Commercial tenancy disputes in Australia: when landlord and tenant clash
Lease disputes are more common than you think
The landlord-tenant relationship in a commercial lease does not always run smoothly. From disagreements over rent and outgoings, to disputes over make-good, to allegations of breaching the terms — commercial tenancy disputes are among the most common types of business dispute.
Understanding the resolution process early helps you respond quickly and in the right direction when a dispute arises.
The most common types of dispute
Rent and outgoings disputes: Disagreement over how the rent is calculated after a review, or over which outgoings the tenant must bear and whether the calculation is correct.
Disputes over condition and repairs: Who is responsible for what repairs? The landlord usually covers the building’s structure; the tenant usually covers their own fittings and equipment. But that line is not always clear in the contract.
Make-good disputes: At the end of the lease, the landlord asks the tenant to return the premises to their original condition, but the two sides disagree on what the standard for “original condition” is, or on who bears how much of the cost.
Disputes over renewal and options: The tenant forgets to exercise the renewal option on time and wants to keep leasing, but the landlord refuses or wants to change the conditions. This is a dispute that often has no good way out for the tenant, because the deadline is usually firm.
Landlord ending the lease early: The landlord alleges the tenant has breached the terms and wants to terminate the lease — the tenant disagrees with the allegation or wants time to fix it.
Assignment or sublease disputes: The landlord refuses to consent to the tenant assigning or subleasing the premises.
The resolution process — from lowest to highest
Step 1 — Direct negotiation: Communicate in writing (email is best — it leaves evidence), and set out your position clearly based on the contract terms. Many disputes are resolved at this step if both sides act in good faith.
Step 2 — Mediation: Bring in a neutral third party to help the two sides negotiate. This is usually faster and cheaper than litigation. Many states have a commercial mediation service.
Step 3 — State body (for retail leases): If you have a retail lease, each state has its own retail lease dispute resolution body — usually faster and cheaper than the courts. For example, NSW has the NSW Small Business Commission; VIC has the Victorian Small Business Commission.
Step 4 — Court: The last resort — expensive, time-consuming, and with no guaranteed outcome. Suited to disputes over large sums or important points of legal principle.
Commercial leases (non-retail) — fewer protections
With a standard commercial lease (not retail), you have fewer dispute resolution options. The state system for retail leases does not apply. Negotiation, mediation and the courts are the main options.
This is why the original commercial lease must be drafted carefully — your protection depends on the terms of the contract, not on automatic statutory protection.
When the landlord breaches
It is not only the tenant who can breach — the landlord can also breach their obligations under the lease. For example: failing to carry out repairs they are responsible for, interfering with your right to quiet enjoyment, or refusing a renewal option without lawful reason.
Record every problem in writing — send an email rather than just speaking. When a dispute escalates, your written history is the most important evidence you have.
When to call a solicitor right away
Call a solicitor immediately when:
- You receive a Notice to Remedy Breach or a Notice to Vacate from the landlord
- The landlord notifies you that they want to terminate the lease
- You receive a letter from the landlord’s solicitor about any matter
- There is a dispute over a significant sum (make-good, unpaid rent)
- You are considering stopping rent payments (this is a dangerous step)
Do not wait until the dispute becomes urgent — the sooner you get legal advice, the more options you have.