RETAIL LEASE DISPUTES

Marianna Idas, the Principle Solicitor of eLease Lawyers, discusses the procedure involved with resolving retail leasing disputes.

Disputes can arise at any point during the term of a retail lease or after its expiration. We set out below the procedure that parties should adhere to when resolving a dispute.

WHERE SHOULD YOU BEGIN?

If you have a dispute you should:

1. Communicate first with the other party to see if there is an ability to resolve the matter directly. You can do this face to face and or in writing.

2. Check your lease and see if there is a dispute resolution clause that you must comply with and follow the relevant process.

3. Check the relevant legislation in your state as all jurisdictions relating to retail shop leases have provision for the determination of disputes between a retail shop tenant and landlord. The legislation usually provides that matters are first submitted by a dispute notice to a mediator and then to a tribunal if the mediation is unsuccessful. This does not prevent you from seeking an order from a court/tribunal in the nature of an injunction (urgent matters).

The clear objective of this legislation is to avoid the resolution of disputes between retail shop Landlords and tenants through the court process except where there has been a failure of arbitral outcomes. It enables disputes between those parties to be accessible to specialist mediators, conciliators or tribunal members (as the case may be).

Please note that in Victoria disputes relating to a claim by the landlord solely for the payment of rent and in Queensland solely about the amount of rent and outgoings payable are not a proper matter for the alternative dispute resolution provisions of the legislation. In other jurisdictions, a retail tenancy claim can include a claim for the payment of a specified sum of money with certain limits being placed on the jurisdiction of the relevant tribunal.

Speak to a lawyer to obtain advice on how to begin the mediation process. It is always advisable to have them help you through the mediation stage.

If mediation is unsuccessful then the matter will be referred to the relevant tribunal/court for determination.

MEDIATION

There is an 80 per cent chance that a retail lease dispute will resolve on the day of mediation or shortly thereafter. Mediation is ‘won’ or ‘lost’ because of the preparation or lack thereof of the party’s representatives. Please ensure that mediation is taken seriously and obtain proper legal advice.

Look at what the interest of the landlord is. If you do not look at what they want then how can you resolve the dispute? It is possible that the landlord may not be driven by money but by its reputation for example large shopping centres. Litigation can result in information entering the public domain which some landlords prefer to avoid.

LITIGATION V MEDIATION

Disadvantages of litigation include:

• Uncertainty – until a judge decides the case, you can never be certain of the outcome.

• Costly – the costs of engaging lawyers can be expensive. Further, if you are the losing party you may also be liable to pay for some of the other side’s costs of litigation.

• Delay – the litigation process can take many months, if not years.

• Stress – the above factors can increase stress levels.

Advantages of Mediation include:

• Quick – there is a fast turnaround time in obtaining a date for mediation.

• Cheap – mediation is much cheaper than litigation. For example, in NSW the cost is approximately $152 (incl GST) per party per hour. You must pay for five hours in advance ($760 per party). It is not mandatory to have a lawyer present so this may be the only cost attributable to attending mediation. On the other hand litigation can cost anywhere between $2,000 to $15,000.

• Informal – this is an informal process where the parties try and negotiate a resolution. The Mediator will aim to help this process.

• Confidential – the outcome of the matter is not recorded on a registry like it is in Court. The agreement is documented between the parties and a clause can be inserted to ensure that the outcome remains confidential.

• Preserve the relationship – if the parties have an ongoing relationship it is best to try and negotiate a resolution together. Mediation is generally viewed as the willingness of both parties to enter into the process voluntarily and to participate fully to reach a mutually agreeable outcome.

In conclusion, it is in the best interests of both parties to aim to resolve the matter together through means outside of court and tribunals including via mediation. The advantages far outweigh the disadvantages by attending mediation as your first action.

Marianna Idas, the Principle Solicitor of eLease Lawyers.