A contract for certain catering services to be made available to staff from within your leased premises, may be a "retail shop lease" governed by the Retail Leases Act in NSW.
In the Administrative Decisions Tribunal case of Lytton v North Bondi RSL Club the tribunal decided that if the agreement between the parties granted rights of occupation for the caterer to provide goods and services, then that agreement may be a retail shop lease.
The Lytton case revolves around an RSL Club that engages a person, by way of a licence agreement, to operate a bistro or provide "food services" from within the Club's premises. Those services included "exclusive use of the kitchen".
The Club argued that the Act should not apply as the Club's premises, to which the caterer had access to, had a multitude of activities and it could not be said to be "used wholly or predominantly" as a restaurant by the caterer. In the alternative, the Club sought to argue that the caterer had "access" to a large area of the Club's premises (in excess of 1,000 metres squares anyway) and that would exclude the application of the Act.
However, the Tribunal having considered the terms of the agreement and the exclusive right granted to the caterer to occupy at least the kitchen area, the agreement constituted a retail shop lease. It was further decided that there was insufficient control over or no "constant use" of any other part of the Club's premises to constitute it as an occupier of those other parts of the Club in the sense in which that term is used in the Act.
The Tribunal was of the view that "a mere right to use or access" premises is very different from a "right of occupation" which the Act contemplates for a retail shop lease. On that basis, the caterer's right of access to other parts of the Club's premises was not a grant of a retail shop lease for those premises but ancillary to the right to occupy the kitchen premises.
In the common scenario where a tenant that occupies multiple levels of a building, engages a caterer to provide cafeteria and catering services (to essentially staff) from one of its leased floors, it would not be so extraordinary if that catering agreement was determined to be a retail shop lease – especially if it otherwise satisfied the requirements of a retail shop lease under the Act.
It is important to keep in mind the reach of the Retail Leases Act whenever you propose to allow a right of occupation to a person providing goods or services (as prescribed by the Act) regardless of who the customer may be.
Case Reference: Lytton v North Bondi RSL Club (RLD) [2012] NSW ADTAP8
The content of this article is intended to provide a general guide to the subject matter. Specialist advice should be sought about your specific circumstances.
