Who Really Controls the Business? VCAT's Ruling on "Change of Control" Clauses in Retail Leases

When a retail tenant company changes its shareholdings, most landlords look to the change of control clause in the lease. A recent Victorian Civil and Administrative Tribunal (Tribunal) decision from October 2025 makes clear, the real question is not who owns the shares – it is who controls the business.

In San Remo Australia Pty Ltd v San Remo Holdings Pty Ltd [2025] VCAT 970, the Tribunal delivered a practical interpretation of change of control clauses, providing guidance for both landlords and tenants.

The Background

The San Remo Ballroom, a long-established events venue on Nicholson Street in Carlton North was leased by a tenant company jointly owned by two corporate shareholders:

• Buca Investments Pty Ltd (Buca), associated with Ms Mary Cadoni (Cadoni), and

• Kalubon Pty Ltd (Kalubon), associated with Mr Raphael Hirsh (Hirsh).

Both were guarantors and on paper, jointly involved in the enterprise.

Reality had quietly departed from the paperwork some years earlier. From around 2014 to 2015, as Hirsh's health deteriorated, Cadoni assumed progressively greater responsibility for the business. By 2020, Hirsh had ceased any meaningful involvement. He passed away in March 2023.

In December 2022, Kalubon transferred its 51% shareholding to Buca - formalising what had long been true in practice by giving Cadoni's entity full ownership of the tenant company.

Upon receiving an ASIC notification of the transfer, the landlord issued default notices under s 146 of the Property Law Act 1958 (Vic), contending that the share transfer constituted a "change of control" in breach of the lease.

The key issue became simple: was there actually any change at all?

The Clause in Question

The relevant provision, clause 1(t)(iii) of the subject lease, operated as these clauses typically do.  It deemed a change of control to occur where:

1. there is a change in the membership of beneficial ownership of the tenant; and

2. as a result, the business becomes “effectively controlled” by a person who did not effectively control it at the start of the lease.

The second limb is decisive.

The clause asks: who runs the business – not who owns the shares.

VCAT's Reasoning

Senior Member Nash considered the clause's commercial purpose was to protect landlords from a material change in the risk profile of their tenancy – specifically the arrival of an unknown or untested party at the helm. The clause is not designed to catch internal reorganisations that change nothing of practical significance.

Drawing on authorities including:

• Mount Bruce Mining Pty Ltd v Wright Prospecting Pty Ltd [2015] HCA 37

• Section 50AA of the Corporations Act 2001 (Cth)

• Plzen Pty Ltd v P&O Wharf Management Pty Ltd [2007] VSC 318

• Kay v KRM (Vic) Pty Ltd [2020] NSWCA 92,

the Tribunal focused on who held functional and practical control of the business.

The conclusion was straightforward, Cadoni had effectively controlled the business since at least 2014 to 2015. The December 2022 share transfer merely formalised the long-standing reality. It did not introduce any new controlling mind, therefore:

• there was no change of control;

• the deemed assignment provisions were not triggered; and

• the default notices were invalid.

The Tribunal also noted, even if there had been a technical breach, the landlord's refusal of consent under s 60 of the Retail Leases Act 2003 (Vic) was unreasonable. Nothing about the tenant's financial or managerial position had materially changed.

What This Means for You

If you are a tenant operating through a company with multiple shareholders, a share transfer does not automatically breach a change of control clause. The question is: Has effective, practical control actually shifted to someone new? If the same individual has been running the business consistently, realigning the share register with the reality is unlikely to trigger a breach. That said, the prudent course is always to review your lease carefully before proceeding, and where there is genuine doubt, to seek consent proactively.

If you are a landlord, this decision is a reminder that change of control clauses require a substantive, not merely procedural assessment. Issuing default notices based on a formal change in the share register, without examining who actually manages the business, carries real risk.

The case also highlights the pitfalls of a mismatch between legal documentation and commercial reality. For years, the tenant company's share structure did not accurately reflect who actually ran the business and this gap resulted in mediation, default notices, a contested hearing, and a detailed 63 paragraphs decision most of which might have been avoided by proactive housekeeping.

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