Subway Vault (NSW) Pty Ltd v Gogo MD Pty Ltd

Solicitors: SBA Lawyers (Respondent) File Number(s): COM 22/48012 Publication restriction: Nil

REASONS FOR DECISION

1. This is determination of the issue of jurisdiction. That issue has been set down for hearing as a separate and preliminary matter for determination.
2. The issue for determination is whether premises the subject of a lease between the parties are a "retail shop" within the applicable definition of the Retail Leases Act 1994 (NSW) (the RL Act). If they are, the proceedings involve a "retail tenancy claim" lodged by a former tenant under s 71 of the RL Act, and the Tribunal has jurisdiction. If they are not, the lease is a commercial lease to which the Tribunal has no jurisdiction under the RL Act.
3. In this decision, any reference to 'the lessee' is a reference to the applicant and any reference to 'the lessor' is a reference to the respondent.
4. The premises the subject of the dispute were at all relevant times used for the purpose of a bathhouse/sex on premises venue. The premises were not used as a brothel. Patrons paid an entry fee to use the premises and the facilities within the premises with a purpose of consensual sexual activities occurring whilst they were present on the premises. There is a factual dispute as to whether that was the predominant purpose, or object, of patrons using the facilities on the premises.
5. The premises were located in an inner-eastern suburb of Sydney. The premises were not located in a shopping centre. The local Council had given planning permission for the premises to be operated in the manner which the premises were operated, and there was no subterfuge in that regard. However, the wording of the local Council planning permission has been raised by the parties as being relevant to the issue in dispute.
6. The documents of the parties make clear that the building is a strata building. Shop 6 is Lot 6; Shop 7 is Lot 7; and Lot 4 was subdivided into Shop 4A and Shop 4B.
7. The premises were located in a multi-floor building. The applicant had, from about February 2012, operated an adult sauna and bathhouse trading under the business name 'Sydney Sauna'. That business originally operated only in Shops 6 and 7.
8. Shops 6 and 7 are not the subject of this dispute, because they involve separate leases, and the application brought by the lessee in the Tribunal is only in respect of the lease pertaining to Shop 4B.
9. Lot 6 is owned by Black Mountain Properties Pty Ltd, and was the subject of a separate lease between DVF Pty Ltd and Aspen Properties (Vic) Pty Ltd which expired in October 2020, but remained on a holding over basis until 21 June 2021, when Black Mountain Properties Pty Ltd entered into a new lease with Subway Vault (NSW) Pty Ltd. No evidence was provided by the parties as to the identity of the lessor and lessee in respect of Lot 7.
10. A report of Town Planning Group Pty Ltd dated November 2021 prepared for the purpose of a Statement of Environmental Effects to the local Council identifies the strata building as a 3 level commercial building with mezzanines. There are commercial/retail tenants at the ground floor, which has direct access to Oxford St, Sydney.
11. Sydney Sauna originally operated at the first floor level in Lot 7, and upper ground floor (Lot 6). There was a doorway with stairs to Oxford St from Lot 7. Lot 4 had been divided into two parts. An internal staircase had been added at the rear of the site, allowing access from Shop 4B to Lot 6/Shop 6, and vice versa.
12. On 1 November 2020, the parties entered into a written lease in respect of Shop 4B which is located immediately below Lot 6/Shop 6. The lease was for a fixed term of 2 years; with 4 consecutive options to renew of 5 years duration.
13. The lease which is the subject of this dispute ended on 31 October 2022 and the lessee has vacated the premises.
14. On 28 October 2022, the applicant filed proceedings in the Tribunal seeking damages of $190,281.32 and various declarations. Damages were sought for matters including: 1. The costs of fitting out and dividing Shop 4 into two separate premises (Shop 4A and Shop 4B). 2. Unreasonably refusing to consent to the assignment of the lease to a proposed purchaser of the Sydney Sauna business in respect of Lots 4B; 6; and 7. By reason of the lessor's alleged conduct in failing to renew the lease and "increased rent demands" the purchaser of the business demanded the sale price be reduced by $50,000 and not involve Lot 4B. The lessee asserts that it had no choice but to accept the revised offer. 3. Reimbursement of rent between 19 May 2022 and 31 October 2022.
15. Cause of actions were pleaded that included unconscionable conduct and breach of contract (including repudiation of the lease).
16. The application also sought various declarations, including that the lessor had "repudiated the lease;" a make good by the lessee was "not required" and the October 2022 rent paid by the lessee into a Solicitors trust account be refunded.
17. On 20 December 2022, the proceedings were listed for a directions hearing at the Tribunal. The lessor asserted that the Tribunal had no jurisdiction to hear and determine the matter because the lease the subject of the dispute was not a retail lease.
18. The Tribunal set the matter down for a hearing on the issue of jurisdiction, and made procedural directions for the parties to file and serve documents and written submissions on the issue of jurisdiction. The timetable for the filing and serving of documents and submissions was extended. The parties complied with the amended procedural directions.
19. The matter was listed for an oral hearing on the issue of jurisdiction on 14 March 2023. Mr Bennett of Counsel appeared for the applicant. Mr Blanks, Solicitor, appeared for the respondent. Neither party had required the other party's witnesses for cross examination; nor objected to the other party's evidentiary materials. Both parties evidence in a documentary form was admitted subject to weight and relevance.
20. In essence, the hearing on 14 March 2023 comprised of the oral submissions of the parties to supplement their respective written submissions.

Applicant

1. The applicant relied upon an affidavit of its director, Mr Ritchie, dated 1 February 2023. Mr Ritchie is also the guarantor of the lease. The documents annexed to the affidavit of Mr Ritchie were: 1. Copy of the written lease and guarantee. 2. Development Approval of local Council dated 11 April 2013 (D/2013/211). 3. Development Approval of local Council dated 14 April 2016 (D/2016/124). 4. Undated photographs of "the premises," being the premises at Shop 7; Shop 6; and Shop 4B. 5. Promotional materials/advertisements for various parties/events at Sydney Sauna. Most of those materials did not have the year identified, but one referred to the 2015 Sydney Gay and Lesbian Mardi Gras. 6. An undated Food Menu. 7. An undated Drinks Menu. 8. An undated Alcohol Price List 9. An employment 'Sexual Services Policy" setting out prohibited conduct by employees. That document is headed "Subway Vault (NSW) Pty Ltd; Subway Vault Pty Ltd." The "date created" is identified as "7 September 2016" and the "review date" is identified as "6 September 2017". The document prohibits employees from fraternising with, or performing sexual services with, patrons.
2. The applicant also relied on a second affidavit from Mr Ritchie dated 3 March 2023.
3. The applicant filed and served written submissions in chief dated 31 January 2023; and submissions in reply dated 6 March 2023.

Respondent

1. The respondent relied on an affidavit from Mr Palumbo, director, dated 27 February 2023. The documents annexed to that affidavit were: 1. Copy of registered strata plan for the building. 2. Plan of the ground floor, including plan to sub-divide Lot 4 into "Lot 4A" and "Lot 4B". 3. Lease for Shop 6 between Black Mountain Properties Pty Ltd (lessor) and DFV Pty Ltd and Aspen Properties (Vic) Pty Ltd (lessee). 4. Lease for Shop 6 between Black Mountain Properties Pty Ltd (lessor) and Subway Vault (NSW) Pty Ltd. 5. Plans for Lots 4, 6 and 7 which Mr Palumbo asserts the lessee provided to the lessor in late April or early May 2021. 6. Report of Town Planning Group "Statement of Environmental Effects-Change of use of rear ground floor are for a sex on premises venue" dated November 2021. Mr Palumbo asserts this report was provided by the lessee and he approved the document being submitted to the local Council as part of a Development Application involving Lot 4. 7. Development Consent of local Council (with commencement deferred subject to compliance with conditions) dated 16 March 2022. The approved development was "Alterations to existing restricted premises (sex on premises venue) to be expanded to the new lower ground floor of Lot 4".
2. The respondent also relied upon an affidavit of its Solicitor Mr Blanks dated 27 February 2023. That affidavit annexed Section 4 of the local Council "Sydney Development Control Plan 2012". Relevantly, that part of the Plan contains (at Cl. 4.4.6) the definitions for the City of Sydney Sex Industry and Adult Entertainment Premises, including "Adult entertainment premises;" "Brothel" and "Sex on premises venue."

Terms of the Lease

1. The lease between the parties commencing on 1 November 2020 is headed "Commercial Lease" rather than "Retail Lease". The heading "Commercial Lease" is used on the first page of the document; on the first page of Part 1 of the document; and on the first page of Part B of the document.
2. The permitted use identified at Item 17 (pertaining specifically to cl. 6.1) is "Recreation Centre". Clause 6.1.1 states the lessee must "use the property for the purpose stated in item 17 in the schedule and not for any other purpose".
3. The lease does not define the descriptive phrase "Recreation Centre."

Affidavit of Mr Ritchie dated 1 February 2023

1. The majority of Mr Ritchie's affidavit refers to the nature of the business operated by Sydney Sauna.
2. However, the affidavit does not clearly delineate between the services and facilities in Lots 6 and 7; and the services and facilities in Lot 4B.
3. Mr Ritchie states that "via the applicant company" he owned and operated the business Sydney Sauna between approximately February 2012 until September 2022.
4. Sydney Sauna is identified as an "adult sauna or bathhouse targeted towards the entertainment of same sex attracted men, which has planning permission to allow customers to have sexual encounters on the premises."
5. At paragraph 8, Mr Ritchie identifies the "facilities for our customers to use for their own amusement and entertainment". Those facilities include: 1. Sauna. 2. Spa. 3. Cinema rooms (one showing adult movies; the other mainstream non-adult movies). 4. Adult toy sales and hire. 5. Internet café. 6. Café. 7. Board games (no additional charge). 8. "Cabins" (being small lockable rooms). 9. Rentable private rooms with beds
6. Mr Ritchie states that the premises also hosted "regular theme nights, events or parties" including drag shows and guest DJs.
7. At paragraphs 13 and 14, Mr Ritchie states that Sydney Sauna also "hires and/or sells" various items pertaining to sexual activities; and "also operates a café offering customers a range of food, non-alcoholic drinks and within the last year has also introduced alcoholic drinks".
8. Mr Ritchie states at paragraph 16 that customers of Sydney Sauna would spend "an average of 2 to 3 half-hours (sic) enjoying the facilities on a normal day/evening" and "an average of between 5 to 7 hours during a special event or party". Some customers would spend "their entire day within the premises utilising the facilities, having refreshments at the café and socialising."
9. At paragraph 17, Mr Ritchie states that the premises are "not a brothel" and that persons who attend the premises are not obligated to engage in sexual activities on the premises, but can do so if they choose. Mr Ritchie further states the premises is not a "nightclub" because alcohol sales are only incidental to the business and sales are limited to "a small area in Lot 7". The first liquor licence was granted in mid-2022.
10. At paragraphs 18-19, Mr Ritchie refers to an art collection on the premises, and asserts that "people would pay entrance to the business simply to view the collection".
11. At paragraphs 21-23 Mr Ritchie refers to various interactions with the director of the respondent and asserts there had never been any "misunderstanding" between the parties as to the "true nature of the business".
12. At paragraph 24 Mr Ritchie asserts as follows: …it would be incorrect for any person to suggest or conclude that the business is only a place for people to engage in sexual encounters based solely on the town planning designation, rather (sic), the business provides facilities and services for customers to be entertained and amused whilst having the option to also engage in sexual activities if they choose and consent.

Terms of Development Consent 11 April 2013

1. The approved development is identified as "internal reconfiguration of existing bath house/sex on premises venue." Clause 11 of the conditions sets out a variety of conditions applicable to "Management and Operation of Sex on Premises Venue".

Terms of Development Consent 14 April 2016

1. The approved development is identified as "alterations to existing mezzanine level for extension of first floor sex on premises venue including internal fit out." Clause 6 of the conditions sets out the same "Management and Operation of a Sex on Premises Venue" as was set out in the previous development consent.

Affidavit of Mr Ritchie dated 3 March 2023

1. Mr Ritchie briefly asserts that he had "made enquiries" and after "consulting with" ACON Health Limited, who "represent sex on premises venues in NSW" he believe that there are "9 venues in NSW which have the planning designation Sex on Premises". Of those venues, Mr Ritchie asserts that "Sydney Sauna and 3 other venues are of a similar nature" and "5 other venues are more akin to a sex shop with sex on premises approval".

Affidavit of Mr Palumbo dated 27 February 2023

1. Mr Palumbo is the sole director of the respondent.
2. Mr Palumbo states that the respondent became the registered proprietor of Lot 4 in May 2020, and the rear part of Lot 4 is "a half-level below" the front part of Lot 4. The respondent leased the front part of Lot 4 and the rear part of Lot 4 separately. As discussed previously, Lot 4 is below Lot 6. Lot 6 is owned by Black Mountain Properties Pty Ltd, of which Mr Palumbo is a director.
3. In late April or early May 2021 the applicant provided Mr Palumbo with plans for Lots 4, 6 and 7. A copy of the plans are attached to the affidavit.
4. In about November 2021, the applicant provided to Mr Palumbo the report "Statement of Environmental Effects-Change of Use of Rear Ground Floor Area for a Sex on Premises Venue" that has been referred to previously. Mr Palumbo approved that document being submitted to the local Council as part of a development application concerning Lot 4.
5. On 1 April 2022, the local Council gave a Development Consent in respect of Lot 4. A copy of the Development Consent is attached to Mr Palumbo's affidavit.
6. Mr Palumbo asserts (at paragraph 11) that he has observed the interior of Lot 4 and attaches photographs of that area. He asserts there is no café in Lot 4; nor "are any items of the kind referred to in paragraph 13 of (Mr) Ritchie's affidavit, or any other kind", are sold or hired".

Report of Town Planning Group Pty Ltd-Statement of Environmental Effects Change of Use of Rear Ground Floor Area for a Sex on Premises Venue November 2021

1. The report was prepared as part of a Development Application pertaining to Lot 4. The report refers to the proposal as follows: The application proposes a change of use of rear lower ground floor area of Lot 4 to bathhouse/sex on premises venue in association with Lot 7 and Lot 6. … The proposed expansion of the premises has been reviewed to ensure that the development provides for no visible expansion of the site from the outside of the building. An internal staircase has been added at the rear of the site, which will allow access from Lot 6 to the below level of Lot 4. Lot 4 has been split into two parts, with the street front part, maintaining its use as a retail tenancy of approximately 90 sqm and the rear part converting to a separate tenancy for the sex on premises venue of 170 sqm. Within the retail tenancy at the front, a new sink and toilet facility has been provided, with a separate fire escape door to the eastern access hall of the strata building which leads to the …Street exit. The expanded sex on premises facility, as noted includes a new staircase leading from the above Lot 6, and have an open area space, private room, sling rooms and two toilet/shower facilities. A fire escape door leads to the access hall within the strata building and one to fire escape staircase. There will be no access to the carriageway (…Street) elevation. Tenancy 4 for the shopfront will continue access by the frontage on … Street. This shop front will maintain its current retail use. …. CONCLUSION The proposed change of use of rear lower ground floor area to bathhouse/sex on premises venue, are appropriate to the site when reviewed in consideration of the Sydney LEP and Sydney DCP. The proposed extension to Sydney Sauna will not affect the amenity of nearby businesses, residents or visitors. The extension will be unnoticeable from any external viewpoint and will be managed in accordance with the existing Plan of Management. The internal walls separate the retail tenancy at the front of the ground floor, and the front tenancy of Lot 4, will maintain its retail use. Sydney Sauna plays an important role in the GLTBI community as a venue for men to meet and socialise, in a safe place and free from the fear of violence with an ongoing safe sex message. The expansion of the facility will better accommodate the needs of the patrons in a modern environment. The design has taken into consideration its context and site constraints and provides a response that should be supported.

Development Approval dated 16 March 2022

1. On 16 March 2022, the local Council approved the development application subject to conditions.
2. The development approval is in respect of "Alterations to existing restricted premises (sex on premises venue) to be expanded to the rear lower ground floor of Lot 4".
3. The applicable conditions are set out in Schedules 1 and 2. Schedule 1 involves the works (in particular, the windows) and that the approval is subject to the Council issuing a Building Information Certificate. Schedule 2 sets out the works are to comply with various legislative provisions.
4. The "approved use" of the premises is set out as follows: (3) APPROVED USE The premises may only be used for the purpose of a Restricted Premises as defined in Sydney Local Environment Plan 2012, and specifically as sex on premises venue as defined in Sydney Development Control Plan 2012 with an ancillary licensed café. A restricted premises is defined in the Sydney LEP 2012 as follows: Restricted premises means premises that, due to their nature, restrict access to patrons or customers over 18 years of age, and includes shops and similar premises but does not include a pub, hotel, or motel accommodation, home occupation (sex services) or sex services premises. A sex on premises venue is defined in the Sydney DCP 2012 as follows: Sex on premises venue means a premises that gains income from an entrance or membership fee paid to use the premises for sex between the clients but are not premises where sex services takes place, or are arranged in exchange for payment. Sex on premises venues include swingers clubs and sauna clubs that accommodate sexual encounters.

Affidavit of Mr Blanks dated 27 February 2023

1. The affidavit of Mr Blanks simply annexes a relevant extract of the Sydney Development Control Plan 2012.

CONSIDERATON

1. The Tribunal only has jurisdiction if legislation empowers it to hear and determine a dispute. Part 8 Division 3 of the RL Act contains the relevant powers of the Tribunal to hear and determine retail lease disputes.
2. The Tribunal has jurisdiction (subject to limitation periods; and leases to which the RL Act does not apply under ss 5, 6, 6A and 6B of the RL Act) to hear and determine a "retail tenancy claim" by a "party or former party to a retail shop lease" (ss 71 and 72 of the RL Act).
3. There was no submission made by the lessee that the premises the subject of this dispute fall within the definition of "retail shopping centre" in s 3 of the RL Act (which includes a cluster of premises where at least 5 of the premises are used wholly or predominantly for the carrying on of one or more of the types of businesses set out in Sch. 1; and premises located in one building or in 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). In any event, the evidence provided by the lessee does not establish that the premises the subject of the lease between the parties falls within the definition of "retail shopping centre."
4. Section 70 of the RL Act defines "retail tenancy claim" as follows: 70 Definitions In this Division - retail tenancy claim means any of the following - (a) a claim in connection with a liability or obligation with which a retail tenancy dispute is concerned, being - (i) a claim for payment of money (whether or not stated to be by way of debt, damages, restitution or refund), (ii) a claim for relief from payment of a specified sum of money, (iii) a claim for the doing of specified work or the provision of specified services, (iv) a claim for the surrender of possession of specified premises, (v) a claim for assignment of rights under a lease or for a declaration that a lessor is not entitled to withhold consent to an assignment of the rights of a lessee, (vi) a claim for relief against forfeiture, (vii) a claim for the rectification of the lease or the lessor's disclosure statement, (viii) a claim regarding the invalidity of a lease for inconsistency with this Act or the regulations, (ix) a claim for a declaration of the rights, obligations and liabilities of the parties under a lease, (x) without limiting the generality of subparagraph (i), a claim for compensation under section 10, 34, 35 or 62E, (xi) without limiting the generality of any other subparagraph, a claim with respect to the entitlement of a party or former party under a lease to receive payment of the whole or a part of a security bond, (b), (c) (Repealed) (d) an application by a specialist retail valuer under section 31 (3) (including as applied by section 32A), (e) a claim against a specialist retail valuer under section 31A (3) (including as applied under section 32A) for compensation for loss or damage suffered as a consequence of the use or communication or divulging of information. unconscionable conduct claim means a claim for relief under section 62B.
5. "Retail shop" is defined in s 3 of the RL Act as follows: retail shop means premises that - (a) are used, or proposed to be used, wholly or predominantly for the carrying on of one or more of the businesses prescribed for the purposes of this paragraph (whether or not in a retail shopping centre), or (b) are used, or proposed to be used, for the carrying on of any business (whether or not a business prescribed for the purposes of paragraph (a)) in a retail shopping centre.
6. By reason of Reg 4 of the Retail Lease Regulation 2022 (NSW) (RL Regulation) the businesses identified in Sch. 1 of the RL Regulation are "prescribed" under s 3 of the RL Act.
7. Sch. 1 of the RL Regulation is, in substance, the same as the former Sch. 1 of the RL Act.
8. The type of business identified by the lessee as attracting jurisdiction of the Tribunal under the RL Act are as follows: Adult books and toy shops … Amusement and entertainment services … Coffee, tea and other non-alcoholic beverage shops … Internet café … Knick-knack shops and novelty shops … Lingerie shops … Shops selling or engaging in provided any one or more of the following goods or services in relation to any person-(a) accessories…(e) clothing, (g) underwear. … Shops selling or renting any one or more of the following goods-(f) CD's, (g) DVDs, (h) other similar products … Underwear shops …
9. In determining whether premises are a "retail shop" the starting point is the decision of Barrett J in Moweno v Stratis [2002] NSWSC 1151 (Moweno). At paragraphs [9]-[11] and [25]-[31], the Court stated that, as with interpretation of any written contract, the task involves an objective analysis of the terms of the agreement. If the permitted or agreed use of the premises clearly identifies premises set out in Sch. 1 of the RL Regulation (formerly Sch. 1 of the RL Act), then consideration of whether the actual use of the premises is "wholly or predominantly" for the purpose of carrying on such a business is usually unnecessary. Proceeding direct to examination of the "actual use" of the premises is not "the primary matter to be investigated."
10. However, if it is suggested that the parties written agreement did not reflect the actual bargain struck; or the parties subsequently mutually changed their intention to form a new and different mutual intention; or if there is waiver or estoppel; or if the lease definition of the use of the premises is uncertain, consideration of the actual use of the premises is required.
11. In Moweno, the central issue was whether a lease was a "retail shop lease" in circumstances where the permitted use identified in the (varied) lease was "as a licensed restaurant with ancillary Function and Reception facilities." Sch. 1 of the RL Act identified a retail shop as including "restaurants…and other eating places", but not function or reception centres. There was no factual dispute that the business in Moweno catered mainly for wedding receptions; parties and other functions but contained a restaurant and advertised itself as a restaurant (Moweno at para [25]).
12. At paragraph [30] of Moweno, Barrett J stated: 30 There can be no doubt, as I see it, that the agreed use defined by the combination of the description "a licensed restaurant with ancillary Function and Reception facilities" and the development consent compliance clause is a use "predominantly for the carrying on of" the business of a "restaurant". The fact that the aspect involving "Function and Reception facilities" is declared by the parties to be "ancillary" means, of necessity, that the "restaurant" aspect ("restaurant" being the word used in both Schedule 1 to the Act and the parties' document) is agreed by them to be "predominant". There is no reason to think that "restaurant" does not have the same meaning in both the variation of lease and Schedule 1 to the Act. It follows that, whatever may have been the status of the lease in its original form, the agreement between the parties as it now stands (that is, since the variation of January 1999 which evidenced the parties' new agreement as to use) is a "retail shop lease" as defined by the Act.
13. In other words, as the terms of lease contained a mutual agreement of the parties that the predominant use of the premises was as a restaurant that had ancillary function and reception facilities, it was unnecessary to consider whether the actual predominant use of the premises was as a restaurant or as a reception/function centre. By the terms of the lease, the premises were predominantly used as a restaurant and there was no basis to depart from the terms of the lease.
14. The NSW Court of Appeal approved this approach on appeal: Moweno Pty Ltd v Stratis Promotions Pty Ltd [2003] NSWCA 376.
15. The principle in Moweno has been applied by the Tribunal and its predecessors regularly. The Appeal Panel of the Tribunal in Hanave Pty Ltd v Wine Nomad Pty Ltd; Wine Nomad Pty Ltd v Hanave Pty Ltd [2022] NSWCATAP 153 (Hanave) stated with approval at [126]: In Doula Spirit Pty Ltd v Andrew Argyrou [2014] NSWCATCD 251, the Tribunal said on the question of jurisdiction: 35 Some of the issues arising for determination in this application have recently been considered by the Tribunal in Honings Bakery Pty. Ltd. v Cerialis Pty. Ltd [2014] NSWCATCD 87. In that case Senior Member Bluth reviewed the cases relevant to the approach to be taken in determining jurisdiction of the Tribunal and referred to Wood and Wilson v Bergman [2003] NSWADT 82 and Moweno Pty. Ltd. v Stratis Promotions Pty Ltd [2002] NSWSC 1151 approved in the Court of Appeal in [2003] NSWCA 376. The Senior Member said, in summary, that the correct approach is: 1. Firstly, one looks at the lease to see what is the permitted or agreed use of the premises, 2. If the agreement clearly defines what the use of the premises is to be, then the question as to whether or not the premises are a "retail shop" under s 3 of the Act will be determined by whether or not that use appears within Schedule 1, 3. If the permitted or agreed use is not clear or is uncertain, or the use covers a number of different types of businesses some of which are, or may be, within Schedule 1 described businesses, then an analysis is required of the actual use(s) of the premises to determine whether the predominant uses(s) fall within one or more of the businesses prescribed in Schedule 1.
16. The Appeal Panel in Hanave (at [127]-[128]) referred to the principles in Moweno in the context of an issue that arose in that matter (which involved whether an area adjacent to a retail shop and the subject of a licence between the parties formed part of the retail shop premises). This part of the decision in Hanave was not overturned on appeal to the Supreme Court (the successful appeal involving a separate issue regarding expert valuation of market rent:
17. In Robin Raju & Associates Pty Ltd v Kaplan Investments Pty Ltd [2021] NSWCATACD 90 (Raju), the Tribunal applied the test set out Honings Bakery Pty Ltd v Cerialis [2014] NSWCATCD 87 (Cerialis) at [37]. In that matter, the permitted use under the terms of the lease was "Function centre before 4 pm and Function Centre/Restaurant after 4 pm only".
18. In Raju, the terms of the lease were different to those in Moweno. In Moweno, the parties had agreed that the premises were predominantly for use as a restaurant, and there was no factual dispute that restaurant activities occurred on the premises. In Raju, there was reference to both "Function Centre" and "Restaurant" but no reference to one type of use being predominant (or ancillary).
19. The Tribunal found that the matter fell within the third category in Cerialis, because there were different permitted uses only one of which fell within Sch. 1. The Tribunal then determined on the facts of the particular case that the predominant use of the premises was as a Function Centre, which did not fall within any of the types of businesses set out in Sch. 1.
20. In Dee-Tech Pty Ltd v Neddam Holdings Pty Ltd [2012] NSWSC 251; (2012) 16 BPR 31,089, White J applied the principles in Moweno, in circumstances where a varied lease contained some types of business that fell within Sch. 1; and another type of business that did not (a commercial laundry). The Court found the commercial laundry business was the "principal or predominant business" at stated at para [46]-[47]: I infer that the commercial laundry business is the principal or predominant business carried on upon the site. I infer that in 2002 when the variation of lease was entered into the parties then expected that the commercial laundry business, once established, would be the principal or predominant business. The plaintiffs have not discharged the onus that lies on them of showing that the premises were proposed to be used predominantly for the carrying on of a prescribed business. Accordingly, the Retail Leases Act does not apply.
21. In Diamond Certification Laboratories Pty Ltd v the Trust Company Ltd [2015] NSWCATCD 122 (Diamond Certification) the Tribunal (comprised of two Principal Members) appeared to take a different approach to Moweno and Cerialis, despite citing both decisions at [35]. The Tribunal distinguished Moweno on its facts, and without any detailed discussion of the principles set out in Moweno and Cerialis, stated at para [37]: The critical question is, irrespective of the nominated permissible use as contained in the lease, whether the operation of the Act results in the conclusion that, at law, for the purpose of the issue to be now determined, the business actually conducted is that of a shop, as defined in s 3 of the Act.
22. In Diamond Traders, the Tribunal found that, on the evidence, the premises were not being wholly or predominantly used as a "retail shop" within the RL Act definition. The business was involved in the purchasing of gold items. However, one of the matters that was taken into account (at para [38] (1)) in reaching this conclusion was that the permitted use of the premises as defined in the lease was "commercial offices" and that under the terms of the lease the lessee was required to use the premises for the permitted use only.
23. The Tribunal stated at para [38]: The facts weigh heavily in favour of the conclusion that the subject premises constitute a business, rather than a retail shop, as defined in the dictionary for the following reasons: (1) The permissible use of the subject premises was "commercial offices." Further, by cl.6 of the Lease, DCLA was required to use the premises for the permitted use only; (2) The subject premises were not configured as a conventional shop. No shop front existed, only a glass entry door which was opened after activation of a doorbell. Access was therefore restricted to a reception area, through which access was by another door to the operational area of the business. (3) The solicitor for the landlord, Mr A Stephen Phillip Pallavicini, in his affidavit sworn 22 July 2015, describes his visit to the subject premises whilst DCLA was occupying them: "I recall that to gain entry into the Premises, one had to ring the doorbell on the outside of the door. I recall that as I walked through the entrance, the Premises were shaped like a horse shoe and the reception area was on the right hand side with a counter. I recall that after going through an entrance way past reception, on the left hand side of the Premises, was a work area where people sat at desks with computers. There was some equipment on some desks and although I cannot now recall who said these words, I do recall that a person inside of the Premises said to me to the following effect: 'Those machines are for weighing gold.' I also recall there was a television and a water cooler and in the middle of the Premises, there was a conference table. I did not see any products or items for sale displayed anywhere in the Premises." (4) The business involved the purchase of merchandise. However, the evidence of retail sales is virtually non-existent; (5) The landlord had actively promoted the business by placing advertising signs in the retail area of Piccadilly Plaza. Pillar signage and Atrium signage in Piccadilly Plaza referred to the business as one engaged in the purchase and buying gold items, bullion, gold jewellery; Further, the landlord has, by virtue of the electronic directory, by allowing or arranging for promotional signage and by its promotion for Piccadilly Plaza in pamphlets promoted the business of DCLA. (6) Despite such promotion, no such advertising refers to the business of DCLA as "a shop." All of the landlord's promotion of DCLA was consistent with promotion of DCLA's business. None of the material relied upon can be relied upon as promotion of a "shop." (7) The layout of the subject premises does not accord with the layout and presentation of a retail shop. (8) There is no real evidence of retail sales from the subject premises. No articles were displayed for sale, and the premises were not configured for retail sales.
24. In other words, despite asserting that the "critical question" was the "business actually conducted at the premises," the Tribunal explicitly took into account the fact that the parties has signed a lease stating that the premises were to be used for "commercial offices" when determining what business was "actually conducted" at the premises.
25. The issue of what is a "retail shop" was again considered by the Appeal Panel in Targeted Property Investments Pty Ltd v Look Up Technologies Pty Ltd [2022] NSWCATAP 318 (Look Up Technologies). In that matter, there was no dispute that the terms of the lease specified some uses that were within Sch. 1 of the RL Act (as it then was) and some uses that were not (para [33]). The Appeal Panel stated at [12]: At [16] of the Decision the Tribunal stated that the jurisdictional requirements had been set out in the case of Hanave PL v Wine Nomad PL [2022] NSWCATAP 153 at [122], [126]-[135]. The Tribunal stated that it is necessary to first look at the permitted or agreed use of the premises to see if that use fits within one of the uses in Schedule 1 of the RL Act. If the use covers a number of different types of businesses, some of which are, or may be, within Schedule 1, then an analysis is required of the actual use or uses of the premises to determine whether the predominant use or uses falls within one or more of the businesses prescribed in Schedule 1.
26. In Look Up Technologies the Appeal Panel held there was no legal error in the approach of the Tribunal at first instance to the determination of what the premises were "predominantly" used for, and that the premises fell within Sch. 1 (paras [60]-[67])
27. Look Up Technologies was appealed to the Supreme Court: Targeted Property Investments Pty Ltd v Look Up Technologies Pty Ltd (No 2) [2023] NSWSC 416. The appeal was unsuccessful.
28. However, in the course of the decision (at paras [53]-67]) Griffiths AJ referred to the authorities dealing with whether premises were a "retail shop" under s 3 of the RL (and Sch. 1). At para [53] Griffiths AJ stated that "at least superficially" there appeared to be "tension" between the authorities, being the approach in Moweno and the approach in Diamond Traders.
29. At para [65], Griffiths AJ stated that the Appeal Panel's decision in Look Up Technologies had "applied the same approach" as in Diamond Traders, and cited para [12] of the Appeal Panel's decision. It was unnecessary to further consider the "tension" between the authorities as neither party suggested the test set out in para [12] of the Appeal Panel decision was wrong in the circumstances of the case (para [66]).
30. However, the comment at para [65] does not reflect what the Appeal Panel stated in para [12] or in para [59]. At para [59] of its decision the Appeal Panel stated: The decision records how the Tribunal approached the question of jurisdiction by referring to the Hanave case. We agree that that approach is the correct approach and neither of the parties to this appeal contended otherwise.
31. The test that the Appeal Panel was applying as the correct test was the test that was set out at para [126] of Hanave. That is the 3 step test that was enunciated in Cerialis and arises from the approach in Moweno. What the Appeal Panel was referring to in para [12] was not the test in Diamond Traders, but the third category in Cerialis.
32. In this matter, as discussed previously, the permitted use identified in the written lease between the parties was "Recreation Centre." That is not a type of use that clearly falls inside or outside the types of businesses set out in Sch. 1 of the RL Regulation.
33. Accordingly, the Tribunal must consider what was the purposes for which the premises were wholly or predominantly used for and whether that is a type of business within the defined premises in Sch. 1.
34. "Predominant" use is the "most conspicuous or effective portion of the use." A specific percentage figure is not determinative, other than the use must be more than 50% to predominate (Hardcore Gym Pty Ltd v Police Citizens Youth Club Ltd [2014] NSWCATCD 249 at [15]-[17]; Look Up Technologies at [34]).
35. The written submissions of the parties refer to few authorities.
36. In submission in chief, the lessee refers to Kim v Kim [2011] NSWADT 92 (Kim) and State of Victoria v Tymbook Pty Ltd [2005] VSC 267 (Tymbook).
37. In Kim, the predecessor Tribunal was dealing with an interlocutory summary dismissal application by the lessor. The premises were identified in the permitted use in the lease as a "Karaoke" venue, and were licensed for the sale of alcohol. In brief reasons, the Tribunal held it was arguable that the premises may be wholly or predominantly used for "amusement and entertainment services" within Sch. 1 of the RL Act. However, the issue was not determined as the only issue being considered by the Tribunal was whether it was arguable that the premises were wholly or predominantly used for "amusement and entertainment services" which was a question of fact to be determined at the final hearing.
38. The Tribunal commented that "amusement and entertainment services" were more than merely amusement parlours or games parlours (at [17]) and stated: …As it seems to me, the provision of a karaoke facility constitutes at least an entertainment within the ordinary meaning of that word.
39. However, Kim is of very limited assistance. It was only determining whether it was "clearly unarguable" the premises were retail shop premises as defined by the RL Act. There is no detailed discussion of what is meant by premises that are "wholly or predominantly" used for the carrying on of "amusement and entertainment services."
40. Tymbook involved the Retail Leases Act 2003 (Vic). The issue for determination was whether the dispute fell within that Act. If so, the Court did not (by reason of s 89 (4) of the Act) have jurisdiction unless the parties had participated in dispute resolution before commencing proceedings.
41. "Retail premises" were relevantly defined in s 4 (1) of the Retail Leases Act 2003 (Vic) as follows: (1) In this Act 'retail premises' means premises, or a part of premises, that under the terms of the lease relating to the premises or part are used, or are to be used, wholly or predominantly for - (a) the sale or hire of goods by retail or the retail provision of services; or (b) the carrying on of a specified business or a specified kind of business that the Minister determines under section 5 is a business to which this paragraph applies. …
42. In Tymbook, the premises were a cinema, theatre, and live music venue. The Court held that the presentation to the public for reward of films, theatre or music was "the provision of retail amusement services."
43. However, the Victorian legislation is fundamentally different to the NSW legislation. The Victorian legislation does not have the equivalent definition of s 3 of the RL Act and Sch. 1 of the RL Regulation (and former Sch. 1 of the RL Act).
44. There are numerous Victorian authorities that deal with s 4 (1) (a) of the Retail Leases Act 2003 (Vic): e.g. Fitzroy Dental Pty Ltd v Metropole Management Pty Ltd & Anor [2013] VSC 344; IMCC Group (Australia) Pty Ltd v Cold Storage Pty Ltd [2017] VSCA 178; Iszett St Pty Ltd v Applgold Pty Ltd [2021] VCAT 174 and Eastcombe Pty Ltd v Fagersta Steels Pty Ltd [2022] VCAT 780.
45. However, those Victorian authorities are focussed upon whether the activities conducted at the premises wholly or predominantly involve the sale by retail of any goods or services to members of the public. In NSW, the salient consideration (if the permitted use of the premises is unclear; or the uses involve types of uses within, and without the definitions in Sch. 1 and the premises are not within a shopping centre) is whether the premises are used, or proposed to be used, wholly or predominantly for the carrying on of one or more of the businesses prescribed in Sch. 1. In Victoria, there is no relevant limitation to the types of business operated from the "retail premises" and if the premises used or are to be used wholly or predominantly for "the sale or hire of goods by retail or the retail provision of services" they are "retail premises."
46. Accordingly, the Victorian authorities are of limited assistance.
47. The lessor's submissions refer to Wy Trading Pty Ltd v Wang [2012] NSWADT 190 (Wang) and Lauven Pty Ltd & Anor v Venus Adult Shops Pty Ltd & Ors [2006] NSWADT 359 (Venus Adult Shops).
48. Wang involved whether a brothel fell within the definition of "amusement and entertainment services." The predecessor Tribunal (Rickards JM) held it did not, and the lease was not a retail shop under s 3 of the RL Act.
49. The predecessor Tribunal referred to statutory interpretation principles and the dictionary definitions of "amusement" and "entertainment." The predecessor Tribunal stated at [21]-[28]: The term "amusement and entertainment services" was inserted by the 2005 amendments to the Act. Does this term mean and include a "brothel"? The Applicant submits that it does; it points to definitions contained within the Oxford dictionaries, where the term "entertainment" is defined to mean "the action of providing or being provided with amusement or enjoyment" and in turn, the term "amusement" which is defined to be "the provision or enjoyment or entertainment ... something that causes laughter or provides entertainment". The above broad definition is somewhat tautological, but the Applicant says that the term "brothel" falls within its bounds, because it is a service providing amusement or entertainment; it also submits that Parliament could reasonably have intended that the term 'brothel' was to be covered within the term 'amusement and entertainment services´ and that it therefore considered that there was no need to elaborate further. In further support of this proposition, the Applicant also submits that 'brothel' may not have been a term that Parliament wanted to use in a statute when it was already covered by other language. At stated above, it is not the task of this Tribunal to seek to guess as to what Parliament's intention could have been. The term "amusement and entertainment services" may certainly be capable of covering a wide area of activities whereby amusement or entertainment are provided. However, the mere fact that someone who attends a brothel may derive some "amusement" or "entertainment" should not divert attention from what is really involved in the use of premises as a brothel. The suggestion that it is reasonable to conclude that Parliament may have been somewhat reluctant to use the word "brothel" within its legislation cannot be accepted; use of this word by Parliament can be seen at least as early as over a hundred years ago within the Crimes Act 1990 and also within more modern legislation such as the Environmental Planning and Assessment Act 1979, just to give two examples. Use of dictionary definitions will usually assist to some extent in determining the textual meaning of a term used within legislation, but not the context within which the term is used. Further, as stated above, the Tribunal must also consider the overall purpose of the Retail Leases Act when considering whether a brothel is to be considered as retail shop premises for the purposes of the Act. The Oxford dictionary defines "brothel" to mean "a house where men visit prostitutes" and the term "prostitute" is defined to mean "a person, typically a woman, who engages in sexual activity for payment". These definitions, in the Tribunal's view, coincide with the common and usual understanding within the community as to what a "brothel" is; it is a place where people, usually men, visit and pay other people at that place, usually women, to engage in sexual activity. The context provided by the Retail Lease Act is that it deals with goods or services which are being sold or supplied at premises. The service supplied and sold at a brothel is sexual activity; whether the customer receiving this service is amused or entertained is coincidental, and is not an essential component of the service. The quite specific retail activity of a brothel is not listed within Schedule 1 and is not covered by the term "amusement and entertainment services.
50. In Venus Adult Shops the issue in dispute was whether an 'Adult Store' (i.e. retail premises selling pornographic videos and DVDs, pornographic magazines, sex toys and lingerie was a retail shop. At the relevant time, Adult Stores was not a type of premises listed in Sch.1 of the RL Act. There was evidence before the (predecessor) Tribunal of the specific percentage of the type of goods sold at the premises to members of the public.
51. The Tribunal held at para [19]-[20]: Having regard to their ordinary meanings I find that the following businesses listed in Schedule 1, as it applied on 1 February 2004, apply to the lease the subject of this application: 'bookshops', 'lingerie shops' and 'video and pre-recorded music libraries'. In my opinion the sale of adult books would come within the ordinary meaning of a bookshop. There are various types of bookshops such as children's book shops and it is difficult to see why a distinction should be made for adult shops other than the restrictions that are placed on sellers of such books where they have been classified for restricted access and sale. These restrictions do not alter the nature of the business. The same would apply to video and pre-recorded music libraries. And in the case of lingerie, this in the ordinary sense would only apply to adult lingerie, which in my opinion would include lingerie of an explicit sexual nature. However, the same could not be said for toys and electronic appliance shops or electronic equipment and supplies shop. These I do not think would be understood to ordinarily include adult items of an explicit sexual nature. Hence the only question that remains is whether the use of the premises as a bookshop, lingerie shop and video and pre-recorded music libraries are the predominant purpose. When regard is had to the schedule prepared by the respondent the most items sold (47.50%) and which generate the most gross income (53.41%) is that of DVD/video sales. The next most significant is that relating to toys (14.35% of items sold and 21.61% of gross income generated). Had these been the only items sold then the sale of DVD/videos would undoubtedly be the predominant use. However there are other items sold, some of which come within business listed in Schedule 1 and others do not. In my opinion, on balance, having regard to the percentages set out paragraph [3] above for items that do come within the businesses listed in the Schedule and the fact that the sale of DVD/videos is the most dominant items sold overall, I find that the predominant use of the premises is that of video and pre-recorded music libraries combined with the other uses of bookshop and lingerie shop.
52. The lessee asserts in its submissions in reply that Wang can be distinguished on its facts as the premises the subject of this dispute is not a brothel and "the business does not offer sex services and customers do not derive their amusement and entertainment from sexual acts alone." In respect of Venus Adult Shops, the lessee submits that the Tribunal held the premises were a retail shop, and thus the decision supports the lessee.
53. The lessee further submits that the planning permission of "sex on premises" venues is not inconsistent with "amusement and entertainment premises" in planning instruments. The lessee submits that "(a) the ordinary meaning of the word recreation; and (b) the actual uses to which the premises were put, are squarely within the ordinary meaning of amusement and entertainment."

What is the Predominant Use of the Premises?

1. The lessee bears the onus of establishing on the balance of probabilities that the premises were "wholly or predominantly" used, or proposed to be used, for one or more of the businesses prescribed in Sch. 1 of the RL Regulation (Raju at [37]). As discussed previously, that means the lessee must prove that more than 50% of the use of the premises the subject of the lease is for the carrying out of one or more of the businesses set out in Sch. 1 of the RL Regulation.
2. As discussed previously, the lessee's evidence referred to a number of different activities at 'Sydney Sauna.'
3. However, irrespective of the fact that the evidence of the lessee did not differentiate between Shop 4B/Lot 4B and the other Shops/Lots that formed part of the 'Sydney Sauna' business, there was no clear evidence about what percentage or proportion of the activities involved anything other than "amusement and entertainment services".
4. The lessee submitted that there were activities at the 'Sydney Sauna' business that included a café; sale of adult toys; sale of lingerie/underwear/clothing; and sale/rental of DVDs.
5. However, there was no evidence of what percentage or proportion of the use of the premises of Shop 4B/Lot 4B that these activities involved; nor of the other adjacent Shops/Lots that formed part of the Sydney Sauna business.
6. The evidence does not establish that any such business activities constituted more than 50% of the business activities conducted in Shop 4B/Lot 4B.
7. Further, to the extent that such business activities were conducted at the adjacent Shops/Lots that formed part of the 'Sydney Sauna' business, the evidence does not establish that the said activities were more than ancillary or peripheral to the main business activity. The same principle is applicable to the use of the premises for parties and functions.
8. The Tribunal is satisfied that the predominant use of the premises (and the main business activity) conducted at Shop 4B/Lot 4B was for members of the public to pay a fee to use the premises to partake in sexual activities, or observe others partake in sexual activities. That does not mean that patrons could not simply enter the premises after paying a fee and not participate in, or observe, sexual activities.
9. The relevant test is what was the "predominant" business activity conducted from the premises the subject of a lease. Just as a person can enter a library and not read a book or borrow a book; the mere fact there was no obligation on patrons engaging in sexual activities or observing sexual activities does not change the predominant use of the premises for the business purpose of persons paying a fee to enter the premises to engage in consensual sexual activities with other persons; and observe others engage in consensual sexual activities.
10. That factual finding is not to be confused with the premises being used as a brothel. Persons entering the premises were not paying a fee to use a prostitute to provide sexual services. That is clear from the various Development Consents for the premises, that clearly distinguish the difference between a brothel and a sex on premises venue. It is also clear from the evidence contained in the affidavit of Mr Ritchie dated 1 February 2023.
11. The evidence that strongly supports the Tribunal's factual finding that the predominant use of the premises at Shop 4B/Lot 4B was for the carrying on of a business where members of the public paid a fee to use the premises to partake in consensual sexual activities or observe others partake in consensual sexual activities is as follows: 1. The evidence contained in Mr Ritchie's affidavit dated 1 February 2023 about the activities of the business (in particular, para [7]-[8] and para [24]). 2. The Development Approval of the premises as a "sex on premises venue" and the conditions imposed by the local Council that pertained to such an approved use. 3. The report of Town Planning Group (Mr Adam Parker) dated November 2021 which formed part of the Development Application to redevelop Lot 4. The proposed use and business activities are clearly set out at pp 8-9 and 11 of the report. The plan of the sub-division of Lot 4 and the proposed facilities within Shop 4B/Lot 4 are consistent with the premises being used as a sex on premises facility, with any other use being ancillary or peripheral. 4. The evidence of Mr Palumbo at para [11] of his affidavit dated 27 February 2023, where he states that in his observation of Shop 4B/Lot 4 there is no café or any of the types of facilities referred to in para [13] of Mr Ritchie's affidavit dated 1 February 2023.

Is Such Use An Amusement and Entertainment Service?

1. This is the critical jurisdictional issue. Unsurprisingly, most of the lessee's submissions focus upon arguing that the predominant use of the premises was to carry on a business for "amusement and entertainment services." Unless the lessee falls within "wholly or predominantly used for the carrying on of a business" providing retail "amusement and entertainment services" to members of the public, then (subject to one further issue discussed later in this decision) the Tribunal has no jurisdiction.
2. There is no definition of "amusement and entertainment services" in the RL Act; nor is there any definition of "services."
3. In Project Blue Sky v ABA [1998] HCA 28; 194 CLR 355, Brennan CJ stated at [78]: However, the duty of a court is to give the words of a statutory provision the meaning that the legislature is taken to have intended them to have. Ordinarily, that meaning (the legal meaning) will correspond with the grammatical meaning of the provision. But not always. The context of the words, the consequences of a literal or grammatical construction, the purpose of the statute or the canons of construction[56] may require the words of a legislative provision to be read in a way that does not correspond with the literal or grammatical meaning. In Statutory Interpretation, Mr Francis Bennion points out[57]: "The distinction between literal and legal meaning lies at the heart of the problem of statutory interpretation. An enactment consists of a verbal formula. Unless defectively worded, this has a grammatical meaning in itself. The unwary reader of this formula (particularly if not a lawyer) may mistakenly conclude that the grammatical meaning is all that is of concern. If that were right, there would be little need for books on statutory interpretation. Indeed, so far as concerns law embodied in statute, there would scarcely be a need for law books of any kind. Unhappily, this state of being able to rely on grammatical meaning does not prevail in the realm of statute law; nor is it likely to. In some cases the grammatical meaning, when applied to the facts of the instant case, is ambiguous. Furthermore there needs to be brought to the grammatical meaning of an enactment due consideration of the relevant matters drawn from the context (using that term in its widest sense). Consideration of the enactment in its context may raise factors that pull in different ways. For example, the desirability of applying the clear literal meaning may conflict with the fact that this does not remedy the mischief that Parliament intended to deal with." (footnotes omitted)
4. It is well established that the starting point to statutory interpretation is the grammatical meaning of the words of the statute being interpreted. However, the task does not end there. The Tribunal must consider the meaning of those words in the context of the statute as a whole; its purpose; and the legislative intention. The Tribunal must also give words in the statute a meaning which is logical and harmonious with the other provisions of the statute, rather than an inconsistent and illogical meaning, or an "absurd" result (Cooper Brookes (Wollongong) Pty Ltd v Federal Commissioner of Taxation [1981] HCA 26; (1981) 147 CLR 297).
5. In Alcan (NT) Alumina Pty Ltd v Commissioner of Territory Revenue [2009] HCA 41; 239 CLR 27 (Alcan) French CJ stated at para [4]: The starting point…is the ordinary and grammatical sense of the statutory words to be interpreted having regard to their context and the legislative purpose. That proposition accords with the approach to construction characterised by Gaudron J in Corporate Affairs Commission (NSW) v Yuill as: "dictated by elementary considerations of fairness, for, after all, those who are subject to the law's commands are entitled to conduct themselves on the basis that those commands have meaning and effect according to ordinary grammar and usage." In so saying, it must be accepted that context and legislative purpose will cast light upon the sense in which the words of the statute are to be read. Context is here used in a wide sense referable, inter alia, to the existing state of the law and the mischief which the statute was intended to remedy.
6. In Alcan, Hayne, Heydon, Crennan and Kiefel JJ referred to the "danger" of unduly focussing upon the "purpose" of legislation, stating as follows at [47] and [51] (citations omitted): This Court has stated on many occasions that the task of statutory construction must begin with a consideration of the text itself. Historical considerations and extrinsic materials cannot be relied on to displace the clear meaning of the text. The language which has actually been employed in the text of legislation is the surest guide to legislative intention. The meaning of the text may require consideration of the context, which includes the general purpose and policy of a provision, in particular the mischief it is seeking to remedy. … Fixing upon the general legislative purpose of raising revenue carried with it the danger that the text did not receive the attention it deserves. This danger was adverted to by Gleeson CJ in Carr v Western Australia when he said: "[I]t may be said that the underlying purpose of an Income Tax Assessment Act is to raise revenue for government. No one would seriously suggest that s 15AA of the Acts Interpretation Act has the result that all federal income tax legislation is to be construed so as to advance that purpose. Interpretation of income tax legislation commonly raises questions as to how far the legislation goes in pursuit of the purpose of raising revenue. In some cases, there may be found in the text, or in relevant extrinsic materials, an indication of a more specific purpose which helps to answer the question. In other cases, there may be no available indication of a more specific purpose. Ultimately, it is the text, construed according to such principles of interpretation as provide rational assistance in the circumstances of the particular case, that is controlling."
7. The ordinary meaning of the "amusement;" "entertainment" and "services" are wide. "Amusement" is defined in the Macquarie Dictionary (8th ed.) as: noun 1. the state of being amused; enjoyment. 2. that which amuses; pastime; entertainment. 3. a mechanical entertainment, as a merry-go-round at a fair.
8. "Entertainment is defined as: noun 1. the act of entertaining; agreeable occupation for the mind; diversion, or amusement. 2. something affording diversion or amusement, especially an exhibition or performance of some kind. 3. hospitable provision for the wants of guests.
9. "Service" is defined as including: noun 1. an act of helpful activity. 2. the supplying or supplier of any articles, commodities, activities, etc., required or demanded. …
10. "Services" also has a wide definition in other legislation. For example, s 2 of the Australian Consumer Law 2010 (C'th) (which is a law of NSW by reason of s 28 of the Fair Trading Act 1987 (NSW)) defines "services" for the purpose of that legislation as: "services" includes: (a) any rights (including rights in relation to, and interests in, real or personal property), benefits, privileges or facilities that are, or are to be, provided, granted or conferred in trade or commerce; and (b) without limiting paragraph (a), the rights, benefits, privileges or facilities that are, or are to be, provided, granted or conferred under: … (ii) a contract for or in relation to the provision of, or the use or enjoyment of facilities for, amusement, entertainment, recreation or instruction; or …
11. The definition of "services" under both s 4 of the Fair Trading Act 1987 (NSW) (FT Act) and s 79F of the FTA is in similar terms to the ACL definition. S 79F of the FT Act (which involves the definition of "services" for the purpose of jurisdiction of the Tribunal under Part 6A of the FT Act includes: (c) the provision, or the making available for use, of facilities for amusement, entertainment, recreation or instruction
12. However, the mere fact that "services" is widely defined in other legislation is not determinative of what the phrase "amusement and entertainment services" means in the RL Act. It is the RL Act that is being interpreted, not the ACL or the FT Act.
13. The difference between the retail lease legislation in NSW and Victoria has been discussed previously. Unlike in Victoria, the NSW legislation identifies that the premises must be used, or proposed to be used, wholly or predominantly for the carrying out of one or more of the businesses set out in Sch. 1. The legislature has identified a list of specific businesses. To that extent, the legislature has adopted a more restrictive approach by identifying a concise and explicit list of businesses; and if the type of business activity does not fall into one of those businesses, the lease is a commercial lease rather than a retail lease (subject to the inclusion of shops in a retail shopping centre discussed previously).
14. If the legislature intended that the RL Act applied to businesses more broadly, or that "amusement and entertainment services" be given an expansive definition, there would be no need for many of the types of businesses identified in Sch. 1. For example, an adult bookstore or adult toy shop provides "amusement and entertainment services" if an interpretation was adopted that any retail service that provides amusement or entertainment from shop premises (provided it is the whole or predominant use) falls within that definition. The same can be said for other types of businesses identified. Persons may be "amused" and "entertained" when they purchase lingerie; or a croissant from a coffee shop.
15. The legislature has also chosen to use the conjunctive phrase "amusement and entertainment services." The retail services provided must be to both amuse and entertain, not merely amuse or entertain.
16. The legislature has also chosen not to include certain types of business activities. For example, an adult bookstore or adult toy shop is in Sch. 1; but a brothel is not. For the purpose of planning legislation there is a clear distinction between what is a brothel and what is a sex on premises venue. A sex on premises venue is a specific business activity for the purpose of planning legislation. However, the legislature has also chosen not to include in Sch. 1 sex on premises venues, just as it has chosen not to include brothels.
17. The phrase "entertainment and amusement services" should not be given an overly broad or expansive interpretation. There is nothing to indicate that to do so is consistent with the context of the words in the statue, or the legislative purpose of the RL Act.
18. The RL Act has been referred to as "beneficial" legislation which is protective of lessees and should not be construed narrowly (Manly Council v Malouf [2004] NSWCA 299; (2004) 61 NSWLR 394 at [1] and [74]; Hanave at [132]-[133]). However, that does not mean that when determining whether a sex on premises venue is a business wholly or predominantly providing "amusement and entertainment services" if there is any doubt the Tribunal should find that an expansive interpretation should be adopted that confers the Tribunal jurisdiction under the RL Act. In Malouf, the Court of Appeal held that a public area the subject of a licence between the operator of a restaurant and a public authority allowing outdoor seating was not "retail shop premises" under s 3 of the RL Act because it involved a license over bare land. Principles of statutory interpretation that pertain to the determination of jurisdiction are not obviated merely because the RL Act is "beneficial" legislation.
19. Further, the Tribunal gives weight to the approach taken by the predecessor Tribunal in Wang. The fact that a person who attends the premises the subject of this dispute may derive amusement and entertainment due to engaging in or observing sexual activities is not determinative. The "service" that is being provided to members of the public on the retail basis is the use of the facilities on payment of a fee. The experience of patrons being amused and entertained whilst they engage in consensual sexual activities is not the critical enquiry. The legislature has identified in Sch. 1 that gymnasiums and fitness centres, including yoga, barre, pilates and dance studios are retail shop premises. Those types of businesses (as with brothels) may also involve other types of business activities (such as, for example, a coffee shop).
20. Persons who attend a gymnasium or fitness centre may be amused and entertained. However, the legislature has chosen to include gymnasiums/fitness centres, but not include brothels and sex on premises venues, in the types of businesses listed in Sch. 1 of the RL Regulation.
21. The Tribunal notes the comment in Kim that a karaoke bar may fall within the definition of "amusement and entertainment services" and that "amusement and entertainment service" is not limited to arcade games parlours. As discussed previously, the comment about arcade games parlours was an observation in an interlocutory matter. It is unnecessary to explore it further. This case does not involve a karaoke bar. It involves a sex on premises venue constituted by the business activities previously described in this decision. The decision in Venus Adult Shops is of no assistance, as it involved a type of business that now falls within Sch.1 and there is no detailed exploration as to what is meant by "amusement and entertainment services".
22. Finally, it is unnecessary to explore in any detail whether the use of Shop 4/Lot 4 and Lots 6 and 7 are such that Shop 4B/Lot 4 falls within the principles set out in Hanave at [134]. In Hanave, the Appeal Panel held that a license agreement between the same parties to a retail lease to use an area in the same building adjacent to the leased premises fell within the definition of "retail shop" premises under s 3 of the RL Act and distinguished Malouf. That reasoning of the Appeal Panel was not disturbed on appeal by the Supreme Court (Hanave Pty Ltd v Nomad Sydney Pty Ltd (formerly Wine Nomad Pty Ltd) [2023] NSWSC 265), although the Appeal Panel was found to be in error in other aspects of the decision involving valuation evidence.
23. The decision in Hanave was not raised by the lessee in its submissions. In any event, the evidence does not establish that, even if all of the premises operating within the building as "Sydney Sauna" are considered together, the premises were wholly or predominantly used for a type of business that is defined in Sch. 1 of the RL Regulation. Further, as discussed previously, the parties who leased Shop 4B/Lot 4B were not the same parties who leased all of Shop 4A/Lot 4A; Lot 6 and Lot 7. Hanave is distinguishable on its different facts.
24. Finally, it is appropriate to note that no evidence or submission was put forward by the lessee that the premises fall within the definition of a "retail shopping centre" under s 3 of the RL Act.

CONCLUSION

1. The Tribunal is not satisfied that the lease between the parties is a retail lease under the RL Act. Accordingly, it is a commercial lease. The Tribunal has no jurisdiction to hear and determine the dispute. Any rights that the parties may have must be dealt with in proceedings in a Court of competent jurisdiction by way of fresh proceedings.

THE ISSUE OF COSTS

1. The orders of the Tribunal contain procedural directions to deal with a costs application if such an application is made.

ORDERS 1. The proceedings are dismissed as the Tribunal has no jurisdiction under the Retail Leases Act 1994 (NSW) 2. Any costs application is to be determined as follows: 1. Costs applicant is to file with the Tribunal and serve on the costs respondent all costs submissions and documents by 14 days from the date of this decision. 2. Costs respondent is to file with the Tribunal and serve on the costs applicant all costs submissions and documents by 28 days from the date of this decision. 3. Costs applicant is to file with the Tribunal and serve on the costs respondent all submissions in reply by 35 days from the date of this decision. 4. The costs submissions of the parties are to include whether or not they agree to the issue of costs being determined on the papers and without a further oral hearing and if not, why not. 5. Subject to consideration of the submissions of the parties the Tribunal may determine it appropriate to dispense with a further oral hearing and determine the issue of costs on the papers in accordance with s 50 (2) of the Civil and Administrative Tribunal Act 2013 (NSW). 6. Either party has liberty in writing to apply to the Tribunal to vary or extend the timetable for costs submissions and documents. Any such application must be made by no later than the day prior to the date of compliance with the timetable obligation.

I hereby certify that this is a true and accurate record of the reasons for decision of the Civil and Administrative Tribunal of New South Wales. Registrar DISCLAIMER - Every effort has been made to comply with suppression orders or statutory provisions prohibiting publication that may apply to this judgment or decision. The onus remains on any person using material in the judgment or decision to ensure that the intended use of that material does not breach any such order or provision. Further enquiries may be directed to the Registry of the Court or Tribunal in which it was generated. Decision last updated: 29 September 2023