Retail and Commercial Tenancy Disputes Lawyers Geelong & Melbourne

Retail and commercial tenancy disputes can have significant financial consequences for both landlords and tenants.  Whether the dispute concerns unpaid rent, repairs, lease renewals, outgoings or termination of a leave, obtaining early advice can help you understand your rights and resolve the dispute as efficiently as possible.

Both the landlord and tenant need to be aware of their rights and obligations

Understanding your rights and obligations as a landlord or tenant can be complex. They will depend on the particular terms of the lease, the use of the premises and whether the tenancy is a retail or commercial tenancy.

In Victoria, commercial and retail tenancies are both regulated by the Property Law Act 1958 (Vic).  In addition, the Retail Leases Act 2003 (Vic) (RLA) provides the framework for retail leases and this Act simply cannot be ignored during any retail tenancy dispute.

What is a retail lease?

Whether a lease is for ‘retail premises’ or ‘commercial premises’ is a complex legal question, which involves consideration of all the circumstances, including the wording of the relevant lease.

While there are exceptions to this rule, generally speaking, a premises will be a ‘retail premises’ if under the terms of the lease the premises is used, or is to be used, wholly or predominantly for the sale or hire of goods by retail or the retail provision of services.   Common examples of businesses that may operate under a retail lease include:

• retail stores;
• cafés and restaurants;
• hair and beauty salons;
• medical and allied health practices;
• service businesses dealing directly with members of the public; and
• businesses operating from a shopping centre.

While it may appear clear cut as to whether a lease will fall within the application of the RLA, there are (more often than not) circumstances that are not quite so obvious.  Sometimes, a landlord and tenant will execute a commercial lease on the understanding that the premises is not a ‘retail premises’, but then later discover that it is one and the RLA applies.   If the RLA applies, the landlord could be wrongfully recovering land tax and the payment of certain repair and maintenance costs from the tenant.  Conversely, the tenant could be paying more to the landlord than is legally required.

If the tenant or landlord is unsure on whether the RLA applies to the lease, and has not received any advice, we recommend that they seek tailored legal advice on whether the premises is a ‘retail premises’ for the purposes of the RLA.  Coulter Legal can provide you with comprehensive advice regarding the operation of the RLA, the options available to you and the associated implications and risks.

What laws apply?

Retail and commercial tenancy disputes are regulated by legislation and common law.

Legislation

As noted above, the primary legislation governing retail leases in Victoria is: 

Retail Leases Act 2003 (Vic) (‘RLA’)

The RLA is a state law that regulates leases of retail premises in Victoria.    The requirements under the RLA are extensive, so we cannot provide a comprehensive list of its requirements here.

However, notably, under the RLA:

1. landlords are required to provide tenants with certain documents that must accompany the lease, in particular, a Disclosure Document in the prescribed form must be provided.  Landlords that fail to comply with this obligation are at risk of penalties imposed under the Act.  Additionally, the tenant may be entitled to withhold the payment of rent; and

2. certain expenses cannot be recovered from the tenant by the landlord.

If the requirements of the RLA are not met (including those set out above), the landlord is at risk of penalties and may not be able to enforce the lease (either all or part) against the tenant.  Further, the tenant may be able to avoid/terminate the lease.  For this reason, it is important that the landlord of retail premises understand their obligations under the RLA.

Common law

Common law is the body of law developed and applied by the courts.  Unlike some areas of law, contract law is not codified or governed by one single piece of legislation and instead has largely been established and developed through court decisions over time.  A lease is a type of contract, leases are also governed by common law principles, in addition to any applicable legislation.

When can I commence a dispute?

If a landlord or tenant is in breach of the lease, or an applicable provision of legislation or common law, the other party may be entitled to recover any losses that flow from the breach.   In Victoria, a claim for a breach of contract (including a lease) must generally be commenced within 6 years of the breach.

Regardless, the aggrieved party should take all reasonable steps, as soon as possible, to address any issues and mitigate their loss, as any delay may adversely affect their claim against the other party.

What are my options to resolve a dispute?

Termination of lease

Depending on the terms of the lease and the applicable legislation, the tenant or landlord may, amongst other things, be able to terminate the lease.  Before the landlord can terminate the lease, it may (depending on the nature of the breach) need to issue a notice under section 146 of the Property Law Act 1958 (Vic), which:

• specifies the particular breach complained of;
• requires the tenant to remedy the breach within a reasonable time (being no less than 14 days), if the breach is capable of remedy; and
• in any case, requires the tenant to pay compensation for the breach within a reasonable time (being no less than 14 days).

If the tenant then fails to comply with the notice, the landlord may then elect to terminate the lease and take possession of the premises.  The lease may specify that further requirements need to be met, before the lease can be terminated by the tenant or the landlord.

Dispute process for retail leases

If the lease is subject to the RLA, there is a specific legal process that must be followed by the landlord or tenant to recover any damage or loss.  This process is designed to be simple, cost effective, and suitable for self-representation.

Prior to commencing any legal proceedings, the parties should take all reasonable steps to attempt to resolve the dispute.  If the dispute remains unresolved and the aggrieved party still wishes to pursue the retail tenancy dispute, the following steps will need to be followed.

Victorian Small Business Commission (VSBC)

A retail tenancy dispute commences under the RLA with a referral to the VSBC.  The VSBC aims to resolve disputes between the parties by a process called mediation. Mediation involves a VSBC-appointed officer working directly with the parties to resolve the dispute.  The mediation process is informal, and applications can be commenced directly through the VSBC website.

Further information on the process with the VSBC may be found here: Dispute resolution | Victorian Small Business Commission

Victorian Civil and Administrative Tribunal (VCAT)

A retail tenancy dispute that cannot be resolved through mediation is to be heard and determined by VCAT.   VSBC may, in some circumstances, avoid the mediation altogether and refer the matter directly to VCAT.   The VCAT process is also intended to be simple and cost effective.

Dispute process for commercial leases

For commercial tenancy disputes, there is no need to refer the dispute to the VSBC, before commencing proceedings in VCAT or the courts.

Again, the parties should take all reasonable steps to attempt to resolve the dispute.  If the dispute remains unresolved and the aggrieved party still wishes to pursue the commercial tenancy dispute, the aggrieved party may be able to commence proceedings in VCAT or the courts.

Do I need a lawyer?

While some tenancy disputes may be suitable for self-representation, obtaining early legal advice can help identify risks, preserve rights and improve prospects of a favourable outcome.  The cost of obtaining advice early is often significantly less than the cost of dealing with the consequences of a mistake later.

Our Litigation & Dispute Resolution team can assist landlords and tenants by:

• advising on rights and obligations under leases and applicable legislation;
• advising whether the RLA applies;
• assisting with lease termination and enforcement issues;
• representing parties in mediations conducted by VSBC and proceedings before VCAT or the courts; and
• negotiating commercial resolutions.