Leasing and Property Newsletter – July 2017
Published on July 11, 2017
Introduction
In this edition our team report on the following topics:
1) A recent NSW Court of Appeal decision revisits the uncertainty of whether a “Heads of Agreement” is legally binding or can constitute a lease;
2) Recent tribunal cases regarding retail leases in Victoria that explore:
a) Two cases about the details and technicalities regarding the protection against lessor interference provided by retail legislation; and
b) Disagreements over valuations between parties and a prescient warning for parties to try and resolve disputes before they go to courts or tribunals.
3) An update on the appeal of a case looking at when a particular service counts as “retail” in Victoria.
The Carroll & O’Dea Leasing and Property Team
Harold R Finger & Co Pty Ltd v Karellas Investments Pty Ltd [2016] NSWCA 123
Here, the Court of Appeal held that the heads of agreement were binding, but were best characterised as an agreement to negotiate in good faith which bound the parties to enter into a formal agreement for lease and lease on the terms set out in the letter of offer if and only if agreement was finally reached.
Paul Carroll, Partner
Gallery Bar & Grill Pty Ltd v Freilich Napean Pty Ltd [2017] VCAT 720
This is a section 54 Retail Leases Act (Vic) case – compensation for interference. In this case, a landlord installed hoarding that obstructed access through a courtyard to a restaurant. The restaurant claimed compensation for disturbance – which we normally would expect to be payable. Because of the unusual circumstances of the building, this was disturbance that the landlord was entitled to cause.
Matthew Rafferty, Partner
Versus (Aus) Pty Ltd v A.N.H Nominees Pty Ltd [2017] VCAT 859Text.
This is another section 54 Retail Leases Act (Vic) case – compensation for interference. While this case had many issues, it is interesting here to see that section 54 does not give a tenant a right to terminate the lease, but only to claim compensation.
Matthew Rafferty, Partner
Dalmatino Pty Ltd v Creative Laser Pty Ltd [2017] VCAT 875
This case is interesting primarily as an example of delays and to serve as encouragement for parties to resolve their disputes without going to Courts or Tribunals. It concerns rent for a lease that commenced in 2012, and the option lease that commenced in 2015. The case was heard in February 2016, and the decision was made by the Tribunal in June 2017. The decision ordered the parties to go back and obtain new valuations of the rent from July 2012.
Matthew Rafferty, Partner
Update on “When does Retail Leasing Legislation apply in Victoria?”
We recently reported on the Supreme Court judgement in CB Cold Storage Pty Ltd v IMCC Group (Australia) Pty Ltd [2017] VSC 23 in which a large refrigerated warehouse that stored products for commercial customers was classified as “retail premises” and fell under the Retail Leases Act 2003 (Victoria) as the customers of the warehouse were classified as the “ultimate consumer”.
An appeal of this matter was heard in Victoria’s Court of Appeal where a unanimous judgment dismissed the appeal, agreeing with Croft J’s decision in the Supreme Court. Excepting a possible High Court appeal, this broad definition of “retail premises” in Victoria and the use of the “ultimate consumer” test will continue to stand.