The issue for determination by this Tribunal is whether a "Kitchen Showroom" should be considered a 'retail shop lease' so as to be governed by the terms and provisions of the Retail Leases Act 1994 (RLA).
Swan Kitchens Pty Ltd (the applicant), as lessee, entered into a lease with Wisepeople Investments Pty Ltd (the respondant), as lessor, in respect of the premises described in the lease as Part Folio Identifier 1/132/786434 known as 1/244-256 Taren Point Road, Taren Point described as first floor office and terrace (the premises) being registered lease number AJ789735 (the Lease).
The permitted use under clause 1 of Section B of the Lease provides that the premises is not to be used for any other purpose than as "Kitchen Showroom".
The applicant filed an Application for Original Decision seeking a declaration regarding the validity of the Lease pursuant to s 72 of the RLA dealing with retail tenancy claims. A retail tenancy claim under s 71 of the RLA must relate to a retail shop lease.
On 12 June 2019 the Tribunal ordered that the issue of jurisdiction of the Tribunal would be dealt with on the papers, unless a party objected.
[2]
STATUTORY DEFINITIONS UNDER THE RLA
Section 3 of the RLA defines 'retail shop' as follows:
'retail shop' means premises that:
1. 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
2. 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.
3. Note 1 : Sections 5 and 6B limit the retail shops to which this Act applies. Note 2 : Clause 17 of Schedule 3 provides that the businesses specified in Schedule 1 are taken to be prescribed for the purposes of paragraph (a) of this definition until regulations prescribing businesses and repealing Schedule 1 are made.
Section 3 of the RLA defines 'listed business' as follows:
'listed business' means a business prescribed for the purposes of paragraph (a) of the definition of 'retail shop' (including a business for the time being specified in Schedule 1).
Schedule 1 of the RLA provides a list of 'retail shop business'. In this list, the following appear:
Household fixtures and fittings shops;
Kitchenware shops;
Any other business as from time to time may be prescribed by the regulations.
Section 3 of the RLA contains the definition of 'retail shop lease' as follows:
'retail shop lease' or 'lease' means any agreement under which a person grants to another person for value a right of occupation of premises for the purpose of the use of the premises as a retail shop;
1. whether or not the right is a right of exclusive occupation; and
2. whether the agreement is express or implied; and
3. whether the agreement is oral or in writing, or partly oral or partly in writing.
The question to be answered by this Tribunal, as previously stated in paragraph 1 of these Reasons, is whether the Lease for a "Kitchen Showroom" should be considered a 'retail shop lease'.
Mr Oleg Denejkine, director of the applicant swore an affidavit on 31 July 2019. He says that the applicant is primarily engaged in the design and sale of kitchen fixtures, and the activities included the design and sale of wardrobes, linen cupboards, bathroom vanities and home offices.
Robert Sayegh, father of the sole shareholder of Wisepeople Investments Pty Ltd in a statement of evidence dated 6 September 2019, filed on behalf of the respondent, states:
3. I have observed that the premises are referred to five times as a "showroom" in the Facebook post which describes the premises and the photos as "Old Showroom at Tarent [sic] Point Rd Caringbah NSW" which then also has the writing underneath which reads "24 photos".
5. The photos in annexure "B" depict the interior of the premises known as level 1 Taren Point Road, Taren Point. I know that to be the case because I have personally entered and observed the premises during the time when Swan Kitchens had a lease over the premises and were in occupation of it.
6. I have never witnessed any person engage in the purchase of an item within the premises and leaving with it. Based on my observations of the premises there was nothing in there that was a "good" capable of being purchased there and then. I observed various example cabinets and kitchens and sample charts which had examples of finishes that could be ordered. I did not ever see any cash register, or electronic point of sale."
[3]
SUBMISSIONS ON JURISDICTION FROM THE APPLICANT
The applicant submitted that the proper approach to the issue in determining whether a "Kitchen Showroom" is a retail shop is to first construe the words as they appear within Schedule 1 and only where an ambiguity arises should the Tribunal have regard to the explanatory note to the Retail Leases (Amendment) Bill 2005.
The applicant contends that whilst "Kitchen Showroom" is not in itself listed under Schedule 1 of the RLA, s 72 of the RLA gives the Tribunal jurisdiction to hear and determine 'retail tenancy claims'.
The applicant submits that these proceedings are proceedings for a 'retail tenancy claim' and within the meaning prescribed by s72 of the RLA because:
1. the premises, the subject of the lease, is a retail shop as defined under s3 of the RLA.
2. the Lease is a retail shop lease as defined under s3 of the RLA.
3. the claim submitted by the applicant in these proceedings is a 'retail tenancy claim' as it is a claim that is in connection with a liability or obligation with which a retail tenancy dispute is concerned, as provided for under s70(a) of the RLA.
4. the dispute between the parties is a dispute concerning the liabilities and obligations of a party or former party to a 'retail shop lease or former lease' as defined under s63 of the RLA.
The applicant asks the Tribunal to follow the established approach of the Tribunal in the decision of Honings Bakery Pty Ltd v Cerialis Pty Ltd [2014] NSWCATCD 87 (Honings).
In the Honings decision, the Tribunal at [36-37] stated that the correct approach to be taken when determining whether there is a 'retail tenancy dispute' under s72 of the RLA:
36. Both Counsel submitted to the Tribunal that the approach to be taken by the Tribunal in determining whether there is a retail tenancy dispute over which it has jurisdiction is well established and is set out in Wood Wilson v Bergman [2003] NSWADT 82 and in Moweno Pty Ltd v Stratis Promotions Pty Ltd [2002] NSWSC 1151 approved by the Court of Appeal in (2003) NSWCA 376.
37. In summary it is as follows:
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 whether or not the premises are a 'retail shop' under s3 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 use(s) fall within one or more of the businesses prescribed in Schedule 1.
As "Kitchen Showroom" is not stated in Schedule 1 of the RLA, it is necessary to consider whether the use of the premises would fall within one or more of the businesses prescribed in Schedule 1 of the RLA.
In Lauven Pty Limited v Venus Adult Shops Pty Limited (2006) NSWADT 359 , the Tribunal determined at [17] as follows:
17. Although 'adult shop' is not a business listed in Schedule 1 as it applied at the relevant time, I am not persuaded by the applicant's contention that the mere fact of such a business is not listed in the Schedule, is sufficient to hold that in this application the business as described in the lease is excluded from the operation of the [RLA].
The applicant further submits that "Kitchen Showroom" does fall within the definition of 'retail shop lease' under s3 of the RLA despite not being listed in Schedule 1 by reason of the decision in Thompson v Easterbook (1951) 83 CLR 467 at 481, where it was stated by the Court at [10]:
10. Where the particular purpose for which the holding is to be used is not defined by contract, the legislature must have intended that the purpose should be ascertained by reference to the use or uses which the contracting parties as intelligent and reasonable men be held to have had in their contemplation when they entered the lease.
The applicant submitted that the applicant's business falls within the first limb of the definition of retail shop under s3 of the RLA, namely that the premises 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) and that "Kitchen Showroom" is to be interpreted as a 'retail shop business' under Schedule 1 of the RLA. According to the applicant, the fact that the use of the premises as a "Kitchen Showroom" is not a use that is explicitly listed under Schedule 1 of the RLA (which lists the use that are a 'retail lease shop' under s3 of the RLA) should not bar the applicant from obtaining relief under the RLA because the RLA is beneficial legislation that should be interpreted broadly so as to cover "Kitchen Showroom" within the meaning of 'household fixtures and fittings shops; kitchenware shops; and/or any other business as from time to time may be prescribed by the regulations' under Schedule 1 of the RLA.
The applicant based its submissions on the decision in Manly Council v Malouf (2004) 61 NSWLR 394 at [49] and [74], that the provisions of the RLA should not be interpreted narrowly as it is beneficial legislation.
[4]
SUBMISSIONS ON JURISDICTION FROM THE RESPONDENT
The respondent submitted that "Kitchen Showroom" should not be interpreted to mean a 'retail shop' as defined under s3 of the RLA because "Kitchen Showroom" was not envisaged by Parliament to be a listed 'retail shop business' under Schedule 1 of the RLA. Accordingly, the respondent submits that the applicants claim should not amount to a retail tenancy claim under s 72 of the RLA so as to enliven the jurisdiction of this Tribunal.
The respondent draws upon the affidavit of Oleg Denejkine, the director of the applicant, dated 31 July 2019, which provides a description of the business of the applicant, as follows:
"6. Swan Kitchens has its products manufactured by AO Designs in a factory located in Prestons. This company is unrelated to Swan Kitchens except that we have a very close and ongoing business relationship. The reference in our website to "Swan Kitchens as a factory" is a reference to the factory owned by AO Designs and the text that accompanies it has been supplied by AO Designs and was incorporated into our website.
7. It was only on 30 July 2019 that I become aware of the wording on our website. Swan Kitchens do not own any part of AO Designs."
In the same affidavit Mr Denejkine states that the applicant advertises "We offer free quotes via email, in our showroom or at your home in Sydney and NSW".
The respondent contends that the listed business of the applicant as a "showroom" is distinct from the definition of 'retail shop' under s3 of the RLA. The respondent draws the attention of the Tribunal to the definition of 'shop' in the Macquarie Dictionary, as follows: "a building where goods are sold retail". The Tribunal notes that same definition was adopted by Simos J in Conoid Pty Limited & Anor v International Theme Park Pty Ltd [1999] NSWSC 1138 and subsequently approved by the NSW Court of Appeal in Malouf.
The respondent points to Clause 1 of the Lease which states:
"The Lessee covenants with the Lessor not to use the premises without the written consent of the Lessor for any other purpose than as a "Kitchen Showroom".
The respondent says that there is no evidence that the respondent ever provided the applicant with any consent (written or otherwise) that the applicant could use the premises a 'retail shop', as defined under s3 of the RLA, or in any other way than as a "Kitchen Showroom" during the term of the Lease.
The respondent submits that the premises were not used by the applicant to sell anything, instead the premises were used by the applicant to simply start a process of ordering things and requesting services to be performed at some other place at some future time and date.
The respondent directs the Tribunal to s6 of the Sale of Goods Act 1923 (SGA):
1. A contract of sale of goods is a contract whereby the seller transfers or agrees to transfer the property in goods to the buyer for a money consideration called the price. There may be a contract of sale between one part owner and another.
2. A contract of sale may be absolute or conditional.
3. Where under a contract of sale the property in the goods is transferred from the seller to the buyer, the contract is called a sale; but where the transfer of the property in the goods is to take place at a future time, or subject to some condition thereafter to be fulfilled, the contract is called an agreement to sell.
4. An agreement to sell becomes a sale when the time elapses or the conditions are fulfilled, subject to which the property in the goods is to be transferred.
The respondent contends that the process of ordering cabinetry to be made in the future and not at the premises is not in itself something that can be classified as a "sale". The respondent correctly notes that this process can only become a "sale" as defined under the SGA later in time when installation or delivery of the cabinetry have been met. It is clear from the respondent's submissions that no "sale" of the applicant's business was taking place at the premises.
The respondent submits that applicant's goods and services are instead future goods that can only have been said to be the subject of an agreement to sell as defined under s 6(4) of the SGA rather than a sale at the time that the leased premises were used by the applicant which is required by the definition of 'retail shop lease' under s3 of the RLA. Section 5 of the SGA defines "future goods" as follows:
"Future goods" means goods to be manufactured or acquired by the seller after the making of the contract of sale.
Section 10 of the SGA states:
1. The goods which form the subject of a contract of sale may be either existing goods owned or possessed by the seller or future goods.
2. There may be a contract for the sale of goods the acquisition of which by the seller depends upon a contingency which may or may not happen.
3. Where by a contract of sale the seller purports to effect a present sale of future goods, the contract operates as an agreement to sell the goods.
[5]
Resolution by the Tribunal
The use of the premises is not a use identified in Schedule 1 of the RLA. Custom made kitchens to order does not come under the description of 'household fixtures and fittings shops' or 'kitchenware shops' under Schedule 1 of the RLA. The Tribunal agrees that for a 'retail shop business' as defined under s3 of the RLA to come under the description of 'household fixtures and fittings shops' or 'kitchenware shops' a customer would bepicking up an item off the shelf, take it to the front counter and purchasing it, thus completing the sale there and then. From the evidence that does not appear to be occurring in the premises. The transactions, if any, that may occur within the premises do not fit with the scope of the Sale of Goods Act where the activity is outside of the premises at a future time. No goods appear to be sold within premises itself.
The parties when entering into the Lease clearly contemplated the premises to be a showroom for the construction of kitchens.
In Malouf, the Court of Appeal considered the meaning of the words "premises" within the definition of 'retail shop lease' under s3 of the RLA. Handley JA held that the meaning of 'premises' in the context of the definition of 'retail shop lease' was influenced by the ordinary meaning of the word 'shop' as a building where goods are sold. Whilst the current issue before the Tribunal does not concern the nature of the premises and whether it is in fact in a building, the respondent correctly points out to the Tribunal through the reasoning adopted by Handley JA in Malouf that the business of the applicant does not satisfy the ordinary definition of a 'shop' because the business undertaken by the applicant within its leased premises does not involve "where goods are sold retail".
The Tribunal agrees with the respondent's submissions that the applicant's use of the premises as "Kitchen Showroom" cannot be considered a 'retail shop lease' as defined under s3 of the RLA because the ordinary meaning conveyed by the term 'retail shop' is a place where goods and services are sold, and on the evidence before the Tribunal there are no goods or services sold within the premises.
The Tribunal, following the approach in Honings finds that the use of kitchen showroom does not appear in Schedule 1 nor do any of the activities that occur within the premises have the attributes of retail sales. Accordingly the applicant's use of the premises does not satisfy the definition of 'retail shop lease' under s3 of the RLA. In this instance, there cannot be a 'retail tenancy dispute' as defined under s72 of the RLA to which this Tribunal has jurisdiction.
The Tribunal is inclined to make the usual costs order that each party be responsible for its own costs, as there appears to be no special circumstances. However, should a party wish to seek a costs order, then it can do so by relisting for a costs application. Although the RLA is beneficial legislation, there is a threshold question to be answered first and that is do the facts and circumstances of the Lease come within the term of the RLA?
[6]
Orders
The application is dismissed for want of jurisdiction.
[7]
I hereby certify that this is a true and accurate record of the reasons for decision of the New South Wales Civil and Administrative Tribunal.
Registrar
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
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Decision last updated: 16 June 2021