Glenn Duker on Commercial Lease Tenant Rights Victoria
Glenn Duker is principal lawyer at PCL Laywers in Melbourne and specialises in commercial lease tenant rights and issues in Victoria.  He is an expert legal commentator, blogger and podcaster at LawBizNews.com.au


The Three Types of Tenant Issues - Five Year Minimum Term, Key Money and VCAT As An Enforcement Measure
There are more protections today for tenants than ever before. Most of these protections are enshrined in the Retail Leases Act 2003 (“Act”). Indeed, In all Australian states, there has been the introduction in recent years of baseline legislative protection to assist in protecting fundamental tenant rights. These protections include a guaranteed minimum term of lease, mechanisms which prevent a landlord from easily taking advantage of a tenant and a dispute resolution mechanism which is relatively cheap and less formal than the court system.

My name is Glenn Duker and I am a Melbourne based retail lease lawyer.
The Retail Leases Act 2003
The Retail Leases Act 2003 requires a landlord to provide five full years as an absolute minimum to a tenant. This need not be in one full term but the initial term, combined with the options for further terms, must be a minimum five years. There are exceptions - such as when the lease being entered into is in fact a sublease and there is a head lease which has less than five years to go - but most tenants can look forward to at lease five years tenure provided the tenant has not persistently defaulted during the lease. Notably, the landlord cannot contract out of this rule.

Another protection under the Act is that landlords cannot charge a tenant “key money”. This means that there is no flag fall type fee which became quite popular prior to the introduction of the Act. A breach of this provision entitles a tenant to terminate the lease.
The Ratchet Clause
Sometimes landlords will seek to include other onerous clauses - such as the trying to prevent the rent ever being decreased in a market review situation (also known as a ratchet clause). Any such clause included in a lease is void, as the law as set out in the Act will always prevail.

In the unfortunate event that you do have a dispute with your landlord, and no agreement can be reached between you, the matter will need to first be referred to the Small Business Commissioner for compulsory mediation, unless the matter is particularly urgent, in which case an application can be made straight to the Victorian Civil and Administrative Tribunal (“VCAT”), as sometimes urgent injunctions are required to prevent certain action by a landlord pending the further determination of the issues.
When Mediation Fails
If mediation fails, the then the Small Business Commissioner will issue a certificate which entitles either party to commence proceedings in VCAT. Such proceedings have in inexpensive filing fee and an application is fairly easily to bring on. Formal points of claim (being a similar to a statement of claim in a civil court proceeding) will still need to be drafted and appropriate orders sought. VCAT is championed by many as a cheaper, faster and easier forum to litigate in. The rules of evidence are far more relaxed and there is a strong incentive given to parties to settle their dispute quickly.

Not least of these incentives is that VCAT, at least the in the Retail Leases List, is a fundamentally a “no costs” jurisdiction, meaning that each party will usually have to bear his or her own costs, whether the case is won or lost.

This can seem unfair to a party who has to expend funds to enforce a legal position, the costs of which can sometimes outright the amount in dispute (and I tend to agree that is not helpful to party who has no choice really but to litigate on an important issue). Yet this mechanism tends to focus the parties on resolving their dispute quickly. In any event, if the lease is a retail lease for the purposes of the Act,

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