A RECENT State Administrative Tribunal decision that hinged on the definition of a retail shop could have major implications for business owners.
A RECENT State Administrative Tribunal decision that hinged on the definition of a retail shop could have major implications for business owners.
The case was brought before the SAT this month after Bentley-based car wash business Kwik 'N' Kleen lodged a complaint against its landlord, Sears Wainwright Superannuation, for allegedly charging excessive management fees.
It's alleged the landlord overcharged for outgoings and various fees that Kwik 'N' Kleen was required to pay as tenants on the property.
In order to determine whether it had jurisdiction to adjudicate on the dispute, the SAT had to determine whether Kwik 'N' Kleen's lease was categorised as a 'retail shop lease' under the state's current Commercial Tenancy (Retail Shops) Agreements Act.
If the car wash were determined to be a retail shop, it would have grounds within the SAT to reclaim the thousands of dollars more it had paid for the management fees, with Sears Wainwright possibly forced to reimburse Kwik 'N' Kleen.
Perth-based law firm Denning Deane unsuccessfully argued that, although the core business was a car wash, Kwik 'N' Kleen was a retail shop because vendor machines on the premises sold goods by retail in the form of chamois, air fresheners and miscellaneous car cleaning products.
Under the act, a retail shop must be a business on any premises situated in a retail shopping centre, or a business not at a shopping centre but that is used wholly or predominantly to sell goods by retail.
The SAT found neither the automatic car wash nor the manual car wash bays satisfied the required involvement of the sale of goods by retail, and that the retail sale via vendor machines at the premises was not an essential part of the business.
Based on the determination, the issue over management fees and outgoings of the business did not fall within the SAT's jurisdiction and the application by Kwik 'N' Kleen was dismissed.
Kwik 'N' Kleen is now considering an appeal to the Supreme Court.
Lawyers for the company say that, as a result of the decision, the business does not have the protection afforded to companies that fall under the commercial tenancy act, particularly in regard to aspects of the business such as management fees landlords can charge a tenant.
The SAT's decision came as Commerce Minister Troy Buswell announced amendments to the act, expected to be introduced to state parliament next month.
Mr Buswell said the reforms aimed to create a fair environment for retail tenants and ensure a fair and transparent framework for both landlords and tenants to pursue their commercial interests.
Among other things, changes to the act are designed to: better protect the rights of tenants with respect to renewal options; require landlords to include additional information in the disclosure statements provided to tenants; and improve the negotiating power of tenants by prohibiting landlords from passing on their legal fees to tenants.
