Resolving Commercial Lease Disputes in Victoria

Resolving commercial lease disputes in Victoria can be an overwhelming process. Even when both parties have been fair in the process of a retail lease, disputes may still arise between a landlord and a tenant. It’s therefore important to thoroughly read the lease and the disclosure statements, as these are the key documents for resolving commercial lease disputes. This is because they state the rights and responsibilities of each party. If the parties can come to a resolution, it’s essential to follow a certain procedure. Read on to find out how to resolve commercial lease disputes in Victoria.

Negotiation

Negotiation can be a practical and cost-effective approach for both parties to resolve commercial lease disputes. This is because both parties will be familiar with the facts and can retain control over the process. Negotiation can be completed in an informal or formal setting. However, the negotiating process requires the parties to understand the terms and conditions of the lease. This includes lease duration, rent review, permitted use, tenancy mix, sub-leasing, maintenance, breaches, redevelopment and termination. The negotiation process must provide structure, so it’s essential for each party to provide position statements as well as the outcome they’re seeking.     

Mediation

Mediation is a formal resolution in order to resolve commercial lease disputes. It takes place out of court and involves both parties meeting to discuss the matter. This is an attempt to resolve the dispute amongst the parties, maintain the parties’ commercial relationship, and allow everyone to move on with their own business ventures. The dispute is seen before a mediator, who helps the parties communicate openly and identify options to reach their own agreement for settlement. Mediators don’t decide who is right or wrong, and they don’t give binding judgements. When reaching an agreement, it’s a good idea to put the resolution is writing and ensure that both parties sign it. This ensures the terms of the agreement are clear in order to help both parties in the future.

Apply to VCAT

If commercial lease disputes can’t be resolved through negotiation or mediation, the matter is taken to the Victorian Administration and Civil Tribunal (VCAT). VCAT can help parties reach agreements, and if an agreement can’t be met, the case is decided at a hearing using the relevant law. It’s important to keep in mind that VCAT is not a court but rather part of Victoria’s court system. The tribunal hearings are adjudicated by a tribunal member, not a judge or magistrate. Most hearings are resolved on the day in under an hour, but a second hearing can take place if needed.

Initiate Court Proceedings 

Courts rarely deal with commercial lease disputes. This is because if a party makes an application to another court relating to this issue, the court must transfer the matter to the tribunal. However, making an application to the court may be necessary if the matter is in the ‘interests of justice.’  For example, a party may require an urgent court order that prevents the other party from taking certain action. This may include a termination of the lease, which is also known as urgent interlocutory relief. As a result, court proceedings may be initiated for commercial lease disputes if the matter is urgent.