A VCAT decision, Tiba Kebab Pty Ltd v G8 Education Limited (Building and Property) [2025] VCAT 987 (‘Tiba Kebab’), has provided useful guidance on what happens when a lease that was originally a “retail premises lease” is renewed for a further term and where the Retail Leases Act 2003 (Vic) (the ‘RLA’) then ceases to apply in respect to the lease. The decision confirms that the RLA does not automatically apply to each renewal of the lease and that its application depends on whether an exclusion applies at the time of renewal. Further, it highlights that the drafting of a lease’s provisions is critical to what happens to terms affected by the RLA on renewal.
In this decision, the original lease was definitively a retail premises lease when it commenced. However, throughout its term the lease was assigned to a listed company. This meant that, by the time options for further terms were exercised, the tenant fell within a statutory exclusion of the RLA. The tribunal ruled that protections under the RLA do not automatically carry over to renewed leases and that this specific lease was no longer regulated by the RLA because the tenant was a listed corporation and the listed-corporation exclusion therefore applied.
This raises an important reminder that each renewal is effectively treated as the commencement of a new lease for the purposes of RLA.
The Tribunal also considered what happens to provisions affected by the RLA in an earlier term, such as rent review clauses that may have been void or terms implied into the lease by RLA. In Tiba Kebab, the relevant rent review covenant was drafted to cater for both scenarios. The covenant had one version of its rent review that applied if the RLA applied to the lease, and another version if it did not. As a result, no clause of the lease was rendered void when the RLA applied, and the renewed lease could operate in accordance with the “non-Retail Leases Act” rent review mechanism when the Act no longer applied.
The outcome in this case heavily relied upon by the wording of the rent review and renewal provisions. In other leases, where the drafting does not clearly distinguish between periods when the Act applies and when it does not, the position may be different. Terms implied by the Act in an earlier retail term may, in practice, remain embedded in the renewed lease, and provisions previously rendered void may not easily be revived without express drafting.
For landlords, the key messages are:
- Do not assume that the RLA will automatically apply on renewal. Check whether any exclusion (such as a listed‑company tenant) is triggered at the renewal date.
- Ensure your option, renewal and rent review clauses expressly deal with both scenarios – where the Act applies and where it does not – so that you are not left with uncertain or unintended outcomes.
- Pay close attention to any notice requirements and timeframes in rent review machinery. In Tiba Kebab, it was deemed that the landlord could not rely on the protections in the Retail Leases Act. The Landlord then failure to object to a proposed rent within a timeframe prescribed by the lease itself, meaning that the proposed rent then became binding for the entire term.
Tenants should likewise be cautious:
- If your business structure changes – for example, if you list or become part of a listed group – you may lose RLA protections on renewal and breach a term of the lease.
- Before exercising an option, obtain advice on whether the RLA will apply to the renewed term and how the rent review and outgoings provisions will operate in that context.
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