Norma Farah t/as Luscious Food Catering v Nelmeer Ashfield Pty Ltd [2014] NSWCATCD 144

Civil and Administrative Tribunal New South Wales Medium Neutral Citation: Norma Farah t/as Luscious Food Catering v Nelmeer Ashfield Pty Ltd [2014] NSWCATCD 144 Decision date: 01 August 2014 Before: G Meadows, Senior Member Decision: The Tribunal finds that the agreement dated 19 October 2012 is a retail shop lease with a term of five years expiring on 18 October 2017. The matter is to be listed for directions at the earliest opportunity. Catchwords: Retail lease; premises; retail shop; occupy Legislation Cited: Retail Leases Act 1994

Constantinos Trembelas v Cyprus Community of NSW (unreported), Supreme Court of NSW, 2 June 1998, Windeyer J; Sean Lytton v North Bondi RSL Club Limited [2011] NSWADT 86; Lytton v North Bondi RSL Club [2012] NSWADTAP 8. Cases Cited: Retail Leases Act 1994

Constantinos Trembelas v Cyprus Community of NSW (unreported), Supreme Court of NSW, 2 June 1998, Windeyer J; Sean Lytton v North Bondi RSL Club Limited [2011] NSWADT 86; Lytton v North Bondi RSL Club [2012] NSWADTAP 8. Category: Principal judgment Parties: Norma Farah t/as Luscious Food Catering (applicant) Nelmeer Ashfield Pty Ltd (respondent) File Number(s): COM 14/23465 and COM 14/23468 Publication restriction: NIL

Application 1 The applicant asserts that an agreement first entered into between the parties on 14 October 2011 is a retail lease pursuant to the Retail Leases Act 1994 ("the Act"). The respondent denies this. The matter has been listed for a hearing on the papers to determine this preliminary issue. Both parties have provided written submissions in relation to this preliminary issue. 2 The question to be resolved is thus whether the agreement in question is a "retail shop lease". Section 3 of the Act defines such as a lease as follows: retail shop lease or lease means any agreement under which a person grants or agrees to grant to another person for value a right of occupation of premises for the purpose of the use of the premises as a retail shop: (a) whether or not the right is a right of exclusive occupation, and (b) whether the agreement is express or implied, and (c) whether the agreement is oral or in writing, or partly oral and partly in writing. "Retail shop" is defined as: 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. Note 1. Section 5 limits 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. Certain shops are excluded by s 5 of the Act: 5 Certain retail shops excluded from the operation of this Act This Act does not apply to any of the following retail shops: (a) shops that have a lettable area of 1,000 square metres or more, (b) shops that are used wholly or predominantly for the carrying on of a business by the lessee on behalf of the lessor, (c) … Those sections are particularly referred to by the respondent in its submissions, as discussed below. It is also appropriate to extract part of s 16: Section 16 - Minimum 5 year term (1) The term for which a retail shop lease is entered into, together with any further term or terms provided for by any agreement or option for the acquisition by the lessee of a further term as an extension or renewal of the lease, must not be less than 5 years. An agreement or option is not taken into account if it was entered into or conferred after the lease was entered into. (2) If a lease is entered into in contravention of this section, the validity of the lease is not thereby affected but the term of the lease is extended by such period as may be necessary to prevent the lease contravening this section. Note. For example, if a lease is entered into for a term of 3 years, its term is extended by 2 years to 5 years. if a lease is entered into for a term of 2 years with an option for a further 1 year after that initial 2 years, the term of the lease is extended to 4 years (with the option for a further 1 year after that initial ,4 years). (2) This section does not apply to a lease if a lawyer, or a licensed conveyancer, not acting for the lessor certifies (before, or within 6 months after, the lease was entered into) in writing that (a) (a) the lessee or prospective lessee requested the lawyer or conveyancer to give the certificate, and (b) (b) the lawyer or conveyancer has explained to the lessee or prospective lessee the effect of subsections (1) and (2) and that the giving of the certificate will result in this section not applying to the lease. If the certificate is given within 6 months after the lease was entered into, then, without affecting the validity of the lease, subsection (2) ceases to apply to the lease and the extension of the term of the lease effected by that subsection accordingly ceases to be operative. (3A) … 3 There were in fact two agreements entered into by the parties: the first is dated 14 October 2011 ("the first agreement") and states that the period of engagement shall commence on 18 October 2011 and run for a consecutive period of twelve months. The parties entered into a second agreement in similar, almost identical terms, dated 19 October 2012 and expressed to commence on the same date ("the second agreement"). (These agreements have certain hand-written amendments not included in both agreements, but neither party takes any issue in that regard.) 4 It is agreed that the provisions of the Retail Leases Act 1994 prevail over the terms of any lease agreement and that contracting out of the legislative provisions is prohibited, any term purporting to, or having the effect of, doing so, being void. 5 The agreements referred to above are headed: "Bistro Contracting Agreement/Statement". Clause (1) is as follows: (1) GRANT OF LICENSE AND ENGAGEMENT (a) "The Company" [here, the respondent] hereby grants a license to, and engages "The Bistro Contractor" [here, the applicant] to provide food and kitchen services and provide wait staff to service the hotel dining and/or eating areas during the Term. These tasks are to be performed to the complete satisfaction of the "The Company". (b) The parties expressly agree that no relationship of landlord or tenant is intended to be created by this agreement or the matters contemplated by this agreement, and further that the licence granted to "The Bistro Contractor" is not a licence to occupy any part of the premises owned by "The Company". 6 The belief or intention of the parties as to whether or not the provisions of the licence agreement might constitute a retail lease is irrelevant to the determination of such issue: Sean Lytton v North Bondi RSL Club Limited [2011] NSWADT 86 per Rickards JM at [9]. 7 Clause 2 of the agreement includes inter alia: (2) TERM (a) The period of engagement shall commence on …………and shall run for a consecutive period of twelve (12) months subject to clause seven (7) of this agreement. (b) It is an essential term and a condition of this agreement that "The Bistro Contractor" provides "The Company" with a certificate signed by a suitably qualified legal practitioner pursuant to section 16 of the Retail Leases Act 1994 (c) In the event that "The Bistro Contractor" continues to provide food and kitchen services and provide wait staff to service the hotel dining and/or eating areas after the expiration of the term and with the consent of "The Company" it shall do so as if the other provisions of this agreement were to apply, and either party may terminated this agreement for any reason after providing 14 days written notice. 8 In accordance with Clause (2)(b), a certificate headed "Retail Lease Agreement" in the appropriate form compliant with s16 of the Act, dated 15 October 2011 and signed by Mr Garry Neville Penhall was provided with the 2011 agreement. No such certificate was provided in relation to the 2012 agreement. 9 The conditions of operation of the bistro are set out in Clause 5), headed "Bistro Contractor's Covenants", as follows: (5) BISTRO CONTRACTOR'S COVENANTS (c) "The Bistro Contractor" will provide to The Company" certificates of currency for all the insurance policies noting the interest of the company including but not limited to, workers compensation and public liability prior to commencement. "The Bistro Contractor" is to keep all policies up to date and provide up to date certificate of currency as requested by "The Company". (d) "The Bistro Contractor" is responsible for all payments associated with the operation of the kitchen and dining area under this agreement including but not limited to all food costs, staff wages, taxes, workers compensation, superannuation, sick and accident and/or life insurance. (e) "The Bistro Operators" [sic] is to operate the kitchen and dining and/or eating areas on the following minimum agreed days and hours. MONDAY — SUNDAY Lunch & Dinner (d) "The Bistro Contractor" must provide meals and services to meet a standard of quality that is acceptable to "The Company". The determination of what is an acceptable standard of quality to "The Company" is at the absolute discretion of "The Company". (e) "The Bistro Contractor" is able to use all existing equipment as per the agreed signed inventory (attached to this contract). (f) "The Bistro Contractor" is not to sell any drinks. (g) "The Bistro Contractor" is responsible for the supply of the following items including but not limited to:- 1) Qualified labour to run the kitchen. 2) Labour to serve the dining and/or eating areas. These staff members must be Australian citizens and/or have current working visas, be able to speak and understand good English, and be suitably attired. 3) Keep the kitchen clean to health regulations, including all equipment. 4) "The Bistro Contractor" is responsible for all repairs to kitchen equipment. All equipment is to be handed over to "The Company" in working condition at the conclusion of the term. 5) All Staff serving drinks must provide an RSA certificate to the "Company" and be of an age of 18 years or above. (h) "The Bistro Contractor" must ensure that all staff engaged by it who are in view of the public wear uniforms that are approved by "The Company" along with any protective clothing required to comply with OH & S standards. (i) "The Bistro Contractor" is responsible for the repair or replacement of non-functioning kitchen equipment not deemed to be "Fair wear and tear" (conditions of equipment detailed on inventory) provided that this shall not apply until the date which is 12 months after the commencement of this agreement, during which period "The Company" shall be responsible For same. (j) "The Bistro Contractor" is responsible for payment of any fines incurred due to the operation of the restaurant. (k) No relationship of employer or employee between "The Company" and "The Bistro Contractor" implied by this agreement. (l) On termination the "The Bistro Contractor" shall not be entitled to any payment or other consideration in respect of any Goodwill accrued during the term.