A recent Victorian case has made one thing clear — you can’t get around the Retail Leases Act 2003 (Vic) by adding the ‘right words’ to your lease. What matters is whether both the term of the lease is for more than 15 years, and the lease actually imposes an obligation on a tenant to carry out substantial work, not simply including wording to that effect.
To understand why this distinction matters, it’s necessary to look at the Ministerial Determination, which sets out when certain long-term leases may fall outside the definition of ‘retail premises’ under the Act.
Key takeaways
- You can’t “contract out” of the Retail Leases Act 2003 (Vic) just by including a clause saying so.
- The Ministerial Determination only applies if tenants have real, specific obligations to do major work.
- Clauses that try to exclude the Act are void under section 94.
- Always get professional advice before signing or renewing a long-term lease.
What is the Ministerial Determination?
The Retail Leases Act applies to a “retail premises lease” which although not a defined expression, s4(a) of the Act defines retail premises.
The Ministerial Determination excludes from the definition of “retail premises” in s.4(1) premises which are leased for a term of 15 years or longer and which contains provisions that:
….
(d) impose an obligation on the tenant to carry out substantial work on the Premises which involves the building, installation, repair or maintenance of:
(i) the structure of, or fixtures, in the Premises; or
(ii) the plant or equipment at the Premises; or
(iii) the appliances, fittings or fixtures relating to the gas, electricity, water, drainage or other services; or
(e) impose an obligation on the tenant or any other person to pay any substantial amount in respect of the cost of the matters set out in (d)(i), (ii) or (iii); or
(f) in any significant respect disentitles the tenant or any other person to remove any of the things specified in (ad or at any time after the end of the leases to which paragraphs (a)….apply.
(emphasis added)
If premises are not “retail premises” the lease is not a “retail premise lease” within the meaning of s.11 and the Act does not apply.
The case: A long-term lease that tried to avoid the Act
In Lake Fyans Recreational Area Committee of Management Inc v Halski Pty Ltd & Anor [2025] VCC 1506, a landlord and tenant signed a 21-year lease. The lease contained the usual standard provisions in clause 3 such as requiring the tenant to keep the premises in the same condition as at the start of the lease and providing that the tenant was not obliged to carry out structural or capital repairs or alterations or make payments of a capital nature.
The lease also included two additional provisions, one of which was an acknowledgment that the Act did not apply because, pursuant to the Ministerial Determination, the leased premises were not ‘retail premises’.
The other additional provision contained the basis on which it was said that the Ministerial Determination was enlivened and is set out below:
Despite any other condition contained in this Lease, and without limiting the Tenant’s repair obligations under general condition 3, the Tenant shall be responsible for all substantial work on the Premises which involves the building, installation, repair, replacement or maintenance of:
(a) the structure of, or fixtures, in the premises; or
(b) the plant or equipment at the premises; or
(c) the appliances, fittings or fixtures relating to the gas, electricity, water, drainage or other services.
The lease also provided that permanent improvements to the premises would become the property of the landlord at the expiration or determination of the lease.
The dispute
A dispute later arose regarding the operation of the lease. Although the lease included a clause stating that the Retail Leases Act did not apply on the basis of the Ministerial Determination, the provision relating to ‘substantial work’ only applied if such work ever became necessary. It did not impose an actual, immediate obligation on the tenant to undertake substantial work.
The tenant argued that the Retail Leases Act still applied. The landlord disagreed and commenced a proceeding in the County Court.
What the Court decided
The Court agreed with the tenant. Macnamara J found that:
- The lease did not genuinely require the tenant to do any substantial work — it only said the tenant would be responsible if such work became necessary.
- ‘Substantial work’ had to be identified in the lease, and there had to be a clause which imposed a real and actual obligation from the outset.
- The landlord’s estoppel argument failed — an estoppel by deed could not prevail against the mandatory provisions of a statute.
- The premises were ‘retail premises’.
Why this matters
This case is a clear reminder that when it comes to retail and commercial leases in Victoria:
- The law looks at the reality of the parties obligations under the lease, not the wording.
- Clauses designed to “get around” the Act don’t hold up.
- Parties cannot contract out of the Retail Leases Act.
What landlords and tenants should do
Before signing a lease, both landlords and tenants should get legal advice to, amongst other things, determine whether the Act applies.
At MST Lawyers, we can help you:
- Check whether your lease is covered by the Retail Leases Act 2003 (Vic)
- Review or draft lease agreements to make sure they’re compliant and fair
- Resolve disputes quickly and cost-effectively through negotiation or VCAT
For advice tailored to your situation, contact Evelyn Marcou, Principal, Property & Leasing, or call +61 3 8540 0200.
Freqently Asked Questions
1. Does the Retail Leases Act 2003 apply to long-term leases? It may. A lease longer than 15 years is only excluded if it also contains real, enforceable obligations for the tenant to carry out substantial work under the Ministerial Determination.
2. What is the Ministerial Determination under the Retail Leases Act? It is a formal determination that sets out when certain long-term leases may be excluded from the definition of ‘retail premises’, particularly where substantial work obligations are imposed on the tenant.
3. Can a landlord contract out of the Retail Leases Act? No. The Act is mandatory. Clauses attempting to exclude it are void under section 94.
4. What counts as ‘substantial work’ under a lease? Substantial work includes building, installation, repair or maintenance relating to the structure, fixtures, services, or plant and equipment of the premises.
Links:
→ Retail & Commercial Leasing Lawyers – MST Lawyers
The Victorian Small Business Commission (VSBC) provides guidance on retail leasing, which is governed by the Retail Leases Act 2003. Key guidance includes the landlord’s obligation to provide a disclosure statement at least 14 days before a lease is signed, a requirement for written leases, and information on tenant and landlord rights and responsibilities. The VSBC also offers a dispute resolution service for retail lease issues.
