Fruit-and-veg market stand-off heads to court as sellers face eviction

The state government-owned Melbourne Market Authority has launched legal action to evict wholesale fruit and vegetable sellers who refuse to sign up to new lease agreements with significantly increased rents.

A protracted, eight-month dispute between hold-out store owners and the authority escalated on Tuesday morning when the MMA issued a dozen wholesalers with notices giving them 30 days to either sign up to the new terms or vacate their premises at the Epping market in Melbourne’s north.

The Melbourne Market in Epping. A protracted dispute between the market authority and store owners is heading for the courts.Credit: Justin McManus

The MMA also initiated Supreme Court proceedings aimed at shoring up its legal position ahead of any challenge by aggrieved traders. The authority is seeking a court declaration affirming the enforceability of its lease agreements.

The developments set up a likely courtroom showdown between the authority and Fresh State, a representative group for wholesale traders who supply fruit and vegetables to greengrocers, independent supermarkets and restaurants across the state.

Although there are only 12 traders with expired leases who are yet to agree to new terms, a further 100 lease agreements come up for renewal later this year.

The Melbourne Market Authority and Fresh State have been bitterly at odds since September when the authority first informed market tenants whose leases had expired of a proposed rent hike.

The Melbourne Market Authority and Fresh State have been bitterly at odds since September.Credit: Justin McManus

“The MMA is concerned to achieve clarity as to the future occupation of store premises and relevant entitlements of market businesses,” the authority told the tenants in letters sent earlier on Tuesday. “The MMA therefore intends to commence legal action to determine the status of any occupation of the premises at the expiration of the notice.”

MMA chairman Peter Tuohey told this masthead the dispute had gone through a lengthy conciliation process and needed to be resolved.

“We have worked with the government, we have worked through the tenants and Fresh State,” Tuohey said. “Hopefully, the tenants and Fresh State accept the new deal and we can all get back to work.

“It should be clear to the tenants that this is the last offer. We want to move on and we hope the tenants want to move on and get on with their business.”

Money changes hands among traders at the market. There are 12 traders with expired leases who are yet to agree to new terms.Credit: Justin McManus

Tuohey said the rent increases would have a negligible impact on the cost of produce.

Fresh State chief executive Jason Cooper, who previously called for a rent freeze and for the MMA board and senior management to resign over their handling of the issue, condemned the latest move.

A further 100 lease agreements will come up for renewal later this year.Credit: Justin McManus

“It’s disappointing that the Melbourne Market Authority have decided to take such a heavy-handed approach to dealing with their tenants, which is surprising, and not something that we should expect from a government landlord,” he said.

Fresh State has run a potent campaign against the proposed rent increases. In September, the authority wrote to tenants informing them that under its proposed, long-term lease renewals, rents would increase by a fixed rate of 7.62 per cent a year over 10 years.

This figure was based on a Valuer-General Victoria assessment which found that rents charged to store owners were between 38 per cent and 55 per cent below market value.

After Fresh State publicly sounded alarm about the proposed increases, claiming they would drive wholesalers out of business and increase the price of fruit and vegetable for Victorian families, the MMA asked the Valuer-General to appoint an independent valuer to conduct a further evaluation.

Based on additional information provided by Fresh State, the Valuer-General found the existing leases were between 23 per cent and 38 per cent below market value.

The hold-out tenants have been given a “final offer” of yearly rent increases of between 2.4 per cent and 3.6 per cent – plus CPI – over the next nine years. According to Australia’s current rate of inflation, this equates to rent increases of between 4.8 per cent and 6 per cent a year.

The MMA calculates that annual rents at its larger premises will increase to $121,600 by the end of the nine-year leases. Traders have also been given the option of signing up to shorter, three-year-leases.

The Melbourne Market Authority is overseen by Agriculture Minister Ros Spence. “This is a matter for the Melbourne Market Authority,” a government spokesperson said. “As legal proceedings are to be before the courts it would be inappropriate for us to comment further at this time.”

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