25 February 2025
4 min read
#Dispute Resolution & Litigation, #Property, Planning & Development
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A recent dispute involving an equestrian centre operating a business on leased land highlights the importance of assessing the primary use of the premises and the nature of the services provided when determining whether a lease is considered a lease of retail premises under section 4 of the Retail Leases Act 2003 (Vic) (Act).
In Horgan v Equi Ventures Pty Ltd, the County Court of Victoria (County Court) examined whether an equestrian centre’s operation on a leased premises qualified as a retail premises under the Act.
The centre (the lessee) used the premises to operate a business that included horse-riding lessons and training, polo lessons and instructional polo at offsite facilities and for polo competitions, horse-care services and facilities and some agistment. Each of these services was provided for a fee to members of the public and the services were provided on and off the leased premises.
Section 89 of the Act grants the Victorian Civil and Administrative Tribunal (VCAT) exclusive jurisdiction over disputes concerning retail leases (except for those relating to rent only). Therefore, if the lease was found to be a retail lease, the County Court would immediately stay the proceeding.
Holding Redlich, successfully acting for the lessee, established that despite some of the land being used for agistment purposes, the connection between the business of the lessee and the use of the land was sufficient for the lease to come under the Act.
In assessing whether the premises were used “wholly or predominantly for the sale or hire of goods by retail or the retail provision of services”, within the meaning of section 4(1) of the Act, Robertson J’s analysis centred on the accepted “ultimate user test”.
The judge explained that the key aspect of retailing is to provide an item or service to the “ultimate consumer” for a fee or reward. This consumer could be a member of the public, but not always. To support this conclusion, Robertson J referred to the definition of “retail” in the Macquarie Australian Dictionary, which describes it as “selling directly to the (ultimate) consumer”.
In addition to the “ultimate consumer test,” paragraph 69 of the judgement outlines other relevant factors for determining whether goods or services provided from leased premises are “retail”, these include:
A business which provides services offsite may still operate from “retail premises”.
While the premises did not have signage or ready access to the public, the County Court found that those matters were not determinative of the use being non-retail.
Her Honour found that the use was a retail use, despite some of the services being administered away from the premises. As to the predominant use of the land, the County Court stated at paragraph 91 of the judgment:
“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.”
This contrasts with the Ministerial Direction gazetted on 30 October 2019 (No.435) which excludes, amongst other things, “grazing, including agistment”.
In this case, the County Court established a connection between the use of the premises for grazing and agistment purposes and the services provided as part of the “equestrian services business” for which members of the public paid fees. Horses cared for at the premises was a necessary part of them being available for hire to the public.
The application of the ultimate consumer test remains very broad. Critically, all leases should be carefully analysed to determine the possible application of the Act. Not only will that assessment determine the appropriate jurisdiction for any dispute, it will also enable parties to consider what other claims (for example, recovery of land tax) or causes of action they may have, or risks they may bear, because of a failure to comply with other requirements of the Act.
If you have any questions or need assistance with a retail lease dispute, please get in touch with our team below.
Disclaimer
The information in this article is of a general nature and is not intended to address the circumstances of any particular individual or entity. Although we endeavour to provide accurate and timely information, we do not guarantee that the information in this article is accurate at the date it is received or that it will continue to be accurate in the future.
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