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Definition of "retail shops" and exclusion of certain retail shops

ACT

See section 12. The Act applies to "retail premises" which are premises where:

the permitted use under the lease is for "retail business" (being business involving the sale or hire of goods or the supply of services by retail); or
if there is nothing in the lease about the use, a "retail business" may be carried on under the lease for land that includes the premises, other than "large excluded premises" (being premises of more than 1,000 sqm which are leased to a listed public company or a subsidiary of a listed public company).

The Act also applies to:

premises located in the retail area of a shopping centre, other than "large excluded premises";
"small commercial premises" (being commercial premises with a lettable area of no more than 300 sqm); and
other premises (specified in section 12) including child care centres, sports centres, art galleries, gardening supply centres, premises (other than residential premises) let to unincorporated charitable bodies or to incorporated associations and premises prescribed under the Regulations.

See section 12. The Act does not apply to a lease if:

the premises are prescribed under the Regulations;
the lease is prescribed under the Regulations; or
the lease is for less than 6 months, unless it is a "continuous occupation lease"; or
the lease is a "land sublease" (being a sublease of land approved under section 308 of the Planning and Development Act 2007 (ACT) (power of crown lessee to sublet part of land) but does not include a building sublease (which is a sublease mentioned in section 307 of the Planning and Development Act 2007 (ACT) (power of lessee to sublet part of building).

Under section 10, a continuous occupation lease is a lease for premises for a term of less than 6 months if:

the tenant was in occupation of premises with the owner's consent when the lease was entered into; and
the tenant has been in continuous occupation of the premises with the owner's consent for at least 6 months.

NSW

See section 3. "Retail shop" means premises used, or proposed to be used:

wholly or predominantly for the carrying on of 1 or more businesses prescribed in section 4 and schedule 1 of the Retail Leases Regulation 2022 (NSW) (whether or not in a "RSC"); or
for the carrying on of any business in an RSC (whether or not a business is prescribed in the Act).

See sections 5-6B. The Act does not apply to:

shops that have a "lettable area" of 1,000 sqm. or more:
shops used wholly, or predominantly, for the carrying on of a business on behalf of the landlord;
any shop within the premises where the principal business carried on is a cinema, bowling alley or skating rink and the shop is operated by the person who operates the cinema, bowling alley or skating rink; or
premises used only for any one or more purposes listed as "Excluded Uses" in Schedule 1A of the Act;
premises of a class or description prescribed as exempt from the Act;
short-term retail shop leases (less than 6 months);
leases of retail shops for a term of 25 years of more; or
a retail shop that is a stall in a market, unless the market is a permanent retail market.

NT

See section 5. "Retail shop" means premises which are used wholly or predominantly for:

the sale or hire of goods by retail or the retail provision of services (whether or not in an RSC);
the carrying on of business in an RSC; or
the carrying on of business of a class or description that is prescribed by the Regulations.

An RSC is a cluster of premises:

at least 5 of which are used wholly or predominantly for the sale or hire of goods by retail or the retail provision of services;
which are either owned by the same person or if leased would have the same landlord or head landlord, or which all comprise lots within a single units plan under the Unit Titles Act or within a single unit title scheme under the Unit Titles Schemes Act;
which are either in 1 building or 2 or more buildings that are either adjoining or separated only by common areas or other areas owned by the owner of the retail shops; and
which is promoted as or generally regarded as constituting a shopping centre, shopping court, shopping mall or shopping arcade.

See sections 6-8. The Act does not apply to:

shops with a lettable area of 1,000 sqm or more;
shops used wholly or predominantly for the carrying on of a business by the tenant on behalf of the landlord;
shops within premises where the principal business is the operation of a cinema or bowling alley, and the shop is operated by the person who operates the cinema or bowling alley; or
shops leased to listed corporations, subsidiaries of listed corporations, a body corporate whose securities are listed on a financial market outside Australia and the external territories that is a member of the World Federation of Exchanges or subsidiaries of such a body corporate.

Also, the Act does not apply to:

leases for terms of less than 6 months (where there is no right for the tenant to extend the lease and is not holding over for longer than 6 months) or more than 25 years (with the term of a lease taken to include any term for which the lease may be extended or renewed by the tenant);
leases entered into before the commencement of section 7 or under an option granted or agreement made before the commencement of section 7; or
leases mentioned in section 7 that are assigned to another person after the commencement of the section or a holding over by a tenant of a lease mentioned in section 7(1)(c).

The Regulations may also exclude specific classes and description of leases.

The Regulations may also exempt a specified person, retail shop lease or retail shop or specified class of person, retail shop lease or retail shop.

Currently, the Regulations exclude airport retail shop leases, granted by Darwin International Airport Pty Ltd, Tennant Creek Airport Pty Ltd or Alice Springs Airport Pty Ltd in relation to specified property.

QLD

See section 5B. "Retail shop" means premises that are situated in an RSC or used wholly or predominately for the carrying on of a retail business (specified in the Regulations).

See section 5D. All shops in an RSC are retail shops except where there is a multi-level or multi-building RCS and the premises are not used for the carrying on of a retail business and less than 25% of the level/building is used for the carrying out of retail businesses. An RSC is a cluster of premises having all of the following attributes:

5 or more premises carrying on retail businesses as specified;
all premises owned or leased by the same landlord or within one community titles scheme;
located in the same building, adjoining buildings or buildings separated only by common areas or a road; and
the cluster of premises is promoted or generally regarded as constituting a shopping centre, shopping mall, shopping court or shopping arcade.

See section 5A. The Act does not apply to premises where the floor area is in excess of 1,000 sqm.

The Act will not apply to retail shops within the South Bank corporation area if the lease is a perpetual lease or another lease for a term (including renewal options) of at least 100 years entered into or granted by the South Bank Corporation.

Businesses run in a theme or amusement park or at a flea market including an arts and crafts market or a temporary retail store at an agricultural or trade show or a carnival, festival or cultural event or other type of premises prescribed by regulation are also excluded.

The Act also excludes leases of areas used for information, entertainment, community or leisure facilities, telecommunications equipment, an automatic teller machine, a vending machine, displaying advertisements, storage or parking in what would otherwise be the common areas of the centre.

See section 20C. The Act does not apply to service station franchises caught by the Competition and Consumer (Industry Codes - Oil Code) Regulation 2006 (Cth).

SA

See section 3. A "retail shop" is business premises (being premises at which goods are sold to the public by retail or services supplied to the public or to which the public is invited to negotiate for the supply of services) or premises classified by regulation as premises to which the Act applies.

See section 4. The Act does not apply where rent at any time exceeds the prescribed threshold of $400,000 (ex GST) per annum (as prescribed by regulation), the lease is for a term of 1 month or less or where the occupation rights arise under a sale or purchase of property, a mortgage, or a defined scheme. By virtue of the words "at any time" being introduced by the Retail and Commercial Leases (Miscellaneous) Amendment Act 2019 (SA) (Amendment Act) on 1 July 2020, the Act may apply or cease to apply during the term of the Lease depending upon the value of the rent or a change to the "prescribed threshold" under the Act. We note that the Valuer General is required to review the value of the "prescribed threshold" within two years of the Amendment Act commencing and every 5 years after that.

In addition to the above, those leases entered into after 1 July 2020 will not be subject to the Act irrespective of any changes to the "prescribed threshold" or reduction of rent if the:

rent exceeds the "prescribed threshold" at the time the lease is lodged for registration;
lease is lodged for registration within three months after it is signed;
landlord notifies the tenant of lodgement within one month of the lodgement occurring; and
lease remains registered for the term.

Tenants that are public companies (or subsidiaries of public companies), authorised deposit taking institutions, insurance companies, local councils and State or Commonwealth agencies or instrumentalities are excluded.

The Regulations exclude some classes of retail shops from the Act's application.

The Amendment Act also gives the Commissioner the ability to sign a certificate in relation to a certified exclusionary clause and also grant exemptions from all or any of the provisions of the Act. See section 20K.

TAS

See section 2. "Retail premises" means premises that are used wholly or predominantly for 1 or more of the businesses listed in the Code (Appendix C) or for any business in an RSC.

Note: The Code refers to "shopping centre", as opposed to "retail shopping centre", but the definition is essentially the same as "retail shopping centre" in the NSW Act.

The Code applies to the following in relation to retail premises with a lettable area of not more than 1,000 square metres:

a lease of, or an agreement to lease, such premises entered into on or after the commencement of the Code, regardless of where the lease or agreement to lease was entered into and despite the fact that the lease or agreement to lease purports to be governed by the law of a jurisdiction other than Tasmania;
a lease of, or an agreement to lease, such premises that was entered into before the commencement of the Code, if:
- the lease or agreement to lease is varied after that commencement; and
- the variation was not provided for by the original lease or agreement to lease;
a new lease of such premises resulting from the exercise of an option contained in a lease that was entered into before the commencement of the Code, if:
- the number of times remaining for the option to be exercised is not specified in the lease or does not decrease when the option is exercised; or
- the new lease contains a variation that was not provided for by the original lease; and
- a sublease of such premises entered into on or after the commencement of the Code.

See section 2. The Code does not apply to retail premises having a lettable area of more than 1,000 sqm. "Lettable area" is defined to mean an area measured in square metres and set out in a lease as the area for which a tenant pays rent.

The Code also does not apply to retail premises:

used wholly or predominantly for a business carried out by a tenant on behalf of the landlord; or
within premises where the principal business carried on is that of a cinema, bowling alley, skating rink, indoor cricket centre, basketball stadium, or netball centre, and the business in the retail premises is carried on by the person who operates the principal business (section 2(4)).

The Code also does not apply:

where the lease or agreement to lease was entered into before the commencement of the Code (section 2(3)(a)); or
where a lease was entered into on or after the commencement of the Code, in accordance with an agreement to lease, however the agreement to lease was entered into before the commencement of the Code (section 2(3)(c)); or
a new lease resulting from the exercise of an option contained in a lease entered into before the commencement of this Code, if:
- the number of times remaining for the option to be exercised is specified in the lease or decreases when the option is exercised; or
- the new lease contains no variation other than a variation that was provided for by the original lease (section 2(3)(d)).

VIC

See section 4. "Retail premises" means premises, not including any area intended for use as a residence, that 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.

A number of recent cases have confirmed that premises typically not considered to be retail premises can fall within the scope of operation of the Act.

See section 4. The Act does not apply to premises:

where occupancy costs are more than $1 million (exclusive of GST) per annum;
used wholly or predominately for the carrying on of a business by a tenant on behalf of the landlord as the landlord's employee or agent;
where the tenant is a listed corporation (as defined in section 9 of the Corporations Act 2001 (Cth)) or a subsidiary thereof;
where the tenant is a body corporate whose securities are listed on a stock exchange outside Australia, that is a member of the World Federation of Exchanges or a subsidiary thereof;
located above the first 3 storeys (excluding the basement) of a building (other than a retail shopping centre) where the tenant is providing retail services (not selling/hiring goods);
which are barristers chambers;
leased under a long-term lease (generally where the term is at least 15 years) where the tenant must, carry out or pay for the cost of carrying out substantial work on the premises which it is not entitled to remove at or at any time after the end of the lease;
that are located entirely within the Melbourne Markets being "market land" as defined by the Melbourne Market Authority Act 1977;
where the lease is for a term of less than 1 year and the tenant is not in possession for 1 year or more (see section 12);
leased for a rent of not more than $10,000 p.a. for certain community or charitable purposes (in respect of leases entered into after 1 January 2015);
which are local Council premises that are leased for certain community purposes (in respect of leases entered into prior to 1 January 2015; or
the tenant of which is a body corporate, company or corporation whose securities are listed on a stock exchange outside Australia (or a subsidiary of any such body corporate, company or corporation); or
which are used for certain agricultural or farming purposes for commercial gain (in respect of leases entered into after 29 October 2019).

The Supreme Court of Victoria (Richmond Football Club v Verraty [2019] VSC 597) has ruled that a lease that is a "retail premises lease" (within the meaning of section 11 of the Act) when it is entered into cannot cease to be such a lease during its term, upholding an appeal by a tenant from an earlier decision in VCAT which suggested that if any of the exceptions above do not apply at the time a lease is entered into, but subsequently apply, the lease can fall out of the operation of the Act during the term (and will fall out of the operation of the Act if occupancy costs exceed $1 million). The Court of Appeal has upheld this decision (Verraty v Richmond Football Club [2020] VSCA 267).

Izett St Pty Ltd v Applgold Pty Ltd (Building and Property) [2021] VCAT 174 provides guidance when considering whether a head lease is governed by the Act. The Tribunal held that the fact of a sublease being a retail lease does not definitively determine whether or not the head lease is also a retail lease under the Act. In this case, the head tenant's main business was to sublease parts of the premises to retail tenants. It argued that the subtenants were the ultimate consumers of the subleased space so that as a result, the head tenant was engaging in a retail supply. VCAT found for the landlord. In particular, the Tribunal found that "once the sublease is granted, the applicant is no longer able to 'use' the premises. It has given exclusive possession to a subtenant. Subletting premises is not the provision of a 'service' in the sense required by section 4. If that were the case every sublet premises could be classified as a retail premises." It is important to note in this case however, that the head tenant was not integral to operation of the subleases once granted, so that the retail activities of the subtenant could not be taken to characterise the use of the premises by the head tenant under the head lease as retail.

WA

See section 3. A "retail shop" means premises that are either:

situated in an RSC and are used wholly or predominantly for the carrying on of any business (whether or not retail); or
not situated in an RSC but are used wholly or predominately for the carrying on of a "retail business" (being a business that wholly or predominantly involves the sale of goods by retail or a business of a kind prescribed by the Regulations to be a "specified business").

As at 1 July 2017, the following types of business are classified as "specified businesses":

dry-cleaning;
hairdressing;
beauty therapy and treatments;
shoe repair (which may include key cutting and engraving); and
sale or rental of video tapes, DVDs, electronic games and other similar amusements.

An RSC means a cluster of premises:

5 or more of which are used for the carrying on of a "retail business"; and
all of which

have or upon being leased would have a common head lessor; or
comprise lots on a single strata plan under the Strata Titles Act, 1985 (WA),

but if the premises are in a building with 2 or more floor levels then the RSC includes only those levels of the building where a "retail business" is situated.

Excluded from the operation of the Act are leases entered into before 1 January 2013 - being the date when the amending Act was proclaimed ("2013 amending Act") - which would not have fallen under the Act but for the changes in definitions in the 2013 Amending Act.

See section 3. The Act does not apply to a retail shop if either:

the lettable area of the retail shop is in excess of 1,000 sqm and is not of a kind prescribed by the Regulations (currently, no shops have been prescribed); or
the tenant is either a listed corporation within the meaning of the Corporations Act 2001 (Cth) that would not be eligible to be incorporated as a proprietary company or is the subsidiary of such a listed corporation; or
the tenant is a body corporate whose securities are listed on a stock exchange outside Australia and the external territories (including the New Zealand Stock Exchange Limited) that is not otherwise exempt under the Act.; or
the lease or the tenant or the premises is a kind prescribed by the regulations as being exempt from the operation of the Act; or
a lease of premises for the purpose of the lessee operating only a vending machine or automatic teller machine on those premises.;

The answer to whether the application of the Act to a lease in WA can vary over time is currently unclear. For example, a tenant may be unlisted at commencement of the lease but become a subsidiary of a listed entity during the term. A future amendment of the Act or a judicial decision may be required to make the legal position more clear to parties.

Section 4 also allows exemptions to the Act to be prescribed for in the Regulations.

Due to the definition of "lease" in section 3 the Act continues not to apply to licences of part of the common area of an "RSC" as long as the continued use of the licensed area as part the common area is not thereby precluded.

Definitions and currency

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