Commercial Lease Dispute: What to Do When Your Landlord or Tenant Breaches the Lease

You’re in a commercial lease dispute. Maybe your landlord is refusing to fix the roof, threatening to lock you out, or demanding an outrageous make-good at the end of term. Maybe you’re the landlord and the tenant is three months behind. Either way, real money is at stake, the lease is 60 pages long, and you need to know what to do next.

First: which law governs your lease?

Commercial leases in Australia sit under two layers of law. The lease itself is a contract and governs most day-to-day issues. On top of that, if the premises are “retail” (broadly, shops, cafes, services to the public, and in some states any premises under a certain size or rent), state retail leasing legislation overrides the lease where they conflict:

• New South Wales: Retail Leases Act 1994
• Victoria: Retail Leases Act 2003
• Queensland: Retail Shop Leases Act 1994
• Western Australia: Commercial Tenancy (Retail Shops) Agreements Act 1985
• South Australia: Retail and Commercial Leases Act 1995

These Acts limit what landlords can charge, require disclosure statements, control rent reviews and outgoings, give tenants rights to compensation for disruption, and route disputes to a specialist tribunal (NCAT, VCAT, QCAT, the Western Australia SAT, or the South Australian Small Business Commissioner and Magistrates Court) or a Small Business Commissioner mediation before court. If you are a retail tenant, the landlord’s leverage is much smaller than the lease makes it look.

The most common disputes and the document that resolves each

• Unpaid rent (landlord). Before you can terminate or re-enter, most leases require a formal notice to remedy breach, and some state laws add their own notice rules. Skip it or get the wording wrong and your termination is unlawful, exposing you to a damages claim.
• Landlord won’t repair (tenant). A written breach notice citing the repair covenant in the lease and any statutory obligation, with a deadline and a statement that you will arrange the repairs and claim the cost, or apply to the tribunal or the Small Business Commissioner.
• Lockout or threatened lockout. Wrongful re-entry is one of the most expensive mistakes a landlord can make. A firm legal response demanding restoration of possession and reserving a damages claim.
• Bond or bank guarantee not returned. A letter of demand citing the lease’s bond clause and the retail leasing Act’s timeframe.
• Make-good and end-of-lease. Disputes over what “original condition” means. A reasoned written response referencing the lease clause and condition report, with photographs.
• Rent relief or hardship. A structured written proposal, converted into a deed of variation or payment plan once agreed.

Mediation before the tribunal

In most states, retail lease disputes must go to mediation through the Small Business Commissioner (or equivalent) before a tribunal will hear them. Mediation is cheap, fast and confidential, and a well-drafted written position going in, setting out the breach, the lease clause and the outcome you want, dramatically improves your result.

Why you need the right document, not just an email

In commercial leasing, procedure is everything. Notices must be in the form the lease and the statute require, served the way the lease specifies, and give the correct period to remedy. An angry email is not a notice. A generic template that does not reference the specific lease clause and the state Act is not a notice either, and a competent property manager or lawyer will say so. The tribunal will ask to see it.

DIY vs Claim Done vs lawyer

Move first and move properly. Notice to remedy breach for $49, letter of demand for $49, or a legal response to the other side for $49. Done in about 5 minutes. You approve it before it is sent.