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Definition of a Retail Shop by Paul Anderson | October 2006

A recent decision of the Administrative Decisions Tribunal of New South Wales has highlighted the arbitrary distinctions that can arise in relation to the definition of a “Retail Shop” under the Retail Leases Act 1994. In Kwon v Kim, Judicial Member Fox had to determine if the Tribunal had jurisdiction to deal with a claim for damages for failure to repair under a lease which permitted the premises to be used as an “Internet Café.”

Legislation “Retail Shop” is defined in Section 3 of the Act as “premises that are used wholly or predominantly for the carrying on of one or more of the businesses specified in Schedule 1 (whether or not in a retail shopping centre)”. If the premises are not a Retail Shop, the occupancy cannot be the subject of a Retail Shop Lease and the Tribunal would have no jurisdiction. Schedule 1 lists 134 descriptions of shops, some of which are given in multiples, so that more than 150 separate and distinct uses are named. This is in contrast to Parliament’s usual approach of defining concepts in general terms rather than trying to list particular examples. There was no listing in Schedule 1 for Internet Cafés which is perhaps not surprising since such establishments did not exist when the legislation commenced in 1994. The Member described the use of an Internet Café as the “hire, in situ, of computers to either give access to the internet, email or otherwise to use the available programs to process information or play games”. (In situ means in its situation or position.) Schedule 1 contained only two uses that appeared relevant: Equipment Hire Shops or Games and Hobby Shops.

GAMES AND HOBBY SHOPS The Member held that even if the listing could be read as a game shop or a hobby shop, the term “game shop” meant a shop selling games. It did not cover, for example, a site such as a pinball arcade which hired out the use of games machines. It followed that the listing did not cover an Internet Café.

EQUIPMENT HIRE SHOPS The Member considered that this listing required a taking away of goods and not a hiring of computer equipment. An Internet Café could best be described as the hire of the use of the machine rather than the hire of the machine itself.



There were four other listings that specifically referred to a hiring, namely bridal wear sales and hire shops; costume and formal wear hire shops; television, video equipment and other domestic appliances hire shops; and video tape and music libraries. None of the above listings could possibly involve a use on the premises of the goods hired. For that reason, an equipment hire shop was also limited to equipment which is truly packed up and taken away. The Member found support for this approach by comparing the situation with a laundromat which is not a listing in Schedule 1. In the case of a laundromat “there is traded a temporary right of access to a machine for it to carry out its functions”. This was similar to the situation with an Internet Café and only strengthens the Member’s view that an equipment hire shop required the taking away of hired items. The result was that an Internet Café was not a Retail Shop and the Tribunal had no jurisdiction to hear the dispute.

Fine Distinctions The Member highlighted how arbitrary the inclusion of a use can be in the definition. For example, the Member pointed out the bridal wear sales and hire shops applied to sales as well as to hires but costumes and formal wear hire shops were limited to hires. It is difficult to see the logic or the rationale for the distinction. The Member also referred to a previous decision of Justice Young in Chathay Developments Pty Limited v Laser Entertainment Pty Limited 1998 where a video tape library was held to fall within the Schedule but a shop that sold video tapes did not.

Conclusion A layman would probably regard an Internet Café as a Retail Shop. Certainly, Parliament thought so because shortly after this decision it amended the Schedule to included Internet Cafés. Many of the fine distinctions referred to in the case could be avoided if there was a general definition of a retail shop, e.g. “premises from which goods and/or services are provided by retail to the public.” There could be a listing of any exclusions or exceptions which Parliament has decided upon for policy reasons. It would then be left to the courts to determine in each case whether the use of the premises was a Retail Shop. In discharging this function, the courts would need to bear in mind the purpose of the legislation, namely to provide additional protection to tenants of premises providing retail goods and/or services to the public. A general definition avoids the arduous task of going through some 150 uses in order to determine whether a particular lease is covered by the legislation. A general definition has the added advantage that if new types of stores emerged with technological change, e.g. an Internet Café, such a new type of store may still come within the general definition without the necessity to add it to the Schedule by amendment.



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Definition of a Retail Shop  

A recent decision of the Administrative Decisions Tribunal of New South Wales has highlighted the arbitrary distinctions that can arise in r...

Definition of a Retail Shop  

A recent decision of the Administrative Decisions Tribunal of New South Wales has highlighted the arbitrary distinctions that can arise in r...