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Can a hairdressing chair be a lease? The broad scope of the Retail Shop Leases Act 1994 (NSW) – Landlord & Tenant – Leases



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The famous “duck test” goes: if it looks like a
duck, swims like a duck and quacks like a duck, then it is probably
a duck
. A similar argument is often made for leases, no matter
how much the parties argue they have a licence. If it has the
features of a lease, then it will likely be interpreted as a lease
and, if it is in a retail setting, it will often be a “retail
shop lease” that falls under the Retail Leases Act
1994
(NSW) (or its jurisdictional equivalent).

In the case of
Camseg Pty Ltd atf the Hair By Cam Discretionary Trust v
Napoli
[2022] NSWCATCD 81
, the lease/licence in question
related to the use of a chair space within a hairdressing salon,
part of the common industry practice of chair hiring. This case,
heard in the NSW Civil and Administrative Tribunal (NCAT),
considered whether the chair hire was validly renewed for a further
two years or whether the agreement was terminated. Relevant to this
determination was whether the hiring of a hairdressing chair
constituted a retail shop lease.

Lease or Licence

The definition of “retail shop lease” under the
Retail Leases Act is a premises that are used (or
proposed to be used) wholly or predominately for carrying on of a
business prescribed in the Act or a business (regardless of whether
it is prescribed) that is based within a retail shopping centre.
While an agreement to hire a hairdressing chair does not resemble
the more typical “bricks and mortar” style retail shop
lease, the NCAT decision noted that the definition of
“premises” includes stalls at markets or counters within
a shopping centre (such as a nail bar or engraver).

The NCAT decision referred to the prior Court of Appeal decision
of
Sydney Markets Ltd v Wilson [2011] NSWCA 201
in which a
stall at Paddy’s Markets was found to constitute a “retail
shop” and that the term “premises” should be
interpreted broadly as a space within a building, rather than a
restrictive definition of “shop” as a purpose-built area.
The definition of “premises” in the Act has been amended
since the Sydney Markets decision to explicitly include
market stalls.

In this case, NCAT found that the agreement to provide a
“Chair Space” being a hairdressing chair and its
surrounds amounted to a premises and as a result the agreement fell
under the Retail Leases Act. The fact that under the
agreement the owner of the salon business could, from time to time,
designate the space that was the “Chair Space” did not
impact this finding as once the space was so designated it became
the “premises”. It was not inconsistent with being a
retail shop lease simply because the relevant space might be
changed from time to time.

Implications of a Retail Shop Lease

As the agreement to supply the Chair Space was captured by the
Retail Leases Act, the various provisions under the Act
applied including the requirement that any new lease be accompanied
by a Lessor’s Disclosure Statement at least 7 days before it is
entered into. While the Agreement required notice of a renewed term
to be given by 1 December 2020, the commencement date of that new
term was not until 1 March 2021. NCAT found that the latter date
was, under the Act, the relevant date that the “lease was
entered into” for the purposes of section 11 of the Act. As no
Disclosure Statement was provided, section 11 allowed the lessee to
terminate the lease within six months of 1 March 2021, which it did
via a letter from their lawyers.

The result is that a termination of the lease, viewed by the
lessor as an “early termination” was valid due to the
lack of a Disclosure Statement. While not relevant to the decision
at hand, many other requirements under the Act would as a result
apply to the chair hire agreement. The decision is another reminder
of the broad scope of the Retail Leases Act and that with
agreements to hire or licence an area consideration should be taken
whether the Act might apply.

The content of this article is intended to provide a general
guide to the subject matter. Specialist advice should be sought
about your specific circumstances.

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