Tribunal ruling burns Infusion

THE State Administrative Tribunal has upheld the right of commercial landlords to veto the sale of retail leases if they object to the prospective purchaser.

The owner of Taj Coffee Company, which trades as Infusion Coffee and Tea in Plaza Arcada, attempted to assign its lease to Indra Pratama, whose professional background was in information technology.

Managing agents for Plaza Arcade, Lease Equity, opposed the lease reassignment on the grounds that Mr Pratama lacked significant retail experience, which ultimately led Infusion owner Terry Netto to appeal at the tribunal.

Tribunal-led mediation between the parties in April failed.

The tribunal ruled the landlord was reasonable in its refusal to allow the lease to change hands because Mr Pratama did not provide sufficient information to allay fears that the business may fail.

Lease Equity director of assets, Andrew Pratt, said it was crucial that any new lease owner in a competitive retail environment held necessary experience.

Mr Pratt said a poorly trading tenant could act as a "cancer" within a shopping centre, and could have a detrimental effect on surrounding shops.

The competitive environment of the plaza was not the ideal place to start a retail career, according to Mr Pratt.

"If you look within 200 metres in either direction I think there's about 22 or 23 other coffee offers, so you have to have someone in this particular situation who is very good at what they do, has experience in what they do and has done it before," he said.

But Mr Netto said he thought Infusion's reputation would hold the new owner in good stead.

"We've been trading as Infusion Coffee and Tea for the last 10 years now, so there is a lot of related goodwill with the shop already," Mr Netto said.

"I know you can't really sell goodwill, but we've got a regular clientele and as long as he follows the systems and uses the same products, I can't see that business is going to drop off."