Retail Leases Act 2003 does not apply to premises above third storey
Certain retail premises are excluded from the protection and requirements of the Retail Leases Act 2003 (Act), including premises used for the retail provision of services located above the first three floors in a multi-story building[1] (Third Storey Exclusion). A recent VCAT ruling in Aqua Greenland Pty Ltd v Max Therapy School Pty Ltd (Building and Property) [2023] VCAT 449 has considered the Third Story Exclusion.
In determining what constitutes a storey in a multi-story building, basement levels are excluded. Accordingly (and confusingly), the first ‘storey’ will be the ground floor, the second ‘storey’ will be the first floor and the third ‘storey’ will be the second floor.
In this case, the premises was located on ‘Level 3’ of a building in King Street in Melbourne. The parties were in dispute, prompting the landlord to seek relief from VCAT, including an order that the tenant pay the landlord’s costs, which would otherwise be contrary to section 92 of the Act. The landlord contended that the Act would not apply as the premises was effectively located above the third storey.
VCAT found that the premises in this case was actually located on the fourth storey and therefore the Act did not apply for the following reasons:
1.The definition of ‘storey’ under the Building Code of Australia 2019 – Volume One is (emphasis added) is:
Storey means a space within a building which is situated between one floor level and the floor level next above, or if there is no floor above, the ceiling or roof above but not … a space that contains only –
a lift shaft, stairway or meter room; or
a bathroom, shower room, laundry, water closet, or other sanitary compartment; or
accommodation intended for not more than 3 vehicles; or
a combination of the above; or
a mezzanine.
2.In this case, the multi-storey building (and floor descriptors) accorded with the ‘storeys’ as follows:
2.1. Ground floor to Level 1 (eg. ground floor) is the first storey;
2.2. Level 1 to Level 2 (eg. Level 1) is the second storey;
2.3. Level 2 to Level 3 (eg. Level 2) is the third storey; and
2.4. Level 3 to Level 4 (eg. Level 3) is the fourth storey.
The Third Storey Exemption is not the only exclusion of premises and leases from the operation of the Act. It is important to obtain advice when entering into commercial leases, both as landlord and tenant, as the application of the Act to a commercial lease can have significant effects on the benefits and requirements of both parties.
If you require assistance or advice in relation to lease matters, please contact Vittoria De Stefano, Emma Buchanan or Ben Smith.
Vittoria De Stefano
Principal
M 0407 091 301 | T 03 5226 8520
E vdestefano@ha.legal
Emma Buchanan
Special Counsel
M 0498 563 248 | T 03 5226 8529
E ebuchanan@ha.legal
Ben Smith
Lawyer
T: 03 5225 5262
E: bsmith@ha.legal
[1] section 5(1)(c) of the Act and Ministerial Determination ‘Retail Premises located in a multi-story building’ which came into effect on 1 May 2003.
