VIC storage leasers may be eligible for refund

Companies leasing warehouse facilities in Victoria may be entitled to a refund from their landlords thanks to a recent decision made by the Victorian Supreme Court of Appeal.
Essentially, the Court held that the lease of premises used to provide cold storage and logistics services was a ‘retail lease’ for the purposes of the Retail Leases Act 2003 (Vic), Hunt & Hunt lawyers has shared.
Hunt & Hunt noted that the decision has practical implications for warehouse operators and freight forwarders, making many entitled to repayment of expenses including land tax and repair costs going back six years.
The Retail Leases Act impacts all aspects of the formation, operation and ending of covered leases. In terms of costs for tenants, landlords are not able to pass on land tax liability or legal costs associated with the preparation of leases, and
landlord are responsible for maintaining premises in the same condition as at the beginning of the lease, this includes equipment, appliances and fittings provided on the premises under the lease.
For the case that brought about the decision, IMCC Group (Australia) Pty Ltd v CB Cold Storage Pty Ltd [2017], the Court had to consider whether a lease of premises used to operate cool storage facilities would be classed as a retail lease.
“The landlord argued it was not due largely to the nature of the services provided and the fact that almost all of the tenant’s customers were businesses,” Hunt & Hunt shared. “The Court of Appeal held that the lease was a retail lease and took the following factors into account: any person could purchase the storage services if the appropriate fee was paid; the tenant’s business was open during normal business hours; and the tenants customers were the actual consumers of the storage service.”
The Court was reportedly not concerned that the premises were acquired for a business purpose.
Hunt & Hunt advises that the criteria for ascertaining whether a warehousing and logistics business’ lease is eligible to be classified as retail will include the rental amount, the size of the premises, whether customers can attend the premises, the hours of operation, the services provided and the permitted use of the premises under the lease.
“Every tenant that provides warehousing and logistics services should have their lease reviewed to determine whether it is potentially a retail lease,” Hunt & Hunt noted. “If it is a retail lease under the law, but the tenant has been paying land tax and maintenance and essential safety maintenance costs, there may be a very strong case to demand repayment of those costs from the landlord.”

Crane designer fined for 2013 accident

In a legal first a West Australian crane designer has been fined $16,000 in relation to a 2013 crane accident at Karara.

Entschmann Engineering owner Wally Entschmann pleaded guilty to breaches of the Mines and Safety Inspection Regulations after a dropped load incident, the West Australian reported.

A design modification which had reduced the thickness and weight of boom support plates an 80 tonne crane resulted in an accident during crane testing to 110 per cent capacity.

A load weighing 85 tonnes was dropped approximately five stories to the ground when the boom folded in half.

Perth Magistrates court heard the design modification rendered the crane unsafe to insufficient capacity per the manufacturer’s specification of 80 tonnes capacity.

Defense lawyer Adam Sharpe said the crane manufacturer and external verifier were also obligated to ensure the safety of the crane, however Entschmann accepted responsibility for the failure.

The company was also charged $5000 in court costs.

DMP director of mines safety Andrew Chaplyn said the safety in design was one of the major areas of concern identified by the department.

“We hope this sends a strong message to designers working across the mining industry, but in particular in Western Australia, that negligent or inferior services will be not be accepted,” he said.

Last week a crane tipped over during testing at the Roy Hill mine, and is currently under investigation by the DMP.

Australian Mining understands the crane operator was instructed by an inspector to override the crane’s computer while lowering the boom for inspection, causing the boom to tip forwards onto the ground.

Visy fined $52,470 for suspending worker

Visy Packaging has been fined $52,470 for suspending a worker after he sidelined two defective forklifts in 2011.

The Australian Manufacturing Workers Union said the money will be paid to the union after a Federal Court judge found Visy Packaging wrongly investigated, suspended and issued a final warning to WHS delegate Jon Zwart for ‘tagging’ two forklifts with defective reversing warning beepers.

The company was ordered to pay $23,100 for wrongly investigating and suspending Zwart after refusing a company proposal that the dangerous forklifts be re-used with drivers honking a warning.

Justice Bernard Murphy also set a $24,750 penalty for Visy wrongly issuing a final warning to Zwart, which the unions says makes up 75 per cent of the maximum penalty.

Visy executive Robin Street was also fined $4,620.

The judge said the penalty should act as a deterrent for any company which fails to take OHS concerns seriously.

“The contraventions are serious and Visy must be deterred from again infringing the workplace right enjoyed by health and safety representatives and employees to raise their legitimate OHS concerns,” Justice Murphy said.

Zwart, who worked at Visy for 25 years, said he was glad the stressful matter was over.

“What’s happened to me has changed attitudes on the shop floor, the guys are stoked because we’ve established the principle of our workplace rights and responsibilities under the OHS Act,” Zwart said.

“It’s also our right as employees to have a safe workplace, to be provided with a safe environment.”

UK court case could kill off 3PL industry

A new legal precedent means that small mistakes in the complicated high-end manufacturing supply chain can send third-party logistics operators to the wall – through no fault of their own.
 
The UK-based International Freighting Weekly has reported on a frightening prospect for shippers and shoppers alike. In a worrying development for international trade, a British High Court ruling has found a freight company liable for the theft of products that had been delivered to its warehouse in error by a client, with its insurance policy being declared void due to the clerical error.
 
It all started when GBP 345,000 (AUD 700,000) worth of Bluetooth mobile phone devices which were meant to have been flown to Hong Kong, were mistakenly delivered to Uniserve’s local warehousing facility in Manchester. While the goods were at the warehouse, a robbery occurred and the devices disappeared into the criminal underworld.
 
Uniserve, which would have charged just $6 for moving and storing a pallet of that size, relied upon its limited liability insurance to cover any damage or theft of products. However, because the goods had been delivered by mistake – regardless of the fact that the mistake was not Uniserve’s – the insurance company voided its policy. Uniserve now faces a total bill – including legal costs – of nearly $4 million.
 
On May 11, Judge Mackie QC ruled at the high court that, as the goods had been delivered in error, no limited liability insurance contract could apply.
 
Iain Liddell, CEO at Uniserve told IFW that: “This is going to change the way everything is done through the whole transport chain. Under this new regime, not only will moving a pallet become extremely expensive, but we will have to have far more information about what we handle for other people.
 
“We would have charged $6 for moving that pallet,” explains Liddell. “The increased insurance liability alone would bring costs up to $4,700. Can you imagine that effect on a $2,000 shipping cost? This isn’t pie in the sky. It’s now case law. Unlimited liability claims can be made and insurers can revisit six years of claims to establish if an error has been made, and then demand full payment from anyone in the supply chain who can be held responsible.”
 
Gavin van Marle, editor of IFW agrees. “We are now in a situation where freight service providers operating under limited liability terms and conditions may find themselves uninsured and with unlimited liability in the event of a supply chain error – even if it is caused by a third party or the principal. It puts freight operators in a terrible situation: at best they will have to develop a system of paperwork and checks that will cost a fortune to administer. At worst, they face unlimited liability if an error is made, even when it is not their fault.”
 
Could it happen in Australia? Click here to send your comments to the editor.
 

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