We have recently written about Scotland's deposit return scheme ("DRS") and the key principles and mechanics governing the scheme, including the obligations it will place on retailers. Retailers will have a crucial role to play in the scheme by operating as return points for empty scheme containers (as well as charging a 20p deposit on all within-scope drinks and displaying information about the deposit and how it can be redeemed). This obligation will apply essentially to all retailers who sell drinks within the scope of the DRS, subject only to certain exemptions and exclusions as set out in our earlier post. The launch of the scheme has now been delayed to 1 March 2024, giving retailers further time to prepare for implementation of the scheme.
A popular option amongst retailers will be to install a reverse vending machine ("RVM") on the premises, into which consumers can put their empty containers to receive their 20p deposit back. But what implications might this option have for retailers who lease their premises?
Points for consideration by Tenant Retailers
It will be important for any tenant retailers who want to install an RVM to have regard to their obligations under their Lease and to consider whether there are any restrictions in the Lease which may inhibit their ability to install an RVM as desired.
When reviewing their lease obligations, tenant retailers should have regard to the following key points:
1. Alterations
The Tenant should consider whether any alterations will be required to install an RVM, and whether those alterations are permitted by the lease. If landlord consent is required, it is arguable that the Landlord should not withhold consent to any alterations which are required as the Tenant has a legal obligation to comply with the Regulations, albeit it could do so through accepting 'manual' returns over the counter rather than installing an RVM. In any case, however, it would be prudent for the Tenant to make the application for consent to avoid the risk of challenge by the Landlord at a later stage.
Indeed, it's conceivable that the installation of the RVM could require an amendment to the extent of the premises let. Clearly, any such change will require negotiation with the Landlord.
2. Planning Permission
The Scottish Government has enacted regulations to provide that the installation of an RVM in a wall of a shop or within the curtilage of a shop will not require planning permission. Retailers will not need to obtain this if:
a) the machine is no more than 3.5 metres tall;
b) its footprint does not exceed 80 metres square; or
c) in the case of an RVM being installed in the wall of a shop, no part of the development would protrude more than 2 metres beyond the outer surface of that wall.
Note that consultation is proposed for further regulations and the position is likely to change in the next few months.
3. Permitted Use
As retailers are obliged by law to operate a return point it would be arguable that operating an RVM as a return point is ancillary to the use of the property for the sale of goods. However, tenants should check the permitted use clause in their lease for any restrictions which may conflict with the installation of an RVM and seek advice if they have any concerns.
Conclusion
It is important to note that there is no obligation on retailers to install an RVM on their premises, as they can comply with their DRS obligations by operating a manual return point. However, any Tenant who wants to use an RVM should ensure that they review their lease to be confident that any measures taken are consistent with their lease obligations, or to enable discussions to be had with their Landlord if any variations are required.
Should you have any queries with regards to this or any other leasing matter, please do not hesitate to contact Danny George (danny.george@brodies.com) or Laurence Douglas (laurence.douglas@brodies.com), in our retail and leisure team.
