Retail Lease Disputes in Victoria

The Dispute Framework

Retail lease disputes in Victoria are governed by:

• Retail Leases Act 2003 (Vic) — disclosure (section 17), landlord repair obligations (section 52), outgoings recovery (section 46), option process (section 28), assignment consent (section 60), and the dispute resolution machinery (Part 10, sections 81 to 98).
• Property Law Act 1958 (Vic) — section 146 breach and forfeiture notices, and general common-law landlord-tenant principles.
• Victorian Civil and Administrative Tribunal Act 1998 (Vic) — VCAT jurisdiction, procedure and costs regime under section 109.
• The Victorian Small Business Commission Act 2003 (Vic) — the VSBC's role as the mandatory pre-hearing mediator.

A landlord or tenant that ignores this framework — for example, by issuing a section 146 notice while a VSBC mediation is on foot, or by starting VCAT proceedings without a VSBC certificate — typically loses procedural ground before the merits are heard.

Rent, Estimates and Outgoings

Rent and outgoings disputes are the most frequent retail lease disputes. Common flashpoints include:

• outgoings recovered without proper disclosure or annual reconciliation (section 46);
• land tax passed through where the Act prohibits it (section 50);
• market rent reviews conducted without following section 35 process;
• CPI or fixed reviews that the tenant says do not match the disclosure statement;
• disputes about promotional levies, marketing fund contributions and shopping-centre outgoings.

Where a dispute is properly documented — outgoings statements, reconciliations, disclosure statement and correspondence — the parties can usually agree an adjustment at VSBC mediation. Where it is not, the landlord that cannot produce the reconciliation is the party at risk.

Repairs, Maintenance and Make Good

Section 52 imposes on the landlord an obligation to maintain the structure, plant and equipment used in the retail premises in a condition consistent with its condition at commencement. The tenant is generally responsible for its fit-out. Where the equipment is embedded (for example, an air-conditioning plant serving the premises), the landlord bears the primary responsibility. Disputes about repair are best resolved with a joint inspection, a scope-of-works letter and, if needed, VSBC mediation before either party undertakes the work.

End-of-term make good disputes are best avoided by documenting the condition of the premises — with dated photographs and a condition report — at both commencement and handover. The scope of make good is a question of the lease first and the evidence second; a landlord seeking cash in lieu of make good must be able to explain why physical make good was not appropriate.

Options to Renew and Disclosure

Options to renew are a common source of dispute. The landlord must notify the tenant of the last date to exercise the option at least three months before that date (section 28). A landlord that fails to give the required notice cannot then argue the option has lapsed without giving the tenant a further period to exercise. A defective disclosure statement can also support a tenant termination in the first 90 days (section 17) and can bar recovery of certain outgoings — issues that a landlord's solicitor should review before any dispute escalates.

The VSBC Mediation Pathway

Most retail tenancy disputes must be referred to the Victorian Small Business Commission under section 87 before proceedings can be commenced. The process:

1. Party A applies to the VSBC (application, small fee).
2. The VSBC assesses whether the dispute is a retail tenancy dispute and, if so, appoints a mediator.
3. Mediation is held (often via video), typically within a few weeks.
4. If resolved, the parties sign a Heads of Agreement or Deed of Settlement.
5. If unresolved, the VSBC issues a certificate under section 87 that enables the applicant to commence at VCAT.

The VSBC does not decide the merits — the mediator facilitates settlement. Prepared parties with a clear position paper, a genuine settlement range and authority to settle resolve most matters at the first mediation.

VCAT and Court Pathways

VCAT's retail tenancies jurisdiction is broad — money claims, injunctions, declarations, orders about outgoings, option process orders and orders about assignment consent. The general rule under section 109 of the Victorian Civil and Administrative Tribunal Act 1998 is that each party bears its own costs; costs orders are available in narrow circumstances (unreasonable conduct, offers of settlement, complexity). Where the dispute is outside VCAT's retail tenancies jurisdiction — a serious common-law claim or an urgent injunction — the Supreme or County Court is the correct forum. See our companion urgent injunctions guide and litigation costs guide.

Evidence and Documentation

• the lease, any variations, and every disclosure statement served;
• every notice served (rent review, option, breach, section 146);
• outgoings estimates and annual reconciliations for the period in dispute;
• condition reports, photographs and video from handover and current inspections;
• correspondence — including emails and text messages between the parties.

Related Guides

See when does the Retail Leases Act apply, resolving a business dispute before court, commercial debt recovery in Victoria and enforcing a judgment debt in Victoria.

Frequently Asked Questions