore none of the appearance of retail premises. There were no retail window displays and nothing to entice customers. The downstairs foyer was uninviting and the closed entrance doors presented a spartan appearance.
78 The plaintiff relied on the following statement by Nathan J. in Wellington v Norwich Union Life Insurance Society Ltd,[2] that one should characterise the nature of the business carried on in leased premises:
“… by taking into account the activities actually performed therein, together with those which are permitted under the terms of the lease. … Both subjective and objective criteria are applicable. The fact that a tenant may choose to operate at a wholesale level while the premises are leased as retail ones would not determine the question. The critical matters to examine are those activities actually performed and those which are permitted under the terms of the lease. This conclusion arises out of the definition section which qualifies the use of the premises in both the present and future tenses, the words are ‘premises are used or to be used’. Therefore a court must forecast or at least take into account the potential activities of a tenant in deciding whether they would amount to using the premises for conducting a retail business.”
[2] [1991] 1 VR 333, 335
79 The plaintiff submitted that the word “retail” was to be given its natural and ordinary meaning and in the case of “retail premises” referred to buildings, to which the public can resort for the purpose of having particular wants supplied and services rendered to them: See 536 Swanston Street Pty Ltd v Harbrut Pty Ltd.[3]
[3] (1988) V ConvR 54-323. The plaintiff also referred to FP Shine (Vic) Pty Ltd v Gothic Lodge Pty Ltd [1994] 1 VR 194, 198, and Sorbara v DJ and AJ McCallum Pty Ltd [1999] 2 VR 1
80 In Wellington’s Case, Nathan J. stated:
“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.”[4]
[4] (supra) at 336
81 The plaintiff relied on the requirement in clause 2.2.1 of the Lease that the tenant must not and must not let anyone else, use the premises except for the permitted use stated in item 15. The tenant also had to “comply with all laws relating to the use and occupation of premises” (Clause 2.1.13), and not use the premises for any illegal purposes”: (Clause 2.2.2).
82 The plaintiff submitted that the lease in Clauses 2.1.13 and 2.2.2, had impliedly prohibited the premises being used as retail premises. The premises were situated in an Industrial 1 Zone. Shops were prohibited, although certain types of retail premises could be carried on with a permit. No such permit had been obtained.
83 The evidence did not support the conclusion that the predominant use of the premises was “factory direct to public sales” within the meaning of the second part of the permitted use.
Legal Submissions of the First and Second Defendants
84 The first and second defendants submitted that the Act was applicable to the lease; that this was a retail tenancy dispute and that only VCAT had jurisdiction to determine it. They submitted that the Act required a lease to be in writing and that there was no lease document forwarded or offered to the tenant, nor was there any notice given under s.64 of the Act of an intention to end the tenancy. All of these matters are relevant only if the Lease is subject to the provisions of the Act.
85 Despite the contention that the lease was not in writing, the first and second defendants argued that the terms of the Lease were subject to the Act.
86 I have proceeded on the basis that the Lease was renewed pursuant to the letter referred to in paragraph 26 above.
87 Mr Roth submitted that there was no specification within the definition in the Act of retail premises as to the area involved, nor are the activities of retail defined or restricted. I understood this submission to mean that a particular part of premises, if used as retail premises, could be separately treated as retail premises. Mr Roth submitted that the use of the premises permitted under the lease was a use of the premises for retail activities.
88 Mr Roth relied on the fact that s.4 of the Act refers to activities “under the terms of the lease” and did not say “under the terms of the lease relating to” the premises.
89 Mr Roth also relied on the fact that Mr Aziz had accepted VCAT’s jurisdiction on two previous occasions in respect of disputes about the Lease and that it had been created as a result of a mediation at VCAT.
90 Mr Roth submitted that the use of the premises included as a showroom for trade and a demonstration room. Goods, including phones, were sold by retail from the premises.
91 Mr Roth adopted a definition of “retail” as an activity whereby goods were sold to an end consumer. He said that this was an accurate description of his business, or at least a predominant part of it.
92 Mr Roth submitted that part of the premises could be regarded as retail premises, provided that part was used for trade.
Consideration of the Evidence and Submissions
93 The issue for determination is whether the premises under the terms of the lease 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.
94 Having heard all the evidence for the reasons that follow, I find that the predominant use of the premises was not retail either at the commencement of the lease or at any time since.
95 First, at the time of the creation of the Lease, the primary use of the premises was for wholesale activities, involving the sale of goods to retail chains. This was wholesale activity.
96 Second, there was no evidence of any detail before me of the extent of retail activities that is now carried on at the premises. The plaintiff sought records of sales for all alleged retail activities conducted at the premises for the last three years, but they were not produced. The documents that were produced did not enable any conclusion to be drawn about the use to which the premises were put.
97 The warehouse sales direct to the public occurring at the end of the season ceased, and in any event, had never formed a large part of the activities conducted at the premises. The hiring of DJ and party lights is retail activity but was not the predominant activity.
98 Third, I take into account that much retail activity was not permitted under the planning scheme, including the conduct of a shop. In that sense, the use of the premises for retail purposes was not under the terms of the Lease.[5]
[5] State of Victoria v Tymbook Pty Ltd [2005] VSC 267
99 Fourth, I consider that the evidence does not establish that the activities associated with eBay sales, carried on at the premises, are established to be retail activity.
100 There was no particular evidence led about the operation of eBay. It was assumed by both parties that eBay is a business by which vendors, for the payment of a fee, could list goods for sale on an internet site. Some description of the nature of eBay trading activities is to be gained by the following passages quoted in the New South Wales Supreme Court decision of Smythe v Thomas:[6]
“In eBay International AG v Creative Festival Entertainment Pty Ltd (2006) Aust Contract R 90-248; [2006] FCA 1768 (a case in which eBay claimed that a condition contained on the reverse of tickets sold by Creative conveyed representations that constituted misleading and deceptive conduct on the part of Creative), Rares J described eBay as follows:
‘[4] eBay is a Swiss corporation which operates a website in Australia as well as other websites in various places in the world. eBay’s websites are part of an online global market place which the eBay group operates. Registered users of eBay websites, known as members, are able to buy and sell many types of goods and services online. eBay charges fees for sellers to advertise and offer items for sale on the eBay website. No fees are payable by buyers or bidders. Tickets to concerts and music festivals such as the Big Day Out are offered by eBay’s members to others who wish to purchase on the eBay website.
[5] A member who meets eBay’s requirements for listing items for sale can use one, or a combination, of two different formats for sale, namely an auction format or a fixed price format known as ‘buy it now’. These formats operate in the following way. In the auction format listing, the seller offers the relevant item or items, by describing it or them, setting a starting price and identifying the duration of the listing. Potential buyers or bidders search or browse the eBay website, visit the listing and place bids on the item. At the expiry of the listing the highest bidder is obliged, in accordance with the terms of eBay’s user agreement, to buy the item from the seller for the price specified in the highest bid. In the fixed price format listing, the seller offers an item or items by again describing it or them, stating the fixed price and the duration of the listing. Buyers again search or browse the eBay website. If someone is interested in buying the item, there is no bidding involved. The buyer simply clicks on a webpage button ‘buy it now’ to purchase at the fixed price. The listing then expires.’”
[6] [2007] NSWSC 844 [26]
101 I am prepared to assume that a sale by eBay may be properly characterised as a retail sale. The definition of retail premises is a wide one. The authorities suggest that it is unnecessary, in order for retail activity to occur, that there be “direct personal interface” between the retailer and customer.[7] A retail sale is a sale to an ultimate consumer, as opposed to sales to the trade for the purpose of resale. It does not include a sale to a wholesaler who proposes himself to sell the goods retail.
[7] Croft ‘Retail Tenancies’ p.50
102 However the fact that the first defendant through the second defendant places its eBay listings from premises, does not mean that the premises are used, wholly or predominantly, for the sale or hire of goods by retail.
103 There was a lack of evidence concerning the first defendant’s direct involvement in delivery of goods sold on eBay. Mr Roth performs the logistics to arrange delivery of goods ordered on eBay, but the goods are normally not collected from the premises. Mr Roth said that he did not encourage pickups from the premises. That approach is also evident in the document that describes the activities of “NF Eye”, to which I have referred above.
104 The plaintiff submitted that the eBay business was not retail, pickups were not encouraged and most stock was directly supplied from the retailer in China. I do not consider that selling goods, which appeared to be located mainly in China, or other overseas locations, through eBay to purchasers, who respond to postings on the eBay site, is to use the premises for retail activity.
105 The evidence before me was insufficient to conclude that the first defendant’s involvement in eBay sales involved a use of the premises for retail activities under the Lease. As I have stated in the last paragraph, insofar as there was any evidence on the point, it suggested that most of goods that the first defendant sold through eBay were shipped directly from China or, other overseas locations, to the purchaser. The evidence left to speculation the extent of the activities occurring at the premises associated with sales through eBay. It may have involved the activities of posting the goods on sites and what Mr Roth referred to as performance of the logistics of sending purchase orders received onto the suppliers overseas. However, there is no evidence before me on which I could be satisfied about the extent of those activities, let alone determine whether such activities were the whole or predominant use of the premises.
106 Fifth, the general appearance of the premises as shown in the photographs tendered in evidence and the description of the premises in the evidence of all of the witnesses, including Mr Roth, would be usually described as being used for retail purposes. They more resembled a cluttered warehouse/ storage area and associated office space.
107 Sixth, the fact that the parties had, on two occasions, taken disputes to VCAT, cannot determine the issue in this proceeding. Either the matter is a retail tenancy dispute, or it is not. On the previous occasions, the first defendant commenced the proceedings in VCAT and the plaintiff took no point about the jurisdiction. However, on both occasions the dispute was resolved without the need for VCAT to make any determination about its jurisdiction.
108 Seventh, I do not accept the first and second defendant’s submission that the use of a part of the premises for retail purposes has the consequence that the predominant use of the premises thereby becomes retail.
109 I have not decided this case on the basis that the first or second defendants bore any onus to show that this Court lacked jurisdiction. Rather the issue of jurisdiction having been raised by the first and second defendants, I consider it necessary to determine whether the Court does have jurisdiction in the matter. For that purpose I have considered all the evidence that was placed before me. I have reached the conclusion that the Court does have jurisdiction, because I am satisfied the premises are not retail premises.
Conclusion
110 As I have found on the evidence before me that the premises were not retail premises within the meaning of the Act, it follows that the dispute between the parties is not a retail tenancy dispute within the exclusive jurisdiction of VCAT. In my opinion, this Court has jurisdiction in this proceeding.
111 I find that the Lease of the premises by the plaintiff to the first defendant expired on 31 March 2009. I do not consider that a notice under s.64 of the Act has to be given, because the Act does not apply to this lease. It has been proved that the first defendant has refused to give possession of the premises to the plaintiff and that both the first and second defendants still occupy them.
112 The first and second defendants did not suggest that there was any other question which ought to be tried in opposition to the claim for possession, in the event that it was decided that the Court had jurisdiction in the matter. They did submit that the rent had been paid up to the date of the trial, if various “offsets” that they claimed were owing to the first defendant, were taken into account. However, as I have found that the lease has expired, the payment of even the full rent would at most permit a month to month occupancy. I do not consider that the fact that rent, less offsets determined by the first defendant, may have been paid to the date of the trial, provides a question that ought to be tried, an arguable defence or any other reason for refusing summary judgement.
113 I therefore make an order that the plaintiff is entitled to possession of the premises at 140-142 Langridge Street, Collingwood. I will here the parties as to the appropriate terms of the order bearing in mind the position of the third defendant.
114 I adjourn to a date to be fixed any claim by the plaintiff for other relief.
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